Creo Medical Group (LSE:CREO) — Interim Results

0:01 Good afternoon, and welcome to the CREO MEDICAL GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time by the Q and A tab situated in the right corner of your screen. Just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to Craig Guilford, CEO. Good afternoon, sir. Good morning. Good afternoon, everybody. I'm Craig, Craig Gulliver, CEO and essentially cofounder of CREO MEDICAL alongside Chris Hancock, who's long time friend and postgraduate. A colleague of mine, Chris started out life working at Gyrus Medical post his post doctorate with from university. Gyrus Medical pioneered the development of laparoscopic surgical instruments based in South Wales. That company was subsequently acquired by Olympus for 2 or $3,000,000,000

1:04 back in 2008, 02/2007. And that's the DNA that basically brought us to the world of bringing advanced energy to the field of endoscopy. Let's just skip on to the next one. And so this slide articulates really the journey that we see surgery going on and also the thing that we are gonna be enabling with the technology that we've developed in the last nine years, really, since the the foundation of CREO MEDICAL as it came out of its early infancy. Open surgery, as we all know, started out life with scalpel blades, sharp knives, sutures, and staples. If you're on a ship and you got gangrene across The Atlantic in the late eighteen hundreds, then they chop your leg off for the knee, and seal the blood and the bleeding with pressure and, heat in the form of a battered tongue.

1:56 That hasn't fundamentally changed. We cut things. They bleed. To stop them bleeding, you apply heat carefully, and you apply pressure in the form of early days with suturing or staples more recently in open surgery. Or what Gyris, which is where Chris had his foundational kind of experience did, was at the time at the time when technology was coming into our world, energy was applied to devices in the form of vessel sealing technology, devices that allowed surgery to take place in a keyhole or laparoscopic sense, which is where holes are made in the abdomen, instruments can be inserted into the patient with access for a digital camera so physicians can visualize what's happening within the patient, insufflated sorry, essentially inflating the patient to create space within the abdominal cavity so things can be done less invasively.

2:47 But that keyhole surgery, the laparoscopic surgery, it really took over over the course of, you know, the the late nineties and the two thousands. More than eighty percent of surgery is now carried out keyhole laparoscopically, and that was enabled by that technology, advanced energy, the technology that allows physicians to know that they've sealed and they've cut through the tissues that they're trying to resect or carry out the surgery with. But fundamentally, it's still a PIP procedure that's carried out in the Operating Theater. What's happened is that the cost breakdown and the way in which that's happened has changed. So the cost of doing a colectomy or a laparoscopic colectomy where they remove part or all of one the patient's colon is essentially the same in terms of the coding in The US, but the way in which it's done is done with advanced energy tools rather than inexpensive scalpels and sutures. The cost of that surgery is in the recovery of the patients that takes longer. Takes less time now with keyhole surgery than it used to. Our technology is at the forefront moving that that point of care from the Operating Theater to the endoscopy room. So we're now delivering many cases, thousands of cases where patients are having their their their treatment in the Endoscopy room, mildly sedated. They go home the same day or the next morning as opposed to five or six days later with a significant burden on their health care. We also see in the field of robotics where there is a gap in the market where there's, again, there's insufficient advanced energy for

4:19 the robotic surgical platforms to utilize advanced energy in the form that keyhole surgery is done today, and that's another area where the commactive energy is being has had traction with us with some of the most significant laparoscopic and robotic companies on the planet. The markets that we're going into are significant. So the reception market, which is our key product, which is the SPEBO product, which has been in the market now for the last two, three years. If you look at collect colonoscopy in The US market, there's 16 to 20,000,000, depending on the analyst research that you read, colonoscopies, of which seven percent will find lesions that need to be surgically removed. That's what we can do. The vast majority of those would normally be referred to surgery.

5:07 We're opening up an environment where that can be done endoscopically under the guidance of the inter interventional endoscopist, and that opens up hundreds of thousands of patients for the reception market as with the ablation market where we're attacking those markets with our MicroBlade products with the with our partners, Intuitive, particularly on the ablation side of the business. Intuitive being, you know, the largest robotic business on the planet. Obviously, pioneered the development of robotic surgery currently worth, you know, in the region of a $120,000,000,000, and they came to us and found us to to attack that particular market.

5:52 The core technology that we have, flexible devices, they gain access to the body through single endoscopic platforms, through the natural orifice of the the upper GI, the stomach, the esophagus, through the top, which is where speedboat and spider blade technology will sit all through the colon and with colon colonoscopes. These devices are long, thin, flexible devices where traditional advanced energy that you would find in laparoscopic surgery cannot be delivered through these flexible tiny structures. That's the technological advancement that we've made. That's allowing us to treat patients with indications in the colon with bowel cancer, esophageal cancer, stomach cancer, and other swallowing disorders in the esophagus and the stomach. Similarly with Spider Blade Flex. Microblade range of products predominantly been done where ablating tissue, again, through access through the mouth, through the esophagus, through a flexible endoscopic platform, sedated rather than the general anesthetic. No piercing of the the abdomen to get access.

6:55 The Microplate Flex were ablating tissue in the pancreas, for example, in minimally invasive sense. And Microplate Flex, this year, we did our first case for lung tumor ablation endoscopically under a clinical study that was launched in the beginning of this year. The first case is in April, and that's a process that we'll be continuing to develop as we open up the market with MicroBlade Flex, which is also something that we're working with Intuitive with. So Speedboat is the original device which we've done many, many cases with. That was intended and designed for use for colonic indications for dealing with precancerous lesions in the colon, avoiding surgery for patients so they don't have to have full or partially, resection of the colon. We're doing that on many, cases, but what we're also seeing now is in the upper GI, the stomach, the esophagus.

7:49 Physicians, particularly in The US where we had earlier clearance with the FDA, dealing with things like zinc is the diverticulum, which is a swallowing disorder that patients have. It's the bread and butter for the ENT surgeons, but, again, that's an invasive procedure that we're able to allow physicians in first phase endoscopy to treat those patients endoscopically in endoscopy room or even outpatients as opposed to as an inpatient population. Per oral per procedures per oral endoscopic myotomy is a long winded way of saying that that's enabling people to physician to solve a swallowing disorder where the the sphincter around the top of the stomach gets un unnaturally tightened, and that prevents people from swallowing can, impact on young patients as well as old patients.

8:36 Physicians are able to access that endoscopically again rather than having to have a large scar on the side of the neck where physicians would have to deliver a surgical procedure. The FPOEM is an early procedure that some of the physicians that we're dealing with in The US are are replacing some of those fundoplication procedures, which is a bariatric procedure typically for the obese population where you've got a relaxation of the sphincter at the top of the stomach, which allows which opens up the sphincter that causes acid reflux. It causes GERD, it causes the precursor for Barrett's esophagus, which is the precursor for cancer for an esophageal cancer. To replace that endoscopically is huge because those patients are typically not able to tolerate surgery in the way that they the less obese population for a for a nicer phrase to put on that would would accept.

9:35 That's early stages, but that's a huge bariatric surgical market. Again, all of these indications are where we're replacing surgical procedures with endoscopic devices in the endoscope endoscopy room as opposed to the end of the Operating Theater. Next one. So with Speedboat, with our technology, we are training physicians in many cases to move from being endo endoscopic diagnostic physicians to become therapeutic physicians. To give you a good example of how that works, traditionally, you might get a colonoscopy if that would give you a diagnostic outcome having had a a a colonoscope inserted into you to visualize what's happening. And then we move to a therapeutic endoscopist. In our case, in the past, you would have been referred for surgery with a colorectal surgeon to remove part of your bowel.

10:25 Nowadays, we've got services up and running in The UK where under the FIT test, which is a home test that people can do at home, they get mildly positive result on that. They'll go to the Endoscopy Room already geared up for therapy without having to do any diagnostic intervention, and those patients then are dealt with whether it's a large lesion or a small lesion. The physician is removing those, and it's removing the need for surgery, and it's removing the need for follow on endoscopy. So what we're seeing is endoscopy, this process saving significant funds in terms of the patients on a per patient basis. Typically, in comparison to surgery, it's saving in excess of £10,000 for the NHS. We're starting to see some good data come through from that from our users.

11:10 So training people to do that is important. We're doing it in a way that was very similar to the way Johnson and Johnson pioneered the introduction of the harmonic scalpel, which was another key device that opened up laparoscopic surgery. We're training people to do that, and we're mentoring people through that process. We must remember that this is a surgical device. It's a single use device, and the price point for that device is around about a thousand dollars to do for all of our devices used once and discarded. So regular continued usage on the part of each of those users creates long term annuity income. So over the last twelve months, we've increased the number of our users that we have. Obviously, our pipeline has grown more than doubled in the last eighteen months. We've got all of the indications in terms of our user growth and the user forecast are in line with our expectations that we've got looking forward.

12:07 So the pioneer program, when we first started pre pandemic, we had a gap for the pandemic because we couldn't get in to see customers. We couldn't get into hospitals because they were naturally busy for eighteen months, two year period. But in the early days, we had one guy using the first user of the product. Now we've got many, and we're increasing the number of trainers that we've got dramatically in the last twelve months. We're also increasing the rate at which we're adding new users to our population, which is on the on the bottom left hand side of that chart where we're more doubling our rate of production of users on a monthly basis.

12:48 Through a number of case studies in the deck. So we announced recently that we have been selected for scope and guidance for by NICE with the specific procedures for the lower GI. NICE at working in conjunction with the NHS supply chain who are also analyzing the case data that we've got, which is which is showing all of the exam all of the results that we expected to see in terms of improvements in outcomes for the patient, shorter hospital stays, a reduction in the number of repeat visits to endoscopy, and we're seeing reduction in waiting times, and that is coming through in the the cost savings from a NHS supply perspective, which is what NICE will expect to be using to validate the the process of going through scoping and reaching for guidance.

13:41 So we would hope to get nice guidance for the product over the course of the next six to twelve months in the outside, which will obviously be particularly good for the business. We also recently announced the Royal Oldham NHS Trust where they committed to the program across their endoscopy suites. We trained and took a suite a number of those positions through the process of being trained and the mentoring process where our skilled users that we already have have been mentoring the the the people up in Melbourne to do their cases. And they've gone through their first 40 cases within a couple of months of of launching the scheme. It's validating the process by which we train, mentor, and bring people to to become medium and high volume users in the in the profile.

14:29 And it's not it's a process that we are the first to do. So working with our intuitive colleagues at Intuitive Surgical, they also deliver mentoring and training across their user base even today with many thousands of robots in the market to deliver their gold standard training. People who know how to do the cases and get the best possible outcome for patients will continue to use the data. We use the product, and that's what we're seeing as a great example in Oldham. And that's showing us exactly how we go about the process of investing and training and mentoring physicians so they become regular users of the product. And most importantly, we get the the terrific outcomes that we get to patients at the end of it. Similar examples with the the Baylor College of Medicine in The US is just one example of a big customer over there. So Mohammed and mister doctor have been pioneering some of the early usage in the particularly the upper GI. We're running some clinical studies there as well, and they are now going through a process of training an example of a training site for us in The US where we're using that footprint to train other physicians, and there's also other physicians within that network that are being trained.

15:38 Similar examples in The US would be the VA where we've got early accounts in the VA having got through the procurement cycle with the VA. We're now able to then bring other physicians within the VA group onto direct sales presence in The US. This example with Israel is a distribution model. So our business model in The UK and Europe is direct. We went direct in Europe having acquired a distribution business, which we've now been through the process of integrating across Europe with five plus thousand customers in the GI space in outside of Europe, but excluding The US, we have a distribution model. So this example is a distributor in Israel. And over the course of basically ten to twelve months, we've trained Sergei, who's their lead clinician in Israel.

16:30 He's now been through the process trained and is publishing data, but he's also our training and mentoring specialist for Israel and those regional markets and has now trained a number of hospitals across Israel who are now continuing to do cases again on that razor razor blade model that works for us. He's also an asset that we use as part of that mentoring and training program for the distributors in that region and our sales channel to to deploy in The Middle East is another example where possibly for the first time, we've had an Israeli doctor go to an Arab hospital and deliver some on-site training and mentoring for physicians in The Middle East.

17:14 Similarly, in the APAC region, it was took a lot longer for our operation in APAC to come out after the a after the pandemic. It's really just under about twelve months since they've been able to freely move across the region. Sequentially, we've been going through a process of registering the product in many of those APAC countries. There's so many more to come, but we're active in India, Malaysia, Thailand, Singapore more recently, and Hong Kong. And Hong Kong will become our gateway to start driving the process of regulatory clearance in China. But Thailand is a good example where we delivered our first training and mentoring cases during the course of early the early part of this year. And since then, we've been putting 28 Thai doctors through the process of training.

18:01 The process takes about six to twelve months from identifying people to be trained, to train them in the animal in in the lab, and to then deliver their first cases under mentoring support from our mentoring network before they start delivering regular routine cases. So those that we trained in the beginning of this year, we expect to start impacting in case volumes during the second part of this year and into early next year. So Comaptive is our powered by Comaptive brand is the technology that sits in the our generator, which is the reusable part of our system. That retails for $30,000 at its retail price. The instruments that work with it, our devices that we've just talked about, are predominantly delivered through endoscopic means for therapeutics.

18:51 But the power by is the technology of the integration of the instrument and the integration of the technology and the support from the Chroma platform. And that's what the some of the robotic companies around the world have approached us for because there's a gap in the market for therapeutics in the robotic surgical and interventional space. And there's a simple reason for that. The advanced energy devices that are prevalent across laparoscopic markets that we talked about earlier on, the the the technology cannot be delivered through flexible devices, and it also cannot be delivered effectively through the wrist of a surgical robot. What we've been able to demonstrate is our ability to do both of those, both in a laparoscopic instrument as well as in the robotic flexible device.

19:41 So we recently announced last year that we've signed a an agreement with Intuitive Surgical, which is a huge pioneer of robotic surgery with three pioneering platforms from da Vinci, which is the surgical robot, to ION, which is the flexible robotic instrument for which is currently used for diagnostics. CLR Surgical, which is a UK based challenger brand in the world of robotic surgery. They came to us again for advanced energy for their Versus robot. That's on a nonexclusive basis to work with them to integrate advanced energy into the robot.

20:19 Both of those are great deals, they're progressing very well. And on the vessel sealing side, we deliberately didn't attack the vessel sealing market in in the early days of the company even though we know that the technology could be superior to Harmonics or LigaSure, the core brands that dominate that multibillion dollar instrument market. But even with BetterTech, as a small company, we wouldn't have won. The way for us to win is to integrate that technology into spaces where it hasn't yet reached, and that is the endoscopy market, which we talked about, but also through the the robotic surgical space with these vessel Xelo instruments. So this is some of the testimonials that we're getting from some of the leading surgeons who know and use energy based products in handheld surgery, be it be it for thoracics, colorectal, or pancreatic biliary surgery, and they also have exposure to the the instruments that are currently deployed through using the da Vinci and Versus platforms.

21:23 And what we've got here is something that could very much be a game changer both in handheld and particularly in the robotic space, which is something that we have we're very confident of what might be coming down the pipe in terms of additional commercial arrangements for those devices. So in terms of the headline summary, is this the first one of these that we've done to introduce the company in this forum? What does that mean to the future?

21:52 So we have our distribution business in the in Europe, which is, spinning out around about £30,000,000 a year in revenue, profitable with, about 4.5 to 5,000,000 in EBITDA. Over the course of the next few years, we see layering of increased revenues that come from distributing those products that we distribute in Europe increasingly into the North American and South American markets, which we've only just started to do this year. We've also pro started the process of launching our branded products beyond the advanced tools into Asia Pacific through the our indirect channel over there. And then we see the layering of the increased core revenues and also the the licensing revenues that are starting to fund some of our r and d in more in the the later years will drive the the royalty revenue that we expect to see coming through those licensing partners with Comaptive powered by Comaptive brand.

22:50 And that those are key, but the initial kind of process over the next two to three years is quite well understood, and we can see clearly how we reach that EBITDA breakeven point between, you know, late twenty four into going to '25. So I think that's about it. We'll open that up to questions. Perfect. Craig, thank you very much for your presentation. What I'll do is I'll just bring your camera back up now. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab, is situated on the top right hand corner of your screen. But just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published Q and A can be accessed via your investor dashboard.

23:41 Paul, at this point, if I could just hand over to you just to chair the

23:43 q and a, then what I'll do is I'll pick up from you at the end. Thank you. Thank you for your questions. We have a question first from David who's emailed in saying, Connective revenues were flat in h one twenty twenty two and h two twenty twenty two, excluding milestone payments. Where do you see the inflection point for Conaptive? So the inflection point Conaptive will come as we roll out the combined product with our partners in clinical use, which we expect during the course of 2024. That triggers the the commercialization agreement that comes with that and also triggers a number of milestone payments which have yet to be achieved as we get the the CE marking and the compatibility with the device cleared for the market. So that inflection point will start to come towards the end of of next year.

24:43 The devices we have is cleared. And as we deliver the early cases through the clinical study, that will open up additional usage beyond the the robotic use as well. Another question from David, and just to offer apologies for Richard Reese, the CFO, who was meeting with institutional investors this afternoon, so I wasn't able to join this call. But a question on the financials. Net cash used in the operating activities was 15,000,000. Cash levels at 26.5 with a tax credit of 4.5 and revenue growth at 15%. At the current rate, the investors suggest that spend rate means that your cash could run out q three twenty twenty four. You stated you have cash yeah. You expect to be cash flow positive during full year 2025.

25:31 What actions have you taken to reduce cash burn and to accelerate your revenue growth to bridge this funding gap? I think the key point really is, yes, the overall group revenues are growing at 15%, but the the growth of the high margin core CREO products is significantly greater than that, and that's where we see the contribution of those products offsetting the cash burn, obviously. Actions that we've taken over the last eighteen months to two years have been incrementally reducing that cash burn, which we see continuing to reduce slightly as some of the heavy workload and investment in

26:08 clearing regulatory clearance, some of the work that we're putting into the developing the partnerships that we have with CommActive. We can either selectively increase once we see income or have the income to cut our cloth accordingly around that, or we can also scale that back if we need to if that doesn't succeed. And we also have additional products that we'll be launching over the course of the next six to nine months. So at the back end of last year, we launched a slimmer version of the speedboat product, which saw an immediate jump in usage and also an acceleration in the training program. We have the ultimate speedboat of speedboat flush, which we'll be completing, we expect, in the second half of this year, which we also expect to see an increasing another bump in terms of utilization. Secondarily, we also have the clearance for the upper GI use in Europe, which came through towards the end of q two this year. So we haven't had the effect of that in the numbers moving forward.

27:04 That opens up a number of indications for usage in Europe, which we haven't been able to attack. As a rough example, we're about forty five percent forty to forty five percent of our cases in The US are in the upper GI and the esophageal and stomach space. We haven't been able to do that in Europe. We expect to do much more of that over the course of the next eighteen months. Alongside that, the smaller device gives physicians the greatest access to do more of those upper GI cases where they use smaller scopes.

27:34 There's another question here, which I'll combine with one that's been sent to us via text as well. But fantastic news on the NICE assessment, which could land around q one twenty twenty four. Do you think this is a significant revenue driver? And I think whilst you're talking about that, another investor's asked, following the old success, what other initiatives will you be taking with the other 200 NHS trusts to get them to do the same? So NICE, obviously, is a brand that is well recognized not just parochially in The UK, but across Europe and the world. They don't do this lightly. There's if you look at the number of companies that achieve guidance for their products, it's a very small number in comparison to, obviously, the products that get into the innovative space, which is where NICE, you know, does this assessment.

28:21 So that will certainly help with the NICE guidelines and getting the guys the NICE guidance applied to all of NHS trusts. That gives us the rocket fuel that we need to go even further into, you know, the later adopters. We've already got 24 sites in The UK at varying stages of low, medium, and high usage. We expect that to ease once we get the NICE guidance and it's the later adopters where what we are dealing with is treating is changing diagnostic physicians to become interventional therapeutic physicians. What I said earlier on, if you remember the FIT test that allows people to do their diagnostic test at home without having to go for an endoscopy means that the endoscopist world is going to change, and this is one of the things that will drive that. There is also the possibility that with NICE guidance, the second piece of that might might come that we would be hopeful of, which would be a funding mandate potentially, but that so that will come later.

29:16 Great. That's the other question as well. Yeah. So the other part with it was with the old success, how can you build on that too? And what initiatives would you have to then push into those other NHS hospitals?

29:28 So what we are dealing with is evidence based science. At the end of the day, we are early in our commercial progression. We really started the commerciality of this at the beginning of last year because it's the first full year last year after the pandemic. What we're seeing is the data. So we're analyzing data as part of that NICE evaluation where in the region of a 150 patients treated in one hospital, analyzing the costs and the the the the comparison of that. That data is what we can then utilize not just for the NICE guidance, but the data that's been generated to produce it. We can use with all of the NHS that we're already in touch with. And then they are clearly parallels that fit across, you know, all humankind because we all suffer these indications largely in the same way. There's some subtle differences in terms of indications and prevalence between Asia and and the Western population.

30:19 But as most as the Western diets become westernized, unfortunately, the prevalence of lower GI and upper GI cancer starts to level out, and we're seeing a lot more of that in in the Far East as well.

30:32 Could you say more on the first sales of endotherapy consumables in The US? Are you seeing significant traction? So yes is the short answer. We still have to go through value analysis committees to get the the products into the into the system. We've got orders that have started to come through. We're going through value analysis committees on a per hospital basis, but also deep on some of the big hospital chains where we've got very strong relationships already. So that has got very it's a very promising outlook to give those that may not appreciate that. When we do an upper GI case, the physician would deliberately reset into the the lining of the esophagus, and that did that has to be then clipped because that's the access point for the surgical procedure.

31:20 And that might take anywhere between three, four, or five endoscopic clips to seal up the defect. So we're now producing procedure packs that include those clips, and those clips add anywhere between 90 and $115 per clip. So it's adding a few $100 per case, and it makes perfect sense for us to be not just a an advanced energy, high value product. So, you know, we're bundling the whole package together so that we're a one stop shop for that therapeutic endoscopy environment. And that is our vision. You know, we wanna be the go to business for all forms of surgical energy in the endoscopy space because what we have is is the best surgical energy that you're gonna find, not just in endoscopy, but also in

32:02 laparoscopy and accessing that through the robotic partners that we already have. Plus, there's another 125 companies out there pioneering the development of surgical robots, which is gonna be future in ten years' time, whether it's endoscopically or or laparoscopically. They all will need advanced energy. I guess this is less of a question, but more it gives you a chance to maybe sort of remind people of the consumable model, but one of the shareholders has written they do like the clarity of your model, but every speedboat inject installation or core product installation is a direct benefit to the consumables business. I this generates repeat consumables purchase for CREO, and that's exactly the model. Exactly. What both whether that's, you know, once we have a Chrome system in there with SPEBO being used, every time it's being used, it's a single use sterile product.

32:50 You know, there's the ESG angle for that is is extremely in our favor because we are saving people from dead space at hospital. Some of the early data that we've got is showing at least a saving of five four to five days in in hospital per patient treated. So if you imagine the energy cost of that in in comparison to a single device that might be disposed or incinerated. And in future, we'd like to pioneer the way in which those things can be recycled safely. But that pie that reusable model alongside the the commoditized products that we also now brand as CREO. So the products that we acquired as part of our sales process, having acquired the business in Europe, we are now have an OEM arrangement with that. So they are own brand, CREO branded

33:35 products that we can ship as the shareholder picked up in The US. We can also now ship those in APAC. So things like a large lesion. So one of our doctors was talking about a lady who had a sixteen centimeter lesion removed from her colon having had a fit test, never had an endoscopy until she had that removed. To remove that, you need quite a big net to get put down the endoscope to get it out. You know, we can now provide the net. Why wouldn't we sell the net for, you know, $10.15, $20 for for that procedure? But we can produce the procedure packs that go with these things. So each of these are single use devices. And when you talked previously about the the the money that can be saved, somebody was asking if if your products can save the NHS, but also hospitals all around the world a lot of money, Is there a scope for a revenue share of those kind of savings? Does that work? Is that something that could happen?

34:30 So it's interesting. So one of the things that we are talking about we can't say too much about where it would be, but there's a I met the CEO of a hospital chain, a large private hospital chain where in a country where there is socialized NHS type health care system. But they, like the NHS in The UK, has significant backlog in terms of diagnostics and endoscopy procedures or access to surgery.

34:57 And he is doing a deal, and he's already done deals with the urology team, the gynecology team, different aspects of surgery, and the next one is likely to be the microsurgery team as we're gonna call it, which will be launched in that part of the world where he's outsourcing essentially a premium to the NHS in that country. So it's all it's kind of a prop a share of the revenue, but that's that's starting to see the technology not just being part of the NHS, but it's starting to move into the private health care sector even in a a socialized medical kind of health care system like we have in Europe in many countries. Another shareholder who texted in had asked, now that the heat on is to grow sales of existing products, how close are you and the exec team to the performance of individual sales productivity?

35:44 What kind of activity are the sales reps being measured on? So we have a pretty sophisticated self built CRM system. So the customer acquisition process, we have well dialed in. It's a training, development, and mentoring program. So we measure the sales team in in The US. We've got a direct team that we've built in the same way that we do in Europe. So Dave from who's ex Pentax and Oy has done a terrific job of dialing in all of those processes. You know, I personally know all of the sales team. I've spent a lot of time in the field traveling around, being very close to what's happening, and we've got a lot of the metrics that are telling us in terms of the cohorts of physicians who've been trained, the case reports that we get from those early cases. So, yeah, we have had feedback from salespeople and business development people who've joined the company that have said that the CRM system we have is light years ahead of what they've been used to certainly at this stage of early development of the company.

36:42 And I think one of the other things I'd say is the arrival and the acquisition of LV Medical to become part of the CREO family. What that's brought

36:50 is a real hardcore commercial DNA into what we do. So some of the things that we've done recently, which is really quite exciting to me, is we've integrated some of the distribution from the small office that we had in The UK, for example, into. You know, not easy for some of the people involved, but actually what that's brought in is, you know, we have pallet loads of stuff coming into the office, coming out of the office, the customer services team, which is drilling in that DNA. So we haven't had to reinvent all of that. We've absorbed that mechanism of delivering. I mean, we deliver 5,000,000 a year through that business, so we don't need to learn anything about how to do that. We just need to implement what they've done. So that kind of connectivity between us and the sales guys on the ground is is very short. The leadership gap between me and the guy selling on the ground is very flat structure that we have. Just going back to your training program.

37:44 A question from David. Who trains the trainers? And I assume you have a training facility, and where is this located? Perhaps you can just get back onto that point. Yeah. So we have our advanced trainers who pioneered the pioneer program. We have multiple sites where we can deliver training in the so we have there's two sites in The UK. We have multiple sites across Europe, and very accessible training sites in different parts of The US. So on the East Coast, West Coast, well as in all the different regions. You know, for me, the way I look at it, I look at the business development guy who's running the West Coast, for example, I need to know that they've got at least two training centers with at least two leading trainers who have got the ability to train. And then also there's mentoring capacity beneath those guys so that there's physicians on the ground who've also done cases who can then mentor the the next wave of of trainers.

38:35 But that pioneer program is something that we will continue to drive as the gold standard for training in therapeutic endoscopy, and we know that that's the right thing to do. So working with some of our chief medical officers who work with some of the biggest surgical companies on the planet, What they do is the same. You have to if we train our physicians really well, keep retraining them to adapt to new techniques or new procedures, then they will keep using the products. And that's that's not new to us. That's just well well grounded, well demonstrated access to market that that we can leverage. Moving away from the core products, there's a question regarding your plasma technology. Still very early stage, presumably. How long do you think it is before that could generate any meaningful progress towards revenue?

39:24 So I think the way I look at the plasma product is it was described to me in the early days with the IP because we've got over a thousand patents in our portfolio, and the brand is the way in which we can start to monetize that patent portfolio if we can. We have back in and as to one of the early questions, what we've done to reduce some of the cost. You know, we've taken a very prudent look at the IP portfolio and the way we manage the IP in the last twelve, eighteen months to to really hold back and sort of incrementally reduce the cost of those patents. But some of the plasma technology was described as the next best thing in the fight against bacterial infection since penicillin. You know, we've got a lot of data that shows that it's highly effective against C. Difficile, against the viral infections on the back of the the COVID pandemic, but it's very much outside our commercial wheelhouse.

40:12 That's not something that we have commercial touch points and channels in the in the commercial world, but there are partners out there that we are talking to who do have that connectivity and also have deep pockets that could license that technology as part of the Comaptive brand. You know, that would just be one of those adjacent markets where with a relatively light touch with our platform, we can enable other people to use our platform to finesse these devices for their markets, but under an under a licensing model. You know, it's a tech play medical devices, so it's the beta version of the PlayStation. We need to give it to these people to start playing around with it, but they can already do that with our new generator, which is part and parcel of that collective program. Our last question there, Craig. You mentioned there about your patent portfolio, but this is about the more general road map of future products. Where do you see that road map? What does it look like, and how well protected are all of your products in terms of patents?

41:10 So in my early days to the company, chap, who's been in the industry for a very long time surgically, when we're talking about what sort of instruments we could make and what sort of instruments would we choose to make, he said in many ways, you open up the kitchen drawer, you'll see all of the tools that you're gonna need in surgery because that's what we use to cut and dissect cooked and non cooked tissue of all sorts of different types. So it's no surprise that the devices that we've got and with the ones that we've developed in partnership with our Horizon Group of key opinion leaders over the years is devices that cut device with scissors like devices, devices that act like a blade, and we've got the only bipolar blade that we know of in existence. I've seen even laparoscopic surgeons still using monopolar tools where they they can't make bipolar hooks.

41:56 We can. We've got needles that are very fine that deliver energy into tiny spaces, and we've got flexible probes. They are the foundational structures that we need, and the IP that protects those is the uniqueness. Adapting that to do slightly different versions of scissors or slightly different versions of the blade or slightly different versions of the ablation devices is a relatively low cost and effective way of line extensions on these products, whether they're flexible or rigid. We aren't gonna create a laparoscopic business, but we can license our technology into robotics in laparoscopic cases, and we can license it into handheld device companies that might want to adapt through the power by brand technology for those purposes. But our vision, our life goal is to be energy choice for all forms of surgery to benefit patients because we know that the benefit that our patients get from our energy is quite profound, and that's that's why we're doing this. But that's not the work at the moment. That's the work of, you know, the five to ten year road map of product development hinged on these foundational structures that we've got the IP to protect.

43:07 In the meantime, our number one goal right now is to get to being cash generative. Hence, the question that we're getting from investors right now is how do we do that, how do we cut our clock to make sure that we get there first, and then the rest is is is there for us. Thank you. Before your summary, I'll I'll pass back to Alessandra. Perfect. Craig, Paul, thank you very much for that. I think you've addressed those questions as you can from investors. And, of course, the company will review all the questions submitted today, and we'll publish those responses on the investor meet company platform. But just before redirecting investors, provide you with their feedback, which know is particularly important to the company, Craig, could I just ask you for a few closing comments? I think the key thing for me is we're just seeing continued traction with our devices being used on a regular basis. This is evidence based science. It isn't work at the moment. What we're seeing is all of the foundational blocks building together to to the the vision that we always had. And I'll go back to where Chris and I and the team started with this business was we can see a a clear gap for this kind of technology and the benefit that it can bring to patients every week, every month. I talk to doctors who tell me about visit patients that they've actually seen and felt and delivered a benefit for. You don't get that at conferences. When you go to a conference, the doctors talk about the data and how many patients they commoditize the data. But when you talk to a patient the doctor about their patients, it comes to life. Like, a 42 year old lady who had this lesion, she didn't even know she had. The next morning, you phoned her. She's at home with her kids. She didn't realize what had

44:37 happened and said, oh, that was great. I was thinking about going for a run later on. Is that okay? And the doctors probably is about a day or so, but, actually, she can use her body just as she ever thought she would, and she's avoided surgery. We're doing that on a daily, hourly basis, and that's part of the vision. If you keep doing that, then the world is gonna be working well for us. Perfect. Craig, thank you once again for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations? This may take a few moments to complete, but some should be greatly valued by the company. On behalf of the management team of CREO MEDICAL GROUP PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.