Q4 19/20

Feb 25, 2021

Hello everyone and a warm welcome to the SELLink earnings call for our year end report 2020. This session will be divided into two parts. The first is the presentation by SELLink CEO, Erik Katanon, and CFO, Gust van Danielsen. After their presentation, we will move on to a Q and A session, where I will be back with further instructions if you wish to participate. You can already by now use the live event Q and A to the right and post questions. Those questions will be released during the Q and A session. And by that, I will hand over to Erik. Thank you so much, Isabel, and thank you so much, everyone, for taking the time. I'm excited to go through this earnings call with you today. We are super excited for the Q5 and extremely thankful for the great work the entire team has put in and also the confidence in all our investors and shareholders that have been with us throughout this time period. Thank you so much for that. And with that, I'd say next slide. So as Isabelle mentioned during this earnings call, we'll be going through a little bit of the bioconvergence agenda, something that's been our driving force for the last six months. We'll have a financial summary. We'll go through a little bit about the acquisition of Genolis, which is an important milestone in the bioconvergence agenda, and a few other items, leaving off with the Q and A session. You can go to the next slide. You can go to the next one as well. So when it comes to the bioconvergence agenda and the work that we are doing in this industry, we want to start by looking at the challenges. And today, the health care industry is faced by a few major challenges that are essentially driving the development both from a pharmaceutical standpoint, but also from a medical device and biotech standpoint. And if we're looking at the driving factors behind our growth and our future development for the coming decades as a company, we're looking at essentially first of first of all, the process of developing new medication and pharmaceutical compounds is extremely complex. It takes a lot of time and the fact is it's very expensive. It can cost 2 to $3,000,000,000 to develop just one new drug and the fact is nine out of ten of those drugs, they fail in the clinical stages. This is an indication that the pharmaceutical industry is in a major need of better platforms for testing pharmaceutical compounds at an earlier stage. The next major challenge is, of course, that life is lost every single hour of the day due to the lack of organ transplants. And the fact is, there's a major lack of tissue both the transplantations industry, but again also the first point in the pharmaceutical industry. And lastly, animal studies are a very poor indication of the success of human drug development and that ties also very nicely together of course with the first challenge where we're using animals to study and determine if a drug will fail or succeed in a clinical setting, meaning in humans. And it's proven several times in the last couple of years how animal studies are not good indicators of success for human clinical trials. So in these major healthcare challenges, you can go to the next slide, we see ourselves working in combining a wide range of technology areas and a wide range of fields to create essentially this bioconvergence concept, which we believe is the future of healthcare. So the question is then what is bioconvergence? You can go to the next slide. Bioconvergence is really a combination and converging of a few different disciplines in the field of biology, robotics, mega trends such as genomics, proteomics, AI machine learning, and big data. Now what we believe here is that for the next coming decades, to answer major healthcare questions such as cancer, diabetes, we need to combine a lot of different technologies. Cell Link was started as bioprinting company about five years ago and at that point, we understood that bioprinting is an extremely powerful tool. Bioprinting will change the world of medicine by providing on demand human tissues that can be used for drug screening and drug development and in fact reduce the use of animal trials, and of course in the future and coming decades, be a source of tissue for implantation purposes. But we also understood from the fact that we spent a lot of time with our customers, learning from them that bioprinting itself is not going to make that impact unless it's combined with complementary technology platforms. So over the last couple of years, we've learned that bioprinting, combined with, for instance, genomics, combined with artificial intelligence, microscopy, and novel material sciences, has really the impact to make the change that we wanted to. You can go to the next slide. So that has been our driving agenda forward for the last couple of years, and that's where it comes into the question of what is our agenda moving forward. So looking at our agenda moving forward, we see ourselves working very strongly in the field. So for instance, drug discovery, we're working in regenerative medicine, CRISPR gene editing, and these are potential expansion areas for us moving forward. I know we've been talking a lot about mergers and acquisitions. We've been talking a lot about our strategy forward. And I think it's important to mention here that our strategy as a company is not to acquire companies. We are not an acquisition engine that is driving to just find the next acquisition target. What our goal on this planet is, is to drive the bioconvergence agenda, combine novel technologies that will impact healthcare and solve these major challenges like cancer, diabetes, and the lack of organs. And then the question becomes, how do we do that? Well, one way is to do a very aggressive R and D agenda, to develop the greatest technologies beyond the cutting edge of science. Another way of doing that could be to acquire companies, because for us, it's all about getting into those areas the fastest and having the largest impact on the market, gaining most market shares. So sometimes in certain areas, it's all about acquiring business quickly, helping those companies grow, and getting access to those technologies, and sometimes it's about in house R and D that is the successful and the fastest route forward to our strategy. You can go to next slide. So looking at our business today, we're structured in essentially three business areas. And these main business areas is, first of all, bioprinting, which comes from the core introduction of both selling. We have biosciences, and we have industrial solutions. And something I wanna guide you to is looking at the bottom of these these these circles and how these interconnected circles are working. Well, the first one is disease and tissue modeling. Our bioprinting business area is all about producing diseases and tissue models. So it's printing human tissues that can be used for pharmaceutical development, that can be used for cosmetic product development, and then in the future for implantation purposes and for tissue repair. And in this business area, have our innovative BioX platforms, our holographics, Luminex, and many other complementary technologies. In conjunction with that, once we have printed a tissue or we've printed a disease model, the next step is to do analysis of that model. So for us to really understand how a cancer tumor works and how it's affecting the patient, we have to look at the microscales, we have to look at the single cell that drives that cancer tumor, and we have to look at the cancer tumor as a tissue. And how do we do that? Well, first of all, we have to sort that single cell out. We have a lot of single cell sorting technologies. We have technologies that can be used for cell line development. We have bioreactors for scale up of these cells. And we have a very strong single cell genomics work flow that can really enable the sample preparation steps for essentially looking at the genetic composition of these cells. Another step is of course doing live cell imaging of these printed tissues to understand the long term effects of these drugs on human tissue. So the bioscience business here is really all about disease and tissue analysis. And lastly, once we can print the tissue, once we can analyze the tissue, well then the last part becomes how do we diagnose the tissue? Because if we know how to cure a patient or if we know what will work on the patient, then it's all about being proactive to understand that patient's disease at an earlier stage, and that's when all the diagnostics comes into play. And that's where our industrial solutions technologies are really focusing on mainly today. You can go to next slide. Looking at the market, which important, of course, from a perspective understanding where we are today and where we're anticipating to be in the next coming years and decades. First of all, our our our total addressable market today is about $24,000,000,000, and we're focused on industries such as single cell analysis. We're focusing on three d cell culturing and cell and development. In this industry, you see peers or competitors that we call them out in the field, such as 10x Genomics or or Berkeley Lights. And these companies have been have been successful in growing their business from from the fact that they've they've been able to develop innovative systems that can truly make an impact. However, we also see that their products are typically quite expensive and quite prohibitively priced, which gives us an opportunity to make a very good impact on the market with our products in our segments, and also the fact that we can actually offer workflows that many of these companies can't. And that's really the era that we're entering into right now. The era of workflow enables us to essentially couple together a wide range of technologies to get more insight and get into the customers' work and also drive their development forward. So then, of course, looking looking forward and and into the future, we're looking at being able to offer products more for the bioprocessing and cell culturing industry, which is about a $45,000,000,000 industry. Of course, the single cell analysis and the three d cell culturing, those are sub parts of that major industry. And all combined, this is part of a bigger picture, which is about a $200,000,000,000 market that we see ourselves being able to lead in the next coming decades. You can go to the next slide, please. As I mentioned, it's all about the workflows. And looking at a customer's workflow, this could be one of the examples, especially for drug screening or drug development where the customer would start by printing single cells, sorting these cells into well plates, expanding and growing these cells so that you know you're at you're starting with exactly this the right cell type. Then you're mixing those cells into a bio ink, printing out those tissues, with our liquid handling robots and systems. You're dispensing different molecules and compounds onto those tissues, and then you're imaging these tissues using our live cell imaging products. Now this workflow is something that we can do a plug and play at a lot of different pharmaceutical and biotech companies around the world, but there's been a missing piece to this workflow and that's been really the integration or the architecture that brings all of this together, which is something very exciting that we'll be talking about a little bit later in this presentation, has to do with the latest acquisition of Genoaldis. You can go to next slide. With that, I'll leave off to you, Gustaf. Thank you, Eric. So, of course, it's a great pleasure for the two of us here to present our greatest quarter so far, I'd say. We've had a very strong quarter in terms of the growth we've shown during the end of this year. Important here to notice before we go into details is that this is our first and only fifth quarter that we're gonna introduce to all of you. So we're now converted from a broken year into a calendar year, and we did this by extending our year to sixteen months a year, which means that the q five is four months. In in terms of enabling in a to in order to be able to compare this with previous numbers, with the numbers you'll see as in the corresponding year is also four month period last year. With that said, we reached a record breaking $239,000,000 of net sales in the quarter. This was up from about DKK 50,000,000 last year, corresponding to growth of about 377%, which a lot of that growth is, of course, from our acquisition of Sandin that we did during the fourth quarter last year that was has been incorporated from the September 1, meaning the full quarter of this year of this period. What's even more pleasing for us to see is that the development of our traditional business, the business we had prior to acquisition, has been growing very steadily in the fifth quarter, reaching 73% organic growth during this period. What we see if we're looking deeper to the numbers is that we have growth all across our product portfolio. During the year, we've had challenges, especially with products that are strong in academic sector, we've seen that more academic labs have been closed down than our pharmaceutical customers. And this is something that's impacted our growth all across this year during this pandemic. But in the fifth quarter, we did see some more of these customers opening up, placing orders and accepting them for delivery into the labs. This is the reason why we've been able to see and show higher organic growth in the fifth quarter versus previous quarter this year. This is also up from last year where we had 47% growth in the same period last year. Which is of course pleasing to see is the profitability in the quarter. We have a financial target which says that we want to grow with at least 35% organically year on year and on top of that through acquisitions. In addition to that, we have a financial target saying that we want to do this while maintaining a positive EBITDA margin. The last few quarters we've had negative EBITDA margin and now in the fifth quarter we have broken even and we're now we're showing DKK40 million in EBITDA in the quarter corresponding to about 17% EBITDA margin. The reasons behind this are both seasonality, where we see that especially cyanide has a very strong end of the year, where you see a large portion of the sales coming through in the last three, four months of the year, as well as a big portion of the profitability are corresponding to that period of the year. So I wouldn't extrapolate these numbers into seeing that this is something we would expect to see every quarter in terms of profitability. And this is also something where sometimes when we grow fast in a quarter, the balance here is we're trying to grow the organization as fast as we can. But when the growth is faster than we can build the organization, we will be more profitable some quarters compared with others. This meaning is that we will maintain our financial target of achieving a positive EBITDA margin, but we're not trying to maximise our profitability at this stage rather than maximising our organic growth and doing this while maintaining a positive EBITDA margin. In the quarter, we also showed a positive EBIT as well as all the way down to earnings, and We had about DKK13.1 million versus DKK18 million negative last year in the same period. This corresponds to about DKK0.26 earnings per share in the fifth quarter. If you look a little bit on the rolling twelve months net sales from consumables, this has increased quite significantly in absolute terms, now reaching DKK35 million in revenue from consumables. This is driven both by the acquisition as well as continued growth in the underlying business that we have in the group. What we've seen during the whole year and especially or still in the fifth quarter, is that lab closures and activity is down, meaning that we see less consumable usage and purchases of these consumables during the period, meaning that in relation to our total sales, this is still increasing from previous periods. We're now at about 11.9% of our product revenue stems from consumable revenue. This is something we'll see as long as the lab closures continues and we anticipate when labs are more active, specifically when our academic labs are back in the labs working with these instrumentations. This will hopefully grow faster than our product sales. We can go to the next slide. In this slide, we're broken down the numbers a little bit more. We have now two segments in our accounting which we haven't had before. We are showing the net sales for laboratory solutions, which is basically the old selling. Here we include selling Satina and Dispandex. This amounted to 87,000,000 crowns of net sales in the quarter, which was where saw the more than 70% growth or 73% organic growth. In addition to that, we now have the Industrial Solutions segment here, which is the Cyan acquisition. This amounted to DKK152 million in the quarter, which was of course a very strong ending of the year. There was a couple of different factors that contributed to this. First off, we had a lot of customers placing orders and a lot of deliveries taking place in the fifth quarter where the team at Sandin and operations there has been doing an excellent work to getting these systems out to customers in order to help out with their projects. We also have some contribution from COVID applications here, meaning that Cyan in our contract manufacturing COVID test for some of the customers that just don't have enough capacity and can't build the platforms fast enough, where we then are producing some of these COVID tests in house on our solution on our instrumentation. If you want to dig in deeper to this, you can look under the notes where you'll see the service revenue stemming in the group. I want to also point out that all that service revenue is not related to these COVID applications since we do have contract manufacturing for a wide range of different applications. This is something that will continue even if we don't have any manufacturing for COVID tests in Cyanion. What you see also we show in the segment the gross margin on these two different segments. It's very similar across the whole group in terms of the gross margin structure. And what's pleasing to see is the gross margin is now up at more historical levels compared with previous quarters. And the reason for this is both that we now don't have any significant sales in terms of what we call sanitising business as we've had in some of the previous quarters, and also that we see improved pricing power in the market for our products. During the whole year, well as during Q5, we've had a headwind in terms of currencies, is affecting our gross margin here, where we see that we're pricing all our products in US dollars and euros, and we have majority of our costs still in Swedish crowns, meaning that our gross margins are decreasing as the Swedish crown has strengthened over the year. The last thing I want to point out in this slide before moving forward is our net debt net cash position where we had about $750,000,000 crowns in net cash going into the first quarter here of the year. Since we've of course acquired Genolis, which will have an effect here in Q1 on our net cash position, and we'll get more back to those details a little bit later. One last thing I'd like to point out before going to the next slide here is the Genolis transaction will be included in what we call the Industrial Solutions segment in our Q1 and are anticipated to be included from March 1. In the next slide here, we are showing our rolling twelve months net sales in the group. What you see here is during the fifth quarter, meaning the calendar year of 2020 now, we reached over SEK360 million of sales with over 73% organic growth. All these charts looks a little bit strange because of the significant both organic growth as well as strategic or acquired growth that we have achieved during the fifth quarter. That shows you some of the development we've had over the year. We can go to the next slide. We were touching upon the gross margin in the quarter, and what we've seen over the past year is that we've had a decrease in gross margin from a peak at about 80% about a year ago or more here, down to about at the bottom here in last quarter. I think we were somewhere at 66% gross margin, now over 70% again. Looking at our business model, we have higher gross margins in the consumable segment of our sales versus instrumentation. But really, what I like to point out and show is the profitability of the business are not dependent on increasing gross margins in terms of the product mix, rather than when we increase the portion of sales stemming from consumables, this is not driving OPEX in the same way as sales of instrumentation are doing. That's really where we'll see conversion into a more high margin business in the future. We can go to the next slide. So if we're looking a little bit at the revenue from consumables, we've had a steady increase in sales of consumables. And as you can see, cyanide has a quite similar structure in terms of sales of product versus consumables. It's slightly lower than the rest of the selling group, but instead they also have higher revenue from services versus the rest of the group, where they are somewhere around 20% of their revenues stemmed from services in the fifth quarter. What we see here now is that we've declined from about 14% of our revenue, of the product revenue stemming from consumables in the third quarter down to about 12% now. And the driver here is really the lab closures. As soon as this opens up, we will see a change here. What we see today is that we have customers accepting their deliveries of instrumentations, but they ask us to hold off, for instance, BioInc orders in order because they have a best shelf life. So they don't want that to expire before they can use these in their labs. We can go to the next slide. In the fifth quarter, we see continued strong growth in our North American region. We have 143% year on year growth, that's now about 50% of our sales stem from that market. This is very similar to the fourth quarter where we showed very similar numbers. We have succeeded very well with our direct sales force in The US they all across the product portfolio from bioprinting into biosciences has been performing very, very well in The US. We've had a strong growth in the sample preparation equipment in The US compared with Europe, which has been part of the driver, the difference in the sales between Europe and North America, where we've been able to sell more, for instance, iDOT systems in The US versus Europe. We also see decent organic growth in Europe, about 30%, but clearly lagging behind both Asia and North America. We've communicated about the transition into direct sales force in Europe for about a year now, this is something we're continuously working on and we're implementing the same organisation structure in Europe as we have in North America and we're starting to see this paying off. So we have good hopes for Europe to pick up pace in relation to the rest of the world in the next few quarters. In terms of other areas here, this is fluctuating heavily depending. It's a very small number, so that's why we have a negative number there. And Asia has performed quite strong during the fifth quarter here as well. We can go to the next slide. Getting back a little bit to our long term financial targets and goals here. Well, we are focusing on organic growth. As Eric mentioned previously, when we look at our business and what we want to achieve, we're looking at a very customer centric view of this. How can we improve the value proposition for our customers? Our go to is to develop these products ourselves, finding different ways of offering this to our customers. However, from time to time we find that there's a better way of reaching our customers through M and A and that's why we also have a goal of adding on additional revenue on top of the organic growth through transactions. With that, we'll go to the next segment. Great, thank you so much for that, Gustaf. So, I want to spend a few minutes on the acquisition of Janolis. So the transaction in brief, it was a transaction of about €70,000,000 There was a we followed the previous model of combining cash with shares, which is a successful model that we have applied in the past. And really, the reason why we're doing that is because we want to maintain some kind of long term commitment from our management and long term commitment from the previous owners to stay with the companies for as long as possible. It's an important step in our acquisition agenda when we do acquire companies. And, of course, looking at how this company fits into our portfolio, We have a few different models and a few different areas that will fit in nicely through synergies, and we'll talk through them now on the next slide. So firstly, of course, the, the Genolis platform, it's called Sampia. It has a very innovative modular, modular aspect to it where you can actually combine, a wide range of robotics and a wide range of our products from the portfolio into this modular design. So one example is we're going to offer a modular but the first of its kind, essentially tissue manufacturing workflow, where the customer can choose a bioprinter, a large liquid volume dispenser, an incubator, a microscope, etcetera, all coupled together into one workflow. We see this being possible really thanks to the fact that Genolis modular robotics platform is so well constructed and designed in a way that it can really enable these synergies. The second one is, of course, due to the increased demand of microfluidics and lateral flow IVD tests. It's a it's a driving under underlying factor for us in terms of continuing our expansion for Cyanion and also in industrial solutions side. During q five and also parts of of 2020, Sanion did a great commitment to providing systems for manufacturing on COVID tests, and we've seen that that's also something that Genolis has done and will continue to do. So we're excited to be part of that. It feels good to be able to provide products and technologies that can truly make an impact on the health care industry today. Then of course, lastly, really what we were talking about previously on the slides, the era of workflows. Well, Genola's modular platform is an enabler. It will enable us to really couple together a wide range of products within our portfolios, in an integration manner so that we can have a a more combined offering all under one software. You can go to the next slide, please. So, as I mentioned, the main synergies that we see are really with the bioprinting systems, but also with the industrial systems expansion, And it gives us the capacity now to offer our farm and biotech customers something more reproducible. Over the last couple of quarters, we made a commitment, and this was a strong commitment from everyone at in the selling group to continue to push our products forward to the pharma and biotech industry, and this is a commitment for that to increase the reproducibility and also the high throughput. So as I mentioned, the Samtia platform, it fits really well with the Cyanion footprint and their product portfolio where you can both develop multiplex assays, medical devices and lateral for IVD tests, but also manufacture them downstream for these customers. You can go next slide. You can go to next one. So, as I mentioned also on the bioprinting flow, have a combined modular unit, everything from the start of the tissue manufacturing, printing the tissues in high throughput, analyzing that tissue, feeding that tissue, and then dispensing different compounds on that tissue and understanding the effects and efficacy of these compounds. You can go to the next slide, please. In terms of the integration strategy, I'll go over this quite quickly, but something that we've learned over the last couple of years and through the past acquisition is that it's really important to have a strong plan in place on how we will integrate these companies. It's a testament to how we acquire companies. I think the growth that we managed to do in Q5 and the great result that we were fortunate to show was really a testament to how we integrate companies and that we can do that successfully. So the first thing is, of course, we developed a very strong hundred day plan with the business area manager, and they this case, this is Holger, and and support the the group executive team, but also, of course, the executive team within the acquired entity. Do strong onboarding activities where where the Ginole's team members and colleagues get an opportunity to to work strongly with the selling family and in the selling group, And where we have these strong synergies, they will be implemented over the next coming six to twelve months. It's important to also look at, of course, the commercial capabilities that we can do together as a team. The transaction is not one-sided. It's, of course, two sided, where Salink both gets added capabilities in terms of robotics and modularity. But you can also also get access to large distribution channels, larger sales networks, and the ability to scale up through operations department with our manufacturing both in Berlin, Gothenburg, and perhaps also in The US. You can go to the next slide. So looking a little bit on our historic transactions, we've shown this a couple of times before, but what I want to bring your attention to is the last bullet point here on these three transactions, Where we don't necessarily think we can acquire businesses cheaper than anyone else, we believe that we can show we wanna show you how synergistic this transaction has been for us. The Spendix, we acquired about 11 times revenue two years ago. They're now at approximately one times revenue in relation to that transaction size. And this has been able, we've been able to achieve this really to, while we integrated them into our workflows and to our global sales team and marketing, being able to put the systems next to other systems in the group and really increasing the value offering for our customers. Same thing here with Satina, we acquired them a year and a half ago at about seven times revenue. Now they're somewhere between three and five times revenue in just one and a half year. They've really done an excellent job in Satina and being able to utilise the resources in the group and integrate their solution into workflows, especially with Dispendix and other instrumentations in the bioscience business area. I'll just mention Sian that we acquired in August, September here. We acquired them at about 3.7 times sales. Now with the latest report up to the year, that's at about 2.7. And of course, the majority of that is not a selling factor other than the performance of the team at Saiyan, which has extraordinary. We'll go to the next slide. And I think we'll skip all the way down to selling outlook 2021. So to round off before we open up for an M and A session here, Eric, do you want to go through the outlook? Gladly. So with that, of course, first of all, thank you so much for listening in and thank you so much to all our team members around the world. We're super proud of everybody today. There's been a lot of great work that got into Q5 And important to mention is, of course, that we will continue this strong growth agenda moving forward with our financial targets set at 5% organic growth, at least 35% organic growth in the coming years, and also, of course, a positive EBITDA margin. As I mentioned at the beginning of the presentation, it's important to reiterate this. Our strategy is not to go out and acquire a lot of companies. Our strategy is to become the leading bioconvergence company on the planet that offers innovative solutions that can truly impact the healthcare industry. One way and method of doing that is by acquiring the latest and greatest technologies and integrating them successfully. Another way is through aggressive R and D agendas. So whichever way gets us there faster, we will proceed with. But really, our goal is to continue that bioconvergence growth and build a very successful and healthy company. Right, so I want to give the opportunity also to everyone to put this date in the calendars. We're going to have our first Capital Markets Day on the May 12 in conjunction with the release of our Q1 reports. Put this in your calendars and we promise that you'll have great fun learning about our technologies, listening to customers and R and D leaders in order to understand our technology better. And with that, I think we'll open up for a Q and A session. Yes. That's correct. Now let's wrap up this session with the q and a. And if you join online, you can use the live event q and a to the right and post questions, and we will publish them, Eric and Guston will address. If you're calling in, you can ask questions directly to the speakers. We have had a few participants who have addressed that they would like to ask questions. We will begin with Ulrik Tatne from Kennejigi. Please go ahead, Ulrik. And you do so by unmute yourself by pressing star and six. The mic is slightly delayed here. Yeah. Hopefully, I'm you can hear me alright. Yes. We can hear you. Perfect. Thank you very much. And good afternoon, Guston and Eric. I know you guys in Boston, so perhaps it's it's good morning, and congratulation on this stellar quarter that you had. But if you can help me out, please, with sort of the both sort of the Cyanion development in Q4. I know when you acquired a company, we were looking at flattish year on year growth for Cyanion, the expectations for 2020. So how has that developed sort of if you're looking out for the full year of Cyanion? And what should we expect going into 2021? I think if you look at the performance of Sandion in the fifth quarter, it's there there is a significant seasonality to this that the end of the year is is stronger both in terms of revenue as well as in profitability. I think a large portion of their EBITDA generation is in the end of the year. This is an effect we do believe we'll see in the next year here in 2021 too. Other than that, we don't see that there's any differences in the outlook we have on the business of SANEF from when we announced the deal. We said that they should be able to grow in line with our financial targets. That s great. And obviously we re seeing some growth across, well, for the base business of Stellink, which is great. So would you call it out sort of any specific systems? Is it the iDot system or the single cell dispenser that is driving the organic growth? And I know that you have introduced some new systems from Cytina in recent time. Just your thoughts and prospects of that going into 2021 as well. Great question. So I think from that perspective, we see a great growth opportunity from both the Upside, which was recently launched, I mean, competing with with product offerings from companies such as as Berkeley Lights and a few other players in the selling development field. We see that the the Upside is being a very, very competitive platform. It has the benefits, but it doesn't have the bulky size, and and it has the capacity to be, to be implemented in multiple different laboratories due to its fact that it's actually, democratizing the technology and ability for the researchers to work with this. So so from that perspective, we see tremendous growth in the future from our cell and development products, also from our our single cell genomics workflows with the iDot, of course, as a star product. But what's most important to mention here is the combination of the different systems. So so, again, bioprinting itself, if we take that example, that that technology is making an impact, but it's not gonna make the size of the impact that we wanted to unless we start combining it with with complementary technologies. And that's what we're gonna be doing with with the iDot and with the upside as well, either by building it and integrating into robotic systems of Janolis or by building other workflows around it. And just a small comment in terms of where the revenue growth comes from. I think during the first twelve months of this year, we saw significant revenue contribution from Dispennix as they were growing during the pandemic. Meanwhile, in the fifth quarter, I'd say we saw more of a recovery in the bioprinting, which had quite significant organic growth in the quarter performing better than anticipated from our side. So it was growth all across the product offering. Great. And just sort of on the new product offering, because I noted also as well from Cytina that a new product is launched within the microbiology field and printing of bacteria. It seems like a quite interesting product, so if you can just elute a little bit more, because I believe that that is a completely new vertical for you guys. Yeah. That's that's a great question. I mean, the upside has the capacity to to to work with microbial microbial systems as well, but we of course, we have the the B site that has been operating within the the material field or the microbial field. The microbial industry is an interesting one, we haven't had our foot in it as strongly previously. But we see, of course, potential growth in that industry going forward with the bioprocessing products that we offer, both the Sea Bird but also the bioreactors that we've been offering through our partnerships. So definitely, the microbial field is an interesting one. It hasn't been on our radar as much. I have to admit that. Our focus is really on mammalian cells and working with mammalian systems to start with. Great. Thanks. And just a few question on this Genolix acquisition. We haven't been provided with that much information on sort of the margin profile of the company as well as how the dilution factor will be as it's part paid with shares. So can you just start off with sort of the margin profile of Genolis? Would you call it out to be sort of accretive or on par gross margin wise as the rest of the group? And in terms of dilution, at what price will the shares be transferred and what type of dilution should we calculate? So in terms of the margin structure of Genolis, it's in line with the gross margin of the rest of the business, I'd say. It's not going to improve our gross margin, but you're not going to see any significant changes either due to the transaction. In terms of the transaction payments here, we were paying the enterprise value €70,000,000 60% is paid in cash. The 40% that are paid in shares is based on the volume weighted average price during a specific period. We will announce those specifics in conjunction with closing, but it's it's close to around where we are today, and that's what you should be use when you calculate this. Great. Thanks. And just a few accounting questions before I get back into the queue, and I will let someone else answer ask the question. So just looking at the capitalized R and D and the high depreciation rates in the fifth quarter as well as sort of the cash flow. Could you shed some more light on that? Obviously, quite a substantial part of your R and D is capitalized R and D, and that is quite tied to depreciation, I guess, as well as to the cash flow. But could you provide us with a little bit more insight to the capitalized R and D and the depreciation rate? Yeah. The depreciation here, why that's increasing quite significantly, is mainly due to the transactions. So when we do even if we're using IFRS, you know, when we buy a company, we do purchase price allocation and you can see the preliminary one in the report and then the report where we allocate the asset, the purchase price of different assets that we then start writing off. So basically all material assets and so on that we are identifying, we write off during a specific period of time. A lot of our depreciation is connected to our acquisitions. And then of course, we are capitalizing R and D. In the quarter, we capitalized about DKK20 million worth of R and D expenditures. This is, you know, in terms of our total investments in R and Ds, it's quite a small portion of it. Over the year, we're looking at in relation to what we're truly investing in R and D, it's not that significant in my opinion. If you look at the cash flow conversion, yes, we're showing positive EBITDA and EBIT in the quarter, but the cash flow I think was negative 7,000,000 operational cash flow. Is depending on where you have the cutoff date. Most of our sales came in the end of the year and the end of the quarter, which means that most of our revenues in receivables by the end of the period, which is of course decreasing our free cash flow conversion here in the quarter. And that's something that will change over time. Great. Thank you very much both Erik and Guston. Once again, congratulations on a stellar quarter. I'll get back into the queue and come back with further questions. Thanks. And now we got a question from Rikkell Ander Chans from Abbegier. Please go ahead and unmute yourself by pressing star and six. I think we should go on because we'll receive the questions through the live event Q and A. So maybe Erik you can address that and we can get back to Rikid later. Gladly. We have from Brad from ABG, has the organic growth rate fully recovered to pre corona levels? If not, how should we understand the upside, please? Thanks. Smiley face. I think that it's a very good question, Brad. If Q5, we look right, and we say, are we on par with what we expected to do during a healthy year? I would say that it's in rough numbers, right? Because we of course expect lawn mower during a normal year since the end of the year is a very important period for laboratory budgets, for end of year budgets and things like that. I would say that during the Q5, we have seen effects still from the corona pandemic, and we will continue to see effects in the coming quarters forward. And I know that might perhaps not be the answer that we all want to hear, but quite frankly, we're still affected by the pandemic at this stage. And I'm afraid that I won't be able to tell you indicatively when we will get out of this, but I'm hoping, of course, if all goes well with vaccination and everything, maybe conferences will start back again up in the fall. But yes, for Q5, there was a corona effect was especially on laboratory solutions side of our business. I can address the next question which is also from Brad here. With the fullness of time, what do you see as being the product mix between instruments and consumables, where today it is about 88 to 12%? Could this, for instance, be fiftyfifty in the future and when? Yes, today we're at 12. It's going to take a long time before this is a significant part of our revenue because of our growth on the instrumentation. As long as we're placing a lot of instruments, this is going to be the bulk of our revenue. When we reach more mature states, this will increase in proportion to our business. If we can reach a fiftyfifty level the long term perspective, I think it's possible. I think, you know, we're not eighty twenty kind of company, but it's more likely that we could reach something like fifty fifty in the in the long term. Okay, let's see if we can hear Rickett better this time. Please go ahead and unmute yourself. Right. Hopefully, you guys can hear me now. Yes, we hear you. Great, great. Good morning and good afternoon, Eric, Gusman, Isabelle. Thank you for taking my questions. I'll keep myself short here. So, congrats to another outstanding quarter. First of all, I would like to ask, so I saw a report out that indicated that the FDA has begun to recognize three d bioprinting as an alternative for preclinical testing. However, I've been unable to verify this via publicly available documents or any publications. Is there any substance to such claim? And can you talk perhaps a bit about the potential impact for for selling if if something like that would would pan out? Gladly. So so I was shared somebody shared this report with me. This was a market report. It was also publicly shared on Twitter. This was a few weeks ago. And in that report, it was essentially stated or sourced FDA that had recognized bioprinting for certain preclinical development processes. And I think this is a bigger subject that is coming about. Now, don't know if FDA has set any guidelines. We don't know if that is something that they're preparing. What I can refer to essentially a few years ago, I think in 2018, FDA did at least come out with guidelines for regular three d printing. So it does take some time for them to establish guidelines in new industries and bioprinting is a very new industry. I I can point you to the right direction because just about a few days ago, there was a new report that came out, and this report is from Karolinska Institute. This is a very, very nice report, and it essentially talks about new methods to replace animal trials. We know that the EPA has been communicating a lot about the reduction of use of animals for cosmetic for cosmetic testing. We know that the European Union has been very strong on banning animals for for cosmetic testing. And we're also seeing now a a major movement in the Swedish industry on the market where we're essentially pushing this agenda forward. Quite frankly, as a company, we are strongly committed to and have always been very committed to reducing the use of animals for the development of pharmaceutical compounds and for cosmetic compounds. So the report is it's unfortunately in Swedish. I have it here. It's it's about a 100 pages. I'm sure if you see it on the camera, but we can send out a link or we can provide a a the title for it, after the call perhaps. And I really recommend you reading it because it it does mention bioprinting in a few places. It does mention three d cell culturing and a few different methods that that will be alternatives to animal trials in the future. Great. I appreciate Eric. And pivoting a bit into cell line development, as far as I know, there's no official published methodology on how to demonstrate clonal assurance. Is that underway and how high could the bar be set there? Do you have any estimates on the number of legacy cell lines out there that could require new and up to date practices? Just sounds like a very interesting sort of opportunity for you guys. It's a very good question and I don't have all the answers to it, so I'm going to have to get back to you with the exact details on the scientific side. But what I can say that with the launch of the upside, we have doubled down on our clonality. Right? So the first systems, the f side, the b side, and the c side, those those products were offering single clonality, which means that essentially when you're dispensing these single cells, you're taking a photo and and and documenting that a cell was shot out. Well, listening to our customers, which which is something that we're we do very diligently, these customers came back and said, hey. You know what? It's great to see that these cells are shot out, but it would be even better if we could see that these cells land in each well, right, so that we know that these cells are placed in the right location. So so the the brilliant engineers and team at Cytina, they went back to work, and they developed this amazing scanning technology, which essentially now takes an image of the cell as it being shot out from the cartridge. And then a picture of that cell is being scanned from the bottom, showing that that cell has landed in the right location. So the double clonality is an important aspect for the industry and something that I know we're gonna be pushing very strongly from the commercial side. We're seeing a great interest for the product already, and and that's a that's a testament to the great engineers and and developers that have brought this to the market. I wish I could tell you more about the specifics, but let me get back to you on that. Sounds great. And just a final one for me, please, if I may. On the European sales force, can you talk a bit more about how that's coming along? And can you talk a bit more about the scale of that initiative in relation to your current commercial infrastructure in region? Yeah. So in terms of the European Salesforce, I mean, was a commitment that we went into about a year and a half ago. We went from having a pretty substantial distribution network all over Europe to deciding to open our own offices, locations, and and hire individuals to run the sales. And and it's it's paid off, especially during the pandemic. We've seen that our previous distributors and our previous, our our previous partners in that in that region, we see that, they've had a harder time of they where they perhaps reduced their presence, while in the same time, we've been able to focus on digital sales opportunities, and and communicating directly with customers. During the pandemic, I have to say it, it's been vital for us to have a direct dialogue with our customers in Europe, in America, and in the APAC region. We have been able to work directly with them because during the pandemic, it's not as simple as just offering a product for their solution or for their need and then delivering it. It's an ongoing communication. It's understanding that they're not in their laboratories. It's understanding that they need deliveries of reagents two months later. It's understanding that the delivery should be by DHL or it should be by FedEx because all other delivery methods are banned due to the pandemic. And having that dialogue, I know that it's rigorous and it's time consuming, but it's only possible to do that when you own the customer, when you have direct access to them. And that is what makes the direct sales channel so successful, which is why we've been able to show 143% of growth in America. Mean, that's because we're so close to the customer. And that's why we've been able to show continuous growth in Europe as well. To your question, the strategy forward is to continue to build that sales channel and to have a leading sales force both in biosciences, in bioprinting and also in industrial solutions in Europe. Great. Thanks a lot for that and thanks for taking my questions. I'll get back in the queue. Thank you, Richard. Okay, thank you everyone for listening in to this earnings call and thank you for all the good questions. Our next report will be released, as Gustafsson said, on the May 12 and we'll then also arrange our Digital Capital Markets Day. So have a great Thursday everyone. Thank you and goodbye.