Investor Presentation. January 2019

Transcription

1 Investor Presentation January 2019

2 Forward-Looking Statements & Non-GAAP Financial Measures Statements in this presentation regarding the future financial and operating results, outlook, growth, prospects, business strategies, future market position, future operating environment and goals of Cambrex Corporation (the Company ), including statements of expectation with respect to the acquisition of Halo Pharma ( Halo ) and Avista Pharma Solutions ( Avista ) and expected benefits therefrom, consolidated or product category sales, EBITDA or Adjusted EBITDA, depreciation and amortization, capital expenditures, and the type of acquisitions, divestitures, collaborations, or other expansion opportunities the Company may consider, as well as any other statements that are not related to present facts or current conditions or that are not purely historical, constitute forward-looking statements. These forward-looking statements are based on the Company's historical performance and its plans, estimates and expectations as of the date of this presentation. The words anticipates, estimates, believes, expects, may, plans, will and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking statements are not guarantees that the future results, plans, intentions or expectations expressed or implied by the Company will be achieved. Matters subject to forward-looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different than those expressed or implied by forward-looking statements. Important factors that could cause or contribute to such differences include: customer and product concentration, the Company s ability to renew to win new customer contracts and renew existing contracts on favorable terms, pharmaceutical outsourcing trends, competitive pricing or product developments, government legislation and regulations (particularly environmental issues), the possibility that the benefits from the acquisition of Halo or Avista may not be as anticipated, tax rates, interest rates, technology, manufacturing and legal issues, including the outcome of outstanding litigation, changes in foreign exchange rates, uncollectible receivables, the timing of orders, loss on disposition of assets, cancellation or delays in renewal of contracts, lack of suitable raw materials or packaging materials, the Company s ability to receive regulatory approvals for its products and continued demand in the U.S. for late stage clinical products or the successful outcome of the Company s investment in new products; and the other factors set forth in Part I, Item 1A. Risk Factors in the Company's most recent Annual Report on Form 10-K, as may be amended or updated in the Company's Quarterly Reports on Form 10-Q or subsequent filings with the SEC. Except as required by law, the Company specifically disclaims any obligation to update any forward-looking statements as a result of developments occurring after date of this presentation, even if its estimates change, and statements contained herein are not to be relied upon as representing the Company's views as of any date subsequent to the date of this presentation. EBITDA and Adjusted EBITDA are non-gaap financial measures. The Company defines EBITDA as operating profit plus depreciation and amortization expense and Adjusted EBITDA excludes the impact of any potential acquisitions and restructuring activities. These financial non-gaap measures also exclude the adoption of ASC 606. The reconciliation to the most directly comparable GAAP financial measure can be found in a table at the end of this presentation Cambrex Corporation. All rights reserved. 2

3 Investor Highlights Cambrex focused solely on APIs Compete in Innovator, Generic, and Controlled Substances product categories Over ~120 APIs and intermediates sold annually to leading pharmaceutical companies 5 Year revenue CAGR of 14% through net revenue grew 9% to $534.5 million and Adjusted EBITDA grew 13% to $174.6 million 2018 guidance of -1% to -3% ex-fx net revenue growth and EBITDA of $153 - $159M (excludes Halo acquisition) Recently entered finished dosage form (FDF) and early stage development & testing segments Acquired Halo Pharma Sep 2018, a leading finished dosage form custom development and manufacturing organization Acquired Avista Pharma Solutions Jan 2019, an early stage development, manufacturing and analytical and microbiology testing organization 12 operating sites within US and EU Flexibility ranging from early stage clinical supply and testing to large-scale commercial manufacturing for API and FDF World-class quality systems and excellent regulatory record (FDA, EMA, DEA) API (Drug Substance) Charles City (IA), USA Karlskoga, Sweden Paullo, Italy Tallinn, Estonia Wiesbaden, Germany FDF (Drug Product) Mirabel (Québec), Canada Whippany (NJ), USA Early Stage Development & Testing High Point (NC), USA Agawam (MA), USA Longmont (CO) USA Durham (NC), USA Edinburgh, UK 2019 Cambrex Corporation. All rights reserved. 3

4 Revenue Mix 2017 (100% API) Revenue grew at 14% CAGR and Adjusted EBITDA grew at 25% CAGR between 2012 and guidance for currency adjusted sales growth of -1 to -3% and Adjusted EBITDA of $153-$159 million Cambrex API Revenue by Product Category Generics 20% of 2017 Revenue Serving ~$9-13B market 2018 Guidance*: ~Flat Innovator 66% of 2017 Revenue Serving ~$16-22B market 2018 Guidance: Down low single digits % 2018 Guidance excluding largest product, up mid single digits % Controlled Substances 14% of 2017 Revenue Serving ~$ M market 2018 Guidance: Up high single digit % 2019 Cambrex Corporation. All rights reserved. 4

5 Overview of Recent Transactions Halo: $425 million total cash consideration Consideration Avista: $252 million total cash consideration Funded with balance sheet cash and borrowings on newly refinanced five year $800 million credit facility ($600 million revolver, $200 million term loan) Pro forma full year 2018 revenue for newly acquired companies expected to be between $160 and $170 million * Financial Impact Expected to be accretive to adjusted EPS in 2019 Pro forma total net leverage at closing of ~2.4x 2018 Adjusted EBITDA 2019 guidance to be provided when Q consolidated results are reported in February 2019 * 2018 revenue per ASC Cambrex Corporation. All rights reserved. 5

6 Halo Pharma Overview Leading dosage form custom development and manufacturing organization (CDMO) providing Product Development (PD) and Commercial Manufacturing services to the innovator and generic pharmaceutical markets Broad dosage form manufacturing capabilities Oral solids, liquids and sterile ointments and gels Specialty offerings include modified release, pediatric dosage forms and oral dissolving tablets, among others Key Stats 400+ approved SKUs Focus on complex dosage forms Differentiated drug delivery, controlled substance and complex formulation competencies Integrated product development and manufacturing Product development business feeds clinical and long-cycle commercial manufacturing Diversified customer base with sticky products Includes large, specialty and generic pharma customers Sole source supplier for > 80% of commercial customers Efficient, 2 facility North American manufacturing network Whippany, NJ (167,000ft 2 ) and Mirabel, Québec (234,000ft 2 ) Strong regulatory history and capacity to fuel expansion 100+ active PD projects 70+ active customers 2 state of the art facilities ~450 employees 2018 Cambrex Corporation. All rights reserved. 6

7 Halo Strategic Rationale Expands addressable market and creates new avenue for growth Extends capabilities through addition of finished dose development and manufacturing, allowing Cambrex to offer integrated API/FDF services to customers Complements Cambrex s existing participation in all three API product categories: Innovator, Generic and Controlled Substances Diversifies business, expands customer base, broadens molecule funnel, and facilitates cross selling between Cambrex s and Halo s customer bases Adds efficient North American network with ample capacity Accretive transaction with attractive growth synergy potential 2019 Cambrex Corporation. All rights reserved. 7

8 Avista Pharma Solutions Overview Contract development, manufacturing and testing organization that offers a broad suite of services ranging from early stage API and drug product development and cgmp manufacturing to stand-alone analytical and microbiology testing support Offers a full suite of comprehensive small molecule services Process chemistry, formulation development, API & drug product manufacturing Analytical development and testing, stability storage and testing Solid state chemistry Center of excellence and leading provider of solid state science and crystallization development services Microbiology and cleanroom services Microbial testing including sterility, endotoxin and bioburden Cleanroom services ranging from environmental monitoring to certification Integrated facilities serving all stages of clinical pipeline 4 modern facilities located in Durham, NC, Agawam, MA, Longmont, CO (US) and Edinburgh, Scotland (UK) Strong FDA and EU regulatory inspection history Industry leader in animal health CDMO services Leader in animal health screening and development with a comprehensive parasitology platform and expertise Key Stats >200,000 ft 2 of facility space 200+ small molecules worked on so far in active customers 4 regulatory inspected facilities ~330 employees 2019 Cambrex Corporation. All rights reserved. 8

9 Avista Strategic Rationale Cambrex now participates in the early stage development market for small molecule drug substance and drug product markets Performs early stage services for a large number of projects each year, some of which will advance and eventually require Cambrex s larger scale API and finished dosage form assets Rapidly growing customer base, creating a large and expanding pool of customers to cross-sell a broader set of services Modern facilities with an excellent regulatory track record and inspection history that reinforces Cambrex s existing footprint in the US and Europe Affords access to new, state-of-the-art technologies such as solid state chemistry and standalone analytical testing, expanding Cambrex s small molecule capabilities Adds microbiology testing and cleanroom services and provides Cambrex entry into the niche animal health discovery and development market through its proprietary screen platform Strong organic growth in a large and growing market and expected to be accretive to 2019 adjusted EPS 2019 Cambrex Corporation. All rights reserved. 9

10 Revenue Mix Pro Forma 2018 Entering 2019, Cambrex is now an integrated end-to-end provider with a large funnel of clinical stage projects, hundreds of customers and a very broad set of capabilities covering nearly all aspects of the development of a small molecule, from pre-clinical through commercial Cambrex Revenue by Segment Snapshot Finished Dosage Form 14-16% of 2018 forecasted revenue Serving ~$15-20B market API 72-74% of 2018 forecasted revenue Serving ~$25-35B market Early Stage Development & Testing 11-13% of 2018 forecasted revenue Serving ~$8-12B market 1. See Appendix 2019 Cambrex Corporation. All rights reserved. 10

11 New Cambrex stronger pipeline, broader capabilities & new growth platforms Preclinical Development File IND Drug Development Clinical Phase I Clinical Phase II Clinical Phase III File NDA Commercialization Launch Phase IV Generics Drug Substance Clinical Stage (High Point, NC) Late Stage (Charles City, IA) Late Stage (Karlskoga, Sweden) Generic (Milan, Italy) Drug Product Clinical to Commercial (Whippany, NJ) Clinical to Commercial (Mirabel, Québec, Canada) Formerly Drug substance (NC, CO) Early Stage Development Analytical Testing, Solid State (NC, CO, MA, UK) Microbiology, Cleanroom Services, Animal Health Drug product (CO) 2019 Cambrex Corporation. All rights reserved. 11

12 Now have ability to offer integrated services across API and FDF for all phases of development and manufacturing Early Stage Testing & Development Services Active Pharmaceutical Ingredients (API) Finished Dosage Form High Throughput Screening In Vitro Pharmacology Pre- Formulation Chemistry Computational Chemistry Analytical Services Process Development Microbiology Translational Pharmacology Formulation Scale Up Development Small Molecules Small Molecules High Potent Peptides ADC Toxin Controlled Substance Pre-filled Syringes / Autoinjectors Oligonucleotides Vaccines Cell Therapy Recombinant Proteins Recombinant Peptides Gene / Viral Therapy Monoclonal Antibodies Natural Products Natural Proteins Tablets Capsules Suppositories Beads / Powders Liquids Gels / Creams / Ointments Oral Thin Films / Patches Gums / Lozenges Sprays / Inhalers Sterile Vials Small Molecules Large Molecules Packaging Areas in which Cambrex participates today Areas in which Avista participates today Areas in which Halo participates today 2019 Cambrex Corporation. All rights reserved. 12

13 Acquisitions Further Strengthen Dominance of the Small Molecule CDMO Market [1] Source: Cambrex estimates, Wall Street equity research, PharmSource [2] Source: Cambrex estimates, PharmSource Early Stage Development & Testing [3] Total Market Size $27-30B CDMO CDMO Market Size $8-12B Annual Growth 7-10% 40-45% Outsourced [3] Source: Cambrex estimates, Wall Street equity research 2019 Cambrex Corporation. All rights reserved. 13

14 Favorable Market Dynamics Drive Cambrex Growth Robust funding environment fueling preclinical pipeline Increasing outsourcing Large, fragmented, growing, outsourcing market for small molecules Annual VC Investment / $Bn Growing number of small molecules in clinical phases Small Molecule Pipeline (Phase I, II, III) 1,949 2,064 2,208 1,579 1,630 1,761 Small Molecule Outsourcing Big Pharma plant closures Move from fixed to variabilized costs Access to CMO technologies Strong approval rates of small molecules 42 approved in 2018, most since Increased global use of generics pushing up API demand Limited CMOs with capabilities, capacity and scale Preference for high quality Westernbased assets 2019 Cambrex Corporation. All rights reserved. 14

15 Big Growth in the Small Molecule Pipeline Small molecules are big again Constitute approximately 55-60% of all drugs under development in pharmaceutical pipelines Large and increasing number of small molecules in development: ~5,600 at the end of 2018 (up 3.4% from 2017) ~2,200 in Phase I-III clinical development (up 7.0% from 2017) NCE Small Molecules Under Development ( ) Phase Yr CAGR Preclinical 2,461 2,334 2,743 3,100 3,323 3, % Phase I % Phase II % Phase III % Pre-Reg % Registration % Pipeline Total 4,093 4,023 4,556 5,106 5,455 5, % NCE Small Molecules Moving Phase Per Year ( ) Small molecules rapidly advancing into later stages of development: 518 drugs moved from one stage to the next in 2018 (up 17.5% from 2017) Preclinical Phase I Phase I Phase II Phase II Phase III 2019 Cambrex Corporation. All rights reserved. 15

16 Market Trends and Growth Opportunities Market Trends Cambrex Advantage Higher demand for outsourced development and manufacturing Strong growth in clinical pipeline End-to-end supplier from early to late clinical phase and commercial manufacturing covering drug substance (API) and drug product (finished dose) Flexible, small and large-scale manufacturing and testing capacity in the US and Europe with substantial capex investment over last 5 years Worldwide generic prescription growth expected to continue as governments and payors reduce costs Preference for dependable US and European suppliers Strong growth rates for certain DEA Schedule II products DEA World-class quality and regulatory systems with excellent track record (FDA, EMA, DEA) Growing pipeline of new generic products. Increasing presence in key developing markets through local partners and direct customer relationships Established relationships and supply positions with key marketers of US controlled substances for APIs and finished dose 2019 Cambrex Corporation. All rights reserved. 16

17 Growth Strategy - Summary Win as many clinical stage projects to generate the broadest pipeline possible of commercial products for custom manufacturing, while offering integrated solutions Process and analytical chemistry and testing, development and scale-up of manufacturing processes, supply of cgmp materials for clinical trials, process validations and CMC support for NDA approvals Historically primarily targeted late-stage clinical projects to match our large scale assets and capabilities With the addition of Avista Jan 2019 and PharmaCore in 2016, now work on hundreds of early stage clinical projects per year Feeder for late-stage clinical projects Cambrex to provide seamless transfer to our large scale facilities Since 2016 acquisition of PharmaCore, transferred 4 API projects entering Phase 3 to larger assets facilities. Working on a fifth transfer now Maintain development of new generic APIs at any given time and pursue finished dosage form opportunities for complex generics Focus on niche high value, low volume API products for development and broaden geographic reach. Generic finished dosage form strategy to leverage generic relationships to provide formulation and manufacturing for complex generics 2019 Cambrex Corporation. All rights reserved. 17

18 Cambrex Highlights Leading global CDMO serving all stages of small molecule API and finished dose development and manufacturing for the innovator and generic markets Extensive and growing portfolio of products/projects from pre-clinical to commercial 5 Year revenue CAGR of 14% through Net revenue grew 9% to $534.5 million and Adjusted EBITDA grew 13% to $174.6 million guidance of -1% to -3% net revenue growth and EBITDA of $153 - $159M 2019 guidance to be issued with Q results in February 2019 Recently entered finished dose and early stage development and testing segments, transforming our capabilities and long term growth potential. In last 6 months: Acquired Halo Pharma, a leading finished dosage form custom development and manufacturing organization Acquired Avista Pharma Solutions, an early stage discovery, manufacturing and analytical and microbiology testing organization Experienced management team with a strong track record of profitable capital deployment and ample financial flexibility to make acquisitions and invest internally 2019 Cambrex Corporation. All rights reserved. 18

19 Investor Presentation January Cambrex Corporation. All rights reserved. 19