Senzime AB (publ)

I'm the CEO and one of the co-founders of Senzyme. We're in the world of monitoring patients as they undergo anesthesia in the operating room. We are a medical device company. We're based in Uppsala, commercial operations in 30 countries, US, Germany being the main markets. The business derives from research at Mayo Clinic and Mass General Harvard in the US, and that's what we take into market. We're on NASDAQ main market and have strong funding behind us. So our main business is all about monitoring the neuromuscular blockade of patients undergoing surgery. So when you're under anesthesia, you put the gas on, not to remember, you get various types of drugs to not get any pain, and then you get a paralytic drug to stay paralyzed, to stay still. And what we do is that we monitor to make sure you get the right amount of paralyzed drugs and that you wake up the patient and extubate them at the right time so they can breathe again. And we've developed what's called the TetraGraph system that we're now commercializing around the world. We're targeting about 100 million patients a year, which is our market. And currently about 30 million of these 100 million patients are having complications because they're woken up too early and get side effects from these paralytic drugs. So we just had the Q3 report this morning. We are in an exciting commercial phase. We're moving into the hockey stick phase. We grew almost threefold. And really what the business is, is selling monitors and single-use consumables. Strong focus on the US. We expanded our gross margin. ramping up the business in Uppsala and just secured some good funding. I'll come back to it. So like I said, we're just seeing this ramp up and rolling sales are about 30 million right now. By the end of the quarter, we were more tracking around 50 million. And the business is around these monitors, getting them installed in every single operating room around the world. We have about 2000 just under monitors out there. And once you get them into effect, you have a very nice recurring business model. And you can see to the graph to the right that we're starting to see this effect. The installed base is starting to get the disposable sales of single use sensors. During the last couple of months, we've had a nice commercial success with strong focus on the U.S. We've announced three key hospital deals. We can't go out with the names, but one is a large university hospital system in Southern California. Another one is a top 10 tier U.S. hospital system in California, the north part. And then we signed a deal with an IDN that covers the whole of U.S. West Coast. And these are big deals for us where we come in with over 100 of these monitors equipping every single operating room. And then over time, this will create very nice recurring revenue. And really why they are choosing us, we have a couple of competitors, but we are really the market leader in this, is that we are the only company in this space that is publicly traded. So we're seen as kind of the trusted long-term vendor. We have the, like I said, the Mayo Clinic, we have 40 years of research behind all this. We're seen as kind of the most accurate system out there. This is all powered by an electromyography. So it's a digital algorithm to monitor the effects and understanding the response of your nervous system. And then we have a brilliant commercial team. So once we win these hospital deals, we bring in a big commercial team and clinical with ICU and operating nurses that help to deploy over large scale. and the inflection point for us here has been um clinical guidelines so over the last 10 years there's been a number of guidelines happening that really triggered a couple of months ago when the european and u.s guidelines came out saying every single patient that receives these paralytic drugs need to be monitored with the type of technique that we have. So since that happened, we've seen that's where the hockey stick effect happened. And for us, it's important to track the utilization rate and make sure we have the top 10 or the top customers around the world. And we have really the leading hospitals on this. So for us, the target is to reach above so that it's used in every single patient. Kind of the medium we're seeing is that we want to get up to four times a week. So it's basically used almost every day in the operating room. But if we're tracking these key markets, which is US and Germany for us, we're seeing that we're already above our targets. So it's almost used every day in the operating room. While we're also seeing that in some operating where they're doing Da Vinci robots where the patient needs to be very paralyzed and very standstill, there the TetraGraph is used typically twice a day in the operating room. um so our challenge here in the commercial phase is how do we get value out of an installed base that is constantly growing and how do we get a long-term value out of this so we're working really hard to not just get them installed but get the protocolized use in the hospitals and once we get up the the recurring revenue each of these monitors have a revenue opportunity in excess of 50 000 swedish kronor a year We're also tracking constantly the number of customers, making sure we win hospitals. At the end of Q3 now, we had about 160 major hospital systems that we owe our customers. And this is excluding Japan and South Korea and other markets. We also chose about two years ago to insource our production. So instead of having it outsourced, we moved it back to Uppsala. And by that, we were able to maintain control of supply chain, be a leader in sustainability and also improve gross margin, which is now roughly under 70%. Okay, so during the third quarter, we did two directed shares issues on the stock market where we raised 173 million. We did it in two tranches because we saw an upward trend. So it was nicest for the shareholders to do a smaller one and then a larger one. But we did these two, directed them to Swedish institutions. We did them at market pricing, so no discounts. And the key shareholders that came in were Carnegie Funds, Handelsbanken, AP4, Swedbank Robur, and Segula Medical Acceleration, which is a medical device focused fund. So we also have about 10, 10, 12, 13% of our shareholders in the US. So we will be cross-listed as probably the next couple of days in the US. So the US market, we can attract US investors better. But really, the equation here, my magic equation for creating value in this company is what I call the 300 equation. If we can move, I said we had about 160 hospitals. If we can move this to 300 and we have a nice trajectory and we get each of these hospitals to have 30 monitors that we have, they use them four times a week. that correlates for us to about 300 million SEK in just consumable sales. So that's kind of where we're, you know, the guidelines and the guidance that we've given to the market is that in 2025, we should have net revenues kind of in that range and also long term have an EBTA margin of excess of 40%. So wrapping up, I've been in several medical device companies and this is such an exciting phase because we're in the midst of this new clinical marker. It's now well established after 40 years and the clinical guidelines is just pulling this. So we're really creating something new here. And I have the Kraftwort family here from Lund as our largest shareholder base. And this is a mission to create the next Gambro. So thank you very much.

Thank you. There's a lot of interest in the US side of things here. I think we'll start there. How do you experience deal-making situations in the US? Have you bumped into any cultural hurdles?

Overcome some hurdles. The classic Swedish hurdles, where Swedish companies say they're going to focus everything on the US, but they end up focusing everything on the hospital next to their office. So we've really taken a big chunk of... We have half of our team in the US. I have part of the leadership team there, which is heavily expensive. Sweden is really a low-labor-cost country nowadays. So it's been a long journey. And it's a different mindset of marketing and sales in the US versus Sweden. So that's kind of my constant operational challenge and becoming Americanized, because that's where the business is.

How are you working on becoming Americanized? How do you do that?

No, I think it's just finding the right, it's always finding the right team. and getting the focus and sticking to the focus. So we decided in, for example, in Scandinavia, we're having a distributor. I don't want to start selling here because I'll get distracted. So yeah, that's been the trick here.

What is your marketing strategy to reach the 300 hospitals that you need to reach your goal?

I try to make a very digital approach, because now that the... The guidelines are there. Physicians and anesthesiologists, they are Googling after what type of technology out there. So one of our simple goals is to be number one on Google. So just trying to do this different. Yes, we attended a fantastic anesthesia meeting in the US last week. But we need, as a medical device world, we need to find other ways of reaching the customers. It's too expensive. So taking on a very digital approach using social media and all kinds of routes to find the business.

If we return to the more scientific side of things, could you talk a little bit more about how these patients are monitored today without the use of your product?

So it's different in Europe and in the US. In the US, they are monitored manually or they're monitored with a small little electrical shock. So the biggest competitors here is anesthesiologists who give these drugs and they just kind of lift the head and say, Philip, are you okay? Are you awake? Is the drug out of your body? And then they pull out the tube and they wake up and then I end up in the postoperative care with all kinds of respiratory issues of which a small percentage actually die. While in Europe, they already have an analog technique out there. It's an analog technique for giving us a small little electrical pulse, and then you measure how is your thumb mechanically moving. So there I have a different type. It's a competition versus digital to analog, while in the US it's doing nothing to digital. So it's almost like NMT to 3G, and then in the US it's from analog phones to 5G.

I have another technological question here, whether or not the technology can be incorporated into the anesthesia machine?

Yes. Yeah. So we have partnerships. We work with Massimo, we work with Philips, where we can plug it into their system so it gets to the machine. And then ultimately the goal here is because these types of products, they move into the anesthesia machines and the patient monitors. And I see over time, all these nice little cool handheld portable things in the operating room, they move into an integrated solution. But a couple of years ahead, but we're working on it.

We will end with some more financial questions here. Of the total sales, how large a percentage is derived from US versus Germany?

So US right now is about two thirds of our business. It will in our business plan probably be 75 to 80% going forward.

And finally then, how much money have you raised in the last five years?

A lot of money. Probably about 500 million Swedish kronor, roughly. So it is an expensive business we're in. This is what it takes to really hit the market. A lot of hard work. And we went on NASDAQ main market 2021. And then we were on First North before that. Then we were on Spotlight. So we've done the journey. And long-term committed shareholders is the key to success.

Well, thank you, Filip.

Thank you.