Thor Medical ASA (TRMED) Earnings Call Transcript & Summary

Good morning, and a warm welcome from my side to the presentation of our second half year and full year reports of Thor Medical. My name is Jasper. I'm the CEO of the company, and it's my great pleasure to take you on a journey of our achievements of last year and our focus for this running year 2025. Before we join and start the presentation, let me just share the disclaimer. Usual sermon about forward-looking statements and that this presentation has to be seen in the context of the verbal delivery. Now since we are here as a company that is in the field of medical isotopes, let me introduce our company in a few broad strokes. We are an emerging supplier in the field of alpha-emitting isotopes, and we are a company that is 10 years in the making. So it started with a proof of concept 10 years ago and now developed over these concepts from PowerPoint into something real. So we have built a plant of brick-and-mortar here in Norway, 2 hours south of Oslo and Herøy and Porsgrunn. And this company, this production plant is producing isotopes as we speak. And we see this market developing in a very promising way, which brings us to the ambition to gross out an eye-watering USD 1 billion long term since this market is at its infancy right now. But we will speak about this in a minute. We have had our first production run already in last year, October, we started production and we have produced isotopes, and we are still producing isotopes here in Norway. And while we are doing this in our pilot site, which intention is to prove our technology and scalability, we are ramping up plans to build AlphaOne, which is our first commercial plant to produce commercial volumes of isotopes to supply global pharmaceutical companies in their clinical development. But what do we speak about? In broad strokes, this is the schematics of a radiopharmaceutical, a targeted radiopharmaceutical. And it's important to note that our company is focusing on the radioactive compound. So we are not in the business of developing antibodies or peptides that target these cancers. We are the partner to bring the isotope, the nuclear warhead to the radiopharmaceutical. So the radiopharmaceutical as such will be injected into a patient and the targeting molecule searches the cancer cells because they have a specific surface. For instance, prostate cancer has a different surface and a different antibody structure that can be addressed with this drug than, for instance, a melanoma. And by this way, we bring a toxic radiation to the cancer cells and effectively kill these cancer cells. But our role in the market is the supply of these isotope. And with that, we don't have this binary outcome of clinical development. We are providing these isotopes, and we are agnostic of the targeting molecule or linker. We can work with antibodies or peptides or even nanoparticles. This is the position of our market and is very unique. Looking back at 2024, I would like to share a few highlights with you. So we have opened that plant successfully in time and in budget. At the same time, we have shipped samples from that plant to customers who have approved the performance of our products. So by that, of course, also mitigating the risk of our technology. We have shown that this technology works, is scalable and produces radioactive isotopes for medical purpose in a quality and spec that actually works for our customer. And that's a very big highlight actually to manage. We have already secured sales agreements with 3 players in the field, 2 of them we can name. The third one is a pharmaceutical giant, which wants to remain undisclosed at this point due to the fact that they have not themselves disclosed that they work with lead-212. But with AdvanCell and ARTBIO, we have 2 of the leading companies as our partners and as our customers going forward to actually fill the capacity to a good degree of AlphaOne. At the same time, we need to secure our feedstock supply. And with that, we are maturing discussions with different players in the field that we don't rely on a single source and that we have a very strategic partner at our hand. And last but not least, we had a capital raise for AlphaOne, which is the production plant of our future or commercial site and AlphaOne now is fully funded due to the capital raise we have done in December, together with repair offering that came in, in January and an Innovation Norway loan of NOK 90 million, which, of course, is also very helpful for us to strengthen the position here in Norway and build AlphaOne here in this wonderful country. And AlphaOne is actually front and center of this presentation. We want to take you on this journey to explain what AlphaOne means to us and what it can mean to customers and patients eventually. So in broad strokes, and this is an artist rendering of AlphaOne, but this building actually exists. So we have our pilot site on the right side of this building. And the rest, we have rented on an option agreement. And once the final investment decision is there in March, we will start building AlphaOne in this existing building, and we have a concrete plan how to do it. And in the end, after 3 years, Alpha -1 will deliver 15,000 patient doses and growing. We will employ 15 to 20 people, which, of course, is also a factor for us. And after 12 months after the final investment decision, we will have a mechanical complete, so the plant will be ready. And then after commissioning, we can start production already next year, producing commercial volumes of isotopes from the thorium decay chain, which is big. Now that we have concluded that our company is actually evolving and we are making strides toward an industrial player, a commercial player in the field, let's take another look at the market that is very attractive to us and why we're actually doing it. And there are many data sources out there indicating that radiopharmaceuticals is very hot and that there is a very attractive market out there. And this is a data source that came from 2023, and it projected the growth until 2032. And the same data is, by the way, also used by Novartis in their publications to the stock market. You can actually see that this exponential growth is happening already from 2022, where there was just a mere USD 1 billion market size for the therapeutics. It has grown to a multiple of this already in 2024. And now the $7 billion in '25 this year is not far out of reach. And now that we are picking up speed, we believe that this market will grow to the USD 25 billion, USD 30 billion in the early 2030s, which is, of course, an attractive market. And historically speaking, isotope suppliers like ourselves get a fair share of this market. And don't just take my word for it, have a look at many public newspapers, mainstream newspapers that actually indicate radiopharmaceuticals, especially with focus on certain types of cancers are a hot topic. We see big companies coming into this play, BMS, for instance, Novartis, they all move in the area of radiopharmaceuticals because it's so promising as a therapeutic area. And this is also testified by the fact that the radiopharma deals doubled between '23 and '24, and this momentum is actually increasing. And also this is driven by an all-time high in oncology trials in general. And within radiopharmaceuticals, targeted radiopharmaceuticals, so those that use an active targeting molecule to find the cancer. There are 2 different camps. So beta emitting isotopes and alpha-emitting isotopes. Beta emitting isotopes are generally easier to produce and handle. They have a longer half-life, and they can basically stockpiled and they can attach and the transportation is not as crucial as the short half-lived alpha isotopes. But in beta, you are not as precise because the travel pathway of this particle that is emitted typical electron is very long. So it traverses through hundreds of cells. And the punch, the energy, the kinetic energy it transmitted is not as high because the particles are light. Unlike alpha, where we talk about a very short range, only 5 to 10 diameters of human cell, but it's a very heavy particle. So technically speaking, it's a helium nucleus that is emitted from the isotope and it punches the cancer cell in a way that both DNA strands are ripped through and the cancer cell actually dies. So the efficacy potentially is very high with alpha and the toxicity profile is very low because of the short pathway. And especially with the alpha emitting isotope that we speak of, the thorium decay chain, lead-212 mainly, we see a very clean decay profile. So we have reasons to believe that this is a very healthy and very safe isotope to use in radiopharmaceuticals. Now we talked a bit about the difference between a pharmaceutical biotech and us. And one of the reasons, commercially speaking, is we are -- we have a hedge bet more or less. So if you see the market developing, typically, the attractive part is when the first drug hits the market. And of course, that's an important milestone for us, and we hope that all of these wonderful companies developing these important drugs are successful in their clinical development. But for us, we can already break even before that happens because of the market that is already there in the clinical trials. So this is enough for us to survive, and then we can ramp up the production as we are discussing here to serve our customers through clinical phases, but then also when they achieve commercial approval, we can help them to serve them with commercial volumes of our isotopes and the therapy will actually move up the line. The efficacy is proven in not only the clinical trials, but also in market surveillance studies. So in the end, it will become standard of care in many cancers and the market will develop into a multibillion U.S. dollar market. This is focusing on the customers here working with lead-212. And maybe taking a closer look here, you have also seen our announcements. We have made deals and sales agreements with 3 of them, and we are speaking to all of them actually to sell our remaining capacity and have strategic agreements for the future. And the other element you can see here on this busy chart on the right-hand side, there is a lot of news flow coming out also very recently. For instance, Orano Med, a state-owned French company. Sanofi bought a stake in this company, rendering its valuation to more than EUR 2 billion, which is a massive number for a clinical company. Then, of course, ARTBIO, AdvanCell, big news coming out also for them, partnership with Eli Lilly, a very successful capital raise. So we are very happy to have these companies as our customers. And then, of course, looking at Eli Lilly, looking at Sanofi, these are big, huge names even in the industry. So these names come in to the table of Alpha and lead in particular, which proves for us that we are on the right track with our company betting on these alpha-emitting isotopes. And then, of course, there's a third one that we cannot disclose here, but it's also a big company in the ranks of Eli Lilly and Sanofi that wants to have a seat at the table when it comes to lead-212 and alpha-emitting isotopes. What does it mean for us? And if you ask me what causes sleepless nights for me, it is our capacity of AlphaOne. So we have built AlphaOne based on the agreements and the discussions we had. And we have basically ticked that box that we have enough agreements to build AlphaOne based on the offtake that we have. But we have indicated demands that actually exceeded by far doubling basically what we currently can produce. So what our team is doing in R&D, in production in our management team is to evaluate opportunities to increase output to increase efficiency, to have automation and other innovation done that we can increase our capacity without adding significant capital to the plant. So that's very important to be able to be a partner for more customers and actually to break even quicker and to have -- to capture actually the demand that we see. So for me, it burns me seeing this demand out there not being able to serve because of the limited capacity of AlphaOne. So that's something that we are actively working on. Now that we have concluded that the market is attractive, that we are set up for success in the market, that we are making strides, that we have something tangible out there in Haløyia, I want to invite my dear colleague, Brede Ellingsæter on stage. Brede is CFO and COO of Thor Medical, and he will walk you through the operational development in our process.

Thank you very much, Jasper. Good morning, everyone. It's a pleasure to be able to give an update on the operational development. Let me start by recapping what is the unique position of Thor Medical. So we have developed a proprietary technology that allows us to scale and deliver cost-efficient isotopes from the natural decay of thorium that is what is called Thorium-232. And we can do that without any use of irradiation or in the form of nuclear reactor or accelerator. And what we are doing is that we are taking the natural thorium, and we are extracting the radioactivity that is there naturally in the form of Radium-228. And then we are further purifying and producing our core products that is the Thorium-228 and Radium-224, which is the generator material that the customer used to generate lead-212 close or in fairly close proximity to the patients due to the short half-life. We also have capability to produce the lead itself, which we are doing for one of our partners, but that also put some restrictions on the lead time to that customer. But it's very important to understand the competitiveness of the process. We are able to continuously reuse the raw material, natural thorium. It has a half-life of 14 billion years, which means that we can continue to increase production even if we are only taking in the same rate of new raw material every year. The same goes for our intermediate products, that is Radium-228. It also has a half-life of 6 years, which means that we will benefit from what we produce in year 1, also in year 2 and year 3 and so on. And that is why we call this process self-scaling, self-sustaining, where we are able to reuse all the raw materials and chemicals and it's why we have trademarked the production route AlphaCycle. And this is a process that a nuclear reactor or accelerator can never replicate. This is the natural decay of the thorium chain. So this is core of our competitiveness. But let's be a bit more concrete and look at what we have done so far. We started the pilot in October last year, and it has been running since. And we're using that now as a launch pad for further growth, supplying small quantities, but still commercial quantities of Thorium-228, small quantities of lead-212 and trying to use the pilot as a bridge until we have AlphaOne in operation in 2026. And what we have been doing so far to increase production is that we have made small, but incremental investments in automation, which allows us to increase the production now in the coming months, it will continue to increase towards the end of the year based on the process that I just tried to explain, that we will continue to benefit from what we have produced before. But our main focus now is AlphaOne. This is our first commercial scale plant. It is set to start supplying our partners for the early phase of clinical development and eventually also into commercial stage for them. And it is an expansion of the current pilot facility where we are taking use of the rest of the building that is already there. And the self-scaling process is, as you can see on the graph here, we are reaching some 15,000 patient doses after 2 years, which will be equivalent to some NOK 250 million in revenues. And we will continue to scale until -- over the next decade until reaching some 40,000 patient doses. We believe we will have to do more, invest more at an earlier stage to have more capacity, but this is as the plant is designed right now. And it will be -- AlphaOne will be enough to take the company into a cash positive operation within 2 years of running the site. So we are in a good position financially also. And as was mentioned, we have a target to make the investment decision now in March this year. And then we need approximately 12 months to complete the plant and start producing products sometime mid next year. And this is what I want to talk a little bit more about here on this slide. What are we doing right now? What we are doing is that we're running a preproject preparing for the investment decision. We are completing negotiations with subcontractors for production equipment, stuff like that, which is very important that we have a good visibility when it comes to cost and time to be able to execute the project in a good way. We will conclude this preproject now in the next couple of weeks, and then we are on track to make an investment decision in March. And once the investment decision is there, we will put the orders for the long lead items, which is typically the contract that we are now negotiating. We will start detailed engineering. This is very detailed work of pumps and pipes and stuff like that. And then start civil work in the building, which will take somewhere between 6 and 8 months to remodel and refurbish the building to the purpose of Thor Medical. And once that is done or nearly done, we can start installing production equipment, which will be done towards -- or started towards the end of this year and completed sometime in end of Q1 next year. And then we will need some time to commission the plant, starting the plant up before we start putting products out, which we estimate will be sometime in the summer of 2026. So in parallel to building and executing on the project plan, we will also develop the organization. We have started to hire core positions in the plant, AlphaOne, and we will continue now to build around that. And also in the rest of the company, we will start expanding on support function and stuff like that in a way that we are positioned to grow once AlphaOne is ready. And then I also just want to look back at our fairly ambitious ramp-up plan that Jasper alluded to. So we have -- coming from a period where we did a proof of concept starting almost 10 years ago, we have done piloting. We are now planning AlphaOne, the first commercial site, but we will have to do more once these therapies start coming through to commercial approval. And this is what we conceptually call AlphaTwo and eventually AlphaGlobal that we can reach 1 million patient doses and 1 million patient doses that will be equivalent to treating 200,000 cancer patients, which is a fair target for us. But also somewhere in here, there is also opportunity in AlphaOne to potentially make investments that do not take us directly to AlphaTwo level, but would significantly expand the capacity of AlphaOne. There is space in AlphaOne, and it's an option down the line. Financials. Let's spend some time on that as well. So looking at the previous period, we are still a very lean organization and in that sense, cost efficient. We had a loss for the period of NOK 29.6 million, of which NOK 12 million was related to payroll in second half of 2024. And then we had additional costs, which is mainly related to installments in the pilot factory and other overheads in the company of close to NOK 19 million. We had grants from Innovation Norway in the second half of NOK 3 million. And then we had also booked a support from [indiscernible], the Research Council of Norway of NOK 3.6 million. So we closed the year with NOK 123 million in the bank, but it's fair to also mention that subsequent to the report, subsequent to finalizing the year, we received gross proceeds from the rest of the share issues that was completed in January of NOK 84 million. So we are -- in total, we have raised almost NOK 200 million, that was not reflected in the statement. So we are fully funded for building AlphaOne and ramping up production next year. The estimated capital requirement for AlphaOne is NOK 330 million. We have raised NOK 200 million in equity. We have received a loan of NOK 90 million from Innovation Norway, and we have good dialogue between Eksfin and our commercial bank banking partner to facilitate the working capital facility that would bridge the gap until from this NOK 290 million to this NOK 330 million. So we are fully funded and AlphaOne will take us into a cash positive operation, which means there's no need for further capital for Thor Medical with the current plans. And with that, I'd like to give the word back to Jasper to conclude.

Thank you very much, Brede. So I think exciting stuff. Thanks, Brede, for presenting this. AlphaOne fully funded. We have made strides in securing our customers. We have built a pilot site. We are ready to build AlphaOne, come investment decision in March. Let me just wrap this presentation up with one single slide, which should indicate our laser focus for this year. So 2025 is another pivotal year for Thor Medical, and we need to have our feet on the ground, not be confused with the $1 billion target that is somewhere in the future, but rather do the right things in the right way this year. So we need to refine and innovate our production process in a way that we can potentially have a good angle on increasing our capacity without adding significant CapEx and then execute on the plans we have laid out very diligently for AlphaOne. So come investment decision next year and next month. We will execute on this plan and build AlphaOne as successful as we have built the pilot plant in time and in budget. When it comes to our customer side, we have the opportunity with increased capacity to attract more customers, and we keep continuing our maturing discussions with all these players in the field of lead-212. And I indicated already earlier, there are more players coming to the table. So the pie is getting bigger as we speak, and we are doing what we can to secure a good share of this market, but being a first mover in this field, the chances are very high with our technology and our positioning that we actually achieve a higher strategic or number of strategic agreements with more customers. And then Brede mentioned strengthening the organization, which is very important. But we are, of course, cognizant of the fact that we are not yet cash positive, and we are investing where it really matters, where we drive value. And that is in production. It is in R&D. And it's these focus areas where we are staffing brilliant people and attract them from other countries, other regions in Norway to our sites in Porsgrunn and in Oslo, and we built a fantastic team that actually can do this. But don't expect anytime soon to have a big headquarter organization because we feel that the value is, where really it matters to invest is in production and R&D. And with that, I would like to close this presentation. Thank you very much for your attention here, and we open the floor for questions on the line or here in the room. So Brede, do you have any questions received?

Give me a second.

Any questions from the room so far?

So we have received 2 questions from Petter Arnesen. He's asking if everything is in place, why haven't you taken the investment decision for AlphaOne?

Okay. I think maybe I'll start and then you chime in, Brede. So we are a company that is not cutting corners. So we need to be very mindful of the fact that we are in a business that is very heavily controlled, and we are dealing with substances that are harmful. And with that, we need to prepare this investment decision in the right way that the Board can support it and that everybody is on the same page that we move forward. This means that we are running this pre-project. We are lining up our partners and vendors, and we are tendering in a way that we have a high degree of visibility long term of the entirety of the project in terms of investment, time line and everything that needs to be in place. And that's why we are finishing that work before we take the final investment decision in a couple of weeks. Anything to add from you?

No, that's good. Okay. Then he has a second question here. How far into 2026 are you financed? And what is the status on working capital financing?

I think you're much more confident to answer this one.

Sure. So we are fully funded through 2026 and through ramping up AlphaOne. The status on the working capital financing is that we have initiated the process. We have good dialogue and I have had for some time with Eksfin, the export organ here in Norway, and together with our commercial bank. We will not have anything now likely in the first half of this year, but we expect that we have something, hopefully, second half of the year or into next year. And then we have another question from Benjamin Arnesen. Have you announced -- you have announced 3 offtake agreements. What can you say about commercial progress?

That's a fair question. So we have these 3 offtake agreements, and you've seen the share, what they actually mean of production capacity in AlphaOne. And this has been our limiting factor. So we are talking to a lot of potential customers, and we have sent our samples to a lot of other customers, and they have approved that these samples actually work and are on spec to what they expect. Our problem is that we can currently not give a promise on a meaningful capacity. A lot of these customers request a high capacity from us, which we cannot deliver currently. So we need to work with that and find ways of satisfying the demand. But I think there will be more commercial agreements going forward.

And a question from Thomas Hagen. Which customers will receive deliveries from the pilot site?

Basically, all these customers that we have under contract and more. So we use this pilot site, as I said, in the onset of this presentation to prove that our technology works. And now that we have even increased capacity by a factor of 2, we can support preclinical and sometimes clinical work of our customers. At the same time, we need to reserve a certain capacity to ship to these potential new customers that they get a sample before they actually close a contract with us that they have visibility and confidence that our product is meeting their expectations and their specifications.

And then a question from Björn Erika. Where do the thorium supplies for the pilot come from? And will it be the same for AlphaOne?

We work with a European conglomerate, a big company to supply us with the thorium. At the same time, we explore other partners like mining operations worldwide. And this European supplier has been supplying the pilot and for the foreseeable future, we'll supply also AlphaOne.

Okay. That's it.

Good. Then thank you very much, and have a nice day.