Welcome to the Q3 presentation. Both Børge Sørvoll, our CFO, and I, Jethro Holter, the CEO, will walk you through the presentation today. As it is a virtual meeting today, it does put some limitations on us. For the Q&A session, we kindly ask you to post your questions via the chat function. We are unable to cater for email and verbal questions today. Can we go to Slide two, the agenda slide, please? For the agenda today, we're going to walk you through the highlights. In the usual order, we will go through ArcticZymes, give you some updates there. We'll then walk through beta-glucan updates, then Børge will take you through the Q3 financials, then I'll end with the outlook. If we go to Slide four. We're going to take you through the highlights now.
On Slide 4 here, what you see is these are highlights where you can see in a nutshell, the company continues to achieve strong underlying growth. On top of it, we continue to benefit from COVID-19 related upsides in sales. We've actually reached a new milestone this year. For the first time, the company has already exceeded NOK 100 million in annual sales. For the first nine months, we've achieved just short of NOK 109 million. For ArcticZymes, the enzyme business, we've achieved our second-best quarter quarterly sales. We've performed at NOK 29.5 million we achieved. This is compared to NOK 12 million for the same quarter last year. In the therapeutics segment, where we sell the SAN products, we've received the largest order to date during the quarter for NOK 3 million from our most well-established customer.
In molecular diagnostics, here, we've been working on our sales efforts towards going into new markets, so new geographies. In particular, we made our first steps into China and India. I'm going to talk a little bit about that. In terms of Biotec BetaGlucans, this business continues to operate profitably since we restructured it back in December, and it has done now for three consecutive quarters. Those are the main highlights. I'd like to now skip to ArcticZymes updates on slide number six. In terms of commercial updates for ArcticZymes, we continue to achieve strong underlying growth, where the business is growing 63% compared to Q3 last year. The Therapeutics continues to be our fastest growing segment for us. For the quarter, we've grown by 300% compared to the same period last year.
When you look at the contribution of sales, 52% of the therapeutic sales contribute to the overall enzyme sales for Q3. We received our largest order of NOK 3 million to date from our most well-established customer. This customer is using the enzyme in gene therapy in non-COVID-19 application. Last quarter, we communicated that we signed a supply agreement with ReiThera. This is an Italian vaccine company that is making a COVID-19 vaccine. ArcticZymes has been supporting their efforts in supplying them SAN. They've now moved forward into phase I clinical trials. Of course, we're providing the enzyme to those clinical trials. Of course, as they advance, we continue to provide more enzyme down the road.
Another milestone for us here is that we were audited by a top-tier pharmaceutical company recently. They actually had a three-day audit, a cGMP audit. That was a really tough audit. We did very well. It was a successful audit for us. For the customer, the audit was a prerequisite before moving forward for potential supply to several of their global sites for the SAN products. When it comes to research and diagnostics, we see in the molecular diagnostics that sales continue to grow. One interesting development in the diagnostic area is that we've had the first customer integrate our enzymes into their COVID-19 LAMP diagnostic test. This company now is in the process of initiating clinical trials. They will soon seek approval from the FDA before going to market.
What we're seeing when it comes to molecular research sales to kit manufacturers, we have seen a temporary slowdown there. This is due to coronavirus lockdowns. As you can appreciate, the lockdowns have meant that the researchers normally working in university labs have been not able to work in those labs. They've been working from home office. They haven't been doing their experiments. This has a knock-on effect because our customers who we sell enzymes to, who integrate our enzymes into kits, have not been able to sell those kits to researchers. They've got a lot of inventory on their shelves they haven't pushed. What this means, this reduces the demand, which reverberates back down the supply chain to suppliers like ArcticZymes.
We do expect to see a slowdown for the short term, but we are starting to see that researchers are getting back to the bench, so our customers will eventually start moving those kits and then the supply chain, then more demand for our enzymes will come in when it comes to the research market. In terms of COVID-19 upsides, as expected and communicated during the Q2 update, the corona upsides for Q3 are lower than Q2. When you look at it, corona upsides account 20% of our total enzyme sales during the quarter. When you look at it, as a component supplier serving future demand in the supply chain for corona-related applications is far from predictable. When you just look at the market dynamics, that it's complex, it's uncertain, especially when you're at the front end of a supply chain.
There's absolutely no disputing that the need for corona tests is far beyond what industry can serve today, and I think we certainly see this with our customer base. We're able to serve our customers. We've been very able to provide all the enzymes our customers need from ArcticZymes. However, what we're seeing from our customers is that they have found it difficult to source all components they need from all their suppliers that they have to manufacture their kits. For some of our customers, there's been long delays in launching their kits or sometimes getting supply to keep their kits on the market. Of course, what we also saw, another point we saw, something we saw in Q2 already, was that there was a lot of overstocking because of this fear of the supply chain drying up, and certainly that has happened.
Of course, the supply chain is catching up still, and we're just one of many suppliers to our customer. That said, we have had numerous customers who have been successful in getting their tests on the market and with our enzymes in. Some of these customers are doing very well. However, some have experienced quality issues, and in the worst case, we have observed the odd customer that has been forced to withdraw their test off the market. Hence why it's not such an easy, clear picture out there. There are different forces in play here and why it's complex. What we see here is that there is demand certainly moving forward, and there will be, and it will grow when it comes to the need for enzymes for coronavirus. We will expect quarterly fluctuations.
That should be expected, and we might see large fluctuations quarter to quarter, and that's natural when you look at the complexity in how the supply chain is working here. We do expect over time this will normalize, and it will come to a natural equilibrium, but this is going to take one to two years. For ArcticZymes, when it comes to the coronavirus, our focus is twofold. One, we're focusing on capturing the short-term opportunities, and that's what we've been doing during Q1, Q2, Q3, and that will be up and down. More longer term, what's critical is that we capture the long-term value in getting our enzymes locked down in the next generation COVID-19 tests and technologies.
The example I mentioned is a good example, where I mentioned just a few minutes ago that we had our first customer integrating our technology into their COVID-19 test, and that's the kind of technology which will be more a long-term technology. It'll be there for the test of time. Could we move on to the next slide, please? It's geographical expansion. For ArcticZymes, we've primarily focused in our sales efforts in North America, Europe, and Japan. However, we have had ambitions to expand our geographical reach, in particular into developing an Asian market. Why we're interested in these markets is because they have sizable populations, and there are national focus in diagnostic initiatives. For us, two countries we're particularly being interested in is China and India, and we are just stepping our toes into the water here.
In China, we recently signed a supply agreement with a company called Simcere Diagnostics. In China, the parent company is a significant company there. It is recognized as one of the top 10 innovative pharmaceutical enterprises in China. What Simcere is going to do is that it is going to be using our HL Salt Active Nuclease enzyme in developing and manufacturing infectious disease diagnostic tests based on next-generation sequencing. Also, the deal provides certain distribution rights within China for the HL enzyme. For us, this really does mark our first step into the Chinese market, and of course, we have ambitions to go further, but today we are just stepping our toes in the water. The next thing is to dip our feet in even more as we move forward, and that will be a gradual process.
In India, we've been serving a customer there for just over a year. What we've been doing is providing a diagnostic company our Cod UNG enzyme. What they've done is they've integrated this into a tuberculosis test. This is pretty important in India because India bears a disproportionately large burden of the world's tuberculosis cases. There's around about 2.2 million cases per year. That's approximately just over 20% of the world's tuberculosis cases, hence why it's significant. Why this is of interest now is during Q3, the customer switched to buying the large bulk package sizes that we have, and since business is starting to materialize from them. What we see is these long-term sales here are expected to exceed NOK 1 million. Of course, this is just our first customer in India, and we are looking to expand our reach there too.
Moving forward, what we will do, we will gradually expand our commercial footprint in China, India, and other developing countries, which do have sizable populations and a national diagnostic program. Can we go to the next slide, please? I just want to give you an update on innovations. When it comes to innovations, we are adopting a forward-leaning approach. We want to ramp up our enzyme developments and bring more products out to the market faster. With this, we have a lot of projects ongoing, and I can quickly walk through some of the key ones here. One thing we're doing right now is, one thing is about developing enzymes, but it's also about scaling up enzymes.
That is, one of the things we've been doing is working to scale up Salt Active Nuclease, and this was partly funded by the new grant we got in Q2 from Innovation Norway. We're making good progress there. We're soon in the process of initiating our first medium-scale pilot production batch. Assuming this is successful, we will then move forward into large-scale pilot batch production. Assuming all things go to plan, we should be doing this towards the end of Q4. The second thing here I'd like to talk about is the viral diagnostic component. What we did is, partly funded by Innovation Norway grant, we ramped up our innovation efforts to develop enzymes that form components for viral diagnostics.
R&D is making very good progress in a short space of time, where we have managed to start expressing and purifying thermostable polymerases and reverse transcriptase enzymes. Of course, they still need to be now going to product development, and the manufacturing processes need to be worked out, but we are making good progress there. What we're going to do is these enzymes will be optimized for virus-based diagnostics such as HIV, hepatitis C, and of course, COVID-19 diagnostic testing. We have a lot of other innovations in the pipeline. Too many to talk about today, but I just wanted to give you a flavor. We're working on a lot of things. We have new SAN products we're working on to capture more value from the gene therapy and vaccine manufacturing market. We're working on novel ligases.
Our DNases have been very popular. Of course, we are working on other DNA-like enzymes. We're working on other polymerases, reverse transcriptases, as well as formulations for our existing enzymes. Often customers come to us, say, "We like your current enzyme, but we need it in a different formulation." We do that as well. Of course, we work on non-enzyme support products. For instance, like the ELISA kits, we have one in development to support a new SAN product. There's a lot in the works. Of course, we need people for that. What we're doing is we've made some hires during Q3, which help support the above organic growth initiatives. We're going to continue to expand the R&D team out as we move forward. I'd like to go to the next slide, please.
Part of this organic growth initiative is about expanding our operation. What we're going to do is share with you today what we're going to do here. The facilities in Tromsø, we're going to expand these. We are preparing to expand both manufacturing, so production and R&D. When you look at the enzyme business today, it operates on two separate sites in Tromsø. What we plan to do is bring the ArcticZymes enzyme business together onto one site at the SIVA Innovation Centre. This is shown in the picture on this slide. Today, actually, part of ArcticZymes is based there. Its R&D is based at SIVA today, as well as the marketing function and the administration for the group is based there.
When it comes to R&D, what we're going to do is expand the lab space that we have within the SIVA building, and we want to do this so we can capitalize on ramping up the innovation efforts. Also with this, what we will do is we'll also hire more laboratory personnel, and this will allow us to ramp up the innovation. This will allow us to do more innovation projects in parallel. When it comes to production, we are going to relocate production into a new state-of-the-art and larger production facility at SIVA. This will enhance our capacity and capability to serve both cGMP and diagnostic-grade enzymes to a growing customer base. The whole process is expected to take approximately one year. Okay. Could we go to the next slide, please?
To the Biotec BetaGlucans update. Go to slide 11. With Biotec BetaGlucans, this business is operating profitably. It has done now for three consecutive quarters following the restructure we did back in December. The main drivers here to growth are primarily the consumer health business and the soluble beta-glucan adjuvant. If we quickly walk through each of these areas. In animal health, the glucan sales continue to fluctuate quarterly. This is expected due to the large order we received from our main customer in Q1. It's quite normal these fluctuations because there are seasonal fluctuations in need from our main customer. In consumer health, we continue to see growth in the M-Gard sales. Actually we saw 300% growth compared to the same quarter last year. What's interesting about this business is it continues to attract a handful of new customers each quarter.
When you look at the growth, what's attributing to that is basically expansion of the customer base and growth rate within individual customers. The SBG adjuvant here, we expedited the third SBG order relating to commitments this year to support clinical trials. We are still working on the licensing deal that's progressing. We're in the negotiation phase. It's still ongoing now. When it comes to the wound healing Woulgan, where sales delivered to expectation. If you recall there in Q2, we made a decision and we discontinued the manufacturing of the Woulgan product. In Q3 we shipped all the remaining inventory to our customers. We've stopped all sales activities now. We may still see some small sales in Q4 which relates to consignment stock that some customers still have.
When it comes to the divestment process, this is now drawing to a close. The process has generated several possibilities and options for the company that are now under consideration. That's where I'm going to now switch over to Børge, and he's going to walk you through the financials.
Okay. Thank you, Jethro. Can you please take the next slide here? Of course, as Jethro said, I will give you a few more details on the underlying numbers from what Jethro has talked about. As we have said over the last few quarters now, we are really proud of how we have managed to turn the group around from a loss-making business to a business that is well positioned for future growth and profitability. As I said before here, Q3 is not an exception to this. Going into the ArcticZymes side of the business, if you just skip to the next slide, please. We have continued with our good sales growth for the ArcticZymes side of the business, even though we did not experience the same sort of sales levels as we experienced in the Q2 this year.
In the Q3, we delivered NOK 19.5 million in sales, which was a growth in excess of 60% compared to the same quarter last year. Also, if we exclude the COVID-19 upsides of an estimated NOK 4 million for the quarter, we had a growth in the underlying business of close to 30%, which is of course higher than we experienced in previous years. For the first nine months of the year, we have achieved NOK 71 million in sales compared to NOK 29 million at the same time last year. Of course, this is a growth of close to 250% just for the first nine months here. From the table on the right-hand side, you can see that the therapeutics or SAN segments continue to be strong in sales with an excess of NOK 10 million for the quarter.
While the underlying research and diagnostic segment has a decline of 7% for the quarter, and a decline of 49% when you exclude the COVID-19 upsides. Of course, the reason for this decline is, as Jethro talked about, a slowdown in the research segment where researchers are at home rather than at the lab benches. Of course, we do expect these numbers to continue to fluctuate from quarter to quarter, but overall, we expect the business to continue growing on an annual basis. The next slide, please. Going into the ArcticZymes performance side. By combining ArcticZymes sales with the expenses, we get a good overview on the performance for both the quarter and for the first nine months of the year.
As I said in the previous slide, sales are at a much higher level than previous years, but we have also increased our expenses somewhat due to the ramp-up of R&D projects and the general activity levels we are experiencing in the company here. Our operating expenditures for the quarter was up NOK 2 million compared to the same quarter last year. This increase is primarily driven by higher personnel expenses. We have more people on board now than last year. We had the restructuring that we did end of last year, but we also have new people on new projects that we are driving now, as Jethro talked about on the R&D side here. On an EBITDA level, we have another good quarter with close to NOK 10 million in profit compared to only NOK 3.8 million at the same time last year.
Of course, for the first nine months, we have an EBITDA of close to NOK 45 million compared to only NOK 5 million at the same quarter last year. Of course, you could say that the Q2 performance we had this year plays of course a vital role in this. It is important to see how we have elevated the business to new levels now over the last few quarters. We have seen now good growth now in all these quarters now. On the margin side, we delivered on EBITDA margin of close to 49%, which is a little bit lower than the previous quarter as expected. We are still at levels that are significantly higher than we experienced in previous years.
For the first nine months of the year, we have an EBITDA margin of 60%, which is really high historically for the company and for the industry as such. Next slide, please. Moving into the non-core part of the business. We are experiencing the same sales levels as we were in the Q3 last year, and that we experienced in the Q2 this year. You can see one of the good things with this quarter that we have experienced good sales now in the high margin business. As Jethro said, consumer health, it continues the same trend as we saw in the Q2 with sales of NOK 5 million. Of course, there are some upsides, or there are some COVID-19 related sales there of NOK 1.2 million.
If you look at the first nine months of this consumer health business has experienced a significant and strong growth, sales are now at NOK 14.1 million, compared to only NOK 4.2 million at the same time last year. This is an increase of NOK 10 million for the first nine months or close to 300% for the year as such. Of course, as we talked about in the Q2 as well, we are no longer producing Woulgan, and we are running out of stock now. Q3, as Jethro also said, will be the last quarter where we see sales revenues of significance. We experienced NOK 1.2 million in this quarter, and this was basically all of our inventory. There are some small numbers there going forward, but for all practical purposes, this is the last quarter where we'll actually show Woulgan sales.
Of course, as Jethro said, we continue to drive sales in the adjuvant segments, and we expect these to be on the same levels in the Q4 as well now going forward. Animal health, it will fluctuate from quarter to quarter. Even though we are at higher levels than the Q2 this year, we are close to NOK 5 million lower than the same quarter last year. Of course, if you look at the first nine months of the year, sales are at NOK 16.4 million compared to NOK 17.4 million at the same time last year. We do expect these sales to be close to flat on an annual basis. Of course, this will depend on what happens in the Q4 as well. Next slide, please.
On the performance side, Biotec BetaGlucans continue to deliver profitability with a third positive consecutive quarter and an EBITDA of NOK 2.5 million. Of course, improved sales in high margin business as well as reduced expenses in the overall business is a key factor to this. Operating expenses are reduced by NOK 2.5 million for the quarter and close to NOK 8 million for the year. Giving us a result now for the first nine months of close to NOK 11 million, compared to a loss of NOK 4.7 million at the same time last year. This gives us a total improvement for the beta-glucan business of more than NOK 15 million year to date here. Of course, you can also see this from the table on the right-hand side, where you can see how the business has developed over the last two years.
Also that we can see that we have an EBITDA margin of 23% for the quarter and close to 30% for the first nine months here. You can see all this after we did the strategy change in December last year. After that, we started to see the improvement in the business. Next slide, please. Going to the consolidated group figures and performances. We continue to deliver solid figures, even though we did not reach the same set of numbers that we did in the Q2 this year. Overall, this is the third-best quarter in history on an EBITDA level, only beaten by the first and Q2 this year. Our consolidated sales, they were at NOK 30.8 million for the quarter, compared to NOK 22.2 and a half at the same quarter last year.
Our EBITDA was just in excess of NOK 10 million, compared to NOK 0.8 million last year, or an improvement of more than NOK 9 million on a quarterly basis. Of course, looking at the first nine months, sales are up from NOK 54 million to an amazing NOK 109 million this year. Our EBITDA is up from minus NOK 4 last year to NOK 51 million this year, or an improvement of more than NOK 55 million if you just look at the first nine months. Of course, in the Q3, we had a little bit lower sales than in the Q2, and this also shown by that we have a reduced margin. You can see the margin is only 33% this quarter now. Of course, looking at the first nine months of the year, we have an EBITDA margin now close to 50% for the group as such.
Next slide, please. Looking at the cash flow side of the business, we continue to strengthen our cash position through our strong underlying growth and development. At the end of September, our cash balance was just high of NOK 70 million. This is explained by a change in cash of an excess of NOK 13 million for the quarter now. This is of course the fifth great quarter with positive cash development. From we bottom out in the Q2 last year, our cash position has increased by close to NOK 50 million now, over the last 12 months now. Looking at the Q3 and the first nine months from the financial perspective now, we can definitely say that we have turned this company around from a loss-making business into a company that drives profitability.
With that, I will hand it over to Jethro, who will tell us a little bit more about what kind of expectations we have for the remainder of the year.
Thank you, Børge , for giving us a view under the hood of the financials. That's good. Can we move to slide 20, the outlook slide, please? For the outlook, it remains unchanged. For us, it's really about driving our strategy around profitability and growth. Firstly, when it comes to profitability, it is about delivering our number one goal, to achieve profitability in 2020. Certainly, looking at the numbers, you can see this milestone is achieved. Of course, what's important, of course, is to maintain this profitability moving forward, and that's what we're going to do year-on-year. Secondly, since you cannot forget this company, our main business is about serving B2B customers. When you serve B2B customers, it's natural to have quarterly fluctuations. As you see now, we have some fluctuations, and that's natural. That's to be expected in this business.
When you look at it, a B2B business, it's like looking out in the ocean, it's like waves. This is how it is, and it will continue like this in the future, irrespective of our size. Size doesn't make you immune from quarterly fluctuations in B2B. What's important here is really about the annual perspective. When you look at our annual perspective, we do have strong growth, and that strong growth is really backed up by inherent growth in all areas. When you look at the business, we have an expanding customer base, which are forged on long-term relationships, i.e., our business is long-term, not transient. Secondly, we operate in three attractive and growing market segments. Thirdly, and finally, we have an expanding innovative and synergistic product range. As you've seen today, we are ramping up efforts to bring more products to the market.
Those things are what will drive and accelerate the future growth of this company. With that, I'm going to stop here, and we're going to open for questions via the chat function. There may be a short pause while we quickly review the questions and then start answering those. Thank you.
Okay. Jethro, I think I have a few questions here from the online viewers here. I have one question here, it is the question about, "Is it fair to assume that the lockdown had some negative effect on the therapeutic segment as well? It is hard for me to imagine that it had such a big effect on molecular research, but no effect on the therapeutic segment.
I'd walked through on the therapeutic segment. There has been little effect. Early on, we did see a little effect in Q1, because people didn't quite understand what was going on, so some efforts slowed down a little bit in the therapeutic area, but not at all. That's going full speed, and you can see that at the numbers that we have. When you look at our numbers show that things are moving forward. Of course, there may be the odd company that is still a little bit slow, and not doing the vaccine or the gene therapy developments. We haven't seen that. Of course, on the research kit manufacturers, that's where we've had a negative impact, and that's totally natural. If researchers are at the bench, if they're not at the bench doing science, which they weren't during Q2, during lockdowns.
Remember, our customers have been making kits during Q2, foreseeing sales that they'd have for kits for the rest of the year. Of course, what's happened is they haven't been able to push those kits. Of course, that comes back down the supply chain to us. I think there's always, it's not a one-to-one relationship to the end user market, and down to the front end of the supply chain. It's not a one-to-one relationship, and it isn't on the same timeframe. It's a bit like an elastic band that is stretching and contracting. Things are happening at different times. I think here, this is what you're seeing in the research market. Of course, now we are seeing researchers coming back to the bench, since lockdowns were lifted. Of course, now there are local lockdowns and things like this.
It's going to take a little bit of time for things to normalize again and people get used to a new normal. Researchers are going to get back, research is going to happen, but it is at reduced capacity to what it was. Of course, now our customers who supply kits, that will have a knock-on effect to their sales. Of course, then that comes back to the suppliers. That's natural. We see that as a short-term thing, and it will equilibrate itself. That's where it is. Of course, in the diagnostics segment, there's diagnostics. It's very much hot on coronavirus. We're seeing that people are still, customers are still purchasing, and we're always getting new customers as well who are looking to develop new diagnostic tests.
Like for instance, the prime example is what we've shown in China. What we've shown in India is just some examples of new customers. Of course, our traditional customers are still in U.S.A., Europe, and Japan are still developing and still selling, and obviously still developing diagnostic tests that aren't corona related. I think we need to put it in perspective here, because of course there's a lot going on coronavirus, but we've got to understand that there's a lot going on outside of corona as well. People are just not dropping everything to run after corona here. Of course, for us, we're trying to capture all value in all areas here. When it comes to the corona, yes, it's about long-term.
We're trying to get the long-term value down the road, and of course, we are capturing all the potential we can in the therapeutics and the non-corona related diagnostics. We continue to support the molecular research area. Of course, as we launch more products, those will go into all three areas as well. As you've seen with the SAN enzymes, and the SAN enzymes go into the therapeutics, but also you see that it's going into the molecular diagnostics as well. Hopefully gives you a kind of flavor of each of the three areas we're in and the dynamics there and sort of what to expect for the future.
Okay. Thank you for that one, Jethro. We have a few more questions. How will the scale-up of the SAN be compared to today's capacity?
It is quite significant. What we're doing now is we're scaling up into the hundreds of liters range. That's where we are now. Today, our scale is tens of liters. It's a factor of 10 to a factor of 100 we're going to over time.
Okay. Thank you. What was the effect from COVID vaccines on the SAN sales in Q3? Is it still minor like in the Q2?
It's progressing, of course. That's moving forward. I'm not going to give an exact number because that exposes customers, of course. That's progressing and it's progressing as planned. You can sort of see the example of the typical gene therapy customer. We talked about that early in the gene therapy world. We have seen now our most advanced customer to date is now purchasing orders of NOK 3 million. You can sort of see that's a kind of good example of how business can materialize with a customer. Each customer is different here. Their needs will vary to some degree depending on what that therapeutic is.
Okay. Let me see. We have one more question here. Can you give some more color on the kind of the Simcere deal? Regarding the press release, I get an idea that it's about tailoring new or specialized product for them, and I get the idea that it involves mercantile components as well. Do you have any comments on this?
Sorry, I didn't get that last bit. Can you repeat the last part of the question?
I get the idea that it involves mercantile components as well. I'm not sure what that means.
I don't understand that last bit. That deal is our first deal in China, and of course, we've never been there. We've got to learn how to do business there. I think here for us, it's getting our enzymes into China. With this, we see this as a very good company, hence why they're very well-recognized there. That's why we've given them certain distribution rights as well, not just to integrate our enzyme into the diagnostic test. Remember, we are looking at when you go into these countries like China, they have huge domestic populations, and of course, you want to get locked into national diagnostic testing programs, and that's what we're doing now. We've got our enzymes put into this next-generation sequencing diagnostic test for infectious disease. It's looking at different things.
It could be viruses, bacteria, you've seen different organisms that infect you. Here, this is a good first step for us to get our enzymes into domestic diagnostic programs here. Of course, since they do have good commercial reach, we are seeing how they can do with the HL-SAN enzyme. This is just the start of a relationship with them. We both have ambitions to grow that relationship since they are developing interesting technologies there. It's our first step into China, and of course, we have ambitions to expand that. It's a significant market, China. Remember, a lot of these Chinese companies aren't just serving the domestic markets. They're also trying to compete on the international stage.
If they're going to compete on the international stage, they need high quality component, hence why a lot of Chinese companies like to reach out to European and U.S. companies, to get the quality components they need from recognized suppliers like ArcticZymes.
Okay. Thank you, Jethro. We have just a few more questions here. I see that profit margins have been reduced in the last quarter. Is this a tendency that will continue and due to restructuring and expansion, or due to reduced prices, increased competition here?
No. Actually, Børge, you're probably even better to take that one, actually. Being serious.
No. I don't think it's a clear answer here. You can see that we still have good margins in the business. Of course, our profit margin will, at the end of the day, depend on how our sales are progressing here. I don't think that you can say that this will continue, or if that they will reduce going forward now. We have good margins on our product, and of course, we have a quite steady expense base in the company now. I think it will all depend on how we are doing now on the sales side. Of course, but as we said here earlier, is that our numbers will continue to fluctuate from quarter to quarter. Some quarters will be better and some will be lower, but as we also said, we expect this business to grow on an annual basis here.
That we do. Okay. I think I have one more question here. Is it likely to believe that Woulgan will be sold during 2020?
I'm not going to comment on that. I think we are moving very forward on that, and we have got several options we're exploring now. What we can do is take the time needed to get the best deal for the company.
Okay. I have one last question here. What is your plan for distribution and marketing of M-Gard? It has been very difficult to source in certain parts of the world after you closed the web shop.
At the end of the day, when it comes to the web shop, this is about selling small pots or of capsules. When you look at it, we're not set up for that type of business. It is filling a lot of pots. It's a lot of effort. It's costly to make. It's not going to make very good margins. Where we make the best margins and the margins that you're seeing now, the good margins, is from the large bulk sales. I think it's about making the right choices. Yes, it's very nice, those pots, but it isn't that cost-effective to do, and you do need a quite significant sales marketing effort. Plus, it's a major logistics effort to ship, pack, and send out thousands and thousands of small orders. We're not set up to do that.
That's why we don't do it anymore, while we're focusing on the large bulk packages that we send out, which have very good margin.
Okay. I don't think we have any further questions. I think with that, I think we can say we thank you for the time that you spent with us today, and we wish you all a good day going forward now.
Likewise. Thank you.
Okay.