Comment on Fluicell’s Q3-22 Report

On November 30th, Fluicell published the company’s quarterly report for Q3-22.

Summary of Operating Activities

During Q3-22, the revenue amounted to SEK 0.51m, compared to SEK 1.1m in Q3-21, which corresponds to a YoY decrease of 52%. Compared to the previous quarter of Q2-22 where the revenue amounted to SEK 0.49m, the increase corresponded to 5%. The revenue is lower than we estimated, where it is likely that the effects from the pandemic are still posing challenges to regain the historical growth rates observed prior to the pandemic regarding Fluicell’s top line. This was confirmed in the CEO comment, where CEO Victoire Viannay mention that there are still efforts to be made to return to pre-pandemic growth levels, but Fluicell is moving forward steadily by regaining the capacity to travel to Asia, Europe, and Australia meeting customers. However, the revenue does not include the Biopixlar AER sales order from the Australian distributor AXT Pty Ltd, as well as orders of other products amounting to a total of SEK 0.94m, which is estimated to show in the Q4-report. Total revenue, which also includes other operating income of SEK 2.9m, amounted to SEK 3.4m in Q3-22, compared to SEK 1.4m in Q3-21, corresponding to a YoY increase of 138%. SEK 2.5m of the other operating income was related to a non-recurring item that Fluicell received as a repayment from a previous patent agent, and SEK 0.4m was attributed to grants. Going forward, the company expects a total accumulated revenue of minimum SEK 6.2m, including the orders announced at the end of Q3-22. The operating result during the third quarter amounted to SEK -2.8m, compared to SEK -4.7m in Q3-21. The substantial improvement of the operating loss was attributed to the non-recurring item received from the previous patent agent.

Progress in the BIRDIE-Project and Projects Related to Regenerative Medicine

In the CEO comment, it is mentioned that Fluicell has provided several important contributions to the ongoing BIRDIE-project funded by the EU, including the Biopixlar Switching Head which is a new add-on to Biopixlar that was developed specifically for the BIRDIE-project to enable virological research with high precision and gives the user more control of the microenvironment. The project, which aims to developed bioprinted kidneys-on-a-chip in-vitro models for pharmaceutical testing and kidney diseases, is progressing well where Fluicell is estimated to receive another grant payment of SEK 1m. Additionally, Fluicell aims to publish further technical progress in regards to the project soon. The increased focus on kidney models for drug testing and diseases is an interesting opportunity for Fluicell to expand the company’s value proposition as well as total addressable market in Analyst Group’s view. Together with the advances recently made in the diabetes and cardiovascular therapeutic programs, Fluicell is making progress in the business areas of human tissue-based disease models and human tissue-based therapies. Going forward, we will monitor the developments regarding kidney diseases as it could lead to new partnerships in pharmaceutical research and is well in phase with the growing interest in the pharmaceutical industry for non-animal research models based on human cells.

Financial Position and Burn Rate

At the end of Q3-22, Fluicells cash balance amounted to SEK 8.6m, compared to SEK 15.8m at the end of Q2-22, corresponding to a net change in cash of SEK -7.2m. The change in cash was mainly due to negative changes in working capital, namely, an increase in receivables as well as a decrease in payables. After the end of Q3-22 however, Fluicell received approximately SEK 19m in net proceed from an earlier announced rights issue. The company’s burn rate per month during Q3-22 amounted to SEK -2.4m and SEK -2.2m on an LTM basis. Adjusted for changes in other payables of SEK -2.6m during Q3-22, the LTM burn rate per month would correspond to SEK -2.0m, which Analyst Group believe is reasonable to assume going forward. Given the current cash position, the net proceeds from the rights issue, and an assumed burn rate of SEK -2.0m, Fluicell is estimated to be financed until the end of Q3-23, all else equal. However, Fluicell has additional warrants outstanding of series TO 4 that are due to strike in June 2023 and have the potential to extend the cash runaway. The outstanding warrants are estimated to generate up to SEK 16.4m before expenses, given full subscription.

In conclusion, we see that Fluicell are taking the right steps to become a leading player in single-cell biology, bioprinting and regenerative medicine. Despite setbacks in the macro environment slowing down the expected growth, Fluicell is participating in several interesting projects and keeps developing the product portfolio which should present interesting opportunities to drive growth going forward.