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Horizon Discovery Revenues Up 8 Percent in 2019

NEW YORK – Horizon Discovery Group reported on Monday that its 2019 revenues rose nearly 8 percent year over year, thanks to growth in its research reagents and screening business units.

For the 12 months ended Dec. 31 2019, the gene editing and gene modulation technologies company reported total revenues of £58.3 million ($63.2 million), up from £54.1 million in 2018. On a constant currency basis, revenues rose nearly 5 percent.

At the beginning of 2019, Horizon, based in Cambridge, UK, 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. The firm completed the divestment of the in vivo business unit in December to Envigo RMS for a nominal cash consideration.

2019 revenues for research reagents rose 8 percent to £33.5 million from £30.9 million the year before, while revenues from screening products rose 28 percent to £11.4 million from £8.9 million. Bioproduction revenues, meanwhile, fell 1 percent to £8.6 million from £8.7 million in the year-ago period. Diagnostics revenues fell 14 percent to £4.8 million from £5.6 million. In the 2019 period that Horizon owned the in vivo business, the unit generated revenues of £4.6 million. These revenues were excluded from continuing operations in the 2019 results.

"In 2019, we prepared the business for growth by investing to improve operational efficiency, discontinuing non-core operations and doubling down on high-growth operations. As a result, we moved into 2020 with a simplified, more robust, and focused business comprising a mix of well-established and potentially disruptive business units," Horizon CEO Terry Pizzie said in a statement.

In April 2020, the company raised £6.9 million in gross proceeds through a placement of approximately 4.5 percent of its current share capital in order to provide additional financial flexibility during the COVID-19 pandemic. Pizzie noted that this placement, alongside a range of other mitigating actions the company is taking, will mean that Horizon has the financial flexibility to continue investment in strategic projects, and a sufficient working capital and liquidity position to be protected in the event of a prolonged pandemic-related economic downturn.

"We remain confident about the group's long-term prospects given our industry-leading gene editing and gene modulation expertise and our broad portfolio of tools and services, which provide the basis for a sustainable competitive advantage and strong prospects for growth in 2020 and beyond," he added. "However, given the ongoing uncertainty around the scope, duration, and impact of the pandemic, Horizon is unable to predict the full year consequences of coronavirus."

Horizon said it initially experienced a limited impact from COVID-19. However, orders towards the end of March indicated pressure in the research reagents business as academic research labs slowed or stopped working following the widespread lockdown orders that were implemented in the second half of the month. This trend appears to have continued into the second quarter of 2020.

The company noted that both its UK and US sites are open and running client projects without disruption, and that it is not experiencing any material delays in either distributing its products or running its service projects. The firm is also actively monitoring key suppliers for potential supply chain interruptions and hasn't identified any immediate risks to its supply so far.

Horizon is undertaking a number of initiatives to conserve cash, including deferring certain non-essential projects while continuing with key strategic ones; deferring capital expenditure where there is no impact on key strategic projects; instituting hiring freezes, pay cuts, and pension reductions for staff; and furloughing approximately 24 staff members in the UK and covering about 160 US employees under the US Paycheck Protection Program. These measures should save about £8 million to £10 million, the firm said.

The company also noted that it submitted a draft registration statement to the US Securities and Exchange Commission in February related to a proposed initial public offering of the company in the US. While the US listing process is currently delayed due to market volatility, the company said it plans to pursue the IPO when market conditions are more favorable.

Horizon's net loss for 2019 widened to £9.2 million, or 6.1 pence per share, from £3.7 million, or 2.5 pence per share, in 2018.

Its R&D costs rose 6 percent to £14.2 million in 2019 from £13.4 million a year earlier. The firm's sales, marketing, and distribution costs for the period rose 14 percent to £14.3 million from £12.5 million, while its corporate and administrative expenses for 2019 rose 20 percent to £24.4 million from £20.4 million in 2018.

Horizon ended the year with £18.8 million in cash and cash equivalents.

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