Kane Biotech Inc Ord

Parties will be in a listen-only mode. Following the presentation, the conference call will be open to questions. If you have a question, please press star, then 1-1 on your touchtone phone. If you would like to withdraw your question, please press star, 1-1 again. This conference is being recorded today, August 29th, 2024. I would now like to turn the conference over to Ray DuPois, Kean Biotech's Chief Financial Officer. Please go ahead.

Thank you, Operator. Good afternoon and welcome everyone to CAEN Biotech's second quarter 2024 earnings conference call. We are delighted to have you join us today. This call will cover CAEN's financial and operating results, along with a discussion of some of our recent highlights and goals for the range of 2024 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 CAEN'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 essential 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 they're up 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. For the second quarter 2024 financial results, all the numbers that I will mention have been rounded and are therefore approximate. The following figures are all in Canadian dollars. The second quarter 2024 financial results reflect the closing of a sale of Kane Biotech's 67% interest in its STEM Animal Health subsidiary, which took place on April 12, 2024. The company recorded a gain of $10.4 million on its transaction, which is offset by income tax loss carry-forwards for income tax purposes. The following second quarter income statement results include the results of STEM Animal Health up to April 11, 2024. License and royalty income for the three months ended June 30, 2024 was $300,000, an increase of 74% compared to $173,000 in the three months ended June 30, 2023. The increase is due mainly to the company recognizing its license revenue The outstanding balance in contract liabilities related to the exclusive license and distribution agreement with Decra Veterinary Products. There are no further obligations to Decra under this agreement upon the sale of STEM. Product and services revenue for the three months ended June 30th, 2024 was $510,000, an increase of 5% compared to $484,000 in the three months ended June 30th, 2023. The increase is due mainly to incremental contract manufacturing revenue from DECRA, subsequent to the sale of STEM, offset by the discontinuance of animal health product sales upon the sale of STEM. Total revenue for the three months ended June 30th, 2024 was $810,000, an increase of 23% compared to $657,000 in the three months ended June 30th, 2023. Gross profit for the second quarter of 2024 was $464,000, an increase of 41% compared to $330,000 for the second quarter of 2023. Total operating expenses for the three months ended June 30th, 2024 were $1,520,000, an increase of 76% compared to $866,000 for the three months ended June 30th, 2023. The increase, which is one-time and mostly non-cash, is primarily due to the combined effect totaling approximately $700,000 of an adjustment to accrued salaries and short-term compensation expense in the comparative period and expenditures related to the manufacturing scale-up of the company's revised antimicrobial wound chow in the current period. Net income for the second quarter of 2024 was $9.2 million, compared to a net loss of $968,000 for the quarter ended June 30th, 2024. Net income in the current quarter reflects the gain on the sale of STEM Animal Health. Cash from continuing operations as of June 30th, 2024 was $1,010,000. In connection with the completion of the sale of CAEN's 67% equity in STEM Animal Health, a portion of the net sales proceeds was used to repay the loan from Pivot Financial of $6.7 million. With that, I will now turn the call over to Mark.

Thank you, Ray, and thank you, everyone, for being on today's call. I have to say it really feels like this flywheel we've been building and pushing on is finally starting to gain some momentum and that everything we've been putting in place is coming to fruition. That certainly started at the beginning of the quarter with the sale of Stem to Decker Veterinary Pharmaceutical. That allowed us to clean up our balance sheets, pay off all our interest-bearing debts, and refocus the company on biofilm-mitigated topical infections with a strong emphasis on chronic non-healing wounds. A quick side note here, I want to say thank you again to the team at Pivot Financial. They were real partners and really helped us out over these years. last few difficult years and they were great partners and thank you once again. Now, with regards to Revive, there has been a lot of activity starting at the end of the quarter when we completed the skillet manufacturing process with our manufacturing partner, Halo. Now, for a variety of reasons, the order did not officially get released until the following Tuesday, which was the first business day of the third quarter. But today's numbers do not reflect that shipment of our Revive antimicrobial wound gel to Progenicare. Shortly after that, we announced that we had obtained our ISO 1345 medical device single audit program, or MDSAP certification, which has now allowed us to file for regulatory approval in Canada. To be clear, the file has been submitted but we needed to make some administrative adjustments to the file, and it is now moving forward. With the U.S. FDA 510K clearance, it's an accelerated process with Health Canada, so we're still hopeful to get the approval this quarter. More great news followed when the FDA agreed to remove the dosage limitation on our Revive antimicrobial wound gel. This provides a clear pathway for a revived antimicrobial wound gel spray. We believe the spray will be a key product in the burn market and will have strong military appeal. Also with regards to our usage limitation, Salud Pharma, our partner in Colombia, Panama and Costa Rica, had been waiting for that limitation removal to file a regulatory approval. The dossier has now been submitted. and we're hopeful sales will start early next year. Finally, we signed two new distribution agreements with distributors in the United Arab Emirates and Qatar with more deals to come before year end. Now, I do read some of the discussion forums and want to take a minute to address why we chose to build a network of local distributors rather than sign a worldwide distribution agreement with a larger player. There's a number of reasons, but in a nutshell, We've chosen partners that are more dedicated to the brand, have a greater influence on, we have a greater influence on their success, and it also eliminates the risk of a global partner taking on the product and not giving it the full energy that it deserves. Also, as we grow our portfolio, we can quickly add these new products to that network. So a lot of exciting things going on with Revive. More distribution and line extensions to come this year. Now, with regards to our Dispersion B and in particular the trials in ACNI, we're making very good progress at the University of Miami. We're still hopeful to start the ACNI proof of concept trial this year. We're finalizing the schedule at the university and we'll update investors on our progress shortly. We'll also be providing more detailed updates on acne and the scientific rationale explaining why we believe this person B will be a game changer. Dr. Jeffrey Kaplan has been doing a lot of research on this front, and the results are very compelling. A good example of that is a publication we announced this morning. with regards to dispersant B and wound care, we're addressing all of the FDA's feedback and still believe we have a clear path forward to initiate the trial in the first half of next year. I also want to highlight a few other successes we've had since my Q1 remarks. So we signed licensing agreements with IMED Pharma for dispersant B. IMED is a great company out of Montreal, I wouldn't call them little, as well as Omni Biosuiticals for our Derma KB line. Finally, we announced $200,000 of funding from an ICR rep to expand our Revive portfolio. So once again, it's exciting to see our flywheel that we're building gaining some real momentum. So with that, I'll turn it over to you, Victor, if there are any questions.

Thank you. At this time, we'll conduct a question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for a name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

One moment for any questions. And at this time, I'm not showing any questions.

I would now like to turn it back to Mark Edwards, our CEO, for closing remarks.

Thank you, Victor. Thank you, everyone, for tuning in today. If investors do have any questions, please feel free to reach out. In closing, I just want to say I've been working very closely with our executive chairman these past few weeks, doing a little non-deal roadshow with investors and wanted to salute Dr. Robert Huizinga. It's been a real pleasure. He's a tremendous contribution to the team and really a big part of our successes. It's not just good timing on his part there. He's really helping us push this up the hill. So thank you very much for everyone and Yeah, thanks for tuning in.

Thank you for your participation in today's conference. This does include the program. You may now disconnect. Everyone, have a great day. Hello. Thank you. Thank you. Thank you. Good afternoon, and thank you for standing by. Welcome to Kean Biotech's second quarter 2024 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, please press star, then 1-1 on your touchtone phone. If you would like to withdraw your question, please press star 1-1 again. This conference is being recorded today, August 29th, 2024. I would now like to turn the conference over to Ray DuPois, Cain Biotech's Chief Financial Officer. Please go ahead.

Thank you, Operator. Good afternoon and welcome everyone to Cain Biotech's second quarter 2024 earnings conference call. We are delighted to have you join us today. This call will cover Cain's financial and operating results. along with a discussion of some of our recent highlights and goals for the remainder of 2024 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 CAEN'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 essential 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. For the second quarter 2024 financial results, all the numbers that I will mention have been rounded and are therefore approximate. The following figures are all in Canadian dollars. The second quarter 2024 financial results reflect the closing of a sale of Cane Biotech's 67% interest in its STEM Animal Health subsidiary, which took place on April 12, 2024. The company recorded a gain of $10.4 million on its transaction, which is offset by income tax loss carry-forwards for income tax purposes. The following second quarter income statement results include the results of STEM Animal Health up to April 11, 2024. License and royalty income for the three months ended June 30, 2024 was $300,000, an increase of 74% compared to $173,000 in the three months ended June 30, 2023. The increase is due mainly to the company recognizing as licensed revenue the outstanding balance and contract liabilities related to the exclusive license and distribution agreement with Decra Veterinary Products. There are no further obligations to Decra under this agreement upon the sale of STEM. Product and services revenue for the three months ended June 30th, 2024 was $510,000, an increase of 5% compared to $484,000 in the three months ended June 30th, 2023. The increase is due mainly to incremental contract manufacturing revenue from DECRA, subsequent to the sale of STEM, offset by the discontinuance of animal health product sales upon the sale of STEM. Total revenue for the three months ended June 30th, 2024 was $810,000, an increase of 23% compared to $657,000 in the three months ended June 30th, 2023. Gross profit for the second quarter of 2024 was $464,000, an increase of 41% compared to $330,000 for the second quarter of 2023. Total operating expenses for the three months ended June 30th, 2024 were $1,520,000, an increase of 76% compared to $866,000 for the three months ended June 30th, 2023. The increase, which is one-time and mostly non-cash, is primarily due to the combined effect totaling approximately $700,000 of an adjustment to accrued salaries and short-term compensation expense in the comparative period and expenditures related to the manufacturing scale-up of the company's revised antimicrobial wound chow in the current period. Net income for the second quarter of 2024 was $9.2 million, compared to a net loss of $968,000 for the quarter ended June 30th, 2024. Net income in the current quarter reflects the gain on the sale of STEM Animal Health. Cash from continuing operations as of June 30th, 2024 was $1,010,000. In connection with the completion of the sale of Kane's 67% equity in STEM Animal Health, a portion of the net sales proceeds was used to repay the loan from Pivot Financial of $6.7 million. With that, I will now turn the call over to Mark.

Thank you, Ray, and thank you, everyone, for being on today's call. I have to say it really feels like this flywheel we've been building and pushing on is finally starting to gain some momentum and that everything we've been putting in place is coming to fruition. That certainly started at the beginning of the quarter with the sale of Stem to Decker Veterinary Pharmaceutical. That allowed us to clean up our balance sheets, pay off all our interest-bearing debts, and refocus the company on biofilm-mitigated topical infections with a strong emphasis on chronic non-healing wounds. A quick side note here, I want to say thank you again to the team at Pivot Financial. They were real partners and really helped us out over these years. last few difficult years and they were great partners and thank you once again. Now, with regards to Revive, there has been a lot of activity starting at the end of the quarter when we completed the skillet manufacturing process with our manufacturing partner, Halo. Now, for a variety of reasons, the order did not officially get released until the following Tuesday, which was the first business day of the third quarter. But today's numbers do not reflect that shipment of our revived antimicrobial wound gel to Progenicare. Shortly after that, we announced that we had obtained our ISO 1345 medical device single audit program, or MDSAP certification, which has now allowed us to file for regulatory approval in Canada. To be clear, the file has been submitted but we needed to make some administrative adjustments to the file, and it is now moving forward. With the U.S. FDA 510K clearance, it's an accelerated process with Health Canada, so we're still hopeful to get the approval this quarter. More great news followed when the FDA agreed to remove the dosage limitation on our Revive antimicrobial wound gel. does provide the clear pathway for a revived antimicrobial wound gel spray, we believe the spray will be a key product in the burn market and will have strong military appeal. Also with regards to our usage limitation, Salud Pharma, our partner in Colombia, Panama and Costa Rica, had been waiting for that limitation removal to file a regulatory approval. The dossier has now been submitted and we're hopeful sales will start early next year. Finally, we signed two new distribution agreements with distributors in the United Arab Emirates and Qatar with more deals to come before year end. Now, I do read some of the discussion forums and want to take a minute to address why we chose to build a network of local distributors rather than sign a worldwide distribution agreement with a larger player. There's a number of reasons, but in a nutshell, We've chosen partners that are more dedicated to the brand, have a greater influence on, we have a greater influence on their success, and it also eliminates the risk of a global partner taking on the product and not giving it the full energy that it deserves. Also, as we grow our portfolio, we can quickly add these new products to that network. So a lot of exciting things going on with Revive. More distribution and line extensions to come this year. Now, with regards to our Dispersing B and in particular the trials in ACNI, we're making very good progress at the University of Miami. We're still hopeful to start the ACNI proof of concept trial this year. We're finalizing the schedule at the university and we'll update investors on our progress shortly. We'll also be providing more detailed updates on acne and the scientific rationale explaining why we believe this person B will be a game changer. Dr. Jeffrey Kaplan has been doing a lot of research on this front, and the results are very compelling. A good example of that is a publication we announced this morning. with regards to dispersant B and wound care, we're addressing all of the FDA's feedback and still believe we have a clear path forward to initiate the trial in the first half of next year. I also want to highlight a few other successes we've had since my Q1 remarks. So we signed licensing agreements with IMEDPharma for dispersant B. IMED's a great company out of Montreal, I wouldn't call them little, as well as Omni Biosuiticals for our Derma KB line. Finally, we announced $200,000 of funding from an ICR rep to expand our Revive portfolio. So once again, it's exciting to see our flywheel that we're building gaining some real momentum. So with that, I'll turn it over to you, Victor, if there are any questions.

Thank you. At this time, we'll conduct a question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for a name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

One moment for any questions. And at this time, I'm not showing any questions.

I want to turn it back to Mark Edwards, our CEO, for closing remarks.

Thank you, Victor. Thank you, everyone, for tuning in today. If investors do have any questions, please feel free to reach out. In closing, I just want to say I've been working very closely with our executive chairman these past few weeks, doing a little non-deal roadshow with investors and wanted to salute Dr. Robert Huizinga. It's been a real pleasure. He's a tremendous contribution to the team and really a big part of our successes. It's not just good timing on his part there. He's really helping us push this up the hill. So thank you very much for everyone and Yeah, thanks for tuning in.

Thank you for your participation in today's conference. This does include the program. You may now disconnect. Everyone, have a great day.