Episurf Medical Provides Strategy Update

Episurf Medical is implementing a strategic focus that brings increased growth in the U.S. market, as well as a transition to a distributor model for other key markets.

The strategic focus means:

• Operational measures to significantly improve the company’s financial position and running costs.
• Accelerate the path towards, and increase transparency for, operational profitability.
• Increased focus on distributor sales and collaborations.

Going forward, the company’s strategy is based on the following main activities:

Launch of the Episealer Patellofemoral System in the U.S. The product is already cleared for the U.S. market and approximately 20 distributors are contracted. Launch activities are ongoingn.

Complete and submit the FDA 510(k) application for Episurf’s big toe implant system, the Episealer MTP-System, to FDA shortly, with the goal of a rapid launch in 2024. The company believes that this product and this market segment are the commercially most attractive for the company in the short term.

Continue to drive sales for Episealer Knee and Episealer Talus in several countries outside the U.S., primarily through distributor channels. The company is now showing strong growth in this market segment, and the company believes that a distributor model is most suitable and efficient to achieve larger scale over time.

The updated strategy means that the company becomes more cost-effective, and that product launches better match the company’s financing. The company will focus on a combination of established markets within the osteoarthritis segment, where the company considers that the commercialization opportunities are very attractive in the short term, and within the segment for focal cartilage and bone lesions through Episealer Knee and Episealer Talus, which represent significant opportunities in the slightly longer term.

The EPIC-knee study continues, but as we said before, patient recruitment has been challenging. The study continues, and costs are incurred mainly when surgeries take place.

In connection with the strategic focus, the company plans to make several positions redundant. Overall, these measures are expected to reduce operational costs by approximately SEK 25 million (~USD $2.4 million) on an annual basis. A one-time expense of SEK 4m related to the strategic focus will be charged in the company’s 2Q23 report. The company expects that current funding will be sufficient to launch both the Episealer Patellofemoral System and Episealer MTP System in the U.S. market. Given that the company is implementing the strategy for the U.S. market, the company also believes that profitability can be achieved more quickly, and the capital requirements are significantly less, than what the previous cost level indicated.

“After the pandemic, with clinical results available, we wanted to give our international efforts the highest priority, largely through a direct sales model. However, following the establishment of our technology in the market, we must take the next steps at larger scale through a larger distribution network. We have also made rapid progress in our product development activities with a focus on the U.S. Overall, we believe that the company’s opportunities to quickly achieve commercial success, which significantly changes the company’s financial profile in the short term, comes from increased focus on distributors and partnerships in all our markets. That is why we are implementing this strategic focus. We also believe that we owe our shareholders greater clarity around the path to profitability, something that was challenging during the research and development phase, and which continues to be challenging given the clinical acceptance we must drive. This clarity is best achieved through our updated strategy, which also will enable an increased focus on the U.S. and the products we have, or are in the process of developing, for the U.S. market,” said Pål Ryfors, CEO of Episurf Medical.

Source: Episurf Medical