MBX Biosciences, Inc.

Good morning, everyone. Thanks for joining us today. We have a session with Microbix to discuss the Q2 results they put out this morning. You can find those on the company's website on CDAR and the press release probably was sent to your inbox, let's hope. So with me today, I've got Ken Hughes, COO, Jim Curry, CFO, and Cameron Groom, CEO. The format of the session will be a review of the quarterly results by Cameron and his team, and then we'll open it up for Q&A. So feel free to start putting your questions in the Q&A box if you'd like, or you can email them to me. I don't believe that we're going to work off a formal presentation today. But as always, this session will contain forward-looking statements. You can find more about those on the company's website, on the presentation on the website, which I will update later today with the results. And with that out of the way, I'd like to turn the mic over to Cameron Groom, CEO. Hi, Cameron.

Hello, Debra. I'll start by taking myself off mute. It's always a good start for these things. Thank you very much, Debra. and Jim and Ken for joining us and for Second Deborah as well. And thank you to everyone participating for taking the time this morning. Very pleased to be reporting our results for the second quarter and first half of Microbics' fiscal 2025. In these periods, the three and six months respectively, we've demonstrated solid sales excellent gross margins and material net earnings. All those achieved as we've been continuing to build out the capabilities and capacity needed to successfully engage with the largest multinational diagnostics companies and PTEQA agencies and clinical lab chains. Our Q2 results specifically, we had $5.3 million in total revenues. Strengths in our antigen or in Greek test ingredients sales business over the quarter and slower sales of our quality assessment products due to a few one-off factors. We had excellent gross margins for the period at 60%, up a full 7% gross margin over the prior year. And as expected in the second quarter, we had... geared for this level of revenues to generate effectively a break-even result, which is what we achieved. For the first half, total revenues of $11.4 million, gross margins up by 10% year over year, so very strong progress there, and materially positive net earnings of $900,000, which, while we don't publish our budgets, both figures were in line or ahead of what we had targeted for the six months. Jim, did you want to offer any further color on the Q2 or first half results?

Yes, Cameron. I think you've covered the key points, but certainly the one area that I'm happy with, and I don't get happy easily as these two guys know, but I'm happy with is the gross margins and the cost of sales of the products, especially on the androgens business. We've put a number of processes in place within our androgens business to improve our margins. And we've seen that come through in spades over the last year. So that's an excellent one. We've also, in terms of the quarter, we've had a good strong quarter from cash and available credit, I guess, during the quarter. We exercise or people exercise $2.7 million worth of warrants and options during the quarter. We utilize some of those funds to pay down our mortgage of 1.15 million. And we also work with our bank to increase our credit line, doubled it from 2 million to 4 million. So overall a good strong quarter and we see that our balance sheet is in probably the best shape it's ever been in. We had good strong ratios at the end of the quarter. with our current ratio at 9.36 and our debt equity ratio at 0.27. So overall, an excellent quarter and an excellent half.

Well, thank you. Thank you very much, Jim. I think that's a great point to discuss the financial strength of the company, just how we have been building up our liquidity to keep executing and have been adding to our capabilities and capacity in that process and ending up still stronger. We've also, of course, continue to buy back a material number of shares, and that is a use of proceeds and capital that also holds back the improvement of those ratios somewhat as we're using equity to buy back shares and some of our surplus liquidity. So I think that's a wonderful summary, Jim. Thank you very much. And we'll leave time for more questions on the quarter should people want to field them into the Q&A queue. We've also done, I think, some excellent operational work in Q2 and over the six months. Some of the things that I'll point to there, we have... commissioned for the first time, recombinant capabilities are coming in. So our specialty has been in native antigens, which are the native viruses and bacteria grown up, purified and inactivated for use as ingredients in immunoassay tests. But there are cases where synthetic or recombinant test ingredients can play an important role. And onboarding these capabilities, as we announced in January, is now ongoing, progressing very well, and opens up the substantial new addressable markets for our test ingredients business and really enables us to offer a broader suite of services to our customers. We've also made some excellent progress in our CAPS business with demonstrating our global leadership in screening for human papillomavirus, so screening for cervical cancer, and enabling globally the move from the 1950s, albeit very valuable, pap testing methodologies which rely on cytology and pathology into molecular Diagnostics looking for the genetic signature of the virus that will drive that cancer formation over a period of many years five to ten typically and Our leadership there is enabling that transition globally as evidenced by our Indo-Pacific alliance with the Australian Centre for the Prevention of Cervical Cancer and other global organizations across the Indo-Pacific. We've also demonstrated our leadership in emerging pathogens with our work with the H5N1 virus in developing synthetic constructs. to be able to determine can labs' existing tests pick up the emergence of H5N1 into human-to-human transmission and more broad spread. God forbid that happen, but we're enabling labs to validate whether their lab developed or commercial tests can do that detection with our partner, API, and, again, demonstrating technical leadership. We've also been opening up new addressable markets in our CAPS business, starting work in genetics testing with a very exciting point of care genetics test program out of the UK and in oncology, working to help in the emerging field of molecular pathology as there's really a blending between pathology and molecular diagnostics. And all of those innovations need to be validated. And Microbic's again taking a leadership role in doing that. And lastly, before I hand the baton over to Ken for a bit of an operational update, I don't want to neglect mentioning the excellent progress that is being made with microbics, therapeutics, therapeutic drug asset. This is the thrombolytic kinlytic urokinase, a program that would have been too much of a financial lift for microbics to undertake on our own and had been successfully partnered with Sequel Pharma. portfolio company of a globally significant U.S.-based private equity firm that has all been wonderful partners in advancing that. And we had a very substantial milestone just announced a short while ago on May 5th. outside of Q2 is still relevant for this discussion where our partner has undertaken another major program step, providing the incontrovertible evidence that this program is progressing well. So I don't want to steal all your material, Ken, but maybe you could dive in a little bit more deeply on some of the operational progress that's being made.

Sure. The operational side of the business, I mean, the operations of the business is humming along very nicely. And we've spoken about building capabilities and building capacity to support our growth going forward. And that's exactly what we're doing. That's exactly what we've done. And that's what we will continue to do. So from the perspective of manufacturing, the manufacturing process upgrades we've put in place in the last little while using operational excellence are manifested in the numbers in the margins. So we're getting much better yields and bigger yields in our antigen products. We're getting a lower scrap rate. And we're going to be driving on from there. And as I say, that is represented in margin gains to a certain extent. And we're going to continue doing that. Use of the digitization that we've done, the electronic quality management system and the enterprise resource planning software has allowed us to, and of course all the automation we've done in the lab as well in the last little while, has allowed us to reduce the workload and the drudgery to quality control, to quality assurance and regulatory and other manufacturing staff. And that again is manifested in capacity of the business and in the margins that you see in our financials. The CL2, the new CL2 laboratory, containment level two laboratory in building three is humming along nicely. It's fully operational and there's good testing and products coming out of that as we speak. The high throughput filling line is online and operational. There are new caps, quality assessment products coming from the molecular side and the protein side and the formalin fixed paraffin embedded clinical specimen side from oncology and And molecular pathology, they're moving along. The recombinant aspects are going really well. Our first recombinant antigen is going to be ready for primetime imminently. And there's a rich pipeline coming beyond that. That will open up new customers, but also we'll be a customer for that because we'll be securing our own supply chains for products down the line. And, you know, really everything we're doing is bearing fruit in the operational side. And I can't really speak highly enough of the team, whether it's manufacturing, QC, QA, R&D, IT, facilities and finance, even finance. They're all doing a great job and creating a great environment for growth. And that's what I would say with firm operations. Things are going very, very well.

Excellent. Well, thank you. Thank you very much, Kent. That's great. So first half, you know, very much delivered as we have been targeting. And we're pleased to see the build of our financial strength, the build of our operational capabilities and capacity. You will see in reviewing the disclosures associated with Q2, though, we are looking at a more challenging outlook for the second half of the year. Specifically, that's going to be weaker than we've been targeting on our sales of test ingredients and offset somewhat, but not entirely, by strength in our antigens business. We've seen specifically in the test ingredients business a real pause in our sales of certain respiratory-oriented antigen products into China. Our distributor and other clients with whom we deal have indicated that there just wasn't as much spread of bacterial pneumonias in China over the 2024-2025 Chinese New Year period, which is normally a period of many, many hundreds of millions of people traveling over that period and presents a spreading event. We provide antigens for that diagnosis, which is done immunologically in China, and there wasn't a great sell through this year of those tests. So understandably, clients, they're pausing their purchase of ingredients until that inventory is either sold through or expires. So we are looking at a reduction in our sales to China over the second half, but we are looking and we are seeing the onboarding and acquisition of many new clients in our CAPS business. And although that doesn't result in an immediate upshift in sales, it gives us very excellent visibility on the strategic wins that we've been targeting for our CAPS business. So we are looking at a more challenging second half, but from a revenue perspective, but that is a tactical matter while we are achieving all of the strategic objectives that we're looking for as our business in acquiring major international, multinational diagnostics companies and PT, EQA agencies and continuing to build our more retail sales in the clinical lab period. So continued excellent prospects for our business, strategically more tactical challenges over the second half of 2025, for which of course we have ample treasury to withstand any headwinds and continue to move forward. And all the while, of course, Kinlytic is moving forward as well. So from things looking a little too far away to perhaps grab attention fully, That is moving ever closer, and we are continuing to be optimistic for a refiling of a supplement to the biological licensing application, SBLA, by our partners and ourselves in 2027 with the target of a reapproval by FDA late that year. So that's most of the news that's fit to print and happy to go into specifics. I do also have our current and recently refreshed corporate PowerPoint ready to pull up should we want to touch on any supplement, any of the information provided here. But I do encourage everybody to review that on our website. I think there's some excellent materials in there and all the time. We look to provide everything we see going on in as much of a level of candor as we can about the excellent progress that's being made, as well as some of the challenges as well. So with that, I'm happy to launch into questions, Deborah.

i've got a few audience questions and so talking about the slowdown in revenues from the chinese market do you expect this to normalize in the coming year um or do you expect that cap sales are anticipated to compensate for the shortfall long term well you know with china we've had no evidence and we you know we uh we work through a distributor in china but we've had no evidence that this is anything geopolitical rather it's just um

probably residual immunity from a worse year from a respiratory infection point of view, the prior year that people still had some ongoing acquired immunity to those bacteria this year. So, you know, we have to balance between, you know, the China perhaps snapping back very fast with a bad vaccine respiratory season in 2025-26, or does that take longer? So we don't want to be caught without inventories for those products, but we don't want to build too much either. So we're threading a needle between too much and too little on that for those products and those particular SKUs.

Understood. Then a couple questions about the caps. So Has the delay in the caps partner impacted your outlook on overall cap sales? Do you still foresee this segment growing annually?

We do very much see this segment growing. And one of the absolutely delightful and motivating things has been to attend some of the major international trade shows and scientific congresses and just see the excitement with potential major, major companies about the capabilities we have and what we can deliver for it. So, you know, working with Working with such companies is absolutely delightful, and we're currently acquiring and in the process of onboarding some of the largest companies in the field that have huge instrument install bases as well that need new assays, new games for that, Game Boy or PlayStation devices. installation and it's a delight to be pulled into supporting those customers. It takes a little while. The typical workflow is the product starts with product development and that's revenues in the tens of thousands, then into pilot lots, to validate manufacturing, which moves into the hundreds of thousands, then pre-launch inventories and potentially onboarding kits to train new sites and new installations, and then finally into commercial reorders of a product post-launch. And that takes multiple quarters to work through that process. But as we load the pipeline at the front end, our experience has been that things do come out the back end and that involves, you know, a hundred fold expansion and the potential revenues who are there, the revenues from the start to the finish of that process. So as we keep loading the pipeline, we see that coming and it becomes a question more of when rather than if.

Can you provide some color on the delays with the large caps customer?

um this order we had two two issues one one customer and it's impolite to to kiss and tell too much and go into details so i i won't be discussing uh specific client names um but you know one one client moved from parallel uh development of multiple assays to serial development and that has led to timing changes in their plans and revenue changes for us at least in the short term while we onboard other clients in the field because keep in mind we work with with supporting multiple companies and we're platform agnostic uh by and large The other issue in this quarter is many of our proficiency testing customers. These are the agencies that provide what's called proficiency testing programs in North America or EQA, external quality assessment programs, schemes, they call them in Europe. So it's either PT programs or EQA schemes, depending on whether you're using North American or European terminology. Those programs most often have three events per year. So a lab's competency is challenged with a blinded package of caps for a particular program. form of testing three times per year. So one of our major CAPS clients, it happened this quarter that one of their events, the shipment for one of their events did not fall within this quarter. So that meant a lower CAPS number for this quarter. And we'll see a resumption of CAPS numbers more in the 2 million plus range per quarter from Q3 forward.

Do you expect a bit of a rebound in the back half of the year for caps?

Very much. Yeah, caps will be fine and on track in the back half of the year. And it's always a question of, you know, which new customer moves from that tens of thousands to hundreds of thousands to more process and how many quarters that takes. And sometimes, you know, customers, for example, if they're working on a respiratory assay, you've got two choices. You've either got the northern hemisphere assay, quote-unquote flu season or the southern hemisphere flu season to do your studies, but you can't just pick August and expect to enroll patients to qualify a new respiratory virus test, for example. There's some inherent seasonality to some things like respiratory or gastrointestinal. One tends to be winter, the other tends to be summer, and some things have no seasonality or little seasonality associated with them, so you don't have that timing issue there.

Got it. But as you continue to expand that pipeline of devices and products in kind of your formative tens of thousands of sales, as that grows, the lumpiness should go away on the larger orders?

Absolutely. And along with customer concentration issues as well. The two come together. We have now about... 10 clients each in the hundred. We have several clients in the multimillion dollar range across our portfolio. We have, and we have about 20 clients that are a hundred thousand or more in annual revenues split between antigens, ingredients, and caps medical devices. And as we broaden out that number of significant customers of six or seven figure customers, the customer concentration risk comes down as does the lumpiness in revenues, quarter by quarter.

Got it. Taking a step back, what are the total addressable market sizes for caps and antigens respectively?

Well, for antigens, we're broadening it out substantially with bringing on full recombinant antigen capabilities. We expand that addressable market by multiples. You're probably looking for native antigens. The total addressable market would be in the $50 to $100 million range globally. Um, with the amount we can capture being a subset of that, we've expanded that substantially with our, with onboarding and common capabilities and, and keeping in mind, we're not doing this on speculation. but rather microbics will become the first customer for our recombinants that we produce, we'll use in our medical devices business for our caps, and then be able to offer those more broadly to our ingredients customers as fully validated products. And that's the process we're undertaking there. So that market expands at least doubles or triples in terms of the addressable market there. And in caps, it's an interesting question. We probably originally thought overestimated the potential of that business in the laboratory space as many laboratories use patient sample pools rather than that are internally validated rather than externally validated controls as they should under the regulations but you know are under extreme margin pressure and have to sometimes come up with creative solutions for the Proficiency in EQA business, we're certainly expanding that and we've grown that at least fivefold over the past several years in terms of our penetration of that business. And I think that certainly moves us well into the tens of millions in overall potential growth. for the accreditation side the proficiency and accreditation side of our business and then the test makers which is what we've started and are now adding more and more customers has dramatic potential for external controls used in kits of point-of-care test cartridges is a certainly an area we see tremendous potential on as well as internal controls that we'll talk more about, I think, over the coming quarters that are materials within the actual test cartridges of companies is another big area we're looking at. And then, of course, onboarding kits for training and validating new sites and use in the clinical lab to bookend daily test runs, even if they're on large automated instruments.

And a couple questions on GNA. Was the increase in GNA part of ongoing OPEX investment? Should we expect a similar run rate going forward?

Good question, Jim. Do you want to tackle that one?

Sure. Some of it definitely is. As Cameron indicated, we are certainly making further investments in research and development as well as in our sales and marketing, unless it was specific to the admin line. I guess in the admin line, there was some sort of non-recurring costs in the admin side that we encourage during the quarter that we do not anticipate going forward. So of our total OpEx in the quarter, there's probably a couple of hundred thousand dollars in there that will not be recurring and we shouldn't see in Q3 and Q4.

Yeah. By and large, we have created deliberately the level of infrastructure to, frankly, be taken seriously and have the cutting edge capabilities and win new business. So you've got to have that balanced with enough financial strength. that potential international clients look at us and say we are a good pick as a critical sole source supplier to those customers. And that's really what we've been doing and why we're running the business as we are. in bringing in state-of-the-art capabilities, whether that's synthetic biology, digital PCR, bioreactors, recombinant technology, all these immense capabilities that we've onboarded while improving our financial strength along the way. So I think it's been a challenging course to chart, but a lot of fun to sail that race.

We have a lot of capabilities now in place to support growth without adding massively to the operational expenses. We have that additional capacity. In the next little while, we're going to realize a little bit of increased margins as we reduce testing portfolio, automate testing. So we're really building that efficiency in the background all the while. And so you won't see any particular increase in operational expenses as our sales grow.

I may lean on Jim though, just to be born to authorize fixing those broken chairs in the boardroom and perhaps even redo some of the carpets. It's getting a little embarrassing. We have clients in, but we do spend all the money on the labs and the manufacturing spaces.

I guess a similar question, this level of gross margin, as a percentage, is it sustainable going forward? It sounds like yes.

Jim has a bit of alchemy on overhead allocations, but I think that's a bit more teasing there. Sorry, Jim. But yes, in short, these are improvements that have been most significantly driven by progress from our MTech group on manufacturing, technology, engineering, and some benefit from optimizing pricing and having a very clear-eyed and steely-eyed view on what our real costs are. Jim, did you want to comment further?

No, I think you covered most of it off, Cameron. I think, yeah, I think as we go forward, that would be my expectation. I think one of the key areas where we have been held back a little bit has been in our test ingredients or antigen business where we haven't had the yields that we had anticipated and we were working on process improvements that have finally come to fruition. And so based upon where we are today, I would expect that the the margin expectations should be where they are right now.

And we still have, and now we have the capabilities, the size, the critical mass to drive these processes, to continue to boost yields and to continue to reduce unit costs. And that's what's going to happen. So bottom line here is absolutely we'd expect to maintain those margins.

Yeah. And I think we have the torque on revenue growth here. as well as, as Ken, it indicated and Jim has indicated, you know, we're not, we're not adding a tremendous amount from here to our footprints in infrastructure. So as you know, as revenues grow, we'll see some of that some further margin expansion, particularly as we secure longer run commercial programs and fewer pilot product development programs for our caps business, that would have an upward bias on margins. But of course, we need to be allocating manufacturing costs across what revenues we generate quarter to quarter. So we'll still have some lumpiness for a few quarters yet, I think, before that works its way through the system.

That's a good point, Cameron. I was just going to say that. I mean, one component of Gross margin is the cost aspect, but the other is the revenues. And we've certainly got the manufacturing infrastructure in place to grow our business and probably produce 50% more than we are producing today. However, if we do drop off in revenues, they're going to be absorbing the overhead in that short-term period. Yeah.

Moving on, I've got two questions left. So if anyone has any, make sure to get those in before we get through these. So the first question is on most favored nation policy implications. How might the recently revived most favored nation directive proposed by President Trump impact the pricing strategy or reimbursement outlook for Kinlytic in the U.S.? ? This policy could potentially influence reimbursement dynamics and we're interested in understanding the company's preparedness and response. Bit of a long one, Cameron. It's the first one in the Q&A box if you need to review it.

I may do just that. I'm just going to digest that sentence here. Okay. So this refers to the... comments in the past few days about drug pricing in the United States and how the United States should not be priced dramatically higher than other nations in terms of the cost of drugs. We're very fortunate in what we're doing is very much rubber meets the road kind of medicine. So we're talking about a drug with catalytic urokinase for catheter clearance, where you are infusing about $150 worth of drug. into a catheter to dissolve a clot and then safely remove it and avoid probably $10,000 or more of surgical costs from having to remove a long-term indwelling catheter and replace it with a vascular, using a vascular surgeon as the physician and often a general anesthetic and a nurse. and risk of morbidity and mortality associated with that. So this isn't the sort of million dollar orphan therapy that we hear about. it's very much meat and potatoes in terms of the dollar costs being modest and the benefits being incontrovertible. So I don't see this being an issue for us at all. In fact, our partners are looking at the manufacturing of this drug in the United States um for the critical uh portion of the manufacturer of the active ingredient so it will be a u.s product for the vast majority of its value and thus would attract no tariff regardless of the situation and the pricing is is so modest compared to many therapies and the benefits so clear i i don't see it being an issue at all ken is there anything you'd want to expand on or correct in that

No, I think that's fine. The Eurocani program is addressing what is essentially an unmet medical need or a monopolist situation. So the drive to do that is clear. And to your point, SQL and the CDMO that we're working with will be essentially a US-based experience. And therefore, we don't see any problem with that going forward. Notwithstanding, it's the state of the art. It's the best product in this particular space. And so people want it anyway. And we're moving forward at a pace to do that. I mean, I might jump in and reiterate to the group that our relationship with SQL is excellent. And they're very sophisticated in the process development, regulatory and marketing aspects of this. And we're working closely with them. And of course, they have a portfolio company, one of the biggest life sciences VC groups in the world who are covering the entire cost of this, including paying for my time to help them with the technical and regulatory aspects of this product. So we're very, very serious and moving forward. And of course, recently in this milieu, SQL has just brought on board the contract manufacturing organization for the fill, finish of the drug product, the labeling, the packaging and labeling, and they're ready for distribution as part of the program. So we're moving forward and we expect to realize the timeline remains the same for 2027. The opportunity remains the same going forward and the relationship with SQL continues to be excellent.

Absolutely. Thank you, Ken. And I would encourage everybody to review our news release from May 5th, which describes the latest progress, and that's the second biggest contract and spend associated with the return of Kinlytic to market. The largest contract and spend was with the Drug Substance Manufacturing, CDMO, or Contract Drug Manufacturing Organization, was announced last year this year this spring we've been pleased to announce the engagement of the drug product cdmo so one is the active ingredient the other is the finished formulated package product and both those contracts have been undertaken collectively they would have blown through our entire treasury probably times two so uh those con those agreements so it uh speaks to the logic of our doing this uh through a partnership where um all costs are being funded and and uh including um including the direct support as ken mentioned

And the relationship with both CMOs continues to be very constructive and on pace and on track. Yeah.

Thank you.

Great to hear. Got another long one for you, Cameron. Okay, better open it up. So this one's on your European expansion strategy. And actually, let's start with, because they talk about cyanokinase. which as a lay person, I'm assuming is some sort of drug competitor to urokinase. So maybe we can start there and you can give us a little bit of background on cyanogenase.

I don't know that trade name specifically, but there have been what are called high molecular weight urokinases available as legacy approval drugs in Europe. And There are a number of functional differences with high molecular weight kinases that make them less desirable as a therapeutic. But the biggest issue is that high molecular weight urokinase is manufactured by... isolating the molecule from vast quantities of urine collected typically from soldiers or prisoners. And that process is typically run in India or China where there are large population centers of such individuals. Regardless of how good your filtering or viral inactivation processes may be, there's always an immense risk of a process failure or a catastrophic risk, however small, of process failure exposing treated individuals with potentially the risk of 50 or 100,000 individuals health records so those sorts of products um well they have legacy approval in some markets um would never get approval in the united states or approval at the eu level even if they're available as legacy items in some markets so that's sort of the the difference Our process is cell culture derived from a single tissue donation. So the risk is completely inverted. Whereas, you know, the 50,000 people might be contributing urine to a pool and then that be treated with you know thousands of people uh we're looking at one donation that would be heavily screened as well as all state-of-the-art viral inactivation filtering procedures being conducted on it from a clean donation versus donations that inherently cannot be clean and relying on that so just a bit chalk and cheese if i can use the uh the term in in terms of the comparability

So maybe just to supplement that, cynokinase is indeed a urine derived, a high molecular weight form of urokinase, which is from thousands of liters of donated urine with all the issues that Cameron described there. High molecular weight urokinase has been used in Europe and in Asia for a long time. It's never been approved in the U.S., for the very reasons Cameron already said about the safety and the origin of the materials. There's another aspect to this. The urokinase that comes out of the urine is high molecular weight form, which has growth factor domains and different biodistribution capabilities, which can influence potentially influence health outcomes. And that's the reason why TPA is totally dominated in that market as well. It's not a good alternative. And we shouldn't be confusing high molecular weight urokinase with kinlitic, which is the low molecular weight form, which doesn't have all those receptor binding domains that cause differential biodistribution. And also it's produced with a biotechnology process with all the necessary bells and whistles and testing that goes with that. So, and I would also point out, even though the presence of Synecone is in Europe, TPA still has more or less a monopoly and the European regulators actually reached out to microbics to remind us not to forget them with our product when we bring it back online after we've dealt with the FDA in the US market. So clearly this is a superior product and they don't have the advantages we do. And they also don't have the advantages we have over TPA, which is the stability of urokinase at room temperature. The TPA is stored in the fridge and that's a very big operational advantage for urokinase going forward. So I would not be concerned by the presence of a high molecular weight urokinase form whatsoever. It will not take over the TPA market. We will be a functional bio similar to TPA when we come on the market and an actual bio better.

Yeah, great, great points, Ken. Thank you so much. And, you know, just dealing with the second part of that question, you know, how does that expand? You know, how do we expand that market? Initially, we'll be looking at the clearance of blocked catheters in the United States. Then we will be looking at... likely catheter prophylaxis, so clearing of biofilms out of catheters that aren't yet blocked to reduce the risk of blockage or infection. We'll then in parallel be looking at expanding the geographies for the catheter clearance indication And then we'll, in parallel, be doing some, I hope, redevelopment of the upstream manufacturing processes to enhance efficiencies. Once we have in-dated product to compare with, we can more readily validate new processes. And that is the path to reopening the systemic indications, the many systemic indications for our low molecular weight urokinase kinelitic products. for things like pulmonary embolism and other systemic clots like stroke, heart attack, peripheral arterial occlusions, deep vein thrombosis, and so forth.

Well, I think just in providing some background on cyanokinase, you mostly answered this question, but just so that I'm thorough, I'm going to pose it. If there's anything else you would like to add, feel free. So the question was, And is our understanding that cyanokinase is currently available in four European countries and holds approval across all four major indications, a milestone that Kinlytic may be some time away from reaching? Is there any concern that cyanokinase has not expanded to more EU countries because the demand may not be sufficiently strong? I think you've covered that it's not a demand issue, but maybe a product issue.

No, I think it's very much a product issue. And it's, you know, anytime you're looking at product that's pooled from many individuals that um may you know that inherently have a risk of having um infectious human pathogens in the in the sample or tissue they're donating it it has a um um It has enough risk to make regulators pause. So I think expanding the number of countries and the number of approvals and indications will be a challenge and it will be even more of a challenge. when Kinlytic comes back into those markets. And you say, if we can supply something that's superior from a functionality point of view, as Ken indicated, and has lower associated inherent risks, becomes a question of what is the role for Synerkinase going forward, much more than it is a question about what's the role for Kinlytic.

Yeah. Synerkinase is an inferior product to tissue plasminogen activator, and that describes why it hasn't taken off. Kinlytic is not an inferior product to the tissue plasma gene activator, the current market incumbent effective monopoly. It's a better product. And therefore, if you look at where PPA cells, you'll understand where Kinlytic is going to sell.

I think that answers the question sufficiently. So moving on to some other more general questions. Can you provide information regarding the development going on for European customers? What kind of revenue are expecting from the different regions you operate? I'm assuming that they mean for all products.

Okay. Yeah, you know, I'll cite a typical example. On the 13th of May, we announced a program with Aurevia for support of labs doing molecular diagnosis of bacterial vaginosis, which is a condition of an imbalance of between healthy and potentially pathogenic bacteria. Such a program initially starts as a pilot program, and that might involve 50 to 100 labs where that's piloted out to see how the Microbics caps perform on all the different instrument platforms and help provide that validation. So typically that will involve, in this case, three samples, three events, 50 to 100 labs piloted, and then as data is gathered and any necessary troubleshooting is done, then that program might expand five, 10, 20-fold next year in terms of the number of labs. and become a regular product offering for that customer of that agency customer and an annuity for microbics. So what we're doing is building and layering on these annuities. And another example would be the H5N1 work with American Proficiency Institute. Again, started with multiple pilot events to look at that, and then that will become a regular product offering into likely thousands of labs in subsequent years, 2025 forward, as labs need to continually validate, revalidate that, yes, we can find H5N1 if it occurred. So, again, another layering on of an annuity. Other developments that we look at, anytime we're baked into the regulatory file of an assay, and that could be a laboratory-based assay or a point-of-care assay, those reorders, again, become recurring business to us. And there are a few things that are less predictable. For example, our onboard kits where those are for training new installations and new assays. That just depends on the ongoing market penetration growth of customers as well. So there's there's many, many layers to our business and we continue to grow. And Europe. Um, Europe remains an important market for us. Um, it's fluctuated between about 40% of our sales and probably in the, you know, and, and, uh, 25 to 30%, depending on what's gone in other markets, but it remains a significant portion of our business.

That was 35% through the first half of the year, you know,

Thank you, Jim. I didn't have that number in my head, but that's absolutely wonderful to get it. Appreciate that.

Staying on percentage of sales, we have our last question, which is what percentage of antigen sales are in China?

We grew that into a significant portion of the business across two categories, respiratory and prenatal test screening. The portion of antigen sales overall became significant, quite significant last year, and has been significant in the first half as well. So we were... north of 40% in terms of sales into Asia for the ingredients business last year for the antigens business. And it was significant over the first half as well.

All right. I don't see any additional questions, but somebody always sneaks one in at the end, so we'll give them a minute. Okay. Cameron, Jim, Ken, thanks for taking the time to review the quarterly results and outlook for the rest of the year. I think that's been really helpful. Is there anything that you wanted to discuss today that we didn't cover or any last thoughts you wanted to leave?

Yeah, you know, I think certainly our... Our strategic gains are continuing to come, and we're going to see those come, I think, fast and furious. Just looking at the disclosures we've made of new programs and customer onboardings since January is quite significant, and we don't see that pace slowing down at all. So strategically, we're very much executing. I think what we have is the simple market ebb and flow coming out of Asia on disease incidents, and that's going to bite us a little bit in the second half. But we have tremendous financial strength, so we have no issues with that tactical approach. matter disrupting anything strategic that we're pursuing and continue to execute on so great strength in the diagnostics oriented side of our business and excellent ongoing progress there coupled to tremendous balance sheet strength and all the while we're winding forward on kinetic to drive that forward so a healthy diagnostics business growing and providing leadership and acquiring customers left right and center and adding programs coupled to the successful development of a drug asset and without the normal binary balance sheet risk that we see with such companies. So, again, you know, microbics, operationally excellent, strategically in place, and immense financial strength.

I think it's interesting what you said. Sorry, go ahead.

No, I was just going to ask if Jim or Ken wanted to add any thoughts.

I would just support that position. I think we're in an operationally excellent position. We're continuing to build yields, add product offerings, reduce costs per product offering by implementing things like the electronic quality management system and ERP. Everything's on course as it should be. We've executed as we said we would. all the labs are there. And I can't speak highly enough of the teams from all the different departments. We have a fantastic group at Microbras. It's not just us three sitting here. We have a huge team behind, not a huge team, but a very strong team behind us driving us forward. And that capacity building and that capability building is setting us in great stead to go forward. So basically just to support what you said, Cameron, I think that's absolutely right.

Great. Well, thank you, Ken. Jim, any parting words?

No, I think you two gentlemen have covered everything off pretty well. So no, nothing incremental.

Okay. All right. Well, Deb, any questions, further questions you might have? No.

I was just going to comment that Kinlytic is something that we've discussed for a long time. It's always seemed long dated, but as you point out, like 2027 is not that far away as I've watched a lot of companies report Q1 over the last couple of weeks, you've seen analysts start to roll out their 2027 estimates. You're a quarter ahead, right? So I would assume that you're going to start to see 2027 estimates being put out there in the market. And I mean, it's 18, whatever, 18 to 24 months away still, but it's going to creep up pretty fast. And I think it'll start to materially impact how people are evaluating microbics or should within the next year. So I think that's a strong positive for the stock and, you know, not to harp on the past at all, but I have worked with you for a long time, Cameron. I've seen you lose revenue lines before and quickly replace them. I think that's one of the really efficient skill sets that the ability to backfill products and backfill revenue and figure out new product lines. So like you always talk about, you build a platform for growth. So now you just have to go and find some of that growth for the back half of the year and for next year. And I have full confidence you've done it before. You'll do it again. But for anyone new to the story, I would say the coming quarters is probably going to be a really good buying opportunity.

Yeah, I think this is it. We've got to run, you know, we obviously disclose what we see when we see it and we'll continue to be completely forthright. And I just remind everybody, you know, when we do disclose programs, these aren't things we just conceived and threw out there. These are things that are now fully baked. And that's the trigger for our disclosure. So when you see a new program coming out, we're announcing it because it's done. And we continue on that pathway.

Speaking to the timeline and the risk on Kinlake that you mentioned as well, yes, the timeline is short and it's still targeting 2027, as we've said all along. But as I say pretty much every time, I'm going to say again, This product is not new. It's already approved. We're putting new manufacturing in place. And there are decades of clinical experience with this product. This is a new biologic production system, but not a new biologic per se. And so I'll state directly, there is zero chance of clinical failure of this product. So this is purely a manufacturing site transfer. And that's why the timelines are short. And that's why the risks are low.

Yeah, still expensive. It's a big boy game, biologic drug manufacturer. And why we partnered this, yeah, yeah.

New entities in phase one, less than 10% exit phase three successfully. There's no chance of that happening with Kinetic.

Exactly.

Well, we're ending pretty much right on the hour. So thank you, gentlemen, for your time. Thanks to the audience for your questions and your participation. And I hope everyone has a really nice afternoon.

Thank you. Thank you, Debra. Thank you, Joe, Ken, and everybody. Really appreciate it. Take care. Bye.