Genovis AB: Half-Yearly Report January – June 2020

April – June in brief

• Net sales rose by 35 percent to SEK 15,490 (11,509) thousand. Adjusted for acquired sales, growth rose by 11% to SEK 12,714 thousand.
• Gross profit/loss improved by SEK 978 thousand and totaled SEK 13,146 (12,168) thousand.
• Operating result before depreciation and amortization (EBITDA) totaled SEK -38 (2,390) thousand and was negatively impacted by non-recurring items for acquisitions and restructuring costs of SEK 1 million.
• Operating result totaled SEK -1,291 (1,628) thousand.
• Comprehensive income for the period totaled SEK -3,124 (1,380) thousand.
• Comprehensive income per share, basic and diluted, totaled SEK -0.05 (0.02).
• Cash flow from operating activities was SEK -123 (profit: 145) thousand.
• Cash and cash equivalents at the end of the period totaled SEK 46,554 (8,921) thousand.
• Genovis has acquired all shares of QED Bioscience Inc. Total cost of the acquisition, including transaction costs, is SEK 20 million QED merged with Genovis Inc.
• The Annual General Meeting, held on May 5, 2020, elected Torben Jørgensen to serve as chairman of the Board of Directors and reelected Board members Kenth Petersson, Mikael Lönn and Lotta Ljungqvist.

January – June in brief

• Net sales rose by 15 percent to SEK 26,965 (23,440) thousand. Adjusted for bioprocess sales in 2019 and acquired sales, sales growth totaled 15%.
• Gross profit totaled SEK 24,123 (23,309) thousand.
• Operating result before depreciation and amortization (EBITDA) totaled SEK -885 (profit 5,086) thousand and was negatively impacted by non-recurring items for acquisitions and restructuring of SEK 2.3 million.
• Operating result totaled SEK -3,180 (profit: 3,571) thousand.
• Comprehensive income for the six-month period totaled SEK -5, 038 (2,971) thousand
• Comprehensive income per share, basic and diluted, totaled SEK -0.08 (0.05).

Comments from Fredrik Olsson, Chief Executive Officer

The coronavirus pandemic has affected society at large during the quarter, and our business operations were no exception. The pandemic has been accompanied by several unforeseen challenges that have caused us to reset and focus our resources on new circumstances. I am proud that despite these challenges, our sales continued to grow by 35% and, excluding acquired sales, we were able to achieve sales growth of 11%, given the market situation in the second quarter.

The beginning of the quarter was clearly affected by the restrictions implemented in several key markets in Europe and North America, resulting in a pronounced decline in customer activity. As more markets eased the restrictions, we saw a gradual increase in activity in May and June. In the Asian markets we’ve seen a clear recovery after a weak first quarter caused by the pandemic.

In addition to the loss of sales, the operating result was also affected by non-recurring acquisition-related costs and increased personnel costs as we added 14 people to the organization, compared with the second quarter last year. Adjusted for the acquisition-related costs, the operating loss for the quarter is SEK 0.3 million.

To date, we have launched two products this year. FabRICATOR™ MagIC, which was launched in June, is intended for simplified and parallel analysis of antibody molecules in automated systems in several parts of our customers’ value chains. The product has initially been adapted for an instrument from Thermo Fischer Scientific, associated with our collaboration agreement relating to analysis of biologicals. At the beginning of the current quarter, we launched our second product for the year, GalactEXO™, a new enzyme for glycan analysis of proteins, and we still intend to launch more products during the second half of the year.

During the second quarter, we also closed the deal and acquired QED Bioscience. Despite the challenging market situation, QED’s activities in San Diego have achieved sales on a par with the same period the previous year and the company has been fully operational since we formally took over the business on April 29. Given the situation associated with the pandemic, we had to begin the integration process remotely, for which reason we gave top priority to fully integrating QED into our various business and reporting systems, which has now been concluded. We can now devote our full attention to implementing combined marketing and business strategies as the market situation gradually improves. 

We have intentionally chosen to lean forward into a challenging market situation and have focused our efforts and resources on our long-term strategies within automated analysis, glycomics and integration of the newly completed acquisition of QED Bioscience.

Despite these challenges and the uncertain market situation with clear limitations, including canceled marketing activities and customer meetings, which are key cornerstones in our business, my colleagues at Genovis have done an incredible job this quarter. We have also had the opportunity to welcome new employees from QED and we now have about 40 employees worldwide, working on developing and growing the business at Genovis together with our customers.

In the short term, there is still uncertainty about how quickly economies and activities in various locations can recover and how any new waves of the pandemic could affect customer activity. But in the long run, I remain confident in our ability to continue on this growth journey with Genovis through customer-driven innovation in close collaboration with our growing customer base.