Earnings Call Transcript - INBS Q1 2023

Operator, Operator

Greetings. And welcome to the Intelligent Bio Solutions Inc. First Quarter 2023 Earnings Conference Call. Currently, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference call is being recorded. Joining us on the call today from the company are Harry Simeonidis, CEO and Chairman of the Board; Spiro Sakiris, Chief Financial Officer; and Philip Hand, Executive Chairman of Intelligent Fingerprinting Limited. A press release announcing the results and the update has been issued this afternoon and is available now on the company’s website. If you haven’t received this news release or if you would like to be added to the company’s distribution list, please contact the Investor Relations Department noted at the bottom of the earnings release. Some of the statements on this conference call are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, which involves risks and uncertainties. Forward-looking statements on this call include, without limitation, Intelligent Bio Solutions, Inc.’s ability to develop and commercialize its diagnostic test, realize commercial benefits from its partnership and collaborations, and secure regulatory approvals, among others. Although Intelligent Bio Solutions, Inc. released these expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may results have been materially different from the results expressed or implied by such forward-looking statements. Intelligence Bio Solutions, Inc. has attempted to identify forward-looking statements by terminology, including beliefs, estimates, anticipates, expects, plans, projects, intends, potential, may, could, might, will, should, approximately or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. These statements are only predictions and involve running uncertainties and other factors included in the company’s public filings filed with the Securities and Exchange Commission. Any forward-looking statements contained in this release speak only as of the date. We undertake no obligation to update any of these forward-looking statements contained in this release to reflect any events or circumstances occurring after the or to reflect the occurrence of unanticipated events. During this conference call, the company may refer to EBITDA, a non-GAAP measure. EBITDA is not and should not be considered an alternative to net income loss, income loss from operations or any other major of determining operating performance. EBITDA is normally calculated by adding back income tax, depreciation and amortization to net income loss. I would now like to turn the call over to Harry Simeonidis, CEO of Intelligent Bio Solutions, Inc. Harry, please go ahead.

Harry Simeonidis, CEO

Thank you, Operator. And thank you everyone for joining us on our fiscal first quarter 2023 financial and business update call. Today, I am going over the last three months milestones and achievements. Most notably of which was our acquisition of Intelligent Fingerprinting Limited or IFP, which lays the foundation for the future of the company and is reflected in our announcement name change to Intelligent Bio Solutions. In brief now, we have a strong broad technology platform for delivering convenient, on-site diagnostic and substance testing with comprehensive and complementary manufacturing commercial infrastructure and expertise from both companies. I will then turn the call over to Phil Hand from IFP, then Spiro, our CFO, for a review of some key financial metrics included in our preliminary year-end and fourth quarter results with an updated forecast cash burn. Without a doubt, finalizing the acquisition of Intelligent Fingerprinting or IFP, announced on October 4th, which has been in active development for some time is a significant achievement for the business going forward. Not only with the highly complementary and synergistic on-site point-of-care testing technologies, but also increased our commercial manufacturing and regulatory capabilities. We are confident that this acquisition is in the best interest for both companies and shareholders alike. As a brief reintroduction, IFP is a U.K.-based developer and manufacturer of point-of-care medical diagnostic products, specializing in lateral flow products, utilizing fingerprint sweat as its primary test substrate. IFP’s pioneering and proprietary testing for evidence of recent drugs of abuse misuse including opioids, cocaine, amphetamines and cannabis. This is commercially available in specific geographies and leverages a full portable system with sample collected and analyzed on-site in a matter of minutes. We are in the process of expanding our geographies globally and we expect to be selling within Australia early in the new year, followed by other regions within Asia and Europe. Turning then to what we now simply refer to as the biosensor product, which is a non-invasive saliva-based glucose biosensor solution for patients living with diabetes. Intelligent Bio Solutions has initiated activities toward key clinical studies intended to be conducted in parallel. The first of these studies is intended to optimize the testing by eliminating the variables that may affect detection of glucose levels in saliva and in the sample collection method. While the second study is designed to effectively assess the accuracy and the reproducibility of measuring saliva glucose with the biosensor strip. Preparations for both of these studies are actively underway and neither one is in any way impinged financially or otherwise by the recent IFP acquisition. Meanwhile, and leveraging IFP’s ongoing manufacturing infrastructure and expertise, Intelligent Bio Solutions continues to progress its construction of a state-of-the-art manufacturing facility at the University of Newcastle, Australia. Specifically aimed at production of the biosensor to support both clinical development and commercial demand primarily for glucose testing, but also with other potential test applications very much in mind. The company anticipates construction to commence before the end of the calendar year of 2022. Finally, and before turning the call over to Phil, it would be remiss to not also welcome Mr. David Jenkins and Mr. Jason Isenberg to our Board of Directors. Both individuals bring a wealth of operational, technical and strategic experience, and insights that will be invaluable as we both grow and pivot our integration of IFP, and further development of the biosensor into IBS. I would now like to turn the call over to Phil, the Chairman of IFP, who will be introducing IFP’s product and our future. Phil, please go ahead.

Philip Hand, Executive Chairman

Thanks, Harry, and I welcome the opportunity to partake in the company’s earnings calls. Let’s get straight into it. The IFP fingerprint testing platform is proving highly disruptive when compared to the traditional invasive urine and saliva tests, and is garnering widespread attention and adoption. Among the many recent contracts that serve as a testament to the overall and relative value of the fingerprint test are those recently announced new client relationships with Goldstar Transport, Eastern Airways and The Glass Systems Group. Each of these sales wins reflects the unique advantages, both technical and practical of on-site testing, these being sufficient to displace legacy methods and warrant organization-wide adoption and rollout. Adding context to the opportunity with IFP, the global drug testing market is estimated to be approximately $4.6 billion as of 2023, with an anticipated compound annual growth rate of 5.6%. The United States alone is estimated to comprise some 75% of this global market. Intelligent Bio Solutions has its eyes set squarely on the expansion of the IFP product line into the U.S. point-of-care workplace market, which ultimately requires commercial accreditation from the U.S. Food and Drug Administration, FDA. Initial interactions with the FDA have begun in earnest and though additional work remains, we believe those interactions to have been favorable. In all, we envision our pursuit of U.S. market approval and launch as a two-year plan, requiring approximately funding of $2 million to $3 million that will open access to an estimated $3 billion U.S. drug testing opportunity. As with GBS’ prior proprietary saliva-based testing technology, Intelligent Bio Solutions intends to explore the full breadth of applications for fingerprint testing beyond the current portfolio of drugs of abuse, including potential diagnostic applications already identified, these being, opioids for pain, epilepsy treatments, antipsychotics, cortisol, C-peptide and fructosamine. Based on the IFP knowledge base and intellectual property, Intelligent Bio Solutions also foresees diagnostic potential for the fingerprint testing platform in areas including infectious diseases, such as MRSA, Lyme disease, dengue, severe dengue, measles and German measles. And finally, also in quality control assurance of the food supply with prospective testing capabilities for biological food contaminants such as Salmonella and Proteus. Moving beyond just fingerprint assays, another area that clearly demonstrates the diagnostic potential of IFP’s lateral flow technology is the recent receipt of CE marking for a saliva-based rapid antigen screening test for COVID-19, which is both less invasive compared to nasal and throat tests, contains no single-use plastic and is 95% lighter than conventional tests, reducing both material waste and logistics costs associated with the ongoing global demand for COVID testing. The management team that is now integrated into IBS along with the intellectual property behind IFP will allow us to continue to grow at a rate that would not have been attainable without coming under the Intelligent Bio Solutions umbrella. I would now like to turn over the call to our CFO, Spiro Sakiris, for a more detailed review of our third-quarter financials. Thank you, Spiro.

Spiro Sakiris, Chief Financial Officer

Thank you, Phil. I will now provide a brief overview of Intelligent Bio Solutions 2023 first quarter results. As of September 30, 2022, the company’s cash, cash equivalents and marketable securities totaled approximately $5.74 million, compared to approximately $8.24 million on June 30, 2022. This change was primarily due to expenditure relating to the proposed pilot manufacturing facility in Newcastle, reduction of current liabilities from June 2022, the major component of this being equipment purchases being commissioned for this facility, and exchange rate losses from the conversion of our foreign currency balances to USD and general overhead. For the year ended September 30, 2022, the company had a preliminary net loss of $1.21 million or $0.08 per share, compared with a net loss of $1.43 million or $0.10 per share for the same period last year. This decrease in loss is primarily due to government support income recognized in the current period compared to the same period last year. Government support income was $0.31 million and zero for the year ended September 30, 2022 and 2021, respectively. This is a result of increased qualifying expenditure incurred in the setting up of the pilot manufacturing facility. The company is of the view that the current operating plan and financial resources, its cash, cash equivalents and marketable securities as of the 30th of September 2022 will be sufficient to cover expenses and capital commitments into the first half of 2023. This cash runway forecast does not incorporate revenue from planned new markets for the IFP product nor the potential exercise of the glucose North American license option agreement. Lastly, we will be switching over to a December 31 calendar year when it comes to our reporting. That being said, in our next earnings release, we will be reporting 2022 full financials that will incorporate IFP.

Operator, Operator

That being said, in our next earnings release, we will be reporting 2022 full financials that will incorporate IFP. With that summary complete, I’d now like to turn it back to the Operator for any outstanding questions amongst our call participants. Operator?