Bonesupport Holding AB (publ)

Good morning. Thank you, operator. And welcome to everyone to the bone supports quarter two, 2024 results call. I'm Emil Billbeck, the CEO of bone support, and I'm making this broadcast as always together with Håkan Johansson, our CFO. We will use the next 25 minutes to guide you through the presentation of the second quarter results, and then we will open up the line for question and answer session. Before starting the presentation, I would like to draw your attention to the disclaimers that covers any of the forward-looking statements that we might make today. Let's go to slide three. I would like to begin the entire presentation by covering some condensed highlights from the report that we released this morning. Overall, quarter two sales were 220 million SEK. which corresponds to a reported growth of 57% year over year, and in constant exchange rate, the growth rate was 55%. The sales increase was positively influenced by accelerated market penetration of Cerament G in the U.S. During the quarter, Cerament G in the U.S. reached a milestone of surpassing 100 million SEC. We see that the existing customers are continuously increasing their usage. And in addition, the new users are constantly being added. At a total growth rate for the company of more than 10 times market, we are, of course, taking significant market shares. The strong sales resulted in a record operating result, despite the large blocks of R&D investments that took place in the quarter. Before incentive provisions, the operating results was 36 million, and I reported EBIT on 29 million SEC. So as you might have seen from the release of the report this morning, the very strong business momentum has also led us to raise our sales guidance for 2024. Let's move to the highlights of the quarter. So operationally, first of all, I would like to highlight that our New Executive Vice President of Quality Management and Regulatory Affairs, Anna Stegmark, started about 10 days ago. We're very pleased to welcome her and her contribution to our future journey. There has been elevated R&D cost in the quarter. As most of you know, we received U.S. regulatory approval for CEREMENT BVF in interbody fusion in the U.S. in the first quarter of this year. Before launch, which presumably takes place earliest in quarter four 2025, we will assemble an extensive launch package, including a variety of preclinical application studies. And these studies were started during the quarter and will run into early 2025. Other highlights of the quarter include Cigna's recognition of CMS's transitional pass-through payment, CMS's proposal for a one-year extension of the NTAP reimbursement, and strong data from Australia on reduced amputation rate with sediment. All these topics will be covered later in the presentation. Let's start with looking at the sales development on slide four. The chart you see shows total last 12-month sales in Swedish currency every quarter since early 2017 in stacked bars per region and product category. Topline is advancing with a solid and steep trajectory, as Cerement rapidly is taking market shares from other treatment options and seemingly also is even expanding the market. It is mainly the antibiotic eluting cerament which is driving the development with, in total, 82% growth in Q2 2024 versus Q2 2023. Since the end of the pandemic, where we could again visit customers and promote cerament, we have seen strong progress in both geographic segments with an almost linear development for total sales development since early 2022. There are no signs of this trend slowing down. To give you some input on how well CEREMENT is performing in relation to peers, we have included a slide from one of the most established industry reports. So let's go to that. It's on the next slide. So this is from an institution called OrthoWorld. OrthoWorld is the leading market intelligence platform within orthopedics. In their recent orthopedic annual report, they summarized the industry's sales performance for 2023. We had to cover the other companies in the matrix to avoid displaying data that does not belong to us, but we left the public companies visible. As you can see in the table, We are still a rather small player in the segment of orthobiologics, but nevertheless, we are the absolute organic growth leader. As you can see from the numbers we presented today, we have a growth pace of well over 50% for the first six months of 2024. So it is likely that we will move up the list notably for the next annual report. Let's progress in the presentation and go next now to North America. Next slide, please. So at sales of 173 million SEC in the quarter, this corresponds to a reported growth of 67% year over year and 66% at constant exchange rate. This means that the U.S. sales in quarter two had a reported sequential growth of 22% over quarter one, 2024. Cerament BVF grew with 13% in the quarter. A lot of new accounts are being generated by the strong interest in Cerament G. And some of these new accounts have started to use Cerament BVF on patients with very low infection risk. The highlight of the quarter otherwise, of course, was the strong sales of Cerament G. In quarter two, we saw very strong uptake and sales reaching 108 million Swedish krona. Surgeons that have pilot use of Cerament G at the end of last year have now evaluated patients thoroughly with x-rays and are now ramping up a repeat use. At the same time, new surgeons are constantly being added. The surgeons that have done medium-term follow-up are encouraged that the treatment outcomes are mirroring what has been seen in published clinical studies for cerament. Our transitional pass-through payment, TPT, And the open trauma approvals have brought a lot of interest with new surgeons and new clinics for ceremony. But the impact on sales is so far only minor. The big launch conference for the open trauma indication will be the OTA, the Orthopedic Trauma Association, meeting in October 24th to 26th, 2024. Now, it is common that some of the private health care insurance providers honor the reimbursement issued by Medicare and CMS, the Center for Medicare and Medicaid Services. The scrutiny and the evaluation by CMS work a bit as a guiding standard. So the third largest healthcare insurance provider in the U.S. with more than 20 million people covered, that is Cigna, announced this quarter that they will follow CMS's decision on TPT for the use of Cerament G in the outpatient setting. This is an early success on the path towards establishing Cerament G as a new standard of care in the U.S., We will over time report other specific reimbursement schemes by private insurance providers, but we will only do that when it relates to the top providers. And on the slide that is on the screen, you can see the different top providers of private health care insurance to the right. The NTAP, the New Technology Add-on Payment, That was awarded to CERAM-NG for bone infection effective October 2022 to October 2024. It's proposed by CMS to be extended one year to October 2025. After the NTAP period ends, bone support will apply for colds, granting a permanently elevated reimbursement based on strong health economic data and patient outcomes. With the evolving success in the US for CERAMENT, both in sales development, market access, reimbursement and regulatory approvals, we have invested in additional resources to drive further market penetration. We have recruited two clinical specialists to drive CERAMENT awareness in the outpatient settings. This is related to the TPT reimbursement. In addition, A senior and well-experienced Spine product manager has been hired for the future entry into Spine. And four back office positions were added at the onset of the quarter in anticipation of increasing demand and execution of strategic initiatives going forward. The U.S. headcount was 35 at the end of the quarter. The approval and penetration of hospital systems, also called IDNs, is progressing well. In the quarter, we have landed some additional prestigious and high-value hospital system contracts. Now let's turn the attention to Europe and the rest of the world, which is on the next slide. So much of the focus, of course, in this report has been on the US, given the strong sales development, but I want to underscore that we're seeing excellent progress in euro, where Salamand is capturing market shares in more or less all markets where we are present. For the quarter, we saw sales of 47 million SEC, corresponding to a reported growth of 28% year-over-year and 26% at constant exchange rate. We continue to see positive market dynamics, as there is a continued catch-up of the surgical backlog in most geographies. There are, however, some sporadic continued challenges from shortage of staff, exacerbated by nurses striking and other disruptions like the hacker attack on the NHS. The latter might sound trivial, but A disruption of a few days in the surgical theater on major London hospitals is actually visible on surgery volumes. The antibiotic-eluting serment, which is serment G and V combined, is clearly leading the growth trend. The positive differentiation of cerament G and of cerament V versus traditional treatment options is well validated in several clinical studies. In the quarter, results from a clinical study conducted in Australia on 136 patients with infected diabetic foot ulcers was published. It was a retrospective study comparing historical patient outcome with outcome after switching to Sermon G or V. And all of this took place at one specific large clinic. The result displayed an amputation rate of 2% for patients receiving antibiotic-eluting Sermon versus the historical rate of 18% when using standard of care. When switching to Sermon G or V, the number of patient days in hospital over a 12 months period decreased from 26.1 day to 12.6 days. So almost cut in half the time that the patients have to stay in the hospital. This is in line with previously published European data. Now, Australia is an attractive market, and in the quarter we changed distributor to make sure that we cover more indications and more hospitals. This study will of course be very useful in the hands of our new competent distributor to accelerate market penetration. We have previously concluded based on solid published evidence that there are large health economic effects to be gained by preventing fracture related infections. In a well-made Dutch study that was published in the quarter, 246 patients with severe fractures were monitored with a mean one-year follow-up. The infection rate with the studied cohort was 18%. The authors concluded that the cost of care tripled with patients that got an infection and required one additional surgical intervention. When this was compared to the patients that were infection free, the cost was driven by the extra stay in the hospitals, the additional procedure and the use of systemic antibiotic. Now, even worse for those patients that required multiple interventions due to reinfections, the cost of care in total rose sevenfold. This speaks in very strong economic favor of CERAMON G and V, bringing infection rate down to around 4% with a one stage procedure on severe trauma induced fractures. Before moving on to the final section, I should mention that we expect to see the primary investigators present the first results from the Solario study at the European Bone and Joint Infection Society meeting on September 26 to 28. And with that, I will leave over to Håkan to guide us on a deep dive in the numbers.

Thank you, Emil. So let's move to slide nine. Net sales improved from 140.4 to 219.8 million, equaling a growth of 57% or 55% in constant exchange rates. Emil has already spoken about the strong performance in the two segments and the major drivers behind the sales acceleration. So we move forward to slide 10. The contribution from the North America segment improved with 35.1 million and amounted to 66.8 million. The improved contribution relates to increased sales after effect from increased costs. Sales and marketing expenses during the quarter amounted to 99 million compared with 66.5 million previous year, of which sales commissions, the distributors and fees amounted to 61.6 million compared with 36.7 million the same period last year. From the lower graph, showing net sales as bars and gross margin as the orange marker, it can be noted that the gross margin remains very strong and amounted to 95.8%. In Europe and rest of the world, a contribution of 14.2 million was reported to be compared with 7.6 million previous year. Sales and marketing expenses increased with 2.1 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 euro. From the lower graph and the orange marker, you can see the gross margin remains stable with a minor impact from market mix with a higher ratio of indirect sales in the period. Let's move to the next slide. So looking at expenses, the increase in selling expenses reflects investments in organization, as mentioned by Emil. We also invested in systems to improve customer handling, inventory management, and to meet the increasing demand. The sales and marketing expenses in the period also included a 1 million bad debt provision relating to the bankruptcy of the steward healthcare system in the U.S. As presented at our Capital Markets Day in November, R&D is focused on execution of strategic initiatives such as Spinal Fusion and a planned marketing authorization submission for Cerament V in the US. These initiatives have been progressing well during the quarter, reporting an increasing spend. And underlying administration expense excluding the effects from the long-term incentive programs, remaining on a stable level, however, impacted by temporary resources and recruitment costs in the quarter. So let's move to the next slide, please. The adjusted profit was reported to 36 million compared with 13.6 million for the same period previous year, an improvement of 22.4 million following a strong sales performance and despite the investments made in commercial and innovation. The difference between adjusted EBIT and reported EBIT are provisions regarding long-term incentive programs amounting to an expense of 7.4 million this period compared with 7.7 million previous year. Of the total cost of 7.4 million in the period, 1.4 million was cash flow impacting. With a strong momentum in our sales and the revised sales forecast, we have decided to bring forward our plans to further improve our safety stocks of raw materials and semi-finished products. With these adjustments made, we have created a good position for the rest of the year. The increase in inventories, together with a temporary self-growth driven increase in trade receivables, contribute to a negative cash flow for the period. Here is worthwhile mentioning that we had seen material timing effects in trade receivables with large inflow of payments in early July. And with that, I return back to Emil.

Thank you very much, Falka. So we are, of course, very pleased with the quarterly performance and the continuous solid trend. We're delivering strong sales and solid earnings. Thanks to the strong market access achieved through agreements with GPOs and IDNs for Saramagi, we have seen a robust sales dynamic over the past 18 months. Given this growth trend and the recent US regulatory approval in open fractures, we are raising our 2004 guidance. We are expecting a sales increase of over 50% in constant currency versus previous year. We have strong confidence in this market guidance. In the long run, Saramend is on track to prove its role as an orthobiologics platform with broad applications in various bone healing indications. We see the two market authorizations earlier this year as the start of this journey, thanks to its clinical superiority over standard of care. CERAMENT is constantly increasing its user base and enabling surgeons to achieve a better patient outcome. With that, we conclude our presentation and would like to open up the line 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 Christopher Liljeberg from Carnegie. Please go ahead.

Thank you. Good morning. Three questions for me. First, I wonder if you could comment a little bit how we should think about further investments in selling expenses here going forward if you plan to hire additional people in the US organization in the near term. Second question related to cash flow, you comment here about... i think it seems temporary higher receivables but maybe you could kind of how we should think about these going forward any changes there as you add new clients new indications etc and then finally this reimbursement recognition by signa how do you think this will impact the sales and demand and the reason i'm asking is that you that you have already seen a very strong demand, especially for insurance patients, which seems to have made up a larger part of sales than what was initially expected. Thank you.

Thank you, Kristoffer. So the first question was regarding further investment. The dynamic we see in orthopedics is very long cycles. So when we get then, as we did earlier this year, the TPT reimbursement in outpatient setting, we recognize that we should put resources to this great opportunity. So that's why the hiring has taken place. Another hiring that I mentioned was the spine product manager, who is then starting to work towards the introduction in quarter four of 2025. So all of these are actually forward-looking investments. They're not cost that comes to cope with the existing business. They are investments to further open up new areas like new market segments or new product indications. So when it comes to the US, you should not expect that we have that kind of hiring going forward. now it's time for these people to get introduced, to find the structures, to start adding to our journey. And then gradually, I think we will also start to see the sales that will come out of these initiatives. So we have different parts of the business. We have plenty of resources that are working on driving new accounts, taking care of existing accounts. And then we have these strategic investments for the next wave of business development in terms of penetrating new markets and new indication. When it comes to cash flow, I pass over to you, Håkan, to comment on some of the vectors that have influenced that in the quarter.

Thank you, Emil. So happy to respond. And what we see in the second quarter and what we also try to comment on is that we see a temporary high. So that's always a challenge when you take the temperature of the balance sheet on a specific day, etc. It's not really showing the absolute trends. When we look underlying, we in fact see gradual improvements in DSO in the US and in Europe, we see them remaining stable. So I think that that's something to continue monitoring and look at from a longer time perspective, but it should not be seen as an increase in DSOs.

The final question was on Cigna. What do we expect in terms of impact? We see this as very positive actually. The private insurance providers have already been very positive to CRMG due to the health economic effect. We can show that there's a reduction in amputations. We can show that there is reduction of number of days in hospital and so on. So it felt pretty natural that the third biggest private healthcare insurance provider also adopted a higher reimbursement. It is quite unusual that that happens so quickly. We only got the TPT reimbursement in January. So usually such integration with the private insurance companies takes place after one year or 18 months. So I think this is a testament to the strong documentation we have. So what will be the effect? Well, the effect will be that if there were any doubt in outpatient setting, with a Cigna patient before because the DRG reimbursement was low in relation to the CRMNG cost. Well, that is most likely then eliminated now as the full cost of CRMNG will be covered by Cigna on those procedures. So you can think maybe a smaller procedure like a hand or a foot, for example, a foot surgery, which has a low DRG and where Sermon G otherwise would even exceed the DRG. Well, that is then that potential hurdle is then eliminated by this reimbursement.

Could I just follow up on that? So in the inpatient setting, does all major insurance company follows the NTAP, recognize the NTAP?

They do not. We have no notification of any of the private insurance companies that are following NTAP. But in the inpatient procedures, they're usually much more severe and they relate to long bones or to more difficult injuries. So the DRG is naturally significantly higher. So the same hurdle that I discussed before a bit or mentioned doesn't occur in the inpatient settings.

Okay, that makes sense. Thank you.

Thank you.

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

Hi, good morning, everyone. So just first question, can you say anything about the Cermonti unit volume growth in the US and how that compares to the growth of number of surgeons using the product?

That's a good question. You're catching us a little bit off guard because we worked so much on the report and we actually haven't seen that data yet. What I can share with you is that we have no price erosion. The number of units can vary from month to month and quarter to quarter, depending on if there's a big use of 5 ml, the smaller box, for foot and ankle surgeries, or if it's the 10 ml for slightly bigger injuries. But in general, over the last, I would say, 18 months, what you've seen on ceremony is that the sales increase is fully reflective of the increase in units. There's small variations back and forth, but the trends are parallel.

I was more getting at if the new user acquisition is outpacing unit growth, or if it's mostly the growth is now driven by, say, surgeons acquired a year ago. Let's call it that.

I apologize. I thought you were asking about the specific unit growth. So what you can say basically is the growth, the very strong growth that we've seen in the launch of Serum and G, I have shared in the beginning of the year that it was about 50-50 in terms of the sales growth, 50% coming from existing users and 50% from new users. I would say in quarter two, there is an overweight towards Existing users, of course, as that box, let's say, is significantly growing. We see that a lot of the surgeons that came on board and started using Cermon-G at the end of last year have now received all the approvals necessary and have started with a heavy and extended repetitive use. I think it's also interesting to see that indication that it almost sometimes takes six months for people to land in the full evaluation of ceremony with x-rays and everything before really getting into very repetitive use.

Okay, thank you. Makes sense. And then I noticed in the report that you're saying now that the focus of the sales force is know basically only introducing new users to sermon g um and i know you've talked about the launch being sort of stepwise in the us uh but should we see this as some sort of indication that we're now entering a period of higher use requisition adding more users rather than educating and helping existing ones so really long questions but i'm trying to understand sort of near-term pace for use requisition yeah i will try to answer it uh

In the beginning of the launch of Saruman G, a big focus was on getting the approvals by the IDNs and getting the hospital system approvals. This has gone better than anticipated. We are now well over 125 approvals for hospital systems and IDNs, and with big focus on the major ones. So there is a high concentration on the absolutely biggest IDNs in the country. And what happens now is then that the salespersons are splitting their time between going to hospitals, new hospitals that are under these contracts and informing about Sarment and then going back to surgeons that started using Sarment maybe two, three, four months ago. So that's the mix. We will take the pedal a little bit, the foot of the pedal when it comes to driving more IDN approvals, because we are completely fully booked with taking care of those hospitals that already belong to IDNs where we have contracts and where many surgeons are calling us and asking to be introduced to ceremony. This trend has taken off when we got the approval for the indication open trauma and as we got the TPT reimbursement that has driven a lot of interest.

Okay, thank you. And then you talked about the NTAP extension and I remember I think it was a year ago you said that the NTAP usage was very low basically no one was using it. I mean have that changed in a way so that the extension matters now, or is it still mostly irrelevant?

You're correct, Erik. So in the beginning, we saw much less use of NTAP compared to how large part of the population actually are connected to Medicare, which is about 17%. That has increased. That has picked up. But at the same time, our sales with NTAP is still below what it would correspond to as part of the population. And one explanation for that is that NTAP reimbursement is solely dedicated to inpatient setting, where anyhow the the injury or the damage to the bone is such severe so that the DRG is at a very high level. So the effect of the NTAP is not as big as you would anticipate the effect of the TPT, which is outpatient, where the DRG is at a lower level.

Okay, thank you. That makes sense. And then, sorry, just one last question. I was just going to ask you, Håkan, I mean if the working capital effect is basically purely timing I'm just wondering a bit like how does that happen? Does that relate to one big system making a larger purchase or do you just have some sort of unfortunate synchronization of many different systems?

It's not linked to a specific system etc. If that is a good explanation, it's just a coincidence. It's the effect of a certain cutoff day. And I think Wes mentioned in the call and in the report, we've seen substantial inflow early days of July. That is balancing what we see in the balance sheet end of June.

You could look at it also like that. We have a large influx of new customers. have started to use the product, they receive the invoice, and before they pushed it through their system, it takes a little bit more effort than with existing customers. So if we look at both invoicing and chasing payments, it has a very steep incline at the end of the quarter, which means that quite a few of them have spilled over into the next quarter, not with invoices, but with receiving the payments. So it's a bit of, as Håkan said, it's very much related to timing effect, but it's many, many small customers, not one big.

Okay, perfect. Yeah, it doesn't sound like anything to lose sleep over. Thank you very much, guys. I'll jump back in.

Thank you, Erik. Have a great summer.

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

Yes, good morning. I have a question regarding the sales number. Were there any unusual orders in Q2, like stocking orders from any customers or anything like that we should be mindful about going forward?

The answer is no. The only thing unusual was an unusual amount of many users adopting CERAMENT, but no big orders, no stocking orders, and no shelf-moving. Every product invoice is a product used on a patient.

Great. Thank you. I noticed the uptake in BVF sales in the U.S. It's been... relatively flat over several quarters and now it jumped are you sure that there's no sort of pre-usage in spine of that product or I think you mentioned something during your remarks which I can't remember now but it's not spine driven already now is it by some early I hope not I hope not

I hope not, but you never know sometimes with these. I mean, it could very well be, Stan, that there's a very experienced user with Saramant that comes up with the idea that they also want to use it for spine procedures. It's regulatory approved, but we cannot assist those surgeons with material. We can also not recommend them to do it. What we've rather seen is that new customers that have come on board, signed contracts, and been initiated on Ceramon G have patients with sometimes very low risk of infections where they have been impressed by the bone building capabilities of Ceramon. But the infection rate is so, the risk is so low so that they have used BVF instead. And this has meant that A couple of hospitals where we have had no presence before, we have gotten in as a supplier with Saruman G. And then there are surgeons that have started to use Saruman BVF. So one question I received this morning is, is that trend going to continue? Honestly, we don't know because it's a handful of, big hospitals. And I think it's yet to be seen how they evaluate the product and if they want to continue with BVF. We hope so. But I cannot make any guidance to quarter three or quarter four based on what we have seen now.

Okay, fair enough. Regarding the Cermagy, which again was a strong number and it seems like It has not been driven by the new or the broadening of your approval. But so should we assume then after the conference which you said was in like September that the actually the growth rate will pick up in Q4 even higher than from this broadening of the approval?

Yeah, it's a very good question. We've seen a handful of trauma surgeons in level one trauma center, which are the most heavily frequented one and the most prestigious ones that have started to use CERAMON-G. But one has to remember that no one will start using CERAMON-G for trauma just by reading about the approval. It has to be preceded by training and education from our side. So we can only increase the number of users at the pace of our salespeople being out there informing. So yes, the use and sales of CRMNG in open trauma is absolutely likely to increase for the end of the year. The big launch conference in October will be our first real opportunity to meet a lot of trauma surgeons in one place and have generation of leads and communication on site. Otherwise, it's basically one-to-one that we are meeting in our sales promotion. And we know also that adaptation of techniques and to adopt a new technology like this for new indication, it takes time. So it's something that's going to happen gradually.

Very clear. Thank you very much. One final question for me is on the R&D costs and how we should think about that in the second half. Is the sort of the 20 million level you had in Q2, will that increase gradually now in the second half? Is that what we should expect?

I think that what we could say is that the second quarter forms a good reference for the level going forwards, keeping in mind that some of the investment we do and the cost that we have for those initiatives are not volatile in terms of timing, etc., but all in all, I would say that the second quarter remains a good reference.

Fantastic. Thank you very much.

Thank you, sir.

Have a great summer.

The next question comes from Mattias Vadsten from SEB. Please go ahead.

Hey, Emil and Håkan. I have two questions. Firstly, to follow up on the to this question here on Cerement BVF. If you could comment and help us a little bit on the development of maybe old customer of yours for BVF in the quarter, just to understand the contribution from new accounts. And then also, if you could put into perspective what share of hospital systems in the US at which BVF is sold at compared to the amount of hospitals that Cerement G now address. That's the first one.

Yeah, so we're not open enough to cut and slice all data. But what I can say is that the growth that you see, the very strong growth you see in quarter two on BBF is related to new accounts. The existing accounts also had a good growth. quarter for BVF, a bit better than the previous quarters, but rather taking it to maybe a few percentage points of growth back and forth. When it comes to Sermon BVF, the number of hospital systems where we have approval is somewhere between 265 and 275. with CERAMON-G, it's about 125. So if we look at the dynamic here, there are hospital systems where we have received approval for CERAMON-BVF, but underneath that hospital system, there are hospitals that have not started to use BVF. And when we now get access with CERAMON-G, we can present ourselves as a bit more of a full portfolio because these surgeons will also have patients with very low risk of infection. And this is the dynamic that we have seen in quarter two, which has given these very strong growth rates.

I think that's perfectly clear. Then on Solario, I mean, we certainly hope it can validate a lot of the things that we found based on the significant clinical data gathered in the past. But looking at the study here for Sermon G and V, what incremental new insights are you hoping this study can show? That's the next one.

So to give systemic antibiotic when there is surgery has been standard of care for many, many years, 100 years or 50, 60 years. It's well established. But as well as the established concern of giving four weeks of systemic antibiotic in terms of what it does to the patient, in terms of side effects, and what it gives rise to in terms of resistant bacteria, bacteria that is resistant to antibiotic, which is possibly the real pandemic we should be worried about in the future. So for a long time, there has been ways and search of opportunities to reduce systemic antibiotic. Sermon G and V has proven exceptional good results, but no one has really investigated if Sermon G and or V could even then reduce the days of systemic antibiotic that the patient otherwise had to endure. So this study is in that matter the first of its kind. The second point is that the SOLARI study is made on 500 patients under the umbrella network of European Bone and Joint Infection Society. So the study has a much bigger impact of moving and shaping the standard of care. The studies that you've seen published recently and that we spoke about today, they are great when it comes to promoting the product, converting surgeons and individual hospitals. But the Solario has the ability to move things on a higher level, on a societal level, on a political level, on a national level. And that's why... We share that with you. We have very high expectations, and we're very excited to see what will come out at the end of September.

Good. I think that's all from me. Thank you very much.

Thank you, Mattias, and I'll see you. Have a great summer. Let's see if we have further questions.

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

Hi guys and congratulations on a strong sales development. I do have a few questions and I think that I'm just going to do them one by one and then you can answer them. The first one, and we have discussed this before, you have a new target for 2024 with 50% sales growth and that's all nice to hear but it's not all that significant from what we analysts expect already. Why are you not prone to make financial targets that are a bit longer on time horizon and perhaps also on profitability?

Thank you. That's a good wish list. And I hope we can honor that. I think the reason why we said we just had a one-year guidance is that There is so much movement and so many big changes happening in the market environment in terms of regulatory reimbursement, market penetration. If we look at the consensus of analysts, I'm not disputing what you said, but I would say that most of them are with growth rates for the full year between 40 and 45%. And we can conclude after two quarters that we're at 55%. So we felt that it's prudent to revise our guidance, to share to the market, to share to the analysts that we have such strong confidence in how the demand is continued strong and keep picking up. But I hear you loud and clear. And of course, also bone support will have to come to terms with giving a slightly different longer guidance and also a guidance both possibly on gross margin and on EBIT level. It's too early for that, but I hear you and it will come.

I understand the change in working capital and so on, but is there any reason to start worrying about CAF's position?

It's relevant to my question, Oskar, in the light of what was reported on the balance sheet day. But trust me, Oskar, it's nothing that keeps Emil or myself sleepless at all. We are confident in the cash flow that we see ahead of us and the available cash we have. Yeah, there's absolutely no risk. Good to hear.

And then the R&D expenses going forward. The Q2 figures, is this something that we will see as sort of a steady state for the common quarters or should we expect it to accelerate somewhat?

As I responded earlier in the call, Oskar, I believe Q2 to be a good reference point for the next few quarters. There is always, in the nature of these expenses, a certain underlying volatility in terms of the timing when things occur, etc. But if you use Q2 as a reference for the next two quarters, it's a good reference.

And I would say... What about after that? So either we will then have strategic projects that we will be very clear in displaying that might replace the ones that are completed. And if not, then R&D will go down again. So you can expect this for the rest of the year. And then there will be a lower level because the increase is now related to the investments in, among other preclinical studies on spine. which we see as a very big initiative.

Okay, thanks. And then here's my last question, and this is a speculative one, but I mean, so far, the clear majority of US ceremony sales come from bonus action. But as I understand, it's still some off-label trauma usage, even since the launch. And now with the trauma indication in Q3 and Q4, do you expect that in the first years after the launch of trauma, it will surpass the sales which CERAMENT-G did in the first years of its long-term bone infection.

Okay, I think we have to come back to that question. I'll do my best to answer it, but the open trauma is clearly a bigger indication. It's an indication also where it makes big changes health economic sense to use Sarah McGee. And I think we've seen in some recent publications what really could happen if the infection is not prevented with sevenfold, threefold cost increase. But you're asking more to say on the pace of ramp up and I will just need more observations before I can give any hint on that. So I'll remain as curious as you, Oskar.

I'll come back in Q1 maybe and ask.

You are most welcome. Until then, have a great summer.

Thank you. You too.

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

Let's see.

Christopher Liljeberg Carnegie, your line is now unmuted. Please go ahead.

Yeah, thank you. Two follow-ups. First, if you could comment on the administrative approvals among hospitals for the trauma indication, how that is going ahead of the launch. And then I just wonder also on this other sales line that were up quite a bit sequentially in the U.S., something specific in the quarter or if this is also reflecting a new trend for those products?

The addition of information in the systems where we have approval already, where we have contracts for bone infection and we're adding open trauma has gone very well. I told before that we will be completely through by 1st of September. I think it's likely that it happens now mid-August. We see great recognition and given that we have both, in one hand we have the FDA market authorization and in the other hand we have the clinical studies and the health economic data. it's progressing slightly better than we thought, easier than we thought. It was more difficult to get the bone infection in at the first place than it was to add open trauma to the approval. The second point, the other position that you see, that is what we call the ancillary product, the support product. So what we have spoken about before are these specific tools, hardwares to inject Ceramant in the chondroplasty area you know just above or below a joint. It's also a kind of plastic tube that we have so that sediment can be reached and filled in non-invasive, of course invasive, but minimal invasive procedures where you could get reach in difficult places. And it's also application support tools like bead tray to create small pellets of ceramins, specifically if there's an indication where there's quite a wet wound and a lot of drainage into the wound. This is going up because ceramide is being used in more and broader indications and it can also be a sign of increasing use in trauma in open fractures where some of these tools specifically are used.

Okay, great. Thank you.

Thank you. And maybe also to that point from Kristoffer, because I missed one part of the question. You said, is this going to continue? Yes. This position can go up and down with a couple of millions back and forth. But over time, it's going to be an increasing trend as Ceramant is growing in various different applications and techniques.

There are no more phone questions at this time, so I hand the conference back to the speakers for any written questions or closing comments.

Thank you. We used a full hour for this. Thank you everyone for your insightful questions and your interest in bone support. We're delighted to have delivered a great quarter and wish all of you a great summer. We hope to stay in touch and you soon. We go with great excitement into the autumn. Thank you, everyone, and take care.