IXICO releases financial results for the year ended 30 September 2019
First profitable full year built upon increased penetration of growing market combined with operational leverage
IXICO plc (AIM: IXI), the AI data analytics company delivering insights in neuroscience, today announces its final results for the year ended 30 September 2019.
· First year of profitability since admission to AIM;
· Another year of record revenue of £7.6 million (2018: £5.4 million) representing 40% growth over prior year;
· Gross margin of 65.4% (2018: 58.8%) representing 660 basis points over prior year;
· EBITDA profit of £0.5 million (2018: loss of £0.6 million) due to operational leverage and controlled administrative costs;
· Operating profit of £0.4 million (2018: loss of £0.8 million);
· Profit per share of 0.92 pence (2018: loss of 2.0 pence);
· Closing cash of £7.3 million (2018: £7.9 million), with operating cash outflows being held at £0.1 million (2018: £0.1 million);
· A healthy contracted order book of £15.9 million (2018: £19.3 million) with further contracts signed since year end; and
· Two new institutional shareholders, BGF Investment Management and Canaccord Genuity Group, joined the share register.
Commercial and Operational
· Secured £7.7 million of (both new and expanded) multi-year contracts across all phases of clinical development;
· Strengthened visibility for continued revenue growth despite £3.5 million client trial cessation in August 2019;
· Expansion of key scientific collaborations to develop new artificial intelligence algorithms for imaging and digital biomarkers, enabling further diversification into a broad range of neurological disease therapeutic areas; and
· Investment in further strengthening of the leadership team to drive future growth.
Post year-end events
As previously reported:
· A start up agreement with a new client for a multi-study programme in Progressive Supranuclear Palsy (PSP), with an initial value of c. £0.4 million over 12 months;
· New contract worth c. £0.35 million for a 3-year expansion of an existing study to add a significant patient cohort in China; and
· 2-year contract worth c. £0.45 million for a new US biotech client to support a Phase IV study exploring a new application for a marketed drug for mental health.
Giulio Cerroni, CEO of IXICO, said:
"2019 has been a pivotal year in strengthening IXICO as a trusted technology partner in clinical development. Revenue of £7.6 million built on the growth in 2018, resulting in a 3-year CAGR of 35%. We also achieved our first full year of profitability since admission to AIM. Our strengthened leadership team has allowed us to scale operations and enhanced our strategic planning. With a healthy order book of £15.9 million, new contracts signed since the year end, and a new US-based Chief Business Officer we continue to execute our ambitious growth plans with the aim of delivering another record year."
Notice of AGM
IXICO also announces that its Annual General Meeting (AGM) will be held at BGF Investment Management, 13 - 15 York Buildings, London, WC2N 6JU on Friday, 17 January 2020 at 9:30am. The full annual report and accounts along with notice of annual general meeting will be posted to shareholders on 16 December 2019.
For further information please contact:
+44 (0) 20 3763 7498
Giulio Cerroni, Chief Executive Officer
Grant Nash, Chief Financial Officer
Cenkos Securities PLC (Nominated adviser and sole broker)
+44 (0) 20 7397 8900
Giles Balleny / Max Gould (Corporate Finance)
Michael F Johnson / Russell Kerr (Sales)
Optimum Strategic Communications
+44 (0) 203 950 9144
Mary Clark / Supriya Mathur / Manel Mateus
IXICO's purpose is to advance medicine and human health by turning data into clinically meaningful information, providing valuable new insights in neuroscience.
Our goal is to be a leading proponent in the use of AI in clinical development, to improve biopharma R&D productivity through the adoption of breakthrough data analytics in precision healthcare. Through the deployment of novel AI algorithms, we analyse and interpret brain scans and digital biosensor data to enable better trial design, patient selection and ultimately clinical outcomes across all phases of clinical evaluation. Our data analytics services are deployed on some of the most important clinical trials in neuroscience and rare disease, providing valuable insights to disease progression and patient safety, enabling our clients to make better informed decisions earlier in the clinical development pathway.
A year of outstanding growth and first profitability
I am pleased to report that IXICO is now profitable and delivered this important milestone in the Group's evolution a full 2 years ahead of the market's expectation at the beginning of the year. This follows a third consecutive year of accelerating revenue growth and effective strategic execution by our strengthened leadership team.
IXICO is an Artificial Intelligence (AI) data analytics company, with strong links into the biotech, pharma and the academic community, delivering intelligent insights in neuroscience.
Our purpose is to advance medicine and human health in neuroscience by converting raw clinical trial data into clinically meaningful information. Our data analytics services provide clinical insights to improve the efficiency of biopharma clinical development. Through the deployment of novel AI algorithms, we analyse and interpret brain scans and wearable biosensor data to enable better trial design, patient selection and ultimately clinical outcomes across all phases of clinical evaluation.
In FY19, we have reported record revenue, strengthened gross margins, and most significantly, our first operating profit since admission to AIM in 2013.
During the year we announced several new contracts with leading biopharmaceutical clients. These multi-year contracts give good visibility to future revenue and provide confidence that we enter the new year with a continued growth trajectory.
We close the year with a strong balance sheet that underpins continued investment in our data analytics platform, AI algorithms and commercial team. These investments are designed to drive our ambitious growth plans for further international market penetration and thereby realise our full potential in the growing neuroscience market.
Governance & people
As the Group leverages data analytics and AI algorithms to provide specialist technology services to the clinical trials market, our people remain an integral part of our unique value proposition. We seek to recruit and retain highly qualified technical and scientific staff who develop deep understanding of our clients' requirements and drive forward our development programmes to provide innovative technology solutions.
As in any successful, high growth business, IXICO's future success depends on its people. In a competitive market for skilled individuals, we have focused significant efforts to develop the IXICO culture. This engenders hard work and accountability while offering a place where employees are empowered to be creative within a clearly defined structure. Our refreshed values - Ability, Aspiration, Accountability and Agility - reflect this evolving culture and underpin our approach to employee recruitment and performance management.
In addition, the Board uses the 10 principles outlined in the Quoted Companies Alliance ('QCA') Corporate Governance Code to ensure it maintains appropriate governance arrangements. The Board conducts itself in a manner which places IXICO's values and the QCA principles at the core of the Group's culture.
During the year we have seen a couple of changes on the Board. Grant Nash, Chief Financial Officer and Executive Director, was appointed in April and joined the Board in August. Tim Sharpington, Non-Executive Director, stepped down from the Board in September. We thank Tim for his long and excellent service. We welcome Grant who brings over fifteen years of life science experience to the next phase of our planned growth.
At the 2020 Annual General Meeting ('AGM'), in accordance with the Company's Articles of Association, Giulio Cerroni and Grant Nash will stand for re-election, supported by the Board of Directors' recommendation.
During the year we welcomed BGF Investment Management and Canaccord Genuity Wealth Management to the register as new institutional shareholders. They join an impressive list of leading institutions who have invested in the Company over the last 2 years during which we have refreshed and diversified our institutional shareholder base. As we reflect on 2019, it is also pleasing to note the wider recognition in the market of the impact that our commercially-led growth strategy has had in delivering value to our clients.
Based on direct feedback, we believe our major shareholders are well aligned with the Group's vision and strategy set by our executive team, led by our Chief Executive Officer, Giulio Cerroni. This is important, as it is from these shareholders that we will seek support as we continue to accelerate our growth plans.
Over the last year, we have seen increasing interest in IXICO from both the industry we serve and the investment community. As we improve how we communicate our capabilities, and as our sector continues to embrace the rapidly advancing benefits of AI data analytics, so the Group is ever better placed to support new and growing numbers of clinical trials. This, alongside the investments we have made in diversifying into new therapeutic areas and wearable biosensor analytics, underpins the Board's confidence in IXICO delivering continued profitable growth.
Chief Executive's Statement
Strengthening IXICO's position as a trusted technology partner in clinical development
With continued clarity of purpose and our focused investment for growth programmes in place, we go into the new year with confidence to continue to deliver on our ambitious goals.
Delivering our data analytics strategy
2019 has been a pivotal year in the delivery of our vision to transform IXICO into a leading proponent of AI in clinical development.
The year has seen the Group transformed not only by a significantly strengthened financial performance and balance sheet to support ongoing organic investment, but also by its ability to scale in support of growing client demand for our specialist technology-driven services.
Clarity of purpose
IXICO's purpose is to advance medicine and human health in neurological disease by turning data into clinically meaningful information, providing valuable insights. After some costly and disappointing drug trial failures in central nervous system ('CNS') diseases, the field is welcoming a renewed funding surge in tackling one of humanity's greatest clinical and societal challenges.
Accelerated commercial traction
The long-term runway for growth is driven by the increasing outsourcing requirements of the biopharmaceutical industry and the value that they derive from AI data analytics to increase R&D productivity. This is reflected in this year's revenue of £7.6 million (+40%), building on the revenue of £5.4 million (+32%) in 2018 and a 3-year compound annual growth rate ('CAGR') of 35%. Furthermore we are entering 2020 with strong commercial momentum and an order book at the 2019 year-end of £15.9 million (2018: £19.3 million).
We expect to continue to add new clients in all global regions and to expand our reach in existing client programmes. Revenue growth will continue to be fuelled by executing on our strategy of expanding our portfolio of proprietary imaging and digital biomarkers from wearable biosensors and further diversification into new adjacent neurological therapeutic areas. In addition, we plan to make significant investments in commercial capabilities and leadership, in particular to directly address the world's largest market, North America.
Achieving operational leverage
Our strengthened management brings a strong focus on delivery and we will continue to identify areas for enhanced client service levels and increased automation to enable even greater operational leverage in the future. This strengthened focus on operational efficiency resulted in significant progress in our productivity Key Performance Indicators ('KPIs'), including over 600 bps improvement in gross margin to 65% and revenue per FTE increasing from £94k to £124k.
Science & innovation
The primary focus of our investment for growth programmes is to further accelerate revenue contributed by our data analytics. To do so, we have developed five strategic R&D programmes to address additional identified opportunities in both current and new markets. A central part of this is focusing our efforts on developing partnerships with both academic and industrial partners in the coming year to maintain our position as the go-to people for AI in clinical development in neuroscience.
Innovation will be the key element by which we will build accretive, high margin growth and long-term value. We are setting out to grow into attractive adjacent markets, with a focus on developing leading edge algorithms and adapting our proven technology to new applications focused on neurological disease.
Business as usual: profitable growth
In 2019, we have delivered on the promise of accelerating commercial traction, executing on our ambitious growth plans and a strengthened organisation.
I sign off this year by thanking all my colleagues at IXICO for a truly pivotal, profitable year. With a clarity of purpose to advance medicine and human health in neurological disease, I look forward to 2020 being another year of achievement in establishing IXICO as a leading proponent of AI in clinical development to the global biopharmaceutical industry.
View the full financial report here