Kane Biotech Inc Ord

Ladies and gentlemen, thank you for standing by, and welcome to the Kean Biotech Quarter 3, 2021 financial results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press 3 and 0 on your touchtone telephone. And as a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Lorne Gerber, Head of Investor Relations, sir, you may begin.

Thank you, Mel. Good afternoon, everyone. We're delighted to have you join us today for Cain Biotech's Q3 2021 results conference call. With me to review the financial and operating results for the third quarter ended September 30th, 2021, are Cain's CEO, Mark Edwards, and its CFO, Ray Dupree. Following prepared remarks, we will open the lines and take your questions. Before handing it over to Ray, let me caution you that our comments and discussion will include forward-looking information within the meaning of applicable securities legislation. Forward-looking information will include, among other things, forecasts and projections which involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from such forecasts and projections. Therefore, although we believe that anticipated future results, performance, or achievements expressed or implied by the forward-looking information are based on reasonable assumptions and expectations, you should not place undue reliance on such forward-looking information. Now I'll hand the call over to CFO Ray Dupree to discuss the Q3 2021 results, and then Mark will provide an update and outlook for our business. With that, Ray.

Thank you, Lorne. To streamline things, all of the numbers I will mention are rounded and are therefore approximate. The following figures are all in Canadian dollars. Revenue from product sales in the three months ended September 30th, 2021 was just over $438,000, an increase of 53% compared to just under $287,000 in the three months ended September 30th, 2020. This increase is due mainly to sales attributable to a new agreement with PetSmart Canada and the financial reporting reclassification in the current period amongst revenue, cost of sales, and general and administrative expenses retroactive to the beginning of 2021. In the three months ended September 30th, 2021, the company recognized license revenue associated with license and milestone payments received from Animal Care and DECRA in 2021. License revenue increased by 114% from the comparative period. Gross profit for the third quarter of 2021 was just under $132,000, an increase of 2%, compared to just over $129,000 for the quarter ended September 30, 2020. Total operating expenses for the three months ended September 30, 2021 were just over $1.7 million, an increase of 38% compared to just over $1.2 million for the quarter ended September 30, 2020. Loss for the third quarter 2021 was just under $1.6 million, an increase of 53% compared to just over $1 million for the quarter ended September 30th, 2020. Cash at September 30th, 2021 was just under $1.3 million compared to just over $1 million at December 31st, 2020. Further detailed financial information concerning CAEN's third quarter 2021 financial results is available on our website and on CDAR. With that, I will now turn it over to Mark.

Thank you, Ray, Lauren, and good afternoon, everyone. I'm excited about the momentum we're generating through the end of this year and into the next. This is the case across all three of our strategic pillars, stem animal health, OTC dermatology, and wound care and surgical. In addition to my comments on Q3, I'd like to provide a more detailed business update, as there are so many exciting developments to share. We are more confident than ever that our focus on being a biofilm company, or the biofilm company, helping to resolve the many challenges and problems biofilm cause across multiple industries, as well as the entire healthcare spectrum, is providing to be the right strategy, proving to be the right strategy. Both our DispersinB and CoActivePlus technologies continue to be recognized for their effectiveness in dispersing biofilms. As a result, the pipeline, of licensing and commercial opportunities continues to grow, while discussions with several potential partners are advancing through various stages of development. Now let's review each business line, beginning with animal health. With investments in both our product line and across the supply chain, STEM is positioned for long-term growth, poised to capture market share and additional shelf space. I'm more excited than ever before about this business and our partnership with AnimalCare. Now that these investments have been made, Kevin, our CEO, and his team are seeing the acceleration of this business's top and bottom line as it further captures a larger share of the $5 billion pet oral care market. At the same time, getting our products onto the shelves of retailers like PetSmart will create awareness and provide the ability for consumers to try a Bluestem product. In addition, we remain confident that our oral care Health efficacy certification is imminent, will be a major milestone for STEM, and we look forward to announcing that shortly. Turning now to what was known as OTC, now dermatology. The DermaKB line of business continues to grow through direct sales to consumers online via our website, as well as on Amazon, where we recently listed in both US and Canada. We still remain largely focused on capturing licensing opportunities in this segment. we have a number of ongoing potential discussions with potential licensing partners. The high efficacy provided by our DermaKB shampoo that we've shown through our very large consumer trial provides a very compelling story. Focusing on biofilm disruption allows us to provide this high level of efficacy without using any harsh antimicrobials or antifungals, which generally cause irritation and other negative side effects, making our DermaKB line very attractive to potential partners. In addition to our shampoo line, Dr. Jeff Kaplan, the discoverer of Dispersin B and a member of Kane's Scientific Advisory Board, and Dr. Nanda Yakandawalla, Kane's VP of R&D, have been building the business case for using Dispersin B formulated into a face wash. They strongly believe that Dispersin B could significantly enhance current treatment protocols. We're also finalizing a research partnership with a dermatologist at the University of Miami to conduct a proof-of-concept trial. We'll be sharing more on this in coming weeks. Last, but certainly not least, wound care. Recall, for the last several quarters, we made reference to our efforts around reviewing partnership for these businesses. As we introduced our technology to major global players in this space, a lot has developed. For our dispersant B wound gel, We've completed the previously announced 28-day safety study. As we fully expected, both toxicity and biocompatibility pose no issue. And what's particularly interesting is that the wounds appear to be closing much faster than the control, which is extremely positive. We've also made notable progress on our Coactive Plus wound gel. We're on schedule to begin the testing required for a 510K submission in the coming weeks. In late October, we attended the Symposium on Advanced Wound Care, where we met with key opinion leaders who all seemed to agree both our platforms have great promise. They reiterated that biofilms remain one of, if not the biggest, unresolved problem in wound care. This is all very encouraging, further validating our commitment to make both Coactive Plus and Dispersion B game changers in wound care. Finally, with respect to our wound care business, we are currently in fairly advanced discussions with a global player that has serious interest in moving forward with a potential partnership. One that would be highly synergistic and very material for Kane. This momentum will hopefully lead to a strategic announcement for this business in early 2022. In closing, I hope I have conveyed our optimism about the current momentum for each of our businesses and the confidence we have in the model we started putting in place last year, specifically anchored around our IP, the Coactive Plus and Dispersion B platforms. Both are gaining in notoriety and bolstering the opportunity pipeline across many industries. As such, we will close financial 2021 and enter fiscal 2022 in a position of strategic strength with the wind at our backs. Thank you for your confidence, and let's see if there are any questions.

Thank you. Ladies and gentlemen, if you have a question at this time, please press the star and then the number one key on your touchstone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the hash key.

We will pause for just a moment to compile the Q&A roster. Again, if anyone would like to ask a question, that will be star one on your touchstone telephone. I'm showing no question at this moment. Please continue, presenters.

Great. Can you close and relax for everybody?

No, I think we're very, very excited about everything that's going on. I wanted to take the opportunity today to give everybody an update on the financials. And thank you, everybody, for listening in. And have a great day. And, yeah, thank you very much.

See you next quarter. Thank you all. Happy holidays. Take care.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. Have a wonderful day. You may all disconnect.