Hello, and welcome to the Bactiguard Audiocast for Teleconference 2022. Throughout the call, all participants will be in a listen-only mode, and afterwards, there will be a Q&A session. Today, I'm pleased to present Anders Göransson [CEO] and Gabriella Björknert Caracciolo [CFO] . Please go ahead with your meeting.
Thank you, operator. Thank you everybody for joining the call today, in which we will share some very exciting news and forward-looking thinking from our side. Before we start, I want to inform you that there is a correction to our quarter four press release. As we wanted you to have all relevant information at hand when we announced the Zimmer Biomet agreement last night, we accelerated our quarterly release, and we re-released it already last night. However, due to human factor, we released some incorrect numbers relating to the cash flow from operating activities. We have therefore just released a corrected version, both in English and Swedish. Furthermore, this morning it was noticed that the Swedish version still included some internal working comments that had been fully integrated in the report.
Of course, this is not something we're proud of, and we're very sorry for this, and we are revising our processes to increase the quality going forward. If we go to page two, the more exciting part of this call. Today, we will cover three topics with you. First, we'll comment on the large news from last night, the new expanded collaboration with the orthopedic giant, Zimmer Biomet. This is, of course, a huge milestone for us as a company, and we will share more information today. Secondly, we will review our Q4 results that were released last night, which is weaker than we want, especially compared with the Q4 in 2020, which was very strong. Though, if we look at the full year, our revenues are stable. We also start seeing our investments into our strategy is impacting the bottom line already in the Q4.
Finally, we're excited to share our new focus goal strategy and also our long-term financial targets with you that also was released last night. If we go to page three, let's deep dive into our expanded partnership with Zimmer Biomet. From a financial perspective, this will generate license and development fees of $1 million during 2022 and an additional $7.5 million in milestone payments contingent on U.S. regulatory clearance for different product categories. Most importantly, once products in the future achieve regulatory clearance and reach patients, we will start to generate royalty income. The royalties on net sales vary slightly by product category, but are similar to our earlier agreements with single-digit royalty rates.
This is a global license agreement focusing on Zimmer Biomet's core markets and expanding it to the broader part of the portfolio, including joint replacement, like a new hip or new knee or new shoulder, sports medicine, craniomaxillofacial area, which is the head and face implants for reconstructive purposes, as well as applications in the thorax. This is the majority of the Zimmer Biomet's portfolio. It is fair to say it will take multiple years before these products will be regulatory approved and start generating royalty income. Though, if Zimmer would decide to coat a significant part of the product portfolio, the potential royalty income could significantly increase for Bactiguard. It could be in the magnitude of significantly higher than 10x the current Becton Dickinson license income we have per year. This has huge long-term potential for us as a company.
If we go to page four and look a little bit at the history. Because how did we end up with this agreement? We need to take a step back and see when we set out to set a new standard for care in orthopedics. We started the journey with trauma implants. For all of you on the line that might not know what a trauma implant is, it's something you use when you have an accident, for example, a motorcycle accident, and you break a leg in your lower part of your leg, like the tibia bone. These fractures are often very complex with an open wound, and therefore a very high infection risk, up to 30%.
To address this problem, Bactiguard in 2015 entered into a license agreement with the Malaysian company, Vigilenz, which we later on acquired to develop a Bactiguard-coated trauma implant, which we called OrthoSyn. This product was CE marked in December 2018 and launched in Malaysia. In September 2019, we signed a global license agreement with Zimmer Biomet for trauma applications, and within less than two years, Zimmer Biomet launched their first trauma nail, ZNN Bactiguard in Europe. I think it's important to understand that short timeline was due to that we had an existing CE mark for a trauma implant with a Bactiguard OrthoSyn product. We're still working together with Zimmer Biomet to get the trauma implant approved in other regulatory bodies across the world.
Now, 2.5 Years since the original agreement and the very close collaboration partnership with Zimmer Biomet, we're expanding the collaboration to Zimmer's broader portfolio. This is a global agreement focusing on the assignment's core markets, but does exclude some parts in Asia, like Southeast Asia, India, and China, based on the OrthoSyn availability there. If we go to page five. As highlighted before, the initial agreement covered trauma implants, which is 30% of the orthopedic global market of $49 billion. The new agreement covers other orthopedic implants in Zimmer Biomet's portfolio, like the very large markets of hip and knee joint replacements. Just to make sure we all understand what that is.
A hip or knee replacement is when you need to do a primary operation where you basically replace your own hip with artificial implant that stays in your body for long term. It also includes revisions when you have to redo that, either because the implant has been in there for a long time and gotten worn, or you had a complication like an infection. It doesn't only cover hip and knees. It also covers shoulders, the craniomaxillofacial, and thoracic, and sports medicines segments. We are going after a significantly larger part of the global market with this agreement. An obvious question is, of course, what will one go after first? That will be decided later on by Zimmer Biomet, and we will communicate that when and if we can.
One can speculate that priority areas will of course be implant areas with either a high infection rate or where an infection can have devastating effects. If you go to page six and look at why Zimmer Biomet. For us, it was critical to partner with one of the major global players, and Zimmer Biomet is clearly one of those. It has a turnover of more than $7.8 billion. In addition, they have a focus on bringing solutions and improving patient care, which is very much aligned to our vision of keeping patients safe from infections. From that perspective, they were a perfect partner. If you look at the right-hand side, you see an extract from their earnings call this Monday. You see that their current net sales for knee joints is $2.6 billion.
For hips, it's $1.9 billion. For all other categories, which includes trauma, $1.7 billion. You can do the math and see why we see them as a great long-term partner for us and why we're so excited about this agreement. To summarize, our expanded partnership with Zimmer Biomet is a huge milestone for Bactiguard. Not only does it give us significant license development and milestone payments as the collaboration proceeds, most importantly, it will enable us to help patients once products in the future receive regulatory clearance and are getting implanted into patients, and that is when we'll start generating license royalties as well. If we go to page seven. That was everything that we wanted to share about the Zimmer Biomet collaboration, but we'll of course open up for questions after this presentation.
Let's now move on to our Q4 results. If we go to page eight, I just want to highlight a couple of key numbers on this page. If we look at the revenue in Q4 2021 and compare it with Q4 2022, it is of course a significant drop and not what we're happy with. That is of course partly driven that we had new licenses in 2021, which of course is a disappointment, but with a new and expanded Zimmer agreement will of course impact our coming quarters in this years. I think it's also important to look at our revenue line, because over the year we've been quite stable. It's not a drop compared to our other quarters this year. That is for me quite comforting as we look into the future.
I also think it's important that we look at the EBITDA, because of course, one thing impacting the decline in EBITDA is our product mix with having a lower share of license sales in the fourth quarter. Of course, the other part is we have started to invest in our commercial capabilities to really accelerate our growth going forward. That has started to hit the bottom line. Gabriella will come back to more detail of these numbers later on in the presentation. If you go to the next page and focus on license revenue. The BD license revenue has stabilized over the year to pre-COVID levels, returning after the 2020 lower levels. After an unusually strong Q3, the Q4 was slightly lower this year.
We expect it to remain at these yearly levels, as the U.S. is returning, U.S. healthcare is returning to their pre-COVID levels of healthcare offering. Our collaboration with Zimmer Biomet is like a true partnership, and we're working to progress trauma implants to patients, and the new agreement will, of course, even further deepen our partnership. The EMEA launch of ZNN Bactiguard is progressing well with good feedback from customers. We're working together with Zimmer Biomet to get the trauma implants registered in other regions as well. I think it's also important to look at Vigilenz, which was the key driver for our high Q4 in 2020.
We have not yet gotten a new order from them this year as they have had a problem acquiring new customers due to the pandemic impact in China, leading to quite strict lockdowns and access to hospitals and the ability of opening up new customers. We're working also with them to make sure their own locally coded products are approved in China. That, I think, will be a great future once that happens. If we go to the next page and look at our BIP or our Bactiguard portfolio. If you look at the full year, we had a significant decline, but that is driven by the very large disinfection order in 2020 to the Swedish Police Authority.
If you exclude disinfections, which was a great opportunity in the beginning of the pandemic, but now has maybe become a market we don't believe in the future will be a focus area for us. If you exclude that, our year-over-year portfolio sales is actually increasing. If you zoom in on our focus products like the BIP catheters and our wound care portfolio, we see close to 40% growth year-over-year. If you look at the catheters, right? They're growing rapidly, especially markets where we have invested in our own sales force, like the Nordics, India, and parts of Europe. As we're launching expanding our wound care portfolio, that is also fueling growth. Those regions where it's really taking off is in Southeast Asia as well as the Middle East, but also starting to take off in the Nordics.
We are launching across Europe as we speak. We have, during the year, of course, been impacted by the pandemic, and especially by some strict lockdowns in Southeast Asia, which have impacted our suture business. That means that in total, as we move out of the pandemic, we do think we can see an accelerated growth of our own portfolio. Then just if we go to page 11, a brief comment on our commercial capabilities. Because this is what we're investing in to be able to accelerate the growth of our products. This is where the investment is going this year. I'm not gonna go through all the details, what it is we're doing, but it's a mix of frontline staff and more strategic staff, like since, sorry.
Since Q4, right, we have the new Chief License Officer in place to really drive our license business. If we go to the next page, I think it's important just to comment on COVID, because if you look at this graph, it looks very different compared to our earlier graphs because of the huge increase in Omicron variant and over close to 400 confirmed cases globally. I think we all know that the Omicron variant, which is milder and combined with the increase in vaccination rates, have reduced the number of severe COVID-19 cases, and therefore, also the impact on healthcare systems. Of course, the near-term uncertainty because where will Omicron happen, will new variants come, makes it uncertain for us. As we are moving out of the pandemic, I think we're really set up to accelerate our growth.
Go to the next page, and I'll hand over to Gabriella.
Thank you, Anders. Good afternoon, everyone. My name is Gabriella Björknert Caracciolo, and I will take you through the financials for Q4 and full year 2021. Next page, please. Page 14. Let's look on the fourth quarter 2021. Coming back to what Anders referred to earlier, we have a stable revenue quarter-on-quarter during 2021, but we have started to invest in our growth journey, which is impacting the fourth quarter results negatively. On this slide, we look at the sales development and profitability in a rolling 12-month perspective. Looking back the last 12 months, i.e., during 2021, there is a clear negative impact from the pandemic, mainly from the parts of our business operations due to the impact on the hospital systems and also the uncertainty that have slowed down the business discussions in both license and BIP sales.
Looking at a full year comparison, excluding the large orders regarding disinfection in the beginning of 2020 and the order to China in 2020, we actually see an increase of approximately more than 10% year-on-year. In addition, we start to see signs of recovery, both in terms of the number of increasing dialogues in the licensing business, but also the interest in the BIP portfolio in certain markets. Starting with the licensing business, the blue bar in the chart. We have a solid platform in the recurring license revenues from BD. The revenues from BD vary slightly between quarters, but are essentially stable on a yearly basis, roughly SEK 100 million a year. This quarter, the revenue from BD is almost at par with Q4 2020.
Part of the royalty fee are based on previous quarter end user sales, and this confirms that the recovery in the U.S. market has stabilized. The income from the Bactiguard-coated Zimmer implant is minor and is mainly based on the manufacturing fee. As of yet, we have not started to receive any royalties this quarter given the recent launch. Sales of our own product portfolio is shown in importance in terms of the broader product portfolio, also contributing to more stable revenue stream, here shown in the green bar. To mention a few highlights, we see a continuous growth, especially in Europe and the Middle East, as well as high promise in India, however starting in India from low level. The sales in Southeast Asia is stable.
We see a rebound growth of the BIP product after a slowdown during the pandemic, in particular in Europe and the Nordics. At the same time, the wound care range successfully saw an increase, and we are looking very much forward to see the development of the wound care. Moving on to the yellow bars shown that show new license revenue, which is lumpy in nature and connected to the deal-making process. We are very happy about the new agreement with Zimmer Biomet and the financial impact we will start to see in the first quarter 2022. During 2021, we did not close any major new licenses, mainly due to lower investment appetite impacted by the pandemic.
In addition to the milestone payment from Zimmer Biomet in June 2021 connected to the launch of Bactiguard-coated implants in Europe, this quarter, the new license revenue is mainly connected to license development activities of approximately SEK 1.1 million. Looking at the results, we have a negative development of EBITDA in the quarter, mainly due to the revenue mix with a lower share of licensing revenue and the increasing investment in the growth plan. The operating expenses increased in the fourth quarter with SEK 7.7 million, and primarily driven by investments into marketing and sales-related activities and consultants and temporary staff to initiate activities to accelerate the expansion. Also, personnel costs increased with approximately SEK 4.3 million, where we have strengthened the marketing and sales organization as well as the management function. If we go to the next page, please.
Here we have the corrected and updated numbers. Looking at the financial overview QoQ, the revenues total SEK 46.1 million, a revenue decrease compared to same quarter last year, total SEK 55.6 million, a decrease of -17% and currency adjusted -22%. The comparison of quarterly revenue year-over-year was impacted by the order from Well Lead China in the fourth quarter 2020. EBITDA for the fourth quarter 2021 landed on SEK -12.1 million and an EBITDA margin of -26%. EBITDA year to date is lower than previous year, mainly due to the extraordinary orders of disinfection and the orders from Well Lead and the increased investment in our growth strategy.
The EBITDA margin full year 2021 is -4% compared to the same period 2020, when it was 14%. The net result for the fourth quarter 2021 was SEK -25.4 million and is related to the depreciation of our coating technology by SEK -6.4 million, which is the same every quarter and according to plan. The cash flow is not impacted by the depreciation. Now turning to the next page, please. On this slide, we have the overview of our cash flow and liquidity. The credit facility with SEB was renegotiated in December 2021 due to the directed new share issue. The credit facility was extended two years to December 2024.
The covenants are changed to mirror the growth strategy, and the overdraft facility was decreased to SEK 30 million compared to SEK 45 million before. Q4 had a negative operating cash flow of SEK -16.8 million compared to SEK 3.9 million, mainly driven by the investment in our growth strategy. However, full year 2021, the operating cash flow was positive and landed on SEK 2.1 million compared to full year 2020, SEK 0.7 million. At the end of the year, the overdraft facility was not utilized compared to last year, where it was SEK -3.9 million. Available liquidity, including overdraft facility at the end of 2021 was SEK 247.6 million compared to last year, SEK 39.9 million. With that, back to you, Anders.
Thank you, Gabriella. Now let's look forward and look on our new focused growth strategy and our long-term financial targets. If we turn to page 18, I think we need to start with the threat of antimicrobial resistance. If you saw on the right-hand side, I think many of us heard about the threat in the future. By 2050, SEK 10 million annual deaths from antimicrobial resistance, which is when antibiotics don't work anymore. Of course, to solve this, we need to develop new type of antibiotics or use antibiotics differently, and that's a core part of the solution. If you look on the left-hand side, this is a study published in the very well-renowned publication, The Lancet, only a couple of weeks ago. It's the largest, most comprehensive study to look at today, what is the impact of antimicrobial resistance?
This is quite surprising number, I think, for many of us, right? five million people were associated with antimicrobial resistance in 2019, and 1.3 million died directly caused by antimicrobial resistance in 2019. Put that in perspective to the COVID pandemic, right, which sadly would have killed more than 5.7 million globally. So, I think it shows that antimicrobial resistance, the threat is here, and we need to act now. The first thing we need to do is, of course, preventing infections from happening in the first place. Go to the next page. Of course, the first starting point has to be to make sure if you enter a hospital for any reasons, you or your loved ones, that you don't acquire a new infection when you're there.
One out of 10 entering a hospital does acquire an infection when there, normally via a medical device inserted in their body. That's, of course, a key focus. As we look on the threat of antimicrobial resistance, we need to go beyond hospitals to address this. We need to address a broader set of infections, which our technology, both our hypochlorous acid, but also our coating technology enable us to do. Therefore, we're broadening the scope we're going after, which is for me, very exciting as it gives us more opportunities. If we go to the next page 20. As we set this new strategy, we have also aligned our vision with expanded opportunity. Our vision is to keep people safe from infections. A vision our whole company is aligned behind. If you go to page 21.
We also looked on how do we refine our strategy to really get keeping people safe from infections at the center and having the patients at the center of what we do. The way we can get to patients is either through our own product portfolio or through our licensed partners and their products. That's how we can protect patients. We then leverage our proprietary patented technology, our scientific evidence, and our manufacturing and regulatory know-how to scale this business model. As I talked about, right, we have two arms. We have licensing and we have BIP. As we look forward, we see those two getting closer and closer aligned, right?
The BIP sales and the closeness to the customer that gives us the understanding of their needs and of the patient's needs, it informs us and makes us a better licensing partner going forward. We see we need to have both of these going forward, but we need to integrate them better. That's why we decided to focus in on six therapeutic areas to really understand the patient and the customer needs deeper and see how our technology really can help prevent infections in these areas. Those six areas are orthopedics, which I think yesterday's announcement clearly shows we're on a good path of setting a new standard of caring. Nephrology, which is problems with the kidney, and the biggest problem or consequence is, of course, ending up on dialysis, where we see a great potential for our technology.
Urology is, of course, our urinary catheters and more, which we since a long time back have in the market together with Becton Dickinson. Another focus area is critical care, and especially our central venous catheter, which we see as a cornerstone to our future strategy as we expand our own portfolio. We also see dental. The dental area is a very interesting area. We have a lot of problems with biofilm infections, and therefore our technology can play a key role. Finally, wound management, which we entered, especially through the acquisition of Vigilenz, but we also see a longer-term potential of our own coating also in that area. If you go to page 22 and look, do we reduce the scope of the opportunity by focusing on these six therapeutic areas? The answer is no.
As you look at the global market size of these different areas, the opportunity is huge in all of them. Remember, urology is what have generated most of our licensed revenue over the previous 17 years as a company, and that's the smallest opportunity of these, and there's still more room to grow there. If you go to page 23, you also see that our current product portfolio is actually very well aligned, as is our license partnerships with these prioritized therapeutic areas. We have our own OrthoSyn implant in Southeast Asia, as well as the Zimmer Biomet for the broader portfolio outside of Southeast Asia and globally, a huge opportunity. We have our urinary catheters, which is licensed to Becton Dickinson, especially in the U.S. and Japan, and it is also licensed to Well Lead in China.
Critical care, we already have our ETT with the recent great clinical trial results confirming the value they bring in this setting and the CVC. Both those are also licensed to Well Lead in China. We have our wound management portfolio, which is our different wound applications, as well as our surgical sutures. I think we have a very strong foundation to accelerate our growth as we go forward. If you go to page 24, I think another shift we're doing is making sure we focus on high potential geographies. Currently, we're only present in the U.S. through our Becton Dickinson partnership around urology catheters.
As you see, the United States is a huge part of the global med tech market, and it's also a market where infection prevention really is a priority, and we see our technologies could really add value. Going forward, we will of course zoom in on the key markets where we see the biggest potential long-term. If you go to page 25, because if you follow us a while, you might think, "Why now?" I think that's a very relevant question, but we and the team here is convinced we now have a very strong foundation to fuel growth from. First, we have very strong clinical evidence, which we have built up over years of use of our technology.
That is of course both important from a clinical perspective, but also from a regulatory perspective, as that gives us a competitive advantage. There's also two pieces here you see on the slide, two large, high-quality studies that was published in the last year. One on our urinary catheters and one on our endotracheal tubes. They both confirm a significant reduction in infections, which shows the technology works no matter what you apply it on, which gives us great confidence that our technology can be applied to many new areas across the world. The second point is, as you know, at the end of September last year, we brought in capital to fund and fuel our growth. I think that's a key cornerstone for us as we now can invest to accelerate the top-line growth we're striving for.
Finally, the commercial capabilities we started to build, and we see the results, we see how better customer insights and patient insights help us fuel both our own product portfolio, but also making us a better licensor partner going forward. And I think yesterday's announcement of expanded collaboration with Zimmer Biomet is also a real proof of concept that we now have even a stronger stamp of approval that our technology works, which makes us very excited going forward. If you go to page 26. Based on this, that is why we now have updated our long-term financial targets, and we aim for at least SEK 1 billion in revenue by 2026 and an EBITDA of SEK 400 million.
This is an ambitious target, especially on the timeline on how quickly we plan to get there, but we're convinced we have the potential of achieving it. I also wanna highlight a quote from our report, right? We are going into an investment phase, and in the near coming years, it will be impacting our bottom line. The focus will be, of course, top line growth and securing long-term license deals that will ensure top line growth in the long term. If you go to page 27 and just summarize. The Zimmer Biomet expanded partnership is a huge opportunity for us that can significantly increase our license revenues once products are regulatory approved and gets into patients.
Our Q4 2021 results compared to last year was not very good, but if you put it into perspective and see that we're investing for future growth, we think they actually reflect potential for the future. Finally, our new focus growth strategy and long-term financial targets, we're very excited about and we believe it can help us focus and deliver on the potential of our technology. Just to finish off, if you put a device in your body, within two days, biofilm start forming because bacteria it sticks to the surface. After two days, right, you have biofilm, and that leads to infections. Our coating prevents the bacteria from sticking to that device.
Therefore, we believe everything that goes into your body more than two days can benefit from our coating, and that is the potential we're going after with this new strategic plan and our financial targets. Thank you all for listening to a very intense presentation. Now looking forward to your questions. Operator, over to you.
We have a question from the line of Mattias Vadsten from SEB. Please go ahead.
Hi there. Thanks for the presentation. First one, can you comment on the expected timing for potential regulatory approval for the product categories that you expanded within here? My thinking is that the works with this likely will go ahead after potential approval for trauma implants in the U.S. That would, to me, suggest maybe likely to happen earliest 2024. Is this a reasonable thinking, or do you want to add some flavor there?
I think overall, the reasoning makes sense, right? Of course, the trauma implant will be the first approved product, and after that, you will get more clarity on the timelines of potentially other products. I think to put in perspective, right, we signed the agreement 2.5 years ago, and so far we don't have an approved product in the U.S. Of course, we're also starting up the collaboration, and there is potential that we might be able to speed it up depending on what product IA one pursues.
Good point there. Also to that, I guess, should we expect you to thereafter be one product category at the time, or is it reasonable to think Zimmer, with its capacity, will try to get products approved with, you know, dual track or at the same time, and how should we approach that thinking, do you think?
From my perspective, right, they are in the process, and they have launched trauma implants, so they're learning the coating and learning how it works. How big of a bet they wanna make on that and how quickly they wanna make that bet is up to Zimmer that has the answer, right? I think we have an agreement that this is not about going in and for some small product categories only. Long-term, the aim is to coat many parts of their portfolio, right? In the end, Zimmer Biomet sits in the driver's seat there and haven't yet communicated on how and what they will prioritize.
Great. One quick question. Can you just remind us when is reasonable, do you think, to expect bacterially coated trauma implants in the U.S. to be approved? I guess we've talked about sort of mid-2022 before.
I can't give you a more exact answer more than we're working very closely together with Zimmer Biomet on getting the product approved. That is what I can say about the timeline.
Great. Next one. Can you comment anything on how costs for the clinical trials will be split between you and Zimmer Biomet, and who will be responsible for applying the coating to the product over the long term? I guess the latter question goes for trauma implants as well. Thanks.
On the first question, Zimmer Biomet is doing the clinical studies to prove the value of their products, right? They will be paying for those investments. That's part of the reason we do an exclusive deal with them, to give them the certainty to make these investments to show the value of the technology, right? When it comes to long term, for now, we have contract manufacturing set up, and that was also a way to enable Zimmer Biomet to get quicker to the market, and we're doing the manufacturing for them. Longer term, I would assume, just like Becton Dickinson has set their own production line, also Zimmer Biomet will do that.
Perfectly clear. My next question, you know, following a few of your comments in the report and that you emphasized it here in the presentation regarding OpEx ramp up, you know, just ballpark, what kind of OpEx growth are you expecting over the next two years? I mean, excluding depreciations, I think adjusted OpEx grew about 22%-23% for the full year of 2021. Just the ballpark thinking.
It is of course dependent on what geographies and what therapeutic areas we decide to start investing, to start building our portfolio to both drive our own sales, but also to really pursue license agreements. The detail of that ramp up, we haven't really worked out on a detailed level. However, I think you can expect continued growth in OpEx over the coming year for sure.
Perfect. That was all from me, I think. Thanks.
Thank you, Mattias.
Just as a final reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. It seems we have no further audio questions, so I'll hand it back to the speakers.
If there's no further questions, I wanna thank you all for taking the time to dial in, and I hope you're excited about the future as we are, and we look forward to hearing back with you later on in the year. Thank you, everybody.
This concludes our conference call. Thank you all for attending. You may now disconnect your lines.