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spk03: Good afternoon, and thank you for standing by. Welcome to Cain Biotech's first quarter 2023 earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference call will be open to questions. If you have a question, simply press star 1-1 on your telephone. If you would like to withdraw your question, simply press star 1-1 again. This conference is being recorded today, May 25, 2023. I would now like to turn the conference call over to Nicole Cain Biotech's investor relations advisor. Please go ahead.
spk01: 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 first quarter of 2023 along with a discussion of some of our recent highlights and goals for 2023 and beyond. Following our prepared remarks, we will open the conference call to a question and answer period. Our call today will be led by Cane'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 believe, should, may, plan, will, estimate, predict, continue, anticipate, potential, intends, expects, or other similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors 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 result 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 Dupuis. Please go ahead, Ray.
spk02: Thank you, Nicole. Before I turn the call over to Mark for an update on our commercial activities, I would like to provide a brief summary and update on our first quarter 2023 financial results. To streamline things, all the numbers that I will mention have been rounded and are therefore approximate. The following figures are all in Canadian dollars. Total revenue for the three months ended March 31, 2023 was $678,000, an increase of 20% compared to $565,000 in the three months ended March 31, 2022. License and royalty revenue for the three months ended March 31, 2023 was $138,000, an increase of 66% compared to $83,000 in the three months ended March 31, 2022. This increase is due primarily to VOHC certification received in the second quarter of 2022, which has had a favorable impact on both license and royalty revenues recognized in subsequent periods. Revenue from product and services sales for the three months ended March 31, 2023 was $539,000, an increase of 12%, from $482,000 in the three months ended March 31, 2022. The increase is due primarily to higher demand for contract manufacturing services during the current period. Gross profit for the first quarter, 2023, was $345,000, an increase of 88% compared to $184,000 for the quarter ended March 31, 2022. This increase is due primarily to higher license and royalty revenue recognized as well as higher profit margins realized on product sales in the current period. Total operating expenses for the three months ended March 31, 2023 were $1,361,000, a decrease of 4% compared to $1,420,000 for the three months ended March 31, 2022. Contributing to this decrease were salary-related cost reductions that affected the current period lost for the first quarter of 2022 was $1,245,000, an increase of 8% compared to $1,152,000 for the quarter ended March 31, 2022. This increase is primarily attributable to higher financing costs in the current period, as well as a higher non-cash fair value adjustment on government loan advances received in the comparative period. Cash at March 31, 2023, was $991,000. compared to 1,105,000 at December 31, 2022. With that, I will now turn the call over to Mark.
spk04: Thank you, Ray. Thank you, Nicole. We're having a good day today there. I hope everybody saw our 510 clearance announcement this morning, and I will definitely get into that a little bit later in my remarks. I think all in all, 2023 so far has been a really, really good year for cane with regards to its commercialization. We, if I start with our animal health business there, we announced recently the licensing of our pet dental care line to scale sauner pet supply. or Scouts Honor, and I really truly believe this is going to greatly accelerate the expansion into the U.S. pet retail markets. Scouts Honor, I was in San Diego on Monday and met with the team there and they have really built an enviable business and they've got a clear plan for our dental line. And I mean, I'm confident that as soon as there's product available, their dental line based on our technology is going to be available in in thousands of retailers uh retail stores uh including uh some of the very very big names in uh in animal health i was joined in san diego was joined with uh by denna uh uh Sorry, I apologize for that, Dena. And who is now leading our animal health business, previously our director of marketing. And we're very excited and really think Dena and the scouts on our team are going to do very, very well at bringing our technology to market through that network. I just got back from my meeting at EmTech and there was an army ranger there with his dog. EmTech is a military technology enterprise consortium. It's through them that we got our Dispersed in B funding. So I was at this EmTech meeting and there was an army ranger there with his dog and asking about his pet's teeth and there were four other gentlemen at the table that I didn't know and And they all wanted to know about this product that could really quickly fix their dog's halitosis or bad breath. So it always surprises me that nobody really knows that this product is available. And when they do find out that it is available, it's something that they really want and feel that they need. So that's very, very exciting. Big news, of course, there before getting to the clearance is our distribution agreement for a coactive plus antimicrobial wound gel with Progenicare Global. Burt, Howard, Case, the whole team there at Progenicare have a fantastic team. They have a clear vision. We're aligned. We're going to work together and very confident that we're going to be able to ramp sales up there quickly and working with them to really disrupt this $200 million US wound gel market there. We've got a differentiated product. that fits within Medicare reimbursement, which really is the big, big driver in the US there. So it's a $200 million market where the agreement provides for some good margins. And we're excited about that and expect their half-million-dollar USD payment there before the end of this month. So that will be great. The other thing also with this 510 clearance, we've got Salut Pharma that can now move forward and get regulatory approval for our product in Columbia, Panama, and Costa Rica. The more I talk to these gentlemen at Salud Pharma, the more I am confident that they can move a lot of product. I've seen them do it with other companies. They're doing very, very well and expect them to do the same with our product. So should be a high margin, high volume product for us for our distribution partners and investors should expect to see a number of additional licensing agreements or distribution agreements globally. And then finally, it's our 510 clearance that we announced this morning. We got the news late last night and very, very exciting this This 510 clearance was a long fought journey and we're very excited. As I mentioned, there are a number of countries and geographies that depend either on the US FDA 510 clearance or the CE mark in Europe. And this really opens up the door to commercialize our gel globally. So that's obviously very, very exciting. If I may, I want to take a minute to reiterate, I don't know if everybody's had a chance to go see our coactiveplus.com website. but really a really great triple threat combination of of when we look at, compare our gel to other gels in vitro in terms of efficacy, we're second to none. The ease of use of the gel is definitely very, it makes it very compelling. A number of things. First of all, it's a clear gel, so once you apply it, you can still see the wound underneath and secondly it's it's um the piloximer in there has got thermal reversible properties so as you um as it heats up or goes from room temperature to the body temperature it gels even more if you cool it down below 16 degrees celsius or 60 degrees fahrenheit it it will liquefy so it's not so much that it'll liquefy but when you apply it uh it will stay on and not run. And that's obviously a big deal. But if you've got a sensitive wound and you want to remove the gel, you can do so with cold water, which makes it very, very easy to use. And in particular, very practical for patients suffering from first or second degree burns. So, before I wrap it up, I apologize, I've got a long list, but I can't go without thanking the team there. The CAEN team have worked extremely hard to get us across the finish line here, both getting the licensing agreements and getting this 510K clearance. So I have to thank Vijay, Mila, Gabriel, Suresh, Patricia, Mangaljeet, Rajneet, Wendy, Greg Schultz, our CSO, Great to hear him talk at conferences like SAWC. Nanda, who's really been the heart and soul of this company for the past 20 years. Gordy, who we're still very, very close to. Ray Dupree, Nicole, Sue, Pauline, all fantastic. Our summer students, Cedric even Put in some long hours to to get this all done and then. Last, but not least from the, from the cane team. I have to, I have to mention Laurie Christophilus. Laurie was. Was instrumental both from a quality perspective and regulatory perspective and getting this across the finish line. uh fielded hundreds of calls from me and and i i really appreciate her patience a lot and then really the people that are very very close to us alrigo our regulatory consultant gary mass therese j um our scientific advisory board robert rivka and then my board george and phillips so i i want to i want to i want to thank uh everybody there And then finally, as I mentioned, I was at this week, we were presenting a poster on our, on our dispersion, the, um, we are funding us through, um, there at, uh, at, um, uh, in the, in the U S army. Uh, and it was, it was great to. be able to meet a lot of the people that we've been engaged with for a while now in person. And very interesting to see that there's some really good potential for a CoActive Plus gel within the US Department of Defense. So that's also very, very exciting. So with that, it concludes my remarks, and I'm going to open it up for questions. Jonathan?
spk03: Certainly. Ladies and gentlemen, if you do have a question at this time, please press star 1-1 on your telephone. One moment as we put together our cue. And I'm not showing any questions from the phone lines at this time. This does conclude the question and answer session as, oh, one moment. Yes, David. One moment.
spk04: Oh, sorry.
spk03: And our first question comes from the line of David Kemp, ITG.
spk00: Hi, Mark. I was just curious as to, you know, what kind of timeframe you'd expect to,
spk04: see this new 510k bear some fruit on the on the contract side for wound care so really the the rate limiting step right now david is is um is is manufacturing so we should start seeing some revenue uh from this i'm hoping we'll start seeing some revenue from this in q4 okay as we ramp up manufacturing all right thank you
spk00: Good.
spk04: Thanks, David.
spk03: Thank you. And just once again, if you do have a question at this time, please press star 1-1. And seeing no further questions at this time, this does conclude the question and answer session as well as today's program. Thank you, ladies and gentlemen, for your participation. You may now disconnect. Good day.
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