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Horizon Discovery Revenues Up 14 Percent in H1

NEW YORK – Horizon Discovery Group reported on Monday that its total revenues as reported for the first half of 2019 rose 14 percent, thanks to large increases in revenues from its bioproduction and screening business units.

For the six months ended June 30, the gene editing and gene modulation technologies company reported total revenues of £28.6 million ($35.6 million), up from £25.1 million in the first half of 2018. On a constant currency basis, revenues rose 9 percent.

At the beginning of 2019, Horizon implemented a new business unit structure, replacing the former reporting structure of research products, applied products, and services with five units referred to as research reagents, screening, bioproduction, diagnostics, and in vivo

H1 revenues for research reagents rose 12 percent to £16.5 million from £14.8 million the year before, while revenues from screening products rose 39 percent to £4.3 million from £3.1 million. Bioproduction revenues rose 155 percent to £2.8 million from £1.1 million in the year-ago period. Diagnostics revenues, meanwhile, fell 29 percent to £2.5 million from £3.5 million, and revenues from in vivo products fell 4 percent to £2.5 million from £2.6 million a year ago.

Under the company's previous reporting structure, its total product revenues for H1 rose 15 percent to £22.8 million from £19.9 million in H1 2018 and service revenues for the first half of 2019 increased 12 percent year over year to £5.8 million from £5.2 million.

"Horizon has enjoyed a solid performance in the first half of the year with the business as a whole performing in line with expectations," Horizon CEO Terry Pizzie said in a statement. "[Horizon's] research reagent business unit, which encompasses more than half of revenues, also had a good start to the year and we expect strong growth in the second half as this business unit benefits from the increased capacity in cell line engineering that we have implemented in the first half."

Pizzie noted that the company saw some "organizational challenges" in its diagnostics business, but had made some improvements that should lead to better performance in the second half of the year. There were also several factors that contributed to the revenue decreases in the in vivo business, including a decreasing demand for custom animal models and pricing pressures. 

"With our traditional second-half weighting and strong order book for the remainder of 2019, we are well positioned to deliver on our strategy, as we continue to transform Horizon from a scientifically led business into a fully commercial tools and services company with industrialized processes and customer-directed R&D," he added.

Horizon also said that it has been implementing a growth strategy to become the go-to provider of patent-protected cell engineering products, leading it to prioritize CRISPR screening and reagents, cell engineering, bioproduction, and diagnostic reference standards. To support this growth, Horizon has committed £5 million over 18 months period to an investment program focused on supporting growth, including investments in automation to increase production capacity, in laboratory information management systems to improve data handling, in business intelligence, and in digitization.

So far, Horizon said it has achieved a tripling of capacity in cell line engineering with no additional headcount, and expects to increase this further through the addition of automation by the end of the first quarter of 2020. The redevelopment of the company's web and e-commerce project is also on track for completion in October 2019, and will finish the consolidation of the former Horizon and Dharmacon websites into a single platform.

Horizon's net loss for H1 2019 narrowed to £5.3 million, or 3.5 pence per share, from £7.6 million, or 5.1 pence per share, in H1 2018.

Its R&D costs rose 7 percent to £7.9 million in H1 from £7.4 million a year earlier. The firm's sales, marketing, and distribution costs for the period rose 25 percent to £7.1 million from £5.7 million, while its corporate and administrative expenses for H1 2019 rose 19 percent to £10.9 million from £9.2 million in H1 2018.

Horizon ended the first half of the year with £24.8 million in cash and cash equivalents and £2.6 million in investments.

For the second half of the year, the company said it expects an increase in the overall growth rate for the research reagents business, thanks to the increase in cell line engineering capacity. The company is also seeing strong demand for its screening business in H2, having received an order for £850,000, which will impact revenues in the second half of the year. 

For the bioproduction business, Horizon said it remains optimistic for revenue growth during H2, but also noted that the sales of high value contracts in this unit tend to be "lumpy," and that the unit set a high bar at the end of 2018, which could make for a tough year-on-year comparison.