Biovica International AB (publ) (BIOVICB) Earnings Call Transcript & Summary

Hello, everyone, and welcome to the Biovica Q1 earnings call for the fiscal year '23, '24. My name is Anders Rylander, and I will, together with some of my colleagues, the one on the screen here, Warren Cresswell, responsible for our U.S. business. Henrik, for our pharma business and Anders, our CFO, the four of us will go through the reports and the highlights and this is the agenda. So I'll give a short introduction about the company in general, then I'll go through the highlights for the quarter, then Warren will take us through the U.S. status where we stand and Henrik will do the same for our pharma services and collaborate. And then lastly, Anders will do a financial update before we go into summary and Q&A. And talking about Q&A, you'll have the opportunity to ask questions using the chat function and if you, for some reason, want to remain anonymous, you can do so by checking that check box. And we will start the session with our equity researchers who will be letting into the call to ask questions about the report. So if we start with the company, the company Biovica, biovirus cancer is what it stands for, was founded in 2009. However, it's based on research that spans many decades back. So it's from Uppsala University, where the headquarters still is based. We're currently publicly traded at Nasdaq First North Premier since an IPO in 2017 and in recent years, we have established ourselves and built up a business in U.S. with the headquarters in San Diego, where we also have our CLIA certified lab. Warren will talk a little bit more about our business model over there. When it comes to regulatory status, yes, we have been ISO certified for many years, and we are -- both have regulatory pull both in the U.S. -- from the U.S. market with our 510(k) clearance that we received last year. And we also have a CE label, which allows us to use the product or market the product for clinical use on the European market. So those are our two focus markets. And our vision is to improve cancer care for cancer patients by offering innovative blood-based biomarkers and talking about our innovative and cloud-based biomarker, our product DiviTum, that stands for Dividing Tumor is our first product, which we are now launching on these markets and using in our pharma collaboration. DiviTum stands for Dividing Tumor. And so what we do is through a blood sample, we're able to measure cell proliferation. And as you all know, cell proliferation is what is defining cancer, at least uncontrolled cell proliferation. So by using DiviTum, the treating physician can get very important information about the disease state and we've also shown in several clinical trials that we have the ability of providing quick feedback on treatment efficiency for patients being on treatment for their cancer. And this is also our first and key application. We have also focused on the metastatic breast cancer area, where there is an unmet need created by new targeted treatment within that space called CDK4/6 inhibitors creating a lot of improvement for patients on treatment, but also some challenges and the need for better biomarkers, a need that we can meet. We've shown in several clinical trials. And that's also the basis for our 510(k) clearance from the FDA. And this, of course, is important for the patient, making sure that you are on an effective treatment. And if not, you can switch to a different treatment because there are many treatment options, but also for the health care providers as these treatments are very costly with a standard price of $10,000 per patient a month. So there's many winners from using DiviTum and we can create great values. And talking about our commercial road map. As I said, the breast cancer, specifically the metastatic breast cancer area is our focus area. Hence, we have taken ourselves to the regulatory approval allowing us to launch the product on the U.S. and the European market. In U.S., we are going to market using our own CLIA lab and our own sales force and in Europe, we are working through partners. In -- yes. And we are in 3 years after launch, our ambition is to realize 15% of that market potential. And long term, we expect to be able to realize 50% on the market that we launched a product within. Currently, in Europe, we have launched the product on our 3 first territories and looking to expand to further territories. Beyond the metastatic cancer -- breast cancer area, we're also looking to expand the product within earlier phases of breast cancer, and we also have proof of concept data -- early data outside of the breast cancer area. One very interesting area is the metastatic malignant melanoma, where patients are being treated by checkpoint inhibitors, where we, together with Karolinska have strong results, which we are looking to build upon. And on the slide, the third area is our pharma collaborations where we have the ambition together with pharma to codevelop new products financed by pharma and creating value both for pharma company developing compound and diagnostic product as well as for the patient, of course, making sure that you respond to that treatment. This is Henrik's area, and he will talk a little bit more where we stand within that area. That was a very short introduction and summary of the company and where we stand. And if you look at the first quarter in our fiscal year that starts 1st of May, and in July, this is what we reported as significant events. During that time, we had -- if I group them together, we are able to launch back and entered our first 3 commercial agreement on the U.S. market with private payers. This is significant for us being able to establish the product in that private payer community and something that Warren will elaborate a little bit more about what that means. Talking about the U.S. market and the payers, we have a different area. That's the public part of the market, and that's covered by Medicare. And the first milestone to get into that system is to get a PLA code. And that is something that we reported that we were able to do in July this year. Also a big milestone, which Warren will talk a little bit about more. And we have already a really, really strong foundation when it comes to the clinical evidence and that was further strengthened by the publication of the so called the SWOG trial. The SWOG was the one that we used in our FDA process for our clinical validation. So we have talked about that in the past. What was interesting when this presentation took place at ASCO was that we, in this presentation presented results where we were compared towards CA15-3, which is an existing biomarker that is being used within the breast cancer area -- for breast cancer patients and DiviTum came out very strong. This is the second time we've been compared in publications or clinical trials, and it's the same result that DiviTum performed very well. That was the most important milestones that took place during the quarter. And after the quarter ended in July, we announced that we started yet another trial. This is a prospective interventional trial together with Yale and Warren will cover that as well in his presentation. So to sum it up, we're super happy that we are making progress, and we also are meeting the milestones that we set out before the start of the quarter. And so we have received a really good start on -- especially the U.S. market where we just entered commercially. And looking at the pharma business is still progressing well, which Henrik will cover later on. I think that will do as an interaction from my side, and I will now leave it -- hand it over to Warren to go through the U.S. business. So Warren, please take us through the U.S. business.

Thank you so much, Anders. And so what I'm going to be talking about is the real continued -- how we continue to execute the U.S. commercial strategy and the progress that we're making. And I'll be covering really the early engagement and the very positive feedback we've received from medical oncologists on DiviTum. I'll be talking about the benefits and progression that we're making with respect to our client bill contracting, and this is really specific to hospitals. We'll talk about the expansion to our commercial agreements. We've expanded by one this quarter. I'll also be giving a status update on establishing coding pricing and reimbursement. This can be a very complicated area of our business. And also, I will be talking about the very positive strides that we're making from the clinical side by both strengthening and expanding our clinical utility in breast cancer. The next slide, please. So as I've mentioned previously, we've constructed a very sophisticated call plan strategy. And part of that strategy is calling on NCI and NCCN designated cancer centers and also very notable cancer centers, also calling on key opinion leaders and regional thought leaders and also community oncologists that have a high portion or high number of metastatic breast cancer patients that they manage. So we've really focused on that. I'm really proud to report that we've had a 100% engagement and ongoing engagement with NCI and NCCN designated centers. There's very high interest in DiviTum. And in our targeted number of medical oncologists, that number is about 1,500. So far to date, we've done 525 clinical presentations, and we have ongoing dialogue with these individuals. So the feedback from DiviTum has been very, very positive. And in fact, I've put some comments down there below in regards to kind of some key things that we keep hearing over and over and over, and one of which is DiviTum addresses a biomarker white space that is desperately needed to manage Medicare breast cancer patients. And there's just a real lack of blood-based biomarkers that can help physicians manage those patients, and that was something that's a real call out. The second one is identifying non-responding patients that enables clinicians to switch therapies that are clinically needed. So today, physicians are looking really for signs and symptoms. They're looking for imaging results before they would switch a patient. And here, they can use DiviTum to really help provide additional needed information to make those decisions on how to manage those patients. And the third thing that we keep hearing over and over and over is around imaging and physicians will likely lengthen time between imaging for patients with low TKa values. And many of these patients are very ill and going and getting imaging can be a burden to these patients and physicians really want to manage imaging the right way here. So DiviTum really provides some additional information so that potentially clinicians can lengthen the time between imaging and also flip it around where they may need to shorten the time between imaging as well. So it's really been the positive feedback we've received from medical oncologists. Next slide, please. So we're really focused on executing client build contracts. And again, these are hospital contracts. And the rationale is it really does drive accelerated growth in our business. And by being able to contract with an institution, and the one point I want to make is contracting with an institution isn't one institution. It's these -- some of these institutions that we're dealing with have 15 separate hospitals. So they're really health care systems that we're contracting with. So when we contract with an institution, we're really contracting with a family of those hospitals that are part of that institution. So these agreements we're putting in place are significantly important to our business. What it does as well is when we speak to a medical oncologist, and we have that discussion about bringing that test on board with that institution, typically, there's a follow-on meeting with something called the formulary committee that really makes the decision for the institution overall in regards to does this product have clinical utility, can our medical oncologist uses to help manage the patients. And this -- the discussions that we had have been very, very positive. And we do have a number of these agreements in the pipeline. The first one we believe will be signed in Q2. So what does it do for us? It drives access within institution. It helps out with respect to the ordering process within the institution. And the third thing is it does guarantee payment to Biovica. So instead of us being able to bill insurance companies in these situations, we actually invoice the institution and we get -- we receive payment from them. So this is really a strategic imperative of our business moving forward. And our goal for the full year is 10 contracts, which I believe we'll be able to achieve. Next slide, please. So we're proud to announce that we did sign the third commercial agreement. This was with Occum Health. And just as a reminder, these agreements are really considered kind of wrap PPO agreements and how they work is really provides solutions for organizations that are self-insured where the product is not yet contracted with an insurance company. And this is what happens when you newly launch a product, you're not contracted with all the big insurance companies out there. So what you can do is you can contract with MediNcrease, Contigo Health, Occum Health and that actually provides the avenue for that patient to be able to get the test and it provides an avenue for the organization like Biovica to be able to get compensated for that test. So what we do is we negotiate with these organizations, we negotiate a rate with these organizations. So that really provides not only easy access for the patient to get the product, but it also provides payments to Biovica, while we work with these private insurers to be able to be covered moving forward. Next slide, please. So in the U.S., coding pricing and reimbursement is a pretty complex process like it is in most countries. What we did earlier in the year was, as we first became Medicare credentialed. And what that means is when we receive a sample that is a Medicare patient and we run that sample, we can legally bill our Medicare contractor for payment. We accomplished this in early March of this year. Then what we did is we applied for a PLA code, and we applied through the AMA and we were granted the AMA codes. So congratulations to the team. That was in July of 2023. And what that PLA code does for us is that PLA code is specific to DiviTum and it's specific to our laboratory where DiviTum is run. So nobody else can use this PLA code. So even from a competition perspective, if somebody did try to develop another competing assay, they would have to walk through the exact same process. So for us, there's even some competitive benefit. But it also what it does is from a Medicare perspective, that it clearly identifies DiviTum being run in our CLIA lab and there will be a price associated with that. The third piece of this is we're working with CMS. So AMA decides the code number. CMS, Centers for Medicare & Medicaid Services, they determine the price that's going to be reimbursed for that product. And there's a couple of different processes that we can go a couple of different ways. One is called the crosswalk and one is called gap fill. We're working currently with CMS. There will be a determination on which path we go and that will happen either sometime this month or next month. The second part I want to discuss in regards to this -- the same subject matter is the reimbursement channels. And the reimbursement channels are wide open. So even though we haven't walked through that gap fill or crosswalk process, we still submit claims to Medicare. We still submit claims to commercial insurance along with Managed Medicare. We've received payments back on commercial insurance and Managed Medicare. They've been favorable. We expect to get a Medicare payment sometime early this month. And as soon as we sign these client build contracts, we will be able to activate those. And when we receive samples from those institutions, we will invoice those institutions back. So from a reimbursement channel perspective, they're open and they're working very efficiently. On the next slide, Anders. And lastly, I think we've made some substantial progress from a clinical perspective. And here, we have really 2 separate types of trials that we're working with. We have interventional trials and interventional trials, the way you need to think about it is that these are trials where principal investigators are trying to answer questions that are not answered out there yet. So what they're trying to do is they're trying to ask questions and try to understand clinically how else the product can work. So this can help us in a number of different ways in regards to building clinical utility for our product. But what it also does when you sign agreements, whether it's interventional or observational, it drives utilization through an organization. So most of these principal investigators are the key opinion leaders or very notable medical oncologist leaders. So it enables us to be able to communicate and actively work with them, their institutions and these institutions, as I mentioned before, they may have 10 or 15 additional hospitals. When those clinical programs start, those clinical programs are open to all of those medical oncologists. So what it does is it drives utilization of DiviTum through those organizations and through those medical oncologists. So this is very beneficial for us. And at the tail end of this as well, we were able to get that clinical utility data as well in regards to how the product is used. So for instance, with Yale, Yale is looking at patients that are not responding to CDK4/6 inhibitors and they're trying to figure out why that is. And one of the things that they're doing is that they're taking a look at drug-to-drug interactions because there is some early evidence out there that shows that certain drugs, even over-the-counter drugs, can impact the performance of the efficacy of CDK4/6 inhibitors. So physicians want to be able to help patients respond better to those therapies and they're using DiviTum to really understand, hey, is this a drug-to-drug interaction or is this a patient just a nonresponder, and we need to find a new therapeutic solution for that patient. We do -- we are working with a number of different PIs in regards to other interventional trials that we'll announce once those opportunities are signed. Also, we have observational trials as well. And here, this is really a real-world experience in regards to how DiviTum is used with respect to the intended use specifically. So we have -- both of these trials are open for recruitment, and we are as well working with a number of these institutions in getting these observational trials up and running. So the real benefit with this. One is working with these key opinion leaders, these thought leaders with regards to these trials. Two is working with these leading institutions within these trials, and it gives us access to other medical oncologists there. It gives us clinical utility data. It strengthens our current clinical use. It drives utilization within these institutions. And then what we've done as well is we've taken a very creative way of financing these things. And not only are these trials cost neutral for us, but they will most likely earn us a slight bit of revenue as well in regards to these. So I think we've done a very, very good job at managing this and the pipeline is really rich with opportunities here. And with that being said, I'm going to pass this on to Henrik Winther.

Thanks Warren. and so now we'll move from -- away from the U.S. business update and I'll give an update on the pharma Services and collaborations business. So overall, we are super thrilled with the continued strong progress we have on this part of our business also during Q1. The strong progress is actually related both to the signing of agreements, initiation of new projects as well as the strong growth in our fee-for-service revenue. We'll come back to that later. You actually might recall the upper part of this slide from the Q4 reporting last fiscal year. It's representing the typical onboarding route for our new pharma partners. I was not at that call, so I'll just spend a few minutes on this slide to explain how we onboard these pharma companies. So initially, pharma, they'll try out our technology and also our service quality through what is called a technical evaluation service agreement, TESA, that is step number one. Then they will typically realize our TK assays capabilities and our service quality and then they'll ask for a master service collaboration between pharma and Biovica. These master service agreement is what is called MSAs here. And through the master service agreements, we typically run several bigger projects together with pharma and then depending on the results, we will initiate discussions on a more formal development collaboration in which we customize our TK assay to monitor pharma-specific drug. This is step #3 on the slide. And then this development collaboration will -- could lead to the development of a companion assay, a new Biovica product on the market, which is step #4 here. This would typically happen in 10% of the projects, you could say. And hence, it's really important that we have a broader portfolio of these projects running together with pharma. And then also on the slide here for each of the onboarding steps. The slide mentioned the financial value to each of these steps. And it's going from smaller numbers in the early stages and then grow into larger numbers on the following stages. In the lower part of the slide, you see our current status on Q1 development, both with regard to the individual steps. And the highlights, they go as follows: we have a total now of 10 master service agreements. One new master service agreement was signed during Q1. And we also have 1 master service agreement in negotiations, and it will be signed in Q2. Our master service agreements, they are with both Tier 1, Tier 2 and Tier 3 pharma companies. We have a total of 18 projects running, and they are primarily projects running under the master service agreements which is, of course, really important because these are the projects that will lead typically to closer collaborations with pharma. During Q1, we also initiated 2 new projects. When it comes to the financial, let's turn to the next slide, Anders. We had a very, very strong Q1 with 200% plus increase in revenue as compared to last fiscal year Q1. And yes, we know we're coming from lower actual numbers. But the trend is very clear. Now also being one month into the second quarter, it's very clear to us that pharma and biotech, they are super excited about our assay and our services. So for the full year, we expect a significant growth. When we look at the development in revenue distribution, we see a shift towards more revenue coming from service activities than just from supplying kits. If you look back in fiscal year '21, '22, we had most of our revenue, actually 90% coming from only kit sales, whereas during the last fiscal year, the revenue distribution split 50-50 between kits supply and services. And it just shows that we are getting more and more involved in the pharma clinical studies and that we have initiated discussions on true customization of our assay to specific needs on the pharma side. So I'd say, all in all, a very successful start to the new fiscal year within our pharma services and collaboration business. Over to you, Anders Moren, regarding the financial update.

Thank you, Henrik. Thank you. You just stole my thunder. I was going to say that we had a 200% growth, and you just mentioned that. So I don't have much to say on the revenue side. But at the end of the day, we sold 1.8 million almost, 545,000 last year same quarter. So that's, again, a little bit more than 200% growth. Still from low numbers, but very impressive growth. And we see that continued really high interest in research and pharma collaborations area. And on top of that, we actually got a few samples -- a handful of samples from the IBD and the U.S. business being processed in the CLIA lab in the U.S. So it's looking really, really promising, I would say. Cash and cash position and headcount on the upper hand of the slide, we had SEK 76 million when we closed the quarter. We had SEK 72 million same quarter last year. On the lower hand of the slide, I'm trying to explain the operating cash flow. And I took then the quarter-on-quarter growth because I think that, that's a more relevant comparison because Q4 last year was the first quarter when we had a full U.S. sales force on board. At the end of the day, we -- our operating cash flow before change in working capital was minus SEK 30 million in Q1. It was minus SEK 35 million in Q4. So it's actually small improvement there. On the other hand, the change in working capital was negative by SEK 8 million A little bit of that is, of course, coming from the increase in sales and accounts receivables and also we're producing more kits, so we have goods to sell. But the majority of that increase in working capital was actually a reduction in accrued liabilities due to annual incentive payouts being paid out in the first quarter of this fiscal year. It also says headcount on the heading. I don't have any slides on that, but we were 35 employees, average this quarter. Same quarter last year was 26. And so that's an increase in 9, and that is coming from the U.S. sales organization that I was talking to earlier. So with that, I think I will leave it back to Anders.

And I will just summarize the reports and open up for questions. So as you hopefully can see in here, we are excited about the product that we have DiviTum and the phase that we are in, we're seeing a lot of progress in many areas. We haven't mentioned Europe so far, but we are progressing there as well. We -- it probably has an important purpose to be able to measure cell proliferation, thereby improve the care for cancer patients. We also found a niche where we can address an important clinical -- currently unmet need and that has been recognized by some of the world-leading key opinion leaders within this field. And together with them, we have performed all these clinical trials that also provide evidence about the product's potential. And on top of that, of course, the big market potential, where we now are focused initially on the metastatic breast cancer area, but there's going forward, great opportunity to expand into other metastatic cancer areas and also earlier phases where the breast cancer area is the one that is most closely upcoming. If you talk about the upcoming milestones, we have actually, for the fiscal year this year, we are starting to address and check some of them. The PLA code, the payer agreements, we are making progress. Warren is confident making those 10 agreements with U.S. hospitals and I've seen his sales pipeline, so I agree with him. The Medicare process, yes, the PLA code is part of the Medicare process, but getting reimbursement with a specific code and price, it's only the price that remains really there. And we are making progress there as well. If someone stood up, makes the ambitious goal of 15% of the market potential in U.S., a stretch but achievable goal that we still -- that we believe strongly in. Yes, if you look at Europe, we haven't talked so much about that, but we have signed 2 agreements for 3 territories. So that was the starting point. And we're now preparing and the late phases of that preparation to launch the products on these markets, we are setting up the product in different labs. We are training the sales force. We are having events with key opinion leaders, training other oncologists, et cetera, et cetera. So we are progressing well there as well on the markets that we have already started working on. And you can expect to see agreements both on those markets, similar to the hospital agreements that we are -- have discussed for the U.S. market as well as new commercial agreements for Biovica to open up new markets. So during the remainder of this fiscal year and next fiscal year, where our ambition is to provide more such agreements in the big 5 European and the Nordic area. So we, by end of next fiscal year, have that area covered. And of course, we have the same aggressive goal there that we agree with our partners that we should be able to realize 15% of the market potential on each specific market when entering that market. And the pharma services, as Henrik said, we're already seeing a significant revenue growth. We want to continue building on this opportunity and add more projects beyond the 18 that we currently have. And as Henrik said, when you have a portfolio of 10, 1 of 10, we assume we could turn into companion diagnostics projects and yes, in that master services agreement phase, we are about to reach that number. So we're looking forward to continue those discussions and hopefully sign that first agreement although that's a little bit more outside of our control and dependent on a third party, but we have a good hope of being able to do that. So looking at the situation to summarize it, we are in a very good position and great progress. I think the biggest challenge, which I guess we'll talk about on the Q&A -- that's the -- that our financial position is a bit weak, something we've been working on for quite some time. And with this progress that we're making, we also believe that, that helps us a lot in those discussions and are expecting to be able to close something that going forward. So with that said, our presentation is over and done with, and we open up for the Q&A session.

The process will be that we will first start with our equity researchers and then we will pick from the chat if there's been questions submitted. So let's see, maybe Johan Unnerus from Redeye, if you could unmute and you can go first with your questions, and the team together with me, we'll do our best to answer your questions.

Excellent. Can you hear me?

We hear you well here.

Very good. Congratulations to the progress made so far even if it's still early on, on this launch journey, the -- I have some questions then. The first is regarding the pipeline of direct contracts and with the hospital change or hospital networks, how certain can you be of signing the first contract? It sounds like you possibly have more than one on the go.

Yes. Warren talked a bit about that and laid out some details. But maybe, Warren, if you have the opportunity to elaborate a little bit more to give some guidance to Johan and others, that will be much appreciated. So Warren.

Yes. Thanks, Anders, and thanks, Johan, for the question. Yes, we have been working on these client build contracts, these hospital contracts essentially since we commercialized the product. So there are a number of these contracts that are in our pipeline right now where we've had ongoing discussions in regards to the early negotiations. And I would say that my confidence level is extremely high that we'll have at least one contract signed during this quarter. So these things, we want them to move as fast as we possibly can, but part of our strategy is certainly to be able to work with as many of these institutions as we can and start that negotiation process early on. And so we have a nice pipeline of these. So I wish I could comment and provide you with a little bit more detail. But you'll see a flow at these coming soon.

I think maybe to repeat what you said also in your presentation, Warren, is that many of these is several steps and 1 key step -- there's 2 key steps really. One is getting through that committee where there's a number of people looking at like scientific evidence, et cetera. And another one is the more commercial aspects. And the reason why Warren is extremely confident. I think is for some of these that we are now in the pipeline, we have passed those 2 milestones. So we're in a late pace of getting those agreements in place.

Yes. And Anders, if I can just comment a little bit further on this, just one point that I want to make is that with these contracts, although a side effect of the contract is guaranteed payment of Biovica, that's a positive thing. There's no doubt about it. But the real benefit of these contracts as well with these institutions is it really drives the committees within these organizations to review DiviTum to understand what that clinical utility is and to sign off on the fact that their medical oncologists can order these particular tests to typically build these into their systems. So it really gives us this really broad reaching access within those organizations where they've looked at it, they've agreed the product yet provides clinical utility and they've authorized their medical oncologists that they can't use that particular test. And that is the real benefit for us.

Yes. And that leads us to the next question, assuming then we use -- secure the first contract then during Q2. What's the time line between the signing and actual order and deliveries of DiviTum?

Yes. Maybe, Warren, if you can elaborate a little bit what's the process after signing.

Yes. So after they signed -- after a contract is signed and executed, then typically, the oncologists can immediately start ordering the test. In some cases, there's -- there can be a little bit of a delay for the fact that it depends on the lab side of the business in regards to they will often want to build into their system. An ordering mechanism from the medical oncologists to the laboratory. So if they're using a system like Epic, they want to include DiviTum and so that when the physician is meeting with the patient, they can easily point and click within their system to get that test ordered. So there can be a slight delay there. But oftentimes, or most of the time, a medical oncologist can almost immediately order the test once the contract has been executed. And certainly, when -- as we're working through this process, we do have a champion within the system. So it's typically like the Chair of the department is very interested in bringing DiviTum in and typically, they have patients that are really -- they've identified and are waiting for testing. So it can happen pretty quickly.

I mean, I can add to what you said that we have worked on our side to make the integration very effective and smooth. So we have built an interface so we should be able to easily support this process to -- so it shouldn't be in a lag time on our side.

Yes. And when it comes to that stage, when a specific oncologist is about to use the test for the first time, do you expect to receive a corner or inquiries at that stage?

Yes. This is something you looked at as well, Warren, so please?

I didn't understand the question. Can you repeat it for me. My apologies.

Yes. You repeat it Johan.

Yes. At that stage, when the oncology is about to make the fast order and use the DiviTum for the first time. Do you expect to receive a call or an inquiry and support the specialists at that stage?

Yes, absolutely. Absolutely. So we work closely with these physicians when they order the test, when the test has been -- sample has been drawn. The blood sample has been drawn sent to us, and we report out, we also, at the time of reporting out as well, we contact that particular ordering physician and walk into those particular results to make sure they understand completely what those results mean and answer any questions. And this is something that we don't do just at the beginning, this is something we do all the time. This is part of really being a partner with those institutions.

And if I can comment because it's an interesting question where there are differences between Sweden and the U.S. In Sweden, you have these EMRs or [Foreign Language] in Swedish, which take care of like 99% of those ordinary orderings. In the U.S., there's a big variety meaning sometimes you get a fax, sometimes you get a call. And sometimes, if possible, you can integrate with the EMR system. So when I'm saying that we have made efforts on our side to make an easy integration, we have prepared for that integration with EMR system. And I think that's a little bit unique and it differentiates us on the U.S. market, especially for a company of our size that we've thought through those processes as well to be effective. It should be easy to order the test. So we can receive the order in all channels, but, of course, prefer to do it electronically.

Great. And then moving on to something different than do you completed PLA process, you expect that to be published on the 1st of October. And then you expect the price to be decided by the end of the calendar year, I suppose. This sort of faster alternative that you alluded to, does that presume that it will be in the crosswalk alternative.

Yes, Warren, please.

Yes. So there's 2 paths that can take place here. One is this crosswalk path and one is called the gap fill. There's a subcommittee that makes a recommendation to CMS in regards to what direction we should go, whether it's crosswalk or gap fill. Crosswalk is the one where the PLA code with their price would go into effect January 1, 2024. Gap fill would go into effect January 1, 2025. The subcommittee makes a recommendation to CMS. CMS then decides what decision they're going to make. They can align with the subcommittee or they can make their own decision. I do want to emphasize the fact that both methods or both pathways are very positive because you have CMS that believes it's either aligned with another product or it's a unique product, but it does not align with an existing CPT code, which is at a much, much, much lower price. So from that perspective, either path is very positive. We've gone down the path of Crosswalk, but when we submit these claims through Medicare today, we get paid through something called the Medicare Administrative Contractors. So you hear people talk about your local MAC, that's what that refers to. So when we submit a claim, a Medicare claim to our MAC and they pay for that particular test. If, in fact, crosswalk is not decided upon with CMS and we go gap fill. So we're not going to get a price until the end of the following year. Our Medicare Administrative Contractor still pays us or reimburse us for the test, and it's going to be the amount that they decide upon. So there could be some things here where it's above, in fact, the price that we would inevitably get and it's positive for us or it could be below. So we don't know until Medicare gets back to us in regards to what path we take, and we don't know what the prices from our MAC will be until they pay the first claim. So -- but whether you go gap fill or crosswalk it's one is not -- we prefer crosswalk because it's quicker. But if we go gap fill, we will still get paid on the product.

And will you be informed by the recommendation from the subcommittee. And if you are, will you publish that?

Well, we have already been informed from the subcommittee, and it was a positive outcome when it comes to crosswalk. But since that's not a final decision, we're not PR-ing that because, yes, we PR final decisions not -- Yes. Interim decisions, we don't, yes. But as soon as we have the final decision from the CMS committee, we will, of course, PR that. And that will also, after that decision become public information.

Yes. if I can further elaborate on that as well, Anders, is that CMS, they will make a preliminary decision and then that preliminary decision is public, but then there's an open public commenting period for 60 days before there's a final recommendation. But to Anders' point, we want to be a little bit cautious about PR-ing early recommendations versus final decisions.

When we say that the Medicare process as well is progressing well. That's -- yes, that's the kind of progress that we are seeing and referring to.

Very interesting. And this recommendation from the subcommittee does that already sort of reduces the risk of the worst possible outcome that you will be priced similar to a low-price existing test? Or will that be risk be reduced when you have the preliminary CMS decision.

Yes, that's a good question. And Warren, please, how does it work?

Yes. So there's 3 options here. One is to be priced at that very, very low amount. One is to be priced at the crosswalk amount, which really compares us to another product in the marketplace. It doesn't even have to be cancer-based product, but a similar technology. The third is gap fill, where it's really more of a financial exercise and it's looking at cost versus value. The vote from the subcommittee, there was not a single person on the subcommittee that recommended that DiviTum be priced at that lowest amount. So it's very, very positive. But again, I can't stress enough that -- it's always up to CMS, they're the final decision-maker here. But there were 9 people in the subcommittee and nobody recommended for that low price.

That's interesting. And then we're not taking too much time here if there is -- there are other questions. What about the growth capital question -- is there -- are there other alternatives that you judge to be viable other than sort of more typical equity number of share dilutive capital?

Yes, we discussed this briefly on the last Q&A we had for the Q4 report. And as we said then, we are exploring non-dilutive option as well or to some extent, we prefer that in the situation we're in now. And since then, we have made some really good progress, and that's what I think is really strengthening our case is what also will facilitate that process. So we're in that process. And as you know, this one, we need to have a PR to talk about. So we have to come back when we have something we can talk about under PR.

Excellent. And finally, from my side, unless there are any follow-ups later. On the pharma side, you grew that sales by 200% Q1. Is it possible to give any sense of what's realistic for the -- your full year and April, can you repeat Q1 for the full year?

Maybe, Henrik, you could elaborate a little bit on that?

Well, as I said, I mean it's also now looking a little bit into Q2. It's looking good, I can say. And the goal we have for the year -- I mean, this year, we had some single-digit numbers million SEK. Our goal for this year is 2 digits. So it is a significant increase in what we expect. And so far, it is looking really good.

Luisa [indiscernible]. If you're -- if Johan has checked all your questions or if you can -- if you have questions, please.

Well no, I still have just two. So after -- it's very comprehensive. So just wondering in regards to the clinical presentations that you are doing and now with the medical oncologist. So you said that you have done around 35%. So when do you expect to achieve most of it, let's say?

Yes. That's U.S., that was in the U.S. market. So maybe also Warren, you can talk about that and how we prioritize a little bit shortly. So just to remind people listening in.

Yes, absolutely. So with respect to those clinical presentations, and certainly, we want to be able to get through that kind of full list of the 1,500 that we've identified upfront. Part of the challenge that we're faced with is a number of medical oncologists who are considered no call medical oncologist, so it's very, very difficult to get into those offices or in front of those folks. And that's just the reality of the business that we're in. But we're certainly making every effort we can to be able to move forward and engage those particular medical oncologists that we haven't engaged with. From an exact date, I can't provide guidance on that yet because it really kind of depends in regards to kind of availability of those individuals, the institutions that we're at. And part of our strategy as well is when we -- like and this kind of dovetails with the contracting, what we do with institutions. So what we do is when we have an institution that we're working with for a client bill agreement, we will take a look at those medical oncologists that are kind of those high value those ones that we really want to engage with and really have many clinical engagements with them which really kind of takes time away per se from being able to achieve those full -- engaging those full 1,500 but it's definitely part of our strategy. And as we move forward, we'll be able to see that number continue to creep up. So unfortunately, I can't give you a hard number, but since January, we've engaged 525.

But Warren, I think one thing that might be good to add is that if you look at it on a high level, when prioritizing, we're looking at a couple of parameters. One is potential. So we are focusing on the high potential one and the other one we're looking at is likelihood. We've done -- in preparation work we've done advisory boards, et cetera, and receive feedback. So we've done a lot of preparation and we learned a lot and so we have sorted out parameters to find out who is most likely to respond well to these messages. So of course, we are combining that. So if it's 35 of the volume, we think it is higher when you look at the potential and the likelihood.

Okay. Very clear. And indeed very nice that -- well, the several steps that you are taking now also help each other, let's say. And I wanted also -- for a final question just on the companion diagnostics collaboration that -- well, you've mentioned that you have currently under discussions. Also here a bit in terms of time lines, could you elaborate a bit more on that if there is any typical time line for such discussions? Or what do you -- when do you expect, let's say, a decision on this?

Henrik, can you give us some guidance?

Yes. So as I mentioned, I mean, so we're going through these different steps, typically with pharma for a couple of pharma companies also including 1, 2 of the bigger ones. We have been through the [indiscernible]. We have master service agreements. And that's we have now started discussions on more customizing our assay towards their specific drug needs, you can say. And these are discussions ongoing and whether -- or how we could actually move into a collaboration on more customizing our assay towards their drug. It has started. We have these discussions ongoing. It's difficult for me to put a time line on it. But it is something we are, of course, not really pursuing because, as I said, I expect whenever you have 10 contracts running, you will have typically one that actually turns into a companion diagnostic co-development. This is my experience from back in the time, my Agilent days. And currently, we have 10 or 12 projects actually running in that regard. So hopefully, we will see something soon actually turning into a true collaboration.

All right. Thank you, Luisa, and I know you're on vacation. So thank you for that commitment signing in. I'm going to Chien, who is covering for Dan, Chen from Pareto. So I appreciate you're here as well.

Congratulations on the program. Maybe I'll focus on the financial side. So as we mentioned earlier, the sales for this quarter are mainly from pharma, so when do we expect to book the first commercial sales in the U.S.? And do you have any estimate for the coming years?

Yes. All right. So we also -- we've already booked the first sales in U.S. to start with, but still a minority of that number -- it's a handful of tests. Those are still very important because we've been able to prove that we are getting the processes that we've set up in place to work, and we are -- as Warren talked about have received claims that have been approved on price levels that we are very satisfied with. So that has started. But as Warren laid out the strategy, we need to get -- able to scale this fast and reach those goals that we've set out in a couple of years. We believe heavily in that client bill approach, and that's why the client -- the hospital agreements are certain. As we said, we are about to find first one in the near future. And at the end of this fiscal year, we expect to have at least 10, and that also when you're [indiscernible] to see some sales within that area. And it's the same thing that Henrik that it will be in the double-digit number, but around -- yes. Not so more specific in that at this moment.

Okay. And what about the operating costs? Do you expect it will remain stable in coming quarters? And -- or do you have any plans to increase the sales force in the U.S.?

Yes. That's also a good question. And as Anders said, that our operational cash flow, we expect to be on the current level, which is SEK 10 million per month for the foreseeing future. And then at the end of the year, when you see that the sales are growing we will improve our cash flow to lower numbers. That seemed to hold very well so far, and it's also due to that we are currently having a very strict cost control also. So we won't increase cost until we see the results of our sales efforts, which we expect to see later in this year, as we said.

Okay. Maybe last question for me. So could you elaborate a bit more in the expansion plan in Europe? Do you plan to find individual partners in each countries? Or where -- there can be one partner which covering multiple countries?

Yes, it's a good question. We actually are doing a combination of that. So Italy, 1 agreement, 1 territory; Poland, Netherlands, 1 agreement, 2 territories. And going forward, it will be like that. If we find partners that are represented in multiple countries because there are some criterions we're using. They need to have a historical strong performance. They need to have a sales force within oncology, et cetera, strong references. So depending on how they fulfill those criterions, we will then do some territories. But we are in discussions now with partners that have more than one country as tier. So in order to cover these markets that I talked about, it will most likely be less agreement than territories if you understand what I mean. Thank you very much. I think I'll try to wrap it up here in the end. Maybe you noticed, it's 1, 2 minutes past the hour. We actually received 2, now 3 questions. I'll just respond to them very quickly because they are good questions. The first one was actually, I think we responded hospital contracts. And the question was, can we do see this during the next quarter? Yes. The first by next quarter, end of the year, our goal is to be able to sign 10 of those based on the current pipeline that we have. When -- another one around pharma service is also a good one when you have not announced the agreement up until now. Will you start announcing those to the market? Well, that is true because when it comes to commercial agreements, that could actually be -- it's very much so with pharma, could potentially be so with some of the hospitals. We will agree -- we will PR whenever we can, when we get allowance from the pharma. And if it's significant volumes, we have to PR, even if we don't get allowance from the partner, but unanimously, so a compounding diagnostics agreement was definitely significant, we would announce it no matter way. And we have -- if we entered that close collaboration, we believe we have a good chance of also making it public with which partner it is. Same thing with hospital agreements. We will deem those as significant. Hence, we'll PR those, hopefully, with name. If not, we'll just do it anonymously and explain the potential in those agreements. I hope that answers the question. And then the last one was a time line for Europe. Yes, I think this is a little bit like the companion diagnostics. We will update you on like the pipeline, our probability, but I think because we're dependent on a third party when you negotiate, you want to keep your cards pretty close as well for that negotiation. So it's difficult to be too specific when you're negotiating with third parties. But we'll continue to give guidance -- and also those goals, it looks really promising that we'll be able to meet those or even achieve those. I think that has to be the last question. We are a couple of minutes over time. I'm very grateful for the big interest and all the questions. To summarize it, I think we have a super interesting product that has been really, really well received now the first month that we've been really after all the approvals that enables us to let the sales team interact with potential customers to quote that warn percentage just the top of the iceberg. So we're looking forward towards the future and be able to provide a lot of value both to the patients and also the shareholders. So thank you very much for tuning into this session. Bye-bye.