Hello everyone, and welcome to the Biovica Q1 Interim Report. Today I'll be presenting, me being Anders Rylander, together with my CFO, Anders Morén. We will be presenting according to this agenda. First, a short introduction about the company and the product. We'll go through the highlights of Q1, and Anders will do a financial update before a summary, and then we open up for a Q&A session. The Q&A session will be done that way that we will start with Johan Unnérus, our analyst from Redeye, who will ask questions in the meeting. Everyone else listening also has a chance to ask questions by submitting them into the chat function. You can remain anonymous if you want to by checking that checkbox. We will answer as many as possible of the questions that we get during the meeting.
Also, if we're not able to answer all of them, we typically answer them in writing and put them at the end of the presentation that will be published after the meeting. A few words about our product, DiviTum. With DiviTum, we measure cell proliferation. As you all know, cell proliferation is what defines cancer, or at least uncontrolled cell proliferation. We do that through a simple blood test that has a lot of advantages, especially when we are monitoring with several blood tests over time to make sure that the patient is on an effective treatment. If not, it could be switched to an alternative treatment or an alternative dose in order to get the best possible treatment outcome of its cancer treatment.
These patients are typically monitored today using image diagnostics, and we have in clinical trials shown that we can provide several advantages compared to imaging, both more convenient but also quicker feedback by using DiviTum for monitoring. This has been shown in more than 30 clinical trials that have been performed by our partners and peer-reviewed and published in scientific magazines and journals. The majority of the data is within breast cancer, which is the area, our focus area, where we have focused our commercial efforts, where we have our 510(k) clearance from the FDA in the U.S.A. in the breast cancer area, allowing us to market the product for clinical use in the U.S.. There are several other important and interesting areas where we also have data, so there is potential to grow outside of the initial breast cancer area.
Typically, the data shows that before start of treatment, that we can be both prognostic and predictive for how the disease will develop and how the patient will respond to the treatment, and during treatment, to be an effective monitoring tool, providing quick feedback to whether the treatment is effective or not, so that the treating physician can act on the results of our test. The partners that we're working with are some of the most renowned institutes, both in the U.S. and in Europe, and also especially in the U.S.. Those are our first customers that are starting to use the test, the so-called NCI/NCCN Designated Cancer Centers, being important cancer centers that others follow on the U.S. market. We published really strong data from several clinical trials in December last year at the world's biggest breast cancer conference, San Antonio.
I still highlight those, even now, more than half a year later, we're still benefiting from these results that have opened up new accounts and new oncologists have started using the assay thanks to this data, and it contributes to the growth that we're seeing. If you look at the breast cancer area, the first of many to follow, we have a focus on the U.S., where we have launched the product, the biggest market, where we have established a price level also through Medicare and with agreements with private hospitals and payers. Based on the price level we've been able to achieve, combined with the number of patients living with the disease and the testing frequency, that boils down to a very significant market potential.
With the data that shows that we can provide very strong value in the early phases of breast cancer, where patients are being treated, so-called adjuvant treatment, and they can be using DiviTum to monitor that treatment, it opens up an even bigger market as there are more patients in that earlier phases. With that price level, we have still a very attractive gross margin from the test as it is very straightforward and pretty. It's not so costly compared to the price levels to produce. Besides our breast cancer use for clinical use, we also have a Pharma Services business where we serve pharma that are developing new cancer therapies to be brought to the market, and we facilitate that in the clinical trial phase and even in the preclinical trial phase. More on that later.
If we then move into the events that took place during our first quarter that starts in May and ends in July, one very important event was the rights issue that we performed that brought in SEK 122 million before cost for the transaction, and I'll go into the details on a separate slide. In the U.S., we communicated an agreement with the diagnostic company Tempus, or Tempus AI, to be specific is their name, that expands the commercial reach for DiviTum with being able to get access through their large, large sales force. And we also have a growth in the U.S. with about 30% in local currency for the second quarter in a row. And if you look, growth in we have nine consecutive quarters with growth. I'll go into the details and how we look upon that on a separate slide.
Our pharma services, we also have had a good first quarter where we have signed several new Tier-One Master Services Agreements , and we have also on top of that served six new work orders. So in total, we have now a strong pipeline for the coming years, which is an important part of our revenues for this fiscal year and the next one. When it comes to the clinical data and patents, we also made progress. ASCO, probably the biggest conference within cancer in general. We had three abstracts and posters, or actually our collaborating partners presented data with DiviTum within several cancer areas and also several treatment areas. There was more data in breast cancer and CDK4/6 inhibitors. There was data within immunotherapies and melanoma, which is a super interesting area with even a greater need, a bigger area than CDK4/6 inhibitors in breast cancer.
So it's an interesting opportunity for the future. We also presented data on chemotherapy and ovarian cancer, another big area closely related to the breast cancer area. So the immunotherapy, we have submitted several patent applications, and one of them was granted for Europe, and we continue the process for other geographies in order to protect, patent protect our slightly modified version of DiviTum that's been used in producing the results within immuno-oncology. So that's very interesting for the future. Something that's very interesting here now is the ability to move into earlier phases of breast cancer, and we have launched a variant of our test as an LDT Laboratory Developed Test from our lab in San Diego that enables us to market the test for early breast cancer in addition to the metastatic breast cancer that was earlier approved as a 510(k) cleared test by FDA.
If we dive in a little bit to the rights issue, I'm very, very grateful for the confidence that's been shown by the investors. We had a structure for the capital raise that granted SEK 80 million, which was required for us to be able to execute our business plan. And in the end, the outcome became more than 50% more than that, so SEK 122 million. That meant that we didn't have to use any of the bottom underwriters, and no shares were allocated to them. And we had, you can see, three big categories: the Dutch family office and several Swedish investors with previous holding in Biovica that was part of the anchor investors that guaranteed the transaction. And then there was a lot of private investors that took part in the transaction. And this, of course, puts us in a great position to achieve our long-term goal.
It's actually not that long. It's not that far away. We are aiming to do so in our third quarter for next fiscal year, so that will be in the beginning of 2027, and of course, this extra capital that came out of the transaction, that provides us with an even better opportunity to do so. It improves the probability for success and reduces the risk as we have more room to maneuver with some additional capital, so I'm very grateful for the outcome and the confidence shown. If we move into the U.S. area where we offer our tests for clinical use within breast cancer, so far we've been focused on the metastatic area, and recently we were able to launch our LDT and expand into the early phases of breast cancer.
As you can see, we've had growth for nine consecutive quarters, still on fairly small amounts, low levels, but the last two quarters have picked up the growth rate. So we have a 30% growth per quarter in the last two quarters in local currency, and we are grateful for that, although our ambition is to increase that organic growth rate even further, and if we look at what the actions behind these numbers, I think with the agreement with Tempus AI, where we will have them target the community oncologists, which is the largest area of the U.S. segment, then we can focus on the more high-value customers, the NCI, NCCN Designated Cancer Centers, and the IDNs.
The IDNs are integrated delivery networks that typically both have a hospital chain where they provide care as well as an insurance leg in order to provide health insurance for their customers and patients. These are areas where we have a history of being able to enter this organization and get the usage of the assay, and now with the focus on this area, this is also where we see the biggest growth in volume. It is something that requires quite some time and persistence, but the reward is higher because we have the potential to grow, and we can see that it's been a bit slow. We're not happy with the growth within several of these accounts. We see now that we are able to widen the use to more oncologists and to open up more of the existing accounts, which I think I'm grateful for, and very positive.
There's a lot of potential to grow just on our existing accounts, as well as we have been able to attract some new large customers, large accounts that have the potential to be even bigger than the existing ones. One important factor here is also the early breast cancer and the new test that we developed here. We've just launched it earlier this week. We did a large campaign to get the word out, and we see here potential for growth on the existing accounts because most of our oncologists are treating our breast cancer oncologists that are treating both in early and metastatic breast cancer, and the volumes within the early phases are significantly larger, so the explanation for the growth is that we have new data.
We have the data both within early breast cancer and also new data that was presented on the metastatic breast cancer in December last year. Some of those oncologists have been very active promoting their results. That was very strong. That has also helped us convince new users to test out DiviTum, and that has been positive and continue using it, so that is a very important factor, and also we've invested time to understand sometimes it's simple problems like logistics, getting access to labs, the ordering process. We've sorted out that as well, so there's a lot of combined factor that explains growth, and we are looking to continue to learn from our actions and, based on that feedback, tailor our sales process to continue our growth. Our ambition is to increase from 30%-40% by quarter growth to even higher numbers going forward.
So the organic growth is important, and it provides us a lot of feedback that we learn from, and we can tailor our messaging, and we can develop our value proposition. But one big game changer, if we go from just a few sales reps to hundreds of reps and companies with resources that exceed ours to a great extent. And that's why the Tempus AI agreement is so important, because then we go to sales force with hundreds of reps that have integration through the EMR systems and can target patients that can benefit from our test. So that's very, very positive and has great potential, and that can be a game changer when also driving revenues for DiviTum. I just came back from San Francisco, where I met with the Tempus team that is working on the implementation work here.
The positive thing is that they have actually a higher level of ambition than what we understood when we signed the agreement. It's not only offering DiviTum as a standalone product, but in combination with their products within breast cancer to target strategic areas. And that means that they will invest more resources than we expected, and that will pay off over time. So that's very, very positive, and we appreciate that. At the same time, it's added complexity, and it introduced a delay. We were hoping to have enrolled the first patient already. That's going to take some additional time, but we're working hard together with the team to get it up and running as soon as possible. A little bit of the same story with a big healthcare giant. This is a company, a so-called IDN, with revenues more than $100 billion per year.
So, a real giant. I've also met with them at the same trip, and it's very, very inspiring to see how they recognize the value, what this could bring to them, and have an ambition to implement this as a standard of care using one or actually several trials. So that's very, very positive. That will give us revenues, and it will also provide important data for Biovica that can be used in order to enter guidelines and, of course, drive demand on a wider base. Here, I think we were expected to have this up and running in September. It's going to take some additional weeks here as well. And we have agreed with them that we should support them with additional resources to speed up the implementation. It's in our interest, and so we're moving forward here as well.
So, still very positive discussions, and we're moving forward, although a little bit bump in the road that we have delays on these two. One thing that is very, very rewarding. We have now more than 400 patients that have benefited from using DiviTum, and there's more and more stories. We get a lot of spontaneous feedback from patients that I wanted to share. I think this is very gratifying to see this, and you get very touched by it. And this is what we also want to achieve. We would like to improve life for cancer patients and the outcome of their treatment. And it's great to see that we actually are doing that to a great extent already. And it's not only that they are communicating this right back to Biovica, they also are sharing it to other patients through patient forums on the internet.
So the word has spread, and this has led to us getting additional accounts and, of course, more patients being tested. The typical process is that they are contacting their oncologist, and we can support them in that and start using DiviTum. And then sometimes you see results like this or feedback like this, which is heartwarming, I must say. In this process, we have now been on the market with our CLIA lab for almost two years, and we have a patient that has been monitored since then for more than 20 tests. And one of the patients here that discovered DiviTum had been responding to CDK4/6 inhibitors for more than seven years, actually.
Having the feedback from DiviTum that she continues to respond, and if she wouldn't, that we'll get an early signal that could do something to find a solution that would work is comforting for the patient. So very happy to see this. If we move into the Pharma Services business, I think it's fair to say that we've been able during the last year or so being able to revitalize our Pharma Services business after a somewhat slow fiscal year last year. We've been able to sign now several new Tier one companies and sign Master Services Agreements to be able to perform multiple projects together with them. This is a significant investment in time to go through their customer or their supplier enrollment process, which we've done. And now we're starting our projects with these Tier one companies.
You can see that also it is much quicker for us to scale up our business. After signing a master services agreement with one of these customers, we have received five work orders during the summer and in August, and there's more to come. And so after that patient enrollment process, the supplier enrollment process, we've been able to grow it a lot quicker, and it looks very promising for the years to come here. In total, when you summarize our services pipeline, it's now SEK 27 million over the coming three years, 36 months. And on top of that, we know that we will sell kit sales. Previously, the kit sales has been about 50% of the total volume. We believe that's going to be lower now when we shift more and more into the services business. But still, we expect the kit sales to be significant.
More or less, all the big Tier ones, they do business, they do clinical trials in China, and then you need to buy kits and send it into China because you're not allowed to export biological material. So the Pharma Services business has been developing very well lately. Another way we can see is more projects, but it's also larger projects. The bigger companies provide a more stable project pipeline with better funded projects and CROs driving the projects. Very grateful for that. We have our financial goal for the fiscal year on SEK 50 million, and we are on track to reach that with these new agreements. This was my introduction. Now, Anders is going to go through the financial numbers before I come back and summarize the quarterly report.
Okay. Thank you very much, Anders. Quick look at the financials.
Growth versus Q1 last year, so that's 12 months growth, about 50%. If you exclude foreign exchange or compare dollars to dollars, because 95% of what we are invoicing is in dollars, or at least 90% are in dollars, it's about 70%. The biggest individual contributor here is the IVD test or the US business. That's 72% growth versus last year. Research has grown about 40% in Swedish kronor, about 60% in dollars. We zoom into the U.S. business. This is basically the same type of chart that Anders was showing just by quarter by quarter. So you see here the growth versus prior year, Q1 is about 90%, and versus Q4 is about 27%. As Anders said, it's a good achievement to reach over $100,000 in a quarter or SEK 1 million, but we're still not happy with or content with that growth.
We are driving that to become a higher growth, both in absolute numbers and in percentages. Cash position closed in July with SEK 16 million in our bank. We had this combination of rights and directed issue of SEK 122 million that we got in August, which was extremely good outcomes. The plan was to get in SEK 80 million, which was the guaranteed amount, SEK 122 million or 50% more, gives us a bit of headroom and also possibility to selectively invest in sales activities, driving sales growth continuously. Last slide on financials. Cash flow has improved SEK 5 million versus same period last year. It's driven by sales and lower operating expenses. We are very careful with our expenses. Compared net operating cash flow, so that includes change in working capital, that has improved SEK 12 million versus last year.
That is, of course, then driven by the same things, increased sales and lower operating expenses. But also last year in Q1, we paid out a lot of the restructuring expenses that we had accrued for in the Q4 close of 2023/2024. With that, I'll hand it back to Anders to open up for the summary and the Q&A.
Thanks, Anders. Just one short summary slide. We have growth for a second quarter in a row at 30% level organically. It's a good start. We're working to increase that, and we have put a lot of pieces in place in order to do so. We're working with our two major partners. We have progress. Unfortunately, a slight delay, but still, that's something we would have potential to increase revenues on a different level.
And then we have our pharma services, where we've been able to attract more large pharma customers. We have now five of the Tier one, which we offer services to. And Tier one is the ones that have revenues over SEK 100 billion . And contracted volume is now SEK 27 million in services for the coming 36 months, which, combined with the expected kit sales, means that we're on track for the SEK 50 million fiscal year number. And with the capital injection, I think we established a very good foundation for reaching our long-term goal, and that is to become cash flow positive. So with that, I'm opening up for questions. And I think first, we have Johan Unnérus. Thank you.
Thank you for taking our questions. And can you hear me?
Hear you very well, Johan.
Excellent. So we'll start off with perhaps Tempus. You are improving clinical sales in the U.S., fairly substantial in terms of percentages, but still from a modest absolute base, and Tempus comes across as a quite significant opportunity given the sales force team and so on, so when can we expect the first sort of patient tested and what's sort of left to get the Tempus team on the ground, so to speak?
Yeah, so we're still in the planning phase here, and we are seeing if we can try to make an early launch of a Standalone DiviTum product and to reduce complexity and shorten time to market, and then have the higher ambition a little bit later, so I cannot be so much more specific than that because also we have a partner to consider, so I think I need to come back with some more update. But the delay, we think we're talking about months, not weeks, not years. Yeah.
Yeah. Thank you. That's useful. So it sounds like it should be a sort of cautious uptick from that side or very limited in the current ongoing quarter. Is it possible to see some sales support already in Q3, in your Q3?
Yeah. I think ideally we would have that would be in our third quarter that ends in January. So either Q3 or in Q4.
Yeah. Thank you. That's useful. And also you used the term healthcare giant, and you have a study that will support some channels. When can we expect the study to start? You alluded to September, October. October, is that realistic?
Yeah. I think we need to update you with more details going forward there as well. We've identified that one of the reasons that we had this delay, that you would think that such a big organization has resources, but I think they have not extra resources for starting a clinical trial. So now that we've identified that, we've been able to support that, especially also with the extra resources we got from the capital injection. So we have agreed to support them with that, and hopefully that will speed up the process. And I have to come back with a more specific date on that as well.
Yeah. And that brings us to the next question, which relates to these additional resources. Is it a matter of sort of some specialist team input, or will it require external resources as is the case with studies?
Basically, even if the trial that we're talking about here will give them giant savings, the setup that they have is that they are set up to treat patients. They have very efficient and allocated resources for that. And when it comes to big clinical trials, they typically get external funding, and then they allocate resources. In this case, we are not going to fund the trial fully, but we are going to support with some resources so that they can free up time and then that way accelerate the execution of the trial, basically. I hope that answers your question.
Yeah. You also mentioned that you get better traction and feedback from medical ad boards. What do you do actively to promote that dynamic, and what will you do going forward?
Yes, that's an excellent question, actually. And so we do. I think the growth that we're seeing is a combination of many initiatives. One thing when it comes to targeting both existing and new customers is we do that through ad boards. Ad boards is when you have an oncologist with experience of DiviTum that informs others about the benefits, and that has opened up several new accounts. We try to plan this very, very thoroughly and tailor this process to open up new accounts. Another thing that has been very positive is, for instance, the Roswell Park trial from San Antonio. The oncologist there has been very active in promoting the results, not only at San Antonio, but also in other conferences and in other forums where he has brought our people also. We have done co-presentations. There are forums for oncologists talking about new results.
In such a meeting, we could reach out to several hundred oncologists that's been invited. I think that's an example of communication events where we can communicate one to many oncologists, and we can see also we can track back from these events that both are increasing usage from existing customers as well as we get new customers from it. We're learning from this process, and we're optimizing our targeting process. One last thing is a user group that we've set up with some of our key accounts that are very committed to using DiviTum, see the benefits, plus some new early users that we have great potential. I think we can scale up. They are meeting on a bimonthly basis, sharing experience. Also that's a way for us to use them to reach out to other oncologists.
The opportunity to use DiviTum at an early stage out of metastatic breast cancer, does that also capture some interest in this context of ad board medical?
Yes. That's the Roswell Park trial contained data from the early breast cancer in combination with the PENELOPE-B that the German Breast Cancer Group performed with over 1,000 patients. So that was a significant trial. So I think the early breast cancer area, it's also driven by the fact that there are new therapies approved in this area, and that increases the need for better biomarkers in order to provide feedback on adjuvant treatment. So people are looking actively for solutions here and DiviTum. That's why the results that came in December last year is very well timed. So yeah.
And also now, when you get more sort of clinical field feedback, it's obvious that genetic testing is gaining pace, and there is probably a good case of combining DiviTum with genetic testing in different ways. Is that something you see or interest in, or have you got any comment on that?
Yes. In this big pharma that I was referring to, just as an example, and in our ad boards as well, by the way, you can see the perception is that DiviTum and ctDNA or genetic testing, which is blood-based, which is an advantage in the metastatic setting when you do it with the repeat testing, correlate very, very well. So then you can use DiviTum to discover progression, and you can use the ctDNA tests to gain more information when progression occurs. That seems to be the general understanding, and it fits us well because then we become complementary and can, like Tempus has viewed it, use DiviTum to discover progression so that we can sell more of the gene testing products to get more information about patients that need to be assessed for an alternative treatment.
And also, if I may, of course, tests that are sort of approved and start to gain traction, there is also a case that they will be included in some guidelines that can be done at various ways and status, so to speak. Is that something you're considering as well?
Sorry, I missed your question.
Oh, yes. Tests like DiviTum and others are sometimes featured in guidelines, and that can be in different ways. Is that something you sort of see for DiviTum, or?
Yes. We have previously said that we would apply for NCCN Guidelines as our clinical data is stronger and stronger. I guess the only way to find out where we stand is to submit according to the process and to get some feedback. That we've done in August. Every year, the NCCN Guideline Committee for Breast Cancer has their yearly meeting, and then you should submit well in advance of that. We've done that, and we expect to get some feedback later this year. I think our interventional trials where we have data where we've acted on DiviTum, we have not; it's ongoing, for instance, the IMPACT Trial, but we have not been able to include that data in our current application.
I think our data set will be stronger over time, but I think it's important for us to get the feedback so that we can maximize the probability to get into guidelines as soon as possible. You can say that the process is started.
Excellent. And finally, on the OpEx side, it's clearly reduced compared to Q1 last year. Could you elaborate on that and sort of the clean normal run rate? There are some extra costs. I think you changed the cost base last year, for example.
Yes. Yeah, that's a good point. We've been able to reduce our OpEx compared to last year's first quarter, like Anders showed a slide on. We have reduced our cash flow with SEK 12 million. That's a significant increase. But if you compare operating cash flow to operating cash flow, it's about a SEK 5 million per quarter reduction as we had SEK 7 million in restructuring costs last quarter. So we're actually running a slimmer, m ore lean organization.
At the same time, we're able to increase revenue. So I'm grateful for that. But I think we need more sales reps in order to accelerate the growth. In combination, we can do some organic growth, but that's why the partnership deals come in.
Excellent. Thank you. That's all for us. And sorry for all the questions. Maybe there was too many.
No, I appreciate them, Johan. It's always good questions. And it's good to clarify what we said. So I guess even if we covered it, I think it's good to get those type of questions.
Thank you.
Okay. So we have quite a few questions here from the chat. I guess some of them we have answered. One is, yeah, I'm going to be a little bit careful to comment about revenues in the middle of the period. The question is how our revenues are growing during August and September. And I feel we're continuing the trend, and I think we also have some activities going. So yeah, looking forward to try to increase the growth, basically, as I said earlier.
I don't want to comment on individual months, and then it also varies between weeks and weeks. So our ambition is to grow quarter by quarter. Europe is not. We have had sales in Europe. Both we have had trials in Italy that have bought kits during last fiscal year. Same thing in Spain. And we also have interest for additional kits in Spain from both pharma and from institutions. So things are starting to happen.
But as I said, I have set pretty low expectations on Europe. And I think more importantly that they're starting up activities like trials to get us into guidelines, which is also happening. For instance, in Sweden, we have a protocol ongoing. So yeah, Europe is moving forward as well, but it's going to take a while before you see any revenue impact there. I think that was the questions I got. Thank you, everyone, for tuning into our call. And we will, after the meeting, as we usually do, we will also publish the presentation with answers to the questions that we covered. Thank you very much. Bye-bye.