“You can go anywhere in Hong Kong, but not Tsz Wan Shan,” the minivan driver told Stephen Lo FCPA and his chief executive officer. But that’s exactly where they had to be. In July last year, the densely populated area in Wong Tai Sin District was a hot spot of coronavirus outbreaks at the start of Hong Kong’s “third wave.” In response, the government appointed Prenetics, the Hong Kong-based digital health and genetic testing company, to provide free testing to restaurant staff across the city.
“The first day we started, our co-founder and I went to the highest-risk area to distribute the COVID-19 testing kits and collect the kits from the restaurant staff ourselves,” says Lo, Chief Financial Officer at Prenetics, and a Hong Kong Institute of CPAs member. “As leaders and senior executives we have to be on the frontline. After that weekend, we were able to make improvements to the workflow, improve the standard operating procedures that increased our productivity significantly, and share tips on how to do things smoothly.”
He adds that there was another reason why it was all worth it. “Speaking to the restaurant staff was a very satisfying moment for me. People were highly appreciative that we went to a high-risk area to deliver the kits.” The company helped test 200,000 workers at 16,000 restaurants, supermarkets and wet markets.
Slowing the spread of the virus and helping the world return to normalcy is one of Prenetics’ missions, says Lo. The company was founded in 2014, focusing on genetic testing, doing research and development on new genomic testing technologies, and launching CircleDNA, its own brand of at-home test kits that detect ancestry composition, disease risk, nutritional needs and personality and behavioural traits. Then, with the alarming rise in COVID-19 cases in February and March last year, the company quickly diversified to offer coronavirus tests and saw its business accelerate.
“The situation had become worse globally and so internally we were thinking about how we could help because we are a genomics company, and it turns out that genetics has a strong role to play in the fight against COVID-19. If you want to diagnose it, you would use a polymerase chain reaction (PCR) test, which is a genetic test. If you want to treat someone, antiviral drugs are extensively used, which was developed using genetic engineering, and for vaccine development you use mRNA vaccines, which leverages genetic technology,” says Lo. “We realized that we had huge testing capacity that was not utilized and so we thought we should start doing PCR tests in Hong Kong and the United Kingdom.”
As the pandemic grew more serious, Prenetics’ laboratory in Quarry Bay expanded and converted into a COVID-19 testing facility, relocating the rest of the office into a new place across the street. “Our lab can now do 30,000 tests on a daily basis,” says Lo.
The company now works with governments providing community testing, as well as operates testing sites in various airports, including Hong Kong International Airport and five airports in the U.K. It also helped with the restart of the English Premier League season in June last year by testing players and staff from the 20 football clubs.
Last month, it was announced that airline Virgin Atlantic was partnering with Prenetics to offer customers at-home tests needed for trips to destinations where these tests are accepted. Lo sees it as a sign of growing demand for rapid and convenient COVID tests for foreign travel. “Travelling is one the most important testing cases because people really want to travel again and go on vacation,” he says. “With vaccination, I think the pandemic is moving into the next phase. Earlier it was about finding out positives, doing contact tracing and quarantine. Now with vaccination, people are expecting the resumption of normalcy and the dynamics have changed to testing for negatives to ensure safety when we resume travelling.”
Building trust
Lo joined the company in 2018 when the company was a start-up. “I got to witness the transformation of the company and be part of the transformation,” he says. He hired the company’s second accountant and helped build the finance team. Today, his finance team in Hong Kong is made up of 15 people, while the U.K. team has more than 10.
Lo says as a start-up CFO, he had to be very hands-on with the bookkeeping. Nowadays, his focus is on different things, including maintaining a strong company culture as Prenetics continues to grow. “The challenge now is maintaining that culture of innovation and agility, even if we grow from 400 to, say, 700 people. When the company was small, it was easier to maintain cohesiveness,” he says.
While the top-down approach is important, so is bottom-up, he adds. “When we hire people, we have to understand what they are looking for; whether they believe our vision of disrupting healthcare. Because this is not just a business, it is a business about people’s health. If we make a mistake, it could have a devastating impact on society. We hold ourselves accountable for every decision we make so the people we bring in have to believe in what we do.”
Lo is also focused on ensuring sustainable business growth. “We have to ensure we push ahead with all the strategic initiatives while having fiscal discipline and a good corporate governance structure to secure the financial future of the company, because research and development requires quite a significant investment and it will take some time in order for us to recoup that investment. This is something I care about deeply.”
As the company grew, so did the importance it placed on its corporate governance systems, says Lo. “Corporate governance was important even when we were a start-up, but the way it was manifested was different because our shareholder base was a smaller group of venture capital investors and it was a lot easier to communicate with them. We have more investors now and earning their trust through adhering to certain principles is very important. We have to ask ourselves: how do we make ourselves trustworthy?”
It’s a key question, particularly as consumer genetic testing companies have come under scrutiny around their use of genetic data. “Nothing is more important and private than someone’s genetic information, so we take data privacy and data security very seriously,” says Lo, adding that the company does not share genetic information with anyone except with the authorization of its customers. “It is very difficult to earn trust and very easy to lose it. If we uphold high standards throughout the entire customer journey, I think this can help us earn trust.”
Before joining Prenetics, Stephen Lo was a vice president in the Asia-Pacific investment banking team of Citigroup, where he completed initial public offering transactions, mergers and acquisitions, and fundraising.
“The challenge now is maintaining that culture of innovation and agility, even if we grow from 400 to, say, 700 people. ”
Key lessons
After graduating from Hong Kong Baptist University with an accounting degree and a masters in accounting and finance at the London School of Economics, Lo started his career at EY as an auditor working on capital market transactions while gaining his CPA designation. “The hours were long, the tasks were difficult, but looking back it was a great experience,” he says.
Lo says his audit experience and CPA training has been instrumental for handling issues in his current role, not just because of the technical skills he picked up but also because it broadened his understanding of business. “When I was an auditor, I got to look at confidential information about a company. Each invoice had a story behind it, for example, of why a company was investing in a certain business initiative. Gradually, I developed this sense of business that has become a part of me,” he says.
“I also had the chance to work with investment banks and I saw how financing transaction is done, how banks help companies to succeed, and I realized I could do it too. I started knocking on the doors of investment banks and eventually got my foot in the door,” he adds. After more than three years at EY, Lo joined the Asia-Pacific investment banking team of Citigroup as a vice president, completing initial public offering transactions, mergers and acquisitions, and fundraising.
He credits his time at Citigroup as influencing his priority of recruiting people who fit in with the corporate culture. “I did a lot of technology transactions, and something that I saw in all of these successful technology companies is that they were a start-up at one point in time and managed to grow rapidly. As I worked with them, I saw patterns of success, and something that kept coming up from time to time is that strong team and culture. While people are important, people are just one part of it. If the company doesn’t have a strong culture, you cannot maximize the potential of the team. So after working with these successful technology companies, I developed this way of thinking when building a team and this has become my guiding principle since then.”
In recent years, Prenetics has been actively pursuing opportunities and making deals to drive growth, which is where Lo taps into his investment banking experience. One example is Prenetics’ move in October 2020 to acquire Oxsed, a spinoff of Oxford University that developed a rapid viral RNA test for COVID-19, which is able to deliver accurate test results without a lab within 15 to 30 minutes, compared with the “gold standard” PCR test, which takes one to two days. “The year before that we had a technology transfer agreement signed with New Horizon Health, a company in China that develops a highly accurate colorectal cancer DNA test, the only one approved by China’s National Medical Products Administration. The year before we did our fundraising, so we have been very aggressive to make sure we achieve our business goals,” says Lo.
But at the same time, when Lo wears his accountant hat, he’s cautious. “I’m conservative in managing the financials of the company. My CPA training has a long-lasting impact on how I think about risk. We have to make sure that our accounting policies are prudent, and that we are accountable for our performance and have a healthy balance sheet.”
Lo started his career at EY as an auditor working on capital market transactions. He was there for more than three years.
“My CPA training has a long-lasting impact on how I think about risk. We have to make sure that our accounting policies are prudent, and that we are accountable for our performance.”
Post-COVID potential
Lo first met Prenetics Co-founder Danny Yeung at a technology conference. “He had charisma and talked about his vision of disrupting healthcare, but his background was in e-commerce. I was thinking either he was onto something or he was crazy,” recalls Lo. Moved by the entrepreneur’s ideas and foresight, Lo got in touch with Yeung, and later left investment banking. Lo took a deep salary cut – and a career risk – to join the start-up. “When I came across Danny and Prenetics, I was reminded of the pattern of success I saw from my other clients. Danny thought healthcare was ripe for disruption, which I think he was spot on because healthcare hasn’t changed in the past decades. COVID-19 exposed how unprepared the global healthcare system was,” says Lo, adding that caring for the sick was more reactionary than preventive.
There are therefore huge opportunities in preventive healthcare, says Lo. He notes that the company is currently working on developing 30-minute home test kits for COVID-19, influenza, sexually transmitted diseases and other infectious diseases. “Imagine waking up one day feeling a bit sick, testing yourself at home, and 20-30 minutes later getting an accurate result of the type of illness you have. You would know whether to stay home and rest or go straight to the hospital,” Lo explains.
In the meantime, the work of helping everyone return to normalcy continues. Lo says that next month, Prenetics will launch a new at-home testing device for COVID-19 that has already been approved by health regulators in Hong Kong and the U.K. But what will happen when the world returns to pre-COVID normal? Lo believes that the demand for testing for various illnesses will continue to surge. “That would be a great day,” says Lo. “But even if COVID-19 goes away, testing is here to stay. In the past, it was difficult to explain to people what we do as a company. Now, even my grandma knows what a PCR test is, and so that kind of awareness about health and genomics has changed this sector forever.”
When the “third wave” of COVID-19 struck, Prenetics helped test 200,000 workers across 16,000 restaurants, supermarkets and wet markets.
