SCN Interim Report January - March 2009

Net sales for the period amounted to MSEK 11.5 (16.3)
EBIT amounted to MSEK -6.5 (-4.9)
Loss for the period amounted to MSEK 9.0 (-6.6)
Earnings per share, basic and diluted, amounted to SEK 0.48 (-0.45)
Action plan to lower the costs and strenghten the balance sheet has been successfully initiated

“After a couple of years of negative results and cash flows, I’m very pleased to see that the steps taken at beginning of 2009 to lower the company’s cost base and reducing the debt ratio already have started to give effect. The group’s operating costs have decreased by 15% compared to Q1 last year (the actual cost reduction in Q1, however, is approx MSEK 20, or 53 percent, due to capitalization of branding expenses taking place in Q1 2008, and later reversed in Q4 2008). The primary cause to the cost savings are derived from the marketing expenses in the US where our new Direct Response partner TNC assumes all risks and costs related to marketing of CUUR on the US market. This is beneficial for SCN as the risk exposure decreases significantly. Furthermore, our fixed costs have been reduced as well during first quarter. In spite of the large cost reduction, our net sales has not been that affected during the switch-over process, and is expected to reach a positive development especially during second half of 2009. However, the urgency of generating positive cash flow and results have been prioritized in favor of achieving sustainable sales growth.

In regards to the debt situation, the necessary measures that have been taken in order to decrease the company’s leverage and to strengthen group equity have begun to give effect, e.g. by partially converting the convertible debt of MSEK 24.7 into shares in Scandivir (transferred from SCN). However, the global financial crises still effects SCN and management will need to continue to put a lot of effort in stabilizing the company’s financial position and to secure long-term funding. During the first quarter we have made some important progress in regards to future sales development. For instance, our new product Thin400 will be launched during second quarter in Norway and Finland as the first markets, and will be rolled out to additional markets later this financial year. The sales indications that we have received so far are promising and we see great potential in this product. I can also spot positive sales tendencies regarding Coldizin and Immulina in Europe, where new agreements have been entered into with customers in Great Britain and Greece, and where the projected launches will take place during second half of 2009.

All in all, we still generate red numbers from our operations and management is humble towards the challenges that lie ahead for SCN to make a possible turnaround. Nonetheless, I look forward to the future with confidence as the positive signals that we receive from the markets and the immediate effects of our actions regarding cost reduction and strengthening the balance sheet inject a strong belief that SCN will turn the ship around in 2009.”