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spk04: Good day and thank you for standing by. Welcome to the Kean Biotech Q2 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Nicole Sendi, Investor Relations.
spk00: Nicole will cover Cane's financial and operating results for the second 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 session. Our call today will be led by King'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 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 over the call to Chief Financial Officer Ray Dupuis. Please go ahead, Ray.
spk05: 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 update on our second 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. Revenue from product and services for the three months ended June 30th, 2023 was $484,000, an increase of 68% from $288,000 in the three months ended June 30th, 2022. This increase is due mainly to higher STEM animal health online and pet retail sales, as well as a higher demand for contract manufacturing services during the current period. Royalty revenue for the three months ended June 30th, 2023 was 90,000, an increase of 74% compared to 52,000 in the three months ended June 30th, 2022. The Veterinary Oral Health Care Council, or VOHC, certification that STEM received in April 2022 immediately triggered minimum royalties from STEM's licensing partners, which has contributed to the increase in royalty revenue recognized in the current period. Total revenue for the three months ended June 30th, 2023 was $657,000, a decrease of 22% compared to $840,000 in the three months ended June 30th, 2022. Total revenue in the comparative quarter includes license revenue of $431,000 recognized by STEM related to the VOHC certification that STEM received in April 2022. Excluding this revenue recognition, Total revenue for the three months ended June 30th, 2023 increased by $248,000 or 61% compared to the three months ended June 30th, 2022. Gross profit for the second quarter of 2023 was $331,000, a decrease of 48% compared to $639,000 for the quarter ended June 30th, 2022. Revenue recognized with VRHC in the comparative quarter significantly contributed to the gross profit recorded in that period. Total operating expenses for the three months ended June 30th, 2023 were 866,000, a decrease of 36% compared to 1,361,000 for the three months ended June 30th, 2022. The decrease is due mainly to an adjustment in the current period of accrued short-term incentive compensation expense recorded in prior periods, as well as lower contract research expenditures related to the company's CoActive Plus antimicrobial wound gel and dispersant B hydrogel product development programs incurred in the current period. Loss for the second quarter, 2023, was $968,000, an increase of 22% compared to $795,000 for the quarter ended June 30, 2022. cash at June 30th, 2023 was $1,146,000 compared to $1,105,000 at December 31st, 2022. With that, I will now turn the call over to Mark.
spk03: Thank you, Ray. Thank you, Nicole. Once again, our second quarter saw us achieve significant milestones as we continue to successfully deliver on our business plan. Starting with STEM, our animal health subsidiary, Denna Maraban, who has been running STEM for the past five months, has been doing a fantastic job. The significant period-over-period increases in Bluestem product sales and royalty revenues is very encouraging. And as is the signing of a licensing agreement, Scouts Honor, for our pet oral care line. Scouts have built a fantastic business and brand and just officially launched their oral care lineup of products at SuperZoo earlier this month. We're confident they will do very well with our technology. STEM in partnership with Animal Care has four major revenue streams. Licensing agreements with Decra Veterinary Pharmaceuticals for the veterinary market across the Americas. A licensing agreement with Animal Care for the veterinary market outside of the Americas. A third licensing agreement with Scouts Honor for the North American Pet Specialty Market. And finally, the sales revenue for our BlueSTEM product line. In early August, we announced that we have engaged Research Capital Corporation as CAEN's exclusive financial advisor to conduct the strategic review process for a STEM animal health business division. Back in 2020, the partnership agreement signed with Animal Care funded our animal health business. And over the past few years, we've created significant value within STEM and now believe it's time to monetize that asset, at least in part, which would allow us to significantly strengthen our balance sheet and fund ongoing wound care and dermatology product development and commercialization efforts. Although capital markets are tough these days, pet care is a very attractive sector for investors and strategic investors with lots of perceived tailwinds, so we're very optimistic on this front. Our wound care business saw the achievement of two major milestones in the first quarter. First, obtaining 510K clearance of our Coactive Plus antimicrobial wound gel from the U.S. Food and Drug Administration, the FDA, for the management of ulcers, including diabetic foot and leg ulcers and pressure ulcers, first and second degree burns, partial and full thickness wounds, large surface area wounds, and surgical incisions for adult populations. This was a huge leap forward for Kane. We're bringing an effective, differentiated, and accessible product to the multi-billion dollar wound care market. In addition, we're already working on expanding the product line to include aerosol applications, cleansers, and sterile surgical gels, and have multiple FDA interactions in this regard scheduled in the coming months. Second, signing an exclusive distribution agreement for the United States for Progenicare Global for our CoActive Plus antimicrobial wound gel was yet another defining milestone for Kane. We're working closely with Progenicare to bring our technologies to the wound care and surgical markets. The technology transfer and scale-up process involving the contract manufacturer of our CoActive Plus antimicrobial wound gel is well underway, and the preliminary feedback we've gotten so far is very positive. We're also making good progress on our dispersant B hydrogel clinical trial. The FDA recently confirmed our proposed designation as a combination product with the medical device being the primary lead. And we have subsequently filed an investigational device exemption, which will allow us to begin our clinical trial upon approval, which is expected this quarter. Finally, we continue to make good progress in acne. We filed some new provisional patents specifically around acne. The team at the University of Miami, who will be conducting an upcoming acne clinical trial using Kane's Dispersin-B technology, are more engaged than ever. An application for funding for this clinical trial will be filed with the National Institute of Health in the coming weeks. In addition to this, Jeff Kaplan, who discovered Dispersin-B, has recently moved to Israel and accepted a position at the Galilee Medical Center in the dermatology department. where he is planning on continuing his research on dispersant B and acne. And so far, his research has shown some very, very promising results. Therefore, as I said in my introduction, our second quarter saw us achieve significant milestones as we continue to successfully deliver on our business plan. With that, I'll turn it over to you, Josh, to see if there are any questions.
spk04: Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. One moment for questions.
spk01: And as a reminder, that's star 1 1 to ask a question. And I'm not showing any questions at this time.
spk04: I'd now like to turn the call back over to Mark Edwards for any further remarks.
spk03: Thank you, Josh. That'll conclude today's remarks. I appreciate everybody for tuning in and look forward to keeping you updated on all our progress as we move forward. Have a great evening.
spk01: Thank you.
spk04: This concludes today's conference call. Thank you for participating. You may now disconnect.
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