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

Good afternoon, and thank you for standing by. Welcome to Kane Biotech's Third Quarter 2024 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, December 3, 2024. I would now like to turn the conference call over to Ray Dupuis, Kane Biotech's Chief Financial Officer. Please go ahead.

Thank you, operator. Good afternoon, and welcome, everyone, to Kane Biotech's Third Quarter 2024 Earnings Conference Call. We are delighted to have you join us today. This call will cover Kane's financial and operating results, along with a discussion of some of our recent highlights and goals for the remainder of 2024 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 law, 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 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 and other -- 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 results of any revisions to any of the forward-looking statements contained herein to reflect future results, events or developments. For the third quarter 2024 financial results, all the numbers that I will mention have been rounded and are therefore approximate. The 2023 comparative results exclude STEM Animal Health subsidiary, which was sold during the second quarter of 2024. The following figures are all in Canadian dollars. Product sales for the 3 months ended September 30, 2024, were $598,000 compared to $4,000 in the 3 months ended September 30, 2023. During the quarter -- during the third quarter, the company recorded $595,000 from its first commercial sales of revyve Antimicrobial Wound Gel to its U.S. distributor for ProgenaCare. Product services revenue for the 3 months ended September 30, 2024, was $685,000,compared to $0 in the 3 months ended December 30, 2023. Product services revenue is derived from animal health, manufacturing and quality control services that the company is providing for a limited time post sale of STEM. Total revenue for the 3 months ended September 30, 2024, was $1,283,000 compared to $27,000 in the 3 months ended September 30, 2023. Gross profit for the third quarter of 2024 was $559,000 compared to $23,000 for the third quarter of 2023. Total operating expenses for the 3 months ended September 30, 2024 were $1,170,000, an increase of 18% compared to $995,000 for the 3 months ended December 30, 2023. The increase is primarily due to higher employee compensation, consulting, travel and investor relation expenses recorded in the current period. Net loss from continuing operations for the third quarter of 2023 (sic) [2024] was $679,000, a decrease of 45% compared to a net loss from continuing operations of $1,244,000 for the quarter ended September 30, 2023. Cash as of September 30, 2024, was $544,000 compared to $749,000 as of December 31, 2024 (sic) [December 31, 2023]. With that, I will now turn the call over to Marc.

Thank you, Ray, and thank you to our investors for being present on today's call. So I think the numbers are really starting to reflect all our hard work at Kane and that -- but not fully, yes. I think Kane has had an incredible year, and there's lots more great news to come. This capital raise will -- sorry, we've -- just to highlight a few of the achievements we've had. So our first commercial sale of revyve Antimicrobial Wound Gel to ProgenaCare Global which led to these great results in Q3. ProgenaCare have gotten revyve in with almost all the major distributors and most of the big DMEs who basically take the prescription and get it to the -- get the product to the patients, get revyve to the patients. Now we need to increase the number of doctors prescribing our great product. We had our licensing agreement with Omni Bioceutical Innovations for our DermaKB line of skin care products. [Jane and Nicola ] will be great partners for DermaKB but also for some of the FP Dermatology products as we bring them into the dermo-cosmetic/medspa markets. We received our ISO 1345:2016 MDSAP quality certification which honestly is a result of years of hard work by the team and open the door for Health Canada approval, which I'll get back to you a little later in my remarks. This is a big deal for Kane. MDSAP is absolutely not an easy certification to get. And it not only opens the door to Health Canada, but also the Australia, New Zealand, Brazil and eventually Japan. Then we got the FDA's approval to increase the dosage allowance for revyve Antimicrobial Wound Gel. This opens the door for U.S. sales of our revyve Spray Gel. The spray will quickly become our flagship SKU under the -- until we get DispersinB to market. Spraying a gel in the gel form isn't easy. And by working with our Swedish partner, Aurena, we've been able to file for patent protection on the spray, which is potentially huge for Kane. Then we announced that we had received some NRC IRAP funding to support -- to expand our revyve Antimicrobial Wound Gel, providing funding for our wound gel family, so providing funding for revyve spray, helping us develop a sterile version of our gel to be used in the OR in an effort by hospitals to prevent surgical site infections. And we're also working on a revyve cleanser. Then we announced our distribution agreements with Razan Medical Trading and Qatar Datamation Systems for revyve Antimicrobial Wound Gel, and we should see some expansion on those agreements following a trip that Robert Huizinga, our Chairman, and myself took to the Middle East. We've got participation in the NRC IRAP multinational corporate collaboration product. Now this is our guidance as well as $75,000 of funding from NRC IRAP for the development of our DispersinB Wound Gel, Now we've got this funding because we've been able to secure support from our largest -- from one of the largest wound care companies in the world for our DispersinB gel. And really, as we move forward with this product, we're getting more and more attention from some of the biggest wound care companies in the world, and keeping a close eye on what we're doing here. Then one of our -- probably one of our biggest milestones ever was the agreement to acquire FB Dermatology. Now again, this is a huge milestone for Kane. It will provide us with revenue, greater commercial reach and some great technologies, which include LumiHeal. LumiHeal is for the treatment of chronic wounds. It is -- it has a CE Mark with the EU MDR for the treatment of chronic wounds, as I said, but also as a Class II de novo device from the U.S. FDA for surgical scar reduction. We intend to quickly apply to Health Canada for approval as a wound treatment device in an effort to conduct clinical trials in Canada, which hopefully will lead to U.S. approval for LumiHeal as a wound care treatment. Kleresca, which also has the EU CE Mark, stimulates the skins on repair system in a harmless nondestructive and painless manner and is used for skin rejuvenation and the treatment of acne and rosacea. And then Lumixa, which we're hoping to bring to the medical aesthetics, medical spa markets, activates the biological process and regeneration mechanisms of the skin, and we intend to work with Omni Bioceuticals to bring that to markets. Then we got our Health Canada approval for revyve Antimicrobial Wound Gel. Again, very exciting. We've got a number of distribution agreements in the works for Canada. And through NIHB, they're noninsured health beneficiaries, in Canada, we believe we can start selling our product to -- that our product -- not only can we start selling it, but we'll also be reimbursed for First Nations and Inuit people. And then another big milestone was the BioStem Technologies acquisition of ProgenaCare, making BioStem Technologies our U.S. distribution partner for revyve Antimicrobial Wound Gel. I don't want to say too much here. We're working closely to finalize that transition between -- as they work to close the deal, we're working hard to confirm all the terms, but really BioStem Technologies is a much larger organization than ProgenaCare, growing very, very fast. It is my understanding that there's no overlap between our revyve Antimicrobial Wound Gel and other products in the BioStem Technologies bag. We are expecting this to accelerate distribution of our products. And we're finalizing the details, but I believe this will be very good for Kane. Now going forward, investors can expect before the end of the year, at least a couple of new distribution agreements outside of Canada and hopefully a couple of distribution agreements in Canada as well. The first commercial sale of our revyve Antimicrobial Wound Gel, I actually shared a video this past weekend in -- on LinkedIn, the product has been packaged as we speak and is going through the various release process. And then we should also expect OTC approval for our revyve Antimicrobial Wound Gel by Health Canada. Going forward -- and then also the launch of our DispersinB -- before the end of the year, the launch of our DispersinB acne proof-of-concept trial at the University of Miami. Now as I said, this is a proof-of-concept trial to confirm that the fantastic in vitro results we've seen for DispersinB on acne are reproducible in the real world. Now following this trial, we can then decide what the best regulatory path is to pursue and which will guide the commercial route will undertake for DispersinB. So this is not a clinical trial where we're seeking approval for the product, but really just trying to confirm the efficacy of in vitro. In the new year, I think we'll see the closing of our transaction for the acquisition of FB Dermatology, where we should have the kick-off of our DispersinB wound care clinical trial, the commercial launch of our surgical gel many more distribution agreements and regulatory approvals for revyve Antimicrobial Wound Gel and Antimicrobial Wound Gel Spray. And we're also working very, very hard to secure funding for revyve Antimicrobial Wound Gel in order to demonstrate our clinical superiority. For example, one of the routes we're going to be pursuing, [ AmTech ] who are already providing funding for our DispersinB, in their 2025 preannouncement, have 2 focus areas where we believe our revyve spray could really set itself apart. The first one is burns. So that's really -- when we developed a spray, burns was one of the target markets. But also, they're looking for a prophylactic to prevent infection and battlefield wounds from traumatic penetrating injuries in far-forward austere environments. So basically, 40% of soldiers that are injured on the battlefield will develop a chronic wound despite the U.S. military's ability to get an injured soldier to an aseptic hospital within an hour of their injury, and they attribute that problem to biofilm. So we believe that by being able to spray on our gel to a battlefield wound right at the point of injury, we can significantly reduce the number of cases of chronic wounds that are developing. So a lot of great things that have come forward previously. This year, a lot of great things that will happen before the end of the year and going into the new year. Now this morning, we announced a $3 million private placement. I believe this is a great opportunity for us. And we've had a lot of interest in the raise and believe that we'll be able to wrap this up very, very quickly. So that will conclude my remarks for today. Operator, are there -- let's take a minute and see if there are any questions.

[Operator Instructions] I'm not showing any questions at this time. I'd like to turn the call back over to Marc Edwards for any closing remarks. We do have one question. I'm sorry. One moment for our first question. Our first question will come from the line of [ Steve Simmons ] from A.

Did you say Lexima does not need any kind of approval [indiscernible] kind of missed part of your call here?

Sorry, Steve, I'm -- that was a little scratchy. I believe you asked me if DispersinB doesn't need any regulatory approval to sell.