Good morning, welcome to the Q1 presentation for Biotec Pharmacon. I'd like to welcome the people here in Oslo who are present. I'd also like to welcome people on the web, I'm sure that there's a lot of colleagues in Tromsø who's also watching this. As I've said many times, one of the biggest shareholder groups in the company are the employees of the company. Shareholders for us is a very real thing. It's something we discuss every day at the lunch table, how the share price is developing because a large number of the employees of the company are shareholders. A warm welcome to, as I said, everybody here in Oslo and people on the web. The agenda is what we usually go through. Nothing has changed there. This is just a thing just to remind people of what we are.
What I think is important that we come from Tromsø University, we are based in Tromsø, we have a very good relationship with the university that we benefit from today. Not only did actually the company originate from University of Tromsø, but that relationship that we have with the university is still beneficial for us today in a number of areas. We are happy to be located up in Tromsø, we are happy with the relationship that we have with the university still up there. These are the highlights of Q1. As we wrote in the Q1 report, we are not a quarter-by-quarter company.
Most of our business areas are business to business, they can fluctuate, especially, we have a number of large customers, whether they order in one quarter or the other quarter, it can influence our numbers, but does not actually influence the overall business we have with them. That said, it's always nice to have a good quarter. It's always nice to have a good comparison when we compare to Q1 2018, how the numbers are developing, it's always nice to have a good start of the year. We are happy with this. We had growth in all high-margin areas. That is our Woulgan business, our ArcticZymes business, our Consumer Health business. The one area where we did not have growth was in the Animal Health business. There are fluctuations as to when our customer sells their products to their customers.
That is not a concern for us. They will fluctuate from quarter to quarter, we are happy, we are confident that the business we have there is in good shape. Growth in all high-margin areas, that can also be seen by the EBITDA. EBITDA has been reduced. The deficit has been reduced over last year. We have launched a new product in ArcticZymes. We have a growing Woulgan business, recurring sales from the same customers in Germany, especially. Then we got a grant from Norges Forskningsråd, as we announced in the beginning of February, where they will help us develop the new Woulgan products over the next four years.
All we think, as usual, a very busy quarter for us, but also a quarter where actually a number of the things that we have put in motion are getting the results that we like to see. For ArcticZymes, we are seeing a broader customer base in ArcticZymes and that is, I think, very good news for us. We have, as many of you know, been very dependent on one customer, a relationship that we cherish and a relationship that we really work on. That one customer also put high demands on us. Those high demands makes us then better equipped to go out and sell to other companies. We have seen not only a growing business this quarter, but we are also seeing a double-digit % growth of the sales outside this one big customer.
That indicates to us that we now have a broader customer base, and we are not so dependent on this one customer, whether that customer buys in the quarter or not. Our products are getting a broader acceptance with a wider customer group, which is our strategy and which is nice to see. Secondly, we launched a while back our SAN products, mainly for use within gene therapy. We can actually see now some of our customers in that area are also buying some of our other enzymes. The fact that we used the SAN product as a door opener to these companies, now we can actually also sell some other products to these customers. Again, an important strategic point for us to broaden our customer base so we are not so dependent on this one customer, but we have more customers in the portfolio.
That was good to see, and as you saw, 25% growth over first quarter last year. We here, again, I would caution that it is not a quarter-by-quarter thing. We sometimes get an order in end of March. Sometimes we get it beginning of April, and that can influence our quarter end numbers. The business is in good shape, and of course, as I said before, having a good start to the year is always nice. We also launched the first ligase. A ligase is an enzyme that binds together DNA. We are in the process of identifying more ligases. There are, in principle, six subgroups of ligases, and then there is a number of variations of that. The way we do this is we go out and we talk to our customers. What would you like to see?
What kind of functionality would you like to see in such a ligase? This is not us sitting in Tromsø and trying to figure out, this is a fantastic ligase, let us go out and see if we can sell it. We actually develop it. We get the ideas from the customers and then we develop it. Secondly, I think also important that we have received a grant of €254,000 to develop more enzymes together with the University of Tromsø and with a Danish-American company. Those enzymes developed in that collaboration, we are free to commercialize at our will once they are there. I think, again, a testament to the research environment and development environment we have in Tromsø. Not only do we manage to get funding from Norges Forskningsråd, but we also manage to get funds from European Union to develop new products.
I think a big plus for the people and colleagues up in Tromsø. We also, as we have said many times before, we are looking for inorganic growth opportunities in ArcticZymes. We can develop and launch new products. Last year, we launched 4 products. Launch of new products and having a wider customer base is key for us to the growth. We would like to jumpstart this growth and not only go step by step, but actually can we jumpstart it. Therefore, we are spending quite some time on identifying cooperation partners, that being mergers, that being acquisitions, whatever, in Europe for companies that are interesting for ArcticZymes, where we can actually benefit and becoming bigger and have the scale that we like to have quicker than doing it ourselves. That work is ongoing, and we are very active.
We have hired a company to help us with those endeavors. Of course, the minute we have something to announce, you will hear about it. The BetaGlucan side of the business. Woulgan, as you saw, NOK 1.2 million sales, up from Q4. We now see a steady increase in the business. We see a lot of repeat buys from Germany, especially. That is, for us, a good sign that we see the same customers actually ordering more and more. We also get orders from England. We get orders from the Nordics. But the big bulk of the growth and what we see here is from Germany. We also signed, as you saw on Friday, we signed a new distribution deal with publi-care in Austria. publi-care is part of a company called Publicare, which is a home care company based in Switzerland.
They have operations in Switzerland, in Austria, and in Germany. We now signed a deal with them in Austria. They will then need to go to the authorities to get the product reimbursed, which is a bit of a process, as you are all aware. We will not see any sales until end of this year, beginning next year, once they have the reimbursement. But again, a good sign that a company is willing to go into doing these efforts in terms of doing the work of getting reimbursement. I think that also is a testament not only to the clinical documentation we have on the product that actually works, but also the rumors coming out of the German market that actually there is something here that is worthwhile pursuing. We also signed a deal with a Portuguese company.
We didn't think this was big enough for a stock exchange announcement, but we have a distribution deal with a small Portuguese company who are very well-connected within the Portuguese healthcare system. So we've been down there. We've been training their nurses. We've been having meetings with KOLs. They will now start selling. We had the first small order from them here in April. But this will not turn the company around, but it was a good sign again that Woulgan can be accepted. It is part of our strategy. On the next slide, I will show the same slide as we actually showed in Q4. But a number of shareholders have asked us what is actually the new strategy for Woulgan. And there it is in Europe.
Find partners who can help us sell this product, who are willing to put some resources behind it because we do not have the resources. They will mainly be in areas where we can get a decent price, because there has to be some room for the companies to earn some money. That's what we're doing and PubliCare in Austria, ExcelDerme in Portugal, are a testament to that strategy that this is what we're doing. We also, as you probably saw in the, I'm not sure you saw it, in the quarterly report, we got the first conclusions from the PMCF study that was done. As you know, we have to, as part of the registration of a product to get the CE mark, the regulation is you have to follow up that everything you claimed in the registration, does it actually work? Is it safe, the product?
So forth and so on. That study, as we announced, finished in December. The last patients were exited in December, and we now have the first result of the report from the investigators saying that the product is safe, the product is useful, and therefore, they will report back to the MHRA in England, which is our notified authority, to say that, yes, the product does perform in line with the CE mark, and therefore, it's safe to use, and we can continue with that. That was good, a tick mark to get that done. And we will, of course, constantly monitor the performance of Woulgan. This is what you have to do when you have a medical device, that you have to monitor performance, adverse events, anything that goes on there, and report to the authorities if you see anything that is not right.
The PMCF is just one part of it. It's an ongoing thing, but at least now we have confirmed that the things we put into the CE mark is okay, and we will report that back to the authorities. The Woulgan strategy is two things. One is we would like to promote SPG as an active ingredient, which it is. It is an active pharmaceutical ingredient, and therefore, this is the thing that makes Woulgan so different from anything else, that we have SPG inside. We like to promote that. The sales focus will be on Woulgan, of course, because that's what we have today as a product. And we have also, as announced in January, we will also launch more products as we go on. We now got the funding from Norges Forskningsråd to launch a wider portfolio of SPG wound care products.
We're also looking for partners, especially outside Europe. Inside Europe, we want to take our destiny in our own hands, and therefore, going country by country, identifying partners who are willing to put resources behind it because we don't have the resources. Outside Europe, looking for partners, and if somebody outside would like to not have Woulgan but use SPG, saying, "Well, we have a dressing, we have something where we actually think that SPG would be a good fit to put in," we have no problems having an agreement with such a partner that they can use SPG for their use. Whether we then do license deal, royalty, whatever, that remains to be seen. This is what we do. Not only Woulgan, we sell it in Europe through distributors, we're looking for partners outside Europe.
We are developing more products within the Woulgan range, and we are also looking for partners who would like to use SPG as an active ingredient in whatever shape and form they would like to do. The assortment will not be something we produce ourselves. We do not produce Woulgan ourselves today. We produce SPG ourselves, but the gel, the packaging, everything else is done from the outside. The same goes for the products that we are going to develop. We will develop the products in cooperation with contract manufacturing organizations, that is a CMO, who knows how to build or produce these various products, and we will identify those partners and then build the new products. We cannot have manufacturing for that in Tromsø or wherever. This is not our core. We need to identify partners who can help us produce it and develop this with us.
That is the adjusted Woulgan strategy. This is what we are doing. This is what Finn Ketler is working actively on, identifying partners in Europe that are willing to put resources behind it so we can see the sales of Woulgan expand, develop more products so we are more relevant, and then outside Europe, find a global partner. If somebody wants to use SPG, we have no problem selling SPG as an active ingredient in somebody else's product. It is a bit like Gore-Tex. You know a company called Gore-Tex? They sell their technology to a number of different clothing companies, but it is the same technology. We have SPG inside. Instead of Gore-Tex inside, it is SPG inside. It is like Intel Inside in a computer. We would like to use SPG Inside to other companies who can then use it in their applications.
In the other beta-glucan segments, we are still recruiting patients in New York. As you know, this is the neuroblastoma cancer. It is an awful cancer that affects children. Sloan Kettering is a very renowned institute in New York. They are getting patients actually from a number of countries outside the U.S. who are then trying to get into New York and to be treated at Sloan Kettering, because neuroblastoma is not a very big indication, but it is a very deadly indication for children. Sloan Kettering is one of the best institutes in the world, has most experience in the world with this. So we are still recruiting patients in this double study, where we have two legs, and it remains to be seen to what the results is.
What they are trying to do here is to give the vaccine up front, and in one part of the study, they give the SPG six weeks later, and the other part, they give it at once to see if they can isolate the effect of SPG in the study as an adjuvant. No results as of yet, but of course, fairly exciting for us. I have also been in pharma long enough to know that these studies can suddenly turn upside down, and therefore, we are cautiously optimistic. We will have to see the final results before we can make any conclusions. In consumer health, we have had a good quarter, mainly driven by sales in Asia and in the U.S. This is an area which is very competitive. If you go into amazon.de or amazon.com, you will find at least 150 to 200 beta-glucan products in all sorts of shapes.
We don't have any IP in this area. This is gone. We have a lot of IP in the opera area within SPG, but within consumer health, this is more something that somebody else can do. We think our products are better and we sell it as being better, but there's a lot of competition there. Within animal health, as I said in the beginning, we had lower sales this quarter than we had in Q1 2018. We did sign a big deal with a Norwegian marine feed company here in the beginning of April. We are confident that this business is in good shape. What we see here, we see some quarterly fluctuations, but we have heard nothing from neither the marine farmers out in Norway nor from our partner here that there's any noise in terms of the beta-glucan acceptance or anything else.
We are confident we'll get the business back. We actually got a fairly big order in the beginning of April here. This is more a quarterly swing, nothing that worries us. This is how the business went in Q1. Very busy. We grew the business in all high-margin areas. We lowered the deficit, we had good cost control. We launched new products. I think most important thing is not only do we have some very demanding customers out there. We can attract these demanding customers, but their end consumers, they need our products. I think that's the most important thing, that the products we are selling are really relevant to the end consumers. That's important for the business going forward.
With this, I will hand over to Børge for the financials. I will come back to talk about the outlook.
Thank you, Christian. As you all have seen, we have basically seen improvements in all areas of the business now in the last quarter. Going straight into one of the most important aspects, looking at the cash flow. We had a cash outflow of NOK 3.5 million for the quarter. Last year, in the same quarter, we had NOK 10.6 million in cash burn. This gives us an improvement of more than NOK 7 million on a quarterly basis. We also see that our receivables, they are unchanged from the same quarter last year. We see that our payables are actually reduced. This gives us a better position as well. We also see at the end of the quarter, we had a cash balance of NOK 28.2 million.
If you look at the tables here, you see that our cash position has flattened out. In the past, the curve has been much steeper here. We actually see now a positive trend here on the cash balance side. We hope that this will continue in the coming quarters. On the sales side, as Christian touched upon, our business has grown in all of the high-margin areas. We are really happy to see that Woulgan has actually grown now. Comparing it to the same quarter last year, we have actually grown the sales now 140%, and we have grown them 30% compared to the Q4 2018 results. ArcticZymes is also growing their sales. We had NOK 6.3 million in the same quarter last year, and now we are seeing NOK 7.9 million, There's a good traction here.
We see the growth, we are happy with that one. As Christian said, animal health, we had a small decline in this quarter, still we see a good growth in the consumer health side. We had some good orders in the first quarter, we're really happy with that, we hope that this will continue in the coming quarters as well. On a group level, our sales figures were NOK 14.8 million, up from NOK 14.2 million in the same quarter last year. We even know that the growth is not that high, we have seen the growth in all of the right places now. We see the growth in all of the high-margin areas, that's where we focus our efforts. That's really good to see here. We continue to improve our EBITDA.
For this quarter, we had a minus NOK 3.9 million in EBITDA, improvement from NOK 5.1 million in the same quarter last year. The improvement is primarily related to sales. On the cost side, we have kept the cost level at a steady state, we have increased the activity level substantially in the business area. You can also say that we have IFRS 16, as maybe some of you know a little bit about. It was implemented on January 1st, 2019. It has an effect for our figures. It basically means that everything relating to property, plant, and equipment now is put on the balance sheet, and it's now just as an asset and a liability. In practice, it means that the expenses that we had on property, plant, and equipment, it will now be depreciated. So what happens is that our EBITDA is improved on a quarterly level.
If you look at the actual figures we presented last year, they were NOK 700,000 worse than the NOK 5.1 million we have now, so it was more NOK 5.7 million last year. We've done all of our 2018 figures to be able to compare the figures now. On an annual basis, this will mean that we are moving around NOK 3 million from property, plant and equipment to depreciation. It's a technical exercise, it needs to be done as well. The important thing here, we are improving our business. We are reducing our deficits as well. Going into the ArcticZymes side of the business. As you see, we have grown the sales figures from NOK 6.3 million to NOK 7.9 million. We also see that ArcticZymes has increased their expense base from NOK 7.6 million to NOK 8.8 million in the same quarter last year.
The expenses are primarily related to personnel and some external expenses. We are now switching some of the personnel that we have on the production side in Biotec BetaGlucans over to ArcticZymes because we have such a high activity level there. That means that some of the expenses will increase in ArcticZymes, but they will decrease in Biotec BetaGlucans as well. As you can see here, even though we have increased our expenses, we still managed to improve our EBITDA on the bottom here. Even though it's just a marginal improvement from -NOK 0.4 million to -NOK 0.2 million, it is an improvement that we are happy to see. On the beta-glucan side, sales are a little bit lower than last year. It's NOK 1 million lower than we had in the same quarter last year.
As we had in the fourth quarter as well, we see that even though the sales number are lower, it's lower in the right places. It's on the animal health side where the margins are lower. We still managed to increase our gross profit here. We see that we have NOK half a million in improved gross profit here because we have it in the high margin areas. It is in Woulgan, it is on the consumer health side. It is a good thing to see. We also see it, as I talked about with ArcticZymes, we have managed to reduce our expenses here, close to NOK 1.4 million here. It also because we have moved some of the personnel expenses from BBG to ArcticZymes, and it's also because we have reduced some of the external consultants that we have used.
EBITDA improved by NOK 1.6 million, and we're really happy to that we are seeing a good improvement in profitability now. With that, in conclusion, I would say on the financial side, a lot of things are looking really good now. We are on the right track. We have done some efficiency steps in the organization. We are trying to utilize more of the organization in a better and more economic way. We need to continue now. We have a constant focus on our cash burn, and we need to see that getting closer to breakeven now on the longer level, longer side. I think that we are saving cash. Or saving, maybe not saving cash. We want to generate more cash, and we want to have control of our costs in the future now. That's what we do now.
I think with that, I think I leave it to Christian to take us through the last few.
Yep
The outlook for 2019.
Yes, as Børge said, cash is important for us and something that we talk about every day, and managing our cash is a key requirement for us. We do these switching of personnel. We do whatever we can to get synergies out between the two business areas, and thereby saving resources. As Børge also said, the activity level has gone up quite a bit. You might not see so much in terms of sales, but if you see that animal health sales is maybe one customer, which does not actually require a lot of transactions, and we saw that going down maybe, but that doesn't really help us on the resource side. We have done a number of new ArcticZymes customers. We have a number of new Woulgan customers. That is actually something that is taking resources out.
With that, still we maintained a very almost flat cost development, including also the salary increases that we had last year. That is in those numbers, and including also that we have spent some money on external resources for identifying partners for ArcticZymes. All that is managed within the same cost figure. Cost management is key for us. Cash management is key for us. We have reduced the space we have in Tromsø to save some resources there. We had two floors before, now we only have one floor. We put people together and see how much we can save, and having flying offices. We don't need to have all of us having offices up there. Savings wherever we can and put the resources where they actually make a difference, namely in the sales and development of new products.
That's where we put them, and we try to save on anything else. The outlook for 2019 is the same as we presented end of January. We expect revenue growth in the two focus areas, ArcticZymes and Woulgan. This is where we put the resources. This is where we see the benefit from the shareholders' point of view, that those two business areas needs to be growing. We would like to grow the business in ArcticZymes organically, and we have plans, and we're doing that. We're also looking at inorganic growth opportunities in order to jumpstart to be a bigger company faster than we are today. It takes some time with the resources we have available to build it, and if we can find a partner we can merge with, we can buy, then suddenly we are in a different league to put forward there, again.
It's about increasing sales in existing and new territories and finding partners who are willing to put resources behind it. We cannot put resources behind it. We have limited resources. We need to find partners who are saying, "We think this is a great product. We think there's something in it for us. We would like to do as we saw in Austria, we would like to put it through the reimbursement process." Those are the kind of partners we're looking for. Then we'd like to expand the portfolio for Woulgan. I think as I've said a few times, to use a picture for that, if you come with maybe a Ford Focus, I do not know, but I think it's a fairly good car. It does everything it's supposed to do.
It does the trick, but it is not as relevant if you go to the Volkswagen group or you go say, "Well, we have a Ford Focus." It's more interesting if we have a family of cars, saying, "We have a whole family here. How do you like that? We have this product today, and we'll have those products in the future." When you can picture that, when you can describe that picture to partners, it's a completely different picture than having only one product. And that's what we try to do, having Woulgan and then saying, we have more products in pipeline. We have received funding from , and we are out there looking for partners who can help us produce and develop these products. So that's the outlook.
Organic growth, focus on cash consumption and cost control, and ArcticZymes looking for inorganic growth opportunities, to see if we can jumpstart the business. And with that, presentation is finished, but I'm sure there are questions here or there are questions on the web. I'm happy to take your questions.
Can we expect any new products this year or will it be for next year for the Woulgan side?
We are working very hard on new products. I don't think we can manage to do it in 2019. It's too short for that. One thing is to develop the product. You have to go through the registration, you have to go and make sure that actually works. That process is pretty long. Technically, to have a product that works, it can be done within a year or something, but then you have to go through the whole process of actually getting it reimbursed, getting it CE mark, getting it.
Two or is it five, or could you tell a little bit about that?
We're looking for new distributors in Europe. Outside Europe, we are looking for partners who maybe have a more regional scope or a global scope. There we do not go country by country. It is basically it's too far away from us. We don't have the resources to be able to support distributor sites. Outside Europe, we're looking for regional or global partners. Inside Europe, we are going country by country. This is an area we know. This is close to home. There we are mainly looking for countries where we see there is a fairly high price and there's a willingness to pay for new and innovative products. How many countries? We are working on a number of countries. I would love to announce it when we have them. At this point, I'll just say we're working on several new countries in Europe as we speak.
Thanks.
I have one question from one of the listeners on the line.
Yeah.
What do you think about the market potential for Woulgan in Germany based on your experience so far? What do we expect from sales revenues on that side?
I would be very hesitant to come up with a number because I know that that number almost will be wrong for a lot of reasons. Either it's too little or too much. We think there's a bigger potential, which is why we're working so much on it, which is why we're seeing more and more home care companies coming to us. We are educating more and more home care nurses. These are the nurses that actually go out and treat the wounds in the patients on a daily or weekly basis. What the team is tracking, they're tracking how many nurses have we trained in Germany and the other countries we're in, because we see that as an indicator of that. At some point, if we have trained so many nurses, there will be sales coming in.
We are tracking on a monthly basis from all our distributors. We are asking them to come back, how many nurses have you trained this month? Therefore, to have an indication of when can we see sales coming in. Germany is the largest medical device market in Europe. How big our sales can be there, I would not put a number on, but it's definitely bigger than it is today. What the limit is, I would not come with a number.
Any other questions?
I would like to thank you, the people who showed up here in Oslo. I'd like to thank the people who are listening on the web for the questions. Of course, you're always willing to, as you do, and we are very happy with that, write to us, call us, in between the quarterly meetings here so we have an understanding of what you're interested in and what your worries are, and we can address it and we can then have these discussions also, as I said, outside these meetings. Thank you