Hello and welcome to today's podcast with OssDsign, and CEO Morten Henneveld and CFO Anders Svensson that will present the company's Q2 report. My name is Ludwig Sjöström and I work for Finwire. After the presentation, a Q&A will be held, so if you have any questions, you can submit them in the form to the right. With that said, I give the word to Morten.
Thank you very much and welcome to this second quarter and first half year webcast. My name is Morten Henneveld, I'm the CEO of OssDsign. With me today, I have our CFO, Anders Svensson, and today we want to walk you through our Q2 results and the highlights of the quarter, which showed significant acceleration in the business and in particular in the U.S. It was also a quarter that really broke numerous records in the company, which we'll come back to a little bit later on. As always, when we do these presentations, the normal disclaimer. But before we go into the actual numbers and the performance, I just want to recap to everyone why OssDsign is here and why we are dealing with some very unmet clinical needs. Today, current bone replacement products fail to heal a wide range of skeletal defects.
For cranial, 10% or perhaps even more of implants used end up becoming infected, of which many need to be removed. For spine, one in five patients today do not achieve what we call a so-called fusion. Ultimately, for both patient groups, it means that they must undergo revision surgeries, sometimes several, which is not only extremely painful for the thousands of patients this happens to, but also extremely costly to the healthcare system and therefore also to society overall. We are addressing some very real unmet clinical need in the marketplace today. With that said, let's go to the highlights. As I mentioned earlier, this is a quarter we are extremely proud of and which I believe probably exceeds many expectations.
We came back very strong from a depressed market in the first quarter and showed another record sales quarter this quarter, not only in terms of total sales, also in terms of U.S. sales. We had an all-time high in our PSI sales. We showed the first meaningful contribution, and we also treated more patients than ever. So in many ways, a very real record sales quarter. The U.S. was really the highlight of the quarter with triple-digit exponential growth, making it the largest commercial region in the quarter, exactly in line with our corporate strategy. We also, and here I'm a little bit inclined to say finally, launched in Japan and immediately recorded our first sales. And while commercial ramp-up will happen gradually, the strategic importance of being present in the second largest medtech market in the world is extremely high.
The fourth highlight we want to call out is the launch of our highly innovative nanosynthetic bone graft called OssDsign Catalyst, which is going very well, and during the quarter, we hit the magic number of having treated 100 patients in the U.S., and last but certainly not least, we also made some very strong progress on our clinical program, which you know was one of our strategic priorities in the company. We completed patient enrollment in our first-in-man TOP FUSION study, and we also managed to launch and enroll both the first sites, but also the first patients in PROPEL, which is our U.S. prospective spinal fusion registry, so overall, a very strong quarter and a number of strong deliverables as well on our strategic plan. I'm also extremely pleased that in the first half of the year, we've now delivered on all the milestones that we communicated.
All of these are, of course, important commercially and clinically, but I think it also clearly shows now that we are executing and delivering to the plan, but also delivering to the promises we've made previously. So also something, of course, as CEO and Anders as CFO, are very pleased with the organization having delivered on what we said we would. With that, I want to hand you over to Anders, who will take us through the numbers.
Okay, good morning. So if we start by looking at the total group results, we have reported SEK 12.5 million in net sales in Q2. And that corresponds to 63% growth. And if you normalize that for exchange rates, you have about 49% growth, which is still extremely, extremely high, obviously. It's also in a market which we believe is far from normalized, better, but far from normalized. As Morten alluded to, we had a weaker quarter in Q1, and if you compare that, we're about 76% up from first quarter. So it's a fantastic quarter overall. Now, looking at where the growth comes from, we can see on this slide where the U.S. business has significantly accelerated to SEK 6.9 million in sales. That's an exponential growth of 155%, quite astounding. That also means that we delivered a sales lift of about two and a half times the previous quarter.
That's an outstanding achievement by our U.S. team, and it's driven by both very strong Cranial PSI sales and also by a meaningful contribution from OssDsign Catalyst. In Europe then, we reported SEK 5.5 million in sales, and we managed to grow the business by 13%, obviously much lower than the U.S. But as we mentioned before, last year we started to see in Europe a very different impact by market from the COVID-19, with in particular the U.K. being very depressed with a poor outlook for recovery in the near future. At the same time, we saw some big opportunities elsewhere, for example, in France. So therefore, what we've done in the last couple of quarters, we've been prioritizing sales force in Europe, reprioritizing markets, and restructured the sales force, I should say. So that's an ongoing process.
So while the 13% growth is acceptable given this process that we're going through, we clearly expect more from our international business going forward. All in all, a very strong quarter driven by the U.S., which we are very satisfied with. And if we dig a little bit deeper into the U.S., we can have a look at this, which is a chart that shows the last 12-month rolling sales called LTM in the U.S. As you can see here, for a long time, we've seen the U.S. growing pretty much in line with the company overall. But as you can see now, in the last 12 months, we've started to see a significant acceleration and basically double the momentum in the last year alone. So we often talk about growth and growth profiles in the markets, but it's interesting also to highlight the absolute numbers here.
So since we came to market in the U.S. in 2017, we worked very hard on breaking through, and we reached the first SEK 10 million rolling sales in the second quarter of 2021. That's after approximately four years. But as you can see now, in only the last 12 months, we have almost added another SEK 10 million to that number, clearly highlighting the exponential momentum we have in our U.S. business right now.
Thank you, Anders. We also want to provide you an update on the clinical programs, which, as you know, is one of the top five strategic priorities in the company. For cranial, we are really focusing on two main things. It's post-market surveillance data, and it's building a U.S. cranial registry. The last Cranial PSI post-market surveillance data we published at the end of 2021 showed a very impressive clinical outcome across 1,455 patients. And that updated report will be published at the end of this year. But we don't want to just rely on the post-market surveillance. We actually also want to drive more data collection and more publication. And in order to do that, we are working on setting up the U.S. cranial prospective registry. And we are in dialogue with a number of very high-profile U.S. neurosurgeons to work with us on this.
We will, of course, make sure to update you as that program progresses going forward. Those are our two clinical priorities when it comes to Cranial PSI. For our bone graft franchise, we have now completed all patient enrollment in TOP FUSION, and patient follow-up will now happen at different time points at three, six, 12, and 24 months. Equally important, simultaneously, we've launched PROPEL now, and we are actively enrolling patients on a weekly basis, and we expect to expand the number of sites in the registry in the coming quarters. In essence, when I look overall, we are doing exactly what we said we would, and so far we are delivering to the clinical plan and the clinical priorities that we outlined when we also launched the strategy. Very solid progress that we are also happy with.
As we look forward, it is really continue to execute on our ASCEND strategy. You know, it's a strategy that really zoomed in the company on serving neuro and orthopedic spinal surgeons. And to achieve this, we have set five very clear priorities for the years to come, which is something that we live and breathe every day. We've already talked about the disproportionate investments towards the U.S., which is now starting to pay off. We've also talked about the acceleration on clinical programs and registries. So in terms of outlook for the second half of 2022, I would say we look forward to that second half with a high degree of confidence now based on the momentum we are seeing in the business. On the commercial side, we continue to see the U.S. accelerate in the coming quarters.
In our international business, as Anders alluded to, we are now almost in place with our revised market focus and the sales force restructure, and we expect to see an acceleration into the mid-level double-digit growth. On the clinical side, we are also accelerating patient enrollment in our PROPEL registry, and we now have set a target to get to 100 patients by year-end, and while we're very pleased with the result this quarter, and we have seen an improvement in the market, the staff shortage is omnipresent worldwide in the healthcare systems today, and it does prevent the markets from fully normalizing, so as Anders said, we are seeing some slight improvements in the markets, but there is still a lot of room before we are back to normal, which is, of course, an opportunity for us.
But I am extremely pleased with the way we as a company are navigating those challenges right now, and we are certainly making progress both on a commercial side and on the clinical side. Of course, one of the other things that happen in the world right now is the lead times on materials and raw materials. At this point in time, we continue to handle this well, and we don't expect any material impact on the business in the coming quarters. That does mean that we are not dealing with it on a daily basis, but we, as I said, we are handling it well, and we don't expect any material impact on the business from this. So as a final remark, I hope everyone like us really feel and see the momentum and the acceleration we have in the business.
We set a number, or we beat a number of records actually this quarter. We showed the highest global sales number ever. First time we get into double-digit absolute numbers. We also had highest sales ever in the U.S. Our cranial PSI sales was also an all-time high. And as I said, we've never treated as many patients. Approximately, we've treated twice as many patients this quarter as we did the previous quarter. As you know, we've worked intensely over the last year or two on changing a number of things and focus areas in the company. And I think we are clearly starting to see the impact of this, which I'm sure will drive even more value into the company in the future. And with that, I want to thank you for listening to the presentation and hand over to the operator for questions.
Thanks for the presentations.
We will now move on to the Q&A, and the first question is, now when the pandemic is over and we're back to normal, hospitals are going back to focus on more normal elective care. Will this be a driver for growth looking forward?
Yeah. Just before I answer, maybe I just want to correct that statement. The markets are clearly not back to normal yet. The last number we've seen is that probably they operate around index 70 when it comes to elective surgeries. Having said that, yes, of course, as hospitals slowly start to return to normal, do more and more elective procedures, of course, it also means that there are more patients being treated and more patients that will need an implant or bone graft from us designed. So of course, there is a correlation between those two. But I really see it as an opportunity to the fact that we can come out with a number like this right now and the momentum in the business, even in a market that still hasn't normalized. So we see it more as an opportunity right now than actually a threat.
Thank you. Reading the 2021 annual report and listening to your recent statement, it's not completely clear to me whether you'll communicate the six-month result of TOP FUSION in early 2023, or if investors will have to wait for the one-year result. Could you clarify a bit around that?
Yeah, thank you very much. I'm not sure why it's not clear. The time point that you operate with in the spine world is fusion at 12 months. So no, we will not communicate anything after six months.
Yes. And should investors be worried that COVID has affected TOP FUSION in any meaningful way, for example, patient exclusion because of missed follow-ups and so on?
No, well, you know, we have finished now patient enrollment. Patient follow-up is happening right now. I can tell you it's going according to plan, but of course, COVID is generally a risk when it comes to clinical studies relative to patient actually coming in, being able to come in. So far with the follow-ups that have already been performed, we have not seen an impact of that.
Yes. Under Q2, you sold your first cranial implant in Japan, and if we look further, how does the market potential in Japan look?
The Japan overall is the second largest medtech market in the world. So of course, there are a very, very big potential. Having said that, Japan is one of those markets in the world that takes time. It's a very hierarchical, it's very KOL-focused market. So the ramp-up in Japan is not going to happen overnight. It will happen gradually over the coming quarters and years.
Yes. Coming from this record quarter in sales, is there any effect of phasing that supposed Q1 sales were moved to Q2 and the numbers are not reflective of the real underlying demand?
It's a very good question. It's very difficult for us to really see. I mean, we can see internally where we had cases in Q1 that were postponed into Q2. They are not of any magnitude that materially changes anything between the two quarters. Now, what has happened overall in the marketplace in terms of patients not coming in for the scheduling or the test that they were supposed to and pushing that into Q2, that could be the case, but it's not something that we really have any data or insights into.
Yes. Well, sales are increasing, costs are increasing more. Will you need to raise any money for the next 12-18 months, or do you have a plan for increasing costs?
In terms of raising money, that's something we discuss with our board regularly and not something we want to comment on here. In terms of cost, yeah, they've increased, that's for sure. There are several reasons behind that. We talked before about that we have a positive exchange rate effect on sales. Obviously, since we have a lot of our costs in other currencies, we have a big operation in the U.S., for instance, and a lot in Europe and the U.K. We have a lot of costs in other currencies. When we have a positive effect on sales, it's a larger negative effect on OpEx. In that cost increase that you can see, a big part is purely foreign exchange. We've also increased the average number of employees in the company, has increased in the last year.
So we have more people costing money now, and the new ones are slightly more expensive than what we had previously. They're sort of reorganized a bit. So we have a lot of effect from people employed last year that now gets full year effect this year. And then probably the biggest effect here is the conscious effort that we've undertaken on clinical studies. That's a big cost item, and that's perfectly in line with strategy. We need to focus more on clinical studies in order to have a future. That's simply a very conscious cost effort.
Yes, thank you. During this quarter, an implementation of a strategic advisory board was completed. How will that improve your organization?
I'm not sure it's going to improve our organization as such. I mean, what the strategic advisory board is, is a group of very respected, very knowledgeable surgeons in the U.S. who can help us and guide us and help us to get to the right decisions relative to some of the biggest strategic things in the company. Could be regulatory pathways, could be clinical priorities, new product development, and other similar things, so I can't see how it would affect the organization in the company, but it is certainly a help for us as we prioritize the most important things and mobilize on the most important things in the company, and of course, also when you then get to the market, there is a group of KOLs who, of course, will in some ways also be ambassadors for some of the things you're coming out with.
Yes, and when can investors expect to see meaningful data from PROPEL concerning fusion rates?
I think now you're asking about investors because I think there's a difference between investors and actually when we are going to use it commercially. So let me ask you the question. So the registry is collecting data right now. We are enrolling patients, as I said earlier. The golden time point is 12 months. So when we get to a cohort we are happy with, then of course, that's something that we will write up or publish in various ways, whatever we decide. I also just want to say, and that also goes for TOP FUSION, that just because it doesn't get published into press releases and so on, does not mean that we cannot use that clinical data, which on an ongoing basis is being procured as patients come in for follow-up.
The clinical data that we are sitting on today, the images and so on, that is certainly something that we can use in a confidential setting in the various conversations we have. So it will take a while before it goes out to the investors, but it does mean that we are not actually showcasing selectively during our commercialization effort today.
Moving on to the last question here. What does OssDsign looking forward to the most under the second half of 2022?
To me, the most important thing, as I said, we took a number of also hard decisions in the company and changed a number of things. So what we're looking forward to clearly is a continuing acceleration, continue to work and build on the strong momentum we're seeing in the company right now that we are extremely happy with. That is the most important thing.
So we want to thank Morten and Anders for the presentation today. I wish all the viewers a very pleasant day and good luck.
Thank you very much.
Thank you very much. And thank you for listening.