Report of a Foreign Private Issuer · Form 6-K
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1: 6-K Report of a Foreign Private Issuer 61± 274K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
Date of Report: April 10, 2001
BIORA AB
SE-205 12 Malmo, Sweden
Telephone: (011) 46-40-32-13-33
Indicate by a check mark whether the registrant files or
will file annual reports under cover of Form 20-F or Form 40-F.
|X| Form 20-F |_| Form 40-F
Indicate by check mark whether the registrant by
furnishing the information contained in this Form is also thereby
furnishing the information to the Commission pursuant to Rule 12g3-2(b)
under the Securities Exchange Act of 1934.
|_| Yes |X| No
If "Yes" is marked, indicate below the file number
assigned to the registrant in connection with Rule 12g3-2(b):
Not applicable.
This Form 6-K consists of Biora AB's Annual Report for
2000 (see Annex A).
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 hereunto duly authorized.
BIORA AB
Dated: April 10, 2001 By: /s/ Anders Agering
------------------------------
Anders Agering
Chief Financial Officer
ANNEX A
BIORA
ANNUAL REPORT 2000
CONTENTS
Biora - summary of year 2000 5
Biora in brief 5
Focus on the core business 7
Biora - objectives and strategies 11
Emdogain and dental disease 13
Research and development 16
Clinical experiences of Emdogain 18
The market for Emdogain 20
International Customer Center 22
Quality and environment 24
Directors' report 25
Statements of operations 29
Balance sheets 30
Statements of cash flow 32
Notes to financial statements 33
Auditors' report 52
Board of directors and auditors 53
Management group 57
Shares and shareholders 60
Five year summary and key ratios 62
Addresses 64
This Annual report may contain certain forward-looking statements that
relate to future events or future business and financial performance. Such
statements can only be predictions and the actual events or results may
differ from those discussed. The Company cautions that these statements are
subject to important factors that could cause actual results to differ
materially from those expressed or implied in such forward-looking
statements and are more fully discussed in periodic reports filed with
the Securities and Exchange Commission.
ANNUAL GENERAL MEETING
The Annual General Meeting of shareholders of Biora AB (publ) will take
place on Thursday, May 3, 2001, at 5:00 p.m. in Hotel IBIS (Skyline Hotel)
Bisittaregatan 2/Stadiongatan in Malmo.
REGISTRATION
Shareholders who wish to attend the annual general meeting must:
o be registered in the share register of the Securities Register Center,
VPC AB, not later than Monday, April 23, 2001; shareholders who have
registered their holdings through an investment manager must request
temporary share registration with VPC well before April 23.
o register their participation no later than 4:00 p.m. on Thursday,
April 26, 2001.
SHAREHOLDERS MAY REGISTER BY:
o the shareholder registration card attached to this Annual Report
o Internet at Biora's website at "www.biora.com"
o letter, to Biora AB, Attention Christel Rosendahl, Medeon Science
Park, 205 12 Malmo, Sweden
o fax on +46-40-32 13 55
o telephone on +46-40-32 13 69.
WHEN REGISTERING, SHAREHOLDERS SHOULD STATE:
o their name
o their social insurance, social security or registration number
o their address and telephone number
o the name of any potential accompanying persons (two guests per
shareholder are permitted)
If the shareholder intends to participate by proxy, notification must be
submitted prior to the meeting.
ITEMS FOR THE AGENDA
The agenda and list of items to be discussed at the Annual General Meeting
will be published in the major Swedish daily newspapers. The agenda may
also be requested from the company when registering for the meeting.
FINANCIAL INFORMATION FROM BIORA IN 2001
Annual General Meeting of shareholders May 3
Interim report for the first quarter 2001 May 3
Form 20 F, U.S. GAAP 2000 June
Report for the first half year 2001 August 23
Interim report for the first nine months 2001 November 7
Capital markets day for financial analysts, investors and media
(in Stockholm) May 17
BIORA - SUMMARY OF YEAR 2000
o Net sales for the year 2000 were SEK 89.2 million, compared to SEK
73.6 million during 1999. This corresponds to an increase of 21% in
SEK and 15% at fixed rates of exchange.
o Loss after tax was SEK 76.1 million compared to a loss of SEK 86.7
million during 1999.
o Sales in the U.S. market increased by 51% in SEK and by 36% in U.S.
Dollars compared to 1999. Sales in Japan as well as in Germany
decreased by 13%. In Germany, a fourth quarter sales increase of 13%,
both in SEK and in local currency, reversed the previous negative
sales trend. No deliveries were made to Japan during the fourth
quarter, compared to deliveries valued at SEK 2.7 million during the
corresponding period in 1999 (see below).
o Rickard Soderberg became the new President and Chief Executive Officer
of Biora AB in August.
o Emdogain Gel, a development of Emdogain, was introduced in Europe in
June 2000.
o The U.S. Food and Drug Administration, FDA, approved Emdogain Gel in
January 2001.
o In November, Seikagaku Corporation, Biora's marketing and sales
partner in Japan, recalled all deliveries of Emdogain in order to
comply with the registration authority's guidelines which required the
same changes to be made to the production process for deliveries to
Japan as had previously been implemented for other markets. The
Japanese regulatory authority has indicated that it will look
favorably on an accelerated registration process for Emdogain Gel and
registration is expected during 2001.
o Biora's Board of Directors has decided to divest, or find a partner
for, BioEx, the organization dedicated to all non-dental research and
development.
o During the first quarter of 2000, Biora acquired the rights to a
patent-protected pharmaceutical project for the treatment of dry mouth
(xerostomia), a common affliction among the older population and a
common side effect of many medicines and radiation treatment. In March
2001, Biora signed a license agreement under which Biora retains the
right to sell the product to dentists and the licensee obtains the
right to sell to other target groups.
o In February 2001, it was announced that Biora's Board of Directors
intends to recommend that the shareholders at the Annual General
Meeting give the Board authority to issue new shares, if deemed
necessary, at a time and on market conditions that are considered to
be appropriate. This will increase the company's freedom of action and
secure an adequate capital base.
BIORA IN BRIEF
o Biora is a Swedish biotechnology company that develops, manufactures
and markets pharmaceutical products for dentists and dental
hygienists. The company had 75 employees at the end of the year, with
headquarters and production based in Malmo, Sweden.
o Sales of Emdogain and Emdogain Gel are conducted through wholly owned
subsidiaries in the U.S., Germany, Italy, the Benelux countries, Great
Britain and Switzerland, and through Biora's own marketing
organization in the Nordic countries. In other countries, such as
Japan, for example, marketing is done through distribution or
collaboration agreements.
o The company's most important product, Emdogain, is based on a natural
enamel matrix protein that is used to treat periodontal disease.
Emdogain is a patent-protected product in all the important markets.
It was launched in Sweden and Germany in 1996, in the U.S. and the
rest of Europe in 1997 and in Japan in 1998.
o Emdogain Gel, which is an improved product based on Emdogain, is a
pre-mixed, ready-to-use product, which provides a simpler and less
time-consuming treatment than Emdogain. It was introduced in Europe in
June 2000, in the U.S. in February 2001 and is expected to be launched
in Japan during 2001.
o Research and development will concentrate on dental indications that
will extend the use of Emdogain Gel within the next few years.
o Research and development of products for non-dental indications are
carried out by a separate organization, Biora BioEx, which Biora now
intends to divest or find a partner for.
FOCUS ON THE CORE BUSINESS
As Biora's new President, I am fascinated by all the possible areas of use
that exist for Emdogain and the great potential of this product.
Consequently, I find it easy to envisage all the benefits that Biora can
expect to reap from Emdogain in the future.
However, the real challenge for Biora right now consists of finding the
business possibilities that can be expected to lead to a stable financial
platform in the short term. From this platform, Biora has the potential to
expand at a rate that can be expected to provide shareholders with a good
return on their capital and employees with an interesting work place in
which they can thrive.
CONCENTRATION ON OUR CORE BUSINESS
During my first six months as President, I have met customers and
researchers in order to form an understanding of what Biora and Emdogain
stand for.
Biora has today established a strong position among researchers within
periodontology, and a significant number of specialists use Emdogain
successfully as standard treatment in regenerative therapy for periodontal
disease. We also have committed, highly competent employees in our researcher
and production organization as well as in our sales force. Taken together,
this provides a number of possibilities that can contribute to a continuing
increase in sales. Therefore, we are concentrating on the following:
o To first attain a strong position in several important key markets and
then expand into other markets. Biora has traditionally been very
ambitious, and has simultaneously introduced Emdogain to too many
markets.
o To focus on customers with large sales potential and to establish the
product among them. The target group has been too broadly defined, and
we have tried to approach many different customers in parallel. By
focusing more clearly on a well-defined customer segment, we can build
our customer relations in a more systematic way.
o To emphasize the advantages that Emdogain offers the dentist and the
patient, before concentrating on the mode of action of the product.
o To focus on research projects that support Emdogain and have the
potential for rapid market introduction. There has previously been a
certain imbalance in the research between projects intended to support
Emdogain in the short term and long-term projects directed towards
other areas of use for enamel matrix proteins.
My mission as President is to ensure that we concentrate on our core
activity, in relation to both selling and research. This process is already
underway.
KEY MARKETS WITH LARGE GROWTH POTENTIAL
The U.S., Germany and Japan are Biora's three key markets with large
potential for sales growth. In the U.S. alone, approximately 2 million
surgical procedures for periodontal disease are performed every year, and
it is Biora's opinion that Emdogain could be used successfully in at least
half of them. Only a very small percentage of these patients are treated
with Emdogain in the U.S. today. Corresponding situations exist in Germany
and in other markets.
Why am I so optimistic about the potential of Emdogain in these markets?
o Our sales in the U.S. market have grown 51% in SEK compared to 1999.
With the launch of Emdogain Gel, we can offer a product that
simplifies periodontal treatment for dentists as it is pre-mixed,
unlike Emdogain. This should strengthen the product's position in the
American market.
o In Germany, during the fourth quarter, a negative sales trend was
reversed to provide an increase of 13% in both SEK and local currency.
In a publicized statement, the German Periodontology Association (DGP)
supported Emdogain's use in periodontal surgery. This statement has
meant that several of the larger German insurance companies now fully
or partially reimburse patients for the cost of Emdogain treatment.
o Historically, Japan had a stable level of sales growth. In November,
Seikagaku Corporation recalled Emdogain. This was because of the
Japanese registration authority's guidelines, which required the same
changes to be made in the production process for deliveries to Japan
as had earlier been implemented for other markets. The Japanese
authority has now expressed support for an accelerated registration
process for Emdogain Gel, which means that Seikagaku Corporation can
launch a product that can be expected to be more attractive to the
Japanese market. The date of registration is always difficult to
predict, but Biora is planning to introduce Emdogain Gel in Japan
during 2001.
NEW INDICATIONS TO ESTABLISH EMDOGAIN GEL AS STANDARD THERAPY
Within Biora we have now given the highest priority to research projects
that support the use of Emdogain and have a shorter time to market
introduction. Prioritized indications are tooth trauma, treatment of
exposed root surfaces (recession type defects) and restoring lost
tooth-supporting structures in connection with non-surgical cleaning of the
dental root.
Two additional indications, which involve treatment by general dentists,
have been initiated within Biora.
o The first of these projects aims to develop a new enamel matrix
protein-based product to accelerate healing of wounds that occur in
conjunction with non-surgical treatment of the dental root.
o The goal of the second project is to demonstrate that treatment with
Emdogain could lead to that a dental pulp that is damaged does not
need to be replaced with a root filling ("root canal"), but can
instead be preserved and surrounded by new hard tissue.
These projects are vital if we are to establish Emdogain Gel and enamel
matrix proteins as standard therapy for different oral cavity diseases for
which tissues need to be regenerated.
BIORA BIOEX - DISCUSSIONS ABOUT DIVESTITURE OR PARTNERSHIP IN PROGRESS
Biora's Board of Directors intends to focus activity within the company and
is therefore aiming to divest Biora BioEx, or find a partner for it. There
are several interesting projects being developed by Biora BioEx, such as
improved healing of chronic ulcer and stimulation of bone formation. A sale
of BioEx or collaboration with a partner will enable more resources to be
allocated to these projects allowing the development to be completed. A
divestiture should also strengthen Biora's financial position and provide
the company with improved liquidity. Biora is presently negotiating with
several interested parties, but as usual in negotiations no guarantees can
be made as to the result. Should we not be able to sell BioEx, alternative
strategies will be considered.
NEW PRODUCTS FOR THE FUTURE
In my judgment Emdogain Gel will become increasingly important in the
treatment of periodontal disease. In order to strengthen Emdogain's and
Biora's market position, we aim to increase our portfolio of pharmaceutical
products for dentists and hygienists. During the year, Biora acquired the
rights to one such product, a treatment for dry mouth, which affects a
large number of older individuals and is a common side effect of many types
of medication and radiation treatment.
THE GOAL IS TO MAKE BIORA A LEADING COMPANY WITHIN ITS FIELD
My goal is to make Biora a profitable enterprise with strong sales growth.
To achieve this, Biora must assume a leading position within its area of
activity - namely pharmaceutical products that are used by dentists and
hygienists for diseases in the oral cavity. Biora will be present with its
own organization in markets such as the U.S. and Germany. In other markets
with large potential, Biora will work together with partners. For certain
new indications the target group can be increased to include general
dentists, and for these Biora will look for partners to collaborate with,
instead of expanding its own organization.
NEW ISSUE
In order to increase freedom of action and to secure continued adequate
finance, the Board of Directors intends to ask the shareholders at the
Annual General Meeting to give the Board authority to issue new shares, if
deemed necessary, at a time and on market conditions that are considered to
be appropriate.
Rickard Soderberg,
President and Chief Executive Officer
BIORA - OBJECTIVES AND STRATEGIES
BIORA develops, manufactures and sells pharmaceutical products to dentists
and dental hygienists so that their patients with dental diseases can
regain or retain their dental health and improve the appearance of their
teeth. In this way, Biora creates added value for its customers and through
long-term sales and profit development added value for its owners.
OBJECTIVES
Biora's goal is to become the market leader in the area of pharmaceutical
products used to treat or mitigate dental diseases and our target group is
periodontologists and certain dentists specialized in periodontology as
well as hygienists.
EMDOGAIN GEL - BIORA'S PLATFORM
Biora's principal product and the platform on which it will build its
business is Emdogain Gel, a development of Emdogain that offers a simpler
and less time-consuming treatment. Emdogain Gel provides dentists with a
ready-mixed product that, like Emdogain, regenerates natural
tooth-supporting structures. It was launched in Europe in June 2000 and has
been well received by our customers because it is easy to use and saves
time. Emdogain Gel was registered in the U.S. in January 2001, and market
introduction is in progress. The Japanese authority has expressed support
for an accelerated registration process for the product, with registration
expected during 2001.
FOCUS ON KEY MARKETS
The U.S., Germany and Japan together make up 75 per cent of Biora's total
sales. In the U.S. and Germany, Biora will use its wholly owned marketing
organizations to build relationships with key customers and attain a strong
position. These organizations will also be able to market and sell other
products in Biora's portfolio of the future. In Japan, Emdogain is marketed
and sold by Biora's Japanese partner, Seikagaku Corporation. Biora is
aiming to secure a strong position in these key markets and then to expand
into other markets.
FOCUS ON ESTABLISHED CUSTOMERS WITH LARGE SALES POTENTIAL
Experience with Emdogain and Emdogain Gel shows that customers who learn to
use the product correctly and have used it repeatedly are satisfied with
the results of treatment, and the aim is now to get them to increase their
use of Emdogain Gel. Expanding the indications for Emdogain will enable the
product to be used on more and more patients.
FOCUS CLINICAL RESEARCH ON NEW INDICATIONS FOR EMDOGAIN GEL
Research and development within Biora will concentrate on dental
indications that are expected to expand the use of Emdogain Gel, such as
surgical treatment of recession defects or restoration of lost
tooth-supporting structures associated with non-surgical treatment of the
dental root.
DIVESTITURE OR COLLABORATION FOR PRODUCTS WITH NON-DENTAL INDICATIONS
As part of a move to focus its business activities, Biora intends to
divest, or find a partner for, Biora BioEx, the part of the research and
development portfolio that covers non-dental indications. BioEx's portfolio
includes several interesting indications for enamel matrix proteins,
including healing of chronic sores such as leg ulcers, and stimulation of
bone formation, as well as the patent application relating to inhibition of
certain cancer cells, based on early cell studies. The process of finding a
buyer or partner for BioEx is underway, and a sale or partnership will
enable more resources to be allocated so that the development of BioEx's
projects can be completed. In addition, a divestiture is expected to result
in improved liquidity for Biora
INCREASED PRODUCT PORTFOLIO WITHIN THE DENTAL AREA
In order to take full advantage of Biora's marketing and sales resources in
the marketing organizations, Biora is actively seeking new pharmaceutical
products with dental indications. During the year, Biora acquired the
rights to a patent-protected pharmaceutical project for the treatment of
dry mouth. The work of developing a formulation for the product is in the
final phase, and clinical studies are in progress. In March 2001, Biora
signed a license agreement for sales of the product to target groups other
than dentists.
EMDOGAIN AND DENTAL DISEASE
Periodontal disease occurs throughout the world and its range and
distribution are so great that it could be considered a disease of the
entire population.
PERIODONTITIS - A COMMON DISEASE
One third of the population over 55 suffers from periodontal disease. For
patients with extensive loss of tooth-supporting structures and jawbone,
surgery is usually required. According to a report by the American Dental
Association, around two million such surgical procedures are performed in
the U.S. every year. The number of procedures in the world is estimated to
be about five million.
Careful and regular oral hygiene is required for healthy gums and healthy
tooth-supporting structures. Otherwise, large numbers of bacteria gradually
accumulate on the teeth and along the edges of the gums, inflammation
occurs and the gum becomes red and swollen and bleeds easily. If layers of
bacteria are allowed to continue to grow along the edges of the gum, the
inflammation will spread deeper into the tissues and the tooth's supporting
structure can be affected and gradually broken down and destroyed.
Eventually, a pocket is formed between the dental root and the tooth, and
the layers of bacteria around the neck of the tooth can grow down into this
pocket. As the patient cannot brush under the edge of the gum, the disease
continues to spread deeper, and if the disease process continues the
periodontal pocket becomes deeper and there is a risk that the patient will
eventually lose the tooth.
TREATMENT OF SEVERE PERIODONTITIS
In about 10 percent of the entire population, the breakdown of the
structures supporting the teeth is so extensive that surgical treatment is
required to stop the progress of the disease. In the most common form of
treatment, an incision is made and the edge of the gum is folded to the
side so the dentist can reach and treat the affected root. Defects in the
jawbone are leveled out and the gum is sutured to the leveled jawbone. This
removes periodontal pockets, and the patient is able to manage his or her
own oral hygiene. The disadvantage is that new tooth-supporting structures
are not created, and often the normal function of the tooth is not
regained. Furthermore, patients often complain about sensitivity to cold
from exposed root surfaces, and an unaesthetic appearance to their mouth.
EMDOGAIN - REGENERATES LOST TOOTH-SUPPORTING STRUCTURES
Emdogain consists of an enamel matrix protein that existed when the
tooth-supporting structures were originally formed. By surgically covering
the surface of the dental root and other tissues with a layer of protein,
the regeneration process can begin and new root cementum, new ligament
fibers and new surrounding jawbone are formed. This means that the tooth
regains new, natural supporting structures. In clinical tests conducted by
Biora, it has taken between eight and twelve months for the formation of
new jawbone to be clearly visible on X-rays. This formation of new jawbone
can continue over several years.
A large number of scientific articles on Emdogain have been published in
international journals from many parts of the world. The published results
from both pre-clinical and clinical research show that:
o Emdogain is based on an established biological concept and has a
mechanism of action that is well documented
o Emdogain's safety and effectiveness have been documented in
independent, controlled studies
o Emdogain's ability to start the formation of tooth-supporting
structures with new root cementum, ligament and jawbone has been
confirmed with human tissue preparations.
Over 250,000 patients have so far received treatment with Emdogain.
Experience to date, coupled with results from the large number of studies,
confirm that Emdogain is both effective and safe when used for dental
injuries resulting from periodontal disease, and that the product
regenerates lost tooth-supporting structures.
EXPOSED ROOT SURFACES (RECESSION DEFECTS)
Many people lose part of the gum on the front side of the teeth. The cause
is often an inflammation of the gum or an improper (too hard)
tooth-brushing technique that causes the edge of the gum to successively
recede and expose part of the root of the tooth. These gum defects often
cause increased sensitivity and shooting pains in the tooth. Furthermore,
the long dental roots that are visible in the front part of the mouth can
be perceived as aesthetically unpleasing. These defects are currently
treated surgically by "lifting up" the gum and laying it over the exposed
root. Biora has recently completed a series of clinical studies using
Emdogain to improve the result following such treatment, and the results
are now being analyzed.
DENTAL TRAUMA
The indication trauma means treatment of teeth that have been completely
knocked out in accidents. This most often affects adolescents, whose jaws
are still soft and whose support structures for the permanent teeth are not
fully developed. The recommended treatment for a permanent tooth that has
been knocked out is to set it back in the jaw as soon as possible. If the
tooth is outside the mouth for more than 15 to 20 minutes, the outermost
layer of cells on the root surface will die and the likelihood of good
healing is reduced. Instead, the tooth grows together with the jawbone and
the dental root gradually begins to break down until the tooth is lost. In
addition, this can cause difficulties in replacing the lost tooth with an
implant or bridge, as the growth of the jawbone is often halted. Treatment
of knocked-out teeth is an approved indication for Emdogain in Europe,
Canada and Brazil. Studies are in progress to further strengthen the
documentation of this indication and to prepare a corresponding application
for registration in the U.S.
OTHER INDICATIONS RELATING TO PERIODONTAL DISEASE AND ORAL SURGERY
Another indication for Emdogain is the treatment of periodontal defects
between the dental roots, so-called furcation involvement, in a molar with
several roots. Clinical results show that Emdogain can successfully be used
in a mild form of furcation involvement that is also an approved indication
in Europe and Canada. Preliminary studies are now in progress to
investigate the possibility of using Emdogain in patients with more severe
defects.
When impacted wisdom teeth are extracted, there is a risk that the
neighboring tooth will lose its attachment. This is because a wisdom tooth
that cannot erupt in its normal upright position due to insufficient room
in the jaw will injure the attachment of the neighboring tooth. A pilot
study using Emdogain in connection with the surgical removal of impacted
wisdom teeth has so far shown primarily positive effects on the healing of
the wound. Further studies of this indication have been deferred as
priority has been given to other indications.
In addition, studies are underway to investigate the possibility of
restoring lost tooth-supporting structures with Emdogain Gel in connection
with non-surgical cleaning of the dental root.
EMDOGAIN GEL - SIMPLIFIES THE PROCEDURE AND SAVES TIME
Emdogain Gel was introduced in June 2000 in Europe and in February 2001 in
the United States. Instead of mixing two components, as done before,
Emdogain Gel, which is a premixed gel filled in a syringe, offers the
dentist a simplified solution with a premixed formulation in a unique
syringe delivery system, which is easy to use and saves time for the
dentist.
The product has been well received in Europe. In Japan Emdogain Gel is
expected to be launched during 2001.
RESEARCH AND DEVELOPMENT
Research and development at Biora is concentrated on dental diseases.
Emdogain has been shown to stimulate the formation of soft tissue as well
as hard tissue, which provides the possibility of the development of
several indications.
GLOBAL CONTACT NETWORK FOR RESEARCH
Biora maintains its own laboratory in Malmo, Sweden, which has ten
researchers in biology and chemistry, as well as resources for the
coordination of clinical research and registration. In addition, Biora has
a large network of contacts among universities in Europe, the U.S., Japan
and Australia with which Biora exchanges results as well as researchers.
During the year, Biora has received external financing for research from,
among others, a Marie Curie Industrial Host fellowship.
INCREASED KNOWLEDGE OF MATRIX PROTEINS
The research on matrix proteins has gone from tissue level, with microscopy
of tissue preparations, to cell and molecular level in order to study in
detail how these proteins and various types of cells affect each other. A
better understanding of the mechanisms involved and the similarities or
differences among different cell types has so far resulted in six patent
applications for use of Emdogain and other enamel matrix proteins in a
range of new areas. Despite the fact that the proteins that Biora works
with exist in the body only when the teeth are developing, they can be used
to rebuild tissues in adults. This rebuilding of tissues is not limited to
the teeth. Cell culture experiments show how cells, for example from skin
or bone, that attach to a surface layer of enamel matrix protein also start
synthesis of new proteins and form new tissues. Models can show how enamel
matrix proteins during an early phase attach to newly formed tissues, and
follow how the tissues develop to become functional units. The results of
these models can then be transferred to clinical tests and the development
of new products. Among other things, this work has resulted in the
wound-healing project that is being carried out by BioEx.
DEVELOPMENT PROJECTS
EMDOGAIN GEL
Biora's principal project, Emdogain Gel, a stabilized protein that is
delivered as a pre-mixed gel in a sterile syringe, has recently been
registered in major markets, including the European Community, Canada, the
U.S. and Brazil. The work of registering Emdogain Gel in Japan is in
progress. Since Emdogain Gel has to a large extent replaced Emdogain as it
has been introduced to more and more markets, Emdogain Gel is now Biora's
principal product.
WOUND HEALING IN TREATMENT OF MILD PERIODONTITIS
Patients who have a mild form of periodontal disease are treated by
removing the bacterial deposits and tartar that accumulate in the
periodontal pockets around the affected teeth. This treatment (scaling and
root planing) cleans the tooth effectively but it may cause the patient to
experience tenderness of the gum, pain and swelling for up to a week
following treatment. It has been reported that enhanced wound healing is
observed following periodontal surgery with Emdogain. Pilot studies have
shown that Emdogain also accelerates the healing process after non-surgical
periodontal treatment. A product based on enamel matrix proteins with
improved effect on soft tissue healing will be tested in clinics in 2001.
NEW TREATMENT TO PRESERVE DENTAL PULP
During the development of caries ("cavities"), toxic substances can enter
the dental pulp, which results in varying degrees of inflammation and pulp
necrosis (pulp death).
The dentist often finds during treatment that the pulp has been damaged.
Many believe that a damaged pulp must be removed and replaced with a root
filling ("root canal"). Just as enamel matrix proteins can be developed for
use with soft tissue healing, they can also be developed for formation of
hard tissues. When Emdogain is used to regenerate new tooth-supporting
structures, regeneration of both soft tissue (ligament) as well as hard
tissue (root cementum and bone) is stimulated. The result from model
studies within the tooth indicates that Emdogain can also stimulate the
pulp to form new mineralized tissue (dentin), which protects the pulp and
thereby can reduce the number of root canal procedures performed.
The recently started project aims to demonstrate the clinical effect of
Emdogain for this indication (endodontics).
XEROSTOMIA - DRY MOUTH
The aim of Biora's xerostomia project is to develop a product that can be
pre-scribed by dentists to patients who have discomfort caused by dry mouth
(xerostomia). Like periodontitis, dry mouth is a very widespread problem. A
normal flow of saliva is vital for a healthy mouth and therefore essential
to the individual's wellbeing. Dry mouth is a hidden but very common
disease that primarily affects older people but is also a common side
effect of many different types of medicines and radiation treatment. The
substance for which Biora has acquired the patent causes the saliva glands
to be stimulated more effectively by local treatment in the mouth. The
development of a formulation of the product is in its final phase and early
clinical studies are in progress. Dry mouth can be caused by many
underlying factors, and drugs for the treatment of this problem can be
prescribed to patients who are not being treated by dentists. Therefore,
Biora, in March, 2001, entered into a license agreement with a British
biomedical development company, Medpharma, which receives the rights to
sell to target groups other than dentists. Under the agreement Biora
receives a one-time payment, to be paid in equal installments during 2001
and 2002, as well as a royalty based on future sales once the drug has been
introduced to the market. Development costs for the project up to and
including early clinical tests will be shared between Biora and Medpharma.
The agreement covers the whole world except Japan.
BIORA BIOEX
Biora BioEx was formed in the spring of 1999 when international patent
applications for wound healing with matrix proteins were being submitted.
The intention was that Biora BioEx would develop products for indications
outside the oral cavity. During 2000, the Swedish Industrial Development
Fund granted a conditional loan of 15 million SEK to finance the
wound-healing project. This project has advanced through further
pre-clinical tests and is now in clinical phase II for the indication
venous leg ulcers. Also included in the work of Biora BioEx are a project
for stimulating bone formation and a patent application for the inhibition
of certain cancer cells, based on preliminary studies. Biora's Board of
Directors has decided to sell BioEx or to develop BioEx's projects in
collaboration with one or several partners.
CLINICAL EXPERIENCES OF EMDOGAIN
DR ANDREAS PARASHIS, PERIODONTIST,
ATHENS, GREECE
Regeneration of the periodontium has always been a significant part of my
practice and over the years I have tried different techniques, such as bone
grafts and guided tissue regeneration. In 1995, I started using Emdogain
for the treatment of intrabony defects and now it is the only regenerative
modality I use. With Emdogain, I can consistently achieve clinical and
radiographic results that are as good as or better than those obtained with
other techniques, and with minimum time required and a considerably faster
healing with minimum discomfort for my patients.
DR FRANK BECK, PERIODONTIST,
REGENSBURG, GERMANY
I started using enamel matrix derivatives (EMD) in 1996, initially in just
a few periodontal cases, and now use it in every regenerative treatment and
also in some plastic surgery. Based on my experience, I would recommend
practitioners new to this form of treatment to use EMD in the following
order:
1. for one wall defects*
2. for multiple recession covering**
3. for two wall defects*
4. for three wall defects*
The results obtained with EMD are generally the same as those obtained in
traditionally guided tissue regeneration with non-resorbable/resorbable
membranes. However, the benefits are a much easier treatment procedure and
a better wound-healing reaction of the tissue, which may lead to better
results. For practitioners, EMD treatment reduces the chair time
dramatically as you do not have to spend time adapting a membrane.
Furthermore, you do not have to deal with typical healing complications
like membrane exposure.
In the future, I see opportunities to combine EMD with other new trends in
periodontal surgery, such as minimally invasive techniques and growth
factors.
* relates to the number of bony walls in the periodontal defect; the
fewer walls, the harder it is to treat successfully.
** this indication is presently in clinical development.
PROFESSOR DAVID COCHRAN, CHAIRMAN OF PERIODONTICS,
UNIVERSITY OF TEXAS HEALTH SCIENCE CENTER AT SAN ANTONIO DENTAL SCHOOL, U.S.
The use of Emdogain in my patients has provided a refreshing and innovative
approach to periodontal regeneration. In the past, problems with membranes
and various bone-grafting materials have made regenerative procedures
difficult and unrewarding. Emdogain's ease of use, the excellent response
to it by the tissues and its advanced clinical healing make this protein
formulation the unqualified choice for periodontal regenerative procedures.
The scientific basis for Emdogain means that it occupies a unique position
in the marketplace. No other product for peridontal regeneration stimulates
both the hard and soft tissues of the periodontium at the same time. I use
Emdogain in all my patients with infrabony pockets and some of the results
have been remarkable. I think that Emdogain will maintain its unique
position in the marketplace for the foreseeable future.
THE MARKET FOR EMDOGAIN
About one in every ten individuals and about a third of individuals aged
over 55 in the Western World suffer from periodontal disease
(periodontitis).Throughout the world, an estimated five million operations
involving flap surgery are performed annually to treat severe
periodontitis.
Most of these surgical procedures for severe periodontitis are still being
treated without any addition of regenerative materials. When a regenerative
procedure is performed, bone graft material or various types of membranes
(GTR) are utilized even though these methods do not have the same
capability as Emdogain of regenerating the tissues - bone, cementum and
ligament - that make up the tooth-supporting structures. During 2000,
Emdogain was used in approximately 75,000 flap surgeries. Biora estimates
that Emdogain can be used successfully in more than half of all flap
surgeries, especially among patients with local bony defects surrounding
the tooth. This implies that with the current indication to regain lost
tooth-supporting structures alone, Emdogain has a significant opportunity
for growth.
Three markets, the U.S., Germany and Japan, are among the largest for
products used in connection with periodontal surgery. These markets
together accounted for 75 per cent of the total sales of Emdogain during
2000, and Biora is therefore focusing its marketing efforts on these three
markets.
It is Biora's intention to increase the number of indications and to
clinically document Emdogain for other diseases of the oral cavity. Several
projects are in progress with an expected introduction within the next few
years.
o For teeth lost to trauma (avulsed teeth). This indication is currently
approved in Europe, Canada and Brazil. Ongoing studies aim to further
strengthen the documentation for this indication and to prepare for an
application for registration in the U.S. In Europe, marketing efforts
for this indication will be increased during the fourth quarter of
2001, which also coincides with the publication of studies that are
currently in progress.
o To regenerate tooth-supporting structures in connection with
non-surgical treatment of the dental root.
o For surgical treatment of recession defects.
In most markets, the main target group for Emdogain is periodontists and
dentists specializing in the treatment of periodontal diseases. In the
U.S., there are approximately 4000 periodontists. In markets such as
Germany, general practitioners with knowledge and experience of such
treatments usually treat patients with periodontal disease.
SALES DEVELOPMENT DURING THE YEAR
Sales for the year 2000 amounted to SEK 89.2 million, an increase in SEK of
21% compared to 1999. Sales were especially strong in the U.S., and in
Germany there was a turnaround in the fourth quarter from a negative sales
trend to a sales increase. Emdogain Gel, which was introduced in Europe in
June, has been well received and has virtually replaced the earlier
formulation of Emdogain.
U.S.
There are approximately 13 million patients in the U.S. diagnosed with
periodontitis, and most of them have had some kind of treatment for their
disease. The U.S. is Biora's largest single market, and sales in 2000 were
SEK 43.8 million, an increase of 51% in SEK and 36% in US dollar compared
to 1999. Approval of Emdogain was obtained in the U.S. in September 1996,
and Emdogain Gel was approved in January 2001 and introduced to the market
in February. Biora's primary target group is periodontists. A total of 670
new customers purchased Emdogain in 2000, and of these, 475 were
periodontists. Compared to 1999, Biora has increased the number of
customers who purchased the product at least three times. The share of
customers who bought Emdogain at least three times during 2000 was 43%
compared to 36% during 1999. In total, about 3000 American periodontists
have bought Emdogain at least once since its introduction. Emdogain is
today an accepted product among periodontists in the U.S. Emphasis on
existing key customers and the launch of Emdogain Gel are considered to be
important factors for success in the U.S. in 2001.
GERMANY
Germany has approximately 8000 dentists who perform surgical treatment for
periodontal disease and is the largest market for Emdogain in Europe. Sales
during the year amounted to SEK 16.8 million, a decrease of 13 per cent
compared to the previous year. After reorganization of Biora in Germany,
sales have increased again in SEK as well as in local currency, with a
sales record being achieved in November 2000. During the last quarter of
the year, sales in this market went from a negative sales trend to an
increase in sales of 13 per cent compared to the same period in 1999.
An important event took place in September when the German Periodontology
Association (DGP) officially endorsed the use of Emdogain by making the
following statement: "The evidence of histological and controlled clinical
studies shows that the use of enamel matrix proteins, applied to a clean
root surface during flap surgery, is an effective and reliable regenerative
method for the treatment of vertical periodontal bone defects." This
statement is significant in establishing Emdogain as a standard treatment
and has resulted in several German insurance companies agreeing to now
fully or partially reimburse patients for the cost of treatment with
Emdogain Gel. Several university hospitals in Germany now use Emdogain Gel
regularly.
THE MARKET FOR EMDOGAIN
JAPAN
Emdogain was approved for treatment in Japan in January 1998 and Biora's
Japanese partner, Seikagaku Corporation, introduced the product in April of
that year. Biora's shipments to the Japanese distributor during 2000
amounted to SEK 6 million, a reduction of 13 per cent compared to 1999. In
November 2000, Seikagaku Corporation recalled Emdogain in order to follow
the registration authority's guidelines which required the same production
process for Emdogain distributed in Japan as had been implemented for other
markets. Discussions with the Japanese registration authority have resulted
in the decision to accelerate the registration process for Emdogain Gel,
instead of applying for approval of a product produced by the changed
process, as previously planned. This means that there will be a somewhat
delayed reintroduction in the Japanese market, but that Seikagaku
Corporation can introduce Emdogain Gel earlier than planned. Registration
is expected during 2001.
OTHER MARKETS
The Italian market for dental products is substantial. Of approximately
35,000 dentists in the country, about 6,000 perform surgery for periodontal
disease. Sales during the year amounted to SEK 6.4 million, an increase of
18 per cent compared to the previous year. The increase in sales was mainly
due to the introduction of Emdogain Gel.
Sales in the Nordic markets were SEK 5.1 million, an increase of 6 per cent
compared to the previous year. Marketing efforts during the year focused on
existing customers, and it is among these that an increase in usage has
occurred. The introduction of Emdogain Gel in June is believed by Biora to
improve the conditions for establishing Emdogain as a standard treatment in
the Nordic market.
Emdogain has been launched in approximately 30 countries. In markets where
it does not have its own organization, Biora collaborates with partners and
distributors. Total sales in these other markets amounted to SEK 11.1
million, an increase of 36 percent compared to the previous year.
INTERNATIONAL CUSTOMER CENTER AND BIORA.COM
In November 2000, Biora opened its International Customer Center (ICC).
This center provides Biora's customers with an improved service by, among
other things, enabling customers in markets where Biora does not have its
own marketing organization to order Emdogain directly and to have the
product delivered directly to their offices. With a department dedicated to
managing customer enquiries and processing orders, Biora's marketing
organization will have additional opportunities to focus on customer needs
and growth opportunities within their markets. This investment lowers
Biora's inventory management and distribution costs and makes it possible
to communicate directly with customers, especially in those markets where
the company does not have its own marketing and sales subsidiaries. The
goal is to improve the overall customer service level and at the same time
take advantage of increased cost efficiencies.
biora.com
Biora's Internet portal, WWW.BIORA.COM, is an important communication
channel for dentists, dental hygienists, patients and shareholders as well
as other interested parties. Questions can be answered and literature
ordered through the website. One objective of this channel is to eventually
enable customers to purchase Biora's products on line.
QUALITY AND ENVIRONMENT
Biora shall manufacture products that comply with a good margin with the
laws and standards that regulate its operations.
QUALITY
Biora has adopted a quality policy that states, among other things, that
the company shall manufacture products that comply with a good margin with
the national and international laws and standards that regulate its
operations. For the manufacturing and marketing of Emdogain in the EU,
Biora follows "Medical Device Directive 93/42EEC" and quality systems
ISO9002/EN46002. Manufacturing must meet all of the requirements that are
imposed, including Good Manufacturing Practice (GMP) and Quality System
Regulation (QSR).
Biora will continually strive for high quality in all its activities. The
quality system will enable Biora to maintain control and create stability,
reliability and capacity. It is important to maintain a systematic focus on
quality issues when a company is growing as rapidly as Biora. Quality
targets are achieved by providing every employee with education, adequate
training and experience and access to appropriate tools and equipment.
Biora will measure and evaluate its success by regularly monitoring, for
example, trends in the number of error-free products, the number of
comments during inspections, feedback concerning distribution and customer
satisfaction.
ENVIRONMENT
Greater attention is now being paid to the impact that the companies'
operations have on the environment and it is important that both employees
and suppliers engage in recycling and strive for growth that can be
maintained over the long term.
Biora's production in Malmo, Sweden, is water-based and uses relatively
large amounts of water. However, Biora's use of water is almost exclusively
for cooling, which means that it is not contaminated with any environmental
pollutants. The chemicals used most in Biora's quality and research
laboratories are collected and sent away for disposal. An application for a
permit for Biora's activities in accordance with the Swedish Environmental
Code was submitted to the county administrative board during 2000.
DIRECTORS' REPORT
Biora AB (publ) is a Swedish biotechnology company that develops,
manufactures and markets pharmaceutical products for the treatment of
dental diseases. The company's principal product, Emdogain/Emdogain Gel, is
marketed in approximately 30 countries throughout Europe, North and South
America and Asia.
ORGANIZATION
Biora had a total of 75 employees at the end of 2000 compared to 92 at the
end of 1999. The head office is located in Malmo, Sweden, and consists of
administration, marketing, research and development, manufacturing and
quality control departments. Rickard Soderberg joined the company as
President and Chief Executive Officer in August 2000.
SALES AND MARKETING
Biora has made the strategic decision to focus on the three key markets,
the U.S., Germany and Japan. The company has built up its own marketing and
sales organization in the U.S., Germany, Italy, the Benelux and Nordic
countries. For other markets, Biora has chosen to collaborate with external
distributors. In Japan, Biora's products are marketed by the biotechnology
company Seikagaku Corporation.
The U.S. is the largest single market for Emdogain and during 2000 this
market has experienced the fastest growth in sales - 51% in SEK and 36% in
USD compared to 1999. The U.S. Food and Drug Administration, FDA, approved
Emdogain Gel in January 2001.
Sales in Germany decreased by 13% compared to 1999. However, following a
change in Biora's organization in Germany, sales have again increased, with
record sales in November calculated in both SEK and local currency. During
the fourth quarter, the negative sales trend was reversed and there was an
increase of 13% compared to the fourth quarter in 1999.
In November, Seikagaku Corporation, Biora's marketing and sales partner in
Japan, recalled all deliveries of Emdogain in order to comply with the
registration authority's guidelines, which required the same changes to be
made for the production process for deliveries to Japan as had previously
been implemented for other markets. The Japanese registration authority has
indicated during discussions that they will look favorably upon an
accelerated approval process for Emdogain Gel, and registration is expected
during 2001.
RESEARCH AND DEVELOPMENT
From the latter part of 2000 onwards, Biora's research has concentrated on
dental indications that support the use of Emdogain and are likely to have
a shorter time to market introduction.
NEW DENTAL INDICATIONS FOR EMDOGAIN
Clinical studies are in progress for new dental indications for Biora's
main product, Emdogain. These indications are;
o to regenerate tooth-supporting structures in connection with
non-surgical treatment of periodontitis
o surgical treatment of recession defects,
o teeth lost to trauma (avulsed teeth)
o treatment to preserve vital pulp
o a new product to accelerate the healing process after non-surgical
treatment of the dental root.
A pilot study using Emdogain in conjunction with the surgical removal of
impacted wisdom teeth has so far demonstrated positive effects on
post-operative wound healing. Further studies have been deferred, as
priority has been given to other indications.
EXPANDED PRODUCT PORTFOLIO WITHIN THE DENTAL FIELD
During the year, Biora acquired the rights to a patent-protected
pharmaceutical project for the treatment of dry mouth. In March 2001, Biora
entered into a licensing agreement under which Biora retains the right to
sell the product to dentists and the licensee obtains the right to sell to
other target groups.
DIVESTITURE OR PARTNERSHIP FOR BIOEX
As part of a move to focus Biora's business activities, the Board of
Directors intends to divest, or find a partner for, BioEx, the part of the
research and development activities that cover non-dental indications. The
process of finding a purchaser or partner is underway, and it is expected
that a sale or partnership could improve Biora's financial position while
at the same time enabling the development of BioEx's projects to be
completed. There are ongoing discussions with several interested parties.
No guarantees can be made that these will lead to a sale. Should these
discussions not materialize in a divestiture, alternative strategies will
have to be considered.
ENVIRONMENTAL PERMISSION
Biora's activities are affecting the environment through the waste of
organic material and degradable solvent into water. In connection with the
change in environmental laws in 1999, Biora was required to apply for an
environmental permit. The application was submitted during 2000 and a
permit is expected to be issued during 2001.
The activity that requires the environmental permit is one important part
of Biora's production process.
FOREIGN EXCHANGE MANAGEMENT
As a result of the EMU (European Monetary Unit) collaboration, the prices
in the European countries have been harmonized. Prices have been adjusted
to those prevailing in the largest markets within the currency area, where
prices were somewhat higher than in the smaller markets.
Slightly more than 90% of Biora's turn-over in 2000 was invoiced in
currencies other than SEK and 50% of the total costs were in foreign
currencies. According to the company's financial guidelines, the currency
risks should be minimized. The majority of debts and liabilities that are
held in currencies other than SEK as well as expected cash flow in foreign
currencies for the next twelve months are secured against currency
fluctuations. When hedging currencies, the company uses forward cover
contracts. The parent company is responsible for managing foreign exchange
risk for the group.
THE BOARD OF DIRECTORS
The work of the Board is regulated by the General Corporation Act and the
working program and working plan that the Board has approved.
The Board consists of eight members and one deputy member, chosen by the
share-holders at the Annual General Meeting. During 2000, the Board has had
five regular meetings in addition to the initial constituent meeting.
There is a separate Audit Committee, consisting of three Board members. The
Audit Committee met three times in 2000.
The company's auditors report directly to the Board regarding their
assessment of the company's internal controls. Each Board member has a
special area of responsibility in addition to his or her general
responsibilities as a member of the Board. The composition of the Board,
its members and their specific areas of responsibility are described in
more detail on pages 36-37.
NET SALES
The group's net sales during 2000 increased to SEK 89.2 million (1999: SEK
73.6 million). The increase was mainly in the U.S. market.
RESULTS
Gross profit was SEK 68.0 million (1999: SEK 58.1 million). The improvement
is attributable to the increased sales.
The operating loss amounted to SEK 78.7 million (1999: SEK 91.8 million
loss). The increase in administrative expenses results from different
business development projects as well as severance payment to the previous
President. Research and development costs decreased by 2% after deduction
for amoritization of capitalized research and development costs. Net
financial items were SEK 2.7 million (1999: SEK 5.2 million). The reduction
was due to a lower level of interest-bearing assets.
Net loss after tax in 2000 was SEK 76.1 million (1999: SEK 86.7 million
loss) corresponding to a loss of SEK 3.59 per share (1999: SEK 4.09 loss)
calculated on the average number of shares outstanding.
CAPITAL EXPENDITURES
Capital expenditures in tangible long term assets and patents in 2000 were
SEK 5.5 million (1999: SEK 4.3 million).
FINANCIAL POSITION
The net change in cash and cash equivalents in 2000 was negative SEK 59.0
million (1999: negative SEK 74.2 million).
At year end, the group's liquid funds amounted to SEK 53.8 million (1999:
SEK 112.8 million), the equity/assets ratio was 55.8% (1999: 78.3%) and the
group's equity amounted to SEK 50.9 million (1999: SEK 127.4 million).
PARENT COMPANY
Net sales for 2000 amounted to SEK 53.6 million (1999: SEK 51.1 million)
and its loss before appropriations and income taxes was SEK 79.9 million
(1999: SEK 79.4 million loss).
Capital expenditures for tangible long-term assets and patents were SEK 2.8
million (1999: SEK 2.6 million). Net change in cash and cash equivalents
during 2000 was negative, in the amount of SEK 56.5 million (1999: negative
SEK 77.9 million). At the end of the year, the parent company's liquid
funds amounted to SEK 47.1 million (1999: SEK 103.6 million), the
equity/assets ratio was 69.2% (1999: 85.8%) and shareholders' equity was
SEK 65.5 million (1999: SEK 145.4 million).
PROPOSED DIVIDEND
The group does not have any non-restricted retained earnings and therefore
no dividends shall be proposed. The Board of Directors proposes that the
accumulated loss on the balance sheet, SEK 79.9 million, be covered by
charging the share premium reserve.
FUTURE OUTLOOK
Biora does not issue any earnings forecasts. During 2001, efforts will
continue primarily in the U.S., German and Japanese markets. Biora now has
a European marketing organization that coordinates sales with Biora
international customer Center in Malmo and marketing with the U.S. market
company.
Furthermore, the process to divest BioEx continues. In addition, the Board
of Directors proposes that the shareholders at the Annual General Meeting
give the Board authority to issue new shares, if deemed necessary.
STATEMENTS OF OPERATIONS
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2000 1999 2000 1999
2,3 Net Sales 89,160 73,556 53,598 51,061
8 Cost of goods sold -21,148 -15,470 -19,688 -15,267
GROSS PROFIT 68,012 58,086 33,910 35,794
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6, 8 Selling expenses -78,387 -90,783 -48,305 -58,972
8 Administrative expenses -25,437 -18,505 -24,715 -18,324
7, 8 Research and development costs -42,789 -41,597 -40,600 -41,142
9 Other operating income 643 4,001 636 3,622
9 Other operating expenses -753 -3,007 -565 -3,013
LOSS FROM OPERATIONS -78,711 -91,805 -79,639 -82,035
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13 Result from participations in group companies - - -2,813 -2,390
Interest income and similar profit/loss items 3,095 5,231 2,933 5,069
Interest expenses and similar profit/loss items -365 -11 -355 -7
LOSS AFTER FINANCIAL ITEMS -75,981 -86,585 -79,874 -79,363
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10 Appropriations - - - 1,535
11 Incomes tax -168 -154 - -
NET LOSS FOR THE YEAR -76,149 -86,739 -79,874 -77,828
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BALANCE SHEETS
ASSETS
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ASSETS DECEMBER 31 2000 1999 2000 1999
LONG-TERM ASSETS
12 INTANGIBLE ASSETS
Capitalized research and development
costs - 10,514 - 6,481
Patents 7,112 6,059 3,380 4,103
TOTAL INTANGIBLE ASSETS 7,112 16,573 3,380 10,584
TANGIBLE ASSETS
Plant and machinery 2,160 2,248 2,160 2,248
Equipment, tools, fixtures and fittings 4,282 8,253 2,273 4,258
Advance payments for tangible assets - 342 - 342
TOTAL TANGIBLE ASSETS 6,442 10,843 4,433 6,848
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FINANCIAL ASSETS
Shares in subsidiaries - - 12,511 17,258
13 Receivables from group companies - - 12,552 16,640
14 Other long term receivables 2,553 2,534 2,300 2,319
15 TOTAL FINANCIAL ASSETS 2,553 2,534 27,363 36,217
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TOTAL LONG-TERM ASSETS 16,107 29,950 35,176 53,649
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CURRENT ASSETS
INVENTORIES
Raw materials and consumables 1,172 1,200 1,172 1,200
Work in progress 666 2,761 666 2,761
Finished products 5,040 1,214 4,633 275
TOTAL INVENTORIES 6,878 5,175 6,471 4,236
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Current receivables
Accounts receivable - trade 9,173 9,281 2,198 3,654
Other current receivables 2,618 2,769 1,899 2,234
16 Prepaid expenses and accrued income 2,693 2,757 1,807 2,062
17 TOTAL CURRENT RECEIVABLES 14,484 14,807 5,904 7,950
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BANK DEPOSITS 40,000 90,000 40,000 90,000
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18 CASH AND BANKS 13,755 22,804 7,088 13,606
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18 TOTAL CURRENT ASSETS 75,117 132,786 59,463 115,792
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TOTAL ASSETS 91,224 162,736 94,639 169,441
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BALANCE SHEETS
SHAREHOLDERS' EQUITY AND LIABILITIES
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SHAREHOLDERS' EQUITY AND LIABILITIES
DECEMBER 31 2000 1999 2000 1999
SHAREHOLDER'S EQUITY
19 RESTRICTED EQUITY
Share capital 848 848 848 848
Share premium reserve 144,559 222,386 144,559 222,386
Other restricted equity 303 173 - -
TOTAL RESTRICTED EQUITY 145,710 223,407 145,407 223,234
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ACCUMULATED LOSS
Accumulated loss -18,646 -9,262 - -
Net loss for the year -76,149 -86,739 -79,874 -77,828
TOTAL ACCUMULATED LOSS -94,795 -96,001 -79,874 -77,828
TOTAL SHAREHOLDERS' EQUITY 50,915 127,406 65,533 145,406
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PROVISIONS
Provisions for pensions 233 248 - -
Other provisions 28 196 - -
TOTAL PROVISIONS 261 444 - -
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LONG-TERM LIABILITIES
20 Liabilities to credit institutions 2,400 - 2,400 -
Other long-term liabilities 5,506 5,505 7,320 7,320
TOTAL LONG-TERM LIABILITIES 7,906 5,505 9,720 7,320
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CURRENT LIABILITIES
Accounts payable - trade 8,973 7,600 7,629 4,860
Income tax liability 150 - - -
Other current liabilities 2,150 2,285 934 875
21 Accrued expenses 20,869 19,496 10,823 10,980
22 TOTAL CURRENT LIABILITIES 32,142 29,381 19,386 16,715
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TOTAL SHAREHOLDERS'
EQUITY
AND LIABILITIES 91,224 162,736 94,639 169,441
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PLEDGED ASSETS AND CONTINGENT
LIABILITIES
26 Pledged assets None None None None
Contingent liabilities 9,136 10,201 9,136 10,201
STATEMENTS OF CASH FLOWS
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(TSEK) CONSOLIDATED PARENT COMPANY
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CASH FLOWS FROM OPERATING ACTIVITIES 2000 1999 2000 1999
Net loss -76,149 -86,739 -79,874 -77,828
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH FLOWS USED IN OPERATING ACTIVITIES
Depreciation of tangible assets and
amortization of patents 8,852 5,552 5,851 3,657
Change in capitalized research and
development costs 10,514 8,595 6,481 5,298
Capital loss 257 221 84 200
Write-down of shares in subsidiary - - 4,747 -
Changes in receivables from group
companies affecting net loss - - -4,041 12,724
Changes in other long term receivables -16 49 13 51
Changes in provisions -190 87 - -
Changes in long-term liabilities
concerning option premiums received 1 30 - -
Appropriation to foreign exchange
reserve - - - -1,535
Taxes 168 154 - -
CHANGE IN ASSETS AND LIABILITIES
Accounts receivable - trade 616 -3,137 1,456 -2,761
Inventories -1,340 -1,031 -2,235 -612
Other current assets 284 3,707 590 3,412
Accounts payable and other current
liabilities 545 2,908 5,326 4,890
NET CASH USED IN OPERATING ACTIVITIES -56,458 -69,604 -61,602 -52,504
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (tangible assets and
patents) -5,740 -4,024 -2,834 -2,508
Proceeds from sales of tangible assets 242 32 24 283
Advance payments for tangible assets - -342 - -342
Shares in subsidiaries - - - -571
Transfer of cash to group companies - - 5,488 -22,330
Payments concerning other long-term
receivables 6 -29 6 39
NET CASH USED IN / FROM INVESTING
ACTIVITIES -5,492 -4,363 2,684 -25,429
---------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Issuance of debt 2,400 - 2,400 -
NET CASH FROM FINANCING ACTIVITIES 2,400 - 2,400 -
---------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash
and cash equivalents 501 -277 - -
NET CHANGE IN CASH AND CASH
EQUIVALENTS -59,049 -74,244 -56,518 -77,933
---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, beginning of
year 112,804 187,048 103,606 181,539
Cash and cash equivalents, end of year 53,755 112,804 47,088 103,606
NET CHANGE IN CASH AND CASH
EQUIVALENTS -59,049 -74,244 -56,518 -77,933
---------------------------------------------------------------------------------------------------------------
Cash received for interest 2,926 8,806 2,747 8,647
Cash paid for interest 392 11 381 7
Cash paid for taxes 42 41 - -
NOTES
(Amounts in SEK 000s where not otherwise indicated)
NOTE 1 ACCOUNTING PRINCIPLES
The accompanying financial statements of Biora AB (publ) (the Parent
Company), and its subsidiaries (Biora AB and subsidiaries collectively
referred to as the Company) have been prepared according to the Swedish
Annual Accounts Act and the Swedish Financial Accounting Standards
Council's recommendations, which means in accordance with generally
accepted accounting principles in Sweden (Swedish GAAP).These accounting
principles differ in certain significant respects from generally accepted
accounting principles in the United States (U.S. GAAP). See note 25
regarding differences between Swedish GAAP and U.S. GAAP affecting the
Company's earnings and shareholders' equity.
The accounting principles have been kept unchanged as compared to the
previous year.
CONSOLIDATION PRINCIPLES
The consolidated financial statements comprise the financial accounts for
the Company. The consolidated financial statements have been prepared in
accordance with the Swedish Financial Accounting Standards Council's RR
1:96 recommendation. Consolidation has been carried out in accordance with
the acquisition accounting method. Inter-company transactions have been
eliminated in the consolidation.
TRANSLATION OF THE ACCOUNTS OF FOREIGN SUBSIDIARIES
The Company applies the Current Method, which means that the Balance Sheets
of the foreign operations have been translated at the average of the buy
and sell exchange rates prevailing at the end of the year, and their
Statements of Operations have been translated at the average exchange rate
for the fiscal year. Resulting translation differences have been recorded
directly to shareholders' equity, see note 19.
REVENUE RECOGNITION
Revenue from the sale of goods is recorded upon delivery.
COST OF GOODS SOLD
With Emdogain becoming fully commercially available in 1996, the Company
has accounted for production costs as costs of goods sold, with the
exception of costs directly related to research and development. Cost of
goods sold also includes 2.5% royalty to Astra on sales of Emdogain (see
note 24).
RESEARCH AND DEVELOPMENT (R&D) COSTS
R&D costs consist of all costs attributable to the preclinical and clinical
divisions in the Parent Company, including product development, costs
relating to product registration and costs for clinical studies. R&D costs
also include amortization of capitalized R&D costs and patents and
depreciation of equipment for R&D purposes.
CAPITALIZED RESEARCH AND DEVELOPMENT (R&D) COSTS
Capitalized costs in the Consolidated and Parent Company Balance Sheets
comprise R&D costs and costs relating to the registration application for
Emdogain. The capitalization of these costs began when the clinical tests
were concluded and the registration application for Emdogain was prepared
and submitted to the U.S. Food and Drug Administration (FDA). All R&D costs
previously incurred by the Company have been charged to the Statement of
Operations. The Company reviews the recoverability of the capitalized costs
based upon projected future undiscounted cash flows of the related product.
The capitalized costs are fully amortized in connection with the year end
closing 2000. They have been amortized over a five-year period, based on
the estimated sales revenue beginning in 1996 when Emdogain became fully
commercially available. R&D costs attributable to the development of other
products based on the Emdogain technology and to new formulations of
Emdogain are currently expensed. Product registration costs are expensed as
incurred.
PATENTS
Patents have been reported at original acquisition cost less accumulated
amortization. Patents are amortized over the estimated economic life of the
product to which the patent refers, which normally exceeds 5 years,
beginning when the product becomes fully commercially available. The
amortization period does neither exceed 10 years nor does it exceed the
period of validity of the various patents.
MACHINERY AND EQUIPMENT
Machinery and equipment are reported at original acquisition cost less
accumulated depreciation. Maintenance and repair costs are expensed as
incurred. New investments, improvements and major repurchases are
capitalized. Computer equipment are depreciated over an estimated useful
life of 3 years. Other machinery and equipment are as before depreciated
over an estimated useful life of 5 years.
LEASING AGREEMENTS
The Company leases certain plants and equipment under operating leases.
RECEIVABLES
If a subsidiary has a negative equity recorded, the Parent Company's
receivable from the subsidiary is written down by the corresponding amount.
All other receivables are recorded at their expected net realizable value.
INVENTORIES
Inventories are reported at the lower of cost and net realizable value. The
"first in, first out" method has been applied for all inventories.
Provision has been made for obsolete inventories.
CASH EQUIVALENTS
Cash and banks and Bank deposits are considered as cash equivalents. The
cash equivalents have original maturity of 90 days or less.
INCOME TAXES
Deferred income taxes reflect the impact of temporary differences between
the amounts of assets and liabilities recognized for financial reporting
purposes and such amounts recognized for tax purposes. Deferred tax
liabilities are set off against deferred tax assets. Remaining deferred tax
assets, which include the tax effect of tax loss carried forward, are
reduced by a valuation allowance to the amount that is "more likely than
not" to be realized. Tax legislation in Sweden offers the company the
opportunity to defer its current tax liability by making tax deductible
allocations to untaxed reserves. See note 11 and 25.
RECEIVABLES AND LIABILITIES IN FOREIGN CURRENCY
Assets and liabilities denominated in foreign currencies have been
translated at the year-end exchange rate. Currency-hedged balances have
been translated at the spot rate when the balance occurred with adjustment
for the accrued deduction or addition agreed upon in the hedge contract.
Exchange gains/losses pertaining to operating assets and liabilities are
included in consolidated Other operating income by 198 (3,987) and in Other
operating expenses by 484 (2,770). Exchange gains pertaining to current
financial assets have been included in consolidated Interest income by 127
(312). In the Parent company, the foreign exchange reserve for unrealized
exchange gains related to long-term receivables was resolved in 1999 in
accordance with the Swedish Financial Accounting Standards Council's RR 8
recommendation.
HEDGING OF FUTURE CASH FLOW
Certain expected future cash flows in foreign currency concerning
anticipated transactions are hedged using forward exchange contracts.
Unrealized gains and losses on such financial instruments that are
designated as a hedge are deferred and are recognized as an adjustment of
the measurement of the transaction when it actually occurs. It is the
policy of the Parent Company to hedge 75% of anticipated, budgeted future
cash inflows in foreign currency the following twelve months. Additionally
part of the anticipated cash inflows in YEN in the year 2001 was hedged as
per Dec 31, 1999, after decision by the Board of Directors. To avoid
currency risks in the net receivables from the subsidiaries (receivables
after deduction of write-downs made) the Parent Company has, in accordance
with this policy, hedged the main part of the net receivables in accordance
with forward exchange contracts. The forward exchange contracts prevailing
on December 31, 2000, had a duration up until March 30, 2001. During 1999
and 2000 budgeted inflows in YEN were hedged by foreign exchange contracts.
The corresponding inflows budgeted for the year 2001 have been hedged by
foreign exchange contracts.
NOTE 2 SALES TO SUBSIDIARIES
Of the Parent Company's sales, sales to subsidiaries accounted for SEK 37.0
million (36.6), in per cent 69(72). The Parent Company has no purchases
from the subsidiaries.
NOTE 3 GEOGRAPHIC SEGMENT INFORMATION
The Company's manufacturing facilities are located in Sweden.
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CONSOLIDATED PARENT COMPANY
NET SALES 2000 1999 2000 1999
U.S. 43,778 28,952 23,878 18,821
Germany, Austria 16,789 19,360 6,998 11,844
Japan 6,034 6,902 6,034 6,902
Italy 6,390 5,427 3,242 2,910
Nordic countries 5,062 4,759 5,062 4,759
Benelux countries 3,146 3,398 1,701 1,931
Canada, Mexico 2,239 1,308 2,196 1,308
Switzerland 1,234 1,126 680 655
UK 1,159 875 525 482
Other countries 3,329 1,449 3,282 1,449
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TOTAL 89,160 73,556 53,598 51,061
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NOTE 4 PERSONNEL
The average number of employees during the fiscal year at each working
site.
[Enlarge/Download Table]
2000 1999
Number of Of which men % Number of Of which men %
employees employees
----------------------------------------------------------------------------------------------------------------
PARENT COMPANY 38 24 40 26
----------------------------------------------------------------------------------------------------------------
SUBSIDIARIES
Germany 13 48 18 45
Switzerland - - 0 50
U.S. 26 54 22 59
Italy 1 7 2 50
Netherlands 4 54 3 47
UK - - 2 0
TOTAL, SUBSIDIARIES 44 51 47 50
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CONSOLIDATED 82 38 87 39
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WAGES, SALARIES, OTHER REMUNERATION AND SOCIAL INSURANCE COSTS DURING THE
FISCAL YEAR.
[Enlarge/Download Table]
2000 1999
Wages, salaries, and Social insurance Wages, salaries, and Social insurance
other remuneration expenses other remuneration expenses
(of which pension (of which pension
costs costs
----------------------------------------------------------------------------------------------------------------------
Parent Company 17,721 9,225 18,712 9,203
(3,490)* (3,695)*
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Subsidiaries 25,157 3,071 29,346 4,765
(715) (897)
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CONSOLIDATED 42,878 12,296 48,058 13,968
(4,205)** (4,592)**
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* 1,434 (781) of the Parent Company's pension cost refer to the category
Board of Directors and President. The Parent Company did not have any
outstanding pension obligations neither at December 31, 1999 nor at
December 31, 2000.
** 1,623 (1,260) of the consolidated pension cost refer to the category
Board of Directors and President. The consolidated outstanding pension
obligations to this category amount to 233 (248).
WAGES, SALARIES, OTHER REMUNERATION AT EACH WORKING SITE DISTRIBUTED
BETWEEN THE PARENT COMPANY AND THE SUBSIDIARIES AND BETWEEN BOARD MEMBERS
ETC. AND OTHER EMPLOYEES
[Enlarge/Download Table]
2000 1999
Board of Board of
Directors and Directors and
President Other employees President Other employees
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PARENT COMPANY 4,893 12,828 3,165 15,547
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SUBSIDIARIES
Sweden - - 25 -
Germany 1) -135 5,528 2,600 8,435
Switzerland - - 340 182
U.S. 1.,800 14,895 1,623 12,4
