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

Good day and thank you for standing by, and welcome to Kane Biotech Q3 2023 Financial Results. [Operator Instructions] Please be advised that today's conference is being recorded. If you would like to ask any questions, you can send the e-mail to Marc Edwards, CEO of Kane, at medwards@kanebiotech.com or you can call Marc Edwards at (514) 910-6991. I would like to introduce your host for today's call, Nicole Sendey, Investor Relations. Please go ahead.

Thank you, operator. 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 third quarter of 2023 along with a discussion of some of our recent highlights and goals for 2023 and beyond. 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 believes, should, may, plan, will, estimate, predict, continue, anticipate, potential, intends, expects or other similar expressions. Such forward-looking statements also 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 in 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 hand the call over to Chief Financial Officer, Ray Dupuis. Please go ahead, Ray.

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 third quarter 2023 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. Revenue from products and services for the 3 months ended September 30, 2023, was $549,000, an increase of 29% from $426,000 in the 3 months ended September 30, 2022. This increase is due mainly to higher STEM Animal Health online and pet retail sales in the current period. Royalty and license revenue for the 3 months ended September 30, 2023, was $169,000, an increase of 16% compared to $145,000 in the 3 months ended September 30, 2022. This increase is due mainly to incremental license revenue in the current period associated with the Skout's Honor license and distribution agreement, which the company signed earlier in the year. Total revenue for the 3 months ended September 30, 2023 was $718,000, an increase of 26% compared to $572,000 in the 3 months ended September 30, 2022. Gross profit for the third quarter of 2023 was $315,000, an increase of 17% compared to $270,000 for the quarter ended September 30, 2022. Total operating expenses for the 3 months ended September 30, 2023 were $1,513,000, an increase of 35% compared to $1,121,000 for the 3 months ended September 30, 2022. The increase is due mainly to higher noncash long-term incentive expense and legal expenses relating to both the company's private placement offering and amendments to its credit facility recorded in the current period as well as higher government assistance recorded in the comparative period. Loss for the third quarter of 2023 was $1,198,000, an increase of 41% compared to a loss of $852,000 for the quarter ended September 30, 2022. Cash at September 30, 2023 was $1,623,000, compared to $1,105,000 at December 31, 2022. In the third quarter, the company closed its fully subscribed $500,000 private placement and received an additional $1 million of financing from its lender, Pivot Financial. With that, I will now turn the call over to Marc.

Thank you, Ray, and thank you, Nicole. Before I begin, I have to apologize to our listeners as Ray and I are traveling today, so we have recorded our remarks. If you do have any questions, please do not hesitate to reach out to us at ir@kanebiotech.com. I'd like to start my remarks by welcoming Dr. John Coleman to our Board of Directors. I had this pleasure of spending the day with him yesterday at our Q3 Board Meeting. We're looking forward to working with John and further benefiting from his experience both as a scientist and as a successful biotech CEO as Kane enters the next stage of its growth. Our strategic review of STEM Animal Health is making good progress, and I look forward to reporting on the positive outcome of that review in the near future. STEM is a great company built on a patented and proven technology with multiple licensing agreements and growing revenues. I also want to thank Pivot Financial for their continued support as we work through this strategic review. With regards to our newly rebranded revyve Antimicrobial Hydrogel, scale of manufacturing is progressing on schedule with our manufacturing partner. In the meantime, we're making close to 2,000 ounces a month in-house for our commercial partner, ProgenaCare. We recently introduced the new name and branding to practitioners at the Symposium on Advanced Wound Care where revyve was very well received. The number of practitioners that signed up for valuation program -- for our valuation program significantly exceeded our expectations. In the coming weeks, we'll continue to introduce revyve to practitioners at the Innovations in Wound Healing Conference as well as at the John A. Boswick Burn Symposium, where Dr. Greg Schultz has an accepted abstract. Turning to DispersinB. We're making good progress towards getting FDA approval of our DispersinB wound gel clinical trial. So all in all, we're laying the foundation for 2024 to be a transformative year for Kane Biotech. And I'm very excited for what the future holds. I apologize once again for not being available on the call for questions. Please do not hesitate to reach out at ir@kanebiotech.com.

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