Xvivo Perfusion AB (publ)

Thank you so much for that and welcome to Exvivo's earnings call for the fourth quarter of 2023 as well as the full year 2023. Today's presenters are me, Christopher Rosenblad. I'm currently at the headquarter in Gothenburg and our CFO, Christopher Nordström, who is in Philadelphia and living in the US currently. And with that, we go to the next slide, slide three, which is a glance on the Q4 financials and I'm happy to report the improvement in all three business areas. The adjusted EBITDA was slightly lower than expected and our CFO will get into the details later in the presentation. For sales it came in at a record 156 million Swedish kronor. The gross margins are continuously improving also in Q4. I'm especially proud of the abdominal gross margin where we are closing into the 2027 strategic goal of 70% gross margin already now and show 69% during the quarter and 66% during the year. But for avoidance of doubt, the abdominal growth is hampered by production capacity. It's still growing and growing expected. However, that thorax growth or the line growth is lower than expected during Q4. And this is mainly explained with XP having two feet, few feet on the ground in the US due to the reorganization of the US sales team to enable a product service model. To some extent, a few orders stand up on the wrong side of the new year this year versus last year. But that is not the main reason. We are also pleased to report that the integration of our latest three acquisitions has progressed according to plan and now significantly contributes to the growth we see in the quarter and the year. And as I said, the abdominal portfolio continues to grow as fast as it can during the quarter, plus 22%. Key here is that we see a higher growth in Q4 versus Q3, which means that we have enabled higher quantities for production in Q4. So sequentially, we are growing. And we can see that the main limiting factor, of course, is production. And for really high growth in abdominal, we need to get into the US market, which I will come into later in the presentation. And with that, we go to the full year picture. A key takeaway here is that a quarter can stick out, but the importance is the annual progress we can see. And we see growth in all segments and improving gross margins. That has led to an EBITDA amount being almost double of that in 2022 in amounts. So we posted 103 million adjusted EBITDA 23 versus 56 last year. So we see progress year on year. When we look back at 23, we can conclude that not only the numbers in our current lung business are pointing in the right direction, but also have passed many important milestones. I mean, for example, the heart usage in Australia, the US study includes DCD, and it has started with good inclusion of patients. has cost recovery. Also, the two recent acquisitions in services has been integrated and has been a very good integration, which we are both proud and happy about. And lastly, the overwhelmingly positive feedback from our liver and kidney customers, both in terms of clinical results and in terms of user experience. and you will hear more from our CFO on the numbers later so I will skip into more into the highlights on and we will look into organ by organ highlights 23 and what to expect 24 for clarity and we will start with heart on slide number six and accomplishment 23. And it has been a truly fantastic year for the Krivo heart technology. And I especially want to mention that we finished the EU heart trial. We now look forward to the presentation of data. The US trial has started, and it's including patients according to plan. And the study is unique in the sense that it includes both DBD and DCD hearts in one study. And I mentioned before and mentioned again that the opportunity to include DCD into trial design was very important. The DCD portion of the donor pool in the US was approximately one third last year and DCD is growing very fast. So having the opportunity to perfuse also 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 longer and healthier life. And it's hard to not mention Australia and the compassionate use we see there. It continued at the high level through the year. We see that approximately 30% of all heart transplants in Australia and New Zealand are with our heart box. And we can only use it for DBD right now and there we actually are up to 37% of all DBD hearts in Australia. And I think this is a testament for what the heart technology can do in the future also in other market. And the reason for this and the last point is that the data published from Australia was just fantastic. It was presented during ICT in April last year, and we see that the 30-day mortality was zero, even though we more than doubled the out-of-body time from the generally accepted four hours. And the testament which the doctors in Australia say is that, yeah, if it is not we don't do donation transplantation within the same city we think it's unethical to not use the heart box. So that brings us into the slide number seven and what we will focus on during this year 24. The key milestone for this year is obviously the presentation during ISHT in April this year in Prague from the European randomized controls trial. The next key milestone then will be the subsequent regulatory approval in Europe. The status right now is that we have handed in all our technical and clinical documentation to be approved by notified body. We have had very good response times. We are on plan for Also, the Swedish MPA who has to prove some of the pharmaceutical substances have shown responsive. What we see now is that the European agency that has to review one pharmaceutical substance might push the timeline from Q2 approval to somewhere during late Q3, early Q4, and then a subsequent launch in Q4. This is under investigation if we can do something about it but this is the current status of EU approval. I want to mention that in the meantime we have applied for compassionate use also in Europe at a few targeted countries in Europe. The third key thing to look out for is of course the US trial. It has very good momentum. Right now, we have already, as of Monday this week, included 15 patients. There are four DCDs. On Monday, we will initiate the fifth site. So we can see that the first five sites perform approximately 500 heart transplants per year in the US, which represent 11% of the total use volumes in 23. Hence, this study will give us a very good footprint the day we will launch the product in the US. And with that, we will move over to the next organ, which is lung and accomplishment during this year. We can see that the hub model has proven to be successful in the US for lung EVP, and we have established two hubs in Europe this year. This is something we will continue to grow. We are the market leader, and we want to be perceived as the thought leader in lung, so we have master classes. They're very appreciated by the lung transplant community, and I must say a lot of good ideas how to use the XPS for new indications are shared and presented during those meetings. Of course, regulatory hurdles will be there, but we hopefully see the fruit of those new indications in approximately four to five years if everything goes well. And lastly, even though it's not a key strategic initiative, we are focusing on hub models. There is a high interest for the XPS at many clinics. And we have actually seven XPS installations through the year 2023. And now the key is, of course, to train them. and as fast as possible get them up to approximately 12 EVLPs per year, which we deem is the hurdle for having a successful EVLP program. And with that, we look into 24 and what we plan to do. And in short, we plan to have three main initiatives in 24. The first one is we want to continue to be perceived as the thought leader. in lung transplants. So to accomplish that, we will increase efforts in EVLP training and collaboration between clinics. Two, we continue to expand the hub concept both in EU and the US. It shows successful so far. And with more feet on the ground in the US, we think that we will be having a very successful 24 in this regard. We also have a pipeline of clinics which show high interest So now it's time to execute on that interest. And three, we haven't talked about this before, I think, but three, we have demonstrated now that if we increase flushing volume for Perferex Plus, it has proven to be beneficial for the lung, both the donated lung and the patient. So this is something we will drive to demonstrate at clinics to drive above market market volume growth next year and also to drive better patient outcome in lung transplantation. And from lung we will go over to the next slide which is kidney and our kidney assist transport product you see on a picture there and we are now on slide 10. And it's been, even though we don't see it in sales right now, it's been a fantastic year for the kidney assist transport. We have all DCDs in the Netherlands of perfusory kidney based obviously on the very good Lancet study results where we had 97% one-year survivor versus standard of care 90%. said it before said again production of disposable kits has hampered the launch and we are investing as fast and as much as possible we can to solve this issue so that's one of you mentioned to date we have fully launched the kidneys is transferred in that lesson Italy in q4 23. Next fully launched market is the US. There has been a selective launch of the kidney assist transport to learn more from the market in the US, in Australia, in Sweden and Spain, a few of our smaller countries. And so far we have got very good initial response from the customers and the response is one confirming that the clinical results we have seen published in Lancet that it holds. And two, confirming that it's easy to use, which is very important for getting a large uptake of the product. And with that, we go to the slide 11 and looking forward to 24, where key is ramping up production so we get more kits. We are gradually ramping it up, so we see that we got more kits in Q4 versus Q3, and I expect to see a further ramp up in Q1 versus Q3 23. The next key milestone though to alleviate the key hurdle of quantities is that we will have our components automated manufacturing. We have a deadline for 30 June 2024, so this year. And that will enable a full launch in the U.S. approximately after holiday, then in Q3, if we follow this plan. And as I said, I still expect that we will see gradually more and more quantities and gradually improving sales then. In parallel to improving production, we will expand the U.S. abdominal field force to enable meeting more customers and especially opioids. And in the opioses where the majority of kidney perfusions are made. We see a very high interest in the US and we need enough sales and clinical staff on the field to meet this high interest we have. And with increasing disposable volumes, we will launch the kidney assist transport in country by country in Europe as well, but we will focus on the US first. And with that, we go over to the next organ and next product, which brings us into liver. Liver has been a key growth driver for Forex Vivo in 2023. And it's also impressive how many milestones have been passed through this year. And just to mention a few, we integrated Avionord in approximately one month after we acquired them. we sent the press release that they have just accomplished that they perfused their 1200th liver and we can also see that this service product model works very well and in Italy the ABU Nord now ex vivo perfusion services they perfuse almost 25% of all livers in Italy now which is a far higher penetration ratio than we've seen in any other country. And it's actually only beat about what we've seen in the heart in Australia in terms of fast uptake in the market. I also want to mention that, as I said before, I'm very proud of both cost improvement on the production side and price improvements on the sales side. And we see better gross margins. We always said that we expect 70% during the strategy period, 2027. But we now see that that goal is in reach a lot faster than that. And when we accomplish the goal, we come back with new goals, of course. A lot of studies has come out also during 2023, and it has really showed the product leadership, both in terms of clinical results, as well as convenience for the transplant team. So, for example, the liver cyst shows significant high graft survival compared to static cold storage. Also, the recent press release, I think it was maybe yesterday, of long-term perfusion is showing that we can enable plannable surgery to some extent, and that study has attracted a lot of interest. Lastly I want to mention a very important MDR approval which enabled 24-hour perfusion. This together with the study will open up liver cysts not only for improving liver transplant outcome which is an indication but it will also open up for logistical use and daytime surgery. If you read the study or the press release we see that we can reduce two-hour surgery time if we move it to daytime versus nighttime which is of course will enable more livers in the future. And with that talking about the future we go to the next slide 13 and we talk about what we're going to accomplish this year and what are the key milestones to Lord. I said it before we have two key bottlenecks for increased liver growth and they are one production capacity and two lack of EU's approval. So of course we will focus on that this year. And we hope that we can submit an idea at the end of this year. Also to mention in terms of production capacity Kidney has the priority number one right now in our production scale up project. Liver has number two where we see that the number of kits produced are too low at the moment. We are continuously and gradually increasing volumes until the end of this year when we believe that our full scale production will be fully up and running. Also, being the European market leader, we want to be perceived as the thought leader as well. So during 2024, we'll host a masterclass to spread living knowledge in the community, similar to what we have done on lungs. This will hopefully drive new indication, planned daytime surgery, et cetera. Also the launch of the new MDR device with remote monitoring so both enabling 24 hours on label and remote monitoring will support usability and daytime surgery. And with that we go over to the last segment which is the organ recovery service and to start with I must say I'm truly truly impressed by the organ recovery team and the progress made during 2023. They've done a fantastic job. They have literally improved on all parameters as well as pilot the NRP service and established scalable partnership for ground and air transportation during 2023. So in 2023, we have laid a foundation that will enable a control, high quality and scalable growth path for organ recovery in the US. Where we can also start with to pilot the product and service revenue model that we believe that a lot of our clinics want to have. So with that we can go over to the 2024 plan for organ recovery service business. The demand for organ recovery is very high in the US. And to meet the demand short term, we will expand our clinical roster. And we will also expand geographically in the US. We are now on the East Coast in the US. And we believe that there we have a good coverage with approximately 10% of all hearts and lung recovered. But we want to spread to other geographic areas in the US. For mid-term, we will expand offering to include NRP. It's a fast-growing indication and showing very good clinical results. And as I said, establish a product service offering. The goal with the product service offering is to support the clinics with the first 25 hours of the transplant process in order for them to, one, sleep more during the night and enable them to do more transplants. And with that, we can go over to slide 16, which is the divider slide, and jump to slide 17 for our clinical pipeline. And as a company, we will, of course, focus on the current business. And right now, we are hitting the market with approximately one and a half product or 1.3 products of the four possible, that being lungs globally and liver in Europe. So to enable a full global footprint, we are also focusing on the kidney launch and the regulatory approvals for heart globally and liver in the US. So in the US, as I said, the heart trial is progressing according to plan, and they're working very hard to include all clinics as soon as possible. But I'm glad to see that we have a clinical trial really on plan, because that gives good confidence for the future. I have mentioned the situation in Europe. We are according to plan for regulatory approval in Europe. The part which we can't really affect right now is the EMA or the European Medical Agency, where we will get back when we have more information. But if they use their full 210 days, we might push the commercial launch into Q4 2024. And in Australia and New Zealand, it's less of an issue since the product is used in 37% of all GBDs right now. And the regulatory group will be repending the C mark. So we'll come back to that. For the liver, we have previously reported that we have been granted breakthrough device designation by the FDA. This will mean we get a faster route through the FDA PMA process. It's also quality stamps that the price are innovative and fulfill a need on the market for both US clinicians and patients. We have started both the process of documenting the ID application. We have started to invest in the organization both to run the study and to pile their documentation. The aim is that we hand in all this documentation for an ID application during this year. And with that, I will hand over to our CFO. That is actually also in the picture here on slide 17. And I hand over the control to you, Kristoffer.

Thank you, Kristoffer. This is an overview slide at the beginning. So first some short comments on sales as I will elaborate more on this area on the following slides as usual. Net sales in Q4 came in at 156 million SEK with an organic growth of 12%. And as we have already said, full year sales, 598 million SEK and an organic growth of 30%. Strong overall gross margin improvement. we achieved 75 percent in Q4 and 74 percent for the full year. We should spend some time on EBITDA and EBIT. So adjusted EBIT in Q4 was one million SEK meaning one percent. We want to clarify that adjusted EBIT in Q4 includes a few cost items impacting comparability. Firstly We had a retrospective full year amortization which we highlighted in the report of immaterial assets connected to the Avinod acquisition amounting to 6 million SEK. The following four years the yearly amortization of 6 million SEK will be recognized evenly each quarter with 1.5 million SEK. But in this year we had everything in the same quarter so to say 6 million. In Q4, we also had 6 million in extra cost provisions for employee bonuses for achieved milestones not previously provisioned for during the year. So this impacted Q4 in isolation for both EBIT and EBITDA. Excluding these cost items, EBIT in Q4 would have been 9% and EBITDA would have been 17%, which is more in line with our full year achievements. As you see in the numbers on the right, Year-on-year adjusted EBIT tripled versus last year and EBIT almost doubled. So we are definitely developing in the right direction. Moving over to business area thoracic, sales came in at 98 million SEK versus 88 last year. Organic growth disposables were 14% in the quarter and full year the growth was 28% year-on-year. On the gross margin side, we delivered yet a Another strong quarter, 85% gross margin, primarily a result of ASP development in both machine perfusion and static preservation over the year. Americas, as you can see, stood for 62% of sales. And that's our relation in line with previous quarters. Transplant volumes in the US came in flat in Q4 versus Q3. Kind of hard to compare specific quarters, but looking at the full year trend 2023, lung transplants in the US grew 12%, which is a strong development historically. Moving over to abdominal. On the abdominal side, we continue to grow quarter by quarter as a result of our solid position in Europe, mainly with a strong customer offering. Net sales amounted to 38 million SEK which is a new record quarter. The organic growth of disposables in Q4 was 22% and for the full year a very strong 54% organic growth. Liver stood for 80% of total sales in the quarter and also for the full year. Over the year we have gradually increased our Kinesis transport sales from a growing install base on the selective markets. I noticed there was a question in the chat here about CAT sales and we had in Q4 sales of 7 million SEK and year to date it was 22 million SEK and we have seen a gradual increase quarter by quarter fairly linear I would say and that Stepwise development is what we also expect for next year. Gross margin disposables came in at 69% in the quarter and 66% for the full year. And this is a significant increase. And we are, as Kristoffer mentioned before, planning our ambition to solidify these margins on a level over 70% during our strategy period. Moving over to business air services. So as previously communicated, 2023 has been a very good year for us where we have put high focus on strengthening our organization and partnerships in order to optimize the service offering and also to prepare for business integration. We are very proud that we today are involved in 10% of all thoracic organ recoveries in our active service area, which is primarily the East Coast. That's a significant number given the fact that this is a company that has not existed that many years and a great position to grow from. So number of cases in 2023 grew 14% to 562 cases. And we now move into 2024 with a scalable model, and we see growth potential in various dimensions over time. Q4 sales were 19 million and grew 19% versus last year. Full year sales were 79 million SEK and grew 57%. EBITDA and profitability. Adjusted EBITDA came in on 14% in Q4, which means that the good rolling 12-month trend temporarily weakened, as you've seen. This is, as previously explained, due to the increased costs primarily in the isolated quarter of Q4. Full year adjusted EBITDA was 17% and improvement from last year's 14%. As we said, our ambition is to continue to improve EBITDA, but we should do that in a balanced way so we also make the right decisions and the right investments in them in the big market opportunity and sales growth and growth strong growth margin improvements will be the engine My final slide here on the cash flow of financials we're happy over the development of our cash flow from operating Activities in q4 and also for the full year so plus 18 million second q4 and plus 46 million sec for the full year of 2023 and I also want to mention that our cash flow from operating activities also covers our current spend on investments in machine perfusion devices placed at the customers and the ambition is to continue to see that also in 2024 as our investments in these assets will of course increase. We ended the year with a strong cash position of 546 million SEK. And that was all from me for now. Kristoffer, over to you.

Thank you. Thank you, Nordström.

And with that, we go over to the outlook. And as always, I want to remind you on the slide 26 on the long-term outlook and where we are, both in terms of market and as a company. And we should remember the demand for transplant is times 10 of today's supply. The sales value of machine perfusion versus cold static storage is also approximate times 10. So we're looking at a large market opportunity. Machine perfusion and service models have improved to increase the number of organs to be used for transplantation, especially in the fast-growing DCD organ pool. So service models and machine perfusion together will enable DCD grafts in the future and will drive growth in the near term. And lastly, to grow all the way to 10 in number of transplants, the company believes is possible with the current human donor pool. However, over time, new innovative sources of organs will probably be used, for example, xenografts, et cetera. And for both machine perfusion and new sources of organs, Exvivo has a proven product pipeline. So this puts Exvivo in a unique position on the market today. And from the longer term outlook, we jump over to the 2024 outlook, which is we have gone through most of it. So this is more of a summary of what has been said before. But we will have a razor sharp focus on key priorities. We have a huge market opportunity and now it's up to us to deliver on that. So for the HeartBox, we will prepare for European and Australian launch. Looking forward to the ISHRT this year in April. And in terms of the US trial, we will make sure that we deliver on time plan for that. The product has, the Heart product, whatever we've done so far, has delivered amazing clinical results and user experience. So key here is that we replicate that in the US as well. In terms of lungs, we wanna maintain the global leadership and increase usage of our products, both to enable better patient outcome and also better logistics for the lung transplant teams. And for liver and kidney number, key is to ramp up production of kits. to meet the demand for the product. They have proven to be very good products and superior graft survival, one year survival. So now production is key. And parallel, we will wrap up the sales force in the US for the kidney assist transport full launch. And lastly, we will, and I think my main focus area this year will be the expansion in the US in general, recovery service in particular and also enabling a product service revenue model we hear from many clinics that they want to have logistical help and we have all the components we just need to have a good model for it so we give them a full full support And with that, thank you so much for listening to this presentation. And with that, we will open up the floor for questions.

If you wish to ask a question, please dial £5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial £6 on your telephone keypad. The next question comes from Ulrich Trattner from Carnegie. Please go ahead.

Great, thank you very much, and thanks for taking the questions. I have a few, and perhaps Christoffer and Rosenblatt, if I can start off with you. You sound, in your CEO wording, very muted on the outlook for the first two quarters of 24. as you're stating, gradually develop our customer offering and strengthen our commercial organization. Could you help us decipher what this actually means and what it entails and why ramping up commercial activity would have a hampering factor on sales?

Thank you for the question, Ulrik. Very good question. To start with, it's in the US. And we can see that we are... few to few feet on the ground in the US. We have hired recently a lot of really good people, they need training. I believe that we will gradually see improved sales both on lungs, on services and combined offering during the year. But we see that I shouldn't say unexpected, but we see that having too few feet on the ground has an effect on sales. But that being said, we have started this year pretty good.

Are you looking into adding substantial number of headcounts in the US market for 24 and we should expect selling expenses to go up substantially during the year or what to expect here?

Compared to 2023, no. We have ever changed the headcount to different type of headcount in some cases. Then gradually we will increase, but not substantially. We will not add new on what we had, but we had to change a few of them in order to enable the product service offering.

Great. And since we're on service offering, the collaboration you have with MTJ Aviation and you talked about in previous course about expanding number of hubs in the U.S., where are we in terms of having those operational for start of this year? And perhaps if you can give us some roadmap for how that going to be expanded if we were to focus on services and the US market?

I'm actually going to the US on Monday where we're going to discuss exactly this. The plan is that we have a couple of axes to grow on or grow more organs for example where we are waiting clinical studies and regulatory approvals and um the other access is of course where we have a very good coverage on the east coast and and to spread with our customers to the west coast and that's something it's hard to say i need to come back in next call more how the timeline looks like but the interest is there and the foundation for it is now there in terms of how we're going to do that The other interesting axis to grow on, especially in DCD Heart, is the NRP opportunity, which we see grow very, very fast, where we would also have an offering. And that, I think, can go faster. We ran a pilot last year and did a few cases. So that can be also a very, very interesting opportunity to help the transplant team to enable more transplants.

Can you give some clarity on what you're doing in NRP and how that fits into your offering?

Yeah, basically that NRP is that we are having a recovery service. So what we do is that if we need to do NRP during the recovery service, we will add that as a service component to the full service offering for a very actually very little added cost for that. Before we did only organ recovery, DBD mainly. Now we can also do DCD for the sites that want to do that.

And would these be provided by Transmedics or who will be the LNRP provider?

uh no that that that will actually be us so we we are doing the nrp uh ourselves um with help of of let's let's call right now standard equipment okay um and sorry no just just to mention that the dcd arm we have in the in the u.s trial is is first first we do nrp and then then the we do the heart box. So that would be a proof of concept in that trial that we can use, that we can get better results if we do first NRP and then our heart box.

And that's what we've seen in poor science studies when we perform them.

As you are West Coast, are you still suffering from limitation of finding surgeons to take on new contracts or is that solved for now?

No, it is solved for now. It's always, I mean, good recovery surgeons is of course a scarce resource, but we believe that we have a good offering for the surgeons to come on board, especially when more and more results from the heart trial will come out.

We believe that we would be in a good position to attract the right type of recovery surgeons for our service offering. Okay, great.

And if we were to move to the kidney assist transport and liver, am I correct to assume that liver is also affected by the production limitation as well as on the kidney assist transport? Are we to expect... It sounds like you're saying that you're going to have a gradual... that you still have a gradual ramp up in terms of production, but the big milestone is mid-year this year until... 2025 when you have increased the capacity by 10 times. Is that a fair assumption?

No, but that is a fair assumption. And to be clear, we do see that we gradually get a little bit better quarter by quarter. So we had higher sales in 2020. Q4 versus Q3, for example, so we are increasing the quantities Q on Q, so we see a gradual improvement. But as you stated, to get the lid off, so to say, we do need to see the first milestone for kidney, which is the component, and that is expected to happen in during, in June this year. So hopefully then we will see volumes in Q3 for kidney. And then end of year, we will be up to full scale. So then production will not hamper the, let's say, sales increase numbers of liver. Then it's more back into feet on the ground and sales efforts, et cetera.

Okay. And you also mentioned MDR approval for the CAT device. How important is MDR in this case?

I mean, in one sense, it's very important because it's a license to sell and to market the product. So it's, of course, very important. I think the key here is that we got through that. MDR is a completely different rule where compared to the old MDD, which was quite easy to get through, the hurdle for MDR is a lot higher. So I think it's also a quality stamp to both the product, the clinical data, and to our team and the effort they put in to get it approved here. So that will, of course, be important for the future that we have passed all those milestones and we now can focus on the customer production and improving how the kidney assist transport is used.

Okay, great. Last questions then, or two questions on my end. You mentioned 15 patients included in the study. I'm guessing that corresponds quite well with 15 transplants performed. Are we to assume then that you will add roughly at least 4.5 million in sales from these 15 patients for Q1? Given that you have reimbursement for these or are these deferred into later in the year or how should we calculate?

The assumption is to some extent correct.

I know a few of them came in. I can't remember the number right now. We need to check that. A few of them came in during Q4 and then a few will come in here during Q1.

But it's a good... Yeah, I can add also that we are billing these. for these transplants as soon as we can after they have occurred. So there's no deferral. We are allowed to bill the customers when they have done their procedures.

Great. And then last question on my end, and this might be for you, Nordström. Sales bonuses here, are they generally accrued during the year and paid out in Q4, or is there something exceptional happening here for

Yeah, so standard procedure and normally during the year we accrue for all bonuses month by month assuming that we will reach our target set for the year. So that's normally something that should not stick out in a specific quarter. In this case it was additional bonus approved by the board for operational milestones connected to hard trial, project building, et cetera, and not sales related, which we had not accrued for early in the year. So that's why there was a hit in this quarter isolated.

Okay, great. Well, thank you very much for taking my question. I'll get back into the queue.

Thank you, Ricky.

The next question comes from Jacob Lemka from SEB. Please go ahead.

Hi, and good afternoon, and good morning to you in the US. My first question is on lung and machine perfusion. You started the year quite well, I would say, but now we have two quarters with a bit more slower growth. If we look more long-term, I know you have this goal of doubling the adoption of lung machine perfusion. I'm just wondering how are you progressing towards this and how will these hiccups or organizational changes impact that?

Thank you for the question.

To be very clear, we truly believe that this is the right thing to do in order to to fuel growth long term. We can now see that we lost a few feet on the ground, especially in the US, and that has hampered growth during the two quarters you mentioned. And it takes some time to get everybody trained and up and running, but I think we would definitely see gradually through the year an increased uptake and increased sales in EVLP quarter on quarter. this year when we get everybody trained up and running, when we get a clearer product service revenue model in a few pockets this year. So the right thing to do long term happens a little bit short term, yes.

Okay, and just to follow up. On these people on the ground you say that you have lost, what is the background to that really?

Key background is we had a few competences that we needed to change to fit the new go-to-market model and of course when you do that you lose both the feet on the ground and the customer interactions on a daily basis and it takes time to train new people coming on board. So that's the background.

Also worth mentioning that we have a solid position in EVLP in the US and we have over the years developed very strong relations and partnerships with key customers and those customers are growing and will continue to grow. They have the programs in place and efficiency in their infrastructure, etc. So it's most likely more the hunting for new sales that might be impacted until we are fully up and running with new competencies.

Yeah, and I also want to mention lastly that we have a very good pipeline with interested customers. It's more our inability to act on that. Which we will do as of now and see better and improved results.

Okay, that's very clear. Moving on then to liver where it looks like momentum continues to be very strong. You're mentioning these production issues. Just wondering, when you look into sort of 2024, do you still see that we can have this sort of gradual continued growth or is there any bigger sort of production capacity to be reached here?

I mean, for kidney, absolutely. So going into Q3, my view is that it will look totally different. And we can actually already see now in January, February, that we see an improved situation on kidney. For liver, we see more of, yeah, we will continue to see a gradual uptake. We are improving every day, actually, on production. We have focused more on kidney. We see it's now faster, the gradual uptake here already in January, February. And we will hope to see that very soon also in liver. It's something we work pretty much day and night on. For the key milestone, as I said, is end of Q2. We're going to see the real impact on kidney beginning Q3. Depending on summer months, we have to see how that translates into sales, but in terms of production. For liver, we see the big, big jump. terms of production at least in in in end of this year where we will have set up the full scale production so that that will be very important because that means that our development team and our operation team can focus more on the daily business and improving the products as well so it has both that we get the right quantities but also the there that they can focus on on being closer to to the customer as well so and long story short just to to be very clear we have when you run clinical trials you have a clinical trial type of production and supply chain and and when you go large scale into production normally you want to do that seamless unfortunately in our case it sales took off a little bit faster than than and what we could could scale up production And when we tried to scale that up with more people in the clean room, we ended up having untraded more people in clean room and that led to the toxins. So we had quite high production volume, but you have to throw away half of it.

So that's the true story behind that.

Okay. And then my next question is on the heart revenues in Q4. I'm just wondering what the split is between Australia, the US, and if there's anything in Europe.

I don't have the split, unfortunately, but the heart sales in Q4 was 10 million SEC versus full year of 30 million SEC. So with that, you can, of course, see that In the beginning of the year, it was only Australia, but as the year has developed, we have also been able to include these sales in the US Heart Trial as well.

Okay, and just a final question on services. It seems like the number of recoveries declined here, quarter over quarter, while the revenue per recovery increased quite a bit. Is there any abnormal things here or is this sort of representative level for the future?

It's a good question. Good question. Thank you for asking. It's first of all, in terms of what we have done, which I'm very proud of, is that we have increased the profitability of this business area significantly. We are now on an EBITDA level on pair with the group, and that means that despite You're right that the case load was lower in Q4. We still have been able to improve our revenue per case. So that is very good. It is still a business that, despite covering 10% of all the thoracic recoveries on the East Coast, it's still a few customers. And we had one customer with a high volume that simply hired their own procurement surgeon. And that can, of course, happen. It will look differently from customer to customer. So that took a little hit in Q4. With that said, we are now in a position where we have a slight overcapacity in terms of surgical competence, meaning that we can take on new customers in the beginning of the year here and not necessarily need to hire more surgeons short term.

Okay, understood. That's all from me today. Thank you very much.

Thank you so much.

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

Great. Thanks for taking my question. Just a few add-ons. NRP is also interesting. You seem to have the tool, you have the service model by the look of things. Do you have any formal hurdles or approvals to pass to process that part of the business?

Thank you. I mean, if you take the hard product there, of course, to include that, fully into the NRP system for our new heart box and the heart technology. Yes, we have the regulatory approval and that was the great thing with FDA that they asked us that because we actually only applied for DBD side and they asked us we also need the product for DCD. So the answer is yes, in terms of our service offering, there is no approvals, it's more training When we have an organ recovery service, it's a very intimate business for a transplant team. When somebody else is recovering your organ or doing an NRP on the organ that they're later going to be transplant, it's their patient, et cetera. So it's more to build up that confidence with clinics that we can do this job. If we specialize on it, we can do it better than anybody else in the U.S. So that's more the hurdle in any type of service business.

Great. And not that you're in the business of providing any half-year outlook or forecast, but to add some flavor on the surprise today and the modest organic growth you reported, it's pretty clear that we can expect sort of a gradual improvement throughout 2024 for different reasons, capacity and support and also added service support. What about the earlier part QS and Q2? Should we expect sort of improved organic growth compared with Q4 or could it be that Q4 is representative or any flavors on that?

Thank you Johan. Great questions and the answer will be a little bit speculative but

but in general we we if i remember correct q1 last year has quite easy comparable so it was a good quarter but but uh i think q4 2023 were a stronger quarter so we would expect higher growth than than this one organically um in in both quarters uh We definitely plan for a lot higher growth than that, but then we have to see. I think key now for us is to get the US sales force up and running as soon as possible. And I would say also, the same is actually partly true for we have a lot of opportunities also on Lange Vilpin Europe. to get that up and running and start running on those opportunities. And I believe that we, in parallel, we see a gradual improved supply chain on both liver and kidney products that will support growth to some extent. So we both hope and plan for better than this quarter, especially on the thorax. I don't know if you want to add, but in terms of services, you add contracts and they're normally yearly. So the swings will be less in terms of services, if I put it that way.

Good. And you already mentioned the commercial team. You changed the go-to-market model. You alluded to the fact that you do have a healthy pipeline of prospects. to execute on these is obviously very important. And it seems like a combination of both changing the profile of the sales team or part of the sales team, and you perhaps need to replace some and certainly add some. How much of a concern is this?

I mean, the thing is that, Short term it hurts, but long term it's the right thing to do. And we are definitely a growing company. We see that we have a fantastic market opportunity where we feel, especially in the US, that we have everything pointing in the right direction in terms of the market right now. there is a huge need for increased transplant due to the high alternative cost of a transplant. And I just talked to one of our youth customer. He said that this is probably the first time since Pearl Harbor, there were unanimous vote in both the Senate and the Congress where everybody unanimously voted that we need to restructure the transplant system in the US to enable more transplant. So we see that of course, and with us coming with new products in quite, near future. I mean we're talking about kidney is second half of this year and then heart after that. We believe this is definitely the right thing to do. It might hurt a little bit short term but we have to take the right decision for the long term.

Yes and finally then we it's obviously fact that the FDA has been very proactive on the heart side. And what about the liver side? You published or press released a publication yesterday regarding the liver. And even if the standard of care situation is slightly different, it's certainly a great need to improve the liver situation as well. I'm thinking about what to expect out of the protocol you will file later in 24, can you include both efficacy and extended perfusion time?

The answer to that is that we are currently discussing that internally and so we don't have the answer right now to how we want the protocol to look like because Yeah, we sent the press release yesterday and we need some time to digest it internally to see what is beneficial. But that being said, when we talk to liver transplant surgeons in the US, that's one of the things they mentioned. It's definitely the logistical aspects of the transplant process. And it doesn't only apply to liver, by the way, but talk to transplant surgeons. One of their their dreams is really daytime surgery. And this could be a piece of the puzzle to enable daytime surgery.

Great. Thank you. That's all from me.

Thank you.

The next question comes from Ulrich Trattner from Carnegie. Please go ahead.

Great. Thank you, Faf. quick follow-up question on my end. Compassionate use in Europe for the hard device. You mentioned it in passing. Is that something we can expect in the near sort of next few months or generally how long does it take in order for you guys to get that approved?

We already have some approvals in Germany. We will also focus on France and Belgium. I haven't seen... I heard good words from my CMO about both France and Belgium. So I think that's what we will focus on. But it's actually already up and running in Germany.

And I'm guessing you want to have compassionate youth approved ahead of the presentation in Prague in April. Yes. Okay. That was the only question I had left. Thank you very much.

Great. Thank you so much. I see we're actually going over time. If there's one last question, we can take that. But then I believe there will be probably other calls today.

There's one question on the chat that I can address and it relates to our future R&D spend in clinical trials and what we can expect there. I guess my answer is that what we capitalize on over the balance sheets is our primarily our clinical trials and we raised capital in the fall 440 million SEK which will be dedicated and will be enough for the US trial for heart and liver and for the production setup project. The production setup project will be concluded in the middle of 2025. with all costs, and the clinical trials obviously will run over a few more years. But those 440 million SEK, that's probably what we should expect to be capitalized over the strategy period.

Thank you.

Thank you so much, Christopher Nordström, and thank you so much, everyone. With that last question, we conclude this meeting. And we look forward to meet all of you on April 24 when we present Thank you.