Interim Report January – March 2020

First quarter in brief

• Net sales totaled SEK 11,475 (11,931) thousand. Adjusted for the bioprocess order during the first quarter of 2019, which totaled SEK 2.4 million, growth for the quarter was 20%.

• Gross profit was SEK 10,977 (11,140) thousand.
• Operating profit/loss before depreciation and amortization (EBITDA) totaled SEK -847 (2,695) thousand. Non-recurring expenses relating to the ongoing acquisition of QED Bioscience Inc. had a negative impact on operating profit of SEK 1,354 thousand.
• Operating profit/loss was SEK -1,889 (1,942) thousand.
• Comprehensive income for the period was a loss of SEK 1,915 (profit: 1,591) thousand.
• Comprehensive income per share, basic and diluted, totaled SEK -0.03 (0.03).
• Cash flow from operating activities was SEK -1,506 (2,709) thousand.
• Cash and cash equivalents at the end of the period totaled SEK 61,641 (11,025) thousand.
• Genovis signed a Memorandum of Understanding for the acquisition of all shares in the privately held company QED Bioscience Inc, based in San Diego, California. The acquisition will be paid for through an estimated cash payment of about SEK 20 million, including transaction costs.
• Genovis carried out a rights issue that raised SEK 50 million for the Company before issue expenses.

Comments from Fredrik Olsson, Chief Executive Officer

The Covid-19 pandemic has had some impact on our sales during the first quarter. Nevertheless, we grew our core business by 20%, adjusted for the bioprocess order which affected comparability from the first quarter of 2019. Growth in Europe and North America remained strong, while the Covid-19 outbreak heavily impacted growth in Asia, which accounts for a smaller portion of our total sales, in February and March.

At the end of March we saw a slowdown in customer activity in Europe and North America as a result of the restrictions introduced in many countries to reduce the spread of the disease. As a result, orders could not be delivered to some customers due to closures, which affected revenue at the end of March. We estimate that postponed deliveries and geographic impact, especially in Asia, lowered revenue by approximately 10-15 percent for the quarter.

My assessment is that the impact is temporary in nature; it is not caused by any underlying driving forces in the market, but is entirely linked to the reduction in activities at pharmaceutical companies, research institutes and universities because of the Covid-19 pandemic. We have seen a gradual increase in customer activity in Asia in early April.

As with many other colleagues in the industry, the extensive closure of laboratories, canceled conferences and sales activities will likely have a dampening effect on our sales in the short term. We are well prepared for such a scenario, even though the time until we return to a more normal market situation remains difficult to assess. We are closely monitoring developments and evaluating alternative cost-saving measures in relation to the development of the business and its long-term strategies.

Meanwhile, we now have the opportunity to focus our resources on product development to be ready with several new products when the markets return to normal. Our operational capacity is intact; we do not see any impact on production capacity at this time and our distribution chains continue to function well.

Despite these challenging times for society at large, the course of events resulting from the coronavirus pandemic clearly demonstrates the value of Genovis’ offering of tools and technology to increase understanding of biological processes, which can help researchers to develop new medications and to improve diagnostics.

Over the past few weeks, antibodies and biological drugs have been highlighted as important components for fighting the coronavirus pandemic. In this perspective, our upcoming acquisition of QED Bioscience is an opportunity to address new relevant areas within antibody-based research and diagnostics.

At the same time, the importance of research in infectious diseases caused by viruses has become quite clear, especially for the industrialized part of the world. The Covid-19 outbreak is likely to result in the allocation of more resources to these areas by companies and communities for a long time to come so as to be better prepared for future pandemics.

Just a month or so ago, we could not have imagined that our customers and we would use our products to investigate viral proteins in detail, how they interact with receptor sites on human cells, and the role played by glycans in viral infection and spread. The fact that surface proteins on the virus, which is visualized in every newscast, are coated in glycans demonstrates the importance of glycobiology and confirms our strategic objective of providing new enzymatic tools in the field of glycans.

Overall, I maintain a strong positive basic philosophy regarding our potential to contribute to society at large and to Genovis’ growth in the long term.
 

For more information, please contact: Fredrik Olsson, CEO, Genovis AB Tel: 0046 (0)46 -101233 fredrik.olsson@genovis.com

ABOUT GENOVIS

Genovis’ business concept is to apply its knowledge and imagination to design and provide innovative tools for the development of the drugs of the future. Today Genovis sells several enzyme products known as SmartEnzymes all over the world in innovative product formats that facilitate development and quality control of biological drugs.

The Group consists of Genovis AB and the wholly owned subsidiary Genovis Inc. (USA). Genovis shares are listed on Nasdaq First North Growth Market and Erik Penser Bank is the Company’s Certified Adviser, certifiedadviser@penser.se, T: +46 (0)8-463 83 00.

This information is information that Genovis AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, by the contact person set out above, on April 29, 2020.

Published reports can be downloaded from the Genovis website:

https://investor.genovis.com/en/financial-reports/

This press release is a translation of the Swedish original. In the event of any discrepancy between this translation and the Swedish original, the Swedish version shall prevail.