Bonesupport Holding AB (publ) (BONEX) Earnings Call Transcript & Summary

Let's start. Welcome, everyone. Big welcome to the 2023 Capital Markets Day for Bonesupport. And extra big welcome to you that -- all of you that made it here in the snow storm. And for those all of you that were running around Turegatan earlier, we're extra pleased to see you here, making it to the final location. So let's get started immediately. There will be some people dropping in. They can use the back entrance. We put together an agenda really to reflect what we would like to communicate today. Hopefully, some of you have already seen our press release from 12:00 and know the main themes for today. I will provide a strategic update and after that, my colleague, Dr. Michael Diefenbeck will give our clinical overview and status update. Michael, if you could please stand up, so everyone will see you. Hopefully, some of you recognize Michael and met him before. That will follow with question and answers after we go into a coffee break. Now unfortunately, we were supposed to have also Stephen Quinnan here. Dr. Dr. Stephen Quinnan from the Paley Institute in Florida, he could not make it. So he will join us digitally. He will be on the screen, and he will share a couple of patient cases, and he has quite an extensive experience on CERAMENT and CERAMENT G that he will share with you. After that, we will finish off with a short financial update and status by myself and Hakan Johansson, please Hakan if you'll stand up. You recognized Hakan, very good. So I'm also joined here with a couple of more colleagues. We have Annelie Aava Vikner, who is our EVP of Global Marketing. And she is at the back of the room. So if you turn your head to the left, you will see her strolling down the aisle. We also have Dr. Michael Wrang Mortensen, who is our Executive Vice President of R&D and operations, great to have you here; and [indiscernible] -- sorry, I missed [indiscernible]. Charlotte Stjerngren who is going to moderate our session who is our outmost professional IR and communication support. So let's get to it. Why did we feel that it was a good idea to have a Capital Markets Day? Well, first of all, it's been a year. We had the last Capital Markets Day in September 2022. Before that, the Capital Markets Day was in 2019. At the first Capital Markets Day, we set out a new strategy. We showed how we have reorganized the European organization. We gave a pathway for CERAMENT G. Now we ticked all those boxes. All of those topics that we spoke about have been fulfilled actually. And a year ago, we said we're going to focus on the CERAMENT G rollout in the U.S. And for those of you that follow the company, you've seen that the market penetration and uptake of CERAMENT G has been rather strong. Also at last year's presentation, we mentioned that we're not going to talk about innovation and business development that we were going to come back to that, and that's exactly what we do now. We have decided to give a 2-year perspective. the team under Michael Wrang and the entire company is working on a lot of very interesting innovation and business development topics. Later in the presentation, Michael Diefenbeck is going to give an overview on all the preclinical and clinical studies that are done with bone active substances -- bone active drugs. And this is a research that continues. And probably at the next Capital Markets Day, we will share more details on this as we have then more details on the data and can give also firmer time lines. So some of you know here we're looking at a focus in the both extremities and in spine with active substances as well as osteoporotic fracture, which is a quite interesting and attractive market segment with about 100,000 procedures a year. So let's dive into the business and speak a bit more about the lead into this Capital Markets Day. As you know, the business momentum is currently very strong. You've all seen this slide and especially those -- sorry, the quarterly reports that we have released recently have also heard me and Hakan mentioned that sales is taking off very nicely in the U.S. with CERAMENT G as we are gaining new customers. Customers that before had not trying CERAMENT and also, we see with the existing customers more and more use. And I'll come back to this point. I will speak a little bit more about this dynamic. Sometimes when I show this slide, I feel that the attention on the U.S. is trumping also the great European numbers. So allow me to show a slide which we haven't looked at before. This is only the European numbers. On the previous slide, the European sales growth looks almost flat, but indeed, it's actually taking off very nicely. You can see the -- a note when we reorganized our European sales, when we staffed up, when we increased our sales team in the direct market. You can see how sales almost immediately responded to that and then were dampened by the pandemic before the health care system, again, got started, started to dig into that massive backlog of elective surgeries and with a strong momentum. So if we look at last 12 months compared to a year ago, the European business is growing with 27%. And the antibiotic eluting products, that's the AX grew with 33%. If you look 2 years back, the antibiotic eluting products are growing with 80%. Many of you have asked also what are the next steps in Europe? And what you're going to see during next year? So we are going to gradually also start increasing with more sales reps. We're going to add more people simply because some of the territories are becoming too big for the direct sales team. So we need to split them -- divide them so that we can probably take care of our customers. We have currently 26 people direct in sales, then we have support function, customer service, of course, marketing, administration, 26 people are out selling and this means that sales per head is about EUR 400. So with long experience in the orthopedic industry, what is the -- when does the sales start to flatten out in sales per head around? Between EUR 750,000, up until EUR 1 million. So you can see already here, we have plenty of capacity left with the direct sales teams. But regardless, we see the opportunities. And as you know, when we see the opportunities, we keep investing, and we also keep adding people to safeguard that, that growth continues. So let's start the actual presentation. And look, what do we have to communicate today. First, I would like to speak about the market size. We have acquired and commissioned research and data to validate the market sizes. These have -- some of these sources are public. Others have been specifically tailored for us. So if you look at the total universe of bone grafts. And the definition here is, a graft is a material that is placed on the injured bone inside the cavity when the bone otherwise could not heal by itself. So in the total market, as we define it, there are 3.8 million procedures. And here's how they divide. 70,000 is cranial maxillofacial, that's the skull. We have excluded dental. Dental is not part of this. Dental is about 2.2 million grafts a year, but with very small volume, sometimes less than 1 milliliter. So the market divides with spine 58% and extremities 40%. And extremities is the area that we have focused on. that's where you've seen also most of the very solid clinical studies that the company has made and also that has been commissioned by many of the university clinics and that's where we have made the biggest penetration. But as you saw from the announcement at 12:00, we're also now starting the preparations to enter the spinal fusion segment. The right bar, you see how the different market segment splits per region. And the U.S. is, of course, the most developed market in the world. You could also notice that spine in the U.S. is significantly bigger. Again, it's a procedure, not in value. If you would do this in value, the gap or the difference to Europe would be even greater. But a very strong reimbursement in the U.S. is driving the high amount of procedures taking place. And in the U.S., there's also open and available statistics showing that back problems is one of the most common reasons for absence from work. This chart is only displaying the figures in spine where there's a graft needed. In total, otherwise, there's 1.5 million instrumentation implants but we're focusing on where there are grafts needed. Okay. So let's then look also at the subsegments under each of the indications. So spinal fusion can be divided into thoracic, cervical or [ lumbar ] procedures. [ Lumbarl ] is the bottom part of your back which is where most of the procedures take place, where most of the people have problems, herniated discs and over mobility. The thoracic is the middle part, you will see some pictures later on, brostryggen in Swedish and cervical is the neck. You see the same for extremities. And here, there are some changes. And before we make changes to any slides like this, we carefully consider it and contemplate it. What we've done here is we have removed the segment before called chronic osteomyelitis. Why? Well, because chronic osteomyelitis actually is divided and exists in all of these. And it comes from whenever there is an infection and that infection is not cured. There's a recurring infection but the origin of the infection is either a trauma, revision arthroplasty, a foot and ankle surgery or a tumor. So when we look at the data available, and there's quite a lot of references here, all the others had chronic osteomyelitis as a subsegment of the different indications. So we've gone with the same way. Chronic osteomyelitis is not an indication by itself, but rather a consequence of someone having, for example, a trauma and then not getting proper healing. I see that the numbers have jumped a little bit. But I think you can all see that foot and ankle is 260,000 revision arthroplasty is 305,000. Here's another revision we've made. In total, there are about 3 million procedures done annually to replace a hip or a knee or an elbow or a shoulder. That's not our market. Our market is about 10% of that where the surgical is wrong or where the patient comes back and the implant is loosening or there's been an infection. Those are the cases where there is more bone loss, and that's where our product fits very well. So we've revised this slightly. And what we've revised mainly is the infection rate. And here's where we made an early mistake in our communication because in the primary surgery, when you remove a hip or a knee and replace it, it's well prepared, so the infection rate is very low. It's below 1%. But if you look at those cases, that goes wrong, that's 305,000 procedures, and this is where the infection rate is quite high because we need multiple surgeries, and there could also be a bacteria that have stuck to that first implant in the first place. So this is the focus segment for us. So we're carving out here really and saying, what is it that is the addressable market for us, but also what are the markets that are directly applicable and attractive for CERAMENT. Now when we speak also about infection incidents and ranges, we should be aware, for example, on spinal fusions, which we will speak quite a lot about today, it can be anywhere between 2% and 6%. But there are numbers going up all the way to 12% and 18%. So when we pick a range, we do it with what is that focused universe of ours and where are most of the clinical studies pointing at because you will find clinical studies that shows both more and less. So if we take trauma, for example, with closed fractures, fractures, the bone is broken, but the skin barrier isn't destroyed, the infection incidence is as low as 1%. While on open fractures, it can go all the way up to 52%, but the average is around 15%. So we always give you references so you know what is the data that we're referring to. And if we take it one step further and also look at what are the key geographies to find the data is not so easy. So when we, on the next slide, I'm going to show you which countries really in detail, not just speak about Europe and the U.S., we're going to do it on extremities. We don't have the data yet here. We know how big the U.S. is for spinal but we need to dig more deep into the numbers for Europe before we can show you that. So this is what it looks like on extremities. This is not spine. It's not cranial maxillofacial, it's only extremities. So here you see the 380,000 procedures in U.S. You see the 390,000 procedures for Europe, and you see how we have divided rest of the world. Now a few things to notice on this slide, there are almost as many procedures in the U.S. as in Europe, but the pricing is significantly higher. This is why the U.S. is the most attractive market and one of our focus markets. We also see that some of the markets where we are direct, Germany, U.K. belong to the biggest markets in Europe. We know France where we are anticipating to a market entry, but it has to come after the conviction study is finished because before that, we cannot secure the kind of reimbursement that we're looking for. And then we have Spain and here is Italy, where we have just set up a hybrid structure, a hybrid system. So we are direct in those markets that are most valuable to us and have also the longest tradition of synthetic bone grafts. See how the pricing differs and you see that France is significantly lower than the German and the British markets. In terms of rest of the world, some of you -- we know that we've entered South Africa, which is just here, Australia. We have business in Canada. All these 3 businesses are growing very nicely, but from a low level. And for the rest of the world, the standard of how to treat this indication is very varying. And in both China and India, huge market, but with very low prices. So this is what the universe looks like. Final details possibility to this is that Europe has a much higher share of autograft where the doctor will take bone from the patient to fill the void and to repair an injury while the U.S. has a higher preference for allograft and demineralized bone matrix as well as synthetic products. So let's look at our penetration before we go into the initiatives. These are market share numbers that we have compiled based on the market intelligence and the market data that we have been able to acquire. I see that I need to speed up a little bit. So if we look in total Europe, we know that it's 390,000 procedures, right? So we can easily see how many of those procedures are done with CERAMENT, 2.4%. We've only scratched the surface. We're only in the start of this journey. If you look at value market share, you can double that or even slightly more than double it. Because autograft doesn't have a value. It's unfortunate. There's procedures that are done, but you don't have a price tag on your hip. So when you look at the amount of money that the hospitals are willing to spend, of course, then our market shares are bigger. But let's look again at the procedures. We know that about 1/3 of the procedures are done with synthetics and in the synthetics in Europe, in total, we have 7% market share already or in value around 14%, not too bad. Now we said probably looking at all of Europe is a bit unfair because we are only in a handful of markets. We're not in France by choice because the reimbursement is not to the level where we think CERAMENT would be given justice. So if you look at the core markets, really the markets where we have been actively promoting CERAMENT for more than 5 years, basically since we did the big reorganization in Europe. Then the market share in total is 3.6%, in synthetic 11%. And if we look in the infection management, either treatment or prevention, it's 8%. And again, you want that in value, you can double it. Let's look at the U.S. Same. So the market share is slightly higher, 2.9% in the synthetic segment, 11% almost. And if we look in the infection management. We know that in 38% of all grafts, local antibiotics are used off label. And again, I show this just to explain that this journey has just started. Let me spend just a few seconds on speaking about the market dynamics. This statement here, get it right the first time. We got from a surgeon. This pyramid here shows the severeness of disease. So those patients that have a very severe injury is really at the top of the pyramid and you go down the pyramid, bigger volumes as you go to less severity. And here's the dynamic how it works, a surgeon that gets convinced to try CERAMENT, let's say, CERAMENT G use it on one of those patients that -- where the patient has come back, and is more or less a hopeless case. And the patient is still suffering and the surgeon has tried all the traditional methods. They then try CERAMENT G, have success. They do it again. And then over time, they start to use it on less and less severe patients. Why am I explaining this? Because I want you to understand the dynamic that when we win a surgeon to use CERAMENT, they don't switch all of their patients immediately. One of the same surgeon keeps growing over many years as they introduce it to more and more patients and more and more indications. And the surgeon who said this, he actually said, "Well, I'm going to switch quicker because right now when I fail, then I use CERAMENT, and I succeed, but I'm going to try to do it right from the beginning, instead. I'll do it right for the first time." And that's also what we are promoting now to speak to all those surgeons that are using the products so they will try on more indications. And this is what you will see from Michael's presentation, why are we doing more clinical studies, preclinical studies and different indications. It's also to give the comfort and the validation for the surgeons to keep going down this pyramid. So let's jump to the initiatives now that we announced this morning. I'm going to cover first spine and then CERAMENT V before handing over to Michael. And when Michael is done, I'm going to have a question-and-answer session. So anything you write down from my presentation or from Michael's, we'll try to address before we go on a coffee break. How could I forget? Sorry, I've 1 more slide, which is I know few of you like a lot. So when we speak about market share, and we say we're just in the beginning and the journey has just started. We are indeed a small player in this field because you will find in orthobiologics from January to September, huge sales by all the big orthopedic companies. I wrote down 4 companies here where it is -- they are public, so I can find the information easily. It's taken from Orthoworld, which is one of the leading institutes in market Insights for orthopedic and I made a crooked line here because between Anika Therapeutics and Bonesupport there is like 8 to 10 different players. So this is absolute sales to the left, but the landscape looks slightly different if you look to the right and you say what is the delta? What is the growth in -- not percent because that's cheating, but what is it in U.S. dollars? If you look at million U.S. dollars, there's none of these companies that have our growth. So yes, we're small, but we have a brilliant technology, and we're winning market share and growing faster than any of the other orthobiologic companies. But the topic is spine. Let's -- before we disclose why we felt it was a good idea to start investigating and also enter spine, let's look at what it is that really makes CERAMENT so special. Many of you have heard us before and say, do we have to speak about that again? Yes, we do actually to really understand that CERAMENT is not a product. It's technological platform for healing bone. And it has the versatility to give the tools to the surgeon, almost regardless of what kind of injury they have. There are limitations, but there are more opportunities than early limitations. CERAMENT is specifically designed synthetically to mimic natural healing. And it is resorbed at the same pace as new bone is being built. And in this process, as CERAMENT transforms inside the body, antibiotics is eluted and is protecting the implant. That's the magic. And you've seen many times the elusion of antibiotic. And of course, when you have a platform, it also renders to your imagination, what other bone active substances could you use with CERAMENT -- mix with CERAMENT or have in addition to CERAMENT and have the same mechanism. And that we will come back to. That's not the theme for today, but just to tickle your imagination and make sure that you also show up for future Capital Markets Day. When I say that it's so versatile, what do I mean? When you have CERAMENT initially in an injury and you inject it, it's liquid, and it will feel the irregular shape of a bone injury. Look at this. Some of you have seen this picture will modify this lightly. Here, you have a healthy bone. This is the site of injury, right? And the surgeon will remove dead bone. So there is a gap here. Building bone is a contact sport. Building bone requires contact. The cells that build bone cannot do it in midair. They need to replace. They need something to climb on. They need something to build upon. That's why you need the maximum interdigitation. Meaning, the ultimate lock between CERAMENT and healthy bone, maximum surface contact. You get that when you inject CERAMENT. But you could also use CERAMENT as a [ putty ] or as beads. But then you need to be very well aware of what you're doing. When you have [ putty ] there will be these black areas, which is dead space. That doesn't mean dead bone. It means that there are space where there is nothing for the bone-building cells to build upon. It's empty, it's blood possibly. There's not air, but hopefully, you have blood or plasma here, but it's still dead space. You don't have contact between your scaffold and the healthy bone. When you use beads, that dead space is even greater and can be up to 50%. Even if you pack it with beads, these small pellets, you will not have the interdigitation that you will have with a liquid bone graft. Clear? So a few words on spinal fusion. What is the whole purpose of spinal fusion? The whole purpose of spinal infusion is to stabilize the spinal column. With extremities, the bone is a lever, [ havstang ] stone, right? [ Limbos ], legs, arms, fingers, hands, foot. The spine is a pillar. It's a pillar that holds your body up, allowing some motion. But if the motion becomes too big, well, then you will have problems. So to the right, you can see what this -- where do you apply the bone graft to create a spinal fusion? And in basic, there are 2 categories. The nuances are many here, but you either have a posterolateral fusion or an interbody fusion. So this is the spine, okay? When you feel you're a spine like that or your hand, you fill these small bumps, right? Hopefully, I do. It's these bumps here, that's what you feel. So this is towards your body. This is inside your body, and this is to the outside. And when you do a posterolateral fusion, you place bone graft on the vertebraes and you also fixate it with metalware with screws. And what you would like to have happen is that this vertebrae and this vertebrae fuse into one, become completely rigid. So whatever injury you might have here, overmotion or a slipped disk gets completely stabilized. You want to build bone. The interbody graft is where you remove the disc. Look here, beautiful, healthy disks that have been removed here and this space is filled with bone graft because you want to build bone here. Those are the 2 categories of fusions, okay? There's much more to read about this, but I don't pretend it with the expert, Michael is. But there are also other slides, and we give references to where you can find more information about this. So why are we entering this field? Well, first of all, it's a very attractive field. 750,000 procedures in the U.S. alone. And we know that bone heal more or less the same way in long bone as it does in the vertebrae in the back. We know that CERAMENT has more clinical studies, preclinical studies than any other bone graft out there in terms of how to build bone. We also know that the failure rate to get a fusion is about 1 out of 5. So in 1 patient out of 5, the patient will come back and the fusion has not happened. So the pain is still there. The challenges are there. The issues are there. And in about 2% to 6%, there is an infection. The infection incidence is rather low if you compare it to some of the extremities, trauma, for example. This is a controlled surgery. So there's more time to prepare the patient and avoid infection. But when the infection strikes, the consequences can be quite troublesome. What numbers do I have on that? Because when we speak about the U.S., we speak about numbers, right? So a spine infection, an infection after a spinal fusion drives on average, if it's a deep infection, cost of $75,000 extra for the payer and insure that year. And that gives you an indication on the kind of activities that are required to bring this patient back to health, $75,000. We also know that the fear of an infection is big among these surgeons. And that's why in 40% of the cases, local antibiotics are used completely off label because there's no product that have approved local antibiotic elution in this field. So CERAMENT BVF is the first wave that we anticipate to bring to market, has the market approval for posterolateral fusion. Let me repeat that. CERAMENT BVF has market authorization for this procedure. And that's the minor procedure. 82% of the fusions take place here. And that's why when I say that we are going to submit in quarter 4 to have a full market authorization. It means to have both the posterolateral and the interbody fusion. So what happens now? What are the next steps? So we are adding data. We are starting in quarter 1 to generate more preclinical data to underpin the regulatory submission, but also to have sufficient data for a later market introduction. And I can understand your question, when is the market introduction? I'm not going to tell you because I don't know. We're going to file FDA in quarter 4 next year. So in 1 year, the submission will go to FDA. And then as you know, FDA has 150 days to respond. It's a 510(k) but we also know from experience not to try to forecast how long time it takes for FDA. So as soon as we get the approval, we will go to market. And here, you see a very nice picture also we could follow the different terms on the spinal fusion. But let's keep pushing on. On the next slide, you will see why the interdigitation is so important. Why is the versatility with CERAMENT so important? Look at this. You recognize these pictures in terms of different application technique, right? This is a big picture that we borrowed. Here you see an interbody fusion. Here, you see a cage and bone graft. What is the cage? The cage is something you slip in where the disk used to be to keep the distance and support the healing. This is a cage. How do you fill that cage with bone graft? You push it down. If you have a putty or if you have autograft, you push it through. But we tend to believe that if you have some -- a paste with CERAMENT BVF. You will be able to fill all the cavity in this. So it's basically a full block of titanium cage and CERAMENT as you insert it after we get that approval. Remember, you want to have maximum contact between healthy bone and the bone graft. So pushing on, looking at CERAMENT V for the U.S., which we also announced today, why we launched CERAMENT G a year ago? Business is doing really fine. Why is there a need for CERAMENT V? We'll use our experience from Europe. We know that there are patients with polymicrobial infections. We know that there are patients with infections that are resistant to specific different antibiotics, and you want to give a choice to the surgeon. We have feedback from U.S. surgeons that in about 15% to 20% of the cases, they would like to use CERAMENT G and 1 more antibiotic. And we see this also more and more in the southern part of Europe that these products are used combined. I know this graph could be rather difficult to interpret, but it shows different strains of bacteria. They're divided into gram-negative and gram-positive. You see that gentamicin almost covers the entire spectrum. But there are bacteria strains here Staphylococcus aureus, MRSA, that specifically react to vancomycin. So there are about 5% to 10% of the infections that actually vancomycin will do a better job of eradicating the infection. This is why we're bringing CERAMENT V eventually to the market. The FDA submission will be in quarter 1 of 2025. And as some of you will have seen already from October 16, FDA has labeled this as a breakthrough device designation. And I think there must be a lot of products that get breakthrough device because Bonesupport get this regularly. No, it's not. If you look at the statistics, it's quite an unusual categorization but these products truly bring breakthrough benefits to the market. So that concludes my roundup on the initiatives, on the market sizes. And I would like now to hand over to Michael Diefenbeck to go through the clinical update. And after that, we have Q&A.

Thank you, Emil, for the kind introduction. Ladies and gentlemen, it's a pleasure to be here again to speak at Bonesupport's Capital Market Day again. Just a short introduction from my side. My name is Michael Diefenbeck. I'm an orthopedic surgeon. I'm Bonesupport's Chief Medical Officer since April 2017. That was about the IPO. But I've been working as a consultant to Bonesupport before that time, starting in 2014. So I'm quite familiar with the company now for a quite long period. Before that, I've been working as an orthopedic surgeon in different clinical positions, and in my last position, I was working at a bone infection unit. And of course, this knowledge now comes handy when we talk about bone infection, when we talk about fracture-related infections and antibiotic eluting products. My agenda for today, I want to show you new clinical evidence and key indications. I want to talk about antibiotic stewardship. I want to focus a bit on CERAMENT's primary mode of action, which is, of course, remodeling into bone. And finally, I want to talk about CERAMENT in the future, spinal fusion and bone active substances as already mentioned by Emil before. CERAMENT has the most clinical evidence compared to any other grafting therapy. And I used this slide last year at the Capital Markets Day to show you the whole body of evidence, which is around on all different levels of clinical studies. And this was taken from the clinical evaluation report from 2021. And I just updated it now for this year. And you can see that the strong interest in the product continues. So we have from independent investigators and research is now more case series cohort and studies, mainly focusing on the antibiotic eluting products. And we have still a high interest for an individual researchers on animal models and material science publications and this is a bit what I wanted to touch upon in the end of my presentation. I borrowed this slide from Emil. You've seen it before. And I wanted to show you now new clinical evidence in 4 key indications, it's diabetic foot osteomyelitis, revision arthroplasty, open fractures and osteomyelitis and fracture-related infections, together, as Emil mentioned that this group belongs together. Let's start clockwise with the diabetic foot osteomyelitis. It's a truly hard-to-treat indication diabetic foot osteomyelitis is mostly a consequence of soft tissue infection, usually a diabetic foot ulcer from the sole of the foot. It spreads into the bone first into the outer part, the cortex and then in the marrow and the typical consequence is that in a diabetic patient, the tendon shorten and they develop the [ scraw ] toe position and then the metatarsal heads become prominent and then the bone pushes against the skin and the skin against the floor or the shoe. And this would be usually really painful. But the diabetic patients, they don't feel the pain due to the neuropathy. They continue walking on the bone and then the superficial ulcers develop. They get contaminated, infected and then the deep ulcers and the osteomyelitis, the diabetic foot osteomyelitis develops. Then there are a lot of treatment attempts, which are marked here with some little dots, different conservative operative therapies but often not successful and sadly followed by amputation. There's a different mechanism in the deformity of the foot. It's called Charcot foot. It was discovered by Dr. Charcot from France. Basically the ligaments and tendons in the diabetic foot tore and get more weak. So basically, the architecture of the foot is completely destroyed. And now this bone is -- the talus is pointing downwards. Same mechanism as before, it presses against the skin and causes ulcers, which get infected. Now the new clinical evidence comes from Professor Venu Kavarthapu who has been speaking some years ago in the Capital Markets Day from the King's College Hospital, which is famous for their Diabetic Foot Clinic, it's a retrospective case series on those indications I just showed you, 53 patients, mainly Charcot foot. The treatment was a 1-stage treatment in the diabetic foot osteomyelitis and 1 or 2 stage for the Charcot foot and CERAMENT was always used to reconstruct the bone defects. CERAMENT V was used in 40% and 65% CERAMENT G was used with a good follow-up of about 30 months, so about 2.5 years. Now in group 1, complete eradication of infection 87%. And in group 2, 100% of the ulcers were restored and in 100%, the limp was salvaged and no amputations necessary. Now is this good results? Is this bad? We need to compare it to some benchmark. And this is here the benchmark, the standard of care with an amputation rate up to 24%. And in this cohort, no amputations were necessary. So a lot of limbs could be saved due to the use of CERAMENT G and CERAMENT V. Next indication I want to talk about is revision arthroplasty, Revision arthroplasty is performed when a primary joint replacement fails. Reason for failure could be infection, aseptic loosening, recurrence, recurrent dislocation or a fracture. And as Emil mentioned, there are 3 million arthroplasties done worldwide every year and about 10% goes into revision. And then at revision, the patients present with a significant bone loss, which needs to be addressed. This is a classification where you can see after the cap has been removed, there might be a bit of a bone loss, but it can get worse and worse over here, so you see big holes coming up. And in the worst case, there's a complete hole in the center, which now needs to be reconstructed with bone or a bone-graft substitute and this information comes from Professor Malhotra from the All Indian Institute of Medical Science in India, New Delhi was published this year on 24 patients. And the bone defect, which I just showed you before, they were treated with a combination of CERAMENT G and allograft, long follow-up, more than 4 years. And when we look into the results, consolidation of the bone graft was seen in 24 -- all 24 patients between 100 and 150 days. If you look at this with the endpoint of revision of a component, the survivorship was 100% and all were infection free. Again, we have to compare it to something to a benchmark. And here, the infection rate after this revisions for infection is 12.8%. In this group, it was 0, and the revision rate in addition to that for aseptic loosening that you have to do the whole procedure again is 6.8%, and it was 0 here. And on the radiographs, you can see that this cap is completely loose. It's moving around, and it destroyed this area of the bone, which is now osteolytic and here is the replacement and this is the area which was filled in the combination of CERAMENT G and auto -- and allograft. And you can see how nicely it remodels into bone. The third indication, open fracture, I showed this slide before to explain open fractures. Open fracture is a fracture with open wound or the skin is broken, which is caused usually by the fragment. And in clinical studies, we mostly focus on this kind, the IIIB open fractures. There are high-impact injuries, high-energy fractures. And here, the orthopedic surgeon need helps from a plastic surgeon to close the wound with the local or free flap. You can't close the wound without transplanting or transferring tissue. New evidence comes from the team from Anand Pillai, Professor Pillai was here last year at the Capital Markets Day. It's a long-term follow-up of open Gustilo-Anderson IIIb fractures that was just showed. It was published this year on 81 patients, and they have looked at these patients before, but now they updated their data with a longer follow-up to show if the results continue to be good. And yes, now with a mean follow-up of 55 months, infection rate is 3.7% with a good union and limb salvage rate compared to the benchmark, the standard of care, 15% of CERAMENT G again lowered the risk of infection. And on this image from the publication, you again can see how CERAMENT is used. Here is the bone defect. It's stabilized with the plate, which you can see here on the radiograph as well. And then the bone defect is filled with CERAMENT G to promote bone healing and to protect the bone healing. Last indication is osteomyelitis, which is defined as a bone infection, which is long standing, which is standing for 6 months, at least with a couple of different features. It comes as a recurrent disease. And the vast majority, as Emil already explained, comes from fractures or posttraumatic and is probably mostly a subset from fracture-related infections, terminology is changing a bit. You will hear less about chronic osteomyelitis in the future and more about fracture-related infection. We established a benchmark already last year, which is the recurrence of infection, about 13.3%. Now let's look at the new evidence. It comes from Oxford from Professor McNally, published last year on 100 patients. The treatment, debridement of the bone void and dead space management with CERAMENT G. The follow-up is now long. They looked at the patients before. They re-elevated them now with 6 years follow-up, recurrence rate only 6% with pathological fractures of 3% and a good follow-up rate of 96%. And again, you can compare it to our benchmark 13.2%, much lower infection rate. And this is shown on this Kaplan-Meier graph 2. So it shows infection-free patients over time. And taken from the publication, 3 recurred in the first year, 2 in the second year, and then there was 1 further at 4.5 years. And there was some criticism on the first publication from Martin McNally that the follow-up would not be long enough and that probably a lot of late recurrences would be missed. And this is the evidence that there are no late recurrences, that the patients continue to stay healthy. A short outlook on SOLARIO. Maybe some of you remember SOLARIO. SOLARIO is a randomized controlled trial of 500 patients. It's an appropriation for short and long antibiotic regimes and orthopedics. And its indication is infections. All kinds of infections of the musculoskeletal system, osteomyelitis, fracture related infection and PJI. And the update is that the last patient was -- sorry, the last patient was recruited in August this year. So 12 months follow-up, the last patient out with the data will be in August next year. And fingers crossed, we hope that the SOLARIO team will publish their results in the end of 2024. What were they looking for? They were doing debridement and dead-space management with an approved antibiotic eluting device plus systemic antibiotic treatment. They divided their patients in 2 groups. One group with a short course of antibiotics and 1 group with the standard of care with a long course of antibiotics 4 weeks or more. And the primary endpoint is the treatment success so free from infection. And the consequence of this study, if it reads out positive, would be a change in the standard of care for musculoskeletal infections to a combination of an antibiotic eluting device, CERAMENT G or CERAMENT V plus a very short time of systemic antibiotics 1 week or less instead of the standard of care, which is at the moment, 4 or even more weeks. And this is a huge step to antibiotic stewardship. So what is the problem? And why do we need antibiotic stewardship? Many organizations like the World Health Organization recognized the problem of antimicrobial resistance. And if we fail to address the problem of antibiotic resistance, it could lead to 10 million deaths by 2050 and immense costs. So antibiotic stewardship is the effort to measure and improve how antibiotics are prescribed by clinicians and used by patients, improving antibiotic prescription and U.S. is critical to effectively treat infection, protect patients from harms caused by unnecessary antibiotics and to combat antimicrobial resistance. So if we think a bit closer about it, effectively treat infection would mean the right drug, at the right dosage, at the right time with a good clinical outcome. Looking at the harms, to protect patients from harms. We have to look at the systemic side effects and that the compliance is the patient really taking the drugs. And finally, do local antibiotics cause antibiotic resistance in bacteria? And if we now look at CERAMENT G, the right drug? Yes. CERAMENT G is active against gram-positive and gram-negative bacteria as Emil has showed before. The right dosage? Yes. High concentration right in the beginning with the first dilution at the right time, it's injected exactly after debridement when the bacteria are weak, and it's available for 28 days. And with a good clinical outcome. I just showed you the data from Martin McNally from Oxford with this 94% of infection-free patients after 6 years. To protect the patients from harm, no systemic side effect of locally implanted CERAMENT G were documented so far and the compliance, well, that's not a worry because CERAMENT is implanted in the bone. So you don't have to worry that the patient is taking constantly the antibiotics. Final question, do local antibiotics cause antibiotic resistance in bacteria? There are 2 studies, 1 from the lab from Bidossi et al. from Milano, who showed -- or who concluded it did not lead to stable or transistent adoption in either of the testing materials traced. In other words, he did not find the development of resistance and there is an interesting study from [indiscernible] Young from Oxford they looked at recurrence of infection, and they had 2 groups in 1 group local antibiotics were used before and then the other group not, and they didn't find a difference in the resistance patterns of the bacteria later on. So this led to the conclusion that the treatment of orthopedic infection with local antibiotics was not associated with the emergence of antimicrobial resistance. So to summarize this, if you look at the 3 points again, CERAMENT is optimal antibiotic stewardship. I was focusing a lot on the secondary mode of action of CERAMENT, which is the elution of antibiotics. But don't forget the primary mode of action, which is remodeling into bone, and it's for all 3 products. There are 3 ways or 3 steps, how I want to show you how to prove the remodeling and 2 steps come from an animal model and the third from a clinical study. And here, I just wanted to quickly illustrate again how CERAMENT is used. So this is a bone void. It's in an animal model. CERAMENT is injected. It's in the toothpaste state. The void is completely filled, then it's compressed into the void to get this good interdigitation that Emil was talking about to create a scaffold for the bone cells to grow into the bone defect. That's a closer look at this model. This was the bone defect, 2 centimeters deep, 2.5 centimeter in diameter, so about 10 milliliter volume. And these animals were followed up for 3 days up to 12 months and compared to other treatment modalities. And this is the first step to show that bone remodeling is a critical success factor in bone repair. In the first -- still you can see a CT scan, which follows. And could we start the first video, please? This is an empty void which was not filled. And if we go through this void, you see that in the center no new bone is filled. So this one stays empty. If allograft is used, which is the movie #2, which we could start now, please. Then you can see that there is some bone generation, but there are holes and gaps in between and some parts are probably not remodeled. It's still the old graft which lies there. And if you use CERAMENT in these bone voids after 12 months, we would just jump to this right slide here to this movie. You can see that the bone void is completely filled with new bone with nice trabecular bone filling the complete void, which I still think is quite amazing for a pace which you inject that it leads to the generation of living bone. A second way you can look at this is the sequence, how bone remodels and I just want to show you 2 videos here, the first one. This is at the third day, and if we started now, you can see how well CERAMENT interdigitates with the bone. There are no gaps in between. This is exactly contact sports Emil was referring to. And then if we look at this slide, this one, the third one, this is at 3 months. you can see that the original CERAMENT is degraded, resorbed and build this hydroxyapatite rich matrix. And if we look at the histology, this is the place where the new bone already at 3 months starts growing into and in the end, as I showed you before, fills the complete void. The third step to show the bone remodeling capacity is the 35 study. Maybe some of you are aware of it. It is a randomized controlled trial, 135 patients with tibial plateau fracture. One group, the bone defects were treated with autograft from the patients' pelvis from the iliac crest and then the other group CERAMENT Bone Void Filler was used. And for this one, we wanted to focus on the bone healing radiographs. It was a noninferiority study to show equivalence to autograft. And in very short, CERAMENT checked all the boxes, CERAMENT Bone Void Filler reached all outcome parameters. And today, we just want to look at the bone healing radiographs. So on the top row, you can see a patient where autograft was used. Here is the fracture. You can see how the bone is depressed. So the orthopedic surgeon has to lift this fragment up again to reconstruct the joint line and stabilize it with screws and the plate and here develops a bone defect, which was treated with the so-called Golden standard, the autograft, and it used well. And the second one is CERAMENT Bone Void Filler similar fracture, similar stabilization, but now the void is filled with CERAMENT, which is clearly visible due to the iohexol, the radio contrast agent, and then at 6 months, 26 weeks, beautiful remodeling into bone. So the difference is that this patient does not have a scar now on his pelvis and the pain from the grafting procedure, and this patient has. Last part of my presentation, CERAMENT on the future, and this is looking into spine. So CERAMENT BVF as the first step with the submission to FDA for interbody fusion in Q4 2024, as mentioned by Emil. Now do we have any evidence or any information that CERAMENT Bone Void Filler is useful in spinal fusion? And here, I wanted to point this presentation. It was presented at the Orthopedic Research Meeting this year, Orthopedic Research Society Meeting in Texas in February. It's an international group from Lund and [indiscernible] Germany. And they presented a paper calcium sulfate/hydroxyapatite CERAMENT Bone Void Filler, mediated controlled delivery of BMP-2 which is the growth factor and zoledronic acid or zoledronate which is a bisphosphonate which enhances spinal fusion in rat posterolateral spinal fusion model. Here, I have the model once again. So this is the [ processi transversi ] this and this. They are debrided a bit that you get some bleeding bone contact. This is the contact surface you want to create. And then it's filled with the grafting material. And then after some weeks, here, the bone generation starts and both vertebra grow together. And a lot of groups were tested and you can see this combination with the growth CERAMENT Bone Void Filler with a growth factor or with a bisphosphonate. Now is this a surprise that these substances were used? No, because there are a lot of publications already, and I just wanted to show you that this substances have been discussed for years now. It's the BMP-2, bone morphogenetic protein and is alendronate as a bisphosphonate. So let me summarize this topic a bit of the bone active substances. So far, these 3 substances, zoledronic acid, BMP-2 and PTH have been tested together with CERAMENT. But the idea which is in common for all those substances is to transform CERAMENT from an osteoconductive scaffold to an osteoinductive material. So this...

You want to explain that maybe for those that do not know the terms.

Yes, it's in the next sentence. It is -- osteoinductive means that a substance can transfer stem cells into osteoblasts, which generate bone, so the scaffold, the CERAMENT Bone Void Filler or CERAMENT G and V is a scaffold. It's basically a place or a house, we provide a house where the cells can live. But the osteoblast have to move in and if -- to make it osteoinductive, it would mean you create the osteoblasts and then you have a higher number of osteoblasts, which can live in the scaffold. So you would basically speed up this process of bone remodeling and bone generation. But as we showed you before, CERAMENT is efficient at the moment, and you saw this in all the clinical evidence I showed you, but of course, this osteoinductive product could be used in very challenging cases. For example, if there is a long-standing nonunion where the bone is not healing together or it's a large defect and as Emil showed it before, it could be probably used for these patients, which are very difficult to treat. So far, there are only 2 osteoinductive products on the market. And there is no decision yet, which of those products to be used for a commercial osteoinductive product. These are options, as they have been described already but there could be some other options coming up, too. And we are at the moment in this process to fine-tune the combinations to see what makes really sense to be further developed. Coming back to this model, I showed you before, the spinal fusion model from the international group. And if we just look on the first row, this is CERAMENT Bone Void Filler, CERAMENT Bone Void Filler leads to the fusion in this model. So we see, of course, a bit of an advantage and an increased formation of bone if this bone active drugs are used. But just the standard CERAMENT Bone Void Filler seems to be effective for this fusion and this is why we want to continue with working towards the submission. A quick summary. I showed you new clinical evidence in key indications. I hope I showed you why CERAMENT G is an optimal antibiotic stewardship, I touched on the proven remodeling into bone. And I talked about CERAMENT in the future, spinal fusion and bone active substances. Thank you for your attention.

Excellent. Thank you, Michael. So we're good in time. You stay here with me. And let's see now if there are questions on those 2 parts, first part of the Capital Markets Day, we start with Kristofer.

Kristofer Liljeberg from Carnegie. So on the filing in Q4 2024, was that the 510(k)?

Yes.

And have you had any discussions already with the FDA about the plans and what you have to provide in the filing?

We have not. We haven't had any conversations with FDA regarding the 510(k) submission, that will happen in a year from now. But with the 510(k) submission, there's plenty of information. So I think we have a good understanding on what is required.

And for the fusion cage, would that need a separate approval or will that be included in the spine?

So what we will submit in a year from now is the cage. We already have the posterolateral fusion. So out of the 2 principles, we have one, and we're merging into the next. And when we have that, we have a full indication coverage.

And then my second question, the SOLARIO trial, how important do you think that will be to drive penetration for CERAMENT G?

I think it's a really interesting study, and I would say it's a milestone. There was a study before which was called [indiscernible] trial where the question was, could you use oral antibiotics instead of IV antibiotics. And that had a quite huge impact worldwide to reduce the intravenous antibiotics and to switch to oral antibiotics. And I see that this could have the same effect that there is a change in the standard of care that now the focus goes to local antibiotics combined with a very short time of systemic antibiotics. And of course, this combination then, of course, would drive the use of CERAMENT G and CERAMENT V.

Erik Cassel from Danske Bank. So a lot of talk about going to spine, but do you have any more clinical data to share? I believe the rabbit model is the standard for animal models. Do you have any data on fusion rates and average time for fusion in that?

So there was some historical data from submissions or from data created before at the time when bone support started in spine. And at the moment, we are generating exactly this data to really be able to answer your question on fusion time, fusion rate. So this is one of the steps towards the submission.

Do you have reasons to believe that it would be better than the current standard of care?

I would say it's -- from what we know from this bone remodeling, it will be difficult to show that it's superior but with what it can do because of an autograft and allograft is used and these are materials which come with some drawbacks because you have to use them from the patient's own body but they are good materials in themselves. So probably what we can show is equivalent to show that it's as good as the materials. Superiority, that would be probably then the future vision with the bone active substances. But for the first step, it would be equivalents.

Do you plan to run any sort of large-scale in human trials with this as well because I believe most products with bone graft in spine now is just in animal models. Do you need to do that to convince surgeons in any way?

Would you like to answer? Or should I?

So yes, I think it would be a very big task to try to change the current market standard. So I think we'd rather play within the market standard. For the future, it's something we will have into consideration as we have done with the bone void filler where we have one of the few randomized controlled trials, Level 1 studies, so it's a consideration, but for the regulatory submission and potential launch, that will not be required.

Okay. Is there any overlap between extremity surgeons in spine as well so that you can sort of grab any share just from normal uses within, say, trauma or infection?

The estimate is that the overlap is about 15%. But then, of course, the extremity surgeons and the spine surgeons, they work in the same department many times. So there is also an overlap in word of mouth and sharing, for example, difficult cases where CERAMENT has been used and proven excellent in rebuilding bone for extremities. So we believe there are also interactions that we can build upon.

Okay. Do you expect any say, large-scale off-label use of CERAMENT G once you've proven that the BVF is on par with current standards?

It's very difficult to say. We can conclude that infection prevention is a big thing in spine. We have validated data that in 40% of the cases, antibiotic powder basically is mixed or sprinkled down in the wound cavity. So there is a need in the market. And then how that translates into execution, I think it's too early to say but our ambition eventually is also to bring antibiotic-eluting CERAMENT to spine.

And then when we go home and do our math on this, how much CERAMENT G would be used for making, say, one bridge in spine fusion?

Do you want to reply to that?

So for the ...

The volume.

So as you saw with the cages, you would need some volume to fill the cage. And I would guess that's not too much, that's about 2 to 3 milliliters. Then you want to fill the space between the vertebra around the cage. And then you want to use it between the [indiscernible] posterolateral fusion. So altogether, I would guess about 10 milliliters per procedure for one segment. But sometimes you need to use 2 or 3 or 4 segments, and then, of course, it's more.

Okay. Great. Then I just have a few last questions on the guidance as well. I mean the 40% -- above 40% organic growth into next year, is that dependent on getting the label extension into trauma as well?

The label -- sorry, yes, that we're filing now in quarter 4 for the existing CERAMENT G. Yes, yes. It's -- there are some sales at the end of the year, but that's a fraction in compared to the total.

Okay. And how much off-label use in other areas is needed for that to happen? And are you seeing that off-label use already happening? Or is it not wishful thinking, but does it need to change anything in terms of usage of CERAMENT G [indiscernible]?

No. I think that's a good question and also to connect it, let's say, with the label extension that we're filing. So the current momentum that you see in the business is very strong. We see and we'll come back to that in the financial overview that we're winning new accounts, we are seeing extended use with current accounts. And the product is being used both as prevention and as treatment. But the way you should see this is we are not promoting off-label. We're not promoting it for prevention. But the surgeons that have used CERAMENT G, if they tried it, they tried it the first time to treat an infection. And then they walk out with maybe 5, 6 really positive experiences. And then we see that on their own discretionary mind, they try to use it also for prevention, which we know in Europe is working quite fine. The analysts currently that follow, Bonesupport has an average growth rate. The consensus next year is 35%, and we're saying that's too low because the current momentum is much stronger than that. So even regardless of the extended label, which will only come at the very end of the year, so it cannot influence that much. Even without these initiatives, our momentum is stronger than what you guys have anticipated.

I'm [indiscernible]. Just a short question on the antibiotic stewardship. Not that I advocate this, but could we do without the one-week systemic use of gentamicin altogether?

Yes. That would be, of course, perfect. But I'm afraid I have to disappoint you a bit. Because in these bone infections, you have an additional soft tissue infection around it. And with the local use of CERAMENT G and V, we can address the bone, but we cannot address the tissue around the soft tissue, the skin and the muscles in the first year. And this is well perfused. So this can be reached with systemic antibiotics. So basically, as I see it, we need the combination of both because [indiscernible] just local in the bone. So you can treat the bone infection but not the soft tissue infection, you want to treat both. But I think if we could get it down to one week, it would be a huge step forward.

Can I just ask a short question so I fully understand this. Interbody cage that you showed, is that used today with other bone graft institutes or is it your solution?

Sorry. Yes. No, very good question. The cages are used extensively today. All the big companies have cages out of titanium or other materials. And it's used in combination with autograft, with allograft, with other orthobiologics. So it's already established. And we think that with an injectable solution, we can play right into that trend.

[indiscernible]. So first one, so back in 2008, CERAMENT Spine Support was [indiscernible] and sort of the lead asset of the company, but it was down-prioritized. I do realize you were not part of the company back then. But it would be interesting to understand why it was down-prioritized and why now is the right moment to tackle this market?

Absolutely. So let's see if I can flip fast enough through some of these slides because I want to have a picture in the background when I explain this. So one of the first ideas really on CERAMENT was to repair vertebrae that have cracked. So if you would have an osteoporotic vertebrae, so your bone quality is low, and you have a crack here, you get quite massive pain. And the original idea was then to come with a needle, a syringe and inject CERAMENT and repair that vertebrae. And it worked really well. There are 2 rather big Italian studies published, peer-reviewed, very good and shows that the vertebrae heals very well with CERAMENT. The only challenge, why was it abandoned? Because there are only about 15,000 of those procedures done. So it's a tiny, tiny indication it's called kyphoplasty where you repair these. There are other treatments then also more conservative treatment. There are physiotherapy in Europe, which is much bigger than it was back then. So this area, while clinically working well, didn't have a lot of commercial traction actually. What we're talking about now is a totally different indication. So if this is -- sorry, I'm talking U.S., if this is 15,000 procedures and in Europe, it's about 20,000 procedures. The spinal fusion, which is done here or here or both is 750,000 procedures. But we use the knowledge that we have. How does the vertebra heal? How does it reproduce bone? And that is the same knowledge that gives us encouragement to say that enter this indication, which is significantly bigger. What we probably didn't mention before, what I didn't mention before is that the spinal fusions has been growing with more than 10% per year for the last 10 to 15 years. So basically more than doubled. And it is a technique that have developed significantly in the last 20 years, become much more refined. And 35% of the spinal procedures are done minimal invasive. And if you want to do something minimal invasive, you need to have the skills or navigating through [indiscernible] with something which is injectable. So there's a lot of things that has happened since then. But the simple answer is that it's a completely different indication, worked well [indiscernible] commercially.

Perfect. And as I understood, you already have sort of market access for part of the indication. So when will you start marketing it and will you require new contracts or GPOs, et cetera, just to understand sort of the set-up here and what you need to build and what's already there?

Yes. Very good. Thank you. So on a few GPOs it will be the same process as we did when CERAMENT G was launched. Remember, we had BVF. We [indiscernible] opened up a new segment. And I think we all can agree that our success rate with GPO was really good. We anticipate here that just extending an indication. It's the same product that they have experienced, which we think that process also will be very straightforward. Then there will be, in some cases, other distributors, in some cases the same distributors. There will be some [indiscernible] that's something we will come back to. We will not go to market until we have done sufficient data to live up to our standard. When we go to market, the surgeons know that we have application data, that we have safety data, that we have efficacy data and they know they can put as high demand on us when we enter spine as what we have done in the past. This is a product you trust on.

And just a final one. On the sort of longer-term ambition in spine with active APIs. Can you elaborate a bit? Because I thought I saw something about potentially doing something with antibiotic-eluting potential, but also something with BMP-2, which, as I understand, there's been some controversy here with some lawsuits and some issues around that. So maybe if you could elaborate a little bit on how you're weighing the different alternatives and just if I misunderstood anything there?

So if I speak about antibiotic, you speak about BMP. So the first wave of spinal fusion will be the submission in quarter 4. We will come back on timing on when the antibiotic-eluting products could come to market. So here to Kristofer's questions, on the antibiotic-eluting products, here we have to have some pre-submission meetings with FDA. This would be a de novo application. This is a 510(k). Here, we have good transparency and understand well. Here, it will be a little bit more complicated, but we have great confidence and trust in the data that either we have or will be created. And for both of these products, both the first wave and the second wave, we see a great market need. Because imagine you're a spine surgeon in the U.S. and one out of 5 of your fusions are currently failing. And 2% to 6% have an infection, and that caused the clinic and the patient and the payer a massive amount of money. So that's the [indiscernible] coming back. Then on BMP, yes, there's some controversy. And I think there is a couple of clinical topics that have to be solved. Maybe CERAMENT could be part of that. What do you say?

Yes, exactly. So you're right, the growth factors of BMP-2, they come with some drawbacks, which depends on the concentration. And this is the question how much you -- how high should the concentration be? And the lower, the better, of course. So you want a good effect, but you don't want the adverse events or the side effects, and this is exactly what is looked at the moment. How far can you reduce it? And can you combine it with something else, for example, with alendronate to even reduce it further. So there's a lot of fine-tuning going on at the moment, but it is -- so the first time line is clear. The second is to be developed. And what I'm talking about is the third one, which is even further out.

The problem with BMP is to contain it basically, you want to make sure you have it in the -- where it's supposed to give efficacy. So as you saw from the rat model, it is being trialed. It's being researched. But these are, unfortunately, a couple of years out because this is a very difficult and sophisticated chemistry.

And since the time line is so long, other substances could show up, and I had this little green question mark on the presentation, which is an indicator that there might be other substances, which can help us [indiscernible] activity without the backdrops of others. So it's to be developed.

But what is the potential you see and how fast it can remodel?

It's difficult to give a time for that. I think it's -- what you have to take into consideration is the patient is the host. So this is because basically in a young patient, there would be enough osteoblasts around. But if we look into aging population, elderly osteoporotic fractures, for example, here would be good to have the substance to generate bone to change the stem cells to osteoblasts. I think it's not really to speed up the process, but really to enable the process and patients, which have a lack of bone-building capacity. So it's not speeding up.

But to secure that it really happens because after 2 failures, then it starts to become difficult. We have 2 more questions. First, Kristofer, and then Mattias?

Are you aware of doctors using BVF off-label in spine fusion today?

Yes, it has happened.

Is it common, you think?

I couldn't tell. We know there are cases. We've been contacted. We've even seen one or 2 documented cases where they used it but it's nothing that we can build as evidence, and we don't have any opinion on how common it is.

And I could see the case with CERAMENT G for spine fusion, you have a very different product versus competition. But what do you think will make physicians change what they use today to BVF in that indication?

So there are 2 things, mainly. And that's why we put also some time today in showing the very strong and well-documented bone remodeling. So we know that one out of 5 of the fusions fail, and it fails because the bone doesn't grow. And what Michael showed you is several examples of well-documented preclinical and clinical studies, where CERAMENT has shown a superb ability to remodel into bone. So that's one. The second is the application where this is more or less a standard of care for interbody fusion. So this is well established, as we mentioned [indiscernible] question before. The insert. Now to fill this to the very max and not have any dead space, you don't want to have any areas that do not have contact with bone graft. We believe that an injectable bone graft that you can use as either injectable or as a [indiscernible] and shape it and form it and fill this cage to get maximum surface contact, and that will also offer the surgeons something which they don't have today.

Mattias Vadsten from SEB. My question is first, what do you believe is driving the failure rates in spine fusion? And if CERAMENT could reduce these failure rates and if so, what is supporting that?

So there's a lot of things that can go wrong, mainly 3 things. One is that the screws come loose, they don't attach, they come loose. So the implant loosens and before you have this bony bridge, that's number one. Two, you don't have -- the bone will not grow sufficiently between the 2 vertebrae.. You want these 2 to fusion into one basically. And if that process doesn't work, there is a failure or there is an infection.

Perfect. And then perhaps a bit difficult question. But if you believe would CERAMENT G, which is probably a little bit more differentiated, correct me if I'm wrong. Would this launch be more effective without entering with CERAMENT BVF first?

Yes, you're right. It is a difficult question. It's a bit hypothetical. But the same question is would we have succeeded so well with CERAMENT G, unless we had so much sales of BVF. And how did CERAMENT BVF in the U.S. perform against other bone grafts? And I think somewhere there is the answer. BVF sales in the U.S. took a decent market share because of the bone remodeling capabilities in the non-infection segment. And we built that infrastructure and relationship. So we knew the market when we came with CERAMENT G. I think that's a good model to copy for the spine.

Good. And then my last one was, I think you perhaps mentioned it during your presentation. But in terms of the preventive use, what share of surgeons use antibiotics preventively in spine? I think I missed that.

Which antibiotic?

Yes, antibiotics as a preventive to avoid infections in the spine setting?

40%. 40%. So of the 750,000 cases, we will look at it again later on. On the 750,000 cases done, in 40% of those, there's local antibiotics used, vancomycin to the biggest extent, but also tobramycin and gentamicin and other antibiotics. And most of the time, it's mixed into whatever they use, autograft or allograft or some other bone graft or just sprinkled directly into the wound. So quite unpredictable and unscientific.

Let's have some coffee, and we'll be back at 3:20.

We will be outside also if you have questions meanwhile. [Break]

I don't think you can see the audience, but they can definitely see you. And I would like to very warmly welcome you to our Capital Markets Day. Outside, it's complete snowstorm. So I think you're in a much better place than we are. Stephen Quinnan is in Florida, ladies and gentlemen. And Dr. Quinnan is someone that we have worked very well with. He has some great experiences with CERAMENT that I would like him to share and the original plan was that he would be here. But we know that flights doesn't always work as they should and everyone with a busy schedule, I thought this is an absolutely excellent idea. I'm sure if you would have jumped on the plane, Dr. Quinnan, it would have got stuck in the snowstorm anyhow. So this is a better option. So welcome to our Capital Markets Day. And we will start the presentation and write down your questions. And then in the end, Dr. Stephen Quinnan will also be able to answer your questions diligently. Thank you so much, Dr. Quinnan, over to you.

Absolutely. Well, thank you, everybody, for the opportunity to speak today. And it's really a pleasure to be able to introduce some of the cases that I have to show and tell you some of my experiences. I guess we'll start with the sort of first slide there. Basically, as sort of background, we've had the bone void filler in North America for a long time. But we haven't had CERAMENT G or V for nearly as long as our European colleagues have had it. That being said, over the course of a little more than the past year, I've had the opportunity to do a pretty extensive number of cases. It was more than 60 already for me. And my experience has been really excellent. And I think that these cases will highlight some of that. So this first slide here shows a patient. She's a 32-year-old woman. She had an open fracture while skiing. She had afterwards, some skin breakdown and a prolonged open wound. It took them about 8 weeks to finally go ahead and perform a gastrocnemius flap to cover it. So it had a little back and forth drainage for a prolonged period of time. You can obviously see there are some pieces of bone that look suspicious for being devitalized fragments that with that potential fluid shifts or potential [indiscernible] infection. She's been on antibiotics for a while. She was on some suppression at the time I saw her, and it had been about 7 months, you can see that there's very little healing present there at 7 months, virtually none. Her white count and her CRP were not that concerning, but her skin around it was pinkish and a little swollen, tender at the area of the nonunion site. And she also has a little bit of apex anterior deformity that happened at the time of nailing. So we decided in this case that this was really an ideal case to proceed with a one-stage solution, assuming that, in fact, this is an infected case, which we figured it probably was that we would go ahead and debride the site and that we would use CERAMENT G as the local delivery as well as to augment the healing at the nonunion site. And we would also remove the implants and exchange them for new implants and at the same time, correct the deformity that was present. So you can see that our specimens taken at the time of surgery did indeed show there was Enterobacter present at the site. And as we proceed forward from that period in time, we have a proper alignment present, and you'll see that there is a gradual remodeling to bone that starts to occur. And this process that we see, it takes a little education to understand what happens here is that initially, you see the iohexol, you see the full location of where the CERAMENT is. And then it starts to be resorbed. So the area on the periphery becomes a little bit of a black zone where it looks like nothing is there. And then behind it, as that moves toward the center, we start to see that outline of where the new bone is being calcified on the outside. So if you take a look here further on, we now start to see that in the middle, we're seeing less of the CERAMENT there, but we're starting to see a full outline on the zone of where it's going to come in. And she did receive a course of antibiotics for 6 weeks with this, which is still the standard and pending some of the trials we discussed earlier. And fortunately, she has now been disease-free for approximately 5 more months. So a successful outcome from her and clinically, she's doing well with no pain. So it appears as though we've successfully treated the nonunion and the infection in this single-stage event. So the next one that we're going to look at is a lot more complicated of a case. You can go forward. This lady, she's 55, she had a motorcycle accident, and she had a whole series of very bad injuries. She had an open femur, open distal tibia, open pilon. You can see the original injuries here. And in the very early going, she has extensive bone loss in all of the locations. So we initially pursued different pathways for each of these. What you can see is that we pursued a strategy in the femur that included a polymethylmethacrylate spacer. We tried to maintain a lot of the pieces of bone so that we wouldn't have such a massive bone loss here. We fixed the femoral neck fracture with intramedullary device that you see. We have a spanning plate in the distal area, which is supporting the multi-fragmentary joint segment as well as the area that is a defect. So this was our initial femur treatment. The tibia, on the other hand, had a lot of soft tissue loss, and it also had bone loss. We ended up doing an intentional shortening to close her soft tissues and a subsequent lengthening for the tibia. So that was treated directly with that. And we proceeded forward with her reconstruction. You can see here the basic aspect of the tibia getting it back together, and we'll move forward on that. And then you see what we do next is we tried to bone graft. We used autograft combined with pellets of calcium sulfate for some local antibiotic delivery. And we were trying to do this approach because we were already going to lengthen the tibia and we wanted to simplify the treatment of the femur. We knew it was short, but we wanted to try to get it to heal with sort of a one-step process. We didn't yet have CERAMENT G available here at the time that I did this case or that certainly would have been a potential opportunity for us, even though that would not have been an existing infection, although it was certainly at high risk. Then you see moving forward, we have success with the tibia, it continues down the pathway. Unfortunately, things didn't go as well for the femur. So that entire area ended up becoming purulent and it was draining pus. So we had to go back. We had to remove all the bone graft, which is as you can imagine, a huge setback for the patient and the surgeon to have harvested all that bone graft and now to have to remove all of it after the morbidity of harvesting it from elsewhere. In addition, we had to remove the other fragments of bone that we had kept earlier because those pieces were kept when we were trying to keep them within the sterile envelope of the leg. But once they are now infected and contaminated, they will act as a nidus and a more radical debridement is necessary for removing them. So you can see we end up with a more extensive bone loss in the distal femur, and we have maintained it with the methylmethacrylate spacer at this point in time. So we have a very difficult situation. We're completing that complicated reconstruction of the tibia. And now we've got this femoral problem as well. Now given the problems that we had with infection, we decided to go with initially a strategy that involved some lengthening and distraction osteogenesis, which as we know, is fairly resistant to infection. It comes with its own challenges, of course, and it's more difficult for the patient in a number of ways. But we proceeded with this at the time. And you can see that we were successful at getting leg length back and we did bring the bone ends into some apposition, but there's still a pretty significant area of missing bone that's present there. Fortunately for us, at this point in time, we were able to set that up. We used the spacer in this case prior to the next step. And in the next step, we used the core of CERAMENT G, together with a small outer shell of autograft, much smaller amount than would have been needed and with the protection of the antibiotics that will allow us to proceed with a successful overall reconstruction. So clinically now, she's doing well. Her pain is finally resolved. And if we zoom in on it, you can see that process that I talked about occurring is that the outer portion of that now is fully outlined with where that new bone is setting in. And clinically, you can see that this is actually an advanced state of healing because the patient is quite well already, even though the calcification is still in the process of settling in. So this helped us complete the final stages of what is a really extraordinarily complicated set of limb salvage surgeries for this patient. And fortunately, she was able to maintain her entire lower extremity instead of having a very high above-the-knee amputation in this case. You can see here another case, this was a polytrauma patient. She also had a complex reconstruction of her femur, and what we're dealing with in this case is her tibia. So she had a malunion from an earlier nailing. And you can see that it's a simple varus deformity, and she's a little short in the tibia. So what we did in this case was a simple opening-wedge osteotomy. This was done in the standard fashion. You can see the oblique osteotomy to take advantage of the large healing surface in the metaphysis and what we did in order to maintain that space is we used an allograft wedge, and we used a plate design for this kind of osteotomy. And you can see the postoperative result. Looks good. Everyone is happy with it. The alignment is what we would want it to be. Patient initially doing fairly well. We had her walking on it in the initial get-go. You see here is the alignment. There's that spacer that's present within it. Then things go on a little bit. We see her a little further out, and things still look okay. Unfortunately, at 6 weeks when she came back, we had started to see some resorption of the allograft and clinically, it was clear that she had an abscess underneath where the allograft was present. So we didn't know how extensive this would be at the time, but we knew that, that allograft was a nidus for infection. We also knew that the plate was obviously going to be contaminated. So we proceeded with the procedure where we opened it up, we removed the plate and screws that were present and we debrided out the entire allograft that had been there that was compromised. Fortunately, what we found is that the lateral side was already solidly healed with good healthy [indiscernible] bone. And we were able to really scoop out and remove the entire area of what appeared to be compromised tissue. So we exchanged the plate for a brand-new plate after performing a debridement that was very thorough with irrigation and we went ahead and used CERAMENT G to fill the hole with a bone supplement. We also put a little bit of powder in there, which we mentioned earlier [indiscernible] powder on the outside of the plate. And we closed the wound and gave her a course of antibiotics. And she has gone on to do very well clinically. She is still in the process of remodeling the CERAMENT G, but now she's several months out. And clinically, she's doing extremely well and appears to have cleared the infection successfully. So you can see that the CERAMENT G for us in the United States is the first biologic available that has the antibiotics impregnated with it. And it's also very effective at promoting bone formation, as you've already seen in all these excellent presentations. And when it's used correctly for the proper indications, it's just easier, faster and better then the elution characteristics of PMMA or really any of the other fillers that we have available. Certainly, that's been my experience here. And I think that it's been a powerful new tool that, as alluded to earlier, [indiscernible] and have expanded to cases that are maybe not quite as extremely difficult, but found it useful in them as well in getting successful results. So thank you all for your attention. It's -- obviously, my practice has a very large number of patients with complex limb reconstruction and bone infection. And so this is really in my wheelhouse to discuss, and free to be reached out to by any of you at any time if you had any questions or concerns afterwards. And for right now, I'm happy to answer any questions that you have.

Thank you very much. That was a very interesting presentation. My name is Charlotte. I'm the moderator today. I guess very many in here will have questions for you, Dr. Quinnan. Could we perhaps start where you ended, how much you use this? And how much did you use CERAMENT before you got hold of CERAMENT G?

So it's an interesting dynamic with CERAMENT before. I had used it on a number of occasions, and I had, had some successes and some not, so I'll take you through that. As a simple bone void filler, I had been able to successfully use it on some occasions. I had, had some struggles with it, and I can tell you why and how I've solved that. And with antibiotic mixing, I had, had even more mixed results that had made me a little bit cautious about it. So, when it comes to that, I'll tell you why, is that CERAMENT is an amazingly powerful tool, but there are specifics of how it needs to be applied to have it properly crystallize. There are just details of the steps that have to be followed that I wasn't very educated on in the beginning when I first used it. And that led it to be a little liquidy and sometimes drain in the wounds in a way that really was -- I didn't really like. And so my usage was a little more limited for some years before because I had, had a mixed experience. Once I better understood how to use it properly, to give it a chance to start to crystallize without mechanical agitation on the back table and to make sure that I had as dry a field in terms of blood crossing into it as possible, my results completely changed for the better. And those concerns really mostly disappeared, and I started to have wonderful results. So as a bone void filler, I'd had experience for a number of years using it that, especially mixing with antibiotics, I wasn't so convinced I could always get it to harden. But these days, the only time that I struggle sometimes with getting it to harden is if, off-label, I mix antibiotics in it. Because the antibiotics that you can mix in it that aren't CERAMENT G or V, they're different manufacturers, they have different co-products. And when you try to mix it, mix and match, sometimes it works and sometimes it doesn't.

No off-label use, please.

Yes, for the off-label use, it's an issue, not only because it's off-label, but from a practical perspective, it makes the crystallization process much less reliable, which is why CERAMENT G has been fantastic, because it's given me a predictability that I know that it will work as it's supposed to when I use it.

We had a question from Mattias. Please?

I don't know if you mentioned it, that you have used CERAMENT BVF as well, but can you share in terms of improvements for patients using CERAMENT BVF rather than other bone grafts in extremities sort of without infections, if that's possible? Quite clear with improvements on affected patients, it seems, but if you could share some thoughts here.

Yes. No, it's great. And I think when we harvest bone graft, especially, let's say, we harvest bone graft, not from the iliac crest. Let's say we harvest it from the distal femur or the proximal tibia, something like that, right? It's even more important that those areas reconstitute bone for the integrity of that portion of the skeleton. And when you use the bone void filler from regular CERAMENT in a non-infected field, it will allow it to reconstitute itself back to normal bone. And it's extremely helpful for that. And if you use it properly, it works extraordinarily well for that. So I do use it routinely now as a bone void filler. Clearly, in this presentation, I focused on its use for these harder cases that really are what get us super excited, but it is a valuable tool even for those more mundane situations.

I appreciate that. Then maybe the next question. We have non-resorbable antibiotic carrier plus autograft, of course, as you mentioned. Is the main perk with CERAMENT G that it is a one-stage procedure? Or is it also that sort of less systemic antibiotics is used, apart then from lower reinfection risk and, I guess, economics as well?

I mean it's kind of multifactorial, right? I mean the fact that you can use this and it can remodel to bone, like -- so I don't usually use just CERAMENT G to fill a bone void. I usually will supplement with a small amount of autograft. But one of the differences is it can be a huge bone void and I only need a relatively small amount of autograft. So the harm to the patient in harvesting it is much smaller in order for me to use that technique that I like to use. But it also provides a very, very heavy infection prevention in terms of recurrence of infection in the area. So it's causing less harm in harvesting the patient's own bone. It's causing that local action. And to your point, you're absolutely right. It's delivering an amount of antibiotic to the area that far exceeds what we could deliver systemically, and potentially allowing us to deliver less systemically for either less periods of time or through oral routes, all of which are more beneficial to the patient. So I think the use of this really accomplishes multiple things at once. And that's one of the things that's so nice about it.

Kristofer?

I have a question of how CERAMENT G has been implemented at your clinics and among your colleagues. So first, I guess you started to use CERAMENT G pretty early after the approval a year ago.

Yes.

So -- but overall use at the clinics and what you hear from colleagues at maybe other clinics, et cetera?

Absolutely. Yes, I think we were one of the earliest places that did use this in the United States. And I think we're probably one of the biggest sites in terms of usage. Some of my partners also have been using it for a number of indications One of my foot and ankle partners has been using it for quite a bit of diabetic, also in Charcot cases, as you guys talked about earlier, and has found it to be an incredibly helpful adjunct there. One of my partners that does do some spine work, I know, has done a few cases when they came back for infection where they had used it. And we have, in other cases, that have used it for extremity osteomyelitis or post operative infections as well. So we've seen it across those things in a number of the different partners in the group.

And was it you that introduced it to the partners so that you talked about it or?

It was me that introduced it in. And when we first brought it in, the first case that we actually did was my foot and ankle partner. And then the second case we did was mine, but I actually brought it into the institution.

My question is, if you have any experience of using this product on patients with rheumatoid arthritis and with problems of healing from fractures, et cetera?

So far, I've only used it on one patient with rheumatoid arthritis. So I don't have extensive experience. That was to sort of backfill a void in an arthroplasty case, and it actually did work very well. But I don't have extensive experience with that. I certainly think it's a great thing. I mean, I guess, to that extent, those patients have an elevated risk of infection with a lot of stuff, even apart from the healing aspects, which can be challenging. So I think that in those ways, for those patients, that this combination of biology and antibacterial action is going to be very helpful. It just so happens that my number of patients that I've happened to come across for this is small so far.

Okay. I just wonder how often is it -- that from a bacteria susceptibility point of view, CERAMENT G or V is not sufficient?

See, that's a very, very good question, and it's something that I talked about with Dr. McNally a bit, and others. One of the differences here, especially, when it comes to G, is that the amount that's delivered locally with this is absolutely extraordinary. It's so much higher than what could be brought to the site through an IV. So when we look at antibiograms and sensitivities to different antibiotics, and you see a gentamicin sensitivity, the levels achieved locally here are just orders of magnitude above what are normally listed there, to the extent that most bacteria are greatly susceptible to this even if they have some sort of resistance gene. Now, when it comes to vancomycin, that's a different animal. So vancomycin can be very effective at some bacteria that are resistant to gentamicin or other things. So we use it a lot for that, especially Staph that's resistant, things like that. However, vancomycin only has gram-positive action, so it can't affect the gram negatives. That's sort of why I think you heard some allusions, earlier, to surgeons, such as me, that if we had CERAMENT V available, we would be more inclined to use it in combination. Because having a coverage for those difficult gram positives can be very valuable, especially if we know that one of those organisms is a player. But I would be hesitant to leave behind the broader coverage that comes with G, because of my concerns that a fair number of these become polymicrobial when they have draining wounds associated with whatever bacteria is identified, and we want that broader coverage. Now in terms of the organisms that are not locally covered by either of these, I have to say, I think it's relatively small, with the exception of things like mycobacterium or fungus, which are kind of different animals altogether, and haven't really been part of the conversation here, so to speak. But as far as bacterial infections go, I think it would be a relatively rare bug that would not be susceptible to one of these, at least, if not both.

I have a question on CERAMENT G, as implant coating. Have you tried using it as implant coating, or know any colleagues that have and have any sort of feedback on that use case?

Now that's an interesting question. So generally, I have not used it as an implant coating. There is definitely a good rationale to that, I think. I guess maybe that gets you into a little bit broader of a question that I'll go to and then come back to that. The question that I think you're really asking there is as perhaps a prophylaxis, which is currently not on label. I think as a prophylaxis, it certainly has great potential that needs to be explored, and hopefully one day indicated. I have used it in a prophylactic manner in my cases in terms of filling voids that are at high risk and things. I usually haven't used it to cover a plate. And I guess I wouldn't say that I would never do that. It has a little bit of a drawback in that, if there's ever a reason or an issue to take a plate out and you have successfully turned the CERAMENT into bone, then you're really making it difficult, because the plate is going to be hidden underneath bone. So I think I'd be more inclined to use it either in a thinner layer or in adjacent areas or the bone underneath, so that I get that dilution of antibiotics in the zone but don't necessarily coat the plated implant just in case there's a time in the future when it needs to come out. Now time will tell whether that's really a valid concern or not, but it's one of the things that makes me think, as much as it might be a helpful thing to prevent things from adhering, I might be more inclined to do it that way.

Okay. Perfect. And then I have a question if you have any colleagues or surgeons that you know that are skeptics of CERAMENT G? And if so, what their concerns are?

It's interesting because I've talked about this in a number of forums, things like the Masters Fracture Forum and stuff where there's a lot of orthopedic traumatologists and things like that. And most of them were not nearly as familiar or at all familiar at the time that I discussed it. And some of the things that they brought up echo a couple of the earlier questions. It was, well, what do you do if the bacteria is not sensitive to gentamicin? That was a really common question, right? And I think that explaining the dynamics of the delivery, and also being able to point to clinical data, I mean, there's good clinical data on this, right? It exists and it's pretty long-term stuff that shows the clinical effectiveness, that I think once you're able to provide that education, I think the buy-in is pretty good. And the number of naysayers that are not interested in trying it becomes fairly limited. I think that from a company perspective, education, in terms of when you get that first use from the physician, making sure that the sales force is there to give them the advice on proper application so that their first usages are good, they're good experiences for the surgeon, that's probably the single most important thing. Because I believe that you're going to have a pretty effective time getting people to try to use it because it has clear advantages that are well documented. The only challenge is going to be to make certain that when they have that first or second experience, that those are good experiences. And if you do that, then I think you're going to get tremendous adoption.

So a question, please, on the relation you have today between BVF and CERAMENT G and how you look upon your own usage into the future, how do you see that developing the relation?

Sure. So the bone void filler, for me, is excellent for things that have a very low risk profile for infection. So a harvest site from bone graft should really have a very low risk for infection. It's a great place to use a bone void filler. A closed, let's say, lateral tibial plateau. Relatively low infection risk in that scenario, generally, so I might use it in that scenario. A bad bicondylar tibial plateau, an open pylon and open things like that, those are a little trickier because those have a very significant infection risk even closed. So in those circumstances, just bone void filler alone, I have a little hesitation about. And I'm a little more inclined to provide some level of protection from infection one way or the other. And I think that, that's is -- it may not be an on-label use for prevention of infection in a bad bicondylar tibia or an open pylon, but in my practice, it wasn't CERAMENT BONE VOID FILLER, but some of the predecessors in terms of injectables, Norian and stuff. I have seen what happens when they get infected in the bone void in those high-risk cases and it really ends up with an extensive amount of bone loss. So I really would like to have some kind of protection in those cases, and I think most traumatologists do. So I think that, that's what you'd see is, generally, when we have lower risk fractures that have joint impaction that need support and you have voids from harvest, those are good for bone void filler. When you have joint line impaction that need support, in a scenario that has real potential for infection, people are going to want, not just a bone void filler, they're going to want something that gives them a level of protection from infection when they apply definitive treatment.

I have 2. So it sounded like CERAMENT G was -- you tried to focus more on the complex and high-risk cases. But I think it would be interesting to hear and understand what share of your total case load, roughly, on a normal year, constitute these more complex cases, just to get a sense of the magnitude and of the usage of CERAMENT G?

Yes. I mean, I have a unique kind of practice and I have a pretty high volume of cases that are revisions from elsewhere and limb salvage cases and things like that. So with my current method of usage in terms of the cases that I have, it currently represents probably around 15% of the cases that I have. But to the extent that they talked earlier, I think that, that percentage use has really gone up over the past year. And I think that there probably is still room if I continue to see the results that I've been seeing that, in my practice, may even continue to grow going forward.

That's very helpful. And it would be interesting also if you could describe the awareness of CERAMENT G you see in the U.S.? And maybe if you could discuss, like, the most important hurdle to reach a standard of care shifting status? And yes, I understand there are some speculation on some of your thoughts, but if you could paint what you see in here in the U.S.

Yes. I mean, I think in the U.S., this is still relatively new. I think that it's getting a lot of people's attention. I think that it's still a minority of surgeons that have had the opportunity to even use it. Even among people that are at relatively high volume places, there's still many of them that have no experience with it at all. So I do think that there's been a fair amount of buzz created around the potential for this. It has definitely gone noticed that Bonesupport managed to cross a hurdle that evaded many people for many, many years. And that is getting a bone void filler or, really, implants or anything in the United States on label with the FDA that has antibiotics as part of it. I mean, there have been many attempts over the years that have failed to do that, and this company succeeded. And people have definitely paid attention to that and noticed. And so I think that from a perspective of getting people's attention, it's there. Now the challenge is going to be -- it's a few things. One is any time there's a new product that is an additional cost, that has to be brought into the institutions. And having the bone void filler already in an institution is a helpful step forward, but it's going to take time for the company to work through agreements with different hospitals. So that's one obstacle, right, that the hospitals need to agree on pricing and they need to be shown the data and brought along of the value of this in the long term. So that's one thing that I think is I'm sure they're working hard on, but it takes time. That's from the hospital side. And from the surgeon side, I think that as new surgeons or as surgeons who haven't used it before come on board, they just -- they need to have those experiences and the support so that they see those early successes, and they start to move down the pathway of acceptance for a broader spectrum of cases. And I absolutely agree with what was discussed in terms of usage patterns and how, yes, this is going to come in for really bad cases at first when people are like, "Man, I need everything I can get." And then when they see that it actually helps them for that, they are definitely going to open their minds up to things that are less extreme. I think that, that's exactly how things go across the board.

Thank you very much, Dr. Quinnan. Thank you for being with us, and this was really appreciated. Thank you.

It's my pleasure. I very much hope, on a future occasion, it's with you there in Sweden. All right. Very good.

Big personal thank you, Dr. Quinnan. Really appreciate it. Now I know you're a busy man, so we're going to let you go. Thanks for -- a big round of applause for Dr. Quinnan.

Thank you, all. It's been a pleasure. All right. You stay well.

Thank you. Same to you.

Okay. So you saw that from the agenda on the beginning that we're going to wrap this up in 30 minutes, so we're going to give a financial perspective and outlook, and then summarize a bit shortly what have we seen and communicated, transmitted today. So let's see, how do we go from this presentation now to the finance presentation? That is interesting.

That's a good question.

That is a good question. And I think we just did it, so here we go. Over to you, Håkan. I'll stand here out of your way.

So as said many times today, there is a good underlying strong momentum in the business. And so now here we are. So just to recap ourselves, this is the numbers as reported third quarter this year. So comparing year-to-date third quarter '23 with the same period last year. And again, as you can see, somehow it's a strong underlying growth, 85% reported. But if we adjust for currencies, so it's 75% in constant currency. We can see a strong improvement in gross margin. Everyone that has been following us knows that, somehow, for the sales in the U.S., we have a higher gross margin. It's about 94%. So as we grow sales in the U.S., et cetera, it has a favorable impact on gross margins. We've seen operating expenses increasing. This is both an effect of investments we've made, ahead of the launch in the U.S. of CERAMENT G. But it is also related to sales and marketing activities coming back to normal post pandemic. Congress is happening, higher intensity in [ everything ] in terms of meetings with KOLs, et cetera. But despite that, and all in all somehow, we've been able to report, now in 3 quarters, a growing and positive EBIT. And also in the last quarter, a positive cash flow. And this is somewhat showing some of the scalability of our business model. That's also what we try to explain in the graph to the right, where we are looking at the profit improvement in relation to the gross profit improvements. When looking at 2022, compared to 2021, we had an EBIT conversion of 36%. If we make that same exercise year-to-date, it's somewhere above 38%. And if we look at the last quarter, it's around 42%. So you can see how we are constantly improving the leverage in the business. And as a way, also, to continue looking at the trends, we have been, during the last number of years, showing in our quarterly reports, financials for the last 8 quarters to help everyone following us to see what's the underlying trends. And let's walk through this because, somehow, by knowing your history, it tells you quite a lot of what to expect going forward. Gross margin, starting in 2021 Q4 of 89.3%. Here, you can see a continuous constant improvement with the sales growth in the U.S. primarily. Selling expenses, growing, following some of the changes in the U.S., the booster program that we implemented ahead of the launch of CERAMENT G in the U.S. and also by an increased momentum in sales and marketing activities, both in the U.S. and in Europe, contributing to the sales growth that you've seen. R&D remaining in this period at a very stable period of around NOK 55 million a year. As a reference, if we look a bit back into, in this case, 2019, where we had more studies and activities that we're doing, happening in this field, we had a cost that was $50 million a year higher. Administrative costs, also remaining very stable throughout the period. All of this having a positive and favorable impact. If we take all the expenses and compare that to sales in the cost-to-sales ratio, we have gradually improved from 1.17% back in end of 2021 to 0.77% in Q3 of this year. And finally, somehow -- with the business momentum, somehow, we have a current stable cash position that is enabling us to fund any initiatives going forward and also then, in the final quarter, reporting a positive cash flow from operations. So another way to look at this is to look at the cost of sales ratio as a trend -- as a graph. And it's very seldom that you see a graph that is as linear as such a graph. So the quarterly trajectory in cost of sales ratio really confirms a stable and underlying improvement in operational average. Before running off, also a few words, because it's hard to have a day like this without touching, in a few words, what's happening also in terms of ESG. And again, somehow, this is something where, for us, as many others, it's something of strategic and operational importance and something that is highly built into our various processes. It's easy to relate this to somehow the stewardship in fight against antibiotic resistance, but it's also so much more. As an organization, like Bonesupport, our people is a critical asset. Somehow we recruit a lot of important and key competencies into the business. And for us, it's important to constantly work with our teams to build strong functional teams in a diversified and multicultural environment. We are also working with making sure that we have compensation practices that is incorporating, somehow, and showing that we reflect the value that our people bring to the organization. We are frequently taking the temperature on some of our people and staff by doing quarterly employee reviews, employee surveys. And these are giving us a lot of feedback where we can make sure that we can see where things are working well and areas where we can improve. And it's a strong tool in terms of the dialogue between leaderships and managers and employees. In these surveys, somehow, we're kind of proud because, again, it's easy to talk about surveys, but what do they show, what -- a few examples, somehow. We have what's called an Employee Net Promoter Score that shows the willingness to recommend us as an employer, of 43. Well, 43 is a number. But if we compare it to benchmark, benchmark is 8. So 43 is really strong. We have an engagement score of 8.3, while benchmark is 7.8. And when asking our organization on what they believe in work environment, the score is 8.9, with a benchmark of 8.4. Bonesupport and CERAMENT also brings a lot of positive values for our patients and health care system. We heard today about the clinical benefits and health and economic benefits that Bonesupport and CERAMENT brings into the world. But we are also actively working to reduce what we can in terms of environmental impact. And we acknowledge our responsibility to contribute to the UN Sustainability Development Goals. And one of our recent steps that we reported during this year was the launch of CERAMENT G in the third generation, reducing package size with 28% and waste with 35%. And to round off on next slide, a few words on our short midterm priorities in this field. The team of leaders at Bonesupport has been trained and certified by a third party to form a dedicated core team within the company to further support and advance our sustainability initiatives. As part of that, an extensive mapping and review of our value chain has been made, with the aim of identifying areas of higher sustainability impact, both positive and negative. And this serves as a platform when prioritizing actions and work going forward. A code of conduct for our business partners has been developed, to encourage and promote sustainable practices. This is made available on our website. We are now rolling this out when updating or entering into new contracts. We have rolled out several improvements in employee health benefits programs, and we have also communicated that we will and we have the ambition to join science-based target initiatives that promotes best practice in terms of emission reductions, and to set science-based emission targets. And again, somehow, with many of you, we're extending the dialogue with various stakeholders, improving the ability to meet and ensure relevant expectations. And finally, somehow, we are continuing our work and efforts to make sure that we can comply with and ensure meeting up with the CSRD reporting requirements following the new EU directives.

So let's stay here, and we're good in time, so we actually thought we just wrap up and people can then make their way through the snowstorm. Wow, there's a lot of stuff here. So if we look at our journey, there's a lot of work, of course, leading up to a Capital Markets Day. But it's not -- sorry to say, it's not prepared for you. It's stuff we prepare anyhow for ourselves. You get a snapshot of where we are currently in our development and where we're heading. And I think we're -- as a company, we're -- we have a good access, so we are open on where we're going, and we communicate that in basically 2 years' block. So what we've discussed before is the improvement in productivity by the direct sales team. You saw that also in my European slide, where we're at EUR 400,000 per direct sales sets, room to improve. But still, we will do more investments and take those opportunities where we see them. In the U.S., the procedures are back to normal. They're back to prepandemic levels, and they're actually slightly above. In Europe, that's going to take between 4 and 7 more years. Doesn't come from me. That is -- are the reports that we read mainly from the U.K., Germany and France. The backlog created during COVID, combined with a shortage of staff, has created the biggest backlog ever in elective surgeries that has to be dealt with it, become a political topic. And only in the U.K., they've added GBP 7 million -- sorry, GBP 7 billion to cope with this, to build [ down ] the backlog. So we tend to think that we'll start to be in a very even more favorable market dynamics with these products. And as we open up more growth avenues, of course, you already heard from Dr. Quinnan and others what this product can do. During the pandemic, we invested in a hybrid sales team in Italy and Iberia. We see these markets take off very nicely. We got the U.S. CERAMENT G approval in May of last year, launched in October. And then in just a couple of -- well, 2 or 3 weeks, we're going to file the label extension for using CERAMENT also in prevention for these high-risk cases. Michael spoke about SOLARIO. And when SOLARIO is eventually published, we believe that the results of that study are going to last for years. And a study with 500 patients, you can anticipate that it also have a big impact on the -- both national, regional and global guidelines. And then what we've discussed today and informed today is the CERAMENT V for the U.S. And this will be application that will take place in quarter 1 of 2025. It will be a de novo application. So the FDA has 150 days to respond. When they come back, if they have questions, it means that we have 180 days to reply to their questions. For CERAMENT BVF in spine, that's the 510(k). So FDA has 90 days before they have to reply. So 150 days on de novo, 90 days on the 510(k). And then same there, after that, the process can start if there is a dialogue regarding the material on data and so on. So basically, what we anticipate here is that end of 2025, we're adding 750,000 and 10,000, so 760,000 procedures to our total addressable market. The existing -- the current business is doing well. You've seen that on the previous slide, so we hope with this, we'll also open up even more growth avenues. And then for the future, depending on the conviction, we are anticipating to enter France. The regulatory process for Japan has started. And there's no date here. Why? Because we still have to understand what the authorities require on a pioneer product like this. The Japanese authorities have looked at the first material sent over. Not an application yet, just a dialogue. And of course, we have to understand here what kind of data is required to enter the Japanese market. And since we don't have a firm timing and it comes after 2026, we prefer to communicate that at the later stage. And then we have finally the 345,000; 300,000 preventive, 45,000 treatment, CERAMENT G and CERAMENT V eventually also for spine, which is our ambition. So what have we communicated today? Outside, it was snowing massively, and probably I had a little bit of snow in my head. So I want to come back to your question, Erik. Sales in 2024 will be above 40%, with or without the approval for open fractures. Why? Because as I stated before, we want to have that approval because it will help us on reimbursement and also being more legitimate in promoting it. What we see now is already a momentum where this is being used. And it doesn't come by surgeons being devious. It's come because they have great care for their patients. So with or without it, sales is going to be above 40%. We've also seen that in quarter 4 next year, we're going to file for BVF. It's going to be a de novo. And in quarter -- look, here's a copy. So here it says quarter 1 2025, but you can't really see it because it's [ secreting ]. The final thing we learn today is that my partner in Investor Relations, a person I love to work with, Charlotte Stjerngren, works at Cord and I do know her last name. So thank you very much, everyone. I hope you enjoyed the show today. I hope you enjoy the future journey. And please let us know if you have any questions. You can always contact us. That's all for today