Bioretec Ltd’s Financial Statements Bulletin 2021 (unaudited): Major steps in preparing for commercialization of RemeOs™
Bioretec Ltd Company announcement 17 February 2022 at 9.00 a.m. EET
This is a summary of Bioretec Ltd’s Financial Statements Bulletin 2021. The complete Financial Statements Bulletin with tables is attached to this release and available at www.bioretec.com /investors-in-english/reports-and-presentations.
JULY–DECEMBER 2021 IN BRIEF
- Net sales increased by 24.2% and amounted to EUR 956 thousand (7-12/2020: EUR 770 thousand).
- Sales margin was EUR 598 (554) thousand and 62.6% (71.9%) of net sales, up by 8.1%.
- Net profit (loss) amounted to EUR -3,226 (-892) thousand.
- Earnings per share (undiluted) were EUR -0.23 (-0.01).
JANUARY–DECEMBER 2021 IN BRIEF
- Net sales increased by 33.6% and amounted to 2,003 thousand euros (1-12/2020: 1,499 thousand euros).
- Sales margin was EUR 1,376 (1,103) thousand and 68.7% (73.5%) of net sales, up by 24.8%.
- Net profit (loss) amounted to EUR -6,017 (-2,259) thousand. Net profit was affected by the costs related to the cancelled IPO and realized technical listing, funding rounds and the accrued interest of capital loans totaling EUR 3,350 thousand.
- Earnings per share (undiluted) were -0.43 (-0.02) euros.
- Board of Directors proposes that no dividend will be paid for 2021.
KEY EVENTS IN 2021
- In April, Bioretec received Breakthrough Device Designation status by the U.S. Food and Drug Administration (FDA) for its RemeOs™ trauma screw products. Under the Breakthrough Device Designation program, Bioretec continued interactive discussions with the FDA regarding the registration of RemeOs™ trauma screws for the U.S. market. The U.S. market authorization for the RemeOs™ trauma screws is planned for the first half of 2022.
- On 7 June 2021, Bioretec announced that it had applied for its shares to be listed on Nasdaq First North Growth Market Finland and commenced an initial public offering (IPO). The offering, including the over-allotment option, was oversubscribed, but the conclusion of the sole global coordinator and bookrunner of the offering was that the offering could not be completed. Therefore, the company cancelled the IPO on 17 June 2021 based on reasons that were not related to Bioretec, its actions or financial position. According to the sole global coordinator, the oversubscription in the offering was not sufficient for the expected development of the Bioretec share price on the secondary market to be beneficial to Bioretec and the investors.
- On 23 June 2021, Bioretec announced that it had completed a EUR 7.2 million equity funding round. The funding round was oversubscribed and therefore ended during the first subscription day.
- On 27 September 2021, Bioretec announced it had completed a private placement and raised EUR 1.7 million of funds. In the private placement, Bioretec issued a total of 580,000 new shares to institutional investors and a limited number to other investors.
- In September 2021, Bioretec executed a technical listing on the Nasdaq First North Growth Market Finland and trading of the company's shares was commenced on 28 September 2021.
- Relocation to new facilities in Tampere was completed in August 2021.
- Bioretec announced on 30 December 2021 that it had submitted an application for the CE mark for the first product in its new RemeOs™ product family, the RemeOs™ trauma screw. The CE mark is a legal prerequisite for the commercialization of a medical device in the European Union. Bioretec’s target is to receive the CE mark and to introduce the bioresorbable magnesium alloy trauma screw into the markets in the European Union during 2022.
KEY FIGURES
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1 A reverse split was performed in April 2021, based on which the number of shares were divided by 15.
2 Number of personnel at the end of the period.
CEO TIMO LEHTONEN: BUILDING THE FOUNDATION FOR THE FUTURE GROWTH
“2021 was a significant year for Bioretec. We took important steps towards commercializing our first RemeOs™ product and completed a listing of our shares on Nasdaq First North Growth Market Finland. The net sales grew 34% from the previous year.
Commercialization of RemeOs™ trauma screw progressing
Bioretec intends to introduce a new generation of bioresorbable materials with enhanced strength for improved surgical outcome. The new RemeOs™ product line is based on a magnesium alloy and hybrid composite. Market authorization for the first product is anticipated in the United States in the first half of 2022 and in the European Union in 2022. Bioretec is positioning itself through its product pipeline to enter the addressable USD 7 billion global orthopedic trauma market.
During the spring 2021, the first RemeOs™ product, trauma screws based on magnesium alloy, was accepted into the Breakthrough Device Designation program by the U.S. Food and Drug Administration (FDA). The designation confirms that the product represents a breakthrough technology, offers significant advantages over existing approved or cleared alternatives and that its availability is in the best interest of patients. Interactive discussions continue with the FDA, aiming at market authorization approval in the United States. Also in the European Union, Bioretec took a significant step in the commercialization of the product by filing for the market authorization (CE mark) in Europe in December 2021.
In order to ensure a smooth supply of raw materials for its RemeOs™ products, Bioretec entered into a supply agreement with Meotec in Germany for magnesium alloy in January 2022.
Shares traded in Nasdaq First North Growth Market
In 2021, we assessed several options to fund the commercialization of RemeOs™ product family. After the cancelled initial public offering (IPO), Bioretec completed a successful EUR 7.2 million equity funding round in June. The technical listing of Bioretec shares on Nasdaq First North Growth Market Finland was finalized during the third quarter. In September, prior to the technical listing, Bioretec completed a private placement raising EUR 1.7 million of equity capital. The trading of Bioretec shares on Nasdaq First North commenced on 28 September 2021.
Market recovery supporting sales
In 2021, Bioretec’s net sales were at an all-time high, EUR 2,003 (1,499) thousand, up by 34% from 2020. The growth was mainly due to the contribution from new distributors and our active sales efforts that resulted in higher sales of Activa products in all territories but especially in Europe. The growth in net sales was also related to the growing number of surgical procedures in markets where the COVID-19 restrictions had been eased. While the global orthopedic market saw a clear decline in 2020 due to canceled and postponed surgeries, in 2021 the markets already showed some signs of recovery. The main market for Bioretec, the trauma products markets, has suffered the lowest impact from the pandemic, while elective surgeries have declined more severely.
Bioretec’s sales margin in 2021 grew by 25% to EUR 1,376 (1,103) thousand, which was 69% (74%) of net sales. Profitability was lower than in 2020, mainly due to a two-month production shutdown and costs related to relocation to our new facility during the summer. Our net profit was affected by the costs related to the cancelled IPO and funding rounds in June and September, as well as the costs of completed technical listing in September and accrued interest of capital loans. As a result of the commercialization efforts of our first RemeOs™ product, our R&D spend increased to 35% (24%) of net sales.
Making progress in R&D
Bioretec’s R&D projects are progressing on schedule, with focus on supporting market authorization for the new RemeOs™ products. The first RemeOs™ product, the trauma screw, has successfully passed the clinical trials, and the preliminary results of a 2-year follow-up study are available and will be published as soon as they are finalized. The 3-year follow-up study is currently ongoing. In addition to the trauma screw, we have started product development of three other RemeOs™ implants based on the same metal alloy. The clinical trials for the K-wire are expected to start in 2022 with commercialization anticipated in 2024. The intramedullary nail is expected to be commercialized in 2026 and the spinal cage in 2027 at the earliest.
We are also expanding the application areas of our current product family, the Activa implants. A post-market clinical follow-up study of Activa IM-Nail™ in pediatric diaphyseal forearm fractures continues on schedule. An investigator initiated clinical trial to treat pediatric wrist fractures with Activa IM-Nail™ is also proceeding as planned, with one third of patients treated at the end of 2021.
Increased production capacity supports commercialization
In August, Bioretec relocated to new premises in Tampere, Finland. With expanded production capacity and improved cleanroom and R&D facilities, Bioretec is now well prepared for the future growth of RemeOs™ products. The new premises also further improve our operational efficiency and logistics. In Europe, the new Medical Device Regulation (MDR) came into force in May. We have therefore updated our operations and procedures to fully comply with the new regulation.
Strengthening competence with new talent
The competence of our personnel is an important factor for the long-term success of Bioretec. In 2021, we recruited new members to our management: Johanna Salko joined the company as CFO in February 2021, and Rami Ojala was appointed as Sales and Marketing Director at the end of the year. We also strengthened our competence through other recruitments in functions important for advancing our strategy, such as R&D and product commercialization.
I am proud of the Bioretec team’s commitment and efforts in 2021. In a single year, our team was able to carry out the listing of the company’s shares on Nasdaq First North, file for the CE mark for our strategically most important product, and actively continue sales and product development activities.
Targeting EUR 100 million net sales by 2027
Our financial target in the long-term is to reach net sales exceeding EUR 100 million in a global USD 7 billion total addressable market by 2027, and to reach positive cash flow from operating activities by the end of 2025.
As a significant share of Bioretec’s future revenue is expected to come from products still in the development and commercialization phase, the company expects to incur significant costs relating to further product development resulting in operating losses during the next few years.
In the long-term, the orthopedic trauma products are a growing market. The world’s increasingly aging population and the increasing number of bone fractures are a global health care challenge. We believe our innovative products can provide an important and valuable solution for orthopedical treatments.”
BOARD OF DIRECTORS’ DIVIDEND PROPOSAL
The parent company’s distributable funds on 31 December 2021 totaled EUR 885,348.77. The Board of Directors proposes that no dividend will be paid for the financial year 2021.
FINANCIAL REPORTING AND ANNUAL GENERAL MEETING IN 2022
Bioretec will publish its Annual Report, including the Financial Statements for the year 2021 during the week 10/2022, at the latest.
The Annual General Meeting is planned to be held on 13 April 2022.
Bioretec’s Half-year Report January–June 2022 will be published on 12 August 2022.
For more information, please contact:
Timo Lehtonen, CEO, tel. +358 50 433 8493
Johanna Salko, CFO, tel. +358 40 754 8172
Certified Adviser:
Nordic Certified Adviser AB, tel. +46 70 551 67 29
Bioretec in brief
Bioretec is a globally operating Finnish medical device company that continues to pioneer the application of bioresorbable orthopedic implants. The company has built unique competencies in the biological interface of active implants to enhance bone growth and accelerate fracture healing after orthopedic surgery. The products developed and manufactured by Bioretec are used worldwide in approximately 40 countries.
Bioretec is developing the new RemeOs™ product line based on a magnesium alloy and hybrid composite, introducing a new generation of strong bioresorbable materials for enhanced surgical outcomes. The RemeOs™ implants are resorbed and replaced by bone, which eliminates the need for removal surgery while facilitating fracture healing. The combination has the potential to make titanium implants redundant and help clinics reach their Value-Based Healthcare targets while focusing on value for patients through efficient healthcare. With the U.S. and EU market authorization for the first RemeOs™ product expected in 2022, Bioretec is positioning itself to enter the addressable USD 7 billion global orthopedic trauma market and become a game changer in surgical possibilities. Better Healing – Better Life. www.bioretec.com.
