Impact Coatings AB (publ)

and welcome to today's webcast with Integrum, where CEO Richard Brodermark, CFO Jörgen Svanström, and US President Jeff Rezani will present a report. After the presentation, there will be a Q&A, so if you have any questions to the company, you can send them in via the form to the right. And with that said, I hand over the word to you guys.

Thank you very much, and welcome everyone to Integrum's company presentation, the first quarter of this fiscal year. Next slide, please. so we go directly to the introduction and and so it's the i'm rick deborah one of my accountants founder and ceo and to my left here i have you're looking at monster and on the other side of the pond we have zani u.s president so we we start with a quick recapitulate recapitulation of the company you know we have been uh the real pioneer in bone anchored prosthetics and also into the neuromuscular integrated prosthetics. Our core product is the O-brain implant system, and it is still the only FDA-approved osteointegrated prosthesis for amputees, and currently the approved indication is for above-knee amputees. We have since 2020 had an annual revenue growth of about plus 30%. We have had increasing profitability and we have been trying to scale up the company. We also have a growing pipeline of new products and new indications, such as not only above the knee, also above the elbow, amputations with prosthesis, and we are also working on what we call EO, that is brain control smart prosthesis. We think that we now are well positioned to capitalize on the larger growing global market for advanced perspectives and it's estimated that the market size currently is about 8 billion US dollars. I think we have a proven track record of clinical excellence, scientific innovations and commercial success. We've been in this field for more than 20 years and there are now more than 700 treated patients worldwide. Next slide, please. So here are some of the milestones. We started in 1998. We went to the U.S. first in 2015, where we had a limited FDA Google Humanitarian Device exam. And then end of 2020, we got the full or pre-market approval, or PMA, so we can really start to scale up the business in the US. And last fiscal year, our annual revenue surpassed 100 million Swedish crowns. Next slide, please. So our key market, that is the US. That's the most important medtech market in the world. We've got the PMA in 2020. We have our subsidiary that is run by Jeff. We have our internal sales force that is now strengthened. We work with different distribution partners that Jeff will also talk about. There is a substantial market size. In Europe, we sales force, distribution partners, and it is a smaller market, but still a substantial market, about $2 billion. We have some of the most prestigious institutions in the world that we collaborate with on the experimental side, primarily MIT, Massachusetts Institute of Technology, and on the clinical side, for instance, Johns Hopkins and the Mayo Clinic. Next slide please. So what is the core product OURA? So this is in the field of amputations, but not all amputations. This is towards the subpopulation of persons living with amputation due to trauma, accident, war-related injuries, or cancer-associated amputations. So that is what we are targeting today with the indication. And only with that limited subpopulation, we have this substantial total addressable market. So in the U.S. right now, we are only approved for above-knee amputations. But there is a very, very significant additional market if we can move into below-knee amputations. And we have publicly stated that we are initiating clinical studies funded by, actually in the the Reed National Military Medical Center, that is the major military hospital in the US. So that means that over time, we will be able to expand the total addressable market substantially. So Oprah, what is it really? What is the difference compared to standard prosthesis? The standard prosthesis is a socket-based prosthesis. And the socket sits on the outside of the amputated stomach. And there are certain mechanical constraints to that solution because it's not really anchored to the skeleton. So you get mobility problems, You get infections, a part of the heel bones because the socket is rubbing towards the skin and you need to change the sockets frequently due to these problems and also because the body is all the time changing in shape. If you add weight or you lose weight, et cetera, over time you lose some of the muscle mass and then you lose volume. The Oprah implant on the other hand is directly connected to the skeleton, then bypassing all other problems related to the impaired mechanical solution with the socket. so that means we eliminate all our socket related problems and we can increase range of motion that's how much you can move the joint and limb strength it's also so that with a direct connection to the skeleton you get a feeling for your prosthesis and it's a combination of proprioception that is a joint position feeling and what we call osteoporception that you can actually feel within that and it's very easy to put on the prosthesis. So what is really the difference here? If you have a socket and you've been taking a shower and you want to put on the socket, it could be very difficult because it needs to dry out. With an implant that is connected to the bone and there's a mechanical connection to the prosthesis, you can just snap it on in a matter of seconds. Next slide, please. So the way we do it, we have a surgical two-step procedure, and that's been shown to be an efficient and now a standardized treatment. We have also added additional features. So the XO2 release system, that is like a ski binding. So if you get an overload, that will reduce the risk for fractures. implant system and also for fractures to the skeleton. We have also since the introduction, actually in the early 90s, added what we call the biohelix surface. That is a novel surface that increases the success rate of the implant and the integration to bone tissue through mechanisms that is making the healing more rapid and the connection between bone tissue implants stronger. And we have now more than 700 users globally. Next slide, please. We have worked extensively with scientific evaluations. So I think we're still the only ones that have published prospective studies is actually the data that paid away for the PMA in the US. We can show that we have increased mechanical function and this sense of self or superception. You take more step counts per day with a prosthesis like that. And in overall, you also increase your mental wellness and quality of life. Next slide. So even though in the US, or today only, knee amputation indication approved. We have outside of the EU has been working with upper arm, lower arm, thumb, index fingers and below knee. What is currently CE marked under MDR, that is the new regulation in Europe, it's the upper arm, it's the above knee and it's the thumb and index fingers. Next slide, please. So let me very briefly talk about EO-Pram at this point. But it's the most advanced control system that is in the scientific evaluation phase. So it's a way to create direct brain control to external prostheses. But we don't do it directly in the brain. We use neuromuscular integration. We use pattern recognition algorithm. artificial intelligence, and we're also adding tactile sensory feedback. And why is that important? Well, you know, an extremity without sensory feedback is not really a real extremity. And we would like to try to make an artificial limb become a true part of your body. Next slide, please. So this is what we call, you know, signal from the brain to move the prosthesis. Sensor signals This is how an intact limb is working. That's what we're trying to recreate. But this is a challenge and it's not something that we can fully develop by ourselves. So for instance, we work with leading institutions and the recent years we've been working a lot with Massachusetts Institute of Technology. Next slide, please. So I'll leave the word to you, Jonathan.

Thank you. And as you've seen in the report, We have net sales of 18.5 million Swedish kronor for the quarter, in comparison to 20.4 million in the corresponding quarter last year. And this leaves year-on-year growth of minus 9.5%. The operating profit for the quarter was minus 12 million in comparison to minus 2.9 in the corresponding quarter previous year. And of course, both of these operating profits lead to negative EBIT margins. But I also want to note that we are still at above 100 million for the last 12 months in net sales. And our annual growth rate is 33.4%. And if you look at the quarterly revenue, you can see historically, it's been a bumpy ride. It's not exactly a linear curve pointing just one way. And I guess you can say that it's the same thing for the operating profits. If we compare the currency effect on the revenue, we had minus 9.6. So the currency effect is not quarter. Of course, if you exclude the currency effects, they were negative. So the direct currency effects, you have an EBIT of minus 10.6. So more or less minus 1.4 in currency effect for the quarter. Looking at the operating costs, they are, as you can see, higher than last year. I want to point out that there are one-off effects of 1.2 million and also that we are more active, which leads to more professional services and also that we use more consultancy services. If we look at it regionally, the United States had net sales or revenue of 13.7 million Swedish, in comparison to the corresponding quarter last year of 15.2 million, and this leads to a minus 9.8% growth. I guess a highlight is the Hanger Agreement, which we signed in the quarter. Jeff will talk more about that later on in the presentation. From my point of view, I want to point out that we secured a trade-term loan agreement. I suppose that you can say that it's almost like a factoring deal, but it means that we can actually finance on our purchase order instead of selling the invoices, which is much, much better for us because it means that we can finance at an earlier stage. The agreement is specifically made for the US, but we are currently negotiating to include the rest of the world as well. So that will come in quarter two. Looking at the rest of the world, the revenue was 4.8 million in comparison to 5.2, which meant minus 8.5% in year-on-year growth. I think it's worth pointing out that in the quarter, we got the market approval in Israel, which means that the certification is out of the way. I also want to highlight or emphasize that We talk about the inventory build-up, and it's quite an effect actually when starting out in a new market. So I think this is something important to understand. The UK adopted the MDR regulations, so they use the same regulations, which means that We actually fulfill the demands, but they still need to go through the administrative process of approving it. And this is what we are waiting for in the UK before, or at least we did in the quarter before we can start operating. Yeah, and also, a comment on EOPRA. We are also in a memorandum of understanding with COAD to further develop EOPRA. I now hand over to Jeff for the U.S.