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CLS revises strategy – increases focus on neurosurgery

CLS

CLS revises strategy – increases focus on neurosurgery

24 May, 2024

Clinical Laserthermia Systems revises its strategy to increase the possibility of achieving the goal of reaching a positive cash flow in 2026. The new strategy prioritizes the neurosurgery business area, enabling cost savings of approximately SEK 65 million.
– The background to the announced changes to the business is the strength of the ClearPoint Prism product offering, a strength that has become increasingly clear in the spring of 2024 through the initial market launch in the US, CLS writes.

Clinical Laserthermia Systems (CLS) is a Lund-based medtech company developing products for image-guided laser ablation. For some time, the company has focused primarily on two business areas – urology and neurosurgery – but has now decided to reallocate resources to the latter.

The company’s US neurosurgery partner, ClearPoint Neuro, plans to initiate a full market launch of the ClearPoint Prism Neuro Laser Therapy System in the US in the second half of 2024. Together, they have taken several important steps during the spring.

– During the spring, the companies have jointly taken several decisive steps to, among other things, further strengthen the product offering and expand the market in the US, CLS writes in its press release.

FDA 510(k) clearance

An important milestone was the 510(k) clearance from the FDA at the end of April for ClearPoint Neuro’s product Prism Bone Anchor Accessory, expanding the use of the laser therapy system beyond the MRI and into the operating room, thereby expanding the addressable market.

CLS will now prioritize and increase its investment in the neurosurgery business area, which is expected to result in reduces cost and improved profitability during the period 2024-2026.

–  With these changes, CLS and ClearPoint Neuro create the right conditions to fully benefit from the potential in neurosurgery while not compromising our potential in the field of urology, says Dan J Mogren, CEO of CLS.

Commercial efforts in urology decrease

Within the urology business area, the company will focus on delivering on already established negotiations, agreements, and clinical collaborations in the USA and Europe. The company plans to ramp up its commercial efforts in urology again towards the end of 2025.

This means that the ambition for 2026, communicated in January 2024, of having 20 active customers in the US is reduced by half. Instead, the company will prioritise large annual treatment volumes. According to CLS, the operations will not be affected in Singapore, where market approval was obtained at the beginning of the year.

Reducing costs and risk

The revised strategy entails an expected reduction in the company’s costs by SEK 65 million during the period 2024-2026. The company’s goal is to achieve a positive operating result (EBITDA) for the financial year 2026. To accomplish this, CLS estimates that sales of approximately SEK 70 million will be required in the same year.

– After stress-testing our forecasts during the spring, it is reassuring that, with the news presented today, we are reducing the risk in the business and strengthening our ability to be cash flow positive in 2026. With these changes, CLS and ClearPoint Neuro create the right conditions to fully benefit from the potential in neurosurgery while not compromising our potential in the field of urology, says Mogren.

CEO comments on the revised strategy

CLS vd Dan Mogren i korridoren på Medicon Village, Lund
Dan Mogren, CEO of CLS

BioStock contacted Dan Mogren to find out more about the change in the direction of the business.

Could you tell us a bit more about what has led to this decision?

– There are three main factors behind our decision. The first is the very positive response from the market and users to the ClearPoint Prism Neuro Laser Therapy System, which is now routinely used for 4-5 NeuroLITT treatments every week in the USA.

The second factor is our well-functioning collaboration with ClearPoint Neuro and their successful market penetration, leading to the planned full market launch of the ClearPoint Prism Neuro Laser Therapy System in the second half of 2024.

Finally, it is about ensuring that we can achieve our goal of becoming cash flow positive by 2026, which, for me, is the highest priority goal.

 How can the revised strategy increase the company’s profitability?

– By shifting towards neurosurgery and our business with ClearPoint Neuro, we increase the reliability of our forecasts and our margins while reducing our costs, particularly in the urology segment during the announced period.

What will be the direct implications of the focused strategy?

– The most important thing is that we increase the focus of our operations on a single market segment, which reduces complexity and increases efficiency in our decision-making and implementation processes.

How would you summarize the opportunities in the neurosurgery field?

– Currently, they are very promising. ClearPoint Neuro has a large customer base with over 80 active customers globally using their products today. This ensures a rapid roll-out in the USA with potential that also extends beyond the USA. Our operational objective is to continue being a good partner through a concerted effort in the neurosurgery segment, with an increased focus on our collaboration with ClearPoint Neuro, and to ensure that we jointly quickly gain market share in a market where we have every opportunity to become a leader in the near future.

The content of BioStock’s news and analyses is independent but the work of BioStock is to a certain degree financed by life science companies. The above article concerns a company from which BioStock has received financing.

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