AlphaHelix - Already profitable DNA detection in Sweden

[Geologiopiskelija]

Disclaimer. I’ve already managed to bring at least two Swedish stock exchange companies to the forum whose share prices have since tanked by over 50%, so third time’s the charm

The industry is not familiar to me, so I’ll focus on the business numbers.

AlphaHelix’s description on Nordnet:

“AlphaHelix Molecular Diagnostics AB develops, manufactures, and markets products for DNA-identification and quantitation in molecular diagnostics and life science research. Its product inlcude Rob, BugScreener MRSA, and aAmp. The company applications inlcude Diagnostics, PCR and Liquid handling.”

So the business is related to DNA identification in the health technology sector. (The Swedish Nightingale?)

The stock price has fallen significantly, as have other growth companies.

However, the company is already profitable, and growth has continued well, at least in some parts, also at the beginning of 2022. Apparently, the cash position is also quite good:
Key highlights from the Q4/2021 report:

Q4 profitability was seemingly quite weak, but still profitable. I don’t know what kind of seasonality there is, or if there were one-time items/investments etc.

And the report
Bokslutskommuniké 2021 - AlphaHelix Molecular Diagnostics (cision.com)

Notice from January about a subsidiary (with Google Translate)

"Alphahelix’s subsidiary Techtum set a sales record in January

The life science company Alphahelix’s subsidiary Techtum set a new sales record in January.
The company had sales of close to SEK 6.8 million during the first month of the year. January is normally a seasonally weak month and last year sales were around SEK 2.4 million. Techtum also set a sales record in December.

In January, the company entered into a distribution agreement with Italian Sentinel regarding the Nordic market.

"It is mainly increased diagnostic sales that accounted for the increased sales in January, but it is gratifying that the majority of agencies have made a positive contribution. The collaboration with Sentinel strengthens Techtum’s product portfolio, primarily for increased automation for clinical operations. Sentinel’s products are characterized by user benefits combined with an attractive price picture "Techtum continues to connect with new interesting diagnostic companies for the Nordic market. The fact that we were contacted by Sentinel also indicates that our competitiveness has attracted international attention," says CEO Mikael Havsjö in a comment."

A member of the management team apparently bought some shares
“Board member increases his shareholding in Alphahelix
On February 23, Artur Aira bought 27,152 shares in the life science company Alphahelix, where he is a board member. The shares were purchased at a price of SEK 1.96 per share, a deal of SEK 53,000. The deal was made outside the trading post. It appears from Finansinspektionen’s transparency register.”
In the autumn, however, some sold larger amounts.

P/E with 2021 results approx. 20

Has anyone else come across the company? It seems quite cheap, so I assume there’s some bomb hidden that I haven’t yet noticed due to the Swedish-language releases . Of course, I could be wrong and actually found a hidden gem this time.

[MicceZ]

A familiar company from quite a few years back. I can’t really find a clear competitive advantage in their products; the only difference they’ve had since the company’s inception is the ability to use slightly larger sample sizes in analyses due to ‘superconvection’.

Quite a few large and small companies make similar ‘traditional’ qPCR tests using the exact same 96/384 microtiter plate format and automation. PCR tests are generating very good results right now (and probably for some time to come) if they have a COVID-19 test for sale. They are not involved in that business.

The company focuses on nucleic acid analyses and, in that respect, compares to, for example, Mobidiag. A significant difference from Mobidiag and many other PCR diagnostics companies is that AlphaHelix still primarily focuses on equipment. The big money lies in practical applications.

[Geologiopiskelija]

Q1 report

Nordnet

Good growth relative to the stock’s valuation, and if I understood correctly, profitability was also good, assuming the effects of the acquisition are excluded.

Google Translate:
AlphaHelix reports sales growth of 38.5% to SEK 13,110 thousand (9,463) compared with the first quarter of the previous year. Profit after tax amounted to SEK 1,422 thousand (1,612). The acquisition of Cybergene charged the quarterly result with depreciation of SEK 537 thousand.

The profit margin was 10% during the period with a gross margin of 45%.

Cash and cash equivalents were strengthened during the period to SEK 10,441 thousand.

Group January 1 - March 31, 2022

• Revenues SEK 13,229 thousand (9,462)

• Profit after tax amounted to SEK 1,422 thousand (1,612)

• Earnings per share amounted to SEK 0.02 (0.03)

• Equity / assets ratio 73% (37%)

• Cash flow was SEK 4,579 thousand (518)

Parent company January 1 - March 31, 2022

• Revenue SEK 75 thousand (50)

• Profit after tax -77 KSEK (-84)

• Earnings per share amounted to SEK 0.00 (0.00)

• Solidity 99% (98%)

The CEO comments

• I am very pleased with the development during the first quarter. The Group shows good sales growth and profitability with a continued good profit margin. The subsidiaries have exceeded the budget despite turbulent times with a large proportion of new employees in both companies. The number of employees has increased by over 40% since September 2021. Despite the higher cost situation, we have managed to maintain good profitability. If we deduct depreciation, the Group’s profit margin is closer to 15%, which is approved for the mix of products that the Group sells. We see that an increased share of diagnostic sales results in an increased gross margin. The Group thus focuses on developing the product portfolio in diagnostics.

Today we have an economy and stability that enables further expansion of the sales organization, primarily in diagnostics. The subsidiaries have not previously had sufficient resources on the sales and marketing side to reach the market. Today, the organizations have been strengthened, which provides the conditions for continued growth. It is primarily the Nordic market that will be strengthened with sales offices in each country.

The subsidiaries have developed a new graphic design that will be implemented gradually during the year. The design of both companies is not on a par with what the leading companies in the diagnostics industry present. The parent company is also changing its website with the intention of improving ongoing information for investors.

Techtum started the year positively with a sales record in the normally sluggish January. In the end, the company has increased sales by 25% to SEK 12,023 thousand (SEK 9,570 thousand) and a profit margin of 15%. The result can be considered very good as the company during the period has mostly been busy with product training, reorganisations and phasing in new staff.

Increased costs for transport and currencies have had a negative effect on earnings during the period when the company has not had the opportunity to adjust prices on some fixed agreements.

Techtum negotiates with a number of diagnostics manufacturers for distribution in the Nordic region. It is primarily in molecular diagnostics with detection of viruses and bacteria that the company is looking for partners. The company is in continuous discussions with manufacturers and expects to publish more partners soon.

In the Nordic region, there is currently a transition from open QPCR systems where several instruments are used for the analysis chain to instruments that automatically handle the entire analysis chain. We also note that demand increases as the pandemic burden on our diagnostic customers decreases. This is positive as the pandemic has been an obstacle to Techtum’s diagnostic expansion.

Techtum’s range for research has increased well during the period. The trend applies to the entire range. Biobank sales have also shown an increasing trend during the first quarter after being stagnant for a few years. Sales there should increase from just over 4 to over 7 MSEK. It is really only pandemic-related products that we have seen a decline for. Techtum has mainly sold systems and tests for tests at airports or for travel certificates. The reduction in sales is therefore limited as tests are still required for the unvaccinated and in a lot of countries. If China opens up for travelers, we will have a marked increase in sales as there is a great pent-up need on both the business and tourist side, not least from China’s side.

Cybergene had a very good sales increase of just over 65% to SEK 1,193 thousand (719) with a profit margin of 14%. The turnover is the highest in three years that I have information about. This is probably an effect of increased processing in combination with a reduction in the pandemic in Europe. Unfortunately, the margin is negatively affected by the company being redundant during parts of the first and second quarters. During the second quarter, costs will be reduced as the current CEO retires.

The company’s operations can be divided into the following three areas: market, quality work and development. Two people have strengthened the organization during the quarter. A sales and marketing manager started in January and a person for quality work and production who started in February.