Q-linea AB (publ) (QLINEA) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Q-linea Audiocast Teleconference Q4 2021. Today, I am pleased to present CEO, Jonas Jarvius; and CFO, Anders Lundin. [Operator Instructions]

Thank you very much for that, and welcome everyone, for our presentation of our development and earnings call for the last quarter of 2021. If we can take the next slide, we'll present our disclaimer in case me or Anders would make any forward-looking statements. Having said that, I think we move on to the next slide, which is basically the overview of the last quarter of 2021. As you know, we're a company that are heavily focused on developing disruptive solutions for faster infectious disease diagnostics. Our first product is being marketed as we speak, is targeting patients with severe blood stream infections, where sepsis is the most severe condition. We have developed and grew according to plan over last year, and we are now 173 employees and consultants at year-end in the company. So of course, also when we look back at the company, I think we had a tremendous development last year. We had our CE-IVD applications for the first test for ASTar beginning of May. We have also presented just recently very strong results from the commercial valuation performed by Thermo Fisher Scientific and I will provide some more details during my call. We have also seen that Thermo Fisher has now since their official launch in October, been active in the market and already presented after our 2 trade shows, and I will also come back to that. So overall, we see a very strong interest from the market. And I think we have developed a very good product and really look forward for taking the next steps in the years to come. We have also intensified our discussions around Podler, our portable culturing technology. And of course, we are now thinking about how to bring that product to the market. But if we move into the next slide in the presentation, just an overview of sepsis. It's a global health crisis. It's the immune response to an infection you have somewhere in the body that sort of mitigates and comes into the blood stream that could cause some very severe symptoms. Around 50 million people are affected every year, every third second a person will die, and it's really the #1 cost driver for the U.S. health care system. So it's a severe problem, and I think it's a very good application for our first product for ASTar. If we then look at the next slide, provide some more details around sepsis. I think that if we focus on the left bottom panel, I think what really is important here is that you start, of course, the therapy for the underlying bacterial infection for sepsis. You start today with empiric therapy with antibiotics. And you have to do that because time is critical here. A patient that moves into static shock, the likelihood of that person to die increase with over 7% every hour. So you need to start the diagnostics and you need to prescribe antibiotics to that patient. The problem is that at that time point, you don't know if the patient actually has sepsis. You don't know what bacteria might be causing it, or you do not know what antibiotics to use. So basically around 50% of all empiric therapies are inappropriate. They might actually treat the condition, but they might be too broad for instance, so you overuse antibiotics for that particular patient. The more severe cases is that the initial treatment actually is wrong and the patient progresses through sepsis septic shock and will die before you have received the answer. So in this case, rapid diagnostics can truly make a difference in how to treat these patients, how to use antibiotics more carefully and more directed, but of course, also save lives in the long run. So if we look at the panels to the right, of course, providing a rapid susceptibility test, indicating what antibiotic to use for any specific infection is going to be key to fight one of our biggest threat to mankind antimicrobial resistance. I mean, as we use antibiotics, bacteria will develop resistance towards these antibiotics, and this is becoming a huge, huge problem worldwide. Also, we can see that rapid diagnostics can provide a better tool and better uses of antibiotics, for instance, respiratory conditions where we use a lot of over prescription of antibiotics. For instance, you have a viral infection, but you still provide antibiotics. Of course, this could change with rapid diagnostics. And when we look at sort of the out -- respective parts of AMR, we can see that if we don't change anything today, it's expected around 10 million people will die in the next 30 years. So of course, we, as a company, cannot solve this problem, but we can be an important piece together with colleagues in the market to be able to fight AMR, and that is, of course, extremely critical. Then we take the next slide, we look into ASTar, our first product. This is just an overview on the top part, where you can see the traditional workflow in many labs in Europe and U.S. And you can see that it's a multi-day, multi-step process. You start with a blood culture, you prescribe empiric therapy and then have to wait for several days until you know actually what antibiotic to use. And as I said, this is a huge problem. So with ASTar, you can dramatically reduce that time. And you can also provide an answer of very many antibiotics as we presented 26 antibiotic program negatives for non-fastidious bacteria, an additional 6 for fastidious bacteria. So shortening that time point, you can, of course, change to proper therapy much, much faster. ASTar has also been designed to seamlessly integrate in the workflow. So it takes around 2 minutes to start the test and then you're done basically. So that has been our ambition with ASTar. If we take the next slide. This is just a summary of 3 independent health economic studies that have looked into the possible benefit if you can provide 24-hour faster diagnostics for this patient group. And you can see from left to right, you can see a reduction in mortality according to this study. You can, of course, also if you can change to appropriate and narrow spectrum treatment faster, reduce the pressure for development of resistance and super infections in the hospital. They have also indicated that you can have a patient to leave from the intensive care bed on average 2 days faster if you are put on appropriate therapy faster. So I think this is, of course, very important parts. We are now sort of starting up, moving towards our first own health economic studies while we, of course, would like to investigate how ASTar can have a potential and good benefit for all of these aspects. If we then take the next slide and just look at the overview of ASTar. I mean we have developed it with potential future customers for several years, and it's really been designed around 4 cornerstones or 4 pillars. It needs to be easy to use. I mean, in these labs and what we have seen primarily also during the pandemic is that it needs to seamlessly integrate in the workflow and needs to be simple to use, so anyone can use it during the day or even during the night where you might be running with a very sort of skeleton crew or perhaps a lower education during night shift. So ASTar has been designed to be simple to use. Of course, it needs to be fast, providing results within approximately 6 hours for a very broad panel and that's when you see the comprehensive part. I mean the driver has really been to be able to develop a system so that the likelihood of providing an action result is very high. So when you load after with a sample, the likelihood of being able to act upon the result should be high. So we have built a broad panel, and we cover a lot of bacteria and also different classes, fastidious and non-fastidious, for instance. Then also what we have seen today, when infections become more and more severe, you need to have not just rapid results to treat them, you need to have very specific tools to treat the patients. And one of that key information topics is to have the MIC value. The MIC value is the concentration that [ cannot heal ] with bacterial growth. And we do know that for some infections, you might actually need the MIC value to guide the treatment. I mean, how often do you dose the patients, what concentration to dose them with and so on. So providing the true MIC value also gives an added benefit to fight severe infections. Of course, it needs to be reproducible as well. So if we take a highlight on this, we take a look on the next slide. The ease of use and 24/7 availability has been proven out. It's been tested by hospitals. This is just one testimonial for one of our first sort of uses of the system here in Uppsala, and you really could see that the lab could really do much more with our time because ASTar was so easily to integrate in the workflow, and they basically needed a couple of minutes of their time to start a comprehensive test. So I think this is -- it's very good feedback from customers testing up the system and see that, yes, it actually performs and it is easy to use. If we then look at the next slide. This is just results from our CE clinical study that we had approved in May last year. I will not go into the detail. But we could demonstrate that ASTar performed well above all the guidelines necessary to launch the product in Europe, also the breadth and wider panel is the broadest available today when you look at the number of antibiotics and also dilution ranges. So of course, that is very important when you're going to choose a test to treat patients with. The last part, if we take the next slide, is looking at throughput. I mean we have designed the system to operate from roughly 500 beds in hospitals, a medium size and up. And then, of course, you need a high capacity to do so and I expect around 12 patient samples in parallel. We have also designed the system to be able to be adopted to new type of tests. I mean, today, we have a blood test. We also are looking into other tests such isolates, for instance. And in that case, we will not use the sample preparation projects and the disk, you will only run the disk. So that means that the system is future compatible to address different type of samples and also at various price points. So I think that's also very important. If we then take the next slide. This is coming from a press release that we presented earlier this week. And this is really the results from an extensive commercial valuation performed by Thermo Fisher Scientific during last year, of course, supported by us. And the real goal of this study was to test the instrument in the real-world settings at various types of labs, 24/7 labs or extended work day labs. And to do that in a clinical setting to really see how the system perform? Is it stable? What type of results does it provide? It was a large study. I included close to 500 determinations using routine clinical samples, and the results were really amazing. So when we look at the -- for instance, the essential agreement, meaning that you provide the same MIC value that can inhibit bacteria as the reference, which is a [indiscernible] system from Thermo Fisher Scientific, we surpassed all to the CE-IVD claims, so 96.6%. What I think is even perhaps more important here is that the database covered 98.7% of all the Gram-negative organism seen in this study. And that, of course, really provides you a good method and tool to develop in the practice to provide answers on many, many different infections. Also, the system was very robust. We only had one service invention throughout the study. And I think that is, of course, very important. So I would say that we personally and Thermo Fisher are very, very happy with that results from the study. And I think it's also important now to be able to present that outward to see that the system is actually performing extremely well under these real-world conditions. If we then look at the next slide, we have also participated or run commercial valuation here in Sweden. We are selling the system direct here in Sweden. So this is just a result from a Swedish regional hospital performed end of last year over a month. Again, essential agreement surpassed what had in the CE-IVD study. It was, of course, a little bit smaller study around 30 patients. We could see both non-fastidious and fastidious bacteria in the studies. We did see Haemophilus influenza, for instance. And we really outperformed traditional care by providing same shift results. And we could also provide escalation results on average 18 hours faster for particular patients. So overall, I think it was a very successful study. And of course, we're now moving forward to see what could the next step be. If we take a look at the next slide. This is one example from one patient in this study. It was an elderly gentleman who had surgical treatment. He then developed sepsis, and he was put on empiric therapy with pip/tazo in this case. And you can see the timestamps on the bottom of the slide. We could see that as soon as we had a positive blood culture, you loaded the system in ASTar and already the same day ASTar provide results indicating that this particular bacteria was resistant towards pipe/tazo. The hospital then used that information to escalate to meropenem for this particular patient, and that was at least 18 hours faster compared to what they could do with the standard practice. The overall assessment is that this could have been a life-threading decision for that particular patient. So I mean I'm super happy to see that all the hard work from everyone in the company now starts to pay off and that we can actually change trajectory, providing faster treatment recommendations for severely ill patients. So very promising. And of course, I look forward to seeing many, many more cases such as this. If we then move on to the next slide. We could also indicate during the quarter that we started the last leg of our U.S. clinical study with enrollment at 3 hospitals in the U.S. We saw some slight delay with those hospitals, not primarily in the direct effect of COVID of not having access to the lab, because the systems were there, but actually because lab operators got COVID. That has, of course, settled. And we're also happy to announce here that we have now started the 510(k) application. The initial review of the data looks very strong. So we are comfortable to moving into that stage, which is really the preparation before submitting this to the FDA for hopefully a clearance, of course. So promising development also in the U.S. clinical study. If we then move on to some market activities on the next slide. We have seen, as we said, I mean Thermo Fisher has been launching the system more or less a quarter, the last quarter of last year, already presented ASTar several trade shows, one virtual, one in real life, so to speak, with a very strong interest from potential customers. So I really think it's so nice to see our part of Thermo Fisher Scientific not bringing the systems out in front of, of course, not just people visiting trade shows, but of course, a lot of visits at various hospitals and lab. So very good development here. If we then take a look at the next slide. As I say, Thermo Fisher is, of course, actively now marketing the system. We see a very large and continuously growing sale funnels. The results from the evaluations have been very strong, and there are, of course, continuously ongoing evaluations at the time we speak. We have seen some slight delays particularly at the end of last year, well of course, the Omicron variant possessing a problem for some labs. We have seen that in our regional changes within different countries also, but we see that most of these effects are slowly passing away. So I think it's quite a good situation where we are right now. What we also see is that the interest to actually perform an evaluation of the system is perhaps larger than we currently can meet. So of course, we're looking together with Thermo Fisher how can we develop that capability to do even better here. What we also have seen and learned is that a lot of changes within tenders will indicate that we will see a slower sort of pickup over this year, more towards the end of the year. But all the development we see, all the response we see and the interest for the system is very well. So we look very positively on the future, but it might be a more back loaded year than we initially had hoped for. If we then take the next slide, we see some highlights after the period end. I already mentioned the 510(k). But as I also talked about before, I mean, our goal with the system has really been to provide treatment recommendation to as many patients as possible. And we could announce here in January that we had further extended an already quite significant panel with 18 more combinations of bacteria and antibiotics. So we covered 222 different combinations in total. So 23 antibiotics non-fastidious, 6 for fastidious. We also provide support of 9 different blood culture bottles and of course, this is important to be able to address customers using different type of blood-culture systems, but also have variations in the type of bottles they prefer for their patients. We have also, of course, as you know, have an extended claim. So you can actually enroll a system and test it in ASTar up to 16 hours after positivity in the blood culture cabinet. Of course, during day, this time should be extremely short, but we're thinking primarily on labs that are only open daytime. You typically see a number of bottles hitting the alarm during the night shift, during the evening. And of course, if you have a limitation in the time that you can use, you might not be able to load them in ASTar when you come into the lab in the morning. So I think overall, to summarize that, we are very satisfied with the performance of the system, the results we see from evaluations, and we really look forward to see how we can see development over this year to come. So very good so far. If we then take the next slide, it's just some comments on the corona pandemic on Q-linea, and we are really seeing that we are moving back to normal in Sweden and, of course, in other geographies as well. So I would say that the only thing I would like to highlight here is that we still see that might be a risk to assess some customer to perform evaluations, although I would not put that at a very specifically high risk where we see it right now. So finally, perhaps we can see that we'll come back to a new normal, of course. It will never be exactly as before, but I would also really send out my deepest thoughts to anyone that has been affected by the pandemic and all the spirit and enthusiasm within Q-linea and all the staff that I think has managed to work on these difficult conditions for a couple of years, have really done a great job of doing so. So with that, I would say that I'm finished with my part, I will hand over to Anders Lundin, our CFO, to discuss our income statement for the fourth quarter.

Thank you, Jonas. I'll start at Slide 20. And in the fourth quarter, we have net sales of ASTar and consumables of SEK 3.9 million, and we expensed goods in the same quarter of SEK 3.4 million. The operating result was SEK 51.6 million compared to SEK 57.1 million, but we should also see that we had to reverse accrued costs for one of our performance share program. So you can say that the operating result is somewhat affected or impacted by lower personnel costs. We reported a loss after tax of minus SEK 51 million, and earnings per share were SEK 1.75, slightly less than last year, we had minus SEK 2.1. Then I'm changing to Slide 21. By the end of the year, we had SEK 15.1 million in cash and cash equivalents. Then we had SEK 91 million in short-term investments in interest funds, and we had almost SEK 60 million in bonds -- listed bonds, which had due time within 12 months. And then we had non-current bonds of SEK 182 million almost. Inventory, we have built inventory during this year. It had been doubled since last year. It is SEK 28.6 million compared to SEK 12.4 million end of last year, and that includes a write-off of minus SEK 4.7 million. The majority of the inventory is ready to -- it's ASTar ready to be sold. And it's also, in some way, security inventory of critical components that we see to offset a possible shortage in those kind of components we could foresee could happen in this year. And then going to the next slide. The cash flow from operating was minus SEK 91 million. And the increase in cash outflow is mainly because of the working capital that -- we are building working capital. It's -- inventory is one of them. So investment activities is SEK 84.4 million, and that is mainly that we have sold off interest funds and we have also invested in production equipment of approximately SEK 6 million in this quarter. Financing activities is very low. It's only SEK 40,000, and we are repaying loans. So by the end of the year, we have in cash equivalents and easy accessible cash is a little -- is SEK 347.8 million, and that will take us at least 12 months going forward that will cover our need for working capital during this year and also part of next year.

Thank you very much, Anders. And can you put up the last slide in the presentation, #23, and me and Anders will say thank you for listening into this presentation. And of course, we'll be happy to discuss and answer any questions you might have. Thank you very much.

Thank you. [Operator Instructions] Our first question is from Ulrik Trattner of Carnegie.

First could be on what you're now alluding to speed procurement and tender markets for ASTar. Could you help us out a little bit more, give us some more information? Are you currently in any large tenders? Do you believe the majority of your sales throughout 2022 will come from tenders? How this looks like as well as will you be able during the year to provide any sort of guidance in terms of uptake in number of systems from ASTar. That would be my first question.

Good questions. Yes. So my current view is when we look at the tender processes in Europe, we see that there has been a change. So we see -- I would say that maybe the majority of ASTar will go through tender processes. That's my expectation as of today. Of course, there are a number of labs, commercial labs that do not have to go through a tender process. And there together, it's a discussion with Thermo Fisher Scientific, what might the balance be like? I think it's a little bit too early to provide that guidance. But from my perspective, I suspect that the majority will go through a tender process. And of course, what you would like to see then is that how long would that tender process be like? I think we have a very strong system to win those tender processes. And I think that's good, of course, essentially long-term. And then also, are there any ways to sort of capture an interest during that tender process to use the system. So of course, we are looking into various avenues to do so. I think also initially at this part of the launch, I would say, it's still a young system and it's a fairly young market overall. And I think that most customers initially would like to evaluate the system first before they commit to buy. I think that as we see more systems being placed in the market and at important labs, key opinion leaders, I think that you will also see the move that customers are willing to buy the system without trying it out themselves because they trust their colleague, but he or she has done the system and evaluate it properly. So I think that majority guess, that's why also we indicated that we see a very strong interest, but it looks like more back loaded. Regarding more details around what we'll present regarding sales is something we also discussed with our partner, Thermo Fish Scientific to find what level of guidance, I mean, you are all curious. I mean, internally, we have some clear plans, of course. So I hopefully think that as we progress throughout this year, we can provide some more information on placements and perhaps key placements and see how we develop the business going forward. So did that answer your question, Ulrik?

Sure. Absolutely. I had a few follow-ups please. And as you're talking about [indiscernible], could you just walk us through your typical selling process from initiated contact to initiating tender part entered to initially or eventually when in the tender and actually seeing the revenue, what type of time frame are we looking at? If you can get through that, that would be helpful. As well as -- just the second one as well there, and I think this could be sort of 2 answers. In terms of the tenders, are we looking more the market now tilting towards capital sales for the better reason for rental payments that we have seen historically. -- those 2 questions.

Right. Yes. But I can provide perhaps more insight in. I will start with sort of the Swedish process, and I don't think we look terribly different throughout Europe with my indication. I think the interest and the funnel has been built up really already during last year. So I think we have a high number of qualified leads. I mean, customers that really have looked into ASTar to see what it can provide. So the next obvious step is of course, to do an evaluation. I mean, as we did in one of our regional hospitals, we started the discussions. We provided a suggestion for a contract around that evaluation. And here, I think it's important that not just place an instrument and hope for the best, but you actually go through what the customer expects from the instrument that we need to deliver, the scope and size of the study. And if it turns out to be successful, of course, the ideal step is the customer would then be willing to move into commercial discussion. So looking at that time frame, I would say that you might be looking at say, 6 weeks or so. I mean, first discussion with the contract start the study might be a 4-week study, at least that's the way we plan them. And then you have decommissioning and move into the next phase. The tender process as such, depending on a little bit perhaps from country to country, I would say that around 3 to 5 months could be a tender process time line. And of course, if you are a commercial lab, you can completely -- you don't have to do that. But overall, I would say, 3 to 5 months. Important part, of course, when we internally look at projection is the commit to buy. If a customer has tested the instrument, feel that it delivers and say, we would like to have ASTar, I mean that is what provides us the signal that this is a good way forward. And then, of course, we have to wait for the tender to be fully executed. So I would say that roughly those are the time lines, I would say. They might differ a little bit from country to country. Some are in the shorter end of that and some in the long run. So I think that is -- this might be the case. Regarding your second question, if it's more towards capital or reagent rentals, I would say that it is a mix. I think in general, the trends we see, and of course, that's also why we have Thermo Fisher Scientific as a partner, because if you have a customer that wants to buy an ASTar, Thermo Fisher Scientific can provide, of course, cash-based sales, naturally, reagent rental or even leasing. So I think no matter how you would like to procure the system Thermo Fisher Scientific can support that process. In my estimation, I tend to see that we see more of reagent rentals coming up perhaps versus cash, at least in Europe, may look a little bit different in the U.S. So it will be a mix. Leasing, perhaps not the biggest part, but for sure, some customers. So I would weigh rate and rental to be over 50% that is maybe over 60%.

And just since your word has been in evaluation with certain customers, should we then assume that you're currently in tender process for ASTar? And just historically, tenders that you have seen, how big have they been in terms of number of systems?

I mean to answer that question a little bit faster is that, let's say that ASTar is involved in active discussions in those matters, if I can answer that in that sense. The size of tenders, I mean, we have really designed ASTar to. If you're a medium-sized hospital and if you buy one ASTar for the blood product, that should be sufficient for your needs in throughput and capacity. Of course, also, as you know, Ulrik, we are also looking into other type of applications to ASTar to even put more tests to the same platform. And then, of course, if you are large enough, you might need more capacity. But initially, I would say that if you are a medium-sized hospital buying ASTar, we would be able to support the blood culture what you have in that hospital. So for us, that means that you really are focusing on one instrument and then of course, it's to fulfil of consumables that's really the interesting part, to be honest.

And just, now you have had ASTar placed in the commercial evaluation for at least a few months. In your opinion, how far away are we that these customers, trying to specify these customers as to ones that have been evaluating ASTar to be replacing their old ASC fully with ASTar. How far away are we to reaching that point?

Yes, I might answer it a little bit first around the question. What we have seen so far, I would say is that the likelihood of entering a commercial discussion has been very high with people who have tried ASTar. So I think that's a very positive development. But if you have tried it, you are extremely positive to move into the next discussion. Of course, it needs to be finally settled, but that's the direction we see. So I think that's good. Replacing your current fleet, I think that would take some time. I think what we are looking for in the first step is really, if you invest in ASTar and I do hope that, that happens for many, many customers, the idea is to really put your blood culture test into ASTar. So you will keep your fleet of instruments that you have for other type of samples. I mean the micro lab will analyze a lot of different samples. And of course, what we want to aim initially is that, that culture sample should be entered into ASTar. And that with the broad coverage we have, the results we have, I think the likelihood for that customer to need to do a follow-up test sort of traditionally is very, very low. Then of course, in a couple of years' time, if our development and the way we think about new applications, I mean, we have seen isolate as being a product actually requested by customer. And I think that when we look at our product, we have 336 [ vials ] at our disposal in one consumable. We provide 2 MIC values of a very long concentration ranges. And we really see that this could be an extremely valuable product for isolates. And of course, you will only use a disk and not the entire set of sample prep card and disk. So I think that would be a very nice diversification of our tasks. And I think that -- me personally, in the long run, could be more replacing of the traditional equipment out there that are on this more focused at isolate analysis.

Great. If you -- last question on my end. First one might be a bit shorter than the second one. You write in your CEO letter that you have extremely positive discussions with a number of major commercial firms regarding Podler. It's great that we have an [ 8 ] months on this new device. I'm also guessing that you can disclose who you're currently having these discussions with, but it would be helpful if you can direct us -- I'm guessing it would be in the field of where we currently are today. The second sort of follow-up on that one would be, would you be prone to initiate a partnership prior to the clinical study has even been initiated? Or would you rather wait until you have more clinical data or they have started to be initiated and closer to commercial launch?

Yes. So regarding your first question, I can say, of course, we have a good partner Thermo Fisher Scientific. And I would say that the usual suspects are the big 4 companies, the same 4 companies as we started discussing the ASTar commercial development for. So you see, of course, Thermo Fisher Scientific, [indiscernible] and Beckman Coulter. So these are typically the companies you would expect, might be others also in this field, but to give a sense of directional input of that, that will be the companies I would mention. Regarding the development of Podler, of course, it's not just for us to decide. But as you know, we entered in an agreement with Thermo Fisher Scientific before the product was launched. And I would expect that to be a fairly likely scenario actually to enter that. So you can also together work with preparing it and taking that product out to the market. So I would not necessarily, personally would like to wait after that, but rather before.

Great. I might squeeze in one last question. Just sort of prior to having a partner, who would you prefer to be your commercial partner for this. You mentioned the big 4 is in this industry, which would be your preferred choice?

I will not give you that answer because if I say that, I think that -- I think I keep it for myself. I think we are in one good partnership with Thermo Fisher Scientific. But we also have very good discussion in relation with other parties as well. So -- and it might be several ones. It doesn't have to be necessarily one either, right?

Fair enough.

Our next question is from Johan Unnerus of Redeye.

Yes, interesting question so far. What about we could start off with compliance study you refer to yesterday and the compliance with the ability to provide in test results among the samples tried and patients tried was very high, even extremely high. That seems to be very reassuring and rather surprising perhaps.

Yes. Thank you, Johan. I will more comment to that, not from a question standpoint. First of all, we have an extremely good system, I must say. No, but I would agree to, I mean our ambition has really been to provide a broad coverage to be able to work on that. I mean we had our internal goal has been 95%. That's the way we have been thinking about the panel. So it is very high. And of course, it can be some variation of these hospitals at this time actually saw more of these samples. That could be one question, but we saw still 500 terminations. So statistically, I think it should be sort of normally distributed anyway. But I think this is a result of a lot of work with having a broad capable panel and trying to have the right panel. So I think this is maybe the first time we can present it sort of outwards that having a broad panel actually do make a difference in the treatment. So I can't necessarily comment why apart from this is, of course, always been our ambition to provide broad coverage and actual results. And we, of course, know that 100% is never possible, of course, but coming very high up is very positive, of course.

Yes, 76 out of 77 or something like that is pretty close to [indiscernible]. Yes, and when it comes to evaluations, procurement and commercial testing, this aspect is presumably very important and also in the next step to actually migrate to ultrafast AST, the ability to rely on AST and also providing an answer in the rather severe cases, unusual cases is presumably rather important.

Yes. So do you mean comment on the evaluation that they foresee is important part because if...

Yes, you're now testing in Sweden and together with Thermo Fisher, well, not in Sweden, but elsewhere as well and the ability to actually provide an answer in many different patients and perhaps difficult patients is presumably a very important part of that test.

Yes. Yes. No, I agree. Personally, I mean, for the sales process, I think today, evaluations is key. You want to try and see the system. I mean rapid AST is still fairly new. But I think also when we see this evaluation we did in Sweden, where you think that typically, we don't see a lot of resistance, we don't have a lot of problem with that in Sweden. And in general, we don't. But even during that short evaluation, I mean we could clearly see for that patient that pip/tazo was not the correct treatment that would not have worked for him and to be able to change that therapy, of course, you need to trust the system to change. They did trust it. They did change and they had a positive outcome for that patient. So yes, I think performing evaluations, I mean, important commercially so that the hospital or the lab can try it out. But I mean, also, when we see these results from the Thermo Fisher, that evaluation from what we start seeing from our own internal evaluations are the ones in Sweden, we can actually see and the customers or potential customers can really see that it makes a difference in real life for patients. And of course, I mean, until you see that it's all hypothetical, right? You can look at the number of papers and you can see indications. But when you see it in your own hospital that it's easy to integrate, you get results that you would have missed and missing that with 1 day for patients moving into [indiscernible] could be the difference between life and death. So I think that as we go along with these evaluations and as we see more, I truly anticipate that we'll see more results in that like this. This will, of course, also help the sales funnel for other potential customers to see what are the difference for a lab that do implement this technology? How can I think about doing it in my lab? So I think it's critical from very many angles to do it. And what makes me very happy so far is that what we have seen from the system and from early sort of testers or person evaluating is very positive. And of course, when you do develop a system and we take 6, 7 years to do so, you can never -- you can do it together with customers as we have, but it's not really until you are in the position that we are right now that you can actually see that all the hard work starts to pay off. And of course, I mean, it's an early phase of launch. And really, my ambition is to build the most prominent company in this field over the next 5 years. And of course, these early indications is a very important piece of that puzzle.

And if we go back to that example, when patients have positive blood culture and then actually able to change the antibiotics within 16 hours. Is that an unusual case can that often be the case?

No. So this was faster. It was 18 hours faster than the traditional method. So yes, I mean this was a patient had surgery received sepsis and also comal infections at the hospital -- and I mean this is what we see. We know today that without rapid diagnostics, we see that around 20% of patients developing sepsis will actually have died before you get the treatment answer today. So I think this is just one example where the initial empiric therapy doesn't work. So we know this. We see it in the statistics. But of course, I mean, to me personally is to see that you see the results, it is resistant. You have a selection of a number of more antibiotics to choose from. I mean, we provided certain more additional antibiotics to choose from than the current standard practice at this specific hospital. To look at that menu, select what do you think is most appropriate from sort of a side effect from that patient from the overall sort of picture of patient and to see that works. I would not say it's unusual for sure. I mean, this is a reality for most hospitals, but of course, you can't see the change until you test a rapid system to see what can it mean for the patients in my hospital. So I would not say it's unusual to have it.

And particularly to get to this sort of process and speed, it requires rapid ID or multi -- and in Europe, among the medium-sized and larger hospitals, what's the penetration rate of Rapid ID?

I would say it's high. I mean, when we look at Europe, we see -- of course, MALDI the key idea method in Europe. And we do know that if you do around of MALDI the traditional way doing a clean pay and run it from that is, that's the next-day result. But most of the labs that focus on speed, they do what's called a smudge plate MALDI. They do a rapid streak directly from the positive culture and then they sort of do their mild analysis on that. So also when we look at time frame, I mean, typically, that's around 6 hours. So it's the same time frame as for ASTar. So of course, I mean when we look at actionable results, you need to link the ID to the AST. So even if you have an AST faster, you still can't act upon that. So in this case, I think we tack perfectly with what's traditional here in Europe. Of course, in the U.S., where we use more molecular tools -- molecular technology, can be 1 hour, 1.5 hours to ID. But I think also for Europe, we are sort of aligning perfectly with the time frame to get the ID and AST at the same time and really act upon that. So I think we are centered well here for the European labs. And we see that SmartState MALDI, Rapid MALDI is coming -- it's already implemented in many face, but it's coming fast also here.

Excellent. And finally, presumably, right now, procurement and sourcing is not perhaps a major challenge. But as we move into the second half of the year with a slightly higher volume and increasing volumes that could, of course, change. What's your level of confidence in able to meet the volumes in terms of procurement and sourcing?

Yes. So I mean, also, as Anders discussed, I mean there are -- we see a shortage of components in the world due to the pandemic. And we identified that during last year, we've also built to save the stock on key equipment or key components for ASTar. And of course, the ambition to do that is to make sure that we, as a company, can meet the sales volumes of our partner, also from a consumer standpoint, that's why we do invest quite a lot. And we are installing more and more automated equipment to build capacity basically for that. So I would say that where we are today, I'm confident that we can meet the need for the commercial need. We still have to be on top of that every time. But so far, I'm confident that we have been sort of proactively engaging and building up the capacity in the right way. It always needs to be balanced, but I'm happy where we are right now.

Our next question is from Jakob Lembke of ABG Sundal Collier.

This is Jakob Lembke at ABG. I have a few questions. And if we start maybe with the order development from Thermo Fisher and not meaning the sort of your sales, how has the number or the size of orders developed since you got your first order in Q1 in '21?

So, Jakob, well, I mean I can't really comment on that, to be honest. The orders happening from Thermo Fisher, of course, is still confidential in between the companies. So I can't provide an answer to your true question. And this is what I mentioned a little bit in our call, we are looking into -- at what level we can communicate, we would like to be as transparent as possible. We also have an agreement that we need to adhere to. So I can't comment on that. But what I can comment on is that we see that the sales funnel from the Thermo Fisher perspective is growing in a very positive direction. And also the ASTar evaluation is growing in a very positive direction. So I would say that, that, of course, will then eventually funnel down in the order from Thermo Fisher Scientific to us. But I can't give you any precise numbers as of today. And I do hope you appreciate that. I would like to, but I'm not at liberty to.

Yes, I understand. And if you move on to -- I mean, looking at the sales development more in general, is there any particular trigger that you're waiting for before sales can take off by speaking of sort of Thermo Fisher flicking sort of the big marketing switch, maybe more health economic data? Or is it more just a continuous process of getting your product out there and convincing key opinion leaders and so on?

I don't think we are waiting for a specific trigger. As I mentioned, what I do think we can increase the capacity to perform more simultaneous evaluations. I mean, initially this phase, it's a try-before-you-buy type scenario. And you would like to, of course, be very specific on what to expect during that evaluation. So I think there we can do better to do -- I mean, drive that even faster. I think that would be the most important part right now. And apart from that, I don't see any sort of any magic that needs to happen, but that needs to be continuously sort of adopted. I think for -- when we look perhaps into next year and moving forward, when you move from the key opinion leaders, when you want to go sort of much, much broader, then I think has economic data is going to be an important aspect for sort of a large wide adoption of rapid AST in general. And of course, we are planning moving into a economic studies. We, of course, have to start them and wait the results. But as of 2022, I think it's just more hard work, present ASTar trade shows, provide evaluations for customers. But the interest for Rapid AST, the interest for ASTar, in particular, I would say, is very positive. So we just need to find the best way to meet that and address that demand, that would be my sort of response. Nothing in particular that we wait for.

Okay. Understood. And if we move on to the U.S. market, you mentioned here that you're looking to complete the study and file for 510(k) now during the spring. Does that mean that it's sort of fair to assume approval by mid this year and then potentially that we could see sales in the U.S. by late Q3 or maybe Q4?

I would say yes, we are planning to submit during the spring. And of course, I mean, the official time lines for FDA is 90 days' time. We have seen in the past that primarily because of the COVID, there's been a very high priority on releasing vaccines and test for viral variants. So they have not been able to keep up with the 90 days. So regarding the time line for the FDA, I mean we see that the pandemic overall is at least for now, moving into a more stable phase perhaps. So I would say that providing guidance on that time line will be easier when we start sort of have an ongoing discussion with FDA. And also I would say that would be heavily dependent on if we see a new wave of virus coming up or something else happen. We do know that AST in general is a high priority for the FDA. And also, as we mentioned, we have now hired our first U.S. members of the team based in the U.S. And of course, they will provide support, of course, in the clinical studies we do. They will perform training on Thermo Fisher personnel to be ready for the U.S. But they will also be part in premarket activities in the U.S. because as soon as you have filed the 510(k), you can actually start do premarket activities. So what we're going to try to do is we can't do much about FDA time line. We can hope for it to be good and hope that our application meets our requirements. We don't have too many follow-ups. But I think we really plan to get sort of started in the U.S., not -- I mean, as in Europe, it was this large commercial valuation to really pressure test the system. I mean this is not needed in the U.S. The system has been on the market there for quite some time. So the idea is to plan how can we have a running start as soon as the device will be cleared, of course, I would say, hopefully, but I'm very confident that it will be cleared, of course.

Okay. That's great to hear. And my final question is on the costs in the quarter. The -- as you mentioned, you had, I think, a positive one-off impact in personnel costs in the quarter. But more in general, I mean, this is the second quarter in a row now where costs have been a bit lower? And just sort of looking ahead, how should we think about the cost development in the -- yes, maybe in the next 4 quarters?

Right. Yes. So I think that -- I mean, where we do invest primarily is, of course, scale up in production equipment. And what you might anticipate is, of course, eventually, we want to have a fully automated assembly line for consumables. We're not there yet, and we have no plans to be there yet. So you might see an increase in production personnel before you move into that stage. I think that in general, overall, we are becoming a sort of a solid team, a solid crew in the company where we don't see any sort of extraordinary. We will continue to hire of course, we still have a plan to grow, but not necessarily as excessively as we have done over the last number of years. So I would say cost will be primarily driven, of course, by more clinical studies, an investment in production equipment, I would say those will be the main parts. And they will, of course, be in balance with the need for consumables primarily, I would say. So yes, I don't see us -- I don't really have the ambition to be double the size in the year, if I say it like that.

There are no further questions at this time. So I'll hand back over to our speakers.

Okay. Thank you very much for very good and interesting questions. And I do hope you follow us as a company, and we are in a very interesting phase of our development. So me and Anders would like to say thank you for listening into the call, taking your time. I also look forward to the spring. And of course, we all plan towards ECCMID the next big happening here in April. Thank you very much. Bye-bye.

Bye-bye.