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Agenda
2
●
Full year results FY 2014
●
Exiqon Life Sciences
●
Exiqon Diagnostics
●
Corporate objective and investment case
●
Financial calendar and outlook for 2015
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Full year results 2014
- Q4 revenue growth driven by newly launched RNA sequencing services
● 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
● FY 2014 total revenue increased 7% to DKK 132.4 million (DKK 123.6 million)
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 - OEM sales declined 12% to DKK 11.6 million (DKK 13.2 million)
o Services sales increased 32% to DKK 20.5 million (DKK 15.5 million) - Driven by newly launched services for RNA sequencing analysis o Income from licenses increased 16% to DKK 8.9 million (DKK 7.7 million)
o Income from contract research and grants increased 76% to DKK 6.7 million (DKK 3.8 million) ● New market opportunities for RNA sequencing and RNA functional analysis driving growth
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) 3 0 20.000 40.000 60.000 80.000 100.000 120.000 140.000 2010 2011 2012 2013 2014 tDKK
Revenue and product and services sales
License income and contract research Product and services sales
0 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 2010 2011 2012 2013 2014 tDKK
Product and services sales - Europe
Europe 0 5.000 10.000 15.000 20.000 25.000 30.000 35.000 40.000 45.000 50.000 2010 2011 2012 2013 2014 tDKK
Product and services sales - North America
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Full year results 2014
- Increased R&D costs and recent years’ investments hold promise for 2015
● 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) ● 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 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)
- Depreciations increased 32% to DKK 6.2 million (DKK 4.7 million) reflective of recent years’ increased investment
● Headcount increased to 91 (83)
o R&D including bioinformaticians hired to support new strategic initiatives within RNA sequencing and RNA functional analysis
4 0% 10% 20% 30% 40% 50% 60% 70% 0 10.000 20.000 30.000 40.000 50.000 60.000 70.000 80.000 90.000 2010 2011 2012 2013 2014 tDKK Gross Profit
Gross Profit Gross margin
0 5.000 10.000 15.000 20.000 25.000 30.000 35.000 2010 2011 2012 2013 2014 tDKK R&D Costs 2010 2011 2012 2013 2014 0 2.000 4.000 6.000 8.000 10.000 12.000 2010 2011 2012 2013 2014 tDKK
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Full year results 2014
- First ever positive EBITDA and increasing growth following recent years’ investment
5● Accelerating growth in services sales hold promise for 2015
:
(DKK ’000) H1 2012 H2 2012 H1 2013 H2 2013 H1 2014 H2 2014 Investments 1130 471 582 3.856 3.239 1.592 Services sales 6.910 11.752 8.812 6.670 7.576 12.931 Growth
(six months delay) 70,07% -25,02% -24,31% 13,58% 70,68%
-35% -30% -25% -20% -15% -10% -5% 0% 5% -35.000 -30.000 -25.000 -20.000 -15.000 -10.000 -5.000 0 5.000 2010 2011 2012 2013 2014 tDKK EBITDA
EBITDA EBITDA margin
-50% -45% -40% -35% -30% -25% -20% -15% -10% -5% 0% -45.000 -40.000 -35.000 -30.000 -25.000 -20.000 -15.000 -10.000 -5.000 0 2010 2011 2012 2013 2014 tDKK EBIT
EBIT EBIT margin ● EBITDA profitability of DKK 3.1 million (DKK -4.1 million)
● 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) ● EPS improved 72% to DKK -0.08 (-0.29)
● 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) -40% -20% 0% 20% 40% 60% 80% 500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 4.500 H2 2012 H1 2013 H2 2013 H1 2014 H2 2014 tDKK
Growth in services sales compared to investment - six months delay
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Agenda
6
●
Full year results FY 2014
●
Exiqon Life Sciences
●
Exiqon Diagnostics
●
Corporate objective and investment case
●
Financial calendar and outlook for 2015
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Changing market dynamics have affected Exiqon Life Sciences’ markets
72010: Hypothesis driven
Array content defined based on what is expected to be relevant
2015: Hypothesis free
No need for initial hypothesis, just ask what is in the sample?
Microarray analysis
•Content defined by tool provider •Content defined based on what is
expected to be relevant (the hypothesis)
qPCR verification
•Product defined and validated based on array content
•Products in stock
Functional analysis
•Product defined and validated based on array content
•Products in stock
RNA seq (NGS)
•No need to define content prior to experiment
qPCR verification
•Hypothesis formulated at this point •Products designed to verify hypothesis •Products manufactured upon request •Bioinformatics enabled
Functional analysis
•Product designed based on outcome of the above
•Products and experiments are enabled by bioinformatics
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New unmet customer needs will be addressed by new strategy
8 RNA seq workflow Sample preparation Library preparation RNA seq (NGS) Data analysis Hypothesis generation Verification & RNA functional analysis
• Isolation of RNA with adequate quality for NGS analysis
• Strand specific library preparation • High throughput library preparation
• 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
Customer challenge
• Repositioned Exiqon’s existing products for high quality NGS analysis
• Sensitive library preparation kit incl. pre-amp • Service: High throughput preparation
• Cloud solution
• Best in class RNAseq pipeline • Advanced reporting
• Cloud integrated assay design
• Integrated and easy ordering of customer defined assays
Exiqon’s flexible solutions for RNA analysis (end 2015)
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Integrating product offering with cloud based bioinformatics during 2015
9Exiqon Products & Service
RNA seq (NGS) •Sample preparation •Library preparation •RNAseq Service qPCR verification
•Custom products for all RNAs
RNA Functional
analysis
•Custom products for all RNAs
Exiqon Cloud & Apps
● Service reports
● RNAseq pipeline
● Cross database searches
● Design custom qPCR validation assays based on RNAseq
● qPCR pipeline
● Apps
● Custom functional analysis based on RNAseq
● Apps
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Leveraging existing competences to capture the new opportunities
Proven capabilities New opportunities:
Existing business
miRNA Services
LNA oligo’s
OEM business
New business initiatives
RNA functional analysis
Technical sales
Manufacturing
Product development
Bioinformatics
Logistics IT IPR Finance HR Existing competences
miRNA products
10
RNA seq services
App bioinformatics RNA seq products
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Agenda
11
●
Full year results FY 2014
●
Exiqon Life Sciences
●
Exiqon Diagnostics
●
Corporate objective and investment case
●
Financial calendar and outlook for 2015
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Exiqon Diagnostics
- Third party financed opportunity with leading partners
Program Total budget Exiqon grant Remaining 31.12.14 2014 2015 2016 2017 2018
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
Total (DKK’000) 196.929 43.945 18.385
● 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:
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Exiqon Diagnostics
- Promising pipeline addressing large unmet needs
Colorectal Cancer (Recurrence stage II test ) launched RUO Colorectal Cancer (Early detection test)
Prostate cancer (Early detection)
miRSign colorectal Cancer test (Cancer cells versus normal cells ) launched RUO
Colon cancer (Treatment selection)
● 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
13
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Agenda
14
●
Full year results FY 2014
●
Exiqon Life Sciences
●
Exiqon Diagnostics
●
Corporate objectives and investment case
●
Financial calendar and outlook for 2015
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Long term objectives
- Achievable over the coming three year period
FY 2015 objectives FY 2016 objectives FY 2017 objectives
• Double digit growth in own sales
Increased innovation (R&D costs)
New products for new markets;
miRNA market leader
• First diagnostic RUO product launched
Prioritize prostate cancer programs
Commercial partnership/new grants
• Positive cash flow from operations
Positive EBITDA
Negative EBIT
• Sustainable revenues
Continued growth driven by
RNA sequencing and functional analysis
miRNA market leader
• Second diagnostic RUO product launched
Continued financing
New diagnostic programs initiated
• Profitability
Positive EBIT
Capitalized tax asset
• Unique value proposition
Broad portfolio of products for RNA analysis
Revenues from both segments
New sales channel based on app’s
• Diagnostic product marketed
Colorectal or,
Prostate cancer product
• Profitability
R&D costs ~15% of revenues
SG&A ~30% of revenues
15
● 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
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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
17
●
Full year results FY 2014
●
Exiqon Life Sciences
●
Exiqon Diagnostics
●
Corporate objectives and investment case
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18
*The outlook for 2015 is based on an average USD/DKK exchange rate of DKK 6.50.
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: 30 January 2015
Deadline for shareholders’ proposal to
the annual general meeting: 1 February 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
MDKK 2015
Revenue 150-160
EBITDA 5-10
Financial outlook for 2015 Financial calendar for 2015
Revenue from 3 sources in the 2 segments:
Life Sciences Diagnostics Products incl. Services √ >2015
Contract Research √ √
Royalties and upfront √ √
