Bactiguard is primarily exposed to market risks, operational risks, and financial risks. The risks and how they are managed are addressed below.

This section can also be found in the Annual & Sustainability Report 2023

Production risk

Bactiguard primarily licenses its coating technology to partners, while it also has its own production capabilities. The company’s Wound Management products are produced in facilities in Malaysia. In addition, Bactiguard has production facilities in Sweden. By having several facilities, the company is less exposed to the risk of any production losses if a site is forced to reduce or stop production.

Financial risk management and financial instruments

Through its activities, the Group is exposed to various types of risk, which are managed in the company’s risk management program that concentrates on minimizing potential unfavorable effects on financial results. The company’s Board of Directors is ultimately responsible for risk exposure, management, and follow-up of the Group’s financial risks.

The frameworks that apply are set by the Board of Directors and revised annually. The Board of Directors has delegated responsibility for daily risk management to the company’s CEO, who in turn has delegated this to the company’s CFO. The Board of Directors can decide on temporary departures from these established frameworks. Financial risks

^{Financial risks are described in note 4 of the Annual Report 2023.}

Climate risks

Bactiguard has identified a few company-specific risks related to climate change. The Group has a negative impact on the climate through, among other things, transports of products and raw material. Bactiguard always strives to optimize transport to reduce the negative environmental impact. Bactiguard’s internal travel policy is that employees should always choose a more environmentally friendly alternative and, if possible, replace travelling with digital meetings.

Liquidity risk

The liquidity risk is monitored monthly through rolling 12-month forecasts which evaluate the liquidity situation and is the base of taking relevant financial or operational measures. On 31 December 2023 cash and cash equivalents amounted to SEK 123 (198) million and the Executive Management makes the assessment that current liquidity levels will be sufficient to manage the company’s commitments for the coming year. The bank loan originally was set to mature in December 2024. In April 2024, the company extended the maturity until May 2025.

Macroeconomic risk

Weak economic performance and high national debt may cause both public and private customers to experience difficulty in obtaining financing. As well, this may have a negative impact on some countries’ ability and political willingness to invest in and allocate public resources to healthcare. Bactiguard maintains presence in geographic markets where the medical need and interest for infection prevention is significant. By offering the company’s technology in multiple markets, the country-specific portion of the combined macroeconomic risk is minimized. The company has a large exposure to the USD and other currencies, in relation to its partners and own geographic footprint. These exposures are monitored on a regular basis. Increased interest rates also affect the company’s interest costs but given its sound debt situation it will have limited impact. For further information, see Note 4 of the Annual Report 2023.

Organizational risk

Bactiguard is a specialist and knowledge-based organization, where the ability to retain and attract qualified employees is crucial for its future success. It is an integrated part of the strategy to secure that the company is attractive as an employer and offer competitive working conditions and opportunities to develop. Bactiguard highly value equality and offer a safe work environment. For further information, see the Sustainability Report on page 28–30 of the Annual Report 2023.

Regulatory risk

As a manufacturer of medical devices, Bactiguard’s operations are subject to requirements and standards that are determined by regulatory authorities for each of the markets where Bactiguard and the license partners operate and sell products. Regulatory processes in various countries may cause a risk of delays in the launching process of products in these countries. Bactiguard works in close collaboration with license partners and their regulatory advisors to minimize these risks. The company strives at communicating the different phases of partnerships in a clear and transparent manner to manage expectations on when a license partner will have products in the markets and generate revenues for Bactiguard.

Technology risk

The company continuously monitors and finetunes the intellectual property portfolio to keep the highest protection standards. During 2023, Bactiguard strengthened the intellectual property portfolio as the European Patent Office granted protection until 2039, which marked the third generation of patents. In the US, Bactiguard’s current patent is maintained until 2040. The patent portfolio focuses on the coating, although the coating process is also covered. The combination of extensive protection of intellectual property and Bactiguard’s specialized knowledge related to both manufacturing and coating processes prevent replication of the unique technology. Regulations for medical devices are getting stricter, which means that Bactiguard’s strong clinical evidence will become an even more important competitive advantage. Bactiguard’s technology has been tried and tested for many different applications. New competitors and technologies must invest in clinical evidence to be approved, which takes a long time and requires significant financial investment.

Geopolitical risk

Changes in the geopolitical environment is affecting Bactiguard. The global economy is affected by the war situations in Europe and Middle East, and the development is monitored closely. The operational and financial effects are evaluated continuously as the global situation may rapidly change and affect the company’s financial position. The company and its license partners often engage in longer-term contracts and therefore it is not always possible to change price towards the customer if the company’s costs increase, which can have a negative impact on the financial position.