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

Welcome to the Q-linea Q3 Report 2024. [Operator Instructions] Now I will hand the conference over to CEO, Stuart Gander; and CFO, Christer Samuelsson. Please go ahead.

Hello, everyone. Thank you for joining our Q3 presentation for Q-linea. Stuart Gander here, the CEO. I'm joined by Christer Samuelsson, my CFO. Just a quick note here on disclaimer for any forward-looking statements that we may make during the presentation. And I'll jump straight into the key messages for today. So 4 overall messages that we'd love for you to take with you as we exit the call today. Number one, I'll give a little more color on our market situation and how we're approaching it, but just highlighting that we are going after market potential of between 5 million to 7 million annual tests for rapid AST. And we'll talk more about how that breaks down into the hospital segments and lab segments that we are approaching right now. Related to that, we are continuing to accelerate our momentum in the U.S. We have expanded our commercial pipeline considerably over the past months, and we are approaching the first of our U.S. contracts now and aim to complete those during this quarter, Q4. Thirdly, we've now confirmed that we've established ourselves at a new and lower cost position, having completed our restructuring that was announced previously. Those costs have been -- cost savings have been realized at a slightly higher rate than we had initially planned, and we do continue to observe the costs going forward and anticipate being able to do targeted savings in selected areas as we go forward. And fourth, you may have seen the news this morning, we've announced a Rights Issue that aims to raise up to SEK 225 million to give us additional funds to go into the market. That should fund us for at least a year now. We think that this next year is going to be a pivotal one for Q-linea as we see the expansion of our commercial pipeline and the conversion of our first commercially used instruments in the market and initial revenue generation. So I'll spend a bit of time on this call talking through how we see that developing and what you can expect going forward. Just to elaborate a little bit on some of the highlights from the quarter. So as I mentioned previously, on the commercial side, we have multiple commercial evaluations ongoing in the U.S. Several of these have already completed, and we are now into contracting phase. As I said, with these customers, that phase can take varying amounts of time, but we are confident that the first of these contracts will be signed during Q4. We also aim to have a dozen plus of these evaluations lined up. So we will continue this pace of evaluations through this quarter and into 2025. Worth noting, it was anticipated previously, but we are very happy to have confirmed the decision from the CMS in the U.S. for the additional NTAP reimbursement coverage, that's the new technology add-on payment. This is only available for tests run on the Q-linea ASTar platform, not available for any other rapid AST platform in the U.S. and will offset up to $97.50 per patient, who's covered by eligible Medicare and Medicaid coverage. So this for us is a very significant benefit for Q-linea and ASTar. We see this as a strong commitment from CMS in both promoting rapid AST into the market and also a recognition of the technical and commercial significance of the ASTar proposition versus others in the field. Looking outside the U.S., we were happy to confirm an additional unit sold in Italy. So that's 3 now over the past several months here. Within Italy alone, we have something in the order of a dozen evaluations either ongoing, near completion or planned to start. So we would expect this pace in Italy to continue over the coming months. In addition to that, we've announced that we are in contract negotiations in the U.K. and in Belgium. So we would expect some good news from customer placements there over the coming months as well. Maybe a final point here on the commercial side. We announced the news of our partnership in both Romania and the Gulf Council countries of the Middle East where we have partners there that will help us get into 2 of the highest antimicrobial resistance markets in the world, where there's the greatest clinical need and where we'd expect both high interest and potential for adoption of the ASTar solution to address that need. Looking more inward, our innovation and product development pipeline. Our #1 priority is on the U.S. side to get into commercial -- sorry, clinical trial for our version 2 menu in the U.S. This trial has been set up. We announced previously that we've done our pre-submission with the FDA, so we are now competing to set up, and we'll move shortly into the trial process. We aim to complete this trial during 2025. In addition to that, we continue with a number of development projects, mainly aimed at improving the ASTar platform. Some notable areas of focus, the additional features will enable us to add further breakpoints, both to cover CLSI breakpoints for markets that require that, for example, in the Middle East, and others. Also, it will enable customers potentially to customize their breakpoints as this has been a message we received from the market from certain users. There are a number of other user experience improvements that will, we think, further extend the ASTar capabilities and performance in the lab. This is one of the areas where we really think that ASTar shines versus competitors in the field. So we will continue to focus on making it as simple and as usable for our lab technicians. Beyond that, we've got some longer-term projects that are still moving forward. Notably, we've called attention to this before, our Gram-positive menu expansion, which we will aim to launch in the future, and that will complement our current Gram-negative offering. On the organizational side, we announced some changes in the executive leadership team. So I would like to take the opportunity to thank both Thomas and Tiziana who've been instrumental over the past years in bringing ASTar to market, really helping position Q-linea at the forefront of our field. We've entered a number of markets with the support of Thomas and Tiziana, has been tremendous and leading our clinical studies and our clinical work in the market, which has helped to establish the evidence base that we're now bringing forward to customers to motivate the use of rapid AST. Franco Pellegrini, who has been leading our Italian direct sales team will step into the overall VP of Commercial Operations for the EMEA region going forward. In addition to these moves, we've further strengthened our U.S. in-market team. The principle here that we are keeping careful track of, Jim and I, Jim Kathrein, who leads our U.S. sales team, the principle is to match the resources with the growing pipeline. We've got significant demand here and in order to manage all of those evaluations and the consequent contracting and placement processes, we'll continue to add resources as we see those customer evaluations coming through. And then additional note here. We've extended a long-term incentive program to the staff at Q-linea with a view of sharing in the long-term benefits as Q-linea opens up this new market segment that I'll talk to shortly. On the financial side, Christer will speak to this in more detail, so I won't say too much here. Just to confirm that we've reduced our operating costs at around SEK 14 million a month. This is below the budget and slightly below where we aim to come out of, as I mentioned, after our cost-saving program. So we're happy that we will aim to maintain or continue to reduce these costs while also simultaneously shifting resources into the market-facing commercial activities. So this will be a key part of our budgeting efforts going into 2025. And then the aforementioned fundraising initiative where we've now aimed to raise SEK 225 million to fund our forward journey. So that maybe -- and just a quick reminder for anyone who are new here, we are focused on the rapid AST market and really, the Q-linea proposition linked to our ASTar platform really results around a few core arguments. Number one, the overall ambition here is to significantly reduce the time to an actionable result for a physician to 6 hours from the time of the test. This will save lives and improve patient clinical outcomes, notably through getting ahead of the sepsis infection for a patient. It also saves money for hospitals as this is the most expensive in hospital costs that we face across our societies and reduces the effort needed for lab and physicians in addressing the patient while they wait in current standard of care, often 2 or more days for a result. The instrument itself is extremely easy to use with 2 minutes or less of hands-on time, really simple plug-and-play interface for the technician. And we are the only fully automated random access platform available in the market with a comprehensive and highly reproducible test results. So maybe a few words just to orient it. We've spoken at this, I know high level previously, but I think worth noting is we now see more granularity in the market as we get into it. So I'll set the stage here, and I think this is something we can keep coming back to over the coming presentations. So we are focused, obviously, within the microbiology space. We are addressing bacteremia patients at large. And within that, we are really focused on bloodstream infection patients initially. The reason for this focus is that the platform technically wouldn't be capable of addressing a wider range of indications and we aim to do so over time, but really, the aim to address the bloodstream infection patients because this is where the most critical urgent clinical need is today. Bloodstream infections are roughly 1/4 of the total bacteremia patients. And as I mentioned before, they are the major driver of in-hospital care costs. Our platform right now is designed to address the vast bulk of these patients. Currently, our menu, which is a Gram-negative menu will address around half of those, a little less than half of the patients in total. As I mentioned before, we are actively developing a Gram-positive menu that will address the rest. So we have a pipeline here that aims at the highest clinical unmet need, and we will continue to expand the platform to address more and more patients as this platform becomes established, and it is, therefore, easier for customers to adopt additional indications on the platform they already have. So this is really how we're thinking about it from a patient and needs perspective. And then just some orientation on the market itself. There is a current standard of care, obviously, in this space. This is the AST platforms that take 48 or more hours in many cases to generate a result. And currently, that -- those platforms produce the bulk of those 25 or so million bacteremia tests annually. This market, we would say, in terms of the addressable component that we're aiming at, is something in the order of 1.5 billion annually according to market research. And it's really the pull out of this market as those tests are moved into a new segment that we are creating here along with some other players in the field, really on the back of this urgent clinical need for a faster response. So this emerging gold standard, as we would call it, with a same shift or same-day results is a new segment currently with very limited revenues for any player, and we would consider ourselves to be at the forefront of this segment. And as we think around, I mentioned this opportunity, I mentioned the 5 million to 7 million tests per year, we would anticipate that the total cost for a hospital will be something in the order of $100 to $200 per test, depending, of course, on volumes, in which market we're in, et cetera. And therefore, you can get a bracket for what this total market segment will be worth over time. We would expect at least $0.5 billion to $1 billion, just addressing the core bloodstream infection test that we're looking at today. This segment will obviously grow as more indications are there, but this is really one of the highest clinical needs. So we see ourselves as, again, being in the forefront of opening this segment up, and it is really driven by that underpinned high clinical need, and tests will start to migrate there as the technical solution makes itself available. So how does this landscape work in practice? And just to share a little bit more granularity on how we're looking at this and segmenting the market. So some of you will be familiar that there are thousands of microbiology labs out there in the world. In the U.S. alone, we would anticipate something in the order of 4,000, 5,000 labs doing some sorts of tests like this or at least running blood cultures. The ASTar platform is designed as a fully-automated instrument. It is optimized for labs with more than 1,000 positive blood cultures a year, that is patients a year. That doesn't say that it wouldn't work in other labs smaller than that, but that's really our sweet spot. So given that, that's already something in the order of 1,200 to 1,500 U.S., that's plenty to start with, and there are similar numbers in the rest of the world. Our team right now is very focused on addressing the early adopters and high potential users in the U.S. There are something -- 200 to 300 labs in the U.S. account for more than 1/4 of the entire volume in the U.S. market. This makes it more manageable for us to get out with a smaller team in front of the key players in the U.S. market. It's also in these institutions that you find the key opinion leaders, those that we've collaborated on, on some of our early access programs and clinical work, which is now being published. I'll speak to that shortly. And these are really the trendsetters and the ones that the rest of the market looks to, to help determine which new technologies are adopted. So it's this focus on the top 200 to 300 in the U.S., for example, that we have right now. I showed this picture last time. This is just a mapping that Jim and the team are using of those initial tranche of focused customers. But just to add a little bit of color on this one, so since our FDA approval at the end of April this year, we've now been in contact with more than half of these institutions. And really, our initial outreach is to determine, is the institution interested in rapid AST? Are they aware of it? I think these days, we can comfortably say that the vast majority of institutions at least at this caliber are very much aware of the -- of rapid AST as a technology space. And therefore, the question is really, are they currently considering adoption of rapid AST? And now we've had several months interacting with several dozen institutions here. And we are seeing that close to half of them are saying, yes, we want to know more. We are actively reviewing this for our lab, which is very heartening here. So what the team then does is very methodically screen these customers through multiple interactions. And we're really looking for a few things. We're looking for fit. Are they an institution where ASTar would work well in their workflow? Typically, for institutions of this size, the answer is going to be yes, because it is very much optimized for medium and high-volume labs. But there's a variety of factors we want to understand with their workflow. Then we are looking to confirm the budget availability. I would say initially, this is the main sticking point, that labs may not have yet approved the budget to adopt a new technology. And this sometimes leads to us parking the conversation for a while and coming back later. But there are already several dozen who've confirmed for us that, yes, we have the budget and we'd like to go further. So then it's really about screening for that likelihood, timing to make sure that we are sequencing them in the right order for evaluations. Because once we move into the evaluation phase, we want to essentially move straight from there into commercial and full clinical deployment of the solution as quickly as possible. So far, we've got more than a dozen U.S. labs that are either completed, completing, initiated or are planned in the very near future in evaluation. So we continue to move customers through this pipeline. I'll talk more about that in a second. And we expect that evaluation pipeline to continue to grow in size over the coming months and into 2025. So how do we think about that funnel, right? And this is not rocket science, very familiar to anyone in the diagnostics lab equipment space. But just some numbers to kind of orient around as we think about the pace of development in the market. So what you're seeing here is a typical buying cycle for major lab equipment, which the ASTar system would be. And normally, this would take end-to-end, something between 12 and 18 months. As I mentioned, we're already getting into contracting with several customers, which suggests that they move through this much faster, which is true. And we will see customers who do that, especially in the early phase as there's a great interest in getting rapid AST deployed for the benefit of the patients. But this is a typical time frame that I would expect to see normalize as we go forward and some of the enthusiastic early adopters kind of clear through a little faster. So just to walk this through. So the first phase and probably the longest and most uncertain of the phases is this initial customer engagement. So this is a little bit the dance where we've either received the lead through one of our marketing outreach programs or our sales team has reached out to them because they're a priority customer. And then we're going through the process of qualifying them, as I mentioned, for fit, budget, likely purchasing timing, et cetera. The customers are typically also reviewing the alternate technologies available, so there will be kind of competitive review, and we will be talking to the benefits of ASTar versus other alternatives for the lab. And really, the point of this phase is to anchor on support across all of the stakeholders internally for evaluation. We don't want to get too carried away with one of our other stakeholders because it will typically just stall later on as they will need to bring everyone along within a hospital who is required to approve it. So we're trying to get all of those on the same page before we go into an evaluation. So at this point, the timing is typically determined by budget availability or the lab focus. There may be other things that are on their top priority that they need to clear out first before they get started with rapid AST. And we're kind of looking for that timing signal. And then once we get that, then we -- with the customer, let's go ahead and start a demo. And from here on in, it's a relatively standardized or standardizable process. The demo is typically 3 months, 60 to 90 days, where the customer actively uses the instrument in their lab environment. At this stage, we are very involved here with our in-field support team on the ground, helping the customer to design that evaluation. If there are any questions on the system or interpretation of the data that they need support with, we are very closely engaged here. And the evaluation, as I said, is pretty routine and standardized. The time frame is more dependent here on the -- typically on the customer's internal review of the data. So they may have completed all of the tests for the evaluation but they need to pull together that report and again, discuss it with and align on the conclusions with all those stakeholders in the institution. It's at this point also where institutions with multiple lab sites or reference lab networks may start to engage with the broader set of stakeholders. So you now talk about multi-site conversations that are happening. And of course, we very much encourage this because for these institutions, we would like to standardize rapid AST to an ASTar solution. And while this may take longer in this stage, as we speak with more of those stakeholders, it will speed things up as the subsequent installations can then go ahead without an evaluation since they now have a sort of approval, if you will, from the central or the main site that did the evaluation. So once those results are concluded and the customers come back and said, okay, great, we got what we expected against the protocol that was established for the evaluation, we then go into the purchasing process. And here, of course, the negotiation on commercial terms. We will have talked about those at a high level before. We even got started with the evaluation, so they will receive indicative pricing and they will be aware of potential volume benefits and whatnot. But here's where we dot the i's and cross the t's, so to speak, with all of the details. And they need to trigger all their internal decision-making, which may involve legal, for example. It certainly will involve the finance team. And it's this, let's say, iteration and involvement of different types of stakeholders that are outside the lab and clinical environment that typically defines the time line, right? So it can go very quickly. But in a difficult case, it's a couple of months, 2, 3 months in this phase. And then once we get a purchase order, we're off to the races, so to speak. The instrument may already be there from the evaluation. Our goal is to have a very high conversion rate for evaluations. This, as I mentioned, is a fairly involved process with the customer. So they don't want to do an evaluation on something if they're not serious about bringing it into their lab. So there's a good chance it will stay there. But in the event they've sent it back or we've taken it to another location for an evaluation, they will get an instrument shipped to them and our team will again help to set that up. Then the main work here is really about integrating this into their core clinical workflow. So our team will help them work through their clinical protocols and adjust those so that any time a patient with the right indication comes in, the ASTar test is going to get run. So this should be the new standard of care for that lab. And also it will need to be integrated into a lab information system. And this is, again, typically the component that determines the time line. It can either go very quickly and smoothly if all the resources in the lab are available to do this or it can sometimes take a little longer if they need to get some specialists again on their side usually to get all the appropriate software and wiring in place. So once that's done, the lab will specify a go-live date, and we would expect that all of the patients that meet their clinical determination for the ASTar test will now be run as standard of care on ASTar. So again, that's -- again, typically a 12- to 18-month process. I would expect the average to be around 13 to 15 months over time. And as I mentioned, we've -- since April, FDA approval, we've now got several customers in that purchase phase of the process here, so you can already assess that we've moved a little faster with some -- several cases. And I would expect that to be the case going into next year, but over time, this will normalize to sort of standard market average. And what are we looking for in those evaluations? I mean the customer is looking for a few things. They're looking for the technical performance to match what's on the packet, basically. So in our instructions for use document, which is very detailed, so they'll be looking that the performance is in line with that. We would always expect that that's the case since it's been robustly tested in clinical trial. So what they're looking for beyond that is really that the impact of the test is going to demonstrate in their workflow and in their clinical environment what we would expect from rapid AST. And the core proposition, as we keep going back to is that it should significantly reduce the time to actionable result for a physician. And what you're seeing here on the slide is some of the data that was presented at our webinar and was very capably presented by Dr. Yee at George Washington University. We've had several of these now complete in the U.S. and really, the scatter plots all look the same, and they correspond very closely to what we see in similar studies in Europe. And that is because the current standard of care is just very hard to shortcut. It's going to take 48 hours or more to get the results for the patient. And what you very consistently see or we see in these studies is that even the longest of the ASTar patients who may have had to wait for a technician to come in after a night shift or something if they're not open for a third shift to start it, that's why you see some of them take longer than others. The ASTar test itself always takes around 6 hours, so variability is really driven by the customers' lab workflow. But even the slowest of the ASTar patients is going to deliver many hours, 10-plus hours earlier and the fastest of the current standard of care patients. So in any event, essentially every single patient is going to benefit from being run on ASTar versus the current standard of care. So it's this data that they're looking to confirm in their own workflow and again, work with our team to help optimize their protocols so that we can speed the time to ASTar results up even more. Ultimately, we want all the patients to be delivered in that sort of 6-hour range from when the positive blood culture goes off. So I'll conclude there. That's sort of an overall on how we see things. I think the main message here is we're very active in driving that pipeline in the U.S. The published results from our early access programs really sort of indicate the core argument of ASTar, and we're expecting to see that in essentially all of the evaluations that we're running now. So those evaluations should continue to move into contracting, and we look forward to announcing those concluded contracts as they come. So with that, Christer, do you want to give some of the financial highlights?

Yes. Thank you, Stuart. And I will start off this by stating a few focus areas in the financial part, I will guide you through here. Four focus areas that I will talk a little bit about is our financial status, the Rights Issue that was press released this morning, our burn rate, our expenses and the going concern. And I will start off by highlighting some of the things that happened during the quarter and after the quarter. As Stuart has mentioned before, our cost savings is running as planned, and they are almost in full effect now in the Q3, which is really good and helpful for us. Also the loan facility, I would like to highlight that we have a loan facility of next to be total of SEK 101.5 million. The existing unutilized facility as of 30th of December was SEK 23 million. And then we have SEK 7.5 million at the bank totaling SEK 30.5 million cash available. The Rights Issue, which I will talk about a little bit more on the next slide, was announced this morning and was secured to 80% or is secured to 80%. And the operating result, which is an indication of our cost saving program, the operating result for the third quarter was minus SEK 41.2 million, which averages the SEK 13.7 million per month. And the parent company equity, to highlight also the financial status of our parent company is SEK 132.6 million. And it's helped by the Podler technology valued at SEK 70 million. That is also one of the main reasons why the parent company equity is higher than the group equity. The Rights Issue, the bridge loan, it was a press release this morning. There was a lot of information in that press release, a lot of financial information, a lot of technical information, and not everyone understands all of it when you read through it one time. So afterwards, in e-mail or via phone, I'm happy to answer all the questions around this Rights Issue. But here, just a few short things around the Rights Issue. It's a capital raise of approximately SEK 225 million, as Stuart said before. And it's an issue of units where 1 unit consists of 2 common shares and 1 warrant and the transaction that has been secured to approximately 80% and the subscription price to be set at 30% discount to TERP, which is a term, so theoretical ex-rights price, is a volume-weighted average price during 9th of December to 3rd of January. So it's not set yet. So it will be decided later in this process. And then the subscription period will be in January 2025. Also for you to know, this -- as I said, this transaction has been secured up to 80% and the guarantee fee is 10% in this transaction. Also important in this total structure is the bridge loan, which will help us through to get -- to when we get the net proceeds from the Rights Issue transaction in early February. And the total capital raised in this Rights Issue with warrants depends on several factors, such as subscription level, 80% or higher, utilization of the warrants, share price development. So you cannot say for certain what kind -- what the total amount in this Rights Issue when you include the warrants as well. But -- so this is sort of the facts we can give. There are lots of more facts to read in the press release. And as I said, any questions, I will take them in this call here or separately when you call me or e-mail me. Right. For the third full quarter, profit and loss, not much to say. The operating income, sales is still low. We are still in the early commercialization phase. And also, we have a reagent rental model used in Italy and in other places in Europe, which obviously takes down the sales volume initially. Over time, it will improve, obviously. And then we see, however, that the -- we can call it the balance between reagent rental and capital sales will shift gradually, especially when we move into the U.S. But we still will have the reagent rental model for the future. And it's a good one, but it will mean that we will not have the upfront sales of the instrument, it will be taken over time, that income. The operating result is minus SEK 41.2 million as compared to last year SEK 48.3 million, which is lower is better. And the operating result per month on average for the third quarter was SEK 13.7 million. Obviously, thanks to the cost saving program earlier this year, and just comparing the first half year result, the average monthly operating result was SEK 20.2 million. Then we should note that we took SEK 8 million to SEK 10 million in restructuring costs, you have to adjust for that one. But still, the cost saving programs are in line with what we have previously communicated. The financial position in the third quarter. As I've said before, we have SEK 7.5 million in cash and then in addition to that, we have SEK 23 million unutilized loan facility from main owner, totaling the SEK 30.5 million at end of September. Looking at the working capital, it's been reduced. It will be even more reduced when sales will pick up, but it's lower than last year-end, so the SEK 39.6 million as compared to the SEK 45.6 million, where obviously, the instruments have a large part of that inventory size. The group equity is SEK 25.7 million compared to the year start of EUR 189.6 million. And then just to give you a sense of how this has been spent or burnt for the total period, January to September, we had SEK 18.2 million on average per month. On only the third quarter, it went down to the SEK 14.1 million decrease of equity. So there, you can also see the cost saving program, how it fits in. And the parent company equity, as I stated before, it's stronger than the group equity, mainly thanks to the valuation of the Podler technology. Future financing is obviously a focus area for us. And as I've said before, the SEK 30.5 million available at end of the quarter. And then we have this Rights Issue of the SEK 224 million, SEK 224 million to SEK 225 million, which is secured to 80%, is also part of our future financing plans, obviously. And that was sent out earlier this year -- today. And then we also have information on our burn rate, which was SEK 13.7 million per month the last quarter, and which is based on the 50 -- lowered by the savings program of the SEK 50 million per annually previously communicated. And based on this fact, the Board considers the available cash and cash equivalents and the unutilized portion of the loan facility and the 80% underwritten ongoing Rights Issue sufficient to cover the company's requirement to carry out the activities planned for the next 12 months. Obviously, we also continue to be engaged in other means of financing, including strategic partnership discussions, capitalization of existing assets within Q-linea, lowering our operating expenses further and, of course, negotiations with new and existing investors, financiers and lenders. That was it from the finance side.

Thank you, Christer. So I think with that, we can turn it over to questions.

[Operator Instructions] The next question comes from Johan Unnerus from Redeye.

The first question relates to the number of active systems in testing on evaluation, if that's possible to give. Clearly, it's been increasing. It seems to be good momentum. Can you provide a flavor for roughly how many systems are in sort of testing evaluation stage and may be compared with a year ago?

Johan, thanks for joining, and thanks for the question. Yes, I tried to give some color there. So you asked how many are in evaluation, and evaluation only could take 2 or 3 months typically. Some go longer, so we moved the instruments around from one to the other. So the number of instruments tied up doesn't correspond exactly to the amount of evaluations we've completed. But I think your question was probably how many evaluations have we completed in total, right? So I would say over lifetime, we've completed several dozen evaluations of varying sort. But most interest for us here today, I think, is the evaluations during this year of which across the U.S. and Europe, we've completed or are completing, I would say, a dozen plus. And as I mentioned, there's more setup to come, right? So this pipeline has grown during the past 2, 3 quarters here, and we're getting those evaluations set up going forward. So we've got visibility on another couple of dozen, let's say, to be run here over the coming months.

Great. And let's see -- and also, it was very good to see that you provided an overview of the -- both of time and different stages. And you also alluded to that you expect and that the number of -- that the probability of the sort of a successful outcome of an evaluation, you expect that to be reasonably high. And is this corresponding to recent experience?

Yes. I mean the end number is not as high yet as we'd all love to see it get higher, right? But I know it's high enough to call on average, right? But we would anticipate our win rates overall in competitive deals to be at or above, let's say, 50%. That would -- I would aim for that. We're not the only player in the field. Competitors will take some share. But we can say with confidence that at a technical level, the ASTar is superior to anything in the field. We see that from public tender criteria that have been published, right? So there isn't a way that a competitor would score more than us on the technical scoring, maybe down to the weighting of it if we're sort of more or less at parity. So this really comes down to the commercial terms and how much discount others want to take versus ASTar's pricing at its core in the market. So we are the -- we are in the good position of being the superior technical solution. So that said, we fully respect our competitors in the space. They're going to do what they can commercially to take some share, but I would expect ASTar start to win more than its sort of fair share of those deals. I think we'll have to give it a few more rounds before we see the averages sort out. But like I said, we're aiming for 50% or more of win rates in the active commercial discussions.

That's useful. And also on the OpEx side and the cost savings, it came in a bit lower than perhaps we expected in Q3, and you alluded to that you haven't still reached a sort of full impact of the cost saving, but probably fairly close to it, I suppose.

Yes, I can take that, Stuart. Yes. I mean, we are fairly close to it. There are still some savings that we can see in the near term here, but also we should be aware of -- we have to balance that towards the commercial buildup in the U.S., for instance. So we are balancing these things, and we will keep the OpEx -- total OpEx level at this level or lower. That's what we aim for.

Yes. And related matter then, towards the later stage of evaluation and you progress into negotiation and especially installation, is that -- is the sort of support side of that on the U.S. side? Is that in place? Or is that something you need to increase the team for? Well, of course, if you have a very large number of these cases, of course, but I mean, within sort of what's to be expected near term?

Yes. Yes. So the quick answer to that is yes, the team is in place on both sides of the Atlantic, so in the U.S. and in Europe. And the good thing is that the team can cross support. So if there's periods of intensity, our team from Europe can, for example, support into the U.S., which they've already done on multiple occasions and vice versa. So we'll be thoughtful about where and how we add resources going forward. But I see that team as a global one to support our overall fleet of ASTars in field. But for the time being, we have the resources in place to support the pipeline we see. I mentioned adding resources kind of on a just-in-time basis, if you will. As we grow the pipeline, we announced the addition of a couple more of our corporate account leads in the U.S. who are helping especially at the front end of that funnel. They drive the process right the way through and continue to engage the customer, obviously, after deployment as well, but especially important in that early stage of the funnel as we engage and build the relationship with customers. So that's the big bolus right now that's building up. And as we get more and more of those into evaluation phase and installs, we will appropriately add resources into the U.S. So we've got a game plan for that. It's in our budget planning for next year. It's speaking to what Christer mentioned about making sure we can appropriately offset costs in the -- our overall cost base so we can add resources where needed without increasing our overall burn rate.

And center-related question is this NCI, this connected center that is going to do an evaluation, these centers tend to be fairly big and probably very good reference sites. When can that be completed? And do you have any other similar in the pipeline?

Yes. So great question. We're really excited about that partnership. For the time being, we can't mention the name of the site. Once we're fully deployed and they've run their evaluations and approvals, we hope we can share it because it is a very, very reputable institution. Of note there, I mean it's part of the National Cancer Institute's network, if you will. And the fact is, unfortunately, that this indication area for sepsis is an acute need for immunocompromised patients such as those undergoing cancer treatment. So oncology patients have a high need this space. So we're very pleased at the level of interest here and the potential for ASTar to make a really meaningful impact for that patient community. And we would hope, obviously, that after a successful evaluation, which we can be confident in, I think, that, that will then encourage the rest of the both that network, but also just oncology centers in general to consider rapid AST and specific ASTar as a solution for their lab. That evaluation, I can say, is a standard one. So it's got a 90-day period, which time to have free use of the instrument. And we've already shipped and installed the instrument, so we expect that to complete, if not already in the year here, it will be completed very early in next year. And then beyond that, it will be -- we'll be into the next phase of contracting and all that provided, of course, that they are satisfied with the evaluation results.

Great. And also you have direct contracts, including a multi-vendor testing. And how common is this when you have direct contract presumably without any tender process?

It varies by market, right? So the tenders are more a kind of European phenomenon, if you will. The U.S. process is a little different. It's not often that they're sort of fully public tenders. They have a variety of ways of exploring different technical options available for them. They may trial one or more instruments. Often, it's a sort of desktop review and they may go to see a reference site to see different technologies in play. They sort of more typically trial -- fully evaluate a single system that they will have determined as a preference, maybe two. The tenders are more frequent in Europe. We have public health care systems and more sort of public review of spending and whatnot. But even in Europe, you can get institutions that have budget approved for an area, and they can move straight into a purchasing process. It will still often involve obviously a competitive review. They'll look at what technologies are available, but they may not have to do a kind of full public tender. So we will expect to see these cases pop up. We've had one in Northern Europe recently for -- interested in a couple of systems. So obviously, we take them into the funnel and work it through largely on the process that I described earlier. So the fact that they're not a tender doesn't mean that they can sometimes go quicker, but that's not always the case.

And also without being overly technical then on the DOOR MAT study, if -- what does that sort of add to the reference status on top of sort of analytical and health economics?

Yes. Great point. So there's a couple of elements of that study that we're really excited about. So the essence of that study is essentially twofold. So they're looking to measure specifically the time for a patient to get on to optimized therapy and how that differs for different patient groups who may have gotten inappropriate therapy, so one that wouldn't work or they have got suboptimized therapy. So it may be, for example, using overly broad spectrum antibiotics. So it will look at sort of antibiotic by antibiotic specific data to look to prove the hypothesis, if you will, that ASTar can really improve the time to optimize therapy. And that's a little suddenly different from the time to result for a test, right? So it's actually looking towards that clinical benefit for the patient. So that's even more material, if you will, as a data point for a clinician who wants to see the so what for their patients. So that's one aspect of it. I think the other aspect of the clinical design for this study that's quite exciting is that they are a site with a bit of a hub and spoke. So they have a central lab with different treatment facilities. So it's one of these larger networks that you frequently find in the U.S. And they are looking -- so the study is building in a component of how much time does the bottle take to get from one of its referring sites to the central lab to do the test. And this has multifold implications here. So number one, the benefit of putting ASTar out into all of the spoke sites will be demonstrated because what the hypothesis is, of course, that bottle transit time has an impact on patient results, right? So we were specifically looking at that. So one conclusion from that would be for a large multisite institution to say, okay, I want the ASTar in all the satellite sites as well as the core lab. The other implication for us, which is potentially, down the road, even more interesting as there are a lot of distributed multisite institutions where they might not have the volumes to put or the technical capacity and microbiologists to put in all the remote satellite locations is Podler, right? So this will help us underscore the value potential inherent to Podler, which supports the site in not losing time during transport for the incubation of the sample. That is to say when it comes into the core lab, it will already be closer to its readiness to process than is typically the case. So for really any country with a geography where you find patients more remote or with a health care system with smaller satellite clinics and locations that refer into central core labs, I can mention Sweden, for example, this type of technology with Podler could be potentially very advantageous. So this study will, amongst the other benefits for the clinical impact, also help us to uncover more of the specifics for that transit cost burden that is on many patients today.

It could also have some implication for potential commercial partners related to the U.S.

Absolutely. Yes. Yes.

And also, when will we -- when do you expect to have the first sort of clinical and commercial ASTar system installed in the U.S. as a reference system?

Yes. So we -- well, we've got some systems installed and up and running, right, already. And to some varying extent, these are already reference systems. These are communities of known individuals. We are collaborating with some of the leading key opinion leaders in the field. So it's no secret to the community in some areas where we were able to cross-refer appropriately for folks to have discussions on the instruments. So to some extent, that's already happening. I mentioned that our first full commercial -- start-to-finish commercial discussions, we aim to complete during Q4. Some of those may be reference sites as well that others will want to just use the system. So we'll continue to expand our reference library, if you will, our reference partners. But we are already, I think, well served by some of the partners we're working with today.

And to go back to Europe, on the rental part of the business model, as that will gain traction in terms of numbers, is it possible to do sort of any financial contribution or sort of, what's the word, specialty financing on the sort of capital cost on your side? Because, of course, you need to manufacture and put the systems in place even if you get recurring revenues of a smaller size in these examples.

Yes. We're very conscious of the working capital implications of expanding the fleet, and we hope to expand it at an increasingly rapid speed. So Christer, do you want to say a few words about our discussions on that side?

On the working capital, obviously, we have a number of systems that are -- we have. So we could -- we are happy to sign on the rental -- reagent rental models in Europe when they come up. We have the capital. But obviously, we are also looking for capital sales. So this will be -- it will be a mix. But in Europe, so far, we have the reagent rental model mostly. So that's how it is. And we are very cautious about the working capital, obviously, and we plan that very much in detail going forward.

Then relating -- yes?

Well, I think you were asking if there's any deal-specific financing that we can make. I think that's something that we're -- we've explored. So when we get to that at the appropriate time, we'll give you some more details. I think there's options there, but we haven't yet completed one of these.

Yes. And finally, then you also stated during the call that you have, with a guaranteed amount of the proposed Rights Issue, you expect to have 12-month run rate. Of course, there are some variable bits and pieces, save some financials on the rental side and the number of evaluations and interest and so on. Is it -- and then you have the warranty you can get additional support from that, come the spring. Is it -- out of clarification, the 12 months is from today, basically then, is that how we should understand it? Or is it from completion by -- on the Rights Issue?

The 12-month run rate or the going concern that we stated in the -- is from the date of the Q3 report, which is end of September, that's formerly how it's done. And what we -- obviously, we are looking for as much funds from the Rights Issue as possible and from other means as well to take us further. So -- but the -- what we stated in the Q3 report is as from 1st of October.

Yes. Good clarification. And is it something to be said about any flavor of expectations or what to be -- what's reasonable for the next years in terms of complete evaluations and even perhaps a number of systems delivered in a very broad ball mark? Or is it too early yet?

Yes. I think it's still a little early, I think, just as we try to get a sense for what the normal speed through that funnel is going to be, right? So if I were to make the assessment based on every customer that's already in negotiation, we will anticipate things will be moving very quickly indeed. So I think we'll have to see a little bit what the kind of norm looks like and then we can start to give some more concrete projections for instrument placements. I think we also need to see what the final win rates are, right, as we discussed before. I would expect to see maybe our primary competitor respond with the commercial terms that they have available to them once we start winning too many of the deals, so to speak. So we'll have to see where that kind of shakes out in terms of the commercial side of the negotiation process and how long that takes. Great. Thanks, Johan. Appreciate the questions. Any other questions from the community?

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

All right. I think we covered it all then. Appreciate everyone's time. We went a little bit longer this time, but great questions. So I appreciate that and look forward to presenting some more good news at our next quarterly report. Thank you.

Thank you.