MAY 2021 – JULY 2021

Net sales		2 373 (131) KSEK
Operating result before depreciation (EBITDA)		-3 439 (-4 549) KSEK
Net result		-4 469 (-6 417) KSEK
Earnings per share		-0.31 (-0.45) SEK
Gross margin		60 (-20) %

IN SHORT

• Sales in May – July surpassed sales during any previous quarter.
• Based on the increasing number of customer inquiries, sales are expected to continue to grow.
• The company’s distribution network has been expanded and reworked into a leaner and more cost-effective partner network, which is anticipated to increase revenues and reduce costs per unit sold.
• In August, the company entered a partnership with the US-based RegenMed Development Organization to establish PHI’s HoloMonitor technology as a standard tool for quality assurance in large-scale manufacturing of artificial organs.
• The second validation phase of the HoloMonitor fluorescence module has only revealed some minor issues that are not expected to delay the market launch of the fluorescence module notably.

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.

Therefore, we have begun to expand and rework our distribution network into a leaner and more cost-effective partner network, which is expected to increase revenues and reduced costs per unit sold. Based on the increasing number of customer inquiries, we also see that sales will continue to grow in the future.

Peter Egelberg, CEO

NET SALES AND RESULT

Net sales for the first quarter amounted to 2 373 (131) KSEK and operating results before depreciation (EBITDA) to -3 439 (-4 549) KSEK. The net result amounted to -4 469 (-6 417) KSEK.

INVESTMENTS

With an emphasis on application development and development of fluorescence capability, the company invested 1 501 (659) KSEK in the product, patent, and application development during the financial year.

FINANCING

Cash, cash equivalents, and unutilized granted credits amounted to 28 167 (27 137) KSEK by the end of the period. The equity ratio was 3 (67) %.

PHI has secured working capital until 2023. One of the loans from Formue Nord A/S of 20 000 KSEK, of the total approved loan amount of 35 000 KSEK, can be repaid in cash or by debt/equity swap, under certain specific conditions.

Rolling 12-month sales with trendline

 

RISKS

The company may be affected by various factors, described in the 2019/20 Annual Report. These factors may individually or jointly increase risks for the operation and result of the company.

ACCOUNTING PRINCIPLES

The accounts are prepared in accordance with the Annual Accounts Act and general advice from the Swedish Accounting Standards Board BFNAR 2012:1 Annual accounts and consolidated accounts (K3).

REVIEW

This interim report has not been subject to review by the company’s auditor.

STATEMENTS ABOUT THE FUTURE

Statements concerning the company’s business environment and the future in this report reflect the board of director’s current view of future events and financial developments. Forward-looking statements only express the judgments and assumptions made by the board of directors on the day of the report. These statements have been carefully assessed. However, it is brought to the reader’s attention that these statements are associated with uncertainty, like all statements about the future.

CALENDAR

• September 2021, Annual report 2020/21
• October 20 2021, Annual General Meeting
• December 29 2021, Interim Report 2

For additional information, please contact:
Peter Egelberg
E-mail: ir@phiab.se
Web: www.phiab.com – Live cell imaging & analysis

Phase Holographic Imaging (PHI) develops instrumentation and software for time-lapse cytometry. The products are used for long-term quantitative analysis of the dynamics of live cells, particularly significant in the research of cancer, as well as in the treatment of inflammatory and autoimmune diseases. The products are sold globally through the company's distributors. The company is based in Lund, Sweden, and in Boston, Massachusetts.