Strong growth and accelerating momentum with more cases, users and trainers delivering excellent clinical outcomes
First revenues received through the Kamaptive programme with first in-human robotic procedure expected 2023
Creo Medical Group plc has today provided a trading update for the year ended 31 December 2022, including an overview of its commercial and clinical progress.
Further progress in commercialisation of core advanced energy electrosurgical products, translating into scaling revenues across multiple business revenue streams
In FY 2022, sales in Creo’s core electrosurgical products and technology during the period, including Kamaptive licensing revenues, increased eight times over FY 2021 (from £0.3m to £2.3m) and over 60% in the second half vs H1 2022. Sales of Speedboat Inject and the CROMA Advanced Energy platform have grown threefold with 45% growth in the second half vs H1 2022.
FY 2022 was the first full year following the lifting of most global pandemic restrictions, and the benefits of their removal for the Company’s sales operations and the roll-out of core Creo products have been a key driver of progress over the year. The launch of the Kamaptive license and partnering brand, and the signing of the Group’s first two deals in 2022, generated first sales for this business revenue stream. These key drivers provide a positive trend and outlook going into 2023.
With the steady and profitable revenue coming in through the European consumables business, providing the anticipated foundation for integrating sales of the core Creo products across this network of existing customers, the growth in core Creo Technology revenue accounts for all the c. 7% overall growth in Group revenues during the year, which is in-line with market expectations and the original business plan set out at IPO.
The Board believes that the Group’s core technology, protected by a significant patent portfolio, is now entering a phase of accelerated growth as the Group continues to commercialise its suite of products. The Creo consumables business continues to deliver steady and profitable revenues, and the launch of Creo’s consumable range in the US provides further opportunities from cross-selling to support the roll-out of core electrosurgical products in that key market.
Expansion and momentum in our clinician education programme
The Company launched the Pioneer clinical training programme in 2022 which is recognised in the industry as class leading. The Pioneer programme sits at the heart of the sales process tracking doctors engaged with the business to join the programme. The Company tracks all customers through this five-step process, from engagement, through to purchasing of equipment, training and mentoring, before becoming users. During FY 2022, the number of physicians in the process doubled to more than 450 by Dec 2022. With 60 doctors trained in H1 and 90 during H2, this resulted in 80 confirmed users at Dec 22, a fourfold increase from the start of the period and in-line with the Board’s expectations, and leaving a wider cohort of engaged clinicians which the Group will work to convert to regular users in H1 2023.
Given the number of physicians training and mentoring other doctors is increasing all the time, this pipeline provides clarity and predictability over the coming year and will be enhanced by new product launches anticipated during the year.
The business is focussed is on the quality of training, mentoring and then increasing utilisation, with every case performed by a user having both a positive impact for the patient and providing revenue on a per case basis for the business.
Continued new product innovation
Creo launched its upgraded, slimmer Speedboat device to the market in November 2022. This provides clinicians with the original benefits of Speedboat Inject, but with a slimmer profile that enables it to be delivered via the working channel of most major endoscopes used by medical practitioners around the world, expanding the Company’s market opportunity further. It is also compatible with paediatric endoscopes, for both lower and upper GI indications, and the slimmer Speedboat has already demonstrated highly positive clinical outcomes, with excellent feedback from all users. The Company has seen increasing adoption of this upgraded product, with significant orders received and cases already successfully completed. Management expects the slimmer Speedboat Inject to drive increased sales during FY 2023.
Microblate Fine has now been used in over 25 cases across six centres internationally for further ground-breaking pancreatic ablations and initial use for liver tumour ablation. Like the Speedboat products, Microblate Fine is low procedure cost and minimally invasive. This allows patients to be treated as outpatients with cancerous tissue being ablated under sedation, rather than be subjected to longer procedures under general anaesthetic. The Company expects to publish updates on patient outcomes during 2023.
First revenues from licensing deals
The Company’s Kamaptive (IP) licensing deals announced during the year continue to progress well. First revenues were received during the period and are included within Creo’s core electrosurgical sales. Development of Creo’s core technology for use with both Intuitive and CMR Surgical’s robotic platforms is progressing well, and there are ongoing discussions to expand and broaden partnership opportunities substantially with additional and existing partners. Management expects that the first in-human robotic procedure using Creo’s Kamaptive technology will occur during 2023.
Outlook
The Group continues to progress towards profitability with revenues continuing to grow and the intensive investment product development and launch phase coming to an end. Material reductions in operating costs have contributed to a reduced underlying EBITDA loss for FY22 compared to FY21, which is expected to be in-line with market expectations. Management considers that this combination of strong core product revenue growth and active cost control means that the business is well-positioned to further reduce cash burn in FY 2023 and remains on track for EBITDA breakeven during FY 2025, also in-line with market expectations.
Cash and cash equivalents as at 31 December 2022 were £13.1m (30 June 2022: £26.1m) and the Board is considering a number of options to ensure that the Group is sufficiently funded to meet its stated growth ambitions.
Craig Gulliford, Chief Executive Officer of Creo, commented:
“Against the backdrop of challenging macroeconomic conditions, 2022 was a year of significant operational progress for Creo. I am pleased we are expecting to report revenues and underlying EBITDA for the year in-line with market expectations. Most pleasing is the rapid growth in the core technology and product revenues coming out of the pandemic which leaves us well positioned for ambitious future success as we move towards EBITDA breakeven.
“Our excellent progress across our clinical adoption, Pioneer Training, new product launches and partnering projects underpins that confidence. We have seen new indications discovered for our core products, a record number of clinicians trained and fantastic large scale training events held worldwide, all creating more Creo product users around the world. Our Kamaptive partnerships with Intuitive and CMR Surgical are progressing well, and we continue to evaluate opportunities with other potential licensing partners to add revenue streams.
“The foundations for rapid growth have been well laid during the year. I’d like to thank our shareholders for their continued support and look forward to updating the market with further news in 2023.”
