Selvita Posts 67 Percent Increase in Operating Profit for Services Division; Innovative Research Division Reaches Inflection Point as SEL120 Enters Clinical Development
KRAKOW, Poland, March 28, 2019 /PRNewswire/ -- Selvita (WSE: SLV), a clinical stage company engaged in the research and development of novel cancer therapies as well as provision of drug discovery and development services, today announced that it has, recognized dynamic growth last year in the Services Division. The segment's revenues from external clients amounted to PLN59.1M, which represents an increase of 34% y/y, higher than expected 30% growth. Operating profit in the Services Division rose by 67% to PLN8.8M. Thus, the segment's operating profitability increased from 10.8% to 13.7%. The Services Division backlog for 2019** already reached PLN41.7M and is 43% higher than the portfolio of orders in the same period of 2018. The Innovative Research Division has reached a major inflection point with the acceptance of SEL120 IND submission and the initiation of clinical trials.
The Group's backlog currently amounts to PLN82M and is 19% higher than the portfolio of orders in March last year.
"The Services Division grew faster last year than we had originally projected. We delivered higher than expected 30% revenue growth. We also significantly improved operating margins in this business unit by roughly 3 percentage points, despite investments in the development of services and sales. We are aiming to maintain the pace of the services growth in the years ahead and therefore we are looking to develop not only via organic growth, but also through acquisitions of other companies," said Bogusław Sieczkowski, co-founder and Chief Operating Officer of Selvita.
Selvita has intensified investment in projects of the Innovative Research Division, to which it has full property rights, in line with the assumptions of the strategy for 2017-2021 and owing to the capital raised in the public offering in the first quarter of 2018. This concerns both lead candidate SEL120 and less advanced programs. The Innovative Research Division operating loss was PLN24.6M in comparison with PLN6.4MM profit one year ago (SEL24 project commercialization with PLN20.3M upfront payment took place in March 2017).
"At the outset of 2018, we have changed our accounting policy in terms of recognizing costs of all research and development in the Innovative Research Division projects. Therefore, we do not activate the development costs of the most advanced projects, but we recognize them in the profit and loss statement regularly. In effect, total expenses incurred in connection with research and development activities, including SEL120 development, weigh on our results," explained Bogusław Sieczkowski.
"We have been constantly working on monetizing early stage projects in our portfolio. Our priority is to optimize value for the company and its shareholders, with a view to potential transactions. In 2018, the key accomplishment of the Innovative Research Division was the recapitalization of Nodthera from external sources. As a result of a revaluation of the value of shares in April last year, we recognized PLN16.6M of net income. With the dynamic development of the project, it is expected that the value of the company will experience continued growth," commented Bogusław Sieczkowski.
Ardigen, the Selvita Group bioinformatics company, also generated noticeable growth. The Company posted revenues of PLN11.5M last year (an increase by 53% y/y) and operating profit of PLN2.2M (42% higher than a year ago). In Q4 2018, Ardigen revenues climbed to PLN3.9M (an increase of 125% y/y), while EBIT was at PLN1.2M (versus a PLN0.1M loss a year ago).
"Ardigen has been growing dynamically in line with expectations. The company has been engaged with over 30 global clients and employs 75 highly skilled professionals. Aside from services provided, Ardigen is increasing its investments in the development of its own products in the field of personalized medicine in the area of immunooncology and microbiome. These projects have immense commercial potential. Despite increased expenditure on product development, the company generated operating profit of about PLN2.2M in 2018. We expect that this subsidiary will continue to grow dynamically in the future, as a result of the developed service activity and the commercialization of our own products," explained Bogusław Sieczkowski.
Selvita is developing novel small molecule therapies that address emerging targets in oncology with industry-leading research expertise supported by a research services division. Pipeline candidates apply diverse mechanisms directed at kinases, synthetic lethality pathways, immuno-oncology pathways and other cancer-related targets. SEL24/MEN1703 is a dual PIM/FLT3 kinase inhibitor licensed to the Menarini Group in clinical development for the treatment of acute myeloid leukemia. SEL120 is a CDK8 kinase inhibitor with potential for development in indications including hematological malignancies and solid tumors. Selvita is headquartered in Krakow with offices in the U.S. and U.K.
More info: www.selvita.com
* The result excludes accounting costs of a stock incentive program ended in Q1 2017 (PLN0.583M in Q1 2017)
** Backlog for 2019 as of 22.03.2019. Backlog for 2018 as of 26.03.2018. Backlog is understood as the value of the contracted portfolio of orders, resulting from commercial contracts and grant agreements signed as of the date of publication of the report
Julia Balanova (investors)
Rich Allan (media)
Piotr Ksiazek (investors and media, Poland)
Malgorzata Syjud (corporate)
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