Interim Report 1 (2021-05-01 – 2021-07-31)

CEO commentary

The strategic shift of sales and marketing continues to prove itself. Despite being a “slow summer quarter”, sales in May – July surpassed sales during any previous quarter.

Regenerative Medicine

Regenerative medicine is the branch of medicine that develops methods to regrow, repair or replace damaged or diseased cells, organs or tissues. The rapidly expanding field includes the generation and use of therapeutic stem cells, tissue engineering and the production of artificial organs.

According to the Alliance for Regenerative Medicine, there are 1 200 ongoing clinical trials worldwide of cell, gene, and tissue-based therapies by close to 1 100 medical institutions and regenerative medicine companies. These numbers are well within the 5 000 registered clinical trials on ClinicalTrials.gov that involve therapeutic stem cells, according to the Stem Cells Portal. ClinicalTrials.gov is maintained by the National Library of Medicine at the National Institutes of Health in the USA.

Also, according to the alliance, gene therapy financing was up 73% in 2020 from the previous year, while cell therapy financing was up 160%. For more details, see Alliance for Regenerative Medicine Annual Report Highlights Record Sector Growth and Resilience in 2020.

Biomanufacturing Partnership

With the above in mind, we recently entered a partnership with RegenMed Development Organization (ReMDO) to establish our non-invasive imaging technology as a standard tool for quality assurance in the large-scale manufacturing of artificial organs.

In close association with the Wake Forest Institute for Regenerative Medicine (WFIRM), ReMDO conducts research to promote biomanufacturing scale-up by making regenerative technologies more accessible and affordable. With its team of 400 researchers, WFIRM is recognized as a power factor within regenerative medicine. The institute has received multiple major grants from the US government. Most recently, the institute received a $15 million grant from the US Department of Defense to lead the project that aims to develop a micro-engineered organ that characterizes the effect of various pharmacological and toxicological agents.

The Fluorescence Project

The second validation phase of the HoloMonitor fluorescence module has only revealed some minor issues. The issues have been addressed and are not expected to delay the market launch of the fluorescence module notably. The sought-after fluorescence module provides additional value to our customers and will significantly expand our market reach.

GlycoImaging

Based on synthetic “plastic antibodies”, the overall goal of the EU-funded GlycoImaging research project is to develop new methods for the detection of aggressive and metastatic cancers. The formal EU project will end now on September 30. Once the final report has been delivered, we intend to decide on the project’s subsequent commercialization phase. PHI’s patent rights are an essential part of such commercialization. Consequently, PHI will continue to uphold these patent rights in the US and other markets.

Increased Earnings and Reduced Costs

The strategic shift has increased our ability to serve customers directly over a large geographical area without involving a middleman, a.k.a. distributor. The rationale for having a middleman has previously been to overcome language barriers, cultural differences and communication difficulties over large distances. The first two reasons have never actually been a problem in the life science industry. The language of science is English, and the science community has its own international culture of how science is practiced.

Now when the third and final obstacle no longer is an issue, the future role of the middleman will be quite different. In most geographical markets, the middleman will be a facilitator rather than a full-fledged distributor, who everything is channeled through.

Peter Egelberg, CEO

Consolidated – PHI Group

Income statement (KSEK)

	Q1	Q1	FY
	2021/22	2020/21	2020/21
Net sales	2 373	131	3 637
Cost of products sold	-943	-157	-1 346
Gross profit	1 430	-26	2 291
Gross margin	60%	-20%	63%
Selling expenses	-2 070	-1 609	-8 773
Administrative expenses	-2 057	-2 834	-7 084
R&D expenses	-1 670	-3 120	-11 720
Operating income		1 200	1 972
Operating result (EBIT)	-4 367	-6 388	-23 314
Financial net	-102	-29	-195
Result before tax (EBT)	-4 469	-6 417	-23 509
Net Result (EAT)	-4 469	-6 417	-23 509

Balance sheet (KSEK)

	Q1	Q1	FY
	2021/22	2020/21	2020/21
ASSETS
Non-current assets
Intangible assets	15 374	15 649	14 823
Tangible assets	286	611	337
Total non-current assets	15 660	16 260	15 160
Current Assets
Inventory	1 609	1 393	1 334
Short-term receivables	3 558	2 157	2 938
Cash and equivalents	6 167	13 887	2 256
Total current assets	11 334	17 437	6 528
Total assets	26 994	33 697	21 688
EQUITY AND LIABILITIES
Equity	893	22 476	5 384
Financial liabilities	18 658	4 875	7 400
Operating liabilities	7 443	6 346	8 904
Total equity and liabilities	26 994	33 697	21 688

Changes in equity (KSEK)

	Q1	Q1	FY
	2021/22	2020/21	2020/21
Opening Balance	5 384	28 896	28 896
Equity issues, net
Net profit	-4 469	-6 417	-23 509
Translation difference	-22	-3	-3
Closing balance	893	22 476	5 384
Equity ratio	3%	67%	25%

Cash flow analysis (KSEK)

	Q1	Q1	FY
	2021/22	2020/21	2020/21
Operating activities
Net result	-4 469	-6 417	-23 509
Depreciation	1 001	1 839	6 541
Translation difference	-22	-3	-4
Operating cash flow	-3 490	-4 581	-16 972
Increase (-)/decrease (+) in inventories	-275	137	196
Increase (-)/decrease (+) in operating receivables	-620	354	-348
Increase (+)/decrease (-) in operating liabilities	-1 461	403	2 882
Change in working capital	-2 356	894	2 730
Cash flow from operating activities	-5 846	-3 687	-14 242
Investing activities
Development expenses	-1 501	-659	-4 091
Patents			-170
Tangible assets
Cash flow after investments	-7 347	-4 346	-18 503
Financing activities
Net proceeds from equity issues
Increase (+)/decrease (-) in borrowings	11 258	3 750	6 275
Cash flow from financing activities	11 258	3 750	6 275
Cash flow for the period	3 911	-596	-12 228
Cash and cash equivalents at the beginning of the period	2 256	14 484	14 484
Cash and cash equivalents at the end of the period	6 167	13 887	2 256
(Incl. unutilized credits)	28 167	27 137	35 506

Data per share

	Q1	Q1	FY
	2021/22	2020/21	2020/21
Earnings per Share, SEK	-0.31	-0.45	-1.63
Equity per share, SEK	0.06	1.56	0.37
Number of Shares, end of period	14 394 971	14 394 971	14 394 971
Average number of shares	14 394 971	14 394 971	14 394 971
Share price end of period	28.45	31.15	25.00