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(NASDAQ: IRGI) William Blair Growth Stock Conference June 25, 2003

(NASDAQ: IRGI) William Blair Growth Stock Conference June 25, 2003. Safe Harbor Disclaimer.

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(NASDAQ: IRGI) William Blair Growth Stock Conference June 25, 2003

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  1. (NASDAQ: IRGI) William Blair Growth Stock Conference June 25, 2003

  2. Safe Harbor Disclaimer Statements contained in this presentation that are forward-looking are based on current expectations that are subject to a number of uncertainties and risks, and actual results may differ materially. Factors that might cause such a difference include, but are not limited to, risks associated with: the reduction in research and development activities by pharmaceutical and biotechnology clients, changes in government regulations, the effects of interest rate and foreign exchange fluctuations, our ability to attract and retain employees, the loss or delay of contracts due to economic uncertainty or other factors, our ability to efficiently manage backlog, our ability to expand our business through strategic acquisitions, competition within the industry and the potential adverse impact of health care reform. Further information about these risks and uncertainties can be found in the information included in the company’s recent filings with the Securities and Exchange Commission, including the company’s Registration Statement on Form S-1 and Form 10-K filed on February 18, 2003. 5478706

  3. Building the world’s leading and most profitable drug development services company 5478706

  4. Operational Overview Strategy for Profitable Growth 2002 Financial Overview First Quarter 2003 Financial Overview 5478706

  5. Investment Summary • Global market presence • Full-service drug development capability • Large market opportunity • Established leadership position in pre-clinical development • Unique position in clinical development • Diversified revenue mix and client base • Proven management team • Track record of growth and profitability 5478706

  6. Company History 1964 Inveresk performs first pharmacology/toxicology studies (in Edinburgh) 1965 CTBR (Pre-clinical Americas) founded (in Montreal) 1988 Inveresk Clinical Research founded (in Edinburgh) 1989 ClinTrials Research founded (in Nashville) 1996 ClinTrials Research and CTBR merge 2001 Acquisition of ClinTrials by Inveresk Research 2002 NASDAQ listing (“IRGI”) 5478706

  7. Origin of Clients - 2002 Client Type Other 12% RoW 6% Japan 7% Europe 31% Biotech32% Pharma 56% USA 56% Global Market Coverage 5478706

  8. Final Patent Application File IND Marketing Application Market Approval DiscoveryResearch Development Research RegulatoryReview Post-MktgReview Pre-clinical Testing, Toxicology, Drug Metabolism & Pharmacokinetic Studies (DMPK) • Basic Research • Genomics • Proteomics • Virtual chemistry Synthesis Biological testing Pharmacological screening Phase I Phase II Phase III Phase IV Clinical Trials Market segments covered by Inveresk Research Full-service Drug Development Capability 5478706

  9. Growth in R&D vs. Revenue (Indexed) Market for Outsourced Drug Development Services ($ in billions) CAGR – 13.7% R&D Growth Revenue Growth Source: CMR International, IMS Health Source: Frost & Sullivan Large Market Opportunity 5478706

  10. % of 2002 Net Service Revenue 64% Revenues - $142.2 million 1,830 Employees Locations – Edinburgh, Scotland and Montreal, Canada Pre-clinical Overview • World #3 in toxicology • World #1 in speciality toxicology • Integrated laboratory sciences • Established over 35 years ago • 85% repeat business • Diverse client base • Focus on quality, value-added • Clients - USA, Europe and Japan 5478706

  11. % of 2002 Net Service Revenue 36% Revenues - $80.3 million 720 Employees Locations – USA, UK, Germany, France, Spain, Italy, Belgium, Poland, Czech Republic Clinical Overview • Key global capability • Phase I-IV coverage • European #4 • World class Phase I - 62 bed clinic with “first-into-man” focus • ClinTrials integration completed successfully • Further opportunity for revenue growth and improved profitability 5478706

  12. Highly Diversified Client Base Percentage of 2002 Net Service Revenue Top client – 5.9% Top 5 clients – 21.1% Top 20 clients – 43.2% 5478706

  13. Walter Nimmo President & CEO (15 years) Paul Cowan CFO (1 year) Pre-clinical Clinical Mike Ankcorn President - CTBR (24 years) Brian Bathgate President - Europe (12 years) Nick Thornton Corp. Development (2 years) Alastair McEwan President (7 years) Proven Management Team 5478706

  14. Acquisition of ClinTrials – April, 2001 Track Record of Growth and Profitability Net Service Revenue ($ in millions) Income From Operations(i) ($ in millions) Acquisition of ClinTrials – April, 2001 5478706 (i) Excludes amortization of goodwill prior to 2002 and exceptional charges related to our IPO in 2002 of $54.6 million.

  15. Operational Overview Strategy for Profitable Growth 2002 Financial Overview First Quarter 2003 Financial Overview 5478706

  16. Key Market Drivers IRGI Response • Drug Industry Trends: • Huge demand for new therapeutics • Impact of new technologies - genomics • Growth of “biotech” and biotech products • Increased “pharma” competition • Strategic: • Continue focus in earlier development stages – Pre-clinical, Phase I through early Phase III • Differentiate through a higher value-added service offering • Maintain global reach • Concentrate on areas with the highest barriers to entry – toxicology, lab sciences • Maintain diverse, high quality client base • Provide solutions, not just science • Impact on Research & Development: • Increasingly demanding regulation • Escalating R&D expenditures • Need for improved R&D productivity • Service Offering: • Focus on quality and responsiveness • Maintain broad based service offering • Address both pharma and biotech • Continue emphasis on speciality services • Leverage Pre-clinical/Clinical cross selling opportunity • Industry Response: • Increasing and more focussed R&D • Greater trend to outsourcing • Need for global drug development Response to Market Characteristics 5478706

  17. Target bottom line growth of over 20% per annum Financials - Key Growth Drivers • Maintain revenue growth in Pre-clinical, accelerate in Clinical • Controlled capacity expansion in Pre-clinical and Phase I – to sustain/enhance operating margins • Progress margin expansion in Clinical - towards target levels of 15% to 20% • Continue migration of “old ClinTrials” clinical contracts to higher margin business – to be completed in 2003 • Maintain emphasis on cost control and improved business processes across all business areas 5478706

  18. 2003 2004 2005 Stage 1 - Montreal Toxicology and Lab Sciences Toxicology & Lab Sciences Stage 2 - Montreal Stage 1 - Edinburgh Toxicology Stage 1 – Clinical Americas Phase I Stage 2 - Edinburgh Stage 1 – Clinical Europe Lab Sciences Phase I Key Elements for Organic Growth 5478706

  19. Operational Overview Strategy For Profitable Growth First Quarter 2003 Financial Overview 2002 Financial Overview 5478706

  20. 2002 Key Highlights • IPO completed in June; 12 million shares sold at $13.00 per share • Net revenue up 42% to $222.5 million • Pro forma operating income up 104% to $45.6 million • Full-year operating margin 20.5% • 2002 diluted EPS of $0.88, pro forma • Cash flow from operations $51.3 million(i) • Stage 1 Montreal pre-clinical expansion completed, on time and within budget, and pre-sold on a multi-year basis • Reorganization and integration of former loss-making ClinTrials clinical businesses has progressed beyond expectations 5478706 (i) Before payment of accumulated shareholder loan interest.

  21. Net Service Revenue ($ in millions) Income From Operations (i) ($ in millions) +104% +95% +42% +49% +31% +100% 2001 2002 2002 Segment Results – Pro Forma (i) Pro forma, excluding amortization in 2001 and exceptional charges in 2002 relating to the Company’s IPO. 5478706

  22. Peer Group - Mean Relative Profitability - 2002 5478706

  23. Review of Cash Flows • Net cash provided by operations: $51.3 million, before deducting accumulated interest of $21.5 million on pre-IPO shareholder loans • Capital expenditure: $25.5million • Cash flow (before accumulated shareholder loan interest paid) as a % of Pro forma net income - 155% • Net DSO’s at year end: 30 (45 at December 30, 2001) • Cash and equivalents at year end: $19.9 million • Gross financial debt at year end: $68.0 million 5478706

  24. Operational Overview Strategy For Profitable Growth 2002 Financial Overview First Quarter 2003 Financial Overview 5478706

  25. Q1, 2003 Financial Highlights • Net service revenue up 8.5% to $57.7 million ($53.2 million in Q1, 2002) • Income from operations $8.6 million ($5.2 million in Q1, 2002) • Pro forma income from operations $9.2 million ($9.8 million in Q1, 2002) • Significant rebound in activity levels at our Montreal-based pre-clinical operations • Clinical revenues grew 14.3% year-on-year. Operating margin increased to 10.6% in Q1, 2003, from 4.1% in Q1, 2002 • Diluted EPS of $0.20, compared to a loss per share of $0.02 in 2002 • Pro forma diluted EPS of $0.22, a 22% increase over Q1, 2002 • Cash flow from operations $4.8 million, before capex of $4.3 million • New business signings $76.6 million in Q1, 2003 • Confirmed backlog - $222 million at March 31, 2003 5478706

  26. Income from Operations ($ millions) Net Service Revenue ($ millions) +9% -15% -6% +64% +5% +14% +194% Total Reported Pre-clinical Clinical Pre-clinical Clinical Total Reported Total Pro Forma 2002 2003 Q1, 2003 Financial Results by Segment 5478706

  27. Key Factors Influencing Q1, 2003 Results • Volatility in short-term business flows in Montreal-based pre-clinical operations – strong rebound experienced in March/April • Reduced levels of pass-through costs in European pre-clinical operation deflate revenue, but not profitability • Continued recovery in clinical business – in terms of growth and profitability • Transaction exchange losses recorded totaling $1.5 million – now hedged • Social security costs on employee share option exercises booked in Q1 totaling $0.2 million • Negative mark-to-market adjustment on interest rate swaps of $0.2 million • Share offering costs of $0.7 million expensed in quarter • Positive impact of Canadian and UK tax credits, reduced Canadian corporate tax rates and newly available UK tax deductions for share option expenses 5478706

  28. Moving Annual Total of Signed Contracts Moving Annual Total of Signed Contracts – cumulative previous twelve months new signed contracts, net of cancellations 5478706

  29. Confirmed Backlog 5478706

  30. Outlook and Strategy • Continued strength in new business signings across all operations • Rebound in Montreal-based pre-clinical operations experienced in March and April • European pre-clinical operations experiencing continued strong demand for both toxicology and laboratory sciences services • Clinical businesses continuing strong performance of 2002 • 2003 EPS forecast to total between $1.07 and $1.09, on revenue growth of 11% to 14% • Continue to service our clients with quality, high value-added services • Pre-clinical expansion on track, Stage 1 Montreal expansion pre-sold – leveraging our world leading capability • Diverse revenue and client base, positions IRGI well for the future 5478706

  31. Investment Summary • Global market presence • Full-service drug development capability • Large market opportunity • Established leadership position in pre-clinical development • Unique position in clinical development • Diversified revenue mix and client base • Proven management team • Track record of growth and profitability 5478706

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