SenzaGen AB

Thank you very much. I am Rodnall Wehn and I will guide you through this broadcast. We will start with the presentation of the results and trends. Then we will move on to a Q&A session. where I will be moderating and you have the opportunity to send in written questions and also to be on the phone. So with that, Peter, welcome and present the result.

Thank you very much Rodney and also welcome from my side to this quarterly report for the third quarter. Jag går rakt på och berättar att vi kommer att lägga upp det här med en agenda. Det jag kommer att prata om är den finansiella utvecklingen under kvartal 3. Sen ska jag berätta lite grann om den positiva utvecklingen för Guard och våra dotterbolag. Därefter så, för de som kanske lyssnar på kvartalsrapporteringen för första gången, så blir det en kort introduktion av bolaget. arbeta med och därefter så går vi in på strategi först i form av vår R&D pipeline som går framåt och därefter så avslutar jag med våra strategiska prioriteringar hur vi ska växa bolaget framåt. Och sen kommer vi ju då tillbaka till en frågestund som Rodney kommer att moderera. Vi har haft ett Kvartal 3. Vi pratade under första halvåret och både vår Q1 och Q2-rapportet mycket pekar på att vi skulle ha ett starkare andra halvår än första halvår. Det är också det vi nu ser och har levererat. Vi har nått både tillväxt i kvartalet, 18% icke-valutajusterat, And we have also had a break-even on the EBITDA level in our movement results. So here we see just this turnover of 15.2 million in Q3 2025 compared to 13.2 in 2024. An increase of 15% or 18% if we adjust for the currency against the wind we have in line with the Swedish crown tax. Significantly towards the euro, but even more towards the dollar. Our guard business, which we report separately, grew by 12% or 15% in constant currencies. and we ended up with a gross margin of 66% compared to the previous year of 67%, which you could say is on the same level. And this sum, that we have had such a good increase in revenue and kept our costs stable, has led to us reaching a break-even result on EBITDA at zero. and it is an improvement of 1.2 million SEK and it is also visible in the moving result that you can read about in the result calculation. We have worked disciplined in our entire group to keep our costs down, but I just want to say that the third quarter for us who have a lot of staff in Sweden is normally a lower quarterly rate because of the semester periods. So we have had some help in lowering the costs in the third quarter because of that. But on the other hand, it is something that we also had in the third quarter of 2024. So that we kept the costs stable while we increased the turnover shows that we have very good leverage in our business. Kassan ligger på 29,3 miljoner. Det är ingenting vi är oroade för. Vi har haft väldigt hög fakturering precis i slutet av kvartalet, vilket fått kundfodringarna att hoppa upp lite grann i balansräkningen. Därigenom har vi haft en påverkan på kassaflödet. Let's move on to sales. I'll start by talking about Guard, our core business. We have very good development there. We had 12% growth quarter to quarter, up to 10.5%. You should remember that Q3 is usually a weaker quarter. We have a lot of our business in Europe, 75% all year round in 2024. And with the semester period in August and September in Europe, we get worse sales. What we have also had is that we have continued to see this a little longer lead time for large orders and a certain resistance with the currency. We continue to work very focused on getting new customers. We have 10 new customers that have joined Guard here during the quarter. And the joy is that half of them are such large multinational companies that we know are what we want in the customer portfolio, because then we create a recurring business. We can also see this in customer loyalty in the quarter. 85% of sales come from existing customers. It's a little higher than it usually is. And what makes Q3 sell pretty well for GARD despite the semester period in Europe and this longer period of time for major orders in Europe is that we have had good development in the USA. So we communicated two major orders that came in, one from the chemical industry and one from the pharmaceutical industry. Both two over one million kronor and that has led to a higher share of sales from the USA in the quarter. Sen fick vi ju precis i början av Q3 godkänt på TG497 för Guard och vi har haft ett fantastiskt mottagande av det. Vi ser ett väldigt stort engagemang kring Guard hos våra partners, CROs och distributörer och vi har också väldigt många leads som kommer in nu här och vi tror att det här kommer att ge oss en fin utveckling framöver. VitroScreen, which we are working on developing, here we see now after a weak first half of 2025, where we talked about that we started to see small signs of the pipeline starting to be built on VitroScreen under Q2, we are also delivering a better quarterly result for VitroScreen with 15% growth in constant currencies. The sales are still not at the level where we want VitroScreen, but we see signs of improvement. So we will continue to work with VitroScreen in this way, with a focus on sales, customer acquisition and keeping costs stable. Our second subsidiary, ToxHub, which is an advisor in both pharmacology and toxicology, provides a very strong result. We have, through sales work and marketing focus, which we started one and a half years ago with ToxHub, reached new customers. This has led to a tripled sales for ToxHub in the quarter. And it's a trend we've had during this year, because in total, during the first nine months, Toxab now accounts for 9% of the group's sales. And throughout the year, in 2024, we were at 5%. So we have a very strong development for Toxab, and it's also a very profitable part of our business. Ja, lite grann här kring de kunder. Vi jobbar ju med världsledande bolag med Guard. Vi vill nå in till de här stora bolagen som L'Oreal i kosmetika-industrin, Sonova i medical device-industrin, ExxonMobil i... the chemical industry, Lundbäck in the pharmaceutical industry. Because we know that when these customers have started to use GARD, they will return to a very large extent, both during the same year, but also later when we get a loyalty and an increase in our business, which we have seen for several years now. Therefore, these new five large customers, which are in parity with some of these brands, you can see on this slide, are very good for us. Vår vision med gruppen är ju att ersätta djurförsök och på det sättet så bidrar vi till att förbättra hälsa och skydda människor från skadliga kemikalier i omvärlden. Men vi vill göra det utan att offra miljontals djur i processen. And to explain that, we have a group that consists of three companies today. We have Sensagen in Lund, which has developed the revolutionary GARD test, which I have just announced the sale of. We also have another toxicological testing in our GLP certified lab. Sensagen accounts for 65% of the company's turnover and there are 21 employees in the company. Vi har ett datorbolag VitroScreen i Milano som kompletterar Senseian genom att erbjuda så kallade 3D-vävnadsmodellstestning och har en testplattform som heter Aura. stands for 30% of our turnover and has 10 employees. And then we have our advisor, ToxHub, which in 2024 stands for 5% of sales and has three full-time employees, but a network of other expertise that they can draw on when you need to meet the needs of customers. I'll tell you a little bit about our market. We operate on a growth market. It grows between 6 and 9.5% and we are looking at the animal-free toxicology and effect testing market. The total market for this is estimated at 13 billion dollars. And we have, as I said, brought that down to a SAM, serviceable addressable market, at about half a billion dollars. So that is the market we theoretically could sell today if we reach all customers and take 100% market share within the services we can offer today. We believe that this market will continue to grow. There are four big drivers. One is that we have scientific development. There has been progress in AI, but also in cell and molecular biology and similar models that make it possible to look at what is happening today in biologically complex organisms such as humans, and thereby get closer to what could happen when we are exposed to chemicals in our natural environment. We also have regulatory forces, There will be legislation similar to the Cosmetica that introduced an animal testing ban in the EU in 2014. There will be similar preparations for new legislation elsewhere in the world. There will also be a lot from the USA in both NIH, National Institute of Health, and FDA, to encourage companies to switch to animal-free testing in their preclinical operations. Furthermore, animal-free testing is often more cost-effective than animal testing, and it lowers the company's development costs. And it can also improve time-to-market, it's faster to do animal-free tests, you don't have to make any ethical applications. The last thing is that companies also work on their social engagement and to reduce the number of animal trials is one way to get engagement and improve your footprint. So the four of them work together and we believe that this market will grow many years ahead. Today it is Europe and North America that are the major parts of our growth market. 75% There are signs that things are happening in Asia. Now China is starting to take hold of this message as well. But our focus with Sensagen Group is on the European and North American markets. Vi jobbar ganska brett med flera olika industrier, så nära till hands tänker man kanske på kosmetika när det gäller djurtester. Det är en väldigt viktig marknad för oss också. Men man ska komma ihåg att medical device och medicinteknik också gör mycket djurförsök. Faktum är att när det gäller kontaktdevices, produkter som är i kontakt med huden, They are the main part of the animal experiments that are done today in the field of skin sensitization. So if this industry could change, you would save a lot of animals. And we could reach a very large market with the sensor again. The chemical industry is also an important industry. Medicines, and there is also testing in nutrition and food. Jag skulle säga att alla de här branscherna är viktiga och en sak att ta med sig är ju att Sensein rör sig i ett fält där vi inte är beroende av att en enskild bransch rör på sig eller inte. Vi har en aktiv tillväxtagenda och för att fokusera in lite grann på vår R&D, vi är ett teknikbolag och vi har tagit fram världsledande teknik som vi lyckats få godkänd. Vi fortsätter investera i den teknikplattform vi har utvecklat och vi tror att det kommer att leda till väldigt stark försäljningsutveckling framåt som ni kan se på den här illustrativa grafen. One project we are working on is about dose response. It is about developing GuardSkin regulatory. Today we have an approval where GuardSkin can be used for so-called hazard identification and say if an item is allergenic or not. Vår dosresponsmetod, som vi har färdigutvecklade och redan säljer av, säger istället vid vilka koncentrationer som ett ämne börjar bli farligt. Det här är en väldigt viktig sak för bolag att titta på, och vi försöker få ett direkt rapport godkännande även på den här koncentrationen. The second major growth project we are working on is in medicine technology, which I talked about earlier. This is an area that still does a lot of animal testing. What the industry follows is an ISO standard, and there are all tests, even animal tests, defined how they should be done. In this, there is no standardized animal-free test today for skin sensitization. We work with SensiM, probably the first method that comes into this. We work with it with a project where we have already developed the method and we will go through what is called Ring Trial. The last is that we work with Aura and it is VitroScreen that has a technology platform for tissues. And there we work with utveckla nya plattformar så att kunderna kan titta på nya effekter. Sista vi jobbar med inom Guard så jobbar vi med att förbättra vår teknikplattform i sig. Sista ledet vi jobbar med där är en så kallad gen-expressionsanalys. Genom att byta ut det steget mot ny, mer modern teknik så kommer vi att öka vår bruttomarginal och få upp vår licensförsäljning. So a little bit of progress. This has gone with our initiatives. I mention two here. First, we have the DOS Response project. There we have sent our application to ECWAM, which is the EU's authority to evaluate methods in order to then be able to recommend them for OECD inclusion. And it is OECD that controls standardization in our test industry. And this process is quite long. We have gone through it once with GuardSkin. We think it is reasonable that we can get a complete OECD approval in 2027. And that will significantly increase the demand for our dose-response test. Then we have our MedTech project. We have presented the MedTech data for ISO's working group. Resultatet av den presentationen och den datan som för övrigt ser fantastisk ut, vi klarar i princip av att identifiera alla hudallogener. Det var också konklusionen från arbetsgruppen som rekommenderade att GARD nu går vidare att genomföra en så kallad ring trial. Ring trial betyder att vi ska undersöka och bevisa att vår metod funkar on three labs independent of each other. We have prepared this process, and we are in the final phase right now with trading up test labs. And the goal is to start up our ring trial already now, during this quarter. And then we should reach an ISO inclusion in 2027. beroende på hur snabbt den här ISA-arbetsgruppen arbetar. Men det vi gör är att den delen vi kan kontrollera som handlar om att nu få igång den här ringtime, det ska vi få till så fort som möjligt. Så, vad ska vi göra framöver? Ja, vi ska skala upp affären, fortsätta förbättra effektiviteten, alltså få hävstång på våra kostnader, och lägga investeringarna i de här viktiga tillväxtprojekten inom Medical Device Dose Response, Aura. Organic sales and organic growth means that we continue to establish direct sales, improve our position on our existing markets by increasing our customer portfolio. We have several partners. We give the opportunity to expand to new markets. The CRO we have, for example, is responsible for the American market, which we signed almost a year ago. We see that we are starting to get a certain traction now. I have already talked about the test portfolio, the initiatives we have there. Very, very important to drive our future growth. And then the way we reach our customers and we get customers to test on Guard, it is through this thought leadership to drive scientific communication. vi har också gjort två lyckosamma förvärv fått till en breddning av vår testportfölj som annars skulle tas flera många många år och den här konsult och rådgivningsverksamheten Toxab som bidrar så fint till vår lönsamhet. Vi ser att förvärv som kompletterar gruppen har en plats men vi vill att det ska vara rätt bolag som tillför rätt kompetens och rätt pusselbit så att vi kan ytterligare förbättra vår organiska tillväxt. Jag tackar så mycket för att ni har lyssnat på den här kvartalsgenomgången och vi ska arbeta med framåt. Och jag vill nu flagga för att vi den 10 november, nu på måndag, kommer att hålla en kapitalmarknadsdag där vi kommer att gå igenom i bättre detalj vår strategi framåt och mer exakt våra målsättningar och vad de kommer att leda till de närmaste åren. Vi har ett väldigt starkt program med externa talare, experter inom djurfrittestning och också ett par kunder som kommer att uttala sig för vår räkning om Sensagen. Så jag rekommenderar varmt den här eventen. Inleds på plats i Stockholm 11.30 med lunch, med en presentation och kommer att ta vid vid klockan 13. Det går också bra att delta digitalt. Så det finns ett par platser kvar för den fysiska eventen så anmäl er där om ni inte har gjort det via mail eller anmäl er till online-eventen. Tack så mycket och jag lämnar tillbaka till dig Rodney för Q&A. Thank you so much, Peter.

As I mentioned, you can both send in questions in writing or you can also put yourself in the telephone queue and we will let you in in order. But before that, a few questions from me. You mentioned that you have received 10 new guard customers this quarter. Can you say something about what trends you see, what industries, industries and testing methods are common?

It's exciting. As I mentioned in the presentation, first of all, it's five multinational large companies. It may be a little more than it usually is in terms of percentage and our new customers. The other thing to highlight is that there are three new customers from the pharmaceutical industry. We have had a slightly smaller sales to pharmaceutical customers, but now there are three new ones. It's an interesting trend. The last is that of the new customers, 9% are from Europe. So nine of them are European.

And how do you see the possibility of developing the relationship with those customers? Can they grow and become bigger too?

It is mainly these five large customers that may have placed a little smaller orders initially. We think they will grow and get bigger.

You mentioned that nine out of ten new customers are from Europe, but in this quarter the American market was very strong. I would say that an overwhelming part of the growth in this quarter, about 18%, comes from that market. Do you see any new trends that will continue, or is this more of a temporary situation?

Yes, that's right. It is a... An absolutely significant part of the growth comes from the USA. Almost half of the sales in the quarter comes from American customers, compared to the whole year of 24 where we had 25%. It remains to be seen if this is a trend that will last. It is explained by two major orders that we also communicated in the quarter. We got a big order from an American pharmaceutical customer And one big order from an American chemical company. And the other, Rodney, that you might want to think about is that just Q3 sales in Europe tend to be lower because of the semesters. So it's not that strange that the American market dominates our sales in the third quarter. So we'll see if this becomes a trend that stays in place. Yes, that's right.

Du nämnde också att du varit närvarande vid flera sådana internationella forum i kvartalet. Kan du ge oss någon form av ögonblicksbild och stämningsläge? Hur var liksom stämningen på de här forumen och hur uppfattar du sig att ni tog sig emot?

Ja, alltså, jag har ju nu varit på... I will mention one event. We have two really big events that we have absolute focus on every year. The first is the Society of Toxicology in the USA. It takes place in the spring and then here in the fall we have the equivalent in Europe called Eurotox. And I have been to five Eurotox in a row now. And I have never experienced a greater pull around Sensagen than what we had this year. And it is visible on several fronts. Kunder och key opinion leaders som presenterar Guard data nu. Det är inte bara vi som står och pratar om det. Vi har ett helt annat drag i vår monter med kunder som kommer att bli både befintliga och prospektiva nya. Min uppfattning är också att vi har varit på en hel del andra engagemang scientific conferences, trade shows, and that we have seen the corresponding trend there. So, of course, Sensagem, we have moved from being a challenger in the industry to being an established player that drives a lot of the development in animal-free testing.

And as far as vitro screening is concerned, we have talked about it in this talk, that you have made a change, that it has been a slow sale, that you have I have worked a lot with to replace that company. Now it was a very nice trend in this quarter and up 15%. It is a clear improvement, but at the same time you say that the company is still under renovation. So could you give us some indication? What kind of work is left before the renovation is done? Can you give us some kind of understanding when it's done?

We are happy with What I'm pleased with this quarter on VitroScreen is that we've got the percentage growth rate up to 15%. I think that's a reasonable growth rate for the company where it is now. But we want to have VitroScreen up to a higher turnover level. have more projects that take place in the lab, have more new customers. So the big focus is to continue to work with sales and marketing, while it is now necessary to keep up and have a high cost efficiency. So, as I said, we saw a sign here in the first half of the year that the sales pipe was improved, so we expected both because of that, that we would get a little better sales development in the second half of the year when we have seen a good Q3. As far as the future is concerned, it takes some time to build up such stability in the business, but the sales pipeline continues to look good, so we will continue to develop Vitroscreen.

It may be the most relevant in the report, your smallest area, ToxHub. which has grown three times in the quarter. It is really self-sustaining. And now it stands for 9% of the profit. What is behind the dramatic improvement during the quarter? Is it sustainable or was it more of a peak during the quarter?

In that case, I think we have taken up Toksab to a more sustainable level, since we have expanded the customer base a lot. When we acquired Toksab, there was a fairly large concentration of customers in Southern Europe. And one goal we had was to get a customer portfolio that is also outside. So we have worked a lot with marketing and re-establishing the company to be able to reach customers outside. And that has led to the fact that we have also, eventually, also received a release on sales. Then I would also say, Rodney, we have a slightly better market in just medical device in Europe. Vi hade ju den här Medical Device Regulation, MDR, som hade en deadline på först 2024, sen flyttades det fram till 2027. Då fick vi en tillfällig nedgång under 2024 i efterfrågan, för man tog det lite lugnt. Men nu börjar 2027 komma ganska nära, så vi ser en ökning nu.

Vi börjar få in en hel del frågor här ifrån publiken, vilket är glädjande. Vi börjar här med Jakob Lindberg. Han frågar så här, en månad in i Q4 2025, hur ser du på resten av året gällande tillväxt och kan du säga något om orderboken i förhållande till hur det såg ut vid den här tidpunkten 2024, likt du gjorde tidigare i år?

Mm. Vi undviker att ge prognoser på kvartalsnivå, men det jag kan säga är väl att vi har haft en väldigt bra utveckling på orderboken under starten på fjärde kvartalet och ligger något bättre till just nu än vi gjorde för ett år sedan. Det är två månader kvar. Vi kommer att jobba hårt för att göra ett så bra resultat vi kan och fortsätta den här tillväxtresan. Men vi lämnar ingen prognoser. Tack.

Sen har vi Magnus Stenberg. Trots bra utveckling inom mycket växer sales svagt sett över de två, tre senaste åren. Varför ser det ut så?

Ja... It's often the case. With regard to Guard, we have had a development where we have brought in many new customers. We also have a good repeat in the business, which will lead to growth that remains. You can also see that we are not dropping completely during the quarter, but we have a fairly stable turnover that also grows over time. Men att vi inte vuxit lika kraftigt just det här året och föregående år, det beror på att vi har lite grann ett skifte just nu. Vi har haft lite trögare med större orders det här året. Vi har haft fler mindre ordrar istället för få stora. Men It also gives a more sustainable growth when it looks like this, since we are constantly working with an extended customer base. So that's one explanation. The other explanation for the decrease in growth is that we have had this change in the virtual screen, where we had a management shift during Q4. It has weighed us here in the first half of the year quite well in 2025. But as we are talking about, we are working to arrange it and see signs that it is changing.

Jakob Lindberg, one more question. I also asked this, but it's this strong growth from Toxab. Is it something you expect to continue or is it a temporary performance? And you answered well on that. Maybe it could be an additional question. Do you expect that you need to invest more in Toxab just because of this strong sales? Or will you clear it off with the existing organization?

No, we will... Precisely. It's a very good question, an operational question. It will come, and just as we see it right now, we want to see that we can handle the business at the level it is now, and maybe even more, since we not only have people who are employees of the company, but also have a network of external consultants who can contribute. But if we want to, over time, internalize the revenue and lower our consulting costs, then we could hire more, but in that case we will exchange resources from external to internal.

Then we have another question here from Julian Ademius. Hi, when a customer buys services from Senseagent, does it tend to be typically a one-off deal for a certain product that a customer will bring or new drugs and so on? Or are tests also carried out on existing products?

A good question from Julian. No, but it happens then. when you make a new product, and then you have to do a safety test. In MedTech, you also do, when you do less, it can also be a little less adjustment, you may change paint or color on your component, or change some incoming chemicals, so there are also always some small changes in the product. But it is often triggered by some form of product development.

Yes, those were the questions from the audience. You have a few more minutes to ask, so I'll ask a question in the meantime, or two. The EBITDA result has been greatly improved, and for the first time it was not negative. You explained it with increased sales and lower costs, but what are the main initiatives that are behind this strong improvement?

Yes, it is a It's the increased sales. We've talked a bit about VitroScreen and ToxHub and what we've done there. We also have a little better sales of methods that complete Guard, which is another of our strategic investments that has given results. So there we have on the sales side. Then on the cost side, it is that we have been careful and we have tried to get better efficiency on the cost mass we have. We have also had a little bit of a seasonal advantage of the semester period, which leads to a little lower costs for us. But as I said, it's the same trend as we had in Q3-24.

Good. The cash flow was negative for the quarter, despite the fact that you improved the result. Is this something that is temporary and do you expect the cash flow to come back during the next quarter?

We had, you can see it on the customer feedings, we have almost twice as high customer feedings at the end of Q3 2025 as we had in Q3 2024. And so we factored a lot during September. And that's what we're paying for now, so to speak, or getting cash for now. Jag skulle säga att det är en tillfällig effekt. Det är ingenting vi har lagt ut pengar till i övrigt. Good, thank you.

We have no more questions from the audience, so I'm going to ask you to finish by giving us a little cliffhanger around next week's capital market day. What are you going to focus on? And you, it's a group of people, so what are you going to focus on?

You can expect to get a little more complete history about Sensei and our path forward. One is our strategic priorities. Vad vi förväntar oss av dem och när vi tror att effekten kommer. Vi kommer att berätta mer om vår R&D pipeline och de framsteg vi gjort som jag gav en liten inblick till nu. Vi kommer att berätta mer och vi kommer också att berätta vad som kommer att ske härnäst. Vi kommer att dela ganska mycket insikter om vår försäljning och vår kundstock. So, it will be our customers who will tell us about the experience with SenseN and how they see the trends. And we ourselves will draw other customer examples. We will also have external experts such as Professor Ian Kimber, who is a toxicologist from Manchester University. Ian has a long, long history in this industry. He has been involved in many of the animal methods and now sees this development towards animal-free methods and can tell more about it. So you will get both key opinion leaders, customers and you will get other insights about how we think about the future in both the short, medium and long term.

Yes, we thank you for that and we thank you who have been here and listened to your activities and questions. We hope to see you again next week on November 10th. Thank you for this and thank you Peter for your presentation.