Good day, and thank you for standing by. Welcome to the ChemoMetec Half-Year Report 2023 to 2024 webcast and conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Alternatively, you may submit your questions via the webcast. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Rasmus Kofoed, CEO. Please go ahead, sir.
Thank you very much, Sharon. Hello, I would like to welcome everybody to our ChemoMetec webcast, where we will present the half year financial results from our fiscal year 2023-2024. My name is Rasmus Kofoed. I'm, as of August last year, the CEO of the company, so now six months old in the organization. We expect our presentation today will take approximately 15 minutes, where we will present a business update and the financial results, followed by a Q&A, where we will take any questions you might have, either via the phone or webcast. As all of you know, please be aware of our disclaimer around forward-looking statements. Today's speakers are myself, as well as our group CFO from ChemoMetec, Niels Høy Nielsen.
As a short introduction, and for those of you not familiar with ChemoMetec, we are one of the global leading players, providing high-quality equipment and services within the field of cell counting and analysis of cells. The company was founded almost 30 years ago in Denmark by three founders. Historically, ChemoMetec's primary market has been within the field of cell and gene therapy. However, also other markets like bioprocessing are markets we would like to play an important role in. We are represented at the moment with our products and services in more than 100 countries, and we employ 170 full-time employees. We have our own value chain with global competencies in both sales and marketing. We have our own team of service engineers, R&D team, as well as Q&A and production.
Our teams are present across Europe and the U.S., and in APAC, we mainly operate through partners and distributors. We normally say that ChemoMetec operates what we call a scalable business model, also known as the razor and blade or Nespresso model, where we sell an instrument typically lasting for years with recurring revenues in consumables and services. Shifting gears, and with this slide, we would like to speak to some of the key highlights from the first half of our fiscal year 2023-2024. Yesterday, we released what we, under the circumstances and despite continued challenging market conditions, see as an acceptable and solid financial performance for the first half of our fiscal year 2023-2024. The financial results are in line with our own expectations and in line to reach our financial guidance for the full year.
We saw strong growth in sales of services, low single-digit growth in consumables, while sales of instruments continued to decline significantly. Despite an increase in biotech funding in Europe and U.S. in 2023 versus 2022, we have seen a continued dampened funding environment within the cell and gene therapy market, linked to macroeconomic factors like high inflation, high interest rates, and insecurity in general. Still, we do see great opportunities and attractive prospects linked to our future products and services portfolio. As mentioned during our webcast in September of last year, we expect to launch four new instruments by the end of this calendar year. Namely, the XcytoMatic 40 and 30, the Xcyto 5, and NC-203. This is still our ambition. With XM40 and XM30, they will help us unlock significant opportunities within the bioprocessing market.
With XM40, we have now completed several market tests over the last month with some of our key customers, and the feedback and reactions are positive and promising. By now, we have completed more than 20 customer trials with XM40. We have sold the first instruments and are closely monitoring several hundred active leads. We are excited to share that as of April this year, we will officially release our XM40 for sales and broader global launch. At the same time, we have worked hard to complete the development of XM30, which is a fully automated instrument, tailor-made and aligned to customers in need of automating their processes. XM30 are already out there being tested with customers as we speak, and also here prospects are promising.
Another important highlight for the first half of 2023, 2024, and in order to establish our foundation for future growth, we have now set a new, ambitious, strong, and experienced, and what I would actually call a high-competency executive leadership team, whom, together with me and the rest of the ChemoMetec team, will be laser focused on reigniting and following through all of our key opportunities. One of the key focus areas for us as a team has been, and still is, to revamp our culture and strategy in the company, to ensure we align to and fully utilize our strengths and opportunities while being focused on the right priorities. We have by now initiated the process of forming a new growth strategy, which we will share more of as soon as we are ready.
One of the other key strategic priorities for us in the first half of the year has been within ESG, which Niels, in a few minutes, will elaborate a little bit more on. But before handing over to Niels, please have a look at the development of capital raised in the biotech and cell gene therapy market over the last six years. I mentioned earlier that our market has been challenged due to global economic headwinds. This is well illustrated in our eyes by the funding level, by this slide, and what we see here with the funding level in our markets. If you look at the left-hand side of the slide, you will see the amount of capital raised by the biotech industry in Europe and the U.S. over the past six years. As the figure shows, capital became very accessible in 2020 and 2021.
As interest rates started to rise in early 2022, it had a strong negative effect on the funding environment in general. Bearing in mind that 2022 is a low level of comparison, we see that the broader industry has been getting more access to capital in 2023, illustrated by an estimated increase of up to 60%. If we look at our key market, the cell and gene therapy market, and at the top right area of the slide, we see a very similar situation. Global funding, with a large jump in 2019 to 2020, almost got close to half in 2022. However, a big difference between the broader biotech industry and our key market is that we are still waiting for the upturn.
In fact, funding on the global cell and gene therapy market had left a minor decrease on 7% compared to last year. We expect our key market to follow the evolution in the broader industry, as outlook to lower inflation rates and interest rates seems more optimistic. There has been a lot of indications that the tighter funding market for many biotechs had led to reductions in workforces and streamlining of project pipelines. As a reminder, robust global pipeline of trials, as seen in the graph in the lower-right corner, signals that there's still strong clinical data, proven companies that are ready to accelerate as soon as the market normalizes. Despite the headwinds, we keep getting reminded of the great progress that our market is making.
In December, many of you might recall that two gene therapies were actually approved in the U.S. and Europe for the treatment of sickle cell disease, which marked a milestone in the industry. An example that reminds us that our market keeps going despite current economic headwinds. From here, I would like to hand over to Niels, our CFO, for a little more insight on our financial performance in the first half of fiscal year 2023-2024. So, Niels, over to you.
Thank you, Rasmus. Hello, everyone. I am Niels Høy Nielsen, the CFO of the company. So I'll take you through the financials, the ESG update, as well as the financial outlook. The financial results for the first half of the fiscal year 2023-2024 came in more or less as expected. Despite headwinds on the top line, the revenue, the first half year ended at DKK 199 million, minus 17% compared with the same period the year earlier. At constant exchange rate, the half year decline was 14%. For the second quarter, the revenue ended at solid DKK 108 million, and that's actually up from 91 in Q1.
EBITDA for the first half year ended at DKK 93 million, and declining by 36%, as activity level was maintained through the first half year. At constant exchange rate, the EBITDA was down by 32%. The decline in EBITDA was mainly due to the decrease in revenue, increasing prices on materials and components, and increase in personnel costs. As a consequence, the EBITDA margin declined to 47% for the first half, from 60% a year earlier. Profit before tax also declined in line with the EBITDA by 35% to DKK 89 million. We generated cash flow from operations of DKK 41 million. This was down from last year, mainly due to the EBITDA decline and slightly increased inventory and receivables and decrease in trade payables.
Our inventory increases as we build up for the launch of the XM40 and also the other new instruments. The company's level of solvency increased to a solid 84% from 81% six months ago. So all in all, acceptable financial results, taking the headwind into account, and as we prepare for the launch of the new products in calendar year 2024. Looking at the geographical split, the share of revenue remains between the regions. It's unchanged. North America is still the main market, but we also see all markets with declining revenues. For the first half, North America declined by 18%.... You can say Europe only declined by 7%, as we did see some European market seems more resistant to the overall downturn.
Keying in on the product segments, it is obvious that the overall revenue decline is caused by the decline in the sale of instruments, which for the first half year declined by 43%, and for Q2, 37%. The new NucleoCounter NC-202 instrument generated the largest part of the revenue for the first half compared to the total sales of the instrument with 43%. Sales from consumables increased by 1% for the half year and by 5% for Q2, which was also in line with expectations, also according to guidance. Sales from services grew double digits by 12% for the half year and 7% for Q2. Despite the double-digit growth in services for the half year, the level of services is impacted by the lower number of installations and implicitly the decline in the sales of instruments.
Now, as we turn to our ESG, we have during the first half year of the fiscal year 2023-2024 been focusing on executing on our ESG roadmap that we actually developed more or less one year ago. Firstly, we have implemented our Code of Conduct to guide our employees internally, but also provide insight to external parties how we conduct our business in terms of behavioral aspects and ethics. Now, most of our employees have been trained in the Code of Conduct. Secondly, we have performed an employee engagement survey, for the first time in the history of ChemoMetec, and that with positive results. The overall score was 78 on a scale from 1 to 100, and compared to benchmark of 72, this was actually fairly good. We have collected feedback and have also formed actions accordingly.
Thirdly, we have added an extra full-time resource to the ESG work for us in time to prepare for the reporting on ESG that is coming up as part of our reporting within the CSRD framework for fiscal year 2025, 2026. That means that we will report in September 2026. So what are the next steps? Well, the next step, firstly, will be to implement a supplier code of conduct to ensure that our suppliers are also living up to the standards required. Furthermore, we will focus on the double materiality assessment in preparation for our reporting on CSRD, as already mentioned. And finally, we will, according to the feedback from the engagement survey, work on improving the talent development processes with the aim to also reduce our employee turnover rate going forward. Now, outlook 2023, 2024, it remains unchanged.
Based on the still subdued market outlook, the results for the first half and the activities planned for the second half, we still expect a revenue in the range of DKK 400 million-DKK 435 million. In this guidance, we see a positive contribution from price increases and also from the sales of XM40. For XM40, we have still dialed in a low double-digit million DKK amount into the guidance. On EBITDA, we still expect to end in a range of DKK 200 million-DKK 220 million, as price increases will have a significant positive impact on margins as we aspire to reach an EBITDA margin of at least 50%. This concludes the presentation of the financial results and ESG highlights and outlook for 2023, 2024. So back to you, Rasmus.
Thank you, Niels, for that one. As a closure for our presentation today and before opening up for Q&A, we would like to highlight just a couple of key focus areas for us. I would like to reiterate what Niels just mentioned. We will continue being laser focused on delivering on our financial outlook for the year, both on top line with our revenue as well as on our bottom line with our EBITDA. We will do that by ensuring focus on four key priorities. One, successfully launching our new innovations by end of this calendar year, starting with the XM40, XM30, followed by Xcyto 5 and NC-203 later this year. Two, we want to be more margin focused with balanced and smart investments while ensuring cost consciousness.
And three, we have initially started, but we will continue our focus on transforming the organization by revamping culture, shaping our growth strategy, and with that, build upon our strengths and opportunities and create an even stronger foundation for the company. And finally, the fourth priority, ESG, as Niels just mentioned. ESG remains a key strategic priority for us in everything we do going forward. We believe that these priorities will help us remain focused around few important and vital priorities, supporting a stronger foundation, bringing us back to solid growth. So all in all, and despite the headwinds we faced in the first half of the year from macroeconomic factors, we remain optimistic about the future of our company, our abilities, and our opportunities ahead of us.
Thank you for listening in, and, with that, I would like to hand it back over to our host, Sharon, to facilitate the Q&A.
Thank you, sir. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced.
... To withdraw your question, please press star one and one again. In the interest of time, please limit yourselves to one to two questions and rejoin the queue for any follow-up questions. If you wish to ask a question via the webcast, please type it into the box and click submit. With that, we will now go to your first phone question. One moment, please. And your question comes from the line of Simon Larsson from Danske Bank. Please go ahead.
Yes, good morning, gents. Yeah, so maybe two questions from my end then. First, on the overall market, so we're seeing some mixed signals here from your international peers in the Q4 reporting around, you know, biotech market environment and so on. And it sounded a bit on you, Rasmus, and the CEO letter that, yeah, you're seeing some green shoots here during the quarter. So it'd be interesting to hear your thoughts on the current market environment and maybe how you experience the market activity now versus maybe, let's say, half a year ago. And if you're also confident that the worst is behind us, so to speak, or, or sort of—or do you think the market will continue to be quite muted here for the coming quarters? Thank you.
Thank you, Simon, for the question. Yes, you're right. I would say we—I would probably put it that we are, you know, cautiously optimistic. That's probably how I would put it, right? So we do see also as we presented, I think it was on slide 6, around the funding situation in general. We do see that funding seems to increase, at least within the biotech industry, in 2023 versus 2022. However, 2022, as mentioned, we're still on a relatively low level, so to speak.
But we do see when we zoom in on the cell and gene therapy market globally, that the funding still seem to be at a lower level, similarly as, you know, 2022, we saw similar levels in 2023, actually with a small decline of 7%. So I think, you know, we see some optimism here and there. I was actually coming back from a customer a week, I would say, in the U.S., a couple of weeks back, where I had the chance to speak with many, many of our customers. Also feeding back that the sense is that maybe we have reached the bottom, and hopefully there we will see some increase going forward.
But I would probably underline it as cautiously optimistic, Simon.
Yeah. Yeah, that's very clear. And maybe also... I mean, obviously very encouraging that you already booked a few XcytoMatic 40 sales here already in Q2, as I understood it, that you were sort of guiding us for more sales contribution during second half of this fiscal year. So, how could you comment anything on sort of how the XM40 sales funnel is building up here? Are you confident, I guess, in your, like, around roughly 10 million DKK guidance for the fiscal year? Or, I mean, how, how do you see the sales funnel building up here initially in the launch phase?
Yeah, I would say we have seen, as mentioned here, we have sold the first instruments. We have completed more than 20 trials with key customers of ours. We've had, and we've also taken the time to adjust, you can say, the 40 accordingly, so that we are ready, you can say, and finishing off with that pre-launch phase we've been in. So that officially as of April, we will be going out much broader into the market with a full-blown launch. We do see quite the, quite some positive vibes. And as mentioned, we actually follow quite closely several hundred active leads within the XM40 frame, right?
So we are optimistic around this, and we also believe that we are able to still see sales in the magnitude of low double digits millions of DKK for the remainder or for the total of the year, right? So we remain positive here, Simon.
Okay. Yeah. Yeah, I will probably limit myself to two questions, so, I'll get back in line. Thank you so much, Rasmus.
Thank you.
Thank you. We will now go to the next question. Your next question comes from the line of Viktor Sundberg from Nordea. Please go ahead.
Yes, hi, Viktor Sundberg from Nordea.
Hi, Viktor.
First of all, thanks for taking my questions. I have a few ones. I will start off with three quick questions here on kind of the same theme. The first one on Europe that really stood out, I think, in terms of instrument sales, if you look at the sequential growth. I wonder if you could perhaps, perhaps give some more color on what drove that strong performance. And just maybe also overall, I mean, we have seen this kind of seasonality pattern of your sales overall being strong in Q2. How much of this is just seasonality, i.e., what you would call maybe a budget flush? And how much would you say this signifies some kind of light at the end of the tunnel for you guys?
Finally, we have heard that some customers knew about the price hike going into 2024. Did you see any stocking pattern in Q2 due to this fact? I'll start with that. Thanks.
Okay. Thank you for that, Viktor. I think for the first one, again, with the market and, as we just mentioned, we-- yeah, we remain relatively optimistic, cautiously optimistic, in what we see in the market, right? And I would also say that this is very much what we delivered in the first half is very much aligned to our own expectations. Would we have liked it to be even higher? Of course, we would. We're still waiting for that, I would say, upturn in the market, in the funding market, specifically where our cell and gene therapy customers, you know, are still, I would say, at a relatively low level in terms of funding and investment in general.
So we're still waiting for the upturn. So when we talk about the optimism in general, we are definitely looking at our, you know, four new innovations that we will bring into the market. That's a key component of the optimism and the fact that we will, with some of those, with XM40, XM30, will be able to penetrate into the bioprocessing field, which for us is a super interesting market to be gaining ground in. So I think that's probably where you should see it. I think the diff- you know, the performance are very much linked according to what we expected six months ago. I don't know, Nils, if you want to add anything on that one.
No, I mean, in terms of the Q1, Q2, of course, Q1 is normally the low quarter, one of the low quarters, right? Because you have July and August in there, and Q2 is normally a quite good quarter. So you're correct, there is something there about seasonality, for sure. And then about the budget loss, I would not say that that was significant. So that would be my comment to that. And in terms of stocking pattern as well, of course, our customers, they knew about the price increases well ahead, but I don't think that that was a main thing also for November, December. So that would be my comment on that.
Okay, thanks. And just on Europe, on the strong quarter-on-quarter growth there, it would also be great if you have some more color on what drove that strong performance. Thanks.
Yeah, we can only see it geographically a little bit, where we did see some some actually good tendencies and, and trends. That was in the French and also in the Scandinavian markets that were actually holding up quite well. And even though you can also say UK was actually also fairly good. So it seems that in terms of, of the downturn, that they were, they, those, those markets were actually, were actually performing comparatively quite well. Yeah.
Okay. And just a quick one on another seasonality pattern here that we've seen before. On EBITDA, you usually have a bit weaker margin in the second half of the year versus the first half. So could you help me understand maybe your assumptions to reach your guidance range here? And maybe give some color on why that has been the case historically, but might not be the case maybe here in 2023 and 2024 fiscal year. You talked about price hikes that you've as one reason, but have you also had price hikes in previous H2s years historically? That will also be interesting to know. Thank you.
Yeah, sure. I'll take that, Rasmus. I think, historically we have basically not done any price hikes. You know, our revenue, you can say, is only, you can say, say, actually increasing with prices as we introduce a new instrument, for example, right? So, so I mean, this is the first time we actually introduced a really price increase. And we also did communicate that when we were actually out on our roadshow back in September, that we will actually increase prices, but we didn't know exactly how much. And now we will increase it to between 5% and 10%, 10% on the consumables and 5% on the rest.
So that will drive, of course, also help the top line, but it will also certainly help on the margins, on the EBITDA margins as well. So, we have seen some inflation impact dripping in on our gross margins, and of course, we need to counter that one. So that's the reason for the price hikes.
And that kind of seasonality pattern we've seen historically, with a bit weaker EBITDA margin for the second half of the year, has that just been due to random patterns, or is there something we should read into that going into the second half of this year, or?
Yes, I think that's more random. That's not something we have actually, you know, really picked up on. No.
Okay. Thank you very much. Appreciate your question, your answers.
Good question. Thank you.
Thank you. We'll now go to the next question. Your next question comes from the line of Yiwei Zhou from SEB. Please go ahead.
Hi, it's Yiwei from SEB. Thank you for taking my question. I also have a couple of questions here. I'll do one at a time. Firstly, on just a follow-up question on the instrument sales, big improvement in Q2. And you also said that Q2 is normally a large quarter and not significant budget flush. But my question is if there has been any one-off order or sales from specific customers? I'm asking because, how you also mentioned, we have seen some cell-based therapies approval late part of last year. I was wondering if you have benefited from those approvals.
Hi, Yiwei, and thanks for the question there, and we can confirm that Q2 did not have, you can say, a bulk order or any major orders for instruments. So, so it was actually quite, you know, scattered, and definitely at a higher level than we saw in Q1. So no specific major orders were the key driver behind.
... Great, thanks. And my next question here is on the sales price increase. It starts first of January, and so far, have you got any pushback from your customers? And do you expect any loss of sales volume after the increased price?
I think we have not received any actually negative response from customers. Actually, I would say the opposite, that I think most of our customers understand the situation. You might recall that, when we had our webcast six months ago, we did not specifically mention, and we were not—we didn't know exactly what price increase level we would decide to go with. We were tracing also the inflation rates in general and try to find a level that were acceptable and fair. And we actually communicated to those customers upfront in the end of Q4 of last calendar year to those customers, to many of our customers, actually.
So, so many knew that, it was there. We did not see any, you can say stocking effect as we just, talked about. But I think in general, we have received relatively fair, and positive feedback from, from customers. So it's not that we see that we are losing customers because of, of this one, actually, actually opposite.
Great, clear, and thanks. And my last question here, I noticed you mentioned there was a non-recurring cost in the first half. Could you maybe quantify a bit the impact here?
I cannot go into specifics there, Wei, in terms of there were some on the personal cost. There was a one-off there, but I will not quantify them as such.
Okay, fair enough. Thank you very much.
Thank you, Yiwei.
Back to you.
Thank you. Once again, if you would like to ask a question via the telephone, please press star one and one on your telephone keypad. We will now go to the next phone question, and the question comes from the line of Jesper Ingildsen from DNB. Please go ahead.
Hi. Just a couple of questions from my side. I think you also previously talked about you have been facing, headwinds from inventory reductions, so not just purely end market, headwinds. Could you comment a bit about, that, how far you are with those headwinds, and how much of drag that might have been in the quarter? And when you expect that to clear.
And then secondly, on the XM40 launch, if you could give a bit more, or generally speaking, moving into the bioprocessing, if you can give a bit more insight to how you might expect that to impact your margins, but also from a consumables sort of like side of things, considering the higher throughput here, can we expect the consumables to account for a higher proportion of sales within this part of the business, and thereby also your total business? Thank you.
Thank you, Jesper. I think there may be, Niels, if you want to address the inventory.
In terms of the inventory, of course, there are two pieces into this one. There is the consumables, and here, we recognize a pool flush out now, so nothing left, basically, also with a shelf life of 15 months. So back to the COVID-19, I think also that stocking is basically out there. And then you have the instruments, and that's probably the key thing to your question here. And there is probably, and we know there are some instruments that has not been installed out there. So yes, we still have some stocking in the market. Exactly how much, it's really difficult to quantify as well, but there are some stocking there.
For the, Jesper, thanks for the question, also on the, XM40 and, and linked to the bioprocessing. Let me see if I captured all of your nuances in, in the question. First of all, in the bioprocessing field, we, we have high expectation, right? Today, we might have only a couple of percentage share in the bioprocessing market. And we would like to, you know, be at, maybe take our fair share of, of that market as well. And we believe that actually XM40 and XM30, that they are, you know, perfect, I think, pieces of, of equipment for that, for that market. It's actually tailor-made for that market. We have already now, as, as mentioned, received quite some, some feedback from customers.
So we did these more than 20 trials and been in super close contact with each single customer in terms of what we could do to adjust here and there to make it an even better instrument. So we have now sold the first few instruments and we are, as mentioned, following through quite a long list of potential leads here in the marketplace. So we are, at the moment, supporting our sales team and ensuring that we have a geographical overview of where do we see, you know, interesting prospects in terms of bioprocessing customers, where we might be able to have a good dialogue around what XM40 can do for a given customer. So we have high expectation there.
Margin-wise, we stay true to the business model we have right now. So I think we will definitely not sacrifice margins with the XM40 when we see more of those being sold within the next, you know, month and years. To your question around consumables, if that will, you know, have a higher weight going forward. I don't think it will have necessarily a higher weight. It could be, but it will probably be at least, you know, similar to what we have today. You might recall the XM40 comes with, it's not a cassette-based instrument.
It is coming with chemicals in containers, so to speak, so that the machine itself basically takes the dye and the chemicals it needs for each given test. It is true that it is a higher throughput. So that means obviously the quantity of tests might increase. But I also think that the test, you know, the price or the cost, so to speak, per test, will be a little bit lower than maybe what you would see with a cassette today. So I think all in all, I think we'll be true to the model. I think it will not necessarily be much higher or lower compared to what we have today.
Is that a fair question back, or sorry, answer back, Jesper? Or did I miss something?
No, maybe just on the XM30, which seems to be even more automated than that of the XM40. Any changes to the dynamics there when it comes to consumables, given that you have even less, or you, or you only have the, the chemicals essentially?
It's kind of, you know, the XM30 in many ways is similar to the 40, except for the fact that it is a fully automated instrument. Meaning that you can really automate your workflow at a complete different level than any of the other instruments we have. It is like the XM40, but it's also based on a reusable measuring cuvette where the sample passes through, right?
Then you can either do it manually, but there will probably be many of our customers, because of the automation focus, that would have potentially a robot arm, so to speak, that would basically take the cell sample and put it into the chamber of the XcytoMatic 30, and that will happen automatically. So we have, like we mentioned before, high expectations also for the XcytoMatic 30, when we get there. But it's very true, it is a fully automated system.
Thank you.
Thank you. There are currently no further phone questions. I will now hand the call back for web questions.
Thank you, Sharon. So, I have the first question here from Oceanside Family Investment. Hi, Guillaume. The question sounds like that, like this: If I may, to increase long-term shareholders' value, I'd love to know your approaches to capital allocation in general, and more specifically, share repurchases versus dividends, and anything you'd like to add. Thank you. Yes, in terms of capital, we are generating a quite significant cash flow, of course, and the capital allocation here. And we, of course, want to ensure that we have a long-term growth here. So we do, of course, invest, and the capital investment allocation is, of course, in people in R&D, specifically. We also investing in some buildings to actually improve the space.
If you look at the capital allocation for share repurchases versus dividends, we actually recently paid out DKK 104 million in dividends, basically 25% of the total revenue. So I think actually, we actually are also allocating a lot to our investors and shareholders, and not sitting on the money as such. Of course, we want to be well consolidated and able to go for our opportunities, but that's how we think about it. Second question here, it's more technical. It's from Stefan Hegel, private. "Do you use AI in your new products? And to what degree do peers use AI in their products?"
Thank you, Stefan, for the question.
We can confirm that yes, we are actually using AI in our four new instruments that we will put in the market by the end of this calendar year. So you would see that our software platform, which is a complete new one, will actually have quite some AI included that would improve the whole imaging of a cell analysis and cell counting in general. So you would be able to do more, you would be able to see more compared to what we were before. I'm not able to speak to what our competitors might be doing on this front, but we can confirm that we are definitely having AI in our portfolio of our software.
Then I have a question from Salim, from Moneta Asset Management, and the question sounds like: "Can you give us more color on what you have seen in January? Question mark. Same recovery trend, question mark." We can, of course, not comment on January as such. I think we have also outlined the, the guidance and outlook for the remaining part of, of the year. So, I think we have already answered that question. Mm-hmm. So go to the next one. That's, Mikkel Kierkegaard Petersen from Kipet Capital. "Do you see any implications from the recent FDA warning regarding CAR-T therapy, or is it too early to speculate how it will affect the number of coming CAR-T therapies? Question mark."...
Yeah, thanks for the, for the question.
We don't see a specific impact, as of now on that FDA warning. So we cannot confirm that, at least from our sales here. What is still interesting, I think when we're talking about CAR-T in general, we still see these, you know, several thousands of trials here in the cell and gene therapy pipeline. Both, you know, preclinical, but also through phase one, two, three. And what we know of, and according to the American Society of Cell and Gene Therapy, more than 50% of those gene therapy pipeline, so number of trials, are within the CAR-T treatment.
So, I think, despite, we see, and I've seen that FDA warning, we still see quite some activity around CAR-T in general, with many trials going in this direction.
Thank you, Rasmus. Next question is from Christian Frantz, retail investor. Could you please elaborate the impact of CRISPR on ChemoMetec's potential turnover and/or a timeline by when this might have an impact on ChemoMetec?
I think it's difficult to say specifically, right. So, it's not that the exact same day where we might have, let's say, a therapy being approved, that we will have an impact in our sales, right? So I think it's difficult to say, but we obviously follow that one with interest, right. So, yeah.
Thank you. Then I have a question from Shegu Lombard from Lumia Capital. Could you please explain why the revenue growth for animal semen was particularly strong during Q2? Should we expect this growth to continue in the coming quarters?
Again, thanks, thanks for the question here. I think, there's definitely some seasonality here when it comes to, to the growth that, that we've seen in the, in the animal, business. For us, we provide the, the instrument we call SP-100, for, for the animal semen business. It's not that we see a particular, you know, changing trends or anything in, in Q2. So I think it's, it's, it's more a coincidence. It is a, a relatively, you, you can say, stable growing, market. So, we are selling around, you know, 30-40 SP-100s, per year, across, across the globe. And, and you are right that, that Q2 seems like it was, a little higher than, than what we've seen in average per, per quarter.
But I think it's more acquainted than anything else.
All right, then we have another question we have from Michael Raun, Raun Holding ApS, and this is in Danish.
So this is a question about the new machines and which market they will hit or be in. So maybe a question to you, Rasmus.
Yeah, and maybe I can speak to that one. I think what Michael refers to here is probably the bioprocessing market that we already talked a little bit about with our XcytoMatic 40 and 30, that are tailor-made for the bioprocessing market thing. I mean, do we see the same impact there as we might see in the cell and gene therapy market? Actually, I think it's difficult, Michael, to just find a report that confirms specific details on each of these markets.
But there are indications that the bioprocessing market will probably be growing at least, you know, 10%-15% year-over-year. So this is a market that's mentioned earlier, that we are only scratching the surface of. At the moment, we might have only a couple of percentage share there, but our ambition is much higher than that. And the weapon, the tools to get there are obviously the XM40 and the XM30, as mentioned.
I have a question from Lars John Rasmussen, investor
uh,
You say you are a global leader. What about competition?
Yeah, I think that's, that, that's a great question as well. I think when we're talking about a global leader, we're probably talking about the classical cell and gene therapy market. Again, we don't have reports. There were actually an older report by SDI Global Assessment, that put our report a couple of years ago. It was updated in the end of 2023 around the market share, for those companies doing cell counters. In there, we were the second highest with 20% market share in the in the cell and gene therapy market. But as mentioned, we are significantly lower in terms of share when it comes to the bioprocessing field. So this is where we would like to enter.
This is why we have developed, a big part of our new portfolio, here, the XM40, the XM30, that are tailor-made for that market. This is important for us, in the future that we also have that leg, so to speak, to stand on. But at the moment, I think we are probably, among the top three players, in terms of market share within the classical cell and gene therapy market.
... The next question is from Christoffer Munk Christensen. What went wrong with Xcyto 5 launch, and what are you doing different with this, with the relaunch?
Yeah, I don't think that something per se went wrong with the Xcyto 5. It's true that Xcyto 5 was almost developed and we finished the development of the Xcyto 5 a few years ago. Then COVID came, and with that, we also had challenges in getting some of the components, you know, from a supply chain perspective, to finish that, the last bits and pieces we needed to finish, right? At the same time, as COVID hit, and we had challenges with supply in general with some of the components, we had a massive increase of orders coming in for NC-200, NC-202, and the rest of our portfolio.
There were a decision basically to say, let's put Xcyto 5 maybe on hold for a while and deliver on the expectation from our customers and the orders we were receiving there. So per se, nothing went wrong. It was almost ready, and we are, you know, finalizing those elements now to ensure that we will put the Xcyto 5 in the market by the end of this calendar year.
Then I have a question from Morten Braa, private person. Due to a great lack of knowledge about product progress, the stock market has heavy doubts and swings dramatically. Why don't ChemoMetec extend the stockholder information about progress to a professional and broader level?
I think we have actually moved the piece quite significantly on the information. We have opened up for webcast, and I think you know also been more open to the investor community in the past year, and we will also keep on that going forward. Of course, we are not a huge company, and we don't have a huge communication and investor relations department, so we also, of course, need to—we cannot just be very expensive on that part there. So of course, we will also try to stick to what's possible there. So, but I think we have actually already opened and been quite professional going forward. We also will.
Then I have a question from Tom Hopper from Ennismore Fund Management. What were the contributing factors to +42% growth in animal semen analysis in Q2?
Yeah, and we just talked a little bit about it. I think it's more seasonality than anything else. We don't know specifically what we're driving that seasonality and also do not expect that it will necessarily continue at that pace in the coming quarters. So I think it's more seasonality than else.
Yeah, I agree. Next question from Rickard Anderkrans from Handelsbanken. Hi, are the XM40 consumables proprietary and patent protected, similar to the setup with a system closed in a similar way as the cassettes with the NucleoCounters? Thanks.
You can say that. I mean, we are. I mean, the chemical or the chemicals are, of course, are not. It's basically white labels that we are doing there, so they are not patent protected. But of course, the guarantee will not be in place if they use something and destroy the machine in, e.g., the XM40. So in terms of that, we are trying to protect the consumables business there, of course, but it's not patent protected as such.
We have a question from Bradley Ware, from ABG Sundal Collier. Hi, Jens. Clarify when you'll be able to elaborate more on your reshaping growth strategy. Before June 30, 2024 or later? Thanks.
Yeah. I don't think we will commit to a specific date, Brad, as soon as we are ready to share more. It's a process we have started up. We have also just started it up, and we intend to continue that dialogue. It's super, super important work we have in front of us in terms of where we would like to go, where we would like to double down as a company in the future. So we will definitely come back with more on this one as soon as we are ready.
Then I have a question from Raphael Membre from Degroof Petercam. On your answer about one-off cost included in H1 2023-20 24, ChemoMetec previously had such a non-recurring cost as well as prior to the new management. This as well could not be discussed. Is there still some to come? Is that related to previous owner management or linked to [legal]?
I don't expect something to come as such. Of course, you never know. The one-off costs, they become just immediately, right? So, I cannot really comment more on that one that I already commented on.
So, I'll go to the next question, and that's a follow-up question from Lars John Rasmussen. You say you are among top three globally. Why should a customer buy your product?
I think, I think that's, that's a great question. And Lars, I can tell you, I've asked exactly that question to many of our customers over the months that I've been with the company. And the feedback I receive is that ChemoMetec has a, you know, a brilliant quality mindset. We are providing consistent measurements for any instruments we have. We have a very high degree of service in our organization, talented people. We have, I would say, a state-of-the-art R&D approach to our portfolio, now seen with the four new instruments we are launching by the end of this calendar year.
So those are some of the things that our customers are sharing with us that are important to them. I think also, the agility is another element I want to mention here, that we as a company, according to our customers, are very fast at responding. So if they need a helping hand, if they need support, we are there, and we are accessible basically, 24/7. So I think those are some of the key components that I think our customers value with us. I am aware there are more questions on the webcast, but I would like to hand over to you, Sharon, on the telephone. I think there is one more in there.
Thank you. We have one final question today, and the final question comes from the line of... One moment, please. The line of Viktor Sundberg from Nordea. Please go ahead.
Yes, hi again, and thanks for the follow-up here. Just had a more high-level question on the XM40. I often get investor questions, if you could see that being used as a high-throughput replacement of the NucleoCounter in some instances, as some customers, I guess, have complained a bit from our channel checks at least, that the NucleoCounter, although the leading counter, is still at low throughput with one cassette, one count. And then another follow-up is also in terms of bioprocessing, when you use that term, do you mean both monoclonal antibodies outside of outside of, let's say, cell therapy market? Or do you also push that in, in lentiviral production, which would be more coupled with your current market? Thanks.
I think, thanks, Viktor, for the question around the XM40 here. I think when we're talking about replacement, I don't think, you know, again, it's a high-throughput instrument. And if you, as a customer, decide that you would like to move in this direction, right? Then obviously, you have a great opportunity with the XM40. So we don't see it as a big, you know, a threat in terms of cannibalization of our existing portfolio, for example, the NC 200 or 202, per se. XM40 has been designed specifically for the bioprocessing field with high-throughput. And as mentioned, we also, at the moment, have very low share.
But the ambition is definitely that we will have much higher share in the future here. So we are approaching, you can say also, new customers as we speak, within the bioprocessing field, and this is a key focus for us. I think, yeah. Sorry, is that okay, Viktor, for an answer?
Yeah. Yeah, I also wondered in terms of bioprocessing, just, when you use that term, if you mean, you know, the monoclonal antibody space primarily, or is it also, you know, lentiviral production, which would be in, let's say, the cell therapy space?
So it's both we are, we are aiming for here.
Okay, thank you.
Okay. Thanks, Viktor.
Thank you. I will now hand the call back for closing remarks.
Thank you so much, and I just want to make it very short. Thank you for listening in. Thank you for taking the time, Niels and me really appreciated the interactions here, and we look forward to seeing many of you and interacting with many of you also in the days to come. But thanks again for the interest and your questions. Thank you.
Yeah. Thank you.