BrainCool

Group
The period in brief

Jon Berg, CEO Comments

BrainCool has focused on operations in the fourth quarter of 2023 to ensure deliveries of BrainCool™ System meeting rising demand and already taken orders. We succeeded in delivering around 25 systems in the last quarter and around 70 systems for the year as whole. This is reflected in an increase in sales of close to 80% to SEK 9.6 million in the quarter compared to same quarter last year and 32% to SEK 23.2 million for the full year.

In parallel with capacity expansion, we have been working intensively with our production subcontractors to gain economies of scale and lower production cost per unit as volumes increase. In November we extended our cooperation with the Finnish company Scanfil.

Special emphasis has been put on consumables to BrainCool Systems that is produced by our Polish partner TM Rubber owned by the Swedish company Garpco. The production of consumables has mainly been manual with difficulty in increasing capacity and running at too high cost. Now investments have been made to change the production process from manual moulding to a much more efficient process of automated injection. Manual glueing of the silicone pads is also converted to an automated process.

The transformation of the production process for consumables has entailed certain extra cost in the quarter, but we foresee a successive reduction of production cost by 25% during the second quarter in 2024 and additional reduction of 25% during the autumn. The actions taken will substantially enhance our gross margins.

At the same time, we are increasing deliveries. The order of 20 systems from Zoll® for the German market that we received in December 2023 will have been delivered in full by the end of the first quarter. Deliveries to Zoll® in the U. S are up and running.

BrainCool has also announced several of important steps in the fourth quarter and during the first two months of 2024. A milestone was the approval of the COTTIS 2 study in early January by the German pharmaceutical agency (“The BfArM”). COTTIS 2 is an EU funded multicenter clinical trial led by the University of Freiburg in Germany. The objective of the COTTIS 2 study is to evaluate the efficiency of combining cooling treatment of patients undergoing thrombectomy. BrainCool’s ultra early cooling solution is by far the most promising solution for protecting the brain after a stroke.

In February we started deliveries of MiniChill to a Japanese hospital in Nagoya. MiniChill is a new product based on RhinoChill. MiniChill is smaller and the weight has been reduced from 13 kg to only five kilos, which facilitates transport and handling.

Furthermore, in November BrainCool signed agreements with two of the largest General Purchasing Organizations (GPO) regarding the purchase of healthcare products in the US, Vizient and Premier Inc. The companies operate nationwide managing purchases for different hospitals with a total of 800,000 hospital beds. The new agreements significantly strengthen BrainCool's market coverage in the US. Orders and deliveries will be handled by our partner Zoll.

In October, the American Medical Association (AMA) announced the approval of a new Current Procedural Terminology (CPT®) code for cryotherapy – using the company’s Cooral® System - in patients undergoing chemotherapy. The new code has several positive implications for BrainCool and its product Cooral® System. It opens for reimbursement for Cooral® System from Medicare – the U. S public health care system. The future strategy for Cooral Systems is pending further decisions.

In December BrainCool secured 12,5 million euros in venture debt financing facility from the European Investment Bank (EIB). The significant loan agreement recognizes the high potential of BrainCool, its technology and business opportunities. It could also reduce BrainCool´s possible long-term needs in financing products that will be brought to the market. Any tranche is not yet drawn.

The change in management that was carried out in early February was aimed for a better balance of work between different functions within the company. I have been involved in the company since the founding of BrainCool in 2014 and I feel confident in assuming the CEO role in the new phase that BrainCool is entering. It will be a lot about streamlining and increasing production as well as to secure deliveries and lower production cost per unit. Ramping up and tuning the production processes to be able to meet the significantly increased demand for our BrainCool ™ System and Cooling Pads will be a major focus area in the coming period.

Former CEO, Martin Waleij will in his new role as Head of Commercial Operations mainly be responsible for the company's clinical research projects, the execution of clinical studies and further development of the collaboration with ZOLL®.