Interim Results. For the six months ended 30 September 2016

Transcription

1 Interim Results For the six months ended 30 September 2016

2 Forward-looking statements This presentation and information communicated verbally to you may contain certain projections and other forward-looking statements with respect to the financial condition, results of operations, businesses and prospects of BTG plc ( BTG ). These statements are based on current expectations and involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. There are a number of factors which could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements. Any of the assumptions underlying these forward-looking statements could prove inaccurate or incorrect and therefore any results contemplated in the forward-looking statements may not actually be achieved. Nothing contained in this presentation or communicated verbally should be construed as a profit forecast or profit estimate. Investors or other recipients are cautioned not to place undue reliance on any forward-looking statements contained herein. BTG undertakes no obligation to update or revise (publicly or otherwise) any forwardlooking statement, whether as a result of new information, future events or other circumstances. Neither this presentation nor any verbal communication shall constitute an invitation or inducement to any person to subscribe for or otherwise acquire securities in BTG BTG International Ltd. All rights reserved. Imagine where we can go, BTG and the BTG roundel logo are trademarks of BTG International Ltd. BTG and the BTG roundel logo are registered trademarks of BTG International Ltd in the US, EU and certain other territories. Bead Block, DC Bead, DC Bead LUMI, LC Bead and LC Bead LUMI are trademarks and/or registered trademarks of Biocompatibles UK Ltd. EKOS and EkoSonic are registered trademarks of EKOS Corporation. GALIL is a trademark of Galil Medical Ltd. PneumRx is a registered trademark of PneumRx, Inc. TheraSphere is a registered trademark of Theragenics Corporation used under license by Biocompatibles UK Ltd. Varithena is a registered trademark of Provensis Ltd. CroFab and DigiFab are registered trademarks of BTG International Inc. Vistogard is a registered trademark of Wellstat Therapeutics Corporation. Voraxaze is a registered trademark of Protherics Medicines Development Ltd. Lemtrada is a trademark of Genzyme Corporation. Zytiga is a trademark of Johnson & Johnson. Biocompatibles UK Ltd, EKOS Corporation, Galil Medical Ltd, PneumRx, Inc., Protherics Medicines Development Ltd, and Provensis Ltd are all BTG International group companies. Not all products and/or indications are available in all territories. For prescribing information, safety information, and/or product information, go to: bead-block.com crofab.com dcbead.com dcbeadlumi.com digifab.us ekoscorp.com galilmedical.com lcbead.com lcbeadlumi.com lemtrada.com pneumrx.com therasphere.com varithena.com vistogard.com voraxaze.com zytiga.com. 2

3 Agenda Opening remarks Louise Makin, CEO Financial results Operating review Rolf Soderstrom, CFO Louise Makin 3

4 Introduction Interventional Oncology Macroeconomic and technological trends favouring the adoption of Interventional Medicine (IM) therapies Many IM markets are large, high growth and underpenetrated BTG has the strategy, capabilities and track record to exploit the compelling opportunities in IM 4

5 Structural trends driving strong growth in Interventional Medicine therapies 1. Macroeconomic pressures to reduce healthcare costs Efficiency savings which result from interventional treatments relate to decreased in-hospital stays, reduced occupancy of operating theatres, avoidance of general anaesthesia and a shift to more day-case procedures. In turn, these offer significant reductions in morbidity and mortality in comparison to conventional surgery Royal College of Radiologists Source: 2. Hospitals need to increase efficiency and improve outcomes Greater focus on patient QoL Move from fee-for-service to outcomes-based payment 3. Advances in imaging, early diagnosis, access and device technology favours minimally invasive therapies 5

6 Use of minimally invasive therapies is expanding Cardiology e.g. coronary stents Neurology e.g. mechanical thrombectomy for acute ischemic stroke Oncology Pulmonology Peripheral/ Vascular 6

7 BTG has the capabilities to exploit the significant IM opportunity Components for IM success Innovation to meet market needs Examples at BTG LC Bead LUMI, EKOS PT4, biodegradable bead, TheraSphere dosimetry Strong brand value and customer intimacy High-content technologies, established reputation Dedicated sales, marketing, and reimbursement teams focused on specialist physicians 6 sales forces across US, EU and Asia Financial flexibility to enable investment in innovation and clinical data >40 Investigator Initiated Studies (IIS) in IM, 30% of studies approved in 2016 Engaging in early-stage and digital innovation West Coast innovation hub Agile, scalable organisational structure and culture 5 acquisitions integrated since

8 We are a high growth business with a strong track record 1. Building leading positions in Oncology, Vascular, Pulmonology 2. Established commercial capabilities and infrastructure 3. Acquisitions & Investments Identified leading therapies in exciting areas Integrated five businesses since 2011 Accelerated product development Acquired capabilities 4. Delivered 51% Interventional Medicine revenue CAGR ( ) IM now the biggest component of Group revenues Capability and financial strength to deliver further growth 8

9 Our model for sustained value creation Deliver sustained double-digit product revenue growth Maximise cash generation from established assets Accelerating investments to capture growing IM opportunity set: M&A Innovation & Development Double-digit product revenue growth Strong $ free cash flow generation M&A Innovation & Development Sales & Marketing Disciplined investment in growth opportunities A global leader in Interventional Medicine therapies 9

10 Summary Interventional Oncology Structural trends in healthcare driving big opportunities for Interventional Medicine therapies BTG has the market leading capabilities to create significant value from this opportunity Proven strategy and strong track record Increasing investment to capture the opportunity set in IM 10

11 Financial Results Rolf Soderstrom 11

12 Financial highlights H1 16/17 ( m) H1 15/16 ( m) Growth Growth at CER 1 Revenue % 10% Interventional Medicine Revenue % 24% Adjusted operating profit % 4% Adjusted basic EPS p 14.7p (5%) Free cash flow (7%) IFRS operating profit (34%) Double-digit Group revenue growth 24% IM revenue growth EPS impacted by one-off items, including 17.0m FX losses 1 Constant exchange rate ( CER ) growth is computed by restating 2016/17 results using 2015/16 foreign exchange rates for the relevant period. 2 Adjusted operating profit, adjusted basic EPS and free cash flow are not prepared in accordance with IFRS. All adjusted financial measures are explained and reconciled to the most directly comparable measures prepared in accordance with IFRS in the appendix. 12

13 Double-digit revenue growth driven by Interventional Medicine 32.7m 285.4m +14% CER growth 7.9m 7.0m 16.7m 229.6m 221.1m ( 8.5m) H1 2015/16 Zytiga one-off payment H1 2015/16 adj. IM SP Licensing FX H1 2016/17 13

14 Interventional Medicine is now the biggest component of Group revenues H1 16/17 ( m) H1 15/16 ( m) Change (%) Change at CER Interventional Medicine Interventional Oncology Beads / TheraSphere % 17% Galil Interventional Vascular EKOS % 22% Varithena nm nm Interventional Pulmonology PneumRx Coil (24%) (32%) Total Interventional Medicine % 24% Specialty Pharmaceuticals CroFab % 5% DigiFab % 13% Voraxaze % 8% Vistogard /other nm nm Total Specialty Pharmaceuticals % 9% Licensing Zytiga % (7%) Lemtrada % 80% Others (18%) (28%) Total Licensing % (1)% Total % 10% 14

15 Interventional Medicine 24% CER revenue growth H1 16/17 ( m) H1 15/16 ( m) Revenue Cost of sales 1 (28.4) (21.3) Revenue (m) IO EKOS Varithena PneumRx 64% CAGR Gross profit Gross margin 1 71% 70% SG&A (53.4) (42.1) Contribution Contribution margin 17% 10% H1 12/13 H1 13/14 H1 14/15 H1 15/16 H1 16/17 Strong H1 revenue growth H1 16/17 IM revenues >7x H1 12/13 IM revenues Operating leverage emerging, with significant potential to increase margins over time 1 Contribution includes fair value adjustments on acquired inventory and PP&E of 0.7m (2015/16: 1.5m) 15

16 Specialty Pharmaceuticals Strong cash generation H1 16/17 ( m) H1 15/16 ( m) Revenue Cost of sales (10.7) (9.0) Gross profit Gross margin 89% 88% SG&A (13.6) (11.6) Contribution Contribution margin 74% 74% Contribution (m) 13% CAGR H1 12/13 H1 13/14 H1 14/15 H1 15/16 H1 16/17 Topline growth drives increasing contribution and cash generation Continued focus on operational efficiencies 16

17 Licensing Royalties driven by Zytiga and Lemtrada H1 16/17 ( m) H1 15/16 ( m) Revenue Cost of sales (49.6) (40.0) Gross profit Gross margin 46% 51% Adjusted SG&A 1 (15.4) (11.2) Contribution Contribution margin 30% 37% Contribution (m) H1 12/13 H1 13/14 H1 14/15 H1 15/16 H1 16/17 Prior year revenue includes 8.5m of back-dated Zytiga royalties Gross margin reduction reflects a high proportion of Lemtrada sales 1 Adjusted SG&A excludes a one-time charge of 28.0m ($36m) relating to the settlement with the US government in relation to the previously announced investigation into the historic marketing of LC Bead 17

18 Investing in Innovation & Development Product innovation: Biodegradable bead New EKOS control unit Digital Innovation 11.6m (31%) 15.4m (41%) 10.8m (28%) Existing product support: Medical and Regulatory affairs Post-approval commitments Investigator Initiated Studies H1 15/16 Clinical trials and studies: TheraSphere Phase III trials EKOS (ACCESS PTS & OPTALYSE) PneumRx RENEW study GALIL Lung and Bone cancer trials Varithena product variants 10.1m (30%) 13.4m (40%) 10.1m (30%) 18

19 Continued strong free cash flow H1 16/17 ( m) H1 15/16 ( m) Growth Free cash flow (H1 15/16 excl. one-off Zytiga receipts) % One-off Zytiga receipts nm Free cash flow (7%) Investing and financing cash flows (55.8) (22.9) Foreign exchange on cash and cash equivalents 3.7 (0.2) Increase in cash and cash equivalents Sep 2016 ( m) Mar 2016 ( m) Cash and cash equivalents Access to 100m multi-currency RCF, with option to extend for further 100m Capacity to leverage balance sheet

20 Financial outlook for the full year Reiterating underlying revenue guidance and reflecting recent currency movements Guidance using H1 actual rates and assuming $1.25/ for H2 Revenue Adjusted SG&A 1,2 R&D 535m - 565m (previously 510m - 540m) 175m - 185m (previously 165m - 175m) 80m - 90m (previously 90m - 100m) FX on forward contracts c. 25m full year charge at rate of $1.25/ Adjusted effective tax rate 2 c.10-14% for the FY FX sensitivity $0.05 strengthening of $ = + 10m on H2 Group revenue + 2m on H2 adjusted SG&A + 1m on H2 R&D + 8m additional loss on FX contracts in H2 1 SG&A excludes a one-time charge of 28.0m ($36m) relating to the settlement with the US government in relation to the previously announced investigation into the historic marketing of LC Bead 2 Adjusted SG&A and Adjusted ETR are not prepared in accordance with IFRS. All adjusted financial measures are explained and reconciled to the most directly comparable measures prepared in accordance with IFRS and shown in the appendix. 20

21 Financial summary Continued delivery of double-digit top line growth Strong cash generation and disciplined cost control Investing in commercial expansion, innovation and acquisitions Robust financial position supporting long-term growth objectives 21

22 Operating Review Louise Makin 22

23 Annual sales Building on our portfolio of leading interventional therapies Establishing new therapies Double-digit growth Cash generation Interventional Medicine Varithena Injectable microfoam clinically proven to reduce the symptoms and improve the appearance of varicose veins PneumRx Coils Shape-memory metal coils implanted in the lungs of patients with severe emphysema. Clinically proven to improve quality of life, lung function and exercise capacity EKOS Ultrasonic catheter drug delivery device used in the treatment of severe blood clots Interventional Oncology Embolic, drugeluting beads and radioactive microspheres to treat tumours in the liver Cryoablation needles to treat tumours in the kidney Specialty Pharma Licensing Early Stage High Growth Established Schematic. Not to scale 23

24 Embolic beads Beads / TheraSphere Differentiated products for the interventional treatment of liver tumours DC Bead LUMI approved in Canada, LC Bead LUMI launched in the US Collaboration with Philips Interventional Oncology Solution OncoSuite TheraSphere First treatments in S. Korea and Malaysia Differentiated product: Symplicit 90 Y dosimetry software cleared βeta Radiation Safety Programme launched Flexible 90 Y product with a range of doses that can be tailored to each patient 24

25 Galil Medical Broadening our Interventional Oncology portfolio Galil Medical integration is on track No disruption to business momentum Continued good sales growth First treatments in Argentina FDA approval of additional needle size in early October US commercial integration to be completed during H2 Investing to accelerate product innovation 25

26 EKOS Strong growth through product leadership Commercial expansion Taking share of growing interventional market US hospital penetration c.70% (c.60% in 2015) Converting more hospitals to PE customers Ongoing market development in UK, France and Germany First patients treated in Taiwan; EKOS now available in Hong Kong Innovation 510k and Design Dossier (CE Mark) for new control unit submitted Building on clinical data OPTALYSE & ACCESS PTS enrolment completed results anticipated around H1 17 CAVA study (Netherlands) continues to enroll patients Intelligent Drug Delivery Catheter Ultrasound Core Device 26

27 PneumRx Coils Developing a growing therapy with clinical data Interventional Pulmonology is an emerging medical discipline based around a growing medical community COPD is a high unmet medical need 5m+ patients with GOLD stages III & IV in the US and EU Importance of clinical data for the long-term development of a new therapy Largest data set on endoscopic intervention of mainly GOLD stage IV patients Learnings from RENEW sub-group analyses will enhance patient selection and clarify predictors of response US PMA submission in H2 European national reimbursement discussions ongoing in France and Germany 27

28 Varithena Progress in the US reimbursed market Seeing signs of improvement in physician usage Physicians completing patient evaluations Accounts reordering Sep-14 Mar-15 Sep-15 Mar-16 Sep Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Continued improvement in payer coverage and reimbursement process CPT codes anticipated in 2018 FDA approved extension of post-activation shelf life to thirty days from seven Progressing venous leg ulcer strategy 28

29 Specialty Pharmaceuticals & Licensing Highly cash-generative assets Specialty Pharmaceuticals Extended supplier partnership with Clinigen Increasing CroFab brand equity through SnakeBite911 app CMS approve a New Technology Add-on Payment (NTAP) for Vistogard Licensing No generic Zytiga in the US anticipated before October 2018 Lemtrada royalties expire in September 2017 Cash flows supporting investment in core IM growth areas 29

30 BTG: a differentiated growth opportunity Interventional Medicine is Oncology a growing area of healthcare BTG is now a leader in Interventional Medicine therapies High growth business Increasing demand for minimally invasive therapies Ongoing advances in imaging and device technology High unmet need (e.g. cancer, COPD, vascular disease) Growing opportunity set (physician interest, VC investment) Diverse portfolio of leading technologies Commercial infrastructure focused on specialist physicians Capability, experience and culture Leading positions in IO and selected areas of IM 51% revenue CAGR in Interventional Medicine since 2012 Strong financial underpin Proven and successful acquisition and integration strategy Strategy for sustained value creation Continue to deliver double-digit revenue CAGR Reinvest to maximise portfolio value Accelerating investments in innovation, development and M&A 30

31 Q&A 31

32 Appendix 32

33 Reconciliation between IFRS and Adjusted consolidated income statement For the period ended 30 September 2016 For the period ended 30 September 2016 IFRS Total Release of the fair value uplift on acquired inventory and PPE 1 Amortisation of acquired intangible assets 2 Acquisition costs 3 Fair value adjustments to contingent consideration liabilities 4 Litigation and other 5 Adjusted Total m m m m m m m Revenue Cost of sales (88.7) (88.0) Gross profit Selling, general and administrative (82.4) (110.4) expenses Research and development (37.8) (37.8) Other operating income Amortisation of acquired intangible assets (19.9) Acquisition and reorganisation costs (1.1) - Operating profit Financial income Financial expense (18.1) (17.8) Profit before tax Tax credit 1.8 (0.3) (6.4) - - (2.8) (7.7) Profit after tax Weighted average number of shares - basic Weighted average number of shares - diluted Basic earnings per share Diluted earnings per share p 0.1p 3.5p 0.2p 0.1p 6.6p 13.9p 3.3p 0.1p 3.5p 0.2p 0.1p 6.5p 13.7p 1. The release of the fair value uplift relating to inventory and PP&E acquired with Galil Medical in June 2016 of 0.7m. 2. Amortisation charges relating to intangible assets acquired through corporate acquisitions of 19.9m. Cash flows supporting 3. Acquisitions costs are directly attributable investment costs related to the acquisition in of Galil core Medical in June IM 2016, including growth costs incurred with areas professional advisers in relation to the corporate acquisition of 1.1m. 4. Fair value adjustments to contingent consideration includes the change in fair value of contingent consideration liabilities relating to the PneumRx acquisition of 0.3m. 5. Settlement with the US government in relation to the Department of Justice s investigation of the historic marketing of LC Bead of 28.0m. 33

34 Reconciliation between IFRS and Adjusted consolidated income statement For the period ended 30 September 2015 For the period ended 30 September 2015 IFRS Total Release of the fair value uplift Amortisation of acquired Fair value adjustments Adjusted Total on acquired inventory 1 intangible assets 2 on contingent consideration 3 m m m m m Revenue Cost of sales (70.3) (68.8) Gross profit Selling, general and administrative expenses (64.9) (64.9) Research and development (33.6) (33.6) Other operating income Amortisation of acquired intangible assets (17.2) Operating profit Financial income (12.7) 1.8 Financial expense (5.8) (0.6) Profit before tax (7.5) 64.1 Tax charge (1.6) (0.6) (5.5) - (7.7) Profit after tax (7.5) 56.4 Weighted average number of shares - basic Weighted average number of shares - diluted Basic earnings per share 13.4p 0.2p 3.1p (2.0)p 14.7p Diluted earnings per share 13.2p 0.2p 3.0p (1.9)p 14.5p 1. The release of the fair value uplift relating to inventory acquired with PneumRx in January 2015 of 1.5m. Cash flows supporting investment in core IM growth areas 2. Amortisation charges relating to intangible assets acquired through corporate acquisitions of 17.2m. 3. Fair value adjustments to contingent consideration; includes the change in fair value of contingent consideration liabilities relating to the PneumRx acquisition (credit of 12.7m) and EKOS acquisition (charge of 5.2m). 34