Ladies and gentlemen, welcome to the XVIVO Group interim report Q2 2021. I will now hand over to Dag Andersson, CEO. Sir, please begin. Yes. Good morning, good afternoon, good evening, depending on where in the world you are right now, and welcome to the second quarterly telephone conference 2021. I am happy to present with my CFO, Kristoffer Nordström, as mentioned in the quarterly report, which was released this morning, we had a strong second quarter from many aspects. Sales, margins, and EBITDA showed very positive performance. Sales in local currencies increased by 116% in the quarter. Gross margin of non-durable goods, 76%, and EBITDA margin adjusted of 14%. These are very strong numbers. On top of that, an organic growth of 82% for the Thoracic business area also worth mentioning, since this is actually an exceptionally strong number. The level of recovery within organ transplantation varies from country to country. In the U.S., the number of transplants increased for all major organs compared with 2019. Interesting to note regarding lung transplants is a very strong second quarter number. During the second quarter, 712 lung transplants were performed in the U.S. versus 675 in 2019 and 587 last year. In Europe, the recovery is slower and more fragmented. Central Europe recovering at a quicker pace. Nordic countries and Southern Europe at slower pace. This is, of course, strongly correlated with how much available capacity there is in intensive care units for non-COVID-19 patients. As travel restrictions are now, or at least are on their way to disappear, the commercial team within XVIVO is now able to meet with existing and potential customers and discuss EVLP programs, liver perfusion, kidney perfusion, et cetera. Consequently, we have also increased the number of customer training events and held very successful webinars on different topics, such as how to start machine perfusion programs, kidney perfusion, et cetera. We have also continued to invest in our commercial team, as earlier mentioned. Particular focus on preparing the U.S. organization for the launch of the Abdominal product range, with initial focus on our highly acclaimed Kidney Assist Transport, which was featured in a publication in The Lancet November last year. We are also investing in Europe as we see reimbursement initiatives open up business opportunities in different countries. Coming back to Q2 highlights, it is worth mentioning the submission of the 510(k) application with FDA for the Kidney Assist Transport, we expect regulatory approval end of this quarter. NICE in the U.K. is supporting EVLP, and we are actually starting an EVLP program this quarter in a leading lung transplant center in the United Kingdom. More clinics included in our European trials for heart preservation and also PrimECC. We have started something very exciting, a digital transformation journey together with the University Medical Center Groningen, one of the leading medical centers in the Netherlands. I will talk about these highlights in greater detail after Kristoffer has presented the numbers. As regards financials, before I hand over to Kristoffer, I have already mentioned sales, margins, and EBITDA performance. Another important number is the machine perfusion percentage of net sales, which in quarter two amounted to 52% versus 39% last year. This is very important, and it shows that customers are increasingly perfusing organs, and this is actually the only way to ensure that organs are in optimum condition ahead of the transplantation. We had SEK 10 million in one-time costs. One third of this amount refers to an M&A process which was terminated. Kristoffer, are you ready to talk through the numbers in greater detail? Yes. Thank you, Dag. Starting with a P&L overview and the key ratios. First of all, as you said, we are pleased with the overall net sales for the quarter, given the fact that there is still a COVID-19 effect on healthcare, especially in Europe. Net sales amounted to SEK 59 million, corresponding to growth of 95% compared to last year and 116% in local currencies. Overall, strong sales in America within lung transplantation compensated for weaker sales in Europe for all organs. Regarding gross margin, we are very pleased with the margins also for this quarter. Total gross margin, including both non-durable goods and durable goods, was 75%. EBITDA adjusted for one-time costs was SEK 8 million, corresponding to an EBITDA margin of 14%. Same thing here. We are satisfied with this level, especially since we have invested quite a lot in the organization during the last 12 months here. I will comment more on the one-time costs on my last slide here. Year to date, we present net sales of SEK 118 million, a total gross margin of 74%, and an adjusted EBITDA margin of 12%. If we deep dive a bit into the Thoracic business area, net sales amounted to SEK 50 million, corresponding to a local currency growth of 82%, very strong against 2020. This was, as I said, mainly driven by a strong recovery in the U.S. on both static preservation and machine perfusion, such as EVLP. Non-durable goods accounted for 98% of sales. That means no XPS sales in this quarter. However, outlook is promising and for example, we have increased our stock in the quarter to meet the future demand for our machines. In terms of regions, Americas accounted for 65% of sales, Europe 30%, and APAC 5%. U.S. strong, as we have said, for example, all our top 10 U.S. clients are returning growth on year-on-year terms. In terms of EVLP, the most important U.S. clinics are now more or less returning to normal levels, which is very satisfying. In Europe, the recovery varies country by country, and overall it has not come as far as in the U.S. Gross margin on non-durable goods was strong, 80% in the quarter, which is in line with last year. Next slide. If we look at the Abdominal business area and the Q2 highlights, sales came in on SEK 9 million. Comparative figures in our report are missing since the acquisition took place in Q4 last year. However, organic growth for Abdominal and former Organ Assist was 126% compared to 2020, and sales came in line with the comparable quarter 2019. Year-to-date, 64% organic growth compared to 2020 and 56% organic growth compared to 2019. Non-durable goods was 77% of sales, and durable goods, meaning machines, was 23%. As you know, Abdominal more or less only operates in Europe still. So 98% of sales came from Europe. Gross margin 52% was in line with Q1. Let's move over to the EBITDA. Perfect. One back. Exactly. Some comments on the EBITDA. Adjusted for one-time costs, EBITDA was SEK 8 million, corresponding to a margin of 14%, as we said. The one-time costs, as we like to present them, amounted to SEK 10 million in the quarter and consist of the following items. Cost of an M&A process, cost from business integration with Organ Assist. We expect that type of cost to cease in the third quarter. Finally, cost from cash-based incentive programs for employees outside of Sweden. The rolling 12 months adjusted EBITDA is SEK 31 million positive and also 14%. This could be compared with SEK 19 million and 10% last year. Let's go to my final slide. Cash flow financial position. The cash flow in the quarter, cash flow from operating activities was negative, minus SEK 13 million. That was mainly due to our one-time costs of SEK 10 million. Furthermore, as I said, we increased our inventory during the quarter, which impacted on our cash flow. Both machines and disposable sets were manufactured in order to meet the future demand and to secure transition into new manufacturers. Except from these costs based on strategic decisions, I would say that cash flow from our core business was positive for the quarter. Cash flow from investing activities was minus SEK 23 million, mainly attributable to investments in our R&D projects such as our heart preservation trials. We ended on a cash position of SEK 311 million in the end of Q2. That is in line with our year-to-date expectations. Finally, we continue to have a healthy balance sheet, equity assets ratio of 88% and no external debt exists. Now I will hand over to you again, Dag. Thank you very much, Kristoffer, for this. I will talk a little bit about some of the significant events which I earlier mentioned, I will talk them through in more detail. If we start with one of the most important ones, the Kidney Assist Transport. Nearly 2/3 of all transplants in the world are kidney transplants, and therefore our new Kidney Assist Transport will play an important role in preserving kidneys in optimal condition ahead of the transplant. An article published in the scientific journal, The Lancet, in November last year proves that oxygenated perfusion of kidneys before transplantation has a significant impact on the first year result of the transplantation. Less graft failure, better function, and lower rejection of the kidney when compared to the cold perfusion alone. The plan to receive market clearance for the U.S. launch by Q3 is still valid, U.S. go-to-market strategy, pre-launch activities, education, supply chain optimization, are all ongoing activities. We have already received questions on our filing from FDA, which is good, we are well prepared to provide them now with the answers. As mentioned earlier, we will start an EVLP program in the U.K. during this quarter. One leading hospital will perform EVLP not only for the hospital itself, but also smaller lung transplant centers. This model is very exciting and a true breakthrough for us in the U.K. One important aim of this initiative is to collect EVLP data in order to support the reimbursement process in the U.K. As regards our clinical trials, notably the European Heart Preservation Study and PrimECC, we are now including five centers in the heart trial in Europe, we expect three more centers joining the study during the third quarter. We have also decided to include additional centers in France and Germany to speed up the trial as much as possible and conclude the trial by end 2022, as earlier communicated. The same logic applies to PrimECC, where we intend to include the leading hospitals in Oslo and Copenhagen, we are also in discussions with two leading German centers. I'm also very excited about the digital transformation journey we have initiated with the University Medical Center Groningen in advanced analytics. The project, named ACCEPT, aims at extracting liver perfusion data from our Liver Assist machine, and the objective is to have surgeons make more data-driven decisions and increase the number of successful liver transplants. We are also planning to initiate a similar pilot project alliance with a U.S. transplant center in the near future. What is key for us for the remainder of 2021? We are in the process of preparing the 2022 to 2026 strategic plan, and we'll have a meeting with our leadership in Gothenburg end August to finalize the plan. We will become the global leader in machine perfusion for all major organs, and our strategy will tell us what we need to do to achieve this. Of course, the launch of the Kidney Assist Transport in the U.S. is key to start our Abdominal journey in the U.S. We are also planning FDA submission for the Liver Assist machine. We are, as I told you as well, speeding up heart and PrimECC trials and continue preparing for the launch of the U.S. trials. We're also focusing on continued price increases in the U.S. and Europe and work with reimbursement authorities in Europe. Final comment, we will have our first Capital Markets Day on September 23 in GoCo Health Innovation City in Gothenburg. There will also be an online webcast, of course, but we have a great agenda and hope to see as many of you there as possible. And as a company involved in preserving and evaluating organs, it is important never to forget the purpose of XVIVO, which is that we believe in an extended life of organs. No one should die waiting for a new organ, and this is what I and my colleagues around the world strive for every single day. Wishing you all a great summer vacation. Thank you very much for listening. Thank you and goodbye. Thank you. Ladies and gentlemen, if you do have a question for the speakers, press zero one on your telephone keypad now. Our first question comes from Niklas Trattner from Carnegie. Please go ahead. Your line is now open. Thank you very much, good afternoon, both Dag and Kristoffer. I'll start off with just the strong development in the Thoracic segment and essentially for all lungs. Seeing non-durable sales up 75% year-over-year, putting that into context of the increased number of transplantation. I'm not sure if I got this right, was it up 21% year-over-year, 712 transplants versus 587 last year? If so, are you gaining market share, or is this just purely an effect of your price increases? You remember the number correct. It was 587 in quarter two last year. It was 675 in 2019 and 712 this year. We believe that we are actually gaining some market share as well in the U.S. If we look at the large customers we have, we are doing more lung transplants with those customers than ever before. It's a combination of gaining market share. Of course, price increase plays a role here as well, and the general sort of market growth. You have the organic growth, you have gains market share, and you have price increases, which all lead to this fantastic development. If you could help shed some light on the price increases. How much are we now currently on a year-on-year basis for both- We made a price increase in Q4 last year of 15% in the U.S. on Warm Perfusion and 10% on cold. There have been really not been any objections from the customers here. I would say that we have had a full impact of those increases on the Thoracic sales in the U.S. Perfect. Thanks. On to the gross margin. As for the Abdominal segment, noted that it was affected by change in supplier. Yes. If you could help us with just how much that was in Q2, you mentioned that will not be any major effect into Q3 as well as, will the new supplier provide you with cheaper options that would have positive effects on these non-durable goods for the Abdominal segment? Do you want to answer that? Yep. Exactly. We are in the middle of a transition to new suppliers. In that process with the old supplier, we have received higher prices on the present kits that we sell. We need to live with that for a couple of months here. The new kits that will be manufactured will have a bit lower manufacturing price, which is good. As you can see, the gross margin was more or less in line with Q1, that has also to do with the fact that the amount of distributor sales in Q2 was lower than in Q1. There we had a positive effect isolated to this quarter that offset the higher prices, let's say, on the kits, on the purchasing prices. Okay. If we look in the future, we believe that, and the target for European sales until we go over to the new kits, the level of gross margin that we present now is reasonable, so to say. Yeah. A U.S. launch, of course, will give us possibilities to increase that margin. Perfect. Just on the one-off costs in the quarter. Obviously interesting to see that the M&A activity remained high, and I am guessing you won't go into detail on what type of acquisition that was related to. If we were to focus on the one-off related to the cash-based incentive programs, when will that start to abate, and are we to expect similar effects going into Q3 and Q4? Thank you. I totally understand the question because it is a one-time cost that is a bit odd since it has nothing to do with our operations, and it is only an effect of the increase or decrease of our share price. The history is that we have historically launched incentive programs, such as subscription warrants for Swedish employees, and we have not offered that to our employees outside of Sweden, and instead, we have offered them a bonus model that more or less mirrors this potential outcome of the Swedish programs. There will not be a cash effect in future quarters until potentially the Q2 in next year, because we have these two-year programs that are running. There is one program left associated with this type of cost, an incentive program that ends in May 2022. There will potentially be a cash effect, but all quarters until May 2022 could have a P&L effect based on the share price development. Okay, fully understood. On to exciting times ahead for the Abdominal segment. Obviously, it looks like the Kidney Assist Transport device is ready to be launched on the U.S. market fairly soon. What about Liver Assist? What is left before filing for U.S. approval for that product? As well as if I remember correctly, there were earn-outs related to the acquisition of Organ Assist related to these some milestones. Are these earn-outs we are to expect to be paid out during the next six months? To answer the last question first, of course, I would like to see the earn-out paid out because that also shows things are being delivered. There are two components in the earn-out. One is the Kidney Assist Transport registration completed by end 2021, and the other component is the sales value of Abdominal product range globally in 2021. As it looks now, the way we plan things, it is expected that the earn-out will be paid out. That is where we are right now. It is also very much linked to the timing of the launch of Kidney Assist Transport because part of the budget for the Abdominal range is linked to U.S. sales in the fourth quarter of this year of the Kidney Assist Transport. Hopefully, if everything moves forward the way it is doing now and we get the FDA registration completed by the end of September and we can start selling in October, of course it should be fine. That is on earn-out and kidney. When it comes to Liver, we are in the process of filing for the FDA registration. The challenge with the Liver Assist is that there isn't really a similar machine on the market, so we are trying to see here also what categories would fall in under and there is something called de novo category, which we hope would be the case with Liver Assist and so on. We are in the process of communicating with FDA and trying to assess what kind of registration process is the correct one for this device. The work has started, we expect to have it done by next year. The big focus now is of course the Kidney Assist Transport. We have to focus and do things also one at a time. We can't just do everything simultaneously with that. There's nothing in the budget for this year related to Liver Assist in the U.S., it's only sold in Europe. We'll see how we plan the budget for 2022. Did that answer your question? Yeah. Perfect. Thank you, Dag. Two last question on my side before I'll get back into the queue. NICE and obviously the track towards reimbursement in the U.K. is interesting, and you mentioned that you're expecting reimbursement to be in place in Q1 2023. What are we to expect in terms of costs to be seen for reimbursement in the U.K. up until 2023? Will there be any sort of cost coverage from NICE during that point in time? Yeah. We will start selling to one very large center in the U.K. who also will work with lungs from other centers. We are in the process to prove our case. NICE is giving us this, what we call it, Kristoffer, it's like a temporary financing of EVLP for us to be able to prove our case so that it becomes a nationwide reimbursement. We expect good sales and it is safe in the center during quarter three. That's already decided. We will start selling officially in the U.K. this quarter. Is there any limitation it's not full reimbursement for the whole U.K. Yeah. Sorry. What is the current limitation from a budget perspective for EVLP under the NICE agreement that you currently have? I don't know exactly how the agreement is formulated, but we know that there is a certain quantity of EVLP that will be performed which we have already discussed and negotiated prices already decided. Everything is ready, but it's not a full national reimbursement yet. It's a selective reimbursement because there is great belief in EVLP and we are starting to sell in the U.K. as if there was reimbursement, but only for this center with some smaller centers attached to this very big center in the U.K. I don't really have more details than that right now, but you will see sales during quarter three in the U.K. Yes. Okay, perfect. Just last question, and I don't want to infringe on the Capital Markets Day, where I'm guessing you will talk more about this, but if you can give us some more insight onto the digital efforts that you're currently doing and the press release from last week, what that entails in terms of how that would imply in terms of adoption of both in the Abdominal and Thoracic segment. Is this a new segment where you're seeing transplantation moving towards? There are many reasons to work with digital transformation in the area of lung and liver and also kidney and heart transplantation. We are starting this initiative in Netherlands. We are also starting in the U.S. We are not allowed yet to mention the sites for legal reasons, we believe that there is lots to be done when it comes to algorithms in terms of predicting the functionality and suitability of organs. We will talk much more about that at the Capital Markets Day. If you don't mind, I would prefer not to say more than this right now. Since in September we will be able also to reveal the U.S. center and what we expect to get out of it. Would it be fine if I didn't talk it through in more detail right now? No, that is perfect. We'll have something to look forward to at the Capital Markets Day. Absolutely. Perfect. Thank you very much, both Dag and Kristoffer, and I'll go back then to the queue and congratulations on a great quarter. Thank you for very good questions. Thank you. Our next question comes from Dylan van Haastrecht from Robey & Co.. Please go ahead. Your line is now open. Hi, Kristoffer. Hope you're well. Thanks for taking my questions, congrats on a nice print. Perhaps unsurprisingly, most of my questions have been answered. Just two. I understand you might not be able to exactly give me a range, could you give me a rough estimate of the transplant capacity versus last year for U.S. and Europe? I know U.S. is ahead of last year, not being as disrupted, in Europe, I understand it can be very wide. Anything here helps. My second question would be, I also noticed you had some more capital spending, or it appears this way at least, on the side of the centers buying more machines. Could you perhaps tell me a bit about the placements and what kind of devices you placed, if this is a leading indicator for non-durable sales third quarter, what kind of range you expect that to be relevant? Thank you. Thank you, Dylan, good to hear from you as well. When it comes to Europe, it is very much varying from country to country. There are certain countries which are relatively strong. Benelux, for example, is performing relatively well, so is Austria and Switzerland, whereas Scandinavia Spain has really not been able to do, for example, anything on the EVLP side due to the COVID situation. I think Germany, where we don't really have reimbursements yet for lungs. Germany is also a country where intensive care capacity has been relatively high, they have also managed the COVID-19 situation much better and been able to perform other surgeries, including organ transplantation. It's hard to give you exact percentages. I don't know, Kristoffer, if we have anything to share which gives precise percentage compared to 2019, 2020. As we said, and it applies to both the Abdominal area and the Thoracic, is that, for example, Southern Europe has so far been a struggle and has impact on our sales, Italy, Spain, France, for example. In relation to Thoracic, what we see is that, for example, the EVLP programs have not seen such a significant recovery as we see in the U.S. I think that is the main difference when it comes to lungs between the two continents. Could you please rephrase your second question? Sure. I saw that durable sales are actually going well. I was just wondering what kind of devices you placed, and if they're placed in new centers, and if these are all EVLP devices or other devices. Durable sales in the quarter was, if we talk about XPS machines in lung, were zero actually. No sales, no placements. Outlook is good. We're having interesting discussions with centers in, not new centers, in both U.S. and Europe, which is good. When it comes to Abdominal, we are looking at different possibilities. If we should sell machines, or we should place machines with a volume commitment, and that is an ongoing process at the moment. For lungs, normally, we sell a machine. For lungs, we know that there should have been probably one or two deliveries in Q2 that will now happen in Q3 instead. We know already two customers in the U.S. who will take lung machine. We have U.K. We also have probably two more machines in Europe coming in quarter three, early quarter four. Quarter 2021 could actually be the strongest year ever for XPS machines if everything goes. Yeah according to plan. Excellent. Thank you very much for taking my questions. Thank you, Dylan. Thank you. Our next question comes from Johan Unnérus from Redeye. Please go ahead. Your line is now open. Thank you for taking my question. Some of them, or most, have been answered already. Congratulations also to a solid quarter and what I understand, a pretty good outlook as well. Yes, a few things. U.K. prices you have are set, and I guess you won't release any prices this way, but is there anything we can say about the price level that has been set? You mean for the U.K.? Yes, indeed. I don't have the exact price, but I know it's a good price. That's all I know. I haven't seen the exact price level in pounds. I don't know, Kristoffer, if you have seen it, but it has been agreed, and it's a good price level. Definitely not Europe average or above. It's a good price. That's all I know. That's helpful. Is there anything that could be said about, you were pretty specific that we should expect Q3 sales already from the U.K. Is there anything we can say about the volumes that it's a big center. There were some satellites or related. Yeah. We are not allowed yet to reveal the customer as I understand it. It's a very famous and big hospital, and I'm sure you can guess which one it is. There will be two smaller hospitals that will also use this big center and the XVIVO machine for EVLP. I don't want to give any number when it comes to how many EVLPs will be performed, but it is a good number that makes my commercial team happy, and if they are happy, it means that it is a good number. We will be able to say more after Q3 and maybe even at the Capital Markets Day. I would prefer not to say anything that makes this sensitive because we are just about to start up with this program in the U.K. That's understandable. Also, you seem to be pretty confident about the U.S. launch, possibly already in October, and that's also related to some earn-outs. Is there anything to be said about these volumes? We have planned a certain budget for the U.S. for the fourth quarter. We are planning to sell a certain number of Kidney Assist Transport. We are already talking to the centers. We are prioritizing the centers because we believe this will be in high demand. Of course, when you launch something, you have to be a little careful in the beginning because you will always have a buildup of stock and supplies and so on. We are talking about a good number. We are not able to talk about the exact number when it comes to the U.S. because it's in the future. For the Abdominal product range, this number is significant and it's a good margin and so on. Once again, unfortunately, I will have to pause here and then when things happen, we will be able to talk about them again. Thank you. You are pretty confident that earn-out will come into play? Yeah, I am confident. We are working according to the plan that has been communicated since a long time with FDA registration and commercial launch. Of course, something can always happen last minute, you never know. We are working with this. We have great product team. People are making sure that things are being delivered according to the timetable that has been established, and we have appointed a product champion for the U.S. We have appointed a marketing manager for the U.S. Many things are in place for this launch. We are just waiting for the formal FDA approval. Once we get that, we can start shipping the device to the U.S. Absolutely. Thank you. That's all from me. Thank you. As another reminder, if you do wish to ask an audio question, please press zero one on your telephone keypad now. Our next question comes from Caroline Daniel from Danske Bank. Please go ahead. Your line is now open. Hi, Dag. Hi, Kristoffer. Thanks for taking my questions, which unsurprisingly, most have been answered already. I was wondering if you could shed some light on where you see the long-term gross margins going for non-durable goods, obviously a bit lower due to Abdominal being part of it since Q4. Once you see price adjustments and so on in place, where do you see gross margins ending up overall then? Kristoffer, do you want to take this? Yes, sure. When it comes to Abdominal, there is a lot to do on the margin, and we will take this step by step. We have experience from our non-durable goods in lung transplantation, and we should reach something similar. We should know that at the moment we have a highly profitable solution, the Perfadex, for non-durable goods in lung, which we don't have for Abdominal. Excluding that, I would say that our midterm goal here would be around 70%, should be reasonable for the abdominal non-disposables. We will work with the price increases, but as for other industries, of course, there will also always be increases on the other end as well. MDR costs and raw material, et cetera. U.S. price levels are generally higher than European price levels. The more we sell in the U.S., the better for the gross margin. I think 70% is a good benchmark for the Abdominal range, as you said, Kristoffer, for the disposable products. All right. Thank you for that. Does that answer your question? Oh, for sure. Yes. Thank you. Most questions have been answered already. I'm stuck with more of a sentiment question. You're not getting much pushback on your price adjustments. As you said, Dag, prices are generally higher in the U.S. Would you say that the sentiment is the same when you raise your prices in U.S. versus Europe or? The big difference is, if you have reimbursement in a country, if you have good reimbursement, of course it's much easier to talk about price increases. If you look at U.S. as an example, if you take one competitor like TransMedics who is pricing much, much higher than we are, and they have an inferior product to us. In the U.S., there is competition with very high price. That makes it, of course, easier for us to raise our prices. In Europe, it varies from country to country, depending on what kind of reimbursement model is in place. In Europe, we also have certain contracts which have been long contracts with limited price increase opportunities. We are increasing prices in Europe wherever we can, and we will continue to do so. It's easier to do it in the U.S. because of the reimbursement model in the U.S. Sure. Understood. All right. That's all from me. Congrats on a good and stable quarter, guys. Thank you, Caroline. Thank you. Thank you. Thanks. Thank you. There appear to be no more audio questions. I return the conference to the speakers. Perfect. Great. We are done. Thank you all for listening and welcome, hopefully, some of you to the Capital Markets Day. For everyone else, we'll be in touch again after Q3. Thank you. Thank you