Hello and welcome to the Sedana Medical Report Q2 2020. Throughout the call, all participants will be in listen mode only, and afterwards we'll have a question and answer session. Today I'm pleased to present to Christer Ahlberg, CEO. Please go ahead with your meeting.
Okay, thank you very much. That introduction, we also will have our CMO, Peter Sackey, to present, and we also have our CFO, Maria Engström, here if there are any additional financial questions as well, so here we are today to present Sedana Medical's interim report for the second quarter, and I would start to give you a short summary of the company and what we are doing, so you're updated on that. I will, after that, go into the consequences of COVID-19 and how that has impacted our business in the quarter. Thereafter, Peter, our CMO, will guide you through the clinical development and the clinical program, and we will end this session with some financial updates as well for the second quarter, so let's start then. Same slide, slide three, to give you a short update here.
Sedana Medical, as you all know now, most of you know at least, is very focused on inhaled sedation in intensive care patients, and our vision is to make inhaled sedation with our product, AnaConDa and IsoConDa, to become a new global standard care therapy for mechanically ventilated intensive care patients. We believe that we have a unique and leading therapy, and the possibilities are great, actually, to achieve this vision. Going to the next slide, the market potential for this segment is obviously also a blockbuster potential with the EUR 2 billion-EUR 3 billion annually, and with a growth rate in a normal year by 5%. COVID years, the growth rate is much, much higher, as you understand.
The focus areas are Europe, which is one of 1/3 approximately of this potential, and then also later on, focus is very much in the U.S. with a high price level, as well as a very interesting potential here. Going to the next slide regarding our strategic priorities and financial targets, and we will come into that much more in detail. In Europe, we are prioritizing to get ready for the full registration of inhaled sedation with AnaConDa and our drug candidate, IsoConDa. We estimate that that will be approved in the second half of year 2021. In parallel to that, we are now preparing ourselves for the big launch at the same time in Europe, at least in 15 countries in Europe. In parallel to the European commercialization and registration, we have prioritized U.S. registration process.
We estimate that we will have an approval in the U.S. a couple of years after Europe in 2024, and that we will have a decision whether we should commercialize this ourselves or together with some partners. We will do that decision two years before launch. The rest of the world, we are looking to lots of markets, but we focus on the big ones such as Japan and China. The long-term targets in Europe, especially, we have seen that we will have after three years after launch and registration in Europe, the aim is to achieve approximately EUR 50 million in revenues, which is approximately 8% of the market potential. We have a very nice EBITDA margin of 40%, especially possible when the volumes go up. Going to the next slide. Going to the quarter, this is just the highlights of the quarter.
I will not go so much into the details here. We will cover them soon. What we have seen, though, is that the major step forward, the major milestone, is the announcement of the top-line results of our pivotal phase III study early July, and it was positive, and it could give us a really good platform for the registration in Europe. We have also, during the quarter, initiated and sponsored many new investigator-initiated studies on ICU patients, both on COVID-19 patients, but also generally for ICU patients, and also, during the quarter, we have succeeded to finalize agreements with important partners outside Europe in the Middle East, where we also have an approval of AnaConDa now, and also in Australia and New Zealand, and we have also now a good footprint in Eastern Europe, where we also signed a contract, so that has happened during the Q2.
Going to the next slide, going more into the consequences, how we have been influenced by COVID-19 during the first half year. Going to the next slide, slide eight. First, as you have seen already, we have a fantastic growth rate in the second quarter by 133% versus the same second quarter last year. And we have a rolling 12-month growth of 76%. And what you could see here is that we have also first time ever reached a milestone of past SEK 100 million in rolling revenue over a 12-month period, which, of course, internally has been a really important milestone for us.
The increase comes from both established customers in intensive care units, approximately by 60% of the growth, and as much as 40% comes from new intensive care units, where I mean we have actually initiated and trained new ICUs, not only in Germany. I would say mainly in many new ICU centers in Europe, such as France, U.K., Benelux, Nordics, Spain, Italy, etc. And that is, of course, important for us for the future. And going to the next slide, what you could see here on slide nine is the development. Our aim is, of course, to be with our own direct stake in the big markets in Europe when we have the registration in place. And what you can see here in the growth rate in the stake, Germany stands for 70%, has 70% growth.
And that is, of course, a little bit less than the average of 133%. But we can also see that we have a massive increase in other direct markets in Europe with more than 500%, of course, from low levels, low figures. But that gives you an indication that we have succeeded to start up many new ICUs in the new market. And also, it gives you an indication comparing to the distribution markets, where we have an increase of 250% with approximately the same platform where we started from the same level. And we see here that we are very effective to sell through our own direct sales channels. And that is still our main strategy in Europe to actually do that. And still, the distribution market has not reached more than 10%, a little bit less than 10% of the total sales.
More than 90% comes from our direct sales channels. Okay, let's go to the next slide, slide 10, the impacts of COVID-19 as stated. We already know what we can comment here, as well as the increase initially in the quarter was very aggressive, I would say, compared to the last part of the quarter, where the increase rate is a little bit normalized, but still higher than pre-COVID, the time before COVID-19. It looks still very, very interesting, and what we could say is that we have a lot of new orders coming in all the time from both new customers and existing customers, most customers, so that's a good sign. What you also have seen in the report is that the cost of goods, or the gross margin, has decreased somewhat compared to normal quarter. We have now 67% gross margin.
The main reason for that is that we had increased freight costs, quite dramatic increase, because we needed actually to have air freight instead of sea freight. It was more like during the worst period in the COVID. You could say that the freight was more of a black market, where the increase in costs was really, really tough for us. We didn't want to compensate that cost increase through price increases. These are the consequences for that. We also have seen an increased demand of monitors, where we are actually more giving a service to ICUs to install and supply monitors more at the service level instead of earning lots of money on them. That also has an impact on the gross margin.
From clinical development point of view, of course, we have seen some delay of the top-line results, as you know now, and also, we will have a registration submission in Q4 instead of Q3. But we still believe that we will have full registration on time in the second half year of 2021, and we have no reason to expect a delay in U.S. registration process either. It looks good. And financially, you can say that, of course, increased rates had a positive impact on the EBITDA and also a positive impact on the cash flow. So going to the next slide, slide 11, and the reasons for why we have such an increased demand of AnaConDa during this period is that mainly that COVID-19 patients do require much longer sedation and deeper sedation.
And you have a problem to use the intravenous drugs for those with over a long period. It gives you challenges when it comes to side effects, as well as mobilization after the ICU stay. But also, we can see some potential pulmonary protective effects as well that could also have an impact on the demand of AnaConDa. So there are both medical reasons why they have initiated the treatment. I would say that that is the most important. But of course, we have a push reason where we have in Europe seen during some weeks a shortage of the intravenous sedation as well. That also has had an impact of the increased demand.
So going to the next slide, slide 12, before I let Peter start with the clinical development program here, I can just mention about Japan, where we now have actually waited for the clinical results from the SED001 study. So we can go forward with the preparation for Japan application and the meeting with the Japanese authorities. But Japanese authorities are not allowing anything else than physical meetings, face-to-face meetings. So it will most likely be postponed until after the beginning of the first half year of 2021. And generally, you can see that Asian countries have been a little bit more challenging to communicate with during this crisis. And you can also see the same pattern in China, where everything looks good, but we have had a little bit of challenges to have discussion with authorities there over the period.
But still, the estimate is that we will have this approval of AnaConDa in time before next summer. And in India, we have seen that they can use the treatment based on the CE label and registration in Europe still. But we have an ongoing process of the registration for AnaConDa there as well. We have seen an increase in Mexico and then demand for new ICUs, as well as in Canada. That is what's interesting to see and follow. So now I will leave the word to you, Peter, to go through the clinical development and slide 13. And I expect that you want to go to slide 14 directly.
Yes, please. We move to slide 14. And from our label treatment to approved therapy and new standard of care in the ICU.
As many may be aware, we have completed our first large clinical trial, the IsoConDa study in Europe in adults. The high-level results have been communicated. I'm going to mention them further on. The first of our clinical trials. The next one will be starting this autumn. That's a pediatric IsoConDa study in four European countries. We anticipate to start two randomized control trials in the U.S. in 2021. The first studies are for the European approval, and the two U.S. studies are for the U.S. approval, which anticipate in 2021 and 2024. Besides our own clinical trials, we're also supporting large investigate-initiated trial that are aiming at identifying potential benefits of inhaled sedation. One of them is a SESAR trial, a French multicenter study of patients with acute respiratory distress syndrome, comparing inhaled sedation with intravenous sedation.
Another study is a COVID-19 specific prospective observational trial called the ISCA trial, which is taking place in several European countries, and finally, we have the INASED study, which is a study also in France, which is aiming at identifying potential benefits on the development and duration of delirium in ICU patients, and now, if we move on to the third results from the IsoConDa study, which were communicated in July, just a recap. They were positive, and I'm going to come to specific data on that. Some of the quotes from the release at that time, myself stating that we're proud to conduct the world's largest study on inhaled sedation in intensive care, and I would say that this is the most recent milestone in the therapy area since the development of the AnaConDa.
The principal investigator, coordinating investigator, Andreas Meiser, stated that these results align with long-standing clinical experience of many doctors all over the world, and this shows that isoflurane is a safe medication for the kids and basically that they can treat real patients, and there's a hope that small patients will benefit from this therapy in the future, and the quotes from our CEO, Christer Ahlberg, I'll let you.
I think it's important actually to mention that this is really a milestone. And I think this definitely will give us the entry to the market, and especially the European market. And that is what we should expect with this study. And it will be.
Some kind of giant leap closer to our vision now too.
Going to slide 17. This is a slide depicting the primary endpoint of the IsoConDa study. It demonstrates that IsoConDa sedation is the same as propofol or non-inferior. What we see here is the mean proportion of time in target RASS, which was RASS - 1 to - 4. RASS is the Richmond Agitation-Sedation Scale. It was approximately 91% for propofol and almost 90% for IsoConDa as well. What we see there is the bars are representing the 95% confidence interval of time in target RASS. The non-inferiority margin was about 27%, which means that the study was able to demonstrate that using IsoConDa for sedation in these patients is clearly non-inferior to propofol. It is a very strong result. We move over to slide number 18. Safety. Serious adverse events and adverse events have been listed.
And there are a few adverse events and serious adverse events in both groups, despite a very sick population. And adverse events that have been found in both groups are generally not related to sedation and not to the AnaConDa device. So we move over to number 19, slide number 19. The secondary and exploratory endpoints. These are currently under analysis after a summer break for the submissions. And as they are compiled, they will be part of the dossier together with the primary endpoint and adverse event reporting. And the data will be communicated via peer-reviewed publication in a medical journal. So this will be sometime next year. And so a recap of what the study was about. The IsoConDa study, phase III, non-inferiority study of IsoConDa, randomized controlled open-label trial that was run in Germany and in Slovenia.
300 patients were treated for up to 48 hours with either IsoConDa or propofol. The study was completed in January. We expect to submit a marketing authorization application that includes the study as the centerpiece in Q4 of this year. That will give us a marketing authorization in Europe in 2021. The primary endpoint was, as I mentioned, the proportion of time with adequate sedation for isoflurane versus propofol. Secondary endpoints include wake-up times, proportion of time with spontaneous breathing, opiate requirement, ventilator-free days. We move over to slide number 21, clinical development US. We can directly move over to slide number 22. Last year, we met with the FDA and discussed our development plans. The FDA requested from Sedana to perform some non-clinical studies, two clinical trials, and also build a safety database.
This work is underway. What's needed before a clinical trial can start is non-clinical substances studies in rodents and non-rodents and human factors testing, which are ongoing. After that, we will be performing two large randomized controlled trial, as sessor-blinded trial in the U.S. The data from the German and Slovenian study and the new studies will be included in the safety database. As Chris mentioned earlier, the commercialization term will be set in 2022. The ongoing activities for the U.S. are to finalize the non-clinical study protocols. Sorry, the non-clinical studies need to start the internal trials. These are ongoing and well underway. We will be finalizing our U.S.-adapted AnaConDa training program and performing human factors testing in December. We have a preliminary selection of the contract research organization for the U.S. study.
We are currently finalizing the clinical study protocols together with the CRO and key investigators. We are also selecting study sites. We currently have significant interest from over 30 academic centers from Western Europe. The plan is to start the clinical trials in the early half part of the second half year of 2021. The timeline for the clinical development registration activities in Europe are as follows. Now we're on slide 24. As I mentioned, in January, we had the last patient in the IsoConDa study. In July, we completed positive high-level data for IsoConDa study. In Q4, we will be submitting our dossiers to 15 countries in Europe in the first round. In the same quarter, we will be starting the pediatric study. 2021, we anticipated marketing authorization.
In 2022, completion of the pediatric study and the approval for pediatric indication of AnaConDa for sedation. For the US, we're completing the human factors formative study, completing non-clinical studies this year and next year, and IND and clinical study to start. Further non-clinical studies not requested for clinical trials, but for the final NDA. In 2022, a decision how to launch and 2023 finalization of the clinical trials and the application that would render an approval in 2024. Now we go to slide 25. Last clinical development slide. This is a short recap of the IsoCOMFORT study that will be for the European pediatric indication and hopefully also used for the U.S. pediatric study plan. This has been approved by the European Medicines Agency protocol.
And it implies that we will randomize 160 children between ages 3 and 17 to isoflurane via AnaConDa or intravenous midazolam up to 48 hours. And the primary endpoint is similar to the adult. Proportion of time with adequate sedation without rescue sedation assessed with a COMFORT-B Scale. And the preliminary duration of the trial is 18 months. And we have actually finalized the site feasibility assessment that we have with site initiators. And we plan to recruit the first patient in Q4 this year. The sites are 18 sites in Spain, Germany, France, and Sweden. And what should be mentioned is that the outcome of the study is not a requirement for the marketing authorization for adults. And also, once the study is completed, that will be a guarantee for our 10-year market exclusivity in Europe for IsoConDa via AnaConDa.
As you mentioned finally, the FDA has given input on the feedback on the study protocol so that the study would be possible to use for the U.S. program. And then we move over to slide 26. Back to Christer Ahlberg, financial highlights.
Yeah. And I think we have most of it we have already covered on slide 27. Net sales in past SEK 40 million . We have a gross margin of 67%. And we just slightly didn't reach the positive EBITDA result. We have an OpEx increase due to the expansion of the organization's marketing, medical, regulatory, quality, everything to be ready actually to launch this treatment in Europe next year. We have a number of FTE in full [50 in end of 40 by Q2,] but a number of heads are more. And I would say that the fully launched organization is closer to 100 people to launch this in Europe. Cash flow positive. We have a positive cash flow in operations, which is, of course, positive. Total cash flow, though, minus SEK 8 million , which is much better than the previous quarter.
And going to the next slide, slide 28, you see that we have a very good cash position, SEK 433 million. And with a burn rate then obviously of - 8 this quarter. But of course, that will be not as good the future quarter when we start to spend a lot of capital in the U.S. and for the clinical studies and also the development of the organization. So also going to slide 29, we can see that the shadow release is approximately the same as before. A mixture between institutions and founders and insiders here. So it's a good mixture. And that will be the last slide. So we go to slide 13. And that is the last slide. Open up for questions. And questions is possible to raise from if you are connected via web. It should be possible to raise questions there.
Please explain also for us how you ask questions if you are connected via phone.
Thank you. If you wish to ask a question via telephone, you may do so by pressing zero one on your telephone keypad. If you wish to restore your question, you may do so by pressing zero two to cancel. Again, it's zero one on your telephone keypad if you wish to ask an audio question. Okay. There appear to be no questions via audio at the moment. So I'll hand back to the speakers for any other remarks.
No. I mean, are there any questions? No one via phone? Okay. I think this was a long meeting, and I think we have been quite a lot of information, and hopefully, that was enough then, and if there are any questions that you find out afterwards, then you're always free to send us an email, these questions, so we will try to answer them and respond to you as fast as possible, so thank you for now, and have a nice day.
This now concludes our conference call. You may now disconnect from.