Xvivo Perfusion AB (publ) (XVIVO) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Xvivo Group Interim Report Q3 2022. [Operator Instructions] Now I will now hand over to Christoffer Rosenblad, acting CEO. Please go ahead.

Thank you so much, and welcome to you all to Xvivo's Earnings Call for the Third Quarter of 2022. I move over to Slide #2 on the slide deck. Today's presenters are myself, Christoffer Rosenblad, acting CEO for [indiscernible]; and Kristoffer Nordstrom, CFO, DuMet before. As you all know, our CEO, Doug Anderson passed away a month ago, and I assumed the role as active here immediately. Our thoughts are with Doug's family. So the ones on the call that don't know me, this is actually my 34th quarter earnings call, but my first as acting CEO. I worked for [indiscernible] for 10 years, where as CFO; and 2 years as COO and Business Development Director. [indiscernible] for North America during 2015 to 2017 and are been serving as deputy CEO since 2017 until now. Let's move over to Slide #3 in the deck. Here we see the financials at the glance. I'm proud and very happy to report that Q3 was the strongest quarter ever posted by Xvivo with sales of SEK 97 million and organic growth of 35%. We're also very pleased to see both high growth and high gross margin for disposable products. Our CFO will give you more details on our financial performance later in the presentation, which brings us into Slide#4, and that's the Q3 highlights. And we will pass on to Slide #5. So let's start the highlights with our sharper strategy presented at our Capital Markets Day a little bit more than a month ago. Our vision is still that nobody should die for an organ. This is a very strong vision that comes from the organization. And I dare say, if you wake up anybody in the middle of the night and they ask [ emollition ] they will have this. We know that today only 1 out of 10 that needs a new organ actually get transplanted. So there is still a lot to be done to fill our vision. Our financial goal is to gradually improve EBITDA levels to about 30% in the strategy period. The economic engine is unchanged this revenue per installed machine. The strategic focus areas are in all lessen the same, but developed sharper this year. That data strategy put more emphasis on acceleration of our market leadership in lung as well as a broader definition of new market expansion. For example, Brazil has proven to be a future important market for Xvivo. We have the large part of our portfolio already improvement as well, and it is the third largest abdominal market in the world as well as being the largest insurance market outside the U.S. With that, we move to Slide #6, and I wanted to update you on our latest acquisition, which is the [indiscernible] machines of the future. They are today our distributor in Italy. So this is a forward integration case. So moving to Slide #7, I will explain where it fits in the in the value chain of the train process. And as you see, we now fit very well into the existing offering. They have perfusions employed by offering expertise and support to [ gear ] machine perfusion. Together with the star acquisition, we will now offer all parts of the transplant process when an organ is outside the body. And with that, we move to Slide 8 and some more details on the acquisition. In short, as you know, machine of perfusion adopted a revenue model that is based on revenue per procedure rather than on revenue per kit. And that is highly appreciated by its customers. As you can see in Italy, they are active in 15 out of 22 [indiscernible] today. The acquisition is fine to a 60% share and 40% cash, and this will make the owner family of revenue of machines and perfusion, shareholder in Xvivo which we think is very good. The acquisition is estimated to be completed in the next couple of weeks. And if we move to Slide 9, we see the strategic rationale. The main reason for the acquisition is that we clearly support our strategy seen on the right side of the presentation. The long-term opportunity into those products, we have been an business model is fantastic. The deal rationale is that we secure Italy, which is Europe's largest middle market. We also get an option for an organ transporter called [indiscernible]. It's developed after the transplant process and could be used long termly more [indiscernible] obviously. But more importantly, the business model of our machine perfusion is interesting the cost of SEK 3 million. The first one is it increases emission and perfusion market penetration. For example, today in Europe, the liver market penetration is approximately 5% for machine perfusion. It's a little bit different country by country, but roughly there in Italy between 20%, 25%. The second reason is that it gives high customer satisfaction since it removes customers resource [ images ]. If we, at Xvivo machine perfusion, canter machines and running it optimally, the clinical focus on the transplant, which is what they do there. The third reason is that the gross margin is higher for this type of business model. And we will see that going into 2022 next year, that we will come close to our dominant gross margin target of 70% over next year. So that was the latest acquisition, will lastly move over to our core business on Slide 10, is a [indiscernible] business. We can skip over to Slide 11, very quickly. So on Slide 11, we can continue to see a very good momentum for EVLP. I'm very happy to announce that we have 8 new express machines installed this year, and that's a new record. The gas machines are mainly sold to customers. But as we said before, we can sometimes place them to a higher price per kit or there is a leasing contract. As we see the activity on EDLP is increasing at the corporate, and we show a strong growth. We can -- YTD is 40% organic growth. And in the quarter alone Q2 alone we can see the 14%, which is very high. And by we should say it was quite low comparable Q3 last year. And on the other hand, we see quite high comparable Q4 for the loan. So with that, but we're still very happy with the year-to-date number, and we are very happy that we can see that we're out of Covid. So the next part in the dark blue is that we are pursuing hub models, and you can see that newly published study shows that, that is the current lay forward. For example, this study that was recently posted in the Journal of [indiscernible] shows that we can use not accepted lands, but often usable for transplantation with similar results as pristine lungs in the control group. The study also confirms what we've made before, but at the use of [ even increases ] the use of PCB organ. PCB audience is the fastest-growing domino today, both in the U.S. and outside the U.S. Now we go over to Slide #12 to take a look at the market in number of transplants. And this picture confirms what we said before, that prove now using its group of the transplant market. And you can see that in the American Transplant data, we see a gradual recovery of total and [indiscernible] and Q-on-Q and year-on-year. We're not 100% back to where we were in 2019. But when we talk to [indiscernible], I believe that will be that very soon and hopefully[indiscernible] 23. That was the thoracic business. We move to Slide 13, where we have the abdominal business go through that. We skip back to Slide 14, where to start with very happy to announce that our abdominal products, kidney [indiscernible] both [indiscernible], and we have, therefore, secured the product for sales and marketing in Europe for the future. An enormous amount of resources that a has got into this task, and I'm very effective to our dominant team down in [indiscernible] as well as our QARP on a global level. They've done a fantastic job here. I'm also very pleased to report that the liver assistant and Ba3 device designation by the FDA. This would mean that we get a fast to the [indiscernible] process is also quality stand that the products are innate and fulfil the need in the market. And with that, we move to Slide 16, just a kidney transport update. The kidneys is transport with oxinate perfusion as earlier reported some great results compared to what is available on the market today. For example, the kidneys transfer shows 97% 1-year graft survival versus only 90% of the controlled group for DCD kidneys on domes over that 50 years. We got 5 approval in Q1 and have during the year received great interest from eliciting and OPOs. During the year, we collected American use the feedback and improve the product. We're also in the process of ramping up production and machines to satisfy the demand we see. And we prepare for an accelerated launch in both the U.S. and Europe during Q1 2023. And that will bring us to the last part of the business update. This is our clinical pipeline on Slide #16. And over to Slide 17 right away where we see the studies we are currently running. To start with the hot precedented product is a truly innovative and a paradigm shifting product. And they have, among other things, enable [indiscernible] transplants as well as pushed out of body time to almost 9 hours with very good results. And that should be measured to bought a standard of care today is roughly 4 hours out of what time today. As we have reported earlier, the product consists of the machine and disposable and a new innovative patent solution that is very important for reaching those results. The studies we are conducting our -- for the heart blocks are currently 2 to prove benefit and get market approval. In June, we have now included 75% of our patients in the study. We are still aiming to launch in Europe in the beginning of 2024. The Australian study is almost finalized infusion and the data we've seen the feature scientific turns around the world. But clearly talked to are very happy with the heart box. And as you've heard, Professor [indiscernible] during our Capital Markets Day, the self are very good, and he deems to be in an ethical to not use it for transportational parts. Which is probably the best results you can get from and hear from the work doctrine study. In the U.S., we have to meet our [ IV application ]. And as usual, there are discussion with FDA. It is very interesting that we have a great team assembled. It's high interest from really the best [indiscernible] in the U.S., high volume, high impact center, and they have also committed to be part of the study. We will start the study as soon as we get the[indiscernible] from the FDA. We don't know exactly when that is, but we are definitely closer now than before. Lastly, our [indiscernible] study in our primate products. It's a very interesting product. It's a CMOS product actually. We don't sell it today, but we will see [indiscernible] in it. It has shown very good results in a smaller 40-plus 40-patient study. What we're do now is that we are doing the large study on a smaller patient group and were to finalize inclusion in 2023. And we are very happy that it's up or running again after some Covid restrictions [indiscernible]. And with that, I move over to Slide 18, which is the financial performance. With that, I'll also hand over to our CFO, Kristoffer Nordstrom, who will present the financial performance. Thank you so much.

Thank you for that Christoffer. Yes. First, some overall comments on our P&L, and then I will present the highlights for each business area as usual. So even followed up Q1 and Q2 with a solid third quarter, proving especially that the good momentum within this both continues and more especially within [indiscernible]. Net sales in Q3 amounted to SEK 97 million. We are getting closer to SEK 100 million, which will be up in for us and a 76% increase versus Q3 last year. Organic growth in local currencies, most importantly, was 35% acquired growth, 22% comprised by starting and currency effects was 19%. As you all know, we are in favor of a strong U.S. dollar. Q3 gross margin was 72%, an improvement versus 69% last year. Both EBIT and EBITDA was strengthened in Q3 versus last year. EBITDA margin was 10%, then volume would have been 14%. If we were to exclude some one-offs related to organizational cost of stuff, I'll come to that at the later slide here. Year-to-date, we present an organic growth of 35% and a significant gross margin improvement on disposables. And that is, of course, both [indiscernible] and promising. Moving over to the next slide, which is the thoracic business area in Q3 highlights. So I think it is another strong quarter and continues to deliver growth. Net sales amounted to SEK 71 million and the organic growth of 45% in local currencies. Our growth comes from where it should come from, right? So increased sales of EDLP. [indiscernible] in Q3 more than doubled versus lost year, and the growth year-to-date is about 40% versus last year. And also our focus on price increases. We feel that, that's paid off, representing around 12% of the growth. As you can see in the [indiscernible], so to say in the middle here, U.S. was particularly strong in Q3, which is delighting since it is our most important market. So 3 expert machines was delivered, 2 in the U.S., very interesting centers and 1 in Italy. And we are now delivered 8 machines during the year. And as Christoffer said, that is a record and a very, very proud over that. Gross margin disposable continues to be good, 84%. That's 5% units better than last year. Thoracic, as you know, that's more of a mature business for us. And then we see strong margins also due to economy from scale. Okay. So moving over to abdominal on Slide 21. Net sales came in on SEK 140 million. Sales were mostly comprised by liver sales in Europe. Growth of disposables, most importantly, was good, 32% versus last year. Total growth was 8% organic growth in total 1%. And is the reason for that for the kind of low growth is the fact that the machines were delivered in the quarter without invoicing them. As you know, that is part of our new strategy of placing machines at volume commitments and higher price on [indiscernible], but you don't really see any machine sales in the numbers this quarter. So as a handful of placements. But mostly for a year, 32% growth versus last year on disposables. Gross margin on disposables was 51% versus 53% last year. And the decrease there is primarily due to a high portion of distributor sales within this quarter. That is a fact that we most likely will not see in the future because Avino acquisition, as you know, have now is 25% of our total abdominal sales at the moment and with them not being a distributor in the future, that will have a significant impact on our gross margins. Looking year-to-date, gross margins in abdominal has increased from 51% to 53%. That's good. Abdominal, as you know, is not yet a mature market for us. So for that reason, we don't yet see economics of scale, but that will come. And as communicated on our Capital Markets Day, our margins within abdominal will increase in the next few years, fueled by the introduction of service models, such as [indiscernible] model, but also the launch of [indiscernible] transport in the U.S. where the pricing points are much higher as you know. Moving over to services. Services consists of [indiscernible] and their organ recovery business in the U.S. We acquired starting in November 2021. So this was the third whole quarter to this business. As Christoffer said, there is a big interest in the U.S. for this service model will outsource for a recovery. One new contract was secured in Q3, and we will see that come into effect in Q4. We have a handful of other leads out at the customers with the customers. And in parallel with this, we will focus to invest in the organization to find more surgeons, especially in order to secure future capacity. The integration with the [indiscernible] product offering has not yet started. So there are really no synergies in these numbers at the moment, but we expect to start this and to see this during 2023. Net sales was SEK 12 million, and that representative sales growth of 23%. Moving over to profitability and EBITDA. Rolling 12 EBITDA margin is 13%, representing SEK 46 million. Our gross profit has increased with increased sales. But during the last 12 months, we have also invested heavily in the organization and offering initiatives to support growth and to continue to build the market for machine precision. Adjusted EBITDA in the quarter was 10%, excluding some one-offs for organizational costs. EBITDA was 14%. We had some organizational cost primarily primary leading costs for a case that is not closed and with a positive outcome for Xvivo. So this was yet another quarter with a positive EBITDA in terms of increasing EBITDA with for this to happen gradually year-by-year during the strategy period, as communicated on the Capital Markets Day. Moving over to my last slide for this session. So the financial position and cash flow. Operating cash flow, Q3 was positive, was good, plus SEK 17 million, and that was mainly a result of our -- of the increased sales that we have seen now both in Q2 and Q3, but also a very, very good work from my colleagues at the Biomet department in collecting payments from customers. So we reduced the working capital quite a lot. Investments amounted to SEK 34 million, primarily spending in our clinical projects, and that led to a total cash flow of minus SEK 18 million. And finally, just a heads up on the Avino acquisition. We expect this transaction, as Christoffer said, to be closed in Q4. The purchase price is maximum EUR 12 million, and there is an initial purchase price that is maximum EUR 9.6 million. 40% of this the 3.8 million will be paid in cash, [indiscernible]. So there will be a cash effect of roughly 4 million in Q4. There is also an additional purchase price, an earn-out of a maximum EUR 2.4 million, and that is expected to be paid out in Q1 or Q2 2024. That was all for me now, and I hand over to you again, Christoffer, and you will talk a little bit about our outlook.

Thank you so much, Kristoffer, for your view on the financials. We will take a look at first helicopter view on the big picture and then the outlook for the next 12 to 14 months. If we move over to Slide #26 is the more helicopter, which I think is good to always start outlook with. I mean the demand is still for transplant is in 10 times the supply today, which we have mentioned earlier. It's also good to note that the sales value of machine per future versus cold static storage is roughly times 10 as well. I think a great example is [indiscernible], for example, [ perpe exercise ] for bulks and semi is roughly around USD 3,000 and then we will peak this roughly around 0. So that is roughly where it is machine production has also proven to increase the number of organs used for transplantation, especially the fast-growing DCD group, which is the future source of, let's say, new organs as well as BD organs not used today. So that's what we can see that we have a great opportunity to use machine perfusion to improve the life for many patients that to [indiscernible]. Over to [indiscernible]. We have a unique and innovative and world-leading products on the market or in the R&D pipeline as you have today. And we also have a strong management team and a strong organization in place. So we are ready to deliver on the strategy presented in September during our Capital Markets Day. Now with that, I'll move over to the -- a little bit closer outlook on the next 12 to 14 months on Slide #27. And the 4 key points, we will focus on is one, especially perfusion, our core business. We see continued momentum to our [indiscernible] models. And the next thing we do is to integrate [indiscernible] in Q4. Of course, we have our kidneys transport, where we will have scale up production. And with that, a very good customer feedback we have, we're now really ready to ramp up in 2023, both in the U.S. and actually launched the new kidney transport in Europe. Then focus, we put a lot of focus on our heart box, which is truly innovative product that can change the paradigm of transplantation, as we know today. And during this and next year, we will prepare for commercial launch in Europe and Australia and Zealand. We also aim to start the [indiscernible] study in the U.S. are communicated. The last point number four, continued price increases. You still see that we are underpriced versus competition. And we also know that we find ourselves together with all other companies in the world in an inflationary environment. And this leads us to continue to increase prices where we are truly wiliness on our products and when we can save money for the health care system as a whole, which our product can do. With that, we move to Slide 28. Thank you very much for listening today. And with that, we open up the lines for questions.

[Operator Instructions] And our first question comes from the line of Ulrik Trattner from Carnegie Investment Bank AB.

And first of all, my condolences regarding Doug. I would like to start off with the Nord acquisition, if I may. And I'm sorry if I missed this, but when is the acquisition plan to be completed here during Q4, just to get a rough idea how much to include for Q4 numbers.

Well, that's a good question. There were 2 condition precedents that are -- one is passed. One we hope to hear in the next couple of days, that's all I heard. And then there will, of course, be some days to actually complete the acquisition. So we hope that we can do it in November. -- and some [indiscernible].

Great. And again, sort of regarding Avionord, Italy seems to be quite a unique market when it comes to relationship between businesses and especially in the field of health care. And I know it's obviously this good penetration in Italy. How -- sort of how many markets have you identified elsewhere in Europe where you can replicate the same type of forward integration and expecting the same type of results.

That's a very good question. Today, there are in your very few companies similar to Avionord. -- but we have identified a few markets in Europe where we could build or replicate the model, which is open for it. And typically, you can see Benelux in such a market where they have opened up for it. Switzerland is a similar market, where we think this model would work. And I think for me, the biggest market where this would have an interest is obviously the U.S. There are already service models in place.

And you wouldn't be afraid that, that would infringe or your -- with your current collaboration with lung by engineering...

It depends product to product. I mean in terms of abdominal run by engineering is not present today in kidney, for example.

Yes. And if we were to keep on the topic of services, are you happy with the development of [indiscernible] teams, 23% growth here? I note that you're adding some additional sort of recurring revenue clinics to the portfolio, but are you happy with the development of [indiscernible] teams and what are sort of the main limitation for growth in that business as well as you previously talked about expanding the product portfolio to abdominal. Do you have a time point for when that is about to happen? And as well, this might be a long shot, but is there any possibility at all that the heart box under the PMA route in the U.S. would in any way be used by [indiscernible] teams in a clinical trial setting? Or is this way too optimistic to assume?

Thank you. Thank you for your questions. And to start with, we would have hoped for high growth on the service model. For sure, there is a market for it. We are currently on the shorter of surgeons, actually, that's what's hampering the growth, not the customer demand at this moment. We will investigate let's say, all your other questions, we will need the U.S. together starting and to for, let's say, a strategy going forward. We have previously chosen not to integrate the 2 companies to let [indiscernible] growth. We have now -- we now see that there are greater opportunities for integration than we earlier anticipated. For example, what you mentioned with a hot trial in the U.S., it's a great example where I know there are interest among our clients that start with our [indiscernible] that there is an interest that [indiscernible] do the retrievers of them and actually do machine perfusion. So we will come back with a more precise answer to your questions after our mid-number strategy in l[indiscernible] together where we define, let's say, development plan going forward. But you can expect a further integration between the 2 companies because there are a lot more commonalities than we initially anticipated between the 2 revenue models.

Great. And on abdominal, Kidney assist transport. It looks like there's been a slow sales ramp-up since it was approved, if I'm not mistaken, just taking out the U.S. sales from abdominal, it's slightly below 1 million in sales for Q3. But could you give us any indication on when you're really trying to do a wide commercial launch of this as well as do you have an indication on -- or could you give us an indication on how many systems that have been placed thus far?

Yes, I think I will start in the CEO word as well. We can expect -- the reason there hasn't been a wide launch, yes, is the production capacity. So we are currently working very hard with ramping up the production capacity, and we hope to have find at the end of the year. So we expect a ramp-up launch, if we call it that, in -- during Q1, both here in Europe, where we have the old kinetic and in the U.S. as well. We have a limited because we have been producing though lower volumes. So we have a limited number of [indiscernible] customers in the U.S. where we have performed a prelaunch type where we collect customer feedback and try to improve products while we ramp up production. So that is the reason why we haven't seen a product take up, but the interest is very, very high, and I know we have very frustrating separate U.S. really want to sell this product because both clinics and the deals really like the product. It has a great clinical results, especially on the DCB side. And it's a very good product also, but I'm really looking forward to next year when we can see the real impact of this product. Hope that answers your question.

Yes, absolutely. And just regarding the production capacity because if I'm not mistaken, now all products are approved in Brazil. And obviously, Brazil is a huge market for abdominal transplantation. And I'm guessing that the kidney assist transport is going to be an important product on that market. But do you believe that there will be sufficient production capacity to serve both the U.S. market and the Brazilian market from 2023? And are we to expect any meaningful revenue contribution from Brazil in 2023?

To answer the first question, we will not launch a clinical transport in Brazil in June 2022. Do you focus on Europe and the U.S. mainly. -- there might also be a [indiscernible] Australia for it. But regarding Brazil, yes, we'll focus on that, as we say, the first growth market outside Europe and the U.S. because of the level of the situation. I think that we will start to see meaningful revenue in the beginning of 2023 from Brazil. And that we gradually ramp up year-on-year.

Great. And last question on my end. Is there any updates regarding expert approval in China?

No, I don't have any updates right now on the express approval out I need to come back to you on the next call. The only thing I know is looking good, but I don't know I heard that before. So I don't know exactly where we are in the process, but I figure out during the next quarter.

Our next question comes from the line of Dylan van Haaften.

Congrats on the quarter and my condolences as well. And perhaps staying on that topic of bags, very large shoes, maybe as your first question to you, Christoffer. This is taking on the CEO role is something that is in a more permanent fashion. Is that something that's on the cards?

To answer that, that's obviously the Board's decision. I mean, their main job is to hire and fire the CEO. So something [indiscernible]. But yes, of course, it's in the cards, so to say, but it's their sole decision to take and to mine to have any [indiscernible].

Understood. Understood. And maybe then to move on to one of the other things on the XES places this year. I think you've done very, very well. Are these add-ons, new installs, replacements or new centers? Could you qualify that a little bit?

Nordstrom, do you want to take this question?

Yes. Sure. So 3 new expense machines in the quarter. One was sold, 2 was placed 2 very exciting machines in the U.S. The first one is Oklahoma clinic, as we wrote in the report, that with support from [ HeliCinique ], who is the -- one of the -- as you know, one of the hospitals with the absolutely great EDLP programs in the U.S., they will support and share the knowledge so that they can build a regional hub in Oklahoma. So that is, of course, very, very promising, and they have a great ambition. But the second one is [indiscernible] Hospital, Massachusetts, who is also a very, very prominent hospital who will [indiscernible] their EVLP program. They took a hit on Covid and they have also now great ambition, but we also have that seems very, very promising. So the third one is the Italian one [indiscernible] smaller volume center, but with our relations and support also from Avino, we believe that can also be very interesting in the future.

Excellent. Super exciting. And maybe then a question on -- and I'm not sure if you guys can answer that, but just obviously, everybody is waiting for the sort of the approval of the IDE plan. But could you perhaps remind everybody on the plan centers and enrollment targets and potential timings we could think about once the IDE approval comes in.

For the heart box in the U.S.

Sorry, yes, for the heart box.

Sorry, yes, for the heart box. Yes, yes. I mean, yes, we don't try to focus on a few high-impact centers who can enroll at a fast pace in this trial. So we all pursue that we get there to get started. We believe we can start more or less on the right away because we have geared up with the right organization behind it. It's always hard to estimate the infusion rate study. But given that clinics, we have a board from the study, we believe it can be comparably quite quick [indiscernible] we have had in the U.S. or Europe...

Understood. And then maybe just a final question from my side. Just on [indiscernible], I felt there is definitely sort of a sense of improvement there sequentially. Could you tell us a little bit about if you have changed anything in your initial strategy from when you've acquired the company? And what you're kind of seeing in the marketplace and how you guys are sort of matching with the [indiscernible] team over the U.S. right now?

Yes. That's a great question. I mean, to start, we see huge changes for a service model in the U.S. for many recalls, [indiscernible] is that the transplant team on to increase their capacity and do more transplants, and they see that, for example, retrial of organs is something they can outsource that to do more tractors because they all wanting to [indiscernible]. We did change lately since, let's say, only a month or 2 ago, I had many discussions with starts that you have one about the integration. And I mean, from the beginning, we thought that we would give it 3 years to build up the service model alone. Now we see that we can reap the benefits of an integration of faster -- so that's what we decided to do. So we will initiate that work in here during November, and then we will know integration takes longer than a month to do, but it will probably take a year to fully reap the benefits. But we do see great results from the kind of start of integration we have done already to the [indiscernible] from [indiscernible] August on a few issues like logistics set could be more helpful. So we do see that we can get more sales revenues and also some, let's say, cost revenues and combined product. So this model integration the pace on the integration. So that's where we are right now that we will initiate that work here mid-November.

Our next question comes from the line of Peter Östling from Pareto Securities AS.

And of course, I provide my condolences as well for Doug's shocking departure. A couple of questions, start off with -- you said that you -- with this placing of the one expressed machine in Oklahoma, you are aiming to expand this hub-like model in the U.S. And I was just wondering how lung bioengineering would react to that...

I mean I would [indiscernible]. I mean I would say as Xvivo lung by engineering. I mean, we shared the same vision that nobody should die waiting for a new organ. So it's in their interest that vision will be fulfilled to [indiscernible] . They also have ambitions to start and establish more hubs as well looking further west in the U.S. So I don't think the experience that there is any concerns from their side.

Well, maybe have you discussed expanding the hub system together?

Yes. Christoffer Rosenberg. Yes, it's something we discussed with them on a, let's say, ongoing basis. I think both we and Xvivo and everybody in [indiscernible] engineering realize that it is not going to be one player pulling this up. It's a huge market we have in front of us. It's very big to fulfill times 10 of today in terms of number of transplants. There is a huge task. So I think we all realize that there will need to be more players, and we need to do this together if we are to succeed.

Okay. And keeping on the hub topic but moving to another part of the world. Can you give us a brief update about the situation in the U.K.

If you take Europe in general, we can see the same trend as in the U.S. that interest for hub models is increasing. And we are seeing that more and more hubs are to be set up in Europe. We are -- in the U.K., our -- the centers that will lead the hub there are still in negotiation with NHS. But right now, they have come back to us and said, yes, we want to -- we might want to stop any way because we can't await -- so we are still in that we are still in, let's say, in a mode that we want to maybe go ahead anyway. So that's where we say in the U.K. So the interest is really, really high. There are unfortunately some [indiscernible] take need to be [indiscernible] -- but the clinics in the U.K. want to start now.

Yes. And do you know what might be the concerns from the NHS -- because I -- as I remember, NICE has put out some positive recommendations regarding the use of [indiscernible] in the U.K.

Yes, that's correct. I haven't seen exactly what they have said. From what I understood is more of a [indiscernible] issue right now, which take longer time than the clinics on [indiscernible].

Okay. Okay. Moving over to the Avino acquisition. At the time of the acquisition, you were going to issue some shares at a significantly higher value than where the shares trade today, is the number of shares fixed? Is that the swing factor for maximum? Or will you release more shares now when the share price has declined quite significantly from the 222 that was mentioned in the press release.

No. Thank you, Peter. So a good question. No, we have press released a number of shares, and that can't change, so to say. It's based on the 10 days we best before the signing of the deal.

Okay. The signing of the deal that was done in April then Okay.

So August…

Yes, August, sorry. Okay. Sorry. So the price of that portion is more or less fixed.

Yes. You will see that in the press release.

Okay. Okay. And then just finally on -- back on the service model in the U.S. Have you seen any effect on sales related to the expansion of this national OCS program that TransMedics is pursuing.

We have heard about the program. We have, let's say, to date, not seeing an effect of it, but we know they are quite [indiscernible] on the U.S. market right now.

Okay. But you haven't seen any effects on your service model? Because I guess when you see how they want to pursue it's a similar kind of model that they want to integrate the entire chain from the owner to the recipient.

Yes, that is true. I mean they -- but we haven't seen any effect on our sales, so to say, from that model. But all we are aware of what they're doing and -- there are obviously, since the last capital was quite aggressive on the American market. But we don't see a direct effect right now. And to be truly honest, it's a very big -- we go slightly up to slightly different slightly different customers with very different models, so to say, even though on the first look, it looks very similar. But the start offering is more of [indiscernible] service while the TransMedics model is more they go after organs that, let's say, became would never -- will not go for. I think where we would see, for example, if we have a perfusion hub and the [indiscernible] model to get there, that then our 2 models would be more in competition. But it's a star-based model, it's quite wide competition from TransMedics today. It might increase in the future, but that's what we see today. While definitely, we will go after the same type of [indiscernible]perfusion model in half, then there might be more of the competition.

Yes. And as you have alluded to, that you want to integrate the [indiscernible] model more? And then it would be more similar to the NOP – transparent.

Yes.

Okay. Just can I just squeeze a short one, finally, when you received the breakthrough medical device designation for the Liver Assist -- did you get any kind of feedback from the FDA regarding the 2 liver machines that are already approved in the U.S., the organic and the OCS Liver. And how... And how your liver assist would compare to those machines?

To start with, it's a slightly different approach for the 2 ones approved today are for more perfusion business, while we are perceiving [indiscernible] model for us. This is slightly different. But the good news is that when there is something approved by the FDA, it does help to be, let's say, number 2 and number 3. We've seen that very clear with lines where we were number 1 and have to take the road further by us, but that's all the tasks than being number 2 and 3. So we think that the 2 prior approvals will be of great benefit...

Well, I acknowledge that you use cold and then they use warm, but I believe that the aim is still to expand the number of available organs. So that's why I asked the question.

Yes. Yes. Yes. I mean definitely, that's the [indiscernible] to that as well as improve working quality and [indiscernible] survival is other [indiscernible] let's say, all of our models. That's why we hear…

And we currently have no more questions registered, I hand back to our speakers.

Thank you so much. And the talk is actually coming very close to [indiscernible]. This calls over. Thank you so much for listening in to this quarterly earnings call [indiscernible] -- thank you very much for all good questions. And I hope to see you in January for the Q4 earnings call. Thank you so much.

Thank you.

This now concludes our presentation. Thank you all for attending. You may now disconnect.