Acarix AB (publ)

Welcome to today's live queue that we here at Reda have together with Akadix and its CEO Amir Mahmoud and the CFO Christian Lindholm. Very welcome, stage is yours.

Thank you, Philip. We're glad to be here and excited to announce our Q1 earnings as we kind of have progressed over the last 90 days. So we'll get right into it. We'll have a quick agenda here. We're gonna go through an executive summary, high-level briefing, and then a Q1 highlight, as well as the Q1 financials and a little bit deeper dive. But really, what we wanna start off with is what we've done in the last 90 days through Q1. We've been able to implement a number of strategies. We've taken our go-to-market model and dramatically shifted it to a more adoptable model. one that has less barriers. We have a new focus on our clinical trial situation in the United States and officially have launched one of our first clinical trials in the U.S. that will identify workflows and the cost-based savings of Acarix and pushing the CAT score system as a risk stratification process at point of care. And we're also working towards a partnership that we have facilitated to expedite our processes in reimbursement, which is one of our key focuses and objectives for the future of Acarix and CAT score. So we're very pleased where we're at. We believe that we've really structured this business as well as our strategy to really procure the long term to 2024 and beyond. Some of the Q1 highlights. So the growth focus model. We evaluated in the first 60 days what we were trying to accomplish. And that's truly to get this thing adopted and drive high volume to really push the submission process that will procure us with a static reimbursement code specific to our diagnostic tool. And what we've done is we've shifted it to where we've removed the barriers surrounding what the process is to implement CAT score in practices, in emergency rooms, in hospital settings, as well as any other facet where these patients can be seen similar to PCPs. So we have removed the process of actually having to buy the CAT score system, which we were selling, and we're putting that on a consignment model because to get the adoption where we need to go, we've got to remove those barriers and increase our volume and submission to payers like the private pay insurances as well as Medicare and Medicaid. So what we've shifted to is really focusing on the patch. We're not selling the widget anymore. We're selling the patch. The patch is the future of Acarix and our top line revenue growth, as well as really significant incremental approaches towards the gross margin, as you'll see in the future slides. But what it does is you're taking the razor blade model, right? So you've got the razor, you're selling the razor blades, and that's where we see a significant trajectory and opportunity. And by placing more CAD score units, you're going to see more of a hockey stick curve regarding patch adoption and usage. So the exciting news is we did launch this new model March 4th, which is the first day of the month, last month of the quarter. We did sell 13 units in Q1. What we realized is the last 20 days, so initiation of the new sales model through 20 days of May, 20 business days, we were able to procure 10 units placed and a significant number of boxes. And in regard to this model, there's the consignment of the CAD score system also has a obligation to purchase the boxes of patches up front so that you have the utilization and ability to start tracking and then subsequent orders will come in over the next 12 months of additional boxes. One of the best KPIs that we've seen and we saw it relatively soon and we expected anywhere between 45 and 60 days for reorders And those have started coming in. So we're really cautiously optimistic about that continuing that track. We're very new into this model. However, we're seeing significant traction and we're very, very much so enthused. We have some significant wins that you recently saw some press releases on. So we've got multiple primary care clinics that have adopted our technology. One very large clinical cardiology practice in the Northeast, Capital Cardiology, over six different facilities with over 300 cardiologists. We also work towards an ER setting that is part of NewTex, which is a publicly traded organization that specifically focuses on ERs and micro hospitals. So they're very similar to what an urgent care setting would look like. but specifically and acutely focused just in that facet or demographic of the market. The team. So we've done a top-down analysis on everybody on the Acarix team. What we have done is we have really evaluated each of the commercial team members and really tried to structure it as best we could. And we have separated from some people that were underperforming. And we have brought in people that are specifically and acutely focused on cardiovascular sales. Some of them specifically into the diagnostic market and some of the larger organizations that created the disposable wearable patch market. So we feel very good about their talent. We feel very good about their acumen clinically as well as from a sales capacity. And we truly believe that the expertise will continually drive the momentum that we've created since March. Really excited to announce, just as of a couple days ago, we have now officially contracted with our new head of US sales, Jeff Thomas. Jeff Thomas and I have known each other for over 20 years, and he has really developed into a significant high-level executive sales and commercial leader. The exciting thing about Jeff is he brings 20 years of specific cardiovascular experience, And most recently, he was doing exactly what we're doing. We're building a team. We're building a structure. We're building a new culture. And we're building the entire process of growing a new team. And that's what he just recently did in his former role. But he's very excited to join us. One of the key things that Jeff brings to the table is he's actually an engineer by education. And having that ability to complement a commercial aspect and an engineer aspect, being able to deliver the consult of technical sale to the physicians as well as the administration of hospitals, as well as the team members and educating them on how to follow these processes, will truly be significant and a significant driver for us for the top line. We're really excited to announce Jeff, and he's going to be joining us on June 1st, just in a few days. Really exciting news that we got at ACC just this past month in the U.S. It was the CADScore Health Economic Analysis done by Dr. Susan Barron and Michael Gibson out of Mass General and the Boehm Institute, a highly recognized institution in the United States that truly has a number of significant clinical outcomes and studies that are ongoing. And what was truly remarkable about this is that The CAT score, when implemented in the emergency room situation, was $177 million saved per 100,000 patients. So if you do the math, that's $1,778 per patient saved when the CAT score system is implemented. And how that kind of procures is that, you know, when you show up to an ED emergency room or emergency department, There's a protocol in place when you have acute angina or you have low to moderate chest pains. There's a specific protocol that you follow and it's a very detailed protocol that involves significant checkoffs before the patient can be discharged or forwarded for a risk stratification. When implementing CAT score, you're able to basically mitigate the process for the people that truly do not have a coronary artery disease threat and can be ruled out by CAT score and moved out of the process and push the patients that truly have angina or truly have a strong likelihood of a coronary artery disease event forward through the risk stratification process. So you're mitigating the time in the ER, time in the hospital, additional testing that wouldn't need to be done, or any of those kind of opportunities where cost basis goes very, very high. As well, you can't really discharge a patient without a cardiovascular consult, and that can take anywhere from five hours to a few days. depending on the day you roll in. So significant value. It's a value proposition that I mentioned on our last quarterly call where we have a comprehensive value proposition. We're not only impacting the patient, we're impacting the physician, but also the payer. So truly comprehensive and quite frankly, part of the driver that we have in our current conversations with payers as well as Medicare and Medicaid. We have now launched our very first clinical evaluation in the United States. UC Davis, a highly acclaimed institution that is going to do something very similar and roll this out into their workflow in the ED space. We have already signed the IRB agreements. We've signed the contracts. They've been trained. We're anticipating launch at any time. This would be a 200-patient study, and we're really excited at what this could possibly procure for the U.S.-based demographic because we have had feedback. A lot of our data is from Europe. People want the exact U.S.-based demographic data, and this is going to be the start of a few more to come. The CAT score reimbursement activity. So we have engaged with a very highly reputable law firm, Arnold and Porter, in Washington, D.C. We have already had conversations with them. We have initiated a partnership with them. Really exciting is that our lead attorney, who is going to help us facilitate the strategy and conversation with CMS to drive the CPT-1 code, as well as additional codes that we'll talk about in a second, But this gentleman is a JDMD, so he's an attorney and a physician, and he also was on the board of CMS or a partner in CMS for the past few years, no longer is, but has all the connections and the know-how and the knowledge base and the acumen that really will help us to progress forward very rapidly. What we need to get to CPTP1 is the comprehensive clinical evaluations, demonstrate widespread usage, which will also be catapulted by our new risk-sharing model. And then we're really pushing towards KPIs and we've already seen it. So we've already had a very significant outcome. If you the checkbox here, United Medicare has now removed us from do not pay. Right. So in the U.S., health care is very different than abroad. So there's private pay. There's public pay. Public pay typically comes in the Medicaid, Medicare segment, which is older generation, 65 and plus people. And then the private pay section is a for profit business. There's a number of large private pay institutions that facilitate insurance for the private pay world. And those conversations are ongoing. But part of the step to get to the static reimbursement is the removal of do not pay for Medicare. So we have seen that and we actually have seen payments for Medicare. which is a truly remarkable thing, and this all was effective May 1st, so just the past few days. They've already proven, Arnold and Porter has already proven themselves as to what they can procure. Within seven days of our initial visit and execution of a partnership, they got us a visit with CMS to discuss a completely different segment, that is the ambulatory payment center. So that's basically the APC. So you're looking at anywhere like an emergency room, urgent care center, ASC, OBLs, all the patients that are coming to those kind of facilities will have a different segment of reimbursement codes. And we were able to already present to CMS and got in before the end of the deadline for a July announcement as to whether they've accepted our proposition. And what we're doing is we're setting a fixed reimbursement code for those settings. And we should know by July that'll be effective July, January 2025. So we're cautiously optimistic. We had a very good meeting with CMS and all our consultants feel like it's all trending the right direction. So we're very excited and cautiously optimistic waiting on that. And just as a note, as you can see on the slide, that opens up a population of 7 plus million patients. And just to go back one second, when you look at the opportunity that United lifting the Medicare no-pay quote, that's another population of 8.9 million. So just in those two segments, that's over 17 million patients that will become an opportunity for the CAT score system and the CARICs as we progress our initiatives in the U.S., Some really exciting things as we continue to build our reimbursement thought process. We have three new organizations that are now providing reimbursement, Peoples of United, Anthem Blue Cross Blue Shield, and Novitas. Novitas is something that really is important because Novitas is a Medicare reimbursement organization. So you can see that we're starting to get Medicare reimbursement. And what typically procures is that it tends to drive the adoption in the private pay market once Medicare is set up. So it will facilitate and help our conversations with the payers, the private payers, as this continually progresses with the Medicare side. And Blue Cross Blue Shield Anthem is 14 different states. So we're really going to start to target and segmentize where we're placing our commercial activities and try to go through concentric circles and work our way out of those cities into broader expansion in the United States. So process improvements, all while we're doing external commercial activities, we also have to focus on internal activities to ensure we can position ourselves well for scale and growth, as well as streamlining our operations and efficiencies in our processes, right? So ERPs are very important. We're a partner with Microsoft Business Central. We're fully integrated at this point, and we're working towards making sure that it's being used and used efficiently, and it should hopefully streamline our process and make things a little bit more effective and more productive. Very excited to announce we just left our annual shareholder meeting and we have elected two new board members, two gentlemen I've known for many, many years, including Ken Nelson over 20 years. And he has been a phenomenal person in the digital health world, known as an effective master of digital health and what's going on in digital health. He's played a role in some of the largest group projects. organizations, iRhythm, BioTelemetry, and Barty, all three had significant exits. He has mastered the process of understanding the commercial activity, the reimbursement activity, as well as the go-to-market models. So he has been involved, and he will now be a very core team member as a board member. Dr. Tony Das out of Dallas, who is one of the head at Baylor, Scott & White, he is one of the... very early onset adopter of digital health and has tried to procure that in his practice as well as Baylor Scott & White. Tony also sits on the board of a number of companies and has worked with a number of PE and VC firms and has raised over $150 million in funds. So he's very active in the clinical aspect, but very astute in understanding of the strategic business development aspects. So those combined truly bring our board to a place where we have significant influence, significant acumen in both commercial activities, leadership, and the clinical aspect that can merge together. And we've refined the board to be nimble, faster, and being more effective in the specific U.S. market. So we're very, very excited about what they bring to the Q1 2024 financials. Very excited to announce we've had some really great traction and made some significant strides in the last 90 days. We've implemented new updates, refined our business models, and really looked at OPEX and how we can take costs out of the system that doesn't need to be there or repurpose those funds for more commercial activities or clinical activities. But really excited not specific to the u.s we saw 170 percent u.s patch growth uh that's in units and as compared to 2023 uh our u.s gross margin jumped to 91 points uh versus 83 points uh in 20 in q123 and we've had a significant reduction in our in our opex by 16 percent now there was one a one-time charge uh in q1 that's offset from this but 16 points in opex and again We want to reassure our investors, our shareholders, our customers that we're not just reducing our spend. We are looking to reduce spend, but we're looking to repurpose those strategically and effectively in driving what we need for outcomes. And what we need for outcomes is good commercial strategy and good reimbursement, as well as clinical outcomes. So we're going to repurpose the funds we feel we need to repurpose, but we're going to keep the cost savings if that is the best option for us at the time. Now I'd like to turn it over to my CFO, Christian. My pleasure.

You can hear a lot of very good things is happening in the company and some of them have a direct impact on the P&L. And the business model, the risk sharing model is of course impacting in a good way. With the risk sharing model, we are delivering the system to the customer, but Carex still owns the system, and we depreciate the system during 24 months. So, and that is the reason why we see this decline in revenue from 1.9 million to 1.5 or 1.6 million. And that's basically because out of the 13 systems that we sold in the quarter, 10 of those were risk sharing model. That means that there is no revenues coming from the systems, but the revenues come from the patches. In the long run, that means that we have a quite steady development of placement of the systems. In a while, we are working hard to see an exponential increase of the patches. Mind if I add a little color to that? Sure.