(C) Sygnis 2016 - Pilar de la HuertaSygnis: Expedeon & liquid biopsy tests for future growth

September 2016. Edison Investment Research Limited has published a research update on SYGNIS AG entitled “Bigger, stronger, faster”. According to the Edison analysts, the Expedeon acquisition is a solid basis for growth and crucial for the medium-to long-term profit potential of SYGNIS. However, the full impact of the acquisition with regard to the Company’s growth will not be visible until 2017 and 2018, since management has focused initially on controlling costs and integrating the businesses. Expedeon already started selling SYGNIS kits in June 2016.

Edison forecasts consolidated 2016 revenues of around €3.2m, with an estimate that Expedeon might contribute over €228k EBITDA (at a 13% margin) in 2016 (half year). Edison assumes that Expedeon brings €500k in cash and estimates that in 2017, sales synergies should be in place, direct sales of molecular biology kits could have risen and costs should have been rationalised, all of which might take the merged business to profitability. Edison states that a combination of high growth and controlled costs would give a very favourable profit outlook for 2018 and 2019, although at the moment it is too early to be clear about the longer-term prospects for the business. Edison emphasizes Expedeon’s strong OEM sales channel with Sigma and a Chinese deal with Tanon. These deals might offer further opportunities for SYGNIS’ molecular biology products. SYGNIS also plans to use its innovative molecular biology technology to enter the research market for liquid biopsy tests – tests for DNA fragments in the blood that can track and detect cancers. This could be a major product, currently in late-stage development.

Edison has not changed its valuation or forecast from May 2016, as guidance on the progress of the integration and the potential sales in 2016 and particularly 2017 will be issued in November with the Company’s Q3 results.

 

Footnote EdisonIR report: Sygnis is a research client of Edison Investment Research Limited

Sources:Sygnis AG & John Savin, Analyst Edison Investment Research Ltd.  

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