Tuesday, October 12 2021

A life science company that packed its bags and moved most of its business to the South Carolina coast from the mountainous west a few years ago has taken another big step forward.

Only not as tall as he had hoped.

Researcher and supplement maker Thorne HealthTech Inc. launched its initial public offering last week, but not before significantly downsizing the deal.

The company had hoped to raise up to $ 135 million by selling shares up to $ 15 each. He pulled that number down last week and ended up raising $ 70 million.

Nasdaq-listed stocks began trading when the opening bell rang on Thursday under the symbol “THRN” and stumbled sharply, falling 24% by the end of the session.

It was a decidedly cold market start for a company that aims to make deeper inroads into the growing and highly fragmented health and personal wellness industry, where no player has amassed more than 5 % of the market, according to Thorne’s calculations. A Grand View Research report earlier this year predicted the size of the dietary supplement industry to nearly double to $ 271 billion by 2028, from $ 140.3 billion in 2020.

In this context, Thorne said his goal was to redefine “consumer health and create a brand with science-backed personalized products that meet the highest standards of quality, safety and efficacy.”

Thorne HealthTech, which moved most of its operations to Summerville (above) from Idaho in 2018, went public last week. File / Staff

“We have a significant opportunity to continue to penetrate the product categories and channels in which we compete today,” according to its IPO filings.

The share offering is the last step in this plan. Up to $ 20 million in investment products. along with existing liquidity reserves, will finance the development and testing of new dietary supplements as well as the Onegivity Health clinical research platform recently acquired by the company. Up to $ 30 million will go towards sales and marketing initiatives and the expansion of Thorne into new global locations. The remainder will be used to repay the debt of a Japanese lender which is due next year and for other general purposes.

“Our organization has never been so excited about the future growth potential and impact of our business as it is today,” wrote CEO Paul Jacobson in a letter to potential investors.

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Although it lists New York City as its corporate headquarters, Thorne is essentially a South Carolina-based company.

Almost five years ago, the company announced plans to move most of its key operations to a new 270,000 square foot building in Summerville, northern Idaho. The deal included a capital investment of $ 35 million and 350 jobs of all kinds.

“This facility includes manufacturing and production, research and development, medical affairs, engineering, quality management, laboratory testing, brand marketing, inside sales, customer service, finance, legal, human resources, warehousing and materials management, purchasing and security, “Thorne said in a recent filing with the Securities and Exchange Commission.

He also noted that he recently signed a new five-year lease for an additional 115,500 square feet of warehouse and distribution space in Summerville.

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“This will expand our warehousing and shipping capabilities for finished products to the eastern United States and international markets,” the company said.

Thorne Research CEO Paul Jacobson.jpg (copy)

Thorne Research CEO Paul Jacobson. File / Warren L. Wise / Staff

The company passed through Thorne Research when it embarked on its quest to relocate across the country in 2014. By that time, it had moved beyond its manufacturing base in Sandpoint, Idaho, and n wasn’t sure if she could expand her building or even extend her lease. Over the next two years, he explored dozens of sites across the country. The Lowcountry and York County near Charlotte emerged as the two main contenders.

Jacobson believed the Charleston area would be attractive to customers and other visitors. In addition, Thorne thought it was a plus that the region grew and was home to several colleges, an established medical research community, and a major US seaport.

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“It didn’t hurt that Charleston is a culturally diverse and interesting place,” Jacobson said in a 2016 interview. “It’s important to us because it allows us to attract the kind of people that we do. want to recruit. “

The former Goldman Sachs banker made an equally unconventional path to the corner office in Thorne, which started in Seattle in 1984 and moved six years later to Sandpoint, not far from Spokane, in eastern Washington. He recounted in his letter to investors how he came to acquire the company with certain partners in 2010, inspired in part by a former boss of the pharmaceutical industry whom he met while serving on a board of directors. ‘administration.

“He was fed up with me asking him how a big pharma could turn compounds that barely surpassed a placebo or natural products into multi-billion dollar drugs, and one day turned to me and said: “If you think you’re that smart, start a natural product business. ‘ He said that to do it right, we would need to compile clinical data to demonstrate the effectiveness of a more natural approach to health. … This sparked my interest in determining if he was right, which led me to spend several years researching the natural products industry, ”Jacobson wrote.

Thorne now develops, manufactures, and ships approximately 300 different supplements, health test kits, and other wellness products that it sells to 3 million customers through wholesalers, retail stores, online resellers and more. ‘a growing subscription business. The company also said it works with 42,000 medical professionals and thousands of professional athletes.

Quality of life helps to strike a deal with headquarters

The IPO documents give precise figures on Thorne’s financial trajectory.

Sales jumped 35% last year to $ 138.5 million, suggesting the company benefited from the health and fitness boom that emerged during the COVID-19 crisis.

And while Thorne didn’t make a net profit on an annual basis – he lost $ 4 million last year – he was in the dark as of June 30 with a margin of $ 4.4 million. Meanwhile, revenue continues to climb sharply, increasing 38% from the first six months to $ 87.4 million.

“We have experienced significant growth in sales of our health supplements and tests through the acquisition of new customers and strong customer retention,” said Thorne.

While its Wall Street debut was a bit chilly, Wall Street seemed to warm up a bit for the newcomer on its second day in the public markets. Shares rebounded 10% on Friday to close at $ 8.35.

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