Photocure Asa

All right. Well, good afternoon. Good morning. My name is Dan Schneider, CEO and President of PhotoCure. Welcome to PhotoCure ASA's third quarter 2024 results. With me today is Eric Dahl, our Chief Financial Officer, and David Moskowitz, Vice President, Investor Relations. Next slide, please. So just a reminder, usual disclaimers are in effect for today's presentation. Next slide, please. So I thought I'd like to start with our strategic priorities and initiatives. I think it's important that we kind of put this up front so that you can see how all the activities and ultimately the results are following behind. In the first block of accelerate and expand, our strategic priority is deliver our guidance for revenue EBITDA and tower placements for the year, and we're well on track. As you know, after Q2, we did raise the bottom end of the range for the installations of blue light scopes in the U.S., and we feel very confident that we will come solidly within that range. Drive the blue light systems to be mobile strategy through Fortec in the U.S. We now have all 18 towers placed out in the U.S., and then also increasing the penetration in our priority growth markets in Europe through image quality upgrades, new installations throughout the continent. And finally, expand and leverage our geographic distributor and distribution partners. In the second block, positioning and access, Position BLC is a primary diagnostic tool to facilitate early and appropriate use of non-muscle-invasive bladder cancer therapeutics. In Q2, we talked a lot about the trends. We talked about the number of companies trying to come to market with new therapeutics, bladder sparing therapeutics, all intended to help patients avoid the ultimate muscle invasive bladder cancer. And blue light cystoscopy can play a very important role and a growing role in that initiative. We also want to support high-def blue light technologies entering the market. We've had Karl Storrs launch their new blue light high-def technology. Richard Wolff has launched theirs. And I'm pleased to say that Olympus is in the final stages of their launch. We expect it here in the fourth quarter, which will be important, particularly in the Nordic region of Europe. We also will facilitate the reclassification of blue light cystoscopy vis-a-vis the U.S. Citizens Petition that was entered by Carl Storrs. We continue to put pressure on the U.S. FDA, and we continue those efforts going forward. And then also, finally, reintroducing flexible blue light cystoscopy with our partnership with Richard Wolff. In fact, the teams are meeting today to take a look at the development pathways and prototypes. And then the third block, acquire and transform, actively assess the opportunities of non-muscle invasive bladder cancer and other uro-oncology indications such as biomarkers, AI, new technologies, devices. Also leveraging all of this, leveraging our global commercial infrastructure in a broader uro-oncology segment. And examples of this are recent collaborations with both Richard Wolff to reintroduce the world's only blue light flexible cystoscope, and also our mobile strategy with Fortec in the United States. Next slide, please. So some of the highlights for Q3, I'm very pleased with the quarter. It fell very solid, good momentum growing behind all the initiatives. delivered 12% growth in Q3. We continue to expand the Sapphira footprint and are on track to meet our guidance for new and upgraded tower placements in the US. We're executing on the EU priority markets. We had a 12% growth in the priority markets, growth markets of UK, Italy, and France. These are high potential under-penetrated markets in Europe, and we'll continue to to make progress and momentum there. We had a recent meeting with Olympus. We believe the CE mark in Europe will be issued soon. Equipment availability in certain countries will begin later this month or in early December. We continue to monitor those developments and are looking forward to collaborating with Olympus on this new product launch. We also generated positive EBITDA. It's our sixth quarter in a row and added cash to our balance sheet in the period. So I'm very pleased with the strength of our balance sheet. And some on the important news flows, the Fortech mobile strategy is answering the challenge of access and capital costs in the US. We have 36 accounts as of today that have tried it or by the end of October have tried or evaluated the system and we're starting to build a strong base of repeat customers. The contribution of mobile so far exiting out of October is greater than 3% of our US business is now coming out of the mobile segment. Blending that across the years is roughly 1%, but we expect that to continue to grow. And if you remember when we talked about this in the prior quarters, The analogs used for mobile strategy by Fortech, looking at prior things like MRI fusion, et cetera, showed a slow continued growth and then often an acceleration later on around the 12-month marks or beyond. So we expect this to continue to grow and are excited about it. The Richard Wolff Flex development is underway and puts the control back in our hands to relaunch into the largest cystoscopy market. That's the surveillance market. And then Hexfix was approved early in China. And we're very pleased with the regulatory body noted that the high quality phase three data An NDA application that we had worked on with Osiris, it actually kind of, what they said to us, ranked in the top 1% of submissions they've seen in the Chinese, by the Chinese NMPA. So that's fantastic. It was approved essentially six months ahead of schedule. It is not able to launch. We have to wait for the Richard Wolff equipment to go through its regulatory process. approvals, which are currently underway. We're hopeful that that happens fairly quickly. We expect the launch in China probably late second half next year into 2026. And then Subaira continues to undergo regulatory review. And we are told in its public by Osiris that they will file a pre-submission with European regulators later this quarter. So we look forward to seeing what that brings. Next slide, please. So getting into segment trends, we'll move to the next slide, please. So each of our direct sales territories had solid unit sales growth in the quarter. In the US, we estimate that our unit growth of rigid towers grew in the low double digits, both year over year and sequentially. This more than offset the decline in flex sales in the first half. In Europe, we had a strong quarter, mainly from Germany, growing at 11%. And if you remember taking over the business from Ipsen, it was basically a flat to declining business. We've been delivering single mid to high digit growth. This put us in the double digit growth for Germany. Most of this on the back of upgrades and efforts in particular regions of Germany that were under penetrated, like the West Valley region. So we're very pleased with the development here. And it was a 12% combined performance in our priority growth markets, Italy, France, and UK, with particularly strong growth in the UK. We continue to expect to see good, steady growth in Germany and other European territories. And the relaunch of blue light synostomy throughout the continent will start with Olympus upgrades this quarter. So we're looking forward to that, and particularly its impact on the Nordic region. where Olympus has a stronghold. Next slide, please. So trends in North America, Q2 revenue in the U.S. was up 12%. Market unit sales were up 6% driven by a 10% growth in the first half and continued flex to disc discontinuation. The installed base was plus 12 for a total of 49 new and upgraded Safira installations so far this quarter. This puts us on track to meet the 55 to 70 Safira placements that we guided for on the year. Access to BLC equipment remains our top priority. The reclass efforts will continue and more pressure is mounting. Meanwhile, Fortech is a powerful alternative strategy to expanding access to otherwise inaccessible accounts. and patients. While we believe it will take some time for the awareness to get out there, the process, you have to get the champion within these accounts, so the top urologist or influential urologist to really want to bring blue light in. You got to take a look at the operations budget and get approvals through that. P&T committees for the drug to be brought into the hospital, the evaluation, and the committed customer. So it does take time to move this through. And as I said, the analogs of the past from Fortex efforts with other launches of mobile strategies show the same trajectory that we're on. But the momentum and awareness are building. And it is in line with analogs of the past. And today we have 36 accounts that use the service that otherwise would not have had access to it. I think that's an important thing to underscore. These are accounts that either A, the capital was too costly, B, Carl Storrs was not the primary vendor, or C, it just is an account that we just couldn't get to. So Fortech is accessing over 2,000 accounts or 2,200 accounts in the U.S., and we expect continued growth in this segment. Next slide, please. So getting to the Sapphira installed base, we now have 48% of the U.S. market is upgraded to the high-def system. It consists of 17 new accounts, 14 upgrades, and 18 mobile towers that were delivered to Fortec in the third quarter this year. High definition blue light equipment in the U.S. is now roughly 50% of the market. And as I said, keep in mind, Karl Storrs roughly has about a 35% or so share of the U.S. market. So if you kind of take a look at the installations versus what Karl Storrs' primary customers are, we actually have a high penetration, which bodes well for when we talk about entries of future manufacturers, whether it be reclassification, to a 510K pathway or other methods, it will open up this market dramatically for us. We also expect Carl Storrs to continue the promotional program for blue light cystoscopy to the end of the year. We think that'll have impact on the fourth quarter and continue the momentum. And again, our main focus is to leverage the new high-def equipment through fixed and mobile towers and continue to improve their productivity. Next slide, please. So looking at the European trends, there was strong performance in Q3. Germany continues to build momentum for us since we took it back from Ipsen. We have restored growth from mid-single-digit growth to now the 11% this quarter. Priority growth markets, UK, France, were major performers in this group. Italy is trending well, is also very well. Italy also has a challenge of a lot of outdated equipment from Karl Storrs that is being – upgraded as we work on it with the customer base. We also had one system, and an example of this is in Italy, our largest customer, equipment went down in Q3, and so that did have an impact on Italy's total unit sales, pushing them into the high single digits from strong double digits, but we expect that equipment back up here in the fourth quarter. Italy received favorable position paper on guidelines in the third quarter. We had the DGU, the German Urology Conference, where we partnered with Our partners on the bus, Carl Storrs, and customers were quite excited about what they were seeing in terms of the new definition equipment. We expect the launch of Olympus blue light feature at state-of-the-art Viscera III will have a positive impact on the Nordics, who are dominated by Olympus and their aging standard definition blue light equipment that they currently have on hand, particularly in Denmark and Norway, but also throughout the rest of the Nordics. Key initiatives throughout continental Europe are having impact, continuing to execute on these. We've had 44 image quality upgrades in Q3 alone, 220 since 2023, and 29 new accounts added in the past 20 months. And this is fueling a lot of the resurgence and growth throughout Europe. So that is what we have in Europe. So let's go to the next slide. So what do we have to look forward to? The growth initiatives. And this is where we get very, very excited. If we go to the next slide, slide 11. While I'm very happy with the quarter's development in 2024, I believe the execution on these key growth initiatives will take the company to the next level. We're going to accelerate access vis-a-vis the Fortech mobile solution. As I said, there are 30 accounts by the end of September, 35 by the end of October. It's roughly 3% of our total U.S. sales to date, and that's giving its only launch in the last few months. I think that's fantastic. And again, it's following the analogs of prior years. launches by Fortech in other areas of devices that they've put on mobile trucks. We have the reentry of surveillance in a market that's three times the surgical market and growing. This is through the Richard Wolff Agreement on developing a blue light surveillance flexible scope. The development is underway. We think roughly two years we expect to bring this to market. But we continue to look for ways to expedite the reentry. The patients, physicians are increasingly needing better surveillance, determining what the next bladder cancer sparring treatment should be. So we believe that this will have a high impact once we launch back into the market. We're looking for alternative ways to get to this market faster, so stay tuned. Also, I think the final piece is the rapidly expanding treatment landscape needs complete and accurate diagnosis and follow-up, and blue light cystoscopy can play a central role in that. The wave of new therapeutics coming into the space has been traditionally underserved. But billions are being poured in into solving this problem. And to solve the problem, you have to see the problem. And blue light cystoscopy is the best technology for the diagnosis and determination of that patient's treatment forward. Next slide. And talk about value generating Osiris programs, two different types of deals. So I kind of made a little more distinguish between the two to help everyone understand. The first one is the HexFix commercial partnership with Osiris. I want to just state, you know, so far with our partnership with Osiris, we've taken in over 18 million in milestones across both of these programs. It's added significant cash for us, operating cash and also future ambition cash, but also has potential to deliver more in the future to fuel our corporate ambitions. On the commercial partnership on HEXFIX, HEXFIX got marketing authorization several months earlier. In fact, it's close to six months earlier. It was a high quality regulatory application. Top 1% of Chinese NDAs have ever been approved in that speed. So fantastic job by our friends in China. The potential for a Chinese approval for the Richard Wolff Blue Light system, we expect in the second half of 2025. It's under regulatory review. We understand it's going well so far. And we expect the commercial launch of the device late 2025, early 2026. On the CIVIRA out-licensed program for a pre-cervical cancer product, the NDA remains under regulatory review for potential approval in China. Aceris has publicly disclosed that they will plan to file a pre-submission with EU regulators this quarter to see if the EU will accept their submission for review. If you recall, they have roughly 60, 65 patients that were in their phase three trial. that were of European descent. So I want to see if the European authorities will accept this as a submission. If they do, we'll receive milestones for both the filing and acceptance and approval of the EU if it's achieved. And then the Chinese regulatory decision for Savira is expected to be in late 2025 event. And finally, the US, OSIRIS is working with the US FDA and we'll have more information on that as it becomes available. All right, so with that, I'm going to turn it over to Erik Dahl, who will go through the Q3 financials. Next slide, please.

Thank you, Dan, and please keep it at slide 13. In this, we will review the consolidated income statement, segment reports for the two main segments, as well as finally the headlines from the cash flow and the balance sheet. But first, a few words about the impact of foreign exchange. As everybody knows, we have negative movements from the Norwegian crowner in Q3 and year-to-date. Measured by unweighted monthly averages, the crowner in Q3 depreciated 2.2% against U.S. and 3.2% against euro. Year-to-date, the crowner depreciated 1.7% against U.S. and 2.1% against euro. Looking at the financials, the year-over-year FX impact for Q3 revenue was positive, approximately 2.4 million, while the year-to-date year-over-year impact on revenue was positive, approximately 7.2 million. For EBITDA, the year-over-year FX impact for Q3 was positive, approximately 0.5 million, while the impact year-to-date was positive, approximately 1.9 million. And please, for the presentation, keep in mind that all amount mentioned will be in Norwegian kroner unless other currency is specified. Next slide, please. Slide 14. So we're now looking at the consolidated income statement. Total revenue was 120.2 million in Q3, an increase of 12% from Q3 last year. And main drivers were the unit sales growth of 6% in US and 9% in Europe. We also had positive impact from average pricing in U.S. and FX in both regions. Year-to-date and including milestones, our revenue increased 7% year-over-year. Consolidated HECS-REC system revenue in Q3 increased 12% and year-to-date 9%. Year-to-date is within the guidance given at the beginning of the year. Consolidated in-market unit sales increased 8%, impacted negatively by the ongoing flexible BLC phase down in U.S. Total operating expenses, excluding business development expenses, was $106 million, a year-over-year increase of $9 million, or 10%. However, of the 9 million kroner increase, 5.2 million relates to a one-off accounting adjustment in Q3 last year for the capitalization of registry expenses in the US. And the remaining part of the increase is driven by project expenses and ethics. Sequentially, from Q2, operating expenses declined 2%. We also note that our operating expenses have been relatively level the last 11 quarters, adjusted for FX and inflation. Business development expenses were minor in Q3, 1.2 million. Operating expenses within business development are mainly related to lifecycle management of Hexvix SysVue. And the expense level obviously may vary from quarter to quarter given the one-off nature of these expenses. EBITDA in Q3 after business development expenses was 5 million, and this compares to 3.3 million Q3 last year. We have achieved a positive quarterly EBITDA the last six quarters. A year-to-date EBITDA after business development expenses was 40.7 million. Depreciation and amortization was 7.2 million in Q3. Main cost item is the amortization of intangible assets related to the return of the European business from Ipsen in 2020. And net financial items in Q3 were a net cost of 2.8 million compared to a net cost of 4.8 million Q3 last year. Tax expenses were a net income of 1.5 million for the quarter compared to a net income of 3.9 million Q3 last year. And after tax, we have for Q3 a net loss of 3.7 million compared to a net loss of 4.8 million same period last year. And now to the segment performance. Next slide, please. Slide 15. For the segment reporting, we will focus on the two main segments, which is North America and Europe. And the North America segment includes US and Canada. Revenue for North America increased 12% in Q3. And the main drivers are volume increase of 6%, increased average prices and foreign exchange. This is partly offset by face down of SISB usage in the flexible BLC setting. Q3 diary cost increased year over year with 8.5 million or 25%. And the increase is driven by a 5.2 million one-off accounting adjustment in Q3 last year. This is for the capitalization of registry expenses in U.S. And the remaining part of the increase is driven by project expenses, inflation and FX. In general, Q3 direct cost is level with the two previous quarters current year. Q3 contribution was 4.6 million compared to Q3 last year of 8 million. Adjusting for the one-off accounting adjustment last year, the Q3 contribution increased year-over-year with 1.8 million kroner. Our European business had year-over-year a revenue increase of 12% in Q3, mainly driven by 9% volume growth and 3% FX. Direct cost increased year-over-year 3% in Q3, driven by inflation and FX. We ended Q3 with a contribution of 35.1 million compared to 29.1 million last year. Now let's move to the cash flow and balance sheet. So it's next slide, slide number 16. Cash flow from operations in Q3 was 34.5 million compared to 8.7 million last year. And the difference is mainly driven by improved EBITDA, non-cash expenses and improved working capital, particularly accounts receivables in both regions. Cash flow from investments in Q3 includes interest received partly offset by investments in tangible and intangible assets. Q3 last year was negative 2.5 million due to the one-off accounting adjustment for the capitalization of registry expenses in the U.S. And cash flow from financing in Q3 was negative 12.9 million, which is driven by the earn-out payments to Ipsen of 9.8 million in the quarter. And the term loan from Nordea was fully repaid at the end of Q2 last year. So this gives a net cash flow in Q3 of 24.1 million compared to the negative 3.9 million Q3 last year. The largest driver of this change is improved working capital. With this cash flow, we ended Q3 with a cash balance of 291 million NOK. Looking at the balance sheet, we ended the quarter with total assets of 720 million. Non-current assets was 322 million at the end of Q3. This included customer relationship with 100 million. And customer relationship is the intangible asset identified in the purchase price allocation for the Ipsen transaction. Non-current assets also include goodwill from the Ipsen transaction of 144 million and a tax asset of 43 million. Inventory and receivables were 107 million at the end of Q3. The decrease from end of Q2 this year is driven by improved collection in both regions. Long-term liabilities, so 143.5 million, include the earn-out liability related to the Epson transaction, totaling 120 million at the end of the quarter. And finally, equity at the end of the quarter, 500 million or 69% of total assets. This concludes the financial section. Thank you. Dan, it's back to you. All right. Well, thank you, Eric.

Let's go to page 17. Well, actually, let's go to 18. So in summary, so you can tell I'm quite pleased with the developments of the organization, particularly third quarter, solid quarter growth with 12 percent top line growth, positive EBITDA. This puts us multiple quarters in a row of positive EBITDA. And also positive contribution from commercial businesses. We had 12 new Sapphira installations in the US and now represents Sapphira. The new high def system represents about 50% of those installed base. And if you think about the way things are installed and as they replace, we're rolling into like the 2018-2019 installations that are kind of up for upgrades. So we expect the final 50% of the survivor that are out there that are standard definition to be upgraded over the next 24 or so months. Fortech national rollout is gaining traction. As I said, we're watching this month over month. We've got 36 accounts right now currently who have evaluated the service, used the service. Many have reordered the service. We're going to monitor it. It's roughly 3% of the business exiting out of October, which is really, really good to see as it offsets some of the declines that we've seen on the flexible side. And it also offers us access to accounts and patients that we otherwise would not be able to get to whether it be the challenges with capital costs or the fact that they are not a primary vendor with Carl Storrs, or they just need another option and they're more likely to do an operational budget expense than a capital budget expense. So I think this is a novel model. I'm really excited about where it's going. It's falling in line with the analogs of prior launches by Fortech And we'll continue to report on it. In Europe, extremely happy with work to date. 44 image qualities in the third quarter. 220, I think it was, in the last 20 months. The priority growth markets, which we promised would take time but would respond in due time, are now growing at double digits. And in particular, just noting that it would have been even, I think, a little bit higher had the one Italian large company Client not had equipment failures, but we expect to get them up online the fourth quarter. Despite the Flex phase down, Richard Wolff and PhotoCure continue on the joint development program to bring Flex back to the surveillance market. I will tell you that there is an increasingly growing need for blue light cystoscopy in the surveillance market, particularly with this onslaught of new therapeutics. bladder sparing therapeutics that require us, require physicians to determine whether or not a patient is eligible for continued therapy. So blue light, cystoscopy, can play a major role. And blue light cytoscopy flexible is the product that will be the difference maker there. We know in Europe, particularly in the UK, there is a demand for it. The US had 69 installed back when it started the discontinuation. And we knew at 69, we had roughly 30 with purchase orders into the first quarter. So we know that there will be a good demand for this when we bring it back to market. We expect it within the next quarter couple years, but we are looking at all alternatives to get it to market sooner. We have a great presence at the conferences. We're gearing up for AUA and EAU. There are a lot of submissions on the importance of blue light cystoscopy across all the different markets and different uses. So we're excited about what that could become as we look at the April timeframe. And our cash balance remains strong with $291 million knock up 30 million at the end of year 2023. All right, final next slide. So what are we looking forward to and why am I super excited? The anticipated milestones and corporate objectives. We reiterate our 2024 financial guidance, 6% to 9% product growth in constant currency. I know that right now you're seeing 9% growth, but keep in mind there is a slight FX impact there. Positive EBITDA. XRBD spend very strong there as well. And U.S. Sapphira Tower placements in the range of 55 to 70. I believe we're currently at 49. So obviously we feel very, very good about that range. We'll see how far we can push it, particularly given that Carl Storrs is continuing their promotional program to the end of the year. We'll continue to increase the HEXFIX SysView kit throughput with tower upgrades and installations. collaborating with Fortec on the mobile tower national rollout, continue to put pressure there. And also, as I'm speaking here today, last week, our teams met with the Olympus teams to lay out an explicit plan for the Olympus relaunch or upgrade launch of their blue light capabilities throughout Europe. So that's exciting for the fourth quarter, and we'll see the impacts as we move through 2026. We're going to continue to support the citizens petition. The election in the US has not changed our strategy. In fact, fortunately, a lot of what we had in play is still in play. As it played out, we have legislative efforts and other things going on, so we feel really good about where we are. There is, again, no statutory requirement by the US FDA to answer this petition in any particular timeframe, but I think even with some of the recent appointments from President-elect Donald Trump, particularly this new Department of Health, efficiency with Vivek, and I'm going to mess up his last name, who comes from industry. We feel like there could be some positive wind in our sails for the citizens petition. So we'll wait and see. Again, there's no statutory requirement, but we feel pretty good about that. There's a lot of data that we'll be publishing through next year, a lot of it coming out of the real world patient registries that we support. And that's very, very exciting, particularly in the context of coverage and reimbursement. We'll advance partnership with Richard Wolff, developing and then commercializing this next generation flexible blue light system on a global scale. Again, we're gonna look for every avenue to expedite this into all the markets, particularly the US. So more to come there if we're successful. And then I think Osiris, you know, Hexfix was approved. They'll likely launch Hexfix in the second half of next year. And the Savira program is undergoing regulatory review, which we understand is going quite well. And they're going to have a pre-MMA submission for Savira in EU. And they want to engage in FDA discussions again as well. So that could produce a tremendous amount of milestone cash to PhotoCure to fuel our future ambitions. So with that, I think we'll end on slide 20, and I guess I'll turn it over to David, who's managing the Q&A for Eric and I. All right, thanks, Dan.

So we'll move to the Q&A portion of the call. Please send in your inquiries through the chat. We'll start with the first question, which is about Olympus. Dan, are you able to give more clarity on the launch of Olympus This new blue light system and how do you work with them on that launch to get the most out of it?

Yeah, the teams met in Hamburg last week at the Olympus European headquarter. They were going through account by account throughout Europe where they were going to and how they were going to employ the tactics and strategies to get the upgrades in. The Viscera 3 system is a fairly simple system for them to upgrade to. It is a universal system. They can turn on the software and get it up as long as the Viscera system is in the accounts. We expect, from what we hear from Olympus, they got their tooth a couple weeks ago. We understand they're in the final stages of the CE mark registration, and we expect them to launch here in the fourth quarter. We will report back out. I should say this. We will report out to everyone when we see the first commercial installation and use of blue light.

Excellent. And just to follow on to that question, how meaningful do you think the opportunity would be? How fast do you think you will start seeing tangible improvements? results in terms of growth rates.

It's going to be, yeah, it's going to be particularly, well, I think it's going to be very impactful for Olympus. We know for a fact what they've told us is that their 2026 or 2025 aspirations in terms of revenue are impacted by the success of this launch. So if that tells you anything about how impactful and important it could be to them, certainly it's going to be very impactful to us, particularly in the Nordics. For those of you who've been with us for quite some time, the Nordics used to be a very strong market for us. But over the years, with outdated standard definition equipment by Olympus, who holds roughly 70% or more of the Nordic market, They were selling NBI against blue light because obviously the blue light was standard definition inferior. They now have switched. They are going to be selling the blue light system as the premier system to have for the staging diagnosis and surgical resection of tumors. I think it'll have a big impact. particularly in Norway, where they have a high concentration, Sweden, and also Denmark. Timing on this doesn't happen overnight. They've got to get the systems in, upgraded, and used. But I think over the course of 2025, we'll continue to see building momentum and hopefully rebuild the Nordic markets. But the good news on the Nordic markets, as currently as it sits, is they're stable. We're not bleeding out anymore. I think all the accounts are anticipating and are excited about this new Olympus system with blue light capabilities.

Okay, great. Recurring question, U.S. reclassification, are you able to give any update on the timeline?

No, there's no statutory requirement. We keep putting pressure on them. The FDA and Carl Storrs of the primary context, and from what we understand, there hasn't been any dramatic initiative so far. All we know is that the FDA is fully aware of this, and I think with the election and maybe the change in administration, maybe fresh eyes will take a look at this for us, and maybe we'll get a break, but we will let you know as soon as we see change here.

Excellent. Okay. Moving to the Richard Wolff Flex agreement. You mentioned in the materials that as soon as possible, you'd like to get this to patients. So how is that partnership going? Are there any updates? And the other question on that would be, do you need US down classification to launch it in the US if once successfully developed?

I think the relationship with Richard Wolff is extremely strong. If you take a look at our our ambitions in China, it was Richard Wolff that stepped up. When you look in countries like Finland, where Olympus was selling against us in accounts and parts of Sweden, And we needed to counter that NBI initiative. Richard Wolf stepped up and went into those accounts and sold, uh, the system blue into those accounts for us. Uh, again, they stepped up when we look for partnerships to develop a surveillance blue light, flexible system. You know, it wasn't the only one we talked to, but they're the ones who stepped up with us and their excitement and their, um, Their eagerness to go after this is quite, quite, quite good. Like I said, we met with them. We're meeting with them today. Several people on my staff actually apologize. They're not on the call today to hear the quarterly presentation because they are in meetings with Richard Wolff. going through the development plans, the prototypes, et cetera. We have every intention of getting this to market as quickly as we can. That is a top priority. I think patients deserve it. You know, so I'll have more information on that as far as that goes. As far as the U.S. and suspicion, and whether that is the gate or not, it is not the gate. There are We're looking at alternative ways to try to get ourselves to the U.S. quicker and not wait for a citizen's petition. I think patients deserve it. I think we have a relatively strong case to the FDA when the only blue light system in the market has been withdrawn. And yet the trends and the demands for better diagnosis and treatment are out there and continue to build. You need that solution. We are that solution. We will be the only solution in the world, at least when we launch. So We will try to find our best way to the U.S. as quickly as possible. More to come on that as well.

Excellent. Next question is on the U.S. scope placement. So of the 387 scopes in the U.S., 186 of them are SPHERA, if you multiply out the 48%. That leaves 200 roughly older scopes, other legacy equipments. Are these scopes still active? And are you seeing higher kit utilization on the Saphira systems?

Yes and yes. So the ones that remain likely were bought, I mentioned in my presentation, are likely were bought in 2019, 2020, 2021. If you go back through our Through our presentation, you'll see the numbers that were placed back in those days. Those are likely ones that will be up for end of life, end of service and replacement. And Carl Storrs has every incentive to get those switched because they don't want to lose those accounts to Olympus or to Richard Wolff or anyone else. And since they do have the monopoly in the US, it's in their best interest to convert. So I think there'll be pressure over 2025 and 2026 to get the rest of those converted over. Most of them are still in operation. There are some that have died on the vine. Some of those accounts will switch to the mobile solution because capital budgets are tight. But one way or the other, we wanna get those patients. In terms of, does it have an impact? I think, you know, I point to the impacts on Europe with 220 upgrades. And I think I mentioned Q2, Germany had 69 upgrades back then. 35 of those accounts had double-digit growth after the upgrade. In the US, a lot of it is degradation of sales with standard definition and stemming the tide and then bringing sales back up again. So yes, it does have a positive impact and it's very important. And I think anybody associated with the device world knows the importance of continuously upgrading systems and its impact on retaining customers.

Excellent. Okay, so turning to Fortech, two questions here. One is, how big do you see Fortech getting in terms of the percentage of your business? You mentioned 3% exiting Q3. And how is the ramp going? Is it meeting your expectations, beating your expectations in line It is.

Yeah, I characterize it as exceeding at this point, which is good because we expected a lot. And the 18 installations or purchases by Fortec and actually deployments happened later than what we thought was going to happen. It was a couple of late deliveries by Carl Storrs. But in the end, they're exceeding our expectations. They're exceeding the expected plans initially. And if the expected plans expected those machines out a month or two or whatever earlier, we're already exceeding and we came into market later. So if you understand what I'm saying. In terms of what can it mean to the U.S. business, it wouldn't surprise me for it to go up into the double digits in terms of our mix of business, if not even greater. We'll see where it goes. Some of the accounts that Fortech hits are going to be If you think about some of the largest accounts, the big academic centers, et cetera, those will probably always remain purchasing customers. They will own their systems. and they will use them because they utilize them so much. They got huge patient bases. But for the smaller accounts that are out there, maybe they only have 100 TRBTs a year, this mobile solution is the right thing for them. It's an operational budget expense. So, yeah. So I think we're accessing, I think the key here is we're accessing customers that we otherwise would not have access to, at least in today's world. Now, in the future, if there's multiple manufacturers out there and everybody has a blue light capability, and it's as simple as turning on software, then obviously the world lights up with blue light, but we're not there today. So this is our counter strategy to the fact that we have limited access throughout the United States.

Very good. Here's a financial question. You have roughly $300 million in cash, I'm sorry, 300 million knock in cash. and positive cashflow from operations, positive EBITDA. What is your strategy for the cash that you have?

I think you will find the answer looking at the growth initiatives that we're taking part of. Looking at Richard Wolff and the development of the Flexscope and maybe other developments as well. And looking at the opportunities that are given now by other companies in the non-massive invasive market. So it's kind of that's where you find way that we might want to use this cash also one kind of maybe distant comment but we should be aware that the risk level in the in the world has increased over the last few months and i need to take that into consideration when i'm looking at the minimum cash balance i need okay excellent um here's one on the uh

The priority growth markets, very strong in the third quarter, 12% growth. Do you expect this to continue?

Absolutely. Absolutely. It's going to continue. Extremely pleased with the progress and the efforts put in by the teams. We're increasing effort in Italy. We're extremely pleased with the U.K., And then France also has now picked up its momentum as well. So I see no change. In fact, I could see it continuing to strengthen over time across all those markets. Again, keep in mind, when we're talking about UK growing at significant double digits, they started with a pretty low base. So that growth rate might kind of trickle down a little bit, but that base business is growing with it and returning. So I don't see any stop to that.

Cool. And related question to that is, in terms of utilization in both U.S. and Europe on the image quality upgrades, so whether it's new severe systems or in Europe, the incremental image quality upgrades, you know, what can you tell us about the trends in utilization related to those?

I think we answered that earlier. I said they, you know, I gave the example of Germany, 69 upgrades in Q2. when we talked about in Q2 69 upgrades, 35 are in double digit growth, US reversing downward trends because standard definition breaks down. So yeah.

And onto Osiris. Osiris did mention a spillover effect from the early approval of Hexfix and that it could relate to Savira. Do you expect a spillover effect from that early approval?

I would say this, when you have a reputation of quality submissions, that does help. I think the Chinese FDA or NMPA, as we call them now, will take that into account. Spillover in terms of will it expedite? I think only in the sense that the data that is submitted, they'll feel like it's coming from a valid and reliable company versus somebody that they don't know. That will help. But at the end of the day, it is a different product with different data. So I can't estimate it, but I do think it has a positive overall impact for Cyrus. I will also say, Cyrus, along with our team supporting as well, have done a phenomenal job in making sure these data packages are pristine. And that the questions coming back, in fact, there were no questions that basically came back on Hexfix, which is almost astounding. It was just that good of a package. We're hoping for the same on Savira, although it's not an approved product in the world versus Hexfix, which already is approved. Savira is first to market in the world. So we expect some questions on that, but I think we're well prepared. And the key here, on these is how quickly you can respond and how completely you can respond. And both teams work extremely hard to be fast and complete. Excellent.

OK, and actually last question is also on Savira. Do you receive a milestone on the EU regulatory filing and approval? And what about this pre submission? filing that Osiris is talking about this quarter. Is that, is that something we would receive a milestone on?

Not, not on the priest, not on the, the pre-submission or at least the conversation I have with the EU, we won't receive a milestone, but we will receive milestones if it's accepted by the EU for review. And then if it's approved and it's significant, um, it's, it's slightly more than the Chinese payout, Chinese market payout. So yeah, it's significant money. We're If both of those were to come through, it would come close to getting closer to doubling our cash balance. Impressive.

All right. Very good. That is all the questions we have today. So, Dan, I'll turn it back over to you.

All right. Well, great. Well, thank you, everyone. Look forward to seeing everyone on the Q4, I think, in February. I don't have the exact date. Maybe Eric remembers. But thank you for joining us today. Have a great day. Bye-bye. Bye.