Greetings, and welcome to the BioPorto third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tony Pare. Please go ahead.
Thank you, Stacy, and good afternoon, everyone. Thank you for joining us to review BioPorto's third quarter results and operational highlights. Joining our call today is George Rosa, BioPorto's VP of Global Reporting and Controls, who will present the financial portion of today's call. As noted in our September announcement, due to the amicable departure of our previous CFO, Neil Goldman, we have initiated a search for a new CFO. I'd like to thank Neil for his contributions that have helped BioPorto get to this critical stage of our lifecycle development, and welcome George to assist with this call while we continue our search for a new CFO. Before we go any further, I'd like to remind everyone that the company's remarks made during today's conference call may include predictions, estimates, or other information that may be considered forward-looking.
For more information, I refer everyone to our public filings. Now, let's get into our highlights for the quarter. For the nine months ending September 30th, 2023, we recognized revenues of DKK 24.4 million, or $3.5 million, reflecting a 20% growth as compared to the prior year. For the third quarter, ending September 30th, 2023, we recognized revenues of DKK 8.6 million, or $1.3 million, reflecting a 63% growth as compared to the same quarter last year. Additionally, we continue to move forward our commercial endeavors outside the U.S. to increase global sales as we work towards opening the U.S. market to sales of NGAL. George will go into more detail regarding our financial results shortly.
Jumping into activities in the quarter, the biggest operational news this period has been the update on the NGAL Test regulatory approval pathway following feedback from the FDA. The company's regulatory pathway for NGAL has moved from De Novo application to submission of a 510(k) premarket notification, which was immediately accepted by the FDA. 510(k) premarket notification is required for registered device manufacturers who must notify the FDA of their intent to market the medical device at least 90 days in advance of a planned launch. We are pleased with the progress to date, which continues to move forward. With our 510(k) submission accepted, we are now awaiting clearance from the FDA approving launch of NGAL in the U.S.
As of now, there has been no interruption in dialogue with the FDA throughout this transition as the review team remains the same, and this transition has no impact on the continuity of the NGAL review process. The recommendation of the FDA towards the 510(k) approval pathway applies principles from their least burdensome provisions guidance, which requires the most efficient manner to expeditiously get this important test with breakthrough device status to the U.S. market. If the FDA grants Marketing Authorization, BioPorto's NGAL Test will be the first authorized pediatric acute kidney injury, or AKI, biomarker test commercially available in the U.S. This week, we will have two poster presentations at the American Society of Nephrology in Philadelphia.
We are excited for our participation at this important industry meeting, as ASN represents more than 21,000 kidney health professionals from around the world, including key opinion leaders working to help people with kidney diseases and their families. From our observations, we are seeing many publications which continue to show that NGAL biomarker utilization is shifting from research affirmation to suggested clinical protocols, which is an acknowledgment by clinician researchers that the biomarker is ready for use. While we initiate preparations to support NGAL commercialization in the U.S., we continue to advance our global activities in order to expand commercial sales, which currently includes the sale of our NGAL test in approved markets, as well as our antibody business.
As announced, we are also revising our 2023 adjusted EBITDA guidance, and the rest of the year will be focused on extended sales in European markets and countries where the CE mark is recognized. Looking at the period's results and BioPorto's growing track record of execution, we continue to maintain a simple formula for success, especially now as we move closer to regulatory approval of NGAL in the U.S. Also worth mentioning on today's call is the ongoing work with KDIGO to update their acute kidney injury and acute kidney disease clinical practice guideline. We are actively participating in developing the guide's statement of work with respect to NGAL as an AKI and AKD biomarker.
The nonprofit organization, KDIGO, which stands for Kidney Disease Improving Global Outcomes, is in the process of updating its 2012 practice guideline for acute kidney injury and acute kidney disease and will be the first time in the guidelines publication history where biomarkers for AKI and AKD will be included. To date, we have submitted statement of work comment pertaining to the situations and use cases across multiple work streams, where biomarkers are critical for the identification and management of procedure-based operational adoption of AKI and AKD-related best practices. This guideline often drives clinical decisions in many countries. It is important to point out that the KDIGO guidelines inform most hospitals globally on how to diagnose and treat kidney disease. Globally, the guideline is also a critical guide in terms of clinical treatment pathways, national guidelines, and reimbursement.
As such, an updated guideline will provide guidance to healthcare providers managing people with AKI and AKD. We believe it will further validate use of NGAL in identification of AKI through biomarker testing. In this effort, BioPorto has been working diligently to transform the industry in the early identification of AKI. At this juncture, it is also important to remember that AKI remains particularly challenging to identify and treat in a timely manner due to its lack of specific symptoms. General symptoms, including reduced urinary output, swelling, or fatigue, are not specific to AKI and therefore can be misinterpreted. This makes AKI difficult to detect and diagnose. AKI is also a time-sensitive condition. The longer it goes undetected and untreated, the greater the damage to the kidneys and the higher the risk of severe outcomes.
Potential late-stage outcomes include chronic kidney disease, necessitating dialysis, kidney failure requiring transplant, and even death. Fortunately, early detection of AKI can help guide effective therapeutic interventions. In clinical settings, hospitals have a high incidence rate of AKI, as it affects 1: 4 hospitalized children and 1: 5 adults in the same setting. AKI is often accompanied by other recognized events, injuries, or medical procedures, including cardiac surgery, mechanical ventilation, transplants, in many circumstances when nephrotoxic agents or drugs are used as a treatment. This makes AKI a significant economic burden and is detected in a shocking 12% of critically ill patients, with 21% of these unfortunately succumbing to AKI. These statistics are well known to clinicians in the field who are actively seeking a better diagnostic for AKI.
In the absence of readily available early AKI biomarkers like NGAL, serum creatinine, and urine output are standard method for detecting AKI. Published studies have shown that when only these criteria are used, between 28% and 43% of AKI cases are missed entirely, and 2/3 of AKI cases are misclassified. Moreover, 70% of clinicians believe they are missing AKI. With AKI, serum creatinine and urine output unfortunately fail in terms of sensitivity, specificity, and timeliness of detection relative to AKI onset and progress. We also believe that NGAL can be the difference in having an effect on positive patient outcomes, relieving the burden of growing healthcare costs due to the advancement of AKI into chronic kidney disease. Firmly believing that early detection of AKI can spare kidney function and reduce or halt the risk of further damage.
To catch up those on the call who are new to our story, BioPorto's NGAL test is already marketed in Europe under CE mark, in Korea and in additional countries. The test is run on standard hospital diagnostic lab equipment, eliminating the need for additional capital expenditure. It is also brand agnostic, compatible with Abbott, Roche, and other premier clinical instruments. The test is a reagent-only product, boasts high gross margins even at the current production levels, with potential for further economics as we grow and expand, with a simpler and shorter regulatory process in general. As we await 510(k) premarket clearance approval in order to market the test for pediatric use in the ICU, we are working collaboratively with our distribution partner, Roche Diagnostics, which allows us to leverage their vast footprint.
Roche is an industry leader, and their instruments are readily available at large academic medical institutions, which handle the most complicated patient procedures. In the U.S., the term pediatric means patients between three months and under 22 years of age. Previously, the FDA has already granted the NGAL Test breakthrough designation status, which the FDA reserves for diagnostics that provide the more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions. While it is early days still, we are actively planning regulatory work for studies to support indication and instrument expansion, including adult populations such as the ICU and emergency departments. At the same time, we're planning to expand approved instruments beyond the initially designated Roche instrument to other targeted instrument manufacturers as well.
Ultimately, as we build the momentum along this commercial strategy, we aim to pursue a full adult indication for one or several specific disease-associated NGAL test uses, which will require additional clinical testing. However, these future endeavors will be strongly supported by all of the preceding clinical and real-world use of the NGAL test to date. In total, the additive effect of indication, instrumentation, population expansion in the U.S. could increase the potential market almost tenfold, from $134 million in pediatric ICU populations to an approximately $1.2 billion in addressable market, and ultimately $3 billion in global addressable market for the NGAL test. We are building out our commercial capabilities in a concerted manner. Following a pre-market approval from the FDA, we will need to form an internal sales force in the U.S.
Additionally, we are working towards expanding already available ex-U.S. opportunity through a multipronged approach that engages all key stakeholders in these open markets. Those stakeholders include our distributors and sales partners, who we are increasingly engaged in rationalizing whether they have the correct capabilities and willing to make the appropriate investments. With those distributors, we will thoroughly train and proactively support. These efforts also include our customers, who we market to directly and engage directly in coordination with distributors, as well as key opinion leaders and clinical champions, whom we work with proactively to leverage their experience and appreciation for our NGAL test and all the benefits it offers. The market in Europe is large, but traditionally requires extensive effort to get established, which is the reason that we have focused on select countries and distributors to get started.
Our focus remains on one, getting FDA approval, two, expanding our total addressable market in the U.S., and three, growing the business in the rest of the world. We are managing these pillars of success through prudent management of our cash position, through financing and promoting high-margin product sales, and managing expenses, while also making sure we have a motivated, talented employees to manage execution. Now, I will turn the call over to our VP of Global Reporting, George Rosa, who will review our recent financial performance.
Thank you, Tony, and hello, everyone. Let me take you through our financial performance for the period. Year to date, total revenues were DKK 24.4 million, a 20% increase as compared to prior year. Looking at the chart, Q3 2023, revenue totaled DKK 8.6 million, a 63% increase over the prior year period. NGAL test revenue in the third quarter of 2023 totaled DKK 5.8 million, an increase of DKK 3.2 million, or 119% over the prior year period. Year to date, in 2023, NGAL test revenue is up DKK 5.5 million, or 57% over the prior year period. Antibody revenue in the third quarter of 2023 totaled DKK 2.2 million, an increase of DKK 0.1 million, or 5% over the prior year period.
Year to date, in 2023, revenue from antibodies is down DKK 1.1 million, or 12% over the prior year period. NGAL Test sales have continued a positive growth trend, with an increase of 50% over the last 12 months compared to the previous year. It's important to note, NGAL test sales can show timing variability among U.S. customers, as the test is currently only approved for research use in that region. Additionally, antibody sales can be influenced by the timing of tender-driven bulk customer orders. This slide provides additional historical trend information on the sales of NGAL tests over rolling last 12-month period. Year to date, third quarter revenues delivered gross profit of DKK 16.4 million, corresponding to 67% margins.
Gross profit during the third quarter of 2023 increased by DKK 1.9 million over the prior year period, primarily due to higher sales volume over the previous year. Adjusted EBITDA loss for the third quarter of 2023 totaled DKK 9.7 million, a 43% improvement over the prior year period. That brings the year-to-date adjusted EBITDA loss to DKK 41.2 million, a 17% improvement over the prior year. These are illustrated on the chart, which shows historical quarterly adjusted EBITDA and cash balances. We continue to see the positive effects from our restructuring efforts implemented last quarter, including a workforce reduction that affected 28% of our global employees.
The restructuring better aligned the company's resources with the strategic priorities of gaining NGAL Test regulatory approval in the U.S., growing revenues in European and other markets that accept CE mark, and expanding the total addressable market for NGAL Test. Moving to the balance sheet, cash and cash equivalents as of September 30th, 2023, totaled DKK 69.9 million, or $9.9 million. This balance includes the DKK 41.3 million net proceeds of the preemptive rights offering that we completed near the end of the second quarter, 2023. Our team has continued the effective management of working capital, which, as of September 30th, 2023, totaled DKK 64.9 million. With this in mind, we believe that we have a comfortable cash runway through Q3 of 2024.
As Tony mentioned at the start of the call, we continue to maintain our 2023 outlook, with projected revenues for the year of approximately DKK 30 million-DKK 33 million and revise our guidance for adjusted EBITDA loss to approximately DKK 56 million-DKK 59 million. We have operated with fiscal discipline and will continue to take responsible measures with careful and conservative expenditures that focus on our program's critical path. Finally, please note that BioPorto's outlook is subject to risk factors, including those described in the 2022 annual report, as supplemented in its 2023 interim reports. With that, I will turn the call back to Tony for his closing remarks, and thank you.
Thank you, everyone, for joining us on the call today. We are very excited at this juncture of our corporate development as we anticipate pre-market approval for our tests in the U.S. While we can't anticipate the timing for which we will get approval, we believe we have submitted all the necessary materials and have been lucky in being able to work with the same team at the FDA, despite withdrawing our De Novo application and submitting a 510(k) pre-market approval. Since joining BioPorto two years ago, I've never been as confident as I am today with regards to our prospects. I am proud of our team, as they have delivered on every critical objective that we have promised, and we have a clear execution plan for capitalizing on NGAL approval in the U.S., as well as fulfilling our commercial objectives globally.
With this, I'd like to turn the call over back to the operator for questions.
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your headset before pressing the star keys. Your first question comes from Yi Chen with H.C. Wainwright. Please go ahead.
Thank you for taking my question. So, the first question is, based on recent communications with the FDA, is this still possible that the 510(k) clearance could be obtained before the end of 2023?
Yeah. So let me explain how the 510(k) process works, right? So the 510(k) submission is actually a notification to the FDA that we intend to market our product within 90 days. The FDA can react in one of four ways. One, they can say, "Yes, we approve," in which case, you can immediately market your product.
They can say, "No, we decline your ability to market your device." They can also say, "We require additional information, and so we're extending our 90 days while you get that additional information." Or they can say, you know, after 90 days, "We want to continue interactive dialogue with you to get more information, and therefore you don't have the ability to market within that time period." So right now, we are in interactive discussions with the FDA, literally on a weekly basis. The other thing to note is when the FDA approves a product, they're not only approving the clinical data and the analytical data, they are approving the packaging that the product comes in.
They are approving all of the wording in our indications for use. They are approving all our user training materials, and in this particular case, this very specific regulation that serves as our predicate for this 510(k), there is a requirement for user training that we have to meet. And so they review all of those materials, and they approve all of those materials. So that's the extent of the review. It's very extensive, and, you know, we're in those stages where they're re-reviewing the materials at this point in time.
So is the FDA bound to give you their official opinion within 90 days of accepting the 510(k) application?
That's exactly right. But that official opinion could include, "You don't have a approval yet. We need to continue interactive dialogue." Right? So
Oh, okay.
It's... Yeah.
Mm-hmm. Got it. A second question regarding the KDIGO guidelines. Is it getting updated on a regular basis, or it's getting
Un-
updated sporadically?
Yeah, unfortunately, it's not updated on a regular basis. The last version was 2012. They've made the decision this year to update it again, and this will be the first time. If you look at the previous KDIGO guidelines, it does not include the use of biomarkers to diagnose or help diagnose for acute kidney injury. This version, however, will include that, with NGAL being one of those biomarkers that can be used. The thing with KDIGO is that it, even though it's a voluntary, how do I want to say? Voluntary compliance to KDIGO, many hospitals, many countries utilize KDIGO as their bible, as their guide for therapeutic intervention.
If I understand correctly, you don't necessarily need the inclusion in the KDIGO guidelines to market a test and to secure reimbursement, but the
No, no, no.
inclusion will definitely help.
It helps.
We don't need it. We don't need it, but it helps.
Okay, got it. That's clear. Thank you.
All right. Thank you, Yi.
There are no further questions at this time. This concludes today's teleconference. You may disconnect your line, and thank you for your participation.
Thank you.