On May 26, 2020 Selvita (WSE: SLV), one of the largest preclinical contract research organizations in Europe, reported its first quarter 2020 financial results and provided a corporate update (Press release, Selvita, MAY 26, 2020, View Source [SID1234558512]).

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The company continues its dynamic growth and reports backlog for 2020 of EUR 21,8 million, indicating a 41% increase to the values reported a year ago. The increase in the value of signed contracts in the Services segment amounted to 48%.

For the first three months of 2020, Selvita reports consolidated revenues of EUR 7 million, up by 41% on a year-on-year basis, thus confirming very good preliminary estimates published on April 29, 2020. What is quite remarkable, despite the worldwide COVID-19 pandemic, the company has managed to strengthen its position in the global CRO market, especially among US customers considered the largest biotechnology market in the world.

Commercial revenues in the Services Segment amounted to EUR 5.8 million in 1Q 2020, indicating a 46% increase as compared to same period previous year. The Bioinformatics Segment’s (Ardigen, where Selvita holds 54,7 percent of votes at the General Meeting of Shareholders) commercial revenues increased by 33% and amounted to EUR 0.7 million.

Company’s EBITDA profit reached EUR 1.7 million and was by 52% higher than in Q1 2019, with a profitability margin of nearly 24%. The net result increased by 92% reaching EUR 0.8 million. These results, demonstrate that Selvita has not only maintained but in fact exceed its planned rate of growth.

– We’re sticking to the plan and not slowing down our pace of development. We’re maintaining high revenue dynamics, at the same time increasing EBITDA margin, which in Q1 2020 has increased by nearly 2 p.p. The results we managed to achieve in the past quarter are particularly satisfying, due to the global economic uncertainty caused by COVID-19 pandemic. So far, it looks like Selvita successfully went through this difficult time. We implemented safety measures in order to secure the health and safety of our employees and managed to maintain business continuity in all projects. In this uncertain environment, we were able to strengthen our position among foreign customers, especially on the U.S. market. Many pharmaceutical and biotechnology companies have realized the need for geographical diversification of outsourced services. Selvita skillfully fits into these changing trends on the preclinical CRO market – comments Bogusław Sieczkowski, co-founder, and Chief Executive Officer at Selvita.

External revenues from the services commissioned by US customers increased in Q1 2020 by 175% and already constitute over 25% of the entire Services Segment revenues. At the same time, revenues from the services commissioned by customers from the United Kingdom increased by 74%. Services contracts from these two largest global biotech & pharma markets include both drug discovery and regulatory research. Increasing customer recognition for the high quality of services and competences offered by Selvita team results in further contracts. As on May 21, the backlog in the Service Segment amounted to EUR 18.0 million, i.e. was 48% higher than same time previous year. Out of which, nearly EUR 14.0 million concerns the services in the area of drug discovery and EUR 3.5 million in regulatory research.

– The continuously growing backlog, demonstrates that during the pandemic, despite the restrictions placed on international travel and cancelation of industry events, we are able to acquire new contracts efficiently. With most of global business activity going virtual, the geographical barriers have disappeared and we can build our position on the international market on an equal level with other providers – emphasizes Bogusław Sieczkowski.

In addition to increasing revenues, Selvita’s new strategy also assumes maintaining a stable EBITDA margin and over EUR 230 million of market cap in 2023. For this purpose, in 2020-2023, the company intends to execute investments worth up to EUR 75-90 million, which will be allocated to acquisitions and organic development.

In order to execute the strategy, Selvita plans to raise approx. EUR 21 million by issuing up to 15% of the share capital in a Follow-On offering. Approximately 80% of the proceeds will be allocated for acquisitions. One of the elements of the strategy execution will be the creation of Selvita Research Center in order to secure own research space necessary for further growth. The Company has already made a first step towards execution of this aim, and signed a preliminary contract for a plot of land in the neighborhood of its current laboratories. The initiation of the investment is planned for 2021.