Clinical Laserthermia Systems AB publishes interim report January – March 2023

Summary of the interim report (relates to the Group)

Three months (01/01/2023–03/31/2023)

• Net sales totaled SEK 587,000 (SEK 708,000).
• Profit/loss after financial items totaled SEK -21,464,000 (SEK -13,842,000).
• Basic and diluted earnings per share totaled SEK -0.15 (SEK -0.21).
• The equity ratio at March 31, 2022, was 7,5% (12%).

Significant events in the first quarter of 2023

• The twentieth and final patient was treated by the Urological Research Network, LCC, based in Florida, USA, in the phase 1 clinical trial using the CLS TRANBERG® Thermal Therapy System in combination with Focalyx® Fusion for focal laser ablation of low-to-intermediate risk prostate cancer.

• CLS entered into a strategic partnership with Soteria Medical to jointly market and sell the companies' combined product portfolios for MRI-guided prostate procedures in markets outside the US.

• A letter of intent was signed with HALO Precision Diagnostics in the US for a post-market study with up to 25 patients, to evaluate the TRANBERG Thermal Therapy System for ultrasound-guided treatment of prostate cancer. Following evaluation of the study, HALO Precision Diagnostics intends to begin discussions with CLS to purchase the system for use in some of its 16 nationwide clinics.

Significant events after the end of the period

• CLS began research collaboration with the National Institutes of Health Clinical Center in the US under which the NIH CC will begin using and evaluating the TRANBERG Thermal Therapy System for ultrasound-guided treatment of prostate cancer. NIH CC will purchase the equipment and material needed for the study from CLS.

• CLS signed a Mobile Service Provider agreement with AVANT Concierge Urology whereby CLS will provide the TRANBERG Thermal Therapy System, including consumables, training and on-site clinical and technical support to AVANT physicians and staff, for a fee per treatment. The first patient was treated in May.

• CLS entered into an agreement with Unio Health Partners to conduct a phase 1 clinical trial of the CLS TRANBERG Thermal Therapy System for image-guided focal laser ablation together with the ExactVu™ micro-ultrasound platform from Exact Imaging Inc.

• CLS announced that all five glioblastoma patients in the study at Skåne University Hospital have been safely treated and that the study is being extended to treat up to 10 additional patients.

• The Board of Directors of CLS announced its intention to propose, at an extraordinary general meeting to be held on June 8, a resolution on a rights issue corresponding to approximately SEK 135 million, followed by an option to further raise up to approximately SEK 50 million through free warrants.

• CLS announced that its global distributor ClearPoint Neuro Inc. installed two additional ClearPoint Prism™ Neuro Laser Therapy Systems in the U.S. In total, there are now three systems installed on the American neurosurgery market

Comments from CEO Dan J. Mogren

Clear growth strategy with the ambition of reaching break-even by 2025

I am very pleased with the excellent position CLS has secured for further market establishment and commercialization. In the past year alone, we have achieved several important milestones towards our vision of establishing minimally invasive laser ablation as an effective standard treatment and a safer alternative to surgery for several patient groups in the urology and neurosurgery segment. Therefore, we are now in a position where we can and want to clarify our ambitions for the future.

In mid-February, we presented a strategy update to investors. We announced that we aim to reach break-even in about two and a half years. This means that CLS needs to achieve a positive cash flow, measured as EBITDA, in 2025. This, in turn, requires sales revenues of SEK 100 million for the same year. In particular, the urology segment in the US will contribute to sales revenues. This will be accomplished by achieving commercial success in urology clinics with our laser ablation system that allows image-guided treatment of prostate cancer with MRI-fused ultrasound.

According to our estimates, the urology segment will account for about two-thirds of total sales. The final third will be generated in the neurosurgery segment. A limited market launch of our 510(k)-cleared product for the treatment of brain tumors and drug-resistant epilepsy is currently underway in the US. It is estimated that our focus market, the US, will account for 70% of sales. Selected markets in Europe and Asia-Pacific will contribute with increased sales from 2024 onwards.

Cost trends and sales

Costs increased slightly compared to the first quarter last year, driven by higher personnel costs from our investments in the US commercial organization and in the Quality Assurance and Regulatory Affairs organization. The overall cost trend is in line with our expectations and is moving steadily towards our full-year target. We also expect sales to pick up in the second quarter and, especially, in the second half of 2023, driven mainly by the US.

Several important achievements

During the quarter, CLS raised a gross figure of SEK 12.8 million in new share capital through the exercise of the TO5 warrant. The capital injection was extremely important for the continued financing of the company's operations. Another highlight of the quarter was the signing of a strategic agreement with Soteria Medical, which has a navigation system for MRI-guided procedures. Under the agreement, we will jointly market and sell the companies' combined products in our markets outside the US.

In our clinical program, the Urological Research Network treated the last patient in the phase 1 clinical trial where our system is used together with Focalyx Fusion. Another important event was that CLS and HALO Precision Diagnostics, a US diagnostics company whose growth strategy also includes therapeutics, signed a letter of intent to evaluate the effect of laser ablation treatment of localized prostate cancer with our system in a post-market study. The study is planned to start in the first half of 2023 and will inform discussions on the possible purchase of the system.

After the period ended, we also began a strategically important research collaboration with the National Institute of Health Clinical Center, the primary federal authority conducting and supporting medical research in the US. NIH CC will begin using and assessing the CLS TRANBERG system for image-guided focal laser ablation of prostate cancer. In addition, we entered into an agreement on a clinical phase 1 study with Unio Health Partners, a service platform for attending physicians in the San Diego, Los Angeles and San Francisco areas. The study, which concerns focal laser ablation of prostate cancer, will use the TRANBERG system and a micro-ultrasound platform from Exact Imaging.

The media attention given to our study at Skåne University Hospital in Lund was also very gratifying. This is the first time in Europe that glioblastoma patients have been treated with laser ablation performed while the patient is in an MRI scanner throughout the procedure. This treatment method provides more precise results and is safer and gentler on the patient. The last patient in the initial study was treated in the second quarter, and the study is now being extended to include 10 more patients following approval by the Swedish Medical Products Agency.

Looking ahead

The uncertainty in the world means that there is a continued shortage of components, which primarily affects the supply chain. This component shortage has not had any immediate impact on CLS production, and we also have a stockpile to protect against any future delivery delays. Increased interest rates have also not affected the company in the short term, but may do so in the long term, among other things in the form of a generally lower risk and investment appetite in companies in early stages of development and a generally higher cost of capital.

Uncertainty regarding regulatory requirements in Europe continues, although some clarification was provided in the first quarter in the form of an extension of the period for transition from MDD to MDR. This will automatically extend CLS's existing CE markings for products on the market until 2028. Thus, we do not expect any regulatory-related interruptions for CLS CE-marked products until then. In Singapore, we have market approval processes ongoing and hope that these will be finalized in 2023.

The Board announced in May that it intends to propose to the AGM a resolution on a rights issue of SEK 135 million (gross) to finance the company's operations and growth and to improve the capital structure by repaying outstanding loans. With that financing secured, together with the utilization of associated warrants at the highest price, the company will manage without further financing into 2025, while our ambition is to achieve SEK 100 million in sales that year.

Dan J. Mogren

CEO, Clinical Laserthermia Systems AB

This disclosure contains information that CLS is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person set out below, on May 25, 2023 at 08:00 CET.

For more information, please contact:

Dan J. Mogren, CEO Clinical Laserthermia Systems (publ)
Tel: +46 (0)705 90 11 40
E-mail: dan.mogren@clinicallaser.com

About CLS

Clinical Laserthermia Systems AB (publ) develops and sells the TRANBERG® Thermal Therapy Systems, including Thermoguide™ Workstation and sterile disposables, for minimally invasive treatment of cancer tumors and drug-resistant epilepsy, according to regulatory approvals in the EU and the US. The products are marketed for image-guided  laser  ablation  and  used in studies for  treatment  with  imILT®,  the Company’s interstitial laser  thermotherapy  for immunostimulant ablation with potential abscopal  effects. CLS is headquartered in Lund and has subsidiaries in Germany, the US and Singapore. CLS is listed on the Nasdaq First North Growth Market under the symbol CLS B. The Certified Advisor (CA) is FNCA Sweden AB, Tel: +46 8 528 00 399. E-mail: info@fnca.se

For more information about CLS, please visit the Company's website: www.clinicallaser.se

This disclosure contains information that CLS is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 25-05-2023 08:00 CET.