A warm welcome, of course, to our quarterly presentation for the second quarter of 2025. I'm going to first give you a brief introduction about Lifecare ASA, as I assume that some of you are new to this company. I'm not going to make that too thorough, but at least I'm going to go through the basics. I'm going to provide a quick look at the operational highlights for the quarter, and I'm going to leave the word to Renete Kaarvik, our CFO, to do the financial review and come back for an operational review, where I also will introduce our CSO, Professor Andreas Pfützner, who has visited us today. I will end, of course, with an outlook and the potential to do questions afterwards. Lifecare ASA is a high-growth medtech opportunity, and I think it's important to emphasize that we are working within the field of medical technology.
We're not a biotech company. Of course, we are a life science company, but we are working within medical technology. Specifically, we are working with the next generation of diabetes medical technology. We are working with sensors, continuous glucose monitors. This represents a $5 billion addressable market going forward. As we have a capital-efficient path towards our commercialization, including near-term value inflection points, and being the second mover, which we see as an advantage for implantable continuous glucose monitors, we calculate and expect that we have a peak revenue potential within the not-too-far future of around $1 billion. Diabetes as a disease is a growing global health crisis. A former president of the International Diabetes Federation described it as a pandemic spiraling out of control, which is quite, quite, it's a good way to describe it.
It's a trillion-dollar healthcare challenge with more than 600 million people affected worldwide with diabetes. Of these 600 million people, approximately 57%, according to the newest numbers, are diagnosed, meaning that more than 300 million people in the world have diabetes and know they have it. Also, diabetes causes approximately 3.4 million deaths. It did in 2024. That represents one death every second. Just maybe to put it into a more tabloid format, we just heard this morning that Barbie, the Mattel doll, now has its own variant of a diabetes Barbie, not only, of course, with the disease, but also with all the equipment needed to handle the disease, the medtech that handles diabetes for the patients. Continuous glucose monitors have become the standard of care for diabetes patients, at least in the developed world.
Today, as you probably have seen, you've seen people going around with these white plastic things on their upper arm. This is a continuous glucose monitor. This is the follow-up of the previous technology, which was pricking in the finger to take a blood sample. It's quite a significant step going from a manual measurement method and into a continuous monitoring method that has been around now for approximately 25 years. We believe that the future of diabetes care, the future of continuous glucose monitors, are within the implantable field. That's where we are working. We want to take the CGM, implant it under the skin for a long wear, giving an inject-and-forget solution for the patients. They don't have to have it on the arm. They don't have to change it rapidly, as is the case today.
The existing continuous glucose monitoring systems represent approximately 10 million sales annually as of today. It's led by Dexcom, Medtronic, and Abbott, Abbott being the leader. The big problem, the big downside with this fantastic technology, is the time of wear, the duration. The continuous glucose monitor, as they are today, have to be changed between every 7th and 15th day, depending on which supplier you use. There is in the market already an implantable device from the company Sensionics. They have a device called Eversense that they have introduced to the market, both in the U.S. and in Europe. As of the end of 2024, they had approximately 8,000 patients. That was an increase from 3,000 the year before. This is starting to grow. That's the company we are following after. They are going up our regulatory path.
That's why we're saying we are the second mover on the implantable side. Lifecare's product will be used for a minimum of 180 days when in the market. We are in the form of a small capsule, as you can see here. We use, as the only one in the world, the osmotic pressure as the sensor principle, and we expect to have a cost for the patients being in between the traditional CGMs, as they are today, and the new CGMs from Eversense or from Sensionics. Going forward, we are going to miniaturize further our sensor down to the grain of rice, and we're going to increase the time of wear. We don't see any technical challenges related to the time of wear.
The longevity can be expected to be in years going forward, but our claim, our promise to the market in our first product is a minimum of six months. We have a focused, as mentioned previously, capital-efficient path towards commercialization. First, I want to highlight the fact that we have already done human studies. In 2022, 2023, published in 2023, we did a human study with our sensor in patients for more than up to three days. This was a wired solution. We did not have the wireless readout at that point of time. We had a wired solution to get the proof of concept that the technology not only works in the laboratory, that it also works in the human, in live tissue, basically.
What we got out of that was results confirming that we, in live tissue, measure glucose just as efficient as Abbott, as Dexcom, two of the biggest players as of today. We also got the confirmation that we had a MARD, which is an industry standard, the mean average relative difference between capillary blood measurements and interstitial fluid measurements, as we do, of 9.6%. This is a big thing for us. It's maybe not that easy to grasp, but it's a big thing for us because from a regulatory perspective, you have to have a MARD lower than 10%. In our first human study, we had a MARD lower than 10%, which is a great start. This was not a regulatory study, so we can't use it in that perspective, but it's a great start. This year, we are going to do a pre-CE study.
We are starting now to do what we define as the first in human study with our implants. We have applied for approval from Norwegian and German authorities. As of now, we have received the first approval from the ethical committee. To get an approval from the ethical committee, it's necessary to go further to the medicine agency that gives us the final approval. We have gotten the first approval and we're waiting to get the final approval. That's work in progress and probably going back and forwards. Our aim is to be able to get that confirmation within the end of this quarter and also to execute and end this study in Norway and potentially, and hopefully also in Germany by end of year. Next year, we're going to focus on our regulatory study, our pivotal study to get the CE mark.
Our ultimate goal for next year is to get the CE mark for, of course, for human use in Europe and then go towards a European launch in 2027 for humans. On the side here, we're also doing activities, low-hanging fruit based on our technology and product development to go into the veterinary market. I'm not going to go into details other than to say that we expect to go to market in veterinary this year, have a full launch next year, and look towards the U.S. in 2027. The highlights, that's why we're here, of course, the highlights of the second quarter is the fact that we did a design freeze for our implant, for our product, for our first in human trials and veterinary study. Furthermore, we have appointed the Principal Investigator and trial sites for the upcoming trial.
The Principal Investigator for the trial will be Professor Simon Dankel at the University of Bergen, and the second trial site will be at our CSO's clinic in Mainz, Germany. We have filed for the human trials. This is paving the way for our CE mark. Very important is the fact that we have started our formal preparations toward the CE mark. This is kind of a big effort in terms of documentation to get the product approved. We have to have thousands of documents that are interlinked and are given making sense, of course, to describe the whole path of the development to production and to the product. We have started that already. That is necessary for us to be able to achieve the CE mark by end of 2026. Furthermore, in the quarter, we had a funding round based on warrant exercise that supports our progress.
That said, I'm going to leave it over to our CFO. Of course, just we are a company not in the market with no income. I look forward to be able to hand it over to you when we are having some results that are worth mentioning. At least we're going to give a good update on the financial situation.
Thank you, Joacim. Hello and good morning, everyone. I will go through the Q2 financials. We start with the profit and loss. Revenue and other income was NOK 7,000 this quarter. In 2024, we had grants and other income related to project support and non-recurring items, and no such income has been recognized so far this year. Employee benefit expenses are relatively stable at NOK 8.5 million. Depreciation and amortization amounted to NOK 1.4 million, which is up compared to last year due to investments in machinery and equipment. Other operating expenses came to NOK 12.3 million in the quarter. While this is a reduction from Q2 last year, the year-to-date expense is up, and this reflects our investment in the design freeze. In total, the operating expenses this quarter came to NOK 22.2 million, which is in line with our forecast.
This is also pretty much in line with previous quarters with an average of NOK 25 million per quarter. Moving to the cash flow, we started the quarter with NOK 40 million in cash. We completed a warrant exercise period in June, which provided net proceeds of NOK 16 million. R&D expenses totaled NOK 19 million, and other OpEx was stable at NOK 4 million. We also had CapEx of close to NOK 0.5 million in equipment to our new production facility in Mainz. We closed the quarter with NOK 32 million in cash. This means we had a net cash outflow of NOK 9 million in the quarter. If we adjust this with a capital increase, the cash burn was NOK 26 million, which is aligned with our expectations. We expect the cash use to increase going forward, and this is driven by clinical studies and CE mark readiness.
To maintain our current development pace and deliver on our milestone plan, we are preparing additional financing in the second half of 2025. In addition to equity, we also expect some funding from public grants, and we are also exploring other capital sources. That concludes the financials. I will give the word back to you, Joacim.
Thank you very much. Going into the operational review, I'm going to highlight, of course, we have released our report, so the full picture is there. I'm going to highlight three topics at this presentation. At the end of that, we're also going to go a bit into the product and the product development as is. First of all, the product development, we've done, we've, as mentioned, finalized our product design and reached the design freeze that was necessary to move on towards the first in human studies. We have obviously done initial validations of our implant successfully to get to this stage. We have applied for the first in human studies in Norway and in Germany.
Just to put this into a context and remind you, this is the forerunner for our pivotal trial that we expect to execute in 2026 to be able to base a commercial launch of our CGM in 2027. We are in this phase going from dogs to humans, basically. We have still an ongoing longevity study for dogs, providing us confidence in the safety of the product and the functionality and the stability of the device. We are not reporting kind of specifically from this study, as this is a development study. It gives us very interesting, valuable information ongoing. The upcoming studies are the ones important when it comes to the actual data, or let me rather say the actual clinical data. In a development study, we achieve tons of information on a daily basis. The other parts of this are already covered.
I'm going to jump from this and also just underline the fact, as mentioned, that we have started the process to achieve our CE mark. I cannot kind of underline this enough, how important this milestone is for the company. Kind of in a tabloid version, it's easy to understand kind of the impact of us having also receiving an approval from the ethical committee to do clinical trials. That's an easy grab. The start of this quality work is so much more fundamentally important for the company than the ethical approval. This is really a major milestone for us that points out the direction that we have said, that we have stated to follow, that we plan to follow to be able to get the CE mark by end of 2026. Let's look a bit at the product. I already showed you.
One thing is to see, look at the cool big picture. This is the size of it, right? It's not that the size of a grain of rice. Our sensor, however, is at the size of a grain of rice. The thing is that we need electronics. We need antennas, so we need a bit more in our product. We can choose whether we want to go into the real miniaturization phase and wait, let's say, another five or ten years before we hit the market, or we can go to the market with an MVP. For us, this is more than an MVP. This is our first product. This is definitely going to hit the market, and it's going to make a difference. In addition, we have to get the data out. I mentioned that we're doing trials with dogs. We're planning to go into the veterinary market.
We obviously have a readout device for the dogs. This is basing what we're doing towards the regulatory authorities. This is basing what we're doing towards the human side because you have to build the MVP first. We're moving from this stage and into this stage when it comes to the readout for the humans. As you also can see in the picture, this is at the size of a smartwatch. Maybe interesting to also compare it to the existing CGMs. It's basically at the same size. This is our hardware, important. We also have to communicate, obviously, with the customer. We have to have software in line. We have to have software in place.
It's been important for Lifecare ASA to not become a software company because if you make an application, you have to ensure that it's updated frequently, and you have to hire a lot of UX designers and technologists to follow up on the actual app. We do not plan to go to market as Lifecare ASA selling CGMs. We're a small fish in a huge ocean. We plan to go on a partner approach to market. I bet that when we partner up with a company bigger than us, they're going to already have an app or they want to have their own app. We don't want to spend time on making our own app.
What we have done is that we have entered a strategic partnership with a Swedish company called OneTwo Analytics, specialized in reading out glucose data from CGMs and to deliver these data to pumps for insulin. We're kind of connecting this with an external provider that is already CE approved, that is already FDA cleared. We are taking their commercial app. We are customizing it to our needs in the veterinary field. We are considering whether we need to customize it when it comes to the human field, whether we want to basically have our logo in it. This is how we connect these dots. We have progressed on this. This is, of course, pictures on it. I have the app on my phone. I think it's fair to tell you why I have this app on my phone.
I've been looking forward to showing you, of course, the hardware and software we have been working on for years. These are our products. They are real. They are on the table in front of me, to put it that way. I have some kind of curiosity towards how this actually works. I want to give you information, a bit personal information on this. Six weeks ago, our Chief Scientific Officer, Andreas Pfützner, implanted the sensor in my upper arm. I have been wearing it since. Why do I do this? First of all, important for me to clarify, this is not a medical trial. This is a curiosity-driven experiment. It's also part of, to be honest, product development, obviously.
It's an experiment that is driven by our need and my interest to understand our product fully, not only from the commercial side, also from the customer side, also from the developer side. The main questions I had were how does this implant feel? How does the implant method work? Are there any pain, any discomfort over time? How does it compare, of course, to body-worn CGMs? Even though it's the end of summer, I'm as tanned as I can be, my communication chief has told me not to show my, to not undress on stage. It would have been fun. I'm not going to do that. I think we're all happy about that. To jump from that point, I want to just share my personal conclusions from this. My personal conclusions, you might say I'm biased. That's fair.
I am even more convinced that we have a product, that we have a product that is functional. We have a product that gives meaning and that will actually make a difference for the hundreds of millions of patients, potentially, that want to use an implanted CGM in the future. Through this curiosity-driven experiment, we are gaining information kind of out of this world on the form factor, on the stability, on the radio communication, on the Bluetooth communication. This is extremely valuable on the battery. This is extremely valuable in our product development. I want to introduce Andreas, our Chief Scientific Officer, and just to brag a bit on behalf of Lifecare ASA. Andreas is what we can mildly define as a somebody. Andreas has been around in the field of diabetes technology for decades.
He was deeply involved and led the development of the first CGM that was FDA cleared back in 1999, the Minimed device. He has been involved from the start in the Diabetes Technology Society, which is kind of our home, our specific home in the field of diabetes technology in the world. He's been a speaker on conferences for years. He's running his own diabetes clinic, so he's also a practicing diabetes doctor. Andreas, I want to give you the word as you did the implantation and provide your insights from our experiment.
[Foreign language] I have to do it in English. I was very happy that he started in English. That makes my life much easier. You may realize I give it a try. First of all, I can confirm that I did this implant.
I can also confirm that everything went super well. There is the situation that what we know from the Eversense, and obviously, I got trained by the Eversense company to do these implants. Hence, it was okay for him to come to me because I know how to do that. What I can confirm is that our device, I'm very proud to say that, although it has a similar form factor to the Sensionics device, it does not walk around. We have this issue when we implant the Sensionics sensors. They actually cannot be found at the same place again when you try to explant them. It's one of the issues that the company has. Joacim is now really wearing this thing since three months. Very courageous, by the way. We save a lot of money with this, you know, because normally, we have to do studies in subhuman primates.
No, it's not. We have the CEOs. We have the Lifecare CEO who did that job. Having said that, why did I do that? I did it because I know I can. I carry the medical responsibility for this experiment. It is an in-house experiment. As Joacim has correctly mentioned, it has no regulatory value at all. It's not going to be mentioned even because it's not possible to use any of the data. As you can imagine, having a functional product in such a long-term test in a CEO helps you to all the different groups to actually improve the functionality of the device. The good news is also that our supposed to be biocompatible coverage seems to be biocompatible. At least we haven't seen any mental impact so far.
What I can also tell is that I'm very satisfied with the way that this product actually glided into the pocket that I prepared. It appears to be safe, and it appears to be working. I cannot share any data, obviously, but I can assure you that this device has brought us, in particular, this N equals one experiment has actually brought us very much forward in the development process. By the way, this is normal. We're not the only company doing it that way. It is okay to do it that way. The other thing I would like to say is that, as Joacim has correctly pointed out, I have been involved in many CGM developments.
I am actually 10 years with Lifecare now. I can tell you that this is a very fast development compared to others. The competitors needed more than 20, 30 years before they could even start about having a functional product. I was involved in that with Minimed before. Here, we have been taking a lot of expertise, a lot of effort, a lot of intelligence in our team. We have a wonderful team in Germany, in the UK, and here in Norway, obviously, to bring this as fast as possible to the market. The smart idea to also use this need, this incremental need in the animal market, in the veterinary market, we are the first to go that path.
You may not know it, but there are hundreds of thousands of dogs in Germany that suffer from type 1 diabetes. The same is true with cats. Cats usually suffer from type 2 diabetes.
Having a product for them ready by the end of this year makes me very proud because it is a first step into the right direction to make Lifecare a profitable company. As you can imagine, I also have shares. I count on you. What else can I say? I think I have summarized my personal emotions in this particular situation right now. I am very proud to be part of that team. I believe that we will make it. Obviously, we will face discussions, hurdles, back and forth. That is usually in a medical product development. We have very thoroughly followed the path that we have tried to also explain to the outside community. So far, we have achieved. My hope is that we will continue to achieve. At least I will do my very best that this is the case.
Thank you, Andreas. Thank you very much. Thank you. Just to kind of sum this up, my experience here is about confirming the confidence in our technology and our product. It is giving me answers to the curiosity of how it is to wear and not to mention to fully understand the product and our position as a company. This experiment is, in my view, a proof of our vision becoming a reality. We just started on that actual path. I'm looking forward to be able to provide actual numbers from regulatory studies at a later stage. I'm going to sum this up before we open up for questions and maybe even comments. The outlook for Lifecare ASA is, as mentioned, that we have a strategic focus on our capital and fashion development with a clear milestone path towards the market.
We expect to get the approval for the first in human studies in the third quarter this year. We also anticipate to achieve compliance with all relevant standards for CE marking of the electronics, which is part of the CE marking, of course, for the medical device. We will continue longevity studies in dog in parallel with first in human trials that we plan to start in the second half, followed by a CE mark study next year. Veterinary commercial launch is still planned before the launch in the human market. To get to this, we require capital to finance the next stages of our development. Implants is, in our opinion, set to be the driver of the next wave of the CGM innovation. This represents a $5 billion market addressable. We aim to go to this market with the smallest and calibration-free implant that is able to manufacture.
We look towards a peak revenue potential of $1 billion in the 2030s. We have done our design freeze and are ready to do the first in human. When we get the final approval, this means that we are entering a decisive phase for Lifecare ASA as a company. As mentioned, both from Renete Kaarvik and from me, we need additional capital to continue this development. You can download the full report, of course, as usual, at lifecare.nl. With that, I thank you all for your not only being here, but also to paying attention to what we are saying from the stage and open up for any questions you might have. Thank you very much.
OK, while we're waiting for the audience to ask questions, we have some online. Is there any potential for using the implant as a diagnostic tool for other illnesses in the future?
Yes, theoretically, we see that as obvious. Based on our concept of sensing principle, the osmotic pressure, we have developed chemistry that connects to glucose, increasing the osmotic pressure. That's our measurement technology. What we can do is that we can adjust this chemistry to connect with other substances than glucose, so that we can use our measurement technology to identify and measure other body analytes with the same hardware, obviously.
Yes, any questions from the audience?
Please feel free to do it in Norwegian if you want to.
Oh, I can do it in English.
It's all good.
Yeah. As someone who had a dog with diabetes, it was incredibly, it was impossible to regulate the, you know, this was a lively dog, to regulate the blood, the glucose levels. Are you saying that you have dogs already with the implant in, that you're getting the data back from already?
That's what I'm saying, yeah.
Yeah. The kind of launch, you'll be launching it to the veterinary market, but you're sort of, you're already in there in a way, aren't you?
In a way, but it's at the Norwegian University of Applied Sciences, I believe it's called [Lomborgsøysskolen] at Ås. It's in a development setting. It's the easy thing. We don't have CE mark for electronics, so we cannot sell it yet. We expect to be able to go to market with the first product in the veterinary market this year. It's very important for me to emphasize that everything we do is with the aim of going to the human market. That's the company's DNA. The invention back in 1980, had to do with the kids' diabetes. Most of our investors, at least the long-terms, they have been on board because of this vision. We don't do anything towards the veterinary market that does not make sense for the human market.
Now we are at the stage where we believe or are increasingly confident that we can take our product and use it as it is in the veterinary business, veterinary market. The aim is to be able to do the first launch of this by end of year.
Because just as a kind of follow-up on that, being able to open up that market would give you hopefully significant or at least some revenue to support the rest.
That depends, of course, on how quick we can move on that. We're not going to hire sales personnel to cover Europe, et cetera. We're also here depending on a partner approach to actually grow that business. Andreas mentioned a number of hundred thousands of dogs. I'm not sure what his source is, but what I can say is that I have a quite firm source telling me from the insurance companies telling me that both in Europe, there is approximately 1 million diagnosed dogs with diabetes. In the U.S., it's the same, approximately 1 million diagnosed dogs. Just keep in mind, diagnosed means that somebody paid the bill for the veterinary to get the diagnosis. Hence, you already showed an interest to actually, what can I say, to pay what it takes to provide, to ensure a good life for your dog.
No question, there is a market that is addressable and interesting for us in the parallel path towards the human market where the real revenue lies. To add on, even cats have diabetes. As a fun fact, you know, dogs have type 1 diabetes and cats have type 2 diabetes. That's quite fun. I mean, I can see that. It's like Garfield.
OK, next question online. What could be the potential revenue from the vet market be?
We have straightforward indicated that we see this to be a $10 million market going forward. It depends, obviously, on how big part of it we are able to get. We also know that there are different mechanisms in the veterinary market with insurance companies, et cetera. There is no question, it's a significant market that is interesting for us to follow up.
OK, do you reckon Lifecare ASA also could be bought by a bigger medical company?
Yeah.
[Foreign language]
If anybody doesn't understand it, the question is whether I agree to the statement that everybody, not only type 1 diabetes patients, can have interest of our device. Yes, I can. We also need to look at the mechanisms in the diabetes technology market. The question of life and death is solely for the type 1 diabetes patients. There is no question that when you bring a CGM to the market, you go where it's most relevant medically seen. This is also the smallest part of the diabetes market. It's approximately 10% of the market. The remaining 90% with type 2 diabetes definitely need to have continuous glucose monitors. Some of the type 2 diabetes patients, approximately 30%, need to measure their blood glucose. Hence, they can use a continuous or should use a continuous glucose monitor.
The second thing is that, of course, attending to conferences, et cetera, what we see now is a dramatic shift from the clinician's point of view because the treatment of diabetes has increased and improved for the type 2 diabetes patients. Now clinicians are very much focused on the treatment for type 2 diabetes patients to be able to, first of all, diagnose as early as possible so that one can prevent them going from type 2 to type 1, which is the obvious path for a diabetes patient. There is a push from the clinical perspective to go downwards on the chain. We know that Abbott and Dexcom last year got their CGMs that already were approved for type 1 diabetes based on a prescription model. They also got devices approved for over-the-counter sales in the U.S. The shift is definitely going in that direction.
As a future supplier of continuous glucose monitors, we're also going to address the type 2 market.
OK, last incoming question. It's over 90 days since the filing of the upcoming trial. Why have you not achieved any confirmation to start yet?
What can I say to that? We haven't received the feedback from the agency, and hence, we are not able to say why we haven't gotten it yet. We are in communication with them, but they are not starting to actually handle it before we got the ethical confirmation that we were able to communicate August 5th. This is work in progress. The bureaucracy works as it works in different countries. It takes time, and we are not worried about this.
OK, how big is the implant you have in your arm?
It's 0.5, so it's 5 millimeters in diameter, and it's 28 millimeters length.
Any questions from the audience?
I was wondering if you had any picture proofs of your operation.
Yes, I do.
Are they on the internet?
No, but I can disclose that I'm going to post this on LinkedIn today with picture proof.
Perfect. Thank you.