2cureX AB (publ) (2CUREX) Earnings Call Transcript & Summary

Yes. I think we are online and ready to start. So Tonni, will you please...

No, Ole will start.

Ole will start.

Good evening to everybody, and welcome to this 2cureX webcast and Q&A. It's a while back when we had the last webcast, but we think it's very important to update everybody on where we are today. This morning, we had an extraordinary general meeting, where we elected 2 new board members, both of them, Nat Hutley and Dan Honeywell are here today. Let me start the presentation by showing you the agenda for the meeting. We will present to you the outcome of this morning's meeting, a meeting that was held in Malmö, Sweden. Thereafter, I will present to you the transaction, I would say, transformation of 2cureX. And then our new Board members, Nat and Dan, represent to you a new business model for 2cureX. And at the end, [ that ] will be opened for any questions you may have. So let me give the mic to our Chairman, Tonni Bülow.

Thanks Ole, and hello, and good evening, everybody. To this later briefing in 2cureX AB. Pleased to meet you all by this electronic media here. And we have a relative short agenda tonight, really focusing on the outcome of the AGM this morning here. As Ole said, we elected 2 new board members, Nat Hutley and Dan Honeywell, they will have a chance to introduce themselves after me. But I can say these 2 gentlemen here from London, U.K. brings a lot of experience and skills that we need to help transform 2cureX AB to a new commercial platform for bringing the latest and most prestigious precision oncology diagnostics to the world. And they will explain this business model later. So back to you Ole.

Please, Nat and Dan, maybe you will present yourself. Should we have Nat first?

Yes. No, I'm very happy to go first. So thank you, Ole and Tonni. And thank you, everyone, to 2cureX. I'm very happy to be part of this journey, and I'm very excited for the future. So my background, over the last 5 years, I've been focusing on med tech and biotech investing with a particular focus around robotics. I had a growing fascination in organoids. And that's really where this journey began. So at the moment, I'm focusing on that area. And I've had a very diverse background, having lived in many different countries all over the world and done some interesting things. So this is going to be a journey. It's the beginning of the journey. I appreciate that for many of you on this call. It's been a long journey already. But I'm very much looking forward to working with the team at 2cureX and to bring this company forward to where I believe it should be. So I'll hand over to Dan, and it's very nice to meet you all.

Thank you, Nat. It's a great pleasure to be here. Good evening to everybody. Thank you, firstly, to the 2cureX team for placing their trust in myself and in Nat. And as Nat says, this is a wonderful opportunity to truly take this company to the next stage of the journey. My background and experience comes from 2 sides, one on the advisory where I worked with an advised start-ups through to Global Enterprise on strategy and innovation, more and more on AI. And also from the founder side of the table where I've grown a business from an idea through to $100 million-plus valuation, then I exited that company in 2022. That was a med-tech company focused on oncology diagnostics. So I also understand a little bit about the process that is required from concept through the [indiscernible] design all the way through to the regulatory approvals. On the personal note, I invest in and advise in [indiscernible] space. I have a clinic on [ Harley ] Street focused on pain treatment. I have a precision supplement nutraceutical business. and I also advise on multiple other companies in that space. So it is my pleasure to be here, and I look forward to working with you all as Nat says, on this long winding journey, but there is a great opportunity in my mind to create a category defining business here and all that, that entails, including capturing the majority of the market share over time. So it's a great pleasure to be here, and thank you very much for the time.

Thank you to Nat and Dan. It is a great contribution to our Board. We really look forward to it already tomorrow. We have our first board meeting. So we are sort of working actively immediately. Let me jump to the next slide that I think some of you might be interested in, and some of you might be depressed, obviously. The share price of 2cureX have been a little bit of a roller coster ride. But I think it's very important when you look at this slide, where the blue graph is 2cureX. The black is health care companies at First North Stockholm. What you will see is from the very beginning, it starts when we IPO-ed in November 2017. We actually did okay with regard to the general index, but then we actually did shoot above it. And we actually been above the index all the way until 2023 May-ish. Though we have to admit, we really went into trouble. And I know that a number of you have lost money. And this is extremely unfortunate, and we hope to do something about it. Why did that happen? The major reason was that we chose a wrong commercial model. The technology we have was strong, and that is indicated by the very positive influence on the share price over the last several years where we developed the technology. But we picked a commercial model that were based on distributors that just failed. That is what we want to change now. Now the company that was listed in 2017 was actually 3 companies. There was the Swedish 2cureX that is a listed company. Under that, there is the Danish 2cureX, and there is a small subsidiary in Germany, Hamburg or Hamburg, Germany. The Danish company were doing the development and the German took care of partnerships in Germany. When you saw the share price development in the last slide, it was really difficult for us with such a low share price to raise funds on the stock market. We actually tried. We tried several months in the last bit of 2023. I would just have to admit that we could not raise the funds necessary to run all 3 companies. So we then said, "Okay, we may have to split 2cureX into 2 blocks." We may have to -- the Swedish-listed company as one and then the Danish with this subsidiary as another one with 2 different business models. To do this, we had to get help. We received help from one of the biggest audited companies in the world, Ernst & Young, and we simply said, "If we're going to make this split, would you please give us a valuation?" How much is the company worth, how much is the Danish German company worth if we need to spin it out. An 18-page long document from Ernst & Young said that the company is as a whole, SEK 5.6 million. This was actually the share price plus 10%. And I would say, they dived into all details about the company, the situation on the stock market and said that is the price. We then had an Annual Meeting on July 1, where we asked the general meeting, "Are you prepared to sell the company for SEK 5.6 million to a consortium of investors." Investors that include Nat, as you've seen here, and it also includes some our Swedish shareholders. And there, the answer was yes. We then also decided and stated here that we actually wanted to distribute the proceeds for this sale of the subsidiary, Danish 2cureX, to all shareholders pro rata. Obviously, in accordance with the Swedish Companies Act, Aktiebolag. And I can say we are in the midst of that process. There will have to be a new general meeting where this is approved, and we have auditors working on the material that will be presented at that meeting. So that's the situation we are in at the moment. We have separated the 2 companies, and they have 2 different business model. And let me just say the business model for the Danish/German company is to develop a decentralized IndiTreat offering, whereas the listed company where you, our shareholders, that is to do the commercialization what we believe the right way. And here, I want to give the word to Nat and Dan.

Ole, before you give the word to Nat and Dan, I just want to say that people should use the Q&A bottom to ask questions.

Yes.

So hello, everyone. Thank you, Ole. And I know that we have been announced here that we're going to announce a new commercial strategy, full business plan. While we can talk broadly about what the intention is a more specific, a more detailed plan will be coming in the coming months. I think it's probably better for us now to take a step back. And really, as an investor in this area and now a Board remember what my what our vision is, what I think the shared vision is. So our belief, and I think that this is supported by the industry, it's supported by Ole and other professionals in the industry. Our belief is that functional -- this form of functional Precision oncology will be ubiquitous across the industry in the future. So we have started with a very small investment into 2cureX, which we intend to significantly increase over the coming periods. We intend to make additional investments in the industry generally and all focused on precision oncology, the creation of tumoroids and organoids, and the automation within that space. I don't think that the share price of 2cureX comes close to what it should be or indeed what it could be. I think we've got a mountain to climb in front of us. But I think that the work has been done already, I would say. I think to give credit where credit's due, the only thing that I would say has gone wrong to date is the commercialization strategy of IndiTreat and 2cureX. And so there's not a great deal that we need to change. There's not a great deal that we need to do, and we have a very clear plan of how we want to execute a direct-to-patient model across the industry. And I think that, that's learning from comparables, industry comparables, and it's executing on the plan that we believe is the winning strategy. So I think that this -- our investment here is the beginning of a number of investments, and we would like to use 2cureX as an investment vehicle to consolidate, acquire and grow precision oncology businesses over the coming years. So that would be the next slide, please. We -- there was a massive drop in the share price. And this did create -- I don't know -- from my perspective, this created an opportunity, which I appreciate might not be a good opportunity or the creation of that opportunity might not be so good. But I'm now very excited about what comes next. So what comes next, there are series of contracts, a series of investments and a series of partnership agreements which the ultimate goal is to automate and distribute at scale, this amazing science, which should be mainstream industry-wide. So I would like to hand over to Dan. Perhaps you could also further introduce yourself and talk a little more. But I think we're very excited about the future.

Thank you, Nat. Yes, I think with the caveat that we have literally been appointed to the Board today, I feel that we need a reasonable amount of time to really get under the -- pardon the pun, under the skin of the business and of the opportunities. However, that said, one of the challenges that we see in the industry generally and actually, in my personal view, why the sector has, in some cases, struggled to attract the types of investments that are required as a scalability challenge. Now scalability can be solved by automation. That's a big technological challenge, but there are also opportunities out there that we see whereby we may be able to partner, acquire, merge, et cetera, with other organizations to achieve the scalable automation that we require to really make this a forceful player in the sector. And we also clearly see a regional expansion as an opportunity. But from my perspective, one of the things that I have been truly impressed by is the expertise, the diligence and the technical capabilities of the team at 2cureX. I believe, having looked at the market as well that the technical approach is correct. And with like Nat, I think this is a common theme across these types of organization, whereby the commercialization is a whole different ball game. Regulatory approval, as I used to tell my Board over and over again, is not a lottery win. It is an entry ticket to the market. You still have to do all of the right things in the right order in order to gain any kind of commercial return. And that's where we'll be placing a very fine focus on all of our efforts at the Board level to drive the right behaviors and the right engagements, the right partnerships and so on to propel this business forward. So really, this is, in many ways, it's a very, very high-level view at the moment. I will just say that we do have a lot more detail and rigor behind this. But we'd ask that you give us a little bit of time for when we share that with you, it's dutifully thought through and we've considered all of the known knowns, all of the known unknowns and put all of the right strategies, teams and investments around the problems that we need to solve before we communicate back to you, our shareholders, because we are fully aware and mindful of the journey you have been on. And we want to make sure that when we communicate with you, we do it in the correct way and in the correct order. I feel that's super important. So that was it for me, team. I wonder who you'd like to bring back in now.

Thank you so much. And I now want to on the Q&A session of this meeting. So as Rosita indicated, please put your questions into the chat. And we will be happy to answer. I'll give you a couple of minutes to sort of present your questions.

We have the first question here. "When will IndiTreat -- be decentralized lab, when will the decentralized IVD-R-certified and ready to go to the market? Until then, we will any this business sales be going to 2cureX AB?

I don't know if I should take that with regard to the IVD-R, which is the new regulatory environment that we live in, in Europe where it has been changed to IVD-R being a very rigorous and restricted regulatory path you need to go through. 2cureX already in a discussion or an agreement with a so-called notified body. And we have delivered in what's called a technical file. And we expect that next year, after -- just after summer that we will have the whole IndiTreat system IVD-R-certified. So you can say that's the development of the system, then it needs to be placed and that comes subsequently. So with regard to the actual sale business case. Now I'm sorry to throw Nat and Dan out on the deepwater this early in the process, but how do you see the active commercialization, both with regard to having some tests done already in the centralized model and subsequent when we have the full decentralized solution?

I think the best way for me to answer that is more anecdotally because the way that I see it, the way that we see it is that the main -- the key difference between the commercialized strategy of old and the new one is I believe that this concept of a direct-to-patient model should not be approached through distributors, rather it should be approached directly to patients. Ole had long discussed this idea or this philosophy, which is at the core of 2cureX, which is there are multiple stakeholders in the business, of which you're constantly reminding us that the patient is why we're all here. I think that the limitations of the test is number of tests you are able to do per year. So I think that the first stage is to make sure that you are running at overcapacity. You have too many tests to handle. That's step 1. And then we need to work out how do we do 10x more, then how do we do 1,000x more. That's the objective. So I know it's not enough detail that perhaps you're looking for, but I think that's it for now.

Thank you, Matt. Right now, we don't have any further questions. So maybe if you have one, use the Q&A button. It seems most coming in. No? No further questions? Then Ole, I will give the word to you.

Let me say this is obviously a completely new situation for 2cureX. And if you have any further questions, please send them to our IR account. So [email protected]. You can put any questions that you may have to any of the gentlemen here are just to the general issues of 2cureX and we'll make sure that we answer them. And so please, to your fellow shareholders to make them aware of this new situation that 2cureX is in. And they may also have questions, then we will be happy to answer them as they come in. So if that is the end of the questions, I would say thank you so much to the listeners and to our panel, and I look forward to work closely with Nat and Dan in the process going forward.

We just received one question. It says -- let me check here. Two seconds. I need an update here so we can -- just a second. Okay. "Since the patent and the rights of the IndiTreat was sold with the AS, as I've understood the value, does the AB own as it is?

Maybe I should take that one. I think that's a very good question because there might be an incentive that everything have gone with AS, and that's not true. We have a lot of information that is related to the market. We have talked to a lot of oncologists. We have had about almost 200 hospitals we have been in contact with. We have made surveys, a survey with 140 oncologists. All that material is staying with the AB. And so that we have in the AB, a lot of material that we can use with regard to contacting patients directly. We have a website that is owned by the AB. So you can say what have moved is the actual technology. But what have stayed is the knowledge of the market. The -- all our -- actually most of the resources we spend over the last couple of years have been in marketing, have been in contacting hospitals, have been in making agreements with hospitals all that will stay with AB.

Thank you, Ole. Let's just take a second and see if any further questions are popping in. I've just made a refresh. And for now, no further has -- no further question has arrived. It's -- I think you can say that was it.

Okay. Then -- I was about to close it 5 minutes ago. So I will do that now. And again, thank you for attending. And please shoot us any questions you may have to [email protected]. And we will make sure to answer them as fast as we can. So -- and follow us, I'm sure you will see a very positive development of the company. I'm excited. Thank you so much, and have a nice evening.

Thank you. Good night.

Thank you.

Well done Ole. Very good, well done. See you.