BrainCool has strong momentum right now. Karolinska Institutet has initiated patient recruitment for a cardiac arrest study with the company’s device RhinoChill, and a recently completed rights issue was subscribed to a total of 171 per cent. BioStock contacted the new CEO Jon Berg for a status update and to learn more about his visions for the company.
– BrainCool is in an exciting phase and, we believe there is a great market potential and global demand for our cooling devices, says Berg.

BrainCool is active in the field of Targeted Temperature Management (TTM), i.e. early and rapid cooling (hyperthermia) with controlled temperature regulation in various disease states. The company has three primary products:

1) The BrainCool System (marketed as IQool System in the US), intended for the treatment of sudden cardiac arrest and neurological fever. The devices are currently sold through a global distribution partner.

2) The Cooral System, intended for the treatment of oral mucositis, a very painful side effect of chemotherapy that affects the lining of the mouth.

3) The portable cooling system RhinoChill System, developed for early and rapid cooling of the brain via the nasal cavities, with the ambition to significantly reduce the risk of the patient dying or suffering from neurological impairments in the event of cardiac arrest or stroke.

All the company’s devices are based on the same commercial principle; the systems have associated disposable products, which are consumed with each treatment. This creates a constantly recurring after-sales of disposable products. The sum of this after-sales also grows as the installed base of systems becomes larger over time. This type of business model is typically very profitable in medical technology, as the margin on disposable products is usually very high.

KI has initiated patient recruitment for cardiac arrest study

Just over a year ago, BrainCool signed an agreement with Karolinska Institutet (KI) for deliveries of the RhinoChill System for an extensive international clinical study on very early cooling of patients who have suffered cardiac arrest. Recently, KI initiated patient recruitment for the study, called PRINCESS 2, where survival and recovery of neurological function will be evaluated after treatment with RhinoChill. In total, around 1000 patients will be recruited to approximately 20 European clinics.

Emergency vehicles equipped with RhinoChill

The PRINCESS 2 study is interesting, partly from the perspective of potentially being able to improve the treatment strategies for the indication, and partly due to how it should be implemented in practice. Several Swedish emergency medical vehicles are now equipped with the RhinoChill System, which gives healthcare professionals a practical experience of the tool in their daily work, while the evaluation is ongoing. Treatment begins with RhinoChill as soon as an emergency vehicle reaches the patient. Patient inclusion began on March 27, 2024, and can be followed via the study’s website.

Per Nordberg, chief physician at Karolinska University Hospital and principal investigator of the study, commented on the entire study in a press release earlier this year;

The project is unique in the world and involves highly specialized care with cooling already at the site of the cardiac arrest or in an emergency vehicle and then continues upon arrival at the hospital.

Significantly oversubscribed rights issue

BrainCool carried out a rights issue in May with a total subscription rate of 171 per cent, which provided cash flow of approximately SEK 85.8 million before issue costs. The company thus has the financial means to invest to reduce production costs for BrainCool System, make RhinoChill System ready for launch and prepare for the commercialization of Cooral System. The company has a stated target of positive cash flow by 2025.

CEO comments

BioStock has been in contact with BrainCool’s recently appointed CEO Jon Berg to find out more about his visions for the company in the coming years.

Jon, you have only been CEO of BrainCool for a couple of months, but operationally active since the company was founded. Can you tell us a little about the company’s growth journey during these years?

– BrainCool’s operations started in 2014 with the focus of developing, marketing and selling leading medical cooling systems for indications and areas with significant medical added value in healthcare.

– Three devices have been developed and evaluated in clinical studies since 2014; BrainCool System/IQool System and RhinoChill System in the Medical Cooling business area for the intensive care market, and Cooral System in the Oncology business area. Over the past ten years, the company has obtained many patent approvals for all three devices. The company has also received significant research grants from the EU, the Swedish Heart-Lung Foundation and Vinnova, which have assisted the development of the business.

– Our first devices, BrainCool System/IQool System, is now being sold commercially in large parts of the world, through an extensive distribution agreement with the American medical technology company ZOLL. The distribution agreement covers several years of predetermined and gradually increasing quarterly order volumes, creating a stable base of sales. The agreement covers both systems and associated single-use products.

– Our unique device RhinoChill System is in two large clinical studies for stroke and cardiac arrest. RhinoChill is expected to be marketed after completion of regulatory and clinical processes. In addition, we have Cooral System, which has received regulatory approval in the US. Cooral is evaluated for different scenarios, with the aim of capitalizing on the device.

You recently managed to carry out a heavily oversubscribed rights issue in a difficult economic climate. What is behind the great interest in participating in the issue?

– Of course, it was great that the interest in the issue was so strong. After the issue was announced, we were able to quickly gather subscription commitments from several of the company’s largest shareholders. All in all, it shows the strong support we have in our shareholders. I think the interest lies in the fact that BrainCool has several interesting devices at different stages. In addition to the fact that BrainCool has a global distribution agreement with a guaranteed order value of SEK 120 million, the company’s devices are also included in two major international studies.

One motive for raising capital was to reduce the production costs of the BrainCool System. Can you discuss in a little more detail how this process will work?

– With larger orders, there is an opportunity for efficient series production, which of course requires some additional investments. Our basic purpose is to significantly reduce production costs and thus increase profitability. With a more automated manufacturing process, production is streamlined, which is needed to meet the rising demand for our products. Historically, our disposable products have been made with compression molding and manual gluing. BrainCool’s development department is currently working together with our subcontractor to transition to injection molding and semi-automated gluing of our disposable products. This will significantly reduce our production cost and thereby raise margins to attractive levels. The required investments were already included in the budget that we presented in connection with the new share issue. The investments are now being implemented gradually during 2024.

You also aim to prepare RhinoChill System and Cooral System for commercialization. What do these plans look like in more concrete terms?

– The lead times for commercialization of medical devices are long and require significant investments, including to get RhinoChill System market approved under the new European legislation for medical devices, the EU Regulation MDR 2017/745 (the “MDR Regulation”). In addition, investments in new tools are required for the upcoming production of the RhinoChill System. We have great confidence in our ongoing studies and are continuously investing in the upcoming commercial alliance of RhinoChill.

– There are several different ways to capitalize on Cooral and there is currently a strategic review underway regarding which way is most beneficial for the company. One of several different ways is to establish insurance compensation for the device, to then be able to commercialize it as standard of care.

The company’s former CEO was fired last spring, followed by a police report due to a non-permitted loan. Can you comment on this?

– We will not comment further on this, the incident has been reported to the police and an external review by PWC Forensic Team has been conducted. I can say, however, that the irregularity is an isolated incident, which has now been dealt with. I therefore see no reason why this should have to affect BrainCool negatively in the future.

Finally, what are your visions for BrainCool in the next three years?

– BrainCool is in an exciting phase, and we believe there is a great market potential and global demand for our cooling devices. BrainCool focuses its medical technology for cooling on the major therapeutic areas of stroke, cardiac arrest, oncology and neurological fever, all of which are considered rapidly growing common diseases and are globally prevalent. Cooling in connection with treatment of the mentioned therapeutic areas can provide significant patient benefits in the form of increased survival, reduced suffering for the patient and that the risk of disabilities decreases. Furthermore, it can lead to major health economic gains. BrainCool is technically and product-wise at the forefront of the therapy areas on a global level, as demonstrated by our distribution agreement with ZOLL and our ongoing clinical studies. This means a major competitive advantage for BrainCool.

– I look forward to the strong growth of BrainCool in the coming years. It is about continuing the company’s clear journey towards becoming a global commercial player. Our focus is to achieve and maintain positive cash flow throughout this journey.

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