Q-linea AB (publ) ($QLINEA)

Welcome to the Q-linea Q1 Report 2026. [Operator Instructions] Now I will hand the conference over to CEO, Stuart Gander; and CFO, Christer Samuelsson. Please go ahead.

Hello, and welcome, everyone, to our presentation of our Q1 report. I know that we're going into a long weekend here in Sweden. So I really appreciate everyone taking the time to join. I'll start off with the usual disclaimer here. We'll take this as read and understood. So we'll go through the fairly regular agenda we've done on these. I'll give you some of the commercial updates here. I'll speak to our recent FDA clearance and what that means for us in the market and for our customers. And then I'll spend a little bit of time on our priorities for the remainder of the year before handing over to Christer to go through the financials and, obviously, the Q&A at the end. So with that, and for those who don't have very much time with us today, some highlight messages I would want you to take away from this presentation. The first point is that Q1 of this year was thus far a record one for moving instruments into the market. We put 7 instruments out there. I'll talk more to that. We also saw our highest demand yet for consumables. This is notwithstanding an approval that came during April for the FDA clearance. So this is our big news for this month. It materially expands our value proposition for U.S. customers. I'll speak to that. We think this will make a very real difference in the market over the coming months and quarters. And with that, we do expect to see the U.S. kind of jump start from approval here. I'll speak to the pipeline we're working with and the dynamics there. Then we have a little bit of an update on our R&D side. We expect to be able to launch our dedicated isolate kits during Q3 of this year under research use-only registration, and I'll speak to the background of this one and what the opportunity is, but we're very excited for that news coming to the market back half of this year. And then finally, as Christer will speak to in more detail, we have been successful in executing on our restructuring and cost management activities. So we now see our OpEx dipping below SEK 11 million per month with a favorable trend line in that regard. So with that, for those new to these presentations and Q-linea, firstly, welcome. And secondly, just a quick overview of what we do. So we are a medical diagnostics company with focus on the bloodstream infection and high antibiotics challenge in the world. To resolve this, we provide an integrated solution that's built around a diagnostic instrument called the ASTar and its associated menu that I'll speak to in more detail during this call actually. And it has a few unique features amongst many, but a few that really stand out in terms of making it unique on the market. It is the main fully automated random access platform on the market, the only one available worldwide, including the U.S. and Europe. It's a very easy-to-use system, limited hands-on time in the lab. This is much appreciated. I will speak more to what we're hearing from the market there. And it provides a test in a quick turnaround time vis-a-vis current standard of care, saving upwards of 30 hours to wait for the test. As you always know when you run a master test, it will be ready in 6 hours. So that's what we do. And what we're trying to achieve in aggregate here with our business plan and our objective is to really deliver for patients with acute infections, which start off with blood infection patients who either have or a serious risk of acquiring sepsis. Right now, these are treated by that will deliver an answer typically 36 to 72 hours after the blood culture was positive. And our mission is to convert this to a same-day result, providing the answer in 6 hours from positivity. And as I said, we start with blood detection. There's 5 million to 7 million of those in our addressable markets, but I will speak more on today's presentation to going beyond blood and what that means. So I think what we're all interested to hear more about is how do we see the commercial pipeline progressing. I would start by just stating obviously, the U.S. market really gets going now with our v2 menu approval. Our pipeline of evaluations and customers awaiting this has been building up in the background. So you see that kind of in the increasing number of evaluations shown in the graph here as the U.S. activity starts to pick up pace in expectation of this. And now our focus is on converting that pipeline in the U.S. Meanwhile, the rest of the world has continued, I would say, steadily. Italy remains the leading market. We have shipped during this month a few more -- or signed a few more contracts, and we did ship some instruments during Q1 as well for contracts that were signed before the new year. But 3 new contracts have recently been signed. So Italy is on pace. We also signed our first contract in the DACH region in Austria. We're excited about that, and we see a positive outlook for the rest of this year and certainly going into next year as that region comes onstream for rapid AST. We are excited about our first close in Southeastern the United States on the back of v1. So that's already in place. The team there is trained. It's going live right now basically with real patients. So we will see the effect of that through Q2 and going forward this year. And then obviously, as I said, it's about for the remainder of this year, really pushing on the conversions for the rest of the U.S. customers that have been waiting this approval. So in the background, once we sign the contract, and there's efforts made to work with the site to receive the shipment and do the installation and training, that typically takes between 1 is the fastest, 2 or 3 months. So there's a bit of a lag, and you see the ASTar in use sort of picking up in the background. That would be expected to track closely to the contracted ASTars over time. And then from that, once we go into clinical use, we see the pull-through in the tests and the trend line is visible there as well. So I think the macro story here is that the European market is continuing on the plan that we outlined at the beginning of the year and the U.S. market is sort of now off to the races with the approval that has been received, more or less right when expected. In fact, the FDA was a few days faster for us than anticipated. So I'll speak a little bit more to that in detail. This gets a little bit into the weeds of sort of what we do. So I'll give a little bit of orientation. What you're seeing on this slide is a graphic that's essentially the menu that a physician is getting results for. And each of the dots here represents a drug-bug combination that the physician is interested in seeing results so they know how to treat the patient. The more dots, simply speaking, the more options for the physician. And what we did with this recent clearance was we increased the number of dots on our menu here by 93. So we now have 215 approved combinations in the U.S. This is by far the market leader. We'll speak to that in more detail on the next slide. But from a physician perspective, also what's critically important is we've added a number of new drugs that they were really waiting for, specifically ceftriaxone and etrapenem. If we had to take on a couple of things, these were the two big ones that we're holding back our V1 menu as they are go-to drugs for physicians as they consider their therapy decisions, and they wanted to have these available before recommending ASTar to their patient population. Another key feature that's very relevant for physicians and, obviously, the labs is that now with this approval, we also have the update to all of the latest FDA breakpoints. I won't go into the details of what that is. Suffice to say that, over time, resistance changes in bugs and that affects the breakpoints. So you want to make sure that you're getting an instrument that has the latest and greatest view on those that the FDA regularly updates. And now we have that all embedded and approved on the platform as well. So this is a huge step forward for us clinically in terms of our value proposition. Like I said, for customers, we now have the broadest antibiotic and pathogen menu available. We no longer see any major clinical gaps for a physician. Like I said, ceftriaxone, ertapenem are now there. That gives them more options for therapy decisions that increases the value of the platform. It also gives crucially more confidence now to deescalate to oral therapy. That's where a hospital would see savings. When you have patients that are waiting, for one reason or another, in an ICU bed, it's very expensive. They maybe are holding them or can't discharge them until they have confirmation of the resistance profile of the medications they would like to send them out on. And now we have more options than any other on the market to provide that. So what we see now going forward for us is that the pipeline we've been diligently here in the background will start to convert. I think I've mentioned it before, we had hopes that the V1 menu would be able to carry us there, especially with the efforts we did on our bridging strategy. We understood some of the clinical limitations. Now that those limitations are gone, there's really sort of no excuses for not deploying. So we do expect to see a difference here going forward. And I'll get to this in a second, but we're very confident this makes us the clearly differentiated gold standard platform in the market, both with the clinical side of things with the menu, but also just reinforcing the underlying proposition for ASTar in terms of ease of use, and it's a very efficient workflow for the lab. So this is another picture of basically that same menu but color-coded here. And we just wanted to use this as a visualization for, again, if you're a physician or a microbiologist in the lab, you have different tools you can choose from, and this menu of results is a key factor in selecting those tools. So what we've done here is we've taken the liberty of overlaying the ASTar menu on top of what would be the next best system you could buy in the market in the U.S. And anything orange on this picture here is [indiscernible] or ASTar only. Anything blue, it will be something that we do not have on our platform. I'll talk a little bit more on that in a second. But just right there, you can see that there's a lot of orange. So this makes it clearly a standout differentiator. For clarity, all the gray boxes that are shown here are available on both platforms being assessed here. I'll call out a couple of things. First of all, you'll see some stars on the combination. Not all drug-bug combinations are created equal. For each type of pathogen, you have typically recommended therapies for either in period treatment or escalation or de-escalation. So part of the trick here is to map our offering to how hospitals really use the drugs in their clinical study. We've done a lot of work to understand that and how that differentiates or differs between markets. The U.S. is different than Europe in terms of how it applies it and similarly for the world as a whole. And we have now a very strong US-specific offering. And the stars here indicate many of those combinations that we have that -- are certainly not available on the second best and most cases are not available on any platform on the market other than ASTar. So we think this creates a very standout offering just on the surface, but then you click on that and there gets even better, so to speak. The ASTar platform, the way it was built with the disc with 336 wells allows us to provide a lot more dilution steps per drug. And the reason why that's important, basically a dilution step is a data point for the physician. And it allows you to provide, we call it, the MIC value, the specific result at that dilution. -- and if you do not have as many steps, you're forced to make some compromises. Either you skip some and your system is interpolating or extrapolating the findings, which isn't a true MIC. And this is never the case for ASTar. You are always getting a true MIC. Or in the worst cases for other platforms that don't have the number of dilution steps, when the breakpoints change, it means they can drift out of the dilution range that you have available, and that really changes or decreases the clinical value of the results. So just reinforcing again our advantage that as the FDA breakpoints were updated in this latest round, we were readily able to update the system with all of those because we always have all the dilution steps. So this is, as I keep saying, a huge step forward for us. This is clearly very clearly the leader here. Those with observant eyes will notice there's a couple of blue lines where there are drugs we don't have. One of them, imipenem, has been, by and large, replaced by other carbapenems here on our menu. So we're not all worried about that there's no stars there. That doesn't come up in physician conversations. The other, amoxiclav, we actually have on our disk. We have the European formulation. We're working to add the U.S. formulation. There, of course, will be some labs that would maybe look to our results using our advanced user software just to validate other forms of testing on the amoxiclav. So there's still some value from what we have there. We're not worried that this is in any way a showstopper in that regard. There's plenty of alternate information available on our platform for any physician. So we obviously make a lot of claims ourselves, but we are particularly excited when the customers make statements for their own right. And we were particularly proud and happy for the team at Baylor, Scott & White when they were recognized by Microbiology Spectrum, a leading journal in the microbiology space, for their pioneering work in rapid AST. The team has been an early adopter with us. We worked very closely. And it's been fantastic to see them putting the ASTar into clinical use. And now we've had some time in hand, so to speak, with the instrument, and we're starting to see the data coming out from that. And they were able to put this into a journal that was accepted. So a big congratulations to that team. I would say the results are not overly surprising for those who have been following us before. They are confirmatory to what we've seen before. Obviously, the performance of the ASTar is very high, and always nice to see that on true clinical isolates. They differentiate that in the study between real-life patients and those that are pulled from, call it, data banks or bio banks. So the real-life in-clinic performance, very high for ASTar. We see the same results over and over and over every time we do these. Significantly faster test results than standard of care. Here, we saw in excess again of 30 hours of savings, and this can be life-changing for a patient, obviously has very positive economic benefits to the hospital as well. It would be very interesting to see data, and there was more breakdown for those who have a chance to read it, in terms of the therapy recommendations that would have been made on the ASTar results. Would have influenced around here 83% of cases, which is, I would say, higher than sometimes we see. Sometimes we see 75 or-so percent. So here, obviously, these patients benefiting from the more accurate results that ASTar to provide faster. In roughly 2/3 of the cases, they would have been able to de-escalate the patient off of broad spectrum or aggressive treatment onto something that would have less toxological damage for the patient and, obviously, reducing the exposure and long-term resistance impact from overusing our last resort drugs or, you could say, our aggressive drugs. And very importantly, in 14% of the cases, patient would have been escalated. And this is very meaningful because that means the therapy they were receiving would not likely have yielded as good results clinically, so possibly life-saving, right? And in addition to all of that impact on the patient, which we're very pleased to see, the report also highlights any of the downstream benefits that we would expect to see from adopting rapid AST. Obviously, the side effects I mentioned: reducing overall antibiotic exposure, being able to discharge the patient more earlier, as I talked about before, and overall reducing the length of stay. So again, these are really tangible in-clinic, in-hospital benefits that are seen when ASTar is adopted. So very, very happy to see the Baylor, Scott & White is finding that and Microbiology Spectrum was open to putting that into publication. And on that note, we've not said still in terms of the value proposition. We, from the outset, have been aiming to provide a comprehensive solution for improving treatment of patients with infectious disease. And as part of that, obviously, the blood infection patients were the #1 place to start, the most critically urgent, call it, high-value patient, if you will, but not losing sight of the fact that there are many other patients in the hospitals that could benefit from a faster result. So we have long had an idea to develop a nonblood kit, and now we're very proud to say that we have visibility now launching this under research-use only application during Q3 of 2026. And in advance of that, a couple of customer posters. We highlight Baylor, Scott & White again as an active user. We were very happy that they were open to exploring the research application here with us with very positive results. And excited also that an Italian customer, active customer of ASTar, also saw similar results as well, both pointing to the fact that ASTar is as reliable. You see very high performance in clinic when you apply isolate tests. And we did our own very, call it, aggressive testing with some of the most gnarly resistant bugs we could get hands on. And our poster that was also presented just highlights that the performance stays high with ASTar. So it is a very robust system. I think the other thing to highlight that the Baylor, Scott & White paper points out is that the workflow for ASTar is extremely easy in doing this. Because everything is done on system for the blood test, it basically doesn't change. So you can go essentially straight from the plate in the lab, where you're culturing the isolate, straight into ASTar with no intermediate steps. And this can sometimes be a barrier for hospitals in doing a rapid test because of the workflow challenges for other platforms. So again, it further doubles down on ASTar's that was designed really for this type of application in line downstream. So we're excited to see this, obviously, for the research customers initially here. Timing of a full clinical product will be a little bit contingent on feedback from the market, but we should see some effects from this already from the RUO launch hopefully during this year and through early next year. So before I close out, just a kind of recap of our short-term priorities. We remain also focused obviously on that commercial pipeline. The drivers, I keep saying, on those U.S. customers, they've been standing there waiting enthusiastically in line. So you can bet the team is on calls with them all the time now planning timelines. Just to set expectations, obviously, there's lots of steps. It needs to go through a contract, in legal in many cases and so on. These are large institutions. This will not happen overnight. But we will be working on the backlog and getting the instruments out as soon as we can. So the other things we're doing. We do see that the, I mean, Italian footprint continues to expand at a pretty predictable pace here, converting the pipeline we see in Italy. What we're really working on now is to take the positive feedback that we get from the physicians and the lab and to turn that into more tests. The Italians are very open that, due to economic reasons, basically budget constraints, they have to ration which patients get rapid AST. And they know that's not an ideal situation. But when you're adopting a new technology, it's often the case. So what we're doing now is to work with them to highlight the impact that they are seeing in their clinics and to help manage their stakeholders to increase testing over time. It's not going to be something that is a major step change overnight, but we already see positive trends basically month on month. And we'll get more and more advocates, let's say, in our corner. And I will continue to point to Italy as the bellwether for what to expect from rapid AST. They remain in the lead here. So very good to see that trend. We will continue to work on that. And now team with Franco is working diligently on expanding our footprint. On previous calls, I've said we wanted to remain very focused, conscious of resources. Now it's a good time. We got through the U.S. launch here now, and we can focus on the next step, which is adding the next tranche of geographies to our distribution set. I would point out that the ESCMID Conference that was held here in April in Munich was very energizing. I had a chance to talk to dozens. In total, we spoke with 100-plus customers, distributors and so on, and I interacted with many of the distributors there. And very encouraging to see that not only is rapid AST seen as a solution for critical AMR challenges around the world, we knew that, but now ASTar really standing out as the platform the distributors want to work with. And to bring it in, they're coming to us with specific customer deals or flagship customers in their markets that they want to introduce us and start working on. So this is the work that we have been working a little in the background, and now we really double down and get that going. On the clinical side, I believe that I talked about the non-blood isolate testing kit. So we're pivoting to getting that on market now as well as the next phase, which is to add more drugs. Fortunately, for patients around the world, pharmaceutical companies are not standing still. They know resistance is increasing on existing therapies. We need the next line of defense against infection. We will keep pace with them. I would say one key advantage here now is being seen as the gold standard in this field is that the pharma companies are very open to working with us actively. So several of them have already provided us with active ingredients to work with, with guidance on how to support our formulation and, crucially, with help with characterizing bacterial strains so that our algorithm work those even faster. So this is positive time for us to get new things on the market and has a positive effect for them when the leading diagnostic instrument can give a readout on the relevance of their new therapy vis-a-vis existing therapies, let's say, neutral benefit for all parties, including the patient. And then not losing sight of our continued cost down activities. We do that also for OpEx. Christer will speak more to that. But the team is paying a lot of attention on our COGS as we see the scale growing in consumables. I've talked many times that we have a set of activities we will trigger each volume milestone, and we look to seeing those milestones and setting up to realize them. So COGS continues to come down against plan. And now with the instrument shipments growing, like I said, 7 in Q1, the COGS in the instrument becomes more and more relevant. So activity is happening there as well. And I won't step too much on Christer's point on the financial side. So I'll turn over to him. But just suffice to say that we're very happy to see that we're on plan here, trending down below 11% as we've guided to before. And 1 s the things that I'm focused on here on the commercial side is that we maintain as good a capital recovery profile as we can. Obviously, we know many customers will want to place the instrument on reagent rental. That's fine. It's part of the business model in our area. We expect that. We plan for it. It's a good model for us as well. That said, it does require more capital from us as the instrument is out and it takes more time for the money to come in. So the balance of this is key, making sure that we're working with customers where they have the balance sheet to use that to a mutual benefit to allow our cash runway to as long as possible. So that's another big area of focus for myself and the commercial team and, obviously, Christer as well. So with that, Christer, I'll turn it over to you.

Thank you, Stuart. I will reiterate our priorities at the end of my presentation. But obviously, I will start off with the first quarter and first quarter results and starting with the top line. As you might have seen, the net sales is lower than the same period last year, and that's due to the lower capital sales this quarter. But we are glad to see a good improvement in the recurring income, that is the sales of consumables that are up 60% approximately compared to same quarter last year. And this is our key priority in terms of net sales. Obviously to increase the net sales of consumables, we need more ASTars out there, and we are very glad to see the FDA clearance of the two2 panel in the U.S. That will be very helpful going forward. And also in terms of having higher pull-through, that is number of tests per ASTar, it will help that we get some more ASTars placed in the U.S. Looking a little bit more on the OpEx side. As Stuart said, we had an outlook in the previous presentation, where we said we will be around SEK 11 million to SEK 11.5 million mark per month. We are now below that number. We are at SEK 10.7 million for the first quarter. We believe that's a sustainable level through 2026, and we are happy about that. We are not so happy that we are not doing anything more. We will continue to focus a lot on OpEx and being more efficient. And we have a lot of initiatives ongoing. And hopefully, we can come down even further than this, but so far, as planned or a little bit better than planned. Looking at the cash flow, obviously follows right now the OpEx line, more or less. But going forward, this will change. When business volume increase, depending on the mix of what we call capital sales or rental contracts, we will require more cash in the business that is invested in ASTars in our business. And we are looking forward to that, and we have plans for that, that I will get to a bit later. But so far, we are tracking as planned in terms of cash flow development. Looking a little bit more deeply into the OpEx development, just for some new participants who haven't been looking at Q-linea before. The past 3 years, we come from like SEK 20 million OpEx per month. Now that's a little bit more than the SEK 10 million mark per month, which is a drastic decrease actually. It's 47% decrease comparing with Q1 2023 and Q1 2026. We will continue to focus on that, as I said. And one of the things we are midst of doing right now, it's the consolidation of the cities in Uppsala, where we will gather all personnel in one site. It will lower expenses, yes, and that is good. But I think even more importantly, it will increase our efficiency when we sit at the same place. We are now back a little bit less than 70 people employed and 55 persons in Uppsala. So it helps a lot to actually sit together, take all the issues much passive way. So we are happy about that one. And looking on the number of employees, as you can see on the bottom right, that comes down from the 149-ish to the 73 today. It's a drastic decrease over time. Going forward, the EBIT improvement -- looking back, the EBIT improvement has come from lowering OpEx, which is good. But obviously, there is a limit of that. And going forward, we will now see the EBIT improvement coming from the sales and the gross profit, and we look forward to that. Now, as I said, I will reiterate our priorities going forward. We are, as always, looking for increasing consumable sales. And yes, we now believe with the FDA clearance for the V2 panel in the U.S., we have a good chance of doing that since the U.S. customers in general are bigger, and they will consume more per ASTar. So that will help us a lot. But obviously, we need to sell and install new ASTars. That is the key, and we have a great pipeline supporting that. Now it's about, as Stuart said, conversion. Now the OpEx level is the key. And we will strive to keep as well the SEK 11 million mark per month, and that is the top, not above that one, but obviously, we will strive for even lower. The third one is to secure the ASTar financing. Looking at these three priorities, we can control fully the OpEx level. That's in our control. And if and when we will increase the number of ASTars placed and the consumable sales as we have in the plans, the secure ASTar financing, that will not be a big problem. Obviously, it's linked to the success of the sales and the deliveries of ASTars . But once we get that going, we will secure that financing. That is what it is. And we have ongoing discussions with this. So we feel pretty confident that, that will happen once the business in the U.S. and elsewhere will increase as we anticipate. And basically, that's all for me, Stuart. So back to you.

Super. And we'll open it up for Q&A.

[Operator Instructions]

Great. So Christer, why don't you help us just highlight the questions as they come in?

Right. So far, no questions in the activity feed as I can see here, I think. Now there is a question for here. The question is, how is the collaboration with BlastID developed since 2025?

Yes, good question. Well, I caught up with Paolo in Munich, and he was visiting us here as recently as last week after the Munich conference. So we continue to stay very close there. Both companies share a vision here that we have an opportunity for a direct from whole blood products. The proof-of-concept work that we've done demonstrates that this thing works. And basically, the ASTar component of that, you could say, is probably complete. BlastID has plenty to work on their side, which they're making progress on. I cannot speak to that in detail. To be honest, I don't have all the details, Paolo will do that much better, other than to say we're staying close, right? And as I said before, there's various ways we can go with this together. So at the end of the day, this comes down to timing for the market on when direct from whole blood solution would be warranted. I continue to maintain that a direct from positive blood culture solution is what the market is looking for now. It provides very significant clinical improvement versus the standard of care. So it's already beneficial there. The main challenge we direct from blood is not necessarily the technical one, although that is material, but I would say the teams at Q-linea and BlastID are very technically savvy. I'm not worried about the technical challenges. The challenges are often economic because you have up to 90% of the cultures or the patients that draw blood suspected of possible infection are negative. So that economic challenge is one of the major ones. We obviously have some ideas on how to get around that, but it also is a factor for timing in the market that informs some of our thinking here on how to go forward. So it's a long answer, but hopefully fulsome in terms of we stay close. We're excited for their progress. They are working on some technical solutions there that are encouraging, and more to come.

Thank you, Anders, for putting this question. Thank you. See if there is anything else. A bit empty right now, Stuart.

People are keen to get to the long weekend maybe. So it's understandable. I appreciate everyone who stayed on through the end. Thank you very, very much. I look forward again to connecting, for those shareholders who want to attend our Annual General Meeting, you're most welcome. Otherwise we'll catch up on the Q2 report review.

Thank you.

Thank you so much.