Genovis

Comments from Fredrik Olsson, Chief Executive Officer

Looking back at 2023, I can say that we have once again achieved our best performance to date. We increased our sales by 55% and our operating profit more than sixfold compared with the previous year. For the full year, the core business grew by 31%. Enzymes in analytics grew by 35% and the antibody business by 13%. At the same time that we moved the entire enzyme operation to new custom-built premises in Kävlinge, we have maintained our operational capacity, ensured the functionality of our new production facility, and launched 4 new products. Our 2023 launches have garnered considerable interest and have been well received by our customers. With the new products, we have expanded our offering of enzymes targeting key components of the immune system, thereby opening opportunities for new applications in analytics and potentially for diagnostic and therapeutic use in the future.

In the fourth quarter, sales rose by 6% compared with the corresponding quarter last year. For Enzymes in analytics, sales grew by 12% and the antibody business declined by 18%. The dampened pace of growth in the quarter is mainly attributable to sluggish customer activity in December. As we enter 2024, however, we note a resurgence in customer activity in line with our expectations.

Enzyme sales continued to be strongly driven by the North American and European markets, which together achieved over 20% growth in the quarter. Market conditions in China remained challenging, especially when compared with the same quarter last year. Sales of our antibody conjugation technologies continue to grow strongly as customers pursue ADC-related projects, where our products have multiple applications. The antibody business continues to be affected by volatility related to production orders for diagnostic applications, but we expect a recovery in 2024.

The development project of the Xork enzyme as a potential pre-treatment in gene therapy is making progress. Recently a development milestone was achieved that triggered a 1 million USD compensation to Genovis.

I am not satisfied with the results in the fourth quarter due to lower growth rates than in previous quarters of the year. In addition, the rapid appreciation of the SEK toward the end of the year, as well as costs related to the relocation of premises and activities related to our business development, had a negative impact on earnings of approximately SEK 3 million. Despite a weak operating profit, we show a strong cash flow for the quarter, mainly linked to improved working capital. As a result of the cash flow, we have further strengthened our cash position, affording us operational leeway to implement our strategic growth initiatives.

In December, we launched another unique enzyme for a specific type of antibodies, expanding our coverage to encompass most of the key antibodies in the immune system. Our pipeline of product development projects continues to expand in line with our long-term strategic growth initiatives. At present, it is significantly broader than previously, including several projects within existing markets for enzyme and antibody conjugation, as well as completely new markets such as Genomics. In addition, we continue to develop enzymes for potential therapeutic applications such as gene therapy, where we see a continued strong interest in new enzymes, and we now have several new enzymes under development.

Because of the growing opportunities in product development, we have implemented changes in our organization to better meet the needs of our customers and our lofty ambitions for new products in 2024. We also remain deeply committed to pursuing our strategies for inorganic growth avenues, including licensing, commercial partnerships, and acquisitions.

I would like to thank all my colleagues at Genovis for their fabulous efforts in 2023. Despite a challenging business landscape and the relocation of our operations, we achieved our best year to date. With a strong 2023 behind us and a promising start to the new year, I eagerly anticipate what lies ahead with confidence. With an expanding pipeline of innovative solutions for our growing customer base, my colleagues and I look forward to continuing to develop business at Genovis in the coming year.