Strengthened position following intellectual property and regulatory approvals

Underlying end-user sales continued to grow in the first quarter of 2010, with total end-user sales amounting to 303 million, up 31 per cent compared to the same quarter last year (source: IMS). In the USA , Pronova BioPharma's partner GlaxoSmithKline (GSK) initiated a direct- to-consumer advertising campaign for Omacor^®/Lovaza(TM) in the quarter, including TV advertising launched end of March. The campaign, which is expected to last for approximately 12 months, is significantly increasing the promotional investment in the product.

 

The Kalundborg manufacturing facility was approved by the US Food and Drug Administration in April 2010, earlier than expected.

 

Overall, total group revenues grew by 27 per cent, to NOK 455.4 million (NOK 358.6 million), as a result of continued growth in demand and the group's operational flexibility.

 

Gross margin was 76.9 per cent (74.4 per cent) in the quarter, positively impacted by the inventory stocking of finished goods and negatively impacted by the lower price per tonne shipped.

 

EBITDA was NOK 185.2 million (NOK 164.1 million), an increase of 12.9 per cent compared to the same period last year. The EBITDA margin was 40.7 per cent (45.7 per cent).

 

The group's operating profit decreased in comparison with the same period in 2009, to NOK 99.3 million (NOK 120.8 million). The growth in gross profit is offset by increased operating expenses as a result of full operation in Denmark and increased legal costs.

 

Net financial items were negative at NOK 46.2 million (negative NOK 111.6 million), with net interest expenses of NOK 27.5 million. The Norwegian krone (NOK) was strengthened in the quarter, which resulted in currency effects from inter-company borrowings between Pronova BioPharma Norge AS and Pronova BioPharma Danmark A/S. Currency effects of inter-company borrowings adversely impacted the financial items by NOK 47.4 million (NOK 101.9 million). Net profit for the quarter was NOK 32.7 million (NOK 3.3 million).

 

EU patents have been granted for the group's proprietary stripping technology for the removal of environmental pollutants and cholesterol, and an intention to grant patent has been achieved in the USA. Following the increasing regulatory and public focus on the potential harmful effects of environmental pollutants in omega-3 fish-oils, these patents constitute important intellectual property assets for Pronova BioPharma.

 

The ongoing litigation process against Teva Pharmaceuticals USA, Inc., Apotex Inc. and Par Pharmaceutical Inc. in the United States District Court for the District of Delaware progressed according to agreed schedule. The case is currently in the discovery phase, and documents have been exchanged. Pronova BioPharma will vigorously defend and enforce its patents.

 

The preliminary clinical trial on alginate capsules to study the alginate characteristics in humans identified that further optimisation of the product is required. Optimisation of the capsule technology is expected to be finalised by year end, delaying the project by approximately nine months.

 

Pronova BioPharma has initiated evaluation of the results from the GISSI -HF study, and expects to file for a label extension or for a new indication based on the data from the study in the third quarter of 2010. The R&D initiatives on several PRB candidates (next generation omega-3 derived pharmaceuticals) are advancing according to plan. Pending final pre-clinical documentation on the products, the group expects to advance into Phase I clinical trials late in 2010.

 

Two lawsuits were concluded in April. The German Federal High Court of Justice dismissed Pronova BioPharma's appeal as a result of an appeal against the Federal Patent Court's ruling from November 2007, which declared the Omacor^® patent in Germany invalid. In Italy, the District Court of Milan decided to cease the nullity action against Pronova BioPharma's patent.

 

Mr. Hamed Brodersen has been appointed VP Investor Relations and Communications and will take up his position on 1 June 2010. Mr Brodersen has extensive investor relations and communication experience from various companies in the process industry, and was most recently VP Communications at NorSun AS.

 

The R&D programmes are continuing to mature, with a second new chemical entity expected to enter clinical phase 1 in late 2010, implying that R&D costs will increase later this year. As previously communicated, legal costs are also expected to be higher in 2010. Expected partner demand in 2010 remains unchanged around 1 800 to 2 000 tonnes. Contractual price adjustments related to crude fish-oil are expected to have a negative impact on 2010 sales prices. However, if the crude fish-oil price stays at current level, the group anticipates API price levels to return to previous levels in 2011.

 

The US Food and Drug Administration (FDA) approved the Kalundborg plant in April 2010, ahead of expected schedule, securing the operational flexibility to supply increased volumes to the market. A re-focused growth strategy has therefore been initiated with increased focus on driving the market potential in existing markets and launches of Omacor^®/Lovaza(TM) in new territories. Life-cycle initiatives are intensified, and there is continued focus on the development of new products in order to secure future profitable growth.

 

Pronova BioPharma's major investment programme related to capacity increases was completed in 2009 and a continued strong cash flow from operations is expected in the foreseeable future. This enables the company to change its long-term dividend policy to distribute 25 to 75 per cent of the company's annual net profit as dividend. The board expects that dividend will be paid for the first time in 2011, based on net profit achieved in 2010. Dividend payments will be dependent on future production capacity requirements, new opportunities and the general financial position.

 

The complete first quarter report is available at www.newsweb.no and at www.pronova.com.

 

The company will present the results today at 08:30AM CET/07:30 GMT. The presentation, will be webcasted live and can be accessed at www.pronova.com. (Internet explorer web browser needed). Web cast attendants may send questions electronically during the session.

 

 

For further information, please contact:

Hilde H Steineger, Vice president IR: +47 48 00 42 40

Synne Røine, CFO: +47 22 53 49 10 

 

 

This information is subject of the disclosure requirements acc. to §5-12 vphl (Norwegian Securities Trading Act)