aXichem AB (publ), Interim Report January - September 2024
aXichem's development during the period 2024-01-01-2024-09-30
In this interim report, the aXichem group is presented, which consists of aXichem AB (publ), Incendia Pharma AB and aXichem AS (Norway). Amounts in brackets refer to the corresponding period of the previous year.
aXichem's development 2024-01-01 - 2024-09-30
Turnover and results
The group's net sales amounted to SEK 7,179 thousand (SEK 1,534 thousand).
Operating profit amounted to SEK -10,963 thousand (SEK -11,988 thousand).
The group's profit after tax amounted to SEK -12,501 thousand (SEK -14,753 thousand).
Financial net SEK -1,538 thousand (SEK -2,765 thousand).
Cash flow and financial position
The group's cash and cash equivalents on September 30, 2024 amounted to SEK 8,613 thousand (SEK 6,993 thousand).
The equity ratio amounted to 89% (81%).
Investments
Investments in intangible, tangible or financial fixed assets have been made so far this year with SEK 3,735 thousand (SEK 5,117 thousand).
Depreciation
Depreciation of intangible and tangible fixed assets has been done so far this year with SEK 3,140 thousand (SEK 2,825 thousand).
Stock data
Profit as of September 30, 2024 corresponds after tax to a profit per share of SEK -0,37 (SEK -0,74).
Equity per share at the end of the period amounted to SEK 1,46 (SEK 2,54).
aXichem's development 2024-07-01 - 2024-09-30
Turnover and results
Net sales amounted to SEK 504 thousand (SEK 287 thousand).
The operating profit amounted to SEK -5,545 thousand (SEK -3,824 thousand).
The group's profit after tax amounted to SEK -5,907 thousand (SEK -4,538 thousand).
Financial net SEK -362 thousand (SEK -714 thousand).
Investments
Investments in intangible, tangible or financial fixed assets amounted to SEK 656 thousand (SEK 1,050 thousand).
Depreciation
Depreciation of intangible and tangible fixed assets amounted to SEK 1,092 thousand (SEK 999 thousand).
Share data
After tax, the periods result corresponds to a result per share of SEK -0,15 (SEK -0,21).
Significant events after the end of the reporting period
- On August 14, 2024, the company announced that it together with the distributor Chr. Olesen will conduct two commercial production tests with aXiphen in collaboration with poultry producers with a significant export business. aXiphen is now delivered from Chr. Olesen to the producers, who are both based in southern Brazil. The tests have a positive impact on aXichem's cash flow of around two million kroner as the product now moves from distributor to end customer.
- On August 27, 2024, aXichem announced that the board of directors, in its annual revision of the company's communication policy, has decided that from now on aXichem shall not publish any financial forecasts or forecast-like targets. The board's decision means that the company's total sales are presented in the quarterly reports and previously communicated sales targets will not be commented on.
Significant events after the end of the reporting period
- On October 7, 2024, it was announced that the subscription price for warrants of series TO1A issued as part of the rights issue completed in April 2024 has been set at SEK 0.95. The subscription price of the warrants corresponds to 70 percent of the volume-weighted average price of the company's shares on the Nasdaq First North Growth Market during the period 1 October - 7 October 2024.
- On October 16, 2024, the company announced that an agreement had been entered into for free guarantee commitments (so-called "top-down" or "top guarantee") in the ongoing redemption of warrants series TO1A. The guarantee commitments comprise a total of SEK 2.0 million, corresponding to approximately 11 percent of the issue proceeds that the Company can contribute through the redemption of TO1A.
- On October 23, 2024, the outcome of the exercise of the warrants series TO1A, which were issued in connection with the Company's preferential issue of units in March 2024, was announced. A total of 17,862,853 TO1A were exercised, corresponding to a subscription rate of approximately 95 percent, for the subscription of 17 862,853 new A shares in aXichem.
- On October 24, 2024, it was announced that the board of aXichem, in line with previous communication, decided on a targeted new issue of 946,437 A shares, to the investors who provided a so-called top guarantee in connection with the exercise period regarding the warrants of series TO1A. The subscription price in the directed new issue amounted to SEK 0.95 per share, corresponding to the subscription price when using TO1A. Through the directed new issue, SEK 0.9 million is added to the Company before issue costs.
CEO's statement
The operating profit for quarter three 2024 amounts to SEK -5,545 thousand and net sales amount to SEK 504 thousand and comes from the sale of aXivite. Operating expenses for the quarter amount to SEK -6,084 thousand and are primarily linked to costs for marketing activities and to costs for completing the company's application for Feed Additive approval in the EU.
aXiphen was presented to chicken feed players in Brazil
In August we were on site in Brazil, at the SIAVS conference, Anhembi Parque, São Paulo, to present aXiphen to chicken producers and feed producers. aXichem is represented in Brazil by Chr. Olesen, who are well acquainted with aXiphen and the product's salmonella prevention properties, and together we had a busy few days. The result was a plan for two commercial production tests with aXiphen at established poultry producers, with slaughter volumes of 100,000 - 500,000 birds per day. The agreed test start was during the third quarter, but due to practical reasons at the producer, the tests only started in the fourth quarter. It is of course frustrating that activities slip in time, but we know that organization and structure differ between different geographic markets. Now the activities are underway and we await the results, which should be in place around the turn of the year.
The problems with salmonella in Brazil are extensive, we get that confirmed time and time again, and we have good opportunities to position aXiphen as a sustainable alternative to prevent the problems and increase the producers' productivity. The work with the market establishment in Brazil continues, partly through communication work in social media, which is widely used in Brazil, partly through hands-on sales by our local partner.
Studies for EU Feed Additive according to plan
The work to supplement the information in environmental safety, consumer safety and efficacy, which EFSA considered necessary for our Feed Additive application, has continued according to plan and we are satisfied with the implementation.
The status at the time of writing is:
· Study regarding consumer safety completed. It showed no residues of aXiphen or degradation products in related foods
· Studies regarding possible environmental impact in the final phase and indicate expected results
· Studies regarding effect in the final phase. A partial study has been analyzed and showed promising indicative partial results
As previously communicated, the material will be compiled when all studies have been completed. After compilation, submission to EFSA/EU takes place. The company has received confirmation that only the requested additions will be reviewed, which we see as positive. As before, I would like to emphasize that it is not possible to accurately predict the time required for the authority's review process, but our hope is that we will have an announcement in the first half of 2025. The company will notify the market when there is a significant change in the process.
aXivite continues to generate sales
During the third quarter, we continued to deliver aXivite to Uriach and Pharmafoods in Spain. The signals we are getting are that the sale of Uriach's nutritional supplements with melatonin, where aXivite is included as a bio-enhancer, meets Uriach's expectations and plans. This is of course positive for aXichem and creates the conditions for continued collaboration. We are pleased to note that we have now passed the order value of 400,000 Euro that the agreement regulates. So even if we can't maintain the nice sales trend from last quarter, I believe that during the year overall we see a statement of strength for aXivite. We also had that confirmed in October, after the end of the period, when it was time for this year's edition of Supply Side West in the USA. Together with the American distributor SEE Nutrition, we presented aXivite and met new and existing contacts. SEE Nutrition exhibited aXivite in a fantastic way in its stand and we got to see several new products in, above all, for sports and fitness with aXivite as an ingredient.
The treasury was strengthened in October through the use of warrants
After the end of the period, in October, the warrants issued in connection with the rights issue of units were exercised in March this year. The options, TO1A, were used to approximately 95% through subscription and the remaining 5% of the issue volume was covered by a free guarantee in the form of a directed issue. Through this, approximately SEK 18.8 million was added to the company before issue costs. This means that aXichem can maintain the planned pace with regard to the production of both aXiphen and aXivite. It also means that the company will repay the convertible loan, equivalent to approximately five million kroner, which was taken out from Formue Nord earlier this year.
I am happy and grateful that the warrant turned out so well for the company. The added capital and the interest we see within our respective business areas give us good conditions to continue the work with the commercialization of phenylcapsaicin.
Torsten Helsing, CEO
About aXichem AB (publ)
aXichem's business concept is to develop, patent and market nature-analog industrial compounds. aXichem's product is a natural analog substance called phenylcapsaicin, which is a synthetically produced and patented capsaicin. As phenylcapsaicin is synthetically produced and has several advantages compared to natural capsaicin, such as controllable quality and production process.
The product has benefits that makes it commercially interesting in several application areas, for example as ingredient in animal feed, as ingredient in dietary supplements, as a bio-enhancer and as a bio-repellent in marine applications. aXichem is currently marketing the product under different brands in two prioritized areas: aXivite® for dietary supplements and aXiphen® for poultry feed. aXiphen® has shown properties as a growth promoter and anti-salmonella ingredient in studies made in commercial poultry production settings. In the market segment for sports nutrition products aXivite® is today included in several products for weight control, improved metabolism, and gut health.
aXichem aims to become a global supplier of industrial natural analogue chemicals to players in the chemical industry who manufacture products containing aXichem's raw materials. The company's share is listed on NASDAQ First North since 2013.
Future prospects
aXichem's commercialization of phenylcapsaicin under the brands aXiphen® in the animal feed market and aXivite® in the food supplement market continues. The production capacity and logistics through subcontractors are in place, as is a production process optimized for commercial volumes. The pace of development in the establishment of the products is determined by market approvals in the strategically important countries or regions, starting with the EU, USA, Brazil and India. aXichem cooperates with specialized distributors, who either have their own production or cooperate with innovative leading producers.
Within the Dietary Supplements business area, the company has market approval for aXivite® in the EU and in North America, and market establishment of the company's product is ongoing.
Within the Animal Feed Business Area, aXiphen® has been approved in Brazil since December 2023 for sale as an ingredient in chicken and pig feed, and market establishment is in an early phase. An application for market approval for aXiphen® in the EU is being processed by regulatory authorities and a corresponding application for the US market is being prepared. The company's strategic focus is to prioritize Brazil and the EU, as these markets have the best conditions for an initial establishment.
On August 27, 2024, aXichem announced that the board of directors, in its annual revision of the company's communication policy, has decided that from the date of the announcement aXichem shall not publish any financial forecasts or forecast-like targets. The board's decision means that the company's total sales are presented in the quarterly reports and previously communicated sales targets will not be commented on.
Financing
February 1, 2024, it was announced that the company's board, subject to the approval of the general meeting, decided to carry out an issue of shares and warrants ("Units") with preferential rights for existing shareholders ("Rights Issue") of approximately SEK 40.3 million before issue costs. A Unit consisted of five A shares and five warrants of series TO1A. The subscription price per Unit amounted to SEK 7.50, corresponding to SEK 1.50 per A share. The warrants were issued free of charge. The rights issue was covered to 70 percent by subscription and guarantee commitments. The rights issue requires the approval of an extraordinary general meeting, which is scheduled to be held on March 6, 2024.
The board also decided to take out a new convertible loan from Formue Nord Fokus A/S of approximately SEK 5.3 million, which partially replaces the existing convertible loan.
The outcome of the rights issue, which was 70 percent subscribed, was announced on March 26, 2024. Through the rights issue, approximately SEK 28.2 million was added to aXichem before issue costs. The number of shares in aXichem increased by 18,809,290, to 40,305,615, and the share capital increased by SEK 3,761,858, to SEK 8,061,123.
During the period 1-7 October, warrants of series TO1A were exercised at a rate of SEK 0.95. The warrants' subscription price corresponds to 70 percent of the volume-weighted average price for the company's shares on the Nasdaq First North Growth Market. The outcome from the exercise of the warrants series TO1A amounted to 17,862,853 shares. In addition, a targeted new issue of 946,437 A shares was carried out, to the investors who provided a so-called top guarantee in connection with the exercise period regarding the warrants of series TO1A. This meant that the company received SEK 18,809,290 before transaction costs and that the number of shares increased by 18,809,290, from 40,305,615 to 59,114,905, and that the share capital increased by a further SEK 3,761,858, from SEK 8,061,123 to 11,822,981 SEK.
Incentive program - Employee stock options
At the annual general meeting on May 31, 2022, it was decided on an option program of series 2022/2026 for employees and key persons in the company comprising 400,000 options with the right to subscribe for 400,000 A shares. As of the balance sheet date, 270,000 options were allocated to staff and key persons, of which 101,250 were vested.
The employee options are earned over 4 years, with a quarter each year, provided that the participant is employed by or otherwise engaged in the company on the grant date. The staff options are awarded free of charge. Earned employee options can be exercised during a three-year period, however no earlier than three years after the respective grant date. Each employee option gives the right to subscribe for 1 A share at a subscription price that corresponds to 140 percent of the volume-weighted average price for the company's A share during the five trading days immediately preceding the day on which the employee options are awarded. The subscription price and the number of A shares to which each employee option entitles may be subject to recalculation as a result of a bonus issue, split, issues or similar measures. In order to enable the delivery of shares according to the incentive program, it was also decided to issue a maximum of 400,000 warrants.
Ownership structure
For information about the company's owners, see the company's website www.axichem.com under https://www.axichem.com/investor-relations/#investor-structure
For information on insider trading, see the Financial Supervisory Authority's register.
Certified Adviser
Västra Hamnen Corporate Finance is aXichem's Certified Adviser.
Number of shares
The number of shares and votes in the company as of 30 September 2024 was 40,305,615 and the company's share capital amounted to 8,061,123 SEK SEK. The company has only one class of shares, shares of series A, with 1 vote per share. The quota value is 0.20 SEK per share. After full utilization of the warrants of series TO1A and a directed new issue of 946,437 A shares, to the investors who provided a so-called top guarantee in connection with the exercise period regarding the warrants, both of which took place after the end of the period, the number of shares amounts to 59,114,905.
Accounting principles
The company applies the Annual Accounts Act and BFNAR 2012:1 Annual accounts and consolidated accounts (K3) when preparing its financial reports. The accounting principles are unchanged compared to the most recently submitted annual report.
Dilution per share
aXichem has outstanding employee options and convertible debt. There is no dilutive effect on earnings per share as long as the group's earnings are negative.
Non-controlling interests
The group treats transactions with non-controlling interests as transactions with the group's shareholders. The share of assets and liabilities, incl. goodwill belonging to non-controlling interests has been valued based on the group's acquisition value at the time of the business acquisition. In the case of acquisitions from non-controlling interests, the difference between the purchase price paid and the actual acquired share of the reported value of the subsidiary's net assets is reported in equity. Profits and losses on disposals to non-controlling interests are also reported in equity. When the group no longer has a controlling influence, each remaining holding is revalued at fair value and the change in carrying value is reported in the group's income statement. The fair value is used as the first reported value and forms the basis for continued reporting.
Financial instruments
Financial assets and liabilities are reported according to the acquisition value method. Long-term liabilities are reported at accrued acquisition value, which corresponds to the present value of future payments discounted with the effective interest rate calculated at the time of acquisition. Short-term receivables are reported at the lower of acquisition value and net sales value. Short-term liabilities, which are expected to be settled within 12 months, are reported at nominal amount.
Convertible debt
Convertible liabilities are reported divided into a debt part and an equity part. The fair value of the debt part at the time of issue is calculated by discounting the future payment flows with the current market interest rate for a similar debt, without the right to conversion. The value of the part reported in equity is calculated as the difference between the issue proceeds and the fair value of the financial debt. The part reported in equity consists of the value of the built-in option to convert the debt instrument into shares. The interest expense is reported in the income statement and is calculated according to the effective interest method.
Loan expenses
Loan expenses are charged to the result for the year to which they relate.
Employee stock options
The employee options are earned over 4 years, with a quarter each year, provided that the participant is employed by or otherwise engaged in the company on the grant date. The staff options are awarded free of charge and are reported as staff costs and additions to equity in line with vesting.
Definition of key figures
Solidity
Adjusted equity as a percentage of total assets.
Earnings per share
Profit for the year divided by the average number of shares.
Equity per share
Equity divided by the number of shares in the market at the end of the year.
Related Party Transactions
The company defines senior executives, board members and close family members of these people as related parties. The following transactions have been carried out during the period in addition to transactions attributable to salaries and related payments.
The company had no related party transactions during the third quarter 2024.
Personnel
The group had as of 30 September 2024 seven employees.
Significant risks and uncertainties
Regulatory issues are considered to be the single largest risk for the company. The effects of Covid-19 still have some impact on the company's operations in Asia. The changed security situation in Europe and the tragic development in Ukraine do not currently affect aXichem's operations, but we are following the development closely in order to be able to manage any possible effects.
Review
This interim report has not been reviewed by the company's auditor.
Financial calendar
Year End Report 2024 2025-02-27
Q1 Report, Jan - March 2025 2025-05-22
Annual Report 2024 2025-05-28
Annual General Meeting 2025-06-18
Q2 Report, Jan - June 2025 2025-08-28
Q3 Report, Jan - Sept 2025 2025-11-28
Year End Report 2025 2026-02-26
The Board of Directors and the CEO assures that the interim report provides a fair overview of the company's operations, position and results, and describes the significant risks and uncertainties that the company faces.
Lund, 28 November, 2024
The Board of Directors of aXichem AB (publ)
The information was submitted, through the care of the contact person below, for publication on 28 November 2024, at 08:30 AM CET.
The report is published on the company's website under Investor Relations. Direct link to the report: https://www.axichem.com/investors-relations/#financial-reports
Company Contact
Torsten Helsing, CEO
T. +46 70 686 33 55, E. torsten.helsing@axichem.se