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

Good afternoon, everyone, and welcome to today's Redeye Live Q with Biovica following the release of their Q4 report for fiscal year 2025, 2026 this morning. My name is Filip Lindkvist, Redeye's analyst covering Biovica. Joining us today are Biovica's newly appointed CEO, Theis Kipling; and CFO, Anders Moren. Before I hand over the floor to management, a quick note on the format. Biovica will begin with a brief presentation. This will be followed by an interactive Q&A session. [Operator Instructions] With that, I will hand over to you, Theis. Please go ahead.

Thank you very much, Filip, and good afternoon, and welcome to Biovica's Q4 2025-2026 Earnings Call. My name is Theis Kipling, and I joined as CEO on May 1 of this year. I'm joined today by our CFO, Anders Moren. And as you've heard, our moderator for today's call is Filip Lindkvist from Redeye. Before we get into the results, this slide contains our standard forward-looking statements disclaimer. I'd encourage you to read at your convenience. It covers the usual caveats around risks and uncertainties and the fact that some financial information might be preliminary. As mentioned, today's presenters are beyond myself, also our CFO, Anders. We will begin with a brief introduction to Biovica and the key developments in the business, followed by a financial review and then open the call for Q&A. We welcome you to submit written questions through the chat, and these will be addressed by our moderator during the Q&A session. As mentioned, I joined Biovica as CEO on May 1. I have around 20 years of experience from the health care industry across both commercial and finance leadership roles. Most recently, I served as Chief Commercial Officer at Devyser Diagnostics, where I helped scale the business over the past 4 years. Prior to that, I was Chief Commercial Officer at Atlas Antibodies. And earlier in my career, I held several regional European and global roles at Agilent, including assignments in Italy and Germany. In the next few slides, I will introduce Biovica and highlight several aspects of the company that I believe are especially compelling. DiviTum TKa is a 510(k) FDA-cleared blood test designed to monitor and predict treatment response in hormone receptor positive metastatic breast cancer. Biovica is listed on NASDAQ First North in Stockholm and is headquartered in Uppsala, Sweden, with a CLIA and CAP-acredited laboratory in San Diego, California in the United States. We have built a strong and expanding evidence base with more than 30 publications covering more than 5,000 patients across multiple study programs. Within this data set, DiviTum TKa has demonstrated the ability to provide clinical insight as much as 83 days before imaging, which can support earlier and more informed treatment decisions in hormone receptor-positive metastatic breast cancer. Hormone receptor positive metastatic breast cancer remains our beachhead indication and the area where we currently have the strongest clinical evidence. At the same time, we continue to broaden our clinical activity across adjacent settings. And I'm pleased to share that a leading NCI center in the U.S. is now using DiviTum TKa in a more than 100 patiatent-wide early breast cancer study. Let me now turn to our U.S. CLIA and CAP-accredited laboratory and services business in the U.S. where we are seeing encouraging commercial traction. April was our strongest month to date. During the past fiscal year, we had 72 ordering providers across 34 active accounts. Importantly, 79% of these accounts were retained from prior year and 71% placed multiple orders during the year. The institutions shown on this slide are behind these numbers, which reinforces our confidence in the long-term potential of DiviTum TKa. Coming from a commercial background, I view retention as one of the clearest indicators of underlying product value. In Biovica's case, that retention is not only strong in absolute terms, but it is also being driven by well-recognized institutions that are actively researching and publishing data on DiviTum TKa. As mentioned earlier, hormone receptor positive metastatic breast cancer is our beachhead market. We estimate the opportunity at approximately USD 500 million across roughly 100,000 patients in the U.S. This is our immediate focus, and it is where we intend to win through clinical adoption, continued evidence generation, publications and over time, also guideline inclusion. At the same time, we are working closely with the research community to build evidence in early breast cancer, which has the potential to expand our addressable market by approximately fivefold. Let's now turn towards what currently is Biovica's the largest contributor to growth and revenue, our Pharma business. We see three distinct revenue opportunities here. First, services and kit sales linked to drug development programs. Today, primarily focused on CDK inhibitors, but increasingly extending also beyond that area. A typical engagement generates approximately between USD 50,000 to USD 400,000 per project, and this is where our pharma revenues are generated today. We currently have around SEK 23 million or approximately $2.5 million in ongoing contract value, which almost doubled over the past year. Second is the companion diagnostics collaborations, which represents an important and growing opportunity for Biovica. Several of our current engagements have the potential to progress into CDx programs. While we do not yet have signed CDx contracts or CDx revenues, we do have active discussions around potential future engagements. Third is CDx product sales, which is when both the pharma drug alongside DiviTum has been regulatory approved as a companion diagnostic, represents naturally a very high and a highly attractive long-term value opportunity. And although this is not yet a revenue stream for Biovica today, we believe that there is potential. There are many examples of how companion diagnostics and complementary diagnostics have transformed companies. And with more than 20 ongoing collaborations, we naturally expect that some of these may ultimately convert into CDx-related revenues. I'm encouraged by the continued momentum in the pharma business. Having worked with companion diagnostics commercialization in the past, I also understand how strategically important this area can become for a company like Biovica, and I see meaningful potential to further strengthen our position here. Biovica is a focused and agile company, and I have been impressed by both the depth of the evidence behind DiviTum TKa and the traction that we are seeing across our IVD and Pharma business. That momentum made April the strongest month in the company's history, and I'm pleased to say that this was not an isolated event. We have also seen continued strong demand in the first month of the new fiscal year. We continue to increase the number of NCCN and NCI centers adopting DiviTum TKa in clinical routine. Very recently, a leading NCI center initiated, as mentioned, a 100pent-wide patient study in early breast cancer, which we believe can further support our expansion into this indication and materially expand our addressable market versus our current focus. The U.S. is our core focus and the only market where we are currently investing for commercial expansion. As a consequence, we have decided not to pursue European IVDR certification at this time. We have not generated sales in Europe during the past fiscal year. And based on this decision, we do not expect European revenue in the short to medium term. We will revisit this decision if and when our pharma engagements evolve to a point where IVDR certification becomes strategically necessary. As part of this shift in focus, we have also initiated termination of our commercial distribution agreements in Europe. To provide further context, the effort required to pursue IVDR would be comparable to or potentially even greater than the efforts that we are currently investing to scale in the U.S. In addition, even after certification, Europe is very diverse and would require a country-by-country process for guideline support and reimbursement, which would likely be both lengthy and also uncertain. Importantly, the decision not to pursue European commercialization contributes positively to our operating expense base. We have reviewed our cost structure carefully and implemented tighter discipline across the business. We expect this sharper focus to have a meaningful positive impact by extending cash runway and shortening the path to breakeven. And with that, I will hand over to our CFO, Anders Moren, who will take you through the Q4 and full year financials.

Okay. Thank you, Theis. On the next slide. Our Q4 sales was SEK 4.8 million. That is by far the best quarter so far, and that was driven by both IVD testing on the U.S. market and a really great quarter for our pharma service team. We'll zoom in on the details on the next couple of slides. Full year sales was SEK 13.4 million, and that represents about 55% growth versus last year in Swedish krona. And in local currency, that growth was equal to 74%. Our cash position at the end of the reporting period was SEK 70.4 million, and operating cash flow improved in quarter 4 to minus SEK 16 million versus minus SEK 17.8 million last year. Looking at Q4 sales versus same period last year. The blue bar in the slide represents our U.S. IVD sales, which had an 18% growth in Swedish krona, which corresponds to a 35% growth in local currency. The gray bar that represents our Pharma Services testing sales. This part of our business has really grown dramatically, driven by some really large Tier 1 pharma customers, which has placed a number of work orders during the fiscal year. And we see that now that focus on the larger pharma companies is starting to pay off. They are less price sensitive and they have later-stage trials, which generates larger volumes for us. The yellow bar represents the pharma service kit sales. This part of the pharma service business has declined slightly, which is fully in line with our expectations since the large Tier 1 companies are usually preferred to contract including analysis rather than buying kits due to -- and do the analysis themselves. Previously, we sold quite large volumes of kits to more preclinical trials, whereas now we are more selling tests into proper clinical trials. Go to the next slide. Yes. Full year sales shows a very similar picture to the quarterly picture on the previous slide. Overall growth was 55% in Swedish krona, and that's 74% in local currency. Worthwhile to point out is the continued growth on U.S. IVD with 55% growth in local currency and more than doubled sales in Pharma Services testing, driven by the same factors as mentioned in the previous slide. As Theis pointed out earlier in the call, we have not sold any IVD kits in Europe during the fiscal year. You can see that, that tiny little orange bar from last year has disappeared. Thus, we have decided to focus on U.S. IVD and Pharma services and EU IVDR projects and EU distribution contracts will be put on hold for the time being. Last slide on the financials. Cash position, as said earlier, at the end of the reporting period was SEK 70.4 million. Net operating cash flow improved to minus SEK 16 million in the fourth quarter. With that, I'll hand it back to Theis.

Thank you, Anders. And let me close with a few summary remarks before we open the call for Q&A. We are very encouraged by how the quarter closed and also especially by the momentum we continue to see across the business. I am particularly very excited about the opportunity that lies ahead for Biovica, while also remaining disciplined in how we communicate expectations until I have seen these developments progress further. In the meantime, we are taking concrete actions to reduce cash burn and extend runway. Financial discipline and commercial execution will be two defining priorities alongside continued evidence generation. Let me also briefly address how I view the market in the context of ctDNA and DiviTum TKa. I see these technologies as complementary yet distinct with ctDNA identifying tumor-specific genomic mutations and DiviTum TKa quantifying real-time proliferative activity. Together, they enable a more complete understanding of treatment response and resistance. In other words, ctDNA tells you what the cancer is. DiviTum tells you what the cancer is doing. That creates an attractive opportunity for DiviTum TKa to establish itself as the proliferation monitor, an early simple signal of whether a therapy is working. This remains an underserved need, and it is where our FDA clearance, our evidence base and our 34 active accounts gives us a very strong starting position. I look forward to maintaining a close dialogue with the investor community and to sharing further updates as we continue to execute on our strategy. And with that, happy to give the word back to Filip and to open up for questions.

Thank you very much for that presentation. So let's start with the figures. Sales more than doubled to almost SEK 5 million, primarily driven by Pharma Services. And in Biovica's Q2 report, it was guided that Pharma Services would pick up in your Q3 and Q4. Should we expect Pharma Services to continue this momentum or maintain at these levels or decline in the coming quarters?

While I will remain being a little bit cautious considering this is still my week 7 with the company, so early and in my listening mode, it is a clear signal that we will continue to see a robust growth from the Pharma business. But unfortunately, I'm not able to give you more guidance than naturally, this is a business we continue to see growing and will also continue to grow this fiscal year over the past fiscal year.

Got it. And there's a great potential should the DiviTum become a companion diagnostics tool, as you mentioned. Can you outline your view of this opportunity and perhaps provide a rough time line on when this can be achieved in a best case scenario?

Yes. That is difficult, obviously, to kind of give you concrete guidance on time line. But I can say that this is indeed such an instrumental opportunity for the company. And you don't really find that many companies who sit on such a strong evidence base and such a strong relationship with pharma. Look at the number of pharma companies we're working with and the growing number of projects and underlying, obviously, the revenue base that sits within the contract value pool, I think that confirms that we are on something good. When a potential CDx would come -- I mean, it's very, very difficult to say because this is not in our hands. We are obviously reliant on when and if pharma trials are successful. But I'm hoping that it's going to be within our short to midterm period, meaning within the next 1 to 3 years, absolutely.

And maybe a difficult question, but if a partner, clinical trial is successful, would you say that it's a high chance for you to sign such an agreement that would make sense for them, right?

I would -- there's a lot of assumptions we have to put and make here. But if we do assume that this is essentially helping identify the right patients, then I would personally and subjectively be confident in believing that it will also lead to CDx collaborations.

Sure. And if we move over to IVD sales, they remained low. And in the CEO letter, you write that you will continue to expand the body of clinical evidence, accelerate commercial adoption and deepen your collaboration with leading clinics, health care providers and payers. Could you break this down for us? Maybe if we start with clinical evidence. You mentioned before that you've conducted many studies, over 30 publications and over 5,000 patients. What are you focusing on when it comes to additional clinical evidence?

Yes. I mean, let me say that we're nothing without and we are all about our evidence base. So this is obviously a critical disease area we're dealing with. And while I'm very happy with the more than 5,000 patients we have in our clinical data pool, I'm also realizing that it's a great starting point, but it's not enough. But I'm very reassured by the collaborations we have with this many Tier 1 accounts that was shared also in the presentation. These are indeed the accounts who you would want to go with. It's not a given that they will collaborate with you, but we do work with several of these Tier 1 accounts. And the great thing is that even within each of them, there's a growing number of clinicians who adopt DiviTum in their clinical routine, but also continue to work within their research and publications. So I'm very hopeful, and I think this is the natural way things are -- should go. It's an adoption curve we are addressing. But before we see widespread adoption, I don't personally believe that will happen really before we have guideline inclusion and for guideline inclusion, there's still some way to go. So that's where our disciplined actions come into place. We will focus on the cost base, make sure that we have the funding to continue to support evidence generation and broadening the engagement that we have within the U.S. market.

It seems to have a solid strategic way forward there. But on this topic, what's the status of the potential study with the large IDN.

Yes. That's something that you would definitely all have heard if this was done and dusted completed and generating revenue. It's not, but it's moving in a good direction. That's not the same as saying as it's secure. That's why I'm a little bit cautious on my comments here. However, we do have weekly meetings with the accounts. And we do everything in our power to push this all the way beyond the finish line. But we are not there. We have a good feeling about it, but you will get to know me. I want to see the orders coming before I believe it. And right now, when I look in the order inbox, there are no orders from this account yet. So I will be hesitant confirming anything beyond this.

Got it. What specific milestones would make you consider DiviTum TK to have achieved a meaningful clinical adoption within the next 12 to 18 months? Maybe a hard question to answer, but.

I think we're going to -- I mean, there, we will continue to broaden the evidence base, continue to broaden the number of clinicians within and beyond these Tier 1 accounts. That's something that we will continue to track, right? And the slide that I shared on the commercial traction with the number of accounts and retention rate is something I'm going to keep and continue to report on earnings calls moving forward so that we can have an ongoing monitoring and conversation around how we're doing with generating that evidence. Within the next 12 to 18 months, I doubt we will have significant milestone achievements in the sense of meeting guidelines, but I do hope that some of the study engagements we have, including this potential NCI engagement will give us the data pool that we need to submit towards guideline inclusions. But there, I think we're more within the 24 to 36 month period from today.

Yes. And you also write in the CEO letter that you are entering the next phase with a sharpened focus and increased efficiently, and you have outlined some answers to this already. But the question here is if you -- if this implies a reallocation of funds from R&D to direct sales resources?

It does imply reallocation of funds, not necessarily from R&D, but we are focusing investments that both goes today into FTEs that tomorrow will go into other aspects and vice versa. And essentially, what I'm bringing in here is a kind of a revived financial discipline focus with cost-conscious decisions across the board and something that I'm really putting a lot of emphasis on that we will obviously -- there's no way -- we will have to grow our way into where we want to become. We can't save our way. So that's not what I'm trying to do. But I'm being very careful and very deliberate with the funding we have available and the investments we are making to make the maximum impact in the primary market of the U.S.

Sure. And can you share your view on the collaboration with Tempus AI? Do you have a similar approach as with the IDN that you wait and see concrete progress before.

Having worked with these type of large companies who have been very, very successful. I also know the long queue of companies like Biovica who really want to work with them. So they get -- they are bombarded by a number of priorities day in, day out throughout the year. We have an agreement with them, but they have not yet gone commercial, which more relates to some of their internal phasing of their own product launches. So we have not yet seen commercial traction and revenues from Tempus. We have a close collaboration with them. And this is something I've done successfully in the past, and I'm bringing myself as close as possible to Tempus leadership to make sure that Biovica, we can support and also help steer the direction for this collaboration. But it remains still to be confirmed how successful and when that will be.

All right. And you mentioned that you have initiated negotiations regarding the termination of distribution agreements in the EU. Can you elaborate on this and if we should expect any one-off costs or penalties associated with breaking these contracts?

There's no -- and Anders can confirm, but I don't foresee any costs related to this in any way.

No, it shouldn't be.

And in your '25, '26 fiscal year, operating expenses were minus SEK 84 million. Should we expect costs to continue in a similar range for the next fiscal year?

I'll ask Anders to.

Yes. We -- as mentioned previously, we are having a very, very tight control on the costs now. And we -- I think you should expect slightly lower costs in the next 12 months compared to the SEK 84 million that we had in the fiscal year that we closed end of April. But we don't give any guidance around that, but it should be slightly lower.

And the question here is if you believe the current cash position is sufficient to reach the next major commercial milestone without raising additional capital. And with milestone, I'm not really sure what the question here asked about.

That's -- yes, exactly. That would be my follow-up question, what the commercial milestone. But we -- the Board has given guidance that there is sufficient funding for the next minimum next 12 months, both on Page 8 and 10 in the year-end report. And that's the kind of guidance that we are giving around our funding situation, nothing more, nothing less.

Right. And a question here on the U.S. market. So we all know that test hasn't picked up as one expected. So how have you changed the strategy going forward now in the U.S. in terms of increasing IVD sales in the short term? And are you focused on the short term? Or is it a long-term game you're focusing on?

Very much long-term game. And I would also like to kind of readdress those expectations because I think there's a couple of fundamental things to take with you. And one and very important one is that we see that DiviTum works. And we have seen that confirmed over and over again across both the businesses, the U.S. services, but also Pharma Services. So we absolutely know it works. We absolutely know that it's highly appreciated. But we -- I also know that it takes time to break through into the U.S. market. And you can potentially fund your way to accelerate it like some of the big American giants have successfully been doing. But if you're a company that are a little bit more constrained like QUBICA, European-based, it will take time. But there's no doubt that the clinical adoption is happening. And we continue to pursue that with the diligence we have already applied. We'll invest a little bit extra to double down on more evidence because we really rely on evidence, and we do that initially and for most within our beachhead indication, which is within metastatic breast cancer, but doing so while also gradually expanding early breast cancer. We do need to have more outcome-based data, so more utility on the product before we realistically can pursue guideline inclusion. And before guideline inclusion, I doubt you will see this massive uptick, but I'm highly confident in saying that we will continue to see a continued adoption and also continued acceleration of revenues.

And last question from my end. You mentioned clinical utility that you need to show it. Can you elaborate on how you will show this? Is it a study that you will conduct in-house or together with a partner to generate this sort of evidence?

I think there is -- this is going to be an external study driven by -- could be the NCI, as we have talked about potentially. That's one of the great opportunities that I personally see. We -- what we do need to do is to show the what if -- answer the what if. So -- and that needs to be confirmed in a study that is prospective, and that is what we are working on. And it's one of the final pieces in all transparency that we are missing before I realistically believe that we can pursue guideline inclusions. But that still will take some efforts and engagements, some funding and some years, 2, 3, probably, if not more. But it's -- in that said, it's -- I believe it's within reach, but I can't come closer to when and how soon. And lastly, given the strong traction we have in pharma, there is still the opportunity that we do engage into a CDx collaboration, right? And that will also help us accelerate data generation and eventually also through that avenue, get into guidelines.

Interesting. So that was all questions from my end and from the investor side. So with that, would you like to give some concluding remarks, Theis?

Yes, please. Thank you, Filip, and thanks to the audience for submitting the questions. I really am very, very, very positive looking back on my 7 weeks here. And the good thing is that it's an accumulating feeling, which is nice, right? I'm very, very reconfirmed about the data, the traction I'm seeing across both businesses is highly reassuring. And I think with the cost corrections we are currently making will help extend -- lower the cost base, extend cash runway. And I think it will instill a higher -- a sharper execution focus. And I really look forward to working with the team on doing so. So I'm very, very optimistic sitting here today in 7 weeks in and also highly appreciating of the retail investor community. So you will see us communicate when there are news to be shared and with the highest frequency as we possibly can. So with that, I look forward to the continued strong collaboration with the community.

Thank you, Theis and Anders, and thank you all for tuning in.