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spk00: quarter 2022 results conference call. A question and answer session for analysts and institutional investors will follow the formal remarks. As a reminder, this call is being recorded. Please proceed.
spk04: Thank you, Emma. Good afternoon, everyone, and thank you for joining us for our fiscal third quarter 2022 results conference call. Discussing Numinous' performance today are Peyton Nyquist, founder and ...statements that are based on current expectations... ...and are subject to a number of risks... ...that could cause our actual financial... ...operating results to differ significantly from our forward-looking statements argued on May 31, 2022... ...and in our other Canadian security filings available on CDAR. NUMINUS does not undertake, update, or revise any forward-looking statements to reflect new events or circumstances, except as required by law. Our third quarter results are made available earlier this afternoon. As a reminder, all figures discussed on today's webinar will now turn the call over to Peyton Nyquist.
spk05: And good afternoon. everybody um before i provide my comments i'd like to extend the utmost squamish and slavery to peoples and on the sovereign indigenous lands and territories reciprocity and humility Over our performance during the quarter, the highlight of our acquisition of the preparation and strategy platform and entry into the U.S.
spk02: markets. While this work was underway, our Canadian clinics and operations stayed focused on client needs and building our strong pipeline of business, which included obtaining approval for our first special access program approval through Health Canada for psilocybin-assisted psychotherapy. While completion of our acquisition of Novamind, the acquisition closed just after quarter end on June 10th.
spk05: As a result, our third Quarter results do not include any contribution from Noblemind's operations, but as it has grown the scope of our operations so meaningfully, I'll take a few moments to provide an update on that business integration.
spk02: We're very pleased to see that our teams are already working well together, thanks in part to the shared values and culture we recognize the NovoMind team had with Numinous.
spk05: departments are now all working together with team members from both sides rebranding initiative with our across our websites, social media, and clinic materials, of this new, better-aligned brand will help us grow as we strive for stronger brand recognition and continue to we'll be implementing the new brand across our U.S. clinics and digital assets and by the cohesive brand, which will drive, which will and more effective marketing strategies.
spk02: Finally, I'm pleased to say that we continue to be happy with our business performance since the acquisition completed.
spk05: And we made concerted effort to ensure focus on their clients and growth strategies as we pursued U.S. expansion. Our U.S. clinics services with a growing pipeline of clients who are currently being treated. On June 10th, in connection with the completion of the NovoMind acquisition, we were also pleased to announce several key executive appointments.
spk02: We welcomed Reid Robison as Chief Clinical Officer and now oversees all of our medical and health professionals. Reid also provides deep subject matter expertise in our clinical product development and practice.
spk05: We also appointed Paul Seelke of Numinous, a role that he previously held at Nobleman. Paul now oversees all research at Numinous including bioscience and senior clinical research.
spk02: And we were also president and chief operating officer. Michael has been instrumental in Numinous' growth to date. In his expanded role, he will now oversee all company operations and will lead strategic strategic directives to drive revenue growth through future footprint and product line expansion. Today, Numenistics is extremely well positioned to continue our growth trajectory and expand access to important mental health therapies across North America. We now operate 13 wellness clinics, four clinical research sites, and one research laboratory. We have ample cash on hand to execute our strategy with approximately two years of cash runway. And we have built a scalable operating platform that will provide some operating leverage and efficiencies as we continue to drive growth. If not the highest revenue producing mental health care companies offering psychedelic assisted therapies. With a forward-looking annual revenue run rate of more than $16 million, based on the most recently reported progress, we have a clear pathway to profitability. This distinguishes Numinous from others in the space. With profitability achieved in the near term, our focus is squarely on making that happen.
spk05: And we believe we have the right tools and
spk02: and environment to achieve operational profitability within two years. Specifically, we have significantly strengthened both in Canada and the United States. Our strategy to accelerate our path to profitability also includes expanding higher margin services, increasing our business development activities, and proactively managing our operating costs. This plan has also resulted in some strategic realignments to best leverage the opportunities we see for the company ahead, where we invest across our operations and the timing of certain projects.
spk05: First, following the acquisition of NovaMind, it was which we believe could generate a higher ROI
spk02: our previously announced second location in Vancouver, Canada. As a result, we have decided to postpone the second location in Vancouver and reallocate that capital to the United States-based growth opportunities we are currently reviewing for research labs to focus purely on proprietary research activities for the foreseeable future. ceasing our third-party analytical testing services for now. This decision was made in part due to changing sector dynamics and sector consolidation, with fewer companies in our space currently looking for these kinds of services. Our analytical testing capabilities remain available for our own proprietary research and for on-request projects. However, we have stopped business development activities for these services to reduce expenses. As a result, we do not expect... bioscience to be revenue generating in the near term. And finally, we have made the decision to postpone our phase one and phase two clinical studies for NB-IO01 and NB-IO03 due to the significant cost of carrying out these trials. And there have been no clear regulatory pathway to monetize in the near term. We believe this was a prudent decision until the regulatory environment for unique compounds becomes more viable. Once we see a clear path to regulatory approvals in Canada or the U.S., we'll reevaluate launching these clinical studies.
spk05: Turning to our third quarter performance, which is a reminder, occurred prior to the NovoMind acquisition.
spk02: Overall, we were very pleased with our results with 7.5% revenue growth from our clinic network compared to the previous quarter. Overall, our clinic network achieved a 23.8% gross margin during the quarter and $174,000 of gross profit. The 7.5% growth in clinic revenue was due mostly to increased client appointments, which were up 5.9% from the second quarter. All our clinics experience meaningful growth in client appointments, the significant improvement seen at our Vancouver clinic, which has the most room for capacity growth. As contributions from Novamine will begin to be included in our next quarter's performance, we expect client appointment figures will spike given the high volume of business that occurs across our new U.S. clinics. To provide some context, during our fiscal third quarter, NovoMind clinics completed more than 14,000 appointments, compared to the more than 5,600 that occurred at numinous existing clinics. So we're excited by the significantly increased scale of our wellness clinics now operating within the numinous network. We were also pleased that psychedelic-assisted therapies have been approved through Canada's special access program during the third quarter. In May, Health Canada approved our first psilocybin-assisted therapy client for treatment outside of the clinical trial, which was one of the first approvals in Canada. We continue to work with clients seeking psilocybin or MDMA-assisted therapies and referring physicians to navigate the special access application process. Numinous is taking a thoughtful approach to these SAP processes, ensuring that the clients we submit applications for are likely to receive approvals. Our client ensures Numinous remains in high standing with Canadian health regulators as we continue to drive for further access. As a reminder, our wellness clinics provide a wide range of mental health
spk05: and neurological care.
spk02: Collectively, these services will continue to drive reliable revenue streams and cash flows across our clinic network as we grow regulatory reform. On the research side of our business, we continue to see opportunities for our unique proprietary processes and testing techniques, which will commercial value as regulatory changes in certain states
spk05: to support and focus on natural psychedelic substances.
spk02: Just a few weeks ago, we filed a patent application to the World Intellectual Property Organization. This application is expected to provide additional proprietary rapid production process for psilocybin and other fungi species containing psilocybin and other compounds. and is additional to the provisional patent application we made to the U.S. Patent and Trademark Office last year. As a reminder, this proprietary process significantly increases production of psilocybin and other fungi species for the use of psychedelic-assisted therapy, while reducing product variability, increasing production efficiency, and ultimately reducing commercial costs. Over the next several months, we will continue to refine our strategy for our research lab to ensure our activities are best aligned with the opportunities we see within the regulatory environment, changing sector dynamics, and with a broader clinical research organization now that Novomind Cedar Clinical Research Division has joined in this. There's substantial value in our bioscience activities. licenses, and talent, and we continue to see long-term opportunities for the Division as regulatory environment becomes clear in Canada and the United States. To note, our numinous bioscience process is one of the most, if not the most, extensive licenses to work with psychedelics in Canada. as well as abroad, allowing our lab to process, produce, assemble, sell, export, deliver, test, and research a wide variety of psychedelic substances, including DMT, ketamine, LSD, mescaline, MDMA, psilocin, psilocybin, and psilocybin-truding bodies, ayahuasca, and San Pedro. We think there may be many opportunities to better leverage this licensing in the years ahead. And with that update on our strategy and operations, I'll now turn the call over to John Fong to review our fiscal third quarter results in more detail.
spk01: Thanks, Payton, and good afternoon, everybody. Our third quarter results demonstrated the strength of our growing wellness clinic network and the strategic realignment underway at Immunist Bioscience. Total revenues for the quarter were $741,000, and was the result of an increase in revenue from our wellness clinics compared to last quarter, but was offset by the decline in revenue due to stopping revenue-generating activities at numinous bioscience partway through the quarter. Overall, revenue was 5.7% lower from the prior quarter, but up 31.8% year-over-year. ...5% from the same quarter last year, to $731,000. As Peyton mentioned, most of this but also an increase in the proportion of higher-value student ketamine-assisted therapies. Gross profit for our clinic network grew to $174,000 during the third quarter, representing a 23.8% gross margin. As revenue-generating activities were underway for part of the third quarter at numidus biocides, the division recorded $10,000 of revenue. Going forward, we do not expect numidus biocides to contribute to revenue in the near term and will instead focus entirely on developing proprietary processes and patents that can be monetized in the long term. Overall, our company-wide gross margin was 24.4%, up due to a significantly higher proportion of revenues coming from the higher margin clinic network.
spk03: Also, due to transaction-related activities related to the acquisition of Novamind.
spk01: In total, there were six, which included some additional travel and regulatory costs related to the acquisition. and $456,000 of direct transaction costs during the quarter. Overall net cash outflow during the quarter was 6.2% normal due to cash expenses related to the acquisition of NovoMind, but otherwise in line with our expectation of $1 to $2 million per month, or $0.03 per share. In terms of liquidity, we ended the quarter with a strong balance sheet and $41.8 million of cash in hand. We will be well positioned financially to sustain our business model, pursue our long-term strategy in achieving operating profitability. As the acquisition of NoMine completed on June 10th, our first quarter of of combined results will be our fourth quarter results for the period ending August 31st. We look forward to sharing the performance of our significantly larger business when we announce our annual Biden update on key operating metrics in September. For future results, I'll turn the call back over to David Payne for some closing remarks.
spk05: Thanks, Sean.
spk02: With the acquisition of NovaMind now behind us and the integration of our businesses, business operations well underway, the future of our business, we continue to see opportunities to expand in key markets that we believe could drive strong ROI. We are in the process of into the United States where NovaMind has traditionally not offered these programs. Ketamine and psychedelic-assisted treatments being completed in our clinics in Canada continue to grow, and we have ample cash runway to execute our strategy within the next two years as we aim to become operationally profitable. We are also seeing positive momentum build within the regulatory space, both within Canada and the United States. to psilocybin-assisted therapies coming in Oregon and California potentially and anticipated MDMA approval in 2023, there's a lot of opportunity ahead.
spk05: Despite this positive momentum within our business and in the regulatory environment, we can overall have been faced with market pressure. I can assure you we are doing everything we can to get our story heard and understood.
spk02: But more than that, we are as a leader in the sector and a company well-positioned for continued growth. We are confident that as the real power in our results,
spk05: We will also see it reflect in the value of our stock.
spk03: Investors.
spk04: At this time, I would like to remind everyone to press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster.
spk00: Your first question comes from the line of Sep Manotri from 8 Capital. Your line is now open.
spk02: Hi, and thanks for taking my question.
spk05: Some continued scaling of the comment on the goal.
spk02: So I wanted to ask just whether in the US or in Canada, are you guys looking to provide info around reimbursement success when it comes to
spk05: proportion of revenue historically NovoMind has provided for the U.S. operations? Is there metrics like that that you're looking to put together in that September type of update that you mentioned? Yeah, absolutely. And just to provide a little bit of color there as well, no
spk02: Overmind had done an exceptional job of having their services being reimbursed. And you know, in particular, their ketamine assisted psychotherapy services, which obviously is new territory, and they've already brought not also offer a host of therapies that are fully reimbursable as well. And we certainly look to leverage that as we look to expand that business into other states as well. And obviously up in Canada, really focusing and prioritizing on reimbursable services as well. John, I don't know if you want to maybe add anything to that.
spk01: i just want to add if that's if that information was previously previously disclosed with double mind that's certainly that that's certainly something that we can continue to provide yeah i think they last kind of updated it uh in 2021 um so yeah i imagine it's something that can be periodically updated
spk02: Maybe being able to take those relationships and bring them up to Canada for reimbursement, in particular around our ketamine assistance, helps us really grow and scale our ketamine services in Canada as well. We do look to leverage that as a short-term opportunity.
spk05: And then in terms of crossover, you touched That being in the midst of a rollout in terms of kind of part of the integration, is there certain metrics you can – you already said HR and marketing have already been integrated. How far along in the integration process we are? Sure.
spk02: Yeah, maybe just to quickly give people a little bit of a summary and an update, NovaMind being primarily operating in Utah and Arizona, which never really needed or were forced into looking at virtual opportunities and so had primarily stayed with in-person services. Different in Canada and And our clinic network in Canada at one point in time was at almost 90% virtual. And during that period, we actually saw those services continue to increase a really unique opportunity to develop and grow that virtual services platform. And now being able to take that down into the U.S.
spk05: where
spk02: really helps us grow and scale quite rapidly in the U.S., obviously because of not underway and should be already starting to be integrated now. And we see that really picking up over the next couple of quarters. So do you think kind of that's something that drives this quarter's revenue for that combined business in terms of the period ending in August? I think you'll start to see that growth or start to see that be represented in some of the growth. I would say this quarter, but in particular probably the following couple quarters as well, as obviously this quarter has been busy with just integrating the two businesses from an operations standpoint.
spk05: Got it, got it. And then just the one on the regulation part you touched on,
spk02: Some of the specific regulations in the U.S. that might be to your favor.
spk05: In Canada, there's been... Whether you'd be able to be, for example, qualified in sex administration if there is a decriminalization of, for example, psychedelic drugs.
spk01: That's been assessed as well in progress.
spk02: Yeah, I think in British Columbia, to your point around some of those regulation changes, we're still waiting for a little bit more clarity from Health Canada in regards to what that means for psychedelic therapy services. I would kind of bring us back to SAP as well, where we've spent the last couple of quarters really getting a deep understanding of what it is that Health Canada is looking for in regards to those SAP applications, and obviously highlighted by our approval for psilocybin-assisted therapy, but also a really significant amount of... leg work being done to start to get approvals for MDMA-assisted psychotherapy which Health Canada has not approved yet but we feel very very clear and confident on that process and obviously our collaboration with MAPS is a big initiator for that and we do anticipate over a this next quarter to potentially see some, uh, some, uh, momentum in that direction. And, uh, and, and obviously highlighted by maps, anticipating MDMA being legal, um, and, and approved either decriminalizing or, or even taking a step further and moving towards, uh, legal approval. Oregon, obviously, anticipating the change for natural psilocybin-assisted therapy in January of next year. And states like California are really, really picking up steam and probably along a similar kind of trajectory. So you're seeing a lot of broad-spread change within the United States. And within the next 12 months, those services are really starting to – to expand as well. Got it. And then September, you may provide kind of KPIs that you look to. Is that things like volumes in terms of appointments?
spk01: Or can you kind of characterize the sorts of things you guys are building into track, whether it's patient success measures or clinic flow or just kind of top line things like appointment volume?
spk02: Yeah, primarily non-financial. Maybe I'll let John and maybe Jamie answer that one.
spk01: Sure. Definitely non-financial information, like you said, except some information around clinic visits, the types of percentage of treatment on various service lines. Got it. That's the main thing we're looking at.
spk02: got it got it thanks so much for that detail really appreciate you taking my questions today congrats on the continued growth thank you sounds great thanks up there are no further questions at this time i would like to turn the call back to peyton nyquist thanks operator uh and thanks everybody so much for joining us uh for our conference call today I look forward to speaking with you in November when we will report our fiscal fourth quarter and annual 2022 results.
spk00: This concludes today's conference call. Thank you for attending. You may now disconnect.
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