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spk04: There will be a question and answer session. To ask a question during a session, you need to press star 1 on your telephone. Please be advised that today's conference is being recorded, and if you require any further assistance, please press star 0. I would now like to hand the conference to your speaker today, Graham Farrell. Please go ahead, sir.
spk02: Thank you, Operator. Good afternoon and welcome, everyone, to Cain Biotech's quarterly earnings conference call. We are delighted to have you join us today. This call will cover Cain's financial and operating results for the fourth quarter and year ended December 31st, 2020, along with the discussion of some of our recent highlights and goals for 2021 and beyond. Following our prepared remarks, we will open the conference call to a question and answer session. Our call today will be led by Cain's Chief Executive Officer, Mark Edwards. Before we begin our formal remarks, I would like to remind everyone that some of the statements on this conference call contain certain forward-looking information and statements within the meaning of securities law, which may not be based on historical fact, including, without limitation, statements containing the words believes, should, may, plan, will, estimate, predict, continue, anticipates, potential, intends, expects, or other similar expressions. Such forward-looking statements involve known and unknown risks uncertainties and other facts that may cause the actual results, events or developments to be materially different from any future results, events or developments expressed or implied by such forward-looking statements. Such factors include, among others, the company's stage of development, lack of product revenues, additional capital requirements, risks associated with the completion of clinical trials and obtaining regulatory approval to market the company's products, the ability to protect its intellectual property, and dependence upon collaborative partners. These factors should be considered carefully, and readers are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements are made as of the date hereof, and the company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future results, events, or developments. I will now hand the call over to Chief Financial Officer, Ray Dupuit. Please go ahead, Ray.
spk00: Thank you, Graham. Before I turn the call over to Mark for an update on our commercial activities, I would like to provide a brief update on our fourth quarter and year-end 2020 financial results. To streamline things, all the numbers I will mention have been rounded and are, therefore, approximate. The following figures are all in Canadian dollars. For the three-month period ended December 31st, 2020, the company recorded total revenues of $257,000, a 54% decrease compared with the same period in 2019. Total revenues include $61,000 from license and royalty and $196,000 from product and services revenues, which increased by 24% and decreased by 62%, respectively, compared with the same period in 2019. The increase in license and royalty revenues in the current quarter is due mainly to the initial licensing payment from animal care being recognized over 10 years. The decrease in product and services revenue in the current quarter is primarily due to supply chain disruptions brought about by the COVID-19 pandemic resulting in product shortages, a large order to an international customer in a comparative period that did not reoccur, and lower demand for contract services revenue in the current period. Gross profit for the fourth quarter of 2020 was $103,000 compared to $200,000 for the three months ended December 31, 2019, due mainly to lower project and services revenue in the current period. Fourth quarter 2020 operating expenses were $1.2 million, a decrease of 18% compared with $1.4 million for the three months ended December 31st, 2019. The decrease is largely attributable to higher government assistance received in the current period. The company recorded a fourth quarter 2020 loss of 816,000 or one cent per share, compared with a loss of 1.2 million or one cent per share for the same three month period in 2019. Moving to the results for the full year ended December 31st, 2020, The company recorded total revenues of $1.3 million, a 21% decrease compared with $1.7 million in 2019. Total 2020 revenues include $212,000 from license and royalty revenues and $1.1 million from product and services revenues, which increased 8% and decreased 25% respectively compared with 2019. The increase in license and royalty revenues in the current quarter is due mainly to the initial licensing payment from Animal Care being recognized over 10 years. The decrease in product and services revenue in the current year is primarily due to retail and supply chain disruptions brought about by the COVID-19 pandemic and lower demand for contract services revenue in the current period. Gross profit for the full year 2020 was $527,000, $83,000 lower compared with 2020 due mainly to lower product and services revenue in the current period. Full year 2020 operating expenses were $4.8 million, a 13% increase compared with $4.2 million in 2019. The increase is primarily attributable to higher compensation-related and consulting expenses, higher business development costs related to the launch of our new Dermix AV shampoo product lines, and higher contract research costs related to our Dispersing Bee Human Wound Care Program in the current period, partially offset by higher government assistance received in the current period. The company recorded a 2020 loss from operations of 3.7 million, or 3 cents per share, compared with a loss from operations of 3.6 million, or 4 cents per share, in 2019. At December 31st, 2020, the company had cash of $1 million, compared to 800,000 as of December 31, 2019. With that, I'll now turn the call over to Mark.
spk01: Thank you, Ray. I'd like to begin the call by thanking our employees and partners for all their hard work. Despite numerous personal challenges brought on by COVID, the Cain team was able to come together virtually and lay the foundation for tremendous potential growth in the three markets we believe we can win in. A lot of what I'm going to talk to you today certainly doesn't get fully reflected in our financial statements, but will really lay the foundation for growth, for potential growth. For me, one of the most significant elements of 2020 is that we confirm that both our Dispersion B, but especially our Coactive Plus patented technologies, are truly technology platforms with applications in multiple markets. In animal health, the transaction with animal care that led to the creation of STEM, Animal Health brought about four important elements. First, it will expand the reach of our pet oral care line in the veterinary market globally, building on our great relationship with Decro for the Americas. It provided $5 million of capital dedicated to growing our animal health business. It enables us to bring in Kevin Cole, an industry veteran to lead our animal health business. Kevin is a strong advocate a track record of success, and I'm confident he will maintain that track record within the STEM organization. And firstly, and certainly one of the key elements, is that it provided the necessary funding to conduct our second clinical trial on our pet oral care water additive, which, as we announced two weeks ago, met the primary endpoints, which should lead to milestones and increased royalty revenue. In human health, we launched our Derma KB shampoo line late in Q4. Recent research has indicated that the persistence of microbial biofilms may be linked with aggravating the symptoms associated with common skin and scalp conditions. Our Derma KB line, which leverages our Coactive Plus technology, is a product that had been formulated by Nanda, our VP of R&D, many years ago. We had anecdotal evidence that the shampoo really worked well. Following the leadership of our CSO, Dr. Gordon Guay, and his 25 years' experience as a research fellow at Procter & Gamble, we conducted two large consumer efficacy trials with a total of over 5,000 participants in Canada and the U.S. The results are extremely compelling, and we'll be presenting them shortly, with over 85% of participants seeing improvement in their conditions. Also, the DermaKB scalp detoxifier is approved by the Canadian Dermatological Association, which is certainly nothing to spit at. Finally, we make great strides in our wound care business. The $2.7 million U.S. dollar grant from the U.S. Department of Defense announced in June not only confirms a need for biofilm dispersion technologies in wound care, but is also a great validation of our technology. We're also going to be working closely with Emtech to secure venture funding for dispersant B-gel as well. We also formulated another wound care hydrogel based on our Coactive Plus technology and expect to file a 510K on this product before year-end. Going forward, investors can expect announcements related to new strategic partnerships in both wound care and OTC, as well as the veterinary efficacy certification on our water additives. I will now pass the call over to our operator to begin the question and answer session.
spk04: Thank you. As a reminder, ladies and gentlemen, to ask a question, you will need to press star 1 on your telephone. And to withdraw your question, just press the pound key. Once again, that's star 1 for questions. Please stand by while we compile the Q&A roster. Our first question will come from the line of Don Nicholson. You may begin.
spk01: Hello, Mark. Hey, good afternoon, Don. Always a pleasure to have you on the call.
spk03: Yeah, hopefully there's a few others like me on the call, but I'd like to thank you so much for the update. Could you give us kind of in Q1, Q2, Q3 sort of terminology touchstones of, you know, these three fronts that we've got in motion, when you might expect kind of milestone events to occur? Like are we, you know, on the animal care and on the three things you just enlightened us on?
spk01: So for the veterinary certification, there's the... The lab that did the clinical trial has, I believe, 10 to 12 weeks to draft the final report, and then the people that actually emit the certification have about the same time. So we're probably talking another close to six months there. So before the end of Q3, we're hoping to have that achieved. On the wound care strategic partner search, we're making some good progress. There is a lot of interest, and we're moving that forward as quickly as possible. I don't think it would be... So we're moving forward as quickly as possible. And with the launch of our DermaKB shampoo as well, the consumer trial, as I said, is very compelling. We've initiated preliminary discussions with a few potential partners, and there seems to be quite a bit of interest there. So those are... they're moving forward and remain the strategy and we're confident we'll get it done by year end.
spk03: Okay, great. So all three should have some kind of hopefully significant interest.
spk01: Inflection points.
spk03: Inflection points this year. Good point. Before the end of the year. Okay, good. And Okay, that's it for me.
spk01: Great, Don. Thank you.
spk04: Thank you. Once again, that's star one for questions, star one. One moment for questions.
spk01: All right, I think that looks like... Sorry, Victor, I'm cutting you off there.
spk04: Yeah, I'm not sure we have any further questions.
spk01: Okay, great. So thank you very much, everyone, for attending, and don't hesitate to reach out directly if you have any further questions. Thank you, and have a great day.
spk04: Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.
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