Genovis

Comments from Fredrik Olsson, Chief Executive Officer

We begin 2024 with a strong operating profit and very good cash flow. Even adjusted for license revenue, we improved our performance, both compared to the first quarter of 2023 and the previous quarter. Through continuous improvements and increased capacity, we have maintained good margins despite our expanding product offering, demonstrating the scalability of our business. We have strengthened our already strong cash position, which provides both stability and freedom of movement for continued aggressive investments in growth.

First quarter sales represent the single best quarter to date for our enzyme business in analytics. Sales increased 8% organically compared to the same period last year and by 12% sequentially in relation to the fourth quarter of 2023. This sales growth should be viewed in light of the continued challenging market conditions in China, as well as the ongoing restructuring among both smaller and larger biopharma companies.

In the antibody business, sales decreased by around 30%. Underlying sales to the research market continue to grow, while customers in diagnostics are reducing their inventory levels following the pandemic, which has affected sales for the quarter. Sales to the diagnostics market are expected to recover during the year as customer inventories normalize. We have initiated programs to focus our resources on the most profitable parts of the antibody business to improve performance while adapting the business to the volatile nature of customers in diagnostics.

For enzymes aimed at potential therapeutic applications in gene therapy and other autoimmune diseases, we have initiated more business development activities ahead of formally regaining the rights to Xork™ in the second half of this year. Our development of new enzymes in this application area has also made significant progress recently and we have several new and unique product candidates in development.

Launching new products and enzymes in analytics is an important component of our growth strategy. I am extremely encouraged to see how our pipeline has continued to evolve in recent months, with our team taking advantage of the improved opportunities in our new lab and production facilities. We have already launched two new products and I expect that we will reach our full-year targets in the second quarter and that the launch rate will remain high for the rest of the year.

We see encouraging signs that access to venture capital for biotech companies has improved in early 2024. Even if we, as a supplier to these companies, are somewhat further down the chain of events, it bodes well for the future. The increasing diversification of antibody drugs continues to provide good growth opportunities for Genovis. With our constantly expanding product portfolio and the underlying growth drivers for biologics, I look forward with confidence to Genovis' continued growth journey.

I would like to extend my warmest thanks to my colleagues at Genovis who, with great dedication, work tirelessly to help our customers in their crucial work of developing new important drugs.