Aggregate Partner Company Revenue up 73% in Q3; Guidance Increased to between $360 Million to $385 Million
Posted by | November 3, 2010
Earlier today in our third quarter results conference call, we announced that our aggregate partner company revenue increased 73 percent in Q3, and that for the second time this year, we are increasing our aggregate partner company revenue guidance for fiscal 2010 to a range between $360 million and $385 million. This is a result of many exciting developments taking place at our partner companies. Consider the following:
- Advanced BioHealing now expects to generate more than $130 million in revenue in 2010, up more than 50 percent from 2009 revenue, as a result of increasing demand for its bio-engineered skin substitute Dermagraft® for diabetic foot ulcers.
- AdvantEdge Healthcare Solutions, now one of the nation’s 15 largest medical billing firms, is achieving profitable growth, organically as well as by acquisitions, and expects 2010 revenues to exceed $30 million, up more than 95 percent from 2009 revenue.
- Avid Radiopharmaceuticals remains on track to have its NDA filed with the FDA before year-end 2010 for its amyloid imaging agent, Florbetapir F18, designed to identify Alzheimer’s disease pathology.
- Good Start Genetics joined as a partner company in September when we deployed $6.8 million of capital for a 27 percent primary ownership position. Good Start Genetics is developing a more accurate and comprehensive pre-pregnancy genetic test based on proprietary next-generation gene sequencing technology, designed to replace single-disorder-only tests currently on the market.
- MediaMath, one of our Internet / New Media partner companies, expects annual revenue for 2010 to more than double from 2009 levels as demand continues to build for their enterprise-class digital-media buying and reporting services.
- NuPathe raised $43 million in net proceeds from its IPO of common stock in August, and recently filed an NDA with the FDA for its lead product candidate ZelrixTM, a single-use transdermal sumatriptan patch being developed to treat acute migraine. Zelrix is the first ever submission to the FDA of a transdermal patch for the treatment of migraine.
In addition to highlighting activities from the third quarter, we also discussed our recent announcement that partner company Clarient has agreed to be acquired by GE Healthcare, from which we anticipate that we’ll receive net sale proceeds of approximately $145 million, upon consummation of the transaction. As a result, Safeguard’s cash balance would be approximately $200 million, on a pro forma basis at September 30 — a debt-to-cash ratio of 1 to 2.6. We intend to redeploy those net proceeds into new, high-growth, high-value opportunities, as well as our current partner companies.
The potential is real for additional exit transactions over the course of the next year, despite an uncertain economic outlook. M&A activity has been checkered and IPO pricing has been soft. However, if an opportunity clears our strategic growth and return hurdles, we will respond appropriately. Until then, we remain focused on enhancing value in our partner companies, rather than deploying capital or pursuing exits simply for activity’s sake. Safeguard’s pipeline of new opportunities is brimming. Our diligent research and analysis of those opportunities is ongoing.
Today, Safeguard is stronger, leaner and better positioned to execute our strategic game plan than at any time over the last five years.
