It designs and engineers genetically-modified cells that replicate certain mutations for use in applied research and clinical applications.
The vast majority of its offering is based around accurately reproducing the mutations and anomalies found in cells that can cause diseases like cancer.
Altering almost any gene sequence
The group’s core capabilities are built around its suite of gene editing tools, able to alter almost any gene sequence in human or mammalian cells.
Horizon boasts a catalogue of over 23,000 cell generation and application services. It allows researchers to better understand the genetic drivers of the disease in order to develop therapies to treat it.
Ten of the best selling drugs last year were biologic therapeutics, but access to bioproduction cell lines for their manufacture can be cost prohibitive, which is where Horizon comes in.
Horizon extended a contract with one of the world’s top three pharmaceutical giants in the middle of February.
The agreement adds to an existing Master Service Agreement for in vivo services (animals/ living organisms) which will now also include in vitro services (test tube).
This customer is now Horizon’s largest customer and contributed £1.5mln of revenue last year which it will likely build on in 2017.
“After a mixed year for the Services division, we see this as an encouraging update that highlights the strategy to more deeply leverage existing customer relationships to provide greater visibility, and more efficient management of projects at the expanded HQ in Cambridge,” said City broker Panmure Gordon.
Horizon’s boss Darrin Disley said the new contract underlined the group’s success in deepening relationships with top customers.
“In 2016, our top 20 customers provided over £9.8 million to the group, and in 2017 we are looking to increase our revenue from this segment by at least 20%, with this agreement serving as a template."
If it's good enough for Neil Woodford...
One of the UK’s biggest fund managers once again backed Horizon at the end of 2016 after ploughing more cash into the gene editing group.
Neil Woodford, via his Woodford Investment Management business, snapped up another 80,000 shares in Horizon, meaning he now owns, on behalf of his clients, 14.32mln shares – or just over 15% of the company.
The backing from Woodford came only a couple of weeks after Horizon told investors that it had quadrupled its revenue from its genetic screening platform.
In a more recent trading update, the gene editing specialist said revenues for the year just gone would be at least £24mln, representing year-on-year growth of 19%.
The loss, meanwhile, is set to be in line with market forecasts, while a £5mln programme of costs cuts have been “substantially completed”.
Gross profit margins for the period are expected to be in the mid-50% range (up from 49%). As of the end of January, the company had £6mln of cash in the bank and an undrawn £5mln debt facility.
Turning to 2017, Horizon said that based on “forward visibility” it expects revenues to rise to £30-£35mln as it said it anticipates posting an operating profit this year.
“Early revenue indicators for 2017 already look encouraging thanks to a very robust sales order book,” said CEO Disley.
“This, combined with having the products and services, global commercial resources and sales channels, and business systems needed to drive long term success all in place, reinforces our confidence in becoming a sustainably profitable company as we continue to deliver strong revenue growth."
Back in 2016, Horizon reported a very strong demand in the diagnostics sector and expects to see a 65% increase in those sold to aid research services.
Towards the end of the year, the group announced it was licensing its cell line production technology to the Centre for Process Innovation (CPI) and the National Institute for Bioprocessing Research (NIBRT) and Training.
Further modification of cells
The collaborations mean any organisation that goes through CPI or NIBRT will be able to access Horizon's biomanufacturing cell lines for research purposes.
Terms of the licences will allow for further modification of cells accessed through the CPI or NIBRT and establishes a potential long-term revenue stream for Horizon.
The group’s commercial offering has already been adopted by around 1,400 research organisations across 50 countries.
What the broker says
Panmure Gordon previously described Horizon as a “business with unparalleled strategic positioning,” relating to its recent acquisitions and partnerships, particularly in the promising field of immuno-oncology.
The broker reiterated its “buy” rating on Tuesday, leaving its target price of 250p unchanged. It floated at 200p back in 2014 and is now riding on a nine-month high of 176p.
Last April it peaked at 186p, after the group proved its mettle as a fast-growing player in the sector, topping expectations, although if the last few months are anything to go by, the share price could be headed past that pretty soon.