Annual Report 2007
Legal disclaimer
2007
2007 in brief ... 4
Genovis in brief ... 6
From the CEO ... 8
Goals and strategies ...10
Group overview ... 12
Production ...13
Products ...14
Market ... 22
The Group ... 24
Genovis Inc. ... 26
Genovis Stock ... 28
Corporate Governance Report ... 30
Board of Directors ... 34
Group management and auditor ... 36
Formal Annual Report Board of Directors Report ... 38
Financial statement ... 45
Notes ...50
Auditor’s report ... 64
Financial calendar
Annual General Meeting ... April 17, 2008 Interim report Q1, January -March ... April 17, 2008 Interim report Q2, January-June ... August 13, 2008 Interim report Q3, January –September ... October 22, 2008 Financial reports are also available at www.genovis.com
Annual Report
2007Rubrik
Q2
Patent and license acquisitions generate a new product
In May of 2007, Genovis entered into an agreement with Hansa Medical AB regarding the acquisition of pat- ents and licenses. Genovis combined its NIMT® tech- nology platform with two material surface proteins that, together with specific nanoparticles, become a unique tool for fragmenting antibodies: FabRICATOR®.
Q1
Patents
In the spring, Genovis had a patent approved by the South Korean patent office. The patent had already been approved within the EU (EPO) and in Australia, and an interna- tional application is being filed in Japan, as well as in countries in North and South America. The patent describes the technical grounds for the NIMT® technology, and is valid until 2019.
2007 proved to be an eventful and significant year for Genovis
Genovis underwent a series of changes in 2007. The com- pany transitioned from being a pure research and devel- opment company to supplying products for preclinical research. In one year, the company went from 5 to 12 employees; one of which is employed in the US with re- sponsibility for global marketing among other things.
2007
in Brief
5
Group Parent
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Key ratio 2007 2007 2006 2005 2004 2003
Net sales 255,830 255,830 0 0 1,487 107,593
Earnings after financial income
and expense (11,885,307) (11,884,523) (8,921,433 ) (4,170,887 ) (2,337,912) (2,130,333)
Cash flow (17,945,566) 16,683,257 661,729 (489,027) (1,232,653)
Cash flow per share (2.1) 3.4 0.2 (0.2) (0.6)
Equity per share 2.23 2.23 5.8 1.5 0.8 1.6
equity/assets ratio (%) 87 87 87 42 28 74
Return on equity (%) neg neg neg neg neg neg
Return on total capital (%) neg neg neg neg neg neg
Acid test ratio (%) 40 40 532 43 40 806
Profit/loss per share (0.99) (0.99) (1.33) (1.12) (0.84) (0.77)
Average number of yearly
employees 6.5 6.5 4.5 4.5 4 3
Average number of shares 8,708,987 8,708,987 4,838,490 2,678,390 2,003,390 2,003,390
Stockholders 1,679 1,679 1,700 1,300 1,300 1,300
Dividend per share 0 0 0 0 0 0
Q4
US subsidiary, Genovis Inc.
Genovis established a subsidiary in the US, Genovis Inc, with office in Boston and R. Chris Wilkins has been hired as CEO of the subsidiary. The US is the single largest mar- ket for Genovis’ products, which is why Wilkins will lead the Genovis companies’ global marketing efforts.
Income from product sales.
Genovis got its first customers during the fourth quarter;
Sweden and the US were foremost.
Genovis initiates in vivo project
Genovis initiated a project in cooperation with Lund Uni- versity to evaluate the NIMT® technology as a tool to fa- cilitate animal model studies.
Q3
Online sales of Genovis’ products
The company’s new web site with online sales capability was launched on September 27. We have seen interest from Europe, United States, Australia, India, Korea, Sin- gapore, Brazil and Mexico among others. Genovis’ objec- tive is to be represented in several of these markets, and the new web site will be a resource for partners and dis- tributors in our client relationships.
Hong Kong sales office
Genovis established a sales office in Hong Kong to be closer to customers in the Asia-Pacific region and the Middle East.
Several of these countries are making large investments in the life sciences industry, especially in stem cell research, vac- cine development, and RNA interference.
2007 in brief
Financial overview
Genovis in brief
Business concept
Genovis’ business concept is to develop, produce, and market innovative technologies based on unique nanostructures which can enable new discoveries and make them easier and faster in the hands of researchers in the global life sciences industry.
Genovis offers research tools
Since its establishment in 1999, Genovis has been developing a technology called NIMT® (Nano Induced Magnetic Transfer). The products are used by researchers at pharmaceutical companies, biotechnology firms and in the world of academic research. The actual discovery behind NIMT® and the commercial development of marketable products has taken place in the border area between biology, chem- istry and physics. Genovis owns all patent rights to its technologies and products, which consist of nano-sized particles, a group of proteins, and the knowledge of how they can be used as effective research tools. Today Genovis markets its prod- ucts in three different application areas: imaging, biomolecule delivery and anti- body tools.
Products
Genovis launched 12 products during the fourth quarter of 2007, and another four will be launched in 2008. Research/product development is an ongoing pro- cess at Genovis, and there are more products in the pipeline.
What Genovis offers to customers
New technology in the form of tools that:
• Save time and increase reliability over earlier research through the entire pre- clinical research process.
• Offer a high level of performance and are easy for the user/researcher to use.
Expertise
Genovis offers expertise and experience in the design, production and management of nanoparticles. For all our product categories, we offer all of the support needed for customers to get going quickly and receive as much value as possible from our products. Genovis also offers completely customized solutions to adapt standard
Genovis in Brief
7 products to a customer’s particular needs and way of working. Genovis’ products
have several potential applications that are not part of the product line today, but opportunities will arise where Genovis can create and produce completely new nanoparticles on commission or in collaboration with customers.
Availability
It’s important to customers that products and support be available in all markets, regardless of differing time zones. Genovis’ goal is to operate and further develop the company web site in order to continually offer excellent service, training and support, and to maintain short delivery times through disparate sales channels.
Genovis’ income and cost structure
Today income is generated primarily by sales of nanoparticles and proteins as consumables. Customers can be roughly divided into two groups, based on their throughput. The first group, constituting the largest share (about 90%), uses Genovis’ products for 10-200 tests per week, while some customers use the prod- ucts in so-called High Throughput Screening (HTS), where thousands of tests are processed per week. HTS customers require a special customer relationship where pricing, delivery methods, and support are especially important.
Revenue is also being generated in the form of consulting work associated with the sale of nanoparticles for applications that are not within Genovis’ standard product line. In the future, revenue may also be generated from licensing, pri- marily for products within the antibody tools group.
Variable costs for Genovis’ products are low even at relatively low production volumes, and can be further reduced at large volumes without fixed costs increas- ing. The development and launch of new categories of products does not cause any appreciable increase in fixed costs because Genovis’ technology platform is mature and the company has sufficient capacity to manage these types of pro- cesses. Fixed costs consist primarily of personnel costs for production, support and marketing, as well as costs of maintaining and developing Genovis’ patent portfolio.
Genovis AB was founded.
Sarah Fredriksson was the only employee in 1999 -2000.
Research-focused activities.
Genovis goes from research to product development.
Projects with references customers was initiated
Genovis launched its first products.
Genovis markets its products in three different application areas.
1999
2000
2001
2002
2003
2004
2006 2005
2007
2008
Genovis in Brief
Genovis in brief
After Genovis’ products debuted in Q4 2006, we began the year with several reference projects conducted together with external research groups. Among the ques- tions we were trying to answer, the question of outstanding importance was the customer’s perspective on our products’ per- formance. We were also looking for feedback on technology, usability, storage, and shipping. An evaluation of the projects demonstrated that Genovis’ nanoparticles were competitive in several areas. Therefore, based on these project results, Genovis management decided that our primary goal for 2007 would be to initiate sales of our first products.
Staffing was increased by another six employees in order to reach this goal. The organization was adjusted to take on new assignments focusing on production, quality analysis and support. Meanwhile a marketing plan was developed, and Genovis added additional personnel in the business development, marketing and communications areas to prepare for execution of the plan. The greatest chal- lenge for a comparatively small organization is that all 12 people often have to manage more than one function within the company. By combining production, research and development with the support of customers, marketing managers and distributors, we take advantage of our collective expertise and experience in an efficient way, and can manage all of the functions.
While pursuing intensive internal product development and marketing strategy work, Genovis had the chance during the spring to acquire some exciting intel- lectual property rights from Hansa Medical. In practice, these rights involve ac- cess to a group of proteins that have primarily been investigated in the form of new pharmaceuticals. Genovis acquired the right to use these proteins as a tool for researchers in a completely different market. A market that does not compete in any way with the continued pharmaceutical development that continues at Hansa Medical. All of the proteins are used to study, modify or produce antibod- ies. Combining them with our nanoparticles creates great advantages for the customer, and with this acquisition Genovis receives a unique opportunity to introduce attractive products within another new customer segment.
The first product in this new product category was ready to launch at the end of September, along with ten or so products from Genovis’ product portfolio. All of the products were introduced when Genovis launched it’s new web site and web- based sales at the end of September. The goal was to launch four products. Now we have succeeded in launching more than ten, which was one of the high points of the year. Sales commenced in the last quarter of 2007, and we succeeded in meeting our most important goal without having our own sales organization or any distribution agreements in place. Therefore the most critical goal for 2008 will obviously be to execute our planned marketing strategy to get sales going for
Hard Work and
From the CEO
US is the single largest market, and constitutes several geographic markets unto itself. Genovis has established a US subsidiary in order to have a local presence.
The first intermediate goal for our subsidiary in 2008 will be to identify one or several distribution partners, while simultaneously working with high-quality reference customers. Our focus in Europe during 2008 will be to conclude agree- ments with distributors in four to five different regions, and then increase our activities in 2009. Asia is a fast-growing market where substantial resources are devoted to research and development. Genovis’ products for research in the areas of antibodies, genetic diseases and imaging fit in very will in this environment.
During 2008 we will primarily be looking for distributors and marketing channels in South Korea, Singapore, Taiwan, Japan and eventually in China as well.
No matter where in the world our customers are, their work has high require- ments for reliability and performance, and their requirements for their suppliers are equally as high. Now we must convince them to utilize new technology. Thus, the first customer meeting has a bit of the quality of a dance with an attractive stranger. First impressions might make all the difference, but first you have to get onto the dance floor. We know where the customers are, and our products are ready. We have made preparations for production, support and logistics in 2007.
In 2008, the business will focus on marketing and sales. Now we’ll show our stuff and invite them to dance. Sometimes establishing a long-term customer relation- ship can take awhile. Therefore it is of strategic importance that Genovis can now offer products within three application areas with different customer target groups.
Nanotechnology has a lot of exciting things to offer, and my goal is for Genovis’
nanostructures to be part of the competitive landscape in the future. Thus the creative development process goes on continually, both in terms of new products and production technology. We have decided to concentrate on two exciting projects in 2008. The first is investigating the potential of nanoparticles for imaging and delivery in different animal models. This project could open up entirely new markets for our products. I estimate that during 2008 we will gather sufficient evidence to decide whether to launch in 2009. The other development project, with a similar potential and timeline, is delivery and imaging in highly sensitive cells. The cells could be blood cells or stem cells; they are difficult to work with, and customers do not have good tools at their disposal today.
It may sound like a threadbare cliché, but 2007 involved a lot of blood, sweat and tears, and I know that 2008 will be no different in that respect. 2007 also involved tremendous amounts of joy and creativity. My challenge in 2008 will be to ensure that we continue to develop Genovis into a profitable company in a way that involves the correct balance of hard work and happiness. It’s not hard to accept this challenge, because I’m surrounded by wonderfully skilled, creative and experienced colleagues. I want to take the opportunity to thank everyone who has worked with such great commitment to Genovis this year!
March, 2008 Sarah Fredriksson President and CEO
Hard Work and
Bubbling Creativity
Goals and Strategies
Simplify L ife Science
11 Genovis’ primary task from the shareholder’s point of view is to create a long-
term increase in value for the company. The company’s goals and strategies have been developed on this core prinicipal.
Goals
Up to this point, Genovis’ business has been dominated by pure research and development activities and financed by risk capital. The business is undergoing a pronounced change in 2007 and 2008, as the company transitions from pure research activities to research/product development and sales. The company’s marketing plan and short-term goals were drawn up to verify and test the company’s business model in 2008, so that the company can grow at a quick, cost-effective pace without putting stability at risk. The company’s primary goal is a sharp increase in sales on several markets during 2008-2009.
Overarching goals
• Genovis will be a company with stable, profitable operations and good growth potential.
• The company’s products will be available to customers in all geographically important markets.
• Genovis will be a workplace that can attract, retain and develop creative, ambitious and skilled employees.
Goals for 2008
• The company will attain positive earnings and cash flow in the second half of the year.
• Genovis will accomplish at least four product launches during the year.
Strategy
By constantly striving toward an efficient internal form of organization and combining this with partners, distribution chains and a global network, the company will achieve its stated goals for 2008 and 2009 in a flexible way. The company will experience organic growth in markets where a strong presence is considered advantageous to open up the most effective sales channels.
Genovis will maintain a strong and innovative program of product development that will focus on products that strengthen the customer’s business model. The financial strategy continues to be based on the principle of not using more capital than necessary while maintaining
the company’s focus and speed.
Goals and strategies
Goals and Strategies
R&D Preclinical Clinical Product
Group overview
Group Overview
The challenge and the potential of size
We humans are good at evaluating size, distance and amounts in the “middle world,” the world around us that we see and experience with our senses, which perhaps isn’t so unusual, since this is the world that our brains have evolved over millions of years to survive in. We are very good at evaluating and quickly under- standing distances from centimeters to kilometers, and time from seconds to years. But imagine dividing a centimeter into 10 million parts. One part is 1 nanometer large. It’s so small that it can’t be seen in a microscope. When we go down in size from centimeters (hundredths of a meter) to nanometers, (millionths of a meter), or up from kilometers to light years (9,460,730,472,580.8 km), then we often have trouble comprehending these sizes. Our biological brain is simply not evolved to manage such extremely small or astronomically large amounts.
The consequences can be that ordinary notions that are often based on “common sense” cease to work entirely: ordinary logic simply can’t keep up. How many are 100,000,000,000,000 units of something really? Or how far is it really to the center of the Milky Way? This is a tremendous challenge that faces everyone working in nanotechnology or astronomy.
Genovis offers nanotools for more effective forms of treatment By learning to manage techniques to produce nanosized structures, completely new possibilities open up in medical research and diagnostics, among other areas.
Genovis has developed nanometer-sized superparamagnetic particles with iron oxide cores, NIMT® FeOdots. The iron oxide core makes the particles stable, and also visible with an electron microscope and MRT (magnetic resonance tomography, magnetic resonance imaging), which is a good characteristic in products intended for use in different medical applications. The particles are designed and marketed as products intended to accomplish extremely specific tasks and procedures in medical research. The particles are also sold separately and in solutions that are customized to the client.
Genovis’ customers at pharmaceutical companies, biotechnology firms, and in the world of academic research are working on discovering and testing substances that could one day become pharmaceutical products. The road to a market-ready pharmaceutical product is a long one: it takes from 10-20 years to develop a new pharmaceutical product, and Genovis wants its products to make the work easier and save time for the researcher during the early research and preclinical phases.
13
R&D Preclinical
Genovis can do Genovis would like to do
Genovis is doing
Clinical Product
Production
Designing and producing high-quality nanoparticles to order is a difficult art and Genovis now has extensive experience in this area. Genovis’ concept builds on a strong technology platform called NIMT® (Nano Induced Magnetic Transfer), and in a short time the company has developed an innovative portfolio of products that can be divided into three groups: imaging, biomolecule delivery and antibody tools. All development and production takes place under the company’s own management, and this expertise and the very specific production techniques, along with intellectual property rights, constitute the core of Genovis’ competitiveness.
What does production in nanotechnology involve?
Production in nanotechnology is a tremendous challenge, partly because the materials’ properties differ drastically from the way the same materials behave in our ordinary world, and partly because you can’t see the product you’re working with due to the extremely small size. Not being able to observe the individual particles directly demands extremely advanced instruments for measurement or analysis which often require a great deal of time. One positive aspect is that the substance being produced is so small that space requirements for production are also small. Even a very large production output can be managed in limited space.
Genovis would theoretically be able to meet the world’s total reagent require- ments within its product segments in a few fume cabinets.
Genovis makes its own products
When the size of what you’re making becomes smaller and smaller, the production process also needs to become correspondingly more demanding and more sensitive.
Knowledge of the company’s products as well as the production of these products is of central importance and an absolute core value for the company. Therefore Genovis is building and developing its internal production capacity to meet demand and new product development.
How do you monitor something that’s so small?
It’s of great importance to be able to monitor and provide quality assurance for what you’re producing in a way that’s reliable and effective. In the present situation the answer to this question is a compromise between physical and chemical analysis and functional testing. Progress is happening at a furious pace here as in many other areas, and Genovis is constantly monitoring the situation on the research front in questions of analysis of nanomaterials, making strategic new investments in analytical equipment, and purchasing analytical services when such purchases are justified.
Group overview
It takes from 10 to 20 years to develop a new pharmaceutical product. Today Genovis works with products that will make the work easier and save time during the early research work until you reach the preclinical stage.
Genovis objectives for the future are to be able to offer tools that increase the efficiency and security also in a clinical stage.
Imaging and Delivery Products
For several decades researchers have been studying the function and appearance of various biomolecules in test tubes, i.e. in completely artificial environments.
The next step was to study the effect of these biomolecules within a cell. The cell is the body’s smallest unit and each body contains billions of cells. Cells both undergo division and die in the body as a consequence of the course of nature or due to the influence of the environment. There are different types of cells, and collectively they build up our organs, such as skin cells, kidney cells etc. A particular type of cell functions on its own, but is completely dependent on the body as a whole for its long-term survival. Researchers are greatly interested in individual cells because they are the prerequisite for all life. What happens inside individual cells can often explain the course of various diseases. A tumor arises because a certain cell type begins dividing completely uncontrollably. Rheumatoid arthritis is caused by cells that begin to attack other cells in the joints.
The model systems that researchers use to study cells can be divided up into two groups: In vitro and in vivo. In vitro means in the glass (the test tube) and in vivo means in the living body. In other words it’s possible to induce cells to grow and divide outside the body in test tubes, and by using Genovis’ technology among others, researchers can study various biomolecules in the chemical factory inside the cell in vitro. You could say that this is a way to study the microcosm of the body. The environment is not the same as inside the body, but in this way many different biomolecules and their functions can be studied simultaneously in several different cell types.
The next step in pharmaceutical development for illnesses such as cardiovascular disease and cancer is in vivo studies, which are often performed by studying the cells in an animal model (such as a rat). Genovis’ research and development activity is focused on producing tools in the form of nanoparticles for these types of studies as well.
Imaging - NIMT® FeOlabel
To be able to see what’s happening in a cell and be able to observe it inside an animal, the cell must be labeled. One method to do this is to introduce magnetic nanoparticles into the cell, NIMT® FeOlabel, and then observe the cell using MRT (magnetic resonance tomography, magnetic resonance imaging). The advantage of NIMT® FeOlabel, compared to other technologies, is that the dose
NIMT® FeOlab el NIMT® F eOf ecti on
Group overview15
Nanotechnology Imaging Physical Exam, Symtoms
Biomolecule Delivery Products
NIMT® FeOfection
To understand how plants, animals, bacteria and the human body function and live, and why they sometimes do not function normally, individual cells which are the smallest components in every organism are studied. One way to observe what is taking place inside an individual cell is to introduce a new gene into the selected cell. Genes are large molecules and tools are required for them to be able to enter into the cell. By using NIMT® FeOfection, which is such a tool, we can introduce a new gene into the selected cell. We say that the cell is transfected, i.e. the cells are manipulated to produce a particular protein. Proteins, which are the building blocks of the body, are an important object of study for researchers who want to discover the cause of a disease, or research the structure and function of specific proteins.
The gene for green fluorescent protein (GFP) was introduced into cells that are difficult to transfect. The bars show what percentage of cells have received the gene using NIMT® FeOfection compared with a leading competitor.
Transfection effectiveness
Group overview
0 5 10 15 20 25
Competitor FeOFection 1
Genovis has developed a technology to deliver molecules (such as DNA or genes) into cells.
By making nanoparticles that can be injected into the body and then act like small homing robots that search out a particular type of cell, such as cells that are changing into cancer cells, there are increased possibilities of making a reliable diagnosis much earlier than with the diagnostics in use today. If the same particle can also carry a medication that kills the cancer cell, the conditions for an effective and individually customized dosage of cytotoxic drugs would be completely realistic. The odds are extremely good of being able to cure a tumor that is detected even before it has become a tumor, while it is still undergoing a cellular change.
Nanotechnology has great potential to contribute to improved diagnosis combined with sensitive and more effective medication dosages. The technology is still in its infancy, but is nevertheless an area Genovis is exploring with great interest.
Transfected Cells (%)
Simplify Life Science
NIMT® FeOSilence
NIMT® FeOSilence
Our bodies are built from around 60 billion cells. Each cell consists of about 75%
water. The rest is different molecules, and these are primarily proteins, fats, salts, sugars and genetic material (DNA and RNA molecules). Our genetic makeup directs vital processes through a stream of information from DNA in the cell nucleus via the messenger molecule mRNA (messenger RNA) to the formation of proteins in the cell. One could say that the messenger molecule has a recipe that describes which proteins will be formed, and proteins are the main component in all living things, serving as the building blocks of the body. Everything from digestive enzymes to the receptors of the nervous system is comprised of proteins.
Now it appears that it is possible to tailor RNA molecules, so-called siRNA, which are specific to a certain gene, and which have the ability to break down endogenous mRNA. siRNA simply directs the break down of mRNA (the recipe for the protein) into pieces. This is what is commonly referred to as gene silencing or RNA Interference.
Many diseases can be treated by mitigating the activity of particular genes.
Researchers have high hopes of being able to use RNA Interference in the future to treat viral infections, cardiovascular diseases, cancer and metabolic diseases for example.
The gene for a protein called Lamin has been turned off in the cell by introducing siRNA targeted at the mRNA for this specific protein. The diagram shows how effectively the gene for lamin has been silenced using NIMT® FeOsilence (87 %) compared with two other competing transfection reagents.
0 10 20 30 40 50 60 70 80 90 100
Competitor 2 Competitor 1
FeOsilence 1 Lamin knockdown (%) Group overview
Gene Silencing
17
Simplify Life Science
NIMT® FeOSilence NIMT® FeOSilence
DJ FeOsilence
A record player can read every track on a record, but technology is needed to translate the tracks to the notes we hear coming out of the speaker. The record symbolizes the genes inside the cell, and the record player symbolizes the activity in the cell nucleus: it reads every code in our genes (the tracks on the record).
Technology and the speaker can be compared to the cells’ protein factories. As long as the record player is running, we hear notes (proteins are formed in the cell), and the same notes come from each track on the record every time it’s played. In the same way that a disk jockey can use new technology to remove certain notes from the music, we can add interfering RNA molecules to silence the expression of a particular protein.
Group overview
DJ FeOSilence DJ FeOSilence
Antibody Tools
Antibodies are a special group of proteins which are a central part of immune defense, our defensive army against harmful microorganisms and viruses. The defense mechanism operates through the binding of anti- bodies to a foreign object, such as a harmful bacterium. When the antibody has bound itself to the bacterium, this activates a series of events resulting in the immune defense system neutralizing the intruder.
An antibody can be described in a slightly simplified way by dividing it into two regions. The first region recognizes the intruder – this is the so-called Fab region.
The second region, or Fc region, activates the immune defense system when the Fab region has targeted an intruder.
Antibodies are used in research and medical care for several applications. It could be a matter of diagnostics, analysis and/or purification. Intensive research is currently being conducted on the use of antibodies as medications. A small number of antibody-based drugs are on the market today and the market is expected to increase sharply. The research in this area is driven by the research world and pharmaceutical companies’ ambition to find new and more specific medications for many diseases.
In June of 2007 Genovis acquired a series of patents related to the biotechnical applications of proteins from Hansa Medical AB. These proteins all have a connection to antibodies. The reason for acquiring the patents is that Genovis sees the potential to connect these unique proteins with existing Genovis technology. The goal is to create new, unique products for antibody researchers in a growing market.
Simplify Life Science
FabRICATOR®
Group overview1
FabRICATOR®
Genovis’ first product based on these patents is a genetically modified enzyme that we have named FabRICATOR®. The enzyme cleaves an anti- body in a specific location so that it is divided into two fragments, a Fab fragment and a Fc fragment, hence the name FabRICATOR®. In 2008 FabRICATOR® will be launched in a kit that allows the customer to cleave and isolate pure Fab fragments in 30 minutes – as opposed to current methods which can take days to reach the same result.
Two other products in the antibody tools area will also be launched in 2008. We have decided to call the first one AbDUCTOR™ and the second one LIBERATOR™. AbDUCTOR™ can be used for the purification of antibodies, because it binds specifically to particular surface molecules on the antibody. The advantage of purifying in this way compared to traditional methods is that the quality of the purified antibody is significantly better. Producing a pure antibody is a very common operation in research laboratories around the world today since research on antibody-based medications has increased tremendously.
LIBERATOR™ is a unique protein that cleaves off the sugar molecules found on antibodies. LIBERATOR™ can be used to”wash” cells by removing the sugars that facilitate antibody binding to cells.
Competitors FabRICATOR® Kit
Reaction Time 4-48 h 30 min
No of steps >10 3
Purity Several separation steps One separation step Capacity Requires large quantities
of Antibody of interest Possible to cleave small quantities of Antibody of interest
Simplify Life Science
FabRICATOR®
Simplify L ife Science
Products under Development
Research and product development are an ongoing process at Genovis to reinforce existing product offerings with new products and applications. Development starts with the nanostructures and production methods that make up the core of the business, and there are several new exciting products in the pipeline:
• Delivery and Imagining products that can be used in animal models (in vivo)
These products require a well-designed nanoparticle that can be used in animal models. The goal is for the customer to be able to use Genovis’ products from the first tests in the test tube to more advanced experiments in animal models.
• Improved siRNA Delivery and Gene Transfer methods
There are cells where it is tremendously difficult to conduct a gene transfer or siRNA delivery. By developing a new variation of NIMT ®Nanoheater, it will be possible for Genovis’ customers to manage even these difficult cells.
• More Antibody Tools
A number of proteins are being evaluated as potential commercial products.
The customer will be offered a more effective way to manage and study antibodies.
Group overview
21
Market
The possibility of creating new biotechnology-based drugs for diseases such as cancer, cardiovascular diseases, neurological diseases, and hereditary diseases is resulting in high expectations and large investments in the pharmaceutical industry, as well as grants for academic research. This is also the major driving force behind the demand for and development of nanotechnology within the life sciences industry. This market situation, along with demand for new technology in preclinical research, is the single largest driving force behind the demand for products of the type that Genovis develops and markets.
The company estimates that there are nearly one million people employed in basic medical research (including academia) and preclinical research worldwide.
The costs of preclinical research in pharmaceutical and biotechnology companies alone amounts to around USD 20 billion a year. The total market for the applications/product categories that Genovis represents is estimated at around USD 900 million, where the US is the dominant geographical market.
Below is the market for products and applications that Genovis markets today.
Market sizes for areas using nanoparticles in other applications and in the form of so-called custom-made products are not included.
* 1. Outlook for RNAi 2007 – Business Insights.
2. The Gene Silencing Dashboard, Feb 2007.
3. Percepta Associates RNAi/microRNA 2007 Market Report.
USA 40%
Asia 20%
Europe Others 35%
5%
0 100 200 300 500 400 600
Imaging Antibody tools Gene Delivery
siRNA
Genovis’ target segment * 6 Size of Market * 1-6
Distribution of the market for products that Genovis markets today.
Market
Value: Million SEK
23 Research reports indicate that the use of nanotechnology in pharmaceutical
development and health care will increase dramatically in the next five years1. The three key sectors where the technology is expected to have the greatest impact are delivery (drug formulation), diagnostics and monitoring/imaging2. The greatest driving forces behind these expectations are:
• The possibility of creating more targeted medications, i.e. only treating sick cells and not healthy ones.
• Improving dosages and thus reducing side effects.
• Making it possible to deliver new biological medications such as RNA, peptides and proteins.
• Totally new methods for monitoring and imaging.
• Small medical implants.
1 Nanotechnology, 2007 Business Insights
2 (Salamance-Buentello F, Persad, Dl, Court EB et al, (2005) Nanotechnology and the developing world. PLoS Med 2 (5): e97)
Competitors
Genovis’ competition currently consists primarily of companies that market products in the siRNA, gene delivery, imaging/sorting and antibody tools areas.
Other companies developing nanostructures are not immediate competitors. The competitors consist of large global companies that supply many different types of products to the preclinical research industry such as BioRad, Eppendorf Brinkman, Invitrogen, Qiagen, Promega, New England Biolabs and Fisher Scientific. Another group of competitors is the companies that specialize in one product category such as Amaxa, Inovio, Stratagene, PolyPlus Transfection and Synvolux Therapeutics, which all offer products for siRNA delivery and gene transfer. PIERCE (FisherScientific) and GE Healthcare are two of the dominant companies in the antibody tools product category on the market today. Specialized competitors make use of several sales channels, while the larger global companies use direct sales to a large extent.
Market
120
100
Value (US$ millions)
80
60 40
20
2006 2007 2008 2009 2010 2011 2012
Year
CONGLOMERATE FOOD
AEROSPACE & DEFENCE PHARMACEUTICALS
&HEALTHCARE
AUTOMOTIVE CHEMICALS
Development of the nanotechnology market
Genovis established a US subsidiary, Genovis Inc., during the fourth quarter of 2007. R. Chris Wilkins is the President & CEO of this wholly-owned subsidiary.
He has overall responsibility for sales and the buildup of sales channels in the US, as well as global marketing. The parent company Genovis AB in Lund has principal responsibility for business and finance, production, support and research and development. The CEO and COO have overall responsibility for the Group’s business.
Sales
The parent company is in charge of sales and the expansion of distribution networks in Europe and Asia with the assistance of the Hong Kong sales office.
The Asian initiative is headed up by Björn Hammarberg, who has extensive experience in molecular biology, from places including the Royal Institute of Technology. He has also worked with business development and marketing of products and services for the biotech industry and research institutions world- wide. He has implemented projects for companies such as AstraZeneca and PALL Life Sciences.
The company has invested in a web-based structure to manage geographic expansion.
This structure will support all Group employees as well as simplifying things for distributors and partners. Web-based resources include training, sales material, support both internally and to customers, logistics, and Internet sales.
R&D
There are a total of 6 people employed in research and development, located in Sweden. In addition to day-to-day work, the employees are responsible for customer support and take on assignments or participate in joint projects with customers to produce customized solutions.
The employees are very committed, and several of them are listed on patent applications that are under international review.
Board of Directors
Business Development/
Patent Strategy
CEO
The parent company Genovis AB
The Group
Group overview
25
Production
All production takes place in Sweden, since the production of the Company’s products is an unconditional core value for the company. Genovis is constantly building and developing its internal production capacity to meet demand and new product development.
Employees and organization
Retaining staff and attracting new employees with cutting-edge expertise are top priorities for the organization and a prerequisite for success. This will be achieved by measures such as continuing to create an open and stimulating company culture, where employees can experience growth through their assignments and develop further in the organization. One hundred percent of the staff have degrees from the Bachelor’s through the PhD, and they are provided with the opportunity for continual professional development. No employees have left the company since Genovis was started. The average age at the Company is low, but despite the relatively low average age there is a stable base of expertise due to employees who have been with us since our beginning in 1999.
As of December 31 2007, there were 12 employees in the Group with one in the US, compared to 5 employees in Sweden during the same period last year.
Options program
With the aim of retaining employees and increasing their participation in the company’s growth, the Genovis Board of Directors will propose a resolution to issue warrants with rights to subscribe to new shares at the Annual General Meeting. By making individual long-term owner involvement possible, Genovis wants to provide the stimulus for increased interest in the business and revenue growth, as well as increase motivation and a sense of belonging at the company.
0 2 4 6 8
2005 2006 2007
2004 2003
Sweden USA
Average number of employees per year
Age distribution
0 3 2 1 4 5 6
40-50 50-65
30-40 -30
Men 50%
Women 50%
R. Christopher Wilkins
President & CEO Genovis Inc. USA
R. Christopher Wilkins has extensive experience of the biotech industry. He has had management positions in sales, marketing
27 In 2007 Genovis expanded internationally with the establishment of a subsidiary
in the United States. The establishment of a marketing and sales organization in the US has been a top priority for Genovis, since the US market shows the greatest potential demand for the company’s products.
R. Chris Wilkins was hired as CEO of the subsidiary and will also head up global marketing for the Genovis group. Wilkins has extensive biotech industry experience, and has held executive positions in sales, marketing and business development.
Focus on distribution channels and marketing campaigns
In 2007 Chris Wilkins concentrated principally on establishing connections with potential partners and customers who are of interest to Genovis. He also began establishing the Genovis brand.
In 2008 Genovis Inc. will primarily concentrate on establishing distribution channels in the US and marketing Genovis’ products worldwide.
The North American market
The American market represents 40% of the market for the type of products Genovis is currently marketing, corresponding to USD 360 million, with an expected growth rate of 10-15% per year. In 2005 there were 1415 biotechnology companies in the US, of which 329 were public companies. The entire Life Sciences industry employs around 1.2 million people, and the five largest companies invest an average of $130,000 per employee in research and development. There are more than 400 biotechnology companies developing new potential drugs which are currently in the clinical phase The US can be seen as several geographical markets, with California and Massachusetts being the two largest geographical markets. Genovis Inc. has elected to begin concentrating its efforts on those two areas.
Genovis Inc.
Terry Mollan
Board Member
M.A. Industrial Distrubution,
DePaul University, Chicago, USA Founder and Senior Partner of Lehnen, Mollan &
Associates with offices in Chicago and Rockford, IL, USA as well Rotterdam in the Netherlands.
Associate Professor of Marketing at DePaul University, Chicago, IL, USA.
Previous experience: Executive Vice President, PerBio,Perstorp AB and Marketing Director at 3M Company.
Prior corporate affiliations: Board member at Klein Tools, Mexico; BonaKemi USA, Denver CO; Seymour of Sycamore, Sycamore, USA.
Sarah Fredriksson
CEO and board member
M.S. in Engineering, PhD in Engineering.
CEO of Genovis AB (publ) since 1999.
Member of Nämnden för Biomedicinsk och Medicinsk Utbildning (NBMU - Committee for Biomedical and Medical Education) at Lund University.
Prior corporate affiliations: European Insti- tute of Science AB (publ).
Board of Directors
0 50 100 150 300 350
200 250 400
Quebec North Carolina British Columbia Pennsylvania Georgia Texas Alberta Connecticut
Number of companies WashingtonFlorida
New York
New Jersey
Maryland
Ontario
Massachusetts
California
374
256
143 134
81 75 74 68 59 58 56 48 47 45 33 25
Genovis Inc.
Genovis’ capital stock on December 31, 2007 was SEK 3,483,594.8 made up of 8,708,987 shares including 800,000 A shares and 7,908,987 B shares at par value of SEK 0.40. Class A shares entitle the stockholder to 10 votes and Class B shares to 1 vote per share at a shareholders’ meeting. Each owner of shares in the company is entitled to vote for the full amount of such shares at a shareholders’ meeting, without any voting limitation. Each share carries equal rights to the company’s assets and earnings.
Dividend
The Board of Directors proposes that no dividend be paid for the fiscal year 2007.
1 Formation of the
company 100,000 1,000,000 0 1,000,000 100,000 0.1
2000 New issue 25,600 0 256,000 1,256,000 125,600 0.1 4.8
2001 Stock divided 376,800 0 0 1,256,000 502,400 0.4
2001 Stock convert (200,000) 200,000 1,256,000 502,400 0.4
2001 New issue 125,456 0 313,640 1,569,640 627,856 0.4 9.5
2002 New issue 99,100 0 247,750 1,817,390 726,956 0.4 11
2003 New issue 74,400 0 186,000 2,003,390 801,356 0.4 11
2005 New issue 360,000 0 900,000 2,903,390 1,161,356 0.4 6
2006 New issue 1,161,060 0 2,902,650 5,806,040 2,322,416 0.4 3.5
2006 New issue 1,161,179 0 2,902,947 8,708,987 3,483,594.80 0.4 7
Transaction
Increase in capital stock
Increase in Class A shares
Increase in Class B shares
Total number of shares
Capital stock SEK
Share’s par value SEK Issue price Year
Capital stock development
Genovis Stock
Genovis Stock
2
Issue price
Genovis Class B shares SIX Biotechnology
Shares traded 1,000s (incl. late entries)
JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
Stock - price trends and turnover
Genovis B shares have been traded since 14 September 2006 on the First North stock exchange under the name GENO B in trading blocks of 200 shares. Mangold Fondkommission is Genovis’ Certified Advisor and liquidity guarantor. The highest listed share price during 2007 was MSEK 20.2. The market value of all Genovis shares on December 31, 2007 was about MSEK 102.
Class size Number of
stockholders Number of
A shares Number of
B shares Holdings
(%) Votes (%)
1 - 1,000 906 4,410 456,535 5.29 3.15
1,001 - 5,000 552 23,800 1,381,234 16.13 10.18
5,001 - 20,000 181 24,800 1,664,593 19.40 12.02
20,001 - 100,000 33 6,000 1,177,555 13.59 7.78
100,001 - 7 740,990 3,229,070 45.59 66.87
Total 1,679 800,000 7,908,987 100 100
Class sizes
Name Number of
A shares Number of
B shares Holdings
(%) Votes
(%)
Sarah Fredriksson 565,000 287,900 9.79 37.32
Bo Håkansson med bolag 175,990 2,466,570 30.34 26.57
Nicklas Johansson 0 194,000 2.23 1.22
SSB CL Omnibus AC OM07
(15 pct) 0 158,000 1.81 0.99
Hans Göran Arlock med bolag 0 142,500 1.64 0.9
Åke Svensson 0 100,000 1.15 0.63
Nordnet Luxembourg 0 89,820 1.03 0.56
Didrik Hamilton 0 74,880 0.86 0.47
Viveca Rüter 0 64,500 0.74 0.41
Ownership
On December 31, 2007 the total number of stockholder in Genovis amounted to 1,679. The major stockholders are presented in the table below.
Genovis Stock
