Bactiguard Holding AB (publ)

Thank you, operator, and welcome to the presentation of VactiGuard's Q2 2024 report. I will go through the presentation together with our CFO, Patrick Buck, and open up for questions towards the end. Thank you all for dialing in today. I have just completed my third month as CEO of VactiGuard, and my reflection from this time is that we have a lot of the building blocks in place to execute on our new strategy. We have been through a transformation. However, the team in place is very experienced and highly motivated to make the world a healthier place. While we still have transitional activities from the transformation to complete throughout the remainder of 2024, we are one team collaborating closely together with a solution-oriented approach and a performance mindset. Now turning to the developments of the second quarter. Let me start with the figures on an overall level. Our total revenues for Q2 amounted to 60.9 million SEC, an increase of almost 19% compared to the same period last year, and for the first half to 119.7 million SEC, which was an increase of 6.5% versus last year. Our license revenues are stabilizing thanks to our good partnerships with BD and Zimmer Biomets. We also report a positive EBITDA for Q2. Our EBITDA came in at 1.2 million SEC for the quarter and at negative 0.3 million SEC for the six-month period. Patrick will dig deeper into the financials later in the presentation, but I want to note that we have embarked on our path towards profitability, and I am cautiously optimistic while realizing that we still have a lot to deliver. As for the highlights of the quarter, I assumed my role as CEO in April, and at the annual general meeting in May, Thomas Van Gogh was reelected as chair of the board. In addition to Thomas, we are privileged to have the board that we do supporting Back to Guard with relevant experience and knowledge, both from our industry and the medical sphere, as well as in growing profitable companies. Another important theme from the quarter is the expansion of back-to-guard coded products to new markets with BD, but also with Zimmer Biomet, including the introduction of ZNN back-to-guard in Japan. I will come back to that shortly. In July, we strengthened the organization with the appointment of Nathaniel Bachrach as interim head of R&D, and he is now a part of the back-to-guard executive management team. Tani is a product development executive with more than 25 years of experience in innovating, developing, and launching advanced medical products for global commercialization. He has been executive vice president and chief scientific officer at 3D Bio and previously vice president research and technology at Lifestyle Corporation, where we served together on the Lifestyle leadership team. Prior to that, he held various leadership and technical roles within Lifestyle and organogenesis. Tani holds a PhD in mechanical engineering and biomechanics and has an impressive record of publications and innovative patents. He is based in New Jersey in the U.S. and will spend his time driving our R&D strategy and in new business development. We are all excited to have Tani on board representing Back to Guard and our technology to potential partners as part of our journey towards bringing infection prevention to patients worldwide and profitability to Back to Garden. The back-to-guard infection prevention technology, which is the essence of our company and the foundation of our licensed business, is an ultra-thin coating of the noble metals gold, silver, and palladium. The quantities of the metal are tiny. To put the quantities in perspective, an amount of noble metals equivalent to the size of a pea would coat an entire football or soccer field. When in contact with fluids, the galvanic effect created results in the inhibition of microbe adherence to the surface of medical devices. In the pictures to the right taken with an electron microscope, you can see the difference in bacterial colonization between an uncoated surface to the left and a back-to-guard coated surface on the right. The back-to-guard side shows significantly fewer bacteria colonizing, reducing biofilm formation over time and thus leading to lowered rates of infection. Importantly, we believe in evidence. Over the years, a wealth of data has been amassed, all pointing to the effectiveness and safety of our technology. More than 100,000 patients have been part of over 40 clinical trials covering case reports to randomized control trials, and the results have been published in renowned peer-reviewed publications. Our studies cover various patient cohorts, continents, and regions, and different therapeutic areas. As we look at the global healthcare trends, our offering is more relevant today than ever. The demand for more effective and safe healthcare solutions is clear, driven by economic and demographic developments, as well as the unfortunate increased political unrest, conflicts, wars, and natural disasters. There are clear unmet medical needs with the pressing global societal challenges we experience, including healthcare-associated infections and antimicrobial resistance. Notably, prevention strategies are, according to the World Health Organization, one of the most important factors to solving these issues. The therapeutic areas we have decided to focus on in our core strategy present huge commercial opportunities for back-to-gards. We see increasing interest in infection prevention strategies even with our existing partnerships as examples, urology with BD and orthopedics with Zimmer Biomed. The more we educate the market about our technology, its ability to mitigate infection risk, and how it differentiates partner medical devices, the more confident we are about the joint commercial opportunity. ActiGuard's aim is to seize the significant opportunity presented within each of the strategic therapeutic areas, both with our infection prevention coding technology and the products within the wound management portfolio. The core of our go-forward business model is, as already mentioned, the licensed business. The most fundamental shift in our 2023 transformation as an organization was going from being production and sales oriented to knowledge and specialist focused. The stabilized revenues from our partnerships with BD and Zimmer Biomed reflect more collaboration between our organizations, working together as experts, bringing and sharing knowledge with each other. There are still a lot of activities to work on, but we are on the right track. When it comes to exploring new partnerships and new applications, we are active across our therapeutic areas with multiple conversations and early testing of our technology with leading med tech companies in the relevant fields. Another crucial part is continuing to build the knowledge and specialist organization. Our core competence areas are in R&D, medical, and regulatory. These all represent critical expertise in the collaboration with partners. In essence, the skills and competence needed to bring coded medical devices to the market. With the addition of Tani to our R&D organization, we enhanced the combination of innovation and science with business development and have boots on the ground in the U.S. This is a meaningful step in strengthening our capabilities. Wound management remains an important part of the business, having delivered revenues of approximately 15 million SEC for Q2 and continuing profitable growth. Now into the details of our partnerships and moon management during the second quarter. BD remains our longest and strongest partner. During the quarter, the transition process for additional markets for coded folies continued according to plan, including activities such as training for BD sales and marketing teams across Europe and the Middle East. In these sessions, we shared our knowledge on how to explain the benefits of VactorGuard's technology to healthcare providers and medical professionals. VactorGuard announced in December 2023 that we signed an interim agreement to license additional markets and that a long-term agreement covering all licensed markets would be signed during the first half of the year. However, BactiGard and BD have jointly agreed to focus primarily on the transition activities, and I want to emphasize that our existing agreements remain in full force. Turning to the Zimmer Biomet collaboration, we are pleased to see the continued market activities across Europe. But the true highlight of the quarter was the introduction of the ZNN BactiGard trauma implant at the annual meeting of the Japanese Society for Fracture Repair in Sendai, Japan. This follows the regulatory approval by the Japanese PMDA obtained in 2023. Together with the Zimmer Biomed APAC commercial team, our chief medical officer and Zimmer Alliance lead were onsite to introduce our infection prevention technology to leading orthopedists within the medical community in Japan. We engaged directly with nearly 40 key opinion leaders, both in one-on-one sessions and group meetings and the back-to-guard technology was included in a presentation by KOL Professor Watanabe to a room of hundreds of delegates. The interest in our technology was clear and underlines the growing recognition of the importance of infection prevention solutions to address critical medical needs in fracture management. While we do not expect significant contributions to revenues from the Japanese market during 2024, this is an important step in the partnership with Zimmer and the long-term potential is promising. Within the wound management portfolio, we featured our wound healing product line, Hydrosyn Aqua, in London at the European Wound Management Association Conference in May. Yuma is recognized as the premier international conference for wound care, attracting leading experts, researchers, and healthcare professionals from around the world. Some 5,000 attendees were registered. On the opening day, we hosted a session on the latest advancements of infection prevention within wound care. The theme was Clean to Heal, Paradigm Shift Made Easy. The interest in the product line, Hydrosyn Aqua, is increasing. The more clinicians understand its motive action and how it promotes healing and the quality of life for patients with severe wounds. With that, I hand over to Patrick Buck, our CFO, to review our financials in detail.

Thank you, Christine. I'm very happy to present our financial results for Q2 and the first half year with license revenues and EBITDA stabilizing. And to iterate what Christine mentioned in the beginning of the presentation, we have embarked on our path towards profitability. Now let's turn to the split of revenues for Q2 and the first half of the year. Our total license revenue amounted to 37.8 million, an increase of 13 million in Q2. Revenues from BD, our long-term partner, amounted to 27.6 million, an increase of 9.1 million in Q2. Here is worth noting that Q2 last year was a record low quarter for BD, who was reducing their stock levels, as previously mentioned. For the first half year, BD in total, we saw revenues amounting to 55.6 million, and adjusted for currency effects, revenues increased 1.1% for the first six months. Revenues from SimoBioMed amounted to 10.2 million for the quarter, an increase of 5.2 million. These revenues consist of exclusivity revenues related to the orthopedics agreement, as well as license revenues, including minimum royalties related to the trauma agreement. Revenues from wound management in Q2 amounted to 14.7 million, an increase of 3.5 million in Q2. And for the first half year, revenues from the wound management portfolio amounted to 27.4 million, an increase of 5 million, corresponding to 22.5% growth with and without currency effects. As Christine mentioned, wound management continues on the path of profitable growth. Revenues from BIP amounted to 4.8 million, a decrease of 3.3 million for the quarter. And for the first half years, revenue from the BIP portfolio amounted to 10.9 million, decrease of 2.3 million, As mentioned, the BIP revenues will continue to decrease as our inventory deplete and we cease production. Other revenues for the quarter amounted to 3.5 million. Within this, we saw currency effects of positive 1.5 million. Other revenues for the first half year amounted to 8.4 million, and currency effects within this amounted to 4.2 million within the first six months. So in total, second quarter revenues amounted to 60.9 million, adjusted for currency effects of 1.3 million. Revenue increased by 16.3% in Q2. And for the first half year, total revenue amounted to 119.7 million, Adjusted for currency effects of 4.7 million, revenue increased by 2.3%. Now turning to our operating expenses and our cash flow. Cost for raw materials and consumables amounted to 11.9 million, a decrease of 13.3 million. Other external costs amounted to 19.3 million, again a decrease of 12 million. Personal costs amounted to 27.2 million, a decrease of 19.4 million, and other operating expenses amounted to 1.4 million, a decrease of 2.5 million. In total, our total OPEX amounted to 47.8 million, a decrease of 33.9 million. All in all, we are on track to deliver on the cost savings previously announced, exceeding 25 million Swedish kronor on a yearly basis following the strategic transformation announced last year. Now turning to the cash flow. In Q2, we saw cash flow from operating activities amounted to 16.8 million. Within this, we see change in working capital for the quarter amounting to 22.1 million. Cash flow from investing activities amounted to minus 4 million for the quarter and cash flow from financing activities amounted to minus 3.3 million for the quarter. In total, cash flow for the second quarter amounted to 9.5 million and for the first half year to minus 22.1 million. All in all, cash and cash equivalents at the end of June was up at 105.3 million. With that, I hand back to you, Christine.

Thank you, Patrick. To conclude our Q2 presentation, we have a bold, demanding, and inspiring vision to be the global standard of care for preventing medical device-related infections. Achieving this vision requires focus and determination, and these are our priorities ahead. We continue to work on enhancing the business with our current licensed partners, which include BD, Zimmer Biomet, and WellLead. Simultaneously, we increase interactions and early stage testing of our infection prevention technology together with leading med tech players across our strategic therapeutic areas. We aim to grow our wound management portfolio profitably. As I alluded to earlier, we will continue to build our knowledge and specialist organization further to support our partners and deliver on our vision in the best possible way. Tani Bhakrak is the most recent example, strengthening R&D and business development. We have embarked on the path to sustainable profitability, and we are clearly pleased to deliver a positive EBITDA for the second quarter. License revenues are stabilizing, Operating costs are well under control and the anticipated cost savings related to the strategic shift from 2023 is on track to be delivered on a full year basis. While we still have a way to go to deliver on the promise that the back to guard technology holds, we can conclude this quarter by being cautiously optimistic about the future for the new back to guard. And with that, we would like to hand over to the operator to open up for questions.