INTERIM REPORT OF BIOHIT 1.1.-30.6.2002
BIOHIT PLC. STOCK EXCHANGE RELEASE 7.8.2002 AT 10:00
INTERIM REPORT OF BIOHIT 1.1.-30.6.2002
The net sales of the Biohit Group totalled MEUR 12.8 (MEUR 12.3 1-
6/2001). Biohit continued investing strongly in research and
development and especially in the production and international
marketing of diagnostics. The operating loss before goodwill
amortization for the period was MEUR -0.2 (MEUR 0.8 profit) and the
loss for the period was MEUR -1.0 (MEUR 0.1 profit). The cash flow
from operating activities was MEUR 0.3 positive (MEUR 0.7).
Net Sales
The net sales of the Biohit Group for the reporting period totalled
MEUR 12.8 (MEUR 12.3), i.e., demonstrating a 4 % growth. The net sales
were generated primarily by the sales of liquid handling products,
their disposable tips as well as maintenance services. Primarily a
decrease in the sales in the U.S. market slowed down the growth of the
Group net sales.
Profit
The operating loss before goodwill amortization was MEUR -0.2 (MEUR
0.8 profit). The operating loss was MEUR -0.7 (MEUR 0.3 profit), and
the loss for the period MEUR -1.0 (MEUR 0.1 profit). The income
taxes of MEUR 0.1 have been accounted for on the basis of the
result for the period. However, deferred tax assets relating to
the taxable losses have not been accounted for.
Investments made in the launch of the diagnostic business continued to
weaken the Group result. These upfront investments are very typical
for biotechnology companies. Since the products are finished and the
application procedures of approvals by authorities and the
establishment of sales channels have proceeded favorably, it is
expected that the investments made will in the future have a positive
effect on the development of the Group result.
Balance Sheet
As a result of the dissolution of Locus genex Oy, the subsidiary
company specializing in diagnostics, the balance sheet of June 30,
2002 includes a tax liability of MEUR 1.2 under short-term liabilities
and a deferred tax receivable of MEUR 1.1 under receivables.
Liquidity
The cash flow provided by operating activities during the reporting
period was approx. MEUR 0.3 positive (MEUR 0.7). The Group's liquid
assets totalled MEUR 2.1 (MEUR 2.4) at the end of the reporting
period. The equity ratio was 64 % (65.2 %) at the end of the reporting
period.
Investments
The gross investments of the reporting period totalled MEUR 1.1 (MEUR
1.3). The major part of the investments consisted of machinery,
equipment and injection moulding tools for improving the efficiency of
production, and patent costs. During the reporting period the
expansion of the production premises for diagnostics was completed at
the Helsinki office.
Personnel
The average number of personnel totalled 305 during the reporting
period (281 during the corresponding period in 2001), of which 184
were employed by the parent company (167 in 2001) and 121 by the
subsidiaries (114 in 2001). The increase in personnel resulted from
investments made in 2001 in research & development, production, as
well as personnel increases in subsidiaries made to strengthen
internation sales.
Main Events of the Reporting Period
Liquid Handling
In the area of liquid handling Biohit continued to broaden its eLINE-
range. During the reporting period Biohit launched the single-channel
model for the volume range of 100 - 5000 ul. As a result, the entire
single-channel eLINE -product range has been finished. The said single-
channel family covers the volume range of 0.2 - 5000 ul. The new
generation electronic eLINE-range has been developed for most
demanding liquid handling applications. The microprocessor-control and
novel construction enable maximum liquid handling performance with
very high levels of accuracy and precision. The ergonomical design of
the eLINE-range together with electronic tip ejection reduce
considerably the risk of work-related upper limb disorders.
During the reporting period the accredited calibration laboratory of
Biohit was certified in accordance with the ISO 17025 -quality
standard. Moreover, during the reporting period the capacity of the
plastics production at the plant in Kajaani was increased considerably
and the automation of production was continued.
Diagnostics
The evaluations of the test panel for determining Helicobacter pylori
-infection and atrophic gastritis and for screening the risk of
gastric cancer and peptic ulcer from blood samples (GastroPanel)
continued according to plans.
By the end of the reporting period six GastroPanel evaluations had
been completed in Europe, one in Asia and one in North America. The
number of patients studied in the evaluations totalled 1,732. During
the reporting period ten evaluations were in progress in Europe, three
in Asia and one in the Near East. The number of patients to be studied
in these evaluations totals 4,850. By the end of the reporting period
negotiations were in progress to commence eight new evaluations in
Europe, two in Asia, two in North America and two in Africa.
Biohit received the first significant order for the GastroPanel from
Near East at the end of the reporting period. During the reporting
period the GastroPanel was used at the Jorvi Hospital in Finland and
in two service laboratories in Finland and in Germany. Additional
information on the GastroPanel is provided at the end of this release.
In the area of diagnostics Biohit was awarded the European patent
0812421 for the method for diagnosing systemic lupus erythematosus
(SLE). SLE is a connective tissue disease, which resembles rheumatic
diseases.
Increases in Share Capital
As a result of the subscription of shares made on the basis of the
1999 option program and the option program targeted to Jencons
Scientific Ltd., the share capital of Biohit increased during the
reporting period by EUR 39,397.50 (231,750 shares) to EUR 2,188,771.59
(12,875,127 shares). The share premium of EUR 424,282.50 has been
recorded in the premium fund.
Equity Turnover and Price Development
The turnover of Biohit's B-shares on the NM-list of the Helsinki
Exchanges was EUR 1,984,622 and the number of shares 601,804. The
highest price was EUR 4.40 and the lowest EUR 2.18. The average price
was EUR 3.30.
Prospects for 2002
Biohit estimates that the net sales of the Group for 2002 will
continue to be generated primarily by the sales of liquid handling
products, and that the net sales will increase approx. 2-3%. It is
estimated that the result after taxes for year 2002 will be negative.
The most important factors affecting the development of the result of
Biohit are the development of the liquid handling product market in
the U.S., which has been weaker than anticipated, and the slowness of
the launch of the gastric test panel (GastroPanel). The launch of the
GastroPanel is retarded especially by evaluations carried out abroad,
which have taken longer than anticipated, and the application
procedures for receiving approvals by authorities.
In order to improve the development of the result Biohit has taken
into use an adaptation program of its activities. In accordance with
the program the company aims, e.g., to intensify marketing efforts and
cut costs. The measures to cut costs include according to the
preliminary plan the reduction of personnnel by temporary dismissals.
The related industrial co-operation procedure will be started
immediately after the publication of this Interim Report.
Group Income Statement
1-6 1-6 1-12
2002 2001 Change Change 2001
MEUR MEUR MEUR % MEUR
Net sales 12.8 12.3 0.5 4 25.5
Operating expenses -12.3 -11.0 1.3 12 -23.0
Depreciation excluding
goodwill amortization -0.7 -0.6 0.1 28 -1.3
Operating profit/loss
before goodwill
amortization -0.2 0.8 -1.0 -128 1.2
Amortization on
goodwill -0.5 -0.5 0.0 0 -1.0
Operating profit/loss -0.7 0.3 -1.0 -347 0.2
Financial expenses
(net) -0.2 0.0 -0.2 334 -0.2
Profit/loss before
extraordinary items -0.9 0.3 -1.2 -452 0.1
Extraordinary income 0.0 0.0 0.0 0 0.0
Extraordinary expenses 0.0 0.0 0.0 0 0.0
Profit/loss before
taxes -0.9 0.3 -1.2 -452 0.1
Profit/loss for the
period -1.0 0.1 -1.1 -2077 -0.2
Group Balance Sheet
30.6.2002 30.6.2001 31.12.2001
MEUR % MEUR % MEUR %
Assets
Non-current assets 11.3 46 11.6 45 11.4 46
Current assets
Inventories 4.0 16 4.5 18 4.3 17
Receivables 7.1 29 7.2 28 6.8 27
Cash and cash
equivalents 2.1 9 2.4 9 2.5 10
Total assets 24.5 100 25.7 100 25.0 100
Liabilities and
shareholders'
equity
Shareholders'
equity
Share capital 2.2 9 2.1 8 2.2 9
Share premium
fund 15.3 63 14.9 58 14.9 60
Accumulated
profits/losses -2.0 -8 -0.4 -2 -0.8 -3
Capital loans 1.2 5 1.2 5 1.2 5
Minority interest 0.1 0 0.1 0 0.1 0
Long-term
liabilities 2.4 10 2.4 10 2.1 8
Short-term
liabilities 5.3 21 5.4 21 5.3 21
Total liabilities
and shareholders'
equity 24.5 100 25.7 100 25.0 100
1-6/02 1-6/01 Change Change-% 1-12/01
Investments, gross MEUR 1.1 1.3 -0.2 -11 2.1
% net sales 8.8 10.4 8.7
Employees, average 305 281 24 9 289
Pledges given, commitments and contingencies
30.6.2002 30.6.2001 31.12.2001
Loans for which pledges MEUR MEUR MEUR
have been given
Loans from financial
Institutions 1.8 2.4 1.9
Corporate mortgages 3.4 3.4 3.4
Other long-term liabilities 0.8 0.8 0.8
Mortgages 0.8 0.8 0.8
Leasing commitments 4.0 3.9 4.0
Interest on Capital Loans
The unrecorded interest accrued on capital loans on 30.6.2002 totalled
MEUR 0.5 and on 31.12.2001 MEUR 0.4.
30.6.2002 30.6.2001 31.12.2001
Ratios
Equity ratio, % 64.0 65.2 65.7
Earnings per share, EUR -0.08 0.00 -0.02
Shareholders' equity
per share, EUR 1.20 1.31 1.28
Average number of shares 12,739,250 12,643,377 12,643,377
Number of shares at the
end of the period 12,875,127 12,643,377 12,643,377
Derivative Contracts
The Group does not have any off balance sheet financial instruments.
The figures of the Interim Report are unaudited.
Helsinki, August 7, 2002
Board of Directors of Biohit Plc
Overview on Biohit
Biohit, operating in the areas of biotechnology and high technology,
develops, manufactures and markets liquid handling products and
accessories as well as diagnostic test systems for use in research,
health care and industrial laboratories.
In the area of liquid handling Biohit's main products are electronic
and mechanical pipettors and their disposable tips. Currently,
Biohit's range of electronic and mechanical pipettors is the widest in
the world. Biohit is also the global market leader of electronic
pipettors.
In the area of diagnostics Biohit develops, manufactures and markets
test kits based on the enzyme immunoassay (EIA) -method and monoclonal
antibodies for the screening of different types of disease. Biohit's
diagnostic product range includes, e.g., a test panel for diagnosing
H.pylori -infection and atrophic gastritis as well as for screening
the risk of gastric cancer and peptic ulcer from blood samples (the
GastroPanel), as well as tests for the detection of lactose
intolerance and systemic lupus erythematosus (SLE).
In order to be able to offer complete analyzing systems for its
customer base, Biohit's product range includes, in addition to liquid
handling products and diagnostics, instruments used for the analysis
of test results. Moreover, Biohit offers as a part of its product and
marketing strategy maintenance, calibration and training services
through the Group companies and its distributors.
Biohit's production plants are located in Kajaani and Helsinki. The
sales and marketing subsidiaries are located in France, Germany,
Italy, Japan, Russia, the U.K. and the U.S. Biohit's distributor
network covers altogether approx. 450 members and 70 countries.
Moreover, many multinational companies, such as Beckman Coulter,
Becton Dickinson, bioMérieux, Johnson & Johnson and 3M complement
their diagnostic systems with Biohit's electronic liquid handling
products. As to Group net sales, 96% are generated outside of Finland,
and the degree of domestic production is approx. 95%.
GastroPanel: Diagnosis of Atrophic Gastritis from a Blood Sample
Overview
Helicobacter pylori -infection is one of the most common chronic
infections and results in severe diseases in a significant proportion
of the world population. All infected patients get chronic gastritis,
and even more than 20% of these people may suffer from peptic ulcer
(either duodenal or gastric) during their lifetime. Half of those
infected will suffer from atrophic gastritis (either in the corpus,
antrum or both) during their lifetime, which significantly increases
also the risk of gastric cancer. In approx. 10% of the cases, the
H.pylori gastritis results in advanced atrophic gastritis of the
gastric corpus among whom the risks of diseases linked to the
deficiency of vitamin B12 is very high.
The Maastricht 2 (2000) consensus recommends that symptomatic patients
with H.pylori are to be treated, and it is recommended further that,
in order to prevent severe complications, the patients with H.pylori -
infection and major gastric pathology (atrophic gastritis) should be
eradicated for H.pylori. For this reason, the patients with severe
gastric pathology should be diagnosed and endoscopied in an early
asymptomatic stage: up to 4-6% of such patients are reported to have
definite but curable cancerous or precancerous gastric lesions.
GastroPanel enables the determination of H. pylori -infection and
atrophic gastritis as well as screens the risk of gastric cancer and
peptic ulcer from a blood sample. On the basis of the levels of
Pepsinogen I and Gastrin-17 as well as Helicobacter pylori -antibodies
it is possible to establish if the patient suffers from gastritis,
whether the gastritis is atrophic and in which part of the stomach
(antrum, corpus or both) the changes are located. It is also
noteworthy that patients with atrophic gastritis are at risk for
disorders related to the deficiency of vitamin B12. The tests are
based on the enzyme immunoassay (EIA) -method. GastroPanel is a
reliable and cost effective, non-invasive alternative for gastroscopy
as the initial method when examining patients suffering from stomach
pains and discomfort (dyspepsia).
GastroSoft, an easy-to-use computer program, has been developed for
the interpretation of the results of the GastroPanel. This program
draws up a diagnosis of H. pylori -infection and possible atrophic
gastritis, and determines risk factors for gastric cancer and peptic
ulcer. In addition, the program gives a recommendation for the
treatment of H. pylori -infection based on the Maastricht 2 (2000)
consensus. The program further gives a recommendation whether
gastroscopy and the measurement of the levels of vitamin B12 and
homocysteine are necessary. If the results of the GastroPanel are
normal and the patient has symptoms of reflux disease the GastroSoft
program reminds the doctor of the possibility of reflux disease.
Areas of Use of the GastroPanel
GastroPanel promotes the accurate diagnosis of diseases of the upper
abdomen and mucosa of the stomach, and serves as an aid for assessing
the risks and causes of related diseases. Testing by GastroPanel
promotes the prevention of certain diseases, accurate diagnoses and
targeted treatment (evidence-based medicine). GastroPanel is useful
in:
1) Diagnosis of dyspepsia, i.e., pain or discomfort in the upper
abdomen (prevalence of dyspepsia: approx. 30% of global population):
- Functional dyspepsia (over half of the dyspeptic cases). The results
from GastroPanel and gastroscopy indicate that the mucosa of the
stomach is normal (no atrophy, no inflammation, no H. pylori -
infection).
- Organic diseases underlying dyspepsia. Possible causes are
gastric cancer, peptic ulcer or reflux disease. Prevalence of reflux
disease: approx. 20% of global population.
2) Diagnosis of H. pylori -infection (prevalence on the average over
50% of population) and atrophic gastritis (prevalence: approx. half of
those infected by H. pylori) and risk assessment of gastric cancer
(prevalence approx. 0,1%) and peptic ulcer (prevalence approx. 10%).
3) Diagnosis of corpus atrophy, which causes a deficiency of vitamin
B12. The deficiency may be related to many diseases, such as dementia
and polyneuropathies. The deficiency of vitamin B12 may also increase
the level of homocysteine in the body, which is an independent risk
factor for atherosclerosis and heart and brain strokes. As many as 30%
of those over 65 years may suffer from the deficiency of vitamin B12.
Marketing of the Diagnostic Tests
It has been estimated that the global market potential for Biohit's
diagnostic tests is over EUR 5.0 billion. It is evident that Biohit
cannot independently take adavantage of the said market potential.
Thus, in addition to marketing the diagnostic product range through
its seven subsidiaries and current and new distributors Biohit aims to
engage in co-operation agreements with strong diagnostic and medical
companies. In this area negotiations are currently in progress, and a
few co-operation agreements have already been concluded.
When concluding marketing agreements abroad Biohit pays special
attention to that the distributor is able to market and sell all
Biohit's diagnostic tests and related analyzing systems.
In able to promote the wide use of the GastroPanel-tests Biohit has,
e.g. developed applications of the tests for an automated analyzing
system for a German company (Personal LAB, www.ibl-Hamburg.com).
Approx. 4,000 pieces of such systems based on vertical photometry and
microplates are currently in use all over the world. Similar
application projects are currently in progress. The analyzing system
developed by Biohit is partially automated as to measurement and
printing. Biohit's system suits those market areas in which labor
costs are not yet significant or in which resource constraints exist
and completely automated analyzing systems are not commonly used.
Thus far, the GastroPanel has been awarded the Finnish patent FI 97304
and the European patent EP 0804737 covering 15 countries. Biohit has
continued to develop further the GastroSoft-program. The GastroSoft-
program, which enhances the adoption of the GastroPanel and serves as
an aid for general practitioners for the interpretation of the results
of the GastroPanel, can be tested and down loaded free-of-charge at
www.biohit.com/Diagnostics/GastroSoft.
The fact that the diagnostic tests are currently used extensivly for
research and evaluation purposes worldwide promotes the marketing and
sales of the tests. Biohit and especially its co-operation partners
and different researchers have produced numerous abstracts and
scientific publications of the GastroPanel (see
www.biohit.com/Diagnostics).
In the light of most recent research it is currently known that if H.
pylori -infection is treated early enough it is possible to cure the
resulting atrophic gastritis and avoid the risks of related diseases.
This knowledge for treating atrophic gastritis is new for many general
practitioners and most likely will result in the launch of new
research projects and ensure the routine use of the GastroPanel for
screening and diagnostic purposes. The reflux disease and related
increase of the cancer of the esophagus enhance the launch of new
research projects which employ the GastroPanel and drawing up of
scientific publications. Currently various research projects study the
interlinkage between H. pylori -infection and atrophic gastritis, and
their effect on the development of dementia and heart and brain
strokes. By treating H. pylori -infection it is possible to prevent
and treat atrophic gastritis and the said related diseases. Moreover,
the patient's risk of suffering from gastric cancer and peptic ulcer
decreases.
Thus, the GastroPanel enables researchers to launch new projects which
aim at screening, preventing and diagnosing different diseases and
promote targeted treatment (evidence-based medicine). It could be
assumed that such research projects increase the interest and trust of
medical companies, doctors, authorities and governmental bodies
responsible for the development of health care towards the
GastroPanel.
In many countries Biohit has commenced to inform the general public
and those responsible for public health care about the GastroPanel.
Biohit and its co-operation partners have participated in the U.S.,
certain European countries, in the Near East, in Africa, Japan, China
and Russia in scientific congresses in which Biohit's products have
been displayed for companies, researchers, doctors and representatives
of the health care sector.
On the basis of the feedback received abroad, both from industrialized
countries as well as the developing ones where approx. 70-90% of the
population suffer from H. pylori, it can be stated that the
GastroPanel represents a major, new step in the development of
evidence-based medicine. In addition to benefiting both the doctor and
the patient evidence-based medicine promotes the improved efficiency
of the health care system and reduction of costs.
Current Market Status of Biohit's GastroPanel-Tests
Biohit has carefully and with considerable investments prepared for
the marketing and sales of its diagnostic tests. GastroPanel as a
product is ready, and sufficient scientific evidence exists on its
characteristics and reliability. The amount of this evidence most
likely increases as the GastroPanel becomes more extensively known and
used worldwide.
In Europe the GastroPanel can be sold for both research and clinical
use. In the Near East Biohit is prepared together with its local
distributors to sell the GastroPanel in eight countries. In addition,
a distribution agreement has been concluded recently for South Africa
and certain other African countries. In South America Biohit is
prepared to enter the 5-6 largest markets in co-operation with local
distributors. E.g. in China and Russia, where approx. 70-90% of the
population suffer from H. pylori -infection, the evaluations and
registration processes are in progress. The need for the GastroPanel
is very substantial in these countries, and Biohit estimates that the
deliveries of the tests will commence in 2002. In order to minimize
e.g. freight costs and duties the objective is to commence the
manufacturing of Biohit's diagnostic tests in China during 2003.
Biohit's subsidiaries in France, Germany, Italy, Japan, Russia, the
U.K. and U.S., and its current distributors are preparing to begin the
sales of the GastroPanel.
In North America Canadian authorities have granted a sales license for
the GastroPanel, and currently Biohit is applying for FDA clearance in
the U.S. The FDA approval enables the sales of the GastroPanel also
for clinical use in the U.S. Prior to receiving FDA clearance it is
possible to sell the test kits for research use and commercial
laboratories. It is estimated that FDA clearance for the GastroPanel
will be received in early 2003.
As Biohit is taking measures to cut down costs during the second half
of 2002 it is estimated that submitting the application for receiving
approvals for the GastroPanel in Japan will be postponed until 2003
unless a strong local co-operation partner, e.g., a diagnostic or
medical company, applies for it sooner. During the second half of 2002
Biohit will conduct a distributor up-date for the diagnostic products
and analyzing systems in India, Indonesia, Thailand, Malaysia, South
Korea, Taiwan and Singapore. It is estimated that the majority, i.e.,
80-90% of the population suffer from H. pylori in these countries.
During the reporting period the expansion of the production premises
for diagnostics was completed at the Helsinki office. This enables, by
personnel increases and minor investments, to triple the current
capacity of 60,000 test kits.
The 2002 distributor price of one Biohit's test kit is EUR 162-317.
The GastroPanel comprising the test kits for Pepsinogen I, H. pylori
and Gastrin-17 enables to analyze on the average 50 patients. The
distributor price of the GastroPanel is approx. EUR 600 (taxless end-
user price in Finland and Europe is EUR 1070-1085). Thus, the cost of
examining one patient with the GastroPanel is approx. EUR 20 for a
health care center or a private laboratory. In addition, the cost of
work related with sample taking and analyses totals EUR 15-20. In
Finland commercial service laboratories bill EUR 65 for the
GastroPanel examination. The price of gastroscopy and the related
examination of tissue samples is EUR 250-300. Currently these are the
only alternatives for the GastroPanel for screening and diagnosing
atrophic gastritis.
Biohit Plc
Helena Hentola
Corporate Communications
Additional information: Osmo Suovaniemi, Professor, President & CEO,
tel: +358-9-773 861, direct: +358-9-773 86
250, mobile: +358-40 745 5605, fax: +358-9-
773 86 205, osmo.suovaniemi@biohit.com.
http://www.biohit.com
Distribution: The Helsinki Exchanges
The Financial Supervisory Authority
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