Raising our 2024 sales guidance and integrating our European trial into the US submission - strengthening our file, but extending timelines
Third quarter 2024
- Net sales for the quarter totaled MSEK 39.7 (34.3), equivalent to an increase of 16% compared to the same quarter 2023. At constant exchange rates, sales increased by 20%.
- Gross profit was MSEK 28.3 (23.9) equivalent to a margin of 71% (70%).
- Earnings before interest, taxes, depreciation and amortization (EBITDA) totaled MSEK -9.0 (-12.6), equivalent to an EBITDA margin of -23% (-37%). EBITDA ex-US for the quarter was MSEK -5.3 (-11.9) corresponding to a margin of -13% (-35%).
- Operating income (EBIT) totaled MSEK -14.3 (-18.1), equivalent to an EBIT margin of -36% (-53%).
- Net income for the quarter was MSEK -22.6 (-6.8) and earnings per share before and after dilution was SEK -0.22 (-0.07). The decrease is mainly due to a lower financial net compared to the same quarter 2023. The financial net partly consists of unrealized currency effects on cash and cash equivalents held in USD, but also of interest revenue on cash and cash equivalents.
- Cash and cash equivalents at the end of the quarter totaled MSEK 226.4 compared to MSEK 304.3 at the beginning of the quarter.
- Cash flow from operating activities totaled MSEK -29.3 (-3.9). The cash flow has primarily been affected by payments of short-term liabilities related to investments in our US clinical program, which is why accounts payable and accrued expenses also have decreased.
- Cash flow from investments in intangible assets, mostly driven by our US clinical program, totaled MSEK -36.3 (-41.8). Total cash flow from investment activities were MSEK -37.1 (111.2). The positive cash flow in Q3 2023 derives mainly from deposits invested in the first quarter 2023, which were repaid during the third quarter 2023.
- Total cash flow for the quarter was MSEK -67.3 (106.2). Considering the allocations of liquid assets to short-term investments during 2023, the total cash flow amounted to -67.3 (-46.9) MSEK. Negative currency effects on cash and cash equivalents amounted to -10.5 (-2.4) MSEK for the quarter.
January-September 2024
- Net sales for the period totaled MSEK 129.6 (109.3), equivalent to an increase of 19% compared to 2023. At constant exchange rates, sales increased by 19%.
- Gross profit was MSEK 92.0 (78.0) equivalent to a margin of 71% (71%).
- Earnings before interest, taxes, depreciation and amortization (EBITDA) totaled MSEK -23.9 (-33.9), equivalent to an EBITDA margin of -18% (-31%). EBITDA ex-US was MSEK -14.4 (-32.5) corresponding to a margin of -11% (-30%).
- Operating income (EBIT) totaled MSEK -39.9 (-50.7), equivalent to an EBIT margin of -31% (-46%).
- Net income was MSEK -19.2 (-21.5) and earnings per share before and after dilution was SEK -0.19 (-0.22). The increase in operating profit is due to higher sales and lower operational costs, which are offset by a lower financial net compared to the previous year. The financial net partly consists of unrealized currency effects on cash and cash equivalents held in USD, but also of interest received on cash and cash equivalents.
- Cash and short-term investments at the end of the period totaled MSEK 226.4 compared to MSEK 381.8 at the beginning of the year, supported by a positive exchange rate effect of MSEK 6.6.
- Cash flow from operating activities totaled MSEK -19.1 (-46.8). The improved cash flow from operating activities is primarily due to an increase in operating profit. The cash flow from changes in working capital is higher than the previous period due to lower inventory and higher receivables.
- Cash flow from investments in intangible assets, mostly driven by our US clinical program, totaled MSEK -144.0 (-126.9). Including repaid deposits and the previous year's investment in deposits, total cash flow from investment activities totaled MSEK 10.4 (-280.1).
- Total cash flow for the period was MSEK-11.4 (-330.6). Excluding the repaid deposits and the previous year's investment in deposits, the total cash flow amounted to MSEK -166.7 (-177.5).
CEO comments
With a strong focus on our top three priorities - driving robust sales growth, advancing our journey towards US market entry, and achieving ex-US EBITDA break-even - I am pleased to report another quarter of solid progress:
- Building on 20% growth in Q3 and 19% year-to-date, we are raising our full-year financial guidance to 17-20% net sales growth.
- On the US front, we will follow the FDA's recommendation to integrate our European trial into our US submission. While this step will affect the timeline and associated costs, it is expected to strengthen our filing.
- The agreement to acquire our primary supplier, along with our continued commitment to cost discipline, puts us on track to build a long-term profitable company.
Raising our financial guidance
We report net sales of 39.7 MSEK in the quarter, representing a year-over-year growth of 20%, excluding exchange rate effects. Year-to-date, we have delivered sales growth of 19% and hence continue to track ahead of our sales growth guidance range of 14-18% for the full year. We are therefore raising our full year guidance to 17-20% net sales growth, excluding exchange rate effects.
Our main market Germany grew by 9% in the third quarter and reached approximately the same sales level as in Q2, while the average German intensive care unit reported 9% less patients in Q3 versus the previous quarter. The decline in the number of patients is in line with the typical seasonal pattern.
Our other direct markets once more demonstrated their strong momentum, with sales growth of 49% in local currencies. The growth was again fuelled by an excellent performance in Spain, benefiting from strong commercial execution, an expanded customer base, favorable treatment guidelines, and the launch of our pharmaceutical Sedaconda (isoflurane) with pricing and reimbursement approval.
The UK also continued their accelerated growth path, following MHRA approval at the end of 2023. With the continued high growth, our other direct markets now account for almost 30% of our total sales, underscoring the importance of our strategy to reduce dependence on our main market, Germany. This diversification is crucial as our direct markets outside Germany play an increasingly vital role in achieving our overall growth ambitions.
Our distributor business grew 30% year over year excluding exchange rate effects, which is now the fourth consecutive quarter with solid growth after a period of sales decline. Our targeted approach, which focuses our support on select key partners with high potential and positive momentum, is continuing to bear fruit.
Integrating our European trial into the US submission, shifting submission timeline
Earlier this year, we cleared the important milestone of completing enrolment of our two pivotal trials in the United States. Since then, the long-term follow up of both studies has been progressing according to plan and is nearing completion. We are now awaiting high-level results for both studies.
In our journey towards US market entry, we are pursuing a clear strategy of de-risking our submission by seeking frequent interactions with the FDA and creating alignment on important aspects of the file before we submit. Contrary to our expectations based on earlier feedback, the FDA has recommended that an additional pooled efficacy analysis of all three Phase 3 clinical trials (i.e. the European clinical study and both US clinical trials) be included in the submission. In addition, the FDA has indicated that stand-alone ISE and ISS (Integrated Summary of Effectiveness and Safety) documentation will be required.
We have decided to follow the FDA's recommendation to integrate the data from our European trial into our US submission, as we expect this to strengthen our NDA submission. The first step is a feasibility study to determine the technical and clinical feasibility to pool all relevant endpoint data from the European and US studies that differ slightly in several aspects, such as methods and timing of endpoint measurements, intercurrent events, and data formats.
If the feasibility phase is successful, we will perform the pooling analyses and include them in the submission. These efforts would extend the submission timeline by approximately one year and add approximately 20-30 MSEK in additional cost. Besides the feasibility phase, the extra work includes an extension of the statistical analysis plan, development of programs to pool data across the studies, a conversion of the dataset to comply with the FDA's requirements for data standards and extended documents for the Integrated Summary of Effectiveness (ISE) and the Integrated Summary of Safety (ISS), for which the FDA has requested separate stand-alone documents in Module 5 of the dossier.
In their review and approval decision, the FDA would then consider each of the US trials individually and they would also review the pooled analyses across all three trials, to which we now have the opportunity to add 300 patients at comparably limited cost. We are confident that this approach will ensure the most robust submission and hence support our long-term goals.
Like all FDA processes, both the period leading up to submission and the review itself are subject to uncertainties with regards to the timeline. We will therefore maintain close communication with the FDA and keep you updated on our progress through the CEO's comments in upcoming reports.
Progressing towards building a long-term profitable company
We continue to be focused on building a long-term profitable company and have since 2022 taken decisive measures to streamline our non-customer facing functions and implementing a vigorous shift of resources towards the frontline. Our efforts have had clear results and we have significantly improved our profitability since 2022. For Q3, we report a negative ex-US EBITDA of -5 MSEK, which is an improvement vs. -12 MSEK last year and also vs. -11 MSEK in the previous quarter. As a further move to improve our financial resilience, we have signed an agreement to acquire our main supplier Innovatif Cekal in Malaysia during the quarter and continue to expect closing of the deal before year end. The transaction is expected to add two percentage points to our bottom line once we have sold our existing stock and is therefore another building block of future profitability.
Our cash level at the end of the quarter amounted to 226 MSEK, which we deem sufficient to execute on our plan. Importantly, also with the additional scope of the US submission, we are estimating 2025 capitalized expenses will be significantly lower than in 2024.
Exciting times ahead
When entering this year, we knew that 2024 had the potential to be a defining year for Sedana Medical's future. With only one quarter to go, I see the company well on track to deliver on the goal of reaching an all-time high in sales, in line with our raised sales guidance. At the same time, we are making good progress towards ex-US break even and building a long-term profitable company.
On the US side, the upcoming high-level results will mark another key milestone, I welcome the opportunity to integrate our European trial into the US file and therefore strengthen the submission for our highest-potential market.
I am looking forward to updating you on our progress.
Johannes Doll, President and CEO
Please find the full report at: Interim Reports | Sedana Medical
This document has been prepared in both a Swedish and English version. In the event of any deviations, the Swedish version shall prevail.
Sedana Medical will hold a telephone conference at 13:30 pm (CET) Thursday October 24, 2024.
If you wish to participate via webcast please use the link below. Via the webcast you are able to ask written questions. Link to webcast: Sedana Medical - Q3 Presentation 2024 - Finwire
If you wish to participate via teleconference: +46 8 5050 0828. Meeting ID: 836 8155 4078 followed by #.
For additional information, please contact:
Johannes Doll, CEO, +46 (0)76 303 66 66
Johan Spetz, CFO, +46 (0)730 36 37 89
ir@sedanamedical.com
This information is information that Sedana Medical AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, at 2024-10-24 07:00 CEST.
About Sedana Medical
Sedana Medical AB (publ) is a pioneer medtech and pharmaceutical company focused on inhaled sedation to improve the patient's life during and beyond sedation. Through the combined strengths of the medical device Sedaconda ACD and the pharmaceutical Sedaconda (isoflurane), Sedana Medical provides inhaled sedation for mechanically ventilated patients in intensive care.
Sedana Medical has direct sales in Benelux, France, Germany, Great Britain, the Nordics, and Spain. In other parts of Europe as well as in Asia, Australia, Canada, and South- and Central America, the company works with external distributors.
Sedana Medical was founded in 2005, is listed on Nasdaq Stockholm (SEDANA) and headquartered in Stockholm, Sweden.
