Sedana Medical AB (publ), interim report Q1, 2020

Hard work to meet the intensive care needs during COVID-19

Financial Summary January-March

• Net sales during the quarter amounted to KSEK 33 832 (17 814) corresponding to an increase of 90% compared with the same period in 2019.
   
• Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to KSEK 1 204 (-2 641). This corresponds to an EBITDA margin of 3,6% (-14,8%).
   
• Earnings before interest and taxes (EBIT) amounted to KSEK 82 (-3 660) which corresponds to an EBIT margin of 0,2%
  (-20,5%).
   
• Earnings per share before dilution was SEK 0,07 and earnings per share after dilution was SEK 0,07.
   
• Cash flow from operations before changes in working capital amounted to KSEK 161 (-1 834).
   
• Cash flow from investment activities amounted to KSEK -14 243 (-10 681).
   
• Cash flow for the period amounted to KSEK -22 700 (-9 560).
   
• Liquid funds at the end of the period amounted to KSEK 442 553 (149 849).

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Significant events during the period

• In January, the last patient was included in the pivotal IsoConDa-study. Thus, all 300 patients have been included in the European study which is expected to show” top-line” results during Q2 2020.
• Sedana Medical’s CEO Christer Ahlberg sold 30 000 shares in the company and entered into a 12-month lock-up agreement for his remaining 200 000 shares. He thereby remains as a committed long-term owner.

• Sedana Medical obtained market approval for AnaConDa in Mexico during January. The company’s Mexican distributor Goba will begin sales work in the next few months and in parallel Sedana Medical will evaluate the possibility of registering the drug IsoConDa. Goba will also work for a registration of AnaConDa in Colombia.
• Sedana Medical established its own direct sales organization in Benelux.
   
• Sedana Medical donated AnaConDa and accessories to two hospitals in Wuhan and Zhejiang, China, for anti-epidemic use and evaluation of the effects of inhalation sedation with AnaConDa on severely ill Corona virus affected patients.
   
• Sedana Medical announced on March 30 that the company sees increased demand for AnaConDa as a result of the Covid-19 pandemic. The company forecasts a sales increase of about 50 percent for the first quarter of 2020 and about 100 percent for the month of March, compared to the same periods last year. Due to the Covid-19 pandemic Sedana Medical sees a slight risk of delay of the compilation of the IsoConDa study until the beginning of the third quarter of 2020. However, this would not necessarily mean that Sedana Medical's application for European market approval for the drug candidate IsoConDa is delayed. Sedana Medical still expects to keep the timetable and submit the application in the third quarter, or early in the fourth quarter of 2020 and an approval during the second half of 2021.

Significant events after the period

• As sales during the last days of March turned out to be significantly higher than expected, which led to that the company is reporting significantly higher sales for the first quarter of 2020 than announced on March 30, the company already on April 6 announced in a press release that sales for the first quarter of 2020 was SEK 34 million, which corresponds to a growth of around 90 percent compared to the same period last year.

Outlook 2020

• Since the end of the quarter Sedana Medical has in April seen continued positive sales growth in line with the development in March as a result of the COVID-19 pandemic. Sedana Medical is unable to make an assessment of the sales trend for the full year 2020 due to the uncertainty arising from the COVID-19 pandemic.
   

CEO comments

The first quarter of 2020 was largely marked by the covid-19 pandemic. With our treatment you can say that we are in the center of events and there are a couple of reasons why demand for our treatment has risen sharply as a result of the pandemic.

To begin with, our treatment - sedation of mechanically ventilated patients - is exactly the one that severe covid-19 patients need. These severely ill intensive care patients are normally ventilated for a very long time and sedated for up to two weeks. To succeed with a long and deep sedation, a mixture of several intravenous drugs is usually required, which in itself entails risks. By choosing inhaled sedation with AnaConDa, the patient can be sedated with volatile drugs (such as isoflurane) that allow for deep, safe and effective sedation, and also release syringe pump capacity which has become a shortage in intensive care during the pandemic.

Furthermore, long-term sedated patients who have been intravenously sedated are often difficult to awake. It can take a very long time, up to several days. With inhaled sedation, the patient wakes up within a few minutes, usually within an hour, regardless of sedation time. This is because isoflurane is not metabolized in the body's organs but is eliminated through the lungs, with minimal degradation in the body. Patients usually wake up easily and are relatively alert after inhalation sedation, releasing resources from the intensive care that usually take care of awakening patients with side effects such as delirium, hallucinations, nightmares, dementia-like conditions and agitation. Through faster and easier awakening, the patient flow in the intensive care unit can be increased, which has been important during the pandemic when access to intensive care beds has been limited.

Another feature of inhaled sedation that has also driven demand for AnaConDa is the potential anti-inflammatory effect previously shown in studies in ARDS patients. The theory is that inhaled sedation reduces inflammation in the lungs which improves oxygen uptake. ARDS (Acute Respiratory Distress Syndrome) or lung failure is the condition that often affects the severely ill covid-19 patients. In October last year, we announced that Sedana Medical is co-financing the world's largest multicenter study of 700 ARDS patients to demonstrate that inhalation sedation with AnaConDa has lung-protective properties, shortens ventilator time, and higher survival. 

Overall, demand for the quarter increased dramatically. We had a turnover of SEK 34 million, which is close to doubling compared to the same period last year. The strong and rapid increase in sales has presented the company with a number of positive challenges. The pandemic has made our contacts with customers more difficult, but in response to that, we initiated our e-learning platform available on our website in the quarter, which was developed earlier but now launched faster than first thought. Educating new customers via web and phone is new to us, and we have worked a lot on how that process can be scaled up.

We have also worked a lot to ensure our delivery capacity. Both our contract manufacturers in Malaysia and other global subcontractors have had production and delivery restrictions, but in close cooperation we have succeeded in obtaining exceptions for continued and increased production, and for export from the country of production. In order to meet the strong demand from our customers, we have responsibly split our deliveries so as not to risk certain hospitals standing without products while building up stocks elsewhere. So far, we have succeeded in delivering according to customer expectations.

The interest in our treatment has, to say the least, increased sharply as a result of the pandemic. Both volumes and demand are rising, and inquiries are coming in from both existing and new markets. As an example, in February, we opened our own direct sales organization in Benelux and sales got off to a fast start. In Italy, where we do not yet have our own direct sales organization, we gained several new customers during the quarter and in markets such as the UK, Spain, the Nordic and France we see strong demand. Germany remains our largest market and demand has also increased significantly there.

In addition, we are currently receiving a number of inquiries about clinical studies, retrospective data collection and other studies to further clarify the benefits of inhaled sedation. Of course, it is extremely gratifying while at the same time taking on some administrative resources. We try to prioritize wisely between all the proposals that come to us. Sedana Medical has previously provided support for studies that, in addition to our own registration-based studies, contribute in the long term to strong scientific support for inhalation sedation with AnaConDa.

One of the most important milestones of the quarter was that the last patient in January was included in our registration based IsoConDa study. In the light of the pandemic, we are pleased that the clinical part of the study could be completed in January. However, the administration remains to go through the data, and since access to our examiners is naturally limited by the pandemic, as previously announced, we see some risk of delaying the compilation of the study. We expect the topline result to be presented at the end of the second quarter or early in the third quarter of this year. However, we still expect to keep the timetable and submit the application in the third quarter, or early in the fourth quarter of 2020, and that we could thus obtain approval during the second half of 2021.

Overall, the quarter has been extremely intense. The effects of the covid-19 pandemic on people's lives and health can be devastating and it is very rewarding to work in a company that can help in this global challenge. The pandemic has accelerated interest in our treatment and at the time of writing we see no slowdown in this. I look forward to coming back to you.

Christer Ahlberg, President and CEO

Please find the full interim report at: www.sedanamedical.com under Investors/annual & interim reports.

Sedana Medical will hold a telephone conference at 09:30 am (CET) Thursday May 7, 2020. 
To participate, please dial: +46 8 5055 83 68
Or join us at: https://tv.streamfabriken.com/sedana-medical-q1-2020

For additional information, please contact:

Christer Ahlberg, CEO, Sedana Medical AB (publ)
+46 70 675 33 30
christer.ahlberg@sedanamedical.com

Maria Engström, CFO, Sedana Medical AB (publ)
+46 70 674 33 30
maria.engstrom@sedanamedical.com
 

Sedana Medical is listed on Nasdaq First North Growth Market in Stockholm. 
The company's Certified Adviser is Erik Penser Bank, +46 8 463 83 00, certifiedadviser@penser.se.

This information is such that Sedana Medical AB (publ) is obliged to disclose pursuant to the EU Market Abuse Regulation. The information was released for public disclosure, through the agency of the contact persons above, on May 7, 2020 at 07:00 am (CET).

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Sedana Medical AB (publ) has developed and sells the medical device AnaConDa, for the administration of volatile anaesthetics to mechanically ventilated patients. A major clinical registration study is currently ongoing to obtain market approval in Europe for inhalation sedation in intensive care units with the pharmaceutical IsoConDa® (isoflurane).

Sedana Medical has direct sales in Benelux, France, Nordics, Germany, Spain and Great Britain as well as external distributors in the rest of Europe, Australia, Japan, Canada, Mexico and South Korea. The company headquarters are based in Stockholm, Sweden with R&D operations in Ireland.