GBS Inc.

Greetings, and welcome to the GBS, Inc. Third Quarter 2022 Earnings Conference Call. Currently, all participants are on listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. Joining us on the call today from the company are Dr. Stephen Boyages, Interim CEO and Chairman of the Board, and Spiro Securis, Chief Financial Officer. A press release announcing the results and the update was issued this afternoon and is available now on the GBS website. If you haven't received this news release or if you'd like to be added to the company's distribution list, please send an email to investor.relations at gbs.inc. Some of the statements on this conference call are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. Forward-looking statements on this call include, without limitation, GPS Inc.' 's ability to develop and commercialize its diagnostic tests, realize commercial benefit from its partnerships and collaborations, and secure regulatory approvals, among others. Although GBS Inc. believes that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements. GBS Inc. has attempted to identify forward-looking statements by terminology including beliefs, estimates, anticipates, expects, plans, projects, intends, potential, may, could, might, will, should, approximately, or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors included in the company's public filings filed with the Securities and Exchange Commission. Any forward-looking statements contained in this release speak only as of its date. We undertake no obligation to update any forward-looking statements contained in this release to reflect events or circumstances occurring after its date or to reflect the occurrence of unanticipated events. During this conference call, the company may refer to EBITDA, a non-GAAP measure. EBITDA is not and should not be considered an alternative to net income slash loss, income slash loss from operations, or any other measure for determining operating performance. EBITDA is normally calculated by adding back income tax, depreciation, and memorization to net income slash loss. I would now like to turn the floor over to Dr. Stephen Boyages, Interim CEO of GBS Inc. Stephen, please go ahead.

Thank you, and good afternoon, and thank you for joining us on our quarterly business and financial update call today. I hope you've been able to briefly review today's press release. that provided an overview of our recent achievements, important upcoming milestones and financial results for the third quarter ended March 31st, 2022. On today's call, I would like to highlight some key achievements the GBS team has made this quarter. Specifically, our clinical advancements as well as developments in the build-out of our high-tech manufacturing facilities. I'll then turn the call over to Spiro, our chief financial officer, for a review of some key financial metrics, including our preliminary third quarter results and our forecasted cash burn. The prioritisation of clinical development manufacturing bills has remained a key objective for our team in the last quarter, and we're excited to report we've made several advancements supporting our lead asset, that is the saliva-based glucose testing. In March, we announced the Institutional Review Board approval to initiate subject enrollment to the Diabetes Research Institute of Sutter Health for our prospective study to collect coincident samples of oral fluid and blood to evaluate the time course of glucose. This study is expected to enroll approximately 40 adults with type 2 diabetes mellitus and utilizes key collaborators within the molecular diagnostics industry to ensure the integrity and quality control of each sample being collected, being processed at the highest standards possible. We are fortunate to have industry leaders such as Crest Diagnostics and the Johns Hopkins Hospital Department of Pathology evaluating these samples to determine the amount of glucose in oral fluids, venous blood, and capillary blood. Our team at GBS will perform subsequent statistical analysis of the correlation of glucose levels amongst these sample types. Leading the study is Dr. David Klonoff, Medical Director of the Diabetes Research Institute at the MPMC, will be the primary investigator for this study. We believe this is the first step of building a robust clinical portfolio as we expand our pipeline of additional indications to leverage our novel technologies. Turning to our manufacturing achievements this quarter, I'm also very excited to report today that the development plan to commence construction is in its final stages. The University of Newcastle in Australia and GBS have locations identified on their campus and anticipate breaking ground in the back half of next quarter. Last month, we completed the sourcing for critical equipment to ensure build-out timelines are maintained. This has the dual purpose of immediately utilising the equipment in the interests of efficiency to progress development of the biosensor and at the same time commission this equipment in preparation for the facility. Initial delivery of this equipment is expected in June of this year and we look forward to updating investors as these milestones are complete in the coming months and weeks ahead. We believe the need today for developing innovative biosensors for point-of-care monitoring and diagnostic tests which can provide actionable results is core to the healthcare solutions of tomorrow. Our proprietary technologies incorporate non-invasive, real-time, saliva-based testing approaches with accuracy and ease of use not previously available on the market today. Our patients with diabetes have the right to an affordable, convenient and disposable testing option. GBS intends to drive increased compliance and reliable testing solutions, which will in turn provide better outcomes to patients and reduce excessive costs to patients, providers and payers. We remain enthusiastic and committed to driving returns for our stakeholders. Finally, we would like to thank you for your support and look forward to building on our successes in the future. I would now like to turn the call over to our CFO, Spiro Securus, for a more detailed review of our third quarter financials.

Thank you, Spiro.

Thank you, Stephen. I'll now provide a brief overview of GBS's third quarter financial results. For the quarter ended March 31, 2022, the company had a preliminary net loss of $1.34 million or $0.09 per share, compared with the net loss of $3.14 million or $0.27 per share for the same period last year. This is predominantly due to the timing of development and commercialisation expenditure and government support income. Government support income was $192,500 for the three months ending March 31, 2022, an increase by $158,210 for the same period ending 2021. The nature of government support income is generally in the form of research and development tax offset payments and the process of the australian government mmi grant for the 4.7 million the revenue from these grants is recognized as the qualifying expenditure is incurred as at march 31 2022 the company's cash cash equivalents and marketable securities totaled approximately 10.7 million compared to $12.5 million on June 30, 2021. As of March 31, 2022, the company had 14.9 million shares outstanding. Management's continued fiscal responsibility and controlled cash burn provides a calculated runway for the company, and we are confident the markets will recognize this value. Management believes that based on the current operating plan and financial resources, its cash, cash equivalents and marketable securities as of 31 March 2022 will be sufficient to cover expenses and capital requirements well into the first half of the 2023 calendar year and remains unchanged from last quarter. With that overview of our financials, I will now turn the call back to the operator to open the line for questions. Operator, please open the floor to questions.

Thank you. Ladies and gentlemen, at this time we will be conducting a question and answer session. If you'd like to ask a question, you may press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment while we poll for questions. The first question comes from John Vandermosen with Zax. Please go ahead.

Hey, good morning, Stephen and Spiro. How are you guys doing?

Good morning. Very well, thank you.

That's good to hear. I wanted to start out with just the stake, LSBD stake. I think you mentioned in the proxy there was about 7.5% stake right now. Do you anticipate that to be stable going forward?

John, my understanding is LSBD, their stake is now down to zero. They're no longer shareholders.

Okay. Okay, so it's down to zero now. Okay, very good. Well, I guess we don't have to worry about that. Good. And then on the manufacturing facility build, you gave us a good update there on that. Is it going to be a greenfield build or are you using existing infrastructure for that?

We'll be using existing. Okay, go ahead, Josephine.

Yeah, that's right. Yeah, it will be, what they're doing is the land's being identified. It will be a new build. So they're just going through the momentarily approval process that's required for that.

Okay. And are there any special specs, I guess, that you need for the space that, you know, compared to kind of, you know, just a standard space? I mean, obviously you're manufacturing medical grade equipment there, and I'm wondering about any special specifications that are required.

Yeah, good question, John. I can answer that. It won't be hospital-grade facility specifications because we're not going to be looking at patients on site, but clearly it will need to meet all of the biotech specifications of any existing laboratory.

Okay. And regarding the enrollment, oh, and congratulations, by the way, on the glucose collection study start. When do you anticipate the first patient or the first enrollee to be put in the study?

No, we've actually already enrolled. I'm just trying to get an update this morning. But our last conversation in the previous week, we've already completed 10 patients through the study. So 10 out of the 40 have already been completed. I expect that another five will be done this week. So we're up to 15. So we're aiming for 40 patients. So we're anticipating that that should be complete in terms of data collection by the end of May. Then analysis will take another two to four weeks, depending on what we find. So we should have firm data by the end of June.

Okay, very good. Yeah, sounds like it's going pretty well there in terms of enrollment. Oh, yeah, I'm sorry. Go ahead.

No, no, I was just going to say the teams at Sutter Health are very excited. We've been in close contact with them. It's all progressing well in terms of the collection and the analysis. And then materials have already been shipped across to Johns Hopkins as well for their analysis.

And then looking ahead to the next step for that study, Do you need the final data from the collection study before you can start to develop the correlation algorithm?

Yes. The final data will inform the specifics of the next phase of the studies. We know in broad terms what we want to do, but clearly it will be iterative and informative as to our next steps, but that won't take long in terms of the next design phase.

Okay, great. Well, it sounds like everything is going smoothly and according to plan. Thank you for taking my questions.

Thank you, John.

Thanks, John. Once again, ladies and gentlemen, it is star one to ask a question. At this time, there are no further questions, and I'd like to turn the floor back over to Dr. Boyages for closing remarks.

Well, thank you, Operator, and I want to thank everybody for joining us tonight and to have a great evening. Please feel free to reach out to our Investor Relations Department with any further questions.

Thank you for your participation. You may disconnect your lines at this time.