Annual Report 2014
Agenda
2
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Full year results FY 2014
Exiqon Life Sciences
Exiqon Diagnostics
Corporate objective and investment case
Financial calendar and outlook for 2015
Full year results 2014
- Q4 revenue growth driven by newly launched RNA sequencing services
3
Revenue and product and services sales
● Fourth quarter revenue increased 20% to DKK 34.4 million (DKK 28.7 million)
o Record fourth quarter products and services sales (excl. OEM) driven by new RNA sequencing
services launched early 2014
tDKK
140.000
120.000
100.000
80.000
60.000
● FY 2014 total revenue increased 7% to DKK 132.4 million (DKK 123.6 million)
40.000
20.000
o Products sales (excl. OEM) increased 1% to DKK 82.3 million (DKK 82.1 million)
- Continued decline in array sales off set by growing sales for RNA functional analysis
0
2010
2011
2012
2013
2014
License income and contract research
Product and services sales
- OEM sales declined 12% to DKK 11.6 million (DKK 13.2 million)
Product and services sales - Europe
o Services sales increased 32% to DKK 20.5 million (DKK 15.5 million)
- Driven by newly launched services for RNA sequencing analysis
tDKK
80.000
70.000
60.000
50.000
o Income from licenses increased 16% to DKK 8.9 million (DKK 7.7 million)
40.000
o Income from contract research and grants increased 76% to DKK 6.7 million (DKK 3.8 million)
20.000
30.000
10.000
0
● New market opportunities for RNA sequencing and RNA functional analysis driving growth
2010
2011
2012
Europe
2013
2014
o European products and services sales (excl. OEM)) are steadily growing and increased 10% to
DKK 52.2 million (DKK 47.6) million during 2014
o North American products and services sales (excl. OEM) increased 6% to DKK 37.3 million (DKK
35.3 million) driven by new market opportunities – and
o ROW products and services sales (excl. OEM) decreased 3% in price sensitive markets to DKK
13.3 million (DKK 13.8 million)
Product and services sales - North America
tDKK
50.000
45.000
40.000
35.000
30.000
25.000
20.000
15.000
10.000
5.000
0
2010
2011
2012
North America
2013
2014
Full year results 2014
- Increased R&D costs and recent years’ investments hold promise for 2015
4
Gross Profit
● Gross profit improved 13% to DKK 85 million (DKK 75.5 million)
o Exiqon Life Sciences’ gross profit of DKK 82.4 million (DKK 70.8 million) was realized at
improved gross margins of 63.9% (59.8%) driven by higher volumes and optimizations
o Exiqon Life Sciences’ gross profit was negatively affected by planned extraordinary
scrapping of DKK 2.1 million. Total cost of scrapping was DKK 3.7 million (DKK 1.7 million)
tDKK
90.000
80.000
70.000
60.000
50.000
40.000
30.000
20.000
10.000
0
70%
60%
50%
40%
30%
20%
10%
0%
2010
● Total operating costs increased 5% to DKK 88.3 million (DKK 84.2 million)
o R&D costs increased 8% to DKK 26.3 million (DKK 24.2 million) due to new hiring's in
support of new market initiatives
o S&M costs increased 4% to DKK 43.1 million (DKK 41.3 million) due to new hiring's
2011
2012
Gross Profit
2013
2014
Gross margin
R&D Costs
tDKK
35.000
30.000
25.000
o Administrative costs decreased 5% to DKK 15.1 million (DKK 15.9 million) excl. non-cash
costs of share based payment due to cost savings
- Non-cash costs of share based payments increased 34% to DKK 3.9 million (DKK 2.9
million)
20.000
15.000
10.000
5.000
0
2010
- Depreciations increased 32% to DKK 6.2 million (DKK 4.7 million) reflective of recent
years’ increased investment
● Headcount increased to 91 (83)
2010
2011
2011
2012
2012
2013
2014
2013
2014
2013
2014
Depreciation and amortization
tDKK
12.000
10.000
o R&D including bioinformaticians hired to support new strategic initiatives within RNA
sequencing and RNA functional analysis
8.000
6.000
4.000
2.000
0
2010
2011
2012
Full year results 2014
- First ever positive EBITDA and increasing growth following recent years’ investment
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EBITDA
● EBITDA profitability of DKK 3.1 million (DKK -4.1 million)
tDKK
5.000
2010
2011
2012
2013
2014
5%
0
● EBIT improved 65% to DKK -3.1 million (DKK -8.8 million)
● Net result for 2014 improved 74% to DKK -2.8 million (DKK -10.7 million)
o Tax refund amounted of DKK 3.2 million (DKK 0.8 million)
0%
-5.000
-5%
-10.000
-10%
-15.000
-15%
-20.000
-20%
-25.000
-25%
-30.000
-30%
-35.000
● EPS improved 72% to DKK -0.08 (-0.29)
-35%
EBITDA
● Cash flow from operating activities amounted to DKK -2.4 million (DKK 3.2 million)
o Fourth quarter cash flows were affected by record fourth quarter sales of products and
services (excl. OEM) leading to 57% increase in year end receivables of DKK 24.7
million (DKK 15.8 million)
EBITDA margin
EBIT
tDKK
0
2010
2011
2012
2013
2014
0%
-5%
-10%
-15%
-20%
-25%
-30%
-35%
-40%
-45%
-50%
-5.000
-10.000
-15.000
-20.000
-25.000
● Accelerating growth in services sales hold promise for 2015
-30.000
-35.000
(DKK ’000)
Investments
Services sales
Growth
(six months delay)
:
H1 2012
H2 2012
H1 2013
H2 2013
H1 2014
H2 2014
1130
6.910
471
11.752
582
8.812
3.856
6.670
3.239
7.576
1.592
12.931
70,07%
-25,02%
-24,31%
13,58%
70,68%
-40.000
-45.000
EBIT
EBIT margin
Growth in services sales compared to
investment - six months delay
tDKK
4.500
4.000
3.500
3.000
2.500
2.000
1.500
1.000
500
-
80%
60%
40%
20%
0%
-20%
H2
H1
2012 2013
Investments
-40%
H2
H1
H2
2013 2014 2014
Growth (six months delay)
Agenda
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Full year results FY 2014
Exiqon Life Sciences
Exiqon Diagnostics
Corporate objective and investment case
Financial calendar and outlook for 2015
Changing market dynamics have affected Exiqon Life Sciences’ markets
7
2010: Hypothesis driven
Array content defined based on what is expected to be relevant
Microarray
analysis
qPCR
verification
Functional
analysis
• Content defined by tool provider
• Content defined based on what is
expected to be relevant (the hypothesis)
• Product defined and validated based on
array content
• Products in stock
• Product defined and validated based on
array content
• Products in stock
2015: Hypothesis free
No need for initial hypothesis, just ask what is in the sample?
RNA seq
(NGS)
qPCR
verification
Functional
analysis
• No need to define content prior to
experiment
• Hypothesis formulated at this point
• Products designed to verify hypothesis
• Products manufactured upon request
• Bioinformatics enabled
• Product designed based on outcome of
the above
• Products and experiments are enabled by
bioinformatics
• Products manufactured upon request
New unmet customer needs will be addressed by new strategy
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RNA seq
workflow
Sample
preparation
Library
preparation
RNA seq
(NGS)
Data analysis
Hypothesis
generation
Verification &
RNA functional
analysis
Exiqon’s flexible solutions for RNA analysis
(end 2015)
Customer challenge
•
Isolation of RNA with adequate quality for
NGS analysis
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Strand specific library preparation
High throughput library preparation
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Longer reads
Lack of sensitivity
•
•
•
•
Overwhelming amount of data
Data analysis not transparent
Complicated algorithms
Data often biased
•
•
Lack of integrated assay design
Needs for customer defined assays
•
Repositioned Exiqon’s existing products for
high quality NGS analysis
•
•
Sensitive library preparation kit incl. pre-amp
Service: High throughput preparation
•
None planned
•
•
•
Cloud solution
Best in class RNAseq pipeline
Advanced reporting
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Cloud integrated assay design
Integrated and easy ordering of customer
defined assays
Integrating product offering with cloud based bioinformatics during 2015
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Exiqon Products & Service
RNA seq
(NGS)
• Sample preparation
• Library preparation
• RNAseq Service
• Custom products for all RNAs
qPCR
verification
RNA
Functional
analysis
January 29, 2015
Exiqon Cloud & Apps
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Service reports
RNAseq pipeline
Cross database searches
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Design custom qPCR validation
assays based on RNAseq
qPCR pipeline
Apps
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• Custom products for all RNAs
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Custom functional analysis based
on RNAseq
Apps
Leveraging existing competences to capture the new opportunities
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Proven capabilities
Existing competences
New opportunities:
New business initiatives
Existing business
miRNA Services
Technical sales
RNA seq services
miRNA products
Manufacturing
RNA seq products
LNA oligo’s
OEM business
Product development
RNA functional analysis
Bioinformatics
App bioinformatics
Logistics
IT
IPR Finance HR
Agenda
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Full year results FY 2014
Exiqon Life Sciences
Exiqon Diagnostics
Corporate objective and investment case
Financial calendar and outlook for 2015
Exiqon Diagnostics
- Third party financed opportunity with leading partners
12
● Third party financed opportunity - mitigates risks
● DKK 197 million in total consortium budgets and leading medical competences to address large unmet needs
● Exiqon Diagnostics’ current grant financing is set out in the table below:
Program
Total
budget
Exiqon
grant
Remaining
31.12.14
2014
Colon cancer biomarker discovery
42.270
16.908
0
Colon cancer, recurrence
35.000
2.304
2.241
Pain biomarker discovery
58.538
3.510
2.690
Prostate cancer biomarker discovery
22.572
9.029
5.975
NGS & cancer
38.549
12.194
7.479
196.929
43.945
18.385
Total (DKK’000)
2015
2016
2017
2018
Exiqon Diagnostics
- Promising pipeline addressing large unmet needs
● Exiqon’s Life Sciences products used for the discovery of new diagnostic biomarkers
● Addressing large unmet needs for better diagnostics; future focus will be on prostate cancer
● Commercialization of validated biomarkers depends on industry partners
DIAGNOSTIC PRODUCT DEVELOPMENT
miRSign colorectal Cancer test (Cancer cells versus normal cells ) launched RUO
Colorectal Cancer (Recurrence stage II test ) launched RUO
Colorectal Cancer (Early detection test)
Colon cancer (Treatment selection)
Prostate cancer (Early detection)
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Agenda
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Full year results FY 2014
Exiqon Life Sciences
Exiqon Diagnostics
Corporate objectives and investment case
Financial calendar and outlook for 2015
Long term objectives
- Achievable over the coming three year period
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Corporate financial objectives
● Annual double digit growth in own products and services sales
● Gross profit of 65-70%
● R&D costs ~15% of revenues
● SG&A costs ~30% of revenues
● Sustainable profitability with current share capital
● Third party funded diagnostic programs that address large unmet needs
FY 2015 objectives
FY 2016 objectives
FY 2017 objectives
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Double digit growth in own sales
 Increased innovation (R&D costs)
 New products for new markets;
 miRNA market leader
•
Sustainable revenues
 Continued growth driven by
 RNA sequencing and functional
analysis
 miRNA market leader
•
Unique value proposition
 Broad portfolio of products for
RNA analysis
 Revenues from both segments
 New sales channel based on
app’s
•
First diagnostic RUO product launched
 Prioritize prostate cancer programs
 Commercial partnership/new grants
•
Second diagnostic RUO product launched
 Continued financing
 New diagnostic programs initiated
•
Diagnostic product marketed
 Colorectal or,
 Prostate cancer product
•
Positive cash flow from operations
 Positive EBITDA
 Negative EBIT
•
Profitability
 Positive EBIT
 Capitalized tax asset
•
Profitability
 R&D costs ~15% of revenues
 SG&A ~30% of revenues
Investment case
- Pursuing double digit growth and near term news flow from diagnostics programs
Investment case: Leading provider of flexible solutions for RNA analysis
Our unique investment proposition is the combination of a proprietary Life Sciences business combined with a third party financed
diagnostic opportunity:
● Established provider of high-quality RNA research products:
o Short-term (2015) potential in newly launched RNA Sequencing Services
o Mid-term (2016) potential in leveraging the company’s existing competences to capture new market segments with new products
for RNA sequencing and RNA functional analyses
o Long-term diagnostic potential within prostate and colorectal cancer
● Attractive Risk/Reward profile for the development of groundbreaking novel molecular diagnostic products to be marketed in
collaboration with world-leading diagnostic companies.
● Operating margin expansion potential with increased scale
● Financed until profitability
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Agenda
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Full year results FY 2014
Exiqon Life Sciences
Exiqon Diagnostics
Corporate objectives and investment case
Financial calendar and outlook for 2015
Summarized financial outlook and calendar for 2015
18
Financial outlook for 2015
Financial calendar for 2015
Exiqon’s financial outlook for 2015 does not include any potential
one-time payments from significant new license agreements or
one-time costs*:
Announcement of full-year results
2014:
Revenue from 3 sources in the 2 segments:
Deadline for shareholders’ proposal to
1 February 2015
the annual general meeting:
Life Sciences
Diagnostics
Products incl. Services
√
>2015
Contract Research
√
√
Royalties and upfront
√
√
MDKK
Revenue
EBITDA
2015
30 January 2015
The annual general meeting is
scheduled to be held on:
19 March 2015
Interim report for the period 1 January
2014 to 31 March 2015:
7 May 2015
Interim report for the period 1 January
2014 to 30 June 2015:
25 August 2015
Interim report for the period 1 January
2014 to 30 September 2015:
26 October 2015
150-160
5-10
*The outlook for 2015 is based on an average USD/DKK exchange
rate of DKK 6.50.
Thank you!
Contact information:
CEO Lars Kongsbak
Cell: +45 4090 2101
[email protected]
CFO Hans Henrik Chrois Christensen
Cell: +45 4090 2131
[email protected]