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

Good morning, and welcome to the 2025 Annual General Meeting of CurveBeam AI Limited. My name is Robert Lilley. I am the Non-Executive Chair of CurveBeam AI Limited and the Chair of today's meeting. Thank you for your attendance here today. It is now 9:00 a.m. which is the advertised time of the 2025 AGM. I'm advised that a quorum is present, and therefore, I officially declare the meeting open. Before we commence the formal aspect of today's meeting, I would also like to introduce my fellow Directors: Mr. Greg Brown, Chief Executive Officer and Managing Director; Mr. Arun Singh, Chief Operating Officer, Chief Technology Officer and President, U.S. and Europe Division; Mr. Hashan De Silva, Non-Executive Director and Chair of the Nomination and Remuneration Committee; and Mrs. Kate Robb, Non-Executive Director and Chair of the Audit and Risk Committee. We are also joined today by Mr. Ura Auckland, our Chief Financial Officer; and Company Secretary and representatives from our financial year 2025 auditors, partner, [ John Roberts ] from PwC; and our proposed new auditors, BDO Partner, [ Ben Lee ]; and our legal advisers, Nicholson Ryan Lawyers, partner, Leath Nicholson. I would like to explain the format of today's meeting. Firstly, I will invite Greg Brown to give a short CEO and Managing Director's presentation, which will provide cover progress on the execution of our vision and recent developments. After Greg's presentation, we will consider the resolutions outlined in the Notice of Meeting. I will now hand over to Greg Brown for his CEO and Managing Director's presentation.

Thanks, Rob, and welcome, everybody, to the AGM for CurveBeam AI. Next slide, please. Just bring everyone's attention to the disclaimer and forward-looking statements. Next slide. So just to give an update on the key highlights for fiscal year '25. We had around an 86% increase year-on-year from fiscal year '24 to fiscal year '25. We also had a reduced loss from ordinary activities of around about 30%. Now the FDA clearance on the enhanced HiRise was also achieved in July of 2024. This was a major undertaking that was completed within the company for enhancing the HiRise to be able to process robotic datasets. And for that, there was a number of technical hurdles that had to be met. They were all passed in the FDA clearance received on that device. Now presently, we are doing the verification and validation of that labeling change that will give us a validated product for using cut guides on a key robotic system. Now the delays that have occurred here, I'll go into more detail and give you an update on where we are on that further in the presentation. But it's a key reason for the lack of performance in our share has been the delay in the robotic validation, and we continue to move that forward as quickly as we can. Now, we identified early as a Board and management team that the company's reliance on being able to do these robotic datasets was critical, but we needed multiple shots on goal in delivering a company with the ability to go cash flow positive. To that end, we had a China strategy initiated. This was initiated in early 2024. We got down to a final candidate in around February-March of this year, which led to the announcement of the China strategy and the $10 million milestone-based investment with the JV, Weiying and Wego Orthopedics. This was a key strategy because it delivers a second shot on goal for ensuring that the company has 2 pathways to a cash flow positive position. During the year, we also did a raising in August of last year that was for around $11.5 million. We also announced the expansion of the Stryker agreement, which was to expand the relationship to Australia and New Zealand, and that came out around April this year. The vendor financing was also another significant item to recognize. This is now a signed agreement. We look to start to implement and work with that vendor financing facility towards the end of this quarter and most probably in Q3, Q4. This vendor financing, it won't help in 100% of cases, but in 10% to 15% of prospects, it will help. And that's because in orthopedics, it's quite a capital-intense market. If you look at the cost of these robots, they can be up to USD 1.5 million. This is why capital can be a challenge for orthopedic practices and why this vendor financing facility and about 10% of the cases around our prospects could really help us advance those prospects to a sale. So just highlighting, they were the key highlights: the increase in revenue, the FDA clearance, the China strategy with the additional shot on goal for improving the company's performance, the raising, the expanded Stryker agreement and the vendor financing facility. Next slide, thank you. So talking to that China strategy. This was both a capital injection of $10 million. It's milestone-based. It's also about a 5x our present share trading price. It's a new pathway to material sales and profit. It's a major entry into a key medical device market. And China is a market of 38,000 hospitals, 32,000 being state and around 6,000 being private. Now last week, we had the good fortune to go to the Chinese Orthopedics Association Conference in Tianjin in China. We were able to see the pre-promotion activities occurring on the HiRise. This was a conference of around 25,000 participants. It was a significant conference. And Wego is a major player in this field. What I'm noting here on the left is just showing some photos. This was before the open. As you can see, we've got the HiRise and the association to the robotic system with HiRise front and center on the stand, and we had a video playing on the HiRise on the stand. So it took very high profile. This is a core strategy going forward. Initially, we'll be supplying the U.S. product into China post the Chinese FDA clearance, and then it will move to a locally manufactured product that will then go to a royalty style arrangement. It gives us dual factory capability and reduces our supply chain risk. It also helps us manage tariffs, and it allows us to be compliant within the volume-based procurement policies to access the state system in China. We're very excited about this relationship. We feel that it is, on its own, a very nice value creator for the company. Next slide, please. On that, please note that for the first milestone, the execution of that agreement, there's a $4 million payment that's placed at $0.405 a share. The next milestone is around the Chinese FDA, that's around $1 million. And then we have some sales milestones, which will represent an additional $3 million that represent around $23 million in revenue, and we're targeting that in next fiscal year. Next slide, please. So as you can see, this is our cumulative purchase order analysis year-on-year. We had around an 86% increase in sales. What you'll note is Q1 is notoriously slow. This is due to the summer months within the Northern Hemisphere. And you'll also see that it builds over time quarter-on-quarter. Next slide, please. So on the enhanced HiRise validation with a robotic system. The first point I want to make is that we're doing a lot of work with nonrobotic systems as well. So where you need to do CT planning for surgeries, whether they're osteotomies or their implants, there are several programs that we have underway that are nonrobotic related from restor3d/Conformis, Medacta's knee osteotomy and Newclip's knee osteotomy. These are patient-specific implants, and they are all nonrobotic based. They also offer an ability to open up opportunities for the use of HiRise with these approaches to knee pathology restoration. On the robotics side, we are working closely with one vendor system. If you look at the 4 major vendors with robots in the market, they represent 85% of the market, but only one of the vendors has a CT requirement for their cut guide. And when we refer to a CT cut guide, that's the graphic on the right -- top right hand of the slide, it just shows that they build a 3D model of the patient's joint and they calculate the cut guides for fitting the implant. This way, it reduces the trauma to the bone and makes for a very nice fit of the implant. The benefits of this is you can be literally up and walking within a day or 2 after the procedure. Now today, the CT scans for doing this are done on a normal lying down CT that you would go to at an imaging center or in hospital radiology. But we're working now for the HiRise to be validated to offer this in office so that they can improve their workflow and patients and that the revenue from that CT scanning is available to the surgeon. So the update on our validation around the custom cut guides, what we're needing to do in the labeling change is from a supine position and the use of the reading rod to a standing position and showing that we're substantially equivalent. Now we've had some good interaction over the last 3 to 4 months, which have included demonstrations with the vendor's R&D team. The discussions have been constructive and they continue. But we are still within a process that is an internal one, and it's very much controlled by the priorities of the vendor organization. It's important to note that the HiRise validation of the CT scanning, while it's not a direct revenue contributor to the vendor, it's a major revenue opportunity for their users. Now we have revisited an offer that we've made to help finance some of the resources to bring ourselves out of the queue to get this project resolved. And those conversations continue, and we'll update the market when and if appropriate. Next slide. So this is a slide that I pulled together that I wanted to just give people an understanding of the market dynamics for group surgeon practices and why we are dependent on one system at this present moment in time. The first item to recognize is that about 1 in 4 hospitals now have access to robotics for knee and hip surgery. Now of the 4 major players, and that includes Johnson & Johnson, it includes Smith & Nephew, Zimmer Biomet and Stryker; and of those 4 systems, they represent 85% of the robotics market. Now Stryker by far, with their robot, has the lion's share and that is a system that only uses CT scans for surgical guides. Now today, they use a supine CT for that CT scan for their surgical guides, and we're looking to incorporate the HiRise so that it enables a group practice to be able to do their CT scanning requirements for their robotics within their office, which also creates a revenue opportunity. Now of the other 3 systems, none of the other 3 systems take CT scans. The Smith & Nephew is moving from x-ray to ultrasound, the Velys is x-ray and the ROSA is x-ray. Now this is why the dependence on a particular system for the U.S. market, in particular, is really reliant on the Stryker system as it takes the CT scans for its surgical planning. Now there are other systems that we are working with from Globus to Think Medical. They still are building in their market share positions, and we work closely with them to also offer their cut guide requirements. Now I'll also make note that Zimmer Biomet has recently acquired a technology called Monogram Technologies. They also have a CT-based total knee system. It won't be out until late '27. But that, too, we have worked with Monogram in the past in their CT guidance requirements, and we continue to have a constant interaction with these other players around either advancing to CT on their platform or for their next-generation platforms, making sure that we're available for their CT requirements. But as of today, in the next 18, 24 months, the key product, the key robot, is going to be this system that takes CT scans and why it's an important requirement for a lot of group surgeon practices out there because of its dominance in the marketplace. Now in addition, you will note that in the China strategy, the Wego robotic system, they're going one extra level higher than anybody else. they're not going to work with supply. They've moved straight to weight-bearing CT. Now general consensus and belief within the community is that, that is the future of surgical planning. And in the case of Wego Orthopedics, they're moving straight to validate the HiRise as a weight-bearing CT for their datasets. And that's a significant opportunity for us in the China market in addition to all of the other requirements required in orthopedics. Next slide, thank you. So on the BMD module, the update is as per the last [indiscernible]. We are remaining on our time line, and we expect the FDA clearance to come through by around the middle of next year. Now please note, the first clearance will be on an MDCT, these are these multidetector CTs. And then we will do a 510(k) special for the BMD to the HiRise. Now this opens up an opportunity for doing BMD revenues. It is a modest market opportunity, but because it's mainly focused in trauma and for stat capabilities under an inpatient setting. But it is a key product to help drive our [indiscernible] revenues initially with the modest opportunity within the MDCT market in trauma, the stat capabilities for BMD and then moving to the HiRise, which is very specific to group surgeon practices and -- but only knee and hip where BMD is covered. So I'll just rehighlight that, that in those 5,800 group practices, the HiRise for knee and hip has a favorable reimbursement, and that's where we need to make sure we build our footprint to be able to build our annuity is in that knee and hip market, and this is U.S. market specific that we have that favorable position. Next slide. Thank you. So the competition, just an update. It's good to see that there's other major systems coming out, Cannon. This is a multidetector CT, so high radiation, requires a radiologist to run it. It's not an in-office setting device. I mean this is a massive footprint. Our footprint is very, very modest and can fit within a group surgeon practice quite easily. These are very large systems and are designed for large radiology centers within hospital or commercial. Now this device will be doing everything from trauma cases to cranial cases, to lung screening, to cardiac screening, to oncology and also orthopedics. So one of its functions will be orthopedics. The majority of its utilization will be all other requirements because it's a general CT, and this will have a weight-bearing component. Now we don't see it as a direct threat for our core market, but we do see it as a major help in advancing the significance of weight-bearing CT as the future of this technology. That's the last slide. So I'll pass it back to you, Chairman.

Thank you, Greg. This now brings us the formal part of the meeting. I advise that no notice of any other items for today's agenda has been received and therefore declare that the only matters that will be dealt with at our meeting today are those set out in the Notice of Meeting. The Notice of Meeting was made available to shareholders on 27 October 2025, and I will take it as read. Before we consider the items of business, there are a number of procedural matters I wish to draw to your attention. In accordance with Clause 7.8b2 of the constitution and Section 250L1C of the Corporations Act, all resolutions proposed in the Notice of Meeting will be decided by taking a poll. Only shareholders, proxy holders, body corporate representatives or attorneys can vote. Please note that voting exclusions apply to some of the items of today -- of business at today's meeting. Please refer to the Notice of Meeting for details. Once I declare the poll open, select the Vote icon and the voting options will appear on your screen. To vote, select your voting direction and a tick will appear to confirm receipt of your vote. The poll will remain open during the meeting so that you can vote at any time during the meeting. Each resolution and the proxy count for each resolution will be displayed on the screen when that resolution is being considered. I am holding undirected proxies in my capacity as Chair, and it is my intention to vote all such proxies in favor of all resolutions. Any directed proxies that are not voted at this meeting will automatically default to me as Chair of the meeting. I am required to vote those proxies as directed. How to ask a question? Shareholders, proxy holders, body corporate representatives or attorneys will be able to submit or ask questions or comments at any time during the meeting. To do so, click on the Q&A icon and select the resolution your question relates to and type your question into the chatbox at the bottom of the screen and press send. I encourage you to ask your questions as soon as possible, and we will endeavor to address as many questions as we can during the course of this meeting. However, there may not be sufficient time available to address all of the questions raised. I now declare the poll open. Please submit your votes at any time. I will give you a clear prompt later in the meeting to let you know when the poll is about to close, which will occur following consideration of all resolutions. I will now proceed with the business in the order it is listed in the Notice of Meeting. Item 1, financial statements and reports. The first item of business deals with the financial statements and reports. The preliminary final report was released publicly on 28th August 2025 and the full annual report on the 30th of September. The financials are now presented before this meeting. These financial statements and reports are for the financial year ended 30 June 2025. This is not a resolution and no vote is required on it. On that note, I now invite questions or comments from shareholders in relation to the financial statements and reports and more generally about the management of the company. As I have advised, representatives from the company's auditors for FY 2025, PwC, are in attendance to answer any questions shareholders may wish to direct to them in relation to the conduct of their audit or in relation to the preparation of the financial statements. I also note that the auditor has received -- has not received written questions from shareholders pursuant to Section 250PA of the Corporations Act, which require a response at this AGM. Ura, may I ask if there are any questions?

So yes, we have a question from [ Jon May ]. If you haven't already advised what is expected timetable settlement of first placement tranche?

This is for the China deal. At this point, it's going through the IDI and it's expected by the end of December.

Okay. Then there are no other specifically on financials, but on the management of the company, we have, one. Given the company's need to raise additional capital and the risks associated with going concern, why were senior executives fixed salaries maintained at current levels and how does the Board justify granting while proposing further equity awards when performance targets, particularly robotic integration and revenue scaling, were not met? That's from [ Darryl King ].

Okay. To the first part of the question, there were no further equity awards for executives that were proposed. So that is not the case. On the performance targets and particularly the robotic integration and the revenue scaling, these weren't met and there were several delays that were associated with that and it was very much in the control of our vendor and their priorities around sales. We recognized this risk early on and why we put a full court press on a China-based strategy to identify and reduce that strategic risk around just one core program driving revenue. This is what we were able to announce in October of '25 was the Chinese strategic investment and the whole access into China as a second pathway to offering 2 shots on goal for delivering on revenue and profit targets to target a cash flow positive position. So a lot of this was done in the background. It was 18 months of work to bring it to this. And we are also working on strategies around a third and fourth shot on goal as well. And that is our role. We continue to do our best. We have literally thrown the kitchen sink at trying to resolve the impasse within the vendor priorities. And I think we have got some good interaction around looking at ways that we can fund resources there. At least we've got an open discussion where an offer has been revisited around advancing that opportunity to take us out of the queue and get our program under review. I think the Board has maintained the fixed salaries and not paid any bonuses and I think it's been appropriate in the way it's been remunerated. But as a company during this period of heightened risk, leadership within the team is important. So we have really tried to align the shareholder interest with the material strategic progress that we have achieved and I think that the Board has achieved that. So on that note, any other questions, Ura?

No, at this stage, there are no other questions.

Okay. Hearing no other questions, we'll move on to the second item of business. Item 2, the remuneration report. The next item of business asks shareholders to adopt the company's remuneration report for the year ended 30 June 2025. The remuneration report is included on Pages 11 to 35 of the company's annual report. Unless there is an objection, I will take the motion on Item 2 as being read and refer you to the screen for details of the resolution and the proxies received for this resolution. While this is a nonbinding advisory vote for shareholders, the views and comments of shareholders will certainly be taken very seriously by the Directors when further considering remuneration matters. I note that a voting exclusion applies to this resolution as set out in the Notice of Meeting. The Non-Executive Directors recommend that shareholders vote in favor of this resolution. Ura, are there any questions on the remuneration report?

There are no questions on this resolution, Rob.

If there are no further questions, we'll move on to the third item of business. Item 3, the reelection of Mr. Arun Singh as a Director. The next item of business is the reelection of Arun Singh as a Director of the company. Arun is an Executive Director of the company, is also the Chief Operating Officer, Chief Technology Officer CT and President of the U.S. and Europe division. Details of Arun's qualifications and experience are set out in the Notice of Meeting in the company's 2025 annual report. Arun has been an Executive Director of the company since March 2023. Unless there is an objection, I will take the motion in Item 3 as being read and refer you to the screen for details of the proxies received for this resolution. The Board, with Mr. Singh abstaining, recommends that shareholders vote in favor of this resolution. Ura, do we have any questions in relation to this resolution?

We do not, Rob.

Thank you, Ura. There being no more questions, I will now move to the next item of business, please. Item 4, the appointment of auditor. The next item of business asks shareholders to approve the appointment of BDO Audit Pty Limited, BDO as auditor of the company. The Australian Securities and Investments Commission, ASIC, have consented to the resignation of the company's auditor for FY 2025, PwC, and PwC have provided their notice of resignation. I wish to thank audit partner, [ John Roberts ], and the team at PwC for an outstanding job over the last 5 financial years through the merger and the listing on the ASX. Unless there is an objection, I will take the motion on Item 4 as being read and refer you to the screen for details of the proxies received for this resolution. The Board recommends that shareholders vote in favor of this resolution. Ura, are there any questions in relation to this resolution?

There are not, Rob.

Thank you, Ura. We welcome our new auditors, the BDO audit team and partner, [ Ben Lee ], taking up the mantle after submitting a compelling tender submission. If there are no more questions, we'll move on to the next item of business. Item 5, approval of prior issue of placement shares. The next 2 items of business asks shareholders to approve the prior issue of placement shares. Details are set out in the Notice of Meeting. Item 5.1, Listing Rule 7.1. The first of these items is the ratification and approval of the prior issue of 59,229,599 placement shares under Listing Rule 7.1. Unless there is an objection, I will take the motion on Item 5.1 as being read and refer you to the screen for details of the proxies received for this resolution. The Board recommends that shareholders vote in favor of this resolution. Voting exclusions apply to this resolution as described in the Notice of Meeting. Ura, any questions in relation to this resolution?

No questions, Rob.

Thank you, Ura. There being no more questions, I will now move to the next item. This is Item 5.2 Listing Rule 7.1A. The next item of business is the ratification and approval of the prior issue of 12,992,624 placement shares under Listing Rule 7.1A. Unless there is an objection, I will take the motion on Item 5.2 as being read and refer you to the screen for details of the proxies received for this resolution. The Board recommends that shareholders vote in favor of this resolution. Voting exclusions applied to this resolution as described in the Notice of Meeting. Ura, are there any questions in relation to this resolution?

No, there aren't, Rob.

Thank you, Ura. If there are no more questions, we will move on to the next item of business. Next item of business is Item 6, adoption of Omnibus incentive plan. The next item of business asks shareholders to approve the adoption of the omnibus incentive plan and for the issue of securities under the incentive plan in accordance with Listing Rule 7.2, exception 13B and Sections 200B and 200E of the Corporations Act. Details of the Omnibus incentive plan are detailed in the Notice of Meeting. Unless there is an objection, I will take the motion in Item 6 as being read and refer you to the screen for details of the proxies received for this resolution. The Board recommends that shareholders vote in favor of this resolution. Voting exclusions apply to this resolution as described in the Notice of Meeting. Ura, any questions in relation to this resolution?

No questions on this one either, Rob.

Thank you, again, Ura. If there are no more questions, we will move on to the next item of business. The next item of business is Item 7, approval of additional 10% placement capacity to issue equity securities under ASX Listing Rule 7.1A. The next item of business asks shareholders to approve an additional 10% placement capacity to issue equity securities under ASX Listing Rule 7.1A. This is a special resolution and therefore requires the approval of 75% of the votes cast by eligible shareholders. Unless there is an objection, I will take the motion in Item 7 as being read and refer you to the screen for details of the proxies received for this resolution. The Board recommends that shareholders vote in favor of this resolution. Voting exclusions apply to this resolution as described in the Notice of Meeting. Ura, are there any questions in relation to this resolution?

No, Rob, no questions.

Thank you, Ura. This resolution is the last item on the agenda. So are there, Ura, any other questions of any kind apart from the resolutions that we've just covered?

No, no further questions at all on the platform, Rob.

Thank you very much, Ura. So as there are no more questions, could I ask all shareholders who have not already voted to do so now. I'll pause the meeting for a minute to allow shareholders to finalize their votes, starting now. [Voting]

Thank you, ladies and gentlemen. The time for voting on the resolutions has now expired, and I declare the poll closed. The votes will now be counted by Computershare, and the results of the poll will be available shortly and will be announced on the ASX and on the company's website. A recording of the webcast will also be available following the AGM. Thank you all for your attendance at this meeting and your interest in the company. On behalf of the Board, we look forward to your continued support, and I now declare this meeting closed.