Some of those learnings that we received from Tanner Health and moving those and incorporating those together with Northeast Georgia Health System as well as Cone Health. We recently completed the technical integration into Cone Health's test PACS system as well as their EMR, which went really well. We're now well advanced with the commercial negotiations for both Northeast Georgia and Cone Health, and we expect to conclude those soon. We are still very confident that we'll have all three of these U.S. launch partners fully commercial by the end of this year, giving us a solid base to launch into 2026. Another key activity for us this quarter was boosting our balance sheet to support some of the commercial activities that we have planned. As you know, we recently completed a successful capital raise of $80 million, which was strongly supported by existing shareholders as well as new shareholders.
We are now focusing on building a strong U.S. operational infrastructure that we need to successfully grow in the U.S. and tackle that market and the opportunity that is there. I personally want to thank all the existing shareholders as well as the new incoming shareholders for their support on what we're doing. As we move forward in the coming quarters, we'll start to accelerate some of the initiatives we have planned for our U.S. market entry strategy. We know it's very critical to get this right and get the right people involved and make sure that all the onboarding experiences are successful so that we can use those foundations to ramp up and secure additional customers as we move forward from there.
A key part of that is we're now setting up a commercial hub in the Atlanta region so that we've got the ground support for those first three customers of Tanner Health, Northeast Georgia, and Cone Health. That hub will expand into some of the other participants in the SAPPHIRE study as we bring them on board commercially. We've already appointed a Senior Customer Success Director to support the implementation process as well as onboarding. She's also a reimbursement expert, so we now have that expertise in-house. Other roles that we are looking to fulfill at the moment and actively hiring for are a senior executive in the U.S. to lead the U.S. operations, integration specialists, clinical field specialists to support the clinical side of the hospital systems there, and then customer support personnel, all who will be based in that hub in Atlanta.
Some of the other key activities we've undertaken this quarter also include we've accelerated and onboarded the SAPPHIRE partners, and I'll address that in a little more detail in a moment. We're also developing a clinical advisory board, which will include highly respected clinicians and key opinion leaders that are formed from that SAPPHIRE study group, who will provide a strong clinical voice for us as a company going forward in the U.S. Here in Australia, we're working with Sonic Healthcare and Lumus Imaging to finalize the onboarding of their test sites, and that we expect to be completed in the near future. All in all, this quarter has really laid the commercial foundation and groundwork for us to really focus on what we're really trying to do as a company in the U.S. going forward and really move from this development phase to a commercial reality.
As many of you know, one of the big strategic focus points for us is the SAPPHIRE study. It's a big commercial driver for us as a company, and we've made some good progress so far this quarter. We announced two high-quality, high-volume centers in Piedmont Healthcare in Atlanta, as well as the Huntsville Heart Center in Alabama. It's a critical study for us because of really two parts. One, we want to use this to drive broader adoption within the U.S. by bringing many of those partners on board commercially. The second piece, from a clinical perspective, it will help show that we can change the standard of care in the future by using our Salix platform to better assess the risk of coronary artery disease and how patients are managed.
From a regulatory perspective, I mentioned that the success we had this quarter around the Salix Coronary Plaque module. This was cleared in August, and I do want to just take a quick moment just to talk about that submission and clearance. We spent a lot of time upfront with that application where we put a lot of effort into the clinical study as well as high-quality submission, and we took our time to do that so that we could accelerate the clearance process. We're really pleased to say, as everybody knows, that that was cleared in August, at least just under 30 days earlier than the expected 90-day period. We've also made good progress this quarter on the Salix Coronary Flow module.
We had a very successful Q-sub meeting with the FDA in October, and based on their feedback, we are refining our submission and completing the clinical studies we need so that we can lodge our 510(k) submission with the FDA. Similar to what we did with Salix Coronary Plaque, we're taking very much the same approach where we're putting a big effort upfront to develop and submit a high-quality submission, which will hopefully support another rapid and successful clearance for the Coronary Flow module by the FDA. Finally, as we continue to grow as a company, we are increasing our investor engagement in a stepwise fashion.
As part of a broader push to raise awareness of Artrya's investment case with investors, brokers, and analysts, we attended the 2025 BioShares conference in Hobart, which was joined by a number of healthcare executives and investors, and we found that conference very useful in expanding the messaging. I've spoken about the $80 million capital raise to support our U.S. growth, and we'll talk about our near-term priorities in a moment, but I would first like to hand over to Harvey to discuss some of the financial results.
Thanks, John. I'll now run through the financial activities for the September quarter. All these amounts are in Australian dollars and are unaudited. Cash outflows from operating activities were $6 million, with the increase from last quarter due to the scaling up of our commercial activities for the Salix platform launch, as well as regulatory costs associated with the FDA clearance of the Salix Coronary Plaque module, the Salix Coronary Flow Q-sub meeting with the FDA, as well as some one-off costs. Our key areas of operating activities were project manufacturing and operating costs, which includes all our project-based work, such as the integration and onboarding costs for our U.S.-based hospital systems.
The second main area of operating costs was for the development work, which includes the regulatory costs supporting our FDA submission of the Salix Coronary Plaque module and enhancing our Salix Coronary Flow module with both the Q-sub meeting and technical work as we move to complete that module. While our outflows did increase, it is important to note that this included about $830,000 of one-off costs. These related to the departure of our CEO and CFO on the 1st of July, as well as the Salix Coronary Plaque milestone costs. If we exclude these one-off costs, our cash outflows from operations would have been $5.1 million, which is actually down from $5.4 million in the June 2025 quarter. Our financing inflows were strong this quarter, with the first tranche of our placement completed on September 2025, providing $60.3 million before costs.
We expect to receive the second tranche of $14.7 million before costs this week when it settles after we received shareholder approval last Friday. Additionally, the $5 million raised from the oversubscribed share purchase plan was received by us on the 3rd of October. Both of these amounts are not included in the quarterly cash inflows. We ended September 30th with a cash balance of $62.8 million, and on a pro forma basis with the SPP funds and the second tranche of the placement, this would have been $82.5 million before costs. We have also lodged our tax return for the R&D rebate and expect to receive over $5 million from that by the end of this calendar year. Looking ahead, we expect our quarterly cash burn to increase slightly as we resource up to expand our U.S. commercial operations.
The costs associated with the Salix Coronary Flow study and 510(k) application will fall away post-submission and be replaced by the expansion costs in the U.S. I will now hand back to John to discuss our outlook and priorities. Thank you.
Thanks, Harvey. Just before I move into the Q&A, I do want to touch on our near-term priorities, which really lay the foundation for us as a company to expand and commercially launch into 2026. This will be explained more at the AGM later this next month. It's really focused on three major pillars. One is we really want to drive commercial growth, generating revenue from three foundation customers, as well as incremental revenue from new ones as we expand into the SAPPHIRE study, setting up the operational infrastructure, as I mentioned earlier, and then expanding onto the SAPPHIRE study, and then really building from there to scale our company. In the near term, the priorities that we are focusing on are securing the commercial agreements for the other two U.S. partners of Northeast Georgia Health System, as well as Cone Health. In parallel, we're hiring our next U.S.
go-to-market personnel, as I mentioned earlier, initially focused in that Atlanta hub to support those three partners and also the future SAPPHIRE customers. The second priority is earning our first commercial revenues from the Salix Coronary Plaque module, and we'll expect that to happen with Tanner Health first. Thirdly, we're finalizing our launch plans for the SAPPHIRE study in early 2026, which will be a combination of securing the final three to five sites beyond the two that we've already announced and completing those ethics reviews this calendar year, and then really completing the Salix Coronary Flow module and submission for the 510(k) application so that we can start working with the FDA towards the clearance of that module. As we get into questions, I'd like to end this formal part of the presentation and really open it up to the floor for any questions now. Thanks, David.
Thank you, John. Now, we have a number of questions that are coming through. Just a reminder for our listeners, if you would like to ask a question, please type it into the Q&A window on the Zoom screen. Your first question comes from Nick Fabrio. Has there been any consideration to get further exposure to U.S. investors, whether by a NASDAQ ADR listing in the future or med tech conferences?
Thanks, Nick. Yes. I am in New York next month presenting at a healthcare conference, which includes a number of investors across the U.S. This is also in conjunction with some of our competitors that are presenting at the same conference. We have a real good opportunity to present before the competitors there and really give a lot of the investors in the U.S. exposure to our value proposition as a company.
Your next question comes from Andrew Wilkinson, analyst at Venn Brown. There's a couple of questions. We might just tackle the first ones. John, revenue, it sounds like we shouldn't expect anything material from Salix Coronary Plaque until the third quarter of 2026. Is that correct?
So as I mentioned, we'll be looking to get Tanner Health using plaque this calendar year, then launching into the new year with both Northeast Georgia and Cone Health using both the Salix Coronary Anatomy as well as the Salix Coronary Plaque platform. As we've mentioned in the past, once the flow product is cleared, that will really get us the combination of all three modules into one, and we expect to be ramping at full revenue, sorry, at full click with each of the modules for the three hospital partners into the end of FY2026 and into FY2027.
A follow-on question from Andrew in relation to the SAPPHIRE study. John, you mentioned there's six sites. Does that mean there's only six partners now? Secondly, when do you think you might finalize the protocol for the study?
We've always said between six to eight sites, and the major reason is really just bulking up the number of scans, retrospective scans we need to show the true power of the study, and that may expand beyond six and go to seven or eight. We expect to finalize the study in the coming month or so and then really launching into the new year with the respective partners that are part of that study.
One final one from Andrew in relation to the flow module. Were there any changes or surprises that came out of your Q-sub meeting with the FDA?
No, it was a very constructive and very open discussion with them, which was very refreshing. The major things were agreeing on acceptance criteria for the accuracy as well as our ground truthing, which we really mostly knew anyway, and they've just confirmed what we expected. We're going forward there with what they've put forward now and really starting to push that study forward.
We have another question from another investor in relation to the flow module. Are you expecting to do more trials in order to be ready to complete the submission for the flow module? What is the timeframe that you're expecting to submit the 510(k) application to the FDA?
We do need to run a study for that 510(k) application. It's a fairly simple study with regards to the FDA telling us we need to compare ourselves to a ground truth, which will be a combination of using some of the predicate scans as well as some invasive angiography scans. We'll run that study and submit that as part of the application. At this point, we're still aiming for the end of this year submission, but as I mentioned earlier, we're putting a big effort into a quality submission, so that's really where we're going with that application at the moment.
Your next question comes from Tanu Jane, Analyst at Petra. Thanks for taking the question. With the work on reimbursement and the coding being currently done with Tanner Health for the plaque module, have you similarly repeated work in the same way for the flow module and ready to that being approved? The second part of the question, how soon can a customer live with the plaque module already start generating revenue?
Okay, I'll take the first part. No, if we're SCF, that's one of the, I suppose, the positives of being that agile fast follower where HeartFlow, one of our competitors, has already set up all that work around the coding, the implementation into the hospital system. Effectively, as soon as we are cleared for SCF, then we can start generating revenue straight away because all that work's been done. For SCP, as soon as we put the system in place and start the contractual, sorry, as soon as we get the contract signed up, generally we start the whole onboarding integration process. What we've learned from Tanner Health is just to evaluate where they are from an SCP perspective with regards to the systems, and we'll start putting that in place early on now as well.
But what we have found with Tanner Health, because they are more regional in where they are based, they've got less exposure to the plaque module that other more streamlined systems in the major cities have. We haven't seen the need to do this type of thing that we've done with Tanner with others yet. We don't think that's going to make a difference going forward. To sort of summarize that, as soon as SCF is cleared, we can start generating revenue from them straight away.
The next question is in relation to your staffing in the US. The recruiting for the US-based personnel appears to be done in-house at Artrya. As you have a lot of work to get through, why is this not being outsourced to a specialist HR firm in the US to allow more focus on matters such as the onboarding at Northeast Georgia Health System and Cone Health?
We've actually taken the two pathways on that one. Yes, we are doing part of that internally, but that's through introductions from some of our consulting partners who are ex-HeartFlow and bringing in a lot of those relationships. We're not doing that directly ourselves. We are getting a lot of those introductions. We also do have an external outsource or hiring company, a recruitment company in the U.S. that are helping us with that at the moment as well. We are really tackling this in two paths.
A related question, as you're now moving to be more commercial in the U.S., how do you see yourself competing in the market with other technologies such as HeartFlow? They seem to have a lot of salespeople and expensive infrastructure, so how do you see yourself competing with them?
Yeah, I mean, we've always put a big emphasis on the value proposition of point of care and real-time analysis, and we're really starting to see a massive amount of interest in that. Competing against HeartFlow is really not a direct head-to-head because we are able to provide the conditions with that real-time approach to assess a patient while the patient's still in the hospital room or the imaging room. We will be focusing on that going forward, and a lot of the work we have been doing is making sure that our assessment times are coming down as well as a lot of the resimulation times are in near real-time as well, so that we're expanding that value proposition.
What we've seen specifically over the last month with a lot of the systems that have long wait times, they are having to adjust their workflow because of HeartFlow's time that it takes for them to do that, and it's really frustrating them where a system like ours can accelerate their throughput and accelerate their efficiencies, and we're seeing a lot of interest over there.
Your next question comes from YSim of Jefferies and relates to the CPT-1 code, and why do you still need a reimbursement expert in your group?
Yeah, it's a good question. It's not for any other reason that we want to make sure that we're across the lives covered for all our products going forward. We do want to have someone that can interact with CMS and Medicare and the private payers in the future as well, and to really show the value proposition of us as a company that benefits the insurers as well. Bringing that in-house really makes a difference to us as a company for that understanding of the U.S. market, but also allows us to bring that value proposition to our customers as things change in the U.S. and insurance companies start reimbursing for other modules that we're bringing on board as well.
Coming back to that commercialization, given that your success relies on the distribution of your product in the U.S., HeartFlow looks to be spending a lot of money on marketing. Why are you not handling the marketing of your product yourself?
We see the SAPPHIRE study as our marketing arm, and we don't see the need to, A, put a huge marketing budget in place to promote what we're doing. What we're finding is that the value proposition of the product automatically does that with a lot of the hospital systems. We already have a group of key opinion leaders that are promoting our software for us in the U.S., and that's where a lot of the introductions to the SAPPHIRE partners have come on from a lot of these key opinion leader introductions. We're seeing a lot of inbound coming to us at the moment outside of any promotion we're doing, and we're trying to hold off on that inbound because we want to focus on getting the three partners as well as the SAPPHIRE partners on board commercially first.
As I may have mentioned in a previous call, the three partners perform about 15,000 scans a year, so that for us is about $12.5 million U.S. in opportunity. The SAPPHIRE partners perform up to about 400,000 scans a year, which is $300 million U.S. plus in revenue opportunity. We don't really need to market or put a big sales team on the ground. Just those partners already will drive a lot of opportunity for us as a company.
There's a related question, John, on the SAPPHIRE study. How are these large groups expected to use the platform during the study phase? Is there any reimbursement, or when might you start to generate commercial revenues from those groups?
Yeah, it's a retrospective study, so it's not similar to pharma where a lot of the pharma companies may get reimbursement for it. This is a retrospective study that we'll get the scans in, and we'll process it from a clinical perspective to show the clinical validity of that novel feature of ours. As part of that, we will be integrating into their PAC systems to also receive the data, and that's part of our commercial pathway where we integrate into their PAC systems. We get the scans for the study, but also we are able to start giving them the software to use in situ while they're reporting patients in a normal setting and compare our software to their normal standard of care and show the value proposition that way.
Related to that, you've got your first three target customers. Do you think there's a high potential that your fourth commercial customer in the U.S. is outside the SAPPHIRE study or from those SAPPHIRE study participants?
No, it will definitely be from the SAPPHIRE study participants. If you look at the participants in there, they're three small to medium-sized groups. Huntsville Heart Center and Piedmont are the two that we've already announced. We have a number of large systems that are part of that as well. Similar to what we've done with Tanner Health and Northeast Georgia Health System and Cone Health, we'll focus on the medium-sized ones first, bring those on board, and in parallel, we're already in discussions with many of the large ones. Many of these discussions aren't new. We've already started expanding into the discussions with these systems for a period of time already. It's now just structuring our pathway forward with the SAPPHIRE partners.
Related to that, John, do you have the resources or capacity to take on a large hospital network such as HCA or Ascension in the SAPPHIRE study, or would you say that they're too big or difficult to integrate at this point?
We are focusing on that hub in Atlanta for the group of Tanner Health, Northeast Georgia Health System, and Cone Health, and then if you think of the others in that area, Piedmont Healthcare, Huntsville Heart Center, Wellstar, all in that geographic location. An HCA or an Ascension will probably require a dedicated team to manage those onboardings, those integrations, and the support for them as well. As we start working and getting closer to contractual and commercial agreements with them, we'll start either shifting some of that support from Atlanta to support this group, and we'll also start hiring to support those large groups as well.
In relation to your growth in the company, you're better funded, your market cap has grown. Do you want to make a comment perhaps yourself or Bernie in relation to building out the board and the senior leadership to match that?
I'll talk about the senior leadership, and Bernie feels on just talk about the board. Yes, we are working, as I mentioned earlier, on bringing in a senior executive in the U.S. to lead the operational side of their build, the business for us, and I'll be working very closely with that person as we go forward. I will be looking to move to the U.S. next year as well, so that will help a lot of that expansion. Similar to what we've done with the others, make sure that we're bringing on the leadership team there in a structured manner to support our growth in the U.S.
Thanks, John. I'll take the board situation. It's a good question, and investors would fully expect us to bulk up the expertise on the board. We're well advanced in appointing a new US-based director, and we are going through looking at firms at the moment to bring on an additional Australian-based director. We'll have two new board members within the next three to six months, one based here in Australia and one in the US.
Thank you, Bernie. The next question comes back to the SAPPHIRE study. How many of those participants are currently using or have already used one of the competing products? I guess this comes back to their desire to work with Salix.
Yeah, so that's also a really good question. Many of them have used or are using some of the competing products at varying levels of usage and frustration. As David just said, it's a real testament to what we're doing as a company that they are excited about the software, they're excited about the study, and are not taking any other work around other studies that are available from our competitors because they want to work with us using our software in the future so that they can accelerate their need to put something like ours in place to improve their workflow.
Related to that, John, can you just give a little bit of an understanding about what's involved with rolling out or integrating Salix into these SAPPHIRE partners? You know, how many people, how long does it take, and how many people do you currently have doing this work for you?
Yeah, so first thing we'll integrate into their PACS system, which is a direct connection, which we've now done with Tanner Health, Northeast Georgia Health System, and Cone Health. It's a fairly simplistic process for us to do that. That will then get the scans we need for the study being pushed to us. As I mentioned earlier, because it is connected to their PACS, as patients come in, those scans come to our system as well, which will then give us the ability to provide the software to the clinicians to start comparing Salix to the normal workflow. We have a team here in Australia that has done all the work with Tanner Health, Northeast Georgia Health System, and Cone Health. However, as I mentioned, we are starting to bring on and hire those experts in the U.S.
to take on that work so that we have a 24/7 support team, both from an integration perspective, with the team working in the U.S. to do that work, as well as the team over here who are now experienced at doing that in the U.S. as well.
We have a follow-up question here from Andrew Wilkinson in relation to cash flows. Given the size of your cash position as you ended the quarter, are you looking at pushing out your target for free cash flow in FY2027 as you accelerate growth and maximize your first mover advantage? The question is, will that target move out as you look to accelerate?
Yeah, look, thanks, Andrew. The cash balance is obviously pretty high. As we said before, we expect our costs to increase slightly in the near term as we accelerate into the U.S., but the FDA clearance numbers will be, you know, the actual regulatory costs will drop away and we'll reuse that cash for that U.S. build, if you like. We expect to have a large cash balance for obviously some time. FY2027, we're still targeting moving to a break-even position.
With the SAPPHIRE study participants, obviously, the intention is that you'd like them to move on to a commercial agreement. Do you see there's a risk that they maybe don't sign a commercial agreement either during or after the study?
Look, we don't, and we've seen interest from all of them, and we're working with each of those at the moment, first just to make sure that we sign them up as part of the SAPPHIRE study, get through the ethics approvals this calendar year. We're already working with some of them in parallel at the moment around the usage of the software in the future as well. We don't see that as an issue, but as I mentioned, we have such a large amount of inbound interest from us that if something falls away, we could always bulk that up pretty quickly.
Coming back to the SAPPHIRE study, the question is in relation to a little bit more background or color on the sales pitch with these groups that have signed up to the SAPPHIRE study. How do you sort of promote yourself information-wise or feature in the product? What are the key things that are securing them? Is it the speed, accuracy, visualization? Maybe you'd just like to comment on that sales cycle, John.
Yeah, I mean, there's really three major things that really drive our value proposition compared to our competitors. One, we can streamline the coronary CT processing and reporting into a single solution where our competitors provide multiple solutions, which makes it pretty frustrating for clinicians when they've got to click between screens and between different bits of software. That also consolidates and optimizes how clinicians report, so it brings everybody up to the same level. The second piece of it is because we are able to provide this in real time, their throughput improves quite drastically as well, so they can bring a lot more patients through the system.
That really helps from an efficiency perspective and a cash perspective or revenue perspective, but it also allows them to enrich the patients that are going for elective PCI or elective stenting as well, which they can really grow their volumes over there and get more patients going through that a lot faster. For many of the systems in the U.S., they also have what we call independent diagnostic centers or freestanding emergency rooms where they're trying to scale that a lot fast as well. Having a tool like this that provides the clinician with the opportunity to report in real time allows them to enhance those freestanding diagnostic centers or emergency room centers because they can get more patients through there and rule them out of the hospital system either a lot faster or discharge them a lot faster or bring them in a lot faster as well.
We are seeing a lot of value propositions to our software on its own, which is driving the interest into the SAPPHIRE study. Part of the SAPPHIRE study is that novel component of ours, which looks at how plaque is dispersed on the coronary artery, and that really changes the risk and the treatment profile for the patient over time. That's where they're getting excited from a research perspective as well. The final thing is we've mentioned in the past that we are putting also a big focus on coronary artery disease in women. It's a very underserviced or underdiagnosed and undertreated area or demographic because they get treated the same way and diagnosed the same way as men. Women's coronary arteries, the structure is very different to men.
Having our novel features around plaque assessment as well as this dispersion piece is going to allow us to bring additional value proposition around this extra demographic that is underdiagnosed and undertreated at the moment.
Thanks, John. We don't have any more questions on the line at this stage. I'd like to add that we've had a very strong attendance today, so thank you for everyone who's joined the call and for your interest in Artrya. I'll hand you back now, John, for any final remarks.
I appreciate the time for everybody. As I mentioned, it was a strong quarter this past quarter, and we are really accelerating the pace in a number of areas to move towards this commercial setting as a company and launching into 2026. Thank you for all the support thus far, and I'd like to close the call now.
Thank you, everyone. That does conclude the call. Thank you for participating, and you may now disconnect.
Thinking about that.