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

Hello, and welcome to this live Q with Biovica. First off, we will have a presentation from Bka and from Theis Kipling and Anders Moren. And after that, we will have a Q&A session. And please feel free to send in your questions through our web page. So please, Biovica, go ahead and do your presentation. Thank you very much.

So good morning here from San Diego in the U.S., and welcome to Biovica's Q1 2026, 2027 Earnings Call. My name is Theis Kipling, I'm the CEO of Biovica, and I'm joined today by our CFO, Anders Moren. Before we get into the results, Slide 2 contains our standard forward-looking statements disclaimer, and I'd encourage you to read it at your convenience. Today's presenters are beyond myself, also our CFO, Anders Moren, who will take part in the Q&A session later in the presentation. We will begin with a brief introduction to Biovica, followed by our Q1 highlights and financial update, and then we close with a few summary remarks before opening the call for Q&A. [Operator Instructions] Joining us today, as mentioned, is the analyst Fredrik Thor from Redeye. In the next few slides, I'd like to introduce Biovica and highlight several aspects of the company that I believe make for a particular compelling investment case. DiviTum TKa is our FDA 510(k) cleared blood test that monitors and predicts treatment response in hormone receptor positive metastatic breast cancer, providing clinical insight as much as 83 days before imaging. Biovica is listed on Nasdaq First North headquartered in Upsala, Sweden, with our clear and cap accredited laboratory in San Diego, California, serving all 50 states here in the U.S. I'd like to highlight what I see as the core of our investment case. First, the dividend platform itself, a quantitative proliferation signal from a single blood draw, giving oncologists information before imaging confirms what biology is already showing. Second, that 83-day lead time is validated against the standard in imaging, and we are seeing real patient cases where it flags response and resistance. And third, we built the commercial infrastructure to app on this. Our clear and CAP-accredited lab has processed more than 900 tests over the past 12 months across active accounts with a 75% prior year retention. Behind all of this sits a strong and expanding evidence base, more than 30 publications across 5,000-plus patients and 6 cancer types with our FDA 510(k) clearance, giving us credibility with both physicians and with payers. Our lab model is centralized with a gross margin structure above 85%, so revenues will scale faster than our fixed cost base. And we do see multiple paths for upsides. Our hormone receptor positive metastatic breast cancer beachhead expansion into early breast cancer, a patient pool roughly 5x larger and beyond that, our Pharma Services and CDx collaborations. Let me turn to the commercial traction we're seeing in our U.S. lab and services business. We have now 46 accounts to date, including recurring use by major academic and community oncology networks and repeat ordering across these leading institutions signals real workflow integration and not one-off assembling. Test volumes have grown for 9 quarters straight, up 63% since fiscal year '24 and '25, and that momentum is accelerating into this fiscal year. Looking at the underlying ordering behavior, 75% of our active accounts ordered more than once, 75% also of our providers sent in samples multiple times. We retained 81% of accounts from prior year and 26 out of 36 active accounts ordered in 3 or more months. Taken together, this is what gives me confidence in the durability of demand over here in the U.S. Looking ahead, we're targeting study activation this fiscal year with a large integrated delivery network partnership, which we expect to open a pathway through NCCN guideline inclusion and to further accelerate volume growth beyond what we are already seeing. As mentioned earlier, hormone receptor-positive metastatic breast cancer remains our beachhead. Based on roughly 100,000 U.S. patients, we have estimated this opportunity of approximately north of USD 400 million in available market. This is our immediate focus, and it is where we intend to win through clinical adoption, continued evidence generation, publications and over time guideline inclusion. At the same time, we are working closely with the research community to build evidence in early breast cancer patient pool with clinical trials for this indication starting in Q4 of this year, which has the potential to expand our addressable market. Beyond that, we see a longer-term platform opportunity across multiple indications, including lung, GI, blood cancers from 2028 and onwards, supported by our granted ICI biomarker pattern and algorithm IP that is currently in progress. Let me now turn to our pharma business, which remains a key source of revenue and platform optionality. We see the total addressable pharma opportunity here at approximately USD 8 billion by 2030 with the U.S. representing more than 40% of that. We see 3 distinct revenue opportunities: First, services and kit sales linked to drug development programs, typically USD 50,000 to USD 400,000 per project, which is where our pharma revenue is generated today. We currently have 24 ongoing collaborations spanning across CDK4/6, PIK3, certs and other oncology programs, representing approximately SEK 30 million in ongoing contract value. Second is companion diagnostic collaborations worth roughly and between USD 5 million to USD 50 million per development program. Several of our current engagement, they have CDx potential and those discussions are also ongoing, although we do not have any signed CDx contracts or either any CDx revenue as of today. Third is CDx product sales worth more than USD 50 million a year for approved products, which obviously represents the longer-term highest value opportunity. However, there are no CBx products on the market for us today, but this is where we expect to be over time. Looking at our current work orders, 11 of our partners are Tier 1 companies with more than USD 10 billion in annual revenue. One is Tier 2 and 12 in Tier 3. By drug class, CDK4/6 inhibitors remain our largest focus at 15 programs followed by [indiscernible] at 4, IO programs at 3 PIK3 at 2, which reflects where the market is today. and also where we are beginning now to diversify. My full quarter as CEO has been about decisive action, cost discipline, a strengthened leadership team and accelerating momentum in our Pharma Services business. On the pharma side, Pharma Services revenue nearly doubled year-over-year, up 95% with Pharma Test Services revenue growing 187% on growing demand for pharmacodynamic biomarkers. We also made some difficult but necessary decisions on costs. We have streamlined the organization, which carry a near-term cost in the P&L, but sharpens our cost base going forward. And we ended our agreement with Tempus AI so that we can focus our U.S. commercial resources more directly. Finally, on leadership, I'm happy to say that Maria [indiscernible] will be joining us as CFO. And our Nomination Committee has proposed a renewed Board ahead of the 2026 AGM coming up next week. Together, I believe that these changes, they leave us as a leaner, more focused Biovica heading into the rest of the year. Let me now turn the focus to the Q1 highlights. Net sales were SEK 4 million, up 56% year-over-year or 57% in local currency, driven primarily by Pharma Services. Operating cash flow was in Swedish kroner, minus 16%, which is a modest improvement versus last year's minus 17%. And our cash position stood at SEK 51.6 million, up from SEK 16.3 million the prior year. On the U.S. side, IVD test revenues were in Swedish kroner, SEK 1.84 million, up 1% year-over-year or 2% low currency. However, with volumes that increased roughly 20%. That said, a shift towards commercial payer corporates is for now holding back revenue and improving payer collection naturally is a priority for us moving ahead. On the pharma side, revenue was SEK 2.9 million, up 95% year-over-year, 96% in global currency with Pharma Test Services up 187%, driven by new work orders from existing global pharma partners. So put simply, Q1 delivered growth strong pharma services growth and a leaner cost base while U.S. IVD revenue was held back by payer mix headwinds despite actually seeing continued and higher volumes. Before I close, I want to update you on a capital raise that we are executing to fully fund the business through to the next level. We're carrying out now a SEK 29.2 million rights issue of new Class B shares with preferential subscription rights for existing shareholders at a subscription price of SEK 0.33 per share at discount of approximately 23% to the theoretical ex-rights price. Importantly, the rights issue is expected to be fully covered. Our largest shareholder, HDF and family has agreed to guarantee the amount in full. So the issue is backstop for its complete amount. The Board's resolution on the rights issue was given on September 9, subject to approval and an extraordinary general meeting with the subscription period targeted to open on October 17. Together with the cost actions we have already taken, this capital injection will give us the runway that we need to execute on our strategy. Let me now close with a few summary remarks before we open the call for Q&A. We've built real momentum. Our direction is clear, and I believe our position in the market is very unique. What took us here to where we are now won't take us to where we want to be next. And I want to be very clear about that as we look ahead. On performance, this has been a leaner and more focused Biovica Pharma Services. Revenue nearly doubled year-over-year and the cost actions we have taken, they sharpen our cost base going forward. On commercial traction, we secured our ninth working order and expanded MSA from existing global pharma partners, signed a new lab services agreement with the U.S. Cancer Center and published also new Phase III data. Looking ahead, our execution priorities are a leaner cost base following the Q1 restructuring, a sharper U.S. commercial focus and continued pharma momentum. And on market position, I see ctDNA and DiviTum TKa as complementary, not competing. DiviTum delivers a frequent read on treatment response before imaging regardless of a tumor's rotation profile. As I've said before, we are not the mutation detector, we are the proliferation monitor, the earliest, the symbols simplest signal that a drug is actually working. That is where our FDA clearance, our evidence base and our growing number of active U.S. accounts puts us. And I obviously look very much forward to maintaining a close dialogue with the investor community and to keep on sharing further updates as we continue to execute on our strategy. And with that, Fredrik, I'm happy to open the call for questions.

Perfect. And thank you for the presentation. So first off, a few questions from the investors and participants online. So the first question is improving commercial payer coverage and revenue collection is now an active priority. Could you update us on where you stand with Medicare as well as private insurance coverage?

Yes, absolutely. So we're in a very good position. And I was actually very positively surprised when stepping into the company to see how far we have actually developed. We have medical pricing already. We actually have many of these commercial payers that are paying us. However, many of these commercial payers are, in most cases, waiting to see that we will have guideline inclusion to support them continuing to pay us at a stable price. So we're seeing quite some fluctuation within these private insurers that makes the price we are being acknowledged go up and down and sometimes even at 0. But the team that we have is very experienced in managing this, and we have a plan also on how to proactively mitigate and continue to strengthen the position. So that's in short how we at least look upon this. So it's good, it's positive.

Got it. And what reimbursement changes are you targeting in the near to medium term to help drive IVD cells?

No real reimbursement changes plan. I mean we let's see what if we get into a CDx development program, that might be a trigger for more reimbursement changes. But right now, we are covered. We have good pricing and we have very strong acknowledgment naturally now as we see these headwind challenges, as I described from commercial payers, that's actually a reflection of how we are getting adopted more broadly in the community. And that is -- so essentially, you can flip it and say it's a positive. And now we just need to make sure that we get the guideline support that will sustain that reimbursement level that we know that we can secure.

And you mentioned the guidelines support or maybe you can develop a bit on what it means and how you could get there.

Yes, Absolutely. I mean this is -- we're talking about a very serious disease, right? And naturally, we need to have evidence to support us. And the trigger there will be whenever we're going to have enough, then we will be also adopted into guidelines. That's a long route. The company has been pursuing it for since a long time, more than 5,000 patients across clinical studies. But yet, we have not really shown full the outcome, the utility data through a prospective study. And that's what we are working on. And I'm very confident in saying that once we are in guidelines, I firmly believe we will get into guidelines, then that's going to be the main trigger to have true and full-on adoption here in the United States.

And you mentioned a prospective study. Maybe if you can develop a bit on that as well. And plans for that time line as on.

Yes, absolutely. So this is -- we have several plants in the making and on the progress that will help us with the utility that we need, one of which is this potential IDN opportunity with study activation that was also alluded to and explained in the slide. This is something the company has been working on since quite a while. Since I joined, obviously, I've checked in on that opportunity, and I can confirm, it's absolutely real, and it's very much live. It's not over the finish line yet, but it's -- we're pushing it in the right direction. It's a true partnership. So I'm very confident that we will deliver. And that IDN study activation will most likely give us in full what we need, but we are naturally supplementing that through additional engagements with other of these academic institutions who are publishing on our behalf and together, over time, this is what will bring us into guidelines. But you will need to be patient because this is not something that happens overnight. I am expecting this is going to take several years, most best case, I think, 2 or 3 years as I look at it. But in that period, we will see revenue and adoption continue.

Got it. And a question from a viewer. You mentioned that you are on a solid path towards a potential companion diagnostic collaboration. What has made you more confident what developments are needed to be [indiscernible].

Yes. Good question. I mean this is the business that I come from the field I know, but we also have a really strong competence in our organization who have been the 2 experts in building this and have done this. So it's obviously an assessment subjectively made by the company. But it also is conversations that are openly have and taken with the pharma partners. So we know that they are looking into to this being an optionality on their side. It's not the same as I can confirm that it's a done deal. It is not because that is not where we are today, but we are pursuing this. We have multiple programs, and we are building up the funnel to become more than too handful over time. And then we believe that at least one of them will materialize and hopefully more. So this is also part of why we changed the strategy to be pharma focused first of all because we know this business. We know the opportunities. And we also know, obviously, the diligence that you need to put in. And the good thing is that the biomarker, it really delivers, it really works. So I think it's more of a matter of time before we will get into that position.

And in your slides, I believe you showed the commercial potential a bit of this SDx collaborations. Maybe if you can develop a bit on that on how you will get reimbursed and potential milestones and so on.

So these numbers are not something that are made up, right? This is actually from concrete evidence and experience both from myself and also Henrik Winther, who is our Head of the Pharma business. So he has done it at many times before. So we know this is typically what it entails. And so the way that it would work if when a pharma partner would want DiviTum be included as one of the other way as a CDx development, then there would be -- that's a whole new way of engaging with the pharma partner around a program that would derive the data but also prepare the assay to become truly launched alongside the drug. I've been in this world before, and I can confirm that, that is a truly exciting place to be. The funding flow is very significant, and the opportunity is even higher. But it's not the same as saying that this is slamdown guaranteed thing that will happen. But with Henrik and the team, we feel comfortable that we are developing the business, the biomarker into that direction, making it a lot more robust. We have a lot higher confidence and that's also what you're seeing from the increased number of applications, but also the increased number of press releases that we have issued here in the past months over the summer. This is pharma partners who take a decisive decision. They see the biomarker works. They decide to continue to include the biomarker into their multimillion development programs. and they don't do that just to treat us well. They do that because they see that our biomarker, it works and it can deliver value to them. And our collective responsibility together with pharma is naturally making this a tool that can make a significant improved benefit for patients. And if we deliver on that, then we are in a completely different company.

You mentioned the value a bit also for the pharma companies, but maybe you can develop a bit more what value do they get? I mean, obviously, understanding better how the compound works and so on, but it could be interest to hear a bit more what value they get.

Yes. So on the pharma side, there are lots of cases, but I would encourage the audience to look at kind of the greatest and largest drug in the world, KEYTRUDA from Merck, how they did this. And there are other companies, Bristol-Myers Squibb, with OPDIVO, both cancer drugs kind of initially framed the CDx and complementary diagnostics world. There's a lot of public available evidence on what happens. And we believe that we can do sort of the same, right? I mean we're going to make sure that we can lower the risks on pharma in regards to having success with the drugs by potentially identifying what patients will have the biggest benefit of their drug, but also at what drug concentration and so many other things. So -- and that's -- the breadth of the opportunities is also what excites me. It's not a one-off, a single trick opportunity. There are a number of opportunities that we are pursuing together with pharma, and we know that there is a lot of empirical evidence that this creates a lot of value for the pharma company. And that only happens because it delivers a lot of benefit to the patients.

Got it. And we got a few questions about the rights issue and basically your cash flow projections when they expect to be cash flow positive yes, maybe if you can develop a bit on that.

Yes. So let's start with the rights issue. Obviously, we're very excited that we have -- we are secured this to this partner because that significantly derisked the overall business case. And we have a few milestones overall that I'm pursuing. I want to bring this IDN study activation through -- across the finish line because I think that will help us transform the company. And the third thing will be the CDx program. Now with the capital raise we're making now, I think we're doing it with the highest respect for the existing shareholders. And in that set, we're mindful of the dilution. We've taken the necessary amount that will take us to the next level. We're not going to comment on when we're going to when we believe we will be cash flow positive or breaking even and simply because of these triggers that I've just mentioned, there is a reality in the case they deliver and another reality if they are postponed or failing. And for that reason, I cannot get any closer to any time line.

Got it. And you mentioned this a bit, but the timing of the issue right now? Maybe if you can develop on that it to be able to deliver on your strategy, of course, but why at this specific time?

Exactly. Well, you should as saying, obviously, you should raise money when you can, not when you need it. And I think we're essential that position. This gives us the time, right? What I'm -- I am fully committed. I know this biomarker works. So all I need essentially is time to implement the strategy, get the right commercial focus within the company. And with time, I know that we will deliver on the milestones that I've mentioned. And for that to do that, then we decided to raise money now when we can, when we and without being a dire need. And I think that is a very clever way of acting. I know there can be different opinions on doing this. But long term, this is protecting the company and its is boosting our chances to double down on the success that we have right ahead.

Got it. And can you go through the reason for the Tempus termination and kind of your view of partnerships going forward?