A wonderful good morning, ladies and gentlemen. Thank you for standing by. I am Francie, your course call operator. Welcome and thank you for joining the Marinomed Biotech AG Full Year Results of 2022. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. If you would like to ask a question, you may do so by pressing star and one. Press the star key followed by zero for operator assistance. It's my pleasure. I would now like to turn the conference over tto Mr. Andreas Grassauer. Please go ahead, sir.
Thank you very much, everybody for joining this call also together with me today it's Pascal Schmidt and Eva Prieschl-Grassauer, CFO of the company and Chief Scientific Officer of the company. We're going to share the full year results today with you. We are going also to take a look into our therapeutic areas and this pipeline strategy. Eva will give an update on the recent clinical progress where we have just recently published two press releases around clinical trials. Then I'll give a brief project status update and an outlook what you can expect in the months to come. What are the highlights of 2022?
It was an interesting and challenging year. We now are able to report stable revenues and the growth of our core Carragelose business of 15.5%. That adjusted for the Budesolv milestone that we received last year when we did the first deal for Budesolv, would even be in a revenue growth of 16.5%. Even more important for the future for us was the deal with Procter & Gamble for U.S. We'll talk about progress there also a little bit later, but it's an important step forward. The U.S. market is the biggest market for the cuticle energy segment, more than 2x the size than the entire market of Western Europe.
Incredibly important to get a footprint in the U.S. for us. Marinosolv and our Solv4U unit, where we sell our technology or offer our technology for other partners, we made progress as well here. We got the patent granted in the United States, which is of particular importance for us here. On the technology side, also a good year. Since this is a financial call and numbers are important, I'll hand over to Pascal to present you the financial results.
Thank you, Andreas, and also welcome from my side. We'll start with a brief look into top-line figures. Here we see that we had overall stable revenues. You remember, and Andreas just said it, last year, we had nearly EUR 2 million milestone from the Budesolv partnering, and that's certainly not a recurring item. The recurring business develops well. This is mostly related obviously to the Carragelose business. Although, and we mentioned that in the second bullet point, Solv4U, that is the business that has technology partnerships and offers the Marinosolv technology to pharma partners, that has already contributed a bit also to these numbers.
Overall, the base business, the recurring business has developed well with the double-digit growth, and we are happy with the top-line development here. In with regards to the operating results, the EBIT, you can see that it's slightly worse, given that the revenue from the milestone is 100% accretive to the EBIT. The EUR 2 million last year did fall through the EBIT line, and contributed nearly EUR 2 million. This is still an improvement, which underlines that Carragelose business is profitable and contributes nice margins. We are working heavily with partners like Procter & Gamble in the US, and with M8, formerly Moksha8, in South America and Middle America.
These are mostly regulatory works that need to be done to be able to generate new business and to get products to the market in countries where we are not visible yet or not available yet. Overall, we also attach a positive outlook to that. We have a strong order backlog for the first half 2023. This year starts already with a good order book. We obviously are also working very much on supply chain management. Here we have still the situation that raw materials are scarce resources, so the lead times are high. Plus, obviously, as probably everyone in the market notices, prices have increased significantly.
So far we were able to pass on price increases, but that's certainly also a challenge, not only for us, also for our customers. Moving ahead, and that's always we believe one important item for you as shareholders. We have a solid cash position. We started the year with EUR 5.8 million and ended the year with EUR 8.2 million. Noticeable that we had the drawdown of the EIB per tranche. EIB was the addition to the IPO proceeds. We had a EUR 15 million venture loan that we were able to draw down in three tranches. We took all three, meaning that we all met all the milestones that we needed to meet.
In particular for the last drawdown, we were quite proud of, because if you had the visibility for four years on what is possible to achieve in terms of revenue growth, in terms of clinical success, in terms of also partnering, that's a good achievement and that's an important element to our financing obviously. We also drew down convertible notes from our Convertible Notes Funding Program with Nice & Green. Although we understood from our shareholders that this is nothing that you particularly like, so we suspended it for the moment, and think that the current cash position puts us into the position to do so.
Overall, you can see from the red bars that we have a cash burn in the area of EUR 5, EUR 2 .5 million a quarter, which is reduced by the, what we call working capital, WC at the bottom, which is the earnings from the Carragelose business, which is an aggregate of approximately EUR 4 million. Overall the year, we used approximately EUR 6 million in cash and cash equivalent for operating business, which as you know, is mostly R&D related, so headcount and external services. Overall that means cash flows were controlled over the year. What you always have to take into consideration is the tax receivables. This is EUR 0.6 million on top, which is related to the research promotion.
The research promotion is an effective cash element which sits on the tax account and which can be drawn down within a few weeks. It's cash equivalent. Moving ahead to the statement of profit and loss. As you can see, this is mainly in line with what you can expect overall, similar to last year. Looking a bit into the details, especially on the right top side, you see the sale of goods which is the Carragelose product. Here we have the increase from EUR 9 million to EUR 10.5 million. As said, we were able to pass on price increases and to keep overall pricing stable. The margin remained at a little above 32%.
Also, important, we have the R&D related expenses, mostly as said, personnel related, so on personnel. We're in a stage where we work more internally than externally. External costs are currently more related to data management and data analysis. Internal is more related to studies that we do ourselves and the preparation as the results of clinical studies. Looking at the balance sheet, here we have one key item, which always drives us and it's the result of a very strict supply chain management. We have still raw materials which have lead times of 12 months and more. We stock them ourselves. Here you can see that they have slightly increased.
Given an overall cost of goods of more than EUR 7 million, working with less than EUR 1 million in raw materials is also quite a good example of the visibility of our revenues and working with the circumstances. Cost goods for sale is really related to our revenue recognition. That means that we don't record revenue until the customer has really picked up the goods and it's in his liability. This means these are goods that have just not been picked up but fully produced and invoice is already laid. Unfinished goods, as you can imagine, is on the way to be produced and to be picked up by customers.
This is kind of revenue for the first quarter. Looking at the equities and liability side, you notice the capital reserves have increased. This is related to the Convertible Notes Funding Program. You also notice that as planned, capital and reserves is negative by now. This is as planned because we have a mix of equity and debt financing. The main item of the debt financing obviously being the EIB loan, as well as the refinancing of the real estate. The real estate refinancing has a very long term maturity, meaning 15 years. This is a very long-term element. The EIB is in the process of being repaid.
That's why you see in the current liabilities section, the EUR 2.5 million. This is first element of the EIB loan which has to be repaid. An important position is also the current contract liabilities and current liabilities. Here we have still a significant element related to the COVID-19 trial, which is subsidized through the eCall from FFG, the research promotion agency in Austria. While we use the funding, this one gets reduced, but it's not a liability, but it's using up the funds for the program, which is still in the readout phase. This is it's about the financials, and I hand back to Andreas.
Yeah. Financials are of course important, and thank you, Pascal. Always for a life science company, it's important what's going on and what's up in the future. Yes, you are aware with two big therapeutic areas. One is the virology sections, where mainly our Carragelose products are active, and we are active here with our ioita-carrageenan based broad spectrum virus blocker. Here the clear focus of is expanding worldwide. As Pascal mentioned, the Americas is an important target. Of course, the U.S., where we're working closely together with Procter & Gamble to get progress. One another part is of course Asia.
Interestingly, recent developments in Japan may allow us to get progress there with potential partners. It's a very interesting market as well. We've been working together with parties or potential partners in the past for quite some time we've been in contact. The regulatory path in Japan wasn't that clear. It seems to be clarified now and a couple of partners approached us because of that. We are making progress here as well. It could be interesting development for Marinomed since Japan is a high priced technical market. In the immunology side, as you're aware, our Marinosolv technology is a solubilization technology.
We've made progress here with our lead product, Budesolv, that has successfully completed the Phase III trial and we are now in the process of partnering here as well. It's a very interesting time for us because a lot of business development is going in parallel. That's why we also are having taken support, external support for inflammatory eye program for Tacrosolv with external support here in the business development. First of all, because it helps us to structure the process. Second, because there is some good feedback from the market and we wanna get the best value out of this asset. If you then take a look, we look on our pipeline, it's summarized here.
Basically, the two big programs from on the immunology side are Budesolv and Tacrosolv, with completed clinical trials in the partnering process with and also in regulatory processes on both sides. On the virology side, the development of nasal decongestant product that has is a combination of a decongestant with Carragelose and also the inhalation part of Carragelose. For the year, the priority is of course the high valued assets above. On the commercial side, with the commercialized products, here it's also important, and Eva will come to that their recent clinical trials support our business development here as well.
When we look in our strategic priorities, of course, it's clear that we wanna focus on the revenue generation with our existing products, and product candidates, on the good clinical data that we have. Capitalize on that, first of all, further grow the Carragelose business. Get the product on the market in the U.S. as soon as possible. Achieve additional partnering here. Get Budesolv further partnered outside China. Of course, partner Tacrosolv, the anti-inflammatory eye product, as well, in a structured process.
Once that is done, and once that progresses, we can adhere to our long-term mission to develop further our pipeline. Clearly this year the priority is on commercialization of this asset. Part of that commercialization is also the clinical progress that helps the Carragelose. Here I hand over to Eva. She will share or will give you an update on the progress, the clinical progress.
Other one, I'll come from my side. We are back to the Carragelose. We have performed two clinical trials with Carragelose-containing nasal sprays. I wanna start with the Coldamaris, which is a sorbitol-containing iota-carrageenan nasal spray that also relieves from nasal congestion. It's a non-pharmaceutical decongestant product, and we have tested this product versus placebo in a challenge chamber setting, using the indication allergic rhinitis, in the Vienna Challenge Chamber. This slide further gives you kind of overview how the trial has been performed. Most important point is that in such a challenge setting, patients suffering from allergic rhinitis due to grass pollen allergy are on purpose exposed to the grass pollen to induce allergic symptoms.
When they have the allergic symptoms, they are then treated, with either placebo or the Coldamaris akut with sorbitol nasal spray to reduce the congestion of the nasal cavity that has been the result of the allergic challenge. In total, we had 39 subjects completing the trial. What is also important, this is a crossover study, so each subject function as a control in itself if everybody gets both products in a random manner, and therefore you can compare directly within the population. Next one. On this slide, we see the two head main figures that give you the result of this trial. We have on the right-hand side the objective symptom nasal airflow, which is directly related to nasal congestion.
The higher the score is, the better it is because we get more air in the nasal cavity. The pink line gives you the inaudible clinical study, the blue line gives you the placebo. The starting point is the time point when they receive the treatment. After the treatment, they were still observed until six hours in this challenge. You can see that the cold and mild acute group improved with nasal airflow, while the blue line, the placebo group declined a little bit. This result is statistically significant with a P-value below 0.05. On the right-hand side, you can see how many of the subjects had a benefit from the treatment.
It's pretty easy to see that in the Verum group, more than 60% benefited from the treatment, while in the placebo group it's below 40%. Also this result is statistically significant. What I would like to add to this result is that also the symptom, the subjective symptom, nasal congestion or blocked nose, has been reduced significantly upon treatment, which underlines which also reports what we have seen with the objective symptom. Next one. The second clinical trial that has also covered the indication allergy, has been performed with a nasal spray containing more or less only iota-carrageenan in a buffer system. Here it was a pre-treatment, so we treated the subjects before they entered the challenge chamber and compared it without treatment. Here we had a similar size of the trial.
Again, it was a crossover study, we looked at the development of symptoms over time with or without the barrier function of iota-carrageenan, preventing, at least to some part, the interaction of the allergens with the nasal mucosa. The hypothesis was that the symptoms should be reduced. Here again, two figures that illustrate the trial's results. On the left-hand side, we can see the Total Nasal Symptom Score, which is a composite score of four symptoms, mainly running nose, sneezing, blocked nose, forgot. A fourth one with indication. Itch and nose. Yes, you're right. Thank you. [would you note] , the score can go up to 12 points. You can see here the median after three hours of exposure. This was a shorter trial.
It was not six hours, it was three hours here. You can see that the Verum group, the carrageenan group, is significantly lower in this Total Nasal Symptom Score compared to no treatment. The barrier function seems to work. The most prominent symptom that has been reduced significantly, besides others, was running nose. You can see that here also we see a significant difference in favor of the Verum treatment compared to no treatment. Those symptoms were significantly better, demonstrating a prophylactic effect of the Carragelose nasal spray. Back to Andreas.
Yeah. This is of particular importance for us, when it comes to the development of Carragelose. First of all, several parties, partners already contacted us, because of that data, in order to evaluate the potential a full year product or adding additional products for block- simply blocking the allergens and developing or bringing an allergy product to the market. The second one is the decongestant effect, the clinical effect we have in both trials, will help us in order to push the Carragelose portfolio further, and grow that Carragelose portfolio further. Also it helps us to support the products when it comes to the new Medical Device Regulation as clinical data are required here.
In that translates to the progress we will plan to go through in this year and the next in the year to come. First of all, as mentioned earlier, in the immunology side, the key priority is partnering of Tacrosolv and Budesolv. Clearly we want to enter new partnership in the near future. For Tacrosolv, the professional process has been initiated. To give you a flavor, it's about generating data, contacting parties, discussing NDAs, structuring the process that people can look into data and do their own analysis. It's making quite some progress here.
With Budesolv, we are working of course on the registration with Luoxin in greater China here also. Lu oxin is doing good progress and of course, additional partnerships for Europe, but potentially also for a global outside China possibility as arising here. We're working here as well. At the moment, for both projects, no heavy investment on Marinomed side in further clinical trials is necessary, at least not at the moment. Of course, Tacrosolv as it is a phase II asset will require further clinical trials for marketing authorization, but this is planned to be done with partners.
As already mentioned, for virology, the key focus is registration in the U.S. and Americas, but also business development in Asia and in particular Japan. It could be very interesting and all that development and the clinical data we've recently got will help us to do the progress here. On the Solv4U side, we are entering the first project, what we call in the determination phase. That means successful feasibility studies have been conducted, and we hope to be able to announce the one or the other partnership here in the near future to demonstrate that this part of the business is also a growth business.
It's a long-term growth business, but it's a more or less risk-free growth business opportunity for Marinomed and the development we want to pursue as well. We summarize the outlook. We clearly focus on midterm revenue. Commit ourselves to reach short-term operating profitability. As you saw in our in the numbers Pascal Schmidt presented, even maybe a single-digit million milestone can turn the company into profitability. That's the clear goal to do that. That's why we work on that project and in particular the licensing pursuing licensing deals with pharma partners for Budesolv and Tacrosolv is of key priority because they are our most relevant assets that are ready for partnering and are already in that process.
We also, we don't forget our key, where we come from or what our, what our DNA is. Our DNA is to invent, to develop and to select promising new products candidates to fill the pipelines so this happens as well. We are working on that. The R&D team also works on that. From the, from the corporate perspective, of course, business development is the key element here. We're very optimistic that this is, could be a very good year for Marinomed Biotech AG on that side. Having said that, I wanna thank you for joining this call, for your being a shareholder, being interested in our company. With the financial calendar of Marinomed Biotech AG, you'll see we publish the Q1 results in just about a month. I wanna hand back to the moderator and ask you for your questions.
Ladies and gentlemen, at this time we will begin the question-and-answer session. Anyone who wishes to ask a question may press star followed by one. If you wish to remove yourself from the question queue, you may press star followed by two. Anyone who has a question may press star followed by one at this time. We have the first question from Vladimira Urbankova from Erste Group Bank. Please go ahead.
Hello, good morning. I would have a couple of questions, and let me start with the outlook for 2023. You said that your order book is solid. What kind of growth tempo for Carragelose, the base products, we should pencil in? You said that R&D will increase. Could you maybe be more specific what kind of magnitude of increase we are talking here about? Next question would be related to this expansion of Carragelose products into the allergy field. What are the next steps necessary to really make it a commercial opportunity? To have it on the label, what do you need to do? What is the expected timeframe, and what kind of sales impact we should expect from this expansion?
Last but not least, you have quite a nice overview of your update per project. Do you maybe have any update based on what to expect in 2023 in terms of the new flow for your project? Yeah, I am simply missing here when to get some maybe more data from studies, if you already have some dates, because really you were promising some data from Carragelose studies for first few, but I did not notice anything to be published from the past studies. Also, yeah, if you have maybe any more detailed update on Procter & Gamble. Last time you said that maybe the product launch will face some delays. How the situation looks like here. This would be my major questions for now.
Okay, thank you, Vladimira. Pascal here. I'll start with the outlook and the Carragelose load growth. Overall, as usual, we say it's a double-digit growth for the Carragelose load, which is supported by the order book in the first half. The second half, it's too early to tell. Obviously, the partners wait for the current season to look into the next season and to order for the next season. As soon as they start stocking for the next season, we'll see how this develops and we'll obviously will inform you and all other shareholders. With regards to R&D spending, overall, we think it remains overall stable, plus minus.
As said, we are currently in the phase of reach out, as we've mostly focused on last year. We prepare for new studies in the sense of getting a clear picture and assembling what needs to be done. But the execution of the studies, as Andreas Grassauer mentioned, is foreseen to be in connection with partnerships, because the kind of studies that are the next ones to be done are those which also have an influence on marketing and there the partners will want to have a say. But
Well, I can comment on the claims for the allergy, on the two products that have been mentioned. You know that for the Carrergin could we already have the allergic claim within the leaflet. Here this data support with claim firmer, and in addition, it also allows us a safe transition into the MDR, so the Medical Device Regulation, because their clinical data, an element that needs to be covered to allow the successful transition. For the second product, the buffet iota-carrageenan nasal spray, this allows us to offer an a-seasonal product to our partners. We already had, as Andreas mentioned, several partners asking us for such a product. The product will be available as far as we can see it from today at the end of this year or beginning of next year.
We are very heavily working on the technical documentation to finalize that, and then this can be put onto the market, and I think we are have good progress there. For the update on the other clinical study, mainly the nasal spray study and the inhalation study, we need to keep you still a little bit patient. We know that the inhalation study, at least one point I can tell is that we don't have any safety flags that have been raised. It was a small number of subjects that have been treated, but the only really adverse event that has been noted, which would have been a problem, was in the placebo group, so we are safe here.
Secondly, I also can indicate that even though the trial was very, very small, there is an indication that the treatment has been successful. You won't probably meet a significant difference between the two groups, but the outlook is promising here. With respect to publications, it's planned of course to publish the results of the two clinical studies that are presented today. Also I can tell you that we are present at one of the largest ophthalmology community meetings, and there the results of Carragelose also will be presented, and also their publication is foreseen.
With the update to Procter & Gamble, as you.
I'm aware, as you clearly mentioned that, and I said in the last call, last year, I said, okay, the 2023/2024 season is gone or is most likely gone. That's the case because practically you need to have Order the product already today for large. Basically, the working hypothesis from both sides now is the next season, the 2024/2025 season. And that's what the parties are committed to, both sides to reach the possibility to get the product on the market in the US for that season. It wouldn't be revenue relevant for this year besides some smaller regulatory milestones on that.
Of course, for the future, it's an important pillar for the growth of the Carragelose business. I think we mostly covered the questions. Of course, it's very difficult what would be motivated to give you exact time points for updates on the business development side for Budesolv or Tacrosolv. This is always very difficult to comment on that because you never know when you would ink something or when you will be able to publish what we can say here. We're making progress on with those projects, and are committed to strike deals in the upcoming year.
Thank you very much. One, small detail. What is your estimated sales impact, in case you will be promoting your carragelose products with an allergy label?
With the... Sorry. Overall, the allergy has the potential to fill the gap of the seasonality. There is a good chance that this levels out. The allergy market obviously is huge, and it may not directly compete obviously with the corticosteroids. It has certainly the potential to become a second carragelose pillar in almost the same size.
Okay. Thank you.
The next question comes from Victor Floc'h from Stifel. Your question, please.
Hi. Thank you for taking my question. I actually have two. The first one on Tacrosolv. As I understand that partnership is not expected until next year. I was just wondering if you can update us on the next development this year for the products. And more generally, I was wondering if we should expect any milestone this year, maybe coming from Budesolv or another product. Thanks. Thanks a lot.
Basically with Tacrosolv, yeah, as you know, such a business development process is something that can take a couple of months, and doing, and sometimes a quarter. It's very difficult to give an exact time point. From the project side, we, as you know, the clinical trial has been completed, but there is quite some development work to be done, first of all in, into preparation of further trials and also preparation of a potential partnership.
As we consider this project of high value, we are really interested in entering a part-partnership here in the very near future in order to progress that program into, first of all, the target indication might be a phase IIb or phase II. Another phase II in the new target indication, followed by phase III trials, depending on the partnership. This is a but the discussion's ongoing here. We still are committed to do a partnership here this year. That's why, in terms of the milestone or an upfront payment for this.
In terms of other milestones, we would somehow consider that when we make progress in China or Luoxin is doing progress in China, we would expect a milestone payment there. Not a high one. It's it's a it's around $1 million. There might be payments as well associated with further deals in the for Carragelose and especially also Budesolv depending on the market. For example, we would expect to see some kind of payments associated with the deal with Japan.
Okay. Got it. Thanks a lot.
Ladies and gentlemen, I repeat, if you would like to ask a question, please press star followed by one. It seems to be no further questions at the time. I hand back to Mr. Grassauer for closing comments.
I would like to take the opportunity to thank everybody for joining this call. For being interested in the development of Marinomed. As I look around here in the room, we are optimistic. We are quite committed in achieving our goals for this year, and will keep you posted. Please follow the news. It could be a very interesting year for Marinomed. Thank you very much, and have a good day.
Ladies and gentlemen, the conference is now concluded, and you may disconnect your telephone. Thank you very much for joining, and have a pleasant day. Goodbye