Arcticzymes Technologies ASA

OSE:AZT

Earnings Call Transcript 2020-Q2

[Jethro Holter, Chief Executive Officer]

Okay. So I'm going to kick off now. So welcome to the Q2 presentation. Since this is a virtual meeting, we have muted everybody's microphones, and we will unmute those at the end for the Q&A session. So today, it's myself, Jethro Holter, CEO; and Børge Sørvoll, our CFO, will walk you through the presentation today. Today actually marks a new era for us. It's the first time we actually present as ArcticZymes Technologies. We rebranded the company from Biotec Pharmacon to ArcticZymes Technologies back in June. We are very proud of the new brand. It fits seamlessly and resonates well with our commitment to the enzyme business being our core future focus moving forward. So with the new brand, we have a clear mission and vision. So our vision is, with our daily work, we want to make an important contribution to a healthier world. Driven by this goal, our experienced scientists are constantly working to find and unlock new solutions. What this essentially means is at the end of the day, for us, it's more of enzymes. We want to improve the health care down to the individual level or people like you and I. Our mission: as experts in our field, we discover, develop and provide enzymes without compromises on a consistently high level to make our customers' lives easier by unlocking new solutions. And the key messaging here, for us, it's really about enzymes without compromises. At the end of the day, why should our customers compromise their technologies? We provide really good enzymes with unique features, which allows them to develop their next-generation technologies. So this is really what ArcticZymes is all about and where we're going in the future. So the agenda for today is we're going to start with the highlights for Q2 and we're going to walk you through that. Then we'll talk about the updates for ArcticZymes. We'll then walk you through the BetaGlucans. Børge will take you through the Q2 financials. Then I'll end by giving you an outlook so you can see what to expect for the remainder of the year. And then we'll unmute the microphones and open up for Q&A session. Highlights. What we've seen is we've had a -- in a nutshell, we've had a very good Q2, where we're seeing strong underlying growth. On top of that, we're seeing corona upsides contribute to the sales as well. So when you have a look at the main achievements, we can see that the group EBITDA was NOK 27.2 million for the quarter. That was versus minus NOK 0.5 million for the same period of last year. When you look at the ArcticZymes' sales for Q2, we had here our best sales ever. We had NOK 33.4 million for Q2. Last year, we had -- sorry, for the same period last year, it was NOK 9 million. This accounts for 270% growth in the ArcticZymes business for Q2. When you look at the ArcticZymes sales, we do have some corona-related upsides in the sales, and we have approximately NOK 11 million sales in Q2 related to corona-related sales. But it's important to stress, these are the upsides -- if you take those upsides away, we still have very strong underlying growth in the main business. Also, we rebranded the company to ArcticZymes Technologies, which I mentioned earlier. On the Biotec BetaGlucans front, we're simply operating in that business profitably. And it's been 2 consecutive quarters we've operated that business profitably. So the ArcticZymes update. I want to walk you through the commercial achievements. We -- as mentioned, we have -- we've grown the business 270% for ArcticZymes in Q2 and there's 2 key contributing factors here. Firstly, it's the Therapeutic segment. This is salt active nuclease portfolio, where the -- SAN for short, these enzymes are sold into gene therapy and vaccine production, where they're used to make therapeutic viruses. And what we see is a Therapeutic segment, which has contributed 34% to total sales and this growth is largely driven by new customers coming on board as well as increasing orders of magnitude in excess of NOK 1 million from our most well-established customers. We have not seen any slowdown in the Therapeutic segment with respect to corona. We still see that it's still going to be ahead in the developments ongoing out there. Also during the quarter, we have seen new interest in use of SAN enzymes for the development of COVID-19 vaccines. When you look at revenue growth, there's enough -- there is very little contribution of that to the revenues here at this stage since these projects are very new, people who are developing COVID-19 vaccines, this is very new stuff. Those projects are kicking off. So like the rest of our therapeutic customers, they will start buying SAN in small quantities and then as they progress through their development, they will then put in increasingly more orders of larger sizes. Also a good example of where we're going here is we did sign a supply agreement with ReiThera. ReiThera is an Italian company, who is the leader in developing DNA-based vaccines. They are going to use our SAN enzyme in the development of their COVID-19 vaccine. SAN will be used to streamline one critical step in the manufacturing process. And so basically, what -- like all therapeutic customers here we're working with, SAN is used to remove contaminating DNA from the virus, which is very important to avoid adverse effects. On the other driver for growth for ArcticZymes was COVID-19 upsides. And this relates to sales of multiple enzymes, but mainly, the most sold enzyme here is the Cod UNG. In terms of COVID-19 upside, that contributed 33% of total sales in ArcticZymes. And I think most of you've observed what's happened in the market when it comes to COVID-19. Q2 is where the main peaks happen in most regions, and I think this is very much reflected in our sales as well. And I think our operations team has done an excellent job here in terms of we've had that flexibility in order to take all orders that we received related to COVID-19. So we're able to capture all commercial business related to that where there's been an interest in our enzyme. But also, it's about preparing for the future. In COVID-19, the upsides are fairly nice, okay, but our interest is really about capturing longer-term potential. What we want to do is we want to make sure our enzymes are integrated into the next generation, the viral diagnostic tests for corona and other viruses as well. So with this, what we've done is we've already -- we rapidly scaled up the production batch size for Cod UNG during the quarter. So we're ready to have -- to serve future demand here. So we talked a bit about corona, but what I need to do is really stress when we put corona sales to one side, there is a strong underlying growth in the business. And our top line growth, if you take corona away, is very much progressing according to plan. When we look at corona upside, we just see this essentially icing on the cake. So I think all in all, the business is progressing as planned. In terms of ArcticZymes, we have been working on innovations and ArcticZymes has been recognized as a leading innovative company, which can make a contribution towards the fight against corona. And as part of a national initiative, ArcticZymes was awarded 2 grants from Innovation Norway towards developing technologies against corona. The first grant was for NOK 1.6 million, and that is towards accelerating the upscaling of SAN production. We always had efforts ongoing here, but this just allows us to put more fuel on the fire. We can put more resourcing behind it. We can also work with other national partners to fast track the scaleup of these enzymes. And this really fits timely with a foreseen commercial demand for both COVID virus and non-COVID virus customer activities we're doing. So then the next grant, we got was again for NOK 1.6 million. This grant relates to the commercialization of enzymes supporting COVID-19 and viral diagnostic test development. And as mentioned, our goal with COVID-19, yes, we're enjoying the upside, but we more want to capture long-term value by our enzymes being integrated into other companies' next-generation COVID-19 diagnostic tests. With that, what we're going to do is we're going to build other enzymes around Cod UNG and these other enzymes will be very much optimized to work in viral diagnostics. So this way, what we can do is we can provide a much broader offering of enzymes to viral diagnostic test developers. So we end up giving a more complete offering to our customers and can take more of the value chain. A couple of examples such enzymes would be reverse transcriptases, thermostable polymerases or hot polymerases. Our other polymerases we have on the market are COLD polymerases. So by having the range of these different enzymes automized for viral diagnostic, we can serve the tests that are made in -- for PCR technologies and for non-PCR technologies such as LAMP amplification technology. Okay. We're going to change gears here and talk a little bit about Biotec BetaGlucans. And in a nutshell, Biotec BetaGlucans, it is operating profitably when you look at the business as a whole. For the 2 consecutive quarters, we've operated Biotec BetaGlucans profitably. In short, this is due to a combination of factors. One, it relates to the structural reorganization we did back in December. Also, we scaled back support for the Woulgan business since we're divesting -- where we're divesting that business. We also see a nice sales growth in the Consumer Health business and revenue contribution from the adjuvant sales. I'm going to now walk you through each of these quickly. So first one, in Animal Health, we saw lower Q2 sales compared to Q1 for the M-Glucan product. This was very much expected because we did get a large early order from our main customer in Q1. So we had some tailwinds there. With this business, we do expect fluctuations in sales for the remaining quarters. Overall, for the year, and as communicated earlier in previous presentations, we expect this business to be a flat business going forward. The Consumer Health business, we continue to see growth on the M-Gard sales. For the quarter, we had very strong growth compared to the quarter last year. We grew it over 500% in Q2. Growth is driven by new customers. And also, there are what we do see upsides related to COVID-19, where manufacturers are targeting defense against coronavirus. So we approximately estimate 40% of the sales for Q2 here are related to coronavirus. When we look at the SBG sales relating to the adjuvant, we've commitments to -- our customers committed to us demand for SBG for the neuroblastoma clinical trials they've been doing and linked to the annual commitment, we shipped the second order of SBG to them during the second quarter. Also, we've been moving forward with a licensing deal we're doing -- we're working on with a vaccine owner towards neuroblastoma. And here, a part of this process, always when you have these meetings, it's important to have face-to-face meetings. And we managed to navigate around corona and had an face-to-face meeting at the end of the quarter in Tromsø. And that was important because that they needed to come and see the facilities for themselves part of their due diligence. So that helps drive the process forward. We had productive discussions. And certainly, that visit set the stage for the next stages here. When it comes to Woulgan wound healing, sales were lower in Q2 compared to the same period last year. This was very much expected because we have made a decision to divest, and we're only going to support existing customers. Also during the quarter, we made a decision to discontinue Woulgan production, but this decision was mainly due to the contract manufacturer we were using. That contract manufacturer has been aseptically filling the Woulgan tubes. The contract manufacturer filed for insolvency, which meant that they're unable to meet their commitments to produce the Woulgan tubes and then there was some quality requirements that they could not fulfill either. What we did was, we did search around for alternative CMOs and we evaluated them. But we found no feasible options materialize that we considered would be economically viable for us or would circumvent a very lengthy backorder situation. So with that, we made the decision to discontinue the Woulgan production. We have notified our customers about the discontinuation. We are going to continue supplying Woulgan stocks until they're depleted. We expect the Woulgan stock to be depleted during the second half. From a revenue perspective, we will see the Woulgan sales phase out during the second half. However, when you look at the numbers, the numbers around Woulgan have a very minor contribution to overall sales. So we don't see it having a major impact there in terms of our revenue contribution for the year. In terms of divestment process, does it have a negative impact? No. Because at the end of the day, the whole process around divestment hasn't been about divesting the Woulgan tubes. The process has actually been about divesting the technology platform, which is SBG for development of a broader wound healing portfolio. And the beauty of that is that we have a hefty and substantial documentation package to back that up to a potential new owner. Regarding the divestment process, that is moving forward. It, however, is moving forward at a bit of a slower pace than originally planned. This is due to the corona situation. I think when you look at the industry, it doesn't matter that this is -- all processes right now, divestment processes, they are moving slower due to corona right now. Despite the slowdown, the discussions are ongoing with several interested parties. So that's a kind of a snapshot of where we are with the Biotec BetaGlucans business.Now I'm going to hand over to Børge, who will walk you through the financials.

[Børge Sørvoll, Chief Financial Officer]

Thank you, Jethro. And I will give you a few more details on the underlying performance that Jethro has talked about. And I think it's quite fair to say that we are proud of how we have managed to turn the group around from a loss-making business into a profitable business. And this gives -- brings us straight into the kind of the core of the business where we talk about the ArcticZymes sales. And if you look at the sales, ArcticZymes had sales growth of more than 270% compared to the same quarter last year. We have managed to secure NOK 33.4 million in sales revenues compared to NOK 9 million at the same time last year and NOK 18 million in Q1 this year. And taking away the upsides related to the corona pandemic, we have still managed to have a substantial growth in the company by more than 150%, where we've actually grown the company from NOK 9 million last year to NOK 23 million this year. And as Jethro said, the growth in the Therapeutics segment has played a vital role in the sales now as they are continuing to grow, and they had more than NOK 11 million in sales now just for this quarter. And it's also important to remember that the Therapeutics segment had 0 in sales in 2016. So we have seen a good growth in this part of the business. We also see that we have good growth in the Therapeutic and in the Research and Diagnostic segment. And we have an underlying growth of 130% compared to the same quarter last year. And this is also when we have taken away all of the upsides here. And by looking at the table on the right-hand side here, you can see that the business has shown steady growth in basically all quarters over the last 2 years. But of course, there will always be quarters that can be lower than others. But overall, our ambition is to have solid underlying growth in the business here. And also, if you can see here, if you look at the sales figures from Q1 2020 and Q4 2019, you can see that underlying growth was lower than Q4. But of course, when you take -- when you bring in the coronavirus upside, you can see that we had a growth in this quarter as well. For the first 6 months, I think...[Technical Difficulty] Looking at the first 6 months, we have an underlying growth of more than 120% for the business. And including upside, we have a growth of more than 200% compared to the first 6 months of 2019 here. Okay. I think we'll just move on to the performance -- to the financial performance. You can take the next slide, Jethro. And as I already talked about in the previous slide, our sales have grown substantially, both in the quarter and for the first 6 months. And even though our sales have grown, they have only increased our expenses by NOK 1 million on the quarterly basis and NOK 1.5 million for the first 6 months. And of course, the increase in the operating expenses is explained by the restructuring we did in December last year and the refocusing we did. But also, of course, there have been some added expenses with increased activity levels we've had in the first half of the year. And of course, with increased sales and a small increase in operating expenses, we have achieved an EBITDA of close to NOK 25 million for the quarter and close to 35 -- more than NOK 35 million for the first 6 months of the year. And also, it's a little bit interesting if you look at the table on the right-hand side, you can see the relationship between sales and EBITDA here. And from what we can see here is that when sales passes around NOK 8 million to NOK 9 million on a quarterly basis, basically everything drops down to the bottom line here. And this is also why we can show an EBITDA margin of 74% for the first 6 months and close to -- and 68% for the first 6 months of the year. Yes. And I think moving on to the -- looking at the noncore part of the business now, sales are close to NOK 5 million lower than we experienced in the first quarter this year. But compared to the same quarter last year, we have seen a growth of close to NOK 3 million. Even though sales are lower, product mix has changed from a low-margin business to the high-margin business here. Animal Health that Jethro talked about, which is a low-margin business for us, will continue to fluctuate from quarter-to-quarter, and we expect, as Jethro said, annual sales to be flat here. But what is really positive now for the second quarter is that we have experienced good growth in the Consumer Health part of the business. And sales are now plus NOK 5 million for the quarter, and as also Jethro talked about, 2 of these million can be allocated to the corona -- upsides related to the corona pandemic. But, of course, we also see the increase in the number of customers buying this product. So we -- so there's been steady growth in our Consumer Health. And Woulgan sales, which we have decided to divest, had revenues of NOK 0.8 million for the quarter. And lower sales in this part of the business can, of course, be partly explained by the corona pandemic and a little bit set back in society. But also because there is uncertainty in regards to future supply of Woulgan, as we no longer have the CMOs to support as well. And we don't expect any -- at the end of the year, we don't expect any more revenues from the Woulgan part of the business unless the divestment is concluded. And also for the second straight quarter, we have managed to secure revenues from the adjuvant side of the business. And this one is actually on the same level as we experienced in the first quarter. Looking at the performance side of the business here. And we continue to deliver positive results for the business. And this is the second straight quarter that we have a positive EBITDA and we have a positive EBITDA of more than NOK 4 million in the quarter. And of course, this is partly explained by the change in product mix, but it also is explained by that we have managed to reduce our expenses in this part of the business here. And also, you can see that from the table on the right-hand side that we have managed now to have good EBITDA margin as well. We had 27% in the first quarter and 38% in the second quarter. And also giving us a close to 30% EBITDA margin for the first 6 months here as well. And as we have said now, we have decided to divest Woulgan. And also by divesting Woulgan, our expenses have been reduced significantly. And also looking for the first 6 months, our expenses are reduced by close to NOK 5 million for the first 6 months and a little bit more than NOK 2 million for the second quarter. And then going over to the group figures. Of course, given our performance for the 6 months -- that our performance for the first 6 months has been exceptional, we had an EBITDA for the second quarter of NOK 27 million compared to a loss of NOK 0.5 million in the same quarter last year. And also what we can see is that for the first 6 months of the year, we have an EBITDA of NOK 41 million compared to a loss of NOK 5 million for the same time last year. This actually -- this gives us an improvement of close to NOK 50 million, just comparing the first 6 months in the 2 years now. And of course, I think the explanation behind it's quite obvious. And I think we have seen strong growth in our underlying business. We have upsides relating to corona pandemic and we had good control on our expenses as well. And as you can see on the table on the left-hand side, you can also see that we have good margin improvement in the business here. And if you're looking at Q2, we have EBITDA margin of 61%, and in Q1, we had an EBITDA margin of 40%, and this gives us an EBITDA margin of close to 50% for the first 6 months of the year, which is really good. And if this will continue going forward, that remains to be seen there. And of course, I think going into the cash flow side of the business. Cash flow is, of course, dictated by the underlying growth in the business here. And our cash position has been significantly strengthened over the last year. We had a cash balance at the end of the year at NOK 56 million which is an increase of more than NOK 20 million compared to Q1 this year and an increase of NOK 35 million compared to the same time last year. And with that, I think I can say from a financial perspective, Q2 has been an exceptional quarter that gives us a solid foundation for future growth and profitability. And with that, I think I will hand it over to you, Jethro, to tell us a little bit more on what we can expect going forward now.

[Jethro Holter, Chief Executive Officer]

Okay. Thank you, Børge, and you're really getting under the hood on what's driving the business with the numbers. So thank you. So we go to the outlook now, and it's really what to expect for the rest of the year and beyond. And the key focus for us is really about driving the strategic growth and profitability. When it comes to profitability, we fully expect to deliver on our #1 goal in achieving profitability during 2020. It just -- it really speaks for itself when you look at the numbers there. When it comes to the coronavirus upsides, we were seeing the peak of the outbreak in Q2. Now we're at the back end of the outbreak. Also, we have seen in the supply chain that customers are very well stocked up. What we've seen is, in many ways, customers have been -- it's a bit like the toilet roll syndrome where all toilet rolls are scarce, so people are just buying them up. And we're seeing that somewhat here in the market here, where assay developers are buying a lot of enzymes in excess. So with that -- with those factors in play, we do expect that the upsides we've had in corona will be lower during the second half. But of course, when it comes to corona, as mentioned, our focus is, yes, the upsides are very nice. These things are never planned for the business. But what we are focusing on here is more the longer-term aspects where we want to get our enzymes locked into the next-generation tests. And that's where the long-term value is created. The first component here is really about focusing on growth, and it is really about -- we've seen -- we have very nice growth in the underlying business. This is a business when you strip away corona, that's that long-term business that we've been growing year-on-year. And of course, with our underlying business, it's based on new customers that's coming on board, long term -- that become long-term customers of ours and they start buying products and then they buy other enzymes, and those relationships grow. So that business is growing, the momentum is continuing to grow there. And of course going into the second half, we expect that growth to continue in the underlying business. And again, the corona is just the cherry on top, there is upside on top of that. But, of course, growth is also about -- and to -- certainly growth is really about what you do in the future and bringing in new opportunities. So we have our existing business, and we're going to continue -- that will grow, and we want to continue growing those existing relationships by getting them to take on more products, but also it's about finding new customers as well. So a lot of the focus is towards new opportunities where we want to drive -- so here, we want to cement the foundations for 2021 and beyond. And that's what the team is really working on. And also, this relates to the new innovations we're doing. New enzymes we're bringing on market also opens up new opportunities for us in the market. So that's a little bit of a flavor where we're going into the second half. And with that, I'd like to end there, and we can unmute microphones and answer any questions you have. So thank you.

[Unknown Analyst]

Can you hear me?

[Jethro Holter, Chief Executive Officer]

Yes.

[Unknown Analyst]

This is David [indiscernible] Partners. But I guess, setting corona aside, as you always already -- you always want to point out that this is a short-term upside, obviously. And the reason that we're really excited about ArcticZymes in the begin -- to start with is the gene therapy exposure that you have. I was just listening to a presentation by the Sarepta Therapeutics CEO the other day, pointing out that there are 800 INDs at the FDA for different gene therapies. And there are some 300 projects undergoing clinical research at the moment. Can you talk about the potential for the -- for ArcticZymes in the gene therapy field long term? How many of these 300 therapies in clinic are viral based? And also, do you have any insight to such number for the INDs at the FDA? And if you can talk about volume ramp-up for you when such a project typically moves from preclinical to Phase I to Phase II and then into production, I guess?

[Jethro Holter, Chief Executive Officer]

Yes. I can talk to some of that. There's a lot there. So I can give you a kind of perspective where we are. So let's start from products. Two areas we're focusing on is we're very much focused on AAZ, and that's been the main virus that's being used in gene therapy. And that's where our SAN HQ enzyme has been focused, and that's where most of the -- that's where most of the sales are today in that area. What we did is that we know in gene therapy, there are viruses used, such as lentivirus, and that's actually used in cell therapy for CAR-T, things like that as well. So we want to push down that area as well. And that's why we launched another SAN enzyme, M-SAN, we launched not so long ago, and that's targeting that market -- for that type of virus and other viruses, too. So we want to capture as much -- we want to have enzymes here that we'll be able to touch all viruses here, so we can capture anybody making virus at the end of the day. Of course, when it comes to gene therapy, you're right, virus is just one way to gene therapy using viruses. There are other ways of delivering. And for everybody on the call here, let's make it simple. Why do you use virus? Well, virus is basically like a microscopic syringe. It will inject a therapeutic DNA into cells. That's why you use virus. There are other delivery mechanisms out there, which can be, for instance, lipid-based, where you have fat that delivers the therapeutic DNA into cells. There's also technology like CRISPR gene editing technology that is being considered, but that's in a much earlier stage. But that technology can also be used in viruses as well. And then, of course, when you take the cells out of the patients and modify them and put them in, that's a kind of gene therapy, cell therapy. There, you can use electroporation or use electric shock to get DNA into cells. So of course, you have all these technologies out there when it comes to modifying DNA. And -- but at the end of the day, it really depends on the individual disease and the therapeutic regime you need to which one of these tools you select. So I think when you look at how much of this is related to viral diagnostic, at least where we are, what we've had -- we have in terms of our customer base and opportunities in the pipeline and our funnel, we're working with over 100 customers when it comes to people developing viral diagnostics. And we know not everybody is going to be successful there. But the point is, here, we have such a [ good ] portfolio of customers that we know some of those will drop off, of course, as you do in any therapeutic area. So -- but what's important to stress is none of the customers we have today are commercialized yet. They are all preclinical or early clinical trial stage. And what I alluded to earlier is that in terms of scale and -- what we've seen is when customers start out, they buy a few thousand krone to start with, but then that rapidly ramps. So -- and if you think of some of our earlier customers we started working with back in 2016, today, they're putting individual orders in -- of over NOK 1 million. And that is just for -- and remember, they haven't commercialized at this stage, and we do expect larger orders from those customers down the road. So I think -- I'm trying to give you a flavor of the business on how it materializes. We are still at the early stage in terms of our relationships with our customers here. So I hope that -- David, does that give you a bit more perspective of where we are?

[Unknown Analyst]

Yes.

[Jethro Holter, Chief Executive Officer]

It's a very interesting question, I took a very long time to answer in a lot more detail.

[Unknown Analyst]

But what a blockbuster gene therapy, for example, what would such drug require in terms of enzyme volumes?

[Jethro Holter, Chief Executive Officer]

You're looking at -- there's 2 things here. One is, today, we're not there. I think when you look at somebody going in the therapeutic -- let's say somebody who reaches that nobody has yet. So this is still theoretical for us. You'd probably be looking between NOK 5 million to NOK 10 million, and that's fairly my neck-up because we're not actually locked down. Nobody is at that stage yet. That's the kind of what we're looking at as a kind of annual sales. But again, it depends what the therapeutic regime is. And because, of course, each disease you're targeting is different, it will require a different type of virus and different things need to be taken into account here. But that's the kind of volumes that we see. And I think what we've seen in the industry, and this is something which is very well published out there, it is difficult to achieve the scale that is needed for the therapeutic demand in the future. So this is why companies are very much looking at that scaleup -- to get the scalability they need for the treatments down the line. So -- and of course, and this is why we're really prepared for the -- we're preparing with scaling up the SAN products, so we have that commercial scale needed as our customers move towards commercialization. But again, when I said about commercialization, of course, a lot of enzymes used during development, but we know not everybody is going to be successful. Some of those clinical trials will fail. That's natural. But since there are a vast opportunity funnel with different customers we're working with, I think that's the beauty of it. We -- if some fall off, it doesn't matter. We have enough customers in our pipeline to handle them. But I think the numbers show for itself, how this business is progressing for us. And of course, we're looking at how can we capture more value there in our innovations as well. There's other things we can do to take more value there.

[Børge Sørvoll, Chief Financial Officer]

Any other questions?

[Unknown Analyst]

It's [ Michelson ] here. I have a question about Cod UNG. So there's a huge volume of PCR tests probably for COVID, including Thermo Fisher and many others. So how successful can you be in penetrating this market with Cod UNG going forward? And will you actively do something to achieve a greater penetration?

[Jethro Holter, Chief Executive Officer]

Exactly. And that's part of -- let's come back to what we talked about with the innovations, one of the grants that we have and something that we want to do is -- don't get me wrong, the upsides are nice, and we want -- and that's good we're able to do it. But what we want to do is take advantage of the longer-term potential of coronavirus and viral diagnostics. Corona is just 1 virus. There's a lot of other viruses out there, of course, and we want to make sure that we make enzymes that are optimized for viral diagnostics. And Cod UNG is one of those. So the grant we have got, and irrespective we've got the grant or not, we would have done it anyway, but it just gives us some extra fuel. What we're going to do is we're going to develop other content around Cod UNG where you optimize other enzymes. Because when you do a viral diagnostic COVID-19 test, it's not just 1 enzyme you're using, you're using quite several different enzymes to make that test. And what we want to do is to provide all those enzymes that are also optimized to work together. And in that kind of environment, you need, when you do the -- to be tailored for viruses. So that's part of what we're doing. We very actively want to do that. We want to take more of the value chain and just not make it about Cod UNG. We're going to make those polymerases, the hot polymerases, which are used in PCR. We also want to make the reverse transcriptases. These are the enzymes that convert a different genetic molecule RNA to DNA. And of course, we want to optimize some of our other enzymes such as isothermal polymerases and those enzymes are used in non-PCR amplification technologies like LAMP. We want to optimize it to fit for -- optimized with viral diagnostics. So it's already on our innovation map. We're working on it. We want to capture more value from that beyond just a Cod UNG. And when you look at Cod UNG, this is very much -- we've seen many new customers come on board -- our existing customers in Q2 integrating Cod UNG into their rapidly launched COVID-19 tests. So -- and then we've been very well positioned operationally to take advantage of all those upsides that have come in. We've had that flexibility in production to accommodate those upsides. But of course, you know we want to capture more through our enzymes down the line.

[Børge Sørvoll, Chief Financial Officer]

Anyone else? Unless there are any further questions, I think we just -- thank you all for participating in this second quarter presentation. And I think we just leave it at that. Thank you, everyone, and have a good day.

[Jethro Holter, Chief Executive Officer]

Have a good day. Thank you.