Xvivo Perfusion AB (publ)

Thank you. And dear all, I welcome you all to the Exvivo's earning call for the third quarter of 2023. Today's presenters are me, Kristoffer Rosenblatt, CEO, calling in from Gothenburg, Sweden. And we have also Kristoffer Nordström, the company CFO, calling in from Philadelphia. And we go to the next slide, which is slide number three, and Q3 financial at the glance. I'm both very proud and happy to report that Q3 was another strong quarter with improvement in performance in line with the last four quarters we have seen. It's also very encouraging to see that our scaling up our business model showed an improved adjusted EBITDA that actually came in almost three times higher versus Q3 last year in terms of Swedish kronor. As you see on the slide sales came in at 147 million SEK and we posted the third consecutive high organic growth quarter with 37% in Q3. The gross margin and the adjusted EBITDA margins are continuously improving and we see that also happening in this quarter. On top of that, we're also very, very pleased to see that the integration of our three latest acquisitions has progressed according to plan, and they continue to significantly contribute to the high growth we see in the quarter. The recovery service in the U.S. is now organizationally and brand-wise fully integrated. The services are very high quality, appreciated by our customers, and the next steps are to start acquiring new contracts and pilot the product service model in a few clinics to start with. I also want to mention the abdominal portfolio, which is growing very fast for disposables. We can see 100% organic growth during the quarter. In liver, it's really encouraging to see that we see strong growth in all major markets in Europe. I especially want to mention France, where we now have full reimbursement, and that obviously helps growth a lot. But now I also want to start to mention the kidney loss, which is now gearing up, and we start to even see that in the numbers. The limiting factor for increased growth in the abdominal segment is production capacity of disposables and regulatory approval for liver in the US. The production capacity is gradually improving, and we will invest to scale up volumes. During the presentation we will go further into the details regarding our plan forward for all areas mentioned and especially production and regulatory approvals. Then we go to slide four which is the next slide where I want to give you the same picture but for the first three quarters of the year or YTD. And the key takeaway from this slide is that the progress shows similar pattern as we saw in Q3, and it's not isolated to one quarter. And when we look back at the first nine months of this year, we can conclude that not only the numbers in our current land business and abdominal business in Europe are pointing in the right direction, but also that we have passed many, many important milestones. And for example, we have heart Australia usage We have the US Heart Study that includes DCD and now has started. I also want to make integration and performance of our two service acquisitions, which has been truly amazing. And also the overwhelming positive feedback from both our liver and kidney customers, both in terms of clinical results and in terms of user experience and easy to use. We can also conclude. looking back at the nine first months of 2023 that the market is growing fast and especially in the US it is accelerating in 2023. This is a result of new technology coming to the market but also maybe more important political pressure that comes from the high alternative cost to a transplant for patients with end-stage organ diseases. So the passing of those important milestones together with an organization with a razor sharp focus to deliver and an underlying positive market fundamentals lies behind the number we see in front of us. I won't go into them in great detail here, but later in the presentation, our CFO will give you further details to both the numbers and the drivers behind the numbers. And with that, we change slide to slide. And we look into the Q3 highlights. This quarter, we will focus on progress for the heart technology, the kidney launch, and lastly, the very successful capital raise of 440 million sec aimed at increasing production capacity and obtain regulatory approval for heart-inclusive DCD and liver in the US. So with that, we go to slide, next slide, which is slide number six on the slide deck. And we start with the U.S. heart update. As we reported last quarter, the FDA granted us an IDE, including both the DBD and DCD donor heart. This meant that we could start a regular trial in the U.S. And as you saw already in mid-October, we have already had the first patient in to the study at the very reputable Duke University Hospital. As we have stated before, we can include a maximum of 20 sites to enroll 141 patients into the study. I want to especially mention again that the opportunity to include DCD into the trial design was very important. The DCD portion of the donor pool in the US was approximately one third last year in 2022, and DCD is growing very fast. Having the opportunity to also produce DCD hearts prior to transplantation will be key to save more hearts in the US and hence give the opportunity to more patients with end-stage heart disease a chance to a longer and healthier life. And if we look at the last bullet on the slide, I'm sure that many of you have already seen this or read it in major newspapers in the world. And the news was that Maryland performed their second seno heart transplant during the quarter. And we in Exviva are both very proud and humbled to be part of this groundbreaking science. Proud that our heart technology enables seno transplants, which is a more complicated heart preservation. And we're also very humbled by the fact that we work with very competent partners that maybe one day can change the future of transplantation. However, I do want to mention from an investor standpoint, the key takeaway is that Xvivo, together with Xtend and Legolas, has developed extremely innovative technology that can not only improve ordinary transplants, but also more advanced transplant models. It underlines the fact that Xvivo is the innovation leader in our field, However from a financial contribution standpoint there will be a limited financial contribution both in the near and midterm future. And with that we will change slide to number seven and we will take a look at an update on the European and Australian heart experience. As we reported, we have in Europe finalized inclusion of the regulatory study during Q2, and we are now entering the one-year follow-up phase. We have a very good initial feedback from the participating clinics. We have already submitted the technical documentation to Notified Body for regulatory approval or CE mark for the heart technology. In the meantime, we have applied for compassionate use. We will target three to four countries in Europe to enable compassionate use prior to regulatory approval in Europe. In Australia, we see that compassionate use cases, in other words before regulatory approval, in Q3 continue at a high level and represent approximately 30% of all heart transplants. in Australia, New Zealand. We are present at all clinics. And during the quarter, we have actually broken the record out of body time with one minute compared to the old one. So now it's a total of 48 minutes. And the fact that we are not allowed to market the heart products in Australia and New Zealand but see high usage is a testament that the need for the product is very high. And the reason for this is as I would say as always that the clinical data is convincing so far and that seeing is believing. Many of the surgeons we talked to say that to see the heart is in better condition after being on our heart box and even though we pushed out about the time to almost double of the generally accepted four hours and that is very encouraging. And the percentage clinical survival data is also truly, truly impressive with zero third-day mortality, even though the out-of-body time was more than double of the generally accepted four hours, and that is from the Australian study. With that, we leave the update on the heart side for the quarter, and we go into next slide, which is slide eight. and this time we want to give an update on the kidney assist transport launch update. We can now see that with production of kidney assist transport disposable kits when they are gradually increasing we see that we are also gradually increasing sales on the product and we can see that the selective launch is gearing up. The kidney cyst transport is now fully launched in the Netherlands, where we already produce all DCD kidneys in the Netherlands. And this is a very important both milestone and proof point for the future, since we know that almost one third of the donor pool in the US was DCD during 2022. And we know DCD is growing very fast. It's encouraging to see that success in the launch. is early and as I said we had a selective launch where we have selectively launched the kidney assist transport in the US, Australia, Sweden and Spain with very good initial customer response and the response we get is one it confirms the clinical result we have seen published in Lancet for example and two we get a confirmation that the kidney assist transport device is easy to use And that is very important to get into really high use rates for a product. I also want to point out that we have now installed the first kidney assist transport in an OPO in the US. OPOs are today performing a majority of kidney perfusions in the US. And of course, the OPOs will be a very important target group for the future launch of kidney assist transports. If we look at the operational scale up, as I mentioned, the limiting factor to an increased growth pace right now is production of kidney assist transport disposable sets. It is gradually building up both production and sales but right now demand greatly outpaced supply and hence that's why we choose for selective launch. During last quarter Q2 it was communicated from us and the company that the key focus right now is to build up production capacity for kidney assist transport in particular, but also for liver and heart, where we see great demand in the next couple of years coming. Even though the production quantity is gradually increasing month by month, there will be important milestones along the road. The first one we're aiming to is to having component production fully up and running in a good and automated clean room environment. And this milestone we hope to pass during Q2 next year. And when we pass that milestone, we'll increase production output dramatically for primarily the kidney assist transport. As of next summer, we will gradually scale up assembly and sterilization capacity. We aim to have full production capacity up and running in latest Q2 2025 for heart, liver, and kidney disposables. For lung, we make a judgment that there are no hurdles going forward because it's already fully set up. And with that initial highlight, I will change slide to slide number And I hand over the word to our CFO, Christoph Nordström, that will tell you more about the recent capital race.

Yes, thank you, Christopher. So in mid-September, we could proudly announce the carryout of a successful capital race, where both international and Swedish long-term very high-quality investors participated. We're very happy over that. Obviously, the 440 million SEC directed share issue took place at a zero discount, and the interest from both current but also new investors was solid, and we are very grateful for the trust and support, of course. The proceeds, worth emphasizing, will be earmarked to secure three strategic objectives that together will enable us to become the global leading oil organ company. So first of all, to finance a first class clinical trial and regulatory PMA process for the heart in the U.S. Second, to enable our liver PMA process in the U.S. to be conducted more in parallel with heart, hence reduce time to the U.S. market. And third, to finance the scale up, as Christopher mentioned, of disposable production times 10 over the next few years. So with this capital racing, we're now fully founded to capture the great market opportunities and, of course, to bring our life saving innovations to all major markets. I will leave the word back to you again, Christopher, and jump in when we come to the next financial section. So here you go.

Great. Thank you. The next slide is slide number 10, which is a quick clinical and regulatory timeline review. And we can actually skip or go over to the main slide, which is slide 11. By the way, we have clear focus areas, which is the current business, the kidney assist transport launch. then also regulatory approvals for heart and liver and that's the two last focus areas we will talk about on this slide. As mentioned in the US trial we had our first patient in and I'm very proud of the team that they could both include DCD into the trial design and and get the first patient in with almost no delay at all, which is a fantastic achievement. I know that the clinical team in the US is working extremely hard right now to enable more sites to participate in the clinical trial for heart in the US. As mentioned before, if we go to the next point, which is Europe, heart. We have handed in our technical documentation for review according to our time plan. We are aiming for a launch in Europe during Q2 2024. I still want to say that we have handed in our technical file in good quality and we handed in on time but it's always hard to predict exactly when you get a regulatory approval in time. Especially that we know that notified bodies are under a high work pressure with MDR but this time now we have and we are at this point confident that we will reach it. We have touched the Australia New Zealand experience at many times. We have high usage. The regulatory strategy for Australia and New Zealand is that we will. have commercial laws pending CMARC in Europe first so that hence Australia and New Zealand will be regularly approved after Europe in the timeline what it looks like right now. Then Kristoffer Nordström just mentioned that we raise some capital and one of the aims for that capital is that we will enable to run both the heart U.S. trial and the liver U.S. trial are more in parallel than what we could have done before. And this is great news. We have previously also reported that liver assist has been granted breakthrough device designation by the FDA. This means that we will get a faster route through the FDA PMA process. It is also quality stamped that products are innovative and fulfill a need on the market. And the global level team is actually, as we speak, meeting in Groningen in the Netherlands to design the US study and compiling both the quality file for an ID application and talk about trial designs. We have already started to invest in an organization to run the study. During this year, we see a great number of publications being released with overwhelming evidence that DeliverAssist and its protocol showing superior clinical results versus what is available today. We see that reflected in our sales numbers, and it also strengthens us in our belief that the US clinics should get access to this technology. The US study planning will be done during this quarter. And we aim for an ID approval late next year, 2024. And ID approval means that we have approval to start a regulatory trial in the US. And with that, we go to the next slide, which is financial performance and I give the word back to Kristoffer Nordström who will present financial performance.

Thank you. So yes overall Q3 was a strong quarter financially where we did not not only see continuous sales growth versus last year but also a significant improved cash flow and profitability. So net sales came in on 147 million SEK, and that's a 51% increase year on year, where organic growth came in on 37%. And this was primarily driven by the continued use of machine perfusion at our centers globally. Gross profit increased 39 million SEK to 108 million SEK, and the total gross margin grew 1% unit to 73%. As I mentioned, both EBIT and EBITDA were strengthened significantly. where EBITDA tripled versus last year. So the adjusted EBITDA margin was 10%, adjusted EBITDA margin 19%. And these adjustments that we have made are all related to the year-to-date integration costs, which we had previously communicated. And this project has now, as we enter the fourth quarter, been finalized. So in Q3, you had around 12 million SEK that were included in marketing and sales costs driving that part of P&L OPEX up a bit. Year-to-date sales amounted to 442 million SEK and that's a growth of 56% where of 39% is organic and that adjusted EBIT year-to-date 9% and adjusted EBIT at 18%. So overall we're proud of delivering yet another growth quarter and we are now entering the fourth quarter with competence. Moving over to the business area slides, starting with Thoracic Q3. Once again, a solid quarter with sales of 91 million sec and an organic growth of 20% for disposables. Here, I think it's worth mentioning the third quarter is usually impacted by a lower level of transplant activity at clinics during the summer months. And we could see this also this year, where an example in the US, the lung transplant volumes 8% versus Q2 this year. And this relation was actually also mirrored in our sales where we also saw our disposable sales declining 8% versus Q2 this year. But overall we still feel that we have a very strong momentum and something We continued to see hard sales in the quarter, 4 million SEK in Australia, which we are of course happy over. The gross margin for disposables were record high, 86%. And here we continue to work hard on our ASP development, where we have been successful this year. We also had strong sales of Perflex Plus in the quarter, which is our highest margin product and that contributed to this record level of disposables for this quarter isolated. As a final remark, we're happy to announce that in the third quarter we saw two new hub models in Europe that were established. One is a Nordic initiative. where a Copenhagen hospital, the Danish Rikshospitalet, will perform EVLP services to one Swedish hospital to start with. And this is the first EVLP collaboration across national borders in Europe. The second one is a collaboration between two hospitals in France who recently performed their first EVLP in their project. So great initiatives that we are very curious and will continue to support in the future. Moving over to abdominal, we continue to see a sequential growth of the quarters. This is primarily driven by a continued momentum in Europe for liver. Net sales amounted to 35 million SEK, which is a new all-time high. The growth of disposables was once again very significant, 129% in local currencies, where 100% was organic. Similar ratio to previous quarters in terms of liver-kidney, so liver sales 69% and kidney 29%. Gross margin came in on 61%, which is a significant increase from last year's 51%. We did not manage to repeat the 70% record level from Q2 this year, and that was because of a lower portion of sales from Italy. But the year-to-date margin increase from 53% to 65% is, of course, very solid, and we're very happy about that. Final business area, moving over to services. A very busy quarter with the integration into the Exvivo. So this is our organ recovery business in the US. Q3 sales were 21 million SEK, which means a 68% growth versus last year. Cases in line with Q2, so 148 cases were performed and year to date we have grown 23% in case volume. 2023 has been a year where we have put high focus on strengthening our organization and logistics efficiency. And this in order to optimize our service offering and to prepare for the new integration with the project. And as we have previously announced, StarTeams is now fully integrated with Exvivo. And by that, we have established a really, really solid platform for growth that is designed to meet the increasing demand for this kind of service. So focus of the next year's, sorry, next quarter's is quite simple. I mean, we will continue to renegotiate current contracts and right-size them in terms of profitability. We will recruit more surgeons That's a high priority in order to be able to secure new contracts. As we have expressed earlier, the demand is very strong. Moving over to EBITDA. So Q3 delivered sound profitability, I must say. EBITDA adjusted for integration costs were 28 million SEC, and that corresponds to a margin of 19%. And as mentioned, in comparison to last year, EBITDA tripled. The rolling 12-month trend looks good as well, and EBITDA margin now reached 18%, representing 102 million SEC. And this positive development is primarily a result of the increased sales and strength and gross margins. And as we have highlighted many times before, I mean, we will continue to seek a healthy balance between profitability and investments in OPEX also the next upcoming quarters here. My final slide, cash flow. Q3 was strong from a cash flow perspective. Operating cash flow gave 25 million SEK, which is delighting as we continue to build stock, shouldn't forget about that, in the quarter to meet the demand. Operating cash flow roll in 12 months is 61 million SEK now. Investments amounted to 28 million and was primarily invested in our regulatory approval projects, such as the HART trial. And this was in line with Q2. acquisitions that happened in Q2 and as I mentioned we carried out this successful capital raise that gave 430 million SEK of the transaction costs which leads us at a cash position at the end period of roughly 600 million SEK which is of course very good for the future and that was all for me and over to you again Christopher

Thank you so much. That will bring us into the end of the presentation, which is looking a little bit into the future, the outlook. So we turn to page 19, and after that, we turn to page 20, and we start with a long-term outlook. I always think it's important to establish the long-term picture while we're here. We are right now only scratching the surface of this huge opportunity. It's good to remind ourselves that according to the WHO, the demand for transplants are times 10 of today's supply of donated organs. The other thing we should remember is that the sales value of machine perfusion is roughly times 10 versus cold static storage. Hence, we're looking at a market opportunity that is very big. The third point, which is very important, is that now we have a solution to this deficit of organs and resources in the transplant universe, and that is machine perfusion and service models that have proven to increase number of organs to be used for transplantation, especially in the fast-growing DCD organ pool. The main growth drivers are superclinical results from machine perfusion and the fact that service models reduce complexity and time for the transplant clinic. Hence, machine perfusion service models on both normal DBD and standard and extended criteria, as well as DCD graphs, will drive growth in the near future, which is the next five to 10 years. On the bigger picture, we also want to mention that to grow all the way to 2 times 10 in number of transplants, the company believes it's possible to do that with current human donors. However, over time, innovative sources of organs will probably be used. One example is xenografts. And I think the key takeaway here is that for both machine perfusion and new sources of organs, Exviva has a proven product pipeline. And this puts Exvivo in a unique position on the market today. So from the bigger picture and the five to ten year outlook, we go into the next year outlook for 2024. We will continue to build machine profusion through hub and service models. You know that the next step is to integrate service and product. and establish more service hubs both in Europe and the United States. For HART, the HART box will be prepared for both European and Australian launch. We have started the US PMA trial and the key aim here is to finalize trial inclusion as soon as possible. and that would be a key focus for the US heart trial next year. For liver we are aiming for ID submission to the US FDA and as I mentioned many times through this call and a lot internally in the company our key priority is to increase production capacity by at least times 10. We will reach an important milestone. It will happen gradually but an important milestone in Q2 next year and then we will have full capacity without any capacity constraints as of Q2 2025 for all products in our pipeline. Then we went through the kidney assist transport laws today. We see encouraging results from the initial launch. And we will focus even more on this opportunity, both in Europe and in the US. Here, what is happening to us right now is the production capacity. At the moment, the introduction has been from a customer viewpoint, great. So it's all about gearing up production and increasing the sales footprint mainly in the US. So with that, the last point is that we will keep a razor sharp focus on our key priorities during 2024 to deliver the cornerstone of our long-term strategy. Thank you so much for listening today. With that, we turn to the last slide, slide 2022, and we open up for questions.

If you wish to ask a question, please dial star 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star 5 again on your telephone keypad. The next question comes from Ulrich Trapner from Carnegie. Please go ahead.

Thank you very much. And hi, Christopher and Christopher. A few questions on my end. If I could start off talking or asking about revenues and start with abdominal, what is happening with liver in Europe? What is explaining this high growth beyond reimbursement in France? Just to get some understanding on this high level of growth that we're seeing in Q3.

Thank you Ulrik. I will start to give an overview of what is happening and then I will hand over to Nordström if he has something to add. But a few things have happened. Number one is that a number of clinical trials have come out lately and been published showing the superiority of both our product and the protocol we use So that's one thing we see. So the interest for liver perfusion in, I would say, especially DCD, but we also see convincing results in DBD has been very good results. And then the interest is increasing. That's the number one. We have also a very good sales force in Europe that is working very close to customers. and have done under a number of years, and we start to see that result. So the result we see now in Q3 is not country-specific, but it's more European-specific. So we see high growth in France, definitely driven by reimbursement, but we also see high growth in Germany, Belgium, Spain, etc. So it's more of all major countries in Europe type of growth we can see.

And perhaps I can speak on a follow-up. What's your estimated market share in liver right now in Europe?

That's a good question. We don't have an exact number. We know we are the market leader in liver in Europe. But we don't have an exact number. And it's something we will start to measure over time. But we know we are by far the market leader in terms of machine perfusion for liver in Europe.

Great. And staying on abdominal, you're saying kidney now gearing up. I get around to two, three million sitting sales in Q3. And I know that you're expanding your disposable capacity and expecting that to be gradually stepped up. But is it around two, three million that we should anticipate going forward as well, that your current capacity, and just how we should view the capacity ramp up? I know that you're stating that by 2025, it should be full operational 10x of what you currently are able to produce, but if you can help us guide us along the way until 2025, what we should be able to anticipate?

That is a great question. I think what we see now going forward is a gradual ramp up of our production capacity in Qantas being shipped to customers, where we will go to have more countries where we fully launch the product. Next country, for example. So that will happen gradually until Q2 next year, 2024. Then we will have, according to the time plan we have, we will have the components manufacturing full scale up and running. We have two positive effects. It will free up some time also in assembly. So we have some resources for both liver and kidney downstream in the production. And that will also take away the main capacity constraint we have right now. It's mainly linked to components manufacturing at the moment. So I think the first milestone we look to right now is a gradual uptake month by month, quarter by quarter until Q2 next year. And then we will see more of a lack of capacity constraints. Then we know that the need will far outpace also the clean room and the sterilization capacity we have. So that's the next project that we start then during the summer, next summer, where we will scale up that as well to have what we hope is no capacity constraints at all. Because once we set up this supply chain, it should also be a scalable supply chain. Hence, if we want to grow up from times 10 to times 20, that should also be possible with all the product and sterilization validations we will perform. I hope that answers the question.

It did. It did. And how are you prioritizing customers? You mentioned that you just obtained your contracts from the first OPO in the U.S. I'm guessing here that that is something that you would like to prioritize in getting into more OPOs given the price point and the share volume of of transplants performed of opioles in the US. How are you planning to allocate this for an increased capacity over the next quarter until full production?

In the next, let's say three quarters, we will definitely target opioles in the US because they are perfusing the bulk and the majority of kidneys in the US. We will continue to selectively launch in as many opioids as we can during that period, knowing that there will be constraints. But we will try to get our foot into a few during this period until we can, let's say, go full-scale launch. also in the U.S. And this is one opioid. There are 55 more, of course. But the good thing is also that the opioids, they talk to a lot of clinics, so the word will spread over time, that one opioid talk to clinics and that those clinics talk to other opioids, et cetera. So it will have a positive effect over time the more opioids we come into.

And on the thoracic side, I think we could start off with lung and any reason for the strong performance of PerfectX Plus. Because I see the same numbers that you are seeing on number of lung presentations performed in the U.S. and seeing a small decline sequentially Q2 into Q3 and If I remember correctly, you say last year was not a weak quarter for cold profusion. So what is driving excess growth of Perfidex Plus?

Maybe I start off and then I hand over for the detailed numbers to Nordström. But our Perfidex sale is normally good. market indicator because we we know that each clinic they use approximately the same amount uh so and since we have a have a dominating market share in the world on perfect x we we see that that's a good indicator on how many lung transplants we made during a quarter um they could there could be some stocking effects uh in in some quarters but i believe that that that is a quite limited explanation, at least this quarter. The fact is that in the US, there is very little stock on Perfidex outer clinics. We have next day delivery. So if they call us before noon, they have it before 10 o'clock next morning. So they keep quite low stock. So I believe at least the US's majority of sales, and I believe that's probably not an explanation for this quarter. So we see sequentially it's going down from Q2 and we can see that in our numbers. But we can see year on year that volumes are increasing, Q3 this year versus last year. Nordström, do you want to add something to that?

No, just that it is a bit hard to look at isolated quarters still, given the size of the company and the nature of the business. Usually, as you said, it is a good indicator on where the market and the next quarter is leading.

Okay, great. And on hard sales, I know there's a slight slowdown in revenues, just shy of 4 million, if I'm getting the math right, in I know it's limited sales, and I know it's not under full approval, but is this something that is stable volumes or a seasonal trend? As you mentioned, you have the summer months during this timeframe. If there's something that we should look out for in regards to the hard sales, A follow-up to that is it's very positive and encouraging to see that you have included first patients in the HART trial in the U.S. And I remember that you're getting reimbursement for these patients. Are these patients to be recognized as revenue in Q4 already, or is that something that we should anticipate first in 2024?

That's correct that there is a reimbursement in place approved in the US which we are happy over and we will be able to build the clinics patient by patient so you will see revenue already in Q4 that will be wrapped up as we include and activate more centers of course. Christopher, maybe you have more insight to the Australia sales. But I think the good thing, of course, is that we see that we are on 30% penetration, which is truly amazing. Might be that there were some extra stocking in the beginning of the year because they got their last patient included in Q4 last year. And it's in summer, et cetera. But please add, Christopher, if you have more.

Yeah, no, I can confirm that that is correct. In terms of, if you compare to the US and Australia, we don't have next day delivery. Hence, they need to keep stock at the site in order to have enough supply to perform heart transplant with our heart technology. Hence, the sales could shift quarter on quarter. I think the important is that the underlying usage is still Similar to what we have seen and even a little bit more. And the sales spike we saw in Q1 was driven by definitely some stocking up at all clinics in Australia. So that is the explanation why we see some sales going up and down for heart quarter on quarter. But the underlying usage is what is important here. And that is stable and even improving a little. or increasing?

Absolutely. Do you know anything about their current stock levels and if they follow the same general trend as the rest of the markets where we could potentially see some stocking up here in Q4 when they're ending their budgets?

That's a great question. We are not privy to that information right now, but it's something I will ask our head of Australia if he has more knowledge on that. But we don't have any that information right now unfortunately.

Okay great. Few more questions on revenue and one on OPEX if I may. Price increases. If I remember it correctly, you tend to increase prices in the US in November and in Europe by the early part of this year. Is this something that you're planning to do for 2024 as well here in November or closing in on November right now? And to what extent are you planning to increase prices?

Yes, we are planning to increase prices. similar to what we have seen in previous years, similar amounts. We will look at it a bit selectively where we add the most values and we are, let's say, more underpriced than in some products and some geographies versus others. But we are aiming at increased prices according to the same procedures last year.

Great. And then one quick question on two European hubs. If I remember correctly, Denmark and France, right? And quick question is, are you the only supplier of EVLP to these sites?

Yes, is the answer to that question.

Great. And last question that is on the OPEC side and what happened with personnel costs in Q3. It looks very low, even if including the integration charges that you took here in the quarter. Is there any reason for that? I believe it was at 9% of sales or something like that. Is there something that has been shifted to other places in the OPEX?

Are you referring to the admin cost? Yes, the admin cost, correct. It's a little lower than before. It's a natural effect of summer holidays, vacation, impact on costs, etc. Minor... reduction of costs due to employees leaving. But overall, looking at if you skip all the one-offs and the adjustment costs, we are at 10% of total sales here to date. which I think that is the level where we are currently, where we should be given the sales that we see and predict for the full year.

Okay, great. Thank you very much for taking all of my questions.

Thank you, Rick.

The next question comes from Jacob Lemka from SEB.

please go ahead hi and good afternoon I have a few questions starting on for a sick machine profusion I think the growth looks sort of lower than than previous quarters is there anything behind this I can answer that one

We can see sometimes shift between quarters. We can see Y2D gives a better number. But if we compare this Q2, 2023 was comparably quite strong. And the same with last year Q3 in terms of lung EVLP were also comparably strong. So comparably high comparable and a little bit stronger Q2.

um is what we have seen um so i think a more correct view is the y2d in terms of the y2d performance okay and then just wondering if it's possible to sort of quantify the the tries increases you've had this year in different products or business areas yes so uh first of all

This is a high focus. For a few years now, we have really worked on improving our ASPs and we've been very successful. If you look at Thoracic, the EVLP this year, the ASP growth was 12% and Perfodex Plus close to 10%. These are global numbers. Abdominal. liver sales in Europe, actually a 20% increase this year, excluding Italy. So here we have really worked hard and been successful. When we expand to new countries, we have an option to come in on a good price level. When we expand to new customers, it's the same thing. So 20% roughly on liver.

Okay, and then on abdominal, I think it's very impressive growth. You see that you can hold up this kind of high growth when you look into next year. Is there anything like structure that we should be aware of looking into the future?

Thank you for that question. It's a very good question. I mean, we have mentioned production capacity, that would be the main. uh main driver uh of of increased growth so once we scale up production we see also growth scaling up um so that's number one i i think if if we look at the at the long term picture to have the liver in the us will of course be a game changer so to having the right focus on on that project will be key um but besides that we we don't see bottlenecks so to say, besides the fact that there could be sometimes an effect between supply and sales that when we have supply, it takes maybe a month or two before sales are really gearing up and meeting the right amount of customers to include them and train them on our products. So we have to work a little bit before the curve with the sales team. So they start training and and uh product training and and launching the product into new customers a little bit before so we are already when the production scale up comes i hope that answered the question yeah that's that's good uh just the final question then on on kidney assist transport i i understand that you are sort of moving production facility and and

importantly also for the consumables can you give any sort of guidance or yeah help on when this this will be done as i understand that that will be the main sort of yeah releasing factor for for higher production yeah did you say that the kidneys is transport kits yeah yeah yeah yeah as i said before yeah that that would be key uh the first milestone we look into is components

and the first milestone we have is q2 2024 to reach that one after that we should have less of capacity constraints going forward okay very clear that's all for me thank you very much thank you so much

The next question comes from Johan Aniris from Redeye. Please go ahead.

Thank you for taking our question. Just a few. The first one, you're clearly investing in services, which is also an integrated part of the offer, of course. How should we, over the next 12 months, should we assume that you sort of investing ahead of the curve, so to speak. You have some pressure on the margin, but of course you don't capitalize on that side, I suppose.

Sorry, one more time, Johan.

Oh, yes. You're investing in the services offer quite significantly, and that's, of course, also an integrated part of the solution offer. As a result of your investments, you could view that as being ahead of the curve. There is also some pressure on the margins. You don't capitalize anything on that side. Should we expect you to step up the offer ahead of the curve also for the next 12 months?

Yes. I mean, the general question is yes, we will step up there.

Service will be very important. It's also very profitable over time, because we are solving a real problem at the customers, which is time and resource constraints. So that's something we definitely need to scale up. I think we have proven in at least the last 11 years I've been here that we are scaling up with We have a control scale-up when we do it. We don't spend a lot of money and normally make huge losses. We had one loss in 2020. gradually increase. Now we have the right people on board, highly qualified people, both in Italy and the US. We have made the revenue model and how we should perform the service. We have very, very good customer interactions where at least customer feedback I got has been that they're very happy with the service and think it is of high quality. So now it's obviously time to scale up that.

That will happen, as always, gradually, where we invest while we grow. Then I think the really interesting part will be when we integrate product and service, because then we truly solve all the customer wishes, which will be very important.

Thank you, and also the ability to secure access to products. trained and senior professional surgeons. Is that a bottleneck?

No, you know this better than me, of course.

It's not a bottleneck, but it is of course a typical factor. I am very pleased working with our recovery service now for several months to hear and to see how hell of a good reputation we have and our surgeons have.

So this is very much a surgeon recommendation referral strategy that I think will be successful and we are currently working on it, and I think we will be able, at least from a surgeon perspective, not to invest, not need to invest heavily in the head of the curve, but rather work, you know, on pair as we've been working on more contracts in a controlled manner. In hard Europe, you did produce that there could be some delay in the submission. I mean, there's never zero risk. is that something you can expand on and when can be when can you provide some feedback on the submission no no either way around there is no no delays in submission we have submitted So it's all done. And the initial feedback was that it was very good quality. Very few questions. Feedback on the files we have sent so far. We are definitely on time. I just want to point out that is that we aim for launch Q2. We still do that, but you never know, so to say. We're under a lot of work pressure, but we are definitely doing our part of the equation, so to say. And what we can do is to hand in on time, so they have a window for checking the files and hand them in at the best quality. So it's very clear for them what they are doing. considering for approval. So far, there's no signs of a delay, but I know from a fact that the oil notified bodies in Europe are under high High workload, so to say.

And we can't affect that. I want to be very transparent, not more than that. So I don't want to, no alarm bells, but I want to be transparent here.

And they also confirmed that you are aiming to secure compassionate use in some selected markets in Europe. And what's the, when can we get feedback and clarification on that?

We will get feedback and clarification on that hopefully during this quarter. We have obtained in some geographies in Europe and we are currently discussing that in the HART team right now. How much resources and where we should put on compassionate use in Europe. So we will come back here next quarter.

Finally study publication from

Australia, New Zealand, the publication, is that ? That's a good question. I don't know exactly when in time it is. I will ask my CMO and we see when in time that will come. That will obviously be a high-impact publication. Indeed. Okay, thank you. That's all from me. Thank you so much, Johan. Please dial star 5 on your telephone keypad. I think that there is... Is there any more questions? We have nine minutes. The next question comes from Ulrich Tratner from Carnegie. Please go ahead. One question on my side. Just a quick one on Star. And what's your view on the latest integration and expansion in the U.S.? ? You're seeing more contracts being signed and growth both expecting to accelerate from here or what's the current trend for the star now? Basically, where we are is that we have right-sized the organization and worked very hard with integration. That has now been completed, end of Q3. So going forward, we will be there for new contracts, so to say. It's hard to say exactly where we will end up. work very hard to sell our services both in the geographies where we are present, where we have the hubs, which is eastern United States.

If you take from Chicago down to Texas and you go east. We will also expand our service network to the western part of the of the us um but but we see uh we see high interest for for our service model we see a very high interest for a combined service product offering um so so we we don't feel that there are any type of constraints there um it's all to scale it up within um that we scale it with controlled scale that that's what it's all about now because it's a it's a service you take care of somebody's organ for for for a clinic so you have to do it with um the best best best quality you can okay so by extension more sites that would mean more contracts

which would be another step in terms of the revenue. Yeah, correct. Great. Thank you very much. Yeah. Thank you. Thank you, Oleg. I see there's one more question. Please state your name and company. Please go ahead. Hi. I just have a quick question on the for the XPS system. Last quarter, if I remember correctly, there was one additional system installed, but you didn't state any data on this for this quarter. Do you have any additional insights? That's a good question. Nordstrom, who has that knowledge, has They just jumped off the call because they had another meeting. The model going forward is that we go more for a hub model. So we do install systems in new geographies mainly, but in existing geographies, we try to pool the EVLPs to existing XPSs. So the most important use this quarter was the hub model in Copenhagen and the model in France, that we are hence not placing a new XPS there, but we have a new clinic that we connect to an already existing XPS. Thank you so much. So much. for all the questions and for listening in to the Q3 2023 interim report. I hope to see you back in January where we will report

for the full year 2023 and Q4 as well. So until then, I wish you a good day. Thank you.