BIOHIT GROUP HALF YEAR FINANCIAL REPORT 2016

Biohit Oyj Half Year Financial Report August 18, 2016 at 9:30 am local time (EEST)

SUMMARY

January–June 2016

• Net sales grew by 8.4% compared to 1-6/2015
• Net sales EUR 3.8 million (EUR 3.5 million)
• Operating loss EUR -2.1 million (EUR -1.5 million)
• The result for the reporting period was EUR -2.1 million (EUR -1.4 million)
• Net sales from international operations 90.5% (88.2%) of total net sales
• Equity ratio 85.4% (84.7%)

PRESIDENT & CEO SEMI KORPELA:

‘In the first half of the year 2016, our net sales grew by 8.4% compared to the reference period Q1-Q2/2015. With regard to the costs, the most significant change compared to the reference period is related to the costs incurred by the new smoking intervention study and losses accrued from the Chinese joint venture’s efforts made towards preparations to start manufacturing as well as costs incurred in recruitments in ramp-up of the sales organization. Together these caused an additional cost of EUR 0.7 million. The other cost structure of the Group has not substantially increased from the comparison period. We expanded our international distributor network, intensified cooperation with our partners, updated our product range and commercialised new products as well as communicated study results significant to Biohit’s future to the important stakeholders of the company. We continued increasing the awareness of decision-makers, doctors and broader public on carcinogenic acetaldehyde and importance of the screenings. Our spearhead products are Acetium®, GastroPanel® and diagnostic quick tests as well as diagnostic analysis systems and laboratory services. Main market areas are China, Europe, Russia and Middle East.

We expanded our distributor network and advanced product registrations as well as reimbursement practices

We continued expanding our distributor network with new agreements and by restructuring the existing agreements. During the first half of 2016, we signed the following contracts for the distribution of Biohit’s diagnostic products: OnSite Diagnostic Lab India Pvt Ltd will sell our diagnostic tests in India and SPD Scientific Pte Ltd. in Thailand. Arad TajhizAzma Ltd. was appointed as distributor of Biohit Total 25OH vitamin D test in Iran. Diagnostic tests in the Philippines will be distributed by UC Biosciencies Inc. Pooyandegan Pezeshki Pardis was appointed as distributor of GastroPanel® test in Iran and Delta Biologicals S.r.l. in Southeastern Italy. Tianjin Jingsheng Biological Technology Development Co. Ltd. will distribute the Biohit Calprotectin test in China. We extended the exclusive distribution agreement with our partner Melon OOO for the next contract period. After the reporting period, we signed a contract with Beijing HuayiHuilang Medical Instrument Co., Ltd of the distribution of Celiac Disease Quick Test in China.

During the reporting period, Ericon S.r.l. received exclusive right to sell Acetium in Moldova, and Inversiones Naturalia S.A. in Panama. The L-cysteine capsule binding acetaldehyde registered as a food supplement in Mexico with the brand name Etium received an import permit for Mexico in May 2016. The first sales lot was delivered to Mexico early this summer. During the first half of the year 2016, registration of several diagnostic tests was completed in Costa Rica. In general, the duration of the product registration process is different in each market area. It is not possible to accurately predict the time needed by the authorities to handle and complete the registrations in different countries and for product sales to begin.

During the first half of 2016, a price approval decision on the three GastroPanel® tests (pepsinogen l, pepsinogen II, gastrin-17) was issued in two Chinese provinces. The price approval decision has already been issued in 14 provinces by now: Anhui, Gansu, Hebei, Henan, Hunan, Jilin, Sichuan, Tianjing, Shandong, Jiangsu, Inner Mongolia, Liaoning, Shanxi and Shaanxi. Price approval is the pre-requisite for reimbursement of GastroPanel® and start of the sales.

We bought a share of Norwegian Genetic Analysis AS company with a directed share issue

Biohit Oyj and Genetic Analysis AS (www.genetic-analysis.com) signed a share exchange agreement through which Biohit Oyj acquired ownership of 18% of shares in the company. In addition to this, the companies signed a distribution contract giving Biohit Oyj a right to sell Genetic Analysis AS’s Dysbiosis Test globally under the Biohit brand and exclusively in Finland and in China, complementing Biohit’s products and services. In the future, Genetic Analysis will also operate as a distributor to Biohit Oyj’s selected products and services in Norway.

We started the confirmatory smoking intervention trial

Biohit Oyj started the confirmatory smoking intervention trial in cooperation with research agency Kuulas Helsinki. The aim of the study is to confirm the promising results obtained in the previous study with a similar design. Provided that the difference between the treatment and placebo groups will remain at least the same, the new study is designed to ensure adequate statistical power to confirm that the Acetium lozenge is a breakthrough in the development of smoking intervention methods.

The scientific report of the first smoking intervention study by Biohit was published in a widespread international journal Anticancer Research. According to the trial, the Acetium lozenge is a promising novel method to assist in smoking cessation. Additionally, the lozenge has beneficial effects on oral health and it binds carcinogenic acetaldehyde dissolved into the saliva from cigarette smoke and formed endogenously from alcohol into a harmless compound.

Separate screening studies provided additional evidence on detection of gastric cancer risk and vitamin-B12 deficiency

Additional scientific evidence was obtained regarding the association between Helicobacter pylori and gastric cancer. A long-term follow up of the population screened in 1994-1996 was completed, and the study report was accepted for publication in Scandinavian Journal of Gastroenterology. The study confirms previously reported results implicating that Helicobacter pylori infection alone increases significantly the risk for gastric cancer. This risk increases substantially further, when untreated infection has progressed to atrophic gastritis.

More evidence on GastroPanel® test as a predictor of gastric cancer risk was also reported recently. Low Pepsinogen I level in the GastroPanel® test predicts the risk for stomach cancer even years in advance. This was established in two separate recent studies among Asian and Caucasian population, where the subjects were followed-up for several years after GastroPanel® testing. Low serum levels of Pepsinogen I accompanied by increased Gastrin-17, is a sign of atrophic gastritis of the corpus. This, in turn, is a known risk factor, e.g. for gastric and oesophageal cancer. This longitudinal predictive value of GastroPanel® test for gastric cancer has not been previously confirmed in a Caucasian population.

According to a study conducted in Estonia and Finland, a majority of B12 vitamin deficient cases in elderly people in Estonia and less than 25% in Finland remained undiagnosed. The study compared the prevalence of atrophic gastritis and vitamin-B12 levels in elderly people in both countries. Early diagnosis of atrophic gastritis and vitamin-B12 deficiency in elderly people is important to prevent, e.g. the irreversible neurological complications as well as memory loss and depression. Atrophic gastritis is caused by Helicobacter pylori infection or autoimmune disease. Atrophic gastritis is related to an increased risk for gastric and oesophageal cancers and it is the most important cause of vitamin-B12 deficiency. In all cases when vitamin-B12 deficiency is suspected, it is appropriate to make GastroPanel® test, which accurately detects atrophic gastritis unlike the other commonly used helicobacter tests (www.biohithealthcare.com/additional-information )

We offered our expertise at the disposal of food industry

After the reporting period, we started cooperation with Pyynikin Craft Brewery and brought our biotechnological expertise at the disposal of the brewery production process. As a result of this cooperation, Pyynikin Craft Brewery launched a new beer brand called Pyynikin Vapaa (‘Pyynikki’s Free’), in the production of which the consumers’ demands were taken into account. The product is, among other properties, gluten-free and it has a very low acetaldehyde level. The cooperation with the brewery was a new business area for Biohit and it paves the way for developing the production of other food stuffs as well. We want to be part of the development aimed to offering the customers alimentary products made of pure raw materials.’

THE GROUP’S KEY FIGURES

REPORTING

Biohit's product portfolio consists of diagnostic tests, analysis systems, products binding carcinogenic acetaldehyde into a harmless compound, monoclonal antibodies, as well as service laboratory operations. The entire product and service portfolio is reported under a single segment.


NET SALES AND RESULT

January-June

Net sales grew by 8.4% compared with 1-6/2015.

The operating loss was EUR -2.1 million (EUR -1.5 million 1-6/2015). The result for the reporting period totaled EUR -2.1 million (EUR -1.4 million).

Consolidated net sales and result

BALANCE SHEET

On 30 June 2016, the balance sheet total was EUR 12.8 million (31 December 2015 EUR 11.7 million). At the end of the reporting period, our equity ratio stood at 85.4% (31 December 2015 87.9%).

                                       
FINANCING

Biohit Oyj has a moderate financial position, which allows necessary investment in building an international distributor network as well as the development and commercialisation of new products. Liquidity is at a healthy level. At the end of the reporting period, the company's financial assets totaled EUR 8.1 million including EUR 2.5 million worth of Genetic Analysis AS shares (31 December 2015 EUR 7.2 million).

RESEARCH AND DEVELOPMENT

During the first half of the year, we focused on innovating new products and preparing them for the market. We improved the technical features of the products in order to make them as simple and user-friendly as possible for the customers.

Biohit employs external experts and subcontractors in its R&D operations. Development expenditure has not been capitalised. Research and development expenditure during the 1-6/2016 reporting period amounted to EUR 1.1 million (EUR 1.1 million).

CLINICAL RESEARCH

During 2016, almost twenty clinical trials are ongoing in Finland and abroad with the Biohit’s diagnostic tests and Acetium products (www.biohithealthcare.com/scientific).

Confirmatory study on the efficacy of Acetium lozenge in smoking intervention

In the study completed in 2015, the efficacy of slow-release L-cysteine in Acetium lozenge was assessed as a novel aid in smoking cessation. In meticulous analyses of the results, the efficacy of Acetium lozenge in smoking cessation was almost at the same level as that of nicotine replacement therapy (NRT), which is currently the most commonly used method for smoking intervention. Unlike the medications used for intervention, Acetium lozenge has no side effects or restrictions for use, and it does not cause nicotine addiction. The product binds carcinogenic acetaldehyde dissolved into the saliva from cigarette smoke and formed endogenously from alcohol into a harmless compound. In addition to this, the Acetium lozenge has beneficial effects on oral health, due to its xylitol.

Although there was a marked difference between Acetium and placebo groups, the statistical power was not sufficient due to the small sample size. To confirm the results, the study will be repeated with a notably larger sample size. In the beginning of 2016, a new double-blind, randomised trial was designed with a sample size of 1,800 smokers. The study is estimated to be adequately powered provided that the difference between Acetium and placebo groups will remain at least equal to that of the first study. The study design is similar as in the previous study, except that the participants will be randomised also by gender, to control for the potential bias due to the male smokers showing a higher propensity for giving up smoking shown in the first study. The study will be conducted entirely over internet without contact visits to the research units. Research agency Kuulas Helsinki is responsible for study logistics and recruiting the voluntary study subjects. The recruitment of volunteers started in May 2016, immediately after the ethical committee approval. The duration of the study is six months for each subject.

Effect of Acetium capsule on migraine and cluster headache as well as on atrophic gastritis

Two randomised double-blind studies investigating the effect of Acetium capsule as a new method to prevent migraine and cluster headaches are still ongoing. Both are multicenter studies started in 2014 in six centers in Finland. The migraine study is approaching to its conclusion. The cluster headache study has progressed more slowly, as cluster headache is a rare disease and the occurrence of the attacks is related to the annual season. Because blinding is perfect in both studies, and unblinding will be made only at study completion, not even preliminary results are available.

As to the long-term studies, the placebo-controlled double-blind study testing efficacy of the Acetium capsule in the treatment and cure of atrophic gastritis is ongoing in two leading gastroenterology clinics in Italy (Bologna and Parma). Final results are expected after two years at the earliest, as the study includes a prolonged follow-up period to confirm whether the treatment is effective in the long-term. Atrophic gastritis caused by helicobacter infection or autoimmune disease can be diagnosed with the unique GastroPanel® helicobacter test. Other helicobacter tests, ¹³C-urea breath test, fecal antigen test and antibody tests still in use, cannot detect atrophic gastritis with associated cancer risks, and the first two give plenty of false-negative results in cases when the early discovery of helicobacter infection with associated risks would be vital (www.biohithealthcare.com/additional-information).

Prevalence of vitamin-B12 deficiency and its causes among the ageing population in Estonia and Finland

During the spring of 2016, an international study investigating the prevalence of latent vitamin-B12 deficiency and its cause, atrophic gastritis, among elderly people beyond 75 years of age was completed. The study was carried out by using the Biohit GastroPanel® test and measuring vitamin-B12 concentration in blood. The study report is currently in press in an international scientific journal of geriatrics. The results show that latent vitamin-B12 deficiency among the ageing population is even more common than expected. At the same time, the results show that serious complications, caused by vitamin-B12 deficiency can be prevented with early and appropriate GastroPanel® and vitamin-B12 testing and replacement therapy.

Accuracy of GastroPanel® test in population-based screening in St. Petersburg

Another completed study assessed the diagnostic accuracy of GastroPanel® test in a population-based screening. The project was conducted as collaboration between two clinics in St. Petersburg. The results were completed in spring 2016, and the report was published in an international cancer journal in July 2016. This is the first screening study using GastroPanel® test, where only the GastroPanel® positive subjects were controlled by gastroscopy and biopsies. The results were also corrected for the verification bias, which has not been the case in the previous GastroPanel® studies. The results show that GastroPanel® test is also highly suitable for population-based screening of asymptomatic people.

Clinical validation study of the unified GastroPanel® test

Clinical validation study of the unified GastroPanel® test is ongoing at the gastroenterology clinic, GastroCenter, Oulu University Hospital (OUH). The study validates the unified GastroPanel® test in gastroscopy referral patients. The study subjects represent the patients referred to OUH for gastroscopy from the primary health care. The first patients were examined in January 2016. Based on the study results, reliable cut-off values for different diagnostic categories of GastroPanel® test can be determined.

Comparative study of colorectal cancer screening tests in Brazil

An international study comparing colorectal cancer screening tests has been ongoing in one of the leading cancer centers in Brazil since 2014. The study design is similar as in in the previous study in St. Petersburg, published in 2015, but the cohort is larger. In the previously published study, Biohit’s new-generation ColonView FIT test proved to be superior to the conventional guaiac test, which is non-specific to human blood. ColonView FIT test detects both hemoglobin (Hb) and hemoglobin-haptoglobin (Hb/Hp) complex in the stool sample, whereas the conventional FOB test only detects Hb. The new comparative study is estimated to be completed by the end of 2016.

Celiac disease quick test in pediatric patients in Romania

A study assessing the accuracy of the Biohit Celiac Disease Quick Test in pediatric patients with suspected celiac disease is ongoing in a children’s hospital in Romania. The study has progressed more slowly than expected, in part because the local guidelines for the diagnostic work-up of celiac disease have changed during this time.

Additionally, Biohit is the supplier of Celiac Disease Quick Test kits for an extensive multi-center celiac disease screening study in healthcare centers in the Netherlands, examining young people. The study is conducted by the Department of Pediatrics, Leiden University Medical Center.

Helicobacter pylori as a cause for dyspepsia and its diagnostics

Globally, there is a very great demand for a simple, quick and reliable test for the diagnosis of Helicobacter infection (gastritis), which causes dyspepsia and many diseases. In western countries the prevalence of dyspepsia caused by different reasons is 20-40%. It is estimated that 20-80% of the world’s population is affected by the usually asymptomatic Helicobacter infection. It is estimated that in Finland, over half of the 70-year-olds, quarter of the 30-50-year-olds and 10 % of those born after 1990 have helicobacter.

Sixteen gastroenterology experts from twelve different countries in the international Healthy Stomach Initiative organization’s working group propose the blood sample based GastroPanel® biomarkers for the basic examination of an asymptomatic as well as a dyspeptic patient in order to screen and diagnose Helicobacter pylori infection, and for atrophic gastritis which is caused by helicobacter or autoimmune disease ( Agréus L, Kuipers EJ, Kupcinskas L, Malfertheiner P, Di Mario F, Leja M, Mahachai V, Yaron N, van Oijen M, Perez Perez G, Rugge M, Ronkainen J, Salaspuro M, Sipponen P, Sugano K, Sung J. Rationale in diagnosis and screening of atrophic gastritis with stomach-specific plasma biomarkers, Scandinavian Journal of Gastroenterology 2012; 47: 136 – 147).

Among dyspeptic patients, GastroPanel® helps to identify those in need of gastroscopy and biopsy examination due to an increased risk for gastric cancer (Syrjänen K. Serologinen testi dyspepsia-potilaiden diagnostiikkaan ja mahasyövän riskiryhmien seulontaan. Best Practice Gastroenterologia 2015;1: 2-7, www.biohithealthcare.com/scientific: A simple blood test reveals whether the stomach is healthy or not). 

Undiagnosed helicobacter gastritis due to the test methods or other reasons can progress to gastric cancer or most often asymptomatic atrophic gastritis, which can cause the risk for gastric cancer and vitamin B12 deficiency. Atrophic gastritis with its associated risks may also develop due to gastric mucosal autoimmune disease and it may occur simultaneously with other autoimmune diseases, such as type 1 diabetes and thyroiditis. It is well known that still many gastric and oesophageal cancer cases lead to examination and treatment only after the patient has so called alarming symptoms and a poor prognosis. Contrary to current practice, atrophic gastritis, the most important risk factor for the increasingly common vitamin B12 deficiency, is most advantageous to treat early enough together with vitamin B12 determination, as the population ages. (www.biohithealthcare.com/additional-information, www.biohit.fi/varaaverkossa).

GastroPanel® and Acetium

The GastroPanel® and Acetium® innovations are together a unique combination that can help prevent gastric and oesophageal cancers. GastroPanel® detects atrophic gastritis, which is related to an increased risk for gastric and oesophageal cancer, while the conditions are still treatable. Atrophic gastritis of the gastric corpus, which is usually irreversible, leads to a permanently anacidic stomach. In an anacidic stomach, which is also caused by long-term proton pump inhibitor (PPI) treatment, microbes from the mouth can survive and produce acetaldehyde from alcohol and the sugar present in food. In 2009, the WHO published a new list of carcinogenic compounds classifying acetaldehyde present in alcoholic beverages and formed from ethanol endogenously in Group 1, i.e., in the same category with the well-known carcinogens asbestos, tobacco smoke and benzene. Globally, acetaldehyde exposure mediated by gastrointestinal tract microbes or tobacco smoke is associated with several important cancer types, including upper aerodigestive tract cancer, colon cancer and lung cancer. Biohit Oyj has developed Acetium® products which can be used to reduce the exposure to acetaldehyde, which is produced by microbes from ethanol or derived from food (www.acetium.com, www.biohithealthcare.com/scientific/study-protocols).

Acetium® capsules bind the carcinogenic acetaldehyde in the stomach with individuals suffering from an anacidic stomach due to the following reasons: 1) atrophic gastritis, 2) PPI medication or 3) gastric surgery, as well as in individuals with 4) a gene mutation affecting acetaldehyde metabolism or 5) chronic helicobacter infection that produces acetaldehyde. Acetium capsules may treat atrophic gastritis and prevent migraine and cluster headache (studies ongoing).

Acetium® lozenges improve oral health and additionally bind carcinogenic acetaldehyde dissolved into the saliva from cigarette smoke and formed endogenously from alcohol into a harmless compound. It may also assist in the cessation of smoking (additional study ongoing). Acetium lozenge removes 87% of the immediate effects of acetaldehyde in saliva from alcoholic beverages containing high levels of acetaldehyde and over 90% of acetaldehyde dissolved in saliva during smoking.

In 2012, the European Commission's appointed group of experts gave a unanimous recommendation stating that cosmetic products may contain at most 5 mg/l of acetaldehyde while no acetaldehyde may be added to mouth wash. Many alcoholic beverages and foodstuffs sold in Finland exceed by several-fold the maximum permitted acetaldehyde levels for cosmetic products (www.biohithealthcare.com/laboratory-services/determination-of-acetaldehyde).

INVESTMENTS

Gross investments during the 1-6/2016 reporting period totalled EUR 0.1 million (EUR 0.1 million). Key investments in the period were related to equipment purchases.

PERSONNEL

During the review period, the Biohit Group employed 55 (53) people on average, 45 (45) of whom were employed by the parent company and 10 (8) by the subsidiaries.

SHORT-TERM RISKS AND UNCERTAINTY FACTORS

Biohit’s key risks have to do with the investments required for business growth and adequacy of economic resources these require in the medium term. There are risks involved in areas such as the success of clinical trials, the selection and development of new market areas and distribution channels, personnel recruitment, registration processes, product pricing, and political decision-making affecting the progress of screening programs. Significant short-term risks are associated with the successful selection of new market areas, the timing of expansion into the selected markets, and product success in these markets. The recent increase in uncertainty factors associated with international politics may have an unfavorable impact on the company's business.

The duration of the product registration process is different in each market area. For this reason, it is not possible to accurately predict the time needed by the authorities to handle the registrations, to complete the process in different areas and for product sales to begin.

When investing liquid assets, the objective is to gain a return on investment with a minimum risk of equity loss. The investment portfolio consists of deposits, money market investments and corporate loans. A fundamental aspect in portfolio management is sufficient diversification across different asset classes, investment instruments and counterparties. Biohit conducts its investment activities with at least two partners.

Thanks to its wide customer base, Biohit does not materially depend on any individual customers or project deliveries, with the exception of GastroPanel® sales in China, which currently represents a significant business for Biohit. Most of the company’s business is conducted in euro, and the indirect effects of currency exchange rate fluctuations are considered minor.

OUTLOOK FOR 2016

Together with its distributors and license partners, Biohit has several product registrations ongoing in a number of markets, which is affecting net sales development.  A number of such registrations are expected to be completed in 2016. In addition, negotiations are in progress with new partners, including the launch of major screening projects, but a number of political risks may affect the progress of such projects.

Biohit's cost structure is characterised by high investment in research to obtain further evidence on the efficacy of Biohit's diagnostic tests in various clinical settings and in population-based screenings. Studies assessing the efficacy of the Acetium product in new indications, such as in prevention of migraine attacks, were continued also in 2016. These, strategically important projects will require significant additional investments also during the latter half of 2016.

In the beginning of 2016, our partner GrandPharma started the sales of Acetium capsule in China using the brand name Shubang. The product received wide attention, for example in public transportation, social media and in printed media. Royalties to be obtained from the sales of Shubang during the first half of the year are not expected to have a material impact on Biohit’s result.

Biohit Biotech (Hefei) Co Ltd is expected to start production in the end of 2016. The factory is currently producing validation batches in accordance with the requirement of authorities, and after approval the factory can start producing GastroPanel® kits for the Chinese market. The ramp-up of the sales organization and the recruitment of personnel have been successful. Sales of the GastroPanel® tests produced in Finland to the distributors has had a good start and the product has been sold for commercial purposes to almost 90 different distributors and in most of the provinces in China. One of the short-term key objectives of the joint venture is expanding the coverage of the distributor network, and it is subject to considerable efforts. Wide distributor network is a prerequisite for full exploitation of the commercial potential of the product in Chinese market, especially after the screening studies have been completed.

The company aims to grow profitable and it is strongly committed to taking actions necessary for the future, especially in international marketing. Net sales growth is expected in 2016. The company does not publish forecasts when the result will turn to positive.


MAIN EVENTS IN THE REPORTING PERIOD

Biohit Oyj bought a share of Norwegian Genetic Analysis AS company with a directed share issue

Biohit Oyj and Genetic Analysis AS (www.genetic-analysis.com)   signed a share exchange agreement through which Biohit Oyj acquired ownership of 18% of shares in the company. In addition to this the companies signed a distribution agreement giving Biohit Oyj the right to sell Genetic Analysis AS’s Dysbiosis Test globally under the Biohit brand and exclusively in Finland and in China, complementing the company’s products and services. In the future, Genetic Analysis will also operate as a distributor to Biohit Oyj’s products and services in Norway.

In consideration, Biohit Oyj issued 350.000 pcs of new Biohit Oyj’s series B shares to Genetic Analysis AS. The trading in the new shares commenced as of February 15, 2016 on NASDAQ OMX Helsinki together with the outstanding B shares. The arrangements related to the share exchange have been completed and the new Genetic Analysis AS shares have been registered in Biohit Oyj’s name. 

Biohit and OnSite Diagnostic Labs India Pvt Ltd. signed an agreement for the distribution of Biohit’s diagnostic tests in India

Biohit Oyj and Onsite Diagnostic Labs India Pvt Ltd signed a distributor agreement for the unique Biohit diagnostic portfolio in India. OnSite Diagnostic Labs India Pvt Ltd will focus on the marketing of Biohit's tests and analysis systems in India. Diagnostic tests covered by the distribution agreement include e.g.: GastroPanel®, Active vitamin-B12 test, Celiac Quick test, Calprotectin test, ColonView FIT test. According to the CEO of Onsite Diagnostic Labs India Pvt Ltd, the company focuses on key disease areas contributing to death rates in India and brings advanced technologies and cost savings for early diagnosis of gastric cancer risk using GastroPanel® analysis systems. (www.gastropanel.com/decision-makers/screening-model)

Biohit and Tianjin Jingsheng Biological Technology Development Co. Ltd. signed an agreement for the distribution of Biohit’s Calprotectin test in China

Biohit Oyj and Tianjin Jingsheng Biological Technology Development Co. Ltd signed a distributor agreement for the distribution of the Biohit Calprotectin ELISA test in China. In China, there seems to be differences in prevalence of Inflammatory Bowel Diseases (IBD), that is ulcerative colitis and Crohn’s disease between rural and urban populations. The disease is increasing particularly among young people. Fecal calprotectin has proven to be a useful biomarker of IBD. Biohit Calprotectin test differentiates reliably IBD and IBS and reduces significantly the need of colonoscopies.

Pooyandegan Pezeshki Pardis to distribute Biohit GastroPanel®-test in Iran

Biohit Oyj and Pooyandegan Pezeshki Pardis (3P) have signed a contract for the distribution of the Biohit GastroPanel^® test in Iran, where gastric cancer resulting from helicobacter infection and atrophic gastritis, is a particularly common disease (www.biohithealthcare.com/additional-information) Most of the studies have confirmed that in Iran helicobacter is found in almost 90 % of the population, and more than 50% of children become infected before the age of 15 (J Clin Pathol 2004;57:37-42). Symptomatic Helicobacter pylori infection, atrophic gastritis and high acid secretion detected by the unique GastroPanel® require confirmation by gastroscopy and biopsies, and appropriate treatment and monitoring. The other helicobacter tests, ¹³C-urea breath test, stool antigen test and antibody tests, which are still in use, do not detect atrophic gastritis with associated cancer risks. Additionally, ¹³C-urea breath test as well as stool antigen test may give plenty of false-negative results in cases where early detection of Helicobacter pylori infection with associated risks would be of vital importance (www.biohithealthcare.com/additional-information)

Biohit Oyj started a confirmatory smoking intervention trial

Biohit Oyj started a confirmatory clinical trial for smoking intervention in cooperation with research agency Kuulas Helsinki, as soon as the ethical approval from the regional ethical committee was obtained. At least 1,800 voluntary smokers will be invited to the study. The aim of the new trial is to confirm the promising results obtained in the previous corresponding trial. If the study is successful, this new study (adequately powered to confirm the statistical significance between Acetium and placebo) can confirm the previous results according to which the Acetium lozenge would represent a breakthrough also in the development of smoking intervention methods. The lozenge has favorable effects on oral health, and it binds carcinogenic acetaldehyde dissolved into the saliva from cigarette smoke. The study is expected to be completed by the end of 2016.

The scientific report of the Biohit’s first smoking intervention trial was published

The scientific report of the first smoking intervention study by Biohit was published in a widespread international journal: Anticancer Research. According to the trial, the Acetium lozenge is a promising novel method to assist in smoking cessation.

Atrophic gastritis and vitamin B12 deficiency remain frequently undetected in the ageing population – early diagnosis is important to prevent complications

A majority of B12 vitamin deficient cases in Estonia but less than 25% in Finland remained undiagnosed. This is evident in a study comparing prevalence of atrophic gastritis diagnosed with GastroPanel® and vitamin-B12 deficiency in elderly people in Finland and Estonia. Early diagnosis of atrophic gastritis and vitamin B12 deficiency in elderly people is important to prevent, e..g. the irreversible neurological complications. Atrophic gastritis is caused by Helicobacter pylori infection or autoimmune disease, is related to the risk of gastric cancer, and is an important cause of vitamin-B12 deficiency.

More scientific evidence on GastroPanel® test – the test predicts gastric cancer risk even at 15-year follow-up

Low Pepsinogen I level diagnosed with GastroPanel® test predicts the risk for stomach cancer even years in advance. The result is evident in two separate recent studies among Asian and Caucasian population, where the subjects were followed-up for several years after GastroPanel® testing. Low Pepsinogen I level in the blood sample accompanied by high Gastrin-17, is a sign of atrophic gastritis of the corpus. The latter is known to be a risk factor for gastric cancer. The long-term predictive value of GastroPanel® test as a predictor of this risk has not been previously confirmed.

Helicobacter pylori infection increases the risk for gastric cancer – Long-term follow-up of the population- screening in Finland was completed 

Additional confirmatory scientific evidence is obtained regarding the association between Helicobacter pylori and gastric cancer. A long-term follow up of the population screened in 1994-1996 in two cities in Finland has been completed, and the report was accepted for publication in Scandinavian Journal of Gastroenterology. The study confirms previously reported results implicating that even Helicobacter pylori infection alone increases significantly the risk for gastric cancer. This risk increases further, when untreated Helicobacter infection has progressed to atrophic gastritis. 

Decisions of the Annual General Meeting of Biohit Oyj and the constitutive meeting of the Board of Directors
 
The Annual General Meeting (AGM) of Biohit Oyj held on Monday April 25, 2016 approved the financial statements of the parent company and the consolidated financial statements, and discharged the members of the Board of Directors and the President and CEO from liability for the financial year 2015.

Distribution of dividends

The AGM approved the Board of Directors proposal that no dividend shall be paid for the financial period ended on December 31, 2015.

Members of the Board of Directors

The AGM decided that the number of members of the Board of Directors would be six (6) and elected the following Board members until the end of the next AGM: current members MD, PhD, Professor (h.c.) Osmo Suovaniemi, MD, PhD, Professor Mikko Salaspuro, Commercial Counselor Eero Lehti, M. Sc. Eng. Seppo Luode, Managing Director Franco Aiolfi and Master of Political Science Janina Andersson.

Additionally, the AGM decided that the Chairman of the Board of Directors would be paid a meeting fee of EUR 1,600 and the other Board members would be paid a meeting fee of EUR 1,500.  

Election and remuneration of the Auditor

The AGM elected authorised public accountants PricewaterhouseCoopers Oy as the company’s auditor until the end of the next AGM. The auditor will be paid remuneration against the auditor’s invoice.

Authorisation of the Board of Directors to decide on the issue of shares and to issue special rights entitling the receipt of shares

The AGM decided to authorise the Board to decide on the issue of shares and to issue special rights referred to in Chapter 10, section 1 of the Limited Liability Companies Act entitling the receipt of shares with the following terms and conditions:

 The maximum number of new Series B shares to be issued pursuant to the special rights is 3,000,000, which corresponds to approximately 26.4% of the company’s all existing Series B shares.

 The authorisation includes the Board of Directors’ entitlement to decide on all terms and conditions regarding the issue of special rights. The issue of shares and the issue of special rights entitling to the receipt of shares can occur deviant from the subscription right of the shareholders (special issue).

The authorisation remains valid for two years from the resolution of the GM and the authorisation replaces the former authorisations.

All decisions of the AGM were made unanimously.

Constitutive meeting of Biohit Oyj’s Board of Directors

Biohit Oyj’s Board of Directors elected in its meeting Mr Osmo Suovaniemi as the Chairman of the Board of Directors.

Biohit Oyj’s Option Scheme I 2013 – International Sales Management Option Arrangement

Biohit Oyj’s Board of Directors decided to distribute in total 10,000 pcs option rights in class I 2013E of the option scheme I 2013 to the key members of the company’s international sales management as follows: Ilari Patrakka 5,000 pcs, Qiongchao Zhang 5,000 pcs. 

Biohit Oyj Stock Options I 2013 were decided to register in the Finnish book-entry system

Biohit Oyj decided to convert all outstanding Biohit Oyj I 2013A–E stock options into Biohit Oyj I 2013 stock options. Additionally, the Board of Directors of Biohit Oyj decided to register the Stock Options I 2013 in the Finnish book-entry system. Registration will not affect the terms of the Option Scheme or share subscription periods. The terms and conditions of Biohit Oyj Stock Option Plan I 2013 are available on the company’s website www.biohithealthcare.com/investors.

MAJOR EVENTS AFTER THE CLOSE OF THE PERIOD

Biohit Oyj and Pyynikin Craft Brewery to start cooperation

Biohit Oyj started cooperation with Pyynikin Craft Brewery. Biohit brought its biotechnological expertise at the disposal of the brewery production process. As a result of this cooperation, Pyynikin Craft Brewery launched a new beer brand called Pyynikin Vapaa (‘Pyynikki’s Free’), in the production of which the consumers’ demands were responded to. The product is, among other properties, a gluten-free product. The cooperation with the brewery is a new business area for Biohit and it paves the way for developing acetaldehyde-free food stuffs and their production (www.biohithealthcare.com/laboratory-services/determination-of-acetaldehyde).

Beijing HuayiHuilang Medical Instrument Co., Ltd to distribute Biohit Celiac Disease Quick Test in China

Biohit Oyj and Beijing HuayiHuilang Medical Instrument Co., Ltd. signed an agreement for the distribution of the Biohit Celiac Disease Quick Test in China. According to the General Director of Beijing HuayiHuilang Medical Instrument Co., Ltd:n, in China, celiac disease has so far received insufficient attention. Biohit’s sensitive and specific Celiac Disease Quick Test helps detect celiac disease patients among those with dyspeptic symptoms.

Vitamin B12 deficiency remains undetected and untreated far too often particularly among elderly citizens

A lively discussion has been ongoing in daily newspapers, weekly magazines and Finnish Medical Journal (SLL) as well on vitamin B12. In this discussion, perhaps the most surprising has been the proposal to make a treatment attempt (intramuscular B12-vitamin, at 1-2 week interval, three times) instead of a detailed diagnostic work-up. The modern medical treatment should always be based on correct diagnosis. In addition to determining vitamin-B12, it is justified to recommend the cost-effective and highly informative GastroPanel® test also for testing asymptomatic people always, when there is a possibility that the person belongs to a risk group for vitamin-B12 deficiency. The most important reason of vitamin-B12 deficiency is atrophic gastritis related to helicobacter infection or autoimmune disease, remaining undetected with the helicobacter tests still in use. (www.biohithealthcare.com/additional-information, www.biohithealthcare.com/investors/annual-report 2000, page 23: image and text, www.biohit.fi/varaaverkossa)

GastroPanel® test detects the risk factors of gastric cancer – a population-based screening study in Russia was completed

A population-based screening study for gastric cancer risk was completed in Russia. The study results confirm the previous study results showing that GastroPanel® detects patients at increased risk for developing gastric cancer. GastroPanel® test was used for screening of randomly selected asymptomatic people in a country with high incidence of gastric cancer. The results have been published in the August issue of an international cancer journal Anticancer Research.

Simultaneous testing of GastroPanel® biomarkers is possible – preliminary study results were completed

In accordance with the licensing agreement signed in 2013 between Biohit Oyj and clinical diagnostic company Randox Laboratories Ltd., an initial study investigating the simultaneous analysis of Biohit GastroPanel® biomarkers using Randox Biochip Array Technology (BAT) was completed. According to the preliminary study results, BAT simultaneously detects three GastroPanel® biomarkers from a single patient sample. The different tests of GastoPanel® analysed at the same time make the assay even more cost-effective and user-friendly for diagnosis of helicobacter infection and dyspepsia as well as for gastric and oesophageal cancer screening.

Changes to Biohit Oyj’s Management Team

M.Sc. (Tech.), Daniela Söderström (b. 1987) was appointed as Quality and Regulatory Affairs Director and a member of the Management Team of Biohit Oyj as of July 5, 2016. She joined Biohit Oyj in 2014. In her new position she reports to CEO Semi Korpela.

ADMINISTRATION

Biohit's financial reporting and Annual General Meeting in 2017

Biohit will publish a time table for financial reporting and Annual General Meeting 2017 later this year.

Biohit Oyj's Management Team

The members of Biohit's Management Team are: CEO Semi Korpela, CFO Niklas Nordström, Director of Business Development Lea Paloheimo, Production & Research and Development Director Panu Hendolin, Sales and Marketing Director Anu Mickels, Quality and Regulatory Affairs Director Daniela Söderström and Chief Medical Director Kari Syrjänen.
 

SHARES AND SHAREHOLDERS

Biohit Oyj’s number of shares is 14,698,533 (14,315,593), of which 2,975,500 (2,975,500) are Series A shares and 11,723,033 (11,340,093) are Series B shares. The Series B shares are quoted on NASDAQ Helsinki in the Small cap/Healthcare group under the code BIOBV.

Supposing that the market capitalisation for series A and B shares is equal, the total market capitalisation at the end of the period was EUR 72.8 million (30 June 2015 EUR 66.3 million). Shares’ trade value during the period amounted to EUR 7.1 million.

Shareholders

At the end of the reporting period on 30 June 2016, the company had 6,505 shareholders (6,739 on 30 June 2015). Private households held 79.4% (78.0%), companies 20.3% (20.2%) and public sector organisations 0.0% (0.0%). Foreign ownership or nominee registrations accounted for 4.2% (1.7%) of shares.

Further information on the shares, major shareholders and management shareholdings is available on the company's website at www.biohithealthcare.com/investors.

ACCOUNTING PRINCIPLES

Half year financial report has been prepared in accordance with the requirements of the IAS 34 Interim Financial Reporting standard. Biohit Oyj has applied the same accounting principles in preparing this half year financial report as for its financial statements 2015.

Biohit classifies Genetic Analysis AS shares as an asset available for sale recognised at fair value. The value of the investment for the half year financial report is determined based on the assets market value, which led to a positive change in the value of 0.4 million euros (including the effect of deferred tax) in Genetic Analysis AS shareholdings. The change in the value is recorded in other comprehensive income.

The figures in the half year financial report have not been audited.

Earnings per share calculated from earnings attributable to equity holders of the parent company

STATEMENT OF CHANGES IN EQUITY

RELATED PARTY TRANSACTIONS 1-6/2016

During the first half of 2016, there were no notable changes in related party transactions.

Biohit Oyj B-shares subscribed with stock options I and II 2013 during the 1-6/2016 reporting period

During 2016 there were no subscriptions with stock options.

NEXT FINANCIAL REPORT

Biohit will publish a time table for financial reporting and Annual General Meeting 2017 later this year.

Helsinki, 18 August 2016

Biohit Oyj
Board of Directors

Additional information:
CEO Semi Korpela
tel. +358 9 773 861
investor.relations@biohit.fi
www.biohithealthcare.com
 

Biohit Oyj in brief

Biohit is a globally operating Finnish biotechnology company. Biohit mission is “Innovating for Health” – we produce innovative products and services to promote research and early diagnosis. Biohit is headquartered in Helsinki, Finland, and has subsidiaries in Italy and the UK. Biohit Series B share (BIOBV) is quoted on Nasdaq Helsinki in the Small cap/Healthcare group. www.biohithealthcare.com