Welcome.
Thank you, and I appreciate the English as opposed to Swedish. I've still not picked that one up.
Yeah, I mean, it's a—it's a journey. You'll get there. And we have recently hosted Capital Markets Day with you here. Today's conversation, I hope it will be more of a conversation. We will talk on general topics: where Paxman is, where Paxman has been, and where you're going also.
Looking forward to it.
Yeah. I also urge everyone to ask questions in the live chat. We have that open. If you have a question in the audience here, we have a mic going around, or I'm going to have to repeat the question in my mic so that the live chat works as well. Let's dig into it. For those new to Paxman, what is Paxman? What do you do?
Yeah, absolutely. Paxman AB is really a company involved in medt ech. We are experts in cryotherapy, managing side effects from chemotherapy treatment. Primarily, we have a product that's used to prevent or reduce chemotherapy-induced hair loss, one of the most difficult side effects of chemotherapy treatment or cancer treatment. More recently, what we've been doing is developing a product in an area called chemotherapy-induced peripheral neuropathy, if I could say it properly. That's nerve damage, another really difficult side effect of chemotherapy, and actually an unmet need with a potential huge impact, which we're excited about launching.
You have been doing this for quite a while now, and you've started from quite low levels. How are you making money? How has your revenue evolved in these years?
Okay, so the family has been doing this for 25 years, a long time after my mum had breast cancer in the 1990s. I joined the business in around 2009 and took over as CEO in about 2016. Our real driver for growth, as well as a sort of shift in gears in terms of how supportive care is viewed in, in modern healthcare systems, but it was really that entry into the U.S. market. In 2017, we actually came to Sweden and raised some money to launch in the U.S. market. Since then, we've really seen some positive momentum. Sort of looking at roughly 30% year-on-year growth over the last eight years, which is incredible.
A little bit slower this year, but as we enter into the future years, we expect to start picking up that momentum again based on some big changes in the reimbursement landscape.
Since the family has been doing this, you have been doing—you have been doing this also for a while. How has the landscape in supportive cancer care evolved during these years?
Yeah, it's changed a lot. Let's have a look at when my mum was first diagnosed in the 1990s. I mean, it was very much about survival, about making sure the patient got through the cancer treatment, let alone worrying about the side effects and things like hair loss. I think fast forward to the last 10 years, and what we've seen is a real shift in how people treat patients, how people look at patients. I mean, patients and people are living longer, so we need to make sure that they're living longer and healthier and feel right when they're being treated with these toxic chemicals. Scalp cooling, we probably launched too early in reality. That's why now we actually become part of the standard treatment, like any other side effect, like sickness, nausea, neutropenia, etc.
A really good time for us going forward as, as patients are treated holistically, as opposed to just the cancer itself.
In short, this is—a mission has been born then. What, what is the long-term mission of Paxman?
Originally, or just recently, it was very much about wherever you are, no matter where you are in the world, no matter what your income is, gender, ethnicity, you should have access to scalp cooling. I strongly believe we can do that. Visit me in the U.K., and all our hospitals do that. We can do that in an evolved medical system or a mature medical system. Actually, beyond that now, we feel it is about actually treating both those side effects, so giving access to scalp cooling and cooling for neuropathy in the future. Again, I believe we have that opportunity.
Just a little bit of a touch on you as a persona, Richard. You've been with this as a CEO for next year will be 10 years, right?
Making me feel older now.
Not my point, but, when you look back at these 10 years, what's the most exciting part of working with Paxman, and what keeps you awake at night, maybe?
Okay, I think there's probably a few answers to that, but the patient impact, I mean, you can't get away from it. It's phenomenal. When you learn what this means to patients, you—all the hard work falls into insignificance. I mean, it makes the whole difference. I am also very fortunate to work with some amazing people now, 140 of them, which has grown significantly. That is what drives me. In terms of what keeps me up, I sleep really well, thankfully. Probably things like reimbursement challenges are probably the most frustrating thing. It is just about it being a journey. There is not a clear A to Z in how to get reimbursement in the U.S., which is the biggest unlocker of our growth, our utilization. That is, let's say, a frustration, not keeping me awake.
Hopefully you all got a little bit of an idea where you stand. Now let's dig into some more details. We'll start with scalp cooling. When you talk about cancer, you always imagine it's a huge opportunity. Can you give us some numbers on that? How huge of an opportunity?
Give us some help.
Perfect slides. There are about 20 million new cases of cancer around the world every single year. That's, unfortunately, growing. I mean, no matter what we're doing with drug discovery, etc., the cancer incidence is increasing. We expect between 3 million and 4 million of those patients are having some type of chemotherapy, which is causing hair loss, even if it's not first line, it's second line. That means today we are treating less than 1% of eligible patients for scalp cooling. It means we have a huge opportunity to make a massive difference around the world. Now, of course, that's global. We have core markets and core focus, but we're really only scratching at the surface, giving us a great opportunity socially and financially.
If you're treating approximately maybe 1% of the patient population, can you describe for us where can we find the Paxman scalp cooling systems in the world today?
Yeah, okay. If you look at the U.K., that's our primary market, our original market. We've got about 99% of the National Health Service using the equipment, which is phenomenal. We operate in 60 markets. That sounds very grand, but there are core markets that we look at. The U.S. is our biggest number one market, but we do some work in Latin America, Canada, and other European markets where we have direct opportunities in France and Germany and Spain. Japan is our largest Asian market to date, but with opportunities elsewhere in Asia. I'm just back from China, there's lots to do, but our core focus has to be the U.S. at the moment, as that will drive the revenue and the potential profitability of the business, then a view to expand elsewhere.
Driving acceptance and all that. What are the driving forces behind that? I mean, in the, you've mentioned that you probably maybe meant launched too fast. You were too early for the market. What are the driving forces now? What drives the adoption?
If you look at, let's focus on the U.S., because that primarily is where the business focuses. What drives adoption, of course, is access. That's critical. You know, availability of that for patients in cancer centers. There's an awareness angle to that. The biggest, biggest factor in that particular market is reimbursement. We must get that product fully reimbursed in order to drive utilization and make sure it's available for all patients, not just those that can afford, as currently patients have to pay quite a high price out of pocket to access scalp cooling in America. If we remove those barriers, the utilization, number of patients who access that treatment will, with no doubt, increase.
How do you work with the barriers? What can you do as a company? For instance, reimbursement.
If you've ever heard me talk, I'll talk about three pillars of reimbursement. It's very dry, but coding, coverage, and payment. We've been spending a fortune on U.S. consultants for many years now, navigating that space and making sure that we've got coding. We started with CPT III codes. More recently, I think we've got some information on a timeline here. Actually, we started with CPT III codes. We got on the guidelines. We've been working on moving from CPT III codes to CPT I codes. Again, I'm not expecting you all to know what that is, but it's a big step in terms of U.S. reimbursement.
We have been trying to make our customers switch onto what we call our new model from self-pay to insurance-based billing, where we change from selling to the patient directly, in essence, which we then sell to the cancer center, who then bills insurance on what's a simple buy-and-bill model. It is quite straightforward. It just takes some time. That is a number of years of a lot of hard work, a lot of dollars spent, but we are nearly there, which is really exciting.
I think we'll get back to the IBBM and reimbursement a little bit more again, since this is, even if it's a dry topic, I think it's very interesting. It's good to hear from you, like you explain it. If you've heard Rich talk before, or maybe if you've heard us talk before about Paxman, you probably know that the competition situation is quite special in your case, because you've acquired basically the only competitor you had, Dignitana. Can you tell us, maybe how that happened, when it happened, and then the rationale behind it?
Yeah, absolutely. Dignitana, another Swedish company, also was listed on the Nasdaq First North . Dignitana have done some great things over the years. They've had some troubles with cash flow, etc. and we have had the opportunity to both connect in terms of leadership and see what the best route was for Dignitana. It made sense that we would merge the two companies together or acquire Dignitana, in reality, the more technical approach. We took that decision at the back end of last year, and early in the new year. If you've been watching us, you'll have seen that as of June, and then more recently took full control of the company.
We've been making some significant changes to the people in the company, unfortunately, and the operations, but also then looking at what the key drivers are for that growth of that business. The reality is, as you can see here, we've acquired 260 Dignitana customers, in reality, a few more than that, actually. That really adds to our revenue growth, but also at a perfect time, as we're moving from this self-pay business model to our Insurance-Based Billing Model, that unlocking and in potential growth in utilization, we've added all those customers, which could have taken us multiple years to actually achieve. This is an overnight, well, not quite an overnight success, but it really adds to our potential growth. It's a great company.
We're looking forward to turning it into, well, already turning it into a profitable company, which adds to our overall business.
Acquisitions are really overnight successes, but you're on your way. What has gone well and what could you have done better, maybe, in this process so far?
Okay, you're probably better off asking the people at Dignitana this, but, actually, we've recently done an integration survey with the people at Dignitana. One of the key things for me is about communication. I think we've communicated very well throughout this process. Some of the things that we could have done better, perhaps, is, you know, we've had to manage some of the close down and operations in London, fortunately. That's quite tough and learning the businesses, understanding the businesses. You know, perhaps we could have taken longer to do that, but our sort of view is we need to rip the plaster off. We need to make sure we do this quickly and effectively. If there are going to be some issues along the way in the short term, we'll resolve them anyway.
Yeah, I'm, it's hard to say exactly what I would have done differently just yet. Time will, time will tell. Overall, I'm pretty satisfied with our approach. It is a learning curve for me. I mean, that was the first acquisition. Hopefully some more in the future, perhaps. I'm not sure.
You were in the same field. You're now one company. But the product, is it different? What are the technical differentiations between them two?
Yeah, so, I mean, we both actually were nearly put together 25 years ago by our VC. The technology roughly is a cooling system. It's very, very, very similar. They do not do their own design work. They did not do their own manufacturing. These are contract manufacturers. We have a really strong control over our product, over our manufacturing and assembly, ability to change, update with minimal cost and low cost, whereas they have a higher cost. Although there are some bits of their technology we like, the reality is it makes sense to move forward with the Paxman technology, especially as we have adapted it and improving it as we go along very regularly.
The plan will be to leave the equipment that's installed across the U.S. until it needs changing, and then we'll slowly update that equipment appropriately. That helps us with capital spend as well. We're not spending capital on just swapping equipment out there, which already works well.
It's a little, the main market for Dignitana has also been the U.S., and now it is, of course, the focus for you. We have a beautiful map up here. What does the landscape look like now? We see some high volume states in Midwest, not so, not so active, I guess. What does it look like? Which states are you most active in, and how does the situation look like there?
Good. The most active states really for us sit with New York, New Jersey, Massachusetts, Connecticut. I mean, probably where the population lies in reality, but where we've got really strong relationships for Paxman and Dignitana. We had not as much traction in terms of patient volumes in Florida. Dignitana have done a great job. That was a beautiful addition to what we're doing. Similar in California, they've had some really strong traction in California. The addition of the sites in California has been as good. The opportunity is vast. I mean, over 900 cancer centers today, still many more to go at, but our focus should be driving utilization at these existing locations where, I mean, we see seven patients per system installed at the moment. That's low, but we've got a huge opportunity to change that.
In some of our cancer centers in England, you're seeing between 20 and 40 patients per system per year, really, again, drives up revenue potential.
Just staying on that, driving the utilization potential, IBBM in the U.S., can you explain it to us in simple terms? What it is, what do you do?
IBBM, so insurance-based billing, it is relatively what it says on the tin. Today, I think I briefly mentioned it, we install the capital equipment and own the capital equipment into the cancer center, okay, so our cooling systems. We then transact with the patient directly and sell the cooling cap and a number of treatments to the patient. It is all out of pocket. That is difficult for a patient at a time where it is expensive, anyway, healthcare costs in America, you might not be working. There is a real barrier to access, and it really is only for those that can afford. You also get hesitancy from a physician or a nurse. They do not want to talk about something that is going to cost the earth for the patient. It is not what they are there for. They are there for patient care.
If you change to insurance, you remove those cost barriers for the patient and also that hesitancy from the provider. It's just prescribed like any other side effect management treatment. What we're doing is shifting. We still install the capital equipment, the cooling systems, literally at no cost, a bit like a photocopier market or a razor blade market. We have a direct relationship with the cancer center. We'll sell our cooling caps at about $1,900 to the cancer center. The cancer center prescribes the treatment to the patient, but then quite simply bills insurance. They get paid from the payer, make some profit, cover the costs, pay us, and the patient gets not always free access to the treatment, but a low cost access to the treatment. Everybody wins. It's a perfect solution.
How far along are you in rolling out the model?
Not far enough. We have about 122 clinics on our Insurance-Based Billing Model, but there's been some hesitancy. The reason for that hesitancy relates to the fact that we have CPT III codes today. That's about having temporary investigational codes. They're for sort of new technologies. They don't always come with good coverage, insurance coverage, that's what I mean. They don't always come with good payment. You move to a situation where we have CPT I codes as of January 1, and that changes. That becomes more, people become more confident that coding's right. It's a permanent code. It's got good utilization and strong clinical data. It's not an investigational device. We see better coverage with people like Medicare, Medicaid, and other commercial insurers, and people start to pay better.
It unlocks that ability to implement the Insurance-Based Billing Model. Watch this space through 2026. We're going to start seeing that momentum build.
For many of us, maybe you, now you mentioned CPT code reimbursements. Let's just jump back a little bit on your reimbursement work, what you've done and what's going to happen in 2026.
Yeah, so we've done a lot. I think we touched on this briefly, but it all started with the guidelines. You know, we spend far too many dollars with our reimbursement consultants. Sorry if you're listening. It's been a huge expense, a huge investment, but actually the ROI on that will prove beneficial longer term. It's about the guidelines. It's about appropriate coding with the AMA. The CPT III codes, then to CPT I codes. It's about working with CMS, trying to get appropriate payment rates from both Medicare, Medicaid. Sorry. In addition to that, it's about commercial payer outreach, building relationships with those commercial payers. As we move into 2026, the CPT I codes will come live. We'll start working with the private payers in more detail and ultimately switching those customers to our Insurance-Based Billing Model to drive that utilization.
There's a little bit also of the legislation. The American system works a lot different than ours here in Europe. Can you explain what's been happening in the recent years there?
Yeah, absolutely. What you tend to see in the United States is when new technologies enter the market or new treatments, you tend to see that different states will start to lobby government to try and change legislation to ensure that those products, those treatments are covered for their members of their state, the people that live there. Independently to Paxman's efforts, we've been seeing this real trend across the United States supporting this. As of earlier this year, New York passed a bill, which will go into play in January 2026, mandating that scalp cooling is covered for patients that live in New York. Amazing. Same with Louisiana. As you can see on the slides, we've got multiple other states all doing this independent to Paxman.
These are either patients who've put forward these ideas or alternatively even local members of the different houses or physicians or nurses themselves who see the real importance of this. This movement for us is, I mean, it's testimony to actually how important this treatment is to patients.
I've already mentioned we hosted a Capital Markets Day yesterday, and then we had a content-packed day on CIPN, the other product. If we touch very shortly on what, the timeline, you're going to launch it soon, hopefully. What is the timeline for the neuropathy product?
Yeah, so that's the plan. We've got an FDA timeline, a European timeline. Again, back to focus, the U.S. market will be our number one focus for this product to launch. We've been working on our regulatory packet, all our 60601 testing, all the really exciting stuff. I say that with a bit of sarcasm. We're looking to put our regulatory submissions in by the end of the year. Both of our submissions from a European perspective and an American perspective have been granted certain special allowances. One is what we call a STeP program. Another is a new pilot with the European regulator. That's really to offer additional expedited support with really guaranteed reviews to getting this product over the line, which I think, again, is testimony to the technology and what it does for the patient.
We expect by early Q2 to have clearances and approvals depending on where they are in both the whole of Europe and in the U.K. and in America. That does not mean we are going to launch in all those markets. Our focus will be the U.S. number one, the U.K., and also probably one of the European markets. I apologize, it is not Sweden, but it has to be based on opportunity early on, but eventually rest of Europe, bits of Asia.
We've talked reimbursement, we've talked coverage legislations, new products on the market. Is there anything particular or maybe you think some biggest misconception about the industry that investors should know that you feel that you don't really feel that everyone, the message gets out to everyone?
Yeah, I guess that's a, that's a, I think from a CIPN perspective, the opportunity is vast. I mean, if you do not yet understand what peripheral neuropathy is, please go away and look at it. I mean, it's a debilitating side effect, which has a huge and costly impact on the patient and the health system. So that potential, looking at health economics and actually how we can get this commercialized quickly, effectively, and with a decent amount of payment, could be an incredible opportunity. Then from a scalp cooling perspective, I think we just need to understand the reimbursement piece a bit more. It's complex, it's slow, but it's not about if, it's about when. I think please understand that these aren't overnight successes, but we are doing everything in the right way and we're gathering really, really impressive momentum. It's watch this space.
2026 is going to be a fun, fun journey.
Now on 2026, we could probably talk about Paxman with you, Rich, for hours, but the time is running out. If we'll have some closing remarks, maybe as we approach 2026, what are the key things that you want the markets and what will you be focusing on as well?
Yeah, okay. You know, I talk a lot, so I'll try and keep it quick. Simple Switch. That's our transition of customers from our self-pay to Insurance-Based Billing Model. That has to be our biggest number one priority. You can get all the reimbursement pieces right, but if you don't get the customers on the new model, then you won't see the increase in utilization, revenue growth, improved EBITDA. That's the plan. The integration stuff with Dignitana will be done and dusted in the majority, so that's not a core focus anymore. Commercialization of products. We've got a new cooling cap on its way. That will be launched in Q1, hopefully 2026, and then our neuropathy product thereafter. That is exciting, really exciting. Revenue growth, rest of world, not our core focus, all those other markets, but we must see growth.
We see about 20% year on year, so it's still fairly enjoyable. Operational excellence and clinical excellence has to be something that we focus on. Operationally, you know, we're growing, it gets tough, we need to digitize, we need to make our jobs, our people work better, work smarter. That's key for us as we get to that next stage of growth. Clinical excellence as well. You know, staying ahead of the competition, investing in what the future looks like, improving what we do all the time, it's critical and that's something we'll continue to invest in.
We are very much looking forward to following your journey. Thank you, Rich, for being here, for talking to us. Thank you all for listening.
Thank you very much.