Intelligent Bio Solutions Inc. (INBS) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to the Intelligent Bio Solutions fireside chat. Thank you all for joining us today. My name is Valter Pinto, Managing Director at KCSA Strategic Communications. And today, I'm joined by Harry Simeonidis, President and CEO; and Peter Passaris, Vice President of Product Development. Earlier this month, the company submitted its 510(k) premarket notification package to the FDA for its intelligent Fingerprinting Drug Screening System, seeking clearance from the FDA to enter the U.S. market. We're hosting today's call for management to have an opportunity to provide investors with more detail as to where we stand in the FDA process, more information regarding the data submitted to the FDA and provide a look ahead as to what to expect next. Before we begin, quickly, I'd like to remind everyone that statements made during today's fireside chat may be deemed forward-looking statements within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially due to a variety of risks, uncertainties and other factors. For a detailed discussion of some of the ongoing risks and uncertainties in the company's business, I refer you to the company's reports filed periodically with the SEC, including its annual report on Form 10-K and for the fiscal year ended June 30, 2026, and the investor materials under the company's Investor Relations website. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. I want to thank everyone again for joining our call today. At the conclusion of our discussion, we'll have a live Q&A. Please submit your questions via the Q&A function at any time. We'll do our best to get to as many questions as we can today. If for some reason, we don't get to your question, please e-mail our team at inbs@kcsa.com. Please note this call is being recorded today, Thursday, September 24, 2026, at 4:30 p.m. Eastern. The recording will be available on the company's Investor Relations website under Past Events at the conclusion of this call. Before we get into our questions, I would like to turn the call over to Harry to provide a brief overview on the company. Harry?

Yes. Thanks, Valter, and thanks, everyone, for joining. Look, let me first start with an opportunity just explaining who we are again for a lot of people that don't know. Intelligent Bio Solutions, we're listed on the NASDAQ, ticker code INBS. What I'm going to be sharing today is our product and our business and what we've been doing for the last few months, a very exciting period for us right now. Let me just talk with you about what we do have. So we have got a product. It's a commercially available product, and it is a drug screening system. And as you can see here, I'm holding in front, this is what we call the reader for the drug screening system, and we have what is the consumable, which is a cartridge that goes with it. So what this does is we have the ability to test drugs, which is in your system and via sweat. A lot of people probably understand that either via urine test or a saliva test, but we use the tips of your fingertips to actually collect a sample of sweat that we can actually detect what kind of drugs you have in your system within a space of 10 minutes. Now some of the typical drugs that we do screen for is opiates, cocaine, methamphetamine and cannabis. What I'd like to do right now is just show you how simple this test is. Let me take you through the traditional way. And traditionally, if you want a drug test, you would ask the individual to urinate in a cup. So you would have to witness them, they would have to want to urinate. That can take time. You have to find a place to -- for the actual individual to be able to fill the cup. Once you got that sample, then that sample is then analyzed and that could take from several -- half an hour, an hour, or 2 hours to do that whole process. For us, it's a simple 3-step process. What we do is we get our cartridge here, and we ask the individual just to take a fingertip and place it on the collection of our cartridge, 5 seconds per digit, and then within a space of 1 minute, we have all the sample that we need. We then get this lovely cartridge and we put it inside the readers, as you can see down here on the bottom. And then within 10 minutes, we get the result. And the result will come back, either you are positive or negative for those drugs that we'd actually screen for. Now the one advantage is, obviously, it's a very noninvasive way you can actually see the individual providing the sample and it's easy and simple as you just saw. It's 10 minutes, noninvasive, very easy. The other key factor of our system is we have what is called a very short window of detection. What that means is typically, when you take drugs, it can remain in your system. Now if you have a urine test, you can actually see what's been in your system for 7 days up, maybe 10, 12 days depending on how each individual metabolizes -- the drug metabolizes in the individual. Now what that means is I could be having cannabis on the weekend and then have a drug screening test on a Wednesday or a Thursday and come back positive. Even though I'm not high, I can work and it's safe for me to work. With our drug screening test, we can only detect what's been in your system for the last 24 hours. So what you can see is a shorter window of detection shows how likely you've had the drug within that 24-hour period. And the close you can get from the time of ingesting the drug, the more it shows if you are impacted in terms of -- are you high? Can you work? Can you drive that bus, fly that plane, drive that forklift? So the shorter window of detection infers or implies that you are affected by the drug. So a lot of our customers actually enjoy that shorter window because you are truly testing an individual to see if they actually are affected by drugs. Now this product has been in the market, commercially available outside of the U.S., and we're pleased to -- as you probably saw from our financial statements, we are continuing to grow year-on-year and our revenues, we closed our financial year above $4 million. We closed at USD 4.2 million, and that was up from $3 million in the previous year. So significant growth on the top line. And the other key factor is we're not only growing the top line revenue, but we're also growing the overall margin. So we're getting the leverage both from the ability of scale, but also we've done a lot of key things on our manufacturing side to reduce the actual cost. So we're making better margins and a stronger growth period. So a very exciting period for us as we continue to grow. 3 years ago, if you -- when I was having a discussion, we were doing $1 million worth of revenue. We are now over $4 million, and we continue to do that. Now our revenue comes from 2 factors, 2 key factors. One is the actual reader itself, which is a once-off buy for the customer. But the key is our consumable, which is our cartridge. This is a reoccurring revenue for us. And every time you do a test, you need a new cartridge. So as you can see, the more readers or the more installed base you have out there, the more consumables and that continues to grow. So we're seeing both growth in our overall installed base and our overall consumable business. The other key factor for us, as you can see, we're doing good revenues outside of the U.S., but we want to get back in -- we want to be in the U.S. And for us to be in the U.S., we require 510(k) clearance. Now we've done a lot of work, and Peter will go into it a lot more in detail on what we've done, but we were finally able to submit our 510(k) submission early September. And there was multiple steps that we needed to do to complete to ensure we have what we consider one of the best submissions we ever had. Now why the U.S. is important for us. The overall drug screening market, depending on what kind of research papers that you look at, we see it -- we take the average, and it's approximately a $10 billion market, and half of that market comes out of the U.S. So U.S. is close to a $5 billion worth of market of drug screening. Now one is the size, and we understand it's a huge opportunity for us, but drug screening is becoming more -- it's increasing more and more. And the reason for that is more and more drugs are becoming legalized. And people are really concerned about employee safety. So they are testing more and more people at work to ensure that they're not affected by some of the legal drugs that we have. For example, now cannabis, not only in the U.S. but globally, it's becoming legalized. So people are taking more and more cannabis. And that's fine if they require to take it, but they should not be taking it or being affected by cannabis if they're driving, flying a plane, that bus taking our kids to school, or that person driving, the Amazon delivery down the street should not be high. And what people are doing now, companies are screening more and more. And the best way to screen is a noninvasive, fast way with a shorter window of detection, and we're the only one in the market that can provide that. So on that one, I would like to hand it back to Valter. And thanks, Valter, for the opportunity for both myself and Peter to be able to present.

Thank you, Harry. I think that was great. And Peter, perhaps a question for you first. We've talked about, on this call, the FDA submission of the 510(k) package that was submitted on September 9. I guess from your point of view, if you could give our audience an idea what it took to get to that point where you were ready for the submission? And what, if anything, can you say about the review process for people to expect from -- now that we have submitted the package to the FDA?

Sure. Yes. Thank you, Valter. The 510(k) submission that we put together is very detailed and very comprehensive, and we could not be prouder of our team with the efforts of our team and our extended consultants, believe it or not, we put over 18,000 hours it took to get this across the line. Now 18,000 hours is a lot of time. So what did we do over that -- those work hours? Let me give you a high-level view of the major aspects of our 510(k) submission. So that would include a cutoff study, a precision study, an interference study, a method-comparison study, a usability study, and then we did a lot of cybersecurity work around our reader. Now it was necessary for us to start with a cutoff study. And the reason is, it allowed us to fine-tune the needle when it came to our codeine threshold. Then we're able to take that new cutoff, apply it for other studies, and they all lined up beautifully and look great. Another study that's important to note is the interference study, which demonstrates that regardless of what your hands may have on it, right, in different environments, different workplaces, if you have dirt, oil, if you have hand lotion, that our product remained robust and remained accurate throughout the interference testing. The method-comparison study is kind of the highlight, I would say, or the golden star of this submission and for good reason. Because what the method-comparison study showed is that our product is greater than 98% accurate on our screening device, which is absolutely incredible. We could not be more thrilled with that. And then we can't forget about the cybersecurity aspect, right? So cybersecurity software is all around our reader that Harry held up. And we had to ensure that this cannot be hacked, this cannot be compromised in any way. So we use a third-party group to do extensive penetration testing and EMC testing. Then they identified a list of vulnerabilities. They gave it to us. We addressed every single one of those vulnerabilities before we finished this portion of the 510(k) and added it to our package. So overall, a lot of aspects, a lot of hard work in individual areas, as you can see has been put together in this whole package. We did submit it on September 9, as you mentioned, and it is currently with FDA, and they are currently reviewing it. We are on standby to answer any questions they may have with an overall anticipated response of H1 next year.

Thank you, Peter. Obviously, a lot of work went into that package, including the method-comparison study. These are requirements to submit the package to the FDA. But for the investors on the call, what does the accumulation of all this data tell from an investor's point of view? What does it all mean?

Right. And I'll focus on -- so the method comparison -- what the important part of the method-comparison study is that it gave us -- I'll step back. The method -- what does the method comparison study tell us? It tells us the -- it determines the accuracy, the sensitivity and the specificity of a product, right? And so when we were building our method-comparison study and building every aspect of this study, we were building the protocol, how we're going to execute each aspect. And we purposely built it to be very robust, which is why in the method-comparison, we executed it across 3 independent U.S. clinical sites. We had 135 participants and 9 operators, which gave a representative diverse demographic of the United States population. And we could not be happier with the results, giving us, like I mentioned, a greater than 98% accuracy, a greater than 94% sensitivity and 100% specificity. Now what that means is 100% specificity tells us that we did not have a single false-positive result across our entire study, right? And that is huge and very important for our customers, too, because a false-positive result can lead to somebody being wrongfully terminated. And so we can't play around with this. So having 100% specificity is a huge strength when it comes to our method comparison. And as I mentioned, every aspect of our submission was started from the protocol of how are we designing this to be robust, to be very strong, all coming off of the new cutoff and creating a very, very strong 510(k) submission.

Very interesting. I appreciate that, Peter. And Harry, again, congrats on the FDA submission. We know the undertaking that comes along with it. And I realize that there may be limitations on what you can and can't say. But for the investors on the call, what happens now? What should investors expect now that we have had the submission, the time line starts? What can you disclose to investors about what happens from here?

Yes. No, great question, Valter. Look, a couple of aspects. First of all, as you can understand, key for us -- the FDA submission was key for us. It was a major milestone. And what happens here is virtually we were in the hands of the FDA. They're going to be reviewing it, and they'll be coming back with any questions. And then I expect from my experience, while everyone quotes a 90-day window when they come back to you, there's a bit of back and forth in terms of questions and answers. So I expect sometime in the first half of 2024 (sic) [ 2027 ] with an answer from the FDA aspect. Now that's what we submitted, but we're not sitting down and doing nothing, right, in the meantime. So one thing that we will continue to do is grow our revenues and be strong commercially. And we are starting to get a lot -- or we're preparing our distribution network in the U.S. So once -- when we get final answer from the FDA and hopefully, once we get clearance, so we can start selling, there's a couple of key aspects that we need to do for us to be successful in the U.S. One is we want to build out our distribution network, and we're already commencing now and talking to individuals on who's going to sell it for us. We won't be doing it direct. We will be going via distributors. The reason for that is -- the simple fact is distributors already are playing in the industry. They know the customer installed base. They know the land -- the lay of the land. So they're the best people to go and hit the ground running very, very fast. So we are in talks with multiple distributors in the U.S. The other thing is that we're preparing to get ready is, once we get this first phase of FDA clearance, which will clear our reader, our back-to-lab method, our whole system and how it works, but only one indication of drugs. We've got multiple drugs that we want to add on to this panel. And the first one we're going to be hitting with is cannabis. And in fact, what we're going to be doing is we're going to do a side-by-side approval, and we're going with 3 key drugs. We're going to go cannabis, methamphetamine and cocaine straight off the bat. So we expect this, once we get cleared for -- our codeine right now, we're going to go hard with the other ones. So as you can see, our commercial, we'll just keep on going on that one, get our distribution ready for the U.S. And then once we get that FDA clearance, we're off and getting those other drugs very, very fast approved because what we need to do is have a comprehensive test for the U.S. market. And unless we get those other 3 indications approved fast, we won't have the ultimate product for the U.S. market.

I appreciate that. And then a question came in from our audience, and there was a question that I had as well. So as you're preparing for U.S. commercialization, and obviously, you have a massive footprint outside of the U.S., how do you think about the differences or things to be prepared for when you're commercializing in the U.S. versus outside the U.S.? Are there a lot of similarities? Or are there things that you're finding where you're getting yourself prepared for the differences in those 2 markets?

Okay. So the one thing is we've been in the market, as we said -- and most of our revenues right now is coming out of the U.K., which is a very strong drug screening market for us. And we do have some international sales and growing on the international sales. But one thing that we have learned is we've done our proof of concept. We understand how to sell this product. We understand what works, what doesn't work, how to mine your installed base, how to grow your installed base. So that is key for us. Once we get into the U.S., we have all those scars that we have been -- had to have this product in the market. So being able to sell into the U.S., we've got that experience going through. So I would pretty much say it's kind of the same. You might have to tweak it here and there and the messaging a little bit here and there, but pretty much we have the know-how how to sell it. But when it comes down to then manufacturing and supplying this product, we'll be doing it out of the U.S. While we can support the U.S. outside and manufacturing, which we have been doing outside -- out of the U.K., we need to get close to the customers in the U.S. So we will be manufacturing both our readers and our cartridges, manufacturing facility out of the U.S. for a couple of reasons. One is we're closer to the customer, which is key because it is a high demand and fast-moving product. Second of all, it's cost effective for us. We have been doing some modeling and we have pricing, and we know how much it's going to cost. So manufacturing out of the U.S. won't be that much more expensive than what we're currently doing. And in fact, some aspects might be more productive. And last but not least, we need to ensure that we don't have all the logistics costs and freight and shipping overseas and duties and customs and all the complexity that goes around that as well. So if you want to hit a product hard in the market, and you have to have the product close to the customer and to be able to fulfill that demand. The worst thing that we can do is to have product outside of the U.S. and customers waiting for the delivery of that. Customers don't wait. They wander here and there. So that's key for us to get ready for the U.S. market.

Yes, that makes total sense. And we received a lot of questions from our audience, so I appreciate that. Just one last question for me before we open up the call for you, Harry, and Peter, love your point of view. So Harry, in your presentation, you did talk about the size of the U.S. market, obviously, a large multibillion-dollar opportunity. More specifically, when you think about the competitive landscape in the U.S., we understand the alternatives. But how do you think about competition? How do you give an idea to investors? Obviously, we have this new technology coming into a new market. How do you think about competition in the competitive landscape?

No, it's a great question. And we deal with competitors every single day outside of the U.S. Look, the alternative from us is the traditional way of people been doing it, a urine test or a saliva test. Now from a urine test, it is so archaic, it's not funny. And first of all, having to watch a person urinate and to ensure that it is their sample. So there's so much gaming in urine, as we know, handling warm samples, the risks to going around urine, it's just not the way to do it. And the other aspect is that shorter window of detection. Being able to have a shorter window of detection is key, especially now that the cannabis is becoming legalized. And the way that I always say it is -- and I'll compare it to an alcohol test. An alcohol test does not test to see if you drink, right? It's legal to drink so everyone drinks. An alcohol test right now is to see if you're drunk, right? It's the same thing with us, our product. Our product does not test to see if you take drugs. There are better tests to do that to see if you take drugs. If you want to see someone takes drugs, the best test out there is a hair follicle test to see if you've ever taken drugs in the last 3 months. That's not where we are at. We are at to see if you are impaired, are you high? Are you affected by any way with drugs in your system? And the only way you can do that at this day is ensuring that you've got the shortest window of detection. So again, for our standpoint, our key competitive advantage is, one, it works super fast and super simple, 10 minutes from go to whoa, and we're actually looking at -- we've done some announcements is we're validating now to actually speed up that test. Currently, it takes 10 minutes. We could be potentially down to sub-5 minutes in terms of our test, and we announced that we're doing a validation study. So first of all is our speed. Second of all is the ease and simplicity to do it. I can do a urine test right now on screen within 10 minutes by just using my digits of the sweat of my fingers. So really fast, really simple to use and you've got shorter window of detection. And then put that all together and our price in terms of how cost effective it is, we are as affordable or sometimes less. But when you take into consideration lost productivity, how long it takes and all the other PPE that you need -- if you're doing your own test, you need to have gloves, a proper vial. We don't need all of that stuff. So when you look at it in a holistic standpoint is we're faster, easier, shorter window of detection and sometimes cheaper. So for me, it's an easy sell.

I don't know if you have any point of view, Peter.

I'm sorry?