Devyser Diagnostics - Q3 2024

Devyser Diagnostics, a Swedish company specializing in genetic testing solutions, continues its strong growth trajectory with a focus on innovation and expansion.

Financials

• Net sales in Q3 2024 increased by 4.4% year over year to SEK 48.7 million. Adjusted for exchange rate fluctuations, net sales increased by 7.2%. Organic growth was lower than expected, but the company anticipates the strong growth trend seen in recent years to continue.
• The gross profit margin in Q3 was 72.3%, which is lower compared to 85.0% for the same quarter last year. This decrease is mainly due to moving costs and the planned curtailment of production as the business relocated to a new facility.
• Operating expenses increased in Q3, primarily due to:
• Recruitment in sales, development, and administration to support the company’s growth strategy.
• Implementing a new ERP and CRM system.
• Costs associated with two rents due to the depreciation of right-of-use assets for both the old and new premises.
• Incentive program costs.
• The company also invested SEK 10 million in new product development during Q3.

Product Innovation and Expansion into the US Market

• Devyser presented new, innovative products, and research findings at ASHI 2024, a leading transplantation conference in the US. They presented six posters and one abstract highlighting the advantages of their products compared to the competition.
• Devyser and Thermo Fisher Scientific are working to obtain FDA approval for their NGS test, One Lambda™ Devyser Accept cfDNA, for monitoring kidney transplants. The test uses cfDNA in the blood of kidney transplant patients and has the potential to revolutionize kidney transplant monitoring in the US due to its potential for faster and more accurate test results.
• The collaboration with Thermo Fisher is developing well. While Q3 sales were lower than anticipated, this should not be interpreted as reduced commitment from Thermo Fisher but rather as irregular purchasing patterns. Devyser sees continued strong focus from Thermo Fisher on their products and collaboration.
• Devyser is investing in building its US CLIA lab, which is expected to be a major revenue source in the future. Although current sales are limited, the company is making progress in validating its products and securing reimbursements, with the expectation of receiving the first reimbursements in the first half of 2025.

Overall Outlook

• Devyser remains optimistic about its future, believing that DNA diagnostics will maintain a central role in healthcare for diagnosis and treatment planning.
• They anticipate the continued strong growth they experienced in 2023 and the beginning of 2024, expressing confidence in meeting their financial targets.

Key Takeaways from Q3

• The FDA approval process for the kidney transplant monitoring test is a key development, with the potential to significantly expand Devyser's presence in the US market.
• The continued growth of the US CLIA lab is a major focus area, with revenue generation expected to begin in the first half of 2025.
• Despite lower-than-expected organic growth in Q3, Devyser remains confident in their long-term growth trajectory, driven by product innovation and expansion into new markets.

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