Four-year results Investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged, and they can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company can review your questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll, and I would now like to hand you over to President and Chief Technology Officer, Nicolas Loebel. Good afternoon to you.
Good afternoon. Thank you, Alex. Hello to everyone. Welcome to Ondine's full-year 2024 results presentation. My name is Nic Loebel, Ondine's President and Chief Technology Officer. We'll go through this presentation, which is also now available on our website, and take questions afterwards. This presentation provides general information. It's not intended to be comprehensive. Please review the company's annual report available today for further information. 2024 was a transformative year for Ondine. We'll talk about our robust commercial expansion, our pivotal phase three study, which launched at the end of the year with HCA Healthcare, our strategic distribution partnership with Mölnlycke Health Care of Sweden, our leading medtech company specializing in wound care and surgical procedures. We'll touch on the launch of our high-volume, high-margin Illuminator System, driving the steady wave of revenue growth, and, of course, the successful CAD 21.7 million financial raise of 2024.
Just in respect of key metrics, note that revenue grew 70+% on a year-over-year basis, with a 600 basis point increase in gross margin. I'm also pleased to report an 81% growth in the number of hospitals using Steriwave over the year. Just like to remind investors why we're doing this. Imagine nine Wembley Stadiums filled with people. That's how many people in the U.K. are contracting and suffering a Healthcare-Associated Infection each year. As a reminder, these are infections the patient didn't have before going into hospital. Their infections suffered because the patient went into hospital. This is a sad and terrible fact of modern healthcare. These HAIs are costing the NHS GBP 2 billion annually, and they're requiring 5.6 million additional bed days in hospitals at a time when NHS is suffering from the worst backlog in history, some 6 million patients waiting for surgery.
Remember that each infection affects countless downstream stakeholders, from the patient themselves to employers who have to sustain businesses without the patient, to waitlisted patients who cannot access available beds. Assessments have been carried out showing a 10-1 increase in total cost over the direct infection, in some countries a 100-1 impact, making HAIs one of the most expensive adverse events in modern healthcare. Let us take a look at where these infections start. The nose has proven to be the starting point of many of them. In fact, 67% of all HAIs involve the same pathogens as those found in the nose. You can decolonize the skin. You can decolonize the hair. That is quite common. The inside of the nose is a warm, wet breeding ground for pathogens that can infect you after a surgical incision.
Today, only a few agents, primarily antibiotics such as mupirocin, are used to treat the nose before surgery. These agents are becoming increasingly ineffective because of antibiotic resistance. Ondine has developed and is the worldwide leader in advanced antimicrobial technology called photodisinfection. This can eradicate all fungus, all bacteria, all virus, and it can do so in minutes without harming the human tissue. It's been used for a decade in Canada in over 200,000 patients, and it's now being rolled out through distribution partnership with Mölnlycke Health Care and into the pivotal clinical study in the US with HCA Healthcare, which we will discuss later in the presentation. Please visit the website if you'd like a more detailed look at how this fast and painless and effective technology actually works. Last year, Ondine invested in operational capacities to support the growing demand.
We launched the enhanced Steriwave nasal illuminator seen in the middle of your screen, designed for high-performance, high-volume manufacturing and stronger gross margins. These replace the fiber optic units of the last 10 years. You can see the laser activator on its clinical roll stand to the right of the picture and the consumables pack on the left side. We sell tens of thousands of these consumables per year. Let's look at our financial results. The performance in 2024 was marked by continued strong revenue growth and improvements in gross margin. All these figures, by the way, are in CAD. Revenues increased by 70% to CAD 2 million versus 2023 at CAD 1.2 million, driven by an 81% increase in hospital deployments, as well as per hospital revenue increases on a year-over-year basis.
Gross margin improved to 64% versus 2023 at 58% due to operational efficiencies, the introduction of the enhanced Illuminator, and, of course, better unit economics. We made further investment in automation and production capacity to support scaling in 2025 and beyond. The operating loss was CAD 19.4 million versus 2023 at CAD 14.8 million, as we fully prepared for the U.S. phase three study, as well as the Canadian ICU study, and developed infrastructure to support our expanding growth. We successfully raised CAD 21.7 million net cash during 2024, with an additional CAD 5.7 million strategic investment from HCA Healthcare's investment arm secured just after year-end. Cash reserves at year-end were just under $10 million. Some further detail on these results. As we indicated, this 81% increase in hospital deployments took us from 16 hospitals in 2023 to 29 hospitals in 2024.
Importantly, we benefited from a 33% shorter time to close each hospital in Canada, which obviously reduced our cost of sales. Post-period deployments and near-term commitments in 2025 have already increased this hospital number significantly. Revenue as a percentage of sales and marketing expense increased dramatically by 183%, reflecting significantly higher efficiencies in our sales cycle. By the way, 100% customer retention is still the case. Not a single hospital has ever lost the system once deployed. Ondine expanded Steriwave's footprint across Canada. It's now used in five of the nation's 10 largest hospitals. In the U.K., Steriwave is used in five NHS hospitals across leading NHS trusts and is listed on the NHS supply chain. Importantly, hospitals are increasing use of the product once launched into a particular specialty. That's our same store sales metric.
For example, a pilot program deployment into a particular orthopedic specialty, such as hips, can multiply rapidly as hospitals roll out Steriwave to all of their orthopedic procedures, as shown in this real-life example in example two. An orthopedic deployment can extend across the hospital to unrelated and additional specialties, as shown in example one above. These additional sales are occurring without our sales staff being directly involved. The cost is lowered to acquire the additional sales. These are internal referral sales. I'd like to briefly discuss our partnership with Mölnlycke Health Care. They're an 8,000 person strong, EUR 2 billion company. They specialize in wound care and surgical procedures. Mölnlycke have integrated Steriwave as a key product in their infection control portfolio. They're now able to provide complete perioperative disinfection alongside their HIBI Portfolio. That would be from the nose to the toes.
The company's partnership with Mölnlycke will accelerate Steriwave's entry into the EU and the Middle East markets once the U.K. introduction is complete. This will, of course, leverage their existing worldwide distribution network. In Canada, Steriwave is now evolving past the early innovators and early adopter customers, and it's becoming mainstream medicine. For example, in British Columbia, Steriwave is used to protect patients undergoing surgery across all five of the province's health authorities. We're very proud of becoming standard of care in many of these authorities. Initial results from pilot studies at leading NHS trusts have recently been released, and they confirm similar benefits to the ones patients see in Canada and opening the door to now early adopters in the U.K. on this curve. More evidence is always better evidence for mainstream adoption. We're focusing on three new sources of evidence beyond our Canadian real-world experience.
One, in the large phase three pre-surgical study in the U.S., approximately 5,000 patients with HCA Healthcare. Two, the ICU study in one of the busiest hospitals in British Columbia, Fraser Health Authority. That is the 500-bed Royal Columbian Hospital. Three, we are co-developing several pharmacoeconomic publications based on investigator-sponsored studies to demonstrate to customers the return on investment of Steriwave. The most recent health economic validation of Steriwave in the U.K. was completed by York Health Economics Consortium, Privileged Pharmacoeconomics Modeling Consortium, with substantial payback demonstrated for every pound spent on Steriwave across the surgical population. Just to repeat, that is not just for patients with infections. That is for everyone receiving Steriwave. If Steriwave were deployed this way across all U.K. hospitals, this data alone shows that Steriwave could save the NHS over GBP 200 million annually in the reduction in surgical site infections.
In the U.S., the pivotal Lantern study kicked off in December 2024 with the first patients enrolled. We spent the first quarter of this year optimizing the protocol, focusing on patient communications about the study and training hospitals on study-wide operations. Patient recruitment is actively progressing, though it is slightly slower than we expected, with 10 of the 14 planned HCA Healthcare hospitals now operational. Additional site activations are pending. Further sites beyond the 14 are being assessed to bring in the timelines. We do anticipate the second half of the study, as you can see on this graphic, to be shorter than the first because all hospitals will be trained and active. With these measures, we do anticipate last patient recruitment to be delayed by one quarter.
In Canada, at the ICU study at Royal Columbian, this was contracted in 2024 and kicked off post-period in March, run by a top Canadian ICU clinician called Dr. Steve Reynolds. With twice the infection rate and 10 times the mortality rate than the surgical population, the need for protective solutions in ICU has never been greater. Remember that U.S. guidelines already recommend universal decolonization in the ICU. This provides us with strong tailwinds for what is a multi-billion dollar market. As we start to diversify Steriwave into standard of care and mainstream medicine, we're investing in our operational infrastructure, our commercial foundation, and in clinical development, as we just discussed. We intend to expand indications horizontally, as shown, with $10 billion in addressable markets in the first two indications of pre-surgery and ICU alone.
We also intend to expand vertically across multiple countries, which contain developed healthcare systems and high infection rates. That is in collaboration with our partner, Mölnlycke Health Care. As we expand additional products from our pipeline into our partners, such as treatment for burns and wounds, suppression of ventilator-associated pneumonia, catheter-related infections, and so forth, this will fully develop the platform technology of photodisinfection. To summarize, we have proven technology, both in terms of research results and real-world evidence over many years, demonstrating safety and effectiveness. All of this has gone to the U.S. regulator. 2024 showed strong commercial growth, repeating the performance of the previous year. Our U.S. phase three study kicked off on schedule, and we're closely working with HCA Healthcare to bring in the study to conclude this year.
Both HCA Healthcare and Mölnlycke Health Care have steadily increased their commitment to us operationally and financially, leveraging our efforts. To conclude, I'd like to express our deep appreciation for the patience and trust you've placed in us as investors and partners in developing this groundbreaking technology. While we focused on organic commercial growth, enhancement of unit economics, two major partnerships, two major clinical studies, and many internal initiatives over the year. As we enter the next quarter, we intend to build further on all these initiatives. I'd also like to thank Paul and Alex of Investor Meet and Angelica Vance, our Head of Corporate Communications, for all her assistance with these slides in this presentation. Thank you again for partnering with us on this journey, and I look forward to answering any questions you may have.
Fantastic, Nicolas. Thank you very much indeed for your presentation.
Ladies and gentlemen, please do continue to submit your questions using the Q&A tab situated on the top right corner of your screen. While the company takes a few moments to view those questions submitted today, I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your investor dashboard. Nicolas, we have received a number of questions, both pre-submitted and throughout today's meeting for investors, and I wanted to start off the Q&A session with these. Thank you. We have received three questions related to tariffs, and the first one is, what is the impact on U.S. tariffs on trials in Canada? What is the impact of U.S. tariffs on the U.S. FDA trials relating to costs and timelines, if any?
Will Steriwave still be a feasible, cost-effective option for hospitals in the U.S. and globally after the U.S. tariffs?
Thank you for the questions. Finished goods, medical products, and pharmaceuticals are entirely excluded from the tariffs, so we see no impact at the moment. At the component level, no near-term impacts on cost of goods sold. We maintain at least a six-month build inventory on hand. Therefore, we're not seeing any impact there. For the clinical studies, those units are already built and sent to the sites, and so we see no impact on trials in either Canada or the U.S. related to the tariffs. Tariffs could return or expand, and we have a small number of components in the laser unit that might be subject to tariffs. We're always exploring second sources to mitigate across the supply chain, that kind of thing.
Thank you very much, Nicolas.
The next question we've got here is, what is the current position of the phase three trial, and how is Ondine addressing challenges?
Thank you. As I indicated in the presentation, recruitment is very actively progressing. We're now at 10 of the 14 planned HCA Healthcare hospital sites. The remaining site activations are pending, and we're looking at adding still further sites, as I said, to increase that patient throughput. Based upon early learnings in terms of the protocol, in terms of workflow in the hospitals, we've made some adjustments to optimize the protocol, the time required for patient processing, for data processing, and the overall trial plan. This hasn't dramatically affected the study. We anticipate last patient recruitment to be delayed by approximately one quarter, and we're even working hard to bring that timeline in.
Note that obviously, the more hospitals and clinicians we expose to Steriwave during the study, the more familiar HCA clinicians get with the technology.
Thank you. The next question is on runway. What is your current cash position, and how long is your runway?
Cash flow runway guidance remains unchanged from previous guidance. That is, runway will extend into early Q4 this year, as previously announced. We do have disciplined cost controls in place, priorities on commercial and clinical milestones. We are actively exploring with a number of parties non-dilutive and strategic funding options that should support the next phase of our growth. For example, when we funded the large ICU study in Canada, we did so in shares and not cash. That is an example of how we're conserving cash.
Thank you. Next question is, what are your key priorities for the next 12 months?
Number one, commercial growth, keeping our eye on receivables, expanding Steriwave adoption in hospitals across Canada, in the U.K., of course, and the EU with Mölnlycke and Mexico. Those are our key commercial priorities. Clinical evidence, as I said, we are completing that phase three study in the U.S., 5,000 patients, and the ICU studies to enable entry into those new markets and support rollout of nasal photodisinfection as a standard of care. Operationally, we expect to continue to scale our operational infrastructure. That is internal manufacturing, supply chain, all of the mechanics of quality management. We are also now starting to explore Canadian production sites because it provides us with a little more supply chain resilience and better cost control.
Thank you, Nicolas. The next question is quite lengthy, so if you just bear with me.
Could you give me some more information on how Steriwave is being used in hospitals? If Steriwave is being used in surgical settings, how many Steriwave treatments does each patient get during their stay? Where Steriwave is being used in surgical settings? Oh, sorry, that is just a copy of it. The last one is, overall, where is Steriwave being used in surgical settings? Oh, sorry, it's just the same question.
Very good. Steriwave is being used in hospitals in surgical settings, but please note that in Canada, we are on label for all applications, both microbiological and reduction in surgical site infections. It really just depends on what the clinician would like to do with a particular patient. In general, each patient going through surgery will receive a single Steriwave treatment.
That is, within the prior 24 hours, generally it happens within the prior two hours to surgery. A single treatment generates the great outcomes, on the order of 40-50% reductions in surgical site infections that we see. You're seeing a single treatment being highly effective, but there could be an immunocompromised patient or a patient at very high risk, an elderly patient, a diabetic patient, a hypoglycemic patient. In those cases, the clinician is free to use it again. They may decide to use it in post-acute care more than once. In general, we see it being used once. Where it is used in that single treatment, it's at a very high compliance level. Why? Because the nursing staff and the infection control folks in the hospital pre-surgical suite are deploying the therapy.
This is the key issue that discriminates and differentiates us from competitive products such as antibiotics. Those things require to be used a couple of times a day for a week, five, six days before surgery. You're at the mercy of patient compliance. If the patient decides to do it, doesn't decide to do it, you have no idea what's coming into your infection control paradigm. By contrast, this is deployed pre-surgically by the nurse or the physician's assistant, and that creates a high compliance. The staff is enrolled in the procedure. The staff understands they're part of infection control. Airway management is a critical component prior to surgery, and making sure that the airways are blocked from pathogens is a really important piece of the puzzle of how to reduce SSIs.
That's a big difference, and it's generally deployed in that approach, very high compliance, often in excess of 90%.
Thank you, Nicolas. The next question we've got is, what proportion of sales come from recurring consumable sales?
There's a very high proportion there because we start with hospitals with a sense that they're not just deploying for a short period of time. We've never lost a customer. You can imagine over 10 years, there's a lot of hospitals which just keep repurchasing the product. We are purchased through consortium financing where there's a contract in place for an extended period of time. We're purchased just in time, but generally, you'll see recurring revenue from all hospitals that are in active deployment.
Thank you. Great. Next question.
How quickly, smoothly do you anticipate that a hospital, once rolled out with Ondine, will go to full saturation on all theatres, procedures, or do you see it happening in two, three phases according to acuity in any given hospital?
Interesting. We do not see it according to acuity. We do see it in terms of phases. Full saturation occurs in the following way. You might see the ortho procedures or the cardiac procedures or the neuro procedures with a problem in a given hospital. That problem is high surgical site infection rate. It is not understood how it is happening, whether clinicians themselves are contributing Staphylococcus to patients or whether patients are bringing it in from the community. It is really not understood how it is occurring, but they know they have a problem. We get deployed into the high acuity single spot.
Cardiac sees that ortho's numbers are down by half. Cardiac decides to deploy. Neuro says, "If they're doing it, we should do it." It rolls out across the hospital. We are very proud of that concept because it does not require a lot of our sales staff and expense and time and cost to be involved. It happens organically within the hospital. It can happen in two or three phases. It can happen over six to nine months, and it can happen across the entire hospital versus a single surgical specialty.
Thank you, Nicolas. How are U.K. sales going with Mölnlycke? They were going to recruit four dedicated sales reps. Have they done this? Once in a hospital, what does the ramp-up look like?
Mölnlycke is a very exciting portion of our day.
Obviously, 8,000 people and EUR 2 billion top line makes for a very different interface to our customer than we can ever think about providing in the near term. Yes, they have recruited. There are four dedicated sales reps. There are way more people than that involved in the entire Mölnlycke suite. I recently was in Gothenburg. I had the privilege of attending seminars on Steriwave. There were upwards of 20 people involved, but the four dedicated sales reps are highly trained people. I recently worked with them on an FAQ seminar. Really top-notch folks who've had extensive experience in med tech and biotech sales. They are doing very well. Their rollouts are more directed towards trusts than they are towards individual hospitals. That takes some time. A bit too early to tell you exactly what's happening, but the energy and the ambition there is tremendous.
We're super excited.
Thank you. Moving on to a different topic. Does the disruption at the FDA throw out the assumptions of when the FDA will approve the solution?
It's tough to answer that question. I would say that we are not seeing any current concerns. There is disruption, but I think you'll see over the next short while, it's pretty much business as usual when it comes to us and companies like us. FDA has provided a very positive interface to us over many years, very supportive of a technology that displaces antibiotics in any way, especially one with this large real-world evidence basis. At the moment, we're not seeing any direct impact of FDA disruption.
Thank you, Nicolas. Perhaps one last question here. Will Steriwave be used to reduce absenteeism in healthcare staff? How many treatments would staff need for this to be effective, once a day or a week?
I'll answer that carefully in two parts. Will Steriwave be used to reduce absenteeism? It is currently being deployed in healthcare workers and clinical patient-facing folks. We know that because clinicians can dispense the product in that way at their clinical behest. We do not sell it to clinical teams because they are not patients. This is a Health Canada-regulated product, as it is with the other regulators in the world, and it is designed for the risk-benefit ratio and profiles of patients. We do know that clinicians, who themselves are susceptible to and targets for microbes just like anybody else, they are a common denominator. Sometimes, unfortunately, one clinician can contribute microbial load to multiple patients.
There are hospitals where their infection rates are so low because of Steriwave that you can see that little blip when a clinician has a problem and needs to treat themselves. The clinician, at their own recognizance, can deploy the system within the sales or healthcare staff. Now, we know from work that we did during COVID that the system is safe when deployed multiple times. In fact, two or three times per week, we demonstrated using upwards of 50,000-60,000 treatments in people associated with commercial enterprises. These were people associated with meat processing facilities and filled out questionnaires, and they were evaluated. There was no impact on safety. From a safety perspective, we understand the product can be deployed multiple times. In terms of efficacy, you're going to get your 48 hours out to a week coverage anyway.
We would not anticipate it to be used too many times in healthcare workers for an effective block to occur. One day, in the fullness of time, we may well bring it on label in the healthcare worker.
Fantastic, Nicolas. Thank you for addressing those questions for investors today. Of course, the company can review all questions submitted today, and we will publish those responses on the Investing Beat Company platform. Nicolas, before we redirect investors to provide you with their feedback, which is particularly important to the company, could I please ask you for a few closing comments?
Thank you so much. We really appreciate everything that investors have done for us over the last years of interaction. Thank you to you, Alex and Marc, for your assistance with this presentation. I mean, we are a small company doing a huge remit.
As I said during the presentation, there were those internal initiatives, the two major partnerships, HCA Healthcare and Mölnlycke, the two major clinical studies, the focus on gross margin. We're really building the business from the ground up, and we're doing it solidly. It takes time, and we very much appreciate investor trust. From the perspective of an exciting future, I do not think it has ever been brighter with Mölnlycke's ability to lift this product to market and HCA's enormous focus and trust in us. Once again, thank you so much to our investors for all of your trust and all of your patience and support over the years.
That's great, Nicolas. Thank you very much indeed for updating investors today.
Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of Ondine Biomedical, we would like to thank you for attending today's presentation, and good afternoon to you all.
Thank you.