Good evening and very welcome to today's live queue. My name is Filip Einarsson, and I work as an Equity Analyst here at Redeye with a specialized focus on life science. Today we're going to dig a little bit deeper into Acarix Q4 figures as well as the year-end report released earlier this morning. With us today we have the CEO Aamir Mahmood as well as the CFO Christian Lindholm. Welcome to you, and go ahead, Aamir.
Hey, thank you, Filip . I appreciate the entry, and welcome to everybody on the call. Thank you for joining. I'm Aamir, I'm the new CEO. Today is my 10th day on the job for Acarix, and very honored and humbled to be here. I think we have a lot of great things going on in this organization, and why I chose to join this organization is just basically surrounding the opportunity, the fantastic technology, and quite frankly, the people and opportunity. So with that, I want to get into this call. We'll have room for Q&A at the end. So, Christian? Full disclaimer surrounding our public listing. Here we are. So who is Acarix? Acarix is a point-of-care device, and really what we're trying to do is to transform early diagnostics in the office setting, so point-of-care. Something that is not a current opportunity.
This is a first-in-class device that truly can set a significant precedent surrounding cardiac diagnostics, surrounding any type of cardiac coronary event. So this is something that's first-in-class. As I mentioned, we've got FDA De Novo clearance, and quite frankly, we're very excited to be able to bring this to the U.S. market, which is an untapped market for us. Christian? So as many of you guys know, there's many opportunities for patients to get examined. You've got the CT scans, you've got the stress tests, you've got all these kind of challenges that are a little bit burdensome to the cost basis of cardiac coverage, as well as the procedures that involve the timeliness to get into the procedures, as well as the physician's time to make sure they understand it and review, and to the diagnostics to be able to present to the patient.
So what they need is improved stratification in their risk assessment and an ability to understand what exactly the stable chest pain means. And it's a very common presentation in patients. Nine out of 10 patients will see it at some point in their lifetime. Next. So where we're at from a device standpoint, this is the CADScor System. And essentially, what it's going to be able to do is provide that point-of-care offering to diagnose and to really limit out, at 96.2% efficacy, the risk of cardiac coronary disease. So this is something that is not currently available. This is something that could really provide an opportunity to not only the patient to understand what's going on with their own health in regard to any sort of chest pain immediately, to define the anxiety level, or to progress in additional risk stratification.
So as you can see here, it's fairly simple. If the score is less than 20 after the acoustics and computational progression of learning within the device predicts whether it's 20 or below, the patient has very low significance of CAD. If it's higher at 20 points or greater, they need to continue to go down the referral pathway for additional risk stratification. So it's a very simple-to-use system, but a very effective system in determining what patients need to progress forward and what patients really do not have that fit. Because as you can probably see, in the scope of 20%-40% of patients that are sent forward for additional risk stratification via CT scan or stress test really don't need it after having gone through the entire test procedure of a CT scan or stress test. It was not needed.
So that's where this really becomes an opportunity in regard to the payers, which is a very significant thing. Health basis and costs surrounding health care are extraordinarily expensive worldwide, particularly expensive in the United States. So this is something that, as I mentioned, has a three-faceted value proposition: the payer, the patient, as well as the physician. Christian? Really exciting news as of recent. We got on the federal supply schedule for the VA, which is very near and dear to the United States and the people. These are the vets that serve the country in public service. And really, what this does is opens up a very, very significant population for CADScor to be adopted. And in many of these institutions, the delay of care is not something that is well reflected.
CADScor will really provide that opportunity to risk assess patients immediately in a rapid fashion, anywhere ranging from seven to 10 minutes, and define who needs to move forward in a much more streamlined and effective way, and mitigating the risk of sending patients that really don't need to go in and bundle up the system with delays or timeliness of being able to be diagnosed and treated. So what this opportunity is, is it really risk stratifies the actual purchasing process. So there are very ease of entry into the market nationally at this point. And so we're going to see some significant traction and adoption, which we've already seen over the past eight days that it's been announced. So we're really moving, and this is going to be one of the single largest opportunities for us in the near term in regard to commercialization efforts.
We have a significant focus and incentive base around making sure that this gets traction and continually focuses on really driving our top-line revenue and our engagement with usage. So what we're doing on top of that, so reimbursement, which is also in a slide ahead. The two things in this space that are vitally important to success are reimbursement as well as real-world analysis, right? So real-world data, clinical evidence that this device is actually working. Because as you remember, as I mentioned, this is first-in-class, right? So this is something that's going to be provided to patients and physicians that really are just continuing with the standard of care.
So to break that habit of just assessing patients via CT scan or stress test, this is where we're going to have to really provide the real-world evaluation studies that can show the differences of patients being able to have the CADS cor opportunity and then subsequent CT scan and risk assessment of stress tests as they need if they're needed. So that's really exciting to us. So what we're doing is we're launching immediately five or six evaluation sites in which we're going to be able to trial 100-200 patients in a relatively rapid fashion. The hope is we can do this in a couple of months to be able to bring the data in and then show real-world data as to how effective the CADS cor system is in ensuring the streamlining of processes as well as safely discharging the low-risk patients, right?
So those are the two things that are vitally important in healthcare. We want the speed of therapy to be quickly to patients who are needing it and really get the patients that are not needing any CAD risk stratification out of the system. Not only, one, does that make them happy, but it also alleviates the stress within the system. Moving forward. Again, this is something that was just announced this morning. So we are really, really excited, and I'm very, very excited to announce this new commercial and clinical strategy team. So Professor Götte is one of the leading cardiologists in Germany, but more pertinently, he is the single largest user of CADScor. So he has a great deal of experience that he continually shares with us. Dr. Baron at Mass General is a scientific collaborator with us.
She actually has an ACC poster that has been adopted, and it's really showing the clinical cost efficacy within the CADScor System. So that will be presented this year at ACC in April. And then Ken Nelson. He's a medtech innovator. This gentleman has had two decades within the space, specifically focusing on the United States, has been part of many, many big digital health companies, truly is a digital health expert at this point in his career. He was part of the BioTelemetry, which was a Holter-based company that was acquired by Philips. He was also one of the key people and initial people at iRhythm Technologies, which has the Zio patch, which is something that kind of progressed the business into patch-based Holter monitoring. And that company went with a very, very successful IPO.
And he also was the chief commercial officer of Bardy Diagnostics, which, as everybody here probably knows, was another digital health company in the cardiovascular space that was acquired by Hillrom. So currently, Ken Nelson is on the Medtech Advantage Fund as a partner. He is also on many, many boards, including CardiaCare, HeartBeam, and actually, I think he's chairman of CardiaCare. So really, really excited to have him on board because just his experience level and relations will help us to continually progress Acarix on the right trajectory here moving forward. Dave Braun is a business executive in the United States with a global presence. He actually has been a strategic advisor to me before, but also has been a strategic advisor to a number of companies. And his specialty surrounds deep diving in strategic opportunities, finances, investor relations, and banking relations.
So very excited to have him on with his experience. And then wrapping up this board of five with Dr. Saumil Oza. He is a cardiac electrophysiologist at Ascension Health. He is a very, very astute developer of products. He's on a number of startup company and biotech company advisory boards to assist in commercializing and strategizing the scientific approach to devices. He's very excited about Acarix for his practice as well as what we can do to help the entire population to be risk stratified. And subsequently, he also sits on the advisory board of Boston Scientific, Novo Nordisk, Johnson & Johnson, and a number of private equity and VC firms. So really excited to have these guys on. They bring a deep, deep understanding of the business as well as the scientific nature of the business and technology nature of the business.
So they're really going to help us to propel this organization in a rapid fashion forward. We are very focused on making sure shareholder value is one of our priorities right behind patient care. So that's one of the key reasons we're really focused on all three of these aspects, but most pertinently, making sure we're helping to develop the opportunity as well as the therapy for the commercial adoption in the United States to manage these patients. Moving on. So we're continuing. So part of the process here is reimbursement, right? So that's really important for physicians and healthcare organizations to make sure that there is some compensation in return for these diagnostics that are being done. Of course, we have FDA de novo clearance, so that means we're first-in-class. So we've got to really set the precedence, which is not easy. It's something that does take time.
Two of the key measures that we're working towards is continually tracking the payments to substantiate widespread usage. Usage is critical, right? So we have to have the adoption, and these payers have to see the submissions to really adopt it and create its own code and to create the involvement surrounding access and pushing this thing where it's a little bit more adopted reimbursement from a reimbursement perspective nationally. And then secondly, as I mentioned, capturing real US data. We have to have the real-world data to show these organizations that this does bring value not only to the patient but to the system as a whole. And then lastly, working with ACC and other agencies to get the endorsements to really progress this thing forward.
So we continue to develop all the reimbursement traction we can, and I anticipate that this will ramp up quite rapidly over the course of the next three to six months with wider adoption, the VA opportunity, as well as the clinical evidence that we're going to progress towards. We are actually progressing towards at this immediate time, and hopefully, we'll have some resolution to that before the end of this quarter. So with that, we will have Q&A later, but at this time, I'll hand it over to our CFO, Christian.
Thank you, Aamir. Thank you. So we start with the patch utilization, and we have discussed it earlier. It is the customer's usage and our sales of patches that will drive the company's long-term growth and profitability. So during this quarter, we have an increase of accumulated sales of patches by 39% over the past four quarters.
The growth is below our expectations and partly affected by delays in the U.S. federal budget, which, I mean, in turn, affects the sales to key customers in the U.S. market. We are following our customers' patch consumption closely, and currently, we have an average daily consumption of patches between 0.5 and 4 among our 4 patches per day among our active customers. We see a higher utilization rate persistent in the U.S. market compared to the European market. During the quarter, we recognized revenue of SEK 1 million-SEK 2 million is generated from sales of five systems and 2,100 patches. It represents a 29% reduction in revenue compared to the same quarter previous year when we sold 13 systems and 2,100 patches. In a higher average sales price in the U.S. market, resulted in a relatively lower reduction in revenue.
Looking into the gross margin, we have an increase to 88% during the quarter, representing an increase of eight percentage points compared to the same period previous year. The reason for this is the increased sales in the U.S. market and an increased portion of patches sold compared to system. And the systems have a little bit lower gross margin. Looking into the EBIT for the period, it was -SEK 22 million, which is slightly better than the fourth quarter of 2022 and is attributable to expansion in the US market. So looking at the current OPEX level, we see approximately a saving of SEK 8 million annually in 2024 compared to 2023. Alongside the focus we have on the market, we really continue to monitor our OPEX very closely. Yeah, here we go.
So as clearly explained by Aamir's presentation and our communication to the market, our strategic focus on the markets continues. So looking at the rolling 12-month revenue, we see an increase of 7% from SEK 5.8 million to SEK 6.2 million in 2023. The growth is also, of course, below our expectation, and it's partly explained by the delays in the U.S. federal budget, which in turn affect the sales to our key customers. Furthermore, I mean, the planned and the executed focus we have and the resource allocation to the U.S. markets have a negative impact on European sales as planned. And last but not least, I mean, obtaining an acceptable reimbursement level from insurance companies is in the early stage time. It's very time-consuming for our U.S. customers. And of course, we are supporting the customers in that process. But that's the three key explanations.
On the positive side, sales in the U.S. have doubled for the fourth quarter compared to the fourth quarter previous year. And the U.S. share of revenue accounts for 58% of the total sales. So by that, back to you, Amir, for ending the presentation.
Yeah, thank you. So guys, really exciting time here. We're going to continue our focus on U.S. expansion, the world's largest market with some of the greatest average selling prices worldwide. We've got the European validation, the commercial strategy and businesses with sales in Germany, Australia, Switzerland, Nordics, and the U.K., but really, the U.S. is where we're really focused on. It's ideal timing. So we've just recently announced that we've got the de novo clearance. We've got the CPT3 code. Just under 14 million patients present on a yearly basis.
So we anticipate that market as a whole is around $1 billion in market opportunity. Given our high margin on both aspects of our business, the capital piece as well as the disposable, we're really excited. As this thing kind of progresses, what we need is the continued focus surrounding our expansion in the U.S., our commercial opportunities in the U.S. Given the fact that this is my 10th day in, what I want to reassure all shareholders and investors as well as physicians and patients is that we're going to take a comprehensive look at everything that's going on in this organization, expand on all the opportunities we can, expose the weaknesses that we have, and fix those weaknesses as rapidly as possible. Just give a little bit of time. We'll get through this, and we'll get this thing on the right track.
I'm confident in our abilities. I'm confident in what we're doing, and I'm confident that this technology is vitally needed in the U.S. And again, remember, the value proposition is fully encompassed to the patient, the physician, as well as the payer. So that in itself makes it a wonderful opportunity, and we will see this thing progress where we need it to. So with that, Filip, I will send it back to you.
Okay. Thanks a lot, Aamir and Christian, for the walkthrough of the company as well as recent developments. And I thought I, on my end, could start with you, Aamir. Of course, I mean, as you mentioned in your presentation, 10 days inside Acarix, and it'll be interesting to hear from your point of view as the first quarterly report as a CEO. What would you say are the sort of key takeaways for the coming, let's say, 3-6 months? What should one look out for?
We're not extraordinarily happy with the results from Q4. I think that's needless to say. However, what we do see is an opportunity. I think that a lot of the things that have been done here have been done well. I think there's some things we can tweak to really accelerate our top line in regard to adoption. I think that there's a number of opportunities we can look at from a clinical strategic standpoint for partnerships in developing and progressing forward in the clinical evidence that's needed for the U.S.
I think that we're going to be able to develop a lot more conversation surrounding payers and really getting that reimbursement that really needs to be put in place in a more effective way and a long-term way because that's really where we're going to see the adoption. How is that going to progress? It's just, as I mentioned, we're going to need the clinical evaluation done for the U.S., which really assists in the clinical evidence and the benefit of the device, which will get garnered the usage, which will then get the attraction of the payers. That's where we'll truly have the adoption of the payers to continue moving forward in the reimbursement theme.
Right. Just revisiting, you, in the presentation, also mentioned your advisory board, which actually today, Acarix announced a press release with a few additions to it, right? It would be interesting to hear a little bit more about what will be the initial focus on this advisory board.
This advisory board will specifically focus on the clinical data, how we present the clinical data in the most effective way, additional clinical data, and what the protocols will be in those workflow opportunities that we're rolling out now. Commercial opportunities to really stratify our P&L, mitigate the expenses we don't need, progress forward in expenses we do need and investments we do need, and then revitalizing the focus on the commercial efforts and making sure that we have the right people in place, the right partnerships in place, and the best avenue for us to be able to get the trajectory on the right track in growing our top line.
Right. So we have received actually several questions from a group of investors here that I thought we should bring up to the table and sort of discuss. We can just start off. The first question is related to the directed share issue that Acarix announced a little while ago. It's about that in this directed share issue, the new owners will have brought 20% of the company, yet no one knows who they are. Could you explain why that is?
Yeah. First, I don't think I could really disclose who they are just without their permission, but more pertinently, these are all U.S. based investors. So they're all vetted investors that are part of VC firms, part of PE firms, as well as cardiologists that are in the space. So I think that there's a broad group of people. I think that once it all has been closed out, I think that that's where we maybe can announce the names. But at this time, I just couldn't do that.
Right, right. And is there possible you could say anything on how you got in contact with these investors, maybe?
Yeah. So a lot of them are people that I have worked with in the past. I've been part of companies that have gone through fundraising processes. So these were opportunities that were presented. I think that there's a lot that has been done on the marketplace without my involvement, just based on the fact that I am here. I think that people value the background I have, what I've done in the previous organizations. I think that's where a lot of the growth in our share from the US and shareholders in the U.S. is truly coming from.
Right. Then next question is also related to this topic. It's about, I mean, you recently did a directed share issue, and you also have a warrant exercise just in the next few days. It starts the period. How does this look? I mean, how is the cash position in relation for, let's say, the coming six to 12 months in relation to this?
Yeah. So Christian, I'll let you take that one.
Yes, thanks. Yeah. So that question is related to our burn rate and actually the warrant programs that is running now in March and in September. The simple answer on that is that we are counting on we are counting on those warrant programs.
I mean, if we are in the money in both of them, we are clearly above 12 months going concern. The first warrant program is going off now in March. And of course, we need some traction on the share price in order to get into the money for this warrant program. But we are quite sure that positive things will happen now during the next coming quarters. And the next warrant program will for sure be in the money.
Right. And the follow-up to that question from the investors is pretty much then, I guess, is it possible to remove the floor? Because you have a floor on the warrants, which is at SEK 25, sorry. Is it possible to foresee that or change that? Is the question, basically.
We have discussed that internally and also together with our legal advisors. It's not possible to do anything about the floor or the timing of the warrant program. So that remains.
Right. That's clear. I mean, we've talked today. You presented the report, and you presented interesting news related, not least, to the advisory board. And there's a lot going on in the U.S. But if we take a step back and look in a few years ago, Acarix announced a financial vision. And that was to turnover of approximately SEK 200 million in 2024. And it would be really interesting to sort of hear your take on, I mean, current actions with the government budgets, etc. How is this looking from where you're standing right now?
Right. So we are not, as an organization, changing any guidance at this time. But remember, on my 10th day in, I am reviewing everything. And I think we will have a full assessment top-down, bottom-up, to really get a better understanding of the fundamentals surrounding where we're at financially, where we're going from a revenue standpoint, as well as we have seen some traction in the VA. The budgets in the U.S. have started to get reassessed and put back together. As you know, a couple of things happened.
There was deployment of funds from the U.S. to a budget overseas. And I think that's going to be a precipitous of moving things forward. So we're hopeful to see some of the traction that we have and some of the initial reactions we have of the new FDA contract coming to play, as well as those POs coming in and actual sales being conducted. So at this time, what I would say is that give me a little bit of time to review everything. Let me get on the right page. Then we'll assess how we move forward from there.
Right. And sort of on this topic, the next question relates to the VA, actually, as we talked about. And how quickly do you think you can receive a VA order after the budget is set?
Yeah. I would hope for yesterday. But we are on track. We have many, many things going on. I mean, I'm in conversation on a daily basis with the commercial team as to where we're doing, where we're at, what's going on. We have, as I mentioned, significant traction. And honestly, I think some of the first sales should come in in the coming days.
Right. So next question then. It relates to with only five units sold in Q4, which is lower than previous quarters. You have clearly shifted focus from smaller deals to slightly larger ones in form of VA and IDNs. Could you tell us more about these? How are these deals progressing? And how many? Sorry. How many units are we talking about per deal? Sorry. It's many questions in one ear. I'm trying to sort of. Yeah.
I understand. As an investor, I'd ask the same question. So I don't doubt the question is of importance. However, I don't have any metrics to actually give you the amount or the volume that could be predicated by any of these deals. But as mentioned on the actual interview I had with you, the way the U.S. market works, and it comprehensively shifted about 12 years ago to where the economic customers, such as the IDNs, the GPOs, administration within hospitals, really took over the ability to make decisions, where it used to be the actual physician, and the physician could drive decisions.
The physician could drive purchasing decisions almost immediately without even getting consulting with the administration. They could just move forward. But as the paradigm shifted to the economic customer, IDNs and GPOs, they just become paramount in doing any business in the United States. I mean, they facilitate the majority of the U.S. business, which is very, very significant in regard to medical devices or any sort of purchase that is regarding healthcare. So getting on these IDNs and GPOs opens up a massive opportunity, right?
So you look at the purchasing power of these guys. I mean, you're looking at one of them, one of the top ones, it's $100 billion a year. That's just one out of like 12, right, of the larger GPOs. So the opportunity itself presents, in a way, from shifting. And we're not disregarding smaller opportunities. Let me be very clear about that. We will take every sale possible. And we will focus on every sale possible. However, to take this company to the level I expect it to be, the IDNs, GPOs are critical to our success, including the VA, which is its own IDN and GPO.
Those are the things that will transition the stock to where it needs to be. This is where it'll take the company, where it needs to be from a revenue generation standpoint, as well as a bottom line standpoint. So we can't be as successful and wildly successful in any market without having the ability to drive these national, larger tenders and contracts.
Right. That's a good clarification. So next one, in conjunction with the directed share issue, it was stated that a portion of the proceeds would be used to ensure delivery in innovation projects. Are there any ongoing projects within the company that shareholders are currently not aware of?
No. Not at this time. We're developing the next generation of CADS cor, the seismocardiographic. That's continually in development. It's working through the processes as we speak. We hope to have some prototypes coming soon. But those are our two significant focuses, right? So coronary artery disease and heart failure are two of the largest challenges this world faces, and the U.S. specifically, both near and dear to my heart. I think that this is something no pun intended, but we do expect good things to procure with our development pipeline.
Right. And you mentioned heart failure. So I guess that takes us into the next one then related to the SEISMO. So where is the SEISMO standing today? Or is the project completely on hold, or are there developments happening in the background? If so, please elaborate.
No. Nothing's on hold. We're still focused on how we're going to generate this internally with R&D. They're still focused on both of these opportunities. So no changes to that opportunity at all.
Right. So the last one, I guess, relates to sort of a forward-looking statement then. It's a long one, so I'll just summarize it. But what can you tell the shareholders in this company to sort of what will be the sort of breaking point, or what should they focus and look forward to after these few years where things have been moving at a slower pace than initially anticipated? What will turn the table, so to say?
I think that there's a lot of things that could turn the table, right? So I'm a new CEO. I'm a high-energy guy. I think that I have a significant broad base of people in the U.S. that can help us to assist in moving this thing forward from every aspect in the business, as represented with Dr. Oza, Ken, and Dave being brought on board. I'm also not a guy who thinks I can do everything myself. I'm very open to feedback. I'm very open to help.
So I think what has occurred in the past needs to be the past, right? We're going to take this in a new direction. We're going to take this from day one, which was February 1 for me. For new shareholders, what I can say is that I have a vested significant interest in making sure this is going to be a wild success. I think it's going to be a very important thing for all of us to stay in line and positive regarding where we're going. And the commercial side is going to be critical.
So we're looking at every single avenue and every single sales model that could procure the best for the patient, as well as shareholders from a bottom line standpoint and top line standpoint. So I think what we'll do is we'll continually focus. What I can say is just be optimistic for what's in store.
Right. I think that was all on my end. There's not more questions coming in right now. I guess I will give you an opportunity if there are any concluding remarks you want to leave us with here today, Christian and Aamir.
Yeah. Christian, if you have anything, feel free to jump in. Listen, I know what the past has been, but the past will not predict the future. I think that we have a tremendous opportunity. This device is relatively an unknown in the United States. Quite frankly, I've been in the business greater than 20 years. When I was approached by the folks on the board for this opportunity, I didn't even know what Acarix was. I do know what Acarix is.
I've been in the business long enough to know it's a home run. I think that this opportunity is going to present itself, as I mentioned, in a multifaceted value proposition that is very difficult to achieve. So I think we're going to have the ability to drive significant traction, adoption, get the reimbursement in place. And then it's just something that could be a very fun ride. So with that, all I can ask for is the continued support. Let's stay focused and together. And together, we'll go places.
All right. Perfectly. So I would like to thank both of you, Aamir and Christian, a lot for today's participation. And we hope to hear more from you in not-so-distant future. And good luck with the future commercialization on the U.S. markets.
Indeed. Thank you, Filip.
Thanks.