Q linea AB

STO:QLINEA

Earnings Call Analysis

Company Fortifies Commercial Strategy and Controls Costs

During 2023, the company expanded its European network, initiated commercial operations in the U.S. and Italy, and increased tender activities. They launched a health economic center in Italy, anticipating significant results to be shared in early March. A notable triumph was winning the first tender in Italy with their ASTar system, proving it technically superior to competitors. ASTar's extended offering now includes Meropenem/Vaborbactam for severe infections, with clinical studies in Europe and the U.S. completed. The company eyes FDA clearance and has applied for U.S. reimbursement mechanisms, expecting cost savings of SEK 50 million annually starting the latter half of the year. They spotlight the urgency of addressing antimicrobial resistance and sepsis, with their applications aimed at improving outcomes in these critical areas .

Strategic Focus on Growing Rapid AST Market in Europe and Preparing for U.S. Launch

The company's strategic efforts have led to a marked increase in rapid Antibiotic Susceptibility Testing (AST) system tenders in Europe, with particularly strong activity in Italy, signaling a positive shift in the European market. To continue fostering market growth and competitiveness, the company is poised to enrich its operations and presence in the United States. With discussions on FDA clearance reaching their final stages, the U.S. market, characterized as more mature for rapid AST, remains a critical focal point. The company is actively engaging key opinion leaders and potential hospital customers to establish a firm footing in preparation for a wider market launch post-clearance.

Expansion Efforts and Financial Prudence in the U.S. Market

While the U.S. market doesn't guarantee immediate explosive growth upon FDA clearance, the company envisions great potential towards the end of 2024 and into 2025, reflecting positive consumer feedback comparable to Europe. Expansion strategies include discussions on distribution partnerships to broaden market reach, effectively leveraging the current sales force, and targeting medium to large hospitals for strategic relationships. A noteworthy advancement is the ongoing application for NTAP (New Technology Add-on Payment), which, if awarded, could provide dedicated reimbursements and cost coverage for labs.

Corporate Restructuring to Maximize Shareholder Value

Strategic corporate decisions include the formation of a subsidiary to house the Podler technology, allowing the company to focus intently on ASTar. This move is designed to maximize shareholder value by providing clear developmental directions for both ASTar and Podler. The separation also facilitates continued business discussions and potentially leverages Podler's value independently from the core business.

Financial Overview and Cost Management

The financial review unveils a slight dip in sales against expectations, attributed to protracted sales conversion and long lead times – a primary focus area for improvement. However, the operating result shows an improvement year over year, from SEK 59.6 million down to SEK 55.4 million in losses. This progress stems from a cost-saving plan launched in the previous spring, demonstrating the company's commitment to fiscal responsibility. Additionally, earnings per share have experienced a significant shift to SEK -0.46, factoring in both improved performance and an increase in share count from the recent rights issue.

Earnings Call Transcript 2023-Q4

[Operator]

Welcome to the Q-linea 2023 Q4 report. [Operator Instructions] Now I will hand the conference over to CEO, Jonas Jarvius; and CFO, Christer Samuelsson. Please go ahead.

[Jonas Jarvius, executive]

Thank you very much for that introduction. So happy to have you join our Q4 report for 2023. As you can see also on this first slide, we also have Stuart Gander, our President coming in from March 1, and he will have the opportunity to present himself to all of you during this call. Having said that, I suggest we move on to our disclaimer slide in case me, Christer, or Stuart will make any forward-looking statements during this call. But as you read that, let's focus on the main topic for this conference. So when we look at the highlights really for this call and for this year, I would say, overall, I think we have seen a lot of activities happening throughout this time. And I will actually use opportunity to look back on 2023, which was a very important year for us as a company and talk a little bit about it from basically January 1, up until the last quarter and also into the first part of this year.

I think the key message here was that during last year, we started off basically in Sweden. We have built a strong partnership network in key geographies within Europe. We have really also started commercial-focused companies in U.S. and in Italy. And we have really been actively performing after evaluations, both in Europe, primarily in Europe but also in the United States. And as we see today, we can see that these results are coming in very strong. And we also see that they are now moving and triggering an increase in tender activity early this year. Another important priority for us last year was to start our health economic center that was started in Italy beginning last summer. And we are going to present the interim results on this at AMCLI, which is the big Italian [indiscernible] Conference on March 9. If we look at the period end, I think the most promising part was that we could announce our first tender win in Italy. And we could see that ASTar was really technically superior to other competing offers into that tender. But of course, although that we have seen in these evaluation that ASTar has been a very strong and very competitive product, we're not standing still. So we can also announce just of the period end that we could extend our offering in the Gram-negative panel with adding of Meropenem/Vaborbactam, which is a very important [indiscernible] antibiotics for patients with severe resistant infections. But I've also talked about FDA review and clearance of ASTar in the U.S., and I will come back to that. But we clearly see that we're coming closer to sort of the final one in that race. Another part that we think might also be of important for the U.S. market is that we have submitted for new technology add-on payment, so dedicated reimbursement for the U.S. market and ASTar, and we plan to [ sign ] that during the first quarter. We'll come back to that during the call as well. Another very important part, of course, is that as we have moved through our development path, we have made ASTar competitive product. We have completed our clinical studies in Europe and U.S. for the Gram-negative panel. And we see that we are refocusing the company towards, of course, a more commercial-oriented operation and that is, of course, one reason that Stuart is coming in, and he's going to tell you a little bit more about his background and why we think that, that's a very good handover from me to Stuart. But it also means, of course, that we are looking at the funds available. And with this restructuring program, we can see quite a significant cost savings of around SEK 50 million on an annual basis coming into full effect second half of this year. So with that, I will present Stuart Gander to you and give the word to you. So welcome Stuart.

[Stuart Gander, executive]

Thank you, Jonas, and I appreciate the chance to introduce myself to everyone on the call. So a few words about my background and a little bit how I think about it, stepping in now at this very important stage to Q-linea. So I'm Canadian by birth and operating with educated in Business Administration and Finance, Queens University in Canada and moved to the Nordics more or less directly afterwards in year 2000, where I started working with Sonera at that time in Helsinki in the ecosystem around the telecom boom that was ongoing, obviously, at that time. And then moved over to Stockholm in the year 2003 when Telia and Sonera merged.

So at that time, it was focused on launching new mobile web products and working with the mobile internet and getting immersed in the telecom space. It was around that time also that I got to know some of the folks at BCG, the Boston Consulting Group. I was invited to join the team there in Stockholm in the year 2006, initially to help grow the telecom practice of the Stockholm office, but was pretty early on in my career there at BCG when I got a chance to meet some of the global thought leaders in healthcare practice area who were working on a concept that was at that time unnamed, but later has been known as value-based healthcare, which is really centered around the notion of driving value in healthcare by putting patient outcomes delivered at the same or improved cost at the center of the strategic thinking around how to move forward in healthcare and building strategies for our clients around that.

So I spent nearly 15 years working at BCG across the healthcare sector, across pharma, payers and providers and most importantly, medtech sector, where I worked most of the medtech segments over time, especially within the diagnostics space, where I spent the better part of the last 5 to 7 years, focusing a lot of my time on diagnostics, across all modalities and elements of value chain and getting immersed in that space. It was also in the year 2017 that in conversation with the healthcare leadership at BCG, I agreed to move over to the U.S. based out of Boston to help grow the medtech practice in the U.S. as well. So I continued to work with BCG in healthcare in the U.S. for a few more years. In 2021, I was asked to join the management team of a company called StatLab, a leader in histology consumables based out of Texas. So I spent a few years in various roles there. It's a high-growth private equity-owned medtech company.

So I spent the year as the Chief Operating Officer there for taking on some commercial roles, including leading U.S. distribution, international sales, marketing, product management, R&D. And then as that company's strategy was also driven by organic growth and M&A that's given the opportunity to lead our U.K. acquisitions that we have made during the last part of my tenure there at StatLab. So as at the end of last year that I was reacquainted with this space. I had followed the AST space with some interest over time. I looked at it early on in my BCG career. And when I had a chance to discuss some of the -- with some of the Board members of Q-linea after having heard that they were looking for a new CEO for the next phase, I was really impressive to see how far Q-linea had come.

So a real credit to Jonas's leadership and the whole of the Q-linea team for bringing the company to this point, extremely impressed by the product and how they've stepped out into the market here, as Jonas just spoke to and will speak to in a little bit more detail. I'm very excited to lead the company as we go into the next phase of commercialization.

So with that, I'll turn it back to you, Jonas.

[Jonas Jarvius, executive]

Thank you very much, Stuart. And I really look forward to seeing the next transition and journey of Q-linea. So we'll go back to the presentation, talk a little bit about what we've seen during the year with the focus, of course, on the last quarter. But before I do that, I really just want to emphasize what's our purpose? What's our goal in this world? And it's really focusing on improving infectious disease diagnostics. It has been presented as the largest tract to mankind when we look at it overall.

And you know we have had antibiotics more or less in day practice since '50s but we see antimicrobial resistance is increasing, and we really need to think about how we use antibiotics in the future. But of course, that's a big problem to tackle, and we will be -- a small piece of that parcel. Our first application is really focused towards sepsis, blood stream infections, where we can see that there's an urgent need to have more rapid evidence-based therapy prescriptions.

So the highlights of sepsis is the mortality is high. We start treating these patients empirically meaning that we, in around 50% of the cases are not having the patients on the best therapy available. And unfortunately, a high number of these patients will die before you get the traditional diagnostic answer. It simply takes too long.

It's of course, a very big problem, the most common cause of death in our hospitals and also in the progression of sepsis when you move into septic shock into the intensive care unit, it also is the main cost driver in the U.S. healthcare system. So this is a big problem that we and others are trying to address. And I will focus a little bit more about how Q-linea and ASTar will fit into that picture. If you look at this slide, of course, you have seen it many times before, if you have followed Q-linea. And of course, if you look at the traditional workflow, it's many stats over many days and you start therapy without knowing if the patient will develop sepsis, what bacteria is causing the infection and most importantly, how to treat that infection. That today can take 3 or 4 days with a lot of work from the staff in the microbiology lab. So of course, this is what's changed with Q-linea to make it much easier for the persons in the lab and then provide a very complete and broad answer fast to guide therapy and of course, with the purpose of a better outcome for patients. Just a very high level market triangulation. I mean we see at least 4 companies that we think are providing semi-automated or automated products to this space. When we look at the market with a focus or weighting of U.S. and Europe, we see around 20 million blood cultures annually. If we say that initially, around 20% of them will be eligible for testing in a rapid AST, although I think over time, that number will increase. The value is high.

If we then say that just for a pure mass exercise that we will divide the market equally among us, that will equivalent to around 1 million tests per year. This is just the numbers. So it is a large market and it's a high value. What's important here also in this picture is that, of course, we didn't only design ASTar to work with blood, we have tested and also presented data on complicated [ urine infections ] or urine in general but also ISO testing So that is something for us to grow into the future. And I think with Stuart's leadership, that's going to be some interesting announcement over the next coming years, of course. Where I think we are a little bit different. I mean when we look at the market today, we see the fully automatic system which basically means very little hands-on time for the lab user and we have the semi-automatic that do require some more hands-on time before you load it. So we see this market in basically in 2 categories. And what we see as a strong point of ASTar is that we include a lot of the good features, the features that we feel that customer will value in one complete package.

So we're fully automatic. It takes less than 2 minutes to load the system, around 50 minutes of training for a person to be able to run an ASTar. It is truly random access based system, and that really means that if there is free available capacity in the system, you can load a sample at any given time point. You don't have to wait for the completion of say, a batch-initiated run. Large throughput, 12 patients [ on person ] parallel is the maximum capacity in ASTar. And we do in Europe, now we will also include [ prestigious and non-prestigious ] bacteria. So we have a very, very broad coverage in an ease-of-use platform.

I think what we have seen after all these evaluations we performed last year and, of course, continue to do is at the breadth of the panel, meaning the number of antibiotics but also the concentration range is where you can determine the concentration that would cure and inhibit bacteria growth, meaning the mix value can really be assessed over a large range with ASTar.

So if we look at that compared to our colleagues or you may say competitors in the field, we have a very, very broad product. And I think that is something that we have seen in these evaluation being highly appreciated by our customers. But this is also to look back a little bit over last year. And as you may remember, we started the year in January having a sales force in Sweden only because we have done recently decided jointly to separate from Thermo Fisher. We had a very competitive product in our opinion at that time point. And then over this year, we have progressed to what we see are the main markets in Europe, the high priority markets and find good distribution partnership that we now, of course, want to extend and refine to be truly successful in all geographies in Europe.

In Italy and in the United States, we have set up 2 companies. In Italy, the reason being that, first of all, it's a very different sales model in Italy with sales agents. We also had a very good person that worked with ASTar during the Thermo Fisher era, Franco Pellegrini, and he were then willing to join the Q-linea journey and continue with ASTar and has done it very successfully.

The same in the U.S., the team led by Jim Kathrein and of course, now Stuart is initially based in the U.S., where we have a very complete but small team. And there, we're now doing basically the same thing as we did last year in Europe meaning presenting ASTar to customers, enable them to test the system, see the benefits. So I think that retrospectively, we have come a far, come a long way in our journey. Of course, in Europe, we want every region to be orange. So that will be a continued extension of our partnership or sales in Europe as well. This is really a summary or just partly summary of some of the many, many customer evaluation studies we performed last year. I'm really proud to see that in all of these studies, and I can truly say all of them ASTar has been received very positively, and they have seen the effects that rapid AST can actually bring to the patient population.

But it extends beyond that. It's not just finding the right therapy, meaning that it can reduce antibiotics or it can escalate, if you need to save money and of course, aim for a better outcome for the patients. We have also seen perhaps unexpected effects that rapid AST early on can really also have reduced outbreak in the hospital because you can much, much faster identify what type of bacteria you have and what resistant patterns it has. And that means that you can then go beyond the ASTar rapid AST for one particular patient and look at it more from the hospital population. That was unexpected but very, very positive and we saw that in basic stock in one of the evaluations. But if we look at ASTar and what we bring to our customers, I would say that there are 2 main areas that I'd like to highlight. The first one is study, it really fits into their processes. It's super simple to use, and it really requires no change in the lab practice. This is very positive. The second part is that the breadth of the panel has now come to demonstrate that in a very high degree of patients or samples that you load in ASTar, you can act upon that. So around about 95%, you will actually have an actionable result. And this is a very high number. And of course, means that it provides a large value for each test. These of use were schematically, you love the sample, put the bar code on, walk up to ASTar and you are guided to a graphical user interface, you can start around all this in less than 2 minutes. And as soon as you start around, you know exactly when that sample will be completed. This is quite good actually because it also means that you can alert your physician to tell him or her when to expect the result of this coming out. So you can sort of be ready, all ready when you start to test. Of course, ASTar is an ally as bidirectional unit, so it will be reported if it's decided to be connected to the hospital network, but you can actually plan in advance. And this is something that we've also received very positive feedback from a number of customers. The second part of the panel, I will, of course, not go through this. This is just our European panel. And I think the reason we can provide the breadth of this panel is our technology that's built into our AST consumables. It's based on a compacted platform that has really been pioneered here in Uppsala and in one is, we can have 336 reaction wells. While we see many other chose the more traditional [ line for 61 plate ] format. And that, of course, means that we can cover more ground, so to speak, more antibiotics, more consultation ranges, in a unique consumable. And we see that this truly adds value to our customers as well. If we then look at what this turns up, this was our first tender, the first tender that we submitted to last summer, we can see that all companies submitted to this tender. Of course, we all want to shape and move these fields. Typically, in these tenders, you have a financial score and a technical score and they weighted differently with more weight on the technical side.

So just on a very objective view, we can see that the price in this case, we actually came in close to the limit of this specific tender of EUR 600,000, meaning an instrumental consumable over a period of time. That, of course, are reflected in a fairly low, in this case, financial score.

I think the key part here was the technical score where ASTar really performed well. And because of the technical benefits of the platform, we were ranked 1 in this particular tender. And this is, of course, just one tender, but it perhaps give an idea that ASTar is truly a competitive system in this environment. But I think what might be more interesting is that we now start to see that overall market is slowly moving. I mean, when we were here a year ago, for the same reports about 12 months ago, we didn't see any tender activity in Europe. Now I would say, because of us and the rest of the companies in this field have been active in the market, have been performing a lot of the evaluations, we can today see that more than 15 rapid AST system tenders are either announced or very close to be announced. Most of them, I would say, are in Italy. This is also the country where we started to work earliest.

We started in Italy and then we signed distribution partnerships in the other geographies in Europe. So Italy is a bit ahead compared to the other geographies. But this, to me, indicates a very clear shift in the trend of rapid AST. And that's why I also think that the shift from me now to Stuart is to really continue to grow this market, the market awareness, the competitiveness of the system, and then, of course, continue to do that in U.S. as well. So if we move over to the U.S. market, we have talked about our FDA discussion. And we have said that we are coming closer and closer to clearance or approval but clearance is the word I dare would use for it. And I would say that where we are today, if you compare this work with a marathon we are coming closer to the last leg of that raise. So find details in discussions, no major questions or concerns. So hopefully, this is something that we can bring to you in the very near future.

The reason we say that U.S. is the most important market, it's not just because of size, it is also because U.S. have been seeing or been aware of rapid AST for a longer time than Europe, I would say. So it's more mature in our opinion compared to Europe. We do see Europe being a very interesting market. The message here is not that Europe is less important, just that U.S. is more mature for this. And we have started. We announced that in December of last quarter that we are now putting ASTar enhance all to, hopefully, future customer but today, evaluation hospitals.

And of course, we have started with 2. We have several in the pipeline, and we will, of course, adjust the volume and speed with that coming into the spring here. But so far, the feedback has been very, very positive. Again, obviously, it is the ease of use how ASTar presents the data and at what timeline. So the strategy of U.S. is going to be similar than Europe is first anchor ASTar performance in key labs with key opinion leaders and then go broader. So we get the right feedback first. And of course, Stuart with his background and of course, being on ground in the U.S., I think, will be instrumental together with already in-place U.S. team to bring this market forward. This is not the message to understand that as soon as we have clearance, the market will explode. That's not the way the market works, but we clearly see that if we see the same type of messaging from customers in U.S., as we have seen in Europe, I think this could be a very interesting [ genre ] when we come into end of '24 and '25. Another part of U.S. is, of course, it's a very large country. And as I say, we have a very complete and competent sales and commercial force in the U.S., but we are now discussing on how do we broaden that reach in the U.S. market.

So there are ongoing discussions with distribution partnership. Some might cover a very large region of U.S., some smaller, but we're also looking into how we can use our team at the best during this year. And we think we can be very efficient even with a smaller team actually.

And the reason for that is that, as you may remember, ASTar speaks for the medium size and up hospitals, and we don't think we need to address all hospitals in the U.S. We have a very clear list on what's on our priority list? What would make the biggest difference before we take the next step? And finally, for the U.S. market, because we were awarded Breakthrough Device designation by the FDA, we are now continuing to sort of use that stamp -- that acknowledgment, I would say from the FDA to apply for NTAP. And NTAP is an add-on payment to promote new technology that they find the value to U.S. hospitals and the patients, which could enable you to have a dedicated reimbursement outside the DRG reimbursement that's already in place for 3 consecutive years.

We do not know if we are going to be awarded NTAP, but we are continuing that submission at least. I don't think that if we make or break the U.S. market, but of course, it will be an added value to be able to do that and would provide some cost coverage for the labs. What we also had, as an announcement after the period end was that the Board of Directors have decided to place Podler in a separate company. So today, it's a fully owned subsidiary, and we are just in the preparation of completing that transformation.

The purpose is very simple. A, Q-linea needs to focus on ASTar. We see we have a strong product and we need to really focus efforts on that. But it also enables us to perhaps in a parallel track, continue the ongoing business discussions and really have focus for Podler and ASTar separately. And of course, the underlying thinking here is to maximize the value for Q-linea shareholders going forward. And if we see that we can't develop Podler in Q-linea, of course, we can bring some value of that back into Q-linea, it will be of very much interest to both the company and hopefully its shareholders. So now the last slide I have here is also bit of an announcement. We are going to present at AMCLI in Italy on March 9. That's going to be a workshop here. And I just want to highlight 2 prominent speakers in that workshop. Professor Alexia Verroken from Brussels will participate in our workshop. Professor Verroken, she was responsible for the largest comparative study of rapid AST system performed in Europe during last year. I do not know what she will present, to be fair and honest, but I'm very happy that she decided to participate in our workshop during that conference. The other very important part is, of course, Professor Sanguinetti, who is participating in the health economic study that we are performing in Italy. He will present interim data from where we are today in that CR study. And of course, hopefully, that would be very positive for us and for all of you that will listen into this. And then, of course, the rest of the study, we aim to complete that during later part of this year. But at least an indication of where we are right now. So interesting and quite important.

So with that, I will just sort of end on the highlights of how we look at it. The clear focus today is ASTar and Gram-negative product. But of course, our goal is not to end there, we will, over the next several years continue to increase expansion.

And also, we have products and value, I would say, in the company that we think could be worthwhile in the long run. But of course, the focus is ASTar, and I would say only ASTar in the short term.

So with that, I would like to hand over to Christer, who will run you through the financial statements for the fourth quarter. So go ahead, Christer.

[Christer Samuelsson, executive]

Thank you, Jonas. I will, as Jonas said, take you through the more financial part of the presentation. And I will start with some P&L highlights from the fourth quarter. Starting on the topline, we can see somewhat lower sales than anticipated due to slower conversion of the sales funnel and long lead times. That's something, obviously, that we are focusing on to shorten this lead time is a key focus of us going forward, obviously. Going a bit deeper in the P&L and looking at the operating result, we can see somewhat improved, although negative improved result, minus SEK 55.4 million as compared to last year's SEK 59.6 million. And it translates current or the fourth quarter operating result amounts to SEK 18.5 million minus, negative per month.

And looking at the first 9 months of this year, the same operating result was minus SEK 19.5 million. It's just the full year, but I should say the first 9 months there. And obviously, we have -- we are looking at this very carefully. And the last year, we had a cost saving plan that we initiated last spring, and that explains the improvement we can see in the fourth quarter.

Stepping down a little further down is the P&L, looking at the financial net, and we can see an improvement there, thanks to excess cash that we have invested and the higher interest rate on the market. That's the explanation on that one. We have the same story as on the operating results when looking at the earnings before tax and earnings after tax, it's also improved as compared to last year, both for the quarter and for the full year. And looking at the earnings per share, it's a fairly dramatic change. it is negative, minus SEK 0.46 per share before and after dilution. And it's explained obviously by the somewhat better result but mostly because of the increased number of shares coming from the rights issue last summer. Stepping ahead now and looking at the cash or the consolidated statement of financial position and starting with the cash. At the end of the year, we have cash and cash equivalents of SEK 81.9 million. And adding the remaining loan facility from our main owner Nexttobe, [ SEK 41.5 million ], which adds up to SEK 123.4 million available funds at December 31. And also, if you look back, we have a spending last quarter in Q4 of SEK 18.5 million, just to give you that number in connection to this amount of funds. Looking at some other parts of our balance sheet. We have inventories of SEK 46.5 million, a slight increase as compared to last year. But here you also shall be aware of a large part of this amount constituted by instruments, sellable instruments. Looking at the equity, we have SEK 189.6 million, an increase as compared to last year. Obviously, that is a result of last summer rights issue. And although it's good that, that is fairly solid as of December 31. Let's switch to last page. An important part is obviously, given the fact where we are in our phase of development is the future financing. And as you have seen, and you're probably aware of, we do not yet generate a positive cash flow from our operations.

And also in Q4 in this year-end report, we have reported that we do not have growing concern. In this section, there is a section in the report says future financing, where you can read basically what is written on this page, but I would like to summarize it like this and also give some extra comments on this one. And as I have previously informed, we have a total of SEK 123.4 million available funds at year-end. And as I said, an average operating result in Q4 of minus SEK 18.5 million. Also, as previously announced, we have a large restructuring cost savings plan ongoing and implemented with the full effect as from Q3 this year which obviously positively will impact the spending. Also, as you are aware of, as Jonas has said, we are in an early commercialization phase. And for this reason, we are engaged in pursuing alternative financing options. And that includes licensing of distribution rights and sales rights, strategic partnerships, capitalization of existing assets within Q-linea and of course, negotiations with new, existing and/or existing investors, financiers and lenders. Given this summary of future financing, it is the Board of Directors' assessment that the group successfully will be able to finance company operations going forward.

I think this is the summary of the financial part.

[Jonas Jarvius, executive]

Thank you very much, Christer. That actually concludes our presentation part of this meeting. I will now hand back to the operator to open for the Q&A section. Thank you, everyone.

[Operator]

[Operator Instructions]

[Unknown Attendee]

We have a question from an anonymous comment. Can you please state your name and company and then ask your question, you're unmuted now.

[Johan Unnerus, analyst]

It's Johan Unnerus from Redeye. And the first one, you mentioned that you are working on speeding up the sales conversions, the activity has improved and you referred to some 15 tenders in process or preparing, including some that you are preparing for, most of them seems to be related to Italy, what can be done to improve the conversion?

[Jonas Jarvius, executive]

First of all, thank you, Johan, for your question. Well, I think the conversion is more or less basically to be frank and honest, respond to the tenders and have a competitive product. So that is just for the tender process. For the conversion overall, I think it's important to understand that [indiscernible] is still a young field. And today, we see in the market that customers really want to try and test the product in their lab, understanding the value for the lab and the patient. I think this will continue throughout this year, to be fair and honest.

But on the other hand, we also see that previous evaluations are now turning out to publications and some I think will be proven to be very strong in the value for the lab and the patients. And I think that when more of these publications become available maybe this -- we're looking at next year or so, I think there will be a little bit different structure in, say, sales funnel. Today, it's basically testing and find the instruments. Then you have to motivate it, of course, for the finance department of the hospital, and then you can raise the tender.

So I mean, approximately, that process could be 12 to 15 months long. So it's a fairly long process from A to Z. But I think that when more evidence becomes clear and when we see more key opinion leaders talking about the system in their positive environment, I do hope and I foresee that many customers can then bypass the evaluations that the evidence is strong, and you can more into a tender. I also think that what could be speed up in the overall process is that I mean it's easy to forget, but we're still recovering from a large pandemic. Of course, the pandemic as such is over. But during last year, we saw that very much strain in hospital budgets. And that is still the case for basically all countries, but it's starting to be more positive. And then I think also to be a change that with increased value and more funds available that could be important step. So maybe a very long answer to your question, Johan, but I see it's many facets on this process overall. I do hope it answered your question a little bit, Johan.

[Johan Unnerus, analyst]

Yes. And could we expect some publications of the testing and tender testing already in '24?

[Jonas Jarvius, executive]

Yes, I do believe so. I mean we -- some have already been actually published on posters. So that's due to the first step where you can see the highlights of the study. And of course, we do know that many clinicians and labs are working to have proper peer-reviewed publications. That, of course, is a longer process before they are approved and reviewed. But yes, we have already seen more. I do also expect that we are on ECCMID, which is in Spain this year, the largest conference that we see many, many more of these posters coming out.

So I think the answer is yes to that. And also, as a follow-up on your previous question, when we talked about tenders, depending on country, not all countries are as tender-driven, that's the majority, but we do see more cash-based sales as well. And hopefully, that could be part of the mix to some degree in Europe, maybe to a larger degree compared to Europe in the U.S.

[Johan Unnerus, analyst]

Good. And perhaps a little bit more details then on Italy, which seems to be a more dynamic market.

[Jonas Jarvius, executive]

Yes, for sure. I think, Italy is -- first of all, as I said, we started with our presence in Italy. That was the first country that we addressed basically, it's also the country where we are running our health economic study. So we are running that as a multicenter study in Italy. So I think ASTar is more known to Italian customers. I think also one key is Franco Pellegrini, who has seen the system over a longer period of time and truly has been very successful in working with the Italian market.

So Italy, yes, it's a high need, high prioritized area. I would say, in the past, you would call Italy an early adopter country. I don't really think there are any early adopter country after the pandemic, but they are earlier perhaps than the others. But we do anticipate to see traction coming up in U.K., France, Benelux, Sweden also during this year. But they are a little bit behind just because they started later, but they're still doing a great job.

[Johan Unnerus, analyst]

Good. And then, of course, gross capital and the finance is very important. You had a rather good illustration of the -- some of the alternatives. It seems like you can be running well into the second half at least. But this suggests that we should expect some sort of clarification fairly soon. Is it something that can be said about that?

[Jonas Jarvius, executive]

Well, I can't give you any sort of details on that, Johan. But I think Christer's slide summarized it very well. And I think what is [ new ] providers is, first of all, we have actually a number of options going forward, both based on ongoing discussions but also various options. So the Board assessment of us being very, very able to take this on forward is something to stand by. Does it may actually mean finance from the capital market? That could be an option, but there are also alternatives in the mix. And I would not like to be into more details on that. But I'm pretty sure that Christer and Stuart going forward, you will see some of that activity that we have started. So I know that it's not a very super clear answer, but I think it provides the best assessment where we are.

[Johan Unnerus, analyst]

Yes, quite understandable. So you can confirm that there are discussions ongoing at some level of, I would say, well, at top level right now or recently.

[Christer Samuelsson, executive]

Johan, It's Christer, obviously, I mean, the company of our -- in our phase at where we do not generate our own funds from our own operations, these discussions on all options are always ongoing. So that's nothing new actually. And I think we -- as Jonas said, we summarized the various options in a slide, and that's how it is. So it's nothing more to add on that actually.

[Operator]

There are no more questions at this time. So I hand the conference back to the speakers for any written questions or closing comments.

[Jonas Jarvius, executive]

So thank you very much. We had a couple of written questions in the forum. I think we have actually also done by answering Johan's questions. So I think that would be fine. So with that said, I would like to say thank you. This is my last audio cast. I would thank all investors and your belief in the company. I do hope, and I'm very sure that you will see that the hard work will pay off and that we are moving into a very interesting 2024. And I'm also super happy to hand over the relay stick so to speak, to Stuart. Christer will, of course, continue. But to take the company into the next phase. So I'm very delighted to put that. I also would like to invite Stuart, if you have some closing remarks from your view since you are taking over from basically Friday.

[Stuart Gander, executive]

Absolutely. And thank you, Jonas. I think once again, just to reiterate, I think we're in a fantastic place right now picking up from the legacy that you built with the team. And our company is really focused on bringing this fantastic product out to the patients and the market. The transition towards that commercialization has already started. And I think you highlighted a number of the really important foundational elements that have been built up over the last 12-plus months that are putting us in a good place now to really accelerate that growth.

So I would just like to close by saying a big thank you to Jonas for leading thus far, and that I'm very honored and excited to step in now. And I look forward to meeting you all over the next coming quarters to update on our progress.

[Jonas Jarvius, executive]

Okay. Thank you, Stuart. And with that, we thank you for listening in to our last report for 2023 and have a great day, everyone.

[Christer Samuelsson, executive]

Thank you.