Photocure ASA (PHO) Earnings Call Transcript & Summary

All right. Well, good afternoon and good morning, depending on where you are in the world. My name is Dan Schneider, President and CEO of Photocure, and you're here for the Photocure Second Quarter 2025 results. With me today is Eric Dahl. Just a reminder, the usual disclaimers are in effect for today's presentation. I thought I'd start just kind of reiterating our strategic priorities and initiatives before I get into what I think was a very, very good quarter for Photocure. So first block, accelerate and expand. I think what's important to keep all this in the background of what we've been focused on over the past couple of years, delivering on our financial growth, both revenue and EBITDA this year and continue generating operating leverage. I believe this is our ninth quarter in a row of positive EBITDA and that leverage continues to build. Driving the BLC mobile strategy in Fortech is doing quite well for the U.S. and has increasingly become an important part of our opportunities there. And then for Europe, increasing our penetration in the priority growth markets, Italy, France, U.K. and expand our geographic footprint, which we mentioned in Q2, we now have expanded into Spain. I'll go into that in more detail, but it is one of the larger markets in all of Europe, and it was a market that we were in many years ago when GE had launched back in 2006, 2007. Second block, positioning and access. BLC is positioning to be the primary diagnostic used in precision medicine. That's the way we see it. We see it as a godfather, we want to maintain that positioning. It's key to the detection, surveillance and therapeutic monitoring of these expensive therapies coming on to the market. The high desk technologies are entering the market, we've had upgrades now in all 3 of the major manufacturers, the most recent one being Olympus in Europe. That has already had an impact, particularly in Germany, Austria and now the Nordics as we move through the second quarter. So we're very pleased with that development. And of course, we partnered with Richard Wolf for the blue light flex development for the world's only 4K high-def system that we are currently in -- currently is on track. But in the interim, we do have and figured out an interim solution that is being implemented and has already had cases go off in the second quarter. We'll talk more about that in the U.K. And then the third block, the acquirer and transform, looking across nonmuscle-invasive bladder cancer and uro-oncology in general, there's some really fast-moving rapidly growing interest in precision diagnostics. And as I mentioned, blue light cystoscopy remains the godfather in this space. And we believe that coordinating, it has synergistic effects, but a lot of the other things going on in this space and opens up some real opportunities for Photocure to expand our offerings. In real-time examples of that are even the Richard Wolf high-def 4K flex development that we're developing on a worldwide basis. and, of course, leveraging the mobile solution with ForTec and continue to look for these strategic partnerships and opportunities. So let's go into the second quarter. So obviously, I'll start off today by saying I'm very pleased with the overall results. Overall, we had revenue growth was at an all-time high of NOK 135 million. It was a 9% increase in units globally. In North America, we delivered a 14% unit growth and a 15% revenue growth, offsetting the continued Flex decline, which we estimate to be minus 46% in the second quarter and minus 60% overall in the first half of the year. So we see this continuing to bleed out to the end of this year. The installed base of the fiber blue light equipment continued to increase with 3-tower placements and 9 upgrades in quarter 2 and I'll talk about this a little bit more. But importantly, you should understand that [indiscernible] signaled that they're doing a Saphira promotional program that begins on July 1 and typical of customers. They tend not to buy before they get the sale price. So we believe the pipeline is set for the second half of this year and will materialize throughout the rest of the year. We had a fantastic 21% unit growth in the rigid surgical market, and this is inclusive of the ForTec medical mobile solution. Very important, Fortecnow represents over 10% of our total business, and it continues to build the momentum, it is outpacing our expectations on those of ForTec as well. So we're very pleased with the demand that continues to build for the mobile solution. and the number of active accounts increased by 24% year-over-year to 359. This sets the stage for the continued momentum into the future. In EU, revenue was up 8%, units up -- very solid growth in the EU, fueled by Germany, Austria and France with support from Nordics. All the other countries are kicking in. We see positive momentum in all of them. We continue to execute across the board, and as I mentioned, Olympus upgrade is key to this execution and has a significant impact for Austria, Germany and now the Nordics kicking in. A total of new Olympus upgrades, and there's more in the pipeline. So we're very pleased with the developments there. And as I mentioned, key is the Nordics where Olympus has a very strong presence, and they've begun their upgrades as well as the second quarter, a little bit behind Austria and Germany. Second block, we generated positive EBITDA of NOK 14.8 million. If you take out the BD and milestone, it's NOK 22.6 million. It's our ninth quarter in a row and we can 2 building operating leverage through 2025. The balance sheet remained strong with NOK 239.1 million, no long-term return debt. And of course, we bought back 0.5 million shares for treasury stock. Important news flow, we launched into the Spanish market starting in late June. I'll talk about that when we get to EU segment. Regarding 2 major congresses, AUA and EAU, there were significant presentations and discussions on the growing importance of BLC as a precision diagnostic for the diagnosis, resection and stratification and ultimately monitoring leading to better informed treatment decisions and it continues to build underneath our blue light cystoscopy offerings. The Richer Wolf interim solution, the first cases took off in the U.K. in late second quarter. they went off well. There's more institutions that are interested in trying the interim solution. The key here, just to remind everyone, we ultimately want to bring out the 4K high-def solution at a very sharp price point on a worldwide basis. We're working on the development with Ricard Wolf. It's going to take us a couple of years to get it through its approvals. But in the interim, we want to try to keep flex surveillance alive, collecting the data, making sure the user experience continues forward. We do not want the market to go cold. So this important support coming out of at least starting with the U.K., we'll have other centers throughout Europe that will hopefully implement the interim solution and at least try the surveillance blue light cystoscopy, perhaps with lasers, et cetera, in the outpatient setting. And then partner news. I know there's been a lot of noise on Asieris, particularly with Cevira.There is no real update here they continue through their interactions with the NMPA. It's a Chinese FDA. There is no statutory requirement on them in terms of time lines. Historical average has been somewhere in the 18-month plus range. Again, it could be the end of this year, early next year. when they get an answer from the NMPA. But I will say that their actions at least to date, have been active and ongoing. They're a public company. Therefore, any statements outside of what they've already stated publicly, we cannot say. So that's as much as we know. I will remind everyone, should they get the approval for Cevira, that triggers $11 million milestone payment and the launch in the Chinese market, and then data presentations and abstracts, et cetera. The Danish population study concluded higher levels of BLC use improves in bladder cancer patient outcomes. Basically, the more blue light cystoscopy used, the better the outcomes will be for your patients. So that was great data coming out of the population study. All right. Let's get into the segment trends. So strong unit sales in both regions, both North America and Europe delivered their highest quarter of revenue in history. In North America, it overcomes the decline of the flex surveillance market First half, like I said, was minus 60%. It was minus 71% or 70% in the first quarter, minus 46% flex in the second quarter, averaging out to minus 60% on the half. As we move through the year, the percentage decrease probably will start waiting and then we get into next year. It's basically now been relegated to a few sites in the U.S. where it's still alive and active and supported. And we're trying to keep them going as long as we can to collect the data. Meanwhile, the rigid surgical market delivered a 21% unit growth in Q2, which was Q2 results surpassed previous high watermarks as the momentum continues to build of 20%, and it was the highest, fastest-growing segment for us. We lost it when Karl Storz withdrew the flexible system. This is why it gives us great excitement in anticipation of the new 4K high-def flexible stop cystoscope that we're working on with Richer Wolf because that market was growing at 30% and 40%. And and it was a high percentage and is a $1.3 billion TAM worldwide. So we want to get back into the space. We want to keep it as live as we can, but at least for now, our Flex units in the U.S. are roughly 4%. We see that really going near 0 by the time we're this time next year. Despite all this, the rigid growth was 21%. ForTec has added in a lot. Like I said, over 10% of our total revenues our units and it continues to grow. 12 new Saphira installed. Reminding everyone upgrades are important. When the upgrades happen, we're seeing, on average, double-digit growth out of these upgrades and sustainable. So we're excited about that on both sides, U.S. and Europe. And the account growth of roughly 24% in the. So this is, again, more institutions, more physicians using it bodes well for quarters ahead. Mobile ForTec now has reached 70 accounts by the end of June. There's more already. That's plus 13% from Q4. It's actually plus 13% over the last couple of quarters. So it seems to be around a trend of adding roughly 13 to 15 accounts each quarter, but that could accelerate. They anticipated to that's reaching over 150 different users, physician users and that demand is growing. The awareness is up, and we see this is a key growth driver for our business in the U.S. Access to BLC remains our top priority, ongoing efforts with the FDA for reclassification and reimbursement. We are also working with the other manufacturers to support their initiatives to try to make it into the U.S. market. And I'll repeat 1 thing just for the U.S., but also it's across Europe as well. Post AUA, EAU, there were a lot of discussions around blue light asoscopy. There is a growing belief that blue light cystoscopy ability, so with Cysview and Hexvix, its ability to see more assures a physician the ability to perform a more complete TURBT, which leads to more accurate pathology, staging, risk stratification and ultimately, we see this as potentially helping monitor these expensive therapeutics, giving physicians a more informed precision medicine diagnostic. So this is an important trend that's kind of a macro to everything that we're doing here at Photocure. And then going final to 1 more chart, active accounts. As I mentioned, they're up 24% for the -- to date, we have 359 accounts that currently have active use of Blue Light Cystoscopy. We include the FTC, and we include anyone who is using Blue Light Cystoscopy in a 12-month period. And this includes reactivated accounts that the U.S. team has worked hard on where they had old standard definition they stopped using blue light. We've got the upgrade support from Karl stores, and now those accounts are back doing blue light cystoscopy. So we see a continued momentum in the overall interest in adoption of Blue Light cystoscopy and Cysview in the U.S. And finally, turning to Europe. Q1 marks the highest revenue quarter ever, supported by solid growth in the DACH, Nordics and France. France has growing momentum, and we had a really strong June double-digit growth in June. So we're really excited about where France is going. And the rest of the countries are come on as well as they're moving through the year. The Visa 3 upgrades are going extremely well. 36, as I mentioned, have been installed 25 in DACH, 5 in Nordics, but good pipelines behind them. It has a significant impact on the business. So we want to support that as much as we can. The picture to the right of the page actually marks our third bladder cancer tour through Germany. This time, we did it in combination with Merck and Olympus. So all 3 of us came together. If you recall, if you go back 5 years ago, we did this, I believe it was with Wolf or stores, I can't remember which one. The next year, we did it with the other 1 and then this year now with Olympus. So it's really exciting that they're coming to us wanting to be a part of the tour. They had over 18 stops and reached over 500 different health care professionals. So very exciting. There's a lot of energy behind it as a tour around the DACH region. As I mentioned in my opening, we did start operations in Spain. We installed an account manager there, country manager in late mid-June focused on the large metros of Barcelona and Madrid. We have a collaboration with all 3 of the manufacturers, but I will say that we are leveraging the Olympus launch of Vira 3 in Spain, sort of the excitement of that and us coming back into the market. There is favorable reimbursement in Spain. It is the largest of the Big 5 in terms of bladder cancer incidents at 19,300 cases per year. They do over 58,000 TURBTs just opposed to Germany doing about 105,000. So Spain is really basically the second largest market in Europe and certainly the second largest the big 5. It's reimbursed as I mentioned. On the guidelines, it has been abandoned since the GE days, and I'll explain that a little bit. So the guidelines need to be updated. The medical team is working hard on that. We want to get those up to the EU level guidelines. But to this point, with no focus, no effort in Spain, everyone's sort of gone quiet, but we're going to bring it back. But I will remind you, GE launched in 2007, the very first year they did over 1,000 units. It was the fastest-growing market they had. Then the financial crisis hit Spain. And not only did we find it a challenge or GE founded a challenge, but that was across the entire med tech and life science space. So a lot of people abandoned it. As you recall, GE then transferred the business over to Ipsen. Ipsen never put a sales force in there even when the economy came back, Ipsen didn't go after it. We wanted to establish ourselves in Europe. And then as we plan, get into Spain we're in a solid place. We expect Spain to start growing as we get towards the end of this year and into next year. One of the challenges in Spain is the equipment is old. So we need a lot of upgrades, particularly Karl stores sold equipment and they'll, of course, see Olympus. But again, we're leveraging the Vistara launch with Olympus. So we think that will really help put some jet fuel in our efforts. And we're also engaged with the top 6 KOLs in Spain. So we feel like we're in a really good place medically I guess, and scientifically. So roughly 270 hospitals perform TURBTs in Spain, the 326 that have urology clinics. So again, it's a manageable market. So let's go to Slide 10 with growth initiatives. And just to remind everything, some of the key elements and accelerators are in the business that they haven't picked up on it yet. Two things, ForTec 70 new accounts. They have -- both our sales force and their sales force are incentivized to push the mobile solution they try stack cases. So if they go into a hospital, they want higher throughput. I think this is a really key thing to understand that ForTec makes money, the more the machines are being used. So there is a lot of effort put into their sales force, their technicians, their incentive comps and also their offerings or price offerings to customers to stack cases and increase volumes per per machine that goes into those hospitals. Currently, over 150 different users of the machine that continues to grow it is facing both our expectations. I said when we launched into this strategic partnership with ForTec that they have -- they are quite open to expanding. So what I mean by that is they have 18 towers out there, all 18 weren't operational to the first quarter of this year. As they reach capacity, they are very willing to buy additional machines and build on top of that. So this could be an exciting development as things continue to progress. with the flex with the mobile solution. Everything is on -- in terms of flex, everything is on track. The interim solution has been tried in the U.K. It's gone -- the cases have gone well. We look to expand it. There's other accounts interested. And then in terms of development of the high-def 4K system is on track reminding you that is a $1.3 billion total addressable market in the U.S. and and we see that as a real opportunity, and we will be the first and only to market with this high def flex Blue Light system. And as you think about the macro environment and what's going on with all these therapeutics having the best way of the best precision diagnostic to monitor these therapeutics is actually a real benefit for us as we look forward. Final comment, we'll go to Slide 12 on our partnership with Asieris, reminding you it's 2 different products. Hexvix has been approved, but they're awaiting an approval of the Richard Blue Light system. That has had some challenges, but they expect it to be approved hopefully by the end of this year, and they'll be able to launch in 2026. And of course, we have some revenue streams coming off of the sales of Hexvix over time. And then on Asieris, just to be, as I mentioned, to be clear, everything seems to be more or less on track. They're interacting with the NMPA, and we'll hear more from them as things develop and they get a decision out of that. And then I think the other kind of development that you can pick up on the public airways for them, they are possibly looking at a second indication. We believe it to be low grade. And if that's the case, that also would trigger the opportunity for additional milestones and regulatory approvals and, of course, ultimately in sales revenue shares. So exciting, looking forward to it, and we'll see more as they progress. So with that, I guess I'll turn it over to Erik on the financials.

Thank you, Dan. Well, I will give an overview of the second quarter financials, which includes the consolidated income statement, it's a segment report I will present as well headlines from the cash flow and the balance sheet. The first was about foreign exchange year-over-year and measured by unweighted monthly averages the kroner in Q2 appreciated 4.1% against U.S. dollars and depreciated 1% against euro. Year-to-date, the kroner depreciated 0.6% against U.S. dollars and depreciated 1.5% against euro. If you look at this in terms of Norwegian kroner, the FX impact for Q2 revenue was negative approximately NOK 1.3 million. And for OpEx, positive approximately NOK 1.3 million as well. So the consolidated impact on foreign exchange on EBITDA was not material. Final remark. As always, all financials in his presentation are in Norwegian kroner, unless another currency has been specified. Next slide, please. Now looking at the consolidated income statement. Hexvix/Cysview revenues in the second quarter increased 11% to NOK 135.6 million which is all-time high. The sales increase was mainly driven by a combination of volume increase of 9% and higher average pricing in both regions. Partially, this was offset by an expected decline in flexible kit sales in the U.S. and the impact of foreign exchange. The volume growth in U.S. to some extent driven by customers' orders moved from Q1 to Q2. Not all of the -- you will remember Q1 that we had customers that have postponed their ordering. And not all of that came in Q2. Actually, a significant amount of orders is expected to take place the rest of this year. Total revenues in the second quarter decreased 7% to NOK 235.6 million. The decline was driven by milestone payments we received from Asieris. Second last from Asieris in Q2 last year related to the development of Cevira. The impact of foreign exchange on total revenues was approximately $1.3 million negative in the quarter. Q2 total operating expenses, excluding depreciation and amortization, but including business development were NOK 110.8 million and at level with Q2 last year of NOK 110 million. Operating expenses, excluding business development expenses were NOK 103 million compared to NOK 108.6 million Q2 last year, a decrease of NOK 5.6 million year-over-year. The expense decrease was mainly driven by timing of expenses related to congresses and business meetings as well as expenses related to FTE adjustments. The decrease was partially offset by merit and inflation. The impact of foreign exchange was positive approximately $1.3 million in the quarter. As previous quarters, personnel expenses were relatively stable year-over-year, except for merit increase. However, project-driven expenses particularly within business development, may vary significantly year-over-year as well as sequentially between quarters. Business development expenses in Q2 was NOK 7.8 million compared to NOK 1.3 million in Q2 last year, and the increase is mainly driven by market research activities and legal fees related to partnership contract support. EBITDA in Q2, including business development expenses and milestones was NOK 14.8 million compared to last year, NOK 27.8 million. However, last year Q2 included a milestone of NOK 21.6 million from Asieris. EBITDA, including milestone revenue -- sorry, EBITDA, excluding milestone revenue and business development expenses for second quarter was NOK 22.6 million, which is an improvement of NOK 15.1 million from Q2 last year, reflecting improved operating leverage for our core business. Depreciation and amortization was NOK 7.3 million in Q2, main cost item as the amortization of the intangible assets related to the return of the European business from Ipsen Net financial items in Q2 were a net cost of NOK 4.9 million compared to a net cost of NOK 4.5 million in Q2 last year. Net financial costs were driven by foreign exchange losses as well as accrued interest cost included for the deferred earn-out liability due to Ipsen. Tax expenses were an income of NOK 2.4 million for the quarter. The tax expense is mainly driven by group sales, but also into company items in the parent company. And of the net financial items and tax, we have for Q2 a net profit of NOK 4.9 million compared to a net profit of NOK 12.3 million in the same period last year. Now to the segment performance. Next slide, please. So as usual, I will focus on the 2 main segments, North America and Europe. And I'm starting with North America segment, which includes U.S. and Canada. And revenue from North America increased 14% in Q2 and overall volume increased 15%. This was driven by an increase in volume for the region market, including a ForTec Mobile Solution. as well as an increase in average sales price. This is partly offset by the impact of the phase down of Cysview usage in the Flex segment and a negative FX impact. Furthermore, Q2 revenue growth was positively impacted by the delay of orders from Q1 to Q2 and later this year. Q2 direct costs were level with Q2 last year at NOK 45 million and cost containment and revenue growth have resulted in significant improvements in financial results for the North America region. The contribution has more than doubled to NOK 9.2 million and we have secured a positive EBITDA for the quarter. Looking at Europe. The European business had a positive development in the second quarter with year-over-year revenue growth of 8%, mainly driven by Germany, Austria, France and Nordic. Volume growth was also 8% for the quarter. Q2 direct costs decreased 4% year-over-year, driven by the timing of expenses related to Congresses, partially offset by merit [indiscernible] FX. We ended Q2 with a contribution of NOK 42 million, which is 54% of revenue and EBITDA for Q2 was NOK 2.6 million, reflecting an EBITDA margin of 33%. Now let's look at the cash flow and balance sheet. Next slide, please. So as usual, I'm looking at year-to-date cash flow and ending balance, so year-to-date, cash flow from operations was negative NOK 2.8 million compared to positive NOK 27.9 million year-to-date last year. And the difference is mainly due to the milestone of NOK 21.6 million received from Osiris Q2 last year. Cash flow from investments of $1.3 million year-to-date includes interest received and paid down investments intangibles and intangible assets. Cash from financing year-to-date was negative NOK 53.3 million and compared to a negative EUR 21.1 million year-to-date last year. The amount is driven by the Ipsen earnout payment for both years as well as a share buyback programs current year. In total, we paid NOK 29.6 million for the 500,000 shares we acquired this year. Year-to-date net cash flow was negative NOK 54.7 million compared to positive NOK 7.5 million year-to-date last year. And the 2 main drivers for the decline is the Osiris milestone last year and the share buyback program this year. And with this net cash flow, we ended second quarter with a cash balance of NOK 239 million. Looking at the balance sheet, we ended the quarter with total assets of NOK 685 million. Noncurrent assets were NOK 314 million at the end of Q2, and this included customer relationship with NOK 87.5 million. Customer relationship is the intangible assets identified in the purchase price allocation for the Ipsen transaction. Noncurrent assets also include goodwill from the Ipsen transaction of NOK 144 million and a tax asset of NOK 49 million. Inventory and receivables were NOK 131.8 million at the end of Q2 compared to NOK 132.6 million at Q1 this year, so flat in spite of increasing revenue. Long-term liabilities of NOK 128 million include the earn-out liability related to the Ipsen transaction totaling NOK 109 million at the end of the quarter. And finally, equity at the end of the quarter was NOK 479 million, which is 70% of total assets. This concludes the financial section. Thank you. Dan, it's back to you.

All right. Thank you. All right. Moving to the summary of Q2 results. So obviously, extremely pleased, very happy with the teams, both in U.S. and EU and across the entire organization, all the support work. Overall, a very solid quarter with 11% top line growth, 9% unit growth and that despite Flex decline and perhaps some foreign exchange headwinds. We had positive EBITDA of NOK 14.8 million, and that was our ninth quarter in a row for positive EBITDA. We continue to build on operating leverage as Eric clearly articulated in his presentation. And by virtue of ex milestones, ex BD expenses were NOK 22.6 million. But I think what's key here is we continue to invest in key growth initiatives that we believe will generate revenue growth and increased operating leverage in the business. On the flex surveillance market now and in the future, Richard Wolf, Photocure joint development program to bring flex back to the surveillance market is a big opportunity at a NOK 1.3 billion total addressable market, and we look forward to that happening in the course of the next couple of years. It's on track, as I mentioned in my presentation, and we look -- in the meantime that the interim solution has been already implemented in the U.K. It went off very well. And we want to keep the interest high, collect the data, same as in the U.S. with what Flex machines are out there. the users that are using them, we want to continue to stay engaged. On the account growth, installs, upgrades in mobile, we grew our active accounts, which is both new, reactivated and upgrades by 24%. We believe this is a great indicator of our performance. This is up from 17% growth in Q1 2025 and 11% growth in Q4 of 2024. So you can see the momentum building quarter-over-quarter in terms of increased accounts. Again, mobile is a key driver in there as well. But these upgrades are also significant. In fact, on an upgrade level, we have now upgraded 60% of the old standard definition. We expect the remainders, which were probably purchased in 2022 and 2021, those will convert over the next couple of years. So we will have all high-def equipment in the U.S. at that point. And as I mentioned, there is a positive impact when you use the high-grade equipment versus the old standard definition that was 2 decades old. Remind you also Karl Storz is running a promo program for the second half of this year, I began in July 1. And Certainly, the reps are equally incentivized. So we expect that to help out on the pipeline, which we're looking at today as we look through the rest of the year and into 2026. The ForTec national mobile rollout continues to gain traction. Like I said, 150 users so far, 70 new accounts. They added on another 13 in the quarter. It continues to build momentum. It's outperforming both our expectations and for tech. And I think watch this space, it does hit a market that otherwise we would not be able to hit. These are hospitals that either don't have the capital budgets to afford to purchase these high-priced calstore Blue Light systems or they want to try it first, try before they buy. And this is a nice way to get them used to it. And ForTec and us are obviously driving utilization at the local level. So this is -- it's a really nice partnership, and we appreciate their hard work. And in revenue and units were up 8% in quarter 2 for Europe. We continue to facilitate the in quality upgrades of our nearly 600 target accounts. We believe Olympus light upgrade will help us strengthen this initiative. And as I said, there were 36 installed year-to-date, and they have a nice pipeline behind it. And you can already see the impact in some of the key countries that have adopted the viscera 3 where Olympus has a stronghold. And finally, I'll conclude, we had a very strong presence in AUA, EAU. Some of it orchestrated by us, but much to our surprise and very much to our delight, -- we were an active conversation in so many presentations, so many discussions about using Blue Light Cystoscopy in bladder cancer patient care. So we're really excited about where this is going. And finally, obviously, as Erik mentioned, we have a very strong balance sheet and a nice cash balance of NOK 239 million. And I'll close with the final anticipated milestones and corporate objectives, we remain with the financial guidance today at 7% to 11% product revenue growth and positive EBITDA improvement in 2025. We also expect continued operating leverage through the commercial businesses, as Erik articulated in his presentation and we see the possibility for significant growth in milestones this year with Asieris and Cevira. We continue increasing Hexvix and Cysview kit throughput through tower upgrades, new installations and leveraging of the mobile solution in the U.S. And the Olympus launch is going quite well, and we already see the impacts. We're going to continue to advance the partnership with Richard Wolf, obviously, on the development of this next-generation state-of-the-art 4K high-def flexible Blue Light system, but also where we can implement this interim solution in countries that Richard Wolf has it available Europe primarily, especially U.K. We want to continue to keep Bluelight istoscopy an active conversation in the surveillance market. Lots of work going on with publishing and presenting additional data. As I mentioned, we were sort of talked about whether we forced it or someone just talked about at AUA and EAU. We see that continuing a lot of publications that have been coming out, if you've been following them. So this is really exciting. And our U.S. registry continues to be a very key asset for the company, and there's a lot of interest of how people can access it for the information they need in developing their products, et cetera. We'll continue to support the additional equipment manufacturers coming into the U.S. I mentioned the systems petition and the reclassification is a key pathway and we are putting a lot of money, effort and pressure on that. the FDA is fully aware. It's not an awareness issue, it's a prioritization issue. It's a government entity. So we are making every effort we can to pressure them from all to get them to make a move. In the meantime, there has been identified ways potentially to get to market by a couple of the manufacturers, so we support their efforts and hopefully, one way or the other, they're total manufactured in the U.S. market soon. And finally, on the Asieris progress, again, we can only say what Asieris says, which is everything appears to be on track. Hexvix is approved. Richard Wolf is working through its approval in China, and hopefully, they can get it end of this year into next, early next year, so they can launch Hexvix in China. And then, of course, on the subvirus side, they continue to have exchanges with the NMPA looking for a decision maybe late this year, early next year. So with that, I want to thank everyone, and I guess we'll open up to Q&A.

[Operator Instructions] So the first time the first question is, can Photocure confirm whether it has any knowledge of Richard Wolf's regulatory resubmission for System Blue to the Chinese authorities, especially in light of what appears to be 2 approvals granted on July 11, 2025.

So that was surprising to Richard Wolf because both those products were approved. What it opens up is the opportunity for an interim solution. It's just saying that those camera heads are compatible with their current system. That was not a new approval. It was a recertification as it turns out. There's no new news there.

n Do you have any insights into what is delaying the reclassification of CSP in the U.S.?

It's a government. I mean, as I mentioned, when they went down this first path with systems petition, there's no statutory requirement. It's not like submitting an NDA for FDA approval, and they have so many days to approve at our 510(k) and 90 days. these systems petitions can be identified and acted on by the FDA very quickly or they can linger. We believe, we know for a fact through our efforts, in fact, our last interaction with the FDA, they asked us before we showed up. Please do not remind us again about this reclass. We are fully aware of it. It is on our radar. It's about prioritization. So sometimes it takes more efforts. Sometimes it takes -- we just had a switch in administration. We believe the new administration is a little more open to clearing some of this stuff up and called kind of under their common sense initiatives of things that just don't make sense, let's fix it. We think this is a common sense just fix it situation. So if we can leverage the current administration, Congress, whatever we need to do, we continue to push on it. But in the meantime, like I said, there are more ways to skin this cat, and we found some other ways. The Holy Grail is to have additional manufacturers in the U.S. market so that there's more access, hospitals that are identified Olympus hospital or richer Wolf Hospital or whatever hospital that they have the opportunity to access blue light from whatever manufacturer they prefer. And it works very well for us in Europe, and we think it works very well in the U.S. So again, reclass is 1 way, and that's big and splashy. And even with an announcement like that, it will take the FDA time to sort of lay out the cook book on how to submit their 510(k). In the meantime, we are fully aware there's other efforts, and we're very optimistic that those efforts will be successful.

Can you provide some more flavor on the following from the presentation? Business development marked NOK 7.8 million in the second quarter relates to efforts that can diversify our business?

It definitely can. You can also further enhance the development for Hexvix issue. What we're looking at in terms of spending this quarter is expenses related to market research, I think NOK 3 million to NOK 4 million, we have legal fees, which is much related to negotiations on end market research for partnerships. We have multiple conversations going with different companies on this. So we're really pushing this. It's very important for the future of the company.

We have a long question here. Regarding statutory requirements for an NMPA for a supplementary review. It seems like the time line for NMPA is around 1/3 in addition to the ordinary review of 200 days. This adds up to 67 days extra, meaning a reply is expected Q3 2025. Is this correct, which reference to your statement in the presentation.

I don't know any of that. And again, this is Asieris' product. I cannot make a public comment on Asieris' expectations there. The only thing I know about the NMPA and past processes is that it's on average now around 1.5 years to 2 years for their approvals. This is a drug device combination. That's as much of a comment as I know personally, if you want specifics, I would suggest the investors go straight to us Asieris. They're a public company. We have to respect their privacy on that.

And we have questions on ForTec. How big is the contribution from ForTec on total or U.S. revenue? And what is the potential? Or ForTec considering purchasing extra scopes?