Sedana Medical AB (publ)

Hello everyone, and welcome to today's Finwire webcast presentation with Sedona Medical. With us presenting today, we have the CEO, Johannes Dahl, CFO, Johan Spets, and CMO, Peter Säcke. We'll do a Q&A after the presentation. You can either type in your questions using the form to the right, or if you're calling in and would like to ask a question, please press star 9. to raise your hand and start 60 on mute when you get the word. And with that said, please go ahead with your presentation.

Thank you for the introduction and welcome to our Q3 report presentation today. Let's dive straight in on page three with the highlights of the quota, please. Thank you. The short version of this report is this. If I compare to the analyst expectations ahead of the report, sales have come in lower than expectations, also lower than our own ambitions today. But despite that shortfall in sales, our bottom line was actually better than people expected. Year to date, we are still showing a profitable XUS business, and I'm very confident that we will deliver on our financial guidance for the full year. And this is exactly what I am hoping you will take away from today's call. We have now reached a scale and put in place a... cost structure that allows us to keep our ex-US EBITDA in the positive territory even when we have quarters like this one where market circumstances lead to no or quite low growth. Because the truth is this, our business is subject to seasonal swings every year and sometimes these seasonal swings differ quite a bit between years. Sometimes this will be in our favor. And from time to time, as we see it today, we will see quarters like this one where we have much less patients with respiratory problems in the ICUs, which will then affect our sales. What is important for me, though, is that we show consistent growth when we take a bit of a through cycle perspective and look at longer periods than just one quarter. And also that we stay so disciplined on the cost side that lower sales quarters will not affect our goal of achieving positive EBITDA levels outside the US. Looking at the numbers, we grew net sales by 7%, of which 1% was organic and the rest was contributed by our acquired contract manufacturing business. This is quite a difference, obviously, compared to the strong growth in the first half of the year. But despite the low growth, we still stand at 18% growth year-to-date, of which 12% is organic. And again, our ex-US EBITDA year-to-date is still positive with 1% and actually would have been 3% without the exchange rate headwinds that we had. So we are fully on track to deliver on our promise to show positive XUS EBITDA for the full year. And with Q4 coming up, which has traditionally been a stronger quarter for us than the summer quarters, I'm quite confident that this will happen. What we're seeing here is the result of the cost savings measures we have implemented, especially in our non-customer facing functions in the corporate headquarters and also the acquisition of our main supplier in Malaysia is starting to show positive effects on the gross margin. On the US side, it's very exciting times now. We are gearing up for the upcoming pre-NDA meeting. Pre-NDA meeting is a formal meeting with the FDA ahead of the submission to create alignment on formats and contents of the submission and to ensure we have ticked all the boxes that FDA has asked us to tick. If we receive positive feedback on all our questions, we can move ahead towards submission. The preparations are ongoing. on track and are going full steam. But also if the FDA has further comments or requests, we will have a chance to address them ahead of the submission. So it's an important meeting to try and reduce the risk of delays or a possible rejection during the review process, which of course we want to avoid. And looking at our US endeavor overall, it's worth reminding ourselves that we have met the primary endpoints in both studies. There was no new safety signals. The secondary endpoint outcomes offer several results that we are hoping to convert into compelling label claims. FDA has given us fast track designation and have authorized an early access program in which we're expecting the first patient to be treated this year. So it's a Of course, always a bit advisable to be a bit humble in a process like this, especially when the FDA is involved, but the individual pieces are really coming together quite nicely. So let's move on. Look at page number four, please, which shows the longer term sales development. You can see that we are now operating at sales levels that are higher than the COVID-19 years. And also this year, we are on track to set a new all time high in sales. Even though Q3 was a bit soft in sales, it was still the best Q3 we've ever had. Just like Q1 was the best Q1 and Q2 was the best Q2. Overall, in the first nine months of 2025, we saw a sales growth of 18%, of which 12% came from the core business and the remaining 6% were contributed by contract manufacturing revenue from Malaysia. Again, the return to growth after the quite dramatic decline in 2022 following the COVID-19 period was a result of a quite decisive shift in how we use our resources away from non-customer facing functions into the frontline. And just to illustrate, our headquarter team is now less than half the size compared to 2021. And instead, we have a much more forceful frontline team in our core markets. On the next page, page five, you can see the effect on the bottom line. There is some cyclicality in our business with the winter quarters Q1, Q4 being the strongest one sales wise and the summer quarters showing lower sales and profitability. But you can see the clear trajectory of steadily improving EBITDA both XUS and on the company level. Again, we see a positive XUS EBITDA year to date and also the group level EBITDA. has improved quite well in the quarter, 8 percentage points, which actually would have been 11 without the exchange rate headwinds. On page 6, no change on how we see our addressable market. The market where we are active today represents a market potential of approximately 3 to 4 billion SEC, and we see three times that potential in the US market, which we will talk about in just some minutes. But it goes without saying that the U.S. could mean a step change for the company with a potential quadrupling of our addressable markets once we have the approval. And for the more short term, we have communicated a very simple financial target for the year, which is to deliver full year positive EBITDA ex-U.S. in the low to mid single digit range. Year to date, we stand at 1% with the weaker quarters Q2 and Q3 behind us now. It actually would have been 3% without the exchange rate, which gives me very good confidence that we will meet this target for the full year. Because as usually, I would expect Q4 to be stronger than Q3. If we then look at the performance by country, starting on page seven with Germany, minus 9% in net sales is, of course, not what we want to see, especially not after our acceleration program had delivered good results in the first half of the year with 13% growth in the first half and even 19% growth in the second quarter. Year to date, we now stand at 6% higher sales than last year. So it deserves a closer look at what happened here. So on page eight, what we see here is data from the Robert Koch Institute. This is hospitalization rates for severe acute respiratory infections. This is not exactly our market, which is mechanically ventilated and sedated patients in intensive care, but it's a very relevant indicator as a part of these patients will end up being relevant patients for us. And what you see here is the comparison between 2024 and 2025. Both curves are higher in Q1 and lower in Q2 and Q3. And you don't have to be a visionary to predict that they will increase again in Q4. That is the normal seasonal pattern we see every year. But what's also quite evident here is that the years are still quite different. So the flu season this year was more extensive and longer than last year, which has given us some good tailwinds in Q1 and Q2. But then the situation flipped and hospitalization rates have been significantly lower than last year since approximately May. So if you look at Q3 and isolation, 34% less patients were admitted to German hospitals with severe acute respiratory infections. And Robert Koch Institute actually also publishes how many of these patients end up requiring intensive care. We don't have access to the raw data, so we can give slightly less accurate numbers. But also, that group has decreased between 20% and 25% compared to last year. We also collect our own data, so we're tracking a sample of hospitals and that also shows that the ICU occupancy rate has decreased in Q3 compared to the previous quarter. The effect that this market development has on us after a quite strong beginning of the year is that less products have been used in intensive care during the end of Q2 and Q3. leading to later and then oftentimes also smaller reorders by many of our customers, which explains our sales decline. The truth is we will have quarters like this every once in a while because we cannot influence how the market develops. What's important from an execution perspective is that we stay focused on what we can control, and that is to maximize the time in the field, that is to focus on the right balance between new customers and increasing penetration and existing high potential accounts, And these measures, by the way, are also exactly the measures that are going to be helpful in mitigating some of this volatility going forward. You will never be able to fully avoid it because respiratory patients are the majority of patients in the ICU. But expanding the use and more patient diagnosis so we are less dependent on respiratory patients. opening new accounts, so you're less dependent again, and focusing on big university hospitals that are typically quite well occupied, even when there's overall less patients. In other direct markets, on the next page, we were up 22%, even though we saw some of the same market dynamics as in Germany, so less patients overall. The growth was once again led by our Spanish team, which has really shown fantastic growth over the last years now. That was again the case in Q3, based on a good execution, but also based on a very, very strong network of believers and opinion leaders that the team has built on the customer side. And what's worked really well in Spain is that we do not just have the academic key opinion leaders who are oftentimes not treating so many patients anymore, but we have a lot of what we call bedside ambassadors. So oftentimes younger doctors who treat a lot of patients see the benefits of inhaled isoflurane sedation in real life every day and not just in studies and who are at the same time very influential for their peers. So other doctors who seek advice on the best treatment options. In the UK, we were unfortunately hit by a temporary staff absence in the third quarter, which in a small team has a big impact because it leads to a quite significant reduction in field presence. So we could not deliver the growth that we were planning for. And when you have reduced resources, you often run into a typical problem that a lot of time is taken up by responding to the very good demand from potentially new customers. And you then have to neglect a little bit to maintain and drive the growth in your existing customers. And that is exactly what's happened in Q3 here. We have suffered from this phenomenon a little bit, but we'll soon have the team fully staffed again, and then also focus our energy on the right balance between new customers and existing customers. What will also help a bit is that the MHRA has now also approved our pediatric indication in the UK. So we now got approval for the pediatric indication in all countries where we asked for it, which provides some upside as well. And in fact, we just went live in a new pediatric unit just this week. In France, we continue to see a quite split performance with isoflurane customers performing very well. But in customers that are still using our devices with off-label sevoflurane, we continue to see sales decline following the CESAR study. Overall, this results in a rather flattish development, which is not good enough. So the plan for France is quite self-evident, focus on switching remaining sevoflurane users to isoflurane. And there we are really making good progress. If you look at the CESA clinical trial sites, for example, which you would imagine are the hardest nuts to crack, given the CESA results, 60% of those hospitals are today using isoflurane. So the conversion is progressing well. Overall, I see our other direct markets or the direct markets outside Germany as a big success story. Of course, only a few years ago, Sedana, was essentially Germany and not much else. Now we have built a business in these countries that represents more than a third of our core business sales. On the next page, on page nine, we see our distributor business. This is the smallest part of our business. And you are by now used to seeing a bit of an up and down because most distributor partners order less frequently and stocking effects tend to influence the order patterns more than in our direct markets. In Q1, if you remember, we had seen a decline in sales because we had a big order from South America falling into the comparator time frame. In Q2, then we were up 32%, and this time we're relatively flat with a growth of 4%. And from an execution perspective, we are still pushing ahead with enhancing our focus and offer the best possible support to a few select key partners where we can jointly drive the most value. Let's go to page 11 and switch gears to the United States. Before I will ask Peter to take us through the details, let me briefly recap our strategic plan for the US. As you know, the US is our largest growth opportunity. We have estimated the US market potential for our products to roughly a billion dollars, so 10 to 12 billion SEC. So a market entry in the US would instantly quadruple our addressable market. This is because of a high number of ventilator beds in the US, but also a medical practice that favors intubation and mechanical ventilation much more than in Europe, and also an overall quite attractive price level. We do see a very good product market fit, for example, because of the proven opioid reduction that our therapy has been shown to provide, for example, because a reduction in the ICU length of stay is generally a very effective driver of adoption in the US, more so than in Europe. And also because the guiding thoughts behind existing guidelines, treatment guidelines, such as fast wake up, early mobilization, early ICU discharge, are quite in line with some of the benefits of inhaled sedation with isoflurane. And on top of that, As we've discussed before, Peter and his team have done a really excellent job in building a network of key opinion leaders in our clinical trial sites that are very supportive of our therapy and already very active speaking about inhaled sedation at different global conferences. So we have a high market potential, a good product market fit, a KOL network eager to get started, and also an early access program that will allow hospitals to get trained and started before the actual approval. Therefore, we continue to believe that we can create the most value if we launch ourselves in the US, capture more of the upside and generate proof that this therapy can be successful, while then over time keeping the option open to either scale up ourselves and take it all the way, or at some point to complement our presence with a partnership. we deem that can create more value. Now with this, let's move to the next slide and I will hand over to Peter for our US and medical update.

Thank you, Janice. Yes, so as Janice mentioned, we have the clinical trial sites that were very active in the trial, 31 different hospitals across the US that enrolled 555 patients over the course of two years, and they continue to be very excited and interested in inhaled sedation, which of course is nice to see. We can move over directly to the next slide, please. So, as I alluded to, we are sort of on a good track towards our NDA submission with the two phase three trials that both showed non-inferiority for the primary endpoint and opioid reduction and other benefits that we know of when it comes to inhalation, such as fast time to wake up and sleep. positive data when it comes to ICU stay and mortality and these studies are being prepared now together with the pooling analysis and it will be submitted early next year and in parallel with that we have the early access program that is being initiated and we're looking forward to the pre-NDA meeting later this year and we'll get guidance from the FDA on how we will how they want to see the submission. And if we move to the next slide. So the Early Access Program for those who haven't heard of it before, it's something that you get for patients that have a life-threatening condition and where the current therapies are not successful enough. We applied for this with the FDA and got a green light for providing our therapy free of charge to hospitals who request it. And the patient category is the difficult to sedate patient group, which is a patient group that occurs. You see these patients with different kinds of conditions, but typically mechanically ventilated and with different background diagnosis, but who require high doses and different combinations of IV drugs and In this scenario, inhaled isoprene sedation has been shown to work clinically. It's the most popular indication across all ICUs that use our therapy. And this is something that we can do until we get a marketing approval. And it's open to all interested hospitals, the expanded access program. And this, besides being something that's helpful for patients that are struggling to be comfortable and safe in the ICU, it also offers an opportunity for us to continue training physicians and ICUs when it comes to inhaled sedation. And that of course is a very good, can give us a very good start at launch because these hospitals will be proficient and they'll be experts in inhaled sedation. And also it's an opportunity for us to refine our training and the whole supply chain, et cetera, ahead of launch. And currently we have 11 hospitals that have expressed interest and we're taking them one by one. So we're working with the finalization of the contracts for the first hospitals. and also have set up a supply chain for all our products, and we expect to see the first patients treated within the EAP before the end of this year. Can we go to the next slide, please? And so in parallel with this, we are driving a lot of medical activities around the globe, mostly focusing on Europe, of course. So a lot of different activities ongoing, and it's workshops, roundtables, symposia, and webinars that we've been running. One of the activities, of course, after the CSER study this spring was to educate people on the differences between the off-label CO3 and R-labeled celaconda isofrene. And it's also been about diversifying from patient groups such as a difficult to sedate patient or respiratory patients to other patient categories that are intubated and require sedation. And most recently this week, we did a round tour in the UK where we met clinicians together with one of the authors, actually, of the CSER study, who was also helping describe the difference between SIBO, fluorine and silicone isoprene and also local ambassadors. So we met representatives from 10 different hospitals in London, Liverpool and Bristol. And with that, I'd like to move over to slide 16, which is you, Johan.