Good morning everybody and welcome to the the quarterly IR call for EQL Pharma. We'll get right into it since we have a lot of things to cover today.

Here is just a brief brief summary of what I intend to cover. We'll do quarterly overview like always.

Then I will do a bit of a deep dive on the scrapping items that we had in this quarter. Then we will try to dissect the quarter excluding excluding the scrapping and seeing what worked well and what did not work well.

Then we will do a little bit of a deeper outlook than than normally. I think it's it's it's obvious to to everyone here and to us of course that EQL is going through a tougher period.

I will offer a little bit more details on our outlook here. Then I will try to cover some of the some of the key focus areas for us as as management team, and how we plan to to to get out of this tough period and not only get out of it, but actually get out of it in a much stronger position than we went into it.

Then of course pipeline and portfolio update and a brief summary, and then we'll open up for questions in the end. If we go into the quarterly overview, as as expected and as previously communicated, the sales was was was weak.

There was not no sales growth in the quarter. We'll come in more more to the underlying reasons in a couple of slides.

The gross margin, of course, very weak given this big scrapping item of 20 million. Gross margin of only 17% after that scrapping.

We had 43% last year, it's of course significant decrease. The gross margin was 35% excluding this scrapping.

OPEX was 31.5, so that's also an increase towards last year as as expected. Of course a terrible EBITDA margin due to the scrapping items and of course the the weaker underlying underlying business in the quarter.

So 12% EBITDA excluding the the one-offs. CapEx around 16 million, significantly less than than in the same quarter last year.

We keep our growth outlook for the year to around 15%, which then of course insinuates that we have a more optimistic view about the rest of the year, and I will come into that come into that later. I want to also stress the leverage number.

Of course the leverage number mathematically becomes very high when we have these one-offs and an underlying weaker weaker EBITDA. That does not insinuate that that we will not be in a position to honor our bond obligations or anything like this.

That is more related to the underlying cash flow. Of course we want to get this want to get this number down, and and we're going to do that with the focus of course on on curing our our EBITDA here going forward.

If we look a bit on business development, couple of developments during the quarter. If we start with Meloson, we got the approval for one of the strengths in Kazakhstan, which is very exciting of course.

We are in the really final launch preparation stages in Turkey, and we are in launch preparation in Italy, two very interesting markets of course. We see that our partner Medice for Germany and the other DACH countries and UK, they are growing their sales still very nicely, especially in Germany.

We still have the procedures ongoing in GCC, the Gulf countries. For Meprex, there was also some development during the quarter.

We added Spain as a new territory. We're very happy about that because it's obviously one of the one of the Europe big five markets, where we also have a quicker regulatory route to approval.

We can have actually approval already in the next fiscal year, which would be very nice. We launched Meprex in Germany in the quarter together with our partner Dr.

Pfleger, which was one of the milestones for the year, we're happy about that. We are in final launch preparation stages in both France and Israel.

The Benelux procedure had some progress, we have received what is called end of procedure in Benelux, and then we are only waiting for the final national approvals. We also have the procedure ongoing in Ireland.

Regarding pipeline, we added three new products in the quarter and we removed one. We also launched two products in the quarter, two typical EQL niche generics, which take the portfolio to 49 products and the pipeline to 44.

These three new products that were added, all of them have potential both in Nordics and in Germany, and in some cases actually also Netherlands. This is a mind mindset shift we're trying to adapt when finding new products now that we are working also with Germany and Netherlands.

Operations-wise of course, our main focus is to to address and resolve the root causes that have have put us in this tough period that we are currently in, and I will come back to that later. Then of course, we are, as I have alluded to before, we are really now trying to roll out AI in the company, and we see quite nice potential with that.

We will focus a lot on on AI during the autumn here. If we start diving a little bit into the scrapping items, I will try to dissect and explain what that comes from.

It's of course a very disappointing event. The scrapping item in the quarter was 20 million scrapping, and that is mainly connected to hospital products.

The root cause for this scrapping is that we as EQL, we have planned our supply for hospital tenders in accordance with forecasts that we get from the tender regions. We have The hospital segment is relatively new to us, the reason why we're doing this is that we really want to gain a reputation as a reliable and stable supplier in the hospital segment.

Then in some cases, and this mainly happened for Finnish tender regions, in effect they called off far less volumes than they indicated in the tender in the tender contracts, leading to that we had purchased too much stock and hence having to scrap. It is a relatively new business unit as I said.

We still fundamentally believe that it is a healthy business, but that we need to make several adjustments and improvements to the way we manage it, especially in regards to sales and operations planning. Working differently with demand plans, differently with supply plans, and differently with the sales and operations planning, which is the forum where you where you really tie the demand and supply plan together.

We have of course tried as as well as we could to offset this by by selling in other channels, but but apparently here we were not able to to mitigate the scrapping in full. If we look at the quarter excluding the scrapping, just trying to understand the quarter.

It was a weak quarter. Many of the stockouts that we hoped were going to get resolved during our Q4 were not resolved during our Q4, we went into Q1 with a weaker inventory situation than we had hoped, and that is what is reflected basically in the quarter.

The the excluding scrapping gross margin of 35% I think, I mean it is representative for the quarter. It's very weak, and it mainly stems from from continued stockouts in the quarter.

Same thing for the EBITDA margin. Given given far less gross margin than where we where we should be performing, and an OPEX that is higher than previous year, EBITDA becomes weaker also.

If we switch now a little bit to to looking at the rest of the year here, I would like to offer a little bit more detail and granularity than we than we normally do here because we are in in a challenging period. We are keeping the sales outlook for the year around 15%.

The reason why we're doing that, despite a weak first quarter, is that the inventory situation now going into Q2 and Q3 looks significantly better than when we went into Q4 and Q1. As things stand right now, we actually expect a fairly good Q2 here, and and if the improvement work continues well, also a good Q3.

I realize that that might sound a little bit counterintuitive after just having presented such a weak Q1, but but that is that is what we are seeing here in the inventory in the inventory levels. Let's say since this tough period started, we have averaged, let's say five to seven products stockout, and now when we're going into Q2, we are seeing more one, two-ish stockouts.

It is not a situation that is fully resolved yet, but it is still a significant improvement. On top of that, we have the the Meprex and Meloson, which are becoming increasingly important to us.

The order book here for for the autumn and the rest of the year looks fairly strong. Actually on Meprex, even stronger than what we can can fully deliver, we are working very hard to try to get the API volume for the manufacturing and to try to debottleneck that.

Then also of course we we have gradually here new launches in new countries for these products, we're optimistic about this segment. When it comes to to launches, this is an area where we are still struggling, and I want to deep dive into that a little bit because historically we have been, I would say, I'm satisfied with how we have handled launches historically with, let's say, 7, 8 up to 12, 13 launches per year.

The reason we're struggling in the launches right now is that the products that are currently in the launch phase, most of them are the last of the developmental products that we signed with Cadila already in 2015, '16. These are technically more difficult products, and that is also the reason why they have taken longer to develop, and it's also the reason why they are more difficult to launch, and it's more difficult to have a reliable launch timeline because we're running into challenges with these products.

We are going to launch them, of course. If we look at the pipeline a little bit more holistically, we see that our current assessment is that this launch challenges are temporary.

We see in the pipeline for future launches a lot more far, far less technically complex products. This is a phase that we have to work through.

Even though we see the launch challenges as temporary and mainly depending on the technical difficulty of the products, it has shed light on a lot of improvements that we want to make. We we are focusing a lot on our launch process and significantly up- upgrading that.

Also so, we had we had the one-off items here in Q4 regarding abiraterone especially, now we had scrapping in Q1. These things, I mean nobody likes nobody likes these items, of course.

We will we will, I mean we of course always review our balance sheet, but we will make that a little bit more thoroughly even than usual to try to take a really forward-looking perspective here and see if we shall make provisions during the autumn for risks, let's say in the coming even 24 months period, so that we avoid all these negative surprises. We will also start making continuous provisions, accruals for potential scrapping that that could could come in the future so that it will look it will be, let's say, much more even going forward.

Of course we had a significantly weaker start to this five-year period than what we are are used to. EQL's process is that once yearly we do a strategy work, we call it, and then we go through what the figures look like 5 years, 10 years into the future given the pipeline and the portfolio and so on.

We will do that as we always do in the autumn. If we see that this tough period that we're going through now has will have some implications structurally on our ability to deliver on on the targets that we have set for this five-year period, we will of course communicate that.

That is a work that that will be will be ongoing. It will it will of course mainly depend on the the health of the pipeline.

If if the health of the pipeline is good or intact, our abilities to to to deliver on the targets will will remain intact. If the health of that pipeline has has somehow shifted as a result of what we are going through, we might have to to alter those targets.

We will come back with that during the autumn and what our assessment is. I want to come back to this one.

I have presented it previously here, showing the the the key commercial milestones to happen here for us to to to actually be able to deliver this around 15% growth in this year and also to be in a really good shape for next year. We have of course the the recovery in the pharmacy segment.

That is, I mean mainly driven by getting the inventory back in control so that we suffer less stockouts, and also of course in the longer run to perform the new launches. The inventory looks far better now, but it's too early to sort of wave the danger over flag here.

I want to monitor that very, very closely, and of course see it materializing a couple of quarters before we can sort of declare that the recovery has happened. Secondly, branded.

There we have a couple of key things in this year: Meprex launch in France, Germany, and Israel. Germany is already now carried out, I have marked it green here.

Meloson growth in Germany and UK. It was very good in the first quarter, but remains to be seen here over the coming couple of quarters if the growth continues.

We have the debottlenecking and the COGS improvement regarding both Meprex and and Meloson, which are ongoing. The effect will come first in the next year, but it's very, very important work streams for us.

Then we want to be launch ready here in Italy, GCC, Benelux, Turkey, Ireland, and Kazakhstan. In Turkey we are actually already launch ready, so that one is green-marked here.

I will come back to this slide so that you can also, as shareholders, follow the progress of of the comeback work here. Then of course growth and recovery in hospital, and launching our first special generics products.

That that is still our intention to do that in this fiscal year. Looking at sort of the same the same topic, but from a little bit of a different perspective, I want to share with you a little bit how we are thinking in the management team, and what we are focusing on, and how we are trying to change our approach to really sort of address the the structural issues here.

What I think from from a more operational standpoint here, what is really, really key when you are going through a tough period like this, especially we're coming from a long period of of of good growth and ability to solve things, and then we're moving into a period which is much tougher. I think it's very, very important to try to stay objective, non-defensive, to stay curious, and to really try to identify and resolve root causes of issues.

This is what we are doing. During the spring here, we have performed a diagnosis and we have identified root causes, things we want to fix in our company to be able to: one, resolve the problems we have; two, prepare for the next growth phase.

These root causes that we have identified, I have talked about them before, around around demand planning, supply planning, these these kind of things which we want to to upgrade, are are structured into separate work streams for a solution. We will really, really try to stay focused on the structural problem solving here, getting getting rid of a problem once and for all so that so that the growth journey can continue.

Of course it's important that we always follow up and that we test our solutions. One way to test a solution is to to come up with an upgrade of a process and then pressure test that upgrade by taking an an old problem we have had and run it through that as a pilot test and see, would this new solution have captured that problem?

This is the mindset we'll try to have. Of course also try to embed continuous improvement into into the the work that we are doing, so that it's not a so that it's not something that is done on occasions, but it's done continuously.

The target of all this of course is is for it to be an enabler for the next growth phase of of the company. This picture, coming back to here, seeing the blue line, externally communicated target up until 24/25.

Here we have been good at reaching what we have promised externally. Then we are in in a tougher period now, things looking a little better for Q2 and Q3.

For me to really be able to to to declare danger over, I want to see a couple of of good, solid quarters that are good for the right reason. I want to really see that these these root causes we have identified are structurally resolved, so that we have a couple of good quarters behind us and we can with confidence guide for a much more ambitious growth in the period to come.

Those things are the sort of the triggers for me to to be able to declare danger over here, and and we are not there yet. The portfolio, as we said, grew to 49 products and the pipeline 44 products.

As we have cleaned up here a little bit in the pipeline and added a bit of new products. We still aim to launch seven more products, I think it is here, in in in this year.

Then you can see the the the updated launch outlook in the picture below. Before we open up then for for questions, I would like to make a a sort of a summary from my perspective and from management's perspective of sort of where we are standing right now in relation to the sort of broader context.

The period 2017 to to Q1 25 was was a period that I'm pretty happy with, pretty proud of. We managed to deliver really solid growth and and a growing profitability, so that was good.

Now in 2025 and 26, we're going through a much tougher period than we have done historically. This has related to supply issues that we have been unable to to mitigate.

It has come from technically more complex launches leading to launch delays, which we are which we have not had that much in the past. Of course the OPEX base is higher now, these these challenges will have impact also further down in the P&L.

I really want to to to to say here that every tough period has a beginning, it also has an end, and this one will as well. We will resolve these operational matters and we will emerge on the other side much, much stronger.

That is our target. I also reflection from my side.

We are taking this very, very seriously, of course, focusing extremely much on resolving the the things that we can impact as EQL. On the other hand, I think that it is natural for a high-growth company to go into a sort of plateau phase and to get some kind of a growth pain.

We have been growing during my years with the company. We've been growing from like 25 million kronor in revenue to to well above 400 million.

Of course now there is a complexity in the business that we didn't have a couple of years ago, and we have a couple of things we need to really work out to be able to handle that complexity in a better way. The complexity will of course of course continue here as we grow, we need to get better at that.

With all the information that we have right now, it's it's too early to say danger over, absolutely. As it looks like right now, this Q1 that we just presented will have been the the low watermark of of the tough period.

It looks it looks a bit stronger here ahead. Again, we need to see that that is actually structural, not just something here for for two quarters to come, but that's something that's really embedded and and and structural.

We will of course come back more to that. That was everything I wanted to share with you.

I will stop sharing and I'm sure there are questions. Let me see here.

I need to open the chat. We we start with the with the questions here in the chat.

A couple of questions here from Øystein: 'Any risk of further inventory write-downs?' Øystein asks.

As I said previously, what we want to do now is to really make a not only a short-term outlook, but really a longer-term outlook on if we're seeing any more any more scrapping risks. We have completed the sort of 24-month outlook.

There is a little bit of scrapping risk in the coming 24 months, but it's far the figures are far, far smaller than the ones we saw now, and a lot of it might still be mitigatable. We have little risk of of of further inventory write-downs, but much more marginal to the ones that we have seen here.

Second question from Øystein: 'What will you do if you see that you are getting close to cash covenant on the bond?' Yes, let me be very, very clear on that one.

We have no intention of breaking the bond covenant, and based on everything we're seeing right now, we will not do that. I am seeing a couple of external outlooks on our liquidity and and and so on, and I can understand that it's different if you do it externally than if you do it internally.

With what we are seeing with our mitigation measures and and the cash flow we're seeing here, we we do not intend to to hit that covenant. Then we have a couple of questions here.

They are not from Allan actually, they are from from Rasmus who posted them before. He wanted us to bring them up in the call, we will do so.

'At Q1's cash burn rate, you have roughly two to three quarters of runway. At what cash level would you consider an equity issue due to bond covenants or otherwise?'

That is, I mean partly connected to to Øystein's question here. We do not plan to hit the covenant, and thus do not see the new issue scenario with the information we have available at this point.

Our ambition and our plan is to to handle our and take responsibility of our liquidity. 'Longer term, since you now only signing products with back-end loaded rights payments to preserve cash, how does that affect the 28/29 and the 29/30 launch cohorts compared with what was assumed when the current five-year plan was launched?'

I think that is a good question and we are thinking about that also. The the new signing CapEx that we are spending in the year of 2026, most of it will not have any impact in the current five-year five-year period due to the due to the business cycles.

Of course one or two fast licensing products might. Also we aim to have this period of a little bit more CapEx caution, we aim of course to have that period as as short as possible.

There are still opportunities for us. Remember we did sign three products in in this quarter and they are good products, where we're really looking to to have have them fast to the market with limited limited CapEx impact.

Of course as Rasmus states here, if the period if if a period where we cannot sign new products is extended for a longer period of time, of course that would risk to impact the long-growth perspectives of the company. We do not intend for for that scenario.

'Considering liquidity, how much CapEx is needed to still deliver seven launches this year?' For the seven remaining launches this year, the CapEx has already been taken, there is basically no CapEx left for that to happen.

It's more related to to technical technical matters in the final stages of the launch. However, I mean we do have we do have a remaining CapEx spend this year, which is more related to to the broader portfolio, which we are of course looking at.

The best for us would be if we can keep all projects ongoing according to plan. If we have to slow one or two projects down in order to manage our liquidity in the short run, we we will do that, and then we will do that of course with a with a commercial commercial focus.

Ambition is to have full speed ahead here in the in the pipeline. 'How large is the remaining inventory carrying value exposed to the same call-off risk?'

It's basically the same question like from from from Øyvind. We've done an analysis in the coming 24 months, and we see we see some risk in the coming 24 months, which is normal.

There is always scrapping in a business like this. Our our target is to have scrapping more at, let's say, 1, 1.5% of sales, which we of course have not reached this year.

I believe that shall also be possible to do. The scrapping risk that we are seeing in the coming 24 months is far, far, far less than than what has materialized here in in the quarter.

'15% for the full year requires roughly +20% across Q2 to Q4 from a flat Q1. What has to be true for that?

At what point do you revise rather than reiterate?' Yes.

I I realize that it is a bit of a power statement from us here to to keep the forecast as it is. Basically what needs to be true for that to materialize is that the comeback that we are seeing in the inventory levels and the stockouts continues.

Of course new launches will will help, but already getting our base portfolio back on track will get us very far. That's a big focus.

Those were the questions from Rasmus. We move on to questions from Jonathan here: 'Hi, looking at the inventory today, do you feel comfortable with the booked values as of today or is there more scrapping risk going forward?'

I think that that connects also to, and I can understand why these questions come up, they connect to to Øyvind's and to Rasmus' question as well. Forward-looking scrapping risk is is far less here in the orders of of magnitude, and we will assess it here in the autumn and might also make provisions for it in order to in order to, let's say, have more more stable quarters going forward, and to have the the the fair value of the balance sheets truly truly reflected.

'And given the new way of accruing some inventory scrapping, how much do you believe that you affect your gross margins going forward?' No, I mean when we're looking at similar businesses like EQL, a typical, let's say, run rate scrapping figure is between 1 and 2%, certain years worse, certain years better of course.

I still fundamentally believe that if we do this comeback work in a really good way now and really dare to see our root causes and have the persistence to really solve them, that that is something what could be representative for EQL in the long run also, something around 1.5% of of sales, I would say. 'You have previously talked about Meprex and Meloson API being very important to lift gross margins.

Can you give us any kind of update on how that is going, and if you believe there could be any kind of risks in the pipeline here?' Yes.

Let's start with Meprex, and that is the product where our current API is too expensive in our opinion, and the production capacity of it is too low to meet our demand. We are doing a project there to change the API source, and if we are successful with that, we will have a debottlenecking, meaning that we can fulfill all the customer demand.

More importantly, we will have a quantum leap in the gross margin of that product. The status of that project right now is that the validation batches with the new API are on stability, and we need three months of stability data before we can do the submission.

I hope we will have this three months of stability data late August or early September. After you take the sample, it takes roughly one month to do the analysis, there is a little bit of a lag.

If that time plan holds, we will be able to do the submission in September, October, and have the new API approved early next year. If we have it approved early next year, it means that with a purchase order lead time of about six months, somewhere mid-next year we would be able to switch deliveries to customer to the new API, and that would be a significant success for us.

On Meloson, it is another matter. In Meloson, we have a factory right now, a supplier right now that we don't think is optimal for this product, where the COGS is too high and the supply campaigns are not optimal to us.

There we are looking into or we are in the process of switching factory, and that will happen here during the year. That will also bring down COGS in a very nice way on on Meloson.

Next question: 'I get that the Q2 will be good given the comparables we see, but what is needed for you to believe that the Q3 will be great? Is it the pipeline, logistics, or what is needed?'

Let me just comment the Q2. We believe that that that Q2 will be a good quarter, not only in comparison with the disastrous Q2 we had we had last year, but that it will actually be a good quarter.

Let me be very clear with that. Next regarding Q3, I don't remember that I have said that Q3 will be great anywhere, Jonathan says here, but that would be would be fantastic if it will be great.

I see that Q3 can become good or strong, and basically for that to happen, what we need is that this comeback that what we have seen now on inventory, going from five, six stockouts to one, two stockouts, that that continues and is actually structural and not only something temporary. That is the first thing that needs to happen.

Secondly, what needs to happen is that the production and the supply of especially Meprex is is good. We have a very good order book for Meprex and Meloson in the autumn, it's up to us to to actually deliver on that.

'You write in the report that you have faced headwinds in securing approvals. Given that the launches are back-loaded this year, do you feel comfortable that they will end up in this year or could this be moved further going forward?'

It is a difficult question because of the technically more difficult nature of the launches we're having this year. How it looks right now, our aim is to launch seven more products this year, several of them right now in in Q4.

I hope that that will will be possible, but having seen delays before, there can of course be more delays, but our target is 100% to get them out this year. We have a new question from Øystein here: 'With what you now know, how do you assess the risk of an equity issue?

Do you have the levers you need to avoid this?' Yes, we have no intention at all of of doing an equity issue due to a liquidity situation.

We have when we are looking on our liquidity, I'd say there are four or five main inputs to look liquidity: first of all, it is the the underlying the underlying cash flow from the operations; then we have the OPEX; then we have the CapEx; and we have the inventory purchase. If we're looking at this, CapEx and inventory are two main, main, main drivers where you can achieve a little bit of effect with with working with those with those as levers, so that would be sort of our our starting point.

Of course if the if the, let's say, comeback we're seeing a little bit here in Q2, if that is structural, I don't know if it's structural yet, but if it is structural, it also means we will have a stronger cash contribution from from the running the running business here. One more question from from Øystein: 'With the supply chain disruptions that you are currently experiencing, are there any risk of a permanent loss of revenue, i.e.

that customer doesn't want to deal with EQL anymore because of your recent track record with delivery issues?' In our pharma, if we take the different channels, in our pharmacy channels, it's more of of a tendering system.

In a way there is not no end customer in in the traditional sense, it's more so that if we cannot sell, it means some some of our competitor sells sells more volume. In the hospital channel, of course we have a we have a customer.

There our problem has rather been, I would say, overdelivery than than underdelivery, I don't see a risk there. Then if we have Meloson and Meprex, there we really have a customer at the end of the day.

We are working very closely with our customer to to ensure that they don't stock out as a result of of the bottleneck especially on on Meprex, and so far that is going that is going well. We have not seen any significant stockouts and we have a very good collaboration with our customers, and we are very transparent to them as well.

We also do very active allocation of volume to make sure that no single customer stocks up too much while somebody else is out of stock. Right now I have no indication that we're going to lose customers or have any permanent impact on sales.

A couple of questions from Kristoffer: 'How is the switch to the new Meprex API progressing? Does it feel like everything is going according to plan?'

I feel I've already answered that question, so far everything is going according to to plan, and I hope it will go according to plan. 'Once the new Meprex API is approved further down the line, are there any further major critical steps before you will know that supplying Meprex at a lower COGS is achievable, or are the step you are on now and the approval itself the most critical ones?'

Yes, the the steps we are on right now with getting the stability data and actually getting the approval, they are the most critical ones. Then of course before we can finally shout 'hurrah', we need to see it actually happening, but that has far less probability of being delayed.

'Meprex is showing a fantastic growth in the UK in line with the overall market. Do you feel the UK market could already be even larger today if delivery capacity, both yours and your competitors, were higher, or is it primarily demand that is setting the ceiling?'

It's primarily demand in the UK. We we have backorders to our customer in UK, meaning we have not been able to deliver everything they want, but they still have inventory levels, we're in very tight dialogue with them.

We have not lost any sales in in the UK due to due to stockouts. Final question from Kristoffer: 'Could you talk a little about the Meprex launches in Germany and France?

Has anything deviated positively or negatively since the last report? For instance, the price in Germany looks to be fairly high.

Is that right?' If we start with the German case, we have launched now, and sales has only been ongoing for a very, very short time, I will be I will be careful with I need to see more data before we can see how it's going.

Initial reports from Dr. Pfleger are good.

Pricing also seems to be on a good level, like you state here. Meprex launch in France, yes, is ongoing.

I had actually hoped to have launched it already by now, but we're really, really in the final stages of launching there. That will also eventually be be a price matter, of course.

That always depends on what authorities judge as a fair comparator. Most authorities want to compare us to antibiotics, whereas we do not want to be compared to antibiotics because we think that we create a higher health health economic value by not being an antibiotic.

Let let me come back to that, Kristoffer and and and everyone, after we have seen a little bit more months of of of sales here and getting first feedback in the market. Then we have a question from Christer Nilsson.

I will translate that to English if we have, I think we have some non-Swedish speaker: 'How does EQL view the Middle Eastern situation and the effects on the freight cost? Has the situation improved since Q4?'

Yes, this is, we have tried to to quantify here historically, but it's very difficult. I, to me, the situation is better when than when it was at its worst, but it's worse than one what it was before this Middle Eastern situation started, if that makes sense.

What we are seeing now is that it's a little easier to get get the containers. We're seeing the container freight rates and also air freight rates going down a bit, but of course not fully fully in our hands.

A slight improvement sequentially, but still more challenging than historically, is the short answer. Then a question from another Christer, Hörström I suppose: 'Without the scrapping, GM would have been 35%.

Why so low?' That is because, because in the quarter we still had, let's say, five, six stockouts that we suffered from of important products, so that is the reason why it's so low.

We don't see these stockouts going into Q2, definitely our assessment that GM will be on a on a more representative leveling in Q2, but that's the reason. 'When do you realistically think you will be back to the 40 or 40+ percent GM?'

Yes, this is a very difficult question for me to to answer. We might very well have a fairly good Q2 and Q3 here, but for me what is most important is that the quarters are good for the right reasons, and in this case, that they are good because we have structurally solved our issues.

I need to see that happening before I can really really answer that. My estimate would be that, we're going to be busy doing this structural problem solving for for the next for the next 6 to 8 months definitely.

That doesn't mean that that all quarters will be weak until that is solved. We can very well see good quarters here, but I want to see the quarters being good for for the right reasons.

More questions from Norway here. Øystein: 'Do you still have untapped check credits and factoring that you can use to boost the cash position if you're getting close to the cash covenant on the bond?'

Yes, we have. I wrote it in my CEO word, I think the unused credit facility is 26 or 27 million right now, we definitely have access to that if we would need it.

Next question from Øystein: 'Do you have potential to free up cash by reducing your inventory?' Yes.

Yes, we have. This is why This is what I mentioned before, that inventory and CapEx are our major levers when it comes to when it comes to the liquidity.

Next question. Oh, it seems like Allan will get to make his debut here.

'Allan, it would be interesting to hear your thoughts being at EQL for about six months now. What kind of work have you focused on starting at EQL and what kind of work do you think is needed to be done going forward?'

I hand over to you, Allan.

Thank you. Let me cover that.

It was actually four months as we speak. Let me take this opportunity just to shortly introduce my background, you have that also.

I have 14 years with stock-listed companies, mainly larger ones, Danish food ingredients Chr. Hansen, and the French luxury goods provider LVMH.

The past five years I've spent with private equity, focusing on optimizing scale-up companies. What we see here in EQL is much the same as I've seen in my last five years, is that you see companies with a very large growth trajectory and excellent performance that the excellent team has done, but then you reach a certain plateau where you need to fundamentally optimize your structures, your organization, your processes, your systems.

Fixing each problem at a time can take you to a certain level, but you reach a point where you need to structurally and fundamentally resolve these issues when they appear. That I think is the stage where we are at right now, and that is exactly what we are focusing on, and we will resolve over the coming period of time.

Thank you very much, Allan. Very wise words, and from my perspective, I'm extremely grateful that Allan has decided to join our team.

It's only been a few months, we're already doing really good work together. You're also going to see and hear more of Allan in investor relations contexts here going forward as soon as he is fully onboarded and into all the details in the company.

As you probably noticed just hearing him reflecting for a few minutes, he's a very high-caliber guy here and a very, very nice addition to our team. Next question from Andreas: 'Any update on the EBM investigation?'

EBM means Ekobrottsmyndigheten, the Swedish authority for financial crime. Let me comment on that one as well.

As most of you probably know, one of our existing colleagues and one former colleague of ours, and potentially close family member to that former colleague, are under suspicion for insider trading in the EQL share. Gud vad bra att du kom.

Jag trodde aldrig [unclear] Can you help me to mute or Johan, can you mute your Ah, thank you. Thank you.

One our existing colleague was also was also actually arrested for for a couple of days on that. It's of course it's of course a very serious very serious thing ongoing.

I think reflecting on it a bit more openly, I mean what what happened what happened prior to our profit warning in September was a bit strange. A lot of people noticed it, and I welcome that authorities are looking into it.

We cooperate with the authorities and we we hope and think that it's there's going to be a resolution here. If crimes have been committed, I have confidence that they will that they will discover that definitely.

There is no update however. It's ongoing investigation and, yeah, I'm not I'm not able to comment more than I've I've done now.

We will come back when we have more more information. Then a question from Viktor: 'You've noted that the final Cadila-partnered products are facing technical hurdles in the launch phase.

Beyond the stated analytical method transfers, are you also encountering formulation stability or scale-up issues as you transition from clinical to commercial batches? Given the complexity, how should we view gross margin profiles on these specific products and financial potential?'

Analytical method transfer, it seems Viktor here is a person with knowledge about pharma development. Analytical method transfer, that is the method you use to analyze that the product is okay, like it should be.

That method needs to be transferred between labs, and the more technically difficult the product is, the more difficult that is, simply. That is one of the things we are facing.

We are also struggling with formulation stability. Like, for example, one technical complexity of a product could be that the API in the product is inherently an unstable API, and also if you have that one in really, really small amounts, like you do with D-vitamins, for example, it is a more tricky job to get that product stable.

These are like the technical things we're trying to we're trying to work out. Also of course like you mentioned, scaling it up from from clinical or to, let's say, exhibit, as we call it, exhibit batches to commercial batches is more challenging, the more difficult the product is.

I wouldn't say that that has any sort of automatic implication on on gross margins and financial potential, it's more a matter of trying to avoid further delays. Johan asks: 'What financial covenants apply to the company the company debt?'

We have the covenant of of that we need to have at least 20 million cash available, and that includes unutilized unutilized credit facility, such as factoring. Then we also have a limit on the permitted debt.

I think we have a total permitted debt of of 125, something like that, which means that we can we can utilize the majority of that credit line. We don't have any covenant like that is connected to the leverage number that you have on some bonds, it's the cash position only.

A question from Mattias: 'OPEX increased by approximately 23% year-on-year to 31.5 million in Q1. Previous communication indicated that the cost base is not expected to grow at double-digit rate during full year 26/27.

Do you still expect full-year OPEX growth to remain in the single-digit growth?' Let's say our our ambition and and what we committed to regarding regarding OPEX growth really here going forward is is that we year-on-year going forward in this in this five-year plan shall not have OPEX increases larger than 10%, and I still believe that that is that is possible in in the current year that we are in.

We are taking several measures here to to manage our OPEX in in a good way, but we will have to see. We will have to see how the year how the year develops.

Now I realize there is very little time left for verbal questions. A lot of questions this quarter.

Is there Is there anybody else who has questions they want to ask either either verbally or through the chat? No, it doesn't seem like.

If there are more questions, of course me and Allan are are available also also after the call. Thank you very much for for listening.

I think we went through There were a lot of good questions. We we went through a lot of the challenges we have right now and how we are seeing the situation at least improving in the short to mid run here, but that we still have a lot of fundamental work before we can we can wave the danger over flag.

Thank you very much for your attention. Bye-bye.