Increased focus on the transplantation sector

Increased focus on the transplantation sector

The Board of Directors of LinkMed today announced a strategic decision
to further focus the company's operations on the transplantation sector.
Consequently, LinkMed will work actively to find additional acquisitions
in the sector and continue its global efforts in Olerup SSPs and
AbSorber's product area. Going forward, LinkMed will prioritize
investment in this sector. At the same time, the company will intensify
work to realize the value of the portfolio of life science companies
built up since 1998. In the long-term, LinkMed's operations will
essentially be focused on the transplantation sector.

“This is a great opportunity for us to build a business and become a
global player in the transplantation sector. The transplantation market
is characterized by solid growth and robust growing demand for products
that increase the chance of carrying out successful transplantations. It
is also possible to cover a major part of the market with a relatively
small sales organization. By intensifying our exit work, we will enhance
visibility of the underlying value in our venture portfolio and use the
freed-up capital in the transplantation sector. I see good opportunities
for powerful expansion in this sector, which will also contribute to
strengthening our cash flow,” said LinkMed's CEO Ingemar Lagerlöf.

Transplantation sector

The transplantation market is an attractive niche market in which
transplantations are performed by a limited number of medical centers.
Today around 550 centers perform transplants in the U.S. and Western
Europe. This makes it possible for a smaller company with its own sales
organization to become a global operator in key markets. The
transplantation market is characterized as being relatively stable, with
increasing demand, and independent of business cycles. Products are sold
with high margins and the market is growing on a global basis.

The shortage of organs and problems with rejection reactions drives the
need for better matching between the donor and recipient. This requires
methods that provide information on whether or not tissue from different
individuals is a fit and identifying any antibodies that may cause
rejection reactions or attack the new host in conjunction with
transplantation. LinkMed's transplantation operations are active in this
sector.

LinkMed's two subsidiaries Olerup SSP AB and AbSorber AB form the
foundation for the company's transplantation operations. LinkMed
acquired Olerup SSP in July 2008. At August 31, LinkMed's ownership
stake in the company was 91 percent. LinkMed has gone from solely
investing in development companies to owning a commercially active
company. The acquisition strengthened LinkMed's position in the
transplantation area, a sector where LinkMed was already an investor
with the acquisition and subsequent build up of AbSorber as one of its
portfolio companies.

In December 2009, LinkMed acquired an additional 51 percent of AbSorber,
classifying AbSorber a new LinkMed subsidiary. Since then, LinkMed
acquired further shares in AbSorber and today the company's ownership
stake exceeds 98 percent. The remaining shares in both AbSorber and
Olerup SSP are owned by SSP Primers AB, a company controlled by Olle
Olerup.

Both companies offer tests that are required prior to a transplantation
to match the donor and recipient. The better the match the greater the
chances are for a successful transplantation and the lower the risk of
complications such as rejection reactions following transplantation.
Olerup SSP's products are primarily used prior to bone marrow
transplantations, while AbSorber's XM-ONE® product is primarily used
prior to solid organ transplantations, where kidney transplantations are
the most common. Consequently, the company's products complement each
other well. A long-term objective is to merge the operations of both
companies. A major step in this direction is that the two companies will
move into joint offices in early 2011.

Olerup SSP 

Olerup SSP, first in the development of SSP products for HLA typing, is
market leader in Europe, where Italy followed by Germany constitute the
single largest markets and account for around 40 percent of sales in
Europe. Some of the products, in particular low definition SSPs, are
used for organ transplantations, while high definition SSPs is used for
hematopoietic stem cell transplantation (bone marrow transplantation).
The bone marrow transplantation segment, which constitutes around 70
percent of Olerup SSP's turnover, grows between 10 and 13 percent in
volume on an annual basis.

 The markets that represent the largest growth potential for Olerup SSP
today are the U.S., representing around 40 percent of the total global
market, and new markets. In the second quarter this year, SSP achieved
considerable growth with sales that were 47 percent higher year on year.
New markets being prioritized by the company are Brazil, India, China
and countries in Eastern Europe. Olerup SSP's net sales for the first
six months of 2010 amounted to SEK 38.8 million with an operating margin
of 54 percent.

 AbSorber

 AbSorber's XM-ONE® cross match test, unique in its genre, has now won
patent protection in Europe, among other regions. XM-ONE® primarily
targets the organ transplantation market, in which over 75,000
transplantations are carried out on a yearly basis, with kidney
transplantations being the dominant operation at 55,000 per year. Growth
is lower than in the bone marrow transplantation segment due to a lack
of organs to transplant. In the Western world, the growth rate amounts
to 2 to 4 percent per year, while in Brazil for example, the growth rate
lies at around 7 to 8 percent per year. Wait times for a new kidney
often stretch over several years in most markets. The market potential
for XM-ONE® is estimated at around SEK 800 million annually based on the
number of transplantations performed today. The potential could increase
considerably, more than 50 percent, if the product were also used for
monitoring and follow up of patients after transplantation.

 AbSorber efforts are primarily focused on the U.S. market, where ten of
the largest laboratories now use the test for research and validation.
Furthermore, a few major centers also use XM-ONE® regularly in
conjunction with transplantations, including UCLA, which offers the test
to all hospitals in the U.S. The increased marketing efforts now
underway are expected to generate results as early as the fourth quarter
this year, repositioning the product from being very interesting from a
research perspective to being used to a greater extent clinically.

 Sales and Distribution

Considerable efforts have been made in 2009 and 2010 to build up a
powerful organization to manage sales, distribution and logistics for
Olerup SSP and AbSorber's products. In conjunction with this, measures
have been implemented to enhance control of and profitability for Olerup
SSP's products and to facilitate future distribution and sales of other
products in this segment. Olerup GmbH, based in Vienna, is responsible
for sales, distribution and logistics in Europe and the rest of the
world, with the exception of North and South America, markets that are
covered by Olerup Inc. in West Chester, Pennsylvania, US.

Olerup GmbH is jointly owned through Olerup International by LinkMed in
conjunction with SSP Primers AB and the Norwegian biotech company
NorDiag ASA, while Olerup Inc. is jointly owned through AbSorber by
LinkMed and SSP Primers AB. Efforts to build an in-house sales
organization fully focused on the transplantation sector has already
started to generate positive results, as mentioned above.

Future growth

Expansion will primarily be achieved through organic growth from
existing products and new products from AbSorber's own R&D pipeline.
Proprietary products include an AB0 column being developed by the
company, which is expected to be launched in Europe at the end of 2011.
Organic growth will be combined with an active acquisition and licensing
strategy. Work to identify suitable growth areas in the transplantation
sector has already commenced.

Venture portfolio

LinkMed has invested in and built up life science companies since it was
founded in 1998. Today, LinkMed's portfolio consists of ten companies.
Of these, six operate within diagnostics and medical technology and four
in drug development and biotechnology. LinkMed's ownership stake in its
associated companies ranges from 17 to 73 percent.

Several of the companies have reached such a stage of maturity that
LinkMed is actively working to realize the value of these companies,
work that will now be intensified. During this process LinkMed will
continue to be an active owner in these associated companies. LinkMed
may therefore be required to provide further capital injections during
the divestment period to secure the value of the companies. However, no
new investments will be made in companies outside the transplantation
sector.

Parent company

The strategic focus on the transplantation area will lead to a gradual
streamlining of the organization, generating cost savings for the
organization.

For more information please contact:
Ingemar Lagerlöf, CEO, cell +46 (0) 70-873 2733 or email
ingemar.lagerlof@linkmed.se
Okee Williams, Portfolio Manager cell +46 (0) 70- 600 5364 or email
okee.williams@linkmed.se (okee.williams@linkmed.se) 

Or visit www.linkmed.se