SCN Interim Report January-September 2008 (Q3)

Scandinavian Clinical Nutrition AB, listed on NGM Equity and Oslo Axess, today releases the interim report for the third quarter of 2008. The entire report can be found in the attached pdf file, and on the company's website www.scnutrition.com.

January-September 2008 in brief for the SCN group
• Net sales for the period amounted to MSEK 42.5 (5.8)
• EBIT amounted to MSEK -27.1 (-30.6)
• Loss for the period amounted to MSEK -6.6* (-30.7)
• Cash flow for the period amounted to MSEK -12.6 (-2.5)
• Earnings per share, basic and diluted, amounted to SEK -0.44* (-3.01)
* Includes capitalization of deferred tax asset of MSEK 10.2

Highlights January-September 2008
The market for SCN’s products is characterized by strong seasonal variations. Depending on the indication, the products have different sales peaks during the year, creating significant variations between different quarters. This makes it difficult to make any predictions for the full year based on a quarterly report.

During Q3, SCN’s results have improved significantly. This is partly due to the financial income following the sale of shares in Scandivir (see below), but increased cost control and streamlining of the organization, for example by using synergy effects from the integration with the Danish subsidiary, have also played an important role. These synergies, in combination with the strategy to work with partners, have enabled the company to reduce the number of employees and thereby cut the fixed costs in Denmark. The year-to-date results still show a loss, but with lower overhead costs from 2009 onwards and positive signs from the market (see below), SCN is optimistic about the future development.

During 2008, SCN has achieved “proof of concept” for the company’s strategy - to build product asset values by establishing products on selected markets in cooperation with established and prominent business partners - by establishing the weight control product CUUR in USA. With CUUR as a successful case to build on, SCN’s US subsidiary and the company’s US partner have now moved on to launching the cold product Coldizin in mass market in the larger New York region. The first orders were shipped in late Q3, and new orders for delivery in Q4 have already come. Based on the experiences of this test launch, SCN is optimistic about the coming national launch.

USA is the primary market for SCN since it is the world’s largest market for nutraceuticals, but the company also aims for other markets through the Danish subsidiary, using the same strategy – working with established partners on local markets, to benefit from local knowledge and keep the costs low at group level. During 2008, Coldizin and Immulina have been launched on several markets and Membra7 has been launched in Scandinavia. Negotiations are ongoing for several other markets world-wide. Negotiations are also ongoing regarding the option the company’s US Immulina partner has to buy the product for MUSD 13.

The foundation for SCN’s strategy is that every product has solid clinical documentation, and therefore, continuous R&D work is a vital part of the company’s business. One of the promising cases in the company’s pipeline concerns the obesity virus Ad-36, for which SCN’s subsidiary Scandivir AB has an extensive IP portfolio and exclusive sales rights. Intensive R&D work is being carried out by the company’s R&D partners to develop a test kit and possible treatments for Ad-36 infection. During Q3, SCN sold 13.5% of the shares in Scandivir for MSEK 13.5, which indicates a total value of Scandivir of MSEK 100. SCN is currently evaluating selling additional shares in Scandivir.

Regarding the existing portfolio, SCN has initialized a 2-3 year process aiming to register the active ingredient in Coldizin as an OTC drug, potentially increasing the value of the product and the brand. The company has also entered into a Danish research consortium, aiming to find better methods for developing safe and effective nutraceuticals. Clinical studies are ongoing within the 10-year Network of Excellence that SCN has established with Karolinska Institutet. Some of these projects will be funded by money raised in a capitalization process carried out in Q2-Q3 in cooperation with Glitnir, which provided the company with about MSEK 30 in funds after costs associated with the issue.