Good morning and welcome to Lifecare's Q3 presentation. My name is Joacim Holter, I'm the CEO of Lifecare. Before we start, I want to underline and emphasize that this presentation is being recorded as a Teams meeting. I am going to bring you through the content of operational review, financial review, and our progress and outlook, and of course Q&As at the end. What I can say for starters is that we are continuing to build our positive momentum in Lifecare, and for the third quarter, the focus has been mainly on building a basis and a foundation for a solid company. We have continued on building the basis.
We already have a proven medical technology, and the key highlights of our third quarter are related to the fact that we have been listed, uplisted to Oslo Stock Exchange, but also that we have continued to prove our already proven medical technology through our ongoing longevity testing. Another important part of building a solid product as a foundation for continued growth is, of course, that we have been able to work on the manufacturing processes and have been able to do the first processes of the manufacturing automated. And as a kind of a new direction, we have also entered a strategic collaboration that has given us access to software for use within glucose monitoring. The reason why I identify this as to some extent new is that this is our first actual step towards a user interface.
This is the first step towards the product in addition to the actual production, of course, of our sensors. Moving on to the operational review. Very important for us is to continue to prove the medical technology. As you know, we are now doing longevity studies in dogs. We have previously done proof of concept studies. We have done studies in pigs. We have done studies in humans with very positive results. Our next step before we actually scale up and go into actual automated production is to also prove the longevity of our sensors in dogs. The first patient has been completed in this study.
The dog has been referred to as Ellie, the Great Dane, and we have carried out our study at the Norwegian University of Life Sciences, the veterinary institute there, but then executed by the team in Lifecare Veterinary. In this study, we aim to assess and confirm the implant's operational longevity, more specifically the biocompatibility and the duration of the sensor itself, and what we see after removing the first sensor is that the tests we did when we took it out confirmed both the durability and the biocompatibility, meaning that the biopsies and bacteriological testing done at the university confirmed that we have no unexpected foreign body reactions or any tissue responses that were unexpected, which was then confirming the biocompatibility after a 12-week implantation period.
So our conclusion after this part of the study is that the implant remained stable throughout the whole 12-week period, which is, in our view, a very positive sign going forward. To start our fundamental progress towards the human market, which is our main goal, we have to ensure that we have a manufacturing process that is stable, productive, etc. As we work on very small surfaces, to some extent nano surfaces, it has been important for us not only to do the pilot production, but also to be able to automate the critical steps, the most critical steps of our production. A bit more into those details is that we have identified two steps as critical in this respect.
First of all is what we define as a 3D printing method, or you might say a 3D printing method where we are applying the pressure sensors on the sensor body. This is done in the size of 40 nanometers. Hence, we have to, of course, do that with a machine. We have done that with a machine that has been operated by a human being so far. Now we're able to do that automated based on software that we have customized. The second part of our automation is the filling and sealing of the sensor. We are using a chemistry in a nano chamber where we're talking about a couple of hundred nanometers. Filling that into the chamber is, of course, a complex thing to do by hand. So it's important for us to do that by machine.
Those two critical steps we have been able in the third quarter to actually do in an automated setup. I want to emphasize that this is not an automated production. We are doing automated steps towards the automated production, and the step after the automated production would be the scalable production where we're going into scale. We have, however, in this process, identified some opportunities where we want to further optimize both our product and production tolerances to ensure that we meet the highest quality standards that we need, not only to go into the veterinary market, which is our first goal, but also, of course, most important to go into the human market. We have engaged, and I can also say that our staff is to some extent unbalanced when it comes to establishing the manufacturing because we are a company going from the R&D stage.
We have a lot of fantastic and good scientists, and we have a team of manufacturing experts. But in this phase, we see that we will profit on engaging external consultants. Lifecare has been a company where we have been building down the use of consultants and building up the use of internal employees. But at this stage where we're going from R&D, we are taking advantage of our internal resources, but also engaging external consultants so that we can follow up on the opportunities we see to further optimize the tolerances of both the product and the production. We have engaged a company from the U.K. called TTP that are specialized. It might be wrong to say specialized because it's quite a big company with a broad experience from production setup of subdermal implants and other implants.
Based on this cooperation, we do anticipate advancements in our production consistency by the end of this year. We are then preparing to validate this consistency early 2025. The consequence of this is that we are not ready right now to put the product out in the veterinary market. We want to ensure the highest quality of product before we do that, just as we will do in the human market. Hence, we are pushing the expected launch of product in the veterinary market until the first half of 2025. The production is a very important step towards being able to actually execute on our primary goal to go into the human market. Based on the status as of now, we have executed our next point on our study planning, which is to draft the protocol for our long-term human clinical study.
This has been done with our internal experts, and it has been ticked off both in the board and, of course, also in the scientific advisory board. We are now ready to submit the protocol as soon as the production is set up in a high-quality way. This is a significant advancement for us towards the next phase, which is then the clinical study for regulatory approval in humans. And right now, we have an ongoing tender to connect with a contract research organization that is optimized for our needs and also to identify the clinical study sites. We will have one site in Germany. We will probably have one in Norway and probably also one in Denmark and/or Sweden. Coming a bit back to the cooperation with OneTwo Analytics and the first step towards a user interface.
To provide continuous glucose monitoring for diabetes patients, but also for healthcare professionals, is a fantastic leap from doing finger pricking and blood measurement. But we have to keep in mind that the amount of data coming out of a continuous glucose monitoring is quite enormous. One continuous glucose monitor will provide 2,000 data points per week. And we cannot expect that neither the patients nor the healthcare professionals are able to actually make good use of that amount of data without a good analytic tool. Lifecare is a company that is specialized in producing technology within sensors and continuous glucose monitoring. We have no ambitions to become a data analytics company. Hence, we have entered a cooperation with an advanced company from Sweden called OneTwo Analytics. They are specialized in data analytics from continuous glucose monitors already.
And they have a portfolio of AI and ML-based software for patient self-monitoring and also for caretakers interpretation of the CGM data. When I say a portfolio, it's because it's three elements of these softwares. The first one being a bit untraditional for a company that is providing an application. The first one is a data software tool for the healthcare professionals. So that's the primary use of the data that is read in the software systems. They are providing an analytic tool for the doctors at the hospitals, basically, so that they are able to give specialized or individual advice for the patients. The second part of this software portfolio is that they also apply the data into a software where they are able to prioritize the patients, which is also, of course, for the healthcare professional.
The third one is the user interface, the application used by the patient. And we have made an agreement with OneTwo Analytics where we get a license to commercialize the software in the veterinary field so that it's customized for our use in the veterinary field. But most important, we also have access to their software tools in the human market so that this is completely outsourced from our side, but it's providing us with a world-class analytical software to provide to our future customers. I'm going to say a few words about our financial situation. Throughout the quarter, we had operating expenses of NOK 22 million that was in line with the expectations. We have a CapEx in this period of NOK 8 million . This is related to equipment for automated production.
And to go a bit into detail there, these are the costs that we actually took on around late 2023, early 2024, which now has been paid in the third quarter. We have a net cash flow of NOK 25 million and a cash position of NOK 76 million. The progress of our company is visualized here in this timeline where we see split in studies, our compliance work, and also our production and market preparations. And as you can see, in 2024, we have executed the start of the longevity study in dogs and also started the preparations for the CE regulatory study for humans. I want to also note that this was earlier this year, but still in 2024, that we earlier this year bought a company called RemovAid, which is specialized in the removal of subdermal implants.
This is where we now hold this technology and are able to customize it for our need so that we in the future will have a response for the need to take out the implants, not only to put them into the patients, and we have in 2024 done our pilot production and also the key steps in the automated production. We are looking forward towards finalizing the longevity study in 2025 and also to start the clinical study called LFC-SEN-003. We will, throughout 2025, build technical files to claim the CE Mark as soon as possible, and also, we envision that we will do the product launch for the veterinary market based on an automated production in 2025, and to summarize that, we are advancing our production consistency. We are continuing our study in dogs to confirm longevity and biocompatibility.
And we are now increasing our focus on preparations for the clinical study for human use. The full report is downloadable at lifecare.no at the address shown on the screen right now. That concludes my presentation, and I'll be happy to answer any questions you might have.
Hello, Ludvig here from Carnegie. Can you hear me? Yep. Yep. So one first question from me. Is it possible for you to specify which specific measures that you will take together with the TTP to optimize the product and production?
No, I don't think it's that. Thank you for the question, Ludvig. I don't think that we are going into details on that. But what we are facing is, of course, we have a range of technologies that we are combining into one product. And that affects the consistency.
So it's important for us to ensure that we optimize kind of the puzzle of the components into the production. So this is not a question of the science or the technology as is, but it's a question of practical production preparations.
Okay. Great. Thank you for the answer. I'll jump back in the queue and let some other people ask questions and come back later.
Thank you. There's a question here from F ilip Einarsson. Given what you know right now, could you expand on your expectation for CGM data software for the human market? Are you anticipating differentiating considerably in terms of the UI and available metrics, for example, compared to the ones used by Dexcom and Eversense, for example?
I think that, first of all, I think that, of course, to the extent Lifecare will offer software solutions and user interface, we obviously have to be in line with the patient expectations as this is driven by Abbott, Dexcom, and other players as well. I don't believe that it will be in Lifecare's core focus to deliver an end-user interface based on the software, but it is an option to use what we can deliver because our progress is towards partnering with a bigger player, and we do expect that whoever we partner with will already have an infrastructure of software, at least an application towards the end user.
So I think we are not kind of in the details that you're asking about now, Filip, but my response will be that we obviously have to be in line with the patient expectations, and that is driven by the big players, Dexcom, Abbott, and to some extent, Medtronic. No more questions?
Yep. Also from Filip, could you provide some more context to anticipate the next step and timeline related to the Sanofi agreement and follow-up? You expect to conclude the LFC-SEN-003 trial in the second half of 2025. Do you anticipate having a commercial partner in place by then?
I would love to comment on it, but we have a strict policy on this based on the agreement. It is based on confidentiality and, of course, balance towards what we are expected to provide of information to the market.
Unfortunately, I cannot kind of give you any prelook into where we are going on that agreement. As you know, we just reported that we finalized a new phase and reported that to Sanofi. We are in ongoing contact with them and look forward to explore both that potential and other potentials in 2025. No more questions? Anybody here? No. Okay.
I think Filip sent another question. There is no more question here. There's coming one more. Yes, there's coming one more here. Given the implant remained stable throughout 12 weeks, given what you know right now, to what extent would you say the risks, the sensor stability for durations longer than that?
I'm not sure it's correct of me to kind of say that it de- risks it to this extent.
What I can say is that we have our long-standing reply and statement is that we will provide a sensor that has a duration of minimum six months. We do believe that this can be an understatement, but I don't have the basis to actually go into to share with you any new number of months. But obviously, the fact that the sensor throughout or the implant throughout a 12-week implantation shows no unexpected foreign body reactions, show no significant or no unexpected effect in the tissue is a confirmation for our statement that it will have a duration of a minimum six months in the body. It's possible to speculate around this because what we see is that we are not consuming any of the physical properties of the implant. We're not consuming any of our chemistry.
So the limiting factor in this respect is the fact that everything degrades over time. And when we now know that it has a not noticeable degradation over the first three months, that is obviously positive for the outlook. I can share that I have instructed our CSO to do a paper study based on the components of our product to consider whether we will be able to, within not too long, say something public about our expectations beyond six months. But as of now, I stay with six months as it has been for a long time with those remarks.
One last question from Filip. Approximately how many patients will the LFC-SEN-003 recruit? We don't know because we haven't been in direct dialogue with the regulatory authorities. And this is a statistical question. How many patients do you need?
What I can say is that we have an expectation of somewhere around 200 or 300. However, we know that the Senseonics device, the Eversense, in their first pivotal trial, they had, I believe it was 125 patients. So we might overshoot expecting 200, 300, but at least that's what we are aiming at. The final number will be available when we are entering into the actual discussions with the regulatory authorities as soon as we're ready to submit the protocol for approval. So the imprecise answer would be some hundreds.
Not any more questions yet.
Some final questions from me, Ludvig here. I was wondering if you see Eversense as a competitor or rather a player that will help you to build sort of the implantable CGM market.
I think it's fantastic to have Eversense ahead of us.
We are together with Eversense representing the new generation, the next generation of continuous glucose monitoring, so as of today, the standard is to have a body-worn device, as also actually Eversense has, without an implantation, but the next generation of continuous glucose monitors will definitely be implantable, and the need for body-worn accessories will be reduced and disappear over time. Of that, I'm completely convinced, and I think it is a good thing that they are doing the regulatory pathway ahead of us. That makes it easier acceptable for regulatory authorities to actually approve our submissions, and for the U.S., as an example, it will bring us into an easier pathway, an easier regulatory pathway. I think it's also important to underline that the market share of Eversense is not very. It's small, basically.
They have less than 5,000 patients on a global base as of today, and that's out of a total of 8 million CGM users worldwide. So they are a step ahead of us, which, of course, can seem a bit intimidating. However, I think that the step is, they are just a small step ahead of us, leading to us taking advantage of the fact that they have actually gone the path for us so that it's easier for us to go forward. It will also, of course, affect the acceptance from the users, I expect. So I think it's a good thing to have a good competitor in the same space.
Makes sense. Thank you. You're okay. And lastly, maybe a little bit on the launch in the veterinary market.
I was wondering if you can say anything about your own expectations on this in terms of market uptake and penetration.
I think that it's a huge need in the veterinary market. And I also believe that the uptake will be, of course, based on early movers. And I believe that you will have a lot of early movers in the Nordics, maybe in the U.K., not to mention in the U.S. And I think there are, if you take Europe and U.S. under one as one number, it's more than two million dogs that are diagnosed with diabetes every year. And they do not have any actual good solution to do the monitoring of glucose in the dogs. So I think it's obvious that the market is very promising.
But for Lifecare as a company, I think we will see that one thing is that this will give us an MVP approach where we actually get a product out and can gain feedback and understanding of our product, preparing us better for the human launch, and at the same time provide us with turnover. And then it remains to see how big the uptake is. But I think that the potential is almost unlimited. And I'm looking forward to get to the point where we can actually do the launch in the veterinary market and explore that thoroughly.
Great. Thank you very much for the presentation.
Thank you for the questions. Then I believe it's time to say thank you very much for participating. Welcome back in about three months. And in the meantime, reach out if you have any questions. Thank you.