Company Presentation John Dawson Maddy Scott July 2004
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Transcript of Company Presentation John Dawson Maddy Scott July 2004
Company Presentation
John Dawson Maddy Scott
July 2004
Contents
Introduction
Recent Financial Performance
Growth Strategy
Marketing Investments
Development Investments
Summary
Alliance Management
John Dawson, Managing DirectorPharmacist, MSc Finance; 33yrs sector experience, board member, controlling shareholder, 7 yrs with Alliance
Tony Booley, Sales & Marketing DirectorBSc Physiology, MBA, Chartered Marketer; 23yrs sectorexperience, board member, shareholder, 5 yrs with Alliance
Maddy Scott, Finance Director ACCA; 16 yrs experience across manufacturing and service industries, board member, company secretary, 5 yrs with Alliance
Alliance ManagementSam Madden, Technical & Regulatory DirectorBSc Biochem/Toxicol, MSc Biopharmacy, 24yrs sector experience across wide base; board member, shareholder, 7 yrs with Alliance
John Barber, Director of Scientific AffairsBSc Pharmacology, MSc Information Science; 18yrs sector experience, 4 yrs with Alliance
Andrew Dean, Business Development DirectorBSc Chemistry and Business; 10yrs sector experience, marketing & sales management, 1 yr with Alliance
Alliance Non Executive Directors
Paul Ranson, Non Executive Director LL.B Barrister Solicitor. 20 years sector experience, board member
Michael Gatenby, Non Executive ChairmanMA. FCA ex-director of Hill Samuel and Co, ex-vice Chairman of Charterhouse Bank. Holds a number of non executive directorships
Alliance History
Trading started
June 1998
Growth via 6 acquisition
deals between Jan ‘99 &Feb ‘04
Listed onAIM
Dec 2003
Apr
1998
Jan
1999
Aug
2001
Oct
2001
Apr
2002
Sep
2002
Feb
2004
Fostering arrangement
£2.1 M £0.5 M £9 M£4 M £2.1 M £0.9 M
16 brands
Rheumatoidarthritis
Parkinson’s
disease
Potassiumdeficiencies
Creams for dry skin and
eczema
Enteric coated aspirin
Alphaderm
Slow-K
SymmetrelDistamineBroflex
Biorphen
Pragmatar
Naseptin
Aquadrate
Nu-Seals Acnisal
Meted
Pentrax
Occlusal
Alliance Acquisitions
4 Derma Brands
Organisational Development
1. Big pharma experience with small company speed and flexibility
2. Progressive, stepwise development of resources and range of operations
3. Advantageous use of outsourcing
£10m sales, 27 brands and 2 development projects
run by 13 people
14 employees
Manufacturing
Field Force
Distribution
Clinical Trials
Strategic HQ
OutsourcedOperations
Recent Financial Performance
Sales - Growth to date
£0
£2,000
£4,000
£6,000
£8,000
£10,000
£12,000
£000
s
1999 2000 2001 2002 2003 2004
Year ending February
03/04 Cash Sales by Brand
Others 11%
Cafergot 3%
Synacthen 3%
Alphaderm 4%
Distamine 4%
Slow-K tabs 6%
Naseptin 7%
Syntometrine 7%
Symmetrel 11%
Syntocinon 15%
Nu-seals 29%
3. Growth to-date - gross margins
• From the first fostering deal to date gross margins have more than doubled as fully acquired products deliver substantially higher margins than fostered ones
• Now, over 85% of gross margin comes from acquired products
0%
10%
20%
30%
40%
50%
60%
70%
Bioglan Acquisition
Distamine Acquisition
Symmetrel/Slow-k Acquisition
Nu-seals Acquisition
Nu-seals switches manufacturing to
Alliance
Operational Performance
0
2000
4000
6000
8000
10000
12000
Turnover Direct Costs GrossMargin
OperatingExpenses
Interest AdjustedEBAT
2002 2003 2004
Operational Financial Performance
Yr end
Feb ’02
£000
Yr end
Feb ’03
£000
Yr end
Feb ’04
£000
Turnover 6,342 8,327 10,416
Direct costs (4,800) (4,687) (5,377)
Gross margin 1,542 3,640 5,039
Gross margin % 24.3% 43.7% 48.4%
Operating expenses (1,181) (1,553) (2,327)
Interest (excluding issue costs) (187) (1,079) (1,502)
Profit pre tax, exceptional items, issue costs & amortisation
174 1,008 1,210
Source Annual Report and Accounts 2004 and 2003
25% growth
8% like for like17% impact of
full year on 2002 acquisitions
Amortisation, issue costs & exceptional items Yr end
Feb ’04
£000
Profit pre tax, pre exceptional items,
Issue costs & amortisation1,210
Amortisation of intangible assets (907)
Costs associated with reverse into Peerless Technology Group
(258)
Amortisation of reverse takeover goodwill (843)
Debt redemption premia (1,185)
Finance issue costs (169)
Profit pre tax (2,152)
Balance Sheet Feb ’04
£000
Fixed Assets 18,135
Intangible Assets* 16,376
Development Costs 487
Goodwill on Acquisition 1,124
Tangible Assets 148
Net Current Assets 2,820
Long Term Liabilities 18,731
Total Net Assets 2,224
Share Capital / Share Premium 5,993
B/F Profit (Losses) (3,769)
2,224
* Alliance’s acquired brands
Debt structure (gross)
Cash generative brands facilitate leverage
Senior Term Loans to 2009 (base + 2.5%)
£10.9m*
Mezzanine Loan, payable 2009/10 (base + 5%)
£2.5m
Current Funding £13.5m
* Interest rate hedging: base rate fixed at 5.0% on £10.6m to Nov 2008
* Currency hedging: £4.1m denominated in €
Cashflow 1
2004
£000
2003
£000
EBIT 704 687
Depreciation 83 67
Amortisation 1,750 1,400
Change in Working Capital (425) (65)
Net cashflow from operating activities 2,112 2,089
Cashflow 2
2004
£000
2003
£000
Net cashflow from operating activities 2,112 2,089
Interest paid and similar charges (1,537) (1,079)
Taxation (33)
Redemption premia and issue costs (1,764)
Development expenditure (487)
Net cash from acquisitions and capital
expenditure
522 (12,229)
Net cash from financing 5,517 11,818
Increase in cash in year 4,373 566
EPS2004 2003
Basis of Calculation
Weighted average number of shares in year (assumed)
79,973k 72,917k
Loss transferred to reserves (£1,955k) (£732k)
Unadjusted earnings per share (2.44p) (1.00p)
Eliminating amortisation, one off charges and deferred tax
3.62p 1.92p
Adjusted earnings per share
- based on year-end capital
1.18p
0.85p
0.92p
Alliance Strategy
1. Selective acquisition of cash-generative brands
2. In-licensing of launch opportunities from overseas R&D companies
3. Creation of launch opportunities by limited end-stage development projects
Strategy 1: Brand Acquisitions
Niche pharma Rx brands have a long life
Target profile:• Stable historic sales pattern• Low promotional investment• Ungenericised
Big impact on P&L
Sales Margin Price? EBITA Debt EBAT
£2m 70% £6.3m £1.3m £4.2m £1.0m
£5m 60% £13.5m £2.8m £9.0m £2.1m
£10m 50% £22.5m £4.6m £15.1m £3.5m
Current Growth Projects Marketing Investment Nu-Seals 75 – Ireland / Cardiovascular
£0.3m
Symmetrel – UK / Parkinson’s Disease
£0.7m
Dermatology
£0.2m
Nu-Seals Opportunity
Rapidly growing market (28% CAGR)Heart disease No. 1 killer in Ireland Government initiatives
Ageing population
Nu-Seals 75 £2.3m sales in Ireland 15% increase year 02/04 70% of antiplatelet market 84% of low dose aspirin
marketIreland highly branded market
2002: 782k people over 55
2010: 833k people over 55
2020: 1m people over 55
Nu-Seals 75 Sales Ex Irish Warehouse
Mon
thly
sal
es
MA
T S
ales
0
20000
40000
60000
80000
100000
120000
Jan-
02
Feb-0
2
Mar
-02
Apr-0
2
May
-02
Jun-
02
Jul-0
2
Aug-0
2
Sep-0
2
Oct-02
Nov-02
Dec-02
Jan-
03
Feb-0
3
Mar
-03
Apr-0
3
May
-03
Jun-
03
Jul-0
3
Aug-0
3
Sep-0
3
Oct-03
Nov-03
Dec-03
Jan-
04
Feb-0
4
Mar
-04
Apr-0
4
May
-04
0
200000
400000
600000
800000
1000000
1200000
Paris Actual units MAT Paris Actual units
Acquisition from
Symmetrel UK Opportunity
Acquired from Novartis in Oct 2001 Current sales £1.2m
Parkinson’s disease market £80m 120,000 patients
Symmetrel renaissance in PD 50 papers specifically on amantadine in PD in the
last 5 years The only nmda antagonist for PD
Dyskinesias Niche segment 15,000 potential patients Unmet needs
SymmetrelImplementation
Founded new business unit in Dec 2003
Highly targeted campaignKey opinion leader endorsement
Neurologist reaction positive
Roll out message to less specialised physicians
Acquisition of Dermapharm Ltd
8 derm brands sales £1.7m
Currently promoting brands ex Dermapharm
Planning additional growth utilising existing infrastructure & alliances
Dermatology
Naseptin
Acnisal
Occlusal
Alphaderm
Pragmatar
Aquadrate
Pentrax
Meted
Building Dermatology Portfolio*
Leverage on hospital tendering
Strategy
£110mDermatology Pipeline
UK, RoI, Scandinavia
Nov 2003
£35mNiche Hospital Generics
UK & RoIApr 2003
Market Size
ProductsTerritoryPartner
Strategy 2: In-licensing
*Adds to current portfolio:- Alphaderm, Aquadrate, Pragmatar- Occlusal, Acnisal, Meted, Pentrax – ex
Dermapharm
Strategy 3: Product Developments
Two low risk developments:
• APL 202 (intra-vaginal misoprostol for induction of labour)
• APL 510 (1.5mg SR melatonin for sleep disorders)
Smaller investment reaches market first
Proof of principle well known on each
Both already used “off licence”
Developments funded and underway
EU registration strategy
Possible introductions in H2 2005 and H2 2006
10 yr data protection for larger opportunity (APL 510)
Commercialisation strategy in place
APL 202 – Market BackgroundAround 20-25% of labours in UK (150,000 - 175,000 pa) are induced (many more are augmented) Two drug interventions in assisted labour• 1. Dinoprostone (a prostaglandin) for induction
“Ripens” (softens) cervix Stimulates uterus to contract
• 2. (Syntocinon – Alliance Pharma) for induction and augmentation Is used to stimulate uterus to contract (if cervix is ripe) Maintains contractions after labour has been started
Improvements sought over dinoprostone (ex market research)• Greater efficacy (more predictability, more deliveries achieved within 24hrs)• Reduced need for Caesarean sections• No need for refrigeration of the drug• Suitable for home initiation
APL 202 – Current Knowledge on Misoprostol
Originally introduced to reduce gastric acid secretionsLarge bibliography in obstetrics• Early usage was given orally• Current preference is for vaginal administration
Local action Reduced side-effects
• Some trials show greater efficacy than dinoprostone• Published trials unsuitable for registration
High awareness• Already used “off-licence”• But requires 3 serial cuts to the oral tablet (200mcg to 25mcg)
Does not require refrigeration
APL 202 – Status of Development
Clinical Trial Application submitted
Ethics Committee Application submitted
Trialists currently being recruited (multi-centre)
Trials expected to commence September 2004
Marketing Authorisation Application H1 2005
Possible introduction H2 2005
Low development cost (<£1m)
APL 202 - Commercialisation
Alliance Pharma to market in UK & Ireland
• Existing Specialist Hospital sales force in UK
• Existing GP / Hospital sales force in Ireland
Introduction is eagerly awaited
Specialist marketing – low cost
Will probably license out in rest of EU
Current EU labour induction market estimated at £32m
APL 510 – Market Background (Sleep Disorders)
Sleep disorders are of many types
Anti-histamines are available OTC
GPs (and patients) are reluctant to use current therapies• Benzodiazepines
concerns over habituation and hangover effects seen as unsuitable for children
Nevertheless UK prescription hypnotics market is £46m
Key product improvements desired (ex market research)
• Non-addictive, especially for long term usage• No drowsiness or hangover the next day
Particularly for school children, teenagers and working adults
• Product that will restore sleep to a normal pattern
APL 510 – Market Background (Melatonin)
Melatonin freely available OTC in USA• Classified by FDA as a nutritional supplement
Melatonin sales banned in EU• Needs to be registered as a medicine
Melatonin used “off licence” in UK• Initiated by NHS specialists• Patient-specific usage continued by GPs• “Named patient” supply regulated by Dept of Health
manufactured under a “Specials” licence controlled importation
• Usage estimated at £3-4m per annumCurrently melatonin used mainly for sleep disorders in• Children with Special Needs ( a wide variety of conditions)• Blind patients
APL 510 – Current Knowledge on Melatonin
Melatonin – hormone that regulates circadian rhythm (body clock)Therapeutic melatonin has been shown to promote sleep in many different sleep disorders• large bibliography, but unsuitable for registration
Seen as a “natural” productCurrent prescribers (ex market research)
• Are very enthusiastic about its results• Biggest complaint is restrictions imposed by not having a marketing authorisation• Seek a formulation that is quick acting but has a prolonged release
High awareness in GPs (ex market research)• 100% awareness• >50% had been involved in its usage via specialists
APL 510 – Status of Development
Special release formulation has been developed
Phase 1 trials in human volunteers completed
• Rapid production of therapeutic blood levels
• Blood levels then maintained for 5 hours
Phase 3 clinical trials to commence H2 2004
Regulatory submission planned for H1 2006
Possible introduction H2 2006
Will gain 10 yr data protection in EU regulatory system
Moderate development costs (£4-5m)
Pharmacokinetics studyPerformance of surge-sustained formulation
Mean APL 510 Plasma Levels
0
500
1000
1500
2000
2500
Time - Hours
Mea
n M
elat
onin
Con
c. (
pg/m
L)
1.5mg Surge-sustained 1.0mg Sustained 3.0mg Surge-sustained
APL 510 - Commercialisation
Alliance Pharma to market in UK & Ireland
• To Specialists initially to gain endorsement for GPs
• Will need GP sales force to accompany Hospital sales force
• Existing GP / Hospital sales force in Ireland
GP marketing – significant investment
License out in rest of EU
• Down payments plus royalty stream
EU sleep disorders market estimated at £500m
Summary
Capable & experienced management
Profitable & growing base business
Making good progress on a clear growth strategy
Acquire cash-generative brands
In-license launch opportunities
Develop launch opportunities