Xvivo Perfusion AB (publ)

Good morning and good afternoon and welcome to Xvivo's earning call for the first quarter of 2025. As stated earlier, the presenters today are me, Kristoffer Rosemblad, CEO for Xvivo and Kristoffer Nordström, CFO. And with that, we can go over to the second slide, the Q1 financial at a glance. And I'm proud and happy to report that Q1 shows improvement on top line, as well as EBITDA compared to the same quarter last year. Q1 shows again that Exviva has a scalable business model with improving margins with scale, even though we have continued to invest heavily into the organization for future growth. The quota was very strong from a North American regulatory perspective with many milestones passed. For example, the liver ID was approved and we can now start our trial in the United States. The heart cap was approved and the heart trial clinics now have access to the life-changing heart technology in the US for a limited amount of patients. And lastly, Health Canada approved our liver and kidney technology, which opened up that market for our abdominal portfolio. If you look at the slide, sales came in at 219 million SEK. The gross margin continue to show strength and we have a scalable production setup. We plan to improve the abdominal gross margin to 70% at the latest in 2027 or earlier when we reach economies of scale in production. The EBITDA shows an improvement to 21%, and Christopher Nordstrom, our CFO, will later get into the details on sales, gross margin and EBITDA. The growth showed a mixed picture during the quarter. In Thorax, we see the highest ever interest to start an EBLP program, but sales growth came in lower than we expected. Of course, the lack of hard sales, both in the US trial and from the European, hampered the growth. The good heart news is that besides that the cap is now approved in the US, we also see that heart in Australia is growing very fast with the Australian growth of 60% Q1. The penetration last year was approximately 30% for Australia heart and we saw a slight increase during Q1. The high interest and the Australian experience once again show that the heart technology has the potential to change the paradigm of heart transplantation. And we get more and more customer testimonial that that is the case. The abdominal sales showed strength during the quarter. In the US, cat disposables grew 100%, albeit from low levels. And in Europe, both liver and kidney showed strong growth based on excellent clinical and hospital economic data. We are not... pleased with the progress in our US service business. We have initiated a strategic review of our service efforts that will be finished in June this year. At a first glance, the Italian model with a perfusion is works very well and we will spearhead a perfusion as modern initiative in the US already in Q2 this year. uh we acknowledge that the service business is crucial for the heart launch and when the strategic review is finished we will come back with the plan forward for the us services business lastly and most important to mention is that the projects are progressing according to plan the heart project is still on time and budget albeit we didn't expect a long review from the ema and the swedish medical agency due to high workload at the two european agencies the production capacity project where we invested scale up volumes times 10 up to day volumes for disposables are running in land with communicated timelines The full-scale production of disposables for heart, liver, and kidney will be extremely important to capture the future growth potential for all three product groups. And with that, we can go to slide three, which is the the highlights of Q1. The picture in front of us remind us all why we're here, and that is to make sure that no one dies waiting for an organ. Alex on this picture is one of the 400 patients that got the opportunity to heart transplant thanks to our innovative heart technology. We start with regulatory highlights, so we can quickly go actually to slide five, and the progress on the US Heart Preserve Trial. We are pleased that the Continuous Access Protocol now is approved and that we can give access to the heart technology to the limited number of patients in the trial sites. Besides that, the Continuous Access Protocol will strengthen the clinical file with more patient data in the US. heart technology so far has surprised us positively every time it has been used and more data will be key to build a solid clinical file and again i want to to remind us all that the 13-month enrollment was a record time for a clinical trial five months ahead of schedule and it showed the enthusiasm we've seen in australia and europe is also has also been seen in the united states with that we can go over to slide six and our liver trial the deliver trial the id or investigation device exemption was approved during the quarter for labor key takeaways are at one the liver technology is the market leading europe and more than 20 clinical papers just during the last 12 months showed superiority in graft survival for both short and long-term. Hospital economics, where the liver assist saves more than 25,000 euro per transplants due to lower cost of aftercare. And lastly, by using the liver assist, surgical teams now can not only see better patient survival and hospital economics, but also improve work-life balance with morning surgery. The liver growth in Europe is partly driven by the 2024 Cochrane Review and the 1,200 patient real-world data. The Cochrane Review supports the implementation of HOPE with liver assist as a routine practice for liver transplantation. two with the id approved we can now start the clinical trial in the us that will form the basis for our pma application with the fda the trial will enroll 215 patients at the maximum of 20 clinics the inclusion criteria for the trial is extended criteria livers i.e very similar to the heart trial we just concluded in terms of patient inclusion The work with CMS for site reimbursement and the hospital for both ethical approval and site contract is underway. We know from experience that this work takes some time and the plan for first patient in is during Q3 this year. In conclusion, we are very excited that delivery technology that has changed the life for many patients in Europe now can be accessible for American transplant clinics under the trial. And with that, we can go over to the last regulatory highlight, and it's on slide seven, which is the regulatory highlight from Canada. During the quarter, we got MD-SAP approval and, subsequently, Health Canada approval for our liver and kidney products. and we have hired our first employee to facilitate our launch there in Canada. We have a full abdominal team in the US that will support the launch of kidney assist, transport and liver assist. Canada is an interesting market due to the similar geography to Australia in terms of large distances between hospitals. Canada is also interesting from a US perspective where surgeons very often cooperate over the Canadian border, which will be helpful also for the later US launch. So we know that learnings in Canada can be deployed from a surgeon to surgeon basis into the US as well. Lastly, the heart launch in Canada will depend on that we first get a CE mark, and based on the CE mark, Health Canada will make their own judgment based on the file and the CE mark. So we have to wait for heart in Canada. But we are very pleased that we now can start working with the abdominal products in Canada, where we know there has been an ask for getting our products approved. And with that, we go to slide eight, which is the overview of where we have regulatory status. And the status is that we are yet are working for approvals for heart in all core markets and liver in the US. With the recent good news in Canada, it will be considered core market as of now. But this slide hasn't yet been updated to reflect that. And with that, we can go to slide nine, which is the timeline and the progress of regulatory processes. We see a constant progress, as I think Q1 is a testament to, that there is progress in each process. But the key message is the same as last time we met. So I would partly repeat what I said in January 2025. The hot trial is, as you know, fully included in record time. Next milestone is the 12 months patient follow up. In parallel, we will prepare the technical and preclinical file for submission, as well as building the clinical file larger with the help of CAP data or continuous access protocol data. After the 12 months follow up time and some time for database lock, we can start preparing the clinical file for submission as well. As mentioned before, in Europe, we have handed in our technical documentation for review according to our time plan. In dialogue with our notified body, we understood that the heart box is already approved. This enabled us to talk to clinics about the heart box. The insecurity we still face is how fast EMA, which is the European Medical Agency, and the Swedish MPA can handle their review time. They are under a lot of stress due to MDR. uh so we have we have not yet full insight into their timelines today however we are ready to launch when the product is approved so the launch plan is ready staff is recruited and interest from clinics in europe is very very high for the whole product as i stated earlier in in earlier on this call in australia and new zealand we have seen high usage of the product The regulatory approval will be pending the C-mark in Europe, and the same will apply for Canada. have initiated dcd data collection in united states as part of the trial in europe as part of a 40 patient trial and we will initiate the same type of data and data application and trial in australia as well to get dcd data in australia to have full usage of the hotbox once approved Lastly, the liver, we have gone over that one, but we have been granted breakthrough device designation by the FDA. And with an approved ID, we are working hard to get the trial started in Q3 this year. So with that, we can go to the next slide, which is the ISAT 2025 and the expected highlights, which the ISAT would be next week in Boston. It's a key event for lung and heart transplant surgeons during the year. We will have five days of meetings and excellent presentation of new data. The most important speech during conference we deem will be the one-year follow-up of the trial data. Last year, Professor Rega presented a 76% risk reduction of severe PDD, which is the leading cause of early and late mortality after heart transplant. This year, he will present how well the patients are doing after one year. So we are all eagerly looking forward to that presentation. We are also looking forward to the novel trial presentation by Dr. Sanchez and to our two industry symposia. Last year, they were packed to the brink of the room and people had to stand up lining the walls. The general view was also that the symposia we led had a higher scientific level than most of the ordinary program, which is a great testament to our marketing team and clinical team who prepared those two symposia. We aim to repeat that 2024 success also in 2025 in Boston. So you will hear more of this when we meet next time in July. And with that, we can go over to the business operation on slide 11, and we can go straight into slide 12, where we start with the surrounding world. And the key message is that we will continue to invest to make sure that no one dies waiting for an organ. If we start with trade policies, we see a constantly changing environment, and we have plans for each scenario. Today we have production in the United States for the XPS and part of the lung kit while we produce heart, liver and kidney products. as well as disposable and sterile products in Europe. We know, for example, for Perfidex that account for somewhere between 0.2 and 0.3% of the total cost for long transplant in the US, that a price increase will not affect the number of heart transplants in the US. it would be important to keep patient safety always first. And it's better for the patient if we have a stable production of sterile product with good goods that make sure that they will survive lung transplants than if the price is 10% higher than it was today. For machines that are not sterile, we aim to set up dual production. In other words, we will in the future have one production site in the United States and one in Europe. In terms of investment into the organization, we will continue to invest heavily into the US organization, and we'll soon open a new R&D and academy in Denver, Colorado. In parallel, we continue to invest in commercial, R&D, and regulatory capabilities in the United States. if we turn to the next slide we go in more to segment updates and notion will give you more of the details and i will give a more an overview of where we are and what actions we will take i stated earlier heart is performing very well where we're allowed to sell the product which now is australia we are preparing for you launch uh For lungs, we have seen a very good last year, a softer Q1, with an extremely high interest to start an EVLP program. The new commercial force we put in place in Q4 2023 have now been up and running for approximately a year, and the key learnings are that one, we will invest in more clinical reps closer to the customer. Two, many customers need on-site support with Profusionist. And hence, we will try the Italian model, which has been working very well in Italy with on-site perfusion. And three, we know the hub models works. We have to encourage more clinics in the US to do what they do in Paris, which is that one clinic or one OPO evaluate lungs for more clinics. The good example we see is that we see a lot higher usage of EVLP lungs around the two lung bioengineering hubs in the United States, which is a testament that hub models works. I also want to highlight that during the quarter, two great publications were released around EVLP and lungs. One showing that lungs on EVLP show good patient survival for high-risk patients and high-risk recipients. Also, Exviva came out significantly better than a competing product during that trial. The second publication is very encouraged in showing that an EVLP program is economically beneficial for clinics if they perform more than three EVLP lung transplants per year. If we go into the abdominal business, it's showing good progress in Europe. Liver is the growth driver by interest for kidneys picking up. Key for the US market is to run the liver trial and to develop the kidney protein, including acquired clinical data to have true success for our abdominal portfolio. So now we are hitting clinical doors or hospital doors in the US, while the majority of kidney perfusions are done in the opioids, but that will take another couple of of of four to six quarters before we have the right product and the right clinical data to really see good performance on cat in the us and we can go to the slide 14 which is the last before we go before our cfo takes over and we look at the u.s organ recovery service In short, it can be said there is a large need for organ recovery services in the United States, especially if they're paired with perfusion services. So the combined service of an organ recovery service and perfusion is also strategically important for the heart loss in the United States. The other thing that we can conclude is that we are not pleased with the current performance and are currently conducting a full strategic review of our US services business. We will come back when that one is finished in June. We will continue to invest into Flowhawk. So they are in few clinics in the US, but where the Flowhawk software is, it's very well appreciated and adds value to the clinics. So we will continue to invest into that integration. And with that, I say thank you for this part of the presentation and we can turn over to slide 15 and actually you will take over, Kristoffer, from here.

I will, Kristoffer, thank you. Yes, so let's move on to the financial section here and starting with the net sales and key ratios for the quarter. This was a quarter where sales performance varied a bit amongst our three business areas, and I will shed some light on each area later on. Overall, the underlying trends for our current businesses are positive for both thoracic and abdominal as we increase our customer base and we continue to see a growing demand for technologies. On the services side, as Kristoffer mentioned, we have work to do in order to accelerate these businesses. Worth highlighting is that this was a quarter where we lacked some revenue that we had last year. So, for example, revenue from trials in the US. And as a comparison, last year we had 7 million SEK in revenue from our heart trial. We expect revenue from the CAP trial to start gradually here in Q1 already, followed by additional revenue from our liver trial in Q3. But so to the numbers, net sales were 218 million SEK and organic growth was 14%. If we look at the rolling 12 months, as we prefer to do, the organic growth was 33%. Overall gross margin was in line with last year, 73%. Adjusted EBIT increased 50%, that's a lot, in SEEK and reached a margin of 14%, strengthened from 11% last year. And finally EBITDA was 21%, an improvement over the 20% last year. We did not see any major effects on our P&L from the weakened US dollar in Q1. As you know, we have a high portion of our business in the US. And I will provide some comment on this topic in a few slides when we dig down a little bit on the EBITDA. But moving over to the thoracic business area, total sales in Q1 amounted to 142 million SEK, which is an organic growth of 16%. The rolling 12 months organic growth is 39%. After a strong sales quarter in Q4, from a pure sales number perspective, this quarter was weaker. But A, EVOP is not always a quarterly stable business. We need to live with that as we grow bigger and longer trends provide better understanding of the trajectory we're on. And B, I will provide some useful insight by digging into some details here. For LANGS, sales grew 18% in local currencies. That's softer growth than the previous quarters. However, we truly want to emphasize that the underlying health of our EWP business is stronger than this number suggests. Last year's comparative numbers were to some extent inflated by some research sales and this Q1, we could not onboard our new XPS customers until the very last weeks of the quarter. which led to some reduced growth to our own forecasts. But however, the quarter finished strongly and four XPS devices were sold in the last weeks, right? So two in the US and two in Europe, to France and to UK, by the way. And the XPS interest remains very high and we truly believe that 2025 it can really be a record year for us in terms of XPS programs started. As we mentioned in the report we will still face some limitations on the XPS production capacity in the next two quarters and we forecast that we can be able to produce around three XPS machines per quarter. for the year, but still, if we manage to do that and sell those, it will be a record year. Gross margin stable 82%, one percentage unit better than last year. When it comes to hearts, it's interesting and exciting. So sales were 8 million sec this quarter versus 12 last year. However, we had around 7 million sec worth of US heart trial last year. So it means that set aside the US heart trial, we grow quite nicely here. What sticks out and what we're extremely proud of is the development we see in Australia. So this quarter they brought in 6 million SEK of revenue with a growth of 61%, as Christopher mentioned. And it really demonstrates the huge enthusiasm that they have for our technology in that region. So to conclude Theresec, I mean, hard chosen improved momentum in Australia and also Europe, some compassionate use cases there as well. And we're waiting to see Mark as you know. Lang had a little bit of a softer quarter, but the underlying health is good and we will remain being the partner of choice based on the order books that we see for the XPS devices globally for all the customers who wants to set up an EVLP program in 2025. Abdominal. Net sales Q1 came in at 57 million and organic growth was 28%, very much in line with the rolling 12 growth that we see on 31%. So I would say it's a business as usual quarter, but in a positive way because we continue to grow in Europe on our main market. Liver stood for 75% of abdominal sales and kidney 25%. liver sales grew 25% in local currencies and kidney sales grew 51%. So here we start to see now some growth both in the US, but also in Europe on the kidney assist transport, although still from small numbers, we know that, but we're getting there. As an example, in the US, the disposable sales of kidney assist transport grew 108%, so we doubled the sales there. Gross margin disposables decreased from 68% last year to 63%. I think we need to live with some fluctuations here on abdominal in the next one, two years until we get some economics of scale. But the primary reason this year was a higher portion of distribution sales and some higher research sales from last year with higher margins. But a solid quarter for abdominal in my opinion. Last business area, moving over to services. Sales amounted to 20 million organically. Sales from organ recovery decreased by 19% due to a lower activity volume, while the acquisition of Flohock contributed positively with an acquired growth of 13%. So all in all, a negative 6% decrease versus last year. On a positive note, we signed new recovery service agreements with three clinics in Q1, and we look forward to start serving these clinics here in Q2. Gross margin increased 38% versus 36%. This margin is expected to strengthen gradually as the recovery volumes increased, but most notably when sales of FlowHawk increase, which is a SaaS product with margins similar to a long portfolio actually, if not even better. In Q1 we had integration costs here. We continue to build this offering right and integrate. So we had integration costs of 3 million SEC as we continue to further build and integrate Flowhawk into the service offering. In order to further develop and define our service offering, a strategic review, as Kristoffer mentioned, will take place here in the next few months. A project we have also started to work on is to look at how Flowhawk could be connected also with our various perfusion devices over time here in the future. Two more slides before I'll hand over to Kristoffer again. Ebitda profitability. EBITDA came in at 21% in Q1, a 1% unit better than last year. And at rolling 12 months, we're at 22%. Yeah, something like a broken record. But we've stated before, our ambition is to continue to improve EBITDA year on year. But we want to do that in a controlled way. So we maintain a healthy relationship between sales growth and sustainable profitability development. As I stated in my introduction here, Q1 was not negatively impacted by the weakened US dollar against SEC in the P&L. Most likely we will see a fairly large impact in our numbers during the rest of the year though. And to provide some guidance, we could look in the past, right? So if we look at last year's numbers, in terms of sales, approximately 60% of our sales were in US dollars. And we have most of our COGS in Euros and SEK. And if the USD against the SEK in 2024 was 10.5 roughly, a decrease to 9.5, as we see now in 2024, would have led to a decrease in SEK net sales last year of 45 million SEK. And that in turn would result in a decrease of EBITDA of approximately 20 million SEK or 1% unit on the EBITDA margin last year. So I hope that provides some guidance here on what we can expect for the future. Final slide, cash flow and financial position. Q1 operating cash flow was minus 15 million SEK. No concerns there on my side, primarily due to a payment of our annual employee bonuses for 2024. If we wouldn't have that, we would have been positive on the operating cash flow. We continue to invest. Investments amounted to 59 million SEK, as always. That's primarily spent on the US clinical trials, but also the production project Billy. We ended the year with a solid cash position of 316 million after exchange rate effects on cash of 22 million SEC. And finally, as we announced in the last call, we have entered into a revolving credit facility of 20 million euros here in January, which currently remains unutilized. And with that, I will give the word over to you again, Kristoffer, for the outlook. Thank you.

Thank you so much. Yes, we will look into, as usual, first what to expect during the year. And I think the first thing is that we see a very high interest on starting an XVVVLP program. We will invest to capture that one. both in terms of head counts and possible perfusion in services. We have stated that we have a scarcity of XPS machines right now, and we do see that we have more XPS machines in the second half of the year than the first. So we'll come back when we see that production picking up. For HART, we will continue to prepare for the launch in Europe and Australia. We will continue to build the US regulatory and clinical file for heart. For liver, the excellent clinical data published, we will invest in commercial capabilities in Europe to capture the growth opportunity we see here. And we aim to start our clinical PMA trial during Q3 this year. So those are the milestones from regulatory viewpoint. Lastly, I also want to stress that we see great investment potential during 2025 with return on investment of approximately one year. And we will invest into those opportunities. Key commercial investments are the EU heart launch, strengthening the kidney US launch, strengthening the US lung business, as well as the abdominal launch in Canada. We will continue to invest in supply chain and quality department, regulatory department to capture the increasing customer demand for our products. And I also want to stress that we are building up our inventory levels. We have taken a revolver credit to do that. So we will see increasing inventory level during this year. That is a planned action we do for making sure that we can always delivering products to the customers. And if we look into the little bit longer term outlook, which is the important one, and the reason why we are here, we see that the demand for transplant is still 10 times higher than the supply, according to WHO. The sales value of machine perfusion is approximately times 10 versus static cold perfusion, which is typically a beer cooler type of box with ice and the solution. Machine perfusion and our service model have proven to increase the number of organs to be used for transplantation, especially in the fast-growing DCD organ pool. The main growth drivers are superior clinical results from machine perfusion and the fact that service model reduce complexity and time for the transplant clinic. Hence, machine perfusion and service model on normal and DCD grafts will continue to drive growth in the near future and the long future. Exviva has a unique and proven product platform to one day accomplish that no one will die waiting for an organ and with that i turn to the next page 24 thank you for listening today and with that we open up the lines for questions