In Q3 showed a revenue of SEK 45,000, still very limited, as we do not have a large-scale sales force or marketing activities at present, and we are still pursuing regulatory approvals both in Europe. So, our operating expenses, though, are down to SEK 6.7 million, which, and this is where we have been focusing a lot lately in order to get the company to a lower cash burn and aligned with our new strategy to work through partners. So what we have done is we have reduced the staffing level to 13 people.
Only the sort of very critical R&D staff and a few administrative people are on board now, and we also moved out our quite large lease for production and laboratory facilities in Ballerup. So now we have reduced our rental payment and our salary costs significantly. At the same time, since we completed the development of our CRP capsules, our cost for external consultants related to that is also gone down. So that is why we can show a 43% reduction in OpEx in Q3 compared to Q1, and we still will be showing even further reductions when we move into Q4, as we'll start to see the effect of the rent decrease and the full effect of the staff reductions at that time also.
So, that's our primary focus on, on the cost side that has been there, last quarter. There's not much to say about the distribution of the revenue. I mean, it's, it's so small numbers, this year, so... but it's, it's, from different countries, I say, outside of Sweden, I think is, is the most important takeaway from that. Moving on to the balance sheet, our intangible fixed assets are SEK 105 million.
That's actually a slight decline from the level that we had on the balance sheet in Q2, and it's basically because we now are writing down more of our capsules R&D than we are adding based on the cost cutting that we had and the fact that we are less active on new capsule development internally than we used to be. There's also a year-on-year decrease in the tangible fixed assets and the long-term liabilities, and that is the termination of the lease for the production facility. We had a 10-year lease, and that was quite a substantial liability actually under IFRS on the balance sheet.
So we are happy to take that out since our new strategies certainly would never have see us taking any benefit from that lease. So that was a very, very important move for us in sort of bringing the company in a better shape for tomorrow. Finally, then I also just wanted to mention that when we look at the short-term liabilities of SEK 53.7 million, a significant part of that, SEK 25.5 million, is a prepayment that relates to the FIND R&D project. That was a fund for innovative diagnostics that paid us to develop a multiplex capsule for SARS and influenza test at the same time.
That project is on hold right now, but we have confirmation that we will not be asked to pay the money back, even though the R&D activities, we never completed the project as intended. Basically, it was decided to put the project on hold. This means that we need to now work with our auditors on the right way of taking this off the balance sheet. But we have a confirmation that we will not have to... that this is money that stays in Qlife. So, the real short-term liabilities would actually be only half of what we see here when we adjust for that. Then moving on to cash flow.
We had cash flow from operations for Q3 of -SEK 10.7 million, and changes in working capital of SEK 3.8 million. Then we had cash flow from investing of SEK 3.9 million positive and then SEK 6.9 million from financing, and that gave us a total cash flow of or cash burn for Q3 of -SEK 3.6 million, and that gives us a cash at the end of the period of SEK 5.6 million. Included in that was actually the convertible loan that we received in Q3 of SEK 4.7 million.
So, with that in place, we are in and as we also communicated to the market, then that gives us the operating cash we need for the end of this year and into Q1 next year. And that is when, because we, as also indicated, that we have, we expect we will be receiving SEK 8.5 million of tax credit from the Danish tax authorities related to our R&D activities last year, in November. Then moving on to the significant events that has happened during the year. I was going over a lot of it already, but I will just sort of quickly go over what we accomplished in 2023 so far.
So first of all, we launched the Egoo CRP assay and the Egoo Innovate, so open system, and presented that in, at, the AACC show in Anaheim. Then we also completed a rights issue of SEK 57.7 million in April 25. Then we and this is still ongoing, Aidian initiated an arbitration against us related to the agreement we had with them for distribution of our SARS COVID capsules. And, basically, they want us to pay unpaid invoices of SEK 0.8 million. That is on the balance sheet today.
And against that, we said, "Yeah, we'll be happy to pay, but only when you have paid us the SEK 2.2 million of missed profit from the unmet minimum purchase commitment that is on the agreement." So and we are happy that the arbitration court in Finland has accepted to treat the two cases as one. And we believe we have a strong case. We have just filed all our arguments earlier this month and expect a resolution on this case in early 2024. So, as mentioned, we believe we have a strong case, and so that could possibly be an improvement of our cash situation once that gets settled.
Then, our Q2 warrants outcome was announced, and, as the warrants were significantly out of the money, we had a very modest signing of 0.17%. As mentioned before, we have also taken on a convertible loan of SEK 4.6 million. And, finally, then we have, and this is actually, I think one of the most important things that happened is that we signed the LOI with the Hipro Biotechnology for exploring options for a partnership going forward. And that, we'll talk a little more about that when it come to after Q3 events. Because when we look to after the end of the balance date of Q3, then we had the outcome of the Q3 warrants again, and one program significantly out of the money.
So very limited, the signing only 0.02%, so no cash injection from that. But apart from the savings that I mentioned before, then we had good progress with the partnership agreement on Hipro, with Hipro Biotechnology. We traveled there in for our first visit last month, and we're happy to see, first of all, that they are a very, very capable organization. They are already today selling their own diagnostic devices to hospitals in China. They have several versions of that, but the main one is a device that can do a full test portfolio, including CRP, and CRP are by far the test capsule that they are selling most of.
The total sale of tests into China expected for them in 2023 is 25 million units. So it's quite significant compared to the 100,000 tests that we have sold to date for our PCR tests. The agreement that we are gonna do with them is, first of all, we have received quote for them to manufacture our capsules and our Egoo Collect. The pricing is significantly below what we can purchase for Europe, primarily because they have... They own the full supply chain for capsule production, including plastic molding factory.
And so we are sending a team now out to look at the quality of what they can do, and once we confirm that that lives up to our standards from a full technical perspective, then we will start receiving, I believe, the test production runs of capsules components. Then they are also gonna work on a regulatory approval in China to be obtained in 2024 for three different test assays. And this is interesting because the biochemistry tech behind the test that Hypo has in their current portfolio, and you can check it out on their own page, is very similar to the type of biochemistry that we are using in our test capsules, which means that.
Most we believe actually that the full program test program they have is very easily adaptable to the Egoo platform as well. And then finally, they are gonna commercialize the Egoo platform in the Chinese market, and we expect this is gonna be based on that they will be selling the products and paying royalties for the tests while we will be manufacturing and shipping the devices to them. We expect to complete the final commercial agreements on these three in these three areas in 2023. So we have a binding commitment from both sides to as we enter into 2024.
So we are very happy with the speed that this is happening with, and we are also very, very happy with the potential volume outcomes that this has. Basically, before we were working with Hipro, we could not see a way into the Chinese market that is very, very big relative to the European market in terms of tests, et cetera. So this is definitely to add a lot of upside to our future outlook when we see it, and with very little financial commitment from our side, since Hipro is gonna be in charge of making these things under the agreement.
Also, it gives us a quick route to develop further tests to our platform, since we can if we utilize the chemistry and the technology behind Hipro's current test portfolio, then we believe we can do this very fast. And then finally, sort of, we moved to the new offices in Scipion on November first. As mentioned before, this gives us lower rent, which is also good. So I think we are in a good shape to move into 2024 and start executing on our new partnering strategy with focus on what we're gonna do with Hipro. And with that said, I think this was what I wanted to take you through. I know that there are quite some questions already, as Klaus mentioned, so I'll be happy to take those now.
Well, thanks a lot, Kasper, and sorry about the technical flaws, but we solved it, and you gave a good impression of what happened in Q3 and what we should look into in 2024. So, with that said, Kasper, let's start off with questions and to the audience, you're more than welcome to pose more questions. First of all, Kasper, you mentioned the loan you received during the quarter, and you also mentioned the money you get from the tax authority. In terms of Hipro, are there any milestones besides royalties connected to signing the deal? And with that said, how far does your current liquidity situation take you into 2024?
So, when we talk about Hipro, then I would say, as I mentioned, there will be the regulatory approvals to be obtained in China, which would be milestones prior to the royalty. That is as much as we know now, based on what we have in the LOI. Everything else, I think is, I mean, we're still negotiating on the terms of the agreements. But we are looking very much forward to be able to share the content, part of the content of these agreements once they are signed. But of course, until we have them in place, in the final version, it's too early to talk about the content in more detail.
Talking financing, we have financing into Q1 2024. We are looking into plans to address that.
Kasper, so and that's fully understandable, and if milestones are connected to approval, we'll probably see things coming late 2024. Normally it takes time, even China, to get approval for things, yeah?
I think, yeah, first of all, it's important to understand that, that, especially with the IVDR change that happened in Europe, the Chinese FDA approvals are less cumbersome to achieve compared to the. So the number of tests required, et cetera, are fewer. And we look—that was part of what we covered on our first trip to China. And Hipro has good experience in working with the Chinese FDA on obtaining these approvals. So it will come in 2024. When in 2024, it's too early to say, because I as I say, we don't know it yet.
That's fair enough. So the other measures then, the loan and the SEK 5.something million you have on your balance-
Yeah
Right now, and the money you get in return, and best case, you win the arbitration case, even though you're of course confident, and you should be. With your cost-cutting program, what would your new burn rate be in 2024? If you could tell a little more about that.
It will be... Yeah, I think you can work from what we've... It will be below what we have right now.
Yeah.
I will not mention a specific number, as we are still negotiating. There are some moving parts still on our plan for 2024. So, that will come when we're ready to share it.
When will you see the full effect of the cost cutting program, Kasper? Is it Q1 or Q2?
It will be Q1.
Okay, good. So you will probably address it in connection with your full year report?
As I mentioned, yeah, because basically, these on the salary and the personal cost side, we see the full effect already in Q4.
Yeah.
And then the only sort of major item that's left is the rent, where we will see the effect starting November first, right? So that we have one month of high rent still in the numbers for Q4. So we will almost be there in Q4. But as a slight improvement in terms of cost size, and then basically we project that we will then say... And the reason why I'm not saying more is basically then we start looking into how will we build up then and how does it make sense?
But now we have we are cut down to a level where we are in control, and we can then add cost that there's a good business justification for on our new strategy. Before that, we basically had commitments that it was costly to get out of, and that work is done now, and unfortunately, it takes quite a while, given the labor legislation and the lease we had to work on in Ballerup. Now we are... The new lease we're into, it has only a three-month binding period. Our agility, sort of financial agility, is significantly improved now. We are in a much better shape when it comes to that.
Thanks a lot, Kasper. Let's change focus a little to your rollout in UK and Ireland. Could you give us a brief update? You're not CE approved in Europe, and I hope most investors know that, but the company's focus so far is the wellness segment. Could you.
Yes. It's important you ask that. So we are not CE marked for commercial use in Europe. So to be specific.
Yeah
The device is CE marked, and we are pursuing that and working with North Zealand Hospital on creating the data required for the professional use and, or ultimately the home use CE mark in Europe also. So we're still working on that with partners again, but here it's the hospitals in Denmark that we are working on to achieve that. And basically, we are working with our partners in the U.K. I think that and finding the right way in terms of regulatory approvals, what we can do with the current state of the product and what requires further approvals in the U.K. and it's important to understand that U.K. is not covered by the IVDR anymore.
So, they have their own regulatory approval set up that's very close to, but it's not the same. So, we have good interest still from the UK, as you can see from the sales numbers. Not large revenues yet.
Good. Thanks a lot. And, you've been attending quite a lot of conferences recently. What... and that's probably more a question from your colleagues, but I know you're a small organization, Kasper. What is the feedback you get on your products? And two, is it sufficient to have only one test in the market, or do you need more tests to get a decent upscale in your sale?
So yeah. So the feedback we get on the market is very good, I would say first of all. People really like the product. They like the concept. I think, and I think that they see a lot of potential also in the fact that this is a connected device that enables sharing of data with other systems and with medical advisors, et cetera. So that everybody sees a huge potential. To be fair, I think also in the home use, one test is not enough for people to be willing to invest in that until unless they have very, very specific interest in a certain biomarker. And then the market for that would be very limited.
So it’s important to understand, of course, key here is that we need to develop a broader test range or portfolio for the device. And that’s why, again, I want to highlight the Hipro partnership. They are unique in the sense that they have a broad test portfolio that’s already working on their device with a technology that is very similar. What we add to that is basically what we have solved relative to their devices. Our device is significantly smaller, it’s cheaper to manufacture, and we have, through the freeze drying technology, also found a way that it can be distributed to homes without needing a cooled distribution network.
Which means that sales to consumers is possible in a much cheaper way than if everything has to be refrigerated. But basically, through Hipro, we believe that this us getting to a broader test portfolio will happen much sooner. And you can see basically that Hipro is taking on to finance doing the test portfolio up to three tests first for the Chinese market. We expect that the two tests and that they will be adding to the CRP will be first of all can be taken into the wellness segments quite easy and also will be prepared so we can file for the IVDR approvals for these also in Europe by adding data to what has happened already.
But protocols and all technical issues will already have been solved in order to achieve the Chinese FDA approvals.
Very good. How fast? How fast, because when we talk the content of the capsules and the capsules, as I remember from interviewing Thomas a couple of months ago, when you first announced the Hipro, you're going to hold the intellectual properties. And, isn't that right, and then-
Yes.
Um, well
That is what we are.
Yes. Of course. But how do you secure those, intellectual properties in relation to the Chinese? And two, how fast can you take a new capsule to the market?
Yeah. So, we protect the intellectual property through our patents that we've taken out for the technology. Of course, our ability to enforce a patent in China alone is gonna be limited. So, I think that. And that's where it bEgoomes important that we actually have a partnership with Hipro, where we are targeting more than just them selling our product. So, they see benefits in working with us. And also it's quite clear from what we have discussed already, that our technical knowledge, both when it comes to manufacturing, say, of the device and when it comes to developing it and positioning assays onto the device, is very much needed.
Hipro cannot do this on their own. They need us, and that's why all our R&D teams is traveling there in early December. This is a plan, but they will not travel until we have the agreement. So, we hope to have - we are targeting having the agreements in place earlier than before they travel, but we already received the invitation. So I think that this is moving along as we want.
Good. So, how fast can you take a new capsule to the market? If we exclude Hipro, and we just focus on the European
We think it's between six to do the. So there are two elements in that, right? There is us doing the tests, and that will take six-nine months to perform the tests required. And then there is the processing time from the regulatory from the notified body. And that I cannot speak to because the IVDR right now is, there's a lack of resources under the regulatory body, notified body to do this. So it should take 6 months after that, but it's out of our control. We don't know.
Okay, Kasper. Maybe one final question here. Even though we're a little delayed, time is less, it's more or less up. Kasper, if you look into 2024 from a
Mm-hmm
Point of view, what should investors focus on besides the Hipro deal? Because that's a game changer, I know that. But if we look into the European market and your strategy, Europe, should we see double sales numbers as of today? Hopefully, we should see more. Could you elaborate a little on that, Kasper?
I think so, so what we should be looking for there is, once we receive the CE mark, so we can start. So we have, as mentioned, there's a lot of things happening right now on home hospitalization. I saw also that there was a question raised to that. And part of the things that we are working with the North Zealand Hospital is actually looking into whether the Egoo device can help achieve better results for home hospitalizations. So results from these studies and progress towards the European CE mark would be something I'll be looking for. And then a doubling of our sales revenue numbers as today, well, is not even gonna take us anywhere. We need much more significant.
I think that on this, that will happen only when... is what we see now, only when we have the CE mark. Or a broader portfolio, and marketing, financing to do marketing on this. But so that would be the key progress towards the regulatory approvals in Europe, because that's what's gonna take us there ultimately.
Good, Kasper. Thanks a lot for all the questions, and thanks a lot, Kasper, for participating in this event and answering all the good questions from the audience.
Sorry, because there was one thing that unfortunately was me. Then, of course, also other partnerships that could be announced would also be something to look into. I cannot mention anything specifically, but that could also be something that will significantly change the outlook for the company.
Fair enough, Kasper. Thanks a lot for that. So, with that said, first of all, Kasper, thank you a lot for participating. Sorry about the technical issues. We solved that. Thanks a lot to the audience for all the good questions. And with that said, I will close today's session, and enjoy your morning!