NorDiag experienced strong progress for its Arrow instrument in the first quarter 2010. 21 instruments were sold, the first OEM-agreement was landed, and the Company started the second quarter with an attractive order backlog for the new instrument. Other business activities developed satisfactory, although a breakthrough for the Bullet instrument outside Scandinavia still remains to be achieved. 

Financials:
NorDiag had operating revenues of NOK 26.2 million in Q1-2010, compared with NOK 4.2 million in Q1-2009. Infectious Diseases segment reached NOK 6.9 million in operating revenues, compared to NOK 7.0 million in Q4-2009. Operating revenues for the Infectious Diseases segment increased with 64% compared to Q1-2009.
 
Gross margin in Q1-2010 was 28% compared to 47% in Q1-2009. The lower gross margin is attributable to the HLA Typing segment. This segment accounts for the major part of revenues. It has a lower gross margin and was included from Q3-2009. The segment had a gross margin of 24% in Q1-2010, and the low margin reflects the fact that this is a distribution business. The gross margin for Q1-2010 decreased with 2% compared to Q4-2009. This is related to a reduction in the infectious diseases segment margin going from 51% in Q4-2009 to 37% in Q1-2010, as an effect of introduction offers and sales channel (direct vs. distributor) mix. Looking forward, it is important to notice that the product mix between instruments and reagents will change in favor of reagents, thus increasing the overall margin of the infectious disease segment. Furthermore, the margin on the Arrow instruments will improve when full scale production of Arrow instruments and reagents are implemented. 
 
EBITDA in Q1-2010 was NOK - 7.6 million compared to NOK -10.5 million in Q1-2009. Infectious Diseases had an EBITDA of NOK - 8.6 million and HLA Typing had an EBITDA of NOK 1.0 million in Q1-2010, compared with respectively NOK - 6.1 million and NOK 0.4 million in Q4-2009.
 
Net cash flow in Q1-2010 was NOK -8.1 million, providing cash balances at the end of Q1-2010 of NOK 47.6 million. Infectious diseases segment has a cash burn in Q1-2010 of NOK - 13.9 million, compared to NOK -7.6 million in Q4-2009 and NOK - 15.0 million in Q1-2009. Although increase in working capital is expected when NorDiag grows, the cash burn for the next quarter is expected to be significantly lower.
 
Operations:
NorDiag sold 3 Bullet and 21 Arrow instruments in Q1-2010. Accumulated number of instruments sold/leased by March 31 2010 is 34 Bullet and 46 Arrow instruments. The framework for further growth in sales is in place; with CE labeling of instruments and most of the kits.
 
The sales of kits and consumables for the Bullet instrument in Q1-2010 were slightly below the record high level in Q4-2009 (NOK 3.2 million). There was a significant effect of the H1N1-virus epidemic in Q4-2009.  However, worth to mention is that the H1N1 wiped out the seasonal flu which under normal circumstances would generate solid revenues from our Viral kits. The sale of Arrow kit is in its starting phase, but will increase as the number of instruments in the market increases. The first substantial order for Arrow kits has already been placed from Hain Lifescience.

In HLA Typing segment, an important milestone for NorDiag was reached in the quarter, as the first Arrow instruments was sold. 

Outlook:
"We are comfortable with our growth targets for 2010", says CEO Mårten Wigstøl in a comment to the first quarter results. "This implies sale of 162 Arrows and 13 Bullet instruments. The instrument sale will fuel further sales of kits and disposals. Together with volume production of Arrow, this is expected to improve margins", Wigstøl adds. He continues: "We target new partnership deals during 2010, and a distribution agreement in US has high priority. The interest for the Arrow instrument inside the life science industry has started to increase, and we have hired a new life science marketing manager to build this unit going forward. Although there are always new challenges, I feel NorDiag is now on the right track".

Contact:
CEO Mårten Wigstøl  -  Phone: +47 91165775
CFO Tone Kvåle  -  Phone: +47 91519576

Q1 Report 2010
Q1 Presentation

Read the notice in Norwegain here.