Photocure ASA

OSE:PHO

Earnings Call Transcript 2020-Q4

[Daniel Schneider, President & CEO]

All right. Well, good afternoon and good morning, depending on where you're calling in from around the world. This is Photocure's results for year-end and fourth quarter 2020. I'm Dan Schneider, President and CEO. And with me today is Erik Dahl, CFO.Usual disclaimers are in place for today's presentation. So let's go with a little bit of the background on Photocure and the product Hexvix/Cysview. We treated over 0.5 million bladder cancer patients worldwide. In fact, I think the number has reached 637,000 and growing rapidly. We have direct sales in both the U.S. and Europe. And otherwise, worldwide partnerships around the globe, recently announcing our China partnership with Asieris.We do about NOK 256.5 million in 2020. We're approved for use in over 30 countries. We currently have 90 employees, as we've recently built our European operations up. And as I said, we treated well over 0.5 million patients.Our strategy is pretty straightforward. Strategy steps 1 and 2 are focused on Hexvix/Cysview, ways to accelerate the brand itself, drive the breadth and depth of Hexvix and Cysview use and expand geographically and also enhancing the product itself. Stages 3 and 4 around acquisitions and transformations. These are in-license, these acquisitions, and building out the -- strengthening the portfolio in bladder cancer, is all in our purpose to deliver transformative solutions to improve the lives of bladder cancer patients across the globe.So the highlights for the fourth quarter. I'm sure most of you have read the reports. We've had a 48% growth in U.S. revenue, 66% growth adjusted for Hexvix and Cysview globally. Our European operations went live October 1 seamlessly, transitioning from Ipsen to Photocure.And we have partnership news. Cevira's first Phase III patient was dosed in Q4 of 2020, and we announced the partnership with Asieris for Chinese rights in -- for Hexvix in China. We ended the quarter with an increased cash balance to NOK 334.9 million.So let's talk a little bit about the disease itself and what we're treating and why this opportunity is so fantastic for us at Photocure. So bladder cancer is a chronically underserved segment of all the oncology. It's the sixth most common cancer in the world. There are 550,000 patients annually that are newly diagnosed, with over 200,000 deaths, of which 75% are men.It's most expensive. And I think that often shocks people. It's the highest per patient lifetime treatment cost of any cancer. And the reason is the patients once diagnosed will go through a lifetime of procedures. Its recurrence rates are also quite astoundingly high, up 61% within the first 1 year of being diagnosed and 78% reoccurrence rates within 5 years. And probably the most dramatic is the progressions.It's key to keep the patient, if you can, in a non-muscle invasive category where treatments are much less invasive. Going to muscle invasive can often lead to -- ultimately to death. And a 5-year progression from 1% to over 45% to muscle invasive. So clearly, there's a need to do a better job of treating bladder cancer patients around the globe. And we believe we have that treatment. Hexvix/Cysview for the better detection and management of non-muscle invasive bladder cancer. This is a razor-razor blade business model.On the left -- this is a drug device combination for better visual contrast so you can tell the difference between benign and malignant cancer cells. On the left is our product, Hexvix/Cysview, the razor, is preferentially accumulates in bladder cells and under blue light glows bright pink. It is a lyophilized powder that is reconstituted and instilled into the bladder an hour prior to procedure.On the right side is the capital equipment sold by Karl Storz, Wolf or Olympus around the globe. It's only sold by Karl Storz in the U.S. And down the lower right, we show the difference between a rigid scope, which is used during surgical resections, and a flexible scope used during outpatient cystoscopies.Next slide. I do apologize. I didn't say next slide in my first couple. But hopefully, you're following along. We should be on Slide 8, and this is a picture of what the dramatic difference is between the current standard of care, which is White Light, and what we believe will become the new standard of care under Blue Light.On the left side is pictorial depicting what a physician would see under White Light Cystoscopy when they put the scope inside the patient's bladder. In this scenario, they see nothing. However, if they were instilled with Cysview or Hexvix an hour prior to procedure and a Blue Light was turned on -- Blue Light equipped cystoscope was turned on, they would clearly see that there is malignant cancer cells, clearly defined margins. And the opportunity to do a perfect resection.The key benefits are very clear. There's improved detection and a more complete surgical resection. You also have a much more accurate risk classification. And the reason why that's important is because that risk classification will determine the follow-up procedures necessary for that patient. So in the case of this picture, this patient would go home believing they are cancer-free and probably wouldn't return to their physician until there was significant blood in their urine or other kind of complications.However, if this is CIS on the right -- under Blue Light, this patient would be categorized as high risk and asked to return within a week to have a surgical procedure and 3 months after that and 3 months after that, and onwards and onwards. So risk classification is extremely important in the treatment of cancer. And also, it improves patient -- better patient monitoring and the surveillance with cystoscopies. So as the patients come back for follow-ons, using Blue Light, will detect these sorts of cancers.It's been detected 21% of the recurrent patients over White Light and what's most dramatic is 35% of patients with CIS are detected with Blue Light that are not detected with White Light alone. And as you know, CIS is one of the more deadly and high-risk cancer cells.Next slide. We have the complete support of all the major global and national guidelines; AUA, EAU, SUO, NICE, AFU, German, both from a global standpoint as well as even local and regional support. So there is a strong body of evidence and strong supportive environment for the use of Blue Light Cystoscopy in the detection and management of bladder cancer.Next slide. So this slide depicts the journey of the patient. And this just shows the loop that I was talking about, why this disease is an expensive disease -- expensive cancer to treat. The patient enters into the process on the left. They generally will have blood in their urine or some other kinds of symptoms. They'll go see their general practitioner who will refer them to the urologist. The urologist at that moment will perform a cystoscopy. They'll go inside the person's bladder in the office setting and take a look and see if they see anything suspicious.They will combine those findings with the cytology, perhaps a blood test of sorts, and determine whether that patient likely has cancer. I do say that about 85% of the time, it's usually something else, but for the 15% to 20% of the time, it could be and probably is bladder cancer. If bladder cancer is suspected, they now enter into the loop. And the loop is they go into a surgical setting and have a TURBT, transurethral resection of the bladder tumors, basically carving out the bladder cancer that they see.There are over 700,000 procedures done in the U.S. and EU annually. We believe Blue Light Cystoscopy is a perfect place to use it. As I mentioned in the prior slides, getting the diagnosis correct from the get-go is very, very important to the patient staging and future treatment. So using Blue Light in their very first TURBT is extremely critical, and we believe Blue Light Cystoscopy can become the standard of care.After the patients cancer cells are removed, they're then put on some sort of chemotherapy or BCG treatment and then asked to return for a follow-on cystoscopy. At that point, you're in the lower part of the loop, the second red dot, where the physicians will ask you to come back to the office, and they'll take another look inside your bladder. Again, Blue Light Cystoscopy can prove to be a very important component to the accuracy of finding the cancer and treating it.There are over 1.65 million procedures between the U.S. and the EU. When I say the EU, I'm talking about the EU5, not the broader pan-Europe. So there's still even more than that, that are out there.So this is a tremendous cost structure for these patients. They'll continue through this loop for their lifetime. The whole key to this is not to end up in the red zone, the progression zone, to muscle invasive. If they go muscle invasive, this leads to cystectomies, which is the bladders are taken out, and a very different lifestyle and oftentimes metastases and things of that sort. So very, very important that they stay in this gray circled area, and we believe Blue Light Cystoscopy can improve their outcomes overall.Next slide. So we're well positioned. Commercial organization in place for all the major markets across the globe. We have a sales force of 35 in the U.S. We have another 27 in Europe. We have a growing global footprint with partnerships in Canada, Chile, China, Australia, New Zealand. We continue to look for other opportunities to bring Blue Light Cystoscopy to the patients that are suffering across the globe.Next slide. I'd like to turn it over to Erik Dahl to go through the financials. Erik?

[Erik Dahl, Chief Financial Officer]

Thank you, Dan. And well, in this part of the presentation, we will start with a financial review of our segments. And then we will follow with the consolidated income statement, the cash flow, and finally, the balance sheet.But first, we need to add some comments about the impact from foreign exchange on the results. In short, the FX impacts for Q4 was for revenue positive, approximately NOK 4 million, and for EBITDA positive, approximately NOK 2 million. Full year, the FX impact was positive on revenue of NOK 18 million, and for EBITDA, a positive NOK 4 million.I would also like to highlight the impact of the inclusion of the former Ipsen business in our accounts. This transaction has an impact on the income statement as well as the cash flow and the balance sheet. And I will comment on this when we get to the relevant slides. However, you will find detailed information in the report, both in Note 1 and also in Note 6.With this, let's discuss the financials. All the amounts that are mentioned in this presentation will be in Norwegian kroner unless other currency is specified. I will start with the segment reporting and focus on the commercial franchise first, and the headlines for our commercial franchise for Q4 are first of all that we had great results in the quarter.We had a revenue growth of 66% in the quarter and an EBITDA of almost NOK 18 million. We had a successful transition and launch of the European Hexvix operations and had the commercial rights transferred to Photocure on October 1. Q4 shows a positive impact from this transaction on both revenue and EBITDA.U.S. shows great performance in the quarter, with volume growth of 11% in the quarter, in spite of growing impact from the COVID-19 pandemic. And we do see a resurgence of the pandemic late in Q4, which caused some of our territories to decline compared to the prior year period. But despite these challenges, the revenue for our commercial segment increased both for the quarter and for the year.Total Hexvix/Cysview revenues in Q4 increased 66% compared to Q4 2019. Full year growth was 20%. And in constant currencies, the full year growth was 11%. In-market unit sales decreased 7% in Q4 and full year with 5%. Unit sales was obviously impacted by the pandemic.In U.S., Q4 revenues increased 48% to $41.1 million, and unit sales increased 11% in the quarter, in spite of development of the pandemic. On the other hand, U.S. revenue in Q4 was also impacted by a partial release of the Medicare-related accrual that we accounted for in the second quarter. We accrued then $1.2 million. And as this topic now is closed, we were able to release $900,000 or about NOK 8 million of this accrual. Full year U.S. revenues increased 15% to NOK 113 million. In U.S. dollar, the revenue increase was about 7%.In spite of the pandemic and, therefore, limited access to institutions, we are growing our installed base of Blue Light Cystoscopes. During 2020, 45 cystoscopes have been installed, driving the total installed base to 268, a growth of 20% from fourth quarter 2019. And in fourth quarter alone, we installed 15 cystoscopes.Europe. The revenues for Europe in 2020, as we reported, includes now full year Nordic revenues as well as sales and royalty revenues from Ipsen, the first 3 quarters, and also our in-market sales in the fourth quarter. And the total Europe revenues increased 83% to NOK 56.6 million in Q4. The increase was obviously positively impacted by the revenue contribution from the successful transition of the Ipsen territories in the quarter.Unit sales declined in Q4 with 11%. This was due to challenging market conditions associated with the COVID-19 pandemic, which impacted patient treatment volumes in the quarter. Also impacting unit sales was stocking imbalances with our customers that accrued safety stocks of Hexvix during the first and more recent surges of COVID-19. These stocking imbalances include the safety stock acquired by the Danish authorities earlier in 2020, which then was sold by the authorities in the market, mainly in the fourth quarter.Full year revenue increased 24% to NOK 141 million. Full year revenue was negatively impacted by reduced shipping of goods to Ipsen in the third quarter. And we also, in the third quarter, agreed to take back inventory remaining at the end of the quarter. The impact on revenue on this transaction was NOK 8.9 million negative in Q3 and also for full year. And the impact on cost of goods sold was a credit of 2.5 million. Full year unit sales declined 8%.The operating expenses in Q4, excluding depreciation and amortization, increased 47% to NOK 73 million. The increase is mainly driven by investment in Photocure's European commercial organization as well as impact from foreign exchange of approximately 6%. Full year operating expenses increased 25% to NOK 233.7 million. The increase was driven again by investments in Europe and also by currency impact.EBITDA for the commercial segment was NOK 17.9 million in Q4, and full year NOK 4.2 million. Adjusted for one-off transition costs related to the Ipsen agreement of NOK 7.9 million, the full year EBITDA was positive approximately NOK 12 million, which is an improvement from full year 2019. And we accomplished this in spite of the COVID-19 pandemic.The financials for our development portfolio has been driven by the license agreement for Cevira with Asieris. In 2019, we received $5 million signing fee payments from Asieris. In addition, we accrued revenue in 2019 of 2 development milestones, totaling $3 million, which were committed and timed. The fees from Asieris were accounted for according to IFRS 15, and revenue recognition in 2019 was, therefore, based on contract value of USD 8 million.The Asieris transaction resulted in revenues of $56.4 million in the fourth quarter of 2019, and full year 2019, a total of $65.1 million. In 2020, we received $1.5 million in the first quarter from Asieris, and we also received another $1.5 million in the fourth quarter. This obviously impacted cash flow, but no revenue in 2020, as revenue recognition has been done in 2019.Operating expenses continued to decline for the development portfolio. The reduction from 2019 was full year NOK 5.3 million or 39%, and the decline is partly driven by one-off expenses in 2019 related to signing of the license agreement with Asieris.Now to the consolidated income statement. And you will recognize the revenue numbers from the segment analysis that we just went through. So let's first look at the cost base on this slide.We see operating cost increased 43% in the fourth quarter. Full year, the operating cost increased 21% or NOK 41.8 million. Contributing to this increase is, first of all, the investment in Photocure's European commercial organization, which is required to support the European sales. And total amount full year is about NOK 19 million. Secondly, we have the impact from foreign exchange. Full year impact is approximately 6%. And then finally, we have noncash cost related to share-based compensation as well as scaling of the group activities within regulatory and marketing.We see that many companies have reduced number of customer-facing employees due to the COVID-19 pandemic. We have not done that. We have maintained our sales resources and, as far as possible, maintained customer-related activities during the COVID-19 pandemic. And we believe the benefit of being prepared was demonstrated with the rapid sales rebound in Q2 and Q3.EBITDA in Q4 2019 was NOK 54.8 million. Excluding the Asieris fees, the Q4 2019 EBITDA was negative NOK 1.6 million. Q4 2020 EBITDA was NOK 15.2 million, positive, a significant improvement from same quarter 2019. The improvement is mainly driven by the inclusion of European business as well as the partial release of the second quarter accrual for Medicaid-related discounts. Full year EBITDA was negative NOK 3.9 million as compared to full year 2019 EBITDA of NOK 58.9 million and negative NOK 6.2 million, excluding the Asieris fees for -- of NOK 65.1 million.Depreciation and amortization, full year, NOK 19.3 million, and this includes the amortization of the investments in the Cysview Phase III program, a total of NOK 10 million for the full year. This program was fully amortized by the end of 2020. In addition, depreciation and amortization, full year as well as Q4, includes NOK 4.2 million of amortization of the intangible asset related to the return of the Hexvix sales. In Note 6 to the accounts, we have explained the treatment of the intangible assets and goodwill from the purchase price allocations of the Ipsen transaction.We had restructuring cost of NOK 2.5 million in the fourth quarter and NOK 12.9 million for the full year. The restructuring cost relates solely to the transition activities for the European business.Net financial items was a cost of NOK 5.4 million in Q4 and income of NOK 2.8 million for the full year. Q4 and full year includes a total of NOK 6.4 million of accrued interest cost for the deferred consideration to Ipsen, meaning the future earn-out payments to Ipsen. Again, Note 6 to the accounts will help the explanation to this.Tax expenses in Q4 and income -- is an income of NOK 10.6 million and full year an income of NOK 10.8 million, driving the Q4 tax amount is the impact of the tax deduction or depreciation of goodwill from the Ipsen transaction as well as cost related to private placements. Tax income and expenses relate to our tax asset and tax loss carryforward in the parent company. In other words, it's not tax payable.After net financial items and tax, we have, for the full year, a net loss of NOK 22.4 million compared to a net profit of NOK 31.8 million full year 2019.We move on to the cash flow statement. Net cash flow from operations was positive NOK 11.1 million in Q4, and full year positive NOK 15.6 million. Both for the quarter and full year, the decline from 2019 was driven by payments from Asieris in 2019. Furthermore, the inclusion of the European business had a one-off negative impact on working capital in Q4, as we, from October 1, are invoicing the customers in Europe.Cash flow from investments for full year negative NOK 167 million, and obviously driven by the acquisition of rights from Ipsen. Cash flow from financing, full year, positive NOK 361 million, driven by private placements and bank financing. We had 2 private placements on April 27 and June 24, raising a total net of NOK 302 million. We also secured bank financing of NOK 50 million in Q2.Net cash flow, Q4, positive NOK 13 million, driven by milestone payments from Asieris of $1.5 million. Year-to-date net cash flow was positive NOK 209 million, driven by additional funding in Q2, partly offset by the acquisition in Q3. And this gives us a cash balance at the end of the year of NOK 335 million.Next is balance sheet. And at the end of the year, we had NOK 776 million of total assets. Noncurrent asset was NOK 364 million at year-end. This included customer relationships of NOK 163 million, and customer relationships is the intangible assets identified in the purchase price allocation for the Ipsen transaction. Noncurrent assets also include goodwill from the Ipsen transaction of NOK 144 million and a tax asset of NOK 50 million. Customer relationships is amortized on a straight-line basis over 10 years, while the goodwill is subject to impairment testing.Inventory and receivables were NOK 77 million at year-end, an increase from year-end 2019 of NOK 16 million. This is driven by the inclusion of the European business from Ipsen, as we, from October 1, are invoicing the customers in Europe.The long-term interest-bearing debt of NOK 50 million is a loan secured under the State Guarantee Scheme for loans related to COVID-19. The loan carries a floating interest, effective interest rate at the end of the year was 2.7%. The loan is a 3-year term loan. First year interest only, thereafter quarterly payments of NOK 6.25 million.The earn-out liability totaling NOK 143.7 million represents a capitalized value of estimated future earn-out payments to Ipsen. The liability is subject to a 10-year annuity, and we accrued NOK 6.2 million as interest expenses for the earn-out liability in Q4 2020. And finally, equity at the end of the year, NOK 508 million or 65% of total assets.And this concludes my part of the presentation, and Dan will continue by discussing the U.S. and the European businesses. Thank you.

[Daniel Schneider, President & CEO]

Okay. Great. Thank you, Erik.Let's move to Slide 18, if we could. So U.S. positioned for growth. This is the monthly kit volume over the last 3 years, comparators. As you see, the fourth quarter, all 3 months exceeded the 2019 level, even though we still were experiencing the COVID volatility in 2020. And I think also noticed the dramatic dip in April and May, and then coming back out, recovering, as Erik said, keeping the sales force intact and optimizing the opportunity. We are now hitting another slighter trough from COVID with limited access, patients maybe not seeking treatment as they should, but we expect that will recover over the period of the first half of this year, but still a great year in terms of kit volume.Next Slide 19. This is probably the most exciting news. When you think about COVID and the limitations of getting into the ORs, the key to getting cystoscopes placed is getting in ORs, getting into the hospitals to place them and to have 45 placed in 2020, a third highest ever in a COVID-ridden year where a lot of the year we were locked out of these hospitals but still yet succeeded. And in fact, reached basically the rates of 2019 in the fourth quarter of placing 15 scopes was, I think, quite astounding.And on top of that, of the 15 scopes placed, 5 of them were flex, and we're seeing a growing trend and momentum in the flex market, approximately 40-some-odd percent growth year over prior year. So really, really good results. This is a key indicator for our future is the scopes, again, are the razors and our kits are the razor blades, which we make the money on. So this is a very encouraging development even in a COVID-ridden year.Slide 20, Slide 21. Let's talk a little bit about Europe. We look at Europe in basically 4 segments. We have the established Hexvix markets, the Nordics, where we have been direct sales for the past decade. We have a 40% penetration rate, meaning that 40% of the patients who could benefit from Blue Light Cystoscopy are getting Blue Light Cystoscopies at very high level.Then we have the active Hexvix markets. These are markets held by -- previously held by Ipsen. It's a dark region, France and Benelux. We see a very good penetration in DACH, with the opportunity to grow to the Nordic levels of 40%. We see France and Benelux, roughly a 10% penetration, again, more opportunity, put a lot of effort in there. Then we have 2 untapped markets. One is the large EU markets, which is U.K., Italy, Spain and Poland, where either Ipsen had not launched into or they exited the market 4, 5 years ago. We roughly called about 0% penetration and we see tremendous growth opportunities in those markets.And then we have the untapped small EU markets, the Baltics, Czech Republic, Hungary, Ireland, Greece, Portugal. Again, smaller markets with 0% penetration yet. In all these markets, there is demand, and there's the opportunity to work with 3 of the -- any 1 of the 3 capital equipment manufacturers. And what's interesting to know is that the European market is approximately the same size of the U.S. market in terms of number of TURBTs and deaths per year. So the opportunity is tremendous, and we're looking forward to, as COVID begins to subside, really starting to accelerate penetration in these regions of the world.All the resources are committed for Hexvix with direct promotion on -- next slides, please, on Slide 22. Direct promotion initiated on the 1st of October, went extremely well, seamlessly. We don't believe we lost any sales along the way. It was the light switched off for Ipsen and the light switched on for us. So a tremendous job to the team on the Photocure side for really shepherding that through.We now have expanded the EU commercial team from the 7 employees that once occupied only the Nordics to 27 that cover pan-Europe, and they came on board and are off to the races. 5 very experienced country managers, all the channels -- distribution channels were built. And I think most importantly, maybe, is that we consider that this segment is EBITDA positive as a segment on its own and still has tremendous growth opportunities.Next slide, Slide 23. When you look at all the segments and markets together, you can see the tremendous opportunity that rests within the U.S. and the EU. If we can reach the same levels of penetration in the Nordics, you can imagine the amount of revenue that could be brought in. We see this becoming the standard of care and reaching a potential in an addressable market of $1.9 billion.Said another way, we've got all the key success factors in place. We have the approvals in place, both surgical and surveillance. We have acceptance in all the major and local guidelines. We have the access of permanent and favorable reimbursement. We have activated awareness in that patients are demanding it, physicians are asking for it. We've -- and then finally, the acceleration, which is -- really rests on our side, the execution piece, which is getting the right people set up to do the job. And because of these tailwinds, we believe we're going to be extremely successful, and this is a growth story for the company. Despite COVID headwinds this past year, we still had, I think, a remarkable year.Next slide, Slide -- let's move to the next slide, Slide 25. This is the deal with Asieris for Cevira. This is a value from a license of a noncore asset. Asieris, reminding everyone, is a Chinese subsidiary focused on genitourinary diseases. The product that they are licensing from us is Cevira for pre-cervical cancer. It's a breakthrough single-use integrated drug device technology.The terms of the deal had a total valuation potential of about USD 250 million. And we're most pleased with the speed at which Asieris is moving. They've -- what's happened in the fourth quarter is basically they had first patient dosed on the Phase III study, which was approximately 8 to 9 months ahead of what we thought the development pathways would be. And we also were able to issue a new patent on the product to cover them out until 2034.So tremendous opportunities. We don't expect to hear anything really changing in this space. So we're going to move forward to continue enrollments over the next year or 1.5 years.Next slide -- and we'll go to this next slide, Slide 27, summary and guidance. So the story is just continuing to execute. We're positioned for growth. We had sales increase in Q4 and fiscal year 2020 year-over-year, despite the impacts of COVID-19 pandemic. Significant slowdown in April and May, recovery through the third quarter, and then as we experienced in the fourth quarter that everyone knows across the globe, between the resurgence, a new strain of COVID, I would say, the slower rollout of vaccines we probably hoped, it has had a little bit of an impact on our performance.Yet we've been able to place 45 scope towers in 2020. We had a positive EBITDA in Q4. Our cash position grew to NOK 335 million from NOK 322 million versus last year. We integrated the entire European Hexvix acquisition and consolidated our rights worldwide to Hexvix and Cysview in all the major markets across the globe. We now control the world and begin partnerships in markets that we don't want to go direct in.We managed through a very challenging year, but kept the team on board to recover sales as quickly as COVID lifts. The pandemic itself is not resolved. And so the long-term ambition guidance has been suspended at this moment until we get a clearer view on the second wave of COVID. New guidance will be issued when COVID is better managed and is in a decline. And I think -- despite all that, I think you can see very clearly that Photocure is well positioned for a very strong growth post-pandemic, returning or exceeding our prior growth rates once the pandemic lifts and we have access, patients return to the clinics and physicians begin performing the procedures.And we'll go to the second last slide, Slide 28. The investment highlights for you. Photocure has an established position as an innovative leader in a very large underserved market of bladder cancer. We believe we have a best-in-class product, Hexvix/Cysview, that should be and will become the standard of care in bladder cancer treatment. We're accepted on all the major treatment guidelines. We have reimbursement support in our major markets, and our penetration efforts are continuing. We have demonstrated commercial execution, we'll continue to do so.We believe there's a significant upside potential, not only in the U.S., where our relative penetration is 5%, if you can imagine, with a total addressable market valuation of nearly $2 billion, to get that to the Nordic levels would be multiples of hundred millions of U.S. dollars, and we believe we can get there one day. We also are quite pleased with the significant upside potential that we see in Europe, and now we've gained rights, but we're getting a clear view of what the opportunity are and quite excited about that. And then we have the ROW, Rest of World, partnering opportunities such as you've seen with Chile and China last year.And finally, our ultimate ambition is to grow organically and inorganically. We have plans to acquire new products, technologies or businesses to build our bladder cancer franchise on a global level.So I want to thank you. We'll go to the last slide, and I'll open it up for Q&A. Thank you.

[Erik Dahl, Chief Financial Officer]

Okay. I got some questions on the Internet here. First of all, the question is from [ Nicolas Daflon ]. Do you expect any additional restructuring expenses Q1 2021?I pick that question because it's a very simple answer, no.Next question from Rickard Anderkrans. Did you get scope placements in the Kaiser accounts in the U.S. in Q4? And how is the progress with that account?

[Daniel Schneider, President & CEO]

Yes. We've begun scope placements with Kaiser. It will continue to roll out throughout the course of 2021. We're quite excited about the opportunity. I think that's one of several opportunities we have in the U.S. We also struck a deal with the Inova, integrated delivery health network system, in the D.C. area. That was another fantastic opportunity. We continue to incur more and more of these. It's beginning to gain its own momentum. So yes, we're excited about the opportunity.Again, there's limited access for patients, nonetheless, and for physicians accessing and for us to access, but we're quite pleased with the continued excitement on Kaiser side to bring Blue Light Cystoscopy to the patient base.

[Erik Dahl, Chief Financial Officer]

A question from Tomas Skeivys. Could you please elaborate on the likely cost development this year and beyond?I'll do that. But I hate always to have to go back to the COVID-19 situation. If the COVID-19 situation, as we see it now, continues during the first half, I expect relatively limited cost changes or cost increases in the first half. We do need to staff up and finalize the staffing of the European organization, but it's limited how many medical programs and marketing programs we can run because we still don't have access to the customers in a 100% way. And there is fairly limited travel cost, et cetera.Now if this -- if the COVID kind of is reduced or disappears by the end of -- or in the second half, I do believe to see a cost increase. I do believe to see programs being started. I do believe to see activities increasing. But it's not going to be an explosion, but there will be a limited increase in cost. But the European organization, we need -- we do need to staff up and finalize the building up.A question again from -- sorry, again, from Rickard Anderkrans. Have you started to gain traction in large untapped markets in Europe? You want to take that, Dan?

[Daniel Schneider, President & CEO]

Yes, I can take that one. Yes, we have, but slowly. I mean COVID, as you can imagine, with limited access to clinics, has limited our interactions. Yet, we've been able to already commit and place some scopes, which is fantastic. Kits -- and involvement with the KOLs has been substantial. We expect that once COVID sort of dissipates over the course of the first and second quarters of this year, we'll get in and we'll be able to accelerate the sales. But I think most importantly, we've been able to profile the accounts, identify the opportunity and align our resources behind it for when we are back into those clinics to really drive sales.

[Erik Dahl, Chief Financial Officer]

Okay. Question from Karl Noren. What do you expect for in-market growth in the EU during 2021?I understand that this is hard to give a figure, but just more on a high level. And we can continue what you just said, Dan, about the development on the growth markets in Europe. And if COVID-19 retracts, we do expect to see an increase of in-market sales or volume in Europe, we do expect that. But COVID kind of makes it very difficult to give an estimate and a good insight into what's going to happen.

[Daniel Schneider, President & CEO]

I think I might add, Erik, if you don't mind. No, as you think about the markets, both U.S. and Europe, despite COVID, there's nothing really selling Against us. What's selling against us is our own efforts. And our efforts are predicated to depend on our access and getting into those accounts. So you can imagine, as access improves, we're putting a full force commercial effort and press on this, and we'll regain the momentum we had pre-COVID, if not more.

[Erik Dahl, Chief Financial Officer]

And to further add on that, Dan, I mean given the increase of the Blue Light equipment in U.S., 45 new installed -- new installations, I mean we have a different starting point in 2021 than what we had in 2020, definitely.Question from [ Nicolas Daflon ] and this will have to be one of the last questions. Are you actively looking for acquisitions?

[Daniel Schneider, President & CEO]

Yes. The short answer is yes, we are. We want to find the right opportunity that adds value to you, the shareholders, that is something that's meaningful to patient care and physician's treatment of those patients. So you'll have to stay tuned. This is not something that happens overnight, but the process has begun with the identification and assessment of those opportunities.

[Erik Dahl, Chief Financial Officer]

I got another question from [ Yon Henrik Rune ] this time. Has there been any positive effects for Photocure during the pandemic?

[Daniel Schneider, President & CEO]

Yes, I'll answer that one. There have been. I'll tell you what some of the positive things that come out of pandemics or any challenge in life, right? You find new ways of doing things, either more efficiently or better or faster. So we've had to think differently. We've had to be agile, one of our key values, in addressing a market that's changed on us overnight. And I think we've done a pretty darn good a job of that. We have the ability now to do virtual details, or virtual visits with physicians, even into the OR settings where Zoom is turned around with laptops and they're able to watch and guide the physician through the procedure.I think the other thing that's a positive is that COVID has changed -- has affected the way patients are flowing in and out of the clinics and in for procedures. You can imagine, cancer didn't stop during the pandemic. It continued to grow. Patient may not have come back. So as we go back to talk to physicians, we really highlight the idea that isn't it better to get that first TURBT correct with Blue Light Cystoscopy, a very good, clean, perfect resection. And then if a pandemic or something interrupts patient care, you feel more confident that you've gotten everything you should have gotten. And that when they return, it hasn't progressed at a faster rate or that there's tumors that you've left in the body.So again another positive, I think, outcome is it's been able to -- for us to sort of position our product in a much more important and prominent place in the physician's mind. And I mean there's been a lot of other, obviously, opportunities, but those are some ones that come in mind just cold calling.

[Erik Dahl, Chief Financial Officer]

Good. Regretfully, I have to stop here. I will keep a list of the questions that we still haven't been able to answer and try to get back to you guys.

[Daniel Schneider, President & CEO]

All right. Well, thank you.