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Yes, it's 2:00 this afternoon. So welcome to this digital event with BioPorto. My name is Henrik Ekman, and I'm BioTech Equity Analyst here for Andersen Capital. And with me today, I have the pleasure of welcoming the CEO of BioPorto, Tony Pare; and CFO of BioPorto, Neil Goldman.
Before I hand it over to Tony and Neil, just a few remarks. The audience is welcome to post questions in the box, and I will do my best to forward it to the management team. And afterwards, we record this. We will put it on the different media platforms so you can see the event again if you missed something.
So with that, a very warm welcome to 2 of you. I know that your 1-year anniversary Tony, it was yesterday. So a lot of things has happened. And I know you've been very busy in the latest call. So please tell us what the highlights are.
Okay. Thank you. Thank you once again for hosting Henrik and a warm welcome to everyone participating on this Q3 2022 financial results and business update call. We are thankful that you have chosen to spend your afternoon with us to review our latest interim quarterly report. With me today is Neil Goldman, our Executive Vice President and Chief Financial Officer.
Before we begin, let me remind you that the company's remarks made during this conference call today, November 9, 2022, may include predictions, estimates or other information that may be considered forward-looking.
Let me begin with an update on our submission of the de novo application to the U.S. Food and Drug Administration or FDA of an NGAL test to aid in identifying pediatric patients aged at least 3 months and up to 22 years at risk of moderate to severe acute kidney injury or AKI.
We have committed that we will submit by Q4 of this year, and today, we are reiterating that commitment. Additional work remains and our team is completely focused on getting it right. That includes, for example, engaging former FDA reviewers to advise on the submissions analytical approach, documentation and presentation.
We will not submit unless we are reasonably confident that we have met the objectives to find at the beginning of the clinical trials. That said, remember this a very complex clinical trial comprised of 3 separate studies that contain hundreds of data elements that are being analyzed, documented and reviewed. Ultimately, of course, the FDA is the judge. Depending on the outcome of the very last details, all of which are important, we maintain our expectation of a submission this quarter.
Turning to financials. We saw revenues of DKK 5.3 million or $0.7 million in the third quarter of 2022, which was on par with the prior year's revenue in the same period. Year-to-date, our revenue was DKK 20.3 million or $2.9 million, a 16% increase over the same period last year. Year-to-date revenue from sales of NGAL test totaled more than DKK 9.7 million, which is a 15% increase over the prior year.
While we are pleased with this growth, it is important to understand that most hospitals around the world are still waiting for BioPorto to receive marketing authorization from the FDA before adopting NGAL test for clinical use.
These year-to-date revenues are within our expectations, and we are maintaining our revenue guidance for the financial year. As Neil will discuss further, we exercised appropriate cost control and deferred certain commercialization expenses, thereby reducing costs below our expectations. Therefore, we have improved our expectations for full year 2022 EBIT and adjusted EBITDA losses.
The strategy we set at the beginning of this year for 2022 and 2023 is built around launching an FDA-cleared test in the U.S. That strategy has 3 pillars: drive market adoption of the NGAL test and have a pipeline of products that deliver high medical value, strengthen the company to scale and execute and attract, develop and retain the best and brightest employees aligned with our values and with clear roles and responsibilities.
As our first pillar and as we get closer to a prospective U.S. launch, we will be investing more heavily in our commercialization strategy, including hiring personnel, continuing to prepare manufacturing and quality systems. Those personnel will include, for example, medical affairs specialists to educate key targets on the clinical value of NGAL test. As we have done this year, we will balance managing our cost, while also preparing for prospective commercial launch in the U.S. Along the way, we will sustain our other revenue streams and continue to developing a pipeline of potential new products, which I will talk about later.
For our second pillar is to strengthen the company to scale and execute by investing in our production, quality and documentation systems while solidifying our supplier relationships. In addition to working on the FDA submission, these systems have and will continue to be an area of important focus by our team so that the FDA can be -- so that our team can be FDA-audit ready.
Following our planned submission, BioPorto will continue executing its commercialization strategy, including hiring personnel and preparing manufacturing and quality systems while working to make the NGAL test available for adult populations, which are aged 22 and over. In addition to building the team's -- the company's own commercial team, we will work with our strategic partner, Roche Diagnostics to refine our market access plan. I'll talk more about that in a bit. This strategy also means focusing on our core business operations and financing the company, assessing our capital needs and exploring future financing pathways is and will continue to be an ongoing activity.
Our third pillar is to attract, develop, retain the best and brightest employees aligned with our values. Building the right team for the future of BioPorto, we need to recruit the very best to help drive success. As a team we are becoming increasingly selective. We are pleased to have attracted a top-tier team to date on the quality -- based on the quality of the company and prospects of the NGAL test. It is our job to continuously ensure that BioPorto is a company where employees are motivated to grow and stay.
As we approach the time to commercialize NGAL test in the U.S., I'd like to describe our go-to-market model. Our model follows an industry-tested approach for 4 reagent companies like BioPorto that manufacture products that are run on clinical chemistry analyzers in the core labs of hospitals.
Recall, there are 5 recognized leading global analyzer manufacturers. They are Roche Diagnostics, Abbott, Siemens, Beckman Coulter and Ortho [indiscernible]. Companies like BioPorto are generally responsible for product development, regulatory approval, intellectual property, manufacturing, clinical education and marketing and ongoing studies in reimbursement. Because the instrument manufacturers have an existing -- have existing hospital relationships through sizable and wide-reaching sales teams, they have a vested interest in making NGAL tests part of their product portfolio to meet customer demands. The instrument manufacturers also have a comprehensive supply chain and distribution channel that we will leverage.
We have a nonexclusive strategic relationship with Roche Diagnostics and are naturally in discussions with the other major manufacturers. In this model, BioPorto will benefit from analyzer manufacturers large sales and support organizations. This means that BioPorto can build its commercial organization around medical and scientific education that promotes the use of NGAL test and their ability to detect acute kidney injury.
When Neil and I joined BioPorto nearly a year ago, as Henrik was describing, the company was working on a diverse set of possible tests. We quickly made a strategic decision to focus on gaining de novo marketing authorization from the FDA for an NGAL test for pediatric use for AKI. The top half of this chart illustrates how we have continued to investigate other potential critical care biomarkers in the next generation of NGAL test. The bottom half of the chart illustrates potential targets for expanding NGAL test into adult critical care applications.
Our currently planned submission sets up the gold standard for which future submissions will be measured. Therefore, the analytical requirements for an adult submission to the FDA should be less complex. We are investigating the regulatory feasibility, clinical development requirements, cost and market potential for each of these targets to drive our prioritization decisions.
Now turning to a refresher on acute kidney injury or AKI as well as NGAL tests, their clinical need and BioPorto's market opportunity. AKI is a significant global health issue. AKI represents up to a $24 billion burden in the U.S. today. And it is pervasive, affecting 1 in 5 of all hospitalized adults and 1 in 4 of all hospitalized children. It is preventable and treatable if detected early, but 70% of clinicians believe they are missing it. They are missing it because AKI is currently clinically silent, which means there are no apparent symptoms and it is not reliably detectable with current tools. Unfortunately, if AKI is not detected timely, patients face irreversible kidney damage, leading to a lifetime of dialysis or death, that's where NGAL comes in.
NGAL stands for neutrophil gelatinase-associated lipocalin. It is a protein that is expressed at various locations within the kidney's urine filtration pathway is detectable within 2 to 3 hours after an injury occurs. And before the kidney has lost any functional capability.
NGAL test results can help clinicians move from nontreatment or indeterminant prophylactic approaches to targeted reactive treatment of AKI. That can save kidneys and lives and also improve the efficiency of hospital intensive care unit operations.
The current approach to attempt and to identify AKI is to monitor urine output and measure serum creatinine, which may rise, but not until days after your kidney has been injured. It may not be detectable until 50% of the function is lost. That essentially means losing the equivalent of one full kidney before the doctor becomes aware and can intervene. The good news is that leading physician researchers recognize this and are actively publishing more and more studies that support the value of NGAL test. Of course, we will use these as part of our clinical education and commercial work that I talked about earlier.
To illustrate, I will share with you some examples of a couple of studies that were published and/or presented in the past 2 months. The first is NGAL for cirrhosis patients. The liver and the kidney work together to remove waste from the bloodstream. Damage to the liver in the form of cirrhosis can result in a couple of types of prerenal AKI.
Determining the type of AKI is key to determining the pharmaceutical therapy to prescribe. There are emerging pharmaceutical treatments such as Terlipressin that have been studied as a vasoactive drug in the management of low blood pressure that may treat the liver, but are only appropriate for one type of prerenal AKI called hepatorenal syndrome AKI. This study was published in September in the peer review journal hepatology and was presented just last weekend at the American Society of Nephrology's 2022 Kidney Week in Orlando, Florida.
The study demonstrated that NGAL is an excellent urinary biomarker in differential diagnosis between 2 types of AKI and can, therefore, play a significant role in refining patient diagnosis. So clinicians know when Terlipressin can be effective and should be prescribed. The study also concluded that NGAL is a predictor of in-hospital mortality.
The second presentation that I would like to highlight was presented at the International Symposium on AKI in children in Cincinnati, Ohio last month. I attended the conference with approximately 300 nephrology experts and witnessed this slide being presented. It depicts how rapidly the timing of AKI progresses and the impact, the short timing windows have on when different types of therapeutics should be prescribed to be effective.
As you can see, NGAL stands out among other kidney biomarkers as the best predictive diagnostic because of how quickly it is measured after the kidney is injured. In particular, this slide and its underlying peer-reviewed study that was published in pediatric nephrology highlights how a difference of a couple of hours changes the appropriate therapy and the importance of near real-time diagnostics.
These therapies can be applied during the preventative and restorative phases of AKI before permanent damage to the kidney is done. The bottom line is that the science for the treatment of AKI continues to emerge and depends on a biomarker like NGAL to be available to administer new life-saving therapies.
At this stage, I am going to turn the call over to Neil to discuss our financial results.
Thanks, Tony, and hello, everyone. From a financial perspective, things have also progressed positively and according to plan. Starting off with revenues. On the left side chart, which shows revenue by quarter for 2022 and 2021, you can see that revenue in the third quarter of 2022 was DKK 5.3 million or $0.7 million, which was on par with the same period last year. I'll further describe the components of this in a moment.
In the first 9 months of 2022, total revenue was DKK 20.3 million or $2.9 million, representing a growth of 16% over the prior year period. The chart on the right shows year-to-date revenues by product group. Each bar also shows the contribution by quarter, and the labels at the top of the bars are the year-to-date amounts in millions of kroner.
Our revenue for the third quarter of 2022 reflected growth over the prior year quarter in our 2 largest product groups, NGAL test and antibodies, which was offset by a decline in sales of ELISA kits and royalty and other revenue combined.
NGAL test revenue for the 9 months of 2022 was DKK 9.7 million, a 15% increase over the prior year period. Revenues from antibodies for the 9 months of 2022 was DKK 9.0 million, an increase of 27% over the prior year period. Gains in those areas were somewhat offset by sales in our smallest product revenue group of ELISA kits and royalty and other revenue, which combined for the first 9 months of 2022 was DKK 1.6 million, a 19% decline over the prior year period. As it is presently a research-use-only product in the U.S., NGAL test sales may have timing variability among customers as we discussed on the second quarter call.
The next slide here provides further historical trend information on sales of NGAL tests, which, as I said, are up 15% on a year-to-date basis over the prior year period and the chart to the right shows rolling last 12-month NGAL test sales.
Now turning to operating results for the third quarter of 2022. EBIT loss for the period was DKK 20.0 million or $2.7 million, a 38% increase over the prior year period. Adjusted EBITDA loss for the third quarter of 2022 was DKK 17.1 million or $2.3 million, a 14% increase over the prior year period. These are reflected in the chart on the left, which shows historical quarterly adjusted EBITDA and cash balances.
Moving to the balance sheet. As summarized on the right, we had cash and cash equivalents of DKK 98.9 million or $13 million as of September 30, 2022. I'm pleased to report that we reduced our year-to-date cash used in operations by DKK 14.5 million over the prior year period. More specifically, that reduction is from an operations burn of DKK 50.5 million in the first 9 months of 2021, down from DKK 35.9 million in the first 9 months of 2022. The improvement was principally related to our management of working capital that started with a focus at the beginning of this year and with an accelerated impact into Q3.
Now I will discuss our updated guidance for 2022. The company has a small base of customers that provide dependable repeat business. Large bulk orders for antibodies, such as those we experienced in the first and second quarter of 2022 could be forecasted but are not yet at a reasonable level of probability. Also, the fourth quarter of 2022 is expected to reflect continuing costs of finalizing clinical trials and incremental costs intended to support the commercialization strategy that Tony described earlier in the call. These include hiring personnel and continue to prepare manufacturing and quality systems.
During the first 9 months of 2022, we have exercised appropriate cost control and deferred certain commercialization expenses that have reduced costs below expectations. Therefore, BioPorto has revised its 2022 guidance for operating EBIT loss from approximately DKK 95 million to DKK 100 million, down to approximately DKK 83 million to DKK 88 million and adjusted EBITDA loss were for approximately DKK 76 million to DKK 81 million, down to approximately DKK 71 million to DKK 75 million. BioPorto maintains its 2022 revenue guidance of approximately DKK 24 million to DKK 27 million.
Now handing it back to you, Tony, for closing remarks.
Thank you, Neil. As indicated before, it's been almost a year to the day since I joined BioPorto, as the CEO. Since then, we've developed a strategy that focused our team on execution, and we are delivering on our commitments. I am very proud of the entire BioPorto team and appreciate our clinical trial partners as well and the study participants for their important roles in making an exciting new life-saving test available. As I shared at the beginning of the call, our next key milestone is the FDA submission during this quarter, at which time, we will provide an update.
I also want to take this opportunity to thank all of our shareholders for their -- continue to support of BioPorto and our important mission. We have indeed accomplished a lot in this very short time and our focus continues to be on delivering results and our commitment to keeping you and the market informed of our progress within the framework of what is prudent to disclose considering both NASDAQ rules and the competitive environment.
With that, I will hand the call over to you, Henrik, as we are happy to take questions.
Thank you very much, Tony, and thank you, Neil, for a very thorough presentation. As always, very interesting. And there's a lot of questions from the audience already. So let's take the first one.
Regarding the -- as you said, the possibility of research sales only in U.S., which actually means that you are selling this stuff. And the question is that since it's sold, it's probably because it works. So how does this affect your belief that this time, FDA will approve it?
Yes. I mean it's the whole reason that I came to the company is that I saw that the -- there was research-use-only sales in the U.S., and it was adopted by clinicians to actually treat patients. That being said, the FDA still relies on solid data to support an approval of an application. We do, as part of the submission process actually get testimonials from some of these clinicians and make it part of the submission. And that's one of the things that the FDA requests. So it does have an effect. But that being said, we need to have a very tight submission for the FDA to approve it.
Okay. And then there is a question. Since -- in the eyes of the FDA, what is your assumption that would be -- they will consider the most critical issue to approve for the NGAL test?
Yes. So we do have breakthrough status, right? And the breakthrough designation is provided to test that they believe -- the FDA believes will have an impact on health care, and where no other tests exist that are like it. So that will give us priority in terms of a review. That being said, because we are a new test, there is no gold standard or to compare ourselves to. And as such, we had a very complex clinical trial that generated a lot of data that the FDA actually has to review. So I won't set the expectation that the FDA will review very quickly, they will just make it a priority to start the review.
Okay. And then there's I think a very interesting question relating to your patent protection. It says, the NGAL tests as we all know, has been very long underway. So the initial patent protection for the technology, does that still work? Or how should we look upon the -- your patent protection?
Yes. So that's a great question. The -- we have 2 sets of patents that we are operating under. One is a set of patents that BioPorto developed on their own. And the other is a set of patents that was developed by -- actually Cincinnati Children's and then who licensed it to Colombia and who licensed it to us. Both of those families have expiration dates of 2027 and 2028.
We have a group of folks in our discovery group that are developing next generation NGAL. So next generation NGAL means different formats of the NGAL test as well as improvement in sensitivity, specificity. This is very normal for companies like us to do in order to generate new patents that -- to provide more protection around what we have today.
Okay. And then there are question, as said, you already saw the NGAL test in different countries. So there's question in which countries do you actually sell it today on a commercial basis?
Yes. So we sell across Europe, and we sell to a select number of companies in -- or countries in Asia. I will tell you that many countries are also waiting for FDA clearance. So even though we have the ability to sell our CE Mark product into those countries, they too want the stamp of approval from the FDA.
Okay. And then perhaps we could turn on to what is very relevant. And the last when you had this announcement that you would seek an auditor to potentially prepare for U.S. listing. And relating to that, of course, there is, I guess, some expectations that you will try to raise capital at some future point in U.S. But there's a question here from -- or comment. So what about lending money and not choose to raise capital. The question is there's sure there's a lot of exhausted shareholders. So what are your thoughts in that regard?
Yes, you want to take that, Neil?
Yes, happy to and yes, thanks for the question, Henrik. Well, I guess, let's start at initially that things around capital planning need to be handled well in advance. And you mentioned the announcement last week of the upcoming AGM in a couple of weeks. And that was -- as any of our shareholders know Tim Eriksen that has supported our Investor Relations activities for many years. Earlier this year, Tony and I brought in a firm called LifeSci Advisors to help expand our reach in that area, our reach in capital markets.
And the decision around auditors is similar because we're focused on having the right financial advisers in place for as and when the time may come to expand our capital sourcing to the U.S. and broader beyond the focus in Denmark is I think the second half of your question referred to Henrik.
So the point is we're always thinking about our capital structure. We're always assessing the needs and the pathways for that. And as and when the time is right for how to approach it, we'll execute and keep the market informed.
So if I could do a follow-up. So what does it actually bring to the company this ability to also have this potential to do a listing? What would it bring? Because I guess one thing is for certain, it will have -- you will have to bear a lot of extra costs anyway for having this dual listing. So what does it bring to the company?
Well, let me start by saying that your reference to dual listing, there are a number of avenues by which BioPorto or other companies have the ability to access multiple capital markets, a dual listing being just one of them. And the company has made no decisions around how to execute on that at some time in the future.
That said, the benefit of that is to provide broader areas of capital to support the business, the impact that the NGAL test and the additional indications and things that Tony talked about earlier that are part of our future to be able to bring that to market and save lives. That requires capital and having access more broadly is a benefit to all shareholders.
And then there's a lot of questions, but one of them relates to you -- you mentioned your pipeline, the additional indications where NGAL test could be used. And somebody ask here, what about your pipeline? And I guess, when perhaps a couple of comments relating to the timing of the development of this pipeline.
Yes. So there's 2 components of the pipeline, as I indicated before. One is expanding the indication for NGAL into the adult population. Immediately after submission, we will be working on identifying specifically which adult population that we will pursue. Designing a protocol for the trials that will be required to support that application and actually holding presubmission meetings with the FDA. All of this occurring while we're waiting for approval. And of course, it depends how long the approval takes. But we're not going to wait for approval to start on some of those activities.
The other category of the pipeline is new test or new sensitive and specific test. At this point in time, these are still in a proof-of-concept mode, what I call discovery mode, and they haven't moved to development. We will, on a parallel path with expanding for the adult indication, we will likely move 1 or 2 of these projects into development, of which I haven't defined which ones will move into the development process yet. Not ready for Prime Time.
Okay. Then there's a question relating to the sort of the practical time line of -- after the FDA potentially has approved the NGAL test, what happens then? Would you actually be able to start selling and delivering 24 hours after approval? If you have seen the prospect but just to get what happens then?
Yes. So it's -- one of these things that we have been doing is balancing how much money that we invest into our infrastructure with putting together our submission. We are investing already in the ability to improve manufacturing, meaning the volumes as well as improving our quality system so that they can survive an FDA audit.
So it really depends on when the FDA approves. We're going to invest -- continue to invest in that area now. It will be a number of months before we'll have the ability to actually sell that FDA approved product. However, that being said, it could be a number of months before the FDA approves. So it really depends on the timing of the FDA approval. We are investing now. We're not holding back on that investment at this point in time.
Okay. I can see the time is running, a lot of questions and a lot of good answers. But sort of on a longer-term basis, and you have this slide showing the future potential on a global basis. What should we expect from -- if your analysis is correct that the NGAL test is better than the current other options, what should we expect in terms of market share, just roughly speaking? And how fast are you coming to this level where you would be -- you would expect to [indiscernible]. And also perhaps, how should we understand the profitability of the NGAL tests compared to other diagnostic tools, just roughly speaking and sort of -- yes.
Yes. Sure, sure. And I can let Neil speak to the profitability as compared to other tests. So once this gets approved, customers need to budget for the test, right? So it is an incremental test. It doesn't replace anything that's in the hospitals today. So that budgeting process to adopt that's a period of many months to a year, right?
So I would expect that in terms of market share gain, it's not going to happen overnight. However, that being said, once we get the early adopters, once we start establishing the value of NGAL, the word gets out and the word gets out pretty quickly that this is a good test and can be used alongside with other KDIGO guidelines for diagnosing AKI.
And I will tell you, the demand is out there. It's really how fast hospital systems can get a test within their particular hospital, right, which means getting it approved by management as well as getting it -- added to the test menu of these clinical analyzers. That takes some time. It's not all -- it's -- clinical education is important, but just as important is helping customers with implementation.
Neil, if you can talk about the other question, please.
Yes, sure. Thanks, Tony and Henrik. From a margin standpoint, a typical diagnostic company like BioPorto is able to generate gross margins in the 70% plus range. And we don't see any reason why BioPorto would not be able to deliver that as well.
Yes.
All right. Well, that was a very good answer and very precise. So yes. And I think -- and would that cover because I know there are different reimbursement schemes and all sorts of things and framework in the various countries. Does that goes for all regions? Or is it a particular U.S. that will be very profitable?
Yes. So the U.S. reimbursement structure is a combination of a public reimbursement program called CMS and Medicare, Medicaid. And the way they reimburse is under DRG codes. And then the U.S. -- 2/3 of the U.S. reimbursement actually comes from private companies. And so you actually have to attack both of those and work with both of them to get reimbursement.
Our initial indication for pediatrics from a CMS standpoint will be covered under existing DRG reimbursement. However, the DRG reimbursement has 2 different -- in many cases, has a category for patients with AKI and patients without AKI. And if you have AKI, you have a higher level of reimbursement. So there is a big benefit from a reimbursement standpoint to identify the AKI. For other countries, it really, really depends on the country. Many require health economics studies to be performed and that's another area of focus for us as we move forward.
Okay. And then a final question, I think, which is relating to -- we all -- all this discussion, we all assumed that you will eventually submit the application and get the approval of the NGAL. What happens if you don't get it?
Yes. So the FDA will give us reasons why they don't provide, right? And if they don't provide that approval, hopefully, it's for a reason that we can very quickly react to in terms of getting more data. Our focus will -- and unless it's a reason that we can't overcome, our focus will continue to be on getting the data that the FDA requires for NGAL.
And those illustrate just briefly, I know we're running long on time. But those illustrate why we're taking a very patient, measured and comprehensive approach to putting together the submission package. As Tony mentioned in the prepared remarks, including, for example, bringing on board former FDA reviewers of submissions and using them to give us advice and feedback to help ensure the package meets its objectives.
Okay. Well, thank you very much, Tony Pare, and Neil Goldman from BioPorto for having this presentation, taking all these very good questions from the audience. As said in the beginning, we will post this on various platforms, where you can see the video. So thank you for now, and have a good day.
All right. Thank you, Henrik.
Thank you.