Hi, good morning everyone, and welcome to ABG's Life Science Summit. My name is Erik Cassel, and I'm responsible for our MedTech coverage here at ABG, and for today, we'll go with the standard format of a 20-minute presentation followed by a short Q&A. To kick off the seminar, I'm very happy to have Morten Henneveld with us here today to present OssDsign.
Thank you very much.
I won't take any more of your time, so please go ahead, Morten, with the presentation.
Thank you very much, and thank you for having me once again. Good morning to everyone out there and here. As always, when we do these presentations, we have the normal disclaimer. Just if there is anyone here new to OssDsign, we operate in the orthopedic industry. It's a fairly large industry, $53 billion worth. Today, OssDsign is in two of those segments, what's known as CMF, cranial maxillofacial with our cranial implant, and in orthobiologics with our recently launched nanosynthetic bone graft. Today, the company is active in 10 markets globally. Let me take a step back and talk a little bit about why we are here. What we're seeing in the marketplace today is that the current bone replacement products just fail to heal a wide range of the skeletal defects. Now, the reasons are a little bit different.
If we start with our cranial implant, unfortunately, many people have traumatic brain injuries. Some ultimately will need to have an implant. What we see in those implants, which is typically treated with conventional technologies like plastic or metal implants, is an extraordinary high rate of infection. I think the 10% you see here is even very conservative. Now, if you have an infected implant, then in the vast majority of cases, of course, it needs to be removed as it sits close to the brain. For our bone graft, which we apply in spine surgery, that's a little bit different. Of course, as we grow older, and these days we get a lot older, and there are more people getting older and older. So as that happens, our spine naturally degenerates, will get what's known as spinal instability.
Ultimately, many will need what's called a fusion surgery, where you apply some kind of metalware, screws or rods or cages, but you always use some kind of bone graft. It can be the patient's own bone, it can be a donor-based product, or what we are offering is a synthetic solution that is biologically active. What we see today is at least one in five patients do not get that outcome. When you add it all up, you have thousands and thousands of patients who need to go through revision surgery. That's extremely painful for the patients, but of course, it's also very, very costly for society. These are extremely expensive surgeries. What is it OssDsign is bringing to the table?
What we have and what we offer to the market today is really the next generation bone replacement products, products that are intended to heal as nature intended it. Basically, using the body's own healing capabilities. Today, we have two different franchises. The first one is really where OssDsign was founded. It's our cranial patient-specific implant, a highly regenerative product. As you can see, we now have post-market surveillance of almost 2,000 implants, and we have reported a constantly improving clinical outcome rate, and now it's 1.4% due to infection. You can put that in the context of the 10% I spoke about before. The product is also the only one in the U.S. that has what's known as an osteoconductive clearance.
The FDA acknowledges, and this is the only implant in the U.S., cranial implant that has that, the implant actually resorbs and turns into bone during the healing process. Now, when we introduced a new strategy for the company, we also acquired a company called Sirakoss back in 2020, which means that today we are also in the market of orthobiologics. This is a nanosynthetic bone graft product. It is extremely high margin. It's fully scalable. It's sold and produced in bulks, and it's targeting completely standard procedures, which means that you have a very constant flow of patients coming in for those surgeries.
What's unique here is that this is based on preclinical data, and what we have seen, and the reason we acquired the company is that this is the best preclinical data that we've ever seen, essentially showing a 90% fusion rate at 12 weeks and 100% at 26 weeks. There's only one in this discriminating animal model it was done in called Boden model that really got to that level, and that is a drug, very, very expensive from Medtronic and also with a fairly high risk profile. When you compare it to other, I would say, equivalent bone graft products, they typically sit around 25%-50% fusion. So very, very promising. And as you'll see, we've been off to an extremely good start. The product today is only sold in the U.S.. So this means that OssDsign today is in two segments of the orthopedic industry.
We are in our cranial and in our biologics. Both of these segments are the fastest growing in the industry of around 7% and also characterized by high gross profitability, in particular the orthobiologics that sits at 90%, so what that ultimately means for us is a much, much bigger potential than when the company was founded, operating in a $3 billion addressable market with high gross profit. The bone graft we apply to spine surgery, bone graft is actually used from head to toe in various shapes and forms. As you can see, the biggest opportunity really is in spine. As it happens, many people in OssDsign have past life. We actually have more years of experience in spine and orthobiologics than we do in cranial in the company, so it felt very natural for us to go into this space. It's the biggest opportunity.
We know the dynamics, we know the players, we know the customers, we know the surgeons, and so on. So we know how to sell the product. So how's the company doing right now? Well, in sum, the company is doing exceptionally well. We just posted our first quarter results last week with a 203% growth globally, almost 400% growth in our U.S. business, 74% growth in the markets outside the U.S., our cranial business growing by 1,000%. And then, of course, because we recently launched our orthobiologics, more than 1,000%. But I think what you'll see is also some more meaningful absolute numbers. So overall growth everywhere in the business. What we are really seeing also is that the U.S. is continuing quite an exponential growth trajectory. What you see here on the presentation, each bar represents rolling 12-month sales.
And as you can see, something quite dramatically happened coming into the, in particular, the early part of 2022, where things really started to accelerate. That is, of course, driven by catalysts, as you can see in that introduction. It also means that in the U.S. right now, we have four consecutive quarters of triple-digit growth. And probably more importantly, we see this being very sustainable because we see underlying growth in the hospital approvals. We see underlying growth in our customer base and the number of repeat customers. And then I think it's a little bit mind-blowing. We, as a company, went into the U.S. in 2017. It took us almost $5 million to get to a rolling 12-month sales of around $11 million. And if you look at the last quarter, that's actually exactly the number that we added in terms of incremental sales.
So in the last quarter, we actually delivered as much as the company did in the first five years. So it tells you something about the exponential growth that we're seeing over there. The second thing that's really happening in the company is that we are increasingly becoming a U.S. business. Only about three years ago, we had one-third of sales coming from the U.S. Now we have two-thirds. And of course, with the growth that you're seeing in the U.S., that is only going to increase as we look into the coming quarters and years. What's also happening is that the bone graft, which we launched in August of 2021, but it takes about six, eight months to get these different approvals and get hospitals up and running. So we really only started selling in the second quarter.
That's already 41% of sales likely to go to closer to 50%, at least here during the year, and that's just on sales. From a gross profitability point of view, I know we don't disclose it. Some would like to see that, but it already means that it's by far the majority of gross profit that's coming through the new franchise, so that is development we are clearly seeing in the company right now, which is and will be highly accretive to margins as we look forward. As we also said in the report, we are seeing growth right now being very sustainable, and we are also seeing it accelerating, so what you see here is the last five quarters that we've reported, and then you see the growth line adjusted for constant currency, so you're seeing a very sustainable growth quarter- on- quarter.
You're also seeing an increase in growth line, so overall, very much in line with what we said when we launched the strategy, what we would like to see, and I think even in a market that still hasn't normalized and still suffers from staff shortages and therefore some depression on elective surgeries, I think these results are quite remarkable, but it's not all about just the numbers. As part of the strategy, and we really started doing this towards the end of 2021 or coming into 2022, we are making some very meaningful strategic investments in building clinical data. A lot of it right now goes into our new orthobiologics or the OssDsign Catalyst product. We have a first-in-man TLIF fusion study running.
All patients have been enrolled right now, and we're working through the data and expect to be able to publish something on that in the early part of next year. We've also set up a spinal fusion prospective multi-center registry in the U.S. called PROPEL. We already hit 100 patients in November of last year. So we are really moving fast on building clinical data in that business. We've actually, early part of this year, in January, we published the first patient report from our TOP FUSION study showing complete fusion at six months and already progression to fusion after three months. So a very, very, very strong indication and very much in line with what we saw OssDsign Catalyst performing in the preclinical data. But in Q1, we also had some really good progression on, as I said, 100% growth on our cranial business.
And we also hit some milestones, meaning that we now have 750 implants sold in Germany. We've now sold 200 implants in France, many of these in the last year or two alone. But also very importantly, lead time has been a challenge for us on the cranial-specific implants, in particular in the U.S., with a lead time of closer to five weeks. We've worked very diligently and hard over more than a year on bringing that down. And in March, we announced that now we have reduced that lead time by 40%, which means that we can now deliver a patient-specific regenerative implant in less than three weeks anywhere in the world. Then, as I said also early on, we are seeing a very, very strong acceleration on OssDsign Catalyst.
In January, we reached what we felt was a good milestone of 500 patients over a year after, just a little over a year after we launched the product. But already here in May, we've now hit 1,000 patients. So there is clearly a very exponential growth happening right now in OssDsign Catalyst. Surgeons think this is a fantastic product, very strong preclinical data, but also very importantly, and that's probably really the differentiating factor on the product, is what's known as handling capabilities or handling qualities. It works extremely well in the OR. It doesn't dissolve when you mix it with blood. And because of the high silicate level, it just allows surgeons to really mold it into exactly where they need it in the surgical site, and it stays there.
So we are getting some extremely good feedback on the product, which is also reflected in the number of cases we're doing. So if I'm to sum it up, we launched a strategy some years ago, and I think we are delivering very much on the key promises in that strategy. There's clearly an enormous amount of value being created in the company these days. And I think overall, we are becoming a much stronger company with greater scalability. If we just quickly look at the five strategic priorities, the first one was to win in the U.S. We now have four triple-digit quarters. Our rolling 12-month momentum is up three times at 65%. And it's just a much bigger and more recurring customer base. Our biologics business, $17 million in year one and now heavily accelerating.
We have 1,000 patients treated, and we have some extremely high-profile surgeons as part of our advisory board, including our chairman, Peter Whang, from Yale. We've launched a line extension, which means that we now have a full-size range on OssDsign Catalyst, really strong momentum on our clinical programs. We're already starting to see some early publications, and we'll see a lot more in 2024, and as I mentioned, we've also reduced lead time, so we can now deliver cranial PSI in less than three weeks anywhere in the world, so I think overall, we are very pleased, and we're very proud of the progress and where the company is right now, and certainly also where it's heading in the future, so I think with that, that was everything from me, and I'll hand it back to you.
Thank you very much, Morten. I have three questions for you today. First, I think we should talk about Catalyst, which is driving the biggest improvement in sales as of now. Just to sort of understand the market you're in and maybe the long-term implication for it, I mean, the spine market is relatively consolidated by a few large players, but I guess there's a different maybe competitive situation in your niche within synthetic bone grafts. Maybe if you could just start to talk about how that competitive situation looks, is there anyone doing a similar thing to you, or what's going on there?
Oh, I can tell you. I mean, generally, bone graft, I think, has been a little bit of a Wild West market. There are almost 400, technically 400 clearances in the U.S. with that. Interestingly, this space is not something that really matters a lot to the large players. So you have lots of from large to small players in the bone graft market. I think what's important to note, and that brings me a little bit to the dynamics in the industry, there are many of these bone grafts that are sitting there, which are first or maybe second-generation technologies where we are probably, I think we will fall into the fourth-generation technology. And then there are some dynamics in the market.
For years, the gold standard has been to use a patient's own bone, which is called autograft, or you can use a donor-based product called allograft, or you can use a synthetic product. But what's happened is the synthetics in general are starting to show efficacy, which is at least on par.
And we also showed that in our own preclinical data. We heavily outperformed the autograft, which was one comparative arm. We also did a lot better than another large product from Medtronic called Mastergraft. So we are seeing a swing towards synthetics, also because if you use a donor-based product, I'm sure you've seen there've been some quite unfortunate cases, tuberculosis cases recently. So the risk profile is a little bit higher on those types of products. And now we have an offering, which is a safe choice. We've done safety studies on it. We also published that. And I think we're seeing a swing towards these latest and greatest, OssDsign Catalyst, fourth-generation products. So I think there's many dynamics. We're both getting older, so you're seeing an underlying growth in the volume and the patients that need treatment.
But I think actually within our space, our niche space, you're also really seeing a swing towards synthetics. And to the extent that, as us, you can come out and be the most nano-synthetic product on the market, I think we're able to capture a lot of that growth.
Okay, great. And now that you're out to hospitals and meeting surgeons and all that, what are they primarily asking for when evaluating your product? Do they think they need more clinical data? Do you need to show economic studies on it, health economics? Is it mostly that they want to see handling, or what's the key aspects?
Well, let me maybe just go back. This product does not change any type of procedure for the surgeon, right? So I think that's important to iron out. This is not a de novo or anything of that nature. Of course, it's a new product. It's a novel technology. So the very first question you get is, is it safe to use? As it should be. We've now done 1,000 cases. We've done post-market safety on 511. So I think it certainly confirms a strong safety profile on the product. I think what they're really paying attention to is the preclinical data.
All bone graft products in the U.S. are cleared through the 510(k) route, which means that they're based on an animal study. So surgeons know what a good animal study looks like and what a not-so-good animal study looks like, and they also often can do the translation themselves based on their experience that if this shows this in animals, then it works like this in human beings.
But I think the key feature for us, and that's really hard to show. You can't just show it clinically, is what we call handling qualities, meaning that the product, it comes in a syringe. It feels a little bit like clay that our kids play with. But you need to mix it with blood or other kind of liquid. It cannot dissolve. And to the extent which you can with us because of the high level of silicate, is you can actually mold it very specifically, and you can feel confident that it stays exactly where you want bone to grow. Because just imagine you want bone to grow in a certain place. If the bone graft starts to dissolve, then suddenly you're actually growing bone in places you don't want bone to grow. And that's actually what's happened a little bit with the product called Infuse from Medtronic.
So if you ask me, yes, people love our preclinical data. I really think it's the handling that's setting us apart from competition. And you see it immediately when you show this to surgeons. They're very hard to impress. They are a tough crowd. But many of them just put in their hands and go, wow, this feels really good. And that is important. It's an area that's very often neglected. But if it doesn't work intraoperatively for the surgeon, it's very hard to get usage. If it works well, it can actually swing things.
Yeah, yeah. Yeah, and I think you've showed that in the numbers as well. You showed these pretty graphs before. And there has been a really good launch of it, and you've been reporting ahead of at least my expectations. But I was curious to sort of look under the hood and sort of see what's going on in the launch. Is there any specific large hospitals that have been driving these volumes, or would you say that it's fairly broad with a lot of hospitals and a lot of surgeons, or is there like a few champions driving these sales?
I think we, so let me just first answer. We are now moving beyond just these few small ones. We have many dozens, actually, of what's known as VAC approvals, and we have many users of the product. So we're no longer in this handful or two hands. We are way beyond that, but of course, within that, you have a normal distribution, as you do in all business. You have some very high users.
You have some medium users, and then you have a tail end of a little bit lower users, and of course, you're trying to bring them into more users. But of course, many of the ones that may be using a little less are also the latest arrivals, and it's quite natural. They start using you for certain procedures, and then they feel comfortable. They see there's no safety concerns, and then they expand from there, so there's nothing out of the ordinary, but I think it has surprised me, actually, how broad we've actually been able to get into the market. Bear in mind, we've really only been there a year and a half from starting to even engage with surgeons, so I think it's quite mind-blowing, and it's also, as I said, actually ahead of our own.
Things are moving really fast, and we are running fast to keep up with that demand.
Yeah, yeah, it's been really impressive. Very excited to see where we end up in a few years. So thank you very much, Morten. We'll now take a pause at this track until 10:30 A.M. when we have AddLife presenting here. But in the meantime, we'll be live over at track two with the Integrum starting in a few minutes. So we'll be right back over there. Thank you.
Thank you very much.