ContextVision AB

OSE:CONTX

Earnings Call Transcript 2021-Q3

[Fredrik Palm, Chief Executive Officer]

Welcome to ContextVision's company update for the third quarter, including additional important events up until today. The highlights from the quarter are: we received very positive results from studies with INIFY Prostate; we now plan to expand the scope within Digital Pathology; we reached all-time high Q3 sales within Medical Imagings; and our financials remain solid. Let me start with an update on Digital Pathology and the decision support tool INIFY. Very positive results from studies in Europe and United States has been presented at 2 different congresses. Results were presented at the European Congress of Pathology and it shows that INIFY Prostate is highly accurate and robust across different sites. The multicenter study is performed with 4 different laboratories located in Sweden, Italy, Spain and France. The study in United States is performed in Ohio State University in Columbus and Tufts Medical Center in Boston. And it was just presented at the Pathology Vision Congress in Las Vegas. Results show that INIFY finds 100% of all cancer areas, including small ones, this with a specificity of 96% to 98%, which means that the predictions are highly correct they contain cancer. Smaller cancer areas are of high importance since signing out benign cases can make the pathologists anxious about the possibility that something might have been missed. Lastly, encouraging results from a research project in Sweden within colorectal cancer was presented as well at the same Congress. It indicated that the pathologists could make the assessment significantly faster with maintained diagnostic accuracy when using our prototype. Promising results in studies with INIFY Prostate bring me over to our plan to build our first modern pathology lab. Five years of investment in technology and application knowledge made this path clear to us. An internal research project to investigate this path has been ongoing for quite some time and the findings and conclusions in the project led to a Board decision to proceed. We intend to expand the business within pathology and build our first modern pathology lab from scratch. It shall be built with fully integrated digital process control from specimen delivery to diagnostic report delivered back to the referring physician. Full control and standardized processes for specimen preparation and scanning will optimize the perquisites to utilize all the horsepowers in our AI technology to support the pathologists in their diagnostic task. The lab service will be focused on prostate cancer as a start, and it will be built to be scalable in both volume, sites and additional cancer types. First steps are taken, an experienced laboratory manager has been recruited and there are plans to grow the team with medical professionals, including pathologists as the laboratory are being built up. We have also initiated negotiations with lab premises in Stockholm in close proximity to world-class medical research and health care. We will now create a subsidiary for this where we plan for the intended lab operations. Medical Imaging. We reached SEK 26 million in sales in the third quarter, an increase -- an 18% increase compared to Q3 2020 and a 7% increase in comparison with previous quarter. The sales level we maintain in these pandemic times is a clear proof of how important we are for our customers and the value we create together for image-based patient diagnostics. Looking at sales per region, Asia is flat, Europe decreased, and we had record sales in the United States. But since we moved several customers to be booked in Asia instead of Europe since the beginning of the year, we need to make an adjustment to make a correct quarter-on-quarter comparison. So after adjusting this to make it comparable with Q3 last year, the situation is that Asia decreases, we had a slight increase in Europe and the United States is where we reached extremely strong sales this quarter, thanks to some exceptional orders. But variations between the quarter is normal for us. We foresee sales growth in the United States compared to historical numbers, but we expect it to be more evenly distributed over the year going forward. We saw a significant growth into the ultrasound in the quarter, while other product lines were weaker than corresponding quarter last year. But this, we consider it to be normal quarterly variations. The share of sales per region was shifted this quarter because of the high sales in the United States. Asia remain to be our largest region, but the U.S. took a larger share of total sales than Europe in this particular quarter. Short financials. Sales has already been covered. EBITDA ended at SEK 5.7 million. Our operating result was positive and ended at SEK 2.9 million, which corresponds to an operating margin of 11.2%. Strong sales and maintained cost level within the Medical Imaging business gave a very strong margin in this quarter. We saw an increased cost -- increasing cost within our pathology business, mainly related to clinical studies and increasing investment in resources for product development and the laboratory project. Cash flow was negative with SEK 2.7 million, and the cash position at the end of the quarter was SEK 48.1 million. In summary, a very eventful period filled with positives. Yet another record quarter in sales, and our financials and cash position remains solid. Very positive response and results in our ongoing studies in Europe and United States injects confidence and trust in our development of decision support tools within digital pathology. We expand our efforts within pathology and now aiming to build an ultramodern pathology lab from scratch, a proof of our relentless dedication to push the digitalization within pathology and create a true paradigm shift for the best of both patients and a medical profession. More financial details can be read in our report available on our website. I look forward to sharing more information as we go forward. Thank you for listening.