Welcome to the Q3 presentation. Both Berge Saville, our CFO and I, Geoffrey Holder, the CEO will walk you through the presentation today. As it is a virtual meeting today, it does put some limitations on us. So for the Q and 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 2, the agenda slide, please? So for the agenda today, we're going to walk you through the highlights you through. Then in the usual order, we will go through ArtEx time to give you some updates there. We'll then walk through the Glucan updates. Then I'll go to the Q3 financials, then I'll end with the outlook.
If we go to Slide 4, we're going to take you through the highlights now. So 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 corona related upsides in sales. We've actually reached a new milestone this year. For the first time, the company has already exceeded NOK 100,000,000 in annual sales.
For the 1st 9 months, we've achieved NOK109 just short of NOK109 1,000,000. For Onyxymes, the enzyme business, we've achieved our 2nd best quarter quarterly sales. We performed at NOK19,500,000 dollars sales we achieved. This is compared to say NOK 12,000,000 for the same quarter last year. In the therapeutics segment, where we sell the sand products, we received the largest order to date during the quarter for NOK 3,000,000 from our most well established customers.
In molecular diagnostics, here we're 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 about that. In terms of Biotech beta glucan, this business continues to operate profitably since we restructured it back in December and it has done now for 3 consecutive quarters. So those are the main highlights.
So I'd like to now skip to Alixxime's updates on Slide number 6. So in terms of commercial updates for Arlyxymes, 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. And 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.
I mentioned it a minute ago that we received our largest order of 3,000,000 krona to date from our most well established customer. And this is actually this customer is using the enzyme in gene therapy and in non COVID-nineteen application. Last quarter, we communicated that we signed a supply agreement for Ria Terra. This is an Italian vaccine company that is making a COVID-nineteen vaccine. Arnie Science has been supporting their efforts in supplying them SAM and they've now moved forward into Phase 1 clinical trials.
And of course, you know, we are providing the enzyme to those clinical trials. And 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, and they actually had a 3 day audit, a cGMP audit, and that's a really tough audit. We did very well. It was a successful audit for us.
And for the customer, it was the audit was a prerequisite before moving forward for potential supply to several of their global sites for the SAM products. When it comes to research and diagnostics, we see in molecular diagnostics that sales continue to grow. And one interesting development in the diagnostic areas that we've had the 1st customer integrate our enzymes into their COVID-nineteen LAMP diagnostic test. And this company now is in the process of initiating clinical trials and they will soon seek approval from the FDA before going to market. What we're seeing in molecular when it comes to molecular research sales to kit manufacturers, we have seen a temporary slowdown there, and this is due to coronavirus lockdowns.
As you can appreciate, the lockdowns have meant that the researchers normally working in university labs or have been not able to work in those labs, they've been working from home office. So 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. So they've got a lot of inventory on their shelves they haven't pushed. So what this means is this reduces the demand, which reverberates back down the supply chain to supplies like Ardich's iron.
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, though 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-nineteen upsides, as expected and communicated during Q2 update, the corona upside to Q3 are lower than Q2. Now 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, you know, serving future demand in the supply chain for corona related applications is far from predictable. When you just look at the market dynamics, it's complex, it's uncertain, especially when you're at the front end of the 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. You know, we are able to serve our customers. We've been very we're able to provide all the enzymes our customers need from our enzymes. 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.
So for some of our customers, there has been long delays in launching their kits or sometimes getting supply to keep their kits on the market. And of course, what we also saw another point we saw or 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. So, 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 had 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. But hence, while it's not such an easy clear picture out there, but there are different forces in play here and why it's complex. So what we see here is that there's always been there is demand certainly moving forward and there will be and it will grow when it comes to the need for enzymes for coronavirus.
But 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 complex in house supply chain is working here. But we do expect over time this will normalize and it will come to a natural equilibrium, but this is going to take 1 to 2 years. So for Arctic science, when it comes to the coronavirus, our focus is twofold. 1, it's really 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.
But 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-nineteen tests and technologies. And 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 the COVID-nineteen test. And that's the kind of technology which will be more a long term technology that will be there for the test of time. Could we move on to the next slide, please? It's geographical expansion.
So in terms for our Eximes, 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 particularly into developing an Asian market. And why we're interested in these markets is because they have sizable populations and there is there are national focus in diagnostic initiatives. So for us, 2 countries we are particularly being interested in is China and India, and we are just stepping our toes into the water here. So in China, we recently signed a supply agreement with a company called Simsea Diagnostics.
In China, the parent company is a significant company now. It's recognized as one of the top 10 innovative pharmaceutical enterprises in China. And what Simsea is going to do is that it's going to be using our AHL, cell active nuclease enzyme in developing and manufacturing infectious disease diagnostic tests based on next generation sequencing. And also the deal provides certain distribution rights within China for the HR band enzyme. So for us, this really does mark our 1st 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 our customer for just over a year and what we've been doing is providing a diagnostic company, our KODU NG enzyme. And what they've done is they've integrated this into the tuberculosis test. And this is pretty important in India because India bears a disproportionately large burden on the world's tuberculosis cases.
There's around about 2,200,000 cases per year. That's approximately just over 20% of the world's tuberculosis cases, hence why it's significant. And why this is of interest now is during Q3, the customers switched to buying the large bulk package sizes that we have and since business is starting to materialize from them. So what we see is this long term sales here are expected to exceed NOK 1,000,000. And of course, this is just our first customer in India and we are looking to expand our REITs there too.
So 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 national diagnostic program. Can we go to the next slide, please? So I just want to give you an update on innovations. And 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.
And so 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, we're talking about scaling up enzymes and that is so one of the things we've been doing is working to scale up some active nuclease, and this was partly funded by the new grants we got in Q2 from Innovation Norway. And we're making good progress there. We're soon in the process of initiating our 1st medium scale pilot production batch. Assuming this is successful, we will then move forward into large scale pilot batch production.
And 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. So what we did is partly funded by Innovation Norway Grant, we've ramped up our innovation efforts to develop enzymes that more components for viral diagnostics. And R and D is making very good progress in the 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 it's, you know, we are making good progress there.
And what we're going to do is these enzymes will be optimized for viral based diagnostics such as HIV, hepatitis C and of course COVID-nineteen diagnostic testing. We have a lot of other innovations in the pipeline, too many to talk about today, but I just want to give you a flavor working on a lot of things. So we have new SAM products we're working on to capture more value from the gene therapy and vaccine manufacturing market. We're working on novel ligases, we're working on our DNases have been very popular and of course we are working on other DNase like enzymes. We're working on other polymerases, reverse transcriptases, as well as formulations for our existing enzymes.
Often customers come to us and say, we like your current enzyme, but we need it in a different formulation. So we do that as well. And of course, we'd work on non enzyme support products, for instance, like the ELISA kits, we have one in development to support a new SAM product. And there's a lot in the works and of course we need people for that. So what we're doing is we've made some hires during Q3, which help support the above organic growth initiatives and we're going to continue to expand the R and D team out as we move forward.
And so I'd like to go to the next slide, please. And part of this organic growth initiative is about expanding our operation. And what we're going to do is share with you today what we're going to do here. So we're going to the facility in Trumpsa, we're going to expand these. We are going to expand both manufacturing, so production and R and D.
When you look at the enzyme business today, it operates on 2 separate sites in Tromsar. And what we do, what we plan to do is bring the Arctic's enzymes business together onto one site at the CEVA Innovation Centre. And this is shown in the picture on this graph sorry, on this slide. So and today actually, you know, part of Arctic Sciences is based there. So it's the its R and D is based at CEVA today as well as the marketing function and the administration for the group is based there.
So when it comes to R and D, what we're going to do is expand the lab space that we have within the CEVA building. And we want to do this so we can capitalize on ramping up the innovation efforts. Also with this, what we would do is we also hire more lab laboratory personnel and this will allow us to ramp up the innovation. This will allow us to do our innovation project, 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 CEVA.
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 1 year. Okay. Could I could we go to the next slide please to the Biotech beta glucans update and then go to Slide 11. So with Biotech beta glucans, this business is operating profitably.
It has done now for 3 consecutive quarters, following the restructuring we did back in December. The main drivers here to growth are primarily the consumer health business and the site will be the glucan achievements.
So if
we quickly walk through each of these areas, so in animal health, the M Glucan sales continue to fluctuate quarterly. This is expected due to a 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 EMGuard sales. And 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. So 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 SPG adjuvant here, we expedited the 3rd SPG order relating to commitments this year to support clinical trials. Also, we are still working on the licensing deal that's progressing. We're in the negotiation phase is still ongoing now.
When it comes to the wound healing, Wargan, where sales delivered to expectation. If you recall in Q2, we made a decision and we discontinued the manufacturing of the Worgan product. So in Q3, we have sold out of the remaining so we shipped all the remaining inventory to our customers. With stock tool sales activities now. So but we may still see some small sales in Q4, which relates consignment stock that some customers don't 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. So that's where I'm going to now switch over to Berge and he is going to walk you through the financials.
Okay. Thank you, Gretro. Can you please take the next slide here? And of course, as Gretro said, I will give you a few more details on the underlying numbers on what Jethro has talked about. And 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.
And as I said before here, Q3 has not been an it's not an exception to this. Going into the Artix Times side of the business, so if you just skip to the next slide, please. We do we have continued with our good sales growth for the Alexam 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 SEK 19,500,000 in sales, which was a growth in excess of 60% compared to the same quarter last year. And also, if we exclude the COVID-nineteen upside of an estimated SEK 4,000,000 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 1st 9 months of the year, we have achieved NOK 71,000,000 in sales compared to NOK 29,000,000 at the same time last year. And of course, this is a growth of close to 2 50% just for the 1st 9 months here. From the table on the right hand side, you can see that the therapeutics or sand segments continue to be strong in sales with an excess of SEK 10,000,000 for the quarter, while the underlying Research and Diagnostics segment has a decline of 7% for the quarter and a decline of 49% when you exclude the COVID-nineteen upside. And of course, the reason for this decline is, as Sveto talked about, a slowdown in the research segment where researchers are at home rather than at the lab benches. And of course, we do expect this number to continue to fluctuate from quarter to quarter.
But overall, we expect that the business to continue growing on an annual basis. The next slide, please. Going to the Arisame's performance side. But and by combining Adesheim's sales with the expenses, we get a good overview on the performance for both the quarter and for the 1st 9 months of the year. And as I said in the previous slide, sales are at a much higher level than previous years and we have also but we have also increased our expenses somewhat due to the ramp up of R and D projects and the general activity levers we are experiencing in the company here.
And our operating expenditures for the quarter was up SEK 2,000,000 compared to the same quarter last year. And 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 are driving now as Jeso talked about on the R and D side here. On an EBITDA level, we have another good quarter with also SEK 10,000,000 in profit compared to only SEK 3,800,000 at the same time last year.
And of course, for the 1st 9 months, we have an EBITDA of close to SEK 40 5,000,000 compared to only SEK 5,000,000 at the same quarter last year. And of course, you can say that the 2nd quarter performance that we had this year plays, of course, a vital role in this. But 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 an EBITDA margin of close 49%, which is a little bit lower than the previous quarter as expected, but we are still at levels that are significantly higher than we experienced in previous years.
And for the 1st 9 months of the year, we have an EBITDA margin of 60%, which is really high historically for the the Moving into kind of the non core part of the business. We are experiencing kind of the same sales levels as we had in the 3rd same sense we were in the Q3 last year and that we experienced in the Q2 this year. But you can see one of the good things with this quarter that we have experienced good sales now in the high margin business. And as Jester said, consumer health, it continues the same trend as we saw in the 2nd quarter with sales of SEK 5,000,000. And of course, there are some upsides or there are some COVID-nineteen related sales there of SEK 1,200,000.
But if you look at the 1st 9 months of this, consumer health business has experienced a significant and strong growth and sales are now at SEK 14,100,000 compared to only SEK 4,200,000 at the same time last year. And this is an increase of SEK10 1,000,000 for the 1st 9 months or close to 300% for the year as such. And of course, as we talked about in the Q2 as well, we are no longer producing Rolgren and we are running out of stock now. And Q3, as Seth also said, will be the last quarter where we see sales revenues of significance. We experienced 1,200,000 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 will actually show Guggen sales. And of course, as Gertrude 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 SEK 5,000,000 lower than the same quarter last year. But of course, if you look at this, the 1st 9 months of the year, sales are at SEK 16,400,000 compared to SEK 17 point 4,000,000 at the same time last year.
And we do expect these sales to be close to a flat to be 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, Biotech Better Glukins continued to deliver profitability with a third positive consecutive quarter and an EBITDA of SEK 2,500,000. 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 SEK 2,500,000 for the quarter and close to SEK 8,000,000 for the year, giving us a result now for the 1st 9 months of close to SEK 11,000,000 compared to a loss of SEK 4,700,000 at the same time last year. And that this gives us some total improvement for the better glucan business of more than SEK 15,000,000 year to date here. And 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 2 years. And also that we can see that we have an EBITDA margin of 23% for the quarter and close to 30% for the 1st 9 months here. You can see all this is after we did the strategy change in December last year.
That's when we have 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 kind of the same set of numbers that we did in the Q2 this year. But overall, this is the 3rd best quarter in history on an EBITDA level, only beaten by the 1st and second quarter this year. Our consolidated sales, they were SEK 30,800,000 for the quarter compared to SEK 22 point 2.5 in the last at the same quarter last year.
Our EBITDA was just in excess of SEK 10,000,000 compared to SEK 800,000 last year or an improvement of more than SEK 9,000,000 on a quarterly basis. But of course, looking at the 1st 9 months, sales are up from $54,000,000 to an amazing $109,000,000 this year. And our EBITDA is up from minus $4,000,000 last year to SEK51 million this year or an improvement of more than SEK55 million if you just look at the 1st 9 months. But of course, in the Q3, we had a little bit lower sales than in the 2nd quarter and this also found out that we have a reduced margin. The margin is only 33% this quarter now.
But of course, looking at the first 9 months of the year, we have an EBITDA margin of close to 50% for the group. Next slide, please. And let's looking at the cash flow side of the business, we continue to strengthen our cash position through our strong underlying growth and development. And of course, at the end of the September, our cash balance was just shy of SEK 70,000,000. And of course, this is explained by a change in cash of an excess of SEK 30,000,000 for the quarter now.
And this is, of course, the 5th 3rd quarter with positive cash development. And from the bottom out in the Q2 last year, our cash position has increased by close to $50,000,000 now over the last 12 months now. Looking at the Q3 and the 1st 9 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. And with that, I will hand it over to Jester, who will tell us a little bit more about what kind of expectations we have for the remainder of the year.
Thank you, Birger, for giving some of you under the hood of the financials. That's good. Can we move to Slide 20, the outlook slide, please? So for the outlook, it remains unchanged. For us, it's really about driving our strategy around profitability and growth.
The first thing, when it comes to profitability, it is about delivering our number one goal to achieve profitability in 2020. And certainly, looking at the numbers, you can see this milestone is achieved. And of course, what's important, of course, is to maintain this profitably moving forward, 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. And 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. And when you look at it, B2B business, it's like looking at it in the ocean, it's like waves. And 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. So 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 focused on long term relationships, I. E, our business is long term, not transient. Secondly, we operate in 3 attractive and growing market segments.
And thirdly and finally, we have an expanding innovative and synergistic product range. And as you've seen today, we are ramping up efforts to bring more products to the market. So and those things are what will drive and accelerate the future growth of this company. So with that, I'm going to stop here and we're going to open for questions via the chat function. We will there might 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 that it's a 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 the molecular research, but no effect on the therapeutic segment.
So I'd walk through on the therapeutic segment, no, 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 a therapeutic area, but not until that's going full speed and you can see that at the numbers that we have when you look at what 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, but no, we haven't seen that. But, you know, of course, on the research kit manufacturers, that's where we've had a negative impact and that's totally natural.
You know, if researchers are at the bench, if they're not at the bench doing science, which they weren't during Q2, during lockdowns, and remember our customers have been making kits during Q2 for seeing sales that they'd have for kits for the rest of the year. And of course, what's happened is they haven't been able to push those kits. So of course that comes back down the supply chain to us. I think, you know, there's always, you know, you can't have a it's not a one to one relationship, you know, 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 the same on the same timeframe.
It's a bit like an elastic band that is stretching and contracting. Things are happening at different times. So I think here this is what you're seeing in the research market. So of course, you know, now we are seeing researchers coming back to the bench, you know, since lockdowns were lifted. But of course, you know, now there are local lockdowns and things like this.
So it's going to take a little bit of time for things to normalize again and people get used to it to a new normal. Research is going to get back, research is going to happen, but it is at reduced capacity to what it was. And of course, our customers see supply kits that will have a knock on effect to their sales. And of course, and that comes back to the suppliers, that's natural. But we see that as a short term thing and it will equilibrate itself.
So that's where it is. And of course, in the diagnostic segment, no, we're actually seeing, you know, of course, as diagnostics, you know, it's very much hot on coronavirus, but we're seeing that, you know, 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. And of course, our traditional customers are still in USA, Europe, and Japan are still developing and still selling and our Sysco are still developing diagnostic tests that aren't corona related.
So I think we need to put it in perspective here because of course there's a lot going on corona virus, but we got to understand that there's a lot going on outside of corona as well. You know, people are just not dropping everything to run after corona here. And of course, for us, we're trying to capture all value in all areas here. And 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.
And we continue to support the molecular research area. And of course, as we launch more products, those will go into all three areas as well. And as you see with the cyan enzymes, and the cyan enzymes go into the therapeutics, but also you see that it's going into the molecular diagnostics as well. So I hope to give you kind of flavor of 3 business each of the 3 areas we're in and the dynamics there and sort of what to expect for the future.
Okay. Thank you for that, Wundjotro. We have a few more questions. How will the scale up of the sand be compared to today's capacity?
It's quite significant. So what we're doing now is we're scaling up into the 100 of liters range. That's where we are now. So we're going to go to today, our scale is tens of liters. So 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 sand sales in Q3? Is it still minor like in the second quarter?
It's progressing, of course. That's moving forward. Of course, I'm not going to give an exact number because that exposes customers, of course, but now that's progressing and it's progressing as planned. And you know, and then 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 good orders of NOK 3,000,000. So you can sort of see that's a kind of good example of how business can materialize with the 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 Simsir deal? Regarding the press release, I get an idea that this is about tailoring new or specialized products for them.
And I get the idea that it involves mercantile components as well. Do you have any comments on this?
So I didn't get that last bit. Can you repeat the last part of the question?
And I get the idea that it involves Mercantile components as
well? No. I don't understand that last bit. So that deal is our first deal in China. And of course, you know, we've never been there.
We've got to learn how to do business there. And I think here for us, it's getting our enzymes into China. And with this, you know, we see this as a very good company, hence why they're very well recognized there. So that's why we've given certain distribution rights as well, not just to integrate our enzyme into a diagnostic test. And remember, you know, we are looking at when you go into these countries like China, you know, they have huge domestic populations.
And of course, you want to get locked international 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. So it's looking at different things. It could be viruses back to you and you've seen different organisms that infect you. So here, you know, this is a good first step for us to get our enzymes into the diagnostic into domestic diagnostic programs here.
And of course, you know, since they do have good commercial reach, we are, you know, seeing how they can do with the HLSAM enzyme. And this is just the start of a relationship with them. And, you know, we both have ambitions to grow that relationship since they are developing interesting technologies there. And it's our first step and we into China and of course we have ambitions to expand that. It's a significant market, China.
And remember, a lot of these Chinese companies aren't just serving the domestic markets, they're also trying to compete on the international stage. And if they're going to compete on the international stage, they need high quality component and hence why a lot of Chinese companies like to reach out to European and US companies to get the quality components they need from recognized suppliers like HARDI's on.
Okay. Thank you, Detro. 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 expansion or due to reduced prices, increased competition here?
No, actually, maybe you're probably even better to take that one actually.
No, and I don't think the answer here it's not I don't think it's a clear answer here. You can see that we have we still have good margins in the business. And of course, our profit margin will, at the end of the day, depend on how our sales are progressing here. And I don't think that you could say that this will continue or if that they will reduce going forward now. But we have good margins on our product.
And of course, we have a quite steady expense base in the company now. So I think it will all depend on how how we are doing now on the sales side. And of course, but as we said here earlier, our numbers will continue to fluctuate from quarter 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. So okay. I think I have one more question here. Is it likely to believe that Volcan will be sold during 2020?
I'm not going to comment on that, but I think we are moving very forward on we're moving forward on that and we have got several options we're exploring now. And, you know, what we can do is take the time needed to get the best deal for the company. Okay.
I have one last question here. And what is your plan for distribution and marketing of MGuard? It has been very difficult to source in certain parts of the world after you close the web shop.
So at the end of the day, when it comes to the web shop, this is about selling small pots of capsules. And when you look at it, it's not a very we're not set up for that type of business. It's 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. So I think it's about making the right choices. Yes, it's very nice in those spots, but you know, the it isn't that cost effective to do and you do need a quite significant sales marketing efforts. And plus, it's a major logistics effort to ship, pack and send out 1,000 and 1,000 of small orders.
And 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 package that we send out, which have very good margin.
Okay. I don't think we have any further questions. And 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.