Implantica AG

Thank you. Good afternoon, everybody. My name is Peter Forssell and Implantica, as you know, is all about bringing advanced technology into the body. For new listeners, I have invested lots of money in Implantica and this is the second round of successful implant business. The first was the adjustable gastric band. Implantica has developed an e-health platform, a wireless energizing platform, which we are complementing with a simulation system. And this is a very advanced system and that will be able to be used to most of our pipeline products to create very advanced smart e-health products. And the key to success is that you should be able to monitor what happens inside the body from inside the body. And you report to your health care provider and they can then take action and change treatment on distance. And this requires lots of effort to do this in a safe, secure way. And if you can do that, you will be able to save lots of costs for society because suddenly you don't need to have people running to the hospital all the time. And e-health will for sure revolutionize health care. It has happened so many advancements outside the body that has not yet reached inside the body. And in the past of Implantica's work, this will happen. And we are in the forefront of this development. And together with that, you then need a wireless energy supply because if you have these advanced implants, suddenly you consume much more energy. A paste baker, for example, could last the battery for 10 years without any wireless energy supply. But that's because to stimulate the heart muscle, you need very, very little current. However, these advanced implants, it's not possible to cut people open every month and change the battery. And therefore you need a wireless supply of power. And Implantica has, based on these platform technologies in our eyes, we have made lots of patent application. We actually have more than 1000 patent cases. And we've been sitting 70 people for three years doing market analysis, product analysis, prototyping and selected 40 what we believe viable implant products among around more than 300 really mentions. So we have a fantastic pipeline. However, our focus now, of course, is on reflux top. And based on that, we have a very bold vision and mission. We believe we should become the world leader in smart medical implants. And that's based on all the patents, all the platform technologies and actually our first product reflux top, who has an exceptional potential. And our mission is to provide needed medical implant solutions to millions of patients and at the same time save cost for society. Let's start with reflux top. I will before I start with the business update, as usual, give a little recap. And here you see the device deployment tool where we insert reflux top and you see the device there. And the device is like two and a half centimeter in size. And existing treatments today have clear weaknesses. So the surgical treatment, they have been focusing on and believe that the muscle, the sphincter that close between the stomach and esophagus, that this is weak. However, that's not the case. And therefore existing methods is then focusing on trying to support the closing with the side effect that you get swallowing problems, you can't belch and vomit, you get gas bloating because you mainly can get gas down with your saliva and food, but nothing comes up anymore. And these methods, they have been declining over the years and it's actually only a fraction, small fraction of all the patients that need surgery that actually get surgery because the medical doctors thinks the side effects is too high price to pay. And reflux top on the other hand, we treat the cause of acid reflux. So we realized that there's absolutely nothing wrong with this winter. We don't need to fool around to affect the food passageway at all. The only thing we need to do is to restore the original anatomic position of the sphincter and it needs to be way below the diaphragm. And this we do by placing a little device, the stop device on top of the stomach. It's called fundus. And this is then securing the position, it's restoring the angle of his, this angle between the stomach and the oesophagus and the sphincter position here. Everything is restored in its original shape and then people treat themselves. They get completely treated. And this has been confirmed in a white paper from the American Folgott Society where they basically describe how reflux should be treated. And it's basically a description of the reflux stop procedure. Here you see how it looks on an x-ray sitting below the diaphragm and you see the stomach further down and it's a bit more so not that the lines are a bit cloudy, so to say. And you also see on the right here, how you have gone with the gastroscope and endoscope down in your stomach and you turn it upside down and you see how the reflux stop device sits there nicely. And why is now reflux stop such a special product? Yeah, first of all, the market is completely enormous. It's one billion people who suffer from acid reflux and one billion people take PPIs every year. One billion people and PPI is then a medical treatment to reduce the acidity in the stomach. However, this drug, I will come to that, is dangerous to take for the rest of your life because it has too many side effects. Forty percent of all the people who take drugs, which is then around 400 million people, they are not well treated by the medical treatment. So it's only 60 percent that actually get treated by the drugs. And even if you consider and accept the drug therapy, it's still an enormous amount of people who need the reflux stop device. And why is now this so important? Yes, it is important because people get cancer. So you know that there is society do anything to find cancer patients. They have big programs for breast cancer and they try to find every cancer, save lives. In our treatment field, 48,000 people is allowed to die in esophageal adenocarcinoma only in Europe and United States together. 48,000 deaths. That's absolutely unacceptable. It's nothing that could go on. And the problem is that the cancer is can come in the background for all the side effects with surgery. And there is no other good treatment available. And you can see to the right here all the side effects with these drugs to start with. You get cancer, you get kidney disease and so on. And in the large study from United States with hundred and fifty seven thousand US veterans taking PPI for 10 years, four and a half percent died. Extra deaths due to PPI use. So it's not a light drug to take. You can take it for some time and for five years or the rest of your life. It's really dangerous to take these drugs. So that's why reflux stop has an extreme potential to become a really, really blockbuster product. And I wanted to start with some business update. So first of all, reflux stop has the potential to become standard of care in the treatment of acid reflux. And that's because our society has been so fantastic and we have been very successful in convincing the surgical society that reflux stop is really the way to go. So the likelihood for this to happen has dramatically decreased the last one and a half year because we have been extremely successful in convincing the society or surgical community that this reflux stop is really something to go for. And I will tell you a little bit of what has happened here in our different areas. And as you know, we separate a little bit our market access into market expansion, superior clinical data and superior cost effectiveness because you need all these three to be able to get the societies and health care insurance companies to pay for the device. And it's when you finally get paid for the device, that's when the business finally take off. So first of all, United States is, of course, a very large and very powerful market. And it's also a bit easier to get going with that market than in Europe. It takes longer time in Europe to achieve reimbursement. And it's so many countries, different rules in every country. So we filed now for our FDA approval in March. And this is the first of three modules. So we have agreed with FDA that we can divide the application up in three modules and they will be filed with three months in between each. So we have filed the first. We are before the summer here going to file the second one. And we will then get feedback from FDA as it's ongoing. So we will within not too far time get feedback from the first module and so on. So when we come to the third module, it will only be feedback on the third module left. And this is, of course, a fantastic achievement. And this is really a heavy work. It's really significant. It's hard to understand how much work it is behind such an application. It's a wall of papers, even if they nowadays are digital. So we completed during the first quarter request from FDA. And we are now going to validate its human factors validation study of reflux stop. That basically means that we had 16 surgeons who was basically operating by their own. First they were trained. We actually trained even 20 surgeons on the reflux stop, 60 surgeons then before the actual test where they operate themselves. So to say, with the reflex procedure often getting the successful training. So we had more than 45 cadavers and we worked at Northwestern University Stimulation Lab in Chicago. And it was an incredibly successful event. And this also then is a fantastic pre-launch event in the United States. Because suddenly we have 20 surgeons who is very well trained. And we had four European proctors over there to train them. And they were trained in all aspects of the procedure before they made the actual test. And all these centers, all these surgeons want to start with reflux stop, of course. So it is really, really a powerful start in US. And it's of course fantastic to have trained them. Of course we need to retrain them on real patients when we finally start. But it's a really good start for the commercialization when we finally get our approval. In Europe we have so far more than 750 patients operated. We have more than 25 reflux stop hospitals. It's actually more than that, but it's going quite well. However, we are only selecting center of excellence. We are not giving priority to sell and get turnover at this stage. We are only focusing on quality, quality centers, good results, fantastic surgeons. And the interest for reflux stop is enormous. We can easily double this quickly if we would like. We are not selling in the Middle East. We'll give lots of more turnover. We are just now focusing on quality, getting our FDA approval. Because the US market, that's something completely different. And I will give you a little bit of overview of what happened during this quarter. We had our first ever public tender win for reflux stop in Italy. So the public healthcare system has approved to pay full price for reflux stop for this hospital here in Italy in Turin, which is a fantastic achievement. Not only that, second win, second hospital. All these hospitals of course now filing to be paid for reflux stop in a similar way, but it's all a public tender system. And also here they got approved. In this case, they got funding for 36 reflux stop devices for full price. All this is the beginning of a new era, you know, when we finally can get paid for our products. So all these hospitals we have today, they operate without getting paid. They find resources in some way. They get some money for doing studies. But they really can't go with full blow and do this procedure because they are not paid. Same in Spain. The first in-country public tender win for reflux stop. They get paid full price for the device in a public tender. All this will achieve the reimbursement outcomes in more countries. This will strengthen our position when we're working towards getting finally reimbursed in many European countries. Here you see a bit the countries we are focusing on. And I guess you already could look at the map here and see. I have some centers who have been added, I will show you about. So we had, I will give you an example here of six centers that have been added. So in Italy, we have one in Palermo Hospital who has been added to make new reflux stop surgeries. We have a second one in Italy. This is, where is this? I don't remember. Anyhow, another second center in Italy. We have a Okershus in Oslo, University Hospital, Norway. They made five surgeries and it's two surgeons who will be involved in doing surgeries here in Norway. We have Spain. This is on the Canary Islands. They also started to do more surgeries. We have another hospital in Spain in the Madrid region. Also a University Hospital starting with reflux stop. We have another center in NHS who is starting to do reflux stop. We have to be in agreement with the hospital, how and what we say about this, so we cannot disclose the center right now. But most importantly, NHS has started to review reflux stop for reimbursement. So we have had the initial meeting with something called EPAC. It's the Interventional Procedure Advisory Committee of NICE. NICE is sort of the National Institute for Healthcare and Excellence in the UK. That's the one who pays for all the healthcare in the UK, except they have a private section as well, but the public section is NHS. So they are now, this is a procedure that will take a year maybe. And then we'll go through everything about the reflux stop and then they will decide in different categories how we could be reimbursed. Maybe it will be some entry level reimbursement. It's hard to predict exactly what the decision will be here. But this is of course good news. If we then move over from the market expansion to clinical evidence, that's of course what we are working very hard on, because that's the platform as you see here together with the other two. We need superior clinical evidence. And that's why we are starting not less than two randomized trials, which I probably have told you before, but it's the decent compared standard of care and we also compared to the drug PPI. In another study where Oxford University is the leading hospital. And here it's in Vienna, Professor Schopman, who in AKH they are called, it's the largest hospital actually in Europe, who is doing this, being the lead of this study. So we are doing more studies and it's lots of results because it's now more and more hospitals who get longer and longer data, more and more patients, and they present their data. We are supporting to help them if they have any lack of resources and so on. And it was six presentations in the world's largest Congress, Hages. Six presentations about reflux stop, read world data from more than 200 patients in different centers, clinical outcome of our four year results. We have fantastic four year results with our CE study. The results just continue to be good year after year. And in terms of clinical evidence, we are really, really good. We are just continuing the hard work to collect more and more data. We get longer and longer data. And that is the key component for achieving reimbursement that they pay for the device. We also publish articles, of course. Here is two articles that has been published. One is in effective esophageal motility. So many patients have weakness to move. Contractor esophagus, so they get swallowing problems, food is not moving as it should. And that's an important group of patients where no good existing treatment exists today. So the existing treatment, as you remember, they encircle and put pressure on the foot passageway. And that, of course, works very poorly if you don't have the power in your muscles to transport food down. Then you can't bypass this pressure you put on the esophagus. So these patients suddenly have a treatment that they didn't really have before. We also have large hernia patients. That's also a very difficult group of patients where the stomach is going up into the chest and it could be 10 cm, 8 cm of stomach into your chest. And when you then put it down, you have like 50% recurrence rate. And it's very difficult to operate these patients. Also with reflux stop, it will be a higher rate of recurrence. But everything tells us that we will have better results than existing treatment. Here is a study about large hernia also published. Here you can see a little bit the achievements we are doing here. You see 2023. If you just look at abstracts, we had 45 abstracts during 2023 and already now during 2024, we have 24 abstracts. This is sort of a summary of studies that you present on the conference orally. And you see here manuscript six was published last year and we have 50 now in the pipeline to be published. And we are doing two registered studies, two RCTs and ITT studies. We are really putting all effort we can to show we are superior. If we then go over to the cost effectiveness, here I don't have so much new to tell you, but I just wanted to repeat for the completeness. At University of York, there is Health Economic Consortium, which is one of the most respected centres for health economics and medical health economics in the world. They made a study for treatment of reflux. They compared nesophundic application, links, the magnetic band, they compared PPI, medical treatment and the reflux stop. And the conclusion was reflux stop is the most cost effective as a reflux treatment. This study is gold for us. That means when we come to the payers, to the health care society, so we come to the insurance company and say, hey, you gain money. You don't lose any money by operating the reflux stop. That's of course fantastic. Also, we have published, we have published more many articles here. So first of all, we have the cost effectiveness. This is published in Journal of Medical Economics, which is one of the most respected magazine in this field. Also, we have another article about budget impact of reflux stop in UK. And this is also very important to show that we have very limited budget impact when you operate the reflux stop because you save so much money on complications and side effects and that you get the better treatment results. So from our perspective, it has been really, really good quarter. We feel really well here at Implantica and we feel that reflux stop is unstoppable. If we then go over to the market and finance, I wanted to give the world to our CFO Andreas Ördberg.

Thank you very much, Peter. Good afternoon or good morning. And we should now be on slide 47. Implantica had a strong start leading into the year with sustained momentum for reflux stop, where the team continued to activate new centers and deliver excellent patient outcomes. The reported net sales of 596,000 euro for the quarter, an increase of 94% compared to the same period last year. This is driven by a combination of new centers and higher activity levels at existing centers. As mentioned by Peter, we are only selectively engaging with key opinion leaders to build a strong reimbursement platform. This to create the foundation for broad scale commercialization of reflux stop. Moving on to gross margin. We continue to deliver industry leading gross margins, despite the subscale nature of the business. Adjusted gross margin for the quarter amounted to 92% compared to 95% in the same period last year. The combination of superior gross margins and no limitations to scaling reflux stop production underpins the operating leverage we can expect as the business scales and matures. Let us look at EBIT. Our operating loss expanded to 7.1 million euro, up from 4.9 million euro in the same period last year. The general and admin costs remained flat year on year. At the same time, we experienced a sharp increase in R&D spending, both quarter on quarter as well as year on year. Let us unpack the drivers of the R&D cost expansion. Four types of costs make up the R&D line item. Firstly, costs for filing new patents and managing the existing patent portfolio. Secondly, data collection, as the studies that Peter just mentioned. Thirdly, development work relating to the EL platform and pipeline products. And fourthly, activities relating to regulatory approvals. Over Q1 2024, the key R&D cost driver was the regulatory approval process in the US. Best met the FDA related cost in Q1 to be in the range of 2.5 million euro. R&D costs relating to the EL platform and pipeline products have been materially reduced. As communicated over the poll, we will continue to reduce investments in e-health and pipeline products as we redeploy resources to the commercialization or reflux stop, including the launch of the RCTs that Peter has mentioned. And those studies will show up as R&D on the financial statements. Let us turn to slide 48 on our balance sheet. We are fortunate to have a solid financial position. End of March, we held 80 million euro cash. We do not carry any interest in bearing debt on our books. Over the quarter, the total net cash outflow amounted to 6.9 million euro. For the rolling 12 month total net cash outflow amounted to 22 million euro, also supported by FX Tailwinds. Let's turn to slide 49. In addition to our CEO and main shareholder, Dr. Peter Purcell, as well as other senior leaders in the organization, our investor base is dominated by Swedish and Swiss high quality institutions. And we are grateful for the trust and support we are receiving to build a commercialization to address a huge unmet patient need. Back to you, Peter. Thank you.

So, I think it's time for questions.

The first question comes from Qian Hun Lee from Pareto Securities. Please go ahead.

Hi, good afternoon. Thanks for taking my question. So, a few questions here. Could you elaborate on the timeline for modular submission? Do you think it will be longer than the traditional submission or is it the opposite because now you can receive ongoing feedback from the FDA?

Yeah, so because you get ongoing feedback and have them time to if it's anything FDA wants to have done or want to be corrected, you can do that during the meantime the process is ongoing. So, it's the same total timeline because you save time to have their feedback, not all at the end, so to say. You get feedback module after module.

Okay, thank you. And for those public tenders, you have one right in Italy and Spain, for example. Could you give us some indication in terms of the revenue potential and how many of these kind of contracts do you prefer see yourself to achieve, let's say in the coming 12 months?

I mean, it's all depending on how we apply our resources, you know, how many more centers we decide to go on. But for the moment, we have, I think it's eight plus seven centers in Italy and Spain, and we have at least as many who would like to start. And all of them will of course try to achieve a public tender win. This everybody will file for this. And this is a process that will then expand year from year. So maybe the first time you make such a tender win, you get 36 products. You know, the next year you get 70 products and so on. It's a process that takes a few years before you can expect, you know, most of the country to actually pay for this device. So it's a step by step process, but it's also from our perspective, balance between that this stage, we only want to operate with pop-clos centers. Really experience surgeons. We need quality. FDA will review data from all over the world. We are insured. Our main focus is FDA approval and to long term become a huge company. That's what we are aiming at. The revenue today or tomorrow, that's not so important for us. It's all about building our strategic plan step by step. Ensure that this would be a very, very successful project and that the investors will be super happy one day.

OK, yeah, that makes absolute sense. Just a last question. So regarding the RCTs, do you still expect to initiate one of them within this year? And if so, which one will be the first one against PPI or with the initial fund application? Thank you.

So we are starting both these RCTs this year together with our two registry studies. So we will have four ongoing. We will actually start the fifth RCT as well. So all this will happen in parallel. It's all about the question. Hospitals and contracts, they go a bit slow. It's a bureaucratic organization. It's not like you negotiate a contract in one day, so to say. And all these contracts, all these approvals by the different ETI committees all over the world. Now we have the ETI committees approvals waiting and so on. This is a bureaucratic process that we can't 100 percent predict. But our goal is that we should be able to start already before the summer with this RCT. But I can't tell you. We have one center, you know, with Oxford, as I said. They are leading the PPI study and AKH in Vienna, Professor Schottman. They are leading the Nissan study. So it would be wrong of me to tell you something. I don't have control over. But you can ensure that Implantica is doing everything we can to now start these studies. And it's not a long time left before we can start.

OK, got it. Thank you very much for taking my questions.

Thanks for joining the call, Jen.

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

Yeah. I don't know. Where do I see the written questions then? I see that there are no written questions. I mean, you are always welcome to write to Implantica if you have questions. If something didn't work out here. But I can't see any questions.

So.

Meanwhile, I can tell you, for example, that Implantica has seven people only working with clinical evidence. They are just doing literature searches, supporting writing of articles, supporting abstracts, supporting presentations at different congresses. They do everything to be a support function and to help us get more and more articles published. And it's four medical doctors in a team of seven people who only do this. As, for example, what is required here to really get this done in a professional way. And also, as you know, all these studies require visits to the hospitals and follow up. And it's quite a big effort to just to do one randomized trial is a big effort to do five or sorry, five. It's not randomized. All of them meant to

do

three randomized trials. That's a huge undertaking. And that's why we really want to speed up the process to finally get this going in a in a good way. I think we can conclude that we don't have any any more questions then. And we thank you very much for listening and really appreciate everybody's support and effort. And yeah, have a really good day.