The first half in review

• Net sales increased by 22% to 22.1 MSEK (18.1) with sales growth in Europe and North America, but reduced sales in Asia due to stochastic purchasing patterns from Bio-Works’ largest customers in the region. 
• Order intake decreased by 28% to 15.9 MSEK (22.2).
• Operating loss for the first half was -28.8 MSEK (-23.5), a worsening of 23%.
• Earnings per share in the first half of the year amounted to -0.81 SEK (-0.66).
• Cash flow from operating activities amounted to -26.4 MSEK (-27.1).
• Bank deposits amounted to 43 MSEK (79.9) at the end of the period.

High-value products drive continued growth for Bio-Works
Bio-Works focus on high-value, differentiated products continues to pay dividends as sales in the first half of 2023 grew 22% versus the same period in the previous year.

Growth in sales was driven primarily by our portfolio of high-value products: GoBio prepacked columns, custom resin solutions and affinity resins. We continue to believe that as the market for biological therapies diversifies, the need for diversified purification tools will continue to grow. This trend is favorable for Bio-Works given our strong customer-focus and flexibility.

From a regional perspective, the North American and European markets both grew over 30%. Asia declined during the period, but this is primarily due to a small number of large customers with stochastic ordering patterns.

Signs of recovery after a period of generally weaker demand
Following a period of remarkable growth, the entire bioprocessing market has faced headwinds during the first half This is due to two macro factors:

1. Many large pharma companies are right-sizing inventories after a period of increased stocking levels.
2. A significantly weaker capital market for our customers. Low rounds of private financing and a largely unrewarding public market have put a hold on many clinical projects. Less clinical manufacturing means less scale-up activities and a weaker demand for raw materials, such as chromatography resins.

A recent survey of suppliers clearly demonstrated the breadth of this effect: Suppliers of “Raw Materials and Consumables” estimated an average annual growth rate of 13.8% for 2023, down from 27.0% in 2022. This weaker demand is reflected in our order intake which was down 28% compared to the same period last year.

That said, there are signs that the second half of 2023 could lay the foundation for an industry-wide recovery. An increased number IPOs, acquisitions and successful clinical trials signal a healthy start to the second half. Even the FDA’s Center for Biologics Evaluation and Research (CBER) has reportedly announced that they will grant Regenerative Medicine Advanced Therapy and Breakthrough status to Advanced Therapeutic Medicinal Products (ATMPs) which qualify in order to spur the industry along, in order to address the unmet needs of patients with rare diseases where therapies do not exist or need to become more effective. The fundamental and long-term growth potential in the biotech sector continues to be high due to new technology and unmet patient needs.

Increased focus on cost management
In May, Bio-Works announced a cost-savings initiative designed to extend cash runway to ensure that the company reaches profitability in 2024. This program is expected to save 13 MSEK annually without significantly impacting the company’s growth potential in the coming 18 months. We expect to see the full effects of this program in the fourth quarter of this year.

Our strategy to achieve profitability remains unchanged. Bio-Works' focus is to continue to drive strong revenue growth in an attractive, long-term market at the same time as improving cash flow.

Thank you for your continued confidence and support.

Together we continue the journey towards profitability.

Jonathan Royce
Chief Executive Officer
Bio-Works Technologies AB