Welcome to Q3 Report from Lifecare. My name is Joacim Holter. I'm the CEO of Lifecare. We're starting off today with a picture of our implant. It shows, of course, a big version, a big picture of a very small implant that we have developed and look forward to also proceed to put into the market within not too long. This is the setup for today's meeting. We will go through the operational highlights, review the operations, provide a financial review, and wrap it up with an outlook summary and a Q&A at the end. Lifecare is working within implantable CGMs. As many of you already know, CGMs have become the de facto standard of care for diabetes management.
However, we believe, and we have good reason to believe, that the future is within the inject and forget segment, where we can put a CGM under the skin where it stays for quite a long time, which will be quite an improvement from today's solution where you have body-worn CGMs, and not to mention the old pin-pricking blood glucose monitoring technology that has been around for about 30-40 years. We expect that implantable CGMs will be the fastest growing segment within the CGM technology going forward. This is the area where we will see the innovations and also the market increase.
Based on our predictions, we expect that the implantable CGM market size, being a subsegment of the CGM market as a whole, will increase significantly in the years to come, where we see and calculate the market opportunity in Europe and North America by 2035 of approximately $5 billion. Lifecare has a focused and capital-efficient path towards our commercialization. To date, we have been able to confirm our efficiency of the sensor in numerous in vitro tests in our premises in Germany. In addition to this, we've also confirmed the accuracy of our sensor in a human study that was finalized in 2023, where we gained a MARD of 9.6%, which is a very good number. MARD is an industry definition of when the CGM is good enough compared to blood glucose monitoring. The aim of the MARD is to be below 10%.
Our first human study already confirmed an accuracy within the field less than 10%, which also would be in the regulatory accepted field. In addition to this, we have an ongoing biocompatibility and longevity study with a CGM reference validation. I will come back to this a bit later. As of now, we are working to prepare our pre-CE study. The first in-human study will hopefully be approved this year so that we can execute it early 2026. We also look forward to being able to continue our longevity study so that we can do an initial launch in the veterinary market in early 2026 before we move on to a full launch for the veterinary side and a CE mark within 2026 on the human side. This will prepare us to do a European launch in 2027 and also to prepare for a U.S. launch starting 2027.
The highlights from the third quarter of 2025 is, first and foremost, the fact that we have secured $80 million in funding that will support our next development and our regulatory milestones. We've also finalized our product design and our production setup, which positions us for a near-term veterinary market entry. We have entered a final regulatory review phase for the first in-human clinical approval. We plan to perform an underwritten rights issue in January 2026, where we expect to raise up to $100 million. Of this $100 million, $80 million is already underwritten based on our existing shareholders and external funds. In addition to this, we plan to exercise two warrant periods in the first half of 2026. On the short term, we have secured bridge financing for our operations of NOK 50 million until the end of January 2026.
The planned financing round in January 2026 is expected to secure our runway until early Q2 2026. On this basis, we will be able to continue our veterinary longevity study, complete our first in-human study, and file for our pivotal CE study by the end of the second quarter of 2022. If we are able to raise the full 100%, the $100 million, I apologize, this will extend our runway to late Q2 2026 and also allow some accelerated preparations for our CE study. In our product development progress, we have evolved our technology into a product, meaning that we've gone from a laboratory innovation to a fully integrated CGM prototype, which is based on a finalized design. We have also, in the quarter, been able to achieve key compliance milestones for the electronics embedded in the implant.
As of now, and in the weeks behind us, we have ongoing adjustments and fine-tuning on the product and production base, and this will, of course, also continue. However, due to the financial challenges that we had in the third quarter, we've also experienced a temporary slowdown in our workstreams into the fourth quarter, which affects our progress of the longevity study. We've also disclosed information on key learnings from our longevity trial to date. It's important for us to first say that the early trial results provide very valuable insights for system optimization. What we see is an excellent biocompatibility. We see safety as expected, and we also see reliable end-to-end signal transmission consistent with interstitial glucose changes. The next generation of implants have been upgraded in material stability, antenna design, and firmware based on the key learnings from our longevity trial to date.
We now expect a new batch for implementation in dogs in December. It's also important to underline the fact that this trial is not only a medical trial, not only a veterinary trial. It's a very, very important product development trial. One thing is that we're able to see signal transmission consistent with interstitial glucose changes. That is, of course, important for us, but it's important for us to underline that we have already confirmed our sensitivity of the sensor both in vitro and in vivo in human trials previously. In view of product development, the fact that we're able to have a reliable end-to-end signal transmission, the fact that we have biocompatibility and safety that is excellent, is just as important to be able to provide good glucose results.
In our regulatory progress and our preparations for upcoming CE trials, we have progressed on key regulatory preparations towards the first in-human trial. We have initiated formal CE marking for the complete CGM system, and we have continued our work on a comprehensive regulatory preparation and documentation. This basis has, as we already in the second quarter presentation communicated, this has led us into this quarter, which has been a quite capital-intensive quarter. Our CFO, Renete Kaarvik, will provide more insights on the financials. When I'm done with the first in-human trial readiness, apologies for that. As of now, preparing for the first in-human trials, we have received ethics approval from the regional ethics committee in Norway. We are now awaiting a regulatory approval from the Norwegian Medicines Agency that is expected to be ready around mid-December. It might be prolonged with up to 20 days.
End of December should at least be the date where we get the result from NOMA. This study will assess implant safety, tolerability, and glucose measurement accuracy. We have, as previously communicated, appointed both principal investigator and clinical sites for the trial. With that, I'll leave the word to Renete Kaarvik, Lifecare CFO.
Thank you, Joacim. Good morning, everyone. Let's move on to the financials with focus on the profit and loss and the cash flow. The third quarter has been a period of high activity, as Joacim mentioned, with related high costs. Revenue and other income relates to grants and came to NOK 500,000. Grants are lower this year compared to last year as some projects have been completed. Employee benefits expenses are relatively stable at NOK 9.1 million. Depreciation and amortization amounted to NOK 2.6 million, reflecting investments in machinery and equipment. Other operating expenses came to NOK 54.7 million in the quarter. This significant increase is driven by focus on product development, continued work on quality documentation, regulatory compliance, and preparations for clinical trials. We also had costs related to our new production facility in Mainz, Germany, where we are relocating to in December.
In total, the operating expenses this quarter came to NOK 66.4 million with an operating loss of NOK 65.9 million. Turning to the cash flow, we started the quarter with NOK 32 million in cash. R&D spending was the main driver with NOK 60 million. Other OpEx was stable at NOK 4 million, reflecting a lean setup. Due to timing effects, payables increased by NOK 41 million. We had investments of NOK 3 million related to our new production facility in Mainz, and we closed the quarter with NOK 6 million in cash. In total, the net cash outflow was NOK 26 million, which is in line with the previous quarter. Looking ahead, we expect our capital use through 2027 to stay broadly in line with what we have communicated previously, close to NOK 300 million, mainly to complete product development, clinical trials, and CE mark activities.
As Joacim mentioned, we are planning a rights issue of at least NOK 80 million in January 2026, followed by two warrant periods. We have secured bridge loan facilities, which provide funding until the rights issue has been completed. In total, the planned financing is expected to secure runway at least through the first half of 2026. In addition to equity funding, we are also exploring strategic and grant-based sources. Revenue contributions are expected from 2027, aligned with our commercial timeline. That concludes the financials. I will give the word back to Joacim.
Thank you very much, Renete. Going into the outlook and the summary, we have, as mentioned a couple of times now, already secured NOK 80 million and prepared for the partly unwritten rights issue in January 2026, with subsequent warrant periods in Q1 and Q2 of the same year. Bridge funding is in place, meaning that we secure operation until the rights issue. As of now, we have a state-of-the-art implant where we have incorporated the improvements from our longevity study. We expect to do a market launch in the first half of 2026 in the veterinary market. We also expect to receive a regulatory approval for the first in-human trial within short and then start the trial in Q1 2026, where we will continue this and expect to commence the pivotal human trials mid-2026 to prepare for a human market launch to be expected in 2027.
I think that this is already covered, that we have secured the funding, and we are looking forward now to receive our new implants that we will also provide some more information around in the upcoming week. Our regulatory process and CE preparation continues, as do the longevity trial. We look forward to be able to both do some readouts from the longevity trial in dogs and also to commence in the first in-human trial in the first quarter of 2026. On the basis of the funding that has been secured based on the underwriting from existing shareholders and also some external funds, we are well positioned to provide and drive our development towards a finished product forward, more or less aligned with our planning.
We look forward to be able to report on the progress in this project, both ongoing throughout the fourth quarter and also throughout the first quarter until our next quarterly presentation. I go from there and tell you all, of course, that the full Q3 report is available for download as usual, and I'm opening up for any questions you might have. It seems to be no questions in the chat, so we're going to give it some time, and please write in if you have any questions. We have a couple of questions already. Is the wet market launch depending on the results from the longevity study, or what are the criteria requirements for this launch? Is the production capacity currently sufficient for this launch?
I'm going to answer the last question first. The production capacity is not a problem to do a limited launch, and we also have firm plans in how to update our production capacities so that we will also be able to do a bigger launch in due time. To put some numbers on that, I believe that we have—I don't believe—I know that we have plans to build up our production capacity to be around 130,000 implants annually. And that is calculated to be sufficient until 2029, where we expect to increase our production capacity based on extra production lines. The veterinary launch is, to some extent, planned to be done after new results in our veterinary study, not because it's directly necessary, but because we want to have full confidence on the performance of our sensors before we do the first launch.
While we have a very good insight in our sensitivity, the glucose sensitivity in vitro from humans, and also to some extent also from the initial part of the veterinary study, we need to ensure and copy the results, to put it that way, also in sense of the product and the product duration, etc. The answer is yes, to some extent, it is depending on the ongoing longevity study. However, that is from a kind of a safety and not an effective efficiency point of view.
Okay. We have five questions from one of the spectators. I think we will divide them a little bit up. You currently have cash runway extending into Q2 2026. Which key milestones do you expect to achieve within this period?
Within this period, we expect to be able to do important communication around results from the veterinary study, from the longevity study. We expect to also have finalized our first in-human study and at least be able to provide some data from that study. Whether we completed this is not—we might not be done with all of the data calculations in the start of the second quarter next year, but to execute and to have data readouts, we will be able to have within that timeline.
NOMA approval is expected between early December and early January, potentially plus 20 days if extended communication occurs. How do you assess these risks to this timeline?
First of all, obviously, we have a belief that we will get the approval when we now have done the application, and also the application is validated so that it's actually been handled by NOMA. To date, we have no feedback from them that indicates anything else that they will provide us an answer by mid-December that might, as pointed out, be prolonged. There is also a risk that if they have questions, they might stop the counting of days until we then reply to any questions that they might have. To the extent, we don't see it as—we don't have a significant risk connected to this. We would basically just wait and see what they come back with. We expect this to be approved.
Okay. Next, ahead of the pre-CE first in-human study, what preparations are currently underway, and what additional steps remain for study initial?
First of all, we have agreed on principal investigator and also on the sites where we want to do the CE study. The steps that we need to finalize is, first of all, to proceed on the veterinary study in terms of data from that point on. The second thing is that we will have to execute our first in-human study and also get the data from that study. We are preparing in the sense that we already have a framework, of course, for the application and for the setup of how we want to structure the study. We also would, of course, engage with an external CRO to assist us in the application process and also in the study process to ensure that we are prepared to gain CE mark as planned by end of 2026.
Okay. Next, looking ahead to the pivotal CE study planned for late 2026, what further preparations are required to ensure smooth transition from the first in-human trial?
I believe I already answered that. We will have to await the results from the first in-human trial, and that will, of course, be also used as part of the documentation basis for the pivotal CE study.
Besides which site hosted the research unit for health survey in Bergen, which additional clinical sites are involved?
We have one clinical site in Sweden in Uppsala. We have one site in Aarhus in Denmark, and also one site in Mainz, Germany.
Operating expenses were high in Q3, largely driven by product development. Could you provide more detail on what specific activities or deliverables these costs relate to?
Yeah, they relate to the transformation of our implant into a finalized product. Based on the product design, there is still—sorry, the design phase—there is still, of course, preparations to do in terms of getting the parts of the implant to the stage of optimization and also the preparation for the production itself. On top of that, we also have the documents needed to be prepared also in a regulatory context. It might be worth to kind of compare this with any kind of ball game, I would say, being football, handball, or basketball for that case. We are at all times looking for the best passes. Sometimes we miss, and we get the ball back. At the end of the day, we're able to complete our attack and put the ball in the goal.
It is not as easy as that we are able to put the ball in the goal from anywhere in the field at any time. It is a complex venture to take the technology into product, and it is also not uncommon to underestimate the costs related to the finalization of the product. We are in the middle of that phase where we, as already projected and communicated on previous quarterly reports, are in the middle of a capital-intensive period to be able to proceed to the production that we need to be able to execute on our upcoming studies and market launches.
Okay. New spectator. What grants or subsidies, both Norwegian and EU, have Lifecare applied for the next year? Are you applying for Skattefond, and have you applied for grants for the loans from Innovation Norway? Two, have you much time, and what is the cost for developing or the necessary chemicals, etc., or for the other new analytes?
We have Skattefond. I think authorization is already going into next year, if I'm not wrong. So that we do have, both in the veterinary company and in the mother company, Lifecare also. We are in dialogue with Innovation Norway related to innovation loans. That is, to date, we have not been able to get innovation loans, but we will, of course, continue that dialogue with Innovation Norway. We are currently not proceeding and going for any external in the sense of European loans. What is worth to mention in that respect is that both, I mean, the time consumed to be able to get such loans is quite significant, and the reporting in the aftermath is also quite significant.
Even though it is money that is non-dilutive, it's quite work-demanding to be able to get such loans, and the output is very far. The conclusion is very far from given in advance. It is complex dialogues ongoing there. The last part of the question was related to if we have cash to do optimization of our chemistry towards other solutions than glucose, I understand.
How much time and what is the cost of developing the necessary chemicals, etc., for other analytes?
I don't have specifics on that question in terms of time and costs, and that is due to the fact that we focus to get into the market of glucose first and prioritize that so that we're able to actually show that we can get into the market, and then we are able to move on the adjustments on the chemistry. However, this will not be anywhere near the capital-intensive situation as we see of today. We are quite on top of the chemistry, and we are able to adjust that with reasonable measures, but I cannot quantify it in terms of neither costs nor time.
Okay. New one. When does Sanofi's right of first refusal expire? Do you have contact with other companies for the market and sell if Sanofi does not exercise its right? Do you have contact with any companies for the development of analytes than glucose?
The Sanofi contract is not disclosed, so I don't want to go into the details on that other than to say that we have not come to the point where the first right of refusal is effective. From the point of time where it is effective, there will be a consideration time, and this will last for up to the total of 12 months. We are not in the—this will not happen in the near future. Yes, we do have contact with other companies, significant players within the CGM industry. Whether we will do a distribution or technology deal with Sanofi or other alternative partners remains to be seen. We also are in contact with potential partners within the veterinary field.
Given our focus to go to market based on the glucose solution, we at this point of time have no active contacts towards potential partners of other sensors than glucose.
Next. Could you remind us of the design for the pre-CE study?
The design of the pre-CE study is that we will execute this in four different sites: one in Germany, one in Norway, one in Denmark, one in Sweden. The number of patients remains to be seen. That will be based on calculations that, to some extent, will be based on the data that we get from the first in-human study and also the longevity study that we have ongoing. In comparison, I think it's fair to indicate that the first studies executed by Eversense and for the—was in the range of 90-120 patients, if I'm not wrong. That is at least some kind of indication for what we're looking for, but we don't have this firmly lined up and already sorted out in our study design.
Is Lifecare working on reducing its cash burn or reduce costs? If yes, what actions are you taking? Are you in contact with any larger companies or investors regarding further financing for 2026?
First of all, that's two questions as I understand it. First of all, we will see a decrease in our capital need based on the progress of the ongoing product and product finalization and production setup. As already mentioned a couple of times, we're in the mid of a very capital-intensive period. When that is done, the expenses will by itself be significantly much lower. We are, of course, also looking into other cost-saving measures as we always should do, and we are looking into operational to how we can optimize our operations across our entities. However, our basic costs are reasonable. That's at least the starting point.
When it comes to discussions on larger investments in 2026, I don't want to go into any details around that based on our need to be transparent in our communication, and we want to await that until we have something firm to communicate.
Okay. Next is the goal of receiving CE mark by the end of 2026. Not a bit optimistic given that the notified bodies have a quite long review time. Will you use the fast track option they offer?
I think that as we are approaching the end of 2025, I think that's a very fair question. However, we are looking ahead at one and one of our kind of major milestones. From that perspective, our first and most important milestone as of now is to be able to get into the veterinary market and in parallel also to execute on the first in-human study. From that point, our next main milestone will be to initiate our CE study in 2026. On that basis, we, of course, will do whatever we can to obtain a CE mark as quick as possible. Whether it's possible to actually meet our optimistic timeline remains to be seen, and we will evaluate that on an ongoing basis.
Okay. How many dogs have been implanted with the sensor to this day?
To this day, we have communicated results from two dogs.
Two seconds. Have you made any contract agreements or similar for the marketing and sales for the sensor to the veterinary markets?
No, we have not.
He's still waiting.
Not okay. Then we seem to be at the end of the Q&A.
I have one more here. Somebody's asking if you meant the pre-CE study from the FIH study in first half year 2026. I think there was a misunderstanding, but we can clarify that later.
What was the misunderstanding?
You're answering the pre-CE study. The question was badly formulated by me. Apologize. Meant the pre-CE study from the FIH study in first half year 2026. So that was a correction from one of the participants.
Okay. Does that?
No.
No. Okay.
Okay. Then we will end this session. As always, please reach out if you have questions to any of us. Our contact information is available at our websites and also on the communication on the stock exchange. Feel free to reach out by email or phone if you have questions, and we will reply as quick as possible and as thorough as possible. Thank you very much for participating, and we look forward to seeing you again in around three months. Thank you.