UPPSALA, Sweden, July 22, 2002 (PRIMEZONE) -- Biacore's sales in the second quarter of 2002 increased by 26% to SEK 154.6 million (122.4). Sales were strong in both the Americas and Asia-Pacific. Half-year sales increased by 16% to SEK 295.9 million (254.9).
Biacore's earnings per share rose by 88% to SEK 0.75 (0.40) in the second quarter of 2002. This improvement was the result of the growth in sales, careful control of costs and the payment from Thermo BioAnalysis Corp for damages awarded for its infringement of Biacore's surface chemistry patent in the U.S. However, the Company has become increasingly concerned about the deteriorating conditions within the general biotech early-stage community and has decided to make a SEK 14.2 million provision against its entire equity portfolio in this sector. Earnings per share in the first half-year 2002 increased by 27% to SEK 2.92 (2.30).
The second quarter saw the first sales of the Company's new Biacore(R)C system. This system, which is used for manufacturing quality control applications, extends further Biacore's product offering to the pharmaceutical/biotech industry.
The development of Procel, the new cell-based assay system which is based on technology acquired from Axiom Biotechnologies Inc., is making good progress and is on schedule to be launched before the end of 2002. The new Procel system is designed to complement Biacore(R)S51 and will provide Biacore with a highly competitive offering in the field of lead optimization.
Based on market developments in the second quarter, where there are clear signs of a slowdown in purchasing by the pharmaceutical industry, and the recent weakening of the U.S. dollar, Biacore now expects its sales to increase by approximately 15% in 2002. The Company had previously forecast that its sales would rise by approximately 20% in 2002. Apart from this revision of sales expectations, the forecast published in the interim report January-March 2002 is unchanged: After major investments during 2001, combined marketing and administration costs are expected to increase by no more than 10% in 2002. In addition to the Company's on-going level of R&D spending, which is targeted at 15% of sales, Biacore plans to invest in the region of SEK 35 million in 2002 on commercializing its SPR array chip technology.
January - June April - June
2002 2001 Change 2002 2001 Change
Sales, SEK million 295.9 254.9 16% 154.6 122.4 26%
Operating income,
SEK million 61.8 29.2 112% 32.2 3.4 847%
Operating margin, % 21 11 21 3
Income after
financial items,
SEK million 50.7 34.0 49% 19.5 6.0 225%
Earnings per share,
SEK 2.92 2.30 27% 0.75 0.40 88%
OPERATIONAL REVIEW JANUARY-JUNE 2002
Amounts stated in this report pertain to the Biacore Group, unless indicated otherwise. Figures in parentheses refer to the corresponding period in 2001.
Biacore's sales increased by 26% in the second quarter of 2002 to SEK 154.6 million (122.4). This represents a sharp increase on the growth seen in the first quarter when sales rose by 7%. Sales to the Company's core academic customers were strong, offsetting a slowdown in purchases by the pharmaceutical and biotechnology industries. Sales in the first half of 2002 increased by 16% to SEK 295.9 million (254.9). Excluding currency effects, sales in the first half-year 2002 increased by 13%.
Biacore3000 continues to be the Company's best selling product. This flexible system is used for applications in the critical areas of drug discovery upstream of high-throughput screening (HTS), including target identification and validation, and assay development for HTS. The system is also the Company's key product offering to academic customers in Biacore's core basic life science research market. In key academic centers and institutes around the world Biacore3000 is used to solve a wide range of biological research problems especially in the field of proteomics.
The second quarter of 2002 saw further sales of the Company's new BiacoreS51. This new system has been designed for lead optimization and certain specific ADME applications, two of the key problem areas faced by the drug discovery industry. The second quarter also saw the first sales of Biacore(R)C, which is used for manufacturing quality control applications.
Sales were divided geographically as follows:
January-June April-June
SEK million 2002 2001 Change 2002 2001 Change
Americas 147.1 128.8 14% 80.8 54.7 48%
Europe 67.0 62.6 7% 36.5 39.8 -8%
Asia-Pacific 81.8 63.5 29% 37.3 27.9 34%
Sales growth in the second quarter was strongest in the Americas where sales rose by 48%. This represents a sharp pick-up from the first quarter when sales declined by 11%. Sales also grew strongly in Asia- Pacific with revenues up 34%. Sales in Europe however failed to maintain the positive momentum seen in the first quarter and steps are now being examined to improve Biacore's sales capabilities in this key market.
The 83% gross margin achieved in the first half of 2002 was consistent with prior periods.
In line with its forecasts, the second quarter saw the Company costs increase more slowly than sales. Total costs for marketing, administration and research and development increased by 12% to SEK 107.4 million (96.0) in the second quarter. Marketing and sales costs increased by 16% to SEK 55.6 million (47.8), while administration costs rose by 5% to SEK 19.5 million (18.5).
R&D spending amounted to SEK 32.3 million (29.7) in the second quarter, an increase of 9%. The decrease of R&D costs by 1% during the first half- year 2002 resulted from the decline in outsourced costs associated with the development of the BiacoreS51 and BiacoreC, which were launched in the second half of 2001. During the second quarter SEK 8.8 million (8.0) was spent to commercialize Biacore's unique SPR array chip technology. In 2002, Biacore expects to spend in the region of SEK 35 million on this project. SEK 29.9 million was invested in this project during 2001.
The Company's control of costs plus the impact of the Thermo patent payment, SEK 19.6 million, meant that Biacore's operating income for the second quarter amounted to SEK 32.2 million (3.4), an increase of 847%. Excluding the impact of the Thermo payment, operating income increased by 271% to SEK 12.6 million. The operating margin excluding the Thermo payment was 8% (3).
Currency differences amounted to SEK -8.4 million (2.0) in 'Other income and expenses' and SEK -0.1 million (0.3) in 'Financial items'.
Due to the deteriorating conditions within the general biotech early- stage community, Biacore has decided to make a SEK 14.2 million provision against its entire equity portfolio in this sector. Following this provision, Biacore's remaining exposure to this sector is SEK 12.6 million.
The tax charge for the second quarter was 63% (33) of income after financial items. This much higher tax rate is due to losses on equity investments only being deductible against gains on such investments. Biacore currently has no realized or unrealized gain on any such investment against which it could offset any loss. Excluding the impact of the provision, the tax rate was 36%, which was slightly higher than normal due to the geographical mix of the Company's profits.
Net income in the second quarter was SEK 7.4 million (4.0), giving an 88% increase in diluted earnings per share to SEK 0.75 (0.40). For the first half, diluted earnings per share increased by 27% to SEK 2.92 (2.30).
INVESTING ACTIVITIES
During the first half-year 2002, capital expenditures totaled SEK 9.0 million (15.4).
PERSONNEL
The 2002 Annual General Meeting of shareholders approved a five-year employee stock option program of maximum 80,000 Biacore shares with an exercise price of SEK 244.
At the end of June 2002, Biacore had 316 (277) permanent employees.
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