Report for the third quarter of 2020
July – September in brief
- Net sales totaled SEK 14,216 (24,279) thousand. Adjusted for acquired sales, bioprocess sales in 2019 and changes in exchange rates, growth rose by 18%.
- Gross profit totaled SEK 15,487 (20,814) thousand.
- Operating profit before depreciation and amortization (EBITDA) totaled SEK 3,262 (7,987) thousand.
- Operating result totaled SEK 1,715 (7,019) thousand.
- Comprehensive income was SEK 662 (7,473) thousand.
- Comprehensive income per share, basic and diluted, totaled SEK 0.01 (0.12).
- Cash flow from operating activities was SEK 1,191 (7,448) thousand.
- Cash and cash equivalents at the end of the period totaled SEK 46,231 (15,303) thousand.
January – September in brief
- Net sales totaled SEK 41,180 (47,719) thousand. Adjusted for acquired sales, bioprocess sales in 2019 and changes in exchange rates, growth rose by 14%.
- Gross profit totaled SEK 39,609 (44,123) thousand.
- Operating profit before depreciation and amortization (EBITDA) totaled SEK 2,377 (13,072) thousand was negatively impacted by non-recurring items for acquisitions and restructuring costs of SEK 2.5 million.
- Operating result totaled SEK -1,465 (profit: 10,589) thousand.
- Comprehensive income totaled SEK -4,376 (10,444) thousand.
- Comprehensive income per share, basic and diluted, totaled SEK -0.07 (0.17).
- During the year Genovis acquired all shares of QED Bioscience Inc. Total cost of the acquisition, including transaction costs, is SEK 20 million
- In the first quarter Genovis raised SEK 50 million for the Company before issue expenses in a directed share issue.
Comments from Fredrik Olsson, Chief Executive Officer
In the third quarter, organic growth for the core business for enzymes within Analytics was 18%, which is a doubling compared with the second quarter this year. Organic growth for the nine-month period for the core business was 14%.
We have periodically experienced challenges in various geographic markets as a result of local restrictions associated with the pandemic. Customers have reduced the number of employees working at the same time in laboratories to reduce the risk of spread of infection, which negatively affects productivity and the number of analyses carried out. Nevertheless, the revenue in our core business grew and we remain strongly convinced that the markets will improve over time when the restrictions can be reduced.
QED, which sells antibodies for the diagnostics industry, has been impacted by the general reduction of tests conducted within health services since fewer people seek care that is not related to the ongoing pandemic. However, at the beginning of the fourth quarter we have seen customer activities resume in QED’s antibody business as the diagnostics market recovers and more customers return to laboratories within industry and academia.
As it has become more apparent that our normal marketing activities, such as scientific conferences, trade shows and customer encounters, have all been postponed, we have transitioned to investing in our customer support systems and electronic marketing channels. The basic strategy remains the same – scientific communication with solutions and unique products for our customers within the global biopharma industry. We have streamlined the work in our electronic channels to prioritize business opportunities and new sales. With these initiatives, the inflow of new customers has continued and our customer base has continued to grow during the quarter.
We have not received any government relief, nor have we furloughed any employees, despite the uncertain situation over the past six months Instead, we have chosen to lean forward and focus our resources on bold initiatives for the future.
A strong focus on our product development projects has culminated in three product launches, two of which are completely new enzymes for analysis within the biopharma industry. We have maintained good momentum in our development pipeline and intend to launch additional products at the end of the year in order to be even better equipped for 2021.
We have also worked intensively to broaden and strengthen our industrial partnerships. This is a key component of our strategy to build customer value by offering our customers several automated workflows with our products.
Our efforts to ensure production capacity in both the short term and the long term are proceeding according to plan: in the short-term through skilled subcontractors, and in the long term through planned investments in our own infrastructure and capacity to meet our anticipated growth over time.
Despite the continued uncertainty about market conditions in the short term as a result of the pandemic, my assessment is that Genovis’ business opportunities moving forward will be strengthened as a result of initiatives with an increased focus on research, diagnostics and biological drugs in the wake of the pandemic.
I am extremely impressed by the innovation and resilience of my employees as they cope with these new circumstances, which have led to the continued strong organic growth of the core business in a challenging business climate.
Although the external situation is difficult to assess in the short term, I am convinced that our innovative efforts and business model will enable us to fulfill our high ambitions with continued strong growth over time.
Half-Yearly Report January – June 2020
April – June in brief
- Net sales rose by 35 percent to SEK 15,490 (11,509) thousand. Adjusted for acquired sales, growth rose by 11% to SEK 12,714 thousand.
- Gross profit/loss improved by SEK 978 thousand and totaled SEK 13,146 (12,168) thousand.
- Operating result before depreciation and amortization (EBITDA) totaled SEK -38 (2,390) thousand and was negatively impacted by non-recurring items for acquisitions and restructuring costs of SEK 1 million.
- Operating result totaled SEK -1,291 (1,628) thousand.
- Comprehensive income for the period totaled SEK -3,124 (1,380) thousand.
- Comprehensive income per share, basic and diluted, totaled SEK -0.05 (0.02).
- Cash flow from operating activities was SEK -123 (profit: 145) thousand.
- Cash and cash equivalents at the end of the period totaled SEK 46,554 (8,921) thousand.
- Genovis has acquired all shares of QED Bioscience Inc. Total cost of the acquisition, including transaction costs, is SEK 20 million QED merged with Genovis Inc.
- The Annual General Meeting, held on May 5, 2020, elected Torben Jørgensen to serve as chairman of the Board of Directors and reelected Board members Kenth Petersson, Mikael Lönn and Lotta Ljungqvist.
January – June in brief
- Net sales rose by 15 percent to SEK 26,965 (23,440) thousand. Adjusted for bioprocess sales in 2019 and acquired sales, sales growth totaled 15%.
- Gross profit totaled SEK 24,123 (23,309) thousand.
- Operating result before depreciation and amortization (EBITDA) totaled SEK -885 (profit 5,086) thousand and was negatively impacted by non-recurring items for acquisitions and restructuring of SEK 2.3 million.
- Operating result totaled SEK -3,180 (profit: 3,571) thousand.
- Comprehensive income for the six-month period totaled SEK -5, 038 (2,971) thousand
- Comprehensive income per share, basic and diluted, totaled SEK -0.08 (0.05).
Comments from Fredrik Olsson, Chief Executive Officer
The coronavirus pandemic has affected society at large during the quarter, and our business operations were no exception. The pandemic has been accompanied by several unforeseen challenges that have caused us to reset and focus our resources on new circumstances. I am proud that despite these challenges, our sales continued to grow by 35% and, excluding acquired sales, we were able to achieve sales growth of 11%, given the market situation in the second quarter.
The beginning of the quarter was clearly affected by the restrictions implemented in several key markets in Europe and North America, resulting in a pronounced decline in customer activity. As more markets eased the restrictions, we saw a gradual increase in activity in May and June. In the Asian markets we’ve seen a clear recovery after a weak first quarter caused by the pandemic.
In addition to the loss of sales, the operating result was also affected by non-recurring acquisition-related costs and increased personnel costs as we added 14 people to the organization, compared with the second quarter last year. Adjusted for the acquisition-related costs, the operating loss for the quarter is SEK 0.3 million.
To date, we have launched two products this year. FabRICATOR™ MagIC, which was launched in June, is intended for simplified and parallel analysis of antibody molecules in automated systems in several parts of our customers’ value chains. The product has initially been adapted for an instrument from Thermo Fischer Scientific, associated with our collaboration agreement relating to analysis of biologicals. At the beginning of the current quarter, we launched our second product for the year, GalactEXO™, a new enzyme for glycan analysis of proteins, and we still intend to launch more products during the second half of the year.
During the second quarter, we also closed the deal and acquired QED Bioscience. Despite the challenging market situation, QED’s activities in San Diego have achieved sales on a par with the same period the previous year and the company has been fully operational since we formally took over the business on April 29. Given the situation associated with the pandemic, we had to begin the integration process remotely, for which reason we gave top priority to fully integrating QED into our various business and reporting systems, which has now been concluded. We can now devote our full attention to implementing combined marketing and business strategies as the market situation gradually improves.
We have intentionally chosen to lean forward into a challenging market situation and have focused our efforts and resources on our long-term strategies within automated analysis, glycomics and integration of the newly completed acquisition of QED Bioscience.
Despite these challenges and the uncertain market situation with clear limitations, including canceled marketing activities and customer meetings, which are key cornerstones in our business, my colleagues at Genovis have done an incredible job this quarter. We have also had the opportunity to welcome new employees from QED and we now have about 40 employees worldwide, working on developing and growing the business at Genovis together with our customers.
In the short term, there is still uncertainty about how quickly economies and activities in various locations can recover and how any new waves of the pandemic could affect customer activity. But in the long run, I remain confident in our ability to continue on this growth journey with Genovis through customer-driven innovation in close collaboration with our growing customer base.
Interim Report January – March 2020
-
Net sales totaled SEK 11,475 (11,931) thousand. Adjusted for the bioprocess order during the first quarter of 2019, which totaled SEK 2.4 million, growth for the quarter was 20%.
- Gross profit was SEK 10,977 (11,140) thousand.
- Operating profit/loss before depreciation and amortization (EBITDA) totaled SEK -847 (2,695) thousand. Non-recurring expenses relating to the ongoing acquisition of QED Bioscience Inc. had a negative impact on operating profit of SEK 1,354 thousand.
- Operating profit/loss was SEK -1,889 (1,942) thousand.
- Comprehensive income for the period was a loss of SEK 1,915 (profit: 1,591) thousand.
- Comprehensive income per share, basic and diluted, totaled SEK -0.03 (0.03).
- Cash flow from operating activities was SEK -1,506 (2,709) thousand.
- Cash and cash equivalents at the end of the period totaled SEK 61,641 (11,025) thousand.
- Genovis signed a Memorandum of Understanding for the acquisition of all shares in the privately held company QED Bioscience Inc, based in San Diego, California. The acquisition will be paid for through an estimated cash payment of about SEK 20 million, including transaction costs.
- Genovis carried out a rights issue that raised SEK 50 million for the Company before issue expenses.
Comments from Fredrik Olsson, Chief Executive Officer
The Covid-19 pandemic has had some impact on our sales during the first quarter. Nevertheless, we grew our core business by 20%, adjusted for the bioprocess order which affected comparability from the first quarter of 2019. Growth in Europe and North America remained strong, while the Covid-19 outbreak heavily impacted growth in Asia, which accounts for a smaller portion of our total sales, in February and March.
At the end of March we saw a slowdown in customer activity in Europe and North America as a result of the restrictions introduced in many countries to reduce the spread of the disease. As a result, orders could not be delivered to some customers due to closures, which affected revenue at the end of March. We estimate that postponed deliveries and geographic impact, especially in Asia, lowered revenue by approximately 10-15 percent for the quarter.
My assessment is that the impact is temporary in nature; it is not caused by any underlying driving forces in the market, but is entirely linked to the reduction in activities at pharmaceutical companies, research institutes and universities because of the Covid-19 pandemic. We have seen a gradual increase in customer activity in Asia in early April.
As with many other colleagues in the industry, the extensive closure of laboratories, canceled conferences and sales activities will likely have a dampening effect on our sales in the short term. We are well prepared for such a scenario, even though the time until we return to a more normal market situation remains difficult to assess. We are closely monitoring developments and evaluating alternative cost-saving measures in relation to the development of the business and its long-term strategies.
Meanwhile, we now have the opportunity to focus our resources on product development to be ready with several new products when the markets return to normal. Our operational capacity is intact; we do not see any impact on production capacity at this time and our distribution chains continue to function well.
Despite these challenging times for society at large, the course of events resulting from the coronavirus pandemic clearly demonstrates the value of Genovis’ offering of tools and technology to increase understanding of biological processes, which can help researchers to develop new medications and to improve diagnostics.
Over the past few weeks, antibodies and biological drugs have been highlighted as important components for fighting the coronavirus pandemic. In this perspective, our upcoming acquisition of QED Bioscience is an opportunity to address new relevant areas within antibody-based research and diagnostics.
At the same time, the importance of research in infectious diseases caused by viruses has become quite clear, especially for the industrialized part of the world. The Covid-19 outbreak is likely to result in the allocation of more resources to these areas by companies and communities for a long time to come so as to be better prepared for future pandemics.
Just a month or so ago, we could not have imagined that our customers and we would use our products to investigate viral proteins in detail, how they interact with receptor sites on human cells, and the role played by glycans in viral infection and spread. The fact that surface proteins on the virus, which is visualized in every newscast, are coated in glycans demonstrates the importance of glycobiology and confirms our strategic objective of providing new enzymatic tools in the field of glycans.
Overall, I maintain a strong positive basic philosophy regarding our potential to contribute to society at large and to Genovis’ growth in the long term.
Genovis AB publish Annual Report 2019
Year-end Report January – December 2019
Period January – December
October – December in brief
- Net sales rose by 22 percent to SEK 12,830 (10,537) thousand.
- Gross profit improved by 1,109 thousand to SEK 12,065 (10,956) thousand.
- Operating profit before depreciation and amortization (EBITDA) totaled SEK 492 (2,954) thousand.
- Operating earnings fell SEK 2,434 to a loss of SEK 522 (profit: 1,912) thousand.
- Comprehensive income for the period declined by SEK 2,180 thousand to a loss of SEK 895 (profit: 1,285) thousand.
- Comprehensive income per share, basic and diluted, totaled SEK -0.01 (0.02).
- Cash flow from operating activities rose by SEK 3,059 thousand and totaled SEK 2,824 (-235) thousand.
- Genovis launched Immobilized SialEXO for more effective sample handling of biologicals. SialEXO is used in spectrometry, but is also adapted for analysis using capillary electrophoresis.
- At the Extraordinary General Meeting, held on December 20, 2019, Sarah Fredriksson was elected to serve as a new director and as Board Chair since Mårten Winge left the Board at his own request for personal reasons.
The full year in summary
- Net sales rose 75 percent, or SEK 25,981 thousand, to SEK 60,549 (34,568) thousand.
- Gross profit improved by SEK 23,371 thousand to SEK 56,187 (33,816) thousand.
- Operating profit before depreciation and amortization (EBITDA) totaled SEK 13,563 (4,091) thousand.
- Operating profit/loss improved by SEK 11,026 thousand to SEK 10,066 (loss: 960) thousand.
- Comprehensive income for the full year improved by SEK 11,109 thousand to SEK 9,549 (loss: 1,560) thousand.
- Comprehensive income per share, basic and diluted, improved by SEK 0.18 to SEK 0.15 (-0.03).
- Cash flow from operating activities was SEK 13,125 (loss: 1,250) thousand.
Events after the end of the year
The Board decided to advance the publication of all reports in 2020 due to more efficient financial routines.
2019 – A milestone in Genovis’ growth journey
We ended an extremely successful 2019 with our best sales quarter ever, excluding the bioprocess deal. Sales reached almost SEK 13 million, which represents growth of about 22 percent compared with the corresponding quarter in 2018. Growth was 75% for the full year, driven by the new bioprocess business area, as well as strong growth in the underlying core business.
Operating earnings for the financial year improved significantly compared with 2018 and it is with great pleasure that for the first time my colleagues and I can report a net profit for an individual financial year.
During the fourth quarter we completed the planned investments in the production plant for enzymes used in biochemical analysis of biological drugs. The facility is designed to be able to handle the production needs of the core business area Analysis for many years to come and substantially strengthens our internal production capacity. In conjunction with the investment in the production plant we have also hired additional staff for the production team.
We are therefore well equipped to continue to expand our product portfolio at a rapid pace this year. In the fourth quarter we initiated several new projects from our pipeline that we will launch in 2020. Our collaborative effort with Thermo Fisher has made good progress during the fourth quarter and prospects are good that the collaboration will culminate in a product launch in 2020.
Our marketing activities at conferences and through customer visits intensified in the fourth quarter and our sales and marketing organization have welcomed additional employees.
Because of these bold initiatives, our expenses increased during the fourth quarter, which is in line with our strategy of reinvesting our accumulated cash in future growth.
In 2020, our main focus will be on expanding the product portfolio and continuing to grow our revenues through investments and initiatives to strengthen Genovis for the future. Our strong performance in 2019 has enabled us to reinvest our generated surplus in an aggressive strategy for continued long-term growth.
To ensure that more of our product development projects reach the market in 2020, we will hire new employees to strengthen our product development organization at the beginning of the year. To keep pace with the development of the product portfolio, we will also continue to expand our marketing organization.
As we now leave 2019 behind us and look ahead, I would like to extend a special thank you to our owners who have demonstrated their confidence in our ability to develop Genovis for many years. In closing, I would like to extend a warm thank you to my colleagues for their outstanding efforts in 2019 – a milestone in Genovis’ growth journey.
Fredrik Olsson, Chief Executive Officer
Interim Report January–September 2019
July – September in summary
- Net sales rose by 164 percent to SEK 24,279 (9,206) thousand.
- Operating profit before depreciation and amortization (EBITDA) totaled SEK 7,987 (1,747) thousand.
- Comprehensive income for the period improved by SEK 7,131 thousand to SEK 7,473 (342) thousand.
- Comprehensive income per share, basic and diluted, improved by SEK 0.11 to SEK 0.12 (0.01).
- Genovis delivered an order worth 13,5MSEK of SmartEnzymesTM for use in the manufacturing process for a biological drug. This is a new application for the company’s products. The customer intends to use Genovis’ enzyme for production of a drug candidate for a phase 1 clinical study.
January – September in brief
- Net sales rose by 99 percent to SEK 47,719 (24,031) thousand.
- Gross profit improved by SEK 21,265 thousand to SEK 44,123 (22,858) thousand.
- Operating result improved by SEK 13,463 thousand to SEK 10,589 (loss: 2,874) thousand.
- Comprehensive income for the period improved by SKE 13,290 thousand to 10,444 (loss: 2,846) thousand.
- Comprehensive income per share basic and diluted improved by SEK 0.22 to SEK 0.17 (-0.05).
Comments from Fredrik Olsson, Chief Executive Officer
The third quarter was our best quarter ever, in terms of both sales and earnings. Sales rose by 164 percent and adjusted for currency effects, growth was 147 percent. This strong growth was mainly driven by our single largest order for a bioprocess application and accounted for SEK 13.5 million of our sales. Adjusted for this order our growth in the third quarter was 17 percent and for the period it was 34 percent.
The quarter was characterized by intensive efforts to produce and deliver the large order of enzymes that will be used in the manufacturing process of a biological drug for a phase 1 study. I am both pleased and proud that as a result of the hard work of my colleagues we have successfully met challenging demands for both volume and quality standards, and that the order was delivered in its entirety, as requested, during the third quarter. The order has temporarily required redistribution of lab resources for production, but we have now resumed operations in our development projects. The same applies to implementation of our plans for long-term investments in increased capacity for production of enzymes for analysis. These investments will be fully implemented during the fourth quarter and are expected to total approximately SEK 2 million, which is according to plan.
Operating profit totaled SEK 7.0 million and was adversely affected by an impairment loss of SEK 3.5 million. The impairment loss relates to a claim on our insurance company in conjunction with a legal dispute in 2016. However, we will continue to pursue the claim for compensation.
Expenses for the quarter rose compared with the previous year, mainly because of increased costs for raw materials and personnel costs related to the bioprocess order. We also expanded our premises during the quarter to permit continued growth, as we welcomed two more employees to our growing team.
We are entering the fourth quarter with a strong cash flow from the previous quarter and stronger liquidity. We are now generating a surplus, which we plan to initially invest in product development projects in order to increase the launch rate of new products in 2020.
I would like to conclude by sending a huge thank you to my co-workers, who did an amazing job of completing one of our most challenging projects during the quarter! This valuable experience has given us confidence that will contribute to our continued growth and expansion at Genovis.
Half-Yearly Report January – June 2019
· Net sales rose by about 34 percent to SEK 11,509 (8,578) thousand.
· Operating result before depreciation and amortization (EBITDA) improved by SEK 2,986 thousand and totaled SEK 2,390 (loss: 596) thousand.
· Operating result (EBIT) improved by SEK 3,553 thousand to SEK 1,628 (loss: 1,925) thousand.
· Comprehensive income for the periodimproved by SEK 3,173 thousand to SEK 1,380 (loss: 1,793) thousand.
· Comprehensive income per share, basic and diluted, improved by SEK 0.05 to SEK 0.02 (-0.03).
· Cash flow from operating activities was SEK 145 (80) thousand.
· Genovis signed a collaboration agreement with Thermo Fisher Scientific for the development of new methods for automatic sample handling and analysis of biopharmaceuticals based on chromatographic and mass spectrometric analytical methods (LC-MS).
· Genovis signed a distribution agreement with FUJIFILM Wako Pure Chemical for the markets in Japan, Singapore and Taiwan. The agreement includes distribution of current and future SmartEnzymes.
· Genovis launched SialEXO® 23 for improved glycan analysis. SialEXO 23 is a specific enzyme that can be used to study glycan profiles in biological drugs.
· Genovis has hired Johny Humaloja to serve as CFO. Humaloja assumed the position in August and is responsible for financial management and ongoing financial reporting at Genovis.
Half year in brief
· Net sales rose by about 58 percent to SEK 23,440 (14,825) thousand.
· Gross profit for the period improved by SEK 9,247 thousand to SEK 23,309 (14,062) thousand.
· Operating result EBIT improved by SEK 6,863 to SEK 3,571 (loss: 3,292) thousand.
· Comprehensive income for the six-month period improved by SEK 6,160 thousand and totaled SEK 2,971 (loss: 3,189) thousand.
· Comprehensive income per share, basic and diluted, improved by SEK 0.10 to SEK 0.05 (loss: 0.05).
Events after the end of the half year
Genovis received an order for SmartEnzymes that will be used in the manufacturing process for a biological drug. The order amounts to about SEK 13 million This is a new application for the company’s products. The order is the result of the positive outcome of an evaluation study conducted at a global biopharma company in early 2019. The customer now intends to use Genovis’ enzyme for production of a drug candidate for a phase 1 clinical study.
Comments from Fredrik Olsson, Chief Executive Officer
The Company’s strong growth continued during the second quarter. Sales rose by 34 percent compared with the same period the previous year. Operating profit continued to move in the right direction and improved by about SEK 3.5 million compared with the second quarter of 2018. Over a rolling twelve-month period, our sales volume passed SEK 43 million, and operating profit during the same period was about SEK 6 million.
Production, product development and the marketing organization have all been extremely active, at the same time that we successfully achieved several key milestones for Genovis’ future development.
Our collaboration agreement with Thermo Fisher has generated activities in both product development and our marketing organization during the second quarter. We have participated in several marketing activities organized by Thermo Fisher where we had the opportunity to showcase our products. In addition, we jointly initiated product development projects primarily aimed at automatic quality analysis. For example, during the summer we had instrumentation from Thermo Fisher installed in Lund in order to be able to maintain the pace of the projects and develop new solutions for efficient quality analysis for the biopharma market.
During the period we initiated collaboration with Fujifilm for sales, marketing and distribution of our products in Japan, Singapore and Taiwan. Their marketing organization now has our material and I am confident that we will have continued growth opportunities in the Asian markets going forward.
In terms of operations, the quarter has been influenced by continued expansion of the business at every level. An important step was taken in association with the expansion of our production facility with modern new premises, which were also taken into operation during the second quarter. We have invested in modern new production equipment that will be able to offer increased productivity and flexibility with retained high product quality for our customers. We will continue to invest in our production facility in the coming quarters to meet the increased demand for our current product portfolio, as well as future product launches. Investments have affected our cash flow according to plan during the second quarter. At the beginning of the third quarter, we further expanded our total area to enable continued expansion of our operations.
In August we received our largest single order to date. The order is linked to the previously announced evaluation of Genovis’ enzyme in a new application. Our product was evaluated as part of a process in the production of a biological drug and the order is the result of a successful evaluation study conducted at a global biopharma company. Unlike our current main market in quality analysis, where our enzymes are used to determine whether a drug has desired or expected properties, our product will now be used as a step in the actual production process for a biological drug in phase 1 trials. This means that our products must meet increasingly stringent quality requirements, at the same time that we need to increase production capacity, since volume requirements and safety are crucial in bioprocess applications. We have acquired the necessary capacity for this initial order and if the bioprocess business area continues to develop favorably, we will make additional investments in production capacity.
I am both pleased and proud of the years of effort that my colleagues have dedicated to building the Genovis brand and a whole array of quality products that are now proving to have high customer value even in the production of biological drugs.
We have demonstrated continual strong annual sales growth on a twelve-month basis for almost five years with retained margins and we have now achieved an operating profit for four consecutive quarters. I look forward to working with my fabulous colleagues to help our customers in their efforts to develop tomorrow’s medications and to continue to build Genovis for the future.
Interim Report January – March 2019
· Net sales rose by about 91 percent to SEK 11,931 (6,246) thousand.
· Operating profit/loss before depreciation and amortization (EBITDA) totaled SEK 2,695 (loss: 16) thousand.
· Operating profit/loss improved by SEK 3,310 thousand to SEK 1,942 (loss: 1,368) thousand.
· Comprehensive income for the quarter improved by SEK 2,987 thousand and totaled 1,591 (loss: 1,396) thousand.
· Comprehensive income per share, basic and diluted, improved by SEK 0.05 to SEK 0.03 (-0.02).
· Cash flow from operating activities was SEK 2,709 (loss: 2,024) thousand.
Significant events after the end of the quarter
Genovis signed a collaboration agreement with Thermo Fisher Scientific for the development of new methods for automatic sample handling and analysis of biopharmaceuticals based on chromatographic and mass spectrometric analytical methods (LC-MS). The purpose of the collaboration is to develop advanced work flows from start to finish for complex biological drug molecules in order to meet the growing need for effective, fast and simplified quality analyses.
Comments from Fredrik Olsson, Chief Executive Officer
We began 2019 with strong sales growth. Net sales surged in the first quarter by about 91 percent compared with the corresponding period in 2018. Currency effects had a favorable impact on growth for the quarter and corrected for this, organic growth is clearly robust at 73%. Our sales over a rolling 12-month period now passed SEK 40 million. Operating earnings continued to improve significantly compared with the same period the previous year and it is particularly satisfying that we have now achieved an operating profit for three consecutive quarters.
Growth during the first quarter was generated broadly across the product portfolio which, along with one large order of about SEK 2 million during the period, contributed to the accelerated growth. The area of application for this order is outside our current main market in quality analysis of biopharmaceuticals and relates to an evaluation study at a global biopharmaceutical company using one of our existing enzyme products.
During the quarter, we continued to work on product development with an extra emphasis on automated analysis strategies for the biopharma industry. Our efforts culminated in our first collaboration agreement with Thermo Fisher Scientific, which was announced at the beginning of the second quarter. With its substantial marketing capacity and hardware expertise, partnering with Thermo Fisher will enable us to develop new products and work flows to meet the growing demand for simpler, more efficient quality analysis of biopharmaceuticals. We will also look for opportunities to collaborate with selected key customers who have clear ambitions to automate their analytical workflows. Our aspiration is to further refine and adapt products for automated quality analysis, both from our current product portfolio and using newly developed enzyme solutions, in close cooperation with world-leading biopharma customers.
The period has also been characterized by intensive efforts to find new partners for sales in prioritized geographic markets in Asia. I can conclude that this effort has been successful and that we will likely soon be able to handle sales in additional markets.
We continued to invest in our production capacity during the period. This spring we will further intensify these efforts when we move to a modern production facility in newly renovated premises. Over the next few quarters, we will continue to invest in our production facility to meet an expected increase in demand for our current product portfolio, as well as to strengthen our capacity for future product launches. These investments are laying the foundation for scaling up and broadening our operation in the long term to meet market needs and to enable agile production at Genovis in the future.
In summary, 2019 is off to a great start throughout our operations and I look forward to continued growth and improvement in our business going forward. It is particularly gratifying that for the first time, we have now been operating at a profit over a twelve-month period. With our current initiatives based on reinvestment of our surplus in the business, I look forward to our continued growth journey at Genovis along with my colleagues, with a focus on building value for customers, employees and shareholders.
Year-end Report January – December 2018
· Net sales rose by about 51 percent to SEK 10,537k (6,974k).
· Gross profit for the periodimproved by SEK 4,013k to SEK 10,956k (6,943k).
· Operating profit/loss before depreciation and amortization (EBITDA)* totaled SEK 2,954 (loss: 574k).
· Operating profit/loss improved by SEK 3,056k and totaled SEK 1,912k (loss: 1,144k).
· Comprehensive income for the periodimproved by SEK 2,542k to SEK 1,285k (loss: 1,257k).
· Comprehensive income per share**, basic and diluted, totaled SEK 0.02 (-0.02).
· Cash flow from operating activities was a loss of SEK 235k (loss: 1,436k).
· Genovis was certified to ISO 9001:2015. Quality certification means that the management system meets the requirements imposed by International Standard ISO 9001:2015. The certification covers product development, production and sales.
The full year in summary
· Net sales rose by about 51 percent to SEK 34,568k (22,867k).
· Gross profit improved by SEK 11,975k to SEK 33,816k (21,841k).
· Operating profit/loss before depreciation and amortization (EBITDA)* totaled SEK 4,091k (loss: 6,226k).
· Operating profit/lossimproved by SEK 6,875 to a loss of SEK 960k (loss: 7,835k).
· Comprehensive income for the full year improved by SEK 6,552k to a loss of SEK 1,560k (loss: 8,112k).
· Comprehensive income per share**, basic and diluted, improved by SEK 0.11 to SEK -0.03 (-0.14).
· Cash flow from operating activities was a loss of SEK1,250k, (loss: 8,355k).
* Genovis has chosen to apply IFRS 16 in advance, as well as the simplification rule regarding short-term leases. Consequently, this will not have any effect on the figures reported for 2017. Costs for rent and leases are therefore recognized under depreciation and amortization and beginning in 2018 will not affect EBITDA for the Group. Readmore under accounting policies, page 12.
** Earnings per share is calculated by dividing comprehensive income by the weighted average number of shares during the year. There is no dilution effect.
Comments from Fredrik Olsson, Chief Executive Officer
We ended an extremely successful 2018 with our best quarter ever in terms of both sales and profit. Sales jumped 51 percent compared with the same quarter last year and adjusted for currency effects, organic sales growth was 41 percent.
For the second consecutive quarter we can report an operating profit – in the fourth quarter it hit SEK 1.9 million, which gives an operating margin of 18 percent. Operating profit improved significantly both year on year and quarter on quarter.
We see growth in both the quarter and the full year in all main geographic markets – North America, Europe and Asia – and the percentage increase in sales is broadly distributed across the entire product portfolio.
Sales for the full year reached SEK 34.5 million, which represents growth of about 51 percent compared with 2017. We have achieved strong and steady growth for four consecutive years as a result of our dedicated hard work following clear strategies for productdevelopment, production, support and marketing.
The substantial improvement in our operating profit compared with the previous year clearly confirms that our business model delivers. In 2018 we laid the foundation for the future expansion of Genovis.
Our focus on enzymes for glycan analysis has demonstrated clear value in both academic and industrial applications. In particular, the considerable attention received by scientific publications from the FDA and Johns Hopkins University indicates the value of the products in research. We will continue our product development within glycan analysis moving forward in order to offer products that both improve and simplify the efforts of our customers to develop new and better drugs.
An important milestone for the year was the certification of our operations in compliance with ISO 9001:2015. The work with quality certification has been extensive and was carried out at the same time as our new product launches and the expansion of both production and the marketing organization.
As I look ahead to 2019, I see several exciting new business opportunities that can contribute to the continued development of Genovis. With a strong 2018 behind us, we will focus our product development on new enzymes, as well as on added-value products from our current enzyme base. One example is FabRICATOR-HPLC, which we launched during the autumn. Refining and adapting products for automated analysis systems is an important aspect for solving the challenges our customers in the biopharma industry need to address moving forward – with increasing requirements for productivity and product safety. Closer collaboration with leading suppliers of instruments and technology is crucial if we are to make quick progress in this area, for which reason it will be the focus of our efforts during the year.
In summary, 2018 was a breakthrough year for Genovis and confirmation that our agile and customer-focused organization continues to build value for customers, employees and shareholders.
I would like to thank our shareholders and the Board of Directors for their support and dedication during the year. At the same time, I would like to warmly thank my colleagues for their wonderful contributions during 2018 which have enabled Genovis to make major advances in its development.
We expect continued sales growth in early 2019 and I look forward with great excitement and dedication to our continued journey at Genovis.
Interim Report January – September 2018
· Net sales rose by about 74 percent to SEK 9,206k (5,286k).
· Operating profit before depreciation and amortization (EBITDA)* totaled SEK 1,747k (loss: 1,299k).
· Comprehensive income for the period improved by SEK 1,983k to a profit of SEK 342k (loss: 1,641k).
· Comprehensive income per share, basic and diluted, improved by SEK 0.04 to SEK 0.01 (-0.03).
· Genovis expanded its sales and marketing organization at its Lund headquarters and hired Rob Horsefield as Sales & Business Development Manager.
· Genovis launched FabRICATOR®-HPLC for quality analysis of antibodies in automated analysis systems. The product is based on Genovis’ FabRICATOR technology and can be used in current analysis systems for rapid analysis without manual sample handling.
January – September in brief
· Net sales rose by about 51 percent to SEK 24,031k (15,893k).
· Comprehensive income for the period improved by SEK 7,959k to SEK 22,858k (14,899k).
· Operating profit/loss improved by SEK 3,816k to a loss of SEK 2,874 (loss: 6,690k).
· Comprehensive income for the period improved by SEK 4,010k to a loss of SEK 2,846k (loss: 6,856k).
· Comprehensive income per share, basic and diluted, improved by SEK 0.07 to SEK -0.05 (-0.12).
Events after the end of the period
Genovis became certified to ISO 9001:2015 Quality certification means that the management system meets the requirements imposed by International Standard ISO 9001:2015. The certification covers product development, production and sales.
By designing a quality management system with a strong customer focus in which all processes and procedures are meticulously formulated and quality-tested in compliance with the international standard, Genovis ensures that it continues to deliver products and provide services that meet market demands.
* Genovis has chosen to apply IFRS 16 in advance, as well as the simplification rule regarding short-term leases. Consequently, this will not have any effect on the figures reported for 2017. Costs for rent and leases are therefore recognized under depreciation and amortization and beginning in 2018 will not affect EBITDA for the Group
Comments from Fredrik Olsson, Chief Executive Officer
Continued strong sales growth in the third quarter
Sales growth in the third quarter was strong, 74 percent, and was positively impacted by currency effects. Currency adjusted organic growth was approximately 60 percent.
In the third quarter we reached a milestone in our growth journey – for the first time, we can report a profit and positive cash flow from operating activities in a single quarter. For the nine-month period we see growth throughout the product portfolio and in all geographic markets – North America, Europe and Asia. Our goal of having partners in key markets in Asia in the near future remains unchanged.
Sales growth of products launched over the past two years continues to be strong, both for Biopharma, our main market, and the early research applications in industry and academia. Our customers have appreciated our strategy of offering new products that improve and simplify analytical methods for O-glycans, which is reflected in the growth of this product segment.
During the quarter we launched FabRICATOR-HPLC as a “value-added” product intended to establish a stronger link between our FabRICATOR enzyme and automated analyses for process development and production of antibody-based drugs. Sales began at the time of the launch and I believe that revenue, as with any new product, will be limited during the introductory phase, but will gain momentum over time as the product is validated and evaluated by the market.
Growth and earnings in the third quarter are of course encouraging and an acknowledgement that our strategy is working well. At the same time, it is important that we continue to focus on the top half of the income statement. Genovis is a growth company with good momentum and this positive trend will pave the way for new opportunities.
We see continuation of a favorable growth trend at the beginning of the fourth quarter. The continued underlying demand for enzymes and new analytical tools in our main markets of biopharmaceuticals and protein analysis provide a firm footing from which to view future developments at Genovis with great confidence.
