logo-loader

Horizon Discovery firing on all cylinders

Last updated: 17:33 02 Aug 2016 AEST, First published: 03:33 20 Jan 2016 AEDT

rsz_shutterstock_118277080
Horizon supplies research tools to over 1,200 organisations, including major pharma groups and academic establishments.

Horizon was founded in 2007, floated in 2013, and already supplies research tools to over 1,200 organisations engaged in genomics and the development of personalised medicines, including major pharma groups and academic establishments.

Its gene editing platform help scientists understand how changes in DNA causes diseases, like cancer, and such tools have enormous value.

Among its notable backers is influential investors Neil Woodfood through his firm  Woodford Investment Management.

Its inventory of products has risen from 2,750 at the end of 2014 to more than 23,000 genetically-defined cell line and in vivo models, and molecular diagnostic reagents at the end of 2015.

As finance director Richard Vellacott explained to Proactive, the more products on offer, the better for all parts of Horizon’s business and strategy.

"The more products we have in our vending machine, of these genetically engineered cell lines, not only can we sell them, but we can also sell the derivative products from those - so we can use these cell lines to manufacture other products, such as diagnostic products."

Products mean prizes

There is very strong demand currently in the diagnostics sector for these products, but moreover, they also can be sold to aid research services too, and the group expects to see a 65% increase in this side of the business too.

House broker Panmure draws attention to the group's leveraged business, which also continues to develop, underscored by deals announced with two new collaborations signed in 2015 with Redx (LON:REDX) and French firm Servier.

The Servier deal was struck last October and saw Horizon license-in a cancer programme that could eventually be worth £50mln.

Horizon will deploy its technology platform to identify which particular cancers Servier’s kinase inhibitors might be effective against.

The collaboration with fellow AIM firm Redx will assess potential for a colorectal drug from the Redx stable.

Revenues beat forecasts

Horizon saw strong growth in revenues and a lower than expected loss in 2015.

Total group revenues in 2015 rose 69% to £20.2mln from £11.9mln in 2014, with product revenues up 124% to £7.8mln from £3.5mln the year before and services revenue 69% higher at £12.2mln (2014:£7.2mln).

The underlying loss (EBITDA) of £6.6mln was broader than 2014's loss of £4.0mln but narrower than the market had been expecting.

During the year the company ploughed £5.3mln into research & development (R&D), significantly increasing its product catalogue and service offerings, while sales & marketing expenditure clocked in at £5.1mln.

“This is in line with investment strategy and our 'path to profit' that is expected to enable the company to drive towards profitability as revenues continue to scale,” the company 's chief financial officer, Richard Vellacott, told investors.

Chief executive Dr Darrin Disley said 2015 had been characterised by continued strong growth for Horizon.

Broker forecasts

The stock is worth 252p, according to the broker Numis, while Panmure Gordon has a price target of 270p.

“The potential for additional agreements to be secured within the space is high,” said Panmure’s Dr Mike Mitchell.

 

-- updates for 2015 results --

Acquisition gives Horizon Discovery a 'full and complete suite of tools' to...

Chris Claxton, VP Investor Relations & Corporate Communications at Horizon Discovery Group PLC (LON:HZD), discusses with Proactive their 'transformational' acquisition of GE healthcare business Dharmacon. The US$85mln deal was announced in July and funded through cash and shares and...

on 4/9/17