Earnings call transcript: Devyser Diagnostics posts first profitable quarter in Q4 2024

Devyser Diagnostics AB (DVYSR) reported its first profitable quarter as a public company in Q4 2024, with revenue reaching SEK 64.2 million, marking a 41.5% year-over-year increase. This achievement aligns with the company’s strong revenue growth trajectory, which InvestingPro data shows at 25.3% over the last twelve months. Despite this milestone, the company’s stock price fell by 6.12% in the open market, closing at SEK 130.5, down from its previous close of SEK 139. The earnings per share (EPS) forecast was -0.6801, with recent upward revisions, indicating some positive expectations from analysts. According to InvestingPro analysis, the stock’s RSI suggests it’s currently in overbought territory.

Key Takeaways

• Devyser Diagnostics achieved profitability for the first time as a public company.
• Revenue increased by 41.5% year-over-year in Q4 2024.
• Stock price declined by 6.12% following the earnings announcement.
• The company is focusing on expanding its market reach, particularly in the transplantation diagnostics sector.
• Strategic partnerships and FDA approval pursuits are key focus areas.

Company Performance

Devyser Diagnostics demonstrated significant growth in Q4 2024, with revenue increasing by 41.5% compared to the same period last year. The company reported an EBIT of SEK 0.7 million, which would have been SEK 6.9 million excluding an Italian payback provision. The company’s gross margins were near 85% for the quarter, contributing to its profitability.

Financial Highlights

• Revenue: SEK 64.2 million, up 41.5% year-over-year
• EBIT: SEK 0.7 million, adjusted to SEK 6.9 million without the Italian payback provision
• Gross margins: Approximately 85% in Q4
• Cash reserves: SEK 145 million at year-end

Earnings vs. Forecast

The company’s earnings per share (EPS) forecast was set at -0.6801, with two upward revisions in the past 90 days. This suggests that analysts had some positive expectations leading up to the earnings release. The actual EPS and revenue figures have not been disclosed, making it difficult to determine the exact variance from forecasts.

Market Reaction

Following the earnings announcement, Devyser Diagnostics’ stock price dropped by 6.12%, closing at SEK 130.5. This decline occurred despite the company’s first profitable quarter and impressive 73.32% return over the past year, as reported by InvestingPro. The stock movement might reflect investor concerns about future growth prospects or the impact of the Italian payback provision on EBIT. InvestingPro subscribers have access to detailed Fair Value analysis and 10 additional ProTips that could help understand this price action better.

Outlook & Guidance

Looking ahead, Devyser Diagnostics plans to leverage its investments and focus on profitability throughout 2025. The company’s strong financial position is evidenced by its healthy current ratio of 4.21 and moderate debt levels, according to InvestingPro data. The company is pursuing FDA approval for its transplant diagnostics and aims to expand its market presence, particularly in the Canadian market through a potential Ontario tender. Revenue forecasts for the upcoming quarters suggest continued growth, with expectations of reaching SEK 8.41 million by Q4 2025. The company maintains an impressive gross profit margin of 80.01%, providing a solid foundation for future expansion.

Executive Commentary

Frederick Dahl, Acting CEO, emphasized the company’s strategic positioning: "We are positioning Devisor to better serve our customers and patients as well as our employees and shareholders." He also highlighted the company’s potential: "We have a great potential with a lot of commercial and scientific talent."

Risks and Challenges

• Market saturation in key regions could limit growth.
• Regulatory hurdles, particularly in obtaining FDA approval, may delay product launches.
• Fluctuations in foreign exchange rates could impact financial performance.
• Competition from established players in the diagnostics market remains a challenge.

Q&A

During the earnings call, analysts inquired about the transfer of transplant customers to Thermo Fisher (NYSE:TMO), the buildup of inventory, and expected sales patterns. Management confirmed the ongoing FDA approval process and addressed concerns about the performance of direct sales, which accounted for 65% of total revenue in Q4 2024.

Full transcript - Devyser Diagnostics AB (DVYSR) Q4 2024:

Conference Operator: Welcome to the Devisor Diagnostics q four report 2024. For the first part of the conference call, the participants will be in listen only mode. During the questions and answer session, participants are able to ask questions by dialing 5 on their telephone keypad. Now I will hand the conference over to the speakers, CEO, Frederick Dahl CFO, Sabina Berlin and CCO, Theis Kipling. Please go ahead.

Frederick Dahl, Acting CEO, Devisor Diagnostics: Good day, and welcome to the Devisor q four twenty twenty four earnings call. I’m Frederick Dahl. I’m the acting CEO of Devisor and would like thank you everyone for joining our call today. On the call today, we have, in addition to myself, also our CFO, Sabina Berlin, and our Chief Commercial Officer, Ty Skippling. Since this is my first earnings call for Divisor, I will start with a short introduction on who I am and my background.

I will then review our updated strategy before handing over to Sabina for a review of our financial results in Q4 twenty twenty four and then to Thijs for an update on our commercial activities. I have been a board member of Deviserv since 2021 and is the acting CEO since January 16. I have a PhD in Molecular Medicine from Uppsala University and carried out the postdoc at Stanford in DNA Technology Development. After my studies at Stanford, I worked in startup seen in Silicon Valley in Next (LON:NXT) Gen Sequencing, and have co founded both Halo Genomics and Vanadis Diagnostics that we sold to Agilent (NYSE:A) and PerkinElmer (NYSE:RVTY). I have a background from both startup companies as well from large international corporations in both the research tools and diagnostic space.

And I will remain as a member of Devisor Board of Directors. During my first few weeks, my team and I have focused on updating our strategy. And it was reconfirmed to me that Devisor has a great potential with a lot of commercial and scientific talent. An overall goal for us in the coming year is to make Devisor a more efficient organization, and that goal starts with a clear and more focused strategy. With this updated strategy, we propose to focusing on two customer segments.

The first is our customer group in Clinical Genetics Labs. In these labs, both research and diagnostics of patients within the field of inherited diseases is carried out. Many of our current products belong to this research discipline such as our inherited cancer products, cystic fibrosis and diagnostics of cardiovascular disease causing genetic variants. We have a well established commercial footprint in these labs with long and good relationships with the leading researchers as well as recognized commercial brand. We strongly believe there are significant more unmet diagnostic need that we can address in a systematic approach together with our customers and scientific collaborators.

Our ambition here is to become the number one partner and the one stop shop for these laboratories. The second customer group we would like to focus on is the transplantation lab and their patients. The fast growing diagnostic field has been subjected for a paradigm shift with the introduction of cell free DNA as a sensitive diagnostic marker to measure transplant reaction. By detecting transplant reaction early, more organs and human lives can be saved. Devisor has developed a highly competitive product in CF DNA measurement for post transplant analysis with superior sensitivity compared to competition.

We currently have a partnership with Thermo Fisher to allow for faster market entry and our longer strategy is to continue to expand our portfolio in this field to become the pioneering partner for decentralizing transplantation diagnostics. So what does decentralization mean in this field? Well, today the great majority of all samples are being shipped to large central service labs. These samples are prepared and analyzed by the central lab and data finally sent back to the local transplant laboratory. This procedure is subjected to high cost and long turnaround times.

With devices Radiant Kit, we have an opportunity to bring the test closer to the patient at the local hospitals, increase turnaround time without compromising on performance. With that, I would like to shift focus to the fourth quarter results for 2024. I’m very pleased to announce that we had our first profitable quarter as a public company. And the theme for 2025 is to leverage our recent investments and continue to focus on profitability. With that, I would like to hand over to Sabina to share more details on our financial results for Q4 twenty twenty four.

Sabina Berlin, CFO, Devisor Diagnostics: Thank you, Frederic. Let me here give you a summary of the financials for the quarter. Revenue for the period October to December came in at SEK 64,200,000.0 compared to SEK 40,000,000 in the same quarter last year and SEK48.7 million in Q3. And growth at 41.5% in the quarter brings us back to full year growth just below our target of 30% annual growth. All of our markets have performed well in the quarter and Tijs will soon share more specific highlights from the commercial side.

The trend over our historical quarters remained stable. Q4 showed the best quarterly revenue so far with the first time above SEK60 million in a single quarter, catching up from the slightly softer Q3. We can expect some of the inventory build up that we saw from Thermo Fisher in Q4 to impact their purchasing pattern in the early months of 2025 before partner sales pick back up again. Our EMEA region remains our biggest market and grow by 33% compared to last year during the quarter and just below 30% over the full year with our new and direct markets carrying the strongest growth. APAC has seen a small decline in growth, but North And South America grew at about the same pace as Europe, landing at a full year sales of SEK19 million.

During 2024, direct sales made up 65% of total revenue, which is lower compared to the 77% of the sales last year as sales to Thermo Fisher has picked up. Distributor sales have almost doubled compared to 2023 for the same reason. The fact that direct sales being lower than the same quarter in 2023 is mainly due to the transfer of the last transplantation customers to Thermo Fisher in 2024. Outside of the agreement with Thermo Fisher, also our other distributors show a healthy growth during the year. Gross margins during the quarter is back close to 85% in October to December, but remained just below 80% for the full year after the impact from our move to the new office and expanded production facility during Q2 and Q3.

We were very proud of the first EBIT positive quarter since the company was listed. Even if EBIT was only SEK0.7 million, it would have been a positive SEK6.9 million without the provision for Italian payback that was made in the quarter. This payback fee was initiated several years ago when the Italian parliament imposed a law enforcing companies selling medical devices in Italy to make payments to the Italian state if medical device expenditures exceeded the regional maximum ceiling. During 2024, a decision in the constitutional court in Italy confirmed the law and Devise decided to make a provision for the period of 2015 to 2024. And annual reservations for payback fee will be made going forward also.

The positive EBIT result marks an important step in the path towards profitability, which is under control and progressing on plan. As part of the journey, there will be quarters in H2 of this twenty twenty five year that are less strong than H2. During the Q4, we also saw gains from the savings initiated in Q3, which impacted that quarter negatively. We closed the year with SEK 145,000,000 in cash and our liquid And I feel comfortable that our cash flow will turn over the foreseeable period as our focus on profitability continues. And with that, I hand over to Thijs.

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: Thank you, Sabine. Q4 was indeed a great quarter in many ways that you just heard. We are continuing to make lots of great improvements across markets and especially within The US, including our partnerships with Thermo Fisher as well as Cytiv. During Q4, we received the expected order from Thermo Fisher, the largest in the history of our company. We are pleased to see the partnership continue to advance in the right direction.

We recently had a joint leadership meeting with Thermo Fisher, including also our acting CEO, Frederic Dahl, who once again underlined the commitment on both sides to make this partnership a success. Both companies are ambitious and eager to build as large a market position as possible. Let me start with an update from our CLEAR lab in The US, where we, during the past months, have been working diligently to prepare for obtaining reimbursement for our CF DNA transplantation assay. We had a first pre submission meeting with MolDX and are on track to getting reimbursement during the second half of this year. Furthermore, we recently signed and extended the agreement with The UK based oncology company cited to continue through 2027 and with certain revenue commitments associated to the agreement.

Just on this agreement alone, we will be doubling our revenues in 2025 versus 2024 within North America. Turning towards our momentum we have with RHD, we continue to be optimistic around the potential for this product within North America. Starting in Canada, I’m pleased to see that Canadian bot services are expecting to reach clinical routine within a few months from now. Additionally, I’m equally pleased to see that Hemo Quebec recently ordered their first set of RHT products to commence their validation. Within The US, we continue to be working with some large potential customers around RHD.

If we win just one of these large opportunities, then we will be poking a sizable hole into The US market, which you will hear more about as we progress the year of 2025. Moving on to Europe, but staying with RD, I’m happy to mention also the recent Class D IVDR approval that we obtained late last year. Class D within the IVDR represents the highest risk classification within the framework and hence is also associated with the toughest data requirements. This is definitely a milestone for the company as well as it’s a clear differentiation within the market that I expect will help us with the continued expansion of RHD across Europe. Beyond this, I’m equally reassured that managing the highest risk classification puts us in a solid spot for working with the FDA in The US to have products approved within The US market.

We’re committed to making the most of this momentum in Europe, and one of the next markets to adopt the testing first before giving the prophylactic treatment is our largest market, Italy. I expect to be able to share more good news within the next quarters around a first public hospital in Italy to take on our RTD assay as part of regional screening. The team in Italy continues to make impact as you recently saw from our press release with a new tender for cystic fibrosis that we won for five years, and they are continuing to ride the wave that they have created for themselves as well as the remaining biorex markets are doing equally so. All in all, as you can see, the momentum is building, and I look forward to keeping you updated throughout the year. And with that, I pass the word over to you, Fredrik.

Frederick Dahl, Acting CEO, Devisor Diagnostics: Thank you, Tyson Sabina. With the updated strategy, I’m confident we can build a solid foundation for Devisor going forward with improved productivity, customer focus, and optimized investment spend. With a more focused and efficient organization, we are positioning Devisor to better serve our customers and patients as well as our employees and shareholders. With that, I open up for questions.

Conference Operator: The next question comes from Ludwig Lundgren from Nordea. Please go ahead.

Ludwig Lundgren, Analyst, Nordea: Yes. Hi, Fredrik, Sabina and Tais. A few questions from me. Starting off in the direct sales channel here, I think Sabina said that this was negatively affected by your transitioning customers to Thermo Fisher than in the transplant tests. Is it possible to quantify like the cannibalization then of direct sales and maybe the growth rate when excluding transplant in direct sales?

Frederick Dahl, Acting CEO, Devisor Diagnostics: Okay. Sabine, do you want to take that one?

Sabina Berlin, CFO, Devisor Diagnostics: We’re not fully allowed to quantify, but I think, Thijs can give a little bit more color on the direct sales and transition to distributor sales.

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: Yeah. I can do that. And and as as mentioned, obviously, we have in a couple of iterations now expanded the agreement with Thermo Fisher. And what happened in July 2024 was that we reached an agreement with Thermo to hand over the exclusive we had an exclusive number of customers for Kymerism that we had kept out of the contract, but to enable Thermo Fisher to gain access to those accounts and broaden their reach within those, we agreed to carve those out. And that meant carving it out of our direct sales business and then reporting it in q four as part of Thermo Fisher, meaning that it’s part of distributor sales as that’s how we are classifying Thermo Fisher.

Overall growth, we we have not commented on neither for the, for the prospective businesses. So there, I would have to defer back to the comments that we provided at the Capital Markets Day a few months ago.

Ludwig Lundgren, Analyst, Nordea: Okay, understood. Just a quick follow-up. What like can you elaborate anything on like what these assays will be used for from Thermo Fisher? Is it for like clinical diagnostics or is this some validation batch that you deliver here?

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: Can you clarify? I’m not sure. Are we referring to the drop in direct sales and the other questions you just had or?

Ludwig Lundgren, Analyst, Nordea: Thinking about this large order then for transplant assays basically, like will this be used I suppose in Europe most of it will be used in the clinic, so to say, but is there a boost from some initial validation batch and so on in this quarter?

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: It’s all of the above. And not only, restricted to Europe, but obviously there’s expected to be quite a number of this utilized for demoing and onboarding new customers as well as providing existing customers who are already in clinical routine.

Ludwig Lundgren, Analyst, Nordea: Okay. Thank you. And then jumping to Said, because here you said that you have extended your agreement. Reading your own old press release when you initiated this partnership, I think you estimated a 6,000,000 sales from this agreement in 2024. Like is it a doubling from this amount that you’re referring to here when you say that you will double the business in 2025?

Or is it the full 16,000,000 American sales that you reported here for 2024?

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: It’s a combination. So it’s the direct sales that we have within North America, and not the number because the number you’ve seen for North America, I believe, are covering the whole of North America sales, including Thermo Fisher. So this relates to what is in our own remit and is a sizable incremental increase. But we’re not providing more specific guidance on exact numbers.

Ludwig Lundgren, Analyst, Nordea: Understood. But could you say anything about so you estimated this to be about 6,000,000 on a 25,000,000 contract. Could you say anything about how much of this is delivered, so to say?

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: In ’24 or ’25 or can you specify?

Ludwig Lundgren, Analyst, Nordea: ’24.

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: We have been following the agreement pretty pretty, to the to the letter. And now we have expanded.

Ludwig Lundgren, Analyst, Nordea: Okay. Very clear. Great. I’ll jump back into the queue. Thanks.

Conference Operator: The next question comes from Ulrich Trattner from Carnegie. Please go ahead.

Ulrich Trattner, Analyst, Carnegie: Thank you very much. And a ton of questions on my end. Because to be honest, it looks pretty mess it is. And if we can just start off to get some clarification additional clarification on the direct sales development and how worried we should be. I heard what you said, Faiz, that you carved out the shimmerism that’s now reported under distribution.

But taken from your slides at the Capital Markets Day, adding that back like by a quarter, it still looks like a really poor performance in direct sales. So is there any sort of fundamentals that we should be worried about or trend shift that sort of direct us in 2025 to direction where you’re not growing and you’re declining in sales as well as I guess we should extrapolate the direct sales in Q4 into the absolute numbers for 2025 given that it’s been transferred and it’s hitting numbers now and will be hitting numbers going into ’twenty five?

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: Should I start, Frederik Sveen, on number one?

Frederick Dahl, Acting CEO, Devisor Diagnostics: Yes. Please continue.

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: Yes. So I can only appreciate that it’s difficult to see through, obviously, all the details here. We the guidance I can give is that we had a fairly attractive number of customers with associated revenue that we, we saw would be beneficial to pass over to Thermo Fisher. That had a double digit million revenue, in Swedish kroner associated. And you can’t you can’t you cannot, dissect that and, you know, take out a quarter and then add it back because it has some seasonality.

But all in all, there’s nothing, you know, that that makes a lot of sense for us and for thermal to hand that over to Thermo Fisher. That will only increase and accelerate the overall momentum, also utilizing our solid organ tests. That that was part of the rationale. To your question on direct sales, from from my side, you know, we are right on plan with with all our direct markets. There are no markets going back.

We have, we’re right on plan, right? And that is a sizable growth number. We have not disclosed exactly what that looks like. But it’s promising. It is exactly as we have been planning.

And I’m only highly optimistic when I look into the funnel of the direct markets. So I hope that can initially clarify some of the questions.

Ulrich Trattner, Analyst, Carnegie: Sure. Let’s just have a follow-up on this. So given the fact that you have transferred customers to Thermo Fisher, I guess this only refers to the transplantation, the Schoonerism and accept customers or products. But then you talk about ordering sort of stocking from the Thermo Fisher side and expecting or sort of guiding for sort of turning out this inventory for Q1. But I guess that the customers you have transferred is not part of the order stocking.

Right?

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: Yes and no. You can argue. Obviously, those customers are, from our side, ordered and billed at a different revenue basis. So they they may they can supply those customers with the kits, but then there’s this, you know, in the agreement certain considerations that we obviously fully acknowledged at end user pricing for those specific customers. And that’s gonna be with a deferred revenue logic.

So so we’re in that sense delaying their, that part of the revenue by a quarter or so. But, but that’s fully as per, for this design and then fully unplanned and meant to support the acceleration of that business.

Ulrich Trattner, Analyst, Carnegie: And what’s the risk of sort of churning out the inventory will linger into Q2 and Q3 that thermofisher is now sufficiently covered for an entire year?

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: They would be low. I mean, they they they are as guided. This will have an impact on Q1 for sure. It may go into parts of Q2 but, there’s nothing here, indicating that there will be any softness for the year.

Ulrich Trattner, Analyst, Carnegie: Phytet, these are obviously not your own diagnostic tests. And you talk about positive on gaining reimbursement on your own tests in The U. S. Sort of midyear this year. But how should we interpret you using the sort of the volume in your labs to a non proprietary product?

Is this a priority or due to sort of or do you have that type of excess volume in your CLIA lab in The U. S. That where you feel that you can do cover the volume that you will make up your own with the site that expanded site of agreement?

Frederick Dahl, Acting CEO, Devisor Diagnostics: Faiz, you can continue here.

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: Yes. We, I mean, it’s a very clever way of doing business, I’d say. It’s a highly attractive, profitable business model doing services for other companies like the partnership we have with them with Sided here. So that will go on. We, when you look into the capacity, there are no risks in our capacity for capitalizing and doubling down on the products that we are soon bringing out with reimbursement.

And to your point, we are on track with what we call the transplant trace or the CF DNA solid organ test that we are launching through our clear lab here later in the year as we get reimbursement. And we expect that to also gain quite attractive revenues, right? And here again, I defer back to the commentary we provided at the Capital Markets Day on how we are approaching the market in two ways now with the kits. And as I also had a comment on the slide, we may even go together with Thermo Fisher for them to be the channel for selling the services on the, and then we have the FDA project ongoing. Right?

And those two, we expect will be able to carve out a fairly sizable, market share in The US.

Ulrich Trattner, Analyst, Carnegie: Yes. And and you mentioned carving out if you are awarded like few of the tenders that you are participating in. And you also mentioned that Blood Canada is now starting to run clinical samples from Q2. But we have yet to see in any sort of announcement of you being awarded the large tender that we’ve been talking about for the last few years. What does the sort of that information that you provide today, what does that entail in terms of timelines and sort of size of such a tender, etcetera?

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: If we look into the Canada, market, Canadian market, you you need to kind of let’s let’s break it up into two sole providers that we’re working with. Hema Quebec that we now saw now a couple of years back even, covering, the region of Quebec. They just ordered their first initial batch of products for validation. And that means that now they have concluded they made a restructuring and a remodeling of their premises that was sizable and took a lot of time, buying in new equipments, designing that whole workflow in accordance to the device or HD workflow. Now that is designed and in place and they are starting validation.

I don’t expect them to to reach clinical routine anytime before late this year, but they will continue to order for validation. Moving into Canadian blood services which could or could not cover the rest of Canada. And I think the 10 or the region you’re referring to still being a question mark was the region of Ontario, which is a very sizable region of Canada holding 16,000,000 citizens out of the, about 40,000,000, in in in the nation. So very sizable. Canadian Blood Services are, have already initiated validation.

They are about to complete it. And as I mentioned, they are soon to initiate clinical routine. So, that’s great. And that we have been we’re we’re still working with them on, signing off a few, final pieces before we will issue this or more formally in the press release with more, information. We have also positively heard indications of, them being a part partly or fully awarded.

We don’t know yet, but the Ontario tender. But, since there are still uncertainties, I can’t give you more specific information than what I’m sharing today. But it is looking from my part of that table very attractive and very positive and as we have planned.

Ulrich Trattner, Analyst, Carnegie: Great. And last question on my end and that would be addressed to Sabina and it’s great to see progress on EBIT. And I know that’s like adjusting for the IITLA levy, it looks better, but it also looks a bit boosted by higher capitalized R and D and FX tailwind. So if you can give us some rough guidance on what to expect in terms of net capitalized R and D because it has closed to doubled year over year ’24 versus ’23 and just what it entails for the profitability near term as well?

Sabina Berlin, CFO, Devisor Diagnostics: Yes. I can confirm that we definitely had some tailwinds when closing the year. The increase in R and D mostly comes from gained efficiencies in ways of working, including the new office that we have been able to strongly focus on getting our processes, and we’re working in the r and d structure up and running. And we will have a continued strong focus on profitability and on stable cash flow during 2025. I think that if we want to guide even further on the quarters, that would be for Frederic to decide.

Ulrich Trattner, Analyst, Carnegie: Yes, great. But in terms of capitalized R and D, where should we expect and extrapolate the trend that we’re seeing, I. E, capitalized R and D doubling sort of again

Sabina Berlin, CFO, Devisor Diagnostics: in 2020? I don’t think it will, double year over year in a way that we’ve done between ’24 and compared to ’23. But there will definitely be sort of continuing on the path that we saw in q four, in just us having our new way of working in place. So we will have a strong r and d, and we will continue to capitalize the work we do with new products.

Ulrich Trattner, Analyst, Carnegie: Great. Perfect. I’ll get back into the queue. Thank you for taking my questions.

Sabina Berlin, CFO, Devisor Diagnostics: Thank you.

Conference Operator: The next question comes from Oskar Bergin from Redi. Please go ahead.

Oskar Bergin, Analyst, Redi: Hi, guys. I got a few questions. I could start off with, I guess, the direct sales. Just wanted to get an update on the conversion of distributor markets and maybe some comments on how you think Q1 could develop in comparison to Q4?

Frederick Dahl, Acting CEO, Devisor Diagnostics: Yes. Thijs, you can take this one.

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: Yes. I mean, we have converted the markets we believe are relevant to be converted to direct sales for the time being, and then there will be a phase of which we are building indirect markets to the maturity needed before we turn them into direct. So there are no real changes in in that moving element. Direct sales, from my side is looking, as I said, initially also, it looks promising. You know, there’s nothing that, would would make me see this and the outlook more negatively on the on the on the contrary.

So we have already announced press releases in the first month of the year. I can be assured we are working on a lot of additional deals. It’s across a number of markets and across a number of products within especially the european direct markets leaving out these updates I’ve already given related to both US and Canada. So, but I can’t give I can’t give you more concrete guidance than that.

Oskar Bergin, Analyst, Redi: Okay. So no more concrete guidance. I guess it’s unnecessary if I ask you if Q1 sales are likely to be more in line with, let’s say, Q1, Q2 ’20 ’20 ’4 than they are to be aligned with Q4 sales?

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: Well, I think, the In other words, what I can comment on is the the great thing without business is it’s it’s a very stable run rate business. So, so that means it’s it’s pretty it should be fairly easy to, the baseline is stable. And then we are a highly competitive and relevant company so we’re we’re continuing to be winning over new customers and new, tenders and that will that will be the the challenge on your side, obviously, to, to projectify, right? But, as mentioned, I’m I’m very, you know, bullish on on the potential. I don’t I don’t believe we have we’re not even beneath the surface yet.

We’re still scratching. There’s a lot of growth for us to be taken out of these markets but it will take time. But the the trend will is continuing. There will be bumps along the way but it’s going to be a very clear and onward, upwards going slope.

Oskar Bergin, Analyst, Redi: Okay. And then, the fibular sales, I’m just wondering if you operate with any volume commitments from Thermo Fisher or will they order where they feel like ordering?

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: We have not disclosed the terms of the contract, but obviously we have certain guardrails in the contract to steer performance and also transparency and forecast the forecasting ability, right, which is relevant on both sides. So we remain having a very close collaboration and, you know, conversation with Thermo Fisher.

Oskar Bergin, Analyst, Redi: Okay. And, this inventory build up, I mean, it seems to be mostly focused for the European market if you look at the sales from the different geographical markets. And I’m just wondering if Thermo Fisher is having a strategy in this early launch phase to target the European market or could we expect also up in a bit of a build up order from Thermo Fisher focused on The U. S. Market?

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: It’s easier to go, obviously, continue that momentum in the Europe in the European market as we’ve already built, right? You need to take into consideration that The US market is different and then going back to Fretech’s initial slide on decentralizing. Here we’re bringing in a paradigm shift. So we are up against very established services market and you know to break into that and changing patterns and routines takes longer time. So it’s it’s it has longer pathway in The US and that’s why we are also investing into the FDA program.

So, so but the inventory will cover both of those markets.

Oskar Bergin, Analyst, Redi: Okay. But I suspect that we should expect most of the commercial sales for 2025 to be directed to the European market?

Theis Kipling, Chief Commercial Officer, Devisor Diagnostics: I can’t help you any further unfortunately.

Oskar Bergin, Analyst, Redi: Okay. That’s up to me then I guess. And then, a final question is on investments in Q4. It were quite high at SEK20 million. Just wondering if you could elaborate on that figure and is it a result of increased activities regarding studies and so on for the FDA approvals?

Frederick Dahl, Acting CEO, Devisor Diagnostics: Sabina, do you want to take that one?

Sabina Berlin, CFO, Devisor Diagnostics: Of course. It’s a combination of several aspects. It is, r and d build up, as in normal work done hours created in house. It is studies and preparatory work for the FDA program, and it’s also investments into software as we have transitioned to both a new ERP and new CRM during the year.

Oskar Bergin, Analyst, Redi: Okay. And I mean, this figure stands out if you compare it to the other quarters. Is this something that we should expect for Q1 and Q2 or should it come back down?

Sabina Berlin, CFO, Devisor Diagnostics: Similar to what I said before, I mean, the all the work done for in house in terms of related activities related to the new office, activities related to software, they are 2024 only. But we will see costs continue for the FDA program as well as for our roadmap to increase our portfolio. So we should stay for R and D at a similar level as in Q4.

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

Frederick Dahl, Acting CEO, Devisor Diagnostics: Okay. So with no more questions, I would like to thank everyone for joining today. And with that, I think we’re going to close the session.

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