All right. Thank you. Good morning, and welcome to this webcast for Gentian Diagnostics, Third Quarter, 2023. My name is Njaal Kind. I am the CFO. Also presenting today is Hilja Ibert, CEO of the company, and Aleksandra Havelka, Chief Scientific Officer. Before we get started, just some practical information. There will be a Q&A session after our presentation, and you are welcome to submit questions in the questions box to the right on your screen. You can already—you can start to post questions already now, and we will try to summarize them and address them in the questions Q&A session. Lastly, we will make a recording of this webcast, so if you are not able to participate to all of it, you can access it later.
It will be available shortly after the presentation. So with that, I would like to introduce Hilja Ibert, which will start off the presentation. Hilja?
Thank you, Njaal. Good morning. It is my pleasure to introduce our session today with the introduction of Gentian. We have Dr. Aleksandra Havelka today with us, who will give a little bit more deeper insights into selected products, and then this will be followed by Njaal, with the results Q3 and obviously as well, year- to- date. Yeah, Gentian Diagnostics is fully dedicated to the clean statement, which is our red line, which drives our decision-making processes. And this mission is about the innovation of efficiency for the diagnostics market, and with this, allowing clinicians in the hospitals at the general practitioner office, offices to take better treatment decisions. This sounds easy. It is not easy, but it is very, very relevant.
With relevance, we carry from Moss, little bit south of Oslo, here in Norway, where we have our headquarters. We have as well sales offices in Sweden. We have a sales office in the U.S. and a representative office in China. And from all of these sites, we serve more or less all laboratories all over the world. We can, we have not yet all laboratories as our customers, but we are able to serve the world with our products and services. The company has achieved NOK 112 million in 2022, and looking back, over a period of four years, we achieved a compound growth rate of 28%. And I hope that makes you curious why we have achieved that and if we continue to be able to achieve such, such or similar growth.
Since 2016, we are listed at the Oslo Stock Exchange, and end of September, our market cap was about NOK 660 million. For some of you, you may not be so familiar with the diagnostics industry. We are part of the big life science industry, and big is mainly the pharma and biotech part, where it's about treatment of patients. The diagnostics industry can be split in two parts, the in vivo diagnostics and in vitro diagnostics. In vivo diagnostics, just for your information, is, for example, X-ray. In vitro diagnostics, IVD, is our space. We are helping laboratories to examine samples of patients, so not at the patient, but blood or urine samples are taken from a patient and transported to a laboratory, and there, the examination is taking place with all kinds of technologies.
Our current focus is the immunoassay technology, and even more specific, PETIA. The PETIA expertise, which we have developed during the last years, enables us to achieve a significant value proposition or to propose a significant value proposition to our customers and our partners. Because we are addressing a preeminent challenge in the market, and that is efficiency. The laboratories, more or less all over the world, are faced with increasing numbers of samples, with same or less resources. So therefore, they are looking for efficiency or productivity gains. In addition to this, they have challenges from clinicians to provide results for relevant biomarkers faster, and more often, and at lower cost.
So, with this, our contribution is to allow laboratories to drive or transfer biomarkers from currently inefficient, low throughput instruments, which require much higher amount of work, for time, to instruments which have a much higher throughput possibility, and which are as well, providing results much, much faster. And with this, the benefit for the clinician is that they, as the clinicians, achieve results or receive results significantly earlier, which is very important for them to take those results into account when they take treatment decisions. And for the laboratories themselves, it is that they achieve a productivity gain, as they can run biomarkers now with a 3 times-10 times higher throughput. So going back to the value proposition, we achieve faster results at lower cost, so more for less, and that is a very powerful value proposition.
Back to why have we achieved a 28% compound growth rate during the last years? So these last years, we had followed a strategy which has been, of course, constantly evolved and improved. But all in all, the strategy is built on three pillars. Number one are obviously our products, the products which are driving this value for laboratories. We had the aim to have a product portfolio which is constantly growing. So since this quarter, we have increased our product portfolio by one. So we have now—our strategy is now based on eight tests, with a addressable market of about $1.8 billion. The growth of this market is estimated by the research company, which we have used 5%-10%.
We will speak later a little bit more in detail about the products, but to be mentioned and important for our success now and in the future is our team. We have assembled since the first hour when the company was founded until today first-class talents in the field of PETIA, but as well in other domains, like product production of high volume products, biological products, regulatory affairs, commercial affairs. So all of the expertise you need to work in this highly sophisticated diagnostics market. Talking about the commercial affairs, our go-to-market model was quite realistic about the nature of our products, which are reagents, which can be used on all instrument platforms you can find in laboratories.
So these instruments are sold by many companies, but you can say there are top 10, top 20 companies which cover probably 80% of the market. And those companies are attractive partners for us to add our reagents to their instrument portfolio, and they're selling our reagents as part of their total portfolio. So while we are still serving customers directly, but we do that very selectively to keep in touch with customers and to know what the trends are in the market, the majority of our sales is coming from these, the, collaboration with these commercial partners.
As we had reported in the last years, we have, all in all, five major global IVD companies contracts like Beckman Coulter for Cystatin C, like our partner, BÜHLMANN, who has achieved a partnership with Roche, or as well earlier an earlier collaboration, which we have started with a well-known company, Siemens. We believe this is a good model, and all in all, the strategy we concluded is working, and I mentioned it before, because when we are looking back the last four years, we achieved a high 28% compound growth rate. Which is encouraging, and especially as we believe we can maintain at least that level as we have as well to blockbusters and potentially even accelerate that growth.
We call them blockbuster products because they have individually a significant potential in the market, and we will speak today at least about one of these products in more detail. So all in all, our eight products are categorized into three, I think, well-known categories. The so-called established products means those products are part of the medical routine in many or maybe all countries of the world. Here, for example, we have Cystatin C, our number one product, our first product as well, addressing kidney disease, and it has a more and more recognition in the market, as you can see as well from the growth rate.
FCal, the third product on this list, is addressing a different kind of disease, inflammation of the bowels, the absence or the presence of an inflammation in your bowels, and as well the availability via our technology to clinicians. It has increased the demand for this and is as well part of our growth success, which we had in the last years. Another example of the established products is now our new product, RBP, Retinol- Binding Protein. And Aleksandra will speak in a minute a little bit more about our new value product. The other category is market development. We have maybe starting with the second SARS-CoV-2 contributed to the pandemic with an antibody assay, which is our core business. All companies supported governments with whatever is in the expertise.
This product, the markets need to develop in this direction. The pandemic is over. We will not actively work on market development, but the product is available in case the need for such antibody detection is required. But more important is the product GCAL, which we launched in 2019 with severe market development program, mainly under the lead of Aleksandra, who you'll meet in a minute. We will not speak today. We had last week last quarter spoke a little bit more in detail about GCAL. This market development efforts are mainly based on clinical studies proving the value of GCAL or calprotectin in serum and plasma, which has been scientifically clearly confirmed, and the awareness in the market is increasing month after month.
So we are very positive. While the sales is still not where we want to see it, but knowing market development, we know as well this will come one day, as long as you see that the science is positive and confirms the clinical value and the clinical relevance. Last but not least, the third category is product development, and here we have with NT-proBNP, a cardiac marker in development since many years. And this, the reason is that this is breakthrough development as we are going into areas of sensitivity, which no other scientist or company has ever achieved with this technology. But it is important. We believe it will be, it will drive a lot of value for laboratories to have, such a high volume marker available on clinical chemistry analyzers.
Aleksandra will give an update as well, where we are, where we are standing with this. Having that said, I'm ready to hand over to you, Aleksandra, starting to speak about new baby. Thank you.
Thank you, Hilja, and good morning. My name is Aleksandra Havelka. I'm Chief Scientific Officer in Gentian, and I'm happy today to present a new assay in our portfolio. The assay is Turbidimetric, instrument independent, and is used for measurement of Retinol-B inding Protein. So Retinol- Binding Protein is protein, as indicated by the name, that binds retinol or vitamin A. And it's involved in the transport of vitamin A from liver to organs and tissues in the body. Levels of RBP correlates very well with levels of vitamin A in blood, and RBP can be used as a surrogate biomarker for measurement and assessment of vitamin A levels in blood. So this assay can be used for screening for vitamin A deficiency and also for estimation of vitamin A levels in the blood.
Levels of RBP in blood are relatively stable, and this biomarker can also be used for estimation of nutrition status, basically for estimation of undernutrition. Prevalence of undernutrition is increasing in the world, partly because of the economic situation in the world, but also because of the increasing prevalence of elderly people and people with different food-related disorders. RBP is mainly produced by liver, but it can also be produced by adipocytes, fat cells. It has been shown that this biomarker is increased in patients at risk to develop type 2 diabetes and in diabetic patients. So it can very well be used for assessment of the risk for development of diabetes and monitoring of insulin resistance in diabetic patients.
RBP protein is small, so it's freely filtered and reabsorbed in the kidney. So together with the Cystatin C, one of our biomarkers and assays, it can be used to better understand renal insufficiency. As you see, there are many clinical areas where this biomarker and assay can be used, and in the line with our strategy and the proposal value proposition with RBP assay, we will replace cumbersome and time-consuming methods that are used in the laboratories today. We will provide fast results with easy integration of our assay to the laboratory workflow. The assay is ready for distribution in sales in U.S., U.K., and Europe today. I'm also happy today to report good progress on development of NT-proBNP assay.
During third quarter, our team has reached a significant technical advance in development of the assay prototype that we are working with today. As you know, that, BNP, NT-proBNP, is used for the detection and the estimation of congestive heart failure. And the majority of technical specifications with the working prototype have been met during this quarter and current assay prototype. As previously mentioned, our assay, Gentian assay, will not be affected by glycosylation of NT-proBNP molecule, and we are currently working on understanding of impact that will have on the clinical performance of our assay and other assays on the market. So as soon as we have finalized optimization phase, we will start with the planning and execution of studies that will confirm clinical performance of our assay.
We will, of course, analyze samples from healthy individuals in order to establish reference range in healthy population, but we will also study samples from patients with confirmed congestive heart failure in order to establish and align our assay with the existing assays on the market. The development period after finalization of optimization phase will require 12 months-18 months for finalization of technical development, and clinical evaluation of clinical performance of the assay, in order to ensure compliance with new regulatory IVDR standards. So that's all from me for now. I hand over to Hilja again.
Yeah. Back. I'm back. Thank you very much, Aleksandra. So you may ask yourself, "Wow, there are lifestyle-related or associated diseases, there is cardiac, there inflammation, infection." So you may realize that we are not focusing on one disease area. We are focusing on our contribution to efficiency of laboratories. So like with Retinol- Binding Protein, the assay is mainly done currently with very cumbersome methods, and having that now available as a PETIA-based reagent, which can run on the clinical chemistry analyzers, which will enable laboratories to increase productivity, but as well serve clinicians now with results much faster. So, and the same, obviously, with NT-proBNP, it is about the clinical and the laboratory efficiency, which we hope then to improve.
Speaking now about the business potential of our product portfolio, we have estimated total addressable market of $6.1, a little bit more, based on Kalorama market research done in 2022. Our total serviceable markets, we have then, and that means that this is specifically those part of the market segment, which we can address with our product, as the segments are often defined much larger, is $1.8 billion. We have made the difference for us between the established product. It has been the five products I mentioned before.
We have a company estimate of the Retinol-B inding market of $20 million added to the established product part, and more to come on that when we do our next big survey. But specific data have not been yet available until now, but we will continue to search for it. But currently, our estimation is it is a $20 million market. We have as well the category of GCAL itself, and GCAL as infection sepsis marker, which is a product category or technology category in this market research data themselves, where we estimate that the serviceable market is $440 million.
Then we have the other part of which GCAL can address inflammation, which are rheumatoid arthritis, for example, and there the market is $250 billion. And NT-proBNP, one of the reasons why we call it a blockbuster, is $900 million total serviceable market. This brings us to the $1.8 billion. We have a, we believe, a realistic estimate to be able, during a period of time, which need to be defined, we have currently 5 years-7 years in mind. It can be shorter, it can be longer, to achieve a market share of 15% in average. And, as we work mainly with partners, we take from that 30%-50% share, as our partners are the ones who sell the product.
All in all, I mentioned before, we assume this market to grow by 5%-10%. So with this, you can follow, most likely, how we get to our $1 billion ambition. It's an unrisked ambition, and obviously, it's as well, when we look to the market, service or market size of NT-proBNP, quite dependent when we are able to launch NT-proBNP. But all in all, there is big potential for us in this market and room to grow for established products, GCAL and NT-proBNP, and more to come. And last but not least, before I hand over to Njaal, a summary of our strategy, and with this, our long-term ambitions to achieve NOK 1 billion, again, unrisked. We continue to aim for 20% annual growth of our established products.
In addition to this, we are working hard to create more and more demand in the market for GCAL, calprotectin in serum and plasma, with focus on infection and sepsis. And all hands on deck from our R&D team to finalize the optimization of NT-proBNP and finish then the remaining part of development and regulatory affairs, to have the product in Europe and later on in the rest of the world. In addition to this, we have projects in the pipeline, and the aim is to continue to deliver, bring new products to market on a constant level. In addition to this, we have five IVD, large IVD companies as partners and engage with them. Our aim is to have at least one more contract per year, means one more product for the existing partners or a new partner.
For this year, I think we have achieved this very nicely. From a financial point of view, we aim to achieve a gross margin of 60% coming from 50-ish these days, mainly with scale up, with the volume growth. We have, therefore, as well, the ambition with some cost control and discipline to have a long- on a long-term period of time to achieve an EBITDA margin of 40%. Yeah, let's see how we have done in Q3. You can then challenge us how we are doing against our strategic aims. Njaal?
Thank you, Hilja. So I will give a financial review. And let's start with the headlines and highlights for the third quarter and also for the first nine months of the year. So today, we are pleased to report sales of NOK 32.1 million in the third quarter. This is up 39% compared to the same quarter last year, so that's quite strong. If we adjust for currency tailwind, we report an organic growth of 29% in the quarter. Year- to- date, organic growth is 21%. We are also pleased to report positive EBITDA, NOK 1.2 million in the third quarter and NOK 4.3 million year- to- date, so we are still in positive numbers.
Year- to- date last year, we had an EBITDA loss of NOK -11.5 million . So the improvement in EBITDA year- to- date, compared to the same period last year, is close to NOK 16 million . If we look at the products, let's say, the champion this quarter, it is Cystatin C, where we have 90% sales growth compared to the third quarter last year, and we have 39% growth on that assay or that marker year- to- date. As spoken here, another highlight from our side is that we added a new product to our portfolio. It's called Retinol- Binding Protein or RBP, and we look forward to update you further on the development, sales development on that marker going forward.
But obviously, no sales of RBP in this quarter. So, some details here, on the sales. As you can see, overall, strong growth, to NOK 32 million, compared to NOK 23 million last year. Asia, if we look at the geographies, Asia is the big winner this quarter, where we are happy to report NOK 11.5 million of revenue, so this compares to NOK 2.8 million, so exceptionally low, third quarter last year. The U.S., it's still quite small figures, so we have, in that respect, a soft quarter.
But year- to- date, we are up 24% on sales in the U.S., and we are looking to invest more in our sales and marketing efforts in the U.S. So to bring sales in that region up towards the levels that we have in Europe and Asia. If we look at the first nine months, you will see that we have seen growth on all the products and through all the sales channels that we use to get those products out to the final customer. And also, year- to- date, Cystatin C has shown strong growth.
fCAL turbo, when we look at the product, you will see that this quarter is actually down 10% compared to the same quarter last year. However, on a year-to-date basis, it is up by some 20%. The reason we have seen a decline in sales for fCAL turbo is that we had some orders, some order volumes, being shifted from the third quarter to the fourth quarter. So, this is just a delay of sales, and we really look forward to report the fCAL turbo sales for quarter four when we get there, and hopefully that will have even out. Third-party products, just a note on that as well.
As you see year- to- date, 66% growth, very strong, driven by, to a large extent, some major accounts that we won in Norway and Sweden over the past year. So developing quite strongly there. Other products, as you know, is some of these smaller products contributing to growth as well. After revenue comes cost, and we report NOK 17.3 million in cost OpEx before depreciation here. As you can see, we see a decline in admin expenses, and we see an increase in marketing expenses. In total, we are in fact lower on cost than in the same quarter last year.
So, I would say quite decent cost control, especially in light of a strong sales growth. So, we are quite satisfied with that, and we believe that this shows, to a certain extent, the scalability we have in the business. Having said that, on OpEx, as we continue to grow, OpEx will increase over the longer period. We need to invest in scaling this business properly to the sales volume. And which we also have a question about later, we also see inflationary effects. But for the moment, we are able to, let's say, offset those effects with productivity gains.
Cash, NOK 76.4 million, so that's still a healthy and strong cash position. Year- to- date, we have had a cash burn of NOK 5 million. In the quarter, it was NOK 4.3 million, so the majority of it came now in the third quarter. But as I said, year- to- date down a cash burn of NOK 5 million, that compares to a cash burn of NOK 21 million for the same period last year. So we have in fact reduced our cash burn significantly compared to last year. Equity ratio remains at the same level in the mid-80s. And there's not been any significant CapEx, and we do not foresee any significant CapEx going forward. It will be a few million NOK per year.
I think that wraps up the financials. Please use the questions box if you have any questions here. It actually takes us to the Q&A session. And I will have to. I've written down a few questions while Hilja and Aleksandra spoke, so I will take my notes, and I will try to moderate the session. So let's get into... Everybody's in the picture? Good. I think let's start with some of the products here. So Cystatin C, very strong quarter in Asia. We also spoke last quarter about some changes in the recommendation for Cystatin C. And I think here the question can be summarized: how do we see the growth and the prospects for Cystatin C going forward?
Numbers, the recommendations, maybe just a short reminder, Aleksandra, and then I can probably take a little the numbers.
Yeah. So cystatin C is acknowledged and recognized in several recommendations in U.K., in Europe, and the U.S., showing the advantages of cystatin C compared to other biomarkers, mainly creatinine used in routine today. So we foresee increased use of this biomarker in these areas.
Having that said, we have made a company guesstimate, if I may say so. We know that, out of 1,000 patient samples, on a global average, four are tested with Cystatin C. The other 1,000 are the routine marker, creatinine, which has a lower performance, but cost us very much less, and it's part of a routine which is more done on every kind of patient. So Cystatin C is already tested when it's more specific, when the questions are already, when there are suspicion. But we believe with this recommendation, as they are very concrete, that the four becomes 20 over the next years. Next years to be defined, five to we don't know. Yes.
Okay, thank you. Another further question was to fCAL, so it was down a bit this quarter, up 20% year- to- date. Any concerns here? Anything to note from that?
Yeah, no, no concerns. A normal life of a diagnostic company, you have raw material supply delays, you have a stronger demand than forecasted, and therefore, you cannot produce as fast as you should. So, this is an order fulfillment challenge, which we had in Q3 and resolved. That is what we can report. So therefore, it would be not professional to say that this never happens in the company, but most important is that we have resolved it fast, so that we can ship the product and customers have not suffered from this. I think that is the most important.
Yeah, and they have received the product-
Yes
at the beginning of this quarter, so we will see that in the
... stays for Q2.
Okay, the local search, that's good. Continuing here with a few product with one additional product related question. So it goes on, on our new product, RBP or Retinol- Binding Protein. Would it be possible to shed some light on the business potential? And maybe how do we see the revenue ramp up? Will it be fast or slow, et cetera?
Currently, I foresee this product being in a niche market. I mentioned it before, in the $20 million global, this is what we estimate is the current market, and that is definitely a niche, niche market. But for us, as a small company, an attractive market, and we know that we drive value with having our PETIA assay. We assumed, as I mentioned before, to get into the 15% market share in that market, you can make your estimates and taking with global partner 50% of this, we are landing into a EUR 1.5 million product, or NOK 15 million product over a period of time. So with this, the sales for the next quarters and years, I assume, will be under others.
Okay. Thank you. I think we've covered most of the product-related questions here. One question about inflation: Do we see any inflationary effects? I can answer that. Yes, we do. We do see raw material prices increasing. We also have, in our cost base, a lot of personnel costs, which, to a large extent, follows inflation. What we are doing is, on one hand, where we have the opportunity, we increase prices. And on the other hand, as you have seen, we work strongly on maintaining the cost base at a similar or lower level than we have done previously, and so far, we have succeeded.
But as I said, going forward, you will see an increase in OpEx, but it will be more driven by sales volume and revenue growth, more than inflation growth. So-
That's a nice challenge we have.
And it's a good, it's a good challenge to have. It puts us on the edge of our seats, obviously. And obviously, we are not experts in this area, but hopefully, we will see then also inflation pressures coming down or softening a bit, as we go forward. Yeah. Lastly, we can take a question popped up on the screen here. Would you see Gentian being on track for the NOK 1 billion revenue goal that we have announced?
I would say yes. 28% compound growth rate year- to- date as well, above 20%, need to be accelerated to get into the period which we had in mind. We have products in our pipeline which can and have the potential to be an accelerator. So I would say the variable is the time rather than the amount.
Mm-hmm. Mm-hmm. And just to add on that, this revenue ambition also then includes a significant contribution from NT-proBNP.
That's right.
Not yet developed, but good news this quarter. Absolutely.
Yeah.
I think that concludes, basically-
Maybe on RBP, one-
Yeah.
When we talked about RBP, what element? When I guesstimated this $1.5 million or NOK 50 million , we should mention as well that this product was not developed by Gentian. I think that's an important information as well. We are creative and as well looking for highly valued partners in that area. And with this, we have been very efficient from a cost point of view, and therefore can attract. Can such a relatively small market be attractive for us, as we produce a product but have not invested into development for this.
Mm, good comment.
Mm.
We have no further questions, so unless anyone has some concluding remarks, we will close the webcast now. We will be back again in February with our fourth quarter and full year results. So until then, thank you, and please do get in touch with us if there are any additional questions or comments, or if you have anything you would like to discuss with us. So-
Thank you.
Thank you.
Thank you. Thank you.