Sanochemia: Preliminary figures for the 2006/2007 fiscal year (1. 10. 2006 - 30. 9. 2007)

Sanochemia: Preliminary figures for the 2006/2007 fiscal year (1. 10. 2006 - 30. 9. 2007)

>> Consolidation of AlcaSynn prevents a positive EBIT

>> There is a need for a one-off write down of approx. €6m

Sanochemia Pharmazeutika AG, Vienna (ISIN AT0000776307), listed in the Prime Standard of the Frankfurt Stock Exchange, announces preliminary results, subject to audit, for its 2006/2007 financial year. Despite difficult circumstances, it was possible to keep revenues stable at €30m (PY: €30.3m). This achievement is all the more remarkable given the higher milestone payments received in the earlier period (a difference of €2.4m). Operating performance rose marginally to reach €37,3m (PY: €36.0m). The core segments of Production and Human Pharmaceuticals, both of which were able to make positive contributions to group results due to higher order volumes, proved themselves to be stable factors underpinning sustainable growth. EBITDA amounted to €2m (PY: €6.0m). The otherwise positive earnings before interest and tax (EBIT) were impacted by the need to recognise unscheduled impairment of the investment in AlcaSynn. Final EBIT amounted to minus €5.9m following plus €2.2m in the prior period.

The unforeseen and complete consolidation of the investment in AlcaSynn resulted from the fact that it was not possible to incorporate the shares into a Life Sciences fund as had originally been planned. This, in turn, meant that the preconditions for recognising these assets under IFRS 5 (as assets held for sale) no longer existed, and required that they be written down and reflected in the Group’s operating performance as follows:

Approx €4.1m: Write down (following impairment test) of the purchase price and contractually based payments for expenses incurred,

+ €1.2m: Write down required by AlcaSynn losses in FY 2006/2007, and

+ €0.9m: R&D spendings of Sanochemia for AlcaSynn projects

Group results were also hit by additional expenses associated with higher than foreseen severance payments following the departure of senior management personnel.

The financial result for the entire period was, at €0.5m, below the level of a year earlier (€1.5m) due to the revised investment strategy pursued (involving a shift from forward exchange contracts).

The result before taxes (EBT) was consequently minus €5,4m (following untaxed profits of €3.7m in the prior period). After taxes, the net result for the Group was minus €5.4m (net profits in PY: €3.0m), equivalent to losses per share of €0.53 (EPS in PY: €0.29).

The audited results including segment reporting will be released as scheduled on 29 January 2008. Details of upcoming events are available either online at or on request from the Company.

Outlook for AlcaSynn Pharmaceuticals GmbH

Clinical trials have been commissioned which are intended to provide the basis for decisions as to the further development of the active agents currently identified as lead substances. A screening carried out by external consultants should establish which of the numerous available molecules actually appear most promising in development terms. Sanochemia will search for research cooperation partners after identifying these suitable lead molecules. This approach is intended to ensure that existing potential is tapped more efficiently and rapidly, while at the same time enabling the Group to more widely spread the associated risks which have, until now, been borne by Sanochemia alone. The aim is for Sanochemia to concentrate on its core business of advancing development projects which are close to market maturity.

Personnel appointments

Maria Popova, MBA has been appointed as a deputy member of the Board of Management to head up the Research & Development and Business Development divisions with effect from 1 January. Popova has a long and well-proven track record in these fields following her activities at a research institute and positions at Novartis, Schering and, for the past six months, at Grünenthal. It is hoped that her extensive scientific knowledge and wide network of contacts will make a major contribution to rapidly and efficiently advancing R&D projects at Sanochemia, and help in the search for partners with whom to further develop projects.

Group outlook

The focus on core competences, the review of AlcaSynn projects and the resultant improvement in the structure of R&D expenses, combined with the optimisation of business processes are all expected to improve the financial situation in the area of R&D.

On the basis of the steps taken, Sanochemia is confident that it has re-established the prerequisites for the Group’s future operating success.

For further details please contact:
Margarita Hoch Investor Relations
Phone: +43 / 1 / 3191456 / 335 Fax: +43 / 1 / 3191456/ 344

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