FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934
For the months of June and July 2003
Commission File Number 000-28966
Biacore International AB (publ)
C/o Biacore International SA
Puits-Godet 12
CH-2000 Neuchatel
Switzerland
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X
Form 40-F
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934.
Yes
No X
If "Yes" is marked, indicate below the file number assigned to the registrant
in connection with Rule 12g3-2(b): Not applicable.
HALF-YEAR REPORT JANUARY - JUNE 2003
* Whilst sales to the academic sector increased, Biacore's total sales in the
second quarter of 2003 fell by 8% to SEK 142.5 million (154.6). In the first
half of 2003, sales amounted to SEK 249.0 million (295.9), a reduction of 16%
compared with the previous year. Excluding the impact of exchange rates, sales
fell by 8% in the first half of 2003.
* Biacore's earnings per share increased by 267% to SEK 2.75 (0.75) in the
second quarter of 2003, primarily as a consequence of capitalization of
product development expenses, tight cost control and lower tax. Earnings per
share in the first half-year 2003 increased by 21% to SEK 3.52 (2.92).
* Biacore entered a market segment with substantial growth potential with the
recent introduction of its new GxP package to be used in conjunction with
Biacore(r)3000. The key application of this combination will be in the
clinical trials of the new wave of biological therapeutics, where it will be
used to measure data such as the product's immunogenicity. The Company
continued to invest in the development of its new SPR array technology with
the first system based on this technology due to be introduced in the second
half of 2004.
* Given current market conditions and the fact that sales in the second quarter
recovered more slowly than anticipated, Biacore now expects its revenues for
the full-year 2003 to be approximately 5% below last year's level. As a result
of this changed sales outlook, earnings per share, positively affected by the
capitalization of product development expenses and lower tax, are forecast to
increase by approximately 40% in 2003. The previous outlook for the full-year
2003 was for sales to be approximately the same as last year and for earnings
per share to increase by approximately 60%.
January - June April - June
2003 2002 Change 2003 2002 Change
Sales, SEK million 249.0 295.9 -16% 142.5 154.6 -8%
Operating income, SEK million 32.4 61.8 -48% 28.3 32.2 -12%
Operating margin, % 13 21 20 21
Income after financial items,
SEK million 40.5 50.7 -20% 31.5 19.5 62%
Earnings per share, SEK 3.52 2.92 21% 2.75 0.75 267%
This report contains certain forward-looking statements within the meaning of
the United States Private Securities Litigation Reform Act of 1995 which, by
their nature, involve risk and uncertainty because they relate to events and
depend on circumstances that will occur in the future. There are a number of
factors that could cause actual results and developments to differ materially
from those expressed or implied by these forward-looking statements.
Accordingly, investors and shareholders are urged not to place undue reliance on
these statements.
Operational Review January-June 2003
Amounts stated in this report pertain to the Biacore Group, unless indicated
otherwise. Figures in parentheses refer to the corresponding period in 2002.
In the second quarter of 2003, Biacore experienced some improvement in its
overall operating environment which was led by increased sales to academic
customers. In contrast, demand from early discovery customers in pharmaceutical
and biotechnology companies in the United States and Europe is still lower than
anticipated. However, sales to this segment in Asia-Pacific showed good
progress.
Sales in the applied segments of the market, which are addressed with
Biacore(r)S51, Biacore(r)3000 with the GxP Package and Biacore(r)C, performed
somewhat better than the early discovery segment in the second quarter. As a
consequence of the continued slowdown in sales to early drug discovery customers
in the United States and Europe, Biacore's sales fell by 8% in the second
quarter of 2003 to SEK 142.5 million (154.6). This compares with the 25% decline
seen in the first quarter. Sales in the first half-year 2003 decreased by 16% to
SEK 249.0 million (295.9). Excluding currency effects sales in the first half of
2003 fell by 8%.
Biacore(r)3000 is Biacore's most important product offering to the basic life
science research market in academia and early discovery in the biotech and
pharma industry. In order to enhance significantly the utility of Biacore(r)3000
in the field of functional proteomics, the Company has introduced a new
automated functionality to the system which will enable it to work seamlessly
with mass spectrometry (MS) systems.
In addition, the second quarter saw the introduction of a new GxP package to be
used in conjunction with Biacore(r)3000. A key application of the Biacore(r)3000
GxP Package will be in the clinical trials of the new wave of biological
therapeutics, including antibodies, where it will be used to capture data such
as the therapeutic product's immunogenicity. Since its launch, this new
combination has shown good progress in both the United States and Europe. The
introduction of these two new important applications of Biacore(r)3000 are
expected to positively impact the sales of this system in the second half of
2003.
Sales were divided geographically as follows:
January-June April-June
SEK million 2003 2002 Change 2003 2002 Change
Americas 106.4 147.1 -28% 65.2 80.8 -19%
Europe 70.7 67.0 6% 39.8 36.5 9%
Asia-Pacific 71.9 81.8 -12% 37.5 37.3 1%
Although there was a slight improvement in the second quarter of 2003, sales in
the Americas continued to be affected by a slowdown in orders from the U.S.
pharmaceutical sector. Sales in Europe increased by 9% in the second quarter to
SEK 39.8 million (36.5). Sales in Asia-Pacific in the second quarter were on the
same level as in the previous year, SEK 37.5 million (37.3), as orders from
pharmaceutical industry customers in Japan picked up.
The gross margin in the second quarter increased to 80% from 77% in the first
quarter.
Given the uncertain sales development, the Company has continued to keep a tight
control of its operating costs. Total costs for marketing, administration and
research and development decreased by 24% in the second quarter of 2003 to
SEK 81.2 million (107.4). During this period, marketing and sales costs
decreased by 22% to SEK 43.1 million (55.6), while administration costs fell by
4% to SEK 18.8 million (19.5).
R&D spending in the second quarter amounted to SEK 31.5 million (32.3). Of this
amount, SEK 12.2 million (0) was capitalized. During the first half-year 2003,
Biacore has capitalized SEK 24.1 million. Since Biacore, due to new accounting
standards, started to capitalize certain product development expenses in 2002,
SEK 29.1 million have been capitalized.
Due to lower sales in 2003 and SEK 19.6 million in damages from Thermo
BioAnalysis in the second quarter of 2002, operating income in the second
quarter 2003 declined by 12% to SEK 28.3 million (32.2) despite the Company's
tight control of costs. The operating margin in the second quarter was 20% (21).
Currency differences during the period amounted to SEK -3.3 million (-8.4) in
"Other income and expenses" and SEK 0.1 million (-0.1) in "Financial items."
The effective tax rate for the first half-year was 15% of income after financial
items (44). The lower tax rate is due to a change in the geographical mix of
income, one factor being the Swiss operations. The tax rate in the first
half-year 2002 was affected by non-deductible write-downs of shares.
Net income for the second quarter of 2003 was SEK 26.9 million (7.4), giving
diluted earnings per share of SEK 2.75 (0.75), an increase by 267%. For the
first half-year 2003, diluted earnings per share increased by 21% to SEK 3.52
(2.92).
Capital Expenditures
During the first half-year of 2003, capital expenditures totaled SEK 10.7
million (9.0).
Personnel
The 2003 Annual General Meeting of shareholders approved a five-year employee
stock option program of a maximum of 100,000 Biacore shares with an exercise
price of SEK 178.
At the end of June 2003, Biacore had 340 (316) permanent employees.
Business Review
The second quarter of 2003, Biacore has seen some improvement from the depressed
first quarter in the demand for its world leading surface plasmon resonance
(SPR) technology. Systems based on this technology are used for the real-time
detection and monitoring of biomolecular binding interactions. This improvement
appears to be based on the end of the Iraq war, which has removed some of the
uncertainty from the global political and economic environment. While sales to
early drug discovery customers in the United States and Europe remained
difficult, the applied segments of the market, i.e. lead optimization, clinical
trials and quality control, all showed progress.
Looking ahead, Biacore remains confident that its recently strengthened product
offering and its well-balanced customer base, which includes world-leading life
science research institutes, leading companies in the pharmaceutical and
biotechnology industries and major food manufacturers, will enable it to resume
a pattern of attractive growth once the macro-environment improves.
Academic Customers Focusing on Molecular Causes of Disease
Biacore's marketing activities continue to focus on the ability of its SPR
technology based systems to help solve many of the important problems faced by
academic scientists working on a better understanding of the molecular causes of
disease.
Key areas where Biacore has focused its marketing include Cancer, Neuroscience
and more recently Infectious Diseases, where a full scale disease area launch
was undertaken. As part of this campaign, an article was published in 'Trends in
Microbiology', highlighting the value of SPR technology in HIV research.
In addition, Biacore has placed a great deal of its on-going marketing effort in
another key area of life science research, Proteomics, where the Company is
increasingly being recognized as a global leader. In the field of functional
proteomics, there are two areas where Biacore's SPR systems have clear
competitive advantages, namely ligand fishing and protein interactions. These
areas are both crucial to developing a clear understanding of disease and for
identifying drug-like structures that may prove the basis of potential drug
candidates.
Biacore(r)3000 - Additional Utility in Functional Proteomics
Biacore has recently introduced a new module for Biacore(r)3000 which marks an
important step forward in the integration of SPR-MS. This new module enhances
the functionality of Biacore(r)3000 by allowing automated and increased capacity
recovery functionality as well as direct MALDI target deposition for further
analysis by a number of mass spectrometry systems. This new functionality is the
result of Biacore's collaboration with Bruker Daltonics. The combination of
these two technologies is designed to:
- generate functional information on proteins, receptors and ligands of
interest,
- isolate and purify these molecules, and
- characterize and identify these proteins or other molecules.
Biacore is confident that this new SPR-MS linkage will provide researchers with
a radical new approach to functional proteomics studies and strengthen its
already strong competitive position in the rapidly growing proteomics market.
Early customer response to this new module has increased Biacore's confidence in
the long-term sales potential of this technology combination.
Developing High Quality Drug Candidates
A key element of Biacore's strategy is to increase the utilization of its SPR
technology-based systems by pharmaceutical and biotechnology companies to
discover and develop better drugs for the treatment of a wide range of diseases.
Lead Optimization - A New Market Opportunity
Biacore(r)S51 - New Customer Data to Support Marketing Activities
Biacore(r)S51 is the first Biacore system introduced specifically for the
pharmaceutical and biotechnology industry. This system addresses critical
bottlenecks in the drug discovery process downstream of high-throughput
screening (HTS). Biacore(r)S51 is able to achieve this by providing more
relevant biological information on compound activity, in a single assay, than
any other technology available today.
Given the progress that has been made with Biacore(r)S51 since its launch,
Biacore is confident that it will become a major contributor to its future sales
growth. In the second quarter, the utility of the system for small molecule
analysis was enhanced with the introduction of a new software package and two
new chip surfaces.
This confidence is also based on the growing appreciation of the product from
the market as well as new customer-generated data highlighting the benefits of
using Biacore(r)S51. In the last few months, more data supporting the value of
the Biacore(r)S51 in lead optimization has been made public. Amongst these data
are the results of small molecule screening studies, which were conducted in
conjunction with GlaxoSmithKline.
Procel(tm) - Building Awareness
Procel(tm) is designed to complement Biacore(r)S51 and provide a highly
competitive offering in the field of lead optimization. By using Procel(tm),
researchers have access to an easy-to-use cell-based fluorescent analytical
system which has been designed to characterize compounds that interact with both
G protein coupled receptors (GPCRs) and ion channels. These are two main classes
of drug targets under evaluation today.
Since this system is based on a new technology for Biacore, sales of Procel(tm)
are expected to build more slowly than has been the case with Biacore(r)S51.
Biacore(r)3000 GxP Package - Accessing The Clinical Trials Market
In line with its strategy of developing new solutions which are tailored to the
needs of its customers, Biacore has recently introduced a new GxP package to be
used in conjunction with Biacore(r)3000. This new package has been designed to
facilitate pharmaceutical companies' compliance with worldwide regulatory
expectations and will complement Biacore(r)C, launched in 2001 for rapid
concentration analysis in drug development, manufacturing quality control and
in-process control applications.
A key application of the Biacore(r)3000 GxP Package will be in the clinical
trials of the new wave of biological therapeutics, including antibodies, where
this new product will be used to capture vital data such as the therapeutic
product's immunogenicity. This new application is expected to provide an
important source of growth for Biacore, given the large number of new biological
therapeutics, which are being developed by both pharmaceutical and biotechnology
companies around the world. A major advantage of using an SPR assay to measure
specific antibody levels in the blood of clinical trial patients is that no
purification of the blood samples is needed. This enhances both the speed and
reproducibility of the measurement. The major benefits of Biacore(r)3000 GxP
Package in this segment of the pharmaceutical development market will be a key
factor in driving Biacore's overall sales for the remainder of 2003.
Food Business Unit - Sales Continue to Build
Biacore's food business unit had a very successful second quarter with sales of
Biacore(r)Q being particularly strong in Europe with some customers ordering
their second systems. This demand for second systems was due to these food
manufacturers incorporating Biacore's SPR technology into the routine analysis
of their manufacturing process, a positive sign for the development of the
Company's food business unit.
The second quarter also saw the introduction of a number of new Qflex kits which
have extended the range of antibiotics which can be analyzed using Biacore(r)Q.
SPR Array Technology - Meeting the Need for Higher Information Content
Biacore is determined to build on the strong SPR-based business that it has
established over the last decade. In order to achieve this, the Company is
working on a number of important technological breakthroughs in SPR detection
and micro-fluidics that form the basis for the development of its new SPR array
system.
This system, which is on-track to reach the market in the second half of 2004,
will be able to deliver a significant improvement in the speed with which
information on protein interactions can be generated. Delivering the same high
sensitivity and data quality that the Company's customers currently enjoy and
require, this new platform will enable Biacore's SPR technology to be used
across a broader range of applications in both basic life science research and
drug discovery and development than is possible today.
To commercialize its SPR array technology, Biacore has utilized two
collaborations to develop specific applications and gain access to reagent
expertize. These collaborations with Millennium Pharmaceuticals and BD
Biosciences Pharmingen have enabled Biacore to develop the critical elements of
the system's specification so that it meets the demands of its targeted
end-users.
The SPR array system is designed for applications in the interaction proteomics
and post-HTS small molecule characterization areas, where its sensitivity,
increased throughput and high information content will complement Biacore's
existing systems. Over time, the Company expects the SPR array system to have
applications across the spectrum of drug discovery and development activities
and be a valuable tool in many proteomics applications.
Future Growth Prospects Remain Positive
Despite the slowdown in sales seen during the first half of 2003, Biacore
remains confident that it is in a strong position to build the value of its
business over the next several years. This positive view is based on:
- The growth expected from the Company's core life science research customers as
Biacore's SPR technology gains even greater recognition in the field of
functional proteomics.
- The anticipated success of the new applications of the Biacore(r)3000 which
include the new interface with MS systems which will extend the system's value
in functional proteomics, and the new GxP package which will take Biacore into
the fast growing bio-therapeutics clinical trials market.
- The continued growth of the three new systems recently introduced to meet the
specific needs of customers in the pharmaceutical and biotechnology industry,
Biacore(r)S51 and Procel(tm) for "hit to lead"-selection, and Biacore(r)C for
quality control applications.
- The significant commercial potential of the new system being developed based
on Biacore's novel SPR array technology.
These opportunities allied to the strength of the overall Biacore organization
should enable the Company to continue to deliver attractive returns to its
shareholders over the next several years.
Accounting principles
This interim report has been prepared in accordance with the Swedish Financial
Accounting Standards Council's Statement No. 20 (RR 20), Interim Financial
Reporting.
Parent Company
Biacore International AB handles group-wide functions and provides certain
intercompany services but has no other business of its own. Sales during the
first half-year 2003 amounted to SEK 12 million (1) and income after financial
items was SEK 1 million (-11).
Quarterly Sales Variations
Biacore's total sales during the period 2000-2002 were split between quarters as
follows:
Quarter 1 23% Quarter 3 22%
Quarter 2 23% Quarter 4 32%
Outlook For The Full-Year 2003
Given current market conditions and the fact that sales in the second quarter
recovered more slowly than anticipated, Biacore now expects its revenues for the
full-year 2003 to be approximately 5% below last year's level. As a result of
this changed sales outlook, earnings per share, positively affected by the
capitalization of product development expenses and lower tax, are forecast to
increase by approximately 40% in 2003. The previous outlook for the full-year
2003 was for sales to be approximately the same as last year and for earnings
per share to increase by approximately 60%.
Uppsala, Sweden, July 18, 2003
Biacore International AB (publ)
Ulf Jonsson
President and Chief Executive Officer
This interim report has not been subject to examination by the Company's
auditor.
Financial Information
Biacore plans to release its interim report for January-September 2003 on
Wednesday, October 22, 2003.
Biacore is a global market leader in Surface Plasmon Resonance (SPR) technology
based systems with its own sales operations in the U.S., across Europe, Japan,
Australia and New Zealand. A strong patent portfolio protects Biacore's SPR
technology. Target groups for the Company's products consist primarily of
medical and life science research laboratories and pharmaceutical and
biotechnology companies around the world. Biacore is focusing on drug discovery
and development as its prime areas for future growth. Based in Uppsala, Sweden,
the Company is listed on the Stockholm Stock Exchange and Nasdaq in the U.S.
More information on Biacore is available at the Company's website:
www.biacore.com
Biacore Consolidated Income Statements
January-June April-June Full year
SEK million 2003 2002 Change 2003 2002 Change 2002
Sales 249.0 295.9 -16% 142.5 154.6 -8% 614.2
Cost of goods sold -53.1 -49.5 7% -28.8 -25.1 15% -100.9
Marketing -81.7 -98.5 -17% -43.1 -55.6 -22% -199.8
Administration -34.2 -35.5 -4% -18.8 -19.5 -4% -68.3
Research and development -37.8 -54.6 -31% -19.3 -32.3 -40% -104.4
Other income and expenses -7.8 6.3 -3.2 11.2 4.3
Amortization of goodwill -2.0 -2.3 -1.0 -1.1 -4.5
Operating income 32.4 61.8 -48% 28.3 32.2 -12% 140.6
Financial items, net 8.1 -11.1 3.2 -12.7 -20.4
Income after financial items 40.5 50.7 -20% 31.5 19.5 62% 120.2
Income taxes -6.2 -22.3 -4.6 -12.2 -40.1
Minority interest 0.1 0.5 - 0.1 0.7
Net income 34.4 28.9 26.9 7.4 80.8
Basic earnings per share, SEK 3.53 2.96 2.76 0.75 8.28
Diluted earnings per share,
SEK 3.52 2.92 2.75 0.75 8.20
No. of shares, average,
diluted, thousands 9,774 9,909 9,773 9,896 9,851
Net income 34.4 28.9 26.9 7.4 80.8
Stock options issued 0.5 - 0.5 - -
Dividend -29.3 - -29.3 - -
Currency translation
differences -15.8 -13.6 -11.4 -11.5 -15.3
Change in shareholders'
equity -10.2 15.3 -13.3 -4.1 65.5
Quarterly Income Statements
2Q 1Q 4Q 3Q 2Q 1Q
SEK million 2003 2003 2002 2002 2002 2002
Sales 142.5 106.5 175.9 142.4 154.6 141.3
Cost of goods sold -28.8 -24.3 -28.5 -22.9 -25.1 -24.4
Marketing -43.1 -38.6 -53.4 -47.9 -55.6 -42.9
Administration -18.8 -15.4 -13.6 -19.2 -19.5 -16.0
Research and development -19.3 -18.5 -26.3 -23.5 -32.3 -22.3
Other income and expenses -3.2 -4.6 -4.5 2.5 11.2 -4.9
Amortization of goodwill -1.0 -1.0 -1.1 -1.1 -1.1 -1.2
Operating income 28.3 4.1 48.5 30.3 32.2 29.6
Financial items, net 3.2 4.9 1.1 -10.4 -12.7 1.6
Income after financial items 31.5 9.0 49.6 19.9 19.5 31.2
Income taxes -4.6 -1.6 -9.1 -8.7 -12.2 -10.1
Minority interest - 0.1 0.1 0.1 0.1 0.4
Net income 26.9 7.5 40.6 11.3 7.4 21.5
Basic earnings per share, SEK 2.76 0.77 4.16 1.16 0.75 2.21
Diluted earnings per share, SEK 2.75 0.77 4.15 1.16 0.75 2.17
No. of shares, average, diluted,
thousands 9,773 9,770 9,786 9,750 9,896 9,918
Sales by region
January-June 2Q 1Q 4Q 3Q 2Q 1Q
SEK million 2003 2002 2003 2003 2002 2002 2002 2002
Americas 106.4 147.1 65.2 41.2 63.8 59.6 80.8 66.3
Europe 70.7 67.0 39.8 30.9 62.7 44.2 36.5 30.5
Asia-Pacific 71.9 81.8 37.5 34.4 49.4 38.6 37.3 44.5
249.0 295.9 142.5 106.5 175.9 142.4 154.6 141.3
Biacore Consolidated Balance Sheets
June 30 Dec. 31
SEK million 2003 2002 2002
Intangible assets 105.2 80.9 84.8
Property, plant and equipment 116.1 105.6 117.1
Long-term investments 1.0 22.4 7.9
Other long-term assets 28.1 25.4 27.7
Other current assets 229.7 245.3 242.3
Liquid funds 339.1 285.0 351.6
Total assets 819.2 764.6 831.4
Shareholders' equity 624.5 584.5 634.7
Minority interest 0.7 0.9 0.9
Provisions 83.4 66.6 83.4
Liabilities 110.6 112.6 112.4
Total shareholders' equity and liabilities 819.2 764.6 831.4
Financial structure
Operating capital 324.3 311.6 327.4
Long-term investments 1.0 22.4 7.9
Net interest-bearing assets 301.1 251.0 313.9
Net payable and deferred income tax liability -1.2 0.4 -13.6
Minority interest -0.7 -0.9 -0.9
Shareholders' equity 624.5 584.5 634.7
Biacore Consolidated Statements of Cash Flows
January-June Full year
SEK million 2003 2002 2002
Net income 34.4 28.9 80.8
Less: Depreciation and amortization 15.7 12.0 23.7
Less: Income from long-term investments -4.0 14.2 28.7
Change in working capital 9.2 17.3 37.1
Other -9.4 -3.1 -6.6
Cash flows from operating activities 45.9 69.3 163.7
Acquisition of business, net of cash acquired - - 1.6
Purchase of intangible assets -28.9 -1.0 -7.0
Purchase of property, plant and equipment -10.7 -9.0 -31.7
Sales of long-term investments 11.0 - -
Cash flows from investing activities -28.6 -10.0 -37.1
Dividend -29.3 - -
Change in financial liabilities -0.5 4.9 4.2
Cash flows from financing activities -29.8 4.9 4.2
Net change in liquid funds -12.5 64.2 130.8
Key figures
Operating margin 13.0% 20.9% 22.9%
Return on operating capital 19.9% 38.1% 42.4%
Return on equity 10.9% 10.0% 13.4%
Equity ratio 76% 77% 76%
Shareholders' equity per share, diluted, SEK 63.89 59.00 64.44
No. of shares, thousands 9,750 9,750 9,750
No. of shares, end of period, diluted, thousands 9,774 9,906 9,849
No. of shares, average, diluted, thousands 9,774 9,909 9,851
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Biacore International AB (publ)
By: Lars-Olov Forslund
Name: Lars-Olov Forslund
Title: Chief Financial Officer
Dated: August 11, 2003