Maria Karlsson Osipova: Good morning, everyone, and welcome to DNB Carnegie. My name is Maria, and I'm an analyst here at the bank. And today, we're hosting Paxman's Q2 presentation. And with me here, I have Richard Paxman, CEO of Paxman. Welcome, Rich.

Richard Paxman: Hi. Good to see you.

Maria Karlsson Osipova: Yes. And the format is as usual. You take us through the quarter, Rich, and talk about recent developments and what you've seen and so on. And then we continue with the Q&A session. [Operator Instructions] So now it's over to you, Rich, please.

Richard Paxman: Fantastic. Thank you, Maria, and good morning, everyone. I hope you're as happy with our report as we are. As you've seen, group sales amounted to just over SEK 105 million. So we've hit that 100 mark for the first time in our history, which is fantastic. And that's a 40% growth over this time last year. EBITDA was at about SEK 14 million for the quarter, again, substantial growth from this time last year with a positive impact from the Dignitana acquisition, bringing in about SEK 5.2 million of EBITDA. I think the biggest highlight we've all seen in the report is our growth in insurance-based billing. And that has -- I'll say finally, because I think we've all been waiting on it, some momentum, and that's really about adoption of the insurance-based billing model and that driving utilization, which we'll touch on shortly. So our U.S. revenues for Paxman and the group achieved SEK 7.1 million for the quarter compared to 4 -- sorry, $7.1 million, I best say, compared to $4 million in the same quarter in 2025. So we're really pleased. And then I think one of the most significant pieces of news this quarter relates to the revised approach for our neuropathy device, and we'll talk a little bit about that, but now going down the De Novo route, which, again, timelines are frustrating, but we've got a clear pathway and not too much delayed and so excited about the opportunity still. So for the first time, we put in some new KPIs, and hopefully, you like some of these, really focusing on those U.S. revenues and that sort of differentiation between the different models. Again, showing that really strong growth from both Paxman and Dignitana in terms of U.S. sales, but then more specifically looking at that insurance-based billing model growth of 110%, which is excellent. And Rest of World revenue staying strong but relatively stable, maintaining and achieving a decent gross profit margin. And then looking at that EBITDA margin improved from the prior year, but then adjusting that margin based on the costs associated with CIPN and some other commercialization activities, hitting that 18.5% EBITDA margin. We're showing you the EBITDA less CapEx margin to help you understand a little bit about cash usage. And then to look at cash that SEK 105 million still in the bank account, which I think really shows the strength that we've got as an organization to continue with that commercialization plan and grow the business with some comfort of knowing we've got good cash behind us. So just very high-level results. So as we know, the SEK 105 million revenue, decent gross profit margins. Some of you will have seen the heightened OpEx figures personnel relatively stable with the reductions in Dignitana and then the increases overall. Some of that relates, of course, to our neuropathy work and other commercialization activities. But there's overall some additional costs in the business for the quarter. Some is just timing, for example, large exhibitions that we do, for example, in Australia and Chicago, which were quite big exhibitions this year based on the work we're doing with neuropathy and the launch plans. And that all then adds on to travel. We've got some heavier R&D expenditure in this quarter, legals and patent costs. So some are one-offs, some are general trends. But again, we're not overly concerned -- the cost generally dipped a little bit over the period. So still really strong results. But adjusted EBITDA giving nearly 19%, so really tracking to where we want it in the future and then 13%, of course, with all costs associated with CIPN. From a cash flow perspective, as we said before, very, very happy with our overall position even with the investments that we're making. And we are making substantial investments, so not just into CIPN, but other operational excellence goals that we need to do, which, again, relate to the longer-term improvements in the business efficiency overall as well as then investment into that new building as we start to develop and build and fit out the property. In terms of the acquisition, not a lot to say here. We've really stabilized now. Still work to do with the team and building that out and making sure that we've got the right structure. So we'll be looking at Dignitana AB. We'll be looking at Dignitana Italy and how we all work together to make us as streamlined as possible longer term. But the teams are working great. We've got some very good people that we're able to work across the business now rather than just in the separate entities, which we're really pleased about. You can see costs have sort of maintained. We've seen some heightened cost in Dignitana U.S. this quarter, and that really relates to the additional activity that we've got in that group. So we're installing a bit of new kit in places. We're investing in more travel really to support that growth of that business longer term. So the U.S. focus, what we're all looking at and wanting to see. So you see for the quarter, we delivered 56 systems. So those won't really be driving revenue and income as yet. But if you look at the number of caps sold through IBBM, that is a significant increase up to 1,326. And although I can't talk about what's happening in this quarter, all I can say is we're still seeing the general trends continuing. I think it's important to understand we're not going to deliver the same level of growth every quarter -- I'd like to, but we're not. But I think I can comfortably say that the business model remains strong. And with the outlook of continued changes in the market in terms of interest in installing more equipment and switching to IBBM, we'll continue to see improved utilization and that number growing longer term. Again, Dignitana, a little bit slower on the IBBM stuff because they've only just started, but still seeing some positive momentum there. So really pleased with these U.S. results. I think for me, what's the most impressive thing is when we start to look at utilization, and that's really, really important. So when we start comparing our self-pay customers to our insurance-based billing customers, so you're looking at this per quarter a self-pay hospital in 2026 would be seeing 3.1 patients per site or 1.6 patients per system. You switch to insurance-based billing, and that's 8.6 patients and 3.4 patients, respectively. So that's a really impressive increase in utilization levels. So if we get those systems switched, we will start to see those improved revenues even from the existing customer base without any new installations. And finally, we're seeing momentum with contracts, both existing transitioning, but also new contracts as well, which is great. Dignitana overall, a better utilization in both models. I think you're going to be wary about the IBBM model just as yet only based on the fact that it's relatively new data. So we've got to be mindful of that. Coverage continues to remain strong, so that's good. We still need to do lots of work in the area of coverage and payment, and we've got a really, really clear plan on how we're going to do that. We are also looking at building out our reimbursement team as well and trying to create better value internally than using external resources longer term and more to follow on that in the coming months. Rest of World activity remains strong. As you can see, it was a strong quarter for our Rest of World team as well as U.S. installations. You can see here where those sales are coming from. I think what's really important is to see what our order book looks like. So 190 systems on order I know some of you missed that stat last time. But 80 of those are coming from the U.S., again, showing strong demand in the U.S. marketplace, which is fantastic. If we can drive the utilization levels from those systems, you can start to do the math to show what impact it has to have a strong rollout over the coming months. So here to neuropathy. So our original timeline, of course, I sat here and I was adamant that we would be fine with a 510(k) submission. And I have to take guidance from our consultants. And unfortunately, at that time, they weren't quite right. Still adamant that a 510(k) is appropriate, but there's only so much arguing you can do with the FDA. Frustrated at the delay, as I'm sure you are based on the fact that the FDA didn't come back to us in the timeline we would normally expect and want for our Q-Sub. And that lost us a few months in reality. But we are where we are, and we will continue to push forward. Our plan is to submit the 510(k) De Novo this month, so very, very soon. We've got all the information. We've got the clinical data, and we'll submit that, and I'll talk about the timeline. Our plan is still Q2 2027 U.S. commercialization. Again, if you look at the timeline shortly, we'll see that anywhere between April and August is when we would expect to respond -- expect to gain clearance, sorry. And for those of you who are not quite sure about what the difference is between the traditional 510(k), which is what we did, versus a De Novo, here's a really good table. Again, I'm not going to go through every single line, but the reality is the FDA did not believe that we had a substantially equivalent predicate that was already legally marketed. In other words, the scalp cooler. So we now need to obtain a classification for our novel device, which is low to moderate risk without a suitable predicate. It is a new device first of its kind in the market, and we expect an FDA grant with a new classification for a Class II device. In terms of clinical data, we think and we believe strongly that we've got the clinical data to support this. We've got 150 patients in our Singapore study. It's important to understand not all de novo applications need clinical data. So we think, although it's a single-arm study, it's a very well-designed study. And it's a study -- it's the clinical data we use for our European regulatory approvals. And it's important also to understand MDR is gold standard and a very high bar to cross. So if they come back and suggest that they want an RCT, please remember, we've got our data from Dana-Farber as well, which is already well into recruitment, and we should have data readout by the end of the year. Just looking at the timelines, as I said, it's 150 FDA review days, very, very likely that there will be a stop and start. They'll always ask for additional information, but we're prepared for that. So the expected timelines is anywhere between 8 and 12 months. We're hopeful based on the conversations we've already had with the FDA that, that can be sped up, but we'll be doing all we can to put resource into this to make sure that we get there in a timely manner. There is more investment into the regulatory pathway. We're hopeful we'll get the small business exemption, which is a reduced cost. But overall, it's not adding much cost to the overall business cost structure. So our plan still remains that we built these 50 units that they're now all being deployed into real-world and usability pilots. We are gearing up for our version 2, which is our commercially ready design, and those will be starting to be built in Q4, so October, November and December. Those then now will be focused on selling into European markets, and then we'll go into more of a steady controlled manufacturing process through 2027, preparing for that U.S. launch and what could be potentially a more aggressive rollout as we've got more opportunity to warm the market. And as previously mentioned, we'll be carrying out some additional pilots in the U.S. or clinical trials in the U.S. We're talking with a site in Michigan. We're talking with one of the community oncology aggregators. Memorial Sloan Kettering are very interested in doing something, and we're already in protocol development with City of Hope. And from a U.K. perspective, we've got signed contracts now to do pilots. So we're going to be doing pilots in some of the major private hospitals, which is great. We're also working with Mid Yorks and Leeds, which are two very big trusts in West Yorkshire to look at how we can get scalp cooling -- neuropathy cooling, well adopted into the National Health Service longer term, and that's being supported by Health Innovation Yorkshire & Humber. And then European interest as well. So by September, we want to be rolling out to sites in Germany, France, Spain and the Netherlands. So although our timelines have been extended, we are still putting focus and effort Rest of World. Final reminder of our strategic priorities, which I think are paying off. So our Simple Switch, so that increased payment and coverage and improved utilization, which is driving those revenues and improved EBITDA. Some delays on our new cap and cover and neuropathy device, but we're still all steaming ahead. We've got revenue growth, which I think we're showing overall for our Rest of World markets. And then that digitalization, that operational excellence is critical to getting us to a point where we can really, really grow effectively and efficiently when we get into our new premises. And then clinical excellence, continued investment into research and development, continued investment into clinical trials, really making us the Hoover of scalp cooling. Hopefully, that translates in Sweden. So thank you very much. Still very much on track apart from the FDA delays and really pleased with the quarter. So I look forward to answering any questions.

Maria Karlsson Osipova: Thank you, Rich. Always with a comment about Sweden. Let's start with some -- there are many questions here in the chat, so I'll try to combine them with my own questions as well so that we can broaden the base a little bit. If we start with congratulations on Q2 in IBBM, it's great. How much of that do you think is -- would you say is repeatable going into the second half of the year?

Richard Paxman: So very comfortable with the level of IBBM revenues. I think the growth per quarter is not going to be there. I think that would be aggressive growth. And I'm not quite sure we're there yet as we've all seen, it takes time to contract with these sites. But if you see that order book of 80 systems for the U.S. once those are up and running, you'll start to see again that the additional improvement in sales plus then the switching sites. So I'm confident we'll start to see an improved trend, but I'm not sat here saying we'll get that 100% of the 110% improvement quarter-on-quarter.

Maria Karlsson Osipova: Yes. And about oncology. You mentioned that several practices are now transitioning. When would you say should we expect to see some revenue coming from that?

Richard Paxman: Yes. So we've got five, I think we've got 5 practices that have all signed what we call letters of participation now. And our team -- onboarding team are working with those locations now to get them either some are transitioning or additional equipment new sites. So we expect the revenues to be impacted Q4 for that.

Maria Karlsson Osipova: All right. And moving on from revenues to costs, maybe a little bit. You've elaborated on the OpEx picture through -- in the presentation, but I do have a question here in the chat and also a development to it. So the question is, could you elaborate a bit more on the increased costs during the quarter? And also, how does the CIPN launch -- the new timeline, how does it affect the full year guidance that you previously had for CIPN?

Richard Paxman: Yes. Okay. So if you look at the OpEx less the adjustments for CIPN and other activities, you're talking about, I think, about SEK 6 million variance from Q1 to Q2. So there is a fair amount of costs associated. I think it's important to understand Q2 is often a busy month. We've got some large exhibitions, which can be quite costly, especially because we're looking at launching CIPN as well. So we're doing over and above what we would have done historically. We've got some R&D costs sat in there. We've got some legal costs as well and patent costs. So albeit overall an increase, and there's a few one-offs in there. So not overly concerned. I think as well, it's important to understand, although I pull out that rough cost of sort of SEK 5.6 million this quarter, it was SEK 4.3 million last quarter in terms of CIPN and other activities. There are other costs going through the business, which relate to the activities we're doing to grow longer term. So I think it's not just a trend of us yet spending. I think it's they're investments in reality for our future growth. If you look then at CIPN, I don't think you'll see a massive difference. You're going to see a slowdown CapEx rollout, of course, because we're going to be putting less systems into the U.S. market. But actually, we'll still build that 150 as planned in the last quarter. So you're still going to get the costs associated. They just won't -- they'll sit on the balance sheet in a different way than moving to the U.S. balance sheet. We'll sell some of those. So, you'll see some hopefully improved rest of world sales or European sales. That's the plan. And then into -- into the new year, sorry, again, we're not going to slow down building the team and doing the right things because we're still confident relatively soon, we'll be in that U.S. market building the business. So you're going to see some perhaps reduced cost and reduced outlay, but not massively. And overall revenues, to be honest, from the U.S. in the last quarter and in the first quarter are not ridiculously high based on our projections. So we're pretty comfortable with where we're at.

Maria Karlsson Osipova: Yes. All right. Another question from the chat here is if you could add some more color to the working capital movements during the quarter?

Richard Paxman: Yes. Okay. So I think the improved sales will -- building our debtor book, of course, hits ultimately working capital movement. You've also then got some -- you've got the costs associated with our new building, which have been a reasonably large cash outflow for us. So we've been supporting some of that co-development at the moment until some of the grant funding comes through. But overall, you'll see albeit not a positive cash flow, actually, the underlying trend is good. You've seen a SEK 5 million movement in available cash. So we're confident in our position.

Maria Karlsson Osipova: And a little bit back to -- from costs and cash flow back to revenues here. The strong development in Q2 for especially IBBM, would you say it's a result more of the CPT I codes or market activities and mix of both maybe?

Richard Paxman: Less marketing activities. It's more about CPT I codes give confidence to make the switch to insurance-based billing as well as seeing other sites making the switch. So the drive is ultimately the transition of sites to the new model, which then ultimately drives the utilization and increased numbers. I was speaking to one of my colleagues yesterday, and I think we had -- we've got a new site in Florida that's just started after they transitioned from Dignitana. They had eight patients in the whole of last year. And in the first month under IBBM, they've had eight patients. So just anecdotal information like that shows getting on to this new model drives revenue. If you look at the number of sites on IBBM versus self-pay, but then you look at how much revenue they're generating, it's nearly 50% but there's half the number of IBBM sites. So yes, it's very positive in that respect.

Maria Karlsson Osipova: And if we move the focus a little bit from the clinics to the patients, there's a question here in the chat that goes, how do you see awareness and demand for scalp cooling evolving? Is adoption being driven more by patient demand or maybe oncologists?

Richard Paxman: Yes. So in a self-pay scenario, typically patient demand, and that obviously has helped by driving awareness and information to patients, which is typically hard based on oncology being a very competitive market, not scalp cooling, but oncology. But under IBBM, it sort of changes your mindset. So your oncology team would start to then consider talking about scalp cooling because it's part of that patient pathway. It's more standard of care without an out-of-pocket cost. But we still got more work to do there. I mean there's still more activity to undertake to build awareness and get more strong buy-in from the physicians. I think if you look at CIPN, that will be a different story. It will be the physicians talking about neuropathy before the patient.

Maria Karlsson Osipova: Before we move over to more CIPN questions, there's one more here on the scalp cooling. There's a question here that's regarding the utilization of Paxman IBBM and Dignitana, where Dignitana IBBM utilization seems to be at 10 and Dignitana self-pay 3.5 patients. Is there any logical explanation why Dignitana system has so many more patients per system?

Richard Paxman: Yes. So I sort of mentioned IBBM is a little bit early to start really getting the full data trend. So I think we need to be careful of that 10 number, it's not far off the 8. So it may track out right, but they've got a lot less sites, a lot less experience there. But if you look at the self-pay, they have historically better utilization than us. They put less capital into the markets early on. Now which model is right, I'm not sure. I think we've placed the equipment and it's ready for ramping up. So we should be able to get away with not placing further equipment into those additional sites. But yes, hands up, they did a better job at driving utilization early on.

Maria Karlsson Osipova: All right. And now moving over to the neuropathy business here. A question from the chat. You state that you intend to submit De Novo application in the very near term. How confident are you that the FDA will not return with questions or the need of additional data? You mentioned some of that in the presentation, but maybe like a wrap-up.

Richard Paxman: Yes. I think definitely, they'll ask more questions. I mean that's the process. So the 150 days, doesn't equate to up to 12 months, does it so that builds in those stop and start questions. Will they want more data? Now a lot of the conversations with the FDA has been around safety and new safety questions. So -- that's less about the clinic is not less about clinical data, but less about the efficacy endpoints. What we can get hold of very easily, and in fact, I've just had a report from SWOG with over 600 patients in the study looking at adverse events. We can very much add to the data we have to demonstrate the safety of the device. So no adverse events with over 600 patients in the clinical trial. It's fairly positive. So building that case, albeit not having a full RCT within our data package yet should result in not needing to do any further clinical trials. If they come back and say they want that RCT, as mentioned, we will work with Dana-Farber to get early interim analysis to support their needs. I'm quietly confident -- but I did sit here before and tell you that we were going down a 510(k). So there is always a risk. But even still, we have the data behind us. It just means that we need to submit it.

Maria Karlsson Osipova: And a little bit more on the De Novo. It pushes the timeline for launch, but does the route come with any specific benefits for the future?

Richard Paxman: Sadly not. There's a new classification, but no specific benefits. That's an unfortunate situation. It's not like a PMA where there's a slightly different approach and then people following you behind.

Maria Karlsson Osipova: There's another question in the chat now back to scalp cooling. California looks very close to passing the bill for mandatory scalp cooling. Are you doing anything to position yourself for a potential path given the size of that market?

Richard Paxman: So I mean, we're fully behind all the legislation at the moment. We work closely with the different advocacy groups and legislators to support that. In terms of preparing to do anything additional in those markets, we're already very active with all those major cancer centers, talking with them about IBBM, talking with them about legislation. So no more than what we're doing already in reality. They're all waiting and watching to see that. We've got some IBBM customers now in California. So there will be good references to support. But as you can see, there's legislation happening all over the country, again, helping drive some of these decisions to make the transition.

Maria Karlsson Osipova: All right. And then actually, there's another question on IBBM here in the chat. Paxman self-pay sites declined slightly and IBBM sites increased in similar proportions. Could you quantify what share of this shift reflects direct conversion of existing sites, which then would validate the simple switch thesis? And also, it says congratulations, Rich, on a great quarter.

Richard Paxman: Well, first of all, thank you very much. Yes, you can see that a large proportion of those will have been switching, but you also need to look at the number of systems installed into the market at 56. So I think it's a fair balance between new sites and switching sites, but I don't have the statistics offhand, but it will be a fair balance as is the future 80 as well. In the quarter, if you recall, we've got some decent changes with Yale and NYU. We kept talking about that for some time, and they finally got into that quarter, which was great. So that helped with some of that sort of switching piece.

Maria Karlsson Osipova: So we are starting to run out of time, but maybe two short questions left before we end the conversation here. Next time we're going to talk like this is Q3. So that's when European rollout for CIPN is hopefully well along. Could you remind us on the commercial model and pricing for the rollout in Europe? What are you going to do in those markets?

Richard Paxman: Yes. So we're looking at three key markets, Germany, France -- sorry, four key markets: Germany, France, Spain and the Netherlands based on our experience and direct operation in a number of those. In terms of price points, not fully set yet, but we think similar -- on a similar basis to scalp cooling because we know that's an acceptable level. And you could argue that there's more value derived from neuropathy, but that's sometimes a hard budgeting case in a socialized health care system. Once we get stronger health economics data, which is what we're starting to collect at the moment in the U.K., that could drive and improve those sorts of things. Our business model will be CapEx plus annual changing of gloves and boots. So you get some capital, but then you get regular income derived from the accessories themselves, the wearables or the garments, whatever we end up calling them.

Maria Karlsson Osipova: All right. And last question -- it's a bit of a combo from the chat and from myself. Are you satisfied with the development in Q3 so far? And if you have any concluding remarks for this Q2 call?

Richard Paxman: Yes. So can't be too, but yes, satisfied. You've seen the order book. The general feel for IBBM continues, which is good, along with new sites and more contracting happening as we speak. So overall, I'm pleased with the momentum we're finally achieving. And then I think, yes, just concluding remarks, the team are performing incredibly well. So super proud of what we're achieving. There is a setback with the De Novo route, but it's just a setback. I think we've got to remind ourselves that the opportunity is still exactly the same as it was a month ago before we knew we were going down the 510(k) route. We have a really exciting business ahead of us. So onwards and upwards, and looking forward to the remainder of this year and more importantly, heading into the new year with the new product. But thank you very much.

Maria Karlsson Osipova: Thank you, Rich, for talking to us, and thank you all for listening and asking the questions in the chat.

Richard Paxman: Thank you.