Dear fellow Shareholders,
Today we are reporting on yet another quarter with clear steps in the right direction. The key metric of the number of surgeons using the Episealer grew by 75% in the quarter, and gross order intake was up by 43%. We clearly experienced positive developments in our commercial activities during the end of the year. Within product development, we concluded the year with a major milestone being achieved – namely, the 510(k)-clearance for the Episealer® Patellofemoral System. In 2023, it is important that we take the next steps as a company, broadening the user base globally, including the marketing of our first commercially available product in the US.
Commercialization
In 2022, we spent considerable resources on restructuring our commercial organization. We made changes in Germany, the UK, and the Nordics to optimize and strengthen our commercial organizations. Further, we have expanded our commercial organizations in Poland, Spain, and Portugal by hiring experienced business development managers. We are running a combined direct and indirect sales strategy, and we must ensure that both direct sales reps and distributors have the best possible prerequisites for success. We are now present in a large number of countries, but the majority of our gross order intake is still derived from the German market. If we succeed in taking the next commercial steps in our other regions while also ensuring continued growth in Germany, then we will be successful in our commercialization strategy.
In 2023, we will also start talking about the US market when accounting for commercial activities. We are currently focusing on the last preparations for the actual delivery of products, and we are building a commercial organization. Initially, we will run an indirect sales organization in the US and are currently in an intense preparation phase. I can also confirm that the first distributor contract is signed.
I am excited and optimistic about our commercial prospects for 2023 and onwards. We are in a better position than ever to capitalize on our groundbreaking technology, and it is clear that Episurf has now moved into a commercial phase.
Product development
At the end of the quarter, we received market clearance from the FDA for our patellofemoral implant system. The patellofemoral implant system replaces both sides of the patellofemoral joint of the knee. This means that our technology can now treat not only focal lesions in the cartilage but also overt osteoarthritis. Hence, we can now serve a broader range of indications and have access to the world’s largest and most dynamic orthopaedic market. I am proud of the team that completed this development project, and we are grateful to the FDA for the interactive process that was concluded just before Christmas.
During the fourth quarter, we also confirmed our intention of filing a 510(k)-submission to the US FDA in 2023 for the toe implant we are developing. We aim to receive market clearance to launch the product on the US market during 2024. The implant is intended to treat osteoarthritis (hallux rigidus) in the big toe, and more specifically of the so-called 1st MTP joint. Yet again, we are expanding upon our proprietary technology platform for the individualized design of implants and surgical instruments. This is highly exciting, and the market for osteoarthritis in the greater toe is a market of significant size.
We constantly review additional product development opportunities, as we believe the technology platform is strong and proven. Should we initiate a new project, we will likely target clinical indications for which we can develop products that have a relatively easy and fast road to market, both from technical and regulatory perspectives.
Clinical development
Recently, we have been focusing on the various clinical trials on our ankle implant, Episealer Talus, which progressed during the quarter. The EPIC-knee trial had patients recruited in the US arm; however, the recruitment rate still needs to be higher, and we are constantly looking out for alternatives that could speed things up. A significant milestone during the fourth quarter was the presentation of the Episealer® technology at the 6th ICRS Summit (International Cartilage Regeneration and Joint Preservation Society) in Miami, US, in November. The presentation, held by Associate Professor Tim Spalding, Cleveland Clinic, London, UK, was part of the scientific program within the session Evolving New Technologies Unloading Procedures & Focal Resurfacing. This was yet another testament to the interest in our technology, and we are now experiencing this in a larger global arena.
Concluding remarks
In November, we arranged a Capital Markets Day during which we outlined our plans for the coming years. I encourage investors to look at the event presentations, which are available on our website and on Youtube. A critical component of our commercial plan presented at the event is to increase the user base globally. Recruiting additional orthopaedic surgeons to our customer base, who then increase their usage of our implant technology as experience grows, ensures increasing revenue generation. In 2023, we have positioned ourselves to deliver upon this commitment, and the organization is optimized accordingly.
Expenses in the fourth quarter were higher than the previous year, driven mainly by costs related to the 510(k)-clearance as this project went through a very intense phase. The positive commercial trend we experienced during the quarter continued in January, with January being our best month ever. It remains to be seen how Q1 2023 finishes, but overall I am confident that we are now on a path toward a commercial breakthrough.
Stockholm, February 2023
Pål Ryfors, CEO