Interim Report Q3 – July – September, 2022 Redsense Medical AB (publ)

Focus ahead as US purchasing patterns burden Q3

July – September 2022

• Net sales amounted to kSEK 1,023 (3,566), a decrease of 71.3 percent.
• Operating loss, EBIT amounted to kSEK 5,857 (2,852).
• Result after tax amounted to kSEK -2,372 (-2,547).
• Earnings per share was SEK -0.23 (-0.18) before and after dilution.

January – September 2022

• Net sales amounted to kSEK 6,077 (6,008), an increase of 1 percent.
• Operating loss, EBIT amounted to kSEK 10,506 (9,218).
• Result after tax amounted to kSEK -6,205 (-6,937).
• Earnings per share was SEK -0.50 (-0.49) before and after dilution.
• Net cash at September 30 was kSEK 14,173 (26,900).
• Cash and cash equivalents amounted to kSEK 4,371 (4,277).
• Cash flow from operating activities amounted to kSEK 43 (16,578).

Significant events during the period

• On July 6, it was announced that newly appointed CEO Pontus Nobréus would take over the helm as of August 1, 2022. Outgoing CEO Patrik Byhmer took position as Chairman of the Board as of the same date.
• On September 15, Redsense disclosed that a scientific article recently published by the American Heart Association (AHA) recommends home hemodialysis over in-center hemodialysis for kidney patients with cardiovascular disease.
• On September 26, Redsense presented at Aktiespararna’s event Aktiedagen Lund.

Significant events after the end of the period

• On October 18, it was announced that Redsense had received its highest value order to date.

Comment from the CEO

Busy quarter with the US in focus

Overall, the third quarter of the year was characterized by intense forward-looking activities.

First, let us note that the sales recovery is taking longer than expected. Redsense’s third quarter falls clearly short of expectations in terms of sales, as net sales reached kSEK 1,023 in the quarter and kSEK 6,077 in the first nine months of the year. The latter figure is on a par with the corresponding period last year and while the overall situation has improved in the healthcare systems, it is apparent that some challenges remain in the pandemic aftermaths. We have experienced variations in purchasing patterns from our US distributors, which built up surplus inventories during the market slowdown and now reduce their stock levels to meet the current demand. As such, net sales for the quarter, while unimpressive, are not an accurate reflection of the demand on the market at present and should not be over-interpreted. Indeed—as communicated—Redsense early in the fourth quarter secured its largest single order to date, valued at MSEK 3.7, from one of the US distributors.

We continue our clear focus on the US market, with a high level of sales and marketing activities, and in addition we work with our distributors towards a more consistent purchase pattern which also will benefit the supply chain flow.

A busy quarter with many positive signs

In September, further proof of the relative benefits of home hemodialysis (HHD) was brought forward, as the American Heart Association (AHA), the largest US voluntary organization for matters related to cardiovascular health, published the findings of an extensive review. The AHA’s statement clearly expressed that home treatment is associated with a much better clinical outcome for the large group of kidney patients with cardiovascular comorbidities, not least because the longer, slower, and more frequent HHD sessions better mimic the operation of a healthy kidney. This, of course, aligns with the strong commitment and plans among our main US customers to increase the proportion of HHD, which has numerous benefits for patients and is also the subject of political incentives.

For us, this is a major positive sign: The Redsense Alarm and Clamp are both particularly valuable in a home setting, as they, by design, compensate for the reduced access to nursing staff. Especially in light of the prevalent nursing shortage, HHD can act as a leverage to extend care to more patients without increasing staff requirements, as Redsense’s technology provides the patient safety needed to unlock the benefits of home hemodialysis as well as for high-risk patients in clinics.

In regard to the ongoing process of US reimbursement, where the aim is to ensure that Redsense is included in the Medicare coverage, everything is moving on and discussions with key stakeholders are promising. In September, we exhibited at two US conferences, first at the California Dialysis Council’s Annual Educational Conference, then at the National Kidney Foundation of Florida’s Renal Professional Forum. These types of events are excellent opportunities to showcase our products and promote patient safety during hemodialysis.

Moving ahead in Europe

In Europe, we maintain our strategic focus on Germany as the prioritized market. Our goal is to get established with a large dialysis provider, with which we have had on-going discussions as well as a general product validation. As planned, we have performed training in two clinics in collaboration with this provider, and on-site evaluations of our products are now ongoing.

In parallel, the preparations to get the Clamp ready for launch have reached the final steps, which involves user studies to complete the CE marking process. We are working with Toronto General Hospital to finalize the documentation to get this study up and running. Going forward, countries such as Canada and Australia will be among the prioritized markets for launch, and the US regulatory process will also come into focus.

Looking forward

Our strategy going forward rests on three pillars: capitalizing on our strong HHD position in the US; focusing on markets with favorable conditions in the EU; and launching the Clamp in selected markets.

To achieve this, we will focus strongly on sales in the home hemodialysis segment in the US, looking especially at boosting sales efficiency as well as marketing activities such as conferences and exhibitions, where we showcase the products and raise awareness. Furthermore, it is important to continue to raise political awareness in regard to patient safety for home hemodialysis and how our products can contribute in this area. This work is important to lay the foundation for the reimbursement process for home hemodialysis. In parallel, the process in Germany will proceed, as will the user studies for the Clamp CE marking.

After having visited the United States and interacted with investors and stakeholders in various contexts during the quarter, my final reflection is that Redsense stands on a strong footing—stronger than the sales figures for the third quarter indicate. The fourth quarter is off to a good start. With an excellent team in place and the continued high level of activities, we are in a good position to grow our business. I see the beginnings of good things!

Pontus Nobréus
CEO, Redsense Medical

This information is information that Redsense Medical AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact persons set out below, on November 9, 2022, at 08:30 CET.