Centogene NV (CNTG) 2020 Q4 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Centogene First Year 2020 Earnings Results Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to turn the conference over to your speaker today, Lennart Streibel. Please go ahead.

Thanks, Sarah. Hello, and welcome. Thank you for joining us to discuss our Q4 and full year 2020 results, which were issued earlier today. You can view this presentation and the related press release on Centogene's website. For those unable to view the webcast, you can find the relevant slides on investors.centogene.com.

Before we begin, please refer to the Slide 2 of our presentation, which provides information about certain statements to be made today that may be considered forward-looking statements within the meaning of the U.S. securities laws, including those regarding our strategic plans, development programs and future financial results. Statements made during this call that are not historical statements may be forward-looking statements and as such may be subject to risks and uncertainties, which if they materialize, could materially affect our actual results. The forward-looking statements in this presentation speak only as of today, April 15, 2021, and we undertake no obligation to update or revise any of these statements to reflect future events or developments, except as required by the law. Additional information regarding these statements appears on our SEC filings.

It is now my pleasure to introduce you to today's speakers, our Chief Executive Officer, Andrin Oswald; and Richard Stoffelen, our Chief Financial Officer. Following our presentation, we will open up the call to Q&A. We kindly ask you to only ask 3 questions.

I will now hand the presentation over to Andrin. Please turn to Slide 4. Andrin?

Thank you, Lennart. Hello. Good afternoon, good morning, everyone.

Today, I will begin by walking you through our operational performance during 2020. I will update you on the progress of our core businesses, meaning the Pharma and Diagnostics segments, and provide you with further insights into our company and its key assets. Richard will then take you through the financials, including what we have been able to achieve in our commercial COVID-19 testing segment. We will then provide our financial guidance for 2021 and the business outlook. Afterwards, we will open up for Q&A.

Let's please turn to Slide 5. Now let me first highlight the key messages for the day. We had a very strong performance from a revenue perspective, having more than doubled in 2020 compared to 2019. The company surpassed EUR 100 million in revenues for the first time in its history for a record year overall. Additionally, we have achieved the record adjusted EBITDA. Both revenues and adjusted EBITDA were driven by the COVID-19 testing segment in the second half of the year. I believe this is a truly impressive achievement and a credit to the strong performance of a dedicated working team at Centogene, especially during a very challenging year.

When looking at the core business, I want to underline that this is our firm focus for 2021 and beyond. Even though the core segment's overall financials for 2020 reflect the headwinds from the pandemic, I'm pleased to say that our Diagnostics segment continued recovering since the lows in the second quarter, and sample and order intake values in Q1 2021 is approximately on par with Q1 2020 and growing. In Pharma, we signed 16 new collaborations in 2020 and a further 16 extensions of existing collaborations. As such, I'm confident that the overall core business is back on track for growth.

Looking at 2021, the positive financial contribution from our COVID-19 testing segment leaves us in a stronger financial position. These contributions have allowed us to make continued investments into our rare disease core business at Centogene as Centogene embarks on its next phase of growth. On that topic, I'm pleased to invite you all to our virtual investor event planned for June 22, where I will, together with the Centogene executive team, provide further insights and discuss the company's strategy and future direction.

Let us now discuss the company's 2020 performance. Please turn to Slide 6. In 2020, our revenues more than doubled compared to 2019, reaching EUR 128.4 million. This increase was driven by COVID-19 testing, which accounted for EUR 89.3 million for the full year, and EUR 59.8 million in the fourth quarter.

We experienced headwinds for sure from the COVID-19 pandemic that impacted our core business segments, particularly in the second and third quarter of 2020. The core segments gradually recovered towards the end of the year, but did not match our prior year's performance overall. That meant that the full year revenues within the Pharma segment decreased by 21% and within Diagnostics by 19%. However, COVID-19 testing revenues have enabled us to more than make up for the headwinds in the core business. As we look ahead into 2021, I'm confident that we will return to solid core business growth.

Now please turn to Slide 7 to have a closer look at Diagnostics. Now firstly, I'd like to share an update on the momentum in our Diagnostics segment. The graph on this slide depicts the sample order intake value for each quarter using Q1 of 2020 as a benchmark for pre-pandemic levels. You can clearly see the levels falling dramatically to approximately 50% of normal levels in the second quarter of 2020, showing the impact of COVID-19 pandemic. Since then, we have steadily seen levels of recovery each quarter to approximately 80% of pre-pandemic levels in Q4 2020 overall.

And as already mentioned, I'm pleased to say that we have seen the trend to continue in Q1 2021, with sample order intake values approximately on par with Q1 2020 and growing. I believe this demonstrates the ongoing and increasing need for our testing services.

In 2020, we maintained also and built our leadership further in rare disease diagnostics and continue to strengthen our superior scientific insights and knowledge. We laid the foundation for this by authoring 55 peer-reviewed publications in 2020, which was a record year for Centogene. This truly demonstrates our commitment to continuously unlocking further insights into rare genetic diseases.

Some of the scientific achievements are shown on the slide. Many of them are proof points for increasing diagnostic yield with genome sequencing and how we are providing bioinformatic tools to enable best-in-class diagnostic interpretation. Furthermore, our research is aimed to uncover specific genotype-phenotype associations to understand novel causes and unknown syndromes.

We view our contribution in better understanding rare diseases at the core of our commitment to patients around the world, aiming to provide the best-in-class diagnostic possible for rare diseases, and you can expect more of this in 2021.

Please turn to Slide 8. As explained, we saw a dip in the number of sample and order intakes in our Diagnostics segment. This is true for the overall core business, as you can see here on the left side of the chart. However, we still made progress on growing our bio and databank, which include samples as well as data and cell lines. On the graph on the right, you see the number of individuals in our data repository. Over the course of a difficult 2020, we still added approximately 100,000 individuals to our rare disease-centric data and biobank, an increase of approximately 20%. In the next few slides, I would like to demonstrate how this biobank translates into valuable data assets.

Please turn to Slide 9. It is Centogene's mission to revolutionize the understanding of rare diseases by connecting patients and their biology. This allows us to address different use cases for value creation. Our biobank can be visualized as a sphere. On the outer layers, there are hundreds of thousands of individuals for which we have clear genetic information. This data drives our general knowledge on the underlying genetic constellations which in turn build up superior diagnostic insights and enables us to find and diagnose patients.

One example of being able to provide value in the patient-finding process was recently demonstrated regarding SORD gene, a novel genetic cause of neuropathy. A global academic consortium recently identified 45 patients carrying a mutation in this gene. While this is a new genetic cause only just identified, Centogene's biobank already contains 42 patients, all with exome and genome sequencing performed, and most of them with HPO terms-based clinical descriptions. This truly demonstrate that we already have patients in our biobank and, in many cases, are able to quickly respond and be ideally positioned to support R&D for finding new patients, even for new diseases.

In addition to the growing size of the database, we also prioritize its quality. One reason we believe our databank is unique apart from its focus on rare diseases is the unique linkage of phenotactical information and diagnostic findings. We ensure this through careful curation of the cases and the way we measure the quality of the data descriptions through standardized HPO terms. The continuous improvements to the quality of the data and the phenotypical information is reflected by the increase of average number of HPO terms per patient sample in our database, up from 5 in 2019 to 8 in 2020.

Another example of the patient-finding aspect of our databank are sponsored genetic testing collaborations like the one with Takeda. The program focused on lysosome storage disorders for which an enzyme replacement therapy exists, such as Fabry, Gaucher or Hunter Syndrome.

The goal is to enable a faster path to identify patients here via chemical screening or genetic analysis and accelerate patients receiving a diagnosis and potential access to treatment. In a normal year, we screen approximately 40,000 to 50,000 samples for Takeda. And as announced early this week, we are pleased to report that we have extended our collaboration with Takeda in Q1 2021.

When moving from the diagnostic use case to the acceleration of drug and therapy development, we are looking at the specific data points and tools that help identify biomarkers, genetic modifiers and potential targets. These are the data sets for which we have more information available, superior description of phenotypes, research content in place and complete genetic information as well as multiomic information.

The middle layer displayed enables clinical trial support and patient stratification use cases. A recent example is the Denali cooperation on Parkinson's. At the core, you will see the areas we view as having full disease models available, which then also includes cell models to be used for in vitro compound screening via stem cells. Each layer allows us to address different use cases internally and of course with pharma partners. On the next slide, I would like to highlight 2 in particular. Please turn to Slide 10.

A good example of a collaboration on the clinical trial case, or the middle layer of the sphere previously shown, is our ROPAD study. This global study demonstrates both our innovative capabilities and how it can be a value driver for patients and pharma partners and internal development.

As a brief reminder, Centogene entered into a strategic collaboration with Denali Therapeutics for the target global identification and recruitment of Parkinson's disease patients with mutations in the LRRK2 gene in 2018. We were proud to announce recently that the study now includes over 10,000 participants from over 120 sites globally, which we believe to be the most comprehensive data set on genetic Parkinson's disease today.

We utilized our broad physician network, which is particularly strong in neurology, to successfully identify hundreds of patients with LRRK2 mutations. The study also created further novel insights. We leveraged our biobank to analyze and predict consequences of reducing LRRK2 function, an important element for our partner, Denali Therapeutics, who is working on a LRRK2 inhibitor.

In fact, the rich data in our biobank already contained individuals with homozygous [loss functions] and without clinical symptoms, which are especially valuable to Denali. Based on a large cohort of individuals for each exon and genome sequencing had been performed in a diagnostic setting and for a wide range of phenotypes, we did not find evidence for heterozygous or homozygous LRKK2 loss of function variants to cause any distinct phenotype. And thus, our data facilitated the conceptual novel confirmation of the safety of LRRK2 activity-reduced treatment strategies in Parkinson's disease, fundamentally derisking the therapeutic development of such inhibitors. On that note, I'm very pleased to announce that we have just signed an extension of the contract with Denali for another 2,500 patients.

In addition, we also believe that this unique data set will be very valuable beyond LRRK2, including the potential to identify new disease modifier targets for Parkinson, an opportunity that we are exploring internally and also with other potential partners.

Let us now please turn to Slide 11. I would like to highlight a target and drug discovery case here. You know that Gaucher is one of our focus areas where we leverage our deep data and biobank. In authoring numerous publications, we have shown that power of lyso-Gb1 as a biomarker for diagnostics as well as a tool for monitoring treatment response and quality.

Now we have a large cohort. We have over 1,800 diagnosed Gaucher cases in our databank. Looking at the depth of the biobank, we have over 130 fibroblast samples and have built patient-derived tissue-specific cell models to allow us to continue to build a full disease model for Gaucher, thus enabling accelerating and derisking therapy development. In essence, we went from clinical to the preclinical stage here. To this effect, we have set the up disease model and the needed multilayer, multiomic tool.

A disease model for us is the patient-derived tissue-specific cell model from stem cells established with relevant readouts. On the side of bioinformatic tools, we have generated better insights into Gaucher disease through an extended multiomics disease map for lysosomal storage disorders by mapping Gaucher Disease subtypes from gene to phenotype.

Now our clear ambition is that the core data set we create can be used to identify pathways, targets and modifying genes. We have set up 2 work streams in this regard.

First, we are looking at Lyso-Gb1 as a well-known target. This is well underway as part of our partnership with Evotec, where we bring access to the large -- where they bring access to the large molecule library they own. We have evaluated the first chemical compounds in our disease model in 2021 and will continue these efforts in the coming months. The collaboration is built on co-investment and sharing of findings, but the progress should be apparent in the next 6 to 8 months.

Additionally, we are also looking into novel target discovery exploring modifying genes. We anticipate that target-mining and novel target identification will take 12 to 18 months. In the meantime, the research project here will drive the development of our multiomics platform and capabilities which will support the use case for all the disease areas as well.

And of course, we won't stop at Gaucher. I believe our bio and databank and its expansive physician network is uniquely strong in neuroscience, metabolic diseases, such as lysosomal storage disorders. The progress on Gaucher is something we are replicating in other disease areas, and we are prioritizing the next disease areas we believe we can do so. We will update you on those in the upcoming investor event.

Please turn to Slide 12. I want to give you a quick update also on our management team. We have restructured it to really better reflect the 2 core segments where we drive value in the future. Centogene, in my mind, has always had a fantastic drive for science and following science, but we now want to pair the scientific know-how also with commercial know-how and competence. And to that extent, we have created leadership teams consisting of a commercial and a scientific leader for both our Diagnostics as well as our Pharmaceutical segment. Those teams will be jointly driving the value creation of these specific segments going forward. They are, of course, supported by dedicated, highly skilled functions such as bioinformatics and HR.

And in that regard, I want to give you also an update on 2 new members that joined us just recently. And first, I would like to introduce Nathalie Daste, who has joined Centogene as our new Chief Human Resource Officer starting in March. Nathalie has a strong track record of developing talent, fostering company culture and building required capabilities to achieve a company's strategy. Over the past decade, she has spearheaded a number of large-scale projects in the talent area, such as building capabilities for life sciences and pharma companies focused on value-driving skills and behaviors. I think this will be particularly important as we move forward to our next growth trajectory.

I would also like to welcome Maximilian Schmid. He recently joined us as Chief Commercial Officer, Diagnostics. Max will be responsive for Diagnostics business strategy and growth. He brings an entrepreneurial spirit, having worked at a Silicon Valley start-up before they were acquired by Roche. At Roche, Max was a member of the global leadership team of its sequencing business unit before he joined us. You will have the opportunity to hear from the team directly at our investor event in June.

Well, with that said, let me hand it over to Richard to walk you through the financials in more details. Richard, over to you.

Thank you, Andrin. Could I kindly ask you to turn to Slide 14. Our full year 2020 revenues grew by an impressive 163% compared to 2019. This was largely driven by COVID-19 testing revenues, which rolled in close to EUR 90 million in revenues for the full year. The core business segments experienced headwinds due to the COVID-19 pandemic, particularly in the second quarter. Hence, the financials for the core segments reflect the challenging year. The Pharma segment recorded EUR 17 million in revenues, a 21% decrease compared to 2019. The Diagnostics segment recorded EUR 22.1 million in revenues, a 19% decrease compared to the year 2019.

While such results are disappointing for the core business, I believe the company was nimble and effective in its response to the circumstances as we made good use of our diagnostic capabilities. We are well positioned as we continue into '21, and we'll get back to solid core business growth to materialize Centogene's long-term potential in its core segments.

The slowdown in revenues translated into a decrease in adjusted EBITDA for both core business segments. Nonetheless, we are pleased with the momentum in the Pharma segment currently and look forward to this translating into revenues in '21. The adjusted EBITDA margin in Pharma decreased to 37% for the year. While the Diagnostics segment showed a solid recovery in the second half of the year, fixed cost elements resulted in the adjusted EBITDA margin declining for the year overall to minus 11%. Having said that, I want to emphasize that if sample volumes had been at pre-pandemic levels, adjusted EBITDA for the Diagnostics segment would have been positive for the year.

The COVID-19 testing segment delivered 42% adjusted EBITDA margin for the full year. Even though we do not have a comparison to 2019, I want to note that such includes upfront expenses for the setup of our COVID-19 segment at the beginning of 2020. Consequently, adjusted EBITDA margin improved in the third and fourth quarter as we increased the revenue substantially throughout the year.

Now let's look at a further breakdown of where revenues in our segments came from in 2020. Please turn to Slide 15. As usual, we provide you with the breakdown of revenues in our Pharma segment by new and existing contracts for the period. As a reminder, we define a new contract as one signed in the last 12 months. We are happy to report signing of 16 new contracts in 2020. The majority of the 16 new contracts was signed in the second half and did not result in recognized revenues for 2020. Rather, we will see the revenues of these contracts in '21. And therefore, the revenues for new contracts presented here are not an accurate reflection of our Pharma segment's momentum.

In saying that, we did see revenues from existing contracts increase by 10% in 2020 compared to 2019. While it's our goal to grow the Pharma segment, it is nevertheless encouraging to see our existing collaborations bring in a robust revenues base even in a year as challenging as 2020.

Looking at the Diagnostics segment. Revenues from NIPT decreased in 2020 compared to 2019. As mentioned in previous quarters, NIPT is not a core focus of our strategy. Revenues from other tests decreased by 19% compared to 2019, which was due to the previously discussed headwinds to our Diagnostics segment. As for the COVID-19 segment, we demonstrated a significant ramp-up in each quarter in 2020, particularly in the second half of the year, which led to the substantial contribution to our top line for the year.

Now please turn to Slide 16, where I will discuss the financials for the fourth quarter in more detail. Looking at our revenues for the fourth quarter of 2020, COVID-19 testing brought in EUR 59.8 million. In addition, we recorded an adjusted EBITDA margin of 45% in that segment, which was an increase from 35% in Q3 2020. Although COVID-19 testing is not strategic to our business long term, the financial contribution from this segment will support us in making key strategic investments into our core segments.

Shifting to our core business segments. In Pharma, we recorded EUR 4.7 million in revenues in Q4, which was a 41% decrease compared to the same period in 2019. In Diagnostics, revenues decreased by 19% compared to Q4 2019 to EUR 5.8 million. These financial outcomes reflect the trends we discussed earlier in the presentation, whereas signed pharma partnership contracts will result in '21 revenues and Diagnostics will continue recovering towards the end of the year.

Let us now finish discussing other key financial elements for this period. Please turn to Slide 17. Looking at our income statement, we have already mentioned the increase in revenues for a record total for the company of more than EUR 128 million. Such increase in revenues drove an increase in gross profit of approximately EUR 19.2 million in 2020 compared to last year. Our expenses, including other operating income, increased by approximately EUR 20.2 million for the year compared to 2019. As a result, the operating result was lower by approximately EUR 1 million. Let me comment on the 2 biggest factors that drove this increase in expenses.

Firstly, general and administrative expenses increased by approximately EUR 14.5 million. As mentioned last quarter, the increase in G&A costs are primarily a result of being a public company, such as D&O insurance, corporate governance, investor relations expenses and share-based payment expenses. Naturally, we did not incur those costs in 2019. In addition, we incurred costs related to our COVID-19 testing efforts, including continuing to internally test our employees to keep the company operational as well as some upfront costs related to test site expansions.

Second, our R&D expenses for the year were up by approximately EUR 5.3 million. This increase was driven mostly by personnel cost and IT-related expenses. This is [reflective of our key] commitment to advancing our biomarkers, databases and technology platforms such as AI. It also emphasizes that, although we experienced headwinds in our core segments this year, we did not lose focus of our long-term strategy and mission of the company towards rare diseases.

Now please turn to Slide 18. Let us have a closer look at the cash flow and balance sheet. Cash flow from operating activities improved significantly compared to last year. The additional revenues from COVID-19 testing and the healthy adjusted EBITDA margin at that segment led to a positive cash flow.

Looking at the change in cash flow used for investing activities compared to 2019, I would like to emphasize that the cash flow from investing activities last year included a net positive cash flow of EUR 21.3 million from the sale and leaseback of our Rostock headquarters. Taking that into account, the negative cash flow originated from our investments in PP&E and right-of-use assets, mainly related to starting our COVID-19 segment, including the development of our corona test portal.

Cash flow from financing activities decreased compared to 2019, as our IPO in 2019 resulted in roughly double the raise when compared to our follow-on equity offering in July 2020. As of December 2020, we had EUR 48.2 million of cash and cash equivalents on our balance sheet, which I believe is a strong financial position for a company the size of Centogene. Regarding our outstanding debt, I would like to remind you that as of year-end 2020, this includes more than EUR 21 million of lease liabilities.

Having looked at our performance for 2020, let me now update you on our financial guidance for '21. Please turn to Slide '20.

Finally -- firstly, let's start with our core business. We have seen the core business segment recover towards the end of 2020 and into '21. As such, we believe we can return to solid growth in our core business. Moving to our COVID-19 testing segment, we will continue leveraging the contribution from that segment. As uncertainties remain around the vaccine rollout, it is possible that demand may be different than we perhaps expected. Based on the current trajectory, we anticipate revenues from the COVID-19 segment in '21 to be approximately the same level as in 2020.

Now let me hand it back to Andrin for our '21 business outlook. Please turn to Slide 21.

Thank you, Richard. So before we get into Q&A, let me summarize the presentation briefly and highlight the key takeaways from today's discussion. We had a strong finish to the year and ended 2020 with triple-digit revenues from the first time in company's history for a record top line growth. Whilst the segment is not strategic or a long-term focus for us, the financial tailwind from COVID-19 testing means we entered 2021 with a robust balance sheet, and that allows us to continue our investments in our core business. And I'm pretty confident that COVID-19 testing will also contribute significantly during this year.

But I would like to reiterate again that the focus in 2021 will be our core business segments. They are what drives the long-term value and growth of the company, and it is our priority to see these segments to foster and grow.

We have seen the level of sample order intake value return to approximately 80% of normal pre-pandemic levels at the end of 2020. In addition, we have seen that the trend continues in Q1 2021, with sample intake more or less at the level of Q1 2020, too, and growing. This is an encouraging sign, and we anticipate those levels remain robust going forward and that we will emerge stronger post-pandemic than we were before.

Our pharma partnerships are also slowly starting to pick up again. We have signed 16 new deals in the second half of 2020. We have extended 16 collaborations. And I believe that you will see more new deals coming in, in the next couple of months.

I also view our data and biobank as the key asset delivering value for orphan drug development and the driver of our long-term value growth. We plan to deploy that asset more strategically and sharpen the value propositions for both and our pharma partners, as for our own internal development.

I would also like to invite you to the upcoming investor event. Hopefully, you have noticed some of first steps we have taken to date to be more transparent and clear on what we do and the things that matter to you. I would like to take the opportunity on the June 22 to dive deeper into our strategy, how we create value, and I would like to do that with our executive team that you can engage with there. Due to COVID-19 restrictions, it will be hosted in a virtual format, unfortunately. We will update you further on the agenda and registration for the event, but please save the date. I look forward to seeing you there, and hopefully, many of you.

Overall, I'm confident about what Centogene can and will do for rare disease community and to amplify the impact that we have on patients families awaiting answers on diagnostics and therapies.

I will now turn the call over to our operator for Q&A. Please, kindly, I would like to remind you not to ask more than 3 questions so we have time to get to as many of you as possible. Thank you for joining us today.

(Operator Instructions) Your first question comes from the line of Puneet Souda from SVB Leerink.

This is actually Wesley on for Puneet today. Congrats on the quarter. I wanted to start on the outlook for 2021 and more specifically on the COVID testing side of things. Rich, I appreciate your comments on approximately similar levels year-over-year and the difficulty that goes into modeling out the COVID testing cadence. But just given where we are, having the first quarter closed at this point, if you could provide any additional clarity on the cadence of testing throughout the year, and if you see any opportunity for COVID surveillance testing as well.

Yes. Maybe just 2 thoughts before I hand over to Richard. I hope you understand that forecasting COVID is tricky. You cannot easily compare quarter of our existing for future quarter. I mean, the results are impacted, to some extent, almost adversely, in the sense that if the pandemic -- and we're talking about Europe here, where our COVID testing is happening. When the pandemic gets worse and travel restrictions increase, we see somewhat less testing. And when the pandemic gets better, we see more. Given that we go more or less from wave to wave and the restrictions are constantly changing, it's hard to tell exactly where we're going to end up.

I mean, I think we had a good first quarter as far as revenues for COVID are concerned, and I'm pretty confident that, especially as vaccinations progress and traveling takes up, the numbers can look even better. But how good they will look, I think that's, frankly, is anyone's guess. It's mostly influenced by the pandemic and government policies. Richard, over to you for any other thoughts there.

Thank you very much, Andrin. Thank you, Wes, for asking the question. As you do appreciate in asking the question, we have not closed Q1 formally yet. So my guidance will vary depending on the progress of the pandemic as well as the vaccination programs and travel patterns, as Andrin just expressed. We would expect the first half of the year being somewhat similar to the second half of last year, and we feel very comfortable in saying that when looking at the initial closing of Q1 for COVID revenues.

Just quickly on the second part. I mean, yes, we do that in Germany. But given the guidance and the determined policy on that front and also the fixed revenues you can make with it, I mean we -- while we do it, we don't think this will be a major revenue contributor overall.

Great. And then -- so I guess, sticking on the first quarter, looking towards the Diagnostics part of the business. Appreciate that volumes are beginning to return to pre-pandemic levels. I'm curious on the mix of those volumes between -- I know that you've previously been seeing some momentum in higher-value tests. So just how we can expect the mix of volumes to trend, and what that means for the top line as a result.

Yes. We haven't dived into that analysis as we're focusing closing the full year and the full reporting of the 20-F. But I have heard nothing to the contrary of the trends we saw before, Wes.

All right. And then just finally, looking forward to the Investor Day in June. Andrin, now that you've had some time to get to know the company over the past few months, just curious on some of the key priorities for the next year, where you see some opportunities. And Rich, I guess, how you're feeling about the cash position currently and where some opportunities might lie there.

So I don't want to -- of course, steal the thunder. I guess you will have to have a little bit of patience until we have the investor event. But I think, as mentioned during the presentation, I do believe that we have a great asset with our bio and databank. And I think while we focus on ensuring that it clearly built the use cases that we have identified then mine our data and really line it up with the value that can be generated with it, I think we will have fantastic disease areas where we can bring a lot of value to the table.

So with a bit more focus on those priorities and then really aligning our resources and investing behind them, I think we will see good development, and we can share with you milestones that we expect along the way over the next couple of quarters and how this will translate into visible progress.

Yes. When answering your question, Wes, in respect of our cash position. We're very comfortable, particularly as we see a continuation of this healthy revenue contribution of COVID. So we're very comfortable there.

Your next question comes from the line of Erin Wright from Crédit Suisse.

So my first one is, can you speak to what the changes were with your Takeda relationship in the expansion of the contract there? How big of an opportunity that is for you. And also, what were your new pharma partnerships signed in the quarter versus extensions of existing relationships?

Yes. So I think on the Takeda extension, we are -- on the extension itself, we are pretty much continue doing what we have done there with Takeda in the past. And we do have other collaboration with Takeda in rare diseases beyond that specific effort. And I think we definitely, of course, want to take the opportunity in the next couple of quarters, engaging Takeda on those further, so that we will develop additional new partnerships along the use cases that have outlined with Takeda. Those discussions are ongoing, and we will see where that leads us in the next couple of quarters.

I think on the signing of other deals and the names, I'll refer to Richard as I'm not entirely clear in terms of what we can share and what is confidential.

Happy to step in. We cannot disclose too much detail on a numeric basis, unfortunately. But we are not unhappy with the extension of the contract. Let's put it that way.

Okay. That's helpful. And then I guess, can you speak to kind of how the pharma partnership pipeline is looking heading into this year? And has anything changed in terms of your strategy around acquiring new pharma partnerships? Or can you remind us of how you're actively marketing and soliciting kind of new business from a partnership perspective?

So I think the pipeline looks pretty strong, in my mind. So again, I feel pretty confident, as we said before, that we will, with that pipeline, even in a risk-adjusted way, be able to get that business back to growth and have a good year compared to last year. There's no doubt in my mind.

And in terms of how we approach it, there is some form of a change there, I think, that we have been initiating. To be more specific, I think in the past, our partnership approach was a bit opportunistic. I mean, we would talk to people at a conference, had some scientific discussion. And out of it came an interesting idea and something would start. And I think now, the size of the company that we are and the expansiveness of the biobank that we have, I think we want to formalize those use cases as I try to give you first outline on more specifically so that we have a much clearer service offerings, that we can bring more, I would say, repetitively to a broader number of partners, with a high level of confidence, of course then, the organization can also deliver against them.

I think we are also looking at expanding our commercial presence. And I highlighted with -- I highlighted how we start, of course, with that at the top. But then when I look at the opportunity, how big the market is in what we could do, I think we will do better by also increasing our resources there, that we can really cover the partner universe. There are many companies now engaged in rare genetic diseases, and I think we have not yet maxed out with regards of us being able to bring our value propositions to as many of them as possible.

And I think the last point is that I want -- we are going to be more mindful in terms of how also we maximize the partnerships in terms of what is a simple service where we offer for a transaction fee, and were are we better off to really strategically partner in the value creation because we want to participate in the upside. And in that regard, I think we're developing our framework. I don't think it will be either/or, meaning that we will just do simple services or want to do only Evotec-type of partnerships. But we want to have more clarity on what opportunity is good enough for us to also invest some of our own money and how we communicate that in the future.

Your next question comes from the line of Alex Cogut from Kempen.

With respect to your biobank repository, I noted the increase in Q4 was somewhat lower than the previous quarters, I think, 5,000 versus 40,000. Could you provide some more color on that?

The increase on what? I'm sorry, I didn't understand your...

The biobank repository.

Yes. Yes. I think, overall -- I mean, we -- there can be slight changes with regard to the -- normally, what comes from the clinical diagnostic from the Diagnostic segment is pretty steady, meaning it's growing as the Diagnostic business grows.

On the Pharma side, you can, of course, see some variances. I mean, if you do a large clinical program with a pharma partner, then of course, the samples come in over a couple of months while that recruiting takes on. But those should be smaller changes quarter-over-quarter. I wouldn't get too much hung up on that.

I think overall, we expect the sample intake to continue and steadily grow. Now we are, as you said, for the year, I think we had about a 20% overall growth over the year, and I would expect this to accelerate during next year.

Got it. And looking at your G&A expenses, I understood it was primarily due to being a listed company. What can we expect for 2021? Would the similar magnitude increase? Or were there some one-offs in last year?

Shall I take that up, Andrin?

Yes, please go ahead, Richard.

Alex, thank you for asking that question. It's a little bit the elephant in the room that we don't want to move around. No, we don't expect a similar increase. The increase was kind of a once increase, but it will be retained at a certain level. Even though we are, every year, carefully reviewing where we spend our money. So we spend it in the wisest way possible, which we will do for this year as well.

Part of it was also related to setting up new test centers in the COVID segment, which we don't know yet whether that will be -- continues to be expanded into this year, or given how the pandemic would evolve, that, that would not be part of it anymore. So a careful review, but not anticipated, the similar increase as we had from '19 to '20. Not at all.

And 2 points I would add is, as the newcomer, I mean, there's little doubt in my mind that during a turbulent 2020, where the company was, in a couple of months, trying to build up the COVID response. And if you think what that meant, right, in terms of rare disease testing volumes compared to the COVID testing volume, the COVID testing volume is about 10x bigger than what we normally do with rare disease. So what this meant with regards to brining people in, strengthening logistics and what have you, I mean, this was a massive, massive effort.

So I do think now, with this being a separate business you need to manage on its own, I mean, we have to very careful look at our G&A costs and go deeply into it and say, what do we really need for the future? And is there, here and there, something maybe that we can wind down again? So rest assured that we're going to make sure that efficiency exists on that side.

I mean, that being said, I think it's worthwhile to note that -- and I assume you have some understanding for that. I mean, the -- you cannot compare our G&A to a typical biotech company who is just moving 1 or 2 molecules through the pipeline. I mean, our business has, of course, a global presence, especially on the Diagnostic side, with a global commercial presence with representation in, I think, over 50 countries and what have you.

Yes, so there is a certain, of course, G&A cost that is needed for us, which looks big, if you wish, as compared to the Diagnostic business, but less big if it looks compared to all the samples we also get through that and how we build up our bio and databank with it.

Got it. That's very helpful. And with respect to your pharma business growth in 2021, as U.S. and Europe look to be reopening at different rates, is there some kind of difference in how your Pharma business is exposed to Europe versus U.S.?

The bigger part of our Pharma business is in the U.S., meaning the customer situation, I mean, it's not a surprise that of course the U.S. has the largest life science and biotech community overall. So in that sense, you would think, and it's probably fair to assume, that the recovery, if you wish, will be faster in the U.S., where we are stronger than in Europe.

And I do think that the overall R&D is going on. I mean, there is not so much a -- I would say the argument we would make, there is no R&D. But it is true that given that a lot of the deals that we do are based on the exchange, the business-building, the value offering, not having -- at least over the last couple of quarters, any conferences or normal convenings, where you can bring your value to the table and can start these discussions, was quite a challenge. There are certain things you can do virtually on a Teams call, but not everything.

So I think while the opening up happens, I'm pretty confident. And as I said before, I mean, we're also adding some commercial resources there, I mean, for us then to really be well positioned to get out there and make sure our value proposition reaches the -- not just the existing, but also new customers.

Thank you. And look forward to 22nd, June.

Our next question comes from the line of Catherine Schulte from Baird.

This is actually Tom on for Catherine. I appreciate the questions and congrats on the quarter. So I just wanted to first get into sort of monthly pacing on the Diagnostics side in 4Q.

And any color into 1Q '21? I appreciated sort of the comparisons to 1Q '20, but was just curious if you saw any significant monthly differences given sort of COVID flareups.

Well, Richard, shall I take that?

Take it? Or I could. I'm just going back to the slide where we show the graph on the sample intake. Felt that will probably most helpful.

Yes. I mean, you saw that on that graph on page -- which page was it?

That was Slide 7.

Slide 7. I mean, the -- of course, we don't show monthly numbers there. So there's a bit of leveling out. But otherwise, I mean, these numbers are -- or the trend there is accurate. And the monthly variation is sometimes there for 2 reasons.

I mean, we have, in certain countries, larger contracts, let's say, with a hospital chain. And it can be that there are some batch of test comes in, in the end of the month or at the beginning of the month that can move the numbers a bit. And -- but I think apart from that, I mean, we don't see that much of a variation. I mean, the trend is pretty clear.

Yes. I'd like to add that typically, the only variation you see is in the number of days where some of our bigger customers, they kind of stack together all the samples for a week. So sometimes, it's just in 1 month versus the other because how the week ends or how the week starts and when they ship them. So that's nothing that we are really focusing on. On a quarterly basis, we see an upward trend like we were seeing before the pandemic as well. We're almost at pre-pandemic levels, as you could see at Slide 7, so we are very comfortable there.

Great. That's helpful. Moving to the Pharma side, I appreciate sort of the color on the extended momentum sort of in the back half. I was just curious, more broadly, how conversations with current and potential pharma partners is evolving, particularly as 2021 budgets become finalized.

I guess, what I'm trying to get at is, would you sort of characterize project time lines and outlook is kind of more or less immune to COVID shocks and flare-ups at this point, now that sort of those expectations are sort of built into Pharma 2021 outlooks as well?

Yes. They're built in. I think -- I mean, who knows what suddenly an unexpected mutation would do to the world? But based on everything which is known today, I mean, the gradual recovery with some uncertainty remaining, of course, at the end of the year, is factored in there. And so in our, I would say, optimism in what we said about where we think the Pharma business will be this year.

In my mind, the uncertainty that is -- remains is, for me, more on the -- also how we structure certain deals. I mean, as I tried to describe before, that you can structure a deal with a pharma partner by which we pretty much sell an element of our biobank and create some revenue with it, but then the asset is gone. Or you can structure a deal by which in the other extreme, we co-invest because we believe it creates long-term value. And you don't see anything in the top line, but the value of that deal may be bigger than some revenue generated during this year.

And while we think through how we structure those deals and then how we set them up for the future, I think that creates, of course, some uncertainty, not on the overall value creation, but in terms of how much short-term revenue you were to see versus long-term value creation.

No. That makes sense. That's very helpful. I want to follow up lastly maybe on the COVID side. Just sort of -- I think you sort of touched on this as to travel opening up, et cetera, could actually be beneficial for volume. So -- and it seems like you would expect your airport testing partnerships to continue. Are there any other opportunities that you're working through on the [surv] side, kind of getting at something like a travel corridor, et cetera?

And then I was also just curious, how, if at all, mix shift has changed from a COVID diagnostic standpoint for you guys.

What has changed? Sorry, I didn't understand the last piece of your question. The product...

Sorry. Just mix shift between -- given the antigen offering -- yes.

Yes, okay. Got it. Understood. So I think on the product mix side, I think the -- we clearly have our offering in the high quality, high end, right? I mean, that's same for rare disease genetic testing, we are at the high-end, high-quality solution provider. And that's the same for COVID-19 testing.

So we do PCR. We are also, of course, going with the trend to make it faster and faster so you get a more rapid turnaround, even at an airport, of your PCR result. And so that you can basically go to the airport -- at least if you go to -- if you're not the one who rushes to be there 10 minutes before the flight leaves, but if you go as you should, according to the guideline, you can actually do your testing at the airport, wait for the result and then move on.

And we also do have an antigen test, but only the, again, what we call high-quality, lab-tested antigen. So the idea really for us is that we want to make sure that our test results are professionally confirmed and then can serve as confirmation for travel or for whatever you need to do from an authority point of view. I mean, that's the business that we are in. And we believe that it's highly likely that these policies, that you will have to test and show these results in a confirmatory way, that will continue.

I do believe that the mutations that are circulating, while I'm not so worried that they will launch us back into lockdowns, I do believe that they will probably mean that testing will be required for a longer period of time, at least for traveling.

I also believe -- to your question on the customer base, I also believe that there will be a certain risk of flare-ups within a country, especially, as I said, if new mutations were to emerge, which may not overfill the hospital, but still if not diagnosed, would create a spread in already-vaccinated people. So I think there will be -- or it's absolutely possible that there will be need for also in-country testing.

And I think, in that regard, next to having testing centers at major cities, we are also establishing and have established contracts with major organizations, whether those are large corporations or government entities, who really want to make sure that they have solutions in place that allow them to contain any future spread within an organization. So that's basically what's our key customer segments are, if you wish.

thank you. Just trying to be mindful of time. We've got a few minutes left, so trying to be succinct as possible, Sarah, with the next questions.

Our next question comes from the line of Sung Ji Nam from BTIG.

Firstly, on the biorepository, impressive to see 20% growth despite the pandemic. I was curious, prior to the pandemic, I think there are efforts to expand, further diversify the biorepository, I think expansion into the North American market and also maybe Asia as well. I was wondering if there was any progress on that front. Or has it been just largely from the traditional geographical sources?

You mean with regards to our Diagnostics, where the samples come from?

Exactly.

Okay. Yes. For the time being, it's pretty much what it was before the pandemic. So I think, as you can imagine, during the pandemic, it wasn't the best time to try to go and set up new channels.

That said, we clearly have a plan and an aspiration to strengthen our presence geographically in Europe. And this is my priority #1.

And then when you go into Asia, we are in discussions there, and I think we'll accelerate those now while things become easier in a few selected attractive Asian markets to strengthen our presence. But those are early days.

So I think you will have to be a little bit patient. We hopefully can share more on that progress in the second half of the year.

That said, as said initially, I just want to make the point that the presence that we do have and I think the regions we are in, I think, are -- apart from Brazil, which is still suffering tremendously from the pandemic, I mean, there are robust-growing regions. I think that's why we believe we have an underlying strong demand for an increased -- increasing demand for our tests.

Got you. And then if I could ask one more question. Just on the ROPAD study and the efforts there. Obviously, a lot of progress you're making. Just kind of curious, could you talk about what differentiates Centogene's efforts around the LRRK2 mutation identification? Is it just largely the pure breadth of the database that you have or the samples that you have? Or are there differentiated kind of biological insights that you're finding that you might be adding value for as well?

Yes. So the 2 aspects, maybe I read the first one, was really how could we build up that big cohort in a reasonable amount of time? And I think that really translates to the physician network that we have. And I do think we have a very strong experience and connection in neuroscience, and that's something we want to leverage also going forward with regards on how to prioritize diseases.

I mean, there's a -- there are quite a couple of highly intriguing strong connections if you look at pathways that emerge from rare diseases, rare genetic disorders, that have implications for the more well known, maybe more towards end of stage neurological diseases like Parkinson and others. So that is clearly an area, with the know-how that we have, we want to go deeper in.

And I do believe that we have a benefit there because we can connect the rare diseases, the many rare disease patients, often children we have in our databank, that doesn't present this neurological symptoms and syndromes and mine that data in the anticipated understanding of what some of these insights mean if you compare it to the data set of Parkinson patients, if you wish. So I do believe that our rare disease biobank is a unique asset to do mining in areas like Parkinson.

All right. I think that brings us to the end. Lennart?

Yes, I think we're at the end of the call. Thanks for joining, everyone. We're looking forward to connecting later in the quarter, either when we announce the Q1 results or at the investor event or in May at the Kempen conference.

So with that, I think we can close the call.

All right. Thank you. Thank you, everybody, for participating. Appreciate your time. Thank you. Bye-bye.

That does conclude your conference for today. Thank you for participating. You may all disconnect.