Horizon Discovery – Strong Revenue Growth and Focus on Operational Gearing Underpin Path to Profitability
Cambridge, UK, 20 September 2016: Horizon Discovery Group plc (LSE: HZD), a world leader in the application of gene editing technologies, announces its interim results for the six months ended 30 June 2016.
Highlights (including post period end):
Financial
· Group revenue increased 19% to £10.2 million (HY15: £8.6 million)
· Products business revenue increased 62% to £4.8 million (HY15: £3.0 million)
· Services business delivered revenue of £5.2 million (HY15: £5.4 million)
o Solid growth in in vivo and in vitro service revenues
o Temporarily reduced molecular screening capacity as the Group consolidates Boston operations into newCambridge, UK headquarters
· The Group remains eligible to receive future R&D milestones of up to £208 million plus future product royalties (HY15: £158 million) through its Research Biotech business
· Loss Before Interest, Tax, Depreciation and Amortisation of £4.3 million (HY15: £4.9 million) in line with expectations, as the business invests for scale and transitions towards positive EBITDA in 2017
· Cash resources of £13.0 million (FY15: £25.1 million) following one-time investments in new global headquarters in UK, business automation and Avvinity Therapeutics
Commercial
· Strong customer growth continued with more than 1,600 unique customers (+33% increase over HY15)
· Deal signed to integrate Horizon’s molecular reference standards into Qiagen’s GeneReader NGS workflows
· Partnership formed with Ventana Medical Systems for the provision of reference standards
· Two OEM Agreements with market leading Next Generation Sequencing Company with potential for additional agreements to follow
· Collaboration with Fulcrum Therapeutics for novel CRISPR-based target discovery in genetic diseases with potential for additional future projects
· License of biomanufacturing cell lines to the Centre for Process Innovation (CPI) and the National Institute for Bioprocessing Research and Training (NIBRT)
· Launch of Avvinity Therapeutics, a cancer immunotherapy company formed in a joint venture with Centauri Therapeutics
Financial Guidance and Path to Profit Strategy
· Based on historical H1/H2 revenue weighting (typically 40%:60%) and the current strong trading outlook, full year FY16 revenues are expected to be within a range of £24 million to £26 million. This guidance reflects:
o A reduction in molecular screening capacity as the Group consolidates the Boston facility into its new Cambridge, UKheadquarters, expected to reduce revenue by £2.7m in FY16, before returning this part of our business to growth in 2017 on a more profitable basis
· Horizon on course to report positive EBITDA in FY17 in line with the Company’s previously stated strategy:
o Path to Profit strategy includes increased business automation and reduction of senior management headcount by a third – activities on track to be complete by end December 2016
o Estimated restructuring costs of closing the Boston facility by the end of 2016 of up to £0.75 million to be recognised in the second half of 2016 that are expected to deliver run rate cost savings of at least £3.0 million from 1 January 2017
o Commitment to deliver overall Group annual cost savings of at least £5 million in 2017
Commenting on the interim results, Dr Darrin Disley, CEO of Horizon Discovery Group, said: “Horizon is making a fundamental contribution to the rapidly growing personalised and genomic medicine markets by deploying our proprietary gene editing platform to build cells and then apply them in an increasingly broad range of applications including genomics research, drug discovery and development, clinical diagnostics and drug manufacturing. Today, our core cell building platform and catalogue of over 23,000 products drives our ‘commercial fly-wheel’, an engine that generates multiple revenue streams from our cell-based assets. We are pleased to report continued revenue growth driven in particular by continued momentum in our Products business.
“Since our IPO in 2014, Horizon has made strategic investments to build an optimal business model for exploiting our technology platforms and achieve our strategic goal of becoming EBITDA positive in 2017, and sustainably profitable thereafter. We have today announced changes to the shape of our business that will allow us to focus on our core strengths, continue to scale the business on a significantly reduced cost base and drive considerable growth, integration and innovation.
“We are pleased with the progress delivered during the past six months and look forward, with confidence, to building on this in the second half of the year and beyond given the encouraging prospects for our newly shaped business. We already see signs in H2 of strong business growth and we have a clear route to profitability.”
