Biovica International AB (publ)

everyone and welcome to the Bayerika interim report for our third quarter. Today, it will be me Anders Rylander, Warren Cresswell, Henrik Winter and Anders Mohren presenting and we have Helle Fisker also helping to produce the webcast. And the agenda for our presentation is first a short introduction, a general presentation about the company by me, and also the highlights 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 from the quarter. I'll do a summary and then we will open up for questions and answer session until the end of the hour. So we expect this to take an hour. The entire presentation and it will start with our analysts and then it will also take questions through the chat feature so you can all the time from now on during the presentation submit your questions you're using that chat. uh feature and uh if you want to remain anonymous you should click that checkbox because we will then post the question when we are when we answer them okay um so let me start with the the introduction of the company in a few slides very uh a great overview so uh our core product that we developed and is now bringing to the market is DIVITUM. And DIVITUM is a blood-based assay that measures cell proliferation. And as you 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 our treatments within metastatic breast cancer, where 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 and strengthened by initiatives, several initiatives by the FDA called Project Optimus, for instance, that requires efficiency and 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 a pretty significant level with over $10,000 per month. and patient within the metastatic breast cancer area. And of course you want to make sure that this money is well spent. The product has been throughoutly documented in more than 30 clinical trials that has been peer reviewed and published. The majority is within breast cancer, our first commercial area. And they, but we also have proof of concept data outside of breast cancer in other cancer areas. And it supports the use as a clinical biomarker test for monitoring of treatments in cancer, but 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 the message, convincing all the oncologists, the potential customers out there using this for their patients. And as I said, we don't now only have the uh data from clinical trials we now see this works very good in the clinical setting which warren will give some very exciting sound spot this is of course the foundation for our commercial activities starting from getting the 510k clearance 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. And when it comes to territories, we initially focus on, first of all, the US 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 US at $400. And also now being on the market and receiving price for 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. And we also see that there is a huge potential and we have a big, a strong market position, especially within companies that are developing so-called CDK inhibitors for the future. So it's very exciting. And beyond that, we see several indications where there's a great potential One area that we could mention is the use of immunotherapies 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 patent application. That about the market potential. If 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. First of all, US, 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 new price. level, so it's really, really good. And 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 Washington University in this case. presented data on our products on this conference. And 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 continue to sign commercial agreement, both for the Nordics, a company called Axelab, and now the latest one, Palex, that covers Spain and Portugal. We also did a rights issue that we closed by end of year that enables us to continue the market introduction of the assay all the way to making our goal of becoming cashflow positive during 2025. And after the end of the third quarter, we continue in the US to launch a new trial with Washington University, which also has a great potential and value for us. which Warren will cover, and 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 a collective value of 2.9 million Swedish kronor. So with that said, I'd like Warren to take us through the US 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 going to focus on five separate topics, one of which is sales and contracting performance. I'm going to talk about the reimbursement milestones and progress we've made there, along with regulatory progress. I'm going to touch base on clinical activities. And then I'm going to 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 Divitam as well. So that number went up from five. So prior in Q2, we had seven ordering institutions and now we have 12. So that's very, very beneficial to 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 Divitam 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 Divitam, we have 47% of patients to date that have had more than one Divitam test. And many of these have had several. That number will probably go up as well because we've had a number of patients, 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. 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 forward to future growth as well. From a hospital contracting perspective, our goal, our ambitious goal at the beginning of the year was to sign 10 contracts. To date, we've executed three. 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. And 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 to get those contracts through the system. 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 messages 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 divotum tests as of January 1st on, we submit a claim using our PLA code with this particular price, and we've been getting paid on it, which is absolutely fantastic. So we're starting to get those claims, those payments in the door. Secondarily is private insurance. And with private insurance, private insurance has kind of two components, one of which is a person that's on On private insurance, the other is a person that is on Medicare, but is managed through private insurance. That's called managed Medicare. And 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. And in fact, the private insurance claims, we've been getting paid more than we've expected. So this is fantastic news as well. And then from a client bill perspective, we've been getting paid what we've contracted and that's what our expectations were. And that is still our core strategy within our businesses, move as much business as we can into that hospital contracted channel. The two indicators here that are really, 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. And 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, It's been, I think, very spot on for the organization. And I think the other point, as Anderson mentioned just 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 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. And today, we can actually provide divitum to 49 of the 50 states plus Washington, D.C. So the only remaining state that we are working on is New York State. And we've already submitted all the necessary information to New York. We've interacted with them. We are only waiting for their audit date at this particular point in time. We've spoken with them, I think it was two weeks ago, and 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. So 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, and that really identifies potential medical compliance and drug-to-drug interaction. And kind of the secondary endpoint, I would say, is is 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 Divitam and how oncologists change how they manage those particular patients. One of which is, 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. And thirdly, we just signed a clinical trial called Better. This also is through Washington University. And 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 CDK4-6 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 with supporting the clinical utility. We will use this data from a guidelines perspective, and we've made really great progress here. The other thing that we're doing as well is we're taking a look outside of metastatic breast cancer because early indications indicate that Divitam will work in not only earlier stages of breast cancer, but other disease states as well. And one thing we're doing is we're looking at the adjuvant breast cancer setting. And 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 CDK4-6 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 readout 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. from a sales perspective, it's the same call point. So those medical oncologists that are getting used to using Divitam with their metastatic breast cancer patients, they're actually measuring, 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 educating folks today on Divitam, 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 test. We use the same PLA code number for our test and we use the same price for our test so that all of alliance perfectly with regards to our business. So we're very, very excited about about this and in the work that's being done there. Next slide, please. So I'm going to. I'm going to talk through four separate. Case studies here. These these are this is data from from real patients, real data. And 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, very recent. So 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 CDK4-6 inhibitor plus an endocrine therapy. The patient is feeling very good. No issues whatsoever in that regards. They had a CT scan and the CT scan did not show any disease progression. They had blood chemistry work done. Liver enzymes were slightly elevated. This particular oncologist has been using DIVITUM and they decided to try or 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 two to three weeks after that Divitam 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 courses of therapy, moved from a CDK4-6 inhibitor plus an endocrine therapy to an immunotherapy plus chemo, and that patient is responding. And the doctor told us, you know, without Divitam, 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 image. Thank you, Anders. The next one I want to talk about is dose reduction due to tolerability issues. So in this particular case, a patient was on abemacyclib and fulvestrin. they had an issue with they had a side effect in this particular case this patient had diarrhea and and it was not they were not able to control it unless they took the patient off this particular therapy so they took took the patient off the therapy they managed the diarrhea but then the oncologist said you know before i switch cdk46 inhibitors i'm going to try to dose adjust this patient down to see if we can manage the tolerability side of things They did that. They took that patient. Well, we tested the patient off therapy. You can see it's 408, very high number. They put that patient on a lower dose of Abema 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 Divitam. The 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 an anastrozole, and they had an issue, they had 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 incredibly low score, but, 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 put the patient on Pelvociclib plus an 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 23. Very, very low scores. In this particular case, the patient could tolerate Pelvo 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 realistically doing imaging and waiting for disease progression. So again, very good clinical utility. And if you can provide the next image as well, Anders. Final one, I think this is fantastic for the patient, is this patient has been on ribo and fulvestrin. 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, they have a drug holiday one week. These samples were taken during their drug holiday and you saw no rebound effect of 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, maybe we should dose adjust down and give them minimal effective dose. 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 Divitam. And 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. And with that being said, I'm going to pass this over to Hendrik.

All right. Thank you very much, Warren.

So I'm here to present the pharma service and collaboration business. And it's always a great pleasure to present that part of our business also because we have a really good momentum there. So two slides. The first slide here is just saying that we have a continued strong progress during Q3. And as we have communicated earlier on, the prime goal of this business is really developing companion diagnostic products, bring them to the market, and bring them to the market in collaboration with pharma, and of course, based on our TKA testing technology. So currently, we are onboarding pharma and biotech companies. We're getting them familiar with our powerful TKA technology, and they use it as a tool to monitor whether their drug is efficacious. We typically onboard pharma through master service agreements, 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 8.5 million Swedish, as is stated here. And it was actually coming from only, not only, it was coming from 12 master service agreements we have with different pharma partners. But by the end of February, that's one month into Q4, we have a work order book value of 11.4 million Swedish. and now coming from 14 different master service agreements. We also saw an increase in the upper limit of the revenue value per project to 2.5 million Swedish 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 clinical 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 more than back on track.

Next slide.

Now, if we take a closer look at our current customer portfolio and CDX product market potential they represent to us on this slide here, we have classified our farmer biotech 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. But then, you know, selling off these new drug candidates to tier one and two companies afterwards. BioVika obviously needs to engage with all tier levels. And 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 assay when they are commercialized by the Tier 1 and 2 pharma companies. As you can see on this slide, the far majority of our PharmaBiotech customers, they are developing drugs within the next generation of CDK4-6 inhibitors. And hence we also on this slide here have tried and provide an estimate of the CDX product total addressable market potential only within this one drug type CDK4-6 inhibitors or next generation of those. We assume that the CDX product revenue potential represent two to 4% of the drug revenue potential. This is, you know, the market guidelines. And here we only look at the CDK4-6 inhibitor potential in North America. That means U.S. and Canada. And the total addressable market potential for a CDK inhibitor CDX in North America in 2030 has an impressive value of 1.2 billion U.S. dollars. And we have a solid footprint with our TK assay being used by 95%. of all relevant pharma biotech companies developing these next generation CDK4-6 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 assay outside the CDK4-6 inhibitor drop field. Actually, six out of the 13... Sorry, seven out of the 13... Sorry, six out of the 13 tier 3 companies, that's almost 50%, are using TKA together with other drug types, which will further expand our CDX market potential.

And by that, over to you, Morain.

OK. Thank you very much, Henrik. Let's see if I can get this to work. A few slides on the financials there. So Q3, we had sales of about 1.1 million Swedish kronor, a little bit short of that. As Henrik said, I was negatively impacted by some delays in clinical trials, but it was no cancellation of work orders. It's more a timing difference. So we are confident that it will sort of bounce back in Q4. For the full court year to date numbers, it's 5.4 million Swedish kronor. Zooming in on the US sales, as you can see here, it's still small numbers, but you can see an impressive uptake as Oren 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 we have a confirmed price which is quite high and we have confirmed payment terms so that's really where we want to be in our business medicare we have a new price now from first of january this year it's about 50 of the test distribution about 40 of the revenue distribution the tricky part here is the private insurance that's about 33 of the test distribution, but only 12% on the revenue distribution. And 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 we start seeing payments as Warren was referring to that these payments are actually quite much better than we anticipated in our assumptions around revenue recognitions. It's actually a factor of somewhere two to four times what we are currently using in our conservative estimate, but the numbers are quite small. So we are still using that conservative estimate when you do revenue recognition on the private insurance payer segments. But as we see this sort of numbers grow, And we have a confidence in that we will actually continue to having 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 those quarter three with 105 million, and that is in line with our prospectus that we shared with the market for the rights issue at the end of last year. Net operating cash flow by quarter, you see an improvement here going from minus 28 million up to minus 23 million. Majority of that is coming from change in working capital. On a side note, we communicated in the prospectus that we would go for an equity bonus rather than a cash out bonus. We have investigated this quite significantly. And 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 delusion of equity bonus. So we still think that that will fit within our business plan that we had in the prospectus. 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 unmet need. We've known that for quite some time. We have significant documentation from collaborations with some of the leading QPN 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. And we also see potential outside what we've defined, which we are also documenting now, which is earlier phases of breast cancer that Warren mentioned. And 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 went through the US. Really, we see significant growth in Q3, still small numbers, but very strong trend. And 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 patient being monitored. in terms of oncologists and institution. And 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 on how the patient is performing or how the treatment is, how effective the treatment is. And so it's repeat sales. And we are keep adding new oncologists and patients as well also. Pharma services strong growth even after we close 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 the two new very important agreements signed with some with larger partners in Axelab and Paylex, and also the first order from one of those partners, and they are also recruiting sales reps, especially for Divitum. So progress there as well. We look at the short-term targets. We want to continue on our client build strategy and sign more agreements with US 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 us outside the client bill agreements and get paid. So that's good. Very promising. And in Europe, we had our goal of four 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 10 million in revenues by end of fourth quarter is our goal. And we've been, yeah, they're a good foundation for that and also have a strong pipeline going forward. So that's really good. And the long-term important goal, of course, still remains. That's to make cash flow positive by mid-25. at the sales level of more than 50 million Swedish kronor per quarter. So a good start towards that long-term goal. So you could say that we've always believed in the potential in the product, and especially now seeing it in action in the US and from the pharma companies using it, we're more certain than ever about the product's potential. With that said, I'd like to open up for questions questions. And 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 are muted, so please.

Yeah, sure. Good afternoon. So two questions. from me. So since there seems to be no real material sales pickup in this quarter, but you also believe that it will start 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 the we also disclose the US sales that you said. See if you break it down to you as it was significant sales uptake 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 the all the processes, getting the oncology start ordering and monitoring, and now we've seen that pay off. If you look at the overall picture, we've been our sales has mostly or or. Almost 100% has come from our pharma services. I think, like Henrik said, we've been successful in that area as well. However, we're a little 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 happened. So hence, what I'm saying that we are confident our pipeline is strong. That's also work sold, but not yet delivered. We also have taken measures to minimize that risk 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 agreements slightly. Was that a nice question?

Yes, definitely. Thanks for the clarification. Also, you mentioned in your report that you have been receiving regular reports that Divitam significantly improved clinical routines and allows alternative treatment to be more tailored to their needs. So this is very interesting and could you maybe add more colours to that? Did you receive any feedback from the physicians?

Yes, I think Warren, you did for those cases. Maybe you could do the colouring here.

Yeah, absolutely. If I understood your question correctly was kind of the feedback from kind of the tailored or precision, maybe therapy or diagnostics. But yeah, the feedback has been overwhelmingly positive from all of the medical oncologists that we've engaged where they've been testing patients. And 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 as they use imaging. And they can't image a patient every month or every week. They typically spread out the imaging and it may be every six months. And the feedback that we've gotten is that really Divitam gives oncologists kind of this window into what's happening with the patient other than signs and symptoms. And they can see whether or not patients are responding to therapy, whether or not if they switch therapies, are they responding? Can they dose adjust? And how does that impact that feminine kinase value as well? So I think from that perspective, it's incredibly encouraging. And I think also, since this is practice changing, this is almost like when the iPhone came out. 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 Divita 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 start getting, when we educate oncologists, what they typically do as well as they will find these kind 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 uh thank you for the the color warren and i think you can see that from from when you meet our sales rep also that uh they they really uh yeah get a lot of interest in the product if i if i add some facts i think uh examples you're asking for in warren's first example they discovered that this patient was actually has developed triple negative breast cancer a different type of breast cancer and which is treated differently so that's a very good example when when it was treatment changing and the way they saw that is that if you have triple negative and not responding then hence to the cdk it's a you see elevations in in measure bar assay 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, two of Warren's example is these different, there's three CDK4-6 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 it up, it's a lot of combinations and managing those combinations 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 combination, And it takes many months to test out each combination. Yeah, it's a game changer. So yeah, I hope that answers your question, Jan.

Yes, perfect. Thanks for taking my questions. And yeah, congrats with the progress.

Thank you very much. All right. Should we move on to Luisa?

Can you hear me?

Very well.

Yeah. 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 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 this more of an estimation that a master service agreement could turn into a companion diagnostics. A joint venture with one of those companies.

Yeah, they're all good questions. So first of all, yeah, you are correct. You know work orders. They typically know go from, you know, 8 to. 18 months typically in our work order more and more pharma are using our assay in prospective studies, you know, big clinical studies. So we're talking, you know, many patients, we're talking, you know, between 500, 1500 samples. So it differs a little bit, you know, between the different studies. we see a clear tendency of being included in the bigger and bigger trials. And that's also, we are very optimistic about moving from this service phase into true collaboration with pharma. And we expect that to happen within hopefully a short timeframe. We have some really promising discussions with pharma companies, especially the tier one companies is of course where we believe it's gonna happen. It is interesting with the Tier 3 companies as well because they are bringing a lot of new exciting 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. But we have some really good communications discussions with the Tier 1 companies. And we have three known players within the CDK4-6 inhibitors. And then we have upcoming also T1 companies that are really focusing on that area. I don't know if that is, hopefully it's answering your question.

Yeah, 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 need to, how do you proceed here? Do you need any authorizations? Do you need to submit anything? Or can you already use Divitum as is?

Yeah, that's a good question. And then to be very 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 to the FDA, or we could, as we now have the CLIA 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 510K clearing, 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 an 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 Warner very briefly mentioned it's already covered because our PLA code and the scope for that is wider than our 510k intended use it's a bit complex here 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 not tied to any state or phases. And also, I think the beauty here with the sales efficiency is that to a great extent, uh it's the same oncologists treating the different phases of breast cancer so uh we would then be able with this to target those uh overlaps uh our coal plants etc that we're targeting right now yeah hopefully that that answers your question yep very clear thank you for taking my questions good all right you on we are now eight minutes but uh So Johan, 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 you won.

He was soon sorted out. So in the meantime I will take some questions from the Q&A and then as soon as we get the sound from you one we will let him in. So I'll take with the first one. It's from anonymous. So it's the question is. Does this? product work on all or different cancer forms or it's only breast cancer? And then that's a really, really good question. And the question is, we measure cell proliferation. It's 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 measured by our assay. 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 unmet need with the treatments that are being used there. And we also have excellent results from clinical trial. It's a good match. So it's a good way to the market. And from there on, we can expand. And that's our ambition. So excellent question. I have one which I think you maybe can elaborate a little bit on. Warren, it says so far I read it for you. So far, hospitals does not seem to ordering 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 starting procedure works, Warren.

Yeah, absolutely so. Whenever we do contract 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 things for us. It does engage the molecular formulary committee within institutions to determine if there's medical necessity for the product, so it gives us greater access to those institutions. I think the utilization with the hospital contracts have been good. They will continue to increase with additional usage and experience with Divitum. We're still not completely up and running and 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. But certainly all signs point to utilization moving forward will certainly increase in these institutions.

Thank you, Warren. So now we have you, Juan, on the line.

Can you hear me?

Yeah, we hear you well.

Excellent. I had some problems earlier. Thank you. Great. Let's see. Can start with Warren. And it seems like some of the master service agreement has not yet converted into workbook. work orders what's the outlook on that side and also the prospects of the existing work orders to expand further so uh one uh the client bill should be i think yes yeah so if you can elaborate thank you yeah absolutely um so yep we have uh so we have those three particular uh institutions that we've signed contracts with

With one of them, it's 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 either 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. But what that 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 just depends on which physician uses which access point for a 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 kind 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.

So the prospects have 14 direct bill in the pipeline. And are they sort of different dynamics and different stages, presumably?

Yes, absolutely. And with all of these contracts, I think 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 were in much deeper stages than others. But nevertheless, many of those institutions that were 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 and labs that they take the approach of trying 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 that what to be expected from new additional hospitals and physicians that they will go through a period of trying a few patients before using it more often?

Yes, exactly. So as we as we engage oncologists, The sales process is really us educating them on thymidine kinase and the role of Divitam. 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, those four examples, if you looked at the dating below, these are very recent cases and 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 educate and show the utility to individual oncologists within institutions. The process is really educating, and then when physicians decide to try the product, they typically would never just kind of flip the switch and incorporate this with every one of their metastatic breast cancer patients. What they 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 the particular patients or all patients. Ideally, then we get to a point in the process where we get incorporated into that institution's care pathway. and what that means is that they write in their protocol that with a particular patient type automatically the order would get a patient would get a divotum test regardless of what oncologist is managing 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 where we're educating and oncologists are evaluating the product with specific patient samples or patient cases And we have some that are really a little bit further down the pathway. And we can expect this probably for quite some time until we get greater critical mass.

So 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 pretty significant, but the volumes are modest. So you're right, and we tried to guide, also set the expectations. We know that it takes time to start generating revenues. And as Warren also said, our strategy has been, with our experienced sales force, to go for the high potential, the so-called tier ones, or decile 10, the ones that are the highest prescribers, or CDK 4.6. inhibitors and so those are the one that is now is testing out and of course that's why it's so important that the test performs so well that they see the the value of it and that's basically what's been achieved now the yeah that we showed the evidence of in this presentation so yeah really good and that is laying the foundation for revenues down the road yeah And that's, I think, is the right strategy to reach those pretty aggressive goals that we have set, both short term, but especially the long term goal of 50 million per quarter to break even. And that, of course, will be Henrik's part of the business. The pharmaceutical will 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 dilutive that also suggests that you're pretty confident that you will reach break even based on the current financing yeah that was based on a lot of parameters one that we were we were

able to manage our our cost and cash out uh very well uh and also to find the best solution uh in this case uh for the shareholders because we would in the end we thought it would be too expensive and also uh not compliant with the swedish code of ethics uh to set up an attractive so we went back to the uh cash out and uh 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 them turned out to be the rest especially since our we're able to manage the cost in line with with what we said in the prospectus with the cash out bonus

Yeah, and finally, Henrik, on the issue then 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 agreement that could turn into work orders. What's the outlook on that side?

Oh, yeah, I mean, so the way you need to understand the master service agreements is that, you know, from each master service agreements, we 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 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 several projects running with each pharma partner.

Excellent and also clarification then since you alluded to that the average size was two and a half that I suppose that's an average from the master service agreements that are active which the sort of work order stage is that.

Correct. I mean, it's because earlier on when we have, you know, communicated on the master service agreements and the value of each work order, you know, it was up to approximately, you know, 500, you know, to 2 million Swedish per work order. And now we experience that that is not enough, you know, within that frame because we have recently signed work orders that are bigger than 2 million Swedish. And that's why, so we just increased and say, okay, so when we report on it, It's now typically between 500 and 2.5 million Swedish for work order.

And is there anything to be said? I mean, you disclosed and shared the level of the totality of the present work orders. Anything to be said about the prospect of adding new?

Yeah, we have... two technical evaluations ongoing. And technical evaluations is when new companies are trying out our TK 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 testing out our technology. And I would be surprised if it's not ending in master service agreements.

And also, of course, the 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 it possible to add any flavor on that?

My optimism is, you know, increasing from every quarter. Which I guess is just reflecting that we are having 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 my optimism is going in the right direction.

Yeah. and if and when you've reached that stage is it realistic to expect some kind of upfront part of this business opportunity if it's possible to to upfront payment oh yeah absolutely i mean the way i'm used to to running farmer collaborations is really that you need to onboard resources uh to be able to execute on

on developing a companion diagnostic assay. And hence, you know, you need some upfront payment. So absolutely, yes.

Yeah. Excellent. Thank you.

Thank you, Johan. 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 returning customers. What about the 7%? Yeah, I think you need to consider it's really difficult to get into 100% because we roll on new customers and sometimes they don't have time to submit their second one 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 a great question. Appreciate that. And I want to run off and say that, yeah, the volume's still on low, but the trend is really, really good. And we're more optimistic and we have a stronger belief than ever in the potential of dividends. So we're looking at the future and this is, believes it's really bright. So thank you very much for joining the call today. Over and out.