Okay. It's 10:00 A.M. I think we should start. Welcome. Thank you for joining our Q3 report webcast. Like we do every quarter after we publish our quarterly reports. This time we are still the three usual presenters, Kenneth Johansen, our CFO, Ole Thastrup, Chief Scientific Officer, and myself, Fernando Andreu. This time we are in three different locations. Usually, we are sitting all in the same room. This time we are in three different locations. 2 of them in Denmark. I am in Spain nowadays.
Reason for this is that we today and tomorrow I am participating together with our distributor, with our local distributor, Werfen, in a symposium where we will be gathering together with more than 100 pathologists and oncologists from Spain and Portugal, speaking about personalized oncology and among other things, presenting IndiTreat to all of them. It's a very, it's a very exciting moment. We decided that we would hold this webcast totally virtual this time, so including the speakers. We are shooting at approximately 30 minutes overall for the session. We will keep the presentations short because as you probably know, we held a strategy deep dive session few days ago.
Many of the topics in the quarterly report were already discussed there. We think it's worth keeping the presentation shorter and then allowing more time for the Q&A, which is really where we can address the questions that the audience has. We will be taking questions on the quarterly report, obviously, but also if there are any questions about anything that we presented at the strategy deep dive, please feel free to use the Q&A tab for this. With this, I would like to start. This is the agenda. We are going to touch, as always, in the three topics, geographic expansion, the IGNITE program.
And then we, I'm going to summarize also the results of the oncologist survey that we ran because we think it's really important, the results that we got there. Then we will have the financial highlights, and Ole will host the Q&A session. A reminder of what our goals were at the beginning of the year. We said we defined, we declared three goals. We wanted to have geographic coverage in 20 countries. We wanted to have 30 hospitals enrolled in the IGNITE program, using IndiTreat, and we wanted to have three products in our, in our portfolio. You all know that the three products is something we achieved earlier in the year. We have three CE-marked products out there, IndiTreat Start, IndiTreat Extend, IndiTreat Explore. I'm not going to elaborate on that.
When we go to the, to the geographic presence, to the geographic rollout, the highlights of this quarter is that we have changed our setup in Iberia. Iberia is how we call Spain and Portugal. We terminated our distributor in Portugal, LAB52, and gave the distribution to Werfen, who was already our distributor in Spain and in Andorra. Werfen is one of the leading companies in the IVD space. They have full coverage in both countries. They work very much integrated between the two countries, and we think it's very advantageous for us to have both of them handling both countries. We also see this as a sign of their interest in IndiTreat.
After almost one year being distributors for IndiTreat in Spain, they were willing to take over Portugal as well. We also have a new distribution agreement, Romania, the company Onco Systems. Romania is a large country. It's adding about 13,000 colorectal cancer patients diagnosed every year. We also. We continue, continuously interact with our distributors and together with them we are joining them in local conferences, activities, et cetera. We've been in Poland, we've been in Turkey, several other places during the quarter. This is ongoing as expected. We have conversations for new distribution agreements in several countries.
We are confident that the goal of being present in 20 countries at the end of the year is something that we will achieve. The second metric that we had was the hospitals using IndiTreat and the IGNITE program. Here, at the end of Q3, we have 15 hospitals enrolled. We have ongoing discussions with more than 40 additional hospitals who expressed interest. I have to say that the review of the contracts by the legal departments of the hospitals and the formalization, signatures, et cetera, typically takes quite long. In this summer period, it has gotten much worse. In summer period in some countries in Europe is July, some countries in Europe is August, in practice it has been really a slow quarter from this perspective.
We don't think we will reach 30 hospitals to at the end of the year, but more likely 20 hospitals. The interest that we see by the oncologist is very high. We don't get any rejection, any pushback to the concept of IndiTreat, and this is very important. The process in itself is slow, and there is not much we can do to accelerate it other than insisting regularly with the legal departments on trying to put our contract on top of their pile.
Some hospitals have given us the feedback that the IGNITE program falls out of their standard, if you want to call it like this, procedures, and that if we would go for a conventional trial, this is easier for them because the process of getting patient consent, the process of getting approvals from ethical committees, the process of reviewing contracts, et cetera, they have a workflow for this. In those hospitals, we are certainly offering now a conventional trial as an alternative to the IGNITE program, if that is going to speed up the process. We keep pushing. Again, we will not reach 30 hospitals in Q4, but we will reach 30 hospitals somewhere at the beginning of 2023. It's not.
We don't see this as a major drawback. The oncologist survey, we published the results already, but I think it's worth emphasizing it because it's one of the highlights of the quarter, where we interviewed a company, 2HM, interviewed 140 oncologists in three different countries, Nordics, which is our domestic market, Poland and Spain are the two largest markets where we have distributors. It was a long survey, summarizing the most relevant results, we see that when asked whether they thought that they need new tools for therapy decision-making in colorectal cancer, 91%, as you can see here, were in agreement. 39% totally agree, 31% almost totally agree.
91% in total agreed to this. The clinical need that we are addressing with IndiTreat is real, is tangible. It's not something that comes from an idea of somebody. It is a real need in clinical practice. Importantly, 2/3 of them think that drug sensitivity testing, this is what IndiTreat does, can be a useful tool to help select the right treatment for an individual patient. From those who didn't think this, actually 12%, the majority of the rest, so to say, don't have an opinion because they don't know drug sensitivity testing, functional drug sensitivity testing. it's a very important endorsement as well.
Also the understanding of what is the role that functional drug sensitivity testing can play in the overall colorectal cancer space is well understood. Well, 80% of those who agreed were saying it provides a guidance for drugs that do not have an associated biomarker, which is exactly what we do with IndiTreat. 55% were saying genomics only cannot predict the response profile of a patient, which is also true. 76% were positive to "I would like to test a drug sensitivity test with my patients." Let's say the what. When we are saying that the IGNITE program is raising a lot of interest, this is what we are seeing here, the 76% of people who would be willing to give it a try with their patients, okay?
In summary, because I want to move on to the financials and then to a Q&A session as quickly as possible. In summary, we continue to see a very strong interest from oncologists, both in our direct interactions with them, but also indirectly, like in the survey results that we have shared. This supports our case that functional drug sensitivity testing will become a multimillion-dollar segment in the coming years. In general, not only for us, in general, the processes to introduce a new medical technology are long, are very complex. Even after you have the regulatory approval for your product, it's not that automatically everybody can start using it. It's a long process. It's a long process to access a very attractive market.
Once the technology is in, once the technology is used in routine, then you can see stable revenue flows, high margins, long, very long life cycles for the product. It's a very attractive market that we are addressing. Keep in mind that we are going through these processes ahead of competitors. We are the first doing all these things that we are doing. Therefore, we will enjoy this advantage of being the first entrant. Anybody who comes after us will have to go through the same processes. In summary, we have the technology, we have the products, we have the right people in place, we have the distribution network, we have the required processes, regulatory quality, et cetera, et cetera. Therefore, we are fully convinced that 2cureX will have a dominant market share in this new segment.
The events of this third quarter have only reconfirmed our conviction here. With this, I'm going to hand over to Kenneth for the financials and after that, we will go to the Q&A session. Kenneth.
You're muted, Kenneth.
Thank you and welcome to everyone. Sorry for muting. Could you please change the next slide for me? Yes, I'll give you a quick introduction to the Q3 and year-to-date September report, which was released this morning. Next slide, please. Let me just give you some highlights here, particularly for the Q3, where you can see if you have had the chance to look at the Q3 report from this morning, that we have a liquidity ratio by the end of September or for Q3, in this particular case of 93%, which is almost comparable to 96% from last year. Our earnings, the results per share were SEK 0.47 compared to SEK 0.31 as of last year due to the investment in it.
Our operating income was SEK 0.4 million, almost comparison to the same period last year, which was SEK 500,000 . Still, the result of grants that we have internally at 2cureX. We had operating expenses in Q3 that were SEK 9.8 million, that were SEK 7.1 million in the same period last year. It's a continuous results of the investment we do, in particular in our commercial efforts. This is also what Fernando have been alluding to here, that in order to keep facilitating and the promotion, so to speak, of the IndiTreat in the market, we carry the investment in the commercials as quite a heavy cost in our P&L.
Our cash position by the end of September is, was SEK 47.8 million, compared to SEK 72.5 million in the same period last year. What we have also given the markets as a general, is quite a strong cash position here. As mentioned also previously in our deep dive session, we have a cash position that we see being within the plans that we have to go throughout 2023 and I would say a significant part into 2024. Next slide, please. This is just an overview. You have the last five quarters, including Q3. You have the Q3 2021 to do a comparison with.
What you can see from this, in addition to what I just explained, there is a total earning of spending of SEK 8.3 million in Q3 2022. Our equity is SEK 50.7 million. The total cash flow for Q3 was SEK 7.8 million. Next slide, please. Just the same development as you see in a graphical form. You have from the left, the second column series illustrating the quarter-on-quarter spendings, and far right is the cash at the end of the period, quarter-on-quarter. Simply here, just a quick graphical illustration of these two combined. You see like a steady investment flow from the second column from the list in our operational spendings. Next slide, please.
On the total earnings loss for the Q3 year to date, so up including September 2022, there's a total earnings loss in this case or investment of SEK 22.7 million. The total cash flow for the period, most of it obviously from our operational costs, is SEK 25.1 million. As mentioned, we have a cash at hand by the 30th of September of SEK 47.8 million. Next slide, please. Similar here, simply in a visual form, not such to focus on the numbers, so I won't give much more presentation to this. I encourage you all, as I do in previously also, please have a look at the more elaborate Q report, which was up this morning. You will see the same numbers.
This was a quick introduction to them. Please have a look. Thank you. That was what I wanted to contribute here.
Okay. I think we will move to the Q&A session, which will be hosted by Ole. I will stop sharing screen so that we can see each other, more comfortable.
Thank you so much. I will try to run through this Q&A session by taking obviously questions from the audience. At the same time, we have received questions from our strategy deep dive of last week. I will take some of those questions as well. Let me start with a question that came in here, and that is related to the financial discussion. I think the question could be placed to both Kenneth and Fernando, but I think from a commercial point of view, maybe we should have Fernando answer this first. What it says is, I understand it depends, and that is obviously sort of for how long our runway and what have you.
It depends on the growth rate, roughly at what yearly revenue do we expect at break-even level? Fernando?
Yeah. I think this is very difficult to answer because as the person in the audience is saying, it depends very much on how aggressive we want to be in capturing this opportunity. We have shared in the strategy deep dive session, we shared our modeling of how the technology is going to penetrate the market. Then the matter here is how what percentage of market share can each company get from that emerging market. This will be directly related to the commercial expenditure mainly.
I think when you look at our current burn rate, one can easily calculate more or less at which, at our current level of spending, what would be required in order to get to the break even. Whether this is the level of spending that we need in order to get a larger market share, a significant market share, a dominant market share, as we have declared. I think the answer is obviously not. We will need to spend more. Again, I'm sorry that I cannot give a number, but I think this is the best answer that we can give at this point.
We would be able to break even very, very quickly if we would stay at the current, revenue, sorry, at the current, burn rate. Would this be advisable from a competitive commercial, strategy perspective? Probably not.
Let me just come with a technical issue because there's there seems to be some browsers that do not have the Q&A tab. If any of you are in that situation, please send us your questions afterwards. We'll be happy to answer them. I will take one that actually came after the IGNITE session, what it says is that please explain the reasons and the consequences behind the IGNITE delay. I think that's for you again, Fernando.
I guess this one is for me, yes. First thing I want to emphasize is that the fact that we have seen in the third quarter a delay in enrolling hospitals to the IGNITE is not a major drawback from our perspective. A major drawback would be if we go to a hospital, explain the concept of IndiTreat, and we would get the response that, "Oh, this is not useful. We don't see value on this," or, "We don't believe in this." That would be a major drawback. What we are seeing is long processes in the hospitals to move a new technology forward. Long processes to review legal documents and administrative documents. Long processes to also align.
Keep in mind that using a new technology, in this case IndiTreat, is not just a matter of one person in the hospital. It's not just the head of oncology who is involved here. There are several oncologists and there are other specialties. There are the pathologists, there are the radiologists, there are surgeons, sometimes, many other people. All these people have to align. These are the processes that we are working on a daily basis with our own teams and with the teams of our distributors. That's a natural process. It takes a bit longer than we anticipated, especially in this third quarter, yes.
Again, we don't see anything that makes us deviate from our course and from the conviction that we have that this is going to develop as we expect. I mentioned before, I mean, how are we trying to overcome this is, okay, first by persistence in our calling in the legal departments, et cetera. Also we are listening and when some of the hospitals are telling us, "Oh, there might be... In our hospital, there might be an easier way if you do it like this or like that," then we are doing this. That's all we can do. Again, I think the question included what are the consequences?
We think there are no consequences at all. The second one is the reasons I think I just explained. It's not that the summer period came by surprise. We knew summer was coming. Normally, and normally there is a decline in summer, in summer period. We knew that. I have to say that it was much worse than it we have typically seen in the past.
Thank you. There is a question here that relates to our automation project. That is, can you elaborate a bit more on the automation project, and why are you prioritizing it now? I take that one. We are actually not sort of just prioritizing it now. We actually came out with an announcement to the market in 2020 that we were starting an automation project. We bring it up now is actually because we have received the second prototype from our partner, Hahn-Schickard, in Freiburg. That is a major sort of barrier that have been passed. The IndiTreat technology that some of you may know is composed of a number of steps.
Some of these are key steps where we really want the automation to kick in, and that's where the ADAPT is very important. Why are we doing this? Well, we do this because we want to have screening done in more locations, so we want to decentralize the testing, the IndiTreat testing. When doing that, we need to be absolutely certain that the technology is robust across sites and there are no sort of, I would say, individual components. Therefore, we need that automation. The decentralization will also open for a new business model. Maybe, Fernando, I don't know whether you will elaborate on why is a new business model important for us.
Yeah, well, because we know that, I mean, let me start with reminding everybody what is our current business model. We have a centralized lab in Copenhagen. We are receiving the samples in Copenhagen from the hospitals. We test the samples there. Then we send back the results. This is our current business model. We know that while this business model is very well established in the U.S., I mean, they are used to sending samples to centralized labs and getting back the results. It is also true that in Europe, there is a strong desire from hospitals to do the testing in-house.
While they are willing to send samples for special requests, for special technologies, when something is a mainstream, when something is a routine test, they want to be able to do the testing in-house. So by automating the critical parts of our IndiTreat process, what we are looking for is to be able to place those instruments in the hospital sites and then allowing them to run the tests by themselves. We would be supplying the instruments, we would be supplying the reagents, the consumables. We would be supplying, importantly, the access to the image analysis software as well. So that's the future business model that we envision, where then we think we can penetrate much better the European market than with the current system.
We got the question last time that I said that, we got the question, "But do you mean that without this automation, then you cannot commercialize?" No, this is not what we are saying. There is a certain percentage of market that we can attract already with our current business model. We are saying that to get beyond that, we will need to be able to decentralize like we are describing.
Thank you. I don't know, maybe we could.
Ole, you're muted. Ole, you're muted.
Sorry. I'm just saying that maybe we can add that we can increase our sort of penetration outside the European continent, where we have concentrated our efforts now. Because if we place it in, say that Asia or the U.S., then we do not have this transportation issue that we obviously have.
Ole, you're muted again. Sorry, something happened.
Strange. I mean... Okay. This has a way of its own. We will actually update the market as this automation project progresses, and we are already working on the instrument that we just saw sort of in a small picture last week. It's already up and running and we will update you guys on how that's going. Here's one more that relates to our sort of products and our activities or new activities. It says here, you mentioned a new IndiTreat Neo test. How does the market look like for this? Yeah. I will take that with regard to sort of why are we talking about a new test.
I think it's very, very important to understand that our products today are all devoted to assist oncologists treating patients in the latest stage of colorectal cancer. As you probably know, there are four stages, and stage 4, that's the stage where the disease have moved to distant organs, in most cases the liver. What we wanted to really show that we can make a difference there. That's the most difficult patients. There we have strong clinical evidence. Now we are moving down into the stages of earlier disease stages. Stages where the patient is not metastatic. That's where this. That is what the NEO project will address. All patients in stage 3 and also in stage 2 B, they will be offered operation, surgery.
Before going into that surgery, there is a huge interest in giving the patients a short treatment, one cycle, that makes the surgery much more successful. There are a huge study coming out, that actually did come out, that showed a huge benefit if you do that. That's where we want to be, so that all patients in stage 2B and 3 will have to have an IndiTreat test done. We think this is a great example of us sort of conquering most of the colorectal cancer treatment space. Again, here, we will update you as soon as we start to run the patients. There is one here, I think, maybe that is one for you, Kenneth.
How CapEx heavy do you think the local hospital testing business model will be? Maybe you don't dare, Kenneth. Maybe we should push it to
I think that's a, it's a really good question.
It's a good question.
But the-
Okay, Fernando, do you have a good answer?
I, maybe I do, but maybe Kenneth wants to say something or-
No, I think that would be more to you, Fernando.
I think anyone who is familiar with the diagnostics business knows that typically there is an investment. The model and we are still far away from that, but the model is typically that there is a reagent rental deal. You place the instrument in the hospital, and then you price the reagents and consumables in a way that will cover the cost of this. As the person who placed the question apparently knows very well, this is heavy on capital investment. It is also true that this is a typical type of operation where financial institutions, including banks, are offering tools to do this.
It's not unusual, for example, that companies take a leasing on those instruments that go into the hospital, and therefore the inflow of money coming from the hospital and the outflow of money going to pay for the investment there are more or less balanced in this way. Obviously we know that there is almost no company in the world except the very, very established and very mature companies that can handle this with out of their own bank account, so to say. Again, we are not worried because there are instruments in the financial world that are exactly designed for these type of situations.
Thank you. We are sort of running to the end here, but there's one that actually we have got a few of our shareholders to raise that question since the strategy session. This simply says: At the strategy session, you introduced the technology adoption curve, this curve, which was very useful. Does it mean that 2cureX is only a good investment in the long run? Fernando, that's yours.
Yeah. Yeah. I really like this question because the short answer is absolutely not. I think 2cureX is a very good investment in the short run, but let me elaborate on that. I think the investment attractiveness is not related to the sales of the company. It is related to how the value of the company develops over time. It is very important to emphasize that sales are not the major catalyst of value in this industry, and especially in the early stages of a new technology. This is not how the value of a company is built in the IVD in the IVD industry. Main catalyst of value are the size of the opportunity and the readiness of the company to capture a significant part of this value.
The likelihood that this company is going to have a dominant market share. These are the two main things, not the sales. Sales in this industry takes time, and we have been discussing this, but it's not, it's not IndiTreat. It's not us. You can look at any medical technology being introduced, new medical technology. It's different if you're launching a product in an already established category. If you're launching a new hematology analyzer, that's not that complicated. But if you're introducing a new technology, this always takes time. But we are seeing that the valuations of companies in pre-revenue stages are huge and are definitely not related to whether the company has sales or not.
Just to illustrate with a recent example, very, very close to our situation, I can refer to this liquid biopsies that are meant to be used in the future for screening purposes. Okay? Screening asymptomatic individuals trying to find cancer in early stages using liquid biopsies. That's the summary of this new technology. This is something that has been around for, like, 10 years now in terms of the discussion about the technology, et cetera. This is a technology that is not yet in the market. It's not in guidelines. It's not reimbursed. There is a product that was launched only months ago in this space.
Last year, last year, we saw actually two transactions that showed the value that investors already have allocated to these companies. One of them is that Illumina acquired a company called GRAIL in this space, in exactly this space. GRAIL didn't have a product in the market, didn't have any sales, just a technology for addressing a market that is theoretically going to be a huge market, but is not yet there. The acquisition price of Illumina to GRAIL was $8 billion. Again, pre-revenue. One month later or two months later, Exact Sciences acquired another company in the space called Thrive, $2.1 billion. Again, Thrive didn't have any sales or was close to anything like this.
When prompted, when the management of Illumina was actually challenged about why did you pay $8 billion instead of $2.1 billion like Exact Sciences, the answer was, we think that Graham is going to be first to market. They are ready to get the benefits of the first entrant in a market that is potentially huge. Potentially huge. This is just to illustrate that the logic of tying the short-term sales to the value of the company, I think, is not valid in this industry. Again, then summarizing the answer to the question, for me, it's an absolute no. The 2cureX is not a good investment in the long run. 2cureX is a very good investment already now.
The real value of the company is much higher than what our market cap shows today. Because of this, it is a very good moment to enter into 2cureX as an investor. That's all.
Great to hear, from a shareholder. Anyway, I think, I will close this Q&A.
Sorry.
Sorry.
There is somebody who raised their hands, but no. Not anymore. Sorry.
Okay, that disappeared. Okay. Sorry. I have no more questions in the Q&A tab, so thank you for the questions, and let me just end the Q&A by saying, should you have any other questions that come to you after this, please send it to us. We have an IR mail address, IR @2cureX.com. We will answer it as swiftly as possible. Maybe if you will close the whole session, Fernando.
Yeah, no, just thanking again the participants and thanking our shareholders for their support. Emphasizing the commitment that we all have at 2cureX to make this the success that we are envisioning. With that, just closing. If there are any additional questions, we will take them offline. Thank you very much.
Thank you.
Thank you.