Genovis signs Letter of Intent for the acquisition of CRO company
– I know that the Eijdo research management team has worked together for several years in the area of contrast media research at Amersham Health/GE Healthcare and lately at Imagnia AB, which is a CRO company. The specialist know-how they possess together with their experience from contract research will strengthen Genovis. The combination Genovis and Eijdo research opens endless possibilities to use the potential of both organizations at maximum, and it reinforces the business model for our products and services in a very competitive manner. I truly look forward to launch this project, says Sarah Fredriksson, CEO Genovis AB.
Eijdo research AB provides broad know-how in physics, biology and biochemistry which enables preclinical magnetic resonance (MR) studies that uses equipment of clinical relevance. For example, products intended for clinical use can be evaluated in the early development phase, without spending the substantial costs involved when clinical MR systems are used.
– The unique combination of our special competences means new opportunities to bring these biologically interesting nanostructues into the imaging world. Nanotechnology is a new and exciting area for Eijdo, and we see great potential for the technology when used for imaging purposes, says Anna Gisselsson, CEO Eijdo research AB.
Genovis nano products show promising results in magnetic resonance studies
Magnetic Resonance Imaging (MRI), is used to detect a variety of diseases and conditions. MRI is a technique that creates images of the interior of a body, but without the need to use x-ray. The images are above all used to study changes in living tissue.
The study results Genovis has obtained show that the nanoparticles have no toxic effect and that they are stable in the biological environment. The studies have also demonstrated that due to their high magnetic quality, the particles produce a unique contrast effect, which makes it possible to use them in several applications.
-The results are extremely stimulating. The studies show that we can market our nano products not only as lab tools, but – which is more important – as contrast agents to be used for modern drug discovery. This is a completely new business area for Genovis. By focusing on our technology platform and by capturing our experiences from years of R&D, our products have gradually gained increased value. We can now commence to realize the values we have built during years of intense development work, says Sarah Fredriksson CEO Genovis AB.
In the market for medical product development, in particular preclinical development, the combination of nanoparticles and magnetic resonance opens up new business opportunities for Genovis. The customers are biotech/pharma, contract research and medtech companies. Genovis has products that offer cost savings, shorter lead times and improved decision-making as regards preclinical drug discovery projects.
Proposal regarding new board members and chairman of the board of Genovis
The new candidates, whose term of office would run until the close of the next annual general meeting, are and Fredrik Lindgren, CEO Biolin Scientific AB and Ebba Åsly Fåhraeus, Vice President Sales and Marketing Anoto AB.
Carina Schmidt, Thomas Laurell and Nicklas Gerhardsson are proposed to be re-elected as board members and Hans Göran Arlock is proposed to be re-elected as chairman of the board.
Bo Håkansson, member of the board, has already declared that he will resign from the board.
GENOVIS: ANNUAL REPORT 2008
This year Genovis will publish the 2008 Annual Report on the company website only,and since most people nowadays read the report on the web there is subsequently decreased demand for the printed version. By publishing the Annual Report on the company website only, Genovis contributes to minimizing the environmental impact by saving distribution and printing costs.
Notice of Annual General Meeting of Genovis AB (publ)
Agenda
1. Opening of the meeting.
2. Election of chairman for the meeting.
3. Preparation and approval of voting list.
4. Approval of the agenda.
5. Election of two persons to attest to the accuracy of the minutes.
6. Decision on whether proper notice of the Meeting has been made.
7. Presentation of the annual report and the auditors’ report, as well as of the consolidated financial statements and the auditors’ report for the Genovis Group.
8. The president’s speech, after which shareholders will have the opportunity to ask questions to the president, chairman of the board and the auditors.
9. Resolutions regarding
a. Adoption of the income statement and the balance sheet for the parent company, as well as of the consolidated income statement and the consolidated balance sheet for the Genovis Group.
b. Disposition of Genovis’ profit/loss in accordance with the approved balance sheet.
c. Discharge from liability of the Members of the Board of Directors and the President.
10. Decisions on the number of Members and Deputy Members of the Board of Directors, who shall be appointed by the Meeting.
11. Decisions on the compensation that shall be paid to the Board of Directors.
12. Decisions on the compensation that shall be paid to the auditors.
13. Election of Chairman of the Board of Directors and other Members of the Board of Directors.
14. Appointment of Directors to the Nomination Committee and adoption of instructions for the Nomination Committee.
15. Proposals for resolution on guidelines for salary and on other remuneration for the President and other Members of the management.
16. Proposal for resolution on amendment of the Articles of Association.
17. The Board of Director’s proposal for authorization of the board to decide upon a new share issue
18. Other business to be addressed by the general meeting in accordance with the Swedish Companies Act or the Articles of Association.
19. Conclusion of the Meeting
The Board of Directors’ proposals for decision
Item 16 – Amendment of the Articles of Association
The Board of Directors proposes that the paragraph concerning time limits for notice of general meetings shall be removed, as these limits already follow from the law and that section 8 in the Articles of Association is amended in accordance with the change in the means of convening a general meeting in the Swedish Companies Act (2005:551), when it has come into force.
Item 17 – Authorization for the board to decide upon a new share issue
The board proposes that the AGM decides upon an authorization for the board to decide upon a new share issue, up until the next annual general meeting, at one or more occasions with or without preemptive rights for current shareholders.
By a decision on a new share issue based on the authorization, the share capital will at the most rise by SEK 1,400,000 by the issuing of new shares at market price, but to a maximum of 3,500,000 shares at full subscription.
Participation
To be entitled to participate in the business of the Meeting, shareholders must be recorded in the register of shareholders maintained by Euroclear Sweden AB (former VPC AB, the Swedish Securities Register Center) on Wednesday, May 27, 2009, and must notify Genovis of their intention to attend the Meeting no later than on Wednesday, May 27, 2009.
Nominee-registered shares
Shareholders whose shares are registered in the name of a nominee through the trust department of a bank or similar institution must, in order to be entitled to participate in the Meeting, request that their shares are temporarily re-registered in their own names in the register of shareholders maintained by Euroclear Sweden AB. Such registration must be effected on Wednesday, May 27, 2009.
Shareholders are requested to inform their nominees well in advance of this date.
Notification
• mail to GENOVIS AB (publ), Box 270, 220 07 Lund
• telephone +46 (0)46-10 12 38
• fax +46 (0)46-12 80 20
• e-mail: info@genovis.com
When registering, shareholders should state their:
• name/company name
• personal identification or corporate identity number
• address, telephone number
• name and personal identification number of any representatives
• name of the attendance of any assistants
Documents
Accounting documents and the Audit report as well as the Nomination Committee and Board Board of Directors’ complete proposals will be made available at Genovis and on Genovis website no later than May 19, 2009 and will be sent to shareholders that request the Company to do so.
Lund May, 2009
Board of Directors
Interim Report January-March 2009
• Consolidated net sales amounted to SEK thousand, 120 (SEK thousand, 106)
• Consolidated operating profit/loss amounted to SEK thousands, – 3 373 (SEK thousand, -4 869).
• Consolidated Net/profit loss amounted to SEK thousands, -3 466 (SEK thousand, – 3563).
• Earnings per share for the period amounted to SEK –0,29 SEK (-0,41).
• Comprehensive income for the period amounted to SEK thousand, -4 089 (SEK thousand, -3 563).
• Cash and cash equivalents at the end of the period amounted to SEK thousand, 1 911 KSEK.
First quarter highlights
• Genovis enters into distribution agreement with Finnzymes Inc. in the US
• Genovis enters into distribution agreement with Biozym Scientific GmbH for Germany and Austria
• 87.6% of Genovis new share issue subscribed
Operations
Genovis develops and markets nanostructures that can be divided into two groups: nanoparticles (NIMT®) for medical imaging (early trials) and transfection/delivery and proteins (Antibody Tools) for antibody fragmentation and -modification. In 2009 the Company will sell or license out the protein engineering portfolio in order to focus on nanoparticles (NIMT®), which are the Company’s core business. Research and Development will focus on preclinical medical imaging. In 2008 Genovis began to introduce its first product in the area and expects to launch a group of products in 2009.
Genovis has signed a distribution agreement with Biozym Scientific, which is well known in the Life Science market in Germany and Austria. Genovis has also expanded its US operations with a local distributor, Finnzymes Inc., and transferred all logistics and marketing activities in the US to Finnzymes. Finnzymes Inc. is a wholly owned subsidiary of Finnzymes Oy and distributor of Finnzymes products in North America. As a result the Genovis brand will achieve substantially broader distribution in the US.
In January Genovis carried out a new issue with preferential rights for existing shareholders. A total of 87.6% of shares were subscribed, with about 82.2% subscribed by existing shareholders and with preferential rights. The rest of the shares were subscribed without preferential rights within the frame of the highest amount of the issuing. The issue provides Genovis with about SEK 8.7 million after issue expenses. The number of shares increased from 10,886,233 to 14,066,466.
Product portfolio
Imaging
Imaging, a market segment undergoing strong growth, is used by researchers for in vivo and ex vivo studies. In order to see what happens in a cell and to be able to follow the cell inside an animal model, the cell must be marked in some way. One method is to introduce magnetic nanoparticles into the cell, NIMT® FeOlabel, and then follow the cell using magnetic resonance imaging (MRI).
Today Genovis is working on two in vivo imaging projects in cooperation with Lund University. One project involves development of nanostructures for use in diagnostics (medical imaging) of extremely small tumors that can rapidly occur in lymph glands among patients with breast cancer. The project recently received funds from the Swedish Research Council to finance an industrial doctoral student for four years. The other project involves nanoparticles as carriers of small molecules to cells in the brain. Genovis also supports several customer projects in which the customer either uses Genovis’ products for medical imaging or to track stem cells.
Transfection/Delivery
There is a large market for technologies that deliver molecules (e.g., DNA or genes) into cells. One such technology is NIMT®FeOfection, which offers high efficiency and low toxicity compared with rival products. RNAi is another field undergoing dramatic growth, where researchers are interested in technologies to silence gene activity in order to treat conditions such as viral infections, cardiovascular diseases, cancer, and metabolic diseases. With its high efficiency and low toxicity, Genovis’ NIMT®FeOfection is also extremely suitable for these studies.
Antibody Tools
FabRICATOR® is a genetically modified enzyme that cleaves antibodies into two parts, a Fab fragment and an Fc fragment. Unlike other technologies on the market, FabRICATOR® cleaves all antibodies in a very short time in exactly the same place, and each antibody is only cleaved once. FabRICATOR is also sold as a kit that allows customers to cleave and isolate pure Fab fragments in less than one hour, unlike other methods which may take up to twenty-four hours to achieve the same results. IgGZERO™ is a unique protein that can specifically cleave sugar molecules that are found naturally on antibodies. Removing the sugar molecules can improve the performance of the antibody in various applications. IgGZERO™ can also help wash away antibody molecules from primary cells. FcDOCKER™ binds specifically to the antibody. This protein is very useful in the antibody production process. Using FcDOCKER™ entails a gentler production process than competing methods and offers great technical and economic advantage.
Geographic markets and market strategy
Genovis sells to dealers and distributors, who in turn conduct marketing campaigns in different regional markets. The distributors have a good understanding of the business opportunities for Genovis’ nanostructures in each region. The company currently has distributors who cover thirteen countries and are geographically scattered from North America across Europe and beyond to the Far East. Sales also take place to some extent directly to end customers in countries where Genovis does not have distributors. Revenues are currently mainly generated from sales of nanoparticles and proteins as consumables, though they are also generated by consulting services combined with the sale of nanoparticles for applications that do not fall within Genovis’ standard line of products.
One of the objectives for 2009 is to begin generating revenues through OEM sales or the sale of licenses, where either Genovis is responsible for production of the product, which is then sold under a partner’s brand, or the partner assumes responsibility even for this portion. In the latter case, revenues can involve both advance payment and royalties per unit sold. In both cases, the counterparty would be responsible for all marketing and sales and the Company has decided to work according to this model for the next two to three years.
With respect to sales of custom-made particles mainly for in-vivo studies and imaging, the Company will continue to handle production and delivery to customers or resellers in the future.
Sales
Net sales during the first quarter were SEK thousand 120 (SEK thousand 106). Two distribution agreements were signed during the quarter, one with Finnzymes Inc. for the US and one with Biozym for Germany/Austria; both distributors have large customer lists that are well-suited for Genovis products.
Net Result
The operating loss during the first quarter of the year was SEK thousand 3,373 (LOSS: SEK thousand 4,869). Genovis is carrying out a cost-cutting program to reduce the Company’s operating costs by 30%. The cost-cutting program will achieve full impact during the third quarter. In contrast with personnel costs in Q 1 2008, Q1 2009 has a charge for accrued vacation pay liability of SEK thousand 174.
Depreciation and amortization during the quarter were SEK thousand -256 (-192) including SEK thousand -256 (SEK thousand -142) for tangible assets and SEK – 0 (50 (SEK thousand 50) for intangible assets.
The loss after financial items was SEK thousand 3,466 (loss: SEK thousand 4,941). Deferred tax during the quarter was SEK 0 (SEK thousand 1,378).
Cash Flow and Financial Position
Cash flow from operating activities was SEK thousand –4,498 (SEK thousand -4,262). Cash flow from change in working capital totaled SEK thousand –1,288 (SEK thousand 487). At the end of the period cash and cash equivalents amounted to SEK thousand 1,911.
The Group’s net investments during the period totaled SEK 0 (0). Net investments included SEK 0 (0) for tangible assets and SEK 0 (0) for intangible fixed assets.
Organization and Personnel
Genovis’ Lund division is responsible for centrally coordinated business and financial functions, as well as production, research and development, marketing, customer support and sales support. The CEO and COO have overall responsibility for the group’s business. Genovis Inc. mainly focuses on strategic business development.
On March 31, 2009, the Group had nine employees, including nine at the Parent Company and no employees in the United States, compared with eleven people at the Parent Company and one in the United States during
the same period last year. The Chairman of the Board of Genovis Inc. is paid a consulting fee when working on projects.
Other information
Risks and uncertainties
Genovis’ general view of the financial risks that could affect operations has not changed since the description published in the most recent annual report. For a detailed overview of the company’s financial risks please refer to page 41 of Genovis’ 2007 annual report.
Stock option program
The company has 187,000 warrants issued. The warrants may be exercised for subscription of shares between February 28, 2012 and May 31, 2012. When all warrants are fully exercised the company’s share capital will increase by a total of SEK 74,800 through the issue of 187,000 shares, each with a par value of SEK 0.40. If the warrants are fully exercised the new shares will constitute 1.7% of capital and votes.
The Genovis share is traded on First North, part of the OMX Nordic Exchange. Mangold Fondkommission is the Company’s Certified Adviser and liquidity guarantor.
Genovis’ Annual General Meeting (AGM) is rescheduled for 2nd June 2009
This activity commenced in Q4 2008, and is estimated to be completed during Q2 2009. In order to grant the incumbent Board of Directors freedom to act during the process, Genovis reschedules the AGM announced to take place on the 23rd April 2009 for the 2nd June 2009. The decision has been taken following consultation with the major shareowners.
The annual report will be published on May 19, 2009
GENOVIS SIGNS GERMAN AND AUSTRIAN DISTRIBUTION AGREEMENT WITH BIOZYM SCIENTIFIC GmbH
Sarah Fredriksson, Chief Executive Officer of Genovis, said “We are excited about the opportunity this distribution agreement presents for Genovis, it will allow us to reach a large number of customers of Germany and Austria and we are looking forward to working with the experienced team in Biozym”
Biozym was founded 1986 in Hamelin, Germany as a public limited company (GmbH) and provides solutions for the scientific community. The product portfolio consists of high performance instrumentation, superior biochemicals and specialized plastic ware, used in the major molecular biological applications like PCR, DNA-sequencing, identification and purification. The company has showed an extraordinary growth especially during the pioneer years of molecular biology.
Hartmut Groth, Ph.D., General Manager, Biozym Scientific GmbH, said “Biozym Scientific is very pleased to announce that we have entered into a long-term distribution agreement for Germany and Austria with Genovis AB. Our company is well known in the Life Science market in Germany and Austria for more than 20 years as a provider for innovative solutions and the reagents for transfection, imaging and labeling of Genovis AB will make our portfolio even more complete”.
Year-End Report January ̶ December 2008
Consolidated net sales were SEK 380 thousand for the year and SEK 105 thousand for the fourth quarter.
Consolidated earnings totaled SEK –25,420 thousand for the year and SEK –11,449 thousand for the fourth quarter.
Earnings per share for the period amounted to SEK –2.65.
Cash and cash equivalents at the end of the period totaled SEK 176 thousand.
Fourth Quarter Highlights
•Genovis launched two new Antibody Engineering products: IgGZERO™ and FcDOCKER™. The two new products strengthened Genovis and doubled its Antibody Engineering product area, a market undergoing strong growth.
•Genovis entered into a distribution agreement with Innovative Biotech Pte Ltd in Singapore for exclusive rights to sell and market Genovis’ products in Singapore.
•Genovis was granted a position for an industry-based doctoral student by the Swedish Research Council, which means one more person working with in vivo studies in which Genovis nanostructures serve as contrast media. The project is a collaborative effort with the Department of Radiophysics at Lund University Hospital.
Full Year 2008
•Genovis carried out a new issue of shares to build marketing and sales channels. The new share issue was oversubscribed at 98 percent with preferential rights.
•Genovis launched a new product, NIMT®FabRICATOR Kit, the most effective tool in the market for antibody fragmentation and isolation of pure Fab fragments. The product is a combination of a unique enzyme and nanostructures that Genovis developed in-house.
•Genovis entered into distribution agreements with:
Nordic Biolabs for exclusive rights to sell and market Genovis’ products on the Swedish and Danish markets.
DI Biotech for exclusive rights to sell and market Genovis’ products on the Korean market.
Stratech Scientific Ltd. for exclusive rights to sell and market Genovis’ products in the British and Irish markets.
Teknokroma for exclusive rights to sell and market Genovis’ products on the Spanish and Portuguese markets.
Biolegio for exclusive rights to sell and market Genovis’ products in the Netherlands and Belgium, as well as nonexclusive rights for Germany.
•Genovis initiated collaboration with Japanese company Magnabeat Inc., which opens commercial opportunities in Japan.
•Genovis implemented conversion to one class of shares and issued warrants to which the CEO,senior executives and other employees subscribed on equal terms.
Significant Events after the End of the Period
Genovis carried out an issue of new shares, which was 90.5% subscribed, of which about 79.5% was subscribed by existing shareholders, with preferential rights. The rest of the shares were subscribed without preferential rights within the frame of the highest amount of the issuing. The issue provides Genovis with about SEK 9 million after issue expenses. The number of shares increased from 10,886,233 to 14,172,066.
Genovis expanded its operations in the United States with a local distributor, Finnzymes Inc. The Company reorganized and transferred all logistics and marketing activities in the United States to Finnzymes Inc.
Comments from the CEO
In 2008 we developed three unique products in our Antibody Engineering protein portfolio, two of which were launched during the fourth quarter. We have introduced the products at scientific conferences and received a favorable response from both the pharmaceutical industry and academia. The introductory market launch has been a requirement to be able to present an attractive customer base to those parties that have shown interest in acquiring the protein portfolio. The protein portfolio is now ready to be sold. Introductory negotiations are in progress and the process initiated during the period is expected to be completed during the second quarter of 2009.
The liquidity of the company is considered satisfactory for Genovis operations in 2009, inclusive of continuing investment in those very interesting application areas for our nanoparticles we have defined as priority areas. This assessment has taken into account the effects of the cost-savings programme we have decided to execute and the liquid from the divestment of our protein products. The authorization we were granted at the extraordinary General Meeting on 17th December 2008, to issue an additional 5 443 116 new shares, gives us the flexibility to increase our liquidity if needed.
The result for the period is according to plan. The turnover for 2008 reflects a period dominated by the need to link distributors to Genovis. Our newly established distributorships are expected to contribute to the turnover in a higher degree during 2009. We are very pleased to have entered a distribution agreement with Finnzymes for the US market. The fact that we have now transferred logistics and marketing to Finnzymes means that the Genovis trademark should get a wider recognition in the US, and as a consequence Chris Wilkins has left his position as President. The remaining operation in Genovis Inc. is primarily focused on strategic business development, and is handled by Terry Mollan, who is Chairman Genovis Inc.
To Genovis, the business model and the competitive strength is built on innovative capability. The strength in a creative organization becomes visible once we have a tool box plentiful of components and projects ready to be geared up to strengthen our business vision. The financial crisis force us however to set priorities among the projects, but the current turbulence also generates new business opportunities. I look forward to capture them in an optimal way.
Sarah Fredriksson, CEO
Sales
Net sales during the quarter were SEK 105 thousand (SEK 251 thousand). Net sales for the year were SEK 380 thousand (SEK 256 thousand). The items net sales and raw materials and consumables for the Group in Q3 were adjusted due to an incorrect classification; this adjustment has no effect on the results.
Net Result
The operating loss during the fourth quarter was SEK 11,449 thousand (loss: 4,025 thousand) and loss for the year was SEK 25,420 thousand (loss: 12,056 thousand). The operating loss has been charged with an one-off measure write-down of the intellectual property assets amounting to SEK 5,942 thousand. The increased operating expenses are mainly attributable to increased personnel and consultant expenses. During the fourth quarter, Genovis initiated a cost-cutting program that will continue in 2009 and is expected to achieve full impact during the third quarter. The cost savings measures comprise SEK 6 million in total, and are mainly pertaining to payroll and consultant costs.
Against the background of changes in corporate taxation as of the year 2009, the current financial situation and the increased insecurity regarding when to use fiscal deficits, a review of the postponed pre-paid tax was performed in Q4. In connection with this, the result of the period has been charged with taxes of SEK 5,523 thousand and with SEK 1, 577 thousands for the full year.
Cash Flow and Financial Position
Fourth Quarter
During the fourth quarter cash flow from operating activities was SEK –3,223 thousand (–2,499 thousand). Cash flow from change in working capital totaled SEK -1,942 thousand (-1,137 thousand).
January ̶ December
Cash flow from operating activities for the year was SEK –16,761 thousand (–12,448 thousand). Cash flow from change in working capital totaled SEK 1,681 thousand (-393 thousand). Shareholder’s equity at yearend was SEK 6,677 thousand (19,399 thousand).
Investments
Investments in tangible assets during the year amounted to SEK 6 thousand (1,015 thousand), while investments in intangible assets totaled SEK 922 thousand (4,415 thousand).
Operations
Genovis markets nanoparticles that are designed to handle different predetermined applications and procedures, and also provides particles directly as commissioned by the customer. Genovis delivers several products in two product areas, nanostructures and proteins. All products that Genovis launched are used by researchers at pharmaceutical companies, biotech companies or in the academic research community.
Genovis’ Nanostructures
Genovis designs and produces nanostructures that can be used as small carriers to deliver various molecules to cells. Since its inception in 1999, the Company has developed nanostructures under the NIMT® (NanoInduced-MagneticTransfer) brand. The nanostructures and the technology that uses them have mainly been developed to deliver biological molecules such as new genes (DNA molecules) and RNA molecules. RNA molecules are substances from the body that researchers currently use for purposes such as developing new cancer drugs. The Company’s goal for 2009 is to transform its experiences from delivering siRNA to cells in a laboratory environment into delivering siRNA in vivo. The RNAi market, which includes siRNA, is a relatively immature market which in 2006 amounted to about USD 447 million worldwide, with an annual growth rate of about 19%. Intensive research is also underway involving the use of RNAi as a medication; this market is expected to reach USD 580 million in the United States in 2012.
Genovis’ nanostructures also work well as contrast media thanks to their magnetic properties. By offering customers nanostructures that can be used as carriers of molecules such as siRNA, which can simultaneously be tracked by magnetic resonance imaging (MRI), Genovis’ nanostructures have a unique competitive advantage. Today Genovis is working on two in vivo imaging projects in cooperation with Lund University. One project involves development of nanostructures for use in diagnostics (medical imaging) of extremely small tumors that can rapidly occur in lymph glands among patients with breast cancer. The project recently received funds from the Swedish Research Council to finance an industrial doctoral student for four years. The other project involves nanoparticles as carriers of small molecules to cells in the brain. Genovis also supports several customer projects in which the customer either uses Genovis’ products for medical imaging or to track stem cells. The preclinical market for imaging, which Genovis is initially targeting in the United States and which represents about 45% of the market, is expected to grow to USD 600 million by 2010/2011.
Genovis’ Proteins
Antibodies that can recognize a detail on the cell membrane are often used to create targeted medications and nanostructures. Sometimes only part of the antibody can be used. Antibody Engineering involves fragmentation and division of antibodies, and requires various tools. In the spring of 2007 Genovis had the opportunity to acquire the patent rights for such a tool. In 2008 the Company expanded this patent portfolio and now has four different products in Antibody Engineering in addition to the Company’s line of products of nanostructures. During the fourth quarter Genovis began working on selling the protein portfolio and expects the process to be completed during the second quarter of 2009.
Product Launches
During the first quarter of 2008 Genovis launched its new FabRICATOR®Kit, a combination of a unique enzyme and nanostructures that Genovis developed in-house. The FabRICATOR®Kit cleaves and isolates pure Fab fragments in 30 minutes with perfect final results – unlike current methods, which can take as much as twenty-four hours to achieve the same results. With the launch of the new Genovis product the market has gained a new method that is both better and faster than any other method available on the market today.
During the fourth quarter IgGZERO™ was launched. This unique protein can wash away antibody molecules from primary cells and specifically cleave the sugar molecules that naturally exist on antibodies. Removing the sugar molecules can improve the performance of the antibody in various applications. Also launched this quarter was FcDOCKER™, which binds specifically to the antibody. This protein is very useful in the antibody production process. Using FcDOCKER™ entails a gentler production process than competing methods and offers great technical and economic advantage.
Geographic Markets and Market Strategy
Genovis sells to dealers and distributors, who in turn conduct marketing campaigns in different regional markets. The distributors have a good understanding of the business opportunities for Genovis’ nanostructures in each region. The Company currently has distributors who cover twelve countries and are geographically scattered from North America to Europe and beyond to the Far East. Sales also take place to some extent directly to end customers in countries where Genovis does not have distributors. Revenues are currently mainly generated from sales of nanoparticles and proteins as consumables, though they are also generated by consulting services combined with the sale of nanoparticles for applications that do not fall within Genovis’ standard line of products.
One of the objectives for 2009 is to begin generating revenues through OEM sales or the sale of licenses, where either Genovis is responsible for production of nanostructures which are then sold under a partner’s brand, or the partner assumes responsibility even for this portion. In the latter case, revenues can involve both advance payment and royalties per unit sold. In both cases, the counterparty would be responsible for all marketing and sales and the Company has decided to work according to this model for the next two to three years.
With respect to sales of custom-made particles mainly for in-vivo studies and imaging, the Company will continue to handle production and delivery to customers or resellers in the future.
Organization and Personnel
Genovis’ Lund division is responsible for centrally coordinated functions in the business and finance areas, as well as production, research and development, marketing, customer support and sales support. The CEO and COO have overall responsibility for the group’s business. Genovis Inc. mainly focuses on strategic business development.
On December 31, 2008, the number of employees in the Group was ten, including ten at the Parent Company and no employees in the United States, compared with eleven people at the Parent Company and one in the United States during the same period last year. The Chairman of the Board of Genovis Inc. is paid a consulting fee when working on projects.
Patents
Genovis’ nanostructures and their applications are described in several patent applications. The first application has been approved in Australia and in the EU and is being processed in several other countries. Follow-up patent applications are undergoing international review. In May 2007, Genovis acquired intellectual property rights for several proteins and applications in preclinical research, where these proteins have unique competitive advantages. The protein patent portfolio includes patents approved in the United States, selected European countries and Japan. There are also patent applications in the final phase of the international review process, which means that the Company’s patent portfolio will expand significantly over the next few years. Genovis owns all patent rights to its technology and products and has also registered several brands internationally.
Related Party Transactions
The Parent Company’s sales to the subsidiary amounted to SEK 115 thousand. Purchases from the subsidiary totaled SEK 339 thousand. Internal pricing within the Group is based on the sales price to external customers with a deduction for a reasonable profit to the subsidiary.
Genovis Share and Ownership
The Genovis Share
The Genovis share is traded on First North, part of the OMX Nordic Exchange, under the short name GENO B in trading blocks of 200 shares Mangold Fondkommission is the Company’s Certified Adviser and liquidity guarantor.
The number of shares at the beginning of the period was 8,708,987 and the number of outstanding shares at yearend was 10,886,233. All shares have a par value of SEK 0.40.
GENOVIS: 90,5 % OF THE NEW SHARE ISSUE WAS SUBSCRIBED
Of the total amount subscribed in the new share issue 79,5 % was subscribed by existing shareholders and with preferential rights. The rest of the shares were subscribed without preferential rights within the frame of the highest amount of the issuing. The issuing ensures Genovis approximately 9,8 MSEK before issue expenses. The number of shares increased from 10,886,233 to 14,172,066.
Contract note and notification of allotment of shares subscribed without subscription rights is estimated to be sent out around February 10, 2009.
