TIDMYGEN
RNS Number : 2383O
Yourgene Health PLC
08 February 2021
Yourgene Health plc
("Yourgene" or the "Group" or the "Company")
Trading update
Strong H2 momentum expected to deliver double-digit annual
growth but below expectations
Deferred revenue opportunities, investment in offering and
further new initiatives expected to drive resumption of stronger
subsequent growth
Manchester, UK - 8 February 2021: Yourgene (AIM: YGEN), the
international molecular diagnostics group, provides an update on
current trading for the second half of the financial year to 31
March 2021 ("H2").
Whilst the stronger trading patterns being observed in H2
compared to the first 6 months of the financial year ("H1") mean
that double-digit revenue growth is expected for the full year, the
ongoing impact of COVID-19 on ordering patterns in UK and
international commerce is expected to result in full year revenue
being below consensus market estimates.
A number of factors associated with the pandemic have continued
to impact customer activity levels and created considerable
variability in the timing of revenues, such that full year revenues
are now expected to be in the range of GBP18-20m, lower than
previous guidance but representing solid year-on-year growth of the
order of 10-20%.
This growth has been driven by the Group's European-focused
product lines in testing for Cystic Fibrosis, prenatal aneuploidies
and DPD deficiency which are performing strongly, along with
European sales of NIPT. However, this has not been enough to offset
the ongoing impact of significant pandemic-related headwinds on
international markets for non-invasive prenatal testing (NIPT)
outside Europe, as reported in our half-year results on 17 December
2020.
The more recently introduced restrictions on domestic and
international travel have had an impact on the Company's ability to
convert new accounts, grow new product sales and commence new
initiatives, which would otherwise have been expected to benefit
full year revenue and offset headwinds elsewhere. In particular,
the activities impacted and the revenue previously expected to be
realised in H2 include:
-- COVID-19 testing revenues of c. GBP4m, including those
through the UK's Fit to Fly and Test to Release schemes along with
reduced workplace and hospitality testing, as a direct result of
the recent lockdown and travel restrictions;
-- Approximately GBP1m from pending reproductive health
contracts with US partners, further delayed as a result of
customers' attention being diverted to pandemic response as well as
travel restrictions impacting the Company's ability to complete
negotiations and installations within the originally anticipated
timescales; and
-- Oncology research testing of c. GBP0.5m from our partners in
Taipei due to the recent suspension of existing purchase orders for
a key client's research programmes, as their focus switched to
pandemic-related initiatives at present.
Notwithstanding these deferred revenue sources, the Group has
worked hard to develop a market leading range of highly innovative
products backed by many strategic partnerships that will underpin
the creation of longer-term value through delivering a targeted
roadmap of products and services. A number of positive developments
in H2 are not only expected to contribute further to overall
double-digit growth for the current year but will also provide
momentum into the next financial year to 31 March 2022. Revenues
for next year are now expected to be in excess of GBP25m, with
considerable upside potential depending on the timing and phasing
of relaxations to COVID-19 restrictions and the resumption of more
accelerated growth. The foundations of this baseline revenue
expectation include:
-- Material COVID-19 related revenues with a strong network of
channel partners primed for the reopening of the UK economy and
international travel markets. We have expanded testing capacity in
our Manchester facility to 20,000 tests per month but are currently
only operating at c. 25%, approximately half of the volume seen in
December. Our testing partners using our Clarigene(R) Sars-CoV-2
assay in the UK Government's Test to Release international travel
programme are experiencing similar volume reductions, but have
retained their infrastructure for the anticipated reopening of
international mobility;
-- Addition of new routes to market such as partnerships to
support COVID-19 testing with sizeable travel hubs to give broader
geographic coverage;
-- The US reproductive health contracts, negotiation of which is
expected to conclude in the first half of calendar 2021;
-- Anticipated growth in UK NIPT testing volumes as a result of
the imminent and long-awaited launch of NHS reimbursed testing for
high-risk pregnancies, for which the Company's long-term partner St
George's NHS Trust has been appointed as one of three national hubs
for England; and
-- Continued penetration of the Company's DPYD chemotoxicity
test into clinical pathways around the world.
Recent investments in the Group's UK-based Genomic Services
offering and adaptation to constrained international mobility
through the recruitment of in-territory commercial and support
teams in North America, mainland Europe and South East Asia,
coupled with the lower than expected revenue growth, mean that
significant profitability improvements expected in the current
financial year are now expected to be realised in the next
financial year. Guidance on COVID-19 testing related revenues, by
contrast, had been forecast to the end of March 2021 only, whereas
these are now expected to make a significant contribution to the
next financial year.
The Group sees an increasing range of growth opportunities in
the next financial year, particularly in US markets where continued
investment is being made into Yourgene's capabilities, including
the recent recruitment of a highly experienced Sales VP to
crystallise this growth opportunity. A number of our US pipeline
customers for reproductive health are in the late stages of
validation, with contracts expected to be concluded over the first
half of calendar 2021, triggering recurring reagent and software
sales. The Company also expects to soon conclude licensing and
supply agreements utilising Coastal Genomics technologies acquired
in August 2020, which would further contribute to the expected
growth for the next financial year.
Commenting, Lyn Rees, CEO of Yourgene, said : "Whilst achieving
double-digit growth during this pandemic is welcome, it is still a
disappointment to report delivery below our original expectations
which we had revised upward at the time of our AGM in September
2020, in response to the short-lived reopening of UK and
international markets.
"Our COVID-19 and core business streams have proved more
sensitive than expected to the severe mobility restrictions imposed
globally since Christmas, particularly in response to the new virus
strains. However, we have continued to expand our capabilities and,
along with our partners, we expect to capitalise on a number of
upcoming opportunities as and when these restrictions are
lifted.
"In our core business, the anticipated US contracts which are
currently in advanced stages of negotiation, our strengthened
commercial footprint in the US and Europe, and our pipeline of
growth opportunities have not been lost, but deferred into the next
financial year. Yourgene remains well positioned to benefit as
domestic and international travel markets re-open, which will
enable us to drive our core business and continue to broaden our
geographic reach. Our prospects beyond the current financial year
remain very exciting and, whilst cognisant of short-term delays and
the challenges of forecasting revenue timing due to the pandemic,
the Board remains highly confident about the longer-term future of
the Company."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014. The Directors of the
Company take responsibility for this announcement.
Yourgene Health plc Tel: +44 (0)161 669 8122
Lyn Rees, Chief Executive Officer investors@yourgene-health.com
Barry Hextall, Chief Financial Officer
Joanne Cross, Director of Marketing
Cairn Financial Advisers LLP (NOMAD) Tel: +44 (0)20 7213 0880
Liam Murray / James Caithie / Ludovico
Lazzaretti
N+1 Singer (Joint Corporate Broker) Tel: +44 (0)20 7496 3000
Aubrey Powell / Tom Salvesen / George
Tzimas
Stifel Nicolaus Europe Limited (Joint Tel: +44 (0)20 7710 7600
Corporate Broker)
Nicholas Moore / Matthew Blawat / Ben
Maddison
Walbrook PR Ltd (Media and Investor Tel: +44 (0)20 7933 8780 or yourgene@walbrookpr.com
Relations)
Paul McManus / Lianne Cawthorne Mob: 07980 541 893 / Mob: 07584
391 303
About Yourgene Health
Yourgene Health is an international molecular diagnostics group
which develops and commercialises genetic products and services.
The group works in partnership with global leaders in DNA
technology to advance diagnostic science.
Yourgene primarily develops, manufactures, and commercialises
simple and accurate molecular diagnostic solutions, for
reproductive health, precision medicine and now infectious
diseases. The Group's flagship products include non-invasive
prenatal tests (NIPT) for Down's Syndrome and other genetic
disorders, Cystic Fibrosis screening tests, invasive rapid
aneuploidy tests, and a recent extension into the oncology space
with DPYD genotyping.
The launch of Yourgene Genomic Services has enabled Yourgene to
offer a global laboratory service network equipped to be a full
life-cycle partner for clinical, research and pharmaceutical
organisations to support partners at the preclinical, clinical, and
post-market stages to develop, manufacture, obtain regulatory
approval and commercialise new products and services. In addition,
Yourgene Genomic Services offers an NIPT and high throughput COVID
testing service.
In August 2020, Yourgene acquired Coastal Genomics, Inc., a
sample preparation technology company based in Vancouver, Canada,
enabling the Company to extend its offering and IP portfolio in the
DNA sample preparation sector. The acquisition increased Yourgene's
geographical penetration into the US and Canada, supplementing
existing coverage in the UK, Europe, MEA and Asia.
Yourgene Health is headquartered in Manchester, UK with offices
in Taipei, Singapore, the US and Canada, and is listed on the
London Stock Exchange's AIM market under the ticker "YGEN". For
more information visit www.yourgene-health.com and follow us on
twitter @Yourgene_Health.
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