Bonesupport Holding AB (publ)

Welcome everyone to Bone Support's quarter four, 2024 results call. My name is Emil Billbeck and I'm making this broadcast as always together with Håkan Johansson, our CFO. We will use the next 25 to 30 minutes to guide you through the presentation of the second results. And then we will open up the line for question and answers. So we progress to slide two. I didn't succeed with that. You have to help me. Fine. So just for everyone to be clear that before we go into the actual presentation, we have some disclaimers that are covering any forward looking statements that we will make today. So next slide, please. So we would like to begin by looking at some of the condensed highlights from the report that we released this morning. So overall, the quarter four sales were 257 million Swedish kronor, which corresponds to a reported growth of 49% year over year. In constant exchange rate, the growth rate was 48%. The strong sales development and leverage of our scalable business model resulted in a very strong operating results. Before incentive provisions, the operating result was 78 million SEK and reported EBIT was at 64 million. This resulted in a record operating cash flow of 73 million Swedish kronor, providing financial flexibility to invest in our future strategic journey. For the full year 2024, net sales were 899 million. corresponding to growth of 52% versus the full year of 2023. The high growth rate in 2024 following a full year growth in 2023 of 72% in constant currency is a testament of the very strong market demand and the unique sediment value proposition. The operating result before accounting effects of... It was 204 million SEK. If we look at some of the highlights of the quarter, of course, we will mention the continued launch success of Cerament G, which reached sales of 154 million Swedish krona, an increase of more than 100% compared to the corresponding quarter last year. In December 2024, a clinical study was published showing that antibiotic eluting ceramide reduced the risk of death in conjunction with bone infection for patients with diabetes. This is absolutely groundbreaking, and I will come back to this later in the presentation. And finally, on our quest to transform an outdated standard of care, we constantly encounter new growth opportunities. And to address these, and especially in underpenetrated areas in euro, we are now launching a sales booster program where we're adding sales resources in prioritized and selected markets. Also more about this in the presentation. Now let's go to slide four, look at the sales development. Thank you. So this chart shows the last 12 months sales in Swedish currency. Every quarter is displayed here since beginning of 2018. And you can see stack bars that display the different regions and the different product categories with explanations underneath the graph. So the strong launch momentum for CYMA-G in the US that I mentioned before is now indeed becoming graphically visible. The market penetration, despite the typical go-stop-go dynamic that is common for pioneering products, where some hospitals initially pause the usage following a cost-benefit evaluation, The sales has been almost linear for Cerament G with an increasing trend. Supported by beneficial health, economic arguments and strong backing from influential surgeons, all of these evaluations so far have resulted in continued use for Cerament G. For the US and Euro combined, meaning the global sales view, the antibiotic eluting ceremony grew with 75% in Q4 2024. The European business looks a bit dwarfed in comparison to the great momentum in the US. But I would like to highlight that the euro business last year grew with 23%, which is more than six times the market growth. But let's go a bit further into the different regions and we will start with the US. So on slide five, you see that sales in the quarter for the U.S. was 209 million SEC, which corresponds to a reported growth of 59% year-over-year and 58% at constant exchange rate. Some of the highlights. Well, coming back again to the successful launch of Cerament G, where the rapid market penetration can be attributed to to a significant market need that exists for a product that effectively heals bone injuries protect against infection and has solid published clinical documentation more and more surgeons have reached a point where they can conclude and document their early experiences with ceremony And the patient outcome that they see, it's matching the strong benefits seen in the large clinical studies. This is creating surgeon advocates that are sharing patient case stories with each other. And we also see that surgeons that are starting to use CERAMENT in many cases had not been using any local antibiotics before. So this is an early sign but seems to correspond to Cerament G actually leading to market expansion. We've seen also a good pickup of trauma surgeons starting to use Cerament G but so far I must say we have only scratched the surface of this large market segment. In the quarter, we have also completed the data collection for CEREMENT-V and we expect to submit our application to the FDA for market approval of CEREMENT-V in the US in quarter one, 2025. Now given the challenges of treating bone infections and the increasing need for rational antibiotic use, the interest of Cerament V in the market is high. So finally we're also progressing our preparations for a future market introduction in the spine segment and we're conducting several parallel preclinical application studies. the results should be ready by early autumn. Let's go to the next slide and focus on euro and rest of the world. So for the quarter, we saw sales of 48 million, which corresponds to a reported growth of 16%, and that would be 17% if measured at constant exchange rate. But two things to mention here. We are meeting exceptionally strong sales numbers from quarter four 2023, where euro growth was 38%. In addition, sales have been a bit negatively influenced by some turbulence and political interference in the British health care system, NHS. The UK is the largest sales market for Cerament in Europe. And in September, we saw the newly appointed government giving the NHS directives on which surgeries and which waiting lists that should be prioritized. This caused a reshuffle in priorities for the operating theaters, which caused a disruption, which was isolated to the UK, but has been stretching up to the end of December and even slightly beyond. In general, both market penetration and market shares are developing very well in the region, and sales growth without the UK for the region was plus 25% in the quarter. So discussing a bit on the highlights that we would like to transmit, we're getting more and more requests from surgeons in new geographies. The business is now at the stage where we have the ability to further expand geographically. So hence, we're launching a euro sales booster program to replicate in more markets the successful hybrid model that we have already implemented in Spain and Italy. And finally, I will share some results from the study that showed increased survival rate for patients with diabetic foot infections when using Cermet G and V. But first, let's look a bit more at the booster program on the next page, please. So continental Europe and the UK remain our absolute priorities. The recent disruption in the UK means that the backlog for sediment surgeries has again grown. The patients are still there. We're taking market shares and we're winning account. This is giving us a positive outlook for many years to come in the continental Europe as well as in the UK. But in addition to Europe, we will focus on Australia and Canada. These markets have combined the same population as the UK, but they only make up about 9% of the sales we have in the UK. So significantly underpenetrated. Australia, Canada and South Africa belong to the so-called Commonwealth countries, and they have health care systems with similarities to the one in the UK. And there are also academic and clinical exchanges across the border with UK and other markets. All three of these markets will be hybrid markets going forward. We also see great potential in the Gulf states of the Middle East, which also have some 60 million inhabitants, so almost the same size as the UK. with many of our existing sediment users in the UK going actively to the Middle East to perform surgeries. The prevalence rate for diabetes in the Middle East is around 13% and infection rates related to diabetic foot but also to trauma are very high. Middle East and also Norway will now be converted into hybrid markets where bone supports commercial and medical personnel will work side by side to support the local distributors. Austria will be converted to a direct market and in total we are investing about 15 million Swedish krona on an annual basis with full cost effects visible from 2026 and we expect these investments to be cash flow neutral within the 18 to 24 months. Recruitments are ongoing throughout this year, and the first person in Canada and in our hybrid support in Norway has already started. So I realized that we shared a lot of information today, but let me finish this section of the presentation of the quarterly report by highlighting the groundbreaking study that was published in December 2024. So this retrospective study on 105 patients with diabetic foot infections compared treatment with antibiotic eluting serum to the conventional treatment. The result was a dramatic reduction in amputation and improved patient survival measured over five years. These are really groundbreaking results. and we are incredibly proud of this clear evidence that antibiotic releasing cerament dramatically reduces the risk of amputation and death. The level of statistical validation is unmistakably validating the unique benefits of cerament. The lead investigator and the professor of the orthopedic department where the study was conducted stated Our hospital has now adopted the use of adjuvant local antibiotic therapy as our standard of care for diabetic foot osteomyelitis. A very inspiring quote, as we're working towards changing the global standard of care hospital by hospital. All in all, CEREM-NG has detailed, peer-reviewed and published global clinical data for more than 1,400 patients. So now, Håkan, I will leave over to you to do a bit of deep dive into the numbers of this quarterly report.

Thank you, Emil. So net sales improved from 172.7 to 257 million, equalling a reported growth of 49% and 48% in constant exchange rate. has already spoken about the strong performance in especially the US and the major drivers behind the sales acceleration. So we'll move to the next slide. The contribution from the North America segment improved with 38.2 million and amounted to 90.2 million. The improved contribution relates to increased sales after the effect from increased costs. Sales and marketing expenses during the quarter amounted to 109.3 million compared with 73.1 million previous year, of which sales commissions to distributors and fees amounted to 69.6 million compared with 44 million the same quarter 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 strong and reached a level of 95.3%. In Europe and rest of the world, a contribution of 12.8 million was reported to be compared with 5.7 million previous year. Sales and marketing expenses came in largely in line with previous year. And from the lower graph and the orange marker, you can see the gross margin remaining at stable levels. The increase in selling expenses remains stable, reflecting investments in organization, but also investments in systems to improve customer handling and inventory management earlier in the year to stay ahead of the increasing demand. The period, however, included a better provision of 5.2 million attributable to the health care system CarePoint Health that filed for bankruptcy in November. We continue to follow the progress in these procedures, but remain with a full provision. R&D remained focused on the execution of strategic initiatives such as spinal fusion and a planned market authorization submission for CERAMID-V in the U.S., These initiatives have been progressing well during the quarter, which explains an increased spend to previous year. And administration expenses, excluding the effect from long-term incentive programs, remain on a stable level, however impacted by temporary resources in the quarter. The reported operating profit amounted to 64.2 million, an improvement of 72.2 million compared with the same quarter previous year. This follows a strong sales performance, but also include favorable currency effects in the period. The difference between adjusted EBIT and reported EBIT are costs regarding our long-term incentive programs amounting to an expense of 13.7 million in the quarter, compared with 18.9 million previous year, as you could see on the previous slide. The increase compared with the third quarter this year relates to a partial inclusion of the share saving program that was approved by the AGM in May of 24. Following the mandate from the AGM in May 2024, a share swap agreement to secure the commitments within the share saving program was entered during the period. The difference between fair value and the value of the equity swap agreement is reported as a financial asset and included in net financial items with a positive effect of 5 million. And finally, with a strong momentum in our sales, increase of our safety stocks of raw materials and semi-finished products were made during the first half of 2024. As satisfactory inventory levels was established, we now see a second consecutive quarter with strong cash flow and an increase in cash at the end of the period with close to 34 million in the quarter. And with this, I hand back over to you, Emil. Thank you, Okan.

So let me wrap up this quarterly presentation. We are, of course, very pleased with a strong performance in the quarter and as well as the continuous solid trend. We achieved 48% sales growth at constant currency and delivered an EBIT of 78 million Swedish krona before the incentive cost. We're especially proud about the continued success launch of Saruman G in the US and the unique benefits being validated by the growing pool of evidence. No other company in the orthobiologic space is even close to match our uniqueness in technology or have the clinical studies required to unlock the opportunities and full potential in the indications that we have targeted. Hence, we feel very confident in delivering a sales guidance of about 40% sales growth in constant currency for 2025. Ladies and gentlemen, that concludes our presentation and we would like to open 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 Matthias Vadsten from SEB. Please go ahead.

Good morning, Emil and Håkan. Thanks for taking my questions. I will take them one by one, I think. First one, I agree with the points you made on clinical evidence, of course. The question is, if you look on the subgroup of extremities, how would you describe the level in this group? I would imagine, for example, or we have seen a lot of data in diabetics books, for example. So any particular group you would like to highlight and any group that you know we would like to prioritize perhaps more resources to in the future that's the first one.

Yeah thank you Mattias and good morning. Yeah great question I think what we can conclude is that there's an overweight of really well-conducted clinical studies in diabetic feet And that has also to do with the consequences of an untreated infection or poorly treated infection many times leads to amputation. So there's been a very high appetite and eagerness from clinicians and scholars to document the experiences that they have seen in this patient group where the situation sometimes is very desperate. In the trauma indication, there is a few really good clinical studies and one heavyweight study from Manchester that is showing very strong results with CRMNG as ability to prevent an infection and also avoid amputation for patients with severe open fractures. The one area where there have been less clinical studies, and this was deliberate also by us, as we had to focus our early efforts in the segments we thought where the surgeons had the highest level of desperation to get improved results. The area where more studies will gradually come is in joint replacements and joint infections. here we started the first studies actually already now six years ago and we should expect some results to be published during spring 2025 and then you can expect that we will continue to produce clinical data and evidence in both trauma and in joint replacement and joint infections. And gradually, you will also start to see some of the early stage spine preclinical studies that we're working on right now.

And that is in early autumn, right? Yeah, that's the first.

Early autumn is the first ability for us to conclude what we have seen. And at that time, we will make the determination if and what it is that we might need further or how we would progress towards a market introduction.

Okay, thank you. I think that's a very good answer. And then if you could provide some, I mean, you spoke about it, but some additional flavor on the open fractures launch here, perhaps, and how much effect you've seen ordered in Q4, or if it is rather, let's say, incremental mostly coming in Q1, or how we should see that. And maybe to that question, I think we have seen the average quarter-over-quarter expansion for Sermon G in the U.S., here in the second half of 2024 being much higher than in the first half of 2024. So yeah, should we expect this trend to continue here into first half 2025, if you follow what I mean? That's my second question.

Okay, yeah. Yeah, we see that there are many hospitals that are eagerly trying Serum Energy for trauma. And as always, and as we've discussed a few times, they start using it and then they want to evaluate and see the effects of it. So far so good, I must say. There is good uptake among trauma surgeons. We cannot see specifically if all the use goes to trauma surgeons or if it goes to other places in the hospital. Sometimes it's ordered by a purchasing department. But we have good contact on the ground with many trauma surgeons that have expressed great satisfaction with the product. I think that when it comes to Sermon G and the uptake, we see, of course, daily sales and weekly sales. And then we display that on a quarterly basis for the market, which is a little bit more blunt. because there will always be some ups and downs. There will always be go-stop-go effects that can skew the results or the sales result with a couple of million back and forth. And sometimes there are fewer operating days, like last year around Christmas, and then it will influence sales. But when Håkan and I and the team look at CEREMENT-G, more on a continuous trending basis, the trend is indeed increasing. So what you also have seen in quarter three and quarter four, we can confirm that.

Thanks, Emil. I will squeeze in one more. It is on Cermont BDF. If this is just a quarterly fluctuation that you see here in Q4, and if you expect this to be sort of, you know, small up, than excluding spine in 2025 and 2026, in line with the communication before.

Yes, sorry about BVF. There are fluctuations. You saw a bit of uptake in quarter three and then slower in quarter four. It will continue to be a little bit up and a little bit down. But the We don't give product and region specific guidance. What I have said is that the potential is still there for CEREMENT BVF, even though our focus, of course, now is to roll out the uniqueness of CEREMENT G. So I think long term, I think there will be growth also in CEREMENT BVF, but I cannot give any guidance to what's going to happen in the next quarters up and down.

Of course not. Thank you very much for all the answers.

Thank you, Mathias.

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

Hello. Good morning, Emil. Good morning, Håkan. So first question, I want to touch upon the UK. We've heard previously from doctor feedback over there that there's been some pushback on the costs of the sort of CEREMENT projects. Could there be any sort of spending reprioritization in the UK now after the budget change? Or do you think it's only procedure reprioritization?

Yeah. of course a very good question so we have we have looked into the details and for the uk we haven't lost a single account we have less usage of product at a few specific big clinics that have moved their prioritization so they have favored other indications other surgeries and The orthopedic surgeries where Sermon is used have been fewer in the operating theater. So the line has piled up. The backlog is increasing over these patients. Price is a pushback that we see not just in the UK. We see it in every market around the world. It has to do with how the health care system is aligned to look for Replaceable solutions that constantly are cheaper. And the dialogue that we're having with those stakeholders is that here's a therapy that will give you better patient outcome and also lower cost because the value of the product is higher. So it is an education process, but nothing of what we have seen in the slump in UK in quarter four has to do with the price of the product. It is completely related to the reprioritization of the new government, who has explicitly said that they're going to reform part of NHS. And I think it's fair to say that the changes they've done now is a bit to appeal to the general public to accept the future changes. And that means that some specific surgeries have been down prioritized and Sarament has been one of them.

OK, excellent. Thank you. And then I wanted to ask about the. sort of cost trend that we're seeing. I mean, if we're excluding everything now with incentives on recurring in exchange insurance, yada, yada, it seems to be coming up quite a bit still. And now given the booster program, a lot of activities around approvals, R&D work to gather data, yada, yada, all that stuff. How are you expecting costs overall to develop during 2025? Are you seeing more prioritization towards driving top line or should we still expect earnings to develop as it has over the past year?

Thank you, Erik. And again, I think that exactly the math that you have been doing is important to look beyond impacts from currencies, etc. And when you do that, if you look at the operating expenses, excluding sales commissions, that is strictly very much following the sales development. You adjust for any temporary currency impacts and so on. And would you then also exclude some of the increase in R&D as this investment is going forward? You would find over the last three quarters, a operating expense level that is remaining at a very stable level. So with that, yes, we will continue to add expenses because we believe some of that commercial investments will be beneficial for the continued growth, whether it's in Europe and in the US. So, yes, increased expenses can be expected, but you will be able also to expect a continued scalable and operating leverage in the business.

Okay, thank you. I'm just going to squeeze in one last. I mean, since the approval in the US and where the sort of, let's call it explosive growth started, you've been building inventory, I guess, in the US every quarter since, which I guess was sort of necessary to build a network over there and be able to supply customers across all the different hospitals. But now in this quarter, there's a pretty solid relief from working capital. Is that some sort of indication that a new number of customers, a new number of hospitals starting use now in the near term, maybe just in Q1, should be lower than before? That there's not really the same new user growth as it has been before?

No, none such observation would be correct. The ramp up of inventory that you saw in quarter two mainly, was to make sure that when we open up the trauma segment, that we have enough inventory so that no one gets trained of the surgeons. They have an important surgery and we have not the ability to deliver. We know that that creates a lot of frustration if the patient is on the table basically in front of them and the product is not there. So we beefed up our production and moved goods also to the US. And our plans, let's say our top line is developing very strongly. And that's why you see the effects that you do. Oka, would you like to comment anything more on that?

I think that fair to add is that a big part of the buildup of safety inventory we made, we also made in raw materials and semi-finished because this is also small levels where we have a longer shelf life than on finished products. So that's a smart way to ensure that we have the flexibility to meet demand and so on. And that's why somehow we made those investments, we made that build up during the first half of last year. and not having the same need when we moved into Q3 and Q4.

I think the final point possibly also on that perspective is that during Covid and just in the aftermath of Covid there was a lot of supply chain issues, a lot of vendors renegotiated contracts so sometimes when we order raw materials we are required to order big batches, huge batches that will last for quite a while So that means that when we ramp up production, sometimes there will be a lumpiness in how we buy materials and how we trap cash, let's say, in the inventory that we build.

All right, perfect. Thank you very much, guys. I'll jump back in here.

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

Thank you and good morning. I have a few questions starting coming back to the UK. And what can you say about the outlook here for the next coming quarters in 2025 as a whole? And also, in the guidance you have given of more than 40% sales growth in 2025, What assumptions have you done for markets outside of the US or outside North America?

So when it comes to the UK, the directive that was in place was supposed to go from 1st of September to the end of December. But given the placement of holidays and where Christmas... was on a Tuesday with New Year's, it was clear that all those patients with prioritized surgeries could not be coped with in December and end of November. So the prioritization seems to have continued to spill over a bit in January and even into slightly into February. But the directive ended end of last year. with a bit of bleed out into the first quarter.

The guidance that we have given this morning of growing sales... But so far in the first quarter, have you seen a similar... Could I ask, what you have seen so far in January and February, is the impact as big as in Q4?

I will not comment on what happens in an ongoing quarter other than that the effect, there was a bit of spillover. So clearly the effects were less, but there were a bit of spillover. Those patients that were called to the operating theaters could not all have their procedures done in December. So then they are the first priorities for early January and so on. The guidance of 40% that we have given is based on our optimistic view on how sales will continue to develop on the strong traction of winning accounts, both in the US and in other markets. But when we give this guidance, we don't separate between regions or product. we're a little bit more holistic there when we say that the total sales will grow with more than 40%.

Okay, that's fair. Can I ask one or two more things? Could you give a figure for the number of new hospital approvals here in the fourth quarter? And also how we should think about the settlement V in the U.S.? ? whether that will accelerate growth or if it's just going to be a cannibalization of effect versus CERAMENT-V. Thank you.

So if I start with CERAMENT-V, I think it's difficult to say, but CERAMENT-V will definitely give a broader and stronger toolbox for the orthopedic surgeon. When we decided to start the work of bringing Cerament V to the U.S. market, we did that because of market feedback that they are experiencing antibiotic resistance from different bacterial strains. And hence, it helps to have all of the needs of a specific surgeon. So let's say a surgeon has... four patients where CERAMENT G is suitable and then one where they would like to use CERAMENT V due to microbiological testing. Now we have the chance to supply that surgeon with all the products they need for infection management. So it will increase sales with existing customers. And it will also open up potentially customers that have a specific preference for vancomycin. So I think both those levers will drive a strong penetration. Sorry, there was one more question there. I don't have that number yet. I'm sorry.

The number of new hospital approvals in the U.S.

Yes, I don't have that number, so unfortunately I'm unable to provide that number today.

Okay, thank you.

The next question comes from Maria Vara from Brian Garnianko. Please go ahead.

Good morning, Emil Haken. Thank you for the presentation and congratulations for closing a solid year again. I wanted to touch upon this expansion program that you're going to start in Europe and the rest of the world. So technically, you will have an impact on investment starting in 2026. So shall we think about market expansion or like sales, yeah, growth? starting from 2026 or should we see some improvements already in this year?

Yeah, so I'll be careful how I express myself so I don't give any specific regional guidance because we don't do that. The cost will start to bleed in or start to increase this year. We've started with a few recruitments already. And the scope here of the total cost will be about 15 million SEK for 2026. I think you could also expect to see some of these markets increasing. The traction in both Canada and Australia, Middle East, we have high expectations on. So potentially you should be able to see that already as we come into autumn. We'll see if we will report and maybe a little bit more about the growth rates about these fairly new markets. But what we should remember is that Australia and Canada, despite that they have the same population as the UK, only have one tenth of the sales to UK. So even if they grow with 100 percent, they don't have the impact as some of the bigger countries on the total. So what we know many times is when we go to a new hospital or a new country or a new region, it's usually a quite long way. It starts with a few surgeons, they build cases, they collect their experience, and then they share it with other surgeons, and then it starts to roll and become a bigger topic. So what you should see this is that we have great confidence that we can create the same kind of success in these new markets that we have done in this slightly more established markets. And this should also allow us to have exceptional growth for many years to come.

Okay, that's very helpful. And maybe you could also touch upon what we can expect for the launch of CERAMEN VBF in Spine in the US. You haven't really commented that much on the commercial strategy. Either you're educating already your Salesforce and how we should look at this.

So we have recruited people specifically with Spine background in the US. And right now we're doing application studies. The application studies will overlap and continue until early autumn. And when we have those results, we will be able to give a firmer understanding on exactly when Cerament BVF could be launched on the US market. At the recent update, we said that the earliest would be at the end of 2025. and we will come back to a more firm view on what month and and how we're going to do it how we're going to do the launch when we have the result from these preclinical studies there is a fairly high interest in the market I would say so we have we have distributors that the launch will The timing of the launch will be determined, but the launch will take place with independent distributors that already have hardware, meaning metal plates and screws and rods in their portfolio. The interest is high for Salamand BVF. But I also have to admit that every conversation ends with either surgeons or distributors or opinion leaders asking when can they have Cerament G or V, the antibiotic eluting. And we have to keep the excitement up. We will announce at a later stage when the antibiotic eluting products could be available for spine in the U.S. market.

Okay, thank you. And maybe just to wrap up on this context of spine, for the pricing of the product, do you expect surgeons to still pay for the same pricing as used in extremities, considering, you know, spine is a bit more of a pricing pressure kind of environment? And do you think they really have the budget to acquire BVF and, you know, afterwards serum NG? Mm-hmm.

Yeah, very good question. The spine segment is definitely competitive. And we see that for the spine products with not so much differentiation and maybe not so strong clinical studies, there is a price pressure. We have done already price survey investigations in the U.S., And those indicate that the price for Cerament BVF and the price for Cerament G will be the same as the current price in extremities. There's a high acceptance for the product and seemingly no changes in price.

Okay, that's helpful. Thank you very much. That's also my side.

Thank you very much, Maria.

The next question comes from Oscar Bergman from Redye. Please go ahead.

Hi, guys, and congrats on a very strong quarter. I've got a lot of questions here today, actually, but I'll ask them one by one. So first up, I must ask about the tragic incident that we heard about earlier this year with the pediatric patient who died of labor use. Have you noticed any sort of decrease in demand or any other hiccups after this, or is everyone understanding the background, for instance?

Yes. Yeah, thank you, Oskar. This was a very tragic event, of course. The investigation is completed, the report is completed, and the report has been sent to FDA. The conclusion is that it was off-label and that not only was the instruction for use not followed, the product was used in in contradiction to the manual. We should remember that these are really big surgeries. It was a large tumor and we're aware that sometimes possibly in desperation the surgeons will try different modalities but with all either pharmaceuticals, medicine, medical devices, equipment. It is important to follow the instruction for use and the manual, especially on these big surgeries. There has been no effect in the market whatsoever. This was a specific and secluded case. Doctors, even at the same hospital as where this tragical incident happened, are endorsing the product and they're clearly aware that the product should be used as intended. But we also look to ourselves and say, And we have won so many new customers in the last four years. We've increased so many new customers. And sometimes doctors tell their colleagues and maybe there's not the right training. So we will also see how we can further enforce and make sure that the training reach out. so that we can avoid any of these tragic mistakes ever again. Unfortunately, it's difficult because these big surgeries, there are always cases where there are adverse events or where accidents happen. I've mentioned before that we have a complaint rate under 0.3%. But if we look at adverse events, meaning when there's something in the clinical surgery which is not working perfectly and there's a complaint, this is even less. This is 0.03%. And of course, in pace with us growing, there could be cases in the future, but hopefully we don't have to see anyone with such tragic outcome again.

Okay, thank you. Let me follow up with that. This off-label indication, I guess we can call it oncology, for the, you know, used to make things easy. I suspect that's a very, very small percentage of your total sales. Let's say maybe 2%, give or take, my estimate. And just to be clear, you don't expect even in this off-label indication that there will be less usage of cerament following this incident?

No, I don't expect that. The on-quality... per se, meaning when there is a tumor in the bone and the tumor is removed, CERAMENT is perfectly approved to fill the gap or the void that has been left by the tumor. But there are certain techniques when doing that that has to be followed. And in this case, it was not. So oncology is indeed, yes, it's one of the smallest areas of our sales, but still many of these surgeries take place with very good results. And the surgeons don't have many different options. So I think, believe that Cerament has a valid place in this category, but we must make sure that the product is used in the correct way.

Right, thanks. And last year, you also gave up some sales guidance. Initially, this was 40%, and then you raised it to 50%. This year, you are saying, so I guess, should we interpret this as possibly also being altered for some time during the year?

Yeah. Well, that's a very interesting question. No, the guidance we give is to the best of our understanding at this point. And there's also a reason for the prefix saying above 40%. We live in a volatile world. So to the best of our intelligence and outlook, this is to provide the market with the ability to build their models. and i think then we will have to see how the year develops i don't have a better crystal ball than anyone else but i i do see how many new surgeons were constantly getting on board and i must say it makes me optimistic and i think that's built into the the guidance thank you okay yeah i think i think it's good to to um to phrase it as plus 40 percent because

That could mean 50%. Anyways, I think a lot of investors are also keen on getting guidance on profitability. Now we are seeing EBIT margins accelerating and so on. Is this something that you are going to look into and make you more comfortable in providing a guidance on profitability?

Again, I think that the way to look at this, Oskar, is to look at everything that we do focused on sales and making sure that we continue to deliver on top line. And we don't want any target in the shorter term to impact any decisions in that direction. In the longer term, I'm sure somehow we'll come back to presenting some guidance and ideas on profit. But I would recommend awaiting somehow what's happening, for instance, in terms of entering into spine and especially in in relation to a timeline and plan for a market rotation for 7G or V into Spine, etc. So, yes, eventually, I'm sure we'll come back to guidance on it a bit. But here now, I think both Emil and myself are very glad to see some of the focus and the guidance that we have presented for 2025 with a plus 40% sales growth.

Yes, okay. And I must also ask a question about the UK and the repatriation of elective surgeries. And I suspect it is knee and hip surgeries. And these are not, you know, high volume indications for sediments. What I'm worried about is if other countries would look into this Do you have any indications that other countries in Europe or even in the U.S. are considering doing more of these surgeries that Cerament G is really a high-volume product?

First of all, you're correct, of course. This is public information. There's been three, four different categories of surgeries, and one of them is primary hip and knee. So the first... the first replacement of a bad joint. And Sermand has a fairly good penetration in the revision. So if those surgeries go wrong, that's when you have more concerns about infection and more concerns about bone loss. In the primary surgery, yeah, the patient is eating antibiotic for a couple of days in advance, and the infection risk is quite low. Some of you might have seen that there's been also statements from the Swedish ministry saying that a couple of different surgeries will get prioritization. The backlog has become unbearable. So I guess what we might see in Europe is a politicization of the health care system where It's used statements like this also to influence general public opinion in the U.S. not. I know that the recent administration, a new administration in the U.S. has made quite some bold statements also regarding FDA and approvals and health care. But I do not think there will be any decisions that will even come close to influencing ceremony as the hospitals and the surgeons have a very decentralized decision making here and they have a much more developed health economic view on setting their prioritization, which is also one reason why ceremony is having such a strong uptake in the US.

OK, thanks. I have a few more questions. And the first one I'd like to ask you is we saw a very good absolute sales development quarter of a quarter in Q3. on CERAMENT-G in the US. At first glance, I thought that it was because of a great contribution of CERAMENT-G in trauma, but then I learned that it really wasn't the case. How would you describe the dynamics in Q4 from bone infection and trauma? Are we seeing a larger contribution from trauma?

Yes. Trauma is picking up in Q4. There was some trauma also in quarter three, which supported those numbers. So if you look at all sales of Sermon G since launch, since inception, you can see a clear trending curve, and that curve is trending upwards. The peculiarity a little bit with orthopedics is that When you have a rather basic product that replaces another product in the portfolio, it's like selling a generic pharmaceutical. You can have a pretty quick uptake, but that's not us. We're changing the standard of care. We're changing the protocols. So we are winning hospital by hospital, surgeon by surgeon. Sometimes that gives a slightly slower uptake, but it gives a very strong momentum once you get that traction going. So what we see in trauma is many surgeons are coming on board, but they're using it a bit cautiously in the beginning to see, is it really giving those results that the clinical studies have proven? And we had exactly the same dynamic when we launched two and a half years ago in the bone infection segments. So we look very confidently that the trauma segment will place itself on top of the existing market segments. And I think there will be even more segments to come that we can open up. We've spoken a little bit about prosthetic joint infections, where we haven't been so aggressive because we haven't had the clinical studies yet. But hopefully this is also coming in due time and giving us new opportunities for growth.

Thank you. And as you said, the sales curve of ceremony for bone infection in the past 16 months or so since it launched has been very steep, very impressive. And from a, I mean, do you expect that trauma sales, considering that the volumes are significantly higher for trauma than for bone infection, that trauma sales in the coming 16 months should surpass what we saw in the first 16 months for bone infection, or do you expect it to develop sort of on a one-to-one ratio?

I cannot give any such prediction. I would just put myself in a corner where I would have to justify what I've said, because I agree that the curve has been linear, but what we see is volatility from week to week, which depends on the go-stop-go dynamic and which surgeons are using it. So if you don't mind, let's encapsulate that question. It's a good one, but let's come back to that when we have more observations, maybe in a couple of months. Sure.

But if I may, if we have a long-term perspective then, do you expect trauma sales to contribute more to group sales than bone infections?

Yes.

Thank you. And then on the very interesting spine segment that could unlock a lot of value in the long term, you have said that you're aiming to not let commissions surpass 30%. I'm just wondering if you can elaborate on that conviction, because I see commissions in this film significantly higher than the 30% you're aiming for.

It's very much dependent on product. So if you have, if there's an existing product in the market and you pay distributed sales reps to replace it, and you say this product will do what that product does, you will have to pay a higher commission. You will have to pay, our investigation showed even up above 50%. If you have a completely unique product, if you have a product like Cerament G, with solid documentation, unique in its place, creating something that no other product can do in the market, our investigation shows that you will be somewhere around 30%. Probably not below 30%, maybe more likely slightly above, but in that dimension. Because the distributor reps can then sell this product on top of what they already do. It doesn't replace a product. It does something unique in that value proposition. Possibly it's too early to say, but one could think that the commission on Cerament BVF might be slightly higher because undoubtedly Cerament G has much more solid documentation and a uniqueness which is unsurpassed by anything else in the market. So Cerament BVF is being worked on right now in the preclinical studies, but I think everyone on this call agrees that the The big traction is anticipated when Cerament G or V will be available for spine. And the indications we have so far is that the commission will be approximately the same as they are for extremities due to the uniqueness of the product.

Okay. And the strategy for... you know, improving your clinical documentation with sediment BVF is now the preclinical studies. But are you also looking into, I mean, on sediment BVF then, doing any clinical studies, or are you maybe approaching this through a registry study once you have launched? Or are you happy with preclinical and then you're going to go commercialize this?

Yeah, for sediment BVF, it's more the dynamic of replacing something which is already another orthobiologic that's already in place. So preclinical studies comes a long way. We have not decided if there will also be clinical studies. Those will be then validating confirmatory clinical studies. The decision hasn't been made and no such studies are running at the point now.

for ceremony it's different here we would like to have clinical studies okay as it is a game changer therapy right right so a final question um i'm very happy to you know hear about your geographical expansion but i'm wondering where japan and other parts of asa stands on the agenda

Yeah, we're running a little bit short on time, but we have to come back to Japan. We are progressing, but we don't yet have regulatory approval. It's going to take a bit more time. We're in good dialogue with the authorities. And when we have the regulatory approval, we will come back and we will share how we will go to market. In Australia, South Africa, Canada, we have full approvals for the products. we have opinion leaders that are asking us about the product. So these are more straightforward to take the concepts that we have rolled out in both US and European markets and replicate them. We will come back also in due time and speak about other parts of Asia, but it's not the focus right now. Now the regulatory team is still working on getting all the approvals to be able to access the market.

Perfect. Thank you very much.

Okay. We're up on time. Thank you, everyone. I do appreciate the many questions.

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.

OK, we will we will have to wrap up. We're short on time, everyone. Thank you so much for taking the time to call in. Thank you for the support. Thank you for the interest. And especially for those analysts that took time out of their sport law to join this call. Highly appreciated. I hope you can enjoy the rest of the week and we'll speak to all of you soon. Thank you. Bye bye.