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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Welcome to Xvivo Q1 Report for 2024. [Operator Instructions] Now I will hand the conference over to CEO, Christoffer Rosenblad and CFO, Kristoffer Nordstrom. Please go ahead.
Thank you so much, and welcome to Xvivo's earnings call for the first quarter of 2024. Today, we will start the presentation with the front picture. The slide in front of you right now is a picture of Alex from Australia. If you see the heart transplant, thanks to Xvivo's heart technology, I think it's important reminder to why we actually are here, and it's to make sure that no one dies waiting for new organ.
And with that, we go to the next slide, which is just today's presenters, and that's me, Christopher Rosenblad, CEO. And to the left of me today in the same room for once, I have my CFO, Kristoffer Nordstrom.
Hi, everyone.
And with that, we go over to Slide 3, which is just a quick glance on Q1. I'm both proud and happy to report the strongest quarter in Xvivo's history and that Q1 shows improvement in all 3 business areas. Sales came in at a record of SEK 186 million. The gross margins are continuing to show strength, so also in Q1. I again want to highlight that abdominal gross margin where we are closing into the 2027 strategic goal of 70% gross margin already now.
This quarter, we show 67% for disposable products which is a slight improvement from 2023 full year margin, which was 66%. We plan to improve our abdominal gross margin further when we reach economies of scales in production. The adjusted EBITDA shows an improvement to 20%, and I will let Kristoffer Nordstrom, our CFO get more into the details on sales, gross margin and profit later in the presentation.
Quickly on the growth of thoracic is picking up and that mainly come from higher XPS activity during the quarter. We have historically seen solid growth in Europe on the XPS, but with more feet on the ground in the U.S., we see an increasing activity there as well. For example, we have one active XPS customer added during this quarter in the U.S. The abdominal portfolio continues to grow fast as well. Growth on disposable came in at 46% growth.
We also see higher sales quarter-on-quarter, which means that we have enabled higher quantities from production this quarter versus the previous quarter since the limiting factor for higher growth in the abdominal segment is production capacity of disposables right now. For longer term, it's also regulatory approval for liver in the U.S.
As you can see, the production capacity is gradually improving, and we invest to scale up volumes times 10 of today's volume for disposables over time.
And with that introduction, we go into the highlights, which is Slide 4, and we go into Slide 5 after that. We, of course, have to start the highlights section with the report from this year's ISHLT conference in Prague, which was a great success for Xvivo. The ISHLT conference is the largest and by far the most important conference for heart and lung transplantation. And Xvivo received a warm welcome from all participants. As one example, Xvivo was the most selected exhibitor. And the result from the EU study, NIHP 2019 with Xvivo Heart technology was the most selected scientific session in the whole program during the week in Prague.
The science from the Xvivo heart technology shows there is a potential to change the paradigm of heart transplantation, and it's great to show the transplant community how far we actually have come. Xvivo also held 2 extremely well attendant industry symposia during the conference. The symposia itself and the abilities for the audience to see what the Xvivo technology can accomplish in the future was very well appreciated by the transplant community.
And many surgeons came up to me afterwards and said that those were the 2 best parts of ISHLT because of the good climate for discussion during the industry symposia. We will talk more about the ISHLT on the next slide, which is the Slide #6, where we will go into the -- more into the heart trial and the results from it. The presentation by Professor Filip Rega attracted by far the most interest. And I do believe that the fantastic topline result was the reason it did.
There are 3 key takeaways: #1, this is, to our knowledge, the first randomized controlled trial with a superiority design in heart and lung transportation. And this shows the confidence the clinicians have in the Xvivo heart technology. #2, the HOPE group, in other words, the one pumped with Xvivo technology showed an improvement of 61% for severe PGD versus the control group. This is highly important as an improvement provider that PGD is the leading cause of early mortality of the heart transplantation and it's except that PGD also negatively affects long-term survival.
The third key takeaway from this seminar is that all HOPE hearts were deemed transplantable after perfusion. This is important to highlight since HOPE perfusion offers safe advantage during especially transportation of an organ.
And with that news, we go to the next slide, which is Slide #7, which is another groundbreaking result from the heart technology and our heart team. And we did press releases, you heard about it. And it's about the truly groundbreaking transatlantic flight that was published in Lancet during the quarter. Professor Lebreton has accomplished the first out of 7 patients in the PEGASE's trial, and that is designed to investigate very long transport times. This case was amazing, not only because it was the first and historic transatlantic flight of a donated heart, also the time outside the body of more than 12 hours is truly impressive since we have to compare this to the generally accepted time on study cold storage, which is approximately 4 hours.
Given that it was a comparably old donor and comparably old recipient, it makes the achievement even more impressive. And it's also important to point out what Lebreton said that the heart regain normal function directly after transplantation, which is a great achievement and testament that the technology really works.
Lastly, I want to mention that the fact that the transport was made on a normal commercial flight is also historical and something we will work more on over time. So all in all, last year, the Australian study show that we can safely increase transport time to 8 to 9 hours and all patients in the study showed 0 as [ survey ] mortality.
In animal studies [indiscernible] university recently published that Xvivo heart technology should give result even after 24 hours. This is -- should be mentioned in animal studies. But this body of evidence start to show that safe usage of more hearts at greater distances is possible. This will also open up for more heart transplants and better matching between donor and recipients with good patient outcome.
And as I stated, the commercial air transport is also important because over time, it will also open up for cost saving for a transplant procedure, if you can use standard modes of transportations. That's normal flight, cars and trains rather than expensive mode of transportation that we normally see heart transplant -- is needed for heart transplant today.
And with that news, we will go over to next slide, which is Slide #8, and recent abdominal milestones. During the last year, we have seen more than 20 publications on the Liver Assist technology showing improved patient outcome on both DBD and DCD grabs after transplantation. But today, I want to highlight and speak to another benefit of this technology, and that is the ability to plan a transplant to daytime surgery.
The background is that no one really wants to work too many nights in a row. But for transplant team, that is business as usual. After this publication for liver transplant teams, we believe this could be about to change. The recent Lancet publication from [ growing ] shows that a liver can safely be perfused up to 20 hours and hence eliminate the need of nighttime liver transplants.
By offering a better work-life balance, a transplant team can more easily attract the right competence. So this is not only good for the fact that we can plan more -- or plan transplants in a better way, but it's also very important so we can attract the right type of competence to hospitals that perform transplant.
And the last point is, and we said it before, sales from abdominal products right now are mainly limited by supply constraints. And the production scale-up of time to time is progressing according to plan. We have invested in machinery and the validation is currently performed. As also stated earlier, and I can mention again, the Kidney Assist transport is growing fast in the 2 markets we launched in. Next large market is the U.S. And as communicated in the last call in January, the target for full launch in the U.S. is during Q4 2024, if we continue to follow that production scale-up plan as we do now.
And with that, we turn our attention to the lung business and 2024 definitely got a great start for lungs. We see high interest from clinics to start EVLP programs with XPS. In the U.S., we have a new sales force that is gradually picking up and gearing up. And as one example, we have one more active XPS customer and it was added during the quarter and the interest from new customers. And the sales pipeline on both sides of the Atlantic is definitely there. So we will keep our sales team busy over the next year and further from that as well.
We see a high interest from customers to start EVLP programs. The high interest comes mainly from the ability to safely use more DCD lung with XPS, which is something we are truly grateful for. That's what XPS and [indiscernible] solution is designed for. This will enable more organs to be used for transplant. And lastly, we will continue to invest to serve our customers in the best possible way. We will invest mainly in clinical expertise and capacity during this year to increase the utilization of EVLP.
And the next slide will be the services and the organ recovery service. Kristoffer Nordstrom will later in this call give you more details on the service development. I will give you the key highlights here on this slide. Number one, all existing contracts are renewed. Two, I truly want to highlight this. During ISHLT [ Dr. Muhammad ] gave a great speed on the benefits of third-party organ recovery. It was very well received and appreciated by the audience, and I am sure that this will open up business opportunities in the future. Three, we continue to get great feedback from customers regarding quality of the organ recovery service and the ability that they can grow their programs with great outcome using our service.
So that's something we're very grateful for. Four, I want to state this because this is also important. We -- every day, we continue to improve our service offering and surging capacity to meet the need on the U.S. market. So now we are having a great service that we are investing behind and I'm sure we will see great interest in the future for this service.
And with that, we will come into the last part of the highlights and the clinical pipeline. So we go to first Slide 11, clinical pipeline and then more to Slide 12, where we will see the regulatory review. Nothing has actually changed or nothing majorly has changed since last time we met. So I will mainly repeat what I said in January. But in the U.S., the heart trial is progressing according to plan. and our clinical team in the U.S. is working very, very hard to include all clinics into the trial.
At the moment, we have 10 clinics out of 20 that are initiated into the trial. And as you can imagine, after ISHLT the interest is extremely high to be part of this U.S. trial. In Europe, we have handled in our technique documentation for review, and everything is going according to time plan. We are aiming for CE mark in Europe in Q4 2024. Very important to mention is that we can't affect the review time to 100%. The good news is that the notified body has been very responsive, even though we know they have high workload on the MDR.
Also, the Swedish MPA is responsive and deliver on time. The insecurity we face still, as reported last time, is how fast EMA, the European Medical Agency can handle their part of the review. But key is that we have done what we can. We handed in the product in clinical files with good quality on time. In Australia and New Zealand, we continue to see high usage of the product. The regulatory approval will be pending the CE mark in Europe. So from a regulatory view, there is nothing more to add for Australia. But since they use these products regularly, it's -- the regulatory approval is not the key here.
If we turn our attention to the liver in the U.S., we have reported earlier that the Liver Assist had been granted breakthrough device designation by the FDA. This means that we get a faster read through the FDA PMA process. And important to mention is also quality stamp and that the products are innovative and fulfilling need in the market. We have invested and are continuing to invest in the organization to run the study and prepare the FDA documentation and then is to hand in the IDE application at the end of 2024.
And with that, I will hand over to our CFO, Kristoffer Nordstrom, who will present the financial performance during Q1 and we can go straight to Slide 14...
Which is an overview of the P&L and key group KPIs. So thank you, Christoffer. Yes. I mean, as Christoffer has emphasized already, we are, of course, very happy with the development in the first quarter. As a recap, sales came in, in Q1 on SEK 186 million, a new record for us. And more importantly, the organic growth was back on the trajectory and 32% versus last year.
We continue to deliver solid gross margins, 73% versus 75% last year. And I will go in a little bit deeper on each business area as we go here because the reasons for various gross margins varies depending on product versus service, et cetera. That will come. EBIT in Q1 was SEK 20 million and 11%, and this was an improvement versus last year with 2% units. EBITDA increased from SEK 25 million to SEK 37 million, which is a record and represented a strong 20% margin for the quarter. So overall, this gave us a promising start to the year, and where we continue to improve both topline and profitability.
Next slide, please. We will go into the respective business areas for a while, starting off with Thoracic. Sales came in at SEK 121 million versus SEK 91 million last year. Organic growth disposables, 39%. Here, the main driver was EVLP and in the United States specifically, Global EVLP sales grew 65% versus last year. So as I stated earlier, 2024 is off to a great start and good activity at key centers.
The strong U.S. sales gave a 68% share of total global sales, which I also think is a record, and machine perfusion achieved a record of 58% share of total sales. And this impacts the margin a little bit as I will go into. So gross margin in Q1 was 82%, which is lower than last year, 86%. And this was primarily a result of the higher portion of EVLP, but also increasing sales from heart dilute our margin a bit, since heart disposables in the U.S. are sold at a reduced price, so waiting regulatory approval. And of course, we are still in low scale production with minimal economies of scale for now.
Heart sales in the quarter were SEK 12 million, with a 61% gross margin. If we look at the lung disposables though, the margin was 85%. Next slide, please, Christoffer. Moving into abdominal. On the abdominal side, we continue to grow steadily quarter-by-quarter as a result of our solid position in Europe, where we have a very strong customer offering in place. Net sales was SEK 44 million, which represents another record quarter for us.
Organic growth of disposables in Q1 was 46%. Liver stood for 76% of total sales in the quarter and also for the full year last year, the comparison. [ Kinasis ] transport sales were SEK 7 million, a 51% increase versus last year. So here we see a result of our gradual ramp-up and increased production capacity.
Gross margin level, 67%, which is good, as Christoffer mentioned, 2% units higher than last year. Moving over to services, final business area. Sales in Q1 were SEK 21 million, which represents a growth of 11%. The customer base from where we ended 2023 remains, and all current contracts have been renewed with increased profitability. And this comes from a new revenue model that we put in place in the middle of last year 2023, where we started customer purchase and not for our provider date of availability, which was earlier case.
As previously communicated, 2023, that was a year where we put high focus on integration and strengthening our organization and partnerships. As Christoffer mentioned, we continue to strengthen our offering in this quarter, and I really think we can take pride in a high-quality service program that has been developed in collaboration with our customers, and that is of utmost importance to mention actually.
The gross margin dropped from 65% last year to 36% in this quarter, and this is a result from a mix of lower recovery case volumes in the quarter and increased surge in capacity from additional recruitment in the quarter. That said, we really have an organization in place now that is ready for growth. And with new contracts also the gross margins will increase.
Next slide, Christoffer. Leaving sales a bit and move over to EBITDA and profitability. EBITDA came in on 20% for the quarter isolated. And as you can see here on the slide, also the rolling 12 months trend continues to develop positively. It was a busy quarter for us from an operational standpoint, and we had spending on conferences such as ISHLT, market activities, and we also continue to grow our organization with increased profitability.
So with that said, we're happy to see that our focus pays off not only in growth of sales, but also contributes to increase profitability. As many times stated before, our ambition is to continue to improve our EBITDA year-on-year to meet our ambition to achieve 30% in 2027.
Final slide for me before I hand over to Christoffer Rosenblad again. Cash flow, financial position. Q1 was a cash positive from operating activities, SEK 2 million despite the busy operations, as I mentioned before, investments amounted to SEK 42 million primarily spending on U.S. clinical trial and the investments into our machine feet. We ended the year with a solid -- sorry, not the year, but we ended the quarter with a solid cash position of SEK 511 million. So that was all from me. Christoffer?
Thank you. We're going to go into 2 pictures of outlook and then into questions, but we can turn to the -- first to the long-term outlook, which I believe is Slide 21. The long-term outlook is important in order to establish the long-term picture, and that remains the same. The demand for transplant is still 10x the supply of organs today according to WHO.
The sales value of machine perfusion is also approximately times 10 versus static cold perfusion, which is typically a beer cooler or a picnic cooler box with ice and the solution. So we see a great market opportunity in front of us. Machine perfusion, our sales service models have proven to increase the number of organs to be used for transportation, especially in the fast-growing DCD organ pool.
The main growth driver are superior clinical results from machine perfusion and the fact that service models reduce complexity and time for the transplant clinic. Hence, machine perfusion service models on normal and extended criteria or DCD graphs will drive growth in the near future.
Lastly, to grow all the way to attending number of transplants the company believe is possible with the current human donor pool. However, over time, new innovative sources of organs will probably be used, for example, senographs or printer graphs et cetera for both machine perfusion new sources of organs, Xvivo has a proven product line. This puts Xvivo in a unique position on the market today.
And with that, we're zooming a little bit more near term to 2024 and our outlook. One, it's important to mention again, we keep a razor sharp focus on our key priorities. Two, after the ISHLT, we realize and we will increase the focus and resources on both the U.S. heart trial and the EU heart launch. In parallel, for lung, there is a great interest from customers to start an Xvivo program, and we will invest to capture that interest, an increase utilization of EVLP and the XPS Xvivo solution.
And #4, we will increase production capacity by at least times 10 to meet the increased demand we see for abdominal products. And lastly, support U.S. growing clinical program with service models to reduce the complexity in the transplant process. And during the year, we will also develop a successful product service revenue model to meet transplant clinics logistical need, which we know is there, and we don't have a good enough offering today, so that we've been developed through the year.
So with that, that was the outlook for long term and the year. And with our vision in mind that nobody should die waiting for a new organ, we open up for questions. Thank you so much.
[Operator Instructions] The next question comes from Simon Larsson from Danske Bank.
Yes. Two questions from my end, please. First on, I mean, a very impressive print from the lung franchise this quarter. If I'm not mistaken, machine perfusion part of the consumables grew some 70% year-over-year. So were there any one-offs in the quarter? Are you thinking orders pushed from Q4 into Q1, something else or just a very good underlying demand? So any more flavor here would be helpful.
Thank you, Simon. Yes, to give some flavor, we had a comparably weak Q4 last year. So we cannot, how do you say, take away the fact that probably some quarters ended up on one side of this quarter or some orders on this quarter rather than the last one. But we do see a high interest, and we do see an increased activity on EVLP during this quarter that we certainly hope will continue, but that is nothing we know for sure, but we will at least do our best with our sales force to meet that interest.
Yes. So you think, it is this like a possible level of sales that we should expect going forward? Or should we expect this to come down a bit here sequentially and further into the year?
I think that's a great question. I think what we should remember is also that compared with Q1 and Q4 last year or were comparably lower quarters to Q2 and Q3 comparables. I think that is also important to keep in mind. It's always hard. This is one quarter. I think we need to see at least 3, 4 quarters of continued growth before we should adjust too much in our model, so to say.
Yes, makes sense. And the final one from my end. You mentioned one new customer that went live with the XPS here in the U.S. during the quarter. I mean, would it be super helpful, like roughly, if you could give us some estimate to what a customer like that could actually sort of bring in per year when up and running with the XPS fully in terms of sales for you?
I mean, a very good, let's say, a larger program could easily do 50 to 60 EVLPs on the XPS per year, when they're fully, fully up and running.
The next question comes from Jakob Lembke from SEB.
I have a few questions and I'll take them one by one. Starting on lung and EVLP. I mean you sound a bit more positive on the sort of customer demand or customer interest here than recently. Would you say that you're seeing some sort of tipping point, where you move towards more like inbound interest rather than you're pushing this?
That's a great question. Again, I have to say we -- this is something we need a couple of quarters to answer with full confidence. We do see the interest there, and we do see that our sales force is gearing up and are getting better at meeting that interest every day. I would say it's still early days, and I would definitely wait a couple of quarters before I say something with 100% confidence. But in terms of interest, I can confirm that is there.
Okay. And then on kidney. I mean it seems like the production movement and improvements are moving according to plan. I think it would be interesting to hear you talk a bit more about the demand situation, such as if there's already like firm orders in place that you can start to deliver on once the production improves.
Right now, we have had 2 successful launches, but very limited, one in Netherlands and one in Italy. And there, we see that use is picking up and that is great. When now we turn our focus to the U.S. and we have done a prelaunch activity, where we do see that they are using the Kidney Assist transplants. So we -- but we don't dare to, let's say, fully launch until we know we have enough products on the shelf.
But I believe that -- so we don't have any confirmed orders yet, but we have a very high interest for the product. and it meets the need that is there, not only on the U.S. market, for the global market, but there is a high need for a better kidney product that can take care of all [ DCBs ] for transportation with good patient outcome. So we are confident that there will be [indiscernible].
Okay. And then just on services. You mentioned that all customers are on a new contract model here. And I noticed the prices was a bit -- or average revenue per case was a bit higher here in Q1. Is this the level we should expect going forward?
Yes. This is definitely a model where we make more money per contract because we were taking on a lot of risk with the old models. So I think the numbers you will see from now on in relation to the case will reflect the correct ASP. And that could be used as a guidance.
Okay. Great. And then just finally, it would be interesting to hear you talk a bit more on the heart product, maybe how the customer reception has been following the very strong results here and now that you are only a few quarters away from launching this in Europe.
No, I can do that. I mean it was overwhelming. The reception we got at ISHLT where all the world's [indiscernible] leaders and, I was going to say all transplant surgeons, but probably some were home and making we're doing transplants as well. But I mean, the reception was just fantastic, and the interest is through the roof.
I think everybody start to realize now what this technology can accomplish, not only in terms of better donor matching, longer distances. We can take care of organs that we could not do. We can do cases we just couldn't do before. And so that's something we definitely will both invest more into and have a higher focus on going forward because I believe we see it as a technology that's going to just change how transplants are made in terms of hearts.
The next question comes from Ulrik Trattner from Carnegie.
And potentially going back to a few questions already been asked, but exceptionally strong EVLP growth here in the U.S. And I know you were a bit muted at the Q4 call, and you were talking about it takes time to train your expanded sales force. Should we see this as a sign of that process being ahead of your expectation? Or is this purely due to a superior underlying demand in EVLP?
I think the main reason is definitely that the underlying demand is higher than we anticipated. That's the main reason. But that said, I also must say that I'm proud of the sales force that is very new, what they have accomplished in a short time and the steep learning curve they have to add an active customer that quick is a true accomplishment that I'm truly proud of.
So it's both. But yes, the main reason is definitely the high interest and the high underlying growth from existing customers driving EVLP right now. It's not so much new customers.
Okay. Great. And you also talked about expanding our service offering in the U.S. And I'm guessing what you're trying here is to replicate more of that of Transmedics, giving your product portfolio and their service offering would be a good match.
And I also note that one of your head of marketing in the U.S., Kelly was previously part of Transmedics. So what does that bring to the table? What should be expected from service offering from the U.S. here in the coming quarters? They're heading up towards full scale Kidney Assist launch in the U.S. as well as building up to heart and liver being approved in the market here in a few years.
That's a great question. I will let Kristoffer Nordstrom answer your question more in depth. But before that, I want to mention that we do see and have seen a long time the need for a good service product offering. And the reason is that a transplant process takes longer and longer time and a heart on average 29 hours.
And if we're going to do 10x more transplants in the near future, the transplant teams won't grow that fast, times 10 in terms of resources. So we need to support them with the first 24 hours and better technology in order for them to do 10x more transplants on the U.S. market. So that is the reason behind we believe so much in this strategy, and that we believe that it will be a winner over time. And we -- that's why we work so hard on improving quality, improving communication, improving the customer offering, et cetera, because we want to nail it when we go large scale.
Last thing I want to mention also is that I think definitely we will come into transportable devices that our product service offering will fit better. So if we think kidney and heart, that's a plug-and-play model, which is -- it's easier, but we believe already with the XPS and later with the liver, which is more back-to-base type of machines that a service model will be advantaged and drive a lot of growth for us.
For example, liver perfusion in Italy is 5x higher any comparable country in Europe, very much due to a service offering model on the perfusion side on the liver device. So we have seen it works. We believe it will work in the future and actually believe it will be a must for the future. But to the expectation next couple of quarters, I will let Nordstrom to add more to answer that question.
Yes. No, I think we see this as 2 phases where we are now in an interim phase where we are strengthening and developing our -- currently the recovering business in the U.S. at the end stage is, of course, when we have our -- both our transportable products, kidney and heart on the market and where we really can see synergies of integrating service into our product offering.
But up until then, we have a platform for growth now. We have continuously improved, and we will. I think our main target is to ensure that we learn more and more and more about the customers' needs, add more customers. So we have a robust position in organization, when we finally have our regulatory approvals in place. And I think we can expect a gradual growth from where we are today, and we will try to do our best to also have -- continuously have a surgical capacity in place that always goes hand-in-hand.
Great. And just to follow-up on that, as you have recruited here in quite recent time, Kelly from -- has been part of Transmedics. Can she bring some additional clarity on how you should perform this?
Absolutely. She is on board now, great [ IDs ] and very valuable added to not only the U.S. team, but also the global team. So she's still, she's one of them who has not been here that long, but I think we can already see that she brings a lot to the table, especially on the service side, of course. It's a great question.
And if I were to move to -- to abdominal and exceptional growth again and especially for the liver in Europe. But on curiosity, which markets are growing? I'm guessing Italy and the Netherlands are fairly well penetrated market. So this must mean that you're experiencing quite strong growth outside of these 2 key markets?
Yes. This answers that question. That being mentioned, there is a lot of penetration and growth still to be done in both Netherlands and Italy. But definitely, we see more of a wider growth everywhere in Europe right now. We had a couple of success stories a year ago with reimbursement in France, for example, for liver, which really helped growth there.
As I mentioned earlier, we have had 20 really good publication on liver just in the last 12 months, showing superior outcome both on DBD, on extended [indiscernible] grafts on DCD grafts. So we see that, that has fired a lot of interest together with better reimbursement. We see a wide growth all over Europe right now.
Great. And last question on my end. Obviously, Kidney Assist transport is a great product with us, a lot of support clinically. It could also be fairly easy to implement. But given the sort of the commercial success of liver in Europe, I believe it would be of high importance for you to get the liver device on the U.S. market. And you touched upon IDE for liver. But can you just give us some clarification on what's left if you start up the liver study?
I mean to start the liver study, you need to agree on the FDA on an IDE. And we are currently designing the study, and we will meet quite shortly with the FDA for a proposed study design. That will be a negotiation, of course. There is also product documentation that need to be approved, where even though it's a commercial product in Europe, there could be product gaps between our CE mark and what the FDA would like.
So that's also a discussion to be had with the FDA regarding if there are any gaps in terms of annual testing or other product-related issues. Then out of experience, I know that the FDA always wants to have a usability tests done on U.S. soil with the U.S. users as quality measure from the FDA side. So there's a few steps still to be taken on the liver side before we can get an [ ID ].
Okay. Great. And last question on my end. Heart sales in the quarter, how much of the reported heart sale is related to Australian, New Zealand compassionate use and how much is related to reimbursed sales out of the U.S. clinical study?
I think I would need to come back to you on that one, Ulrik.
Congratulations again on a stellar quarter.
The next question comes from Jonatan Andersson from DNB Markets.
Congratulations to a great quarter. I have a couple of questions. I think I will begin with abdominal. So when entering and ramping up the Kidney Assist transport in the U.S., how will the commercial debt outlook during late Q2 and going forward? Can you say anything on that? It would be helpful.
With commercial setup, do you mean our field force for loan?
Exactly.
Yes. Okay. Great. Great. We have, if you call it, field force with mainly 3 competencies. One is, of course, sales, where we have 3 persons to start with ahead of and then 1 for west and 1 for east. And then we have a clinical force that we will gradually need to grow the more customers we include in the launch that will make sure that they use the product right and be there for the customers. And then we will have a technical and technical service department that we will also gradually grow with the number of machines we have on the market, the more technical issues you will have and the more you have to do service on them.
So that's pretty much what the team will look like right now, then we will support from both the U.S. marketing team and here in headquarter with support with clinical trials, support with -- if there are any investigator-driven clinical trials that they want to be done, we support with health economic studies and reimbursement support going forward. So that's how the organization for the launch looks like right now.
Clear. And just looking at the potential launch here in Q4 for the Heart Assist transport in Europe. On the back of the supply issues with the kidney, what lessons have you learned? And are you confident in not reaching that, to some extent, supply issues when launching this product?
That's a great question. We have to start -- we've learned a lot. And we have been able to scale the production of heart actually faster than kidney already. And we are -- given the interest we've got during ISHLT, we have, 1, included the heart products into the production scale-up project.
And 2, we are running a program to increase production with the current production setup, which is more -- fortunately, is more scalable than the production setup we saw for Kidney Assist transport. So we learned a lot from that experience, and we are taking earlier actions, and we're taking more decisive actions on heart already now.
Great. And lastly, this might be a bigger picture and long term, but given your clinical data and market position and the underlying market demand, do you feel hampered about your profitability target? Because you do not have any sales growth financial target as of today, would it make sense to switch towards a more growth focused and oriented targets going forward?
That is a great question. And to give you a straight answer, no, we don't feel hampered. It's more of a guidance that we should -- if we do something, we should do with efficiency and we should do it to ensure long-term profitability and make sure we don't take any, let's say, crazy bets in the market. So it's more of a guiding target we have to make sure that we -- if we do something, we do it with respect to the shareholders' money that they -- you guys [indiscernible] us. So we don't feel any constraints in that way. But that being said, we might come to a launch where we feel we need to overinvest for a quarter 2 and the nice straight line from here to 30% might get a bump up or down from time to time. And we do feel that, that would be communicated early enough if we see that need. So everybody would be aware of it. But no, we don't feel hampered anyway. We invest at a healthy level.
Makes sense. And then maybe one -- just one more question. You have done some really rationale M&A activities for the last years. Do you see any M&A opportunities down the road, mainly in service business area? Or how is the market looking like? And what's your view on that?
The view is that we are always open to M&A if it adds value for the company and is strategically the right move and we constantly look for M&A opportunities that fits our purpose, especially if we would take let's say, a strategic step where we believe it's much more efficient to buy a company rather than develop that competence or market position or what we want to achieve, so to say, if it's quickly to buy it or better to buy it that makes economic sense, then we would buy it rather than do it ourselves.
It's always a -- we always have the choice to do it ourselves. We can always partner with someone. We could with license, so we could always acquire something. But those -- we always ask us those questions, what does make more sense for this purpose for what you want to achieve.
Cool. Great. And once again, congratulations to a great quarter.
Thank you.
The next question comes from Johan Unnerus from Redeye.
Great. Thanks for taking our questions. And yet again, congratulations on a good quarter, a very good quarter. Some nitty-gritty questions, you alluded to if you were to invest more intensively, you are currently investing in capacity and commercially Q1, OpEx-wise came in at least in our view a bit on the low side, what to expect there. You are targeting the U.S. market, increasing the commercial activity, capacity that might not always end up in OpEx, but you're doing several things.
Yes. Thank you, Johan. I think overall, a little bit of a guidance here, if you look at our OpEx, so where we will grow as we go is primarily on the marketing and sales side. That is where we have the quickest return on investments.
And I also think by saying that if we expand our OpEx on commercial, we also -- that will also be followed by kind of a quick growth as well. So I do not foresee that, that would dilute our margins with the caveat that Christoffer said that it could be 1 or 2 quarters where we take a deliberate decision to do extended investments. But that's where we will invest gradually as we grow. Admin and research will be, I think, the levels we saw in this quarters probably represented for the next quarters or so as well.
Great. Thank you. Also a smaller part, but strategically important as you explained earlier on the services side. It's obviously important to secure additional contracts, anything more on contract pipeline and perhaps you can do more to conclude this pipeline in the commercial sales process.
Yes. No, I mean we -- with our strong offering that we have developed, we're optimistic. We also got the chance to truly in an international setting, but with high attendance from U.S. stakeholders, we were able to present it as well as ISHLT. So I think we have a good momentum now. We have learned. I mean, there are the cycles of selling in the contract which takes a few months. But there is a pipeline of interesting customers at the moment, absolutely.
Yes. And on the heart solution, you have published a great deal of achievements, and we're looking forward to the U.S. study, anything to be said about the initial centers, your 10 are active and the prospects of any of them sort of concluding their part on the second half of the year?
I mean, what to be said on the U.S. trial is mainly that I mean we got the best of the best centers right now because we are in the comfortable situation of almost being able to choose which doesn't happen that often. There is a huge interest both from the ones who are in the trial and from the centers we want to get into the trial.
Then it's always when you run a clinical trial, you run it at the highest pace you can, but you also want to make sure that you keep your inclusion, exclusion to [indiscernible], et cetera. But we have a very high pace, and I -- we are running according to plan. So we will definitely and most probably see a couple of the bigger ones concluding their portion in -- during this year. Yes.
Great. And yes, it's obviously important to get the traction from the centers. And also you mentioned that interest from centers not actively participating. Is there any way to activate these centers ahead of the approval?
The straight answer to that is yes. Right now, I ordered the team to have 100% focus on the current trial because that is needed to not drop the ball on the trial. But the answer is yes. And we are in the planning phase to see what other trials we can do on U.S. soil that would increase the confidence both from a regulatory approval view from the FDA that they would be interested in, also to build knowledge on U.S. soil around the technology.
I think the key takeaway also from ISHLT was how U.S. clinician was quite impressed with the confidence that the European clinician had around technology. But there is a difference. I mean, most U.S. clinics use technology for 4 months versus 4 years in Europe. So of course, that gives a greater confidence to use technology for a longer time. But I think that definitely despite an interest to take the technology to the next level also in the U.S. So we are planning for that.
[Operator Instructions].
And with that, I want to say that we can take one more question, but then unfortunately, we need to go into the next meeting.
There are no more questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.
Thank you so much. There are no written questions, great questions today. I appreciate them. And with that, we conclude this Q1 report call, and we're looking forward to meet you in July for the Q2 call. Thank you so much.