The sales for Q3 came in at SEK13.2m (SEK10.1m), representing a y/y increase of 31% and a q/q decrease of 10%. The sales can be compared to our sales estimate of SEK15.4m. We learned from the report that GARD sales during the quarter amounted to SEK9.4m (SEK6.1m), representing a 54% increase y/y. Even if the sales came in slightly lower than anticipated, we still argue that it is solid. Moreover, operating expenses amounted to SEK-12.8m (SEK-11.8m) (including depreciation/amortisation) compared to our estimate of SEK-16.0m. Lastly, EBIT came in at SEK-3.9m (SEK-5.2m) compared to our EBIT estimate of SEK-4.9m. Sales came in a bit under our projection; however, costs were lower as well. Excluding the depreciation and amortisation from OPEX, the adjusted EBITDA amounted to SEK-1.2m (SEK-2.3m), which aligned with our estimate of SEK-1.2m.

Overall, Senzagen continues to deliver growing sales each quarter, operates in a growing market, and is closing in on profitability. Additionally, the company has a solid cash position. Observing the Swedish life science industry, we argue there are few companies that can check these boxes and still be valued as low as SenzaGen. Concludingly, we argue SenzaGen is not valued correctly by the market, and at some point, corrections should be seen, resulting in an upward trend in the company’s share.

The changes that we have made in this update do not render any changes to our fair value range. Our valuation of SenzaGen includes a base case of SEK17.5, a bull case of SEK26.5, and a bear case of SEK6.5. The SenzaGen share is currently traded close to our bear case. We argue that the current share price is an attractive entry point for new investors and highlight that the company continues its road toward profitability and is currently valued at solid EV/Sales multiples.