StageZero Life Sciences Ltd.

Good morning, everyone, and welcome to the Stage Zero Life Sciences first quarter financials call. At this time, all participants are in a listen-only mode, and if anyone should require operator assistance during this conference, please press star zero on your phone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Rebecca Greco of Stage Light, Stage Zero Life Sciences. Rebecca, over to you. Thank you very much.

Good morning everyone and thank you for joining the Stage Zero first quarter 2024 earnings conference call. Joining me today is Stage Zero Chairman and CEO James Howard Tripp. Please note the management's discussion today will contain forward-looking statements about anticipated results and future prospects. Forward-looking statements involve a number of risks and uncertainties and Stage Zero's results may differ materially from those discussed today. Investors should consult the company's ongoing quarterly filings and annual reports for additional information on risks and uncertainties relating to these forward-looking statements. Investors are cautioned not to rely on these forward-looking statements. The company disclaims any obligation to update these forward-looking statements, except as required by law. On today's call, management will refer to non-GAAP-adjusted EBITDA. This metric excludes certain items discussed in our press release under the heading Discussion of Non-GAAP Financial Measures and any other items that management believes should be excluded are available in the financial tables in the first quarter 2024 financial results can be found on Stage Hero's website. With that, I'd like to turn the call over to James Howard Tripp, Stage Hero's Chief Executive Officer. James, please go ahead.

Thank you, Rebecca, and good morning, everyone. Thank you for joining us today. On today's call, we'll refer only to the Q1 2024 financials that have been filed on CDAP. I wish to address the still-spending 2023 year-end financials. On April 2nd, 2024, we put out a press release announcing the delay in the filing of the 2023 year-end financials and explained the duty of the company in not having the poor financial resources to fully pay the auditors to complete the 2023 audit and thus establish an independent opinion. The financials would be delayed. The company is working on rectifying this. The Ontario Securities Commission grants a company 90 days to complete the filing once a failure to file C-straight order has been enacted. Therefore, stage zero has unfolded July 3rd to file its year-end financials and associate documents. We're working to file ahead of that deadline. However, we will not make a May 31st, 2023 filing deadline as initially referenced in the press release. of April 2nd, 2024. We will continue to update this as we move forward, and we'll do this on a regular basis. Turning now to the actual financials, key thing, in fact, let me go to the next slide. We actually had a very busy Q1 for a whole variety of reasons. One, to directly address two issues. One is the revenue figure that was quoted in the eight period review for Q4 of 2023 is incorrect. The correct number is approximately $675,000 for the quarter, which essentially puts it in line with the previous quarter. We will update all of the financials, the corrected financials, when we do the audited financials, when we post the audited financials. The second thing is a decline in revenue during Q1. This was due to staff illness. We run a relatively small team, very specialized, highly specialized. And we had just a very unfortunate run with a lot of people being ill at the same time and for protracted periods of time. That affected our ability to actually adequately deal with patients on an immediate basis. And we're dealing with all of the backlog right now. The advantage, obviously, is that we have a backlog. We're still getting new patients. We continue to feed them in. And things are returning to normal. So we expect all of that to play out positively as we move forward. In addition to that, we advanced Aristotle. Huge focus on Aristotle at this point. We built care oncology to back it all up. We, in actual fact, have a very definite advantage versus most other groups in the multi-cancer diagnostic space. I'll talk about this as we go along. By having this set up so it's not only care oncology. It's the telehealth piece as well But Aristotle is where the thrust is Aristotle is what you will hear most about this year as we drive on through And to that extent we've been very busy putting partnerships in place That we feel confident will give us very good revenue potential for this year. So to talk to that specifically I We've added a new lab group, multi-lab group, right across all of the U.S., in addition to the others that we have had during the Q1. The reach is both into the U.S. and Canada, and that's an advantage for us. And they have a particular set of partners which focus on individual patient groups, but also employers. And we are beginning work with them. Aristotle will be key with all of that, but we also have an opportunity to bring a vert into that obviously backed up by the clinic. So we're looking forward to that, and we'll talk to Revenue Potential on that in a moment. Second to that, we've added a new multicenter clinic group into the west of the country, specifically focused into western Canada as well as western U.S. They're in the process of going live right now. Heavy focus on Aristotle as we drive it down through. And we're looking forward to getting that running as well. The third piece is that we are working with a very large executive health group to offer multi-cancer screening across Aristotle. This is from the Canadian side. We will provide more details as we move forward with this. We'll have a nice announcement to make as we formally go live with them. But they're an exceptional group, and it's an ideal clientele for us as well as for them. We also expand their capabilities all the way through this. In addition to that, we've taken the opportunity to reorganize the Richmond lab. As we came out of Aristotle, there was a series of surplus aspects that we had. We've been able to significantly reduce costs as we've driven through all of this. I think if you look at the Q1 financials, you'll see a very significant increase in gross margin. Our gross margin now across all of this is 58%. We're looking to improve that as little as we move forward. And that obviously is a very big advantage. I think particularly important when you compare us to other lab groups, other lab groups tend to run at a very much lower gross margin. It also begins to move us more to being able to stand on our own two feet. The final piece here is that we formalize business development in Europe. and we're preparing for the launch of the upgraded CoC protocol 2.0. Europe is 780 million people. So as that drives through, we have a business development lead into Europe, very well connected, building out with a whole series of new partnerships, allows us to work with upgraded pricing across all of this, and we're moving to that quite aggressively. We have an interest in taking Aristotle to Europe, For that, we obviously need regulatory approval, so we're beginning to move down that path, but that is key as well.