Clinical Laserthermia Systems AB publishes Year-end report January – December 2022

Summary of the year-end report (relates to the Group)

Twelve months (01/01/2022–12/31/2022)

• Net sales totaled SEK 6,268,000 (SEK 2 245,000).
• Profit/loss after financial items totaled SEK -71,265,000 (SEK -64,141,000).
• Basic and diluted earnings per share totaled SEK -0.85 (SEK -1.12).
• The equity ratio at December 31, 2022, was 18,6% (31,7%).

Fourth quarter (10/01/2022–12/31/2022)

• Net sales totaled SEK 4,295,000 (SEK 1,344,000).
• Profit/loss after financial items amounted to SEK -19,618,000 (SEK -19,584,000).
• Basic and diluted earnings per share totaled SEK -0.15 (SEK -0.30).
• The equity ratio at December 31, 2022, was 18,6% (31,7%).

Significant events in the fourth quarter of 2022

• In October, CLS received an order of approximately SEK 5.5 million from its global distributor ClearPoint Neuro for products for the ClearPoint Prism™ Neuro Laser Therapy System. Most of the products were delivered and invoiced in the fourth quarter.

• In November, CLS carried out a directed offset issue of shares to the lenders Modelio Equity AB, Lubrica Equity AB and Formue Nord Fokus A/S following the request for conversion of loans totaling SEK 4.5 million.

• An Extraordinary General Meeting decided in November to amend the Articles of Association regarding the size of the share capital and the number of shares. The Board of Directors was also given the authorization to decide on the issuing of new shares/convertible bonds/warrants during the period until the next Annual General Meeting.

• CLS announced in December that the first patient with a glioblastoma brain tumor had been treated with MR-guided laser surgery (MRg LITT) in the CLS sponsored study underway at Skåne University Hospital.

Significant events after the end of the period

• In early 2023, Skåne University Hospital treated three additional patients with glioblastoma. A total of five patients will be treated in the study.

• The twentieth and final patient was treated in the Phase 1 clinical trial conducted by Urological Research Network, LLC based in Florida, USA. The study uses the CLS TRANBERG® Thermal Therapy System in combination with Focalyx® Fusion.

• In January, CLS carried out a directed offset issue of shares to the lenders Modelio Equity AB, Lubrica Equity AB and Formue Nord Fokus A/S following the request for conversion of loans totaling SEK 3 million.

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

• In February, CLS signed a letter of intent with HALO Precision Diagnostics in the US for an initial post-market study with up to 25 patients to evaluate the TRANBERG Thermal Therapy System for the treatment of prostate cancer. CLS and HALO will then begin discussions on the procurement of the system for use in some of HALO's 16 nationwide clinics.

Comments from CEO Dan J. Mogren

I am very pleased with how CLS employees supported our global distributor in the last quarter of the year with the rollout in the US of the ClearPoint Prism Neuro Laser Therapy System, which is the new brand name for CLS laser ablation systems with MRI guidance in neurosurgery. We delivered hardware and sterile disposables as part of the SEK 5.5 million order we received in October. Employees from the Lund headquarters also conducted training of ClearPoint Neuro's clinical application specialists and sales representatives and assisted them on-site at the US clinics. The system is now being tested widely, for both brain tumors and drug-resistant epilepsy, at a number of selected clinics. This is in order for ClearPoint Neuro, provided the results are satisfactory, to fully launch the system in the US market in 2023.

Great market potential for MRg LITT in the US

As mentioned previously, I feel very confident in our choice of ClearPoint Neuro as a global distributor in the neurosurgery field. MRI-guided laser ablation of both epilepsy and brain tumors is a newly-established market segment with great potential, and CLS is an early entrant. Using ClearPoint Neuro's platform with over 60 installations in neurosurgical centers in the US, the company is well positioned to achieve its goal of making the ClearPoint Prism Neuro Laser Therapy System one of the leading products in the MRg LITT market in the US within the next few years. By 2032, it is estimated that 10,000 people per year with brain cancer or drug-resistant epilepsy will be treated with MRg LITT in the US. That is an increase from the current figure of around 2,000 patients. The total market consists of approximately 26,000 annual cases of brain cancer and 15,000 annual cases of drug-resistant epilepsy, and a further approximately 150,000–200,000 patients with untreated drug-resistant epilepsy.

The market is driven by a strong demand to perform procedures in a minimally invasive way without the use of traditional open surgery, which poses significantly higher risks to patients and does not allow access to hard-to-reach, often deep-seated, areas of the brain. Together with ClearPoint Neuro's stereotaxy solution, we have a competitive offering that is the only one-stop-shop solution on the market. This means more efficient use of time and resources in clinics.

Four patients with glioblastoma successfully treated in CLS study at Skåne University Hospital

Our collaboration with ClearPoint Neuro also continues in the CLS-sponsored clinical trial of MRI-guided laser ablation treatment of glioblastoma at Skåne University Hospital in Lund. Glioblastoma is the most common and aggressive form of brain tumor, and in Sweden 300–400 patients are operated on annually, using open surgery. The first patient in the CLS study was treated in December, and by February, three more patients had been treated out of the five patients planned to be included in the study. According to Dr. Peter Siesjö, consultant neurosurgeon, professor at Lund University and principal investigator for the study, there are great advantages to the new approach enabled by CLS and ClearPoint Neuro products. This is what he said in a press release published by Skåne University Hospital in January:

“We have been planning for this technology for several years, and I am very happy that we can now treat patients who have hard-to-reach brain tumors. In the past, we have not been able to do more for these patients because the risks of traditional surgery are too high.”

Skåne University Hospital is the first hospital in Europe to test the method where the entire operation is performed inside the MR scanner. The operating room has been adapted and rebuilt to perform laser ablation treatment of brain tumors in the hospital's routine care, proving their belief in the CLS and ClearPoint Neuro system and that this can become a permanent solution for the treatment of this patient group.

CLS continues market entry in urology

Ongoing clinical trials of the second generation TRANBERG Thermal Therapy System for laser ablation treatment of localized prostate cancer are progressing according to plan. To date, we have treated 22 of the planned 30 patients in the ultrasound image-guided studies in Magdeburg, Germany, and Florida, USA, and 53 of the planned 65 patients in the MRI-guided studies in Nijmegen, the Netherlands, and Toronto, Canada, respectively. At the current recruitment rate, it is expected that these studies will be completed in 2023. The purpose of the studies is to allow users to evaluate the system as part of their decision to purchase it.

In addition, they generate clinical evidence to support the market establishment of the technology. For example, Sangeet Ghai, MD, who is leading the TRANBERG Thermal Therapy System study at Toronto General Hospital, presented promising interim data based on a 24-month follow-up at the Radiological Society of North America's Congress held in November 2022 in Chicago, USA.

Cost development

Costs developed as expected in the fourth quarter, and overall costs increased in 2022 compared to the previous year. Higher costs are mainly driven by the implementation and maintenance of a new quality management system that complies with the new Medical Device Regulation (MDR) and our clinical trials. In addition, higher costs are due to our commercialization and sales activities.

However, we have introduced efficiency projects aimed at reducing costs in key functions, to provide additional resources for our commercial build-up, particularly in the US. In 2023, we expect to see an increase in personnel-related costs, which will be offset by a decrease in other external costs. Overall, we expect costs in 2023 to be at a comparable level to 2022.

Long-term financing

During the fourth quarter, we continued to work on the long-term financing for CLS 2023 to 2024. The aim is to pay off our loans and thus reduce our interest costs. This will be done both through sales revenue and through external capital contributions. As a first step, we look forward to the holders of the TO 5 B warrants taking advantage of the opportunity to subscribe for new shares in the company during the subscription period that runs from 14 through 28 February. We will then review the terms of the TO 4 warrant (10,182,405 options) which will be available for subscription of new shares in the period 11 through 25 April.

Upcoming milestones

In 2023, we will place increasing focus on scaling up the commercial rollout in the US. The reason for investing so heavily in the US market is that we see that we are best placed to generate sales revenue in the US urology and neurosurgery market, which is also the largest in terms of overall market potential compared to other markets.

A further goal is to expand our commercial partnerships with market leaders in image guidance and stereotaxy for the urology segment. We are also conducting ongoing discussions with the US National Institute of Health to establish a collaboration to evaluate the TRANBERG Thermal Therapy System for focal laser ablation (FLA) of prostate tumors using MR-fused ultrasound as image guidance.

Finally, we also look forward to obtaining clearance from the Health Sciences Authority in Singapore for the use of the next generation TRANBERG Thermal Therapy System in prostate cancer and 510(k) clearance from the FDA in the US for the use of the TRANBERG Thermal Therapy System with Thermoguide Workstation in prostate tissue ablation with MRI guidance. The 510(k) clearance makes CLS the first in the world to commercially launch MRI-guided laser ablation of prostate cancer.

So, we have an exciting 2023 ahead of us, and look forward to sharing many important advances with the market as we pass clinical, regulatory and commercial milestones.

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 February 23, 2023 at 17:00 CET.

For more information, please contact:

Dan J. Mogren, CEO, Clinical Laserthermia Systems AB (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