Interim report January – March 2008

Q1 2008
• Consolidated net sales totaled SEK 106 thousand.

• Consolidated earnings after financial income and expense totaled SEK –4,941 thousand.

• Cash and cash equivalents at the end of the period totaled SEK 873 thousand.


The group was formed in Q4 2007 and present no comparative figures for the period, instead the figures of the parent company are presented.

Significant events in Q1

• Genovis launched a new product, FabRICATOR® kit, that cleaves antibodies and isolates pure Fab-fragments in 30 minutes.

• Genovis enters into distribution agreement with Nordic Biolabs on the Swedish and Danish markets.

• Genovis enters into distribution agreement with DI Biotech on the Korean market.

• During the period Genovis initiated a new share issuing of 15 MSEK with preferential rights for current shareholders.


Significant events after the end of the period
98 % was subscribed with preferential rights in the new share issue that closed on April 7. Shares that was subscribed without preferential rights will be allocated to subscribers in relation to the shares they owned on the record day. Four existing shares on the record day gave shareholders the right to subscribe for one new class B share to the issue price of seven Swedish kronor. The new share issuing will provide the company with SEK 15 million before issue expenses. After the new issuing have been registered the share capital in the company will increase by SEK 870,898.4 and amount to 4,354,493.2. The number of shares in the company will amount to 796 000 class A-shares and 10,090,233 class B-shares. The share capital will be diluted by 20%.

Market outlook
The market outlook for the company's products is good. With respect to Genovis' products, research analysts expect a large increase in the use of nanotechnology in drug development and Genovis' products offer several advantages compared with its competitors; for example, the magnetic core in the NIMT®FeOdot products is traceable with magnetic resonance imaging (MRI).
Strong growth is predicted for the products in Antibody Tools, driven by the endeavors of antibody based pharmaceuticals. In this field Genovis offers products such as the FabRICATOR®, which is both better and faster than any other product on the market today.

Forecast for full year 2008
Genovis does not make any forecasts, but states that interest in the company's products is great. Strong sales growth is expected in 2008 and the board of directors expects Genovis to achieve positive earnings and cash flow during the second half of 2008.

Comments by the CEO

Sarah Fredriksson, CEO says:
Genovis has two clear priorities for 2008. The first is to launch sales channels in the United States and Europe and in selected parts of the Asian market. The second is sales. The first quarter has therefore focused on establishing contacts with various potential distributors. By the end of the period the first two agreements were signed. This means that as of the end of March and beginning of April we now have active sales activities directed toward customers and we can start working with a more focused approach to initial sales. We expect to have an additional five to seven distribution agreements completed by the end of the year. I am convinced that Genovis must have patience and focus efforts on carrying out its strategy in order to build up a large and dynamic customer base. It will take two years before we have fully expanded and established sales channels. Parallel to the expansion of sales channels we will strengthen our business model with new products developed in-house and, if the opportunity should present itself, even via acquisition.
The distributor network requires training, sales support, customer support, and follow-up, which has placed new demands on Genovis' organization. Genovis in Lund handles training and sales support, while the Genovis office in the United States is responsible for marketing activities and sales in the US. The US market is large and can be divided into several geographical segments. Our strategy in the US is in part to grow organically and work with direct sales and in part to simultaneously establish agreements with partners for sales via distribution, with a focus on California and Boston.
The new share issue that was initiated during the period is crucial for achieving our objectives for the year. I am therefore extremely pleased that it was oversubscribed. I have previously noted that 2008 presents several exciting challenges for Genovis. During the period we handled the first of these challenges and the organization has quickly been adapted to the new duties.

Operations
Genovis, which was founded in 1999, has developed a technology known as Nano Induced Magnetic Transfer (NIMT®). The technology has resulted in several products based on NIMT® FeOdots, nanometer-sized superparamagnetic particles, which are a product in themselves, but which also can be produced with several different surfaces to be able to fit into different areas of application. In 2007 Genovis acquired a series of patents for biotech applications of proteins. By linking these proteins with Genovis' existing technology, the company has created unique new products.

Twelve products have been launched and are marketed in three types of applications: imaging, biomolecule delivery, and antibody tools. All products are consumables intended for laboratory use in preclinical research and are used by researchers at pharmaceutical companies, biotech companies, and within the academic research community.

Imaging
FeOlabel - In order to see what happens in a cell and to be able to follow the cell within an animal, the cell needs to be marked. One method is to introduce magnetic nanoparticles into the cell, NIMT® FeOlabel, and then follow the cell using magnetic resonance imaging (MRI).

Biomolecule delivery
FeOfection - Researchers who want to discover the cause of a disease, or who want to investigate the structure and function of proteins study individual cells, which are the smallest components in each organism. One way to follow what happens inside an individual cell is to introduce a new gene into the selected cell by means of NIMT® FeOfection.
FeOsilence (RNA-interference) - Many diseases can be treated by mitigating the activity of certain genes. Researchers have great hopes that in the future they will be able to use RNA interference to treat diseases such as viral infections, cardiovascular diseases, cancer, and metabolic diseases.

Antibody Tools
FabRICATOR® - Researchers are currently heavily involved in investigating the use of antibodies as medications, but antibodies are also used in research and medical care for several applications, including diagnostics, analysis, and purification. Researchers would like to be able to cleave an antibody and FabRICATOR® is an enzyme that cleaves in a specific place so that the antibody can be divided into two parts.

Product launch
During the first quarter of the year Genovis launched its new FabRICATOR®Kit, which is a combination of a unique enzyme and nanostructures that Genovis developed in-house. The FabRICATOR®Kit cleaves antibodies 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.


Geographic markets and market strategy
The market for the products Genovis develops and markets is currently estimated at about USD 900 million. The North American market is the largest (about 40%), followed by the European (35 %), while the Asian market (25 %) is the fastest growing geographic market. The intention during 2008 is to affiliate with strategic distributors that have strong customer relationships in those markets that are most important for Genovis, including the Nordic home market, the rapidly growing Asian markets, and the US. Genovis is represented in the US by the subsidiary Genovis Inc.
So far this year, Genovis has closed two distribution agreement deals. The first was reached with the Swedish distributor Nordic Biolabs, a leading supplier of products for medical research, diagnostics, microbiology, and transfusion medicine that represents about 40 strong vendors and brands, with customers in laboratories, hospitals, and universities, as well as within the pharma and biotech industries.
The other agreement was reached with Di Biotech Ltd in Korea. The company, a spin-off from Pharmacia Biotech Korea, was founded in 2007 and is a groundbreaking market leader in the Korean life science market. The company works closely with its customers, with a focus on three research areas: genomics, molecule interaction, and cell imaging.

Sales, Q1
Net sales during the first quarter were KSEK 106 (1). During the quarter Genovis signed two distribution agreements and the company arranged training programs for the distributors in both Sweden and Korea. The distributors will initiate sales of Genovis' products during the second quarter and have therefore not yet generated any revenues for the company during the first quarter.

Net result, Q1
The operating loss during the first quarter of the year was SEK –4,869 (–2,406). The increased operating expenses are mainly attributable to increased personnel costs. Depreciation during the first quarter was KSEK -192 (-108), including KSEK 142 (108) for tangible fixed assets and KSEK 50 (0) for intangible assets. Profit/loss after financial items was KSEK -4,941 (-2,428). Deferred tax during the quarter totaled KSEK 1,378 (806).

Cash flow and financial position, Q1
Cash flow from operating activities was KSEK –4,262 (-3,695). Cash flow from change in working capital totaled KSEK 1,114 (-962). At the end of the period working capital was KSEK 873.
The Group's net investments during the period amounted to SEK 0. Net investments included SEK 0 (134) for tangible fixed assets and SEK 0 (452) for intangible fixed assets.


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, and customer and sales support. The CEO and COO have overall responsibility for the Group's business.
Genovis Inc. USA is responsible for sales on the American market as well as worldwide marketing and market development.
The number of employees in the company has been constant during the first quarter. At the end of the period the Group had twelve employees, eleven in the parent company and one in the US, compared with eight persons in the parent during the same period last year.

Other information
Parent company
Net sales during the first quarter were KSEK 94 (1). Profit/loss after financial items totaled KSEK -4,946 (-2,428). Cash and cash equivalents at the end of the period totaled KSEK 228 (13,754). Net investments of the parent company included KSEK 0 (134) for tangible fixed assets and KSEK 0 (452) for intangible fixed assets.