Devyser Diagnostics AB (publ)

Good day and welcome to the Devizor Q1 2025 earnings call. I'm Fredrik Thalen, the acting CEO of Devizor and would like to thank you everyone for joining our call today. On the call today we have in addition to myself also our CFO Sabina Berlin and our Chief Commercial Officer Thijs Kipling. I will start with a short summary of our quarterly results and then recap our updated strategy and present some highlights from the team before handing over to Sabina for more detailed review of our financial results in Q1 2025 and then to Thijs for an update on our commercial activities. We had another solid quarter based on revenue, the second strongest quarter in the history of the company. The revenue was 55 million SEK representing a growth of 8% compared to Q1 last year. Gross margins were 83% and EBIT minus 21 million SEK. including 8 million SEC in one-offs related to reorg and another 6 million SEC in FX headwinds. Our cash position was 114 million SEC. As mentioned on the previous call, we have made some updates on our strategy that we now have started to execute on. The overall goal for us in the coming year is to make Divisor a more efficient organization, and that goal starts with a clear and more focused strategy. As mentioned, we propose focusing on two customer segments, the clinical genetic labs and the transplantation laboratories. We strongly believe there are significantly more unmet diagnostic needs that we can address here, together with our customers and scientific collaborators. We are now in the process of updating our product roadmap by reaching out to our top customers and asking them what they need help with. This voice of customer exercise will guide us to better prioritize which products we should develop in the coming years. Transplantation diagnostics has been subjected to a paradigm shift with the introduction of cell-free DNA as a sensitive diagnostic marker to measure transplant reaction. We're trying to transform how this diagnostic is carried out by bringing the test closer to the patient. Instead of shipping samples out to service labs with long turnaround time and high costs, we propose to provide products directly to the transplantation labs where patients meet the medical and scientific expertise. This results in increased turnaround time, better accessibility to patients, lower prices and without compromising on performance. During the quarter, we have identified a number of customers in the US that are ready to adopt our CFDNA product today through self-validation, already before an FDA approval is in place. In addition to a good business opportunity, it confirms our strategy on decentralizing the test, and a dialogue is ongoing with many of these large transplantation labs and their overall opportunity for divisor remains very promising as part of the transplantation strategy we have initiated an fda project as previously communicated to put some more color into the process we have now started to collect samples and qualified partnering transplant centers The project's scope is quite straightforward, including just a handful of centers with a few hundreds of samples needed to carry out the required reproducibility and accuracy studies. A timeline will be communicated later this year. So a few highlights. So I would like to highlight a few activities from the quarter, starting with R&D and product updates. One of the most exciting meetings we had this past quarter was with a collaborator in Texas that carries out about 1500 transplantations per year. They are reluctant to send out samples to service labs and have now started to work on evaluating our technology in-house for self-certification. This is not only a great commercial opportunity, but more importantly, it confirms our strategy regarding decentralization of transplantation diagnostics. We're now in process of initiating more of these labs in the U.S. Continuing with transplantation, we have developed a product to address an unmet and very important clinical need in patients with malignant disease after stem cell transplantation. The product is called HLA-LOS and will be launched before summer and represents a unique and premium product in the segment. This is something we are very excited about. Another upcoming launch is our genomic blood group typing that represents a tool for typing blood donors and has the potential to transform the field of transfusion medicine. We expect to launch this product during the summer and release more information on that. Finally, we're just weeks away from submitting our reimbursement application to Moldex for our post-transplantation test as a service called Transplant Trace CFDNA product. We expect confirmation after summer and are in parallel building up our commercial channel with some of the largest transplantation institutions and companies. I would like to add a few more highlights from the team that deserves mentioning. As previously announced in late 2024, we achieved IBDR Class D approval from our external regulatory assessment on our divisor RHD product. We have now finalized our internal quality process that enabled us to start shipping the product. And this is the highest risk classification under EU regulation and get it over the line, so to speak, speaks to the strength of both our technical and regulatory teams. We have now demonstrated that we can deliver Class D products end to end from development to batch release and shipping directly to customers. And because we built a scalable and regulatory and quality framework, We are well positioned to support the development of any IBD product, regardless of risk class, as we continue to grow our company and portfolio forward. Moving on to production, there are still many low hanging fruits to get our manufacturing more streamlined and efficient. We have initiated a number of value generating projects, such as additional introduction of liquid handling automation and projects to extend the shelf life of our products. Therefore, we are confident that there is still plenty of opportunities to increase gross margins even further from where we are today. Finally, we have been able to execute the majority of initiated organizational changes in Q1 by increasing focus and efficiency. These changes have been done without compromising top line growth, nor delaying any development projects. This initiative is key for the company to reach our financial targets of 20% EBIT by 2026. And with that, I would like to hand over to Sabina to share more details on our financial results for Q1 2025.

Thank you, Fredrik. So let's give you a summary of the financials for the quarter. Revenue for the period January to March came in at 54.8 million SEK compared to 50.7 million SEK in the same quarter last year. and 64.2 million SEC in Q4 of last year. Growth of 7.9% in the quarter is lower than what we saw in Q4, but as stated many times, there will always be fluctuations in individual quarters. We continue to see the same strong trajectory as we have in historical years. Thijs will soon share some additional information about the performance of our different markets during the past few months. Despite the lower than average growth between two quarters, this was still the second largest quarter revenue-wise in the company's history, as Fredrik stated early on in the call. Our EMEA region remains our biggest market, but grew less than usual this quarter, but with strong underlying growth trend. USA has taken some market share and Asia Pacific continues to show strong growth, although still from small numbers. It should be noted in this table that Thermo Fisher sales is split between EMEA and US as we ship to both US and European thermal warehouses. Distributor sales this quarter is a mix of a few smaller thermal orders and a healthy sales funnel from our smaller distributors globally. Our distributor sales business is well managed and steadily growing. Our direct markets, as previously mentioned, showed a more soft quarter overall, with some markets performing very well and some slightly below average, mainly due to phasing over quarters, which Thijs also will cover shortly. Gross margin, it came in at 83.4% during the quarter after a softer 2024 and shows that we are back on track and have started gaining momentum from the expanded office facility with the new manufacturing section, a momentum that we expect to continue. EBIT during the quarter was minus 20.5 million SEC. During the period of January to March, several additional savings initiatives were initiated to right-size the cost base, and the P&L includes about 8 million SEK in one of items from those initiatives. Some of these initiatives carry over into the beginning of Q2 before we see the updated run rate going forward. The quarter was also heavily impacted by an unusually strong Swedish krona, and EBIT carries about 6 million SEK in negative FX impact from the balance sheet alone. Comparing EBIT with that of Q1 last year, adjusted with the impact from one offs on FX, the main operations of the company show an improvement over last year. We closed the quarter with 114 million SEC in cash, and I do feel comfortable that our cash flow will turn over the foreseeable period as our focus on profitability continues. And with that, I hand over to Thijs.

Thank you, Sabine. And good morning from Boston, here in the US, where I'm attending the annual conference for solid organs, focusing on heart and lung together with Thermo Fisher. And what a great week in Boston this already is, I can tell you. Q1 of 2025 was, as mentioned, our second best revenue quarter in the history of the company. Despite the expected softness in revenues from Thermo Fisher, we advanced our business on many fronts, launched our new strategy, optimized our cost structure, and most importantly, did we continue to onboard more new customers, which I will update you on here in the coming slides. Moving up and updating you on Thermo Fisher. Q1 was decent, even despite the very strong Q4 of last year, including the Starbucks stock up effects mentioned for Thermo Fisher on their side. We continue. to win over large new accounts, as Fredrik also mentioned in his slides earlier. And generally, we see Thermo Fisher drive the market expansion in a very strong manner across both Europe north america while gradually establishing the business outside these territories and i've had many potential customers here at this conference outside europe and north america coming to us and asking about how can they get on and test cfdna so it's a very promising outlook The FDA program continues to follow plan, and we're engaging with several of the clinical sites within the US to help us along with the studies needed for the FDA application. As communicated, this is basically only about replicating data that we have from Europe already. We know that the product, it works well, and hence, this is not a question of if, but it's only a matter of when the FDA approval will come. general update on north america as frederick mentioned within our clear lab we're soon planning on submitting our reimbursement application to multiex related to our transplant transplant trace cfdna test for solid organs reimbursement is expecting during the second half of 2025 and is an important milestone that will be instrumental in the current conversations that we are having with potential partners within the US around commercializing the services of solid organs. We have also already submitted for reimbursement for our RSD service in our Atlanta based CLIA lab and await confirmation during Q3. The new site of contracts is being delivered on and there's a lot of activity every week, which we anticipate will only ramp up continuously during the month ahead of us. RHD in Canada is starting to generate revenues, with especially Canadian blood services started testing in larger volumes, while Hema-Quebec is expecting to reach this a little later on. Within the US, we continue our work with RHD across different channels. And I remain confident that we're still only at the very onset of our RFT success story here in the States. During Q1, we did a US focused webinar on RHD together with the prestigious CAP today, featuring two KOLs from Canadian Blood Services and Hemo Quebec in Canada, which generated a lot of interest. And during this year, we will announce more about whom we will be partnering with to have RHD testing in the US to go before the prophylactic treatment as the current standard is. Lastly, we're now starting to see our first customers using our test for cystic fibrosis in clinical routine testing, which is also very promising. Generally, our growth in the US will come from across our product technology areas, both PCR, next generation sequencing, fragment analysis, and will be accelerated by our CLIA lab. Moving on to Europe, I'm pleased to see that across our markets in Spain, France, DACH and the UK, we actually had growth of around 50% versus Q1 of 2024. This is as we have planned it, and hence I expect to see continued strong growth momentum in these markets also going forward. In markets such as Nordics, Italy and Benelux, we were impacted by some large customers placing their orders in late Q4 of last year, which had an impact and made Q1 of this year softer, as Sabine has mentioned. The underlying growth and the outlook, however, looks strong also in these markets. And as you may have seen, we announced another very strong tender win in Italy just last week with an incremental growth of 10% over the previous tender. Generally across Europe in Q1, we had 10% more buying customers than the same period last year. And at average selling prices excluding transplantation being 13% above last year as well. Divisor is leading across Europe when it comes to IVDR certifying products, which is a quality reassurance to our customers that we are the safe choice when considering new products to their labs. The new IVDR regulation comes into full effect in just a couple of years now, and hence Divisor is in a very strong position to leverage the regulatory leadership that we already have. Q1 was indeed a busy quarter where we especially focused on the launch of the new strategy. That was a key milestone. We are already for many laps at preferred one-stop shop. And I'm confident that this is a position we can claim across all our direct markets over time. We're now gearing up to launch several new products and software solutions alongside AI collaborations during the remainder of the year, which will further support our growth. And as an example, when looking at our four most recent product launches, they actually accounted for approximately 18% of total revenues in the past year. And with that, I pass the word back to you, Fredrik.