- Solidity of the activity and results, despite the health crisis
and increase in R&D investments
- Cash position of €19.9 million at June 30, 2020, excluding the
State-Guaranteed Loan
- Order book up 14% despite the health crisis
- Successful roll-out of the new model based on 3 Business Units,
in accordance with the Group’s new strategy
Regulatory News:
ONCODESIGN (Paris:ALONC) (ALONC – FR0011766229), a
biopharmaceutical group specialized in precision medicine,
announces its results for the first half of 2020 and issues a
business update.
Philippe GENNE, Chairman and Chief Executive Officer of
Oncodesign, says: “Within a context marked by an unprecedented
global public health crisis in the first semester, Oncodesign has
deployed a business continuity plan that has enabled to remain
operational to serve clients, drive projects forward and continue
the strategic development. The Group has shown resilience, with
operating revenue of €18.1 million and a net profit at June 30,
2020. Our total revenue, on a like-for-like basis (excluding
upfront and milestone payments), of €11.8 million in the first half
of 2020 has held up, with a record cash position of €19.9 million.
The first half was also marked by the success of our collaboration
with Servier’s laboratories on the LRRK2 project that provided us
with a €1 million milestone payment. The RIPK2 project with its
First-in-class ODS 101 inhibitor, is following its development plan
to the letter, and its IND is still scheduled for June 2021. We are
now equipped to meet the targets we have set for 2023: i.e. pursue
the clinical development of our drug candidates, support the
development of Drug Discovery while consolidating our multi-year
Drug Development service partnership offer (DDSA) and Integrated
Drug Discovery (IDDS) offer to drive Service revenue and EBITDA
growth. The Oncodesign teams and I are more than ever focusing on
the Group’s future, as illustrated by the stakes recently acquired
by members of the Company’s Senior Management team”.
Arnaud LAFFORGUE, Chief Financial Officer of Oncodesign,
continues: “From the start of the year, we implemented the
growth plan for the next five years and structured our company into
three Business Units. Lastly, despite this unprecedented context in
which Business Development has been directly penalized, we have
recorded a 14% increase in incoming orders compared to last year,
to €11.6 million, driven by the signing of a number of multi-year
contracts in Asia and Europe. Also, in the first half of the year,
we have launched the integrated Drug Discovery service offer,
DRIVE, including in partnership with Chinese company Hitgen, and a
new service offer dedicated to COVID-19 in association with IDMIT,
providing a response to the high level of demand on this market,
the latter leading to a substantial order book with revenue
prospects on this offer in the second half of 2020. In addition,
for the first time, the income statements of 2 main BUs are
presented, namely the Service BU and the Biotech BU for the first
half of 2020 compared to the homogeneous figures for the first half
of 2019 in order to better highlight the performance and challenges
of its activities.”
€ millions Consolidated figures
under French accounting standards
H1 2020
H1 2019
Sales
11.81
14.10
Other revenue
6.29
5.96
Total operating revenue
18.10
20.06
Operating expenses
(18.42)
(19.55)
Operating profit
(0.32)
0.51
Financial income and expenses
(0.25)
(0.19)
Exceptional income and expenses
0.24
(0.11)
Income Taxes
(0.13)
0.03
Share of profit/(loss) from associates
-
-
Amortization of goodwill
0.50
0.50
Attributable net profit
0.04
0.73
Cash position (at June 30)
19.9
13.3
First-half 2020 financial results
The Group generated revenue of €11.8 million in the first
half of 2020, down 16% compared with H1 2019, due to both the
decrease in Biotech revenue, with a milestone payment of €1 million
in H1 2020 versus an upfront of €3 million over the same period
last year, and, for the Service revenue, resulting from the public
health crisis.
Other operating revenue, which totaled €6.29 million in
the first half, was up by 5.5% compared with the first half of
2019, and consisted primarily of the following:
- the subsidy received from GSK, within the framework of the
acquisition of the François Hyafil center, which amounted to €3.96
million in the first half of 2020 (6 months pro rata temporis). The
final payment was carried out in January 2020;
- the 12% increase in French and Canadian Research Tax Credit to
€1.66 million, directly associated with investments in internal
programs (RIPK2, MNK1/2) and on AI.
Operating expenses totaled €18.42 million, down because
of the reduction in variable costs such as purchases of external
subcontracting services and business trips because of the pandemic.
Personnel expenses were stable at €9.2 million (+1.3%) as a result
of the decision taken at the start of the year, given the first
effects of the pandemic on the economy, to freeze all wage
increases that normally take place at this time of the year.
However, it is worth noting the effect of the full presence over
the first half of the year of the new staff recruited during the
second half of 2019, i.e. an additional 9 people.
Research & Development investments amounted to €5.41
million in the first half of 2020, versus €4.0 million at June
30, 2019. This acceleration in spending (+35%) was primarily
associated with the RIPK2 program’s regulatory preclinical phase,
entirely financed by Oncodesign.
Thanks to good management of operating expenses, down €1.1
million (-6%), there was an operating loss of -€320k, a
controlled decrease of €830k compared with the first half of 2019
in view of the investment efforts undertaken over the period.
The net profit remained close to zero (+€40k), despite a
financial income deteriorated due to the effect of exchange rate
fluctuations (US$) for €125k. In addition, the restatement of
goodwill, following the sell and lease-back of the Les Ulis
building, enabled income of €500k to be recognized in consolidated
accounts.
Cash position
The Company had cash and cash equivalents of €19.9 million at
June 30, 2020, a substantial increase of +50% compared with
June 30, 2019 (€13.3 million) despite the Group’s considerable
R&D investments. This figure includes the €1.0 million
milestone payment received from Servier, the €7.92 million GSK
subsidy received for 2020 and the Research Tax Credit for 2018
(€3.5 million not redeemed at the end of 2019 and regularized in
April 2020) and 2019, €3.2 million and usually received at the end
of the following year. Lastly, it should be noted that this cash
position was achieved without, as yet, incorporating the
State-Guaranteed Loan.
First-half 2020 business update and outlook
SERVICE BU
Income Statement - Service BU
Data in millions of euros
H1'20
H1'19
Évolution
Sales
14.00
13.76
+ 1.8%
Direct costs
(2.85)
(2.86)
- 0.3%
Gross margin
11.16
10.90
+ 2.3%
Internal costs
(9.56)
(10.18)
- 6.1%
Net margin
1.60
0.72
+ 121.6%
Other costs and revenues
(0.93)
(1.87)
- 50.0%
EBITDA
0.67
(1.15)
+1.8M€
Following completion of the new organization, the Service BU,
which has 203 employees, realizes a total revenue of 14M€ by
cumulating the "External" revenues corresponding to the sales
realized with Oncodesign's customers, and the "Internal" revenues1
carried out for the execution of work related to our therapeutic
projects for the Biotech BU (RIPK2, LRRK2, MNK1/2). It is stable
compared to last year at the same date (+260 K€).
- External revenues amounted to €9.03 million over the period, a
decrease of 10% in the first half of the year, following the
economic slowdown associated with the global health crisis.
Oncodesign SA (worldwide clients excluding the USA and Canada)
recorded a 13.6% decrease in revenue to €7.71 million, while
revenue generated in North America (USA and Canada) remained
dynamic, increasing by 18.4% to €1.4 million. The latter’s growing
weight – with it now accounting for 16% of revenue compared to 10%
in 2019 – demonstrates its strategic role for the Service Business
Unit, thus justifying its development over the coming years.
Moreover, activity recorded in Asia (Japan and South Korea) has
also grown rapidly over the last 3 years, with this region now
accounting for 7% of total first-half 2020 revenue compared to just
2% in 2018. This international development reflects the substantial
investments undertaken by the Company, and notably the
strengthening of the sales teams.
- Internal revenues increased by 30% to almost €5 million
following the acceleration of our programs for the Biotech BU.
In terms of EBITDA, the BU achieves an increase of €1.8 million
to reach €0.67 million in the first half of 2020, representing an
improvement in EBITDA margin of 13.1% from -8.3% to +4.8% (thanks
to good cost control and increased productivity as a result of the
new BU organization). This performance illustrates the Service BU's
ability to improve its operational performance by optimizing its
productivity and internal organization. These figures give us
confidence in the Service BU's ability to achieve its profitability
objectives at term.
The objectives of the Service BU are to accelerate the
development of the sale of integrated and long-term service
contracts for growth in Service revenues and EBITDA.
A COVID-19 offer has been developed in association with IDMIT.
This offer is seeing very high demand in the current context,
particularly as few companies have the infrastructure and expertise
to undertake this type of service. This offer has promising revenue
potential, both for the short term in H2 and for the coming
years.
Impact of the Covid pandemic: the activation of our
Business Continuity Plan and the continuation of activity on our
sites and in our laboratories allows us to undertake the work
entrusted to us by our clients. To date, we have not recorded
widespread order cancellations from our clients. The procurement of
supplies is still possible for most of our consumables/raw
materials; delivery times are occasionally longer but this isn’t
blocking our work. Lastly, the nature of our portfolio of offers,
notably multi-year programs, guarantees us a level of recurrent
activity scheduled over the long term. In contrast, the booking of
orders for one-off and non-recurrent offers could be penalized,
with the cancellation of conferences and ongoing travel
restrictions impeding the fieldwork of our sales staff, without us
currently being able to assess the precise impact.
Oncodesign’s 2023 targets are notably, for the Service BU, to
achieve revenue of €50 million and EBITDA of between 15% and
20%.
BIOTECH BU
Income Statement - Biotech BU
Data in millions of euros
H1'20
H1'19
Sales
2.78
4.00
Direct costs
(5.71)
(5.58)
Gross margin
(2.93)
(1.58)
Internal costs
(0.42)
(0.97)
Net margin
(3.34)
(2.55)
Other costs and revenues
0.02
0.43
EBITDA
(3.32)
(2.12)
Biotech revenues consist mainly of the sale of partnerships and
licensing resulting from Nanocyclix: so in the short term from
Up-fronts / Milestones and the coverage of research costs of the
Servier Partnership for LRRK2. Thus, its sales reached €2.8 million
in the first half of 2020, versus last year’s figure of €4 million
that included the initial €3 million payment by Servier, within the
framework of the strategic partnership sealed in March 2019 to
develop LRRK2 kinase inhibitors as a treatment for Parkinson’s
Disease. Revenue relating to work on LRRK2 increased by +78% to
€1.8 million and the program is progressing rapidly in accordance
with its initial schedule.
Costs in the Biotech BU are under control thanks to our efforts
to rationalize our expenses, in connection with the new allocation
of scientific staff and the control of our purchases.
However, the medium-term trend of this BU, whose programs are
progressing according to their development plan, should enable it
to achieve milestones in the coming semesters.
The objectives of the Biotech BU are to continue to ensure
the ramping up of our pipeline via the selection of, on the one
hand, kinase inhibitor drug candidates resulting from Nanocyclix
technology and, on the other hand, external opportunities on other
targets.
Biotech’s prime focus is to develop the maturity of our
therapeutic pipeline by taking our molecules to the clinical
development stage: RIPK2, LRRK2 and MNK1/2 inhibitors in
oncology.
At the end of 2019, the substantial investment efforts
undertaken in R&D enabled Oncodesign to select a First-in-Class
drug candidate, a RIPK2 kinase inhibitor, for autoimmune and
inflammatory diseases, which represents a first step in the
creation of expected value. As a reminder, Oncodesign initially
planned to finance the development of ODS 101 up to the IND
(significant risk-limiting step on the inhibitor by regulatory
multi-species toxicity studies), programmed in June 2021, while
looking for a Pharma partner.
In February 2020, Servier and Oncodesign announced that
they had reached a major milestone several months ahead of
schedule, within the framework of their strategic partnership in
the research and development of drug candidates to treat
Parkinson’s disease (LRRK2 program). Oncodesign received a first
milestone payment of €1 million associated with the program’s first
success.
Moreover, discussions are ongoing with new partners to enable
the resumption of the clinical development of the mutated EGFR
radiotracer. Regarding the partnership with Bristol-Myers Squibb
(BMS), after the internalization of the program at the end of 2018,
the company decided to stop the program for toxicity reasons
related to the target. The intellectual property concerning the
molecules has been returned to Oncodesign, which is free to exploit
them. Lastly, the MNK1/2 program is continuing to move forward, the
aim being to reach the pre-candidate stage by the end of 2020.
Impact of the Covid pandemic: for the Biotech Business
Unit, as a result of our autonomy on work programs, the pandemic
has had little impact on our activity or the ramping up of our
pipeline. However, we are observing a slowing down of Big Pharma
decision-making and therefore partner research processes for
RIPK2.
Oncodesign is aiming to take 3 products to the clinical phase
by 2023.
ARTIFICIAL INTELLIGENCE
BU
The objective of the AI BU is to continue the development of
our strategic technological pillars using AI: structure the
Precision Medicine platform of the 21st century
On the basis of the OncosnipeTM project, whose launch 3 years
ago initiated the application of AI technologies to the detection
of new therapeutic targets and enabled the creation of an internal
center of expertise on this subject, a third Business Unit
dedicated to Artificial Intelligence was created in April 2020,
under the direction of Stéphane Gérart.
Impact of the Covid pandemic: the OncosnipeTM project was
penalized by the public health crisis in the first half, as it
relies on a clinical trial whose patient enrollments had to be
suspended during this period. In return, we opened 5 new clinical
centers and received the associated BPI subsidy of €0.4 million at
the end of June within the framework of the PSPC competitive
cluster structuring project.
This BU is aiming to build, by 2023, a platform to identify
and validate new therapeutic targets and to increase the Drug
Discovery process’ reliability and reduce its development times,
while developing revenue streams by providing research services to
industry.
Oncodesign’s first-half 2020 financial report is available in
French on the Company’s website: www.oncodesign.com
Next investor meeting: Investir - Direct Dirigeants event in
Paris on Tuesday October 6, 2020
About ONCODESIGN: www.oncodesign.com
Founded 25 years ago by Dr. Philippe Genne, the Company’s CEO
and Chairman, Oncodesign is a biopharmaceutical company dedicated
to precision medicine. With its unique experience acquired by
working with more than 800 clients, including the world’s largest
pharmaceutical companies, along with its comprehensive
technological platform combining state-of-the-art medicinal
chemistry, pharmacology, regulated bioanalysis, medical imaging and
Artificial Intelligence, Oncodesign is able to predict and
identify, at a very early stage, each molecule's therapeutic
usefulness and potential to become an effective drug. Applied to
kinase inhibitors, which represent a market estimated at over $65
billion by 2027 and accounting for almost 25% of the pharmaceutical
industry’s R&D expenditure, Oncodesign’s technology has already
enabled the targeting of several promising molecules with
substantial therapeutic potential, in oncology and elsewhere, along
with partnerships with pharmaceutical groups such as Bristol-Myers
Squibb. Oncodesign is based in Dijon, France, in the heart of the
town’s university and hospital hub, and within the Paris-Saclay
cluster. Oncodesign has 233 employees and subsidiaries in Canada
and the USA.
Disclaimer
This press release contains certain forward - looking statements
and estimates concerning the Company’s financial condition,
operating results, strategy, projects and future performance and
the markets in which it operates. Such forward-looking statements
and estimates may be identified by words such as “anticipate,”
“believe,” “can,” “could,” “estimate,” “expect,” “intend,” “is
designed to,” “may,” “might,” “plan,” “potential,” “predict,”
“objective,” “should,” or the negative of these and similar
expressions. They incorporate all topics that are not historical
facts. Forward looking statements, forecasts and estimates are
based on management’s current assumptions and assessment of risks,
uncertainties and other factors, known and unknown, which were
deemed to be reasonable at the time they were made but which may
turn out to be incorrect. Events and outcomes are difficult to
predict and depend on factors beyond the Company’s control.
Consequently, the actual results, financial condition, performances
and/or achievements of the Company or of the industry may turn out
to differ materially from the future results, performances or
achievements expressed or implied by these statements, forecasts
and estimates. Owing to these uncertainties, no representation is
made as to the correctness or fairness of these forward-looking
statements, forecasts and estimates. Furthermore, forward-looking
statements, forecasts and estimates speak only as of the date on
which they are made, and the Company undertakes no obligation to
update or revise any of them, whether as a result of new
information, future events or otherwise, except as required by
law.
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1 Internal revenues are neutralized in consolidated data
since they are offset by direct costs in the Biotech BU's income
statement
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Oncodesign Philippe Genne Chairman and CEO Tel. : +33
(0)3 80 78 82 60 investisseurs@oncodesign.com
NewCap Investor Relations Mathilde Bohin / Louis-Victor
Delouvrier Tel. : +33 (0)1 44 71 94 95 oncodesign@newcap.eu
NewCap Media Relations Arthur Rouillé Tel. : +33 (0)1 44
71 00 15 oncodesign@newcap.eu