Genovis’ project for automatic analysis with the FabRICATOR® enzyme shows proof-of-concept
“The results are important for Genovis since they clearly show commercial potential for FabRICATOR® (IdeS) in integrated analysis systems. It is mainly in quality control in the development and production of biopharmaceuticals that the system offers major advantages over current methods. We can see that in the long run this will open up a new market for Genovis’ FabRICATOR® enzyme,” says Sarah Fredriksson, CEO.
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
Genovis AB sues US company for patent infringement
Genovis develops, produces and markets innovative technologies that facilitate and enable development of new treatment methods, as well as diagnostics for the pharmaceutical industry. The suit relates to Promega’s new product IdeS Protease, which Genovis believes infringes US Patent No. 7.666.582 for which Genovis has an exclusive global license that expires in 2022 and covers Genovis’ product FabRICATOR®. Genovis has not provided any sublicense to Promega.
“Pursuing legal action is time consuming, but at the same time it is important for Genovis to protect the intellectual property that belongs to the company and its shareholders. FabRICATOR® is the first product Genovis launched and has been sold with good growth in the U.S. market since 2009. The product has also helped to create markets for our other product launches to the world’s leading pharmaceutical companies. Genovis has insurance that covers most of the cost of the suit and I would like to point out that the patent infringement only applies to the U.S. market,” says Sarah Fredriksson, CEO of Genovis.
Genovis’ customers include pharmaceutical and biotech companies, academia and regulatory authorities, including the FDA. They all use FabRICATOR to characterize antibody-based drugs. Modern biological pharmaceuticals against diseases such as cancer are frequently made of antibody molecules that require advanced technology to characterize and analyze them. Analysis is an important cornerstone prior to registration with regulatory authorities, as well as for quality control during production of the approved drug. FabRICATOR is extremely fast and accurate, which enables customers to use a new analytical technique that provides reliable, more easily interpreted results. Customers also save time and lower their analysis costs.
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.
COMMUNIQUÉ FROM ANNUAL GENERAL MEETING FOR GENOVIS AB (PUBL) May 20, 2014
The following decisions were adopted at the Annual General Meeting:
- The balance sheet and income statement were ratified.
- The Board of Directors and the CEO were discharged from liability.
- The Board shall consist of five ordinary members with no alternates until the next Annual General Meeting.
- Kenth Petersson, Jacob Engellau and Erik Walldén were re-elected as Board members.
- Mikael Lönn and Lena Mårtensson Wernrud was elected new Board members.
- Ebba Fåhraeus, Thomas Laurell, Carina Schmidt and Peter Ragnarsson has declined re-election.
- Erik Walldén was elected as Chairman of the Board.
- Directors’ fees shall be paid with SEK 75,000 for the Directors and SEK 150,000 to the Chairman of the Board.
- A Nominating Committee shall be formed and consist of representatives of the four largest shareholders at September 30, 2014, who are not members of the Board.
- Guidelines for remuneration for the CEO and other leading employees were ratified in accordance with the Board’s proposal.
- The AGM decided upon an issuance of warrants with the right to subscribe for new shares. The Chief Executive Officer will be offered a maximum of 360,000 options. The Vice President will be offered a maximum of 90,000 options.
Swedish Shareholders’ Association protest against the decision.
About Lena Mårtensson Wernrud, Ph.D
Born in 1954
Lena Mårtensson Wernrud runs her own consulting firm, Martensson Innovative Partner. She has 30 years of management-level experience in the medical technology and pharmaceutical industries at companies such as Gambro AB, Pharmacia and AstraZeneca. Member of steering groups between AZ and smaller biotech companies and universities. PhD, University of Lund, 1982, in zoophysiology following postgraduate study at the University of Colorado School of Medicine (USA) and Odense University (Denmark). Post doc Medical School Erasmus University (Netherlands). Associate Professor, Lund University, 1992. Certified board member through Styrelseakademin 2014.
Other directorships and positions of trust: No other assignments.
Previous engagements: No previous engagements.
Holdings in Genovis: None.
Lena Mårtensson is independent in relation to the Company and its major shareholders.
About Mikael Lönn, MD
Born in 1949
Mikael Lönn has worked as a physician (urologist) at Södersjukhuset in Stockholm and is now active as an entrepreneur and business leader, especially in health care. He has extensive experience from counseling and active participation on the board of directors for a number of start-up and growth companies, as well as experience from large county and municipal-owned organizations.
Other directorships and positions of trust: Chairman of the board of PRIMA Barn – och Vuxenpsykiatri Stockholm AB, Oral Care Holding SWE AB Vizendo AB, MaBeMi Consulting and Scilife Clinic AB. Board member of Dicel AB, Sturebadet Quality Care AB, Sturebadet Health Strategy AB, Redeye AB/Redhold AB, Mikael Lönn AB, Digilär AB and PPRIMA Vuxen psykiatri Stockholm AB.
Previous engagements: IMIX Holding AB (Medical Devices), Mindab, Mellanskogs industri AB, M & M Medical AB, Norrtäljes Gemensamma Hälso, Sjukvård- och omsorgsbolag TioHundra AB and Diamorph AB (publ).
Holdings in Genovis: 4,838,357
Through his shareholdings in Genovis, Mikael Lönn controls 22.15 percent of all voting rights in Genovis. Mikael Lönn is independent of corporate management.
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
Genovis AB (publ) Annual General Meeting
Tuesday, May 20, 2014 at Scheelevägen 2, Medicon Village in Lund.
4:00 – 4:20 pm Registration
4:30 pm Opening of the Annual General Meeting
Light refreshments will be served after the meeting.
Proposed Agenda
1. Opening of the Meeting
2. Election of Chairman of the Meeting
3. Approval of the voting list
4. Approval of the agenda.
5. Election of one or two persons to verify the minutes.
6. Determination as to whether the Meeting has been duly convened.
7. Presentation of the Annual Report and the Audit Report as well as the Consolidated Accounts and the Audit Report for the Group.
8. Speech by the Chief Executive Officer, after which shareholders will have the opportunity to ask questions of the CEO, the Chairman of the Board and the auditor.
9. Resolutions
a) on adoption of the income statement and balance sheet, as well as the consolidated income statement and consolidated balance sheet
b) on allocation of the Company’s result in accordance with the adopted balance sheet
c) on discharge from liability of the Directors and the Chief Executive Officer
10. Determination of the number of Board members and deputy members to be elected by the Meeting.
11. Determination of fees to the Board of the Board of Directors.
12. Determination of remuneration to the auditor.
13. Election of the Board of Directors and Chairman of the Board.
14. Appointment of members to the Nomination Committee and adoption of guidelines for the Nomination Committee.
15. The Board of Directors’ proposal for a motion regarding remuneration guidelines for senior executives.
16. The Board’s proposal for a motion on the issuance of warrants to subscribe for shares.
17. Other matters to be considered at the Annual General Meeting in accordance with the Swedish Companies’ Act or the Articles of Association.
18. Authorization of the Chief Executive Officer to make such formal adjustments to the resolutions as may be necessary in conjunction with registration and implementation thereof.
19. Closing of the Meeting.
Motions:
Item 2 Proposal to chair the meeting
The Nomination Committee proposes that attorney Arne Källén chair the meeting.
Item 12 Determination of remuneration to the auditor
The Nomination Committee proposes that remuneration of the auditors shall be paid on approved account.
Item 14 Appointment of members to the Nomination Committee and adoption of guidelines for the Nomination Committee
The Nomination Committee proposes that the Committee for the 2015 AGM will consist of representatives of the four largest shareholders at September 30, 2014, who are not members of the Board. The Nomination Committee shall appoint a chairman from among its members. It is incumbent upon the Chairman of the Board to convene the Nomination Committee. Should a shareholder decline to participate in the committee the right to appoint a representative shall be transferred to the next largest shareholder not represented in the committee. If deemed appropriate as a result of ownership changes, the Nomination Committee shall invite additional shareholders to join the Nomination Committee, though the total number of members may not exceed five. In the event a member of the Nomination Committee leaves the Committee before its work is completed, the Chairman of the Board, if the Nomination Committee deems necessary, shall invite the same shareholder or, if the latter is no longer one of the major shareholders, the shareholder next entitled, in terms of size of shareholding, to appoint a replacement Such a change shall be announced on the Company’s website.
The Nomination Committee will prepare proposals for the 2015 Annual General Meeting for resolution as regards chairman at the meeting, Chairman of the Board and other directors, remuneration of directors and auditors, and principles for appointing the Nomination Committee. The Nomination Committee mandate runs until a new committee is appointed.
The Nomination Committee proposes that remuneration will only be paid for direct costs associated with the assignment.
Item 15 The Board of Directors’ proposal for a motion regarding remuneration guidelines for senior executives
The Board of Directors proposes that the AGM adopts the following guidelines for remuneration to senior executives.
These guidelines are valid for employment agreements entered into after the guidelines are approved by the AGM, and for amendments made afterward to existing employment agreements. The basic principle is that remuneration and other terms of employment for the management and CEO will be competitive to ensure that Genovis AB can attract and retain senior executives.
Fixed remuneration policy
The fixed remuneration to the management and the Chief Executive Officer should be competitive and be based on the individual areas of responsibility and performance.
Variable remuneration policy
Variable compensation will be limited and linked to predetermined measurable criteria designed to promote long-term value creation for the company. Variable compensation may not exceed a maximum of 25% percent of the fixed salary and will be set per fiscal year.
The Board will consider on a yearly basis whether or not to propose a share-related or market value-related incentive program to the Annual General Meeting. The Annual General Meeting makes the decisions regarding such incentive programs.
Conditions for non-monetary benefits, pensions, termination, and severance pay
Pensions
Management and the CEO are entitled to a defined-contribution pension.
Termination and severance pay
For the CEO the notice period is 12 months for the Company and 6 months for the individual. For management personnel the notice period is 6 months for the Company and 6 months for the individual. Moreover, assuming that the Company gave notice of termination, in certain cases the CEO may be offered 12 months of severance pay. The Board of Directors may depart from these guidelines if there are particular reasons in an individual case.
The company’s undertaking in relation to senior executives and the chief executive may amount to a maximum of SEK 3,828,810.
Item 16 The Board’s proposal for a motion on the issuance of warrants to subscribe for shares.
The Board of Directors of Genovis (“the Company”) proposes that the AGM resolves in favor of issuance of a maximum of 450,000 warrants. Each warrant entitles the holder to subscribe for one (1) new share in Genovis.
The price at which new shares may be subscribed for shall correspond to a sum that amounts to 150 percent of the volume-weighted average price paid for the Company’s share, which is listed on First North, during the period from May 6, 2014 up until May 19, 2014, though no lower than a subscription price corresponding to the par value of the share.
Subscription for new shares will take place during the period from April 1, 2017 through June 30, 2017.
The warrants may only be subscribed, with deviation from shareholders’ preferential rights, by GeccoDots AB, a wholly-owned subsidiary (“the Subsidiary”) of Genovis, given that the AGM approves the resolution on the issuance.
The warrants will be issued without consideration to the Subsidiary. It is intended that the Subsidiary subsequently, on one or more occasions, will transfer the warrants to the CEO and key personnel of great value to the Company’s future development (“Participants”) as part of a long-term incentive program established by the Company.
For the warrants that the Subsidiary transfers to the Participants, they shall pay a premium corresponding to the prevailing market value according to an independent valuation using the Black-Scholes formula. The Board proposes that the Meeting approve the Subsidiary’s transfer of the warrants on the terms and conditions specified above.
The Board’s reason for the above proposal, and the deviation from shareholders’ preferential rights, is that a personal long-term ownership commitment among the employees can be expected to stimulate increased interest in the business and the earnings trend, increased motivation and an enhanced sense of loyalty to the Company, which the Board considers to be beneficial for the Company and its shareholders. The Board therefore believes that the offer is beneficial to the Company and its shareholders.
Assuming full exercise of the warrants, share capital will increase by about SEK 180,000, corresponding to a dilution effect of approximately 2.0 percent of the total number of shares and votes in the Company.
The Board proposes that the AGM resolves that the Board or the Board designee is hereby authorized to determine the amount of the issue price in accordance with the above decision and adapt the conditions accordingly, and to otherwise make minor adjustments to the resolutions above that may be required for registration with the Swedish Companies Registration Office and Euroclear.
Decisions under this item on the agenda require support of shareholders representing at least nine tenths of both cast votes and shares represented at the meeting.
Right to attend the Annual General Meeting
Shareholders who are listed in a printout of the shareholders’ register produced by Euroclear Sweden AB (formerly VPC AB)
on May 14, 2014, and have notified the Company of their intention to attend the Annual General Meeting by 12 noon on May 14, 2014 at the latest are entitled to attend Genovis’ Annual General Meeting.
Recording in shareholders’ register
Only owner-registered holdings are listed in the register maintained by Euroclear Sweden AB (formerly VPC AB). Shareholders with nominee-registered shares must temporarily register their shares in their own name to be entitled to participate in the Annual General Meeting. Shareholders who have nominee-registered shares must request temporary owner-registration, so-called voting-right registration, with their bank or broker holding the shares a couple of banking days prior to May 14, 2014.
Registration
Register to participate at the Annual General Meeting:
- Address: Box 790, S-220 07 Lund, Sweden
- P: +46 (0)46-10 12 30
- F: +46 (0)46-12 80 20
- E-mail: info@genovis.com
Include the following information when registering
- name/company name
- personal identification number/corporate registration number
- address, phone number
- name and personal identification number of any representative/accompanying representative(s)
Documents, etc.
The annual report, audit report, articles of association, proxy form and the other proposals for motions will be available at the Company’s office at Scheelevägen 2, Box 790, S-220 07 Lund, Sweden, and on the Company’s website www.genovis.com as of April 29, 2014, and will be sent, upon request, to shareholders who provide their mailing address.
It is noted that the Company has 21,845,652 shares and votes.
Shareholders are reminded of their right to request information in accordance with Chapter 7, § 32.
Lund April 17, 2014
Board of Directors
This document is a translation of the Swedish original. In the event of any discrepancy between this translation and the Swedish original, the Swedish version shall prevail.
Genovis shares are listed on NASDAQ OMX First North, and Thenberg Fondkommission is Certified Adviser for the Company, t: +46 (0)31-745 50 00
Genovis switches to pure direct sales of all products in the US
“Our products are unique and have gained acceptance in the market over the past two years, so it is strategically important to have a presence and maintain direct relationships with key customers and Key Opinion Leaders (KOL). The distributors have been an asset to Genovis in the initial commercialization phase. The transition to direct sales will enable us to make better use of our resources and be more effective in the sales process, which benefits both Genovis and our customers,” says Sarah Fredriksson, CEO Genovis.
US office
Genovis AB
245 First Street
Cambridge, MA 02142
T: +1(617)444-8421
