Year-end bulletin Pharmacolog 2023

Fourth quarter October 1 - December 31, 2023

• The Group's net sales for the fourth quarter amounted to KSEK 2 567 (1 785).
• Operating profit for the quarter amounted to KSEK -4,159 (-6,763).
• Net earnings per share for the quarter were SEK -0.06 (-0.36) before dilution and SEK -0.03 (-0.31) after dilution.

The period January 1 - December 31, 2023

• The Group's net sales for the full year amounted to KSEK 9,936 (10,114).
• The operating result for the full year amounted to KSEK -18 492 (-19 109).
• Net income per share for the full year was SEK -0.44 (-1.17) before dilution and SEK -0.27 (-1.10) after dilution.

Significant events during the period October 1 - December 31, 2023

• Pharmacolog initiates a cost-saving program aimed at significantly reducing ongoing operating costs while streamlining the company's organization to support existing customers and external distributors. The implementation of cost-reducing measures starts immediately and will be fully implemented in Q1 2024. At full effect, the measures will reduce operating costs by at least 35% compared to the operating costs for the full year 2022, which corresponds to a sum of at least SEK 10 million.
• Warrants of series TO2 have been recalculated and the subscription price upon exercise of the warrants in Pharmacolog has been set at SEK 0.18. The subscription period runs between October 4 and October 13, 2023. Warrants of series TO2 were subscribed to approximately 1.65 percent and Pharmacolog receives approximately 6.6 KSEK.
• The Board of Directors of Pharmacolog has decided, with immediate effect, to implement a strategy with the goal of divesting all or part of the business. A sale can take place both to companies for industrial reasons or through a financial transaction, such as a reverse acquisition. However, there is no guarantee that such a transaction will take place, and in such a case the Board will work towards a controlled winding up of the business through voluntary liquidation.
• The shareholders of Pharmacolog are summoned to an extraordinary general meeting to be held on November 15, 2023. It was resolved to reduce the company's share capital by a maximum of SEK 11,449,591.081, but not lower than SEK 662,138.90, for allocation to non-restricted equity. After the reduction has been carried out, in accordance with the proposal, the company's share capital will amount to SEK 662,503.42, divided into 66,250,342 shares, each share with a quota value of SEK 0.01.
• B. Braun Medical Spain orders two additional DrugLog™ systems for quality control of compounded drugs in hospitals for delivery at the end of December.

Significant events after the end of the reporting period

• Pharmacolog receives two DrugLog™ orders for installation at well-known hospitals in Europe. A DrugLog™ order has been placed by Pharmacolog's distributor Added Pharma on behalf of The Netherlands Cancer Institute, one of the world's most comprehensive cancer centers, in Amsterdam. In addition, B. Braun Medical Spain orders a complete DrugLog™ system for installation at Hospital de A Coruña, one of the largest hospitals in Galicia.
• Pharmacolog USA Inc. receives an order from Inova Healthcare for a WasteLog™ system to be placed at Inova Fair Oaks Hospital in Fairfax, VA.
• In February, Pharmacolog divests its Druglog™ product line to RaySearch Laboratories AB through an asset acquisition. The total value of the transaction amounts to SEK 8.5 million, of which the cash consideration is SEK 7 million, which will be paid at the time of closing. Through this transaction, Druglog™ will have new and better conditions to develop commercially within RaySearch, for the benefit of cancer patients and healthcare providers worldwide.
• Pharmacolog has terminated the existing partnership agreement with Codonics Inc. entered into in December 2020 for the sales and marketing of WasteLog™ and DrugLog™ for the North American market and several other regions with immediate effect due to underperformance against minimum sales targets for DrugLog™ and WasteLog™ in the agreement. This means that Pharmacolog will continue to have the exclusive right to distribute the company's products in these regions. In addition, management and the Board of Directors believe that the conditions for successfully executing the company's strategy and divesting the remaining assets increase.
• Pharmacolog's board intends to immediately investigate the conditions for a new business direction, which may include the acquisition of niche and profitable companies in the life science sector. This is after the new conditions created in connection with the successful asset sale of Druglog™ to Raysearch Laboratories AB together with the cost-saving measures implemented by the board that have led to the financial risk being reduced to the extent that the company's position can pave the way for such an investigation.

CEO comments

The fourth quarter was characterized by activities resulting from previously communicated cost reductions and the implementation of an industrial or financial sale. In the first place, Pharmacolog has in recent months reduced its workforce by over 60% compared to the same period last year, while maintaining the full range of services provided by the company. I would therefore like to take this opportunity to express my sincere thanks to all remaining employees for their hard work, which has not always been easy under the circumstances.

Through the cost-saving measures, we have significantly improved the company's financial position, which has enabled the management to fully concentrate on preparing and implementing the planned industrial or financial sale. 

Here is perhaps the most positive news to report. After extensive and intensive discussions with various potential stakeholders, management has succeeded in reaching an important milestone in the implementation of the initiated sales strategy by signing an agreement to transfer the assets of the DrugLog product to RaySearch Laboratories AB. In this context, RaySearch has acquired ownership of the Druglog™ product for use in oncology, including the measuring instrument v2.0 hardware platform and all intellectual property rights related to Druglog™. 

On the sales front, we were positively surprised with an order for two DrugLog systems ordered by B. Braun Medical Spain with delivery in December 20, 2018. Braun Medical Spain with delivery in December 2023. Another two DrugLog and one WasteLog system were ordered after the end of the fourth quarter.
However, the sales figures for the full year 2023 were not enough to significantly improve the result compared to 2022. The Pharmacolog Group's turnover for the fourth quarter landed at KSEK 2,567, compared to KSEK 1,785 for the fourth quarter of 2022. The Group's turnover for the full year 2023 amounts to KSEK 9,936 compared to the previous year's turnover of KSEK 10,114. 

The operating result for the fourth quarter was KSEK -4,159 compared to the same period last year, KSEK -6,763. We see here the first effects of the cost-saving measures, attributable to lower costs for external consultants and own staff.

The operating result for the full year 2023 amounts to -18 492 KSEK compared to the full year result for 2022, -19 109 KSEK and shows a marginal improvement, which is mainly related to the savings measures.

With the positive effects of the cost-saving measures and the asset deal behind us, we can conclude that the introduction and implementation of the two latest strategic initiatives meant that the right decision was made at the right time, which significantly reduced Pharmacolog's financial risk. It also means that the work on the continued implementation of the previously communicated strategy can continue with full intensity during 2024. Discussions are ongoing about the sale of all or parts of Pharmacolog's remaining business areas. We will now do everything in our power to finalize these measures to best defend the values created within the company for the benefit of investors, customers and employees.
 

Uppsala in February

Lars Gusch, CEO
 

Upcoming reports and Annual General Meeting

Interim report January-March 2024                May 17, 2024

Annual General Meeting                                June 14, 2024

Interim report April-June 2024                       August 23, 2024

Interim report July-September 2024              November 22, 2024

Year-end bulletin 2024                                   February 14, 2025

This disclosure contains information that Pharmacolog is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 16-02-2024 08:30 CET.