Hi, and welcome to our next presentation at today's Investor Days. My name is Jakob Lembke, and I'm an Equity Research Analyst here at ABG, covering the healthcare space. Our next company presenting is OssDsign. And with that, I leave it over to the CEO, Morten. Please go ahead.
Jakob, thank you very much, and thank you very much for having me today. If you could go to the next slide, please. As always, when we do these presentations, we have the normal disclaimers relative to forward-looking statements. Next one, please, but in case there are any new to OssDsign, OssDsign is a Swedish-based company. We are headquartered in Uppsala but really have a global presence. Our main focus is really on bringing next-generation bone replacement products to the market. We operate in 10 markets today, and everywhere we operate, we have fully patented, we have full regulatory approval, and we are fully reimbursed. Next slide, please, but I really want to talk to you about the clinical challenges that we are addressing. If you go to the next slide, please, because you'll see that they are very profound.
First and foremost, if we start on the cranial side, unfortunately, a lot of people have traumatic brain injuries every year. Some will need to get hospitalized, and some will need an implant. Now, the number one challenge we are facing is what we call post-op infections. So infections coming out immediately after the operation, or at least in the foreseeable future after that, and the literature here clearly shows that that is 10% or even higher. Just a few months ago, the U.K. registry came out with a 16% explantation rate and 10% explantation only due to infection, so this is a major challenge when you're dealing with cranial surgery. Similarly, if we go to spine surgery, then unfortunately, as we grow older, a lot of us will have degenerative diseases, will have spinal instability, and we would need a surgery.
Here you need something what you call a fusion, where the implant itself is growing together with the body. Now, unfortunately, what we see is that at least one in five simply don't achieve that outcome. So when you add the clinical challenges in cranial and you add the clinical challenges that we see in spine, we are talking thousands and thousands of patients who do not achieve the outcome. It's extremely painful for patients, and it's extremely costly for the healthcare system and therefore the society. So these are the clinical, very real clinical challenges that OssDsign is addressing. Next slide, please. So what is it really that OssDsign is bringing to market to deal with that? As I said, we are really bringing out the next-generation bone replacement product. And what is it that makes them special or unique?
It is essentially that the whole way we design the products is that they are stimulating the body's own healing capabilities. So the body is a fantastic phenomenon, and it has many capabilities. And essentially, we are helping the body heal as it was intended. Next slide, please. So if we go into the technology platforms and the products that we have today, then we have our cranial patient-specific implant. Now, that product has shown tremendous clinical results. Just last week, we actually published updated post-market surveillance data on 1,480 implants, and clinical outcomes have improved and now show only a 1.6% explantation rate due to infection. Now, that needs to be seen in the context of the 10% or even more that I just talked to before. And this is something that we have constantly demonstrated from the very first very difficult cohort in 2018 at Karolinska.
We also showed 1.9. So we've now consistently shown what this product can do, and it is just a much, much lower observed expectation rate than anything else in the market right now. We have regulatory proven in EU, U.S., and Japan, and we also have what we call osteoconductive clearance in EU, and we are the only one in the U.S. that actually have that. And what that means is that during the healing process, the implant actually resorbs and turns into bone together with the patient's own bone. So very strong clinical data, very proven clinical data that we're bringing to market here. Next slide, please. Now, the other product that we also started selling here in the last couple of months in the U.S. is our bone graft called OssDsign Catalyst.
What we have here is only preclinical data, and that was also what was used to get the 510(k) clearance in the U.S. But these preclinical data are phenomenal, to be honest. When you compare it to other things that have been done in the market, other synthetic bone graft as it is, when you test it in a preclinical model, it's a very discriminating model. It's essentially rabbits. So you're asking rabbits to jump around for 12 or 26 weeks, which is, of course, a test on steroids relative to what a human being would be doing. And what we see here and what we demonstrated is a 90% fusion rate after 12 weeks and 100% after 26 weeks. When you compare that to other products that are currently in the market, they were actually performing at about half that level or maybe even less.
And the results that we've shown in this preclinical model is actually on par with BMP-2, which is Medtronic's Infuse. It's a bone morphogenetic protein, so it's not a bone graft, but it is by far the biggest selling product in the U.S. market right now, probably around $700 million. So again, we're taking this to market. Surgeons are used to looking at preclinical data. This is something that has resonated extremely well with all the surgeons we've spoken to so far. Next slide, please. If we move a little bit to the company overall and away from the technology, then OssDsign is right now on a journey to become a broader company with a lot more potential. If you go to the next slide, please. For the first 10 years, OssDsign was focusing on cranial implants.
It's an addressable market of around $400 million, give or take, growing nicely, profit. But now we've also entered bone graft. And bone graft is a much bigger market. It's growing at the same rate, but it also comes with a much higher gross profit, typically north of 90%. And what it means for us is that we now have a five times bigger potential. We're operating in a $3 billion market. But I think also very importantly, the bone graft market really is fully scalable, and it's a high-margin product. So we can build the company without having to invest as much, at least, as you need to do on the cranial side. So two very attractive spaces we are in and a much bigger potential for OssDsign in the years to come. Next slide, please. Now, bone graft can be used in many places.
We actually cleared in the U.S. also to use in trauma surgery and what we call kind of load-bearing, so smaller extremities. But our key, key focus is within spine. And why is that? Well, clearly, spine is by far the biggest user of bone graft, partly because of some of the very big clinical challenges I talked to earlier, but also because spine is an area where a lot of us in OssDsign actually have previous experience. So bone graft and spine may be something that's new to OssDsign, but it's not known to many of us. We have people in production, in marketing, in sales in the U.S., myself on the board, and other people in the management team that have previous experience in this. So it may be new to OssDsign. It's not new to us.
And it also means that we have a lot of certain relationships in the U.S., actually, that, of course, we are leveraging to its full right now in the early commercialization phase. Next slide, please. And of course, we'll be using our commercial infrastructure that we've built over the last four or five years. We have direct distribution, direct sales forces in Europe. We have our own subsidiary in the U.S. working alongside lots of sales agents called distributors locally, but they are commission-based. And then we also have agents and distributors in southern parts of Europe and Singapore. Right now, of course, with Catalyst, we are really going heavy on the U.S. Next slide, please. I also wanted to talk a little bit about a very exciting year because every quarter has more or less been more exciting than the previous one.
If we start left to right, we started the year moving into larger production facilities, which essentially means that we can grow the business right now without having to invest more in the infrastructure. We also had a very successful fundraise where we raised SEK 270 million in a 185% oversubscribed rights issue. And that really allows us to go and execute on the strategy that I'll talk to in a second. Now, during the year, we've also had some successes, in particular in the U.S. We've won a number of large GPO contracts. We won Premier, one of the absolute giant GPOs in the U.S. We were also awarded a contract called the DAPA with the U.S. Military and Veterans Departments. Two very important wins, big sales potential, but also really a testimony to the quality of the technology and the clinical data that we have.
And then in this fall, we also launched OssDsign Catalyst, actually ahead of our own plan, which means that we are now actively both selling bone graft and cranial implants in the U.S. And now, over the last couple of months, we also started our first clinical trial on the bone graft called TOP FUSION that's going according to plan. It's taking place with some very well-known surgeons in Varga and László in Hungary. And just as I said, within the last couple of weeks, we also published updated post-market surveillance now on PSI with even better clinical outcomes than what was previously reported. So a very exciting year and some extremely important building blocks, both to help us now, of course, but I think even more importantly, to set us up for a very different future in the years to come. Next slide, please.
I also wanted to talk a little bit about some of the clinical programs that we are working on. This is an absolute top priority for the company. If we start with the cranial on the cranial franchise, then really the post-market surveillance is by far the strongest data set you have when you're talking cranial implants. It's a broad average across many different indications, which traumatic brain injuries, of course, has. So that is an annual publication. We just published it. It will come out next year. But we also know that every time there is a comparison between our cranial PSI product and other technologies, we just come out better. One of the challenges has just been in cranial that there's simply not enough being published. So we are working with KOLs, so key opinion leaders in EU. We've just recently just launched an international registry.
It's an academic registry, so we are keeping it at arm's length, but we are definitely supporting it, and we are just about doing the same thing in the U.S. with some really important brain surgeons actually over there, so very meaningful investments from our side in data that will allow us to demonstrate even more how strong the Cranial PSI is relative to other things on the market. For OssDsign Catalyst, as I said, we started our first clinical study called TOP FUSION that is running. We are, of course, going to see data on an ongoing basis, but really the key data point when you're talking bone graft and spine is the 12th month. That's where you know for absolute certainty what the fusion rate is, so that's one thing we are doing.
We are also in process of setting up what we call a bone graft registry with a number of sites in the U.S., which essentially allow us to capture lots of patient data much faster than you do in a clinical trial. It's also a much broader data set. We know that in spine, some of the clinical challenges in spine is particularly around certain comorbidities, like if you are a smoker or diabetic or other things of that nature. And all these things will capture in the registry, and that will allow us to publish data, white papers, and other things that will be meaningful for both sales and marketing purposes, and of course, also to attract the attention of surgeons in general. So those are some of the things, at least, that we are working on, that we are investing very heavily in the business right now.
Next slide, please. So if we talk a little bit about the future for OssDsign, as I said, this is a very different future than what OssDsign have had in the past. So if you go to the next slide. Earlier this year, we launched our new 25 strategy called ASCENT25. And really, the future for us is just keep executing. We've executed extremely well on that strategy so far this year, as I showed you, and it is continuing to do that. And what it essentially means for us is that U.S. is by far the biggest and the most important markets, and we will disproportionately direct investment towards that market now. We also need to continue to build the bone graft business that we have.
We need some more products in the portfolio, of course, but also we definitely see that as a global product over time, as soon as we have clinical data to also get new regulatory approvals. Generally, an innovation and expansion of the portfolio. I think it's important. We need to keep building on the strong technology platforms we have, and as I showed you, we are making some very significant investments in clinical trials and registries and other similar things, probably at the extent of a ratio of three to four relative to earlier, and then last but not least, as we said in the strategy, we'll focus on operational efficiency, and really, the most meaningful place for us to achieve that is really on the delivery time.
This is a patient-specific implant a s you saw, it is showing some very, very strong clinical data, but you also need to wait a little bit longer because it takes time to produce a ceramic implant as we are. So we are very obsessed with trying to bring down that delivery time and make the offering stronger, of course, in the market. If you go to the next slide. So this was a very short recap on OssDsign. It is a changed OssDsign. It is an OssDsign with a very different future. And just to summarize what I've said today, I think it's very clear that we are addressing a very real unmet clinical need. What we are bringing to market is really the next generation bone replacement products. Our Cranial PSI is a ceramic. It's the only one, as I said, with osteoconductive claim in the U.S.
Our bone graft is nanosynthetic and synthetic at a level no one else is in the market, right, where we are not just mimicking the bone structures, but we are actually mimicking the mineral crystals inside the bone. That's the level we are operating on. A very extensive growth potential, much bigger market, x5 to what it was before, scalable market, high-margin market. Clinical performance, I showed you, Cranial PSI, very strong, very, very promising preclinical data that we can sell on in the U.S. Surgeons are used to looking at preclinical data in spine and bone graft, and it is meaningful to them. And last but not least, as I said, we already have a strong commercial presence. We'll, of course, keep building that in the years to come.
But relative to a company of OssDsign size, this is really an asset that we have, which means that we don't need to start building just going from scratch, but we can actually lever that to accelerate instead. So the sum of all of this for me is that we are very uniquely positioned for growth relative to where we are. We've delivered extremely well or executed extremely well on the strategy so far, and we have an exciting future ahead. So Jakob, I think that was my presentation, and I'm sure you have some questions for me.
Yeah. Thank you, Morten. So maybe if we start with Catalyst, and if we look at the preclinical data you have presented so far in rabbits, which I believe looks quite promising. But how well do you think that this data translates into the potential success in human trials you're conducting right now?
It translates well, right? I think what you can see on the references are made to all the synthetic products in this called the Boden model, which is a very discriminating animal model with a bonus. A lot of the other products where we have access to the data, they actually only fuse somewhere between 25%-50%. And yet we know that in human beings, they typically sit around the 80% mark, give or take. So we know that most products in the market right now are showing less fusion in animals than they actually are in human beings. Of course, with us showing 90% and 100%, you can go above 100%, but it does mean that we feel very comfortable that this will also translate into very strong clinical results in human beings.
And if we look at the spine fusion market, I mean, it's quite consolidated between a few large players. But also, perhaps if we break down the market, I guess there's a bit less competition in your niche. So maybe it would be interesting to hear you talk a bit more about the market dynamics and how you're differentiating yourself from the competition.
Yeah. I mean, of course, when you're playing in an attractive market, you're not the only one that has seen that. I think, Jakob, there are some nuances to what you just said. Yes, the spine market from a hardware, from an implant point of view, is certainly concentrated among the typical top four or five. Now, the bone graft market is a lot more scattered, actually. You have a lot more smaller players there. You also have a lot of products in the market that carry very little clinical data, actually. And then I think it's important to distinguish because, yes, there are a lot of regulatory approvals on bone graft in the U.S. But we are probably where we think we belong to the fourth-generation category when you look at the technology platform on OssDsign. You cannot compare the third or the fourth generation to the first generation.
If you look at some of the market reports, you will see that the early, let's call them the early products in the market and the later products in the market, the latter category is expected to grow probably about four times faster than the earlier category, right? So what I'm saying is that, yes, there are many products on the market. There are also many products that I would argue are old and certainly don't carry the clinical data that is necessary to also scale to a meaningful place. So I feel we are well positioned, to be honest, and as I said, surgeons, more or less every 510(k) clearance in the U.S. is done on preclinical data. So surgeons are very used to looking at preclinical data.
They also have a very good idea that if the preclinical data is showing this, then how does it translate into clinical outcomes in human beings? So we feel we are in a good place, to be honest, despite the fact that, yes, the market is crowded, but as I said, I wouldn't really compare OssDsign Catalyst to some of the other products out there.
And if we look at the early sales trajectory of Catalyst, I think it's quite interesting. Could you maybe say anything about when we can expect meaningful contribution from that product?
Yeah. Yeah. Listen, I mean, as I said, 2021 for us, of course, we are obsessed with sales, right? We are a growth company. But when you take a new product to the market, the most important thing here this year is really on building what we call Centers of Excellence or strong KOL ambassadors because ultimately, you need surgeons also to vouch for your product to other surgeons. So that's really the focus this year. But we have a clear expectation that already next year, we would start to see meaningful contribution from Catalyst to the business.
Okay. I think that was all the time we had today. So I would like to thank you for participating and everyone watching. We'll now take a short break before our next presentation.
All right. Thank you very much for having me, Jakob. Have a good day.
Thank you.