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 And finally, on our quest to transform an outdated standard of care, we constantly encounter new growth opportunities.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.