Hello, good morning everyone, and welcome to the ABG Investor Days, and the first presentation of today. With us we have Promimic, and the CFO Anneli Skafte Persson today to present the company. My name is Erik Hultgård, medtech analyst here at ABG, I will be asking her some questions at the end. For now, I'll just leave the floor over to you, Anneli.
Thank you so much. Hi, I'm here to talk about Promimic and our main product, the HAnano Surface, that helps the integration process of dental and orthopedic implants, and as we have seen, cut the healing time in half. Our technology comes from Chalmers Institute in Gothenburg and also from research, strategic research through the years. We, Promimic today is a small but really fast-growing medtech company. We have a flexible business model. We have an entrepreneurial team with high-educated people, 16 people in Sweden and in the U.S. I will talk some about our growth journey, and this journey is really about the growth of the bone cells, patients and the financial growth for our customers as well as for us.
Hopefully, it might also be that it is a growth of return on investment for shareholders. My name is Anneli Skafte Persson. I have been working for many years within financial positions in medtech most of the years. I don't want to tell you how many years, but it's many years. I'd like to start with just taking like a step back. The three years that have been, they have been terrible, really. Pandemic, war, a lot of economic uncertainties. Really for Promimic, it has been the opposite. We have been successful in attracting new customers and capital. Last year in April, we made a new share issue and entered the First North Growth Market.
The new share issue was on SEK 80 million . The SEK 80 million will finance our business plan. I will talk more about our growth journey. First, a bit about the company. Today, we have our operations the headquarters in Mölndal, outside of Gothenburg. We are at the premises of AstraZeneca, where we have access to labs and a lot of knowledge, production environment. We also have a subsidiary in Houston sales office since 2017. Since last year, a joint venture, a company also in Indiana. The vision we have is to be the international market leader in using nanotechnology to improve patient outcomes through surgical procedures.
How we do that is together with a growing number of leading implant companies, and these companies offer implants that provides increased clinical and financial benefit. Our technology comes from research made by Dr. Per Kjellin and Professor Martin Andersson, and they are very good at studying material, biomaterial and nano material then. They discovered that and they patented also methods and surface products to synthetically produce bone crystals in the same size and shape as the bone we have. The bone crystals consist of hydroxyapatite, which is abbreviated as HA. Also, our technology is proven today. We have over 30 preclinical and three clinical studies together with independent researchers, and we have done this research all over the world, really. The market for our customers is huge.
The dental and orthopedic implant market is worth $55 billion annually. It's really driven by the U.S. And that's why Promimic is really very U.S.-focused also. The trend is of course to, the trend for osseointegration is very strong due to that everyone gets older and older, the need for implants is of course then increasing. Some facts. This picture is enlarged very many times. I don't know exactly how many, our HAnano Surface is really bone crystals that is only 20 nm thin, it's super thin. To understand what that means, we need to understand what is nano.
Nano is a billionth, and if you cut one hair straw 80,000 x, it's easy to remember, then it's 1 nm, and this surface is around 20 nm. To summarize it, we have proven that by mimicking the body's crystals and by coating implants with this, we can cut the healing time in half. It's also a very good thing is that this surface can be used on different types of implants, different types of material. If it's Titanium or PEEK or porous materials, which is the future as we understand it. There are many reasons for our customers to use our surface. Of course, the faster healing is good for the patients because then they can go back to work quicker, et cetera.
Also we have a unique position due to that we can coat 3D printed implants as well. Also, many customers get more paid because there's a price premium. Even though we then get a royalty, that's just a minor of that. It increases for most of our customers, as we have seen it, increases the gross margins for them, which is very good, of course. Also, the risk for a new customer to choose us and collaborate with us is really getting lower and lower because today we have a Master File at FDA, and we have proven track processes of different kinds of approvals from the FDA. We have 26 products today in clinical use. Okay. Sorry for that.
In summary, we can say that the customer benefits are both clinical for the patients and financials, really financial for the customers. Here are four of our important customers. We have the... Let me see. Shit. Oh. Here. Wrong glasses. S.I.N. Implant System, it's a company that are within the dental implant field, and we have been working with them since 2016. They are the fastest growing dental implant company in the world. They are, they were number four, now they are number two, and so forth. It's today our biggest customer when it comes to numbers. We have Enovis. Together with them, we made our first knee coating a knee implant. We have Alphatec.
Enovis is on stock exchange in New York, and Alphatec is on the stock exchange as well. Alphatec is the fastest growing spine implant company in the world today. We have been working with them a couple of years, and the last 1 .5 years, they have received approvals of 12 products, which is quite a lot. We are really only in the beginning of the journey together with Alphatec. We have Onkos. There we have coated a very special implant that are used for patients that have bone cancer. That's another example. Foundation of our growth. Like 10 years ago, we had, well, zero products and one customer.
We started our office in the U.S., 2017 and really worked on the U.S. market. 2019, you see we had four customers. In 2020, we had nine customers, and today we have 15 customers. As you see, the product line, products clinical use is above the other line from two years ago. Today we have 26 products in clinical use, and most of our customers have more than one product with us. On the right-hand side, we see the royalties and that's the rolling royalty and license fees, which is really our core business, and SEK 8.2 million it was for 2022. What did we do last year?
We listed the company, and we made a strategic joint venture together with Danco Medical that was our processing or still is our processing partner in the U.S. for the U.S. customers. Now, Promimic owns 60% of Nano Processing, Inc., and Danco owns 40%. We get the revenue cash from that business, so we changed our business model. Some financials. Our numbers are still very small, but the increase is high. The revenue went from SEK 8.1 million to SEK 16.2 million last year, 101%. License fees and royalties from SEK 3.7 million to SEK 8.2 million, 120% up. Cash is just below SEK 60 million. When we communicated the prospectus one year ago, we also communicated our financial goals.
The financial goals are to have a turnover of SEK 100 million within five years, which is 26 now then. The EBITDA of at least 40% in that year. It will all be funded by our IPO of SEK 40 million. Our growth plan is different things. We have talked about what happened last year. We now continue to work relations with the KOLs and more data from patient data to have more sales arguments. We also need to move office because we need to expand, so we will move to GoCo in November, where we will double our surface square meters for the lab. We will also invest in the NPI to increase the production ability. Summary of why one could think to invest in Promimic.
Well, the market is solid. It's really quite old now with the dental and orthopedic implants, and the market is not so sensitive to financial turmoil, et cetera. It's also U.S.-driven, and we have presence in the U.S.. Also we have established technology. Today our technology is really established because we have 26 approved products. We haven't received sales from all of them yet because it takes some time. 26 products and, as I said, the Master File at FDA. Also it's good to know that our coating can be done on all implant materials, as I have understood it today, which is really a strength. Number three, we are in the beginning of our growth journey, so we are really in the beginning.
We are not cash flow positive yet, but we have high margins, and we have long-term agreements with our customers. We have cash enough, and we are funded for our growth plan, and it looks good. Thank you.
Perfect. Thank you very much, Anneli. I've prepared a few questions for you. First off, you talked about porous implants and why that's the future. I understand that you solve sort of a specific need in that market as well, but could you just talk a bit about why your product is good for that and why that's the future?
My knowledge about it is sort of down to here, but it is really because of our surface is wettable, so it's hydrophilic. That is sort of what we understand is the answer to that question.
Okay. You can basically dip the implant and you get the coating inside of the porous material?
Yeah.
Okay. That's something that your peers can't do, basically?
From my understanding, this is, one of our, sort of biggest, competitive edges at this point.
Mm.
Yes.
Okay. I also understand that you have some antibacterial properties as well. There was a paper published with Stryker last summer. It seems that they're evaluating your coating even though they have one themself.
Uh-huh.
They lack antibacterial properties, basically.
Uh-huh.
Could you talk a bit sort of what they're evaluating and why maybe you have, you know...
Yeah
... something to offer?
It's not, as I understand it's not that we have antibacterial properties in that direct way. It is that, from our understanding, and we are still doing a lot of research on this also, so it's in early phase, but as we understand it is that the bone cells win the race to the surface, so the bacteria, they don't win.
Mm.
That is sort of a simple way to explain it.
Mm. Okay. Okay. You, you touched upon this as well, but as I understand it, you basically need to have a 510 for every new implant that's, you know, launched with your coating. Is there a more efficient way to do that? Is it possible to just make this, you can use this for whatever implant you want to release to the market, basically? Does it need to be a 510 for everyone?
Yeah
... that launches a new implant?
It's a good question. It needs to be a 510(k). We have now discovered that customers can get fast track due to that the FDA knows so much about.
Mm. Mm.
... approvals and, that's really all I can say. We also help, of course, the customers.
Mm.
I think the sort of approval process has been really shortened.
I was just wondering about the switching costs for your customer. It seems fairly sticky. Once you're in, they're gonna keep selling their products with your coating. What are really the switching costs? Could they, if someone better comes along, just replace you, basically?
We haven't had, to my knowledge, any customer that has switched, and I would say they would need to develop, and it takes a couple of years.
Mm
... a new partner, and this is something I can get more data from my CTO at home.
Mm. Mm.
I would guess that it's really. It takes at least the time.
Mm
... for our first customers.
Mm. Mm
I guess.
Just a last question. I'm a bit curious on the business model as such, 'cause it seems like a very good setup that your customers do most of the heavy lifting. The problem is usually, you know, having a sales organization in the U.S. and all that.
Oh.
You don't really have to do much of that. Could you talk a bit more about how that works with the dynamics of, you know, your costs, basically, how you sell?
Excuse me. A customer comes to us and we sign a license agreement, and within that, we then agree upon to develop a new product. Normally, it's secret. Customer don't want to talk about it in public, et cetera. We develop that together with the customer, and when it's sold, we get royalties 2%-5%. That time period can be 1.5 year or so.
Mm.
Can be one year. We try to shorten it. When we get the license and the royalties, of course, the margins are very high.
Mm.
It might be that it looks even better after 2026.
Mm.
We have not been calculating on that yet.
Mm.
It is 40% at that point.
Mm.
Even though our gross margins on the coating liquid is very high, as we write in the reports, it's 96%.
Mm. Mm.
... and royalty and license stream almost 100% margin, we still have a development organization, and we continue to make research for new material, even better methods.
Mm
... and so forth, because that is really our value.
Mm.
It's also, to be honest, I mean, we are in an early phase, so it is quite difficult to count, because we don't have the history really yet.
Mm. Mm. Okay. Yeah. I understand.
Yeah.
I understand. Okay. Well, that was all my questions. Thank you very much, Anneli, for coming here today. Very interesting to hear you talk about your company. Also thank you to everyone listening in person and online as well. Thank you.
Thank you.