aXichem AB (publ), Interim Report January – June 2024
aXichem’s development during the period 2024-01-01—2024-06-30
In this interim report, the aXichem group is presented, which consists of aXichem AB (publ), Incendia Pharma AB and aXichem AS (Norway). Amounts in brackets refer to the corresponding period of the previous year.
aXichem’s development 2024-01-01 – 2024-06-30
Turnover and results
The group's net sales amounted to SEK 6,675 thousand (SEK 1,247 thousand).
Operating profit amounted to SEK -5,418 thousand (SEK -8,164 thousand).
The group's profit after tax amounted to SEK -6,594 thousand (SEK -10,215 thousand).
Financial net SEK -1,176 thousand (SEK -2,051 thousand).
Cash flow and financial position
The group's cash and cash equivalents on June 30, 2024 amounted to SEK 10,024 thousand (SEK 20,900 thousand).
The equity ratio amounted to 88% (72%).
Investments
Investments in intangible, tangible or financial fixed assets have been made so far this year with SEK 3,079 thousand (SEK 4,067 thousand).
Depreciation
Depreciation of intangible and tangible fixed assets has been done so far this year with SEK 2,048 thousand (SEK 1,826 thousand).
Stock data
Profit as of June 30, 2024 corresponds after tax to a profit per share of SEK -0.21 (SEK -0.54).
Equity per share at the end of the period amounted to SEK 1.60 (SEK 2.74).
aXichem's development 2024-04-01 – 2024-06-30
Turnover and results
Net sales amounted to SEK 5,867 thousand (SEK 693 thousand).
The operating profit amounted to SEK -918 thousand (SEK -4,354 thousand).
The group's profit after tax amounted to SEK -1,281 thousand (SEK -5,454 thousand).
Financial net SEK -363 thousand (SEK -1,100 thousand).
Investments
Investments in intangible, tangible or financial fixed assets amounted to SEK -2,396 thousand (SEK 3,414 thousand).
Depreciation
Depreciation of intangible and tangible fixed assets amounted to SEK 1,052 thousand (SEK 942 thousand).
Share data
After tax, the periods result corresponds to a result per share of SEK -0.03 (SEK -0.25).
Significant events during the period
- On April 24, a new order for aXivite® was announced within the agreement with the pharmaceutical company Uriach. The order is linked to the production of a new melatonin formulation for Uriach's brand Aquilea® with aXivite®. This means that the total order value from Uriach, within the agreement the parties have, now amounts to approximately 150,000 Euro. aXichem also received an order for aXivite® from its Spanish distributor Pharmafoods worth 13,700 Euro for the development of a new consumer product to be launched later this year.
- On May 29, 2024, aXichem's annual report for 2023 was published. On June 19, the company held an annual general meeting and on the same day the communique from the general meeting was published. The minutes from the meeting can be read at https://www.axichem.com/arsstamma-2024/
- On June 3, 2024, it was announced that aXichem launched a product-specific website, www.axiphen.se, for its salmonella inhibitor, aXiphen®, targeting the Brazilian market for poultry production and poultry feed. Brazil is one of the global market leaders in the production and export of chicken meat.
- On June 25, 2024, the company announced a significant new order from its US distributor SEE Nutrition. The order, which is worth SEK 3 million, concerns one ton of aXivite®, aXichem's scientifically documented synthetic capsaicin product. SEE Nutrition markets and sells aXivite® to suppliers of nutritional products and dietary supplements for sports, fitness, pre-workout and weight control in the American market.
Significant events after the end of the reporting period
- On August 14, 2024, the company announced that it together with the distributor Chr. Olesen will conduct two commercial production tests with aXiphen in collaboration with poultry producers with a significant export business. aXiphen is now delivered from Chr. Olesen to the producers, who are both based in southern Brazil. The tests have a positive impact on aXichem's cash flow of around two million kroner as the product now moves from distributor to end customer.
- On August 27, 2024, aXichem announced that the board of directors, in its annual revision of the company's communication policy, has decided that from now on aXichem shall not publish any financial forecasts or forecast-like targets. The board's decision means that the company's total sales are presented in the quarterly reports and previously communicated sales targets will not be commented on.
CEO’s statement
The operating profit for the second quarter of 2024 amounts to SEK -918 thousand and we show the company's highest net turnover to date of SEK 5,867 thousand, from sales of aXivite in both Europe and the USA. Operating expenses for the quarter amount to SEK -7,049 thousand and are primarily linked to costs for marketing activities and to costs for supplementary studies for aXichem's application for Feed Additive approval in the EU.
Excellent development for aXivite
I am very pleased with the development we have seen for aXivite in the first half of the year. We have confirmed continued orders from Spanish pharmaceutical and dietary supplement company Uriach within our agreement regarding exclusivity for a melatonin formulation with aXivite. Since the agreement was signed, in June 2023, it has generated sales for aXivite of a total of approximately SEK 3 million.
In April, we were able to announce an order for aXivite for the development of a new consumer product. Our distributor in Spain, Pharmafoods, shows strong drive and creativity, which is exactly what we want from our partners. For aXivite, the structure we see in Spain, i.e. a mix of larger and smaller customers, is exactly the development we want. With good margins, control over production and logistics, we can deliver high quality in product and support. I now also see that we are beginning to achieve this in the US market. In June, aXichem received a new significant order, worth SEK 3 million, from the American distributor SEE Nutrition. SEE Nutrition markets and sells aXivite to suppliers of nutritional supplements for sports, fitness, pre-workout and weight management in the US market. It is a market segment that is growing and SEE Nutrition has been able to effectively market aXivite's scientifically documented effect. The studies that we carried out last year in sports and exercise contribute very effectively to positioning aXivite as an effective ingredient. SEE Nutrition reports steadily increasing sales of aXivite from both new and existing customers. This order ensures that they can maintain short lead times for their customers.
Increased visibility for aXiphen in Brazil within the Animal Feed business area
During the period, we have worked with marketing and communication so that aXiphen will have a continued successful introduction on the feed market in Brazil. In April, our distributor Chr. Olesen in the Nucleovet symposium and gave us positive feedback. There is great interest in sustainably preventing salmonella. With the support of the feedback from our partner and from potential customers, we launched a new website in June, exclusively focused on aXiphen. The site is available in two languages, Portuguese and English, and developed in collaboration with local partners in Brazil. aXichem has also produced articles that, together with advertisements, were published in the July edition of two established animal feed trade magazines, O Presente Rural and Food and Feed Magazine.
After the end of the period, in August, we were present at the SIAVS conference at Anhembi Parque, São Paulo. Together with Chr. Olesen's team met with several of the larger chicken and feed producers in Brazil. The focus on preventing salmonella is clear and there is an interest in aXiphen and being able to combine aXiphen with, for example, vaccines. As a result of the meetings, we will conduct two commercial production tests with aXiphen. The approximately 30-day tests will be carried out at well-established poultry producers slaughtering in the order of 100,000 - 500,000 birds per day and having a significant export business. A very exciting opportunity for aXichem. In the short term, the tests have a positive impact on aXichem's cash flow of just over two million kroner, as previously delivered product now moves from distributor to end customer.
Supplementary studies for EU Feed Additive are expected to be compiled in quarter four
Work on supplementing the information within environmental safety, consumer safety and effect, which EFSA judged to be missing in our Feed Additive application, has continued during the period. The schedule was somewhat affected by the delivery capacity of one of the subcontractors, which means that the results from the studies will be compiled during quarter four instead of during quarter three as previously planned. After compilation of the material is submitted to EFSA/EU. According to the regulations, the authority's processing time is up to six months until formal approval. But as I said before, it is not possible to predict the process with accuracy and with some experience from authority handling, we rather expect six to twelve months. As before, we will update the market when there is a concrete significant change in status.
Exciting quarter ahead
I recommend anyone who wants to get a deeper insight into the potential of phenylcapsaicin, aXiphen and aXivite to read the Annual Report, which was published before the annual general meeting on June 19. I also want to highlight our account on LinkedIn. Feel free to follow us there to take part in both big and small news.
I would like to take this opportunity to welcome Michael Engström to the board. Michael will bring knowledge and long experience of marketing and sales within companies in the growth phase. I would also like to thank Gunilla Savring for ten years of work on aXichem's board. Gunilla continues in her role as responsible for communications and IR, which we are happy about.
Together with aXichem's team and board, I look forward to the coming quarters and the company's positive and exciting development.
Torsten Helsing, CEO
About aXichem AB (publ)
aXichem's business concept is to develop, patent and market nature-analog industrial compounds. aXichem's product is a natural analog substance called phenylcapsaicin, which is a synthetically produced and patented capsaicin. As phenylcapsaicin is synthetically produced and has several advantages compared to natural capsaicin, such as controllable quality and production process.
The product has benefits that makes it commercially interesting in several application areas, for example as ingredient in animal feed, as ingredient in dietary supplements, as a bio-enhancer and as a bio-repellent in marine applications. aXichem is currently marketing the product under different brands in two prioritized areas: aXivite® for dietary supplements and aXiphen® for poultry feed. aXiphen® has shown properties as a growth promoter and anti-salmonella ingredient in studies made in commercial poultry production settings. In the market segment for sports nutrition products aXivite® is today included in several products for weight control, improved metabolism, and gut health.
aXichem aims to become a global supplier of industrial natural analogue chemicals to players in the chemical industry who manufacture products containing aXichem's raw materials. The company’s share is listed on NASDAQ First North since 2013.
Future prospects
aXichem's commercialization of phenylcapsaicin under the brands aXiphen® in the animal feed market and aXivite® in the food supplement market continues. The production capacity and logistics through subcontractors are in place, as is a production process optimized for commercial volumes. The pace of development in the establishment of the products is determined by market approvals in the strategically important countries or regions, starting with the EU, USA, Brazil and India. aXichem cooperates with specialized distributors, who either have their own production or cooperate with innovative leading producers.
Within the Dietary Supplements business area, the company has market approval for aXivite® in the EU and in North America, and market establishment of the company's product is ongoing.
Within the Animal Feed Business Area, aXiphen® has been approved in Brazil since December 2023 for sale as an ingredient in chicken and pig feed, and market establishment is in an early phase. An application for market approval for aXiphen® in the EU is being processed by regulatory authorities and a corresponding application for the US market is being prepared. The company's strategic focus is to prioritize Brazil and the EU, as these markets have the best conditions for an initial establishment.
After the period’s end, on August 27, 2024, aXichem announced that the board of directors, in its annual revision of the company's communication policy, has decided that from now on aXichem shall not publish any financial forecasts or forecast-like targets. The board's decision means that the company's total sales are presented in the quarterly reports and previously communicated sales targets will not be commented on.
Financing
On February 1, 2024, it was announced that the company's board, subject to the approval of the general meeting, decided to carry out an issue of shares and warrants ("Units") with preferential rights for existing shareholders (“Rights Issue”) of approximately SEK 40.3 million before issue costs. A Unit consisted of five A shares and five warrants of series TO1A. The subscription price per Unit amounted to SEK 7.50, corresponding to SEK 1.50 per A share. The warrants were issued free of charge. The rights issue was covered to 70 percent by subscription and guarantee commitments. The rights issue requires the approval of an extraordinary general meeting, which is scheduled to be held on March 6, 2024.
The board also decided to take out a new convertible loan from Formue Nord Fokus A/S of approximately SEK 5.3 million, which partially replaces the existing convertible loan.
The outcome of the rights issue, which was to 70 percent subscribed, was announced on March 26, 2014. Through the rights issue, aXichem was injected with approximately SEK 28.2 million before issue costs. The number of shares in aXichem increased by 18,809,290, to 40,305,615, and the share capital increased by SEK 3,761,858, to SEK 8,061,123. Upon full exercise of the warrants of series TO1A issued in connection with the Rights Issue, the number of shares will increase by a further 18,809,290, from 40,305,615 to 59,114,905, and the share capital will increase by a further SEK 3,761,858, from SEK 8,061,123 to SEK 11,822,981.
Incentive program – Employee stock options
At the annual general meeting on May 31, 2022, it was decided on an option program of series 2022/2026 for employees and key persons in the company comprising 400,000 options with the right to subscribe for 400,000 A shares. As of the balance sheet date, 270,000 options were allocated to staff and key persons, of which 101,250 were vested.
The employee options are earned over 4 years, with a quarter each year, provided that the participant is employed by or otherwise engaged in the company on the grant date. The staff options are awarded free of charge. Earned employee options can be exercised during a three-year period, however no earlier than three years after the respective grant date. Each employee option gives the right to subscribe for 1 A share at a subscription price that corresponds to 140 percent of the volume-weighted average price for the company's A share during the five trading days immediately preceding the day on which the employee options are awarded. The subscription price and the number of A shares to which each employee option entitles may be subject to recalculation as a result of a bonus issue, split, issues or similar measures. In order to enable the delivery of shares according to the incentive program, it was also decided to issue a maximum of 400,000 warrants.
Certified Adviser
Västra Hamnen Corporate Finance is aXichem’s Certified Adviser.
Ownership structure
For information about the company's owners, see the company's website www.axichem.com. under Investor Relations/investor structrue. For information on insider trading, see the Financial Supervisory Authority's register.
Number of shares
The number of shares and votes in the company as of 30 June 2024 was 40,305,615 and the company’s share capital amounted to
8,061,123 SEK (including not registered share capital). The company has only one class of shares, shares of series A, with 1 vote per share. The quota value is 0.20 SEK per share.
Upon full exercise of the warrants of series TO1A issued in connection with the Rights Issue, the number of shares will increase by a further 18,809,290.
Accounting principles
The company applies the Annual Accounts Act and BFNAR 2012:1 Annual accounts and consolidated accounts (K3) when preparing its financial reports. The accounting principles are unchanged compared to the most recently submitted annual report.
Dilution per share
aXichem has outstanding employee options and convertible debt. There is no dilutive effect on earnings per share as long as the group's earnings are negative.
Convertible debt
Convertible liabilities are reported divided into a debt part and an equity part. The fair value of the debt part at the time of issue is calculated by discounting the future payment flows with the current market interest rate for a similar debt, without the right to conversion. The value of the part reported in equity is calculated as the difference between the issue proceeds and the fair value of the financial debt. The part reported in equity consists of the value of the built-in option to convert the debt instrument into shares. The interest expense is reported in the income statement and is calculated according to the effective interest method.
Loan expenses
Loan expenses are charged to the result for the year to which they relate.
Definition of key figures
Solidity
Adjusted equity as a percentage of total assets.
Earnings per share
Profit for the year divided by the average number of shares.
Equity per share
Equity divided by the number of shares in the market at the end of the year.
Significant risks and uncertainties
Regulatory issues are considered to be the single largest risk for the company. The changed security situation in Europe and the tragic development in Ukraine do not currently affect aXichem’s operations, but we are following the development closely in order to be able to manage any possible effects.
Review
This interim report has not been reviewed by the company’s auditor.
Financial calendar
Q1 Report, Jan – March 2024-05-23
Annual Report 2024-05-29
Annual General Meeting 2024-06-19
Q2 Report, Jan – June, 2024 2024-08-27
Q3 Report, Jan – Sept, 2024 2024-11-21
Year End Report 2024 2025-02-27
The Board of Directors and the CEO assures that the interim report provides a fair overview of the company’s operations, position, and results, and describes the significant risks and uncertainties that the company faces.
Lund, 27 August 2024
The Board of Directors of aXichem AB (publ)
The information was submitted, by the contact person, for publication on August 27, 2024, at 08:30 AM CET. The report is published on the company's website under Investor Relations. Direct link to the report: https://www.axichem.com/investors-relations/#financial-reports
This is an unofficial translation of the original Swedish version. In case of discrepancies, the Swedish version shall prevail.
Company Contact
Torsten Helsing, CEO
T. +46 70 686 33 55, E. torsten.helsing@axichem.se