Original-Research: SYGNIS AG (von GBC AG):

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Original-Research: SYGNIS AG - von GBC AG

Einstufung von GBC AG zu SYGNIS AG

Unternehmen: SYGNIS AG

ISIN: DE000A1RFM03

Anlass der Studie: GBC Executive Interview

Letzte Ratingänderung:

Analyst: Cosmin Filker

The past financial year was affected by the acquisitions of the proteomics

specialist Expedeon Holdings Ltd. and lately of the US electrophoresis

supplier C.B.S. Scientific. In addition to that the company has introduced

a series of very promising products into the market. GBC-Analyst Cosmin

Filker talked to the SYGNIS-CEOs Pilar de la Huerta and Dr. Heikki

Lanckriet about the potential of the two acquisitions and the product

pipeline.

GBC AG: In July 2016 SYGNIS AG announced the acquisition of Expedeon

Holdings Ltd. At the time of acquisition the focus was, besides the

expansion of the product range, especially on possible synergy effects as

well on the use of Expedeons sales channels. Have the expectations

regarding the integration of

Expedeon been fulfilled?

Pilar de la Huerta: Our expectations have been fully fulfilled. The

integration of Expedeon was completely done by November 2016, which was a

challenging issue as we had to train all Expedeon sales force into our

technology, move all our manufacturing to Cambridge, integrate all our

administration processes and optimize all of our back office structure. At

the end of 2016 all these processes were completed and we produced

immediate synergies in the expenses side, reducing the combo structure in

more than half a million Euros. This impact will be seen during 2017 as in

2016 we had to afford severances and several payments due to this

restructuration process. Regarding the revenues, Expedeon sales force has a

high level of experience and knowledge to understand quick and deep our

technology. The training process has been completed and we are seeing how

sales grew during the last months of 2016 and how they are performing in

line with our expectations during the first months of 2017.

GBC AG: The San Diego based C.B.S. Scientific has been acquired by the end

of 2016 and thus expanded the product range by including the area of

electrophoresis. How is this new area related to the already covered

business areas genomics and proteomics?

Dr. Heikki Lanckriet: CBS has a very strong track record in

electrophoresis, a technique used to separate biomolecules such as DNA and

protein by using an electric field. In fact electrophoresis is actually

used for DNA sequencing and DNA mutations detection applications.

Electrophoresis also became a core area of expertise of Sygnis through the

acquisition of Expedeon, however, whereas Sygnis' electrophoresis products

are mainly high margin consumable products for protein based applications,

CBS' product range is more focused on devices for both DNA and protein

application. Hence it is clear that the companies' product offering is very

well aligned and of a synergistic nature and that this acquisition fits in

targeted workflow expansion philosophy by building a coherent product

offering.

GBC AG: What synergy effects do you expect from this acquisition?

Dr. Heikki Lanckriet: The CBS acquisition provides us with clear synergies

in the product offering as explained before but there are also additional

synergies in the sales channels. CBS has strong relationships with key

international distributors such as VWR and Fisher Scientific. Discussions

are already on the way to extend our offering through these sales channels

which are expected to have a positive impact on revenue and brand

recognition. Additionally the Sygnis sales infrastructure will also be

leveraged to drive growth of the CBS product range. Furthermore there are

substantial operational cost synergies to be gained by merging the Sygnis

office in San Diego with the CBS facility nearby. This process is expected

to be completed by end of Q2 and we expect to see the cost benefits as

early as Q3 2017.

GBC AG: C.B.S. Scientific is already profitable. What does this acquisition

mean for the operational development of SYGNIS AG?

Dr. Heikki Lanckriet: Our objective to reach the operational break-even

position by end of 2017 remains unchanged. Whilst CBS is already

profitable, the merger and integration costs will somewhat dampen the

impact on the P&L in the first half of 2017. Furthermore I must stress the

importance of continued investment in sales and marketing. Our Trueprime

DNA amplification technology is truly an amazing technology however any

innovative, new product requires a high quality sales and marketing

infrastructure to become widely adopted. The projected cash flows from the

CBS acquisition will support our operational development and assist us with

extracting the potential from our world class product and technology

offering and we expect the CBS acquisition to deliver a positive

contribution towards our break-even position in the second half of the

year.

GBC AG: The launch of the TruePrimeTM Liquid Biopsy Kit also took place at

the end of 2016, by which the liquid biopsy market can be now addressed.

What is the competitive situation in this field and what are the market

potentials in this sub segment of the diagnostics market?

Dr. Heikki Lanckriet: Liquid biopsy is a fast growing emerging field with

lots of large players entering into this potentially lucrative market

segment. Illumina for instance, through its spin-out Grail, plans to spend

over $1B in early stage cancer detection using liquid biopsy approaches. In

my mind there is no question that clinical diagnostics, and in particular

cancer diagnosis and monitoring will move towards liquid biopsy methods as

these techniques become more established. The market potential for a

disruptive liquid biopsy technology, as we believe Sygnis' Trueprime LB

represents, is therefore enormous. Early diagnosis is critical when it

comes to cancer so techniques which can accurate amplify the tiniest amount

of DNA to levels where detection and analysis becomes possible are likely

to become the future gold standard. These two crucial aspects: sensitivity

and accuracy are exactly where Sygnis's technology excels. Hence we believe

that the company is well positioned to become successful in the liquid

biopsy field.

GBC AG: Recently, the introduction of the bioinformatics service platform

TrueHelix was announced, allowing SYGNIS customers to check their samples

for potential contamination. How does TrueHelix work and what are the

additional potentials emerging from the entry in the NGS user market?

Dr. Heikki Lanckriet: TrueHelix is our bioinformatics platform where we

intend to offer a suite of tools to assist our customers with the analysis

of their sequences. Whilst amplifying and sequencing DNA are complex

processes, data analysis of NGS sequences is equally challenging. The first

tool we launched, TruePure, is designed to enable customers to search for

sources of contamination in their sample. Once a customer has uploaded his

sequence to our servers in Germany, our algorithms search for contaminating

sequences and report this back to the customer via email. It's a fully

automated service that runs 24/7. Our main ambition for our bioinformatics

platform is to create additional visibility and brand awareness for Sygnis

and its Trueprime products range whilst supporting our customers in the

final stages of their NGS experiment. Moreover it fits in our workflow

philosophy to add value at every stage in the NGS process.

GBC AG: In the quarterly report as of 30/09/2016 you forecasted to reach

the break even on a quarterly basis by the end of 2017. Is this forecast

still valid?

Pilar de la Huerta: Yes, we still aim to become break even in Q4 2017. To

some extent we need to balance our drive to reach break-even with our

ambition for continued strong double digit revenue growth, however we

strongly believe the break-even position is achievable with the current

business plan and we aim to reach increased profitability the following

year.

GBC AG: Mrs. Pilar de la Huerta, Mr. Dr. Heikki Lanckriet, thank you for

the interview.

Die vollständige Analyse können Sie hier downloaden:

http://www.more-ir.de/d/14817.pdf

Kontakt für Rückfragen

Jörg Grunwald

Vorstand

GBC AG

Halderstraße 27

86150 Augsburg

0821 / 241133 0

research@gbc-ag.de

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http://www.gbc-ag.de/de/Offenlegung.htm

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