Thank you so much for that, and welcome to XVIVO's earnings call for the fourth quarter of 2023, as well as the full year 2023. Today's presenters are me, Christoffer Rosenblad, I'm currently at the headquarters in Gothenburg, and our CFO, Kristoffer Nordström, who is in Philadelphia and living in the U.S. currently. With that, we go to the next slide, slide 3, which is a glance on the Q4 financials, and I'm happy to report the improvement in all three business areas. The adjusted EBITDA was slightly lower than expected, and our CFO will get into the details later in the presentation. For sales, it came in at a record SEK 156 million. The gross margins are continuously improving, also in Q4.
I'm especially proud of the abdominal gross margin, where we are closing into the 2027 strategic goal of seventy percent gross margin already now, and show 69% during the quarter and 66% during the year. But for avoidance of doubt, the abdominal growth is hampered by production capacity. It's still growing, and growing expected. However, the thorax growth or the lung growth is lower than expected during Q4, and this is mainly explained with XVIVO having few feet on the ground in the U.S., due to the reorganization of the U.S. sales team to enable a product service model. To some extent, a few orders ended up on the wrong side of the new year, this year versus last year, but that is not the main reason.
We are also pleased to report that the integration of our latest three acquisitions has progressed according to plan and now significantly contribute to the growth we see in the quarter and the year. As I said, the abdominal portfolio continues to grow as fast as it can during the quarter, plus 22%. Key here is that we see higher growth in Q4 versus Q3, which means that we have enabled higher quantities for production in Q4. So sequentially, we have... are growing. We can see that the main limiting factor, of course, is production, for really high growth in abdominal, we need to get into the U.S. market, which I will come into later in the presentation. And with that, we go to the full year picture.
A key takeaway here is that a quarter can stick out, but the importance is the annual progress we can see. And we see growth in all segments and improving gross margins, that has led to an EBITDA amount being almost double of that in 2022 in amounts. So we posted SEK 103 million adjusted EBITDA in 2023 versus SEK 56 million last year. So we see progress year-over-year. When we look back at 2023, we can conclude that not only the numbers in our current lung business are pointing in the right direction, but also have passed many important milestones. I mean, for example, the heart usage in Australia, the U.S. study includes DCD, and it has started with good inclusion of patient and has cost recovery.
Also, the two recent acquisitions in services has been integrated and has been a very good integration, which we are both proud and happy about. Lastly, the overwhelmingly positive feedback from our liver and kidney customers, both in terms of clinical results and in terms of user experience. You will hear more from our CFO on the numbers later, so I will skip into more into the highlights. We will look into organ-by-organ highlights 2023 and what to expect 2024 for clarity. We will start with heart on slide number 6 and accomplishment 2023. It has been a truly fantastic year for the XVIVO heart technology, and I especially want to mention that we finished the EU heart trial. We now look forward to the presentation of data.
the U.S. trial has started and is including patients according to plan. The study is unique in the sense that includes both DBD and DCD hearts in one study. I mentioned before, I mention it again, that the opportunity to include DCD into trial design was very important. The DCD portion of the donor pool in the U.S. was approximately one-third last year, and DCD is growing very fast. So having the opportunity to perfuse also DCD hearts prior to transplantation will be key to save more hearts in the U.S. and hence give the opportunity to more patients with end-stage heart disease, a chance to longer and healthier life. It's hard to not mention Australia and the compassionate use we see there. It continued at a high level through the year.
We see that approximately 30% of all heart transplant in Australia and New Zealand are with our Heart Box, and we can only use it for DBD right now, and there we actually are up to 37% of all DBD hearts in Australia. And I think this is a testament for what the heart technology can do in the future, also in other market. And the reason for this, and the last point, is that the data published from Australia was just fantastic. It was presented during ISHLT in April last year, and we see that the 30-day mortality was zero, even though we more than doubled our body time from the generally accepted 4 hours.
And the testament which the doctors in Australia say is that, yeah, if we don't do donation transplantation within the same city, we think it's unethical to not use the Heart Box. So that brings us into the slide number 7, and what we will focus on during this year, 2024. The key milestone for this year is obviously the presentation during ISHLT in April, this year in Prague, from the European randomized controls trial. And the next key milestone then will be the subsequent regulatory approval in Europe. The status right now is that we have handed in all our technical and clinical documentation to be approved by notified body. We have had very good response times. We are on plan for the notified body.
Also, the Swedish MPA, who has to approve some of the pharmaceutical substances, have shown responsive. What we see now is that the European Medicines Agency that has to review one pharmaceutical substance might push the timeline from a Q2 approval to somewhere during late Q3, early Q4, and then a subsequent launch in Q4. This is under investigation, if we can do something about it, but this is the current status of EU approval. I want to mention that in the meantime, we have applied for compassionate use also in Europe at a few targeted countries in Europe. The other or the third key thing to look out for is, of course, the U.S. trial. It has very good momentum right now.
We have already or as of Monday this week, included 15 patients, where 4 are DCDs. On Monday, we will initiate the fifth site, so we can see that the first 5 sites perform approximately 500 heart transplants per year in the U.S., which represent 11% of the total U.S. volumes in 2023. Hence, that this study will give us a very good footprint the day we will launch the product in the U.S. And with that, we will move over to the next organ, which is lung and accomplishment during this year. We can see that the hub model has proven to be successful in the U.S. for lung EVLP , and we have established 2 hubs in Europe this year. This is something we will continue to grow.
We are the market leader, and we want to be perceived as the thought leader in lungs, so we have master classes. They're very appreciated by the lung transplant community, and I must say, a lot of good ideas how to use the XPS for new indications are shared and presented during those meetings. Of course, regulatory hurdles will be there, but we can hopefully see the fruit of those new indications in approximately 4-5 years, if everything goes well. And last, even though it's not a key strategic initiatives, we are focusing on hub models. There is a high interest for the XPS at many clinics, and we have actually 7 XPS installations through the year 2023.
Now the key is, of course, to train them and as fast as possible, get them up to approximately 12 EVLPs per year, which we deem is the hurdle for having a successful EVLP program. And with that, we look into 2024 and what we plan to do. And in short, we plan to have three main initiatives in 2024. The first one is we want to continue to be perceived as the thought leader in lung transplants. So to accomplish that, we will increase efforts in EVLP training and collaboration between clinics. Two, we continue to expand the hub concept, both in EU and the U.S..
It shows successful so far, and with more feet on the ground in the U.S., we think that will be that we will be having a very successful 2024 in this regard. We also have a pipeline of clinics which show high interest, so now it's time to execute on that interest. And three, we haven't talked about this before, I think, but three, we have demonstrated now that if we increase flushing volume for Perfadex Plus, it has proven to be beneficial for the lung, both the donated lung and the patient. So this is something we will drive to demonstrate at clinics, to drive above market volume growth next year, and also to drive better patient outcome in lung transplantation.
From lung, we will go over to the next slide, which is kidney and our Kidney Assist Transport product that you see on the picture there. We are now on slide 10. It's been, even though we don't see it in sales right now, a fantastic year for the Kidney Assist Transport. We have all DCDs in the Netherlands are perfused kidney, based obviously on the very good Lancet study results, where we had 97% one-year survival versus standard of care, 90%. Said it before, say it again, production of disposable kits has hampered the launch, and we are investing as fast and as much as possibly can to solve this issue. So that's what we mentioned.
To date, we have fully launched the Kidney Assist Transport in Netherlands and Italy, Italy in Q4 2023. Next fully launched market is the U.S.. There has been a selective launch of the Kidney Assist Transport to learn more from the market in the U.S., in Australia, in Sweden, and Spain, few of our smaller countries. And so far, we have got very good initial response from the customers, and the response is, one, confirming that the clinical results we have seen published in Lancet, that it holds. And two, confirming that it's easy to use, which is very important for getting a large uptake of the product. And with that, we go to the slide 11, and looking forward to 2024, where key is ramping up production, so we get more kits.
We are gradually ramping it up, so we see that we got more kits in Q4 versus Q3, and I expect to see a further ramp up in Q1 versus Q3 2023. The next key milestone, though, for to alleviate the key hurdle of the quantities, is that we will have our components automated manufacturing. We have a deadline for 30 June 2024, so this year, and that will enable a full launch in the U.S., approximately after holiday, then in Q3, if we follow this plan. And as I said, I still expect that we will see gradually more and more quantities and gradually improving sales then. In parallel to improving production, we will expand the U.S. abdominal field force to enable meeting more customers, and especially OPOs .
And in the OPOs is where the majority of kidney perfusions are made. We see a very high interest in the U.S., and we need enough sales and clinical staff on the field to meet this high interest we have. And with increasing disposable volumes, we will launch the CAT, the Kidney Assist Transport country by country in Europe as well, but we will focus on the U.S. first. And with that, we go over to the next organ and next product, which brings us into liver. Liver has been a key growth driver for XVIVO in 2023, and it's also impressive how many milestones have been passed through this year. And just to mention a few, we integrated Avionord in approximately one month after we acquired them.
We sent the press release that they have just accomplished, that they perfused their 1,200th liver. We can also see that this service product model works very well, and in Italy, the Avionord, now XVIVO, perfusion services, they perfused almost 25% of all livers in Italy now, which is a far higher penetration ratio than we see in any other country, and it's actually only beat about what we see in the heart in Australia in terms of fast uptake in the market. I also want to mention that, and I said before, I'm very proud of the both cost improvement on the production side and price improvements on the sales side, and we see better gross margins.
We always said that we expect 70% in during this strategy period, 2027, but we now see that that goal is in reach a lot faster than that. And when accomplished, when we accomplish the goal, we come back with new goals, of course. A lot of studies has come out also during 2023, and it has really showed the product leadership, both in terms of clinical results as well as convenience for the transplant team. So for example, the Liver Assist shows significant high graft survival compared to Static Cold Storage. Also, the recent press release, I think it was maybe yesterday, of long-term perfusion is showing that we can enable plannable surgery to some extent, and that study has attracted a lot of interest.
And lastly, I want to mention a very important MDR approval, which enabled 24-hour perfusion. So this, together with the study, will open up Liver Assist not only for improving liver transplant outcome, which is an indication, but it will also open up for logistical use and daytime surgery. And if you read the study or the press release, we see that we can reduce 2-hour surgery time if we move it to daytime versus nighttime, which is, of course, will enable more livers in the future. And with that, talking about the future, we go to the next slide, 13, and we talk about what we're going to accomplish this year and what are the key milestones to launch.
I said it before, we have two key bottlenecks for increased liver growth, and they are, one, production capacity, and two, lack of US approval. So of course, we will focus on that this year. And we hope that we can submit an IDE at the end of this year. Also to mention, in terms of production capacity, kidney has the priority number one right now in our production scale-up project. Liver has number two, where we see that the number of kits produced are too low at the moment. We are continuously and gradually increasing volumes until the end of this year, when we believe that our full-scale production will be fully up and running. And also being the European market leader, we want to be perceived as the thought leader as well.
So during 2024, we will host a master class to spread liver knowledge in the community, similar to what we have done on lungs. And this will hopefully drive new indication, planning, planned daytime surgery, et cetera. Also the launch of the new MDR device with remote monitoring. So both enabling 24 hours on label and remote monitoring will support usability and daytime surgery. And with that, we go over to the last segment, which is the organ recovery service. And to start with, I must say, I'm truly impressed by the organ recovery team and the progress made during 2023. They've done a fantastic job. They have literally improved on all parameters, as well as pilot the NRP service and established scalable partnership for ground and air transportation during 2023.
So in 2023, we have laid a foundation that will enable a controlled, high quality, and scalable growth path for organ recovery in the U.S., where we can also start with to pilot the product and service revenue model that we believe that a lot of our clinics want to have. So with that, we can go over to the 2024 plan for organ recovery service business. The demand for organ recovery is very high in the U.S., and to meet the demand short term, we will expand our clinical roster, and we will also expand geographically in the U.S.
We are now on the East Coast in the U.S., and we believe that there we have a good coverage with approximately 10% of all hearts and lungs recovered, but we want to spread to other geographic areas in the U.S. For midterm, we will expand offering to include NRP. It's a fast-growing indication and showing very good clinical results, and as I said, establish a product service offering. The goal with the product service offering is to support the clinics with the first 25 hours of the transplant process in order for them to, one, sleep more during the night and enable them to do more transplants. And with that, we can go over to slide 16, which is the divider slide, and jump to slide 17 for our clinical pipeline.
As a company, we will, of course, focus on the current business. And right now, we are hitting the market with approximately 1.5 product or 1.3 products of the 4 possible, that being lungs globally and liver in Europe. So to enable a full global footprint, we are also focusing on the kidney launch and the regulatory approvals for heart globally and liver in the U.S.. So in the U.S., as I said, the heart trial is progressing according to plan, and they're working very hard to include all clinics as soon as possible. But I'm glad to see that we have a clinical trial really on plan, because that gives good confidence for the future. I have mentioned the situation in Europe.
We are according to plan for regulatory approval in Europe. The part which we can't really affect right now is the EMA or the European Medicines Agency, where we will get back when we have more information, but if they use their full 210 days, we might push the commercial launch into Q4 2024. And in Australia, New Zealand, it's less of an issue since the product is used in 37% of all DBDs right now. And the regulatory approval will be pending the CE mark , so we will come back to that. For the liver, we have previously reported that we have been granted Breakthrough Device Designation by the FDA. This will mean we get a faster route through the FDA PMA process.
It's also quality stamps that the products are innovative and fulfill a need on the market for both U.S. clinicians and patients. We have started both the process of documenting the IDE application. We have started to invest in the organization, both to run the study and to pile the documentation. The aim is that we hand in all this documentation for an IDE application during this year. And with that, I will hand over to our CFO. That is actually also on the picture here on slide 17, and I hand over the control to you, Kristoffer.
Thank you, Kristoffer.
... This is an overview slide at the beginning. First, some short comments on sales, as I will elaborate more on this area on the following slides, as usual. Net sales in Q4 came in at SEK 156 million, with an organic growth of 12%. As we have already said, full year sales, SEK 598 million, and an organic growth of 30%. Strong overall gross margin improvements, as achieved 75% in Q4 and 74% for the full year. We should spend some time on EBITDA and EBIT. Adjusted EBIT in Q4 was SEK 1 million, meaning 1%. We want to clarify that adjusted EBIT in Q4 includes a few cost items impacting comparability.
Firstly, we had a retrospective full year amortization, which we highlighted in the report of intangible assets connected to the Avionord acquisition, amounting to SEK 6 million. The following 4 years, the yearly amortization of SEK 6 million will be recognized evenly each quarter with SEK 1.5 million. But in this year, we had everything, in the same quarter, so to say, SEK 6 million. In Q4, we also had SEK 6 million in extra cost provisions for employee bonuses for achieved milestones, not previously provisioned for during the year. So this impacted Q4 in isolation for both EBIT and EBITDA. Excluding these cost items, EBIT in Q4 would have been 9%, and EBITDA would have been 17%, which is more in line with our full year achievements.
As you see in the numbers on the right, year-over-year, adjusted EBIT tripled versus last year, and EBITDA almost doubled. So we are definitely developing in the right direction. Moving over to business area, thoracic, sales came in at SEK 98 million versus SEK 88 million last year. Organic growth disposables were 14% in the quarter, and full year, the growth was 28% year-over-year. On the gross margin side, we delivered yet another strong quarter, 85% gross margin, primarily a result of ASP development in both machine perfusion and static preservation over the year. Americas, as you can see, stood for 62% of sales, and that's our relation in line with previous quarters.
Transplant volumes in the U.S. came in flat in Q4 versus Q3, and it's kind of hard to compare specific quarters, but looking at the full year trend, 2023, lung transplants in the U.S. grew 12%, which is a strong development historically. Moving over to abdominal. On the abdominal side, we continue to grow quarter by quarter as a result of our solid position in Europe, mainly with a strong customer offering. Net sales amounted to 38 million SEK, which is a new record quarter. The organic growth of disposables in Q4 was 22%, and for the full year, a very strong 54% organic growth. Liver stood for 80% of total sales in the quarter and also for the full year. Over the year, we have gradually increased our Kidney Assist Transport sales from a growing installed base on the selective markets.
I noticed there was a question in the chat here about CAT sales, and we had in Q4 sales of SEK 7 million, and year to date, it was SEK 22 million. We have seen a gradual increase quarter by quarter, fairly linear, I would say. That stepwise development is what we also expect for next year. Gross margin disposables came in at 69% in the quarter and 66% for the full year, and this is a significant increase. We are, as Christoffer mentioned before, planning our ambition to solidify these margins on a level over 70% during our strategy period. Moving over to business area services.
So as previously communicated, 2023 has been a very good year for us, where we have put high focus on strengthening our organization and partnerships in order to optimize the service offering and also to prepare for business integration. So, we are very proud that we today are involved in 10% of all thoracic organ recoveries in our active service area, which is primarily the East Coast, East Coast. That's a significant number, given the fact that this is a company that has not existed that many years, and a great position to grow from. So number of cases in 2023 grew 14% to 562 cases. And we now move into 2024 with a scalable model, and we see growth potentially in various dimensions over time.
Q4 sales were SEK 19 million and grew 19% versus last year. Full year sales were SEK 79 million and grew 57%. EBITDA and profitability. Adjusted EBITDA came in on 14% in Q4, which means that the good rolling twelve months trend temporarily weakened, as you've seen. This is, as previously explained, due to the increased costs, primarily in the isolated quarter of Q4. Full year adjusted EBITDA was 17%, an improvement from last year's 14%. And, I mean, as we said, our ambition is to continue to improve EBITDA, but we should do that in a balanced way. So we also make the right decisions, and the right investments in the big market opportunity. And sales growth and strong growth margin improvements will be the engine.
My final slide here on the cash flow and financials, we're happy over the development of our cash flow from operating activities in Q4 and also for the full year. So plus eighteen million SEK in Q4, and plus forty-six million SEK for the full year of 2023. Also want to mention that our cash flow from operating activities also covers our current spend on investments in machine perfusion devices placed at the customers, and the ambition is to continue to see that also in 2024, as our investment in these assets will, of course, increase. We end up the year with a strong cash position of SEK 546 million. And that was all from me for now. Kristoffer, over to you.
Thank you. Thank you, Nordström. With that, we go over to the outlook. As always, I want to remind you on the slide 26, on the long-term outlook and where we are, both in terms of market and as company. We should remember, the demand for transplant is 10 times of today's supplies. The sales value of machine perfusion versus cold static storage is also approximately 10 times. So we're looking at a large market opportunity. Machine perfusion and service models have been proven to increase the number of organs to be used for transplantation, especially in the fast-growing DCD organ pool. So service models and machine perfusion together will enable DCD grafts in the future and will drive growth in the near term.
Lastly, to grow all the way to 10x in number of transplants, the company believes is possible with the current human donor pool. However, over time, new innovative sources of organs will probably be used, for example, xenografts, et cetera. For both machine perfusion and new sources of organs, XVIVO has a proven product pipeline. This puts XVIVO in a unique position on the market today. From the longer-term outlook, we jump over to the 2024 outlook, we have gone through most of it, so this is more of a summary of what has been said before, but we will have a razor-sharp focus on key priorities. We have a huge market opportunity, and now it's up to us to deliver on that.
For the Heart Box, we will prepare for European and Australian launch, looking forward to the ISHLT this year in April. In terms of the U.S. trial, we will make sure that we deliver on-time plan for that. The product has—the Heart product, whatever we've done so far, has delivered amazing clinical results and user experience. So key here is that we replicate that in the U.S. as well. In terms of lungs, we want to maintain the global leadership and increase usage of our products both to enable better patient outcome and also better logistics for the lung transplant teams.
And for liver and kidney, the key is to ramp up production of kits to meet the demand for the products. They have proven to be very good products, and superior graft survival, one-year survival. So now production is key, and in parallel, we will ramp up the sales force in the U.S. for the Kidney Assist Transport full launch. And lastly, I think my main focus area this year will be the expansion of our in the U.S. in general, organ recovery service, in particular, and also enabling a product service revenue model. We hear from many clinics that they want to have logistical help, and we have all the components, we just need to have a good model for it, so we give them full support.
With that, thank you so much for listening to this presentation. With that, we will open up the floor for questions.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Ulrik Trattner from Carnegie. Please go ahead.
Great. Thank you very much, and thanks for taking the questions. I have a few, and perhaps Kristoffer and Christoffer Rosenblad, if I can start off with you. You sound, in your CEO wording, very muted on the outlook for the first two quarters of 2024. As you, as you're stating, gradually develop our customer offering and strengthen our commercial organization, could you help us decipher what this actually means and what it entails? And why ramping up commercial activity would have a hampering factor on sales?
Thank you for the question, Ulrik. Very good question. The key to start with, it's in the U.S. And we can see that we are a few too few feet on the ground in the U.S. We have hired recently a lot of really good people. They need training. I believe that we will gradually see improved sales both on lungs, on services, and combined offering during the year. But we see that I shouldn't say unexpected, but we see that having too few feet on the ground has an effect on sales. But that being said, we have started this year pretty good.
Okay, but-
We see.
Are you looking into, like, adding substantial number of headcounts in the U.S. market for 2024, and we should expect selling expenses to go up substantially during the year, or what to expect here?
Compared to 2023, no. We will – we have ever changed the headcount to different type of headcount in some cases, and that so not... Then gradually, we will increase, but not substantially. We will not add new on what we had, but we had to change a few of them in order to enable the product service offering.
Great. And since we're on service offering, the collaboration you have with MTJ Aviation, and you talked about in previous quarters about expanding number of hubs in the U.S.. Where are we in terms of having those operational for start of this year? And perhaps if you can give us some roadmap for how that's going to be expanded, if we were to focus on services and the U.S. market.
I'm actually going to the U.S. on Monday, where we're gonna discuss exactly this. The plan is that we have a couple of axes to grow on or grow more organs, for example, where we are waiting clinical studies and regulatory approvals. Well, the other axis is, of course, where we have a very good coverage on the East Coast and to spread with our customers to the West Coast. And that's something it's hard to say. I need to come back in next call more how the timeline looks like, but the interest is there. And the foundation for it is now there in terms of how we're gonna do that.
The other interesting axis to grow on is, especially in DCD heart, the NRP opportunity, which we see grow very, very fast, where we would also have an offering. And that, I think can go faster. We ran a pilot last year and did a few cases, so that can be also very, very interesting opportunity to help the transplant team to enable more transplants.
Can you give some clarity on what you're doing in NRP and how that fits into your offering?
Yeah, basically, NRP is that we are having a recovery service. So what we do is that if we need to do NRP during the recovery service, we will add that as a service component to the full service offering for a very, actually very little added cost for that. So that is, before we did only organ recovery, DBD mainly, now we can also do DCD for the sites that want to do that.
Would these be provided by TransMedics, or, or who will be the NRP provider?
No, that will actually be us. So we are doing the NRP ourselves with help of, let's call it right now, standard equipment.
Okay. Um-
Um-
Sorry.
No, just to mention that the DCD arm we have in the U.S. trial is first we do NRP, and then we do the Heart Box. So that will be a proof of concept in that trial that we can use that we can get better results if we do first NRP and then our Heart Box. And that's what we've seen in porcine studies when we perform them.
Okay. But if you are West Coast, are you still suffering from limitation of finding surgeons to take on new contracts, or is that solved for now?
No, it is solved for now. It's always, it's a, I mean, good recovery surgeons is, of course, a scarce resource, but we believe that we have a good offering for the surgeons to come on board, especially when more and more results from the heart trial will come out. We believe that we would be in a good position to attract the right type of recovery surgeons for our service offering.
Okay, great. And if we were to move to the Kidney Assist Transport and liver... Am I correct to assume that the liver is also affected by the production limitation?
Yeah.
As well as on the Kidney Assist Transport? Like, are we to expect, it sounds like you're saying that you're going to have a gradual, that you still have a gradual ramp up in terms of production, but the big milestone is mid-year this year until 2025, when you have, like, increased the capacity by 10, 10 times. Is, is that, is that a fair assumption?
No, but that is a fair assumption. And to be clear, we do see that we gradually get a little bit better quarter-over-quarter. So we had higher sales in Q4 versus Q3, for example. So we are increasing the quantities Q on Q. So we see a gradual improvement. But as you stated, to get the lid off, so to say, we do need to see the first milestone for kidney, which is the component, and that is expected to happen in during in June this year. So hopefully, then we will see volumes in Q3 for kidney, and then end of the year, we will be up to full scale.
So then production will not hamper the let's say sales increase numbers of liver. Then it's more back into feet on the ground than sales efforts, et cetera.
Okay. And you also mentioned MDR approval for the CAT device. How important is this MDR in this case?
I mean, in one sense, it's very important because it's a license to sell and to market the product. So it's, of course, very important. I think the key here is that we got through that. It was a MDR is a completely different rule work compared to the old MDD, which was quite easy to get through. The hurdle for MDR is a lot higher. So I think it's also quality stamp to both the product, the clinical data, and to get it approved here.
So that will, of course, be important for the future that we have passed all those milestones, and we now can focus on the customer production and improving how the Kidney Assist Transport is used.
Okay, great. Last questions then, or two questions on my end. You mentioned 15 patients included in the study. I'm guessing that corresponds quite well with 15 transplants performed. Are we to assume then that you will add roughly at least SEK 4.5 million in sales from these 15 patients for, for Q1, given that you have reimbursement for these, or are these deferred into later in the year, or how should we calculate?
No, the assumption is to some extent correct. I know a few of them came in... I can't remember the number right now, we need to check that. A few of them came in during Q4, and then a few will come in here during Q1. But it's a good
Yeah, I can add also that, Ulrik, that we are billing these for these transplants as soon as we can after they have occurred. So there's no deferral. We, we are allowed to bill the customers when they have done their procedures.
Great. And then last question on my end, and this might be for you, Nordström. Sales bonuses here, are they generally accrued during the year and paid out in Q4, or is there something exceptional happening here for Q4?
Hmm. Yeah. So, standard procedure, and normally during the year, we accrue for all bonuses, month by month, assuming that we will reach our targets set for the year. So that's normally something that should not stick out in a specific quarter. In this case, it was an additional bonus approved by the board for operational milestones connected to heart trial, project Billy, et cetera, and not sales related. Which we had not accrued for early in the year, so that's why we took. There was a hit in this quarter, isolated.
Okay, great. Well, thank you very much for taking my question. I will get back into the queue.
Thank you, Ulrik.
The next question comes from Jakob Lembke , from SEB. Please go ahead.
Hi, and good afternoon, and good morning to you in the U.S. My first question is on lung and machine perfusion. I mean, you started the year quite well, I would say, but now we have sort of two quarters with a bit more slower growth. If we look more long term, I know you have this goal of doubling the adoption of lung machine perfusion. Just wondering, how are you progressing towards this, and how will this sort of hiccups or organizational changes impact that?
Thank you. Thank you for the question. To be very clear, we think that. Well, we truly believe that this is the right thing to do in order to fuel growth long term. We can now see that we lost a few feet on the ground, especially in the U.S., and that has hampered growth during the two quarters you mentioned. And it takes some time to get everybody trained and up and running, but we see. I think we would definitely receive gradually through the year, an increased uptake and increased sales in EVLP, quarter on quarter this year, when we get everybody trained up and running, when we get a clearer product service revenue model in a few pockets this year.
Right thing to do long-term hampers us a little bit short-term, yes.
Okay. Just to follow up on this, people on the ground, you say that you have lost. I mean, what is the background to that, really?
Key background is we had a few competencies that we needed to change to fit the new go-to-market model. And of course, when you do that, you lose both the feet on the ground and the customer interactions on a daily basis, and it takes time to train new people coming on board. So that's the background.
It's also worth mentioning that we have, I mean, we have a solid position in EVLP in the U.S., and we have, over the years, developed very strong relations and partnerships with key customers, and those customers are growing and will continue to grow. They have the programs in place and efficiency in their infrastructure, et cetera. So it's most likely more the hunting for new sales that might be impacted until we are fully up and running with new competencies.
I also want to mention lastly that we have a very good pipeline with interested customers. It's more our inability to act on that, which we will do as of now and see better and improved results.
Okay, that's very clear. Moving on then to liver, where it looks like momentum continues to be very strong, and, you know, you're mentioning these production issues, just wondering, when you look into sort of 2024, do you still see that we can have this sort of gradual continued growth, or is there any bigger sort of production capacity growth to be reached here?
I mean, for kidney, absolutely. So going into Q3, my view is that it will look totally different, and we can actually already see now in January, February, that we see an improved situation on kidney. For liver, we see more of yeah, we will continue to see gradual uptake. We are improving every day, actually, on production. We have focused more on kidney. We see it's now faster than the gradual uptake here already in January, February. And we will, I hope to see that very soon, also in liver. It's something we work pretty much day and night on. For the key milestone, as I said, is end of Q2, we're gonna see the real impact on kidney beginning Q3.
Depending on summer months, we have to see how that translates into sales, but in terms of production. For liver, we will see the big, big jump in terms of production, at least in end of this year, where we will have set up the full-scale production. So that, that will be very important because that means that our development team and our operation team can focus more on the daily business and improving the products as well. So it has, both that we get the right quantities, but also the, the, that they can focus on, on being closer to, to the customer as well.
So, long story short, just to be very clear, we have, when you run clinical trials, you have a clinical trial type of production and supply chain, and when you go large scale into production, normally, you want to do that seamless. Unfortunately, in our case, sales took off a little bit faster than what we could scale our production. And when we tried to scale that up with more people in the clean room, we ended up having untrained and more people in clean room, and that led to the toxins. So we had quite high production volume, but you have to throw away half of it. So that's the true story behind that.
Okay, and then my next question is on the heart revenues in Q4. I'm just wondering what the split is between Australia, the U.S., and if there's anything in Europe?
I don't have the split, unfortunately, but the heart sales in Q4 was SEK 10 million versus full year of SEK 30 million. So with that, you can, of course, see that in the beginning of the year, it was only Australia, but as the year has developed, we have also been able to include these sales in the, in the, in the U.S. heart trial as well.
... Okay, and just a final question on the services. It seems like the number of recoveries declined here quarter-over-quarter, while the revenue per recovery increased quite a bit. So is there any abnormal things here or is this sort of representative level for the future?
It's a good question, a good question. Thank you for asking. It's first of all, in terms of, what we have done, which I'm very proud of, is that we have increased the profitability of this business area significantly. We are now on an EBITDA level, on par with the group. And that means that despite, you're right, that, that the case load was lower in Q4, we still have been able to improve our, revenue per case. So that, so that is very good. It is still a business that, you know, despite covering 10% of all the, all the thoracic, recoveries on the East Coast, it's still a few customers. And we had one customer, with a high volume that, simply hired their own, procurement surgeon. And that can, of course, happen.
It will look differently from customer to customer, so that took a little hit in Q4. With that said, we are now in a position where we have a slight overcapacity in terms of surgical competence, meaning that we can take on new customers in the beginning of the year here and not necessarily need to hire more surgeons, short term.
Okay, understood. That's all from me today. Thank you very much.
Thank you so much.
The next question comes from Johan Unnerus from Redeye. Please go ahead.
Great. Thanks for taking my question. Just a few add-ons. NRP is also interesting. You seem to have the tool, you have the service model by the look of things. Do you have any formal hurdles or approvals to pass to process that part of the business?
Thank you. I mean, in—if you take the heart product, there, of course, to include that fully into the NRP system for our new Heart Box and the heart technology, yes, we have the regulatory approval, and that was the great thing with the FDA that they asked us to add that we—because we actually only applied for DBD side, and they asked us we also need a product for DCD. So there the answer is yes. In terms of our service offering, there is no approvals. It's more training. When we have an organ recovery service, it's a very intimate business for a transplant team. When somebody else is going, recovering your organ or doing an NRP on the organ that they later gonna be transplant, it's their patient, et cetera.
So it's more to build up that confidence with clinics that we can do this job. If we specialize on it, we can do it better than anybody else in the U.S. So that's more the hurdle in any type of service business.
Great. And not that you're in the business of providing any half-year outlook or forecast, but to add some flavor on the, well, the surprise today and the modest organic growth you reported, it's pretty clear that we can expect sort of a gradual improvement throughout 2024 for different reasons, capacity and also support, and also added service support. What about the earlier part, Q1 and Q2? Should we expect sort of improved organic growth compared with Q4, or could it be that Q4 is representative or any flavors on that?
Thank you, Johan. Great, great questions, and the answer will be a little bit speculative. But in general, if I remember correct, Q1 last year has quite easy comparable, so it was good quarter. But I think Q4, 2023 were a stronger quarter, so we would expect higher growth than this one organically in both quarters. We definitely plan for a lot higher growth than that, but then we have to see. I think key now for us is to get the U.S. sales force up and running as soon as possible.
And I would say also the same is actually partly true, for we have a lot of opportunities also in, on, on lung EVLP in Europe, to get that up and running and start running on those opportunities. And I believe that we in parallel, we see a gradual improved supply chain on both liver and kidney products that will support growth, to some extent. So we both hope and plan for better than this quarter, especially on the thorax. Then-
Well-
No, sure. If you, I don't know if you want to add, but in terms of services, you add contracts, and they're normally yearly, so the swings will be less in terms of services, if I put it that way. Yeah.
Good. And you already mentioned the commercial team. You changed the sort of go-to-market model. You alluded to the fact that you do have a healthy pipeline of prospects to execute on these is obviously very important, and it seems like a combination of that you also both changing the profile of the sales team or part of the sales team, and you perhaps need to replace some and certainly add some. How much of a concern is this?
I mean, the thing is that short term, it hurts, but long term, it's the right thing to do. And we are a definitely growing company. We see that we have a fantastic market opportunity where we feel, especially in the U.S., that we have everything pointing in the right direction in terms of the market right now. There is a huge need for increased transplant due to the high alternative cost of a transplant. And I just talked to one of our U.S. customer, and he said that this is probably the first time since Pearl Harbor, there were a unanimous vote in both the Senate and the Congress, where everybody unanimously voted that we need to restructure the transplant system in the U.S. to enable more transplants.
We see that, of course, and with us coming with new products in what quite near future, I mean, we're talking about kidney is second half of this year, and then heart after that. We believe this is definitely the right thing to do. It might hurt a little bit short term, but we have to take the right decision for the long term.
Yes. And finally, then, it's obviously a fact that the FDA has been very proactive on the heart side. And what about the liver side? You published or press released the publication yesterday regarding the liver, and even if the standard of care situation is slightly different, it's certainly a great need to improve the liver situation as well. I'm thinking about what to expect out of the protocol you will file later in 2024. Can you include both the efficacy and extended perfusion time?
The answer to that is that we are currently discussing that internally, and so we don't have the answer right now to how we want the protocol to look like. Because yeah, we sent the press release yesterday, and we need some time to digest it internally to see what is beneficial. But that being said, when we talk to liver transplant surgeons in the U.S., that's one of the things they mentioned. It's definitely the logistical aspects of the transplant process. And it doesn't only apply to liver, by the way, but to talk to transplant surgeons, they one of their dreams is really daytime surgery, and this could be a piece of the puzzle to enable daytime surgery.
Great. Thank you. That's all from me.
Thank you.
The next question comes from Ulrik Trattner from Carnegie. Please go ahead.
Great. Thank you. So a fast, quick follow-up question on my end. Compassionate use in Europe for the heart device. You mentioned it in passing. Is that something we can expect in the near sort of next few months, or generally, how long does it take in order to for you guys to get that approved?
We already have some approvals in Germany. We will also focus on France and Belgium. I haven't seen... I heard good words from my CMO about both France and Belgium. So I think that's what we will focus on, but it's actually already up and running in Germany.
I'm guessing you want to have compassionate use approved ahead of the presentation in Prague in April?
Yes.
Okay. That was the only question I had, but thank you very much.
Great. Thank you so much. I see we're actually going over time. If there's one last question, we can take that, but then I believe there will be probably other calls today.
There's one question on the chat that I can address, and it relates to our future R&D spend in clinical trials and what we can expect there. I guess my answer is that, what we capitalize on over the balance sheet is our, primarily our clinical trials. We raised capital in the fall, SEK 440 million, which will be dedicated and will be enough for these, for the U.S. trial, for heart and liver and for the production setup project. The production setup project will be concluded in the middle of 2025, with all costs, and the clinical trials, obviously, will run over a few more years.
But those SEK 440 million is—that's probably what we should expect to be capitalized over the strategy period. Thank you.
Thank you so much, Kristoffer Nordström, and thank you so much, everyone. With that last question, we conclude this meeting, and we look forward to meet all of you on April 24, when we present the Q1 results.
Thank you.