Transforming ideas from Norway’s Viking traditions and long seafaring history into commercial reality, Biotec Pharmacon has developed a powerful pair of technology platforms and is looking to accelerate growth.
Under the new strategic focus of chief executive Christian Jørgensen, the debt-free group has made strides in cutting losses and is now pursuing acquisitions as well as organic growth.
Jørgensen, who presented at the Anglonordic Life Science Conference in London earlier in May as part of a push to tap into the UK’s greater breadth of biotech investors, said his target of cutting cash consumption means a UK flotation is not on the cards any time soon.
A group of two halves
Biotec Pharmacon, which was originally spun out of Tromso University in the 1990s, is made up of two operating divisions – ArcticZymes and BetaGlucans.
The former business produces recombinant enzymes, which are a key product in the research, diagnostics and gene therapy industries, where they are used to cut and splice DNA and RNA.
Standing out from the crowd of other enzymes on the market, ArcticZymes developed its technology from a by-product of the northern Norway fishing industry to provide much-appreciated time savings for a roster customers that ranges from huge multinationals to individual labs.
To begin sequencing DNA, laboratory workers normally need to turn up the temperature in order to activate their enzymes but as these Norwegian variety are harvested from Arctic-dwelling waters they can be activated at low temperatures, thereby improving efficiency.
While the ArcticZymes’ product range is continually being improved and widened, such as the new line of Ligase products launched this year, Jørgensen said “inorganic growth opportunities are also being pursued”.
“We want to be more relevant for customers,” he explains, adding that exploratory discussions are ongoing with several European companies.
Providing the potential for sharper organic growth of its own is the Biotec BetaGlucans division, which specialises in immune-modulating beta-glucan products, helping the immune system fight disease.
This business has adapted another strand of ancient local lore, this time gleaned from tales of Viking’s boosting their immune systems with mushrooms containing beta-glucans. Consumers can top up their body’s natural resistance by buying capsules of beta-glucans from a Boots chemist or online from the likes of Amazon, and there is also strong demand to from the livestock industry.
While such consumer and animal sales provide the bulk of revenues for Biotec BetaGlucans, a step-up in growth is coming from the development of a new woundcare line where the beta-glucans have been much refined and are many degrees stronger.
Woulgan is the first woundcare product off the production line, which is used in a gel form for ‘stalled wounds’, where the healing process has stopped and where the greatest patient need is from older patients and diabetics. The product also taps into a general market trend towards “active wound healing”, as well as having origins in nature.
Sales have so far been grouped in the Nordics and Germany, but part of Jørgensen’s remit has been to improve the distribution network. The benefits of this are beginning to come through as sales have improved for each of the past five quarters and in the first three months of 2019 topped NOK 1mln for the first time.
“It’s still early days,” Jørgensen says, explaining that he aims to grow organically by ironing out distribution issues and moving into new territories through new partners, as happened in Austria last month, while expanding the range to a “family of woundcare products”.
Results from the first quarter of 2019 saw growth for the group in all high-margin areas compared to the start of last year, with underlying losses (EBITDA) of 3.9mln Norwegian krone (NOK) cut back from NOK 5.1mln a year ago.
Cash stood at NOK 28.2mln at the end of the first quarter compared to NOK 30.4mln at the end of December. This compares to a market cap of NOK 197.2mln at the latest NOK 4.08 share price quote on the main Oslo Stock Exchange.
With Jørgensen emphasising that easing down on the cash burn was one of his key targets, last year saw cash consumption from investing activities reduced 46% to NOK 2.7mln, while the cash outflow from operating activities was cut 17% to NOK 18.3mln.
“We need to grow our top line and control cash so we don’t consume as much, these are our main targets for 2019.”
Outside of acquisition activity, he expects revenue growth in the two focus areas of ArcticZymes and woundcare to be strongest in the second half of the year, with a lift in coming years from new launches in the Woulgan portfolio.