Horizon Discovery's full year revenue rises as volumes increase

24th Jan 2017 10:44

(ShareCast News) - Horizon Discovery Group, a maker of gene editing technologies, saw revenue increased last year, driven by better-than-expected sales volumes.For the 2016 calendar year, revenue climbed 19% to £24m compared to the previous year, with gross margin increasing to the mid-50% range, from 49%, driven by product sales volumes, which were ahead of expectations and due to low costs for goods sold.The AIM-listed company is expecting a full year loss after tax after it took measures to reduce costs by over £5m in 2017, which is part of the company's aim to move to profitability.Horizon Discovery has cash headroom of £11m, after ending 2016 with £6m in cash, and an undrawn £5m debt facility, supported by a "strong" short-term accounts receivable profile following a record final quarter sales performance.Based on an order book with more than 50% of expected revenue, the company said it is confident it will deliver revenues in the range of £30-£35m, and deliver positive earnings before interest, tax, depreciation and amortization (EBITDA) in 2017.Meanwhile, the company said it plans to take advantage of the "new gold rush" taking place around the development of genetically-targeted medicines and cell and gene therapies.Chief executive, Dr Darrin M. Disley, said the company was building a business that "exploits a world-leading position in gene editing to deliver the picks and shovels that support the new gold rush taking place in healthcare around the development of genetically-targeted medicines and cell and gene therapies".He said the group is realising the benefits of this strategy through continued revenue after it invested for scale through and implementing measures to transition to profitability."Early revenue indicators for 2017 already look encouraging thanks to a very robust sales order book. This, combined with having the products and services, global commercial resources and sales channels, and business systems needed to drive long term success all in place, reinforces our confidence in becoming a sustainably profitable company as we continue to deliver strong revenue growth."The products business had revenue growth of at least 44% at an increased gross margin of about 70% due to higher sales of molecular diagnostic reference standards, cell line catalogue and biomanufacturing cell lines.Revenue in the services business rose about 4%, while the genetic screening, custom cell line development and discovery research services delivered a combined increase in revenue of at least 30%, offset by a temporary reduction in molecular screening service capacity resulting from the consolidation of operations from the US to the UK.During the year, the company created a centre of excellence for gene-editing, cell biology and high-throughput screening at its expanded headquarters in Cambridge, which is expected to provide £3m worth of savings.Meanwhile, the Research Biotech business is where the company is eligible for future research and development milestones of up to £208m plus future product royalties, and equity upside through its Avvinity Therapeutics joint venture.The company said that its focus on immuno-oncology and cell and gene therapy positions it at the "cutting edge" of global academic, biotechnology and pharmaceutical research and development efforts.Shares in Horizon Discovery Group were up 0.96% to 167.60p at 1057 GMT.