Presentation of interim report january september 2010

Vitrolife
Solutions for life-critical situations
Interim report Jan-Sept 2010
Telephone conference
November 2, 2010
Magnus Nilsson, CEO
Anne-Lie Sveder, CFO
November 2, 2010
Vitrolife strives to be leading in clinical medium and advanced
disposables for fertility, cell and tissue therapy.
Vitrolife – vision and mission
2
Vitrolife develop, produce and market high-quality systems for the
preparation, cultivation and storage of human cells, tissues and organs
outside the body .
Vitrolife’s platform for growth
Fertility
Maturity
3
Transplantation
Stem
cells
Time
• Sales 68 SEKm, +11% loc curr
• Gross margin 70%
• EBIT 6 SEKm + 9%
•
EBIT* 7 SEKm +10%
Third Quarter in brief - Financials
•
EBIT* 7 SEKm +10%

• Equity/asset ratio 84%
• Earnings per share 0.55 SEK
• Cash flow from op act 7 SEKm
*Adjusted for one-off costs
3
Third Quarter in brief – Highlights
Fertility
• Sales growth in local currency was 12 %. Sales
amounted to SEK 56 (54) million, an increase of 4 %.
• New supplementary product series of laboratory
accessories for fertility treatment together with HertART.
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accessories for fertility treatment together with HertART.
Launch of 20 new products is planned for Q4 2010 and
Q1 2011.
• Acquisition of Conception Technologies Inc, USA (Q4).
Third Quarter in brief – Highlights
Transplantation
• Sales amounted to SEK 12 (11) million, an increase of
5 %. In local currency growth was 8 %.
• A new study shows improved survival with Perfadex.
•
Continuing strategic investments in
STEEN Solution™
3
•
Continuing strategic investments in
STEEN Solution™
• Focusing on market clearance in USA
Third Quarter in brief – Highlights

Stem Cell Therapy
• Sales amounted to SEK 0.5 (1.3) million.
• Launch of a new generation of growth factors and
cytokines for stem cell cultivation
.
3
cytokines for stem cell cultivation
.
• Continuing strategic investments to be able to provide
researchers and cell therapy companies high quality
media, reagents and instruments that will facilitate their
use of stem cells for therapeutic purposes
Main strategies Fertility
• Build a complete product
portfolio of premium
products for IVF
treatments
• World leading quality
control and cost effective
8
control and cost effective
GMP production
• World wide market and
customer support
organisation on all (15)
key markets covering
80% of all treatments
Vitrolife regions and the Global market situation
53%
16%

15%
Europe
TMS 41%
GRTM 5%
Asia
TMS 30%
GRTM 13%
America
TMS 14%
GRTM ?%
Before the aquisition of
Conception Technologies
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16%
12%
4%
Share of Vitrolife sales
Emerging markets
TMS 10%
GRTM 8%
Pacific
TMS 5%
GRTM 6%
Global market size is approx 1.2 million cycles per year
HertART Aps
• Collaboration with HertART, acquired
25% Q2, proceeded during Q3
• Launch of more than 20 products
consisting of culture dishes, tubes and
pipettes during Q4 2010 and Q1 2011

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pipettes during Q4 2010 and Q1 2011
• Option to acquire up to 100% of the
shares
Conception Technologies Inc
•Founded in August 1992, located in San
Diego
•Around 30 employees, turnover approx.
USD 4 million
•Facility is FDA licensed as a medical
device manufacturer and is ISO
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device manufacturer and is ISO
13485:2003 +AC:2007 certified
•Began micropipette manufacturing in
1997. 510(k) clearance for micropipettes
in 1999
•Products for physicians,Andrology and
IVF laboratories, with an emphasis on
pipettes for micromanipulation, ICSI.
• The products supplement existing
range of products
• Vitrolife creates a complete line of
products which are used at all stages
of an in vitro fertility treatment
•
Broaden IVF product portfolio,
Conception Technologies Inc
12
•

Broaden IVF product portfolio,
increase cost-efficient production
capacity and increase market share,
above all in North America
• Purchase price approx USD 5 million
Sales Development Fertility
(rolling 12 months in mSEK)
Third quarter:
56 (54) MSEK
+12% Loc curr
+4% mSEK
13
Jan – Sept:
184 (176) MSEK
+14% Loc curr
+5 % mSEK
Fertility - Goals 2010
Continued execution of main strategy:
• Broaden product portfolio through
R&D and/or acquisition
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• Establish and further develop direct
sales and market support
organisation on all key markets
covering 80% of all treatments
2010 Nobel Prize in Medicine
• Robert G. Edwards was awarded the
2010 Nobel Prize for the development
of human in vitro fertilization (IVF)
therapy. His achievements have made

it possible to treat infertility, a medical
condition afflicting a large proportion of
humanity including more than 10% of
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humanity including more than 10% of
all couples worldwide.
• Approximately four million individuals
have so far been born following IVF.
Many of them are now adult and some
have already become parents.
Professor Robert G. Edwards,
Lesley Brown, Louise Brown, the
world's first "test tube baby“ born
in 1978, with her son Cameron.
Transplantation - Leader of innovation
• Perfadex today 95% of world market for cold
preservation of lungs
• Pioneering new warm perfusion system (ex vivo)
•
More than 50 patients now transplanted with
16
•
More than 50 patients now transplanted with
STEEN Solution™ method
• Development of perfusion systems for other
organs
• Focusing on market clearance 2011 in USA
Perfadex study
• Study at the John Hopkins institute in Baltimore,
USA. 93 % of the patients had received lungs

preserved in Perfadex, the remainder in UW
• For most seriously ill patients, 81.5 % in the
Perfadex group survived, compared to 73.5 % in
the UW group
•
In the UW group: greater risk of being affected by
17
•
In the UW group: greater risk of being affected by
rejection reactions requiring treatment

• Perfadex will also be needed to an equally great
extent in transplantations where the STEEN
Solution™ method is used
Costs for products per
Transplantation (SEK) ~ 10,000 > 80,000
Potential number of lung transplantations ~ 3,000 > 20,000
Market Potential
Perfadex**
STEEN Solution™***
incl disposables
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Total market potential*,
lungs only (SEK million) ~ 40 > 1,600
* Including research market
** Approved in USA 2001 achieved >90% market share in USA 2008
***Approved in Europe 2006, and in Australia 2008.
The method is also being developed for other organs, e.g. liver.
Sales development – Transplantation
(rolling 12 months in mSEK)

Third quarter:
12 (11) MSEK
+8 % Loc curr
+5% in SEK
19
Jan – Sept:
31(29) MSEK
+14% Loc curr
+6 % SEK
Stem Cell therapy
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Freeze cells
in order to
coordinate
transplantation
Transport cells
to the patient
Expansion medium
& growth factors
Transportation medium
Cryopreservation medium
Stem Cell cultivation
• Strategic development of a portfolio of products for clinical Stem Cell
Therapy.The aim for the portfilio is to include, high quality culture
media, cryopreservation media, growth factors, cytokines and cell
culture instruments that ensure excellent and highly reproducible
results.
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Stem cells - Goals 2010
• Continue the development of a new stem cells product line

• Increase cooperations with external partners
 Finn-Medi Research Ltd ( Finland)
 University of Melbourne
 ORF Genetics (distr agreement)
•
Launch of new products for stem cells
22
•
Launch of new products for stem cells
 Launch of new generation of growth factors and cytokines for stem cell cultivation during
Q3.
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Financials
July-Sept January - Sept
Whole year
SEK Millions 2010 2009 2010 2009 2009
Net sales 68 65 217 207 275
Cost of goods sold -21 -20 -65 -61 -82
Consolidated income
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Gross income 48 46 151 146 193
70% 71% 70% 70% 70%
EBIT 6 7 25 24 30
EBITDA 10 11 37 36 46
Income after financial items 11 7 30 23 31
Net income 11 7 30 23 34
Other Keys Ratios
July- Sept Januari - Sept
Whole year
2010 2009 2010 2009 2009

Operating margin, % 8.7 11.0 11.3 11.5 11.1
Operating margin before R&D, %
25.5 25.5 26.9 25.4 25.1
EBITDA, % 14.4 17.0 16.9 17.2 16.8
25
Net margin, % 15.9 11.2 13.9 11.2 12.5
Earning per share 0.55 0.37 1.54 1.18 1.75
Equity/assets ratio, % 84.2 87.8 84.2 87.8 86.7
Shareholders’ equity per share, SEK 16.76 15.25 16.76 15.25 15.94
Return on equity, % 12.6 11.1 12.6 11.1 11.3
Return on capital employed, % 13.8 11.6 13.8 11.6 11.9
Net debt 6.1 -3.1 6.1 -3.1 -8.2