Sanochemia: First Quarter Report 2007/2008

Sanochemia: First Quarter Report 2007/2008 Guidance for the year unchanged despite difficult Q1: continued revenue growth and return to profitability. Viveo®, MR-Lux® and Secrelux®: three top revenue engines – streamlined R&D pipeline

Sanochemia Pharmazeutika AG, Vienna, listed in the Prime Segment of the Frankfurt Stock Exchange (ISIN AT0000776307), today announced its results for the first quarter of the 2007/2008 financial year (31 December):

In line with expectations, consolidated sales revenues in the first quarter (1 October to 31 December 2007) amounted to € 6.3m. This compares with € 8.5m in the same period of the previous financial year – one in which sales of API synthesis products were particularly high. Sales revenues in the final quarter of the 2006/2007 period had amounted to € 5.4m. The volatility caused by the timing of billing for galantamine production campaigns makes it difficult to draw meaningful comparisons across specific quarters for this division. More valid comparisons are obtained by comparing mid-year figures. This volatility is expected to subside to a certain degree in future as production of tolperisone (for Viveo®) is stepped up.

EBITDA (earnings before interest, tax, depreciation and amortisation) for the period amounted to € -0.418m (prior year: € 1.7m) and, due to the lower revenues generated by the Production Division with its high-margin synthesis products, this led to an expected decline in EBIT (earnings before interest and tax) to € -1.6m when compared against the same quarter of the previous financial year (€ 0.8m).

The financial result of € -0.9m (PY: € 0.2m) fell short of expectations. The abandonment of the long-standing financial strategy (based on forward exchange contracts) is being undertaken progressively in order to minimise the impact of closing out positions and realising losses. This process is due to have been completed by the end of the 2007/2008 financial year. The revised financial strategy now being pursued aims to invest primarily in funds with capital guarantees, fixed yields and defined bonuses in order to yield more consistent returns in the long term.

Following taxes on income in the amount of € 0.077m (PY: € 0.102m), the net result for the period was € -2.4m (PY: € 1.1m), which is equivalent to € -0.22 per share, following EPS of € 0.10 twelve months earlier.

OUTLOOK – Growth potential in international markets

Although operational business development was very modest in the first quarter, overall progress during the first quarter was on schedule:

- Optimism is being fuelled by the extremely encouraging sales figures for Viveo®, (Sanochemia’s tolperisone formulation) in Germany. Initial sales forecasts for Viveo®, the brand name of the company’s marketing partner Orion Corporation, were clearly exceeded, and current sales volumes are approaching six figures. The exclusive manufacturing of the API tolperisone will gradually improve the situation in the Production Division not only by increasing the utilisation of synthesis capacity as a result of expanding sales volumes, but also by further reducing dependence on two large synthesis customers. Further national filings for marketing authorisation are planned for Sanochemia’s tolperisone formulation, most notably in Austria and Greece. The start of the MRP procedure is dependent on the preparation of an assessment report by the Federal Institute for Drugs and Medical Devices (BfArM), which is expected to take place in this financial year.

- MR-Lux® - a paramagnetic imaging agent for full-body MRT investigations – has further increased interest in the product range. This product is to be rolled out in Germany in the near future. In the past quarter, Sanochemia was successful in securing marketing authorisation in Switzerland where the launch of the product is expected to take place within the space of the next twelve months. The application for European marketing authorisation (DCP) is planned as the next step toward establishing another product (in addition to Secrelux® - a pancreas diagnostic already generating high revenues) for wide ranging international markets.

- In the Research and Development segment, work is continuing to assess the extent to which the 60% interest in AlcaSynn is consistent with the new, streamlined R&D strategy. The decision has been taken that the high potential of AlcaSynn’s analgesic substances can only be tapped jointly by means of partnerships and cooperations. The most promising projects in the more focussed R&D pipeline continue to be the development of galantamine in a gel carrier substance, for use in the treatment of neuropathic pain, and PVP hypericin, for the diagnosis of bladder carcinomas. Planning for a randomised, multi-centre Phase II trial involving the latter is currently ongoing.

Despite the difficult circumstances affecting the Production Division, the Board of Management remains confident that revenue growth can be maintained, and that the company can return to profitability in the 2007/2008 financial year. Sales revenues are expected to again approach levels seen in earlier periods due to well filled order books. This, in turn, is expected to lead to a considerable improvement in the bottom line.

The full quarterly report including segment reporting may be requested from the company directly or viewed online at

Conference call: Sanochemia will be holding a conference call for analysts and investors today at 10:30. The next Annual Shareholders’ Meeting of Sanochemia Pharmazeutika AG is scheduled to take place in Eisenstadt, Austria, at 15:00 on 27 March 2008. '

For further information please contact:

Margarita Hoch

Investor Relations Tel.: + 43 / 1 / 3191456 - 335 Mobile: + 43 (0) 664 / 21 38 152


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