Mauna Kea Technologies SA (ALMKT) Earnings Call Transcript & Summary

[indiscernible] organized on the occasion of Mauna Kea Technologies First Half 2023 Sales. I will now hand over to Sacha and Côme to present the figures on business update of the company, Sacha, Côme, the floor is yours.

Thank you, Thomas. Hello, everyone. Thank you so much for joining us today. We live from Paris and happy to report on our Q1 and Q2 and H1 business update for the year 2023. So I'm even happier to be here with Côme, who joined us as our new CFO about 6 weeks ago. So this is Côme's first webinar with me and hopefully the first of many. So very happy and to welcome Côme to the team. As a reminder, we are here to change lives by providing a unique opportunity for physicians and surgeons to see sales in real time, thanks to our proprietary platform, Cellvizio. Our mission is to provide our partners and providers with this cutting-edge technology that can transform interventional cancer care, and we're very excited to make great progress on this mission. The future of our Cellvizio platform and business is built on very strong pillars. And I just want to remind you of what they are today. First of all, Cellvizio is a unique and differentiated imaging platform. It's a proprietary platform that produces real-time in vivo cellular images in almost any setting of interventional oncology today. It is used to identify and target abnormal cells and improve patient outcomes by doing so. The second pillar is that Cellvizio is built on a very strong intellectual property portfolio, which consists of more than 250 issued patents, but also more than 20 FDA clearances, clearances as well in Europe, in China, but also Category 1 CPT codes in the U.S. for upper GI endoscopy. So the applications in the esophagus and other organs around that. The third pillar is our extensive knowledge of medical procedures. Physicians have performed more than tens -- performed tens of thousands of procedures on patients in more than 20 countries with Cellvizio and have created a phenomenal repository of clinical papers using Cellvizio for various therapeutic areas. If you went on PubMed and look for these papers, you would find more than 1,000 of these, including very high-profile recent publications. Four, we have a very strong pipeline of potential strategic partnerships. We've announced this new strategy about 18 months ago to enhance our market penetration, thanks to strategic partners. And we have concretized the strategy last year with a very important partnership in China with Tasly Pharmaceutical with whom we have formed the joint venture, and we'll talk about this later. But we also have long-standing collaborations with industry leaders, notably Johnson & Johnson, who is also an important shareholder of ours. And we work with the Lung Cancer Initiative on various initiatives to improve patient care in the field of interventional pulmonology. We also have a long-standing collaboration with Telix Pharmaceutical, an Australian biopharma company with a remarkable path to success. And we work with Telix in the field of urology oncology and notably the procedures of proctectomy and nephrectomy. These -- the markets addressed by Cellvizio in the therapeutic area, as I just mentioned, are very significant. More than $2 billion, $3 billion market potential. And notably, in our core commercial activity, which is in the field of Barrett's esophagus and stomach cancer. This is a multibillion-dollar opportunity that we're addressing. And as you can see, there are many others that are currently being developed on this graphic. We have created in the past 18 months, a very significant pipeline of strategic partnerships with more than 10 indications that we're working on. As you can see on this slide, obviously, several of them are in the field of gastroenterology, but also, as I mentioned, in the field of interventional pulmonology, where we believe Cellvizio can play a key role in the fight against lung cancer in providing a key complement to existing endoluminal robotics platforms or other navigation platforms in this field. But also in the field of urology, neurosurgery and outside of cancer in the field of inflammatory bowel disease and also irritable bowel syndrome, where we are making great progress on the clinical side. We are continuously improving our platform. This is the third-generation Cellvizio platform that we have launched about 18, 20 months ago. And we are continuously improving it by providing new features, new products by developing the ecosystem in which Cellvizio evolves. And notably, we are working on 4 areas of development. The first one is molecular cancer imaging. So this is typically what we're doing with Telix. Also in the field of robotic-assisted imaging, and this is typically what we're doing with the Monarch platform with Johnson & Johnson. We're also working hard on artificial intelligence features, and we'll talk more about this and also in the creation of multi-model data sets, where the integration of Cellvizio imaging can play a key role for pharmaceutical development. More on this later. So to summarize the main achievements of the company in the first half of 2023. First of all, it's all about the team. We have strengthened the leadership team very significantly. So first of all, I appointed a Chief Operating Officer and Deputy CEO, very late in 2022. So Nathalie Lecoq joined us around Christmas 2022 and has been a key performer and addition to the team since then. And of course, more recently, Côme, who joined us as our new Chief Financial Officer, about 6 weeks ago and who will speak in just a couple of minutes. In terms of our activity, we've had excellent business performance this half year, as you will see, strong acceleration of our sales growth, notably in the U.S. despite a sharp reduction in our commercial footprint as announced already last year. In terms of our partnership pipeline, as I said, we have, first of all, launched our joint venture with Tasly in China and have recruited a number of people and the activity there is intense. And we have multiplied the discussions with other potential partners in several therapeutic areas. And again, very importantly, our product is constantly being enhanced by a very agile framework that we have established, thanks to our new CTO in the past couple of years. And we are -- we have launched new features. We're preparing the launch of new features, and we're also preparing notably our submission for first AI features with the FDA in the coming months. With that, I will turn to Côme to give you a description of our Q2 and H1 numbers.

Well, thank you, Sacha. Well, so just let me start saying that I'm very excited to be here today. And to be part of this first webinar with Mauna Kea. And to share as well these excellent figures with you. Indeed, as Sacha just idea we have maintained and even strengthened a very good momentum we have since the beginning of the year. As you know, as a reminder, we know our sales are based on 2 pillars that are the foundation of our current strategy, which is direct sales from our sales force, notably in the U.S. and in Europe and also the licensing revenues coming from our partnerships. And you see that in the second quarter of 2023, total revenues rose by 77% year-on-year to EUR 2.7 million. And this was driven by the very sharp increase we saw in sales in the U.S., which doubled compared to the second quarter of last year as well, as well as by the licensing revenues that we received from the JV, [indiscernible] with Tasly Pharmaceuticals in China. And in this respect, you see this on the graph, we recognized nearly EUR 0.5 million in revenues in the second quarter, which corresponds to the recognition over time of the upfront payment received on signature of the partnerships last year. And then you see that in the first half of this year, total revenue more than more year-on-year, which are rising by precisely 102% to EUR 6.8 million. And so you see that sales for the period amounted to EUR 3.5 million and licensing revenues from the JV in China amounts to EUR 3.3 million this semester. If we go to the sales by segment in the first quarter, and so we exclude the license revenue. You can see that we recorded a positive growth in all the segments. So this is very positive. And the strongest growth was in sales of Cellvizio systems. Since you see that we have almost doubled the revenues compared to last year. Sales came to EUR 699,000, up 93% driven by both the U.S. and Europe with 4 systems sold over the period despite the negative impact of the transfer of Chinese business to our JV. The second segment is the consumables, which is made up of both [indiscernible] sales and revenues from our PPU business in the U.S., where we recorded a 40% increase to almost EUR 1.1 million this quarter. And those numbers are very encouraging. This is a very encouraging dynamic, which is because it reflects the growing use of our system, which is, by nature, more stable and more recurrent than the sale of systems, which are more erratic by nature. And we have particularly benefited from this PPU business in the U.S., which grew by 50% year-on-year and has been very steadily for several quarters now, even centers are experienced difficulties with fluorescein supplies, just as we mentioned last quarter. And this momentum, which is also very positive is that this momentum can be seen both on our existing accounts, but also on the new accounts, and we added 5 new accounts during this half year. Finally, you see that [ sale of ] services amounted to EUR 381,000, up 5% overall, and they benefited in particular from the financial contribution of Johnson & Johnson to whom we provide equipment for clinical studies. And now if we go to the sales by geography this quarter, it's not a surprise to you that the growth is driven by the U.S. And you see that now the U.S. accounts for more than 3x in the rest of the world, given the situation in China where we transfer the business to the JV. So sales in the U.S. amounted to EUR 1.7 million over the quarter, which is the sales reported last year, and they were driven by all the mentioned segments including systems, consumer and services. In Europe, sales which EUR 481,000, up 34% year-on-year, thanks to system sales, including the installation of Cellvizio at Cork University in Ireland that we reported earlier this quarter. And lastly, sales in the Asia Pacific region were [indiscernible] and surprisingly down versus last year. Since the business, as I mentioned, the business in China is now managed directly by our JV with Tasly. And in this respect, we no longer record sales, but we record licensing revenues. And in the near future, what is positive for the growth of the company is that we will also be recording system sales directly to the JV and we'll also be recording our share of the profits from the JV in our accounts. So I'll now let Sacha conclude on the group priorities.

Thank you very much, Côme. So our priorities are quite clear, and they've been as such for now several quarters. First of all, we are focused on driving business momentum. Obviously, we want to intensify the adoption of our next-generation Cellvizio platform in multiple therapeutic areas and by doing so, increasing our monthly revenue. The second priority is to increase or continue to increase our operational performance, grow our revenue, but also optimize our cost structure, which has already gone down significantly in the past 18 months. And by doing so, increasing our cash runway, and we're working on that as well. The third priority is to ensure our technology call excellence as we are probably -- we'll probably be facing some competition, especially in China. We are, as I said, developing new features twice a year, and we're now integrating artificial intelligence to give us an even greater edge, and we are working on the submission, as I said, to the FDA. And fourth, very importantly, we are -- we want to build a very significant value through strategic partnerships. We are working hard to make our JV in China a very efficient and dynamic company. We've hired a number of people. I'll be there in a couple of weeks to work with the team there. And we are very confident we'll be signing new partnerships in the quarters to come, thanks to a very significant pipeline of these potential partnerships that we've built over the past 9 months. With that, I want to thank you all for your attention. I want to congratulate the team for the hard work this past quarter, which is paying off. And I'll -- we will be talking to you, of course, for our H1 financials late September. With that, if there are any questions, we'll be happy to take them and answer.

Thank you, Sacha. Thank you, Côme. [Operator Instructions] But it seems that the presentation was quite clear.

I think the presentation, hopefully, and the results are quite clear as well. So thank you all for your presence and attention. And we look forward to talking to you again very soon.

Thank you, Bye-Bye.

Thank you.

Bye.