Sedana Medical AB (publ) (SEDANA) Earnings Call Transcript & Summary

Hello, and welcome to today's webcast with Sedana Medical; where CEO, Johannes Doll; and CFO, Johan Spetz; and CMO, Peter Sackey will present the report for the First Quarter of 2025. [Operator Instructions] And with that said, I hand over the word to you guys.

Thank you, and welcome our Q1 report 2025. Thank you very much for joining us today. Let's jump straight into the highlights on Page 3. This is a quarterly report that I'm very happy with as we have made strong progress across all of our 3 priorities. On the top line, we have come out of the gate strong with a new record in quarterly sales of SEK 57.5 million, which is the first quarter ever above SEK 50 million and a year-over-year growth of 18%; 15% of that is organic, and the rest is contract manufacturing revenue from our newly-acquired manufacturing plant in Malaysia. What's behind the growth is a good quarter in Germany with 8% growth and continued very strong performance in our other direct markets outside Germany with 50% growth. What's also worth mentioning here is that the publication of the SESAR study on March 18 has not affected our growth trajectory. That is true for March, as you can see in the numbers in this report. And I can also confirm that it is true for April as well, which you cannot see in this report. We are tracking daily orders and also all conversations our field force has with customers about SESAR, and as I said, do not see a change in our growth trajectory. Nice progress also on the profitability side. Gross margins are stable at 71%. In the second half of the year, we are anticipating a further improvement of the gross margins as a consequence of the acquisition of our Malaysian supplier. But even without that future positive gross margin effect, we can report an ex U.S. EBITDA of positive 7% in the first quarter. It's slightly negative on a Group level, which includes U.S.-related operating expenses. But if you correct for exchange rate headwinds we've had during the quarter, also our Group level EBITDA in Q1 was slightly positive. We also had positive operating cash flow. So we are progressing just in line with our strategy, which is to grow sales so we can deliver profitability and positive cash flows from Europe and that we can then reinvest in our future launch in the U.S. Speaking of the U.S., we had great news recently with the FDA approving our Early Access Program or Expanded Access Program as the FDA would usually refer to it. This means that eligible patients will be able to get access to our therapy already before the official market authorization. And this is, of course, great news for us in many ways. First of all, the FDA only approves programs like this if they believe that you are bringing a solution to a situation where there are no good alternatives; in this case, for difficult-to-sedate patients, which is a very good sign. We will also have hospitals and key opinion leaders trained and using the therapy before approval, which could potentially accelerate our commercial launch. And it's also a great way for us to test processes and gain insights ahead of launch that would be very valuable for the actual launch further down the line. As you'd probably remember, we had positive high-level results for both our U.S. trials and the FDA has previously granted us Fast Track designation. So things are progressing full steam towards submission in the early part of next year. And let's move to the next page, Page 4, please, which shows the longer-term sales development. We've shown that slide for a while now as it shows nicely our progression over time. As you know already, we've set a new all-time high in sales for the full year of 2024, which finally exceeded the outlier years during COVID-19. And we have now followed up on that new all-time high in yearly sales with a new all-time high in quarterly sales with SEK 57.5 million. If you have followed us for a while, you know that this is the result of a fundamental transformation of the company, starting with a streamlining of all our noncustomer-facing functions to free up cash to invest into the front line and commercial execution, especially in countries where we have good profitability and momentum. Let's go to Page 5. The sales growth, combined with a simultaneous focus on driving the cost down has resulted in a significant improvement of our profitability situation. 2022 that you see on the left side of this slide was the year with the biggest EBITDA loss in Sedana's history. And over time, you can nicely see the improvement of our EBITDA. For Q1 of this year, we can now see a positive SEK 4 million ex U.S., which corresponds to an EBITDA margin of 7% or 8%, excluding exchange rate effects. And on the Group level, so including the U.S., you still have a small negative. But adjusting for some exchange rate effects during the quarter, we would actually have delivered just slightly positive EBITDA also on a Group level. And this is, of course, a development that I'm very pleased with. If we then go to Page 6, I see ourselves very well on track to deliver on our financial target for the full year. We've guided for positive full year EBITDA ex U.S. in the low- to mid-single digits. And now we've started the year with positive 8%. And we're now entering the summer quarters, which are typically a bit lower sales for us, but then we're also anticipating some gross margin improvement in the second half from the Malaysian acquisition. So overall, I think we are very well on track, and we are confident that we will deliver on our guidance. Good. So let's do a double-click on our sales performance and look at the individual regions. On Page 7, you will see that Germany is back to growth. You may remember that we had flat sales development in Q4 of last year. The reason for that was mostly that we had some turnover in the field force, leading to temporary vacancies and some time that was needed to onboard new colleagues. And our therapy is quite sensitive to promotional activities and presence with customers. So these kinds of disruptions can easily impact the growth in a given quarter. Good news is that now the team is fully staffed again, and we've been rolling out a sales acceleration plan, which the team is implementing with a lot of motivation working on maximizing the time in the field, so the time we spend with customers and also finding ways to broaden use of our therapy across patient segments in high potential accounts. Now we've had 8% growth in Q1, which is good, especially since we are comparing to a strong Q1 of last year, and it's very important to keep growing in our main market. Of course, we had a 13% market penetration in 2024, which is not bad, but we still have room to grow in light of the clinical and health economic benefits that our products bring to patients and intensive care units. We know that in our best-performing sales territories in Germany, we had average penetration levels of quite a bit more than 20%, and those are still growing. So there's still lots of room for us to grow. Then let's turn to the next page, Page 8, and our other direct markets, so the direct markets or the markets where we have our own field force outside Germany. In the first quarter, this group of countries delivered a growth rate of 50%, and they now represent a bit more than 1/3, 37% of our core business. And that for me is a very nice success story as only 3 years ago, these countries contributed 17% to our business. So today, it's 37%, which really helps reduce our historical vulnerability from being too dependent on just one main market. Spain continues to be our strongest market outside Germany. The team there is very successful in making more and more hospitals use our therapy in more and more patients. And that sounds very simple, but that element establishing broad use in a lot of patients in a given hospital is actually at the core of our commercial focus. And for several years now, we followed a very disciplined investment approach where we extend teams that show profitable growth, but also go the opposite way and cut back investments where this is not yet the case. And in Spain, of course, we have increased the team size last year to keep up with the strong demand and further accelerate it, and that continues to have an impact. In the U.K., we've also seen a significant increase in demand during 2024 and also see a continued growth into 2025. We've just added another key account manager to strengthen that momentum. And in France, you know that we've had some flat development for a while, mostly related to lack of stability in the sales team, which made it unnecessary to restructure the team and have a new territory structure. But now we've seen 2 quarters in a row with growth and are working on making that permanent. So then let's go to the next page, our Distributor business, which is the smallest part of our core business. Of course, our strategic focus is on our direct markets given the share they represent in our sales, but the Distributor business is still a nice add-on. We are pursuing a very focused approach here with a lot of emphasis on a few key partners and high potential opportunities. That business is inherently more volatile as ordering cycles are longer and inventory levels kept at distributors tend to be much higher than at a hospital. And for Q1, you can see a significant decline in sales year-over-year, minus 39%. The explanation is that last Q1, we had the only order from our South American partner during 2024, which was worth SEK 1.4 million, and we did not have an order from South America this quarter. So that explains most of the difference. And based on the in-market demand we see in countries like Mexico, Colombia, Brazil, we are still expecting growth for South America for the full year, but these orders will materialize only in the later part of this year. Distributors outside South America are also down somewhat in Q1, which has mostly to do with the timing of orders coming in. Then we move to the next page, and I'm handing over to Peter, who has some exciting news to share regarding our largest future potential market, the U.S.

Thank you, Johannes. So as Johannes mentioned earlier, and we also press released the FDA approved our Expanded Access Program just a few weeks ago. And this is a great opportunity in many ways, both for patients and for us as a company. And just to share Expanded Access Programs are typically granted by the FDA for a specific group for patients that have serious life-threatening disease or conditions, and for treatment with investigational medical products outside clinical trials and before marketing authorization, and when there's no comparable or satisfactory alternative available. When it comes to inhaled sedation with isoflurane, the patient group that have been -- we've been granted the Expanded Access Program for are the difficult-to-sedate patients. And these are patients that are receiving intravenous sedatives in appropriate combinations at maximum tolerated doses and still cannot be kept at a targeted sedation level. And they exhibit recurring agitation with risk of self-harm or have escalating sedative doses or there may be clinical concerns for side effects of ongoing IV sedatives. And that's the agreed sort of criterion for inclusion in this program. And the program, as such, is open for any interested hospitals in the U.S. that have critical care facilities that are sort of up to standard. And we will be giving the device [ scavenging and isoflurane ] for free to these hospitals for these patients. And looking at the benefits of this, as I mentioned, this, of course, is a way to manage patients that are difficult-to-sedate and they are at high risk for complications of critical care. So we believe that will bring benefits to those patients and also to the units. These patients often require a high level of staffing. And as I said, they have complications and they stay longer time in the ICU. For us, it means that inhaled isoflurane sedation will be available and be used in the U.S. in the years until we have an approval. And that means that the hospitals and key opinion leaders that will choose to use this therapy will continue growing their expertise and proficiency in the use of inhaled sedation. And that, of course, is very valuable for us because that means we will have hospitals and clinics and healthcare professionals that are able to speak about this therapy and who can be experts that we can refer to when we launch. And the EAP here also includes a slightly broader range of conditions than clinical trials. So that's also valuable for us. And finally, it's also an opportunity for us to develop and test our implementation, training, supply chain, et cetera, so that we are up to speed at the time of launch. And it's also an opportunity for us to map hospital processes and have discussions on reimbursement and so on before we have the approval in our hands. Next slide, please. The basis for our NDA submission are the 2 pivotal U.S. studies that we've spoken out previously, INSPiRE-ICU trials. They are 2 identical Phase III trials that have confirmed the sedation efficacy of inhaled isoflurane, and we've shared the high-level results with you previously. And they compare inhaled isoflurane with intravenous propofol in adult mechanically-ventilated ICU patients. And these studies had a number of run-in patients and then they had 235 randomized patients in each study with the primary endpoint being the percentage of time at which patients were kept at Richmond Agitation-Sedation Scale between minus 1 and minus 4. And the key secondary endpoints in falling priority are: number one is the opioid dosing during sedation. We're also looking at time to wake up after end of sedation, cognitive recovery after end of sedation and the proportion of time with spontaneous breathing. And both studies have demonstrated noninferiority with regard to the primary endpoint. And we've also had a look at the high-level safety results and share them with you, and they indicate tolerability of the therapy and no new safety concerns. So all of this is promising, I would say. Next slide, please. And the studies were conducted across the U.S. at 31 clinical trial sites that you see listed here from East to West, from North to South. And this, of course, for us is a great platform to start off as we now move into EAP phase, and then gradually looking forward to hopefully an approval and a launch in the U.S. with these places -- some of these places, we believe will be our centers of excellence as we launch. Next slide, please. And now I hand over to -- back to you, Johannes.

Yes. Thank you, Peter. So we're now on Page 13. As you know, the U.S. is our largest growth opportunities. We've estimated the U.S. market potential for our products to SEK 10 billion to SEK 12 billion, which is 3x as much as in our current direct markets combined, which is because of a high number of ventilator beds, medical practice that favors incubation and medical ventilation more than in Europe and also an overall higher price level. We see a very good product market fit, which I will get back to on the next page. And on top of that, Peter and his team have really done an excellent job in building a network of key opinion leaders in all these clinical trial sites that you have just seen. And you've seen that some of these are the premier names in the U.S. hospital landscape, and those people are very, very supportive of our therapy and Sedana Medical as a company already today. So we have high market potential, a good product market fit, a KOL network that is ready to get started, and we have positive high-level results and now also an approved Early Access Program -- so therefore, we continue to believe that we can create the most value if we launch ourselves in the U.S., capture more of the upside, generate more -- generate the proof that this therapy can be successful in the U.S. while then over time, keeping the option, if necessary or wanted to complement our presence with a partnership if we deem that to create even more value. I've mentioned the product market fit. So let's have a closer look at that on the next page, Page 14. We know that inhaled sedation with isoflurane has fantastic clinical benefits for patients. We've seen that for several hundred thousands of patients and more than 1,000 hospitals around the world. But the truth is clinical benefits alone are no guarantee for a product to be successful on the U.S. market. And the commercial success very much also depends on how well the product fits with the healthcare system. There are different payment mechanism for hospitals in the U.S. But by far, the most predominant one for mechanically-ventilated patients in the ICU is diagnosis-related codes, also so-called DRGs. That means that the hospital gets paid a fixed rate for a given patient depending on what diagnosis and partly also what procedures that patient will have. This means that -- from a hospital P&L perspective, the revenue side is fixed and the cost is dependent on how long a patient is in the ICU. So a therapy could potentially help a therapy that could help a patient wake up faster or spend less time on the ventilator, recover faster, leave the ICU earlier. All these would be benefits that help the hospital's financials. And of course, I cannot say that Sedana will be able to provide those benefits in the U.S. because we have to await the approved label, but we have shown all of these things in our European trial. What we also know from our European trial is that inhaled sedation patients need less opioids. If you treat them with isoflurane, 30% less in SED001 and even 50% less in the pediatric trial, IsoCOMFORT without these patients actually having more pain. And the U.S. is, as you know, extremely sensitive to avoid opioids because of the terrible opioid addiction epidemic that is going on in the U.S. And if there's one regulatory authority that is very sensitive about opioids, then it's, of course, the FDA. So bringing a therapy that might reduce the use of opioids, as we have shown in Europe in a vulnerable patient population is a major plus on the U.S. market, especially since there's a very good evidence now that the dose of opioids you receive in the hospital is actually very closely correlated with how much opioids you will be leaving the hospital with. And that's, of course, is a big driver of addiction risk. And thirdly, we know from Europe that treatment guidelines, treatment recommendations can play a crucial role in facilitating the uptake of our products as we have seen, for example, in Spain. And if you read the CDC's Wake up and Breathe document, it reads very much like the benefits that inhaled sedation with isoflurane has shown. It's about getting patients off the ventilator sooner, improving recovery time, having them interact with families faster, shortening ICU stays and so forth. So if we manage to confirm the results in our U.S. study, we'd be fitting right in and would be well positioned to get into the treatment guidelines. Then let's move to Page 15, please. Yes, thanks. Another good news from a growth perspective is that we have now received national approval in 11 countries in Europe for our pediatric indication. This means that our products can now also be used on label for kids between the age of 3 and 17. That is not a huge patient group, but it is a very vulnerable one. And so far, only midazolam was approved for sedation in the ICU for these kids, which comes with a lot of complications. So that's really, really good news. And as a very positive side effect, the group that is working with EMA that is responsible for these things granted us an additional year of market protection. So we now have the maximum that you can get 11 years in total, which will last until 2032. And market protection means that during that period, no company can launch a generic for inhaled sedation in the ICU in the countries where we have approval. Let me now hand over to Johan to do a deep dive into our numbers.

Thank you, Johannes. Yes, [ if ] we spend a bit more time on our financial results for the first quarter of 2025. Just as a reminder, Johannes already mentioned, of course, the sales development, but just to reiterate, so we report net sales for the first quarter of SEK 57 million or SEK 57.5 million to be a bit more precise, which is an increase of 18% compared to the previous year, both in reported currency and also in local currencies. And this robust growth is driven, as Johannes also pointed out, by a reacceleration of growth in Germany and also continued strong performance by our other direct markets, in particular, Spain. While distributor markets saw a sales decline, to a large extent, explained by the fact that the comparator period included a large order from our South American distributor of SEK 1.4 million. And then in addition to our core operations, we now also report contract manufacturing revenue, which amounted to SEK 1.7 million for the first quarter of 2025. We report a stable and robust gross margin of 71% for the quarter, which means then the fact that we have growing sales means that we have an increasing gross profit now amounting to SEK 41 million for the quarter. That's also up compared to the same period of last year. In terms of EBITDA, we show really good progress as well. So EBITDA for the group for the first quarter of 2025, minus SEK 1 million. That's an improvement from minus SEK 4 million in the same period of 2024. And also very important for us as a metric is, as you know, the EBITDA, excluding U.S. And there, we see an improvement to positive SEK 4 million for the first quarter of 2025, up from minus SEK 1 million last year. And as Johannes also pointed out earlier, there is some FX headwind there as well. So adjusted for that, it would be even slightly better EBITDA ex U.S. in the first quarter. So very good to see that type of profitability development over time. If we look at the OpEx side, there, we see a slight increase in the first quarter of this year compared to the same period of last year, mainly driven by consultants in admin functions, our pediatric approval and preparations for the U.S. market. But as you can see, just looking at the improving gross profit and the fact that we're not growing OpEx nearly at the same rate, of course, that leads to this improvement in EBITDA. So we very much expect this to continue going forward, driven by continued sales growth and cost discipline, which very much remains in focus for us. In terms of our organization, as you know, with the acquisition of Innovatif Cekal, we've grown the number of colleagues in Sedana Medical quite substantially at the end of -- or during Q4 of last year when the acquisition was completed. So now at the end of March 2025, we have a total staff, including consultants of 126 people. That's up from 90 at the same time last year. But again, this addition is related to the staff in Malaysia at our new manufacturing site there. Then on the next slide, we can take a closer look at our cash flow and cash position. So starting with the cash position. At the end of the quarter, we had SEK 165 million of cash in the bank, that's compared to SEK 194 million at the start of the year. And if you look at that change in the cash position of minus SEK 29 million, that's driven by 2 things really. It's CapEx mainly in the U.S. of SEK 17 million. And then there's a negative currency effect of SEK 16 million coming from the fact that we have most of our cash now in U.S. dollars. And of course, with the strengthening Swedish krona that we've seen, that comes through as a negative cash effect there. These 2 negative items, so the CapEx and the currency effects, those are offset by positive cash flow from operations and changes in working capital. So that's with regards to the change in the cash position. But then if we look at the actual cash flow as such, we have cash flow from operations in the quarter of positive SEK 6 million, and that's driven by positive operating cash flow from our ex-U.S. business, a reduction in inventory and also increased short-term liabilities. And then cash flow from investments in the quarter, as I said, negative SEK 17 million. And that is driven by our clinical program and registration preparation work in the U.S. And what's important to highlight here is, of course, that it is a significant decrease in the quarterly CapEx level that you can see now coming through in the first quarter of this year compared to the past couple of years, really. But if you compare it to the direct comparator period, it was SEK 52 million in the first quarter of last year, now down to SEK 17 million this quarter. And that very much reflects the fact that, as you know, last year, we concluded our U.S. clinical trials. So we expect now CapEx to remain markedly lower in 2025 relative to recent years. And what that all adds up to in terms of total cash flow during the quarter was now negative SEK 12 million, which again is a quite significant reduction in terms of cash outflow for the company as a whole compared to recent quarters and years. In terms of liquidity management, we continue to have roughly 3/4 of our available funds in U.S. dollars since that is where we will have our spending going forward, related, of course, to the U.S. submission and eventually preparations or the commercial launch activities coming up in the U.S. if all goes according to plan. And again, with this cash position of SEK 165 million that we have now, we expect to be fully financed to execute on our strategic plans for the company. Next slide shows our shareholder list as of the end of the quarter 2025. And it's great, of course, to see that we continue to have support from our main shareholders, some of which have increased their shareholdings during the quarter. So thank you very much, of course, for your continued support. And with that, I will hand the word back over to Johannes.

Yes. And this is our last page, recapping the investment case for Sedana Medical. Our business model lends itself to attractive profitability over time because we continue to see good gross margins of 70% and up. And as Johan said, anticipating a further improvement in the second half from the Malaysian acquisition. So by definition, we can become quite profitable as a business when we reach scale. And at the same time, our customers are intensive care units, so a relatively concentrated target groups that can be covered with a reasonable operating expense level on a local level. We already have proof-of-concept that works in our main market, Germany, where the majority of ICUs are already our customers. The team is generating very attractive EBITDA margins on a local level. We also see growth momentum or great growth momentum outside Germany. And while we are not at the same scale yet, most of our countries contribute positively with local profitability by now. So we have the proof-of-concept, and now it's all about reaching more scale, convincing enough hospitals to use inhaled sedation with isoflurane more broadly and achieving profitable growth. Here we have, of course, convincing clinical and health economic data on our side, as we've seen, showing that our patients really benefit from inhaled sedation and that hospitals save money with inhaled sedation with isoflurane versus the previous standard-of-care. And we have lots of places to grow in Europe and also hopefully soon also in the U.S. where we have positive trial results, Fast Track designation, and now also an approval for the early access program. And all of this still with a solid balance sheet with no debt and SEK 165 million in cash. So you saw a good reduction in the cash burn rate already this quarter, and we will see the same also ahead. So we continue to be financed to execute on our strategic plan. This concludes the presentation. Thank you again for taking the time to listen to us today, and we'll be very happy to take your questions.

[Operator Instructions] And the first caller here is Mattias Vadsten from SEB.

Sorry, can you hear me now?

Yes. Now we can hear you.

First one was trying to get a bit more flavor on customer behaviors post the SESAR trial readout and how the discussions have been with customers, perhaps particularly interested also in France, of course. So that's the first one. Then I have a few more.

Yes. So, no, I'm happy to share some more granularity. So, as I said, the SESAR was published on March 18. And since then, we've been tracking the impact very, very closely. So of course, we have done what we always do, which is to track daily orders on a daily basis, country by country. But we've also asked the field force to report back every conversation they have about SESAR with customers. So we have a pretty good picture of where everybody stands. The most important news first is that on the highest level, on the company level, we do not see a change in the growth trajectory. So our growth momentum is very much intact. So if somebody was concerned about the SESAR study having an impact on our commercial performance, we don't see that, at least in March and April. Then, when it comes to the discussions we are having with customers, the vast majority of feedback is that there's not going to be any impact on the use in these hospitals. These are typical isoflurane users who have used isoflurane for a long time, have seen the benefits, and now don't change their behavior because of a sevoflurane study. So that's the majority of feedback. And then we, of course, have some customers that have raised questions. That is not surprising, and those we need to manage. There's also some customers where they are reassessing whether inhaled sedation, especially with sevoflurane, should be continued in ARDS patients. Nobody has so far stopped inhaled sedation completely, but we might see a little bit of reduction in some accounts that, predominantly those that use sevoflurane and don't want to switch for iso. But then on the other end of the spectrum, we also have several customers who have switched from off-label sevo use to iso use to our drug as a consequence of SESAR. And that's a very positive development because when that happens, we typically see an uptick in sales, first of all, because we sell the gas, and we don't sell sevoflurane, of course. But we usually also see an increased use of the therapy because people start getting better results and the therapy becomes cheaper because isoflurane is at a lower price point than sevoflurane. France, specifically, to your question, we are seeing a little bit the same picture overall. So we've quite a few sevoflurane customers, and there's more sevoflurane customers than in other countries. We've seen quite a few of those switch to iso already, including several hospitals that have participated in the SESAR trials. So seeing the results firsthand, a lot of them have now switched to iso. But we still have a bit more work in France than in other places, simply because the starting base is a higher share of off-label sevoflurane use. But overall, as I said, growth momentum very much intact, and that's, of course, what we wanted to see.

I could just add to what Johannes was saying that we've had a lot of -- we've been relatively proactive in our interactions from the medical department. So we've arranged webinars in the different markets, allowing both customers and others who would like to discuss to have an open discussion. We've also interacted with both the first author and the last author of the SESAR paper. And the picture that is shared independently of Sedana's proactivity is that this is a use of sevoflurane that is quite different from the standard use of inhaled sedation, and certainly different from the use of isoflurane. And that there are also specificities related to sevoflurane and side effects, mainly renal side effects, that are contributors to the findings of the SESAR trial. So of course, we are happy to see that there is an organic academic or scientific discussion about these kind of papers. And to be honest, I think that might actually be beneficial, in a way, because inhaled sedation is something that's being discussed. And we have, in a way, maybe been fortunate to have chosen the drug that seems to be the safer drug. So there will also be a number of letters to the editor that will be responded to by the main authors. And I can mention that the last author of the SESAR paper is Professor Jean-Michel Constantin, who is from Paris, La Pitie-Salpetriere, and he was sort of the mentor of Matthieu Jabaudon. He moved to Paris, I think, 4 or 5 years ago, and 3 years ago, they decided to change from sevoflurane to isoflurane because they were seeing problems with renal dysfunction and polyuria. That was already when SESAR was halfway through, and they didn't have any interim analysis in place until the end of the study. So that's why the study continued. But he was already -- for him, it was already clear that iso was the preferred drug a few years ago. And so he's switched. And, of course, that's something that we -- that's a story we share because that says something about the clinical preference among one of the believers of sevoflurane once upon a time.

I think this is a good answer. You partly answered my question, but my follow-up question to this was how established would you say it is currently with regards to what went wrong in the SESAR study and why the response was so weak or the results were so...

Yes. Last week, we had an investigator meeting here for the U.S. trial investigators. And Jean-Michel Constantin was invited from Paris to come and talk about inhaled sedation because he's a user since over 15 years and also to talk about ARDS and the SESAR trial. And they have done also -- they have done a retrospective chart review of sevoflurane-treated patients. That's not yet published, but that's in review, and they see a lot of polyuria. And his own speculation, although they don't have the data to support it, is that a combination of probably higher dosing than typical, combined with polyuria, which can lead to hypovolemia. It was probably detrimental for a number of patients in this trial. Once again, that's his speculation. That's also our speculation. That's what happens. And that would sort of be very much in line with the data that they did actually collect, namely vasopressor use and causes of excess mortality, where the therapy refractory shock was the driving cause of excess mortality. And it makes a lot of sense. If you have polyuria that's not corrected, and you give a high dose of volatile anesthetics, you will certainly end up with high vasopressor doses and a risk of shock. And you don't see -- we don't see this with isoflurane. There's no report of any polyuria. We don't see that in any of our studies, the polyuria, and it's not been described in any case reports, or at least for me, it's quite clear that there are differences both in the drugs and in the way that patients were treated during COVID-19 and the SESAR study as it was initiated under very -- I would say, war zone circumstances.

I will try to not take up too much time, but I have a few questions around the early access program as well. So hope you can catch them all. But first of all, what support has the FDA had to be able to allow something like this? I would guess it is top line in the U.S. [ SESAR ] trials and the European [ data ]. And then a follow-up question, how many hospitals will you try to approach? Also, what share of patients do you assess are difficult-to-sedate patients, and therefore, are eligible to treat? And also keen to hear what kind of costs you anticipate to deal with this in the U.S.

So I could talk about the medical parts and then, Johannes, if you'd like to talk about the costs. When it comes to the approval of the isoflurane via the Sedaconda ACD is still an investigational product. So this is not a preapproval of our therapy. I think, that's important to point out. We need to put together our dossier and make a strong case. I believe we have the data to support a future approval, but that will be the FDA's call, of course. They do have the top line results from the U.S. studies. They do not have our other results so far from the U.S. They have the extensive literature available, where you have over 200 publications of inhaled isoflurane to date. Among those 200, you have several publications on various patient populations. Isoflurane -- one should remember, isoflurane is a drug that's been used for difficult-to-sedate patients previously. There are publications on that. It's also a drug that is known to, in a sufficient dose, lead to general anesthesia. So it lends itself -- the data lends itself to sort of support its use of isoflurane in patients that are not well managed with IV sedatives. We are obliged to collect safety data. So that is, of course, an obligation for us, but it also is an opportunity to show that this therapy is safe also for these patients. When it comes to approaching hospitals, typically with an EAP, this is not something where you market. You announce it on your homepage, which we have done. There are many of our investigators in our U.S. clinical trials that have been asking about the possibility of using isoflurane in these type of patients. A few of the patients in the trial were difficult to sedate as they joined the trial, especially among the run-in patients, this was a favorite patient category to use this on. So they know it works, and we've received almost 2-digit number of requests for this EAP. So we need to find ways to set up this whole supply chain and make this available, as we've communicated in the second half of this year. And I think that will be -- we'll have plenty of work to meet the demand when it comes to the EAP. We do have people in the U.S. already who are part of the clinical trial educators, and also myself and others from our medical team will be supporting in the EAP. I don't know if you'd like to say anything more, Johannes, when it comes to costs.

Yes. So I mean, it's quite obvious, I think that we have to strike a balance here, right, because we will be providing -- this is not commercial sales. We will be providing the products for free, as is customary in these Early Access Programs. Of course, the FDA would not like you to make a profit off of the Early Access Programs. So we have to strike a balance. As Peter says, we will not be actively marketing this. So we will have to be a bit selective given the limited resources we have on our end. But what we want is having hospitals fully trained, up and running, and bought into the therapy when we launch for real. What we want is to test our processes and gain insights about how the hospital processes work. But at the same time, what we do not want is for this to become such an expensive investment that we are putting our cash position at risk. So we will, of course, balance that very, very carefully. The cost on us is mostly the products as such. So of course, those are cheaper to us than they would be to a customer, but it's still the cost and the logistics of getting it to customers. We are not planning to hire any new colleagues for this program. So, as Peter said, it will be done with existing resources. So overall, without giving you a specific number now, because we've not guided on that, we will make sure that it works out in the end.

We will now carry on to the next questioner, and it's Filip Wiberg from Pareto.

Yes. I think Mattias covered a lot of ground, but I just have a few more here. So perhaps starting with what you just talked about here, the cost for the early access program. So I'm just like a technical question. Will that end up as extra costs, sort of lowering the overall gross margin? Or where will that end up?

Yes. No, we will take that as OpEx because it's not something that we sell technically. So it will be an OpEx under selling cost.

And U.S. OpEx. So it would not affect the ex-U.S. EBITDA, but you would see that cost in the overall P&L.

Okay. And just a question out of curiosity. So I know it's going to be a small amount, but will you have to pay tariffs on the product that you import for the early access program?

Yes. We're doing that analysis right now. It's, as you know, a lot of uncertainty around that at this point and even more so when we look to predicting what it will look like in the second half of the year. It is an analysis that is ongoing, so I cannot give you a definite answer on that. If it was so that we have to pay tariffs, it's, of course, not a showstopper because it's going to be very small amounts in comparison.

Yes. And perhaps just a bit on Germany here. So this sales acceleration plan that you have been doing now, has that -- just if you could give some more details on this. Has it been mostly about hiring the new sales team and getting them up to speed? Or have there been other measures taken as well? And then just following that, so 8% growth now in Q1. Have you seen any difference in the momentum now in the start of April?

Yes. So the sales acceleration plan we have put in place because we were not happy with the performance last year, especially in Q4 where the sales was flat. And part of the explanation was this turnover in a few districts and the fact that it takes time to get people up to speed. But it was not only focused on getting the team stable. It has several elements, including making sure we spend as much time with customers as possible. So there's a lot to do with account planning, making sure you minimize distractions for the field force so they can really spend their time selling and not administrating things. It is about selling approaches, how we make sure that hospitals use our therapy as a routine treatment, so across patient populations, as opposed to just individual patient population. And, of course, there's also always in these programs, there's an element around performance management and how you set the incentives and so forth. And all of that combined, sometimes a bit tricky to say what exactly had the impact, but the combination of these things very clearly has an impact. So we had a strong Q1 last year already and now 8% higher than that. So that's a pretty good result. But hopefully, we will see that performance continue into the next quarters.

Yes, because I think you wrote about, and you talked about it also that you've been tracking the orders quite closely now, and you haven't seen a change in April. So I'm interpreting that you still have a very good momentum in April. Would you say that's a fair assumption or...?

Yes, I've said that on the company level. And Germany is a big part of the company. So I will, of course, not disclose the Germany performance for April. But for the company, we've not seen a SESAR impact in April, yes.

Okay. And then just lastly, perhaps to Johan here. So in the CapEx side, investments in intangibles, it has come down significantly, as you said before. So just wondering about the expectations now going forward. So will it continue to be at this level? Is this a stable level going forward? Or will it continue going down?

Yes. No, so overall, it will remain at a significantly lower level than it's been in recent years. There will be, of course, CapEx remaining as we continue to prepare the dossier for submission and all the work that's involved with that. What we've said previously is that it will gradually come down during the year. Now we saw perhaps a bit more of a reduction already in Q1. So you might not get as much of a continued reduction during the remainder of the year, but it's definitely at an even lower level now relative to last year and should be expected to remain at this newer level.

Thank you so much. And we have received one question as well here. Any news/update on the FDA request regarding pooling of data from the EU and U.S. trials?

Yes. So no update from the FDA's perspective. But what we have done in the meantime is we have completed a feasibility study. So we've looked into whether that's technically feasible to pool the U.S. and the European study. The result of that was positive. So all the endpoints that we want to pool will be possible to be pooled. So the sequence of things now is that first, the 2 U.S. studies will read out in isolation, so we will get the secondary endpoints and the long-term follow-up for each of these studies individually, then the next step is to pool the 2 U.S. studies. That has nothing to do with the recent FDA input that was always planned. So we run analysis across both studies. And then the next step will be, once that is done, is to pool the 2 U.S. studies and the European study together. And all of these things will then be compiled in the dossier, and the timeline for that still very much stands compared to what we said previously. So we are expecting to submit the file to the FDA in the early part of 2026.

Thank you so much. That was all the questions we had. So thank you so much for presenting here today, and thank you all for the questions, and we wish you a pleasant week.

Thank you very much. Have a nice day.

Thank you.