Active Biotech Group Annual Accounts Report January - December 1998
SAIK substance against MS - drug candidate selected
The group's research fields are infectious diseases, inflammatory and autoimmune diseases, and cancer. In the USA alone, over 20 million people are estimated to suffer from autoimmune diseases with few satisfactory treatment methods. SAIK is Active Biotech's collective name for various substances for regulating the human immune defence.
In December, which was quicker than planned, SAIK-MS was selected as a drug candidate. It will be documented during the present year in order to commence the first clinical trials on humans, Phase I, in 2000. Over 20,000 new cases, often young people, are diagnosed with multiple sclerosis (MS) every year. Today only about 25% of the patients can be treated successfully using existing drugs.
SAIK - against other diseases
Experimental studies of the treatment of psoriasis, a commonly occurring disease which affects around 10 million people in the industrialised world, are continuing in parallel. Research into SAIK substances against asthma, juvenile-onset diabetes and rheumatoid arthritis is going according to plan. The goal is to develop new substances with an improved effect, fewer side effects, a better health-care economy and medication in tablet form instead of injections.
PROJECTS IN CO-OPERATION WITH PARTNERS
SmithKline Beecham - ETEC vaccine
During 1998/99, SBL Vaccin, together with the SmithKline Beecham, SB, co-operation partner, is implementing extensive clinical trials in Phase III of the oral ETEC vaccine against so-called tourist diarrhoea. Field studies cover German and Swiss travellers to Kenya and American students of language training in Guatemala and Mexico. A well implemented study is required for approval by the FDA. Information about the studies will be provided when effect data exists, when SB submits the documentation for registration and when the registration is approved.
It is estimated that the international launch by SB of the ETEC vaccine will occur as planned in 2001. Various diarrhoea illnesses often affect travellers to Asia, Africa, Latin America and the Mediterranean countries. The most common cause is ETEC bacteria, and there is no vaccine on the market at present. The market potential is judged to be around USD 300-650 million.
SBL Vaccin has a process patent valid until 2013. An application for a product patent has been submitted during the year. The ETEC vaccine has been developed completely internally since 1993, with experience of the cholera vaccine, Dukoral, registered in Sweden and Norway. Both vaccines contain the same rCTB component, which makes the vaccine drinkable and in itself creates protection. In order to acquire the patent rights to rCTB and to receive all royalty payments from Dukoral and a future ETEC vaccine, the Vitec company was acquired for SEK 25.6 million cash with an additional purchase sum of 60,000 B-shares upon approved ETEC registration.
SmithKline Beecham - Cholera vaccine
Every year, around three million people in the world are affected by cholera, with around 150,000 deaths. SBL Vaccin's drinkable cholera vaccine, Dukoral, is sold in Sweden, and has been sold in Norway for some years, with a turnover of SEK 13 million, an increase of 74%. Dukoral is also registered as a prophylaxis against ETEC. The vaccine is the only cholera vaccine which has undergone field studies. During 1999, an application for registration of the vaccine in the USA and the EU is planned with a launch one year later by SB.
Pharmacia & Upjohn - TTS cancer immunotherapy
The contract research with P&U is progressing as planned and aims to produce a method for identifying tumour cells in order to activate the immune defence system so that the cancer cells are destroyed (TTS is Tumour Targeting Superantigen). The research has previously generated two drug candidates for clinical trials and the goal is to develop a new product candidate for Phase I studies next year. The co-operation entails research revenues over 3 years of SEK 175 million, of which the first year, 1998 is SEK 50 million.
North American Vaccine - IPV polio vaccine
During the year, SEK 18 million has been invested in a total reconstruction of the polio vaccine factory in Solna, Sweden. During 1998, the co-operation partner, North American Vaccine, achieved registration of its new infant vaccine. SBL manufactures an interactive polio vaccine, IPV, which will be included in a completely new combination vaccine on the American market.
Vaccine Solutions Pty - Streptococcus vaccine
A further co-operation agreement, with Australian Vaccine Solutions Pty, has been signed within the highly prioritised field of streptococcal infections. There is no vaccine on the market today. The development and selection of drug candidates has been intensified during the year with planned Phase I studies during the year 2000.
During the year, Actinova's project portfolio has been developed well and broadened through, inter alia, a licence agreement with UMDS, United Medical and Dental Schools in London, on developing a peptide-based drug against streptococcal bacteria in the oral cavity which cause serious caries.
BioPhausia - co-operation on cancer
The research co-operation involves testing the effect of the hyaluronidas enzyme on cancer tumours. The project may have great potential and the aim is, together with American research groups, to test the hypothesis within one year in order thereby to determine the value of the project.
Other technological development
During the year, Actinova acquired a new technology, CDT (Covalent Display Technology), in order to develop a so-called library of peptides and other substances. The technology will be used for in-house vaccine development, and will also be sold to other companies. The first licence has been signed with Invitrogen, California.
Active Biotech's ambition is to be a link between universities and the major pharmaceutical companies. Since 1985, broad co-operation has continued with the Institution for Cell and Molecular Biology in Lund. In total, project co-operation is continuing with around 150 external researchers at 27 Swedish and foreign universities.
New President and new Research Director
Sven Andréasson, from Pharmacia & Upjohn's French subsidiary, has taken over as the new President in Active Biotech as of 01-02-1999. Karl Olof Borg, with a background from Astra and Pharmacia & Upjohn, was appointed research director in the group in March.
FOCUS ON BIOTECH THROUGH DISTRIBUTION OF WILH. SONESSON AB
The board of directors for Active Biotech proposes that the annual general meeting makes a decision on the distribution of all shares in the subsidiary company, Wilh. Sonesson AB, to Active Biotech's shareholders. Since January 1999, Wilh. Sonesson AB is the parent company in a group consisting of the three operating subsidiaries Helikopterservice Euro Air AB, Inter Air AB and Sonesson Inredningar AB, as well as a block of shares in the listed Lifco AB (1.5 million shares corresponding to 16.6 % of the capital and 10.4 % of the votes). However, the proposal is conditional on the possibility for implementing the distribution pursuant to lex ASEA so that it is tax-free for the shareholders. The intention is that the distribution shall be implemented within the first half of the year.
For every share in Active Biotech in series A or series B, it is proposed that the shareholders in Active Biotech shall receive a share from the corresponding series in Wilh. Sonesson AB. After the distribution, Wilh. Sonesson will initially have the same ownership structure as Active Biotech. The number of shares will amount to the same number, 11,246,292.
Further information will be distributed to Active Biotech's shareholders approximately two weeks before the general meeting.
Wilh. Sonesson's activity
Wilh. Sonesson is a development company which will invest in operating companies and which by supplying expertise and capital will improve the companies' inherent ability to grow. The strategy is to operate a few, large projects through active ownership.
At the time of distribution, it is estimated that the distributed group will have equity of around SEK 205 million, approximately SEK 18 per share. The forecast turnover for 1999 is SEK 300 million with an estimated net income after financial items of around SEK 30 million. The parent company, Wilh. Sonesson, will have a debt-equity ratio of 100 %, i.e. completely free of debt, and the group will have a 50% debt-equity ratio. Active Biotech's available liquidity will reduce by SEK 71 million upon distribution.
Sonesson Inredningar trebled profit
Turnover amounted to SEK 141 million (SEK 124 million), +14 % and the net income after financial items amounted to SEK 9 million (SEK 3 million). Sales increased on all markets, especially Denmark +16 %, Norway +44 % and Germany +55 %.
Acquisition of Alnäs Möbelfabrik AB
In order to strengthen its position within the school sector, Sonesson Inredningar has acquired the furniture factory, Alnäs Möbelfabrik AB, in Mårdaklev, Sweden, which had a turnover last year of SEK 25 million and a net income of SEK 4 million. The take-over date will be 01-01-1999. The addition of Alnäs broadens the range, and sales of school furnishings are expected to increase sharply in Sonesson's Swedish and foreign sales channels.
Helikopterservice's profit margin is 18%
In 1998, 83,500 passengers used Helsingborg/Malmö-Copenhagen Airport - a volume increase of around 10 %. Turnover amounted to SEK 83 million (SEK 72 million) and the net income after financial items was SEK 15 million (SEK 25 million). The sale of a helicopter in connection with new purchasing had a positive effect on the net income of SEK 4 million (SEK 12 million).
Inter Air makes investments
During the year, the company acquired a larger aircraft for SEK 64 million and in December sold the oldest aircraft with a profit of SEK 8 million. Turnover amounted to SEK 32 million (SEK 22 million) and the net income after financial items was SEK 5 million (SEK 0 million).
New MD for Wilh. Sonesson AB
Fredrik Herslow, 37 years, former Sweden director for Nova Medical AB, owned by the Bure group, with a turnover of SEK 350 million and 400 employees, has been appointed MD.
Available liquidity amounted to SEK 644 million at the turn of the year. Property sales provided additional liquidity as of the day of taking possession on 01-02-1999 of SEK 320 million. It is estimated that sale of the Solna property will be completed during 1999. The interest-bearing debts in the biotechnology division amounted to SEK 93 million and in the rest of the companies to SEK 148 million. The group's debt-equity ratio was 68% and the parent company's debt-equity ratio was 85 %.
Company acquisitions amounted to SEK 421 million, of which the acquisition of Lund Research AB amounted to SEK 351 million.
Q1 report will be issued on 17 May
Q2 report will be issued on 26 August
Q3 report will be issued on 25 November
An annual general meeting will take place on Monday 10 May, 5.00 p.m., at the Star Hotell in Lund. After the meeting, there will be a guided tour at our research center at IDEON.
Lund, 25 February 1999
Board of Directors
Active Biotech AB (Publ.)
The full report including tables can be downloaded from the enclosed link.
Annual Accounts Report January - December 1998