Microbix Biosystems Inc. (MBX) Earnings Call Transcript & Summary

Today, we have a presentation with Microbix Biosystems, who is going to be going through their Q1 numbers that were reported last Thursday. There will be another Microbix webinar 2 weeks from today, which will be a full overview of the company. So for anyone new to the story, I would highly recommend checking that out as this webinar will be very detailed about the quarterly results. But happy to have all the investors participate in both. With me today, I have CEO, Cameron Groome; COO, Ken Hughes; and CFO, Jim Currie. They're going to do a little bit of an overview of the quarterly results, and then we'll get right into a Q&A period. As always, this presentation will contain forward-looking statements. If you'd like to know more about those, you can find them on the company's disclosures on their website. And as I said, there will be Q&A, so feel free to input your questions into the Q&A box at the bottom. With that out of the way, I'd like to introduce Cameron Groome. Hi, Cameron.

Yes, thank you.

Nice to see you.

Well, great to see you as well, and I'll also take a moment to introduce my colleagues, Jim Currie, our Chief Financial Officer; and Ken Hughes, our Chief Operating Officer.

Looking forward to hearing about the quarterly results. You put up another record quarter, which is fantastic. So maybe you can walk us through the numbers and some updates from the quarterly release.

Absolutely. Well, as you mentioned, Deborah, we'll go into a little bit of a Microbix for beginners conference or webinar in a couple of weeks' time. So I'll focus -- have us focus here more on the quarter and just lead in to say we're a creator of products, we're a manufacturer of products, we're a marketer of products. These being biological products that support the global infectious disease diagnostics industry. So we've got well north of 100 customers who are test makers, clinical laboratories and agencies that do the proficiency testing and accreditation of clinical labs that rely on our 3 principal categories of products, those being ingredient to make tests, those being devices to collect patient samples to effect the tests and then the actual devices that are used to check whether tests are working properly and providing accurate results. So those are the categories of products we make that are sold internationally and used very broadly. With regards to our numbers, it continues -- our numbers continue to reflect the growth of the company as a medical devices manufacturer, regulated and registered licensed products, and not just in the ingredients field where we were active historically. So now we see products that have Microbix labeling on them that are branded by Microbix and that are finished products being used by companies in a very identified fashion. And that's what's driving some of the top line growth we're seeing. Our Q1 came in at just under CAD 4.9 million at top line and just under CAD 900,000 in bottom line, so with very satisfactory gross margins, EBITDA margin, net margin associated with that. And that's really the fifth consecutive quarter of meaningful profitability for Microbix, which is great and something we see continuing with profitable growth. And we're continuing to position the company to be able to further grow revenues in order that the $8 million increase in sales that we realized in fiscal 2021 isn't a one-off with that sort of magnitude of growth continues through 2022 and beyond. And we'll talk perhaps a little bit about some of the upgrades we're making to staffing, to facilities and equipment and to control systems associated with that. So our company is also in a very strong financial position. We're net earnings positive. And outside of the sometimes swing and roundabouts for big sales towards the end of quarters, we are very strongly cash flow positive as well and we have a very strong balance sheet with -- I'll leave it to Jim to talk about some of the cash numbers that we have, but certainly well in excess of $10 million on the balance sheet today. So with that, Deborah, were there any specific questions you've been hearing from shareholders about our results for Q1 or outlook for balance of year?

Sorry to be hanging there a second. Had to find my glasses. I don't see any questions coming in thus far. So to the audience members, if you have questions, feel free to input them. I'm sure that we'll get a number of them as we always do. Maybe we could talk a little bit more about the lab expansions and how that's going?

Sure. Why don't we touch on that? Ken, maybe you can touch on a little bit about what we're doing with staffing, with physical facilities and with support systems. And then Jim perhaps will circle back for a little more specifics on the quarter, particularly as some questions start to flow in.

Sure. No problem at all. Obviously, Microbix is a company in a growth mode, and we're investing in staff and facilities to future-proof our growth and diversify our offerings as we move forward at scale. Behind me, you will see the picture of Laboratory 3 in Building 2, which is a brand newly commissioned. It's part of our rollout plan. And this is obviously a virtual background. I'm actually sitting in my office. And at today and in the previous years, we're populating that with new staff, just starting to work in there, making products in the VTM space and in the QAP space. At the same time, we're building out Building 3 and starting construction on the fourth lab in there, which will house the fully automated systems for production of VTM at the scale to support Ontario, Greater Canada and beyond from there. So we're basically future-proofing the company by investing in infrastructure. Recently, we've hired also a Director of IT, and his team are improving our quality management system, in EQMS capabilities, laboratory information systems and so on and so forth to make sure as we continue to grow we're able to handle the number of SKUs and the amount of data that are in place. And this has been stated before, and we're just executing on that. Microbix is in rapid growth phase. We're continuing to hire new technical and scientific staff. We're going to be Building out the BSL 3 facility in Building 1 this year as well. So there's no shortage of activity, making sure we're ready to accept the new opportunities going forward. Again, as we said we would and so we are.

No, very good. I think, Ken, the -- some of the points you're making are excellent ones. As we move to be a vital supplier of some of these products to industry, we've got to show that we're able to produce reliably at a much greater scale, certainly in QAPs, that we've done before. And we've demonstrated our ability to do that from going to -- from a standing start on viral transport medium to delivering far in excess of 1 million vials of viral transport medium for the Province of Ontario in 2021 and into 2022 and continuing. And that's really showing a skill set of industrial global scale manufacturing that we're bringing forward within the company and all of the investments and upgrades that Ken has talked about are essential to be able to move the company from 12-month trailing revenues now in excess of $20 million to, to support a number more on the order of 100. And all of our upgrades and expansions are helping drive that. And one of the nice things about that is those are funded. And that's a good segue for Jim, perhaps to talk a little bit about Microbix' balance sheet and some of our capital spending plans going forward.

Sure, Cameron. We've certainly taken the opportunity of the cash that has come in through public offering as well as the exercise of warrants and many of which took place in the first quarter of this fiscal year. One of the things that we've been looking at is our existing debt. We still -- we've taken down one of our debentures, prepaid our $2 million debenture in the early part of Q1. We also prepaid a BDC loan. It was in the neighborhood of $300,000 during Q1, as a program that we intended to look at in reducing our debt. We're also following up on what we had said we were going to do as part of our public offering in terms of investing in the business. Ken has talked about the facilities and the new lab space, of which one of them is behind him, which is -- which we've undertaken over the last 3 to 6 months. And they can be expensive, the expansion and retrofitting of the facility. So we've now got 3 facilities at our sort of Mississauga campus all within about 4 doors of each other with the capacity to produce the growth that we've strategically set for us as an organization. In addition to that space, we are also looking at automation, automation of the VTM and QAPs business. And we're making some rather sizable investments in equipment, automation equipment. So we're looking at between -- in fiscal 2022 of spending somewhere in the neighborhood of $2.5 million on capital equipment expenditures to support the growth of the business. From a cash standpoint, as I'd call at Friday, we've got about $12.5 million of cash in the bank, which is great. As I said, some of that is going to be going towards the expansion equipment and the expansion space. And others provide us with opportunities or other opportunities, sorry, as we go forward as well. That's what I've got on the balance sheet, Ken -- Cameron.

Okay. No. Thank you very much, Jim. I think it's a very good news disclosures that we have to make with regards to the nature of the business, the trajectory that we're on and why. And some of our capabilities, as you know, for -- or as shareholders who follow the company know, our ingredients business, because of its very breadth, had been negatively affected by COVID as doctors weren't seeing patients and patients weren't seeing doctors. Our antigens business has seen pressure on the top line, but we've more than made up for that with the rollout of our ever-increasing portfolio of test control products, our QAPs, or quality assessment products as the regulatory catch-all phrase for and for our viral transport medium. And our viral transport medium is certainly a very good new story with having generated tremendous sales growth from standing start in 2021. And the good news, bad news story of that, of course, is that one customer has been buying the vast majority of our production as fast as we make it generally. So as we broaden that capacity out as well, we'll be able to secure more customers and offer better prices as well.

Cameron, is my mic giving feedback? I'm getting a little bit.

Not from my end, Deborah. You're fine here.

Okay. Just wanted to be sure. But we did have one question and something that we usually talk about at the end, so maybe we'll talk about it at the beginning, which is the antigen business that you just referenced. In Q1, your antigen business, I believe, had a run rate of $7 million, which is significantly below the long-term performance of that business. Can you provide some color, like you just did, maybe expand a little bit on that on how COVID has crowded out that business and, more particularly, what the rebound potential might be if things begin to normalize?

Well, this calls for a bit of recent speculation on my part, but I can speak, certainly, historically, if we look at fiscal 2019, which was our last pre-COVID year on the antigen business, we generated sales in the antigen business of $12 million for that full year of 2019. And then that came down to more on the order of $9 million the year following for 2020 and for 2021 is around that same $8 million, $9 million range. We are continuing to monitor that business and see when we might see a rebound. We're probably $7 million to $9 million range for fiscal 2022 on the antigen business, unless we see a faster-than-expected rebound, but that's in our budget numbers. And the beauty of this is we haven't stopped improving the production methodologies and efficiencies in our antigen business, so we're extracting now probably more gross margin dollars even on the lower revenues that we're now experiencing or pretty close to more on those lower numbers. So as that business starts to rebound, as testing broadens out in a little more normality and it's not just overwhelming focus of COVID, then we will see that business rebound at higher margins, we believe, than we've seen historically. So that's a very good counterpoint to some of concerns people have expressed around is whether VTM is too COVID-related. And for that, the same argument and logic is valid for viral transport medium because you still need that for many other forms of testing, not just about COVID. And we're also seeing companies very rapidly key up for multiplex testing capabilities for respiratory viruses and other maladies where, for example, in 2021, you would have been tested for COVID and COVID alone. In 2022 tests, the forward-looking companies are offering tests that, at the very least, will test for COVID and influenza A and influenza B and a virus called RSV, respiratory syncytial virus. And some companies are looking at tests that even can look for 10 or more viruses simultaneously to really say, "Okay. You've got respiratory distress. Now we don't just want to know whether it's COVID. We want to know what it is." And that affects public health decisions, bio vigilance, that affects treatment decisions, that affects isolation decisions. So as all this moves forward, we're at the forefront of that evolution. And you've seen that with the announcement of our 4-plex control for respiratory pathogens that was released in late December. You've seen that with our Omicron control that can establish whether PCR tests properly detect the Omicron variant of COVID. And just to give you an idea of the speed at which we're able to work now, it was precisely 8 weeks between our authorizing work to create a COVID control or COVID QAPs product and having a fully compliant IVD QAPs product that could -- that can and is being used to support the accuracy of lab tests for COVID. So that's the kind of capability Microbix has generated, and we've moved faster than governments and certainly larger competitors. We've shown that we have skill and speed to execute such products. And that's one of many reasons why we see great optimism about our business going forward is the breadth of our capabilities and our product offerings.

Do you have any plan to launch a COVID antigen product or participate in the COVID antigen market?

We already have a COVID antigen product. We've had one for some months. It is recommended to support many companies' tests, and there were -- it is validated across, I don't know, somewhere certainly over 30 different companies antigen tests are shown to be well supported by the Microbix COVID antigen test controls. Ken, you look like you wanted to say something there.

It's a fully valid IVD product and has been broadly used around the world. I want to make -- kind of the first comment I'd make would be on the antigen business following what Cameron said with regards to the efficiencies we're bringing in place. The technical team here -- I can't speak highly enough of scientific and technical team here is continually working on improving processes and margins, and we're seeing the benefits of that. Most people would be aware of what we did with bioreactors and Rubella. But that's not the only product we have is everybody will know in that particular space, and we're moving on from there. The second thing, of course, is that everything we do is under a fully loaded quality management system. I talked about future-proofing what we're doing. And we're doing that in the context of a highly regulated environment. And Microbix' team and quality management and regulatory affairs is engaged with the scientific group to make sure that we bring in the best products into market. When I talk to people about what's coming as COVID goes endemic, ahead of the next pandemic, what's going to happen, things like human papilloma virus testing come up and antimicrobial resistance testing come up, this is something that Microbix has been involved since before the pandemic. So it describes our business is far broader than even with respiratory viruses, we're very involved in that. And all the capabilities and testing capabilities have been generated in the next -- in the last little while throughout the globe are going to need controls and test reagents in this space. So we're nicely positioned to continue our highly regulated growth. And that, of course, we're exactly what we're doing.

Yes, very much so. And there's certainly a real need to start to catch up on the many tests that weren't conducted as a result of different waves of the pandemic. So testing as a broad category is not going away. And there's tremendous capacity that's been built out that's going to be redeployed into other testing. As Ken quite correctly identifies, those tests are going to need controls. We -- if we haven't already got them in our catalog, we will be adding them to our catalog. And as well our DTM supplies will be still needed for many of these categories of patient sample collection, stabilization. And right now, for example, we see testing capacity. Just if we look at COVID and the absolute immediacy of that, we see testing capacity maxed out still even after the eligibility for tests was massively restricted within Ontario, for example. So the level of stability that we'll see on that, that we're quite optimistic will be quite adequate to meet our budget targets and have a tremendous business on a going-forward basis.

I did have 1 question about testing winding down significantly in most jurisdictions in North America. Would you say that's inaccurate?

I think you'll see shifting in what is tested for and why. We saw, for example, clinical labs in our home province here reporting wildly high positivity rates for COVID in December, January and February as the Omicron variant swept through. The public health advice, if you think you have COVID, you probably do stay home is a very good thing. As we start to see lower positivity rates, it makes more sense to test and get more accurate intelligence about what's circulating in the community. You don't want in your community, you don't want the novel flu variant circulating any more than you want a novel COVID variant circulating, and that applies to many infectious diseases in different contexts.

So where do you see the sales going? Do you think that you'll be able to continue having record quarters sequentially? Or do you think you see a decrease in testing and maybe an increase in other business lines. How do you see that?

Well, all of our business lines are involved in testing in some capacity. It's what are you testing for becomes the question. So as single-channel testing for COVID, I think that will start to ease back as particularly -- even as we come into spring, for example, there's a normal seasonality to respiratory viruses. And we'll see that this year as we saw last year and the year before. For us, that doesn't quite line up with our sales cycle as we are helping companies stock product and prepare for the fall season. So if the respiratory viruses starts in October, count backwards a number of months for when products are actually built and created and stocked to prepare for it. So that's one element of seasonality that we look at. The other thing is we're just going to see single-channel testing replaced with multichannel testing and catch up on other matters. So many people have not attended, for example, prenatal workups and obstetrics appointments have been missed as a result of COVID. And pediatric health appointments have been missed because of COVID. And people with lingering infections and conditions have not necessarily gone as readily to see a GP as they might have outside of a pandemic. So we see a lot of these moving forward. And another big, big trend, as Ken was alluding to, is patient self-sampling and testing for a variety of pathogens. There's no reason that somebody who is dealing with a sinus infection, for example, or a urinary tract infection can't self-sample and that a lab can't run a panel test to assess not just be hunting and pecking and guessing. Is it a pathogen A or pathogen B and gradually working your way down to Z, if you can do these 10 at a time, it's a heck of a lot more efficient and say, "Well, we test for 4, 5, 10 different pathogens. We're going to catch 95%, 98% of cases that are going to fall into that bucket. And if it doesn't fall into that bucket, we want to know what it is and why." So the good news is we're talking about much better health care, I think, than we've all seen. Oftentimes, I know my experiences in health care system, thankfully have been few, but those of myself and my family have been about getting a definitive diagnosis is a struggle. And sometimes the health care then flows very, very well, but the challenge is getting that clear diagnosis of what you have, and that's what we're all about helping the industry get there faster and better.

A lot of questions, and I get this question a lot just generally. So with the restrictions becoming less strict in Ontario, are you worried about the next quarter from Ontario to never materialize? And I have about 8 questions on VTM. So maybe you can walk us through where you're at with...

My quick answer would be no. I am not worried about that, and the reason is that we've shown ourselves to be supplying, reliably supplying a product of superlative quality to Ontario in a time of great difficulty in supply chains. And while there is always responsible pressure that companies are cost-competitive or at least reasonably so, we believe our value is a very good proposition. And being able to drop something off in the same afternoon to the designated facilities of public health as opposed to having a 16-week transit time for a container across the ocean right now coming from another jurisdiction. That is a very large strategic advantage and one that is appreciated as well as being under the closer regulatory scrutiny of a home jurisdiction. We really take quality incredibly seriously here, and we believe we're manufacturing not just good product, but the best possible product. And that could be readily validated by any of the -- any of our customers or any of our regulatory authorities.

And in other provinces and entities, other governments, can you give us an update there?

Yes. As we're moving forward with the build-out and further scaling, that becomes more and more relevant. We have moved forward with the hiring and training of the second shift for semi-automated production methodologies that would double our capacity, and that starts to give us a little more elbow room to be able to say, yes, and we can supply you. Also, province BCD, et cetera, with a strategically relevant quantity. And then as the automation equipment ultimately is installed and validated, then that capacity goes up that much more. And as with most things, the greater your throughput, the more you can pass on cost savings to customers and still maintain a commercially acceptable margin.

Okay. You referenced some supply chain issues just generally in the world right now. Are you experiencing any supply chain issues in securing products as well as in getting your equipment for the new capacity?

Yes, we are. We're -- we've experienced delays at our customers, where some launch of new tests and test products have been delayed with things like availability of microchips, for example, for instruments has been an issue. We've seen many cases where small unexpected production items are suddenly available in limited quantities or are in back order, and those have affected some aspects of scheduling production. We've not had any case where we've been unable to deliver product to customers in time to meet their needs, but it does not mean that it's been without challenges in maintaining that flow. So I think our team has been very good in validating alternate sources of materials where required. And we've also encouraged our holding directly a greater amount of raw materials inventory to help mitigate that. In previous years, one of Jim's KPIs, for example, was in helping to control our inventory levels and the amount of working capital drawn in inventory. We specifically backed off on that to be able to have a greater inventory cushion as we use some of our working capital so we don't get caught.

[Technical Difficulty] QAPs online is?

Well, we'll have some updates about that shortly, but we have started the teardown in preparation for install in our third site. The lab that you see behind Ken is obviously done. And the physical construction, we're using some very good techniques to accelerate that. And then the arrival of and validation of equipment follows, of course, the installment. We'll have a 2-step process for our second -- third site, 275 Watline, where the semi-automated production will go in first, followed hopefully in the not-too-distant future with the fully automated lines. And Ken, maybe you want to comment further a little bit on that.

Yes. We work very closely with our contractors who have specialized skills installing laboratories and clean rooms very quickly. The lab behind me went in a matter of weeks. Obviously, some additional validation on that. But we're moving forward expeditiously on Building 3 in 275 Watline with lab 4 for VTM. So it certainly won't be too long before that lab is operating. And of course, we will disclose as that comes online.

Okay. Great. I'm just looking -- I know there's a few more VTM and then we can move on. I have some questions about guidance. And I'm not sure if, Cameron, you're in a position to start offering guidance for the year. Maybe you can go over your kind of Q2...

We haven't given -- made a practice of giving formal guidance. But by and large, we do have an annual budgeting process we go through every year. Typically, in November, we have a board planning offsite where management presents a detailed analysis and a viewpoint on what our objectives are for the coming year in terms of consolidating the existing business and securing additional business and building up product lines. We presented for 2021 -- I'm just trying to remember. I think we were looking at $19 million and change. We came in at $18.6 million, so it tells you that we are pushing ourselves hard in generating top line and business growth to come in -- to come in, not at gunpoint, to your Board and say, "You know what, we want to increase sales by $8 million or $9 million in a single year and move that up by 80%," tells you that we're not exactly timid in how we're approaching this. But it's a reasoned approach, and we look and do a careful bottom-up analysis of where -- from what customer do we foresee and forecast getting orders and for what product. So what products? So it's carefully identified by customer and carefully identified by product. And then looking from an operational point of view, do we have the capacity to make that product to make those numbers. So these aren't fantasy budgets that we look at. They're very much bottom-up-driven and very much checked with reality. And you could see Jim's grim visage there that holds us to account on these things in a very good fashion as well. I tease them a little bit on these things.

I was really just hoping that you're not going to say too much.

Yes, yes. So we're looking at a similar magnitude of growth for 2022, I think I spoke, and as our targets loosely in the $25 million to $30 million range for top line as numbers that should be achievable. And as we see that, our objective, of course, is that our SG&A does attract that growth. It's smaller than that, but we are investing in systems. But I'd like to see us come in with 4 consecutive quarters of profitability in 2022. And I believe that Q4 will be our strongest quarter for the fiscal year given the stocking of products from different companies with whom we're working for the Northern Hemisphere winter in 2022, 2023. And that's -- certainly, there'll be a lot of respiratory in there, but it's not all about respiratory by any stretch.

And then switching gears a little bit back to VTM specifically. Is it possible to get a recurring order cadence from Ontario? Or are VTM orders likely to remain lumpy and large one-offs?

Well, we are working closely with provincial authorities to try and get that visibility. And for both parties' benefit, I think, historically, there's been a little bit of a planning on more of a just-in-time basis, but we're not in a just-in-time world anymore. And this is a product that takes more than a month to manufacture and there's a whole step before QC and QA release this product. So you can't just order -- this isn't something your "Gee, I feel like such and such cuisine this time. I'm just going to phone Uber Eats and it will be at my place in an hour." This has to be planned in advance. And we've certainly driven that point home on multiple occasions. I think the delivery we were able to make just before Christmas was most appreciated, and we're going to be pushing hard for that visibility going forward and to have some standing orders out there so that we can plan to make certain that the needs of our customers are met.

Got it. That actually ties in nicely to another question that's been sitting here for a bit. Do the automation updates necessarily precede any announcement for expanded customer bookings? Or do you see a possibility where you could announce an expanded -- or expanded customer orders before the MFG upgrades are complete in order to give some confidence to the market regarding expected revenue growth?

The old saying, "Luck favors the prepared," we're not looking for luck. This is very targeted, but we have to have capabilities in place. We have, for example, customers for QAPs that we're discussing 100,000-plus units a month capacity, and we need to demonstrate that we can deliver that capacity so that customers can rely upon us. And that's what we are demonstrating and continue to demonstrate. So it's genuinely tough to forecast will capacity could be commissioned shortly before an order that substantiates the need to build the capacity or the other way around. And we're not in the business of giving a blow-by-blow on every discussion with every client. There's confidentiality between us and our customers that's required. So I think, at some point, there has to be some credit and faith given to management and our Board that we're proceeding as -- on a reasoned basis as intelligent business people to build a real business. And that's very much what we're doing. You'll see in our disclosures we're in no way promotional or fluffy or trying to jam the shares one way or the other. What we're doing is building a real business and working to create sustained value for our shareholders. And that's what we're doing. And I encourage people to read the disclosures, read the MD&A, read the CEO letter to shareholders. This -- we don't do this just because we're required as a public company. We're doing this to communicate and tell you where we're going and why.

You talked about partners. Can you give an update on any expansion of business in the future with some of your partners, Seegene, SpeeDx, et cetera?

Yes. There are definitely groups with whom we're working that are leading companies in the diagnostic field that are looking to us for support for their tests. So again, we're not making diagnostic testing instruments or testing systems. These are investments of tens, if not hundreds of millions of dollars that are required to launch those successful. What we're doing is offering the products that pair with those and support them. So if a company, for example, is selling a box of 25 to 50 test cartridges, for example, that might test against a test for COVID, Flu A, Flu B, RSV, I'll use that as an example, with every box of 25 to 50 cartridges might be included a Microbix positive and/or Microbix negative control so that every 50th cartridge can be checked to make sure that instrument is running properly in the lab, the pharmacy, the doctor's office where it's installed. And our next win, I believe, is going to come with including Microbix products in with the consumables of these big OEM manufacturers. And that's the win that we're shooting for now. And that will drive, I believe, volumes of QAPs production, sales that haven't yet been seen by the marketplace. We're just scratching the surface of that.

It seems like an exciting and large opportunity.

We believe so, absolutely.

I had another question about telemedicine providers. Are there any opportunities to work with some of the telemedicine providers, for example, CloudMD?

Great question. These are excellent companies. We'd have to look at whether we can partner with some of those companies with self-collection kits, for example and it's a very interesting thing. Thus far, it's really been more about replacing the unavailability of a doctor for a physical appointment with a Zoom appointment or something like that. But as that gets tied into greater convenience of diagnostic testing as well, there may be a role for that. Well, it's a good question. We'll have to explore that certainly at this time and at CloudMD and others or people we know and should be having a dialogue. So a great, great point, and we'll action it.

Great. That leaves us with one last real area to cover -- actually 2, one is capital market strategy and the other is Kinlytic, Cameron. Can you give us an update on Kinlytic? I have a bunch of different questions. And one of them is asking, are we still working with the same partner. Can you provide an update with your current expectations for time frame in closing on a transaction?

Well, we have dialogue ongoing on Kinlytic. One of the things you'll see in different companies, a lot of firms that have been involved in hospital-based product sales, and these are surgical devices, drugs, et cetera, have been hit hard, as a lot of hospital procedures are getting deferred. That certainly slowed down partnering and it slowed down fundraising for some companies in that space. So we still have contact with multiple parties going on, but I would treat it as aspirational to get a deal done on Kinlytic for us. We're still quite optimistic we'll get one done, but I'm a little bit leery of trying to predict time line.

Got it. And can you talk a little bit about your recent options exercise and subsequent share sale?

Well, I've exercised options, but I haven't sold any shares. So the company, I think, we had some good appreciation of our Q4 results and, of course, our VTM reorder. I think the same way that you end up with some people that do tax loss selling in -- late in the calendar year if companies haven't performed well. As we have performed very well, I think you saw some tax gains selling in the new year with people rebalancing portfolios. There are also occasional exercises of options and warrants. We have a convertible debenture that is converting -- maturing and converting this month. So this is the normal ebb and flow of supply and demand on a given day. And frankly, we don't control that. What we're on about is making sure we're continuing to build the business and create the real value. And the trading volatility, it's a good opportunity for people to add the positions and for people to rebalance where they need to.

Okay.

Just going to close the blind a little bit. The glare off my head is too blinding.

I'm getting a little bit of sun thing happening over here as well, which is nice. It's nice that the sun is out, I am not complaining. I guess the last series of questions that I had, Cameron, is just about the capital market strategy and what we're doing to get the name out there. I think you can talk to some of the events that we have upcoming.

Yes. We -- I am attending the Capital Events Management Conference in Whistler at the end of this week. And we'll be meeting with a number of investors on the West Coast. We also have a webinar scheduled in 2 weeks' time for a more comprehensive run-through in the business for investors that are less aware of Microbix. And we're also doing some work not just with Deborah at Adelaide Capital here in Canada, but also with Torrey Hills, the Investor Relations firm based in California. And we are starting to see companies take note of us. I'm aware of a private equity hedge fund in Greenwich, Connecticut has taken a position and we're in a firm in California that's taken a position. We're in a firm in the Midwest that's looking. So we are starting to see serious investors taking a look at what we're doing and liking what they're seeing for the reasons we've described. And that may as well, hopefully, start to broaden our audience in Canada, ideally, with more equity research coverage from some of the investment banks in Canada. And I wouldn't be at all surprised if we make it into the Small Cap TSX Index during the annual rebalancing in September if we continue to hit our budget numbers and are demonstrating strong quarter after strong quarter. And these start to build the audience. We're still a micro cap or nano cap, whatever the bucket is, but we broke $100 million market cap before the year-end 2021, and I think that's reflective of the fundamental progress of the business that we're continuing to push.

And I noticed that you have a new marketing strategy. I believe you hired a new marketing person last year. Is that correct?

Well, we've got a few people -- new people in the sales and marketing group. And this is looking to deliver sales in different categories. And this, again, speaks to the breadth. We have direct sales in Canada. We have direct sales in the U.S. We have sales through distributors. We have sales to proficiency testing agencies. We have sales to immunoassay test manufacturers. We have sales to point-of-care test manufacturers. So we're really building out a very broad customer base and product line, and we're going to see the benefits of that.

Agreed. Well, I think one of the comments was that -- and I mentioned this to you this morning before the call -- that we're starting to see some Google ads and things like that for Microbix products, which is good to see. And then the last question. Here's the question. Is there a yardstick that can be used to determine how undervalued this company is when compared to peers? It's from former analyst, Cameron, what do you think?

Well, yes, you're -- we're -- certainly, we've seen life science valuations coming down a little bit over late 2021 and into 2022 more broadly, but I think we believe the analysts covering Microbix view us substantively undervalued relative to peers. Now some of that is the size and liquidity discount of the peer companies that are a bit larger or substantially larger than us, but we can well post some very strong numbers for fiscal 2022 on a bottom line basis. And when you start looking at a price-to-forward earnings or enterprise value to EBITDA or some of the other price to sales, some of the other measures that are used, we routinely come out of at a fraction of the valued peers. And I think as our trajectory continues to solidify and we post further and further consecutive quarters of strong results, record sales and record earnings, you're winding the spring. And I go back to Jack in the Box methodology. You just keep cracking on that, just keep cranking. You don't know when it's going to pop, but eventually, it will. And that's the way we look at it. And we also want to make sure that, that gap doesn't get so big that we're an acquisition target that gets taken out without ever fully realizing the appreciation for long-standing shareholders. So that's why we do the ongoing investor relations work even when we don't have an immediate need to tap capital markets. Jim, what are your thoughts on some of what you see in peers and valuations? Any thoughts on those?

Certainly, as you identified, Cameron, there's been a lot of pressure in the life sciences market more recently. We haven't seen that same level of pressure on our performance. And as you indicated, we continue to believe that we're undervalued, and we're just looking for the investment communities to see that and continue to invest in Microbix and the growth trajectory that we're on.

Yes.

Well, I don't see any other questions. I think that's a good place to end off, and we've kept it to the hour, which is miraculous really because usually there's so many questions. Anything that you wanted to cover today, Cameron, that we didn't touch on? Any final thoughts that you want to leave investors?

Final thoughts, I'd say we've got a very strong business now, great team that's working very hard to deliver on things. And we're positioning the company to be able to successfully scale our sales, our earnings and keep growing and delivering real value.

I think it's a great way to start the year off with a record quarter. And as always, you seem to pick the holidays to spend with your shareholders. So happy Valentine's day.

Thank you very much. Yes. Good one. A big hug to everyone.

If anyone has any questions that didn't get answered or you're watching this online at a later date, you have a question, feel free to reach out, and I'll get those answered for you. And yes, have a great afternoon, everyone. Thanks so much for your time.

Okay. Thank you, everybody.

Thanks, Deb. Bye, guys.