ContextVision AB (publ)

Welcome to this third quarter presentation for ContextVision. You are Fredrik Pahl, the CEO. I am Ole Eikland. The third quarter was a good quarter for ContextVision.

Could you give us some highlights? It was yet another progressive quarter for the company. We are following the launch plan within digital pathology with our first product for prostate cancer launched in the end of this last quarter. Sales is increasing compared to previous quarter which we cautiously take as a positive sign. Our x-ray sales continue to grow and we are maintaining solid financials.

But regarding the Inify, which is your first digital pathology product for screening of prostate cancer using deep learning and artificial intelligence, is it on track?

Yeah, we have installed. We made several installations during the quarter and now we proceed with extended studies in the clinical workflow. And this is according to the plan that we had. But what's so good about it? I mean, we are in the beginning of a paradigm shift within pathology. The digitalization opens up for huge opportunities, both in terms of workflow, in terms of increased level of quality and increased level of confidence for the pathologist. The product in itself, Inify Prostate Screening, automatically detects suspicious cancer areas in a digital prostate sample and outlines them for the pathologist. So it works like an experienced digital colleague sitting on your shoulder that already have made its assessment on the samples before it even gets presented to the pathologist. But how do you tackle the workflow here? So to say, in addition to outlining suspicious cancer areas, the software also sorts the sample in a worst first order. So it means that it will automatically attract the attention from the pathologist to the samples with suspicious cancer and minimize the time they will spend on samples with benign tissue.

But it sounds like you're revolutionizing the screening of prostate cancer is done.

Yeah, as I said before, we are in the beginning of a paradigm shift. The digitalization opened up for a completely new way of working within pathology.

But the market drivers, what are they?

I mean, there is a lack of pathologists around the world and the workload is only increasing. Just a few examples is that some reports tell us that there will be a lack of 5,000 pathologists only in the United States by the year 2030. And if we look in development countries, some countries are as low as one pathologist per million people. And the analog process entirely relying on humans naturally gives a variation and it limits the possibility to standardize things. So becoming more digital is a necessity within healthcare and Inify is a product in the forefront that instantly adds value to the patient and the medical professional, so to say, in this transformation.

What are the next milestones we can expect from Inify?

Now we focus on installations and extended studies with selected reference sites in the digital forefront. And this is to build a solid ground for expansion, of course. In parallel, we further develop Inify to incorporate diagnostic capability, which means that the product will also be able to support the pathologist in judging the severity of the cancer according to the Gleason scale.

But Inify, that screens prostate cancer, but you're also working on other different cancer types for digital pathology. Can you tell us a bit about that?

Yes, we have a portfolio strategy where we focus on the cancer types causing the heaviest burden on pathologists since coming back to that there is a lack of that profession.

What are they?

Solid candidates coming up is of course colorectal cancer and lung cancer and we have already started some research in those areas. Exciting, exciting.

But we are living in tough times at the moment. But how is Context Vision coping with these COVID times?

I mean, COVID-19 challenged us all. We've been, so to say, fortunate so far, have seen limited effects on sales. But that's also, of course, related to that we are operating in an area where we see an elevated need of efficient healthcare solutions. Our x-ray business continued to grow, while we have seen a slowdown effect in ultrasound due to other acute priorities in hospitals and clinics around the world. So the third quarter saw an increase compared to previous quarter, while actually if we compare the sales in the third quarter this year compared to the corresponding quarter last year, adjusted for currency effects, the sales are actually on par. But what I think is even more important to look at is the first nine months of the year. We are delivering a 6% growth with an EVDA margin above 30%. And I think that's a fantastic result, given that we are in the middle of a pandemic since February.

Yeah, absolutely. Absolutely. But do you see any differences now than you did in the start of the pandemic?

I mean, the pandemic hit us all basically overnight. We got restrictions. We have no international travel and we have very limited, so to say, limitation in terms of domestic travel as well. But I have to say that I'm impressed about how quickly we have adjusted to these new conditions around the world, both ourselves, partners and customers. So we are making progress, including signing new contracts, but short term at a slower pace than anticipated in the end of 2019. In pathology, the transformation into digital work is also, of course, affected and moves slightly slower than anticipated. But we have to keep in mind that the situation underlines and the elevated need for efficient solutions within healthcare, which is a positive sign for context vision.

Listening to you now, the future seems really good for context vision.

I certainly say so. I mean, we created and implemented an action plan in the middle of the first quarter, focusing on continued progress while maintaining solid financials. We have a solid cash position after this quarter. We just had a slightly negative cash flow. And we are following this plan and we are continuing to build the company brick by brick. most important i think in a three to five year perspective the pandemic is not a threat to the development of our company it only stresses the need for our present and future