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TRANSFORMING DRUG DEVELOPMENT
Interim Results 2019
25 September 2019
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Interim Results 2019 25 September 2019 1 www.ergomedplc.com - - PowerPoint PPT Presentation
TRANSFORMING DRUG DEVELOPMENT Interim Results 2019 25 September 2019 1 www.ergomedplc.com www.ergomedplc.com DISCLAIMER The information contained in this confidential document ( Presentation ) has been prepared by Ergomed plc (the
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TRANSFORMING DRUG DEVELOPMENT
Interim Results 2019
25 September 2019
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DISCLAIMER
The information contained in this confidential document (“Presentation”) has been prepared by Ergomed plc (the “Company”). It has not been independently verified and is subject to material updating, revision and further amendment. This Presentation has not been approved by an authorised person in accordance with Section 21 of the Financial Services and Markets Act 2000 (“FSMA”) and therefore it is being delivered for information purposes only to a very limited number of persons and companies who are persons who have professional experience in matters relating to investments and who fall within the category of person set out in Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or are high net worth companies within the meaning set out in Article 49 of the Order or are otherwise permitted to receive it. Any other person who receives this Presentation should not rely or act upon it. By accepting this Presentation and not immediately returning it, the recipient represents and warrants that they are a person who falls within the above description of persons entitled to receive the Presentation. This Presentation is not to be disclosed to any other person or used for any other purpose. Please note that the information in this Presentation has yet to be announced or otherwise made public and as such constitutes relevant information for the purposes of section 118 of FSMA and non-public price sensitive information for the purposes of the Criminal Justice Act 1993. You should not therefore deal in any way in the securities of the Company until after the formal release of an announcement by the Company as to do so may result in civil and/or criminal liability. Numis Securities Limited ("Numis") is acting in the provision of corporate finance business to the Company, within the meaning of the Financial Conduct Authority’s Conduct of Business Sourcebook (“COBS”), and no-one else in connection with the proposals contained in this Presentation. Accordingly, recipients should note that Numis is neither advising nor treating as a client any other person and will not be responsible to anyone other than the Company for providing the protections afforded to clients of Numis under the COBS nor for providing advice in relation to the proposals contained in this Presentation. 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,
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Company's results of operations, financial condition, prospects, 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. Neither the issue of this Presentation nor any part of its contents is to be taken as any form of commitment on the part of the Company to proceed with any transaction and the right is reserved to terminate any discussions or negotiations with any prospective investors. 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 should not be considered as the giving of investment advice by the Company or any of its shareholders, directors, officers, agents, employees or advisers. In particular, 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. Each party to whom this Presentation is made available must make its own independent assessment of the Company after making such investigations and taking such advice as may be deemed necessary. In particular, any estimates or projections or opinions contained herein necessarily involve significant elements of subjective judgment, analysis and assumptions and each recipient should satisfy itself in relation to such matters. Neither this Presentation nor any copy of it may be (a) taken or transmitted into Australia, Canada, Japan, the Republic of Ireland, the Republic of South Africa or the United States of America (each a “Restricted Territory”), their territories or possessions; (b) distributed to any U.S. person (as defined in Regulation S under the United States Securities Act of 1933 (as amended)) or (c) distributed to any individual outside a Restricted Territory who is a resident thereof in any such case for the purpose of offer for sale or solicitation or invitation to buy or subscribe any securities or in the context where its distribution may be construed as such offer, solicitation or invitation, in any such case except in compliance with any applicable
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in Pharmacovigilance and Orphan Drug Development
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Consolidation and Growth
H1 2019 OVERVIEW
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Consolidation and Growth
H1 2019 KEY DEVELOPMENTS
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Strengthened Executive Team
Board changes
Strategic focus
Positioning for future
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Financial Summary
2019 INTERIM RESULTS
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Financial performance H1 2019 vs H1 2018
IFRS 15 basis (H1 2018: £25.7 million)
IFRS 15 basis (H1 2018: £9.0 million)
£0.0 million)
2019 (30 June 2018: £7.4 million)
26.9% (30 June 2018: £93.2 million)
Certain items in this report are restated and should be read in conjunction with the disclosures in the Press Release dated 25 September 2019.
Unaudited
(£ millions, unless stated)
H1 2019 H1 2018
Total Revenue 35.2 25.7 Gross Profit 14.5 9.0 Gross Margin 41.2% 34.9% EBITDA (adjusted) 6.5 (0.0) Cash at 30 June 2019 8.1 7.4 Backlog at 30 June 2019 118.3 93.2 Basic earnings per share (pence) 7.8p (5.7)p
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CRO 10.2 CRO 13.6 PV 12.0 PV 15.9
CRO 4.1 CRO 7.0
PV 4.9 PV 7.6
Focus on services business model
2019 INTERIM RESULTS: FINANCIAL HIGHLIGHTS
Service Fee revenue split by segments (£m) Service Fee margin split by segments (£m) Service Fee revenue up 32.7% to £29.5m
(H1 2018: £22.2m)
Total revenue up 36.8% to £35.2m
(H1 2018: £25.7 m)
Total gross profit up 61.4% to £14.5m
(H1 2018: £9.0m )
H1 2018 H1 2019 H1 2018 H1 2019
Certain items in this report are restated and should be read in conjunction with the disclosures in the Press Release dated 25 September 2019.
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(£m)
Total Service Fee margin 49.8%
(H1 2018: 40.5% )
Service Fee gross profit up 63.4% to £14.7m
(H1 2018: £9.0m)
+ 32.3% + 56.1% + 33.1% + 72.0%
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2019 INTERIM RESULTS: FINANCIAL HIGHLIGHTS
Strong backlog growth and H1 2019 sales performance
£66.2 million contracted CRO backlog up 28.0%
(30 June 2018: £51.7m)
£49 million Order intake Momentum continued in H2 2019 c £98 million Strong pipeline New BD team beginning to deliver 93.2 118.3
H1 2017 H1 2018
Contracted backlog (£m)
£118.3 million contracted backlog at 30 June 2019
(30 June 2018: £93.2m)
Strong H1 2019 Business Development
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H1 2018 H1 2019
range of services with many new clients
£52.1 million contracted PV backlog up 25.5%
(30 June 2018: £41.5 m)
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Sevuparin Sickle Cell Disease
Sepranolone PMDD
Multikine Head and neck cancer
All projects approaching completion with minimal focus and spend going forward
CO-DEVELOPMENT STRATEGY CLOSING OUT
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PROGRAMME STATUS UPDATE
Peprostat Readyflow
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Renewed Business Development team in key global markets
COMMERCIAL UPDATE
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Full team now in place
Full team to be complete imminently
~ 50% of global clinical trials market ~ 47% of all global clinical trials started in 2018 required US operations 2nd largest global clinical trials market ~ 25% of all global clinical trials started in 2018 required Europe operations USA Europe
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FOCUS ON SERVICES BUSINESS MODEL
Total revenue ~ £2.5m
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New Client
Illustrating Ergomed’s ability to win substantial new global studies utilising all our businesses and services with innovative new approaches
Global study West coast biotech All Ergomed services Rare disease Full service Phase II CRO study
Project A Project C Project B
August 2019 September 2019
New Business / Repeat Client Repeat Client Pharmacovigilance Automation Pre-case processing Full service Phase III New technologies 1,400 patients Global – large APAC Post-marketing consulting GDPR compliance Global – 3 continents European Biotech Total revenue ~ £4.8m
Total revenue ~ £17m
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H1 2019 SCORECARD
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Focused on pharmacovigilance &
Service fee growth of 32.7% driven by CRO growth of 32.3% and PV growth of 33.1%
Orphan drug strategy gaining traction; overlap with PV offers cross-selling potential
45% of CRO new business won in H1 2019 was orphan drug related
2019 growth targets underpinned
Contracted backlog of £118.3m at 30 June 2019
Significant H1 2019 financial performance improvement
EBITDA (adj.) in H1 2019 of £6.5m vs £0.0m in H1 2018
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GLOBAL PLATFORM – FULL SERVICE
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750+
employees
300+
contractors Clinical trials in 59 countries Supporting products in
100+ countries
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Combined PV / specialized CRO ~20%
growth
Public / AIM- listed
(LSE: ERGO)
Biotech / small pharma $80m+
PV / CRO revenue
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Ergomed - mid-tier specialist CRO within reach
EXPLOITING POTENTIAL IN THE CRO MARKET
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MID-TIER Characteristics
Dynamic
LARGE Characteristics
Dynamic
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CONFIDENCE IN MARKET
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Global CRO market
$26.9bn (2018)
6% p.a. growth (2018-2022)
Target areas for future growth
target markets in
high growth areas
Biotech / spec pharma
$14.0bn market (2018)
Oncology
$9.9bn market (2018)
9% p.a. growth (2018-2022) Orphan drug / rare diseases
$7.2bn market (2018)
11% p.a. growth (2018-2022) Pharmacovigilance
$2.4bn market (2018)
16% p.a. growth (2018-2022) USA focus
>50%
clinical trials need US presence
Sources: Grand view Aspects, clinicaltrials.gov, AT Kearney, William Blair & Company
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STRATEGY FOR ACCELERATED GROWTH
SOLID 2ND HALF AND TRANSITION TO 2020 AND BEYOND
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STRATEGIC EXPANSION INTO NEW MARKETS - GEOGRAPHIC AND THERAPEUTIC
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APPENDIX
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23-27. Ergomed’s Business Segments
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IFRS 16 – Impact on H1 2019 of IFRS 16 reporting of right of use assets
IMPACT OF FINANCIAL REPORTING CHANGES
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Income statement Six months to 30 June 2019 IAS 17 IFRS 16 Unaudited
(Figures in £000’s)
1st Half 2019
EBITDA impact Operating profit impact Total impact
As reported
Total Revenue 35,179
Gross Profit 14,489
EBITDA (adjusted) 5,614 867 6,481 Amortisation and depreciation (1,123) (803) (1,926) Operating profit 4,130 64 4,194 Finance cost (1) (123) (124) Profit before tax 4,205 (59) 4,146 Profit after tax 3,668 (59) 3,609 Earnings per share (pence) - basic 7.9p (0.1)p 7.8p
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IFRS15 – Impact on H1 2018 originally reported under IAS18, now under IFRS15
IMPACT OF FINANCIAL REPORTING CHANGES
| 19 Income statement Six months to 30 June 2018 IAS 18 IFRS 15
(Figures in £000’s)
Originally reported Adjustment Revised reporting Total Revenue 25,338 386 25,724 Gross Profit 8,589 386 8,975 EBITDA (adjusted) (432) 386 46 Operating loss (2,546) 386 (2,160) Loss before tax (2845 386 (2,459) Tax (83) 11 (72) Loss after tax (2,928) 397 (2,531) Basic EPS (loss) (p) (6.6)p 0.9p (5.7)p
Balance Sheet At 30 June 2018 IAS 18 IFRS 15
(Figures in £000’s)
Originally reported Adjustment Revised reporting Non Current Assets 38,720
Current Assets 22,162 (382) 21,780 Current Liabilities (11,493) (1,433) (12,926) Net Current Assets 10,669 (1,815) (8,854) Non Current Liabilities (13,348) (4) (13,352) Net Assets 36,041 (1,819) 34,222 Total Equity 36,041 (1,819) 34,222
Cash Flow
Nil - Non-cash adjustment so no impact
Backlog
91.4 1.8 93.2
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ABBREVIATED PROFIT AND LOSS ACCOUNT
Unaudited (Figures in £ millions, unless otherwise stated) 1st Half 2019 Restated 1st Half 2018
Total Revenue 35.2 25.7 Cost of Sales (14.8) (13.2) Reimbursable expenses (5.9) (3.5) Gross Profit 14.5 9.0 Administrative and Other Expenses (9.2) (10.3) Research & Development (0.3) (0.9) Net impairment losses and other operating income (0.8) 0.0 Operating Profit / (Loss) 4.2 (2.2) Net Finance Costs & Investment Income (0.1) (0.3) Profit / (Loss) Before Taxation 4.1 (2.5) Taxation (0.5) (0.1) Profit / (Loss) After Taxation 3.6 (2.6) Adjusted EBITDA (after exceptional and other items) 6.5 0.0 Earnings / (Loss) Per Share (pence) - basic 7.8p (5.7)p
Adjustments are made to EPS for amortisation of acquired fair valued intangible assets, share-based payment charge, deferred consideration for acquisitions relating to post acquisition remuneration, acquisition costs and exceptional items.
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ABBREVIATED BALANCE SHEET
Figures in £ millions, unless otherwise stated Unaudited 30 Jun 2019 Restated Unaudited* 30 Jun 2018 Audited 31 Dec 2018
Non-current Assets 27.1 38.7 21.4 Current Assets 26.4 21.8 25.5 Current Liabilities (14.8) (12.9) (17.2) Net Current Assets 11.6 8.9 8.3 Non-current Liabilities (5.3) (13.4) (1.3) Total Net Assets 33.4 34.2 28.4 Total Equity 33.4 34.2 28.4 | 21
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ABBREVIATED CASH FLOW
Unaudited (Figures in £ millions, unless otherwise stated) 1st Half 2019 1st Half 2018
Operating Profit / (Loss) 4.2 (2. 2) Add: Depreciation & Amortisation 1.9 1.3 Share based payment charge 0.4 0.4 Exceptional items and acquisition costs 0.5 EBITDA (adjusted) 6.5 0.0 FX and Other Non Cash items (0.7) (1.0) (Increase)/Decrease in Working Capital (2.3) 2.3 Net Cash Inflow from Operations 3.5 1.3 Taxation (0.3) 0.5 Investing Activities (1.3) (1.4) Financing Activities 0.8 3.7 Increase in Cash 2.7 4.1 Effect of FX on cash balances 0.2 0.1 Opening Cash Balance 5.2 3.2 Closing Cash Balance 8.1 7.4 | 22
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Business enabler for biotech and pharma
PV & MEDICAL INFORMATION SERVICES
ESSENTIAL PHARMACOVIGILANCE PROCESSES ALL COVERED BY PRIMEVIGILANCE
Data collection Signal detection Risk assessment Communication Decision making Regulatory action No action
PV: Ensuring drugs get on the market quicker & stay there, even if benefit-risk profile is challenged by regulators. Automation accelerated growth. Medical Information: Multi-lingual call centres for enquiries of healthcare professionals, receipt of safety information and product quality complaints, other customer-specific services
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Global Market Insights, Inc.; March 15, 2018
Pharmaco- vigilance market
$2.4bn (2018)
↑ 16% p.a. growth (2018-2022)
16%
PV industry growth
50%
contract outsourcing by 2024
ADRs ↑
Exponential growth of data in the system, including adverse drug reactions
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Critical business enabler in both developed and emerging markets
PHARMACOVIGILANCE (PV) SERVICES
Pharmacovigilance
The science and activities relating to the detection, assessment, understanding and prevention of adverse effects, or any other drug related problem. (WHO, 2002)
Essential Intermediate Premium
Case processing Signal management Pharmaco-epidemiology Aggregate reports Risk management Additional risk minimisation PSMF + SOPs + business continuity EU QPPV Local QPPVs PV referral procedures Internal audits External audits and inspections Strategic consultancy
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Technology / automation Expertise / experience
450+
Employees
130+
Customers Services marketed in
100+
countries
£27.5 m
Revenue in 2018
>23%
growth in sales, majority new business won
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Reinforcing our position in orphan drug development services.
PHARMACOVIGILANCE (PV) SERVICES
Formation of PrimeVigilance in UK Acquisition of Sound Opinion – UK MI company Acquisition
expert regulatory and PV Company Launch of Medical Information IPO on AIM
Consistent growth
Revenues (£m)
Good client retention
Revenues by customer cohort (£m)
2008 2013 2014 2015 2016 2018 2018
Acquisition
small UK PV provider Acquisition
specialist pharmacoepi demiology services | 25
0.0 5.0 10.0 15.0 20.0 25.0 30.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Million
0.0 5.0 10.0 15.0 20.0 25.0 30.0 2013 2014 2015 2016 2017 2018 2013 & before 2014 2015 2016 2017 2018
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Efficient management and control of complex trial protocols
CLINICAL RESEARCH SERVICES
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In its Clinical Research Services division, Ergomed undertakes on behalf of our clients all facets of clinical trial management and execution from Phase I to IV.
£26.6 m
Revenue in 2018
111
Active studies
300+
Employees and consultants
59
Active clients
Ergomed CRO – Service Fee (€m)
The underlying CRO revenue has been growing at 18% CAGR
Development projects and acquisitions
Clinical trials in
53
countries 5 10 15 20 25 2014 2015 2016 2017 2018 Full Service cash PSR cash Co-Development cash Equity share discount
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Personalised medicine Regulatory framework Speed to market Exclusivity Pricing
Orphan Drug trials are complicated by the nature and types
Specialist knowledge combined with tailored recruitment and site management required for optimal outcomes.
Focus: global leadership in Orphan Drug development
CLINICAL RESEARCH SERVICES
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21%
11%
p.a. growth
$7.2bn (2018)
11% p.a. growth (2018-2022)
30m
people suffer from orphan disease
ORPHAN DRUG MARKET GROWTH DRIVERS
5 10 15 20 25 30 Endocrinology Immunology & Infect. Dis. Nephrology Dermatology Pulmology Ophtalmology Urology CNS & Neurology Metabolic Disease
Oncology PSR Ergomed 58% 42% 68% 32% NON-RARE RARE
Full Rare Disease Experience per Therapeutic Area
2018 Revenue 2018 Studies