Dear Shareholders,


Increased pandemic-related restrictions led to a tough start of the quarter, but we were positively surprised by the development of the gross order intake during the quarter. We ended the quarter with a gross order intake of SEK 2.1m, an increase of 30% compared to Q1 2020 and 61% compared to Q4 2020. The quarter was our best ever, and we are committed to building on this momentum as restrictions ease in our markets. Although the absolute figures still have much room for improvement, we are pleased to be building a solid foundation for further growth. I want to explain this statement a bit more today: The core of our strategy is to build a large and loyal base of repeat customers delivering orders quarter after quarter. If this strategy succeeds, we will see the Episealer® included as a standard part of the surgeons’ treatment options (the “treatment algorithm”), and in my opinion, we are really starting to see the beginning of this. In the early days of a strategy execution, it is critical that key indicators shows that you are on track, and I firmly believe we are.


34 surgeons ordered Episealer® implants during the first quarter, an increase of 55% compared to Q1 2020 and 55% compared to Q4 2020. This growth is substantial and important as it is indicative of sustainable success in our sales initiatives, designed to grow the user base. In particular, I was happy about this figure, as the activity level with most clinics decreased significantly during the quarter due to the restrictions. In certain countries or regions, there has been essentially a complete halt of elective surgeries due to the pandemic. In Germany, for example, clinics can only have very few patients in the waiting rooms, consultations hours are kept at a minimum, and patients refrain from visiting their doctors given the restrictions. We expected growth to strengthen as most surgeons are back to regular consultation hours and hospitals return to full operations. In our long-term business planning, we expect surgeons to perform about 14 Episealer® surgeries per year. In Q1 2021, the annualised run-rate among our customers well exceeded 10 surgeries per year across the customer group. The same figure for German customers alone amounted to 16. We are delighted by this development, which indicates the steady patient flow that we need to reach our goals. In 2021, we expect to grow the customer base, and we know that surgeon activity tends to increase with an increasing surgical experience (Episealer®) with associated positive patient outcomes.


An additional positive sign is that, during the first quarter, surgeons in 11 countries ordered Episealer® implants, representing an increase by 120% compared to Q1 2020 and 38% compared to Q4 2020. Geographical expansion is another important task, as we are targeting the early innovator group in several countries, and our geographical presence is growing. This secures a large base to grow from.


Of course, we recognise that we are at the start of our financial journey. But showing a strong increase in gross order intake, a growing number of surgeons using the Episealer®, an improving annual run-rate indicating continued repeat business, and a strong growth in the number of countries in which we are active, during such a challenging quarter as the first quarter of 2021, gives me a lot of confidence for the future. That gross order intake, which is increasing when an implant is ordered, is increasing more than the net sales is explained by the fact that invoicing occur at the time of surgery, which can take place later, especially during the pandemic. This is reflected in the order book which amounted to SEK 1.8m at the end of the quarter, an increase of 71% compared to Q1 2020, and 38% compared to Q4 2020.


We have entered a phase in which we will increase our marketing activities based on excellent and extensive 2-year clinical results and highly promising 5-year data. For the rest of the year, we will be as active as we possibly can in all our target markets. Our marketing strategy has been adjusted for the pandemic, and current marketing initiatives involve a combination of digital and physical events during the year. These activities will take place in various marketing channels, including close co-operation with our strong network of KOLs globally.


Other highlights during the first quarter included the presentation of 5-year data, which was arranged just after the quarter’s close. The data, presented by Dr Johannes Holz from Orthocentrum Hamburg, shows a strong performance of the Episealer® implant of up to 5 years, which is yet another critical clinical milestone. This is the second time we see strong 5-year results from ongoing clinical studies. There have been endless studies performed on our target patient group, and as far as we are concerned, no competing product or procedure has yielded results as good as ours.


Clinical results were also accepted for presentation at the European Society for Sports Traumatology, Knee Surgery and Arthroscopy (ESSKA) congress. This abstract, from the European multicentre study with 24 months’ follow up of 75 Episealer® Knee patients (Mini-metal implants – 2 year detailed cohort analysis of a patient specific implant“), is authored by Associate Professor Tim Spalding, University Hospitals Coventry and Warwickshire NHS Trust, UK. ESSKA is a very important organisation for Episurf and represents an optimal channel for us to reach out to surgeons globally. This year, we have deepened our relationship with ESSKA, and we will run educational seminars and conduct other activities with them during 2021.


The challenges with properly initiating the patient recruitment in the US clinical trial have continued during the first quarter, unfortunately. But at the same time, a lot of work is ongoing in the background in order for the study to kick-start in a good way as soon as possible. Following easning of the restrictions, it appears as if sites in the UK can start research activities shortly, which would be very important for the trial.


With the clinical results published last year, and more still to come, we are excited by the powerful clinical message we can take to an ever-expanding group of surgeons. The whole company is energised by the potential we see for 2021 and beyond.


Stockholm, April 2021

Pål Ryfors