Relocating to strengthen efforts in primary market
Video interview with Bill Cronin, CEO Dignitana Inc
Dignitana shows continuing growth in the United States, both in terms of installed scalp cooling units and revenues. Now the company is moving its Swedish operations to Dallas, Texas. CEO Bill Cronin explains why.
Comparing the third quarter of 2017 to the second quarter, we saw a significant drop in total net revenues for Dignitana. Can you please comment on that.
- Dignitana has two primary revenue streams. The revenue attributable to Dignitana Inc, our pay-per-treatment model deployed in the US, those revenues actually increased 20 percent quarter over quarter which we are very pleased with. The other source of revenue from the company are sales through international non-US distributors. Those, by their nature, will be more variable and sales during Q3 were actually lower in fact than Q2 and as, by their very nature, they will be more variable. But the primary market place being the US, that's the avenue of focus for the company. And again, with 20 percent quarter over quarter growth, we're quite pleased with those numbers.
And how many units are up and running in the US?
- We now have approximately 130 units that are installed and operating in just over 100 facilities around the country. We are represented in 21 states right now and that number continues to grow each quarter.
During the third quarter Dignitana was granted clearance by the FDA for a wider indication for the use of DigniCap. How does this affect your market position in the US?
- The expansion of our indication, which we received from the FDA on July 3rd, from simply being able to treat female breast cancer patients to now being able to treat virtually all solid tumor cancers regardless of those are male or female cases, was a tremendous growth opportunity for the company that takes our available market place from about 160.000 – 170.000 patients per annum to just under 800.000. So that is a huge opportunity for us to expand our patient population in the United States.
And do you have the resources to address these new market segments?
- The expanded indication, again, enables us to reach an audience almost four times as large as that we have today. To ensure that we capitalize on that opportunity we will bring in additional both sales and support staff to ensure that both our patients as well as our partner sites are properly supported.
Soon you are moving all operational activities to the US. which, if any, activities will remain in Sweden?
- The company will maintain its listing on the First North Stock Exchange and as such we will fulfill all of our requirements to keep that listing in good standing. Otherwise, because all of the other operational activities will be handled from the United States, I will become CEO of the overall organisation starting in Q1.
With these measures you expect cost cuts of around 15 million Swedish kronor annually starting from mid 2018. Please explain.
- Certainly. As we presently have efforts both in Sweden and the United States a number of those functions are actually repetitive. Some things that are done in Sweden are also done in the United States. Our quality management for example maintains personnel in both locations. So by moving the operational activities to the United States we will avoid some of the redundancies that we presently have now. And because, again the US being our primary market place, we will be able to ensure that our operation functions more efficiently and on a more timely basis. So the ultimate resulting cost savings of at least 15 MSEK per annum will certainly be achievable.
Dignitana is preparing a rights issue of 42 million Swedish kronor in December. How will you use this new funding?
- The usage of funds from this next round of financing will be primarily threefold. First, we will initiate and ensure that the transference of activities from Sweden to the United States are done with utmost efficiency. Two, we will hire additional personnel in the United States, both from a sales perspective to take advantage of the larger market that the expanded indication provides us, we will hire additional quality personnel as well as some consultancy assistance. And third, we will continue development projects, continue and accelerate development projects for both the device and our caps.
Over a period of 12 months Dignitana has lost more than 80 percent of its market cap. What do you consider most important to regain investors' confidence in the company?
- To regain investor confidence in Dignitana, this company needs to be able to show, through continued quarter over quarter growth, that we have a clear path to both cash flow positivity and ultimately profitability. To do that, again, we are moving all our operational activities to the United States, by doing so we will be able to refocus all of our efforts from our primary market to continue to develop our products so that patient outcomes are maximized and our partner sites are able to more efficiently integrate this product into their existing work flows. This move from Sweden to the US, to focus our efforts there, will enable us to do both of those things.