Sedana Medical AB (publ), Interim report Q3, 2019

Strong sales growth and good progress towards registration

Financial summary, July - September

• Net sales during the third quarter amounted to KSEK 16,416 (12,682) corresponding to an increase of 29% compared with the same period in 2018.
• Earnings before interest, taxes, depreciation and amorti­sation (EBITDA) amounted to KSEK -4,029 (-964) KSEK. This corresponds to an EBITDA margin of -25% (-8%).
• Earnings before interest and taxes (EBIT) amounted to KSEK -5,093 (-2,051), which corresponds to an EBIT margin of -31% (-16%).
• Cash flow from operations before changes in working capital amounted to KSEK -3,913 (-301).
• Cash flow from investment activities amounted to KSEK -12,733 (-8,502).
• Cash flow for the period amounted KSEK -15,250 (-6,390).
• Liquid funds at the end of the period amounted to KSEK 122,152 (175,151).

Financial Summary, January- September

• Net sales during quarter 1-3 amounted to KSEK 51,589 (42,654) corresponding to an increase of 21% compared with the same period in 2018.
• Earnings before interest, taxes, deprecia­tion and amortisation (EBITDA) amounted to KSEK -9,000 (-2,758) KSEK. This corresponds to an EBITDA margin of -17% (-7%).
• Earnings before interest and taxes (EBIT) amounted to KSEK -12,130 (-5,788), which corresponds to an EBIT margin of -24% (-14%).
• Cash flow from operations before changes in working capital amounted to KSEK -7,840 (-1,511).
• Cash flow from investment activities amounted to KSEK -36,829 (-21,696).
• Cash flow for the period amounted KSEK -37,386 (89,655).  

Significant events during the period

• Sedana Medical entered into a distribution agree­ment with the Indian distributor Hansraj Nayyar Medical. Sales will commence in the fall and a registration process will start in parallel. Hansraj Nayyar has committed to a first framework order of 25,000 euros. The Indian market potential for sedation in intensive care is estimated to be around two million ventilation days annually.
• Sedana Medical received approval for the use of AnaConDa in children by the European notifying body BSI Group. The approval also means that AnaConDa can be used in patients with severely impaired lung capacity.

Significant events after the period

• Sedana Medical completed a private placement of 2,896,000 shares. The subscription price for the shares in the private placement was SEK 129.50 per share. Through the targeted new issue, which was several times oversub­scribed, Sedana Medical received SEK 375 million before transaction costs. Investors in the new share issue consist­ed of a number of Swedish and international institutional investors, including AXA IM, Handelsbanken Fonder, Joh. Berenberg Gossler & Co. KG (Berenberg), Swedbank Robur, Third AP Fund and Öhman Fonder.
• Sedana Medical co-finances the world’s largest multicenter study with AnaConDa in France by supplying the investigators with AnaConDa and accessories. The primary purpose of the study is to show that inhalation sedation with AnaConDa has lung-protective properties, shortens ventilator time and higher survival in severely pulmonary intensive care patients.
• Sedana Medical no longer communicates profit targets for the period leading up to the registration of IsoConDa in Europe and clarifies that the sales target of SEK 500 million three years after the European registration only applies to Europe. Sales outside Europe will be in addition to this target.
• Sedana Medical AB (publ) ‘s Board Member Michael Ryan has decided to resign on November 12, 2019. The Nomina­tion Committee of Sedana Medical will begin work to find a successor.

CEO comments

OUR THIRD QUARTER has been intense, both in terms of clinical development and preparation for our European launch. During the quarter, we also made progress in Asia through a distribu­tion agreement in India. In terms of sales, the third quarter was a good quarter with growth of 29 percent.
 

The most important progress in the quarter have mainly been made in the area of clinical development and I particularly want to highlight the work on the European study. The patient recruitment proceeds as planned and the work of compiling and consolidating the results has begun. Thanks to the three Slovenian clinics that were included in August / September, we expect to be able to complete the study according to plan in December 2019 or in January 2020. With that in mind, we will be able to communicate the overall results about 3 months af­ter the last patient in. We will be able to submit our application for a market approval in the summer of 2020 in 16 European countries in a first registration round and probably we can have a European market approval in the second half of 2021.
 

When it comes to the preparations for our pediatric study, they have progressed well during the quarter. The most important milestone is that we got AnaConDa approved for use in children, which is a prerequisite for starting the study in 2020. The approval also means that AnaConDa can be used in patients with severely impaired lung function and all together, this means that we have no restrictions on the use of AnaConDa, and we can address the entire market for mechanically ventilated intensive care patients. The pediatric study ensures a complete application for registration and thus ten years of market exclusivity in the EU. We are also pleased that the European Medicines Agency EMA wants the study protocol to be designed to show that inhalation sedation via AnaConDa is better than midazolam, which is today’s standard treatment for children. That means our therapy can be evaluated to be a first-hand treatment.

We also had the first meetings with the investigators in the pediatric study. At these meetings, the study protocol is reviewed and discussed in great detail in order to optimize investigators involvement. In its way, our clinical activities coincide with our commercial ones. Starting the pediatric study in several countries could be regarded as a pre-launch. We have close to 20 clinics in Germany, Sweden, France and Spain where we expect that the knowledge and interest in using our therapy will be huge at the time of launch.
 

In terms of our commercial work, we are now increasing the pace and we are developing our medical, sales and marketing departments in order to prepare for the launch of IsoConDa with our own sales organization in the largest European markets. This is the main reason why our expenses increased during the quarter. For example, a first major English seminar was held in Birmingham. It was very well attended by pro­spective customers. About 70 physicians and other healthcare professionals set aside a full day to hear about the benefits of inhalation sedation. Through the seminar we started our work in the UK seriously and we continue to participate in major international congresses. During the quarter we participated, amongst others, at ESICM in Berlin, which is one of the world’s largest intensive care congresses.
 

After the end of the quarter, we made a successful private placement of SEK 375 million before costs. The money will primarily be used to finance the way to market approval for AnaConDa and IsoConDa in the USA. The combination regis­tration of AnaConDa and IsoConDa includes activities such as two clinical studies involving a total of approximately 500 patients, human factors validation programs, toxicity studies, safety database, adaptation of the European pediatric study to FDA requirements and application for market approval (NDA).
 

We started the human factors validation program together with Harvard during the quarter and expect it to be completed in the summer of 2020. As far as the toxicity studies are con­cerned, we have started preparatory investigations and expect these to be ready in the summer of 2020. This enable us to plan to submit our IND application to the FDA in the fourth quarter of 2020 in order to begin clinical studies in 2021 in USA. We have already begun to find clinics that want to collaborate with us and work closely with advisory boards at each clinic. Our ambition is to have a good geographical spread at our American clinics in order to secure the commercially important regions. The plan is to reach US approval in 2024 and around 2022 we will decide whether to launch ourselves or together with local partners.

After the end of the quarter, we also announced that we are part-financing the study SESAR, the world’s largest multi-center study, with AnaConDa. The purpose is to show that inhalation sedation with AnaConDa has lung protective prop­erties. The study covers 700 patients and has the potential to dramatically change the perception of inhalation sedation in relation to intravenous sedation. The study is being conducted in France and is sponsored to a large extent by the French Ministry of Health and the EU, which we consider to be a huge success for our therapy. If the study supports the hypoth­esis that inhalation sedation via AnaConDa has therapeutic effects, leads to shorter ventilator treatment and a higher survival rate, it will be an important breakthrough for ICU patients worldwide with severe lung disease.
 

In addition to our ambition to grow 20% per year before the registration of IsoConDa in Europe, we have previously also stated that we will deliver an EBITDA result that is not significantly negative. As registration gets closer, the work of building up larger medical, sales and marketing organizations in and outside of Europe has intensified and we no longer provide an EBITDA forecast for the time before registration. We clarify that our sales turnover target of SEK 500 million and the EBITDA margin target of about 40 percent three years after the European registration of IsoConDa only apply to Europe. Sales outside Europe, for example sales in China and Japan are not included in this target and we do not com­municate forecasts for these markets at this time.
 

In summary, we have experienced another strong quarter that takes us closer to our goals; to register IsoConDa in Europe in the second half of 2021, to obtain market approv­al in the US in 2024 and to establish ourselves in the major markets in Asia. The goals are a first step towards our vision of making inhalation sedation with AnaConDa and IsoConDa a standard treatment for mechanically ventilated patients in intensive care worldwide. Our estimate of the total market potential for inhalation sedation in intensive care is SEK 20- 30 billion annually. Through the private placement, we got a number of new investors and I want to take this opportunity to thank you for the trust given to us by both old and new owners. I look forward to the continued journey with you all.
 

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 13:30 am (CET) Thursday August 22, 2019. 
To participate, please dial: +46 8 566 42 705
Or join us at: https://tv.streamfabriken.com/sedana-medical-q2-2019

For additional information, please contact:

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

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

Thomas Eklund, Chairman of the Board, Sedana Medical AB
+46 70 824 20 25
thomas.eklund@investorab.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 August 22, 2019 at 7:00 a.m. (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 the Nordic countries, Germany, France, Great Britain and Spain as well as external distributors in the rest of Europe, Canada, Australia, Japan and South Korea. The company headquarters are based in Stockholm, Sweden with R&D operations in Ireland.