Sedana Medical AB (publ), interim report Q3, 2020

Financial Summary July – September

• Net sales during the third quarter amounted to KSEK 21 432 (16 416) corresponding to an increase of 31% compared with the same period in 2019.
• Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to KSEK -10 417 (-4 029). This corresponds to an EBITDA margin of -48,6% (-24,5%).
• Earnings before interest and taxes (EBIT) amounted to KSEK -11 700 (-5 093) which corresponds to an EBIT margin of -54,6% (-31,0%).
• Net income for the period was KSEK -13 423 (-4 938) and earnings per share before and after dilution was SEK -0,58 (-0,25).
• Cash flow from operations before changes in working capital amounted to KSEK -8 472 (-3 913).
• Cash flow from investment activities amounted to KSEK -22 031 (-12 733).
• Cash flow for the period amounted to KSEK -27 377 (-15 250).
• Liquid funds at the end of the period amounted to KSEK 406 346 (122 152).

Financial Summary January-September

• Net sales for the period amounted to KSEK 95 773 (51 589) corresponding to an increase of 86% compared to the same period in 2019.
• Earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to KSEK -9 990 (-9 000). This corresponds to an EBITDA margin of -10,4% (-17,4%).
• Earnings before interest and taxes (EBIT) amounted to KSEK -13 535 (-12 130) corresponding to an EBIT margin of -14,1% (-23,5%).
• Net income for the period was KSEK -15 317 (-9 632) and earnings per share before and after dilution was SEK -0,67

(-0,49).

• Cash flow from operations before changes in working capital amounted to KSEK -7 581 (-7 840).
• Cash flow from investment activities amounted to KSEK -53 984 (-36 829).
• Cash flow for the period amounted to KSEK -58 065 (-37 386).

Significant events during the period
Quarter 1

• Sedana Medical donated AnaConDa and accessories to two hospitals in China (Wuhan and Zhejiang) related to the out­break of the Covid-19 pandemic.

Quarter 2

• In the beginning of April, the company announced a sales increase for the first quarter of 2020 that was significantly higher than expected. Sales for the first quarter of 2020 was SEK 34 million, which corresponds to a growth of around 90 percent compared to the same period last year.
• Sedana Medical announced in the beginning of May that the company will support a multinational study of inhaled seda­tion in covid-19-related ARDS (Acute Respiratory Distress Syndrome). The study (ISCA) is conducted in intensive care units in several European countries.
• In May, the first patient was enrolled in SESAR, a study comparing inhaled sedation and intravenous sedation for patients with ARDS. The study is conducted in France and Sedana Medical contributes with financial support and study material.
• At the annual general meeting of Sedana Medical, all pro­posals from the Board and the Nomination Committee were approved. Until the next annual general meeting, all current board members were re-elected and Christoffer Rosenblad was newly elected. The annual general meeting resolved to elect Öhrlings PricewaterhouseCoopers AB as new audi­tor for the period until the end of the next annual general meeting, with the chartered accountant Leonard Daun as principal auditor.
• All warrants in the company’s incentive program 2017/21 have been exercised by the warrant holders, leading to an increase in the number of shares and votes in the company by 310 149.
• Sedana Medical announced in June that the company has sig­ned agreements with distributors in Bulgaria, Cyprus, Greece, Slovakia and the Czech Republic. By expanding in Eastern Europe, the company wants to strengthen its position ahead of the upcoming market launch of its therapy.

Quarter 3

• On July 1, Sedana Medical announced that it had received market approval in Saudi Arabia for its medical device Ana­ConDa, and that distribution agreements had been concluded with distributors in Saudi Arabia, the United Arab Emirates and Oman. Sales are expected to begin shortly in Saudi Ara­bia and within a few months in the other countries.
• On July 10, Sedana Medical announced top line result for the company’s pivotal phase 3 study for the drug IsoConDa. The study reached its primary endpoint; to show that IsoConDa (isoflurane), administered with AnaConDa, is an effective sedation therapy for mechanically ventilated intensive care patients, and non-inferior to propofol.
• On August 19, the company announced that it has signed a distribution agreement for sales in Australia and New Zealand with the distributor Device Technologies. As the AnaConDa already has market approval in both markets, sales can start immediately.

Significant events after the period

• Sedana Medical announced in October that Susanne Anders­son has been appointed new CFO of the company and will start first quarter of 2021. Susanne Andersson succeeds Maria Engström, who on her own initiative has chosen to leave the CFO position. Maria Engström will transfer to an advisory role for Sedana Medical’s management team when Susanne Andersson has started.
• Sedana Medical announced in the beginning of October that the UK’s National Institute for Health and Care Excellence (NICE) has issued a Medtech Innovation Briefing (MIB) on the use of AnaConDa as an alternative to intravenous sedation in intensive care.

Outlook 2020 – covid-19
Sedana Medical has during the third as well as at the end of the second quarter, compared with the period March- May, seen a normalized but continued positive sales devel­opment as a result of the covid-19-pandemin.

However, the pace of the sales growth has decreased dur­ing the third quarter compared with the period March-May this year. This coincides with a slowdown in the spread of covid-19 in Europe in particular, where Sedana Medical has its main sales.

For the full year 2020, Sedana Medical cannot make an assessment of the sales development due to the uncer­tainties that follow from the covid-19 pandemic. These uncertainties range from hospitals’ and clinics’ propensity and ability to use new sedation therapies during a crisis to a possible shortage or reduced availability of intrave­nous sedation drugs in a possible second or third wave of covid-19-pandemic.
CEO comments

Sedana Medical is working to develop inhaled sedation with AnaConDa and IsoConDa to become a new global standard therapy in intensive care. The third quarter began in the best way with positive top line-results1 from our pivotal phase 3 study SED-001 which is the basis for the registration of our upcoming drug for inhaled sedation – the most important milestone for the company in many years. In addition, the business continued to be charac­terized by the covid-19 pandemic but also by intensive work, partly with completing the application for a European market­ing approval but also with preparations for our upcoming US expansion.

The Covid-19 pandemic puts a strong stamp on our entire business since ICU sedation is just the treatment that seri­ously ill covid-19 patients often need. As our treatment leads to potentially fewer side effects and better oxygen uptake in the lungs, demand for AnaConDa and accessories has been strong during the year. An additional contributing factor to the strong demand is that the treatment contributes to increased patient capacity in ICU units, which was important during the pandemic.

The sales increase during the quarter was 31 percent in SEK (39% adjusted for currency fluctuations), which we interpret as the initial sales pressure due to the pandemic has de­creased in line with the reduced number of covid-19 patients in the intensive care units, although the clinics continue to de­mand our treatment for patients other than covid-19 patients.

Sales have been strong in most European countries. Even outside Europe, including Canada and Mexico, there has been great interest and sales are gradually increasing. The increased interest is probably, to some extent, an effect of the pandemic, but also due to the fact that we have a new distrib­utor in Mexico. In Canada, we now have a wide range of clinics that use AnaConDa, among other things in a new investigator initiated trial.

Our strategic planning for how to achieve our vision to make inhaled sedation a new global standard therapy in intensive care is based on 3 steps:

• To get AnaConDa approved in as many markets as possible to enable use, build experience, support investigator initiated trials and be able to do non-inferiority registration studies that show that inhaled sedation therapy is as good as today’s standard treatment.

• To get the drug IsoConDa approved and also the thera­py, in a first step in the EU and later in additional markets. The therapy will then go from off-label to fully approved. We thus sell the entire therapy, including both drugs and the medical technology products that are included (in the EU, this is estimated from the second half of 2021).

• To secure medical evidence with the help of more studies which shows that inhaled sedation is a better and more cost-effective treatment compared to today’s standard treat­ment. Among other things, this can be done by demonstrating significant benefits regarding awakening times, shorter time to extubation, fewer side effects such as delirium, greater pro­portion of spontaneous breathing in patients, better oxygen up­take, shorter IVA treatment times, etc. In this way, treatment will gain ground and be included in national recommendations and gradually take its place as a new standard treatment worldwide.

Our registration study, SED-001, is the single largest advance in inhaled sedation since AnaConDa was developed, and we are extremely proud to have conducted the world’s largest study of inhaled sedation in intensive care. Based on the good top-line results from the study that we published at the beginning of the quarter, we have worked hard to compile an application for marketing approval that we will submit as soon as possible during the last quarter of this year, which means that we are well on our way to reaching the second step to reach our vision.

In a first registration round, we submit the application for 15 EU countries plus the United Kingdom, which due to Brexit has its own national process. If all goes well, we expect an approval during the second half of 2021. After that, an applica­tion for another group of EU countries can be submitted, which normally takes 6 months to obtain approval for.

During the quarter, progress was also made in several of the investigator initiated trials that we support. Among other things, it is very gratifying to see that both INASED and SESAR have started and that the studies have been able to continue despite the pandemic. SESAR is carried out with the aim of showing that inhaled sedation with AnaConDa has lung protective properties in comparison with propofol and, among other things, increased survival as a target. INASED is performed with the aim of showing a reduced incidence of delirium and improved cognitive recovery after sedation with AnaConDa.

Through this type of investigator initiated trials, as well as already published evidence and the own studies that we are planning in the US next year, we gather evidence that will form the basis for a paradigm shift in intensive care. We will contin­ue to support this type of trials as it is an important corner­stone in our continued regulatory and commercial expansion.

As we now approach commercialization in Europe, our work is focused on launch activities. A key factor for a success­ful commercialization is the acceptance from payers in the healthcare systems. Therefore, it was very gratifying to see that NICE in the UK (National Institute for Clinical Excellence) issued a MIB (Medtech Innovation Briefing) on the use of AnaConDa as an alternative to intravenous sedation in inten­sive care. NICE is responsible for providing national guidance on treatments for public healthcare in the UK. The MIB document refers to five analyzes of a total of 1 098 patients which show that inhaled sedation with AnaConDa is as effective as intravenous sedation and can reduce ventilator time. It was very encouraging to see the range of positive state­ments from the clinical experts in the MIB document. Obtain­ing such a positive MIB from NICE, without the treatment being yet fully approved, is a strong recognition and will impact positively for future recommendations from other advisory institutes and future dialogues with payers.
 

Preparations for next year’s American phase 3 studies have been intense during the quarter. To confirm and ensure efficacy and safety, two clinical, randomized and blinded studies of approximately 250 patients each will be performed. We have appointed a CRO that we will work with and we already have interest from over 30 centers to participate in the studies. There are reputable centers and investigators who have shown interest so far and the plan is to have about 40 American centers in the studies.

We are working to be able to submit an IND (Investigational New Drug) application during the first part of 2021 to obtain permission to start the studies. An IND approval assumes that the toxicity studies have been completed and it is gratifying to be able to state that these are progressing at a good pace and according to plan. Depending on how the pandemic develops, we expect to be able to obtain an IND approval before the summer in order to be able to include the first patient in each study during the second half of 2021.
 

We look forward to starting our studies and feel well prepared. Our work with the European study has taught us a lot that we benefit from in the design and execution of the American stud­ies. The goal is to reach a US registration in 2024 and in 2022 we will decide on our commercialization strategy for the US.

All in all, we are adding another extremely intensive but successful quarter behind us. I look forward to coming back to you.
 

Christer Ahlberg, President and CEO

Please find the full interim report at: www.sedanamedical.com under Investors/annual & interim reports.

Sedana Medical will hold a telephone conference at 14:00 am (CET) Thursday November 05, 2020. 
To participate, please dial: +46 8 505 583 66
For more log in information: https://financialhearings.com/event/12714
Or join us at:  https://tv.streamfabriken.com/sedana-medical-q3-2020

For additional information, please contact:
Christer Ahlberg, CEO, Sedana Medical AB (publ)
+46 70 675 33 30
christer.ahlberg@sedanamedical.com (mailto:)

Maria Engström, CFO, Sedana Medical AB (publ)
+46 70 674 33 30
maria.engstrom@sedanamedical.com
 

Sedana Medical is listed on Nasdaq First North Growth Market in Stockholm. 
The company’s Certified Adviser is Erik Penser Bank, +46 8 463 83 00, certifiedadviser@penser.se.

This information is such that Sedana Medical AB (publ) is obliged to disclose pursuant to the EU Market Abuse Regulation. The information was released for public disclosure, through the agency of the contact persons above, on November 05, 2020 at 07:00 am (CET).

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About Sedana Medical

Sedana Medical AB (publ) has developed and sells the medical device AnaConDa for the administration of volatile anaesthetics. Through a combination of AnaConDa and the candidate drug IsoConDa (isoflurane), Sedana Medical provides inhaled sedation for mechanically ventilated intensive care patients. The company is working to obtain market approval in Europe for inhaled sedation in intensive care with the pharmaceutical IsoConDa® (isoflurane) during the second half of 2021.

Today, mechanically ventilated intensive care patients are sedated intravenously which leads to several challenges for both patients and care givers. Challenges that are solved by inhaled sedation. Based on an estimate of seven to eight million patients being sedated in intensive care due to mechanical ventilation globally, on average three to four days, Sedana Medical estimates the total market potential to SEK 20-30 billion, evenly distributed between the US, Europe and Asia. Three years after market approval in Europe Sedana Medical expects sales of SEK 500 million in Europe and an EBITDA margin of about 40 percent. The company has initiated a process to obtain market approval in the US in 2024. Registration activities have also been initiated in other markets outside the EU.

Sedana Medical has direct sales in the Nordic countries, Germany, Benelux, France, Great Britain and Spain as well as external distributors in parts of the rest of Europe, Australia, Canada, China, India, Israel, Japan, Mexico and South Korea. The company was founded in 2005 and is headquartered in Stockholm, Sweden, with medical device development in Ireland.