Senzime AB (publ)

Good morning and welcome to Erik Panzer Bank and this morning's live presentation of the nine-month interim report of Senseim and here to present the nine-month report is CEO Philip Seiberg. Welcome. Thank you.

Thank you very much. I'm here to kind of get the highlights of the Q3 report that we just published this morning here in Sweden. So Senzyme, just a brief recap. We are a Swedish headquartered medical device company. We're in the midst of a technology and clinical shift where we are providing monitoring solutions. eliminate complications as a result of anesthesia and also as a result of opioids and other medications as you are in the perioperative mode of the hospital value chain. We have a commercial infrastructure in over 30 countries with the main focus on the US and Germany, but also distribution and licensed partners. We are a NASDAQ main market company listed with long-term investors backing us up. So a little bit about Q3. I think we had a nice Q3 with a strong continued growth rate and most important also we secured long-term funding in the company. So just the highlights, we reached sales of 9.2 million Swedish kronor. A growth rate of 146% at a quarter and year to date above 160%. The growth was driven mainly by strong US business, but also growth in all markets. We had a number of key wins, I'll come back to those. Product gross margin continues to improve over time in the company. We reached just under 70% year to date. We also announced that we ramped up our operational capacity and our production capacity, which we're now delivering on. And we did two directed share issues during the quarter that I will comment on that raised 173 million Swedish kronor. So to give a feel for where we are, we've had a nice really hockey stick inflection point happening this winter. As a result, I think the new clinical guidelines has been a good catalyzer to this. So we are trailing at about 30 million Swedish kronor in run rate. But by the end of the quarter, we have an even stronger run rate, so up towards 50 million Swedish kronor. So consumables are of course the most important. You can see a small little tiny dip here in the last quarter. I think it's mostly a result of orders coming in the day after the quarter. So nothing really there to comment in any way on. The installed base of TetraGraph systems continue to grow. We are closing up towards the 2000 mark. We are well in line with delivering on these production goals that we announced in early July. And the number of sensors which is the important really business driver and margin driver here continues to grow very well over the year. So we announced three key deals during the quarter, and then we had another major deal on the East Coast in the US that we announced just after the quarter. But to give a comment, the first one was a leading US university hospital system in the southern part of California. It was 70 tetragraphs that we... announced that we will install over time. That deal has actually gone quicker than we thought and they're already deploying and installing and starting to use the systems. We won another major competitive evaluation order from another top 10 US rated hospital systems, also in California. That was 110 TetraGraph monitoring systems. Quite a good initial order value for us there. And probably in and around 5 million Swedish kronor in run rate revenue on consumables over time as it's fully deployed. And that's also now up and running right now as we speak. And then we also announced a contract with one of the leading US IDNs, Integrated Delivery Networks, which is a longer term contract, but we've started to deliver already. This has a huge opportunity and it's covering the most of the western US region. So just, you know, it just summarizes like why are we winning these types of deals? Yes, I mean, I would summarize it into three categories. Senzyme is perceived out there as really the trusted vendor. We are the only company in our niche that is publicly traded. We have a legacy of over 40 years of research and development. Most of our technology and ideas are sprung out of the leading Mayo Clinic and this is developed over a lengthy period of time, as I said, with strong base in Uppsala. Second one is we are really perceived as the leading solution provider. We have the sharpest algorithm. We have now the fifth generation electromyography or EMG algorithm that really provides a very accurate response. It's a very simple solution now to use with auto calibration. We can connect to most of electronic health records and external patient monitors. And now we have a very broad portfolio of electrodes that are used for both adults, for kids and also for patients with sensitive skin. And then the third really bullet why we're winning the deals is the commercial excellence. We have a brilliant clinical team that helps to support, to do the introduction, to deploy, to train. So we have that both in US and Germany, but also in support with our distribution partners around the world. So really the inflection point for us as a company has been these new type of guidelines. I mean, this is a picture here showing the number of guidelines in our space that has developed over the last 10 plus years. The big driver was when the UK came in 2021, but then as the European and the US came this winter, that was really when the inflection point, that's when you start to get the pull from hospitals, and the guidelines are in summary saying that all patients that receive paralytic drugs as part of their anesthesia, which is in and around 100 million patients a year, they should all be monitored with a quantitative, objective neuromuscular monitor, and that's exactly what we're offering to the market. So for us, it's important from a business perspective to monitor the utilization rate. How much are these used once they get out there? And we had a small little dip here, if you can see in the Q3, it's a very small, I'm not concerned about it. It's mostly that we had quite a large volume of deliveries of monitors that are not yet fully in full use so if you look at kind of our what we define as key deployed accounts the ones that we really really are focusing on they are up towards the 4.0 level which meaning four tetrasense electrodes used per monitor and week um but if you really nail down to the markets so this is the uh to the left here is the the us market we're seeing a nice positive trend where we are above above the 4.0 level already and if you look at the german market we are also having a nice trend so it's a little bit just depending on the the regional mix here I'd like to point out one, so we have one interesting customer in Germany. So we're seeing in Europe an increasing trend of using our solutions as part of da Vinci and types of robotic surgery. So these patients require a very deep neuromuscular blockade. They need to be absolutely paralyzed to stay perfectly still. And in these instances, it's very important to have an objective, very sharp monitor to do this. And this is just a major clinic in Munich showing that once we get in there, and this was a deployment that took about about a year, and then it took six months to really ramp up. So they are doing more than two surgeries a day. So this is a utilization rate way above 10 patients a week. So this is a very nice niche market for us as it develops. So I've shown this slide before to those of you who follow the company. It's understanding how do we actually create value over these soon to be 2,000 deployed patients. tetragraph monitors but we're still working very diligently to to increase utilization because the more they're used the more value these tetragraphs are driving and just to give a feel again that when they are in what i define as a decently full use which is four patients a week or more They typically provide up towards 50,000 Swedish kronor a year in run rate. And as you see, if you get up to these top tiers, like we had in Germany, we have run rate revenues over 100,000 Swedish kronor a year. So our installed base of customers is something we also very track. We continue to grow our hospital base. Now end of Q3 was just a little above 161 hospitals. These are the hospitals that we can follow and monitor. So it excludes what we're doing in Japan. It excludes what we're doing in South Korea and also smaller distribution markets. So it's more to follow the progression of our business. So a comment on the Experon system that we acquired last year from Respiratory Motion, the company we acquired in Boston. We continue to really focus on value creation there as well. We are continuing to integrate it into our sales networks. We have defined a very clear leadership for the business unit itself. We are signing up new distribution partners. It's just a little bit of a longer sales cycle right now than the TetraGraph. So this is more where the TetraGraph was probably 18 to 24 months ago. But it's moving on and there are studies more and more confirming the clinical value of following minute ventilation, following the breathing. That is a very early process. and good predictor of length of stay and helping to find if you can predict early that you're having breathing problems then you can understand how to treat the patient and get them quicker out of the post-operative care. um operation efficiencies so we continue we moved home production to upsala a few years ago that continues to help to boost our product and gross margin but it's of course a mix of portfolio it's a mix of regional sales but also control production but we are now trailing 68.7 percent year over over a rolling 12 months and also had a nice gross margin in absolute terms in the quarter And of course, operational efficiencies and operational control is very important too. We continue to kind of to, you know, every single little Swedish Krona matters here as well as dollars. So I'm seeing a trend here that our operating expenses are actually starting to get lower. We've had a number of one-time effects in the past, but if you look at Q3 versus Q2, et cetera, we're seeing a nice kind of slowing trend, but also as I pointed out, I want to flatten this out now as we grow the business. Okay, so to strengthen our long-term financials during the quarter, we conducted two direct shares issues. We did this in two tranches to really make it fair for the shareholders. So we did one for 56 million in August. And then we did another one as the market captured that, which was 117 million for a slightly higher price of 650. And that is still pending final decision. It's with the Swedish Bolagsverket to get the shares out, but everything is clear and these are now registered. So we raised 173 million and we raised it more or less at market price. So no huge discounts. And I think this is a sign of institutional owners believing in what we do. The Crawford family and the foundation remains our largest shareholder, but the ones that came in were predominantly the new Segla Medical Acceleration, a dedicated medtech fund. We also had Carnegie funds come in and also support by the fourth AP fund, Handelsbanken, Swedbank, Roberg, etc. We announced also that we are cross-listing our share in the U.S. We have quite an investor base in the U.S. So this is pending to go live by the end of October, meaning that you can very easily then also trade our Sanzheim share in the U.S. market during U.S. opening hours and in U.S. dollars. And I think we're doing this as a result of interest for the company, interest from U.S. shareholders and to help drive interest in our most important commercial market. Okay, so to wrap up, this is the golden equation that I use to visualize where are we heading. And I've shown this similarly before, but if we can capture 300 hospitals here and we can have them to run approximately 30 tetragraphs in average per hospital with a utilization rate of four tetrasensors per week, Then this correlates to roughly 300 million Swedish kronor in just consumable sales. So this kind of visualizes where we're heading and this is in line with our financial targets that we've announced. So we are really in such an exciting phase. I was just back from the large american anesthesia meeting which is once a year and it was i must say one of the best medical device shows ever we are really in the midst of a technology and clinical shift we have a brilliant portfolio products and a very strong team so very excited about the future to come thank you very much

Thank you so much for your presentation. I would like to start with the classical sports journalist question. How satisfied are you with the quarter?