Good afternoon, and welcome to this presentation and Q&A with ViroGates. With us today, we have the CEO, Jakob Knudsen, and the CFO, Josephine Baum Jørgensen. First, there will be a presentation, and afterwards, a Q&A, where the management team will answer questions submitted via Stokk.io. There have already been pre-submitted questions on Stokk.io, and the Q&A is still open so that you can submit questions live as well. I will now hand over the mic to ViroGates to start the presentation. Your line is now open.
Okay, thank you very much, Anders. My name is Jakob Knudsen, I'm the CEO of ViroGates, and I also have with me today, Josephine Baum Jørgensen, who's the CFO of ViroGates. We are not in the same location because Josephine is not feeling really great today, so I will also conduct the bulk of the presentation. This is not reflective of how we distribute work, but in order to allow Josephine's voice and health to recuperate, I will do the bulk of the presentation and probably also answer to the questions. Please appreciate that we're in different locations, so we hope that we will not have too many technical issues due to this.
Other than that, we are very happy to be now presenting at Stokk.io, and thanks for the opportunity to do so. We will present first the business of ViroGates, and secondly, also the rights emission that is now ongoing. A traditional forward-looking statement, everything that we say is subject to the fact that company announcements have been made. I'm sure you are aware of those typical disclaimers. ViroGates is a company that plays a role in in vitro diagnostics. We have a proprietary biomarker called suPARnostic. The company was founded back in 2001 as a spinoff of a university hospital, but spent the bulk of its initial years developing products and doing clinical research.
We are headquartered here in Denmark, just north of Copenhagen. We IPO'd on Nasdaq First North Growth Market in 2018, where we were about five employees. Now we are 12 employees and also have a sales presence internationally, and we'll get back to that. What we tap into is a world which is both in the hospital scene, where obviously there's a huge issue with staff shortages and an increasing demand for healthcare presented by the aging populations and so on. So we're tapping into a market which is under a lot of reconstruction, I would say.
We also see individuals having more of a curiosity, so to speak, with respect to its own health, and this is one of the growth streams that we're also looking to address with the proceeds coming in from the rights emission. So, we'll get back more into this. It's basically trends that are to our favor in the fact that we have much more interest for our products than say 10 years ago. suPAR is a protein which is present in the bloodstream of everyone.
It's not to dwell too much into the biochemistry, but it's a protein which is cleaved off the surface of various immune cells and also the endothelial cells, so the surface of the cardiovascular system. It's naturally occurring in everybody, but it rises with inflammation, and we typically refer to it as a marker of chronic inflammation. It's also present in acute inflammation, but this is typically a question of suPAR rising to a level where the system cannot cope with acute infections, and this is where suPAR is such a good prognostic biomarker. So we are not a specific diagnostic, but we are a very good predictor of outcome in various diseases and in general health as well.
suPAR has been extensively researched in clinical studies, so as you can see here, we now have more than 900 publications and soon to hopefully reach 1,000 publications over time. So a lot of interest has been going into various disease areas, and most recently, also healthy individuals and how suPAR is predictive of outcome in those different conditions. This is one of my favorite studies still. This is how suPAR reacts when it's combined with one of the typically used clinical scoring systems that are used in the healthcare systems today. So this is if you look at the top of the bars in the various colors, that's how patients typically are triaged using a triage system called the National Early Warning Score.
As you can see, there are quite a number of the yellow patients, and those are the problematic ones in the sense that they're not really fit to go home, but they may not be candidates for being admitted either. So if we, based on a predefined algorithm, re-triaged the patients, we actually see the patients wandering from the yellow category into the green, and also into the red. So we have many more green patients that are candidates to be discharged early, and we also have more red patients, but we're also interested in capturing the patients that are in need of a hospital bed. So basically, a better triage of the patients. So suPAR is typically used in combination with other triage systems.
Another example, and this was the first use case. The second use case that we developed during the COVID pandemic was how to utilize suPAR in COVID patients, and those were typically patients that were presenting with severe respiratory problems into the acute ward. And we saw in a randomized clinical setup that where we utilized suPAR to distribute patients into a category that received either standard of care or a product called anakinra from the Swedish company Sobi, which is basically a drug that can inhibit some of the cytokine storm. We used suPAR to decide whether the patient should have the standard of care, i.e., the typical products that were given, or they should receive this anakinra drug, which was used to dampen the immune response.
We saw that there was a huge positive impact by utilizing suPAR to triage the patients better for... or stratify the patients better for this kind of care. So a 64% improved overall clinical outcome from using suPAR in this manner. Fortunately, obviously, the situation has improved, and there's less of COVID burden now, but it's a good example of how suPAR was utilized in a clinical setting.
The next example is probably more, well, commercially relevant in the sense that a recent study that was presented about 1.5 months ago and has not yet been published, but top-line data were presented in a conference in Vienna, was again a randomized controlled study, where we utilized suPAR to triage patients either to receive standard of care again, which is typically observation in a hospital bed, or the use of an antibiotic drug called meropenem, which is a typical antibiotic, penicillin-like drug. The patients that were interested in here were the ones that were used that were characterized as qSOFA 1, and qSOFA is another way of using a typical triage system as described earlier.
And this is a category of patients that are typically not serious enough to allow them into the hospital, but they are typically observed for a period of time, and if they have a high suPAR, they should actually be treated earlier on. And this was where we showed a much better outcome for those patients that were treated early with the drugs. So again, a very useful way of utilizing our product. The last use case I'm gonna present is how to utilize suPAR for healthy individuals.
The average person can also have an interest in seeing how much chronic inflammation is ongoing, because it's actually predictive of how long we live, how much our risk is to getting cardiovascular disease, type 2 diabetes, cancers, and so on. So, the good example here is an individual who is presenting with a high suPAR has a 15 years worse biological age, so to speak, than the ones with the low suPAR of the same chronological age. So this is a tool that can be utilized to measure your own health.
And if you are, for instance, doing interventions like, the typical more exercise, less alcohol consumption, better sleep, and so on, maybe taking various supplements, if that is the case, you can actually use suPAR to monitor how you progress in terms of a healthy living. So we look very much forward to rolling this system out more internationally over the coming years. And this is where I leave it for Josephine.
Thank you, Jakob. I will start by talking a little bit about the various markets for the use cases, the applications that Jakob just went through. To the left, we have what is currently, as Jakob mentioned, our primary market. It's in acute care, it's in triaging, and very specifically, we've chosen to seek the acute care departments in the hospital since this is very much the entry point of the patient going into the hospital. The patient is typically looked at, viewed, prioritized, if you may say so.
And then we've estimated this potential for the suPARnostic products based on the part of the population that actually enters the acute care department, but then also the part of these people who get blood work taken, since in order to have your suPAR measured at the hospital, you need, or in general, you need to get blood work. So this is how we estimated the acute care market. And then if we go to the middle part, we have this guiding treatment category, which covers two of the use cases that Jakob just mentioned. The first one being within COVID, and the second one, the more recent and potentially of more commercial interest, the sepsis one, since sepsis is, of course, an illness that's here to stay.
And the point of guiding treatment and using suPARnostic® for guiding treatment is that you couple the suPAR test with an indication or a disease that will guide the following treatment of the patients. And the reason why we, of course, are applauding the fact that more research interest and more research articles are ongoingly being developed is because that this research constantly reveals new application areas and diseases for our suPARnostic® products. And then we have the longevity segment to the most right whereas the two other ones are probably the most well-known to or are the most well-known to ViroGates. The longevity segment is something that we've begun to look at more specifically within the last half year.
It's part of the market potential for us in ViroGates, is part of the very much booming wellness market. This market both includes supplements, medical devices for private use at home. So we have, in our estimations, of course, sought out to delimit the addressable market to point-of-care diagnostics and to these laboratories that are taking in blood samples from, it could be smaller clinics or physiotherapists, to evaluate or analyze the blood work. So that's how we've estimated this part of the market. And what we've experienced within the last couple of months that we've been in this longevity segment, is that the sales cycle, at least compared to what we've known in acute care, it is much shorter than what we have experienced before. Thank you.
Then a little bit about what environment are we competing in? As Jakob says, there are almost 1,000 studies demonstrating the prognostic value of suPAR complementing other biomarkers and these risk scoring systems that are already very much implemented into the healthcare, both in the hospitals and in the clinics. What is really unique about suPAR is that it has a high prognostic value for negative outcome, meaning that the suPAR value is really good at predicting whether you are moving either, and the pace in which you're moving either towards disease progression or mortality. It's also non-specific, meaning that it covers all the evil in your body, you might say, since it works across all inflammatory diseases.
This also makes suPAR a great marker for your body's condition in tackling or dealing with the challenge that you might be posed of. So if you are having a lung infection, for example, measuring your suPAR will tell you whether your body are, is in a good state of handling this infection. And this is very much what suPAR can do. And then it's stable. It has high stability over time with little day-to-day variance, meaning that it will not be affected by a flu or a cold. And then it's fast, it has low time to result. It's implemented into existing workflows at the hospitals and clinics. And then we've mentioned, or we've put in the slide some of the complementary biomarkers and systems that are currently in the hospitals.
The one you may know, the most probably is CRP, infectionstal, and we believe that suPAR has a great value in complementing these at the hospitals. Then, a little bit about our product. We sell our product to healthcare customers in Europe and North America, primarily, with an average price of EUR 22. It depends on which type of product you're purchasing, and gross margins above 75%. Going a little bit deeper into our product portfolio, I want to start with the first product launched by ViroGates. It's the ELISA product. You will find it in the right below corner.
It's this plate where you are able to do many suPAR tests at a time, which is what makes ELISA very applicable for research purposes, since you need to have many samples that you do at the same time. Then the following product we launch is the Quick Triage. It looks very much like the COVID test I took earlier today, which was fortunately negative. And you all also may know it from the time that we all did COVID test constantly. But it's this near-patient use, lateral flow test that enables you to from a blood taken from intravenous blood and centrifuge you are able to do the suPAR test.
The following product that we launched in 2018 is the TurbiLatex product, which is the automated use of suPAR testing. It is run on these bigger machines that are available at hospitals, and we have validated the suPARnostic test on many companies' platforms, as you might see also on the slide. The latest addition to our product portfolio is the POC+. The POC+ reminds a little bit about the Quick Triage in that it's a point-of-care, near-patient use. The big difference with the POC+ and the QT is that the POC+ is able to measure the suPAR level in full blood, whereas with the Quick Triage, as I said before, you would need a centrifuge to get plasma to measure it.
So we are, of course, very excited to have launched this product. ViroGates is selling suPARnostic products to customers globally. We do that through both direct sales channels and indirect sales. We have direct sales agents located in Denmark and France and Spain. In France and Spain and Denmark, of course, they're covering a bit wider in their sales. And then we have an established distributor network covering most of rest of Europe and also a small part of the rest of the world. And then we have quite a few countries to where we sell our products for researchers only, marked by the orange in the map.
In our management team and board, we have those that you see visualized here on the slide, which are people that have been part of the life science industry for a long time, and have and has many years of experience in working with products like ours. Mm. Then I'll hand the word over to Jakob.
Okay. Thank you, Josephine. Just a few words on the rights issue that is ongoing. We have launched a landing page, which pops up on our main webpage, but otherwise, it's labeled Rights Issue 2023. You can see the timeline here. We are in the midst of or at the end of the subscription period. So, a little bit depending on your bank, you may act also on Monday, but currently, rights are traded as well as the shares, obviously. But most interestingly, for the rights issue, the rights are traded at the Nasdaq First North Growth Market here in Denmark, but they can be purchased, obviously, from Sweden and elsewhere as well.
And the action is typically to be taken on Monday. We have. I will describe a little bit the use case that we're looking into. We were negatively affected by the COVID, if you like, going into the COVID, but actually, as you saw from the use case in COVID, we actually had some sales in the COVID market, and therefore, we had a double whammy in the sense that, coming out of 2022, we had an issue with our revenues, and we are taking actions to come back into the hospital segments there and reestablish clinical routine. But this has taken some time, and this has obviously negatively affected us.
So our current guidance will bring us out with a lower revenue than last year, but we are getting back on track with respect to both our growth markets and the markets that we are addressing. In terms of the use cases and the use of proceeds, Europe, we have some ongoing reimbursement discussions. It's primarily in Germany and in France, and it's a little bit detailed, but it depends very much on the sector because we are looking to address this in the outpatient segment as opposed to the hospital sector, where it's typically more of a system where the hospital is purchasing and using the test, irrespective of reimbursement.
So we are trying to bring this out a little bit more to an earlier stage, predominantly in Germany, but also with the studies in France. Then we are working on the submission of a 510(k) application, which is the market authorization, market clearance for promoting in our market our products in the US. And that is an ongoing process that we have undertaken with Sobi, the partner in the COVID application that I mentioned, the marketeers of the anakinra drug. They are supporting the submission by both financially and also with knowledge, where we're tapping into the resources in their US organization with respect to the 510(k) process.
So we're very happy about that, and we will disclose as soon as we have something tangible to disclose. We've not submitted the application yet, but we're working on that. And lastly, we have the longevity stream that was also presented, which is the presumably healthy individuals, where we are looking to work more directly with the clinics here in Europe and potentially also internationally. So that is going to be one of the growth areas going forward. In terms of the rights offering, we're offering, we have been pretty straightforward in the sense that one existing share has carried one subscription right. The subscription rights is now traded on individually.
So they're sort of off the original share and are completely tradable. And that entitles to one subscription right, entitles to subscription of one share of 4.5 DKK per share. And as said, at least, depending a little bit on the bank, you need to react on Monday at the latest. But the official ending of the subscription period is mid-next week, and then we will announce the result on Friday next week. Typically, refer to a bank. Nordnet is one of the big traders, obviously, Avanza in Sweden.
I'm sure you're, if you've traded shares and rights, you are familiar with the process, but it's typically done by ways of reacting via your bank. We also have a subscription form on the landing page, but your bank is typically the go-to agent in this setting. And those were the words, and I know that some questions have already been posed, so we would welcome any questions that you may have.
Perfect. Thank you for that, Jakob and Josephine. Let's move directly into the questions. The first question here: in 2023, you have seen a growth in the U.S. of over 70%, if I calculate correctly. What has been the main driver of this growth, and what have you done in this market to secure this growth compared to Europe? Do you expect this trend to continue in 2024?
Yes, that's, that's obviously a very relevant question now that I've mentioned this, FDA application and so on. The U.S. market is, is a little bit complex in the sense that, there is a way to sell into, the U.S. market initially, as Josephine said, as a research use only product. But there is actually a way for the larger, hospital labs, typically, but the, the accredited labs to, to do an own validation of the products. That means that they will then, go through a validation period and, and then offer the products for clinical application in the sites that they are serving. So, that's the stream that we're tapping into. That means that we can do that independently of the FDA.
So this is one of the growth areas that we've seen. We're working with about four U.S. labs that are interested in implementing this as a lab-developed test, and they have actually purchased the products for that validation. And when we go into, hopefully, knock wood, touch wood, clinical use, then they will be offering it as a clinical product. So that's a very interesting trend and we're serving those hospital labs and are looking very much forward to that growth going forward. The next stage is the actual marketing clearance from the FDA, where you can fully promote the product also to physicians and so on.
But as it is right now, there is actually a growth stream directly related to the lab-developed test segment, and that's one of the things that we definitely see continuing also in 2024.
Okay, perfect. And the next question here: previously, I have heard that in the U.S., private hospitals and care facilities can be more open to solutions like ViroGates', as they are a for-profit business looking to increase their profits while providing better care for each patient. First of all, is that true? And if it is, how will you make sure to benefit from this in the future, and can you take the same approach in Europe for private hospitals?
The short answer to the first question is yes. So, there is more of an economy between the lab and the hospital in the U.S. We in Denmark here have typically seen it by ways of Sundhedsplatform, which is based on the Epic system that comes from the U.S., that I guess we saw that what the nurses and doctors here are complaining about is the fact that this system is a little bit more tedious because it actually allows for invoicing back and forth between for the various services that are conducted.
That this is very much a trend from the U.S., where they look more commercially upon the solutions from the lab sector towards the caregivers, the clinical staff. And therefore, actually the U.S. system is one that is favorable to ViroGates products in the sense that they don't see it as a burden in the lab budgets, but actually they invoice it to the physician. So that's a favorable trend to us. With respect to applying this in the European system, it can be applied, but not so much for acute care, because acute care is typically, by and large, across Europe, a public thing.
You're not admitted to a private hospital, for instance, in Denmark, for instance, in Spain, for acute issues. So, with respect to the private labs, it's more of a use in particular use areas. So, the applications that we're looking for in France and Germany are somewhat more directed to the second stream. But we don't—but it's not as commercially oriented as in the U.S., generally in Europe.
Okay. The next question here: Do you have any customers where your product has been to begin with in the research department and from there spread out to clinical use based on that research, or are those two things usually not connected?
Again, a very good question. We've arranged, since we're in different locations, that I address the questions unless we point to Josephine and also allow for her to recuperate and get back on track. Yes, we have seen that, and that is a good example are the streams that we're supporting right now in the U.S., where it's actually technically a research use initially and then to be implemented. So I guess we're just on the borderline of the implementation.
With respect to a general trend, I would say that unfortunately, in Europe, it's often decoupled, and that means that if we are in the research setting, a lot of research is done by PhDs, and they tend to vanish into clinical jobs and so on subsequently, and a lot of acquaintance with our product gets lost in that transition. So it's more difficult to see in Europe. We had a very big customer where the product was initially used for research, then applied in clinical use. And that's, I guess, one of the success stories, but other than that, it's more predominant in the U.S. than it is in Europe.
What do you expect the volume of sales should be to reach break even, and for you to fund the ongoing growth with your own cash flow?
Yeah, I mean, we've not guided specifically on what the volume should be, but I don't think you need much of a mathematician or accountant to calculate back and say it's somewhere above DKK 20 million, maybe closing in on the 25, but somewhere between 20 and 25 million for us to be cash flow positive and EBITDA positive. So there's a little bit of work to get up there. In terms of the cash use, what we've guided now is that with the cash, touching wood, that we will be raising DKK 15 million, we should be able to reach that level.
With the high amount of studies done around suPAR, what is the reason for suPAR not yet being used at a high extent in clinical use?
Yeah, that's again a very good question, and how much use would you anticipate? Josephine mentioned the CRP and that has 67,000 studies. I don't aspire to get up there within the foreseeable future, but I guess there are many reasons for this. Some of the studies that are conducted, as I mentioned, are done as PhD studies, where it's, if you like, more sort of research use rather than development use. The studies that are leading to clinical use is typically randomized controlled studies, like the one that I mentioned with meropenem, the sepsis study.
That's, that's where clinical—that's sort of the golden standard of the studies that, that clinicians are, are looking at, because this is a protocol, a prospective protocol run for how you will deal with patients in the future, and then you apply it to actual patients coming in. So, so that's, that's what drives clinical use. And we actually only have three, if you like, studies of that nature because they are much more difficult to conduct. So a lot of the studies that have been done, which in the past are retrospective study, where you have a, a pool, a biobank of patient samples, and, and then you measure suPAR and see how it performs in terms of already collected samples. So, so the golden standard, that's, that's actually what, what we are looking to apply.
And then obviously, it's down to the individual areas, how much of randomized controlled trial you need in order to implement the product. But the good examples that I mentioned with the COVID and the sepsis are studies of the highest caliber in terms of this is how you can demonstrate that there's a difference to utilizing suPAR versus not utilizing it. With respect to the traditional use in the acute care triage, there is a trend to saying, "Well, we need to see how it performs in our setting, because we have a different patient flow, we handle patients differently," and so on. So it's a little bit more difficult in that area.
But for the first two use cases, those should be directly applicable. And with respect to the last stream, the longevity, that's an area where typically we can utilize the retrospective studies to our advantage, and we don't really need the randomized controlled trials.
Then we are at the last question here, and I think you have addressed the most of it, but I will ask it, and then you can see if you have anything to add. You have not put any numbers on the revenue growth the coming years in regards to the rights issue. Do you have any estimates, or when can we expect to get a guidance for 2024, for example?
Yeah, that's a very good question, and it also relates obviously to our budgeting procedure and so on. So I would have to say it's correct by the person posing the question that we've not put out any guidance for 2024, and I would have to sort of revert and say it'll come in due time. And obviously, depending on also on our internal discussions with our board.
Perfect. That was all the questions. Before we end the webcast, I will just hand over the mic to you again if you have any kind of final remarks to end with.
I guess the final remark is, that despite the fact that we've had some difficulties coming out of 2022, as I've described, we are very anxious to build a business going forward. And this is also... I guess we have actually put our money to show this. We have pre-subscriptions from the three largest shareholders, and we also have pre-subscriptions from management. So we have subscribed to half of the round internally, by way of six, I believe, pre-subscribers.
So, this is a testament that this is actually something that we really believe in, and we believe that we have a much more prosperous future than the troubles that we unfortunately had coming out of 2022. So, I think, with all the caveats that there is to investing in First North assets, we are a business that is not sort of a binary outcome biotech business. We are something that is looking to build a business, and I think we have the right building blocks for the future.
Thank you to both Jakob and Josephine, and thank you everyone for listening in. That ends the webcast, so have a good rest of your day, and see you later. Bye.