Earnings call transcript: Neola Medical AB’s Q2 2025 focus on innovation and market expansion

Neola Medical AB, a company focused on neonatal care technology with a market capitalization of $17.79 million, reported its Q2 2025 earnings call on August 25, highlighting significant strides in product development and market preparation. The company’s stock saw a modest increase of 1.35%, continuing its positive year-to-date performance of 10.4%, reflecting investor sentiment driven by new institutional investors and patent approvals. According to InvestingPro analysis, the company currently appears overvalued based on its Fair Value assessment.

Key Takeaways

• Neola Medical AB onboarded its first institutional investors, Adrigo and Cicero Funds.
• The company is advancing its Neola device, a non-invasive neonatal lung analyzer, with new patents in China and Europe.
• Clinical pilot studies are underway in Sweden, with plans for a U.S. pivotal study.
• The company reported a cash position of SEK 26.5 million but is experiencing negative cash flow.

Company Performance

Neola Medical AB is making significant progress in its mission to transform neonatal care. The company is focused on the development of its Neola device, which uses innovative technology to provide continuous lung monitoring for preterm infants. The initiation of clinical pilot studies in Sweden and the preparation for U.S. trials demonstrate a strategic push toward market entry. Despite financial challenges indicated by negative cash flow, the onboarding of institutional investors suggests confidence in the company’s future.

Financial Highlights

• Cash position: SEK 26.5 million
• Cash burn rate: Negative cash flow
• Direct-to-chair issue completed, raising approximately SEK 20 million

Outlook & Guidance

Neola Medical AB is concentrating on advancing its clinical studies and navigating the FDA regulatory process. The company aims to complete its Swedish pilot study before initiating a pivotal study in the U.S. The successful completion of these studies is crucial for the anticipated market launch of the Neola device. The next financial report is scheduled for November 5, 2025.

Executive Commentary

CEO Hannah Schisturm emphasized the company’s commitment to neonatal care, stating, "Our mission is to transform neonatal care by giving preterm born babies a safer start in life." She highlighted the importance of their technology, noting, "Every single minute really counts for these babies."

Risks and Challenges

• The company’s negative cash flow presents financial sustainability concerns.
• The success of clinical studies is critical for U.S. market entry.
• The competitive landscape in neonatal care technology may pose challenges.
• Regulatory hurdles in the U.S. could delay market launch.
• Dependence on patent protection to maintain competitive advantage.

Neola Medical AB’s focus on innovation and strategic market preparation positions it well for future growth, though financial and regulatory challenges remain. While the company maintains impressive gross profit margins of 92%, InvestingPro data indicates analysts do not expect profitability this year. The company’s progress in clinical studies and patent approvals are positive indicators for its potential in the neonatal care market.

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Full transcript - Neola Medical AB (NEOLA) Q2 2025:

Webcast Moderator: Hello, and welcome to today’s webcast with Diomola Medical, where CEO Hannah and CFO, David Volkerson, will present a report for the 2025. After the presentation, there will be a Q and A. So if you have any questions for the company, you can send them in via the form to the right. And with that said, I hand over the word to you, Anna.

Hannah Schisturm, CEO, Neola Medical: Well, thank you so much. And everyone, a very warm welcome to this quarterly presentation for the Q2 and half year of 2025, where we are summarizing an intensive and productive first half year for Neola Medical, where we continue to reach our milestones according to our business strategy and plan. So presenting here today is myself, Hannah Schisturm. I’ve been the CEO for the company since 2019. And with me here today also have CFO, David Volkessen.

So first, I will shortly present Neola Medical as a company, our market and the significant events during the quarter and the 2025. And thereafter, David Volkessen will walk you through the numbers and the financial summary. Before we start, please note that today’s presentation may include forward looking statements. Actual results may differ due to risks and uncertainties, including, but not excluding such as market conditions, regulatory processes and execution of our strategies. Then to Neola and Neola Medical.

So Neola Medical is a deep tech company developing Neola, neonatal lung analyzer, the very first medical medical device designed for non invasive and continuous monitoring of the lungs of preterm born babies, with the aim to have an instant results of severe lung complications that today the babies are lying much too long with. Our mission is to transform neonatal care by giving preterm born babies a safer start in life. And with Neola, we aim to support healthcare professionals with real time respiratory insights, enabling instant detection of lung complications, earlier prevention and intervention and also proactive care, so that we can have ultimately our goal is to have better outcomes for these very vulnerable patients with the potential to also reduce morbidity and improve long term quality of life. Neola Medical was founded in 2016 and we have our headquarters here in Lund with also a small hub office in Palo Alto in The U. S.

The technology behind Neola is based on very advanced research from Lund University. And today, we are in the clinical phase with our medical device aiming for market authorization primarily with The US. Neolay is based on our patented technology called gas and scattering media absorption spectroscopy. This is a method that was developed at Lund University and further advanced, by our team at Neola Medical. We currently hold eight patent families covering both the medical methods, device and disposables, ensuring protection of our core innovation, but also enabling scalability to other patient groups.

And as you saw in the Q2 report that we published this morning, we continue to strengthen our patent portfolio, a real highlight in this quarter that I will soon talk more about. Our revenue model really extends beyond the primary sales of Neola main unit, but also includes the sales of disposable probes that are changed daily on the baby and also service agreements. And those disposable probes are very important for us, and we expect them to be really a key driver of our future revenue and our future margins. As we move towards market launch, clinical support is incredibly valuable. And we do also get that from the very best in The US, such as Stanford’s associate professor in neonatology, and also from the main key opinion leaders in Europe.

And this is something that we have worked relentlessly for many, many years to build up a very strong credibility with the key opinion leaders and a strong key opinion leader network in both Europe and The U. S. Ahead of our market launch. We are importantly also Stanford impact one company. As Stanford has recognized Neola with the as one of the most promising innovations with the potential to really transform neonatal intensive care from day one in clinical use.

And this is one way of how we really make sure that we have those most important U. S. Endorsement with a lot of connections to the entire U. S. Neonatologist community before launch.

And now one of the reasons why we really get this support is that we are addressing, such a growing clinical need as more babies are being born preterm. Today, one in ten babies arrive too soon to this world and often depend on intensive care for their survival and for their long term outcomes. Many of these babies face underdeveloped lungs that can quickly advance to life threatening complications and lasting disabilities for them. So preterm birth is the leading cause of death for infants under five years of age after pneumonia. So it’s very dangerous.

And specifically the respiratory failure is the primary driver of death. And that is the reason why neonatologist really wants to find lung complications much faster than today, because every single minute really counts for these babies. And also this is a significantly under invested market. So the current monitoring methods in neonatal care are highly insufficient. Doctors really rely on manual observation time, mainly by the nurses.

They do chest x-ray on a daily basis. They have some blood gas sampling and some pulse oximetry, tools that are really slow and provide only snapshots of what’s going on in the lungs. And many of them are potentially also harmful for the babies such as repeated chest x-ray. And in the critical cases, results may take up to two hours for chest x-ray, while a baby might already be deteriorating. So with Neola, our aim is really to provide that continuous and real time lung monitoring that is safe for the baby’s fragile skin with an instant results within seconds, Exactly the type of, neonatologist said that this is definitely the type of tools that they, would like to have to improve care.

And looking at the market worldwide, preterm birth are really increasing and the number of neonatal intensive care units continue to grow. And this also creates a strong demand for improved monitoring solutions, especially then The US is particularly attracted due to its very high rate of preterm birth. So we have more than ten point five percent of all babies being born in The US that are preterm. And this comes a lot from the success of fertility treatments in The U. S.

That is causing more twins and triplets. But also in general, a focus on really having more neonatal intensive care units to address these needs means that the number of for us relevant beds in neonatal intensive care is really growing. So currently, there are 35,600 beds in neonatal intensive care, where our market research and our clinical advisors estimate that 50% to 70% of all these beds should have a Neola next to it in the future. So it’s a great market opportunity for us. In The U.

S. Alone, our addressable market is 400,000 preterm born babies annually. And we have identified the 10 leading children’s hospital as a priority market for our launch. Importantly, we have already established relationship mainly with two of them, as you would say here, Lucille Packers Children’s Hospital in Stanford. We’re very much connected to Stanford and this is also where we have our U.

S. Office. But then also Cooper, and you have seen that during this quarter, we have also signed a contract with the Cooper Hospital to lay the foundation for that very early adoption through doing our first pivotal clinical study in The U. S. Together with them.

We have also received an approval from the hospital’s IRB committee, which means that we are now also ready to start that study as soon as we are also signing contracts for our second study site. I would say a lot of progress towards the clinical study in The U. S. During this quarter. For hospitals, Neola not only address the pressing clinical need, but also creates a clear financial value for the hospitals.

By enabling faster detection of complications, Neola really has potential to shorten length of stay in the neonatal intensive care unit, and also reduce the number of very invasive procedures such as blood gas samples and chest x-ray. It might also free up the nursing time for manual observation, which is important in The US care, as so many nurses have left the profession, especially after COVID, there is a decrease in nurses available. And this has really pressed up the salary levels. So it’s not uncommon for nurses today to have similar salary as the neonatologist in the clinic. So this is also a very important perspective from the American hospitals that any type of technology that can really reduce the burden of the nurses is very welcome in the clinic.

So step by step, we have really moved from research validation amongst the early validation that we got from the independent research study in Ireland on 100 healthy newborns to now being currently in a clinical study in Sweden, our pilot study that we’re doing ahead of our pivotal clinical study in The U. S. In order to make sure that we capture any learnings that we want to bring into The US study. So we’re in a very exciting stage in our company history. And now we’re working with a sharp focus on what we need to get done in 2025.

And we’re really focusing then on our clinical studies, the regulatory process mainly with the FDA, but also our continued preparations in terms preparing for our market launch. So with that short company introduction, I will now go into the highlights of the Q2 report. So for the first half year of 2025, we initiated the clinical pilot study in Sweden following the approval from the Swedish authorities. This pilot study will evaluate the safety and performance of Neola in preterm born babies. So it’s a very first time we’re doing a clinical study on our intended population preterm born babies.

In addition, this study is designed to demonstrate both the utility of the product and its compatibility with the clinical environment. The patient group ranges from a gestational age of 28, and they weigh between one thousand and three thousand grams. The studies in total 10 preterm born babies. These babies are in intensive care when we do monitor them during the study. And the study is also conducted at Sara Elfsbois Hospital in Burgos, an excellent regional hospital in Sweden with a really high level of neonatal care.

And the study team consists of experienced neonatologists, but also neonatology nurses. And I will talk more about this in a minute as well. But then also some of the key highlights of this first half year is that we completed a direct to chair issue of approximately SEK20 million securing financing ahead of our clinical study start in The U. S. And in Sweden and really also strengthening our shareholder base.

This is we got our first institutional investors on board, Adrigo and Cicero Funds alongside the support from existing shareholders. We have also our international IP portfolio was further strengthened with corresponding patents in both China that we received during Q1 and then the same patent granted in Europe in Q2. So two very strategic markets for us. And these approvals is within a new patent family. And they really reinforce the protection of our core medical technology for non invasive lung monitoring, and how we detect pulmonary complication.

So this is a very important medical patent for us. And we’re excited to have it in both Europe and China at the moment. And an application is also sent into The U. S. Market.

So a strong and expanding IP position really remains central to sharpen our competitive edge as we move through this clinical development phase, and it really secures future value. So we continue to focus a lot on our patent portfolio. This new patent family really complements the protection of the company’s first general patents on the basic fundamental concept of how we measure gases in body cavities using diode laser spectroscopy. So it’s also from that perspective, a very important pattern for us. And then moving into Q2 and the significant events here.

So during this quarter, we have then had the very first baby successfully included in our ongoing clinical pilot study on pretermborn babies with Neola. So this marks the very first time Neola has been continuously monitoring the lungs of a baby. And it’s the very first time we have done it also on a preterm born baby. So first time in our intended patient population. So this is a major milestone for us.

We have now reached halfway with our clinical pilot study. And once all the babies are enrolled and have completed the study, the data will be analyzed. The results will be concluded in accordance with the common practice and standards for clinical evaluation and thereafter communicated. And just as a reminder, this pilot study really serves as a preparatory step to ensure that we capture any potential development refinements of the product or the clinical study protocol or process before entering the pivotal study in The U. S.

So it’s a very much from our side also a de risking study. And one of the main topics for this quarter as well is that we have now signed an agreement with our first U. S. Clinical study site, the prominent neonatal intensive care unit at Children’s Regional Hospital at Cooper in Camden, New Jersey in The US. We have together with that, we also have obtained the IRB approval.

So that is the approval from Institutional Review Board that we need to have in order to sign a contract, but also to start our clinical study. We have all of that on board. And this really represents a key regulatory milestone for us. It enables the initiation of the pivotal clinical study on preterm born babies in The U. S.

And I would also say that we are honored to collaborate with Professor Doctor. Vinit Pandari, who is the will be the principal investigator of this He is globally recognized neonatologist. He’s a member of the Board of Director for the US Neonatologist Society. So he’s very much, I would say, one of the key stakeholders within both non invasive and respiratory monitoring, but also as a very well recognized neonatologist and key opinion leader in The U. S.

So we’re very excited that he wanted to be the principal investigator on this study. And it’s also a signal of how important this new technology might be in the neonatal intensive care unit as we come to market. So with this study that will really play a central role on how we build our clinical evidence based for Neola Medical’s planned FDA application, that it will then lay the foundation for a market launch. So it’s an important study for us coming up. And this study will be initiated after the clinical pilot study.

This study site is one out of two U. S. Sites, and we will also be able to confirm the second U. S. Site in a couple of months.

So with that, I move over to another really exciting Q2 event for the company. Neola Medical was named a finalist for Sweden’s new Global Innovation Award, the Pioneer Prize. And we were invited to be part of Sweden’s official delegation and for the company and our product to be showcased at the World Expo twenty twenty five in Osaka in Japan. This award is organized by Swedish Institute together with Business Sweden and the delegation was led by His Majesty, the King of Sweden. So this type of recognition really puts us in the spotlight as one of Sweden’s most promising companies driving innovation with a global impact.

So for us, this was a true privilege to represent Swedish innovation, one of few life science company as well to be present and to be present in this global stage. So standing alongside of other visionary companies across industries really gave us not only the visibility, but also valuable opportunities to build networks and strengthen Neola Medical’s international profile. So these types of acknowledgements really help us position as an credible partner for future collaborations and international market growth. So with that, that was some of the highlights from the Q2 report. And I hand over to CFO, David Volkessen, for the numbers.

David Volkessen, CFO, Neola Medical: Thank you, Hannah. Let’s see if we can get the next next slide. Okay. I have one more. Yeah.

Thank you, Hannah. As you can see, operationally, the first half year has progressed in line with previous last year’s previous period, and we keep our cost at an efficient level. With that said, we keep financial focus and to our path towards clinical validation, which will be a cost driving activity in the coming quarters. And also, as we discussed in previous reports, operationally, we’re now focusing on clinical validation phase for Neola. That means internal preparation and executions for studies.

This has resulted in this year’s total cost being slightly lower than last year’s as the need for external resources has decreased. With that said, the majority of the cost of our for our ongoing study in Brussels will occur in the 2025. If we change slide. And as you also can see in the shareholders list, we’re still very grateful for the confidence from the shareholders. And we can also see that the existing shareholders have a strong belief in the company, which has given us no major changes in the list of the shareholders.

And to the next slide. This is the final show financial calendar calendar for the coming three periods. And next time, you will have a report will be there on the November 5, which will be the q three three report then. Over to you, Hannah.

Hannah Schisturm, CEO, Neola Medical: Well, thank you so much, David. So just to summarize, we are really working towards our strategy with a very clear focus. You can see that we have a large and growing addressable market that we’re really focusing to penetrate and bit by bit are really moving towards the top 10 hospitals in The U. S. With the greatest demand for this type of new innovation.

There is a great clinical need and demand for continuous monitoring of pretermborn infants. And we have also built in a very attractive business models where our disposable probes that are changed daily on the baby will be critical for our revenue growth. We have a proven core technology that we have seen throughout the different studies that has the potential to be an important application within this target group. And with our highly experienced team, we think that we have definitely the right resources now for the next step in Neola Medical’s journey towards market authorization and launch. So with that, I thank you so much for attending this presentation and I also leave the floor open for any type of questions that you might have.

Webcast Moderator: Thank you so much for the presentation. As you mentioned, now we will carry on with the Q and A. And the first question here is how many patients have been included in the Swedish study?

Hannah Schisturm, CEO, Neola Medical: So we’re now halfway. So in total, we have 10 patients to be enrolled in the study. To share some details around it, we can see that we have a healthy inclusion rate. So approximately fifty percent of the eligible babies where the parents are asked for consent also give their consent. So that is, I would say, a very healthy enrollment rate.

Webcast Moderator: Thank you. In the report you expect the Swedish clinical study to conclude in the fall. Has there been a slight delay or is it according to plan?

Hannah Schisturm, CEO, Neola Medical: It’s always hard to plan exactly when you will have a baby in intensive care who really fits also the weight class and the specifics of the babies of the baby that needs to be monitored. So it’s really one of those that where we always have a team that is standby to do measurements as we get an acceptance from the parents. There was always an intense summer periods in terms of personnel schedules, but we’re now have a I would say we’re now in more the everyday action in the clinic, and we have done some measurements here after vacation times as well. So more or less on track.

Webcast Moderator: Thank you. You said earlier that The US study will likely be initiated a few months after the Swedish study has been finalized. Is this still your expected timeline?

Hannah Schisturm, CEO, Neola Medical: Yes.

Webcast Moderator: Crystal clear. So you secured IRB approval in The US. What are the next steps and timeline before starting the pivotal study and how do you view the regulatory risks ahead?

Hannah Schisturm, CEO, Neola Medical: So in terms of when we’re going to start in The U. S, we have everything in place in order to start. What we’re waiting for is the results from the clinical pilot study in Sweden to make sure that we capture any learnings or potential refinements or development of either the product or the clinical protocol before we enter The U. S. Because that is then a pivotal clinical study that will form the foundation of our technical file to the FDA.

So it’s important that we get that one really right. We are also in parallel process with another hospital, so the second site. So we’re also aiming to get them on board here during this fall. And then we’ll start the study when both study centers can start at the same time.

Webcast Moderator: Thank you. From the Swedish pilot study, what key outcomes are you looking for and how might they guide The US pivotal trial?

Hannah Schisturm, CEO, Neola Medical: So mainly we’re looking for it’s a safety study, so we want to make sure that there are no adverse events on the babies. We want to make sure that we have no device deficiencies. And we also want to make sure that we optimize the clinical protocol as much as possible to ensure that we have even better outcomes in The U. S. Study.

Webcast Moderator: Thank you. And with 26,500,000 in cash and negative cash flow, how long is your runway and should investors expect a capital raise?

David Volkessen, CFO, Neola Medical: There’s always hard to tell when or when there will be a capital raise, right, but there’s no such thing initiated at the time.

Webcast Moderator: Thank you. How are you preparing the market for Neola beyond regulatory work in the terms of partnerships, distribution, and early hospital interest?

Hannah Schisturm, CEO, Neola Medical: We’re working very closely with the hospitals that we aim to do the clinical study with in The US. So with those two hospitals that we have in place, we’re working to secure that when that even after they have done the clinical study that they would like to keep Neola in their clinics and expand it. So we’re really working clinic by clinic since this is a very much a key opinion leader led work. But one other example of how we’re working is that we’re very much on the ground in The US. So in a few weeks, for example, I’m going to a summit in Texas, near Texas Children’s Hospital in order to talk to key opinion leaders, but also with representative from the FDA’s Children’s Group in order to see how can we ensure that more medical devices coming to children and very practically how can we make sure that as many of these key hospitals really adopt Neola as fast as possible.

So it’s a very much, I would say, an interaction on the ground in The U. S. That’s going on.

Webcast Moderator: Thank you. And moving on to the last question here. With the new European patent, how strong is your IP protection globally and what is your strategy for securing it in The U. S. And other markets?

Hannah Schisturm, CEO, Neola Medical: We’re working very actively with our patent portfolio. We’ve always done that. There is this medical patent that is important for us is currently under investigation in The U. S. And we hope to be able to communicate on those patents in the next future as well.

And we’re working with specialists within the areas to make sure that we continuously for everything we also discover terms of the clinical study now and going for example that we always take those ideas fast to also send in for patents. So I would say it’s a very active part of our culture to apply for patents and it’s important.

Webcast Moderator: Thank you, and thank you so much for presenting here today and answering all questions. And thank you all for your home at home tuning in.

Hannah Schisturm, CEO, Neola Medical: Thank you so much for having us.

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