Q-linea AB (publ)

Hello, everyone. Thank you for joining our Q3 presentation for Qlinia. Stuart Gander here, the CEO. I'm joined by Christopher Samuelson, my CFO. Hello. Just a quick note here on disclaimer for any forward-looking statements that we may make during the presentation. And I'll jump straight into the key messages for today. So four overall messages that we would love for you to take with you as we exit the call today. Number one, I'll give a little more color on our market situation and how we're approaching it, but just highlighting that we are going after market potential of between five to seven million annual tests for Rapid AST. And we'll talk more about how that breaks down into the hospital segments and lab segments that we are approaching right now. Related to that, we are continuing to accelerate our momentum in the US. We've expanded our commercial pipeline considerably over the past months, and we are approaching the first of our US contracts now and aim to complete those during this quarter, Q4. Thirdly, we've now confirmed that we've established ourselves at a new and lower cost position. Having completed our restructuring that was announced previously, those costs savings have been realized at a slightly higher rate than we initially planned. And we do continue to observe the costs going forward and anticipate being able to do targeted savings in selected areas as we go forward. And fourth, you may have seen the news this morning, we've announced a rights issue that aims to raise up to 225 million crowns to give us additional funds to go into the market that should fund us for at least a year now. We think that this next year is going to be a pivotal one for Qlinia as we see the expansion of our commercial pipeline and the conversion of our first commercially used instruments in the market and initial revenue generation. So I'll spend a bit of time on this call talking through how we see that developing and what you can expect going forward. Just to elaborate a little bit on some of the highlights from the quarter. So as I mentioned previously on the commercial side, we have multiple commercial evaluations ongoing in the US. Several of these have already completed, and we are now into contracting phase, as I said, with these customers. That phase can take varying amounts of time, but we are confident that the first of these contracts will be signed. during Q4. We also aim to have a dozen plus of these evaluations lined up, so we will continue this pace of evaluations through this quarter and into 2025. Worth noting, it was anticipated previously, but we are very happy to have confirmed the decision from the CMS in the US for the additional NTAP reimbursement coverage. That's the new technology add-on payment. This is only available for tests run on the Q-Linear ASTAR platform, not available for any other Rapid AST platform in the US, and will offset up to $97.50 per patient who's covered by eligible Medicare and Medicaid coverage. So this for us is a very significant benefit for Kulini and Astar. We see this as a strong commitment from CMS in both promoting rapid AST into the market and also recognition of the technical and commercial significance of the Astar proposition versus others in the field. Looking outside the US, we were happy to confirm an additional unit sold in Italy. So that's three now over the past several months here. Within Italy alone, we have something in the order of a dozen evaluations, either ongoing, near completion or planned to start. So we would expect this pace in Italy to continue over the coming months. In addition to that, we've announced that we are in contract negotiations in the UK and in Belgium. So we would expect some good news from customer placements there over the coming months as well. Maybe a final point here on the commercial side. We announced the news of our partnership in both Romania and the Gulf Council countries, so the Middle East, where we have partners there that will help us get into two of the highest antimicrobial resistance markets in the world, where there's the greatest clinical need and where we'd expect both high interest and potential for adoption of the Astar solution to address that need. Looking more inward, our innovation and product development pipeline, our number one priority is on the US side to get into clinical trial for our version two menu in the US. This trial has been set up. We announced previously that we've done our pre-submission with the FDA. So we are now completing the setup and we'll move shortly into the trial process. We aim to complete this trial during 2025. In addition to that, we continue with a number of development projects, mainly aimed at improving the Astar platform. Some notable areas of focus, the additional features will enable us to add further breakpoints, both to cover CLSI breakpoints for markets that require that, for example, in the Middle East, and others. Also, it will enable customers potentially to customize their breakpoints as this has been a message we received from the market from certain users. There are a number of other user experience improvements that will, we think, further extend the Astar capabilities and performance in the lab. This is one of the areas where we really think that Astar shines versus competitors in the field. So we will continue to focus on making it as simple and as usable for our lab technicians. Beyond that, we've got some longer term projects that are still moving forward. Notably, we've called attention to this before, our gram-positive menu expansion, which we will aim to launch in future, and that will complement our current gram-negative offering. On the organizational side, we announced some changes in the executive leadership team, so I would like to take the opportunity to thank both Thomas and Tiziana, who've been instrumental over the past years in bringing Astar to market, really helping position Chiellini at the forefront of our field. We've entered a number of markets with the support of Thomas, and Tiziana has been tremendous in leading our clinical studies and our clinical work in the market, which has helped to establish the evidence base that we're now bringing forward to customers to motivate their use of Rapid AST. Franco Pellegrini, who has been leading our Italian direct sales team, will step into the overall VP of commercial operations for the EMEA region going forward. In addition to these moves, we've further strengthened our US in-market team. The principle here that we're keeping careful track of Jim and I, Jim, uh, Catherine who leads our us sales team. Uh, the principle is to match the resources with the growing pipeline. Um, we've got significant demand here and, and in order to manage all of those evaluations and the consequence, uh, contracting and, uh, placement processes, uh, we'll continue to add resources as we see, uh, those customer, uh, evaluations coming through. And then additional note here, we've extended a long-term incentive program to the staff at Qlinia with the view of sharing in the long-term benefits as Qlinia opens up this new market segment that I'll talk to shortly. On the financial side, Christa will speak to this in more detail, so I won't say too much here. Just to confirm that we've reduced our operating costs at around 14 million sec a month. This is below the budget and slightly below where we aim to come out of, as I mentioned, after our cost saving program. So we're happy that we will aim to maintain or continue to reduce these costs while also simultaneously shifting resources into the market facing commercial activities. So this will be a key part of our budgeting efforts going into 2025. And then the aforementioned fundraising initiative where we've now aim to raise 225 million SEC to fund our forward journey. So that may be just a quick reminder for anyone who are new here. We are focused on the rapid AST market and really the Q-Linear proposition linked to our ASTAR platform. really resolves around a few core arguments. Number one, the overall ambition here is to significantly reduce the time to an actionable result for a physician to six hours from the time of the test. This will save lives and improve patient clinical outcomes, notably. through getting ahead of the sepsis infection for a patient. It also saves money for hospitals as this is the most expensive in hospital costs that we face across our societies and reduces the effort needed for lab and physicians in addressing the patient while they wait in current standard of care. often two or more days for a result. The instrument itself is extremely easy to use with two minutes or less of hands-on time, really simple plug and play interface for the technician. And we are the only fully automated random access platform available in the market with comprehensive and highly reproducible test results. So maybe a few words just to orient it. We've spoken at this, I know, high level previously, but I think worth noting is we now see more granularity in the market as we get into it. So I'll set the stage here, and I think this is something we can keep coming back to over the coming presentations. So we are focused, obviously, within the microbiology space. We are addressing bacteremia patients at large, and within that, we are really focused on bloodstream infection patients initially. The reason for this focus is that the platform technically wouldn't be capable of addressing a wider range of indications, and we aim to do so over time. But really, the aim to address the bloodstream infection patients because this is where the most critical urgent clinical need is today. Bloodstream infections are roughly a quarter of the total bacteremia patients. And as I mentioned before, they are the major driver of in-hospital care costs. Our platform right now is designed to address the vast bulk of these patients. Currently, our menu, which is a gram-negative menu, will address around half of those, a little less than half of the patients in total. As I mentioned before, we are actively developing a gram-positive menu that will address the rest. pipeline here that that aims at the highest clinical unmet need and we will continue to expand the platform to address more and more patients as this platform becomes established and it is therefore easier for customers to to adopt additional indications on a platform they already have So this is really how we're thinking about it from a patient and needs perspective. And then just some orientation on the market itself. There is a current standard of care, obviously, in this space. This is the AST platforms that take 48 or more hours in many cases to generate a result. And currently that those platforms produce the bulk of those 25 or so million bacteremia tests annually. This market, we would say in terms of the addressable component that we're aiming at, is something in the order of a billion and a half annually, according to market research. And it's really the pull out of this market as those tests are moved into a new segment that we are creating here along with some other players in the field, really on the back of this urgent clinical need for a faster response. So this emerging gold standard, as we would call it, with a same shift or same day result is a new segment, currently with very limited revenues for any player. And we would consider ourselves to be at the forefront of this segment. And as we think around dimensioning this opportunity, I mentioned the five to seven million tests per year. We would anticipate that the total costs for hospital would be something in the order of $100 to $200 per test, depending, of course, on on volumes and which market we're in, et cetera. And therefore you can get a bracket for what this total market segment will be worth over time. We would expect at least half a billion, $2 billion, just addressing the core bloodstream infection tests that we're looking at today. This segment will obviously grow as more indications are there, but this is really where the highest clinical need is. So we see ourselves as, again, being the forefront of opening this segment up, and it is really driven by that underpinned, you know, high clinical need, and tests will start to migrate there as the technical solution makes itself available. So how does this landscape work in practice? And just to share a little bit more granularity on how we're looking at this and segmenting the market. So some of you will be familiar that there are thousands of microbiology labs out there in the world. In the US alone, we would anticipate something in the order of 4,000 or 5,000 labs doing some sorts of tests like this or at least running blood cultures. The ASDAR platform is designed as a fully automated instrument. It is optimized for labs with more than a thousand positive blood cultures a year. That is, you know, patients a year. That doesn't say that it wouldn't work in other labs smaller than that, but that's really our sweet spot. So given that that's already something in the order of 12 to 1500 labs in the US, that's plenty to start with. And there are similar numbers in the rest of the world. Our team right now is very focused on addressing the early adopters and high potential users in the US. There are something, you know, 200 to 300 labs in the US account for more than a quarter quarter of the entire volume in the US market. This makes it more manageable for us to get out with a smaller team in front of the key players in the US market. It's also in these institutions that you find the key opinion leaders, those that we've collaborated on, on some of our early access programs and clinical work, which is now being published. I'll speak to that shortly. And these are really the trendsetters and the ones that the rest of the market looks to help determine which new technologies are adopted. So it's this focus on the top two to 300 in the US, for example, that we have right now. I showed this picture last time. This is just a mapping that Jim and the team are using of those initial tranche of focus customers. But just add a little bit of color on this one. So since our FDA approval at the end of April this year, we've now and in contact with more than half of these institutions. And really our initial outreach is to determine, is the institution interested in Rapid AST? Are they aware of it? I think these days we can comfortably say that the vast majority of institutions, at least at this caliber, are very much aware of Rapid AST as a technology space. And therefore the question is really, are they currently considering adoption of Rapid AST? And now we've had several months interacting with several dozen institutions here, and we are seeing that close to half of them are saying, yes, we want to know more. We are actively reviewing this for our lab, which is very heartening here. So what the team then does is very methodically screen these customers through multiple interactions. And we're really looking for a few things. We're looking for fit. Are they an institution where Astar would work well in their workflow? Typically, for institutions of this size, the answer is going to be yes, because it is very much optimized for medium and high volume. But there's a variety of factors we want to understand with their workflow. Then we are looking to confirm the budget availability. I would say initially, this is the main sticking point that labs may not have yet approved the budget to adopt a new technology. And this sometimes leads to us parking the conversation for a while and coming back later. But there are already several dozen who've confirmed for us that yes, we have the budget and we'd like to go further. So then it's really about screening for that likely timing to make sure that we are sequencing them in the right order for evaluations. Because once we move into evaluation phase, we want to essentially, you know, move straight from there into commercial and full clinical deployment of the solution as quickly as possible. So so far, you know, we've we've got more than a dozen us labs that are either completed completing initiated or are planned in the very near future uh in evaluation so um you know we continue to move uh customers through this pipeline i'll talk more about that in a second um and we expect that uh evaluation pipeline to continue to grow in size over over the coming months and into 2025. So how do we think about that funnel, right? And this is not rocket science, very familiar to anyone in the diagnostics lab equipment space, but just some numbers to kind of orient around as we think about the pace of development in the market. so what you're seeing here is a typical uh buying cycle for for major lab equipment which which the astar system would be and normally this would take end-to-end something between 12 and 18 months um as i mentioned we're already getting into contracting with with several customers which um you know suggests that they move through this much faster which is true uh and we will see you know customers who do that especially in the early phase as a as a great interest in in getting rapid AST deployed for the benefit of the patients. But this is a typical timeframe that I would expect to see normalize as we go forward and some of the enthusiastic early adopters kind of clear through a little faster. So just to walk this through. first phase and probably the longest and most uncertain of the phases is this initial customer engagement. So this is a little bit the dance where we've either received the lead through one of our marketing outreach programs or our sales team has reached out to them because they're a priority customer. And then we're going through the process of qualifying them, as I mentioned, for fit, budget, likely purchasing timing, et cetera. The customers are typically also reviewing the alternate technologies available, so there'll be a kind of competitor review, and we will be talking to the benefits of Astar versus other alternatives for the lab. And really, the point of this phase is to anchor on support across all of the stakeholders internally for evaluation. We don't want to get too carried away with one or other stakeholders. stakeholder because it'll typically just stall later on as they will need to bring everyone along within the hospital who's required to approve it. So we're trying to get all of those on the same page before we go into an evaluation. So at this point, the timing is typically determined by budget availability or the lab focus. There may be other things that are on their top priority that they need to clear out first before they get started with Rapid AST. We're looking for that timing signal. It's once we get that that we then with the customer, let's go ahead and start a demo. From here on in, it's a relatively standardized or standardizable process. The demo is typically three months, 60-90 days, where the customer actively uses the instrument in their lab environment. At this stage, we are very involved here with our infield support. team on the ground helping the customer to design that evaluation. If there are any questions on the system or interpretation of the data that they need support with, we are very closely engaged here. The evaluation, as I said, is pretty routine and standardized. The time frame is more dependent here typically on the customer's internal review of the data. They may have completed all of the tests for the evaluation, but they need to pull together that report and again, discuss it with and align on the conclusions with all of those stakeholders in the institution. It's at this point also where institutions with multiple lab sites or reference lab networks may start to engage with the broader set of stakeholders. You now talk about multi-site conversations that are happening. Of course, we very much encourage this because for these institutions, we would like to standardize the Rapid AST to an ASTAR solution. And while this may take longer in this stage, as we speak with more of those stakeholders, it will speed things up as the subsequent installations can then go ahead without an evaluation, since they now have a sort of approval, if you will, from the central or the main site that did the evaluation. So once those results are concluded and the customers come back and said, okay, great, we got what we expected against the protocol that was established for the evaluation. We then go into the purchasing process and hear, of course, the negotiation on on commercial terms um we will have talked about those at a high level before we even got started with the evaluation so they will um receive uh indicative pricing and they will be aware of of you know potential volume benefits and whatnot but here's where we you know dot the i's and cross the t's so to speak with all of the details and they need to trigger all their internal decision making which which may involve legal for example it certainly will involve the finance team as this let's say iteration and involvement of different types of stakeholders that are outside the lab and clinical environment that can some that typically defines the timeline right so it can go very quickly but in typical cases it's a couple months you know two three months in this in this phase And then once we get a purchase order, you know, we're off to the races, so to speak. The instrument may already be there from the evaluation. Our goal is to have a very high conversion rate for evaluations. This, as I mentioned, is a fairly involved process with the customer. So they don't want to do an evaluation on something if they're not serious about bringing it into their lab. So there's a good chance it will stay there. But in the event they've sent it back or we've taken it to another location for an evaluation, they will get an instrument shipped to them and our team will again help to set that up. Then the main work here is really about integrating this into their core clinical workflow. So our team will help them work through their clinical protocols and adjust those so that any time a patient with the right indication comes in, the ASTAR test is going to get run. So this should be the new standard of care for that lab. And also it will need to be integrated into a lab information system. And this is again typically the the component that determines the timeline it can either go very quickly and smoothly if all the resources in the lab are available to do this or it can sometimes take a little longer if they need to get some some specialists uh again on their side usually um to to get the all the appropriate software and wiring in in place um so once that's done the lab will will uh specify a go-live date, and we would expect that all of the patients that meet their clinical determination for the ASTAR test will now be run as standard of care on ASTAR. So again, that's again, typically a 12 to 18 month process. I would expect the average to be around 13 to 15 months over time. And as I mentioned, we've since April FDA approval, we've now got several customers in that purchase phase of the process here. So you can already assess that we've we've moved a little faster with some several cases and i would expect that to be the case going into next year but over time this will normalize to the sort of standard market average And what are we looking for in those evaluations? I mean, the customer's looking for a few things. They're looking for the technical performance to match what's on the packet, basically. So in our instructions for use document, which is very detailed. So they'll be looking that the performance is in line with that. We would always expect that that's the case since it's been robustly tested in clinical trial. So what they're looking for beyond that is really that the impact of the test is going to demonstrate in their workflow and in their clinical environment what we would expect from rapid AST. And the core proposition, as we keep coming back to, is that it should significantly reduce the time to actionable result for a physician. And what you're seeing here on the slide is some of the data that was presented at our webinar. and was very capably presented by Dr. Yi at George Washington University. We've had several of these now complete in the US and really the scatter plots all look the same and they correspond very closely to what we see in similar studies in Europe. And that is because the current standard of care is just very hard to shortcut. It's going to take 48 hours or more to get the results for the patient. And what you very consistently see or always see in these studies is that even the longest of the ASTAR patients who may have had to wait for a technician to come in after night shift or something, if they're not open for a third shift to start it. So that's why you see some of them take longer than others. The ASTAR test itself always takes around six hours. So variability is really driven by the um the customers lab workflow but even the slowest of the astar patients is going to deliver many hours you know 10 plus hours earlier than the fastest of the current standard of care patients so so in any event essentially every single patient is going to benefit from from being run on astar versus the current standard of care so it's it's this data that they're looking to confirm in their own workflow. And again, work with our team to help optimize their protocols so that we can speed the time to ask our results up even more. Ultimately, we want all the patients to be delivered in that sort of six hour range from when the positive blood cultures goes off. So I'll conclude there. That's sort of overall on how we see things. I think the main message here is, you know, we're very active in driving that pipeline in the US. The published results from our early access programs really sort of vindicate the core argument of Astar. And we're expecting to see that in essentially all of the evaluations that we're running now. So those evaluations should continue to move into contracting and we'll look forward to announcing those concluded contracts as they come.

with that christa you want to give some of the financial habits yes thank you stuart uh and uh i will start off this by by stating a few focus areas in the financial part that will guide you through here four four focus areas that i will talk a little bit about is our financial status the rights issue that was press released this morning, our burn rate, our expenses, and the going concern. And I will start off by highlighting some of the things that happened during the quarter and after the quarter. As Stuart has mentioned before, our cost savings is running as planned, and they are almost in full effect now in the Q3, which is really good and helpful for us. Also, the loan facility, I would like to highlight that we have a loan facility of next to be total of 101.5 million. The existing unutilized facility as of 30th of December was 23 million. And then we have 7.5 million at the bank, totaling 30.5 million cash available. The rights issue, which I will talk about a little bit more in the next slide, was announced this morning and was secured to 80% or is secured to 80%. And the operating result, which is an indication of our cost saving program, the operating result for the third quarter was minus 41.2 million, which averages the 13.7 million per month. And the parent company equity to highlight also the financial status of our parent company is 132.6 million Swedish. And it's helped by the Podlo technology valued at 70 million. That is also one of the main reasons why the parent company equity is higher than the group equity. rights issue the bridge loan it was a press release this morning there was a lot of information in that press release a lot of financial information a lot of technical information and and not everyone understands all of it when you read through it at one time so afterwards in email or via phone i'm happy to answer all the questions around this rights issue. But here, just a few short things around the rights issue. It's a capital raise of approximately 225 million, as Stuart said before. And it's an issue of units, where one unit consists of two common shares and one warrant. And the transaction that has been secured to approximately 80%, And the subscription price to be set at 30% discount to TURP, which is a term, a theoretical X-Rights price, is a volume-weighted average price during 9th of December to 3rd of January. So it's not set yet. So it will be decided later in this process. And then the subscription period will be in January 2025. Also for you to know, as I said, this transaction has been secured up to 80% and the guarantee fee is 10% in this transaction. Also important in this total structure is the bridge loan, which will help us through to when we get the net proceeds from the rights issue transaction in early February. And the total capital raise in this rights issue with warrants depends on several factors such as subscription level, 80% or higher, utilization of the warrants, share price development. So you cannot say for certain what the total amount in this rights issue when you include the warrants as well. But so this is sort of the facts we can give. There are lots of more facts to read in the press release. And as I said, any questions, I will take them in this call here or separately when you call me or email me. Right. For the third quarter profit and loss, not much to say. The operating income sales is still low. We are still in an early commercialization phase. And also we have a reagent rental model used in Italy and in other places in Europe. which obviously takes down the sales volume initially. Over time, it will improve, obviously. And then we see, however, that the balance between reagent rental and capital sales will shift gradually, especially when we move into the US. But we still will have the reagent rental model for for the future and it's a good one but it will will mean that we will not have the upfront sales of the instrument it will be taken over time that income the operating result is minus 41.2 as compared to last year 48.3 which is lower is better and the operating result per month on average for the third quarter was 13.7 million Obviously, thanks to the cost saving program earlier this year, and just comparing the first half year result, the average monthly operating result was 20.2 million. Then we should know that we took 8 to 10 million in restructuring costs, so you have to adjust for that one. But still, the cost saving program are in line with what we have previously communicated. the financial position in the third quarter. As I've said before, we have 7.5 million in cash and then In addition to that, we have 23 million unutilized loan facility from main owner, totaling the 30.5 million as end of September. Looking at the working capital, it's been reduced. It will be even more reduced when sales will pick up, but it's lower than last year end. So the 39.6 as compared to the 45.6. where obviously the instruments have a large part of that inventory size. The group equity is 25.7 compared to the year start of 189.6. And then just to give you a sense of how this has been spent or burnt, For the total period, January to September, we had 18.2 million on average per month. On only the third quarter, it went down to the 14.1 million decrease of equity. So there you can also see the cost saving program, how it fits in. And the parent company equity, as stated before, it's stronger than the group equity, mainly thanks to the valuation of the Podler technology. Future financing is obviously a focus area for us. And I've said before the 30.5 million available at the end of the quarter. And then we have this rights issue of the 224 million, 224 to 225 million, which is secured to 80% is also part of our future financing plans, obviously. And that was sent out earlier this year today. And then We also have information on our burn rate, which was 13.7 million per month the last quarter, which is based on the 50, lowered by the savings program of the 50 million per annually previously communicated. And based on this fact, The board considers the available cash and cash equivalents and the unutilized portion of the loan facility and the 80% underwritten ongoing rights issue sufficient to cover the company's requirement to carry out the activities planned for the next 12 months. Obviously, we also continue to be engaged in other means of financing, including strategic partnership discussions, capitalization of existing assets within Kulinja, lowering our operating expenses further, and of course, negotiations with new and existing investors, financiers, and lenders. That was it from the financial side.

Thank you, Krister. So I think with that, we can turn it over to questions.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad.

next question comes from johan honoris from redye please go ahead thank you for taking our questions the first question relates to the number of active systems in in testing on evaluation if that's possible to give it's clearly it's been increasing it seems to be good momentum can you provide a flavor for roughly how many systems are in sort of testing and evaluation stage, and maybe compared with a year ago.

Hi, Johan. Thanks for joining, and thanks for the question. Yeah, I tried to give some color there. You asked how many are in evaluation. An evaluation only, you know, could take two or three months typically. Some go longer. So we move the instruments around from one to the other. So the number of instruments tied up doesn't correspond exactly to the amount of evaluations we've completed. But I think your question was probably how many evaluations have we completed in total, right? So I would say... you know, over over lifetime, we've completed, you know, several dozen evaluations of varying sort. But of most interest for us here today, I think, is the evaluations during this year of which across the US and Europe we've we've completed or are completing, I would say, you know, a dozen plus. And as I mentioned, there's there's more set up to come. Right. So this this pipeline has um has grown during the the past uh two three quarters here uh and we're getting those those evaluations um set up going forward so we've got visibility on on another um couple dozen let's say um to to be run here over the over the coming months great and let's see and also it was very good to see that you provided no view of the

both over time and in different stages. And you also alluded to that you expect that the number of, that the probability of the sort of successful outcome of an evaluation, you expect that to be reasonably high. And is this corresponding to recent experience?

Yeah, I mean, the N number is not as high yet as we would all love to see it get higher, right? But I don't know if it's high enough to call an average, right? But we would anticipate our win rates overall in competitive deals to be at or above, let's say, 50%, I would aim for that. We're not the only player in the field. Competitors will take some share, but we can say with confidence that at a technical level, the Astar is superior to anything in the field. We see that from public tender criteria that have been published, right? There isn't a way that a competitor would score more than us on the technical scoring, maybe down to the weighting of it if we're sort of more or less at parity. So this really comes down to the commercial terms and how much discount others want to take versus Zastar's pricing at its core in the market. So we are in the good position of being the superior technical solution. So that said, we fully respect our competitors in the space. They're going to do what they can commercially to take some share, but I would expect Astar to win more than its sort of fair share of those deals. I think we'll have to give it a few more rounds before we see the averages sort out. But like I said, we're aiming for 50% or more of a win rate in the active commercial discussions.

That's good. That's useful. Thank you. And also, on the OPEC side and the cost savings came in a bit lower than perhaps we expected in Q3. And you alluded to that you haven't still reached a sort of full impact of the cost saving, but probably fairly close to it, I suppose.

Yeah, I can take that, Stuart. Yeah, I mean, we are fairly close to it. There are still some savings that we can see in the near term here, but also we should be aware of how to balance that towards the commercial buildup in the US, for instance. So we are balancing these things and we will keep the OPEX, total OPEX level at this level or lower. That's what we aim for.

Yeah, and related matter then towards the later stage of evaluation and you progress into negotiation and especially installation, is that, is the sort of support side of that on the U.S. side, is that in place or is that something you need to increase the team for? Of course, if you have a very large number of these, cases, of course, but I mean, within sort of what to be expected in that time. Yeah.

Yeah. So the quick answer is yes, the team is in place on both sides of the Atlantic. So in the US and in Europe. And the good thing is that the team can cross support. So if there is periods of intensity, you know, our team from Europe can, for example, support into the US, which they've already done on on multiple occasions and vice versa. We'll be thoughtful about where and how we add resources going forward, but I see that team as a global one to support our overall fleet of Astars in field. But for the time being, we have the resources in place to support the pipeline we see. I mentioned adding resources kind of on a just in time basis, if you will, as we grow the pipeline, we announced the addition of a couple more of our corporate account leads in the US who are helping, especially at the front end of that funnel, they drive the process right the way through and continue to engage customer obviously after after deployment as well but especially important in that early stage of the funnel as we as we engage and build the relationship with customers so that's the the big bolus right now that's building up um and as we get more and more of those into evaluation phase and installs we will appropriately add resource into the us so we've got a game plan for that um it's it's in our budget planning for next year and it's it's speaking to what christa mentioned about making sure we can uh appropriately offset costs uh in in the our overall cost base so we can add resources where needed without increasing our overall burn rate and the center related the question is this nci designated center that is going to do an evaluation

these centers tend to be fairly big and probably very good reference sites. When can that be completed and do you have any other similar in the pipeline?

Yep, so great question. We're really excited about that partnership. For the time being, we can't mention the name of the site. Once we're fully deployed and they've run their evaluations and approvals, we hope we can share it because it is a very reputable institution. Of note there, I mean, it's part of the National Cancer Institute's network, if you will. And the fact is, unfortunately, that this indication area for sepsis is an acute need for immunocompromised patients, such as those undergoing cancer treatment. So oncology patients have a high need for this space. So we're very pleased at the level of interest here and the potential for ASTR to make a really meaningful impact for that patient community. And we would hope, obviously, that after a successful evaluation, which we can be confident in, I think, that that will, you know, then encourage, you know, the rest of the, both that network, but also just oncology centers in general, to consider rapid AST and specifically ASTAR as a solution for their lab. That evaluation, I can say, is a standard one. So it's got a 90-day period, which time they have free use of the instrument, and we've already uh shipped and installed the instrument so so we expect that you know to complete uh if not you know already in year here uh it'll be completed very early in in next year uh and then beyond that it'll be uh we'll be into the next phase of you know contracting and and all that um provided of course that they're satisfied with evaluation results great and also you have a direct contract to

including multi-vendor testing, and how common is this when you have direct contract, presumably without any tender process?

It varies by market, right? So the tenders are more kind of European phenomena, if you will. The US process is a little different. It's not often that they're sort of fully public tenders. They have a variety of ways of exploring different technical options available for them. They may trial you know one or more instruments um often it's it's a sort of desktop review and uh and they may go to see a reference site to see uh different technologies in play they they sort of more typically trial you know if that fully evaluates you know a single system that they will have uh determined as a preference maybe maybe two um the the tenders are are more frequent in in europe now we have public healthcare systems and and more uh you know sort of public review of spending and whatnot. But even in Europe, you can get institutions that have budget approved for an area and they can move straight into a purchasing process. It will still often involve obviously a competitive review. They'll look at what technologies are available, but they may not have to do a kind of full public tender. So we will expect to see these cases pop up. We've had one in Northern Europe recently for interested in a couple systems. So obviously we take them into the funnel and work it through largely on the process that I described earlier. So the fact that they're not a tender does mean that they can sometimes go quicker, but that's not always the case.

And also, without being overly technical then on the doormat study is what does that sort of add to the reference status on top of sort of analytical and health economics?

Yeah, great point. So there's a couple elements of that study that we're really excited about. So the essence of that study is essentially twofold. So they're looking to measure specifically the time for a patient to get onto optimized therapy and how that differs for different patient groups who may have gotten inappropriate therapy, so one that wouldn't work, or they have got sub-optimized therapy. So it may be, for example, using overly broad spectrum antibiotics. So it will look at a sort of antibiotic by antibiotic specific data to look to prove the hypothesis, if you will, that ASTHAR can really improve the time to optimize therapy. And that's a little subtly different from the time to result for a test, right? So it's actually looking towards that clinical benefit for the patient. So that's even more material, if you will, as a data point for a clinician who wants to see the so what for their patient. So that's one aspect of it. I think the other aspect of the clinical design for this study that's quite exciting is that they are a site with a bit of a hub and spoke. So they have a central lab with different treatment facilities. So it's one of these larger networks that you frequently find in the US. And they are looking, so the study is building in the component of how much time does the bottle take to get from one of its referring sites to the central lab to do the test. And this has multiple implications here. So number one, The benefit of putting ASTAR out into all of the spoke sites will be demonstrated because the hypothesis is, of course, that bottle transit time has an impact on patient results, right? So we were specifically looking at that. So one conclusion from that would be for a large multi-site institution to say, okay, I want the ASTAR in all the satellite sites as well as the core lab. The other implication for us, which is potentially down the road even more interesting, as there are a lot of distributed multi-site institutions where they might not have the volumes to put or the technical capacity in microbiologists to put in all the remote satellite locations, is Podler. This will help us underscore the value potential inherent to Podler, which supports the site not losing time during transport for the incubation of the sample. That is to say, when it comes into the core lab, it will already be closer to its readiness to process than is typically the case. So for for really any country with with a geography where you find patients more remote or with a health care system with smaller satellite clinics and locations that refer into central core labs. I can mention Sweden, for example. This type of technology with Pottler could be potentially very advantageous. So this study will, amongst the other benefits for the clinical impact, also help us to uncover more of the specifics for that transit cost burden that is on many patients today.

It could also add some implication for potential commercial partners related to the U.S.

Absolutely, yeah.

And also, when do you expect to have the first sort of clinical and commercial ASTAR system installed in the U.S. as a reference system?

So we've got some systems installed and up and running already. And to some varying extent, these are already referenced systems. These are communities of known individuals. We are collaborating with some of the leading key opinion leaders in the field. So it's no secret to the community in some areas where where we were able to cross-refer appropriately for folks to have discussions on the instrument. So to some extent, that's already happening. I mentioned that our first full commercial, start to finish commercial discussions, we aim to complete during Q4. Some of those may be reference sites as well that others will, wanted to just use this system. So we'll continue to expand our reference library, if you will, our reference partners. But we are already, I think, well served by some of the partners we're working with today.

And to go back to Europe, on the rental part of the business model, as that will sort of gain traction in terms of numbers, Is it possible to do sort of any financial contribution or sort of specialty financing on the sort of capital cost on your side? Because, of course, you need to manufacture and put the systems in place, even if you get recurring revenues of a smaller size. Yeah. Examples.

Yeah, we're very conscious of the working capital implications of expanding the fleet, and we hope to expand it, you know, at an increasingly rapid speed. So, Krista, do you want to say a few words about our discussions on that side?

On the working capital, obviously we have a number of systems that we have, so we are happy to sign on the re-agent rental models in Europe when they come up. We have the capital, but obviously we are also looking for capital sales, so it will be a mix, but in Europe so far we have the re-agent rental model uh mostly so so that's how it is and then we are very cautious about the working capital obviously and we plan plan that that very much in detail going forward yeah yeah

Well, I think you're asking if there's any deal specific financing that we can make. I think that's something that we've explored, Johan. So when we get to that appropriate time, we'll give you some more details. I think there's options there, but we haven't yet completed one of these.

Yeah. And finally, then you also stated in during the call that you have a with the guaranteed amount of the proposed rights issue you expect to have 12 month run rate of course there are some variable bits and pieces sales and financials on the rental side and the number of valuations and interest and so on. And then you have the warranty to get additional support from that come the spring. So out of clarification, the 12 months is from today basically then? Is that how you should understand it or is it from completion by? on the right issue.

The 12 month run rate or the going concern that we state in the queue is from the date of the Q3 report, which is end of September. That's formally how it's done. And what we obviously we are looking for for as much funds from the rights issue as possible and from other means as well to take us further. So but but the state what we stated in the Q3 report is as from 1st of October.

Yes, good clarification. And is it something to be said about any flavor of expectations or what's reasonable for the next year in terms of complete evaluations and and even perhaps number of systems delivered fit in a very broad ball mark or is it too early yet?

Yeah, I think it's still a little early. I think just as we try to get a sense for what the normal speed through that funnel is going to be, right? So if I were to make the assessment based on every customer that's already in negotiation, we would anticipate things to be moving very quickly indeed. So I think we'll have to see a little bit what the kind of norm looks like, and then we can start to give some more you know concrete projections um for for instrument placements I think we also need to see what the the final win rates are right as we discussed before where we um uh you know I would I would expect to see um maybe our primary competitor respond um you know with the commercial terms that they have available to them um what you know once we we start winning too many of the deals, so to speak. So we'll have to see where that kind of shakes out in terms of the commercial side of the negotiation process and how long that takes.

Great. Thank you. That's all from us. Thank you.

Great. Thanks, Johan. Appreciate the questions. Any other questions from the community?

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

All right. I think we covered it all then. Appreciate everyone's time. Went a little bit longer this time, but great questions. So appreciate that and look forward to presenting some more good news at our next quarterly report.