Implantica AG

Good afternoon, everybody. My name is Peter Forssell and it's of course the Q2 presentation we are doing today. So for new listeners, which we seem to get quite a few lately, I'm a surgeon. I'm the inventor of the device we will talk mostly about today. And I also once developed just a belgastic band and a very successful business around that. And the funding that has generated in Plantica is coming from this gustic band business. So our main product cornerstone product is reflux stop and that targeting a treatment field of 1 billion sufferers. And that's enormous, absolutely enormous. And here you see the device mounted on the insertion tool, which you use for a keyhole surgery. You see the metal there to the left goes into a little keyhole in the abdominal wall and you introduce the device and place it in the right place. And we have come quite far with our clinical evidence. So this quarter, we actually have published our five-year pivotal study results. And they are objectively absolutely extraordinary results. And you can read these articles yourself, but it clearly shows how superior reflux stop is in relation to existing treatments. And one of the reasons for that is that In the past, everybody has focused on that you should close the food passageway so acid is not coming up from the stomach into esophagus and you have magnetic bands and you have a wrap of your stomach called decent fundoplication to try to compress and close, support the closing. The problem is that they didn't understand how it really works and you get swallowing problems. You can't belch and vomit and you get bloated in your abdomen. And what we realized is how you treat the cause of acid reflux instead. And I will show you a little bit. This is very late research from United States largest user of the magnetic band. And he has published a very interesting article where they have used different sizes of the device. They are 13, 14, 15, 16 and so on centimeters you can see here. And then they have measured the objective measurement, the only really objective measurement to see if you are treated or not. And that you measure pH in lower estophagus over 24 hours. You monitor it for 24 hours. And then he looked at how many got swallowing difficulties so he didn't need a dilatation you go down with an endoscope and you blow up a balloon and you try to make it larger because people are swallowing difficulties and then he looked when he has done several of those dilatations how many patients still had what we call dysphagia that's also swallowing difficulties and he also noticed how many did i need to take away the band because it was impossible if it didn't work at all with the swallowing difficulties And then you can see here that when you get a larger, let's say we take the number second last and third last from the right here, you see that treatment is only 65 to 72%. That means only two-thirds of the patients are actually treated, which is quite low. And at the same time, you look at need for dilatation. you see it 28 to 29%, which is nearly one third of the patients need to do several quite burdensome esophagus dilatations. And at the same time, you can see that they still after this between eight and 14% had persistent swallowing difficulties. So it's, The conclusion here could be these methods doesn't work. You can't attack this winter and try to keep it closed. You get too much problems. So reflux stop, on the other hand, then treats the cause of acid reflux. And I know most of you know this since before and I should be very short here in repeating. But the principle is that you restore the anatomic and physiological situation and you keep it there by placing the reflux stop device on the outside of the stomach wall, invaginated in the pouch and ensuring that the position of the sphincter maintains in relation to the diaphragm. And the reason for this is that when you breathe, you have Pressure variation. You breathe in, you breathe out, and it comes and goes, the pressure. And this is leaking out through the opening here around the esophagus. And this is affecting this winter. So just by keeping this winter far away, you let the body treat itself. We don't treat acid reflux. We just restore a normal situation so the body treats itself. That's what makes this so fantastic. And that's why we have so little side effects and so excellent treatment effect. So medical treatment, they are calling PPI. There are some other new treatments they claim have a better treatment effect, but they are all the same complications. And they fail PPI treatment about 59% of sufferers now and then. And if you measure the objective pH I talked about before, where you saw that we had two-thirds only treated, it's about 60%. who is treated with PPI usage. So it's a large group of patients. And PPI have really serious side effects and people do not understand how bad it is. And I need to say this again, a study from United States from 2019 followed 157,000 US veterans taking PPI for 10 years and more than 7,000 extra deaths due to PPI use. 7,000 people of 157,000 died extra due to PPI use. So it's nearly one out of 20 over a 10 year period. And you can ask yourself, how could this be possible? How could this be so dangerous? And the answer is, it's because these people have reached an older age and have been taking this for a very long time. And then it starts to be really dangerous to take these drugs. And here you can see the four main reasons for deaths. It's cardiovascular disease through the kidney disease. It's actually cancers could be number two and kidney disease number three here and infections and parasites. And I will try to explain a little bit about this because we get so many questions about this and about new, better treatment and so on. And it's not a competitor for the reflux stop device. So first of all, if you go for why do people die in cardiovascular disease? So extra deaths, people die in cardiovascular disease and no one would say, okay, it was my PPI who made my heart attack now. People don't understand that it's the PPI, but it's actually the main cause of death to take PPI and get old and is because PPI reduces nitrite nitric oxide in the blood vessel. It's a substance in the blood vessel who is reduced and that promotes vascular stiffening and plaque formation. And this is crucial, this substance to keep the blood vessel relaxed and preventing plaque buildup. so although all these people who dies from heart disease they don't understand it but it's still when you make a really serious study like they have made here you find out that this is really dangerous and also very simple when you have no acid in your stomach You have no protection for infection and parasites anymore. You know, the acid in your stomach has a function. It's intended to kill anything that you eat that is not good. It kills bacteria, it kills parasites. That's why we survive. But suddenly we have this, don't this protection anymore. And actually the fourth case of that in this study with these 7,000 people who died was infection and parasites. Because you don't have this barrier, this protection anymore. And often for these patients, I think PPI users will know what I talk about. Often the small intestine got overgrown by bacteria, which caused bloating. And it's quite annoying for the patient. It reduces quality of life. And this bloating problem is quite... People rank it very, very high. People doesn't like this at all. And it's called SIBO, if you want to read in the literature. I should have maybe written this here. S-I-B-O. It's a symptom when the small intestine get bacteria overgrowth. Because normally there is no bacteria in the small intestine. Yeah, so how is it then with cancer? Yeah, cancer is the second cause of extra deaths among PPI users. And the bad thing here is that the disease itself gives you cancer. So when the The stomach fluid is coming up and irritating esophagus. It's like burning esophagus. It gets small ulcers, gets red, it gets swollen, irritated. When you do that over and over again, that's terrorizing your tissue. That's a master example how you get cancer. And we know that 10 to 15% of all cancer, people with acid reflux, they actually have pre-cancerous changes. It's called Barrett's esophagus, if you want to read Barrett's esophagus. And this is the pre-cancerous status that up to 15% of all sufferers get. And then out of these, of course, a certain number then get fulminant cancer, very dangerous cancer. Most people die. And it's 48,000 people only in Europe and United States alone that die from esophageal adenocarcinoma. And you can compare this to breast cancer, where they do anything, take any cost to find a breast cancer. They have all these programs to find the cancers. Here, 48,000 people is just let die. It's completely unacceptable. this must change and now there is a treatment with reflux stop who can do this who can treat people without all these side effects and treat people much much better than anything else before that's why it's so important with we get reflux of spread over the world so be old and having eating ppi the rest of your life that's not to recommend Implantica is not only about reflux, but it's also about our platform technologies. We have two platform technologies. You already know we have the e-health platform, which is actually designed, however, due to the US launch and that we need the resources for the US launch. We have thus on a low burn rate for the moment, but as long quickly as we get going with reflux stop on the US market, we will of course restart and launch more products on the market and launch this fantastic e-health platform. And the really fantastic with this is that you can monitor people's treatment on distance and you can change treatment of distance. You can monitor how people have it inside their body. Are they healthy? Is it problems? It's a revolution of health care when this will be launched. And we have also many patents. We have more than 1000 patent cases. We have filed 25,000 pages of patents to protect our e-health platform. It's an absolutely enormous work. And society will save money. You know, people doesn't need to run to the hospital all the time. You will find diseases earlier. You can control treatment more effectively and you can treat more diseases because you can do much more advanced diseases. This is sort of the future of health care. And we have developed a completely new communication system and we are starting to develop our own ship and we see this technology with the ER platform, the wireless platform, something that could probably be licensed worldwide if we want to pursue that route. Just some examples of products that could be classified as humanitarian products, as the products that really would change people's life. And one example is people who has a plastic bag collecting their faecal matter. Maybe someone has taken away the large intestine for some reason, a cancer or ulcerous colitis often young people can get. And they collect two to three liters of fluid in that plastic bag, and they have self-adhesive on the skin all the time. Skin gets red, gets irritated. It's not fun, and it's not fun to run to the beach either. And we have a solution for that. Everything will be inside the body, reservoir, emptying function, sphincter, and they can empty through anus like a normal person. We have people who can't urinate. Maybe you have a spinal cord injury or accident in sport or whatever. And suddenly your legs are gone and you can't urinate anymore. That's not fun. You put in a catheter in your own bladder five times per day to urinate. I can tell you if you succeed to put in a catheter in your own bladder once, you have been very successful. It's really burdensome life. We have a solution for that. We can now just have a remote control for these people to empty their bladder. That's why we have the vision to become the world leader in smart medical implants. A little bit business update finally. FDA, I guess everybody's interested in FDA. We filed our application, the third and last module, June 23rd. And together with the feedback, so answers from the feedback from module two, which was of minor character, we also filed together with that. That means that five weeks from now, if FDA keep their timeline, we can't guarantee that, but If they keep their timeline in five weeks, we will have the answer from the last module. And we will probably have a very, very good idea how quickly we can get our FDA approval. And that's, of course, very, very interesting. There is also a 100-day meeting when FDA will tell us more or less what they think about this. And that's just a week later, basically. because that's 100 days after they accepted the filing of the Module 3. So we have already booked with FDA inspections scheduled for October on Implantica's premises. So everything here looks very promising, of course, pending FDA approval. And we are also preparing for US launch, of course, and production ramp up. We have actually ordered 10,000 devices for the moment. And we are building new production tool multi-cavity tool for the U.S. market. This started two years ago. It has taken one and a half years just to produce this tool. And also, you know, we're setting up now the new manufacturing in U.S. Its final testing in U.S. remains. But this, of course, is quite positive right now when you have all these discussion about custom fees and so on. So I have a little video here, which I think the team behind me here should try to show you. So there you can see that With such a tool, we can do many products. It's fully automatic and silicon in, and then it says, butcha, butcha, basically, and out comes finished products. And it's really to prepare us for a possible success in the US market. So what are we doing more for the U.S. launch? We have set up a complete strategy how we should do this launch. And we have looked at all the other companies, basically how they have done it, what they have done, good or bad. And we have a really good strategy. So for the moment, we have more than 100 surgeons who want to start with a reflux stop after U.S. approval. And we are starting with the first 50 centers that is under selection right now. And as you know, US has a much more favorable payment system than Europe. In Europe, they believe you should be able to run your business for five years before you get any income because they don't pay for anything new. But in United States, they understand that new technology must be favored. The good thing in United States is that it already exists reimbursement procedure codes with good payment amounts for both hospital and surgeons. That means if we start to operate today, Hospital and surgeon can just start operating. They will earn exactly as much money as they earn now or even more. So that's really the good thing. For the implant itself, there is a code, which is good. We can use the implant. We can use this code. However, payments is undefined. And that the process that then will take a year maybe to get most of the insurance companies to accept our payment. And that's a process. That's why we are working on supplying a complete package to the insurance companies, how they save money. Because we know that we have superior cost effectiveness also in the United States. So it's an analysis based on the University of York's Health Economic Consortium's model, who they have developed, and that has been used for the US market. And also in the US, we provide superior cost effectiveness, which is very, very important for these countries. insurance companies and of course the fantastic results we now have the five-year results and lots of articles so this is an important part of course we are targeting the main hubs and we will of course start with maybe 20 and then go to the 50 that we talked about But we have around 600 accounts that previously used the magnetic band. And of course, that's the ultimate goal to replace, so to say, an older method with this in the 600 hospitals. So we think we have all the attributes now to really be the new standard of care for treatment of acid reflux. And the five year results really support that. So we have made a press release where you can have links so you can see these articles. It's one article just focusing on food passageway related aspects, you know, swallowing difficulties, you can't mention vomit. and pain at swallowing and so on. And then it's the more overall outcome, how you are treated with low pH, quality of life, is any taking PPI, and so on. So this is very interesting reading, and basically you can say these results are completely unmatched. It's like night and day, basically. Swallowing difficulty goes from zero or one patient to 30% or 28.9% and able to belch and vomit, 40% can't do that in standard of care. And we have 0%, for example. So it's completely like night and day. And here you can see some of the results. So it's actually Here I see it's missing a little percentage, but it's 97.9% do not take PPI. We have one single patient that took PPI at five years. That could be compared to every patient taking it before surgery and only one patient taking PPI at five years follow up. 97.9% have no swallowing difficulties. We had no device-related adverse event over the entire study. No complication that was directly related to device over the whole study. No device location erosion, no reherniation at five years. defined by x-ray. So it's objective contrast wall of x-ray at five years. All the devices are in place and there is no reincarnation. 100% of the patients convalescent vomit. Gas bloating eliminated in 95.7% of the patients, which is a very serious problem for the patients. The quality of life improved median 90%. No more minimal regurgitation, 95.7%. pH value reduced by more than 90%. It's just absolutely incredible results compared to what I showed you before when 30% are not at all treated and then you have another 30% that's following difficulties and it's just not matchable. Here you can see a little bit the difference. This is standard of carnage and fundoplication. And you see the green staples down there. They are quite different between the orange ones. And our clinical evidence is expanding with snowball effect. It's so many articles, poster presentations, oral presentations and manuscripts. You know, we are publishing more and more and more and more article about reflux stop center of the center pop up and present the results. And the good thing is it all is the same. All is fantastic. So it's not only we in our study. No, it's all these different centers from all these different countries. They have the same results. And we are doing lots now of expanded trials. The registry is already ongoing. We have now just got green light with the starting of the RCT versus Nissan. And that's also why you saw that the revenue went down a bit this quarter. That's because all the key top surgeons... more than 10 surgeons they have not operated this quarter they just accumulated patients to be able to quickly do the trial when we kick off so this is very exciting it will be also a registry in us of course and we will do a 200 patient study there when they get approved so randomized trial is led by professor shopman in akh in vienna this is europe's largest university hospital um so this is a very very exciting study um so round one i don't know these figures they they are always too low because we always forget to change them but here is a 1300 products and 45 hospitals i think it's a little bit more than that and i wanted to give you one example of a good expansion of the market for reflux top surgery. And this is Spain. So this quarter we added another three centers. And I think we wrote in the report that we had 90 new centers, but actually two of them has only said they will start, but we have not operated yet. So it was a mistake. So it's 17 centers, but still we launched 2023. So in two years time, we have 17 plus two wants to start in Spain. And then you can ask yourself that that's quite an astonishing achievement. I mean, if every country would have been have 17 hospitals, it would be very many hospitals. And then the question is, why just Spain? And the answer is that Spain as a healthcare system that it was in the past. They prioritize providing the best treatment. The surgeons have to say what treatment should be used in the hospitals. If the surgeons say this treatment is much better than anything else, I need this treatment, they get this treatment. They maybe don't get the enormous quantities in the beginning, because it's a budget system, so you need to approve more patients every year. But it's still, they look at the patient, they care of the patients. In other hospitals and in other countries, for example, like Sweden, they don't care at all if the patient gets the best treatment or not. It's only about administrative, incompetent, medical incompetent people deciding based on cost. That's only cost who drives the treatment. And that's an absolutely terrible situation. But we are very, very far, very, very far now to get this running and get reimbursement. The reason why we have so many hospitals and so many countries in Europe operating, but doesn't have a huge turnover is basically because no one pays for the device. We have not been reimbursed. But as you know, the situation is easing a bit now. We have NICE, the big organization who give guidelines to NHS, the public hospitals in UK. They have been given recommendations that the hospitals should use reflux stop. And that's for around 50% of the patients, those who has ineffective esophageal motility. So it is starting to open up and we are preparing now to try to convince Germany and France and all the different countries that we now need to be in the public health care system so we could get fully paid. And then of course the business will expand enormously also in Europe. So we had our first UK national UC meeting. It was 21 surgeons. And it was, of course, heavily discussed the positive news that they are recommending now to use this in NHS hospitals. Everybody was very enthusiastic. And, of course, it was discussed about training and so on. And we have also expanded to other territories our work, and Canada has agreed to accept the US filing data. So that means as soon as now FDA gets through, which we hopefully should be in the near term now, then Canada will come as well. And also Japan, we have established all the necessary contact relations, how it should be done, surgeons established. So even here, we have a very good hope that the US approval together with the European will be enough to also get to the Japanese market. And this is basically around 11% of the world market. So that's a very important market. Yeah, so overall, we view reflux stop as unstoppable. And we had a bit shaky start, as you know, with COVID and FDA wanted us to provide five-year data instead of three years and so on. But now it looks really, really promising for Implantica. Then we should go over to the capital market and finances. And I give hereby the word to our CFO Andreas Örnberg.

Many thanks, Peter. I will take you through the financial review, starting with revenues. Oh, sorry. We reported net sales of €433,000 for the quarter, a decrease of 22% compared to the same period last year. The decrease is driven by the deliberate choice of having clinics focusing on enrolling patients into the randomized clinical study that Peter referred to that is commencing in the near term. As also previously noted by Peter, we are at this stage only marketing our lead product, Refluxdop, for which we selectively partner with key opinion leaders in Europe. Looking at the gross margin, we continue to deliver best-in-class gross margins. Adjusted gross margin for the quarter amounted to 90% compared to 91% the same period last year. Given the subscale nature of our business, Period to period gross margin variability is expected and we will continue to see that in future periods. The industry leading gross margins combined with the increased production capacity as announced earlier this week with the two new multi-cavity production tools provide a solid foundation for substantial operating leverage as the business matures. Let us turn to EBIT. Our operating loss decreased by 23% to €4.5 million, down from €5.9 million the same period last year. The lower operating loss was driven by a 54% reduction in R&D spend compared to the same period last year. This reflecting selected pruning of the pipeline product patent portfolio and non-recurring FDA preparation cost in the comparable period. Let us look at the balance sheet. We have a solid financial position. End of June, we held 56 million euro cash and short-term investment. What we recognize as short-term investments on the balance sheet are plain fixed-term deposits with a leading Swiss bank, hence no direct exposure to financial market risk. Over the quarter, the total net cash outflow amounted to 3.9 million euro, the same level as the operating cash flow for the period. We do not carry any interesting bearing debt on the balance sheet. looking at our shareholder structure. In addition to our CEO and main shareholder, Dr. Peter Forssell, and other senior leaders that you see here on the list, 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 ensure that GERD staffers globally are getting access to the best available treatment at Gale. Back to you, Peter.

Okay, thank you very much. So I think we then should try to go to some questions.