Good morning, and welcome to ArcticZymes Technologies Q1 report. My name is Michael Akoh. I'm the CEO of ArcticZymes Technologies and I'm as usual joined by our CFO, Børge Sørvoll, as well as our CCO, Paul Blackburn. Let's take a look at today's agenda. I'm going to go through the Q1 highlights and some of the key takeaways of the quarter. Paul is going to speak to a commercial update. He's going to give a bit more flavor on both segments. The financial performance is going to be walked through by Børge. I'm going to come back with a bit on our strategy, our ambition, and also something on the key strategic priorities that we have a s always, We are also going to end the session by a question and answers part.
We had a strong start to the year, and we have built a strong foundation for 2026. We had a sharp rebound in molecular tools sales, and we also had continued biomanufacturing momentum. If we look at the total revenue, we ended up at NOK 35 million. That's an increase of 41% versus Q1 last year. Looking at the sales revenue, we're just below NOK 32 million. Also, a strong performance up 36% versus Q1 last year. We had a negative currency impact. So, if you look at sales at constant exchange rates. It was at NOK 35 million up 50%.
We also had a profitable quarter coming in at NOK 1.6 million, a real turnaround from Q1 last year of NOK 5.3 million. I would like just to talk a bit about our strategic milestones that we achieved during Q1 and also just after the end of the quarter. Because, there were a number of significant events. First of all, I would like to highlight our Capital Markets Day. For me, it was a great day, a great opportunity to present the company, present our strategy. The most important thing of the day was really to hear from our partners to hear the validation of how our technology implemented in our partners' workflow makes a substantial difference.
I was really pleased to hear from OXB, Senior Director Innovation, Lee Davies, talking about what a massive impact the implementation of M-SAN in their platform process has had in terms of yield, less batch failures, and also hearing from the metagenomics space from Rafi Ahmad. That was a really interesting perspective into the possibilities that metagenomics provide. I'm really pleased to see that we are part of an increasing number of protocols where M-SAN is used for host cell depletion. We also recently announced that we've been granted a European patent on our RNA restriction enzyme portfolio. A very important milestone as RNA enzymes are going to be an important part of the future of ArcticZymes Technologies growth strategy.
Going to get back to that as well. Market development, we had a very successful metagenomics webinar where we were joined by experts from NHS that are really front runners within this space globally. We had more than 160 global participants from across Europe, the U.S., and Asia. Following that webinar, we have received a significant number of requests. Both in terms of acquiring M-SAN, but also in regards to questions about the protocol. Thought leadership, we published an important piece in the quarter a white paper on the economics of SAN, and this was really positioned to clearly position ArcticZymes Technologies SAN portfolio as a game changer within viral vector manufacturing, showcasing very clearly tangible benefits of implementing SAN in a viral vector manufacturing flow.
All of these things contributed to a busy quarter, but also a successful quarter. Next slide, Børge. Some words about the method patent that we've been granted in Europe on our RNA restriction enzyme technology. It's covering analytical process development and manufacturing workflows for therapeutic RNA production. Why does this matter? It matters because we of course need to protect our investment. Maybe more importantly, it also gives our partners the freedom to operate and the IP security that they need in order to integrate our technology into their processes with confidence. We're not done yet. We have further pending applications also in other regions, and we are working on establishing a further IP and strategic collaborations within this space and this new growth pillar.
When are we going to launch the first solutions within this space? Our current target is that we're going to launch the first solutions towards the end of the year or start of next year. We have several things cooking in the pipeline in development. Not only new enzymes not only the restriction enzyme portfolio, but we also have some of our current enzymes that we are developing application data for. So they can be used in RNA therapeutics manufacturing workflows. It's a really, really interesting space where it's not just about developing new enzymes. It's also about repurposing some of the existing enzymes and developing new application data. Currently, we're working with a number of beta testers, and the data we're receiving on the restriction enzymes is really encouraging. Next slide, Børge.
We also had another announcement, an announcement in regards to our continued collaboration with the Austrian Centre of Industrial Biotechnology, acib. We've been working with acib for the past couple of years. Started out in 2023 when they independently identified M-SAN as superior for chromatin removal in viral vector workflows. 2024, we signed a partnership agreement with them. Last year we extended that long-term partnership by three years, and we invested EUR 160,000 in that partnership that extension. It was matched by the COMET organization, also with EUR 160,000. What we have seen coming out of this collaboration is really that now we're able to develop real-life workflow data from viral vector workflows.
We've seen a number of posters coming out. We've seen webinars. We've seen talks at conferences. We've also seen that this has also contributed to the white paper that I talked about the economics of SAN, and it has helped quantify the data that you see on the right. The significant improvement in process yield, the significant reduction in nuclease cost leading to a lower cost per dose of up to or about 40%. This is something that really speaks to some of the core challenges within viral vector manufacturing today reducing the costs of manufacturing to make it viable.
We've already seen that the commercial team has been very successful in using this piece in engaging with customers, and we also have a model where we can allow the customers to input their own data. So they get the exact data on how M-SAN is going to positively impact their manufacturing process. Finally, we're going to host a webinar on June 11th, where we are going to showcase the latest research findings from our collaboration with acib. If you have not signed up yet. Please do so. It's going to be worth while with that, I would like to hand it over to Paul Blackburn to give us a bit more flavor on the commercial part of our business.
Thank you, Michael. Good morning, and thank you, everybody for joining us. Over the next few slides, I'd like to walk you through how we see the first quarter. Not just the numbers themselves, but what those numbers tell us about where the business is going and how we're managing it. I'd like to keep this at a strategic level and for any details, we would be happy to answer them in the Q&A. There are really four things I'd like you to take away today. First, our direction of travel. Second, what we're seeing in our end markets. Third, where we're making deliberate trade-offs. Fourth, why we are confident in our path ahead, while we're still realistic about how that path will unfold. Could you move slides, please? Let me start with the headline.
The first quarter was the strongest Q1 we've had on record excluding COVID. Total revenue was NOK 31.8 million - NOK 35 million on a constant currency basis. That represents growth of 36% year-on-year and just over NOK 8 million ahead of the same quarter last year. Both segments contributed. Biomanufacturing grew around 11%, and molecular tools grew around 72%. I wanna be careful in how we frame those numbers because on their own, they're not a victory lap. The first quarter last year was a soft quarter. Particularly in molecular tools. The percentage growth looks larger than the underlying picture. What I think is more important is the consistency beneath this headline. Both segments came in above their three year quarterly average.
Trailing 12-month revenue has now increased for four consecutive quarters. The growth was broad-based and driven by several large accounts rather than any one single customer carrying this result. That pattern really matters because it reflects the strategy we've been executing for some time. We've been really deliberate about where we invest our commercial effort. We've been deepening relationships with customers and platforms that are most likely to scale. We've been supporting more of our products into commercial stage manufacturing and into diagnostic platforms. Those themselves are ramping. We're being selective about where we chase revenue versus where we build a more durable position. Our direction of travel is towards a higher quality revenue base with stronger engagement from customers that matter most to our long-term trajectory. We're not claiming a step change.
What we're saying is that the shape of our business is improving in ways that we would expect to see if our strategy was working which it is. Quarter to quarter that may not always be visible, but over the last 12 months, it has become more visible, and Q1 is consistent with that. Next slide, please. Turning to biomanufacturing, this is where we get a particularly clear read on our end markets. Revenue here was just over NOK 15 million, which is up around 11% year-on-year. Growth was concentrated on our M-SAN HQ franchise, which delivered its second best quarter ever with revenue more than doubling year-on-year. What I wanna focus on is what sits behind that number. The GMP version of M-SAN HQ, which is what customers use as they move into commercial stage manufacturing.
This grew just under 41% quarter-on-quarter. That's a metric we watch very closely because it's a leading indicator of how customers' programs are progressing from clinical work and preclinical into commercial production. We're seeing that adoption build in a way that's consistent with broader industry changes, and particularly the shift towards improving the quality of these next-generation modalities, cell and gene therapies, and advanced biologics. Of course, this is where our products are well-positioned. The customer mix is also informative. Our top three contributors this quarter were the largest global CDMOs. As you know, these are organizations that manufacture medicines on behalf of pharma. Alongside that, we did see smaller but meaningful contributions from three mid-tier European CDMOs that are newer to our franchise.
That combination, which is established leaders going deeper alongside a widening base of mid-tier customers, is exactly the market signal that we're looking for. As I say, I wouldn't overread a single quarter. Adoption in this market is uneven by nature. Customers will buy in line with their own program cycles and clearly not ours. There will be quarters where this pattern looks less clean. The underlying signal, which is commercial stage GMP momentum, a broadening customer base, and growth in the most strategically or one of the most strategically important parts of our portfolio, is this signal that we want to see, and it's a signal that we are seeing. Next slide, please. Molecular tools is where I want to be most direct about how we think about our trade-offs.
Revenue here was NOK 16.6 million , which is up 72% year-on-year, that is a very strong result. It does need some context. A significant part of that year-on-year movement comes from one single OEM customer normalizing. However, we are of course, very pleased with that relationship. We've built it carefully over time. We're also clear about the concentration aspects that comes with that. You know, that concentration is in some ways deliberate, not accidental. We welcome serving this strategic partner whose platforms are commercialized and stable. It does mean that we manage this segment with a sharper focus on diversification beneath the headline. The encouraging news is that diversification is beginning to come through. Our top five molecular tools customers excluding this key OEM they're all Cod UNG buyers three of those are diagnostic platforms that are now ramping.
We've also got firm orders locked in for 2026 from a U.S. early cancer detection diagnostics customer that uses our Proteinase line. They're currently moving through their regulatory process. They're expecting pre-market approval feedback in early Q3. While one OEM is driving this headline number, the quality of our customer base underneath it is improving. We are obviously leaning into relationships that work, and we're deliberately building diversification underneath, and we're being realistic about the regions and accounts where we have more work to do. Again, progress here will not be linear, and we don't want to present it as such. Next slide, please. Bringing it all together, what gives us confidence as we look forward? The operating signals are positive. Q1 revenue was strong.
We have visible 2026 revenue already from key diagnostic customers. Commercial stage GMP momentum continues to build. Our average order value is up by around a third year-on-year, which tells us the quality of our revenue is improving and not just the quantity. We added 25 new paying customers during the quarter, and our trailing twelve-month revenue has now been positive for four consecutive quarters. At the same time, we're very clear about some of the watch points. APAC molecular tools was down around 19% year-on-year, recovery there depends on a small number of Indian key accounts placing orders again, which we believe is simple phasing. OEM concentration in molecular tools is something that we are actively managing and not something that we consider to be solved yet.
There are also some order phasing effects on the U.S. East Coast for biomanufacturing specifically. We do expect those to normalize in the H2 . We are managing to that expectation. Order phasing, especially on the U.S. East Coast, will create some quarter-to-quarter noise. We expect that to even out through the H2 . None of this is a surprise to us. These are known dynamics. They are part of how we run the business. What I want to leave you with is this. The first quarter is consistent with the strategy and direction of travel we've been describing for some time. We're seeing some indicators that we would expect to see if the underlying business is strengthening. We're making very deliberate choices about where to invest, where to be patient. Where to accept that progress will be uneven.
We're not assuming that we're gonna see a smooth line. We're assuming we're gonna see a positive line over time, and some quarters will look better and some will look softer along the way, and that's where our commercial execution discipline really matters. With that, I'd like to hand over to Børge Sørvoll.
Thank you, Paul, and good morning to all everyone listening in as well. Before I go through the financial details in this quarter, there are two framing points that we should talk about first. First, in Q1. The Q1 reflects the operating leverage that we talked about at the Capital Markets Day. Our sales growth is largely fixed on a cost base even though we are investing. Secondly, the absolute numbers in this quarter as both, Paul and Michael alluded to are influenced by currency. I will start with the currency before I talk about underlying performance and the EBITDA performance. A meaningful share of our reported top line this quarter is shaped by currency.
The Norwegian krone continued to strengthen against the US dollar through Q1. The dollar has moved now from around NOK 11.5 per US dollar at the end of 2024 to around 9.30 today. This is roughly a 20% weakening over the last year and a half year and one quarter. The EUR. However, remained more stable in 2025. Also in Q1, we saw that the NOK strengthened against the EUR as well. Since the majority of our sales are invoiced in EUR and USD, of course, this impacts our underlying growth in the business.
As Michael talked about, in the beginning here, holding Q1 2026 and Q1 2025 exchange rates constant, our sales would actually have been NOK 3.2 million higher in this quarter, bringing reported sales of NOK 31.8 million up to an adjusted NOK 35 million. Year-on-year, that is roughly 50% increase on a constant currency basis versus the 36% that we reported. It is worth mentioning currency works in both directions. A stronger NOK is tailwind on our cost side, but our top line is materially larger than our FX-exposed cost base. The net impact on profitability is negative when the NOK strengthens.
We are evaluating instruments how to reduce this volatility going forward now. Looking at the financials for the first quarter, we already talked about the sales revenues in Paul's and Michael's introductions here. It's also worth looking at other revenues had a quite a good contribution in the first quarter with NOK 3.3 million. This is primarily derived from tax grants of NOK 0.6 million. We also had the Adept project that contributed with NOK 2 million, and there's been a technical IFRS adjustment on the lease calculation of NOK 0.6 million. This one has also an expense of NOK 0.4 million associated with this as well. On a grant-related note, we have booked almost 50% of the expected annual revenues on the Adept project in the first quarter.
This means that there will be lower revenues in the coming quarters, and especially towards the second half of the year on this project. It's similar to what we saw in 2025. On the cost side, cost of materials and change in inventory came in at NOK 2.2 million compared to only NOK 0.9 million we had in first quarter last year. There are some effects that contributed to this. We have done some reanalysis of the enzymes. We have discarded some chemicals that lifted material cost, and we have reduced inventory carrying values by close to NOK 0.7 million from year end of 2025 following a recalculation of our inventory and enzymes. Personnel expenses is higher than last year.
We are now at the NOK 20.8 million, up from NOK 18.8 million in the first quarter last year. This is an increase of NOK 2 million or 11%. This is, however, in line with our plan and the commercial expansion that we carried out throughout 2025. The drivers of this kind of this growth is kind of annual salary increase, but also the full-year effect of all the commercial hires we made in the year of 2025. In previous years, we have also capitalized expenses and in the first quarter last year, we capitalized NOK 0.3 million, whereas in this quarter we didn't capitalize anything. Basically, our personnel expenses are all in expense in this quarter. The headcount-driven cost base that we have seen over last year is now broadly built.
It does not mean that we will stop investing in further recruitment, but we expect that the increase will be lower than what we saw in 2025. It will be based on that we see that this will drive further top-line expansion. Other operating expenses came in at NOK 10.6 million compared to the NOK 9 million we saw in the first quarter last year. This NOK 1.6 million increase reflects the increase in commercial execution that we have worked on over the last year. There are also some other drivers here. You can see external work on R&D-driven projects came in at NOK 0.9 million, which is a lot higher than we saw last year. This is also expenses that are tied up to other revenues and the ADEPT project.
We have also seen that we have some currency headwinds on receivables with close to NOK 0.4 million. We have also seen an IPR phasing of some expenses of NOK 0.7 million. Also, as I said under the other revenues. There is a technical accounting adjustment on the lease that we signed in February of NOK 0.4 million. As in general, we have a higher deliberate commercial spend on both travels, marketing, and conferences this year. This goes with kind of the commercial expansion that we have done and also the increased activities that we are doing. This brings us over to the profitability of the business. EBITDA for the quarter was NOK 1.6 million compared to a negative NOK 3.7 million in the first quarter last year.
As Michael said, this is a year-on-year turnaround of NOK 5.3 million. The EBITDA margin came in at 5%. As you can see from the chart on the left-hand side, this shows a quarterly progression where you can also see that there is some margin improvement of more than 20% compared to the same quarter last year when we had a negative 16% EBITDA margin. Of course, the improvement is driven primarily by top-line growth and the operating leverage dynamics that we presented at the Capital Markets Day. As a reminder, the structural logic of the business is unchanged. We expect that gross margins will remain high.
We expect a fairly fixed cost base for the majority of our business, that the revenue that increasingly converts into EBITDA as we scale and drive growth. Q1 is consistent with that path even though there are some expenses that are a little bit higher than last year. Looking at the cash and short-term investments, they stand now at NOK 264 million at the end of the first quarter. It's a slight reduction of NOK 0.6 million from end of last year. The company has no interest-bearing debt, and we have a strong equity ratio of around 94%. I want to also go back to the Capital Markets Day where we talked about the capital allocation framework. First of all, it's important for us that we will fund organic growth internally first.
We are also looking at the optionality for selective value-accretive inorganic moves where we see there's a strategic alignment between the companies. To round off this presentation on my part now, I think it's important to say we have invested in the commercial organization throughout 2025. We see the full effects of this in 2026, but we have a solid financial position, and we will continue to put money into projects where we believe this can drive the top-line expansion and ultimately shareholder value. With that, I think I will hand it over to Michael for some final remarks.
Thanks a lot, Paul and Børge, for a nice walkthrough of the commercial status and the financial performance of the quarter. I'm going to end things up by just recapping our strategy that we also presented at the Capital Markets Day and also talk a bit about our financial ambition. Next slide, please. First of all, it's all about building a scalable enzyme platform, we have a number of strategic pillars that are going to be fueling that growth and also giving us greater resilience. Approximately two years ago, a bit less than two years ago, we started our transition from a product-focused oriented enzyme supplier to becoming more customer-centric more application-led solution focused. We are seeing clearly that the strategy is starting to pay off.
We are seeing an increasing revenue growth and a larger customer base. Another main part of our strategy is also to create a wider base. It is to increase the number of markets that we can serve and address, and it's also to widen the product portfolio across the board. It's about diversification and increasing the resilience of the business. We have three solution-based growth pillars, molecular tools, where the focus is really on driving growth, especially within NGS and metagenomics. What I'm also extremely pleased to see is that it's not just within NGS that we're seeing opportunities, it's across the board in molecular tools.
I expect that we're going to see a very positive development within this segment during this year and next year as we have some promising opportunities. Viral vectors are a key focus for us. We're working hard also on the application front, and the route really goes through penetrating more CDMOs being onboarded on more platforms. We've made significant progress. Of course, with OXB but also with a couple of larger CDMOs. There's the new kid on the block that we're building the foundation for now, RNA therapeutics. The usage, enzyme usage within this space is a lot greater than viral vectors. So we expect a lot within this space, not only from new solutions that we are going to launch, but also repurposing some of the existing products with new application data.
It's really, really a field that we're focused on. As mentioned, we're going to launch the first solution end of the year, start of next year. Finally, there's channel. The majority of our business comes from the U.S. and Europe. We believe there's significant potential also in other regions such as the APAC, Asian Pacific region. We're currently investing in a number of different initiatives to penetrate a couple of those markets, both to a channel partner, but also through a dedicated channel manager that we have deployed. Next slide, Børge. Going back to our ambition that we also presented at the CMD, our clear goal is to create sustainable double-digit growth.
Long term, our growth ambition is that we want to outgrow the markets that we are serving. This is going to give us profit margin expansion through the operating leverage we have in our company and stronger cash generation and financial flexibility that is going to be used to investigate selective value creative investments to enable us to build a stronger more resilient enzyme platform company. The core priorities for the next couple of years, that is to continue to scale a high-performance commercial engine. I think we have come far. We've established a strong base, but we still have more work to do.
We are clearly seeing, as mentioned, the results of that investment, and we are going to invest more also in fueling the high-performance commercial engine as revenue also grows further. Innovation is of course, key for a company like ours, not just internal innovation that we're seeing now within the RNA space, but also collaborations with partners such as acib and others, and it's going to be a key focus for us in the coming years. As I mentioned, the key to penetrating the biomanufacturing market further is to get on board more CDMO platforms. We're making progress OXB is the example, as mentioned, but we're also working with another number of CDMOs as we speak. Metagenomics, it's an interesting space.
It's difficult to say exactly how it's going to develop and how fast it's going to develop, but we are in there. We are expanding our position as a thought leader through the webinar you saw and through collaborations with NHS and other partners. Finally, I've talked quite a bit about RNA and the potential that we see within the space, and it's going to be interesting to follow in the coming years. It is most definitely going to long term be a significant new revenue contributor and something that's also going to increase the diversification and resilience of our business. To sum things up, we had a really really strong start to 2026. We're confident in our strategy.
We're confident in our team's ability to execute on the strategy. We're seeing tangible results in terms of revenue growth of the investments that we have made. I would like to thank the employees for their hard work and also thank our shareholders for the support. With that, I think we can open up for questions and answers.
All right. Thank you, Michael. We have received a few questions here, and some of the questions relate to the annual report. One of the questions that we have received is that they see that we had a quite a high sick leave last year, and has there been improvement in this in 2026 as such?
I think that's a good and important question, thank you for asking that question. Also makes me happy to see that the annual report is actually being read. That's great because a lot of work goes into preparing it. There's no doubt that during 2025, our sick leave was quite significant. It was also concentrated mostly to our operations team. In 2026, the number is much better. I think it's important also to state that although it had a negative impact during 2025, we still managed to deliver to all our customers without any back orders. That's a great credit to the team.
Even though they were down, they managed to deliver on a timely basis, and we didn't have any back orders whatsoever during 2025. That shows a bit about the flexibility and the capacity and the mindset that we have in the business.
Thank you, Michael. One more question from the annual report is that, here. You presented a lead pipeline of NOK 287 million in the annual report. Can you say something about how much of this has been converted into real orders? Can you say something about the timing and the risk components of this pipeline?
Yeah. I'd like to take that, please. Just to frame that NOK 287 million figure, that refers to our gross lead pipeline and not a revenue forecast as such. That pipeline represents a full universe of identified commercial opportunities across all products, customers, and stages. Many of those are early stage, and they span multiple years and we don't expect them all to convert one to one into orders nor is it tied to a single reporting period. What I would like to say, though is that we're working on the quality. The certainty, and the timing of those opportunities so that they can then enter our forecast.
What we're really talking about there is converting this, universe pipeline. If you like, into a weighted pipeline where we apply quality factors like technical readiness, clarity of the use case, you know, budgeting, time frames, and this kind of thing. You know, early stage opportunities would most likely have a relatively low percentage associated. Really, I want to say that this pipeline demonstrates future commercial potential, but the forecast that we run separately from that pipeline reflects our near-term higher confidence ordering expectation. You know, we're introducing discipline and rigor into our commercial team. To bridge this gap between pipeline and forecast. And that's, you know, ultimately how we're gonna grow the business and gain credibility.
The lead pipeline, the universe of opportunities is something that we wanted to do to kind of document the customers that we're engaging with at all stages and for timings that span maybe 18 months, two years, that kind of timescale. I hope that's clear.
Thank you. Thank you, Paul. One more question. Last year, you signed an agreement with Brenntag. Have you started to see any sales from this agreement so far? How's the relationship moving?
Yeah. I'll take that one as well, please. We have seen some sales from Brenntag. You may have noticed that they've recently launched a BioPharma-specific component called BioPharma. We are in many ways kind of pioneering with them. We're kind of an early entry into what I believe will become a more substantial portfolio for Brenntag. The relationship is excellent. We're working on a really nice. Again, pipeline of opportunities at different stages and we have, you know, incredibly regular meetings. We have a good cadence. I think we need to be patient because of the organizational changes that they've made.
Because the nature of our business for biomanufacturing is based around designing, and there's going to need to be, you know, sampling and validation, adoption, et cetera. We don't expect significant revenues in the short term, and that has been clear from the beginning or before the beginning. Yes, we are seeing traction and the relationship is very good.
Thank you, Paul. One more question here. Is it possible to say something how much of the NOK 25 million in 12 months M-SAN sales you've had that are stemming from kind of early evaluation versus recurring orders? Is it just a few key accounts, or is it more broad-based, the sale?
Yeah. Again, I can take that one. I saw the question come through and had a quick look. I would say around half of the NOK 25 million comes from larger orders. Sorry, larger customers that have ordered over that timescale. About half comes from what you might regard as smaller. You know, there is quite a breadth of customers supporting that revenue number. Yeah, I would say that it's split almost 50/50.
Okay. Thank you. Looking at the molecular tool side of the business. You say that the visibility has improved a lot also with the visibility on OEM orders. With orders locked in for the U.S. early detection company, would you say that the sales level seen in towards the H2 of 2025 and Q1 this year, would sales of a range of NOK 15 million-NOK 18 million on a quarterly level is a reasonable level to expect also ahead?
Yes. I, you know, obviously, I don't have a crystal ball but given the relationships that we have with these customers, and given the agreements we have with these customers that is reasonable. That isn't a promise. Of course. You know, we are still Projects change. You know, the U.S. cancer diagnostic customer that's referred to, you know, they still need to get a pre-market approval with, you know, before they commercialize properly. Is that reasonable? Yes. Is that a promise? No.
Okay. Thank you, Paul. One more comment question on the sales side. You say that you have a biomanufacturing of 11% growth headline. The M-SAN, however, is increasing by 110%. Does this mean that the legacy products within the biomanufacturing portfolio is shrinking?
Yes. Again, that's been a deliberate move from us. There, there's kind of two things I'd like to make comment on there. The first is there has been a an industry shift, or at least more focus on AAV over LV, and we have worked with customers on methodology that uses M-SAN rather than SAN in those methods. Whereas kind of historically, it was considered that SAN would be for high salt for AAV and M-SAN for LV. That's not the case, and that's been deliberate. The second point, or to give some context to that is that we find M-SAN is more defensible as a product. It is like, certainly one of our crown jewels, i f you like.
Again, it's been really deliberate to lead with that product and the business development team typically would lead with that product, where appropriate for the customer and where their workflow would allow. Yes, there has been some swappage there. That's not an accident.
Okay. Thank you, Paul. A last question that we have received now is regarding the lease adjustment that I alluded to, talked about here as well. Can this be considered as a one-off? I can probably answer that. It is, yes, it is a one-off effect because we signed the agreement with our landlord and there was some technical. We had to do some recalculations of the NPV of that contract according to the accounting and IFRS rules. Yes, there is only a Q1 effect in this area. So, we will not see it in the coming quarters. It will be normalized depreciation that we will see for lease in the future.
All right. I think that was the last question that we had. I think we will round off this presentation and Q&A now. I think we thank everyone for listening in. We wish everyone a great day. Thank you.