BrainCool AB (publ) - interim report for Q2 2023

BrainCool Group
The period in brief

CEO Martin Waleij, comments

BrainCool continued its high pace of expansion in several areas in the second quarter as well as after the accounting period. A milestone was the breakthrough deal with the American corporation ZOLL® announced in May. The deal with ZOLL® worth at least SEK 100 million is a distributor- and partner agreement concerning distribution, marketing, and sales of BrainCool™/IQool™ System stretching to 2030. The agreement applies to the markets in the U. S, Germany, Austria, Switzerland, and the Netherlands and implies an initial fixed order of 350 systems and a significant number of cooling plates over 18-24 months period. Deliveries will start on April 1, 2024.

The cooperation with ZOLL® has developed in a very positive way. In July BrainCool received an additional order of consumables from ZOLL® following the order of 20 IQool™ System in June. ZOLL® officially launched the partnership in the U. S in July. We are positive about the rapid development with ZOLL® and assess that several orders can be received before the large rollout is planned from Q1 2024.

We started already in June to reorganize the direct sales organization in the US. Five employees have had their assignments terminated and two more have been offered positions within our partner organization. By the second quarter of 2024 the restructure of the sales organization and supply chain in the U. S will result in savings of SEK 25 million, compared to our US personnel cost budget prior to the deal with ZOLL®. We are now working intensely on scaling up production of BrainCool™/IQool™ System to meet higher volumes in the U. S and the EU. Higher volumes will result in lower cost per unit produced.

The company´s rapid expansion requires capital. A direct share issue of SEK 60 million was conducted on the 28th of August. The new issue is aimed at strategic and institutional investors. The share issue and new shareholders confirm a firm confidence in BrainCool and its future potential. In August BrainCool informed the market that it had applied for 13 million euro in “soft” funding from EIB in order to finance various activities such as clinical studies within ultra-early cooling. In May the company secured SEK 20 million in a revolving credit facility that can be used if needed.

BrainCool has developed a new smaller version of RhinoChill® – MiniChill. The size and weight have been reduced significantly, from 15 kg to only 5kg. The new version will be easier to handle and creates new possibilities such as the miliary market and heat stroke. A new patent application for MiniChill was filed in July.

We are also aiming for establishing the use of cooling and RhinoChill® as a medical indication when treating stroke with thrombectomy. BrainCool has initiated a study encompassing 400 patients. The study will be made in cooperation with the university hospital in Freiburg and it will be financed by means from the EU. In July, we obtained ethical approval of the clinical study, and it will be completed by the first quarter in 2025. In June, the U. S Food and Drug Administration (FDA) granted RhinoChill® status as a “Breakthrough Device” for early cooling of stroke patients treated with thrombectomy. This paves the way for a fast-track market approval and opens for reimbursement in the U. S.

The U. S Administration also presented in June a new proposal for reimbursement aimed at “Breakthrough Device” products called Transitional Coverage for Emerging Technologies (TCET). If TCET is approved by the Congress, it may be very beneficial for BrainCool.

In the spring we launched a new commercialization strategy in the U. S for the new cooling product Cooral® System supporting patients undergoing treatment for cancer. The strategy is aiming for establishing reimbursement in the U. S.