Xvivo Perfusion AB (publ)

Thank you so much and welcome to Xvivo's earning call for the first quarter of 2024. Today we will start the presentation with the front picture. The slide in front of you right now is a picture of Alex from Australia. She received a heart transplant thanks to Xvivo's heart technology. I think it's important reminder to why we actually are here and it's to make sure that no one dies waiting for a new organ. And with that, we go to the next slide, which is just today's presenters. And that's me, Kristoffer Rosenblatt, CEO. And to the left of me today in the same room, for once, I have my CFO, Kristoffer Nordström.

Hi, everyone.

And with that, we go over to slide three, which is just a quick glance on Q1. I'm both proud and happy to report the strongest quarter in Exviva's history and that Q1 shows improvement in all three business areas. Sales came in at a record of 186 million Swedish kronor. The gross margins are continuing to show strength, so also in Q1. I again want to highlight that abdominal gross margin where we are closing into the 2027 strategic goal of 70% gross margin already now. This quarter we show 67% for disposable products, which is a slight improvement from 2023 full year margin, which was 66%. We plan to improve abdominal gross margin further when we reach economies of scale in production. The adjusted EBITDA shows an improvement to 20%, and I will let Kristoffer Nordström, our CFO, get more into the details on sales gross margin and profit later in the presentation quickly on the growth of thorax is picking up and that mainly come from higher xps xps activity during the quarter we have historically seen solid growth in europe on the xps but with more feet on the ground in the us we see an increasing activity there as well for example we have one active xps customer added during this quarter in the US. The abdominal portfolio continues to grow fast as well. Growth on disposable came in at 46% growth. We also see higher sales quarter on quarter, which means that we have enabled higher quantities from production this quarter versus the previous quarter. Since the limiting factor for high growth in the abdominal segment is production capacity of disposables right now. for longer term is also regulatory approval for labor in the US. As you can see, the production capacity is gradually improving, and we invest to scale up volumes times 10 of today's volume for disposables over time. And with that introduction, we go into the highlights, which is slide four, and we go into slide five after that. We of course have to start the highlight section with the report from this year's ISHT conference in Prague, which was a great success for Xvivo. The ISHT conference is the largest and by far the most important conference for heart and lung transplantation, and Xvivo received a warm welcome from all participants. As one example, Xvivo was the most selected exhibitor. The result from the EU study NIHP 2019 with Exviva Heart Technology was the most selected scientific session in the whole program during the week in Prague. The science from the Exviva Heart Technology shows there is the potential to change the paradigm of heart transplantation and it's great to show the transplant community how far we actually have come. Exvivo also held two extremely well attended industry symposia during the conference. This symposia itself and the abilities for the audience to see what the Exvivo technology can accomplish in the future was very well appreciated by the TransLang community. And many surgeons came up to me afterwards and said that those were the two best parts of the ISSRT. because of the good climate for discussion during the industry symposia. We will talk more about the ISHLT on the next slide, which is slide number six, where we will go more into the heart trial and the results from it. The presentation by Professor Philip Rieger attracted by far the most interest And I do believe that the fantastic top line result was the reason it did. There are three key takeaways. Number one, this is to our knowledge, the first randomized controlled trial with a superiority design in heart and lung transplantation. And this shows the confidence the clinicians have in the X-Viva heart technology. Number two, the HOPE group, in other words, the one pumped with FxViva technology, showed an improvement of 61% for severe PDD versus the control group. This is highly important as an improvement provided that PDD is the leading cause of early mortality after heart transplantation. And it's accepted that PGD also negatively affects long-term survival. The third key takeaway from this seminar is that all whole parts were deemed transplantable after perfusion. This is important to highlight since cold perfusion offers safety advantage during especially transportation of an organ. And with that news, we go to the next slide, which is slide number Seven, which is another groundbreaking result from the heart technology and our heart team. And we did press release this, you heard about it. And it's about the truly groundbreaking transatlantic flight that was published in Lancet during the quarter. Professor LeBreton has accomplished the first out of seven patients in the Pegasus trial. and that is designed to investigate very long transport times. This case was amazing, not only because it was the first and historic transatlantic flight of a donated heart, also the time outside the body of more than 12 hours is truly impressive. Since we have to compare this to the general accepted time on static cold storage, which is approximately four hours. Given that it was a comparably old donor and a comparably old recipient, it makes the achievement even more impressive. And it's also important to point out what Le Breton said that the heart regain normal function directly after transplantation, which is a great achievement and testament that the technology really works. Lastly, I want to mention that the fact that the transport was made on a normal commercial flight is also historical. and something we will work more on over time. So all in all, last year, the Australian study showed that we can safely increase transport time to 89 hours, and all patients in the study showed zero third-day mortality. In animal studies, Aarhus University recently published that ex vivo heart technology should good result even after 24 hours. This should be mentioned in animal studies. But this body of evidence, start to show that safe usage of more hearts at greater distances is possible. This will also open up for more heart transplants and better matching between donor recipients with good patient outcome. And as I stated that the commercial air transport is also important because over time it will also open up for cost saving for a transplant procedure if you can use standard modes of transportation. normal flights, cars and trains rather than expensive mode of transportation that we normally see heart transplant is needed for heart transplant today. And with that news we will go over to next slide which is slide number eight and the recent abdominal milestones. During the last year we have seen more than 20 publications on the liver assist technology showing improved patient outcome on both dbd and dcd graphs after transplantation but today i want to highlight and speak to another benefit of this technology and that is the ability to plan transplants to daytime surgery the background is that no one really wants to work too many nights in a row but for a transplant team that is business as usual After this publication for liver transplant teams we believe this could be about to change. The recent Lancet publication from Groningen shows that liver can safely be perfused up to 20 hours and hence eliminate the need of nine type liver transplants. By offering a better work-life balance a transplant team can more easily attract the right competence. This is not only good for fact that we can plan more or plan transplants in a better way but it's also very important so we can attract the right type of competence to hospitals that perform transplants and the last point is and we said it before sales for abdominal products right now are mainly limited by supply constraints and the production scale up of times 10 is progressing according to plans We have invested in machinery and the validation is currently performed. As also stated earlier, and I can mention again, the kidneys' transport is growing fast in the two markets we launched it in. Next launch market is the US. And as communicated in the last call in January, the target for full launch in the US is June 4, 2024, if you continue to follow the production scale-up plan as we do now. And with that, we turn our attention to the lung business. And 2024 definitely got a great start for lungs. We see high interest from clinics to start EBLP programs with XPS. In the US, we have a new sales force that is gradually picking up and gearing up. And as one example, we have one more active XPS customer. It was added during the quarter. And the interest from new customers the sales pipeline on both sides of the Atlantic is definitely there. So we will keep our sales team busy over the next year and further from that as well. We see a high interest from customers to start EVIP programs. The high interest comes from mainly from the ability to safely use more DCD lung with the XPS, which is something we are truly grateful for. That's what the XPS and STEN solution is designed for. This will enable more organs to be used for transplant. And lastly, we will continue to invest to serve our customers in the best possible way. We will invest mainly in clinical expertise and capacity during this year. to increase the utilization of AVLP. And the next slide will be the services and the audio recovery service. Christopher Nordström will later in this call give you more details on the service development. I will give you the key highlights here on this slide. Number one, all existing contracts are renewed. I truly want to highlight this. During HLT, Dr. Hormuz gave a great speech on the benefits of third-party organ recovery. It was very well received and appreciated by the audience and I am sure that this will open up business opportunities in the future. Three, we continue to get great feedback from customers regarding quality of the organ recovery service and the ability that they can grow their programs with great outcome using our service. So that's something we're very grateful for. Four, I want to state this because this is also important. Every day we continue to improve our service offering and searching capacity to meet the need on the US market. So now we are having a great service that we are investing behind and I'm sure we will see great interest in the future for this service. And with that, we will come in to the last part of the highlights and the clinical pipeline. So we go to first slide 11, the clinical pipeline, and then more to slide 12, where we will see the regulatory review. Nothing has actually changed or nothing majorly has changed since last time we met. So I will mainly repeat what I said in January. But in the U.S., the heart trial is progressing according to plan, and our clinical team in the U.S. is working very, very hard to include all clinics into the trial. At the moment, we have 10 clinics out of 20 that are initiated into the trial. And as you can imagine, after ISHLT, the interest is extremely high to be part of this U.S. trial. In Europe, We have handed in our technical documentation for review and everything is going according to the time plan. We are aiming for CMARC in Europe in Q4 2024. Very important to mention is that we can't affect the review time to 100%. The good news is that the notified body has been very responsive, even though we know they have high workload under MDR. Also, the Swedish MPA is responsive and deliver on time. The insecurity we face still, as reported last time, is how fast EMA, the European Medical Agency can handle their part of the review. But key is that we have done what we can. We handed in the product and clinical files with good quality on time. In Australia and New Zealand we continue to see high usage of the product. The regulatory approval will be pending the CMARC in Europe. So from a regulatory view there is nothing more to add for Australia. But since they use this product regularly the regulatory approval is not the key here. If we turn our attention to the liver in the US, we have reported earlier that the liver assist had been granted breakthrough device designation by the FDA. This means that we get a faster route through the FDA PMA process. And important to mention is also quality stamp and that the products are innovative and fulfill a need on the market. We have invested and are continuing to invest in the organization to run the study. and prepare the FDA documentation. And the aim is to hand in the IDE application at the end of 2024. And with that, I will hand over to our CFO, Kristoffer Nordström, who will present the financial performance during Q1. And we can go straight to slide 14.

which is an overview of the P&L and key group KPIs. Thank you, Kristoffer. Yeah, I mean, as Kristoffer has emphasized already, we are, of course, very happy with the development in the first quarter. As a recap, sales came in Q1 on 186 million SEK, a new record for us. And more importantly, the organic growth was back on the trajectory and 32% versus last year. We continue to deliver solid gross margins, 73 versus 75 percent last year. And I will go in a little bit deeper on each business area as we go here, because the reasons for various gross margins varies depending on product versus service, etc. That will come. EBIT in Q1 was 20 million SEK and 11 percent. And this was an improvement versus last year with 2 percent units. EBITDA increased from 25 million SEK to 37 million SEK, which is a record and represented a strong 20% margin for the quarter. So overall, this gave us a promising start of the year and where we continue to improve both top line and profitability. Next slide, please. So we'll go into the respective business areas for a while, starting off with Thoracic. Staves came in at 121 million SEK versus 91 last year. Organic growth disposables, 39%. Here, the main driver was EVLP and in the United States specifically. Global EVLP sales grew 65% versus last year. So as I stated earlier, 2024 is off to a great start and good activity at key centers. The strong US sales gave us 68% share of total global sales which I also think is a record and machine percussion achieved a record of 58 percent share of total sales and this impacts the margin a little bit as I will go into so of course margin in Q1 was 82 percent which is lower than last year's 86 and this was primarily a result of the higher portion of EBLP but also increasing sales increasing sales from heart dilute our margin a bit since heart disposables in the US are sold at a reduced price awaiting regulatory approval. And of course, we are still in low scale production with minimal economies of scale for now. Hard sales in the quarter were 12 million SEK with a 61% gross margin. If we look at the longest possible though, the margin was 85%. Next slide please, Gustav. Moving into abdominal. On the abdominal side, we continue to grow steadily quarter by quarter as a result of our solid position in Europe, where we have a very strong customer offering in place. Net sales was 44 million SEK, which represents another record quarter for us. Organic growth of disposables in Q1 was 46%. Liver stood for 76% of total sales in the quarter and also for the full year last year, the comparison. Kinesis transport sales were 7 million SEK, a 51% increase versus last year. So here we see a result of our gradual ramp up and increased production capacity. Gross margin level, 67%, which is good, as Christopher mentioned, 2% units higher than last year. Moving over to services, final business area. Sales in Q1 were 21 million SEK, which represents a growth of 11%. The customer base from where we ended 2023 remains and all current contracts have been renewed with increased profitability. And this comes from a new revenue model that we put in place in the middle of last year, 2023, where we charge customer per case and not for our provided days of availability, which was earlier the case. As previously communicated, 2023, that was a year where we put high focus on integration and strengthening our organization and partnerships. As Kristoffer mentioned, we continue to strengthen our offering in this quarter, and I really think we can take pride in a high quality service program that has been developed in collaboration with our customers, and that is of utmost importance. to mention, actually. The gross margin dropped from 65% last year to 36% in this quarter. And this is a result from a mix of lower recovery case volumes in the quarter and increased surging capacity from additional recruitment in the quarter. That said, we really have an organization in place now that is ready for growth. And with new contracts, also the gross margins will increase.

Next slide, Christopher.

leaving sales a bit to move over to EBITDA and profitability. EBITDA came in on 20% for the quarter isolated. And as you can see here on the slide, also the rolling 12 months trend continues to develop positively. It was a busy quarter for us from an operational standpoint, and we had spending on conferences such as ISHLT, market activities, and we also continue to grow our organization. with increased profitability. So with that said, we're happy to see that our focus pays off, not only growth of sales, but also contributes to increased profitability. As many times stated before, our ambition is to continue to improve our EBITDA year on year to meet our ambition to achieve 30% in 2027. Final slide for me before I hand over to Christopher Rosenblatt again. cash flow, financial position. Q1 was cash positive from operating activities, 2 million SEK, despite the busy operations that I mentioned before. Investments amounted to 42 million SEK, primarily spending on US clinical trials and investments into our machine fleet. We ended the quarter with a solid cash position of 511 million SEK. That was all from me, Christopher.

Thank you. We're going to go into two pictures of outlook and then into questions. But we can turn first to the long-term outlook, which I believe is slide 21. The long-term outlook is important in order to establish the long-term picture and that remains the same. The demand for transplant is still 10 times the supply of organs today according to WHO. The sales value of machine perfusion is also approximately times 10 versus static cold perfusion, which is typically a beer cooler or a picnic cooler box with ice in the solution. So we see a great market opportunity in front of us. Machine perfusion, our service models have proven to increase the number of organs to be used for transportation, especially in the fast-growing DCD organ pool. The main growth driver are superior clinical results from machine perfusion and the fact that service models reduce complexity and time for the transplant clinic. Hence, machine perfusion service models on normal and extended criteria or DCD graphs will drive growth in the near future. Lastly, to grow all the way to 10 in number of transplants, the company believe is possible with the current human donor pool. However, over time, new innovative sources of organs will probably be used, for example, xenographs or printographs, et cetera. For both machine perfusion and new sources of organs, Exviva has a proven product line. This puts Exviva in a unique position on the market today. And with that, we zoom in a little bit more near term to 2024 and our outlook. One, it's important to mention again, we keep a razor sharp focus on our key priorities. Two, after the ISHCT, we realize and we will increase the focus and resources on both the US Heart Trial and the EU Heart Launch. In parallel, for lungs, there is a great interest from customers to start an ex vivo program. And we will invest to capture that interest. and increase utilization of EVLP on the XPS solution. Number four, we will increase production capacity by at least times 10 to meet the increased demand we see for abdominal products. And lastly, support US growing clinical program with service models to reduce the complexity in the transplant process. And during the year, we will also develop a successful product service revenue model to meet Transplant Clinic's logistical need, which we know is there. And we don't have a good enough offering today. So that will be developed through the year. So with that, that was the outlook for long term and the year. And with our vision in mind that nobody should die waiting for a new organ, we open up for questions. Thank you so much.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Simon Larson from Danske Bank. Please go ahead.

Yes, good afternoon, gentlemen. Two questions from my end, please. First, a very impressive print from the Lange franchise this quarter. If I'm not mistaken, machine perfusion, part of the consumables grew some 70% year-over-year. Were there any one-offs in the quarter? Are you thinking orders pushed from Q4 into Q1, something else, or just a very good underlying demand? Any more flavor here would be helpful.

Thank you, Simon. To give some flavor, We had a comparably weak Q4 last year, so we cannot take away the fact that probably some quarters ended up on one side of this quarter or some orders on this quarter rather than the last one. But we do see a high interest and we do see an increased activity on EVLP during this quarter that we certainly hope will continue. nothing we know for sure but we will at least do our best with ourselves for us to meet that interest yeah so you think it is like a plausible level of sales that we should expect going forward or should we expect this to come down a bit here sequentially and further into the year i think that that's that's a great question i think what we should remember is also that compare between Q1 and Q4 last year or were comparably lower quarters to Q2 and Q3 comparables. I think that is also important to keep in mind. It's always hard. This is one quarter. I think we need to see at least three, four quarters of continued growth before we should adjust too much in our model, so to say.

Yeah, it makes sense. And the final one from my end, you mentioned one new customer that went live with the XPS here in the US during the quarter. I mean, it would be super helpful, like roughly, if you can give us some estimate to what a customer like that could actually sort of bring in per year when up and running with the XPS fully in terms of sales for you.

I mean, a very good, let's say, larger program. could easily do 50 to 60 EVLPs on the XPS per year when they're fully up and running.

Yeah. Okay. Cool. Thanks. That's all from my end. Thanks so much.

Thank you.

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

Hi, and good afternoon. I have a few questions, and I'll take them one by one. Starting on Lange and EGLP, you sound a bit more positive on the customer demand or customer interest here than recently. Would you say that you're seeing some sort of tipping point where you move towards more inbound interest rather than you pushing this?

That's a great question. Again, I have to say this is something we need a couple of quarters to answer with full confidence. We do see the interest there and we do see that our sales force is gearing up and are getting better at meeting that interest every day. I would say still early days and I would definitely wait a couple of quarters before i i say something with with uh 100 confidence but i i in terms of interest i can i can confirm that it's there okay uh and then on kidney i mean it seems like the the production uh movements and improvements are moving according to plan uh

I think it would be interesting to hear you talk a bit more about the demand situation, such as if there's already firm orders in place that you can start to deliver on once production improves.

Right now, we have had two successful launches, but very limited, one in the Netherlands and one in Italy, and there we see that use is picking up, and that is great. Now we turn our focus to the US, and We have done a pre-launch activity where we do see that they are using their kidney assist transports. But we don't dare to, let's say, fully launch until we know we have enough products on the shelf. But I believe that we don't have any confirmed orders yet, but we have a very high interest for the product. And it meets a need that is there, not only on the US market, but on the global market, that there is a high need for it. better kidney product that can take care of all dcd grafts for transportation with good patient outcome so we are confident that there will be uh okay uh and and then um

services, you mentioned that all customers are on a new contract model here. And I noticed the prices was a bit or average revenue per case was a bit higher here in Q1. Is this the level we should expect going forward?

Yes, this is definitely a model where we make more money per contract because we were we were taking on a lot of risk with all the models. So I think the numbers you will see from now on in relation to the cases will reflect the correct ASP and that could be used as a guidance.

Okay, great. And then just finally, it would be interesting to hear, you know, talk a bit more on the heart product, maybe, you know, how the customer reception has been following the very strong results here. And now that you are only a few quarters away from launching this in Europe.

No, I can do that. I mean, it was overwhelming, the reception we got at Dias SOT, where all the world's Cuban leaders and I was going to say all transplant surgeons, but probably some were home and making or doing transplants as well. But I mean, the reception was just fantastic and the interest is through the roof. I think everybody starts to realize now what this technology can accomplish, not only in terms of better donor matching, longer distances, we can take care of organs that we could not do. We can do cases we just couldn't do before. And So that's something we definitely will both invest more into and have a higher focus on going forward because I believe we see it on a technology that's gonna just change how transplants are made in terms of hearts.

Okay thank you very much that's all for me.

Thank you so much.

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

Thank you very much. And potentially going back to a few questions already been asked, but exceptionally strong EVLT growth here in the US. And I know you were a bit muted at the Q4 call and you were talking about it takes time to train your expanded sales force Should we see this as a sign of that process being ahead of your expectation, or is this purely due to a superior underlying demand in EVLP?

I think the main reason is definitely that the underlying demand is higher than we anticipated. That's the main reason. But that said, I also must say that I'm proud of the sales force that is very new. what they have accomplished in a short time and the steep learning curve they have. To add an active customer that quick is a true accomplishment that I'm truly proud of. So it's both, but yes, the main reason is definitely the high interest and the high underlying growth from existing customers driving EVP right now. It's not so much new customers.

Okay, great. And you also talked about expanding your service offering in the U.S. And I'm guessing what you're trying here is to replicate more of that of Transmedics, giving your product portfolio and their service offering would be a good match. And also note that one of your head of marketing in the U.S., Kelly, was previously part of Transmedics. So what does that bring to the table? What should be expected from from service offering from the U.S. here in the coming quarters. They're heading up towards full-scale kidney assist launch in the U.S. as well as building up to heart and liver being approved in the market here in a few years.

That's a great question. I will let Christoffer Nordström ask you a question more in depth. But before that, I want to mention that we do see and have seen a long time the need for for a good service product offering. And the reason is that the transplant process takes longer and longer time and a heart on average 29 hours. And if we're going to do 10 times more transplants in the near future, the transplant teams won't grow that fast, times 10 in terms of resources. So we need to support them with the first 24 hours. better technology in order for them to do 10 times more transplants on the US market. So that is the reason behind we believe so much in this strategy and that we believe that it will be a winner over time. And that's why we work so hard on improving quality, improving communication, improving the customer offering, et cetera, because we want to nail it when we go large scale. Last thing I want to mention also is that I think definitely when we come into transportable devices that our product service offering will fit better. So if we think kidney and heart, that's a plug and play model, which is it's easier. But we believe already with the XPS and later with the liver, which is more back to base type of machines that a service model will be advantage and drive a lot of growth for us. For example, liver perfusion in Italy is five times higher than any comparable country in Europe, very much due to a service offering model on the perfusionist side on the liver device. So we have seen it works. We believe it will work in the future and actually believe it will be a must for the future. But to the expectation, I will let Nordström more. answer that question.

Yeah, no, I think, you know, we see it as two phases where we are now in an interim phase of where we are strengthening and developing our currently that recovering business in the US. The end stage is, of course, when we have our, you know, both our transportable products, kidney and heart on the market, and where we really can see synergies of integrating service into our product offering. But up until then, we have a platform for growth now, we have continuously improved, and I think our aim target is to ensure that we learn more and more and more about the customer's needs, add more customers, so we have a robust position and organization when we finally have our regulatory approvals in place. And I think we can expect a gradual growth from where we are today. And we will try to do our best to also have, you know, continuously have the surgical capacity in place so that always goes hand in hand.

Great. And just to follow up on that, as you have recruited here in quite recent time, Kelly from, that's been part of Transmedics, can she bring some additional clarity on how you should

perform this absolutely she is on board now great ideas and then the very valuable added to to not only the US team but also the global team so she's still she's one of them who has not been here that long but I think we can already see that she brings a lot to the table especially on on the service side of course a great question

And if I were to move to abdominal and exceptional growth again, and especially for liver in Europe, but on curiosity, which markets are growing? I'm guessing Italy and the Netherlands are fairly well penetrated markets. So this must mean that you're experiencing quite a strong growth outside of these two key markets.

Yes, it answers that question. That being mentioned, there's a lot of penetration and growth still to be done in both Netherlands and Italy. But definitely we see more of a wider growth everywhere in Europe right now. We had a couple of success stories a year ago with a reimbursement in France, for example, for liver, which really helped growth there. As I mentioned earlier, we have had 20 really good publication on liver just in the last 12 months showing superior outcome both on dbd on extended criteria graphs on dcd graphs so we see that that has fire a lot of interest together with better reimbursement we we see a wide growth uh all over europe right now

Great, thank you. And last question on my end. Obviously, kidney assist transport is a great product. It has a lot of support clinically. Could also be fairly easy to implement. But given the commercial success of liver in Europe, I believe it would be of high importance for you to get the liver device on the US market. And you touched upon ID for liver, but Can you just give us some clarification on what's left to start up the liver study?

I mean, to start the liver study, you need to agree on the FDA on an ID. And we are currently designing the study. And we will meet quite shortly with the FDA for a proposed study design. That will be a negotiation, of course. There is also product documentation that needs to be approved, where even though it's a commercial product in Europe, there could be product gaps between our CE mark and what the FDA would like. So that's also a discussion. to be had with the FDA regarding if there are any gaps in terms of animal testing or other product related issues. Then out of experience I know that the FDA always want to have a usability test done on US soil with US users as a quality measure from the FDA side. A few steps still to be taken on the liver side before we can get an ID.

Okay, great. And last question on my end. Heart sales in the quarter, how much of the reported heart sale is related to Australia and New Zealand compassionate use and how much is related to reimbursed sales out of the US clinical study?

I think I would need to come back to you on that one, Ulrik.

Fair enough. Congratulations again on this quarter and thanks for answering my questions.

Thanks. Thank you.

The next question comes from Jonathan Anderson from DNB Markets. Please go ahead.

Hey, guys, and congratulations to a great quarter. I have a couple of questions. I think that I will begin with abdominal. So when entering and ramping up the kidney as it's transferred in the U.S., how will the commercial setup look during late Q2 and going forward? You can say anything on that would be helpful.

With commercial setup, do you mean our field force?

Yes, exactly.

Yes. Okay, great, great. We have, if you call it field force, with mainly three competences. One is, of course, sales, where we have three persons to start with, a head of, and then one for west and one for east. And then we have a clinical force that we will gradually need to grow the more customers we include in the launch. That we'll make sure that they use the product right and be there for the customers. And then we will have a technical and technical service department that we will also gradually grow with the number of machines we have on the market. The more technical issues you will have and the more you have to do service on them. So that's pretty much what the team will look like right now. Then we will support from both the U.S. marketing team and here in headquarter with support with clinical trials, support with if there are any investigative driven clinical trials that they want to be done. We support with health economic studies and reimbursement support. going forward. So that's how the organization for the launch looks like right now.

Just looking at the potential launch here in Q4 for the heart assist transport in Europe, on the back of the supply issues with the kidney, what lessons have you learned and are you confident in not reaching that supply issues when launching this product?

That's a great question. We have, to start with, learned a lot and we have been able to scale the production of heart actually faster than kidney already. And we are, given the interest we got during ISST, we have one included the heart products into the production scale up project. And two, we are running a program to increase production with the current production setup, which is more fortunate, is more scalable than the production setup we saw for kidney assist transport. So we learned a lot from that experience and we are taking earlier actions and we're taking more decisive actions on heart already now.

Great. And lastly, this might be a bigger picture in the long term, but given your clinical data and market position and the underlying market demand, do you feel hampered about your profitability target If you do not have any sales growth financial target as of today, would it make sense to switch towards a more growth-focused and oriented target going forward?

That is a great question. And to give you a straight answer, no, we don't feel hampered. It's more of a guidance that if we do something, we should do it with efficiency and efficiency We should do it to ensure long-term profitability and make sure we don't take any, let's say, crazy bets in the market. So it's more of a guiding target we have to make sure that if we do something, we do it with respect to the shareholders' money that you guys borrow us. So we don't feel any constraints in that way. But that being said, we might come to a launch where we feel we need to overinvest for a quarter or two. And the nice straight line from here to 30% might get a bump up or down from time to time. And we do feel that that would be communicated early enough if we see that need. So everybody would be aware of it. But no, we don't feel hampered anyway. We invest at a healthy level.

Then maybe just one more question. You have done some really rational M&A activities for the last years. Do you see any M&A opportunities down the road? maybe in service business area, or how is marketing like? And what's your view on that?

The view is that we are always open to M&A if it adds value for the company and is strategically the right move. And we constantly look for M&A opportunities that fits our purpose, especially if we would take let's say, a strategic step where we believe it's much more efficient to buy a company rather than develop that competence or market position or what we want to achieve. So to say, if it's quicker to buy it or better to buy it and makes economic sense, then we would buy it rather than do it ourselves. It's always, we always have the choice to do it ourselves. We could always partner with someone, we could always license, or we could always acquire something. So those We always ask us those questions. What does make more sense for this purpose, for what we want to achieve?

Cool, great. And once again, congratulations to a great quarter.

Thank you.

The next question comes from Johan Aniris from Red Eye. Please go ahead.

Great. Thanks for taking our questions. And yet again, congratulations on a good quarter, a very good quarter. Some nitty-gritty questions. You alluded to if you were to invest more intensively. You are currently investing in capacity and commercially. Q1 optics-wise came in, at least in our view, a bit on the low side. What what to expect there. You are targeting the US market, increasing the commercial activity capacity that might not always end up in OPEX, but you're doing several things.

Thank you, Johan. I think overall, there's a bit of a guidance here. If you look at our OPEX, where we will grow, as we go, is primarily on the marketing and sales side. That is where we have the quickest return on investment. And I also think by saying that if we expand our optics on commercial, that will also be followed by kind of a quick growth as well. So I do not foresee that that would dilute our margins with the caveat that Christopher said that it could be one or two quarters where we take a deliberate decision to do extended investments. But that's where we will invest gradually as we grow. Admin and research will be, I think, the levels we saw in this quarter probably represented for the next quarters or so as well.

Great, thank you. Also, a small part, but critically important, as you explained earlier on the services side, it's obviously important to secure additional contracts. Anything more on contract pipeline? And perhaps you can do more to conclude this pipeline and the commercial sales process.

Yeah. No, I mean, with our strong offering that we have developed, we're optimistic. We also got the chance to truly in an international setting, but with high attendance from U.S. stakeholders, we were able to present it as well as ISHLT. So I think we have a good momentum now. We have learned. I mean, there are the cycles of selling in a contract. It takes a few months. But there is a pipeline of interesting customers at the moment, absolutely.

Yeah. And on the HAARP solution, you have published a great deal of achievements and we're looking forward to the US study. Anything to be said about the initial centers you can or active and the prospects of any of them sort of concluding their part on the second half of the year?

I mean what to be said on the on the US trial it's mainly that I mean we got the best of the best centers right now because we are in the comfortable situation of almost being able to choose which doesn't happen that often there is a huge interest both from the ones who are in the trial and and for from the centers who want to get into the trial uh then it's always when you run the clinical trial you run it at the highest pace you can but you also want to make sure that you you you keep your your inclusion exclusion criteria etc but we have a very high pace and i i we are running according to plan so we will definitely and most probably see a couple of of the bigger ones concluding their portion um

in during this year yeah great and yeah it's obviously important to get the traction from the centers and also you mentioned that interest from centers not actively participating is there any way to activate these centers ahead of the approval

The straight answer to that is yes. Right now I order the teams to have 100% focus on the current trial because that is needed to not drop the ball on the trial. But the answer is yes and we are in the planning phase to see what other trials we can do on US soil that would increase the confidence both from a regulatory approval view from the FDA that they would be interested in, also to build knowledge on US soil around this technology. I think that the key takeaway also from my associate was how US clinicians was quite impressed with the confidence that the European clinicians had around technology. But there is a difference. I mean, most US clinics use technology for four months versus four years in Europe. So, of course, that gives a greater confidence to use technology for a longer time. But I think that definitely inspired interest to take the technology to the next level also in the US. So we are planning for that.

Great. Thanks for answering the questions.

Thank you so much.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad.

And with that, I want to say that we can take one more question, but then unfortunately we need to go into the next meeting.

There are no more questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.

Thank you so much. There are no written Great questions today, I appreciate them. And with that we conclude this Q1 report call and we're looking forward to meet you in July for the Q2 call. Thank you so much.