Gentian Diagnostics ASA

OSE:GENT

Earnings Call Transcript 2022-Q1

[Njaal Kind, executive]

Good morning. Welcome to this results presentation for Gentian Diagnostics. Today, we have Hilja Ibert and I'm Njaal Kind, CFO of the company. Before we get started, just some practical info. This presentation will be recorded and will be available on our website some moments after the presentation is finished. [Operator Instructions] And then I think we should get started and Hilja will take us through some of the slides, and I will be back a little later.

[Hilja Ibert, executive]

Thank you. Njaal. Good morning. Let me start with a short introduction to Gentian. We are fully dedicated to the clinical diagnostics market, that is within health care as a part of the market, where patient samples and total patients are examined to detect disease or as well to investigate treatment hours in, et cetera. So these examinations of patient samples, which are blood, urine and other tissues are done in clinical laboratories. And our admission for those laboratories is that we aim to innovate diagnostic efficiency in order to enable clinicians who are the customers of those laboratories to take better treatment decisions. Our mission is based on a preeminent issue or problem in the market, which is that laboratories have year after year increasing sample volumes to manage this in context of offering same or in reduced resources. So one of the goals is to increase productivity.

Therefore, our focus and expertise is on shifting our biomarkers from low or in-efficient platforms used in the laboratory to the most efficient laboratory platforms, which are instruments, you can find in a laboratory. And with this, we enable the laboratories to increase the productivity, but as well as providing results of biomarkers, which had not been provided before to clinicians and to provide good biomarker results much faster to provisions. And I will give you later on a few examples what that means.

So I will start with the introduction of the company. We have a high level summary of our business plan. The business plan is based on 7 tests or reagent assays. This is how you can call it, which we have in the market, because that full established products. We have as well 2 products launched there are the market development. And we have 1 product, which is in product development. The difference between market development is the [ product ] for sales, but the products are not yet fully endorsed by laboratories or clinicians. So there is market awareness and clinical proof for work to be done. And for product development, it is in our hands and is a focus for our R&D department. Our business plan is well based on people. We have assembled an industry leading team the know-how, exceptional know-how very focused talent and skills for the areas in which we are working.

And this clinical diagnostics is a very technology-driven market, and there are many, many different technologies. And you need to master them in order to add value to clinicians as well as also the laboratories. So therefore, we have focused all our efforts to the immunoassay technology, and that is where our team is exceptionally skilled. Altogether, we have the ambition to achieve NOK 1 billion revenue within the next 4 to 6 years. And we are quite confident about that ambition as we have achieved between 2018 and 2021, an average growth rate of 27%. So I've spoken before about the assays, regions, products we are selling to laboratories. You must imagine these are little bottles in which there is a fluid. And this fluid contains what is needed for the instrument to detect the molecule which we are looking for. So when you look to the left side of this slide, you can see that we are addressing several disease groups, kidney diseases, inflammation infection, cardiac, and as well pancreatic diseases. So we are not considered to be a disease expert.

Our focus is, again, we don't see diseases, where can we add value to support clinicians to take better treatment decisions. So the list of products has quite simple name. So we are not a strong -- this industry is not very strong in marketing branding. In fact, the clinicians and the laboratory doctors prepared to understand what is behind. And therefore, the names of our products are in fact to continue, which we are detecting. I would like to give you a few examples to explain what kind of value those products bring in addition to what I said before, that they support the laboratories to increase their productivity. They add as well value to clinicians for better treatment decisions.

And for example, starting with the first product, Cystatin C, which is addressing the kidney diseases, this biomarker detect potential kidney failure earlier than the alternative product, which is currently very strongly established in the market. The value of Cystatin C is understood more and more because the respective clinical value is that by detecting the disease earlier, you can treat earlier and say much more targeted and with this presenting severe kidney failure, which leads to dialysis or the worst case leading to transplantation.

We have another example in the group of inflammation and infection, 2 products, which are addressing the same protein, calprotectin, the f for fCAL is fecal. So the calprotectin in fecal samples is aimed to detect or support the assumption that there is no inflammatory bowel disease. When the level is increased in stool samples, the likelihood of an inflammatory bowel disease is high, at the normal level, it is low. And that supports clinician to avoid unnecessary and costly and time consuming and to be honest as well uncomfortable colonoscopy.

So the same protein that detected in blood and very important application is that it enables the early detection of severe infection, which can lead ultimately to sepsis. And with this, enables clinicians to take very early on, important treatment decisions to address that infection, which can have all kinds of sources and with this reducing as well as the totality and especially as well as treatment cost of both infectious diseases. We have more products to talk about, but that would probably take too much time, but we are happy as we said before, to take questions if you have any on the application or as well on the clinical value of any of the other products. I would -- just to highlight that for the group of cardiac, we have NT-proBNP in product development, and I will have a dedicated slide on that later on.

So taking those products and trying to understand better what is the value -- potential value in terms of U.S. dollar in the market? So we have clustered together our established products, which is mainly Cystatin C and fecal calprotectin, including as well pancreatic products, et cetera. And with these products, we address a market based on our technology in the disease areas, USD 1 billion. If you go to the next column then, we have further looked into the details, but specifically, we address what kind of clinical question we are addressing with our biomarker. And that brings us to a serviceable market of USD 180 million. Our aim is to achieve a market share of 25%. And due to our go-to-market model, which is -- we are predominantly not sell directly to customers, we sell via the instrument platform providers, the companies who are installing the instruments in the laboratories or as well very strong established distributor means they take revenue.

And therefore, our revenue take from that market share is depending on the partner, 30% to 50%. The advantage for us is that we have access to very large marketing sales forces, which we, as a small company, could not afford ourselves. The growth rate for the established products is estimated to be 5% to 10% in the next 4 to 6 years. For GCAL, as this is an infection marker, the market, as you can see, alone is for the immunoassay, very sizable with USD 2 billion. Our serviceable market for this unspecific question, which we are addressing is estimated to be USD 300 million. The competitiveness of this market is significantly higher than in the other in the established products. And therefore, we assume here a 50% -- 15% market share, same revenue take and to be highlighted here that Kalorama our research company, which we do estimate the market to grow during the next 4 to 6 years by 15%, mainly based on the emerging needs in the field of infectious diseases and the support of the diagnostic industry.

I mentioned before, NT-proBNP, our cardiac marker, which we had in the -- in product development, maybe to mention on GCAL that this product is launched, but calprotectin, especially in blood is not yet fully established as a routine marker in hospitals and laboratories. And therefore, we have started to work with opinion leaders with very strategic university hospitals to demonstrate the value of this biomarker and has achieved in the meantime very promising data, food sources analysis as well awareness in the market, and there is momentum. So GCAL being an important market for us, and we have here market development efforts ongoing. NT-proBNP another important marker because we are addressing as well as sizable market of USD 1.6 billion, especially for NT-proBNP itself. And marker was addressing congestive heart failure. So with the diagnosis of congestive heart failure is USD 800 million serviceable market.

As well here, the competitive -- the competition is high means that we assume that there will be some resistance or counter actions in the future when releasing this to market. And therefore, we are reasonable with a 15% target market share. The market is as well to be -- is expected to grow similar to the established products sometimes to 8%. One of the highlights of this quarter was that we have launched SARS CoV-2 antibody, a small serviceable market. I will talk a little bit later about that. Similar assumptions, we take a higher share because we're addressing only the Nordics market, which is assumption and our -- therefore, as well, we are assuming that we take 50% of the revenue.

So all in all, we have USD 1.3 billion serviceable market and -- which is, we believe, a very solid ground for our growth ambition. Talking about that, qualifying our key strategic pillars, how to achieve this NOK 1 billion in the next 5 to 6 years from our established products, mainly Cystatin C and fecal calprotectin, we expect a growth of 20% on an annual basis or more. We aim to prove -- to continue to prove the clinical relevant of GCAL and bring NT-proBNP to market.

We continue as well to develop a steady stream of high-impact diagnostics into the market via our pipeline. And very important is that we secure our commercial channel by having at least 1 new contract with a global commercial partner per year in place. From a financial point of view, we aim to improve our gross margin from currently 50% to 60% mainly based on volume production. And the long-term EBITDA ambition is to achieve 40%. In context of our long-term ambition, what have we achieved in Q1 2022, we achieved growth of -- sales of NOK 20.6 million, which is a reported organic growth of 6%. This is somewhat lower than we had reported in the earlier quarters -- in the former quarters.

And now, we further discuss about the reasons and I'll qualify that further. There's a lot of positive momentum during the quarter to report, and therefore, I will always be honored to highlight that we have achieved 81% growth coming from third parties in our Nordic countries, especially Sweden, but since the beginning of this year, so in Q1, we have started to continue selling our products and a third-grade budget products into Norway, Finland and Iceland and that will continue as well to support our growth ambitions with our direct efforts in the Nordic market. As our headquarter is in Norway, we strongly believe we need to be close to our home customers.

We have established new customers in U.S. for the ones who had listened to us in the earlier presentations due to corona, the U.S. has been a very difficult market for us in the last 2 years because corona had avoided laboratories to take on new projects. Situation has changed, and we are very happy to see that we have immediately achieved new customers, who have started to buy our Cystatin C directly. And as we said, for targeted customers, we are doing that, but as we have reported the fourth quarter, most recently, we have as well achieved a distribution agreement with one of the top leading global diagnostic companies, a large global company for Cystatin C covering the United States. So not only our direct efforts will address U.S. markets, we have as well now strong partner in the United States who have a very good installed base over there who are happy to sell our product as part of the M&A.

We launched the SARS CoV-2 antibody assay. As informed earlier, we believe that we have to contribute to this pandemic, and there is a belief by coming from scientific key opinion leaders like Ørjan Olsvik from university of Tromsø, who has supported as well as with the development of this assay that after the acute phase of this pandemic, there will be more questions about [indiscernible] of the population. And then those products are most likely to be of value.

And that is what we assumed with our -- with the investment into this -- and our efforts into this product development. And we have announced as well early this quarter, the agreement with Siemens Healthineers, one of the top 5 diagnostic companies in the world, and we are very proud that we have not only signed the contract in Q1, we have even already rolled out this contract and first shipments have taken place already within Q1. And Overall, this partnership is very positive, and now I would like to encourage you to look into our annual report that you can see as well somewhat from our partners at Siemens. Yes. Our EBITDA will be further discussed as well by, therefore I would not like to take little more time on that one.

Last slide before I hand over to Njaal is an update on the NT-proBNP product development. As I mentioned before, it's a cardiac marker addressing especially the diagnostics of congestive heart failure. And with the development of this assay, we are addressing the needs of laboratories to shift such a high volume marker to the most efficient platforms, very well-established biomarker, high volume, and therefore, that would be mainly a productivity gain for the laboratories, mainly. But there is as well the need for standardization and harmonization of results. Currently, laboratories face that if they produce results from 1 instrument, and the same patient is tested on the different instrument, the results are different. That is not very helpful for clinicians. And as we are an instrument independent region provider, we have to be able to provide results based on a harmonized and standardized manner. So therefore, we have developed as well as part of our asset development reference method, which is aimed to report the true results.

We have as well informed you earlier that this a breakthrough innovation, we are pushing the boundary of what our technology can achieve in terms of sensitivity. So how low can you go to quantify molecules. And that has never -- nobody ever achieved. And based on the nature of such product development, we had more challenges than expected. We had reported earlier about that. Within Q1, we have made progress on the challenges. And currently, we are focusing now on interferences, which is a common problem in -- during product development. And our testing has revealed currently 2 sources. And as we speak, we are working on the potential solutions to eliminate the effect of these sources, but we are screening as well for additional sources just to be sure.

We have as well in Q1, experienced an increased interest from potential partners and which is encouraging for us as a commercial potential behind that product. We had -- I would like to remind you as well that when we have finalized the optimization phase, means the product recipe is defined, there is another 6 to 9 months before we can finalize the development because the recipe needs to be verified and validated and validation takes now as well more time because there is a new regulatory in place, the IVDR as of May, every new product in the market has to follow that regime. And that will take now 6 to 9 months in comparison to about 1 month in the time before the IVDR came into place. This is what we have to take as well into account.

And last one is, I would like to inform you about a good practice. We have technical challenges, and we have strong belief that we can find solutions against them. But obviously, as well as the option to push a product back, not always forward, but backwards as well into the phases in order to find solutions to problems, which you normally cannot find in the so-called optimization phase. You need different kinds of skills and talent and technology. And therefore, just as an information for you that we obviously consider as well the return of the project to the exploration phase. And with this, I hand over to Njaal.

[Njaal Kind, executive]

Thank you, Hilja. I'll go through the financials for the quarter and quantify some of the numbers. So today, we report sales revenue of NOK 20.6 million, an increase of 5% compared to the same quarter last year. Adjusted for currency, we add another 1%. So our organic growth is 6% in the quarter. Of the revenues, which mainly consist of tax breaks and grants showed a decline in the first quarter and I will come back to some of the reasons for that. Total revenues of NOK 23.1 million in the quarter. Cost of goods sold is up NOK 1 million. So that means that we have had slightly negative mix effect in the quarter. While the overall fixed cost has been in line with what we saw last year. EBITDA of minus NOK 4.2 million compared to minus NOK 2 million last year and an operating result of minus NOK 6.3 million versus NOK 4 million last year.

Looking a bit more granular view of the revenues. First, you would see that on a geographic level, we had good progress in the U.S., although the numbers are still small. We have added almost NOK 1 million in revenue compared to last year. This is in Cystatin C and it is a result of turning on gaining new customers in the U.S. and these are direct business, so it's not related to the distribution contract that we announced, but the advantage with direct business is that you have an immediate effect when you make the sale. In Europe, we also increased the sales by NOK 1 million.

In Europe, we have seen very strong development for Gentian AB, and we have also seen a good development for some of the smaller products like CCRP. In Asia, we see a decline in sales, and these are some of the quarterly variations that we speak about. We are subject to bulk orders, especially in China, but to a certain extent, also for fCAL in Europe. So if we look at the product split, we see that Cystatin C is at the similar level as last year with NOK 7.5 million in revenues. If bulk orders have come in at the same level as last year, we would probably have seen this number, NOK 2 million to NOK 3 million higher.

That means that the underlying kit sales is developing cost [ opinion ], sales is comfortable where we show a quite strong decline in revenues compared to last year. It was heavily impressed by both quarters. Kit orders or kit sales increased in fact by 23% this quarter compared to the first quarter in 2021. And as you can see, the order books there, that's where we put the smaller products and also Gentian AB. Gentian AB has revenues of NOK 2.8 million. So that's a little bit less than half of that. The others are CCRP and fPELA are both doing quite well, but no numbers in absolute numbers.

If you look at the OpEx on the left-hand side you see some bars. We are now at an OpEx level, which is more towards what we would characterize as a normal level. We had one-offs in quarter 2 and in quarter 4 last year. So this quarter is more representative for the run rate in operating costs. But we are still growing, and we are aiming for higher growth in revenues. And to support that, we will see FX increasing as well. I said I'll come back to the -- of the revenue, so the decline in other revenue must be seen in relation to the R&D expenses. So in quarter 1 In fact, SARS-CoV2 the assay that we launched in quarter 1 was -- it was handed over from the R&D by the end of quarter 4, and we had to use quarter 1 for regulatory documentation, and we will get a lot of tax grants, tax breaks and grants for the remaining. So we have had a reduction in R&D expenses, and that results in a reduction in other revenues.

So these 2 items are connected. I've already commented on the operating expenses. So you see here that in the quarter 2 and quarter 4, we had some [indiscernible] and we see the cost level now as normal. The cash position. So compared to the EBITDA, we have a stronger cash reduction in EBITDA, that is related to changes in working capital. Those changes go a bit up and down. And I think it's fair to say that in quarter 1, this change in working capital was on the high side. So we are working to -- for different quarters going forward where we have less of a buildup in working capital. Having said that, we still have NOK 100 million in cash, and we characterized that as a strong cash position.

That was my last slide, I think. So I will hand the camera back to Hilja to make a summary outlook presentation, and then I will be back for the Q&A.

[Hilja Ibert, executive]

Thank you, Njaal. Yes. To summarize. That is held on what we have achieved during the last quarter as well as in the last years in our commercial partnerships strategic goals. We have, in Q1, announced the distribution agreement of GCAL with Siemens Healthineers. The initial rollout was in Europe and then further registration in other countries to be followed. In earlier years, we had achieved long -- already the long-lasting partnership with Beckman Coulter on Cystatin C. And as well, not so long ago, our partner, Bühlmann, has achieved a contract with Roche to offer the fCAL assay on their instrument platforms and as we see the rollout in this program is ongoing. As I mentioned before, for Siemens -- the Siemens contract took obviously many -- a long time, let's not say exactly how long, but it was quite a long time.

And they've enabled us to create a very good relationship and prepare the launch as well than to be most efficient after the contract has been signed. And therefore, definitely, we consider a highlight is that the rollout has started in the sales force as the contract was signed and first shipments has happened to customers. And as the first quarter events, we have been able to achieve this distribution agreement with -- on Cystatin C as well with a global diagnostic company. Unfortunately, we have not the agreement to use their name in public and therefore, cannot add this logo. This will happen most likely more often. And over time, we may change the lines, but I have worked with companies before, and I know that there are strategies -- every company has different strategies on public usage of their brand. And that is what we have to respect.

More to come on that. It's one of our strategic goals, and we are -- has made this achievement so far. So what can you expect until the end of this year. The established products, we aim even though we have achieved already our remaining goals per year. We achieved -- we aim to achieve more contracts. At least, we need to prepare signature of contracts as well for the coming years as these are multiyear negotiations and work. We have as well a lot of focus on the readiness for the new IDVR regime, the regulatory regime, which is significant for the entire industry and the milestone we can report already that we have achieved early Q1 an important milestone with the outlet of the notified body.

And with GCAL, we continue to aim to secure additional commercial partners and rollout in Europe. We continue as well our market development efforts, mainly based on scientific proof of development with strategic universities with focus on severe infections and respective diseases like sepsis and COVID-19. And with this as well the endorsement of additional opinion leaders as we have now already established a good level of endorsement and support from the opinion leaders especially in Europe.

For SARS-CoV2, we have the commercial launch executed in March 2022, so as well as Q1. And we focus currently on the Nordic countries, have as well early interest, obviously, from other regions. And -- but as here, we are very much dependent on the collaboration as well as the awareness of government programs, we focus these as our personal effort of the Nordic countries. And last definitely not the least as [indiscernible] team, we work on the remaining challenges. This is the focus of our R&D team. And we published on the reference method for the standardization within this year. That's the goal. And of course, continue to secure endorsement from key opinion leaders like our Scientific Advisory Board and as well additional interest from commercial partners.

With this, I think we are ready for Q&A.

[Njaal Kind, executive]

We have a few questions that has come in. And I think we should start off by speaking about COVID and SARS-CoV-2. It seems to a large extent that in Europe and where we are here in Norway, it seems like we treat COVID for being over, but that is far from the case, right? And we see now when you look to China, we see again lockdowns, restrictions et cetera. And the first question in this relation is that do we see any effect on the sales from -- into China because of COVID?

[Hilja Ibert, executive]

We don't see an effect into China because what we see there is, obviously, the -- you mean of our other products. I thought about the SARS-CoV-2, sorry. that is operations team, why don't you say that?

[Njaal Kind, executive]

So I think we haven't seen any effect on demand into -- coming from China, but it is a challenge to book actual shipments and to have a guaranteed crude freight to the end customer. So that is something that our operations people are working hard on. And so far, we have not encountered any issues, but it is not easy. So demand is okay, operation wise more challenging.

Speaking about SARS-CoV-2, can you elaborate a bit about some we say we launched the product, maybe now available for sale. Do you think you can elaborate a bit about what are the marketing activities? What are we doing in order to get this product, et cetera?

[Hilja Ibert, executive]

Yes. Yes. As I mentioned before, we focus our efforts as they have limited resources on the commercial side to the Nordics market. We aim to ensure awareness of the public health decision makers and other high-level decision makers for such a program even in Norway and as well in other Nordic countries. We will leverage as well our good market piece resources, which we have in Norway and Sweden to sell this product directly to make laboratories aware that this product is available. And as soon as demand is increasing, there is a certain level of volume which triggers laboratories to be eager to shift to the high-volume platform that they know that is available because nobody else has [indiscernible] to analyze.

[Njaal Kind, executive]

Okay. So the first part here is the -- in the Nordic market as we said. What do we think about Europe in general for this asset?

[Hilja Ibert, executive]

We can sell as well of course to other European countries. We have a registration for this. And we have early signs of interest from other markets, which we are following up. Obviously, that would not be in a direct sale of what that would even be a distribution model.

[Njaal Kind, executive]

All right. Thank you. Moving on to Cystatin C, I'm looking at the screen or here when we get the questions in. And the distribution contract that we announced recently the Cystatin C, the question is, is that contract geo-specific for the U.S.?

[Hilja Ibert, executive]

It is in fact, yes. Maybe just to give a little bit of a background on that. The company was -- as a team, is focusing on the united fleet in that company has a strategy of offering the best of possible products into the market. And our Cystatin C assay is known to be the best or at least one of the best and therefore, that can trigger the interest of this [indiscernible] something to have a distribution contract.

[Njaal Kind, executive]

And a follow-up on that, would there be any immediate [ negative ] effect from this contract? Or will there be, let's say, a time before this will materialize...

[Hilja Ibert, executive]

Yes, there is time to develop certain operational structures like how to ship, where to ship, built a warehouse, which has been already an effect on our sales. And that could have as well at the start a little bit more and then later on selling it off takes more time. So we will have an effect from starting a new distribution contract with a large distribution partner. And when we start to see the first sales that is less unpredictable than these direct customers. It will take more time because we have fully processes in place, but it will not take months or year time to look to you -- you are working on that...

[Njaal Kind, executive]

Yes. So there is, of course, a lag between making such a contract and rolling it out and to a certain extent, we will push as much as we can. But at the end of the day, it is our partner who were selling it, and it's always a fight for attention when you have these big partners. So we will do our job. And hopefully aim to turn that into revenue as soon as possible. But this is not like direct sales, it will take a bit of time without us being able to specify how much time that will be.

Looking to GCAL specific questions. Are you in negotiations with potential partners for GCAL?

[Hilja Ibert, executive]

Yes, we are. As I mentioned that as a milestone for 2022 is to establish after we have now these new commercial partners. As I mentioned as well before, those negotiations take time. And can you find them in '22 or in the years to come, that is definitely out of our control, but we have negotiations on going.

[Njaal Kind, executive]

[Operator Instructions] A few number-related questions. And I can perhaps answer a few of them and one is, are we hit by inflation?

And the answer is not yet. We haven't seen any extraordinary or bigger-than-expected price increases on our material. But we expect to see that later. And of course, we are working at our end to try to mitigate the effect of that. So -- but the numbers, the cost base we reported in the first quarter is not particularly projected to inflation.

I see other numbers. So we make a question up here. That was -- does the company expect the revenues of grants and tax breaks to be similar in 2022 compared to 2021?

And I think it's fair to say that the -- of the revenues that we achieved in 2021 were on the high side. For instance, we have, I would call it, a special grant related to the development of a SARS-CoV-2, so that has been booked and the project is completed. So that plans is, of course, not coming back. So on that alone, I think it's fair to say that we will see lower of the revenues this year than what we have seen last year. However, we are not able to quantify it because we are continuously working and applying for grants on all our R&D projects. And the R&D projects are not only related to product development they are also related to process development, technology advances, et cetera. So there are a lot of programs that we apply for and the -- how much we end up being granted, that's always a big question.

Let's say, we have a few other questions coming in here. NT-proBNP assay are you confident that you will solve the technical issues for NT-proBNP? That's the question for you Hilja.

[Hilja Ibert, executive]

Yes. And I encourage you to read as well as in Q1 report that we have seen a little bit more in details about the measures we take to solve the security identified interference challenges. And yes, as I mentioned before, I'm confident that we achieved the finalization of the optimization phase. And that's the nature of Diagnostics. And even by if not, we know what we have to do is we have to look into other technologies when we use to find solutions to take as a challenge. But as we see today...

[Njaal Kind, executive]

And speaking in the pipeline here, when do we expect to announce the next new marker?

[Hilja Ibert, executive]

I believe in Q4, and we have shifted 1 pipeline project into the group process phase, and our policy is to announce new products, which are then officially in product development as soon as they finalize the concept.

[Njaal Kind, executive]

We have a follow-up question to the inflation question, or the inflation answer. The question is, to what extent we are able to compensate higher cost in our prices. And in some contracts, we have fixed prices in other contracts.

We have a lag when it comes to -- when the prices can be increased, and of course, for spot sales and direct sales, we have a list price and the list prices we can change as we want. So for some of the products, we are able to increase prices. For others, it will take -- it will be bit a lag.

Yes. I'm looking again at the screen here. Yes. So here we have a question back to Cystatin C in the U.S., the first sales to new customers for Cystatin C in the U.S.

especially in the Q1 sales If there are all these bulk sales, do you expect sales to grow during the year. So these are not bulk sales, these are kit sales. In the U.S., we should ready-to-use product if we have 510(k) clearance. We expect -- difficult to say how much growth you get on the new customer or if they are already at a volume that you can expect. But we are working to gain more customers in the U.S.

[Hilja Ibert, executive]

And let me speak about customers, these are the end users of the laboratories, selling to a distributor commercial partner are then the instrument platform providers. And that is a different, yes, volume and it takes as well longer to turn them on.

[Njaal Kind, executive]

Going to the outlook part here. We are saying that we still expect strong growth for the year as a whole and lead to much stronger growth than what we report for Q1. And the question here, how can we be confident that sort of the long-term ambition here is in fact when it is not reflected on a quarterly basis?

[Hilja Ibert, executive]

So one is, of course, under strong understanding if there has been any change in demand, which we understand. And an example was the sales of fCAL kit sales, while we see fCAL being negative for [indiscernible] the kit sales itself, I mean the end user buying as before. So we are not aware of any reduced demand. And as Njaal before, we have quarterly valuations when our larger commercial partners order bulk or larger kit orders, and so when you look into Q1, or I would say even the first half of '21, that was particularly strong. And that can happen when you have many bulk orders coming together and the timing in the next year might be different. And for Q1, we can say they have been different. But we are confident that those orders will come.

[Njaal Kind, executive]

Thank you. We are now at the end of the Q&A session. We have answered out all the questions that has come in from the audience. So with that, I think we can at wrap our presentation. Any concluding words?

[Hilja Ibert, executive]

Well, thank you very much for your attention today. And please feel free to reach out if you have any additional questions or afterthoughts, you know where to find us. And I can say your name as well, they are looking forward. Seeing you at least, we are listening soon again at the next report or as well in person whenever there is need.

[Njaal Kind, executive]

Thank you.