Ladies and gentlemen, welcome to XVIVO Perfusion Report Webcast. I will now hand over to Magnus Nilsson, CEO. Please go ahead.
Thank you, welcome to this interim report, January to June 2019. I'm Magnus Nilsson, the CEO, and by my side here, I have Christoffer Rosenblad, the CFO as well. Let's start. Page number two, please. The highlights this half year, and the last quarter has been a lot of things happening, positive things happening. We have got the PMA, which was for the XPS and STEEN Solution in the U.S. We got patents approved for the heart preservation solution both in the U.S. and Europe. We could see or note positive results from the clinical safety study with the heart device at Lund University Hospital in six patients with good results, presented at the International Society for Heart and Lung Transplantation. We got approval from the Swedish MPA to start the clinical study for heart preservation products.
By showing the device for invited leading heart transplant surgeons, we got a very good reception, and there was a lot of interest to be part of the clinical multicenter trial that we are planning. We had change, as you know, the PrimECC production bag, and the first validation batches have now been produced. We're now putting together the file for so we get clearance to start clinical trial, hopefully later this fall. Slide number three. The sales highlights. We continue to have strong non-durable goods sales, as you can note on the graph. We have a non-durable rolling 12 months on 47% year-over-year. We can continue to see a positive sales trend for the cold preservation. We add another country now, Canada, with XPS sales in Q2. Slide number four, please. We look at the profit and loss statement.
There's a few things to note, I think. Important things is to see that the gross margin is still on a high level, a comfortable level. You can see that we have a continued customer built up on the selling expense, still on about the same level. We have in the R&D, the clinical and product development build-up. To be noted is that we have a share-based bonus program to the employees outside Sweden, which is mirroring the Swedish warrant program. It's synthetic type of bonus program for the non-Swedish employees. That is then affecting comparability in the way that those programs follow the very good share price, obviously. When we look at this, we should note that this is SEK 9.5 million on the cost side, affecting by the share price rise.
We can see that the EBITDA profit level is still very strong for this type of company, I think. I think important to note that extra cost for the whole program. Let's move on to page number five. Obviously, it was a great moment for the company history that we received the PMA, was the first company to receive PMA for marginal lungs or warm perfusion for marginal lungs. It was a long effort, obviously, for about 10 years. First, we got the HDE and now the PMA in a large cohort of patients in the U.S. We can see similar, in spite the fact that these were lungs that were discarded, we could see comparative to all statistics that these lung came out as good as or similar as the regular lungs.
We could also note in the study the much increased use of DCD lungs in this. DCD is the donation after circulatory death. In all, this means that more lungs can be used in transplants, which will obviously benefit the patients on the waiting list for new lungs. Next slide, number six. The PMA approval simplifies then the reimbursement process for the U.S. clinics. We also remove all the other restrictions in terms of necessary ethical committee clearances, and all that goes away with the PMA. We still continue to develop our collaboration with United Therapeutics Lung Bioengineering. Let's move on to slide number eight, to talk about the future growth program that we have in terms of development projects. In the lungs, we continue to develop the EVLP. I think we have the most versatile system in the market with more online sensors.
We have online weight sensor. We have before pH sensor, oxygen sensor. In this fall, we're going to add CO2 sensor, and a little bit down the line, glucose and lactate sensors. All that to build a more detailed picture of the lung, so to speak, for the doctor when he takes the decision to transplant or not. We also develop it to make it more easier to set up, easy to run, which means that doctors don't need to be involved so much in the setup of the system or in the running of the system. They can be remotely looking at the data, which makes it obviously much more easy for the doctor to use the EVLP in the selection of lungs that's good enough for transplantation.
Also support clinical studies to look using the EVLP to see the possibility of treating lungs for infections or could be virus infection, bacteria infections. We developed the EVLP protocol to make it more accurate or more detailed. Obviously, this is a long development process. When the science develops, we need obviously to apply that to EVLP system. The good thing with the XPS is that it's very versatile, can be changed, the protocol can be changed. A lot of things can easily be monitored in the system compared to other systems on the market. We also investigate the immunological response to EVLP, by that targeting not only the short-term but also long-term survival. Next slide, number nine, please. This is just the overview.
We have the R&D pipeline, we have the priority 1, which is obviously the heart transplant project, which is a project where we optimize preservation to prolong the time outside the body and also keep the heart in a better condition during time, short or long. Priority 2 is to document the PrimECC, which is an optimized priming solution to reduce all the very well-known side effects with the running heart-lung machine. Then secondary priorities is the STEEN Solution for liver and kidney transplant. We still support that. There is some development. More livers and kidneys have been transplanted after being evaluated with the STEEN Solution. As a priority 4, more long-term, is to see how we can use this technology for other purposes. For instance, drug administration. Okay, let's talk a little bit more in detail about these projects. Slide number 10, please.
It is about the couple of slides on the heart transplant project, which is our most prioritized project, where we have enormous potential and where the preclinical proof of concept studies indicated never seen before maintenance of quality of organs. It was proved in the studies on pigs, where we can show no non-oxygenated time leading to longer possible preservation times, up to 24 hours in pigs. It has been trialed in transplantations from pig to monkey, and monkey survived for six months, which was never seen before, using this device during the transplantation. Now we also have the first clinical data from the study, using Stig Steen's technology at Lund University Hospital on six patients.
They presented at the annual Heart and Lung Transplantation World Congress, where it was shown that the hearts could be kept in this device for four or five hours in patients up to 65 years old with very good results. It looks like it is reduced risk for ischemic reperfusion injury. All this very promising data for us when we now plan to start the multicenter trial. Next slide, please, number 11.
Next steps now. We should say, we also have received regulatory approval from the Swedish MPA. The Lund clinic will be the first to start this trial study. We are still waiting for ethical committee. Otherwise, we are very close to being able to start this trial. Although there is summer. The next step will be for us to ramp up the production of the machines, disposables, and the solution in preparation to get all the centers started in the multicenter trial in Europe. It is eight center planned in all the big markets in Europe: United Kingdom, Germany, France, Spain, Italy, Belgium. We also have starting the preparations and planning for multicenter studies in the United States, in the biggest centers in the United States already, and then in Australia. Very exciting times in the heart transplant project. Next slide, please. Number 12. This is about PrimECC.
The background is, it's about 600,000 times a heart-lung machine is used for open heart surgery all over the world. It's known that with this comes a number of side effects, some pretty severe. The solution was developed to avoid those side effects because the reason for this is when you prime this machine, the heart-lung machine, about a liter and a half of that priming solution goes into the patient, because one and a half liter of blood needs to go out of the patient into the machine. That creates problems because there are today no marketed product or approved product for this purpose. XVIVO has then a patented CE marked product, which we run a clinical study in 40/40 patients that showed it was safe.
We improved the fluid balance and reduced the side effects, now we need to increase the number in a larger trial. We have produced a new batch. We needed by regulatory restrictions, we needed to change out the primary bag that the solution is in, that has now been produced, a new eco-friendly bag. It's satisfying results. Now we're putting together a file that we will submit and to have cleared before we can start then the multicenter trial, where we intend then to increase the documentation of this product. There's a high interest from clinics to be part of this trial. We hope that that will be started, depending on regulatory approvals et cetera, hope that will be started in Q4. Next slide, number 13. We have these focus areas. The main focus area for us is thoracic transplantation and surgery.
Lungs, further development of the EVLP. We see continued interest for our lung device, we see it being spread. We have one machine in China. We have seen increased interest from China and from other big countries outside the prime markets. Still continuing developing the lung indication. Maximum priority for our heart preservation device in preparation for this multicenter studies. That will be on all the major markets. In PrimECC preparation for the multicenter study in Europe. On the abdominal side is to continue to support clinical development of liver and kidney transplantation using STEEN Solution technology. More than 30 patients have been transplanted with the liver and at least a handful of patients with kidneys using the STEEN Solution technology. We intend to look how we can apply our technology into the abdominal market.
The long term, solidify the position in thoracic surgery, then building long-term a new business using STEEN Solution technology or similar in liver and kidney. That was the end of the talk, we are now open for questions.
Ladies and gentlemen, if you have a question for the speakers, please press 01 on your telephone keypad now. Please hold until we have the first question. Our first question comes from Daniel Albin from Danske Bank. Please go ahead. Your line is now open.
Yeah. Thank you for taking my question. I wonder if you could elaborate a bit more on the collaboration with United Therapeutics and where they are in terms of ramping up their operations currently, and also seeing that they are about to complete a new clinic in Florida. I wonder if they are interested and committed in buying your XPS machines and using the warm perfusion solution for that clinic as well.
Okay. I can't really speak for United Therapeutics or Lung Bioengineering as their subsidiary is known as. I can say, yes, they are planning to open a second EVLP center in Jacksonville, Florida, at the Mayo Clinic there. For sure. We are having continued discussions and collaborations around to develop EVLP technology for them. They're using the so-called manual method. They use the same solution today. They're using some of our disposables, which is the old way of doing it with so-called manual system. They have then acquired one system, and we hope that they will acquire more of them, but this is a question you have to ask them. I can say that it's a close collaboration with them, and we're very happy about that. They're still in the startup phase, I would call it.
They're running a clinical trial with that to get the clearance from the FDA to use this. It looks good. I think they have a very impressive setup. The CEO, Mrs. Rothblatt, I know, has strong views to develop the availability of lungs using the EVLP system. Yeah, we look forward to continuing collaboration. In detail, I cannot really comment that.
Okay. Yeah.
I'm not exactly-
Yeah. Just to follow up on that one. You mentioning the clearance. Do you have any timeline for when, ballpark, they are expected to receive some sort of clearance?
No, I cannot answer that question. They're using all the patients in the old system, in the clinical trial. They can now, I think, accept also lungs with the XPS. They're still in training phase, I think. Yes, we hope together with them that we can help them get started using also the more modern XPS system.
Okay. On the competitive front, we are seeing TransMedics, or hearing and seeing more and more of them. Are you seeing them coming into clinics you have today competing-
No, we are-
with your XPS solution?
No, we have not seen any really entrance. The first they got for normal lungs, we haven't seen a spread in the United States, at least, and not in Europe, what I know about, at least. I think it's good that we have several products on the market. It's more easy to compare. I'm welcoming that, like you see, but they are not approved for evaluation. They're approved for transportation of lungs. That's the difference.
Okay. Thank you. Let me see. The last question, I wonder if you could give some graded details on the growth in warm perfusion excluding durable goods, i.e., the machines in the quarter and the growth rate. I think following both that we now see reimbursement codes and the PMA. Shouldn't we see this to accelerate a bit?
Obviously, that's what we're hoping for. We're all humble in the way that we know it takes time. We still have a great interest from clinics all over the world, really, for the XPS. We know it takes time for once a clinic has got the technique to train and to put everything into their processes. Yes, we've learned to be patient about it, but we can see that the centers that has come furthest along away, I think Toronto still is the biggest one. Also you go to Cleveland Clinic or Pittsburgh. They use it for a lot. I can't give an exact number right now, but probably in the order of 10%-20% of all the transplants, and they are making over 100 transplants in Cleveland, for instance.
We see that clinics are very skilled and have used the technology for a while, they tend to increase.
It seems to be a bit slow in the beginning, and then once it takes off they do more and more. Yes, it's a challenge, obviously, for us to help the clinics to get going.
Okay. Yeah. Thank you. That was all for me.
Thank you. Our next question comes from the line of Arvid Nicander from Redeye. Please go ahead. Your line is open.
Yes. Thank you for taking my question. I just wanted to follow up a little bit on TransMedics in light of the recent approval for expanded usage or expanded donor lungs. In their final results of their EXPAND trial, the utilization rate is seemingly quite high and also the incidence of higher grade primary graft dysfunction. Of course, this is not a head-to-head trial, and I know comparisons are difficult. I still wanted to get your take on how you view the data and the quality of the data and the trial design.
Yes. I don't want to comment the quality of data, we can see that we've kind of target a little bit different populations. They've used the kind of old definition of marginal lungs, which is lungs that has traveled more than, I think, six hours, which is very common today to use lungs that have been also brought up at eight, 10 hours. They used the old definition of marginal lung was over 60 or 65 years old, which is today not really considered marginal anymore. I think that the difference is that the population they're looking at using the kind of old definition of marginal is quite different from the ones that we've used, which has been turned down lungs. Our lungs were turned down. They were not determined as marginal because of a certain criteria like age or travel time.
Our lungs were actually turned down, and then they were selected for transplant, which is totally different. If you just use the standard criteria where you say, over 65, it's marginal. I think you have to be careful in comparing these studies. It's a total different population according to me.
Sure. Of course, it's hard to comment on someone else's technology, if the patient population would have been the same or the inclusion criteria the same, do you believe that the results would have been similar to what you're expecting in the final readouts of the NOVEL trial?
Yes, I can't really have an opinion about that. I know what we've done. We've taken turned down lungs. Obviously, if you go out for lungs that are turned down, obviously, a lot of those will be too far gone, so to speak, that they're beyond salvation. Both the FDA and our clinical trial doctors were very impressed by the technology that they can select out from this population lungs that were actually good use. Then when we looked at them a year or two years later and compared to this huge statistical database, where we selected exactly the same inclusion/exclusion criteria, we could still see that those that were selected and used were as good as the other ones. I think our technology, we're very proud of it, and I think the doctors have used it, have a big confidence in this.
That's just the thing I can comment. I can't really comment about their technology in the sense other than I think their study were different from ours. In the sense they were not using, at least what I've seen, they're not using for the same population. This was transplantation. We are looking at evaluation, taking a non-approved lung that would turn down, bring it to the clinic, and then traditionally put it on this and evaluate if it's good enough or not. I think that's the stop there. I can't really comment their technology anymore.
Right. Understandable. Thanks for providing some clarity on that. Just a final question on the I know that you guys are looking at the immunological response of possibly improving the immunological response or lack of response, so to say, when using EVLP. Do you see that as something being included as an endpoint in the heart trial to differentiate the product, let's say?
I think it's a little bit too early to say. I think we are in the early stage of this. The whole trial is we obviously take samples, planning to take samples so we can do this science behind it. I think it's a little bit too early. You say it's very interesting science. It's still in the early stages. I think in lungs, we will probably start clinical trials doing more around this during the next coming half year or maybe nine months. Studies in lungs will be started that would really look at the immunology on EVLP. For heart, I think it's a little bit early.
Okay. Right. Yeah, thanks for that, guys. That was it for me.
Thank you. As another reminder, if you do wish to ask a question, please press zero one on your telephone keypad now. We have a follow-up question from Daniel Albin from Danske Bank. Please go ahead. Your line is now open.
Thank you. Just some financial follow-up questions here. I'm just wondering, the investment rate in the NOVEL study, that is completely done now after the Q2?
Correct. Just to give you the numbers, the total capitalization on the PMA was SEK 53 million. That is, the amortization started then as of May, since we got the approval end of April. That's why we have appreciated two months of those SEK 53 million that will be depreciated over 10 years.
Okay. Coming back to the heart project then, is the SEK 50 million on a quarterly basis the level we should expect going forward in terms of cash flow for this study? Secondly, wondering when can we expect the first interim data from that study?
The first part of the question, I can answer. I think we're right now ramping up post-production and applications for the clinical study. I think, yes, we could expect this in Q3 as well, probably in Q4. Depending on how early we start also in the U.S., we could have this. It's a bit elevated capitalization rate right now due to the study ramp-up. To answer the first part of the question. Magnus, you take the second part?
Yes, sure. It's a bit early to say, but I would expect first or second quarter next year.
Okay. Yeah. Thank you very much. That was all.
Thank you. There appear to be no further questions. I return the call. Oh, sorry. We do have another follow-up question from Arvid Nicander from Redeye. Please go ahead. Your line is now open.
Right. Just a final question. I got kicked out there for some reason. I just wanted to ask you about durable goods and deliveries during this quarter of where machines have been delivered. If you could specify that.
Yes.
China and United States.
China, United States, and Canada was the new machine we talked about in this conference call, which is we're happy that it's the first one in Canada.
The one in Canada, and then there was one in the United States. Is that correct?
Yes, that's correct.
Okay. Yep. Thank you for that.
As there appears to be no further questions, I return the conference to you.
Okay. Thank you very much. Appreciate the large number of people listening today. We're proud to hear that and looking forward to have you on board, listen to the quarter three report. Thank you very much, and have a great summer.
Thank you. This now concludes our presentation. Thank you for attending. You may now disconnect your line.