Earnings Call Transcript - PETV Q4 2022

John Dolan, Chief Business Development Officer and General Counsel

Yes. Thank you, John. Greetings, and welcome to the PetVivo Holdings Fiscal Year Ended March 31, 2022 Financial Results Conference Call. I'm John Dolan, the Chief Business Development Officer and General Counsel at PetVivo. Today's call is being webcast and will be posted on the company's website through playback. Before we begin, I would like to remind everyone that comments made during this conference call by PetVivo's executives may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties. Any statement that refers to expectations, projections or other characterizations of future events, including financial projections or future market conditions is a forward-looking statement. PetVivo's actual future results could differ materially from those expressed in such forward-looking statements for any reason, including those listed in its SEC filings. PetVivo assumes no obligation to update any such forward-looking statements. PetVivo filed its earnings release with the SEC today, which provided a detailed discussion of our financial results. We filed our 10-K on Friday, June 24, 2022. Both of these documents can be found in the SEC website and the Investor Relations section of our website. I would like to now turn the conference over to John Lai, the CEO and President of PetVivo. Please go ahead, John.

John Lai, CEO and President

Thank you, John, and welcome, everyone. Joining me today will be Robert Folkes, our Chief Financial Officer. I would like to begin by discussing some of the highlights from the last fiscal year. Then Bob Folkes will discuss our financial results, financial conditions in much greater detail. I will conclude by sharing additional thoughts on the business strategy and key focus areas for fiscal 2023, and we'll then open it up for questions. Our key highlights for fiscal 2022 were that we raised $11.25 million in the NASDAQ uplift in August of 2021. In the last two quarters, we generated over $100,000 in sales in Spryng. Additionally, we rebranded our product and launched two websites, Sprynghealth.com and Petvivo.com, which specifically target the veterinary space. We are also partnering with Ethos, a private organization that conducts clinical research. So we are undertaking a canine tolerance study, as well as an efficacy study over the next several quarters. We have attracted a very seasoned management team, which will help the company drive sales. I would now like to turn the call over to Robert Folkes, our Chief Financial Officer, who will discuss our recently completed registered offering and our financial conditions.

Robert Folkes, Chief Financial Officer

Thank you, John, and good afternoon, everyone. The most significant event from last year was the uplifting to NASDAQ that John mentioned, in which the company raised our net proceeds of $9.78 million in August of 2021. This really provided the necessary capital for the company to commercialize Spryng, which began in September of 2021. At March 31, 2022, the company had $6.1 million in cash and cash equivalents, and working capital of $5.6 million. We increased our inventory to $98,000 in order to support our expected revenue growth in 2023. We continue to use the net proceeds from our initial public offering to expand our sales and marketing efforts and clinical studies to gain better acceptance and increase revenues from the sale of Spryng. And now I will turn the call back to John.

John Lai, CEO and President

Thank you, Bob. I would like to talk more about our recent developments and key focus areas for fiscal 2023. As we reported in our 8-K on June 24, the company entered into a distribution service agreement with MWI Animal Health, a subsidiary of AmerisourceBergen, ticker symbol ABC. We are excited to partner with MWI as they are one of the largest distributors of veterinary products in the world with over 400 territorial managers in the United States. We expect this distribution agreement will expand our awareness of Spryng and facilitate the introduction of our product within the United States to veterinary physicians. We anticipate distribution or shipment by the second half of July 2022. Specifically, we expect the product to be shipped to multiple distribution centers for MWI. I would also like to discuss our clinical studies, which will help us support our relationship with MWI. Many national distributors such as MWI like to see third-party university studies prior to including products in their catalogs. Additionally, we expect to gather more clinical data about the efficacy of Spryng to help us gain greater acceptance within the veterinary space. We entered into a clinical trial service agreement with Colorado State University on November 5, 2020, to evaluate the injection of Spryng into elbow joints—this was a double-blind elbow study. Due to COVID, we experienced significant delays, but the study has been progressing well, and the enrollment of dogs has picked up; we expect the completion of this study sometime in November of 2023. We also entered into a canine clinical study with Ethos Veterinary Health in May of 2022, with anticipated completion by the end of fiscal 2023. This pilot study will evaluate the intra-articular injection of Spryng in dogs with stifle disease. We will first assess product tolerance and eventually efficacy. We expect to conduct additional trials or studies to gain further acceptance of Spryng. As I mentioned earlier, we have established a new website, Sprynghealth.com, where Dr. Tracy Turner, an equine surgeon and recognized veterinary expert in equine lameness, has developed a video Q&A series. I believe there are 16 short videos addressing various questions regarding the application of Spryng in treating joint health issues. Dr. Turner is actively involved with the United States Equestrian Federation and has participated in the four Pan Am Games and two World Equestrian Games, including the 2020 Tokyo Games. I would now like to open the floor for questions. Operator, can you please go over the instructions for our callers?

Operator, Operator

Okay. It looks like we have a couple of questions here. The first one is Gary Z.

John Lai, CEO and President

Hi, Gary. Go ahead.

Gary Zwetchkenbaum, Analyst

It's Gary Zwetchkenbaum by the way. But, John, I'd like to congratulate you guys and the whole PetVivo team on a great exclusive distribution agreement with MWI Animal Health, a subsidiary of Amerisource. John, can you discuss a little bit about the agreement? I believe you had a sales staff of roughly 5 people including your National Sales Manager. How many outside salespeople are you getting from MWI who will be selling Spryng, and how many of their support staff will be taking orders for your products by phone, etc.? Also, I understand that MWI is going to be a customer and is going to purchase inventory to sell to their veterinary customers directly. Could you elaborate on how the orders begin and when you expect to start sales? Is it starting in July?

John Lai, CEO and President

Yes. I'll take the last one first. Regarding the number of sales reps, there could potentially be over 700 sales reps involved. As part of our agreement with MWI, we will provide educational materials as well as training for key trainers and sales managers to help ensure the product rollout is effective. There is a bit of time involved in that process. As stated in the 8-K, we are focused on promoting, marketing, and then distributing the product. Orders will be shipped to MWI's various distribution centers based on their orders from us, and they will be able to support their sales team in getting the product into the hands of veterinary doctors much faster than we could have on our own. Furthermore, we will be expanding our in-house team with additional sales reps to support the 700-plus reps in the field. Our personnel will function like manufacturers' representatives, as many have significant experience managing 100 to 200 sales reps based on their years in the field. We also plan to establish an in-house customer support team to assist with MWI inquiries as well as veterinary doctor questions. I believe I have answered all your questions.

Gary Zwetchkenbaum, Analyst

I'm excited about the release and hope to hear updates on sales as you progress through this quarter and the next. Thank you very much.

Operator, Operator

We have a second question now.

John Lai, CEO and President

I believe it's Anthony, right?

Unidentified Analyst, Analyst

John, can you hear me?

John Lai, CEO and President

Yes. I can.

Unidentified Analyst, Analyst

I wanted to ensure I was clear on which of your products are currently in the market.

John Lai, CEO and President

The product currently in the market is Spryng with OsteoCushion technology. I understand the 8-K mentions other veterinary products, which they will be introducing in the next two to three years. This is part of our plan, as presented in prior presentations and on our website. The most recent version of our presentation was uploaded just yesterday and outlines potential products in the veterinary space, which could help accelerate the adoption of the other products.

Operator, Operator

We have another question here from a caller.

Unidentified Analyst, Analyst

My question is about your target market in the horse area, particularly concerning the cost of the product. Does this apply primarily to racehorses or also to horses on an average family farm? Who is your target market for this product?

John Lai, CEO and President

The target market would encompass anyone who owns a horse. According to the chart in our PowerPoint, the cost of a Spryng injection is approximately $600 to $900. Based on our observations in real-world cases, post-injection there are often reductions in the use of other products such as various HA injections. This results in potential savings on NSAIDs and others. Therefore, the economic aspect is favorable. We have seen this with cases like Fender Bender and other racehorses, but it applies to all horses. There is a notable decrease in follow-up therapy needed for alternative products.

Unidentified Analyst, Analyst

If I can follow up with another question. Based on your cash reserves, how long do you anticipate your funds will last before needing to raise additional money?

John Lai, CEO and President

Since the uplift, we've targeted the first calendar quarter of 2023 for a potential raise. We anticipate material events that would justify a better valuation, which would facilitate a small capital raise.

Unidentified Analyst, Analyst

Could you elaborate on your plans for entering the dog market? How do you anticipate injection costs for typical dog owners compared to those for horses?

John Lai, CEO and President

No, it would be pretty much the same. We are already selling to canine customers. The difference now is that we have a group that established relationships with numerous veterinary doctors. MWI likely has connections with over 90% of existing veterinary clinics, making it easier for us to engage and discuss the product. If you review the chart I mentioned, you’ll see the significant economic benefits of using our product compared to competitors. Bear in mind that the average cost for standard generic NSAIDs is about $400 a year, which often just masks the symptoms and carries potential side effects, as well as compliance challenges for dog owners attempting to administer pills.

Operator, Operator

It looks like that's all the questions for now.

John Lai, CEO and President

Okay. If there are no more questions, I think we can end the conference call.

Operator, Operator

Goodbye.