Life Sciences Tools, Diagnostics, & Services Q4 2017 Industry Overview
Life Sciences Tools, Diagnostics, & Services: Industry Overview Key Takeaways M&A activity has remained steady at high volumes of transactions Transactions over the last 6 months have been closing at premium levels The majority of transactions are closing at well under $100 million in value (Median $17 million) with several mega deals being closed skewing the average deal to $266 million Acquirers have been continuing to make acquisitions to drive growth as valuations and pricing pressure remain high 60 M&A Transactions in the Last Six Months 2.4x Average Revenue Multiple in the Last Six Months of Transactions Percent of Transactions Announced and Successfully Closed in the Last Six Months 73% 38 27 28 M&A Transactions by Quarter 46 49 40 36 33 32 40 30 30 7 Transaction Volume is Estimated to Remain Within 28 to 33 Transactions Through Q4 of 2017 (2) - 2017-2014 $266 $17 Average Transaction Size Since of 2014 Median Transaction Size Since of 2014 2017 Estimated Revenue Valuation Ranges (1) Low High 3.8x 3.2x 3.4x 2.6x 2.8x 1.8x 1.8x 2.0x 2.0x 2.0x 145 Number of Transactions Under $100 < $5 $5-$15 $15-$30 $30-$50 >$50 (1) Estimates derived from publically traded comparable companies, precedent transactions, and management team experience. Enterprise Value expressed as a multiple of the company s revenue (2) Estimates based on management experience (2) Estimates based on Morgan Stanley Equity Research 2
Life Sciences Tools, Diagnostics, & Services: Industry Overview Active Strategic Buyers and Investors in Life Sciences Tools, Diagnostics, and Services Businesses 9 6 5 4 4 4 Number of Life Sciences Tools, Diagnostics, and Services transactions announced/completed in the last 3 years M&A activity has significantly accelerated in the past year by these selected buyers (1) 32 Transactions completed by the above buyers in the Past 3 Years 14 Transactions completed by the above buyers in the Past Year Selected Transactions Amatsigroup Exova Group GATC Biotech Villapharma Research $872 Agilux Laboratories Brains On-Line $121 LifeMine Therapeutics Science 37 SpyBiotech $153 Astute Medical Trevigen $158 (1) Transactions include both majority and minority investments Evotec Inthera Bioscience Macrophage Pharma Unchained Labs $2,088 Enzymatics Exiqon $609 3
Life Sciences Tools, Diagnostics, & Services: Industry Overview Reasons for the transactions: 1 Synergy generate new revenue channels and complementary product lines 3 Growth increase market share 5 Competition reduce number of competitors 2 Diversification reduce impact of market fluctuations 4 Pricing Power gain negotiating advantages in supply-chain Acquirer Target About the Transaction Eurofins is expanding its portfolio and footprint in this industry. This transaction is another demonstration of Eurofins coitment to provide the most comprehensive portfolio of laboratory services in the industry. Dr. Grilles Martin, Eurofins CEO Strengthening our presence in the diagnostic market remains a natural fit and strategic priority for Bio-Techne. Chuck Kueth, Bio-Techne President & CEO The acquisition supports [our] strategy to offer clients a broader, integrated portfolio that enables them to work with us continuously from the earliest stages of drug research through the nonclinical development process. James C. Foster, Charles River Chairman, President, & CEO Enzymatics. solutions are a perfect fit with our leading offering of universal NGS products as well as with our strategy to develop integrated workflows to drive the adoption of NGS in clinical healthcare. We are coitted to supporting the global sequencing counity through continued access to the solutions and products from Enzymatics. Peer Schatz, Qiagen CEO Source: S&P Capital IQ Company Press Releases 4
Objective Capital Partners is a leader in middle-market M&A advisory services in the Life Sciences Tools, Diagnostics, & Services industry Top Tier Full- Service M&A Advisory Firm Experienced Professionals Led by a team of highly-experienced M&A Advisor professionals Top tier investment bank in Southern California More than 500 transactions in several industries Senior bankers are FINRA licensed professionals Customized, Strategic Sale Approach Achieve client objectives while maximizing the company s value Each transaction is given senior banker attention Digital Healthcare Company (undisclosed) Has been acquired by Has been acquired by General Advisory Services General Advisory Services Has partnered with Has partnered with Financial Advisor to Minimally Invasive Devices Financial Advisor to Target Firm Financial Advisor to New York Genomics Center Financial Advisor to Synberc Strategic Advisor to Allergan Strategic Advisor to Allergan David H. Crean, Ph.D., Managing Director 25+ years of life sciences R&D and corporate development transactional experience in the Pharmaceutical/Life Science industry Ph.D., Biophysics, State University of New York Buffalo; MBA with a Finance Concentration, Pepperdine University School of Management; MS, Oncology, State University of New York at Buffalo; BS, Biology, Canisius College FINRA Series 63 and 79 licensed Jack Florio, Managing Director 40+ years of experience in the Life Sciences industry MBA / APC in Management, New York University; BS, Pharmacy, Columbia University FINRA Series 7 and 63 licensed Trever Acers, Managing Director 15+ years of acquisition, finance and business management experience MBA, UCLA Anderson School of Management with a Finance Concentration; BS, Business Administration, University of San Diego FINRA Series 63 and 79 licensed Channing Hamlet, Managing Director 20+ years of experience advising business owners on management issues and transaction execution MS, Operations Research, Cornell University; BS, Mechanical Engineering, Cornell University FINRA Series 7, 63 and 79 licensed 5
Life Sciences Tools, Diagnostics, & Services: Industry Overview Sell-Side M&A Our experience in the middle-market and knowledge of the sale process enables us to deliver expert advice to our clients We staff engagements with senior-level bankers whose strategic guidance for the process maximizes our clients value Mergers & Acquisitions Buy-Side M&A We provide process guidance, due diligence and valuation advice to buyers Our services include advising management on negotiating the transaction, arranging financing and conducting due diligence on the target company Capital Raise We approach financing engagements by identifying multiple prospective institutional lending sources to create competitive markets We pursue debt financing and growth equity depending on our clients needs Licensing & Partnering We help life sciences clients build, negotiate, and implement essential strategic alliances that represent a non-dilutive form of financing that does not require sale of the company s shares Valuation Advisory Valuation We have provided hundreds of valuation opinions for corporations of all sizes in a variety of industries Our valuation opinions are well-reasoned and thoroughly documented, providing critical support for any potential engagement Strategic Advisory We analyze options and assist stakeholders to arrive at an appropriate strategy to meet client objectives Our senior bankers provide counsel to management teams, shareholders and boards of directors as they explore strategic alternatives Our senior professionals are deeply involved in all aspects of the transaction execution, from the pitch to the successful completion of the deal David H. Crean, PhD, Managing Director Contact Us Phone: (858) 461-9490 Email: David.Crean@objectivecp.com Locations Los Angeles Orange County San Diego 6
Appendix
OCP Life Sciences Tools, Diagnostics, & Services Public Index (Middle Market Less than $5 billion in Market Cap) Company EV/Revenue 2012 2013 2014 2015 2016 LTM Bio-Techne Corporation 7.19x 10.29x 9.00x 7.53x 7.85x 8.69x Cambrex Corporation 1.37x 2.16x 2.02x 3.58x 3.50x 2.70x NeoGenomics, Inc. 2.15x 2.86x 2.79x 4.65x 3.57x 3.14x Luminex Corporation 3.38x 3.51x 3.19x 3.35x 3.08x 2.78x Fluidigm Corporation 5.50x 13.90x 10.14x 3.49x 3.05x 2.90x Enzo Biochem, Inc. 0.91x 1.28x 2.14x 1.85x 2.48x 3.68x Pacific Biosciences of California, Inc. NM 9.42x 8.97x 13.18x 2.79x 3.31x Harvard Bioscience, Inc. 1.08x 1.25x 1.70x 1.19x 1.08x 1.16x NanoString Technologies, Inc. NA 7.85x 4.91x 4.88x 5.53x 2.12x Accelerate Diagnostics, Inc. NM NM NM NM NM NM Pharma-Bio Serv, Inc. 0.39x 1.17x 0.56x 0.37x 0.42x NM Bioanalytical Systems, Inc. 0.69x 1.28x 0.97x 0.79x 0.61x 0.86x PureTech Health plc NA NA 0.00x 22.91x 35.75x NM BIOQUAL, Inc. 0.14x 0.03x 0.47x 0.46x 0.62x 0.83x Champions Oncology, Inc. 4.86x 14.06x 6.95x 6.12x 4.84x 10.60x CombiMatrix Corporation 1.63x 7.15x 3.31x 2.48x 1.74x 2.19x Last Twelve Months (LTM) Avg. EV/Revenue Multiple Gross Profit Margin% 3.3x 49.7% Current Price as % of 52 WK High Avg. % of Assets Funded by Debt 75.5% 18% Avg. ROE Avg. ROA Avg. ROIC -58% -9% -36% 8
OCP Life Sciences Tools, Diagnostics, & Services Public Index (Middle Market Less than $5 billion in Market Cap) Company Name Ticker Stock Price 52 WK High Equity Market Cap EV/Revenue Bio-Techne Corporation NasdaqGS:TECH $126.21 $132.57 $4,719,396 8.64x Cambrex Corporation NYSE:CBM 49.45 62.95 $1,618,480 2.83x Accelerate Diagnostics, Inc. NasdaqCM:AXDX 18.80 30.45 $1,041,474 NM Luminex Corporation NasdaqGS:LMNX 21.46 22.27 $945,409 2.78x NeoGenomics, Inc. NasdaqCM:NEO 8.66 11.63 $687,500 3.11x Enzo Biochem, Inc. NYSE:ENZ 9.95 12.04 $463,152 3.71x PureTech Health plc LSE:PRTC 1.69 1.83 $400,663 NM Pacific Biosciences of California, Inc. NasdaqGS:PACB 2.75 8.32 $319,687 3.26x Fluidigm Corporation NasdaqGS:FLDM 5.28 8.69 $204,060 3.41x NanoString Technologies, Inc. NasdaqGM:NSTG 8.08 23.45 $203,653 2.13x Harvard Bioscience, Inc. NasdaqGM:HBIO 3.08 3.90 $107,258 1.13x BIOQUAL, Inc. OTCPK:BIOQ 43.25 43.25 $39,012 0.83x Champions Oncology, Inc. NasdaqCM:CSBR 3.34 4.79 $36,693 2.17x CombiMatrix Corporation NasdaqCM:CBMX 7.60 8.20 $22,374 1.29x Bioanalytical Systems, Inc. NasdaqCM:BASI 1.93 2.42 $15,901 0.85x Pharma-Bio Serv, Inc. OTCPK:PBSV 0.50 0.99 $11,551 NM Equity Market Cap expressed in thousands, USD OCP Life Sciences Tools, Diagnostics, and Services Index vs. S&P 500 200 180 160 140 120 100 80 60 40 20-2012 2012 2012 Q4 2012 2013 2013 2013 Q4 2013 2014 2014 2014 Q4 2014 2015 2015 2015 Q4 2015 2016 2016 2016 Q4 2016 2017 2017 2017 (1) OCP Life Sciences Tools & Related Services Public Index (Middle Market) S&P 500 (1) Index weighted by market capitalization OCP Life Sciences Tools, Diagnostics, and Services Companies 9
Selected Transactions From Active Buyers In The Life Sciences Tools, Diagnostics, & Services Industry Target Company Name Buyer/Investor Company Name Date Transaction Value EV/Revenue LifeMine Therapeutics, Inc. GV & 9 Other Investors 9/15/2017 Not Disclosed Not Disclosed Trevigen, Inc. Bio-Techne Corporation 9/5/2017 Not Disclosed Not Disclosed Brains On-Line B.V. Charles River Laboratories 8/4/2017 29,124 Not Disclosed Amatsigroup Eurofins Scientific SE 7/10/2017 193,600 2.83x Unchained Labs Inc. Novo A/S & 2 Other Investors 6/26/2017 Not Disclosed Not Disclosed GATC Biotech AG Eurofins Scientific SE 6/2/2017 Not Disclosed Not Disclosed Inthera Bioscience AG Novo A/S & 4 Other Investors 5/31/2017 Not Disclosed Not Disclosed Science 37, Inc. GV & 7 Other Investors 4/25/2017 Not Disclosed Not Disclosed SpyBiotech Limited GV & 3 Other Investors 3/31/2017 Not Disclosed Not Disclosed Evotec AG Novo A/S 2/9/2017 Not Disclosed Not Disclosed Macrophage Pharma Limited Novo A/S & 7 Other Investors 1/9/2017 Not Disclosed Not Disclosed Villapharma Research S.L. Eurofins Scientific SE 12/29/2016 Not Disclosed Not Disclosed Astute Medical, Inc. Bio-Techne Corporation 12/14/2016 Not Disclosed Not Disclosed Exova Group plc, Environment Testing Eurofins Scientific SE 12/6/2016 9,782 0.68x Agilux Laboratories, Inc. Charles River Laboratories 9/28/2016 64,000 Not Disclosed Exiqon A/S QIAGEN N.V. 3/29/2016 111,805 4.25x Enzymatics Inc. QIAGEN N.V. 12/16/2014 114,224 Not Disclosed Transaction value expressed in thousands, USD Target Companies 10
David H. Crean, PhD, Managing Director Contact Us Phone: (858) 461-9490 Email: David.Crean@objectivecp.com Locations Los Angeles Orange County San Diego