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Dec 3, 2012 (4 years and 20 days ago)

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INTERIM REPORT JANUARY
-
MARCH 2001





Biacore’s business continues to grow rapidly. Sales in the first quarter rose
by 46% to SEK 132.5 million.



Earnings per share rose 43% to SEK 1.9
1

after a further SEK 5.6 million of
investment to speed up the co
mmercialization of the Company’s unique
SPR array chip technology. Biacore plans to invest SEK 30 million on this
highly innovative technology in 2001
.



The collaboration with Millennium Pharmaceuticals on SPR array chip
technology continues to make good pr
ogress. Biacore anticipates the first
launch of new systems based on this technology to take place in 2004.



Biacore

S51, Biacore’s first new high performance system, which is
designed for lead optimization and certain specific ADME applications, will
be i
ntroduced in 3
rd

Quarter 2001.



Biacore was awarded damages of approximately USD 1.7 million in the U.S.
patent dispute. The decision of the Court can be appealed.



Sales for the full
-
year 2001 are expected to increase by more than 20%,
with the usual signif
icant variations between quarters.



January
-
March


2001

2000

Change


Sales, SEK million

132.5

91.0

+46%

Operating income, SEK million

25.8

17.1

+51%

Operating margin, %

19

19

Income after financial items,

SEK million

28.0

19.0

+47%

Earnings per share, SEK

1.91

1.34

+43%


Biacore is the global market leader in Surface Plasmon Resonance (SPR) based biosensor
technology with its own operations in the U.S., across Europe, Japan, Australia and New
Zealand. A strong patent portfolio protects Biacore’s technology
. Target groups consist primarily
of medical and life science research laboratories and pharma
ceutical and biotechnology
companies all over the world. Biacore focuses on drug discovery as its prime area for future
growth. Based in Uppsala, Sweden, the Com
pany is listed on the Stockholm Stock Exchange and
Nasdaq in the U.S.


2

OPERATIONAL REVIEW JANUARY
-

MARCH 2001

Amounts stated in this report pertain to the Biacore Group, unless indicated otherwise.
Figures in parentheses refer to January
-
March 2000.


The g
rowing recognition of the value of Biacore’s unique SPR technology led to another
quarter of strong sales growth for the Company. Sales during the first quarter 2001 were
up 46% to SEK 132.5 million. Excluding the impact of changes in exchange rates, sales

increased by
34
%.


Sales were divided geographically as follows:




January
-
March



SEK million


2001

2000

Change


Americas

74.1

45.4

+63%

Europe

22.8

29.2

-
22%

Asia
-
Pacific

35.6

16.4

+117%


The continued revenue gro
wth seen in the first quarter reflects increasing awareness
amongst Biacore’s key customer groups of the benefits that its SPR technology systems
can bring. This is due to the broad range of molecular binding studies that can be carried
out using the
C
omp
any’s most sophisticated system, Biacore

3000.


Biacore

3000

has played an important role in the Company’s aggressive strategic move
to become an important technology supplier to the drug discovery industry. The success
that Biacore has achieved to
-
date wi
th this customer group provides strong support for
the Company’s current strategy of investing heavily to accelerate the introduction of new
systems for the pharmaceutical and biotechnology industries. The Biacore

3000

is used
for applications in the criti
cal areas of drug discovery upstream of high
-
throughput
screening (HTS). These include target identification and validation, and assay
development for HTS. The system has also been particularly well accepted by academic
customers in Biacore’s core basic li
fe science research market where it is used to solve
a wide range of research problems encountered by biological scientists around the
world.


Sales during the first quarter increased at a very fast rate in the Americas and Asia
-
Pacific but declined in Eur
ope. Substantial variations between the quarters are normal in
Biacore’s business.


The gross margin for the first three months of 2001 was 82.2%
, in line with prior periods
.



In the first quarter total costs for marketing, administration and resea
rch and
development amounted to SEK 87.2 million (57.5), a 52% increase. Marketing costs
rose by 36% as the Company continued to develop its sales capability in key markets in
order to support the sales growth
.


The first quarter a
lso saw a 55% increase in R&D spending to SEK 25.2 million.
This
increase was driven by further investment in the structure and resources needed to
commercialize the Company’s unique SPR array chip technology. This technology will
provide major throughput

advantages in comparison to current products and as a result

3

will transform Biacore’s product offering to the drug discovery industry. SEK 5.6 million
was spent on this technology in the first quarter of 2001
.


First quarter administration expenses rose
to SEK 23.0 million (12.5). A major part of this
increase was non
-
recurring professional fees associated with exploring a number of
strategic options
. Administration expenditure was also higher as a result of further
investments in suppor
t of the Company’s new business unit structure, which was
implemented in August 2000.


Operating income for

the first quarter amounted to SEK 25.8 million (17.1), an increase
of 51%. The operating margin was 19% (19). Excluding the investments that were made
in the SPR array chip technology, the operating margin would have increased to 24%.
Currency differences

amounted to SEK 5.
3

million (
-
0.6) in ‘Other income and expenses’
and SEK 0.0 million (0.2) in ‘Financial items.’


The tax charge was 32% (31) of income after financial items.


Net income was SEK 19.0 million (13.1), giving a 43% increase in diluted earn
ings per
share to SEK 1.91 (1.34).


INVESTING ACTIVITIES


Capital expenditures totalled SEK 3.5 million (2.7) during the first quarter.


PERSONNEL


At the end of March 2001, Biacore had
249

(204) permanent employees.


BIACORE AWARDED DAMAGES IN PATENT D
ISPUTE


On April 23, 2001, the U.S. District Court for the District of Delaware granted a
permanent injunction preventing Thermo Bioanalysis Corp (Thermo) from infringing
Biacore’s patent (U.S. patent 5,436,161). Furthermore, the Court awarded damages in
f
avor of Biacore AB and Biacore Inc. to be calculated based upon a royalty rate of 40%
of the sales price of each IAsys biosensor sold by Thermo since July 25, 1995, plus
interest.


Although the final amount due to Biacore has not been determined at this ti
me, it is
estimated to be in the region of USD 1.7 million. The decision of the Court can be
appealed.


PROGRESS ACROSS ALL BUSINESS UNITS


In August 2000
,

Biacore put in place a new corporate structure that is designed to
enable the Company to focus its e
fforts on three key target markets:




the pharmaceutical/biotechnology industry,



the life science research market, and



the food industry


4


These business units are in turn supported by a
new Technology Supply division, which
will bring together the Company’s

extensive technical resources in research and
development, manufacturing, and quality assurance.


Pharmaceutical/Biotechnology Business U
nit


In 1999, Biacore decided to increase focus on the drug discovery market based on the
C
ompany’s confidence that its systems would be able to overcome some key
bottlenecks faced by

the

pharmaceutical and biotechnology
industries
in development of
new m
edicines.


The success that Biacore has achieved to
-
date has served to reinforce this strategy and
as a result the
C
ompany is now investing heavily to bring its new SPR based systems to
the market as rapidly as possible.


New High
-
Performance Systems


T
he
C
ompany’s new high
-
performance systems are designed to help solve some of the
major analytical problems facing the drug discovery industry, particularly downstream of
HTS. These include aspects of hit characterization, lead optimization and ADME, each
of which is a serious bottleneck in drug discovery today. The new high
-
performance
systems will complement the Biacore

3000 system, which targets applications upstream
of HTS.


The new systems, which have been developed in collaboration with major
pharmace
utical partners such as SmithKline Beecham, Pharmacia Corporation and
Millennium Pharmaceuticals, will offer high sensitivity, high quality data and high
throughput capabilities for specific applications downstream of HTS. The first of these
new systems, n
amed Biacore

S51, which will be used for lead optimization and certain
specific ADME applications, is on track to be launched in the third quarter of 2001.


The second half of 2001 will also see the launch of the Company’s first QC system,
which is design
ed for quality control applications by the pharmaceutical industry. This
new system has been developed in conjunction with Boehringer Ingelheim.


SPR Array Chip Technology


A Transforming Technology


Looking further ahead, the key to Biacore achieving it
s aggressive growth ambitions is
its unique SPR array chip technology. This technology is a major breakthrough as it can
potentially increase 1,000 fold the number of binding assays that can be performed per
day. It is this dramatic increase in throughput
that should allow Biacore to become a
major player in the proteomics revolution that is expected to become the most important
area of life science research over the next decade.


The last three months has seen further progress in Biacore’s collaboration wi
th
Millennium Pharmaceuticals to commercialize its SPR array chip technology for
proteomics and drug discovery applications. This collaboration, which was signed in
June 2000, is the first of a number of collaborations that Biacore expects to sign, in orde
r
to achieve the full potential of this technology.


5


Biacore is confident that the successful development of its new SPR array chip
technology will provide the pharmaceutical industry with a unique tool to both explore
protein function and to evaluate the
vast number of proteins identified from genomic
research as potential therapeutic targets.


Higher Investment to Continue


The substantial commercial potential for Biacore’s unique SPR array chip technology
has led the Company to increase significantly its

overall investment in this technology in
order to bring it to the market as rapidly as possible.


In the year 2001, Biacore expects to invest in the region of SEK 30 million on
commercializing its SPR array chip technology. This investment is in addition

to the
Company’s on
-
going level of R&D spending.


Life Science Business Unit


The benefits of Biacore’s unique SPR array chip technology will also be of major
importance for the customers of the
C
ompany’s core Life Science Business Unit,
particularly t
hose focusing on proteomics research.


Biacore made further efforts to extend its marketing activities in the proteomics area in
the first quarter when it launched a new campaign at the Experimental Biology
conference in Florida at the end of March. This
campaign focused on the benefits of
using SPR technology to study protein
-
protein interaction
and for ligand fishing, two key
areas of proteomics research.


The first quarter also saw the Life Science Business Unit initiate a major marketing
campai
gn to highlight the benefits of SPR technology as
a
key tool for cancer research.
The launch of this campaign, targeted at researchers in the area of cancer, is designed
to complement Biacore’s proteomics marketing efforts.


The cancer campaign, which was
launched at the American Association of Cancer
Research Meeting in New Orleans at the end of March, is focused on
explaining the
broad range of applications that SPR technology has in the area of cancer. These
include the identification of DNA binding
events and DNA damage, elucidating the action
of tumor suppressors/tumor promoters, determining expression levels of selected
proteins in normal cells/cancer cells, unravelling the intricate molecular interactions
involved in cell signaling pathways, study
ing pro
-
apoptotic binding events, optimizing
therapeutic antibodies targeted at tumors and identifying tumor markers in clinical
samples.


Food Business Unit


The first quarter had seen a major positive development for the Company’s Food Business
Unit wit
h the successful completion of
an important EC food safety improvement project,
FoodSENSE. It is the Company’s belief that this project successfully demonstrated the
applicability of Biacore’s SPR based biosensor technology as a tool for the analysis of

6

ve
terinary drug residues in foods such as milk and meat. A key finding of the project was
the substantially higher daily throughput of tests, over 1,500 analyses per day, that could
be performed using SPR technology as well as its ability to detect a much wi
der range of
residues compared with existing test methods.


The FoodSENSE project, which was supported by the EC Programme for Agriculture and
Fisheries (EC FAIR), started in mid 1998 and was designed to determine the applicability
of using optical biosen
sors for screening analysis of veterinary drug residues in food. This

screening is important to ensure that the public is protected against potentially harmful
veterinary residues, such as hormones and antibiotics. Although there are numerous other
analyt
ical tests available
,

few techniques have satisfactory throughput, sensitivity or
reliability to be used on a routine basis.


FACING THE FUTURE WITH CONFIDENCE


Biacore’s strong technology platform and its new streamlined business unit structure will
prov
ide a strong base for the Company’s future growth.
The Company’s confidence is
based on
:




the growth that can be achieved by the Pharmaceutical/
Biotechnology Business Unit
through both its present products and the new h
igh
-
performance systems



the growth prospects for the Company’s Life Science Business Unit as a result of the
massive global interest in proteomics



the opportunity for SPR technology to gain acceptance as a
n

analytical/screening
tool for the food industry



the potential of the
C
ompany’s new SPR array chip technology which will allow
Biacore to become a significant player in the proteomics revolution



the Company’s strong financial position, its broad patent portfolio and the
determination and experience of t
he recently expanded Biacore management team.


ACCOUNTING PRINCIPLES


This interim report has been prepared in accordance with the Swedish Financial
Accounting Standards Council’s recommendation No. 20 (RR 20), Interim Financial
Reporting. As of 2001, a nu
mber of new recommendations from the Swedish Financial
Accounting Standards Council have become effective. The adoption of these
recommendations has not affected the reported results of operations or financial position
of the Company.


QUARTERLY SALES VARI
ATIONS


Biacore’s total sales during the period 1998
-
2000 were divided between the quarters as
follows:


Quarter 1

22%

Quarter 2

22%

Quarter 3

18%

Quarter 4

38%




7

OUTLOOK FOR
THE FULL
-
YEAR
2001


Sales for the full
-
year 2001 are expected to increase by more

than 20%, with the usual
significant variations between quarters.



Uppsala, Sweden, May 9, 2001

BIACORE INTERNATIONAL AB (publ)

Ulf Jönsson

President



This interim report has not been subject to examination by the Company
’s auditors.


FINANCIAL INFORM
ATION


During 2001, Biacore plans to release its interim reports as follows:


January


June Monday, July 23

January


September Friday, October 19




This press release contains certain forward
-
looking statements within

the meaning of the
United States Private Securities Litigation Reform Act of 1995 which, by their nature,
involve risk and uncertainty because they relate to events and depend on circumstances
that will occur in the future. There are a number of factors t
hat could cause actual results
and developments to differ materially from those expressed or implied by these forward
-
looking statements.


For further information, please contact:


Ulf Jönsson, President, Phone +46 18 67 57 52

Lars
-
Olov Forslund, CFO, Phon
e +46 18 67 57 08 or +46 708 76 56 73

Jan Isoz, Investor Relations, Phone +46 708 10 31 17


More information on Biacore is available at the Company’s website: www.biacore.com

(SSE:BCOR Nasdaq:BCOR Reuters: BCOR.N)











8


Biacore Consolidated Income Statements
SEK million
January-March
Full year
2001
2000
Change
2000
Sales
132.5
91.0
46%
438.8
Cost of goods sold
-23.6
-14.6
62%
-78.1
Marketing
-39.0
-28.7
36%
-147.4
Administration
-23.0
-12.5
84%
-60.8
Research and development
-25.2
-16.3
55%
-72.8
Other income and expenses
5.3
-0.6
3.3
Amortization of goodwill
-1.2
-1.2
-5.0
Operating income
25.8
17.1
51%
78.0
Financial items, net
2.2
1.9
8.7
Income after financial items
28.0
19.0
47%
86.7
Income taxes
-9.0
-5.9
-27.6
Net income
19.0
13.1
59.1
Basic earnings per share, SEK
1.95
1.34
6.06
Diluted earnings per share, SEK
1.91
1.34
6.02
No. of shares, average, diluted, thousands
9,943
9,750
9,817
Net income
19.0
13.1
59.1
Currency translation differences
5.3
-0.5
5.9
Change in shareholders' equity
24.3
12.6
65.0
Quarterly Income Statements
SEK million
Jan.-March
Oct.-Dec.
July-Sept.
April-June
Jan.-March
2001
2000
2000
2000
2000
Sales
132.5
165.3
88.1
94.4
91.0
Cost of goods sold
-23.6
-27.1
-16.7
-19.7
-14.6
Marketing
-39.0
-52.9
-32.4
-33.4
-28.7
Administration
-23.0
-15.4
-15.3
-17.6
-12.5
Research and development
-25.2
-28.6
-13.1
-14.8
-16.3
Other income and expenses
5.3
-2.4
5.5
0.8
-0.6
Amortization of goodwill
-1.2
-1.3
-1.3
-1.2
-1.2
Operating income
25.8
37.6
14.8
8.5
17.1
Financial items, net
2.2
3.0
2.6
1.2
1.9
Income after financial items
28.0
40.6
17.4
9.7
19.0
Income taxes
-9.0
-12.7
-5.9
-3.1
-5.9
Net income
19.0
27.9
11.5
6.6
13.1
Basic earnings per share, SEK
1.95
2.86
1.18
0.68
1.34
Diluted earnings per share, SEK
1.91
2.80
1.17
0.68
1.34
No. of shares, average, diluted, thousands
9,943
9,957
9,820
9,750
9,750
Sales by region
SEK million
Jan.-March
Oct.-Dec.
July-Sept.
April-June
Jan.-March
2001
2000
2000
2000
2000
Americas
74.1
62.1
40.6
43.8
45.4
Europe
22.8
46.5
32.5
30.9
29.2
Asia-Pacific
35.6
56.7
15.0
19.7
16.4
132.5
165.3
88.1
94.4
91.0

9


Biacore Consolidated Balance Sheets
SEK million
Dec. 31
2001
2000
2000
Intangible assets
31.4
36.5
32.8
Property, plant & equipment
84.0
83.2
83.4
Long-term investments
68.0
17.2
68.0
Other long-term assets
24.1
14.6
22.8
Other current assets
200.9
178.6
169.0
Liquid funds
271.8
249.2
267.8
Total assets
680.2
579.3
643.8
Shareholders' equity
518.4
441.7
494.1
Provisions
55.1
44.2
54.4
Liabilities
106.7
93.4
95.3
Total shareholders' equity and liabilities
680.2
579.3
643.8
Financial structure
Operating capital
210.0
205.3
188.3
Long-term investments
68.0
17.2
68.0
Net interest-bearing assets
247.1
220.6
243.6
Net payable and deferred income tax liability
-6.7
-1.4
-5.8
Shareholders' equity
518.4
441.7
494.1
Biacore Consolidated Statements of Cash Flows
SEK million
Full year
2001
2000
2000
Net income
19.0
13.1
59.1
Less: Depreciation and amortization
4.6
4.4
19.4
Change in working capital
-21.0
-6.3
13.9
Other
4.9
-0.3
5.9
Cash flows from operating activities
7.5
10.9
98.3
Payments for purchase of businesses
-
-0.7
-0.8
Purchase of property, plant and equipment
-3.5
-2.7
-14.2
Proceeds from sale of property, plant and equipment
-
-
1.5
Purchase of long-term investments
-
-
-50.8
Cash flows from investing activities
-3.5
-3.4
-64.3
Change in current financial liabilities
-
-
-7.9
Cash flows from financing activities
0.0
0.0
-7.9
Net change in liquid funds
4.0
7.5
26.1
Key figures
Operating margin
19.5%
18.8%
17.8%
Return on operating capital
51.8%
33.2%
39.4%
Return on equity
15.0%
12.0%
12.8%
Equity ratio
76%
76%
77%
Shareholders' equity per share, diluted, SEK
52.14
45.30
49.66
No. of shares, thousands
9,750
9,750
9,750
No. of shares, end of period, diluted, thousands
9,942
9,750
9,950
No. of shares, average, diluted, thousands
9,943
9,750
9,817
March 31
January-March