Senzime AB (publ) (SEZI) Earnings Call Transcript & Summary

[Foreign Language]

Okay. I'm doing this in English, I believe, and then we'll do some Q&A in Swedish. Okay. So I'm Philip Siberg. I run Senzime. We are a Uppsala headquartered medical device company. We're active in the patient monitoring segment, developing solutions for precision-based patient monitoring. It's based on long-term legacy in the U.S. We are in a commercial phase, and we're listed on the NASDAQ main market. I'll focus a little bit about commercialization. But just to put a perspective, what do we do? So when you are under anesthesia, under surgery, the anesthesiologist is looking for three things. It's the level of sleep, the level of pain, and the level of block. And the level of block means that you get paralytic drugs, which are used on about 100 million patients a year to make sure that the patient is absolutely still and also is intubated. So these paralytic drugs also require a significant need for patient monitoring to make sure you get the right dose of the drug, and making sure that you are woken up and off the ventilator at the right point of time. Otherwise, what we're seeing that there's about 30% to 40% complication rate. So there's a large amount of complications going out in the world because of the lack of adequate monitoring. So the monitoring world has been characterized the last 30, 40 years by subjective means, meaning that you look at the patient, you define the level of drugs based on their weight and their characteristics, and then you monitor via using either subjective or analog techniques. In a few years back, we led the technology and the digital shift to something called electromyography, which is a novel way of monitoring the patients with very high accuracy. It's based on advanced algorithms and it's based on using a disposable sensor. So the system that we've commercialized and brought to market is called the TetraGraph system. It's a monitor that you connect to the patient typically in the operating room. It has -- we have over 200 hospitals around the world that are using this on a daily basis, and It's backed by very strong science. We have a very strong commercial team helping to roll it out to hospitals. And we have a few competitors, but we are really the trusted partner here in this segment as the only publicly traded company. What's been driving our commercial success the last probably 18 to 24 months is the emergence of clinical guidelines. So over the last 10 years, a number of key events have happened that are supporting us, but the strongest driver was that just over a year ago, both the European and the U.S. Society of Anesthesiology came out with guidelines stating that every patient that receives these paralytic drugs should be monitored using the type of technology that we have developed. So this created a very strong push for a commercial pool. So our commercialization strategy has been based on a number of different pillars. We actually started by signing up a license agreement in Japan. And we did that to secure some upfront capital but also to be able to do a very kind of defined development project with a Japanese leading patient monitoring company. And then after that, we signed up a number of distribution partners in key regions. And then in '19 and 2020, we set up our direct sales operations in the U.S. and in Germany. So U.S. is our absolute key market. And last year, we really had a breakthrough year where we grew and we won over 65 major hospital systems around the world. And we are winning the large prestigious hospitals. So our business is not just securing wins and getting into these hospital systems, but it's also securing utilization rate and recurring use of the monitoring system. So the graph to the left kind of shows the growth of the utilization. The number here is the number of sensors used per TetraGraph system and week. And my goal is that the TetraGraph system should be used on a daily basis because the addressable market opportunity is probably about 20 patients a week. So we had some very strong key wins last year, which really created a fundamental for us for continued growth. This includes IDNs, large pediatric hospital systems, university hospital systems and large East Coast, New York and metropolitan-based system. So all in all, these wins together correlate to about 250,000 to 300,000 patients a year, which for us is a run rate revenue of about SEK 50 million, when in full use. So then just a few weeks ago, we announced our biggest deal to date. We won after a very competitive product evaluation and clinical evaluation. We won a large hospital-based system in the Houston area. This was a tender win where we secured more than 250 TetraGraph systems to be rolled out over time. So this also has a value to exceed about SEK 50 million over the next 5 years. So the direct sales is then complemented by licensing and partnership opportunities. So Fukuda in Japan that we've been collaborating with for a couple of years. They both are selling our technology under license in Japan, but they've also integrated our technology into their patient monitors. So in this sense, we supply them with the disposable sensors and we have a royalty agreement as well on the technology. So industry partnerships are key. And early on, as we came out, we signed a partnership deal with Philips Healthcare. So Philips is the global market dominant leader in the patient monitoring world and it's utmost important that when you come out with a new technology, you need to be able to integrate, so your data can be displayed on, for example, Philips monitoring system. We also have a commercial and development partnership with Masimo. It's a leading Southern California-based patient monitoring company. We've launched a number of initiatives where the TetraGraph system talks and displays the data on a Masimo screen as well. There is more to come out of this partnership, but it's a very important part of our commercial strategy. So just 2 slides on numbers. So I think the result of hard work and guidelines, great products and a great team is that we've seen the hockey stick effect. It certainly happened. So last year, our growth was over 150%, about 70% of the business is related to the U.S., and it's related to these big deals that we've secured last year. So we are really ramping up our business. And we're past the regulatory risks, we're past the operational and the R&D risk. So it's purely a very exciting phase for the company. So we have today roughly 2,250 TetraGraph systems in the market. My goal is that each of these systems should, over time, generate revenues of about SEK 50,000 a year in full recurring use. And we are working methodically and strategically to get there, and you can see that our sensor volume also took off last year. So the kind of the golden commercial number that we always worked with is dedicating, how do we reach some kind of a target on our mission here. As I noted, we have more than 200 hospitals today that I know of. We have more hospitals out there in our distribution network that I haven't counted in. But the goal for me is -- the next goal is get this to 300 hospitals. And if I can have 30 TetraGraph systems in average in these hospitals and have them used 4 times a week. This generates a revenue stream of SEK 300 million a year in simply consumable sales. So our goals have always been very bold. We want to be the market leader in this sector and the long-term vision is to have an EBITDA margin exceeding 40%. And of course, a long-term commercial strategy is not possible without long-term financial support. So we have been able to attract a lot of strong owners over the years. Our main shareholder family is the Crafoord family and the Crafoord Foundation, followed by the Segulah and a number of companies in that space and then Handelsbanken and Fjärde AP-fonden and a number of strong institutional funders. So just to wrap up and give a flavor to the commercial side here. We've had a long journey. It's very exciting to see that the commercial strategy is now in a strong gearing and leverage mode taken off. Last year was a landmark year for us and a very positive outlook about 2024 and the future. And our market here is in excess of 100 million patients. So there's a lot to do. Thank you very much.