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 January through February 2004
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.
YEAR-END REPORT 2003
* Biacore's sales in the fourth quarter of 2003 amounted to SEK 160.8 million
(175.9), a decrease of 9% mostly due to currency effects. For the full-year
2003, sales decreased by 16% to SEK 515.5 million (614.2). Excluding currency
effects, the sales decline was 9%.
* Biacore's earnings per share in the fourth quarter amounted to SEK 5.67
(4.15), an increase of 37%. For the full-year 2003, earnings per share
decreased by 45% to SEK 4.53 (8.20). Lower sales and the cost associated with
the discontinuation of Procel(tm) were the main reasons for this decrease.
* Biacore has decided to increase its investment, particularly in sales and
marketing, to capture the significant business opportunities that exist for
its core SPR technology. This investment is designed to further penetrate the
late-stage drug discovery market and to underpin the successful launch of the
Company's ground-breaking SPR array system in 2004.
* Biacore's Board has decided to take the initial steps needed to de-list the
Company's ADRs from Nasdaq National Market in the United States. This decision
is due to the increasing costs of maintaining this listing, the lack of
advantages with a dual listing and the limited number of Biacore ADRs traded
on Nasdaq.
* The Board has decided to recommend to the Annual General Meeting an unchanged
dividend payment for the financial year 2003 of SEK 3.00 per share.
* The current market and currency conditions make an accurate sales forecast for
2004 difficult. However, Biacore expects sales and earnings per share for the
full-year 2004 to increase. As always, sales and earnings are likely to vary
substantially between the quarters.
January-December October-December
2003 2002 Change 2003 2002 Change
Sales, SEK million 515.5 614.2 -16% 160.8 175.9 -9%
Operating income, SEK million 29.5 140.6 -79% 54.7 48.5 13%
Operating margin, % 6 23 34 28
Income after financial items, SEK million 41.4 120.2 -66% 57.0 49.6 15%
Net income, SEK million 44.3 80.8 -45% 55.4 40.6 36%
Diluted earnings per share, SEK 4.53 8.20 -45% 5.67 4.15 37%
Operational Review January - December 2003
Amounts stated in this report pertain to the Biacore Group, unless indicated
otherwise. Figures in parentheses refer to the corresponding period in 2002.
Biacore's sales developed more satisfactorily during the fourth quarter than in
prior quarters 2003. The sales volume was on the same level as the corresponding
period in 2002, and the reported sales decline of 9% was due to currency
effects. Sales to academic customers and late-stage drug discovery customers
continued to increase in the fourth quarter. However, demand from early-stage
drug discovery customers continued to be weak, and this trend was particularly
apparent in Europe in the fourth quarter.
For the full-year 2003, sales declined by 16% to SEK 515.5 million (614.2).
Excluding currency effects, the drop was 9%. Biacore(r)3000 continues to be the
Company's best-selling product. This flexible system is Biacore's most important
product offering to academic customers in its core basic life science research
market. Biacore(r)3000 is used to solve a wide range of biological research
problems, especially in the field of functional proteomics. Sales of
Biacore(r)3000 with the new GxP package, which is used in the clinical trials of
the growing number of bio-therapeutics under development, to capture important
data including immunogenicity, has made good sales progress in all key markets.
Sales of Biacore(r)S51 also continued to make an important contribution, as
major customers in the pharmaceutical and biotech industries have increasingly
recognized the benefits of this system in the field of lead optimization.
Consumables and service accounted for approximately 27% of total sales.
Sales were divided geographically as follows:
January-December October-December
SEK million 2003 2002 Change 2003 2002 Change
Americas 228.6 270.5 -16% 69.4 63.8 9%
Europe 136.5 173.9 -22% 43.2 62.7 -31%
Asia-Pacific 150.4 169.8 -11% 48.2 49.4 -2%
Sales in the Americas were affected by a slowdown in orders from the
pharmaceutical and biotechnology sector. A marked improvement occurred in the
fourth quarter, but it is still too early to tell if this is a new market trend.
In Europe, the sharp slowdown in sales to early-stage drug discovery customers,
which started in the third quarter became more marked in the fourth quarter.
Sales in Asia-Pacific - Japan being the most important market - varied strongly
between the quarters during the course of 2003, a common phenomenon in Biacore's
business.
The 82% gross margin achieved for the full-year 2003 was consistent with prior
periods.
In the fourth quarter, costs for marketing amounted to SEK 45.2 million (53.4),
a decrease of 15%. In the same period, administration costs increased by 26% to
SEK 17.2 million (13.6), adjustment of pension plan assets to required levels
being one factor. R&D expenses increased by 12% in the fourth quarter to
SEK 34.2 million (30.4). Of these amounts, SEK 12.4 million (4.1) were
capitalized.
Operating income in the fourth quarter increased by 13% to SEK 54.7 million
(48.5), and the operating margin was 34% (28).
The Item affecting comparability in 2003 pertains to the discontinuation of
Procel(tm).
Operating income for the full-year 2003 decreased by 79% to SEK 29.5 million
(140.6), mainly as a result of lower sales and the discontinuation of
Procel(tm). The operating margin was 6% (23). After adjustment for the item
affecting comparability, SEK -58.5 million in 2003, and damages received for
patent infringement, SEK 19.6 million, in 2002, operating income decreased by
27%. Currency differences during 2003 amounted to SEK -14.7 million (-16.6) in
'Other income and expenses'. These differences were mainly due to the
depreciation of the U.S. dollar and the Japanese yen against the Swedish Krona.
As a result of deferred taxes and the geographical distribution of earnings, a
tax gain of SEK 2.9 million is reported (-40.1). Taxes have been limited by
deductible expenses for the discontinuation of Procel(tm), among other items.
Net income for 2003 was SEK 44.3 million (80.8), leading to a 45% decrease in
diluted earnings per share to SEK 4.53 (8.20). Earnings per share in the fourth
quarter was SEK 5.67 (4.15), an increase of 37%.
Investing Activities
During 2003, capital expenditures totaled SEK 16.4 million (31.7).
Personnel
At the end of December 2003, Biacore had 346 (325) permanent employees.
In May 2003, Biacore introduced a new incentive stock option program involving a
maximum of 100,000 new Biacore shares.
In January 2004, Mr Erik Wallden assumed the new position of Head of Marketing
and Business Development and Executive Vice President of Biacore.
Business Review
Biacore has a world-leading position in the commercialization of surface
plasmon resonance (SPR) technology. SPR-based systems from Biacore are used
world-wide for the real-time detection and monitoring of biomolecular binding
interactions. The Company's key customers include academic life science
researchers, the pharmaceutical and biotechnology industry as well as the food
industry and government testing facilities.
In 2003, Biacore's sales declined due to pharmaceutical companies, especially in
the United States and Europe, focusing their R&D spending on late-stage drug
discovery and development activities and limiting their purchases of equipment
for early-stage applications. However, there is a high probability that this
trend will cease within the next twelve to eighteen months. Bearing in mind the
large potential for its systems in other market segments, Biacore remains very
positive about its longer-term prospects. Increased investment in sales and
marketing will also contribute to the Company's growth.
Academic Customers - Our Strong Core Business
Biacore's SPR based systems have a strong following from academic customers
around the globe and are found in all leading life science institutions. This is
evidenced by the fact that, as per year-end 2003, more than 3,200 peer-reviewed
scientific papers had been published based on research using Biacore's systems.
The strength of the Company's business has been reflected in the sales progress
to this market segment that has been made over the course of 2003. During this
period, the Company's marketing activities have continued 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.
The research areas where Biacore believes that its technology is in the position
to deliver the most value include Cancer, Neuroscience and Immunology and
Infectious Diseases. In the latter area, the utility of SPR technology was
highlighted when Biacore signed a collaborative deal with the Shanghai Institute
of Materia Medica, the Chinese Academy of Sciences, which will involve the use
of SPR technology to find new compounds which are active against the SARS virus.
In addition, Biacore has succeeded in building the profile of its technology 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, a rapidly growing market, there are three areas where Biacore's SPR
systems have clear competitive advantages, namely ligand fishing,
protein-protein interactions and integration with Mass Spectrometry through
automated recovery and preparation of bound analytes. These areas are crucial to
developing a clear understanding of disease processes and for identifying
potential drug candidates.
Developing Our Pharmaceutical Industry Customer Base
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.
In recent years, Biacore's ability to deliver to this customer base has been
enhanced by the introduction of a number of systems focused on the specific
needs of the drug development process.
Biacore(r)S51 - Building A Business in Lead Optimization
During the course of 2003, Biacore has continued to work to establish
Biacore(r)S51 as a key tool for pharmaceutical and biotechnology customers,
addressing critical bottlenecks in the drug discovery process downstream of
high-throughput screening (HTS), particularly in the area of lead optimization.
Biacore(r)S51 is gradually establishing its position in this segment of the
market based on its ability to provide 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 the Company's
future sales growth. In the second quarter 2003, 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 has led to further interest in the
system from some of the world's leading drug discovery laboratories.
This confidence is also based on the growing appreciation of the product from
the market as new customer-generated data highlighting the benefits of using
Biacore(r)S51 become increasingly available. At the Society for Biomolecular
Screening Conference in Portland, Biacore presented further data on the value of
using Biacore(r)S51 for the detailed characterization of potential new
therapeutics which are directed at kinases.
Biacore(r)3000 GxP Package - Important to the Bio-Therapeutics Revolution
Biacore's GxP package, which was launched in the spring of 2003 and which is
used in conjunction with Biacore(r)3000, has been well received by
pharmaceutical and biotechnology customers. This new combination has been
designed to facilitate pharmaceutical companies' compliance with the regulatory
requirements 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, which
are a major source of growth for the pharmaceutical industry. The new
combination will play a key role in capturing vital data during clinical trials
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 special purification is needed. This
enhances both the speed and reproducibility of the results generated.
Food Analysis Business - Sales Continue to Build
Biacore's food analysis business has made good progress with rapid consecutive
releases of its proprietary Qflex(r) kits for beta agonists, sulphonamides and
chloramphenicol, all residues considered harmful in the food chain. These kits
in conjunction with the dedicated food analysis platform, Biacore(r)Q, are
gaining acceptance by food regulators and food production companies. This is
further evidenced by the growing presence of the technology in markets such as
Asia, where routine testing is now undertaken by one of the major poultry
producers in Thailand, and Europe, where in the United Kingdom key independent
and government facilities now routinely use Biacore(r)Q. Further advances also
in the vitamin analysis segment, including adoption of Biacore(r)Q by some of
the world's leading dairy product and vitamin producers, are further increasing
the Company's presence in this sector.
This market segment also offers considerable longer-term recurrent revenues
through kit sales.
SPR Array Technology - Expanding Our Commercial Opportunities
Biacore is determined to build on the strong SPR-based business that it has
established over the last thirteen years. 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 with a higher throughput and information content than is possible
today.
To commercialize its SPR array technology, Biacore has utilized two
collaborations to develop specific applications and gain access to reagent
expertise. 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 fact that the collaboration with Millennium came to an end, as
planned, in the summer of 2003, allows Biacore to extend the number of
pharmaceutical customers with whom it can work to generate the applications data
needed to ensure the successful launch of this ground-breaking new system.
Initially the SPR array system will be targeted at applications in two key
areas:
* Interaction proteomics, which is of significant interest to academic customers
given the importance of understanding exactly how proteins interact as part of
elucidating the causes of disease, and
* post-HTS small molecule characterization areas, where its sensitivity,
increased throughput and high information content will complement
Biacore(r)S51 in lead optimization applications.
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.
Maximizing The Potential of Our SPR Business
Biacore has decided to re-focus and to increase its investment in the sales and
marketing activities needed to support its SPR-based systems, especially towards
the late-stage drug discovery customers. This decision has been made based on
the attractive prospects that the Company sees for its current and developing
product portfolio and in particular for the enhanced commercial opportunities
that can be accessed via its new SPR array system that is due to be introduced
in the second half of 2004.
Amongst the key areas in which Biacore expects higher sales are:
* The Company's core life science research customers as Biacore's SPR technology
gains even greater recognition in the field of functional proteomics.
* The new applications of the Biacore(r)3000, including the new GxP package
which has taken Biacore into the fast growing bio-therapeutics clinical trials
market.
* Its systems dedicated to late-stage customers in the pharmaceutical and
biotechnology industry, Biacore(r)S51 for "hit to lead"-selection, and
Biacore(r)C for quality control applications.
* The significant commercial potential of the first system being developed based
on Biacore's novel SPR array technology, which is due to reach the market in
the second half of 2004 and which will be targeted initially at functional
proteomics and post-HTS small molecule characterization by the pharmaceutical
industry.
De-Listing From Nasdaq
Biacore's Board has decided to take the initial steps needed to de-list the
Company's ADRs from Nasdaq National Market in the United States. This decision
is due to the increasing costs of maintaining this listing, the lack of
advantages with a dual listing and the limited number of Biacore ADRs traded on
Nasdaq.
Nominations Committee
The Annual General Meeting has decided to establish a nominations committee with
the task to propose to the Annual General Meeting:
1. The number of Board members to be elected.
2. The election of Board members.
3. Remuneration to the members of the Board.
Until the Annual General Meeting 2004, the nominations committee consists of the
following: Lars-Goran Andren, chairman of the board, co-ordinator of the
committee; Peter Bolte, Handelsbanken Fonder; Inger Brattne, Pfizer and Peter
Rudman, Nordeas fonder.
Quarterly Sales Variations
Biacore's total sales during the period 2001-2003 were split between quarters as
follows:
Quarter 1 23% Quarter 3 22%
Quarter 2 25% Quarter 4 30%
Dividend
The Board has decided to recommend to the Annual General Meeting an unchanged
dividend payment for the financial year 2003 of SEK 3.00 per share.
Outlook For The Full-Year 2004
The current market and currency conditions make an accurate sales forecast for
2004 difficult. However, Biacore expects sales and earnings per share for the
full-year 2004 to increase. As always, sales and earnings are expected to vary
substantially between the quarters.
The Annual General Meeting will be held on Wednesday, April 28, 2004 at
4.30 p.m. in Uppsala.
Uppsala, Sweden, February 25, 2004
Biacore International AB (publ)
The Board of Directors
Financial Information
Biacore's Annual Report will be distributed to the shareholders in mid April.
The Annual Report will also be available from that time on Biacore's website.
During 2004, Biacore plans to release its interim reports as follows:
January - March Wednesday, April 28
January - June Monday, July 19
January - September Thursday, October 21
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.
This report contains certain forward-looking statements 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.
Biacore International AB (publ)
Company registration number: 556534-5211
Head office
Biacore International SA, Puits-Godet 12, CH-2000 Neuchatel, Switzerland
Phone +41 32 720 9000
info@biacore.com
www.biacore.com
Biacore Consolidated Income Statements
January-December October-December
SEK million 2003 2002 Change 2003 2002 Change
Sales 515.5 614.2 -16% 160.8 175.9 -9%
Cost of sales -94.0 -100.9 -7% -22.5 -28.5 -21%
Marketing -165.4 -199.8 -17% -45.2 -53.4 -15%
Administration -71.1 -68.3 4% -17.2 -13.6 26%
Research and development -78.6 -104.4 -25% -21.9 -26.3 -17%
Other income and expenses -14.4 4.3 -4.5 -4.5
Amortization of goodwill -4.0 -4.5 -1.0 -1.1
Items affecting comparability -58.5 - 6.2 -
Operating income 29.5 140.6 -79% 54.7 48.5 13%
Financial items, net 11.9 -20.4 2.3 1.1
Income after financial items 41.4 120.2 -66% 57.0 49.6 15%
Income taxes 2.9 -40.1 -1.5 -9.1
Minority interest - 0.7 -0.1 0.1
Net income 44.3 80.8 55.4 40.6
Basic earnings per share, SEK 4.55 8.28 5.68 4.16
Diluted earnings per share, SEK 4.53 8.20 5.67 4.15
No. of shares, average, diluted,
thousands 9,787 9,851 9,767 9,786
Net income 44.3 80.8 55.4 40.6
Stock options issued 1.1 - 0.6 -
Dividend -29.3 - - -
Currency translation differences -20.6 -15.3 -1.4 -2.7
Change in shareholders' equity -4.5 65.5 54.6 37.9
Quarterly Income Statements
4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q
SEK million 2003 2003 2003 2003 2002 2002 2002 2002
Sales 160.8 105.7 142.5 106.5 175.9 142.4 154.6 141.3
Cost of sales -22.5 -18.4 -28.8 -24.3 -28.5 -22.9 -25.1 -24.4
Marketing -45.2 -38.5 -43.1 -38.6 -53.4 -47.9 -55.6 -42.9
Administration -17.2 -19.7 -18.8 -15.4 -13.6 -19.2 -19.5 -16.0
Research and development -21.9 -18.9 -19.3 -18.5 -26.3 -23.5 -32.3 -22.3
Other income and expenses -4.5 -2.1 -3.2 -4.6 -4.5 2.5 11.2 -4.9
Amortization of goodwill -1.0 -1.0 -1.0 -1.0 -1.1 -1.1 -1.1 -1.2
Items affecting
comparability 6.2 -64.7 - - - - - -
Operating income 54.7 -57.6 28.3 4.1 48.5 30.3 32.2 29.6
Financial items, net 2.3 1.5 3.2 4.9 1.1 -10.4 -12.7 1.6
Income after financial
items 57.0 -56.1 31.5 9.0 49.6 19.9 19.5 31.2
Income taxes -1.5 10.6 -4.6 -1.6 -9.1 -8.7 -12.2 -10.1
Minority interest -0.1 - - 0.1 0.1 0.1 0.1 0.4
Net income 55.4 -45.5 26.9 7.5 40.6 11.3 7.4 21.5
Basic earnings
per share, SEK 5.68 -4.67 2.76 0.77 4.16 1.16 0.75 2.21
Diluted earnings
per share, SEK 5.67 -4.67 2.75 0.77 4.15 1.16 0.75 2.17
No. of shares, average,
diluted, thousands 9,767 9,750 9,773 9,770 9,786 9,750 9,896 9,918
Sales by region
Jan.-Dec. 4Q 3Q 2Q 1Q 4Q 3Q 2Q 1Q
SEK million 2003 2002 2003 2003 2003 2003 2002 2002 2002 2002
Americas 228.6 270.5 69.4 52.8 65.2 41.2 63.8 59.6 80.8 66.3
Europe 136.5 173.9 43.2 22.6 39.8 30.9 62.7 44.2 36.5 30.5
Asia-Pacific 150.4 169.8 48.2 30.3 37.5 34.4 49.4 38.6 37.3 44.5
Total sales 515.5 614.2 160.8 105.7 142.5 106.5 175.9 142.4 154.6 141.3
Biacore Consolidated Balance Sheets
December 31
SEK million 2003 2002
Intangible assets 70.0 84.8
Property, plant and equipment 111.9 117.1
Long-term investments 1.0 7.9
Other long-term assets 23.8 27.7
Other current assets 260.2 242.3
Liquid funds 352.5 351.6
Total assets 819.4 831.4
Shareholders' equity 630.2 634.7
Minority interest 0.8 0.9
Provisions 80.6 83.4
Liabilities 107.8 112.4
Total shareholders' equity and liabilities 819.4 831.4
Financial structure
Operating capital 306.0 327.4
Long-term investments 1.0 7.9
Net interest-bearing assets 312.3 313.9
Net payable and deferred income tax asset 11.7 -13.6
Minority interest -0.8 -0.9
Shareholders' equity 630.2 634.7
Biacore Consolidated Statements of Cash Flows
January-December
SEK million 2003 2002
Net income 44.3 80.8
Less: Depreciation and amortization 31.8 23.7
Less: Write-downs of intangible and tangible assets 48.7 -
Less: Income from long-term investments -4.0 28.7
Change in working capital -19.2 37.1
Other -14.9 -6.6
Cash flows from operating activities 86.7 163.7
Acquisition of business, net of cash acquired - 1.6
Purchase of intangible assets -50.1 -7.0
Purchase of property, plant and equipment -16.4 -31.7
Sales of long-term investments 11.0 -
Cash flows from investing activities -55.5 -37.1
Change in financial liabilities -1.0 4.2
Dividend -29.3 -
Cash flows from financing activities -30.3 4.2
Net change in liquid funds 0.9 130.8
Key figures
Operating margin 5.7% 22.9%
Return on operating capital 9.3% 42.4%
Return on equity 7.0% 13.4%
Equity ratio 77% 76%
Shareholders' equity per share, diluted, SEK 64.34 64.44
No. of shares, thousands 9,750 9,750
No. of shares, end of period, diluted, thousands 9,794 9,849
No. of shares, average, diluted, thousands 9,787 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.
Dated: March 12, 2004
Biacore International AB (publ)
By: Lars-Olov Forslund
Name: Lars-Olov Forslund
Title: Chief Financial Officer