Thor Medical ASA (TRMED) Earnings Call Transcript & Summary

Good morning. It's a true pleasure to stand here today in front of you to share Thor Medical's first half year results. My name is Jasper. And in the next 25 to 30 minutes, my dear colleague, Brede and myself, will walk you through our achievements in the first 6 months of this year, and we also share some lights on our plans and the road forward for Thor Medical. Now before we dive into the presentation, actually, this is a very important event for us, not only because it's important for the stock market, it is important because we have moved our office actually to this location. And for the first time, we basically stand here, next to our office and have a crowd to speak of, which is very nice. Thanks all of you for joining today here to talk to us. Before we dive into the presentation, the usual disclaimer. This presentation contains forward-looking statements, and they have to be seen in combination with the verbal delivery. Let's recap a bit what this company is all about. So we have this ambitious plan of being the market leader in supplying alpha-emitting isotopes to radiopharmaceutical providers. And this means that we have a technology, patent-pending technology that allows us to produce in a very pure way these isotopes to our pharmaceutical customers. And we believe this market will explode in the next couple of years. And that's why we believe there is an opportunity for us to generate revenues north of USD 1 billion. And we do this on the base of an order backlog that is calculated to NOK 700 million, which is very sizable for the company at this stage. And we are planning and executing on AlphaOne. This is our first commercial site. This project is in full swing, and we will speak about this also in a bit. We're listed on the Oslo Stock Exchange with a market cap currently floating around NOK 1 billion. Now it has been a very eventual 6 months of this year. So first, we decided -- the Board of Directors decided to go ahead with AlphaOne, our first commercial plant and the importance of this for the company and millions of patients cannot be overstated. So we are producing a significant amount of isotopes once this plant is up and running. We have signed strategic agreements not only on the commercial offtake side but also on securing raw materials from a renowned company, a conglomerate in Europe, so no geopolitical risks, that actually allows us to scale this plant up to the points that actually we are planning and we need to execute on these agreements. Speaking of agreements, we have signed another major milestone agreement with a leading provider, leading company in targeted alpha therapy. So this is a very important agreement for us, undisclosed customer again at this point, but this is a strong signal. And we have closed our funding. So we had an initial capacity of AlphaOne. We did a capital transaction late last year and early this year. And then the market actually reacted in a way that made us reconsider the initial capacity. We raised capital in June to actually build a plant 40% larger than the original scope of AlphaOne without influencing and impacting the time line. So this was very important to us. And this was also done successfully. AdvanCell, one of our largest customer, has also on the back of this capacity extension, signed an agreement to increase their commitment by 50%, which is, of course, a strong signal to all our stakeholders. And I'm very proud that today, we can announce that we have signed an agreement this morning with Oncoinvent. Oncoinvent is a very interesting and compelling company on a mission to finally bring out a treatment for a very nasty disease called peritoneal cancer. So they use radioactivity to treat cancer cells in the peritoneal cavity. So very proud that we have this agreement now signed. So a Norwegian player, and it underlines the importance of Norway as a hub for radiopharmaceuticals. So the symbolic value is also very strong for us. And this is all possible because of AlphaOne. This is an artist rendering. I have to say it doesn't look as tidy when you check it out today because it's a major construction site. The entire building is being refurbished, and there are big rigs being moved in. So the project is in full swing, and we are building a factory. This is a very interesting site to see when you're there because the scale is so huge. I mean I have not seen that before in my entire career in pharmaceuticals. So it's really great to see something tangible, brick-and-mortar in the works. Once this plant is completed, mid of next year, we will commission it and then start production in Q3. And as I said, we are full on track with this project in terms of time and budget, but Brede will also talk about this in more detail. Before we talk about what makes our company so special in terms of processes and technology, let's take a look at the market. And I have to maybe warn you, this can be a bit of a busy discussion and busy slides that I included here, but I try to take you on a journey coming from the entire market and then drilling down to the area we play in, but let's start big. So this is the radiopharmaceutical market as projected. And you can actually see a shift from diagnostics, which is the staple of radiopharmaceuticals, has been used for decades, if not centuries. And then the therapeutics actually are growing, and we are at the beginning of this hockey stick development. And the industry is very much convinced that this is happening, especially with alpha emitters because what we currently see on the market is 2 drugs. Novartis has actually made a strategic acquisition, and they have 2 drugs out there for NET tumors and for prostate cancer. And these drugs are so effective that they are established as standard of care pre-chemotherapy in some cases, especially in the U.S. and they are blockbuster drugs, meaning more than USD 1 billion, and the peak sales combined is USD 7 billion. What this means is that drugs that used to be niche because they are radioactive, dangerous and have a lot of side effects are moving to the front line. So physicians, oncologists are getting more used to using these drugs and to actually treat cancer because they work. And this allows the entire market, the entire field to walk on this path that Novartis has been blazed through the woods and actually sell drugs that are incrementally better than the drugs that are currently marketed. Now this is the slide that I warned you about. I apologize, but the slide is actually so cool, and I like it very much. That's why I would like to share it with you, and let's have an attempt to work through it. So in this bullseye, you see 3 drugs, Luthathera, Pluvicto, this is Novartis, and you see the first alpha emitter on the market, Xofigo. That is a drug invented here in Norway. Just to drive home the point I just made on Oncoinvent. This is a Norwegian invention. The first targeted -- the first alpha-emitter drug that was actually brought to the market was invented by Algeta here and later bought by Bayer. So these drugs are marketed in the middle. And then the rings around the bullseye, these are the clinical stages, starting from preclinical to Phase III. And the first takeaway, I think, is very simple. It is a very busy chart. You see a lot of drugs, a lot of components, a lot of isotopes being used. And for me, the second important part of this is big pharma. If you look at the sector from around 12 to 2, this is all big pharma names. So they are invested in this market, and they are driving their own clinical pipeline and what they typically do, they scoop up young, promising companies, biotechs and take them in their pipeline and to develop it from Phase III to market entry. So this is actually happening. And what is most important for this company is the alpha-emitting part. So the currently marketed drugs are either untargeted like Xofigo, so they have one purpose or they use beta emission. And beta emission is not as powerful as alpha emission because it's a lightweight particle. It travels also far, so it's not very precise. And where we come in as a company, that is the space of alpha emitters. Alpha emitters are emitting heavy particles that have a kinetic punch that can rip apart, do double DNA strand. So certain cell death of cancer cells and they travel only 5 to 10 diameters. Again, beta emission 200 diameters of a human cell, alpha emitters 5. Side effects are low, and it's very effective. And that's why I'm very proud to share that a lot of -- especially in the early phase, preclinical Phase I, you see a lot of alpha emitters. And if you watch out for these pyramids, all these pyramids on the chart, like, for instance, AdvanCell or when it comes to Sanofi or Oncoinvent, you actually see alpha emitters Lead-212. And this is very important because that's the isotope we produce. And Lead-212 has a lot of advantages over the other isotopes like actinium, shorter half-life, cleaner alpha decay. So it's a very good choice and the industry, the oncologists actually see that. So while this slide is very busy, it gives very important messages. The market is very big. It is very dynamic. Big pharma names are coming into the play, and alpha emitters especially Lead-212 have a bright future. Now looking at the leading companies in this field, and that's the list of all of them currently and the list is growing. As you know, so Telix, for instance, came to the list very recently. And I'm very proud to say today that we have, with the majority of these companies, a signed committed sales agreement. And again, I have to pinch myself sometimes. We are still a somewhat small scale up from Norway, and we are playing in the big league when it comes to that. So for me, it's unreal sometimes. So that's the big takeaway. And then of course, we talked about big pharma. These are the names that are publicly on the list. We have another company that is not listed here, big pharma, that actually generated our first revenue, so that's another part we are very proud of over the last 6 months that we have generated first revenue by selling to a very critical player in the industry, a big pharma company. It is not much. So from a financial standpoint, it's nothing to write home about, but the symbolic value for this company and for all the people working with me cannot be overstated. So it's a very strong signal that our technology works, and it's actually accepted by the big league. And this is a very important message that I would also share today. Now there are a lot of biotechs also in Norway and biotechs that are small have a certain risk profile and, of course, also a lot of opportunities. We would like to be a bit different. So Thor Medical is actively managing its risk portfolio by inherently hedging our bets, looking at sorts of customers and managing a portfolio of customers. So the capacity of AlphaOne will not be utilized by only ARTBIO 80% and then the rest, we actively manage portfolio in a way that we are not at the mercy of a single drug candidates succeeding in the market or coming through the clinic to begin with. So I have spent enough time in pharmaceuticals to know that not all of these development project works. We wish our customers all the best. These are fantastic drugs for millions of cancer patients that suffer and they would not suffer if these drugs are approved as long as they're safe. But we know that there is risk and we would like to participate in this market in an accretive way without having the same risk profile as our customers. So this is what we stand for. I hope we have now conveyed that we have made strides in the last 6 months, and we talked about the market. But I think what actually matters for this company most is our proprietary technology and actually how we make use of the natural decay of thorium-232, our raw material. And with that, I would like to hand over to Brede, COO and CFO of Thor Medical. Thank you, Brede.

Thank you very much, Jasper. Good morning, everyone. It's great to be here and be allowed to give you an update first on the operational side, and then I will take you through key financials. So first, let me recap what is it that Thor Medical brings to the market. Well, we play in the value chain of Lead-212. And what we have developed is a proprietary technology to produce the isotopes from naturally occurring thorium. That is what is called thorium-232. So if I draw your attention to the figure on the right-hand side, we start with 1 ton of thorium, and we extract 0.4 milligrams of Radium-228, which is our intermediate product. And as you can see on the chart, the starting material thorium-232 has a half-life of 14 billion years. It means that it effectively lasts forever, continuously decaying into Radium-228, which we can extract. So we can continuously reuse all the raw materials that we are bringing in. And secondly, when we are then extracting the Radium-228, which is the intermediate product, that also has a half-life of around 6 years, meaning that what we extract in the first year will still be there to be utilized in the second year and third year and so on. And that is very important to understand our competitive position. And then we continue further down the value chain, and we extract thorium-228, which is known as a generator material for most of our customers. So they take that product. It has a half-life of 2 years. It can easily be shipped around the world logistically and they generate Lead-212 closer to the customers. But we also produce Radium-224, and we can also go all the way down to Lead-212, which is what we are actually doing now at our site, supplying to this big pharma company. So we are doing this without the use of any irradiation, big accelerators or nuclear reactors, which allows us also to only have the radioactive isotopes that are there naturally. We don't create or generate any artificial radioactivity. And we also say that this production process is self-scaling, and I will show you what that means in numbers. But this is due to the, let's say, infinite reusable raw material, thorium-232, and the accumulation of intermediate products that we continue as we run the plant. And that is -- this is what that means. So when we talk about AlphaOne, our first commercial scale plant, we will continue to increase production from a start without adding any additional CapEx just by taking in new raw materials and reusing what we have already processed. So for capacity for AlphaOne, we say that after 3 years, we will have around 21,000 patient doses of capacity. That's equivalent to revenues of NOK 350 million annually. And the production will continue to increase, reaching around 35,000 patient doses after 5 years and eventually reaching 60,000 patient doses after 10 years of operation. So this plant is fully funded and the scale up. And we expect to be profitable around end of 2027, when we have reached a certain amount of output in this ramp-up. And the project is on track. That is very important to state today. Most importantly, we have had no harm to people, environment or equipment. And secondly, cost and time, we are on track to start the plant at budget Q3 2026. And in terms of quality and capacity, we are also on track and we have secured the necessary raw materials. So that is also very important for us, securing our own value chain. And we are growing the team. We have hired a plant manager. We have also hired other key personnel at the site related to nuclear chemistry, operations, finance and IT and other support functions. So we are moving. And going a bit deeper on time line for the execution of the project. As Jasper said, we made the investment decision in March. First thing we did was to put orders for long lead items. That includes, for example, hot cells. And we also completed the final steps of detailed engineering before the summer in June. And in parallel, the civil construction started. So we started refurbishment of the building and the preparation and now the buildup of the laboratories inside, so that construction period will continue until the end of the year. And then we will start installing the equipment, building up the production line, reaching mechanical completion beginning of Q2 next year, start commissioning and have production start Q3 2026. And we want to hit the ground running. So we are, of course, in parallel, building the team aiming to have a fully staffed and trained team at Herøya when we start the plant Q3 2026. Okay. Now I will take you through some key financials for the period. And the most interesting thing for us was that we actually made first sales, symbolic value, but it was the first shipment of a sellable product that Lead-212 for preclinical use at a big pharma company. Beyond that, we are, of course, very focused on keeping operational costs at the minimum, keeping burn down. And we ended the first half with an EBITDA of negative NOK 23 million. That was driven by payroll of NOK 13 million and other expenses net of grants of NOK 10 million. And the loss for the period, driven by depreciation in between EBITDA here, was minus NOK 31 million. And net cash for the period was NOK 101 million. That is -- the loss is offset by the capital increases, equity raises that we did in the first half. And we ended the period with NOK 224 million in the bank. Subsequent to this report, we had received NOK 10 million in a repair offering that was completed in July. And so what I also want to talk about before giving the word back to Jasper is the capacity expansion that we did in June, this was a very profitable decision. We saw a demand in the market beyond the capacity that was planned for AlphaOne. And we saw opportunities to -- with a limited amount of capital, raising approximately we targeted NOK 85 million in June. We could increase capacity by at least 40%. So you see that this is a value-accretive event. And it was strong support from both existing and new shareholders. And this expansion enabled. For example, the expanded agreement with AdvanCell also enabled the agreement that we signed today. And now we are in a position that we can continue to enter agreements going forward, having the capacity available and we are fully funded for that. So that is very good. So with that, I would like to give the word back to Jasper to take us through the outlook.

All right. So I will just try my best to wrap it up very quickly before we actually dive into questions because I'm sure there are questions online or in this room. But before I look forward, let me allow myself to look back. I'm with the company for a year and I have to say the company looks very different a year ago, especially the last 6 months, 2025 first half have been a formative part of this company. So we have derisked our technology. And I think this is the most important part. A lot of companies have ideas about technology, and they raise a lot of money on the back of this technology, but our technology is working. We have launched the pilot site. It's producing isotopes, and we are selling these isotopes to customers that couldn't be more critical about quality and ability to work with the product. So I think this is a very strong signal that we would like to highlight, and I would like to highlight personally. And looking at the commercial success, I mean, looking at the market, the front runners in this field and saying as a company from Oslo with not even 20 employees that we are capturing more than half of this market in terms of contracts, I think this is a very strong signal to also underline. And the capacity increase of AlphaOne, financially very attractive for the new invested capital. And it's important that we make bold moves in order to be a relevant player in this market. No one is waiting for us, and we need to be there when the customers want us, not only in clinical development, but also when they scale commercially. So they need to have this trust in us, and this starts early that we are the player when it comes to getting this drug on the market outside of the clinic. And the AlphaOne construction, I'm very happy to also confirm today that is fully in line with our expectations. It's working well. We don't have any HSE incidents. And when you come to Herøya Industrial Park to our south of Oslo, to our south of where we stand, you can actually feel the progress. It's a major construction site. People are busy running around. I always stand in the way when I look at the progress. So it's a very good feeling to see this movement, and we are moving as a company, and I think that's important to know. But where are we moving actually? And our ambition is, as I said, to be a meaningful player in this market to not only lead the market, but to shape it. And for that, we need to look at 1 million patient doses. This does mean 1 million cancer patients. It means around 1/4 of million of cancer patients because they need to use more than 1 dose. But AlphaOne is a step on our way. AlphaOne is not the destination we're going. So we need to take steps in between. And conceptually, we call them here, AlphaTwo, AlphaGlobal. I think the secret lies a bit more in how we run our process from bulk operations, 1 ton to 0.4 milligrams and then the purification downstream. So we can leverage this a bit more. So what we are doing tomorrow because today, we are focusing on getting AlphaOne up and running. What we are doing tomorrow is looking at partnerships, looking at ways of improving our output, tapping into new value pools and expanding our capacity where it matters, going in sync with the market and also preempting a bit how the market will develop. And stay tuned for more information around this, but this is very important to us that while we have a vision, we have our feet on the ground and we execute what we have promised. Now let me wrap up by 4 highlights and key areas we are focusing on, my leadership is focusing on. One is to build a world-class team, not only operations, but with focus on operations. We need to get the best people. And it's very proud for me to say, coming from a big name where it's easier to attract talent that we actually get applications from people that want to work for us, that actually have heard about us and they actually send us applications without us posting jobs. So that is very great to see. I mentioned AlphaOne, but I cannot overemphasize how important it is that we have all hands on deck for this project. And together with the Boards, we are making sure that we get the support from external stakeholders like the Herøya Industrial Park. So it's a matter of full focus for this company, and continuing capturing the market. And as you hopefully agree, we are making inroads there. This is not the end. So there are more customers that we are talking to, but have not yet signed agreements with. So we will continue doing so. And since the U.S. is where the magic happens, the U.S. will be the market where the first drugs are approved, will be approved. Our focus is also on the U.S. looking for partnerships again and trying to find ways of signing more agreements. So stay tuned for that as well. And on the supply side, it's also very important to us. We have now secured the strategic agreement that gives us a competitive edge, but this is also not the end. So we will build the future of this company, not on a single big supplier, we will have more suppliers to have a diversified set and also to get an advantage by the access to raw materials. So this is what the team is working on. And with that, I would like to close the presentation and open the floor for questions in the room. We have a microphone or online. So thank you very much.

So should we start with the room while we organize a bit?

Yes. Do we have any questions in the room?

Okay. First, thank you for the presentation. You talked about scalability. And my question is, how scalable is the process itself, like, for example, the chemical reagents that are using, right, I mean are these standard chemical reagents? And is it difficult or how easy is it to source them in larger volumes? Could that become a bottleneck at some point? Or can you talk a little bit more about that?

Yes, that's a great question. Maybe I'll just say a few words and then you have an expert when it comes to operations. So we don't use anything out of the ordinary. So actually, when you look at our permits, the challenge is not a high quantity of assets or high concentration of assets. So we have -- from an industrial standpoint, looking at the industry part, we have a lab-scale environment, even with AlphaOne and even with producing 60,000 patient doses. So the amount of assets is not a hurdle, and they are easy to come by. So this is a commodity on the market. Maybe you can comment also.

Yes. And in terms of sourcing the required chemicals and inputs, we have agreements in place that secures our ramp-up and also when we look a bit further ahead. So we are not concerned about scarcity on those kind of materials.

And then I have another question. Okay. So recently, we've seen quite a lot of encouraging news in the Lead-212 field, right? Like, for example, Perspective Therapeutics from the U.S., right, they showed like really good clinical trial results. And then also ARTBIO raised like USD 132 million recently, it was end of July to advance their pipeline, right? But I mean, both news point to rising demand and validation of Lead-212 like for the entire field, right? But for some reason, Thor Medical stock hasn't reacted to that, and you are part of this story, right? I mean, you are an important part of that value chain. So why do we see this disconnect? I mean where is the friction coming from? Do you think that, I don't know, like when more people or more investors get to know about the company that then this correlation with the sector will improve or because these were like great news, right? But the stock was like not reacting at all.

Yes. Someone way smarter than me told me once not to comment on the stock price development as a CEO. So I will not do that. But I think what we are seeing is that we need to have some patience. So good things will happen to those that execute diligently. And I strongly believe that's what we need to do, and the stock price will come. That's my answer to that.

Great. And my last question is, who do you see as your main competitors? Are these like incumbents that are using reactor-based methods or are these like vertically integrated pharmaceutical companies? Like a good example is Sanofi with Orano Med right? They're vertically integrated biotech, pursuing Lead-212 radiotherapeutics, so who do you see as your main competitors here?

I mean I think to be very clear, Orano Med is not one of our competitors. So they produce isotopes for their own pipeline, and they're not on the market. So they will not be competing with us, at least with my knowledge today. Other competitors are clearly those that have invested a lot of capacity for producing of other isotopes like actinium. So if this market actually shifts from actinium to Lead or if Lead gets a higher presence, they might be poised to produce Lead in their accelerators. The technical team and the R&D team and myself, we are of the opinion that the technology, the artificial production route for Lead is not ideal due to the half-life of Lead and raw material that you actually need, which is also scarce unlike thorium-232, our raw material. And then the process requires the plates to be cooled off, and you lose a lot of activity. So I think this will not be a very efficient way of producing that. So we are not naive to the point that we believe we will be alone on the market forever. There will be more companies, smart companies coming up with production technology, and we hope they don't violate our patents, but they will not be most likely at least from where I stand, the companies that utilize reactors or accelerators. Hope that answers your question. More questions from the room?

So I have, I guess, 2 questions in one. Can you tell us what percentage of the capacity in the next 5 years on AlphaOne it's sold out? And if demand emerges either from new or existing customers, do you have the capacity or the design to do a further expansion?

I think that's a question that is more suited to you, Brede.

Well, first, we wouldn't -- we prefer not to comment specifically on the capacity utilization on those contracts. I think that you, as a skilled analyst, you can probably calculate based on what you know of the size of the contracts and the expansion that we did. But there is still room to enter new contracts. And beyond that, what we say is that we will at least increase the capacity by 40%. This means that we think that there could be opportunities to do more. But the bottlenecks -- we are moving the bottlenecks, meaning that we have to then evaluate what more can be done, and is there ways to debottleneck in other places. So it could be an opportunity. It's not something that we are ready to share with the market that we are there already. But let's see, it could be.

Good. More questions from the room? Markus?

What would you consider being the biggest derisking factors going forward that the investors should track?

Progress of the plant. I think that's important, with all seriousness, technology, we have, I think, derisked to a good extent. Now we execute on this construction project. And the more we get closer to the finish line, commissioning the project, reaching the milestones, the more I expect the perception to be that this is derisking steadily. That would be my answer. Good. I think we also have to take some questions from the web.

Yes. We have several questions. Well, we have one from [ John Gunner Banister ]. Are you sure the medicine will work? I think you can take that one.

Yes, it's a medicine and clinical development. It's a broad spectrum of this definition, will it work? So it works for some patients. So that otherwise, the clinical trials would have been halted. But it is a matter of finishing and finalizing these clinical trials that have a readout that shows an efficacy of the drug with a safety profile that is actually allowing the drug to get approval. So we cannot comment on the pipelines of our customers. What I can say though, that anecdotal information and in other events, we have shown pictures of cancer patients with a lot of metastasis and a lot of spots on the PET/CT scan and then the same patient after receiving Lead without any cancer. So these are anecdotal, but we see that these drugs work, and it's a matter of time to pass through a structured clinical development process until they get approved. And we would leave it to these clinical projects to confirm the efficacy and safety of these drugs.

And we have another one from John Gunner, what is the revenue potential for the next 5 to 10 years?

We talk about this order backlog of NOK 770 million. This is what we have currently in the books. And we need to, of course, attract more customers. But the revenue potential is limited by the capacity, and we just talked about capacity.

Yes, I think we talked about capacity for AlphaOne after 5 years, NOK 550 million revenue per year. But what you have tried to introduce today is that we see a much bigger potential for this company if the market actually develops the way we think. Okay. I think there are more from John Gunner, but we also have several from others. We have one from [ Mari Chelvan ], as the U.S. is a big market, do you see any problems cooperating with partners in U.S. with the current leadership?

That is a good question. So I think this is one of the reasons why we should consider the U.S. also in order to avoid uncertainties around tariffs, but this is far in the future. So at least from our current thinking, we need to take our chances as always. So we deal with players in the field, and we need to find ways of managing our risks and hedging our investments, but the market is too big to be left on this.

And then we have one from [ Lake Wooden ]. For your Lead-212 product, do you purify using radium emission or chromatography or something else? Well, I think we can be open about the fact that we are going through the production steps that we are using are the same pretty much through the value chain, meaning that we are doing chromatography, going from thorium-228, Radium-224 and then eventually Lead-212. When -- this is from Peter Kua. When can the undisclosed big pharma company be revealed?

I would like to share that today with you, if it were up to me, it is not. So this is a company that is keeping their cards very close to their chest. And since they have a footprint in radiopharmaceuticals with other isotopes, it's understandable that they don't want to be disclosed at this point because it's preclinical.

And then we have another one from John Gunner, will Thor own the new property that is being built in Herøya now?

So it's an industrial park and we have a long-term lease agreement, with the industrial park for this entire building, many thousand square meters. So it's large enough for AlphaOne and maybe even some bolt-ons, but it is not owned by us. So we have this as an operating lease.

Okay. I think we can wrap it up there.

We don't have more time today, unfortunately, but thank you very much for coming. Thanks for joining online. It has been a real pleasure sharing our first half results with you. And please stay tuned for more updates from the company. Thank you.