Horizon Discovery Group plc 2017 Full Year Results May 2018
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Disclaimer This Presentation is confidential and is being supplied to you solely for your information and may not be reproduced, further distributed to any other person or published, in whole or in part, for any purpose. Subject to certain exceptions, this Presentation is not for distribution in the United States, Australia, Canada or Japan or any other jurisdiction where its distribution may constitute a violation of the laws of such jurisdiction. The information contained in this confidential document (“Presentation”) has been prepared by Horizon Discovery Group plc (the “Company”) and neither this Presentation, nor the information contained in it should be considered a recommendation by the Company or any of its shareholders, directors, officers, agents, employees or advisers in relation to any purchase of the Company’s securities, including any purchase of or subscription for any shares (or securities convertible into shares) in the capital of the Company. This Presentation has not been fully verified and is subject to material updating, revision and further amendment. Any person who receives this Presentation should not rely or act upon it. This Presentation should not be re-distributed, re-published, reproduced or disclosed by recipients, in whole or in part. While the information contained herein has been prepared in good faith, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers give, have given or have authority to give, any representations or warranties (express or implied) as to, or in relation to, the accuracy, reliability or completeness of the information in this Presentation, or any revision thereof, or of any other written or oral information made or to be made available to any interested party or its advisers (all such information being referred to as “Information”) and liability therefor is expressly disclaimed. Accordingly, neither the Company nor any of its shareholders, directors, officers, agents, employees or advisers take any responsibility for, or will accept any liability whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise, in respect of, the accuracy or completeness of the Information or for any of the opinions contained herein or for any errors, omissions or misstatements or for any loss, howsoever arising, from the use of this Presentation. This Presentation may contain forward-looking statements that involve substantial risks and uncertainties, and actual results and developments may differ materially from those expressed or implied by these statements and past performance is no guarantee of future performance. These forward-looking statements are statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the Company's results of operations, financial condition, prospects, revenue generation, growth, strategies and the industry in which the Company operates. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These forward-looking statements speak only as of the date of this Presentation and the Company does not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this Presentation. This Presentation has not been approved by an authorised person in accordance with Section 21 of the Financial Services and Markets Act 2000. In no circumstances will the Company be responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the Company. In furnishing this Presentation, the Company does not undertake or agree to any obligation to provide the recipient with access to any additional information or to update this Presentation or to correct any inaccuracies in, or omissions from, this Presentation which may become apparent. This Presentation does not constitute an offer or invitation to subscribe for or purchase any securities and neither this Presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever. In particular, this Presentation is for information purposes and does not constitute an offer or invitation to subscribe for or purchase any securities in the United States. The securities of the Company have not been and will not be registered under the US Securities Act of 1933, as amended (the “US Securities Act”) or the securities laws of any state or other jurisdiction of the United States and may not be offered, sold, resold, pledged, delivered, distributed or transferred, directly or indirectly, into or in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the US Securities Act and in accordance with any applicable state securities laws. There will be no public offering of the securities of the Company in the United States. By participating in and/or accepting delivery of this Presentation you agree to be bound by the foregoing restrictions and the other terms of this disclaimer. 2
Our next generation tools power the ecosystem of precision medicine INSPIRED CELL SOLUTIONS We are global leaders in cell Our vision is to unlock the Our advanced tools accelerate engineering. power of the cell. customer solutions. We innovate with our customers using The cell is at the heart of biology. Our Our unique tools and services are used by our unique technology agnostic platform ability to modify the cell helps customers to provide valuable insights that allows us to control the cell using customers understand biology and and applications in: our expertise in: translate knowledge into valuable industrial applications. - research - gene editing - drug discovery - gene modulation - molecular diagnostics - biomanufacturing 3
Unique position to deliver growth Unique position to deliver growth… • World class technology agnostic gene editing and modulation platform • Innovation is driving from traditional approaches to the next wave of precision medicine • Next generation tools and technologies delivered through valuable customer relationships • “Blue ocean” markets with limited competition in fast growing core focus areas …through an outstanding team and full capability • Exec • Global commercial footprint, • Innovation and • Supply chain logistics and leadership eCommerce and distribution science base operations 4
Major growth drivers We expect to gain share in key markets GMP Cell Solutions: Bioproduction, vaccines, cell therapy APPLIED PRODUCTS Market size: £250-350m CAGR: 10-15% Diagnostic Solutions: Reference standards for oncology, NIPT and APPLIED PRODUCTS infectious diseases Market size: £450m CAGR: 10-15% Research Reagents and Models: CRISPR, RNAi, cells, transgenics RESEARCH PRODUCTS Market size: >£1,000m CAGR: >25% Screening Solutions: CRISPR and combination screening SERVICES Market size: £450m CAGR: 15-20% 5 Source: Served Addressable Markets and Market Share based on management estimates
Financial highlights 2017 Revenue Funding £80m fundraising £36.5m • Revenue growth driven by products £28m • • £37.5m cash consideration for • Gross margin expansion to 62% 52% growth acquisition (FY16: 54%) • £28m net funds to support growth 50% constant • Organic revenue £27.5m (14% currency growth) EBITDA Outlook • Solid Q1 with revenue tracking to £1.1m • Positive EBITDA (adjusted) from core expectations and positive outlook Core EBITDA • products and services £2.8m negative EBITDA in leveraged R&D with planned reduction in Q1 • Expect typical H2 weighting of revenue with corresponding phasing (adj) of EBITDA forward net investment • Drive to sustainable, profitable growth 6
Operational highlights • Dharmacon tracking towards • Completed consolidation into UK return to growth Centre of of Boston and Vienna sites Dharmacon • Integration progressing well • Commercial and operational Excellence forming world leading Centre of Excellence synergies evident • Deepening of core gene editing Corporate • Terry Pizzie appointed Group CEO Core gene capabilities Delivery from a world class team • Transposon licence and • • Expanded geographical coverage editing • CRISPR licence expansion for Commercial • Enhanced e-commerce capabilities GMP and to have products made and sold by partners 7
Commercial excellence Next generation technologies delivered through deep customer relationships Relationships Web and digital Sheli Streck • Key to commercial innovation BD Sales • >85% Horizon enquiries • Recruitment of key management originated online driving 67% talent with commercial teams Brian Burke Gabe growth in eCommerce revenue Longhoria fully aligned and integrated Commercial ‘Customer Key Account • Web driven knowledge for Strategy Focus’ • Deepened geographic coverage Product Mgmt Partners customers ‘Commercial APAC Sales • Key account team delivering Success’ • Plans to enhance customer through deep customer ‘Business experience to increase conversion Efficiency’ relationships John Martin and stickiness Customer Elaine Cross selling Service Technical Support O’Brien Marketing & APAC growth eCommerce • Increasing examples of cross Training • Experienced Head of APAC in post selling and upselling based out of Singapore • Key account access driving new • Quality distributor network in pharma opportunities place • Moving from selling technology to • New entity in Japan solutions • Localized support 8
Customer intimacy through commercial coverage From… From… …to LEGEND BD Emile Shaffu - S. UK, N. Ireland & Ireland LEGEND Iceland Abhay Joshi - N. UK EMPTY Switzerland (Open) Emile Shaffu Ron Evers Laura Defranco Andreas Myer - S. Germany Finland Finland Daniella Huber - N. Germany Sweden Europe Small and specialised Horizon team with large Sweden Europe Nordics (Open) • Norway Norway Fabienne Tardieu Rainer Halama LD Jon Seager Open Latvia Latvia Lithuania Denmark Ireland territories and limited customer relationships Lithuania UK Ireland AJ UK Netherlands Belarus Belarus DH ES RE Poland Poland Germany Germany Ukraine Belgium Czech Ukraine ES Czech Luxembourg AM Rep Rep Slovakia Luxembourg Slovakia Moldova France RH France Moldova Austria Hungary Austria Switzerland Switzerland Hungary FT Romania Larger Dharmacon team with smaller territories Slovenia Slovenia Romania Liechtenstein Croatia Liechtenstein Croatia • Portugal Spain Italy Serbia Bulgaria Portugal Spain Open Italy Serbia Bulgaria Greece Greece and deeper relationships in academia WA MT ND ME Commercial …to OR MN coverage ID SD WI NY WY MI IA PA NE NJ NV OH MD LEGEND UT IL IN CO WV BD CA VA EMPTY KS MO KY Ashleigh Teator Teams merged and sell pan-portfolio for broad NC TN • AZ OK NM AR AT SC British Columbia MS AL GA Sasketechawan, Manitoba WA TX LA MT ME FL ND geographic coverage and cross-selling AK Quebec, Ontario OR MN CN ID SD WI NY Products Opn WY JM MI CT RI AP IA PA NE MC NJ HI NV OH MD Opn UT IL IN CO WV CA opportunities DC VA Darrick Chow KS MO JD KY Ashleigh WA NC JM O TN J MT ME ND AZ OK NM AR Ham SC OR AT Jam MN ID MS AL GA Mini C SD WI NY An WY MI TX LA Cha IA PA Technical specialists covering office based training NE NJ HS Ji NV OH FL MD LEGEND AK Kei • UT IL IN CO WV BD Larry CA VA Hamidah Sultan KS MO JD KY Jeff Dale NB NC Nathan Bach TN AZ OK HI NM AR SC as well as field application specialists in situ to MS AL GA Products and services TX LA HS FL AK support commercial organization HI Services 9
Who are our customers? SERVICES RESEARCH • Biopharma customers PRODUCTS discovering novel targets and • Researchers using validating new precision engineered cells, RNAi, in medicines vivo models MOLECULAR BIOPRODUCTION DIAGNOSTICS • Biopharma and contract • MDx companies requiring manufacturers using high quality reference commercial rights to standards to control their bioproduction CHO cell line workflows 10 Note: illustrative analysis based on pro forma full year revenues for Dharmacon
Revenue growth Revenue and gross margin by customer segment Revenue by region 40.0 80% 40.0 35.0 70% 35.0 4.5 30.0 13.7 60% 30.0 25.0 50% 25.0 10.3 20.0 40% 20.0 10.2 15.0 30% 15.0 10.0 20% 10.0 21.6 5.0 12.6 10% 5.0 0.0 0% 0.0 FY15 FY16 FY17 2015 2016 2017 Research products Applied products Services Americas EMEA Asia Pacific Product GM% Services GM% • Group revenue of £36.5m (52% growth, 50% at CER) • Dharmacon accelerating our globalisation • Organic revenue of £27.5m • Strong performance of applied products in APAC • Product revenue of £22.8m (101% growth, 101% at CER) • Significant increase in commercial coverage expected to drive • Services revenue of £13.7m (7% growth, 4% at CER) growth in all regions • Gross margin increase to 62% following site consolidation 11
Foreign exchange Revenue by currency FY17 GBP:USD 1.5 USD tailwind USD headwind 1.45 CC growth 1.4 50% 1.35 (11% organic) 1.3 1.25 1.2 1.15 FY16 FY17 Q1 1.1 Jan-16 Jan-17 Jan-18 • £36.5m reported revenue (£36.0m on a constant currency basis)1 • Significantly increased exposure to USD following Dharmacon acquisition in September • To date the group has focused on natural hedges and this will be kept under review in FY18 • FX headwind within FY172 • Continued exposure to GBP:USD movements in FY18 • Strong Q1 2018 revenue despite FX headwind 1 Based upon average monthly exchange rates for FY16 2 Based upon the start of year exchange rate 12
Research products Market: £1,000m, CAGR >25% (gene modulation reagents CAGR 4-8%) 34% Customers: Life science researchers FY17 Offerings: Engineered cells, RNAi, CRISPR reagents, libraries, in vivo models Mix Price and channel: £50 to £5,000+ at high volumes primarily through eCommerce FINANCIAL HIGHLIGHTS COMMERCIAL HIGHLIGHTS • Leading high-quality catalogue of cell lines for use Revenue GM Growth in academic and biopharma research and product £12.6m 64% 220% development FY16 FY16 At CC £3.9m 68% 224% • eCommerce platform delivery • Revenue growth accelerated by Dharmacon acquisition • Commercial team coverage and cross selling across • Organic revenues of £3.6m (FY16 £3.9m) as large cell line geographies library deal in FY16 did not recur • Underlying transactional growth encouraging and starting to see synergy with Dharmacon portfolio TARGET FINANCIALS: High single digit growth NOW INCLUDING DHARMACON… 13
Research products: Dharmacon INTEGRATION PROGRESSING WELL • Kim Nichols appointed as Head of Global Operations • Integration progressing to plan and business performing well • Extraction of EU logistical operations from GE successfully completed post-period • Post-acquisition integration continues to deliver synergies enhanced by commercial team territorial coverage FINANCIAL HIGHLIGHTS COMMERCIAL HIGHLIGHTS Revenue GM • Expansion of fast-growing CRISPR reagent product £9.0m 63% line through the launch of Edit-RTM CRISPRa FY16 FY16 reagent platform for genome-wide CRISPR activation £27.2m 1 56% 1 • Reinforcement of market leadership in gene modulation, through functional guarantee on Accell • Dharmacon consolidated from 1 September 2017 and fully siRNA included in research products • Revenue tracking towards return to growth • Outlicensing of RNA therapeutic IP • Gross margin expansion to 63% helped by IP synergies • Pick up across all geographies in Q1 2018 • Contributing profitability and cash generation 1 Source: Dharmacon’s 2016 carve-out financials derived from GE’s consolidated US GAAP financials, including IFRS adjustments and using GBP:USD 14 of 1.3512 for the 2016 calendar year (unaudited)
Applied products Market: £700m, CAGR 10-15% Customers: Manufacturers and Diagnostics FY17 Offerings: CHO cell plus licence, Reference standards Mix Price and channel: Biop >£150k, MDx OTS (£10k) 28% FINANCIAL HIGHLIGHTS COMMERCIAL HIGHLIGHTS • Post period successful customer IND filing expected to Revenue GM Growth significantly expand addressable market £10.2m 74% 38% FY16 FY16 At CC • Bioproduction customers moving direct to commercial £7.4m 76% 36% licences • Bioproduction revenue £5.2m at 79% gross margin delivered strong • Strong growth in USA and China performance • MDx revenue £5.0m at 70% gross margin showed continued growth • Reference standard market impacted by change in FDA in our MDX OTS business including sales direct to CLIA labs driven by regulation indicating CLIA labs should be self-regulating. FDA regulation; lumpy OEM revenue in FY16 did not recur in FY17 Seeing success in selling direct. TARGET FINANCIALS: Double digit growth 15
Services Market: £450m, CAGR 15-20% Customers: Biopharma discovering targets and validating precision medicines 38% FY17 Offerings: Custom model generation, application of products to generate data Mix Price and channel: >£5,000 (FTE based) sold through bus dev and key accounts FINANCIAL HIGHLIGHTS COMMERCIAL HIGHLIGHTS Revenue GM Growth • 96% cell line engineering project success rate £13.7m 54% 7% FY16 FY16 At CC £12.8m 40% 4% • First to market launch of Genome-Wide CRISPRi and CRISPRa screening which are in high demand • Gene engineering services grew strongly, particularly in vitro • Increasing focus to grow in vivo through increased coverage • High level of customer satisfaction and repeat and new specialist sales business in Assay Services • Good growth in applied services, particularly Molecular Screening TARGET FINANCIALS: Double digit growth 16
Re-evaluated leveraged strategy • Emphasis now on driving core tools business • Research biotech activity now de-emphasised • Leveraged strategy based on • Core innovation, particularly gene editing • Powerful translational science base • Deep network of scientific key opinion leaders • Partnerships with innovative customers • Capabilities that sustainably drive our core Progress to date • Monetising existing portfolio through • Outlicensing of shRNA therapeutic targets • IP out-licensing • Partnership discussions with respect to validated • Partnering of existing therapeutic targets targets • Paid for partnerships with upside • Avvinity making continued progress with a view to • Third party funding securing third party funding 17
Trading analysis FY17 EBITDA bridge Products and services RBU Products and Exceptional Site Products and Research Total Services Items Closures Services Biotech £'000 (reported) (add back) (add back) (adjusted) (reported) (reported) £'000 £'000 £'000 £'000 £'000 £'000 Revenue 36,510 36,510 36,510 Cost of Sales (13,824) (13,824) (13,824) Gross Profit 22,686 22,686 22,686 62% 62% 62% Opex (32,949) 3,708 2,524 (26,717) (3,353) (30,070) Depreciation and amortisation 5,175 5,175 526 5,701 EBITDA (5,088) 3,708 2,524 1,144 (2,827) (1,683) • EBITDA positive core business before exceptionals and site closures with Exceptional items positive trend through Q4 • Net investment in leveraged R&D of £3.4m Exceptional items FY17 • Site closures of £2.5m related to consolidation of Boston and Vienna sites into UK Centre of Excellence with benefit to be felt in FY18 Acquisition costs £2.6m • FY18 EBITDA expected to be weighted towards H2 due to revenue Restructuring costs £1.1m phasing • Exceptional items expected in FY18 related to CEO change and TOTAL £3.7m integration costs • Tax credit of £4.7m includes offset of losses against Dharmacon profits 18
Strong balance sheet FY17 FY16 £'000 £'000 Acquisition accounting Audited Audited FY17 £m Goodwill 73,831 35,873 Identifiable assets acquired 28.0 Intangibles 52,742 16,241 Property, plant and equipment 13,059 12,025 Goodwill and intangibles 42.0 Investments 1,859 2,238 Consideration 70.0 Other 433 433 Satisfied by Non-Current Assets 141,924 66,810 Cash 38.1 Equity 31.9 Inventories 2,573 1,955 Trade and other receivables 20,584 12,568 Cash and cash equivalents 28,084 6,071 Commentary Current Assets 51,241 20,594 • Acquisition of Dharmacon increased goodwill and intangible assets by £42m Current Liabilities (11,552) (8,701) Net Current Assets 39,689 11,893 • Lean working capital shows benefit of scalable business model Non-Current Liabilities (10,456) (813) complemented by Dharmacon Net Assets 171,157 77,890 • Accounts receivable increase due primarily to high Q4 revenues and settlement of TSA balance with GE (since received) Equity 171,157 77,890 19
Cash flow FY17 £'000 FY16 £'000 Cash flow £m Audited Audited Net acquisition costs (37.5) Operating activities (13,871) (8,151) Net funds raised 77.6 Acquisition of subsidiaries (37,519) (418) Capex (2.3) Acquisition of investment in joint venture - (2,571) Intangibles (1,725) (2,733) Intangibles (1.7) Property, plant and equipment (2,338) (5,679) Operating cash (13.9) Interest (621) 38 Investing activities (42,203) (11,363) Financing activities 77,572 141 Commentary Cash flow 21,498 (19,373) • £78m net placing less £38m cash consideration for Dharmacon Cash b/f 6,071 25,067 • Reduction in one time investing activities and focus on integration Forex 515 376 • £28.1m net cash provides robust funding position to drive organic growth Cash c/f 28,084 6,070 20
Summary
Summary and outlook Significant progress in 2017 • Solid financial growth; operational efficiencies and cost control measures to drive future sustainable, profitable growth • Transformational Dharmacon acquisition; £80 million financing • Strengthened commercial and operational functions Trading and outlook • Strong start to the year in line with Board expectations, despite FX headwind • Revenues expected to be second half weighted as in prior years • Terry Pizzie appointed as Group CEO • Clear forward vision and strategy being executed by a strong team 22
We welcome any questions you may have 23
Progress against our strategy 1 2 3 “Harness the power of “Repeatability” “Global leadership” the cell” Deliver a repeatable, Convert early market Become the go-to scalable business model advantage to global provider of IP rich cell based on visible and leadership in order to engineering solutions predictable revenue deliver growth potential 1. Global presence driving new 1. Increased commercial scale 1. Dharmacon integration brand with clear strategy centred driving growth progressing well and delivering on the cell 2. Beginning to see cross selling commercial and operational 2. Re-evaluated leveraged strategy across research products synergies beginning to deliver value 3. Increased depth of core capability 2. Significant progress in APAC including IP outlicensing is contributing to sustained and through distributors and new 3. World class innovation to drive profitable growth Japanese entity next generation capabilities 25
Technology agnostic cell engineering Horizon is a global leader in gene editing and modulation • We use multiple gene editing and modulation tools • CRISPR, rAAV, ZFN, Transposon, RNA interference • Broad and deep IP position • Extensive practical experience that delivers results • We are world class at editing and modulating cells • Our cells reproduce human diseases in a laboratory setting • Small changes to the cell drive multiples of revenue and margin • Our solutions power precision medicine through: • High quality research • Increased ROI on drug development • Improved patient outcomes 26
Unique position to supply the “blue ocean” of demand SUPPLY DEMAND 1. Repeatable and cost effective cell Commercial coverage 1. Precision medicine including engineering using a technology healthcare economics (cost, agnostic toolbox clinical effectiveness and patient 2. Harnessing the power of the cell in diagnostics) areas such as Bioproduction, Dx 2. Reduced sequencing cost driving Deep relationships reference standards, NIPT, data that need biological answers CRISPR screens, liquid biopsies 3. Rapid adoption of gene editing 3. Broad access to life science techniques across research and research, drug discovery, precision applied markets Continuous innovation medicine and future possibilities… 48 hours 11 years shipment to end users4 new drug to market1 >10k $2.2b genes covered gene editing market size by 2022 2 52 31.1% Net promoter score gene editing market CAGR3 1 Tufts Center for the Study of Drug Development 3 IQ4I Research & Consultancy Pvt. Ltd, 2016 2 Genome Editing Global Market-Forecast to 2022 4 US, UK and EU 27
FINANCIAL DYNAMICS Driving to a balance of visible, predictable and linear revenue with strong forward coverage Illustrative forward 12m coverage 12 month gap Services Services • Relatively linear, phasing driven by biopharma buying cycles Services • Medium to long range visibility c50% Applied products Products 12 month gap Applied Products • Partially linear and visible bioproduction and OEM diagnostic revenue Applied c50% • Increasingly linear OTS as repeatable model develops 12 month gap Research products • Linear and predictable transaction revenue Research products Research products • Drive cross selling synergies based on customer stickiness >80% FY17 FY18 Linear: repeatable revenue delivered consistently throughout the year pro forma (illustrative) Visible: revenue tracked within our CRM REVENUE PORTFOLIO Predictable: revenue anticipated based on consistent run rate trends 28
COMMERCIAL Increasing effectiveness Management • Highly experienced Management team embedded Key Account Partners • Key Account Sales approach established Business Development • Increased Business Development sales Asia Pacific coverage boosting customer intimacy eCommerce • Refocused to solution selling • Integration of Dharmacon commercial Marketing functions Customer Support • APAC distributor partners refined and coverage expanded Feb 17 Feb 18 Jul 18 Dec 18
30
You can also read