Gentian Diagnostics : 30 April 2024 - Quarterly Report - Q1 2024

Q1

First quarter 2024 results

Efficient diagnostics for better treatment decisions

www.gentian.com

Gentian Diagnostics

First quarter 2024 highlights

• Record sales of NOK 38.5 million in 1Q24, up 22% vs 1Q23 (19% organic growth)
• EBITDA of NOK 4.8 million in 1Q24 versus NOK -0.5 million in 1Q23
• Gross margin of 53% positively influenced by favourable product mix and finalisation of integration with Getica AB, which was acquired in July 2023
• Sales of fCAL® turbo increased 44% in 1Q24 compared to 1Q23
• Continued solid development for third party sales which increased 31% in 1Q24 compared to 1Q23
• New KDIGO Guidelines issued during 1Q24 recommends increased use of Cystatin C
• Significant advancements achieved in the technical development and production upscaling of the NT-proBNP assay

About Gentian Diagnostics

Gentian Diagnostics (OSE: GENT), develops and manufactures high-quality, in vitro diagnostic reagents. Gentian's expertise and focus lies within homogenous immunoassays, specifically infections, inflammations, kidney failures and congestive heart failures. By converting existing and clinically relevant biomarkers to the most efficient automated,

high-throughput analysers, the company contributes to saving costs and protecting life. Gentian is headquartered in Moss, Norway, serving the global human and veterinary diagnostics markets through sales and representative offices in Sweden, USA, and China. For more information, please visit www.gentian.com.

Gentian's strategy for long-term growth and value creation

Gentian Diagnostic's purpose is to deliver efficient diagnostics for better treatment decisions.

The growing diagnostics market puts increasing pressure on clinical laboratory efficiency. However, many of the existing, clinically relevant biomarkers are available only on slow and inefficient platforms. Gentian's solution is to utilize PETIA (particle-enhanced turbidimetric immunoassays), based on proprietary nanoparticle technology and knowhow, to convert existing biomarkers to the most efficient automated, high-throughput analysers.

Gentian's portfolio of high-impact diagnostic tests targets several large and growing disease areas such as infections and inflammation,

kidney failure and congestive heart failure. The company has four established products - Cystatin C, fCAL® turbo, Canine CRP and fPELA turbo - that contributed to 30% annual revenue growth in 2019-2023. The most recent launch in 3Q 2023 of Retinol Binding Protein (RBP) will support growth for this category. In addition, GCAL® has been launched and is in market development while NT-proBNP is in the product development phase - both having potential to become growth accelerators. The company also has undisclosed projects in exploration and 'proof of concept' phases.

The company's roadmap for long-term growth and value creation is founded on six strategic pillars:

Grow annual revenue from the company's established products by 20%+ annually - by expanding market access through additional commercial partners and regulatory approvals.

Demonstrate clinical relevance of GCAL® for the early detection of severe infections.

Bring a steady stream of new high-impact diagnostic tests to market.

Secure one new contract with a global commercial partner every year, building on already established partnerships with major diagnostic companies across products.

Grow gross margin from ~50% to 60%+ through economies of scale.

Deliver long-term EBITDA margins of 40% through operational leverage and cost discipline.

Illustration of product categories

ESTABLISHED PRODUCTS	IN MARKET	IN PRODUCT
	DEVELOPMENT	DEVELOPMENT

	Inflammation			Pancreas	Lifestyle	Inflammation	Cardiac
Kidney disease	Inflammation	associated
& infection	deficiency	& infection	disease
			diseases
Cystatin C	Canine CRP	fCAL	®	®	RBP	GCAL	®	NT-proBNP
	fPELA

2006

2012

2015

2020

2023

2019

TBD

Operational summary

Sales

In the first quarter of 2024, the company recorded sales of NOK 38.5 million at 22% growth vs. 1Q22, a 19% organic growth, demonstrating continued positive sales momentum in line with recent sales trends and the company's overall expectations.

Sales in 1Q24 were primarily driven by strong fCAL® turbo and Cystatin C growth in Europe, third party product sales in Gentian AB as well as very positive development for Cystatin C in the US. GCAL® sales growth was at its highest level since the product launch in 2019.

Sales of Cystatin C were NOK 14.9 million during the first three months in 2024 versus NOK 13.6 million in 1Q23, an overall increase of 10 %, whith somewhat lower Asian growth. Cystatin C sales to Asia historically show significant monthly variations due to large order patterns. Growth in Europe and the US were strong, with 40% growth in the US. We do see a positive trend in higher testing rates per laboratory as well as an increase of the Gentian customer base. During 1Q24 KDIGO (Kidney

Disease Improving Global Outcomes) published the new Clinical Practice Guideline for Chronic Kidney Disease (CKD) emphasizing the significance of Cystatin C in estimating glomerular filtration rate (GFR) and its role in risk assessment and clinical decision-making, which is estimated to further positively impact the adoption and usage Cystatin C testing globally.

Sales of fCAL® turbo, which supports fast diagnosis of inflammatory bowel disease, reached a record level of NOK 13.7 million in 1Q24 compared to NOK 9.5 million in1Q23, a 44% increase in sales. This record quarterly sales for fCAL® turbo underpins a continued trend of adopting gastrointestinal testing routines in central laboratory environments, combined with an increase of orders from large IVD partners. Gentian's close and successful partnership with Bühlmann Laboratories as exclusive and global commercial partner continues to ensure a strong market position.

Commercial activities to gain commercial interest for the recently launched Gentian turbidimetric RBP (Retinol Binding Protein) assay continued.

The company's Swedish distribution subsidiary, Gentian Diagnostics AB (GAB), continues to post very strong sales growth performance with sales of NOK 4.7 million in 1Q 2024 versus NOK

Market development GCAL®

Results from clinical studies continue to support the value of GCAL® in early diagnosis of bacterial infections and prediction of clinical deterioration. Data analysis from two studies performed in adult and paediatric patients are finalised and submitted for publication.

Gentian attended a seminar in Czech Republic to present and discuss the use of GCAL® in detection of infection in adults and in children where interest and need for a biomarker for early detection of infection, estimation of disease severity and prediction of clinical outcome were confirmed.

There is an increased interest in the GCAL® immunoassay and growing evidence for use of the calprotectin biomarker in autoimmune diseases, including rheumatic diseases in children and adults. Several studies have confirmed the role of GCAL® in estimation of disease activity and treatment monitoring in patients with rheumatoid arthritis and juvenile idiopathic arthritis (paediatric population). The value of calprotectin has also been described in other autoinflammatory diseases such as vasculitis in adults and in children. The recommendations from the European Alliance of Associations for Rheumatology (EULAR) and the American College of Rheumatology suggests use of S100 proteins, the family of proteins to which calprotectin belongs, for monitoring of inflammatory response in interleukin-1(IL-1) mediated systemic autoinflammatory diseases. Gentian has, in

3.6 million in 1Q 2023 representing an increase of 31%. The positive sales trend in Gentian AB is linked to a combination of a growing customer base and expansion of the third-party product portfolio represented by Gentian AB. Increased market presence also contributes positively.

collaboration with a leading expert in the field, initiated a study to explore the role of GCAL® in assessment of disease activity and prediction of severe inflammatory response in Hidradenitis suppurativa, a chronic, inflammatory skin disease. The aim of the study is to explore if GCAL® can be used as an indicator for early start of biological treatment and monitoring of treatment response.

Gentian has extended the network and collaboration with key opinion leaders (KOLs) engaged in autoimmune diseases, including council members of Paediatric Rheumatology European Association (PRES).

Product development

NT-proBNP

Gentian's NT-proBNP assay is currently in the optimization phase of development and aims to be the first turbidimetric in vitro diagnostic test for the quantitative measurement of NT- proBNP. The goal is to make NT-proBNP testing more accessible on high-volume clinical chemistry analysers, which will increase laboratory productivity and reduce overall costs. The growing cost burden in healthcare systems due to an aging population and lifestyle choices is driving an increase in the demand for NT- proBNP testing.

In the first quarter, significant advancements were achieved in the technical development of the NT-proBNP assay. The stability of the latest prototype formulation is continuously assessed, demonstrating very good results so far. The stability of a diagnostic product is important to ensure accurate and reliable test results over time.

Concurrently, the manufacturing process has been successfully upscaled from a small-scale to a large-scale production size with the possibility for further volume increase. The increased prototype volumes demonstrate the desired product efficacy at this stage of the assay development.

The team continued to investigate the clinical performance of the prototype using blood samples from patients with confirmed heart failure. Good progress is made, and further work is on-going.

Obtaining clinical data to demonstrate clinical performance of the assay is considered crucial to fulfil regulatory requirements in preparation for the anticipated product launch and the company has started to establish a roadmap for clinical studies to acquire the necessary data.

The existing NT-proBNP advisory board has been expanded with several experts, including

representatives from laboratories and hospitals in Europe, to assist Gentian in positioning the product for a successful commercial launch.

Encouraged by recent advancements, the company believes the project is entering the final stages of optimization. However, acknowledging the unpredictability of the development process, the company will abstain from providing definitive guidance on timing for transition to the next phase. Additionally, addressing glycosylation concerns mentioned in earlier reports, the final calibration steps will be deferred to the verification phase aligning with the availability of additional clinical data.

We estimate that the development period for NT-proBNP after completion of optimization will be between 6 and 9 months.

It is important to note that the product will fall under the new IVDR regulatory regime, which will add an additional 6-9 months before commercial launch.

Pipeline

The company is currently overseeing two projects in the proof-of-concept stage where one project is in close collaboration with a major IVD player. Gentian's ongoing pipeline activities are progressing through various stages, with decisions to advance into proof-of-concept phases being influenced by both business and technology considerations.

Additionally, Gentian is actively exploring external technologies that will enable it to fulfill its strategic objectives.

Gentian is continuously considering possibilities related to insourcing of products developed by partners which could be manufactured and sold by Gentian.

Long-term outlook

Gentian targets disease groups that represent a total addressable market of around USD 6.1 billion globally and an estimated growth rate of 4-5% annually over the next 4-6 years, according to leading market data provider Kalorama (2022). From a macro perspective, key growth drivers include a growing and ageing population contributing to an increase in chronic and infectious diseases globally.

The specific segments targeted by Gentian's products add up to a total serviceable market of USD 1.8 billion (2022), with an estimated annual growth rate of 5-10% over the next 4-6 years. The key driver for the higher expected growth rate in the serviceable market is Gentian's selective approach to target attractive segments.

Overall, Gentian targets a market share of 15- 20% for its product portfolio which is offered through commercial partners. With a commercial strategy to serve the market through OEM and distribution agreements it is expected that the revenue take will vary across products but remain within the 30-50% range for the product portfolio as a whole.

The company's strategy for growing its market share is founded on innovative biomarkers based on PETIA technology and proprietary know-how offering clinically relevant benefits, supported by an effective go-to-market strategy. The benefits include early diagnostic results that enable improved treatment decisions and a 3-10x increase in volume throughput that saves costs and makes Gentian's offering an attractive solution to the increasing pressure on laboratory productivity.

Gentian growth ambitions and revenue potential are set to be de-risked through several key

milestones for the company's product portfolio over the coming 12 months.

The key milestones are:

Established products

• Targeting additional large and medium size commercial partners globally.
• Additional regulatory approvals to allow for geographical expansion.

GCAL® (in market development)

• Clinical studies confirming improved patient outcomes and relevance for the early detection of infections, which supports the avoidance of sepsis as well as diagnosis of inflammatory diseases.
• Support adoption of GCAL® assay and its use for assessment of disease activity and treatment monitoring in autoimmune disorders.
• Securing endorsements from key opinion leaders and inclusion in clinical guidelines.
• Securing global commercial partnerships with phased regional rollout.

New products

NT-proBNP

• Successful optimization of the assay.
• Securing endorsements from key opinion leaders.
• Obtain progress on global commercial partnerships.

Pipeline

• Finalize proof-of-concept for two new pipeline projects.

Financial performance

Comparative numbers for Gentian in 2023 in ().

Revenue, geographic split and product split

Sales revenue increased by 22% to NOK 38.5 million in 1Q24 (NOK 31.4 million), with organic revenue growth of 19%.

Revenue from the US market was NOK 2.9 million for 1Q24, up 41% compared to 1Q23 (NOK 2.0 million). Europe recorded strong growth in revenues compared to the same quarter last year, increasing 27% to NOK 27.9 million in the quarter (NOK 22.1 million). Sales to Asia, which to some extent is dependent on the timing of large orders, grew 5% in 1Q24 compared to the first quarter last year.

Geographic split

NOK million	1Q24	1Q23	2023
US	2.9	2.0	8.7
Europe	27.9	22.1	92.8
Asia	7.7	7.3	33.7
Total	38.5	31.4	135.2

The portfolio of established products continues to grow according to Gentian's strategy and long-term growth plan. The sales of Cystatin C grew by 10% in the first quarter of 2024. Sales of fCAL turbo experienced a 44% increase in sales for 1Q24 compared to 1Q23. The distribution of third-party products conducted by the Swedish subsidiary Gentian Diagnostics AB (GAB), continues to expand its activities in the Nordic region, the sales increased by 31% in 1Q24 compared to 1Q23.

Product split

NOK million		1Q24		1Q23		2023
Cystatin C			13.6
	14.9				56.3
fCAL®turbo				9.5
	13.7				43.2
Third party products		4.7		3.6			17.0
Other				4.7
	5.2				18.6
Total			31.4
	38.5				135.2

Approximately 77% (78%) of the sales revenue in the quarter come from long-term contracts with established customers.

Gross margin %

60%

50%

40%

30%

20%

10%

0%

Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1
	2022			2023		2024

Gross margin

Gross margin was 53% (49%) of sales revenue in 1Q24. The improvement is a result of a favourable product mix in the quarter and full effect of efficiency gains from the integration of Getica AB which was acquired in July 2023. Gentian expects further increases in raw material prices and labour cost, but maintains its ambition that over time, the gross margin will continue to improve with increasing sales.

Operating expenses

Operating expenses ended at NOK 18.5 million (NOK 20.4 million) in 1Q24.

R&D expenses amounted to 33% (38%) of operating expenses in 1Q24. In addition, NOK

2.5 million (NOK 0.8 million) of the R&D expenses was capitalised in the quarter.

Earnings

Operating profit before depreciation and amortization (EBITDA) ended at NOK 4.8 million (NOK -0.5 million) for 1Q24. Net profit was NOK 4.2 million (NOK -0.7 million).

Sales Revenues (NOK million)

40

35

30

25

20

15

10

5

0

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2022

2023

2024

Balance sheet

Cash and cash equivalents as of 31 March 2024 were NOK 85.6 million (NOK 76.0 million). The cash is placed in both savings accounts and current accounts.

Accounts receivables as of 31 March 2024 were NOK 15.8 million (NOK 15.5 million), and inventory NOK 36.6 million (NOK 39.1 million).

The equity ratio was 81.2% as of 31 March 2024.

Events after the balance sheet date

There are no events after the balance sheet date.