Q1 2023 Predictive Oncology Inc Earnings Call
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Predictive oncology recently announced a new collaboration with flu Jenne, Inc. On a next generation vaccine related to respiratory diseases and in addition, we are finalizing two quite novel formulation proposals for pharmaceutical companies, both of which will likely begin before the end of the third quarter.
Most recently, we announced the extension of our contract with Integra Therapeutics.
A very well respected leader in the development of next generation gene writing tools to.
To advance gene therapies.
Through this collaboration predictive oncology will utilize our proprietary high throughput.
Interaction chromatography, which referred to we referred to as HFC.
To rapidly and accurately measure by a molecular interactions.
<unk> pharmaceutical and biotech companies in the workflow and process of drug development.
Taken together, we believe that these initial collaborations speak to the prod applicability of our suite of technologies.
Before I turn the call over to Bob I would like to conclude by reviewing some rather noteworthy additions to our scientific advisory Board and board of directors as well as the formation of the business Advisory Board.
Beginning with our scientific Advisory Board, we are pleased to welcome Christophe Reinhart ph D M D a torchy.
Christoph brings vast experience in oncology translational research drug development and innovation.
For more than a decade, Dr. Reinhardt worked at Eli Lilly, where he was responsible for strategy and implementation of translational research for its portfolio of oncology assets and Biomarkers.
As acting Chief scientific officer for itself and Omics.
He now plays an instrumental role in determining what types of novel drugs and drug combinations might be beneficial to future cancer patients with solid tumors.
So this experience Chris stops experience.
Lee is both timely and critical in light of the strategic direction in which predictive oncology is now moving.
Christophe joined Dr. Mark Milan drove and talk to you Robert Murphy on the scientific Advisory Board.
Mark Malandrino as Vice President of operations for Science at the Chan Zuckerberg initiative, and a very well respected expert in genomics molecular biology, biochemistry and bioengineering.
Robert Murphy is a pioneer in the field of machine learning and biological analytics.
He was founding head of the computational biology partner at Carnegie Mellon University.
And led the development of our core <unk>.
Sheen learning technology that powers predictive oncology as petrol platform.
These industry thought leaders comprised what I considered to be a world class scientific advisory board and individually and together.
We are already benefiting from their insights and contributions.
We have also can gained eight business advisory board, which like the scientific advisory board will be comprised of relevant business leaders and key thought leaders that will work directly with senior management, but also interact with the board of directors and the scientific advisory boards.
The names of those advisers will be announced in the coming weeks.
And lastly.
We recently announced that vino rattle ph.
Ph D M D N.
There's also joined the board of directors of predictive oncology.
Doctor Route is a pharma biotech and digital health veteran with extensive experience launching products and building commercial organizations and the prelaunch and early launch phases.
Dr. Ralph currently serves as Chief business Officer portal instruments, where she leads the identification evaluation and negotiation of partnership opportunities for that company and has a team of science and business professionals to guide the company's short term and long term commercial strategy.
Yes.
Dr. <unk> will replace David Smith, who is stepping down as director.
We remain as an advisor to the board and served as lead corporate counsel for the company.
At this point I will turn the call over to Bob Myers, our CFO .
Uh huh.
Thank you Amy.
We ended the first quarter 2023, with cash and cash equivalents of $18 $6 million as compared to $22 $1 million as of December 31, 2022.
In addition, we have 1.8 million outstanding warrants that represent an additional source of capital we have no debt. So our balance sheet is very strong.
As of March 31, 2023 shareholders equity stood at $18 $6 million.
As compared to $21.8 million as of December 31, two.
1022.
We recorded first quarter 2020 revenue a point $2 million as compared to point screening in Dallas in the first quarter of 2022.
Our gross margin in the first quarter 2023, it was 50% as compared to 65% for the first quarter of 2022.
Operating expenses were $3 $6 million in the first quarter of 2023 as compared to $3.6 million for the first quarter of 2022.
Net cash used in operating activities. During the first quarter of 2023 was $3 $4 million as compared to $3 $1 million for the comparable period in 2022.
Net cash used in investing activities during the first quarter of $2023 $1 million as compared to $1 million for the.
Comparable period in 2022.
Net cash provided in financing activities. During the first quarter of 2023 was zero as compared to <unk> $1 million for the comparable period in 2022.
That concludes the financial summary.
You can find additional details in our 8-K containing our earnings press release as well as our 10-Q, which is on fire with the SEC and also available on our website.
So with that I'm going to turn the call over to the operator for Q&A.
And as a reminder, Dr. Pamela Bush, our Chief business Officer is also available for this segment of the call.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue.
You May press Star two if you would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Thank you our first question comes from Michael Broadbent.
Investor. Please proceed with your question.
Hi, Ray and Bob can you hear me.
Okay.
Yes, yes, Michael I couldn't hear you.
Yes, I appreciate you.
Setting up this call obviously.
I actually have two questions. If there's time, if not I'll get back in line, but the first question really comes down to the financials. This company has put its shareholders through quite a bit over the past two years and cash cash equivalents decreasing total liabilities are up revenues decreased significantly we predict that isn't going anywhere I know.
The focus is on pedal core the biobank and other assets, but.
What is the timeline for I'm going to ask US again, what is the timeline for breakeven.
And with the cancer Horizons, how many molecules have you all looked at yet under that partnership.
Pamela did you want to address that or would you like me to address our bot.
Pamela wanted to them got them yeah.
Sure I can I can talk about the compounds.
So thank.
Thank you so much for the question.
In the first project.
Cancer Research UK.
The number of molecules is irrelevant, because we can actually.
Yep.
Hello can actually work with hundreds of molecules at the same time.
We are not at Liberty to disclose how many molecules they have because we've talked about what is the target and the program that we're working on so I thought one of the shows that that is confidential, but we are working on the first program with them and we expect that this is going to expand that to two other targets within the pipeline.
When you say the first program when will that program complete.
And I guess, because predictive isn't going to make money unless milestones are achieved.
No I guess, what we want to know is as the program successful or not.
We do not have the answer to that yet we have not completed the program yet.
Similar to the proof of concept.
12 weeks at fault testing and then there is the analysis after analysis of the data. So we are expecting that before the end of Q3, what kind of have their results, but that all depends because we have to follow the science.
Okay.
And then my follow up question, if I have time for Ray and Bob there's concerns of lawsuits.
Hum.
Is it I believe Richard Gabriel and.
Other other employees that were previously with predictive oncology at subsidiaries.
Can you address those lawsuits and ongoing process is that going to affect us further.
Hum.
Okay cool.
Yeah, Yeah sure.
Mike first off it's a signal of a lawsuit and it does not involve Raymond Alright, Richard Gabriel It's Tony.
On a per day case, yeah, I'm, sorry, all right. That's all right not not a problem. This is a recent lawsuit and.
First and most obviously I cannot comment on the lawsuit.
Where that stands or how are you defending the losses I will say that there is very strong.
And on our part to put this to bed.
And that there will be very little if any impact to the investors because the company as a result of this loss.
Okay. Thanks, Paul.
Hmm.
Okay.
Thank you.
Okay.
The next question comes from Rob Anthony.
Private and pets. There. Please proceed with your question.
Yes, hi, good afternoon. Thanks, Chad Thanks for taking the call guys actually just one follow on to sort of I guess the point of clarification for Michael's question can you confirm that there is in fact at least one compound that is physically being worked on and at some point in time when its complete there will be some kind of quote unquote milestone payment made.
Upon successful completion of that.
That project if you will.
I can.
Thank you for the question, yes, I can confirm that we have at least one compound.
That we're working on a if the compound if successful to continue to move in development that is when the financial terms that we have shared.
And milestones that when that won't become effective.
We will have at least one compound.
Okay. Thank you and that that sort of I guess not to hold you to it but as you said based on the science et cetera. The target is end of third quarter ish cap.
It's determined not you know whether that is.
Successful or not.
That is that is absolutely everybody's cool.
I said it can be it can be sooner, but it can also be later, depending on the science Oh, we're going to follow it but are expecting that it is going to be similar to the proof of concept that we have shared in the past that is what we're what we're estimating to be yes.
Yeah. Thank you Pamela.
I had two questions the first.
First one is really just more a point of clarity on that in October .
It was a big deal with David Smith being brought on as a as a as a director with a lot of value. He he was going to be providing.
Six months later, he has sort of stepped down and been replaced by.
Dr Rowe, who see.
Very very qualified just just curious if you could share as to the rationale and reasoning as to as to why you know David has sort of stepped down and does he maintained his sort of I guess stock that he has been he received a point of.
Being appointed as a director.
Alright. Thank you Robert this is Raymond.
That's a very straightforward answer.
The last part first yes, whatever stock he was awarded while he was on the board.
He maintains the reason he stepped down is a very simple when David joined the board he was with Troutman pepper.
And.
For the law firm Trumpf and pepper.
Yeah.
After he joined the board he moved to DLA Piper DLA Piper as our new law firm and DLA Piper would not.
Would not a wave conflict basically saying that none of their returns not just take that none of your attorneys are permitted to sit on.
The board some publicly traded companies. So he stepped down because he had to step out and his law firm said that he has stepped out traveling.
Dropping pepper did not have that debt.
Whatever that restriction was on their attorneys. However, I mean, it's sort of a blessing and a curse, it's not a curse at all it's actually blessing you staying on as a board adviser.
And he asks does DLA Piper is our law firm and David is now off the board. He is becoming lead counsel to the company. So we don't really have him as a board adviser rehab payments corporate counsel.
Okay. Thank you.
And I guess the other question and then Mike like much like Michael I'll kind of get back in line here, if there's others that one asked but Ramon you commented on our children the.
Sort of relationship and something to be expected towards the end of kind of third quarter.
Was there any kind of P. R made about that I don't I don't remember reading or seeing anything about the relationship and clearly you need to spend a little more time, providing a little color on what that relationship really is.
Well I, it's a very straightforward work for with flu Jan is very straightforward worked for higher they've asked us to they've asked us to test Pamela M.
M I permitted to.
And you've talked about the flu or can you address it more directly than I can.
We are not permitted to share the details about the project, but as Ramon has has fared it is a fee for service a project to advance the biologics that they are developing.
And I would say that that is what we can say at this time.
We're hoping that we are sure.
Robert I mean I think.
Oh, sorry, sorry can I go ahead.
No I was just going to say that are at work.
Work is complete we would be able to share our outcomes are but that would have to be.
Determined when the particles.
Yeah, So Robert I.
I know, what you're asking and this is sort of the opinion of our existence as we can say, we're working with people you can't tell you what they're doing what we're doing but the fact matter is we have to contract with Lou Jen. It is moving forward, we're doing something that's fairly fairly novel AR with them and it is progressing and there is an end point to it that endpoint could be us.
As early as the third quarter say in the third quarter. There are two other contracts with two other companies.
We're working on that are also on the formulation solubilities side.
<unk> that have not yet begun but the which.
<unk> plan or the the plan itself for the work that we've done are in process. So those three things are going on simultaneously or in parallel anyway.
Okay. Thank you.
I'll get back in line in case somebody else wants to ask a question.
Yeah.
Yeah.
As a reminder, please press star one to ask a question.
Yeah.
There are no further questions at this time.
And second.
Yeah.
Our next question comes from Michael Broadband you private investor.
Please proceed with your question.
Bob I just had a one quick follow up do we have any insight on short term. The next quarter next six months for revenue growth.
For P. O AI are we expecting more of the same.
Given the current financials you know are we still on track to a breakeven in the next 12 months of profitability.
I'll grab that Gordon, let me start with it right I mean so.
Michael it's.
Let me say this that the.
Revenue potential over the next six months.
Certainly greater than what we've done is certainly greater than what we've done last year, Raymond and Pamela have already indicated that we have three.
Foodservice contracts, those or billable or invoice hope all of you will.
At the end of the project or upon delivery and that revenue is recognized at that time.
So we're very hopeful that we're gonna be able to show that within Oh.
Course of this fiscal year.
Additionally, we did not do as well I know that skyline has not.
High mix of where we're going in the company, but we did not sell any machines. This past quarter, which is why we were a little lower than our current revenue stream.
But I will and I'm very happy to announce that skyline as smoothly.
And agreement in.
In Canada, and we have just signed on with a system that has 20 hospitals that revenue will be coming in in the next six months or less and will bolster our ability to breaking cash in that too.
Assistant and the flow of expenses that go out towards paddle and any of the other projects. We're working on and so I do think there will be a moving up.
You know the other thing Michael that you have to understand we talk about breakeven in the first thing we need for breakeven is as revenue and that's what we're working towards that's what we're trying to clean the biggest area for that of course, it's Pat.
Pat will take some time and as you just heard pedal has milestones and it also has pass through revenue in the future with a potential percentage from drug discovery.
So this is not going to happen in the next eight or nine months and other contracts are going to have to fill that void.
Meanwhile, we are working very very hard at closing deals similar to the ones that we have with CRH. So that we can move ahead and advance that revenue.
Speed it up if you will and you start seeing that effect during the course of next year and the year after and that's where you're going to start seeing the type of revenue that differentiates us.
Predictive oncology from where we are now.
Yes.
Okay.
Yeah.
Thank you there are no further questions at this time I would like to turn the floor back over to Raymond Veneer T. L for closing comments.
Thank you very much I appreciate it so.
Uh huh.
So that is.
This conversation does conclude our call for today so.
Uh huh.
Well, we hope that you take away from this call that we're really very motivated and frankly very excited about the direction, we're going I know that.
The current industrial has been very patient, it's not impatient with some things, but very patient waiting for us to sort of break take out of the gate here.
So everything you heard today is basically setting the company up for the next year for the next year to two years.
And obviously many of you who are on the phone right now on the call right now some of you called me personally called Us personally.
And you know that you can always reach out and ask more specific questions. I know this isn't perfect I need to do that.
But we will continue to keep you informed and we will continue to make announcements I know that everyone wants to hear good PR and no one wants to give more gift PR more than we do and so we look forward to doing that so thank you all for your support and I look forward to our second quarter update in August and wish you all a good day. Thank you.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Okay.
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