In the full-year results, ISAB reported sales of SEK12.2m (SEK9.4m), which was a bit below our sales estimate of SEK13.8m, but we note that the backlog value was SEK9.1m. The gross margin of 79% was similar to our estimate of 81%, and the operating expenses were SEK-21.7m, mainly consisting of selling expenses and R&D expenses, compared to the OPEX estimate of SEK-22.8m. EBIT was SEK-12.0m, in line with our estimate of SEK-12.4m. Cash flow from operating activities was SEK-12.0m, and cash and cash equivalents were SEK1.8m. However, in our view, the company has a capital need where we estimate a capital raising of SEK15m in 2023, with a 30% discount on current share price levels.

During the quarter, ISAB has received multiple new orders for its Inhalation Research Services (IRS) offering, including one from a large generic pharma company worth SEK1.2m to establish differences in the dissolution profiles between a generic inhaled therapy and its reference drug using ISAB's in vitro dissolution and absorption module DissolvIt. Additionally, ISAB received two new IRS orders in December, including one worth SEK1.9m with a mid-sized US pharma company to test the dissolution profiles of a new drug with several formulations and another worth SEK0.26m with a returning major generic pharma company to be carried out using ISAB’s PreciseInhale system. These orders highlight the continued high demand for ISAB's IRS offering, which has dominated the company's sales for the year. Overall, we are positive about the prospects for ISAB and its IRS offering.

We have adjusted our model with an updated cash position, made some changes in our sales and OPEX estimates for 2023-2025e, and added a capital raising of SEK15m (with a 30% discount to current share price levels) during 2023. The changes result in a new fair value range, including a base case of SEK17 (20), followed by a bull and bear case of SEK27 (32) and SEK4 (5), respectively.