Biohit Oyj - Company Announcement

Biohit decides to sell its liquid handling business to Sartorius Lab Holding GmbH and changes its financial guidance

Biohit Oyj
Company Announcement
26.10.2011 06:52 pm

Biohit Oyj and Sartorius Lab Holding GmbH have concluded an agreement for the
sale of Biohit's liquid handling business to Sartorius. As a result, Biohit
will change its financial guidance. 

The liquid handling business develops, manufactures, and markets laboratory
equipment and accessories for the pharmaceutical, food, and other industries.
Biohit's products are also used in research institutions, universities, and
hospitals. The product range includes mechanical and electronic pipettes, as
well as disposable tips. 

The transaction is subject to approval by Biohit Oyj's Shareholder Meeting and
the authorities. The Biohit Oyj Board of Directors has approved the transaction
and decided to propose that the Shareholder Meeting approve the transaction and
authorise the Board to close the deal. Osmo Suovaniemi, Biocosmos Oy, and
Interlab Oy, together representing approximately 69% of the voting rights
conferred by Biohit's shares, have made a commitment to support the sale at the
Shareholder Meeting. 

If the Shareholder Meeting approves the transaction, it is expected to be
performed by the end of 2011. Once the sale is completed, Biohit's liquid
handling business will be transferred to Sartorius, including the associated
intellectual property rights, production facilities, subsidiaries, other
property, agreements, and certain responsibilities. 

The purchase price is 68 million euros in cash, which the purchaser transferred
to an escrow account when signing the agreement of sale. Ninety per cent of the
purchase price will be credited to the seller when the transaction is
completed, while the remaining 10% will be retained as security against any
claims related to the sale, until 31 March 2014. 

The employees and management team of the liquid handling business will transfer
to the new owner on their existing terms of employment. The diagnostics
employees and Management Team will remain in the service of Biohit Oyj.
Biohit's current president and CEO, Jussi Heiniö, will transfer to Sartorius as
part of the transaction, with a new president and CEO to be appointed later.
The composition of the Biohit Board of Directors will remain unchanged. 

The sales and profitability trends of Biohit's liquid handling and diagnostics
businesses are as follows: 

                                                       2008  2009  2010  1-9/201
                                                                         1      
--------------------------------------------------------------------------------
Liquid handling business, net sales (million euros)    33.6  33.6  37.8     28.9
--------------------------------------------------------------------------------
Liquid handling business, operating profit/loss         3.7   3.2   3.4      2.7
 (million euros)                                                                
--------------------------------------------------------------------------------



                                                      2008  2009  2010  1-9/2011
--------------------------------------------------------------------------------
Diagnostics business, net sales (million euros)        1.5   1.8   2.2       1.4
--------------------------------------------------------------------------------
Diagnostics business, operating profit/loss (million  -2.4  -2.0  -2.9      -1.7
 euros)                                                                         
--------------------------------------------------------------------------------



Biohit's future focus - diagnostics and cancer prevention

The gains from the transaction will enable Biohit to focus on developing the
diagnostics business and tapping its global market potential. In the first
phase, investments will be made in strengthening sales and marketing resources
and the global distribution network. In addition, the company will concentrate
on the development of production technology and on development and
commercialisation of new products and services based on the GastroPanel and
Acetium innovations. 

Growth will be driven particularly by the ageing of the population and the
resulting significant increase in the need for safe and cost-effective
diagnosis and prevention of diseases. People will become more aware of the
carcinogenic effect of acetaldehyde and the risks involved. This is expected to
increase the interest in Biohit's products and services considerably and pave
the way for business growth. 

Some of the income will be reserved for possible acquisitions that will improve
the visibility of the products in the market and facilitate their
commercialisation. The aim is to increase sales and profitability, thereby
ensuring the company's ability to pay dividends. 


The foundation for Biohit's future growth

Biohit Oyj's diagnostics business develops, manufactures, and markets tests and
analysis systems for the diagnosis and prevention of diseases of the
gastrointestinal tract (www.biohit.com/diagnostics/product-brochures,
www.biohit.com/diagnostics/service-laboratory and www.biohit.com/ State of the
art GastroPanel and Acetium innovations for the unmet need), as well as
products for binding and inactivating carcinogenic acetaldehyde (e.g., Acetium
capsules and the BioFood method). These unique products are based on the
company's own innovations, which are protected by patents and patent
applications. 

GastroPanel is a stomach health test that gives a wealth of information about
the state of the gastric mucosa. GastroPanel provides a means of diagnosing
Helicobacter pylori infection and atrophic gastritis, which is usually
asymptomatic. It also aids in evaluating which people experiencing discomfort
in the upper abdomen (about one third of the population) and which asymptomatic
gastric cancer and other patients at risk need to be referred to further
examinations. Before the GastroPanel innovation, diagnosis of gastric cancer
and other risks required histological examination of biopsy samples taken
during gastroscopy; however, such an examination was often performed only when
a disease causing alarming symptoms had already progressed beyond treatability. 

In October 2009, the WHO classified acetaldehyde as a Group I human carcinogen.
All Group I carcinogens, such as asbestos, tobacco, and acetaldehyde, are
subject to the same ethical and legislative principles, regardless of their
source. All possible methods should be used to reduce exposure to these
carcinogens, including exposure through food and the environment. 

Exposure to acetaldehyde has been connected to around four million new cases of
cancer every year, worldwide, or close to 40% of all cancers. Acetaldehyde is
particularly hazardous to people with an anacidic stomach caused by atrophic
gastritis (approximately 500 million people). Mouth bacteria and fungi can live
in an anacidic stomach and produce carcinogenic acetaldehyde from alcohol and
sugar. Moreover, 5-10% of the population of industrialised countries use proton
pump inhibitors, which result in an acid-free stomach. Corpus atrophic
gastritis - i.e., an anacidic stomach caused by atrophy and functional disorder
of the upper part of the stomach - can be diagnosed by means of GastroPanel
testing. 

The Acetium capsule is currently the only means for binding and inactivating
carcinogenic acetaldehyde in an anacidic stomach. Its use is recommended for
all risk groups in connection with the consumption of food and alcohol. The
BioFood innovation enables the elimination of acetaldehyde remaining in food
and alcohol (www.acetium.com/acetaldehyde-exposure-test). 


New innovations

Laboratory tests have produced encouraging results related to the use of the
Acetium capsule for the treatment of Helicobacter pylori infection. More than
half of the world's population suffers from H. pylori infection, and the usual
treatment - a combination of two antibiotics and a proton pump inhibitor - is
expensive and will lead to a dramatic increase in antibiotic-resistant H.
pylori strains. The purpose of clinical studies to be launched this year is to
examine whether an H. pylori infection can be treated through the use of
BioAcetium capsules alone or administered in conjunction with antibiotics. 

Biohit is also about to launch a research project with its partners to study
whether a chewable Acetium tablet, which binds and inactivates carcinogenic
acetaldehyde dissolved in saliva from tobacco smoke, can help people to stop
smoking. From the results of countless animal tests, it is known that
carcinogenic acetaldehyde is also highly addictive. The operation of BioFilter,
which effectively binds the acetaldehyde contained in tobacco smoke, will be
tested for this purpose as well. 


Revised financial guidance for 2011

Upon completion of the sale, the entire liquid handling business will be
omitted from Biohit Oyj's result for the reporting period. Biohit will
consequently change its financial guidance with respect to net sales. From this
day forward, the liquid handling business will be reported upon as discontinued
operations and diagnostics as continuing operations. The new net sales forecast
for continuing operations is 2 million euros and the estimated operating loss 2
million euros. The full-year operating profit of the discontinued operations is
estimated at almost 50 million euros, including 45 million euros of capital
gains, after taxes. The value of the fixed assets and inventory to be
transferred to the buyer is estimated at 60% of the consolidated balance sheet
total. On 30 September 2011, the balance sheet total was 33.7 million euros. 



For more information, please contact:

Osmo Suovaniemi
Chairman of the Board of Directors
Tel. +358 40 745 5605
osmo.suovaniemi@biohit.com


Distribution:

NASDAQ OMX Helsinki Oyj
Central storage facility (www.oam.fi)
Press
www.biohit.com


About Biohit

Biohit Oyj is a globally operating Finnish biotechnology company established in
1988. Biohit's mission crystallises in its motto “Innovating for Health”. The
purpose of the company is to produce innovations, new technologies and analysis
systems for use in medicine, research institutions and industry, helping to
promote research and diagnostics and to improve quality of life by preventing
disease, human suffering and financial loss. Our duty is also to innovate and
develop the marketing and availability of our products and services, in order
to ensure the profitable growth of the company and its ability to pay
dividends. 

Biohit works with scientific communities to produce new technologies, products
and services based on research results and innovations that can be used to
develop safe and cost-effective liquid handling solutions for laboratory work,
as well as diagnostic tests for the early detection and prevention of diseases
of the gastrointestinal tract. 

Biohit has two business segments: liquid handling and diagnostics. Liquid
handling products include electronic and mechanical pipettes, disposable tips
as well as pipette maintenance and calibration services for research
institutions, healthcare and industrial laboratories. 

The diagnostics business comprises products and analysis systems for the early
diagnosis and prevention of gastrointestinal diseases, such as the blood-sample
based GastroPanel examinations for the diagnosis of stomach illnesses and
associated risks, quick tests for the diagnosis of lactose intolerance and H.
pylori infection in connection with gastroscopy, and the ColonView examination
for the early detection of intestinal bleeding that indicates a risk of
colorectal cancer. Acetium reduces the amount of carcinogenic acetaldehyde in
an anacidic stomach. 

The Biohit Group employs around 440 people. The company is headquartered in
Helsinki, Finland, and has subsidiaries in France, Germany, the UK, Russia,
India, China, Japan and the USA. The company also has a representative office
in Singapore. Biohit's products are also sold through about 200 distributors in
70 countries. 

Since 1999, Biohit's Series B share has been quoted on NASDAQ OMX Helsinki in
the Small cap/Healthcare group and is traded under the code BIOBV. 

Read more at www.biohit.com.