Good morning and welcome to this webcast for Gentian Diagnostics Q1 2023 results. My name is Njål Kind , I'm the CFO, and with me here I have Hilja Ibert, the CEO of Gentian Diagnostics. Before we get started, just some practical information. You have a questions box visible to you, and if you want to pose questions during the presentation, please feel free to do so using that questions box. We will get back to a Q&A session towards the end of the presentation. I will be back in a few minutes with the financial review, but to take the introduction of highlights, I leave the floor to Hilja.
Thank you, Njål. Good morning, everybody. As Njål mentioned already, we have focused today on our Q1 results. We are very pleased to share those results today with you. Before we start to talk about numbers, a short introduction to Gentian, especially for those who have not heard about us before. In a very short summary, our mission is to innovate diagnostic efficiency in order to improve and to support clinicians to take better treatment decisions. How do we do that? As a company which is fully dedicated to the clinical diagnostics part, this is the part where specimen of patients are examined in laboratories. We develop and manufacture reagents, and those reagents are used on more or less all instrument platforms you can find clinical chemistry laboratories all over the world.
By helping laboratories to shifting reagents from less efficient platforms to those which I was just speaking about, the ones who are the highest throughput and fastest platforms, we support laboratories to increase and improve their productivity. By providing results faster, and especially results from clinical relevant biomarkers faster to clinicians, enable clinicians to take better treatment decision because they're informed treatment decisions. We believe that we are relevant with our products to this market, and you can judge later when we look into the results. We have developed a business plan, a growth plan, which is based on currently 7 products, which are in the market already established. 1 product is in product development and 1 product is in market development. Both of them I will discuss a little bit more in detail later on.
This is the basis of our growth plan, obviously, but what is enabling all of that is the team we have in place. The team which we have assembled around from all around the world with experience from the early days of Gentian, with the technology expertise which we have established in this company. We brought as well expertise from other companies, process expertise, technology expertise, which is now adding up and has prepared our company already to support the growth we have enjoyed during the last years, but as well to be ready to support the growth which we have in mind. In fact, we have the ambition to achieve NOK 1 billion as a long-term ambition in 4 to 6 years.
That is then based on the team I just mentioned, the 7 products, but to be highlighted is here our go-to-market model. As a small company, we cannot, we at least do not plan to develop a large international commercial team. In fact, we have chosen to work with the global platform providers, those companies who install and sell the instrument platforms I was talking before into the laboratories. Our reagents are added to the menu of those platform providers. The collaboration, the partnership with those companies is key for us to achieve those contracts. What have we achieved so far during the last years? A compound growth rate of 28% is encouraging us, and we believe that our strategy is valid and that our execution discipline is as well strong.
Yes, we will continue this path and hope to get close or even above our ambition. A few words about our products. On the left side of this slide, you can see the disease groups which we are addressing, and you can see that there are several disease groups. This is not our number one decision-making driver, why we take a product into development. It is again, the efficiency thing. Is this biomarker relevant for clinical decision-making? Is this biomarker relevant for the laboratory because the volumes are so high that they have the eagerness to shift it from manual, semi-automated, to these high throughput automated platforms?
Being able to increase the number of tests from 200 per hour to 2,000 per hour, this is what is the driver for us, and that's why we are addressing today already several diseases, disease groups, and maybe as well more in the future. The products are named quite technically, in fact, addressing the protein we are measuring and quantifying in the plasma or serum most of the time. We have as well two products which are tested from fecal samples, stool samples. I do not get now into the details of the application, which is quite in-intensive, but very interesting per product to understand better how it is applied. Even more important, what is the clinical benefit for such a product. We talked already before about the laboratory effect, the productivity gain.
The clinical relevance and the positive effect on the outcome of the patient is very individual, product by product. An example is with the first product, for example, Cystatin C, that the usage of this biomarker improves the ability of clinicians to detect a kidney failure or a kidney malfunctioning much earlier than with alternative markers. With this, there is a lot of clinical benefit up to avoidance of dialysis or even transplantation. Those advantages are clinically described, so we have proof sources for all of them. I think what should be mentioned, and I would like to promote here our event, which we have planned for next week. We aim to or we have invited for a capital market update.
The objective is to enable or to invite all of you who are interested to learn more, especially about those benefits our products have, to take the time to better understand about the basis of our growth plan and the different products which we have here taken into account, starting with Cystatin C, going to the fecal samples with fecal calprotectin or established markers, and those two products currently being our number one growth drivers. Yes, they will continue to grow, and we believe it is very interesting for you to understand why they continue to grow, what is the market driver for these assumptions.
Therefore, I will not spend too much time today on the individual products except a few words on GCAL and NT-proBNP for the reason that these products are aimed to further accelerate our growth in the future as they are addressing very large markets. Again, as well, especially for GCAL, we plan to give a much more detailed update from the experts, not only from me, as I don't understand all of the technology deeply as well as the science. You will have the ability when you come to Moss or if you join us online to understand and to learn from our experts about the exciting benefits our products bring to the market. I promised already a few more updates on GCAL. This is calprotectin.
This is a protein which we are measuring in plasma and serum. The application for this biomarker is well described and it is mainly used in inflammation and infection, disease areas. The advantages are, understood. It is not yet fully established in the medical records all over the world. We had decided a few years ago, starting in Sweden, to support a better understanding of the benefits in clinical usage and routine by running clinical studies with key opinion leaders. Starting in Sweden, in the meantime, having rolled them out in other European countries. Corona was not helpful those two during those days because they slowed down studies which were not Corona-related.
As you may have noticed in the past years, we had in parallel calprotectin as well positioned then as a very useful biomarker for management of Corona patients as well. That was the time of the pandemic. All studies are back on track for infection and inflammation. We have reported in Q1 two studies, and we presented or they had been presented at clinical events and congresses. One from the Karolinska Institutet, well-known in Sweden, and we had started with them a study several years ago, and these results have been promising and supporting again the value of calprotectin in infection, early detection and severity assessment. In parallel, there is always as well there is a question of the economics.
Introducing a new biomarker means the pool is limited of available funding for our reagents in the clinical laboratory. What is the economical value based on the clinical benefits? There we have developed an economical model based on Swedish data, and that had been very positive for the usage of calprotectin in certain patient groups and in certain hospital settings. Again, more about this data and other data from our expert, Aleksandra Havelka, who had worked strongly with key opinion leaders on those studies and other studies. The good news is as well that many of those study sites have used or have converted calprotectin in the meantime in routine use.
One example is as well then that when Karolinska starts use, other hospitals are following. We are proud that in March, a large hospital in Sweden had implemented calprotectin as well now in routine use, beside others which we have reported already before. Our partnership with Siemens Healthineers, I mentioned already before, we are selling individually to direct customers, but very selective, especially those university hospitals with whom we collaborate as well on a scientific level, 'cause our commercial and logistic means are limited. Our way of selling products in higher volumes is via partners. Siemens Healthineers is one example. We had reported the collaboration earlier this year with Siemens Healthineers.
We see first routine use, users have been established, via the team of Siemens, they have started already to work with us on adding more countries, regional expansion, of this marker, so to add that to their portfolio as well, to countries outside of the EU. Another element, of the success into preparing for more success of GCAL is the availability on the different instrument platforms in the market. This we do year after year, we add more of those instruments as the protocol required, as studies required to be able to run that biomarker on these different platforms. We report on a regular basis to you as well that we have added more instruments.
The same happened as well in Q1 with one of the latest and newest instrument platforms from the company Beckman Coulter. We have one product in product development, NT-proBNP. We follow very thoroughly the progress made. We had reported last year that we had some technical issues to resolve, which has happened in the meantime. We are quite pleased with the progress. I would always love to have it faster. The progress is there. We have not encountered new technical problems. We work now hard on the stability of the assay because it's important that when you have a working prototype, it need to be stable on an instrument platform or as well in the warehouse for several years. Therefore, there is still work to do.
Not that we have to wait several years. There are models that you can accelerate those stability studies. But this is, at the end of the day, very promising that we are already at that stage. In addition, we measure now in a robust way raw data. These raw data need to be calibrated to numbers where the clinicians know, is the patient healthy? Is the patient suspicious to have congestive heart failure, for example. This is what we call calibration. That is as well, in parallel, one of our core work currently to work on a model to calibrate our assay, especially as it is a very innovative and different way of measuring the this molecule.
Again, that is as well, you will have next week access to our R&D team if you're interested to understand better what is the difference between our NT-proBNP and other NT-proBNPs in the market. Very promising progress so far. That is not my only opinion. We review the progress on a regular basis with our board of directors, with an external scientific advisory board. This is not a one-woman opinion. This is thoroughly assessed and monitored. Due to the progress made so far, we are planning to start studying true clinical samples, real clinical samples. These are expensive samples to get access to them, so therefore, you will think very well when you start to run those studies. We are now in the preparation of those.
Yeah, to manage expectations, when this phase is finalized, which I cannot estimate currently, we have to verify and validate the performance of that assay and have then the regulatory work to do. All in all, we estimate those additional steps to be 6-9 months after we have finalized the optimization phase. What kind of... What is the market in numbers? As well to give you an idea how we get to our NOK 1 billion ambition.
Of all the products we have talked about, the established products I mentioned before, Cystatin C, fCAL, those products which are used in routine, which are part of medical records, at least in Europe, many of them on a worldwide level, we have identified and serviced a market which we specifically serve of $220 million. These are data coming from the Kalorama report for 2022. We have for GCAL, calprotectin in plasma and serum only as infection and inflammation market, a serviceable market of $440 million and $250 million. These two markets are reported differently. NT-proBNP alone is a market of $900 million. All in all, we serve a market of $1.8 million.
$1 billion. Sorry for this. We aim to achieve a market share after five, six years of 15% in average. From this, we share the revenue, obviously, with our commercial partners. Our take is, depending on the contract, 30%-50%. The market growth is estimated to be 5%-10%. All in all, when you make your own calculations, you will probably come to the same results, which means this is an ambition and this is everything has to go well. So far, we believe that we are on a very good track.
Obviously, the launch of NT-proBNP has an impact on these numbers, therefore, the final date of launch will have an impact if it will take longer or shorter to get to that NOK 1 billion. Before I hand over to Njål, again, look back to what have we achieved during the last years. As you can see from the total revenue on the left side, that we doubled our sales from 2019 to last year, 2022, all in all, a compound growth rate of 28%.
As I mentioned before, First of all, the value of our product in combination with the ability to gain the commercial partnership with companies like Siemens, Beckman Coulter, and Roche, and more, which we cannot disclose, has supported this success. Siemens, Beckman Coulter, Roche only belong to the top five in vitro diagnostic companies in the world. Yes, with this, Njål, I think we are ready to speak about Q1 and our highlights and financial achievements there. Yes.
Thank you, Hilja. I'll give a rundown of the figures that we released this morning. Happy to announce that we reached record sales of NOK 31.4 million during the quarter. That is a growth of 53%. We, as many others, experience currency. I just got a message to flip my slide. That we experience currency tailwinds. If we adjust for that, we have an organic growth of 40% compared to the corresponding quarter in 2022. We also see that with increased sales, we see an improvement in the gross margin. We report a gross margin of 52% this quarter. That's up from 44% in the same quarter last year.
When we look at this sales growth, we see that the growth is, it's wide, meaning that it comes from all products and all geographic markets. Especially, this quarter, Cystatin C has proven to be, shown strong sales development, especially, in Asia and China, where we in quarter one, in fact, saw, lockdown-related, consequences to demand due to COVID. EBITDA this quarter is, negative with NOK 500,000. I would like to highlight the fact that, we expend most of our R&D over the PMA indirectly. This quarter, it was, NOK 6.6 million in expenditure over, the PMA. Total, R&D was, NOK seven and a half million.
If we are to compare the underlying operations that generates revenue and the cost to generate that revenue, we would in fact be EBITDA positive. On non-financial highlights, as Hilja mentioned, we have released a couple of studies during the quarter, which has shown quite good results. Looking now more into the detail of the sales. As you can see, we report sales of NOK 31.4 million, a growth of 53%. If we look at the geographic sales, we see an increase in the U.S. We also see an increase in Europe and a very strong increase in Asia. This is partly due to a weak quarter in Asia in quarter one last year.
All in all, we are satisfied with the development on a geographic basis. Looking at the individual products, we see a strong sales growth for Cystatin C. Not only in Asia, we have also seen growth in Europe and the US for Cystatin C. The majority of the growth there comes from Asia, which is now back on, I would say more the level that we expect to be and growing from that level.
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Distribution business that we run out of our Swedish office, where we distribute our own products, but also distribute products for other diagnostic companies. We have built that business over time, and it now totals a revenue volume which makes it required to report on. Here we have NOK 3.6 million of revenues in the quarter. That's up from NOK 2.8 million in the corresponding quarter last year. Other revenues, that is CCRP and GCAL and some of the other smaller products, also good growth. I would mention CCRP, the canine, so it's a veterinary product showing very good growth in quarter one.
Apart from the sales revenue, we also have some grants and tax breaks and that was in total about NOK 2 million. Total revenues this quarter was NOK 33.6 million. Quick look at the cost. Quite stable cost development when we look at the previous quarters. As a growth company, we also tend to grow the -
Some balance sheet figures and highlights from the balance sheet. We still have a very solid cash position of NOK 76 million. During the quarter, we reduced our free cash flow burn from NOK 13.6 million in the quarter one last year to NOK 4.4 million this year. This is partly driven by CapEx. On a quarterly basis, it doesn't show that well, but last year we had NOK 8.6 million in CapEx due to the expansion of the plant. That has now been fully completed and the plant is fully commissioned. We expect only maintenance CapEx going forward. That will be in the range of NOK 1 million per quarter approximately.
A reduction in CapEx is foreseen going forward here. Working capital. That's basically where we have had the cash burn. We have had the buildup on working capital, mainly driven by customer receivables, that is an effect of the growth that we have seen in the quarter. Before we go to the Q&A, I see on the Q&A list here that the audience is quite quiet this morning. Please use the questions box if you have any questions, we will address them shortly. Before we go there, Hilja already mentioned it, that we have a capital markets day here on Wednesday, May 10th. Starts at 12:00 P.M.
If you are interested to learn more about the company and get deeper knowledge about our products, please sign up for that event. You are welcome to join us here in Moss or you can watch this event on a live broadcast, which will go simultaneously with the presentation. With that, I think we can open the Q&A. If you go here, Hilja, I can read the questions better. Yeah. Let's start here. We have a question on the long-term goal. Let me say it's a long-term ambition of NOK 1 billion. The question is, how important is the development and launch of new products?
Those products in the pipeline, how important are those to reach this long-term goal? Maybe you want to speak to that, Hilja.
They are important without any doubt. The beauty, and that is based as well on my long time experience, is that it's not the only. We have the established products which are a significant part of achieving this goal. We have our current pipeline, and we have as well a portion of pipeline which we have currently in an early phase. We still believe at the end of this period, which we have in mind, they will contribute as well to this. Yes, important, but established products not to be underestimated.
Okay. Thank you. Another question. I mean, we show here good growth in the U.S. and could you comment a bit about what products are driving demand in the U.S. and maybe also what kind of growth prospects we are looking at in that market? I mean, sales is relatively low-
Mm-hmm.
compared to the size of the market over there.
Yeah, that's a very good point. We are obviously headquartered in Europe, and therefore very natural and logic that as a small company, we restart first our successes in the area where we are closest and are most comfortable. That has as well something to do with the market access, the regulatory entry points, and we are very well established with the IVDR. We have all the certificates for our products which we need now and as well in the future. Not many companies have that for Europe. The U.S. requires a different kind of registration, FDA 510(k) clearance or even stronger requirements depending on the product. We have Cystatin C in the market. It is approved, and it's a very successful product.
It's driving currently our growth over there. As we go, it's a question of priority. We need to register as well other products in the United States in order to further grow. In the meantime, and we will do so, in the meantime, we have a very strong growth plan for Cystatin C in the US. It's a huge market, and the momentum in the US is there. Again, I can only encourage you to come to Moss next week. Markus Jaquemar, who some of you have met already, will explain even more and more in detail why we have this momentum currently with Cystatin C in the US.
On the back of that, we have a long-term relationship with Becton Dickinson on Cystatin C. We also announced last year a distribution agreement with another major IVD player.
Mm-hmm.
Do we see more of that type of agreements for Cystatin C?
Yes. We are in negotiations with several interested parties.
Mm-hmm.
Again, because the market demand is increasing automatically, those companies look into their menu and identify, okay, there is a gap, and who is the company who can provide us with this? We, Gentian, are very much branded for Cystatin C. We are the pioneers for Cystatin C and have the highest quality product, if I may say so.
Mm-hmm.
Thank you.
Thank you. Yeah, we don't have a lot of questions on the list here, so I think we've covered exactly that.
Maybe a few more words around the third-party products.
Mm-hmm.
We have decided, more or less in parallel as well with the market development efforts for GCAL, to leverage our headquarter experience in the Scandinavian countries. Knowing that, good commercial teams and access to customers in Scandinavia is not very strong. There are not a lot of great distributors out there. We had with our team here and in Sweden, we have here an advantage. We believe as well, despite the fact that we work via commercial partners to the end users, that the direct access to end users is very important for a company to be successful. We need to know what the laboratories think, what their problems are, where are the trends. Therefore, we have decided to establish a distribution, starting in Sweden.
In the meantime, we are covering as well Norway and Finland with a small team selling and delivering products directly to customers in this region. This is part of our success and our current growth with our own products, which is part of the numbers of the own product. We have as well added to the portfolio of our salespeople in the region, third-party products. Because having a customer visit, you want to have as many products as possible to sell. The visit is very expensive, and therefore we added third-party products, and we are very pleased with the success, and we learn as well a lot about the needs of our customers. It's a win-win.
Absolutely. Yes. I see no new questions here on the list. I think we can just again remind the audience of the capital markets day next or this coming Wednesday. Hope to see as many of you as possible there. If you're not able to come here to Moss, please sign up for the live broadcast. With that, I say thank you for your attention this morning. As always, if there are any additional questions or you would like to chat with us, please don't hesitate to get in touch with myself or Hilja. Thank you.
Thank you. Goodbye.
Bye-bye.