Lifecare ASA (LIFE) Earnings Call Transcript & Summary

And thank you very much. I'm used to doing this in English, so I'm going to continue to do that. Most welcome to our Q2 presentation for 2026. Before I jump into it, I want to kind of point out the small superstar shown on the screen. For those of you who were here last year, you might remember that I informed that I had implanted one of our veterinary prototypes in my upper arm. The reason for doing that, and I still have it right here, of course. The reason for doing that was -- there were 2 reasons for doing that. First of all, based on the information we had, I considered it to be a safe move to do. I mean, to implant something in my body is obviously something I need to consider before I do it. The second thing was the need and interest I had and also the organization had of experiencing our product in real life to actually to -- one thing is, of course, to read PowerPoint presentations and laboratory presentations, et cetera, but to have it in the body to feel how it is, to notice whether it moves or not, to notice whether it affects the daily life and of course, also the communication part because we are on a journey that is quite complex, and we are set out to measure body analytes inside the body. That is kind of -- that is not a straightforward operation. But this also consists of electronics, radio communication, material choices, et cetera. So the output from this experiment I had the last year was very interesting and relevant for me personally. But also in a high degree, the company and our developers. So what I'm showing you here is, of course, it's a picture of our implant, but it's, first and foremost, an indication of the move we have done throughout the last year and especially, of course, in the second quarter of 2026. Our highlights for the quarter includes the fact that we have strongly increased our real-world evidence for use of the implant. We have obtained and gained quite a lot of regulatory clarity. In addition, we have tweaked the company into a high degree of operational focus, which also affects our expected runway. The 3 takeaways here today is, first and foremost, our real-world evidence. Throughout the second quarter of 2026, we have been able to show 3 implants implanted in dogs for 6 months. Last time I was presenting the Q1, we were able to do -- we had a 12-month (sic) [ 12-week ] duration of 1 implant. Today, we have a 6-month implantation of 3 implants, which is a significant progress. Further, we have moved on the regulatory path from a conceptual first-in-human study. We have decided not to do that and rather go directly into our pivotal CE study. That requires quite a lot of more documentation than what was planned for the first-in-human study, but we are progressing, and we are happy to inform you about that in this presentation. And also, some of you might know that we, in Q1, decided to wind down our operations in Germany and move all of our operations to Bergen. That has led to a reduced cost base. And we are -- the consolidation of our manufacturing in Bergen is ongoing, and it looks obviously promising. Throughout the second quarter, we have materially strengthened our in vivo evidence. In vivo means implanted in live tissue. Our dog study evidence based on real-world implantation has been analyzed in terms of the independent tissue analysis and device signal learning that is very promising going forward related to the question of how long we actually can keep our implant in the body. On the first picture, you can see [ Truls ] the dog, [ Truls ]. He's a diabetic dog. He's 13 years old. He's blind because of his diabetes. And he has -- he was our -- I mean, I mentioned that our implant is a superstar. He's our real-world superstar. He was the first dog with a 6-month implantation. And that provided us with the first valuable data in terms of the communication, in terms of the fact that we don't affect the tissue in any degree that is surprising. And also the fact that we could read out relevant data. But independent of that, no, as a consequence of that, the fact that we were able to provide continuous data from his glucose levels to the veterinary, it also provided a way more precise and improved clinical treatment of the dog [ Truls ]. So from the start where he were quite affected by his diabetes to the end of the 6-month period, we were able to play a part in making his daily life better and then potentially also making his owner's daily life much better. And that is an invaluable learning that we cannot show on the data sheets, but that's what this is all about, the fact that we are on a journey where we want to make life better for people and animals with diabetes. The slide where I would expect there to be quite a lot of questions related to our clinical progress in terms of study, our regulatory progress. I mentioned earlier that we have moved from our original plan, which was to have a conceptual and quite small first-in-human study due to the fact that we had a pushback on the regulatory application we did in the first quarter of 2026. We have reconsidered our regulatory plan, and we have also redrafted and outlined a new and overall clinical regulatory plan. Where we have decided to go directly into the pivotal CE study that is meant to give us the regulatory feedback that provides us the possibility to get the CE mark. But this move also includes that the work and the preparation we are doing is quite more significant than what we originally did. We are working to get our submission ready. And to do that, we are depending on having manufacturing control to verify our manufacturing to ensure that we have documentation in terms of quality, in terms of materials, in terms of the production line as is. And this is several work streams going in parallel that is directly affected by the setup of the manufacturing that we are doing in Bergen. So there is a strong link between our regulatory preparations and our manufacturing preparations in Bergen. The regulatory time line now is driven by readiness of the evidence package, not necessarily the earliest possible filing date. And for us, that is a significant -- there's a significant difference in that. We don't want to chase the earliest possible date. So the takeaway from this slide is that to get to the regulatory submission, we need to ensure that we have controlled manufacturing. And I'm probably going to repeat the phrase controlled manufacturing a few times. And just to make that very clear, controlled manufacturing does not mean the ability to manufacture. Controlled manufacturing means that we have full control over all elements in the manufacturing, both in terms of documentation and in terms of execution. And that is imperative to be able to go forward with the pivotal study. And that is one of the reasons why we have decided to move our production from Germany to the U.K. and consolidate and centralize it here in Bergen. This is partly a response to the regulatory feedback, but it also provides us with a lower cost base and an increased engineering focus and an increased execution focus. Traditionally, our manufacturing and also our development has been centralized around science on different locations. And that made sense up to end of last year, I would say. It made sense to be organized in this way. But from an operational point of view, to restructure so that we're able to set up the controlled manufacturing at the same location where we have quality control, where we have all our engineers, makes more sense to have it spread. So this is a shift towards a much more engineering-led execution of our program. Right now, we have consolidated the operational model, the operating model, where we have the equipment for manufacturing already in Bergen. However, to set up the manufacturing is more than moving the equipment. So now we are in the final phase of set of the move of the manufacturing, which is then all about getting control to gain control in terms of the documentation we need to be able to produce the same implant every time without failures. This is a strengthening of our overall organization, while we still keep the U.K. entity when it comes to the chemistry development. It leads to a lower cost base. It leads to an integrated execution. And as Petter is going to tell us quite soon, it also affects our runway for the upcoming quarters. All in all, what I have presented now represent a stronger foundation for our next phase. Q2 isolated definitely strengthened Lifecare's evidence base, the regulatory planning and the ability to execute with capital discipline. We have a lower cost base. We have an integrated execution, and we have a way better planning basis for our regulatory way forward. I deliberately I am not stating any dates related to the filing of the regulatory application. And the reason for that, I feel a need to explain that. The reason for that is that if I were going to state the date today, it would have been artificially because we have to ensure that we control the manufacturing processes before we can say with certainty this is our filing date. So I very much look forward to come back to you guys and tell you when that filing date is. But I know that you understand that we need to ensure that these prerequisites are in place before we actually point it out. This is not any hidden message related to technology, right? Because the technology is -- the evidence for the technology is increasingly improved, and it's increasing quarter-by-quarter. We're talking about getting the production into a controlled manufacturer. Based on our now enhanced focused organization, with the consolidated manufacturing and a clearer regulatory plan. So I think I'm going to stop that part of the presentation there and leave it to Petter to finally be able to inform you about some numbers that are looking better than usual. Not at least, it is showing the effect of the consolidation of our manufacturing and operations.

Good morning, and thank you for participating in this presentation. So I will go through our numbers for the quarter and first half of the year. Yes. So we are still a development company. So we do have some limited revenue, but that's only related to government grants. So in Norwegian, these are SkatteFUNN that we recognize. We had about NOK 250,000 in the quarter. We have, our CEO Joacim has been talking about, a cost base that has been significantly reduced. So our operating expenses in the quarter were reduced even further from Q1, which also had a reduction. But we are now first half of 2026, we are NOK 2 million lower than same period in 2025. But we did have an impairment adjustment in Q1 2026 of NOK 12 million. So if we take that into account, we have a cost base that's really NOK 14 million lower than same period last year. As you see, our cost base has been reduced in basically all the different categories of costs, so employee impairment, obviously, and other operating expenses. And for Q1 -- sorry, Q2, we had an operating expense or loss of NOK 10.6 million, while it in Q2 2025 was NOK 22 million. In Q1, we had NOK 31 million in negative profit, operating profit -- so there is a significant reduction in our cost base. And part of this is related to the winding down of our German entity that we started in Q1. We do have some further effects of that into Q2, but we do not yet have the full effects of the wind down and the following insolvency in the German entity. We will have the full effects of those items in Q3 and going forward. So we will continue to have a lower cost base and also a bit lower than what we are showing in Q2. There are some particular items in Q2 that are worth mentioning. We started a winding down of our German entity in Q1. But in late Q2, the process moved on to a formal insolvency process. And that also means that as of end of Q2, we have deconsolidated the German entity from the group. We do have it included, obviously, in our P&L. But in terms of our balance sheet, it has now been deconsolidated and it's not longer in any part of the group figures. This also led to a gain in Q2 of NOK 2 million through the deconsolidation of that entity following the loss of control. Also here, we are showing the operating profits. But if we go one step further, we would see that we had a quite high financial income in Q2, and that's related to fair value adjustments of warrants. Those were exercised in the second part of the tranche was exercised in June, and it gave us a gain, which in total gives us a profit in Q2 of NOK 4.5 million. Comparatives for last year were NOK 13.6 million in a loss. And first half of the year, we had a loss of NOK 32 million compared to the NOK 33.9 million last year. So we do see effects of the changes that we have been implementing in our organization. The reduction of costs is quite significant, and we will have a further cost reduction also going forward. So moving to our cash flow. We started the quarter at NOK 26 million. And of course, that was following the rights issue and the first set of warrants that were exercised in Q1. So starting at NOK 26 million, and then we had a new capital raise in June related to the second series of the warrants, which gave us NOK 25 million in net proceeds. We continue, of course, with our R&D activities, which were at around NOK 3 million in Q2 and other OpEx of NOK 7 million, which then also includes our own salary for employees within Lifecare. And of course, a large part of those are working actively on our research and development. We have some effects of timing effects related to accounts payables and receivables, and we are ending the quarter at NOK 37 million, which is a good standing at end of Q2. We do expect that the current cash balance we have, given our current plans, will provide us runway through Q2 2027. So we are in a considerable better financial position than what has been the case over some time. So that, I guess, is the summary of where we are on the financial side. So positive numbers and increasing control and reduction of cost base, which we will also see going forward. I'll hand back to you, Joacim, to give us more thoughts on what's coming up.

Thank you very much, Petter. Our chain of execution right now is built on years of experience. It's built on the strong and materially increased real-world evidence. That evidence provides us learning into our product and the product provides us learnings and enhance us to be able to do controlled production that consequently will lead to a regulatory filing and then finally, to execute on the pivotal CE study so that we are getting regulatory authorization to be able to go into the human market. The processes here are in quite an extent parallel. And the fact that we are talking about regulatory preparations is not an indication that we have somebody sitting at the desk and writing down operations and writing applications. On the contrary, the most important thing we are doing going forward is to complete the manufacturing establishment in Bergen with documentation and control processes that leads over to prepare for the clinical investigation based on a submission-ready package. And in parallel with this, we will continue to apply the learnings that we have gained from the veterinary study -- and to be clear, the veterinary study is ongoing. It is not finalized. So we are still doing study with dogs in a 6-month durations. The real-world evidence will give us enhanced information on the implant performance, the signal interpretation and the future, of course, system configurations. Just as important in the upcoming period is the fact that we now have the vessel for our technology. So Lifecare's product is basically our technology. We have the infrastructure ready. We have the implant. So the question is what do we want to measure going forward? We will increase our focus on expanding our potential monitoring analytes beyond glucose. However, we will, of course, we will stay focused on the first application that will be glucose no matter how you envision it. So glucose is the first application for humans for veterinary use. But we will investigate deeper how we can use the basic technology to new applications. And that also then includes that we will increase our focused approach to potential partners going forward, both veterinary and within human medicine. And we can do that based on the fact that our current operating plan, as Petter just explained, provides us with an expected runway through Q2 2027. So after Q2, I think it's -- I'm very happy to be able to say that we have a more disciplined cost base. We have consolidated our execution, and we have a pivotal CE focus. Going back to the opening of this presentation, yes, it was fun last year to tell you that I had implanted the veterinary prototype, but I got to say that this is even more fun to actually feel that the company is developing into a solid, disciplined company with a consolidated organization and a disciplined cost base. We enter the second half of 2026 with high expectations, and we look forward to bring our complete technology important steps forward towards both veterinary and human applications and hopefully be able to say something more about that at a later point of time. I'm not going to go deeper into it. It's too easy to start to babble about it. Okay. I -- it's always fun to be at Vestland på Børs. It's good to have an audience. It's more intriguing than being at the office and doing an online presentation. However, we are also sending this online. Our Q2 report is, as always, available for download. And now it's time to open for any questions that you might have in the audience or that is being published on the online portal. We have 16 minutes for questions, and that might be more than enough time.

So, unless there's some in the audience first, we can start with those.

The current runway through Q2 2027, does that include filing for the CE study?

It includes filing, yes.

Filing?

Yes.

Okay. So we have a question related to how big are the expenses related to the move of production to Bergen.

I don't have a firm number on kind of the exact number on how much the cost. But I think it's -- we have shown significant savings following the wind down and later then also insolvency of the German company that reduced our costs -- ongoing costs quite significantly. Obviously, building up organization in Bergen and building up production will increase those costs to some extent. But the total picture is definitely represented by what we see today. We do not expect any significant increases in costs related to the fact that we're setting up manufacturing in Bergen. So that is somewhat captured in the fact that we aim to do a disciplined capital control of the company.

Thank you. Next question is related to the 3 dogs. Can you say something about the type of data that we got from the 3 dogs over these 6 months in terms of precision, quality and mode?

Yes. I think it's important to say, first of all, our ambitious project is to take technology, meaning electronics, meaning radio, meaning chemistry and put it under the skin in tissue to monitor the biological changes in the body. That is not trivial. And it is important to -- for me to state that it's quite common to think that radio and electronics is available off the shelf. Yes, of course, it is. However, you need to configurate it to your specific use. And placing electronics and placing radio underneath the skin is a quite harsh environment. It is affected by live tissue. It's affected by temperature. It's affected by noise that is in the body. So the data we are getting out is, first and foremost, the fact that we are increasing our understanding of the drift of the noise of the biological influence on the implant we have integrated in or implanted in live tissue. In addition to this, we have a significant increase in glucose-related data. And I specifically define it as glucose-related data. Because this is influenced by the drift, by the noise, by the biological environment. So I think the easy example is that it's to put our sensor on a lab bench and add glucose and get the result that the glucose is increasing and then it will decrease when you take out the glucose. That's easy. But it's more complex to do it in the body. So if you -- if we rephrase maybe that question and say that does your development show that you can measure glucose? The answer to that is definitely yes. We have done that for years. We have done it in the lab. We have done it in pigs. We have done it in humans. We have done it in dogs. Do our development today represent a controlled medical device that can give people with a serious disease specific values that would be accepted by regulatory authorities? No, it doesn't. That is part of our development. The development is all about taking a functional technology through manufacturing setup into a regulatory setup to get the authorization needed to be able to give patients highly important information that potentially affects life and death. The technology works. We have increased our proof on that, and we are very much looking forward to be able to push this through a regulatory trajectory to put it that way. But we are not going to disclose specific dates from 3 dogs, specific data from 3 dogs. We need the time to gain data that will ensure that we have a regulatory package that is good enough, and we will not be able to do that before we have the regulatory CE study finalized. I hope that was thorough enough.

Let's hope so. The next question is related to -- or a comment that you have previously released that the automated production was in place and in principle, could start mass production. What has happened? And why are you now behind on this?