Bactiguard Holding AB (publ)

Welcome to the BactiGuard Q3 2025 report presentation. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the speakers, CEO Christine Lind and CFO Patrick Bock. Please go ahead.

Thank you, operator. and welcome to the presentation of Back to Guard's report for the third quarter of 2025. Our CFO, Patrick Buck, and I will go through the presentation together, and we will have a Q&A session towards the end. Let's start with some high-level comments on the quarter, and Patrick will go into more financial details later in the presentation. We have had another profitable quarter with EBITDA totaling 5.3 million SEC, And the investments we have made over the last two years in strengthening the organization and capabilities to support licensing have not jeopardized our margins or impacted profitability. Even though we do not yet demonstrate significant top-line growth, we deliver a strong EBITDA, and I am confident that we are equipped to execute on the opportunities for our infection prevention technology across our strategic therapeutic areas. Total revenues were just over 48 million SEC with license revenues of almost 30 million SEC. Given our substantial US dollar exposure, which in the license business, the weaker US dollar does continue to impact these revenues negatively. We also had an exceptionally strong third quarter in 2024, which set a high base for comparison. Revenues from the BD partnership bounced back in Q3 compared with Q2 and totaled 28.3 million SEC. Notably, this quarter is the third strongest quarter of the last 10 quarters from the partnership, with only Q3 and Q4 of 2024 being stronger. And we remain positive about the trajectory of in-market sales. Revenues from the Zimmer Biomet partnership were limited this quarter as no milestone or minimum royalties were recognized during the quarter as was expected. However, the partnership with Zimmer Biomet is progressing, including in the expansion of the clinical evidence supporting the advantages of the back-to-guard coded trauma implants. Newly published clinical study data benefits not just the ZNN back to guard, but adds a total body of clinical evidence for our coding technology that also supports our business development activities. Wound management had a slower quarter compared to Q3 24 with revenues of 15.6 million sec, but is still expected to deliver double digit growth. I will come back to more detail on each of these highlights later in the presentation. Before digging deeper into the third quarter, I would like to summarize why Back to Guard is a compelling investment opportunity beyond the fact that we are now a profitable business geared for growth. Firstly, there is a clear need for solutions to reduce the burden on patients, on healthcare practitioner, and in costs to the healthcare system of infections. Secondly, the back-to-guard coating technology and Hydresyn Aqua line of products are differentiated from other solutions, and the coating technology has multiple levels of validation. Validation from robust clinical studies, validation from demonstrated manufacturing scalability, validation from successful and sticky commercialization, and continued validation in real-world use over the last 30 years. Thirdly, our coding platform is highly scalable with proven compatibility on multiple types of materials and in applicability to multiple therapeutic areas, including those that are as different from each other as urology catheters and orthopedic implants. Our licensing business model also means high leverage in back-to-guard scale as our partners reach commercialization stages. And once our technology is embedded, it is integral to the device, making the revenue stream sticky and long lasting. Fourthly, we build from a positive EBITDA base and with new growth verticals and development, putting us at an inflection point for value creation on both sides of our business. I would also like to take a moment to reiterate our core value proposition. We provide global med tech companies with advanced technology that helps prevent medical device related infections. Back to Guards technology is an ultra thin coating of the noble metals, gold, silver, and palladium that has been demonstrated to work on multiple types of materials and devices and in different clinical settings. We have over time coded some 20 plus materials with good outcomes and more than 250 million devices have been coded for patient use. Our technology has amassed a wealth of evidence of its safety and efficacy in reducing medical device-related infections. Some 100,000 people have been part of clinical trials demonstrating up to 70% infection rate reductions. And last, but certainly not least, in 30 years of real-world use, we have zero adverse events related to the coding. In short, a track record that gives confidence to our licensed partners. For our licensing business, Back to Guard is focused on therapeutic areas where infection rates are relatively high and there is an urgent unmet medical need for effective infection prevention solution. Infection in these settings are linked to poor patient outcomes and in severe cases, death, and contribute to high healthcare costs underscoring both the medical need and the market opportunity. Across these areas, there are clear applications suitable for our infection prevention technology and great potential to reduce medical device-related infections. These areas also represent the strongest potential for both enhanced and future licensing partnerships, combining high clinical relevance with tangible commercial potential for VactiGuard. Across the top of the partnership snapshot chart, Our partnership stages against which we will communicate progress in our business development activities matched against the relevant therapeutic area on the left. Starting from the top, we have our partnership in orthopedics within the trauma area with Zimmer Biomed at commercial stages in selected markets and have full rights available for licensing to all orthopedic applications outside of that. Orthopedic represents a significant opportunity with an addressable market of nearly $40 billion. This area involves a high volume of procedures and consequently a high incidence of device related infections. And infection rates can be particularly significant in fracture and trauma related procedures where they can reach up to 40%. We see significant opportunity forward in this segment. Cardiology is one of our newer strategic therapeutic areas and represents great potential for back to guard with an addressable market of around $10 billion. Cardiology includes a variety of implantable devices that are susceptible to infections with reported infection rates up to 7% for implantable electronic devices and up to 39% for ventricular assist devices, despite a well appreciated respect for effective prevention within the cardiology field. These infections pose major challenges, often leading to device failure that necessitates surgical intervention and places considerable strain on both patient recovery and healthcare resources. Last quarter, we initiated early feasibility work and are now progressing in non-clinical studies to demonstrate proof of concept in this area. In urology, The BacterGard-coated Foley catheter has already made a positive impact in preventing infections, especially in our longstanding partnership with Becton-Dickinson. Urology continues to present strong growth potential, both for the already partnered Foley application area and for other applications within the field. In vascular access, we already have an evidence base that comes from the previously approved and marketed BIP central venous catheter. and which we are building on with additional non-clinical studies. Even though we are very excited about the variety of early stage testing that is ongoing, bringing MedTech innovations to market is a long-term process that can take several years from initial testing to commercialization. As mentioned in my CEO statement, the efforts we are making today and will continue to make in the coming quarters are building the foundation for future growth. We are steadfast in our strategic direction, targeting therapeutic areas with significant unmet medical needs and forming partnerships where Back to Guard's infection prevention technology delivers clear and lasting value. Now to give a bit more color on our commercial stage partnerships. As I noted earlier, in Q3, the revenues from this partnership bounced back versus the second quarter, and the momentum in our collaboration with global med tech company Becton Dickinson continues to be strong. Looking at 2025 progress so far, the partnership has advanced steadily. For their core U.S. market, BD has introduced a dedicated product website with a comprehensive section offering evidence-based insights into how back-to-guard coated catheters help reduce infections, improve outcomes, and strengthen prevention protocols. The back-to-guard coated catheters were also launched in India, where healthcare-associated infections and antimicrobial resistance remain major challenges. The team have been actively working on transitioning this market where we previously sold the BIP Foley from BactiGuard to BD. Preparations for launch readiness in Europe is also ongoing, and we expect more market launches in the coming quarters. BD and BactiGuard continue to work closely together, sharing insights and jointly driving growth, and we remain fully aligned on growing the BactiGuard-coded Foley catheters business. Zimmer Biomed carries the infection solutions banner as high as we do, with this category being an important strategic pillar for them company-wide. The ZNN back-to-guard trauma nail system is part of the prevention focus area and continues to be commercially supported across Europe, including through Zimmer's exhibition and educational symposia at the annual EBJIS meeting held in Barcelona this past September. Even though Q3 revenues from the Zimmer partnership were limited, we see in-market growth in sales of the ZNN back-to-guard orthopedic implants and the partnership continues to make progress. Zimmer continues to work on increasing evidence supporting the back-to-guard technology through clinical studies with the ZNN back-to-guard trauma nail system. In Europe, post-market clinical trials are ongoing. including a key comparative study of coded versus uncoated trauma nails, which is on track for completion in 2026 or 2027. These studies are also a portion of the work to the transition to the MDR regulatory requirements for the CE mark in Europe, which also continues according to plan. As a highlight for us this quarter, Through the Zimmer Biomed Partnership was the publication of two independent studies in medical journals, which have further expanded the clinical evidence supporting the back-to-guard coated trauma nail. The study conducted at the Leeds Major Trauma Center in the UK is the first clinical comparative evaluation of noble metal alloy coated nails in a high-risk orthopedic trauma population. The aim of this pilot study was to assess the clinical effectiveness of two commercially available coated tibia nails compared with non-coated implants. The single center cohort study included 234 patients over a 10-year period. All patients had tibial fractures considered at high risk of infection and were treated with one of three types of implants. The coated trauma nail, ZNN-Bactigar, an antibiotic-releasing nail, or a standard uncoated tibia nail. The results showed that the back-to-guard coated nails had the lowest infection rate at 4.9% compared to 7.8% for gentamicin coated nails and 13.2% for uncoated nails. Patients treated with back-to-guard coated implants also experienced fewer unplanned interventions due to complications, a lower non-union rate no cases of anaerobic infections and were observed in both as versus what was observed in both of the other treatment groups. While the study was not statistically powered for all outcomes, the data consistently confirms improved clinical results with back to guard coated nails. Another independent study recently published in the medical journal Injury was conducted at the Val de Brown University Hospital in Barcelona, Spain. The objective of this was to evaluate the clinical outcome of a novel hybrid bone transport technique using a BactiGuard coated nail for the treatment of infected segmental tibial bone defects and showed good outcomes without increasing complications. These studies add to the growing body of evidence supporting BactiGuard's non-releasing biocompatible coating technology as a superior tool in the fight against implant-associated infections. I also just wanted to note that the back-to-guard technology was also featured in a real emergency situation captured in a Netflix documentary series covering the London trauma hospital system called Critical Between Life and Death, where a back-to-guard coded implant was used in a patient involved in a motorcycle and bus collision. While we expect to continue to see real patient outcomes published in medical journals, this unexpected but more accessible context was a gratifying recognition of Back to Guard's role in advancing infection prevention. The wound management portfolio had revenues of 15.6 million sec, a decrease of 13% compared to Q3 last year, which was primarily related to a decline in suture sales. Hydrosyn Aqua sales continue to expand with growth delivered across all regions. And we continue to expect to deliver double digit growth in wound management in line with our strategic targets. Our focus in the near term is on onboarding of new distributors in multiple markets to support the clinically differentiated marketing and sales of the Hydrosyn Aqua line of products, and capture the demand we see in wound cleansing and healing, as well as the future potential in surgical sessions and peritoneal lavage. And now I will hand over to Patrick to review our Q3 financial outcomes in more detail.

Thank you. With our release this morning, we in short deliver continued positive EBITDA of 5.3 million in Q3 alone, despite a decrease in the total revenues across our business. Total revenue amounted to 48.4 million, down 25.5 million, or 35%, against negative currency effects and a high comparison quarter last year. Net sales amounted to 45.5 million, a decrease of 27%, net of negative currency effects. This was driven by lower revenues in both our license business as well as within womb management this quarter. First, net of currency, we see 30% lower revenues in our license business amounting to almost 30 million for Q3, again versus a high comparison of 46.6 million last year. This mainly pertains to periodic effects in similar revenues where no minimum royalties was booked and the currency effects overall. Secondly, in our wool management portfolio, we saw a total decrease in revenues to 15.6 million total or about a 12% decrease net of currency effects. We do see continued growth for HydroSyn, and as mentioned in last quarter, this represents the majority of our business and revenues. However, we saw a decline in suture sales in Q3, impacting the total wool management result. On a year-to-date basis, we now see the total wool management business growing at 8%, fueled by high double-digit HydroSyn growth And we remain confident and still expect our total wound management portfolio to deliver double-digit growth going forward. Finally, looking at the total revenues, as expected, we had no PIB revenues recorded in Q3. And for the year-to-date period, this results in a negative top line effect of 12 million, reflecting the discontinued BIP portfolio that is included, obviously, in our 2024 base. In addition, other revenues for the quarter were down 3.7 million. And in year-to-date, other revenues are down 4.7 million. mainly driven by the negative currency effects. So naturally, this also negatively impacts the total revenue comparison versus last year. Looking closer at our core license business, we saw Q3 license partner revenues of 29.8 million, a decrease of almost 17 million or 29% adjusted for the negative currency effects of more than 3 million. Despite the BD bounce back and recovery from last quarter, BD revenues came in at 28.3 million, down 15% versus the high quarter last year of more than 33 million. Here, we see negative currency effects alone of more than 3 million. And net of this, we see a 5% decrease versus the high comparison quarter last year. We remain confident in the strength and future growth from our BD partnership. On Simr, Q3 revenues amounted to 1.5 million, obviously a large decrease of more than 9 million. However, explained by the fact that no minimum royalties were booked this quarter. For the first nine months period, our core license partner revenues declined 10%, yet net of currency effects, merely a 5% decline against the high base comparison period. We remain confident in the positive in-market growth and positive demand from clinicians we see across our partnerships for our technology. On costs, we continue to make progress on reducing costs and complexity across our business. In Q3, our total operating costs decreased by 36% to 36.6 million, or more than 20 million in net savings in the quarter alone. This decrease is mainly attained to high other external cost in the corresponding quarter last year, which was driven by the increasing cost for consulting, regulatory and legal services. In the first nine month period, our total operating expenses amounted to 119.9 million, a decrease of more than 33 million versus the similar period last year, or corresponding to 22% in savings. On a rolling 12 months basis, we now see OPEX costs down at 174 million. As mentioned, despite a decline in revenues, we continue to deliver positive EBITDA with 5.3 million for the Q3 alone, A slight improvement versus our Q2 result, but down versus our Q3 last year. On a year-to-date basis for the period January to September, EBITDA amounted to 19.1 million, an increase of 9.5 million, and an EBITDA margin of almost 12% versus 5% as of Q3 last year. Our rolling 12 month EBITDA is this quarter slightly down at 27.5 million. Finally, Q3 operating loss amounted to 6.4 million. Again, a slight improvement versus our Q2 last quarter, yet higher than Q3 last year. Net loss amounted to 7.5 million for Q3 and net loss for the period January to September amounted to 20.4 million and improvement of eight and a half million versus last year's year to date period. In Q3, our total cash flows for the period was negative 8.4 million, while cash flow from operating activities was negative 2.8 million. Looking at the nine month period, the total negative cash flows mainly pertain to the voluntary amortization of 51 million in the refinancing earlier in the year. And year to date cash flow from operating activities are negative 13.2 million. All in all, total cash end of Q3 is 37.4 million net of repayments. With that, back to you, Christine.

Thank you, Patrick. Time to conclude and share a few key takeaways. The positive profitability trend continued in Q3 despite a lower top line comparatively speaking. Our existing partnerships continue to make progress both clinically and in preparations to deliver future market launches. We continue to build the partnership pipeline in new business development efforts and in early proof of concept studies. And our wound management business is expected to deliver double digit growth driven by our flagship Hydrosyn product line. I will leave you with this final slide outlining strategic focus areas to meet our 2030 targets. We will remain focused on continuing to drive growth while maintaining discipline in our costs. We will continue to strengthen our existing partnerships and advance new opportunities and early stage testing in our key strategic therapeutic areas. We will do this through our knowledge and specialist expertise to be the very best partner to our partners. And together with our partners, we will reach more patients, prevent more infections, and achieve positive outcomes in both our coding technology and wound management portfolios. And with that, I would like to hand back to the operator to open up for questions.

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Matthias Vadsten from SEB. Please go ahead.

Hello, Patrick and Kristin. Can you hear me?

Yes. Good morning, Matthias.

Good morning, Matthias. Perfect. I have three questions, I think. You mentioned the report in market growth for CNN Back to Guard and that the partnership is progressing on multiple fronts. Just some expansion on this or if you can expand on this and if there is anything that happened lately that we should be aware of and also cover maybe what countries that are selling the product today and where there is a sort of momentum building. That's the first question.

Absolutely. Thank you. Great question. As regards the in-market growth and where we see progress in the partnership, what we do note is that even though our partnership contract is structured around a global agreement with multiple prongs, Zimmer has launched primarily in the European markets. So this is broadly across Europe, including the UK, of course, where the studies were also delivered out of. And we see actual in-market product sales growth, which is very positive for us, even though our revenues from the partnership cover more areas than just in-market sales. So Patrick can give you a little bit more detail on this as well. But that, of course, is a positive for us to actually see pull through in the market of growth and demand for the ZNN back to guard product. As we noted, the product is widely available across Europe. It is in the major markets first, and Zimmer continues to work on increasing market expansions as well, even within the European countries. It's also available in Saudi Arabia and South Africa. But of course, those are smaller markets than the European markets are put together.

Okay. Matthias, just to add to Christine, absolutely. We see positive in-market growth across both partnerships. um for for summer obviously royalties in market royalties growing uh from a low base but growing a double digit and as christine has mentioned we seen here positive feedback across launch markets and as we also mentioned in this quarter alone we did not book any minimum So you may compare this quarter, not with our Q2 last quarter, but rather sort of the Q1 this year. For BD as well, despite that we see net of currency effects declined this quarter of 5%. the sort of year-to-date growth that we see in market is positive. And as we reported last quarter, we see mid-single positive growth coming from existing BD markets. And as Christina mentioned, we are also excited and expect more future launches in the coming quarters.

Okay, that was actually touching on my next question there on BD. It was, as you say, coming back. So I guess communication is then more normal ahead and yeah, that there are certain arguments for sort of growth to resume in, in 2026, all else equal.

Yes, we do continue to see BD continuing to make progress in terms of their planning for the market launches, which of course we're working on together with them. And as I think we indicated last quarter, although the timelines are taking a bit longer for BD to be able to receive the market regulatory approvals that are necessary for them to be able to actually do the launches, we do continue to make progress on the planning for those launches and we're very confident for the periods ahead.

Thank you. And then I have a question on, you also talked about partner dialogues, disability work and so on. If you could just provide us with some insights on this, so yeah, how it has progressed here maybe during Q3 or year to date.

For sure. One of the things that we've continued to work on as Back to Guard has transitioned to a primarily partnership model in the license portfolio is to change from being a supplier of product to our partner or a supplier of concentrate to being a true partner. And that includes both in terms of how we work on data, non-clinical data to help support claims, continued market growth, or what have you, even for the commercialized products, all the way through helping them work together on train the trainer events that allow them to do sales launches in new markets. We appreciate that we are the expert on our coding and what it can deliver to patients and patient care. And we work actively together with our partners who have the underlying devices. that are also delivering benefits to patients to ensure that we have a joint message that works in market. So it's everything from work on the technology all the way through the market launches and the way that the products are positioned. And this is definitely helps us align with our partners where they carry similar messaging and appreciation for patient outcomes and impact on infection prevention as strongly as we do when they go to market with our products.

Okay, thank you very much.

Thank you, Matias.

Thank you, Matias.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

There appear to be no written questions, so I will conclude and thank everyone for joining us today on the call. Thanks for your questions and for listening in today, and we look forward to our next opportunity to engage with you In the meantime, please do not hesitate to reach out. Thank you for today.