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• Fastest-growing European pharmaceutical parallel trade Company plans listing on the Prime Standard of the Frankfurt Stock Exchange
• Unique multi-market strategy and focus on rapidly growing medium-to-high and high-priced pharmaceutical product segments
• Impressive track record of top-line growth with a CAGR (2015-2017) of 50% and very robust margin development
• Additional upside potential through leveraging proven business model in two complementary high-margin growth businesses
• Targeted primary gross proceeds of approximately EUR 40 million to be used for strategic growth initiatives
• Offer expected to comprise a mix of primary and secondary shares with targeted free float of approximately 50%

Copenhagen/Frankfurt, 01 October 2018 - Denmark-based Abacus Medicine A/S ("Abacus Medicine" or "the Company" and together with its fully consolidated subsidiaries, the "Group"), the fastest-growing European pharmaceutical parallel trade Company, is preparing an Initial Public Offering (IPO) and listing of its shares on the Regulated Market (Prime Standard) of the Frankfurt Stock Exchange. The planned offering is expected to consist of newly issued shares from a capital increase with targeted proceeds of approximately EUR 40 million and the sale of existing shares from existing shareholders. The offering is planned to be completed before the year end 2018 and is subject to capital market conditions. The targeted free float is expected to amount to approximately 50%. The Company's current major shareholder, Wagner Family Holding ApS (formerly: Abacus Medicine Holding ApS), which is owned and ultimately controlled by Flemming Wagner (Chief Executive Officer) and his family, plans to retain a significant stake.

"We have a proven strategy which clearly pays off and drives our profitable growth. Our strong data analysis and licencing capabilities along with our presence in twelve sales markets have set new standards in our industry. To further build on our unique platform, we are looking for additional capital to invest in new licences and markets as well as to leverage our proven model in two new, adjacent high-margin businesses. The planned IPO is the next logical step in continuing on our successful path and setting the basis for additional growth," said Flemming Wagner, Co-Founder and CEO of Abacus Medicine.

Growth supported by favourable structural drivers and regulatory environment

Founded in 2004, Abacus Medicine is, according to own estimates, today the fastest-growing parallel trade Company of original prescription pharmaceuticals in Europe. Over the last three years, the Company grew revenues by approximately 50% on average per year and gained significant market share across Europe. In 2017, Abacus Medicine generated revenues of EUR 253.1 million, an adjusted EBITDA of EUR 9.9 million and an adjusted EBITDA margin of 3.9%.

Abacus Medicine's business model is based on the core principle of the free movement of goods in the European Union's (EU) single market, where the same pharmaceutical product is often available at different prices in different countries. Parallel traders like Abacus Medicine help to decrease the overall expenditure for national healthcare systems by buying products in a country where the price is low, and repackaging and reselling them in countries where the market price is higher. Parallel trade is driven by strong underlying market fundamentals, such as changing demographics, longer life expectancy and an increase in chronic diseases leading to an overall growing demand for high-priced medicines. The total European parallel trade market is estimated at EUR 5.4 billion for 2017 and expected to grow to EUR 6.2 billion by 2022. Germany is the largest market for the sector and also Abacus Medicine's biggest market, with a share of approximately 59% of the Company's revenues generated in Germany in 2017.

Unique multi-market positioning, targeted product focus and operational excellence

Abacus Medicine is pursuing a unique multi-market strategy with a focus on medium-to-high and high-priced pharmaceutical products in combination with a high volume of product licences.

The Company has differentiated itself from other competitors through the largest geographical footprint across Europe - being present in twelve sales markets, which together represent approximately 90% of the European parallel trade market. Most competitors are only active in up to three sales markets. Abacus Medicine's multi-market strategy increases flexibility in sourcing and selling and enables the Company to adapt to and exploit fluctuations in market prices, demand and regulatory changes quickly. This approach allows the Company to safeguard growth and profitability, while at the same time mitigating risk.

Abacus Medicine focuses on the most attractive market segment of medium-to-high and high-priced pharmaceutical products for diseases like cancer, multiple sclerosis, rheumatoid arthritis and diabetes. Sales prices per product typically range between EUR 500 to EUR 3,000 per product package and above EUR 3,000 per product package. The segment is characterised by significantly higher growth rates than the lower-priced product segments. In 2017, the Company generated two thirds of its revenues with products from the medium-to-high and high-priced segments.

Abacus Medicine's product strategy is underpinned by the overall number of product licences achieved as well as its ability to constantly obtain regulatory approval for new licences. In total, the Company obtained more than 800 new licences in 2017, including twice as many EMA licences as the next competitor. As of 30 June 2018, the Company had more than 2,800 product licences.

Abacus Medicine has developed strong analytical capabilities, advanced processes and proprietary IT systems, which represent a clear competitive advantage in the industry. Its systems allow to continuously screen sourcing and selling opportunities across all markets while at the same time immediately considering dynamic changes such as price fluctuations, FX rates and logistics costs. The proprietary IT system supports Abacus Medicine's processes across the entire value chain, from the streamlining of the licence application process to logistics coordination and final delivery to the customer.

Additional growth through two new business segments

To further leverage its proven platform, Abacus Medicine has embarked on two new, attractive high-margin growth businesses. Under its wholly-owned subsidiary Aposave ApS ("Aposave"), the Company has entered the supply of comparator drugs for clinical trials and trade with unlicenced medicine. An early stage proof of concept is already shown by the revenue Aposave is generating.

The number of clinical trials for developing new pharmaceutical products is growing, leading to an increased demand for comparator drugs to test new therapies against existing products. The addressable market for the supply of comparator drugs is expected to grow from USD 1.9 billion in 2017 to approximately USD 3.3 billion in 2025, which represents an annual growth of 7%.

Trade with unlicenced medicines comprises the supply of newly-registered US and EU origin pharmaceutical products to hospitals, pharmacies and medical professionals in countries, where these medicines are either not yet licenced or in short supply. Trade with unlicenced medicine is estimated to represent a volume of USD 5.0 billion to USD 10.0 billion as of 2017.

Impressive revenue growth and robust profitability

Over the past years, Abacus Medicine has shown strong financial performance, characterised by very robust margins and strong top-line growth. During the period of 2015 to 2017, revenues have grown by approximately 50% on average per year. In 2017, the Company generated revenues of EUR 253.1 million. Adjusted EBITDA grew approximately 46.7% on average during the same period to EUR 9.9 million in 2017, corresponding to an adjusted EBITDA margin of 3.9%.

In the first six months of 2018, Abacus Medicine continued its steep growth trajectory. Revenues grew by 42% to EUR 161.2 million and adjusted EBITDA increased to EUR 6.1 million in the same period. Accordingly, adjusted EBITDA margin amounted to 3.8% in the first six months of 2018.

For the 2018 fiscal year, Abacus Medicine expects revenue growth compared to fiscal year 2017 to be in the range of 25% to 35%, which corresponds to revenues between EUR 315 million and EUR 345 million. The Company furthermore expects product profit to be in the range of 11.5% to 11.7% of revenue and EBITDA in the range of 3.4% to 3.9% of revenue. Operating profit after the one-off costs is estimated to be in the range of 2.5% to 3.0% of revenue. The highly attractive opportunities in adjacent markets, namely the supply of comparator drugs for clinical trials and trade with unlicenced medicine, is expected to provide further margin upside potential.

Planned IPO as next step in continuing the Abacus Medicine growth story

In connection with the IPO, the Company is currently anticipating a primary offer size of EUR 40 million and the sale of ordinary shares by existing shareholders, the amount of which is yet to be decided. Further ordinary shares will be made available by the selling shareholders pursuant to a customary greenshoe option. The targeted free float is planned to be around 50% post IPO. Lock-up periods will be six months for the Company, 18 months for selling shareholders and 12 months for employees entitled to shares under the Company's warrant programme.

The proceeds will allow Abacus Medicine to invest in gaining further market share across Europe, primarily by expanding its purchasing capacity, increasing its licence portfolio and investing in its manufacturing facilities in Hungary and the Netherlands. Furthermore, Abacus Medicine intends to invest in additional headcount of IT and regulatory experts as well as into the implementation of a new ERP system. The Company will also invest in strengthening its market presence in the two new business segments for unlicenced medicines and supply of comparator drugs for clinical trials.

 

Additional information

Berenberg and Commerzbank have been appointed as Joint Global Coordinators and Joint Bookrunners of the offering. Nordea will act as Joint Bookrunner.

Media contact

 

DISCLAIMER

This publication does not constitute an offer to sell nor a solicitation of an offer to buy or subscribe for any securities. No offer of securities of ABACUS MEDICINE A/S is being, or will be, made to the public outside Germany and Denmark. A prospective offer in Germany and Denmark would be made exclusively by means of a securities prospectus to be published and filed with the Danish Financial Supervisory Authority (Finanstilsynet). Such securities prospectus would at the appropriate time be made available free of charge at ABACUS MEDICINE A/S.

The material set forth herein is for informational purposes only and does not constitute an offer of securities for sale or a solicitation of an offer to purchase securities in the United States, Canada, Australia, Japan or any other jurisdictions in which such offer could be subject to legal restrictions. The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the Securities Act), or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in accordance with any applicable securities laws of any state or other jurisdiction of the United States. No public offering of securities will be made outside Germany and Denmark.

In the United Kingdom, this document is only being distributed to and is only directed at persons who (i) are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended) (the Order) or (ii) are persons falling within Article 49(2)(a) to (d) of the Order (high net worth companies, unincorporated associations, etc.) (all such persons together being referred to as Relevant Persons). This document is directed only at Relevant Persons and must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this document relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.

"Statements contained herein may constitute "forward-looking statements." Forward-looking statements are generally identifiable by the use of the words "may", "will", "should", "plan", "expect", "anticipate", "estimate," "believe", "intend", "project", "goal" or "target" or the negative of these words or other variations on these words or comparable terminology.

Forward-looking statements are based on current expectations and involve a number of known and unknown risks, uncertainties and other factors that could cause the Group's or its industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. You should not place undue reliance on forward-looking statements and the Group does not undertake publicly to update or revise any forward-looking statement that may be made herein, whether as a result of new information, future events or otherwise."

This publication contains certain non-IFRS financial measures and ratios, including EBITDA and EBITDA margin, that are not required by, or presented in accordance with, IFRS. The Company presents these non-IFRS financial measures because they are used by its management for monitoring the Group's business and management believes these non-IFRS financial measures facilitate an understanding of the underlying operating performance of the Group. The non-IFRS financial measures used by the Company, including inter alia EBITDA and EBITDA margin, are alternative performance measures as defined in the guidelines issued by the European Securities and Markets Authority (ESMA) on October 5, 2015 on alternative performance measures. The definitions of the non-IFRS financial measures may not be comparable to other similarly titled measures of other companies and have limitations as analytic tools and should not be considered in isolation or as a substitute for analysis of the Group's operating results as reported under IFRS.
 

^[1] EBITDA is defined as operating profit before depreciations and amortisation. EBITDA adjusted for one-off costs in connection with the preparation of the IPO (EUR 0.4 million in fiscal year 2017). Unaudited and unreviewed. Excluding contributions from the divested DayDose business (see footnote 9 for a description of the contributions from the divested DayDose business), adjusted EBITDA came in at EUR 11.2 million in 2017.

^[2] Adjusted EBITDA margin is calculated as adjusted EBITDA divided by revenue. Unaudited and unreviewed. Excluding contributions from the divested DayDose business, adjusted EBITDA margin came in at 4.4% in 2017.

^[3] Management report prepared by QVARTZ P/S, Ryesgade 3A, DK-2200 Copenhagen N, Denmark, dated August 8, 2018 ("QVARTZ Management Report") which is based on data and information obtained from EFPIA, IQVIA MIDAS Quantum and expert interviews.

^[4] Grand View Research (2018)

^[5] Clinigen 2017 Annual report

^[6] EBITDA adjusted for one-off costs in connection with the preparation of the IPO (EUR 0.4 million in fiscal year 2017). Unaudited and unreviewed. Excluding contributions from the divested DayDose business (see footnote 9 for a description of the contributions from the divested DayDose business), adjusted EBITDA came in at EUR 11.2 million in 2017, while the adjusted EBITDA margin came in at 4.4%.

^[7] EBITDA adjusted for an exceptional inventory write-off in respect of a specific pharmaceutical product of EUR 0.5 million for the first six months of 2018 and one-off costs in connection with the preparation of the IPO of EUR 0.2 million for the first six months of 2018. Excluding contributions from the divested DayDose business (see footnote 9 for a description of the contributions from the divested DayDose business), adjusted EBITDA for the first six months of 2018 amounted to EUR 6.8 million, while the adjusted EBITDA margin came in at 4.2%.

^[8] Revenue includes revenue contribution of EUR -0.1 million for the first six months of 2018 and EUR 0.2 million and EUR 0.4 million for the fiscal years 2017 and 2016, respectively, which were related to exclusive producing, marketing and distribution activities carried out by the Company under the brand DayDose and in connection with the Company's purchase of intellectual property rights related to DayDose in the fiscal year 2017, which have been divested on August 31, 2018. Unaudited and unreviewed.

^[9] EBITDA includes costs (staff costs) related to the divested DayDose business amounting to EUR 0.7 million, EUR 1.3 million and EUR 1.4 million in the first six months of 2018 and the fiscal years 2016 and 2017, respectively.

^[10] EBITDA adjusted for a one-off inventory write-off in respect of a specific pharmaceutical product of EUR 0.5 million for the first six months of 2018 and one-off costs in connection with the preparation of the IPO of EUR 0.2 million and EUR 0.4 million for the first six months of 2018 and the fiscal year 2017, respectively. Unaudited and unreviewed.

^[11] Unaudited and unreviewed.