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

Hello, everyone, and welcome to today's Finwire webcast presentation with Sedana Medical. With us presenting today, we have the CEO, Johannes Doll; CFO, Johan Spetz; and CMO, Peter Sackey. We'll do a Q&A after the presentation. [Operator Instructions] And with that said, please go ahead with your presentation.

Thank you for the introduction, and welcome to our Q3 report presentation today. Let's dive straight in on Page 3 with the highlights of the quarter, please. Thank you. The short version of this report is this. If I compare to the analyst expectations ahead of the report, sales have come in lower than expectations, also lower than our own ambitions. But despite that shortfall in sales, our bottom line was actually better than people expected. Year-to-date, we are still showing a profitable ex U.S. business, and I'm very confident that we will deliver on our financial guidance for the full year. And this is exactly what I am hoping you will take away from today's call. We have now reached a scale and put in place a cost structure that allows us to keep our ex U.S. EBITDA in the positive territory even when we have quarters like this one where market circumstances lead to no or quite low growth, because the truth is this, our business is subject to seasonal swings every year. And sometimes, the seasonal swings differ quite a bit between years. Sometimes this will be in our favor. And from time to time, as we see it today, we will see quarters like this one where we have much less patients with respiratory problems in the ICUs, which will then affect our sales. What is important for me, though, is that we show consistent growth when we take a bit of a through-cycle perspective and look at longer periods than just 1 quarter. And also that we stay so disciplined on the cost side that lower sales quarters will not affect our goal of achieving positive EBITDA levels outside the U.S. Looking at the numbers, we grew net sales by 7%, of which 1% was organic and the rest was contributed by our acquired contract manufacturing business. This is quite a difference, obviously, compared to the strong growth in the first half of the year. But despite the low growth, we still stand at 18% growth year-to-date, of which 12% is organic. And again, our ex U.S. EBITDA year-to-date is still positive with 1% and actually would have been 3% without the exchange rate headwinds that we had. So we are fully on track to deliver on our promise to show positive ex U.S. EBITDA for the full year. And with Q4 coming up, which has traditionally been a stronger quarter for us than the summer quarters, I'm quite confident that this will happen. What we're seeing here is the result of the cost savings measures we have implemented, especially in our noncustomer-facing functions in the corporate headquarters and also the acquisition of our main supplier in Malaysia starting to show positive effects on the gross margin. On the U.S. side, it's very exciting times now. We are gearing up for the upcoming pre-NDA meeting. Pre-NDA meeting is a formal meeting with the FDA ahead of the submission to create alignment on format and content of the submission, and to ensure we have ticked all the boxes that FDA has asked us to tick. If we receive positive feedback on all our questions, we can move ahead towards submission. The preparations are on track and are going full steam, but also if the FDA has further comments or requests, we will have a chance to address them ahead of the submission. So it's an important meeting to try and reduce the risk of delays or a possible rejection during the review process, which, of course, we want to avoid. And looking at our U.S. endeavor overall, it's worth reminding ourselves that we have met the primary endpoints in both studies. There was no new safety signals. The secondary endpoint outcomes offer several results that we are hoping to convert into compelling label claims. FDA has given us Fast Track designation and have authorized an early access program, in which we are expecting the first patient to be treated this year. So it's, of course, always a bit advisable to be a bit humble in a process like this, especially when the FDA is involved, but the individual pieces are really coming together quite nicely. So let's move on. Look at Page #4, please, which shows the longer-term sales development. You can see that we are now operating at sales levels that are higher than the COVID-19 years. And also this year, we are on track to set a new all-time high in sales. Even though Q3 was a bit soft in sales, it was still the best Q3 we've ever had, just like Q1 was the best Q1 and Q2 was the best Q2. Overall, in the first 9 months of 2025, we saw a sales growth of 18%, of which 12% came from the core business, and the remaining 6% were contributed by contract manufacturing revenue from Malaysia. Again, the return to growth after the quite dramatic decline in 2022 following the COVID-19 period was a result of a quite decisive shift in how we use our resources away from noncustomer-facing functions into the front line. And just to illustrate, our headquarter team is now less than half the size compared to 2021. And instead, we have a much more forceful frontline team in our core markets. On the next page, Page 5, you can see the effect on the bottom line. There is some cyclicality in our business with the winter quarters, Q1, Q4 being the strongest one sales-wise and the summer quarters showing lower sales and profitability. But you can see the clear trajectory of steadily improving EBITDA, both ex U.S. and on the company level. Again, we see a positive ex U.S. EBITDA year-to-date and also the group level EBITDA has improved quite well in the quarter, 8 percentage points, which actually would have been 11% without the exchange rate headwinds. On Page 6. No change on how we see our addressable market. The market where we are active today represents a market potential of approximately SEK 3 billion to SEK 4 billion, and we see 3x the potential in the U.S. market, which we will talk about in just a minute. But it goes without saying that the U.S. could mean a step change for the company with a potential quadrupling of our addressable market once we have the approval. And for the more short term, we have communicated a very simple financial target for the year, which is to deliver full year positive EBITDA ex U.S. in the low to mid-single-digit range. Year-to-date, we stand at 1% with the weaker quarters Q2 and Q3 behind us now, actually will have been 3% without the exchange rate, which gives me very good confidence that we will meet this target for the full year because, as usually, I would expect Q4 to be stronger than Q3. If we then look at the performance by country, starting on Page 7 with Germany. Minus 9% in net sales is, of course, not what we want to see, especially not after our acceleration program has delivered good results in the first half of the year with 13% growth in the first half and even 19% growth in the second quarter. Year-to-date, we now stand at 6% higher sales than last year. So it deserves a closer look at what happened here. So on Page 8, what we see here is data from the Robert Koch Institute. This is hospitalization rates for severe acute respiratory infections. This is not exactly our market, which is mechanically ventilated and sedated patients in intensive care, but it's a very relevant indicator, as a part of these patients will end up being relevant patients for us. And what you see here is the comparison between 2024 and 2025. Both curves are higher in Q1 and lower in Q2 and Q3. And you don't have to be a visionary to predict that they will increase again in Q4. That is the normal seasonal pattern we see every year. But what's also quite evident here is that the yields are still quite different. So the flu season this year was more extensive and longer than last year, which has given us some good tailwinds in Q1 and Q2. But then the situation flipped and hospitalization rates have been significantly lower than last year since approximately May. So if you look at Q3 in isolation, 34% less patients were admitted to German hospitals with severe acute respiratory infections. And Robert Koch Institute actually also publishes how many of these patients end up requiring intensive care. We don't have access to the raw data. So we can give slightly less accurate numbers, but also that group has decreased between 20% and 25% compared to last year. We also collect our own data. So we're tracking a sample of hospitals, and that also shows that the ICU occupancy rate has decreased in Q3 compared to the previous quarter. The effect that this market development has on us after a quite strong beginning of the year is that less products have been used in intensive care during the end of Q2 and Q3, leading to later and then oftentimes also smaller reorders by many of our customers, which explains our sales decline. The truth is we will have quarters like this every once in a while, because we cannot influence how the market develops. What's important from an execution perspective is that we stay focused on what we can control, and that is to maximize the time in the field, that is to focus on the right balance between new customers and increasing penetration in existing high potential accounts. And these measures, by the way, are also exactly the measures that are going to be helpful in mitigating some of this volatility going forward. You will never be able to fully avoid it because respiratory patients are the majority of patients in the ICU, but expanding the use in more patient diagnosis, so we are less dependent on respiratory patients opening new accounts, so you're less dependent again and focusing on big university hospitals that are typically quite well occupied even when there's overall less patients. In other direct markets, on the next page, we were up 22%, even though we saw some of the same market dynamics as in Germany, so less patients overall. The growth was once again led by our Spanish team, which has really shown fantastic growth over the last 2 years now. That was again the case in Q3 based on a good execution, but also based on a very, very strong network of believers and opinion leaders that the team has built on the customer side. And what's worked really well in Spain is that we do not just have the academic key opinion leaders who are oftentimes not treating so many patients anymore, but we have a lot of what we call bedside ambassadors, oftentimes younger doctors who treat a lot of patients, see the benefits of inhaled isoflurane sedation in real life every day and not just in studies, and who are at the same time very influential for their peers, so other doctors who seek advice on the best treatment options. In the U.K., we were unfortunately hit by a temporary staff absence in the third quarter, which in a small team has a big impact because it leads to a quite significant reduction in field presence, so we could not deliver the growth that we were planning for. And when you have reduced resources, you often run into a typical problem that a lot of time is taken up by responding to the very good demand from potentially new customers, and you then have to neglect a little bit to maintain and drive the growth in your existing customers, and that is exactly what's happened in Q3 here. We have suffered from this phenomenon a little bit, but we'll soon have the team fully staffed again, and then also focus our energy on the right balance between new customers and existing customers. What will also help a bit is that the MHRA has now also approved our pediatric indication in the U.K. as we now got some approval for the pediatric indication in all countries where we asked for it, which provides some upside as well. And in fact, we just went live in a new pediatric unit just this week. In France, we continue to see a quite split performance with isoflurane customers performing very well, but in customers that are still using our devices with off-label sevoflurane, we continue to see sales decline following the SESAR study. Overall, this results in a rather flattish development, which is not good enough. So the plan for France is quite self-evident, focus on switching remaining sevoflurane users to isoflurane, and there we are really making good progress. If you look at the SESAR clinical trial sites, for example, which you would Imagine are the hardest nuts to crack given the SESAR results, 60% of those hospitals are today using isoflurane. So the conversion is progressing well. Overall, I see our other direct markets or the direct markets outside Germany as a big success story. Of course, only a few years ago, Sedana was essentially Germany and not much else. Now we have built a business in these countries that represents more than 1/3 of our core business sales. On the next page, on Page 9, we see our distributor business. This is the smallest part of our business, and you are right now used to seeing a bit of an up and down, because most distributor partners order less frequently and stocking effects tend to influence the order patterns more than in our direct markets. In Q1, if you remember, we had seen a decline in sales because we had a big order from South America falling into the comparative time frame. In Q2, then we were up 32%. And this time, we're relatively flat with a growth of 4%. And from an execution perspective, we are still pushing ahead with enhancing our focus and offer the best possible support to a few select key partners where we can jointly drive the most value. Let's go to Page 11 and switch gears to the United States. Before I will ask Peter to take us through the details, let me briefly recap our strategic plan for the U.S. As you know, the U.S. is our largest growth opportunity. We have estimated the U.S. market potential for our products to roughly $1 billion, so SEK 10 billion to SEK 12 billion. So a market entry in the U.S. would instantly quadruple our addressable market. This is because of a high number of ventilator beds in the U.S., but also a medical practice that favors intubation and mechanical ventilation much more than in Europe, and also an overall quite attractive price level. We do see a very good product market fit, for example, because of the proven opioid reduction that our therapy has been shown to provide, for example, because a reduction in the ICU length of stay is generally a very effective driver of the adoption in the U.S. more so than in Europe. And also because the guiding thoughts behind existing guidelines, treatment guidelines such as fast wake-up, early mobilization, early ICU discharge are quite in line with some of the benefits of inhaled sedation with isoflurane. And on top of that, as we've discussed before, Peter and his team have done a really excellent job in building a network of key opinion leaders in our clinical trial sites that are very supportive of our therapy and already very active speaking about inhaled sedation at different global conferences. So we have a high market potential, a good product market fit, a KOL network you got to get started, and also an early access program that will allow hospitals to get trained and started before the actual approval. 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 and generate proof that this therapy can be successful, while then over time keeping the option open to either scale up ourselves and take it all the way or at some point to complement our presence with a partnership if we deem that can create more value. Now with this, let's move to the next slide, and I will hand over to Peter for our U.S. and medical update.

Thank you, Johannes. Yes. So as Johannes mentioned, we have the clinical trial sites that were very active in the trial, 31 different hospitals across the U.S. that enrolled 555 patients over the course of 2 years, and they continue to be very excited and interested in inhaled sedation, which, of course, is nice to see. We can move over directly to the next slide, please. So as Johannes alluded to, we are sort of on a good track towards our NDA submission with the 2 Phase III trials that both showed non-inferiority for the primary endpoint and opioid reduction and other benefits that we know of when it comes to inhaled sedation such as fast time to wake up and positive data when it comes to ICU stay and mortality. And these studies are being prepared now together with the pooling analysis and it will be submitted early next year. And in parallel with that, we have the early access program that is being initiated, and we're looking forward to the pre-NDA meeting later this year, and we'll get guidance for the FDA on how they want to see the submission. And if we move to the next slide. So the early access program, for those who haven't heard of it before, it's something that you get for patients that have a life-threatening condition and where the current therapies are not successful enough. And we have applied for this with the FDA and got a green light for providing a therapy free of charge to hospitals who request it. And the patient category is the difficult-to-sedate patient group, which is a patient group that occurs -- you see these patients with different kinds of conditions that are typically mechanically ventilated and with different background diagnoses, but do require high doses and different combinations of IV drugs. And in this scenario, inhaled isoflurane sedation has been shown to work clinically the most popular indication across all ICUs that use our therapy. And this is something that we can do until we get a marketing approval, and it's open to all interested hospitals, expanded access program. And this, besides being something that's helpful for patients that are struggling to be comfortable and safe in the ICU, it also offers an opportunity for us to continue training physicians and ICUs when it comes to inhaled sedation. And that, of course, is a very good -- give us a very good start at the launch, because these hospitals will be proficient and there will be experts in inhaled sedation. And also, it's an opportunity for us to refine our training and the whole supply chain, et cetera, ahead of launch. And currently, we have 11 hospitals that have expressed interest, and we're taking them one by one. So we're working with the finalization of the contracts for the first hospitals and also have set up a supply chain for all our products, and we expect to see the first patients treated within the EAP before the end of this year. We can go to the next slide, please. And so in par with this, we are driving a lot of medical activities around the globe, mostly focusing on Europe, of course. So a lot of different activities ongoing in its workshops, round tables, symposia and webinars that we've been running. And they've been -- one of the activities, of course, after the SESAR study in the spring was to educate people on the differences between off-label sevoflurane and on-label Sedaconda (isoflurane). And it's also been about diversifying from patient groups such as a difficult-to-sedate patient or respiratory patients to other patient categories that are intubated and require sedation. And most recently, this week, we did a round tour in the U.K. where we met clinicians together with one of the authors actually of the SESAR study, who was also helping describe the difference between sevoflurane and Sedaconda (isoflurane) and also local ambassadors. So we met representatives from 10 different hospitals in London, Liverpool and Bristol. And with that, I'd like to move over to Slide 16, which is you, Johan. Please.

Thank you, Peter. Yes. So on the next slide here, we present our financial results for the quarter in some more detail. So we report net sales for the quarter of SEK 41 million, which is up 4% in reported currency or 7%, excluding exchange rate effects. And if we were to exclude our contract manufacturing business in Malaysia that we acquired last year, sales would have been SEK 39 million, so down 2% in reported currency and only slightly up excluding exchange rates. So as Johannes has described, we have seen low ICU occupancy during the summer months and through Q3, in particular, across our main markets. In particular, this was the case in Germany, as you have seen, where we saw sales decreasing 12% in the quarter compared to the same period last year. And excluding currency effects, sales were down 9%. Our other direct markets performed better despite some of the same market headwinds. So overall, our other direct markets report growth of 18% in reported currency or 22% excluding FX. And as has been the case for some quarters now, the main growth engine in this group of countries is Spain. Our distributor markets showed essentially flat growth in the quarter compared to last year in reported currency, 4% growth if we exclude exchange rates. On the gross profit side, we report close to SEK 30 million gross profit for the quarter, which is up slightly compared to a year ago. And if we look at the gross margin, we report 71.6% gross margin in Q3 this year. That's up from 71.2% in the same quarter last year. So what we're seeing with regards to the gross margin is that we are now experiencing the positive effect from reduced cost of goods for our main product, the Sedaconda ACD, following the acquisition of our main supplier in Malaysia, Innovatif Cekal, last year. But important to note that at the same time, we have, of course, added contract manufacturing to our overall business, which introduces a slight headwind because, of course, the contract manufacturing business has a lower gross margin than our core business. So important to be aware of that. But of course, over time, as we've discussed previously, we expect the positive effect on the gross margin to dominate, and we're well on track on realizing that. If we look at EBITDA in Q3, we report for the group minus SEK 5.6 million EBITDA. That's an improvement by SEK 3 million compared to a year ago. And if we look at EBITDA ex U.S., which is what we base our full year financial target on, we report a negative SEK 1.7 million for the quarter despite the market headwinds that we are experiencing. So a clear improvement also there by slightly more than SEK 3 million compared to a year ago. So we are seeing a good reduction in operating costs in this quarter compared to a year ago. And we continue, of course, to look for cost savings and find efficiencies where we can find them, especially in our headquarter functions to be able to continue to reallocate resources as much as possible to the front line. And if we look at the size of the staff, that has increased. So a bit counterintuitive to show these kind of cost reductions at the same time that we increased the staff quite a bit, but that's a function, of course, of the acquisition of our new manufacturing facility in Malaysia, which is behind the increase in staff. And then on the next slide, we can look more closely on our cash flow and cash situation. So cash at the end of the quarter stood at SEK 112 million compared to SEK 131 million at the end of Q2. So the change in cash position is negative SEK 19 million for the quarter, and that's driven very much by our U.S. CapEx. So as you know, we are still spending money in the U.S. in preparation of our NDA submission. If we look at the cash flow from operations for the quarter, negative SEK 1.1 million. That's a pretty significant change relative to a year ago when it was negative SEK 29.3 million. So if we break that down, we have cash flow from operations before changes in working capital, which has improved to now being negative SEK 4.7 million for Q3 this year compared to negative SEK 9 million last year. And then in addition to that, of course, we have some cash flow resulting from changes in working capital. So that includes, as you know, changes in inventory, changes in short-term receivables and short-term liabilities, which then add up to the remaining delta there in the cash from operations this year relative to last. But clear improvement, which is important, of course, in the cash that we're generating from our operations in Europe. Cash flow from investing activities for the quarter, negative SEK 15 million compared to negative SEK 37 million in the same period last year. So that change or the reduction in CapEx is very much a reflection of the fact that we're now spending significantly less in U.S. CapEx, but there is, of course, some U.S. CapEx remaining related to our NDA submission preparations, and we expect CapEx related to U.S. now to stabilize at this new and lower level over the coming several quarters going forward. So a clear difference, of course, to what you've seen in recent quarters and especially the recent few years when the U.S. clinical trials were up and running. So total cash flow for the third quarter of this year of negative SEK 17 million compared to negative SEK 67 million in the same quarter last year. And in terms of liquidity management, we still have over half of our remaining cash in U.S. dollars, and we continue to expect to be sufficiently financed to achieve U.S. approval. And then on the next slide, we have our current shareholder list and, of course, continue to be thankful for the support and hope to continue to engage with all these partners going forward as well. With that, I will hand the call back to Johannes.

Thanks, Peter and Johan. We've arrived at the last slide here. For me, I see 3 big reasons to believe in Sedana Medical success. Number one, and the foundation of it all is a therapy that makes a difference for critically ill patients every day. We help them wake up faster, we help them recover faster, communicate with their families earlier, and leave the intensive care unit earlier. And with more than -- or actually several hundred thousand patients and more than 1,000 hospitals around the world treated and more than 1 million sedation days under our belt, we can say with some confidence that we are truly living up to our purpose, which is to improve life during and beyond sedation. Every single ICU patient has a life that is worth getting back to after ICU and no one should be in the ICU longer than necessary. So true patient benefits and cost savings for the hospital as well. Number two, we have, as you've seen, a growing core business mostly in Europe. We've had all-time highs in quarterly sales now in 11 quarters in a row, and we are now at a point where this business is generating positive EBITDA, so provides proof of concept and also a stable platform for a future U.S. launch. And number three, as we've discussed, as you have heard, we are getting closer and closer to the U.S., which one day should become our largest market as we would quadruple our addressable market upon U.S. approval. With 2 successful U.S. studies, FDA Fast Track designation and an early access program kicking off, there are a lot of positive indicators. So we are very confident that inhaled sedation with isoflurane will benefit also U.S. patients in the near future. Thank you very much for listening, and we will now open it up for your questions.

[Operator Instructions] The first caller in, we have Filip from Pareto.

I've got a few questions here, but I'll take them one by one. So the first one is about Germany. You had quite strong headwinds here from the market. But if we look beneath that, how has the underlying progress been? So I'm thinking more about increased penetration rates, et cetera.

Yes. So that's a very good question. And it's not always easy to differentiate between market circumstances and execution. So sometimes when you have market headwinds, it's a little too easy to blame everything on that and then you forget about the execution. So you know, of course, that after the last year, we have focused a lot on execution in Germany. We've put in place an acceleration program, which has shown good results in the first half. In the first half, we grew 13%. So these were things like making sure we spend as much time in the field as possible. Let's make sure we spend the time with the right customers, so the ones that we can we can grow the most. Let's also make sure we have the right balance between opening new customers and increasing penetration. So all of these things have been going on since the beginning of the year, and we're seeing good progress with it. And of course, it's quite striking that the same team doing the same things has grown 19% in Q2, and then it has been shrinking 9% in Q3. So it's very obvious that the main contributor to this performance is -- or the difference in performance is the market. But of course, we need to be fully focused on execution as well. So overall, there's nothing to be concerned about on the execution side. We will carry on, but at the same time, not lose focus on the execution.

Yes. Okay. And then I also noticed, based on the data you showed on Slide 8, that last year, 2024, there had already been an uptick in the ICU patients, while it has remained flat this year. So is it possible to give any sort of indication around the start in Q4 if the headwinds have remained or have eased?

Yes. So the -- what you -- if you were to -- so these data are publicly available, right? So you can basically update them every week. What we have seen in October is a bit of a continuation. So in 2024, you see that these respiratory infections, hospital admissions have started to increase. We are not fully seeing that to the same extent yet as we're still a little bit behind. But for what is worth my own sentiment from -- the ICUs seem to be filling up. So we see the normal seasonal increase, even though it's maybe a bit weaker than last year.

Okay. Good. Then a few questions around the pre-NDA meeting that you have upcoming. So firstly, do you have a specific date for it yet? Can you share whether it's early or late in the quarter?

Yes, it's relatively early in the quarter. So we will get updated on that reasonably soon.

Okay. And is it possible to also share a little bit more details around what you will be discussing. So I'm thinking mostly around like what sort of risk you see related to the topics that you're going to discuss, potential things that could come up that could have an impact on the submission time line.

Yes. So the very idea of a pre-NDA meeting or at least how we are using it is to reduce the risk, because the one thing that we want to avoid is we submit a file and then we get sent into an extra round, either causing delays or a full -- we've had a complete response letter, as you've, of course, seen too many examples of, especially in Sweden lately. And that we want to avoid. So we have asked very concrete questions that is around the format, the contents, the presentation of the data and so forth in the file. An example is the pooling analysis that the FDA has requested. So we are presenting what we've done in the feasibility studies, which of the endpoints we have pooled the results and so forth and trying to get confirmation that this meets the expectations. And the hope is that with positive responses on these questions, we have reduced the risk of the submission and can follow our time plan. So things for the preparation are progressing according to plan. But even if you have a scenario where the FDA has more requests or they want things differently or they have maybe additional wishes that they didn't have before, then it's also much better to have a chance to address that before the submission, because then you will put in a better file and you avoid delays and additional costs further on. So you used that in your question yourself, it's a risk-reducing meeting.

Yes. All right. And -- but you're also going to talk about potential Fast Track benefits, right? So I was just also curious around like what are the arguments for and against you receiving any sort of those benefits?

Yes. So the decision of -- so we have Fast Track designation from the FDA. What that means these days is mostly that we have a little bit easier access and it's easier for us to communicate with the FDA. And unlike maybe what you hear in other places, our experience is a very constructive and good dialogue. So that's the main benefit now. But when it comes to the review, we have the right to apply for priority review, which would reduce the review period from 10 months to 6 months, which is, of course, a big benefit. That is a decision that the FDA will take. We will apply for this with the submission. So when the file goes in, you put your application. And then, as you probably know, the submission is followed by a 2-month validation period where the FDA is checking whether the file is complete, whether it makes sense for them to review and so forth. And as part of that validation period, they also take a decision on whether the priority review is granted, yes or no. And if it is granted, then you get a PDUFA date in 6 months. And if it is not granted, then you follow the standard time line of 10 months. This is a decision that the FDA takes. An argument for receiving it is that this is a therapy that at least we believe and, based on the Fast Track designation, also the FDA seems to believe that brings potential benefits to U.S. patients, and it's worth bringing this therapy to the market faster. Arguments against could be anything from capacity constraints to complexity of the file that needs more time. So this is really a decision that we cannot influence. But of course, we will try to put the best case forward.

Okay. Perhaps just a question around the pooling analysis, which is now completed, if I understand correctly. So my question is, did -- have the results aligned with your expectations? Have there been any surprises, so to say, or...

Yes, I can answer that one. So no, I would say there haven't been any surprises. Just to mention, at the time when we were requested to consider pooling of our efficacy endpoints with the SED001 study, that was a positive surprise to us because we knew the results from SED001, which were in favor of isoflurane. We didn't know the results of the U.S. study. So you could say, it was a sort of insurance to be able to pool in those data in case any of the U.S. study didn't show a non-inferiority or didn't show opioid reduction or there was something else that didn't turn out the way we had expected. And now they did. So in some sense, you could say that part of the sort of excitement about having getting to pool SED001 with the U.S. studies was sort of neutralized by good data from the U.S., but the other aspect is the possibility to get better power and more precision in the estimates and also to look at subgroups. And where those analysis are just dropping in now as we speak. And to date, there have not been any unpleasant surprises. I think that the data show that our treatment does pretty much the same if you're in Europe or if you're in the U.S. And that, of course, is a very robust statement for us to make to the FDA.

Okay. Have there been any positive surprises or any of the endpoints that have tilted into significance?

No. No new -- sort of no bad nor good news. I'd say it's stronger -- I'd say we have a stronger case now that we have pooled the data and can look into the subgroups. So I would say, for example, looking at subgroups, looking at opioid reduction, for example, when you look at the pooled data, you see that all subgroups have opioid reduction. And that, of course, is very valuable because it shows that it's not just one patient group, for example, surgical patients that benefit from having isoflurane. It's all kinds of patients and old and young and very sick and more healthy patients. So I would say, in some sense, I would say, it's reassuring, I would say. No big surprises in any direction, but reassuring the data when you look at the pooled estimates.

And we'll move on to Mattias from SEB.

Can you hear me?

Yes. Perfect.

I will stay with the previous question here for a bit and ask if you can share anything on mortality or ICU-free days or anything around the pooling analysis?

Yes, those are areas that will be quite useful. So I mean, the health economic endpoints such as ICU-free days, that will make for a very, very useful publication, right? Because we had very consistent results between the European study and the 2 U.S. studies. We saw less time in the ICU across the board, more ICU-free days. So if we have a publication based on -- here we pooled 3 randomized controlled trials in Europe and in the U.S. and you're saving -- or you have 1 more ICU-free days or 1 point, whatever it will be in the publication. And that translates into, depending on the situation, between $5,000 and $11,000. That is, of course, a very powerful tool that you can use with procurement departments in hospitals. So that's an example where the pooled analysis will be translated into a very valuable publication besides the fact that, hopefully, it will also contribute to the FDA seeing this as a very robust data for approving the drug. And the same approach goes for mortality, of course, as well, if there's a way for us to build that into a publication, that can be very supportive for the launch.

So while you answered that you do not see any positive nor negative surprises, it is still possible that something could come out of this analysis that support those statements? Or how should I...

If you have a publication showing a day difference in the ICU length of stay, maybe that's not kind of a traditional FDA outcome that will make the difference between getting approval or not. But we all know that the approval and the clinical benefits alone is not what is going to drive the uptake, and people are going to look at the health economics in the U.S. much more. So maybe it is not surprising in that sense because we knew that our therapy will reduce the time that patients spend in the ICU, but that doesn't make the message less powerful. So that will be an important tool when we launch.

So I could just add to what I said, I maybe didn't spell it out enough when I responded, that there's nothing new. If you look at the results from Sedaconda study and you look at the individual U.S. studies, for example, you will find that ICU-free days are more for isoflurane, not statistically significant. And that means, obviously, that when you pool the 3 studies, you will find similar results. And that, of course, is also very reassuring. And as Johannes was alluding to, even without statistical significance, you can have something that's clinically significant or significant from a health economics perspective. If we talk about mortality, for example, we had a 5% difference in mortality in one of the U.S. studies, 4.3% difference in the other study, which favor isoflurane. So overall, I mean, we are very happy with the results. Even though many of them maybe are not translatable into a label claim, they will be very useful when we launch from a medical affairs perspective and from a health economics perspective.

Okay. And just as a follow-up on the pooling analysis, when is it possible that we can see the results? Or how will this be presented?

The pooled results will -- are not results that we normally post on sort of clinical trials or anything like that. But there is an intent to liaise with an academic center and make a publication out of the pooled results. So that will be peer-reviewed publication, which I think is the strongest way that we can present the data.

Perfect. And then on -- if you look at the U.S. submission, it sounds like everything is intact. Could you maybe speak a little bit about the time after submission? You talked on previous questions quite in detail about this, but it sounds like maybe you can have the product launched towards the latter parts of 2026? Or is it rather 2027 that you see likely for the product to be launched in the event of an approval?

Yes. I mean, as we have discussed before, it's always -- if you are in an FDA process, it's always, to some extent, speculation to talk about approval times and launch time lines, right? What I can say is if everything goes optimally, so pre-NDA meeting goes perfect, we have alignment on everything, we file the submission as we have planned, and then get Fast Track or get Priority Review or a 6-month review time and that goes well, then there's a scenario where we would get approval towards the end of next year, which is very soon. It is, of course, a very nice scenario, but it's also part of the truth that we are fully in the FDA's hands. And unforeseen surprises can come up. We're trying to mitigate them as much as we can. Of course, as I've said, we're trying to derisk this as much as possible before submission. But it is possible, yes. The base case assumption is probably a launch in 2027.

Then I want to follow up a little bit on Germany, if that's okay. If it is clear to you that you are taking market share in Germany with growth of sort of 5% to 6% in local currencies, if you look on 2024 and this year, I'm also asking if you could talk about the scope to further increase the market shares in Germany in coming years? And what sort of brings you comfort that it is not sort of the market shares that we are looking at in Germany? I think that would be helpful to cover on this one.

Yes. So we communicated these penetration levels on a yearly basis. The reason for that is that there's no perfect data that gives us exactly the size of the market that we operate in. So you would need the number of patients in intensive care that are intubated and sedated. And you can get things like how many patients are in the ICU, but you don't know how many of those have a tube in their throat and how many are just not receiving ventilation or are receiving noninvasive ventilation. So there's no perfect data there. So if we were to communicate this on a quarterly basis, there's a bit of a risk of not being precise enough. So that's why we do this on a yearly basis. We are seeing progress. Last year, the penetration was 13%. What we mean by penetration is how many days of all the sedation days in Germany was our products used. That's around about 13% last year. We see an increase this year. And to your question, how high can this go, or have we reached a ceiling? We do, also in Germany, even though it's maybe a bit more mature market than other markets, we do see quite substantial regional differences. And some regions are upwards of 20% penetration and even more and some are much lower than that. And then you see hospitals that have 50% penetration, some have 80% penetration. So there's no reason to believe that 13% should be the limit. So what I usually like as a proxy is if you can reach certain penetration levels in a region, so individual hospitals is something else because you will always have outliers, but if you can have penetration of whatever, 25% in an entire sales territory in Germany, which can easily be, I don't know, EUR 2 million sales or so, that gives you an idea of what should be achievable as a national average as well by transferring best practices and making sure we have the same good execution and continuity in the sales rep position. So 13% is definitely not the ceiling.

I think that's a good answer. And then lastly, sorry for having a lot of questions, around the lower costs in the quarter, if those can be extrapolated. I know you have seasonally higher costs in Q4 typically. But in general, sort of should we expect cost to be sort of stable or slightly down, excluding the U.S. OpEx, of course? Or how do you see it?

Yes. No, that's fair. The one thing to think of -- so we have worked or continue to work on our cost structure in the first half of the year, and we see some of these efficiencies come through in Q3. What you have in Q3 is a vacation period, so then the activity level is typically a bit lower. So there's less conferences, less travel. So that shows a little bit. So sometimes you have -- if you look at historical years, you will see that the cost level in Q3 is often a bit lower, but it is also a function of us having continued to work on the cost structure.

Okay. And that concludes the Q&A. Thank you very much, Johannes, Johan and Peter for your presentation and answers. And thanks to everyone for joining this Finwire presentation with Sedana Medical. And I wish you all a great rest of the day. Thank you.

Thanks a lot. Have a good weekend when it comes.