Hello and welcome to this Q1 presentation with OssDsign. With us today, we have CEO Morten Henneveld and CFO Anders Svensson. My name is Christopher Bergin, and I work for Finnwire Media. After the presentation, there will be a Q&A session, so if you have any questions, please visit finnwire.tv. Click on this webcast, and to the right on the page, you will find a question form, and with that said, I hand over the word to Morten and Anders.
Good afternoon and welcome everyone to this Q1 webcast of 2022. My name is Morten Henneveld, I'm the CEO of OssDsign, and with me I have our CFO, Anders Svensson. Today we want to walk you through the Q1 results, but certainly also the highlights of the quarter. Q1 for us was really a quarter where we managed to make significant advances on our key clinical programs.
Sales was, of course, impacted by the extraordinary high spread of the Omicron variant, but we started to see some real improvements towards the end of the quarter. And as you've seen, we managed to withstand an all-time low in U.S. elective procedures and still grow the business double-digit. As always, when we do these presentations, the normal disclaimer, and with that, I'll hand you over to Anders to talk about the highlights of the quarter.
Okay, yes, thank you. So this has again been a very exciting time at OssDsign in a quarter that was really characterized by clinical, and where we also continue to see sales acceleration. So despite an extraordinarily high Omicron impact, especially in the U.S., we still grew the business double digit. We also managed to win the most prestigious tender contract in France, representing 10% of the entire market.
Then we had a number of achievements in regards to PROPEL our prospective spinal fusion registry in the U.S. So we got the regulatory approval, we got the first sites enrolled, and just after the quarter ended, we also got the first patients included. And then the TOP FUSION clinical study for Catalyst that we started towards the end of last year, we also managed to complete the patient enrollment. We will go through all of these in more detail later on in the presentation.
But just before we go into all the highlights of the quarter, we really want to start, as always, with the clinical challenges and remind everyone what this company is all about and why we are here. So today, overall, current bone replacements fail to heal a wide range of skeletal defects. For cranial, 10% or perhaps even more implants end up becoming infected, of which many have to be removed.
When it comes to spine, one out of five patients do not achieve the so-called fusion, meaning that the implant grows together with the spine or the vertebrae. And ultimately, for both patient groups, it means that they must undergo revision surgery, extremely painful for the patients and also extremely costly to the healthcare system and therefore the society. So some very real unmet clinical needs that OssDsign is solving. And how are we solving that?
OssDsign's product, our products, are based on cutting-edge biomaterial science. It's the next generation bone replacement technology, and we've developed that with world-leading surgeons to really stimulate the body's own healing capabilities, and that does make it very special when we are talking to surgeons. I just came home from the U.S. after doing a bigger tour over there.
It resonates very well to the unmet clinical needs that I just talked about a second ago. When it comes to cranial, I won't go into all the details again. I'm sure you're aware by now that we have now consistently shown a very slow, very low post-op explantation rate due to early infections. Latest post-market surveillance report shows 1.6% out of that now in a cohort of almost 1,500 implants and in 214 hospitals worldwide.
I think it's very fair to say that this is certainly setting a standard for what surgeons should be looking for when it comes to cranial implants. For OssDsign Catalyst, as we've said before, it is preclinical data, but what we've seen here and what we are now commercializing on in the US is some extremely interesting but also very, very promising preclinical data,
essentially showing that OssDsign Catalyst significantly outperforms other synthetic bone grafts that have been tested in that model and actually came at a result which is only seen by one product, bone morphogenetic protein called BMP-2 or Infuse by Medtronic, which sits around the 90%-100% fusion rates. So again, very, very promising. We are commercializing on this data right now in the US, and that certainly resonates with surgeons who are used to looking at preclinical data when it comes to bone graft. So with that, I'll hand over to Anders for the Q1 data.
Okay, if we turn to the results for the Q1, we reported SEK 7.1 million in sales, which is equal to a quite outstanding 18% growth on the same quarter last year and 10% on a constant currency basis. And this is despite U.S. elective cases dropping to an all-time low during Q1 due to Omicron. So if we look at where this growth comes from, you can see that our U.S. operations managed to grow the business by 19%.
So again, despite the severe Omicron impact in that particular market. In Europe, not as severely hit, we managed to grow by 22%. So all in all, some very acceptable growth numbers in a, for us, very difficult quarter. COVID impact, as far as that goes in Q1, we saw, as I said, an extraordinary high impact due to Omicron, where U.S. elective surgeries dropped to index 50.
The percentage of hospitals reporting critical staffing shortages hit an all-time high during the pandemic. In addition, this also caused prolonged processing time for product approvals, which of course is needed to start selling in hospitals, and lastly, we also started to see in Q1 the first raw material shortages. However, this was for us on the non-critical items, and we expect the short-term impact to be low.
Now, as we move forward through the year, we expect to see continued staff shortages in the U.S., and this could potentially cause some fluctuations in sales, but having said that, we've already seen in March significant improvements in increasing elective surgeries, so the very high impact that we saw in Q1, we expect that to be transient in nature, and we have strong confidence in Q2 and beyond to develop well.
Thank you very much, Anders. I'll just walk you through quickly the highlights of the quarter. They have all been press released as they happened. So this is more of a reminding everyone about the many big things that actually happened during the quarter. So as Anders said, we won a major tender, the largest contract in France, which covers 10% of the entire French market.
It is also in this group of hospitals, some of the most prestigious, highest ranking neurosurgeons and neurosurgery departments in the world are within this group of particular hospitals. It is a three-year contract, and we are one of only two suppliers who got awarded that. So again, another big milestone and another very, very strong testimony to the Cranial PSI product and the clinical data that stands behind that.
The next one that I just want to come back to is really the PROPEL. So very early in the quarter, we received the institutional approval to start this registry, and this is really one of the core pillars in our strategy. And why is that? Well, the registry is really bridging the gap between what we see as the device performance in clinical trials and how they are actually used in the real world, in the normal practices over time.
Because it is a multi-center study and it is a prospective spinal fusion registry, it enables collection of clinical data on a large number of patients in very diverse settings, and that is really the power of the PROPEL registry. Its primary endpoint will still be measuring the rate of spinal fusion using CT or radiography 12 months post-operatively, but it also has a number of secondary endpoints where we look at the patient's quality of life, neurological functions, the safety profile, of course, et cetera.
So we see this registry as a really powerful tool for us to quickly generate and get access to a large amount of very diverse data, data that we can use to actively commercialize, that we can use to drive publications or other things, talk about how we're performing against very difficult patient groups, et cetera, et cetera. So a very good start on that. And to do that, we also hired Melanie. We've already introduced Melanie in the past. Very long history, long experience within clinical. We're extremely pleased that we've managed to recruit a caliber of this.
This is certainly also one of the reasons we've been able to accelerate and actually do so many clinical things as we've done just in the last four to five months. With PROPEL, just to return to that, we got institutional approval in January. In March already, we enrolled the first site and very early, just after the quarter ended, we also enrolled the first patient. It's something we're extremely proud of.
We've managed to do this extremely well. We've delivered on the promise that we said we were going to do this, and we actually managed to do it in a very accelerated manner. That I'm, of course, pleased with. I'm also extremely pleased that we have now completed patient enrollment on TOP FUSION. Again, as you know, this is a study where we'll continue to follow up on patients for the next 24 months.
We are going to have the same primary endpoints. We are assessing the rate of bone fusion. And of course, also because this is a first in man, a lack of device-related adverse event, as you know, is done by some very big surgeons in Hungary. But we're extremely pleased. There's always a risk with any clinical trial, as I'm sure you're aware.
And now we have the patients in, and it means we need to, we will follow them and we will access the progress within, assess that progress in that study as we go on. So, you know, as Anders said in the beginning, really a quarter that was characterized by some big advances in our clinical programs. So I'll hand you back to Anders to talk about a little bit going forward and also some of where we are on the milestones that we communicated.
Yes, as you know, we launched the Ascent25 new strategy early last year, and we've continued to execute on that. And as we look forward, we will continue all the way through 2025 to execute on that strategy. And the strategy means that we will focus on neuro and orthopedic spinal surgeons, which also means that we are moving away from being a niche player in the CMF space and are now also entering into orthobiologics and spine.
And to achieve this, we've set five very clear strategic priorities for the years to come. The first one is to direct investment towards the U.S. We are investing elsewhere as well, but we are investing more in the U.S. We will also build a global and a broader bone graft business. We will focus on driving innovation of our portfolio by leveraging both our technology platforms.
And we aim to show clinical superiority, which means we will accelerate work on clinical programs and registries, as you have seen us do in Q4 and Q1. And finally, we will also drive operational efficiency in order to reduce delivery time and costs for our cranial PSI product. So overall, we're very pleased with how we execute on this plan. We have been building a much stronger U.S. team. We have accelerated our clinical programs with a very high U.S. focus. And recently, we also saw the first lead time improvements on the cranial PSI.
All right, thank you, Anders. So just coming back to some of the important milestones which we've previously communicated, as you see here, we have now delivered on three out of the four. We've won the Paris tender. We have our PROPEL up and running, as I said before, and we have also completed patient inclusion. Our launch in Japan, we are still not at a point where we will communicate in due course.
We will be communicating in Japan as we are formally in the launch mode. We are not there right now, so we will do that in due course. So I think overall, as a final remark before we go to Q&A, I hope that everyone really sees that things are progressing well, that we are really executing on the strategy that was presented just about a year ago or so.
Yes, there are some ongoing challenges from the pandemic. We do think they are transient in nature, and we've seen some very significant improvements. Not least, also how we are now really advancing our clinical programs, making sure we're moving forward on them. We are getting access to more patient data, all of which inevitably will drive more value into the company into the future. With that, I want to thank you for listening to the presentation, and I'll hand over to the operator for questions.
Great. Thank you, Morten and Anders for this presentation. Let's start the Q&A session then. So first question, during 2021, you shared a timeline for when you would perform different studies. For 2021, there was a study regarding Cranial Plug, and for 2022, a preclinical study and standalone regarding catalyst. Can you give us an update regarding these studies?
Yeah. Well, I can say, as you've seen, we have been recruiting quite a lot into the clinical team, and it essentially established a wider clinical team. As you saw, TOP FUSION was very important to us, so is PROPEL in the registry. I would say some of the other things, we are going through a process where we are assessing how important they are and also the potential timeline of doing some of these other studies.
Right now, clearly the most important thing for us is to accelerate and make sure that PROPEL becomes a success. That may also allow us to talk to some of the other things that we originally intended to do separate studies for.
Okay, thank you. Next question there. And you mentioned the shortened delivery time there for cranial PSI. Are you still working on shortening it even further, or are you satisfied where you are at the moment, so to speak?
I don't think we'll ever be satisfied with the lead time. Lead time needs to be the lowest they possibly can. As Anders said, we started a larger internal program on this last year, and here about a month ago, we did see the first improvements on that lead time, but that certainly doesn't mean that we stopped. We have a range of things we are looking into. There is no silver bullet when it comes to lead time reduction.
It is essentially the salami method. You keep cutting anywhere you can without compromising the integrity of the production process or the shipping process or anything in that nature, so this is something we're working very, very diligently on, and we will continue to do that throughout the year. I think, honestly, after the program is formally finished, when we get to that point, I just sincerely hope that this is becoming a part of a way of working in OssDsign.
Okay, thank you. Next question. It's regarding the inflation, the rising inflation. Have you increased prices toward clients to cope with the rising inflation, or how do you work with that in OssDsign?
Yeah, I think I'll hand over to our CFO to comment on that.
Yes. So far, we haven't really seen any inflationary pressure on our components. It's quite stable. We have, however, as a precautionary measure, we started to increase prices to some of our customers in the U.S., and quite successfully. There hasn't been any problems with that.
Okay, thank you. Next question. How do you account for the 23% reduction in sales versus Q4 2021 when you have new sales revenue from Catalyst and global easing of COVID restrictions?
Yeah, I'll just talk to that. Well, first of all, I don't agree that there's been an easing in Q1 of COVID restrictions. I think there may have been an easing in certain parts of Europe, but when you look at the US, the impact on the hospital was probably the biggest impact we've seen throughout the entire pandemic. Of course, as a growth company, we want to grow and we need to grow quarter on quarter.
But I think actually when you look at it. I also talked to it after our last interim result. We have been building a much higher robustness, much better robustness in sales. So no, it's difficult to get to the same level in Q4 when you have a market that is dropping to such a low level. But as Anders also mentioned, we saw a significant pickup in March.
Unfortunately, due to the lead times in cranial, that doesn't have a positive impact in Q1. That would have an impact in Q2 instead. So no, I don't think we're ever happy when we don't meet the same target as we do the last quarter. But given the severity of the impact that happened in Q1, I think it's a very decent result actually and does show robustness in sales that we managed to keep it at that level under those circumstances.
Okay, thank you. Next question. Do you have any estimates on how much the agreement in France will affect sales?
No, we are not going to guide. We're not going to guide on that. As we said, it is 10% of the market. We are in discussion with the vendors within that tender. We also have a commitment for some to try the product. So it's going well as we had hoped if we won the contract. But this will be a slow and steady thing as we move into the rest of the year to get hospitals trying our product.
Okay, thank you. Next question. Do you have any sales target for 2022, and how much do you expect from Catalyst?
No, we don't guide on it. And I think I'll leave it in that. We don't guide on a one year. And also at this point in time, given where we are in the early stage of the commercialization, we're also not disclosing how sales are performing by franchise. So sorry, but I won't be able to answer that.
Okay. That was the final question for this Q&A session. So a big thank you to Morten and Anders for the presentation and for answering all the questions. And a big thank you to all the viewers and to all of you who have sent in questions to us for this Q&A. I hope to see you again on the next presentation with OssDsign. And with that said, I wish you all a very good day. Thank you.
Thank you very much.
Thanks a lot.