Earnings Call: H1 2025

Sep 2, 2025

With our Chief Financial Officer, Jason Smith. Today is Labor Day in the U.S., a symbolic moment marking the end of the summer holiday period and a return to business. For Cyclopharm, there couldn't be a more fitting backdrop today because this is precisely the moment when our U.S. expansion is accelerating. After years of preparation, regulatory milestones, and investment in infrastructure, the pieces are now in place. The U.S. market represents the single largest healthcare opportunity in our history, with more than 600,000 ventilation procedures performed at 4,200 locations annually for pulmonary embolism and a far greater pool of patients across conditions like COPD, asthma, long COVID, and pulmonary hypertension. The U.S. is where Technegas can deliver transformational impact. Over the last six months, we've doubled our U.S. revenues, expanded our installed base there, and built the regional sales force to capitalize on the institutional procurement cycles that restart today. This morning, we'll walk you through some of the highlights of the first half: record revenues, accelerating adoption in the U.S., and strengthening of our balance sheet following the close of the half. Above all, we want you to take away that Cyclopharm is entering a new growth phase, one where the promise of Technegas in the U.S. is not just potential but a reality. Just a quick overview of Cyclopharm. Cyclopharm is in 66 countries around the world. We're best known for our product, Technegas. Technegas is a nuclear medicine lung ventilation imaging agent. We've helped 5 million patients to date with our groundbreaking technology. We're in 66 countries, but importantly, we're in direct distribution in 17 of those. Because we're in those 17 direct countries, we're able to leverage our infrastructure that we'll talk a little bit more about later in delivering business partner products that have become an important part of our business. I'm not going to highlight some of the financials. I'll let Jason speak to those. I'll just highlight a few things: record revenues across the board, both in Technegas and in our business partner products. We're not going to spend time on our Beyond PE strategy. We're limited today, and we'll expand upon that later. There has been some opportunity growth in that area. At the half, we finished with $12.4 million in the bank, and we have another $6.2 million in cash coming post the half year. That's linked to our non-core asset, Cyclotron at McCourt University Hospital. Importantly, our investments in business development leadership are in place now to drive the growth in the U.S. Lastly, we are well positioned to deliver against the company's growth strategy. For those of you new to the story, I'll just touch upon what drives revenue for the company. Certainly, the hero of the story is Technegas. Technegas in the U.S. is considered to be a combination product. What that means is it's both a device and a drug. On the left-hand side of the panel, you'll see the Technegas system. It's a synthesis module. It creates the Technegas from the components and then delivers it to the patient via a patient administration ship shown in that middle panel. It's that middle panel that actually is driving the annuity streams once we install a Technegas system into place. The real hero is the Technegas crucible. The crucible is what creates those nano-sized particles. When inhaled, it acts like a true gas, a true gas that goes all the way to the periphery where oxygen is exchanged. We show true functional imaging. In support of our technology, we also have training. We have application specialists that go in and train the nuclear medicine technologists in a very straightforward method of how Technegas is produced. On an ongoing basis, after we've done the installation, our engineers will then perform preventative maintenance. That last point, we work collaboratively with software companies in image analysis that's driving that next phase of growth for Technegas in quantification and Beyond PE applications. It's that complete set when we talk about the countries that we're direct in that allows us to leverage our regulatory infrastructure, our service and sales support to deliver on third-party products, much like Technegas, in that they're a combination of capital equipment or infrastructure that also supports ongoing annuity streams of consumables, much like Technegas. It's because of that decision to get closer to the customer that we've been able to leverage and grow the business partner products. In the meantime, by getting closer to our customers, we can drive our Beyond PE strategy further for Technegas. I'll hand it over to Jason for the financials. Thanks, James, and good morning and good evening, everyone. We're very proud to be sitting here today reporting to you a record sales revenue growth in the history of Cyclopharm Limited. Revenue growth up 26% year on year to $15.42 million. Some highlights of that sales results within Technegas: U.S. sales is certainly a highlight. We delivered $1.24 million of revenue in the first half of 2025, and that was double the revenue we delivered in the previous six months. Revenue in the U.S. is doubling to be in line with installs. We had 17 installs at the end of December, and we finished June with 35. Revenue is very much in line with doubling in line with the installations. Third-party distribution was also a highlight. It grew by 58% to $7.76 million, and we saw very strong growth in both our equipment as well as the consumables and service segments. In line with revenue, we also saw an increase in gross margin. It lifted by 20% to $8.26 million. We had stable gross margins across all of our product segments, but at a group level, there was a skew towards that third-party distribution, just given that high weighting of revenue growth. Net operating expenses grew by a modest 12% to $17.1 million. That growth rate is less than the rate of revenue increase. We made very deliberate investments in sales, field team, regulatory, and inventory, all to support the future growth and near-term growth of the business, and that is within the U.S. The net loss after tax was consistent with last year at $7.69 million. As James mentioned, we ended the half with $12.4 million in cash, and there's another $6.2 million to come in the second half of 2025 from the sale of our stake in our non-core Cyclotron asset. The headline revenue growth of 26% is a really good growth rate for us to be reporting to you today. Even if you look at our growth rate over the last seven halves or three years, we're showing a compounded annual growth rate of 12% per annum. That just underscores the consistency and strength of our performance over time. James. I want to spend mostly the rest of the webinar talking about understanding the U.S. opportunity. I'll start with this slide. Some of you have seen this slide before. It highlights the market share that nuclear medicine has in comparison to CT in the U.S. By and large, nuclear medicine is the minor market share at 15%, but still, it's 600,000 procedures. We are set to displace the competitive products like we've displaced in every other market, and I've got a slide to follow to kind of highlight that assumption. We've also made some assumptions about the growth in comparison with CT, and I'll have a comparison slide to follow. I guess where we want to focus in on is that with the growth and potential of Technegas in the U.S., implementing all of its attributes, we see Technegas taking market share away from CT, and I'll explain in the following slide. The answer is in clinical outcomes. In the U.S., because they haven't had access to Technegas, they've been having to stay with planar imaging. Just to give you a quick overview, planar imaging is something that's been around for decades and decades and decades. When CT became available in the 1990s, it displaced nuclear medicine, and that's where you see that market share shifting to where it dominates the market in the U.S. You can see on the slide here, across every measure, it's better than nuclear medicine. However, it couldn't displace it completely because there are some contraindications with CT that nuclear medicine doesn't have, contraindications like renal impairment or allergies to iodinated contrast media for CT. It's because of that that nuclear medicine still continued on in the U.S. Outside the U.S., the technology advanced because it had access to Technegas. With Technegas, nuclear medicine departments were able to develop three-dimensional imaging or SPECT imaging. If you added a small amount of radiation dose on CT, you're able to get an anatomical reference that would ultimately give you near 100% across the board in sensitivity, accuracy, negative predictive value, all of those measures, how well you can diagnose a pulmonary embolism. We beat CT in every measure. Most importantly, across that, we were better than CT when it comes to radiation dose. Very often, people misunderstand and people use that term, well, it's nuclear medicine, it must have high radiation. Actually, CT is exponentially higher in radiation dose than a nuclear medicine procedure, particularly to women of childbearing years and the breast dose associated with the radiation. This was a survey that was conducted prior to our launch in the U.S. It was in major markets, and it highlights the dominance that Technegas has in nuclear medicine. We're 85% of the market share outside of the U.S. where this survey was taken. The other interesting thing to note is that only Xenon is available in the U.S. because Technegas has displaced it in every other market outside the U.S. The other point to make is that we change clinical practice. Outside the U.S., greater than 95% of imaging is done with SPECT or that three-dimensional imaging or SPECT CT. Compared to that in the U.S., only 32% are using the most modern techniques. They're actually not leveraging the full clinical potential of nuclear medicine. We're going to give them that ability to do so. The point in the survey also in that bottom left-hand panel says that the recent FDA approval for Technegas will change practice. We've done that everywhere else, and we expect to do that in the U.S. I thought it'd be a good time to talk about where we've been in the U.S. and our execution evolution in the sales strategy overall. Let's go back to October 2023, when we got the nod from the FDA, the approval to start marketing in the U.S. Two days later, we submitted our application to CMS, the Centers for Medicare & Medicaid Services. They're the peak body for reimbursement in the U.S. We set about contacting our clinical trial sites and those individuals involved with our new drug application. We went on to those individuals that during COVID had signed a petition requesting fast-track approval for Technegas because of its characteristics, its unique characteristics, not only from a clinical but as a safety profile against COVID. We also had, because we'd been participating in North American Society of Nuclear Medicine meetings because of our dominant position in Canada, where we're now 100% of the market share, several hundred registered of interests that we first contacted, but we didn't have reimbursement yet. That didn't happen until about a year ago, where all that work and multiple meetings with CMS got us across the line where reimbursement was granted. That gave us the ability to actually engage from a commercial point of view beyond the clinical. Clinical is already, the science is settled on that one. Commercially, we had to get through the approval process in procurements in the hospitals and clinics. That's where we really see that the launch of Technegas really took traction. We started with call initiatives, and then we started moving more towards regional exposure. Historically, we were at national conferences where we were known at some of the larger centers, but we've implemented a program of getting at local chapter meetings, engaging with people that heard about Technegas through textbooks, but maybe not have been exposed to it at international or national conferences. During that process, too, we were engaging with local hospitals that were maybe part of larger groups. We were getting traction there, but because we were getting so many different hospitals under that one independent delivery network, we had to stop discussions with them and move towards national agreements. I think that's where we lost a little bit of time and traction on that. Now that we've got those across the line as of February, for example, with the Department of Veterans Affairs and the Department of Defense, as well as the largest private hospital group in the country, we were able to go back and start getting traction at those initial discussions that we had towards the end of last year, which brings us to mid this year, after the Society of Nuclear Medicine meeting, which was heavily attended with over four sessions, four different sessions, about eight different speakers focusing in on Technegas. We've expanded our ground game. We've brought on a new Vice President of Sales, and we've implemented a sales force of business development managers to match a regional approach that we're now starting to take and starting to harvest and leverage that large pipeline in which we've developed. Here we are today. We're not starting from zero, are we? We've got some of the leading institutions in the United States. Yes, we do have 35 installations. What we're also seeing are the green shoots within even those installations themselves. We're seeing growth already where multiple sites are starting to take Technegas up, and those discussions are going forward. Importantly, Jason mentioned the investment that we made in inventory. We already have inventory landed in the U.S. with all these discussions that go back and forth with tariffs. We've already got ahead of that curve and have landed both consumable and Technegas systems on the shore in the U.S. We have an enormous strong pipeline that gained huge momentum after the CMS approval in July. Now, with the ground game going with our business development people on the ground, we're going to execute on the delivery there. Where to from here? Accelerated U.S. growth trajectory. We've laid the groundwork. We have the inventory. We have the people in place to actually leverage from here. I just want to remind you that once we install Technegas, it sticks, and it sticks with a recurring revenue. It's not a one-off. Every patient consumable drives a very good margin off compared to the rest of the world. Our Beyond PE opportunities are growing. More and more clinical papers, even some generated from the U.S. in this short period of time in lung transplant evaluation. We are on track, as we reaffirm, we're on track to deliver our transformational growth and reaffirming our guidance for next year. Lastly, when you exclude the investments that we've made to get into the largest healthcare market in the world, Technegas is a profitable and growing medtech. We're first in class, and the guidelines support that. In this presentation that's online, you'll see some supporting information that highlights some of the guidelines that we're named in. With U.S. FDA approval granted and reimbursement in place, we have the base to grow that recurring revenue and that annuity model that drives the growth out of Technegas. Certainly, the future for us is once we're established, we're in parallel with that growing the Beyond PE applications. I'll finish before questions where I started. Cyclopharm Limited is entering a new growth phase, one where the promise of Technegas in the U.S. is not potential, but it's reality. We have everything in place now, and we're happy to take some questions now. We've had some that came through prior to the start of the presentation. I'll read them out, and I'll either answer those or Jason can take those. One was that came through, "Why are installations to date so low? What pushback are you getting from potential customers, and how can you be confident in achieving guidance?" Let me start by saying guidance is intact. We are maintaining guidance. Installations were never going to be linear, and that's why we reset the guidance at the beginning of this year with 2026 run rate being higher. The summer period in the U.S. is always slow. We saw that last year after we got even the approval from CMS, but we're into a very active selling season now. We've been busy building the pipeline, which is extremely robust. We've invested in sales and customer support in the U.S., and we also support those activities also here from Australia. We'll share our progress as we continue to look forward and accelerate our growth. Let's see what else. Again, there's another question about the installations. Is it behind where we wanted to be? It was never going to be linear. It takes time to build the pipeline. The pipeline is robust. We are focused on conversions now, and after Labor Day, we're going to be extremely more active. Even last week, we were following up on some people that were in Hawaii on holiday. Everybody's back to work after this week. We're looking forward to the traction that we're going to have going forward. Here's one. How many sites in the U.S. will Cyclopharm Limited have to have its Technegas system installed to break even in that country? There was some more detail in there. I think we'll just, do you want to take that? Yeah, yeah. We don't publicly disclose a fixed break-even installation number. What we can say is that the path to break even is driven by a combination of install-based growth and that recurring consumable revenue. Each Technegas system generates a predictable annuity stream through consumable usage. As our U.S. footprint expands, that recurring revenue becomes increasingly meaningful. Here's another one. Could you please explain why there was a fall of around $850,000 in Technegas revenue ex-U.S. between December half of 2024 and the June half of 2025? Do you expect Technegas revenue to keep falling in countries other than the U.S.? I can take that one again. Just to reiterate, in the Technegas rest of world revenue, the question was around why did the revenue decrease by $850,000. What happened there was a temporary measure with our French distributor who deliberately undertook a reduction on their inventory levels on hand. It temporarily impacted our sales into that market. It wasn't a reflection of the underlying earnings that we deliver in France. It was a timing issue related purely to the stock management of our French distributor. Okay. What's in the pipeline for Q4? How many installs do you expect by the end of 2025? What's the commercial plan? What size customers are you now focusing on? We don't share the details of the pipeline other than to say it's materially higher than three and six and certainly 12 months ago after we got approval from CMS. We do expect to accelerate the growth. The thing here is the sales cycle is long with hospitals and clinics, but we've already started with that process. As the new sales BDMs come on stream, they're taking those pre-qualified people that are already well down the track in the sales pipeline across the line. On page three of the Cyclopharm Limited half-year report, it stated that there would be an additional $6.2 million in cash to be received post 2025 half-year from the sale and earnings linked to Cyclopharm's stake. There goes quite a bit more questions, but it leads to that question. Do you want to? Yeah. The $6.2 million that we're receiving in the second half of 2025 is broken down into two components as the person asked the question. There's $1.1 million being the share of earnings in the collaboration agreement, and you'll see that $1.1 million sitting on the face of the P&L at the half. The other component, the $5.1 million, so it's the $1.1 million plus the $5.1 million is the $6.2 million in total. The $5.1 million is in recognition of the sale of the Cyclotron asset. Both amounts, so the total of $6.2 million is recognized, and we receive it as cash in the second half of 2025. Okay. There is a question, I think, coming through. What impact 4D Medical would have on CYC sales in the U.S.? What can CYC do to minimize the impact, if any? There are many software companies out there that leverage off of CT or MRI or nuclear medicine. We work closely with a number of them already. No, I'm not going to talk about any one particular company software other than to say, you know, we, Technegas, deliver clinically proven superior clinical outcomes everywhere. We're named in guidelines throughout the world and peer-reviewed functional imaging guidelines. Our goal is to repeat the success that we've done everywhere else around the world, and we're well on track to deliver that. What are the risks to realizing the same market share in the U.S. as in Canada? As we kind of highlighted in that survey, the survey was conducted in five countries: Australia, Canada, the U.S., Germany, and France. Very strong markets for Technegas. We expect that. The benefits of Technegas are well documented in guidelines around the world. In Canada, they didn't even win as far as during the COVID outbreak to actually dictate that these other competitive products, because of not only because of the viral risk contamination, they should stop and use Technegas. That's why you saw in those flow-on years, we saw additional generators going, systems going into Canada, but not a lot of volume. It was typically those ones that were using DTPA. They tended to, there were smaller sites where we got the Technegas system sold, but low volumes overall from patient administration sets. I think there's a few of those other competitive technology discussions, kind of questions coming through. I'll just kind of reiterate what we've said before. Technegas in nuclear medicine delivers superior clinical outcomes when you're already at 100%, nearly 100% in clinical outcomes. No contraindications, extremely low radiation dose. You're not going to get much better than that, no matter how pretty slides or images may be. I think it's all to do with the clinical outcomes and low radiation dose. We're leveraging off of software. I think software for us is about driving more quantifications and leveraging off of the unique attributes that Technegas can deliver to our clinicians and ultimately our patients. Do you need to raise capital? Certainly. Yeah, we finished the half with $12.4 million in the bank. We've got $6.2 million to come from the sale of the Cyclotron. We are well positioned from a cash perspective where we are. Our focus remains squarely on executing on our U.S. commercial strategy. We're seeing increasing, as James mentioned, demand for Technegas across key hospital networks, and our expanded sales force is actively converting that interest into installations. As the recurring consumables revenue builds and our operational efficiencies take hold, we remain confident in our ability to scale sustainably and deliver on our growth targets. Certainly, we're in a much better position with all the elements in place right now to deliver on our guidance. I think we've already talked about what you expect impact and cash flow to be similar to the second half versus the first half. We haven't given those projections or guidance on that. I think what we're seeing is the growth, the continued growth in implementation of Technegas. We'll give you updates as those installations progress, if there's any key announcements along the way. There are good indications for lung transplant assessment. What are the prospects for COPD assessments and how many current research studies are underway in the U.S. and internationally using Technegas? That's a great question. I wish I had more time to talk about Beyond PE because I could spend a lot of time on that. One of the clinical papers that was actually published in the U.S. from one of our clinical sites was the use of Technegas in lung transplant patients. That's driving off of other applications that we're seeing around the world. We have publications that we released last year in the use of severe asthma patients that were non-responsive to traditional therapies and the response to therapy. There are papers already in publication talking about the use of Technegas specifically in diagnosing COPD before it becomes a clinical burden. With COPD, once you get about 70% of your effective lung, it's sort of point of no return. There are studies that are showing that early detection can mean all the difference in a lifetime chronic condition. There are some studies that are already out there. We're supporting some additional ones. In the very near future, we're going to be probably announcing some work that we're involved with in asthma. Watch this space. I think that's all the questions that have popped up. We want to thank you for the opportunity to share with you this update today. I think where we're at right now, start of Labor Day, I know where I'm going to be overnight speaking to the team over in the U.S. and working on delivering for our shareholders. Thank you very much.