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

Welcome to XVIVO Q1 Report for 2025. [Operator Instructions] Now I will hand the conference over to CEO, Christoffer Rosenblad; and CFO, Kristoffer Nordstrom. Please go ahead.

Good morning and good afternoon, and welcome to XVIVO's earnings call for the first quarter of 2025. As stated earlier, the presenters today are me, Christoffer Rosenblad, CEO for XVIVO; and Kristoffer Nordstrom, CFO. And with that, we can go over to the second slide, the Q1 Financial-at a glance. And I'm proud and happy to report that Q1 shows improvement on top line as well as EBITDA compared to the same quarter last year. Q1 shows again that XVIVO has a scalable business model with improving margins to scale, even though we have continued to invest heavily into the organization for future growth. The quarter was very strong from a North American regulatory perspective with many milestones passed. For example, the DELIVER IDE was approved, and we can now start our trial in the United States. The heart CAP was approved and the heart trial clinics now have access to the life-changing heart technology in the U.S. for a limited amount of patients. And lastly, Health Canada approved our liver and kidney technology, which opened up that market for our Abdominal portfolio. If you look at the slide, sales came in at SEK 219 million. The gross margin are continuing to show strength, and we have the scalable production setup. We plan to improve the Abdominal gross margin to 70% at the latest in 2027 or earlier when we reach economies of scale in production. The EBITDA shows an improvement to 21% and Christopher Nordstrom, our CFO, will later get into the details on sales, gross margin and EBITDA. The growth showed a mixed picture during the quarter. In thorax, we see the highest ever interest to start an EVLP program, but sales growth came in lower than we expected. Of course, the lack of heart sale, both in the U.S. trial and from the European, hampered the growth. The good heart news is that besides that the CAP is now approved in the U.S., we also see that heart in Australia is growing very fast with the Australian growth of 60% in Q1. The penetration last year was approximately 30% for Australia heart, and we saw a slight increase during Q1. The high interest and the Australian experience once again show that the heart technology has the potential to change the paradigm of heart transplantation, and we get more and more customer testimony that, that is the case. The Abdominal sales showed strength during the quarter. In the U.S., KAT disposables grew 100%, albeit from low levels. And in Europe, both liver and kidney showed strong growth based on excellent clinical and hospital economic data. We are not pleased with the progress in our U.S. Service business. We have initiated a strategic review of our Service efforts that will be finished in June this year. At the first glance, the Italian model with the perfusionist works very well, and we will spearhead a perfusionist model initiative in the U.S. already in Q2 this year. We acknowledge that the Service business is crucial for the heart launch. And when the strategic review is finished, we will come back with a plan forward for the U.S. Services business. Lastly and most important to mention is that the projects are progressing according to plan. The heart project is still on time and budget, albeit we didn't expect a long review from the EMA and the Swedish Medical Agency due to high workload at the 2 European agencies. The production capacity project, where we invest to scale up volumes 10x up today volumes for disposables are running in line with communicated time lines. The full-scale production of disposables for heart, liver and kidney will be extremely important to capture the future growth potential for all 3 product groups. And with that, we can go to Slide 3, which is the highlights of Q1. The picture in front of us remind us all why we're here, and that is to make sure that no one dies waiting for an organ. Alex, on this picture, is one of the 400 patients that got the opportunity to a heart transplant, thanks to our innovative heart technology. We start with regulatory highlights, so we can quickly go, actually, to Slide 5 and progress on the U.S. heart PRESERVE trial. We are pleased that the continuous access protocol now is approved and that we can give access to the heart technology to the limited number of patients in the trial sites. Besides that, the continuous access protocol will strengthen the clinical file with more patient data in the U.S. The heart technology so far has surprised us positively every time it has been used and more data will be key to build a solid clinical file. And again, I want to remind us all that the 13-month enrollment was a record time for a clinical trial, 5 months ahead of schedule. And it show the enthusiasm we've seen in Australia and Europe has also been seen in the United States. With that, we can go over to Slide 6 and our liver trial, the DELIVER trial. The IDE or Investigational Device Exemption was approved during the quarter for liver. Key takeaways are; one, the liver technology is the market leader in Europe and more than 20 clinical papers just during the last 12 months showed superiority in graft survival for both short and long term, hospital economics where the Liver Assist saves more than EUR 25,000 per transplants due to lower cost of aftercare. And lastly, by using the Liver Assist, surgical teams now can not only see better patient survival and hospital economics, but also improved work-life balance with morning surgery. The liver growth in Europe is partly driven by the 2024 Cochrane review and the 1,200-patient real-world data. The Cochrane review supports the implementation of HOPE with Liver Assist as a routine practice for liver transplantation. Two, with the IDE approved, we can now start the clinical trial in the U.S. that will form the basis for our PMA application with the FDA. The trial will enroll 215 patients at a maximum of 20 clinics. The inclusion criteria for the trial is expenditure criteria livers, i.e. very similar to the heart trial we just concluded in terms of patient inclusion. The work with CMS for site reimbursement and the hospital for both ethical approval and site contract is underway. We know from experience that this work takes some time and the plan for first patient in is during Q3 this year. In conclusion, we are very excited that DELIVER technology has changed the life for many patients in Europe, now can be accessible for American transplant clinics under the trial. And with that, we can go over to the last regulatory highlight, and it's on Slide 7, which is the regulatory highlight from Canada. During the quarter, we got MDSAP approval and sequentially Health Canada approval for our liver and kidney products. And we have hired our first employee to facilitate our launch there in Canada. We have a full Abdominal team in the U.S. that will support the launch of Kidney Assist Transport and Liver Assist. Canada is an interesting market due to the similar geography to Australia in terms of large distances between hospital. Canada is also interesting from a U.S. perspective where surgeons very often cooperate over the Canadian border, which will be helpful also for the later U.S. launch. So we know that learnings in Canada can be deployed from a surgeon-to-surgeon basis into the U.S. as well. Lastly, the heart launch in Canada will depend on that we first get a CE-mark. And based on the CE-mark, Health Canada will make their own judgment based on the file and the CE-mark. So we have to wait for heart in Canada. But we are very pleased that we now can start working with the Abdominal products in Canada where we know there has been an ask for getting our products approved. And with that, we go to Slide 8, which is the overview of where we have regulatory status. And the status is that we are -- yet are working for approvals for heart in all core markets and liver in the U.S. With the recent good news in Canada, it will be considered core market as of now, but this slide hasn't yet been updated to reflect that. And with that, we can go to Slide 9, which is the time line and the progress of regulatory processes. We see a constant progress as I think Q1 is a testament to that there is progress in each process, but the key message is the same as last time we met. So I would partly repeat what I said in January 2025. The heart trial is, as you know, fully included in record time. Next milestone is the 12-month patient follow-up. In parallel, we will prepare the technical and pre-clinical file for submission as well as building the clinical file larger with the help of CAP data, our continuous access protocol data. After the 12-month follow-up time and some time for database lock, we can start preparing the clinical file for submission as well. As mentioned before, in Europe, we have handed in our technical documentation for review according to our time plan. In dialogue with our notified body, we understood that the heart box is already approved. This enabled us to talk to clinics about the heart box. The insecurity we still face is how fast EMA, which is the European Medical Agency, and the Swedish MPA can handle their review time. They are under a lot of stress due to MDR. So we have not yet full insight into their timelines today. However, we are ready to launch when the product is approved. So the launch plan is ready, staff is recruited and interest from clinics in Europe is very, very high for the heart product. As I stated earlier on this call, in Australia and New Zealand, we have seen high usage of the product. The regulatory approval will depend on the CE-mark in Europe, and the same will apply for Canada. We have initiated DCD data collection in the United States as part of the trial in Europe, as part of a 40-patient trial. And we will initiate the same type of data application and trial in Australia as well to get DCD data in Australia to have full usage of the heart box once approved. Lastly, DELIVER, we have gone over that one, but we have been granted breakthrough device designation by the FDA. And with an approved IDE, we are working hard to get the trial started in Q3 this year. So with that, we can go to the next slide, which is the ISHLT 2025 and the expected highlights, which the ISHLT will be next week in Boston. It's a key event for lung and heart transplant surgeons during the year. We will have 5 days of meetings and excellent presentation of new data. The most important speech during conference we deem will be the 1-year follow-up of the EU trial data. Last year, Professor Rega presented a 76% risk reduction of severe PGD, which is the leading cause of early rate mortality after heart transplant. This year, he will present how well the patients are doing after 1 year. So we are all eagerly looking forward to that presentation. We are also looking forward to the NOVEL Trial presentation by Dr. Sanchez and to our 2 industry symposia. Last year, they were packed to the brink of the room and people had to stand up lining the walls. The general view was also that the symposia we led had a higher scientific level than most of the ordinary program, which is a great testament to our marketing team and clinical team who prepared those 2 symposia. We aim to repeat that 2024 success also in 2025 in Boston. So you will hear more of this when we meet next time in July. And with that, we can go over to the business operation on Slide 11, and we can go straight into Slide 12, where we start with the surrounding world and the key message is that we will continue to invest to make sure that no one dies waiting for an organ. If we start with trade policies, we see a constantly changing environment and we have plans for each scenario. Today, we have production in the United States for the XPS and part of the lung kit while we produce heart, liver and kidney products as well as disposable and sterile products in Europe. We know, for example, for PERFADEX that account for somewhere between 0.2% and 0.3% of the total cost for lung transplant in the U.S. that a price increase will not affect the number of heart transplants in the U.S. that it will be important to keep patient safety always first. And it's better for the patient if we have a stable production of sterile product with good goods that make sure that they will survive lung transplants than if the price is 10% higher than it is supposed to be. For machines that are not sterile, we aim to set up dual production. In other words, we have -- we will, in the future, have one production site in the United States and one in Europe. In terms of investment into the organization, we will continue to invest heavily into the U.S. organization, and we'll soon open a new R&D and academy in Denver, Colorado. In parallel, we continue to invest in commercial, R&D and regulatory capabilities in the United States. If we turn to the next slide, we go in more to segment updates. And Nordstrom will give you more of the details, and I will give more an overview of where we are and what actions we will take. As stated earlier, heart is performing very well where we're allowed to sell the product, which now is Australia. We are preparing for new launch. For lungs, we have seen a very good last year, a softer Q1 with an extremely high interest to start an EVLP program. The new commercial force we put in place in Q4 2023 have now been up and running for approximately a year, and the key learnings are that: one, we will invest in more clinical reps closer to customer; 2, many customers need on-site support with perfusionist. And hence, we will trial the Italian model, which has been working very well in Italy with the on-site perfusion; and 3, we know that hub models works. We have to encourage more clinics in the U.S. to do what they do in Paris, which is that one clinic or one OPO evaluate lungs for more clinics. The good example we see is that we see a lot higher usage of EVLP lungs around the 2 lung bioengineering hubs in the United States, which is a testament that hub models works. I also want to highlight that during the quarter, 2 great publications were released around EVLP and lungs. One showing that lungs and EVLP show good patient survival for high-risk patients and high-risk recipients. Also, XVIVO came out significantly better than competing product during that trial. The second publication is very encouraging, showing that an EVLP program is economically beneficial for clinics if they perform more than 3 EVLP lung transplants per year. If we go into the Abdominal business, it's showing good progress in Europe. Liver is a growth driver, but interest for kidney is picking up. Key for the U.S. market is to run the liver trial and to develop the kidney product, including acquired clinical data to have true success for our Abdominal portfolio. So now we are hitting clinical doors in -- or hospital doors in the U.S., while the majority of kidney perfusions are done in the OPOs. But that will take another couple of 4 to 6 quarters before we have the right product and the right clinical data to really see good performance on KAT in the U.S. And we can go to the Slide 14, which is the last before we go -- before our CFO takes over, and we look at the U.S. organ recovery service. In short, it can be said, there is a large need for organ recovery services in the United States, especially if they paired with perfusion services. So the combined service of an organ recovery service and perfusion is also strategically important for the heart launch in the United States. The other thing that we can conclude is that we are not pleased with the current performance and are currently conducting a full strategic review of our U.S. Services business. We will come back when that one is finished in June. We are continuing to invest into FlowHawk. So there are a few clinics in the U.S., but where the FlowHawk software is, it's very well appreciated and adds value to the clinics. So we will continue to invest into that integration. And with that, I say thank you for this part of the presentation, and we can turn over to Slide 15. And actually you will take over, Kristoffer, from here.

I will, Christoffer. Thank you. Yes. So let's move on to the financial section here and starting with the net sales and key ratios for the quarter. This was a quarter where sales performance varied a bit amongst our 3 business areas, and I will shed some light on each area later on. Overall, the underlying trends for our current businesses are positive for both Thoracic and Abdominal, as we see -- as we increase our customer base and we continue to see a growing demand for technologies. On the Services side, as Christoffer mentioned, we have work to do in order to accelerate these businesses. Worth highlighting is that this was a quarter where we lacked some revenue that we had last year. So, for example, revenue from trials in the U.S. And as a comparison, last year we had SEK 7 million in revenue from our heart trial. We expect revenue from the CAP trial to start gradually here in Q1 already, followed by additional revenue from our liver trial in Q3. Let's go to the numbers. Net sales were SEK 218 million, and organic growth was 14%. If we look at the rolling 12 months, as we prefer to do, the organic growth was 33%. Overall, gross margin was in line with last year, at 73%. Adjusted EBIT increased 50%. That's a lot in SEK and reached a margin of 14%, strengthened from 11% last year. And finally, EBITDA was 21%, an improvement over the 20% last year. We did not see any major effects on our P&L from the weakened U.S. dollar in Q1. As you know, we have a high portion of our business in the U.S. And I will provide some comment on this topic in a few slides when we dig down a little bit on the EBITDA. But moving over to the Thoracic business area, total sales in Q1 amounted to SEK 142 million, which is an organic growth of 16%. The rolling 12 months organic growth is 39%. After a strong sales quarter in Q4, from a pure sales number perspective, this quarter was weaker. But a, EVLP is not always a quarterly stable business. We need to live with that as we grow bigger, but -- and longer trends provide better understanding of the trajectory we're on. And b, I will provide some useful insight by digging into some details here. So for lungs, sales grew 18% in local currencies. That's softer growth than the previous quarters. However, we truly want to emphasize that the underlying health of our EVLP business is stronger than these numbers suggest. Last year's comparative numbers were, to some extent, inflated by some research sales. And this Q1, we could not onboard our new XPS customers until the very last weeks of the quarter, which led to some reduced growth to our own forecasts. But, however, the quarter finished strongly, and 4 XPS devices were sold in the last weeks, right? So 2 in the U.S. and 2 in Europe, to France and to U.K. by the way. And the XPS interest remains very high and we truly believe that 2025, it can really be a record year for us in terms of XPS programs started. As we mentioned in the report, we will still face some limitations on the XPS production capacity in the next 2 quarters, and we forecast that we can be able to produce around 3 XPS machines per quarter for the year. But still, I mean, if we manage to do that and sell those, it will be a record year. Gross margin, I mean, stable 82%, 1 percentage unit better than last year. When it comes to heart, it's interesting and exciting. So sales were SEK 8 million this quarter versus SEK 12 million last year. However, we had around SEK 7 million worth of U.S. heart trial last year. So it means that set aside the U.S. heart trial, we grow quite nicely here. What sticks out and what we're extremely proud of is the development we see in Australia. So this quarter, they brought in SEK 6 million of revenue with a growth of 61%, as Christoffer mentioned. And it really demonstrates the huge enthusiasm that they have for our technology in that region. So to conclude Thoracic, I mean heart shows some improved momentum in Australia and also Europe, some compassionate use cases there as well, and we are waiting the CE-mark, as you know. Lung had a little bit of a softer quarter, but the underlying health is good, and we will remain being the partner of choice based on the order books that we see for the XPS devices globally for all the customers who want to set up an EVLP program in 2025. Abdominal. Net sales Q1 came in at SEK 57 million, and the organic growth was 28%, very much in line with the rolling 12 growth that we see on 31%. So I would say it's, yes, business as usual quarter, but in a positive way because we continue to grow in Europe on our main market. Liver stood for 75% of Abdominal sales and kidney 25%. Liver sales grew 25% in local currencies and kidney sales grew 51%. So here, we start to see now some growth on both in the U.S. but also in Europe on the Kidney Assist Transport, although still from small numbers, we know that, but we're getting there. As an example, in the U.S., the disposable sales of Kidney Assist Transport grew 180%, double the sales there. Gross margin disposables decreased from 68% last year to 63%. I think we need to live with some fluctuations here on Abdominal in the next 1, 2 years until we get some economics of scale. But the primarily reason this year was a higher portion of distribution sales and some higher research sales from last year with higher margins. But a solid quarter for Abdominal in my opinion. Last business area, moving over to Services. Sales amounted to SEK 20 million, organically. Sales from Organ Recovery decreased by 19% due to a lower activity volume, while the acquisition of FlowHawk contributed positively with an acquired growth of 13%. So all in all, a negative 6% decrease versus last year. On a positive note, we signed a new recovery service agreements with 3 clinics in Q1, and we look forward to start serving these clinics here in Q2. Gross margin increased 38% versus 36%. This margin is expected to strengthen gradually as the recovery volumes increased, but most notably when sales of FlowHawk increased, which is a soft product with margins similar to our lung portfolio actually, if not even better. In Q1, we had integration costs here. We continue to build this offering right and integrate. So we had integration costs of SEK 3 million as we continue to further build and integrate FlowHawk into the service offering. In order to further develop and define our service offering, a strategic review, as Christoffer mentioned, will take place here in the next few months. A project we have also started to work on is to look at how FlowHawk could be connected also with our various perfusion devices over time here in the future. Two more slides before I'll hand over to Christoffer again. EBITDA profitability. EBITDA came in at 21% in Q1, a 1% unit better than last year. And at rolling 12 months, we're at 22%. Yes, sounded like a broken record, but we stated before, our ambition is to continue to improve EBITDA year-on-year, but we want to do that in a controlled way so we maintain a healthy relationship between sales growth and a sustainable profitability development. As I stated in my introduction here, Q1 was not negatively impacted by the weakened U.S. dollar against SEK in the P&L. Most likely, we will see a fairly large impact in our numbers during the rest of the year though. And to provide some guidance, we can look in the past, right? So if we look at last year's numbers, in terms of sales, approximately 60% of our sales were in U.S. dollars, and we have most of our COGS in euros and SEK. And if the USD against the SEK in 2024 was 10.5 roughly, a decrease to 9.5, as we see now in 2024, would have led to a decrease in SEK net sales last year of SEK 45 million. And that, in turn, would result in a decrease of EBITDA of approximately SEK 20 million or 1% unit on the EBITDA margin last year. So I hope that provides some guidance here on what we can expect for the future. Final slide, cash flow and financial position. Q1 operating cash flow was minus SEK 15 million. No concerns there on my side, primarily due to a payment of our annual employee bonuses for 2024. If we wouldn't have that, we would have been positive on the operating cash flow. We continue to invest. Investments amounted to SEK 59 million. As always, that's primarily spent on the U.S. clinical trials, but also the production project BILI. We ended the year with a solid cash position of SEK 316 million after exchange rate effects on cash of SEK 22 million. And finally, as we announced in the last call, we have entered into a revolving credit facility of EUR 20 million here in January, which currently remains unutilized. And with that, I will give the word over to you again, Christoffer, for the outlook. Thank you.

Thank you so much. Yes, we will look into, as usual, first, what to expect during the year. And I think the first thing is that we see a very high interest on starting an XVIVO EVLP program, and we will invest to capture that one, both in terms of head count and possible perfusionist services. We have stated that we have a scarcity of XPS machines right now, and we do see that we have more XPS machine in the second half of the year than the first. So we will come back when we see that production picking up. For heart, we will continue to prepare for the launch in Europe and Australia. We will continue to build the U.S. regulatory and clinical file for heart. For liver, the excellent clinical data published, we will invest in commercial capabilities in Europe to capture the growth opportunity we see here. And we aim to start our clinical PMA trial during Q3 this year. So those are the milestones from a regulatory viewpoint. Lastly, I also want to stress that we see great investment potential during 2025 with a return on investment of approximately 1 year, and we will invest into those opportunities. Key commercial investments are the EU heart launch, strengthening the kidney U.S. launch, strengthening the U.S. lung business as well as the Abdominal launch in Canada. We will continue to invest in supply chain and quality department, regulatory department to capture the increasing customer demand for our products. And I also want to stress that we are building up our inventory levels. We have taken a revolver credit to do that. So we will see increasing inventory level during this year. That is a planned action we do for making sure that we can always deliver products to the customers. And if we look into a little bit longer term outlook, which is the important one and the reason why we are here, we see that the demand for transplant is still 10x higher than the supply according to WHO. The sales value of machine perfusion is approximately 10x versus static cold perfusion, which is typically a beer cooler type of box with ice and the solution. Machine perfusion and our service model have proven to increase the number of organs to be used for transplantation, especially in the fast-growing DCD organ pool. The main growth drivers are superior clinical results from machine perfusion and the fact that service model will reduce complexity and time for the transplant clinic. Hence, machine perfusion and service model on normal and DCD grafts will continue to drive growth in the near future and the long future. XVIVO has a unique and proven product platform to one day accomplish that no one will die waiting for an organ. And with that, I turn to the next page, 24. Thank you for listening today. And with that, we open up the lines for questions.

[Operator Instructions] The next question comes from Ulrik Trattner from Carnegie.

And a few questions from my end. Starting off with this Canada opportunity that have emerged and you already have stated have long on the market in Canada, and now expanding that into the KAT product as well as for the liver product. And just if you can give us kind of a scope of how many, sort of, addressable organs there are and how the dynamic looks like. And are you facing the same type of competition in Canada as you do in the U.S., i.e. that TransMedics is the sort of leading product provider for liver and more legacy products for kidney? As well as the follow-up question to that is, do they experience the same type of limitation on the KAT product in Canada in terms of the dual oxygenation ducts to the arteries as well as being larger kidneys that needs to be tweaked in terms of the consumable? That would be my first question.

Okay, thank you, Ulrik. To start off with your first part of the question, Canada is a size in terms of market opportunity compared to a big European market like France, et cetera. So it's definitely a core market for us. Canada is also -- could also act as a bridge into United States due to close relationship between surgeons between Canada and the U.S. across the border. So that's why it's important. The market dynamics is more similar to Europe than the United States in terms of competition and need. In terms of the kidney product, we have to see how -- some of the needs are similar like the dual or triple artery patch on, that is -- will be the same in the U.S. and Canada. So -- but the system with a clinician going out recovering is more similar to Europe than the United States where the majority is pumped in opioids. So it will be a mix of U.S. and Canada. We hope we can learn a lot from Canada, both in terms of meeting key opinion leaders, learning from them, learning more, getting -- acquiring more clinical data that will be not totally applicable to the U.S., but still reasonably applicable. What was the second part of your question? I forgot that when I answered the first part.

I think you answered most of it. It was just more on how big of the market is as well, yes, and similarities to that of the U.S. I think you answered all of it.

Okay.

And sort of follow up question on that would be what is sort of the planned ramp-up here? I did note that you mentioned that you have hired your first sort of rep into that market. How should we view the sort of step-up here throughout '25?

Sorry, your line is a bit broken. Can you try to repeat?

Yes, sure.

We have hired our first employee, Christoffer. So how do we plan to expand the organization and time line for that in Canada?

Okay. Great. Yes. We have hired our first employee. And we will -- in the beginning, we will support from the U.S. Abdominal team. And we will come back somewhere during Q4 with a ramp-up plan depending on how it's going. But it's -- geographically, it's a big market, absolutely. But in number of clinics, it's smaller, so to say. So we are -- we don't foresee having a huge sales force in Canada, if that answers the question.

And if we were to stick to the KAT product and sort of tweaking and updating of the product as well as acquiring clinical data, it sounds like, for your statement, that we should expect that to be resolved closer to into '26 rather than end of this year, which sounds like a bit of a delay from previous statement. Is that a fair assumption?

Yes, that is a fair assumption. Part of it will be solved during the year when it comes to dual patch holders insights. The larger reservoir will probably go into '26. Clinical data will be acquired gradually through this year and next year. But as we know, it takes time to gather clinical data and also publish it. So that we probably have to think more 4 to 6 quarters than anything else before we can go full head into the OPOs.

As well as you mentioned, and I'm not sure if I got this right, that you're expanding your service offering similar to that of Italy from Q2. If you could just remind me what you said and potentially clarify on how that is planned to be expanded throughout to '25?

Yes. We will trial it during Q2. We have always believed, but not been very successful so far in the Italian model in the U.S. So we will now spearhead project in one to 3 locations depending on how long time it takes to get through in the hospital administration, where we pair an EVLP service with the perfusionist. We know that the need -- I would say that probably the biggest hurdle for EVLP growth now is resources. That's my judgment. And this would be one way of reducing that hurdle and getting more EVLPs done in the United States.

And one sort of broader question relating to NRP. And we're seeing -- I guess, we're all seeing the same type of publications coming out in news that NRP is gradually gaining traction, mainly in heart and liver. But can you remind us how it fits into your product portfolio? And correct me if I'm wrong, my understanding is that it's mainly used as a complementary method to your product portfolio.

Yes. Yes, that is correct. I mean to start with, we are really -- we welcome NRP. It's an additional to the transplant world, and it adds more organs from the DCD donor pool. It's also very complementary to our product portfolio. If you look at -- it's obvious for heart, liver and kidney where the kidney and heart are transported. So you would still need to transport them after NRP. And the liver is a back to base where you do -- let's say, you pump the organ before transplantation to reoxygenate the organ. So either you do NRP or not, it doesn't change the equation, so to say, if it's not a very short transport. For lungs and EVLP, it is -- the WHS guidelines is that when you do abdominal NRP, which is the liver mainly and/or kidney, then there is no problem taking the lungs because there would be no damage done to the lungs. When you perform a TANRP, which is a thoracic abdominal NRP and you include the lung and the heart, you do it for the purpose of evaluating and recovering the heart. The risk is that you damage the lungs. So we see that EVLP is actually a tool to increase the number of lungs taken care of after TANRP, where you do -- today, you do it for the heart and you very often have to discard the lung because of the insecurity when you perfuse the lung on too high pressure. So the WHS guideline is that you should be careful using lungs from TANRP, but we believe that with EVLP, you can use those lungs as well. So that's why we view it as a great complement to both the transplant world and to our product portfolio.

A few more short questions. Heart Australia Q1 sales looks to be really strong momentum. I remember it must have been 1, 2 years ago when we had a similar situation in Australia and that followed up by a few weaker quarter where there was some inventory buildup. Is this the case now? Or is there something different?

We see higher penetration this quarter versus last year, full year. We -- it could always be quarter-by-quarter, let's say, stocking, destocking because there are a few clinics and if they have one, 2 or 3 kits on the shelf will affect our growth rate. So I think we should look -- when we look at growth, we should rather look at 12 months rolling. It's just very encouraging to see that there is a high interest. It is an increasing penetration, and we do see that we need better proof on DCD hearts, both with or without NRP. I mean you can do TANRP, which was included in our heart trial. You can do direct procurement, which we're now trialing in Europe on 40 patients in Benelux. And we will also trial in Australia soon. We are right now conducting preclinical trials on DCD hearts in Australia. So we do see to really get the usage up, we have to be able to use both DBD and DCD in Australia, Europe and United States.

And last question and it's a short one for Nordstrom. Net financials, minus SEK 41 million in Q1. What's the explanation behind this?

It's -- that's nonoperational. It's primarily the weakened U.S. dollar and the effect on not only cash, but also our other balance items.

So mainly sort of re-evaluation of receivables?

Yes. And since the biggest kind of -- well, we don't know, of course, but I think we had a big hit in Q1 because there was a big devaluation of the U.S. dollar. And if that stabilizes, I think that effect should be less on the financial items side in the next quarters. But that's -- who am I to judge.

The next question comes from Filip Wiberg from Pareto Securities.

I've got a couple of questions here on the XPS. So you have delivered 4 new XPSs now in the end of the quarter. So I was just wondering if you could give some more details around the type of customers those are, like high volume, low volume? What could you say about them?

Thank you, Filip. Very good question. We are definitely excited. There are high-volume customers. They are the ones that are showing the greatest interest of starting an EVLP program. You need to do a certain amount of lungs per year in order to sustain an EVLP program. And one of them is a very reputable top 10 customer in the United States that was included this quarter.

Good to hear. And I guess they are up and running like immediately. Or is it any delay before they are? I guess they have to ramp up utilization, but is it -- how long time does it take?

Yes, that's a great question. This is something we're working on. It takes too long time today, and we are working on shortening that time frame. So once you deliver an XPS, you then have a training and then you have a couple of cases, trial runs and then you go live. We have seen historically that from somebody sends a [ PO ] until they're up and running, it could be 6 to 9 months, but we are working actively to reduce that time to 2 to 3 months. But today, it is -- unfortunately, it takes some time. Sometimes very practical reasons that you need a training lung and you don't know when there is a discarded human training lung that you can actually perform a training on. But we are running a project to reduce this, let's say, start-up time dramatically from where it is today to where it should be in the future.

Very clear. So gradual ramp-up takes some time, but it's going to increase right away after they have done this trial on them?

Yes. So typically, they are -- once they are fully trained, fully certified, then they ramp up pretty quickly, but it takes too long time to get them fully trained until ramp up today.

And the other one on the XPS here is around the production. So I was just wondering if this is -- is there any new problem here around the production constraints on the XPS machine? Or is it -- have you had the same production capacity for long and it's just that the demand has increased now? Like how do you explain this?

Yes. It's a combination. What happened was that last year, we had a couple of obsolete products in the XPS that we needed to change. That change took longer than we expected to get the -- both get the right products in and get it approved, so we could sell the XPS again. That one is -- that work is now finalized, and we are slowly ramping up. The other thing that happened is that there is a higher interest than we expected. So those 2 in combination is not great, of course, when you have a 6 months non-delivery and then a greater interest than we've ever seen before. So it's a combination of the 2.

But it also sounds like you're talking about how much you're going to produce for the remainder of the year, but you sound highly confident that you're going to be able to sell all of those. Is that a correct assumption?

Yes, that is correct.

The next question comes from Maria Vara from Bryan Garnier & Company.

I wanted to first follow up on the previous questions on the time that it takes to train the perfusionist on using the machine, but more in relation to the heart technology. If I recall from your report, you said that all of the basically initial interest are well trained. But I was wondering how long it takes to actually get trained for heart technology. Is it similar to the lung technology? And how you foresee any other educational programs ahead of the launch in Europe?

That's actually a great question. We have seen that the heart is a lot easier. So again and again, we've seen that a clinician is -- can be up and running very fast. We're talking about 1 to 3 months for the heart technology, and they are more or less fully sufficient using the heart technology after running only 3, let's say, real cases. So there is a learning curve for heart, but it's very, very steep compared to the learning curve for lung, which is -- evaluating a lung is a little bit more complicated than just perfusing a heart, so to say. So we don't foresee the same problem, but we have to be very humble for the fact that there is a training period needed for the heart. And we know that they need to do 3 real cases before they're fully up and running. In Europe, we have 15 centers who are already up and running. So we don't foresee a great training phase here in Europe. But that is because we did -- we run the trial before.

And then I wanted to get a bit of color on DELIVER Trial. It's great news that you get the approval to start enrollment. I was wondering if you could share some details on the expected time for enrollment, considering you're going to enroll about 200 patients. If we could consider a similar rate of enrollment compared to the U.S. trial to get a sense a bit of when will that enrollment will be finalized and then potential approval more towards 2028 or a bit earlier?

Thank you. Yes, if we have similar enrollment rate as in the heart trial, it will -- since it's more patients, it will take somewhere between 24 to 26 months. And that is also what we're aiming. I would like to come back when we've seen, let's say, the few centers in to test that if we see a faster enrollment or slower. We know the interest is very high. So we hope for a little bit faster. But if we do a one-to-one comparison, it's a rather 24 months, let's say, time line we're looking to than anything else.

And in terms of sales that we could expect from the U.S. trial in DELIVER, is it going to be charged or is at least you aim to charge a similar price to the U.S. heart trial?

It will be similar, but slightly lower was the last I heard. So we're still in negotiations. We don't know the final price. It will be slightly lower, if I'm still correct, from the last correspondence with CMS.

And then maybe a last question. It's great news that you got the continued access protocol for heart. However, I was wondering if this 6-months allowance for up to 60 patients means that you will only be able to do it for the upcoming 6 months and then this continued access protocol will stop? Or does it mean that it reinitiate again, meaning that you could continue with the protocol until you get approval?

The correspondence we got from the FDA was that we -- it will be renewed based on safety data. So they will have a quicker review next time and look at the safety data to renew it until approval. That's the last thing we heard from the FDA.

The next question comes from Johan Unnerus from Redeye.

Some of them have actually been answered already. Yes, to go back to some impact on tariffs, just a clarification. It seems to be a rather modest impact on your part. You operate with high margin, especially on the consumable side, and you operate through a U.S. subsidiary and presumably the tariff will be based on a price level closer to COGS. And also historically, you have also been in a very good position to be able to review your prices and your prices are still relatively modest compared to some of the competition. Is that a fair picture?

Yes. No, that is a fair picture. So we are lower compared to competition. We have also unique products which are, in many cases, a fraction of the total cost of transplant per organ. So we believe that there will be an ability to recover the tariffs by price increases for those products. That being said, where we're running a trial and there is a CMS set reimbursement or cost recovery, we can't change the prices because it's set by the CMS. So, for example, the heart trial, we can't change prices or the future cost recovery for liver will be fixed prices. So to be clear, there we can. But that's a limited number of patients and a limited, let's say, amount. And we don't foresee that, that will be -- have a huge impact on our profitability.

And also the expense has been explained. You had some review of earlier products together with higher demand than expected, and it will take some time for you to match the demand level, which is structurally positive, of course. And what about on the lung side on the supply? There have been some glitches on that side as well. But what can we expect? When will you be fully operational? Or this is a small thing?

No. We believe that in terms of expenses, we will be hopefully fully up and running and meet the customer demand in Q4. We are certainly working very hard towards that. So we will do our utmost. Regarding the disposables, we don't foresee any shortages there. We have enough production capacity for the next 2 years. Over time, we will increase production capacity of disposables for lungs. But for the next 2 years, we believe we can't do that.

And also regarding the continuous -- well, the compassionate use or continuous protocol, you got the clearance. The first patient is expected by during this quarter. You will be able to sort of activate some of these 60 patients during the first 6-month period and then they will follow then a safety review and then another 6 months. What -- this is, of course, very important and interesting in terms of gaining clinical experience and activate -- continue to activate clinics and centers, but limited impact on sales. But what can we -- how long will it take to activate all 60? And if this is just a number even if you extend the additional 6-month period.

Yes, that is a great question. I think in the beginning, we will go very -- try to be very sharp and talk to the ones who believe that they can't live without the heart box. We have a few clinics in the U.S. who said now during the down period that they have patients dying on the waiting list because they don't have access to the heart box. And we will target those first because there is still -- this is viewed as a new clinical trial from each hospital site. So we have to renew IRB, and we have to renew the contract. So of course, they look exactly the same as the old one, but it still has to go through an IRB and clinical trial in the hospital -- clinical trial process in the hospital. So it is a bit of administrative work. So we will target a few clinics in the beginning, and then reset and see how much resources we have and/or if we should target all of them or not. That decision has not been taken yet.

And that touches on the Services side. This is, of course, under review and it's a sort of a mix where the current setup is more tailored towards heart, which will be, of course, in use also during this clinical protocol stage. And it's too early to say any specific about the Services. But of course, it's a critical operation. It's important that you have the support of this. But it's also an issue of what sort of sales resources. Should we review your Services business as more of a supporting business in this stage?

Yes. We heard from many heart transplant clinics that they say you have a fantastic product, but you need to pair it with a good organ recovery service business to capture all heart transplants in the U.S. So there is a bit of work to be done there for sure. So it is very strategically important for heart. So what we hope to do is to get the ability of -- during the continuous access protocol, to get the ability to -- for our organ recovery service to train on the heart box together with clinics. So we are fully up and running when we launch the heart. So that is part of the strategic review we are doing now together with third party to make sure that we are ready when we have approval of heart in the United States.

And what about benefiting from the Services side on the lung business? Is that more of a challenge?

It is more of a challenge. The current organ recovery service we have is not 100% tailored towards the lung business. We need more of the Italian model, which is -- we have shown great progress on liver, for example. And that model works very well. So we need to have a 2-phased approach here. First, we have to make sure that we have an organ recovery service that will be second to none when we launch heart. And secondly, we need to have a perfusionist/organ recovery service for lung. So we have -- we can build that organ recovery service until heart launch, so to say. So we don't have to start that work. And since lung is the only Thorax product we have approved in the U.S., that would be perfect to have a great service around the 2 of them. So we do see that we need to add more perfusionist to our service offering to be relevant in lung, which we do acknowledge we're not fully relevant right now. We have surgeons out there who recover hearts or lungs, and they very often recover hearts and they see those are really good lungs. So they -- if they would have a place to send those lungs that would be with the perfusionist, that would be great to -- so we use more lungs from the donor pool.

And presumably, with the dynamics on the NRP side that need may even increase.

Yes, we believe so that if we could have access to a perfusionist close to an NRP site, so we could send the lungs directly to EVLP. This is what they do in France. They have a special protocol where they actually take the lung and then they can do TANRP without damaging the lung with very good success rates. So that's something that would be very good. But then we also need to pair our service offering with an NRP service. So that would be part of our review as well.

And this will take some time to both decide and implement, of course.

True. I mean once we implement, we will act swiftly. But we first have to make sure that we do our homework.

The next question comes from Jakob Lembke from SEB.

I know we're probably running over time, but I'll shoot in a quick question. On liver, it's a bit of a better quarter than recently. And I know that -- or at least it seems like Italy, which is a key market for you in liver, in general, had sort of slower growth for liver last year. And given what you see now, do you see Italy improving and just in general, the outlook for liver in Europe for 2025?

That's a great question. Liver is one of those organs where we have all prerequisites to become gold standards over time, especially in Europe, because all the clinical data shows that it's good for the liver, it's good for the patient. It also saves money to the hospital because you have less aftercare. So -- and lastly, they can actually start to plan surgery. What you have in Italy is that perfusionist model where we support them with pumping the organ as well. So we don't put a restraint on the hospitals by having liver. So we definitely see that, that model we need to spread into the rest of Europe. We see actually growth in more countries than Italy. So we see Italy is definitely back to a higher growth rate compared to last year. But we have to look at it more again, 12-month rolling, looking forward 12 months. Quarter-by-quarter, it could be jumpy. But we do foresee a pretty good growth in liver due to the good clinical results, but also we are nearing that phase in liver where it becomes almost like a general practice to have a liver device. Now we are between 14% to 25% market penetration country-by-country in Europe. And that is typically there we go from being an investigation device to a market practice. So we do see that we have all the prerequisite for growth. Now I think it's up to that we have a large enough sales force to actually capture that growth.

That sounds very promising. And just shortly, did I interpret it correctly that you have gotten confirmation that you can get reimbursed for the cases in the liver trial?

We have no confirmation. We are in negotiation with the CMS regarding cost recovery in the U.S. trial, if that's what you referred to. We have not yet got confirmed. I think we are almost 15 minutes over time. So with that, it concludes the meeting. And I hope to meet all of you on July 11, when we'll report the Q2 results. Thank you very much and see you next time.