FluoGuide A/S (FLUO) Earnings Call Transcript & Summary

Hi. Welcome to this Bio Stock live stream, where we will be talking to FluoGuide about their year-end report. We are joined by CEO, Morten Albrechtsen; and CFO, Ole Larsen, who will, first of all, give us a short PowerPoint presentation, and then we will answer some questions. We've had quite a few questions from you already on our e-mail, but we also have an open chat on YouTube where you can send in questions. But we will start by handing over to you, gentlemen.

Thank you for having us here today and Cecilia. It's a pleasure, and it's also a pleasure to present our end year result here. First, a few introductions to FluoGuide. We light up cancer. That's what we do, and we maximize surgical outcome. So we help patients in that sense, so the disclaimer. And just here is a short summary of what we are. So there's about 20 million patients every year that has cancer. And surgery is used for 12 million of those patients. We have a technology that could work for all patients that undergo surgery and make it more precise. And we have 3 positive Phase II trials. And then we have just had -- this year, we have a discussion with FDA on our lead indication in our lead country, U.S., and we have a path toward registration in alignment with the FDA. So we feel we are in a very good situation. What have happened this year is a lot of interesting things over last year '25. We have -- we started up our head and neck trial. We have result on our low-grade gliomas and meningiomas, so nonmalignant brain cancers. We have had 2 new partnerships, one with Olympus and one with ZEISS. And then we have strengthened our management team, and then we have a capital raise as well so we can fund what we are doing. So very important here and really instrumental for us that we now have a clear path toward registration. It really is derisking the case very much. If we're looking on the financial highlights for the year, in a sense, FluoGuide is very simple. It's basically 5 components that give us the result. It's the other external cost, which is the research and development costs. That means that is the clinical trials we are doing. That's a regulatory cost, and it's also the cost for the CMC work that we need to have in place before an approval. And then it's admin cost, that is law legal cost, it's auditor costs, IT, investor relations and stuff like that. The staff cost that is all the people we are, it's the Board of Directors, it's pensions and bonuses and stuff like that. Then we have a loan where we have paid DKK 5 million interest. And we have a tax credit due to the tax system in Denmark, where we can get a refund of some of the taxes of DKK 6 million. And that means that we have a net result of the year of minus DKK 39 million. If we look at the balance sheet, also very simple. We have assets of DKK 88 million, of which DKK 79 million is cash and securities. And we have a tax credit that we will get later this year that is on the balance sheet. And then we have our patents and our laser that we use for our PTT and PDT that is in the balance sheet. The liabilities, equity of DKK 55 million, and we have a loan of DKK 28 million, and then we have our working capital in payables of DKK 5 million. And if we look at the cash flow, we have a positive cash flow for '25 of DKK 30 million. Our operations, the minus DKK 39 million turns into DKK 37 million in cash flow, deducting the noncash items that was the warrants and also our depreciations. The investing of DKK 30 million is basically investments in securities. The securities will mature later this year, in mid this year as we needed for our clinical development. And then the funding, we had the directed issue, as Morten mentioned, of approximately DKK 70 million, and we had the loan of DKK 27 million. So that's the component of our financial highlights for 2025. If we look at '26 and our milestones, we have -- in the first half, we have already checked off the submission of our IND application, and we also got the green light so that now we can initiate our trial, first registration trial in the U.S. We expect the first patient in that trial to be enrolled in the first half. We also expect to initiate enrollment of the last 10 patients in our investigator-initiated trial in low-grade glioma, and we expect the interim result of those 10 patients later in H2 this year. And on the back of those interim results, the data we had from the meningioma study that was presented last year and of course, also the knowledge we have from our aggressive brain cancer, we will present a tumor plan -- brain tumor plan later this year in second half. We also have in the second half that we want to present a plan on our work with the PDT and PTT, where we are currently trying to optimize the use of it with our laser, and we will present a plan later in H2. If we look at our head and neck, we will publish results of the first 15 patients in the head and neck study. That is the first phase of the study. And in the second half, we will enroll and have interim results for the second phase, the 10 patients of the head and neck study. On the commercial side, we expect one additional partnership during the year, and that is expected to be a partnership pretty much as the ones we have published in '25 and in '24. And with that, I think we open up for questions.

That's good because like I said, we've already had quite a few questions via e-mail, and I've taken the liberty of grouping them a little bit in themes just to make it a bit easier to follow. And the first set is about the head and neck study. And you did mention the data and so on when that's expected. But just as someone asked, is the study progressing as expected? And is it still late March, start of April that you expect to present the first data?

We have said that we will come with the data in the first half of this year. And then we have said orally that, that is going very, very well and that we include the patient faster than we actually thought. But this trial, it always goes a little bit faster than slower. So yes, it's approximately where we will have the patient included and then we have to analyze the data. So yes, we're very much ahead of the plan right now.

Perfect. And then regarding this data, should the investors primarily focus on the quantitative margin improvement? Or do you think that intraoperative decision change rates will be an equally vital metric when you sort of evaluate the clinical impact?

Well, there's 2 objectives with this trial. One is the margins and the one is optimized to the broad range of equipment. In this trial, we have 5 different equipments actually is involved in this trial, and we optimize the dose and the timing for this equipment so we can include all type of equipment, all of the big vendors equipment. So this is the 2 primary thing that comes out. And in the market, that will very much drive cost and workflow benefit, whereas the optimization to the equipment very much will help on the next stage, which will be complex located cancer, and that's very much the patient benefit that will drive that one. So both are very important, but they have 2 different, I can say, benefit they add to the clinical settings.

I understand. And on the clinical value, if someone is asking if you anticipate the primary clinical value to line in deep margin assessment rather than just surface level visualization?

Yes. No, we believe both is very important. There's 2 tracks in that one. You say the first one we fit easily into the workflow. And the other one, we develop the head and neck surgery, and that means that more patients can be treated with surgery. They can have a better treatment. The equipment manufacturer can sell more equipment. So that's a good thing with both of those applications. And ideally, we will have 2 positions of the drug in the market, which also make 2 opportunity for partnering.

Yes, which is good.

Yes, good.

So turning to the commercial adoption there. So from a commercial standpoint, what do you think is the key data point that will drive the adoption of your product? Is it the percentage of margin improvement, cost efficiency or how seamlessly it sort of integrates in the surgical workflow? What is the main driver?

Well, it really depends on data in the end of the day. The first one, the market is they will drive cost and workflow benefit and the other one will drive the patient benefit. So to make it very simple, the first one is probably easier to get into the market and have a lower potential. The other one is slower to get into the market, but have a higher potential, most likely. But they both are important.

Turning to the big news that we had on the 18th of February, which I don't think anyone has missed in the New England Journal of Medicine, where it was indicated that the FDA might be satisfied with just one single pivotal trial instead of the sort of traditional 2 trial requirement. How does this new -- well, we don't really know what this means yet or if it's going to happen. But the person asking the question has phrased it like this. How does this new default option impact FluoGuide's plans for HGG and head and neck? And does it potentially remove the need for an additional confirmatory Phase IIb study?

We -- we have a discussion with the FDA through almost -- most of last year where we have forward and backward and prepared and submitted the IND and everything that is needed for that. And what we agreed [indiscernible] with the FDA is that we are doing the coming study, that Ole mentioned now, where we have the first patient included. We have the green light for FDA for this study. And we have first patient enrolled in the first half of this year. That will be a Phase II trial. And then there will be a follow-up with the Phase III trials, mostly with a little bit additional number of patients, but not much really. So that is what we agreed to with the FDA. But what can happen, of course, is the data can change things as we go on. And in this trial, we put in a lot of secondary endpoint and other things. And of course, with this change in FDA and data, that can, of course, change things potentially. But what we agreed to with the FDA is those 2 trials right now. So that's what we know.

So -- but things can change.

Of course.

As we've just seen with this news, we don't really know where it's going to land. But yes, someone is asking, following this new guidelines, if the FDA has indicated that a single well-powered Phase III trial could support registration in HGG. And if so, what is preventing FluoGuide from just moving directly into a pivotal Phase III study during -- well, the second half of this year, really?

Well, what prevent us right now is that we have had a green light for FDA from this study. We're just going to start. So assuming we should start another study, it would take maybe 6 months before we are here. And then we would need to discuss with the FDA as well. And then we will start a very high-risk study at that point in time. So I think it's.

Not the most efficient use [indiscernible].

It takes some time every time you change the vote, so to speak. And I think it's very important that we have had a very constructive feedback from FDA now in the sense that they're not only looking at the safety of our product, but also efficacy. So they've been extremely helpful, which, of course, means that we get more critical questions in the terms. And even when they gave us a green light for the trial, they still have some recommendations they gave us, which was a little bit unusual, but very appreciated from us. So we are in a very good place, you can say, in our dialogue with FDA. So we have to take care not jeopardizing that with just going back and say, now we want to do another study because they think we are a little bit off.

Of course, I want to ask you what the additional advisory things that the FDA said, but I'm not sure you're going to tell me.

Yes. No, no, but it's just a small thing, but they're very concerned that we have a success. So it was really a small thing that recommended us to do when -- typically, when FDA recommend you to do something, it means that you better do it. But what they are thinking of is they're thinking of our NDA when we submit for approval, and they would like that we have everything ready for that. So a small thing that you can say, well, we could have missed them now, but by including this study and get the answer on it, we are ready to that time.

Your should iron out some to make the part smoother.

We just need to tick boxes, but there was a few things of those that they just asked us to prepare answers on. So it was really, really good.

And turning then to the capital efficiency. In terms of financial strategy, how does the capital efficiency and time line in running 2 Phase IIb studies compare to sort of the prospect of moving directly towards a single pivotal Phase III study?

I think Morten almost already touched upon it that basically, the capital efficiency, you need to look at 3 components, and that's the cost, it's the risk and, of course, time. And if you change any of those, you will add to the others. We have done a lot, especially in 2025 on derisking our programs and try to set us up for success. And in that discussion or analysis, we found it much better for the company and hopefully, our stakeholders and patients that we would run a confirmatory Phase II trial in the U.S. before we went into a pivotal Phase III trial.

And turning a little bit on the path to market. Can you outline the step-by-step path to accelerated approval in the U.S. or conditional approval in the EU based on your current data sets?

I mean accelerated approval, we can probably get any time. We asked for getting it. But right now, what we see is that we have a very constructive dialogue, as I mentioned, with the FDA, where they're also concerned about our efficacy part of our study being ready for the NDA. So this is as much as we could ask for really. So we could apply for that any time. Right now, we will not change much. But what the steps are that we do the study now, which takes approximately a year. We do the regulatory end of Phase II meeting and then we make the Phase III trials and then we file for an NDA also approximately a year for that trial. That is the default plan. And then data can change anything as we move on and FDA and whatever. But I think that data will be the key thing that will change things, if any.

Looking specifically at low-grade glioma, someone is wondering if the existing data set could support today an accelerated approval in low-grade glioma as a separate indication, maybe already this year.

Everything is possible. I mean we were extremely happy by this low-grade glioma data, not only because if you look at the number of patients that not so many patients have low-grade glioma. But the key thing is a lot of the brain tumors there is hidden behind the blood-brain barrier. And what we have seen with our product with the data in low-grade glioma is that it pass the blood-brain barrier and it can illuminate cancer behind the blood-brain barrier. And this is really the triggering point for any brain tumors, also the high-grade glioma because about 5% to 10% of patients will have tumor hidden behind the blood-brain barrier. So this is what we see from FDA. We see it from the key opinion leaders we talk with, and they're very interested in this feature. So of course, and that's what we think of with the data. Let's see on the data, what it shows during the year. Everything is possible, but we would like to -- as always said, we would like to make a plan that is robust and that we are sure we get to the goal, then we can top up maybe if data are good with other possibilities.

We have a question here with quite a lot of ifs. So let's say that you would launch after the first registration trial, assuming that you receive accelerated approval. And then you will conduct a second registration trial post launch. Is that a likely scenario?

I mean it will require extraordinary data in that sense. So let's see with that. And I think also if you ask the next question, if we will ask FDA for that. The first thing they will say, look turn back to us, show us the data. So you could ask them and they could say, yes, yes, if you have those data, it could be very interesting but show us the data. So it makes a lot of more sense for us to create those data. That's what we do in this trial as well, see what the data show us and then make a decision based on this. It's the attitude we have toward FDA now that we try to build up a very serious approach to them, and they will expect the same of us.

One step at a time.

Yes.

Turning to the business model and focusing especially on the U.S. infrastructure. So with regards to the U.S. market, what is your time frame and the perceived likelihood of securing reimbursement under the -- and I will have to read this from the paper, the NTAP, which is the new technology add-on payment scheme. And how significantly does your addressable market size change if you have that reimbursement versus if you don't have it?

Yes. I mean, this is a very specific code in the U.S. It's a code that on target with Cytalux. They have received an NTAP code for that product. So it's very likely we could receive it as well. What it does -- if one look into the detail of what has been granted on target, it does not change the market size because the price is roughly the same from Cytalux and from other image agents. But what has changed is the penetration in the market, so it could go faster. So I think this is one thing that we, of course, clearly should have in preparation to apply for this kind of code. But what we should as well do is think of what can get the price up for our product, what can we -- how can we sell to for more patients. That's another way where we can expand the market. So there's a lot of thing in that toolbox data, for instance, that we put into our secondary endpoint, partnering, which we do, we push for the penetration that will be equal, if not more important than exactly this reimbursement there.

And obviously, everyone's favorite topic, partnering and specifically for head and neck here. You've previously discussed formalizing partnerships by 2027. Can we expect a partner to provide their first monetary engagement by covering the second half of the ongoing trial? And would it then be natural for them to cover more commercially orientated trials after that?

I mean the way we approach the partnering is that in this head and neck trial, we have 4 partner where we have formally a collaboration with and 5 equipment in there. And it creates what I can say, a good basis for us for discussing with them when we see that our product work with their system and see what we can do. So there are some numbers we can put in to calculate what will be worth for them and for us. So it's a perfect basis for starting such a discussion. But such discussion can take 9 months, it can take 18 months on the one side. And on the other side, there are also -- when you get in -- what we see is that there's less and less image agents company that brings forward late-stage image agent company bringing forward to the market. And there's more and more partner that would like to partner. So they are a mismatch in our favor. So there are, of course, some fewer missing out approach in this -- in the whole partnering space. But let's see. We think the default case is '27, but it could go faster, but it could also go slower. It depends also on the terms that's on the table.

But is there constantly ongoing discussions with these potential partners? It's something that's always.

Yes. But what is very important for us in our partnering is that we do not want to rush us into a partnership because what always should be thought about is that when we sell off some value of our product to a partner, we actually take some value of the company from the shareholders. If we have a fundraise, we dilute shareholders. And that's 2 kind of dilution, and we should balance the 2. So if the market is very favorable, it could be better to take in capital and partner later. If the market is [indiscernible], we should partner earlier. So we constantly look at all the options we have, including partnering, of course.

In terms of sales force in the U.S., is the plan still to establish your own dedicated sales force in the U.S.? Or -- and if so, what are you thinking in terms of size of such a force?

If we look at Photocure, for instance, they have -- they did a partnering with Hexvix back in time without any people on the ground, and it did not work that well. So there will be a need for people on the ground, most likely to get it off the ground. If you look at the brain tumor market, neurosurgeons in the U.S., approximately 100 interesting sites. So it could be covered with quite a few people. So the number of people will depend on the partnership structure we do in the brain going forward. But there will probably be some people on the ground.

And turning to some more general questions about the listing. Are there any current plans or thoughts about a dual listing or maybe listing in Denmark again?

Well, it sounds obvious as being a Danish company. So I also think it's a good idea. But we are also listed on First North in Stockholm and are happy with that. But as Morten said, we are always looking what is serving the company best. And right now, that's -- I think that's the listing in First North Stockholm.

And there's a final question then, which came after someone had read the report that you released this morning. And in this person's mind, the most notable milestone is the investor-initiated trial in low-grade glioma because of the potential for crossing the blood-brain barrier. Do you both agree? It's a very open question.

Yes. I mean I personally very much agree with this because it's 2 things really. It's a unique selling point in brain, which is extraordinary, and that's the one that's really give a high interest for regulators, for key opinion leaders and partnering. So this is a great thing for the product. But of course, without money, it doesn't help. So that's also important that we raise money on good terms. And as well, the partnering is important because we also need that. So everything is important, but it was really nice because it paved a way how we can do the commercialization in the brain area and expanding in that area. So very pleased.

And the CFO, of course, is more happy about us getting off the ground with the first trial that supports registration. So we...

That's why you're the CFO and you're the CEO.

He's talked about sales and I talk about derisking.

Well, thank you so much both for coming here today and doing this live stream with us.

Thank you for having us.

And thank you so much for watching and for sending your questions in. And hopefully, we'll see you soon.