BrainCool AB (publ) - interim report for Q3 2023

BrainCool Group
Period in brief

CEO Martin Waleij, comments

BrainCool´s operations develop according to plan with the rapid implementation of the company´s strategy including product development, production, and marketing.

To build up capacity to produce the BrainCool™ System has been a priority in the past six months. In October we expanded our cooperation with the Finnish subcontractor Scanfil.

BrainCool signed a multi-year agreement with Scanfil concerning deliveries of BrainCool™ System. At the same time, we placed an order of 500 systems. As part of the agreement, Scanfil will no longer require an advance payment for materials, which will initially reduce BrainCool's need for working capital by SEK 20-25 million annually. Payment will now be made upon delivery. In addition, BrainCool will have lower cost per delivered unit. Deliveries according to the agreement has now started, orders communicated to ZOLL of 35 units is delivered during the last quarter.

BrainCool will also increasingly use Scanfil as a subcontractor for various components and for service, as well as for more of BrainCool's products, such as Cooral® System.

It is of crucial importance to ensure production capacity to meet rising demand for BrainCool™/IQool™ System. The agreement with Scanfil also secures deliveries of 350 systems starting on April 1, 2024, within the framework of BrainCool's partner agreement with Zoll®.

We have also pursued several market activities during the period. In August BrainCool extended its cooperations with Zoll® to six new markets in South East Asia and the market in Pakistan. At the same time, we received an order for 20 BrainCool™ System with delivery to Zoll®´s operations in Singapore. In addition, BrainCool received two more orders in the quarter for 35 systems from Zoll® aimed for the U. S. market. In China, BrainCool started cooperation with Wallaby Medical with the goal to launch products for the stroke market in the country with special focus on thrombectomy.

Furthermore, in November BrainCool signed agreements with the two largest General Purchasing Organizations (GPO) regarding the purchase of healthcare products in the US, Vizient and Premier Inc. The companies operate nationwide managing purchases for different hospitals with a total of 800,000 hospital beds. The new agreements significantly strengthen BrainCool's market coverage in the US. The distribution of BrainCool's products with IQool™ System takes place within the framework of the agreement with Zoll®. Through our agreements with the three largest GPOs in the US, we now have a solid platform for establishing IQool™ System as the market leader in the US market.

In August, BrainCool concluded an agreement with the University of Maryland in the U. S. to participate in the EU-funded Cottis 2 study. The aim is to establish a new unique treatment for stroke patients by combining cooling with thrombectomy. The findings of this new treatment in the Cottis 1 study were also published in the prestigious Journal of Stroke & Vascular Neurology in August.

In October, the American Medical Association (AMA) announced the approval of a new Current Procedural Terminology (CPT®) code for cryotherapy – using the company’s Cooral® System - in patients undergoing chemotherapy. The new code has several positive implications for BrainCool and its product Cooral® System. It opens for reimbursement for Cooral® System from Medicare – the U. S. public health care system. Reimbursement in this case does not require a U. S. -based clinical trial. This implies that we can bring forward the official launch of Cooral® System on the U. S. market to mid-2024 instead of 2025/26.

In late August, we succeeded in conducting a direct share issue of SEK 60 million securing continued financing. The issue attracted new shareholders as well as institutional investors which confirms a well-grounded confidence in BrainCool and its future potential.