Photocure (Oslo:PHO) Q3 2026 Earnings Call

0:00 All right. Well, good morning. Good afternoon. This is Dan Schneider, CEO and president of PhotoCure. Welcome to PhotoCure ASA's third quarter 2026 results. With me today is Priyam Shah, our vice president of IR, and Dick Peters, our vice president of finance and IT. But also joining us today is a new member of our team, our new CFO, Dennis Camparelli. Dennis, maybe you'd like to say a few words. I know you won't be in so much speaking mode today, but at least introduce.

0:28 Sure, Dan. Thanks. So as Dan mentioned, I joined the team on Monday after 25 years in the healthcare investment banking and corporate finance world. Most recently, I led the life science tools and diagnostics practice at Canaccord Genuity. I've spent this week learning from Dick and the team, and I look forward to meeting many of you guys over the coming months. All right, great.

0:53 Welcome. Day three. All right, we'll get into the next slide. Disclaimers are in place for today's presentation. Next slide. So PhotoCure's strategy is built around the three priorities, and we continue to strengthen. It's strengthening the core by accelerating HEXFIX and SysView through expanded BLC installations, upgrades, mobile adoption, and market penetration. All of these are key accelerators to the current business. We also want to lead the standard, drive broader BLC adoption and non-muscle invasive bladder cancer detection, surveillance, and treatment monitoring through next generation systems, expanded market access, and flexible blue light cystoscopy.

1:39 And the third, expanding on the platform. With a broader uro-oncology and precision diagnostic platform through biomarkers, AI, Strategic Partnerships, and Targeted M&A, building on initiatives such as the acquisition of Vesca Health and the AI collaboration with Claritas and Arterra. Together, these priorities drive near-term growth, expand our market opportunity, and strengthen our long-term value creation. Q3 highlights. Product growth. Overall, we had 7% product revenue growth, XFX. In North America, we delivered 9% product revenue growth, XFX, and a 9% unit growth in a rigid unit where rigid unit growth was 10%.

2:28 The installed base of Sapphira upgraded blue light equipment continued to increase with nine new tower placements and four tower upgrades in the U.S. ForTech, the mobile solution, continues favorable impact on growth with 31 net hours up from 24 now in their national fleet of rentals, underscoring the growing demand for blue light cystoscopy across hospitals without capital budgets. And the number of active accounts increased 20% year over year to 454, setting the stage for continued momentum into the future. In Europe, European product revenue was up 6%, units up 8%. We continue to execute in EU with growth across all our key markets, driven by continued execution focus and tower upgrades.

3:20 The Olympus Viscera III BLC equipment upgrades continue to gain momentum with now 87 Viscera installs in the field, and Stryker blue light enabled equipment has also commercially launched in EU as of Q2. Upgrades through the world have proven to increase the usage of BLC with HexFix and SysView. Encouraging accounts to upgrade remains a number one priority for PhotoCare. Adjusted EBITDA for the quarter was 14.2 million NOC, while reported EBITDA was 4 million NOC. The adjusted EBITDA margin in Q3 was 11%, while year-to-date 2026 adjusted EBITDA is 14% and comparable to last year. We continue forecasting improved operating leverage for 2026 while investing in key growth initiatives across the business.

4:11 We had approximately $9.4 million knock in business development expenses in Q3 on various strategic initiatives and related expenses that bode well for our future. At the end of Q2, we had $162.4 million knock in cash and continue to have no interest-bearing debt on the books. Some key highlights from Q3. Dennis introduced himself. We're super excited to have Dennis join the team. He brings over 20 years of investment banking experience, med tech, diagnostics, and broader life sciences. He brings a valuable combination of industry insights, particularly in the space we're in, the financial expertise, and a strategic perspective to the company, which will be incredibly valuable as we continue to advance our growth strategy and broaden our reach to unlock the full potential.

5:02 of our emerging portfolio. We also had the Vesca Health acquisition. Following the acquisition of Vesca Health and Q2, we continue to integrate AssureMDX into our portfolio as we prepare for commercialization. As a reminder, Vesca's acquisition included a $2.75 million equity milestone for the achievement of the ADLT or Advanced Diagnostic Laboratory Test designation by October 1st. or the amount rolls into a CMS reimbursement milestone as we are now prioritizing the Novitas LCD local coverage determination Pathway to Medicare Coverage for AssureMDX, the ADLT milestone no longer applies.

5:48 Our focus remains on advancing our coverage and achieving Medicare reimbursement in line with the acquisition agreement. So said another way, that milestone that was tied to ADLT now becomes part of and added to the CMS milestone. FDA reclassification. On August 14th, the FDA published a proposed order in the Federal Register to initiate the process of reclassifying cystoscopy systems intended as an aid for the detection of bladder cancer from class three to class two. The FDA is initiating the proposed reclassification on its own initiatives following the review of available scientific, clinical, and post-market evidence. The FDA has stated that there is sufficient information to establish special controls that, together with general controls, will provide reasonable assurance of safety and effectiveness in these devices. The FDA closed the public comment period last week and will now begin their discernment. Reminder that there is no statutory required timeline, but given the level of interest and response, we remain optimistic on timing.

6:55 The unlock has the potential to have a dramatic impact on the U.S. core business, opening up 65% of the market, which has otherwise been very difficult for us to access due to Carl Storrs not having access to those hospitals. In Savira news, Osiris entered into an exclusive licensing agreement with Theramex for Savira, subject to certain conditions. advancing the global development and commercialization of this first-in-class nonsurgical treatment for cervical precancerous lesions in Europe. The agreement is to cover all countries in Europe, as well as Australia, New Zealand, and Turkey. PhotoCure's economics continue to remain only based on the milestones and royalties as per the original agreement with Aceris, and we are not impacted by this new multi-party relationship.

7:46 The first royalty payments were received this quarter related to the sales of Survivor in China and following the start of commercialization in late Q2 2026. In other publications and events, we had real-world economics and advancing the predictive models using blue light cystoscopy, so continuing to build the scientific and economic data around the use of blue light cystoscopy. Moving on to segment trends. There's been strong unit sales in both regions. Both North America and Europe delivered continued growth. In North America, product revenue increased 9%, XFX, with in-market unit sales increasing 9%, rigid growing at 10%.

8:33 13 new survivor towers were installed, nine new, four upgrades, adding to the active BLC account growth of roughly 20% year over year. Daniel Schneider, Anja Gossens-von der Heidt, Anders Neijber, Jane Healy, Priyam Shah, Tolv Hillestad, Dick Peters In Europe, product revenues increased 6% XFX and in-market unit sales increased 8%, driven primarily by 11% growth in the dock countries and 8% growth in the priority growth markets of France, UK, and Italy.

9:20 There are now 87 Olympus Viscera III installs since launch and 29 upgrades of other equipment since year began. We continue to monitor the situation around the generic Hexfix from third parties as part of our normal competitive surveillance. We are aware of a filing in Europe, but at this stage, there's been no regulatory approval or commercial launch of the generic. And the timing and likelihood of any potential market entry remains uncertain. We do not have any information to assess impact on our business at the time, and we will continue to monitor it. Active accounts, particularly in the U.S., 20% growth in active accounts in the U.S., which are accounts that have ordered in the last 12 months.

10:06 Over the past eight quarters, we have consistently seen strong year-over-year growth in accounts as ongoing trend fueled by Fortec and increased interest in importance of BLC. The Fortech program continues to exceed our expectations. Reactivated accounts with BLC upgrades along with new accounts remains an important initiative as upgrades provide double-digit uplift in sales. We continue to see momentum in the overall interest in adoption of BLC with SISU in the U.S., and I'll also comment that the Fortech mobile solution also is a good bellwether to the anticipation of additional OEMs in the U.S. market and the extreme interest in using BLC equipment for blue light cystoscopy using SysFu and HexFix.

10:54 Moving on to growth initiatives. You've seen the slide before, but we can put a check mark on the FDA reclassification OEM expansion. The U.S. offers a significant growth opportunity with three key levers, that can materially expand our serviceable market. First, the FDA reclassification and additional OEM participation can unlock more of the rigid BLC market. The FDA has initiated the reclassification process as of August 2026, and as of last week, they have now closed the public comment period and will begin their discernment. Second, flexible BLC reentry into surveillance opens up a much larger reoccurring use opportunity. We expect to have the Richard Wolff Global Flexible Solution to be launch ready by the end of 2027.

11:42 And third, improved reimbursement can reduce economic barriers and friction and accelerate the adoption, which we continue to work on with CMS. These opportunities build on a substantial underlying market, and approximately 85,000 new bladder cancer patients annually in the US, with more than 400 Daniel Schneider, Anja Gossens-von der Heidt, Another opportunity in expanding our presence in precision diagnostics. Historically, PhotoCure has operated primarily at the confirmed diagnosis and treatment stage, which is the green box on the right of the slide you see. Majority of HexFix and CystV today is used with rigid scopes in the OR setting and will be used in a clinical setting for regular bladder cancer surveillance using BLC Flex, which we're now co-developing with Richard Wolff and expect to be commercially ready by the end of 2027.

12:56 With AssureMDX, the blue box to the left, which we acquired from Beska Health in a transaction back in June, we now move upstream. into the first point of clinical suspicion when patients present with signs or symptoms, primarily hematuria, that require further workup to confirm the diagnosis. Being upstream expands our relevance throughout the patient journey, from initial hematuria evaluation all the way through resection, surveillance, and treatment with our developmental partnerships with Cloridus and Arteria for AI enablement, and then the surveillance through the Richard Wolff co-developed flexible scope. We believe this creates a more integrated bladder cancer platform and strengthens our long-term competitive positioning in bladder cancer care and precision diagnostics.

13:49 And updating on AssureMDx, we're in the preparation for commercialization. Up until now, we have primarily focused on explaining the AssureMDx clinical opportunity and the strategic rationale for bringing Vesca and PhotoCare together. ASURE MDX represents an opportunity for PhotoCure to extend its reach beyond cystoscopy into bladder cancer diagnostics pathway, addressing the need for better risk stratification and more informed clinical decision-making. Since closing the acquisition, our focus has moved very quickly from transaction and integration to now commercialization and execution. We're now focused on the commercial opportunity across Market access is progressing with the PLLA coding effective and the draft Novitas LCD supporting potential CMS coverage by mid-2027, while parallel pricing review is underway.

14:43 We're also establishing the laboratory infrastructure, preparing our existing commercial team, and building the clinical and health economic evidence needed to support adoption. The key is to align reimbursement, operational capacity and readiness, and commercial execution so we can scale efficiently as Medicare coverage advances. This creates a pathway to bring AssureMDx to more patients while leveraging PhotoCure's existing relationships and expertise in bladder cancer. There's a significant breadth of activity underway. While many of our immediate milestones are in the U.S., particularly around Medicare reimbursements, this is very much a global strategy. Our product development work is being designed with potential U.S., European, and U.K.

15:29 regulatory pathways in mind, and our clinical evidence generation already extends across both U.S. and Europe. and looking at one of our ongoing studies, ENABLE. The Cloridus PhotoCure co-sponsored AI cystoscopy study called ENABLE is an important investment in PhotoCure's future. Building the clinical evidence and imaging data set that can help enable the next generation of AI assisted blue light cystoscopy. We reached a significant milestone with our 100th patient now enrolled. Site activation is progressing across North America with 15 of the 16 sites expected to be activated by the end of October, supporting continued enrollment and excitement and momentum. Beyond the enrollment milestone, the strategic value is in the data we are building. By combining BLC imaging and clinical outcomes, Enable aims to create a foundation for AI-enabled tools that can enhance the utility of blue light cystoscopy, support clinical decision-making, and further differentiate PhotoCure's technology over time.

16:42 This is about more than completing a study. It's about building an evidence base that can help shape the future of AI-assisted bladder cancer detection and strengthen PhotoCure's long-term competitive position and continued momentum. And with that, I'd like to turn over to Dick Peters for the financials.

17:04 Hello, all. Today, I'll walk you through the third quarter 2026 financials. In the third quarter of 2026, we delivered 134.2 million kroner of Hexfix and SysU product revenue, which is an increase of 7% at constant currency versus the third quarter of 2025. During the quarter, we also, for the first time, reported royalty income from Aceris for the sales of Savira in China. This was 4.8 million kroner. Please note that this is related to the sales of Savira in China for Q2 only. Royalties related to the sales in Q3 will be reported in our Q4 results. Furthermore, we also had 1.9 million kroner of revenue from API sales to Aceris for the production of Savira. The total other revenues were then 6.7 million kroner.

17:50 Grand total revenues came in at 40.9 million kroner for the quarter, which compares to the 135 million kroner in Q3 2025. Gross profit ended up at 131 million kroner for the quarter. And the gross profit margin of Hexix and Sysview only was 93% of sales, which is a small increase versus the 92% last year. Operating expenses were 127 million kroner. That's an increase of 13% versus prior year, or 19% at constant currency. but please note that these expenses include business development expenses of about 11 million kroner and those largely relate to the vesica health transaction. There were also other expenses related to the biomarker segment included of 4.8 million kroner. but when we normalized for the items mentioned in the adjusted EBITDA, the increase in expenses was 9% at constant currency.

18:42 Reported EBITDA was 4 million kroner and adjusted EBITDA, which excludes milestones, also the royalty income now, business development expenses, biomarker expenses, and the other ad hoc and non-cash expenses, came in at 18.5 million kroner. That's in line with prior year, both in absolute terms and in margin terms. Further down to the P&L, we see a net financial loss of 24.8 million kroner, which is really mainly driven by unrealized foreign exchange losses on an intercompany loan and on the deferred Vesica health transaction contingency and by the Ibsen earn-out payments. So with that, tax benefits came in at 2 million kroner and the result of net earnings were minus 26.2 million kroner for the quarter. Next slide, please.

19:31 When we look at the results per segment, we see that in the American market, we grew revenues by 9% at constant currency, but we faced significant headwind from the weakening of the American dollar versus the Norwegian kroner. The revenue growth, including the impact of foreign exchange, is therefore 3%. Gross profit was 53.4 million kroner, or 95% of revenue, the same as last year. and in North America, direct costs actually decreased by 3% versus prior year and came in at a total of 40.9 million kroner. The decrease is mainly driven partially by an increase in employee related expenses, but then was more than offset by a tailwind of foreign exchange on the expenses. The resulting contribution margin in North America was 12.6 million kroner versus 9.9 million kroner in prior year. This is now 22% of revenue and last year was 18%.

20:24 EBITDA came in slightly positive at 0.3 million kroner. In Europe, revenues were 78 million kroner for the quarter. That's a small decrease including the foreign exchange impacts because also the euro weakened against the Norwegian kroner. But at constant currency, we grew at 6%. The growth was mainly driven by a growth of in-market unit sales in the German, Austria, Switzerland region by 11%, but also by 8% in our high-priority growth markets, France, Italy, and the UK. Direct costs in Europe were also slightly below prior year. Again, an increase in employee-related expenses was more than offset by the impacts of foreign exchange. Contribution margin was 40.8 million kroner, or 52% of revenue. and finally EBITDA in Europe was 26.4 million kroner.

21:13 That's an increase versus the 19.7 million kroner last year. And then we can go to the next slide where we look at cash flow and balance sheet. First, the cash flow statement. During Q3, the operational cash flow was 19.4 million kroner. That is driven by EBITDA adjusted for non-cash expenses and working capital. The cash flow from investments was minus 6.8 million kroner and that includes investments in intangible and tangible assets such as the US registry and further investments in production facilities. The cash flow from financing was a negative 12.7 million kroner and that includes a payment to Ipsen of 10.9 million kroner. With that, the total cash flow was zero, and we ended the cash balance for the quarter at 162.4 million. Then to the balance sheet, we see non-current assets of 525 million kroner, and this includes intangibles and goodwill from the Ibsen transaction and from the Vesica Health transaction.

22:11 We also have inventory and receivables of 191.8 million kroner, and that includes the invoiced, but still outstanding, $4.4 million in milestones from Asieris. Sharehold equity was 583.5 million kroner or 66% of assets and long-term liabilities were 194.4 million kroner and that includes liabilities for future Ipsum earnouts and for the deferred Vesica health burnout. Current liabilities were 101.4 million kroner. Then we can continue to the key performance metrics, which is the adjusted EBITDA. Here we are continuing to see the same upward path.

22:57 Adjusted EBITDA has increased from a negative, both in absolute and margin terms in 2022, to a positive about 13% of margin in 2025. Also in the year to date, we see a continued increase in adjusted EBITDA and we landed a quarter at 14%, same as last year Q3. Next slide, please. As usual, we present a breakdown of the adjusted EBITDA reconciliation. And I just want to clarify that going forward, we have also included the royalty income from ASIERIS as an adjustment item, because the purpose of presenting the adjusted EBITDA is to reflect an accurate view on the underlying core performance of the HACS-VIX SysView commercial segment.

23:48 and with that, we conclude the financial section and I give it back to Dan.

23:53 Great, thank you, Dick. All right, just a quick summary on Q3 revenue and EBITDA overall a solid quarter with 7% product revenue growth in Q3. Adjusted EBITDA 14.2 as we continue to invest in key growth initiatives that we believe will number one, position us for long-term success. Number two, generate future revenue growth and three, will increase our longer-term operating leverage. North American units decreased by 9%, unit growth by 9%, and rigid units growing at 10%. We grew our active accounts by 20%, and Carl Storrs continues to grow their installed base. We had nine new installs and four upgrades. The Fortech national mobile rollout is going extremely well, and as I said, beyond our expectation, now represents 19% of our business.

24:43 Daniel Schneider, Anja Gossens-von der Heidt, Anders Neijber, Jane Healy, Priyam Shah, Tolv Hillestad, Dick Peters Upgrades will help strengthen this initiative. There are now 87 Viscera III installed since early 25, and there's a strong pipeline and aligned interest with Olympus to continue that growth rate. And additionally, 29 upgrade systems from other OEMs are year-to-date, and reminding everyone that upgrades produce double-digit growth impacts on the business. So they're extremely important to our success. We have a strong cash balance at 162.4 million NOC.

25:30 And finally, we continue to advance several business development initiatives in next-generation precision diagnostics, including the integration and commercialization of AssureMDX and the AI, our artificial intelligence partnerships with Claritas and Arterra. Near-term milestones and corporate objectives. We raised our guidance to 10% to 12%. Topline product growth with adjusted EBITDA expansion as we realize further operating leverage on the commercial business. We continue increasing HexFix and SysView account utilization through upgrades, installs, and the mobile solution. We're going to advance the development of the next generation state-of-the-art 4K high-def software. and Daniel Schneider.

26:46 to a precision diagnostic in bladder cancer. We'll increase access to BLC in the US through FDA reclass, but also remind everyone there are alternative OEM pathways that are currently being pursued that we believe will come to market before the reclass materializes, so in the near future. and that brings additional OEMs into the U.S. to expand our growth and momentum. And then continue to support Osiris across both Hexvix and Savira. Finally, I'll close in on the business outlook. We're focused on translating PhotoCure's strong market opportunity into sustained profitable growth. That means continuing to expand the adoption of HEXFIX and SysView, broadening our reach across clinical settings, and building new growth opportunities through data-driven innovation and strategic partnerships. Vesica, or AssureMDX, adds another growth platform with modest operating losses expected in the near term as we integrate the business before scalings towards EBITDA margins above 30%.

27:50 Looking forward ahead, we expect the consolidated business to accelerate to more than 25% CAGR in revenue from 26 to 30, and then delivering an adjusted EBITDA margins above 25% by 2030 with further upside potential. Ultimately, our ambition is to combine the growth in our core franchise with a disciplined platform expansion to deliver a larger, more profitable PhotoCure over time. And with that, I think we can go to Q&A. Thank you.

28:23 All right. Well, thank you both, Dan and Dick. So I've received quite a few questions in the chat as well as by email. Try to get through as many as possible. I think we've left ample time for Q&A. If we do not get to your question, please go ahead and just email me and we'll try to get your questions answered. I'll try to do this a little bit strategically, maybe by topic. gotten quite a few questions around Osiris. So let's start with this first one here. Is the Theramex deal positive for photocure? What does this imply in terms of Sevira approval in the EU? Dan, any thoughts on this?

29:05 I see it as very positive. Look, Osiris is not a global company. They're developing products for global commercialization and they are commercializing directly themselves in China and Asia. But looking across the globe, Europe and U.S., it's always been their aspiration and intention to find partnerships to commercialize the asset. Why that's important to PhotoCure? Because our royalty stream depends on a successful commercialization. What I particularly like about Theramex, if you know anything about them, they're part of the Carlyle Group, is they are focused on women's health. They've been there. This is an established sales force throughout Europe. Daniel Schneider, Anja Gossens-von der Heidt, Anders Neijber, Jane Healy, Priyam Shah, Tolv Hillestad, Dick Peters That's extremely exciting. Does it mean anything in terms of approval?

30:03 I would say that no company moves this far down the track unless they have some level of confidence, but let's remember that this is regulatorily reviewed by EMA. There could be contingencies attached to it. There could be delays, but I think the fact that they've gotten this far down the line tells us that they feel at least some level of confidence that they expect an approval next year at some point. Very good news for them and very good news for us.

30:30 Great, thank you. Second one on Osiris, does photo care have any direct economic participation in the upfront milestone or royalty payments that Osiris may receive from Theramex? Can you also confirm milestone payment amounts between 10 to 20% royalty on Savira sales? Does that remain unchanged by the Theramex sublicense structure?

30:57 Yeah, so the short answer is our deal with Osiris is 10% on net sales. Their deal with Theramexa between them has nothing to do with us other than we benefit from the fact that it commercializes and there's top-line revenues that'll flow through in royalty streams to us. Our royalty agreement with them remains intact, 10% to 20% depending on how high the revenues go. I think Best way to model is 10% for the time being, and that's our expectation. And regarding what we've received to date, Dick, you want to take that one?

31:34 Yeah, sure. So the royalties we reported of 4.8 million kroner, they reflect 10% of their Q2 sales. So we are aware of their September year-to-date report, which reflects their survivor sales. So you could expect that the royalties related to Q3 will be reported to us during Q4. So that's how the dynamic works. We report with a one quarter delay. Based on a report, a series sends to us 45 days after quarter close. And that's the cadence we stick with. We can't get in their way. They're a public company. They need to have a chance to publish their results first. And we don't want to speculate on what those numbers may be.

32:23 Great. Maybe let's move on to AssureMDX questions, quite a few of those. We do want to clarify something here, and maybe the best way to ask this question is, has AssureMDX failed to achieve ADLT status, and has the regulatory path suffered delays? Can you clarify the difference between ADLT and Novitas LCD?

32:51 Okay, so I can kind of start from that. So the ADLT is a regulatory status designation given a specific unique lab test. It's at a national level, and its intention is to get sort of special premium pricing. And it's usually based off a single laboratory. We looked into ADLT, but what was developing as of spring as we were going through the acquisition is Novitas, one of the local carriers, was extremely interested in what we believe is pursuing a class approval. So ADLT, it gets you the price. It doesn't necessarily get you coverage. Keep that very much in mind. We would have had still get the CMS coverage and that was going to be a little bit longer pathway, the one that we had outlined when we made the acquisition. But as the Novitas opportunity evolved itself, Daniel Schneider, Anja Gossens-von der Heidt, Anders Neijber, Jane Healy, Priyam Shah, Tolv Hillestad, Dick Peters We've had our meetings with them. We should receive our pricing, our proposed pricing later this year. And we, you know, as far as the LCD goes from Novitas, they have until May, I believe 17th or somewhere mid-May,

34:23 whatever they started the process to make a ruling. It could come sooner. I think there's some optimism around that and we hope that we're included in it. If in the case we're not included in it, We know pretty specifically what we might need to do, and so we're already starting sort of a contingency plan if that were to happen. But we feel pretty good about where we're at, the level of interest they showed us, the exchanges and communication with them. And so this definitely is an opportunity that we did not want to miss out on. So we've taken advantage of the opportunity with Novitas and the LCD.

35:01 And Dan, can you also clarify around the 2.75 million equity milestone that was due upon ADLT achievement? What happens to that?

35:12 Yeah, that rolls into CMS or the LCD ruling in favor. The whole idea was to get coverage. The ADLT was one step towards that coverage. Now the ADLT part, we didn't pursue that, and that has lapsed, but that 2.75 million milestone now flows into what would essentially be LCD coverage through Novitas. It just adds to what that was going to be for CMS coverage.

35:43 Thank you. So with this change around the reimbursement timeline, does this change the revenue outlook or the target of initial revenue?

35:54 I think the way I would look at it is if we can get to market quicker, then we'll obviously realize those revenues sooner. And that's what we intend to do. I think I also want to just, again, reiterate, as we acquired this asset, it does require some infrastructure bills, which we talk about. and some support. We're going to use the existing Salesforce to start out. But as Flex comes to market, you know, we've got a lot of products and a lot of call points. So there will be some investment in the commercial team to make sure we get an optimized team to optimize the opportunity. But yeah.

36:35 Okay, let's take a couple questions around FDA reclass. Dan, what is your latest read or timing on FDA reclass? And how does it change the competitive dynamics and market entry barriers?

36:51 So two parts of this. The reclass is an important mechanism to get to the final thing, which is what we want, which is additional manufacturers in the U.S. market. So before I get to the reclass, let me remind everyone there are currently two manufacturers pursuing alternate pathways to the U.S. market, both intend to be in the market next year. And we believe there's a reasonable opportunity. Optimism to believe they'll both be there. So more to come on that. Of course, it requires regulatory FDA review, but we believe that's happening. Parallel to that, we've been pursuing the reclass process. We put a lot of pressure on the FDA to initiate this. Where they're at now, why we feel particularly optimistic about this and also optimistic on timing or at least their focus on this is is they initiated the reclass on their own. There was a citizen's petition by Carl Storrs.

37:47 They declared it insufficient, but then quickly, which we had already signaled to the market that they had this intention, then they confirmed in August that they are starting the reclass process. And what that process starts out with, which is the public comment period, which just closed last week, During public comment period, anyone can write into it pros and cons of reclassing a device. There were four write-ins, one of them was ours, and all the write-ins were pro or for the reclass. In other words, there was no one taking a negative stance that we're aware of. One of the key elements that we wanted to get across to the FDA in this process is beyond the special controls, and the engineering equivalencies and all of the scientific and engineering needs, one of their questions was around the clinical data.

38:37 And what we said to the FDA is we said, listen, the clinical data resides with Sysview. Any and all OEMs can reference our clinical data. That's where the performance comes from. But in terms of the device itself, that's an engineering, that's special controls and general controls. That's something that you work out with the OEMs. But as far as clinical data, no one needs to do another clinical trial. They can just reference our data package and have the assurance that the product is going to work in concert with SysView. Daniel Schneider, Anja Gossens-von der Heidt, Anders Neijber, Jane Healy, Priyam Shah, Tolv Hillestad, Dick Peters Historical reviews on reclass process, and this goes back 10 years, is it has taken up to 20 months on average. However, and I really want to hear this, however, the FDA has gotten more aggressive in the recent years, that reclass process has gotten much quicker. And the fact that the FDA has a particular interest in blue light cystoscopy reclass is Given that we've had a lot of interaction with the FDA and the OEMs have as well, given that there's two OEMs pursuing alternate pathways because the reclass isn't available today, gives us a certain optimism that the reclass is of a certain priority for the FDA and that we may see

40:07 an answer sooner than the 20 months and it could be next year. But again, no statutory requirement to it. The FDA has as long as they want to take. But the good news is that at least two OEMs are pursuing alternate pathways. And I honestly think because once that market takes off, other OEMs are going to take notice and they're also going to join in. So I think the FDA has an incentive here to solve for this as soon as possible.

40:34 Great. So if the U.S. reclass does in fact occur, or rather when it occurs, how would you approach opening that 60% to 65% non-Carl Storrs centers currently out of reach?

40:48 Well, first of all, there's a lot. We know, and I already have mapped, we know what every hospital uses as their prime vendor. There are hospitals that use Olympus, there are hospitals that use Stryker, Wolf, et cetera, et cetera. So those are obviously key areas. and already speak with the OEMs and already having experience in Europe with all of them. We know that working directly with them in prioritizing those accounts that, you know, A, have shown interest in Blue Light, but, you know, we're not willing to buy a Carl Storrs system. Makes a lot of sense and we can get them up and running quickly. You take a look at a lot of the mobile hospitals that are out there currently today. Many of them, it's not just capital budgets. They also have issues probably with acquiring Carl Storff's equipment.

41:37 They also now offer a fertile ground. The seeds have been planted, the doctors have been trained, and now the hospitals can buy. If they're an Olympus hospital, buy Olympus. If they're Wolf, buy Wolf. And we can help facilitate that and work very, very quickly. So we know exactly what we want to do as these OEMs enter the market. And we want to... We want to accelerate the adoption.

42:00 Okay, great. Okay, let's switch to, you referenced a generic filing. Public registries are also showing that there is a generic filing. Could you just maybe comment on how you view this?

42:19 Yeah, I mean, first, I think we got to be very clear. The products Sysfu and Hexvix have been off patent since 2019, 2020, depending on which region they're in. There has always been the opportunity that someone could file for it, and obviously we monitor this consistently. But remember very much, very clearly, Sysfu and Hexvix are not a typical pharmaceutical product. Daniel Schneider, Anja Gossens-von der Heidt, Anders Neijber, Jane Healy, Priyam Shah, Tolv Hillestad, Dick Peters After that, there are many generic companies that file or companies that do file generic versions of products on the market, and they never commercialize them.

43:17 So even if they get filing and approval, it doesn't mean they're going to commercialize them. And then move all the way to the far end with commercialization. And everyone on this call who's familiar with PhotoCare knows the amount of effort that goes into commercializing SysView and HexFix, the coordination with OEMs. No one else is coordinating with those OEMs, so those relationships have to be built and executed on. The relationship with the physicians as surgical partners in the operating suite have to be built. You know, it's going to be a lot more than simply a price play, and it's going to require commercial effort. You know, traditional generic drops it in the channel and discounts it heavily. I don't believe that's necessarily going to be the way this goes, but again, we don't have all the information, so it's Daniel Schneider, Anja Gossens-von der Heidt, Anders Neijber, Jane Healy, Priyam Shah, Blue Light Cystoscopy. So I feel like we're in a good position today and a good position in the future. And should a competitor enter the market, I believe that we're in a very strong position.

44:39 So we are at time, but I encourage everyone who didn't have their questions answered to reach out to me, and I'm happy to get those questions answered for you in the coming days. But I think we can close out this call today. Thank you, everyone, for dialing in and tuning in. And Dan, if you have any closing remarks.

45:02 No, I think the closing remark is that the underlying business is extremely strong. I'm super excited about the investments we've made in AssureMDX and where that is going to be for us and what that means to our long-term future and a lot of the other work that we're doing. So thank you very much for today, and we look forward to seeing you on the Q4. Have a great day. Bye-bye.