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spk00: Greetings and welcome to the Pet Vivo Holdings for the year-ended March 31st, 2023 Financial Results Conference Call. My name is John Dolan, the Chief Business Development Officer and General Counsel at Pet Vivo. Today's call is being webcast and will be posted on the company's website for playback. Before we begin, I would like to remind everyone that comments made during this conference call by Pet Vivo's executives may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties. Any statement that refers to expectations, projections, or other characterizations of future events, including financial projections or future market conditions, is a forward-looking statement. PEDvivo's actual future results could differ materially from those expressed in such forward-looking statements for any reason. including those listed in its SEC filings. PetVivo assumes no obligation to update any such forward-looking statements. PetVivo filed its earnings release in Form 10-K with the SEC yesterday, which provide a detailed discussion of our financial results. These documents can be found in the SEC website and the investor relations section of our website. I would now like to turn the call over to John Lai, the CEO and President of PetVivo. Please go ahead, John.
spk04: Thank you, John, and welcome. Also joining me today is Bob Foulkes, our Chief Financial Officer. I would like Bob to begin by discussing some highlights and financial results for the fiscal year ended March 31st, 2023. John Dolan will provide an update on our clinical studies, and I will conclude by sharing some additional thoughts on our business strategy and the key focus areas for fiscal 2024 before we open up for questions. Now I will turn the call over to Bob.
spk03: Thank you, John. I would like to review key highlights and financial results for fiscal year ended March 31st, 2023. We entered into an exclusive distribution agreement with MWI Veterinary Supply, a leading distributor of animal health products and a subsidiary of Amerisource Bergen MWI in June 2022. we recognize revenues from product sales under this agreement of $636,000 or 69% of our total revenues for the year ended March 31st, 2023. We increase brand and market awareness by participating in several key national trade shows and conferences, including having Dr. Joseph Manning, DVM, the company's senior technical veterinarian, present on the use of spring at the American Association of Equine Practitioners annual conference in November 2022. We reported results on the first cohort of dogs in a clinical study in March of 2023, which examined the benefit and tolerability of an intraarticular injection of spring into the stifle joint of dogs with suspected cruciate ligament damage or tear, which is similar to an anterior cruciate ligament or an ACL tear in humans. The preliminary results demonstrated that spring may be a viable alternative for medical management of dogs with an ACL injury. We signed a lease agreement for a new production and warehouse space in January of 2023. We plan to have this facility operational in the fourth quarter of our fiscal year ending March 31st, 2024. 23 we reported total revenues of $917,000 as compared to $116,000 in the year end of March 31, 2022. This increase was driven by revenues of $636,000 related to shipments of spring to MWI and increased sales to veterinary clinics. Our gross margin increased to 43% in fiscal year 2023 as compared to a negative gross margin of 74% in fiscal year 2022. We increased our inventory balance to $370,000 at March 31, 2023, as compared to $98,000 at March 31, 2022, to support the MWI distribution relationship. At March 31, 2023, the company had $562,000 in cash and accounts receivable. In April of 2023, we sold 793,585 shares of common stock, which generated net proceeds of $2.1 million. And these funds will be able to fund our operations through July of 2023. And we are actively discussing funding options to strengthen our balance sheet and to fund our fiscal year 2020 for operating plan. We are excited to see the impact spring is showing in companion animals. And I would like to share three examples with you. The first example is about a family who brought their 15-year-old Labrador retriever in Texas to see their veterinarian because the dog's hips were not allowed to squat to pee. The family was bringing the dog in to be euthanized. The veterinarian injected both the dog's hips with spray. and it's been eight months since that injection, and the dog is running and happy and still with the family. So the family is thrilled they didn't have to put their dog, put their old dog to sleep. Another example I'd like to share is about a military family currently in Minnesota whose German Shepherd had issues with its hips, its knees, elbows, and the family pretty much had no hope for their dog, Oberon. Oberon is currently taking five different medications. The veterinarian injected Oberon in five joints with spring. Three weeks later, he is beginning to wean off one of the medications. And just two days ago, Oberon's owner sent us an update to say it feels like a miracle that the pain and behavior are so dramatically improved and that he is playing fetch and even hiking because he is actually able to do so again. Oberon's owner said she wants everyone to know about spraying because they pretty much had given up hope for him prior to spring. And just the last example I'd like to share is with a horse in Arkansas who was going to be put down. The horse couldn't walk. It was sitting on its hind legs like a dog and had lost significant weight as it couldn't eat. The owner, as a last resort, had the veterinarian look at the horse. The veterinarian injected the hind legs of the horse with spring and one year later, the horse is still moving very well and has regained the weight it had lost. And so these individual results may vary and all companion animals may not respond the same way, but we are so glad that spring is making an impact on our four legged family members. And with that, I would like to turn the call over to John Dolan to provide an update on our clinical studies.
spk00: John? Thank you, Bob. PetVivo has a total of seven clinical studies in progress, six small animal clinical studies, i.e., canine and feline, and one equine clinical study. We are fortunate to be working with a number of world-renowned research organizations, such as Colorado State University, Ethos Veterinary Health, and Initive, Inc., The clinical studies that are in progress or completed are as follows. We have completed data collection in a product tolerability study analyzing the safety of spring injected into the joint of dogs. Collection of data has been completed and publication is expected in Q3 of 2023. Second, we have a clinical study in progress with Colorado State University that evaluates the benefits and tolerability of intraarticular injection of spring into the elbow joint of dogs suffering from bilateral stable elbow osteoarthritis. Enrollment was completed in Q1 of 2023 with the anticipated publication in Q3 of 2024. Third, we have a clinical study in progress with Ethos Veterinary Health that evaluates the benefit and tolerability of intraarticular injection of spring into the stifle joint of dogs and suspected partial or completion cranial cruciate ligament rupture. Enrollment was completed in May 2023 with publication anticipated in Q3 of 2023. Fourth, we have another clinical study in progress with Ethos Veterinary Health that evaluates the benefit and tolerability of intraarticular injection of spring into the hip joint of dogs suffering from osteoarthritis. We expect publication of this study in Q2 of 2024. Fifth, we have a third clinical study in progress in the protocol in the preparation phase with Ethos Veterinary Health that evaluates the benefit and tolerability of intraarticular injection of spring into the elbow joint of dogs suffering from elbow dysplasia. It is anticipated that this study will begin in Q3 of 2023 with publication anticipated in Q2 of 2024. Sixth, we have completed data collection in a product tolerability study analyzing the safety of spring injected into the joint of cats. There were 10 cats in this study, and publication is expected in Q3 of 2023. Next, on the equine side, we have a study that is taking place, a field study in progress that evaluates the benefit and tolerability of intraarticular injection of spring into joint of horses suffering from equine lameness. It is anticipated that approximately 100 horses will be enrolled in the study conducted by approximately 8 to 10 key opinion leader clinics. Enrollment is currently ongoing, and an anticipated completion is in Q3 of 2024. As you can see, the acquisition of clinical data proving the safety and efficacy of SPRING in a multitude of indications is incredibly important to the company. The company plans to organize and conduct more clinical studies in addition to ones in progress in order to expand our library of data and demonstrate the safety and efficacy of SPRING in a variety of indications. Such a library will assist our sales team to gain veterinarian as well as veterinary corporate acceptance of SPRING. Now with that, I'd like to turn this back over to John Lai.
spk04: Thank you, John. I am pleased by our team's performance in 2023 We executed well on our strategies of developing clinical data on efficacy of spring, increased distribution through MWI, increased market awareness of spring to veterinarians, and delivered strong revenue growth. Before I go any further, I would like to introduce Spencer Brightup. He joined our board of directors recently, and he was senior VP of sales at MWI Animal Health. Spencer. Could you jump in and kind of give a perspective as well as what the distribution looks like?
spk02: Absolutely, John. I'd be happy to. And yes, I'm excited that I was able to join the board recently at Pat Vivo. But if you look at the overall market, I think that's where we should start. If I just looked at a VetWatch report, and as of June of this month, the 24th, The animal health industry is up 6.9% net growth. The key indicators that you look at are vaccines and the companion equine space. They're up 6.5%. And then you always want to look at the surgery statistics, and that's up 6.9%. So you can see the animal health industry is vibrant and strong. Now, I had 13 great years at MWI, as John said. I was vice president of sales and supply chain solutions. I have left in December of last year and just recently joined Pep Vivo. But MWI has went through a few changes. They've had some changes in their executive leadership team. But it's a great organization, and they will rebound quickly. But they're retooling their internal team, and they'll have a great run ahead of them. Thank you, John.
spk04: Well, thank you, Spencer. Now, I would like to talk more about our business strategy, key factors, areas for fiscal 2024. So the key for us is, you know, multiple catalysts or highlights that we look at are the multiple studies that we will have that will provide data for the salespeople of MWI and in-house to be able to call on veterinary doctors. So what this does is it puts us into a position of really diversifying our revenues. The equine space right now is more than 90% or around 90% of our sales. There's about 10 million horses in the United States. As this clinical data comes out for the canine and feline, there's approximately 83 million dogs in the United States. and approximately 65 million cats. So you can see the small animal market is much larger than the equine. This data will help us diversify out of that area because the equine market has seasonality factors. Basically November, near the end of November, the Northern part of the United States shuts down for many of the events and then it picks up again in March. So we're also looking at how we're positioned. We feel we're positioned for very good growth going forward with this data. And we have really built the team up with the recent additions of multiple doctors that have very good experience in the area. We hired additional territorial managers. We increase our clinical teams as we develop the evidence to support and drive sales. We're expanding the awareness of spring. MWI has a three-year relationship. There were step by steps that they wanted to accomplish. And one of the things you'll see as we move forward, there will be a lot of social media from the veterinary doctors as well as the consumers that will help drive the awareness. So there's been a lot of questions to me regarding our news release regarding the human side of the market. And I wanted to make it clear that the structure of Pet Vivo Holdings, the publicly traded entity has three wholly owned subsidiaries, Pet Vivo Inc, which is sales, marketing, and distribution of veterinary products, gel doll technology, which is the manufacturing of the particles, and also research and development. And then we have a wholly owned subsidiary, which would be sales, marketing, and distribution of human products. We will be putting together a task force, advisory task force of human experts that actually have guide us in our CRO reports because the reports basically broke down the path, the time, the approximate cost, and insurance reimbursement likelihood. We will rely on them to help guide us through that process. There will be no funding that goes into Pet Viva Holdings that will be used into the human side. That will be a totally separate unit that will achieve its own funding process. That funding process, I believe, will help us monetize the valuation of our IP portfolio and our human product pipeline. So Pet Viva Holdings will benefit actually from the standpoint as we will have manufacturing costs plus a markup as well as R&D costs plus a markup, I'm sorry. So that helps reduce the fixed costs that's within Pet Viva Holdings. So it is beneficial and accreted towards Pet Viva Holdings. Basically with that, I would like to turn this open for questions. Operator, can you please tell the audience and how to ask questions?
spk01: Yes, thank you. So if viewers are joined by computer, they can click the raise hand icon. I will let you speak and then I will promptly turn off your ability to speak after you've asked your question. If you are dialing in, please press star nine to raise your hand. And then once prompted, you can press star six to unmute yourself and ask your question. Questions now. And I'm going to allow the number ending in 1969 to speak now. You can press star six to unmute yourself.
spk05: Hi, John. This is Peter Sullivan, an individual investor. Oh, yes. Hi, Peter. How are you doing? I'm doing great. I'm wondering if you could speak a little bit to kind of where you think you are in the business development. And by that, I mean, should we be paying attention to your revenues right now or the revenues that we have seen over the past, you know, I don't know how to describe this really, but like, okay, we're selling into things, but we're really not going to see any kind of stable sales growth just yet. I, not knowing much about the industry, had sort of predicted maybe a little bit more in Q4 in terms of sales, thinking there might be some seasonality, but it seemed like a lot. And so I'm kind of trying to decide, like, should we be thinking about every quarter the revenues matter? Or should we be thinking about like we're still kind of a startup and it's going to be super lumpy?
spk04: Well, very good question. So if you look at what causes adoption of product is data. So our first small animal data probably came out less than two months ago from Ethos on the first cohort of the cruise ship. So there's a whole series of catalysts that are coming up September, October, where we have feline, canine data coming that will help us reach a much larger market. So that's why we haven't given guidance for a while. Actually, we have never given guidance because it's more important to know the adoption of veterinary clinics. every month. And we are doing quite well in that standpoint on a monthly basis. And a lot of these are brand new clinics that order one or two syringes. And the selling cycle is much longer for the small animals versus the equines. Because the equines, they do the injection. The vet is at the arena or at the tractor able to see the performance. They look at the vet. I mean, they look at the horse. a day or two later and the horses are doing well. A dog that comes in, usually when a vet orders for the first time, they usually inject a dog that have tried everything else and they haven't had any success with it. And then they try our product and it takes longer for the improvement to occur because it's beyond, the issue is generally beyond the joint. It's all suddenly now into the muscle and the gating. So once you inject into the joint, we're kind of fixing, well, I shouldn't say fix, but we're aiding the gating problem. So the muscles take a little more time to come back. So the vet, small animal vet also doesn't see the dog probably for six months out. So the progression takes time. So you gotta look at the value of each vet clinic that you acquire and the percentage of repeat orders. So- So that's a good guidance to take a look at. So the key is we were always looking for that second year of sales through MWI to really start showing gains. And October would be the first full year that we've been dealing with MWI in terms of actually selling with MWI. Now we got data to come to the small animal side. And as we stated earlier, you know, 10 million horses, 83 million dogs and 60 million cats. So it's a much larger market and we should, you know, in the fourth quarter and early on see much potential for stronger growth. And with all that clinical data too, you have the ability to get corporate accounts. Probably over 75% of vet clinics are corporately owned. So they usually have a medical review team that reviews products and they have to rely on data to approve to sell into it. So we've been selling to probably 25% of the potential market. And as we roll forward with the clinical data, it gives multiple catalysts. So we should see very good adoption early next year from a corporate standpoint.
spk05: Okay. Thank you. That's actually super, super, super helpful. And then on the not corporate side, the 25% side, what mechanisms are you employing to sort of try to get the word out? Because I would think that if a vet found success with a dog and such and such, that they would be perfectly happy to, or interested in, in, in letting someone know if someone was to ask. How do you propagate through the non-corporate accounts which may not need so much of the research?
spk04: Sure. So what is very beneficial and have shown very good results is the major trade shows that occur at the beginning of the year. So if you have clinical data and you can do podium presentations, So I'll give you a, for instance, example. Last year at the VMX, which is the show in Orlando, it's the biggest show of the year, second week of January, we usually get about 100 to 125 vets or vet techs that we scan their badges. At this show, two vets that we didn't know were, they were doing presentations on osteoarthritis and other things, and they brought up the success they were having with our product. our salespeople scanned over 2,700 vets and vet techs that visited our booth. So you can see the impact of being able to present data at these conferences. So starting next year at these conferences, or actually near the end of this year, we're scheduled to have these research people like from Ethos and so on do presentations on their data. And that will help draw a lot of veterinary doctors. Also, another thing that's been working is just the vets themselves having success putting up social media videos on TikTok and so on. So, you know, it's really tough to get vets to do that because they're pretty busy. And one vet said to me, well, John, I have a competitive advantage over everybody in my area. Why would I advertise what my competitive advantage is? So- So you get statements like that too.
spk05: Sure. Is it possible for you to give out a metric of how many vet shops, I don't know the right word, clinics have at least used your product or ordered your product at least once? Is that a metric you could give out?
spk04: You know, it's something we probably will start giving up next quarter. But, you know, I can give you kind of a guidance. It's not an exact number. But probably on average for January, February, March, we were doing a little bit over 40 new clinics that ordered a month.
spk05: Okay. Okay. And it doesn't mean that the previous 40 would necessarily reorder, but you at least added 40 new clinics each quarter.
spk04: Yeah, yeah. I mean, when they try it, like I said, sometimes it takes 90, 120 days before they order. Like we had one equine vet. His first order was in November, and he ordered six syringes. And I just took a head count. He's done a total of 175 syringes since last October.
spk05: Got it. Got it. And then, is there any way you are willing or able to give guidance on the revenue that PetVivo gets per syringe?
spk04: No, that's part of confidentiality of the distribution agreement. file it with the SEC with that disclosure.
spk05: Let me ask you a separate question because it might help me answer that question in a roundabout way. Would it be possible for you to give me a mildly comparative product that's sold through distribution? And I might be able to triangulate my own way through that.
spk04: Well, I can tell you our fee structure is very well within line of everything else that MWI or a Patterson is not out of line in terms of what we call commissions or markdowns. Yeah.
spk05: Sure. And there's markdowns, there's markups at both the distributor level and then at the vet level also, I would think. Am I correct about that?
spk04: Yeah. Yeah. The vets buy it for a certain price and then they charge a certain price to the consumer.
spk05: Yeah. Yeah. Okay. All right. That's all my questions, John. Thank you. Thank you.
spk01: If any of the other callers have any questions, please press star nine to raise your hand and then I will allow you to speak. You can press star six to unmute yourself. Again, that's star nine and star six.
spk06: Hi John, my name is Sal and I'm an individual investor. My question is regarding the going concern. Um, how are you trying to deal with the lack of, um, I shouldn't say lack of funding. You probably already had things in place, but in terms of, um, cash balance, uh, sure. The company has a great future. It has a lot of, uh, you know, it's bringing in a lot of experienced people, but it must need money to do that. So how are you going to do that?
spk04: So. The last two or three quarters, I've told the street I would, with our shareholder base, bring in money to cover each quarter because as management, you see we continue to buy the stock when we can. We feel it's undervalued, so we do not want to sell a lot of equity at this point. Fortunately, we're one of the few companies out there that there are people that want to put money in because it's a tough market. So we will continue to bring money in as necessary. So you got to keep in mind, you know, during this little window, we could not, we really technically was difficult to bring money until you announce your earnings. So now it's, we can go ahead and bring in the capital necessary to cover operating going forward. The going concern statement is a pretty ordinary standard statement in early stage companies as they reach revenue. So we will probably have that solved by year end in terms of for the following year, I believe the going concern statement will be off, but we have access to capital to continue the operations.
spk06: Okay. And I think in the last press release, you had manufacturing starting in, August of 2023. Are you delaying it to March of 2024?
spk04: No. Keep in mind we have manufacturing going in our current facility that can manufacture half a million syringes with top line revenue of 125 million. The new facility will increase manufacturing four and a half times that approximately. So that's a new facility. That's a different facility than what we currently have. So there will be no disruption or whatsoever in the manufacturing and build of inventory. And all these facilities actually are human medical device standard. So they have ISO 5, 7, and 8. None of those requirements are necessary in the companion animal health space.
spk06: Okay, thanks for the clarification. I'm sorry. I had not understood properly. I have several few questions, you know, short questions. One of them being, last month, you had some kind of a filing about warrants. You know, the price targeted like $6 or $12, something like that.
spk04: I'm sorry. Oh, yeah, oh, yeah, that's... That was, our institution had some interest in that, but at the end of the day, we couldn't come to terms because it was a $15 unit deal. So yeah, so that just timed out because you had to kind of give disclosure on that, yeah.
spk06: Okay, okay. And finally, I mean, this sounds almost like a miracle product for pets and maybe even for humans. You know, with your own initiative, without getting feedback from vets and others, with your own marketing department, have you done any viral marketing, TikTok or Snapchat, whatever?
spk04: So that's something that we will probably go forward because, you know, it doesn't do any good to get the consumer involved. reaching out to the vet until you have the data in place for the small animals. So once we have that, I think you'll see a lot more social media interaction. And as vets, if you search TikTok and all these videos, you'll see vets putting up their own videos talking about the product, some of the cases they have had that are doing extremely well.
spk06: Yeah, I'd like to see more of those jaspers and buggies and, you know,
spk04: Oh, I agree with you, but you know me.
spk06: You would far in between, I think. Yep. So hopefully that'll happen, you know.
spk04: It will.
spk06: Data gets realized. Okay, that's all I had. Thank you. All the questions. Thanks for your time. Yep.
spk04: Operator, you want to do one last check on questions?
spk01: Absolutely.
spk04: Yep.
spk01: If anyone has any questions, again, it's star nine and then star six to unmute yourself. But at this time, there are no other hands raised. So I'm going to turn it back to Mr. Lai for those closing remarks. Thank you.
spk04: Thank you. So thank you, shareholders, for your continued support and attending this earnings conference call. And always feel free to reach out to me independently. And thank you. And that concludes this call. Bye-bye.
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