Q linea AB

STO:QLINEA

Earnings Call Transcript 2022-Q1

[Operator]

Dear ladies and gentlemen, welcome to the Q-linea audio call for teleconference Q1 2022. Today, I'm pleased to present CEO, Jonas Jarvius; and CFO, Anders Lundin. [Operator Instructions] Speakers, please begin.

[Jonas Jarvius, executive]

Thank you very much for that introduction, and welcome, everyone, to our presentation for the first quarter of 2022. I think we'll start with moving to the next slide, showing our disclaimers slide in case me or Anders will make any forward-looking statements as you have here on Slide #2.

With that I think we move into the activities for the first quarter on Slide #3. So of course, you, who follow us, know that Q-linea is working with developing disruptive solutions for faster infectious disease diagnostics. We have a product in the market. We'll talk about that today. It's ASTar, and it's targeting blood stream infections, where sepsis is the most severe of these syndromes.

We are based in Uppsala, Sweden. We have 3 sites, active sites, with covering R&D, of course, commercial activities but also production because we're focused on production on our consumables. And you can see that on the right of your screen, where you see ASTar being the instrument platform and then the various kits for different type of applications.

So to summarize, on a high level, the first quarter, we have been growing according to plans. We are close to 180 employees and consultants. And you can also see that our growth trajectory is now slowly leveling out. We are at the phase now of, more or less, consolidating and moving on with the company according to our earlier plans.

We can also welcome our first commercial customer for ASTar, very happy about that, of course, I'll come back to that. We also see a very strong demand of commercial opportunities for our system. And it was, as you know, officially released and launched by Thermo Fisher Scientific, our partner of October last year. So we are very early on in the launch phase still.

We're also coming back from ECCMID. I mean the world's largest infectious disease conference. It was in Lisbon this year, and it was a very successful conference for us for sure, but also for Thermo Fischer Scientific. Another big happening during the first quarter is that FDA, Food & Drug Administration in the U.S., awarded ASTar with a breakthrough device designation. And of course, we'll come back to that as well.

We are also, as you know, pursuing with our next product in development, Podler, a fully automated blood culture cabinet that can really save time and transportation, and we are moving on with the commercial discussions there as well.

So what have we seen then at this very early stage of the launch? While we can see that the sales targets are long, they are in line with what we see from other companies in the market with similar products. We also see that we have a very positive feedback of customers that evaluate our system. But we also see that, currently, we have a larger demand of customers wanting to perform an evaluation than we currently can handle. And of course, that's a capacity that needs to be built up.

So we actually do provide some guidance for this first year. So we have guided around 20 ASTar sold during 2022. And I think it's very important to remember that it was launched in October, and we had very short time to launch the product so far.

But if we just move on to Slide #3. Looking at our focus within Q-linea is, of course, addressing the current need for infectious disease diagnostics, sepsis, as I mentioned, the leading cause of death in U.S. hospitals, the #1 cause driver. Kills a lot of people in Europe and U.S. every year. And in the world, a person will die every third second.

The big problem with sepsis is that it's a very rapidly escalating syndrome and it's caused by you having a bacterial infection that leaks into the bloodstream and it can then trigger an overreaction of your immune system. So of course, you need to fight the underlying infection, and that the primary cause of treatment is, of course, antibiotics. The problem is that the current diagnostic workflow for sepsis is long. So around 50% of the patients are on inappropriate treatment. It might be too broad. It might be also ineffective treatment. And that is also the reason that approximately 20% will die before the traditional diagnostic results.

So of course, this is the focus for ASTar, our first product, to dramatically save this time line before you get the correct treatment. But we're also a company that works with a future in mind. And as you do know antimicrobial-resistance is one of the biggest threat we have to mankind. It has actually been presented as the biggest threat to mankind. And it's really coming from over excessive use of antibiotics over a long period of time, meaning that bacteria will develop resistance and become harder and harder to treat.

So of course, the future look rather gloom unless we act and do something right now. And of course, what we do at Q-linea is providing 1 piece of the puzzle with, of course, our ultimate goal that our kids to the next generation should be able to have the same level of treatment, high-quality treatment that we have received or their parents have received. So I think the future where we operate has a very strong and interesting outlook.

If we then move on to Slide #5. It's also bringing a little bit of both ASTar in context, but also Podler, our portable culture cabinets. Where you can see, on the upper part, you see the traditional workflow of a septic patient. It's a multi-day, multi-step process. It takes sometimes 3 to 4 days before you can have the appropriate correct treatment for each individual patient. And in the lower part, this is, of course, what we want to address with ASTar. So much faster time to actionable results, meaning that you do know what bacteria is causing the infection and what antibiotic that you should use, but more so, also what concentration of antibiotic to use.

We have a very broad panel in our product, and that, of course, means that it's very easy to run in parallel with the identification methods. You don't have to wait for ID. And that is, of course, also important to really reduce the time to optimal therapy.

When we look at Podler, it really addresses the step from the type of sampling of the blood culture until it arrives in the lab, and that can take somewhere between 1 and 24 hours. And of course, those hours are hours lost in the diagnostic workflow.

If we then take a look at the next slide, #6. This is just a summary of 3 independent health economic reports. They have looked into what could the benefit be if you could be 1 day faster or 24 hours faster compared to the current diagnostic workflow. I think the effects are quite dramatic, reduced mortality, quite dramatically. But of course, also, if you have the possibility to choose a narrow spectrum antibiotics faster, reduce the pressure for resistance development in the patient, hospital and society, and that could also reduce the super infections.

Of course, also for the hospital, a septic patient that move into a more severe conditions, septic shock, are being treated in the intensive care units, very expensive but a lot of staff needed to keep that patient alive trying to bring them back. And this study showed that you could stay, on average, 2 days in the ICU bed.

So the overall drivers, when we look where we are today and in the future, is very strong for the individual patient, for the hospital and society regarding both development and costs. So I think that the future looks very promising for rapid AST overall.

If we then move into Slide #7. I will not go into the details on this slide, but ASTar has really been developed with customers, together with customers. We have 4 pillars that we, together with our customers, deem that the most important for this type of new technology needs to be: easy to use, fast, of course, obviously, but also comprehensive, so you can actually act upon the result and you don't have to wait for a follow-up test, for instance, but they also need to be accurate.

And when we talk about resistance testing or acceptability testing, what's becoming more and more important today is you have the MIC value, and that is the concentration that kill or inhibit bacteria. And as infections become more difficult to treat, the MIC value can actually be used to guide the treatment, so the dosing regime, the timings and so on, and ASTar, of course, provides that as well.

If we then look at Slide #8, if we take a high sort of overview of these 4 pillars, we can see that the testimonies we have and also the feedback now we receive from customers evaluating ASTar, who have even decided to purchase a system is that it's super easy to use. It's easy to integrate in the workflow seamlessly and anyone at the lab can really run an ASTar with minimal training. And I think we are now moving away from the pandemic, and we have really seen all the work and effort that this staff needs to put in to do testing. So of course, having an instrumental platform that anyone can use 24/7 really optimizes the need for personnel. But of course, also means that you can use it to -- all hours of the day.

If we then look at Slide #9, this is just some highlights on the CE-IVD study that we finished last year. We are, as you know, now moving into the U.S. study and finalize that. But on all the aspects where you are required to deliver results to be approved in Europe, likewise in U.S., ASTar overperformed that has -- was well above the requirements needed to launch a product.

Also when you look at other colleagues or competitors in the field on the lower right, you can see that the breadth of our panel, meaning that number of antimicrobials, the concentration ranges to provide these very important mix results is very broad. It's actually the broadest panel available right now. And that, of course, means broad panel, you have a highlight here that you can act upon the results. And that, of course, brings the value to the hospital in the lab and the patients.

If then moving to Slide #10, we have also designed the instrument to address various workflow, and we also presented this at ECCMID this year. You can run it fully automatic as we talked about for blood. But for other type of samples such as isolates, you can actually also run the system with the AST disc, and this is now under development. And of course, this will address different price points and different volumes.

We also built ASTar in mind for medium-sized and [ up ] hospitals, so a high throughput or random access to be able to handle peak loading in the morning, for instance, but also high sustained throughput.

If we then move into Slide #11, we're coming into more of the highlights for the first quarter. And I would say that, of course, we are early on, but to be able to welcome our first customer in the U.K., it's a great success. The customer performed an evaluation and then decided to invest in the technology to serve their lab, their hospital with providing better care for the patients.

And what we have seen or both ourselves, but also, of course, our partner, Thermo Fischer Scientific, is that there's a strong interest for ASTar, and there's a strong interest for rapid AST. So we had a -- our sales prospect family is growing. But we also see that it is a young and early technology sale. So customers, at this stage, would like to evaluate. I'll start in their lab. I mean running it as they would do in a sort of commercial normal operation before they actually take a decision to buy it. If they do so, we see that the sales cycle because of tenders, the way we have it non-Europe is approximately 9 months. So this is all in alignment with other companies in the field. And of course, we're now looking into other possibilities to shorten the sales cycle. But that is where we are today.

And also due to the fact that customers would like to evaluate before they make a purchase, we see that currently today, our partner, Thermo Fischer Scientific, has limited capacity, and we really look forward to see that capacity grow. And of course, this makes sense. I mean when you start launching a product, you have an idea on what's needed. But then you have to test that in the market, and you have to adjust according to demand, and this is fully natural.

So coming back to my first slide. This overall estimate is at around 20 sales for 2022. And of course, we really look forward for 2023 as well when we also add U.S. coming with Gram-positive and even increase the value of the product.

If we then take a look at Slide #12, I think this is truly important, and I think that everyone following the company should be very happy about that. ASTar is now classified as a breakthrough device by the FDA. But that means that FDA see a value of our technology to provide better and faster care for U.S. patients. Of course, the value of that is, in our opinion, not only sort of a stamp to mark that it is a high-quality product that brings the value, but also as we are now in the really final step of our 510(k) submission for the U.S. market, the breakthrough device designation could help us reduce the time until clearance for the U.S. market. So of course, that's also very positive.

And I think also a lot of U.S. customers see the value breakthrough. So I think it will actually be a positive also when we do launch into the U.S. geography.

If we then take a look at Slide #13. Just after the period end, of course, we participated in ECCMID, the infectious disease conference. And the interest in ASTar and the other products in development was very, very strong at the conference. Both our booth and of course, Thermo Fischer Scientific booth, were fully occupied with demonstrations of ASTars, people asking. We have a strong list of leads at this stage for both companies to follow up after ECCMID. And of course, that's going to be a very exciting period now for the next month to come to see how can we capitalize on the value and the interest that we both saw at ECCMID.

But apart from ASTar, Q-linea also presented the development pipeline for the product. We presented our tentative Gram-positive panel, again, including fastidious and nonfastidious bacteria. So that's unique if we manage to have it all the way to the market, but we, of course, strongly believe so. We also presented, for the first time, AST-disc only workflow for isolate testing, meaning that you can find that at a different price point, also very positively received.

I think when we talk about Podler, our portable blood culture technology, almost went viral. We had a huge interest, people coming into the booth, bringing more people into the booth. And really, the question asked, why has this not been developed before? So I think the entire Q-linea and Thermo Fischer Scientific team are really excited coming back from ECCMID seeing the interest from both customers, but also potentially new customers.

So the next slide, #14. This is just 3 images, where you can see on the top right-hand side, a busy activity in Thermo Fischer booth. People are actually standing in line to have a look at ASTar and that's very positive to see. Likewise, you can see, on the lower 2 images, the Q-linea booth, where we presented really the workflow from A to Z, and the way we manage it and how our products on the market and in development can really meet and change and transform that workflow coming forward. So super excited. And of course, we are now moving towards ASM, a similar conference in the U.S. in mid-June. So we'll come back to that in the next quarter report.

So finally, on my part of the presentation on Slide #15. We are still wanting to manage the corona pandemic. We are moving back to normal operations, that's for sure. We still see that there are some possible effects of the corona pandemic. None of us know if you have a more aggressive variance coming up in the autumn, for instance. So of course, we can see that there are still some residual risks. But overall, most parts of the world are moving back to normal, at least from a customer perspective.

We still see that shortage of components, there's a risk. We see that there's lack in transportation, manufacturing of some components. And internally at Q-linea, we have built a safety stock and we're, of course, looking into this very carefully. So I would not say it's over because it's not, but we do see it pulling back into the right place.

Concluding my part of the presentation, I will now hand over to Anders to talk about the numbers as well.

[Anders Lundin, executive]

Thank you, Jonas. I will start on Page 16 and share some of the financial highlights we had during the first quarter. We reported out the net sales, issued sales at the first quarter about SEK 5.8 million. We have expensed goods and in the production of SEK 12 million, and we have an operating result of close to SEK 72 million minus. We reported about the same minus SEK 71.9 million as a loss after tax. And the EPS before and after dilution were minus SEK 2.46 compared to minus SEK 2.34 last year same quarter.

Then I move into Page 17, balance sheet. That is a list of what we have in available funds. We have cash and cash equivalents of SEK 15.4 million. We have both short-term interest funds and listed bonds, both short term, which are due within 12 months and also noncurrent listed bonds, which are due in 12-plus months. And we have also inventories in stocks of ASTar and consumables. Raw material of SEK 21.9 million, which is a decrease from year-end where we had SEK 28.6 million. And also included in those numbers is a write-off, which we have done of minus SEK 5 million.

So if I move on to Slide 18. That is highlights from our cash flow statement. First quarter, we have operating activities are slightly better than last year same quarter of minus SEK 51.7 million, and the reason for that, even though we had operating results, which were lower, we have improvement in working capital during the first quarter that offset the negative operating result compared to same quarter last year.

We have investing activities of SEK 52 million, meaning that we are net divestment of both short-term interest funds and bonds to support our need for working capital. And we have a small -- we have some repayments of loan of SEK 40,000 in the financing activities, small numbers.

So all in all, we -- by the end of the quarter, we have SEK 290 million in available funds compared to the SEK 348 million by the year-end. And the Board's assessment by having those available funds is that the funds will cover the working capital for the next 12 months at least.

So by that slide, I would like to hand over to Jonas.

[Jonas Jarvius, executive]

Thank you very much, Anders. That was really our last slide for our Q1 presentation, but we'll be happy to open up to any questions from the audience.

[Operator]

[Operator Instructions] The first question comes from Ulrik Trattner, Carnegie.

[Ulrik Trattner, analyst]

I have a few, if I may, and please cut me off if there's too many of them. We can start off with personnel costs. They look to be up quite substantially quarter-over-quarter. Any explanations for that? And is that an expected future run rate?

[Jonas Jarvius, executive]

Yes. So thank you very much, Ulrik. No, I wouldn't say that they are up dramatically quarter-over-quarter, I would not say that. We did, of course, do a lot of production scale up sort of last year. The way we look at the future right now is that we are sort of not necessarily leveling out, but we are more at that level. Now we feel that we are in a good place for the company to do all our activities. So I would not say that I would see the same type of increase as we have seen before in the past in our buildup of the company. So we are more, I would say, we are more coming to a steady state more or less regarding that.

[Ulrik Trattner, analyst]

Great. If we can address the guidance of the 20 ASTar systems for 2022. It sounds, based on your comments on the selling process lead times, that, one, we should not interpretate that U.S. is part of those numbers of the 20 ASTar system as well as -- I'm doing some back tracking, it sounds like these 20 systems are -- must then be based on sales made from first commercial launch in October last year to end of this quarter. Is that a correct assumption?

[Jonas Jarvius, executive]

Now we say, so first of all, yes, U.S. is not sort of included. It's not an approached market just yet. And also with the long sales cycles, you are right, Ulrik. So it's a lot of work upfront. And then, of course, you can see the benefit of that coming up. We are, of course, also looking, together with Thermo Fisher Scientific, if there are ways to shorten it. But I would say that at this stage of the launch, looking at our other colleagues or companies in the field, we are more or less on the same page. So I would agree to your comment there.

[Ulrik Trattner, analyst]

And a follow-up on the lead time and evaluation. As you're stating, this could potentially be shorter, what would be a normalized situation? And could we see these improvements already towards the end of this year? As well as on these evaluations, what's your current win rate in terms of once you have done a demonstration and an installation of these evaluation customers? How big portion of those are then converted into true commercial customers?

[Jonas Jarvius, executive]

Right. So maybe I'll answer the last part of the question first. So I will not provide you with an exact number, but I would say that so far, it's very high. We are very much, and I think that's also why we're really very positive on the future that people that try us are in their lab and see how it performs with work. The results are very positive to move forward with the system. You will never have 100% for good reasons. You might also have an evaluation with a very satisfied customer that maybe not have it in their funds for this year, but can allocate it for next year. So far, I would say that it's a very high number, and I'm very glad about that.

I think when we look at evaluations, I mean, rapid AST is still a young field in Europe, I think we must say that. I think U.S. is a more mature market. So it's going to be interesting to track the development in the U.S. But I think that until we come to a place, and maybe that's a year into the launch or something like that, when we have a number of installed base of instruments at good reputable labs, where people can actually see how ASTar performs at their colleague's lab, for instance, then I think we can move away a little bit from try before you buy in a sense, and actually buy on reputation or colleague recommendation. So I think that could be started. We'll see, maybe end of this year to be -- to give some guidance on that. But it's going to be interesting to follow, I would say. But today, you really want to see it and have it in your lab. See what it does or what it can do for your particular setting. And so far, people are very happy when they have evaluated ASTar. So I'm very positive about that.

[Ulrik Trattner, analyst]

And could you say something about who this first commercial customer is? What type of hospital? Where it's located? Or anything?

[Jonas Jarvius, executive]

Yes. I could, but I'm not allowed to, Ulrik. Not just yet. I think that you will see also publications coming out from this site and lab, and I would be happy to share when they are becoming more. And I think also what's important at this phase of the launch, I think that when you look at the customers, I mean, sometimes you want to have a customer with a very [ restrictive ] reputation or isn't -- not necessarily the biggest lab perhaps in a site. And then, of course, you want to see a mix with more of these large university hospitals, which are more of a pull-through volume type drivers. So I think at this sense, I would like to see a mix for a couple of reasons. One reason you would like to see a mix is, first of all, how that could help drive the sales, of course, obviously, for more installments, but also to be able to align and tweak where do we or Thermo Fischer Scientific needs to put more resources in our sort of, let's say, priority customer, if that's even a word, but it's more like that.

[Ulrik Trattner, analyst]

Okay. Great. And is there any possibility that you can provide us with the revenue split between consumables and systems? And if that is helping your planning to have in your quarterly reports going forward?

[Jonas Jarvius, executive]

Not right now. I think that this is the first time we guide the market. Of course, and I said that we are going to be as transparent as possible. I think we should give it some time so also we can provide some proper guidance on that. And I think it's still very early days. So I don't think you will see it in the next couple of quarterly reports for sure. And we'll see that in the future where we are not with. But of course, it's an important split for sure, for the future.

[Ulrik Trattner, analyst]

Great. Three more questions, these are short ones, I promise you. If we can talk a little bit about -- you mentioned the AST-disc only. So what would be the benefit of having an ASTar with an AS disc (sic) [ AST-disc ] only since it would be then compared to other semi-automated systems, you have your specific [indiscernible], et cetera? So what would actually be the benefit of using an ASTar with an AST-disc only?

[Jonas Jarvius, executive]

Right. So first, of course, I mean, customers will initially buy us for our blood cancer testing. But when we do look at our panel, yes, by [indiscernible] -- as you know, it's the broadest capable panel out there today with a number of antibiotics and dilution ranges. And we do know that we see customers -- this has actually been a comment coming from customers is that, for some samples, we know that the current platforms out there today do not provide sufficient answer. So we think that if you have an ASTar in the lab and you have a very broad capable panel, I'm pretty sure that for a number of samples, you would like to go to the system that provides sort of the most complete coverage. So I would say that benefit is really that if you step into the world of ASTar, you can then broaden that with more difficult samples where you, for instance, see that, I mean, we have fastidious, for instance, on our panel. We don't see that in many other systems. That might be one approach. We also have Colistin. We don't see that performing necessarily perfect on all platforms.

So I think that will be sort of a stepwise approach into that. And I think also after experience with a high capacity for good reasons, and one of that means to be able to grow into other type of applications, [indiscernible] it could be urines, for instance, respiratory in the future. So I would say that the value of that we'll see in the future, but that's the thinking behind it right now.

[Ulrik Trattner, analyst]

Great. And the last question on ASTar and one question on Podler. U.S. clinical study, what is remaining in order for you to file? It sounds like you are in the final stages.

[Jonas Jarvius, executive]

Yes. It's putting all the paperwork together, the last pieces of that. It's still some work to do, but it's really, really at the end stretch, so to speak. And we said during the spring, the spring has been fairly cold in Uppsala, but not too far away. And I think also, of course, we're really happy with the breakthrough device designation that we do hope could provide a good discussion with the FDA. And of course, ideally, we would like to see the possible clearance of ASTar coming a bit faster than if we didn't have the breakthrough.

[Ulrik Trattner, analyst]

Great. And just one on the Podler. You mentioned from ECCMID, great commercial interest in -- or great interest in commercializing Podler, so to speak. Could you provide us with some clarity in terms of when you will decide on what and how you're going to develop Podler? Is that something that we could expect during the fall in terms of if you're going a loan to the market, if you're -- or are aiming to find a commercial partner? Is it going to be a co-development partner? Just some more clarification on that would be helpful, please.

[Jonas Jarvius, executive]

Yes. So I would not probably be able provide maybe the exact details. I think the direction we're going to go, we should be able to present that during the autumn was the current thinking. So we will provide some more flavor on Podler in the next coming of quarter reports. I might not be terribly exact on the necessarily if we decide to go with a partner, who that is, maybe early on, but we'll see. We have to keep that a little bit as a cliff hanger. But the interest was amazing, I would say, very seldom seen, I would say, in this field as we operate in. So I think the entire team came back with a big smile on their faces. Not just Podler that was unique, but also ASTar, so ECCMID was really good for us this year.

[Operator]

Next question comes from Jakob Lembke, ABG.

[Jakob Lembke, analyst]

I have a few questions, and I'll take them one by one. I'll start with a question on the guidance. And it's a bit below my expectations, and I understand that -- I mean, we might have sort of underappreciated the longer sales process. But can you say anything about something that can give more sort of feeling for the ramp up after the 20 systems this year? Perhaps maybe on how the customer interest is developing? Or the number of customer evaluations if they are growing, for example?

[Jonas Jarvius, executive]

Yes. So first of all, well, I mean, yes, the sales times are longer, and you're right. And I think also what we look at is the full sort of commercial launch started in October, coupled a long sales cycle, of course, it doesn't follow a fiscal year ideally. So that could have been different. I think that today, I would not do that. We are talking with our partner, Thermo Fischer Scientific. And I think that developed together, what type of guidance we'll see on a number of leads and prospects is something that we have to internally communicate and then perhaps come back. What I do see is that as we also mentioned that there's a high list of prospects and leads for the instrument for ASTar, and we also see that we have a large demand of testing it.

So I think that as soon as we can, we'll, of course, provide some more flavor to it. But also, as I mentioned a little bit previous, I think that there's going to be an inflection point sometime where you see customers more talking to other customers for ASTar, and that could be a sort of a different slope on the curve. I think also when we look into coming up into the U.S., which is more familiar with rapid AST and also a more consolidated market, I would say, overall, many more 24/7 labs. I mean basically, all of the big ones are there. So I think it's also going to be interesting as we come closer to the U.S., and we can compare and contrast the European launch strategy and sort of turnover, success time lines and so on and then versus the U.S. So that was going to be extremely interesting to see what will come closer.

So I will not provide any more detail today. I think it's the first time we actually do provide guidance at all, which I think is appropriate where we are right now. And yes, of course, everyone would like to see more instruments, we as well. But I think also when we look at it objectively, today, this time is not unique for us. It's more or less the same with all the tender processes and everything that needs to happen now in Europe before sales. So maybe not an exact answer to your question, Jakob, but at least giving a direction of what we think about in the future for how it can change and when, and also in other markets.

[Jakob Lembke, analyst]

So I understand, and the guidance you have given today is, of course, very helpful. My next question is on the cost of goods sold. Would just like to have some more sort of flavor on if it's the consumables or instruments that are mainly at the low volumes and contributing to a negative contribution? And also maybe if you can give any sort of indication on the time line or volumes needed for contribution to be positive.

[Jonas Jarvius, executive]

Right. So my sort of perhaps answer will be that, of course, everything is at low volume, to be honest. I mean the instrument and consumables at this rate. And I think that's very natural at this phase. And when we look at the market, I mean, we have some -- Europe and U.S.A., 5,000 potential customers, maybe not all for ASTar. They are performing some 70 million tests. So of course, the key driver going forward will be to see a ramp-up on the consumable, which I think overall will be the main key driver for the field. Also, when you look at margins, for instance, of course, instruments, I will not say it's at very high margin overall in this type of field. You will put all that focus on the consumables. So as of today, I will not provide sort of an exact volume or ID, but of course, in this phase, we are not really expecting to have positive margins. But as we see volume pick up, of course, that's going to be a key number to change, of course. And also, I can just add to that. As you also know what we are doing in the company indeed also last year is we are investing a lot in scale-up capabilities primarily in the consumable field. The instrument, we have a high capacity or Sanmina, they have appropriate capacity for that. So we do invest now for the future also of these consumables, of course.

[Jakob Lembke, analyst]

Okay. My next question is on the sort of recent deals that have been in the AST space where Sysmex recently acquired Astrego, and we also had the [ Emyria ] acquiring a specific diagnostics here a couple of weeks ago. So has this impacted your discussions with Thermo Fisher perhaps?

[Jonas Jarvius, executive]

That's a good question. What I can comment is that it's exciting times, right? I mean we are seeing some of the big players moving in. And of course, what I think that could indicate to any shareholder in Q-linea is that the big companies see value in rapid AST. This is something that's needed, that's coming. We have seen a couple of companies now taking the firm stake in this field. I mean Sysmex more towards UTI testing, but it's still rapid AST, very important. So I can't comment on any of the discussions internally. But I do think that it provides an overall view of that the field is becoming not mature, but at least it's clearly addressed as an important field. I can say that.

[Jakob Lembke, analyst]

Yes. I agree that the bigger players are now increasingly securing their positions. But would you say that these deals and perhaps more on the specific acquisition will have any impact on the sort of midterm rollout of ASTar, you think?

[Jonas Jarvius, executive]

I don't think so. I mean for a couple of reasons. First of all, I think it's extremely good that we see, for instance, [ Pacific ] now, we have Quanta. Because at this stage, more companies that talk about rapid AST, more customers that are presented with rapid AST solution, it increases awareness. And I mean, to me, actually, I don't call a company a competitor until I lose a sale to them, then they are a competitor in a sense. You might, of course, be competitive earlier on. And when we look at the young age of this field, I don't see it will affect the rollout. This is, of course, my personal opinion. I think, actually, it can be positive. And I also do think that the value proposition of ASTar, the way the system is designed, what it delivers becomes also very much more clear when you can truly compare and contrast it with something else. And that makes it easier for the customer to find what's going to suit their needs.

So I would say that, overall, the move in the field is positive because it indicates that it is an important field for sure. More awareness around rapid AST, I think, it's beneficial for all of us. I think it's good. But I will not say at this stage that we see any limitations really. I might change that view, but not today.

[Operator]

The next question comes from Johan Unnerus, Redeye.

[Johan Unnerus, analyst]

Congratulations for the interesting ASTar. And also, I think it's very appropriate and wise to give some sort of early indication of regarding the sales or the systems that is expected to be delivered this year. My question is mainly a clarification follow-up. The first one relates to the 9-month period, does that -- just out of clarification, does that include the sales processes? Or is that from this sort of establishment of a firm interest to actual commitment?

[Jonas Jarvius, executive]

Yes. So first I would say that the way we look at it it's maybe somewhere in between, but it's definitely included from that view. You have a customer that's become a prospect and decide I want to evaluate the system. So from that time on, I would calculate that. Some might be faster, some might be slower, but that would be the starting point from when I -- looking at the 9 months as of today, as of today.

[Johan Unnerus, analyst]

That's useful. And yes, another, it's probably a bit early on, a lot of things are, of course. At the time, before then, that decision to I want to evaluate ASTar, how long is that open?

[Jonas Jarvius, executive]

I mean that could be fairly quick, I would say. I mean, we do see at Thermo Fisher Scientific, they, of course, have a number of people in their sales force throughout Europe. And I think also, I mean, at ECCMID today, we well exceeded or met our criterias for leads. And from a lead turning into a prospect, I mean, more likely, that could be a fairly short process. That could be a couple of weeks to get. And that's really the pace, again, in my opinion, where you have an interest, oh, I want to [indiscernible] a product, than, of course, doesn't have to be long before you say, "I would like to try this in my lab." So I would say that, that, in overall sense, it could be considered as a shorter time line.

[Johan Unnerus, analyst]

Excellent. And this actual evaluation process there, how long is that out of 3 to 9 months?

[Jonas Jarvius, executive]

Right. So roughly, I mean, what we have seen is a 4- to 6-week time. You need to have the system sort of installed. You need to have some training, although very quick. And then really what we see so far, and of course, Thermo Fisher Scientific maybe needs to talk more on the details. But I mean, I've talked now from our experience in Sweden, I don't think they are very different. Then the customer would like to run the system. I mean -- and that's basically running it in their clinical setting. So they run it with their samples. They try to incorporate in the workflow. And typically, you would need around sort of in the order of 3 to 4 weeks for that. So say, 4 to 6 weeks from start to finish, meaning that you come with the instrument and you remove the instruments in a sense.

[Johan Unnerus, analyst]

Excellent. And I presume that some of the shortage or constraint here is actually to initiate these local evaluation process. It's not only 4 to 6 weeks. It's about having the capacity to actually go ahead with all the evaluation?

[Jonas Jarvius, executive]

Yes. Yes, you're actually right. And that's also what we see. I mean -- because to do this, I mean, these are the experts, the specialist applications -- specialist service engineers. And today, we see that we have more customers wanting to do it, then that currently can be supported. I think it's, again, as I also mentioned a little bit in my presentation is that it is fairly natural in the beginning. You have an idea of the number of resources needed and you have to might adjust that strategy to meet that demand. So I think it's likely to see early on in the phase that you have to adjust sort of the number of people or the type of people that performs different tasks. So of course, that's something we also look forward now to see that how can we improve on that. Because overall, I would say it's much better to have an interest of people wanting to do it than the other way around. But of course, equally, you have to sort out that issue and improve, I would say, yes.

[Johan Unnerus, analyst]

So the challenge during '22 is to sort of secure that you have the collaborations with Thermo Fisher that you have the sufficient number of people to initiate the evaluations. And then into '23, perhaps you will have an increasing number of labs that actually will be sufficient or enough with shared experiences and reference lab and not necessarily separate, yes.

[Jonas Jarvius, executive]

Yes. I would say so. No, I agree. I think that's what I stated, Johan.

[Johan Unnerus, analyst]

Yes. And then finally, also regarding not that we expect it to be specific, but at this very early stage, I guess there is no total typical or normal dynamic that's seen system sales, machine sales and kits?

[Jonas Jarvius, executive]

No, you're right. I mean at this early stage, and also I commented a little bit earlier on that at this stage, you might have a different customer that sort of all, of course, all see the value of ASTar, but they can provide a different value for the next part of the sales cycle. So it is too early to provide sort of an average pull-through in the instruments. And statistically, yes, it's just too early. But of course, that's something that we want to see coming forward when you can actually start doing these averages and you can start cluster and classify the various type of hospitals or lab that -- to run ASTar.

[Johan Unnerus, analyst]

So perhaps when you feel that you are ready to give some sort of guidance on the kits and system separately, that's also an indication that you sort of start to see a more normal dynamic?

[Jonas Jarvius, executive]

Yes. That could be one way to trace it for sure. And then we have to decide that when do we think is the right time to do so. But yes, I still think you need to, in this phase, really look at getting the full picture and starting to classify each individual sort of customer before you give an average analysis.

[Operator]

There are no further questions at this time. I hand back to you speakers.

[Jonas Jarvius, executive]

Okay. Thank you very much for all the good questions and everyone else listening in. So me and Anders would like to say thank you for our presentation of the first quarter 2022. And of course, we do look forward to come back in the next quarter and also present what has happened over the next 3 months. So thank you from me. Thank you, and have a nice rest of the day.