On May 5^th, Genetic Analysis AS (“Genetic Analysis” or the “Company”) announced a placement of a directed issue of NOK 12.8m before transactions related costs of NOK 0.6m, which is conditional on approval from the annual general meeting on May 19^th. The subscription price amounts to NOK 0.86 per share and is based on the average volume weighted trading price on Spotlight Stock Market the last 15 trading days up to and including April 24^th, 2025. The directed rights issue consists of 14,890,576 new shares, which equals a dilution effect of approximately 30% for existing shareholders.

Analyst Group’s View of the Directed Issue

In our initiation analysis of Genetic Analysis, we emphasized that the Company remains in an early stage of commercialization and that earnings are expected to fluctuate between quarters, which means that the need for external capital to finance continued growth initiatives cannot be ruled out. Hence, the announced share issue comes as no major surprise, and the proceeds are intended to be used for commercial investments connected to the existing cooperation with Ferring Pharmaceuticals and other initiatives to increase the presence of the Company’s diagnostic platform GA-map®.

In December 2024, Genetic Analysis announced the partnership with Ferring Pharmaceuticals, which consists of the development of a rapid microbiome-based PCR test, combining Genetic Analysis GA-map® platform with Ferring’s Microbiome Health Index biomarker. Analyst Group views this as a validation of the platform and an indication of an expected market shift towards a more diagnostic approach, as the test is expected to be used to follow up on how individual patients respond to Ferring Pharmaceuticals Rebyota drug, the first fecal microbiota product approved by the FDA. Moreover, we anticipate that the proceeds will be allocated towards growth initiatives in the USA, as this is the largest microbiome market, partly due to a more advanced research and development culture, which is expected to create the largest growth opportunities for Genetic Analysis in that market. Hence, we believe the proceeds from the directed issue will be allocated in strategically important initiatives to drive the Company’s growth going forward.

Terms, Dilution and Investors in the Directed Issue

The subscription price of NOK 0.86 is based on the average volume-weighted trading price on Spotlight Stock Market during the last 15 trading days up to and including April 24^th, 2025. As the share price has increased since April 24^th, the subscription price means a discount of 59% compared to the closing price of NOK 2.12 on May 2^nd. Through the directed share issue, existing shareholders will experience a dilution effect amounting to 30%.

The investors in the directed share issue are a limited number of existing shareholders, including members of the Board of Directors and the management team, where the latter accounts for 23% of the proposed directed issue, which instills confidence in the Board and management’s commitment to the Company. The remainder of the issue is subscribed by existing shareholders, including Genetic Analysis largest shareholder Bio-Rad Inc.

Subsequent Offering Towards Existing Shareholders who do not Participate in the Directed Issue

The Company intends to carry out a subsequent offer directed towards shareholders who were not invited to participate in the directed issue, in order to give them the opportunity to subscribe for new shares at the same subscription price as applied in the directed issue. The subsequent offering will be for subscription of shares totaling around NOK 6m. However, this issue is conditional on the directed issue being approved by the Annual General Meeting and on the existence of a significant gap between the subscription price and the observed trading price on Spotlight Stock Market, such that it justifies the expenses related to issuing the subsequent offering.

Receives Committed Grant Offer to Further Development of the Company’s Diagnostic Platform

Genetic Analysis also announced that the Company has received a committed grant offer from Innovation Norway related to further development of the Company’s diagnostic product related to Clostridium difficile. The grant amounts to NOK 1.125m and is conditional on the Company raising at least NOK 2.5m in proceeds from an equity offering, which will be fulfilled if the directed issue is approved.

Proposals for two new Board Members

Genetic Analysis also announced proposed changes to the Board, as the election committee has proposed the appointment of Mr. Morten Jurs as the new Chairman of the Board, and Mr. Ove Öhman as a new board member. The proposed change in leadership follows the decision by Dr. Jethro Holter, the current Chairman, to step down from his role and not seek re-election. Dr. Holter’s decision is a result of his new role as CEO of AdjuTec Pharma, which he wants to focus on full-time going forward.

Analyst Group considers the newly proposed board members to have relevant experience to drive Genetic Analysis continued focus on further commercializing the GA-map® platform. Moreover, the proposed new board members are subscribers in the directed rights issue, as Morten Jurs will subscribe for NOK 0.3m and Ove Öhman will subscribe for NOK 0.5m, which instills further confidence.

In conclusion, Analyst Group considers the announced directed share issue as no major surprise, as we expect the Company to continue to invest in commercial activities for the GA-map® platform, with an increased focus on the US market, which we consider a good strategic investment for the Company’s future growth. However, given that the subscription price is based on the average volume-weighted trading price up to and including April 24^th, the directed issue is made at a discount of 59% compared to the closing price of NOK 2.12 on May 2^nd, as the share price increased between April 24^th and the announcement of the directed share issue. Existing shareholders who do not participate in the directed share issue are intended to be offered the opportunity to subscribe for shares at the same price as the directed issue, NOK 0.86, in a subsequent offering. Nevertheless, the directed issue results in a dilution effect of 30% for existing shareholders.

On April 22^nd, Genetic Analysis AS (“Genetic Analysis” or the “Company”) announced that the Company are launching a microbiome test for the Consumer Health (D2C) market in China in collaboration with Thalys Medical Technology Group Corporation (“Thalys”). The test is based on GA’s clinically validated microbiome test, the GA-map® Dysbiosis Test, but specifically adapted to suit the Chinese market, with additional tests expected to be launched by Thalys based on the Genetic Analysis platform in the future.

Analyst Group’s View of the Launch

In January 2022, Genetic Analysis announced the collaboration with Thalys to evaluate and develop innovative diagnostic solutions for the rapidly growing human microbiota market in China. The recently announced launch of a consumer test marks the first step of the collaboration between Genetic Analysis and Thalys, with additional tests expected to be launched by Thalys based on the Genetic Analysis platform in the future. As previously announced in the initial collaboration agreement from 2022, Thalys will distribute the tests via its new Independent Clinical Lab (ICL) in Shanghai, while Genetic Analysis will supply the partner with reagent kits.

The launch establishes the Company’s first commercial presence in the large and fast-growing Chinese market. Additionally, the business model of providing Thalys with reagent kits and proprietary software is assessed as low risk while providing potential for high margins. The reagent kits are expected to have a high gross margin, Analyst Group estimates the Company’s gross margin on reagent kits to fluctuate between 75–80 % in the coming years. As revenue will be generated based on the number of tests sold, while Genetic Analysis is not required to make any additional financial investments as part of the collaboration, the launch enables a low risk business model while having the potential to generate significant revenue, given a successful launch.

The Chinese D2C microbiome testing market is expanding rapidly and, depending on the source, the market is expected to grow from USD 50–80m in 2023 to USD 200–300m in 2030, corresponding to a CAGR of 20–30 %. Growing recognition of the microbiome’s vital role in human health is a key driver of China’s consumer microbiome testing market, and advances in e-commerce and digital health platforms have made these services more accessible and scalable. Combined with increased interest in personalized wellness, these factors are accelerating market adoption.

However, the recent increase in consumer testing has raised concerns regarding reliability, as many consumer tests are not regulated in the same way as laboratory-based diagnostics, thus providing high variability in results. Through the GA-map® platform, the Company’s DTC product is expected to address several of the current challenges in the consumer market, as the platform features validated microbiome diagnostic technology that compares results to a predetermined reference range developed through clinically validated studies. At the same time, it remains user-friendly and delivers fast results. User-friendliness is further enabled through Thalys’ mobile software, where customers may easily subscribe, pay, and view report results on their mobile devices.

In conclusion, Analyst Group views Genetic Analysis’ initial launch in the vast and fast-growing Chinese market positively. Thalys is considered to be a strong partner for the launch, with expertise in China’s healthcare ecosystem. The risk-reward profile is seen as attractive for Genetic Analysis in a business model where the Company supplies Thalys with reagent kits, while the partner is expected to be responsible for commercialization. Although competition is expected to be intense given the appealing market growth, Genetic Analysis and Thalys are assessed to hold competitive advantages, primarily through the diagnostic approach utilizing the GA-map® platform.

About Thalys Medical Technology Group Corporation

Thalys Medical Technology Group is a Chinese healthcare company specializing in diagnostic testing and laboratory solutions for hospitals. Founded in 1998 in Tianjin and listed on the Shanghai Stock Exchange since 2016, the company has grown into a major provider of integrated IVD (in vitro diagnostics) services. Thalys operates across more than 200 cities in China, supplying products and solutions to around 2,000 hospitals and 200 hospital laboratories. Its services range from supplying diagnostic reagents and lab automation systems to offering full medical supply chain management.

Thalys also owns and operates Thalys MedLab (TML), a high-tech, third-party medical testing laboratory based in Shanghai. TML offers a wide variety of diagnostic and precision medicine testing services to hospitals, research institutions, and pharmaceutical companies. The lab collaborates with international partners in cutting-edge technologies, including single-cell analysis and microbiome diagnostics. Thalys MedLab combines clinical application with scientific research, playing an active role in advancing precision diagnostics in China.

Analyst Group initiates equity research coverage on Genetic Analysis AS (“Genetic Analysis” or the “Company”), which includes equity research coverage with, among other things, equity research reports with quarterly updates, comments on press releases and CEO interviews.

About Genetic Analysis

Genetic Analysis is a Norwegian diagnostic company with more than 15 years of experience in research and product development within diagnostics of the human microbiome. The Company has developed the diagnostic platform GA-map for the analysis of human microbiomes. This platform provides cost-effective, standardized, and consistent results, forming the basis for diagnosing patients’ microbiomes. Test results are published directly via the Company’s software, eliminating the need for additional resources to interpret the data.

The business model includes recurring revenues from the sales of reagent kits and software to laboratories, as well as revenue from services offered by the Company’s service laboratory for users who do not have the necessary instrumentation for analysis. The Company’s current operations focus on the EU, the US, and Asia.

Three Reasons as to Why Genetic Analysis is an Attractive Investment:

User-Friendly and Efficient Platform Enables Growth Opportunities

The microbiome testing market is currently characterized by non-standardized, research-based tests. Through standardized technology, routine analyses are expected to be performed more efficiently while also providing improved conditions for an accurate diagnosis of the microbiome. Genetic Analysis aims to change this with the Company’s GA-map platform. The Company is the first to develop a CE IVD-marked (In Vitro Diagnostic) product for mapping microbiomes. GA-map is considered user-friendly and offers an automated comparison against a predefined microbiome within a ”healthy range,” while test results are published directly via the Company’s software, eliminating the need for additional resources to interpret the data.

A Platform Strategy Driving Recurring and Growing Revenues

Genetic Analysis’ business model is based on the Company’s GA-map platform, where the primary revenue driver today is sales of reagent kits required to perform tests that serve as the basis for diagnosing patients’ microbiomes. As more laboratories adopt the platform because of the user-friendliness with immediate result publication through the Company’s software, sales of reagent kits are expected to increase, generating recurring revenue streams for Genetic Analysis with high gross margins, amounting to ~83% in Q4-24. During 2024, sales of the reagent kits GA-map Dysbiosis Test grew 37%, which we see as proof of the potential with Genetic Analysis business model starting to materialize. Moreover, Q4-24 marked a breakthrough quarter for Genetic Analysis regarding profitability, being the first positive EBITDA result in the Company’s history, amounting to NOK 0.4m.

Increasing Interest in the Role of Microbiome in Health and Disease Drives Strong Market Growth

The human microbiome has been referred to as a ”newly discovered organ,” and in recent years, research has emphasized the interplay between gut health and the immune system, highlighting its essential role in human well-being. Moreover, several diseases have been linked to alterations in the composition and function of the microbiome. Given these insights, strong market growth is projected in the coming years. Global Market Insights estimates an annual market growth rate of 25.7% from 2024 to 2032, reaching a valuation of USD 6.5bn by the end of the forecast period. The primary growth driver is expected to be advances in research, which have revealed the microbiome’s potential in therapeutics, particularly for the treatment of infectious diseases, metabolic disorders, and immune-related conditions.

Genetic Analysis patented platform GA-map was used to develop and commercialize the first clinically validated and CE-IVD approved test for microbiome analysis, the GA-map Dysbiosis Test. The Company also has several patent families covering platform technology, algorithms and profiles related to treatment outcome. More players in the microbiome field are expected to seek clinically validated solutions with CE-IVD approval, given the attractive opportunities presented by market growth. However, Genetic Analysis holds a first-mover advantage, as the GA-map Dysbiosis Test is well-documented with more than 50 peer-reviewed publications and over 70 clinical studies, which Analyst Group considers a strong competitive advantage and validation of the platform.

Genetic Analysis published the Company’s interim report for the fourth quarter of 2024 on February 26, 2025.

Below are some highlights of the report:

• New sales record – net sales reached NOK 6.2m
• The EBITDA result amounted to NOK 0.4m, the first quarter with a positive result
• New collaboration with Ferring Pharmaceuticals to develop a new rapid microbiome diagnostic test
• Stable financial position

Strong Growth and new Sales Record

Genetic Analysis sales amounted to NOK 6.2m during Q4-24, corresponding to an increase of 63% compared to the same period last year. The Company’s core product, the GA-map Dysbiosis Test kits sales constituted of approx. 71% of sales, reaching NOK 4.4m during Q4-24, corresponding to a 49% growth. The majority of the remaining 29% came from sales of testing services, which is assumed to be sales from Genetic Analysis own service laboratory. Sales from services amounted to NOK 1.7m (0.8), corresponding to a growth of 115%.

For the full year 2024, sales amounted to NOK 15.9m (14.1), corresponding to a growth of 12 %. During 2024, Genetic Analysis executed a new strategy in which the Company has discontinued instrument sales, which instead is handled by the manufacturer. As a result, sales from instruments amounted to NOK 0.1m (1.5) during 2024. This strategic shift is partly due to instrument sales being a low-margin business, and as the focus shifts towards 2025, only a minimal portion of instrument sales remains in the comparative figures. Combined with the strong sales momentum across other product categories in Q4-24, this creates favorable conditions for accelerated growth and profitability in 2025 according to Analyst Group.

First Quarter with Positive EBITDA Result

Q4-24 marked an important milestone as the first quarter with a positive EBITDA result, amounting to NOK 0.4m. However, it should be noted that other income, which includes research work and grants, amounted to NOK 1.2m, adjusted for this, the EBITDA result amounted to NOK -0.8m. The discontinuation of instrument sales strengthened the gross margin, amounting to 83.1% compared to 57.7% in the comparison period. With the new strategy we expect the gross margin to stabilize at this higher level going forward.

Moreover, the operating expenses amounted to NOK 7.2m (11.5), corresponding to a decrease of 37%, which strengthened the result. The decreasing cost base is attributable to the fact that one of the development projects, GA-map IBD Dx, is in a less costly phase, as well as that cost saving has been made. With strong sales growth, an increasing gross margin and decreased cost base, we see good potential for Genetic Analysis to improve results in the upcoming year compared to 2024.

Genetic Analysis and Ferring Pharmaceuticals to Launch Rapid Microbiome-Based PCR Test

At the end of Q4-24, Genetic Analysis and Ferring Pharmaceuticals announced a partnership to complete the development of a rapid microbiome-based PCR test, combining Genetic Analysis’ GA-map platform with Ferring’s Microbiome Health Index biomarker. This test aims to reduce processing time from weeks to hours, lower costs, and enhance standardization in microbiome diagnostics. Set for launch as a Research Use Only (RuO) product in H1-25, Genetic Analysis holds exclusive commercialization rights without royalty or milestone obligations to Ferring. The project is funded by Ferring, Genetic Analysis, and Innovation Norway.

The test will initially target patients suffering from Clostridioides difficile infection (CDI), which is a new disease area to target for the GA-map platform. The launch, expected during H1-25, is expected to drive growth for Genetic Analysis by adding a new product to the portfolio within a new disease area for the Company, along with the aforementioned advantages. The collaboration with Ferring Pharmaceuticals is also part of Genetic Analysis’ strategy to establish strong partnerships in order to reduce the need for independent financing of similar projects.

Strengthened Cash Position and Improved Result Instills Confidence in the Financial Position.

The cash balance at the end of Q4-24 amounted to NOK 13.4m, compared to NOK 11.4m at the end of Q3-24. The strengthened cash position is primarily attributable to a slight increase in liabilities as well as a decrease in receivables and inventory, affecting the cash position positively. Genetic Analysis’ results in Q4-24 instill confidence that profitability is progressing in the right direction, and with this in mind, we consider the financial position to be stable. However, it is important to emphasize that Genetic Analysis remains in an early phase of the Company’s commercialization, which entails uncertainties regarding future revenue generation. As a result, the cash position will continue to be a key factor for investors to monitor going forward.

In summary, Analyst Group believes Genetic Analysis delivered a breakthrough quarter during Q4-24, delivering sales growth of 63% and a positive EBITDA result. We see this as evidence that the updated strategy, with the discontinuation of instrument sales, is leading to improved profitability in the business model. We also see potential for Genetic Analysis to further enhance the Company’s financial performance in 2025.

Analyst Group will follow up with an equity research report on Genetic Analysis.