Hello everyone and welcome to the Biovica Interim Report for our third quarter. Today it will be me, Anders Rylander, Warren Cresswell, Henrik Winther, and Anders Morén presenting, and we have Helle Fisker also helping to produce the webcast. The agenda for our presentation is first a short introduction, general presentation about the company by me, and also the highlight from the quarter we just closed. Then Warren will go into the details a little bit more around our US business and give an update. Henrik will do the same for our pharma services business. Anders will round off with the financial update for the quarter. I'll do a summary, and then we will open up for questions-and-answers session until the end of the hour. So we expect this to take an hour, the entire presentation.
We'll start with our analysts, and then we'll also take questions through the chat feature. You can all, the time from now on, during the presentation, submit your questions and your use of that chat feature. If you wanna remain anonymous, you should click that checkbox because we will then pose the question when we answer that. Okay? So let me start with the introduction of the company in a few slides. Very a great overview. Our core product that we developed and is now bringing to the market is DiviTum. DiviTum. DiviTum is a blood-based assay that measures cell proliferation. And as we all know, cell proliferation is a hallmark of cancer. And by measuring cell proliferation, we can provide very important information for the patient and the treating physician.
The application we have chosen initially is monitoring of treatments within metastatic breast cancer. But there's a very strong unmet clinical need currently, and we have data that shows that we can add real value. And now we also have results from being used in the clinic as well, so it's very encouraging. Also, the demand is further highlighted or strengthened by several initiatives by the FDA called Project Optimus, for instance, that requires efficiency in monitoring biomarkers and DiviTum. That's precisely what DiviTum can offer. This is, of course, super important for the patient, making sure that the treatment that you're on is really effective so it's easier to tolerate its side effects. But also from a health economic perspective, as these treatments are priced at the previously mentioned level, below the $10,000 per month per patient within the metastatic breast cancer area.
Of course, you wanna make sure that these money is well spent. The product has been thoroughly documented in more than 30 clinical trials that have been peer-reviewed and published. The majority is within breast cancer, our first commercial area. We also have good counts of data outside of breast cancer in other cancer areas. It supports the use as a clinical biomarker test for monitoring of treatments in cancer. It also have a strong prognostic value of how the disease will progress, both in earlier phases and the metastatic setting. These collaborations have been done together with some of the leading oncologists and the institutions in the world, which, of course, is important for us in order to reach out with a message convincing all the oncologists and conventional customers out there, using this for their patients.
As I said, we now not only have the data from clinical trials. We now see this works very good in clinical setting, which Warren will give some very exciting stats about. This is, of course, the foundation for our commercial activities, starting from getting the high-paying cases from the FDA, which we have, as well as getting reimbursement and, in the end, driving demand for the product. When it comes to the market potential, we have, as I said, focused initially on the metastatic breast cancer setting. When it comes to territories, we initially focus on, first of all, the U.S. market and also selected markets in Europe where we primarily focus on the big countries in Europe and the Nordics. This market potential is estimated based on an average price in the U.S. at $400.
Also now being on the market and receiving price from Medicare, we are more certain than ever that that assumption holds, which, of course, is very, very important. If you look at the next level, it's the pharma area, pharma services, where the business model actually consists of three different phases, which Henrik will go through. We also see that there is a huge potential, and we have a big, a strong market position, especially within companies that are developing in so-called CDK inhibitors for the future. So it's very exciting. And beyond that, we see several indications where there's great potential.
One area that we can mention is the use of immunotherapy and to monitor them in a good way where we have similar clinical needs as within the breast cancer area, where we also both have data together with Karolinska that we published and also an ongoing pathology application. That’s about the market potential. But we now move on from the more general information to the highlights from this third quarter of ours. I have divided them by business area today. First of all, U.S., I would say the most important milestone from the last quarter was the decision that we got that we now have been included in the Medicare price list starting January 1st. And we are already seeing payments being made by Medicare on that price level. So it’s really, really good.
Another major milestone for us was the yearly San Antonio Breast Cancer Conference. This year, we had three posters or our collaborating partners, different universities, Yale and WashU, Washington University, in this case, who sent the data on our product on this conference. It's an excellent, excellent opportunity for us to meet world-leading oncologists, to reach out with our messages about the value of the product. In Europe, we continued to sign commercial agreements both for the Nordics, a company called Axlab, and now the latest one, Palex, covers Spain and Portugal. We also did a rights issue that we closed by end of the year that enabled us to continue the market introduction of the assay all the way to making our goal of becoming cash flow positive during 2025.
At the end of the third quarter, we continue in the U.S. to launch a new trial with Washington University, which also has great potential and value for us, which Warren will cover. The pharma services area is continuing to develop well. We have signed two master services agreements, and on those agreements, we have also taken the first work order of collective value of SEK 2.5 million. So with that said, I'd like Warren to take us through the U.S. status.
Great. Thanks a lot, Anders. I'm really excited to talk about the US business and give an update, in regards to the positive progress that we've made in this last quarter. Through my presentation, I'm really gonna focus on five separate topics, one of which is sales and contracting performance. I'm gonna talk about the reimbursement milestones and progress we've made there, along with regulatory progress. I'm gonna take space on clinical activities. And then I'm gonna end the presentation on real-world patient data using DiviTum. And what this will do is really illustrate the clinical utility of DiviTum. So, look forward to that. Next slide, please. So with respect to sales performance, we had a very good Q3. Our sales performance doubled over Q2, which is fantastic. But also, which was very interesting, was that we were able to get additional medical institutions to order DiviTum as well.
So that number went up from 5. So prior in Q2, we had 7 ordering institutions, and now we have 12. So that's a very, very beneficial for our business. There are two very good indicators as well of our business, one of which is that we have 93% of physicians that have ordered DiviTum has ordered more than one test. And this is a really good indicator for us. The other thing is that when we take a look at patients that are being tested with DiviTum, we have 47% of patients to date that have had more than one DiviTum test. Many of these have had several. That number will probably go up as well because we've had a number of new patients in the last month or two, and they will most likely get additional testing as well moving forward.
I can tell you, in my experience in this particular market, that number is incredibly high, so and that's my experience and my team's experience. So I think these are incredibly good indicators for our business that the clinical utility with DiviTum is very significant in the marketplace, and we look we look forward to future growth as well. From a hospital contracting perspective, our goal, our ambitious goal at the beginning of the year was to, to sign 10 contracts. To date, we've executed 3. The important thing here, though, is that we have about 14 in the pipeline. Many, many of these are NCI or NCCN designated cancer centers. Many of those as well are currently ordering DiviTum for us. We're just submitting those claims to the standard reimbursement process. So we'll see moving forward some of these getting across the finish line.
Unfortunately, some of these institutions, unfortunately, they're very, very large, and it takes a bit of time for those contracts to sustain. So we're very encouraged with the progress we've made both on the sales side of things and on the hospital contracting side of things. Next slide, please. From a reimbursement perspective, we're really happy about the progress that we've made here. I think the takeaway message is that we're getting paid in all three separate channels, which is fantastic. If we take a look at number one, which is Medicare, as Anders indicated, our PLA code was priced at the end of last year. And that pricing went into place or was activated January 1st. So all DiviTum tests, as of January 1st on, we submit a claim using our PLA code with this particular price.
We've been getting paid on it, which is absolutely fantastic. We're starting to get those claims, those payments in the door. Secondarily, private insurance. With private insurance, private insurance has kind of two components, one of which is the person that's on private insurance. The other is a person that is on Medicare but is managed through private insurance. That's called managed Medicare. We've been getting paid on both of those customer segmentations within private insurance as well. All of the managed Medicare claims have been paid at the Medicare price, which is fantastic. In fact, the private insurance claims, we've been getting paid more than we've expected. This is fantastic news as well. Then from a clientele perspective, we've been getting paid what we've contracted, and that's what our expectations were.
That is still our core strategy within our businesses, move as much business as we can into that hospital contracting channel. The two indicators here that are really impressive is with respect to all of the claims that we've made through Medicare and private insurance, along with client bill, there has been zero claim denials based on medical necessity or clinical utility. This is unbelievable, quite frankly. If you take a look at other organizations, especially in the molecular field, you will see claims denial rates up in the area of 50%. We've had zero. This is fantastic. We haven't even had to submit an appeal yet to get paid.
So I think all of the work that we've done, whether it's getting the PLA code, the pricing of the product, the clinical utility of the product, has been, I think, very spot on for the organization. And I think the other point, as Anders had mentioned this previously, is that when we take a look at the payments through these three channels, whether it be Medicare, private insurance, or Client Bill, that blended average of payments, we believe that we will be at that $400 price range as these, you know, channels develop based on the payments that we're receiving today. So we're very, very encouraged by that news. Next slide, please. With respect to kind of our regulatory side of things, as I've reported in the past, we do have a CAP accredited CLIA lab. We're Medicare credentialed.
Up till now, we've been working on licenses from different states so that we can provide DiviTum TKa. Today, we can actually provide DiviTum TKA to 49 of the 50 states plus Washington, D.C. The only remaining state that we are working on is New York State. We've already submitted all the necessary information to New York. We've interacted with them. We are only waiting for their audit at a specific point in time. We've spoken with them, I think, it was 2 weeks ago. They indicated that before the end of H2, their audit team will show up, audit us, and then we can expect to be able to be licensed to do business in New York State, which adds another 20 million lives. We're really encouraged by that. This has gone incredibly smooth for us. Next slide, please.
So with respect to clinical, clinical is one of the most important areas of our business. We've just added a third prospective interventional trial. Today, we have three of them. So we have one from Yale University that we're working on that really identifies potential medical compliance and drug-to-drug interaction. And kind of the secondary endpoint, I would say, is the dose adjustment. And this trial is up and running. We're seeing samples roll through, almost on a daily basis. The second trial is through Washington University in St. Louis, also known as WashU. That trial is also recruiting patients, and that's called TK Impact. And TK Impact really explores how to use DiviTum and how oncologists change how they manage those particular patients, one of which is should they, should they do imaging earlier? Should they hold back on imaging? What other type of testing should be done?
So this is a very, very important clinical trial for us as well. Thirdly, we just signed a clinical trial called BETTER. This also is through Washington University. With this particular trial, this really focuses on early therapeutic switching when patients are no longer responding. So when a patient gets tested and they have a very high TKA level, one of the things these physicians will do is understand, do we switch these patients to another CDK 4/6 inhibitor, or do we switch to another line of therapy? All three of these are very important to us in regards to the data really helps us in supporting the clinical utility. We'll use the data from a guidelines perspective, and we've made really good progress here.
Other things that we're doing as well is we're taking a look outside of metastatic breast cancer because early indications indicate that DiviTum TKa will work in not only earlier stages of breast cancer but other disease states as well. One thing we're doing is we're looking at the adjuvant breast cancer setting. This has been really the number one thing that medical oncologists have spoken with us about. So we're doing a retrospective analysis of a CDK 4/6 inhibitor clinical trial. This is a big one. This has 1,250 patients and a little bit over 3,200 patient samples. We're evaluating those now, and we believe that the data read-out will be before the end of H2 2024. We're really hoping that we'll be able to have an abstract at San Antonio Breast Cancer Symposium. So stay tuned there.
But we're excited about the preliminary data that we're seeing. The real benefit with the adjuvant market is, as well as that, it's an enormous market. It's significantly larger than metastatic breast cancer. Also, from a sales perspective, it's the same call point. So those medical oncologists that have been used to using DiviTum with their metastatic breast cancer patients, they're actually managing a significantly large number of adjuvant breast cancer patients as well. So it's the same call point. So it's great that we've educated or are educating folks today on DiviTum. Those medical oncologists, they'll be the same medical oncologists that are managing those adjuvant patients. In addition, we use the same product number for our tests. We use the same PLA code number for our tests.
We use the same price for our tests so that all aligns perfectly, with regards to our testing. We're very excited about this and the work that's being done there. Next slide, please. I'm gonna talk through four separate case studies here. This is data from real patients, real data. As you can see on the bottom of each one of these charts that will pop up, you can see that the data is very recent. In this particular case, this is data from October, November, December. All four of these case studies are women with metastatic breast cancer that are hormone positive. If we take a look at this first one, this patient has metastatic breast cancer, is on a CDK 4/6 inhibitor, some endocrine therapy.
The patient is feeling very good. No, no issues whatsoever, in that regard. They had a CT scan, and the CT scan did not show any disease progression. They had blood chemistry work done. Liver enzymes are slightly elevated. This particular oncologist has been using DiviTum, and they, they decided to try or to, to test this particular patient. The value came back incredibly high. It came back at over 2,000. And so instantly, the medical oncologist thought, "Well, based on the liver enzymes being a bit high, but especially because the TKa level was so high, let's do a liver biopsy." They did a liver biopsy, 2-3 weeks after that DiviTum score, and they found liver metastases. Now, those liver metastases were confirmed to actually be triple-negative breast cancer. So that's super important because how you manage triple-negative breast cancer is different from hormone-positive breast cancer.
So immediately, the oncologist switched course of therapy, moved from the CDK 4/6 inhibitor plus an endocrine therapy to an immunotherapy plus chemo, and that patient is responding. And the doctor told us, you know, "Without DiviTum, I would not have done a liver biopsy. Imaging did not show disease progression. And it's incredibly important for us to be able to put these patients on the right therapies to maximize their overall survival." So this is absolutely a huge win for the patient. Next, next image. Thank you, Anders. The next one I wanna talk about is dose reduction and tolerability issues. So in this particular case, a patient was on abemaciclib and fulvestrant. And they had an issue with a side effect. In this particular case, this patient had diarrhea.
And it was not. They were not able to control it unless they took the patient off this particular therapy. So they took the patient off the therapy. They managed the diarrhea. But then the oncologist said, "You know, before I switch CDK 4/6 inhibitors, I'm gonna try to dose-adjust this patient down to see if we can manage the tolerability side of things." They did that. They took the patient. Well, we tested the patient off therapy. You can see it's 408, very high number. We put that patient on a lower dose of abemaciclib, and the value dropped significantly down to 40. And this gave the peace of mind to the patient and to the physician that the patient was responding to this therapy. So again, another great demonstration of clinical utility of DiviTum TKa. Next, image, please.
This is one where a therapeutic switch was made by the medical oncologist. So in this particular case, this patient was on ribociclib plus anastrozole. And they had an issue, a tolerability issue. They actually had four separate side effects that they were facing with this particular drug, one of which was nausea, and they could not manage that. So the medical oncologist made the decision to take the patient off this therapy. We tested the patient when they were on the therapy, and they were responding very, very well at 18. This is an incredibly low score. But they had tolerability issues. So when they took the patient off, that score shot up to 265, which is a clear indication of cell proliferation.
Then they took the patient on abemaciclib plus anastrozole, and the value dropped down significantly, dropped all the way down to 38. And then you could see that one month later, it dropped to 20. So very, very low scores. In this particular case, the patient could P albo better than Ribo, and they're not suffering from any side effects. So again, great way to be able to see this. And there's no way a doctor would be able to see whether a patient is responding other than holistically doing imaging and waiting for disease progression. So again, very good clinical utility. If you can provide the next image as well, Anders.
Another one. I think this is fantastic for the patient. This patient has been on Ribo and fulvestrant.
And in this particular case, from October, November, and December, you can see these values are incredibly low. And, in fact, I know for a fact that with this particular drug, the patient's on therapy three weeks and then off therapy during drug holiday one week. These samples were taken during their drug holiday, and you saw no rebound effect in that value going up. So not only is this patient responding incredibly well to this therapy, but also, this really aligns with Project Optimus from the FDA where the doctor is looking at, instead of providing the maximum tolerable dose, you know, maybe we should dose-adjust down and give the minimal effective dose. And, and again, another clinical utility of this product. So I just wanted to share this with you. I think this illustrates the different utilities of Dividend.
This is, I think, why myself and the entire organization is just so motivated and energized of what this can do to help women with metastatic breast cancer. With that being said, I'm gonna pass this over to Henrik. All right. Thank you very much, Warren. Here to present our pharma services and collaboration business. It's always a great pleasure to present that part of our business also, because we have a good momentum there. Two slides. The first slide here is to say, you know, that we have continued strong progress during Q3. As we have communicated earlier on, the prime goal of this business is really developing companion diagnostic products, bringing them to the market and bringing them to the market in collaboration with pharma and, of course, based on our TKA testing technology.
So currently, you know, we are onboarding pharma and biopsy companies and getting them familiar with our powerful TKA technology. And they use it as a tool to monitor whether their drug is contagious. We typically onboard pharma through master service agreements, the MSAs. And during Q3, we were negotiating two new MSAs, and we were also negotiating additional work orders. And this all led to the recent press releases on two new master service agreements. And it also led to a significant increase in our work order book. So at the end of Q2, our work order book had a value of SEK 8.5 million, as is stated here. And it was actually coming from not only 12 master service agreements we had from different pharma partners.
But by the end of February, that's one month into Q4, we have a work order book value of SEK 11.4 million. And we are coming from 14 different master service agreements. We also saw an increase in the upper limit of the revenue value per project to SEK 2.5 million per project simply because the pharma projects they are including more and more TKA testing monitoring in their studies. During Q3, we also experienced some of the more typical bumps when working with pharma. Three of our current pharma projects they had delays in their initial studies, which impacted our TKA testing service level, and moved some sample testing into Q4. However, when I look at the significant increase in testing activities in the beginning of this Q4, we are, you know, more than back on track. Next slide.
Now, if we take a closer look at our current customer portfolio and CDX product market potential that we present to us on this slide here, we have classified our pharma biopsy customers into three tier levels based on their yearly revenues. Tier one and two companies being those companies that typically move into collaborative CDX development and collaboration projects. And the tier three companies, typically, being companies that are developing new drugs based on their proprietary technologies and then, you know, selling all of these new drug candidates to tier one and two companies afterwards. We can obviously need to engage with all tier levels.
This is to get our TKa technology built into the earlier drug development phases, as a tool to increase the safety and effectiveness of these drugs, and then, you know, hence become a companion asset when they are commercialized by the tier one and two pharma companies. As you can see on this slide, the far majority of our pharma biopsy customers, they are developing drugs within the new generation of CDK 4/6 inhibitors. Hence, we also on this slide here have tried and provided estimates of the CDx product total addressable market potential only within this one drug type, CDK 4/6 inhibitors, or new generation of drugs. We assume that the CDx product revenue potential represents 2%-4% of the drug revenue potential. This is, you know, the market guidelines.
Here, we only look at the CDK 4/6 inhibitor potential in North America. That means US and Canada. The total addressable market, potential for a CDK inhibitor, CDX, in North America in 2030 has an impressive value of $1.2 billion. We have a solid footprint with our TKA asset being used by 95% of all relevant pharma biopsy companies developing these next generation CDK 4/6 inhibitors. As a final comment to the slide here, you can also observe how some of the very innovative tier three companies, they are starting to also use our asset outside the CDK 4/6 inhibitor drug field. Actually, 7 out of the 13.
Six out of the 13 tier three companies, that's almost 50%, are using TKA together with other drug types, which will, you know, further expand our CDX market potential. And by that, over to you, Morén.
Okay. Thank you very much, Anders. Let's see if I can get this to work. A few slides on the financials there. So, Q3, we had sales of about SEK 1.1 million, a little bit short of that. As Henrik said, that was negatively impacted by some delays in clinical trials, but there was no cancellation or work orders. It's more a timing difference. So we are confident that it will sort of bounce back into Q4. For the full quarter to date numbers, it's SEK 5.4 million.
Zooming in on the U.S. sales, it's as you can see here, it's still small numbers, but you can see an impressive uptake as Warren was talking about in his section of the presentation. If we start looking at the different payer segments, you can see here client bill, it's only 20% of the test distribution, but it's an impressive 50% of the revenue distribution. And that comes from that you have a confirmed price, which is quite high, and you have confirmed payment terms. That's really where we want to be in our business. Medicare, we have a new price now from 1st of January this year, about 50% of the test distribution, about 40% of the revenue distribution. The tricky part here is private insurance. That's about 33% of the test distribution, but only 12% of the revenue distribution.
That comes from that we are quite conservative when we recognize the revenues from private insurance because we know from past experience that private insurance can be quite tricky on pricing and also on payments. However, we have seen now that distributing payments, as Warren was referring to, that these payments are actually quite much better than the anticipated in our assumptions around revenue recognition. It's actually a factor of somewhere 2-4 times what we are currently using in our conservative estimate. The numbers are quite small, so we are still using that conservative estimate when we do revenue recognition on the private insurance payer segments.
But as we see these sort of numbers grow and we have a confidence in that we will actually continue to have a significantly higher, we will actually increase that, and that will have a positive impact on our revenue recognition, in the US business, of course. Quickly on the cash position, we had close to quarter three with SEK 105 million, and that is in line with our perspectives that we shared with the market for the price issue at the end of last year. Net operating cash flow by quarter. You see an improvement here going from minus SEK 28 million up to minus SEK 23 million. Majority of that is coming from change in working capital. On a side note, we communicated in the perspective that we would go for an equity bonus rather than a cash-out bonus. We have investigated this quite significantly.
At the end of the day, we concluded that it's more, from a shareholder perspective, it's actually better to keep the cash-out bonus rather than accepting the dilution of, of an equity bonus. So, that's we, we still think that that will fit within our business plan that we had in the, processes. So with that, I'll hand it back to Anders for summary and Q&A.
Thanks. Yes. To sum it up, we have, a product, DiviTum, that, addresses a very important clinical need. We've known that, for quite some time. We have significant implementation and, in some collaborations with some of the leading CAP leaders in the world. Now, we also see that the product performs very well in the clinical setting, so we're even more certain about the potential of, the product. Same with the market potential. We make assumptions there as well, which seems to hold.
We also see potential outside what we've defined, which we are also documenting now, which is, yeah, earlier phases of breast cancer that Warren mentioned. With the market share or the footprint that we have in the next generation of CDK inhibitors, I think it looks very, very promising in that area as well. So if you look at the progress made, I think we made progress with all our three business areas. One got went through the U.S. It really, we see significant growth in Q3. Still small numbers, but very strong trend. We have all the investment we've done now in our go-to-market work is starting to pay off in terms of revenue, in terms of patients being monitored, in terms of oncologists and institutions. We have the beauty of our business model is that we know we see patient in treatment.
We see that they are coming back monthly or actually even more frequently sometimes to get feedback from on how the patient is performing on the treatment or how the treatment is, how effective the treatment is. And so it's repeat sales. And we are keeping adding new oncologists, patients as well also. Pharma services, strong growth even after we closed the quarter. That order book value, we also see that we have a great potential to grow, and that will translate into revenues, of course. And in Europe, we're also starting now to see progress with two new very important agreements signed with some somewhat larger partners in Axlab and Palex, and also the first order from one of those partners, and they also recruit these sales reps, especially for DiviTum. So progress there as well.
If we look at the short-term targets, we want to continue on our client deal strategy and sign more agreements with U.S. hospitals. As Warren said, we have a strong pipeline there, and we're working to convert them into new agreements. However, I think we're able to sell also outside the client deal agreements and get paid. So that's good. Very promising. And in Europe, we had our goal of 4 commercial agreements, which we already met. So we continue to expand there as well. And the important milestone here is to be able to show to translate this into revenues. So SEK 10 million in revenues by end of fourth quarter is our goal. And we've been, yeah, laid a good foundation for that and also have a strong pipeline going forward. So that's really good.
The long-term important goal, of course, still remains. That's to make cash flow positive by mid-2025, at the sales level of more than SEK 50 million per quarter. A good start towards that long-term goal. We should say that we've always believed in the potential in the product and used to see it and now seeing it in action in U.S. and, from the pharma companies using it, to be more certain than ever about the product's potential. With that said, I'd like to open up for questions. We start with our analysts. I think this time, we said that Chen is the first one to start. So Chen, if you can yeah, I see that you're on mute. So please.
Yeah. Sure. Good afternoon. So two questions from me.
So is there going to be no real material sales peak in this quarter? But you also believe that it will start to become significant in the next quarter. Is there any clear signs that you see or could you maybe elaborate on that? Thank you.
Yeah. Well, if you look at the overall numbers, you're right that we also disclosed the U.S. sales attribution. So if you break it down to U.S., it was significant sales up from a very low level, but still, now we're seeing that our work is paying off. It takes time to open up new accounts, setting up all the processes, getting the oncologists start ordering and monitoring. And now we've seen that pay off. If you look at the overall picture, our sales has mostly or almost 100% has come from our pharma services.
I think, like Henry said, we've been successful in areas as, as well. However, we're, we're a bit exposed in our business model. If there's a delay in a clinical trial or two, revenues is not lost, but they're pushed forward. So that's what's happened. So, hence, when I'm seeing that we are confident, our pipeline is strong, that's also work sold but not yet delivered. We also have different measures to minimize, minimize that risk in our, in our business model. So, going forward, I think we'll be less exposed, although it's difficult to totally eliminate it, but we can at least, minimize it, which we've done by, changing our agreement slightly. Does that match the question?
Yes, definitely. Thanks for clarification.
You mentioned in your report that you have been receiving regular reports that DiviTum TKa significantly improved clinical routines and allowed alternative treatment to be more tailored to their needs. So this is very interesting. Could you maybe add some more colors to that? Do you receive any feedback from the physicians or how? Yeah. Yes. I think, Warren, you did four of those pieces. Maybe you could do the coloring here.
Yeah. Absolutely. I understood your question correctly was kind of the feedback, some kind of a tailored or precision medicine therapy to the diagnostics. But the feedback has been overwhelmingly positive from all of the medical oncologists that we've engaged where they've been testing patients.
I think, I think the biggest one of the largest or most beneficial pieces here is that, today, medical oncologists, to understand if there's disease progression, they use imaging. They can't image a patient, you know, every month or every week. They typically spread out the imaging, and it may be every six months. The feedback that we've gotten is that really, DiviTum gives oncologists kind of this window into what's happening with the patient other than signs and symptoms. They can see whether or not patients are responding to therapy, whether or not if they switch therapies, are they responding, can the dose adjust, and how does that impact that thymidine kinase value as well. So, I think from that perspective, it's incredibly encouraging.
I think also, you know, we're also, since this is practice-changing, you know, this is almost like when the iPhone came out. You know, nobody knew that they needed an iPhone until the iPhone was out, and then everybody needs one. It's a very similar situation with thymidine kinase or with DiviTum in many ways, is that physicians haven't used it in the past. So from our perspective, it's us educating them in regards to the value of the product. And typically, when we educate oncologists, what they typically do as well is they will find these kinds of unique patient cases for us to evaluate. And they build clinical experience before they do wider adoption. So I hope that answers your question.
Yeah. Thank you. Thank you for the color, Warren.
And I think you can see that from when you meet our sales rep also that they really yeah get a lot of interest in the product. If I add some facts, I think examples of what we asked for in Warren's first example, they discovered that this patient actually had developed triple-negative breast cancer, different type of breast cancer, and which is treated differently. So that's a very good example when it was treatment-changing. And the way they saw that is that if you have triple-negative and not responding then hence basically it's that you see elevations in TK assays. You see months ahead, and then they started looking. And in combination with liver biopsy, they found out. So that's a good example.
I think another good example too, of Warren's example is these different; there are three CDK 4/6 inhibitors on the market. They all work a little bit different and have different side effect profiles and different dosing. And so when you add that up, it's a lot of combinations. And managing those combinations and with the side effects because their side effects are tough, it seems from the patient cases that we see now that we can add a lot of value and find ways that was difficult to find or took at least months more to find. And if you have many combinations and it takes many months to test on each combination, yeah, it's a game-changer. So yeah, I hope that answers your question, Chen.
Yep. Perfect. Thanks for taking my question. And yeah, congrats with the progress. Thank you very much.
All right.
Should we move on to Luisa Morgado from Van Lanschot Kempen?
Can you hear me?
Hear you very well.
Yes. Okay. Maybe, if we could, discuss a bit the master service agreements. I was wondering, in terms so you mentioned that you have quite a few, well, potential revenues from the order books. So I'm expecting that to kick in into 2024. And beyond that, I also wanted to ask, so one order, what does that equal to, let's say? And how long do you expect, well, let's say it's just more of an estimation, that a master service agreement could turn into a companion diagnostics, joint venture with one of the companies?
Yeah. They're all good questions. So first of all, yeah, you are correct, you know, work orders.
They typically, you know, go from 8-18 months typically, you know, in a work order because more and more pharma are using our assay in prospective studies, you know, clinical studies. So we're talking, you know, many patients. We're talking, you know, between 500, 1,000, 1,500 samples. So it differs a little bit, you know, between the different studies. We see a clear tendency, you know, of being included in the bigger and bigger trials. And that's also we are very, you know, optimistic about moving from this, you know, service-based into true collaboration with pharma. And we expect that to happen within, hopefully, in a short time frame. We have some really promising discussions with pharma companies, especially, you know, the tier-one companies is, of course, where we believe it's going to happen.
It is interesting with the tier-three companies as well because they are bringing a lot of, you know, new drugs to the market or developing new drugs that are then going to be acquired by the bigger pharma companies. And that's why it's interesting for us to be in there very early on. We have some really good communications, discussions with the tier three, sorry, tier-one companies. And, you know, we have three known players within the CDK 4/6 inhibitors. And then, you know, we have upcoming also tier-one companies that are really focused in that area. I don't know if that is. Hopefully, it's answering your question.
Yeah. Yep. That was very helpful. Thank you. And maybe just one last question. In terms of the adjuvant setting, how is the process here?
So, do you know how you proceed here? Do you need any authorizations? Do you need to submit anything? Or can you already use DiviTum as is?
Yeah. Thank you for the question. I'll make it clear. When it comes to our intended use from the FDA, it covers metastatic breast cancer. So if we want to continue and market the product for adjuvant, we need to expand the intended use. We could do that either using a supplement through the FDA, or we could actually now have the lab operating and certified. We could also expand it using an LDT. So, I think we believe that expansion is less of a hurdle than the actual approval process comes here, especially during those times, during the pandemic.
And with the clinical trial that we are doing, it also has the numbers, the volume that it will provide a very excellent clinical validation material. So that's very good when it comes to the regulatory perspective. Then there is another perspective, and that's the commercial perspective. And that starts with the reimbursement and then, of course, the sales efficiency. So if we start with the reimbursement, it's actually in our PLA code, as Warren very briefly mentioned, it's already covered because our PLA code and the scope for that is wider than our final planned intended use. It's a complex area, but so when that was decided, we had data, of course, covering more than only metastatic breast cancer that was considered. And in the end, we got a PLA code that covers breast cancer, yeah, breast cancer.
So it's no tied to any kind of state interface, and also, I think the beauty here with the sales efficiency is that, to a great extent, it's the same oncologists treating the different cases of breast cancer. So, we would then be able with this to target those it overlaps, our call plans, etc., that we're targeting right now. Yeah. Hopefully, that answers your question.
Yep. Very clear. Thank you for taking my questions.
Good. All right. Johan Unnerus, we are now in eight minutes. Let's go. So, Johan Unnerus, if you can unmute, see if we can get your questions. I think you're on mute. I saw you were unmuted, so I think it should work if you just choose unmute on your Teams app. All right. I think Johan Unnerus will soon sort it out.
In the meantime, I will take some questions from the Q&A. Then, as soon as we get the sound from Johan Unnerus, we will let him in. So I'll take the first one. It's from Anonymous. So, it's the question: Does this product work on all or different cancer forms, or is it only breast cancer? And then, that's a really, really good question. And the question is, we measure cell proliferation. Cell proliferation is a difficult word to say, obviously. Cell proliferation is generic for cancer. That's how cancer grows, basically. And the more aggressive the cancer grows, the higher the cell proliferation measurement our assay is. That's documented. So the potential is all cancers. It's more of a commercial and resource perspective.
We have chosen to start with metastatic breast cancer because there's such a clear, major unmet need, with the treatments that are, are being used there. We also have excellent results from clinical trials. This is a good match. It's a good way to the market. From there on, we can expand. That's our vision. It's an excellent question. I have one, which I think you maybe can elaborate a little bit on, Warren. It says, so far I'll read it for you. So far, hospitals does not seem to order a lot of tests. Have you seen any ramp-up regarding orders specifically from hospitals since the quarter closed? Maybe you can elaborate a little bit how the, the starting procedure works, Warren?
Yeah. Absolutely. So, whenever we do contract with, with institutions, there is a bit of a ramp-up process.
We need to put in place logistics and things of that nature. Again, with these hospital contracts, it does a couple of things for us. It does engage the molecular or formulary committee within the institutions to determine if there's medical necessity for the product. So it gives us greater access to those institutions. So, you know, I think the utilization on the with the hospital contracts has been good. They will continue to increase with additional usage and experience with DiviTum. We're still not completely up and running and, you know, at full capacity with these institutions. It does take a bit of time. And we will see this as well with future agreements as well. So, but certainly, all signs point to utilization moving forward will certainly increase in these institutions.
Thank you, Warren. Cash for what?
So now we have Johan Unnerus on the line. Can you hear me? Can we hear you well?
Excellent. I had some problems earlier. Thank you. Yep. Great. Let's see. Can start with Warren. It seems like some of the master services agreements have not been converted into work orders. What's the outcome from that side and also the prospects of existing work orders to expand further? So, Warren, the client bill should be, I think, what's it? Yeah. So if you An elaborate.
Thank you. Yeah. Absolutely. So yep, we have those three particular institutions that we've signed contracts with. With one of them, it is doing quite well with the ordering progress. With another one that we had signed, there are essentially two separate ways that samples come in.
They will even come in through in-service, what's called in-service or out-service. The in-service is blood that's drawn within the laboratory within a particular facility. With that particular institution, we do have access because of the agreement. And we actually have a few doctors ordering from that particular institution. They do draw blood internally. So you're not going to see that in that client bill segment. What the contract did for us is open up that particular institution. We will start seeing some samples come through that particular channel as we add additional physicians. But some will; it depends on which physician uses which access points for blood draw for that institution. In the other contract, we are still working with them to be able to get that channel open.
We've done all kinds of the heavy lifting in regards to getting the contract in place, working with the formulary committee, working with physicians. So we anticipate that really being active soon. So we're doing all the right things. But you will see moving forward that these contracts and new ones will really kick in.
We have 14 direct deals in the pipeline. And are they sort of different dynamics and different stages, presumably?
Yes. Absolutely. And with all of these contracts, I think, you know, if you've seen one, you've seen one because each institution has a different set of dynamics based within those institutions. They are at different stages of discussion. And in some cases, we're in much deeper stages than others.
But nevertheless, many of those institutions that we're receiving samples from today, we are in discussions with to contract that particular business.
So I think that's very positive. So in those particular cases, we've already worked out all the logistics in regards to the path in regards to getting samples to us as well as getting test reports to the right physicians or the portal, let's say, within those particular institutions.
So yeah. So I think once those get across the finish line from a contracting perspective, we will already have samples set up to come in because we already have that path open now and are receiving samples from those institutions.
You have clearly increased clinical use even though the absolute numbers are modest at this stage.
You also explained earlier that it seems like some of the physicians who might take the time to try a few patients, perhaps patients where the need for an early response or changing therapy is particularly high. How should we look at it? Is this what's to be expected from new additional hospitals and physicians if they will go through a period of trying a few patients before using it more often?
Yes. Exactly. So as we engage oncologists, the sales process is really us educating them on the thymidine kinase and the role of DiviTum. Since we've launched the product, the real benefit that we have now versus when we launched the product is we have real-world cases. So those examples that I showed, these four examples, if you look at the data below, these are very recent cases.
We can show the clinical utility of those particular patient cases. So we use those as part of our sales efforts to be able to show the utility to individual oncologists within institutions. The process is really educating. And then when physicians decide to try the product, we typically would never just kind of flip the switch and incorporate this with every one of our metastatic breast cancer patients. What we do is they themselves want to get real-world experience to see the clinical benefit or clinical utility of the product. And then they move into a routine use on a wide range of their particular patients or all patients. Ideally, then we get to a point in the process where we get incorporated into the institution's care pathway.
And then what that means is that they write in their protocol that with a particular patient type, automatically, the patient would get a DiviTum test regardless of what oncologist is managing that particular patient. So if you kind of look at the overall sales process, you know, we're kind of in that area where we're educating. And oncologists are evaluating the product with specific patient samples or patient cases. And we have some that have are really a little bit further down the pathway. So, and we can expect this probably for quite some time until we get greater critical mass. It sounds like you're making progress. But the sort of visibility of the actual ramp-up is still modest at this stage.
Yeah. The ramp-up is significant. But the volumes are modest. And, so you're right.
And we try to guide our successful expectations. We know that it takes time to start generating revenues. And as Warren also said, our strategy has been, with our experience, the sales force to go for the high-potential so-called tier ones or decile 10, the ones that are the highest prescribers of CDK 4/6 inhibitors. And so those are the ones that are now testing out. And of course, that's why it's so important that they test the test so well that they see the value of it. And that's basically what's been achieved now that, yeah, we showed the evidence of in this presentation. So yeah, really good. And that is laying the foundation for revenues down the road. Yeah.
That's, I think, the right strategy to reach those pretty aggressive goals that we have set, both short-term but especially the long-term goal of SEK 15 million per quarter to DiviTum TKa. And that, of course, will be handed over to the pharmaceuticals. We'll be contributing to that a lot as well.
Yeah. And also since you opted to go for cash incentives, instead of shares, and the reason seems to be that it's less diluted, that also suggests that you're pretty confident that you will reach rates even based on the current financing.
Yeah. That was based on a lot of parameters.
One, that we were able to manage our cost and cash out very well, and also to find the best solution, in this case, for the shareholders because we would in the end, we thought it would be too expensive and also not complying with the Swedish Code or Bolagsverkets code, to set up an attractive. So we went back to the cash out. And, yeah, I believe that's the right thing to do. We really looked into trying to find a solution. But I don't think it was good enough. So this, in the end, turned out to be the best, especially since we're able to manage the cost in line with what we had in the prospectus and the cash out bonus. Yeah. And finally, Henrik, on the issues and on work orders and master service agreement, you're making a lot of progress.
The average size of the work order suggests that there are still several master service agreements that could turn into work orders. What's the outcome from that?
Oh, yeah. I mean, so the way you need to understand the master service agreements is that, you know, from each master service agreement, you have several work orders. And what we see is that, you know, in the beginning, you know, when we signed master service agreement, the work orders were rather small, you know, preclinical activities and what have you. But what we have learned recently is now that pharma is still using the assay in bigger studies, really big studies. And hence, the work orders coming out of each master service agreement is really large and also a significant number of work orders from each master service agreement.
We have one company where we are now with the sixth or seventh work order from that company. So we have, you know, several projects running, you know, with each pharma partner. Excellent. And also classification then since you alluded to that average size was 2.5. That I suppose that's an average from master service agreements that are active reached the work order stage. Is that correct? Right, I mean, it's because early on, when we have, you know, communicated on, on the master service agreements and the value of each work order, you know, it was up to, you know, approximately, you know, SEK 500,000-SEK 2 million per work order. And now we experience that that is not enough, you know, within that frame, because we had recently signed work orders that are bigger than SEK 2 million.
And that's why we just increased and said, "Okay. So when we report on it, it's now, you know, typically between SEK 500 and SEK 2.5 million for work order." And then, anything to be said? I mean, you disclosed in clarity the level of the totality of the applicant work orders. Was anything to be said about the applicants adding new? Yeah, we have two technical evaluations ongoing. Technical evaluations is where new companies are trying out our TKa technology. And in 90% of those cases, we will end up signing a master service agreement. So I guess that's as far as I can go. But we have two companies currently, you know, testing out our technology. And I would be surprised if it's not ending in master service agreements.
And also, of course, the next stage, and eventually the companion diagnostic stage, you are optimistic about reaching that. And, reasonably near term, is it possible to give any, less than two years, possibly within one year? Or is there any flavor on that? My optimism is, you know, increasing from every quarter, which I guess is just reflecting that we are having, you know, some really good discussions with the right pharma companies on moving this assay not only from a service assay but really into a companion assay. I guess that's as far as I can go. Just saying, you know, my optimism is, you know, going in the right direction. Yeah. And, if and when you reach that stage, is it realistic to expect some kind of upfront part of this opportunity? If it's possible to upfront payment. Upfront payment? Oh, yeah.
Absolutely. I mean, the way I'm used to running pharma collaborations is really that you need to onboard resources to be able to execute on developing a companion diagnostic assay. And hence, you know, you need some upfront payment. So absolutely, yes. Yeah. Excellent. All right. Thank you. Thank you, everyone. And thank you, everyone. We are actually 10 minutes over time. So I'm grateful for your interest. And I think we covered most questions also in the chat. There's one that we didn't cover. And that's only 93% of the orders are returned to customers. What about the 7%? Yeah. I think you need to consider to really put the TKA into 100% because we roll out new customers. And sometimes they don't have time to submit their second order before we close the quarter.
So, but I think 93% is still really, really good. And we see that they come back for more. So we're really happy with that. Thank you very much for your interest and great question. Appreciate that. And I want to run off and say that, yeah, the volume's still low. But the trend is really, really good. And we're more optimistic. And we have a strong belief than ever in the potential of DiviTum. So we're looking at the future. And I believe it's really bright. So thank you very much for joining the call today. Bye for now.