HEALIUS LIMITED — M&A Activity 2021

Dec 16, 2021

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Acquisition of Agilex Biolabs and entry into clinical research services market

17 December 2021

Contents
	Page
Transaction overview	3
Business overview	6
Market overview	9
Appendix	13

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1. Transaction overview

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Transaction overview

Healius to acquire 100% of Agilex Biolabs, one of Australia’s leading bioanalytical laboratories

• Healius to acquire 100% of Agilex Biolabs (“ Agilex ”) for an enterprise value of $301.3m[(1)(2)]

• Agilex is one of Australia’s leading bioanalytical laboratories, with 25 years’ experience in providing bioanalysis services to meet the clinical trial needs of biotech and pharmaceutical companies

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• Highly strategic acquisition provides Healius with a platform for growth into the attractive global clinical trials sector. High margin and

• Transaction capital-light business model with immediate and long-term growth potential details

• Estimated CY22 revenue and EBITDA[(3)] is within a range of $36-40m and $14-16m, respectively, with strong future earnings growth anticipated

• The acquisition is expected to deliver low single digit EPS accretion in the first full year of ownership[(4)]

• The existing experienced Agilex senior management team will remain in their current roles

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• All cash consideration, debt funded by Healius’ existing lenders

• Acquisition funding • Following completion of the transaction, Healius’ leverage will remain less than 2.0x Next steps • The transaction is subject to limited conditions and is expected to complete at the end of January 2022

Note: All financials presented in A$. (1) Pre-AASB 16, cash-free and debt-free basis, prior to completion adjustments. (2) Healius is acquiring Agilex from an entity controlled by Dr Glenn Haifer. (3) Pre-AASB 16. (4) EPS accretion statement reflects the pro forma impact of the transaction, on a pre-AASB 16 basis and prior to one-off transaction costs and any non-cash adjustments arising from acquisition accounting, in FY23, being the first full year of ownership.

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Strategic rationale

Acquiring one of Australia’s leading bioanalytical laboratories

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A platform for growth via a unique Australian entry point into the attractive global clinical trials sector with
1 
opportunities for both organic and inorganic growth
Balances Healius’ existing cash generative, mature businesses with a high margin and capital-light business
2 
with immediate and long-term growth potential
Diversification of revenue with a portfolio of global biotech, pharmaceutical and clinical research organisation
3 customers; biotech & pharmaceutical R&D funding is growing globally and is increasingly outsourced due to 
better speed and cost-effectiveness for sponsors, as well as growing complexity of clinical trials
Increases innovation and scientific / clinical R&D capabilities of Healius, adding to existing strengths in
4 
genetics and histopathology
A range of complementary capabilities alongside Healius’ core pathology business including across laboratory
5 
operations, scientific staff recruitment and development, procurement, and back-office services
Acquisition is aligned with Healius’ strategic vision as a best-in-class operator of healthcare and laboratory
6 
businesses across multiple healthcare verticals
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2. Business overview

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Agilex is a recognised leader in Australia

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One of Australia’s leading bioanalytical laboratories, employing over 100 scientific professionals

• One of Australia’s leading bioanalytical laboratories, employing over 100 scientific professionals

• High quality management team with extensive industry experience and scientific credentials

• Senior scientists have 15+ years of experience on average

• Reputation for quality with internationally recognised certifications

• Broad bioanalytical capabilities and therapeutic experience with the ability to support biotech and pharma clients primarily in Phase I and Phase II clinical trials

• Development capabilities for both small and large molecule bioanalysis

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Geographic reach
900+ cumulative projects 100+ scientific professionals
Brisbane
Adelaide
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Service customers across 10+ countries
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• State-of-the-art equipment and systems

• Laboratories in Adelaide (head office) and Brisbane (toxicology)

• Servicing customers across 10+ countries

• Current facility expansion with over 2,600m[2] of space under development adjacent to existing Adelaide head office to meet demand

• High customer advocacy with the majority of revenue generated from returning customers

• Acquired TetraQ in Mar 2021 adding leading preclinical toxicology capabilities

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Reputation for quality
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International standards and certifications
Good Laboratory
Practice (GLP)
Good Clinical
Practice (GCP)
ISO 17025
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Agilex has achieved significant growth in planned work

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Agilex has had strong recent growth in planned work which helps to underpin near-term revenue

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Planned Work [(1)] ($m) Extensive experience in the highest growth therapeutic areas
36 Broad therapeutic experience (%) [(2)]
31
16%
Oncology
32%
Infectious disease
7%
CNS
12% Dermatology
Gastroenterology
23
16% 17% Other
Well positioned for growth in oncology,
the largest therapeutic area globally by
trial volume [(3)]
Jun-21 Sep-21 Nov-21
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Source: Agilex Management, Healius due diligence.

Notes: (1) Planned Work includes contracted and uncontracted (but verbally awarded) work, which may be delivered over a period extending beyond 12 months. (2) Based on current planned work. (3) Clinicaltrials.gov

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3. Market overview

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Attractive long-term global outlook for bioanalytical laboratory testing

Biotech & pharmaceutical R&D spending is growing globally and is increasingly being outsourced

Bioanalytical Laboratory Testing Services Market

• Global market for pharma and biotech R&D outsourcing estimated to be >$40bn in 2021, and growing at +7% p.a.

• Strong sector tailwinds and positive long-term outlook

Financial

• Consistent growth in pharma and biotech R&D investments

• Pharma and biotech companies are increasingly outsourcing their clinical R&D

Scientific

• Increased innovation has led to new scientific advancements and therapeutic platforms (e.g. mRNA, gene editing)

Geographic

• Regional players (e.g. Asia) are investing heavily in biotech and growing the total end-market for therapeutics

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Long-term increase in pharmaceutical R&D spend Growing pipeline of drugs under development
Global pharmaceutical R&D spend 6,000 Global pharma pipeline from Phase I to III (#)
Large molecule
5,000
Small molecule
212
198 4,000
190
182
160 169 3,000
137 139 145 149
2,000
1,000
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 1996 98 00 02 04 06 08 10 12 14 16 18 2020
Source: Evaluate Pharma Source: Pharmaprojects 2019, includes innovative drugs only, excludes reformulations
and biosimilars
More pharmaceutical and biotech R&D being outsourced Oncology is a primary focus area
% of total global pharma and biotech R&D outsourced Forecast global market share and sales growth
(Top therapeutic areas)
25%
FY26 FY21-26
24%
Therapeutic Areas Market Share Growth p.a.
23%
Oncology 22% 12%
22%
21% Anti-diabetic 5% 5%
20%
Vaccines 5% 12%
20%
18% Immuno-suppresants 4% 18%
2013 2014 2015 2016 2017 2018 2019 2020 Dermatologicals 4% 17%
Source: Credit Suisse Source: Evaluate Pharma
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Australia is a destination of choice for clinical trials

Australia has significant speed, quality and cost advantages versus other clinical trial destinations

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Australian interventional drug trial starts (# of trials)
 Therapeutics Goods Administration (TGA) has one of the fastest
regulatory processes in the world
Phase I
 Start-up times for a clinical trial of a new drug is ~4-6 weeks in Australia Phase II
versus up to 6 months in the US
257
 Significant advantage for sponsors to speed up their drug development
pipeline
103 9%
 Australia has internationally recognised quality standards and
136
accreditations accepted by all major international regulators
 Australia is a medical research hub with ready access to high quality
scientific personnel and expertise 67
154 17%
69
 Cost advantages for sponsors related to speed and current R&D
tax incentives
FY15A FY20A
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• Start-up times for a clinical trial of a new drug is ~4-6 weeks in Australia

• Speed versus up to 6 months in the US

• Australia has internationally recognised quality standards and accreditations accepted by all major international regulators

• Quality

• Cost advantages for sponsors related to speed and current R&D

• Cost tax incentives

Source: ANZCTR

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Agilex is highly complementary

The acquisition of Agilex by Healius is a compelling strategic & operational fit

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High growth global platform

 Unique Australian entry point into the attractive global clinical trial sector at scale  Opportunities for both organic and inorganic growth

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Step-change in capabilities for the core laboratory business

 Cultural fit and adjacent to Healius’ core laboratory business  Increases innovation and scientific / clinical R&D capabilities of Healius  Adds a global orientation to the Healius network for future pathology partnerships and customer markets

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Compelling financial contribution to the portfolio

 Diversification of revenue  Complementary capabilities alongside Healius’ core pathology business  High margin and capital-light business model with strong future earnings growth anticipated

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Appendix

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Bioanalytical laboratory testing is essential in clinical trials

Bioanalytical services is the development, validation and implementation of biochemical laboratory assays to characterise a drug and the patients’ response to it to support safe, effective and expedient clinical trials

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Preclinical Phase I Phase II Phase III Phase IV
Volunteer size Animal studies Small (20-80) group of Performed on larger groups Randomized controlled Post market surveillance
healthy volunteers (20-300) having the disease multicentre trials on large trial, tested in the market
patient groups (000’s)
Purpose Designed to assess Designed to assess the Designed to assess how well Assessing the effectiveness Designed to detect any rare
preliminary efficacy, toxicity, safety and tolerability of a the drug works in patients of the drug in comparison or long-term adverse effects
safety and pharmacokinetic drug, together with with disease, and to continue with current treatment of a drug after it receives
behaviour in animal pharmacokinetics (how drug Phase I safety assessments permission to be sold
populations is absorbed and excreted) in a larger group of
Required by regulatory
and pharmacodynamics volunteers
authorities or undertaken by
(measure of level of
Involves pharmacokinetics the sponsor
response to drug)
(PK) and pharmacodynamics
(PD), as these parameters
might change in diseased
population
Time horizon
~3-6 ~0.5-1 ~1-2 ~2-4 ~2-4
(Years)
Success by phase - ~66% ~50% ~60% -
Agilex primary focus in Preclinical Toxicology, Phase I and II trials
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Source: Industry expert interviews.

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