Sedana Medical AB (publ)

Hello and welcome to today's webcast with Stana Medical, where CEO Johannes Doll, CFO Johan Spets and CMO Peter Säcke will present the report for the first quarter of 2025. After the presentation, there will be a Q&A, so if you're calling in and want to ask a question, please press star 9 to raise your hand and then star 6 to unmute yourself when handed the word. You can also send in questions via the form to the right. And with that said, I hand over the word to you guys.

Thank you. Welcome to our Q1 report 2025. Thank you very much for joining us today. Let's jump straight into the highlights on page three. It's a quarterly report that I'm very happy with as we have made strong progress across all of our three priorities. On the top line, we have come out of the gate strong with a new record in quarterly sales of 57.5 million SEC, which is the first quarter ever above 50 million SEC and a year-over-year growth of 18%. 15% of that is organic. The rest is contract manufacturing revenue from our newly acquired manufacturing plant in Malaysia. What's behind the growth is a good quarter in Germany with 8% growth and continued very strong performance in our other direct markets outside Germany with 50% growth. What's also worth mentioning here is that the publication of the CESAR study on March 18th has not affected our growth trajectory. That is true for March, as you can see in the numbers in this report. And I can also confirm that is true for April as well, which you cannot see in this report. We are tracking daily orders and also all conversations our field force has with customers about CESAR. And as I said, do not see a change in our growth trajectory. Dice progress also on the profitability side. Gross margins are stable at 71%. In the second half of the year, we are anticipating a further improvement of the gross margins as a consequence of the acquisition of our Malaysian supplier. But even without that future positive gross margin effect, we can report an ex-US EBITDA of positive 7% in the first quarter. It's slightly negative on a group level, which includes US-related operating expenses. But if you correct for exchange rate headwinds we've had during the quarter, also our group level EBITDA in Q1 was slightly positive. We also had positive operating cash flow. So we are progressing just in line with our strategy, which is to grow sales so we can deliver profitability and positive cash flows from Europe and that we can then reinvest in our future launch in the U.S. Speaking of the US, we had great news recently with the FDA approving our early access program or expanded access program as the FDA would usually refer to it. This means that eligible patients will be able to get access to our therapy already before the official market authorization. And this is, of course, great news for us in many ways. First of all, the FDA only approves programs like this if they believe you are bringing a solution to a situation where there are no good alternatives. in this case for difficult to sedate patients, which is a very good sign. We will also have hospitals and key opinion leaders trained and using the therapy before approval, which could potentially accelerate our commercial launch and is also a great way for us to test processes and gain insights ahead of launch that would be very valuable for the actual launch further down the line. As you probably remember, we had positive high-level results for both our U.S. trials, and the FDA has previously granted us fast-track designation, so things are progressing full steam towards submission in the early part of next year. Then let's move to the next page, page four, please, which shows the longer-term sales development. We've shown that slide for a while now, as it shows nicely our progression over time. As you know already, we've set a new all-time high in sales for the full year of 2024, which finally exceeded the outlier years during COVID-19. And we have now followed up on that new all-time high in yearly sales with a new all-time high in quarterly sales with 57.5 million SEC. If you have followed us for a while, you know that this is the result of a fundamental transformation of the company, starting with a streamlining of all our non-customer facing functions to free up cash to invest into the front line and commercial execution, especially in countries where we have good profitability and momentum. Let's go to page five. The sales growth combined with a simultaneous focus on driving the cost down has resulted in a significant improvement of our profitability situation. 2022, the left side of this slide, was the year with the biggest EBITDA loss in Senana's history. And over time, you can nicely see the improvement of our EBITDA. For Q1 of this year, you can now see a positive 4 million SEC XUS, which corresponds to an EBITDA margin of 7%. or 8% excluding exchange rate effects. And on the group level, so including the US, you still have a small negative, but adjusting for some exchange rate effects during the quarter, we would actually have delivered just slightly positive EBITDA also on a group level. And this is, of course, a development that I'm very pleased with. If we then go to page six, I see ourselves very well on track to deliver on our financial target for the full year. We've guided for positive full year EBITDA XUS in the low to mid single digits. And now we've started the year with positive 8%. And we're now entering the summer quarters, which are typically a bit lower sales for us. But then we're also anticipating some gross margin improvement in the second half from the Malaysian acquisition. So overall, I think we're very well on track and we're confident that we will deliver on our guidance. Good, so let's do a double click on our sales performance and look at the individual regions. On page 7 you will see that Germany is back to growth. You may remember that we had flat sales development in Q4 of last year. The reason for that was mostly that we had some turnover in the field force leading to temporary vacancies and some time that was needed to onboard new colleagues. And our therapy is quite sensitive to promotional activities and presence with customers. So these kinds of disruptions can easily impact the growth in a given quarter. Good news is that now the team is fully staffed again and we've been rolling out a sales acceleration plan, which the team is implementing with a lot of motivation, working on maximizing the time in the field. So the time we spent with customers and also finding ways to broaden use of our therapy across patient segments in high potential accounts. Now we've had 8% growth in Q1, which is good, especially since we are comparing to a strong Q1 of last year. And it's very important to keep growing in our main market. Of course, we had 13% market penetration in 2024, which is not bad, but we still have room to grow in light of the clinical and health economic benefits that our products bring to patients and intensive care units. We know that in our best performing sales territories in Germany, we had average penetration levels of quite a bit more than 20%. And those are still growing. So there's still lots of room for us to grow. Then let's turn to the next page, page eight, and our other direct markets. So the direct markets or the markets where we have our own field force outside Germany. In the first quarter, this group of countries delivered a growth rate of 50%, and they now represent a bit more than a third, 37% of our core business. And that for me is a very nice success story, as only three years ago, these countries contributed 17% to our business. So today it's 37%, which really helps reduce our historical vulnerability from being too dependent on just one main market. Spain continues to be our strongest market outside Germany. The team there is very successful in making more and more hospitals use our therapy in more and more patients. That sounds very simple, but that element establishing broad use in a lot of patients in a given hospital is actually at the core of our... commercial focus. And for several years now, we followed a very disciplined investment approach where we extend teams that show profitable growth, but also go the opposite way and cut back investments where this is not yet the case. And in Spain, of course, we have increased the team size last year to keep up with the strong demand and further accelerate it. And that continues to have an impact. In the UK, we've also seen a significant increase in demand during 2024 and also see continued growth into 2025. We've just added another key account manager to strengthen that momentum. And in France, you know that we've had some flat development for a while, mostly related to lack of stability in the sales team, which made it unnecessary to restructure the team and have a new territory structure. But now we've seen two quarters in a row with growth and are working on making that permanent. So then let's go to the next page, our distributor business, which is the smallest part of our core business. Of course, our strategic focus is on our direct markets, given the share they represent in our sales. But the distributor business is still a nice add-on. We are pursuing a very focused approach here with a lot of emphasis on a few key partners and high potential opportunities. That business is inherently more volatile as ordering cycles are longer and inventory levels kept at distributors tend to be much higher than at a hospital. And for Q1, you can see a significant decline in sales year over year, minus 39%. The explanation is that last Q1, we had the only order from our South American partner during 2024, which was worth 1.4 million SEC. And we did not have an order from South America this quarter. So that explains most of the difference. Based on the in-market demand we see in countries like Mexico, Colombia, Brazil, we are still expecting growth for South America for the full year. But these orders will materialize only in the later part of this year. Distributors outside South America are also down somewhat in Q1, which has mostly to do with the timing of orders coming in. Then we move to the next page, and I'm handing over to Peter, who has some exciting news to share regarding our largest future potential market, the US.

Thank you, Johannes. So as Johannes mentioned earlier, and we also press released, the FDA approved our Expand Access program just a few weeks ago. And this is a great opportunity in many ways, both for patients and for us as a company. And just to share, expanded access programs are typically granted by the FDA specifically for patients that have serious life-threatening disease or conditions, and for treatments with investigational medical products outside clinical trials and before marketing authorization, and when there's no comparable or satisfactory alternative available. When it comes to inhaled sedation with ice frame, the patient group that we've been granted the expanded access program for are the difficult sedate patients. And these are patients that are receiving intravenous sedatives in appropriate combinations at maximum tolerated doses and still cannot be kept at a targeted sedation level. And they exhibit recurring agitation with risk for self-harm or have escalating sedative doses or there may be clinical concerns for side effects of ongoing IV sedatives. And that's the agreed sort of criterion for inclusion in this program. And the program, as such, is open for any interested hospitals in the U.S. that have critical care facilities that are sort of up to standard. And we will be giving the device, scavenging and isolating for free to these hospitals for these patients. And looking at the benefits of this, as I mentioned, this, of course, is a way to manage patients that are difficult to sedate and they are at high risk for complications for critical care. So we believe that will bring benefits to those patients and also to the units. These patients often require a high level of staffing and support. As I said, they have complications and they stay longer time in the ICU. For us, it means that inhaled isofenacidation will be available and be used in the US in the years until we have an approval. And that means that the hospitals and key opinion leaders that will choose to use this therapy will continue growing their expertise and proficiency in the use of inhaled sedation. And that, of course, is very valuable for us because that means we will have hospitals and clinics and healthcare professionals that are able to speak about this therapy and who can be experts that we can refer to when we launch. And the EAP also includes a slightly broader range of conditions than clinical trials. So that's also valuable for us. And finally, it's also an opportunity for us to develop and test our implementation training. supply chain, et cetera, so that we are up to speed at the time of launch. And it's also an opportunity for us to map hospital processes and have discussions on reimbursement and so on before we have the approval in our hands. Next slide, please. The basis for our NDA submission are the two pivotal US studies that we've spoken about previously. This is by ICU trials. They are two identical phase three trials that have confirmed the sedation efficacy of inhaled isofrene, and we've shared the high-level results with you previously. And they compare inhaled isofrene with intravenous propofol in adult mechanically ventilated ICU patients. And these studies had a number of run-in patients, and then they had 235 randomized patients in each study, with the primary endpoint being the percentage of time at which patients were kept at Richmond agitation sedation scale between minus one and minus four. And the key secondary endpoints in falling priority are, number one, is the opioid dosing during sedation. We're also looking at time to wake up after end of sedation, cognitive recovery after end of sedation, and the proportion of time with spontaneous breathing. And both studies have demonstrated non-inferiority with regard to the primary endpoint. And we've also had a look at the high-level safety results and shared them with you. And they indicate tolerability of therapy and no new safety concerns. So all of this is promising, I would say. Next slide, please. And the studies were conducted across the U.S. at 31 clinical trial sites that you see listed here from east to west, from north to south. And this, of course, for us is a great platform to start off as we now move into EAP phase and then gradually looking forward to hopefully an approval and a launch in the U.S. with these studies.