Bio-Works Technologies

July – December 2023

• Net sales decreased by 6% to 21.8 (23.2) MSEK. Sales in Europe continued to be strong in the second half as a result of orders made prior to the period. The economic slow-down in North America had a negative impact on sales in the period.
• Order intake* decreased by 70% to 10.2 (34.3) MSEK. The economic slow-down in our main markets has made some of our customers delay production and investments in new projects. The distribution of orders over Q3 and Q4 was 2.8 MSEK and 7.4 MSEK, respectively.
• Profit in the second half of the year was -26.0 (-21.5) MSEK. Sales growth slow-down and one-off costs related cost reduction programs had a negative impact on profit.
• Basic earnings per share in the second half of the year amounted to –0.73 (-0.61) SEK and diluted -0.73 (-0.61) SEK.
• Cash flow from operating activities was –32.6 (-13.1) MSEK.
• Bank balances amounted to 39.4 (65.9) MSEK at the end of the period.

January – December 2023

• Net sales increased by 6% to 43.9 (41.3) MSEK. Sales in Europe have been strong throughout the year and ended at 31.7 (19.9) MSEK. The economic slow-down in North America had a negative impact on sales ending the year at 11.3 (16.0) MSEK.
• Order intake* decreased by 54% to 26.1 (56.5) MSEK. Order intake was significantly below last year as some of our customers delayed production and investments in new projects.
• The order book at the end of the period amounted to 4.4 MSEK.
• Full year profit was -54.8 (-45.0) MSEK. Sales slow-down in the second half and one-off costs and costs related to staff reductions had a negative impact on profits in 2023.
• Basic earnings per share for the full year amounted to –1.56 (-1.28) SEK and diluted -1.56 (-1.28) SEK.
• Cash flow from operating activities was –59.0 (-39.9) MSEK.
• Bank balances amounted to 39.4 (65.9) MSEK at the end of the period.
• The Board of Directors proposes that no dividend be paid for the financial year 2023.

Significant events after year’s end

• In January Bio-Works received two new orders from a production customer in Netherlands. The orders were worth 4.8 MSEK in total. The customer is a global manufacturer of active pharmaceutical ingredients (APIs) with approximately 1,800 employees.

Message from the CEO

A challenging year for biotech and for Bio-Works
After a strong 2022, Bio-Works entered 2023 with a clear ambition to drive the adoption of differentiated and customized products while continuing to grow sales of our standard product offering. Our customers, however, were faced with a challenging year marked by a reluctant biotech financing environment, high inflation, high interest rates, and geopolitical challenges. As customers delayed production and investments in new projects, our efforts to maintain traction and to grow order intake were less effective than the previous year, especially for standard products. Without question, we were caught off guard by a rapidly changing market dynamic, and our sales growth and gross margins were impacted negatively.

Despite the tough market conditions, we were able to grow sales by 6% which is considerably less than our ambitions. Our growth in 2023 is not reflective of Bio-Works long-term growth potential.

Full focus on sales with a lean organization and smaller cost basis
Bio-Works must continuously adapt to changing market conditions, and during 2023 we have worked hard to reduce costs and increase efficiencies. We implemented two rounds of cost-saving initiatives during the year with a combined goal to reduce operating costs by 24 MSEK during 2024. These cost savings include reductions in purchased services deemed non-critical to the company’s success and reductions in staff in all departments. These programs give us a new annual cost basis of 62 MSEK starting in January 2024.

In conjunction with the second savings initiative announced in October, Bio-Works expediently completed a directed share issue which infused the company with approximately 30 MSEK in new funding. These funds were critical to secure the company’s future growth and demonstrate that our largest owners continue to believe in Bio-Works path to success, despite a challenging year.

Finally, we made significant changes in our sales tactics as a direct response to tougher market conditions. After the start of our new CFO, Arne Hauge, my primary focus as CEO has been on working directly with the sales team to drive even better penetration of Bio-Works products into customer processes. This focus will continue into 2024 in order to ensure that we regain lost momentum.

Long-term potential and Bio-Works strategy remain intact
While we believe it is important to react quickly to changing market conditions, we also believe that the market’s long-term potential and Bio-Works strategy to gain market share remain sound. Design-in of our WorkBeads chromatography resins into new production processes, increased sales of GoBio prepacked columns, and a flexible offering of customized solutions continue to be the cornerstones of our growth strategy. These products, coupled with best-in-class customer service, are strengthening Bio-Works’ reputation as a premium supplier of purification solutions.

Biotech set for a rebound in 2024
A GlobalData survey ‘The State of the Biopharmaceutical Industry 2024’ found that more than 40% of the healthcare industry professionals surveyed globally expressed an optimistic or very optimistic sentiment on biotech funding starting to bounce back over the next 12 months. I share this sentiment with the condition combined with a healthy dose of caution about the macro factors facing the industry.

Strong order intake during the previous three months has shown signs of recovery. I cannot say with certainty that we will once again have the wind at our back in 2024, but we are piloting a lighter and nimbler vessel with an experienced crew, and increasingly it feels like we're not going to have wind at our face. In my estimation, this is enough for Bio-Works to regain momentum in the year ahead of us.

Thank you for your continued confidence and support. Together, we continue the journey to a profitable Bio-Works.

Uppsala, February 2024

Jonathan Royce