Release Date: July 23, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Completed enrollment of both clinical trials in the U.S., marking significant progress towards U.S. market approval.
- Acquisition of main supplier expected to improve bottom line by approximately two percentage points over time.
- Highest sales ever recorded in Q1 and Q2 of 2024, with a 20% increase compared to the previous year.
- Strong performance in other direct markets like Spain and the UK, with the UK being the fastest-growing market.
- Positive cash flow expected from the acquisition starting in 2025, with a net positive effect from 2028.
Negative Points
- Negative EBITDA of 14 million SEK, with ex-U.S. EBITDA at negative EUR11 million.
- Weak performance in Germany, particularly in June, due to a low number of mechanically ventilated patients.
- Seasonal fluctuations affecting sales, with Q2 and Q3 typically being weaker quarters.
- High administrative costs due to legal fees related to the acquisition and a new long-term incentive program.
- Significant cash burn from U.S. clinical trials, although expected to decrease in the second half of the year.
Q & A Highlights
Q: Can you elaborate on the seasonality of sales and the situation in Germany? How representative are the 40 key customers surveyed?
A: The 40 key customers provide a good directional indicator of the overall market. The low capacity utilization in June aligns with feedback from key account managers. July has shown improvement, suggesting the June dip was temporary. However, seasonal fluctuations are expected, with stronger winter months and weaker summer months.
Q: What are your expectations for Q3 sales, given it tends to be weaker than Q2?
A: Historically, Q3 can be weaker than Q2, but it varies year by year. While I won't predict exact figures, we expect some seasonal decline but remain confident in our overall growth trajectory.
Q: Can you provide guidance on administrative costs and potential integration costs for the acquisition?
A: Administrative costs should remain stable, with no significant additional integration costs expected. The acquisition will improve gross margins over time, with benefits becoming more pronounced in 2025.
Q: How will the completion of the U.S. trial impact your investments going forward?
A: With patient recruitment completed, CapEx will gradually decrease, especially in 2025. We will still incur costs related to U.S. registration but at a significantly lower level than during the clinical study phase.
Q: What strategies are in place to achieve the all-time high sales target for 2024?
A: We focus on resource allocation, investing in profitable and growing markets like Germany, Spain, and the UK. We also implement cost-effectiveness measures to maximize time spent with customers and target high-potential accounts.
Q: What is driving the strong growth in the UK, and can this momentum improve further?
A: The UK growth is driven by regulatory approval and a focused targeting strategy. We have turned the UK into a profitable and growing market, and we plan to expand the team as needed to maintain this momentum.
Q: How will the acquisition of Innovative Sical impact long-term profitability and supply chain stability?
A: The acquisition will improve gross margins by two percentage points and enhance supply chain stability by reducing cost fluctuations and supply disruption risks. We will also have better control over future capacity scale-up.
Q: Can you provide more details on the current progress and expected timelines for the U.S. market?
A: Enrollment for both trials is complete, with follow-up and dossier preparation ongoing. We expect top-line data in the second half of 2024 and aim for submission in the first half of 2025. We maintain close communication with the FDA to mitigate risks.
Q: How confident are you in commercializing in the U.S. with your own team versus partnering?
A: We are preparing for a standalone launch but remain open to partnering if it adds value. We have strong support from prominent hospitals and key opinion leaders, providing a solid foundation for a successful launch.
Q: Will you continue operations for Innovative Sical's other customers post-acquisition?
A: Yes, we will continue producing for their other customer, which provides a profitable cash flow. This will not significantly impact our operations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
