– BrainCool is in an exciting phase and we believe that there is great market potential and global demand for the company's cooling technology products, says Jon Berg.
BrainCool are 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) BrainCool System (marketed as IQool System in the US) is intended for the treatment of sudden cardiac arrest and neurological fever. The product is currently sold through a global distribution partner.
2) The product Coral System is intended for the treatment of oral mucositis, a very painful side effect of chemotherapy that affects the mucous membrane of the mouth.
3) The portable cooling system RhinoChill System is intended 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 of the company's products 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 these 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 begun 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 to a large international clinical trial on very early cooling of patients suffering from cardiac arrest. KI recently began patient recruitment for the study, called PRINCESS 2, where survival and recovery of neurological function will be evaluated after treatment with RhinoChill. A total of approximately 1000 patients will be recruited to approximately 20 European clinics.
Emergency medical vehicles equipped with RhinoChill
The PRINCESS 2 study is interesting, both from the perspective of potentially improving treatment strategies for the indication, and also how it should be practically implemented. Several Swedish ambulances are now equipped with the RhinoChill System, which gives healthcare professionals practical experience of the tool in their daily work, while the evaluation is ongoing. Treatment is initiated with RhinoChill as soon as an ambulance reaches the patient. Patient inclusion began on March 27, 2024 and can be followed via the study’s website.
Per Nordberg, senior physician at Karolinska University Hospital and principal investigator in 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 ambulance and which then continues upon arrival at the hospital.
Rights issue heavily oversubscribed
BrainCool completed a rights issue in May with a total subscription rate of 171 percent, which brought in cash of approximately SEK 85,8 million before issue costs. The company thus has financial resources to invest to reduce production costs for the BrainCool System, prepare the RhinoChill System for launch and prepare for the commercialization of the Cooral System. The company has a stated goal of positive cash flow by 2025.
Comments from the CEO
BioStock has been in contact with BrainCool's relatively new CEO Jon Berg to learn 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 have been operationally active since the company was founded. Can you tell us a little about the company's growth journey over these years?
– BrainCool's operations started in 2014 with the focus on developing, marketing and selling leading medical cooling systems for indications and areas with significant medical added value within healthcare.
– Three products have been developed and evaluated in clinical studies since 2014; BrainCool System/IQool System and RhinoChill System within the business area medical cooling for the intensive care market, and Cooral System within the business area oncology. Over the past ten years, the company has received, among other things, many patent approvals for all three products. The company has also received significant research grants from the EU, the Swedish Heart and Lung Foundation and Vinnova, which have assisted in the development of the business.
– Our first product BrainCool System/ IQool System is now 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 disposable products.
– Our unique product RhinoChill System is in two major clinical studies for stroke and cardiac arrest. RhinoChill is expected to be marketed after regulatory and clinical processes are completed. We also have the Cooral System, which has received regulatory approval in the US. Cooral is being evaluated for various scenarios, with the aim of capitalizing on the product.
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?
– It was of course very gratifying that the interest in the issue was so great. After the issue was announced, we were able to quickly collect subscription commitments from several of the company's largest owners. Overall, it shows the strong support we have from our shareholders. I believe that the interest lies in the fact that BrainCool has several interesting products at different stages. In addition to BrainCool having a global distribution agreement with a guaranteed order value of SEK 120 million, the company's products are also included in two large international studies.
One motivation for conducting the capital raising was to lower production costs for the BrainCool System. Can you discuss in a little more detail how this process will work?
– With larger orders, there is the possibility of efficient series production, which of course requires some additional investments. Our fundamental aim is to significantly lower production costs and thereby increase profitability. With a more automated manufacturing process, production becomes more efficient, which is needed to meet the rising demand for our products. Historically, our disposable products have been manufactured using compression molding and manual gluing. BrainCool's development department is currently working together with our subcontractor to switch to injection molding and semi-automated gluing of our disposable products. This will significantly reduce our production costs 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 the RhinoChill System and the Cooral System for commercialization. What do these plans look like in more concrete terms?
– The lead times for the commercialization of medical devices are long and require significant investments, including to obtain market approval for the RhinoChill System under the new European legislation for medical devices, the EU Regulation MDR 2017/745 (the “MDR Regulation”). In addition, investments are required in new tools for the upcoming manufacturing of the RhinoChill System. We have great confidence in our ongoing studies and are continuously investing in the upcoming commercialization of RhinoChill.
– There are several different ways to capitalize on Cooral and a strategic review is currently underway regarding which way is most beneficial for the company. One of several different ways is to establish insurance reimbursement for the product, in order to then be able to commercialize it as a standard of care.
The company's former CEO was fired this spring, followed by a police report due to an unauthorized loan. Can you comment on this?
– We will not comment on this further, the incident has been reported to the police and an external review by the PWC Forensic Team has been carried out. However, I can say that the irregularity is an isolated incident, which has now been handled. I therefore see no reason why this should have a negative impact on BrainCool in the future.
Finally, what are your visions for BrainCool over the next three years?
– BrainCool is in an exciting phase and we believe that there is a large market potential and global demand for the company's cooling technology products. BrainCool focuses its medical technology for cooling on the major therapy areas of stroke, cardiac arrest, oncology and neurological fever, all of which are considered rapidly growing and globally prevalent diseases. Cooling in connection with treatment of the aforementioned therapy areas can mean significant patient benefit in the form of increased survival, reduced suffering for the patient and a reduced risk of functional impairment. Furthermore, it can lead to major health economic gains. BrainCool is at the forefront of therapy areas on a global level in terms of technology and products, 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 during this journey, concludes BrainCool's CEO Jon Berg.