CEO’s review

Modulight’s CEO Seppo Orsila in connection with the financial statements bulletin for January-December 2023: Several R&D projects progressed to Phase 3

“Modulight had a promising start of 2023, as we received a US market authorization for our laser device and revenue started to grow. However, as the year progressed, the pace started to slow down, and we were not able to reach our revenue target in 2023. The reasons for this were project delays caused by matters beyond our control, and the implementation of the pay per treatment (PPT) business model in line with our strategy. Overall, we made good progress in our product development projects. Most significant was that some of our customers progressed to Phase 3 of drug development and pilot production.

Thanks to our investment program and new technology, we were able to serve our customers even better and gained a few significant customers. In 2023, revenue was EUR 4.0 million compared to EUR 4.6 million in the previous year. EBITDA was EUR -8.5 million (EUR -5.9 million). The increase in costs was mainly due to one-off costs resulting from the commissioning of new equipment investments. These costs already started to decline towards the end of the year. The impact of the completion of our investment program will be reflected in our numbers in 2024. During the year, measures to strengthen our competence and new R&D initiatives also affected our profitability.


In January 2023, the company received the U.S. Food and Drug Administration’s (FDA’s) pre-market authorization for its laser device for the treatment of wet age-related macular degeneration (AMD). The authorization was a validation of our technology for AMD treatment, but in particular also an approval to use our cloud-based services in healthcare. After receiving the FDA approval, we started the launch of our device in the United States together with our local partner, and the first patients have already been treated with the device. The approval is also important for the wider use of cloud services, as second- and third-generation drugs will become more widely used. This laser platform is now also in use in clinical trials for new indications, where the PPT business model has also been adopted. In these trials, solutions based on second- and third-generation photoimmunotherapy drugs used together with our products are expected to bring significant improvements in patient outcomes.


Given the FDA approval our objective is to expand our own operations in the United States. Currently we have our own Product Support Center on the East Coast, and on the West Coast, in Silicon Valley, our business is promoted by an experienced and well-connected sales director. We also developed our geographical expansion in Europe and Asia with several distributor partners. In particular, we should mention the promising development in Japan with three different pharmaceutical companies, some of which we have previously worked with also in the United States.


Our impressive investment program, the FDA approval and the introduction of the PPT business model have generated growing interest in Modulight among new customers, and we have been active in industry events and organizing customer meetings. For example, during the year we started cooperation with a large dental care company. Our laser platform is also gaining traction among customers for applications in biomedical laser-based microscopy, retinopathy treatment and quantum computing. We see increased activity among our long-standing Japanese customers and believe that the Asian market will show positive development, which in turn will have a positive effect on the US market. 


The implementation of the PPT business model was slower than expected due to audits of information security processes, but towards the end of the year we saw positive development. Therefore, in 2023, we initiated an ISO 27001 certification of our information security processes, which has already accelerated information security audits, and it will prove in advance to customers that our SaaS business is safe to use. Our objective is now to offer the PPT business model to almost all new customers, and some of our existing customers implemented the PPT business model during the year. Revenue generation with the PPT business model is initially slower but steadier than with device sale. We believe that the importance of the PPT business model for our operations will from now on slowly grow, and we expect it to have a financial impact starting in 2024. As the PPT model enables new treatment methods, many of our customers see opportunities to expand the use of this treatment.


Our R&D pipeline grew to 28 projects by the end of 2023. During the last quarter of the year, we saw notable progress with new customers in dentistry, ocular imaging, microscopy and ophthalmology. R&D projects among several customers have slowed down but overall developed well, and several projects are approaching commercialization phase. The potential of the R&D pipeline is further strengthened by the fact that several customer projects have reached Phase 3 with large research populations. Phase 3 requires considerable investments from our customers and is therefore a good indicator of the projects’ potential reaching commercialization.


Our R&D work continued to be active during the year. We saw good progress in for instance glioblastoma and bladder cancer treatment research. The potential of our technology to treat a variety of cancers was further confirmed when a longstanding customer decided to continue to use our technology in research for new indications. A scientific study in collaboration with the University of Maryland, published in the Science Advances magazine, demonstrated the benefits of our laser device in treating ovarian cancer patients and in extending the lifespan of drugs, which is important for the business of pharmaceutical companies. Our patent portfolio and exclusive rights to previously reported research results developed positively.


Our growth strategy stands on a solid base. Our own semiconductor factory, state-of-the-art laser technology expertise, the FDA approval in the United States and long-term cooperation with leading companies and researchers in the field are our key strengths, based on which we can build the future. In 2024, we will continue to focus on implementing our growth strategy including the launch of the PPT model as well as expansion and development of our operations in the United States. We believe that the key actions of our growth strategy and our strengths will contribute to our business returning to strong, profitable growth in the strategy period extending to 2025.