Photocure Asa

All right, well, good afternoon and good morning, depending on where you are in the world. My name is Dan Schneider, President and CEO of PhotoCure, and you're here for the PhotoCure second quarter 2025 results. With me today is Eric Dahl. Just a reminder, the usual disclaimers are in effect for today's presentation. I thought I'd start just kind of reiterating our strategic priorities and initiatives before I get into what I think was a very, very good quarter for PhotoCure. So, you know, first block, accelerate and expand. I think what's important to keep all this in the background of what we've been focused on over the past couple of years. You're delivering on our financial growth, both revenue and EBITDA this year, and continue generating operating leverage. I believe this is our ninth quarter in a row of positive EBITDA, and that leverage continues to build. Driving the PLC mobile strategy in Fortek is doing quite well for the US and is increasingly becoming an important part of our opportunities there. And then for Europe, increasing our penetration in the priority growth markets, Italy, France, UK. And expand our geographic footprint, which we mentioned. In Q2, we now have expanded into Spain. I'll go into that in more detail, but it is one of the larger markets in all of Europe, and it was a market that we were in many years ago when GE had launched back in 2006, 2007. Second block, positioning and access. PLC is positioning to be the primary diagnostic used in precision medicine. That's the way we see it. We see it as the godfather. We're gonna maintain that positioning. It's key to the detection, surveillance, and therapeutic monitoring of these expensive therapies coming onto the market. The high-def technologies are entering the market. We've had upgrades now in all three of the major manufacturers, the most recent one being Olympus in Europe. That has already had an impact, particularly in Germany, Austria, and now the Nordics as we move through the second quarter. So we're very pleased with that development. And of course, we partnered with Richard Wolff for the Blue Light Flex development, for the world's only 4K high-def system that we currently is on track. But in the interim, we do have and figured out a interim solution that is being implemented and has already had cases go off in the second quarter. We'll talk more about that in the UK. And then the third block, the acquire and transform. Looking across non-muscle invasive bladder cancer and uro-oncology in general, there's some really fast-moving, rapidly growing interest in precision diagnostics. As I mentioned, Blue Light Systotropy remains the godfather in this space. And we believe that coordinating, it has synergistic effects with a lot of the other things going on in this space and opens up some real opportunities for PhotoCure to expand our offerings. In real time, examples of that are even the Richard Wolff high-def 4K flex development that we're developing on a worldwide basis. And of course, leveraging the mobile solution with 4Tech and continue to look for these strategic partnerships and opportunities. So let's go into the second quarter. So obviously I started off today by saying, I'm very pleased with the overall results. Overall, we had 11% revenue growth and an all-time high of 135.6 million NOC. It was a 9% increase in units globally. In North America, we delivered a 14% unit growth and a 15% revenue growth, offsetting the continued flex decline, which we estimate to be minus 46% in the second quarter and minus 60% overall in the first half of the year. So we see this continuing to bleed out to the end of this year. The installed base of Sapphire blue light equipment continued to increase with three tower placements and nine upgrades in quarter two. I'll talk about this a little bit more, but importantly, you should understand that Carl Storr signaled that they're doing a Sapphire promotional program that begins on July 1st and is typically typical of customers. They tend not to buy before they get the sale price. So we believe the pipeline is set for the second half of this year. It'll materialize throughout the rest of the year. We had a fantastic 21% unit growth in the rigid surgical market. And this is inclusive of the 4Tech medical mobile solution. Very important, 4Tech now represents over 10% of our total business and it continues to build a momentum. It is outpacing our expectation than those of 4Tech as well. So we're very pleased with the demand that continues to build for the mobile solution. And the number of active accounts increased by 24% year over year to 359. This sets the stage for the continued momentum into the future. In EU, revenue was up 8%, units up 8%. Very solid growth in the EU fueled by Germany, Austria and France with support from Nordics. All the other countries are kicking in. We see positive momentum in all of them. We continue to execute across the board. And as I mentioned, Olympus upgrade is key to this execution and it has a significant impact for Austria, Germany and now the Nordics kicking in. A total of 36 new Olympus upgrades and there's more in the pipeline. So we're very pleased with the developments there. And as I mentioned, key is the Nordics where Olympus has a very strong presence and they've begun their upgrades as well as the second quarter, a little bit behind Austria and Germany. Second block, we generated positive EBITDA of 14.8 million. If you take out the BD and milestone, it's 22.6 million NOC. It's our ninth quarter in a row. And we continue building up ring levers through 2025. The balance sheet remains strong with 239.1 million NOC, no long-term return debt. And of course we bought back half a million shares for treasury stock. Important news flow, we launched into the Spanish market starting in late June. I'll talk about that when we get to EU segment. Regarding two major congresses, AUA and EAU, there were significant presentations and discussions on the growing importance of BLC as a precision diagnostic for the diagnosis, resection and stratification and ultimately monitoring leading to better informed treatment decisions. And it continues to build underneath our blue light cystoscopy offerings. The Richard Wolff interim solution, the first cases took off in the UK in late second quarter. They went off well. There's more institutions that are interested in trying the interim solution. The key here, just to remind everyone, we ultimately wanna bring out the 4K high-def solution at a very sharp price point on a worldwide basis. We're working on the development with Richard Wolff. It's gonna take us a couple of years to get it through its approvals. But in the interim, we want to try to keep flex surveillance alive, collecting the data, making sure the user experience continues forward. We do not want the market to go cold. So this important support coming out of the least starting with the UK, we'll have other centers throughout Europe that will hopefully implement the interim solution and at least try the surveillance blue light cystoscopy, perhaps with lasers, et cetera, in the outpatient setting. And then partner news, I know there's been a lot of noise on Osiris, particularly with Sivira. There is no real update here. They continue through their interactions with the NNPA. That's the Chinese FDA. There is no statutory requirement on them in terms of timelines. Historical average has been somewhere in the 18 month plus range. Again, it could be the end of this year, early next year when they get an answer from the NNPA, but I will say that their interactions, at least to date have been active and ongoing. They're a public company. Therefore, any statements outside of what they've already stated publicly, we cannot say. So, you know, that's as much as we know. But I will remind everyone, should they get the approval for Sivira, that triggers $11 million milestone payment and the launch into the Chinese market. And then data presentations and abstracts, et cetera. The Danish population study concluded higher levels of BLC use improves in bladder cancer patient outcomes. Basically, the more blue lights that stops to be used, the better the outcomes will be for your patients. So that was great data coming out of the population study. All right, let's get into the segment trends. So strong unit sales in both regions, both North America and Europe delivered their highest quarter of revenue in history. In North America, it overcomes the decline of the flex surveillance market. First half, like I said, was minus 60%. It was minus 71 or 70% in the first quarter, minus 46% flex in the second quarter, averaging out to minus 60% on the half. As we move through the year, the percentage decrease probably will start waning and then we get into next year. It's basically now been relegated to a few sites in the US where it's still alive and active and supported. And we're trying to keep them going as long as we can to collect the data. Meanwhile, the rigid surgical market delivered a 21% unit growth in Q2, which was fantastic. Europe's Q2 results surpassed previous high water marks as a momentum continues to build throughout the region with the upgrades of Olympus to the Viscera 3. And also we also have the obviously Richard Wolf and Carl Storrs and the Viscera 3 upgrade obviously particularly impacted DOC, France and the Nordics. And so far 36 have been upgraded and there's more in the pipeline for the rest of the year. Moving specifically to North America, even though the downturn in flex at minus 46% for the quarter, flex units are now as a total, roughly 4% of our total sales from a one-time high of 17 to 20%. And it was the highest fastest growing segment for us. We lost it when Carl Storrs withdrew the flexible system. This is why it gives us great excitement and anticipation of the new 4K high def flexible cystoscope that we're working on with Richard Wolf because that market was growing at 30 and 40% and it was a high percentage and it is a $1.3 billion TAM worldwide. So we want to get back into this space. We want to keep it as live as we can, but at least for now our flex units in the US are roughly 4%. We see that really going near zero by the time we're this time next year. Despite all this, the rigid growth was 21%. 4Tech has added in a lot. Like I said, it's over 10% of our total revenues, our units and it continues to grow. 12 new Sapphire installed. Reminding everyone upgrades are important. When the upgrades happen, we're seeing on average double digit growth out of these upgrades and sustainable. So we're excited about that on both sides, US and Europe. And the account growth of roughly 24% in the base. So this is again, more institutions, more physicians using it bodes well for quarters ahead. Mobile 4Tech now has reached 70 accounts by the end of June, there's more already. That's plus 13 from Q4. It's actually plus 13 over the last couple of quarters. So it seems to be there on a trend of adding, roughly 13 to 15 accounts each quarter, but that could accelerate. They anticipated to that's reaching over 150 different users, physician users, and that demand is growing. The awareness is up and we see this is a key growth driver for business in the US. Access to BLC remains our top priority, ongoing efforts with the FDA for reclassification and reimbursement. We are also working with the other manufacturers to support their initiatives to try to make it into the US market. And I'll repeat one thing just for the US, but also it's crossed Europe as well. Post-AUA EAU, there were a lot of discussions around blue light scistoscopy. There's a growing belief that blue light scistoscopy ability, so with cysts, you and hexics, its ability to see more assures physician the ability to perform a more complete TRBT, which leads to more accurate pathology, staging, risk stratification. And ultimately we see this as potentially helping monitor these expensive therapeutics, giving physicians a more informed precision medicine diagnostic. So this is an important trend that's kind of a macro to everything that we're doing here at PhotoCare. And then going final to one more chart, active accounts, as I mentioned, they're up 24% for the today. We have 359 accounts that currently have active use of blue light scistoscopy. We include the ForeTech and we include anyone who is using blue light scistoscopy in a 12 month period. And this includes reactivated accounts that the US team has worked hard on where they had old standard definition, they stopped using blue light. We've got the upgrade support from Carl Storrs and now those accounts are back doing blue light scistoscopy. So we see a continued momentum in the overall interest in adoption of blue light scistoscopy and SysView in the US. And finally, turning to Europe, Q1 marks the highest revenue quarter ever, supported by solid growth in the DOC Nordics in France. France has growing momentum and we had a really strong double digit growth in June. So we're really excited about where France is going and the rest of the countries are coming on as well as they're moving through the year. The Vistra 3 upgrades are going extremely well. 36, as I mentioned, have been installed, 25 in DOC, five in Nordics, but good pipelines behind them. It has a significant impact on the business. So we wanna support that as much as we can. The picture to the right of the page actually marks our third bladder cancer tour through Germany. This time we did it in combination with Merck and Olympus. So all three of us came together. If you recall, if you go back five years ago, we did this, I believe it was with Wolf or Storrs, I can't remember which one. The next year we did it with the other one and then this year now it's with Olympus. So it's really exciting that they're coming to us wanting to be part of this tour. They had over 18 stops and reached over 500 different healthcare professionals. So very exciting. There's a lot of energy behind it as they toured around the DOC region. As I mentioned in my opening, we did start operations in Spain. We installed a account manager there, country manager in late mid-June, focused on the large metros of Barcelona and Madrid. We have a collaboration with all three of the manufacturers, but I will say that we are leveraging the Olympus launch of this or a three in Spain, sort of the excitement of that and us coming back into the market. There is favorable reimbursement in Spain. It is the largest of the big five in terms of bladder cancer incidents at 19.3 thousand cases per year. They do over 58,000 TRBT's, just as opposed to Germany doing about 105,000. So Spain is really basically the second largest market in Europe and certainly the second largest of the big five. It's reimbursed as I mentioned. On the guidelines, it has been abandoned since the GE days and I'll explain that a little bit. So the guidelines need to be updated. The medical team's working hard on that. We want to get those up to the EU level guidelines, but to this point with no focus, no effort in Spain, everyone's sort of gone quiet, but we're gonna bring it back. But I will remind you, GE launched in 2007, the very first year they did over a thousand units. It was the fastest growing market they had. Then the financial crisis hit Spain and not only did we find it a challenge or GE found it a challenge, but that was across the entire med tech and life science space. So a lot of people abandoned it. As you recall, GE then transferred the business over to Ipsen. Ipsen never put a sales force in there. Even when the economy came back, Ipsen didn't go after it. We wanted to establish ourselves in Europe and then as we had planned, get into Spain. So we're in a solid place. We expect Spain to start growing as we get towards the end of this year and into next year. One of the challenges in Spain is the equipment is old. So we need a lot of upgrades, particularly Carl Storrs old equipment and of course the Olympus, but again, we're leveraging the Viscera 3 launch with Olympus. So we think that'll really help put some jet fuel on our efforts. And we're also engaged with the top six KOLs in Spain. So we feel like we're really good place medically, I guess, and scientifically. So roughly 270 hospitals performed to your VTs in Spain, the 326 that have urology clinics. So, again, it's a manageable market. So let's go to slide 10 with growth initiatives and just remind everything, some of the key elements and accelerators are in the business if you haven't picked up on it yet. Two things, Fortech, 70 new accounts. They have both our Salesforce and their Salesforce are incentivized to push the mobile solution. They try to stack cases. So if they go into a hospital, they want to hire throughput. I think this is a really key thing to understand that Fortech makes money the more the machines are being used. So there is a lot of effort put into their Salesforce, their technicians, their incentive comps, and also their offerings, their price offerings to customers to stack cases and increase volumes per machine that goes into those hospitals. Currently over 150 different users of the machine that continues to grow. It is outpacing both our expectations. I said when we launched into this strategic partnership with Fortech that they are quite open to expanding. So what I mean by that is they have 18 towers out there. All 18 weren't operational to the first border this year. As they reach capacity, they are very willing to buy additional machines and build on top of that. So this could be an exciting development as things continue to progress with the Flex, I mean with the mobile solution. Everything is on, in terms of Flex, everything is on track. The interim solution has been tried in the UK. It's gone, the cases have gone well. We look to expand it. There's other accounts interested. Then in terms of development of the high def 4K system, it's on track. Reminding you that is a 1.3 billion total addressable market in the US and EU five. And we see that as a real opportunity and we will be the first and only to market with this high def Flex blue light system. And as you think about the macro environment and what's going on with all these therapeutics, having the best way of the best precision diagnostic to monitor these therapeutics is actually a real benefit for us as we look forward. So that's that final comment. We'll go to slide 12 on our partnership with Osiris, reminding you it's two different products. Hexfix has been approved, but they're awaiting approval of the Richard Wolff blue light system that has had some challenges, but they expect it to be approved hopefully, by the end of this year, and they'll be able to launch in 2026. And of course we have some revenue streams coming off of the sales of Hexfix over time. And then on Sivira, just to be, as I mentioned, to be clear, everything seems to be more or less on track. They're interacting with the NPA and we'll hear more from them as things develop and they get a decision out of that. And then I think the other kind of development that you can pick up on the public airways for them is they are possibly looking at a second indication. We believe it to be a low grade. And if that's the case, that also would trigger the opportunity for additional milestones in regulatory and approvals. And of course, ultimately in sales revenue shares. So exciting, looking forward to it and we'll see more as they progress. So with that, I guess I'll turn it over to Eric on the financials.

Thank you Dan. Well, I will give an overview of the second quarter financials, which includes the consolidated income statement, it's a segment report, I will present, as well as headlines from the cashflow and the balance sheet. The first, it covers about foreign exchange year over year and measured by unweighted monthly averages. The crown are in Q2 appreciated .1% against US dollars and depreciated 1% against Euro. A year to date, the crown are depreciated .6% against US dollars and depreciated .5% against Euro. If you look at this in terms of Norwegian crowner, the FX impact for Q2 revenue was negative, approximately 1.3 million and for OPEC's positive, approximately 1.3 million as well. So the consolidated impact on foreign exchange on EBITDA was not material. Final remark, as always, all financials in this presentation are in Norwegian crowner, unless another currency has been specified. Next slide please. I'm now looking at the consolidated income statement. HECSWIC's history of revenues in the second quarter increased 11% to 135.6 million, which is all time high. The sales increase was mainly driven by a combination of volume increase of 9% and higher average pricing in both regions. Partially, this was offset by an expected decline in flexible kid sales in the US and the impact of foreign exchange. The volume growth in US, to some extent, driven by customers orders moved from Q1 to Q2. Not all of the, you will remember Q1 that we had customers that had postponed their ordering and not all of that came in Q2. Actually, a significant amount of orders is expected to take place the rest of this year. Total revenues in the second quarter decreased 7% to 135.6 million. The decline was driven by milestone payments received from Osiris, second last from Osiris in Q2 last year related to the development of Silira. The impact of foreign exchange on total revenues was approximately 1.3 million negative in the quarter. Q2 total operating expenses, excluding depreciation and amortization, but including business development were 110.8 million and at level with Q2 last year of 110 million. Operating expenses excluding business development expenses were 103 million compared to 108.6 million Q2 last year, a decrease of 5.6 million year over year. The expense decrease was mainly driven by timing of expenses related to Congresses and business meetings as well as expenses related to FTE adjustments. The decrease was partially offset by merit and inflation. The impact of foreign exchange was positive approximately 1.3 million in the quarter. As previous quarters, personnel expenses were relatively stable year over year except for merit increase. However, project-driven expenses, particularly within business development may vary significantly year over year as well as sequentially between quarters. Business development expenses in Q2 was 7.8 million compared to 1.3 million Q2 last year. And the increase is mainly driven by market research activities and legal fees related to partnership contract support. EBITDA in Q2, including business development expenses was 14.8 million compared to last year, 27.8 million. However, last year Q2 included a milestone of 21.6 million from Asiris. EBITDA including milestone revenue, sorry, EBITDA excluding milestone revenue and business development expenses for Q2, for second quarter was 22.6 million which is an improvement of 15.1 million from Q2 last year reflecting improved operating leverage for our core business. Depreciation and amortization was 7.3 million in Q2. Main cost item was the amortization of the intangible asset related to the return of the European business from Ipsum. Net financial items in Q2 were a net cost of 4.9 million compared to a net cost of 4.5 million in Q2 last year. Net financial costs were driven by foreign exchange losses as well as accrued interest cost included for the deferred earn out liability due to Ipsum. Tax expenses were an income of 2.4 million for the quarter. The net tax expense is mainly driven by group results but also into company items in the parent company. And after net financial items and tax, we have for Q2 a net profit of 4.9 million compared to a net profit of 12.3 million same period last year. Now to the segment performance, next slide please. So as usual, I will focus on the two main segments, North America and Europe. And I'm starting with North America segment which includes US and Canada. And revenue from North America increased 14% in Q2 and overall volume increased 15%. This was driven by an increase in volume for the region market, including for tech mobile solution as well as an increase in average sales price. This is partly offset by the impact of the face down of Cisco usage in the flex segment and then negative FX impact. Furthermore, Q2 revenue growth was positively impacted by the delay of orders from Q1 to Q2 and later this year. Q2 direct costs were level with Q2 last year at 45 million and cost containment and revenue growth have resulted in significant improvements in financial results for the North America region. The contribution has more than doubled to 9.2 million and we have secured a positive EBITDA for the quarter. Looking at Europe, the European business had a positive development in the second quarter with year over year revenue growth of 8%, mainly driven by Germany, Austria, France and Nordic. Volume growth was also 8% for the quarter. Q2 direct costs decreased 4% year over year driven by the timing of expenses related to Congresses, partially offset by merit, inflation and FX. And we ended Q2 with a contribution of 42 million which is 54% of revenue. And EBITDA for Q2 was 25.6 million, reflecting an EBITDA margin of 33%. Now let's look at the cashflow and balance sheet. Next slide please. So as usual, I'm looking at year to date cashflow and ending balance. So year to date cashflow from operations was negative 2.8 million compared to positive 27.8 million year to date last year. And the difference is mainly due to the milestone of 21.6 million received from a Syris Q2 last year. Cashflow from investments of 1.3 million year to date includes interest received and paid and investments in tangibles and intangible assets. Cash from financing year to date was negative 53.3 million and compared to negative 21.1 million year to date last year. The amount is driven by the Ipsen earn out payment for both years as well as a shared buyback programs current year. In total we paid 29.6 million for the 500,000 shares we acquired this year. Year to date net cashflow was negative 54.7 compared to positive 7.5 year to date last year. And the two main drivers for the decline is the Syris milestone last year and the shared buyback program this year. And with this net cashflow we ended second quarter with a cash balance of 239 million NOK. Looking at the balance sheet, we ended the quarter with total assets of 685 million non-current assets for 314 million at the end of Q2 and this included customer relationship with 87.5 million. The 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 49 million. Inventory and receivables were 131.8 at the end of Q2 compared to 132.6 at Q1 this year. So flat in spite of increasing revenue. Long-term liabilities of 128 million include the earn-out liability related to the Ipsen transaction totaling 109 million at the end of the quarter. And finally, equity at the end of the quarter was 479 million, which is 70% of total assets. This concludes the financial section. Thank you, Dan, it's back to you. All right,

thank you, Erik. All right, moving to the summary of Q2 results. So obviously extremely pleased, very happy with the teams both in US and EU and across the entire organization, all the support work. Overall, very solid quarter with 11% top line growth, 9% unit growth, and that despite flex decline and perhaps some foreign exchange headwinds. We had positive EBITDA at 14.8 million and that was our ninth quarter in a row for positive EBITDA. We continue to build on operating leverage as Erik clearly articulated in his presentation. And by virtue of the X milestones, XBD expenses were at 22.6 million knock. But I think what's key here is we continue to invest in key growth initiatives that we believe will generate revenue growth and increase operating leverage in the business. On flex surveillance market now and in the future, Richard Wolff PhotoCure Joint Development Program to bring flex back to the surveillance market is a big opportunity at a $1.3 billion total addressable market. And we look forward to that happening in the course of the next couple of years. It's on track, as I mentioned in my presentation. And in the meantime, we have the interim solution has been already implemented in the UK. It went off very well. And we want to keep the interest high, collect the data, same as in the US with what flex machines are out there. The users that are using them, we want to continue to stay engaged. On the account growth installs upgrades in mobile. We grew our active accounts, which is both new reactivated and upgrades by 24%. We believe this is a great indicator of our performance. This is up from 17% growth in Q1 2025 and 11% growth in Q4 2024. So you can see the momentum building quarter over quarter in terms of increased accounts. Again, mobile is a key driver in there as well, but these upgrades are also significant. In fact, on an upgrade level, we have now upgraded 60% of the old standard definition. We expect the remainders, which were probably purchased in 2022 and 2021, those will convert over the next couple of years. So we will have all high def equipment in the US at that point. And as I mentioned, there is a positive impact when you use the high grade equipment versus the old standard definition that was two decades old. Remind you also, Karl Storrs is running a promo program for the second half of this year, began in July 1st. Certainly the reps are equally incentivized. So we expect that to help out on the pipeline, which we're looking at today, as we look through the rest of the year and into 2026. The Fortech National Mobile Rollout continues to gain traction. Like I said, 150 users so far, 70 new accounts, they added on another 13 in the quarter. It continues to build momentum. It's outperforming both our expectations and Fortech. And I think, watch this space. It does hit a market that otherwise we would not be able to hit. These are households that either don't have the capital budgets to afford to purchase these high priced Karl Storrs Blue Light systems, or they want to try it first, try before they buy. And this is a nice way to get them used to it. And Fortech and us are obviously driving utilization at the local level. So this is a really nice partnership and we appreciate their hard work. And in revenue in units, we're up 8% in quarter two for Europe. We continue to facilitate the image quality upgrades of our nearly 600 target accounts. We believe Olympus Blue Light upgrade will help us strengthen this initiative. And as I said, there were 36 installed year to date and they have a nice pipeline behind it. And you can already see the impact in some of the key countries that have adopted the Viscera 3, where Olympus has a stronghold. And finally, I'll conclude, we had a very strong presence in the AUA and EAU. Some of it orchestrated by us, but much to our surprise and very much to our delight, we were an active conversation in so many presentations, so many discussions about using Blue Light Scistoscopy in bladder cancer patient care. So we're really excited about where this is going. And finally, obviously, as Eric mentioned, we have a very strong balance sheet and a nice cash balance of 239 million NOF. And I'll close with the final anticipated milestones and corporate objectives. We remain with the financial guidance today at seven to 11% product revenue growth and positive EBITDA improvement in 2025. We also expect continued operating leverage through the commercial businesses, as Eric articulated in his presentation. And we see the possibility for significant growth in milestones this year with Osiris and Sabiro. We continue increasing HexFix and SysFu kit throughput through tower upgrades, new installations, and leveraging of the mobile solution in the US. And the Olympus launch is going quite well. And we already see the impacts. We're gonna continue to advance the partnership of Richard Wolff, obviously, on the development of this next generation, -the-art 4K high-def flexible Blue Light system, but also where we can implement this interim solution in countries that Richard Wolff has it available, Europe primarily, especially UK. We wanna continue to keep Blue Light's to be an active conversation in the surveillance market. Lots of work going on with publishing and presenting additional data. As I mentioned, we were sort of talked about whether we forced it or someone just talked about at AUA and EAU. We see that continuing a lot of publications that have been coming out. If you've been following them. So this is really exciting. And our US registry continues to be a very key asset for the company. And there's a lot of interest of how people can access it for the information they need in developing their products, et cetera. We'll continue to support the additional equipment manufacturers coming into the US. I mentioned the citizens petition and the reclassification is a key pathway. And we are putting a lot of money, effort, and pressure on that. The FDA is fully aware. It's not an awareness issue. It's a prioritization issue. It's a government entity. So we are making every effort we can to pressure them from all sides, 360, to get them to make a move. In the meantime, there has been identified ways potentially to get to market by a couple of the manufacturers. So we support their efforts and hopefully one way or the other there are additional manufacturing in the US market soon. And finally, on the Asara's progress, again, we can only say what Asara says, which is everything appears to be on track. Hexfix is approved. Richard Wolff is working through its approval in China and hopefully they can get it ended this year into early next year so they can launch Hexfix in China. And then of course, on the survivor side, they continue to have exchanges with the NNPA looking for a decision maybe late this year, early next year. So with that, I want to thank everyone and I guess we'll open up to Q&A.

We have a large number of questions here. So some are overlapping and we will then leave it with one question for the sake of good order so we can finish the call by the estimated timeframe. So the first question is, can Fodio confirm whether it has any knowledge of Richard Wolff's regulatory submission for System Blue to the Chinese authorities, especially in light of what appears to be two approvals granted on July 11, 2025?

So that was pricing to Richard Wolff because both those products were already approved. What it opens up is the opportunity for an interim solution. It's just saying that those camera heads are compatible with their current system. That was not a new approval. It was a recertification as it turns out. There's no new news there.

Do you have any insights into what is delaying the reclassification of SISU in the US?

It's a government. I mean, as I mentioned when they went down this first path with citizens petition, there's no statutory requirement. It's not like submitting an NDA for FDA approval and they have so many days to approve it or 5, 10K and 90 days. These systems petitions can be identified and acted on by the FDA very quickly or they can linger. We believe, we know for a fact through our efforts, in fact, our last interaction with the FDA, they asked us before we showed up, please do not remind us again about this reclass. We're fully aware of it. It is on our radar. It's about a prioritization. So sometimes it takes more efforts. Sometimes it take, we just had to switch an administration. We believe the new administration is a little more open to clearing some of this stuff up. It called out, kind of under their common sense initiatives of things that just don't make sense, let's fix it. We think this is a common sense, just fix it situation. So if we can leverage the current administration, Congress, whatever we need to do, we continue to push on it. But in the meantime, like I said, there are more ways to skin this cat and we found some other ways. The Holy grail is to have additional manufacturers in the US market so that there's more access. Hospitals that are identified as Olympus Hospital or Richard Wolf Hospital or whatever hospital that they have the opportunity to access blue light from whatever manufacturer they prefer. And it works very well for us in Europe and we think it works very well in the US. So again, reclass is one way and that's big and splashy. And even with an announcement like that, it'll take the FDA time to sort of lay out the cookbook on how to submit their 510Ks. In the meantime, we are fully aware there's other efforts and we're very optimistic that those efforts will be successful.

Can you provide some more flavor on the following from the presentation? Business development knocks 7.8 million in the second quarter relates to efforts that can diversify our business.

It definitely can. It can also further enhance the development for a Hexfix issue. What we're looking at in terms of spending this quarter is expenses related to market research, I think three or four million Kroner. We have legal fees, which is much related to negotiations and market research for partnerships. We have multiple conversations going with different companies on this. So we're really, I mean, we're really pushing this. It's very important for the future of the company.

We have a long question here regarding statutory requirements for NNPA for supplementary review. It seems like the timeline for NNPA is around one third in addition to the ordinary review of 200 days. This adds up to 67 days extra, meaning a reply is expected Q3 2025. Is this correct, which referenced your statement in the presentation?

I don't know any of that. And again, this is a Cyrus's product. I cannot make a public comment on a Cyrus's expectations there. The only thing I know about the NNPA and past processes is that it's on average now around a year and a half to two years for their approvals. This is a drug device combination. That's as much of a comment as I know personally. If you want specifics, I would suggest the investors go straight to a Cyrus. They're a public company. We have to respect their privacy on that.

And we have questions on Fortech. How big is the contribution from Fortech on total or US revenue? And what is the potential? Are Fortech or is Fortech considering purchasing extra scopes?

They are currently over 10% and accelerating. I forgot, I don't know, that was a three-part question. I know one of them was, will they purchase additional scopes? As they reach capacity and they can't service the demand, they surely, and I said that when we first announced the deal that they would purchase additional scopes. Well, there was a middle question in there. What is

the potential for the Fortech partnership?

Yeah, it's a good question. I've said, it's definitely north of 10%. Maybe it gets to 20%. I think we're still analyzing and looking and seeing what it does. Because again, there's two parts. One is part is there are hospitals that just can't afford it or don't believe in buying a bunch of capital equipment. And they will forever be a mobile solution hospital. But there are some hospitals that are trying to buy. So what I'm saying here is Fortech, I'll just make up a number. Say Fortech has got 10 hospitals, each of them are doing 10 units. All right, that's 100 units. The next month, one of those hospitals buys its own equipment. Now those hospitals are nine hospitals doing 90 units. But we got a hospital out there now that bought the equipment and they're doing 10 units. So when I throw out these percentages, part of the analysis is, okay, where did the hospital go? Are they still a Fortech customer? Or have they become a buyer of the equipment? Either way, it benefits us truly. And we want whatever's best for the hospital. Typically if they're buying as a hospital it's because they've got so much usage or they believe they have so much usage that it's economically or financially favorable for them to buy it rather than paying a premium for the mobile solution. So the math will get a little bit fuzzy on the fringes because things will shift back and forth. But certainly this could be 15, 20% of the business. I don't know. But it's accessing a market that we otherwise would not be in right now. So I think that is really key. The 10% of our business right now is a market that these hospitals were not buying blue light, at least in the near term at the current price that it was offered in the market. So again, if we get multiple manufacturers in the market I believe there'll be economic and technological competition. So everybody will want to have the latest bells and whistles. And then they're also going to compete on price. And that might also drive more hospitals to buy and use less of mobile. So again, it's a lot of moving parts here. But ultimately what we want is accessibility to blue light in every hospital in the United States. That's our goal.

Will this quarter be a remember for the one where PhotoCure really turned the corner?

Well, I hope so. I mean, I feel good about what you've done. If you follow the story, actually the first time you come in contact with PhotoCure, you think, oh, this shouldn't be too hard. Simple, single product, sell it directly into hospitals or whatever. As you learn this business, it is very complex. There are so many complexities to it. The mobile stuff, it's the surveillance and the rigid. It's three or four different manufacturers. It's so many different pieces. And so through the course of the last several years, we've been struck with some various challenges. But I'm proud of the team and the way that we quickly respond, the resilience, the speed of action, putting the right plans in place, having the patience and the fortitude to see it through. I mean, I think back to 2023, Karl Storrs was supposed to launch the Sephira system, literally in 2021, delayed by two years. Then we went through the entire 2023 with almost no installations because it just kept getting delayed and they weren't selling the old system because they knew that was crap. So we went a whole year, lost a whole year sales there. We also hit in 2020, as many people did, the pandemic. Then in 2023, they withdraw, I just said I meant 2022 on the Sephira system. Then 2023, they withdraw Flex, which was our fastest growing segment at 37%. We had a pipeline of 35 accounts. We were going to fire up their high productivity accounts. What do you do? What we did, and again, a lot of our effort was in the rigid surveillance market. So we had to switch our focus back over to rigid. That takes time. It takes time to move the ship. Meanwhile, we try to hold on to Flex. We form a strategic partnership with Richard Wolfe. We are developing the world's only 4K high def blue light flexible system to be launched globally in the largest stoscopy market of $1.3 billion to him. I mean, yeah, I don't know. Maybe we turned the corner two quarters ago, you couldn't see it. Maybe it's going to continue to turn the corner over the next quarter or two. But I do feel good about where we're at today. And I feel very proud of the team behind this and the way they respond to the challenges.

So we have passed the indicated end for this call, but we will take a couple of more questions. And turning to OPEX, can we expect the OPEX to stay fairly flat with the revenues increasing as photo-acura investments in the US and Europe starts to pay off?

I think what you should expect is that the personnel cost will remain relatively stable. I don't see any major increases in headcount. However, there are other costs in the P&L which are project related. That could be medical projects, that could also be business development projects. And those will vary. And those will be, I mean, at least at the level where we are now could be higher as well. So I can't promise a flat OPEX going forward. I can promise a flat fixed element of the OPEX, but the project spending, we have to take part in. We have to do that.

With Ford kicking off in the obviously smart, is something similar possible in Europe?

We looked into it. No, there's nothing obvious. We have piloted a very local distributor in Italy. It didn't quite work the same as well. Fortek is, I mean, the competitor to Fortek is Agility in the US. They are absolute pros at this. They have different, slightly different segments of the healthcare market, but Fortek is a pro. But we will continue to look for a similar opportunity in Europe, but there's nothing that's obvious or identified at this point. There's nobody who runs these kinds of things.

We have shortly a hard stop here, but we take one more question. And that is, if survivor is approved in China, triggering a substantial milestone payment and potentially significant royalty payments, will Fortek consider dividends?

Erik, you wanna answer that one?

I always say that this company is a growth company. And we gotta ensure that we have cash required to do the growth and to do the investments needed. I can't say no to a dividend, because I mean, maybe it happens, maybe it doesn't. But my priority right now is growth.

That's conclude the Q&A session. Back to you, Dan.

All right, well, good. Well, great. Well, thank you. Thanks to the team for a great quarter. Looking forward to Q3 when we present in November. So until then, have a great rest of summer. See you soon.