The sales for Q2 came in at SEK14.7m (SEK11.3m), representing a y/y increase of 30% and a q/q increase of 2%. The sales can be compared to our sales estimate of SEK18.3m. We learn from the report that GARD sales amounted to SEK9.3m (SEK6.0m), representing a 55% increase y/y. Furthermore, the gross margin during the quarter was 70% (68%) compared to our gross margin estimate of 73%. Moreover, operating expenses amounted to SEK-17.9m (SEK-15.5m) (including depreciation/amortisation) compared to our estimate of SEK-14.5m. Lastly, EBIT came in at SEK-7.6m (SEK-7.9m) compared to our EBIT estimate of SEK-1.2m. The lower sales were the main reason for the difference between actual and estimated EBIT.

SenzaGen has secured a global licensing agreement with the US-based Institute for In Vitro Sciences, Inc. (IIVS), a prominent contract laboratory specialising in non-animal testing. This agreement grants IIVS the rights to commercialise and perform SenzaGen’s GARD test portfolio, a suite of innovative in vitro assays for chemical risk assessment, at its facility in Maryland, USA. We argue that the licensing agreement is a solid step to increase SenzaGen’s presence in the US, as the risk is fairly low and the partner (IIVS) is a solid and well-established player within in-vitro diagnostics. Furthermore, we expect to understand the agreement’s sales impact better during the late part of 2024 and in 2025.

Our fair value range is based on a DCF (Discounted cash flow) model between 2024e-2037e, applying a WACC of 14%, a terminal growth rate of 2%, and a terminal EBIT margin of 29%. The changes in our sales estimates impact our base case, which is SEK17.5 (18.5). Furthermore, we have also made sales estimate changes in our bull case (-2-4% between 2024e-2030e) and our bear case (-1-4% between 2024e-2030e). As a result, our updated bull case is SEK26.5 (27), and our bear case remains intact at SEK6.5.