Arcticzymes Technologies ASA

OSE:AZT

Earnings Call Transcript 2021-Q2

[Jethro Holter, Chief Executive Officer]

Good morning. Welcome to the Q2 presentation. Both Borge Sorvoll, our CFO; and I, Jethro Holter, will walk you through the presentation today. As this is a virtual meeting, as we've done in the last few quarters, we will kindly ask you to stay on mute during the presentation. You can then unmute the microphones during the Q&A session at the end of the presentation.We'll also kindly ask that you switch off the videos as well. This way, we can maximize the bandwidth for the call. For those calling in by phone, you can toggle off mute, unmute using star 6. We also want to let you know we're also recording this meeting and what we will do is we'll post it on to our website afterwards.So let's fire away in a usual fashion and the agenda for today is we will start with the highlights where we go through the Q2 highlights. After that, we will then go a little bit deeper into the business update. Borge will walk you through the financials and then for the outlook, we want to give you some updated financial guidance.So for the highlights. What we've seen is I think in the last few quarters, we have seen there's certainly a changing environment with respect to coronavirus. And that has certainly created some volatility in the sales. And in Q1, we had a spike, an extraordinary spike in sales and we had the expectation that Q2 sales will come in lower and we came in at NOK 21.4 million for the quarter and it's slightly lower than we originally anticipated.However, when you take into account Q1 and Q2 sales for the first 6 months, we're actually slightly ahead of the sales plan we set out at the beginning of the year. So far, when you look at the first 6 months, we [ earned ] NOK 61.9 million. So actually, even though we see the volatility between Q1, Q2, we are very much on track with our sales and our expectations.What we did not expect was kind of volatility that we're seeing at the moment in quarterly sales and we'll come back to that -- the reasons for that in a bit. Despite the volatility we're seeing in sales, profitability continued to be NOK 6 million in EBITDA for the quarter. We've also reached a new milestone. We've actually achieved NOK 100 million in revenue sales when we take into consideration the last 12 months in sales and I'll come back to that with respect to guidance at the end of the presentation.New innovations are important for future growth of the business and at the end of the quarter, we launched a new product. We launched our second-generation Salt Active Nuclease enzyme, which we call a SAN HQ 2.0. We also conducted an internal innovation review and what we plan to do now is actually start investing more and expand activities in serving the therapeutics segment and we come back to some of these things in a moment in the business update.So for the business update, we start in the usual fashion and we'd like to go through the segment sales numbers. And for sales, in all 3 market areas we serve, sales were lower for Q2 than for Q1 and that was expected because of the extraordinary performance we had in Q1. So when it comes to therapeutics, quarterly sales were down 26% compared to Q2 last year. When it comes to contribution, therapeutics made 40% contribution to total Q2 sales.And part of the reason for the drop in the therapeutic space, and we saw this as well -- to some degree in the first quarter as well is that several of the custom manufacturing organizations, which were some of our largest customers who we've been working with have been prioritizing the manufacturing of third-party coronavirus vaccines such as the RNA vaccines.What that means is they've deprioritized some of the other projects they're working on, particularly like gene therapy and other vaccine projects using SAN products. We have been in discussions with these customers and they have indicated they are working on getting -- expanding the capacity to get those projects back on track.What's really interesting is actually one of those customers have actually indicated to us that they have actually made a strategic decision to develop their own COVID virus vaccine and they are looking to evaluate and incorporate our SAN enzyme into the manufacturing process as they develop that vaccine. Beyond that, we're also experiencing some new early opportunities that has arisen with new customers and this is for utilization of SAN in the coronavirus development programs.But what is really interesting here is that we're seeing opportunities extending to new geographical territories such as Russia and focus on the provision of vaccines for developing nations. And I think we're all aware, vaccination programs are going on really well in Western nations. However, when you look at the world, it is far from vaccinated. In order to vaccinate the whole world, it is estimated that 14 billion vaccine doses are needed to vaccinate the world's population.And in order to achieve that massive undertaking, more vaccines are needed. So that presents opportunities for our ArcticZymes and to expand to new customers it hasn't worked with before in new geographies. Beyond the SAN products, we're seeing interest now for utility of our other enzymes in other areas such as cell therapy, in particular, for the isolation and preparation of cells associated with gene therapy applications. For instance, we're seeing that our proteinase is now -- are getting interest in that area. So we are working with some opportunities in that.In research and diagnostics, we had a [ 14% reduction ] in quarterly sales compared to Q2 last year. When you look at contribution of research and diagnostics, research contributed 20% to total Q2 sales. Diagnostics contributed 40%. As mentioned earlier, lower sales were expected following the strong Q1 2021 performance and we'll talk a little bit about research and I think when you look at the research market and our sales there, we need to take a step back because when you look at how things were pre-pandemic, we had molecular research sales. We had -- it's kind of a fluctuating business.We always had on dominating quarter per calendar year and this dominant quarter has always been related to our largest customer where we had one large annual shipment -- we had a large annual shipment of shrimp alkaline phosphatase to our main customer. And that was always in one quarter and not the other quarters that size shipment. So effective, that shipment came in Q1 this year. We've already taken that large shipment. So it was anticipated that research sales would be lower for subsequent quarters and return to pre-pandemic sales levels.So what we're seeing here is -- and we'll also see that with our other customers who are purchasing these products that those sales are pre-established and now for 2 consecutive quarters, we see that the sales patterns we're seeing from the research base confirms that our research has established with our customers in all regions here. So that's good news for us in terms of research sales coming back online. And of course, it's about driving new opportunities, too and we're seeing new opportunities now emerge here in this area.We have new opportunities in the next-generation sequencing market for our [ prelims ] in research and clinical applications. When it comes to molecular diagnostic sales, we had an extraordinary performance in Q1 and that's due to customer stocking up and it really mirrors what we experienced last year between Q2 and Q3 last year. We saw a stocking effect in Q2 and then lower sales in Q3. It is exactly what we see now between Q1 and Q2 this quarter.We've also had -- we've had some tailwinds as well here in India and India has actually struggled hard with the corona outbreak. We think we had it hard here in Europe, but India, it's been much tougher for them. So consequently, that's had an impact on our business and the business we have, those companies, they just have not been able to operate during the corona outbreak there.However, I think we do expect these sales to gradually return during the second half and the majority of sales there are related to the use of COD UNG in tuberculosis testing. And what's also interesting is that there is interest now to even expand the COD UNG into domestic corona testing and that will certainly be demanded in the future in India as well.Okay, I want to move on to corona-related sales and when it comes to corona-related sales, they had a 21% contribution to total sales. For the reasons I mentioned before, Q2 sales were lower compared to Q1 sales but what we see is the majority of sales we're seeing is reoccurring business from our main customers from a core customer base.On top of that, we are seeing new customer opportunities come in as well and that's reassuring and that's good to hear because it shows that there's still a demand for new corona tests and that's in different shapes and forms as well in terms of different technology in that lot. So we are supporting those customers who want to develop new corona test technologies.What we are seeing is also some competition within our own customer base for China. We have several of our customers who actually stocked up in Q1, are actually competing against each other for selling corona tests into Asia. So this has had an impact on us and [ certainly lowering ] demand between those customers when it comes to COD UNG. Some of those pushed sales very well, ours haven't. So that comes back down the supply chain to us.A bit more looking into the future. In terms of corona test-related sales, where we felt our SAN enzymes [Technical Difficulty] what we do expect is the demand here to level off over the next 12 months. I think we all see that the peak of corona testing is slowing down, but it will reach a new steady state and there will be a kind of new normal post-pandemic. What that level is, that will be determined -- that's to be determined, but we know that, that will level off and there will be a kind of some steady-state sales that will materialize there over time.When it comes to vaccine-related sales, we do expect these to increase, particularly with customers like ReiThera and actually, they're progressing very nicely. I think it was recently published on the 12th of July that the Phase II clinical trials, they started back in March, had a positive outcome and now they are progressing now to Stage III clinical trials and of course, we're there to support them along the way.I'd like to talk about innovation and operations. And we launched our Salt Active Nuclease 2 as mentioned at the end of the quarter and this represents the second generation of the enzyme. And what we've done, we've really optimized this enzyme. So it has a wider, broader compatibility with downstream biomanufacturing processes and that's important because when our customers manufacture viruses, their processes are slightly different and after they use SAN, the processes can be different.So what we've really done is really looked into that and make sure we have an enzyme that supports all those different processes. So what does that do for us? Well, it increases our commercial risk -- sorry, reach within the viral vector market. And beyond that, it also broadens the utility into recombinant protein production. For instance, in production of antibodies, antigens, enzymes, all these kind of different protein products.In fact, prior to launch, ArcticZymes has been working and developing an opportunity with a large international life science company who are looking to potentially integrate the San HQ 2 enzyme into their routine manufacturing process for all their recombinant protein production. So it's a very exciting opportunity, a significant opportunity for us.However, that will take time to integrate our enzyme into their process is a mammoth undertaking. It doesn't happen in weeks, it doesn't happen in months, it is something that will take a year or 2 to do, but of course, we are there and excited to support and hence why we developed SAN HQ to extend its utility into these other areas.The innovation pipeline is progressing with our products that we anticipate launching this year. This includes the MSAN ELISA kit. We're working on DNA Taq polymerase, reverse transcriptase and other products that we want to bring to the market. We also had 2 customer audits during and we really welcome customer audits here. We were audited by a prominent U.K.-based cell and gene therapy company who audited us on -- did a CGMP audit. The other was our main customer, who performed a routine audit for several of the products that it purchases from us.In both cases, ArcticZymes Technologies successfully achieved and retained its critical raw material supplier status and that's what it's all about, and that's about securing the long-term business with our customers and that's what audits are all about at the end of the day. So what we did was an innovation review during Q2 and some of this you've heard before, some of this is new.So when it comes to molecular research and diagnostics, our efforts are very much underway to build a complete offering so we can serve our customers with any enzymes they need for their workflow and technologies and we're doing this via organic and inorganic growth initiatives. So we've communicated that many times what we're doing now. In therapeutics, however, our current product offering and innovation efforts have mostly been focused on expanding the Salt Active Nuclease product line.Moving forward, we plan to expand those activities beyond innovating the SAN products. As part of future investments, the company now wants to integrate into its organic and inorganic growth plan, innovative enzymes to support 3 different areas. First, DNA/RNA therapeutics. Here, this is also about -- so this ties in very nicely with synthetic biology, DNA synthesis, RNA synthesis technologies as well, which we have been working on as well, but there's a lot more we can do there as well.It's also we're going to look more into the gene-editing technologies and start bringing in enzymes to market, but really will fit very nicely with those technologies and also other cell and gene therapy applications I talked about it a bit earlier where we're working with customers now with our proteinase to fit into cell biology, sorry cell therapy applications.And the timing is perfect for this. And we could -- since ArcticZymes has now developed the required GMP capabilities and that's important. You need those GMP capabilities in order to go down this space and we're there now. We built up that competence and skillset and that's going to be very important as we build out the enzymes in the therapeutic space. And of course, we're well-positioned to leverage the greater market opportunity there.And how do we do this? 2 things. One -- several things here. One, it's about innovation, bringing more innovation projects into the R&D pipeline, more than what we've already had on the map. We're going to start exploring in-licensing opportunities. We haven't really explored that avenue earlier but I think this is a new avenue for us and look at in-licensing opportunities there and then also as we're doing in the molecular space, we will expand M&A efforts in this direction too. So with that, I'm going to hand over to Borge and he will walk you through the financials.

[Borge Sorvoll, Chief Financial Officer]

Thank you, Jethro. And Jethro talked about in his introduction, the second quarter this year never managed to achieve kind of the same level of revenues and profitability as we experienced in the first quarter this year and in the second quarter last year but of course, after the first 6 months of 2021, revenues, profitability and cash are all improved compared to the same period last year.And also looking at the sales here. In the second quarter this year, we saw our sales decline by 36% compared to the same period last year from NOK 33 million to NOK 21.4 million. And Q2 2021 is actually on the same level now as we've seen in 4 of the last 6 quarters, with the exception of second quarter last year and first quarter this year. And it is important to consider that second quarter last year was actually the first quarter where we experienced the full effect of the pandemic when we are comparing quarters to quarters.And also, as Jethro talked about, we saw a lot of stocking effect in the second quarter last year and also in the first quarter this year. As you can see, especially last year, the market and our customers were uncertain about the supplier's ability to deliver products when the world went into a lockdown situation. For the therapeutics segment, in the second quarter, sales declined by NOK 3 million from NOK 11.3 million to NOK 8.4 million, which is also on the same level as we have seen over the last year but we are also still waiting kind of for a solid push in this market. But we are experiencing -- Jethro also talked about that potential and existing customers are prioritizing vaccine production rather than new projects.In the research and diagnostic segment, sales declined by 41% from NOK 22 million to NOK 11 million, now to NOK 13.1 million in this quarter and as most of you have suspected this decline is primarily driven by lower sales associated with COVID-19. If we take into consideration the first 6 months of the year, sales in this segment is actually up by NOK 10 million from NOK 33 billion to NOK 43 million and this is, of course, explained by a very strong first quarter this year where we experienced solid sales within the research segment.Combined sales in the therapeutics and the research and diagnostics segment for the first 6 months are also up by NOK 10 million compared to the same period last year. So we have moved from NOK 52 million to NOK 62 million this year. Moving into the COVID-19 sales and as Jethro has also talked about, this quarter gave us an estimated NOK 4.5 million in sales and this is also primarily within the diagnostics area and comparing it to the second quarter last year, we had NOK 11 million and the first quarter this year, we had NOK 16.5 million in revenues. It is, of course, significantly lower.But also, as you can see on the graph above here, it is hard to predict future sales as we experienced a lot of fluctuations from quarter-to-quarter. And it's also important to emphasize as that we do expect that sales to the diagnostics area will level off over the next 12 months as more and more people becomes vaccinated and also, but on the other hand, we do believe that sales within the therapeutics segment will grow moving forward, as Jethro also mentioned a little bit earlier in his presentation.In the first quarter this year, we introduced a graph showing 12 months rolling average sales to eliminate some of the quarterly fluctuations that we see now. And also to say a little bit more about how the company is trending and how we are performing on the sales side. And as you can see on the graph above here, we've had a continuous positive trend over the last 3 years where sales have grown constantly in basically every quarter and from a low-end in 2018 where we had NOK 7.5 million in quarterly sales, we are now averaging in excess of NOK 25 million for the quarter when we are looking at the combined sales with underlying and COVID-19 sales.We also see that the trending sales in the second quarter this year was a little bit lower compared to the strong first quarter this year, but we are still on really high levels and also I think with Jethro's guidance a little bit later on now, we do expect to see this trend to grow moving forward as well. Moving into the profitability side of the business, second quarter was not as strong as the first quarter this year and of course, as a little bit as expected as well and it gave us an EBITDA of NOK 6 million and this is also lower than the NOK 22.5 million we had in the second quarter last year.And of course, the reduction is explained by lower sales, of course, but also because we have some higher expense during the quarter compared to the same time last year. Our expenses for the quarter grew by NOK 5.7 million whereas NOK 4.2 million of this increase is explained by an accrual related to employer's national insurance contribution or in Norwegian [Foreign Language] associated with earned options for the second quarter.Our personnel expenses on a general basis has also increased as we are investing in organic growth through new positions and especially within the R&D side of the business here. And considering the first half of the year, EBITDA is on NOK 31.8 million, which is similar to what we have experienced the last year. And also, as with previous cash flow, our cash flow position remains positive with a change in cash of NOK 13.6 million for the quarter, and we have NOK 36.8 million for the first 6 months of the year, giving us now a cash balance of [ NOK 176 ] million for end of June.And as you can see from the graph here, we had a major spike in our cash during the fourth quarter last year and for those of you who don't remember, this is associated with the divestment of Biotec BetaGlucans, where we received NOK 70 million at the end of 2020 plus an additional NOK 16 million at the end of first quarter this year.And also, as we have talked about in earlier presentations, we are investing in new premises for the production department and after the first 6 months of the year, we have spent around NOK 3.3 million on this project, which includes new equipment and a rebuild of existing premises. And I think with this, I will hand it over to Jethro who will tell us a little bit more about what to expect for the remainder of the year.

[Jethro Holter, Chief Executive Officer]

Thank you, Borge. Thanks for walking through the financials there and for the outlook and -- so what we want to do is give you some financial guidance here. And I think especially with the recent volatility we've seen in calling numbers, it's a bit difficult sometimes for everybody to see where we're going. So what we want to do is to give you some context here to give you some financial expectations and some forward visibility here.Last time we came with financial guidance was back in December 2019 and at the time, we had a goal to reach NOK 100 million in sales revenues by 2023 and what we've actually achieved over the last 2 quarters, we've achieved the NOK 100 million milestone when you take into consideration the last 12 month sales on a quarterly rolling basis.If you look to the graph to the right, the 2 green bars show this. So for Q1, when you look at the last 12 months, we achieved NOK 115 million. For Q2, we achieved NOK 103 million for the last 12 months. So we're proud that we've managed to achieve that milestone 2 years earlier than we originally set out to do. But of course, it's really -- it's also about the future too and for the future, what do we expect?Well, we expect to maintain the last 12-month revenue of NOK 100 million on a quarterly rolling basis. This takes into account foreseeing quarterly fluctuations in the business. Those fluctuations are unavoidable. We're going to see that as part of the business, part of operating as a component supplier and as a B2B supplier. It is always going to be fluctuations [Technical Difficulty]that is unavoidable. But of course, we have factored in also what we expect from the corona situation as that progresses.So long-term, when it comes to revenues, we expect the growth to continue in sales and this is leveraged by the inherent momentum we have within the business already. It's also about developing the ongoing customer opportunities also, we'll drive that as well as new products that we will bring into the mix and all the other initiatives that we have ongoing. So the growth trajectory is set already.So when it comes to -- so with that -- with annual revenue expectations and our goal for 2021, our goal is to achieve NOK 120 million this year and that's shown by the gray bar here. And for the first 6 months, we've already had a good start. We're just over halfway there with NOK 61.9 million in sales for the first half of the year. So I think that is a good place to stop and we're certainly happy to open up for questions here. And anybody calling in by phone, you can mute. unmute using star 6. So thank you.

[Peter Östling, Life Science Analyst of Equity Research]

Yes. Hello, Borge and Jethro, this is Peter Ostling from Pareto. Can I start with 2 quick ones?

[Jethro Holter, Chief Executive Officer]

Please do.

[Peter Östling, Life Science Analyst of Equity Research]

Yes. Just going back to the last thing that you went through. Firstly, why -- okay, you have reached your 2023 goal already. Why don't you release a new 2023 target? That's my first question. And how confident are you with the NOK 120 million in 2021?

[Jethro Holter, Chief Executive Officer]

We are confident in that. That's why we're putting that guidance out for 2021. I think the good question is why don't we come out with a new target for 2023. I think what we want to do here, corona situation does make that a little bit difficult. So we want to see that pans out before we come out with something there. And I think that's the best answer I can give. We're sort of seeing -- we want to see how that levels off and how things are going to be there before we come out with something there.

[Peter Östling, Life Science Analyst of Equity Research]

Okay. Do you -- just a quick follow-up. Do you expect -- it was COVID-related sales was NOK 4.5 million in this quarter. Do you expect it to be on this level or lower going forward. You don't expect these spikes that you saw in Q2 and Q1 -- Q2 last year and Q1 this year. If we don't get a new resurgence of the pandemic.

[Jethro Holter, Chief Executive Officer]

Yes. It's [ auto ] I think I'm really staring into the crystal ball. As far as we see it, we sort of see it will continue to fluctuate. If you think over the last 6 months, there's been a rapid change. We've gone from -- with what's going on. You're going from lots of testing to people being vaccinated. There's a lot of shifting going on there right now and there. So I think here, as a supplier, we're at the front end of the supply chain and then as other -- then we have the people who -- the companies that sell the kits and that to the hospitals and the clinics and that. So I think here, it is a little bit difficult to predict, but we do expect them to continue to fluctuate and I think the best thing -- I think we do see in few discussions with customers. We see that it will. People are expecting that it will, our customers expect it to flatten off and reach that kind of steady state from -- in about 12 months and with that as well, but what that level is, as mentioned earlier, that is difficult to determine and hence why I think we -- any guidance we give on COVID will probably end up being wrong. So that's why I think it is -- the pandemic is an unprecedented thing and I think it is difficult to predict what that's going to be, but it will reach early stage.

[Peter Östling, Life Science Analyst of Equity Research]

Yes. Okay. I jump back in the queue then.

[Jethro Holter, Chief Executive Officer]

Any other questions?

[Peter Östling, Life Science Analyst of Equity Research]

Okay. It's Peter Ostling again. Do you mind if I ask you…

[Jethro Holter, Chief Executive Officer]

Please fire away, we appreciate that.

[Peter Östling, Life Science Analyst of Equity Research]

Within therapeutics, this reprioritization that you have seen from your main customers. When it comes to going back to what they did before or more focusing on projects related to your products? If you look in the crystal ball, how opaque is that or what can you say when that sales could come back or they go back to focusing on the projects that they used to do?

[Jethro Holter, Chief Executive Officer]

We see that sort of starting to come back online and you appreciate these companies, they've had tough decisions to make and third-party manufacturing has been very important to get some of the vaccines, particularly RNA vaccines as well getting those out. So of course, these CMOs have worked and helped to get that out. That's the right thing to do but of course, they've deprioritized things. But of course they cannot do that. They can't just push away all the -- they've got a lot of customers that they need to support and so of course, they really want to get those projects back online. And certainly, they are building up capacity. Capacity is equipment and people. So that's what they're working on. So they continue manufacturing those vaccines. But of course, that demand will not be there forever. So of course, they cannot -- they have to protect their other business. So certainly, they're picking those things back up and as mentioned in the presentation, one of them is very interesting is that they're manufacturing a third-party vaccine, well, actually, we can not make our own [ virus ]. And that's what they're doing. And of course, they're interested in using SAN there. So it has opened up opportunities for us but of course, we're also looking at working with new opportunities as well outside of those customers. So we are getting new customers in as well for the COVID vaccines but that's just part of the business. So I don't want to get carried away around COVID. I think that in terms of our business, remember, Q2, only 21% of sales was COVID-related. The 79%, which was non-COVID and that's an important business for us, which we are really wanting to drive as well. So I think it's important to get that in perspective as well.

[Peter Östling, Life Science Analyst of Equity Research]

Okay, I agree let's leave COVID for now and focus on you released a new version of your SAN enzyme just recently opening up the market more broadly towards biologicals in general outside viral vectors. Have you seen any -- what's the customer interest been within the antibodies or other biologics outside bio vectors.

[Jethro Holter, Chief Executive Officer]

No, what we've seen here is a lot of -- the reason why we developed it is based on feedback from existing customers already or people have tried it. and it worked for that stage of the workflow, but for downstream processing that they would like to see some improvements. That's what we did. SAN's used to remove contaminating DNA protein productions at the end of the day or biomolecules such as -- or viruses things like that. So you can imagine [Technical Difficulty] that's what we're focused on is to optimize the enzyme so it could be dropped into any kind of biomanufacturing process for protein production. So it fits with all the chromatography, different chromatography things such as HiTrap, ion exchange, site selection, size exclusion chromatography, all those different techniques we made it so it fits into. Also, one thing that we've been told a lot, they want a detergent-free solution as well. And that's important. So we made a formulation that's detergent-free as well. And we made some modifications to the enzyme as well and of course, that's our trade secrets. We're not going to share what those are but what we've done is we've missed that on -- we haven't been able to tap into the broader opportunity that is like the antibodies and the antigen type business and general enzyme production as well and certainly that's what we're reaching now. As mentioned, we have that large -- we're working with a large life science carbon who we are looking to integrate it into all their processes for their protein production and adding that includes enzymes and other molecules, antibodies, those types of things as well and there has been a good publication recently on the use of SAN for cleaning up antigens that are used in diagnostic setting as well. So there is a need for these nucleases and at the end of the day, that's why we have worked on making SAN H2, so we can tap into the broader market opportunity there. So hopefully, that puts a bit more kind of granularity on some of the technical advantages of this and the broader utility out there and interest.

[Unknown Analyst]

Can you hear me, Jethro?

[Jethro Holter, Chief Executive Officer]

Yes, I can. Yes.

[Unknown Analyst]

It's [indiscernible] calling. I heard for the first time you were talking about in-licensing this time. Can you talk a little bit more about that. And I think you mentioned it in connection with therapeutics and gene editing. Can you also talk more about that?

[Jethro Holter, Chief Executive Officer]

Yes. I would, so in-licensing is kind of an angle we have not explored before. Yes, we've gone to look at doing M&A or developing our own. But I think in-licensing is another road that we can look at and there are some companies that are sitting there with kind of technologies which we can potentially in-license. And when we've made in-licensing, we want to in-license and own the manufacturing and the rights to -- certain rights to how that product is taken to the market. So I think from any other companies out there that could be a nice win-win situation for us to do that. So that's what we want to do in therapeutics. And what we want to do is we want to get to the therapeutics faster. And if we do -- if we try and develop everything from scratch ourselves, that takes a long time. So I think here, you have to explore different -- you have to do things in different ways, things you develop from scratch yourself and that takes time. In-licensing is one way as well because sometimes M&A isn't the right option because there are some companies that may be one thing you're interested in and not the rest. So in-licensing is another good way to get access to those technologies. Then of course, M&A is a third approach where they -- everything is -- there's -- the majority of the company is interesting or there's assets that you're interested in. So I think we need to open our minds a bit more and explore the different avenues there. I think in a molecular enzyme -- in the molecular spectrum, molecular research, molecular diagnostics, that's much more black and white. I think that's much easier to go out and do M&A and do organic growth. The therapeutics, certainly in-licensing is certainly a much more important in that area to use the in-licensing route as well. So hopefully that helps give you some reasons why we want to look at that and why it's come on the table now.

[Unknown Analyst]

Is there an acquisition on the table for the foreseeable future?

[Jethro Holter, Chief Executive Officer]

It's certainly something. It's a very good question and one of the things we are now in what I call going to acquisition mode where -- and that's part of why we did the innovation review is that we want to now go and expand the kind of scope for also M&A. We've said for a long time, we're going to do that and now we've done that. So what we will do now is really go out and ramp up our efforts in the M&A area and that's -- and we're looking at 2 areas. One will be the molecular research, molecular diagnostics and there are kind of targets there that we've had and that we're talking to already, but of course, we want to expand that even further. And the therapeutics is something we haven't started to explore until now. So that's something we will now start working on and looking at the therapeutic space as well. So now -- right now, it really is now we're going to increase activities and now in that area and really be fully focused in doing something there. And the timing is right now, it certainly is. We can now soon be getting on planes and seeing people and that does really help if you're buying -- if you want to buy some high technology out there, you need to go and see it, and we can start doing that now. And we are also going to open our scope into the other geographies we weren't looking at before for acquisitions as well. So it's basically our searches are going to be -- our scope is going to be much more open than it was before.

[Unknown Analyst]

I see. Certainly, it's exciting to watch.

[Jethro Holter, Chief Executive Officer]

Unless there are any last questions now. I think we will basically wrap it up now. Okay, I think with us then, we'll wrap it up and I think we thank everyone for your participation at this second quarter presentation and we wish you all a great day. Have a great day. And as mentioned, we will post this -- after we process the video, we will put it on the website as well. Thank you. Have a great day.