Hello, and welcome back to DNB Carnegie's Annual Small and Mid-Cap Seminar. My name is Elvin Ro lder. I will be moderating this session with OssDsign and the CFO, Anders Svensson. I think you are all familiar with the format. We will do a 15-minute presentation followed by a 15-minute Q&A. If you wish to ask a question, please just raise your hands and we will provide you with a microphone. If you are joining us online, please just submit your questions in the box below the stream. Without further ado, Anders, please, the word is yours. Thank you very much. Good afternoon. Anders Svensson, CFO, OssDsign. I will try and tell a bit about our company and what we do. Just the usual disclaimer so you do not take anything I say as forward-looking statements. We are operating in the orthobiologics industry. We focus on spinal surgery, more particular fusion surgery, and only in the U.S. for the time being. The reason for that is below. Nearly 80% of Americans will have spinal problems sometime in their lives. That is quite a lot of people. It is actually more than 1.5 million people per year that are going to need some sort of instrumented procedure. About half of those are fusion surgeries, and that is where we come into the picture. The real problem here is that out of those 750,000 fusion procedures each year, about 20%-30% actually fail, or they have an unsuccessful outcome. They do not fuse. Why is that, you wonder? Well, it is basically because when you fuse, the clinical goal of a fusion surgery is challenged by the fundamental human biology, because the environment where you are supposed to fuse is avascular, and you need blood flow to generate bone. That is the main clinical challenge. If you see in the slide here, it normally starts with a degenerated disc, putting pressure on the nerves, pain in the lower back, pain in the legs. What you need to do is then remove the disc, put a cage in, and also stabilize the spine. This picture shows a two-level stabilization. It could be anything from one to five. You stabilize it with metalwork, a scaffolding of screws and rods. You also need some sort of bone graft, both inside the cage and also around the metalwork, so it remains stabilized over time. Around the edges where you have the vertebrae, you have lots of blood cells, lots of blood flow, very conducive to forming new bone. In the center between the vertebrae, you do not have any blood flow at all, or very little, which is what we try to show with the second picture here. Very nice at the end, the ends of the fusion mass, but in the center, very difficult. If you look at traditional synthetic bone grafts, what they do is they use this highly vascular area around the edges to start growing bone. Then the bone growth sort of creeps towards the middle. Sometimes that is quite successful, quite often it is. But when it's not, two things happen, either of two. Either it doesn't reach the center, it creeps in towards the center, but it doesn't reach the center. The objective of the fusion surgery is to build a bridge between the vertebrae to stabilize. Then you fail and you need a revision surgery, which is both costly and painful. The other thing that can happen is that it just takes too long to reach the center. If it takes too long, you probably have other things happening that you don't want, like implant loosening. Again, revision surgery. What we've seen in OssDsign Catalyst is naturally, Catalyst also starts forming bone in the most vascular area. That's where it's most conducive to bone formation. But what we saw early on was that it also starts forming bone in the center, where you could say where it shouldn't, because there's no vascularization. So you then have dual pathways of bone formation, both outside in and from the inside and out. We saw this very early when we did the preclinical work in the Boden model, which is what we then used to get our clearance in the U.S. [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] [Presentation] What we've seen then is very high fusion rates and also very fast bone formation with rapid progression to fusion across all these studies that we've done subsequently, starting with the Boden where we had 80% fusion already at six weeks. Then after 26 weeks, 100% fusion, which was better than the predicate device. It was actually better than autograft, which is the patient's own bone, which is quite nice. When we launched OssDsign Catalyst in 2021, we also started a small first in-patient study, TOP FUSION, and we saw similar behavior there. This was the first test in humans, so quite important. After a year, which is the sort of normally recognized endpoint of the study, we had 93% fusion, which is of course quite good. We did another follow-up after 24 months, and we now had 100% fusion. What we also did when we launched Catalyst was we started a registry. Not a clinical study as such, but we actually contract a lot of sites around the U.S., and they introduce Catalyst in all sorts of patients. Whoever walks in the door, basically, and needs fusion surgery. All comers, as they say in the U.S. Then you get a broad spectrum, and you get a lot of very challenging patients where fusion should be difficult. We've built on that registry, and middle of last year, we managed to publish results from the first 108 patients, and we reached 88.4% fusion, which we thought was quite amazing. You look at these bars in that bar chart, and you see that you have people who are past age 65. It's not that old, but in general, they would probably be excluded from a normal clinical study. High BMIs, smokers, diabetics, osteoporotics, previous failed surgeries, or very many levels of the spine. These are patients that probably 80%, 85% of them would not be included in a clinical study. We've shown this, not just an average of 88.4%, but if you look at these bars, there's actually very high fusion scores in every one of these challenging categories. We also afterwards did a preclinical ovine study where we put OssDsign Catalyst into a muscle pouch of a sheep where there's absolutely no blood flow. We saw some bone growth after six weeks, and we saw a lot of bone growth after 12. More than double than the nearest competitor. Clearly, there's something happening with OssDsign, even in avascular environments. Yes, all these studies have shown and confirmed the potency of OssDsign Catalyst, and it's different from a lot of other bone grafts with a high fusion rate, very fast fusion rate, both in real-world patients and in clinical environments. Also, simple patients and complex constructs. We have seen it across all these, as I said, all these different patient and surgical risk factors which would normally work against a successful fusion. It's also true that OssDsign Catalyst is actually the first clinically available synthetic bone graft that successfully can generate robust functional bone in this challenging avascular environment at early time points. As you remember, the early time point is really important, so you don't end up with an implant loosening or other complications. We've built a body of evidence. We now have 19 preclinical and real-world clinical publications, and we intend to continue expanding this. You'll hear more from us on this front. That's about the product and what it has shown us. About the market then. There are different segments in this market. You have to pick one. We picked the largest. That's spine, $2.6 billion worth each year. We cover both cervical spine and down thoracolumbar. We've chosen only to focus on the U.S. It is 70% of the global market, so it's not small. Certainly enough for us to grow for many years to come. It's also growing at a healthy rate of 8%. We've entertained the idea of possibly branching out to some other geographical markets. It's possible, but we're quite a small company, and U.S. is a large market. For now, we're focusing there. We also have the opportunity not just to broaden ourselves geographically, but our clearance actually covers much broader indications than just spine. Whilst we focus strategically on spine, we also have performed some pelvis surgery in sacroiliac, and we've done quite a lot of extremities work in foot and ankle. We're cleared for trauma, but I don't think we're going to see much of that in the near future. But foot and ankle is really interesting. Very successful results. There's also a study that we've released that is not on the slides, but very good results. There are other possibilities here. We can't spread ourselves too thin, so we'll still focus on the spine. We think we have about 10% access when it comes to the orthobiologics market spine, which means there's 90% still there to go for. That's still untapped. That's a large opportunity. But more importantly, we should not confuse access with market share. Access is just that we have been approved, and we are allowed to sell there. It does not mean they will buy. So if you look at our market share, I would say it is probably closer to 1%. So even if we just stay within that little area, this slice of the cake where we are approved to sell, we can increase by 5- 10-fold. So good growth opportunities. Where are we heading then? Last year, we launched this strategy update called Scale to Profit mid-year, which is basically a roadmap of what we want to do from 2025- 2028. Four pillars. The first one being accelerate access and coverage in the U.S. market, then we hired a U.S. CEO, so that was a good start. But the main thing here is to double the sales force by end of 2026. We actually reached half of that by the end of 2025, and now we are continuing to build to reach the doubling of the sales force by the end of this year. We said we are going to expand the product portfolio and indications, and that is also well underway. We believe we will have one expanded indication clearance in the U.S. by the end of the year, and we will launch one new product at MIS, late Q4 or maybe early Q1. It is a little bit unclear. Around about there. Then we have another product as well, the strip, in the making, and that is probably going to be another year after that. We wanted to build a complete repository of clinical evidence. What we really missed there is a large Level 1 randomized controlled clinical study, and that is what we have started to embark on now. It has been in the prep for a while, and I think we are going to see more firm evidence of that late in the year, and then patient enrollment after that. But we are still going to continue, and we are continuing to recruit to the PROPEL registry. That is a great real-world collection of data. So you will see more publications from that registry as we go along. And last of these targets was to increase the U.S. footprint and also on the production side. We have scaled production where we are now in the U.K., and we are there for historical reasons. But for various reasons, we only sell in the U.S., so it makes sense to have production capacity in the U.S. Then also, you never know what is going to come out of Mr. Trump, so it makes sense to have at least a second facility in the U.S. to protect yourself. Also from an insurance perspective, that you have two in case one fails. I believe also there you will see during 2027 more concrete evidence of that established production facility. And to round off just some of the highlights that we like to focus on for the first half year, the OssDsign Catalyst science and the clinical performance fundamentals remain very strong. We keep seeing that. And we have now treated more than 15,000 patients with OssDsign Catalyst. It is about 10,000 in May last year. We have had a lot of strong surgeon-to-surgeon clinical presentations. They resonate really well with other surgeons, so it is a good tool. Most recently in Southernm ost Spine and ISS. There will be additional publications, and there have been during the spring as well to support the Catalyst results. We now have new sales leadership in place as well. I said we had a new CEO coming in. He came in 1st of January, Mark Waugh. He is an American, and he is in the U.S. just about all the time. But as of the end of June, we also have new sales leadership. We are still very focused on hiring and building on expanding the sales force, but we have also changed the team culture a lot, which now means that 50% of the sales guys who were there 1st of January have been replaced. It is a big undertaking. Unfortunately, sales have flattened out in Q1 and Q2. That is not something we are particularly happy with. I think it is almost impossible not to end up there, though, when you go through such a major overhaul of the sales organization, when you have new people, new sales methods, and also a new comp plan which focuses solely on growth. Unfortunate by effect, but we believe that we had to do it basically to build a better foundation for future growth. To finish off 2025-20 28 strategy, as I mentioned, Scale to Profit. Yes, we believe we are still on track to hit those targets. We have the MIS Catalyst launch progressing very nicely, and I guess that will be the first sort of call point to see that we are heading for our targets on the strategy. That is all I intended to say. Now up for Q&A. Thank you so much, Anders. Just a reminder, if you wish to ask a question, please just raise your hand, but maybe I will start us off. You have been with the company for a couple of years now, and you have been a part with both the previous CEO and the current CEO. You have seen the changes that has happened in the organization and throughout the company. Can you comment a little bit more broadly, what has been the biggest differences that Mark has kind of driven through the organization? Obviously, the change of sales force, there has been a change of incentive models and so on, but can you give us some more insights into what is actually going on beneath the surface of the organization? Well, the biggest thing is that he is American and he is there. I think that is what we could see, we could all see, and Morten specifically could see it, that it was great. His presence and his leadership was great in the first phase of OssDsign Catalyst, and now the next phase required presence in the U.S., and it is just difficult to do from Copenhagen. Simple as that. Mark, he is all sales. He has been sales for 20 years. He has the connections, he knows how it works in the U.S. Like I said, he is not the most American American. He does not wear a cowboy hat and that, but he is very American. He knows the industry, he knows the surgeons. I think that is the biggest change, that he has really converted into real sales culture more so than it was before. Mm-hmm. I guess also kind of there's been a lot of new people coming into the organization, there's been some that has churned out as well on the sales side. Can you comment a bit on where we are in terms of how up and running the new guys and girls are? Yeah. When can we expect them to be not fully utilized, but at to a more kind of attractive level compared to where they are now, if that's the right way to put it? What's your expectations for the facing during the rest of the year, given that they're still kind of new into the company? Yeah. If you look outside sales, I think we're done. We have all the people we need more or less. There could be one or two. But we've built all of that support functions. When it comes to sales, I don't think you're ever done. We set the target of doubling the sales force by end of 2026. If no one had left us, we would have more than doubled already. But some people have chosen to leave, and some people have been asked to leave simply because it's a new way of selling and new requirements, much more data-driven and, as I said, also a new comp plan, which is based only on growth. So the net increase isn't, we were 16% at year-end last year. I think we're about 18% now. It changes every week. But we're going to reach the 20%, 21% that we've said. A lot of these people have come in from April onwards. So I guess it would be asking too much to see very much before Q4 from these new guys. We still have a lot of old guys who still sell in the company. A six-month ramp-up period is probably what you should expect. As we are still adding the people who come in now, there are new people being interviewed all the time. Q4 or maybe early Q1, they will be up and running. I also know that Mark has been very clear that he does not see the doubling of the sales force was a target that we set for 2026 in the Scale to Profit strategy. That is not the limit. As far as he is concerned, as long as we can see there is good growth opportunities, then we will go way beyond that. Perfect. Maybe continuing a bit on the incentive structure or comp plan. You mentioned that you focus now purely on growth. Can you comment a bit on how that is different towards the previous structure you have had? For the people that have remained during both eras, so to say, how has this new structure kind of affected their performance? Are you starting to see results already, or is it too early on to say that, or can you give us some flavor on that? Well, you can see some of the old guys adapting well to the new standard. Of course, the new guys, this is what they bought into, so they are not surprised. There are some of the old people who did not like the new way of doing things, basically because they could see they were going to earn less, or more particularly, they were going to have to work a bit harder to earn what they wanted to earn. I think with the new structure, the potential for a sales guy in OssDsign is really huge, but you have to grow. If you have become a little bit complacent and a little bit happy where you are, then you should probably not be with OssDsign. And also kind of tied to that, I think one topic throughout the years has been, you know, sales commissions and fees. Yeah. Are you worried or how do you kind of assure that the new growth-based incentive plan doesn't infer or infer on pricing towards your customers, that you incentivize people to get kind of aggressive on that? Or how do you maintain a rigor of pricing, basically, in order to ensure margins as well down the line, I guess? Yeah. We have a number of tiers of pricing which they can't deviate from. Anything above or outside that, they have to go a step up. We also have gross margin expectations on them. It's not like they can start dumping the price. That can't happen. In terms of the ratio you were talking about, yeah, that's gone down now, but that's because we're selling less well than we used to. So you have the distributor commissions, but you also have the internal bonus component in that. I have to admit that we haven't paid out that much bonuses this year, given the sales result. That's just the way it is. I hope it is going to increase. Yeah. Perhaps coming back to this recent performance then, I guess. The sales force has obviously been one factor. Then you have also had these contract negotiations. Yep. What has been up for discussion with your customers or with the hospitals? What is the status on these renegotiations now? Yeah. Do you need success or kind of close that chapter in order to get back to growing where we are used to see OssDsign growing? How should we think on that? I think we have two major ones. There's always renegotiations going on, but we have two major ones, and when they reduce speed, it's on a relatively small company, less work to sign that shows in the figures. One of them has come to a really good conclusion about a month or so ago, but it took a while to get there. It wasn't so much price. It's all sorts of different things. What's happening in the U.S. a lot is that a lot of hospital systems aren't doing that well. So they're looking to increase efficiency and become profitable. Procurement department comes in and takes a much bigger role, and decisions are being moved up the ladder to the C-suite, and then you just have a very different and very much longer discussion to get to the target. I think we have still one ongoing, and I have no idea how it's going to end and when. It's just dragging on. We see this also with new customers. It's not just the existing ones, but new large customers, they all have a different sort of efficiency and profitability requirement internally. So, it's taking its time also with the new potential customers. Mm-hmm. You've also kind of flagged that Q3 has some seasonal effects given that a lot of people are on holiday in the U.S. That we should see growth at least after that has been the message from Mark, I would say. Are you in need of a closure of these negotiations in order to get that back on track, or can you affect that more internally with ramping up the sales team and getting them back on track? I think we get back on track even if all these negotiations don't turn out perfect. I'm pretty sure of that. It's an extra boost if one of these or two of these go our way, for sure, because they're big customers. But we'll get back to growth without all of them being successful. In the early years, if we go back a couple of years, we didn't really have much seasonality effects, and we didn't talk about it much. When we got questions, we said we don't really notice anything. But that's because we were adding new surgeons so fast that it didn't even matter if one went on vacation. Today, we're a little bit bigger, and we can tell. If three or four or five of our major surgeons go on vacation for a couple of weeks, then that shows in our numbers. That's what we've seen, especially in July. August, I don't really know how it's going up. Perhaps a bit related to that. You've now had, I think it's 15,000 patients treated by the end of Q2. Now that you have a bit bigger, I guess, repository of cases, have you seen any changes in the adoption trends of surgeons, or what strategy works in order to get them up and running to a level you deem satisfactory? What doesn't work? Is there any conclusions that you are now able to draw on that you weren't able to two years ago when the base was much smaller, so to say? If you are talking like- for- like, I do not think there is much of a difference. If it is the same sort of surgeon, it works in the same way. What you can say is we are probably approaching more larger organizations now, and they have a different way of purchasing. That is quite clear. Like I said, it becomes a more elevated decision and a lot more people involved, and it is a different case. But one hospital with one surgeon, that is pretty much the same process as it used to be. Hmm. Okay, great. Maybe getting just one question in on competition in the industry. You have one listed peer that is also active in the spine segment, and then one that wishes to join the spine segment as well. Yep. There is a lot of also kind of legacy alternatives within the field of orthobiologics in spine. How should we read into what is happening on the competition side? I guess the Swiss-listed peer, Kuros Biosciences, they are growing quite well. Yep. From what we can see on the reports. They are also quite a bigger company. Are you afraid that they are kind of one step ahead of you, or do you think you will be able to catch up with them, or what can you say about competition in general as well? I am not afraid of it. They are definitely one step ahead of us, several steps ahead of us. They started, I don't know, five, 10 years before we did, and they have spent a lot of money investing in clinical studies, et cetera, and building a really fantastic marketing organization. So they are definitely larger than us, and they are ahead of us, and they do a really good job. I think our product is better, but that is something for us to prove. Whether we can catch up with those guys, I don't know. I don't think it is necessary either. We will make our investments and build it the way we see fit. They have teamed up with Medtronic. I don't know where that is going to end up or if there is something like that in store for us. That is not really anything we know. That probably is the main and most impressive competitor. But you still have Cerapedics out there that we bump into quite often, and you have a lot of others. I am not too concerned about if there is one or two more new ones coming aboard, because there are so many out there already. We have enough competition from the sort of four or five big ones that we see all the time. Do you notice that your selling arguments have strengthened over the past year now that you have the PROPEL data? Yeah. Do you expect that to also be kind of accelerated once you have the randomized control trial data out? If that's favorable, of course, let us hope that. But what changes have you seen from that in discussions with hospitals and surgeons and so on? Well, I think, when we get to speak to surgeons who don't know us from before and they see the PROPEL data, they get really impressed. That is impressive for sort of the everyday real-life sort of patient data. I think our biggest problem is that most people don't know about OssDsign. Most surgeons in the U.S. wouldn't have a clue what OssDsign is. So we have a lot of work to do on getting the name out there, a lot of marketing efforts. Now also as we see, as we head into a lot of these larger systems, more prestigious organizations, they are much more concerned about level 1 data than some of the smaller ones who don't really care. So the fact that we're starting a level 1, we're not going to have level 1 clinical data from this study for many years yet, right? But just the fact that we're starting the study, that means we'll be one of maybe four who have that sort of data once, eventually. That just lends a lot of credibility to what we actually do. So it's a big help whether it's going to help us get through the door of some of these places. Let's hope so. Great. Do we have any questions from the audience? No, then I'll take the final question here as the time is moving fast. You're sticking with the target of SEK 400 million in revenue by 2028. I think that looks like a high ceiling for a lot of people given the current trends we're seeing. You have obviously your strategic kind of layers within Scale to Profit, but what needs to happen in order to reach that? What are the biggest kind of sensibility factors, if you were to say, throughout these, I mean, it's 2.5 years now until- Yeah. 2028, so what needs to happen? You're quite right. It's a high target, it seems, especially now. It seemed less high maybe a year ago when we said it, because you'd expected more growth this year. I think that maybe we could have reached it if we hadn't done anything, but I think it would've been tough. There were some changes that needed to be made, and I think now that we've made them, and maybe they were bigger than we actually first thought, so it's taken a little bit longer. But they were still necessary because you can't build successful growth if you don't have the right foundation, the right salespeople, and the right methods. What tends to happen is people sell a lot on relationships. When you run out of relationships, then what do you do? I think that is where we would have been heading if we had not made this change. I still believe we are going to reach that target. Yeah, cool. I think we will leave it at that then. Thank you so much, Anders, for joining us and presenting. Pleasure. Thank you for everyone for listening in.