Corporate Presentation Template - Albany Molecular Research, Inc.

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Feb 22, 2013 (4 years and 5 months ago)

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Investor Presentation



December, 2012

NASDAQ:
AMRI

Forward
-
Looking Statements

This

presentation

may

contain

projections,

estimates

and

other

forward
-
looking

statements

that

involve

a

number

of

risks

and

uncertainties,

including

those

discussed

in

the

Company’s

filings

with

the

Securities

and

Exchange

Commission
.

While

this

presentation

represents

management’s

current

judgment

on

the

future

direction

of

the

Company’s

business,

such

risks

and

uncertainties

could

cause

actual

results

to

differ

materially

from

any

future

performance

suggested

herein
.

The

Company

undertakes

no

obligation

to

release

publicly

the

results

of

any

revisions

to

these

forward
-
looking

statements

to

reflect

events

or

circumstances

arising

after

the

date

hereof
.


2

Global Services Provider


A leading contract research and manufacturing organization. One of the only companies
providing a fully integrated service offering from discovery, through early development to
commercial manufacturing.



Global capabilities with facilities in U.S., Europe and Asia



Proprietary portfolio of early stage drug candidates provides free call option



1,300 employees including the highest ratio of Ph.D. to B.S. scientists compared to
competitors


United States

Europe

Asia

3

Service Platform

Discovery Services

Early Development

Contract Manufacturing


Target Validation


Medicinal Chemistry


HTS


In Vitro Biology


Library Synthesis


Biocatalysis


Custom Synthesis


Natural Products


Structure ID


Early ADME


Chemical Process Development


Analytical Development


Kilo Lab Scale
-
Up


Phase I GMP


Fermentation Development


Salt & Polymorph Investigations


Impurity Identification


Formulation Development


Phase II/III API


Commercial API


High Value Intermediates


High Potency


DEA Regulated API


Sterile Fill &
Finish Drug Product


Niche Generics


Formulation Manufacturing

4

AMRI’s Global
Footprint

5

*

*Closing in March 2013

Value Proposition


Strong intellectual input for creative customer solutions



Higher ratio of Ph.D. to B.S. scientists compared to competitors




-

45% Ph.D. density, 10 years average experience



Proven ability to bring discovery candidates to IND and clinical candidates



to commercialization




-

Delivered over
75
preclinical and clinical leads leading to




over 50 IND’s in last ten years




-

90 patents filed and 300 peer review publications


Integrated global chemistry and biology services


Flexible, customized solutions for our customers to


improve speed, cost and quality


Seamless technology transfer from early



development to commercial production



-

53
Phase I & II customer compounds



-

25
Phase III customer compounds



-

35
Commercial customer products


Partnering and out
-
licensing opportunities

for proprietary early
-
stage portfolio


6

2012 Strategic Initiatives


Enhance revenue growth and mix


Increase multi
-
year strategic relationships


Strengthen aseptic fill/finish business


Drive SMARTSOURCING™
-

a cross functional approach that maximizes the strengths of both
insourcing and outsourcing


Enhance international footprint
-

key appointments in Europe and ASIA



Streamline operations to improve margins


~$16M reductions vs. 2011


Hungary operations closed Q1’12; select services moved to Asia


Ongoing assessment of global operating structure



Maximize licensing/partnering of proprietary compounds to enhance cash flow


Deliver Profitable Operating Performance in 2012.

7

Enhancing Revenue Profile


Build
multi
-
year
c
ollaboration
a
greements
:


Lilly
insourced
c
hemistry


NIH
award
to
develop pre
-
clinical
d
rug
c
andidates


Merck for discovery services at Singapore facility


Drive Aseptic Fill/Finish business


Cardium

agreement
for
aseptic
f
ill
for
commercial
l
aunch
of
Excellagen



Two compounds with NDAs expected. Working on commercial
manufacturing contracts


Expand material commercial manufacturing agreements


Signed extensions on two large API supply agreements


New generic compound approved by FDA in Quarter 2 with both
API and royalty revenue


35 commercial
products already in place


Maximize strong customer clinical pipeline


53
Phase I & II;
25
Phase III


Seven
high potential compounds with
two anticipated
PDUFA
dates and
five
with potential NDA filings during
the next 12
months.


Some
NDA filings may be fast tracked resulting in
PDUFA dates during the same time period.

2012 Contract Revenue Guidance*

*
-

Mid
-
point of Guidance

Development

Large
Scale

Discovery

$112
$37
$34
8

22%
24%
21%
33%
18%
45%
26%
11%
21%
16%
21%
42%
Diversifying The Customer Portfolio

(2012)

25%
26%
19%
30%
Large Pharma/Biotech
Biotech

Spec Pharma


Other

Discovery

Development/Small Scale

Large Scale

TOTAL AMRI

9

Improving Cost Structure


Ended development activities related to
internal R&D programs


~$7M reduction vs. 2011



Right sized US operations


~$3M reduction vs. 2011


Announced closure of Bothell, WA
(March, 2013)



Global cost
-
reduction initiatives to
streamline business


Closed
Hungary facility


$6M reduction vs. 2011


Ongoing operating review


Sourcing initiatives


Lean initiatives



Process improvement investments to
increase future margins for
generic/commercial products


Positioning business for improvement in margins

w
hile aligning capabilities to emerging customer needs.

10

Positive Long
-
term Industry Drivers


Large pharma R&D restructuring


Reduction in internal R&D resources, generic competition,
healthcare reform driving increased strategic outsourcing


More stringent regulatory environment


Requires the use of service providers with strong intellectual
capacity and high quality standards


Globalization of R&D activities


Customers are seeking lower cost alternatives with the same quality
standards they receive in the US


Biotech funding environment


Availability of capital has stabilized


Academic institutional role


Large pharma turning to academics as source of innovation.
Academics need support to “Industrialize” concepts


We believe market pressures will exert increasing trend toward
outsourcing.

11

Market Opportunity

Contract Services

$2 billion

Data Sources: William Blair & Co, Jefferies & Co., Merrill Lynch,
Kalorama

Research, Sterne Agee

Discovery Services


Predict long
-
term growth due to increased outsourcing by Big
Pharma

and entrance of more
virtual Biotech,
non
-
profit, academic organizations


Historically fragmented market subject to significant consolidation

$
36


$
38
million

Estimated

Outsource

Market

AMRI

Share

$1 billion

$
33


$
35
million

Estimated

Outsource

Market

AMRI

Share

Early Development

$12


$14 billion

$
111


$
113
million

Estimated

Outsource

Market

AMRI

Share

Contract Manufacturing

12

Market Opportunity

Sales & Marketing Strategic Direction


AMRI “SMARTSOURCING™



Transitioning from a scientific to a
customer relationship focus


Strategic Account Plan launched to
increase penetration and market share in
the large pharma segment


Geographically expanded team
throughout US, Europe and Asia to
capture larger customer base


318

167

156

1,552

1,716

614

US
Europe
Asia
# of Companies

Public
Private
Global
Pharma
/Biotech
Industry*

AMRI presently provides services to 300
+

Companies.

Large Opportunity to Expand Customer Base.

* Data Source: Ernst & Young


13

AMRI Royalties

Allegra
®


AMRI licensed technology to
Sanofi

in 1995


Earn royalties through 2015


At risk launch of generic version by
Teva
/Barr

in September 2005


Amended license agreement in 2008 to allow

sublicense to
Teva
/Barr


Received $10M upfront payment for sublicense


Received increased royalties from
Sanofi
; royalties on
Teva
/Barr sales


Sanofi

launched OTC in March 2011 in US

Other


New royalty for a generic from previous agreement


Five
-
year royalty stream commencing June 2012


Rolling five
-
year window with any new drug launch

$
28

$
35

08

09

10

11

12

14

$
35

$
35

$
36

($ Millions)

Partnering and Out
-
Licensing Opportunities

15

$0
$50
$100
$150
$200
2000
2002
2004
2006
2008
2010
2012E
Contract Revenue
Milestone Revenue
$40

$60

$72

$145

$122

$137

$153

$165

$201

$162

$163

$173

$183

Moving Forward

Contract Revenue Growth

16

Book to Bill Ratio

Improvement in the Book to Bill Ratio provides optimism for revenue growth
.

17

0.37

0.07

0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
FY 2010
FY 2011
YTD 2012
Multi Year Contracts
1.26

1.33

1.37

2012 Contract Revenue & Margin Guidance

18

$114

$74

$71

$112

$82

$96

$112

$
153

0%
5%
10%
15%
20%
25%
30%
$0
$50
$100
$150
$200
$250
$300
2008
2011
2012*
2015*
Contract Margin %

Revenue in Millions of USD

DDS
LSM
Margin
$196

$170

$183

$265

Margin

25%

1%

8%

-

11%

19%
-

23%

*Amounts
represent midpoint of
guidance


Revenue CAGR for 2011


2015 = 12%

Discovery Biology


Biology Marketplace


Forecast as the fastest growing sector within the Discovery outsourcing market, (estimated to be as
high as 20% compound annual growth over the next 5 years)


Increasing trend towards sourcing end
-
to
-
end integrated drug discovery services


Customers increasingly seeking co
-
location with chemistry


HTS market relatively mature; demand is mainly for niche specialty technologies



AMRI Biology Services:


As standalone and as key component of Integrated Drug Discovery programs


Bothell site provides “High end” custom biology, HTS and Natural Products


Singapore much smaller scale, mainly program
-
support biology, some HTS


Well
-
received by clients (NPS = 45); highly related on all customer feedback metrics (except
pricing)


About 20% AMRI Discovery business is dependent upon our biology capabilities


Biology increasingly an entry
-
point for wider range of services


19

Discovery Biology Challenges


Bothell site is running ~10% capacity => substantial losses


US biology carries high costs inherent in HTS and natural products capabilities


Singapore biology lacks certain important capabilities

(molecular biology, microbiology)


Small scale of Singapore biology raises credibility questions


Very little market
-
appetite for US pricing in biology


US biology is not co
-
located with chemistry services



20

Bothell Exit and Transition

Decision made to exit Bothell by end Q1
-
2013 and consolidate

biology operations at Singapore Integrated Discovery location



Bothell staff notified Thursday November 29, 2012


Of 24 staff, approximately 25% will leave Dec 31st, remainder end
-
Q1, 2013


Several projects will continue through March 2013


Ongoing (and new) biology projects will be executed in Singapore


Work commenced on Singapore biology lab expansion to accommodate broader
-
scope of work
(including HTS, molecular biology and microbiology)


Structural analysis operation will be relocated to Albany, as part of PQS



21

Discovery Biology Summary


Biology consolidation in single location provides:


A biology operation of credible scale


Presents a clear integrated discovery offering to our clients


Supports vision of “Asia Discovery” (Singapore hybridized with India)


Eliminates duplication of existing and future cost
-
structure



Relocation of Structural Analysis business:


Plays to overlap of impurity ID service with chemical development and
gmp

services


Presents logically to clients as associated with existing analytical and separation services


Leverages overlaps in equipment resource with PQS operations


22

Strategic Priorities for 2012


Return to profitability


Right size operating structure


Increase global market share


Continue to enhance quality profile


Expand long
-
term strategic partnerships (insourcing, not
-
for
-
profit/government
collaborations, venture capital relationships, etc.)


Out
-
license/partner remaining proprietary compounds

Adjusting business strategy to address changing market.

23

APPENDIX

AMRI Contract Services

Discovery


A broad spectrum of lead discovery services backed by decades of
experience


AMRI U.S. discovery chemists average 10 years plus of industrial experience, 50% PhD density


AMRI has delivered over 75 pre
-
clinical and clinical leads to customers resulting in over 50 customer
IND’s over the past 10 years


AMRI’s expertise demonstrated by over 90 patents filed and 300 peer review publications


Tightly integrated services can be accessed individually or as a full discovery
program

Extensive depth across multiple therapeutic areas and target classes.

Helping customers discover/advance clinical leads.

25

AMRI Contract Services

Early Development


A suite of drug development services to bring a
clinical candidate from laboratory scale to
commercialization



Exceptional track record and strong compliance
history



Clients benefit from individual components of a
development/ manufacturing program, while
harnessing synergies in discovery



Highly integrated with Large Scale business to
effect technology transfer and accelerate
customer timelines for both API and drug
product


26

53
customer compounds in Phase I
-
II pipeline

feeding large scale business.

26

AMRI Contract Services

Contract Manufacturing


Assets in US, Europe and India allow AMRI to assist customers in product life cycle
management


Excellent FDA compliance history


Thirteen consecutive FDA inspections across global API facilities with no 483s. Approved by
MHRA in UK


Formulation manufacturing added in solid dosage and sterile fill/finish drug product

to
decrease clinical trial timelines and costs


Specialized capabilities in high potency and

controlled substances


Portfolio of niche generic APIs provides a

base level of cost absorption


Multiple successes in supporting

customers progressing to NDA and

Commercialization

-
35 commercial products in place

25
customer compounds in Phase III pipeline.

27

Strategic Partnerships

AMRI & BMS Licensing Agreement


Received over $33 million in upfront fees, research funding and milestones


Milestones up to $66 million per compound for first two compounds and up to $22 million per
compound on subsequent compounds


Opportunity for multiple drug candidates


Royalties on worldwide sales of commercialized compounds


One compound in Phase II, milestones received for one compound that entered Phase II
and two compounds that entered preclinical development

Development of biogenic amine reuptake inhibitors for depression and other CNS disorders.
Preclinical lead compounds licensed in October 2005.

BMS
-
820836 viewed by BMS as one of its most promising
development programs for treatment resistant depression.

28

Condensed Balance Sheet

($ millions)


September

2012

June

2012

March

2012

December

2011

Assets

Cash and Investments
-

Unrestricted

$15.7

$13.4

$8.2


$20.2

Restricted Cash

5.0

5.0

4.5


--

Accounts Receivable

35.2

35.3

33.4


30.4

Royalty Receivable

9.3

7.0

10.7


6.8

Inventory

33.2

35.9

29.3


26.0

Net PP&E

141.5

142.2

145.0


149.8

Total Assets

$266.4

$267.4

$263.4

$263.1

Liabilities and Equity

Accounts Payable & Accrued Expenses

$27.9

$27.9

$25.0


$20.4

Deferred Revenue

7.2

7.2

7.3


6.5

Debt

8.0

8.0

5.4


5.8

Stockholders’ Equity

204.6

205.0

205.3


206.4

Total Liabilities and Equity

$266.4

$267.4

$263.4

$263.1

29

Major Competitors

Discovery

Development/Small Scale

Large Scale

US

Ash Stevens

Cambridge Major

Irix

Norac

Regis

Ricerca

Cambrex

Johnson Matthey

SAFC

Ash Stevens

Europe

Aptuit

Chem

Div

Evotec

Galapagos

Almac

Aptuit

Carbogen

Hovione

Onyx Scientific

Solvias

DSM

Evonik

Hovione

Lonza

Fabbrica Italiana Syntetici

Saltigo

Asia

GVK Bio

Shanghai
Chem

Partner

WuXi

Syngene

Chembiotek


GVK Bio

Jubilant

Syngene

Aurigene

Dishman

Jubilant

Dr. Reddy’s Labs

Shasun

Arch
Pharmalabs

AMRI only company which competes across all segments

30

About AMRI

Albany Molecular Research, Inc. (AMRI) is a global contract research and manufacturing organization
offering customers fully integrated drug discovery, development, and manufacturing services. For over 21
years AMRI has demonstrated its adaptability as the pharmaceutical and biotechnology industries have
undergone tremendous change in response to multiple challenges. This experience, a track record of
success and locations in the United States, Europe and Asia now provides our customers with
SMARTSOURCING™, a full range of value
-
added opportunities providing customers informed decision
-
making, enhanced efficiency and more successful outcomes at all stages of the pipeline. AMRI has also
successfully partnered R&D programs and is actively seeking to out
-
license its remaining programs for further
development.


Contacts
:

Investor Relations: Michael
Nolan, Chief Financial Officer, 518
-
512
-
2261

Media: Gina
Monari, AMRI Communications, 518
-
512
-
2512


31