Earnings call transcript: OssDsign AB reports strong Q2 2025 growth, shares rise

OssDsign AB, with a market capitalization of $165 million, reported robust financial performance for Q2 2025, with organic growth of 73% year-over-year and a gross margin increase to 96.8%. The company’s stock rose by 8.59% in pre-market trading, reflecting positive investor sentiment. According to InvestingPro data, the stock has delivered an impressive 68.3% return over the past year and is currently trading near its 52-week high of $1.71. Despite the strong U.S. dollar impacting reported growth, OssDsign continues to demonstrate significant market potential and strategic advancements.

Key Takeaways

• OssDsign achieved 73% organic growth year-over-year.
• Gross margin improved to 96.8%, up 360 basis points.
• The company raised CHF 160 million through a directed share issue.
• Stock rose 8.59% following earnings announcement.
• OssDsign targets 30% market access by 2028.

Company Performance

OssDsign AB’s performance in Q2 2025 showcased its strong growth trajectory, with organic growth reaching 73% compared to the previous year. The company’s financial health appears solid, with InvestingPro analysis showing liquid assets exceeding short-term obligations (current ratio: 5.11) and moderate debt levels. The company continues to expand its market presence, particularly in the U.S., where it plans to double its sales force by 2026. OssDsign’s strategic initiatives focus on increasing market access and expanding its product portfolio, positioning it well against competitors in the spine biologics market.

Financial Highlights

• Revenue: Not specified in the summary
• Gross Margin: 96.8%, up 360 basis points year-over-year
• Organic Growth: 73% year-over-year
• Reported Growth: 56%, impacted by currency fluctuations

Outlook & Guidance

OssDsign is optimistic about its future, with a "Scale to Profit" strategy that includes accelerating U.S. market access and expanding its product portfolio. The company aims to achieve over $400 million in sales by 2028 and plans to launch a large Level 1 randomized controlled trial in 2026. OssDsign’s financial ambition is to reach a profitable operating result in the second half of its strategy period.

Executive Commentary

CEO Morten emphasized the company’s readiness to execute its growth plans, stating, "We are now sufficiently capitalized to put in place the resources necessary to execute our current growth plans." Additionally, Dr. Stringer, a study investigator, highlighted the clinical success, noting, "Typically, I would expect to see dramatically lower fusion rates for such a complex real-world patient population."

Risks and Challenges

• Currency Fluctuations: The strong U.S. dollar impacted reported growth, which could continue to affect financial results.
• Market Saturation: With only 10% current market access, expanding further will require strategic efforts.
• Competitive Pressure: The spine biologics market is competitive, and OssDsign must continue to innovate.
• Regulatory Challenges: Expanding market access involves navigating complex regulatory environments.
• Execution Risk: Successfully doubling the U.S. sales force and achieving market access goals will require effective execution.

Q&A

During the earnings call, analysts inquired about the upcoming randomized controlled trial, which is expected to involve 200-400 patients and run for approximately five years. The gradual expansion of the sales force and the company’s patent protection, which extends until 30-35 years, were also discussed.

OssDsign AB’s Q2 2025 earnings call highlighted its strong growth and strategic direction, with positive investor reaction reflecting confidence in the company’s future prospects. For deeper insights into OssDsign’s financial health, valuation, and growth potential, investors can access comprehensive analysis and 7 additional ProTips through the detailed Pro Research Report available on InvestingPro.

Full transcript - OssDsign AB (OSSD) Q2 2025:

Morten, CEO/Executive, Ostezine: New growth strategy called scale to profit, and we raised almost a 160,000,000, which means that the company is now sufficiently capitalized to put in place the resources necessary to execute our current growth plans and deliver positive cash flow. I’ll now hand you over to Anders to walk you through the financial results for the quarter before I’ll come back and spend some more time on our clinical programs and evidence as well as our commercial progress and strategy going forward.

Anders, CFO/Financial Executive, Ostezine: Thank you, Morten. As Morten mentioned, we continue to see high growth in the company during the quarter. Organic growth of 73% compared to the same period last year, so on an underlying basis, you might say. On a reported basis, the growth came in at 56%. And this was driven, as you know, by a strong US dollar foreign exchange headwind.

We did see quite a lot of sales coming in the last day or two of the quarter. We always see some of that, but more so than usual this time as there were some customers who ordered slightly earlier than normal. So the numbers reported are slightly inflated as these sales would normally fall in the next quarter. Now how to say exactly, but our estimation is that it’s approximately SEK 1,500,000.0 or equivalent to approximately 5% growth we’re talking about here. If we turn to the first six months, we show an organic growth of 6660% on a reported basis, so not such a large spread.

And this is because the dollar was still very strong for most of the first quarter. As we’ve also said before, the growth will not necessarily be linear. It will take more of a form of a staircase where we increase accounts and users in one quarter and then may slow down somewhat in the following quarter as we get the new customers up and running and then we increase again. And this quarter is a good example of a quarter that jumps with 16% growth compared to Q1, and we’re, of course, very pleased with this development. We continue, however, to believe that the best way to look at the underlying momentum in the company is to look at the twelve month run rate, which we call LTM.

And as you can see here for the first quarter or the second quarter, it’s a strong trajectory continuing and LTM momentum is up 68% year over year. That’s an excellent performance that we are highly satisfied with. Over to the gross margin, it remained very high in the quarter, 96.8%, which is up three sixty basis points against Q2 twenty twenty four. And it’s also slightly up on the previous quarter in ’25. Now for the first six months, we show a gross margin of 96.6%, quite stable for the year, and it’s up three twenty basis points on the same period last year.

So gross margin remains high, significantly above the guided level. And I will now hand you back to Morten.

Morten, CEO/Executive, Ostezine: Thank you, Anders. As mentioned during the quarter, we had many important announcements. First in May, we reached a milestone of 10,000 patients treated with Ostezine Catalyst. The continuous and rapid increase in treated patients is a strong testament to how well Ostezine Catalyst has been received in The U. S.

Market since launch. It’s also a substantial increase from the five thousand patients reported in May 24, highlighting the increasing interest we’re seeing from surgeons and hospitals. Early in the quarter, we also announced the long term follow-up results from the clinical study TUF fusion, which was published in the peer reviewed journal by Medical Journal of Scientific and Technical Research. The results demonstrate one hundred percent spinal fusion rate and improved quality of life outcomes and validate OsteoCyn Catalyst’s unique ability to form bridging bone consistently. These exceptional results strengthen our market position of course and reinforce OsteScience Catalyst as a true game changer in spinal surgery.

During the quarter, we also published a highly exciting new preclinical study where we compared bone formation potential of different silicate containing calcium phosphate synthetic bone graft. And that was also published in a peer reviewed scientific journal called Journal of Orthopedic Surgery and Research. The research which was led by esteemed professors from the University of Aberdeen as well as the University of New South Wales, compared various synthetic bone grafts in a preclinical setting. And the results were quite striking. Ostezine Catalyst emerged as the first clinically available synthetic graft capable of generating robust functional bone in a very challenging vascular environment at early time points.

The study employed an ovine intramuscular defect model, which is a sophisticated method that mimics real world conditions. Over six and twelve weeks, researchers observed the performance of three commercially available synthetic bone graft substitutes. And the results were clear. Catalyst outperformed its competitors, demonstrating significant functional bone bridging after just six weeks. And in just six weeks, it formed strong bridging bone where others started to fall behind.

And the rapid response is not merely a footnote, it is a pivotal advantage. Traditional graft often rely on the presence of host bone to stimulate healing. Now in contrast, osteosync Catalyst thrives in isolation, actively promoting bone formation even in a vascular conditions. This is therefore not just a scientific advancement, it is a very practical solution that could transform patient outcome. And the ability to stimulate new bone growth in challenging conditions also opens up doors to new treatment possibilities.

Of course, the biggest announcement in the quarter was the publication of phenomenal one year data on the first 100 and eight patients in our Procure Spine Registry. As we also mentioned early July, this is a highly, highly complex cohort, and I just want to reiterate the profile of that cohort. We had an average BMI of thirty one point nine, meaning that the average patient is highly obese. We had ninety three point six percent of patients that had at least one comorbidity, with forty eight percent having three or more comorbidities. We have fifty percent of the cohort that had previous spine fusion surgery performed, with another almost sixteen percent having decompression, which is a non fusion spine surgery performed.

So in total two thirds of the cohort had some kind of surgery performed before. We had forty eight percent that were active of previous smokers. We had a little more than twenty percent of all procedures that involved three or more levels of the spine. We had another twelve percent suffer from diabetes and we had just about six percent with osteoporosis. So the results that were published has to be viewed through these lenses.

These are very complex and very difficult to fuse patients who suffer from so many other things that hamper bone formation or where so complex procedures had to be performed that really you should not be expecting a high fusion rate in this cohort. So as you know, we managed to achieve a fusion rate at twelve months of eighty eight point four percent, which is phenomenal. And the fact that we can achieve fusion rates in such a difficult real world population and then beating most of the randomized control studies and coming in significantly above the average in the industry is no other than remarkable and well beyond what you generally can expect. And I think what’s even more remarkable is the fact that we achieved high fusion rate throughout all the known risk factors. And as you can see on the bar chart, it doesn’t really matter if the patient was old, obese, smoking, diabetic, osteoporotic, had previous spine surgery, or even had a large multi level construct performed on them.

Throughout all of these groups of known hard to fuse patients, we achieved very high fusion rates. As also mentioned in our call in July, even the authors were blown away by the result. And what you see here is a quote from, doctor Stringer, who’s one of the investigators and and also the lead author on the paper. And I think he says it very clearly, and I quote, typically, I would expect to see dramatically lower fusion rates for such a complex real world patient population, with forty eight percent of the patients in the study having three or more comorbidities, increasing their risk for potential nonunion. Most clinical studies exclude these difficult patients, which unfortunately represent the majority of patients in need of spinal fusion.

The ostasign catalyst fusion rate of eighty eight point four percent achieved in the PROPEL study significantly exceeded my expectations. End of quote. And I think this statement actually says it all about how doctors themselves view the result. So to sum up, despite only being active in the orthobiologic space for a little under four years, we have already built a very solid repository of evidence with now a total of 15 preclinical and clinical publications and white papers. And I just wanna draw attention to the fact that you may remember when we entered ’24, we did not have a single piece of clinical evidence, but had commercialized solely on the preclinical evidence from the very early bone model.

During the last eighteen months or so, we’ve therefore generated more than 10 publications and white papers, which is something that I’m incredibly proud of and which is crucially important to the company both now and also for the future. But of course the most important thing is what the clinical evidence shows. And I apologize for this somewhat busy slide, but what you see here is a summary of the clinical studies we’ve published. And across all of these studies, we’ve consistently been reporting high fusion rates and fast bone formation with rapid progression to fusion. From the 100% fusion in our BOLD model to 100% again at two years in tough fusion and now eighty eight point four percent in a highly complex real world population.

And of course, in addition to what you see here, you can also add the many strong case reports as well, which have been published. So what is it we can conclude based on the data we’ve published to date? Well, the overarching conclusion is that all preclinical and clinical studies confirm the potency and differentiation of osteosyne catalyst. And more specifically, we can see that firstly, we have shown now high fusion and fast fusion across all types of studies, preclinical, randomized controlled trial and real world registry patients. Secondly, we’ve also shown strong clinical outcomes in simple as well as very complex patient cohorts.

Thirdly, as I mentioned, we can see that high fusion success rate is consistent throughout all well known patient and surgical risk factors. And finally, as the authors themselves concluded in the OVAIN study, Ostezine Catalyst is the first clinically available synthetic bone graft to successfully generate robust functional bone in challenging and vascular environments at early time point. So all in all, it’s a set of very strong data, which means that we are incredibly well positioned in the market. But of course, at the same time, all of these clinical publication, of course, have also helped us fuel commercialization. And, we just wanna give a a a quick update.

I think the last time we updated was in November ’24. And we are now sitting with more than 200, what we call, VAC approvals or hospital approvals in The US. We also continue to build, and also strengthen within that distributor, network, and that network now counts approximately 120 distributors. We also, as you know, have full military access both to active and veterans, and then we continue to execute on our premier GPO contract, which, as you know, represent a very large part of the entire US market. So what that also means is that we have actually hit the 10% access point, but as we’ve said before, that still means that we have 60% of the spine of the biologics market, which is untapped and which therefore represents a significant growth opportunity for the future.

And in addition to that, we can, as we also disclosed during the strategy update, go into adjacent orthopedic segments in the future based on our existing five ten clearance in The U. S. So as a result, in June, we launched our growth strategy to achieve positive cash flow and we call that the new strategy scale to profit. And the strategy has four very clear focus areas. The first is to accelerate access and coverage in The U.

S. Market. And in order to do this, we will double the U. S. Sales force by 26 and also accelerate our marketing effort.

And in addition to that, we will at some point during the strategy period also enter new adjacent orthopedic segment. The second priority is to expand our product portfolio and indication, and we expect to launch two new products, an MIS solution in 2026 and a hydrophilic strip sometime between 2027 and 2028. And in addition to that, we’re also aiming at obtaining minimum one new indication expansion. The third priority is to build a complete repository of clinical evidence. This means continue to build and publish data from our PROPEL registry, but equally important, we’re going to initiate a large level one randomized controlled trial, which is expected to start during 2026.

And by investing in this level one randomized controlled trial, Ostezine will become a top tier for biologics company and one in only very few that can demonstrate such clinical evidence. The final priority is to scale production and increasingly also build a U. S. Production footprint. Specifically, that means we’ll be implementing a scalable, more cost efficient production process and over time also move to an increasingly bigger U.

S. Footprint. As part of the strategy, we also updated our financial ambition and these strategic measures are intended to increase Osterzine sales to over 400,000,000 by ’28 and achieve a profitable operating result and cash flow in the second half of the strategy period. The quarter was also marked by a successful completion of a directed share issue, where we raised almost CHF160 million before transaction costs. And the overwhelming investor interest, which prompted us to increase the offering from CHF9 to CHF11.5 million shares demonstrates strong market confidence in our strategy and in our performance.

And this capital injection means that the company is now sufficiently capitalized to put in place the resources necessary to execute our current growth plans and deliver a positive cash flow. And with those final words, I want to thank you for listening to the presentation and hand back to the operator who will handle questions.

Eren, Moderator/Analyst: Thank you so much for the presentation, Eren. As you mentioned, now we will carry on with some questions here. Can you elaborate on the timing for the RCT? When do you expect the first patients to be recruited? For how many years should it be should the trial be running?

And how much will it require in CapEx?

Morten, CEO/Executive, Ostezine: Yes. As we also said when we announced the strategy, we expect the study to start sometime during 2026. We can’t be more specific right now. We think it’s gonna be somewhere between two to 400 patients, and it’s probably gonna take approximately five years. But there’s a lot of variables that are being discussed with sites and so on, so we can be more precise at this point in time.

Eren, Moderator/Analyst: Thank you. How have the how have the customers welcomed the first data from Propel? Will it help in discussion relating to pushback on price or even increased price again?

Morten, CEO/Executive, Ostezine: Well, I think overall, as you can imagine, it’s been incredibly well received. This is not a result that any other companies have been able to publish on a real world complex cohort. So, of course, it resonates well with surgeons, not least because the patients that we included in the 108, patient cohort we have are the same patients that, surgeons see in their everyday practice. So that’s point one. Point two, of course, is, what the study also clearly showed is that it is agnostic somewhat at least to patient and surgical risk factors.

We demonstrate much higher than average fusion rates across all type of risk factors. And that, of course, means that surgeons are instantly drawn to the fact that this is a product that they can use to actually help the most difficult patients they have. And by by saying that, of course, they can also see that we can help the more simpler patients. So I think this this underlines and emphasizes that this is a product that can be used for all patients in The US market.

Eren, Moderator/Analyst: Thank you. To what degree are Catalyst trained and educated surgeons moving hospital effectively stop using Catalyst?

Morten, CEO/Executive, Ostezine: Sorry. Can you repeat that question? I’m not sure I understand it.

Eren, Moderator/Analyst: Yes. Of course. To what degree, are catalysts trained and educated surgeons moving hospitals effectively effectively stop using catalysts?

Morten, CEO/Executive, Ostezine: Well, I think you’re always gonna have a as as part of the the market, you know, surgeons, stop, and move around in hospitals. And, of course, sometimes it it it benefits you, and other times, you know, you may have a user who who who’s using your product in an approved hospital who moved to an unapproved hospital. And then, of course, that sets you back for a period of time until you get an approval in that site since the surgeon, still wanna use your product. But I I think there’s nothing out of the ordinary. That’s how the the industry works, you know, how surgeons move around to different hospitals over time.

Eren, Moderator/Analyst: Thank you.

Morten, CEO/Executive, Ostezine: Nothing we can control.

Eren, Moderator/Analyst: When should we see your cost increase due to increasing headcount in the US sales force?

Anders, CFO/Financial Executive, Ostezine: I think you see it slowly but surely each quarter. We’ve said that we’re going to double the the Salesforce by the ’26, but that’ll that won’t come in one big swoop. It’ll come one or two salespeople every here and there. So you’ll see slight increases every quarter.

Eren, Moderator/Analyst: Thank you. How quickly will you expand your sales and marketing team in The U. S?

Morten, CEO/Executive, Ostezine: Well, think we’ve said we expect to double it by the end of the twenty sixth. The exact path that that’s going to follow, I think that’s to be be seen. We see it as a gradual, as Anders said, gradual ramp up from now on until the ’26.

Eren, Moderator/Analyst: Thank you. Any larger clinical trials starting in H2 twenty twenty five, should we expect R and D costs to increase in H2 twenty twenty five?

Anders, CFO/Financial Executive, Ostezine: I wouldn’t say that the large clinical trial will drive R and D costs in 2025. It’s most mostly preparatory work scoping the whole study. So I’d expect that to start happening in ’26.

Eren, Moderator/Analyst: Thank you. Q2 numbers being somewhat inflated by last day orders, any clarification on Q3 impact here should be appreciated.

Morten, CEO/Executive, Ostezine: Yeah. I mean, I think the, you know, as we said, let me just go back. You know, we have a mix of customers. Some customers, the vast majority use consignment, which means that it’s invoiced in a case by case basis. We also have certain hospitals who like to buy in bulk.

Maybe they buy once a month. Maybe they buy twice a month. Now the reason that we just called it out is is simply because it it it’s fairly insignificant. As Anders said, our estimation is the 1,500,000.0, but it was a change to the order pattern, which normally would fall in q three, and now it came on the last day of the quarter. So therefore, it it probably slightly inflated.

Time will tell, of course, you know, if they go back to the normal order pattern that would indicate that we’ve moved about 1,500,000 from q three into q two as a result of that. But it it’s too early to to say right now. But but, of course, it is a change to order pattern. That’s why we we wanna call it out that maybe the reported number is a maybe slightly overstated or an inflated because of that, but it could also potentially mean that Q3 will will be missing that 1,500,000.0 as a result.

Eren, Moderator/Analyst: Thank you.

Morten, CEO/Executive, Ostezine: But but let me just let me just confirm. We still see a strong underlying growth, in the company. We still see, as as you saw, we have more than 200 approvals. All the leading indicators continue to move in the right direction. So this is just a fairly insignificant event, but it is an event, nevertheless, that can skew a little bit quarter on quarter comparisons.

Eren, Moderator/Analyst: Thank you. Could you share any comments on CapEx? When is it anticipated to ramp up? Any magnitudes appreciated as well?

Anders, CFO/Financial Executive, Ostezine: Well, not sure we’re going to magnitudes, but you have seen some of the CapEx in both q one and q two, especially now in q two. We expect that to continue in q three and q four. And of course, when the if the clinical study, the big trial is is capitalized, which we don’t know for sure yet, that’s going to have a much bigger impact, but that’ll come in ’26. But the normal sort of product development costs will continue to be capitalized in Q3 and Q4 and onwards.

Eren, Moderator/Analyst: Thank you. Are you expecting any interim readouts from the RCT, or is it too early to tell?

Morten, CEO/Executive, Ostezine: Way too early to tell. We are now, we’re in discussion with potential sites and doctors, and we are discussing the the exact protocol and how that’s gonna play out. So, that’s, way, way too early to to to start to speculate on.

Eren, Moderator/Analyst: Thank you. As your sales force will double in The US, do you have a target in term of coverage versus the current 10%?

Morten, CEO/Executive, Ostezine: Yeah. I think we’ve disclosed that as part of the strategy. We’ve said by ’28, we wanna have access to 30% of the market, and we wanna cover 35 states in The US, which is about 15 states more than where we are today.

Eren, Moderator/Analyst: Thank you. For how long period does Catalyst have patent protection?

Anders, CFO/Financial Executive, Ostezine: Thirty, thirty five. Yeah.

Morten, CEO/Executive, Ostezine: Yeah. So we we have a number of patents, approved patents, and we also have some ongoing applications. But right now, we are cover we are covered into thirty and thirty five.

Eren, Moderator/Analyst: Thank you. Moving on to the last question here. Do you agree with the consensus that Osteoide might do the same journey, if not a better one, than bone support? Is it reasonable to expect similar growth and profitability?

Morten, CEO/Executive, Ostezine: Well, I don’t think we’re gonna we’re not commenting on comparison and how other companies have performed. I think we are we are obsessed with developing this company, and we are very pleased with the with the grow growth rates that we are we are seeing and how we’re building the company both in terms of the financial performance, commercial performance, but also equally on putting all the building blocks, the fundamentals in place relative to clinical data and so on. How that compares to others, you know, I’ll let other people draw those comparisons.

Eren, Moderator/Analyst: Thank you so much for the presentation here and for answering all the questions. That was all we had. So I wish you all at home a good day, and thank you for watching.

Morten, CEO/Executive, Ostezine: Thank you very much.

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