New Year’s Letter to Shareholders in Scandinavian ChemoTech – Reflecting on 2025

Scandinavian ChemoTech reported a year of consolidation in 2025 with record sales through the first three quarters and strengthened operational discipline, emphasizing predictability and U.S. commercial expansion in 2026. The company highlighted growing global adoption of its vetIQure™ Tumour Specific Electroporation (TSE)—with thousands of treatments—and an independent veterinary study in Turkey providing third‑party validation, while its human trial in India continues with incremental progress despite delays. Management frames the outlook as steady, execution‑driven growth rather than rapid expansion, underpinning long‑term differentiation and pricing power for the patented TSE platform.

Analysis

Market structure: ChemoTech (CMOTEC B) benefits directly—veterinary clinics adopting Tumour Specific Electroporation (TSE), distributors in the U.S., and niche device service providers. Legacy electrochemotherapy device vendors are the primary losers as clinical validation supports premium pricing and differentiation; expect modest share shifts in veterinary oncology over 12–36 months rather than immediate disruption, with potential 5–15% clinic penetration for TSE in prioritized segments if U.S. execution holds.

Risk assessment: Key tail risks are regulatory failure or materially negative human/large-animal studies (low-probability, high-impact within 6–24 months), an equity raise causing >10–20% dilution, or operational scaling failures in the U.S. Immediate (days) market moves will be sentiment-driven, short-term (weeks–months) hinge on commercial cadence and distribution news, long-term (quarters–years) depend on reproducible clinical data and reimbursement/pricing momentum. Hidden dependency: revenue is clinic-adoption dependent and vulnerable to a small number of U.S. distributor relationships and device servicing capacity.

Trade implications: Tactical sized exposure is appropriate (small, conviction-weighted): establish a 2–3% long position in CMOTEC B and hedge sector beta with biotech ETF puts (IBB). Use stop-loss of ~30% and scale out half at +100% or on confirmed U.S. revenue acceleration (>20% YoY). Monitor cash runway and any announced equity issuance within 30–90 days as primary exit trigger; consider a short 1% position on dilution announcement.

Contrarian angles: The market may underprice the optionality from validated TSE in veterinary use—adoption could compound revenue faster than consensus if clinical publications and a handful of U.S. KOL endorsements arrive in 6–12 months. Conversely, the pitch underestimates operational risk: rapid U.S. prioritization can trigger service bottlenecks that reverse trust and pricing power; position sizing should reflect this asymmetry.

Key Decisions for Investors

• Establish a 2–3% long position in Scandinavian ChemoTech (CMOTEC B on Nasdaq First North) within 30 days as a speculative growth trade; set a hard stop-loss at -30% and scale out 50% at +100% or sooner if next two quarterly reports show U.S. sales growth >20% YoY.
• Purchase downside protection: allocate 1.5–2.0% portfolio notional to IBB (iShares Nasdaq Biotechnology ETF) 3-month puts (≈10% OTM) to hedge biotech/device sector beta while holding CMOTEC B exposure.
• If ChemoTech announces an equity raise >10% dilution or delays the India human trial beyond 12 months, liquidate long CMOTEC B position immediately; consider establishing a small tactical short (1% portfolio) on the announcement to capture dilution-driven downside with a 15% stop.
• If long exposure exceeds 1% of portfolio, hedge FX exposure to USD revenues: enter a short-USD/long-SEK forward or options position sized to cover >50% estimated USD revenue risk for the next 6–12 months; reassess after next quarterly report.