HSCI: the first Russian public biotech company

Transcription

1 HSCI: the first Russian public biotech company (expanding into new geographic markets) TEASER for Investor presentation (road-show for sale of 28.6 % of HSCI s increased share capital) June 2014

2 Disclaimer Certain statements in this presentation are forward-looking statements within the meaning of the U.S. federal securities laws and are intended to be covered by the safe harbors created thereby. Those forward-looking statements include, but are not limited to: management s assessment of the Company s future results, including revenue, net profit(loss), profit(loss) per share, dividends, investments, capital structure, margins and other operating and financial results; forecasts of the present value of future cash flows and related factors; the Company s plans, goals and tasks relating, among other things, to its products and services development; the Company s expectations with respect to improving its corporate governance practices; the Company s market position as anticipated; economic outlook and industry trends; the Company s expectations as to the sector regulation and assessment of impact of regulatory initiatives on the Company s activity; assumptions and prerequisites under the statements. Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by these forward-looking statements. These risks include the risk of changes in political, economic and social conditions in Russia as well as changes in global economic environment, the risks relating to changes in industry regulation and the Russian legislation, the risk of changes in the Company s operations and business prospects, the competition and other risks. For a more detailed discussion of these and other factors, see the Company s Annual Report and other public filings. Many of these factors are beyond the Company s ability to control or predict. Given these and other uncertainties, readers are cautioned not to place undue reliance on any of the forward-looking statements contained herein or otherwise. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements (which are made as of the date hereof) to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required under applicable laws. 2

3 About the Company Human Stem Cells Institute (HSCI) is Russia s public biotech company (ticker: ISKJ) founded in HSCI is engaged in drug discovery, R&D and marketing of innovative proprietary products and services in the field of advanced biomedical technologies, including such segments as: Gene therapy Regenerative medicine (stem cell therapy and services, tissue engineering products) Medical genetics, including reproductive genetics (Lab & clinics /genetic testing and consulting/) Bio-insurance Biopharmaceutics (within the international SуnBio project) Medical genetics HSCI Bio-insurance Drug development The Company s key products include: Gemabank a family cord blood stem cell bank, the largest in Russia and the CIS, as well as Reprobank, a reproductive cell and tissue bank Neovasculgen the-first-in-class gene-therapy drug for treatment of Peripheral Arterial Disease (PAD), including Critical Limb Ischemia (CLI) SPRS-therapy a set of personalized diagnostics and treateatment procedures based on the innovative cell technology which entails the use of autologous dermal fibroblasts to repair skin damage due to aging and other structural changes Genetico medical genetics centers that provide genetic diagnostics and consulting services 3

4 HSCI Group Projects (as of June 2014)

5 10 Years History: Achievements (IPO) Products on the market 1 Revenue, IFRS (RUB mln) 146 Market Cap (RUB mln) ,440 HSCI is a multifaceted biotech company having a diversified revenue and targeting on business expansion, entering new geographic markets and increasing shareholder value Mono-brand (Gemabank, projects in the field of cell technologies) IPO Change of status, competencies development, PR + IR Multi-brand International status 5

6 Key Financials (Under IFRS) HSCI has a high-growth business: annual revenue growth averaged 35% in Business model is diversified as the company has several business lines that generate revenue Business is financially stable. Net debt / OIBDA was 0.47 (as of Dec. 31, 2013) Revenue Dynamics in RUB mln CAGR = 35% Revenue breakdown (under IFRS) In RUB million % 9% % % Revenue Operating expenses, incl Depreciation & amortization 22.5 OIBDA Operating profit Net profit Total comprehensive income % Gemabank 80% New products & services (Neovasculgen, Genetic testing & consulting, SPRS-therapy) Other revenue 50% OIBDA margin, % 15.5% Operating margin, % 10.2% Net profit margin, % 4.0% Net debt Net debt / OIBDA

7 Business model Gemabank business that has been generating revenue in Russia for over 10 years HSCI Strategy: innovative products and creation продукты of new markets -- > having gained a majority share, grow with the market R&D (product candidates pipeline) IP Creation Medical genetics consulting Sale of licenses New products in the Russian market, business diversification Scaling the Business (bringing existing products and services to new geographic markets) 7

8 International Markets Entry Taking advantage of the company s strengths, expertise, and competencies for scaling the business into new geographic markets Growing cash flow from products and services launched in Russia Experienced team of professionals Medical and scientific competencies Experience of developing innovative products and services, obtaining regulatory approvals, and launching such products and services in the markets IP-protection Scaling into new geographic markets Strong proprietary R&D base Established sales channels Focus on high growth market segments Financial investments in foreign companies of the sector Starting from 2014: Neovasculgen : development, FDA clearance, and launch in the USA and China Investments: Pre-clinical and clinical trials (Phase I, II in the USA (~ 3 years) $ 20 mln Development of services in the field of regenerative medicine and medical genetics in Europe Road show -> private placement/spo of 28.6% of increased share capital (additional issue of 30 mln shares) 8

9 Some Parameters of the Investment Program Main goal scaling the business into new geographic markets Amount (in RUB mln) TOTAL up to 600 up to 2,700 Investment objective development of HSCI s products and services outside of Russia: Pre-clinical studies and clinical trials of Neovasculgen gene therapy drug in the USA Pre-clinical studies and clinical trials of Neovasculgen gene therapy drug in China Purchase of stakes in European regenerative medicine companies (cord blood banks, etc.) Launch of genetic diagnostic services in Europe Launch of cell-based services in Europe In addition: Genetico project (jointly with RVC BioFund) development of a chain of Genetico medical centers to provide a range of personalized genetic diagnostic and consulting services with the aim of early identification, prediction and prophylactic treatment of genetic disorders 9

10 HSCI: Investment Case Proven business model. Sales history from Focused business model of personalized medicine of the future knowledge about genetics for diagnosing, preventing and treating diseases, regenerative medicine, and bio-insurance. Innovative products and services help the Company to create new markets to capitalize on growth opportunities which they present while gaining market lidership. Business transparency IFRS financial statements audited by Ernst & Young. Investment history and investor relations experience. The Company s shares have been publicly traded on the MICEX since 2009 (ticker ISKJ). Professional management team capable of managing business in a period of high growth. Scaling the business into international markets should create a platform for sustainable growth in the long term. Global markets have high-growth rates averaging 25% - 30% and more: Global gene therapy market with Neovasculgen taken into account over US$ 2 billion by 2025; Global regenerative medicine market is forecast to grow from US$ 1 billion in 2011 up to US$ 5 billion by 2017; Global market of stem cell therapeutics may grow from US$ 855 million in 2015 up to US$ 9 billion by According to the Company estimations, HSCI s shares may trade with an 180% upside. (current price per HSCI s ordinary share on the MICEX is RUB 15 as of ; target price is RUB in years). Investor exit strategy may include RTO (reverse takeover) and / or listing on a stock exchange outside of Russia in years (e.g. in the US). 10

11 HSCI: Investment Profile IPO (December 2009) HSCI OJSC placed 15 million ordinary shares (20% of the increased shart capital) Offering price RUB 9.5 per share Amount raised RUB million (USD 4.8 billion) Over 300 new shareholders at the IPO Traded on MICEX (ticker: ISKJ) iim (Innovation & Investment Market) Today MICEX is part of the Moscow Exchange (MOEX) 4.01% Ownership structure as of May 6, 2014 (the record day for the AGM) 16.80% 19.92% Artur Isaev, HSCI's CEO 24.00% 3.12% 32.15% HSCI's BoD members and employees First International Investment Group Ltd. Dynamic Solutions Ltd.* NextGene LLC** Other (mostly Russian individual shareholders) Recent stock price : RUB 15.00; MCap RUB 1,1 bln (USD 32,7 mln) 52 WK HI/LO: RUB / Free float 20% ORD (of the 75 million ord shares outstanding) Number of shareholders As of May 6, 2014: 1,101 * Change in HSCI's shareholding structure as of December 27, see: Press-release (January 14,2014) ** Treasury shares of HSCI, which occurred due to the mandatory buy-back in 2011 (4.67% of HSCI s share capital), were realized during the year 2012 as required by law, with the part of them (in the amount of 4.01% of HSCI s share capital) having been brought to the charter capital of HSCI s 100% subsidiary NextGen LLC as an additional contribution. For more information, please refer to: HSCI vs MICEX Index: Dividend policy As recommended by the BoD 2009: 32% of net profit under RAS for 2009; : no dividend payments; 2013: pay 98% of net profit under RAS for 2013 (AGM to decide on June 17, 2014) 11

12 Contacts Mailing address: P.O. box 373, Bld. 2, 3 Gubkina Str., Moscow , Russia Legal Address: 18/1 Olimpiysky prospect, Moscow , Russia Phone/(Fax): +7(495) Chief Executive Officer: Artur Isaev Tel.: +7(495) art.isaev@gmail.com Investor Relations Director: Svetlana Samoylova Tel.: +7(495) , ext (963) ssamoylova@hsci.ru Website: Social networks: Twitter Facebook YouTube LinkedIn Analyst: Dmitry Krasotkin Mob.: +7(916) , krasotkin@nextgene.ru 12