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

Good afternoon, everyone. Thanks for joining us today for the Microbix Annual General Meeting, with me, I have Ken Hughes, COO; Jim Currie, CFO; and of course, Cameron Groome, CEO. And Christopher Lobb is going to be hosting the meeting. So at that point, I'll hand over the mic to Christopher, and we can get started.

Great. Thank you, Deborah. So the meeting will come to order. Good afternoon, and welcome to the Annual and Special Meeting of Shareholders of the Microbix Biosystems, Inc. I'm Christopher Lobb, the Corporate Secretary of the company, and I will act as Chairman of the meeting. We'll start the meeting by addressing the formal matters. And once these matters have been addressed, Cameron Groome, the President and the Chief Executive Officer of the company, will provide a short summary of recent events and activities. Questions can be asked online and Cameron will answer them at the end of his presentation. I hereby appoint Emma McKenzie and Megan Rocha of TSX Trust Company to report on the shareholders present in person and the number of shares represented in person and by proxy and to compute the votes on any poll taken. Notice calling this meeting and the accompanying management information circular have been distributed using the notice and access provisions under applicable securities regulations, to all registered and nonregistered shareholders. These provisions allow us to post electronic versions of the proxy-related materials, online rather than mailing paper copies to shareholders. This allows us to reduce our postage material costs and also has environmental benefits reducing the volume of paper documents generated. Physical copies of the form of proxy, the supplemental mailing list and notice and access letter have been mailed to all shareholders of record, to the directors and to the auditors of the company. And the registrar and transfer agent has filed with me proof of service. I direct that a copy of such materials with proof of service being next to the minutes of this meeting as a schedule. We'll now ask someone to move and second a resolution dispensing with the reading of this notice.

I move the resolution as follows: be it resolved that the reading of the notice of this meeting be dispensed with.

Ken Hughes, a shareholder. I second that resolution.

I declare this resolution carried. The scrutineers' report shows a quorum to be present. I, therefore, declare the requisite quorum of shareholders is present and the meeting is regularly constituted. I direct that the scrutineers report be annexed to the minutes of this meeting. Before commencing the business of the meeting, I'd like to comment on the voting procedure during the shareholders' meeting. Each holder of a common share is entitled to one vote, for each common share held. As a show of hands cannot be done during an online meeting. The shareholders have been asked to vote in advance of the meeting. At the time of each vote, I will indicate the results of that advance voting. I now present to the meeting the financial statements of the company for the fiscal year ended September 30, 2023, and the auditor's report thereon. It's not proposed to ask shareholders to approve these financial statements. However, Jim Currie, the Chief Financial Officer of the company, will be pleased to deal with any relevant questions that are asked online concerning the financial statements during the question-and-answer period at the end of the meeting. If the shareholders have questions of a general nature, they can also be asked online and answered after the formal part of the meeting is completed. It's now in order to proceed with the election of directors. The Board of Directors consists of 7 directors. I now declare the meeting open for nominations.

Jim Currie, shareholder. I nominate Peter M. Blecher, Mark A. Cochran, Vaughn C. Embro-Pantalony; Joseph D. Renner, Martin Marino, Cameron Groome and Jennifer Stewart, as Directors of the company to hold office until the next Annual Meeting of Shareholders or until their successors are elected or appointed.

I second that resolution.

Based on the scrutineer's report, I declare the resolution carried and those nominated to have been duly elected as directors of the company to hold the office until the next Annual Meeting of shareholders or until their successors are elected or appointed. Next item of business is the appointment of Ernst & Young LLP, as auditors of the company and the authorization of the directors to fix their remuneration. I will now ask someone to move and second a resolution appointing auditors and directing the directors to fix their remuneration.

I move resolution as follows: be it resolved that Ernst & Young LLP be and they are hereby appointed auditors of the company to hold office until the next Annual Meeting of the Shareholders or until their successor is appointed to fix such remuneration, as may be fixed by the directors and the directors be and are hereby authorized to fix such remuneration.

I second that resolution.

Based on the scrutineer's report I declare that resolution carried. The next item of the business is the reapproval of the stock option plan. I'll now ask someone to move and second a resolution reapproving the stock option plan.

I move a resolution as follows: be it resolved that the company's stock option plan and all outstanding grants or of options made by the Board of directors pursuant to the stock option plan and all unallocated options issuable under the stock option plan are hereby ratified, confirmed and approved. And anyone officer or director of the company is hereby authorized and directors to do all such acts and things and to execute and deliver all such instruments and documents as may be necessary to give full effect to this resolution.

And I second that resolution.

Based on the scrutineers' report, I declare that resolution carried. This concludes the formal part of the meeting and I propose that we terminate the meeting -- sorry, terminate the formal part of the meeting, and Cameron Groome, President and Chief Executive Officer of the company, will make a presentation to shareholders and thereafter respond to questions from shareholders that have been asked online. Accordingly, I now ask someone to move and second a resolution terminating this meeting.

Mr. Chairman, I move the meeting be terminated.

And for the final time, I second that resolution.

I declare that this meeting is now terminated and invite Cameron Groome, President and Chief Executive Officer of the company, to make the presentation to the shareholders.

Well, thank you so much, Chris, and thank you, Jim and Ken for you guys doing all the work on this. I'll step up to the plate now and do my part. I'd just like to begin by thanking everyone for taking their time to join today. As panelists, we have me, our CFO, Jim Currie; our Chief Operating Officer, Ken Hughes; and of course, Chris Lobb acting as Corporate Secretary and Chair of the meeting, and thank Deborah Honig and Adelaide Capital for the organization help on hosting us. Also welcome our Board of Directors, who are listening in alongside other team members and shareholders, so delighted to have everyone today. I thought today, I would briefly walk through our current corporate investor presentation asking Jim and Ken to chime in when they feel there may be points to expand on or even correct. If I'm communicating suboptimally. And following that, we'll take some questions via the auspices of Zoom meeting, which can go in Q&A or I believe the chat, either one, and Deborah will moderate those. So I'll pull up our corporate presentation, and I'll breeze through it fairly quickly just so we've got more time for questions, but let me share a screen on that. Please bear with me, and I'll see if we get this to work properly. We're not having good luck with Zoom today, guys, but we'll see if -- I'll try one more time.

It's up there Cameron now, if you want to make it full screen.

There we go. Thanks. Thank you Deborah. That's great. Let just give me some bits kicking over doing the wrong screens. So part of our -- a big part of our model, of course, is growing Microbix responsibly. And I mean that within burning vast quantities of capital and, in fact, maintaining profitability in the most part, we are building a very unique company with tremendous capabilities for revenue growth and profit generation. And we're doing that by supporting a number of the giants of our industry with critical materials and products and moving ourselves regularly up the food chain in that. And I don't -- some of the things I won't dwell on, forward-looking statements. Everybody knows what those are and future-oriented information is subject to these caveats, as you know. In doing this build, we've got a great team, and you've got me, Jim and Ken here, but we've got a tremendous team leading the company for a company of our size, a little over 110 employees now, all working on leading-edge biology and with a focus on medical diagnostics, and we'll touch on exactly what we're doing and where. And we've got a great Board as well, very supportive and pushing us and guiding us without unnecessarily meddling in management level decisions. So we're very pleased to be working with some great directors, and I know a number of them are on the call today. So thank you, guys. And we are, of course, a public company, as everybody knows. We are a public company with growing liquidity in our trading. We are a public company with a market capitalization in the $50 million to $100 million range now, which has moved up over the past few years, and we are a public company with a very good level of cash and liquidity and resources to the point where we, in fact, are buying back shares not issuing new shares. So our business is self-funding and growing, which I think is very critical in a challenging capital markets environment that we found ourselves in for smaller capitalization companies. And in so doing, we're really growing dramatically in the involvement of our business with really a who's who of the diagnostics industry. And by necessity, we've had to over the past number of years, talk about our business is a little bit more of a sum of the part, but I think we're pulling this together in a very nice holistic fashion. We started, of course, with the heritage of the company created in test ingredients, growing up, purifying it and activating a whole catalog of bacteria and viruses that formed the biological sort of tests looking for antibodies in your blood for exposure to a disease or immunity from a disease. And then we've been moving into fully regulated medical devices to support and ensure test accuracy. And calling as well on that legacy of expertise to be able to pursue therapeutics selectively, and we have a fully funded therapeutics program with our Kinlytic urokinase program that is really a supercharger on what's already a great engine of our business. And you see a number here of companies with whom we work. They are either customers, collaborators, in some cases, suppliers of critical materials to us, and we're proud to be working with all of these firms and many more in generating revenues and growing revenues and growing margin dollars and profitability for Microbix and we'll touch on a little bit of how and why is that. There's a lot of opportunity for us to grow our business. And we've grown it certainly since I came on board from below the $10 million mark to -- we should do $25 million or more in revenues in our current fiscal year. So we've really been moving forward. And from that, we start to see $100 million in revenues is an attainable role for our company, and we're moving forward very aggressively to reach for higher numbers where the infrastructure we built is more readily supported by an increasing amount of sales to critical customers and that we can very much drive profitability with that. There's lots of opportunities for cross-selling, why sell one product to an existing customer, when we can sell multiple products in multiple categories of products to those customers, we're continuing to foster and cement new customer relationships and wherever possible that those have become meaning customers that will really move the dial from a revenue growth point of view, which of course as you get bigger, you need larger and larger wins to maintain a growth rate. New product classes, we'll touch on it a little bit, and I think we'll get more of that in the Q&A. There are great trends driving us, whether it's the molecular diagnostic or PCR-type testing that is being done more and more, and point-of-care testing, POCT testing where you bring the ability to the test to the patient rather than having a patient run around to deliver samples in the clinical lab. There is syndromic or multiplex testing is another big trend, for example, knowing what a respiratory infection is? Is it a virus? Is it a bacteria, exactly what is the cause of that problem and a whole bunch of disease categories. And then, of course, the emergence of antimicrobial resistance is an area that we're very much involved in. If you define what the bacteria is, why not do a second test and know whether the treatment you're giving is going to work or not. And similarly to look across a wider variety of viral or the infectious variance to better understand what's driving a disease condition. So we're in the thick of all of this with leading-edge companies now around the world and very proud to be supporting them. And I think as we get further into this presentation, we'll see a little bit more about just the pace of the relationship of product and development and opportunities that are emerging for us just what we've seen over the last 9 months, for example. So our three areas of business: medical devices, test ingredients and Kinlytic urokinase. Each of these is a significant contributor to our financial results in 2024. And each of these has excellent growth opportunities that certainly will touch on more in the Q&A. Just a few examples in our test controls. One area we've been very involved with is testing for human papillomavirus or HPV. And this is a ubiquitous family of viruses probably every one of us on this call listening in and speaking is a carrier of one or more types of HPV, but some of those viral types are persistent and drive the formation of human cancers and the best known of those is cervical cancer in women. And that has been screened for using pathologists, highly-trained pathologists looking at microscope slides of cervical cells to see if there are changes that are indicative of the formation of cancer. And that's been very helpful in reducing deaths and illness from cervical, serious illness from cervical cancer. But it's still a relatively blunt tool requiring a lot of labor hours and a lot of subjective analysis. And of course, it is only detecting once cancer has emerged. There is a much better way of doing this, which looks 5 to 10 years earlier and identifies patients that have a high risk form of the virus and flagging them for a closer watch to catch any emergent tumor at its earliest stages. So looking at for the cause of what could become cancer rather than waiting for the cancer to appear. But all this couldn't be unlocked unless there were controls to validating that kind of testing. And Microbix has created them and is now getting cited by the major players in that industry that are building a market and hundreds of millions into a market and billions, and we are seeing the recognition of that as different national screening programs, such as the Netherlands, is now using Microbix controls to ensure -- help ensure the quality of their national cervical cancer screening program. The Republic of Ireland is also using Microbix controls to support their national screening program. And interestingly, the Netherlands is on a Becton Dickinson platform. The Irish program is on a Roche platform. It is illustrating how we are platform-agnostic. Microbix is happy to support all of these and does support all of these and is now being recommended by all of these leading companies for the controls and growing our sales in this very important category. And I think we'll continue to see wins in additional geographies and companies' platforms, recommending and using these Microbix products on a global basis. So we thank shareholders and our team and everyone involved for helping make these important innovations happen. But one indicative area. Another area is, of course, whereas HPV testing is currently mainly done in the central lab. We're also deeply involved with point-of-care testing. And there are instruments such as the emerging QuidelOrtho Savanna, the Cepheid GeneXpert that are very effective point-of-care test systems, an instrument, roughly the size of a toaster that can distinguish between multiple organisms in a point-of-care test that could be at hospital during the off hours when the lab is closed, it can be at a doctor's office or a clinic, it can be at a long-term care facility, a school, a cruise ship. All of these nontraditional settings, why wait for a lab to be available when these can be done much more readily and much more accessibly for the patients, and we're already supporting many of this in our relatively unique swab-based controls where room temperature stable are ideally suited for this. And we're winning a lot of business with including our controls in kits of point-of-care test cartridges, which is a high-volume utilization of our product. So we have many advantages here. The performance of our products, the formats we have available, there's stability, multiplexing, multiple -- controlling multiple pathogens on 1 swab, for example, resistance and variants, and we have very extensive intellectual property of our own and that of our partners, protecting these innovations. So, we'll dwell on this next slide, but it's taken us a while to identify where these different market categories are. We started providing our products to about $1 million a year to the proficiency testing our lab accreditation agencies that actually regularly challenge the labs to see if they can truly run tests properly, and we become a major supplier to most of the global agencies doing that more of a limited market, but tremendous knowledge base and ability to facilitate our development in new products. We've also started moving forward with providing training materials, our onboarding kits to help new installations of instruments and the operators learn how to use them reliably. Our PROCEED products that are often ones included in test kit consumables and our most regulated level, which are supporting the central lab function, where the lab will book end its runs. And we've taken this business from certainly from $1 million to $5 million last year, it would be likely closer to $10 million this year. And moving forward quite rapidly, we see just unbounded potential for this business and continuing to grow for us. Our medical devices, we also certainly bailed out Ontario during the pandemic and prevented the collapse of the Ontario testing system by identifying it early that there would be scarcity of certain key reagents for stabilizing test samples, and we provided millions of vials of this critical product to Ontario during the peak of the crisis, that work has not continued. But we are now replacing the government business, which may be somewhat more fickle with industry business that we hope will be more steady in this. And we have developed tremendous expertise as a result of this, our company a few years ago thought it was doing yeoman work in filling 100,000 vials a year of product. And during the pandemic, we learned to do 100,000 a week. So 50x our previous volume. And that's still on a semi-automated basis. And perhaps we'll get into Q&A and we'll talk a little bit about the automation that we're laying in to be able to do this and be globally competitive, not just on the superlative quality of our product, but also to be able to compete with anyone in the world on price. So that's another great area of our business that we're quite favorable on. But some of the volatility in this has masked the underlying growth that we're experiencing in our antigens, in our ingredients business and in our controls business. Talk about our Ingredients business. Of course, this is the foundational work of our company. All of our expertise, our deep expertise in virology and bacteriology and biology flows from this work where we are a globally recognized provider of these critical antigen products, these purified and inactivated bacterian viruses that are the biological [indiscernible] of hundreds of company's tests. And, we offer a catalog of products in important categories in this area. And it still makes up about 50% today of our revenues, and we'll see that rough proportion in 2024. But we do see that coming down a percentage even though this category is itself growing because of the higher growth rates in some other areas of our business. But we've really seen a resurgence of this business now that more traditional patient doctor interaction patterns are happening during the -- the height of the pandemic, we're probably down 40% or more on these sales as patients weren't seeing doctors and doctors who weren't seeing patients, but we've seen a real resurgence in 2023, which is strengthening further across 2024 in this important category for us. Kinlytic is well taking our expertise in cell biology and cell culturing, we identified many years ago that there was an opportunity to make this very unique product that is a clot buster drug that could be used to unclog blocked central venous catheters for chemotherapy, parenteral nutrition, other matters and block dialysis catheters is a very unique and identifiable market that is considerable. And -- successfully passed due diligence by one of the largest and most sophisticated life sciences, private equity firms on earth. Who will be investing about CAD 50 million to bring this product back. They are covering all of those costs, and we will retain a very significant proportion of the economics of this product, when it returns to market. We expect in about 3 years' time. So a lot of work has gone into this and complements in particular to Ken Hughes, who's been leading the technical charge insistence on this, and you'll see in the -- on March 14th, that we announced that our partner has signed a multimillion-dollar agreement for one of the largest proportions of work to be done on this. The manufacture of new drug active and the modernization of some of the manufacturing elements and we'll be making a few -- 2 or 3 disclosures per year about this project as major milestones are achieved. But this should generate for us, likely royalties in the range of USD 15 million to USD 25 million per year, starting with those flow of revenue starting in about 3 years' time. So very strong additional economics from this program, and we're delighted to have done this and structured it in a way that only can result in net benefits to Microbix shareholders rather than bleed cash away from our core business. So I talked a little bit about just the pace of development. I think this is interesting. This slide kind of [indiscernible]. Why are they 11 on here or there could be more. But this is just what we've gotten to the point of being announceable and needing to be announced over the past 9 months. And you can see new programs with the lab proficiency organizations like Labquality from Finland, Supporting the national screening program, Netherlands on the Becton Dickinson platform, new STI multiplex products coming out, our first $1 million batch of orders from a major diagnostics industry client, QuidelOrtho in September, in October, Ireland coming on board with our HPV. Another client with HPV assay development signing with us for exclusive collaboration. Another point-of-care company signing with us for exclusive collaboration lab deep multiplex support with a leading Korean company wanting to get its test fully approved in the United States. Our first $1 million-plus batch of orders from a lab accreditation customer, a novel test controls in GI, gastric ulcer infection and gastric ulcer disease, and moving even -- beginning to move into the field of oncology with supporting histopathology and PCR testing for head and neck cancers. So again, these HPV driven, so a very natural evolution with a customer-base already targeted for us. So all these things really looking to -- well, clearly demonstrating the level of work we're doing, the international scope of that work and it hopefully doesn't take a lot of faith to understand that these translate over time into really material revenue growth and margin dollars for Microbix. So operationally, we've got 110 -- over 110 staff now. We're not adding people for the sake of adding people, believe me our people are working hard. And adding our capabilities and capacities with systems modernizations to win business from major international companies that are relying on us as a critical sole source supplier, our systems have to be absolutely up-to-date and first class. And kudos to Jim Currie on driving matters such as the enterprise resource planning upgrades so that we can manage a business at the scale and complexity. And Kudos to Ken and others for driving the quality management system upgrades, where our quality management is fabulous. It was paper-based and it becomes just more and more challenging to scale that as our business grows and customers expect us to have state-of-the-art system. So we've moved through some of these challenges. We're continuing to lay in capabilities. We have further work ongoing in our third site, both scaling our reagent production capabilities for full automation and building out additional QC and lab space. And just having workstations for people is a challenge for us, but we spend our money on the production areas, first and foremost, and of course on our people. Challenging fiscal 2023, I'm not going to spend a lot of time on it. We had to replace $5 million of the DxTM revenues that fell away following the pandemic. We replaced some of those revenues in 2023. We'll certainly have replaced all of them and then some over the course of this year. And we ended the year with a stronger financial position than we began it. So we're off to a wonderful start, for fiscal 2024 with our first quarter being an all-time record with revenues of $8.4 million and strong EBITDA and profitability. Our gross margin, we continue to push it to maintain it and move it higher, both in terms of a percentage basis and of course, most importantly, in terms of overall dollars. And financial ratios, very strong current ratio in terms of our liquidity and a decreasing debt load relative to our equity. So a lot's happening. You've got a great company here, very committed and talented team, and we do have some fun and some laughs along with the hard work, and we're pushing as hard as we can to build value for shareholders in a real and sustained fashion. So we'll proudly talk about our accomplishments, but you won't see us doing a lot of arm waving that isn't supported by very concrete evidence that what we're doing is incredibly real. So thank you for that. And we'll jump into questions. And Ken and Jim, I just kind of rolled through there. I didn't want to exclude either of you guys, but let's have you jump in more, and we'll give more time for shareholder questions at the end of this. So thank you so much, everyone. Appreciate your support as shareholders, you're taking the time to vote your shares and join us on this AGM call and most of all, of course, for the commitment of your hard-earned capital. So thank you I'll stop sharing. And Deborah, maybe you can pop back on grid and we'll invite questions from our audience.

Sure. I was going to actually have [ Lily ] to help with the questions, if that's okay with you?

Sure.

Yes. So if anybody has any questions, please feel free to put them into the chat box and then we can start going through them.

I can't have been so dazzlingly clear that there can't be questions. So please don't be shy everyone. And we would be delighted to address those.

Must have been a very thorough job, Cameron.

Okay. Well, let's hope the question function hasn't been disabled. We are -- I will mentioned we, of course -- tomorrow is effectively our last day of our second quarter. And I don't think anyone will be displeased with the kind of revenues we're generating. So without guiding to any particular top line or bottom line numbers. I just would say we continue to see some strong year-over-year growth and are certainly driving towards demonstrating there.

Well, as we wait for questions, maybe I'll make a quick comment on the progress of Kinlytic and that particular opportunity. As the group knows, we are collaborating with a group called Sequel, a specialty pharma group in the U.S. who are well funded by a major investment capital group, which is going to pay for all of the expenses associated with bringing Kinlytic urokinase back to the marketplace. That relationship is going very well. I mean doubtless saw the announcement that we've actually signed up a contract manufacturing and development organization to prepare the GMP batches and subsequent of all the commercial batches of urokinase going forward. The company we signed up is a really major international player. And we're moving forward that appears with them. Their purpose is to set up new manufacturing of an already approved product. Kinlytic is already approved by the FDA and Health Canada. All we're doing is moving the site and establishing contemporary practices in manufacturing the material. Often people look at Kinlytic, and see it's a biopharmaceutical and think there's a high-risk profile associated with. But often biopharmaceutical processes, the development, does it work at all, and then clinical trials where normally a biopharmaceutical which end its Phase I clinical trials, only 8% exit Phase III clinical successfully. Let me make this statement. There is no chance of urokinase feeling in any clinical trial. There are 20 years of clinical experience with this product. All we are doing is manufacturing the site. So with a biopharmaceutical opportunity on a 3-year horizon, 2- to 3-year horizon, this is very short term and very low risk. People should understand that and not just say this is a bio therapeutic and therefore, it must be risky. This is probably about a de-risked a novel, well, it's not because it's the original product, biopharmaceutical opportunity that exists. And so on to make that point for everybody knows that. It's going forward extremely well with Sequel. Microbix is working closely with Sequel and they're covering 100% of the cost of doing it.

Very good. Thank you, Ken. I think that's an excellent point to me. Just to emphasize that this is a manufacturing site revalidation of an already approved product. So these are big dollars more than we could afford to spend on our own. But the risk level here is far, far lower than typical with the returns still being exceptional.

And one on the sophisticated financial groups in the bio space in the world, did deep due diligence on this. And they're paying for it all.

Yes. Very good, very good. I see some additional questions, some questions coming in. So [ Lilly ], why don't I flow through on some of these, and I'm going to answer one that is also related to Kinlytic just talking on a previous call, we discussed there might be still faster track for approval of Kinlytic, and that's true. We have presumed through our development process that as we validate new manufacturing, the FDA may wish to see some demonstration of clinical usage of the product, and we model that into our budgets and time lines. It is not 100% certain that the FDA will require that additional demonstration. And if it does not, that could shave a significant number of months off the time line. But I think we don't want to cast that best case scenario as the default setting as it were. So right now, we're continuing to indicate the longer time line is the more probable. And if we can come in ahead of that so much the better. So I hope that addresses that particular question.

Cameron, so some other questions have popped in. So maybe if we move to are you able to elaborate on the potential to regain sales of VTM to the province of Ontario or any other provinces?

Yes. There is -- we are looking and we are working to secure sales of similar agents to private industry customers. And those sales are targeted to become material in the near future. We may see the beginnings of such sales even in the quarter. We're just concluding. So that is not in the far future, but very much in the -- here and now. In terms of Ontario, we had a fabulous relationship with the agents in the province of Ontario through 2020, 2021, 2022. A great deal of the staff, effectively all of the staff turned over in the summer 2022 election. And we were not successful in engaging with their replacements and found that procurement was resumed from imported product from untendered purchases from abroad where we were not even given the opportunity to participate in that procurement. So obviously upsetting to us. And we're working with authorities as they frankly reaching the whole procurement system for Ontario, but this is a long process and a frustrating one, frankly. And I think it's frustrating not just for us, but for some of the political leadership, it certainly does believe that security of supply of top-quality Ontario made product that employs Ontarians who pay taxes to make it is important but this is a long process to untie this very tangled situation that they find themselves in. So I don't want to get into too much insider baseball and I certainly don't want to throw stones at anybody, but it's been a very -- a far more complex issue than we had expected. And we're working to get to positive outcomes. But I don't think it will be tomorrow. I think this might be 2025, before we see some clear resolutions with Ontario, specifically. But it won't be that long before we're selling product out of our facilities and using those capabilities.

So next question, is wondering about the potential of P of care market and how you see this evolving?

We see point of care is huge. The ability to test and get fast results of definitive diagnosis is fantastic. What we've seen, for example, here in Canada, if somebody has a bladder infection, for example, and then they're fighting to get an appointment with their GP, who can then get a test taken and then goes to the lab, and then it gets tested in the lab and then a result gets back to the GP who then has to find a time to call back the patient to do -- it's a bit of a mess. What we then can see if somebody walks in and a pharmacist will prescribe blindly an antibiotic presuming what the cause of the problem is. It's far, far better to be able to run a test at the point of care right at the doctor's office or right at a pharmacy or a neighborhood clinic and know precisely what's wrong. Is this an E. coli infection? Is this a sexually transmitted infection. Is this antibiotic resistant, is it not? These are all questions that can be answered quite readily. And there are other jurisdictions that we're working with, such as in Australia, where they have changed the -- they were having a 50% treatment failure rate upfront for some of these infections. And they've reduced that failure rate to 5%. So going from 50% success to 95% success out of the gate, with faster outcomes for patients, more cost-effective care. As Phil Casselli says you can't put this toothpaste back in the tube. And this is a trend that's going -- that's improving access to health care, giving more people access to better health care, more quickly and saving the system dollars on a net basis. So the participations we have in this, we're extremely optimistic about, and we're working with multiple companies in this field.

Great. Sounds like a good opportunity. So next question is wondering about the increase of Measles in The States and the increase of Mpox in the [indiscernible], does this increase interest in your product?

Yes. I think they very much do. We do supply measles antigen, both measles and German measles. And certainly, if there are increased immunological testing going on, that will increase our ingredient sales. We've seen that, for example, in the outbreak of bacterial pneumonias in China, the so-called white lung, we produce products to make diagnostic tests that measure the exposure and whether it's an acute antibody response due to an ongoing infection. And such outbreaks definitely drive demand for our products. So measles maybe likewise, I'd have to talk to our team as to the exact scaling of that. But definitely, it's a positive. And likewise, the Mpox, we developed swab based and liquid-based Mpox molecular test control when that first emerged. We didn't do it because necessarily we thought it was going to become a pandemic of Mpox, but we did it because specific customers of ours said, we will buy this if you make it. And certainly, our development costs have been already more than paid back from what we've done at Mpox so far. So continued emergence and in reemergence of Mpox will also drive it being included in the workup panels for genital ulcers, which now include things like herpes, Chicken Pox and Syphilis and adding Mpox to those multiplex tests, I believe, is in the target of several point-of-care diagnostics companies with whom we're working.

Okay. Great. So the next question is wondering what new products and markets you're going to be able to address with the new L3 lab?

It's a lot of fun. The L3 lab broadens our capability to do conventional virology with greater breadth of pathogens and make sure that, that's done safely and responsibly as we've worked over the past 35 years. And this has been -- we just needed the empty tile as it were to be able to upgrade portions of our core facility to do that. And Ken, you're in the thick of this. So why don't you take it from here?

Well, in terms of L3 capability, some can tell as required localities were utilized. And right now, in building 3, we're building a new CL2 lab for in R&D development and manufacturing, which will finally allow us the space because we're growing all aspects of our business to put a CL3 capability. To address the question, the first thing I'll say is the CL3 facility, if we don't -- if we weren't handling CL3 bugs wouldn't be idle. They can operate on a CL2 level routinely anyway. It's our extra capability. But you can imagine a situation where there's a new Zika virus as an example, if somebody wants us to go and encephalopathy virus. Those are containment level 3 viruses. This suite will allow us to do exactly that. Right now, the CL2 facilities, we can't do that. Another thing would be actually the native virus SARS-CoV-2 as a Level 3 book by way of an example. But -- so that's just going to create a whole load of capabilities as things emerge as an opportunity and ahead of those opportunities, we're just going to operate in the CL2 lab anyway and build a business and have that optionality going forward. But CL2 is a good example.

A great way you characterize that, Ken. There are certain viruses, for example, SARS-CoV-2 cost as level 3. We worked around issues around that using synthetic biology techniques that we're quite adept at as well. But there are other native viruses, for example, Dengue classed as Level 2 and we make a native dengue antigen in our labs, but Chikungunya, which if you talk to people in the islands, you're getting one or the other, that's classed as Level 3. So this just lets us more readily use the different tools of conventional biology or synthetic biology and we can more readily and freely choose between those pathways for product development.

Great. Very exciting. So next question is pivoted. If you could talk a little bit about other Savanna like platforms and what progress you at Microbix may be making in terms of securing them as potential customers?

I will say very good progress. There are other Savanna like programs. The Savannah is a 16-channel instrument so it can run -- distinguish between 16 different pathogens from 1 patient sample and do that quickly and reliably. We're very pleased to be supporting the Savanna. There are also other instruments, a large existing installed bases but might have fewer channels in them and they are smaller more portable or lower-cost instruments being piloted by different companies, for different purposes that we're also working with BioGX would be a recent example that we've got far enough to announce that collaboration with their pixl, P-I-X-L instrument. So another prominent example. Savanna QuidelOrtho has publicly stated their objectives at placing 2,000 instruments a year over the next several years. So if we start to look at it, the number of test they can run per day per instrument is that installed base builds and the menu of tests builds the flow of controls that's required expands massively. And certainly, we're working with other new and established point-of-care companies to support their expanding menu of assays with our controls just the same as with QuidelOrtho Savannah. So I think we're very pleased with that. Our business development group is doing a wonderful job in fostering those relationships and our technical team in terms of product development is working furiously, as well. I think what was the count that Director of R&D indicated 17 ongoing quality assessment product development projects going on right now, we pretty much have almost as many projects as we do -- well, more projects, almost twice the number of projects as we do R&D staff. So they're quite busy. And we're triaging quite effectively, but if that's a group that's going to continue to build quickly.

There's a number of products -- projects on deck as well. And I would comment that we are both molecular biologists and classical biologists. So we can support controls for genetic material analysis like the Savanna, we can also control devices, which look at proteins and antigens because we grow the anti viruses as well. So we have multiple opportunities on both sides of that equation going forward, including all the different systems for all the companies. Recall, of course, our controls are whole genome controls and saw the agnostic to the platform, and so they work on all the platforms. So we think we'll cooperate with each one we're successful in penetrating the market with their particular device.

Good, good. Just going to ask Jim to jump in a little bit, Jim. With all this activity that we've got going, managing triaging and managing our cash to make sure that we are staying appropriately solvent while we're using our normal course, issue a bid actively as well. What's your view on the cash management side and liquidity.

Well, we're certainly in a much better position today than when I started here 7 years ago. We didn't know where the next dollar was coming from. But it's come -- I mean we're in a good position for a variety of reasons. We've had some successful raises of capital. We've also had some successful government funding and also our ongoing business growth has helped to generate cash as well. So that provides us with the opportunity to make the investments that we need to invest in. I can't say no as often as I used to, those that want to spend money. But certainly, we are spending in a variety of different areas, whether it's on our people, whether it's on our facilities, whether it's on our equipment, we're making the investments that we deem necessary to have the strategic targets that we have for ourselves as an organization over the coming years. So I believe that we've got a good solid infrastructure and facilities based to grow the business much more beyond where we are today. So the investment, we hope as we move forward, won't require as much capital as we have historically invested in the business. And I'm just looking for the sales and top line growth that we're supporting to grow. And so if Phil's listening, he knows where -- what he's going to do.

He does. Yes. Yes. I hear him chuckling in the background. But in all seriousness, this is exactly why we're dressed up and talking about Phil, said, we built these capabilities. And the road building is done now getting the cars onto that roadway and utilizing this infrastructure. I think we can't overstate the importance of that. I was in a business development meeting recently with the team and a big prospective client, we were back and forth thinking about new product and support that we're doing for them. And they said, well, you guys are the experts tell us what we need and to hear that from an industry giant talking about Microbix, they know that warns quite hard. Very, very, very pleasing.

And we're well aware that things like the electronic quality management system and the new ERP and general digitizing is an asset, large clients that look at us wouldn't work with us if we didn't have those types of systems because they're not support of growth and infrastructure for the complexity of what we do. So we've set that up, and we stated we're capacity building. And to Jim's point, we have the capacity to grow now, this business very quickly, and that's our intention. So back to Phil in selling stuff.

Very good.

So could you please provide a little bit more information on other opportunities for tissue-related and QAPs as recently announced for head and neck cancers?

Absolutely. We announced that we would be presenting at the EUROGIN conference. That's the European Conference on gynecological infections and neoplasms in Stockholm, that we were presenting a QAPs product that is a mimic of cancerous tissue that's developed in the head and neck as a result of the HPV infection. And that's diagnosed typically those cancers are diagnosed by taking a tissue sample of fixing it in formalin form of wax and taking a slice of that and then doing histological and PCR-based analysis on that tissue sample. But controlling that and analytic process, there haven't been products available to check that whole workflow. The same way we want to check the whole workflows of PCR tests or immunoassays or antigen tests. There haven't been such products available. So it's been a challenge for industry to say, well, does our workflow work for that form of testing. So we've created a mimic of a tissue sample that has been transformed into head and neck cancer by HPV that will support all of the relevant diagnostic procedures and could be used to train staff to do that, to check the labs are functioning properly, instruments, reagents, all the things that we're doing in the other area. And this experience we're developing to say how do we create an optimal tissue matrix that looks exactly like that oncology sample oriented sample opens that whole new area for us, and we're going to work with the key opinion leaders to say, okay, we want something that walks like a duck and quacks like a duck and will support you perfectly. And when we dial that in, that's going to open some very big opportunities for us in other infections and in oncology as well. So we're very enthused about that. I believe the poster is on our website, if anyone is interested in terms of the exact data we presented at that conference. But if it is not, please contact [email protected] and we'll get it to any who's interested.

Great. Thank you, Cameron. Very interesting. So we have more spontaneous question here, asking, seems most antigen QAP products are geared towards human testing. Do you deal with animal testing at all?

Historically, we have not. And I've got probably a good amount of experience in the veterinary field from my background. Veterinary testing for pathogens is behind the human testing side in its depth and sophistication to some degree. But it's also very, very price sensitive, and there is -- because they usually not dealing with human patients, there's perhaps less of a drive towards the rigorous quality control of that testing. So I think it will trail the human industry in terms of the rollout of controls to ensure the accuracy of that testing. So it's a market we have on watch, but I don't think it's necessarily right yet for it to become a focus area versus other areas of human medicine. But if we had a leader in the animal testing field such as IDEXX or other approaches, we'd absolutely support them, but we've not gone chasing on this yet.

And then the final question we have here is just wondering about the employee turnover rate right now. As per your previous year's comment, it was a bit of an issue.

Yes. This is always -- our assets walk in and out the door every day, and we've got to be competitive in our compensation. And we've got to be positive in our culture. That people enjoy coming to work, both of which are issues. We don't have soaring 6-story atriums and award-winning energy saving architecture like many government-funded institutes were private industry. You will see Marvel mountains in the quarter guard. But we have been working to make sure that our compensation is in a competitive range that we have the right benefits and the right opportunities. I think we've had more turnover at the technician level where somebody is gaining experience and more mobile if somebody says, "Well, gosh, I've got some experience now. I want to work somewhere closer to my house." That we can't really control or if somebody gets other family or financial matters. But I think we've got our turnover under control and typically our managers who and hire who participate in our stock option plan, which we thank shareholders for improving again. That's very critical for retention and motivation. We've seen a much lower turnover rate in our managerial cadre than we have on staff who've not yet earned that level of promotion and retention. So -- but we want to move people up as fast as they can be moved. And we certainly see, as we keep growing the business, opportunities for people to be promoted within Microbix and we're aiming to optimize compensation, but not to the point where we dip into losses or jeopardize the sustainability of the business. So it's a balance to strike.

From an operational perspective, turnover of staff is to be expected and remind you accordingly. It's not interfering with what we're trying to achieve. I mean it's kind of annoying. Microbix staff are well known to be very well trained. And so therefore, a quality government organization. It doesn't have this kind of physical rigor that we do. We could offer somebody a huge price for no particular oxide and that individual might want to go and that's fine. We manage that and we anticipate that, and it doesn't interfere with what we're trying to achieve. It's just one of those things. Our turnover rate has gone down. We have a very supportive culture. We talked about benefits and staffing and salary levels of that nature. Microbix is a good place to work. But we don't have fountains, and we are not in downtown Toronto. And we are under the control of fiscal responsibility that others might not be.

I'm just reminded of it saying my dad, if it seems too good, it probably is. It's too good to be true, it probably is. And some of these things can be wonderful with a government grant that needs to be spent in a certain period of time, but then the music stops and there aren't enough chairs. So I think a lot of our staff knows that our compensation is competitive but not insane. And they know we don't lay off people. So it's a very secure environment as well, and there's value to that. Family, we are a family and oriented culture. We drive ourselves hard, but we also are loyal to our staff, and we hope to get that loyalty back. Jim, you're -- HR is your line function as well. Please comment as you see fit.

Yes. I mean I think each of you have outlined what the current situation is like, yes, things were worse a few years back. I think in terms of turnover, you're always going to have turnover. And I think Ken has outlined and Cameron as outlined in the areas of where we're seeing that turnover. We have worked hard over the last number of years. to go to the market and understand what the market is for our roles and compensate our staff appropriately. And where that may not have been the case many years ago. So I think -- I mean, I was just doing some analysis recently and we've overall being able to put in place some increases on the plus side of 10% in the last 16 months. And I think some of that has been promotions and some of that has been the recognition of moving people into the right categories and looking at the external markets to ensure that our turnover does not exceed where we would like it to be. It's never going to be 0, and I don't think having turnover 0 is good either. But, I don't want it to be 30% either.

Yes. We've been, I think, in the 10% to 15% range in terms of our percentage annual turnover. I hear our stories of businesses that are 40% turnover that would not be sustainable in our business. There's too much experiential learning and knowledge base that has to be retained within our business. And I think we manage that and we watch it. We certainly don't -- we want it to be lower not higher, but we recognize it will never be 0.

And speaking to the culture of Microbix, there are a number of staff members here who have left for the various reasons we've previously discussed here and have returned because they found that the grass wasn't greener on the other side, and they came back to the environment they enjoy working in and are happy to do so. Quite a few of those actually.

And we've bee quite happily as we grow and see increased breadth of opportunities been able to promote from within and somebody's putting the time can become a manager and can become a director level professional, and we'll see that going forward. We -- certainly, we've done some business continuity analysis and including, if anything happened to me or Jim or Ken, what we you do and others through the organization, and we're satisfied, there's some resilience built in there to manage any such situations.

Great. Well, that looks like it's all the questions for today, unless there's anything last minute comes up. But thank you all so much for joining the call today. Thank you Cameron and Ken, Christopher and Jim. And it seems like that's all for today. So we're going have a great evening. Thank you so much for joining. If you have any questions feel free to reach out to Deborah or anyone in Adelaide, you'll be sure to get those answered.

Wonderful. Well, thank you, again, everybody. It's a real pleasure to be service to the company, and we take it -- we hope you see how seriously we take it, while having a little bit of fun along the way as well. So thank you, one and all, and I appreciate everybody taking the time to join us today.

Thank you.

Thank you, everyone.

Thank you.

Thanks everybody.