CurveBeam AI Limited (CVB.AX) Q1 FY2026 Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the CurveBeam AI Investor Webinar for the quarter ended September 2025. [Operator Instructions] From CurveBeam AI today, we have the Managing Director and CEO, Greg Brown; CTO and COO, Arun Singh; and CFO, Ura Auckland. The presentation will last for approximately 20 to 25 minutes, and then we'll get into the questions, but I will hand it over to Greg to get started.

Thanks very much, Matt, and welcome, everybody, to the Q1 fiscal year '26 CurveBeam AI update. So just starting with some of the key activities for the quarter. Q1 is notoriously slow because of the summer months in both Europe and the U.S. We had 4 orders for the quarter. It represents about a 33% increase over the corresponding period last year. And we had 3 HiRise this quarter compared to 2 in our last quarter. During the quarter, we also did a placement of $6.5 million to institutional and sophisticated investors just to shore up the balance sheet. In addition, there was several engagements over the quarter with the vendor around the validation of the HiRise for a robotic system. There were several meetings and a demonstration held. We'll go into a bit more detail on updating the market on where we are with the engagement on validation of the HiRise with the robotic system. We're very excited today to really present the China strategy. We've had the great experience of working with a first-class team of professionals in the field in orthopedics and in imaging in China. The company was able to advance the term sheet that we showed in the placement deck from September into contracts. So we now have all 5 contracts that are executed with Weiying and that being a joint venture with Wego Orthopedics. Now Wego Orthopedics is a subsidiary of Wego and it's a listed subsidiary of Wego. The deal grants exclusive rights for the distribution of all of our weight-bearing CT technology and all the associated value-add products around the AI. It's a major distributor in medical devices and in particular, in imaging with a very strong position in orthopedics. So the Chinese distribution will be done through our partner. It will move to a manufacturing capability, not only for the HiRise, but for our next-generation platform as well. And as part of this arrangement, there is an equity investment in the company for around 5% of our issued capital. It is new capital that will be issued. There's $4 million upfront. It's placed at a premium of $0.405. And there's a further $6 million at the same premium that places on regulatory and commercial milestones. So we're very excited about this opportunity and what it brings for the company. I'll go into this in a bit more detail on the following slides. The other major plus was the vendor financing facility. That got signed last quarter. We'll be able to draw down on that facility this quarter. This is really targeted for about 10% to 20% of our prospects within our pipeline. Orthopedics can be quite a capital-intense area. I mean, if you look at robotics alone, $1 million to $1.5 million for a fully optioned robot. So with this capital-intense requirement in orthopedics practices, having this vendor financing facility for a percentage of our prospects could really help us advance those prospects to orders. And I think we'll start to see some of the benefits of that in Q3 and Q4. We do have access to draw down on that facility and start working with that in this quarter. We also maintain our target for the FDA clearance on the BMD, and I'll go into that in a bit more detail later in the presentation as well. So they are the key activities for the quarter. It was, I think, a pivotal quarter for us. It really opens up a global strategy for the company and really does deliver us to another level in our ability to deliver globally solutions in improving the management of osteoarthritis and osteoporosis in restoring function in an aging population. So what are the targeted benefits of the relationship? First of all, of course, there's the capital injection at the reduced dilution. But really with such a major player as a partner with a group of individuals, who have all got excellent track records in placing CT devices in China, it really does offer us a rapid entry into one of the fastest-growing and the largest medical device markets on the planet. China will be initially supplied with our U.S. manufactured product, short term, which will be on a transfer price and then it will move to the locally manufactured product and a wider expansion into the territory, which includes China, Macau, Hong Kong, Taiwan. It's a real validation by a major player in orthopedics, definitely a dominant -- a major and well-recognized brand in China for weight-bearing CT. The manufacturing, once we have the China HiRise and next-generation product manufacturing within China, the business relationship will change to a royalty on sales. I really am confident that the volume-based capabilities of the economies of scale and scope that we'll be able to generate out of China with our partner will really help us address some of our costs and improve our margins going forward and allow us access into markets today that we do not have access today because the U.S. dollar and we have a higher manufacturing cost that closes us out on a number of markets. I think we'll be able to really not only access a lot more of the global markets, but also have a profitable business. The accelerated innovation cannot be underestimated to the resources of our partner and the vested interest in our next-generation platform, I think we'll see a first -- a high-quality first-rate solution in whole body imaging as well. One of the benefits of having local manufacturing as well, the volume-based procurement policies in China now, having that capability will really open up the much broader state hospital system that we want to target as well. And with that dual factory capability and just noting, we will always have U.S. manufacturing, both for HiRise and next generation to supply in the U.S., we will have the Chinese manufactured product to supply not only Southeast Asia, but also other parts of the world for us. So it gives us that dual factory capability. It secures the supply chain, reduces the risk around supply chain. And it gives us a very powerful option for managing tariff risk, for instance. Having 2 manufacture capability -- manufacturing capabilities will really help us manage any of the U.S.-related tariff risk and it opens up the global market for us. So we see a lot of major strategic benefits in a relationship with such a major player, not only in China but globally. So the China agreements, there's 5 agreements. The first one is the subscription agreement and the escrow. This is all new capital that we're issuing, and it's a $10 million equity investment. It will give them around 5% of the company. The execution of the agreement was the first milestone of $4 million. We have various regulatory and next-gen product milestones as well. But there's -- for HiRise, there's a first milestone. It will represent about the first 10 HiRise, so just under $5 million in sales, but it delivers a $1 million milestone as well. And then for around the first 50 cumulative HiRise placed, it delivers a second milestone of $2 million, which represents around AUD 23 million in sales. So we're quite excited about the opportunities and the potential of this agreement in delivering significant revenues, not only for our U.S.-based product initially, but then in royalties going forward. The shares are all placed at the premium, giving a 5% equity position and the escrow provisions are in place for 24 months. So it really does align the interest of all parties because we all believe in what this opportunity can deliver. The common provisions across all the agreements, the first question will be around, is there a noncompete? Yes, there is a noncompete with the partner in place for the term of the agreement. It's a 10-year term. All the governing law and dispute resolution is done through Singapore. And we have an arbitration process if needed. The goodwill that has been shown by our partner throughout this process, and this has been a long and arduous process to get to this point. It's been 9 months in the making. I found all of the individuals, first-class professionals very driven in being commercially successful. We have enjoyed the process, and we look forward to implementing these agreements with them. Now the IP and collaboration agreement that's in place, it's a 10-year license. We will have the regulatory approval that we do on the U.S. product. And then on the China-based -- China manufactured products, our partner will hold the [ CFDI ]. There's a joint steering committee. This is a tactic or a facility that I've used in other agreements. They're very effective. It has equal representation by both parties and everyone works collaboratively to solve challenges and to exploit opportunities. I found that with the level of professionalism our partner brings, it will really help us to really maximize these agreements. That manufacturing agreement is really the exclusive license to sell the HiRise and next-gen products into China. That will be the U.S. produced product. Again, I highlight that we will always have U.S. manufacturing capability for the U.S. market. And then in China, when we go to the China manufactured product, it will be based on royalties. sorry, with the manufacturing agreement, our partner will manufacture the product in China and sell into China and also allow us to buy product to sell in other parts of the globe. The distribution agreement is where the U.S. product is initially sold into China. We'll be setting our minimum sales targets through the joint steering committee. And all of our delivery and payment really is based off pickup from our U.S. facility. So there's 5 agreements in total. We're excited not only for the short-term revenue, the distribution agreement can help deliver, but also for the long-term royalties that we should be able to see through the manufacturing agreement and in the improvement in advancing our next-generation technology. So coming back to the quarter, as we're showing here the trends, this is a cumulative of purchase orders graph and it shows year-on-year fiscal year '24 to '25. The first quarter is always notoriously slow. It is mainly due to the summer months in the Northern Hemisphere, but we have got a good start in our Q1 for this fiscal year. The cash at the end of the quarter was $2.2 million. We had further receivables plus cash due of $5.1 million. In addition, we did the $6.5 million placement, and we will also receive the first $4 million tranche for the first milestone of signing the agreements within the deal. So it shows up the balance sheet going forward so that we can invest in really driving the business and moving forward on executing our business plan. So the enhanced HiRise project, the company had several meetings with the vendor during the quarter. They were positive meetings. There was also a demonstration. And we continue to be within their list of priorities, where we have limited control on those priorities within how they can process the HiRise validation. We remain very confident in the submission and our ability to seek validation. We just need to work through their system of getting our project resourced from a regulatory perspective as quickly as possible. And we're working very closely with the senior management to try and help advance that program. Arun, would you like to comment on the meetings that were held so far, not only last quarter, but this quarter?

Yes, certainly. So last quarter, there was a very effective demo, where 9 of their R&D and regulatory people participated with a very strong interest and many of them were being introduced to the device for the first time. So that did bring them to a more -- a higher level of awareness for our device. And then just recently, we met the senior leadership of MAKO at the hip and knee conference in Dallas, and we had a nice meeting and we started out the future course. So definitely lots of green shoots appearing from those meetings.

And we'll keep the market updated as we have more concrete steps and agreements in place on advancing this program. The other item to note for the quarter is to just give everyone the BMD update. As we know, the revised strategy is to bring out the BMD product on the MDCT first. This will be as a 510(k). And this also offers a modest SaaS opportunity in the trauma market for hip fracture patients, where there is a stat BMD requirement for helping to plan these surgeries. This product will be the first that goes through to clearance. It will then be a special 510(k) from the MDCT to the HiRise for the BMD SaaS model. As part of this first step, we were looking at following around the middle of this year. By August, we had a lot of the data to just submit the BMD as a product. and get clearance. However, for a commercial product, we needed the data management platform to be able to offer the SaaS capability. We have moved very quickly to verify and validate that as part of the following. If we don't do it together, if we separate it, it will become a second clearance that we need to seek on that platform. So by bringing it all together, delaying by the 3 months and getting the verification validation on the data management platform, that will allow us the ability to have a commercial product that we can start to launch in the U.S. Now we believe we are still on our time line for clearance, but that's just a bit of background on why there was a delay with the validation and verification on the supporting software, which needs to meet all the cybersecurity guidance, the HIPAA guidance. There's a whole range of new areas there that we need to be compliant with to be able to offer that BMD solution on an MDCT platform. Now...

And can I just emphasize for those who are new to the company that the MDCT is not our device. So this is the SaaS product using the image from other people's MDCT s.

Well, thanks for that clarification, Ura. And then, of course, our product being the HiRise. This will be really more hospital-based and acute trauma setting for the stat BMD capability. And then this will be really the group practice for total joint replacement as part of their surgical planning for doing a total joint replacement in the knee and hip, but really in that group surgeon setting. So we remain on our 510(k) clearance for the MDCT platform product, and we expect middle of next year [ before that occurs ]. Finally, just a bit of an update. We're seeing a lot of MDCT standing capability starting to emerge. These are massive devices. You're not going to put them in a group surgeon setting, which is our primary target. It's going to be hard to even fit into hospitals. But in some of the imaging -- third-party imaging centers, these devices are designed to do everything from trauma to cranial to cardiac to lung, to oncology and yes, also orthopedics. So they're doing the volume of CT scanning. It's a high radiation scan. But it is very good to see -- they see the future in weight-bearing CT. And I think that's a nice third-party validation as to the requirements around weight-bearing CT, especially for orthopedics. We don't see this as a direct competitor, but we see it helping to really advance the market in weight-bearing CT. Really, our focus is very much in that group surgeon setting, where we look to build our BMD annuity and the hospitals, where we can really offer the workflow benefit and of course, the revenue for that scanning for the surgeons in implementing that in their workflow. So on that note, that's the last slide. Matt, can we open up to questions?

No problem. Thanks, Greg, and you're in the room there. We'll move on to the Q&A session. [Operator Instructions] Greg, first of all, can you cast more light on where CurveBeam stands with Stryker MAKO validation with HiRise? Can you give any idea on time line as this seems a critical step in driving sales with Stryker?

I'll pass that to Arun.

Yes. Thanks, Greg. So the time line is dependent on the partner and their own resourcing and project prioritization. So we are not in a position to give a projection on their time line, but we can definitely reiterate that the level of engagement has intensified lately, and there is strong interest in pursuing it to completion.

And some of the green shoots that Arun is pursuing there, we'll update the market when things progress that we can share something.

Thank you. The next question is the timing on the China deal, was it needed to do the recent placement? And could you not have waited?

Look, good question. Look, we were originally targeting to close these agreements in September. With translations back and forth, things got delayed. And we were coming to a quarter, where we were getting down to $2.2 million in cash. There was no guarantee that we would sign by when we did. So just to be prudent, the Board wanted to just shore up the balance sheet, which we did with that $6.5 million placement. Even with the cash and near-term receipts, what we saw was that the quarter, a number of those receipts that were expected out of Europe and the U.S. actually didn't come to fruition. They're now going to fall into Q2. And so hence, that's why the cash was getting down to $2.2 million. And it was just prudent that we acted and we did a small placement. It was well supported and it allowed us the time to close this deal and the China deal and to really shore up the balance sheet going forward. So we're in a position to invest when and once we're cleared through the makeup process.

Thank you. Wego, the next question is around Wego and citing that it's a major name in China for medical devices. How did the deal come about? And how did you engage with them?

Yes. Look, this Wego, I mean it's a huge name in medical devices in China. I know it's well recognized in the U.S. as well. I think anyone who is involved in Asia and China and globally know the brand, know how big the company is. Look, I think the -- one of their divisions in orthopedics, they're leading the technology edge in robotics. They're leading the technology edge in implants. They've got first-class products. And I think that they see that weight-bearing CT is a critical component going forward. And we had -- I think the initial outreach was around September last year, but the engagement around moving to formal business discussions happened in around February -- early February. So they reached out to us. They had done a lot of due diligence on the opportunity on our product, on our brand, on our literature, clinical research. And there was a clear motivation to move to license the rights to our platform and our AI solutions with their brand. And yes, look, that's how it really emerged was I think they could see that weight-bearing was becoming a big part in this orthopedics field. We are a leader in that field. And just their involvement and the fact that they brought this to agreement with us, I think it is a nice independent validation of the leadership position we've got in weight-bearing CT.

Thank you. The next question is around BMD. It was supposed to file midyear this year, why the delay?

Yes. Actually, I just covered that. But just to go back, basically, we had most of the patient processed and the data available in August. We could have just filed a BMD and got cleared for a BMD and then have to file a data management platform, and that could have taken another 6 to 9 months to have a product that we could then commercially launch. By taking a 3-month delay and expediting the verification and validation on the data management platform to [ actually ] incorporate that into the file, it becomes one file that once cleared, we have the ability to then commercialize the product. So by taking the 3 months, we hope to save an extra 6 months by getting it through on one clearance. Now we do believe we can still meet the mid next year for the FDA clearance on that combined product, at which point that would have been a major time saving for commercialization. And that's what we want to focus on is really getting to access to that market as quickly as we can. And then, of course, filing the 510(k) special for the HiRise. That's where the big annuity really lies is in the HiRise. This is a modest, but it helps, and we would like to get as many contracts as we can in that trauma segment for a stat BMD requirement. And that's why [indiscernible].

The next question I have is, do you need to partner with MDCT scanner manufacturers to install the SaaS product? Or is it employed post-acquisition by the radiologist?

Well, it will be the radiology divisions within the hospitals and in the case of imaging centers with the radiologists, we'll be working with some of the PACS system, management systems to be able to gain access there and where that's all available, we'll be utilizing our data management platform. So we have validated on multiple manufacturing CT. So there's several CTs that were collected within that data set. So from Lightspeed through Philips through to Canon. So we have shown a variety of CTs within the 450-patient data set. really to get that access, we see the PACS management systems as a nice way of incorporating with those companies to gain access to the BMD. And of course, where that's not available, we can utilize our own data management platform.

The next question is, can you speak to CurveBeam's market share currently in the weight-bearing CT space and the growth rate of that weight-bearing CT area?

Look, I see that weight-bearing CT once you get into knee and hip and a major driver for that will be the robotic systems that require a CT image to do their custom-cut guides. Now there's a lot less trauma involved with the robotic systems because they have this 3D CT scan. They can do a very accurate cut guide. It's a much less traumatic procedure. And people are often up and walking within 24 hours after the robotic system. So for us, I see that once we're through this validation, knee and hip, which represents such a massive part of the market -- and because of the emerging growth, I mean, 25% of the market is now robotics, it's growing at an incredible rate. Some of the other augmented reality systems are all accelerating quite quickly. You're seeing some of the players moving towards CT imaging on robotic systems on multiple vendor fronts. I see that, that's going to have an enormous impact and potential growth rate for weight-bearing CT through knee and hip. In foot and ankle, yes, look, there's a huge acceptance now globally on it being almost regarded as standard of care in the diagnosis and the management of a lot of foot and ankle conditions. But foot and ankle doesn't represent the volume of knee and hip. And this is where the 2 when they come together, especially in the group surgeon setting, it becomes a holistic solution for all their requirements, whether they've got a Prophecy for a total ankle from Stryker or they've got a MAKO from Stryker or they've got the ROSA from Zimmer. I mean, it becomes a holistic solution for all of their planning. And I see that, that will have a significant growth opportunity for the device. And if you look at the potential market, there's 11,000 group practices in the U.S. that would qualify -- sorry, 5,800 group practices, about 5,200 hospital systems. So there's 11,000 targets of the group practices and hospitals, there's, I'd say, 2,000 to 2,500 that would have robotic systems already installed and growing. So that's the type of growth rate that we could look at for this device going forward just in the U.S. bring in China, bring in Europe, it starts to get very exciting for growth. And it's -- we've really pioneered weight-bearing. It's really going from that early adopter phase now into routine use.

A question around the Wego deal announced today. Is there a maximum time period to meet the sales forecast to earn the additional $1 million and $2 million milestone payments?

There's no time limit on that, but we expect that post the launch that both milestones should be met within 6 to 12 months.

The next question is, what kind of cost reduction are we looking at once China starts to produce for sales outside China and the U.S.

Well, we can only talk theoretical at this point, but it's material. And we would envisage around targeting a 50% to 60% reduction in cost.

Thank you. And the next question is, how does the height and width compare in meters or feet between PlanMed XFI weight-bearing CT and Skyrise -- sorry, HiRise, I think that's meant to be.

Arun, do you want to handle that?

Sure. The height of the XFI is taller than the HiRise and even our next-generation full body device is a little more than 8 feet. So it doesn't fit in the 8 feet ceiling. The width is a little bit more than the HiRise and -- but the depth is significantly more than the HiRise. So definitely a much bigger footprint than the HiRise does and also bigger than what we project our next-generation device to be.

And the other thing that people think is if you want an XFI, you can have it as a standing device or you can have it as a [ supine ] device. So both have a different footprint. The supine device has a much larger footprint, but the standing device is a small footprint but a very high height requirement that will limit it in that group surgical setting. I think the other key point to note here is that in a HiRise, you've got both in one. The gantry flips, you bringing your table, you can do what non-wight-bearing and weight-bearing all in one device. That will be the same for [ Skyrise ] (sic) [ HiRise ] as well. So one device, one small footprint will give you that ability to do both.

And [ can I ] just cited the potential issues around company IP going to China. And the question is, do you see the loss of slight altering of your IP as a risk?

Look, I would say 20 years ago, 15 years ago, yes, I would have been a lot more concerned. But 10 years ago, China really embraced IP. They've invested heavily into IP. This is why over the last 10 years, we've always filed in China because there is now a clear process for IP and there is, I think, respect for IP. I think that at this point, the fact that the partner has licensed the IP speaks to their respect for the IP. And so -- and they've also signed a noncompete. So for us, I think there's a lot of very positive signs. And we only started really following China 10 years ago because clearly, the approach to IP and the respect around IP became a major focus within their system. And we're seeing this change in transition in China, and we're very much on that forefront. And Wego, I think, and Weiying are very much respectful of that and ensuring that they can use it to their advantage as well. And with the type of player we're talking here, it's a major player. I think it will really deter other competition from emerging because you just don't get the economies of scale and scope when some of these bigger players get involved, they tend to monopoly -- to dwarf the market.

Great. Thanks, everyone, for the questions. There's no more in the queue. Greg, I'll hand it back to you to provide a closing comment.

Yes. Look, thank you, everybody, for the time today. This was a lot of work by the whole team, the U.S., the Australian teams, in particular, our Australian CTO. I just want to thank the team for the resilience and patience for getting this across the line. It's been a big effort, a major effort by all. We're super excited by this opportunity. We are extremely respectful of our partner, the level of professionalism, the level of goodwill, the excitement for what we can do with this has been something that we've all really taken and gained a lot of intrinsic motivation from. We feel that they're helping to lift us to that next level to be a major global player. We're excited for the journey. We're excited about the friendships we've made and the professional relationships going forward in really succeeding on a global basis. So I just wanted to close off that this China deal was a big effort. It took quite some time to pull it together, but we're now looking forward to now implementing and seeing this in practice in the global marketplace. So thank you for your time. We're available for further questions. Just reach out, we can discuss. Thanks, everybody.