Half-Yearly Report January – June 2018
· Net sales rose by about 48 percent to SEK 8,578k (5,812k).
· Operating result before depreciation and amortization (EBITDA)* totaled SEK -596k (-1,624).
· Comprehensive income for the period improved by SEK 352k to a loss of SEK 1,793 (loss: 2,145k).
· Comprehensive income per share, basic and diluted, improved by SEK 0.01 to SEK -0.03 (-0.04).
· Genovis signed distribution agreement for the South Korean market
· Strengthened marketing organization in the US and Kevin Cook hired as Senior Application & Market Area Manager for the subsidiary Genovis Inc.
· Expanded product portfolio and launched GlycOCATCH™, the first product in the company’s new protein purification product category.
· Carried out a directed share issue that raised SEK 10.1 million for the company before transaction costs.
* 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.
Half year in brief
· Net sales rose by about 40 percent to SEK 14,825k (10,607k).
· Gross profit improved by SEK 4,045k and totaled SEK 14,062k (10,017k).
· Operating result improved by SEK 1,745k and totaled -3,292k (-5,037k).
· Comprehensive income for the period improved by SEK 2,026 to a loss of SEK 3,189 (loss: 5,215k).
· Comprehensive income per share, basic and diluted, improved by SEK 0.04 to SEK -0.05 (-0.09).
Events after the end of the period
Genovis expanded its sales and marketing organization at its Lund headquarters and hired Rob Horsefield as Sales & Business Development Manager. Rob has several years of experience in the industry from sales in analytical chemistry, pharmaceutical development and protein chemistry.
Comments from Fredrik Olsson, Chief Executive Officer
Extremely strong sales growth in Q2
The extremely strong growth at the beginning of the year continued during the second quarter: sales surged 48 percent compared with the previous year and totaled SEK 8.6 million (5.8). This is the single best sales quarter in the history of Genovis. Thus we have now had 15 quarters with sales growth (YoY). For the half year, sales totaled approximately SEK 14.8 million, which represents sales growth of about 40 percent for the first six months of the year. The strong sales with a continued high gross margin creates a good platform for long-term sustainable growth and profitability.
Our sales grew on all markets during the quarter. Our strategy is still to have a presence in all key markets and right now Asia is our priority, with the goal of signing contracts during the year for Japan, Singapore and Taiwan. The increase in sales is driven by increased demand, both for our more mature products that have been on the market for a few years and because our recently launched products have rapidly been accepted on the market. This is a clear confirmation that our strategy and business model with customer-focused innovation creates value and growth opportunities for Genovis. In particular, our product portfolio in the glycomics area has achieved faster sales growth. We realized there was a pronounced need in the market for new analytical tools in the field of glycomics, but the response has been both larger and faster than we had initially expected. During the quarter we expanded our portfolio with yet another product in glycomics, GlycOCATCH™, which is our first product for protein purification. Two important scientific articles from the US Food and Drug Administration (FDA) and Johns Hopkins University School of Medicine were published during the summer. Both of these articles demonstrate new and different applications for our glycomics portfolio, which in the long term will open completely new business opportunities for Genovis.
Genovis is in a growth phase and against this background we carried out a rights issue during the quarter with the goal of continuing to strengthen and grow our sales and marketing organization. In addition to the previously announced recruitment of Kevin Cook to our US organization, Rob Horsefield is now joining the Genovis team in Lund. Rob Horsefield brings valuable industry experience and will initially promote our expansion in the Asian markets and develop our business in relation to partners and potential wholesalers, as well as support our continued growth in Europe.
With more than half of 2018 behind us, the beginning of the third quarter clearly indicates continued sales growth. The investments that we have made during the quarter to strengthen our marketing organization and to secure the right patent protection are crucial for us to be able to maintain the high pace of our development portfolio and sales moving forward.
I confidently look forward, along with our expanding team, to accompanying Genovis on its continued journey of growth.
Interim Report January – March 2018
· Net sales rose by about 30 percent to SEK 6,246k (4,794k).
· Gross margin* was 90 (89) percent.
· Operating result before depreciation and amortization (EBITDA)** totaled SEK -16k (-2,534k).
· Operating result improved by SEK 1,495k and totaled -1,368k (-2,863k).
· Comprehensive income for the period improved by SEK 1,476 to a loss of SEK 1,396k (loss: 2,872k).
· Comprehensive income per share, basic and diluted, improved by SEK 0.03 to SEK -0.02 (-0.05).
· Cash flow from operating activities was a loss of SEK2,024k (loss: 1,586k).
*Excl. other revenue and “Change in inventory, finished goods”
** 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.
Events after the end of the period
Genovis has hired Kevin Cook as Senior Application & Market Area Manager for the subsidiary Genovis Inc. Kevin Cook has 20 years of experience with mass spectrometry from both the pharmaceutical and technology industries. Over the past ten years Kevin has worked with marketing and sales of instruments, consumables and reagents for mass spectrometry, which is a good fit with the market for Genovis’ products.
Genovis launched a new product, GlycOCATCH™. The new product, GlycOCATCH, is a tool for fast, simple and specific purification of proteins or peptides and is aimed at pharmaceutical and diagnostics companies, as well as universities that work with O-glycosylated proteins. GlycOCATCH is designed to make these analyses easier, which has been requested by both industry and regulatory authorities..
Genovis carried out a directed share issue of 2,805,838 shares in accordance with the authorization granted by the Annual General Meeting on May 11, 2017. The issue was directed to a small group of qualified investors and raised SEK 10.1 million for the Company. The subscription price was SEK 3.60 per share.
Comments from Fredrik Olsson, Chief Executive Officer
2018 begins with strong momentum throughout the business
We continue to show strong growth in the first quarter of 2018. Our sales increased by 30 percent compared with the previous year and now amount to SEK 6.25k (4.8k). This means that we have now had sales growth for 14 consecutive quarters. Growth is exclusively organic as the number of orders continues to rise sharply and the repeat purchase rate continues to develop positively for the entire product portfolio. Just as for our industry colleagues and as we have seen in past years, we experience seasonal variations, with the first and third quarters somewhat weaker on the revenue side. Consequently, it is particularly encouraging that EBITDA was significantly improved this quarter, compared with the previous year, SEK -16k (-2,053k*). Our gross margin remains at an expected high level of 90 percent. We can also report that all geographic markets grew during the quarter.
Our strategy to expand our presence in key markets remains unchanged. After the end of the period we signed an additional distribution agreement, this time with Chayon Laboratories in South Korea, a market where biopharmaceuticals are on the rise. Our goal is to have agreements with partners in all key markets in Asia before the end of the year. In the next phase we are focusing primarily on Japan, Singapore and Taiwan.
We are clearly in a growth phase, where our expanding product portfolio lays the foundation for new business in all markets. We want to take advantage of and accelerate this strong momentum. Consequently, the Board of Directors decided to carry out a rights issue in order to rapidly gain guaranteed access to additional expansion capital. With the capital raised from the rights issue we can immediately strengthen our sales and marketing organization, thereby ensuring continued development of our popular patent-protected products and so continue on the proactive path of our growth journey. The rights issue is a clear acknowledgement of the quality of the Company and increases the value for Genovis shareholders.
As part of our strategy to increase our sales and marketing initiatives we have recruited Kevin Cook for our US sales organization at Genovis Inc. Kevin Cook has extensive experience in marketing and sales in mass spectrometry from both the instrument side and the reagents side, as well as great technological know-how combined with experience from the customer side. With a wide network of contacts, Kevin will focus on potential customers in the biopharmaceutical industry on the west coast of the US, at the same time that his experience will support us in our future product and application development.
In addition to this recruitment in the US, we intend to strengthen our marketing organization with additional employees. With our base in Lund, we are preparing for continued expansion, both in our existing markets and by developing the business in the Asian markets together with our partners and new distributors. Our continued success at Genovis also improves prospects for hiring top-notch talent. We receive many qualified applicants to our positions, including a large number of spontaneous applications, which strengthens us in our ambitions for the future.
At the end of April Genovis launched its first product for enrichment of proteins prior to analysis, GlycOCATCH™. In simple terms, this product facilitates and speeds up analysis processes, which has been requested by the industry, academia and regulatory authorities. This is our first product in this segment and it will be exciting to follow developments moving forward. Just as with many of our previous launches, we expect that GlycOCATCH will mainly begin to be used in the discovery phase, after which it will gradually be integrated into other parts of the value chain.
With a good start to the year from the first quarter, I see great opportunities to improve our business moving forward. The signs at the beginning of the second quarter indicate sales growth will continue to be strong. With our current efforts to further promote growth by enhancing our organization with new talent and several additions to the product portfolio, I look forward to working with my colleagues to strengthen our position as an innovative partner to the global pharmaceutical companies and driving developments at Genovis forward.
* EBITDA for 2017 was adjusted to allow for a fair comparison on the EBITDA level since the Company chose to apply IFRS 16.
Year-end Report January – December 2017
Genovis has continued to expand in Asia and signed another distribution agreement for the Chinese market with Shanghai Titan Scientific Ltd., as well as a distribution agreement with Allianz Bioinnovation for the Indian market. As a result of these agreements Genovis has expanded its presence in one of the world’s largest and most exciting markets, Asia. Both the Chinese and Indian markets for the biopharmaceuticals are undergoing strong growth.
· Net sales rose by about 26 percent to SEK 6,974k (5,551k).
· Gross profit improved by SEK 1,418k and totaled SEK 6,943k (5,525k).
· Gross margin* was 93 (93) percent.
· Operating result before depreciation and amortization totaled SEK -574k (-1,973k).
· Operating result improved by SEK 1,154k and totaled -1,144k (-2,298k).
· Comprehensive income for the period improved by SEK 1,126k to a loss of SEK 1,257k (loss: 2,383k).
· Comprehensive income per share, basic and diluted, totaled SEK -0.02 (-0.04).
· Cash flow from operating activities was a loss of SEK1,114, (loss: 2,074k).
January–December in brief
· Net sales rose by about 23 percent to SEK 22,867k (18,542k).
· Gross profit totaled SEK 21,841k (23,281k).
· Gross margin* was 90 (92) percent.
· Operating result before depreciation and amortization totaled SEK -6,226k (-13,475k).
· Operating result improved by SEK 6,934k and totaled -7,835k (-14,769k).
· Comprehensive income for the period improved by SEK 6,906 to a loss of 8,112k (loss: 15,018k).
· Comprehensive income per share, basic and diluted, improved by SEK -0.18 to SEK -0.14 (-0.32).
· Cash flow from operating activities was a loss of SEK8,034k, (loss: 16,075k).
*Excl. other revenue and “Change in inventory, finished goods”
Comments from Fredrik Olsson, CEO
More products and larger geographic presence provide strong position for future growth
I’m pleased to report that 2017 was yet another successful year for Genovis. We ended the year with our strongest quarter ever, in terms of both sales and earnings before depreciation and amortization. We have thereby demonstrated high and stable organic growth for 13 consecutive quarters.
Fourth quarter sales totaled almost SEK 7 million, representing organic growth of about 26 percent compared with the corresponding period the previous year. Our operating result before depreciation and amortization is the best in a single quarter in the history of the company and it is particularly satisfying that we retained a gross margin of over 90 percent despite our sales growth and the addition of new products. This achievement clearly confirms that our business model is scalable and can be used to leverage continued growth.
Net sales for the full year ended at SEK 22.9 million, an increase of 23 percent compared with the previous year. New customers and a higher rate of repurchases, especially during the second half, have provided a clear boost to sales. The result for the full year has also shown a clear improvement.
We continue to maintain a high pace in our marketing campaigns through efforts such as participation in several conferences and customer encounters. We have received further confirmation from our customers that the new glycan analysis products perform better than other established products. As a result of our technical support and our strong customer relationships, sales are also taking off faster than previously. This trend is especially clear for the recently launched products that are initially used in the discovery and preclinical phase. But we have also noted during the year that customers are starting to use our established protein analysis products in early clinical phase.
Significant growth in the product portfolio characterized 2017 and we have positioned ourselves as the leading innovator in enzymes for protein analysis. We note a clear difference in how customers and competitors perceive Genovis, which opens new opportunities for growth, partnerships and continued strong product development.
Our operational objectives for 2017 were to expand the product portfolio with at least three new product launches and to establish a geographic presence in strategically important markets. We can now check off these goals. We have launched an impressive five new products this year and have strategic partnership agreements in both China and India.
As I look forward to 2018, I continue to see ample opportunity for growth and expansion. There is an underlying growth in the market, which means new opportunities for Genovis. Our customer base has shown strong growth in 2017 and these customer relationships have given clear indications of needs that we will be able to capitalize on moving forward.
Sales at the beginning of 2018 are at a higher level than at the same time in 2017, which means that we still have a positive fundamental outlook for full year 2018. As previously, we also expect seasonal variations in sales to lead to some displacements of revenue between individual quarters, but underlying growth will continue to be strong.
We will need to recruit several highly educated employees to our growing organization, especially to the marketing organizations in the US and Europe. Our aspiration is to continue to maintain a high launch rate with the goal of three new products per year. Another objective is to establish partnerships in a few more Asian markets. Genovis is currently a global business based on solid revenue streams and our successes in 2017 has thereby built a solid platform for 2018 and the future.
I would like to thank our employees, the Board of Directors and our shareholders for their dedication this past year and look forward with confidence to a new exciting year at Genovis.
Interim Report January – September 2017
· Genovis signed a distribution agreement with the Chinese company Beijing Zhongyuan Ltd. for sales in the Chinese market. The agreement covers all Genovis products.
This agreement will enable Genovis, with its growing product portfolio, to establish a foothold in one of the world’s largest and most exciting markets. Over the last five years the Chinese market for biopharmaceuticals has grown by more than 40% annually. The market includes both large Chinese companies and a number of global pharma giants that have chosen to locate both their research and development and their manufacturing in China.
· Net sales rose by about 14 percent to SEK 5,286k (4,627k).
· Gross profit totaled SEK 4,882k (4,953k).
· Gross margin* was 90 (92) percent.
· Operating result totaled SEK -1,654k (-1,070k).
· Net loss for the period was SEK 1,641k (loss: 1,059k).
· Comprehensive income per share, basic and diluted, totaled SEK -0.03 (-0.02).
· Cash flow from operating activities was a loss of SEK1,474k (loss: 3,003k).
*Excl. other revenue and “Change in inventory, finished goods”
January – September in brief
· Net sales rose by about 22 percent to SEK 15,893k (13,030k).
· Gross profit totaled SEK 14,899k (17,755k).
· Gross margin* was 88 (92) percent.
· Operating loss improved to SEK 6,690k (loss: 12,472k).
· Comprehensive income for the period improved by SEK 5,778k to a loss of SEK 6,856k (loss: 12,634k).
· Comprehensive income per share, basic and diluted, improved by SEK -0.17 to SEK -0.12 (-0.29).
· Cash flow from operating activities was a loss of SEK6,919k (loss: 14,001k).
*Excl. other revenue and “Change in inventory, finished goods”
Events after the end of the period
Genovis has continued to expand in China and signed another distribution agreement with Shanghai Titan Scientific Ltd.
Comments from Fredrik Olsson, CEO
A quarter with intensive marketing efforts and new opportunities in China
Genovis continues its positive sales trend in the third quarter. Sales increased by 14 percent to SEK 5.3 million (4.6), bringing organic growth for the third quarter of the year to 22 percent with sales of SEK 15.9 million (13.0). Sales growth in the third quarter was relatively weak compared with the previous year due to temporary differences between the quarters, though this trend is expected to have limited impact on sales for the full year. We also see a certain negative impact from currency effects that mainly relate to the US market. I am pleased to report that sales have grown for an impressive 12 consecutive quarters and that the margins continue to remain at a high and satisfactory level.
We have launched an impressive five new products this year. Our product portfolio is now significantly broader and consists of a total of 15 product series. The third quarter was characterized by intensive marketing efforts to introduce the new products to customers. We have dedicated our efforts to the roll-out of our new technology for labeling antibodies, GlyCLICK™, and the products for glycan analysis. Genovis has participated in no fewer than five conferences during the quarter and carried out several customer visits. The conferences are well-established and excellent meeting places for us where we receive confirmation of the commercial and scientific strength and viability of our products. While these initiatives have raised our costs for the quarter, we believe they are essential to reach the market. I expect to see the effects of these initiatives already in the fourth quarter, but especially over the coming year as these products enter a more mature phase and volumes increase.
During the third quarter we signed an agreement distribution and sales of our product portfolio in China. Our objective during the year has been to acquire a partner or distributor on location in one of the growing Asian markets. The Chinese biopharmaceuticals market alone has grown by more than 40 percent annually over the past five years. Our Beijing-based partner Beijing Zhongyuan Ltd has resources, expertise, a strong product portfolio and the connections that we need. In addition, we entered into an additional distribution agreement in China after the end of the period. Our latest distributor, Titan Scientific, is based in Shanghai and works with well-known international brands in well-established channels. With this new agreement, another puzzle piece in our Asian venture is now in place. Building relationships with well-established partners is a cornerstone for Genovis to be able to achieve a good foothold and growth in Asia. These agreements also serve as an acknowledgment that our offering holds its own in relation to others and that our products strengthen the portfolios of our respective partners. We can conclude that our sales in Asia have doubled during the year, albeit from a very low level. With two new partners, we hope to accelerate sales further at a rapid pace.
As we now approach the end of 2017 I can see that Genovis is much stronger than last year. Our portfolio is broader and we have strengthened our position as an innovative knowledge partner on the global biologicals market. We will continue our goal-oriented work with customers and partners so that even more people see Genovis as its natural partner in the development of tomorrow’s medications.
Half-Yearly Report January – June 2017
· Genovis added five new products to the product portfolio:
FabALACTICA™: a unique enzyme for antibody analysis. The enzyme is of particular interest to pharmaceutical companies that develop biological drugs in the growing immunotherapy segment.
Three unique enzymes for glycan analysis: OpeRATOR™: a completely unique protease that cleaves proteins at the exact site of a certain type of glycan. OglyZOR™ and SialEXO™: both products have improved performance compared with other similar enzymes on the market and together with OpeRATOR offer a unique and cutting edge option in the field of glycan analysis.
GlyCLICK™: a product for specific labeling of antibodies for purposes such as development of biopharmaceuticals.
· Genovis carried out a directed share issue that raised SEK 11.5 million for the company.
· Net sales rose by about 26 percent to SEK 5,812k (4,595k).
· Gross profit totaled SEK 5,887k (4,036k).
· Gross margin was 86 (92) percent.
· Operating loss improved to SEK 1,978k (loss: 7,953k).
· Comprehensive income for the period improved by SEK 5,976k to a loss of SEK 2,145k (loss: 8,121k).
· Comprehensive income per share, basic and diluted, improved by SEK 0.17 to SEK -0.04 (-0.21).
· Cash flow from operating activities was a loss of SEK 3,662k (loss: 8,499k).
Half year in brief
· Net sales rose by about 26 percent to SEK 10,607k (8,403k).
· Gross profit totaled SEK 10,017k (12,802k).
· Gross margin was 87 (91) percent.
· Operating loss improved to SEK 5,037k (loss: 11,402k).
· Comprehensive income for the period improved by SEK 6,359k to a loss of SEK 5,215k (loss: 11,574k).
· Comprehensive income per share, basic and diluted, improved by SEK 0.22 to SEK -0.09 (-0.31).
· Cash flow from operating activities was a loss of SEK 5,445k (loss: 10,997k).
Comments from Fredrik Olsson, Chief Executive Officer
Five product launches in H1
Genovis has continued to have strong organic sales growth in 2017. Sales in the second quarter increased by 26 percent to SEK 5.8 million, while sales for the first half of the year totaled SEK 10.6 million, corresponding to a 26 percent increase. This means that sales have surged for an impressive 11 consecutive quarters and the margins continue to remain at a high and satisfactory level.
The quarter was primarily characterized by intensive product development and an extremely high rate of new product launches. We launched no fewer than five unique products in the second quarter and have exceeded our goal of launching three new products annually by a wide margin. In April we launched FabALACTICA™, a new addition to our enzyme family with a focus on antibody analysis. We also launched GlyCLICK™, a new antibody labeling technology that was developed in collaboration with Life Technologies. In addition, we developed a new enzyme family with three products aimed at glycan analysis, especially for pharmaceutical companies and researchers who develop biologicals within the growing field of glycomics.
Sales of these new products have developed very positive over the short-term, confirming both that there is a need on the market and that Genovis is able to meet that need. This excellent start to the year bodes well and I expect the contribution from the new products to be another important puzzle piece for our continued growth moving forward.
The new products definitely contribute to strengthening our brand and position in the market. The positive feedback we have received from our customers underscores our capacity, knowledge and ability to produce the right products. For example, this autumn one industrial customer will publish a scientific article based on FabALACTICA™. In addition, GlyCLICK™ is a finalist for the “2017 Innovation of the Year” award at the World Molecular Imaging Congress (WMIC), the largest imaging conference in the world. It is particularly empowering when a world-leading scientific organization like the World Molecular Imaging Society (WMIS) confirms that GlyCLICK is an important addition to the market. The new enzymes for the field of glycomics have also generated extremely positive feedback from customers who have already purchased and tested the products in an initial evaluation step.
The launches in the second quarter have affected our costs during the quarter, primarily due to increased costs for new patents, marketing and production – a natural consequence of a high launch rate. We are convinced that these costs are wise investments for the future.
Efforts to identify partners or distributors in the key Asian markets remain a priority and are progressing according to plan. We continue to aim to have a partner in place before the end of the year.
As I look forward, I see that the contribution from our new products will be an important cornerstone along with our already established products for continued strong sales growth. Our success is largely due to our organization in combination with our close customer relationships. With five new products in our product portfolio, I am convinced that we have further strengthened our position as an innovative knowledge partner in the global biologicals market.
Interim report January – March 2017
· Net sales rose by about 26 percent to SEK 4,794k (3,808k).
· Gross profit totaled SEK 4,128k (8,776k).
· Gross margin was 89 (91) percent.
· Operating loss improved to a loss of SEK 2,863k (loss: 3,449k).
· Comprehensive income for the period improved by SEK 582k to a loss of SEK 2,872k (loss: 3,454k).
· Comprehensive income per share, basic and diluted, improved by SEK 0.04 to SEK -0.05 (-0.09).
· Cash flow from operating activities was SEK -1,586k (-2,498k).
Comments from Fredrik Olsson, Chief Executive Officer
Increasing sales volumes and strong growth from new products
The favorable sales trend we saw last year, especially in the last quarter, has continued and 2017 is off to a great start. In the first quarter sales increased by 26 percent to SEK 4,794k. This means we have had strong sales growth for ten consecutive quarters. Our gross margin remains at a high stable level of 89 percent for the quarter.
It is particularly gratifying to see increased volumes of products used for analysis of materials in the early clinical phase. As order volumes increase, large orders may influence the figures from one quarter to another. In general, sales have stabilized at a high level and are constantly growing. However, we can continue to expect fluctuations between the quarters.
Growth during the quarter is organic and shows an increase in all product categories in the entire product portfolio. In the first quarter FabRICATOR® stands out in terms of sales. There is a huge underlying demand in the industry, driven by the pursuit for simpler, more effective and more reliable analytical methods, as well as new antibody formats for immunotherapy. Our goal this year is to maintain the high pace of both sales and product launches.
During the quarter we recruited two new employees, which along with intensified marketing and product development initiatives, affected current costs. We believe that it is crucial to strengthen both our production and our application work in order to handle the number of products in our pipeline, which has grown faster than expected, as well as to continue to develop customer relations.
During the quarter, we worked intensively to prepare for the launches of GlyCLICK™ in April and FabALACTICA™ in May. FabALACTICA is yet another product in our enzyme family with a focus on antibody analysis, while GlyCLICK is a new technology for labeling antibodies. GlyCLICK was developed in collaboration with Life Technologies and enables development of a new and complementary business area in our product portfolio. Initially, demand will come from the global pharmaceutical companies in the discovery and preclinical phase.
Our efforts to identify appropriate partners or distributors to introduce our portfolio in a few strategically important markets in Asia are a priority. The goal is to have a partner in place before the end of the year.
We see continued strong demand for our products, especially from global pharmaceutical companies that focus on biopharmaceuticals. We have established a strong position in this niche as both a knowledge partner and a provider of effective analytical tools. Close customer relationships are part of our success and enable us to transform customer needs into concrete products that generate sales right from the start. We will continue to develop and improve this formula. Based on our recent experience in the first quarter, I believe we will see additional business opportunities in the coming quarters.
Events after the end of the period
- Genovis launched two new products.
GlyCLICK™ is a product for specific labeling of antibodies for purposes such as development of biopharmaceuticals. GlyCLICK™ is the first of a series of products based on a technology platform in which Genovis’ unique GlycINATOR enzyme isÒ combined with SiteClick™ technology from Life Technologies. GlyCLICK is a new technology in an expanding market for applications in antibody development, preclinical imaging and antibody drug conjugates (ADCs). The market for biopharmaceuticals is large and many pharmaceutical companies are looking for new and improved technologies that link chemotherapy to antibodies.
The SiteClick™ brand belongs to Life Technologies Corporation.
FabALACTICA™ is an enzyme that is of particular interest to pharmaceutical companies that develop biological drugs in the growing immunotherapy segment. With the launch of FabALACTICA™ Genovis now has nine products in its enzyme family for analysis of antibodies.
- Genovis completed a private placement
In accordance with the authorization granted by the Annual General Meeting on May 12, 2016, Genovis raised SEK 11.5 million for the Company through a directed share issue of 5,000,000 shares. The rights issue was subscribed by selected qualified investors. The subscription price was set at SEK 2.30, which corresponds to approximately 92 percent of the average share price during the 10 trading days prior to the day of subscription. After the rights issue the total number of shares and votes in the Company is 60,294.62 and the share capital is SEK 15,073,540.50.
Genovis AB publish Annual Report 2016
The printed Annual Report can be ordered from the company:
Telephone +46 (0)46-10 12 30
E-mail info@genovis.com
YEAR-END REPORT JANUARY-DECEMBER 2016
· Net sales rose by about 58 percent to SEK 5,511k (3,499k).
· Expenses for the period declined to SEK 8,206k (10,790k).
· Comprehensive income basic and diluted excluding legal fees/reimbursement from the insurance company1) amounted to a loss of SEK 1,923k (loss: 3,056k). Recognized comprehensive income for the period was a loss of SEK 2,383k (loss: 3,104k).
· Comprehensive income per share, basic and diluted, excluding legal fees/reimbursement from the insurance company1) as well as non-recurring costs2 totals SEK -0.03 (-0.08). Recognized comprehensive income per share totaled SEK -0.04 (-0.08).
· Cash flow from operating activities was SEK -2,074k (-3,940k).
· Genovis has entered into a license agreement with Life Technologies, a wholly owned subsidiary of Thermo Fisher Scientific, and will launch GlyCLICK™, a unique new method for labeling antibodies, in the spring.
· Genovis has signed an agreement with Penser Bank AB for its services as Certified Advisor.
1) Legal fees and reimbursement from the insurance company are attributable to the settled patent dispute in the US.
Summary: full-year 2016
· Net sales rose by about 40 percent to SEK 18,542k (13,268k).
· Expenses for the twelve-month period amounted to SEK 39,531k (42,517k)
· Operating result excluding legal fees/reimbursement from the insurance company1) and non-recurring costs2) amounted to a loss of SEK 7,168k (loss: 12,926k). Recognized operating loss for the full year was SEK 14,769k (loss: 19,824k).
· Comprehensive income basic and diluted excluding legal fees/reimbursement from the insurance company1) and non-recurring costs2) amounted to a loss of SEK 7,417k (loss: 13,030k). Recognized comprehensive income for the full year was a loss of SEK 15,018k (loss: 19,928k).
· Comprehensive income per share, basic and diluted, excluding legal fees/reimbursement from the insurance company1) as well as non-recurring costs2 totals SEK -0.16 (-0.43). Recognized comprehensive income per share, basic and diluted, totaled SEK -0.32 (-0.66).
· Cash flow from operating activities was SEK -16,075k (-16,117k).
· Cash and cash equivalents including short-term investments amounted to SEK 4,281k (2,052k) at the end of the twelve-month period.
1) Legal fees and reimbursement from the insurance company are attributable to the settled patent dispute in the US.
2) Non-recurring costs relate to 2015 and amount to a total of SEK 6,036k.
Strong sales growth and expanded product portfolio
In 2016 Genovis’ sales were off to a flying start. We can now conclude that sales have grown for nine quarters and 2016 ended as strongly as it began. During the fourth quarter sales surged 58 percent for an increase of 40 percent on an annualized basis, providing an increase in sales of SEK 5,274k. We can also note that our gross margin is at a high stable level.
Growth has been organic during both the quarter and the full year, with sales growing as a result of our established strategy of working with direct sales on our prioritized markets in the US and Europe.
This growth is driven by increased demand throughout the industry, which has a need to simplify and improve analytical methods and new antibody formats. We have seen all of our product categories grow throughout the year and new product launches have immediately generated sales.
We are determinedly working to continuously develop and expand our product portfolio and our geographic presence. In 2016, we launched two products according to plan, both of which generated revenue.
In October we entered into a license agreement with Life Technologies, a wholly owned subsidiary of Thermo Fisher Scientific, to launch GlyCLICK™, a unique new technology for labeling antibodies. This expansion of our portfolio with a completely new type of product has enabled development of a new and additional business area. The agreement with Life Technologies is a clear stamp of approval for the quality of
Genovis’ expertise and technology. GlyCLICK has already attracted interest from our customers and the product is planned to be available for sale at the beginning of the second quarter, after some of its components were affected by delivery delays. Our ambition to introduce our portfolio on some strategically important markets in Asia remains unchanged. Intensive efforts are currently being dedicated to identifying the right partner. We are considering expertise, as well as the existing portfolio and network of contacts, so that we have a natural path forward to new customers.
As we look ahead, we see continued demand for our products, especially from global pharmaceutical companies that are increasingly focused on biologics. The need for effective and reliable analytical methods will therefore continue to be strong. Genovis has established itself as a potential partner for several of these companies. We are a respected brand in the industry and today we are well-positioned to continue to deliver and develop our knowledge into more products and expand to more markets with new and existing customers.
Fredrik Olsson
CEO
INCREASED SALES AND SIGNIFICANTLY IMPROVED EARNINGS
· Net sales increased by 38% to SEK 4,627k (3,358k).
· Comprehensive income was a loss of SEK 1,059 (loss: 6,470k).
· Comprehensive income per share totaled SEK -0.02 (-0.18).
· Cash flow from operating activities was SEK -3,003k (-2,698k).
· Cash and cash equivalents including short-term investments amounted to SEK 6,599k (6,145k) at the end of the period.
Events after the end of the period
Genovis has entered into a license agreement with Life Technologies, a wholly owned subsidiary of Thermo Fisher Scientific, and is launching a unique new technology for labeling antibodies.
January – September
· Net sales rose by about 33% to SEK 13,030k (9,770k).
· Expenses excluding legal fees1) and non-recurring costs2 declined by SEK 853k to SEK 19,086k (19,939k). Recognized expenses for the period amounted to 31,325k (31,646k).
· Operating result excluding legal fees/reimbursement from the insurance company1) and non-recurring costs2) amounted to a loss of 5,331k (loss: 9,801k). Recognized operating loss for the period was SEK 12,472k (loss: 16,652k).
· Comprehensive income basic and diluted excluding legal fees/reimbursement from the insurance company1) and non-recurring costs2) amounted to a loss of 5,493k (loss: 9,974k). Recognized comprehensive income for the period was a loss of SEK 12,634k (loss: 16,825k).
· Comprehensive income per share, basic and diluted, excluding legal fees/reimbursement from the insurance company1) as well as non-recurring costs2 totals SEK -0.13 (-0.58). Recognized comprehensive income per share basic and diluted totaled SEK -0.29 (-0.61).
1)Legal fees and reimbursement from the insurance company are attributable to the settled patent dispute in the US.
2)Non-recurring costs relate to 2015 and amount to a total of SEK 6,036k.
Comments from CEO Fredrik Olsson
I am pleased to report that the past quarter is Genovis’ best single quarter to date in terms of earnings. It is a clear sign that our strategic work with unique, high-quality products for pharmaceutical companies with a focus on biopharmaceuticals represents a market of the future and that Genovis is now well-positioned in this market. The third quarter demonstrates continued strong organic growth in the product portfolio and we can conclude that Genovis’ revenue has increased for the eighth consecutive quarter compared with the corresponding period the previous year. Gross margin remains high and stable in the third quarter at 93 percent and sales increased across the board in every product category. In all, sales surged 38 percent compared with the previous year.
We are extremely pleased with and proud of the licensing agreement with Life Technologies, a subsidiary of Thermo Fisher Scientific, which was signed in early October. It is a clear stamp of quality that a world-leading industry colleague wants to collaborate with Genovis to introduce a new technology for labeling antibodies. As further confirmation in this collaborative effort, Life Technologies is recommending selling and marketing the product through Genovis – high praise for the value of our accumulated customer base and how customers perceive us as a company in this market. Our customer list includes all of the major pharmaceutical companies, representing both recognition of the customer value of our products, as well as our ability to reach out to a global pharmaceutical market.
The new product, GlyCLICK™, opens up a parallel business area for us and focuses on the same customer base that we currently have – pharmaceutical companies that develop biological drugs. I therefore expect that adoption by the market will be facilitated since these customers are already aware of Genovis and recognize our quality, service and knowledge. Our initial market strategy is to establish the product on the preclinical market to promote acceptance and confidence in the technology platform, thereby simplifying the step to clinical use where the value is of course much higher. It will be exciting to follow the growth of GlyCLICK™ moving forward.
Looking ahead, I see several signs of continued strong growth for Genovis. There are strong underlying driving forces in the development of biopharmaceuticals and in recent years we have seen several of the major pharmaceutical companies clearly position their product portfolios based on biologics, especially antibodies where Genovis is already well-established. New antibody formats such as antibody drug conjugates (ADC) and bispecific antibodies will further grow the market. During development and production of these various biologicals cost effective and safe analytical methods will be very important moving forward, och Genovis will be an important player in this segment.
I would like to take this opportunity to thank all our employees and shareholders for a highly successful quarter.
HALF-YEARLY REPORT JANUARY – JUNE 2016
· Net sales rose by about 31 percent to SEK 8,403k (6,412k).
· Expenses increased by SEK 6,610 to SEK -25,101k (-18,522k). The increase relates to the settled patent dispute in the US. Excluding legal fees, Genovis reduced its expenses during the six-month period by SEK 2,058k to SEK 13,462k (15,520k).
· Operating result was a loss of SEK 11,402k (loss: 10,260k). Excluding legal fees and reimbursement from the insurance company the operating result was a loss of SEK 4,861k (loss: 8,741k).
· Comprehensive income was a loss of SEK 11,574k (loss: 10,355k). Excluding legal fees and reimbursement from the insurance company, comprehensive income was a loss of SEK 5,033k (loss: 8,836k).
· Comprehensive income per share basic and diluted totaled SEK -0.31 (-0.45). Excluding legal fees and reimbursement from the insurance company, comprehensive income per share was a loss of SEK 0.13 (loss: 0.38).
· Cash flow from operating activities during the six-month period was SEK -10,997k (-9,478).
· Cash and cash equivalents including short-term investments amounted to SEK 10,011k (9,240k) at the end of the half-year.
April–June
· In June Genovis reached a settlement in the patent dispute with Promega Corporation and entered into a royalty-based global licensing agreement regarding the patent involved in the dispute.
· In May, Genovis carried out a rights issue that was oversubscribed by 10 percent. The rights issue raised about SEK 23 million before issue expenses for the company.
· Genovis launched a further development of FabULOUS®. The new product is being marketed under the name FabULOUS® kit.
· Genovis launched GingisREX®, a new enzyme aimed at customers throughout the proteomics market. The products that Genovis has launched to date have solely been used for modification of antibodies, while GingisREX can be used for proteins in general.
· Net sales rose by about 30 percent to SEK 4,595k (3,526k).
· Comprehensive income was a loss of SEK 8,121k (loss: 5,348k).
· Comprehensive income per share basic and diluted totaled SEK -0.21 (-0.22).
· Cash flow from operating activities was SEK -8,499k (-4,624k).
Comments from CEO Fredrik Olsson
The second quarter showed continued strong sales growth for the Company’s products and was the single best quarter in the history of the Company. Sales amounted to SEK 4.6 million, an increase of 30 percent year over year and 21 percent quarter over quarter. For the six-month period as a whole sales rose 31 percent, demonstrating stable organic growth in the product portfolio. It is particularly gratifying that we see growth in all product groups during the period.
At the end of the second quarter, we reached a settlement in the legal dispute that has been ongoing since 2014. We are pleased to have reached an agreement that gives us royalty income at good levels, but above all, the agreement is strategically important to increase the size of the market and to improve conditions for faster adoption of FabRICATOR in the production of antibody drugs. Now that there are two suppliers of the enzyme, the prospects have improved for the enzyme to be included in critical methods of analysis for the production of antibody-based drugs.
The market for antibody-based drugs is undergoing strong growth and there is a clear need to simplify and improve the analytical methods associated with production. We are now also seeing more requests for larger volumes for use specifically in quality control in the production of antibodies, for which reason I expect continued growth for FabRICATOR since we are still in an early stage.
While revenues from sales have increased sharply, the cost base–excluding the legal costs of the dispute with Promega–has declined 13 percent compared with the first half of 2015. However, the legal expenses associated with the dispute have had a negative impact on earnings for the period. As a result of the settlement, these expenses will end during the beginning of the third quarter.
It is worth noting that organic growth continues without any negative effect on gross margin, indicating efficient use of resources in the production of our products and that the price level remains at a satisfactory level.
As I look ahead to the rest of the year I expect continued good organic growth. We will increase our efforts in sales and marketing to further drive growth. A clearer presence in the Asian markets will be prioritized, while strengthening our own sales organization in North America and Europe. We will also continue to work to broaden the market for our existing product portfolio with new products aimed at new applications, at the same time that we follow the strategy of expanding the product portfolio by introducing new products. In line with this strategy, in the second quarter we launched two new products – GingisREX and FabULOUS Fab Kit. GingisREX opens a new market for us because the product can not only be used for antibodies, but also within general protein analysis. FabULOUS Fab Kit simplifies handling of antibody fragments for a certain type of antibody during production.
In May we carried out a rights issue that was oversubscribed. The additional capital, together with the strong growth we continue to demonstrate, will provide good conditions for further investments in market expansion and a continued positive trend for Genovis.
I would like to thank all of our engaged shareholders and dedicated employees for their efforts, which have resulted in yet another successful six months and created good prospects for a positive development moving forward.
