CurveBeam AI Limited (CVB.AX) Q2 FY2026 Earnings Call Transcript & Summary

Thanks for standing by, and welcome to the CurveBeam AI investor webinar for the quarter ended December 2025. [Operator Instructions] On the webinar from CurveBeam AI today, we have the Managing Director and CEO, Greg Brown; CTO and COO, Arun Singh; and the CFO, Ura Auckland. The presentation will last for approximately 15 to 20 minutes, and then we'll get into the questions. But to kick it off, I'll hand it over to Greg.

Thanks, Matt, and welcome, everybody, to our Q2 fiscal year '26 quarterly update. A lot to update everyone on today. Firstly, in the second quarter, we received 5 orders, 5 devices for Q2 of fiscal year '26. All 5 devices were from the U.S. There was 4 HiRise and 1 LineUp. Now I know the next topic is of great interest to a lot of our investors, our commercialization agreements with WEGO Orthopaedics and the progress on the initial payment of the $4 million milestone, placing at $0.40 a share. The update on that is the funds -- well, the good news, first of all, as we've shared with the market, the Chinese outbound directive investment control, which any company in China has to get approval for before doing a strategic investment or the full $10 million investment at the $0.40 is approved. So the ODI approval is in place for the full $10 million. Now the first payment is the first $4 million. Those funds actually transferred before the long weekend. We had a press release ready to go earlier in the week. What we didn't factor on was the fact that the funds have actually transferred to an intermediary bank, which was CommBank. And this is where it's going through the Australian controls, which are anti-money laundering, there's Austrade controls. And so we expect that to clear shortly and be transferred to our NAB account. So we expect that in the next 7 days now. And we'll, of course, announce that when the funds have landed in our account. But the funds are in Australia. They're in an intermediary bank and just going through Australian regulatory controls before it clears to our account. So I think that will be well received by investors, and we'll keep you appraised when the funds are landing in our account. Now we continue to work with WEGO. We've advanced -- continue to advance the regulatory position for the U.S. manufactured HiRise product. And there's been significant promotional activities, which I'll go into with a bit more detail within the presentation. And with the applicable registration number, there's a lot of pre-promotion that's going on. That started in November. There's been sales training, KOL visits over December and January. So there's a full court press going on in the premarketing for building sales for when our Chinese FDA comes into play. So we'll talk about that further in the presentation. We also submitted the BMD at the end of Q2. We are still targeting a clearance midyear. We've had some clarification questions that we've addressed with FDA, but still on track and excited with meeting that milestone. And we have 400 data points in there, and we're very encouraged by the data that's being presented. We also engaged -- and this is a significant change that has occurred. While our MAKO -- sorry, our vendor validation remains pending, there's been a material change in the engagement. And we're talking at a very senior level within Stryker and all divisions and including above the divisions. And right now, the senior level alignment is really starting to come together. I mean everyone sees this as a major plus to have this validation in place. That's the first major point to make. But there's still requirements that we need to do for the regulatory labeling change and for showing that the performance is equivalent or better than what is available today. And right now, the file is no longer idle, stuck in a queue. I think our offer of supporting additional resources has really been well received. This way, it takes us out of hurting the other priorities they have, but still keeps us progressing. And so right now, we have resource discussions underway. We also have discussions to build to an agreed plan to advance this program. So we feel that while there's further meetings occurring this week, we'll be able to update the market in due course as to how that's progressing. But we're no longer just stuck on a shelf waiting for other programs to complete to be considered. This is now active planning, and they're accepting our offer to help the resourcing so that we can get this through as soon as possible. So on the order front, it's really important to note that with the sales for the last 2 quarters, all sales have been U.S. based. Now the sluggish sales in Europe right now is really related and it's more of a timing issue than it is an interest in the product issue. And this is around the fact that particularly in Germany, customers are waiting for the outcomes on the DVT payment levels. So presently today, there are about EUR 300 in the workers' compensation. They can be as high as EUR 500. But people are waiting for that final payment to come through. And that's why a lot of this slowdown is primarily related to wanting clarity on what that payment level is. And this is why you're seeing a lot more contribution occurring only from the U.S. We expect that, that payment decision has either come out or about to come out. And hopefully, that will start to restimulate some of our prospects that we're advancing within Europe. Receipts from customers were around $2.6 million. We're finding that the company is carrying forward around about $5.1 million -- sorry, about $4.8 million that we have carrying forward in receivables into Q3. So on the update with WEGO Orthopaedics and WeiYing, we had the big national Chinese Orthopaedics conference in Tianjin. That was an amazing experience, 26,000 surgeons. We had a very prominent position on the stand. There was also materials across this board. There was a large screen that was continually showing the HiRise in action. This event really stimulated a lot of interest in the product. We saw firsthand the WEGO robotic system was also on the stand, which was just behind the HiRise. So we're very excited about this. That first payment of course, has been approved or the full payment or the full amount of the ODI approval for the $10 million is in place. That first installment is in the throes of being received by us here in Australia. And we continue to support this effort. So there's been part of our team up there supporting KOL visits, sales visits, smaller conference, regional conferences and now they're training their sales team. So there is a team of salespeople being trained for launching this product. It just shows the commitment behind the product and the readiness to preprepare the market for our HiRise. So on the validation program, as I've shared, we engaged with senior executives on the 13th of this month. The alignment at that senior level is very good. Everyone wants this to happen. It's just how do we get it through with so many other priorities and the limited resources that they have at this point. Our offer has been, I think, well received to help support additional resourcing to get our program through. It's been received well. And with that in line, we're no longer passive in a queue. We're really off the shelf and into active planning to complete the program. So further meetings are going to be occurring next week, and we'll update the market when appropriate on the progress around this. But it was really encouraging for all of us in that meeting at the very senior levels of Stryker, just how important this project is to them as well, but how do they manage this priority. And our resource offer, I think, is being well received, allowing us to move this through the process. So we're encouraged by that, and we look forward to further updates when appropriate. The -- it's important to understand the BMD strategy progresses. So I've got the MDCT here. This is the normal lying down CT that people would have -- go to when they have a CT scan. That is the first product that we get the BMD clearance on. And that file filed in Q2. We've already addressed our first round of clarifications for FDA on that file, and it continues to progress. There's around 400 patients data points that support the file, and we're targeting middle of the year. Now that clearance on the MDCT, of course, offers MDCT BMD capabilities. But the primary requirement today for such a fast bone density test because waiting list can be anywhere from 2 weeks to 3 months in the U.S. This is really designed for the [indiscernible] market, which is a patient presents with hip fracture, pelvic fracture, femur fracture. They're elderly. They're doing a restoration of function and they need to plan. They want to know what's the quality of the bone they're about to do that restoration in. And this is important for making their decisions quickly on the type of implant, whether they're cementing or noncementing and whether they need to have a management of an underlying bone quality issue. So here, while it's a very modest market, it's still an important opportunity that we're going to target for the MDCT, and that's the first stage of that regulatory. The second stage is then doing a Special 510(k) showing that the BMD is equivalent between the MDCT and the HiRise. And to do that, we'll be collecting significant trial data over the next 6 months ready to file that Special on the clearance of the MDCT. So that's the update. We've got some good progress. We're encouraged by the data, and we're looking forward to not only delivering that MDCT product, but also filing a Special 510(k) soon after with the appropriate supporting data to then get the BMD on the HiRise. So on a cash analysis, when you look at our pro-forma position with the $4 million coming in from that first milestone, we're just over $8 million in cash. That's from a pro-forma position. I think it's really important to note that we had some extraordinary one-offs in the quarter as well. We had to commit to more stock of the V2 subassembly. We had our R&D tax concession that also came through. But it's important to note that our cash used from operations in the last quarter was around $2.15 million, and we have a pro-forma cash position of around just over $8 million. You'll note this is the whole WEGO team that was on the stand. There was Arun, myself, Frank and others there to support the event with our CTO, Dr. Yu Peng, a great team of people, and we're very excited to be working with both WEGO Orthopaedics and WeiYing in placing our devices in China. So just recapping how we define what is a purchase order and when to expect the receipt because that can vary from anywhere from 2 to 6 months based on installation, getting a room ready -- first of all, getting the room analyzed for whether it needs changes, getting the room ready, the placement, the training and when we can recognize the revenue. And we laid that out under these definitions. So on that note, that's covered off on the key points for the quarter's update. If I can hand that back to you, Matt, for questions.

Thanks, Greg. As you've alluded to, we'll move on to the Q&A. [Operator Instructions] Greg, just to start off, and I know you touched on it there the company advised that it was 30 to 60 days for the cash to be received back on the 30th of October. So again, can you just remind people on the status of that and maybe a bit of color on why it's taken longer than expected to come through?

Yes. Thanks, Matt. Look, at the time of that release, I think it was October 30, which was announcing the strike -- sorry, the strategic relationship with WEGO for China. Look, what we pointed out in that was that we could only give an estimate. And the Chinese Outbound Directive Investment Board, that's an approval that's needed for any company to make a strategic investment in an overseas company. Now that's always out of the company's control. It's an internal regulatory process. And we can only give our best estimate on the timing of that. And what we did was we gave 30 to 60 days on that estimate. It just occurred just over the 60 days for the ODI, and that was for the approval for the full $10 million at $0.40, not just the $4 million. And that's an important point to note because [indiscernible] have that requirement going forward for the other milestone-based payments. Now the actual transfer of the cash, and we've learned a lot through this first process of this first tranche, I think will become more efficient going forward. And that's where we have to factor in the time for our own Australian regulatory requirements before it can land in our account. So it was the best estimate that we could give at that time, understanding that we don't have control on the ODI process. And that's why we're 2 to 3 weeks late on that estimate.

Thanks, Greg. Sticking with China, can you just give the latest on that China joint venture strategy? What milestones have been reached and what you're expecting next?

Yes. Look, for the first milestone was the signing of the definitive agreements, and that was the IP licensing. It was the subscription, it was the escrow. There was a distribution for the U.S. product into China and of course, the manufacturing agreements. So for all those definitive agreements to be signed was the first milestone. Now the next near-term milestones are going to be the Chinese FDA clearance, then the first orders. Now we see that the first order and the CFDA will most probably go hand in hand. So when the CFDA comes through, we would expect both the milestone payment for the CFDA and the first order for 10 units, which represents around AUD 4.6 million with the additional milestone payments all coming through around the same time. Then there is a further placement and then, of course, the SkyRise prototyping milestone also. So at this point, the near-term milestones, I would say, will be the CFDA in that first payment. The second payment, which could be soon after that represents a significant number of devices as well, around the AUD 20 million sales mark. So we're quite encouraged that by hitting these next 2 to 3 near-term milestones, it has an impact on both our cash from the placement of that money at $0.40 for the milestone, but also around what could be close to AUD 23 million revenue on the 2 order milestones. So they're the near term, yes, we're very excited. We're also very excited just how quickly they're building their capabilities of preselling and getting the market ready for buying [ SkyRise ].

And in terms of the Chinese FDA approval, what's the expected timeline on that?

Look, anything to do with regulatory authorities, it's dependent on their regulatory review. And from a planning and guidance standpoint, we're assuming calendar year 2026 for that CFDA approval. Now our partner is already preparing for a potential midyear scenario from a commercial readiness perspective. But as I point out, it's hard to predict with any accuracy any regulatory authority and our guidance is calendar year 2026.

And a question that's come through is, as you do this broader commercial rollout in China, will you be able to share updates on earlier HiRise installations or hospital engagements?

We definitely will. I think that we would work with our partners to get an updated list. We may not share the prospect list, but we can definitely share where we're placing devices, yes.

And then just switching over to -- away from China. Has Stryker provided a formal timeline or decision point for full integration for MAKO? Or are we still stuck on the shelf until the other priorities are completed?

Look, I think we made some big progress. I mean there's a lot of relief internally. We're no longer just stuck on the shelf. The validation is still pending, but there's a material change in the engagement at the senior levels, even above the divisions. And right now, the encouraging news is that we're working to this new jointly developed validation plan where what gets us out of the queue is this offer of helping to cover some of the resources needed to complete the project. So from that regard -- in that regard, I think that no, we're not stuck on the shelf anymore. I think we're an active project. We're pulling together a plan and it will be a defined plan internally with the highest levels of approval within Stryker to prove our validation of performance and to do the labeling change. And we hope that we can give the market an update when appropriate with an agreed timeline within the highest levels within Stryker.

Thank you. And then another question is, after the BMD module is approved in the U.S., are there plans to submit to the Chinese FDA too? And if so, when would that be?

That's an excellent question. And yes, but we need to collect the data. Now we have 2 strategies there. We'll be running both the bone mineral density and the bone microstructure as part of that CFDA, BMD going first, but also on microstructure. So we're just setting up trial sites, working with our partner to do both microstructure and BMD. And timing on that at this point is a little bit early. But when I do have the opportunity in our first review meeting with WEGO, we'll be able to give some definitive guidance on what we think the timing for both the BMD and the bone microstructure will be.

I have no further questions. So I'll just throw it back to you to provide a concluding comment.

Yes. Look, we -- the orders from Europe have been a bit sluggish. We expect that's a timing issue, not an interest issue in the product. We think that our vendor financing will be attractive to help us move forward some of those prospects. We just need this final decision on payment landed on within the German system. I think that will really open up that opportunity again for us in Europe. It's really encouraging to see what orders are coming through are actually just the U.S. [indiscernible] coming through beyond that will be on top of the U.S. market. And if you look at our history, Europe and international market has always contributed well to our order numbers. So at this point, we expect that once that decision is landed, we'll start to see a lot more activity building in the international market. And look, I think the biggest advance that we saw this quarter was really the engagement from Stryker at the highest levels and wanting to share how important this is to them as well, but where it lies in their priorities, what their limitations are, they've accepted our offer to help there and we're now pulling together a definitive plan. And it's just good to be taken off the shelf and into an active plan to a resolution as quickly as possible. So on those notes, I just want to thank everyone for their time today. We're available for any further questions post the call. Just let us know. Thank you.