Biotage AB

STO:BIOT

Earnings Call Transcript 2022-Q4

[Operator]

Welcome to Biotage Q4 Report for 2022. [Operator Instructions] Now I will hand the conference over to CEO, Tomas Blomquist; and CFO, Maja Nilsson. Please go ahead.

[Tomas Blomquist, executive]

Thank you very much. Good afternoon, everyone, and thank you for joining us on the call. I'm Tomas Blomquist, President and CEO of Biotage, and I'm here with Maja Nilsson, our CFO; Lars Backman, our Chief Legal Officer; and Olof Nord, our Executive Vice President, Business Development.

I will first give a short overview on the quarter and the year, and then I will share some exciting news with you. After Maja has gone through the Q4 and full year financial results, we will answer your questions.

So let's start with our executive summary. We have reported very strong results with 8 straight double-digit organic growth quarters and 5 record quarters in a row, and we can now conclude that 2022 was a record year breaking with SEK 1.5 billion milestone achieved in net sales and more than SEK 300 million in EBIT.

However, we are disappointed as we ended the year with our weakest quarter which did not fulfill our expectations, both on top and bottom line. The minus 0.8% organic growth in the quarter was offset mainly by 2 reasons: the reduced COVID-19 vaccine business in our Scale Up product area; and a showdown at our biggest CRO customer in China. The profitability in the quarter was negatively impacted by the challenges in supply chain, energy crisis and inflation, but also to our planned transformation and acquisition, which I will soon come back to.

When looking at our regions, Americas again delivered another record quarter, and we also saw good growth in APAC. And from our product areas, we saw the highest growth in Analytical Testing, Water & Environmental Testing, and in Biologics & Advanced Therapeutics. I'm also pleased to say that we had a positive cash flow from operating activities, and again, a healthy balance sheet development.

Before Maja dives into the Q4 financial results, I would like to share some exciting news with you. We have today entered into an agreement to acquire Astrea Bioseparations, a high-growth chromatography solutions provider from Gamma Biosciences. This is a transformational deal that we've been working on for a long time, and a combination that makes us a global chromatography platform company.

It has taken us 25 years to be a world-class chromatography leader within small molecules, and now we are naturally moving into the large molecule chromatography area. The acquisition is a strong fit for both companies. It strengthened our customer workflow solutions. It extends Biotage chromatography platforms into the higher growth and larger bioprocessing segment, all the way to the commercial phase with the recurring consumable base revenues.

We will achieve higher quality with increased exposure to leading Biologics & Advanced Therapeutic customers. We will also get complementary competence from Astrea, improved geographical spread and increased manufacturing capacity.

And thirdly, increased innovation. We will have a rich near-term pipeline of new product launches across chromatography resins, columns and nanofiber-based membranes as well as higher product margins.

Some quick facts about Astrea Bio. Astrea's revenue in 2022 was GBP 23.2 billion, and of that, around 90% are coming from reagents and consumables. The revenue growth prior year is over 90%, and the new total addressable market is around USD 10 billion. The high barrier to enter process scale chromatography in the regulated pharmaceutical segment, combined with strong demand for downstream solutions, positioned us together with Astrea for long-term growth.

The company has over 150 employees, a highly engaged and competent team with decades of experience with facilities located in Canada, U.S. and U.K. What we can say when looking at these numbers is that Astrea is an extremely attractive company that is well equipped for the major advancements taking place in the biopharmaceutical market.

Here, we get an overview of Astrea's differentiated best-in-class technologies. Astrea is a leader -- leading supplier of chromatography resins, absorbents and columns as well as novel nanofiber-based purification technologies to the life science industry. In fact, Astrea supplies chromatography resins for more than 21 FDA and EMA approved manufacturing processes. Astrea also has a strong R&D capability and high quality and disruptive technology platforms driving a robust product pipeline.

Our long-term strategy has been to increase our revenue coming from the Biologics & Advanced Therapeutics business segment. And with the acquisition, revenues coming from this segment are expected to grow from 3% to 27%. Also, the aftermarket split will be greatly improved. After the acquisition, the system sales are 36%, and the aftermarket sales 64%.

With that, I will hand over to Maja to speak about Quarter 4 and the full year '22 figures. Maja?

[Maja Nilsson, executive]

Thank you, Tomas. Okay. So let's start with looking at our customer focus areas. So in this quarter, we are seeing the highest reported growth ever from our Red Tech area, where the successful recent launch of our Extrahera high-volume workstation is contributing. Americas is the biggest market leading the way in Red Tech, but we see strong development also in APAC and EMEA.

In Blue & Green Tech, the growth is mainly coming from Americas with the environmental customers and the food, agriculture customers.

Within White Tech, we could see the continued strong development from Biologics & Advanced Therapeutics, offset by a negative development in our Scale Up business, after COVID-19 vaccine development was reduced.

Looking at our sales per product area. The impact from the reduced COVID-19 vaccine development is visible, impacting the sales development negatively within our product area, Scale Up. As the Scale Up business is project oriented, it tends to have ups and downs. Important to state that the underlying business, when excluding the COVID-19 impact in the previous year, is actually showing a steady growth.

The strongest growth is yet again coming from our product area, Biologics & Advanced Therapeutics, where the success of the launch of our PhyPrep system for automated plasmid purification, continues to drive growth.

Our product area, Water & Environmental Testing has the strongest reported sales ever in this quarter, with Americas being the strongest market. We're also very pleased to see the strong development of analytical testing in EMEA, delivering the strongest growth in this product area in Q4.

So let's look at the aftermarket sales. The service business is growing nicely, mainly in EMEA, partly coming from the expansion of the recently acquired oligo business. The successful recent product launches are supporting the healthy system sales development. Our automated plasmid purification system, PhyPrep, together with our Extrahera high-volume workstation, are contributing.

The strong growth of consumable sales that we have seen in this year was negatively impacted in Q4 by the slowdown of the scale of COVID-19 business. Once again, important to state that the underlying consumable sales when excluding the COVID-19 impact in the previous year, is still growing.

Let's look at our regional sales. We're pleased to see that Americas continued to show strong sales growth with yet another record sales quarter. As mentioned before, the reduced COVID-19 vaccine development is negatively impacting the EMEA region. And in APAC, we are seeing the impact from the slowdown at our biggest CRO customer in China, whereas other markets in APAC had a strong development in the quarter, especially India.

So, Q4 tends to be the weakest quarter historically for Biotage when it comes to profitability, and this quarter was no exception. In the fourth quarter, our profitability was negatively impacted by the continued supply chain challenges, inflation, and also an unfavorable product mix as a result of the reduced COVID-19 related sales in Scale Up, which has been a high-margin segment for us. To offset the increased prices in our supply chain, we are implementing step-wise price increases for our customers. However, the sometimes dramatic price increases for purchased components, has created a gap to our own price increases, which is short term impacting our profitability negatively.

At the end of 2022, we rolled out our common ERP platform to our Chinese entity, improving internal visibility and standardization. We have revised our allocation of freight costs for our Chinese entity, resulting in a negative effect on gross margin in the quarter.

We have continued to build on our winning team, mainly investing in further commercial capabilities, still the investments having kept at a healthy level. OpEx is negatively impacted by currency impacts from the weak Swedish krona and the acquisition-related expenses. And also, in this quarter, for the first time this year and opposite to Q4 last year, the currency impact in other operating income was negative, coming from the revaluation of receivables and liabilities. Measures are taken on investments and expenditure to mitigate the short-term profitability impact.

In the quarter, there are transaction costs of SEK 15 million related to the acquisition of Astrea Bioseparations. That's included in OpEx. When adjusting for these costs, the adjusted EBITA improved 4 percentage points in the quarter. Our adjusted EBITA margin is still improving for the full year, and quite significantly when excluding the one-time impact of the SEK 15 million.

On this slide, I would just like to briefly comment on our cash flow development in this quarter. The cash flow from operating activities was somewhat lower in this quarter than previous year. The main reason for this is the lower operating margin. It is, however, offset by positive contribution from working capital, mainly reduced accounts receivable, and a positive momentum on the inventory build-up.

And most importantly, the cash flow is still positive and healthy, putting Biotage in a good position to take on 2023 and our future success. Back to you, Tomas.

[Tomas Blomquist, executive]

Thank you, Maja. Now we are ready to answer your questions.

[Operator]

[Operator Instructions] The next question comes from Mattias Haggblom from Handelsbanken.

[Mattias Häggblom, analyst]

A few questions, please, and I'm starting with the acquisition. I'm curious to better understand the bridge for our sales and EBITA from the base in 2022 to the projection for 2025. It implies a sales CAGR of close to 50% for the next 3 years. So what kind of visibility do you have for that? Is it built on existing products and consumables linked to those growing rapidly in volume? Or is it built on an assumption of a lot of new products coming up on stream, generating the growth in consumable sales? That's my first. And I have a few follow-ups, please.

[Maja Nilsson, executive]

Yes. So I can start on that one. I mean, we have had a very thorough due diligence process for this acquisition. So we have been looking at the numbers and had substantial discussions with management and key individuals. So we have had quite a good visibility into the forecast. However, it is a forecast, I want to stress that, of course. But we do have confidence in that. We have confidence in the management team and their ability to make a turnaround of this business, as they are doing. And the performance that we have seen in 2022 is really supporting that. So there is quite some confidence in that area.

[Mattias Häggblom, analyst]

but I'm not fully clear on if it's mainly existing products growing with existing customers or if it's built more on new customers coming online with launches that drives the volume? I'm not expecting any numbers, but perhaps the proportions, or at least some kind of qualitative comments.

[Maja Nilsson, executive]

Yes, I can tell you that, well, they have been both expanding -- I mean, they are looking at a geographic expansion that is also creating room for growth for the business. This management team has been able to attract new customers coming in. We also see a very impressive R&D pipeline, and launches have been made. So, also new products contributing there, and a very exciting new technique with this nanofiber. So I think that is -- there are quite a few factors behind this high growth.

[Mattias Häggblom, analyst]

And then I'm curious on the -- to the extent there is overlap on the customer side with existing Biotage and Astrea Bioseparations. If so, what proportion are from customers that you already have a relationship with? Or to what extent are these some -- new customers? Any color you can give on that?

[Tomas Blomquist, executive]

Well, overall, we're seeing strategic benefits from synergies between the 2 of us. So we will obviously get some quality, high-level new customers. We have started to enter the space within biomolecules through the acquisition of PhyNexus, and now we will get a rapid acceleration through the team of Astrea. So it's going to be highly complementary, both from competence as well as from geographical spread.

[Mattias Häggblom, analyst]

And then a final one before I drop back in the queue. A question on existing Biotage. I know you don't guide on the 2023 full year, but anything you can say to help us think about the next couple of quarters, any pulls or pushes or if the new base will scale up in this quarter is the right way to think of the growth for that business going forward? Anything you can say to help us navigate the next couple of quarters would be helpful.

[Maja Nilsson, executive]

Yes. I mean, of course, we don't provide guidance, and we are very cautious on that. But I think what we are seeing, as I mentioned before, the Scale Up business that is project-oriented. So there are ups and downs. So there are fluctuations always, and have always been in that business, but -- and once again, the underlying -- when you extract the COVID-19-related sales, it's actually growing steadily. So there are ups and downs. And I think we should look at this as a short-term fluctuation.

[Tomas Blomquist, executive]

Yes. So we're very confident in our underlying business.

[Maja Nilsson, executive]

And of course, I'm being cautious. I mean, we don't know for how long. So I mean, it's a short-term fluctuation.

[Operator]

The next question comes from Karl Noren from SEB.

[Karl Norén, analyst]

Couple of questions from my side as well. So if we start on the acquisition. I mean, first one on -- if you say anything about the pipeline of acquisitions in Astrea as of now, I guess they have been -- recently done an acquisition. Do they have any more acquisitions in the pipeline that you expect to close during this year? Any comments on that would be helpful.

[Tomas Blomquist, executive]

Well, I mean, we're not, yes, commenting on these things. But obviously, I mean, you will see now to combine teams with great ambitions -- and you've heard us repeatedly also speak about our organic growth agenda as well as the inorganic growth agenda. So time will tell. We will -- at the end of Q2, we expect this to happen, the formalization of the 2, and then we will kick off on the exciting journey together. So more news to come.

[Karl Norén, analyst]

And then I have a question regarding the transaction. What's the structure -- the transaction structure auction or were you doing this by yourselves? Or how was the transaction structured?

[Lars Backman, executive]

This was not an auction. This was an exclusive negotiation. We had exclusivity over a time period.

[Karl Norén, analyst]

And then I have a question on the Astrea's customer base. I mean how much is within, let's say, drug discovery or research and then more production late-stage commercial customers?

[Tomas Blomquist, executive]

Well, when we're looking -- of course, we will get to know more insights. We've had a thorough due diligence that, yes, Maja referred to. But what we can say is that it's a fairly balanced approach. What we're extremely happy with is that, we build a world-leading position within flash chromatography in the basic research, drug discovery area. And now we will get the advantage finally to move more into the Phase 1, 2, 3 and 4 and even into commercial phases, and this will be a break in combination between the 2 of us.

[Karl Norén, analyst]

And then just some questions on the quarter. I mean, first quarter for quite some time, where you report negative organic growth. I'm just curious a bit on how long do you see this continuing? Because, I guess the comparable numbers are quite tough, in my view, at least, in upcoming quarters as well. So any kind of color on that would be really helpful, because I think there's quite some uncertainty out there, given that you don't really have been saying how much has been COVID revenues, et cetera.

[Maja Nilsson, executive]

Yes. I mean -- well, basically, in 2022, of course, when you look at the Scale Up business, a significant part of that growth has been coming from the COVID-19 business, and we don't know the outlook of that slowdown exactly. So, I mean -- but it is -- as we said before, there is -- the underlying business in Scale Up is growing steadily. So -- and we've always had these ups and downs within Scale Up, so not too worried about that. It's a short-term aspect, I think.

[Karl Norén, analyst]

And on Astrea Bio, in the quarter here, it seems like it's -- I mean, it's not really growing. What can you say regarding that business? Because -- I don't know, but in my view, it's not really been performing according to plan, maybe, or a bit lower than my expectations, and I think, you are as well when you did acquisition. Can you just comment anything on the outlook of that business? Would be helpful.

[Tomas Blomquist, executive]

Yes. So if you see the reported numbers, as you see diagnostics reporting, yes, 17% on the quarter. We are happy with the development when it comes to, yes, building new customer pipelines. And it's somewhat difficult also to reflect on this quarter because we also made the acquisition in the midst of the previous quarter. So there can be a lot of shifts back and forth. So I think it's more fair to catch up going forward from 2023. And we're very happy with the robust build-up of new customers.

[Karl Norén, analyst]

And then just one -- last one from my side. It's on the cost side here going forward. I mean, if you see a year now in 2023, we see a lot of, let's say, competitors, but there are -- similar companies in the same sectors, et cetera, are guiding for lower growth. I mean, what can you do in terms of cost initiatives to keep the cost level on a tight level? Or are you now expecting to continue to invest a lot? Or what can I say, how much will you prioritize in a growth versus margin in a, let's say, weaker markets where organic growth is a bit lower than your target of 12%?

[Maja Nilsson, executive]

Well, as always, Tomas and I have a very clear profitability focus. So that will continue. Of course, we shouldn't be too worried as a short-term negative dip in sales. We are confident in our business coming back strongly in future. But, of course, as I mentioned before, when we have these types of dips, we take measures and look at our costing. So we're doing that, of course, actively. And we will continue to invest towards future growth, but we will do so also with that profitability in mind, as always.

[Tomas Blomquist, executive]

And also I know that some -- a lot of -- money was also built into the exciting news -- the transaction news that we had foreseen for today. So we're a proactive company and we're investing for the future. If there will be hiccups, we will take proactive actions.

[Operator]

The next question comes from Lars Hevreng from Danske Bank.

[Lars Hevreng, analyst]

How would you -- in terms of the acquisition, how would you characterize the revenue visibility into that acquired chromatography business compared to the chromatography business you have? Is that -- does that differ in any way, depending on client breadth or client portfolio?

[Tomas Blomquist, executive]

No. This will be a clear one. So you will see when it happens, which we're excited and looking forward to. You will see it's built into the Biologics & Advanced Therapeutics. And now you probably kind of understand why we also proactively build a new structure around it, because here, you will see that we're moving from a 3-percentage company to a 27-balance company in higher, faster growing areas. So the complete Astrea business will be reported within Biologics & Advanced Therapeutics.

[Lars Hevreng, analyst]

But I was more thinking about the acquired business, their revenues. Do you have longer-term visibility into their contracting, I mean, their invoicing, so to say, than your existing business?

[Maja Nilsson, executive]

Yes, we have. I mean, in the -- as I mentioned, very thorough due diligence we have performed prior to the acquisition. We have looked into all of the customer contracts, existing contracts and any future and renegotiations. So we have a good visibility into that.

[Tomas Blomquist, executive]

And we're also very pleased we're seeing the new customers coming in and the way how they have addressed also contracts going forward, which is also part of the huge success of the 90% growth that we've seen on the previous year performance.

[Lars Hevreng, analyst]

And with the kind of growth that you're projecting from these new businesses, I guess, your -- looking 1 year ahead, your -- and this is going to be an organic growth, I'd say this, your growth from this almost going to be met. Is that how we should see the contribution here?

[Maja Nilsson, executive]

We never provide that guidance, Lars. So, I mean, you can look at that projection for 2025 and do some calculation backwards, but we don't provide that guidance.

[Lars Hevreng, analyst]

And then just on your comments, again, also this quarter on the supply chain and the gross margin challenge. I mean the inflationary environment, I guess that's -- for many companies, it's a pretty new thing, so to say. And I guess, should we see when -- how should we see about the timing here and things improving? Should we see some kind of structural effects or should we only see as this more near-term effects, I would say?

[Maja Nilsson, executive]

Yes. When it comes to supply chain issues, I mean, that -- we have been living with those ever since the pandemic hit us, and then intensified with the Ukraine war. And I think what we can say about that is that, it has been shifting and changing all the way in the past. And in some areas, we are already starting to see some light at the end of the tunnel. So there are some improvements in some areas. But as for other areas, it's hitting us again with new issues. So I would say it has been a bit cumbersome to foresee the developments in this area. But giving you some guidance here carefully, but I think that, during this year, we will see some relief in that area, but we haven't done so yet.

[Operator]

The next question comes from Josefine Persson from Nordea.

[Josefine Persson, analyst]

So first question is on the acquisition. So it sounds like you're being quite confident regarding the sales growth for the business. So can you also please explain the main driver behind the steep margin expansion for the acquisition as well?

[Maja Nilsson, executive]

Yes. I mean, first of all, yes, we feel confident. We have done a very thorough due diligence that I mentioned now, sometimes. But of course, it is a projection and a forecast, so, just to state that. On the margin development, well, of course, we are seeing that, and we have made some really nice investments previously into their first visibilities and production capabilities that we will get the upsides from in the coming years. There is also a lot of great discipline applied in the sales area with the customer contracts where we see some really nice ASP improvements. And then, of course, as you have read, Astrea acquired Delta also just before this finding. And that is really something that will drive margin improvement as we are consolidating a supplier. So those are maybe the key areas.

[Josefine Persson, analyst]

And the second question is still on the acquisition. So yes, you expect to grow sales by around 50% CAGR. And can you please explain to us how you expect to grow faster than the market and gain market share from very big and established competitors such as Cytiva, which is also offering a complete workflow within bioprocessing?

[Tomas Blomquist, executive]

Yes. And yes, you see that we're, yes, shooting for high numbers that is, yes, part of the market intelligence. But again, yes, we are confirming what we've tried to say in the intro and Maja's comment. I mean, this team has invested a lot in both infrastructure and personnel. So added a high-caliber team in place, starting with management, adding great sales and R&D efforts. Huge plans to reach out in an untapped market, U.S. and also the APAC team where we are strong. So there are -- we see this as a classical turnaround case where they have just started that journey. And with the infrastructure and team of us, we will even realize, yes, additional strengths combined. So we share the ambitious goals together with them, and based on the due diligence, we're going to strive to achieve these numbers.

[Josefine Persson, analyst]

And then a bit on the quarter. So getting back to Scale Up again. So in my view, I don't think COVID-19 can be the only explanation for Scale Up getting back to 2018 levels, since you're also explaining that you're -- you can use Scale Up in other applications as well. So can we have any other explanation for this?

[Tomas Blomquist, executive]

Well, yes, if you go back, you heard a big business some years ago related to your -- to the CBD area or, yes, extracting, yes, THC from CBD purification part. So that will be a big thing.

[Josefine Persson, analyst]

And again, getting back to China, can you give us some color on how we're entering this year in China? Are we more optimistic? Or do you still see the difficulties here, especially with the CRO that you -- that impacted your sales in China in the quarter?

[Tomas Blomquist, executive]

So it's probably 2-fold. Well, number one, and the exciting news for us and our great colleagues in China is that the world and the continents has opened up. So we're very happy that we can now proceed with activities and actions that we used to do some years ago. So that will open up doors. But then reading the trend data that Maja was also touching upon, of course, we're mindful around the CRO trends within China, and we'll watch out these cautiously. So we're very confident in the team, and you've seen the performance over the years.

[Josefine Persson, analyst]

And my last question should be that from -- listening to the peers Q4 reports, sales has been impacted by inventory build-up after COVID. Can you give us some color on what you see among your customers regarding inventory build that they are delocking now?

[Tomas Blomquist, executive]

Yes, we can -- yes, we're mindful of giving this, of course. But yes, we can confirm that we see, yes, trends in the space that there is a slowdown. I mean, there is a continuous cash flow focus for us as well as all the others. So yes, it has been a clear trend that we're also grasping and you could see that also in the numbers on the consumable part, which I probably like to strike out. It's not the only instrumentation, it's also partly consumables. But then again, with that said, you see still the overall performance and the underlying business in many respects is performing at very high levels.

[Operator]

The next question comes from Mattias Haggblom from Handelsbanken.

[Mattias Häggblom, analyst]

A few follow-ups for me. You said the dialogue was exclusive. I'm curious to understand when the dialogue with the pre-end owners started?

[Tomas Blomquist, executive]

Yes. I can probably take that one. I mean, this is -- this has been a long process. It goes back even a couple of years. So -- what -- and we started the dialogue, it was not with the KKR. It was actually with the health care strategic growth business partner, where we're actually very happy to have Kugan to join also our Board. A high caliber, and he's also going to be joined by Kieran Murphy that was a top executive and, yes, leading the General Electric business and actually building the Cytiva business to -- So to have that kind of caliber with us into the Board, which is the expectation going forward will be hugely good for Biotage and management is very excited to get along.

So this has been a long-term journey where we eventually found some -- our mutual platform building that the combination between the 2 would be more powerful combined. So it's been a long process, and of course, more intensified the last years, and also wish to stress the fact that we're also happy to get active ownership into us. It's something we've been lacking. And we've also been very confident and happy in the dialogue the past few years, also long-term thinking they are.

And I think you can also read that on the press release, how they're building, yes -- they're skinning the game through the share deal and through the direct investment and also buildup of the earnout that is set up until '25. So yes, it started some year and the twist got us to get the most attractive strategic fit that is fully complementary that will drive our recurring revenue, that will fulfill a workflow gap that we've had moving into higher growth and faster market. So we're ticking all the boxes with a combination of the 2. So we cannot wait to get starting to work with Kieran and Kugan, and for sure, the exceptional management team and the Astrea Bio team.

[Mattias Häggblom, analyst]

And on the milestone payment of USD 45 million, is all of that paid out if you meet the targets outlined for revenues and EBITA in 2025? Or are those targets higher? Or -- and is it an all or nothing? Or can it be a smaller milestone as well? Anything you can say there to help us understand?

[Lars Backman, executive]

I don't -- we haven't disclosed that down to the details, but there is milestone payments over the years. And it's not a cliff milestone except for the last year. That's a cliff milestone and ones are on a scale, if you like.

[Mattias Häggblom, analyst]

And a final one from me. You mentioned that the gross margin for this business obviously is higher. Anything you can quantify to help us think about how this potentially will change the group mix on a gross margin level?

[Maja Nilsson, executive]

No. I don't think -- we don't provide that guidance, Mattias. But what I can tell you is that this is a business with fully focused on consumable sales, normally very high gross profit margin, which will contribute to the Biotage overall margin development.

[Operator]

The next question comes from Odysseas Manesiotis from Berenberg.

[Odysseas Manesiotis, analyst]

So firstly, sorry to pester on this, it's just getting quite hard to model for the next few quarters. So, on the COVID sales, so talking about mRNA lipid purification, would it be fair to assume that this part of your business took about 5% of group sales in the first half of 2022? And is the margin here, let's say, quite higher than group around 30%, 35% of the EBITA level?

[Maja Nilsson, executive]

Well, to give you some color, at least, and not really responding to your question in full, But, when it comes to that COVID-19-related business within Scale Up, I think you can look at the '22 numbers and think that it was a substantial part of that growth, but it wasn't the biggest part of the whole Scale Up. I mean, there are other elements in that business as well. I think -- and what was the other question?

[Odysseas Manesiotis, analyst]

And on the margin for mRNA lipid purification. Was that -- is it fair to assume around 35% or at least higher than group?

[Maja Nilsson, executive]

I mean, what we can say is that the COVID-19 related business in Scale Up has had a very high profitability, and it's been the strongest profitability, I would say, in the process areas.

[Odysseas Manesiotis, analyst]

And a quick one on Astrea, if any particular modality within biologics where the separation technology, let's say, is market-leading or they have an edge compared to competition or the most established players or, let's say, a part of the biologics pipeline that you're more confident on? If you can share…

[Olof Nord, executive]

So Astrea Bio's portfolio is quite broad when it comes to the different chemical modalities from a purification chromatography point of view. Of course, the cell and gene therapy space with the viral vectors like anti-viruses, AAVs and DNA associated viruses there, Astrea is very well positioned. It relates both to the resin business, but of course, also on the fiber technology -- the membrane fiber technology that they have.

[Operator]

The next question comes from Karl Noren from SEB.

[Karl Norén, analyst]

Just a question on the new owner in KKR that you have. I mean, how do you see them? I mean, you don't really have any maybe ownership that is this big KKR. You usually have -- or mostly have mutual funds, et cetera. How do you see this kind of company as an owner? Is that long-term partner or fully owned Biotage over time and work very closely with you? I mean, was it you that came up with the idea to pay anything in cash, but rather for shares? Or -- any comments on that would be interesting to hear your thoughts on.

[Tomas Blomquist, executive]

No. What we can say is that we've had -- yes, we got to know each other a few years ago when we came to -- yes, to this agreement. So of course, it's a mutual benefit for both. And again, I think they put their skin in the game. And we've also repeatedly said that we've been -- it would be a good thing also for Biotage to have an active owner. And you can see also on the quotes that both these are great quality gentlemen. Kieran Murphy and Kugan has mentioned their commitment and yes -- for the Biotage business going forward.

So we're confident based on the due diligence and the past year's discussions we've had, that this will be a benefit for the shareholders, for Biotage and, of course for our new partners.

[Karl Norén, analyst]

And then just the last one from my side on the acquisition here. Yes, model wise to make it easier maybe for us analysts to model it, Is it possible to give any kind of -- I don't -- I know you don't give guidance, but how we should think on the growth in 2023? Because I guess that's well quite important when we add acquisition into the numbers. Do you expect like a gradual growth I mean, to reach your target, you need to grow around 45%, 50% per year? Is that what one should expect? Or do you see like even growth?

[Tomas Blomquist, executive]

Yes, you know and -- that we are not going to touch upon it. But of course, you see an exceptional growth here coming into, yes, '22 versus '21. And I think the comment from Maja was a clear one of, do the mathematics backward from the '25 figures that we have addressed, and you will get to actually those numbers basically spot on what you were referring to. So that's a logical way of assessing the growth going forward.

[Operator]

The next question comes from Erik Cassel from ABG.

[Erik Cassel, analyst]

I just have one question. I want to understand some background. And if I heard it correctly, you said that you've been in discussion since before KKR bought it. But if I understand everything correctly, I mean, KKR bought Prometic, now known as Astrea, for SEK 100 million in 2020. What has happened with that business since that's made it worth double the amount now?

[Tomas Blomquist, executive]

Yes. But -- yes, so the data that is revealed is what we can, yes, state. And you saw the 90% growth year-on-year. And to my earlier comments, they, of course, also added the Delta acquisition that was happening in the 6th of January, and you also had the Nanopareil business. They also acquired actually a SAP company in Boston, Essential Solutions. I believe the name is.

So they've invested a lot. And you see now the -- with the strength in infrastructure and the strengthened team that they've just started to get some traction of that growth. And now the -- yes, a great partner like Biotage with our stronger geographical spread and infrastructure will take advantage to serve the biopharmaceuticals in an even better combined way together.

[Operator]

The next question comes from Mattias Haggblom from Handelsbanken.

[Mattias Häggblom, analyst]

Yes. I'm really sorry, I'm coming back last time. But I'm getting something coming here from people --, I guess, I ask the question for them then. Question goes along the line, So the 90% growth in 2022, that is referenced in the press release, was all of that organic? It may sound that some of it was acquired. And tied to that, any comment you can give whether or not there was any COVID-related sales in that revenue number?

[Tomas Blomquist, executive]

Yes. So to respond to that, the -- it was organic growth and non-COVID-related touch business based on our due diligence assessments and also confirmation from doing some special customer surveys in the process.

[Operator]

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

[Tomas Blomquist, executive]

Okay. Thank you. So to summarize our call, even though the Q4 was our weakest during 2022, we are very pleased with our performance and results in 2022 and how we achieved the greatest full year financial results in our 25-year history. The planned highly complementary acquisition of Astrea Bioseparations that we have announced today is a transformational deal that will strengthen our position as a global purification chromatography leader.

To summarize, this acquisition will again extend Biotage franchise into the higher growth and larger bioprocessing segment, all the way to Scale Up and manufacturing, with higher gross margins and recurring consumable-based revenues. It will give us access to high-quality Biologics & Advanced Therapeutic customers as well as complementary competence from Astrea, with improved geographical spread and increased manufacturing capacity. It will also give us higher product margins and a rich pipeline of new product launches across chromatography resins, columns and nanofiber-based membranes. That is all we had to share today. We're looking forward to our next meeting in April, 2023. Thank you for your interest. See you soon.

[Operator]

This concludes the conference.