Q-linea AB (publ)

Welcome to the QLINEA Q3 Report 2026. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to CEO Stuart Gander and CFO Annika Blondeau Henriksson. Please go ahead.

Hello, everyone. We have Stuart Gander, the CEO here. Thank you, everyone, for joining QLINEA's Q3 report presentation on this beautiful Swedish afternoon. Appreciate you taking the time. I'm joined here in the room by Annika, our CFO, and she will share some comments later as well. So just before we start, we'll assume the full disclaimer is read and understood. And our topics for today will be similar to these previous calls we've had before. I'll spend a few minutes giving an update on the market and commercial development, how we see things evolving, then sort of bring that together with what our immediate outlook and priorities are before handing it over to Annika to walk through our financial results for the quarter. Of course, we'll wrap up with Q&A. All right, and for those of you who only have a few minutes, we just put the highlights right up front here. So in the last few months, we have succeeded in closing six more contracts for Astar. These include two in the US, three in Europe, and our first placement in Asia. I would say just in summary, you know, we see the momentum continuing in Europe nicely here and it's good to see Asia open in sort of full openness. We did hope to see a couple more in the US come in during Q3. There were a couple of the projects that have slipped into Q4 here, so we hope to see those will come through shortly, in addition to others that we're working on in the US as well, which is starting to show some momentum following our expanded panel launch earlier this year, following the FDA clearance. In service of the US market, we were able to finalize our framework agreement with Premier. Premier is one of the three large national group purchasing organizations in the US. It represents several thousand member hospitals. What this agreement does for us, it doesn't generate immediate contracts with their member hospitals. What it does is basically open up for them to... Thank you very much. We do hope this will start to play out over the coming months and quarters as we can refer to the master agreement here with Premier. We're also very happy that we launched the iSLED RUO kit as planned in Q3. I'll speak more to this in detail, but essentially this is a product expansion. It allows the ASTAR to be used beyond blood infections more easily. The RUO refers to research use only, so this is not FDA or CE IVDR components. Thank you very much. Thank you very much. On the finance side, I'll let Annika speak in more detail later, but those who've read the report will note the working capital has increased. This is driven by prepayments for our instruments. We see that instruments continue to leave the warehouse here, which is great as they move into customers. So we've placed orders that cover a fairly substantial amount of demand. for the coming quarters and that has resulted in an increase in the working capital. Annika will talk to this in more detail on how we can expect that to evolve over the next quarters. And on a related note here, in general, when the instruments do leave Kulinia's premises, we are seeing good capital recovery. This has improved year on year, and we expect it to sort of continue to improve as we put more focus on a couple things. Number one is markets like the U.S., and international markets where we tend to sell the instruments rather than doing a reagent rental. We obviously capture more of the capital right up front and for the reagent rental contracts where they do exist we put more emphasis now on regular rental income rather than tying it to the volume of tests and this allows us to get more predictable and in many cases Thank you very much. We'll start to go into it. And for any who are new to the call here, just a very quick orientation. So Culinea is a manufacturer and innovator of our flagship Astar platform for rapid antimicrobial susceptibility testing. This is used and cleared for blood infections in Europe and US and around the world. We consider ourselves a leader in the space with a fully automated and random access This is a diagnostic instrument. It is designed to be extremely easy to use in the lab, plugged into lab information systems and is very tech-friendly with just a couple minutes of hands-on time. It delivers a result in a highly reliable fashion in around six hours and with a very comprehensive clinical panel that is the leader in the market. And what we see as a broad trend here, those who've been on these calls have seen this before, but it's worth just restating, there's a general move towards more rapid delivery of the information for the physician to make The evolution has already occurred for bacterial ID in many cases. So the hospital already can within a couple hours, few hours tell which bug might be affecting a patient. But they are not yet or haven't historically been able to get a quick answer for what drug should be used to treat that patient and what concentration. and this is what ASTAR is delivering. So we expect that over the coming years for critical patients, namely those with blood infections or those in the ICU or other critical non-blood infections that the physicians will be looking to speedy diagnostic response in order to reduce the time to effective treatment and thereby save lives and money. How is the commercial development going overall? As I said at the outset, our contracted placements for the quarter have increased by six here. Since our Q2 report, we had 24. We now have 30 here. Not all of those are yet fully installed and in place. Thank you very much. And then we're pleased to see that the pull-through continues to grow in terms of the patient tests, both as we install new units that obviously drives the increase, but also importantly we're seeing a gradual increase here in the testing for the instruments already installed. This is Thank you very much. Thank you very much. All right, I mentioned at the outset the launch of our non-blood test, which we refer to as isolates in the field. What you're seeing here on the slide is the menu, which in the format you might recognize from our blood test, there's some subtle differences here with the different combinations, but by and large, it reflects the promise of ASTAR, which is a very comprehensive Thank you very much. And for lab, it's essentially exactly the same. As you put it in the instrument, you press a couple of buttons, six minutes or so, and the test is off and running. And as I said, for the time being, it's for research use only. We're excited to be working with a few early adopter customers here to explore the applications for this in due time. And after feedback from customers, we would anticipate potentially moving forward with We'll be paying close attention to this over the coming quarters in terms of evolution and feedback from customers. And internationally, I think the overall message here is we start to see the first commercial results from our international campaign that's been ongoing for some time. We've given updates here over the past couple quarters. So at least the first shipments went out in Asia for installation here. With a bit of luck, we'll expect to see that up and running with patients in Q4. And then in the Middle East, we're expecting a decision soon in Saudi Arabia for a national tender that will be for the first site that should be confirmed shortly. The nice thing about it is it should provide the mechanism then for other hospitals in Saudi Arabia to make their own determination and follow suit. So obviously having broader conversations via our partner there In Saudi Arabia for a wider set of hospitals and their potential interest through 2027. As we speak right now, our EMEA sales lead, Franco, is in India. There's a large microbiology conference ongoing there, and we were also pleased to see our partner at an earlier conference launching ASTAR in India. India is a market both of high demand Thank you very much. Thank you. A little bit more near to home for those of us in Sweden. We have had a couple of successful evaluations now in Eastern Europe. So those are kind of moving through the pipe with respect to contracting and or tendering for relevant markets. So I would expect to see that we open up a couple of new markets over the next quarter or two. And then the strategy sort of generally is to stay the course here. We're trying to get Astar out into as many countries as we can, given a small and focused commercial organization, but also make sure that we can really support the partners and the customers when we're there. So we're taking a measured approach. We're taking a patient approach. Thank you very much. Thank you. All right, so where does that leave us for pushing through to the end of this year? I'll just cover that in a few areas here. First and foremost, our commercial front really remains highly focused on the commercial drive to close out the year strong. We've talked several times about the strong pipeline in the US that we're keen to convert following the We have seen some customers, you know, We hope to deliver some more good news for Q4 here. I've talked before about the verify and adopt program. So that's another mechanism to try to simplify contracting and reduce the budget burden for a customer to get ASTAR going quickly while they wait for the larger institutional dynamics to play out and get all the contracting done. So we're trying to be as agile Thank you very much. Thank you very much. Another front we're pushing on is on the clinician side. These are the key stakeholders internally to move projects forward. So we're always speaking with the stewardship team and the ID physicians in the various institutions. But also once the instrument is installed, it's important for us to keep engaging with the customer. Thank you very much. We see that where we are able to engage with the team and they're employing best practice across physicians, we see that increase in testing rates over time. So we have a program here now to revisit customers who've had some months or quarters of experience and get that best practice sharing both within the institution but also across institutions. It's something we're working on increasingly as our installed base grows. I spoke to the expanded global footprint, so we'll see more on that as Franco continues to get into new markets. On the development side, it's a busy team here, obviously supporting the launch activities following the Q3 launch of our isolates. We're keeping that fairly focused given the RUO status for a subset of customers for whom that type of product is most relevant. But I do see that there will be some interest in the near term here. And then also we are working on a new platform here for the ASTAR that we expect to launch in the first part of next year that will increase the adoptability and flexibility of ASTAR for the middle-sized and smaller labs. So we're excited about that. We'll keep working on that over the coming months. When it comes to the menu itself, we are working on the next generation therapeutics, what we call internally our V3 menu, following the V2 launch earlier this year. We expect to see the impact of this work during 2027 as well, so more on that soon. And then we are seeing already the impact from some of our cost of goods initiatives of note for us here in the near term given the ramp up that we're seeing in the pipeline and the boxes leaving the building is really to focus on the instrument cost of goods now. We're seeing some progress on initiatives that we've already put in place so we expect to see that showing some effect through 2027. So that leads to the broader financial priorities and a bridge to Annika's comments here. We really just continue to focus on the cost discipline. We want to make sure we stay well within our OPEX window here, keep working on reducing costs as much as possible. We continue to find ways to offset that with cost savings elsewhere. So we have a vision here to keep spending at or below the 10.5 million crowns per month. I mentioned already the strong capital recovery as a main focus here. So, you know, just given our cash position, it's important we recover as much as possible when we move the instruments out. And I think we've got a good pricing and business model structure now to address that. And, you know, we'll keep working on driving the gross margin through cost reduction in the instrument to consume as well, ensuring we get the best value pricing in the market. So with that, I'll hand it over to Annika.

Thank you Stuart. So the financial highlights for Q3 2026. So on the instrument side we have contracted three in the quarter and this is to be compared with five instruments of last year. We are pleased to have signed an additional three instruments after the quarter closed. So now our total contracted base today is 30 instruments. In the quarter we installed one instrument against seven in the same period of last year. And this takes us to a total base of 22 up from 12 at the end of the period of last year. So the installed base keeps growing, even if the quarter itself was slower on installations. Next sales came in at 4.8 million up from 3.5 and our consumables revenue grow approximately 19% to 1.9 million from 1.6 million of last year. The average annual consumable revenue per hour contracted instrument over the last 12 months period was 247,000 down from 306,000 last year. And we explained this by our base of contracted instruments that are still ramping up. Operating results EBIT was minus 30.6 million to be compared with minus 40.7 of last year. This improvement that we have done of 10 million can primarily be explained by the outcome of our cost reduction program that we have been driving during 2026. Cash flow from operating activities was minus 34.3 million versus minus 37 a year ago. In Q3 of this year, the cash flow from operating activities includes a negative working capital change of 10 million, of which five is supply prepayment that covered the next months of supply of instrument. This is obviously a requirement because of the lead times that we have in on certain of our components. We ended the period with a net cash position of 150.7 million compared to 42.6 a year ago. Our cost in average operating expenses in a month in Q3 were 9 million and we are down from 12 million We did this quarter run comfortably below the target that we set on ourselves. Looking ahead to Q4, we expect OPEX to stay below 10.5 million per month. And we are planning some investments in commercial team and activities as we go into 2027. So we need to make operating efficiency to offset those investments so the cost levels stay steady. The headcount chart on the page shows how we brought down the cost structure at the end of 2023. In 2003 we were 122 employees and now we are 66. So we are a leaner company and we are focused on putting our resources where they count. So our key topics, financially going forward, it is the cost discipline. To keep monthly operating expenses stable and at the same time being able to fund commercial growth that we need. We need to recover our capital and by that we want to see better return on every instrument we place. Quicker payback, high test volumes and more US contracts and an increase in share of capital purchase placement. All of these will improve our working capital situation. In gross margin expansion, as instrument and consumable volumes grow, our ability to get room to bring down the manufacturing cost per unit increases, and we'll remain focused on realizing this potential. On the external non-dilutive fundings, we are continuously looking for external funding options, including but not limited to partnerships and trade financing and later for reagent rental contracts. And with this, I conclude the financial plan that we have.