ACTIVE acquires SBL Vaccin AB from the Swedish State


ACTIVE i Malmö AB (publ) has today, the 12th of May, 1997, signed an agreement with the Swedish State regarding the acquisition of 100% of the shares in SBL Vaccin AB. The acquisition forms a part of ACTIVEs concentration of efforts in the biotech area, and it gives ACTIVE a strong position in Swedish and international microbiological research and industry.

The purchase sum amounts to SEK 100M in cash and three additional payments of SEK 15M each, relating to turnover of SBL Vaccin for the years 1997, 1998 and 1999. In addition purchase sums totalling SEK 105M have been agreed subject to the regulatory approval of SBL's ETEC and Cholera vaccines.

ACTIVEs English subsidiary ACTINOVA Ltd performs, among other things, preclinical development of a Group A Streptococci vaccine. The SBL acquisition provides ACTINOVA an organisation with lengthy experience of clinical research and vaccines production.

SBL Vaccin is divided into two different business operations:

SBL - development of international vaccines
SBL Vaccin invests significant resources into the research and development of vaccines, all of which have been developed in-house, and is presently planning an international launch of three vaccines against polio, ETEC diarrhoea and cholera. Since 1993 research expenditure has exceeded SEK 80M.

Product development is performed in close collaboration with major pharmaceutical companies who are contracted for the marketing and sales of the products in the global
market. The blobal market for vaccines is estimated at approx. USD 4 billion, with an annual growth of approx. 15%, which on average is considerably higher than for pharmaceuticals.

The ETEC vaccine - SBL's spearhead programme

Over the last two years, major investments have been made for the development of innovative vaccines, of which two are in Phase III (the final phase) of clinical testing. SmithKline Beecham, one of the biggest pharmaceutical companies in the world, will market the products internationally.

SBL's own oral vaccine against ETEC diarrhoea has great potential. More than 40% of approx. 35 million tourists and business travellers are affected by this condition yearly.
An increasing proportion of the company's R&D resource is allocated to further development of the vaccine for an international launch by year 1999/2000 at the earliest.

Cholera and polio vaccines facing launch

SBL's cholera vaccine is also in Phase III prior to an international launch. It is already registred in selected countries and sales are expected to commence during 1999. The vaccine is already marketed successfully in Sweden under trademark Dukoral, and approved against cholera and ETEC. Also, SBL has for many years marketed a polio vaccine in the Swedish market. The vaccine is of high international standard, and plans are to commence world wide sales during 1999.

One important feature of the ETEC and cholera vaccines is the possibility of oral adminstration, i.e. the possibility to drink them. The key component in this context is the rCTB component, which was developed by Prof. Jan Holmgren, the Department of Medical Microbiology at Gteborg University. The rCTB component represents additional commercial potential for SBL, not only for use in vaccines but also for use with other pharmaceuticals.

Significant cash funds the years following launch

ACTIVE estimates that the research activity at SBL has all the necessary qualities to develop internationally successful vaccines. To achieve this the company will require a significant R&D investment together with investment in production and process developemnt over the next three years. The capital requirement is estimated at SEK 200M in total, which will be infused into the operation by ACTIVE.

Provided that the clinical trials are successful SBL estimates that, given that sales projections are fulfilled, the above mentioned vaccines will generate cash funds to SBL Vaccin exceeding SEK 200M annually.

SBL - on the Swedish market

Strong brand and a dominant market position

The business consists of marketing of its own vaccines and licensed vaccines and the distribution of vaccines throughout Sweden. The product groups are composed of child, adult and traveller vaccines. SBL Vaccin Distribution is an independent unit with a full portfolio of vaccines from all major producers. The vaccines are distributed to pharmacies, school health services, care centres, hospitals, private physicians, industrial
health services, and vaccination centres.

SBL has a strong position in the Swedish vaccine market, with a market share of approx. 50%.

Increased competition after deregulation

Until December 1996, SBL and The National Corporation of Swedish Pharmacies had the sole right to distribute vaccines to end users. This meant that the share of distribution orders as a proportion of total turnover was significant. As of 1997, other suppliers have the right to distribute directly to end users which will lead to increased competition. Increased competition combined with regrouping among the suppliers will have a negative impact on SBL's turnover. To compensate for this and to meet competition, new products will be added to the portfolio.

Sweden is SBL's main market but by keeping pace with deregulations in other countries, the ambition is to establish a strong position in the other Nordic countries and in the Baltic area.

The effects of the acquisition of SBL Vaccin AB

SBL Vaccin AB was incorporated in 1993, and conducts its business in a fully owned facility in Solna, outside Stockholm. The number of employees is 133, of which 37 are in research and development.

SBL Vaccin AB:s invoiced sales in 1994 amounted to SEK 234M, in 1995 to SEK 261M, and in 1996 to SEK 262M, with an operating profit before deduction R&D costs of SEK
35M, SEK 44M, and SEK 34M for the respective years. R&D costs have increased from
SEK 13M in 1994, SEK 25M in 1995 to SEK 37M in 1996, and have been charged yearly, which gave a result after taxes of SEK 0M, SEK 5M, and SEK-3M respectively.

The equity of the company at 31 December, 1996, amounted to SEK 97M.

To ACTIVE, SBL Vaccin represents a strategic investment with high risk but also with considerable potential. The construction of the acquisition agreement limits the risk exposure. Initially is paid a purchase sum of SEK 100M. Remaining payments are in part conditional on the performance of the present business operation in terms of sales, and in part conditional on ETEC and cholera vaccines receiving regulatory approval.
Regarding liquidity, at the day of taking possession ACTIVE will infuse SEK 200M for research activities. The acquisition is not estimated to affect the result of the ACTIVE corporation until 1999, at the earliest.

The completion of the acquisition is conditional upon, among other things, approval from the ACTIVE General Annual Meeting and the Swedish Government.

Malmö 12 May, 1997

ACTIVE i Malmö AB (publ)
Bo Håkansson President