Trading Update
FY2016 revenue in line with guidance as Group
drives to positive EBITDA
- Group on track to meet market expectations in
FY2017
Cambridge, UK, 24 January 2017: Horizon
Discovery Group plc (LSE: HZD) ("Horizon" or the "Group"), the
world leader in the application of gene editing technologies, today
announces a trading update ahead of its full year results for the
twelve months ended 31 December 2016. The Group intends to
announce its preliminary full year 2016 results in May 2017.
In line with guidance, the Group is expected to
report FY16 revenues of at least £24.0 million, representing growth
of no less than 19% (FY15: £20.2 million), with gross margin
increasing to the mid-50% range (FY15: 49%) driven by product sales
volumes ahead of expectations and at reduced cost of goods
sold.
The Group expects to report a full year loss
after taxation in line with expectations (FY15: £10.5 million
loss), having substantially completed the measures necessary to
reduce the cost base by over £5.0 million in FY17 as part of the
Group's stated path to profit strategy. The Group has a robust
working capital position with cash headroom of £11.0 million,
represented by year end cash of £6.0 million and an undrawn debt
facility of £5.0 million, supported by a strong short-term accounts
receivable profile following a record final quarter sales
performance.
ProductsThe Products business continues
to perform very solidly, with reported revenue growth expected of
at least 44% (FY15: £7.8 million) at a significantly increased
gross margin of approximately 70% (FY15: 57%), driven by increased
sales of molecular diagnostic reference standards, cell line
catalogue and biomanufacturing cell lines, with strong momentum
expected to continue in 2017.
ServicesThe Group expects to report
Services revenue growth of no less than 4% (FY15: £12.2
million). Genetic screening, custom cell line development and
discovery research services delivered a combined increase in
revenue of at least 30% over FY15, offset by the previously
announced temporary reduction in molecular screening service
capacity resulting from the consolidation of Boston, USA operations
into the Cambridge, UK site. Full molecular screening service
capacity has now been restored moving into 2017.
The Group has created a world-leading Centre of
Excellence for gene-editing, cell biology and high-throughput
screening in its expanded Cambridge, UK headquarters. This
streamlined operation is expected to provide run rate cost savings
of approximately £3.0 million towards the overall reduction in cost
base in 2017.
Research BiotechProgress continues in the
Research Biotech division where the Group remains eligible to
receive future R&D milestones of up to £208 million plus future
product royalties, and equity upside through its Avvinity
Therapeutics joint venture. The focus of the Group's efforts in
immuno-oncology and cell and gene therapy positions the Group at
the cutting edge of global academic, biotech and pharma R&D
efforts.
OutlookBased on a strong order book with
forward visibility already on more than 50% of expected FY2017
consensus revenue, the Group is confident it will deliver FY17
revenues in the range of £30-£35 million and reconfirms its
strategy to deliver positive EBITDA in FY17.
Dr. Darrin M. Disley, Chief Executive Officer
of Horizon Discovery Group, commented: "Horizon is building a
global life science business that exploits a world-leading position
in gene editing to deliver the picks and shovels that support the
new gold rush taking place in healthcare around the development of
genetically-targeted medicines and cell and gene therapies. The
Group is realising the benefits of this strategy through continued
strong revenue growth, having invested for scale through 2016, and
having implemented measures to transition to profitability
thereafter. Early revenue indicators for 2017 already look
encouraging thanks to a very robust sales order book. This,
combined with having the products and services, global commercial
resources and sales channels, and business systems needed to drive
long term success all in place, reinforces our confidence in
becoming a sustainably profitable company as we continue to deliver
strong revenue growth."
ENDS
Notes for Editors:
The OpportunityThe life sciences are in
the midst of a period of transformative change due to fundamental
challenges facing the pharmaceutical industry. The cost of R&D
in drug development continues to rise1 (4.4% per year 2010-2016)
while the average peak sales post launch is rapidly falling (-11.4%
per year 2010-2016), and so extensive efforts are underway to find
ways to reverse this trend. Part of the solution is to target
populations where value can be maximised through a Personalised
Medicine approach, translating the wealth of genetic information
now available into increased numbers of low-cost "patient targeted"
drug development programmes.
Horizon is a major participant in this gold
rush, using a world-leading position in precision gene editing to
build and apply cells to advance human healthcare, thereby
providing the 'picks and shovels' that are enabling the academic
research, drug discovery, and clinical diagnostics that define this
new era. This is particularly true in some of the most exciting
areas of scientific research and development including
immuno-oncology, precision medicine, and cell therapy, which
promise to deliver cures to patients with both common and rare
diseases that have been difficult or impossible to treat
previously.
Horizon's Markets:The markets Horizon
participates in are large and growing, and combined were estimated
to be worth in excess of £32 billion2 in 2016, with the specific
segments addressed by Horizon estimated to be worth a total of £1.6
billion by 2018.
Academic ResearchAcademic researchers are
looking for predictive cell-based models of human disease to drive
their research forward. To support this market, Horizon offers its
catalogue of over 23,000 cell lines, animal models, and custom
model development services when the model required isn't available
from the catalogue. Horizon Directors estimate this market segment
to be worth £300 million by 2018, growing at 10-12%.
Drug DiscoveryThe pharmaceutical industry
is continually looking to identify new drug targets as the basis of
novel programmes, or to 'personalise' programmes so that they more
efficiently target the right patient populations and are more
likely to succeed and less expensive to run. To these customers,
Horizon offers a broad range of products and services including
contract research, genetic and molecular screening, our catalogue
of cell lines and animal models, and our molecular reference
standards. Horizon Directors estimate this market segment to be
worth £600 million by 2018, growing at 12-15%.
Drug ManufacturingBiologic drug
manufacturers such as pharmaceutical companies and contract
manufacturing organisations seek to improve their processes so that
the yield and purity of their drug is optimised. Doing so requires
access to the best cell-based biologic drug 'factories', which are
expensive and have been priced out of reach of much of the market.
Horizon provides access to cutting-edge biomanufacturing cells
engineered via proprietary precision gene editing under a highly
disruptive business model that has proven very attractive. Horizon
Directors estimate this market segment to be worth £200 million by
2018, growing at 8-10%.
Clinical DiagnosticsThe clinical
diagnostics market consists of two groups, diagnostic assay
developers who are looking for ways to support the efficient
development and validation of new tests, and the hospitals and
clinical labs that run assays on patient samples which need tools
to support assay set-up and ongoing quality control monitoring. To
both these groups, Horizon provides our molecular reference
standards, which consist of engineered cells made to look precisely
like real patient samples. Horizon Directors estimate this market
segment to be worth £500 million by 2018, growing at 12-15%.
Glossary:
- Assay: a laboratory procedure measuring the presence, amount,
or functional activity of a specific biomarker or analyte
- Avvinity: a joint venture between Horizon and Centauri
Therapeutics to discover and develop novel immuno-oncology
therapeutics for both solid tumors and leukaemias
- Biomanufacturing: A type of manufacturing that utilises
biological systems to produce commercially important biomaterials
and biomolecules for use in medicines
- Cell bank: A collection of cell lines
- Cell therapy: the administration of live whole cells
(potentially gene edited) to a patient for the treatment of a
disease
- Genetic screening platform: A platform used by Horizon to
identify and validate genes as targets for novel therapeutics using
CRISPR based screening and other approaches
- High-throughput molecular screening: A platform used by Horizon
to rapidly look at large numbers of cell lines for a range of
applications, including to look for drug interactions and for
immuno-oncology screening
- Personalised medicine: a form of medicine that uses information
about a person's genes, proteins, and environment to prevent,
diagnose, and treat disease
- Immuno-oncology: therapeutic approaches that enable the immune
system to selectively recognize and attack cancer cells
- Precision medicine: a medical model based on the customization
of healthcare, with medical decisions, practices, and/or therapies
being tailored to the individual patient
- Reference standard: a standardised substance (e.g. DNA,
protein) which is used as a measurement base or control for an
assay
- Balancing the R&D Equation, Deloitte, 2016
- Markets and Markets Genomics Market by Products Global Forecast
to 2018, January 2014; Visiongain Cell-Based Assays: World Market
Prospects 2013-2023, February 2013; BCC Research Molecular
Diagnostics: Technologies and Global Markets, March 2013
For further information from Horizon
Discovery Group plc, please contact:
Horizon Discovery Group plcDarrin Disley,
Chief Executive OfficerRichard Vellacott, Chief Financial
OfficerChris Claxton, VP Investor Relations Tel: +44 (0) 1223 655
580
Consilium Strategic Communications (Financial
Media and Investor Relations)Mary-Jane Elliott / Susan Stuart /
Matthew Neal / Melissa GardinerTel: +44 (0) 20 3709 5701Email:
horizon@consilium-comms.com
Numis Securities Limited (Joint Broker and
NOMAD)Michael Meade / Freddie Barnfield Tel: +44 (0) 207 260
1000
RBC Capital Markets (Joint Broker)Paul
Tomasic / Marcus JacksonTel: +44 (0) 20 7653 4000
About Horizon Discovery Group plc
www.horizondiscovery.com/Horizon Discovery Group plc (LSE: HZD)
("Horizon"), is a world-leading gene editing company that designs
and engineers genetically-modified cells and then applies them in
research and clinical applications that advance human health.
Horizon's core capabilities are built around its
proprietary translational genomics platform, a highly precise and
flexible suite of gene editing tools (rAAV, ZFN and CRISPR) able to
alter almost any gene sequence in human or mammalian
cell-lines.
Horizon offers over 23,000 catalogue products
and related research services, almost all of which are based on the
generation and application of cell and in vivo models that
accurately recapitulate the disease-causing genetic anomalies found
in diseases like cancer. Horizon's commercial offering has been
adopted by c1,600 unique research organisations in over 50
countries as well as in the Group's own R&D pipeline to support
a greater understanding of the genetic drivers of disease and the
development of molecular, cell and gene therapies that can be
prescribed on a personalised basis.
Horizon is headquartered in Cambridge, UK, and
is listed on the London Stock Exchange's AIM market under the
ticker "HZD".
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