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8 September, 2017 - 11:52 By Tony Quested

Horizon pushes closer to profit and eyes billion dollar bio status

Horizon Discovery Cambridge

Anyone lifting the hood on personalised medicines pioneer Horizon Discovery will see a billion dollar bio business in the making – a perspective sharpened by a rock solid trading update from the Cambridge company today.

Investors scouring the update and analysts’ notes will conclude that the gene editing world leader is raising the bar for the Cambridge cluster to fresh heights on the international life science stage.

Horizon is on target for consolidated revenue of £37m-£41m for FY17 – between 54 per cent and 71 per cent growth on the 2016 figure of £24m – and that at break-even EBITDA. The company reports a strong second half order book.

The consensus for FY18 is around £70 million revenue with anything between £2m-£3m net profit.

Horizon is also consolidating its Vienna cell line manufacturing operation into its Cambridge HQ, achieving savings on the one hand plus bringing another 16 life science jobs to the Research Park.

The share price was up again to 238.70 after the trading update but the figure to watch is the market cap – currently nearing half a billion dollars at £355m or $460m.

Horizon’s expansion blueprint and path-to-profit strategy have been accelerated through the transformational $85m acquisition of GE Healthcare Dharmacon, Inc at the end of August.

The good news poured out of the trading update ahead of Horizon’s interim results for the six months to June 30. These will be announced on September 26. 

Horizon expects to report six month revenues of £12.1m, in line with previous guidance, representing growth of at least 20 per cent. Reported group gross margins are expected to expand substantially to at least 60 per cent (HY16: 48 per cent), enhanced by significant improvement in service margins as the impact of actions to drive operational efficiencies are realised.
Dharmacon is a global leader in gene modulation products with a fast-growing gene-editing product portfolio that is highly complementary to Horizon’s products business.

The deal has approximately doubled the annual revenue of the group, is significantly accretive to earnings, and provides further opportunities to accelerate revenue growth and margin expansion via commercial synergies and cost efficiencies across the enlarged business.

Horizon has a strong war chest following the £80m over-subscribed placing of shares on August 23 and proceeds will support accelerated scale-up, drive sustainable revenue growth and margin expansion, exploit synergies to drive profitability and strengthen the balance sheet.

CEO Dr Darrin Disley, said: “Horizon is a leader in the rapidly growing gene editing and gene modulation markets that are having a major impact on the crucial drivers of healthcare, including personalised medicine, immuno-oncology, and gene and cell therapy. With our continued growth and delivery of the business strategy, we look forward to a strong performance in the second half of the year.

“The acquisition of Dharmacon has created immediate value for our customers and for the group, and we look forward to benefiting from the substantial commercial potential of the enlarged business.

“The transaction has also allowed Horizon to significantly grow its shareholder base, and we are grateful for the continued support of our existing investors, and to welcome GE Healthcare and many specialist life science investors from the US to our shareholder register.

“With the acquisition of Dharmacon now complete, and a strong balance sheet following the £80 million placing, we are well positioned to unlock the potential of this highly complementary acquisition, building an innovation-driven and customer-focused business that delivers sustained growth and profitability.”

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