Thor Medical ASA (TRMED) Earnings Call Transcript & Summary

[Foreign Language] I'm pleased to be here to tell you about the [ redirection ] of Nordic Nanovector [indiscernible]. We're very proud that we have managed to get this deal in the first half of this year. These are the highlights. As you will see, we had to close down PARADIGME and reduce cost to preserve the cash, the acquisition of Thor Medical, an emerging supplier of alpha-emitters. We managed to reach an agreement with as you accepted at the AGM on the 28th of June, and the transaction was closed just after the half of the year. And we are now strategic repositioning the company, which Alf Bjørseth will tell you more about. And then our new CFO, Brede Ellingsæter will come and tell you all about the financials. I'm just here to present since I was the only one within the company. In the first half year, as you remember, there was an extraordinary General Meeting who elected a new Board. And then again, the Board prioritized to hire me as a former Chairman of the Board of the company. I knew the company. So we worked closely together to see if we can explore the strategic options we had. We had, in fact, negotiations with several companies, but the initiative coming from Roy and Alf, the 2 entrepreneurs in Norway, was actually the best deal we could ever find. So we're very pleased that we can now present to you our plans for the future. And as you know, on the 6th of June, we managed to announce this deal, and the transaction was, as I said, closed on the 3rd of July. I'm very pleased that Alf Bjørseth will come as a new CEO and present to you the deal and the technologies. So thank you very much. Alf?

Thank you. I would like to start by explaining a little bit about the vision of the Thor Medical and the radiopharmaceutical value chain, which we have. This is a very important basis for all the activities that we are going to do. The most important thing is shown on this figure here. And on the right, we see an illustration of a cancer cell. And most cancer cells had a protein getting outside the cell and indicating that this is a cancer cell and a lot of companies -- pharmaceutical companies are now developing antibodies and target seeking molecules that can identify this protein and identify the cancer cell. Our task is to develop a radioactive isotope that can work together with a target seeking molecule and actually destroy the cancer cell. We have selected one kind of radioactive activity, which is the alpha-emitters. The 3 kinds of radiation, alpha-emitters are the strongest kind of radiation that we have. That, of course, there is a fairly large isotope, but it has very high energy, but a very short reach. In such a way that it will kill the cancer cell with very little of the surrounding healthy tissue. And that's the important thing. This is a very, very careful way of actually curing cancer, killing the cancer cell, but very little influence on the healthy cells. Thor Medical has developed a proprietary technology for manufacturing radionuclides, primarily the alpha-emitters, which I talked about. And the alpha-emitters make it possible to eradicate the cancer cells. Thor Medical has a business idea to supply alpha-emitters to radiopharmaceutical companies for development of novel cancer therapies. And this, we have done now over several years, and we are in the process of increasing the production and making an industrial plant for production. The market is fast growing. And a study 2 years ago show that it will increase in average, maybe more than 20% per year. Today, it's used for diagnostic purposes. We expect in a few years that this will, first of all, be used in therapeutics and this is what, which is creating the large market. It's expected to reach more than USD 35 billion by 2031. And the most promising technology is again based on the alpha-emitters, which we are going to produce. The current supply of alpha-emitters are based on nuclear research reactors and with high alternative costs and limited capacity. And especially the last thing is very important, there's a limited capacity for producing alpha meters today. We are using natural thorium as a feedstock. This means that we don't need a radioactive reactor and we are independent of what is going on with reactors around the world. Thorium from natural resources, which is our feedstock is containing these alpha-emitters, and we are extracting them by advanced separation technology. And we are currently checking all the available sources for thorium feedstock to find the method that is more suited for the production. We have a proprietary separation technology. And we can use this technology in an environmental friendly way. It's reliable and it's cost efficient in the supply of alpha-emitters. We already have a supply of thorium 228 isotopes from our separation process and the downstream production of radium 224 led 212, which are actually the alpha-emitters, which the pharmaceutical companies will use. We have -- now we are in the process of refining the production technology and prepare it for industrial manufacturing. We have signed an agreement to establish a pilot facility at Herøya Industrial Park in Porsgrunn. And this pilot will be the basis for refining the process and the production technology. This will be a very important step in preparation towards the industrial scale manufacturing. So this is on the industrial side. In parallel with this, we increased our cooperation with the University of Oslo together with NMBU, and IFE, has established a national center for nuclear research. And in this center, radiopharmacy will be an important part. Thor Medical will be a partner to this research center. The industrial scale manufacturing facility will be the very important step for us to serve the market. We are currently working with a standardization for industrialization. That means that we have to do the plant design. We have to finally select the site where the plant should be. Very important job is the regulatory approvals and permissions to operate with the radioactive materials. And we have to do the front-end engineering and design. In parallel with this, we noticed that there is a significant interest from several companies to sign a letter of intent with Thor Medical, and we are in process of signing such agreements right now. Subject to the outcome of the customer qualification process, final investment decisions is targeted to be in 2025. And the CapEx for the first industrial scale manufacturing facility is estimated to be around NOK 350 million with revenues at least NOK 400 million when we start up in full scale, this facility. So this is our immediate plans and the way that we want to move forward. And then we can talk a little bit about financial review, and I'll leave the audience over to Brede Ellingsæter.

Thank you, Alf. Good morning, everyone. I will take you through a summary of the financials for the first half. During the first half, the company completed a restructuring of the business and reduce the burn with a target to preserve cash. The revenues came in at NOK 0.8 million. Other operating cost was NOK 28.7 million in the first half, down from more than NOK 200 million first half last year. And of the NOK 28.7 million, there was NOK 17 million that we consider to be nonrecurring effects, including transactional costs related to the acquisition of Thor Medical, which means that going forward, we will reduce the burn even further. Profit for the period was NOK 26.5 million. And net cash flow was negative NOK 48.5 million. Let me also just mention that the transaction was closed on 3rd of July, which means that we do not consolidate the financial statement of Thor Medical AS in this statement. But I can inform you that a pro forma financial overview would include a loss of NOK 2.2 million in Thor Medical AS for the first half. Taking a look at the company's cash position. We have reduced the cash from close to NOK 100 million by the end of the year -- last year to NOK 50 million at the end of first half. And this was also a large reduction of outstanding liabilities for the company, which at the end of the year -- last year was mainly related to the restructuring of the company and closing down the PARADIGME study. By the end of first half 2023, the main liabilities is related to costs related to the transaction of acquiring Thor Medical. This means that by the end of the period, we have a free cash of approximately NOK 39 million, which we believe will be sufficient to fund the company's activities for the next 2 years through 2025. Proforma financials would again include cash that is available in Thor Medical AS that is NOK 4.2 million at the end of the period with a free cash of NOK 3.5 million. So for the group going into the second half, we will have NOK 44 million of free cash. In the coming period, the main business focus for the company will be to refine the production technology at the pilot plant in Herøya. It will be to continue dialogue with potential customers and qualification process for future supply of alpha emitters, and it will be to mature the concept of industrial scale manufacturing. In addition, we will continue this process of evaluating options for spinning off the CD37 platform that was also a process that was going on in the first half of the year. So with that, we end our presentation, and we open for questions. No questions. Then we thank everyone for listening.