»Accelerating sales in the US and Europe, partnership with global leaders and strategic acquisitions «
e-post: pia.renaudin@senzime.com
Slavoljub Grujicic, CFO Tel. +46(0)18 51 56 40 Mobil +46(0)763 066 011
e-post: slavoljub.grujicic@senzime.com
• Income after financial items was SEK -40,886 thousand (-22,576).
Income after financial items was
Earnings per share amounted to SEK -0.96 SEK (-0.63).
Figures in parentheses above describe the corresponding period last year. Unless otherwise stated, all information relates to the Group.
Note: 1) Includes monitors sold through direct and distributor sales, Fukuda and monitors placed at customer sites; 2) Excludes Fukuda
Significant events during the period
January 3: SENZIME WON PROCUREMENT FOR 16 HOSPITALS IN Q4 2021
Senzime announces in a business update that 16 hospitals have gone ahead with purchases in the fourth quarter - one hospital chose a competing product.
January 27: JAPANESE STUDY CONFIRMS BENEFITS OF TETRAGRAPH®
Senzime announces that a Japanese study published in the journal Anesthesia & Analgesia concludes that TetraGraph's EMG-based technology is a better indicator for assessing adequate reversal dose of the drug Sugammadex and recovery of neuromuscular function than conventional monitoring with acceleromyography-based (AMG) product TOF-Watch SX.
February 1: EMPLOYEE STOCK OPTIONS ALLOTTED The Annual General Meeting on May 11, 2021 resolved on an employee stock option program comprising 456,050 warrants, which may be allotted to employees - but not the CEO or those who are part of the company's management team. A total of 435,000 of these 456,050 options have been allotted in February 2022. See also under note 8. Employee Stock Option Program.
February 4: PATIENT ORGANIZATION RECOMMENDS QUAN-
Senzime announces that APSF, the Anesthesia Patient Safety Foundation, is revising its recommendations for patient monitoring and recommends quantitative monitoring when muscle relaxant drugs are given to patients.
February 10: CLINICAL EXPERTS TALK ABOUT THE IMPOR-
TANCE OF MONITORING NEUROMUSCULAR BLOCKADE Senzime announces that the patient safety organization APSF has released a podcast that emphasizes the importance of monitoring neuromuscular blockade as this is just as important as monitoring blood pressure, oxygenation and ventilation during anesthesia care.
February 17: SENZIME WINS US PROCUREMENT FOR 50 TETRAGRAPH® SYSTEMS
Senzime announces that the company has won an order from a major US university hospital for the placement of 50 TetraGraph® systems and the sale of associated disposable sensors with an estimated value of SEK 1.5 million annually.
This order is a broad deployment of TetraGraph® systems across all of the hospital's operating theatres, comprising 50 systems with associated disposable sensors.
February 23: APPLIES FOR FDA APPROVAL FOR DISPOSABLE SENSORS IN CHILDREN
Senzime's neuromuscular blockade monitoring system - TetraGraph® - with its disposable TetraSens® sensor has been
Senzime | Interim Report January - June | 2022
approved for sale in the US market since 2019. Senzime's first EMG-based disposable sensor designed for use in young child- ren, TetraSens® Pediatric, is now being launched, for which the company has now requested approval.
March 3: SENZIME WINS US PROCUREMENT FOR 23 TETRAGRAPH® SYSTEMS
Senzime announced that it has won another procurement from a major university hospital, this time in the southeastern United States for 23 TetraGraph® systems and sales of associated disposable sensors.
March 24: SENZIME WINS US ORDER WITH AN INITIAL VALUE EXCEEDING SEK 1 MILLION
Senzime announces that the company has won a procurement in Midwest from an American hospital chain consisting of three hospitals, affiliated with a medical education. The procurement concerns instruments and the sale of associated disposable sensors with an initial order value exceeding SEK 1 million.
March 25: SENZIME RECEIVES CE-MDR APPROVAL FOR NEW DISPOSABLE SENSOR INTENDED FOR USE ON YOUNG CHILDREN
Senzime announced that the company's
TetraGraph® system has now also been approved for use in children through CE-MDR approval of the new single-use sensor TetraSens® Pediatric.
April 4: SENZIME'S NEW DISPOSABLE SENSOR DEVELOPED FOR CHILDREN IS PRESENTED AT THE AME- RICAN CONGRESS OF ANESTHESIOLOGISTS
Senzime announces that the recently launched disposable sensor for children, TetraSens® Pediatric, received great intresse when it was shown at the AMERICAN Anaesthetist Congress SPA Pediatric Anesthesiology 2022. At the same time, a number of studies were also presented where TetraGraph is used on children.
At Senzime's Annual General Meeting, the current Board was re-elected and a decision was made on the Nomination Committee prior to the next Annual General Meeting, rules were adopted for remuneration to senior executives, new Articles of Association and a decision was made on issue authorization.
June 1: SENZIME ENTERS INTO AGREEMENT TO ACQUI-
RE THE AMERICAN COMPANY RESPIRATORY MOTION Senzime announces that the company has signed an agreement to acquire 100 percent of the shares in the American company Respiratory Motion, Inc., for an initial consideration of USD 19 million on a cash and debt-free basis, with a potentially additional additional purchase price of up to USD 25 million paid out no earlier than 2024.
The initial consideration is paid through a new issue of 8,655,238 shares in Senzime, corresponding to a dilution of approximately
12.2 percent. No cash and cash equivalents shall be paid within the framework of the initial consideration. The potential additio- nal purchase consideration presupposes strong sales growth in Respiratory Motion and shall consist of either or both cash and shares in Senzime. Senzime may, in its sole discretion, decide on the distribution of cash and issued shares.
June 1: SENZIME COMPLETES A DIRECTED NEW ISSUE Senzime is carrying out a directed new issue of 5,263,158 shares at a subscription price of SEK 19 per share, whereby the company will receive approximately SEK 100 million before transaction costs. Investors in the private placement include both existing and new shareholders, including Fredrik Rapp, the Crafoord Family and related entities, the Fourth AP Fund, TIN Fonder, Handelsbanken Fonder, ÖstVäst Capital Management, FE Fonder and Swedbank Robur Fonder. Senzime intends to use the net funds from directed new issue for accelerated growth and to finance working capital needs in Respiratory Motion.
June 21: SENZIME SIGNS STRATEGIC CONNECTIVITY AND LICENSE AGREEMENT WITH MASIMO
Senzime announces that the company has signed strategic connectivity and licensing agreements with Masimo, a US and globally leading company in patient monitoring solutions. With the agreement, a new cable module for TetraGraph® will be developed and marketed by being connected to the Masimo Root® patient monitoring system and enabling connection to Masimos Hospital Automation ™ and iSirona ™. Masimo's expanda-
ble Root® monitoring system is sold worldwide, with a rapidly growing installed base. Root® is today the standard system in many hospitals. The collaboration will broaden awareness of the TetraGraph® system and increase the addressable market.
The AGM resolves that the Board is authorized, on one or more occasions during the period until the next Annual General Me- eting, to decide to increase the Company's share capital by an amount corresponding to a maximum of SEK 1,087,500, which corresponds to the issue of a maximum of 8,700,000 shares. Authorization may be used only to issue shares in accordance with agreements entered into related to the acquisition of the company Respiratory Motion, Inc.
Significant events after the end of the quarter
July 1: SENZIME ACQUIRES 100 PERCENT OF
THE SHARE CAPITAL OF THE AMERICAN COMPANY RESPIRATORY MOTION
Through the acquisition, Senzime broadens its product portfolio in the market for monitoring vital functions and increases the company's ability to take a larger part of the patient journey even outside the operating room. Senzime today has a rapidly growing business and well-functioning infrastructure for direct sales in the USA and Germany, which together with Respiratory Motions' existing agreements can further accelerate sales of disposable sensors, while Senzime's total addressable market is expected to triple.
See Note 9 for the acquisition in brief.
Senzime | Interim Report January - June | 2022
Accelerating sales growth in the US and Europe, strategic partnership with global leader and acquisition in the US
The installed base of TetraGraph® is growing and the consumption of disposable sensors is following as a result. During the second quarter, sales growth in Europe amounted to over 70 percent and in our direct sales organization in the US to over 100 percent. For the month of June, the corresponding figures were 125 percent and over 200 percent, respectively.
In the United States, revenues from sales of TetraSens® grew by 154 percent compared with the same period last year. The fact that sales growth does not appear in comparison with the second quarter of 2021 is due to a major inventory build-up order for South Korea of SEK 2.0 million that took place in the comparison quarter last year.
During the year, we won several large hospitals in the US and the installation of TetraGraph® systems is now in full swing. Several of the larger deals are based on a consignment model where Senzime's revenue is generated through the consumption of TetraSens® over time, which is why the sales figures do not yet reflect the full scope of the deals. During the quarter, evaluations in the USA led to us winning 15 contracts and only two hospitals were lost to competitors.
In Europe, we are seeing accelerating growth and June was our best month to date with 50 TetraGraph® monitors installed. During the quarter, evaluations in Europe led to us winning 25 contracts and only three hospitals were lost to competitors. For the coming weeks alone, 39 trials are already planned. We are in a very exciting market situation that is now shifting up with the support of clinical guidelines around the world and I see that we maintain our market-leading position
We are very proud that in June we were able to announce our strategic partnership with the American company Masimo - a global leader in products and systems for patient monitoring. Masimo has a large global installed base of monitors and we are now connecting to their fast-growing patient monitoring solution Root® . The partnership with Masimo means that we will develop a common module that integrates the TetraGraph® instrument in Root® . The sales revenue from this module and the TetraSens disposable electrodes consumed connected to
it are distributed between Masimo and Senzime based on a market royalty model. The collaboration is a fantastic milestone for Senzime and one of the most important agreements we have entered into so far. Our vision is to standardize monitoring with TetraGraph® when using muscle paralyzing drugs and this agreement enables us to quickly access many hospitals while making our new cutting-edge technology even more accessible to customers worldwide. The conditions are good for a sharp increase in the consumption of TetraSens® when we connect to Masimos Root® .
During the quarter, we also completed the acquisition of Boston-based Respiratory Motion (RMI). The acquisition of RMI is fully in line with our vision of a world free of anesthesia
Senzime | Interim Report January - June | 2022
and respiratory complications. RMI is a leader in monitoring respiratory function to avoid respiratory depression, an acute condition that affects up to 30 percent of patients who is undergoing various types of pain treatment in postoperative care.
The deal is the result of a dialogue that began as early as 2021 and is an acquisition with perfect logic. RMI gives us the conditions to further accelerate the roll-out of TetraGraph® at the same time as it expands our business of monitoring patient's respiratory function even outside the operating room. With RMI's unique monitoring system in the portfolio, we achieve sales synergies through our own sales force and distributor channels, and increase the addressable patient volume by a factor of three. We are thus laying the next steps for our journey to become a global market leader in patient monitoring of vital functions with a vision to eliminate complications related to anesthesia and analgesia - anesthesia and pain relief.
RMI's ExSpiron system monitors respiratory function in patients in real time with a unique technology based on many years of research in the USA with the protection of 14 patent families and proprietary algorithms. ExSpiron is CE and FDA approved and validated on over 6,000 patients in more than 30 scientific publications.
Like TetraGraph® , the ExSpiron system is based on a "razor and razorblade" sales model with a monitor and associated disposable sensors. The annual estimated total addressable market for ExSpiron in the United States alone is more than $ 4 billion. After the end of the quarter, the value of ExSpiron has been confirmed by doctors at a large German university hospital. The feedback was very positive with, among other things, the following comment by Professor Weber "I can better ascertain and predict postoperative complications with the extra clinical information that ExSpiron provi- des. ExSpiron data will also help me determine the right clinical route postoperatively depending on patient's breathing".
With strong organic growth, a strategic partnership with a global leader and a recent acquisition, we expect continued high business activity in the future. The development in Senzime also means that during the third quarter we will communicate updated financial targets.
Acquisition of American Respiratory Motion
During the second quarter of 2022 Senzime acquired RMI, a Boston-based medical technology company that develops and markets systems for monitoring patients' respiratory function and other vital functions.
RMI was founded by thoracic surgeon Jenny Freeman and the company has raised more than $ 35 million in capital for development and initial commercialization.
The company's solution - ExSpiron - is the only non-invasive system on the market that monitors patients' breathing volume, respiratory rate and other vital parameters in real time. ExSpiron is based on many years of research by physicians in the United States and is protected by 14 patent families and proprietary algorithms. The system is CE and FDA approved and validated on over 6,000 patients in more than 30 scientific publications.
Monitoring of patients' respiratory function is a critical function that is closely monitored during surgery according to standardized protocols. However, a significant proportion of patients need continued monitoring of respiratory rate and volume in real time even after surgery when they come to a ward. There is often a lack of adequate equipment that can give an early warning of respiratory depression and thus prevent complications in patients whose airways are not secured by intubation.
Respiratory depression affects up to 30 percent of all patients undergoing various types of pain treatment (analgesia) in postoperative care. This leads to complications, extra care time and increased costs for caregivers. Senzime's acquisition of RMI is based on the analysis that this reality must change.
The ExSpiron system is based on a "razor and razorblade" sales model powered by an installed base of monitors with disposable sensors. The estimated total addressable market in the United States alone amounts to more than USD 4 billion, which, combined with RMI's access to approximately 5,500 hospitals, enables rapid growth of the installed base of monitors. RMI currently has a number of strategic purchasing agreements with some of the larger purchasing organizations in the USA through the so-called Group Purchasing Organizations (GPOs)
The acquisition of RMI expands Senzime's product portfolio with unique, complementary technology to monitor patients' respiratory function even outside the operating room. The acquisition triples Senzime's total addressable market.
The acquisition is also intended to further accelerate the market penetration of the TetraGraph® system through clear sales and margin synergies - both through its own sales force and distributor channels.
RMI currently lacks a direct sales organization in the USA and Senzime sees great opportunities to utilize its infrastructure for direct sales in the USA and Germany and thus accelerate the commercialization of RMI's products and solutions. The companies also have clear operational synergies in manufacturing, product development, regulatory affairs and administration.
The transaction also creates the conditions for accelerating Sen- zime's overall goal of becoming a global market leader in patient monitoring of vital functions and thereby contributing to reduced complications related to anesthesia and analgesia.
RMI has sales in Europe, China and the USA, where sales in 2021 amounted to approximately USD 1.1 million with a gross margin of approximately 48 percent. RMI is not profitable at the EBITDA level and was negatively affected by the Coronavirus as access to hospitals during the pandemic was limited and thus complicated the sales process.
Senzime has acquired 100 percent of the shares in RMI for an initial consideration of USD 19 million on a cash and debt-free basis. Payment is made with a new issue of 8,477,937 shares in Senzime, corresponding to a dilution of approximately 12.2 percent.
Upon entry on July 1, 2022, 2,127,537 shares in Senzime were issued through set-off. The remaining shares will be issued within the next 12-month period. No cash and cash equivalents have been paid within the framework of the initial consideration. See more in note 9.
The deal also includes a potential additional purchase consideration of up to USD 25 million to be paid out in 2024. The potential additional purchase consideration is calculated with an EV / Sales multiple of 2023 of 2.6x and assumes strong sales growth in RMI. The consideration shall then consist of either or both cash and shares in Senzime. Senzime may, in its sole discretion, decide on the distribution of cash and issued shares in the event that an additional purchase price is to be paid out.
Senzime | Interim Report January - June | 2022
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