Photocure ASA (PHCUF) Q3 2025 Earnings Call Transcript

2025-10-29 14:36:31 ET

Photocure ASA (PHCUF) Q3 2025 Earnings Call October 29, 2025 9:00 AM EDT

Company Participants

Daniel Schneider - President & CEO
Erik Dahl - Chief Financial Officer

Presentation

Daniel Schneider
President & CEO ...

All right. Well, welcome to Photocure's Third Quarter 2025 Results. I'm Dan Schneider, President and CEO. And with me today is Erik Dahl, our CFO.

A reminder that the usual disclaimers are in effect for today's presentation. 

So I'd like to start with this slide, the strategic priorities and initiatives. It's our guide to how we execute and allocate resources across the company. At a high level, our strategy is centered around 3 key pillars: strengthening the core Hexvix/Cysview business, advancing blue light cystoscopy as a definitive

standard of care in bladder cancer, and expanding our reach into the broader uro-oncology and precision diagnostics space. 

The first pillar, accelerate and expand, is about delivering on our financial guidance for disciplined growth in revenue and EBITDA in our core business, and to continue generating operating leverage, which we continue to do so. It's also about driving the blue light cystoscopy mobile strategy, ForTec, in the U.S., and increasing penetration in EU, particularly in the priority growth markets, France, Italy, U.K. through blue light expansion and the image upgrades, most recently, Visera III, by Olympus. And thirdly, expanding our geographic footprint and leveraging our distribution partnerships across the globe. 

In the second pillar, positioning and access, we're building on the foundations of BLC as a primary precision diagnostic, and you watch throughout today's presentation, I talk often about precision diagnostics in this space that's exploding as a tool to facilitate early and appropriate use of non-muscle invasive bladder cancer, the detection, the surveillance, and the therapeutic monitoring. Inclusive of life cycle management is demonstrated by our recent strategic collaboration to develop the world's first and only Blue Light AI system, which we'll discuss more later today. 

We also want to support high-def Blue Light Cystoscopy technologies entering the market. Upgrades of the 3 big OEMs, so the big Wolf, Olympus, Karl Storz, support the efforts of other manufacturers who want to enter into the U.S. market via the reclass process that's still ongoing or other methods. And also the partnership with Richard Wolf on building an adoption in Europe for the flexible Blue Light Cystoscopy interim solution, while we continue to advance the development of the high-definition 4K state-of-the-art and world's only Blue Light flexible system for global use. These efforts will not only drive near-term growth, but will also solidify our long-term competitive positioning. 

And finally, third pillar, acquire and transform. We are looking ahead and actively assessing opportunities within non-muscle invasive bladder cancer and the uro-oncology indications, which focus on rapidly growing interest in precision diagnostic indications, biomarkers, artificial intelligence, new technologies, digital pathologies, all about diversifying our portfolio and building on our commercial footprint and bladder cancer expertise. 

The real-time examples would be Richard Wolf's collaboration on the blue light flexible high-def system and the ForTec mobile strategy employed in the U.S., both leveraging our existing commercial infrastructure in the broader uro-oncology segment. M&A is a focus this year in an effort to expand our footprint, grow faster, increase our ability to generate a strong cash flow into the future. 

So I'm pleased with third quarter results, and the highlights are very evident. Overall, we had 12% product growth. That's 14% minus FX impacts. In North America, we delivered 14% unit growth and 12% product revenue growth. That would have been 19% without foreign exchange impacts, offsetting the continued Flex decline, which was measured at about minus 52% versus third quarter last year. I will remind everyone that Flex now has reached a level of below 5% of our total sales. There are several accounts that still use Flex sparingly, and we intend to keep them alive as long as we can to continue to generate data in anticipation of our future launch of the Richard Wolf collaboration. 

The installed base of Saphira Blue Light equipment continued to increase with 7 tower placements and 7 upgrades in the U.S. In July, Karl Storz implemented a promotional program that does take time to take hold. So we expect this development and momentum to continue to build into Q4. We had a fantastic 20% unit growth in the rigid surgical market, inclusive of ForTec medical mobile solution. And actually excitingly, ForTec added 6 more rigid Saphira systems to their national fleet of rentals and began deploying them in September, underscoring the growing demand for Blue Light Cystoscopy in the U.S. 

The number of active accounts increased by 23% year-over-year to 373 accounts, and this sets the stage for continued momentum into the future. In Europe, revenue was up 11% and units up 4%. We continue to execute in Europe with strong growth in the Nordics and DACH, driven by Olympus upgrades of the Visera III, and that continues to be a focus throughout Europe. Approximately 30% to 40% of the accounts in Europe use Olympus equipment and particularly strong, as we've talked in the past, in the Nordics, Germany, and France. 

The launch early this year of the Olympus Visera III BLC-equipped system continues to gain momentum with 49 Visera installs in the field. The funnel is very strong. Our strongest country to date with conversions is actually Austria. So we're looking forward to the future of these continued upgrades and their impact because every upgrade has an impact of double-digit growth.

 We generated positive EBITDA of NOK 10.2 million BD expenses of NOK 14.1 million. So when we look at our EBITDA, we look at an adjusted EBITDA, and that growth was to NOK 14.1 million positive. It's a 10th quarter in a row of positive EBITDA, continue building operational leverage throughout 2025, strong balance sheet of NOK 247.8 million in cash, and no term debt. And we completed the 500,000 share buyback program.

On the news flow, on September 22, a new publication from the Italian Society of Urology, the first national recommendations on Blue Light Cystoscopy. Blue Light is recommended for the first TRBT, the second resection, and the recurrence of non-muscle invasive bladder cancer in populations of high risk, very strong recommendation in the Italian Society of Urology, and we expect that will start impacting the Italian market. 

On September 16, a publication came out that was derived from the EU roundtable on bladder cancer. The recommendations published were based on an important meeting of experts in April of 2025 by the International Center for Parliamentary Studies, ICPS, that organized senior-level roundtable on bladder cancer with leading clinicians, industry experts, the EAU, and the World Bladder Cancer Patient Coalitions. The objective of the collaboration was to establish a set of recommendations for the EU and member state policymakers to enhance awareness, prevention, and optimizing early diagnosis and treatment of bladder cancer in Europe. 

The resulting recommendations were published, and they basically stated about -- talked about equal access to advanced technologies, identifying tumors in bladder cancer that reduce the burden on patients and health care systems. Bladder cancer is one of the most costliest cancers to treat, and precision medicine and precision diagnostics are exactly the future, and that's exact positioning for Blue Light Cystoscopy. 

On partner news, and we'll talk a little bit about this as well. I know many are questioning what's going on. Asieris announced that Cevira advanced to the second round of technical review, and anticipating an approval that would trigger an $11 million milestone. They are in active conversation with the NMPA, and there has been no pause in the process; they're moving forward. On October 15, we announced our strategic partnership with Intelligent Scopes Corporation, agreeing to develop the first and only blue light cystoscopy artificial intelligence, and more about that on my next slide. 

So Intelligent Scopes Corporation, the U.S. subsidiary of Claritas HealthTech, is set up to develop an AI software for real-time tumor detection using Blue Light Cystoscopy. 

The overview through this collaboration, Photocure and ISC are combining complementary strengths, Photocure's leadership in bladder cancer detection and ISC's deep AI expertise, to build an intelligent diagnostic platform designed to improve accuracy and consistency in tumor detection. The pilot program analyzed over 200 cystoscopy procedures with over 80,000 images. It demonstrated extremely strong early performance in detecting high-risk and early-stage lesions. It's a joint development work is underway, and the ENABLE clinical study is initiated in both U.S. and Europe.

Following the development phase, we plan to pursue FDA and CE submissions, with Photocure holding exclusive perpetual global commercialization rights once the software receives its clearance. The rationale of the value creation we see in this -- the partnership is strategically important for several reasons. It strengthens our position as a reference company for next-generation cystoscopy, integrating artificial intelligence and Blue Light Cystoscopy.

It leverages the synergy of AI and BLC to enhance the detection, accuracy, and completeness of tumor resection, which directly translates to better patient outcomes and stronger clinical adoption. It extends our technology moat around the data-driven precision care. Paving the way for future AI-enabled diagnostics in uro-oncology. Importantly, it adds a high-margin, scalable software component to our business model, creating durable value beyond our current consumable base.

Moving to segment trends. So looking at North America and Europe, both delivered continued growth. In North America, the business has significantly overcome the continued decline of Flex surveillance market, which in the first half overall was minus 60%. It was minus 71% in Q1, minus 46% in Q2, while rigid surgical market delivered a 20% unit growth in Q3.

In Europe, the Q3 units surpassed previous Q3 high watermarks as momentum continues to build throughout the region through upgrades. Europe is beginning to see the impact of the Visera 3 upgrades rollout, particularly in DACH, and I called out specifically Germany and Austria, France, and the Nordics with 49 through Q3, with more in the pipeline, particularly in the Nordics and the DACH region. Upgrades deliver positive double-digit impact. And a reminder on the impact of these upgrades, 40% of Europe is dominated by Olympus. So we see this as a significant development and opportunity for the European continent.

Turning to North America and trends in North America. Sales still impacted by the downturn of Flex, but despite this, we see adjusted unit growth increasing 20% with the addition of the ForTec mobile solution. 14 new Saphira were installed at 7 upgrades, 7 new, adding to the active BLC account growth of roughly 23% year-over-year, and this bodes well for quarters ahead. The ForTec mobile solution now reaching 121 accounts as of the start of service. That's plus 19 from Q2, and over 185 different physicians have now had access to Blue Light Cystoscopy that otherwise would not have had access to it. This is up 19 accounts from Q2, demonstrating growing momentum and demand.

And as I mentioned in the kickoff, ForTec has added 6 more Saphira systems to the fleet, bringing their total to 24. And it remains -- bringing access of Blue Light Cystoscopy in the U.S. remains a top priority as demonstrated by our efforts with the FDA in reclassification and reimbursement.

Europe growth has also remained strong with solid growth in the DACH and Nordics, which make up a majority of the revenue, and the priority markets of France, U.K., and Italy seeing double-digit growth. As I mentioned, 49 so far, Visera III Olympus systems have been installed and has very strong healthy pipeline behind that as we move through Q4 and into 2026. The picture at the bottom is just a picture of the presence is our presence at DGU.'s the German Urology Conference held in Hamburg, Germany.

Bladder cancer was one of the headline areas at ESMO 2025, which took place in Berlin just a couple of weeks ago, with significant momentum around earlier intervention. I'm excited to say that Blue Light Cystoscopy was frequently mentioned as the key to finding the right patients who can benefit from these precision medicines that are coming on the market, thus reinforcing the growing strategic and scientific interest in this space.

Looking specifically U.S. and growth, significant growth in accounts of 23% of active accounts who have ordered at least once in the last 12 months. The ForTec accounts continue to be a significant portion of our business, reaching over 11% or 12% of our total, spiking up as high as 15%. We believe this is a strong business opportunity for Photocure, and we'll continue to support the ForTec initiative with the mobile solution.

This slide is an illustrative representation. I think it's good to just sort of step back for a moment and look at where we're at and what we see as inflection points that can bring us significant growth potential. Despite the progress we are making, we are still in the early stages in the U.S. market and remains a single most important opportunity for Photocure and is significantly underpenetrated with less than 10% market share today. We have a long runway for growth as awareness, access, and equipment availability expands.

Bladder cancer represents a major unmet need in the U.S. There are approximately 85,000 new cases every year and 0.75 million patients living with the disease. Across the U.S. and Europe, there are over 700,000 TRBT procedures and 1.6 million surveillance cystoscopies annually. The total addressable market for flexible cystoscopy exceeds USD 1.3 billion globally. And we believe Blue Light Cystoscopy, in particular, the one we're developing with Richard Wolf, is uniquely positioned to capture a meaningful portion of this opportunity. We expect several catalysts to help drive the next wave of growth in the U.S. market.

First, improved CMS reimbursement, which we are pursuing through direct conversations with CMS and through legislative efforts in Washington, D.C. Both would further support adoption for BLC across academic and community settings. The return of the BLC Flex system to the market, with a proprietary development work with Richard Wolf, will enable broader access for outpatient and office-based procedures. In particular, in light of the many therapeutics are being used, the therapeutic monitoring aspects will be increasingly important.

Entry of additional Blue Light OEM partners would expand the installed base and provide more choice to urologists in all types of institutions. And finally, the FDA reclassification of Blue Light Cystoscopy equipment, for which there is an ongoing citizens' petition. This could be a potential milestone that would significantly lower barriers and accelerate nationwide uptake.

And overall, the momentum. The momentum in the macro environment as reinforced at ESMO, the expensive precision therapeutics are turning to precision diagnostics like Blue Light Cystoscopy as necessary to find the right patients who can benefit from their therapeutic. Taken together, these drivers support the long-term growth trajectory for the U.S. business that is both scalable and sustainable. The bottom line is we have a proven product with growing clinical endorsement and an enormous underpenetrated market, giving us a potential exponential upside as these catalysts materialize in the coming year.

Our growth initiatives. Jud just really briefly hit on a couple of them. Two key updates. We now have 121 ForTec accounts actively using 185 different users, gaining experience to patients who would otherwise not have had access to Blue Light Cystoscopy. The Richard Wolf interim solution for Flex is on track. When I announced that a year ago, we said it's a 30-month development that is totally on track. And this would open up the market for a $1.3 billion total addressable market in the U.S. and EU5. Super excited about it.

The final comment in the third box, as mentioned earlier, AUA, EAU, the trends are clearly blowing in favor of Blue Light Cystoscopy. The momentum and pressure continues to build behind the notion of accurate diagnosis and complete resections in line with the precision pathway for bladder cancer patient care.

We believe Blue Light Cystoscopy can play a central part in determining that precision pathway, and that is being echoed at every conference we attend, currently. The precision pathway starts with a precision diagnostic like Blue Light Cystoscopy that leads to the right precision therapeutics that are bombarding the market. And most recently, there's been 5 most recent FDA approvals, 2 in the last several months. There are over 26 unique therapy-focused non-muscle invasive bladder cancer trials going on. Billions are pouring in, and they're looking for solutions in the diagnostic place, and we believe Blue Light Cystoscopy plays a central role going forward. 

And 2 value-generating Asieris programs. The partnership continues to progress favorably. We have taken over $18 million in milestones across both programs, with the potential for significant cash in the future to help fuel our corporate ambitions. Here are the highlights of the 2 deals, which are very different. 

On the Cevira out-license program to Asieris, the Cevira NDA remains under regulatory review for potential approval in China later this year into early next year. This will be one of the first Chinese-approved drugs before the rest of the world. In other words, they're getting the product approved in China first, and then they're going for the rest of the world. Typically, it's the other way around. What we can say is only what Assyis is publicly disclosed. 

They are a public company in their annual report. They remain under review with the NMPA. If it approved, it would be the first product approved in China before rest of world. They've had meetings with the EU and U.S. regulators to determine a way forward in both these large markets. in U.S. and EU. And Asieris also disclosed interest in pursuing a secondary indication, which brings additional milestones to Photocure upon approval. 

On the Hexvix commercial partnerships, we're still awaiting the approval of the Richard Wolf Blue Light system that could come at the end of this year or early 2026, with a 2026 commercial launch of Hexvix in China.

And with that, I'd like to turn it over to Erik to review the financials. 

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