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Good afternoon, everybody, and welcome to this interesting event with BioPorto. So topic for today's event is actually what happened during Q3. And with me today, I have the CEO, Tony Pare, and the Vice President for Reporting and Control, George Rosa.
To the audience, as always, if you have any questions, and luckily, you posted a lot of questions already, and we will try to address them the best way. You post the questions just below the video screen.
With that said, I would like to welcome everybody and hand over the word to Tony. Welcome.
Thank you, Claus, and good afternoon, everyone. Thank you for joining us to review BioPorto's third quarter results and operational highlights. As Claus indicated, joining us today is George Rosa, our VP of Global Reporting and Controls, who will present the financial portion of today's call.
As noted in our September announcement, due to the amicable departure of our previous CFO, Neil Goldman, we have initiated a search for a new CFO. I'd like to thank Neil for his contributions that have helped BioPorto to get to this critical stage of our life cycle development, and welcome George to assist with this call while we continue our search for a new CFO.
But before we go any further, I'd like to remind everyone that the company's remarks made during today's conference call may include predictions, estimates and other information that may be considered forward-looking. For more information, I refer everyone to our public filings.
Now let's get into our highlights for the quarter. For the 9 months ending September 30, 2023, we recognized revenues of DKK 24.4 million or $3.5 million, reflecting a 20% growth as compared to prior year. For the third quarter ending September 30, we recognized revenues of DKK 8.6 million or $1.3 million, reflecting a 63% growth as compared to the same quarter last year.
Additionally, we continue to move forward our commercial endeavors outside the U.S. to increase global sales as we work towards opening the U.S. market for sales of our NGAL assay. George will go into more detail regarding our financial results shortly.
Jumping into activities for the quarter. The biggest operational news this period has been the update of the NGAL's test regulatory approval pathway following feedback from the FDA. The company's regulatory pathway for NGAL has moved from a de novo application to submission of a 510(k) premarket notification, which was immediately accepted by the FDA.
510(k) premarket notification is required for registered device manufacturers who must notify the FDA of their intent to market a medical device at least 90 days in advance of a planned launch. We are pleased with the progress to date, which continues to move forward.
With our 510(k) submission accepted, we are now awaiting clearance from the FDA approving the launch of NGAL in the U.S. As of now, there has been no interruption in dialogue with the FDA throughout this transition, as the review team on the FDA side remains the same, and this transition has no impact in the continuity of the NGAL review process.
This recommendation of the FDA towards the 510(k) approval pathway applies principles from their least burdensome provisions guidance, which requires the most efficient manner to expeditiously get this important test through with the breakthrough device status to the U.S. market. If the FDA grants marketing authorization, BioPorto's NGAL Test will be the first authorized pediatric acute kidney injury, or AKI, biomarker tests commercially available in the U.S.
This week, we will have 2 poster presentations at the American Society of Nephrology in Philadelphia. We are excited for our participation at this important industry meeting as ASN represents more than 21,000 kidney health professionals from around the world, including key opinion leaders, working to help people with the kidney diseases and their families.
From our observations, we are seeing many publications which continue to show that NGAL biomarker utilization is shifting from research affirmation to suggested clinical protocols, which is an acknowledgment by clinician researchers that the biomarker is ready for use.
While we initiate preparations to support NGAL commercialization in the U.S., we continue to advance our global activities in order to expand commercial sales, which currently includes the sale of our NGAL tests in approved markets as well as our antibody business. As announced yesterday, we are also revising 2023 adjusted EBITDA guidance, and the rest of the year will be focused on extending sales in European markets and countries where the CE Mark is recognized.
Looking at the period's results and BioPorto's growing track record of execution, we continue to maintain a simple formula for success, especially now as we move closer to the regulatory approval in the U.S. Also worth mentioning on today's call is the ongoing work with KDIGO to update their acute kidney injury and acute kidney disease clinical practice guidelines.
We are actively participating in the development of the guide statement [ of work ] with respect to NGAL as an AKI and AKD biomarker. The nonprofit organization, KDIGO, which stands for Kidney Disease: Improving Global Outcomes, is in the process of updating its 2012 practice guideline for acute kidney injury and acute kidney disease and will be the first time in the guide's publication history where biomarkers for AKI and AKD will be included.
To date, we have submitted statement award comments pertaining to the situations and use cases across multiple work streams where biomarkers are critical for the identification and management of procedure-based operational adoption of AKI and AKD-related best practices. This guideline often drives clinical decisions in many countries. It is important to point out that the KDIGO guidelines inform most hospitals globally on how to diagnose and treat kidney disease.
Globally, the guideline is also a critical guide in terms of clinical treatment pathways and reimbursement. As such, an updated guideline will provide guidance to health care providers managing people with AKI and AKD. We further believe it will validate the use of NGAL in the identification of AKI.
In this effort, BioPorto has been working diligently to transform the industry in the early identification of AKI to help manage kidney health. At this juncture, it is also important to remember that AKI remains particularly challenging to identify and treat in a timely manner due to its lack of specific symptoms.
General symptoms, including reduced urea output, swelling and fatigue, not specific to AKI and, therefore, can be often misinterpreted. This makes AKI difficult to detect and diagnose. AKI is also a time-sensitive condition. The longer it goes undetected and untreated, the greater the damage to the kidneys and higher risk of severe outcomes.
Potential late-stage outcomes include chronic kidney disease, necessitating dialysis; kidney failure, requiring transplant; and even death. Fortunately, early detection of AKI can help guide effective treatment. In clinical settings, hospitals have an incidence rate of AKI as it affects 1 in 4 hospitalized children and 1 in 5 adults.
AKI is often accompanied by other recognized events, injuries and medical procedures, including cardiac surgery, mechanical ventilation, transplants. This makes AKI a significant economic burden and is detected in a shocking 12% of critically ill patients, with 21%, unfortunately, succumbing to AKI. These statistics are well known to clinicians in the field who are actively seeking better -- a better diagnostic for AKI.
In the absence of readily available early-AKI biomarkers like NGAL, serum creatinine and urine output are often the standard method for detecting AKI. Published studies have shown, however, that when only these criteria are used, between 28% and 43% of AKI cases are missed entirely, and 2/3 of AKI cases are misclassified.
Moreover, 70% of clinicians believe they're missing AKI when AKI serum creatinine and urine output unfortunately fail in terms of sensitivity and specificity and timeliness relative to AKI onset. We also believe that NGAL can be the difference in having an effective positive patient outcome in relieving the burden of growing health care costs due to the advancement of AKI into chronic disease.
We firmly believe that detection of AKI can spare kidney function and reduce the risk of further damage. [indiscernible] shows up on the call who are new to our story, BioPorto's NGAL Test is already marketed in Europe under a CE Mark as well as in Korea and additional countries. The test is run on standard hospital diagnostic lab equipment, eliminating the need for additional capital expenditure.
It is also brand-agnostic, compatible with Abbott, Roche and other premier clinical instruments. The test is a reagent-only product, both in high margins even at the current production levels, with potential for further economics as we grow and expand with a simpler and shorter regulatory process in general.
As we wait our 510(k) premarket clearance approval in order to market the test for pediatric use in the ICU, we are working collaboratively with our distribution partner, Roche Diagnostics, which allows us to leverage their BaaS footprint. Roche is an industry leader with their instruments readily available at large academic medical institutions who handle the most complicated patient procedures.
In the U.S., the term pediatric, as a reminder, refers to patients between the ages of 3 months and under 22 years of age. Previously, the FDA already granted the NGAL breakthrough designation status, which the FDA reserves to diagnostics that provide more effective treatment for life-threatening diseases or conditions.
While it is early days still, we are actively planning regulatory work with studies to support indication and instrument expansion beyond pediatrics, including adult populations, such as in the ICU and emergency departments. At the same time, we're planning to expand the improved instruments beyond the initially designated Roche instrument to other targeted instrument manufacturers as well.
Ultimately, as we build momentum along this commercial strategy, we aim to pursue a full adult indication for one or several specific diseases associated with NGAL Test, which will require additional clinical testing. However, these future endeavors will be strongly supported by all the preceding clinical and real-world use data from NGAL.
In total, the effect -- additive effect of indication, instrumentation, population expansion in the U.S. could increase the market potential almost tenfold from $134 million pediatrics to approximately $1.2 billion in the U.S. market and, ultimately, $3 billion in the global addressable market. We are building our commercial capabilities in a concerted manner. Following premarket approval from the FDA, we will need to form an internal field force in the U.S.
Additionally, we are working towards expanding already available ex U.S. opportunities through a multipronged approach that engages all key stakeholders in these markets. Those stakeholders include our distributors and sales partners who are increasingly engaged in rationalizing, whether they have the correct capabilities and willing to make the investments.
These efforts also include our customers who we market to directly and engage directly in coordination with distributors as well as key opinion leaders and clinical champions, whom we work with proactively to leverage their experience. The market in Europe is large, but traditionally requires extensive effort to get established, which is the reason that we have a focus on select countries and distributors to get started.
Our focus remains on one, getting the FDA approval; two, expanding our total addressable market in the U.S.; and three, the growing the business rest of the world. We are managing these pillars of success through prudent management of our cash position through financing, promoting high-margin product sales and managing expenses while also making sure we have a motivated, talented employees to manage the execution. With this, I will now turn the call over to our VP of Global Reporting, George Rosa, who will review our financial performance.
Thank you, Tony, and hello, everyone. Let me take you through our financial performance for the period. Year-to-date, total revenues were DKK 24.4 million, a 20% increase as compared to the same time last year. Looking at the chart, Q3 2023, revenue totaled DKK 8.6 million, a 63% increase over the prior year period.
NGAL Test revenue in the third quarter of 2023 totaled DKK 5.8 million, an increase of DKK 3.2 million or 119% over the prior year period. Year-to-date, in 2023, NGAL Test revenue is up DKK 5.5 million or 57% over the prior year period.
Antibody revenues in the third quarter of 2023 totaled DKK 2.2 million, an increase of DKK 0.1 million or 5% over the prior year period. And year-to-date, in 2023, revenues from antibodies is down DKK 1.1 million or 12% over the prior year period.
Next slide, please. NGAL Test sales have continued their positive growth trend with an increase of 50% over the last 12 months compared to the previous year. It is important to note, NGAL Test sales can show timing variability among U.S. customers as the test is currently only approved for research use in that region.
Additionally, antibody sales can be influenced by the timing of tender driven bulk customer orders. This slide provides additional historical trend information on sales of the NGAL Test over rolling last 12-month period.
Next slide, please. Year-to-date, third quarter revenues delivered gross profit of DKK 16.4 million, corresponding to 67% margins. Gross profit during the third quarter of 2023 increased by DKK 1.1 million over the prior year period, primarily due to higher sales volume over the previous year.
Adjusted EBITDA loss for the third quarter of 2023 totaled DKK 9.7 million, a 43% improvement over the prior year period. That brings the year-to-date adjusted EBITDA loss to DKK 41.2 million, a 17% improvement over the prior year period. These are illustrated on the chart, which shows historical quarterly adjusted EBITDA and cash balances.
We continue to see the positive effects from our restructuring efforts implemented last quarter, including a workforce reduction that affected 28% of our global employees. The restructuring better align the company's resources with its strategic priorities, and gaining NGAL Test regulatory approval in the U.S., growing revenue in European and other markets that accept CE Mark and expanding the total addressable market for NGAL Test.
Moving to the balance sheet. Cash and cash equivalents as of September 30, 2023, totaled DKK 69.9 million or $9.9 million. This balance includes the DKK 41.3 million net proceeds of the preemptive rights offering that we completed near the end of the second quarter.
Our team has continued their effective management of working capital, which, as of September 30, 2023, totaled DKK 64.9 million. With this in mind, we believe that we have a comfortable cash runway through Q3 of 2024.
Next slide, please. As Tony mentioned at the start of the call, we continue to maintain our 2023 outlook with projected revenues for the year of approximately DKK 30 million to DKK 33 million and revised our guidance for adjusted EBITDA loss to approximately DKK 56 million to DKK 59 million.
We have operated with fiscal discipline, and we'll continue to take responsible measures with careful and conservative expenditures that focus on our program's critical path. Finally, please note that BioPorto's outlook is subject to risk factors, including those described in the 2022 Annual Report as supplemented in its 2023 interim reports.
With that, I will turn the call back to Tony for his closing remarks. Thank you.
And thank you, everyone, for joining us on the call today. We are very excited at this juncture of our corporate development as we anticipate premarket approval of our NGAL Test in the U.S. While we can't anticipate timing for which the FDA will grant approval, we [Audio Gap] being able to work with the same team at the FDA despite withdrawing our de novo application and submitting a 510(k) premarketing approval.
Since joining BioPorto 2 years ago, I've never been as confident as I am today with regards to our prospects. I am proud of our team as they have [Audio Gap] on NGL approval in the U.S. as well as fulfilling commercial objectives globally.
With this, I'd like to turn the call back to Claus for Q&A.
Thanks a lot, Tony, for a very thorough presentation. And thanks to you as well, George, chipping in with the numbers. And...
Glad that I can help. Thank you for the opportunity, to Tony and everybody. Thank you.
Yes. You're welcome, George. So well, there's always -- as always, there's already a lot of good questions coming in here, and please continue with your questions. I will try to address most of them.
So Tony, if we should start up with the latest rights issue. And on that rights issue, you also gave us a plan for what the proceeds was more or less is earmarked for. And you mentioned you will grow your revenues in Europe and other markets, where there's a CE Mark today, and this is based on your strategy shift early on this year.
Is it fair to say that we start to see a very good traction in the European market, especially, I think, George showed us a charge on a 12-month rolling basis, where we see its upward slow-moving trend. Do you hear me, Tony?
I think I can, yes. The answer is, well, you saw it in our revenues, right? So we've seen an increase in our NGAL revenues. Some of that NGAL revenue came from the U.S., but a lot of it came ex U.S. as well in markets such as Korea, but also with our distributor, Roche.
And Roche is a big distributor in Europe. Where exactly in Europe, the tests are being used? We don't exactly -- we have some idea as to where it's at, but the increase is happening all over the world.
Good. So thanks a lot for that question. And then when we talk about the FDA approval, and it's really a lot of questions out there. I know you mentioned it before, but maybe you could address it again. So this is 2 ways you have interaction with FDA, but could you bridge from de novo to the 510(k), what actually happened there?
Sure. So one of the things that the FDA does, if a company submits a de novo, is they compare that submission to other products that have been submitted previously and other regulations that have already been established for assays that are out there today.
And after a review of our clinical data after review of our analytical data, they felt that there was a regulation in place already that was close enough to what our product aspires to bring to the market, that they could use that regulation. And that is the -- instead of writing a new regulation, they had us basically utilize that existing regulation.
What that means is we have to compare ourselves to the predicate device that was utilized when that regulation was established. And in our particular case, it was -- bioMérieux will use NEPHROCHECK product. And so that's what we did. Fortunately, there was no interruption in the dialogue with the FDA. Literally, we did that swap on a -- in 1 day and the interaction with the FDA continue the next day with the outstanding action items.
That is also important to emphasize here. This doesn't imply any delays to the process or anything else with FDA. You still expect, I think, some kind of approval end of this year to 2023. Is that right, Tony?
Yes, I will never promise anything. We don't promise anything, it is the FDA. Let me explain with the 510(k). The 510(k) process is basically a notification to the FDA that you intend to notify, that you intend to distribute or market within 90 days of that submission, right?
Now the FDA has 90 days to do basically 1 of 4 things. They can either accept your submission and make you clear immediately for marketing. They can decline it, in which case, you cannot market it. They can basically ask for additional information and put that 90 days on hold. Or they can say, you know what, we need more than 90 days to interact with a dialogue, right?
So we're still within that 90-day period. We are still in that interactive dialogue. The other thing -- I'll just take the opportunity to mention what they are reviewing right now.
So when the FDA reviews the product, they not only review the clinical data, the analytical data, but they literally review every word that's on the product packaging. They review every word that's in the instructions for use. They review and approve the user training materials, including things like font side, believe it or not. It's kind of an interesting process in terms of how in-depth they get.
The interaction with the FDA has been continuous weekly. Typically, the FDA sends a set of questions, and it's done every [ week ] and provides us a deadline to respond to those questions within a few days. And we do that. And so that's the process that we're in right now.
Thanks a lot, Tony. That is really good to get a better impression of what is going on right now. So if we assume that you get green light with no extra additional things to examine. And then you start -- of course, then you start the process in U.S. to market NGAL immediately. Would you receive reimbursement directly? Or will this come a little later?
So reimbursement could come in, in a number of different ways. So the other thing I want to clarify is that our distribution partner in the U.S. for this product that the FDA is reviewing is Roche. So Roche also needs to prepare to launch the product.
Of course.
So the intended use is for the ICU. The ICU typically procedures performed in the ICU are performed under what they call DRG codes, which is a single reimbursement for a cardiac patient recovering from surgery, right? Some of the DRG codes do have different DRGs if that cardiac patient is diagnosed with kidney failure or not. So there's a little bit more money that's added to that.
So with NGAL we are a diagnostic -- we're a tool that allows the clinician to get the patient out of the ICU faster. So if you can get a patient out of the ICU faster, then your profitability associated with that DRG reimbursement is even more. And so that's how we are covered in terms of DRG reimbursement.
So thanks a lot for that. So then you showed a good slide on the path to getting approval for NGAL in adults. And of course, if we assume that you get the approval, what do we talk about time-wise, Tony? And I know there's a lot of different factors, but is everything going the right way?
Yes. I mean that approval for adults really depends on the patient population that you select. We can go directly to an adult population in the ICU, much as we did with pediatrics. Or we can go with a very specific population in adults that -- where we did this, a larger single for NGAL that would basically cause a clinician to react immediately with changes in therapeutic actions.
In which case, the clinical and utility of the test expands even more. We haven't made exact -- we haven't made a decision in exactly the adult population that we will go after. But these clinical trials can be 1 year to 3 years. I just wanted to set that expectation as well.
Thanks, lot. So -- when should we expect BioPorto to generate a positive cash flow, all else equal. I know it's not an easy question, Tony. Is it 2025? Or is it 2026?
I'm not ready to answer that question, yes.
That's fair enough. Then there's a funny question here coming from one of the participants. Do you still have a Mr. Christopher Bird in the company? I don't know why...
No. Chris left the company back in January of this year. Chris went to take a CEO role at a small pharmaceutical company that was never announced, to be honest with you. So he left the company for a better role, which I supported at the time.
Good. Thanks a lot, Tony. Well, time is more or less up, and I hope we addressed everything about FDA. I think Tony gave a very good impression about the different moving parts. And as you probably heard from Tony as well, he's really confident and he's more confident than ever.
So actually, we just have to sit and wait. And hopefully, we will soon hear anything -- any news about the NGAL test in U.S. I know it's on everybody's mind, and I think it -- the same goes for you, Tony, and all your staff.
With that said, I would like to thank the audience for all the very good questions, as usual. And I would like to thank you, Tony, for a really good presentation. And nice of you to bring George onboard to present the numbers. So please enjoy your day, everybody. And with that said, I will finish the event.
All right. Thank you, Claus.
Thank you. Bye, everyone.
Bye.