Bonesupport Holding AB

STO:BONEX

Earnings Call Analysis

Bonesupport Q2 2024 Achieves 57% Sales Growth

Bonesupport reported strong Q2 2024 results with sales increasing to SEK 220 million, a 57% year-over-year growth driven by the successful market penetration of CERAMENT G in the U.S., which reached SEK 108 million in sales. The company achieved a record operating result, with adjusted EBIT growing to SEK 36 million from SEK 13.6 million last year. Bonesupport raised its 2024 sales guidance, expecting over 50% growth in constant currency. Key investments were made in R&D and marketing to support future product launches and market expansion. CERAMENT's role in reducing amputation rates and hospital stays was noted as a significant clinical benefit.

Strong Revenue Growth

Bonesupport reported impressive Q2 2024 sales of SEK 220 million, marking a substantial year-over-year growth of 57%, or 55% when adjusted for constant exchange rates. This growth is primarily attributed to the company's aggressive market penetration of CERAMENT G in the U.S., which alone exceeded SEK 100 million in sales. Remarkably, the company has achieved a sales growth rate more than ten times that of the market as a whole, signifying significant market share capture.

Record Operating Results

In terms of profitability, Bonesupport showcased a strong operating result of SEK 36 million before incentive provisions and an EBIT of SEK 29 million. This robust performance occurred despite substantial investments in research and development (R&D), reflecting the company's ability to maintain operational efficiency while expanding its product offerings.

Increased Guidance for 2024

Based on the strong momentum in sales, Bonesupport has revised its sales guidance for 2024 upwards, now expecting growth exceeding 50% in constant currency. This adjustment provides further confidence in the growth trajectory, particularly following recent regulatory approvals in the U.S. for CERAMENT's applications in treating open fractures.

Significant R&D Investments

The quarter saw elevated R&D expenditures, with a focus on preparing for the upcoming launch of CERAMENT BVF in interbody fusion, anticipated in Q4 2025. To bolster this initiative, preclinical application studies have been initiated, aiming to solidify the product’s market readiness. These long-term investments position Bonesupport for broader application in various bone healing indications moving forward.

Reimbursement Developments

An important milestone during the quarter was the recognition of the Transitional Pass-Through payment by Cigna, effectively approving CERAMENT G's reimbursement in the outpatient setting. Furthermore, the Center for Medicare & Medicaid Services (CMS) has proposed extending the New Technology Add-On Payment (NTAP) for CERAMENT G, which would further secure its market position and enhance its sales potential as it influences private insurance offerings.

Sales Performance in the U.S.

Sales in the U.S. segment alone rose to SEK 173 million, reflecting a staggering increase of 67% year-over-year. Of this growth, SEK 108 million came from CERAMENT G, with many surgeons transitioning from initial pilot uses to repeat orders after realizing positive patient outcomes. The company is actively expanding its sales team and resources to capitalize on this demand and continue penetrating the market effectively.

International Market Dynamics

Bonesupport also reported a 28% year-over-year growth in the European and Rest of World segments, reaching SEK 47 million in sales. The demand is driven by an ongoing recovery in surgical volumes post-pandemic and the demonstrated clinical advantages of CERAMENT products over traditional treatments. Notably, clinical studies highlight significant reductions in amputation rates and hospital stays when CERAMENT is used, indicating strong patient outcomes and reinforcing the product's value proposition.

Challenges and Future Outlook

Despite the positive sales trajectory, Bonesupport faces challenges such as staffing shortages and market disruptions in some regions. However, the company’s strategic initiatives to enhance operational efficiencies and strengthen distribution channels—evident from new hires and expanded market coverage—indicate a robust plan to navigate these challenges and exploit growth opportunities in both established and emerging markets. Looking ahead, Bonesupport appears well-positioned to enhance its market position and drive further growth.

Earnings Call Transcript 2024-Q2

[Operator]

Welcome to Bonesupport Q2 Report 2024. [Operator Instructions] Now I will hand the conference over to CEO, Emil Billbäck; and CFO, Håkan Johansson. Please go ahead.

[Emil Billbäck, executive]

Good morning. Thank you, operator, and welcome to everyone to the Bonesupport's Quarter 2 2024 Results Call. I'm Emil Billbäck, the CEO of Bonesupport, and making this broadcast, as always, together with Håkan Johansson, our CFO. We will use the next 25 minutes to guide you through the presentation of the second quarter results, and then we will open up the line for a question-and-answer session.

Before starting the presentation, I would like to draw your attention to the disclaimers that covers any of forward-looking statements that we might make today.

Let's go to Slide 3. I would like to begin the entire presentation by covering some condensed highlights from the report that we released this morning. Overall, quarter 2 sales were SEK 220 million, which corresponds to a reported growth of 57% year-over-year and in constant exchange rate, the growth rate was 55%. The sales increase was positively influenced by accelerated market penetration of CERAMENT G in the U.S.

During the quarter, CERAMENT G in the U.S. reached a milestone of surpassing SEK 100 million. We see that the existing customers are continuously increasing their usage. And in addition, the new users are constantly being added. At a total growth rate for the company of more than 10x market, we are, of course, taking significant market shares. The strong sales resulted in a record operating result despite the large blocks of R&D investments that took place in the quarter.

Before incentive provisions, the operating results was SEK 36 million and reported EBIT on SEK 29 million. So as you might have seen from the release of the report this morning, the very strong business momentum has also led us to raise our sales guidance for 2024.

Let's move to the highlights of the quarter. So operationally, first of all, I would like to highlight that our new Executive Vice President of Quality Management and Regulatory Affairs, Anna Stegmark, started about 10 days ago. We're very pleased to welcome her and her contribution to our future journey. There has been elevated R&D costs in the quarter. As most of you know, we received U.S. regulatory approval for CERAMENT BVF in interbody fusion in the U.S. in the first quarter of this year. Before launch, which assumedly takes place earliest in quarter 4 2025, we will assemble an extensive launch package, including a variety of preclinical application studies, and these studies were started during the quarter and will run into early 2025.

Other highlights in the quarter include Cigna's recognition of CMS' transitional pass-through payment, CMS' proposal for a 1-year extension of the NTAP reimbursement and strong data from Australia on reduced amputation rate with CERAMENT. All these topics will be covered later in the presentation.

Let's start with looking at the sales development on Slide 4. The chart you see shows total last 12-month sales in Swedish currency every quarter since early 2017 in stacked bars per region and product category. Top line is advancing with a solid and steep trajectory as CERAMENT rapidly is taking market shares from other treatment options and seemingly also is even expanding the market. It is mainly the antibiotic-eluting CERAMENT, which is driving the development with, in total, 82% growth in quarter 2 2024 versus quarter 2 2023.

Since the end of the pandemic, where we could again visit customers and promote CERAMENT, we have seen strong progress in both geographic segments with an almost linear development for total sales development since early 2022. There are no signs of this trend slowing out. To give you some input on how well CERAMENT is performing in relation to peers. We have included a slide from one of the most established industry report. So let's go to that. It's on the next slide.

So this is from an institution called ORTHOWORLD. ORTHOWORLD is the leading market intelligence platform within orthopedics. In their recent orthopedic annual report, they summarized the industry's sales performance for 2023. We had to cover the other companies in the matrix to avoid displaying data that does not belong to us, but we left the public companies visible.

As you can see in the table, we are still a rather small player in the segment of orthobiologics, but nevertheless, we are the absolute organic growth leader. As you can see from the numbers we presented today, we have a growth pace of well over 50% for the first six months of 2024. So it is likely that we will move up the list notably for the next annual report.

Let's progress in the presentation and go next now to North America. Next slide, please. So at sales of SEK 173 million in the quarter, this corresponds to a reported growth of 67% year-over-year and 66% at constant exchange rate. This means that the US sales in quarter 2 had a reported sequential growth of 22% over quarter 1 2024.

CERAMENT BVF grew with 13% in the quarter. A lot of new accounts are being generated by the strong interest in CERAMENT G. And some of these new accounts have started to use CERAMENT BVF on patients with very low infection risk. The highlight of the quarter, otherwise, of course, was the strong sales of CERAMENT G.

In quarter 2, we saw a very strong uptick in sales reaching SEK 108 million. Surgeons that have pilot use of CERAMENT G at the end of last year have now evaluated patients thoroughly with x-rays and are now ramping up a repeat use. At the same time, new surgeons are constantly being added. The surgeons that have done medium-term follow-ups are encouraged that the treatment outcomes are mirroring what has been seen in published clinical studies for CERAMENT.

Our Transitional Pass-Through payment, TPT, and the Open Trauma approval have brought a lot of interest with new surgeons and new clinics for CERAMENT G, but the impact on sales is so far only minor. The big launch conference for the Open Trauma indication will be the OTA, the Orthopaedic Trauma Association meeting in October 24 to 26, 2024.

Now it is common that some of the private health care insurance providers honor the reimbursement issued by Medicare and CMS, the Center for Medicare & Medicaid Services. The scrutiny and the evaluation by CMS work a bit as a guiding standard. So the third largest health care insurance provider in the U.S. with more than 20 million people covered, that is Cigna, announced this quarter that they will follow CMS' decision on TPT for the use of CERAMENT G in the outpatient setting.

This is an early success on the path towards establishing CERAMENT G as a new standard of care in the U.S. We will, over time, report other specific reimbursement schemes by private insurance providers but we will only do that when it relates to the top providers. And on the slide that is on the screen, you can see the different top providers of private health care insurance to the right.

The NTAP, the New Technology Add-On Payment that was awarded to CERAMENT G for bone infection effective October 2022 to October 2024 is proposed by CMS to be extended one year to October 2025. After the NTAP period ends, Bonesupport will apply for [codes] granting a permanently elevated reimbursement based on strong health economic data and patient outcome.

With the evolving success in the U.S. for CERAMENT both in sales development, market access, reimbursement and regulatory approvals, we have invested in additional resources to drive further market penetration. We have recruited 2 clinical specialists to drive CERAMENT awareness in the outpatient settings. This is related to the TPT reimbursement.

In addition, a senior and well-experienced spine product manager has been hired for the future entry into spine and 4 back-office positions were added at the onset of the quarter in anticipation of increasing demand and execution of strategic initiatives going forward. The U.S. headcount was 35 at the end of the quarter.

The approval and penetration of hospital systems, also called IDNs, is progressing well. In the quarter, we have landed some additional prestigious and high-value hospital system contracts.

Now let's turn the attention to Europe and Rest of the World, which is on the next slide. So much of the focus, of course, in this report has been on the U.S., given the strong sales development. But I [want to ] underscore that we're seeing excellent progress in Europe where CERAMENT is capturing market shares in more or less all markets where we are present.

For the quarter, we saw sales of SEK 47 million, corresponding to a reported growth of 28% year-over-year and 26% at constant exchange rate. We continue to see positive market dynamics as there is a continued catch-up of the surgical backlog in most geographies.

There are, however, some sporadic continued challenges from shortage of staff, exacerbated by nurses striking and other disruptions like the hacker attack on the NHS. The latter might sound trivial, but a disruption of a few days in the surgical theater on major London hospitals is actually visible on surgery volumes.

The antibiotic-eluting CERAMENT, which is CERAMENT G and V combined, is clearly leading the growth trend. The positive differentiation of CERAMENT G and of CERAMENT V versus traditional treatment options is well validated in several clinical studies.

In the quarter, results from a clinical study conducted in Australia on 136 patients with infected diabetic foot ulcers was published. It was a retrospective study comparing historical patient outcome with outcome after switching to CERAMENT G or V. And all of this took place at one specific large clinic. The results displayed an amputation rate of 2% for patients receiving antibiotic-eluting CERAMENT versus the historical rate of 18% when using standard of care.

When switching to CERAMENT G or V, the number of patient days in hospital over a 12-month period decreased from 26.1 days to 12.6 days. So almost cut in half the time that the patients have to stay in the hospital. This is in line with previously published European data.

Now Australia is an attractive market. And in the quarter, we changed distributors to make sure that we cover more indications and more hospitals. This study will, of course, be very useful in the hands of our new competent distributor to accelerate market penetration.

We have previously concluded based on solid published evidence that there are large health economic effects to be gained by preventing fracture-related infections. In a well-made Dutch study that was published in the quarter, 246 patients with severe fractures were monitored with a mean 1-year follow-up. The infection rate with a studied cohort was 18%. The authors concluded that the cost of care tripled with patients that got an infection and required one additional surgical intervention.

When this was compared to the patients that were infection free, the cost was driven by the extra stay in the hospitals, the additional procedure and the use of systemic antibiotics. Now even worse for those patients that required multiple interventions due to reinfections, the cost of care in total rose sevenfold. This speaks in very strong economic favor of CERAMENT G and V bringing infection rate down to around 4% with a 1-stage procedure on severe trauma-induced fractures.

Before moving on to the finance section, I should mention that we expect to see the primary investigators present the first results from the SOLARIO study at the European Bone and Joint Infection Society meeting on September 26 to 28.

And with that, I will leave over to Håkan to guide us on a deep dive in the numbers.

[Håkan Johansson, executive]

Thank you, Emil. So let's move to Slide 9. Net sales improved from SEK 140.4 million to SEK 219.8 million, equaling a growth of 57% or 55% in constant exchange rates. Emil has already spoken about the strong performance in the 2 segments and the main drivers behind the sales acceleration.

So we move forward to Slide 10. The contribution for the North America segment improved with SEK 35.1 million and amounted to SEK 66.8 million. The improved contribution relates to increased sales after effect from increased costs. Sales and marketing expenses during the quarter amounted to SEK 99 million compared with SEK 66.5 million previous year, of which sales commissions to distributors and fees amounted to SEK 61.6 million compared with SEK 36.7 million the same period last year.

From the lower graph, showing net sales as bars and gross margin as the orange marker. It can be noted that the gross margin remains very strong and amounted to 95.8%. In Europe and Rest of the World, a contribution of SEK 14.2 million was reported to be compared with SEK 7.6 million previous year.

Sales and marketing expenses increased with SEK 2.1 million and was driven by field vacancies, an increase in sales representatives and a high level of market activities to capture the momentum we now see in Europe. From the lower growth and the orange marker, you can see the gross margin remains stable with a minor impact from market mix with a higher ratio of indirect sales in the period.

Let's move to the next slide. So looking at expenses, the increase in selling expenses reflects investments in organization, as mentioned by Emil. We also invested in systems to improve customer handling, inventory management and to meet the increasing demand. The sales and marketing expenses in the period also included a SEK 1 million bad debt provision relating to the bankruptcy of the Steward Health Care System in the U.S.

As presented at our Capital Markets Day in November, R&D is focused on execution of strategic initiatives such as spinal fusion and the planned marketing authorization submission for CERAMENT V in the U.S. These initiatives have been progressing well during the quarter, reporting an increasing spend. And underlying administration expense, excluding the effects from the long-term incentive programs, remaining on a stable level, however, impacted by temporary resources and recruitment costs in the quarter.

So let's move to the next slide, please. The adjusted profit was reported to SEK 36 million compared with SEK 13.6 million for the same period previous year, an improvement of SEK 22.4 million following a strong sales performance and despite investments made in commercial and innovation. The difference between adjusted EBIT and reported EBIT our provisions regarding long-term incentive programs amounting to an expense of SEK 7.4 million this period compared with SEK 7.7 million previous year. Of the total cost of SEK 7.4 million in the period, SEK 1.4 million was cash flow impacting.

With a strong momentum in our sales, and the revised sales forecast, we have decided to bring forward our plans to further improve our safety stocks of raw materials and semifinished products. With these adjustments made, we have created a good position for the rest of the year. The increase in inventories, together with a temporary self-growth driven increase in trade receivables, contribute to a negative cash flow for the period. Here is worthwhile mentioning that we [had not] seen material timing effect in trade receivables with large inflow of payments in early July.

And with that, I'll return back to Emil.

[Emil Billbäck, executive]

Thank you very much, Håkan. So we are, of course, very pleased with the quarterly performance and the continuous solid trend. We're delivering strong sales and solid earnings. Thanks to the strong market access achieved through agreements with GPOs and IDNs for CERAMENT G, we have seen a robust sales dynamic over the past 18 months.

Given this growth trend and the recent U.S. regulatory approval in open fractures, we are raising our 2024 guidance. We are expecting a sales increase of over 50% in constant currency versus previous year. We have strong confidence in this market guidance. In the long run, CERAMENT is on track to prove its role as an orthobiologics platform with broad applications in various bone healing indications. We see the 2 market authorizations earlier this year as the start of this journey. Thanks to its clinical superiority over standard of care, CERAMENT is constantly increasing its user base and enabling surgeons to achieve a better patient outcome.

With that, we'll conclude our presentation and would like to open up the line for questions.

[Operator]

[Operator Instructions] The next question comes from Kristofer Liljeberg from Carnegie.

[Kristofer Liljeberg-Svensson, analyst]

Three questions for me. First, I just wonder if you could comment a little bit how we should think about further investments in selling expenses here going forward, if you plan to hire additional people in the U.S. organization in the near term?

Second question related to cash flow, your commentary about -- I think it seems temporary higher receivables, but maybe you could comment how we should think about DSOs going forward? Any changes there as you add new clients, new indications, et cetera?

And then finally, this reimbursement recognition by Cigna, how do you think this will impact sales and demand? And the reason I'm asking is that you have already seen a very strong demand, especially for insurance patients, which seems to have made up a larger part of sales than what was initially expected.

[Emil Billbäck, executive]

Thank you, Kristofer. So the first question was regarding further investments. The dynamic we see in orthopedics is very long cycles. So when we get then, as we did earlier this year, the TPT reimbursement in outpatient setting. We recognize that we should put resources to this great opportunity. So that's why the hiring has taken place. Another hiring that I mentioned was the spine product manager who is then starting to work towards the introduction in quarter 4 of 2025.

So all of these are actually forward-looking investments. They're not cost that comes to cope with the existing business. They are investments to further open up new areas like new market segments or new product indications. So when it comes to the U.S., you should not expect that we have that kind of hiring going forward. Now it's time for these people to get introduced, to find the structures, to start adding to our journey. And then gradually, I think we will also start to see the sales that will come out of these initiatives.

So we have different parts of the business. We have plenty of resources that are working on driving new accounts, taking care of existing accounts. And then we have these strategic investments for the next wave of business development in terms of penetrating new markets and new indication.

When it comes to cash flow, I pass over to you, Håkan, to comment on some of the vectors that have influenced that in the quarter.

[Håkan Johansson, executive]

Thank you, Emil. Happy to respond. And what we see in the second quarter and what we're also trying to comment on is that we see a temporary high. So that's always a challenge when you take the temperature of the balance sheet on a specific day, et cetera. It's not really showing the absolute trends. When we look underlying, we, in fact, see a gradual improvements in DSO in the U.S. and in euro, we see them remaining stable. So I think that's something to continue monitoring a look at -- from a longer time perspective, but it should not be seen as an increase in DSOs.

[Emil Billbäck, executive]

And the -- anything else on that?

[Håkan Johansson, executive]

No.

[Emil Billbäck, executive]

The final question was on Cigna. So what do we expect in terms of impact. We see this as very positive, actually. The private insurance providers have already been very positive to CERAMENT G. Due to the health economic effect, we can show that there is a reduction in amputations. We can show that there is a reduction of number of days in hospital and so on.

So it felt pretty natural that the third biggest private health care insurance provider also adopted a higher reimbursement. It is quite unusual that, that happens so quickly. We only got the TPT reimbursement in January. So usually, such integration with the private insurance companies takes place after 1 year or 18 months. So I think this is a testament to the strong documentation we have. So what will be the effect? Well, the effect will be that if there were any doubt in outpatient setting with a Cigna patient before because the DRG reimbursement was low in relation to the CERAMENT G cost. All that is most likely then eliminated now as the full cost of CERAMENT G will be covered by Cigna on those procedures.

So you can think maybe a smaller procedure like a hand or a foot, for example, a foot surgery, which has a low DRG where CERAMENT G otherwise would even exceed the DRG. All that is then -- that potential hurdle is then eliminated by this reimbursement.

[Kristofer Liljeberg-Svensson, analyst]

Could I just follow up on that? So in the inpatient setting, does all major insurance company follows the NTAP -- recognize the NTAP?

[Emil Billbäck, executive]

They do not. We have no notification of any of the private insurance companies that are following NTAP, but in the inpatient procedures, they're usually much more severe and they relate to long bones or to more difficult injuries. So the DRG is naturally significantly higher. So the same hurdle that I discussed before a bit or mentioned doesn't occur in the inpatient setting.

[Operator]

The next question comes from Erik Cassel from Danske Bank.

[Erik Cassel, analyst]

So just first question, can you say anything about the CERAMENT G unit volume growth in the U.S. and how that compares to the growth of number of surgeons using the product?

[Emil Billbäck, executive]

That's a good question. You're catching us a little bit off guard because we worked so much on the report. And we actually haven't seen that data yet. What I can share with you is that we have no price erosion. The number of units can vary from month-to-month and quarter-to-quarter depending on if there's a big use of 5 mL, the smaller box for foot and ankle surgeries or if it's the 10 mL for slightly bigger injuries. But in general, over the last, I would say, 18 months, what you've seen on CERAMENT G is that the sales increase is fully reflective of the increase in units. There's small variations back and forth, but the trends are parallel.

[Erik Cassel, analyst]

I was more getting at if the new user acquisition is outpacing unit growth or if it's mostly the growth we're seeing now driven by, say, surgeons acquired a year ago, let's call it that.

[Emil Billbäck, executive]

I apologize. I thought you were asking about the specific unit growth. So what you can say basically is the growth -- the very strong growth that we've seen in the launch of CERAMENT G. I have shared in the beginning of the year that it was about 50-50 in terms of the sales growth, 50% coming from existing users and 50% from new users. I would say, in quarter 2, there is overweight towards existing users, of course, as that box, let's say, is significantly growing.

We see that a lot of the surgeons that came on board and started using CERAMENT G at the end of last year, have now received all the approvals necessary and have started with a heavy and extended repetitive use. I think it's also interesting to see that indication that it almost sometimes takes 6 months for people to land in the full evaluation of CERAMENT G with x-rays and everything before really getting into very repetitive use.

[Erik Cassel, analyst]

Okay. Makes sense. And then I noticed in the report that you're saying now that the focus of the sales force is basically only introducing new users to CERAMENT G. And I know you've talked about the launch being sort of stepwise in the U.S. but should we see this as a sort of indication that we're now entering a period of higher user acquisition, adding more users rather than educating and helping existing ones. So really long questions, but I'm trying to understand sort of near-term pace for user acquisition.

[Emil Billbäck, executive]

Yes. I will try to answer it. In the beginning of the launch of CERAMENT G, big focus was on getting the approvals by the IDNs and getting the hospital system approvals. This has gone better than anticipated. We are now well over 125 approvals for hospital systems and IDNs, and with big focus on the major ones. So there is a high concentration on the absolutely biggest IDNs in the country. And what happens now is then that the salespersons are splitting their time between going to hospitals, new hospitals that are under these contracts and informing about CERAMENT and then going back to surgeons that started using CERAMENT maybe 2, 3, 4 months ago. So that's the mix.

There will be -- we will take the pedal a little bit -- the foot off the pedal when it comes to driving more IDNs approvals because we are completely fully booked with taking care of those hospitals that already belong to IDNs where we have contracts and where many surgeons are calling us and asking to be introduced to CERAMENT G. This trend has taken off when we got the approval for the indication open trauma and as we got the TPT reimbursement, that has driven a lot of interest.

[Erik Cassel, analyst]

Okay. Okay. And then you talked about the NTAP extension. And I remember, I think it was a year ago, you said that the NTAP usage was very low. Basically, no one was using it. I mean, has that changed in a way so that the extension matters now? Or is it still mostly irrelevant?

[Emil Billbäck, executive]

You're correct, Erik. So in the beginning, we saw much less use of NTAP compared to how large part of the population actually are connected to Medicare, which is about 17%. That has increased, that has picked up. But at the same time, it's still -- our sales would end up still below what it would correspond to as part of the population. And one explanation for that is that NTAP reimbursement is solely dedicated to inpatient setting, where anyhow, the injury or the damage to the bonus is such severe so that the DRG is at a very high level. So the effect of the NTAP is not as big as you would anticipate the effect of the TPT, which is outpatient where the DRG is at a lower level.

[Erik Cassel, analyst]

Okay, makes sense. And then sorry, just one last question. I was just going to ask you, Håkan. I mean if the working capital effect is basically purely timing. I'm just wondering a bit like how does that happen? Does that relate to [one] big system making a larger purchase or do you just have some sort of unfortunate synchronization of many different systems?

[Håkan Johansson, executive]

Yes, it's not linked to a specific system, et cetera, it's just -- if that is a good explanation. It's just a coincidence so the effect of a certain cutoff day. And as I think as mentioned in the call and in the report, we've seen substantial inflow early days of July, that is balancing what we see in the balance sheet end of June.

[Emil Billbäck, executive]

You could look at it also like that. We have a large influx of new customers have started to use the product. They received the invoice. And before they push it through their system, it takes a little bit more effort than with existing customers. So if we look at both invoicing and chasing payments, it has a very steep incline at the end of the quarter, which means that quite a few of them have spilled over into the next quarter, not with invoices, but with receiving the payments. So it's a bit of -- as Håkan said, it's very much related to a timing effect, but it's many, many small customers, not one big.

[Operator]

The next question comes from Sten Gustafsson from ABG Sundal Collier.

[Sten Gustafsson, analyst]

I have a question regarding the sales number. Were there any unusual orders in Q2 like stocking orders from many customers or anything like that we should be mindful about going forward?

[Emil Billbäck, executive]

The answer is no. The only thing unusual was an unusual amount of many users adopting CERAMENT, but no big orders, no stocking orders and no shelf moving. Every product invoiced is a product used on a patient.

[Sten Gustafsson, analyst]

Great. I noticed the uptick in BVF sales in the U.S. it's been relatively flat over several quarters and now are you sure that there's no sort of pre usage in spine of that product? Or I think you mentioned something during your remarks, which I can't remember now, but it's not spine driven already now? Is it by some early...

[Emil Billbäck, executive]

Yes, I hope not. I hope not. But you never know. Sometimes with these -- I mean, it could very well be, Sten, that there is a very experienced user with CERAMENT that comes up with the idea that they also want to use it for spine procedures. It's regulatory approval, but we cannot assist those surgeons with material. We can also not recommend them to do it. What we've rather seen is that new customers that have come on board, signed contracts and been initiated on CERAMENT G have patients with sometimes very low risk of infections where they have been impressed by the bone building capabilities of CERAMENT. But the infection rate is so -- the risk is so low so that they have used BVF instead.

And this has meant that a couple of hospitals where we have had no presence before, we have gotten in as a supplier with CERAMENT G. And then there are surgeons that have started to use CERAMENT BVF. So one question I received this morning, is that trend going to continue? Honestly, we don't know because it's a handful of big hospitals. And I think yet to be seen how they evaluate the product. And if they want to continue with BVF, we hope so. But I cannot make any guidance to quarter 3 or quarter 4 based on what we have seen now.

[Sten Gustafsson, analyst]

Okay. Fair enough. Regarding the CERAMENT G, which again was a strong number. And it seems like it has not been driven by the new -- or the broadening of your approval. But -- so should we assume then after the conference, which you said was in like September that the -- actually, the growth rate will pick up in Q4, even higher than from this broadening of the approval?

[Emil Billbäck, executive]

Yes. It's a very good question. We've seen a handful of trauma surgeons in level 1 trauma center, which are the most heavily frequented ones and the most prestigious ones that have started to use CERAMENT G. But one have to remember that no one will start using CERAMENT G for trauma just by reading about the approval. It has to be -- it's preceded by training and education from our side. So we can only increase the number of users at the pace of our salespeople being out there informing.

So yes, the use in sales of CERAMENT G in open trauma is absolutely likely to increase for the end of the year. The big launch conference in October will be our first real opportunity to meet a lot of trauma surgeons in one place and have a generation of leads and communication on site. Otherwise, it's basically 1 to 1 that we are meeting in our sales promotion. And we know also that adaptation of techniques and to adopt a new technology like this for a new indication, it takes time. So it's something that's going to happen gradually.

[Sten Gustafsson, analyst]

Very clear. One final question, if I may, is on the R&D cost and how we should think about that in the second half. Is the sort of the SEK 20 million level you had in -- for Q2, is that -- will that increase gradually now in the second half? Is that what we should expect?

[Emil Billbäck, executive]

Do you want to answer that, Håkan?

[Håkan Johansson, executive]

Thanks, Sten. I think that what you -- what we could say is that the second quarter forms a good reference for the level going forward, keeping in mind that some of the investments we do and the cost that we have for those initiatives are not volatile in terms of timing, et cetera. But all in all, I would say that the second quarter remains a good reference.

[Operator]

The next question comes from Mattias Vadsten from SEB.

[Mattias Vadsten, analyst]

I have two questions. Firstly, to follow up on the previous question here on CERAMENT BVF. If you could comment and help us a little bit on the development of maybe old customer of yours for BVF in the quarter just to understand the contribution from new accounts?

And then also, if you could put it into perspective, what share of hospital systems in the U.S. at which BVF we sold as compared to the amount of hospitals that CERAMENT G now address? That's the first one.

[Emil Billbäck, executive]

Yes. So the -- we don't -- I mean we're not open enough to [capitalize] all data. But the -- what I can say is that the growth that you see -- the very strong growth you see in quarter 2 on BVF is related to new accounts. The existing accounts also had a good quarter for BVF, a bit better than the previous quarters, but rather taking it to maybe a few percentage points of growth back and forth.

When it comes to CERAMENT BVF, the number of hospital systems where we have approval is somewhere between 265 and 275. With CERAMENT G, it's about 125. So if we look at the dynamic here, there are hospital systems where we have received approval for CERAMENT BVF. But underneath that hospital system, there are hospitals that have not started to use BVF. And when we now get access with CERAMENT G, we can present ourselves as a bit more of a full portfolio because these surgeons will also have patients with very low risk of infection. And this is the dynamic that we have seen in quarter 2, which has given these very strong growth rates.

[Mattias Vadsten, analyst]

I think that's perfectly clear. Then on SOLARIO. I mean we certainly hope it can validate a lot of the things that we found in -- based on the significant clinical data gathered in the past. But looking at the study here for CERAMENT G and V, what incremental new insights are you hoping this study can show? That's the next one.

[Emil Billbäck, executive]

So to give systemic antibiotic when there's surgery has been standard of care for many, many years, 100 years, 50, 60 years. It's well established. But as well is the established concern of giving 4 weeks of systemic antibiotic in terms of what it does to the patient in terms of side effects. And what it gives rise to in terms of resistant bacteria. Bacteria that is resistant to antibiotic, which is possibly the real pandemic we should be worried about in the future.

So for a long time, there has been ways in search of opportunities to reduce systemic antibiotic. CERAMENT G and V has proven exceptional good results. But no one has really investigated if CERAMENT G and/or V could even then reduce the days of systemic antibiotic that the patient otherwise had to endure. So this study is in that matter, the first of its kind.

The second point is that the SOLARIO studies made on 500 patients under the umbrella network of European Bone and Joint Infection Society. So the study has a much bigger impact of moving and shaping the standard of care. The studies that you've seen published recently and that we spoke about today, they are great when it comes to promoting the product, converting surgeons and individual hospitals. But the SOLARIO has the ability to move things on a higher level, on a societal level, on a political level, on a national levels. And that's why we share that with you. We have very high expectations, and we're very excited to see what will come out at the end of September.

Let's see if we have further questions.

[Operator]

The next question comes from Oscar Bergman from Redeye.

[Oscar Bergman, analyst]

Congratulations on the strong sales development. I do have a few questions, and I think that I'm just going to do them one by one, and then you can answer them. So the first one, and we have discussed this before, so here it again. You have a new target for 2024 with 50% sales growth. And that's all nice to hear, but it's not all that significant from what we analysts expect already. So why are you not prone to make financial targets that are a bit longer on time horizon and perhaps also on profitability?

[Emil Billbäck, executive]

Thank you. That's a good wish list. And I hope we can honor that. I think the reason why we said we just had a 1-year guidance is that there's so much movement and so many big changes happening in the market environment in terms of regulatory reimbursement market penetration. If we look at the consensus of analysts, I'm not disputing what you said, but I would say that most of them are with growth rates for the full year between 40% and 45%. And we can conclude after 2 quarters that we're at 55%.

So we felt that it's prudent to revise our guidance to share to the market, to share to the analysts that we have such strong confidence in how the demand is continued strong and keep picking up. But I hear you loud and clear. And of course, also Bonesupport will have to come to terms with giving a slightly longer guidance and also a guidance possibly on gross margin and on EBIT level. It's too early for that. But I hear you, and it will come.

[Oscar Bergman, analyst]

Okay. And I understand the change in working capital and so on, but is there any reason to start worrying about cash position?

[Håkan Johansson, executive]

No it's not. It's relevant on a question, Oscar, in the light of what was reported on the balance sheet today. But trust me, Oscar, it's nothing that keeps Emil and myself sleepless at all. We are confident in the cash flow that we see ahead of us and the available cash we have.

[Emil Billbäck, executive]

Yes, there's absolutely no risk.

[Oscar Bergman, analyst]

Good to hear. And then the R&D expenses going forward, the Q2 figures. Is this something that we will see as sort of a steady state for the coming quarters? Or should we expect it to accelerate somewhat?

[Håkan Johansson, executive]

As I responded earlier in the call, Oscar, I believe Q2 to be a good reference point for the next few quarters. There is always, in the nature of these expenses, a certain underlying volatility in terms of the timing when things occur, et cetera. But if you use Q2 as a reference for the next 2 quarters, it's a good reference.

[Emil Billbäck, executive]

And I would say, what about after that?. So either we will then have strategic projects that we will be very clear in displaying that might replace the ones that are completed. And if not, then R&D will go down again. So you can expect this for the rest of the year, and then there will be a lower level because the increase is now related to the investments in, among other preclinical studies on spine, which we see as a very big initiative.

[Oscar Bergman, analyst]

Okay. And then just my last question, and this is a speculative one. But I mean, so far, the clear majority of U.S. [indiscernible] come bone infection, but as I understand, it's still some of label trauma usage even since the launch. And now with the trauma indication in Q3 and Q4, do you expect that in the first years after the launch of trauma, it will surpass sales which CERAMENT G did in the first years of its launch for bone infection?

[Emil Billbäck, executive]

Okay. I think we have to come back to that question. I'll do my best to answer it. But the open trauma is clearly a bigger indication. It's an indication also where it makes a big health economic sense to use CERAMENT G. And I think we've seen in some recent publications what really could happen if the infection is not prevented with sevenfold or threefold cost increase, but you're asking more, let's say, on the pace of ramp-up. And I will just need more observations before I can give any hint on that. So I'll remain as curious as you, Oscar.

[Oscar Bergman, analyst]

Okay. I'll come back in Q1 maybe and ask.

[Emil Billbäck, executive]

You are most welcome. And until then, have a great summer.

[Operator]

The next question comes from Kristofer Liljeberg from Carnegie.

[Kristofer Liljeberg-Svensson, analyst]

Two follow-ups. First on the -- if you could comment on the administrative approvals among Hospice for the trauma indication how that is going ahead of the launch? And then I just wonder also on this other sales line that were up quite a bit sequentially in the U.S., something specific in the quarter? Or if this is also reflecting a new trend for those products?

[Emil Billbäck, executive]

Yes. The addition of information in the systems where we have approved already where we have contracts for bone infection. And we're adding open trauma has gone very well. I told before that we will be completely through by first of September. I think it's likely that it happens now mid-August. We see great recognition. And given that we have both -- in one hand, we have the FDA market authorization. And on the other hand, we have the clinical studies and the health economic data. It's progressing slightly better than we thought, easier than we thought. It was more difficult to get the bone infection in the first place than it was to add open trauma to the approval.

The second point, the other position that you see, that is, what we call, the ancillary products, the support products. So what we have spoken about before are these specific tools, hardwares to inject CERAMENT in the chondroplasty area, just above or below a joint. It's also a kind of plastic tube that we have, so that CERAMENT can be reached and filled in noninvasive -- of course, invasive, but minimal invasive procedures where you could get reach in difficult places.

And it's also application support tools like [bead tray] to create small pellets of CERAMENT specifically if there is an indication where there's quite a wet wound, a lot of drainage into the wound. This is going up because CERAMENT is being used in more and broader indications. And it can also be a sign of increasing use in trauma in open fractures, where some of these tools specifically are used.

Maybe also to that point from Kristofer because I missed one part of the question, you said, is this going to continue? Yes. This position can go up and down with a couple of millions back and forth. But over time, it's going to be an increasing trend as CERAMENT is growing in various different applications and techniques.

[Operator]

There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions or closing comments.

[Emil Billbäck, executive]

Yes. So thank you. We used a full hour for this. Thank you everyone for your insightful questions and your interest in Bonesupport. We are delighted to have delivered a great quarter and wish all of you a great summer, and we hope to stay in touch and see you soon. We go with great excitement into the autumn. Thank you, everyone, and take care.