ArcticZymes Technologies ASA (AZT) Earnings Call Transcript

Good morning, and welcome to ArcticZymes Q3 Financial Presentation. My name is Michael Akoh, I'm the CEO of the company, and I'm joined by Borge Sorvoll, the CFO; as well as Paul Blackburn, our CCO. Thank you for joining us this morning. Next slide, please. A look at our agenda for today. I'm going to go through our highlights of Q3 and also share an overview of our 2026 strategy. Then Paul is going to go into detail with our sales, both for the biomanufacturing as well as the molecular tools segment. Then Borge is going to come on and go into detail with our financials. Then I'm going to share an outlook as well as open up for questions and answers. Next slide, please. We had a solid quarter where our team delivered profitable growth across both segments. Our revenue was up by 24% to almost NOK 30 million, and we also had a significant increase in our profitability that ended at NOK 3.5 million. A significant event after the quarter ended was the execution of a European partnership deal with Brenntag. Paul is going to go into more details with this exciting new partnership deal. Looking at our GMP nucleases, then we saw significant growth and the nuclease sale in GMP grade now accounts for 26% of biomanufacturing sales in the quarter. This highlights that the strategic decision to do GMP-grade enzymes is starting to pay off, and it also allows our customers to seamlessly go into the later stages of drug development. Another notable event in the quarter was our molecular tools sales. They are back on a growth path. 45% up compared to Q3 last year. As earlier communicated, this was largely driven by the return of a key account, but we also saw growth from other accounts that contributed to a very solid performance within molecular tools. So other accounts grew by approximately 13%. Looking at biomanufacturing, then we had a more reasonable quarter. Year-to-date, we are seeing solid growth, up 23%. And very encouraging, we are also seeing that our customer base is continuing to expand. We're also seeing an increased uptake amongst our CDMO partners that is going to be a nice foundation for future growth. Next slide, Borge. I'd like to take you through our strategic direction and the core pillars we have in the company. It's all about scaling to getting closer to our customers. As we announced approximately 12 months ago, we embarked on a journey to transform the company from being focused on products and being an enzyme supplier to becoming a more customer-driven, market-driven solutions partner. We have come far into transformation, but we are not there yet. But I'm really encouraged by the foundation that we are building for the future for the company. We are currently working with strengthening our customer relations, both in regards to improving our processes, but also in regards to implementing new tools. We are also looking into the future to meet the increased demand. We have a number of projects where we're looking into our capacity. We are right for 2026 and way into 2027. But from there, we are going to be needing to implement new measures to also increase our capacity, especially within the nucleases. So, we're working internally right now with the product -- with our project to increase our yield as well as working with an external partner to discuss upscaling projects. Last but not least, we are also evaluating inorganic growth opportunities. So that's everything from in-licensing of products to larger activities. It's in its early stages. Looking at the pillars, molecular tools first. As we have earlier communicated, we see a big opportunity within metagenomics. And we have a detailed strategy and plan of how to capture market share within that segment. We have already been implemented in two metagenomic protocols, and we're working closely with key opinion leaders. We have upcoming webinars as well, and we expect that this is going to be one of the growth vehicles we have both for 2026 and beyond. We're also looking into expanding our portfolio into the NGS area. Next, biomanufacturing. Here, it's about doing more of what we're already doing. It's about accelerating the adoption in viral vector workflows at our customers. And then it's also very much about deepening the integration with CDMOs on their manufacturing platforms. We have come far with one partner where we are seeing significant growth. Sales year-to-date with this partner is up almost 200%, and we expect that, that's going to continue going into 2026 as well. And looking at the customers or the CDMOs that we are currently working with, where we currently have a foot in the door, we're working with 9 out of the 10 largest CDMOs within advanced therapies. So, we have a good base to continue the talks and the integration with more CDMOs. Finally, we're also looking into expanding into new application areas, and we're also working on a project in order to increase and protect our IP. Next, the RNA market. We've talked about that, and we've also communicated that we believe that this is a strategically important area for ArcticZymes going forward. Enzymatic usage is great within manufacturing, within QC processes of RNA therapeutics. And we have our first restriction enzyme under development. We want to build a full portfolio for RNA customers. And currently, we are also working together with one partner in order to explore both development and go-to-market options. The last core pillar is channels. You've already seen the first execution within this pillar with the Brenntag deal. But it's also important for me to say that we're not abandoning our direct sales approach. That's going to be core to ArcticZymes going forward as it has been in the past. It's important for us to be close to the customers, to be able to support them, to be able to also receive feedback that's also going to generate ideas for new innovation. But we believe that it should be complemented by expanding and activating a greater distribution network. What we have done this week, actually, we have onboarded a new channel manager is going to start. His task is to work actively together with all our distributors, including Brenntag to ensure that we support them in the right way, to ensure that we motivate them and also at first, of course, to ensure that we have the right partners that we believe are right for the company. So, we're going to do an evaluation of all our distributors and work with those where we have a mutual interest and good chance of becoming successful together. So, there's a big focus on channel going forward. And as mentioned, it doesn't mean that we are abandoning the direct sales route, but we are expanding and also putting more focus on developing an active managed distribution partner network. So that sums up the strategic direction for ArcticZymes going into the future. We've already, as mentioned, executed on several fronts. So, we are building a strong foundation for the future. Next slide, please. And now it's over to you, Paul, to take us through sales in the quarter.

Thank you very much, Michael. And next slide, please. So, before we get into the revenue aspects of the quarter, let's talk a little bit and go into a little bit more detail about one of our key commercial milestones this year -- and that is, of course, our new European partnership with Brenntag. So, this partnership represents a really exciting step forward for ArcticZymes. And we have entered into an exclusive distribution arrangement with Brenntag for our salt active nucleases across Europe. As Michael mentioned, importantly, ArcticZymes retains direct engagement with our strategic and our key accounts. So, we're expanding our reach while still maintaining control where it matters the most. So, both parties get a significant advantage from this. We believe there's an excellent match. We're both very motivated, and there's a really great spirit of partnership around this deal. So why does this matter? Well, the rationale behind this partnership is very strong. First of all, the strategic alignment. So Brenntag's life science division or its Pharma division has a very deep focus on biomanufacturing and on cell and gene therapy viral vector customers, which perfectly matches the direction that we're taking with SAN. Secondly, we are gaining expanded reach. So Brenntag has a large network, a large sales network across Europe. And this gives us immediate access to many biotechs and CDMO customers that may otherwise take us years to reach directly. And thirdly, it's also, of course, about brand amplification. So Brenntag is marketing ArcticZymes branded enzymes, and this increases our visibility and reinforces our position as a trusted enzyme supplier across multiple applications. Now it's really important that we set expectations around timing. So, this partnership is not about short-term volume. It's about long-term reach and brand establishment. We've mentioned before many times, adoption cycles are long. Sales cycles are long. Customers evaluate, they validate, and they scale over many months or even years. So, traction is going to build gradually as Brenntag introduces SAN across its customer base and as projects mature through their own development pipelines. So, what we are building here is a sustainable commercial platform. It's one that will drive adoption. It will strengthen our European presence, and it will support long-term revenue growth. So next slide, please. Now let's take a look at our Q3 performance and how it reflects the continued progress across both biomanufacturing and molecular tools. Overall, total sales were up 24% year-on-year, reaching NOK 28.5 million versus NOK 23.3 million in Q3 last year. This is a really strong result that demonstrates the resilience and the diversity within our portfolio. So, within biomanufacturing, I would say that sales were reasonable this quarter following an exceptionally strong Q2, where we saw several large SAN orders. And I'd like to remind that this pattern is entirely consistent with our business model. Volumes in biomanufacturing do fluctuate quarter-to-quarter, but our underlying trend remains positive, and this is supported by ongoing validation and scale-up activities at multiple customers. Molecular tools performed really strongly. even excluding one large customer. So, growth was broad-based and particularly driven by enzymes like Cod UNG, dsDNase and proteinase. And this shows that we're continuing to see healthy demand across multiple product lines and applications. So regionally, EMEA led the way with 70% growth, and this reflects our strategic focus and our increased traction for both direct and new channel activities. APAC grew by nearly 50%, demonstrating continued success in diversifying our global base. And as Michael mentioned, we have now put a channel partner in place and who will be responsible for all distribution channel partners. The U.S. was softer at minus 10% versus Q3 2024. And this was primarily due to timing of customer projects rather than any structural issue. And we expect to see a rebound as the pipeline projects progress into 2026. So, in summary, Q3 underscores steady momentum with a strong 24% overall growth and sustained product diversity and regional balance that positions ArcticZymes well heading into Q4 and beyond. We remain confident in our long-term trajectory even with normal quarter-to-quarter variability that is typical of the enzyme supply business and biomanufacturing's longer adoption cycles. Next slide, please. So biomanufacturing sales came in at NOK 13 million for the quarter, which is a reasonable result following an exceptionally strong Q2, which included some large customer orders. And as I say, this reflects the typical variability that we can expect in biomanufacturing, but the underlying trend is positive as more customers move through validation and into routine use. What is really interesting and exciting is that GMP versions of SAN continue to gain traction and sales reached NOK 3.3 million compared to around NOK 1.2 million in Q2. So, this quarter-to-quarter demand shows that the requirement for higher-grade compliant enzymes is expanding as our customers progress towards clinical and commercial manufacturing. The adoption of our recently launched ELISA kit, the SensoPlus, has been very, very strong, and sales are actually around 10x higher than the previous kit. This highlights the growing need for high-sensitivity analytical tools that support customers' quality and regulatory expectations. And it also shows that customers are now reaching that stage in their pipeline development where they are starting to use these tools more routinely. Critically, we now supply salt active nucleases to 9 out of 10 of the top global CDMOs. Now that's a major validation of both our technology and the trust that the market has got in ArcticZymes as a reliable and specialist enzyme supplier in biomanufacturing. Now for many of those, they are not yet platform enzymes. They have been introduced when a company, a pharma company, a biotech brings its viral vector manufacturing into a CDMO. But of course, that is an excellent way for us to then work on penetrating those accounts to increase the number of platform offerings within CDMO. So, it's great news. So, while quarterly fluctuations are normal, our underlying indicators are very strong. We've got broad adoption. We've got deep integration, and we've got rapid growth of GMP and our high-quality analytical ELISA products. So, these trends reinforce our confidence in our sustained long-term growth as design-ins mature and become reoccurring commercial demand. So next slide, please. So, let's take a closer look at biomanufacturing order patterns, and these continue to give us confidence in the strength of our growth pipeline. So, what we're seeing here is a classic leading indicator of future growth. So, while the average order value is lower, down 16.6%, this is actually a positive signal. It reflects an increasing number of smaller validation projects from both new and expanding customers, particularly those still in R&D or in process development phases. As we know, these customers typically start with smaller valuation quantities before progressing into much larger GMP and commercial scale orders once their validation is completed. So, the data here clearly supports this trend. The unique biomanufacturing customers are up by 3% and order volume has increased by nearly 22%. So, this tells us that engagement is broadening and that we're successfully penetrating deeper into the CDMO and biotech customer base. So, you can see from the chart on the right that the steady growth in unique biomanufacturing customers year reaching 110 in 2025 Q3 compared with 106 last year and just 27 back in 2018. This trajectory reflects the kind of compounding value of our long sales model, long sales cycle model. We invest early in customer relationships. And over time, these validation projects, they convert into substantial long-term supply positions. So, while the average order values are temporarily lower, this trend is highly encouraging. So, it demonstrates to us that adoption is widening. There is strong R&D engagement, and there is a healthy pipeline of customers moving towards GMP scale up. All of this is underpinning our long-term biomanufacturing growth story. So, if we turn now to molecular tools. Next slide, please. So, the underlying business, I'd like to point out is strong and resilient. And actually, of course, our headline is 45% growth versus Q3 2024. Even outside our one large customer, we saw growth of 13%. So, this demonstrates that our broader business remains healthy and that our growth is not dependent on any single account. As I've mentioned before, we've had -- the quarter was driven -- the molecular tools quarter was driven primarily by Cod UNG and dsDNase, both of which continue to perform well and be adopted across multiple applications as well as some significant proteinase orders that contribute meaningfully to this result. So overall, molecular tools continues to deliver. It shows a broad application-based strength, healthy customer diversification and consistent year-on-year progress. So, these results reinforce that our underlying business remains intact and it's growing. Even though individual customer orders fluctuate, there's a sign of resilience and maturity in this part of the portfolio. And next slide, please. So, to close out the commercial section, let's take a look at our year-to-date performance through to the end of Q3, both including and excluding our 1 significant customer to give a clearer view of the underlying business. So total 9-month revenues are down 1.9%. But when we exclude our one large customer, they're actually up by 22%. And this shows, again, that the underlying growth across our broader base remains very healthy. Regionally, we see a mixed but encouraging picture. The U.S. is up by 16%. EMEA is down by 21%, but it's actually up by 26% if we exclude that large single account. And APAC is up by 52%. This is clear evidence that our customer diversification strategy is working, and that growth is broadening beyond our largest accounts. So, in biomanufacturing, we have sales that are up by 22% year-to-date. with continued expansion across GMP qualified SAN and regular process grade enzymes. So, growth remains broad-based, up by 10% in the U.S., 49% in EMEA and 20% in APAC. Again, this highlights balanced regional progress and increasing depth within our customer base as more customers advance through validation and scale-up stages. For molecular tools, sales are down by 21% year-to-date. But that figure improved significantly when we remove our one large customer. Within that, the U.S. is up by 32%, EMEA is down by 43%. It's also down by 9%, excluding this one large account, again, due to a couple of other accounts that didn't -- the phasing of the orders didn't work yet. This reflects timing -- these timing differences in some of these larger orders and really not a structural decline. We've also seen healthy demand beyond our core products such as Cod UNG, dsDNase and HL-SAN, particularly in metagenomics applications. So overall, the underlying business continues to strengthen. And when we exclude the impact of our one major customer, we're seeing broad-based double-digit growth. This confirms that ArcticZymes' revenue base is becoming more diversified, more balanced and more resilient. And this sets us up for a strong foundation as we move towards 2026. And I'd like to thank you for your attention and pass over to Borge.

Thank you, Paul and Michael, for the introduction and a deep dive into the sales side of the business so far this year and for the third quarter. Like previous quarters, I will take you through some more of the other sides of the business, looking at the expense development and also a little bit about the cash position that we have. Looking at the financials here. And as Paul stated, our sales revenues ended up on NOK 28.5 million compared to NOK 23.3 million in the same quarter last year or a growth of 22%. And for the first 9 months, sales are NOK 78.5 million compared to NOK 79.8 million in the same period last year, a reduction of NOK 1.3 million or a 2% decline. But it is, however, important, as Paul stated out, that taking out the largest customer, we have a good -- the growth in the underlying business has been strong. As previous quarters, we've also had a positive contribution from other revenues, where we recognized almost NOK 1.2 million in other revenues. NOK 0.9 million of this is related to the grants we were awarded in the second quarter last year and NOK 0.3 million is related to tax grants. We do, however, expect a lower other revenue number in the fourth quarter this year as we have utilized most of the project-related revenues in the first 9 months of the year. And also, with sales and other revenues for the first -- for the third quarter, total revenues ended up just shy of NOK 30 million, up from NOK 24.1 million last year. And for the first 9 months, the revenues are at almost NOK 84 million compared to NOK 81.7 million last year or an increase of 2%. And you can see the main differentiating factor here is the other revenues that has gone up significantly from last year. Cost of materials and change in inventory were in the low end this quarter with a cost of NOK 0.7 million compared to NOK 1 million in the same -- NOK 1 million in the same period last year, and we have NOK 3.1 million for the first 9 months. Our personnel expenses are slightly higher than the same period last year with NOK 18.9 million versus NOK 16.2 million. And as I talked about in the first and the second quarter, we have increased our expenses related to the commercial team. We have hired a lot of people on -- especially on Paul's team, which impacts our personnel expenses. We have also capitalization of projects and new product developments has also been part of the financial statements in the last few years, and these have an impact on our personnel expenses. And in the third quarter this year, nothing -- we didn't capitalize anything on any of the project, whereas in the same period last year, we capitalized NOK 1 million. And for the first 9 months, we have capitalized NOK 1.1 million versus NOK 4 million in the same period last year. And if we are to add capitalization to our personnel expenses in 2024, you can say that the personnel expenses for the first 9 months would have been similar to what we have seen so far. And also, there is one more important thing on the personnel side. And as I talked about in the first and second quarter, part of our remuneration is associated with variable remuneration and NOK 1.7 million was accrued in the third quarter this year. And in the same period last year, we hardly accrued anything at all. So, there's a big delta there on the variable remuneration. And if we are to pay out this variable remuneration depends on KPI achievement and performance towards the end of the year. Our operating expenses are -- you can see are reduced in the third quarter compared to the same quarter last year. We ended up on NOK 6.7 million compared to NOK 9.1 million in the same period last year. And part of this explanation is that we have reduced our IT expenses. We changed our IT provider earlier in the year, and we have also reduced some of the software licenses -- some of the more expensive software licenses that we had in the previous year. And of course, we have reduced our external services. The use of consultants have been reduced significantly compared to last year. And if you remember last year, we spent quite a lot of money on the ERP integration project. That project was finalized in -- you can see in the fourth quarter last year, and there are no more consultancy hours going into that project in 2025. Hence, there is a lower use of consultants this year. But it is -- we have continued to spend money on marketing efforts. I think most of you can see that we are spending a lot more on LinkedIn, social media platforms. We are attending conferences and shows a lot more than we did just a year ago. And we will, of course, continue moving into '26. We will continue to invest in these kind of commercial efforts to drive the top line growth in the business here. Currency impacts our business for sure. And we've had some headwinds in the third quarter as well as we saw in the second quarter. As most of you know, most of our revenues are denominated in USD and euros and only a small fraction of our revenues are in NOK. And in the third quarter this year, 70% of our revenues was in USD and 30% of our revenues was in euro. And looking at the same quarter -- at the second quarter this year, we had 63% in USD and 36% in euros. And if you look at the spread from last year, we had -- you can see that the third quarter pretty much represents the same as we saw in 2024 with 73% in U.S. dollars and 27% in euros. It is especially the U.S. dollar that has impacted our figures this year that -- whereas the Norwegian kroner has strengthened towards the dollar, whereas the euro-NOK has been fairly stable across the year here. And if you look at the currency implications on the finance side of the business, it has impacted our net finance by a decrease of NOK 0.4 million in the third quarter, whereas we had a 0 gain in the third quarter last year. For the first 9 months of the year, we have a decrease of NOK 1.5 million versus NOK 0.2 million in the same period last year. And this will also kind of explain the difference when you look at the net financials for the business year-to-date, you can see that the numbers are lower in the first 9 months compared to the same period last year, and this is primarily explained by the currency headwinds that we've seen on our bank accounts. But we are not only exposed to currency fluctuations on the finance side, we are also exposed to currency on our sales and on our trade receivables. And these can be seen under other expenses in the organization. And our expenses were actually increased by NOK 0.1 million in the third quarter this year and whereas we didn't have anything in the third quarter last year. But year-to-date, we have seen an increase in our expenses by NOK 0.8 million for the first 9 months, whereas last year, we had a reduction of NOK 0.5 million. So, if you eliminate the currency effects under other operating expenses for the first 9 months, you can see the 3 months -- or the NOK 3 million less in spend we've had so far this year would have been close to NOK 4.5 million if we eliminate currency effects. So, we are actually spending less this year compared to last year. And that is -- makes a lot of sense, especially now that we had that huge ERP projects last year that had impacted our P&L significantly. And that one is not part of the business or not part of our activities in 2025. So, with the sales and the expenses that we have talked about now, our EBITDA ended up on NOK 3.5 million compared to a negative NOK 2.3 million in the same period last year. And for the first 9 months of the year, EBITDA is on NOK 3.7 million and this is also strengthening. We remember, we had a negative first quarter and a strong second quarter, and now we have a good third quarter as well. But now we are above what we had last year, as I said, NOK 3.7 million for the first 9 months versus NOK 2.6 million in the first 9 months of 2024. And also looking at the graph on the left-hand side, you can see that our EBITDA margin has improved, and it's on similar levels that we saw in the second quarter this year, and we had a 12% margin now in this quarter here. The cash balance and the changes in cash has been fairly stable over the last few quarters when we also include kind of the short-term investments in low-risk mutual funds. And also -- but as you can see now from the green line here, changes in cash has had a positive trend over the last 2 years. And in the third quarter, especially in the third quarter this year, we saw an increase of NOK 11.5 million compared to the end of the second quarter this year. And so far, this year, we've seen a net change in cash of close to NOK 14 million for the first 9 months. And this gives us a balance towards end of the third quarter of close to NOK 260 million, which is a fairly healthy financial position for the company. And with that kind of strong financial position, I will also hand it over to Michael now to kind of give us more on the outlook and open up for Q&A.

Yes. Thanks a lot, Borge. Looking into biomanufacturing first, then we believe that the Brenntag partnership is going to be a strong long-term growth driver. Paul has already elaborated on the dynamics of this deal -- important deal. We currently have a smaller market share of the nuclease market. And we believe that one of the things that can help us penetrate the market further is through selected partnerships such as the one with Brenntag. We've also seen a really positive development in the latest quarters in regard to the CDMO partnerships that we have, especially one -- early one where we have seen significant growth, almost 200% year-to-date. And as I said early on in the presentation, we expect that this is going to continue to accelerate into 2026. Molecular tools, our major partner is back on track, and we've also seen growth from other accounts within the segment, signaling that we have a renewed momentum going into Q4. We're also seeing that new applications such as the metagenomic area is opening a number of new opportunities. It's also opening up to consideration of new go-to-market strategies. And we are seeing 81% growth within this space year-to date. The strategic focus ahead is really to take -- we have a rather unique narrow enzyme portfolio, but we have a wide range of application areas. And that's what we are going to focus a lot on in order to increase our penetration of new business opportunities. Metagenomics is one of them. RNA, important for us in the future. There's a huge use of enzymes within that space. We have our first enzymes in development for QC purposes, and we expect to add more enzymes to the portfolio, which could also happen in inorganic ways. We have a focus on developing and managing our CDMO partnerships, strengthening them and ensuring that they accelerate as they are a key foundation for our future growth. And we're going to continue to invest in our direct sales force. We are going to very soon also onboard further sales business developers in the company. And we have also decided to invest in the channel manager position. So, we're going to focus on a dual approach, both direct and selected indirect sales channels to broaden our reach significantly forward. And with that, I would like to thank both the ArcticZymes team for delivering a solid quarter and also thank all the investors for your support. We have a strong foundation. We are building it to become even more resilient for the future. We have a number of growth initiatives that are going to turn out in the coming time. So, I'm excited for the future. And with that, I'd like to thank you for tuning in this morning and then also open up for the Q&A session. I already see that we have a lot of questions in there. So, let's get that started.

Thank you for that closure might be here. I will try and combine some of the questions that you've posted online. But also, the first question is here, now that you have returned to a profitable growth, do you have any plans what to do with the large cash position you have? Are there any kind of acquisition targets you are looking at? Or are you thinking about dividends? Or are you looking at a share buyback potentially here?

I think that it has been essential for me during the past years to bring some stability into the company to strengthen the foundation. And we are now in a position where we have a stronger foundation. So, we are going to start exploring inorganic growth opportunities. And I think the first step is going to be to look into in-licensing agreements in order to expand the product portfolio. We are also open for doing larger activities, but it is essential that we have the right foundation, that we have the right match, and we are stepping lightly within that space at the moment. But we are moving towards inorganic growth opportunities.

I will follow-up. Today, you have approximately 1% of the total addressable market for the sand portfolio. Long-term, how much of this market do you think is possible for you to take?

I think that's a very difficult question to answer. But luckily, we have Paul Blackburn on the call who can maybe that question. I believe that, of course, our market share should be bigger than it currently is. But an exact number is probably difficult. What is your take, Paul?

Yes. So clearly, I mean, there is a dominant incumbent nuclease that has been a default enzyme, if you like, for biomanufacturing. Now within that total accessible market, of course, the market that we can service is primarily the cell and gene therapy market, the viral vector production market. But we've also seen good growth in vaccine development and exosome production and another kind of what you might regard as adjacent markets. Now there's a couple of things that we should consider here. One is the regulatory environment. So, we produce a very, very high-quality enzyme. Frankly, the cost of that enzyme is higher than some alternatives. Now as regulatory bodies get stricter and companies manufacturing these vectors get more risk averse, our opportunity increases, and the value of our enzyme increases. So, I think we kind of helped with that tailwind of regulatory. So when we read about issues with gene therapies, for example, sometimes the perception from an ArcticZymes point of view is perhaps that will drive customers towards greater quality requirements, which we can serve well. I think we've seen a move towards certainly discussions and some early development work for in vivo therapies. And that's likely to be an incredible high level of regulatory requirement. So as customers' regulatory requirements get tighter, as we find adjacent markets, as we position ourselves from a brand point of view and a commercial sales point of view in a stronger way, as Michael says, we're incredibly ambitious to take share as appropriate. So yes, it's difficult to give a number, of course, but significant is the word that I would like to use.

Thank you, Paul. And on that topic with regards to our SAN portfolio, you mentioned in the presentation that you are now talking to 9 of the 10 largest CDMOs. And the question is, are these only in Europe or is it also outside of Europe?

Absolutely global. And just so I'm clear, this isn't -- we're not addressing 90% of all CDMOs out there. That's not the message. The message is that if we look at a list of the top 10 CDMOs by revenue or by project number, we are in 9 out of 10 of those. And as I mentioned during the presentation, a lot of the time or some of the time, at least, it's with projects that are being brought in from their customers. But that is an excellent way to start to influence platform integrations.

And just one comment also to the 9 out of 10. I think it's important also to state that to my recollection, this is 9 out of 10 of the CDMOs that are top within Advanced Therapies. That's how it's specified.

A few questions on the Brenntag deal that kind of I'm missing out. How will our margins be affected on this kind of Brenntag deal? I guess you will have to take a cut on the sales. And also, do you have any kind of minimum requirements for sales through them? Or what's the expectation on this agreement with them?