CONTINUED SALES GROWTH
· Net sales rose by about 32% to SEK 3,808k (2,886k).
· Comprehensive income improved by SEK 1,552k to SEK -3,454 (loss: 5,006k).
· Comprehensive income per share, basic and diluted, improved by SEK 0.14 to SEK -0.09 (-0.23).
· Cash flow from operating activities was SEK -2,498k (-4,854k).
· The Board of Directors of Genovis AB (publ) has resolved on a rights issue subject to approval by the Annual General Meeting on May 12, 2016
· Genovis signed a strategic cooperation agreement with Alphalyse A/S that will provide access to Alphalyse’s expertise in mass spectrometry, while Alphalyse will have the opportunity to offer its customers analyses based on Genovis’ unique enzymes for antibodies and other pharmaceutical proteins.
Comments from Fredrik Olsson, Chief Executive Officer
Once again it is extremely encouraging to report continued sales growth. The first quarter of 2016 is our single best quarter ever, and sales surged by 32 percent compared with the same period last year. This is the sixth consecutive quarter that we demonstrate continued strong growth. The investments we made in our sales organization, both in the US and Europe, continue to produce results and I am particularly pleased that sales for all enzyme lines are growing compared with the corresponding period last year. Gross margin remained at a satisfactory level of about 90 percent.
The number of new customers and orders increased during the quarter compared with the same period last year and I expect continued growth of the customer base in 2016 through increased sales and marketing initiatives.
We are also driving growth by broadening our product portfolio. We intend to continue expanding our product selection during the year and focus expansion of the product portfolio on our existing markets. We will also expand into new markets where our unique enzymes have not yet been used, but where we see clear potential.
In the first quarter, we signed a strategic cooperation agreement with Alphalyse, a company that specializes in protein analysis by mass spectrometry. The agreement enables us both to market our products and to receive information about new market opportunities for our enzymes. We will continue to build partnerships with more stakeholders in the markets where we are active to increase the exposure of our enzymes and thereby further increase sales.
In April, we launched a new product, GingisREX™, our first enzyme that is not limited to analysis of antibodies, but is also suitable for analysis of proteins in general. We received orders for the product right from the day of the launch and our extended distribution network enabled us to send the products to customers immediately after the launch.
Based on developments during the first quarter and the initiatives that we will implement during the year, I expect continued strong sales growth in 2016.
YEAR-END REPORT JANUARY-DECEMBER 2015
· Net sales rose by about 67 percent to SEK 3,499k (2,099k).
· Gross profit/loss improved by SEK 1,959 to SEK –137k (loss: 2,096k).
· Gross margin improved, 74 percent in 2015, compared with 63 percent in 2014.
· Profit/loss after tax improved by SEK 4,799k to SEK -3,062k (loss: 7,861).
· Comprehensive income improved by SEK 4,757 to SEK -3,104k (loss: 7,861k).
· Comprehensive income per share totaled SEK -0.08 (-0.36).
· Cash flow from operating activities was SEK -3,940k (-5,676k).
· GingisKHAN™Fab kit, Genovis launched a further development of the product GingisKHAN™ that will be marketed under the name GingisKHAN™Fab kit.
Summary: full-year 2015
· Net sales improved by about 61% to SEK 13,268k (8,252k).
· Gross profit/loss improved by SEK 4,550k to SEK -1,429k (loss: 5,979k).
· Gross margin improved, 82 percent in 2015, compared with 58 percent in 2014.
· Profit/loss after tax improved by SEK 2,143k to SEK -19,906 (loss: 22,049). Non-recurring expenses had a negative impact on earnings of SEK 6,071k.
· Comprehensive income improved by SEK 2,121k to SEK -19,928k (loss: 22,049).
· Comprehensive income per share totaled SEK -0.66 (-1.02).
· Cash flow from operating activities was SEK -16,117k (-22,193).
· Genovis reorganized, discontinued operations in the subsidiary GeccoDots and sold the intellectual property rights behind the Nanomotus project to the inventors against future royalties.
COMMENTS FROM FREDRIK OLSSON, CEO
In early 2014 we decided to change our marketing and sales strategy and shift completely to direct sales with our own organization in the most important markets. In 2015 we were able to fully implement this decision. The effect is clear: we increased sales for the full year by more than 60 percent to SEK 13.3 million. Direct contact with the end customer is a strong contributing factor for growth in each quarter of 2015 compared with 2014.
We streamlined operations during the year to focus on products based on our unique enzymes, which are principally used in the biopharma industry. The restructuring process had a negative impact on twelve-month earnings of about SEK 6 million, attributable to impairment losses and personnel costs. We are now entering 2016 with a cost-effective organization that is adapted for growth.
Our gross margin improved significantly during the year: 82 percent in 2015, compared with 58 percent in 2014. Our production is now efficient and scalable to be able to meet increased demand.
In the fourth quarter of 2015 our sales surged by 67 percent compared with the corresponding period in 2014. Exchange rate effects in this context are marginal (approximately 7 percent), which means we are growing organically – and this is important for Genovis’ employees, as well as for our shareholders. This achievement reaffirms our conviction to follow and further strengthen our sales strategy in 2016.
Genovis develops and sells products that meet the current and future needs of our customers. In order to continue doing what is necessary, we need not only innovative and talented employees, but also the resources to further strengthen the marketing organization. We intend to further expand our marketing campaigns in 2016 by strengthening existing markets with more resources to drive sales even stronger. We will also seek a local presence in markets where we see significant potential, especially in Asia. We also plan to launch products for new markets and applications to drive growth further during the year. My assessment is that these initiatives will double sales within 18 months and create an organization that can handle continued rapid growth.
Genovis has always had a clear strategy in which interaction with customers guides how we conduct business – every day! This strategy applies to our products, customer care, support and delivery, as well as the simplicity of ordering our products. Our main focus is to solve challenges for our customers in a better way than our competitors do and I am convinced that we have the right strategy to optimally increase value for Genovis shareholders moving forward.
Genovis Interim Report January – September 2015
· Net sales increased by 105% to SEK 3,358k (1,639k).
· Gross profit improved by SEK 3,084 to SEK 822k (-2,262k).
· Loss after tax worsened to SEK 6,647k (loss: 5,545k). Non-recurring expenses had a negative impact on earnings of SEK 4,888k. Excluding non-recurring expenses, the result is better than last year.
· Comprehensive income was a loss of SEK 6,470k (loss: 5,545k).
· Comprehensive income per share totaled SEK -0.18 (-0.25).
· Cash flow from operating activities was SEK -2,698k (-4,537k).
· Cash and cash equivalents including short-term investments amounted to SEK 6,145k (12,003k) at the end of the period.
· Genovis reorganized, discontinued operations in the subsidiary GeccoDots and sold the intellectual property rights behind the Nanomotus project to the inventors against future royalties.
Summary of the first nine months of 2015
· Net sales rose by about 59% to SEK 9,770k (6,153k).
· Gross profit/loss improved by SEK 2,590 to SEK –1,293k (-3,883k).
· Loss after tax worsened to SEK 16,844k (loss: 14,187k). Non-recurring expenses had a negative impact on earnings of SEK 6,036k. Excluding non-recurring expenses, the result is better than last year.
· Comprehensive income was a loss of SEK 16,825k (loss: 14,187k).
· Comprehensive income per share totaled SEK -0.61 (-0.66).
· Cash flow from operating activities was SEK -12,177k (-16,515k).
Comments from CEO Fredrik Olsson
It is extremely satisfying to note that we more than doubled our sales in the third quarter compared with the same period last year. So far this year, sales have increased by almost 60 percent and for the first time in years, we can report a positive gross profit. Cash flow also improved substantially in the third quarter compared with previous quarters this year and the same period last year.
Operating earnings before depreciation (EBITDA) improved by almost SEK 3 million compared with the corresponding period last year. Even compared with the first and second quarters of this year, the improvement in earnings in the third quarter is significant.
Operations in GeccoDots were discontinued in the third quarter and we have divested parts of the company’s intellectual property rights to the inventors against future royalties. By discontinuing operations at GeccoDots we will also reduce costs moving forward, primarily relating to patent and personnel costs. Although some restructuring costs were already taken in the second quarter, most are charged to the current quarter. In connection with the restructuring, we also decided to write down all intangible assets in GeccoDots, which has a negative impact on earnings. In total, restructuring costs for the third quarter amounted to SEK 4.9 million; excluding these costs, third quarter results improved significantly compared with previous quarters this year and clearly demonstrate our commitment to move toward a profitable business.
Genovis’ product portfolio consists of two types of enzymes, proteases and glycosidases. The market for proteases for use throughout the life science area is approximately USD 100 million annually. All proteases that Genovis introduced in this market since 2010 currently account for about 2 percent of the market, and we intend to further increase our market share moving forward. Since its inception, Genovis has built on the idea that a good business is based on delivering a unique product that has a high value for the customer. Genovis has also chosen a path that has not been trodden before, and our philosophy for achieving high value is that it is necessary to go where others have not gone before. The products launched earlier this year continue to grow beyond expectations and thereby contribute to reducing Genovis’ dependence on individual products. The products we will launch in the future will also be unique and solve important problems for our customers.
We can conclude that the third quarter confirms that we are improving our business through close relationships with our customers. Solving our customers’ problems and challenges with unique products will drive our sales even further. We will therefore continue to prioritize sales and marketing with the launch of new products.
In addition, the number of scientific publications in which our enzymes were used almost doubled this year compared with last year, yet another confirmation of the uniqueness and relevance of our products to our customers. I am extremely pleased and proud of all employees at Genovis who contribute their energy and creativity every day to find new and more effective solutions to our customers’ problems.
SIX-MONTH REPORT JANUARY – JUNE 2015
· Net sales rose by about 39% to SEK 3,526k (2,530k).
· Loss after financial items was SEK 5,287k (loss: 4,803k).
· Comprehensive income was a loss of SEK 5,348 (loss: 4,803k).
· Comprehensive income per share basic and diluted totaled SEK -0.22 (-0.22).
· Cash flow from operating activities during the period was SEK -4,624k (-5,767k).
· Cash and cash equivalents including short-term investments amounted to SEK 9,240k (16,829k) at the end of the period.
· Genovis launched a follow-up FabRICATOR® that is marketed under the name FabRICATOR®Z for customers primarily in the pharmaceutical industry for preclinical research.
· Genovis presented data from the mAbCHECK project. The system is based on Genovis’ enzymes combined with Capsenze’s unique technology and Bruker’s cutting-edge expertise in mass spectrometry.
January – June
· Net sales rose by about 42% to SEK 6,412k (4,514k).
· Loss after financial items was SEK 10,292k (loss: 8,642k).
· Comprehensive income was a loss of SEK 10,355k (loss: 8,642k).
· Comprehensive income per share basic and diluted totaled SEK -0.45 (-0.41).
· Cash flow from operating activities during the six-month period was SEK -9,478k (-11,980k).
Comments from CEO Fredrik Olsson
We are extremely pleased to be able to present the best quarterly sales figures in the history of the Company. Sales surged 39 percent compared with the same period last year and 22 percent against the previous quarter. In the first half of 2015 sales climbed 42 percent compared with last year, which means that after the first six months we reached nearly 80 percent of total sales for 2014. Sales increased significantly in both the US market (42 percent) and the European market (37 percent) compared with last year. Gross profit for the second quarter improved significantly compared with the corresponding period last year. However, legal expenses attributable to the judicial process in the US still had a negative impact, which we expect will diminish over time.
As a result of our successful strategy to transition to direct sales, customers have quickly accepted new products and placed orders. Our customer base is steadily growing, which allows more interaction with our customers. Contact with the end customer is crucial in order to rapidly identify market trends and needs. Direct sales strengthen our future product development and sales, which is an important tool to be able to compete in the US and European markets.
Now that we face clear competition in the US, prompt delivery and good customer service are crucial. Sales growth in the first six months strengthens our conviction that Genovis is on the on the right track. In particular, it shows that we can hold our own in a globally competitive market. With our subsidiary Genovis Inc. and warehouse in the US, we can now provide next-day delivery throughout North America.
We can conclude that the new products GingisKHAN and FabRICATOR® Z, which were launched in mid-March and May, respectively, are already responsible for more than 10 percent of total sales since they were introduced. This shows that Genovis can develop new products that customers need. It is extremely gratifying that during the first six months we have shown that we can compete with the largest companies in both the US and Europe. We will continue to introduce new products in the autumn to further strengthen the product portfolio and expect continued positive sales growth.
NEW PRODUCTS AND SHARPLY INCREASED SALES
· Comprehensive income fell by SEK 1,168k to SEK -5,006k (-3,838k).
· Comprehensive income per share, basic and diluted, improved by SEK 0.04 to SEK -0.23 (-0.19).
· Cash flow from operating activities was SEK -4,854k (-6,213k).
· Genovis launched a new enzyme product that is being marketed under the name GingisKHAN™ for customers primarily in the pharmaceutical industry for characterization of antibody-based drugs.
· Genovis launched a new service concept through which customers can order antibody fragmentation with “Smart Enzymes,” thereby opens a new market niche for the company’s products.
· In January 2015 the wholly owned subsidiary Genovis Inc. was registered in the state of Delaware in the US to increase its presence in the North American market.
Launch of demanded product and best sales figures ever
During the past quarter we received our first confirmation that our new sales strategy, pipeline and focus on our customer offering are producing results. Our sales jumped 45 percent during the first quarter compared with the same period last year. If we look solely at current sales of goods and services, and not at reimbursement for development projects, this represents a 73-percent increase compared with last year.
Sales in the US increased by 51 percent and in Europe by 29 percent. This strong performance can be explained in part by exchange rate effects on the US market, but is mostly an actual increase in sales. We see continued growth in the number of new customers, while the number of individual orders increased by 68 percent compared with the same period last year.
Costs rose by 30 percent, in part due to costs associated with staffing and startup costs for our sales organization in the US. Genovis Inc. has an office in Boston and a warehouse in San Diego. The business is off to a flying start and today we can provide our US customers with full support and 24-hour delivery. The largest cost increase compared with the same period in 2014 is primarily the result of expenses related to the lawsuit against Promega, which has had a negative impact on earnings. However, Genovis has an insurance policy to ensure that we minimize our legal costs in this case.
As part of the development of our pipeline, in March we launched GingisKHAN™, the first of several new enzymes. This enzyme has been in demand in the market and has an estimated market potential of USD 10 million. GingisKHAN is an enzyme that splits an antibody very rapidly at a specific location in the molecule. The product complements FabRICATOR® and FabULOUS®, but can also be used in studies of intact Fab and Fc fragments. This is important for Genovis’ customers in analyses such as in crystallization, studies of bispecific antibodies and for studies of the three-dimensional structure of antibodies. We received the first orders on the same day as the launch and we are excited about our continued work with the launch this spring.
Based on the trend during the first quarter, it would seem that the strategic decisions we made last year are now paying off. We will continue to develop our sales initiatives and launch three more products during the year, with the aim of increasing the number of customers and maintaining sales at a high level.
Sarah Fredriksson
President & CEO
YEAR-END REPORT JANUARY-DECEMBER 2014
· Net sales improved marginally compared with the fourth quarter of 2013, SEK 2,099k (2,056k).
· Comprehensive income for the period was a loss of SEK 7,861k (loss: 5,313k).
· Earnings per share totaled SEK -0.36 (-0.34).
· Cash flow from operating activities was SEK -5,676k (-1,502k).
· Genovis established US subsidiary Genovis Inc.
· Genovis’ project for automatic analysis with the FabRICATOR enzyme showed proof-of-concept.
· Genovis filed a plaint against Promega Corporation for patent infringement since IdeS Protease is considered to infringe upon Genovis’ license for US patent No. 7.666.582.
Summary: full-year 2014
· Net sales fell by about 7 percent to SEK 8,252k (8,912k).
· Comprehensive income for the period was a loss of SEK 22,049k (loss: 15,853k).
· Earnings per share totaled SEK -1.02 (-1.10).
· Cash flow from operating activities was SEK -22,193k (-12,469k).
Challenging year brought us closer to our customers, while demonstrating the strength of our products.
After a tough start to the fall, we are pleased to note that fourth quarter sales rose 28 percent compared with the third quarter. Sales also increased slightly compared with Q4 2013. Sales fell mainly on the US market during the third quarter, but even here, sales are recovering. The number of new customers continues to grow as a result of the strategic shift from distribution through a number of partners to direct sales, though more importantly, because our products are reaching more customers. Genovis is now marketing its products directly in Europe and through an American wholly owned subsidiary in the US. In other parts of the world Genovis sells directly and via Sigma-Aldrich.
Over the course of the year our costs rose 11 percent. The costs are mainly related to the restructuring of sales channels, intensified sales activities and expenses related to the lawsuit against Promega. However, Genovis has an insurance policy to ensure that we minimize our legal costs in this case. Overall, with declining revenue especially during the third quarter, earnings for the period on an annualized basis fell short of our objective, mainly because of competition under circumstances that could not be predicted. New situations can arise at any time and our philosophy is to be proactive by increasing interaction and cooperation with our customers, intensifying our marketing initiatives, and continuing to focus on our strategic product pipeline. In this way, we will reverse the trend of this past autumn to achieve growth in 2015.
Genovis’ product FabRICATOR® has initiated a paradigm shift for the methods that the pharmaceutical industry uses to characterize and analyze biological medicines. This new technology is now accepted and on the path to becoming more broadly established. Our strategy is to ensure that we are first with the next generation of products that support and develop this method of analysis. Our customers have strong confidence in us as a result of FabRICATOR. We will take advantage of synergies based on this confidence by growing with more products which, like FabRICATOR, will give the customer results at a lower cost and with high reliability. Consequently we are prioritizing products in Genovis’ pipeline that can be used for several different proteins, and not just antibody-based drugs. These easy-to-use products enable the customer to carry out several different analyses in addition to those already made possible by FabRICATOR. Because of new discoveries in the fourth quarter, we wanted to explore potential IP issues before a launch, but in 2015 we will launch at least three new products.
Genovis is also prioritizing products intended for automation and miniaturization of characterization of biological medicines. The MAbCheck project, in which Genovis is developing automated analysis solutions together with researchers from Lund Institute of Technology, has reached the proof-of-concept stage, which will now be verified by a number of major industrial players. The results will be presented during the spring of 2015.
Our subsidiary GeccoDots concluded the VINNOVA-financed project aimed at developing a new contrast agent for ultrasound with very good results during the fourth quarter. The next step in the project is to complete the prototype and conduct toxicity and proof-of- concept studies for diagnosis of lymph nodes in an animal model.
All in all, 2014 posed certain challenges, but the year also brought positive developments, especially regarding sales of the products launched in 2013. This trend appears to be continuing. Our work with new products is promising for product launches this year and for Genovis’ growth in new markets in the long term.
Sarah Fredriksson
CEO, Genovis AB
Interim Report January – September 2014
· Net sales fell by about 40% to SEK 1,639k (2,750k).
· Comprehensive income was a loss of SEK 5,545k (loss: 2,740k).
· Comprehensive income per share totaled SEK -0.25 (-0.17).
· Cash flow from operating activities during the period was SEK -4,537 (-3,286k).
· Cash and cash equivalents including short-term investments amounted to SEK 12,003k (7,470k) at the end of the period. Short-term investments amounted to SEK 5,000k (3,000k).
January – September
· Net sales fell by about 10% to SEK 6,153k (6,856k).
· Loss after financial items was SEK 14,187k (loss: 10,600k).
· Comprehensive income was a loss of SEK 14,187k (loss: 10,539k).
· Comprehensive income per share totaled SEK -0.66 (-0.75).
· Cash flow from operating activities during the period was SEK -16,516k (-10,966k).
Events after the end of the period
In November, Genovis filed a lawsuit against Promega Corporation for patent infringement. The suit relates to Promega’s product IdeS Protease, which Genovis believes infringes US Patent No. 7 666 582. Genovis has an exclusive global license to the patent, which expires in 2022 and covers Genovis’ product FabRICATOR®. The lawsuit includes an injunction to prevent Promega from producing, using, selling or offering for sale the infringing product, as well as damages. The suit was filed in the United State District Court of Delaware.
Comments from CEO Sarah Fredriksson
After several years of developing new innovative concepts, we have been pleased to see the enthusiasm with which our products have been received in the market. Our customers have published more than 50 scientific publications and have seen strong sales growth. As we now encounter competition from a major player in the market that affects our revenue stream, it is important to act. Genovis has chosen to pursue a legal process that requires both resources and energy, but is necessary for Genovis to retain its intellectual property rights intact. Moreover, product development is the result of considerable time, effort and creativity. Our insurance covers most of the cost of this process.
The loss of income can be attributed in part to the fact that our distributors have now completely stopped stocking our products, which has had an impact on revenue compared with the same quarter last year. The shift from distribution to direct sales is essentially completed and all distribution agreements in the US and Europe will be terminated in three months.
The business is fully focused on the objectives for the year. In August we improved our service by opening web-based direct sales and we expanded production so that we can soon produce all products as endotoxin-free laboratory reagents. All development projects at Genovis and GeccoDots are on track and in November/December we expect to be able to launch from new products in both companies.
Sarah Fredriksson
CEO, Genovis AB
SIX-MONTH REPORT JANUARY –JUNE 2014
· Net sales rose by about 15% to SEK 2,530k (2,200k).
· Loss after financial items was SEK 4,803k (loss: 3,903k).
· Comprehensive income was a loss of SEK 4,803k (loss: 3,852k).
· Comprehensive income per share basic and diluted totaled SEK -0.22 (-0.27).
· Cash flow from operating activities during the period was SEK -5,767k (-3,251k).
· Cash and cash equivalents including short-term investments amounted to SEK 16,829k (10,851k) at the end of the period.
· The company launched a new product format that will make validation of FabRICATOR®easier for customers.
January – June
· Net sales rose by about 10% to SEK 4,514k (4,106k).
· Loss after financial items was SEK 8,642k (loss: 7,860k).
· Comprehensive income was a loss of SEK 8,642k (loss: 7,799k).
· Comprehensive income per share basic and diluted totaled SEK -0.41 (-0.60).
· Cash flow from operating activities during the six-month period was SEK -11,980k (-7,680k).
Comments from CEO Sarah Fredriksson
During the second quarter, sales increased by about 15 percent year on year, and by 28 percent quarter on quarter. Sales in North America jumped 25 percent in the second quarter compared with the second quarter of 2013. Overall this performance represents positive confirmation that our customer base continues to grow, as does demand for our enzyme products. To take full advantage of the potential of our products, our efforts are aimed at convincing the market to implement a shift in technology. We would like to see our customers begin using our first product, FabRICATOR®, in quality control for commercial production of antibody-based drugs. As part of this strategy the Company launched a new product during the second quarter that will facilitate validation of our product. We also have a special focus on the US market, where we are transitioning from distribution to direct sales. This process, which is on schedule and is expected to be completed by year-end in both North America and Europe, has entailed an increase in expenses of about 4 percent for the parent company during the period.
In the wholly-owned subsidiary GeccoDots, activities have intensified in R&D and in marketing of products for the preclinical market as well as in projects aimed at clinical development in the long term. Developments in the subsidiary have resulted in increased costs that have had a negative impact on the consolidated results. All development projects are on track and it is both exciting and inspiring that we were recently able to present two scientific papers reporting good results from the Sentinel Node project’s preclinical studies.
INTERIM REPORT JANUARY – MARCH 2014
· Net sales rose by about 4% to SEK 1,984k (1,906k).
· Comprehensive income improved by SEK 108k to SEK -3,838k (-3,946k).
· Comprehensive income per share, basic and diluted, improved by SEK 0.14 to SEK -0.19 (-0.33).
· Cash flow from operating activities was SEK -6,213k (-4,429k).
· Genovis carried out a private placement in January that raised SEK 3.6 million before issue expenses on the same terms and conditions as the rights issue in December, which raised SEK 23.7 million for the Company before issue expenses.
· Genovis decided to switch to dedicated direct sales in Europe and the US. In other markets Sigma-Aldrich has a non-exclusive distribution agreement.
Comments from Sarah Fredriksson, CEO
During the quarter, we followed through on the strategically important decision to pursue direct sales in the US from now on. Genovis has representation in place, based in Boston, Massachusetts. The conversion will be fully implemented at year-end when the US distributors no longer sell Genovis products. The main reason for the change is to achieve direct contact with our customers. It is crucial for us to understand the needs of our customers and to be able to assist them as they implement our products in more extensive and a greater variety of analytical processes. We see a clear trend in that FabRICATOR (IdeS) will also be used in analytical methods other than mass spectrometry, as was recently described in a publication in mAbs* by researchers in MSD Pharmaceuticals (Merck, Sharp & Dohme). It is important for Genovis’ R&D and sales activities to have direct contact to be able to offer the right product formats for our key customers moving forward. We have also chosen to switch to direct sales in Europe and Israel during the first quarter, as well as to offer direct sales in the rest of the world alongside distribution through Sigma-Aldrich.
During the first quarter we saw a continued increase in sales to customers in Europe and a recovery in the US market, though we did not fully reach the level we expected. This has been affected by the shift from distributor to direct sales; in addition, distributors have kept products in stock since the previous quarter. Certain investments were made during the period, primarily in equipment to streamline production and for quality control. A private placement conducted in early January, and the December 2013 rights issue that was registered in 2014 both had a positive impact on cash flow.
Sarah Fredriksson
President & CEO
YEAR-END REPORT JANUARY-DECEMBER 2013
· Net sales increased by 47% to SEK 8,912k (6,080k).
· Operating loss improved by SEK 4,196k to SEK 15,985k (loss: 20,181k), earnings per share improved to SEK -1.10 (-2.04).
· Cash flow from operating activities was SEK -12,469k (-14,848k).
· Genovis carried out two rights issues that raised about SEK 37.5 million before issue expenses.
Summary: fourth quarter 2013
· Net sales changed marginally compared with the fourth quarter of 2012.
· Operating loss improved by SEK 3,106k to SEK 5,385k (loss: 8,491k), earnings per share improved to SEK -0.34 (-0.70).
· Cash flow from operating activities was SEK -1,502k (-3,889k).
· Genovis launched two new products, FabULOUS and GlycINATOR for analysis and characterization of antibody molecules.
· Genovis was granted SEK 1 million in research support from VINNOVA (the Swedish Agency for Innovation Systems) to explore a method for online process control in conjunction with manufacturing of the biological drug, mAbCHECK.
· Genovis carried out a rights issue in December that raised about SEK 23.7 million before issue expenses.
Comments from CEO Sarah Fredriksson
2013 is the first year that Genovis shows a positive earnings trend. I consider this achievement to be one of the most important milestones in the Company’s development. Compared with 2012, sales rose 47 percent, while expenses increased on an annualized basis to 13 percent, primarily due to expenses for reorganization and continued investments in sales and marketing. Consequently, financial performance for the full year remains unchanged, though it improved over the first three quarters. I am not concerned about this variation over the quarters; in fact, I believe we will continue to see this trend in the future.
We launched two new products in October. They were well-received by our customers and sales took off immediately, which speaks well of our R & D activities. During the fourth quarter, sales increased by about 70 percent in Europe compared with the same period last year, at the same time that we experienced a slowdown in the US market. We noted a cautious attitude in the US during the autumn amid general concerns about the economic situation. The US customers are at the forefront in the use of our products and they are heavily involved in completely new applications. Consequently I do not believe that interest is weakening, but rather the opposite and therefore believe this is a temporary decline. The reduced revenues in the US caused sales to remain unchanged in the fourth quarter compared with the same quarter in 2012, despite a strong increase in Europe. Expenses before depreciation and amortization rose 10 percent on a quarterly basis, with operating expenses increasing by 2.7 percent, while the rest are administrative costs of a nonrecurring nature.
We had three objectives for 2013: to launch two new product lines, to substantially increase sales and for the protein products to become self-sufficient. We achieved the first two objectives and the products in the protein engineering portfolio generate sales that cover the costs of production, administration and sales and marketing activities, while also generating a contribution to research and development. While we did not quite achieve objective number three during the year, we made great strides in the right direction and will continue to do so in 2014. I believe we have every prospect for success in this endeavor.
Sarah Fredriksson
CEO, Genovis AB
