Q linea AB

STO:QLINEA

Earnings Call Transcript 2022-Q2

[Operator]

Good day, and welcome to the Q-linea Q2 2022 Earnings Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Jonas Jarvius, CEO. Please go ahead.

[Jonas Jarvius, executive]

Thank you very much for that introduction, and welcome, everyone, to our Q2 earnings call. I think we'll start jumping directly into the presentation, and we move to Slide #2 where you can also, of course, read our disclaimer slide. And that is, in case me and Anders would make any forward-looking statements. Having read through that, I suggest we move to Slide #3 where we have a high level of summary over the second quarter. And it's truly been an amazing quarter for Q-linea. I mean, as you know, we are working hard to develop disruptive solutions for faster infectious disease diagnostics. Our first product is targeting sepsis, and I will briefly give an overview of ASTar over the next coming slides.

The team working at Q-linea having 175 employees and consultants are slightly lower compared to the last quarter, and I will also comment on that at the end of the call. But looking into the activities during the second quarter, we have been exhibiting ASTar. Of course, our part of Thermo Fisher Scientific has done that as well, both ECCMID and ASM, and they have been very successful. We also achieved a breakthrough device designation for ASTar by the FDA. And that is, of course, a great testament to what we are doing, what we are developing and the impact that could have for patients with serious infections. We also then follow that up with submitting the 510(k), the application for getting market access in the U.S. market to the FDA in the beginning of June. And as you know, Europe is also moving into a more stricter regulatory environment with the IVDR coming up replacing the IVDD that we have had in the last number of years and received that certification for letter of intent in May.

Also looking at other products, Podler, which has tremendously successful and gaining interest that both ECCMID and ASM received a letter of intent regarding that as well. And that's, of course, also very positive. We do see there are long sales cycles for this type of equipment. The interest is huge, but we need to pass a number of gates. But looking at where we are right now, we are still standing by our earlier sort of estimates for this year.

If we then move into Slide #4, just briefly look at sepsis. I mean it's the most common cause of death in our hospitals. It's more common than the primary causes of cancer as we see, even if you take lung, prostate and breast cancer combined. So it accounts to around 30% of all death in our hospitals. Also, a septic patient moving from sepsis to septic shock will be treated in intensive care bed, and that's an expensive treatment, of course. And it's actually the most expensive condition to treat in the United States. But of course, the key here and why we are working at Q-linea to try to improve the diagnostics is that time to correct treatment is critical. Sepsis is caused by an infection somewhere in the body leaking out of the bloodstream, causing an acute reaction of our immune system and of course, you have to treat the underlying infection. And you do that with providing the right antibiotic for that particular bacteria. But however, if you are on the wrong treatment and you're moving into septic shock, the overall survival rate decreases with over 7% every hour on the wrong treatment. So of course, time tax and results is what really matters for these patient groups.

So if you have a look at Slide #5. This is just a high overview of how we can save time compared to the current traditional diagnostic workflow for sepsis. We don't have time to go through it at this call. We're on the top part of the graph, you can see the many number of steps, I mean, every gray circle extending over several days. And that's different when you start treatment and the green circle when you can actually have an actionable effective treatment. And that currently takes too long. So ASTar can cut that time off dramatically. We do have a fully automated AST within 6 hours, and it only takes 2 minutes to load the sample, meaning that anyone at the lab can do it at any given time point. But also, as you can see in the top part what we have seen now, and you can save time in AST, the next really big bottleneck is transportation time for the blood culture bottles. Typically, they are taken at the site of the bed when you sample at the patient but they need to be transported to the central microbiology laboratory, and that can take 10, 12, 14 hours. And of course, during that time, nothing happens with the sample. Podler instead uses all that time in the diagnostic workflow and can then dramatically help saving times also in this step.

But today, we'll focus on ASTar. And if we look at Slide #6, these are 3 independent health economic studies that have looked into what if you can say, 24 hours in providing the correct antibiotic for a septic patients. The effects are quite astonishing. I mean reduced mortality also less pressure for resistance and superinfections. And this is, of course, if you can move away from a broad spectrum treatment that really drives resistance development in the patient and of course, also in the hospital and society. If you can move that to tailored narrow spectrum treatment, you reduce that pressure, but then also cost savings. I mean this patient group are most commonly DRG or lump sum reimbursed. And if you can save time in these expensive intensive care beds, you can save a lot of money for the hospital. And this study show that on average 2 days could be saved in intensive care beds. So I think when we look at the positive outcomes for applying rapid AST is, of course, for the patient will reduce mortality for antimicrobial resistance. You have less pressure for that. And of course, for the hospital, you have cost savings. So of course, we are now moving into -- coming closer to start our health economic study, and we, of course, would like to demonstrate this value with ASTar in clinical settings, but we'll have to come back to you on that.

So if we just have a look at Slide #7. This is just the 4 pillars around what we design ASTar to be actually, and we did that with our customer. It needs to be easy to use. I mean, the only way to implement rapid diagnostics in my opinion, is that anyone should be able to run the sample, should be integrated in the workflow, and it should have very little hands on time. ASTar also supports the random access workflow. So you can start a sample anytime you have free capacity in the system. Then of course, the AST itself needs to be fast, around 6 hours at a high throughput who can run 12 patient samples in parallel. And for those who have followed us more carefully, you can see that we also have the ability to be much faster than this that we have demonstrated in papers. We see if we bring that capability to ASTar.

To me, when we look at the right, I think one of the most important part here is to be comprehensive because, as you know, sepsis can be caused by hundreds of bacteria, and they have different type of resistant mechanisms, so you need to address them with very different type of antibiotics. So with a broad panel coverage, the likelihood of finding a successful treatment for each individual patient, of course, increases. And apart from that, ASTar also covers both fastidious and non-fastidious bacteria, and that really brings a broad coverage also on the bacteria side. But then accuracy, you need to trust the results. ASTar delivers 2 MIC values and MIC is the concentration that kill or inhibit bacteria growth. We can do that over a very wide range at a higher replicability. If we then move into Slide #8. This is just a testament from Uppsala University Hospital, they have been using the system, they really feel that they can save time in their staff. It's easy to work with them to integrate in the workflow. So I think that's also very positive.

On the next slide, Slide #9, we can see results from our CE-IVD study, the European study, where you can see that we exceeded all criteria needed to have their products certified in Europe. And on the lower right, you can also see that the coverage, when we compare it to the other 2 fully automated systems on the market is very broad. And this, of course, is actually the broadest panel on looking at combination of antimicrobials and dilutions in the world today.

We then move to Slide #10 instead. This is just looking at throughput. We have really designed ASTar to be suitable for medium-sized and [ up ] hospitals where you have higher sample throughput or high need for sample throughput so we can run up to 12 patient samples in parallel. We're also designed ASTar as you can see to the left, to be either running fully automatic mode as for sepsis, but you can also run it in semiautomatic mode just loading the disc, of course, at a different price point.

If we then move to Slide #11. I mean we, at Q-linea, are not just focusing on ASTar. We are actually looking at the entire workflow for septic patients or patients with severe infections. And from left to right, we now have Podler in development that could really be a disruptive stuff on using transportation time instead of wasting it that we think can be a big shift in the way we look at blood culturing into the future. Then in the middle, we have the identification part. And those of you who have [indiscernible] for a long time, you also know that we have proprietary highly multiplexed ID capabilities that can actually performed identification directly from venous blood. That was demonstrated on patients a number of years ago, but we are still looking for what's the right appropriate time and to put ASTrID into development. That was a system that I would say was too early for its time, but maybe its time is catching up slowly but steadily. But then, of course, to the right on the susceptibility testing we have ASTar, of course, focus now working with the U.S. market, [indiscernible] market access there, but then, of course, also broadening the test menu on ASTar. But we also have the ASTrea system, which is a development platform. What we can do ultrarapid point-of-care testing for urinary tract samples. So the technology we have in Q-linea is covered by 24 patent families, and we truly believe that looking in the 5-, 7-year scenario, we have very many interesting things to bring to the market.

But when we talk about the market, if we move to Slide #12, I mean you know that we have a very good reference for standardized susceptibility testing. That's the Thermo Fisher Scientific Sensititre platform. which everyone needs to compare to, and that's a great system. But when we look at the world and see the change moving to rapid AST, of course, we will also need a rapid AST reference and we are, of course, our goal is to bring ASTar to that position. So what you see when you compare ASTar on the top graph here with the orange dots to a 3 different bug/drug combinations. You can see an independent samples, and you can see reproducibility. So ideally, they should all be on a single line, then you have sort of perfect [indiscernible] But ASTar performed very, very well. If we then compare that with a current Sensititre platform on the low part of the graph, also performed by the European reference lab, you can see that the spread is much higher. This is probably caused because it's a more manual process, where you have more steps involved. So we really would like to see what ASTar can become into the future for Rapid AST. And also, for those of you who know that you run rapid disc diffusion, for instance, you know that peptase is an inherited difficult combination to run all very often have areas of technical uncertainty on peptase, which is a common bug/drug, while ASTar performs very, very good on that.

So saying that, we're moving on to Slide #13, and we'll focus much more on the actual quarter. I would say the highlights for me was, of course, incredibly successful trade shows. So we presented ASTar both in Europe and in the U.S., and of course, our part of Thermo Fisher Scientific did the same. We had the boost very close to each other, so we can actually have good traffic coming from our booth to Thermo Fisher and vice versa. We had a high number of leads performed demonstrations basically all day. So there was a large interest from potential customers, also larger institutions, but also strategic companies were quite frequent in our booth.

So we do see here that, as we said, the sales cycles are long, but the generated interest at these conferences will, if we are successful will turn into good commercial opportunities during next year, beginning of next year. We also, of course, in our booth, not only presented ASTar but also the entire ecosystem of Podler and also our intent to new product to run isolates separately at a lower cost. And Podler basically went viral. We had a lot of traffic, reoccurring traffic that has seen Podler and yes, never could believe what a -- the simplistic use of it and what it could transform for blood culturing, so extremely positive.

And as I said before in the opening of our call, we still stick to our sales estimate. It's more of a backloaded year. But we are doing a lot of successful evaluations, and I think that looks really promising for the future.

If we then move to Slide #14. Of course, as you know, our main system ASTar have the breakthrough device classified during the first quarter, moving into the market application 9th of June. So of course, now we are waiting, working with the FDA and of course, are looking forward to market approval of that system.

But if I then move to Slide #15. We can also see looking more into the ASTar system. We achieved the IVDR status in May. We have been working for many years towards this. This is a big feat to meet actually, it is a big milestone for us. And the next phase is then, of course, we cover the entirety of the company, which is planned now during the autumn. Also, we send the press release receiving a letter of intent for Podler. First step is, of course, to evaluate the technology. We cannot and we will not comment on from where we received it. But I think it's also positive to see that the Podler is moving slowly but steadily, not just in development, but also in the potential commercial path.

Then on Slide #16. I think we have seen sort of a pivotal point now in the company development. I mean we have been growing for 14 years. I've been part of that journey since we started. And historically, of course, we have been using consultants in the company to handle either peak load or reach specific milestones. And we met 2 of these very big milestones here during this quarter with the IVDR submission, the 510(k) application. So we now actually are starting to see a reduced use of consultants in the company but we've also seen a lot of that knowledge that they bring to the company has now been transferred to in-house staff. So we're actually changing trajectory looking at costs for consultants primarily going forward.

Also looking at this year, as you know, we did a large securement of components for ASTar during end of last year. And that was, of course, due to the difficult supply situation in the world. And we have been very successful in that, been able to keep our deliveries, but we've also been able to handle that peak, and we don't see the same cost coming up to build stock as of last year. So also very positive in that development.

So if we then move to the last part of my presentation is, of course, a little bit of comments about the corona pandemic. I mean, as we know, we are going to live with this virus now for a long period of time, maybe forever. We currently don't see any real effects on operations. But as you know, the new variants are coming up at 2.5 and so on. So we are working on the new normal situation, but we're following it extremely carefully. And future possible effects. One, of course, might be driven by customer effects on that, access to hospitals. But so far, we see it's a manageable situation. And of course, a shortage of components are still at risk, although I think we have managed that situation very successfully in the company, and we don't see that as a major risk drivers. That, of course, expense levels, financing strategy might be linked to that as well.

So with that, I will more or less move from my part of the presentation. On Slide #18, I will hand over to Anders, the CFO of the company, to go through the income statement. Welcome, Anders.

[Anders Lundin, executive]

Thank you, Jonas. I have a couple of slides with the highlights of the financial data that was submitted this morning in the Q2 report. So I'll start on Slide 18. The net sales for the second quarter were SEK 4.1 million. And we have expensed goods to an amount of SEK 10.4 million. Operating results was minus SEK 73 million. And compared to same quarter last year was minus SEK 68 million, so a difference of SEK 5 million approximately. And we have a loss after tax of minus SEK 74 million. Earnings per share were minus SEK 2.53 this quarter.

So if I move to Slide 19, and then we compare with both the balance sheets. We have basically 3 assets on cash equivalents. We have SEK 19 million in the bank account compared to SEK 15.1 million, and that comparison is with the end of last year, so end of December 2021 is the comparison. We have short-term investments in interest funds of approximately SEK 100 million, where of short-term noncurrent bonds are the majority of that 3/4 of that amount. We have bonds which are noncurrent of SEK 94 million, and we have an inventory of mainly ASTar and consumables and raw materials of SEK 18.7 million and we have decreased inventory by SEK 10 million since end of last year. We have a write-off of minus SEK 4.9 million which is on par what we had by the end of last year was minus SEK 4.7 million. So moving to Slide 20. That is the cash flow for the second quarter. We had cash flow from operating activities was minus SEK 69 million compared to minus SEK 45 million same quarter last year. The difference is that we have less favorable changes in the working capital compared to the same quarter last year and we have a SEK 5 million lower operating result, as I mentioned in the income statement slide. Investing activity, we have SEK 73.3 million, and that is we are divesting short-term interest funds in the quarters to finance our operations. We have done some investments in production equipment of SEK 7.3 million in the quarter. And you see the comparison of last year, we had minus SEK 203 million and that is due to the fact that we had a rights issue in the second quarter last year, and we invested those -- the liquidity from that rights issue. We invested that in bonds and short-term interest funds. So that is why the comparison number is minus SEK 203 million. Last but not least, we have financing activities of minus SEK 40 and that is a repayment of loans. And now those loans are fully repaid. And as I mentioned before, the same quarter last year included the rights issue.

So with that said, we have available funds, working capital of SEK 213.8 million compared to SEK 347 million, by the end of last year. And that balance, together with our current business plan that have been approved, we go board, they estimate that this is sufficient to cover the needs for the -- at least for the next 12 months.

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

[Jonas Jarvius, executive]

Thank you very much, Anders. On the last slide, that's Slide #21. We have to say thank you for the call, and we'll bring it back to the operator to open up for any questions. Thank you, everyone.

[Operator]

[Operator Instructions] Our first question comes from Jakob Lembke with ABG.

[Jakob Lembke, analyst]

Thank you, operator, and good afternoon, Jonas, Anders. My first question is on the letter of intent for evaluation and commercialization of Podler. Just wondering if you can go into any more details about what sort of company it is and what sort of deal structure you're looking at?

[Jonas Jarvius, executive]

Thank you very much, Jakob. Well, at this moment, I can't really go into any details. Sorry about that. But I can say that it's a very big company. So well renowned in the field, so to speak. And of course, I mean, typically, as you know, the first stage of any type of moving into a tentative commercial development is try to do evaluation and pressure test the technology, the same that happened with ASTar many years before we signed the contract with Thermo Fisher Scientific. So we are -- it's an early stage, but I do also see quite a big interest regarding Podler. So I'm thinking that this might be conducted at a different pace compared to ASTar. So sorry that I can't give you more detail, but of course, we will provide more updates if we are successfully moving along, which I, of course, do hope.

[Jakob Lembke, analyst]

Okay. I totally understand that. But just on the company, I mean, on the way you phrased it in the press release. Is it fair to assume that it is a company of sort of similar nature that you have partnered with for ASTar?

[Jonas Jarvius, executive]

Well, it's not probably wrong to assume that. I'm not saying that it's not the same company as we're partnering with ASTar either that could be the case. But it's definitely a large and reputable player in the field.

[Jakob Lembke, analyst]

Okay. I understand. And next on -- you mentioned that you see sort of no funding need in the coming 12 months with your new business plan, which includes a potential deal for Podler. So I mean just asking to what extent do you expect this letter of intent to convert into a deal?

[Jonas Jarvius, executive]

So I think, first and foremost, I mean, what we're looking at the Board [indiscernible] on running cash is, of course, the current burn rate is obviously also same so ASTar is one thought that's added to that. And then, of course, any other type of funds that could be gained in the company. When we went with ASTar, we did not want to have money coupled to that license because we wanted, yes, for obvious reasons at that point to be truly independent. For Podler, I think there are many other types of strategies and possibilities that could be here. So I think when you look at the statement, it's an overall statement from all types of income we have or possible income in the company without saying anything about exact timing. But for sure, for 12 months, at least, we would be able to run the business as we'd like and of course, grow the business.

[Jakob Lembke, analyst]

Understand. But just -- I mean, the way you phrased it, it sounds like, I mean, you're quite confident that you are going to be able to strike some kind of deal for Podler in not too a long time?

[Jonas Jarvius, executive]

Well, the phrasing might be that, but let's just say that I'm confident that we'll move forward with that technology. We see a huge interest. And -- but I think that will be interesting development over the next 6 months or so.

[Jakob Lembke, analyst]

Okay. I totally understand. And just maybe you can update us on the way forward for Podler in terms of clinical evaluation and regulatory pathway. I guess it should be at least a couple of years out before you could actually start to use it or sell it?

[Jonas Jarvius, executive]

Yes, right. So I mean what we did, of course, we have selected a contract manufacturer now that's working with the manufacturing, the transfer part for the Podler, that's an important step to be able to generate enough units. Of course, we have been doing extensive testing. We published also a material on that ECCMID and ASM regarding the performance of Podler. So it looks very, very strong. And then, of course, we're moving into thinking about clinical evaluations, how to do that. And I think the exact path for that might actually be also coupled together a little bit with how we partner up around that product and how we take it forward. And of course, also trying to understand the path for that product. We currently assess it to be sort of a 510(k) equivalent, so not a de novo, meaning we don't have to do a huge study for it. And for some markets, we might not even have to do a complete size of that study. So it's still under valuation. And I think also it will be under have a discussion together with whomever will bring it to market with because it might be a little bit different path depending on what we select there.

[Jakob Lembke, analyst]

Okay. I have a couple of questions that's also not relating to Podler. And if you start on the sales in the quarter and your reiteration of the forecast, and you said that it looks like the year is going to be more back-end loaded. I mean, it sounds like you have delivered, I guess, less than half of the target. And that should probably mean that you have seen a bit of consumable sales already this year?

[Jonas Jarvius, executive]

Yes, that's right. So -- and I think also backlog is a lot of activities that has been done and are implemented will drive it to be sort of backloaded both on instrument placement but also, of course, on consumable utilization. Because typically, when you start using this system, you have to validate it in your own hospital, that will take some time. And then typically, you can see an increase over time in adoption of the system. So -- but we have seen a mix of both during the quarter for [indiscernible]

[Jakob Lembke, analyst]

Okay. Great. And my final question is just on -- I mean if you can say anything about how many after systems are in clinical use today and how the reception has been from the ones using it?

[Jonas Jarvius, executive]

So what we have said and sort of agreed with our partner Thermo Fisher Scientific, is not to announce those numbers just of yet. But what I do, of course, see that as we move along in this wholesale funnel and band will become sort of firmer on our commitments moving into next year. We'll, of course, start sharing those details. And also, what I would like to see is utilization of the system on the various settings because I think that's going to be an important factor also for the future uptake of consumer pull-through for instance.

[Operator]

[Operator Instructions] our next question comes from Ulrik Trattner with Carnegie.

[Ulrik Trattner, analyst]

Thank you very much, and good afternoon, both Jonas and Anders. First of all, if you can get some clarification on Podler and what's expected here in the near term in terms of clinical evaluation. You have previously stated that you were hoping to get Podler into clinical settings before year-end. Have this time line somewhat changed since you now have received this letter of intent? Or is there anything else that should have affected that assumption? That would be my first question, please.

[Jonas Jarvius, executive]

Okay. Thank you very much, Ulrik and nice to have you on the call. So internally, we have not changed that assumption within our own plan. So that's still our thinking. But as you know, when you are in discussion, of course, we have to filter in what's the view from a tentative partner do that effect our thinking or not? So internally, we have not changed our thinking, but it could change. Let's say like that.

[Ulrik Trattner, analyst]

Great. And quite intriguing, I've been listening and we've been talking for years. And this is the first time you're actually talking a little bit more about ASTrID and I think you stated earlier in the call that it might be time to move that product forward. Could you just please clarify what you mean by that? I know sort of it's been stated that the multi cost has been dominated in the field and ASTar is a perfect fit with a multi cost. Or is this something that has changed? Or is this something that have come up during the discussions with during ASM or ECCMID that have changed your interpretation on the timing of ASTrID?

[Jonas Jarvius, executive]

Okay. That's a good question. I think overall, I think you're absolutely right. I mean ASTar is what we are really pushing for that's our lead product, and we're planning to follow on with Podler. So that's absolutely the trajectory forward for the company. And I do think that the mass spec is the dominating on analyzing positive blood cultures as of today. What we have seen is a little bit changed, I would say, overall in the market sounds that I think that when we started developing ASTar, it was basically too disruptive. It was too early as you know, it's direct from venous blood, not requiring a culture. So only thing I'm saying here is that I think that over the next 5, maybe 7 years, that platform could really add to the value as the market becomes more mature. But it's not a statement saying that we're going to press the development of ASTrID now. We're really focusing on ASTar and Podler. But I think that what has changed is that the world is becoming more mature for a product such as ASTrID that they simply weren't a number of years ago. So it's interesting to see that the technology we have in our company and covered by a large number of patent families, I think that's we can really see a long-term positive development of our company moving into the various fields in infection diseases. But just to be clear, ASTar is main focus, followed by Podler then we'll see. Of course, the Sample Prep technology developing ASTrID is what we use in ASTar and the same AST engine. So it's really the ID part that needs to come to development there.

[Ulrik Trattner, analyst]

That's perfectly clear. And when you say that the market has become more mature, have this sort of been highlighted in terms of external interest for ASTrID? Is ASTrID actually an instrument that you showcased at conferences? Or is this something that potential external partners are looking at your old clinical data. I think you have quite some clinical data on ASTrID already. And as you mentioned, you're still using the same AST engine? So have sort of external interest for ASTrID increased over the last months?

[Jonas Jarvius, executive]

Probably we were not showcasing ASTrID. Definitely, it's a product that's too much into the future to do so. I would say that when I estimate the market changes that we see that we have are now looking at some hospitals are moving to faster linking up of LIS data to make decisions. So you are also becoming more mature and how you can segment and triage patients for sepsis are still early days, but we see traction there. And I would say that when we talk about ASTrID, it's still, I would say, fairly few people for companies with insights in our technology that look at it, not necessarily the overview of the market. So it's more that I think people see that this field will transform over the next 10 years. And of course, during that transformation, I think different capabilities will be needed in different time stages and what I think is so interesting with Q-linea is that we actually have such a broad capability within our company to address those needs when the time is right.

[Ulrik Trattner, analyst]

Perfectly clear. Two more questions on my end. First is, you expressed in a few wording that you had more than 100 expression of interest at ASM regarding ASTar. Could you help us figure out what that actually means?

[Jonas Jarvius, executive]

Yes, of course. So typically, at a trade show, of course, you have people coming into the booth. But if you are actually performing a demonstration, and those people don't sign up that they are interested in receiving more information about ASTar or any other product that then becomes sort of a lead that has been done. Of course, together with our partner then work to, of course, have bring on as a customer. So what it means is a person that is actually performed or looked at demonstration and expressed an interest in that product. And I would say that looking at the size of the number of tentative future customers at [indiscernible] we are super delighted with that. And I think it's also, to be fair, maybe the first trade show at least for sure, in real life, what we can actually demonstrate ASTar for real. We can demonstrate the panel. People can then compare and contrast with other systems available on the market and then make their own decision on what do you think brings more value to my hospital. Of course, I want it to be ASTar. It doesn't have to be that in any case. So I think it's very positive to now see that we are a number of companies with slightly different solutions and customer can actually visit all of us and then makes their assumption if they would like to proceed with one or several opportunities for that system. So I'm extremely satisfied with the interest we received from both ASTar and also Podler.

[Ulrik Trattner, analyst]

This -- would it be fair to call them leads at least?

[Jonas Jarvius, executive]

Yes, probably like that. But of course, having them to be qualified, that's another thing. So they need to move to a sales funnel. And there are several stage in that funnel, of course.

[Ulrik Trattner, analyst]

Great. Thank you. And last question on my end. And then it is on the cost base. And it sounds like a lot of costs will come down in the coming quarters. A lot of external costs related to consultants, some inventory that has been built up. Could you talk a little bit about how we should approach or the total cost base in the coming quarter as well as sort of looking into 2023 as well? Should we interpret it as the cost is coming down? It's going to be flat? Or should we see it continue growing?

[Jonas Jarvius, executive]

No, I think my interpretation of my view is that we're more leveling out. We will see growth in some parts of the company, I mean, working production and those areas but we see going down in other aspects of the company. So I'm thinking more that the way I look at the comp as of now, I think we have built a solid base, and we expect that to sort of level out now and not as we have done in the past, growing 30% every year. That's not what I do expect for the future. There will be, of course, a little bit rearrangement because of, I mean, higher production volumes as we hoped for and that we have a very mature team now in regulatory and other areas. So I would say that the interpretation is more of a level out situation.

[Ulrik Trattner, analyst]

Great. Thank you very much. And hopefully, we will have a 510 clearance before you for your Q3 report.

[Jonas Jarvius, executive]

Thank you very much, Ulrik.

[Ulrik Trattner, analyst]

I hope you have a good summer.

[Jonas Jarvius, executive]

You to as well. Have a great summer, and fingers cross. Thank you, Ulrik.

[Operator]

This concludes our question-and-answer session. I would like to turn the conference back over to Jonas Jarvius for any closing remarks.

[Jonas Jarvius, executive]

Thank you very much for that. Thanks for all the questions. And I do want to wish everyone listening in to have a great summer, hopefully, some vacation. Also to stress from my side as well that the pandemic is not over. So everyone should remember to wash their hands and stay safe to the best ability. And with that, I would like to conclude the call from me and Anders, and thank you very much, everyone.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.