Implantica AG

This is Peter Forssell here and we should talk about Q4 2024 investor presentation for Implantica. And I always have a slide about my background that I have actually done a successful journey with implants before and invested lots of money in this company. And Implantica has something really fantastic in its pipeline. And that is that we have developed an eHealth platform. And this platform then will allow to treat patients on distance. And you can control what happens inside the body because the focus of this system is from inside the body. And you can wireless recharge implants and connect the stimulation systems and so on. And to be able to treat people on distance means they don't need to go to hospital as much and it will be much more convenient for the patients. And we also have a huge patent portfolio because we have gone through the whole body to see how could we now improve healthcare if we have this platform technology, both the wireless energy platform and the e-health platform. And we actually have spent three years going through all these patents and evaluate them and selected not less than 40 products from 300 inventions. And this will be able to... you know, revolutionize healthcare basically. You will be able to treat better and you treat more efficiently, you will save cost for society. And I have a few examples only quickly here. One is people who has for some reason take away the large intestine, for example, and they have a plastic bag to collect the faecal matter. They don't need that anymore because we can now make storage and open, close, empty and function everything inside the body. And they just need a remote control instead. And this is around 1 million people nearly every year who is operated with this. We also have people who can't urinate for some reason. Maybe they are traffic accident or spinal cord injury or multiple sclerosis disease or something. And in this case, they put in a catheter in themselves every time they should urinate. Five times per day, at least, they need to put in a catheter in their own bladder. And that's quite a burdensome life. And instead, with our system, we can empty the bladder with the remote control without using catheters. Just as examples, Implantica actually have so many products and so big IP portfolio that we believe that we should become the world leader in smart medical implants. So we are not shy in our vision. And the main product that we of course are focusing on right now is RefluxStop, especially since we are coming closer and closer to US launch. And before I start with the business update, just a quick recap how ReflexStop works. So existing surgical treatment today has all been focusing on that you need to compress your food passageway. You need to try to close by applying pressure. And that, of course, logically means you get swallowing difficulties. You can't belch and vomit. You get so-called gas bloating. You get distended swallowing in your abdomen because you can press the gas down with your saliva and food, but it doesn't come up anymore. So it's not so well-liked surgeries and Implantica has then completely new treatment principle. So you don't affect the food passageway at all. The only thing that was needed was to reposition and restructure the normal anatomy in this region. And suddenly the body itself treats acid reflux. so by ensuring that this winter the lower esophagus winter between the stomach and esophagus that that is clearly on distance far away from the opening in the diaphragm muscle you know who divides the chest from abdomen people get treated by themselves and The reason is that when you breathe, you get pressure variation. You can imagine in the chest breathing, the pressure comes and goes, comes and goes. And this is leaking out through this opening here in the diaphragm called the atus. And that is what affecting the muscle and create the reflux. So very simple, very genius solution. And it also works exactly as intended. So here you see a little device to introduce it through keyhole surgery. You see the device in the end and the little deployment tool that is associated with it. And why is now acid reflux so important? Yeah, the reason is it's one billion people have acid reflux. So one billion is enormous treatment field. It's larger than obesity. And it's dangerous to have this acid come up in your lower esophagus over and over again because that's how you get cancer to terrorize your tissue over and over again you know the acid is burning causing small mini ulcers red irritated and that's how you get cancer and it's 48 000 people die from this kind of type of cancer in in the world every year today it's enormous amount of lost lives and most of them are due to this disease so let's come to the business update sorry so We have really good news for today, actually. So, you know, we are filed for FDA approval to sell in United States in three modules. And we have now got the information that module one that's closed from FDA side. So that's good. And also we have received feedback from module two. So module one is sort of closed, although they should come and do a formal inspection of the production sites. And module two, we got feedback who was very, very favorable. The people we have here who has experience of this kind of responses from FDA, they say this is absolutely unique, very, very light and pleasant response from FDA. So we believe FDA really wants this product on the market. So this is really, really good because this module two is the key module. It's ten times more important than any other module because this is the clinical trial and this is the basis for everything that you have a successful clinical trial that FDA accepts. so we we nearly opened a champagne here actually um so it's it's absolutely this is a fantastic milestone actually this is something really incredible because that increased the likelihood that we now will get the fda approval substantially so we are now preparing the response and because this remarks and questions for fda are so light We talk about a few weeks to prepare this answer. We are also completing the module three, which is the last module to file. And that will also take a few weeks. So weeks to a few months, that's sort of the absolute maximum this could take to now file. And it hopefully will be in the very near term now we can file the last module. And that's really, really great news. And why is now FDA so happy with our clinical module? Yeah, the answer is that we had fantastic results. You have probably heard this before, but I like to talk about this because this is so fantastic. At five years, so five years after treatment, one single patient still took medication. this is an absolutely incredible results it's unheard of such results and this is giving a little bit indication why likely fda wants this product to the market as soon as possible because this means something for the patients And you can see here a comparison at five years. So it has recently published a huge literature review of our main competitors, so to say, NIST and Fundification, who is regarded as the standard of care in all the guidelines. And there it has been huge compiling of all the different articles and all the randomized articles has been used. And when you compare to that platform of results for Nissan, you can see here the green lower staples here, they are sort of reflux stop. And it's basically like night and day. It's absolutely outstanding results. So the likelihood that reflux stop will conquer the world and become the new standard of care is quite high. And that's very, very promising, of course. So we are already starting the US market entry preparation of course and it's many many things you know to think about here with the business development and we need to do the right marketing and we need to build up some kind of customer service organization. It's many many many many things that need to be done to prepare for a US launch and that's what we are doing right now. And as we have done already a usability trial in the US, maybe you're aware of that, we had 20 surgeons who were trained on cadavers and operating two reflux stop cases each. Yeah, we had a good way here. So we have already These centers that we trained in the cadaver, they all want to start to do this procedure. And then we have 10 to 20 more who has told us afterwards during the congresses and meetings and so on that they want to start. So we have a fantastic start here in US to make a really good launch. And you can see a bit how it went for our main device competitor. That's, as you know, the treatment is not so optimal because it compressed the food passageway, but they still managed to get 400 hospitals in US and more than 50,000 implants. And now it has sort of declined because now they see new, better treatments. But still, it tells you a little bit the potential of the US market. and what we are focusing on right now is three main topics first of all we need now to show the cost benefit analysis those who has followed us you know that we have made very advanced cost benefit analysis in many countries today we've gone all over the world so to say to try to analyze the cost benefit of reflux stops And now we are building a new model for the US market. And this is very important for the payers. So this is in construction, an article about this. Also, of course, we need to find out what is the payers, so those insurance companies and so on, to pay for the procedure. What is their requirement? So this is ongoing. We have started with the 20 key payers and also selection of hospitals. Which hospital should we now select in the initial start here? And this cost-benefit analysis, you know, we have the leading surgeon in US, basically Professor John Lippham, he is involved in this and he will be the master for this article. So it will be very, very important article. And that's very far away in this process as well. Also the payers, you know, it's actually in U.S. you have more than 1000 payers, but there is maybe 20 who is the key, maybe 10 who is the key payers who pay for the surgeries and so on. And normally in U.S. you can get them to accept that instead of doing the links to reflux stop, that's okay. And you get the same pay. That's why the U.S. market is much easier to target than the European market. In Europe, it's like black and white. Do you get paid or not? Could you do surgeries or not? Here it's more a floating process, which I will show you. So we are already starting to talk to the hospitals. We, of course, are not allowed to make any agreement with the hospitals until we have the approval, but we can prepare all the ground because this is an admin process. normally could take quite some time. It could take half a year to get the hospital fully onboarded and trained and everything. So by starting this process already now, we hope we should get a quicker launch when we actually get there. And here is just an example who shows this is a company called Axionics. There is actually many, many examples on the US market. What happens when you get a good, well-working medical device on the market? Here you can see they get FDA approval 2018. And here can you see how the revenue expands. And it's 2023. I think they had a value of 3.6 billion, something like that. And there is other example with even higher valuations and faster and someone slower. But it's just to give you a feeling that the US market is clearly superior when it comes to developing growth. So if we talk about our three pillar strategy once again, you know, with the superior cost effectiveness, superior clinical data and market expansion, I can show you a bit what we have done here during 2024, because we are now at the fourth quarter. It could be nice to summarize. And you can see here that we have made 36 conference abstracts to leading conferences. We have 28 presentations, either oral or poster presentation in leading conferences. We have 22 submitted manuscripts of articles, whereas 17 has been published. We have 11 additional manuscripts already because it's more and more data, you know, more and more surgeons do reflux stop and more and more data pops up. so already this year we have certain abstracts and and so on several presentations so it it's a really hard work to build the platform from where you can make a very fast expansion of this business So here is one, it was Professor Lippham I talked about before, he hold a nice speech about reflux stop at this big, huge conference they had in Hawaii. So we also have our clinical trials to really be able to really do this in a quicker way, we have realized we need to have a randomized trials. So we have two randomized trials and they are more or less ready to start now. We have seven ethics approval in the different countries, protocols, okay. and so on. So it's sorry, seven submissions and four approvals. Yeah. And we have 12 sites we are working with. So we will hopefully we can even start end of this quarter and maybe more realistic in the beginning of next quarter with these trials. And that, of course, will also be a milestone for for us. We have also lots of real world data popping up and actually the real world data is more or less as fantastic as our clinical trial. It's not that our clinical trials stand out and the real world data is poor. No, it's fantastic. So here you see one study from Germany. It's a totally independent regional hospital, not even a university. They operated 79 patients in Germany. And their results is even better than us, so they had. Also here, PPI use, you know, it was 94.9% took PPI before surgery and 2.5% after surgery. So that's approximately in line with our data. And then they had the questionnaire. You ask people how they are treated, 10, 15 questions. Then you find that the median improvement was 100% and mean improvement 92. That's absolutely astonishing. Imagine you have 15 questions and you have score zero to five which means you can get 75 points And to have 100% improvement on all 15 questions, the patients need to answer zero. And to have a median value of 100%, more than half of the patients need to answer 15 questions zero, if they have any symptoms or any problems. That's an absolutely astonishing result. It's just a dream result, basically. And if we then continue on the economic aspect, we have done some further economic analysis, so we even have done now in Sweden, to show that we have better cost effectiveness. In Sweden, we reflux stopped them in another treatment. And we also have made it in Italy, also successfully published. And the Italian paper even was selected as the top tier 5% in this eSport, the main Congress for these topics for payers and the healthcare providers. So we are working effortlessly And finally, then market expansion, of course, the biggest effort with market expansion is the US part that we can see that we have done more than 1000 surgeries, quite a bit more, and we have quite a bit more than 40 hospitals in Europe by now. And we had 15 new hospitals this year. And as you know, we can have many more hospitals. We can have much more revenue, but we are not taking all hospitals. We are ensuring quality. When you should go to FDA and US, they look at all the data worldwide. We need to control that we only have top class hospitals, centers of excellence that do perfect surgery. That's why we select the key ones. We train them carefully. So our revenue figures, you don't need to care about. Just be concerned that we now get the US approval and you will see how it will develop going forward. So here we have some hospital in Spain. I think this is three centers in Spain. La Paz University is one of the largest hospital in Spain and also worldwide very famous hospital actually. And we have some more hospital here in Germany, in Italy, in UK. So we are, this is just for the last quarter, some hospitals. We're also lacking lots of media and social media attacks. And we have lots of ongoing things everywhere, different activities. I can give you one example here is about the patient here, Philip Perkins, who got a reflux stop and he was interviewed in Radio Jackie, for example. And I don't know if it has like 800,000 listeners or something like that. And Chelsea Westminster, it's one of these NHS hospitals. So that's one of the public hospitals in UK. And they even made their own press release and released. fantastic press release made by them. We are not involved, so to say. And they in their own press release says reflux stop come in as a revolution, says Dr. Gomes. So it's not only we who believe in this. It's many, many others. And we basically see that we have reached the status now that reflux stop is unstoppable. This is like a little snowball in warm snow in the mountain and we are rolling down. So we are very, very optimistic for the moment in the Implantica team and we are very much looking forward for the US launch if we can finalize the rest of the topics. Yeah, then we come to capital market and finances. I give the word to Andreas.

Thanks, Peter. Good afternoon or good morning. Activity levels continue to increase over the fourth quarter. Compared to the same period last year, we saw the number of surgeries increasing, but revenues decreased by 30% to 442,000 euros. explained by an increase in free devices for studies. Full year net sales increased by 38% to 1.9 million euro. We expect the business to continue to grow. There will be quarter on quarter volatility due to order patterns, free devices for studies, as well as seasonality. However, to unlock the substantial revenue opportunity, we will require US market approval or broad European reimbursement. The business continues to deliver exceptional gross margins. Adjusted Q4 gross margins amounted to 90%. A decrease from 92% the same period last year. The lower gross margin is explained by expiring inventory. full-year gross margin decreased to 92% down from 94%. Gross margin fluctuations are expected due to the subscale nature of the operations. At scale, the exceptional gross margins will provide operating leverage, enabling high profitability and free cash flow generation. The Q4 operating loss amounted to €7.2 million, which is 3% higher compared to the same period last year. Full-year operating loss increased to €25.5 million, a 17% increase, explained by a fourth quarter impairment of intangible assets, which is a non-cash expense driven by a real alignment of the product pipeline strategy, and R&D expenses expanding year-on-year driven by minimal capitalization of R&D compared to earlier periods, as R&D activities in 2024 was driven by strengthening the reflux stock offering, which is not capitalized, including FDA submission preparations, usability study, and other data collection. Non-reflux stock R&D has been further scaled down over the year. General and admin expenses have also been managed down over the period. Let us turn to the next slide. We have a solid financial position. End of 2024, we held 64.6 million euro in cash and cash equivalents. Over 2024, we had a nest cash outflow of 22.7 million euro. We do not carry any interest bearing debt on our books. Let us turn to the investor slide. In addition to management colleagues, including our founder and main shareholder, Dr. Peter Forssell, our investor base is dominated by Swedish and Swiss high quality institutions. We are very grateful for the trust and support our investors provide to address a huge unmet patient need. Let me hand it back to you, Peter.

Yeah, I maybe could add that, of course, we this year has had lots of extraordinary costs. For example, the FDA process is very expensive, so you can calculate maybe four million of extraordinary costs just for your understanding. Yeah. So then I think we have reached The questions and answers section. And we will see here.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Qianxun Li from Pareto Securities. Please go ahead.

Hi, good afternoon and congrats with the progress. Just have a few quick questions. So regarding the U.S. commercial preparation activities, do you have an estimate of how many sales floors do you need in order to achieve a strong sales uptake? Thanks.

So, you know, for the start up in US, we don't need people to sell anything because we have this up to 40 hospitals already lined up. So what we need is training, going there to be there to check the surgeries and so on.

And that we develop in regions we are planning

region basically and we have an european surgeon who is working in Frankfurt today who is targeted to where you get a nice package for him. So he can then train surgeons and they can go to this hospital and be teach and so on. So we are preparing different matters. So this should be efficient. And I don't think it will be a large, expensive organization for the moment. It will be reasonable. But of course, we need to do some activities here to get a fast expansion in the US. That's clear.

Okay, thank you. And regarding the European reimbursement, could you provide a little bit more flavor on maybe which country is so far the most advanced? Because I understand you are trying from multiple channels putting the effort, but it's not a so straightforward process. But if you can provide some details on the progress, that would be great.

Thank you. Yeah, so the problem we have is that every country is different. And if I take, for example, Spain and Italy, where we today have 22 hospitals just in Spain and Italy, there is like a budget system. The hospital apply, could I please operate surgery flag stop? And then they get, okay, you get paid for surgery flag stop. The next year they can ask, could I get paid for 50 reflux stop and so on. And more as all these hospitals are now applying because we have several hospitals, as you know, who has got it for their device in Italy and Spain. So now it's all these hospitals is applying to get paid and more and more get paid. And this will expand over the coming years. So I say maybe it takes three years to have a full coverage here with with lots of hospitals getting paid but it's a process it gets more and more and more so in these countries if you take a country like germany That it's the total opposite. There you have something called DRG. That's to say you have a certain surgery has a certain number. This number gives you a certain amount of money. You get nothing else. If you are not part of that system, you are lost, so to say. There is no extra money, nothing to say, no, no, I want this or this in the budget system. No, you need to be in that DRG with a certain amount of money. We have then in Germany managed to get our own DRG. We have our number, we have everything registered, which is fantastic, but we just don't get paid enough. It's too small amount we get paid. So in this process, We are done working. It's something in Germany called IDEC hospitals. That means it's hospitals who do economic calculation. They send all the costs for everything, for the procedure, everything to INEC so they can do their calculation what you actually should be paid. And currently, the problem with this is that the ENIC hospital is not so many and very few of them actually are doing reflux surgery in a good way. We also need centers to do this kind of surgery. So for the moment, we are starting up in a few weeks our fourth center of the ENIC type. they need to operate a certain amount so you then can file into INEK and say, look at the figures, we need more pay for our number. But we have the number, we are in the list system and everything. So it's just a matter of time. In the UK, for example, NICE is currently doing an evaluation of our device to decide how we should be paid. Basically, it's not a reimbursement decision. It's a medical recommendations decision, but that will follow with the payment, so to say. And there we have... NICE is just evaluating if they are willing to postpone. We have applied that they should postpone the decision a bit because we have so... Five hospitals supplying data, safety data, 574 patients, and that's fantastic.

And that's why we are asking them to please put our process on hold.

It's tough work, but most of the work is done. We are coming closer and closer to finally get paid. But when you look at our revenue, as I said before, you can't judge this company of revenue. We decide how much revenue we want. We have prioritized quality, not revenue. So convincing the surgical society that we have the best treatment, that's already done. We don't need that. We just need someone who pays for the device. Then it will be. Okay, perfect.

Perfect. Thanks for taking my question.

Thank you. Thank you. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. Yeah, so then there are no phone questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

OK, so here I have many questions. So. Has FDA visit to production for this been scheduled after? Do you have an indication when it might be? We don't have an indication. Our specialists who is expert on how FDA works believe it could be maybe in June. We can't say, but it seems like FDA is favorable to us and our device. Then it's a question, when is FDA approval coming for Implantica? And the straight answer is, it's not in our hands. It's totally depends on how quickly FDA acts, if they quickly come and do their inspections. And yeah, we don't know. The only thing we can say is that the first two modules, I guess there will be nothing really to discuss because those will be sold. So the only module we have left is the testing module when we do all these biocompatibility. Yeah, it's, I can't also in relation to FDA, I can't really say any timing here, but we hope it will not be so long. It likely will be in a shorter time period. What is the timeline? That's the same question. Swedish healthcare system is that Amman has taken the Swedish Osthyvel and they have cut down the resources for the healthcare over and over and over and over and over again so in sweden you can't get the best healthcare anymore it's administrative people who decides what healthcare you should get it's not It's a disaster, basically. There is no resources for anything. You should be saved. Save money. Save money is the only thing that counts. That you have a new, better treatment that costs something, even if it's more economic in the long run. But they only look at the cost now, and it's admin people who decide. So Sweden is a bit problematic country for the moment in terms of health. Would an FDA approval, which seems to be very likely now, which I agree, affect the European market and the acceptance of reflux? I mean, of course, Every step you can take, I think, affects a bit. So if we get US approval or we get nice to say yes, for example, and so on, everything will affect a little bit. So it goes a little bit faster. But we are quite far. It's not that it will take forever now, I hope, to get this. Then is someone who asked if we should do a broader program for privately founded operations. I think that's a very good idea. Absolutely. We could probably do quite a lot of surgeries with private pay also. So I think that's a good idea. Yeah, then it's the question of NICE and this I have basically answered. Then it's another question of FDA's visit. Would you prefer partnership in US when launching reflux stop? We actually don't think we need that because we already have made a good sales already, so to say. Would you consider selling? Someone has asked if you would consider selling reflux stop and instead focus on all the other excellent products. I mean, we have many fantastic products and incredible many products actually. But I think reflux stop will generate so much funds because it has such a high gross margin. You know, it will be quite a lot of profit when we finally get going. So I think that could be a really good cash cow to have and you should make all these other different products um very good slice in today's presentation where we download the slides oh that's a good question i i can't answer that one um will you be able to keep gross margin this high what is the long term great i mean the It's all depending, you know, how you, let's say you start a new hospital and they need to train first and so on. Maybe you give them three devices for free. That's of course then affects the total gross margin a bit. But because our product, is so inexpensive it doesn't matter so much for the company but we have not done that because it affects the reimbursement process and it's not so good but it's always a possibility that you make it a little bit smoother but it's we will have a very high gross margin anyhow timeline for module three Are you expecting if they finish in three months? Yeah, I think there is something called 100 day meeting. So I think FDA will make this three months review of module three. And then so totally after 100 days, we will have a meeting with FDA. And that meeting, they will basically, I guess, tell us that we will be approved. Yeah. so the it's it's we are coming forward more and more of course now nice i think i've answered what you expect to charge for device in us yeah i mean in u.s the price will be higher that's part of the investigation we are doing right now we are discussing with the surgeons the payers and so on and i will come back to that but it normally The price is higher in US. What is the longer the device has been in place in the patient? Yeah, since December 2016. So that's eight years. That's a very long time and it still works. I want to do surgery in Sweden or Norway. Who can I contact? In Norway we have a couple of hospitals. I don't have the details on my hand, but the person who asked this question could maybe send an email to Nicole and we can answer where you can operate in Norway. In Sweden, it's difficult. They have done three surgeries in Sofia. That's Sofia Hemmet. Yeah, Caroline. No, not Sofia, you're right. Karolinska sjukhuset in Ersta actually, Ersta sjukhus, they have done three surgeries. But then due to economical reasons, although the surgeon wanted nothing more than to do this, they have stopped. So I don't know the situation there right now. Yeah. Long question here. Someone is asking about potential capital raise. And that's of course, this is nothing we have decided anything about, but of course, We have looked into how other companies have made a US launch and we see that those who have invested a bit more, of course, have been a little bit more successful. So it's a balance. What is the best outcome here? And it could be that you raise some money for a faster US launch that could not be excluded. Yeah, I think I have now answered all the questions and sorry for taking some time, but I need to read in between here. And I thank you very much for listening. And I hope I've given you a positive feeling of the future for reflux stop, because at least I have a very positive feeling right now. Thank you and have a good day.