SenzaGen AB

Welcome to SenseAgent's presentation of the first quarter of 2025. My name is Rodnar Löhn and I am the advisor at Halvarsson. I am the CEO of the company, Peter Nellstedt, who will soon start his presentation. After that, we will start a Q&A session that I lead. There will also be an opportunity for those of you who are watching to ask questions if you think about 4.5. Peter, welcome.

Thank you very much, Rodney, and welcome from my side as well to the Q1 presentation. I am the CEO of Sensagen, and we are building a future where what we did with animal testing earlier can now be done without animal testing, without animal-free methods, which we are building on high-tech solutions that we have developed. And this presentation will focus a lot on quarter one, how we have delivered financially. We will break down a little bit this performance in quarter one to how Guard, which is our core business, goes. And how we work to strengthen VitroScreen as an acquisition we carried out a couple of years ago. I will then, for any new investors, describe Sensagen and how we were going to grow in the future, especially with focus on our R&D pipeline. But to go back to quarter one. It has been an incredibly highly active quarter from our side. Vi har jobbat mycket hårt med vår försäljningspipeline och våra R&D-projekt och byggt och fått till många byggstenar i bolagsbygget för framtida tillväxt. Men vi har också verkat i en turbulent omvärld och det har i viss mån påverkat oss. If we look at sales results and Q1 results, then our sales growth is somewhat lower than we expect ourselves. We are back 5% in Q1, and that is due to the fact that we have a slightly different channel mix. We also have a relatively high volatility on the market, which we see has led to the customers taking a little longer to decide for larger investments. And we see that larger projects have become a little late in our sales pipeline. Then we have also had currency against wind. We have basically all our sales in euro or US dollar. If you look at our sales in constant currencies, we have an unchanged volume of sales. It is positive, however, that we have a very strong gross margin of 75%. Den starka bruttomarginalen drivs dels av kanalmix, men den drivs också av att vi har jobbat effektivt. Vi är mycket duktigare på att titta igenom hur vi jobbar med våra tester på laven. Vi har också jobbat med prissättning. And 75% is unchanged today compared to the quarter a year ago. But 75% is historically a fairly large figure, since you can see that the historical one for the whole of 2024 was 67%. And in this situation, where we are expanding the company, we have still managed to keep the costs under control, also with regard to the currency against wind, which we of course also had on the cost side. Vår kassaposition är fortsatt väldigt stabil, bolaget är välfinansierat och vi har 34,7 miljoner i kassan. This is what the total quarter looks like for the group. If we look a little closer at our core business, Guard, we have an incredibly stable core business and we also have a very good customer acquisition. We achieved a sales growth of 3% with Guard, which is lower than what we have had in the last quarter. But it depends on a number of factors that I will go into. However, I also want to mention that even if the sales growth was 3%, we got 10 new customers in the quarter and we continue this trend that we put new customers to our existing customer base. And of the 10, we have 4 large international companies, which is part of our core strategy to attract. We had no big direct sales orders from the customers, but the sales consisted more of, what shall we call it, bread and butter, smaller repeat orders from stable And even new customers might have had a slightly lower volume on the test business. And we see that this is the sign that I'm talking about, that we have a slightly more uncertain environment. Bigger projects take a little longer time for customers to execute on. If we look at how the mix looks, we have 81% direct sales and we usually with Guard are at 91%. Vi har en lite ovanlig affär. Vi har gjort en licensaffär på nästan 800 000 kronor. Det motsvarar 8 % av försäljningen. Det är ett stort forskningsprojekt som ligger bakom detta. Normally, we have a license deal of 1% in the company, so that's quite a lot. It affects the turnover, you could say, since the license income is lower than if we had sold directly. It's about a factor of five in between. But of course, it affects our profitability very positively. It's not something we would have had to invest in and sell. Then of course we are very happy that we have strong customer loyalty. 84% of the revenue comes from returning customers. 86% was 84% a year ago, so it is constant. The gross margin is 74%. Den är högre än den brukar vara, dock inte högre än vad Q1 var och att den är högre än den brukar vara beror på att vi har den här licensintäkten som bidrar med ungefär 2.2%. Our sales position in the industry is incredibly strong. We were at the world's largest toxicology conference in Orlando, where we presented our company. We also presented our customer cooperation with international customers such as Clarence from France and Unilever. And this has led to a very strong interest right now. And we also have many more high-value offers. And we see that this is building a very solid base for growth in the future. Maybe with a heavy weight on the second half of 2025. The example on the right shows our business model, that we start working with customers, contact, discussion. During a period of 60-80 months, it leads to our first order and then we have received a design in from the customer and we get a repeat business where they use Guard to evaluate new products. This example is a real customer example, we cannot tell you about it, but it is a top 20 skin care company in the world. Talking about customers, we have a very nice customer portfolio. We work with basically all the big cosmetics companies. We work with big chemical companies. We work with big medtech companies like Sonova in Sweden, for example. And it's proof that our technology works and meets customer needs that you can't achieve with other technology. The second part of our company is Vitroscreen, which we acquired in 2021, where we, at the end of 2024, made a change in the leadership of the company to get a greater commercial focus. We have now, under Q1, recruited a new sales organization. The individuals we have employed are also fully active. They have undergone product training both at VitroScreen and at Senseen here in Lund. And the sales in Q1 remains at the Q4 level. Men vår orderingång är signifikant högre än vad försäljningen är och vi går nu in i kvartal två med en betydligt högre orderbok än vad vi gjorde när vi gick in i Q1. Så vi ser starka tecken på att bolaget håller på att återhämta sig och att vi har gjort rätt saker. Det avslutar kvartal ett presentationen. Jag ska visa några bilder nu om Sensagen. Vi är ju ett som vill leda skiftet från djurtester till djurfria alternativ inom någonting som heter toxikologi och efficacy, det vill säga säkerhetstestning och effekttestning av nya produkter. Vi erbjuder högteknologiska djurfria testlösningar som supporterar hållbarhet, etika och etik. På det sättet bidrar vi till att reducera djurtester. Vi får till säkrare och mer hållbara produkter på marknaden. En del av vår portfölj kan också användas till att man säkrar upp tillverkningsmiljön och gör det bättre för medarbetare. Vi är en grupp som nu består av 36 medarbetare. Vi är 21 stycken i Lund, där vi har utvecklat GARD-testet, har väldigt stark expertis inom immunologi, men också urfri toxikologi, och har vår testbusiness. Vi har ett dotterbolag i Italien, VitroScreen, i Milano, där det är 12 anställda. I tillägg till att ha toxicitetstestning finns här även effektstestning. And then we have a consulting company called ToxHub, based in HUM. And ToxHub is an important part of our business model, where their consulting can help our test businesses deliver. Vi jobbar på en marknad i en stad i hög tillväxt. Den totala marknaden för effekttest och toxicitetstestning uppskattas till 13 miljarder dollar. The addressable market is estimated at 3 billion dollars and the market we can earn today is half a billion dollars. So given our turnover, there is a lot of potential for the company to grow further. Marknaden i sig växer också mellan 6-9,5 % per år i perioden som kommer härnäst, 2024-2028. Drivkrafterna är starka för att den här tillväxten ska fortsätta. Vi har vetenskapliga innovationer. Vi har regelverk och myndigheter som stiftar nya lagar, att djurtester förbjuds, som gör att vår bransch går från nice to do till must do. We have cost efficiency and we have increased social engagement from companies, that you don't want to do test if you don't have to. Europe and North America account for 75% of the market. That is also our focus today. And we are quite industry agnostic. Our solutions are used in cosmetics, medtech, chemicals, drugs and also in food. För att växa på den här marknaden så investerar vi i R&D. Det har vi gjort historiskt. Vi har ju tagit fram vårt test, fått OECD godkänt och varit lyckosamma med. Men vi fortsätter. Vi jobbar med att få vårt dose response som är vårt riskbedömningstest. To also get the OCD approved would mean many benefits for us since it would be easier to use the test in a regulatory context. We want Guard Skin Medical Device to become an ISO standard so that it is the standardized way to evaluate biocompatibility and skin allergen risk with a new Meditec product. On VitroScreen, we have a technology platform called Aura, which is organoids, which we can shred to customers' needs, and thereby also shred various effect tests. And we also have a project ongoing where we are looking at whether we can improve our analysis platform to reduce our direct costs, but also make it a little easier to get better license sales in the future. Hur går det för oss med våra tillväxtinitiativ? Jag kan rapportera att aktiviteten är mycket hög. Det går jättefint. Vi har implementerat, bredat vår testportfölj genom att implementera ett nytt test i Milano som heter Epicens A. Vi är först i Europa med testet. Vi är faktiskt först i världen utanför Japan med att implementera det. Vi har redan orders och vi håller på att genomföra dem på vårt labb just nu. And we see that there is a big demand, that this is a very good complement to GARD when it comes to regulatory testing. Then we work with and get GARD as a medical device standard in the ISO standard. And now we have carried out our in-house validation and we have fantastic results. which we will now present to the ISO group, and the next step will be to continue with a ring trial, as it is called, where we prove that the test works on three labs independent of each other. During the quarter, we also saw that the FDA made a statement about trying to avoid animal testing in the development of monoclonal antibodies. We see it as incredibly positive that the FDA and the pharmaceutical industry are paying attention to this and putting such strong signals into practice so that we can get a transition to animal-free methods, even within the pharmaceutical industry. Fokus för oss. Vi har en stark kassaposition. Vi ser att bolaget har potential att växa väldigt kraftigt organiskt. Så vi kommer att fortsätta driva försäljningen genom att influera industrin med vetenskap och innovation. Vi kommer att bygga ut vår kommersiella organisation, ytterligare något. And this commercially focused organization that we have recruited to Virtuoscreen will now be released on the market. And at the same time as we do these commercial initiatives, we continue with R&D, expand the test portfolio, run these regulatory approvals so that we lay the foundation for taking the next step in the growth journey. Vi har gjort två framgångsrika förvärv. Vi har en agenda som innebär att vi tittar på bolag. Vi vill förstås att det här ska passa och kunna bidra till vår tillväxtresa. Då får vi återkomma till dem när en sån möjlighet dyker upp. Med det här starka marknadsintresset och de starka aktiviteterna, höga aktivitetsnivån, så har vi lagt en väldigt solid bas för att få en mycket högre tillväxt andra halvan 2025. And then we'll hand it over to a question time.

Thank you, Peter, for this. We will also open up for those of you who are online. But I have a couple of questions I was just going to ask first. You talked about the fact that the decision-making process is longer. And it refers to market anxiety. It's easy to agree with that, so it's been pretty easy. What makes the decision-making process take longer? Has it changed its meaning at the end of the day?