Kane Biotech Inc. (KNE) Earnings Call Transcript & Summary

Good day, and thank you for standing by, and welcome to Kane Biotech Q1 2022 Financial Results Conference Call. [Operator Instructions] Please be advised that this call is being recorded. [Operator Instructions] I would now like to hand the conference over to your host today, Nicole Sendey, Kane Biotech Investor Relations and Public Relations specialist. You may begin.

Thank you. Good afternoon, and welcome, everyone, to Kane Biotech's quarterly earnings conference call. We are delighted to have you join us today. This call will cover Kane's financial and operating results for the first quarter of 2022, along with a discussion of some of our recent highlights and goals for 2022 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 Kane's Chief Executive Officer, Marc 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 laws, which may not be based on historical fact, including, without limitation, statements containing the words believe, should, may, plan, will, estimate, predict, continue, anticipate, 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 development expressed or implied by such forward-looking statements. Such factors include, among others, the company's pace 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 pass our call on to Kane's Chief Financial Officer, Ray Dupuis.

Thank you, Nicole. Before I turn the call over to Marc for an update on our commercial activities, I would like to provide a brief update on our first quarter 2022 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. For the 3 months ended March 31, 2022, the company recorded total revenues of $565,000, a 50% increase compared to $376,000 for the same period in 2021. In the 3 months ended March 31, 2022, royalty revenue increased by 27% to $47,000 compared to $37,000 in the 3 months ended March 31, 2021. Revenue from product and services sales for the 3 months ended March 31, 2022, was $482,000, an increase of 56% from $309,000 in the 3 months ended March 31, 2021. This increase is due mainly to higher pet retail and online sales from the company's STEM Animal Health subsidiary as well as higher DermaKB sales. Gross profit for the first quarter of 2022 was $183,000, an increase of 11% compared to $165,000 for the 3 months ended March 31, 2021. First quarter 2022 operating expenses were $1.4 million, an increase of 23% compared to $1.1 million for the same quarter in 2021. The increase is primarily due to higher research expenditures related to the company's DispersinB hydrogel and coactiv+ antimicrobial hydrogel programs. The company recorded a first quarter 2022 loss of $1.1 million or $0.01 per share compared with a loss of $1 million or $0.01 per share for the same quarter ended March 31, 2021. Cash as of March 31, 2022, was $915,000 compared to $1.2 million as of December 31, 2021. With that, I will now turn the call over to Marc.

Thank you, Ray, and thanks, everyone, for tuning in. In our first quarter of 2022, we continue to make great progress across all 3 of our commercialization pillars. We've experienced strong year-over-year sales growth, as Ray mentioned earlier, in our Animal Health and expect this to continue, particularly with STEM Animal Health receiving the seal of acceptance by the VOHC, which is the Veterinary Oral Health Council, in April of this year, just after the end of the first quarter. With the -- so we're -- the 2 products that will carry this VOHC seal of acceptance are Vetradent from our licensing partner, Dechra, in all of the Americas; and coactiv+, which is the product that Animal Care, our strategic partner, will be commercializing in Europe. And it also marked the launch of coactiv+, and adoption rates seem to be very, very strong right out of the gate. So we're very excited to see what Animal Care will be able to do with coactiv+. Secondly, the first quarter saw some very, very compelling results for our DispersinB hydrogel preclinical trials. I've mentioned it before, but I think it's worth highlighting there, our -- the test wounds using the DispersinB hydrogel healed much better and much faster than the control. And with that, we've got our clinical trials that are set to commence this summer, and we'll have an announcement coming shortly in that regard. In addition to what we're doing with DispersinB, we've got our coactiv+ 510(k) application, with which we're collaborating with the FDA. And we recently had a presubmission meeting and have a clear path forward and well established. On the wound care side, our strategic partner discussions are going very, very well, making good progress there, and look forward to sharing some positive news as soon as we can. Then another big step towards commercializing both our hydrogels, as last week, we announced certainly that obtained our ISO 13485:2016 certification for our quality management system specific to our ongoing efforts to design and develop novel medical devices and manufacturing processes for the wound care markets. I want to congratulate our entire team for that achievement. But in particular, I want to thank Lori Christofalos, our VP of Quality, who really the heavy lifting there to get us where we are today. We continue to see some robust growth in the sales of our DermaKB line, although they still remain modest and, again, growing that as we work on the potential licensing deal. And that is -- we mainly have Amazon to thank for that. Their sales on Amazon are going very, very well. In addition to the sales going very, very well, what's really encouraging is we've got some very, very strong testimonials. Anybody is interested there. I'd invite you to look those up either on Amazon, on Google and Facebook, where we seem to be really helping a lot of people that had tried some very, very harsh solutions, and really, our product seems to be helping them a lot there. And then Finally, another big announcement in Q1 was the appointment of Greg Schultz as our Chief Scientific Officer. So he will be following in the footsteps of Gordy Guay, Gordy is going to stay on as an adviser to myself and is heading up our Scientific Advisory Board, but Greg Schultz is Professor Emeritus at the University of Florida and really the godfather of biofilm. So it really further established Kane as the biofilm company. And we're very, very excited to have Greg as part of the team and helping us grow our business. So that will wrap up my remarks for today. I will now pass the call over to our operator to begin the question-and-answer session. Thank you very much.

[Operator Instructions] And I am showing no further questions. I would now like to turn the call back over to Marc Edwards for closing response.

We just want to thank everyone for tuning in. I'm very, very excited with everything that's going on at Kane today. And it's a tough market going on there. And I was -- just want to tell everybody that I was pretty excited to have the opportunity to grow my position within Kane significantly there to wrap up lastly. So just after the end of the quarter, we announced that we closed our $1 million financing, and I acquired a little over 3 million shares there and really think that's a great opportunity. And I'm -- so thank you very much, everyone, for tuning in. And we'll keep things over for it. Have a great day.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.