Bonesupport Holding AB (publ)

Thank you very much, operator, and good morning, and welcome, everyone, to Bone Support's Quarter 1, 2024 results call. My name is Emil Billbeck. I'm the CEO of Bone Support, and sitting next to me is Håkan Johansson, our CFO. So we will use the next rough 25 minutes to guide you through the presentation of the first quarter results, and then we'll open up the line for questions and answers. So, next slide, please. So, before starting this presentation, I would like to draw your attention to the disclaimers that might be covering any forward-looking statements that we will make today. Let's move forward. So, I would like to begin the presentation by drawing your attention to some of the highlights that we have displayed in the report released this morning. So overall quarter one sales were at 184 million SEK, which corresponds to a reported growth of 54% year-over-year. In constant exchange rate, the growth rate was as well 54%. The operating results for incentive provision was 42 million SEK, which is a profit improvement versus the same period last year of 37 million Swedish krona. The reported EBIT was 32 million Swedish krona, marking our fifth quarter as a profitable company. The main highlight in the period has been the continued strong market penetration of Ceramon G in the US. Sales reached 93 million Swedish krona and we see a good momentum in the business within most of our geographies and indications. The market dynamics are positive and at a growth rate of more than 10 times market growth we are taking large chunks of market share. There were two important US regulatory milestone achievements in the quarter. We received FDA market authorization for CYRAMENT G for open fracture trauma. And we received FDA market authorization for CYRAMENT BVF for spinal interbody fusion. These market authorizations are enabling the future execution of our strategy. And I will come back to the possibilities we see with the CYRAMENT platform. But first, let's look at the sales. development on the next slide. So you're probably familiar with this chart. It shows the last 12 months sales in Swedish currency every quarter since quarter one 2017 in stacked bars per region and per product category. The top line is advancing with a solid and steep trajectory. It is mainly the antibiotic eluting Cerament, which is driving the development with 103% growth in Q1 2024 versus Q1 2023. Cerament G has been in the US market for about six quarters and there is some cannibalization on BVF, but I anticipate much less than anyone expected. We have come out of the pandemic with full speed and we see strong progress in both geography segments with an almost linear development since quarter one 2022. So I will offer one more slide on this theme, actually, where we can see this a bit clearly, where we have looked at sales per quarter in constant currency. So to go to the next slide. Would you see here that in the most recent quarter, quarter one, 2024, with the sales of 184 million Swedish krona, we can conclude that in constant currency sales have tripled over the last eight quarters and it has doubled in the last five. There was already a very strong trend in the business even before Sarana G in the US was launched. But from quarter four in 2022, that trend has really moved up a notch. We also see a rather straight and solid penetration traction, which is common for unique and successful orthopedic products such as CERMENT, where the promotion is preceded by necessary hospital system approvals and the winning of surgeons takes place surgeon by surgeon rather than in big chunks. Let's go into the details for North America on the next slide. So with the sales of 141 million tech in the quarter it corresponds to a reported growth of 65 percent year-over-year and same number they're also in constant exchange rates. One of the highlights of the quarter was, of course, the strong sales of Cerament G. In quarter one, we saw really strong uptake and sales reaching 93 million sick, which is up 17 million or 22% sequentially. The strong continuous pace in hospital approvals have remained at the same pace as in previous quarters. However, the overall priority of our sales teams right now lies in the training and education of newly recruited surgeons at hospitals where contracts have been achieved. The other highlight is, of course, the market authorizations for Sermon PBF and Sermon G. And I thought I'd go through that a bit more in detail on the coming slide. So if we start on the next slide with the spinal fusion authorization, I think most of you are aware that the main reason for fusion surgery of the spine is to stabilize the spinal cordium and reduce pain caused by certain spinal conditions. And the fusion surgery involves joining two or more vertebrae together to create a solid bony bridge with a purpose to eliminate motion between the fused vertebrae. Into body fusion, IVF, is the procedure where a damaged disc is replaced with a caged, which is then filled with organic bone graft or a bone graft substitute and then accomplishing the fusion. The posterolateral fusion involves fusion of the transversal process in proximity of screws, rod, and potential plate, as I think it's clear on the picture. So, Sarment BVF had already regulatory clearance for posterolateral fusion, and since March of this year, Sarment BVF is now also approved for interbody fusion. This means that we're allowed to fully enter the spinal fusion segment in the U.S., adding about 750,000 procedures of addressable market. And this is a market where one out of five spinal procedures fail to fuse, and 40% of the procedures are made with off-label use of local antibiotics. So we will enter this market segment with a strong value proposition. CERAMENT is an orthobiologics platform for bone healing and where local substance delivery can be used. And it is the solid evidence behind CERAMENT's strong bone remodeling capabilities that has facilitated the fast IVF approval. In preparing for entering the market, our focus lies on building preclinical application data, collecting and analyzing the necessary observations, and building training programs for surgeons. We will also work methodically to ensure the right skills and the right resources within a distributor-led sales force, as well as building a strong network of key opinion leaders. All in all, these important activities mean that we will enter the market in quarter four 2025 at the earliest. We are thorough in our preparations and we know what it takes to make and achieve a solid market penetration and market launch. Let's also turn to the next slide and look at the open trauma approval. So in regards to open trauma, we wanted to be clear that SARMA-G has received a broad and wide approval. That means that all extremities are included on the label. The only limitations given are that CERAMON-G volumes should not exceed 10 milliliter and we have also on the labeling the wording that the Gustillo-Anderson 3C traumas are not supported by clinical evidence for CERAMON-G. The Gustillo-Anderson 3C open traumas are only about 8% of the total number of procedures in open trauma, so a very small part. In the data submitted to FDA, close to 500 patients were demographically matched and compared, and a total cohort of 3,060 patients were used to build the definition of standard of care. The patient outcome in the evidence submitted is very impressive. In the summary letter, FDA wrote that the infection rate for Salamangie in the treatment group is extremely low, quote, and that bone remodeling at 96% is favorable to standard of care. As a consequence of the low infection rate and the high unit rate, The amputation rate in the extensive study material submitted to FDA for the treatment group was only 3.7%. Now, this can be compared to the reference material for amputation rate historically for these kind of injuries is at 16%. So we're currently working to ensure that the more than 100 hospital systems where Cerament G is approved already for bone infections also get a registration for Cerament G on open trauma. We're already seeing some surgeons requesting use of Cerament G for open trauma. But we should take in mind that it will take a few months before all the system updates and registrations are done. And only after that will we see a tangible uptake within this indication. We are currently also assessing the merits to file for an NTAP. for Sermon-G in open trauma. The deadline for this is October 1st this year. And finally, I would say with the two recent market authorizations, I believe that Sermon really establishes its role as an orthobiologics platform with broad applications on various indications required bonally. So if you go to the next slide and just do a quick refresher on the U.S. market. We have earlier concluded, and this is from the Capital Markets Day data in 2022, that there are about 380,000 procedures a year in the U.S. where bone grafts are used to enable healing. The most common reason, the most common methodology for these surgeries and procedures is open trauma, as you can see on the pie chart to the left. With the most recent regulatory clearance, another 132,000 procedures will be on label for CERN-NG in the open trauma. And here I deduct the 8%, which are the Gustil Andersson 3C. Our estimate, though, if you look at the total open trauma procedures, is that off-label antibiotics are used in about 40% of the cases. And all of that, as I said before, is off-label. Now, let's also turn to Europe before we hand over to Håkan and the financial part. So for the quarter, we saw sales of 43 million Swedish krona, which corresponds to a growth of 27% year-over-year, and that is 24% in constant rates. We see a strong market dynamics in most of the European countries, as there is a continued catch-up of the cervical backlog. Our strong development is also a reflection of significant market share gains. The antibiotic-eluting thiamine, which is thiamine G and B combined, grew with 28% in the quarter versus last year. Now, much of the focus in this report, admittedly, has been on the US, given the recent approvals, but I want to underscore that we've seen strong progress in Europe as well, with hybrid markets, with Spain and Italy performing especially good. To achieve this, we have continuously ramped up tactical initiatives, participating in conferences, and arranging symposiums. There's a high interest in the product, and it's a high interest in the different application techniques. In total, over 400 orthopedic surgeons attended our symposia held at the key conferences in the US and Europe. These symposia were facilitated by faculty members of distinguished orthopedic surgeons, and featured a blend of clinical evidence, presentations, patient cases, and panel discussions. Also, to meet the evolving demand and increasing demand in euro, we have recruited additional resources within medical education and event execution. and some of those additional head counts you will see reflected also in the financial part and the cost that Håkan will now present. So over to you Håkan for a more detailed view on the numbers.

Thank you Emil. So net size improved from 119.7 to 184.4 million equaling a growth of 54% with the same 54% in constant exchange rate. Emil has already spoken about strong performance in the two segments and the major drivers behind the sales acceleration, so let us move to the next slide. The contribution from the North America segment improved with 30.9 million and amounted to 55.8 million. The improved contribution relates to the increased sales after effect from increased Sales and marketing expenses during the quarter amounted to 78.4 million compared with 55.7 million previous year, of which sales commission to distributors amounted to 47.8 million compared with 29.5 million the same period last year. The increase of 4.4 million excluding sales commission and fees was mainly driven by the organizational investments made following the loss of ceremony and the underlying sales growth. From the lower graph showing net sales as bars and gross margin as the orange marker, it can be noted that the gross margin continues to strengthen at a reported 95.3%. In Europe and the rest of the world, a contribution of 10.7 million was reported to be compared with 7.3 million previous year. Sales and marketing expenses increased with 5.4 million and was driven by field vacancies, an increase in sales representatives and a high level of market activities to capture the momentum we now see in Europe, but also by one of expenses of 1.1 million. From the lower graph and the orange marker, you can see the gross margin remaining stable with a minor impact from product and market mix. So let's go to the next slide, please. Selling expenses in the Euro increase from 5.4 million versus last year, or which 1.1 million relates to one-time expenses and 0.4 million to currency effects. In Europe, we have filled vacancies and increased our total Euro commercial organization with five heads compared to previous year. The sales cost increase in North American default relates to organization investments, ramp up in activity level of Congress's medical education, and, of course, the continued launch of ceremony interviews. If we look at R&D, as presented at our Capital Markets Day in November, R&D is focused on execution of strategic initiatives, such as final fusion and the planned marketing authorization submission for CEREM and V in the US. These initiatives have been in a preparatory and design phase during the quarter, with increasing expenses estimated for the coming quarters. And finally, covering administration, underlying administration expenses, excluding effects from the long-term incentive programs remain on a stable level. So let's move to the next slide, please. The adjusted operating profit was reported to 41.6 million, compared with 4.6 million for the same period previous year. An improvement of 37 million following a strong sales performance and further supported by a favorable impact on currencies of 6.8 million. The difference between adjusted EBIT and reported EBIT operating results are provisions regarding long-term incentive programs amounted to an expense of 9.3 million this year compared with 3.8 million previous year, as you could see on the previous slide. The share saving program approved by the AGM in May of last year, with vesting starting at the 1st of January this year, represents the highest share of the expense. But 3.8 million relates to the programs ended end of 2023 and following the share price depreciation from year end 2023 to when the allotment of shares was executed and social charges were paid. Of the total cost of 9.3 million in the period, only 0.3 million is cash flow impacting. A positive cash flow from operations was reported at 17 million, despite the continued unplanned buildup of both semi-finished and finished products, ensuring full flexibility to future market needs, but also including preparation to launch the third generation of CERAMON-E in the U.S., in second quarter this year. The third generation was launched in Euro during last year involving both increased ease of use and reduced environmental impact. And with this I hand it over back to you Emil.

Thank you Håkan. So let's wrap up this quarter one presentation. Both of us are of course together with the entire organization, very pleased with the performance that we've seen in the quarter, as well as the continuous trend that the entire business is moving at. The strong growth is mainly attributable to the continued successful launch of Cerament G in the US, but we're also growing steadily in Europe, adding Cerament users in all geographies. Apart from the strong financial performance, Highlight of the quarter is that Saramant, through the two market authorizations, proved its role as an orthobiologics platform with broad applications on various indications requiring bone healing. Thanks to clinical superiority to standard of care, Saramant is constantly increasing its user base and enabling surgeons to drive towards a better patient outcome. We feel strong confidence in the market guidance given to grow sales in 2024 with more than 40%. I thank you for your attention and with this we conclude our call and 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 Mattias Vadsten from SEB. Please go ahead.

Hi there. Thanks for taking my questions today. First one to start where you ended, Emil, with the above 40% sales growth target, organic sales. When you set forth this target at the 2023 CMD, did you have in mind back then the open fractures with Sermon G that it was approved so fast? Then, you know, the reimbursement codes would be in place, I guess, around September for open fractures. And I understand, or my guess is at least a boost in sales towards the end of the year. So, yeah, just maybe talk a little bit about that to start with.

Yeah, thank you, Mattias, and good morning to you. When we defined the guidance at the Capital Market State, we concluded that there are so many moving parts, there are so many opportunities, and there's so many pending both regulatory authorizations and initiatives that we will only give guidance for one year at the time currently. So that's when we said above or over 40% growth. At that time, I could not have anticipated that the open trauma authorization would have come so fast. As a matter of fact, I've been asked before and the above 40% or more than 40% growth was a definition of guidance that was given even in excluding open trauma. So you could almost say that comes on top. Then the open trauma indication has immediate reimbursement coverage in the US, as when the patient comes in, the injury is categorized on a DRG coding system. And then the surgeon is basically free to more or less use products of their liking to heal and take care of the patient. But what we will apply for before October 1st, if our analysis point in that direction, is to get an NTAP with CMS. We did that before for bone infection, which was granted. And we're going to do now the same if it's granted also for open trauma. I want to remind everyone that it's specifically only for the CMS patients in the Medicare program and it would then be if granted an incremental reimbursement above what is given in the in the regular DRG.

Good, now you covered the next one as well, but maybe another one, you know further new interesting data showing here later in the year with the Solario question here. To what extent would the Solario dataset be crucial for you? We obviously always try to triangle down how important all study readouts are for the commercial success. So, of course, your thinking here is much appreciated as well.

Yeah, thank you, Mattias. I think we all learned that in orthopedics breakthrough devices like this, which is pioneering the market, there's Not this huge volatility in sales, but rather win surgeon by surgeon, contract by contract, hospital system. Now back to Solario. Solario, if it comes out positively for Saramant, would of course be a formidable tool for us on this journey going forward. Both to drive even faster the conversion from an outdated standard of care with where there's already plenty of studies showing superiority for for cement and sediment with antibiotics. Solari would then be a major milestone in actually proving that local antibiotics distributed in a synthetic bone graft to ensure bone healing is indeed a favorable option versus the more antiquated treatment methods. But the other thing is also that such study results would help us in our discussions regarding the value of the product and the health economic benefits. I think everyone knows that systemic antibiotics is one of the biggest reasons for antibiotic And there's clearly health economic effect also of keeping the patient longer in hospitals and enduring more infections and more complications. So there's a lot of dimensions on a positive flora study that could help us to even further accelerate the journey in the future.

That's a clear answer. Then my last one may be, you know, good cash flows once again and the cash position, of course, rising. I appreciate this is probably a long answer, but maybe if you could share a few words on sort of capital allocation ahead.

That's my last one, and then I jump back to the Q. Again, I think that it's good to see that some of the operational leverage is also then supporting the cash flow. And as I communicated also previously in my short term, It gives us the assurance to have the necessary funds also to the investments initiative and the initiatives that we have revealed and presented at the Capital Markets Day. So, short term, that's where we have the focus and how to use the cash flow that is now generated by the business.

Yeah, I think also it's, to Håkan's point here, it makes us very resistant to variability in the business. It gives us the freedom to fully realize those strategic plans that we have communicated at the Capital Markets Day. So in one end, you can say, yeah, we're out of the tunnel and the open land is ahead of us now.

Good.

Thank you. Thank you, Mattias.

The next question comes from Eric Castle from Danske Bank. Please go ahead.

Hi, morning Emil, morning Håkan. First, just sort of a housekeeping question. I was wondering what the one-off expense of 1.5 million in Europe relates to?

So, thank you, Eric. The biggest part is, for the first time, as I joined the board, we had to do provisions for debt in the euro segment. And that's the biggest part of that amount.

Okay, got it. Thank you. And then since you're talking about having your sales cater more to existing users, can you tell us anything about the effects that's having on getting surgeons to use it more? Can you say or maybe quantify anything that you've seen in the past year in same surgeon, same scope on average?

Okay, good morning, Erik. So the line broke up a little bit. I think I heard a question, but if I shoot off the mark, you just correct me and repeat yourself. The hospital system approvals last year took off really fast. I mean, faster than the group here had anticipated. And when we received hospital system approval, We find it also important to quickly get out to the potential future users, to get out to the hospitals, to get out to the surgeons, because it is an intervention by at least the surgeons that have been part of the user committee and the medical advisory committee that they get further information about the product. So I can I can say that with such a high level of hospital system approvals we have been very focused on getting to those big clinics the big users the prominent orthopedic surgeons and over the last I would say eight to nine weeks we have had a record pace of new users of and I don't think that's controversial in any way because if you get a lot of hospital system approvals that also facilitates and opens the door to promote the product and we know that when we can promote the product in daily use we have a strong conversion from the more antiquated standard of care or the label uses that the doctors have used before.

Okay. Thank you, Emil. Thank you. Then next question, I mean, I hope you hear me all right to say if you don't, but high rate of cannibalization in the US, I mean, of BBF, that is. I mean, is some of it being lost to other alternatives, say other synthetic bone grafts, or does it all relate to switching over to Cermetine?

Yeah, you see, I don't think the cannibalization, I think it's rather modest. I think it's less than we, but also a lot of the analysts would have anticipated. So if you look in the numbers, let's say the sales of BVF, BVF in the quarter, I think was down some 7%, which is quite trivial, I think, given the pace of ceremony. But there's one more thing we have to take into consideration here. Before, we had recruited almost 400 sales reps, and the only product they had from us was CEREMENT BVF. And that got full attention from the salespeople when they also were selling their metal products and their prostheses and others. And now with CEREMENT G, of course, all focus is on CEREMENT G. The cannibalization mainly takes place in the time allocation of the salespeople, and I think not so much in the sales yet. But the few percentage points that the reduction has been in sediment BVF is probably the similar pattern that we've seen in Europe, that when the doctor has and available with antibiotics, they can get the same great bone remodeling capabilities and they can also get protection. And now it is the prevention from infection. They start using that more and more as a first line therapy, even if the infection incidence might be low. We don't see that we've lost customers. The surgeons stay within the family, so to say.

Okay, but we still have BVF down 9% here in the US. And if there's no real cannibalization, then just maybe the effect of sales not focusing on it, should we just expect BVF to sort of fade away? I believe the previous answer has been that it was supposed to be more like the EU, more stable, so to say. Has that changed?

Yeah, clearly there are There are clearly accounts that have used CERAMENT BVF and they now have switched to CERAMENT G or account, I mean specific surgeons, of course. Absolutely. I don't think it will fade away. I think we can look at the European sales and we see that the CERAMENT BVF as a pure bone remodeling treatment has its place. especially for well-planned surgeries, elective surgeries with very low risk of infection, there will be surgeons that will then select BVF to favor the slightly lower price of that product. So where BVF and Sarmadjib will park itself, I think it's for the future. It's too difficult for speculating that right now.

Okay, thank you. I'll just squeeze in one last one, and that's from the ecosystem 3C. I mean, we do see a lot of PMA use and other antibiotic graphs in that, and you choose to not really account for it in your, say, market size. I'm just wondering, why wouldn't surgeons just use that off-label when they are using sort of alternative products as well?

I have to apologize.

There's so much noise on the line that I couldn't hear the first part of the question.

I'm sorry, I'm having a bit of issues with my headset. I'll try again. When it comes to good season 3C, there's a lot of PMA being used in other antibody-eluting bone grafts. Why wouldn't just surgeons use of labeling that because you've decided not to really include that indication in your market pricing. So just curious on that part.

Did you hear the question? Unfortunately not. We have to both apologize, Erik, because we cannot hear the question.

I'm sorry. It's like a boiler room in here today with all the reports. I'll jump back into it and see if I can try again later. Maybe you can type the question, Erik. I'll jump back into you instead.

Thank you. Okay, if you type the question, we'll do our best to respond to it.

Well, that was a little bit difficult to hear. Do we have any further questions from any other participants?

Yeah, Christopher is here. He said my line was unmuted. Do you hear me?

The next question comes from Christopher Liljeberg from Carnegie. Please go ahead.

Here you are. Hi, can you hear me now?

We hear you perfectly.

Hi, good morning. Three topics I would like to ask you about. First one is, if I remember correctly, I think you said last quarter that there were a record number of hospital approvals end of last year, and that was something that could accelerate sales growth. maybe late spring, early summer. Is this something you have seen already or do you still expect this to happen here? Maybe late Q2 into third quarter?

Yeah, we had at the end of the year, we had really good success rate with hospital system approvals. And as soon as they landed, as soon as we had signature on paper, the sales team went out with a clear prioritization list and focus list. And indeed, I can confirm that those hospital system approvals have also resulted in a high surgeon conversion rate. So they take place sequentially. First, we need the hospital system approval, and then we can go out into those hospitals that are associated with the contract and promote it. And I mentioned before that for the last eight to nine weeks, we've also seen a good pickup in new users, new surgeons and new clinics. OK, great, thanks.

And then on the trauma indication, how do you expect that to impact sales coming quarters? You talked about the hospital approvals, of course. Wondering whether you have noticed surgeons, hospitals being more price sensitive for this indication than bone infection. And I don't know if it's too early to say anything about hospital approvals for this indication is related.

Yeah, I haven't noticed, we have not noticed any higher price sensitivity actually. Maybe that's because it's so new and those surgeons that immediately picked up the phone are the ones very hungry and eager to try the treatment and so far we only have a handful of hospital systems where we have been able to change the administration codes and get open trauma on the listing. So I think it's more likely, as you also concluded, Christoffer, that by after summer, so maybe we come to early September, that's when we should be through with the big hospital system approvals. And that means also we will intensify our marketing efforts when that is done. There's a couple of big congresses in the autumn focused on trauma. which we target to get out with the message. Did I cover your full question?

Absolutely. But do you think, if we have to look at the initial launch for boon infection and the sales you had the first quarter, do you think it's fair to see a similar effect on sales on top of current sales and the top of current sales trend for trauma? Or is that the too optimistic scenario?

I couldn't give such guidance, Kristoffer, where I sit now or with the data we have. What I want you to all remember, though, is we received the market authorization from FDA in May 2022. because we knew the work that had to be done with the hospital systems. We told everyone that we would launch in October and then the launch came five months later. So it's the same here. I mean, it takes five months basically to really get on the system and get everything up and running. And there's quite a few doctors also that would like to use the product, but they're not going to do it until they know that it's fully endorsed in the system because of them ending up in troubles otherwise. And then the uptake, I couldn't tell. Actually, I don't know myself. Of course, we built different models, but I'm not ready to share that with the market. So I guess we will have to get our first observations and then probably be a little bit clearer in our guidance going forward, looking into 2025 and forward. Yeah, that's fair.

Last question, maybe for Håkan Kost. If you could maybe... Talk a little bit about how you expect both selling expenses and R&D costs going up or moving up coming years. Or maybe let's say, is it possible to give any sort of indication in absolute terms how much higher selling expenses and R&D costs would be in 2026 versus 2024? A rough figure.

Again, it's very hard to give a very clear guidance. I think that what you can expect and what you will see is that we will continue to make investments step by step following some underlying sales growth and to continue to support sales growth. And we don't expect that to come in any big chunks. It will be more somehow following the development, which then also means that that what you could expect is the selling expenses as a percentage to sales. That should be possible to come down gradually.

Yeah. On the R&D cost, I guess at some point you want to also file a ceremony for final fusion. When should we assume costs for clinical trials related to that happen?

So we will announce that at least one quarter in advance before that starts. That is not now, so it's for later to be making such an announcement.

Okay, thank you.

Thank you, Kristoffer.

The next question comes from Sten Gustafsson from ABG Sundal Collier. Please go ahead.

Good morning and thank you for taking my questions. I was wondering if you could share with us what type of market access you have today when we look at the bone infection indication with 50,000 procedures annually in the US? What type of market access do you have today? If you could potentially give some sort of indication there.

So, what we shared at the Capital Markets Day was a rough estimate on market shares. You asked for the market access, which then relates more, I think, to how many hospital system approvals do we have so that we can get into the hospitals and start to promote the product. And in the early days of the launch, we also displayed how many hospital systems approvals we had, and then we stopped that reporting. We didn't do it because the numbers dropped, We did it because they were taking off, actually. And we have more than 100 hospital system approvals, and that roughly corresponds to between 1,200 to 1,500 hospitals. So that means we have a good market access, slightly better than we anticipated, and we have an absolutely full schedule now. with getting out to those hospitals where we have gotten approval possibly even that we will down prioritize getting more approvals because we are so busy meeting the expectations of those already granted approvals and get out to the clinics and explain what is this new product that has been put down in the system okay so

Do I understand it correctly that you're roughly approved at 1,200 to 1,500 hospitals today out of like 5,000 potential hospitals?

Yeah, it makes sense. Give or take, yes.

Excellent. Thank you. My second question comes to the TPT approval you talked about in the previous quarter for outpatient care facilities. Have you noticed any interest from that group of facilities?

Yeah, thank you. The TPT was announced and came into effect 1st of January of this year. It's valid for three years. The challenge a little bit with the U.S. market as always in everything we do is there's no central communication. There's no institution that sends out a note and say, oh, look at this. This has just been approved or this just has reimbursement. The most reliable source of information for the healthcare practitioners on this topic is our sales resources. So it's the same. We have to go out and constantly inform, sometimes two, three times before we really start to get traction. So what I can say is that in quarter one of this year, there has been little, if any, impact from TPT. So I think we should all anticipate that to have more of a gradual ramp up over the year and hopefully accelerate into 2025 as the coding gets more recognized and as both the healthcare practitioners and the billing office learn how to use this in in a proper way for ceremony it's very unusual for such a product to receive a full tpt so it also requires a bit of information the healthcare provider do not want to make mistakes when it comes to a product that will put down expenses of close to six thousand dollars. So there's a bit of work actually behind all of these enablers before you really start them paying tribute.

Okay, does this mean that you're approved? I think you said that there were roughly two thousand facilities all at once or do you need also individual approvals at each center or group of centers?

It varies. I cannot give a solid answer on that because there are centers that require their own approval, administrative approval. Some of the ambulatory care centers are linked and associated to hospitals or hospital chains, and the approval has been given there, then it's more or less automatic. But with such a generous and solid reimbursement, the approval for the roles that require it is usually very fast and quite simple, because this TPT is lucrative.

Excellent. Thank you very much.

The next question comes from Oscar Bergman from Red Eye. Please go ahead.

Hi, guys. Congratulations on a strong quarter. I only get the crumbs left for the Q&A session, unfortunately, but I still have some. There's a lot of attention on you with sales, of course, and actually we're seeing sales progressing very well there. But if we turn our heads to the EU market, can you just explain some challenges or opportunities that are there in the short term? For example, how is it going with the hybrid conversion and access to hospitals and so on?

Yeah, thank you, Oskar. Absolutely. We always look forward to your questions. The traction in the hybrid market is very strong. It's going well. It's going slightly above expectations. And here we have placed bone support staff working together with either one distributor or several distributors covering part of the country. And this is like a miniature model of what we have in the US. So it gives us the opportunity to to view and monitor metrics and follow up with the salespeople and really see that Cerament gets the proper market introduction. We can conclude that Cerament is not a product that fits all distributors without any handholding. It is a much more sophisticated product. It requires explanation. It's not generic. It's probably easier to sell a generic metal plate than it is to sell Cerament, which is a breakthrough biologic product. The challenge we see a bit in Europe is still the digital stuff, which is holding back acceleration of business, which is holding back further carving into the backlog of surgeries that build up during the pandemic. It has become a little bit better, mainly in the UK. There's also some relief in France, Italy, Spain. Germany remains challenging. And there's a nursing staff shortage and also shortage of surgeons in general, which makes the total market development a bit slow. So the way we view this, of course, is when we're growing 27%, inevitably, there are a lot of surgeons that are preferring sediment instead of more traditional treatment modality. So if you're growing that much faster than the market, you are taking market share. And for this, we are very proud of the team that they keep fighting despite sometimes difficulties to meet the right surgeons due to the staff shortage.

And how would you compare like the surgeons standings on the hospitals in the US versus the EU market. I mean in terms of new innovation coming in and the surgeons having something to say about that. For example, if I guess in the US the surgeons have more of a say in what products they want to use for their procedures compared to the European markets.

Yes, the US is much more open to innovation. The biggest difference probably, Oskar, is that in the US, the clinician, meaning the person who really treats the patient, is much closer to the procurement office, is closer to the health economics of the clinic and the hospital. In Europe, the clinician and the person looking at the cost of the treatment or the benefit of it are usually separated. a greater distance and different layers and hierarchy. So sometimes I wonder if certain European markets have tardiness as a strategy to avoid innovation. The whole conversation in Europe requires many more stakeholders before there is full acceptance both of the clinical benefits and the health economic benefits. That process is shorter and more effective in the US where they go more hand in hand.

How do you overcome that obstacle in an efficient manner? Or is it just something that you have to accept and play along?

We work hard. That's what we do. We work hard. Everyone in the organization has a tremendous passion also for changing the standard of care. we have seen in clinical studies that we can reduce infection, we can reduce amputation. So that keeps us up at night sometime. But for Europe, unfortunately, we are still a small player. We cannot anticipate that we will dramatically change the system or the modus operandi. So unfortunately, sometimes we're forced also to be patient and accept that the system in Europe is slower, but we do what we can. with both continuing with clinical studies and doing health economic investigations so that whenever there are different stakeholders that haven't understood the concept that we're ready with tailored material to answer to those obstacles that different stakeholders might present in front of us. I think You see this with any medical device company that Europe is in general slower due to these more sclerotic administration and systems.

Okay, thank you. I think I really only have one more question and I mean you have CERAMED now at a lot of hospitals in the US and in the EU. Are there any cases, any hospitals where CERAM-MG has become sort of the standard of care at that hospital for those related procedures?

Yeah, I think it's starting. It's, of course, a great question. We see especially on some of these university hospitals where they have done structured and methodological procedures evaluation of the product and the results of that clinic has completely mirrored the strong results from the centrally produced studies with the best in mind for the patient and for the health economic impact. Several of these university hospitals have adapted CERAMENT G or V as a standard of care. with bone infections, but also in increasing pace with open trauma.

Okay, and would you define that as 50% of all procedures carried out at a hospital or well above that?

Yes, that's about right. So somewhere between 40-50% of the procedures or if you want to you can say rather 60-70% of the relevant procedures Sermon is then used Okay, great.

Okay. Thanks.

That's all for me Thank you Oscar the next question comes from Matias Vadsden from SEB Please go ahead Hi again, I was trying to go off the queue after it is running over, but now I'm here and then I have two short question maybe on spine and this data that you will collect, how will this be presented to the market? That's with a press release. And then also to spine. Would you say that the bone graft substitutes part of the market is growing faster in spine compared to extremities over autograft and allograft? If you have any insights, we are interested. That's the only question.

Okay. So We usually don't make a press release on pre-clinical study. I think our standard is that when we have clinical studies that are of milestone character then you will see us issue a press release. So for example Solario study will definitely be a press release on those results. On application data I'm not too sure. I mean did they The studies will at one stage be available so everyone can see the results, but I doubt that they will render attention enough to issue a release. I think rather to say when we have our first patient case, when we have reached the first 100 cases maybe on patients with spine, that's something we will be more happy to speak about. When it comes to growth rate in spine, Spine has had a formidable growth over the last 15 to 20 years, but right now the growth rate is around 5% and I do not have a split on how the different segments, autograft, allograft or synthetics are growing. I have data over the last few years, but they're going a little bit in different directions. I think right now we just conclude saying that the market is growing with about 5%.

Thank you very much.

Thank you, Matthias, and thanks for coming back.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

Yeah, okay, so thank you everyone for joining in on our presentation of the quarter one 2024 result. I know it's a busy morning for all of you. Thank you also for your insightful question, and if there are further topics that you would like to discuss, don't hesitate to contact me and Håkan at Bone Support. We'll be happy to support you to describe also our journey going forward. Thank you everyone and have a good continuation of the week. Bye-bye.