Hello, and welcome to the Bactiguard Audiocast for Teleconference Q2 2022. Throughout the call, all participants will be in a listen-only mode. Afterwards, there will be a question and answer session. Today, I'm pleased to present CEO Anders Göransson and CFO Carin Jakobson. Please begin the meeting.
Thank you, operator, and welcome to all our shareholders, investors and analysts, and others joining us today. Today, I'm also joined by Carin Jakobson, who joined us a month ago as the new CFO of Bactiguard. We're delighted to have you on board. Welcome.
Thank you, Anders. I'm very pleased to be here.
In today's call, we'll share our Q2 results with continued revenue growth, as well as continued investments to execute on our strategy. We will also deep dive into our expanding license business with a focus on the new agreement in the quarter with Dentsply Sirona, a leading company in the dental field. If you go to the next page. Before we go into our financials, I just wanted to reiterate why Bactiguard's vision is so important. The urinary tract infection was the beginning of the end for my friend. That's the heading of a letter to the editor in a local Swedish newspaper earlier this year, where the writer aims to point out the underinvestment in the Swedish healthcare system. He does so by describing a patient case.
A good friend of his, who, in wintertime, slips and falls, gets immobilized and becomes temporarily bedbound, and among other things, can't go to the bathroom. He's therefore given a urinary tract catheter to support him. Though, like many others, he then gets a urinary tract infection. Multiple antibiotic treatments follow, but sadly, he passes away a little bit more than a month after having his initial fall, but not due to the injury from the fall, but due to the urinary tract infection. This is not a rare case. One out of 10 patients that enter a hospital acquires a new infection at the hospital, often caused by bacteria adhering to a surface of a medical device that is used to treat these patients, like a urinary catheter. This gathering of bacteria can lead to an infection and potentially, in a worst case like this scenario, even death.
That is why I am so passionate about working together with the team here at Bactiguard to deliver on our vision, keeping people safe from infections o n page three. With our unique Bactiguard technology, which prevents bacteria from adhering to the surfaces of medical devices, and therefore we prevent these infections from occurring. That means we can prevent seven out of 10 of these urinary tract infections that you would get with a normal catheter, and that is really impressive numbers. In addition, our technology is non-releasing, which means it's also very safe and biocompatible, while many of the alternatives out there are not biocompatible and even toxic materials. We have this year started to accelerate our work to deliver on our vision with the aim to get our technology to more patients across the world through new licenses, as well as through our own Bactiguard Infection Prevention portfolio.
If you go to page four for an overview of the Q2 results. We had another strong quarter with close to SEK 60 million in revenue, growing 30% from last year. We have this year a positive currency effect, and the underlying organic growth is 30% compared to Q2 2021. The largest part of our revenue is from our license business, which was SEK 36.2 million in the quarter, a growth of 15% compared to last year. We also see strong momentum in our BIP portfolio, which grew 70% to SEK 15.6 million. I will share more details on what is driving this performance shortly. Our EBITDA is -SEK 3.8 million in the quarter, which is aligned with our growth strategy.
When we earlier this year announced the long-term revenue and profitability goals for 2026, we announced that we will build the organization and initiate a number of growth initiatives. This will impact our EBITDA during this and next year, even if we plan to continue growing our top line. We're early in our growth journey, and we're on track to deliver on our plan. If you go to page five and look at the detail of our license business. If you look at our most important revenue contributor, Becton Dickinson and Company, who has the exclusive right to sell urinary catheters with Bactiguard's technology in, for example, the U.S. and Japan. They are the market leaders in the U.S. with their infection control catheters. For the second quarter in a row, we see strong revenue from BD, confirming that we're back to pre-COVID volumes of the business.
In the quarter, we also saw the first signing fee as well as the development fees on the collaboration with Dentsply Sirona, which I will come back to later. For Sim environment, we see significant contribution from product development fees for the new agreement, but also a contribution from the initial trauma agreement, which delivers both contract manufacturing income, development fees, as well as a small but growing royalty based on the sales of Zimmer Natural Nail Bactiguard implants in Europe. We expect to see royalties to continue to grow in the coming quarters, but the real increase will come once the trauma implants are approved in the U.S. As highlighted, the total license business grew 15%, partly fueled by positive currency effects. This is especially impressive in light of last year quarter, we had a $1 million milestone payment from Zimmer Biomet.
As we go to page six. As you know, our agreement with Becton Dickinson, or C. R. Bard at the time, was signed in 1990, and first product launched a couple of years later in the U.S., and over the following 10 years grew to become the market leader. In September 2019, Zimmer Biomet and Bactiguard entered into a license agreement for trauma applications. In less than two years later, Zimmer Biomet launched their trauma nail called ZNN Bactiguard in Europe. The launch in Europe and other parts of the world is progressing well with a focus on large trauma centers that also are part of the Zimmer Biomet evidence generation plan for the implants. There's overall very positive customer feedback, but also generating a lot of interest with key opinion leaders.
The next points to see the business accelerate are, one, the U.S. approval, and two, if Zimmer Biomet decides to make this an embedded feature in all their trauma implants. The key priority for both Zimmer and Bactiguard is to get the trauma implants through the regulatory approval process and to patients in the U.S. This is progressing, but as you know, regulatory timelines are uncertain and hard to predict. I cannot comment further on the estimated timelines for the trauma implants at this stage. Over two and half years, we worked very closely and in partnership with Zimmer Biomet, and they got really good insights and understanding of the potential of our technology. Therefore, in February this year, we decided to expand the license agreement to the majority of their portfolio, including reconstruction joints, e.g., knee and hip implants.
It is fair to say it will take multiple years before products in this new agreement will be regulatory approved and start generating royalty income. Though, if Zimmer would decide to coat a significant part of the product portfolio currently generating $6 billion sales, the potential royalty income could be significantly higher than the one we have from the BD license income every year, right? Up to 10 times bigger than that or even more. This has significant long-term potential. The expanded agreement shows a true belief and confidence in the Bactiguard technology, and this stamp of approval is of course important for us in discussion with other potential license partners. In April of this year, we entered a new therapeutic area, the dental area, through a co-development agreement with Dentsply Sirona.
Dental is one of our prioritized therapeutic areas, and this agreement is our first inroad into this. It is a high potential market in which we see our Bactiguard technology can make a real difference for patients. Go to page seven and recap the details of the agreement we signed on April 8 this quarter. In the initial development phase, which is approximately one year, it can generate development and milestone fees of up to $0.9 million. If they use the option to enter into a license agreement, it can generate another $1.1 million in milestone payments, contingent on regulatory approvals. Finally, as in our other license agreement, it would generate royalties on net sales once commercialized. The royalty levels are aligned with other agreements and are in the low- to mid-single digits, depending on the claims supporting a potential product.
This is an exclusive global agreement addressing a segment of the dental treatment market valued at $1.2 million. If you go to next page and see why Dentsply Sirona is such a strong partner in the dental field. They are the largest global infrastructure and have a complete range of products for dental practices. They are the key player in many of these segments, and for example, on the right-hand side, you see the global dental implant market shares, where they're the third largest player with 13% global market share. Based on this, we see Dentsply Sirona as the right partner as we're now entering the dental field, which is an area we see our technology can make a real difference by keeping people safe from infections. To summarize, we have in the last two quarters significantly strengthened and broadened our license collaboration.
We are confident for the continued execution of our focus strategy. If we leave the license business and go to page nine to look at our own Bactiguard Infection Protection, the BIP portfolio. As mentioned, total sales increased by 17%, including positive currency effect. We see our focus strategy and investment behind our own urinary catheter, the BIP Foley, is paying off. For example, a focus on the home care market with focus on elderly patients, an area where our technology really makes a difference. We see more than double growth compared to last year in the quarter and the second strong quarter in a row. This gives us confidence for the future. This growth is driven by strong momentum in key markets like India, Nordics, and Malaysia, where we have invested behind the product and have our own sales force.
In those markets, we focus on education and working with key opinion leaders to create a demand of our BIP products that enables us to enter and also win tenders from hospitals. In our expanding wound care portfolio, we see good momentum as we see the broader portfolio of wound rinses and gels is fueling growth in key markets, and the broader portfolio also support us in tender situations. We have continued very positive feedback from customers. We believe strongly in the product and the potential of it in the wound care market. We also see continued interest and growth in our central venous catheter, as well as our endotracheal tubes, which have triggered a lot of KOL interest based on our study we published last quarter.
As you might remember, the study showed a reduction of infections with 53% in severely ill patients, for example, if you're intubated due to severe COVID. Once again, confirming the effectiveness of our technology. It also shows the importance of continuing strengthening our body of evidence around our technology, both around our effect, but also around our safety. If we go to page 10, we see a recent publication in Nature's Scientific Reports, which looks at the blood compatibility of the most commonly used central venous catheter. This is devices you put into your bloodstream, right? This in vitro study reinforce the safety and biocompatibility of CVCs coated with the Bactiguard technology. This is especially important as patients receiving a central venous catheter often are already quite ill and frail.
The study also highlighted that a CVC coated with chlorhexidine and silver, which is the most common coated catheter, is the least blood compatible, which confirms the potential of our CVC in the coated CVC market, a market worth over $1 billion globally, where there is a need for an effective and safe technology. If you go to page 11. As you saw, our EBITDA is impacted in the quarter by our investments into strengthening our organization to deliver on our strategy and long-term financial goals. I just want to reiterate why we believe this is the right time to invest and fuel our growth, right? We have strong clinical evidence, which we continued to strengthen over the last year, showing that the Bactiguard coating is effective by reducing infection in multiple application areas, but also is very biocompatible and therefore safe.
Second point, we have the capital to invest behind the growth and to fuel our strategy. Part of that is building the commercial capabilities needed to deliver on our focus strategy. Also our recent news that the European Patent Office intends to approve a new patent for our technology gives us even more long-term horizon to work towards. We believe we have a strong IP protection with the know-how of coating different materials, the secret Coca-Cola recipe of our coating, and now with the patent protection until 2039. Finally, I believe our two recent license partnerships is a proof of the concept and shows the potential of our technology and is why we're investing behind the strategy. With that, I would like to hand over to Carin Jakobson to give us more detail on our Q2 financials. Over to you, Carin Jakobson.
Thank you, Anders. Hi, everyone. I will take you through the financials. Page 12, please. On this slide, we look at the sales development as in a 12-month perspective. Recapping on the last two quarters, we see revenue seems increasing for both the licensing business as well as the BIP portfolio as a result of our focused growth strategy. Starting with the licensing business, the blue bar in the chart. We have a solid platform in the recurring license revenue from BD, where volumes varies slightly between the quarters, but are essentially stable on a yearly basis. We can see the volumes are back on pre-COVID levels. The revenue from BD shows an organic growth this quarter of 30%, taking into account the currency effect.
License volumes and the royalty fees are both continuously steady, where royalty is depending on the BD Foleys reaching the end customers. Including in the licensing business is also revenues from contract manufacturing for Zimmer Biomet and a small but growing royalty corresponding to the Zimmer Biomet sales of ZNN Bactiguard implants. Continuing with the BIP portfolio, the green bar in the chart. It is very encouraging that the BIP portfolio shows growth for the third quarter in a row, which is driven by the Nordic countries, India and Malaysia. The yellow bar in the chart shows new license revenue and is connected to the non-recurring revenue streams that we have for licensing business before our products are launched. That can be different types of initial fees, product development fees, as well as milestone payments.
For this quarter, the new license revenue consists of revenue from the new global development agreement with Dentsply Sirona, which contributed with both an initial fee and revenues from development work. Also, revenues from the expansion of the Zimmer Biomet agreement that was signed last month where we do development work. This together with the recurring business are the foundation to continue the growth to meet the long-term goals. Page 13, please. Looking at the financial overview for the first half year. The total revenue for the period was SEK 150 million. That is an increase compared to the same period last year with SEK 17 million, which corresponds to growth of approximately 30%, where both the licensing business as well as the BIP portfolio are growing. Adjusted for currency effects, the growth was 13%.
The EBITDA for the first half year was SEK -8 million, and the EBITDA margin was -6.8%. The investments we are doing are building a platform to for accelerating the growth in the long term. The focus is on license product development, regulatory approvals, patent and brand protection, higher production capacity, and an expanded license and sales organization. These activities are impacting the EBITDA negatively at this point. I will also point out that the EBITDA was positively impacted by the milestone of $1 million from Zimmer Biomet for last year, which we're comparing with. The net result for the first half year 2022 was minus 30.2 million, which is 7.6 million lower than last year. Page 14, please. Now looking at the cash flow and the liquidity slide.
Today, the company has a strong cash situation due to the share issue that we closed last year and the loan from SEB. To have this financial position is fundamental for the focus growth strategy and enable us to invest to meet the long-term goals. As you can see from this slide, the cash flow from operating activities vary quarter to quarter, which is driven by the milestone payments from licensed partners, but also due to seasonal variances and business performance. This quarter, the cash flow from operating activity was SEK -1.8 million, but improved compared to the prior two quarters. Overdraft facility from SEB is SEK 30 million, of which none is used as of today. Total cash and overdraft facilities was SEK 232 million. Next page, please. The global outlook finally.
COVID-19 continues to affect global trade and including shutdowns in China and continued restriction in some parts of the world. The development in the near future is therefore still difficult to assess. Regarding the situation in Ukraine, this does not have a direct impact on the Bactiguard's operation as the company has no business or suppliers in Russia, Belarus, or Ukraine. If it is impacting the world's economy more, it will have a greater impact. We can continue to monitor the macroeconomic situation closely and continuously evaluating the operational and financial effects of it. With that, back to you, Anders.
Thank you, Carin. If we go to the next page. As we started this session with, we're passionate about working together as a team at Bactiguard to deliver on our vision, keeping people safe from infections. We hope we have highlighted to you why you should be investing in Bactiguard and that we're building the momentum to deliver on our 2026 financial goals. If you look at the 10 key reasons, right? Addressing infections and multi-resistant bacteria is key for the UN's global sustainable development goals. We have a great technology to do so, which is both effective but also safe. We have a growing body of clinical evidence that our technology works, and there is a huge market potential in our focus area. We have a clear focus growth strategy to accelerate from our unique market position.
We already have a broad portfolio of existing approved products, but especially we have a very scalable license business. We're now investing to deliver on our growth ambition, and finally, we have a strong base of long-term owners and a very dedicated management team, who also have acquired options in the quarter in Bactiguard, creating an even more motivated team. That was all for us. Thank you for taking the time to listen to us. Operator, we're now ready for any questions on the line.
Thank you. If you do wish to ask a question, please press zero one on your telephone keypad now. We have a question from the line of Mattias Wålsten from SEB. Please go ahead.
Yes, hi there. Nice to see, I mean, big sales getting continued momentum, at least on a year-on-year basis. I guess there are markets that are yet to come out of the real impact of COVID, suggesting sort of further improvements there. At the same time, as you mentioned, we are seeing new COVID cases emerging in many markets. I just would want to comment on to what extent this has been hitting you in recent weeks or currently. Is it difficult with access to customers and so forth right now?
Well, thank you, Mattias. It's a very good question. I think it's a little bit early to draw conclusions. Basically what I can say is we don't really have signals that this is impacting us yet, except from China, where our partner is significantly impacted. There we have seen it and it does impact us, but otherwise it hasn't impacted us to this extent.
Perfect. My next one, I mean, if you look on ZNN trauma implant in Europe with Zimmer, you see a pick up from a low base. I mean, we know the real inflection point is likely to come with the U.S. approval. Do you expect any sort of boost if it turns out COVID have a less of an impact and then maybe a better ability for you to interact or Zimmer to interact with customers to convert from sort of conventional implants into coated implants? Is that a fair assumption?
Well, I think we will see continued traction with the ZNN Bactiguard in Europe, right? It will continue to grow quite rapidly. An established company like Zimmer Biomet, who already have established relationship, especially with these big trauma centers that they're targeting, I don't think will be negatively impacted by COVID, but we should assume they will continue with the launch as per plan.
Thank you.
The next question comes from the line of Hans Bøhn from Trinity Delta. Please go ahead.
Yeah, good morning. I just have a question regarding your investment plans, and you enumerated some functions such as regulatory and patent and so forth, that you saw opportunity to enhance. I just wonder which of these are the most, you know, consumptive of capital or money that you've invested in? Also, have you provided any type of guidance as to how you see your profit margin development in the next couple of years as a result of these investments? Thank you.
No, thank you for the question. Regarding the later part, we have only given guidance on our long-term financial goals in 2026, where we say we will have over SEK 1 billion in revenue and SEK 400 million in EBITDA. That's the only guidance we've given. Regarding the earlier part of the question, it's in multiple areas we're strengthening the organization, but of course, one is product development together with our license partners. To get their products coated and ready to the market is of course going to take some of our resources. We're also getting paid for it, but it is increasing our costs. Of course, strengthening our commercial approach and how we go to market and how we communicate our messages is also taking more resources, but it will also require more people on the ground, right?
Salespeople. That's part of where we're investing. Currently with the implementation of MDR, we are investing quite a lot in regulatory and quality resources to ensure our products will be MDR. We're also looking into new markets where regulatory resources is required to enter. I hope that answered your question.
Okay, that's very helpful. Thank you very much.
As there are no further questions, I'll hand it back to the speakers.
No, I just wanna thank everybody for taking the time to join the call and hope you all get a great summer and look forward to connecting again in the fall. Thank you, everybody. Bye.
This concludes our conference call. Thank you all for attending. You may now disconnect your line.