Hi, welcome back to DNB Carnegie. We are continuing with our day with our digital healthcare seminar. Next up we have Richard Paxman, CEO of Paxman, who's going to update us on the company and what's been happening and what you, what you guys do and what your future might look like. Just to remind you of the format, first it's a presentation then we go on to a Q&A session. Please ask your questions in the chat. I will make sure to be on the lookout, then we'll see if we can maybe answer all the, all of the world's questions here today or not. Please, Rich, you're very welcome. Take it away.
Thank you very much and great to be here. Rich Paxman, CEO of Paxman Scalp Cooling. We're an international business providing supportive care, support to patients going through cancer treatment, whether that be for chemotherapy-induced alopecia or chemotherapy-induced peripheral neuropathy. I just wanna touch on what we've achieved in 2025. It's been really one of our most impressive years to date, that's not just on a financial basis, but more about activity, preparing for the future.
It started off with a directed issue early in March 2025, raising over SEK 123 million . That was all about focusing on the future of the business, commercialization of our new peripheral neuropathy product, planning for our expansion into our new facility in 2027, in addition to further research and development into topical products for more novel therapies that are coming through the pipeline at the moment. A huge moment for the company was the acquisition of our number one competitor, Dignitana. That really means the merging of those two fantastic companies to make one great world-leading business. We've also seen some great momentum with our insurance-based billing model, U.S. being our key market around for the globe. That's about really shifting from what we call our self-pay business model to our insurance-based billing model.
Seeing insurance now cover scalp cooling across the United States. At the end of the year, what we saw is our FDA submission for our new product in neuropathy, as well as a submission to one of the coding bodies to support reimbursement, also in December. A great end to the year. If we take a look at our Q4 highlights alone, we saw that our net sales reached about SEK 85 million, an increase from last year, but that was very much based on acquisition as well as some growth. For the whole year, we saw record sales of SEK 330 million up from SEK 253 million in 2024.
Proportion of that was acquisition growth, but we also continue to see organic growth through the business and expect that to respond stronger next year. We've seen strong progress with our insurance-based billing sales. Looking at these statistics here, about SEK 38.2 million compared to SEK 34 million for the same quarter in 2024 and an improvement from Q3, finally starting to see that momentum in our insurance-based billing. One of the things I touch on is legislation. It's got a real momentum of its own at the moment, and I've already touched on our 510(k) and AMA activity. Looking at the results, as I said, for the year, SEK 330 million sales. For the quarter, still performed strong.
I think you've got to really look at the breakdown of the sales in the company, whether that be our US company, which saw about 10% growth. Looking at our rest of world markets, we still did see growth, but a slight tail off at the year-end where we didn't quite manage to get the equipment out we wanted to do. If you look at Dignitana, our new acquired growth, you saw a little bit of a drop in overall sales, and that was very much down to where we're seeing rest of world distributors, now not ordering anymore. We acquired the business based on US growth, and that's what we've got to focus on and look at. There are pressures from, of course, acquisition.
You'll have seen reduced or increased costs for the period from both the acquisition and the work we're doing on CIPN commercialization, which is expected, which is having a downward pressure, of course, on EBITDA margins. However, if you start to remove those cost pressures, we're looking at about a 13% EBITDA, but we expect to see improved margins as we continue into 2026. Although be mindful, we will continue to invest in peripheral neuropathy as an organization as we plan to commercialize throughout the year. If we talk about cash, again, we've obviously seen critical investments into CIPN as well as investments into the acquisition. It has had some pressure on cash flow. However, we've ended the year at SEK 121 million in cash availability, which puts us in a really strong position moving into 2026.
We'll now start to see the synergies expected with the acquisition going forward. Just very briefly on the acquisition, we've really focused hard on making decisions quickly and fairly in the organization. That means a fair amount of rationalization, working with suppliers, working with distributors, really to make one united company. We set into 2026 with a revised group and structure with reduced cost burden, and we're very happy to say that 99% of all the costs associated with the actual merger itself or the acquisition itself have now been undertaken. We can move, as I said, into 2026 with a new formed group, really benefiting from the synergies that we expected to do during the acquisition process. Huge thank you to the team at Dignitana for all their support in making this happen. We have to really focus on the US.
That is our highest growth potential market. It's where the company in reality has invested significant time and value over the last eight or nine years. If we look to our business models, we've got our self-pay business model and our insurance-based billing business model. What you will see in the last quarter is a reasonably decent growth in our business model for the period. A number of people think that might be about restocking or getting prepared for the end of the year. Actually, if we start to look at the data across all our customers, there was an increase throughout. We're very, very confident that the insurance-based billing model is starting now to take its own momentum.
Also, in addition to that, if you look at sort of utilization as well, if you look at the insurance-based billing income versus the self-pay income and look at the number of sites and locations that's across, you're seeing a considerable improvement in utilization, which we would expect from the insurance-based billing model, which is a strong sign and will help with our focus through 2026. We continue to see good levels of coverage even with CPT III codes, which is excellent. As we move into CPT I codes in 2026, we expect coverage and payment only to improve. That trend continues.
As we enter the 2026, now we have our CPT I codes, these permanent codes which have been set by the American Medical Association, it really gives us a strong platform to start very much focusing on switching our customers from that self-pay business model to that insurance-based billing model. That's incredibly important as that is where we will see the drive in utilization, the drive in revenue growth, and ultimately access to the treatment for patients. This year is very much about working with not only academic cancer centers, but also large community aggregators to ensure that we give them the right tools to make a switch to drive that utilization.
We'll also be developing a very rigorous and in-house payer field team or reimbursement field team, really to understand the challenges that our customers are seeing in the field. On the flip side of that, really engage with those payers to support stronger coverage policies throughout a longer-term payment. In addition to this, what you have seen, or hopefully have seen, is this real momentum across the United States with legislation. What you're starting to see now, led by two states, New York and Louisiana, is that scalp cooling has been mandated to be covered in these two particular states. The noise and the momentum here is creating so much interest from other states in doing exactly the same thing.
We currently have 11 states across the United States working on developing their own mandates, and these are all at different stages, different houses, different committees. Even if we don't see the laws passed this year, what we have seen is an incredible amount of support and advocacy and noise, which can only be beneficial for scalp cooling as a whole. These are some of the priority states for the future. What we're looking at is where currently Paxman and Dignitana are focused, where the biggest opportunities are, and therefore which states we can start to work with to support this. Now, much of this has been led independently, but we are supporting this directly from Paxman Dignitana as we see the real value in it.
Our next core focus is neuropathy, a very debilitating side effect which is affecting many patients across the world. This is not only a short-term issue for patients, but a long-term debilitating side effect, which we need to do something about. As many of you know, we submitted our 510(k) application at the end of last year, as well as submitting to BSI. Currently, the FDA are reviewing our submission package, as well as the European regulators or our notified body, looking at both our QMS system and our technical files. Our expectation is still on track that we hope to see our device accepted both in European markets and US market by Q2 2026, so hopefully April. This is very exciting, and we will try and maintain a positive step forward with our approval dates.
In addition to this, what we did at the end of last year is deliver our AMA submission to get CPT III coding. This is a formal U.S. coding pathway, similar to what we did with Paxman Scalp Cooling. We did this many years after FDA clearance. What we're doing here is actually bringing this right forward so we have an early opportunity to enter the market on an insurance-based billing model. As of February, I was at the meeting, we were awarded three CPT III codes, which is wonderful. Those will come into play effective January 1, 2027, a time for a full launch into the U.S. market. During that period, we will also get an APC rate, which is a payment code set by the CMS.
Very similar again to the process with scalp cooling, and we'll keep you updated on that. A huge milestone for the organization. In terms of our commercialization plans, we're gonna very much focus on the US, the UK, Singapore, and one European market, which is most likely Germany. We want to be very focused in our approach and do each market incredibly well. Longer term, we will look at other important markets. Our US model will follow a very similar role rollout as the scalp cooling model with a very similar revenue generation protocol, so selling consumables. We will also look to generate income per device installed as well to help return investment. The UK and EU will create revenues through a mix of capital and consumable purchases to really support the growth as well.
What we will be doing in the first part of the year and the first half of the year, should I say, is rolling out adoption and clinical pathway pilots, really to allow us to get the best out of our launch in second half of the year, 2026. Capital deployment will be similar across both academic and community sites. We're looking really to focus on our 900 cancer centers that we're already working with on a scalp cooling basis. Our core focus will be on high utilization sites, so we do a much better job at generating good utilization early on in our commercialization pathway. We'll be very much as well looking at priorities around our payer strategies and pricing strategies very early in the year and then throughout the year.
The nice thing is we're able to do this at a very similar time to scalp cooling. Using those engagements on a scalp cooling basis really to start introducing peripheral neuropathy as well. That will really support a much more expedited approach to reimbursement with peripheral neuropathy, unlike scalp cooling. We continue to have really strong data readouts. I won't go into the detail today, but excellent data readouts giving us very strong confidence about the commercialization of the device and the certain claims we can make. We've got great anecdotal feedback from the study in the US. We've now nearly 600 patients recruited, again, showing great promise and improved claims at the point of publication. A smaller study out of Dana-Farber as well using our latest devices and gloves and boots, really getting some good feedback and momentum.
To prepare for our launch of our device, of course, it was really important that we have our future manufacturing facility prepared. There's been some slight delays with our next facility, but we have an interim facility, which will be the home of our CIPN assembly, and that will open its doors in April, May this year. We'll start to build our first devices in May and June, ready for rollout to work in the NHS for different adoption pathways, as well as preparing equipment for the United States after the summer to do some quality assurance programs. We will start to build devices from October to December and place devices into the US market on a direct pay or insurance-based billing model opportunity.
When we get to 2027, we're in a strong position to roll out and really have a good commercialization process and launch plan. By 2027, we'll move into our new facility, and this will give us opportunity to further expand our capacity, which we will need and already needing, as well as a new R&D facility as well. A new home for our growing number of people, which is incredibly exciting. Just to touch on some of the strategic priorities that we've spoken about before, but the simple switch. This has to be our number one priority. It's about increasing coverage and payment. It's about improving that utilization and ultimately leading to improved revenues and driving up that EBITDA margin.
We've got our product commercialization, not only of our new cap and cover, but more importantly, our neuropathy product, which will mean we have to now move to a multi-brand company. Rather than just being Paxman Scalp Cooling, we have to position ourselves differently in the marketplace. I think it's important to understand that these product commercialization costs will continue to weigh on margins, but we will very much report clearly on those costs so we can see the underlying value of the scalp cooling business itself. We continue to work hard with our rest of world markets, albeit not the same level of investment as the U.S., but we have seen growth, and we will continue to see growth through 2026. A key piece for me this year is about operational excellence.
It's about really ensuring that the work we are doing, the processes we are following are as digitized as possible, are as lean as possible. That will help us as we move into our new manufacturing facility. Also make sure that the work that we do here through AI or other means is actually really valuable work, so saving time and efficiencies. To finish off clinical excellence. We've been really good at this for many, many years, we must continue to invest and not forget to do that. That's very much about staying ahead of the game. It's about investment in technology. It's also about investment in clinical trials. It's investment into biological research. We need to stay at the forefront and hold that leadership position and really be that number one scalp cooling and peripheral neuropathy cooling provider.
Hopefully a lot to get through there, but hopefully it's answered some of your questions. I'm very much looking forward to hearing some more questions now.
Thank you very much, Rich. I thought we were going to start with the focus, the US and IBBM, and I think we do this sort of a temperature check quite often. What I was gonna ask you is: what do you think is the gap between the actual demand and the adoption rate? What are the bottlenecks right now? Is it still primarily awareness and the reimbursement questions, or how do you see that situation shifting?
I think that's a really good question, and I think the biggest bottleneck is... What we need to do is get these sites to switch. We've got 130 cancer centers, roughly, give or take, on the insurance-based billing model. What we see with them is we see higher utilization because we're removing the barriers of payment. We switch them onto the new business model. Sorry, we need to try and switch them onto the new business model, those self-pay sites. Historically, we've seen that we've had CPT III codes. There's not clear coverage policies. There's not clear payment policies always. What you get is the, let's say, 500 other customers are being hesitant.
What we need to do now is unlock that bottleneck by really communicating better, using good examples of how things are working, but more importantly, having the payers clearly articulate their position through coverage policies, through better payment policies. That's, that is our biggest challenge this year. I think because we have CPT Category I codes, because we have supportive LCDs, because we've got good track record with those 130 locations, we will start to see that unlocking of those barriers.
Those customers who are maybe a little bit reluctant to adopt the new model, is there any characteristics? Is it any special kind of clinics, or we talked a little bit about community centers before as well.
Yeah, absolutely. We have actually seen more resistance from the community-based providers. That tends to be, first of all, CPT Category III codes, which we've historically did not have a payment rate set with them. If you recall, there's two payment rates that get set. There's OPPS and MPFS. Under a CPT Category III code, you don't get the MPFS, so that office-based practice payment rate. We will do now under CPT Category I codes, or we have done now under CPT Category I codes. If you look at the published rates under the MACs, which are the Medicare administrators, you will see actually quite favorable payment rates for the community oncology providers. If you can de-risk that for those community oncology providers, you can provide a strong business model for them.
Thank you. If we always start with U.S., but we should never forget about the rest of the world, obviously. My question for that is there any segment, any region outside U.S. that is particularly more important? Apart from U.K., obviously, of course, but like other markets, how does the picture look like right now?
Of course. The UK continues to be an important market for us, but it's a well-established market. The UK, I'm not saying it's an easy situation for us in the UK, but it's very much about replacement of equipment that's already been placed. It's become pretty much standard of care in many parts of England. As equipment gets to the end of its lifetime, it then has to be replaced, okay? There are some growth areas, of course, but it's sort of with good leadership from our team in the UK, it looks after itself in that respect. It's a different, it's in a different life cycle period. If you then look at some of our core markets, you, we have to focus our efforts on Germany. That is a strong opportunity for us.
Spain is a strong opportunity for us, and France is a strong opportunity for us. Those are three of our direct markets. The Netherlands is very similar to the United Kingdom, similar sort of life cycle. For me, India and Japan are two critical and key markets for us going forward. We must do more in overseas markets, but there's always an opportunity cost, of course. I think it's important to understand to our shareholder base, our investors, that we see nice organic growth from our rest of world markets, but we, in reality, put a relatively limited amount of investment into those as much of our work and focus goes into the U.S. market, as well as commercialization, of course, of CIPN.
Well, time is flying here, so I was going to end on a little bit of a futuristic questions. I asked this to all the companies presenting before you today, Rich. What hopes do you have? If we meet here today in five years' time, what hopes do you have for Paxman? What is going to happen? Is it going to be standard of care for both, scalp cooling and the CIPN device? How do you view the future?
I, I want us to live in a world where scalp cooling and cryocompression for peripheral neuropathy is standard of care in the majority of developed markets. I think within five years that has to be a must. But perhaps as well beyond that, it's about, you know, Paxman really leading in side effect management full stop. I think there's a, an exciting opportunity for us, leading in this quite niche space.
Thank you very much, Rich. We look forward to following your journey from the sidelines, and thank you for joining us today.
Thank you very much. Nice to be here.