SciBase Q1’24 preview: Still modest growth as US ramp-up is gathering speed

SciBase will release its Q1 report on Friday at around 8:00 CEST. We expect revenue to have grown well at a still low absolute level, with profitability remaining well in the red. From the report, we're looking forward to any additional visibility on commercialization progress and timelines, especially in the US, as we see this as a key driver for achieving cash flow neutrality. With the recent successful capital raise, near-term financing needs are covered, but an update on burn rate and funding runway is still interesting.

Revenue has grown with Nevisense use trending upwards

We expect SciBase's Q1 revenue to have increased by 31% to 6.8 MSEK, mainly driven by increased Nevisense usage and related consumables sales (Q1'24e: 6.1 MSEK, +35% y/y) in Germany and the US. Quarterly revenue volatility due to order timing is normal and adds to the imprecision of the estimate. As long as the revenue growth continues, we consider the exact revenue level to be rather trivial at the moment. The faster commercialization of SciBase in the large US market is still behind the insurance coverage ramp-up. Therefore, the current level of revenue growth is not in line with what the company should be able to achieve in 6-24 months.

Profitability has remained clearly in the red, near-term funding in check

We expect SciBase's Q1 EBIT to have remained clearly in the red at a low absolute level of -13.7 MSEK or approximately -203% of revenue. The decrease compared to last year's level (Q1'23: -10.8 MSEK) is due to increased fixed costs during the rest of 2023. SciBase continues to make upfront investments in the commercialization of Nevisense, especially in the US, which means that it has additional fixed costs that keep profitability negative before the company’s high gross margin revenue increases sufficiently. We expect SciBase to burn ~15 MSEK per quarter in 2024, which means that the company will end Q1'24 with a net cash balance of ~19 MSEK (Q4'23: 34 MSEK). Due to the ~44 MSEK capital increase completed in May (~40 MSEK after costs) (not yet in Q1'24 cash), the company should have a cash runway until around Q1/2025.

Progress and visibility towards faster growth remains key

The company is still in an early growth stage. In our view, the investment case hinges on a successful significant step-up in US sales, which could bring the company to cash flow positivity (2027 in our estimates). This requires an increase in Nevisense's insurance coverage in the US, which we expect to be more clearly reflected in revenue around 2025-2026. As such, we're looking for additional visibility on commercialization progress and timelines already in the next 12 months. The company is not currently providing guidance and we don't expect to see it in the Q1 report given the still low revenue visibility. However, we expect commentary on sales progress in Germany and the US. Additional commentary and potential targets on the progress of the US reimbursement process and the skin barrier applications could also provide additional visibility to our near-term estimates.