Interim report January - June 2012

JANUARY – JUNE 2012
- Net sales amounted to SEK 80.8 million (64.9)
- EBITDA was SEK -20.2 million (-9.2)
- Earnings per share totaled SEK -0.72 (-0.48) before dilution

APRIL – JUNE 2012
- Net sales amounted to SEK 38.6 million (37.5)
- EBITDA was SEK -13.4 million (-5.5)
- Earnings per share totaled SEK -0.42 (-0.31) before dilution

HIGHLIGHTS
German rebates and price adjustments from last three quarters charged to Q2
- Total one-off expenses of SEK 6.3 million in Q2
- Strong outlook for the German business for remainder of the year

Continued underlying net sales growth in Q2
- Adjusted net sales growth in Q2 amounted to 17%
- Adjusted EBITDA amounted to SEK -7.1 million

New share issues improve financial strength
- Total amount raised was SEK 79.1 million
- Repayment of loans of SEK 43.6 million

BUSINESS UPDATE
Net sales in the second quarter and the first half have been negatively impacted by greater than expected rebates on the German market attributable to the last three quarters as well as price adjustments on the Danish market related to 2011. A significant share of the volumes in Germany are sold through agreed contracts with various insurance companies. Bluefish initially sells the products at a gross price, and later receives an invoice for the agreed rebates, however, with significant delays. Consequently, with very limited knowledge about the share of volumes that have been sold to the different insurance companies, the company has to estimate the expected level of rebates that will be charged at a later stage when reporting net sales for the German market. Considering that these estimates have been too low historically, higher estimates will be used when reporting net sales going forward. It is naturally a great disappointment to see the impact of the rebates in this interim report, however, we have taken the full effect as soon as the information became available and also swiftly implemented new principles to avoid a similar situation in the future. Most importantly, the outlook for the German business for the remainder of the year is strong. Net sales during the first six months amounted to SEK 80.8 million, corresponding to an increase of 24% compared to the first six months in 2011. Net sales during the second quarter amounted to SEK 38.6 million, an increase by 3% compared to the same period last year. This is equivalent to a rolling-12-months net sales of SEK 161 million. The disappointing events in Germany aside, during the second quarter and first half of 2012, Bluefish has continued to build its presence in local markets by growing the market share for existing products as well as adding products to the local portfolios. The Nordic markets has continued to show a strong development. At the end of the period, in the UK, a hospital contract with the NHS, the National Health Service, for one of the company’s products was renewed for another two-year period.   

Adjusted for the rebates and price adjustments that are attributable to previous periods, net sales growth in the second quarter amounted to 17%. Similarly, adjusted net sales growth during the first half of 2012 amounted to 33%. The additional rebates that have been charged to the second quarter has had a significant impact on profitability. EBITDA for the second quarter and for the first half amounted to SEK -13.4 million and SEK -20.2 million, respectively. Adjusted for the additional rebates and price adjustments attributable to previous periods, EBITDA for the second quarter and for the first half were SEK -7.1 million and SEK -13.8 million, respectively.

New share issues provide SEK 79 million
During the period, the company successfully closed three directed new share issues, which together provided SEK 79 million. The new share issues were carried out with the ambition to create the conditions necessary for continued stable growth and opportunities for gradually extending the range of niche products within more narrow disease areas and for regional treatment principles. The company currently has seven formulation projects under development within a varied number of therapy areas. The average sales potential for the projects under development is approximately SEK 25 million per product, with an anticipated gross margin of 50%. The registration of the first product is anticipated to commence during the first half of 2013, with a planned launch during 2014. The remaining products will be gradually launched thereafter. The proceeds have partly also been used to repay a convertible loan amounting to SEK 18.6 million, which matured on 30 June 2012 and another short-term loan from Färna Invest of SEK 25 million, that will mature on 30 September 2012. As a result, the net debt to equity ratio has been improved significantly.

Outlook
As market shares increase and the product offering grows, Bluefish expects a gradual increase in net sales throughout the year. The company is actively seeking to improve the gross margin by realizing greater efficiencies within logistics and distribution but also through an improved product mix. The existing organizational structure is well prepared for the expected increase in volumes during 2012. Thus, the operating costs are expected to increase at a considerably lower rate than during 2011 and also compared to the expected growth in net sales for 2012.

For more information contact,

Karl Karlsson, President & CEO Bluefish Pharmaceuticals
Tel. 46 8 519 116 00
Email: karl.karlsson@bluefishpharma.com

Susanna Urdmark, CFO Bluefish Pharmaceuticals
Tel. 46 8 519 116 00
Email: susanna.urdmark@bluefishpharma.com

About Bluefish Pharmaceuticals
Bluefish has undergone significant international expansion since the company was founded in 2005. Bluefish focuses on the development, manufacture and sale of generic pharmaceuticals. The company conducts marketing operations in 19 European markets and has a technology center in Bangalore, India. The product portfolio consists of a total of 83 products and is growing.

www.bluefishpharma.com