ChemoMetec Stock

Okay. It is now 3:00 p.m., so let's get started. Thank you all for joining, and welcome to ChemoMetec's conference call. Today, CEO, Martin Helbo; and CFO, Phillip Massie Price will take you through this year's annual report, followed by Q&A where you can type in questions, and then I will read them out loud.

Okay. So let's get started. Over to you, Martin.

Yes. Thank you everyone, and welcome to conference call. Today, I have with me our new CFO, Phillip, who will give a short presentation here at first. But also I want you to basically give us a little bit of feedback on this new setup. We have had a lot of feedback from investors on previous conference calls. So today, we're trying something new and hope you will provide us with some feedback afterwards.

So over to you, Phillip.

Thank you, Martin. Just a few words from my side, as this is first earnings call here at ChemoMetec. I joined the company in August as a CFO, so I've now been here for a little more than a month now. I can tell that it's been a busy start but also a great opportunity to getting to know the company and the organization. And I really look forward to the journey ahead.

With that, let's turn to the financial performance for the fiscal year 2025, '26. All numbers I'll refer to will be in Danish crowns. Revenue for the year came in at DKK 511 million, which is equivalent to 3% growth compared to last year or 7% at constant exchange rates. EBITDA ended at DKK 281 million, 9% growth compared to the year before. And our EBITDA margin increased from 52.1% to 55%, equivalent to 2.9 percentage point increase, which is mainly explained by the increase in revenue, improved profitability and a reduction in staff cost.

Looking across our product categories, the main growth driver for the year was our instrument sales. Our instrument revenue went up with 13% compared to the year before, which was mainly driven by our sales of XM trucks, including NC-203, that increased from DKK 27.7 million last year to DKK 68.1 million this year. Our service revenue increased by 4% and consumables declined by 4%. The decline in consumables is mainly explained by the U.S. federal government shutdown in the fall of 2025, during which several of our largest customers saw a decline in number of patients treated.

Looking at the geographical development. U.S. and Canada, our largest market decreased by 6% in reported terms, however, increased slightly by 1% at constant exchange levels. Europe increased by 14%, while we saw growth of 21% in the rest of the world. Looking at our 2 business areas. Life Science continued to grow with revenue increasing by 6% to approximately DKK 485 million and is now representing 95% of group revenue. Our animal semen, beer and milk declined by 32% to approximately DKK 26 million, reflecting our continued exit from this market.

And looking specifically at Life Science, it's worth noting that the reported growth does not fully reflect the underlying development in our core business. During the year, we were impacted by lower activity among some of our largest U.S. customers, including the checks from the U.S. government shutdown as well as some larger players leaving the market. This naturally had an impact on our consumable sales in short term. And finally, also reminding the negative FX impact, as mentioned earlier, the underlying growth is more around double digits for this area.

We ended the year with a strong balance sheet. Cash position of around DKK 290 million, equity of approximately DKK 725 million. And during the year, we invested around DKK 100 million in growth initiatives, including software, automation, product development and our facilities here in lab. And finally, our ongoing share buyback program, we have repurchased 105,000 shares at year-end, equivalent to approximately DKK 39 million. As of today, we have repurchased around 206,600 shares, equivalent to 1.2% of the share capital.

Thank you, Phillip. And once again, a record year. And as I'll walk you through a hopefully, also a record year this year. First, I'll walk you through the market conditions than our products and product launch than at last product development before Phillip will take you through our guidance. We're first, market conditions, still really exciting to see all these approved CAR-T cell therapies doing well, mainly we still see growth. And you can though see here that some cell therapies are struggling a little bit. And the one, of course, doing best is heavily our customer. But again, it has been a year with less treated patients. And of course, that is also affecting our consumables.

Overall, we do see some recovery in the field. If you look at this chart, you can see that it starts looking better. Also, when you're in the field talking to customers, actually seeing what's happening, it's easy to see that the flow is definitely getting better. Also, we reported at the year-end that it starts -- we start to see more demand from our customers. And of course, that has something to do with the market. If you look at the start-up environment, which is important to us, we start to see some recovery, and that is, of course, crucial because many of our customers are still in preclinical Phase I and Phase II.

So of course, this is an area which is very important for us. We keep investing specifically at incubator sites where we are very well represented with our instruments. And incubators for those who doesn't know that is where usually you have shared labs. So you'll have early start-ups, maybe professor and an assistant, who are doing some exciting work. They will be then testing a lot, doing a lot of research and then adding our instrumentation into the SOPs. So we have been investing a lot, made sure that when this market is recovering, we have a lot of our products written in their SOPs. Also something interesting is the layoff trigger. I think when I trailed around a couple of years ago, we spoke to customers and started to see a lot of empty spaces in Enbridge, for example. We saw a lot of layoffs, which also layer -- and that, of course, with fewer people, they do less sampling also means less testing and in the end less sales from us -- for us.

So here, I think this is very positive. Also, when we're in the field, we start seeing customers hiring. We start seeing less empty spaces. If you move into the incubator space, you actually have everything occupied by now. So very, very interesting and very good news for the whole industry. As we've just said, we had some, I will say, it was pretty rocky back in November. And you can also see here with the cutting of NIH funding. We saw some clinical trials getting canceled and since we have a decent share of the market, of course, we get hit as well. Majorly, we also saw some of the largest companies out there, Novo Nordisk, Galapagos, Takeda actually exiting the market. And of course, that is hurting ChemoMetec's revenue as well.

Overall, though, we are seeing a recovery, a pretty decent recovery. And again, I think if we move on to the next slide, you can basically see the growth of this company. We only have 45 approvals, and if you look at this charge, sky is the limit. And of course, as we are seeing more approvals in cell and gene therapy specifically, of course, we will grow with that. But also, of course, we have the exciting opportunity for bioprocessing in the future, which I'll come back to you. If you move on to the products, we are now talking a lot about axiomatic and NC-203, and that's mainly because it is the future of the company. We have spent so much time in the field validating the 40, the 30 and the 203 million.

And I will say, I think many of you have by now read a lot of articles and interviews about our XM30 and XM40, and the feedback is amazing. The 203 is also very exciting for us since we have, of course, announced the discontinuation of the 200. So many customers who are used to the flow of the cassette-based instrument will basically replace the 200 with the 203, but also many of them are looking now into automating some processes with the 30. So it actually will be a combination of the 203 and XM30, I believe, in the future for cell therapy. Again, it was a record year for XcytoMatic. And I remember, I think it was just a year ago. I had many investors asking, can you even sell this product? Is it even good? And I think these numbers justifying that it's not only ChemoMetec now saying this product is sellable. A lot of customers feedback [indiscernible], you have seen it all, they love this product.

So hopefully, of course, in the future, we'll start seeing ChemoMetec to expand even more in this area. And as you know, we're also reporting that basically we expect most of our instrument revenue coming from XcytoMatic in the future. For the Q4, specifically, if you include NC-203, we have a record quarter, again, DKK 17.7 million. And of course, most of that revenue, not of course, but most of that revenue actually happened in June. So what we started to see with the discontinuation also with the market improvement and automation. We saw a lot of demand. And again, we mainly had more than 50% of our instrument sales coming from this area. So we are very looking forward to the future.

Again here, some extra numbers. Of course, the growth -- it's explaining itself, and we have, of course, a big hope for the new year. Mainly the trend, which happened in June and Q4 is something we expect to continue into next year, current year. And the key drivers are basically the replacement of the 200. We have sold thousands of NC-200 so many customers, they have to now basically start replacing which means, first of all, they need to make sure they can produce for the next 3 years with NC-200. So we are seeing some last time buys as well as actually some departments already starting to basically validate our NC-203 or XM30, XM40.

Automation, again, is very interesting, I believe, because when we start seeing replacements for the 200, we also have customers saying, well, it would be nice to automate some process flows now when we are actually looking into validation. So we do see a lot of customers doing validations between the Hamilton system and XM30 and also basically a Tecan system in XM30. It also helps that the market conditions are getting better. We can see that, and we can also feel that when we're negotiating I remember a couple of years ago, getting budget for a customer for XM40 specifically was almost impossible, where today, we do see it is easier for them basically to purchase our instrumentation.

And not only that, we do also have been working on some strategic partnerships. And the strategic partnerships is something you only have to do once. Specifically here, I mean the validation into their systems. We have been working very hot in this area to ensure the best possible agreement for ChemoMetec also for the future. And mainly, many of these partnership has happened through customer land because when we have been presenting our XM30, XM40 and 203 in the field, we've had customers saying, why don't you actually start integrating into other systems. So instead of buying specifically from ChemoMetec, we can buy a combined solution, a system. So we started talking to [indiscernible] and Hamilton, Roche, to basically integrate our product into a larger solution, and I think we will see a lot from this in the future.

And then over to product development, where we also have some exciting projects for the future. I think what we're trying to show is mainly that in the future, Nomadic won't only be a cell counter company because one thing is doing an on-site cell count, but many customers actually also are looking into how can we treat more patients? How can we scale this business. So mainly, we're trying to with this cell management system, for example, to automate some procedures to help them scale, to actually help them do way more testing than they're doing today. And I've met with many, many operators also Head of Operations, who sits in the future -- we don't want too many operators in the app, in the manufacturing. They actually won hands free. So it's basically the car manufacturing all over again.

Specifically here, you see our sample management system, but also with an integrated XM50. And we are hoping that customers can save a lot of money by basically buying our automated system, scale their samples, scale their production and actually produce cheaper cell therapies. And talking about automation, hardware alone is not enough. You also need a software to ensure you can cut some costs. I can tell you when we are on site, we usually meet service managers who are overseeing 7,000 instruments where they need to make sure their service, they work, they're up and running. They get to the dairy day. And the whole idea about XM Octopus came to life because of that because what they would love is a fleet management where you can oversee all your instruments, make sure everything is serviced. You can even see is it working as opposed to. Is anything wrong? And if anything is wrong, you can just contact the ChemoMetec service engineer.

So here by moving into the software area, it's basically customer is the customer demand, but also it just makes so much more sense because you can imagine, overseeing 7,000 instruments, which is not only ChemoMetec instruments, it's just a lot of work. So imagine if they can oversee just per system, and basically, look into that and service and everything, you will cut so much cost. Also with XM Octopus, instead of going into a lab to extract data, you can actually send the data by an API into a remote server. And by that, you can do QC approval, you can even do audits from FDA in there. So you have so many opportunities with this new software. And of course, we have big expectations for that as well.

And the next slide here, Phillip?

Thank you, Martin. So to wrap everything up. Our expectations for the fiscal year 2026, '27. We expect revenue of between DKK 545 million to DKK 575 million, equivalent to growth around 7% to 13% and EBITDA of between DKK 300 million and DKK 313 million. Also, we expect CapEx to be around DKK 120 million. So while we expect growth in both revenue and EBITDA our margin and also CapEx will be reflecting our continued growth initiatives.

With that, over to Q&A.

Okay. So let's start with the first questions. Jesper from DNB. Could you help us understand the assumptions behind '26, '27 guidance? Do you expect instrument sales, both XM and NC to be the main growth driver, while consumables and service continue to decline? And what would need to happen for you to end up at the upper versus lower end of the guidance range?

Yes. I'll take that one. And basically, the assumptions behind guidance is, of course, we have learned from last year. I think many, many investors, they reach out, of course, after our downgrade, and this is not something we are very proud of. So we have learned from that. So this year, we, of course, have seen some market improvements. We have a lot of exciting replacements to do. And mainly, we have looked into what is the worst case scenario here because we don't want to disappoint. What we expect is mainly the instrument sales to grow first because you have consumable and service growth, you need instruments to grow it first. We haven't basically had any expectations for Roche, Teek and Hamilton, those collaborations because we don't have any numbers. So mainly, that's, of course, an upside if that happens. So overall, we are looking at the guidance to say the running business itself -- how is that working out with the market and everything. But again, remember, the market improvement is basically only a couple of months old before it really started to take off. So we still have to see the trend, but we are cautiously optimistic about the future.

Okay. And the next question is also from Jesper. How do you view Novartis forcing some of its CGT programs, including YTB323 in DLBCL and PHE885 in multiple myeloma as well as BMS pausing some of its cell therapy programs in terms of what this signals for the broader CGT market and platforms such as TeCharge. And more specifically, have you seen any impact on ChemoMetec's activity or demand from Novartis BMS or related programs?

Yes. And of course, we have been reading about those programs as well. And I think if -- we're going back to the presentation, we saw more than 3,000 ongoing trials. So of course, when you have Phase I and Phase II trials, you have to expect some of them facing some issues. This is in vivo and in vivo is very different from ex vivo since the expansion happens inside the body. And I know they had some issues, but it's not something which causes too much stress or you can say we're -- from our point of view, this is what happens. So we hear it all the time. And of course, when you move into a whole new way of producing a drug, which is in vivo, you have to expect some issues throughout the clinical trials. So, no, we are not too nervous about that. And I think they're going to solve the issues, and we will see some exciting drugs in the future. And also, it is important to say that those platforms, Techar, for example, and next from BMS, they have many drugs on this platform. And so far, it has only been a couple of drugs facing issues. So the platform itself from Novartis and from BMS is to my understanding, not facing any major issues.

Okay. The next one is also from Jesper. You recently announced the discontinuation of the NC-200 platform with sales ending in April '27 and service ending in April '29. We hear that some labs have started making last time buys ahead of the April '27 deadline. Should we expect this to drive any meaningful uplift in instrument sales over the coming quarters?

Yes. And that's actually a very good question, Jesper. So thank you for that. So mainly, our visibility is -- might be 45 days. So from our point of view, of course, when we do a last time buy, we have some expectations for some last time buy. If you're producing with NC-200 and you know the last time buy is in April '27, you need to buy some instruments at some point. You basically cover up for the lag over the next couple of years. So yes, we expect some last time buy on -- related to the 200, and we also expect some NC-203 sales for validation. The difficult you can say, thing for us is basically to estimate it because last year, we tried to estimate it. We heard a lot of numbers, and we believed it. And this year, we're more cautious because we don't want to disappoint again.

And the next question is from Simon Larsson from Danske Bank. What about the push XM order triggering the PW last year, the old FY '25, '26 guidance set at DKK 565 million to DKK 580 million. We ended up at DKK 511 million, and now we have a new guidance pointing towards DKK 560 million at midpoint for FY '26, '27. Can you talk about what happened to those XM orders that you thought would end up in H2 last year? It seems like you're not counting on them materializing this year?

Yes. And mainly, it's because we haven't received the orders yet. So from our point of view, we will wait until we see the PO this year before we start reporting to any investors. So mainly still expect them at some point. It's very difficult for us to say when because these validations, we had a pretty great example last year in our annual report, I believe. Those validations, they take time. We have had validation running for a couple of years with many customers. Some of the sales you see right now is mainly from those validations running over a couple of years. So we also know at some point, these customers, they will buy more instruments. It's just very difficult for us to estimate. So right now, they're mainly not a part of the guidance since we are not familiar with the exact numbers and estimates even if they will arrive this year, next year or in 2 years. So that's the main case here.

The next question is from Ludvig from Arctic. And there's 2 questions. The first one, when it comes to the change in IFRS accounting, you highlighted a DKK 50 million effect on instrument sales in fiscal Q3. What was the effect in fiscal Q4, if excluding the accounting effects in '25, '26 and '26, '27, what is the implied sales growth range assumed in your guidance?

First of all, the DKK 50 million effect was one -- DKK 15 million, in fact, was a one-off, so we don't have any effect this quarter. So if we're looking at the expectation of our product development and investments, mainly, we are looking into investing more in our XM Octopus. We believe software is the future in this area. Also, we are looking to automation, sample management system, autosampler, we have some XM50 coming pretty soon. So we're looking to keep investing. And I think what's important for chemo medic is the next 5, 10 years, sell a lot of cell counters. But at some point, we have to look at what is the next growth leg from our point of view. So we're investing a lot in automation and in software, because we believe the future is systems and to sell a system, you need hardware, software, mainly automated. Also, of course, a big piece of this is for XM Octopus.

And the second question is, when it comes to the expected DKK 120 million product development expense in '26, '27, does this entail only capitalized investments?

Mainly is going to be CapEx, but of course, there will be some P&L as well. But mainly, it's going to be CapEx.

And the next question is from Peter from Posting Invest. Gosh, how far along are you with the collaboration? And when do you expect commercialization to begin? Is the validation process different or easier compared with standard customer validation losses?

Yes. And our expectations from Roche and for the Roche deal, I get the question a lot. And the difficult part from our point of view is, first of all, we're not allowed to talk too much about it. Second of all, we do not have any numbers. But we do expect -- we do expect to start selling next year 2027. And the validation process itself is difficult because when you're replacing driven blue based instrument, there will be differences between our method and driven Blue. Positive part here is we have spent some of our R&D expenses this year to basically develop protocols. So we are able to help the customer to basically do it an easier check transfer. So it will be some work for the customer. It will take time, but mainly, if you move straight to integrating it, that itself is not a problem. It's basically to replace an existing method that can be more difficult. But again, since the product will leave the market, they basically have no option. So they will have to do a validation, no matter what.

And the next question is from Mads from Bernberg. He has 2 questions. Number one, please help me understand what the underlying consumable growth was excluding legacy, for example, animal reproduction and government shutdown and excluding large customers leaving the market.

Yes. And it's a good question because if you look at the Life Science leg alone, the growth was pretty decent. And semens and our milk and beer has been struggling a little bit because it's not a focus area for us. Also, if you're taking those shutdowns into account, of course, it would be -- we'll be looking very differently. So we'll probably be a little above the 10% you see, I would say, probably around 15% for Life Science alone. Consumable wise, we did take a hit from those closures, so that would also have been a little higher. Yes.

And the second question from Mads. He wants an understanding of how many customers you're speaking to on the XM platform and how that compared to the beginning of the year. And in addition, how many potential instruments does that equate to?

Yes. we're talking to so many by now that I do not have the exact number, but it's in the 100s. So it's a lot. And I think the difference from our point of view to last year is that now we do not have to showcase the product before people show interest. We have a lot of customers and potential customers reaching out to they have heard about integration opportunities. So they definitely just want to see, can we just integrate XM30 into Hamilton, we have seen the webinar or et cetera. So the difference is definitely way more demand, way more, you can say, validations, and it's so many that I don't have the exact number, but way above 100.

The next question is from Yiwei Zhou from SEB. You mentioned that you're seeing improved demand towards the year-end. Can you elaborate if the demand improve for both NC and XM instruments?

And mainly, it's for XM and that is due to the discontinuation, the market improvements and many of those validations we have done prior to this year. So it's mainly XM and we definitely expect XM to be the leading instrument in the future, and it will also probably exceed NC next year.

And the next one is from Jesper from DNB. You are guiding for around DKK 120 million of CapEx in '26, '27, up from around DKK 100 million in '25, '26 and equivalent to more than 20% of revenue. how much of this relates to software development, how long should we expect CapEx to remain at more than 20% of revenue? And what would you consider a more normalized level once the current investments are completed?

Yes. And I'll say it always depends if our revenue goes through the sky, we will probably invest even more. We will have limited -- you have limits because you cannot keep investing unlimited. This year, we believe we need DKK 120 million. And mainly, the split is probably quite even between the different areas. But something our investors might not know is we're also spending a lot of R&D expenses for biology, creating protocols, easier tech transfers for our customers. So we have a lot of different areas. So the software itself might be 20%, 25% of our R&D expenses in the future, will we increase? It depends on the revenue and also actually the demand from customers because we expect to launch XM Octopus at some point. If they want something different, we'll build it. So I think this is an ongoing thing. And of course, I think you know is we have decent margins. We are pretty good with math. So if it makes sense, we'll keep investing. If it doesn't, we won't do it. So that's going to be the answer to that.

And then we have a question from Simon from Danske Bank. You stated in the report that before making their financial decision, customers expect documentation that the XM30, the XM40 and the NC-203 all produced comparable results for different cell types as well as country sites. You say it's a new development for customers to express these wishes. Does this mean that you're in discussions with customers looking to also replace competing products with ChemoMetec's cell counters and using ChemoMetec's cell counters as a platform solution.

Yes. And that's exactly what we're working on. That's also why the validation takes a little longer because usually, you might hear from a department, they want to buy 10 instruments. And then they say, "Oh, actually, we now are moving into global alignment because we actually want to replace everything with this new platform." So that what usually happens is that we're talking to one department, then other departments have other different instrumentation. And suddenly, this moves into a bigger project, and down the line, yes, we are expecting to replace a lot of competitor instruments and basically be the one cell counter in the field. I would say cell counter platform, actually.

And then we just have one question left. And the question is from Jesper from DNB. On the Roche collaboration, given the significantly higher throughput of XcytoMatic compared with the legacy [indiscernible], how should we think about the replacement ratio, is there any reason to expect something close to a 1-for-1 replacement, perhaps because customers typically operate the cell counter alongside acidic bioanalyzer. Or should we assume materially fewer XcytoMatic units will be needed?

Yes, and that's a good question again, Yes.So Mainly, if you want to integrate into the CDx bio analyzer, it's going to be a one-to-one replacement, but we have seen when we're replacing competitor instruments in the field that they can actually replace 2:1, which is also a big USP for the customer because our instruments are so fast. So it depends on the setup. But if it's a stand-alone, usually, they will replace 2 old instruments compare instruments with 1 instrument from ChemoMetec unless we're talking integration because then it is a one-to-one specifically.

And that was the last question for today. Thank you all for joining. See you in the next conference call.