H1 2024: Brain+ has executed successfully in accordance with its UK-focused commercial strategy towards proof-of-business and realized financial results as expected
COMPANY ANNOUNCEMENT
Copenhagen, Denmark, 29 August 2024 – Brain+ A/S (Nasdaq First North: BRAINP)
Brain+ will host an investor webinar on Tuesday, 3 September 2024 at 16:00 (CEST) to present the H1 2024 report and the commercial plan and outlook for the UK.
Sign-up & pre-submit questions here.
Today, the Board of Directors of Brain+ (“Brain+” or the “Company”) has approved the Company’s financial report for the period 1 January - 30 June 2024 (unaudited).
Financial results H1 2024
- In H1 2024, Brain+ realized a gross profit of DKK 1.0 million (H1 2023: DKK 1.6 million). The decrease in gross profit is a result of the company’s operational shift, as less development costs have been capitalized while UK regulatory and market access expenses have increased.
- Staff expenses fell to DKK 5.7 million in H1 2024 (H1 2023: DKK 6.2 million)
- The result of operating activities in H1 2024 was DKK -6.7 million (H1 2023: DKK -6.6 million).
- Including financial expenses of DKK 0.8 million related to funding events and an R&D tax credit of DKK 0.5 million, the net result for H1 2024 was DKK -7.1 million (H1 2023: DKK -6.1 million).
- Operational cash flow for the period was DKK -5.4 million (H1 2023: DKK -8.9 million)
- Total cash flow in H1 2024 amounted to DKK 1.6 million (H1 2023: DKK -1.1 million) and cash and cash equivalents on 30 June 2024 was DKK 4.7 million (H1 2023: DKK 5.3 million).
Business achievements H1 2024
In early 2024, Brain+ launched a commercial strategy focused on the UK market as the shortest path for the Company to reach proof-of-business and scalable sales. In 2024 to date, Brain+ has successfully executed in alignment with its strategy and achieved several key business milestones.
Brain+ CEO and founder, Kim Baden-Kristensen commented in connection with the H1 2024 report:
“In 2024 to date, Brain+ has successfully executed in full accordance with the UK Market Access plan and delivered on several key milestones. The company has applied for the CST-Assistant to be included on the NHS procurement platform, completed a usability study in partnership with Age UK to generate relevant UK user data, established a UK branch and significantly upscaled inhouse UK healthtech commercial resources with the hire of Devika Wood as new Chief Commercial Officer. Recently the Clinical Evaluation Report of the CST-Assistant was validated for regulatory compliance and the clinical relevance of the product endorsed by Prof. Aimee Spector from UCL, UK, the founder of CST.
The next steps in 2024 are clearly defined to successfully close out 2024; 1) refine and execute on the UK commercialization plan, 2) certify the CST-Assistant as a UK Medical Device, 3) close the first early adopter NHS contracts to generate first UK sales in Q4, and 4) execute on the marketing and sales plan to build a strong pipeline of leads, converting to contracts and recurring sales in 2025.
Financially, Brain+ has cut back on costs to operate as lean as possible without losing momentum in the UK Market Access plan, as public funding conditions remain challenging. This is reflected in the financial results for H1 2024, and it is the plan to continue a highly diligent cost approach until the company has reached recurring sales.
We look forward to keeping our shareholders and other stakeholders updated on our progress through the rest of 2024 to set the stage for a strong 2025.”
Outlook for H2 2024
Business
Brain+ is on track to deliver in accordance with its UK commercialization plan towards UK launch of the CST-Assistant by end Q3 and the first UK sales contracts by end 2024 and expects the following key milestones for the rest of 2024.
- August/September – Final results of the Age UK usability study of the CST-Assistant
Supportive results will help document product-market fit indications and cost-effectiveness of the CST-Assistant in the UK care pathway.
- September - Start of first clinical study with CST-MCI cognitive training software
First study in people diagnosed with MCI to test cognitive training software relevant for the CST-MCI product
- September – Launch of refined UK sales and marketing plan including sales outlook for 2025-2026
- September – UK certification of the CST-Assistant as a Medical-Device-Software
Product certification against UK Medical Device Regulation is perceived by the NHS as a key stamp of quality and differentiation. It will validate the clinical benefits and the software quality of the CST-Assistant for CST to facilitate a higher pricing and reimbursement.
- September – Commercial release of the CST-Assistant
Final commercial release to follow regulatory certification will open for product demonstrations, direct sales outreach to NHS trusts and the first sales contracts.
- November/December – Close first UK sales contracts
Close the first £10,000-£30,000 ‘evaluation track’ type contracts with NHS Trust.
Financial
In 2024, Brain+ expects to realize Danish sales of around DKK 0.2 million. As a consequence of considerably restrained Danish municipal budgets and the company’s reduced commercial focus on Denmark, the potential of additional Danish sales contracts in H2 2024 has been excluded from the 2024 sales forecast.
In the UK, Brain+ expects to close small initial NHS evaluation track contracts for the CST-Assistant in Q4. Such contracts are expected to represent a combined sales value of around DKK 0.15-0.2 million. Since such contracts likely will be covering a term, a larger part of the sales value may be accounted for as sales in 2025. Total realized sales in 2024 are consequently expected to be in the range of DKK 0.25-0.3 million.
With a continued strong focus on keeping operational costs at a minimum, the company retains its expectations of a net result in 2024 of between DKK -12 and -15 million.
Brain+ has scheduled an internal commercial workshop to refine its commercial plan for the UK. Based on the outcome of the workshop, the company will in September update the market and provide a refined UK sales and marketing plan including an updated sales forecast for 2025 and 2026.
The company expects recurring UK sales from H1 2025 and to reach operational break-even for its UK business by the end of 2025 and for the full company by the end of 2026 based on its current business plans.
Funding
Brain+ has funding for its operations to realize its upcoming key milestone of UK launch of the CST-Assistant by end Q3 2024.
The TO 4 warrants, which were issued to subscribers in the rights issue and now trade on Nasdaq First North Copenhagen, will be exercisable from 16 – 27 September. The exercise price can range between DKK 0.08 and DKK 0.10, corresponding to maximum proceeds to the company of between DKK 4.9 and 5.5 million at full exercise.
Proceeds from the TO 4 warrants will be used to fund UK market penetration, build customer awareness, and establish commercial traction for the CST-Assistant, bridging to the first UK sales contracts in November/December 2024.
Next-step funding activities have been initiated to secure funding for the company’s operations towards commercial scaling from the first UK sales contracts. The preferred route is to make a directed issue of shares or convertible notes to a select number of interested investors, both private and public, as it is the cheapest type of equity-based funding for the company.
The full H1 2024 report can be found under the investor section on Brain+’ homepage:
https://www.brain-plus.com/investor/
Invitation to investor webinar on Tuesday, 3 September 2024 at 16:00
Brain+ will be hosting an investor webinar on Tuesday, 3 September 2024 at 16:00 to present the H1 2024 report and the company’s commercial plan and outlook for the UK. Participating in the call will be new Chief Commercial Officer Devika Wood, CEO and founder Kim Baden-Kristensen and CEO Hanne Vissing Leth, who will answer questions submitted in advance and directly during the webinar.
For sign-up and submission of questions:
Sign-up & pre-submit questions here.
Contact Information
CEO and Co-founder Kim Baden-Kristensen, + 45 31 39 33 17, kim@brain-plus.com
CFO Hanne Vissing Leth, hanne@brain-plus.com
