FluoGuide A/S (FLUO) Earnings Call Transcript

Hi, and welcome, everyone, to this presentation of FluoGuide's Q2 2025 report. Just to get everybody on the same page, we're going to start off with a presentation of the report, and then we're happy to take some questions. [Operator Instructions] And so without further ado, I want to hand it over to FluoGuide's CEO, Morten Albrechtsen; and CFO, Ole Larsen. Please take it away.

[Audio Gap] So aggressive brain cancer is head and neck cancer and also lung cancer. We are a Phase II stage company for all the 3 indications. And quite pleased over the summer, we had the third of our partnership we announced with Olympus. We have previously announced agreement with Intuitive Surgical and also SurgVision, a Bracco-owned company. And they are all nonexclusive, and we will get back to our ideas behind this partnership. We founded in '18. We're incorporated in Copenhagen. We're listed in the first North in Stockholm. This is also the flow of the presentation that we will go through. So start out with the number of patients. As I mentioned, there's about 20 million patients every year that diagnosed with cancer. And in principle, there are 3 treatment modalities for the patient that they are offered, and it's a surgery where you cut away the cancer, it's a radiotherapy where you radiate the cancer away or it's a chemotherapy where you chemically destroy the cancer. And every year, about 12 million patients will receive surgery. And unfortunately, half of them will actually have cancer that regrow locally after the surgery. And it's not really because the surgeon is not good. I mean they're used today only the fingers and the eyes. But with our help that we can light up cancer, we have a possibility that we can significantly improve this figure. So more than -- more of the patients that opt for surgery will actually also potentially be cured from it. Interesting also is that out of those 8 million that are today not receiving cancer, as we make surgery better and we enhance the quality of the surgeon and the equipment, some of the 8 million patients will be offered cancer additionally -- surgery as well for treatment of the cancer. So actually by improving the quality of the surgery, we can actually offer more patients surgery as well. And every year, there's about 45 million surgical procedures expected for 2030. So quite a lot of procedures for each patient, and that is what we can help. In simplicity, our product is a freeze-dried powder. It's injected into the patient prior to surgery, it's circulated in the body, it's bound to cancer. And all that is not bound to cancer will be removed and then only what is left is what is bound to the cancer. And then during surgery, the surgeon can switch on the lines and they can see it light up. And that is, in principle, what we do. I've taken some examples from real life for the 2 trials we have done, one in the brain cancer trial and another one in head and neck. And if you see the pictures above, you have on the left side, you have an image as you look from the surgeon without the light switched on. Then on the right side, then they switch on the light and you can see this black and white image where you can see the white illustration in the bottom of the cavity. I mean that's where the surgeon have removed the cancer and now they have to check any cancer left. In this case, there's a lot of cancer left and it's light up with our product and it really helps the surgeon to remove it. But also it helps them to make decision because, for instance, in the brain, some of the structures are critical and you cannot remove them without killing the patient. And some of them you'll disable the patient. In this case, the surgeon can decide if it's -- if there's cancer enough to run that risk that they potentially can disable the patient or they should leave it in. And that's really a very important and helpful tool that they get during the surgery. On the image below, you can see again the image on the left side that is before the light is switched on and on the right side, it is switched on. And you can clearly see this is colored on top of the image where you see this -- where we see the cancer lights up basically. So this is really what we do. And that's just 2 examples of many more patients that could be helped out there. So we think that the product has been really significantly derisked because it's been proven across the 3 indications. It's been designed by risk mitigation in mind. So we used an already existing compound, ICG, which is an image agent that is used for angiographic visualization. We use that one because it's known to be very safe. We have had very good preclinical data. We have positive clinical data across 3 different indications, it has been very well tolerated across all patients. And we have a clear path for the first approval in the first country and that's glioblastoma in the U.S. Also commercially, we have done a lot to derisk it. One of the thing, again, is by design, we use this compound where all equipment is seen with ICG. So that means that the manufacturers are not -- should not change the equipment. They can basically use it as it is and work with all equipment. That's one very important thing we see when we speak with partners. And the other one is that we start already now to do the partnership with the large MedTech companies. So we have the support and the push into the market when we get to that. So the market size is a question we get sometimes. And I mean, I'm just trying to give an illustration. What you see on the right side of the image is that on this 45 million procedures per year. Then you have the incidence of the highly relevant cancers. And of course, there's a difference between having an incidence and have a procedure. Some patients get more procedures. But if you have -- the first time you get cancer, you're most relevant to get help by surgical curative intent, and that's where our product makes the biggest impact, 9 million per year. Then if you reduce it to the 2 indications we're focusing on now, which is aggressive brain cancer and head and neck, that's not by far the only one that would work and work on many or more cancers, but that's where we have started. And then you take those patients of -- in U.S. and Europe that today's offer surgery. And for instance, in head and neck, it's only 1 out of 4 patients with head and neck cancer that is offered surgery today. And the reason is that the cancer, in many cases, is located in complex location or what can I say, it's too advanced. So it makes a little sense today with the current equipment and the current help to do surgery. But what we can do, enabling the surgeon to see the cancer with more complex location and more advanced stages. And we can do that together with equipment so they actually can get to the complex location and they can actually see the cancer. And by that, we can make this 75% of the patients accessible as well for offering them a surgery. So that means that many more patients and today's offer surgery in head and neck can be offered surgery with our help. So what you see what is left is only the 640,000 patients or incidents per year. And if you take the average price which is used today in the U.S. about is $4,500 per treatment, then you get a drug for the potential, and that's only a minor part of the market. And we have 70x, 7-0x more potential. And of course, we will not get all that. We only have a fraction of it, but just the drug in itself is a very attractive actually value proposition we have here.

And in order to expand that reach and adoption and really reach those numbers that Morten just presented, we believe that partnerships with leading MedTech tech is crucial. And because of that, we are right now building a strong surgical ecosystem, and we believe that a cornerstone for that is that FG001 works with all surgical equipment. That basically means that we cannot only do deals with microscope if FG001 only work with microscope, but we can actually make partnerships with all surgical equipment manufacturers. And so far, as Morten also mentioned, we have done 3 nonexclusive partnerships with Intuitive Surgical, which is in the robots area; Olympus, which is in microscope and open field and endoscopes and SurgVision, the Bracco company. And we are aiming to do another 1 to 2 partnerships during the span of the next 4 to 16 months, so this year and in '26. And we believe that basically all stakeholders benefit from the partnerships. Because of the improved and better surgery, we will have more people to be undergoing surgery. And hopefully, with the result that it will increase the quality of life, but also increase survival. For the partners, they are also able to help more patients. And because of that, they can sell more equipment. And for FluoGuide, not only helping more patients, but also by building the strong collaborative relationships, we can then prepare for a deeper market penetration. That will also support the market entry of FG001. And by having these collaborations, we can also ensure a smooth integration of the surgical workflows. An example of that is when we do the collaboration, we will optimize the various equipments to FG001, and we can make a so-called FluoGuide button on the equipment. So when the surgeons, they come to perform a surgery with FG001, they can push the FluoGuide button and the equipment is optimized for FG001. Of course, working with these leading MedTechs, it will also derisk our regulatory approval because they will also need to do some regulatory work in having FG001 approved for their products. And lastly, but not least, by having these collaborations or partnerships in head and neck cancer, once that has shown to be approved and stuff like that, we will then be able to expand to other indications with FG001 outside of brain, head and neck and lungs. If we then shift gear and move to first half year of '25, our operational highlights are listed here. We received approval to start or initiate our Phase II clinical trial for FG001 in head and neck cancer in Groningen in the Netherlands. That happened in February. And in April, we enrolled the first patient in that study. We also had -- on our brain indication, we published the first clinical data in neurosurgery. And as Morten mentioned, a few days after into July, we announced the third partnership this time with Olympus, which you know as a world leading medical -- MedTech company. If we look at the financial highlights for the first half, we have an EBIT loss of DKK 19.5 million compared to a loss in the same period last year of DKK 16.5 million. The deviation of the DKK 3 million is linked to the timing of clinical studies. Last year, we were wrapping up 3 Phase II studies doing study reports. And this year, we are running a fairly complex study in head and neck cancer in Holland. If we look at cash preparedness, it is DKK 24.6 million compared to last year, DKK 54 million. We have in the period from 1st of July last year until 30th of June this year, we have had an EBIT loss of DKK 32 million. And if you deduct the noncash items in that 12-month period, that being the depreciation of our laser system and also the accounting of the warrants, then that basically explains the difference between the DKK 24.6 million and the DKK 54 million. And the same story, of course, goes for the equity of DKK 6 million compared to last year's DKK 37 million. Our market cap on June 30 this year was DKK 363 million compared to last year, DKK 375 million. And of course, neither Morten nor me are happy with that, and we are trying to do our best to increase that. If we then move to our 2025 outlook executing on our clinical and commercial milestones. If we look at brain on the top left, we have received preliminary data from our investigator-initiated trials in meningioma and low-grade glioma within the brain. And we also had a milestone saying that we would present those data. But happily, those data are right now in escrow because they have been granted that they can be presented at conferences in October in both U.S. and Europe. On our PTT and PDT or photosensitizer therapy, we are continuing to optimize the combined use with FG001 and our laser system in both PTT and PDT. Regulatory-wise, we have submitted a so-called pre-IND application to FDA to confirm the design of our first registration trial for FG001. We will have a meeting and feedback from FDA later this quarter and are on target to then in Q4, submit a so-called IND so that we can get -- submit an application so that we can initiate our first clinical trial -- registration trial in aggressive brain cancer in the U.S. If we look on head and neck, as mentioned, we enrolled the first patient. I think we promised in first quarter, and I think it was the 8th or 10th of April that we could say that the first patient was enrolled. So a little late, but we have enrolled it. And we are still on track to have interim data for the first 15 patients in this trial later this year. And based upon those interim data, we will start planning of a registrational trial in head and neck cancer. And later on, we will, of course, seek evaluation and consultation from FDA on this trial as well. And on the commercial part, we have reached the 2 additional partnerships that we promised. And again, I think we promised them in the first half, and we had a 1-week delay on the last one. So if -- summing up, with 45 million procedures in 2030, we are looking at one of the largest health care challenges of the future and FluoGuide really would like to be a part of that solution. We see a growing demand for treatment. That is based on the fact that we have a growing population in the world. We have a population that are increasing in age. And as Morten mentioned, by improving the quality of the surgeries so that the surgeons can perform even better surgeries, we are untapping a huge potential by maximizing this surgical outcome. So FluoGuide basically represents a technological advanced mover. We have a compound FG001 that is well tolerated. It's relevant in all cancer types, and we have so far proven that it's lighting up in 3 different cancer indications in clinical Phase II trials. We can provide a better patient outcome as we are providing better tools for the surgeons when they are doing the surgeries, they will leave less cancer behind and thereby reducing the risk of residual tumor. And this can contribute to improved quality of life and even more importantly, an increased survival for patients. It will also improve the health care economics. Because of the better surgeries, we will see fewer reoperations and we will also see shorter hospital stays. But maybe even more importantly, it will then increase the likelihood that we can see even more surgeries to the benefit of patients. We also see a growing market for precision surgery. And with the surgical imaging technologies that we see -- sorry -- we believe that FG001 is designed to be widely compatible for all equipment, meaning that we will see more and many of the equipment manufacturers using FG001 on their equipment. And then last but not least, we are not a so-called one-trick pony. We have a pipeline potential. We have already shown that it works in 3 indications, but with the potential of expanding that through our collaborations with our partners. So cut in short, huge potential, significantly derisked with near-term triggers. And with that, I will hand over to Christian, and we take questions.

Perfect. Thank you so much for the great presentation. To start off with, in your Q2 report, you kind of had a special topic, so to speak, around your partnering strategy, et cetera. And among others, one of the things you mentioned was a potential acquisition, which drew some investor interest looking at the questions we received. So can you just elaborate a little bit on what you meant with that?

Well, I think actually, we tried to say the opposite in the sense that what can I say a lot of reasons is not likely that FluoGuide will be acquired on the short term. One of the reasons is that MedTech companies typically do not acquire assets after Phase II. They do acquire cash flow, positive cash flow. So it's much more likely that, that will happen later downstream. Another thing is that one thing that we can develop with the equipment manufacturers is a cash flow coming from our drug. There will be a cash flow coming from the device. And then there will be -- and that's most importantly, there will be a synergy between the device and the drug. And that is to be developed downstream. So if the acquisition just to place now, I mean, then that will kind of be lost. And many of the manufacturers see that as an interesting thing as well. And the last point actually, which I think is important and what we hear from some of them we are talking with is that they actually appreciate that we are not in a hurry to get acquired. And actually, we can see this as a long-term relationship that we can build it deeper with them. Because they don't necessarily have the drug experience, and they will rely on us to do the drug part of it and they do the device side. Many of them also do not like actually to have a drug inside their entity because just for strategic reason, consider that as higher risk than the MedTech elements of the business. So I think that it's not likely that we will be acquired on a short term. But of course, never knows.

Perfect. Got it. And you already mentioned that there are several aspects that make you attractive for potential partners. Right now, the collaborations you have are quite early stage, right? If you presume that data are going to look promising, how could these partnerships develop over time?

Yes. I think it's quite important that we deliberately do not want to sell off any rights at this stage. And there's many reasons for that. So the way -- the intention with the partnership we have now is that in the trials we are running in Groningen, we have kind of 5 seats available for 5 different partners and -- or at least 5 different partners. And we have now 3 announced. So that's why we feel with some confidence that there will be 1 to 2 more in the next, let's say, 12 months' time. And the key purpose of this trial and this work is actually to, first of all, demonstrate that our compound is detectable and can be shown up on the equipment. It was expected so because it was done by design, and I can say that it's no surprise that actually work on equipment is already out there. But the next thing is then that it can -- there's a huge potential actually in optimizing some of the software and some of the elements of the equipment that can make even better performance. And ideally, we do this before we go into the registration trials because if we do so, we get much better result and actually make a stronger case both for that given equipment we work with, but also the patient and the community. So for us, we see this very much as a part in a collaboration where we get to know each other, develop the plans on downstream where we want to work on, and then that will evolve into more tight relationship where also there could be commercial aspect added into it. But I think another thing that is important is that when we see in the deal downstream, I mean, we actually have the drug for ourselves. The device manufacturer could actually have a benefit in selling more equipment that could be there again in the deal. So we don't necessarily have to give away upside on the drug, which is very unusual or very different from pharma deals typically. So it is a very interesting position we are in that we could have a benefit beyond our compound.

Perfect. And could you just elaborate a little bit on now that you've selected several partners in different categories. What are kind of the main factors which you consider in your choice of partners? Is it, for example, the best deal terms or the best equipment?

Yes. We have decided that we want to work with the big companies. And the main reason for that is that they have already equipment out there well distributed. The downside of that is that big companies is just more strict on decision-making, and it takes just more time to get into to speak with them. And we saw that, for instance, with the Olympus announcement here. We saw it also with the -- back in time with Intuitive announcement. But it takes a long time from when we start speaking with them actually to do agreement with them. So that's a downside. But we prefer to work with market leader in each of the equipment type. And they, on the other side, do prioritize working with some of the limitation they believe is going to win. So they have -- and I mean, actively also selected us. They know everything that's going on and are not doing this kind of deals for fun.

Perfect. And you already for a long time that a commercial deal is only likely, for example, right before market entry or after Phase III, for example. You already mentioned during the presentation as well. So has your picture been pretty much unchanged in recent years? Or as you've talked to more potential partners and kind of went further in development, has your view in any way changed there?

Well, it's been -- what we have seen is that when we started back in '19, I mean, there was a very, let's say, uninterested interest, if I could put it that way from the partners is changed as we go on. So now many of them actually have declared a strategy that they want to work with image agent because they want to do more precise surgery. So from having no strategy, 3 of them we have been -- we actually have a very clear explicit strategy of what they want to do. So there is clearly a move towards this field is maturing. And of course, that speak for that, that could happen something earlier. But I still think that we should prepare for the situation where we have a classic situation and that will be downstream. But of course, you never know. I mean -- and one of the idea, of course, having speaking with more partners is that we increase the likelihood of something happening, of course.

Great. And last thing about partnering, you already talked about it a little bit. But when it comes to partnering with leading MedTech companies, looking forward a little bit, obviously, we all hope that you'll reach the market eventually. Can you elaborate a little bit on the advantages of already being integrated with a lot of the equipment, maybe especially in comparison to some of the competitors you've looked at and their potential mistakes they made?

Yes. One -- I mean, one of the things that's been discussed very much in the field is if you should do the deals very exclusively or you should do them completely nonexclusively. What have happened in other deals so far has been more exclusively. I mean, there's been Hexvix with kind of stores that have been Stryker with On Target, for instance. The disadvantages with those is that you actually you block those hospitals that do not, for instance, have a Stryker equipment, they will not be able to utilize the On Target product. And that, of course, is a major disadvantage in the sense that you kind of chop off the market in portions. On the other hand, if you do deals where you just throw out compounds to everyone, then the incentive for really developing synergy between the equipment and the drug decreases. So it is a balance between the 2. And I think where we are is that we don't think it should be either or. It should not be exclusively to one, but it should not be that we throw out to cut on everyone. We really want to have a very selective partnership and then probably go more into that. That's where we are at the moment. And I think that is what we hear as well for most of them we speak with.

Perfect. And I see we just received a question around potential Phase III or pivotal studies, both in glioma and I think head and neck cancer, a lot of people can see that you're getting closer to that stage. Can you elaborate a little bit on how these trials might look? I think the question was specifically around how many centers, for example, such a trial would involve.

Yes. What we can say is that right now, we just submitted our proposal for FDA for the high-grade glioma. That goes from now until approval. And although we have a high expectation of what we'll get out of that feedback, I mean, it's nice to see it in the hand, so to speak. And we will come out with more information after that, probably October, November, where we have digested it. On the head and neck and then -- yes, well, on the head and neck, what we're doing right now, we're running the trials going in this where we have multiple endpoints in that trial. And the endpoint that come out and work well, that will determine the next trial in head and neck. And then if the question is do we need 2 more trials or 1 more trial, I mean, we could choose 2 trials that will derisk a little. It will increase -- sorry, decrease the funding needed, reduce the number of patients, but take a little longer or we could add and do it in one combined study, it will then increase the cost. It could be done a little bit faster, but it will increase the risk. So what exactly we are doing in both head and neck and aggressive brain cancer will remain on FDA feedback and also the phase for the head and neck trial. And we will be very pleased to tell more about that as soon as we really have the data so we can do it on an informed basis. But one of the 2 things. And when you talk about centers, we could look, for instance, on a company like On Target that have done it in lung, but also ovarian cancer. And also, you can see in the breast cancer trial that was running. And number of centers, 10, 15 centers in general for those trials.

Great. I see we also received another question about around partnering. And more specifically, I'm not sure how much you can say there, but you aim to have at least 1 or 2 additional partnerships. How many companies are you talking to, so to speak? Is it a lot and a couple will end up being partners? Or are you focusing on tight dialogues with a few, so to speak?

Well, I think that our attitude towards the partners is the same as with investors. I mean we are ready to speak with everyone and customers in general. And although a partner may be a small partner, maybe not so interested at a given time, then there may be that the person we speak with actually move to another partnership or another partner company. And then suddenly, we have a good relationship. So we speak with everyone, and we're always very open. It doesn't mean that we give away things to them, but we're very open toward everybody. And also, there's a lot of learning from it because the whole industry is an unmature market yet. So all the stakeholders in the market are actually finding the ways through. So we will be stupid not to speak with everyone. So we speak with as many as we can.

Great. Now let's shift gears and go to CT-005. As you mentioned, recruitment of the first patient was a little bit late. Then I think in your progress update from early in the summer, you mentioned that actual recruitment now is ahead of schedule. Can you just explain a little bit how did recruitment dynamics change to kind of enable you to catch up, so to speak?