Ion Beam Applications SA (IBAB) Earnings Call Transcript & Summary

Welcome to the IBA Half Year 2021 Results Conference Call. [Operator Instructions] You can access a copy of the presentation as usual in the Investor's section on the IBA website. I would now like to turn the conference over to IBA's Chief Executive Officer, Olivier Legrain.

Thank you, [ Lekou ]. Good afternoon, and thank you for joining us on our half year results call. I'm Olivier. I'm the CEO of IBA. And with me today is Soumya Chandramouli, our CFO. Before we begin, I would like to draw your attention to the company's disclaimer on forward-looking statements. At -- first of all, I would like to start today by thanking the entire IBA team and our customers for their hard work and understanding in what has been a very challenging environment for all of us. While challenges from COVID-19 remain, we are pleased to see that hard work paying off and the strong resilience of our businesses. And I'm delighted to report on our positive progress over the first part of the year. As always, I will give an overview of our business and run through our outlook for the future. Soumya and I will then summarize our financial statements, and we will then be happy to take any questions. As you know, the group is founded on our world-leading expertise in particle beam technology, which falls across four core business lines: Proton Therapy, RadioPharma, Industrial Solutions and Dosimetry. Each of these business lines have seen good momentum over the period with increased activity and backlog conversion as compared to the previous year. Diving into the key statistics, you will see our many years of experience reflected in the number of accelerators in operations as well as our market-leading position across our four business units. I draw your attention particularly to the increasing importance of RadioPharma Solutions business, which includes nuclear medicine, a market that has grown almost 6% year-on-year over the last 7 years. IBA is firmly committed to impactful environmental, social and governance goals. And our first major step towards the new sustainable stakeholder approach began this year with the company receiving the B-Corp certification in June. We're focused on being a force for good, reconciling profit with settled purpose, and contributing to a more sustainable and inclusive economy and society. I'll now run through the key operational highlights of 2021 so far. In terms of order intake, we've seen 1 5-room Proteus deal agreed in China with a ProteusONE deal currently being negotiated in the United States. Elsewhere, 14 machines have been ordered with Other Accelerators in the period with 4 further post period end, the latest sold today almost as we speak. Dosimetry has also seen a solid order intake, on par with H1 2020. A total of 14 installations began in the period, comprising 1 in proton therapy and the remainder with Other Accelerators. Backlog is high at EUR 1.1 billion. While several projects has been delayed, we should see an increased rate of installation in the second half of the year. All of this is underpinned by a very strong balance sheet. Net cash at the end of H1 was EUR 69 million and has since increased to more than EUR 110 million. On the broader corporate side, we have been pleased to achieve a number of milestones. On the technology side, our high energy cyclotron, the cyclone IKON, was launched, which should open up options for theranostics applications. We have also been pleased to launch a number of collaborations which includes an expanded collaboration with NorthStar to increase the availability of the diagnostic radioisotope technetium-99. More recently, IBA announced its participation in a European-wide proton therapy trial in esophageal cancer, which includes six IBA centers. You'll see a snapshot here on the financial highlights. As announced this morning, a few points to pick up out there. Group revenue of EUR 137 million represents an increase of 25% on H1 2020, which is linked to increased activity across the business lines and better backlog conversion. We've already highlighted the record equipment and service backlog but do also note the significant increase in proton therapy and Other Accelerators equipment revenue up 86%. Proton therapy services continue to perform well with a total of 55 contracts now signed globally. I will now hand you over to Soumya, who will take you through the financial highlights.

Thank you, Olivier. This slide really highlights the strong financial progress that we made over the year. And as you can see, although we have continued to be affected by the pandemic, sales in the first half were still up 25% from the same period last year. And we ended the period with a REBIT profit of EUR 0.7 million, which is up EUR 10.6 million from last year. And finally, our total group loss also decreased to EUR 1.9 million, representing an improvement of more than EUR 10 million of last year's loss. Furthermore, I'm pleased to say that our Equipment and Service backlog has stayed really high at EUR 1.1 billion, thanks to an Equipment backlog of EUR 429 million and a Service backlog of EUR 687 million, both set by the sales that we've made over the first half of 2021. Now moving on to Proton Therapy and Other Accelerators. Sales were up 29.5% versus last year, which reflects the improvement in backlog conversion despite the system difficulties, as I mentioned earlier, in -- with the pandemic, especially for travel. There was also one new sale in Proton Therapy and 14 others for Other Accelerators at end of the period, an encouraging pipeline ensuring that we are in a strong position for the remainder of the year and beyond. The strong improvements in REBIT reflects this improved backlog conversion alongside the ongoing cost control. As mentioned, we were quite pleased to see that our equipment revenues went up so strongly versus 2020, 129% actually, despite -- with 21 projects currently either in production or under installation, including 8 ProteusONE and 13 -- 8 ProteusPLUS, sorry, and 13 ProteusONE machines. Other Accelerators were up 62%, reflecting the strong order intake and backlog conversion and continued stability in services as all of our Proton Therapy centers remained open and treated patients. I'll now hand back to Olivier to take you through a more detailed business update.

Thank you, Soumya. We have continued with steady progress in the U.S. and are negotiating a contract at the moment with one term sheet signed. In June this year, we highlighted our commitment to shaping the future of Proton Therapy by initiating a global DynamicARC in collaboration with leading clinical centers to prepare to make DynamicARC therapy a clinical reality. We recently announced the launch of a significant Proton Therapy clinical trial, PROTECT trial, the research of which aims to extend the use of Proton Therapy and improve patient selection across cancer indications. A reminder of where we stand against our peers in the market. The first half of 2021, so two systems sold both in China with IBA securing a 5-room system; and Varian, a 3-room system. By room, IBA maintained its lead in market share with 143 (sic) [ 134 ] rooms and 61 centers globally. This next slide highlights some of the key market trends that will support the long-term growth in Proton Therapy. Our passion, or should I say our obsession, is to improve the clinical performance of our current and future installed base. Our clients have the potential to treat more indications, better and faster. This will improve the quality of life of millions around the world, strengthened the resilience of Proton Therapy centers and the attractiveness of the modality. As this chart shows, there was more than a sixfold increase in the number of patients treated over a 10-year period as a Proton Therapy has increasingly become a widespread treatment modality. In 2020, there were more than 40,000 patients treated with Proton Therapy globally. IBA remains the largest player with around 40% of the total patients having received Proton Therapy by an IBA machine. In the second chart here, you can see that Proton Therapy is increasingly being used in a widening range of indications. In addition to this, certain indications started being treated in Proton Therapy, for example lymphoma in 2016. The third chart highlights how the increase in generation of data is driving reimbursement. It shows the ongoing clinical trials in Proton Therapy across several indications, and you can see the growth from 2016 to 2020. Finally, the innovation pipeline of new technologies such as Motion Management, DynamicARC and ConformalFLASH will drive further adoption of Proton Therapy and will now run through this in more detail in the next slide. Our progress with innovation continues. And in terms of recent news flow, in June, we announced the initiation of the DynamicARC Consortium in collaboration with the leading clinical centers across the globe, with the ultimate goal of being able to offer DynamicARC to new and existing customers as a more efficient and simple way to deliver Proton Therapy. IBA has also introduced ConformalFLASH, a novel method to deliver FLASH therapy while keeping the benefit of proton [indiscernible] policies. IBA worked with the key knowledge leaders who explored and demonstrate the science that will allow clinical adoption in the future, including Penn's Roberts Proton Therapy Center. As mentioned earlier, there has been a significant momentum in this division, in Other Accelerators, with 14 new sales globally at the end of the period, representing an entry into several new geographies. China remains a major market, and there has also been sales in Europe, North and South America, Asia and Africa. In addition to the four post-period sales, the pipeline remains strong. As of today, we have sold 18 machines, which represent a threefold increase on the same period last year. IBA has also recently launched its new high energy and high capacity cyclotron, the cyclone IKON, offering the largest energy spectrum for PET and SPECT isotopes and enhanced availability of theranostics radiopharmaceuticals. The new generation of the Rhodotron TT1000 enabled the production of x-ray to sterilize in much larger volume in particular, for medical devices. In addition to a new Rhodotron TT300 high energy electron beam is under installation in -- at NorthStar in the United States. Now let's move on to Dosimetry. Dosimetry has seen a strong first half with sales up 9.2% to EUR 26.4 million. Order intake was up at EUR 27 million, in line with the same period last year. Backlog grew 6% compared to the same period last year, reaching EUR 16.4 million. Elsewhere, cost control maintained, allowing profitability to improve and REBIT to more than double for -- from last year to EUR 2.8 million. Taking a deeper dive into order intake, we were pleased to have a strong orders in China, a key growth market for us. In addition, conventional radiation therapy and medical imaging remain important sector for IBA's Dosimetry business, and have seen a good recovery. QA for conventional radiotherapy has also been increasingly important segment within Dosimetry and IBA has been gaining market share here. Innovation lies at the heart of Dosimetry, and we were pleased to launch three new products during the period. Now over to Soumya to talk about the numbers in more details.

Thanks, Olivier. Now as mentioned earlier, total group sales in the first half were up 25% versus the same period last year. And this mainly reflects the increasing activity in backlog conversion following the strong order intake last year. We were also pleased to report a 1.1% basis point improvement in gross margin, thanks to product mix and stringent cost management. At the operating expenses line, the numbers were fairly stable, but beating inflation as the successful cost containment program continued to have an effect. As a result of the increase in group revenue and margin improvement, the recurring operating profit line increased substantially to EUR 0.7 million from a loss of EUR 9.9 million last year, and IBA, therefore, reported a net loss of EUR 1.9 million compared with a loss of EUR 12 million last year. Turning to the cash flow statement. I already mentioned that we had an extremely high cash position as of today. Operating cash flow in the first half was EUR 13.9 million, driven by close management of working capital and continuing payments from customers as backlog conversion continued. There was also a sustained buildup of inventory of projects. And the reduction in cash flow used in investing activities really reflects the lower CapEx investments to maintain ongoing projects versus last year. Alongside the release of a deferred payment following the final completion of the sale to RadioMed that was made end of 2019. We do expect CapEx to increase somewhat in the second half of the year as we continue to make investments in digital and infrastructure. The cash outflow from financing activities included most to repayments on borrowings, repurchase of shares and dividends paid on the 2020 results. And finally, on the balance sheet, there was a further strengthening of the balance sheet with a net cash position at H1 2021 of EUR 68.5 million compared to EUR 65.2 million at the end of 2020. As of today, IBA has an unaudited net cash position of more than EUR 110 million, ensuring that we are in a very strong position for future investment and growth. Olivier?

Yes. Thank you, Soumya. Let's now take a look ahead. We are very proud of the continued resilience across all our business lines. There has been an encouraging increase in activity in spite of the ongoing challenges associated with the global pandemic and with a strong backlog condition. We have also been encouraged by the revival in activity in the U.S. and key emerging markets. We have a strong pipeline with active tenders and discussion ongoing. Underpinning this, our exceptional strong balance sheet, which will enable us to continue to invest in the technologies of the future while seeking value-enhancing business development opportunities. We remain unable to reliably and specifically guide on our future performance, but we remain confident for global prospects in the second half of the year and beyond, underpinned by the high backlog and healthy pipeline. Finally, we are firmly committed to our stakeholder approach, remaining the leader in all of our markets to drive sustainable, profitable growth. Soumya and I will now be pleased to take your questions. Operator, back to you.

[Operator Instructions] Oh we have a first question from Michiel Declercq.

So yes, good results. Almost back to pre-COVID levels for most of the sectors and divisions. But just looking at the backlog conversion for the PT equipment, we do see some impact. Looking a bit at the second half, should we already expect a normalization towards pre-COVID levels? Or where are the main deadlocks, let's say? Where are the main issues here? Because previously, you guided at the full year that the average backlog conversion was around four years for the PT equipment. Where are we today? And is the situation evolving better or worse than expected?

Michiel, good to speak to you. Yes, indeed, so first of all, we did indeed say the backlog represents around four years of conversion. But it's not smooth, as you know, and it's not going to be the same amount every quarter or every semester. I think in 2021, despite the fact that we've been able to have a nice growth in sales, we saw around 25% sales. We are indeed below the levels of 2019 in terms of equipment backlog conversion, and that's really related to the fact that the pandemic continues in 2021. It's still not easy to travel the certain parts of the world, and it keeps fluctuating. We all know that [indiscernible] keep going in and out of lockdown. Shipping is getting more complicated. For example, today, it's more complex to ship pick with men to China. And China, as you've seen, is a big chunk of our backlog today with several sales over the past 18 months or so. It's also difficult to travel and send people across expatriates experts into areas where they need to start installation. So we have continued to install and to advance on conversion despite all of this. But it's not as fast as it would be if all of the effects of the pandemic were not there anymore. I do expect that if things get better over H2, we will be able to accelerate. But again, I cannot give any guarantees on that because we are really extremely dependent on the way in which each country decides to enforce or not certain rules regarding the pandemic.

Great. Great. But the main impact is still from Asia, I assume, yes?

Yes, the biggest impact is indeed Asia and in particular China, but even across the rest of the countries. I would like to point out though that we have -- despite that, continue to incur. We actually completed installation of the first room in Mumbai. And so the first room of the Mumbai contract -- of the Mumbai project has actually been accepted by our customer and should start treating patients in the coming weeks or months. And that has been quite an achievement despite the pandemic. But indeed elsewhere, it is much lower than expected.

Okay. Clear. Just one more question on the margins. We see the growing important and the strong momentum within the Other Accelerator business. Could you give me some rough indication or figures between the gross margin, the differences between the Proton Therapy and the Other Accelerators? And maybe also for the Services, the differences between the two?

We don't usually give separate numbers, Michiel, on the margins between the different businesses. I would just say that there's quite a wide range of gross margins on contracts, which can be dependent on various factors, including the country, the competition that we have around that project or other very project-specific factors, for example, options that have been chosen by the customer. So all I can say is that overall, the project ranges -- project margins range between -- anything between 30% and 50% depending on the situation of the project. I can't say anything specific about each business as such.

Okay. Understand.

But in terms of Service, we always mentioned that we have slightly higher margins, a few basis points above. But given the range that I just gave you, it's rather difficult to really give you a specific number on that. But it's also within the same range basically depending on [ chated ].

We have another question by the phone -- with a phone number ending by 1461.

Yes, that would be me, I think. Can you hear me?

Yes.

Yes.

Matthias Maenhaut, Kepler. Congratulations with the results. If you don't mind, I'm going to do it one by one. First question was actually on the contract in China, that Varian one. Could you maybe elaborate a little bit if you also were in the game? What has triggered the decision of them to opt for Varian? And was this one of the contracts that was excluded from the CGN deal? That will be my first question.

I think on that specific -- first of all, it was not one of the deal that was excluded with CGN because for a while, it's a contract we were in the game, but was strongly biased towards Varian for some reason I don't fully understand. So I think we -- let's say, we started with a poor collective competitive positioning mainly due to relationship, let's put it that way. So yes -- and having 60% market share means that you will lose a deal every now and then.

Okay. Fair enough. And second question is you don't give a quantitative outlook, but from a qualitive perspective, you no doubt that there is an increased level of activity. Could you maybe elaborate a little bit more on how many rooms you're probably tendering and what you think would be a reasonable estimate of contracts that are close to signing or to decision?

I think we -- what can we say? It's multiple. It's more than one. But the key question is really the timing. I think the way we look at it is we see quite a high level of activity in -- especially in the U.S. I think in the U.S. -- I will be nice with you today. I think we can potentially see five deals very active in the U.S. Now are they going to close in second half of the year? I think it's impossible to say. Some will, some will not. But just to give you a flavor of the activity in the U.S., that's -- there's much more, but from the qualification side of the deal, that's what I would like to see, a deal that could close within 12 months, it's probably around five. And then you have the rest of the world. I think Europe is still pretty depressed, even though we have some activities going on. I think we see a slight pickup in the South of Europe, Spain, Italy. I could see potentially two, three tenders activity active. Are they going to close in 2021? I think it's very difficult to say. But reasonably, we can say within 12 to 18 months, providing the situation remains stable. And that's also valid for the U.S., by the way, because one of the reasons it's very difficult for us to guide is you have seen like I did that the number of cases in the U.S. is picking up again. Where we were expecting U.S. to reopen, actually we are canceling events in the U.S., one after the other. So I want to remain careful a bit on the U.S. but Europe as well. So we see some activities in Europe. And then especially in China, I think either IBA or direct or through our partner, CGN, we definitely see, let's say, a couple of very active deals going on in China. So that gives you a little bit of a flavor of type of level of activities we see. So quite -- not too bad for Proton Therapy market and the overall environment globally.

Okay. Understood. And the last question is on the fact you have plans to large-scale multi-institutional randomized controlled trial and that you joined that trial. Can you maybe talk a little bit more about the project? How is this trial designed? Or what are the primary and secondary endpoints? Is this rather an efficacity trial? Or is it rather working on the safety profile of Proton Therapy? And why in this indication? And could you potentially join more of the loss for other indications?

Well -- the overall -- I'm not so familiar with the end point, and we could organize maybe a bit more of a clinical overview of it during our Capital Market Day, inviting some of our clinical partners. I think the overall idea which we pursue is to build the confidence into the NTCP model of developed by deduction and especially applied in Groningen, where we have seen that providing we can select the right patients with a statistical approach comparing conventional radiation therapy planning with what we can be achieved in Proton Therapy and statistically trying to forecast the complication we really believe there's a way to go in order to open more indication to Proton Therapy. So I certainly know that the clinical trial is really about that and they have decided to start with this indication, but more will come, certainly, in the future.

And there are a few points maybe on this trial. First of all, the discussion around proton is always to show the comparative benefit of proton versus conventional radiotherapy, and that is something which will be studied in much detail in this trial. And the second thing is that it's an industry -- it's not an industry-led trial, but it's an industry-supported trial with Varian and IBA, among others, participating. But with several leading institutions in there, of which six are actually IBA proton centers, which will also give us additional information on data on what's happening in this area. And so what we hope is that once things have moved in one indication, they also have an insurance on shifting the needle and other indications and improving there. But indeed, in terms of the endpoints and how and what the timing is, we can have a chat later on with one of our specialists on that point if you're interested.

All right. Maybe last small question. The cash buildup post closure of H1, mainly driven by advances of clients? Or is that just receivables coming in or...

It's both, advances are also receivables. But no, no, it's actually both. But it's been quite a positive summer for us, let's say.

One other question from Carlos Moreno.

Can you hear me?

Exactly.

I have two quick questions. Firstly, as we work through COVID, well I suppose we're maybe nearer the end than the beginning, plus as the other businesses and the Service backlog in Proton Therapy grow, are we at the point now where over the next 12 months, over the next 6 months, you might be able to give some kind of medium-term targets, both for the top line and the bottom line for IBA? Are we in a position now where IBA is a bit more predictable? That would be my rather than very short-term targets. And then the second question, I'd love to hear if -- obviously, you've seen yourself [indiscernible] now is in charge of Varian. Have you observed anything different about Varian under its new ownership?

Yes. Maybe I start with the [ mention ] Varian. I think not yet, from what we understand, they're very busy integrating and in terms of market behavior or a change of posture or aggressiveness or something like that, we didn't see any -- they are out there and pushing for Proton Therapy. We didn't see any change yet. And on the guidance, I don't know, Soumya, if you want to start?

Well, I would say on guidance. I think given the fluctuating situation of the pandemic, it's really difficult for us to guide because it just feels like anything we say will be canceled out by the opposite happening. So we don't want to have that situation, obviously. At the same time, I think we feel internally that excluding any of these impacts, we would potentially be able to give some guidance, but we really want to wait and see how the pandemic pans our over 2021 before we start to do that. But I would certainly say that we are starting to see a clear pass on the type of top line growth and EBIT percentage margins that we could start to talk about. But it's just likely too early. We would really hope you could have done it this year, but I don't think it's -- we are sufficiently out of the situation of the COVID-19.

Okay. That's [indiscernible]. I mean, I always think of guidance as being kind of 6 to 12 months. I'm not really interested in that, but I think all of us would find it very useful if you had like a 3- to 5-year plan, at least directionally, where you think what -- the journey that we're on, I think would be extremely kind of useful. But yes, I appreciate COVID is kind of dragging maybe more than we first hoped. But brilliant.

We have one more question from [ Laura ] [indiscernible] .

Two questions from my side. First one, could you share your view on how you see gross margin evolution going forward? Secondly, of the ongoing Proton Therapy projects in China, how many are ready to start installation? That's a bit linked to what would be the impact of potential reopening in China in H2 in terms of backlog conversion. And finally, we see a recovery in EBIT. Can we expect this to last?

Okay. Yes. On the Chinese contract, I think as you have seen, the whole Proteus spread. So the building phase, let's say, is a bit longer than with the ProteusONE. So we see an installation wave, so to speak, in China more towards 2023. So that's how we look at it. So we basically have two plans regarding that. One is that we are back to business as usual and it is easy to travel to China. And then we're basically ready to install, but we also want to be mindful that the situation might not be back under control yet by 2023. And we are, let's say, fortunate enough to have a strong local team and also a strong partner in China. So we're looking at beefing up as a plan B of our team in China or to basically collaborate faster and deeper with our local partners, even on IBA contracts, so we can be, let's say, more agile in case the COVID pandemic prevent China to fully reopen even within -- even after a year and a half. So we have two plans. We keep an eye on that. And once again, the wave of installation in China will be more towards 2023 then 2022. I will let Soumya come back on the margin evolution.

So the other question you asked, indeed Laura, was about margin. Again, I think we've said we don't give guidance. So I can't really guide you on when we expect margins to grow, how we expect them to grow. All I can say is that we continue to maintain our cost control, and we have strategy plan out in particular for our Service strategy going forward. Olivier, spoke during the presentation about the installed base being really a tool to improving outcome, indicate number of indications and also therefore, creating momentum in the PT market. It's certainly important that we continue to work on improving margins over there, not just for IBA but also for our customers. But I can't give you a hard number on that as such. We just plan, of course, to improve it versus what we have today, which continues to be affected by the pandemic. And I'm sorry, I don't remember your third question.

And so my last question was about EBIT. So we're starting to see a recovery. Can we expect it to last?

I think I have the same answer on that one. I would certainly hope that it lasts. But again, it's going to be quite dependent on how the pandemic affects our numbers over the second half of '21. You've seen that a big chunk of the improved profit is coming really from gross margin, which has improved quite a bit versus last year. We've kept our costs stable and I think we could expect that they will remain more or less stable into H2. But therefore, it would be primordial that we're able to convert more backlog into revenue over H2.

And for me, that's exactly that. I think we might sound a bit, I don't know, conservative here or -- the backlog is there and the margin in the backlog is there, and it's there to remain. As you have seen, we have our cost under control and the cash situation is very good. Now we feel dependent on part of the backlog convention on the number of events that needs to happen. And for them to happen, we need to be able to send equipment, we need to be able to travel to some countries. And this is the part we don't fully have under control. Should this not happen, it will just push the revenue recognition and the gross margin to the next year. So I think it's -- I don't want to sound like if COVID continues, it's a disaster, I think if COVID continues, it's -- it will slow down our backlog conversion, but the backlog conversion will eventually happen. And the backlog is sold with a sale margin that will help us to continue to improve on our company fundamentals being the gross margin, being the EBIT. There is some slight uncertainty on a few events that needs to happen in order for us to feel absolutely comfortable to confirm that within the next 6 months or even within the next 12 months, things will continue to improve. Everything is settled for things to continue to improve with like many other companies dependent on the development of the pandemic.

There is another question by the phone from the number ending by 8291.

I think that's me, Simon Vlaminck, from Degroof Petercam as well. Just two quick questions from my side. We always -- I mean, fantastic to see the deals that are being signed in the Other Accelerators and also the lively pipeline in Proton Therapy, but I was just wondering you mentioned already before, and we're basically at the crossroads for the industry to decide or to choose in sterilization for our technology, which is today about 10% of the of the equipment sales in that for sterilization. In the deals that you have signed, is the deal that you are looking for or hunting for included? Or is that still pending?

Yes, good question. Simon, I think we can certainly say that the biggest impact we have seen from the pandemic was on the medical device sterilization. It might sound a bit counterintuitive, but this business is really driven by the number of surgical procedure in the world that were basically down because of COVID taking all the attention of hospitals. Now we know it's a temporary adjustment. And therefore, the deal you are referring to and the -- let's say, the move that we are all working on for so many years to see the penetration of E-beam and X-ray really growing into the medical device sterilization has not happened yet, even though we have seen early signs of that, especially in 2019. We have seen a bit of a stop in 2020 and early 2021. The only thing I can say is that we have a very high quality conversation with the biggest player in the field, and we don't see any reason why it should not happen quite the opposite. I think slowly but truly the industry recognized that of course, ethylene oxide and cobalt are there to stay, but not to grow anymore. I think it's going to be very difficult, and here I quote one of the market leader in the space saying, well, we will continue to use our cobalt center and we might be able to grow them a little bit in capacity, but it's going to be very difficult for anybody to get an operating license to build new one. So I think the industry is recognizing that and the closest and better alternative to cobalt is E-beam and X-ray . So we have a lot of very high-quality conversations with the industry but it did not convert into concrete order intake yet. But I'm very, let's say, optimistic that this should happen in the near future.

Very nice. Good to hear that I'm clear. On -- also on the Other Accelerators part, I was curious, the NorthStar partnership, I mean we have seen several announcements on that, of stuff that they have ordered already on -- with IBA. Just curious what the expectations are? Is there still a lot in the pipe for NorthStar? Can you give a little bit more color on that?

Yes. I think, well, we have an umbrella agreement with NorthStar for a number of systems. I think we have specifically disclosed that. It's eight systems. And we are currently implementing the first two sets. We have started installation that's -- I was in the U.S. in April, I think, and it's going very well. So the two set, the two first, let's say, proof of concept are currently going under installation, and NorthStar is a very ambitious plan of expansion, and I think they are on target. So yes, there is more to come to -- for the so-called Rhodotron TT300 high energy that can be used to produce radioisotope. Technetium-99 is one, but there is more potential, especially in the space of theranostics. So -- and you might know that theranostics is a pretty hot topic globally. And we believe we have a nice technology solution to produce very efficiently very good theranostics radioisotope with our TT300 technology. So more to come with NorthStar based on the umbrella agreement. And also some more potential for the Rhodotron TT300 in the space of theranostics.

And of those eight systems, two are already -- are now in execution on your side? The six others, are they already in the backlog? Or do they need to pay from before they get in the backlog?

They can. They have their special condition to buy them, providing they meet milestone, but they did not exercise it yet. So it's not in backlog.

Okay. Very clear. And then just curious, last year, you quantified a little bit the COVID impact. If I remember correctly, over the full year 2020, it was about EUR 15 million direct cost and then some indirect costs which was also amounting to close to EUR 15 million. What was it so far this year? Is there any quantification that you can give on COVID-related costs?

Yes. I think you can say that we probably close between EUR 5 million and EUR 7 million -- it's between EUR 5 million and EUR 7 million, more or less, the impact that we've in H1 2021, which includes delays and therefore, extended installation times, which includes additional equipment costs, shipment -- and of course, as you've seen, overall, costs are also going up for materials and potentially some of that will also impact IBA. So yes, between EUR 5 million and EUR 7 million probably. So still quite...

And on -- Yes. Yes, it's a significant number. And on the rising costs that you mentioned, is it -- are you able to pass it on in your contracts to clients? Or is it, in the big scheme of things, not that important?

I don't think it's all that important, but it really depends on the structure of our contracts.

I think we can say that our goal is to pass it on. I think we have started a number of initiatives to [indiscernible] that indeed reflected pricing of our equipment.

Okay. And good luck in chasing the new contract. It's -- I think everybody is quite positively surprised with what everything is happening in the pipeline for PT, I think.

And I don't see other questions from the audience. So if we don't have any questions, I would like to close the call and would like to thank you all for joining. And before we wrap up, I just want to highlight some of the upcoming events in our financial calendar. We are planning to present at ASTRO conference in October. Now we say we are planning because, as I mentioned, we don't know exactly if it's going to be possible. But if it is, we would like to see you over there, and we will provide more details closer -- as we get closer to the date. And as normal, we will publish our quarter three business update in November, and our full year result will be reported in March next year. So many thanks again for your time today. Thank you, Soumya. And we look forward to updating you soon as we remain focused on delivering our strategy across all our four business lines. Thank you, and have a nice day.

Many thanks, everyone. Bye.