Transcript
Welcome everyone to the MDB Capital Holdings' Third Quarter 2025 Update Conference Call. Thanks so much for joining us today. Please remember that statements made on this call and webcast may contain provisions, estimates or other information that might be considered forward looking. While these forward-looking statements represent our current judgment on what the future holds, they're subject to risks and uncertainties that could cause actual results to differ materially. You're cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Also, please be aware that we're not obligating ourselves to revise or publicly release results of any revision to these forward-looking statements in light of new information or future events. Throughout today's discussion, we'll attempt to present some important factors relating to our business that may affect our predictions. You should also review our most recent Form 10-Q for a more complete discussion on these and other risks, particularly under the heading Risk Factors. A press release detailing these results, which crossed the wire this afternoon is available in the Investor Relations section of our website, mdb.com. A replay of this call will also be available later on mdb.com. Your host today is Chris Marlett, Chief Executive Officer and Co-Founder of MDB Capital Holdings. He'll be joined later by George Brandon, MDB President and Head of Community Development. Chris will lead an update on the Third Quarter ending September 30, 2025. At this time, I'd like to turn the call over to Chris Marlett.
Thanks, Tony. Well, welcome, everyone. Thanks for joining today. I saw it was a pretty crazy day in the market. It's been a really interesting period of time to navigate these markets. I just want to thank all of you who have been supporting us and getting behind us, and we've had a really good last few months as our platform takes shape and as our pipeline builds. We're very enthusiastic despite the backdrop of uncertainty. One of the things I wanted to do today was to try and explain what we do at MDB, why we create value, and why we went public. I want to remind everybody that we did this for a very specific reason. There was a big 'why' as to why we went public. But I also want to acknowledge that many of you that have believed in us have lived through the stock declining. While the stock is down, we've experienced various markets before. Sometimes, when you call me or I talk to some of our shareholders, they think that I'm not too worried about things. One, I'm not super worried, but I don't like the stock being down either. We're in this together. I want to reiterate that we're not changing what we do just because the market is down. What we've done for a long time has worked, and we believe it will work again despite changing times. There are fewer small public companies out there. The small public company market has not been strong. We're as excited as we've ever been, even though things with our stock aren't ideal. The last two years have been very challenging because we've enjoyed great historical success, but it is certainly not reflected in the stock today. We've had 28 years of launching big ideas, and we have a record that no other firm has matched. We've never failed at doing an IPO. There have been tough times, but we have achieved 100% success with every IPO we've attempted. Amazingly, all of our IPOs have at some point traded at 2x the IPO price post-IPO. That means these companies were able to go public, raise money, and though they don’t all win forever, we did what we set out to do by launching these companies with significant potential. We published a historical overview of those companies we launched in the public markets to show that this model can work. I think what's lingering in everyone's mind is whether public venture is dead. I'm excited because I believe we're on the verge of a new beginning for public venture. Again, reminding everyone why we went public: for 28 years, we launched only 17 companies, roughly one every 18 months, led by me and our team. Many have looked to me for guidance on whether to buy or sell something, which was a burden I didn’t relish, even though our results have proven effective and scalable. But our operational bandwidth constrained our ability to scale. The funds from the IPO were aimed at building a team to enable this scaling process. Our goal is to achieve 3 to 5 launches per year, establishing a public venture portfolio for our investors, because simply buying one company here or there isn't a strategy. We wanted to help people build a diversified public venture portfolio. By doing this, we aim to amplify our impact and process with more companies. The mission is to establish an operational framework that sustains this business beyond the founders of MDB. We’re committed to this mission and confident we’re making great progress that will soon become apparent. What we've consistently done, as I previously discussed, is curate ideas by examining thousands of them to identify opportunities with asymmetric profiles, which we believe is crucial. Due to our historical success, this process can't be random. Our team has excelled at finding the right ideas, even if many of you bringing ideas to us feel disappointed that only a small percentage receive our support. But please keep bringing them; sooner or later, you’ll improve your ability to find a viable idea. Many of our successful ventures have come from community suggestions. We appreciate every submission from our community as it plays a significant role in our success. Once we curate ideas, we position them for success, which is equally daunting but a crucial part of our platform’s development. I believe right now many shareholders don’t fully grasp the significance of what we have created. The public venture sphere holds explosive growth potential for ventures while also providing market liquidity and transparency. We used to have an old tagline that we’re bringing back because we believe it encapsulates our value proposition: we see value where others don't. Most of these opportunities are not seen as viable by other firms. We uniquely transform early-stage big ideas into investable public companies with $1 billion-plus potential. We’ve carefully assessed what we do that adds value, ensuring everyone knows how we generate our equity positions and build a business. Typically, companies that come to us are exciting but underdeveloped without a clear commercial strategy or protective intellectual property. They often lack focus and find it challenging to access growth capital. After our work, they emerge ready to be leaders in their respective categories, equipped with a comprehensive IP strategy and a protective moat. This distinction allows them to be valued in the public market, grounded in our track record. When such companies walk in our door, they aren't equipped for public capabilities. This transformation illustrates our value creation for shareholders and underscores the foundational components of our strategy that enable us to provide unparalleled services. I believe when we went public, we struggled to communicate our singular focus. Many mistakenly thought we operated multiple businesses, but we truly focus on launching public venture firms, which is a unique approach in the industry. We believe there’s minimal competition in this category. The services we provide are unrivaled by traditional underwriters or venture capital firms. We find and help develop companies that have transformative potential in their sectors. This process ranges from early-stage companies to those more developed like, for example, Buda Juice, which we’re preparing for an IPO. We expedite the process of going public, which facilitates rapid growth. I often say we can help these companies go public 2 to 3 times faster than traditional firms. For such companies, it usually costs around $2 million to go public. However, thanks to our resources, we can typically take companies public for under $500,000 outside of underwriting fees—an aspect that entrepreneurs often misunderstand. To outline how we create value, it combines both fees and equity realized in our shareholdings from various companies. We work strategically and often invest significant time and capital into these businesses to position them effectively, as demonstrated with companies like eXoZymes and Buda Juice. Our teams are highly invested, exemplifying our commitment to the success of these ventures. With an operating budget around $10 million, we leverage our operational foundation as capital to seed the companies we are launching. I think many seasoned investors may not fully appreciate this investment approach when they inquire why we tend to have bigger equity positions in select firms. We're creating value through this platform. Many co-founders might not have otherwise achieved public status without us playing that transformative role. We acknowledge that scale is vital for growth. Our opportunity pipeline now runs deep, allowing us to launch more ventures than we have in the past. Our objective is to enhance the quality of our launches, which should improve the probability of success for all upcoming projects. We have broadened our community approach which aids tremendously. The larger our community grows, the easier it becomes to build these ventures. We continue to nurture our community and expand our circles, which is an enjoyable aspect of our operations. We've already begun to notice significant progress. I'm excited to share that we’re prepared to announce the closure of Paulex soon, alongside Buda Juice, which we expect to price in the next few weeks, pending SEC feedback. It will be the first time we launch two companies in one quarter, which is quite exciting. Looking ahead, we have multiple companies in late-stage negotiations, providing us a realistic opportunity to meet our goal of launching 3 to 5 companies next year. I believe the Microcap sector is entering a renaissance period. The previous struggles have created an environment ripe for Microcap investments. A friend of mine in Indonesia expressed interest in taking his company public on NASDAQ. He believed he would trade at 40 times earnings compared to only 10 times in his local market, highlighting a burgeoning desire for transparent, liquid public markets. I'm confident we’re entering a booming phase for public ventures, and we couldn't be better positioned. Regarding the third-quarter financial update, our operating expenses and financing goals are straightforward. We’ve utilized approximately $5.9 million across the first three quarters but anticipate significant revenue in the fourth quarter, pushing expenses in the opposite direction. We expect a positive end to the year as we seek to stabilize our operating expenses with new financing. Importantly, we expect substantial equity positions in both Paulex Bio and Buda Juice, presenting significant upside for shareholders. We're meticulously cautious with our operational expenditures to ensure maximum efficiency, and I am incredibly proud of our committed team. Everyone has been tirelessly working through challenges, and we have an exceptional group here. I want to reemphasize that we have considerable equity holdings that remain undervalued in our stock price, which I'll delve into shortly. If you analyze our stock's market valuation, along with our positions in eXoZymes and HeartBeam, you’ll find the market value of those positions far exceeds our current stock value. The concerns people have—could public venture be dead?, could MDB have lost its touch?—are understandable. Having navigated various cycles, I acknowledge sentiments can fluctuate, but I want to assert that we are in a strong position to rebound. While some assets remain unrecognized in our stock prices, such as those related to our potential spinout of PatentVest, I'm undeniably excited about creating what could potentially be the first public law firm in patent law, an area primed for growth and disruption. Our discussions about other potential ventures in the clearing space suggest significant value ahead. eXoZymes and HeartBeam are prime examples, where both companies I believe could create transformative breakthroughs, fundamentally changing their industries. eXoZymes is on the brink of unveiling innovative possibilities through its synthetic biology platform, while HeartBeam could introduce groundbreaking solutions to the healthcare sector with its impending FDA approval. It’s a challenging market, but I believe we’re about to witness game-changing advancements. We envision launching 3 to 5 new ventures yearly while covering our operating expenses. We’ve worked diligently to prepare for transformational moves, and I’m confident our efforts will come to fruition. In summary, we possess what I believe is the only true public venture platform, supported by a unique team and process capable of breathing life into meaningful companies. As a shareholder, there’s natural concern in tough markets but, as conditions improve, you’ll find there’s preferred access to these exciting opportunities that I believe will drive significant value. Our proven execution and momentum should bolster confidence in our approach. We’re positioned right; we have a moat, and we are in a league of our own. Distinctly, I believe this is the time for being a shareholder in concentrated public ventures. We see encouraging signs of a resurgence in public markets, in alignment with positive trends emerging in public venture. As Tony said, our model has proven to scale, and the window for opportunity has opened. With that, I’ll take questions.
And at this point, I'd like to welcome George Brandon, MDB's President and Head of Community, who will facilitate the Q&A session. So George, welcome and take it away.
Okay, Chris, you have the first question that comes up in every conference call. Can you share your thoughts on when shareholders might expect a dividend and your views on eXoZymes? It's obviously performing very well. When do you think there might be a distribution, and what is your philosophy on that?
Yes, philosophy is we want to see that the company is out and really there's a developed market for the stock. We don't want a dividend to get in the way of the development of the company. Right now, the volume is pretty low in eXoZymes and I think if the company's business model and execution becomes clearer, it would make sense to do a distribution. I can't predict it, but our philosophy is to make those distributions when there's broader ownership and more trading volume.
So a question to follow up on that. If eXoZymes is going to be raising money, whether through a spinout or new technology, do we expect MDB shareholders to retain the same percentage of ownership as funds are raised? How do you see that working out?
No, any time you buy a public venture company, they're going to need to raise more capital, and we as shareholders are going to be diluted. Obviously, the better the company performs, the less dilution we experience. But yes, there's always dilution as companies raise more money, and we always work to keep it as minimal as possible.
Let's move over to HeartBeam. Look, we're hoping, as they've said on their conference call, they expect to get FDA approval, and you can look at their balance sheets, how much cash they have. How do you see that playing out, and what do you see MDB's role in and around that? We certainly have the right of reverse refusal on funding, just a question on that.
No, listen, I think the philosophy of the Board of the companies has been that we have to be able to tell people what's going to happen with the FDA before we raise more money. The FDA approval timeline has dragged on a little. We hope we're nearing the finish line, and once the uncertainty around FDA approval is resolved, it will be much clearer for investors to decide whether they want to invest.
Got it. Look, we did a whole slide on kind of why I think the stock is where it's at and what's in the portfolio. But the question is, hey, look, we talk about creating value. For those that did the IPO at $12, we're down here around $3.40 or so. What's your thought on why we're trading where we're at? And I know you don't have a crystal ball; you can't see into the hearts of those who own your shares. If you were to summarize those reasons, what would they be?
I think the number one reason is the Microcap market has been really poor. That’s the primary reason. The second reason is that some investors are questioning whether MDB has the capability to identify good investments anymore, which is a valid concern. Additionally, we might see tax loss selling, where investors offload stocks to balance gains from other investments, contributing to further declines. It’s not uncommon for some companies to trade at significant discounts from premiums over time, depending on investor sentiment.
Yes. Here’s a question on you made comments on being bullish on the Microcap market. Certainly, I was at a conference recently and many companies pushed back against going public due to the rising costs of compliance. Can you give a little more detail about why you’re optimistic about the trends for new listings?
It comes down to how these companies are valued. Companies that are performing well in Microcap are showing significant growth and experiencing high valuations. Private equity funding is largely directed towards larger unicorns while neglecting early-stage opportunities. This disparity indicates that more companies will seek to go public, especially those in underrepresented sectors. Investors returning to public markets for their transparency and liquidity also support this trend.
A little confusion seems to arise from our history of launching primarily tech ventures, yet we have a juice company in Buda as our next big idea. Can you clarify the approach of balancing deep tech versus other ventures like Buda?
Absolutely. Buda represents a pioneering opportunity. Beverage choices are typically under 5% fresh; we have a chance to transform that market. I've seen how venture capitalists pursue tech but may miss unique consumer opportunities. We've identified Buda as a leader in a new beverage category, built on proven expertise from founders in the industry. Our criteria for taking a company public focus on category leadership, regardless of whether the foundation is tech-based or a consumer product. We seek ventures with robust business models and significant profitability potential.
Can you give an estimate regarding the timeline for companies we've taken public regarding how long it typically takes for them to establish profitability after IPO?
I encourage everyone to review the comprehensive document that details the historical performance of all companies we’ve launched. Some established profitability and success quickly, while others required more time. Most of our biotech ventures base valuation metrics heavily on clinical developments rather than revenue. Our focus remains on identifying tailored high-potential investments; our extensive experience shows us what presents asymmetric returns.
Could you discuss the PatentVest spinout? Best as you can gauge, what are the potential revenues and market value? How does this impact shareholders?
I'm not making any predictions on market valuation, but I would say it's potentially very substantial. The legal sector feels the impending disruption from AI immensely, and PatentVest is uniquely positioned to capture the impending market. This will impact patent law tremendously, and organizations across various sectors understand the pivot required to leverage AI in their strategies. We are aiming to be at the forefront of this shift, redefining the contours of how law firms operate.
It appears we have around 5 minutes left, and questions are piling up. I won’t get through all of them but will do my best to reply privately. One question poses: Does MDB require more robust investor relations efforts to effectively communicate enterprise stock value given our portfolio holds significant value in eXoZymes and other positions?
Yes, we recognize the need for improved investor relations but realize it’s also on our shoulders to share our story effectively. We've focused primarily on launching companies and navigating challenges in this tough environment, which occasionally leads to a feeling of pushing on a string. Yet we understand the importance of outreach and connection for our business. Building strong business and excellent communication will enable us to connect with our investors more effectively moving forward.
We have around 3 minutes left. Can you shed light on the delays in eXoZymes' progress and reiterate your confidence moving forward?
The pivot in eXoZymes was perhaps not communicated as effectively as it should have been. We decided it was prudent to focus on creating new molecules rather than simply offering fee-for-service engagements. By launching companies capable of substantial value, we believe we can position ourselves for remarkable success. We're optimistic about the potential of two platforms we're preparing to launch, each aimed at capturing significant market share. This focus on creating high-stake opportunities will clarify our strategic narrative moving forward.
Moreover, did our former partner Lou Basenese conduct an insightful interview recently on eXoZymes to clarify these points?
Absolutely, Lou did a wonderful job unpacking these nuances with Michael last week, illustrating the intricacies of the trajectory ahead for eXoZymes. I believe those discussions conveyed the compelling direction we’re moving towards.
Could you summarize the Paulex situation? Provide an elevator pitch regarding its asymmetrical upside?
Paulex utilizes an innovative pathway for beta cell production which has immense potential for the diabetes market. We're working toward clinical trials in the upcoming year with features that should draw high investment interest. Our anticipated market entry could see us reach multibillion-dollar valuations quite rapidly, providing our shareholders with significant upside opportunities. The team involved has an excellent track record, which enhances our confidence in this venture.
What is the timeline for updates on this project?
Barring any unforeseen circumstances, we anticipate updates during the upcoming year, particularly as we initiate clinical results.
Well, that concludes our Q&A segment. Thank you all for your valuable questions. We appreciate your engagement and interest in our journey. I’ll now hand it back to Chris for closing remarks.
Thank you, everyone, for your participation today. The commitment and accomplishments of the MDB team are commendable, and we are optimistic about the road ahead. We appreciate your support as we continue to navigate and build this community. Thank you once again.
Thank you, everyone, for attending today's presentation. This will conclude today's conference call.