DGAP-News: Abacus Medicine A/S / Key word(s): IPO
10.05.2019 / 08:00
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Abacus Medicine is moving ahead with plans for Initial Public Offering
– Fastest-growing European pharmaceutical parallel trade company plans listing on the Prime Standard of the Frankfurt Stock Exchange
– Impressive track record of profitable organic growth with a 37% revenue CAGR (2016-2018) and very robust margin development
– Unique multi-market strategy and focus on rapidly growing medium-to-high and high-priced pharmaceutical product segments
– Additional growth potential in highly synergistic Aposave business of supply of comparator medicine for clinical trials, trade with unlicensed medicine and managed access programs
– Targeted primary gross proceeds of minimum EUR 50 million to be used for strategic growth initiatives
– Offer expected to comprise a mix of primary and secondary shares with targeted free float of approximately 45%
Copenhagen/Frankfurt, 10 May 2019 – Denmark-based Abacus Medicine A/S (“Abacus Medicine” or “the Company” and together with its fully consolidated subsidiaries, the “Group”) is preparing an Initial Public Offering (IPO) and listing of its shares on the Regulated Market (Prime Standard) of the Frankfurt Stock Exchange.
The planned offering is expected to consist of newly issued shares from a capital increase with targeted proceeds of minimum EUR 50 million and the sale of existing shares from existing shareholders. The offering is planned to be completed in the first half of 2019 and is subject to capital market conditions. The targeted free float is expected to amount to approximately 45%. The Company’s current majority shareholder with a stake of around 91.6%, Wagner Family Holding ApS, which is owned and ultimately controlled by Founder and CEO Flemming Wagner and his family, plans to retain the majority in the Company post IPO. The remainder stake of approximately 8.4% shareholding is held by a handful of company related individuals.
“Abacus Medicine is all about better access to medicine. We have a clear market strategy and strong execution rooted in data analytics and excellence in sourcing. To build further on our unique platform, we now seek to raise additional capital. We will invest in purchasing capacity, new product licences, and strengthen our global market presence in the attractive and highly synergistic Aposave business. The next step on our path to future growth is an IPO in Frankfurt,” said Flemming Wagner, Founder and CEO of Abacus Medicine.
Industry leading growth supported by favourable EU regulatory environment
Founded in 2004, Abacus Medicine is, according to own estimates, today the fastest-growing parallel trade company of original prescription pharmaceuticals in Europe. During the period from 2016 to 2018, the Company grew revenues by approximately 37% per year on average and gained significant market share across Europe. In 2018, Abacus Medicine generated revenues of EUR 332.3 million.
Abacus Medicine’s core business is parallel trade of original prescription pharmaceuticals in Europe. The parallel trade business model is based on the principle of free movement of goods in the European Union’s (EU) single market, where the same pharmaceutical product is often available at different prices in different countries. The total European parallel trade market is estimated at EUR 5.4 billion for 2017 and expected to grow to EUR 6.2 billion by 2022. Germany is the largest market for the sector and also Abacus Medicine’s biggest market, with a share of approximately 57% of the Company’s revenues generated in 2018.
Unique multi-market strategy, product focus and operational excellence
Abacus Medicine pursues a unique multi-market strategy with a focus on medium-to-high and high-priced pharmaceutical products in combination with a high volume of product licences.
The Company has differentiated itself from its competitors by selling directly into twelve European countries. Most competitors are only active in up to three sales markets. Abacus Medicine’s multi-market strategy increases flexibility in sourcing as well as selling and enables the Company to quickly adapt to and exploit fluctuations in market prices, demand and regulatory changes. This approach allows the Company to safeguard growth and profitability, while at the same time mitigating risk.
Abacus Medicine is well-positioned in the two most attractive market segments of medium-to-high and high-priced pharmaceutical products for diseases like cancer, multiple sclerosis, rheumatoid arthritis and diabetes. Sales prices in these two segments range from EUR 500 to EUR 3,000 per product package and above EUR 3,000 per product package. These segments are characterised by significantly higher growth rates than the lower-priced product segments.
Abacus Medicine’s product strategy is underpinned by the overall number of product licences obtained as well as its ability to constantly obtain regulatory approval for new licences. In total, the Company obtained 487 new licences from the European Medicines Authority (EMA) in 2018 which was significantly more than its closest peers. As of March 31, 2019, the Company held 3,618 product licences.
Abacus Medicine has developed strong data analytical capabilities and proprietary IT systems, which it regards as a clear competitive advantage in the industry. The systems allow the Company to continuously screen sourcing and selling opportunities across all markets while at the same time immediately considering dynamic changes such as price fluctuations, FX rates and logistics costs. The proprietary IT systems support Abacus Medicine’s processes across the entire value chain, from streamlining the licence application process to logistics coordination and final delivery to the customer.
Additional growth through Aposave: Global access to medicine
To further leverage its proven platform of data analytical capabilities and its extensive sourcing network, Abacus Medicine is expanding its addressable market beyond parallel trade to provide worldwide access to medicine throughout the lifecycle of pharmaceutical products. Under its wholly-owned subsidiary Aposave ApS (“Aposave”), the Company has entered the highly synergistic new business areas of supply of comparator medicine for clinical trials, trade with unlicensed medicine and managed access programs. The Aposave business has already demonstrated proof of concept by generating increasing revenues since 2016. In addition, Abacus Medicine has onboarded an experienced team of industry experts headed by a managing director with vast industry experience who joined Aposave in November 2018.
The number of clinical trials for developing new pharmaceutical products is growing, leading to an increased demand for comparator medicine to test new therapies against existing products. The total addressable market for clinical trials services is estimated at USD 4-5 billion.
Trade with unlicensed medicines comprises the supply of newly-registered US and EU origin pharmaceutical products to hospitals, pharmacies and medical professionals in countries, where these medicines are either not yet licenced or in short supply. Trade with unlicensed medicine including managed access programs is estimated to represent a total addressable market of USD 5-10 billion.
Impressive revenue growth and robust profitability
Over the past years, Abacus Medicine has shown strong financial performance, characterised by very robust margins and strong top-line growth. During the period from 2016 to 2018, revenues have grown by approximately 37% per year on average. In 2018, the Company generated revenues of EUR 332.3 million with an adjusted EBITDA (excluding exceptional items and DayDose activities) of EUR 15.3 million in 2018.
Abacus Medicine generally seeks to maintain a stable margin in its parallel trading business and its efforts have resulted in a stable EBITDA margin of approximately 4.0% for the fiscal years ended 2016-2018 and an adjusted EBITDA margin (excluding exceptional items and DayDose activities) of approximately 4.5%, 4.4%, and 4.6%, for the fiscal years 2016, 2017, and 2018, respectively, demonstrating the Group’s consistent efforts to promote high, organic growth, while operating profitably in the parallel trading industry.
In the first three months of 2019, Abacus Medicine continued its steep growth trajectory. Revenues grew by 26% to EUR 90.4 million and adjusted EBITDA increased to EUR 3.1 million in the same period. Accordingly, adjusted EBITDA margin amounted to 3.4% in the first three months of 2019.
Full year results are audited unless stated otherwise. Quarterly results are reviewed. Number of licences are unaudited and unreviewed.
For the 2019 fiscal year, Abacus Medicine expects revenue growth compared to fiscal year 2018 to be in the range of 20% to 35%, which corresponds to revenues between EUR 400 and EUR 445 million. The Company furthermore expects EBITDA adjusted for IPO-related costs in the range of 4.1% to 4.6% of revenue. The highly attractive opportunities in adjacent markets, namely the supply of comparator medicines for clinical trials and supply with medicine to treat patients in countries where the specific pharmaceutical products have not been licensed or are in short supply, is expected to provide further margin upside potential in the mid-term.
Recent strategic growth initiatives and corporate developments
In January 2019, Abacus Medicine successfully implemented a new enterprise resource planning (“ERP”) system and invested considerable resources in ensuring compliance with the EU’s Falsified Medicines Directive (FMD), which came into effect in February 2019. Following the successful implementation of the ERP system and the FMD introduction, the inventory safety cushion, which was built up at the end of 2018, has been reduced.
Abacus Medicine opened a second repackaging and warehouse site in the Netherlands which is now fully operational. The new site aims at a production capacity of approximately 10-15% of the total annual production and will also be used as warehouse for Aposave.
Significant investments were also made in the three complementary business areas related to parallel trading, namely clinical trials services, unlicensed medicine and managed access programs. In November 2018, a managing director with extensive industry experience was recruited to lead the Aposave business through the next phase of expansion. In early 2019, the Aposave team has been further expanded by the recruitment of additional senior industry experts that add knowledge, experience and a strong network of relevant contacts across these services areas.
Planned IPO as next step in continuing the Abacus Medicine growth story
In connection with the IPO, the Company is currently anticipating a primary offer size of minimum EUR 50 million and the sale of ordinary shares by existing shareholders, the amount of which is yet to be decided. Further ordinary shares will be made available by the major shareholder pursuant to a customary greenshoe option. The targeted free float is planned to be approximately 45% post IPO.
The proceeds will allow Abacus Medicine to invest in gaining further market share across Europe, primarily by expanding its purchasing capacity, further increasing its licence portfolio, increasing order completion ratios and solvency ratios, strengthening its market presence in the attractive and highly synergistic Aposave business of supply of comparator medicine for clinical trials, trade with unlicensed medicines and managed access programs, further developing its manufacturing facilities in Hungary and the Netherlands, investing in growth and operational excellence, and for general corporate purposes.
Berenberg has been appointed as Sole Global Coordinator and Sole Bookrunner of the offering.
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This publication does not constitute an offer to sell nor a solicitation of an offer to buy or subscribe for any securities. No offer of securities of ABACUS MEDICINE A/S is being, or will be, made to the public outside Germany. A prospective offer in Germany would be made exclusively by means of a securities prospectus to be published and filed with the Danish Financial Supervisory Authority (Finanstilsynet). Such securities prospectus would at the appropriate time be made available free of charge at a place to be announced.
The material set forth herein is for informational purposes only and does not constitute an offer of securities for sale or a solicitation of an offer to purchase securities in the United States, Canada, Australia, Japan or any other jurisdictions in which such offer could be subject to legal restrictions. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the Securities Act), or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in accordance with any applicable securities laws of any state or other jurisdiction of the United States. No public offering of securities will be made outside Germany.
In the United Kingdom, this document is only being distributed to and is only directed at persons who (i) are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the Order) or (ii) are persons falling within Article 49(2)(a) to (d) of the Order (high net worth companies, unincorporated associations, etc.) (all such persons together being referred to as Relevant Persons). This document is directed only at Relevant Persons and must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this document relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.
“Statements contained herein may constitute “forward-looking statements.” Forward-looking statements are generally identifiable by the use of the words “may”, “will”, “should”, “plan”, “expect”, “anticipate”, “estimate,” “believe”, “intend”, “project”, “goal” or “target” or the negative of these words or other variations on these words or comparable terminology.
Forward-looking statements are based on current expectations and involve a number of known and unknown risks, uncertainties and other factors that could cause the Group’s or its industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. You should not place undue reliance on forward-looking statements and the Group does not undertake publicly to update or revise any forward-looking statement that may be made herein, whether as a result of new information, future events or otherwise.”
This publication contains certain non-IFRS financial measures and ratios, including EBITDA and EBITDA margin (which are adjusted by certain exceptional items), that are not required by, or presented in accordance with, IFRS. The Company presents these non-IFRS financial measures because they are used by its management for monitoring the Group’s business and management believes these non-IFRS financial measures facilitate an understanding of the underlying operating performance of the Group. The non-IFRS financial measures used by the Company, including inter alia EBITDA, Adjusted EBITDA and Adjusted EBITDA margin, are alternative performance measures as defined in the guidelines issued by the European Securities and Markets Authority (ESMA) on October 5, 2015 on alternative performance measures. The definitions of the non-IFRS financial measures may not be comparable to other similarly titled measures of other companies and have limitations as analytic tools and should not be considered in isolation or as a substitute for analysis of the Group’s operating results as reported under IFRS.
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|Company:||Abacus Medicine A/S|
|Listed:||Regulated Market in Frankfurt (Prime Standard)|
|EQS News ID:||809617|
|Notierung vorgesehen / intended to be listed.|
|End of News||DGAP News Service|