Q1 2025 Pharmala Biotech Holdings Inc Earnings Call
Yeah.
[music].
It is going to be talking about our earnings and our financials.
Started doing this on a regular basis.
So.
Hi, Nick on the CEO for myeloma.
Speaker Change: Joining me today is our new CFO, who you probably haven't had a chance to hear from at least not live like this yet.
Speaker Change: This is will they bring everyone.
Speaker Change: We'll retired from MMP LLP in 2023, where he was a partner spending the majority of his time over a 20 year career, there servicing public companies like ourselves who is based in Toronto.
Speaker Change: This wife, and two young kids and he joined US back in September August September something like that yes September officially in October so that at the time.
Speaker Change: Yes. So Nick will then will have been helping us with all kinds of stuff and really Professionalizing organization. So glad to have the investors have a chance to speak to him and hear from them today.
Speaker Change: Yes happy to be here to thank you Nick for that intro.
Speaker Change: Absolutely so happy to be part of such an awesome team here and I look forward to what we're going to be able to do in years to come.
Speaker Change: Before we get underway here I would like to take this opportunity to refer to the cautionary wording about forward looking statements as well as the risk factors included in our MD&A filed on SEDAR plus on January 29 2025.
Those statements about cautionary wording and risk factors apply to the information discussed in this webinar as of the date of this webinar being February six 2025. However, this webinar is intended to be a discussion of the interim results for the period ended November 32024, and is not intended to be an update of the patient.
Speaker Change: They're in the present date.
Speaker Change: With that I'd like to start with an overview of the key aspects of our recent financial results.
Speaker Change: During fiscal 2024, the company realized revenue of over $1 million representing growth of approximately 90, 595% year over year.
Speaker Change: This was led by growth in MDMA product sales of 723000 or 73% increase year over year.
Speaker Change: In fiscal 'twenty for the company also increased customer deposits to 208000.
Speaker Change: In Q1, we've continued this growth which has resulted in a 70000 increase bringing the total customer deposits to 283000.
Speaker Change: Just to give a little background on that generally we require deposits that account for up to 50% of the total contract value.
Speaker Change: Not universal to all of our contracts many of these deposits are nonrefundable.
Speaker Change: <unk> refundable only in the event the customers.
Speaker Change: Customers failure to secure clinical trial permit is based on our underlying chemistry manufacturing control information, which we provide to these customers.
Speaker Change: The related customer deposits can be recognized with along with the remaining revenue when the underlying product is delivered to the customer based on our experience. It is uncommon for clinical trials not to move forward. However in fiscal 2024, we did have one such instance, and as a result, the nonrefundable nonrefundable deposit.
Speaker Change: What's taken into revenue.
Speaker Change: While we would love to see the growth in deposits turned in revenues in Q1.
Speaker Change: Our sales cycle is such that many of these customers that require the issuance of their clinical trial <unk>.
Speaker Change: Import permits from the relevant regulatory bodies before we can ship the related material.
Adding to that on October 21, 2024, we terminated the supply agreement with Seacrest labs, and initiate a program to secure new distributors in both the U S and Canadian markets. We have successfully partnered with rain pharmaceuticals, who are already in manufacturing.
Speaker Change: Research partner of the company.
Speaker Change: And we have recommenced distribution subsequent to November 30th.
Speaker Change: In the U S. While we continue to seek a permanent distribution partner. We are currently moving forward on individual exports for U S clinical trials and have applied for the necessary health, Canada export permits to enable us to do so.
Speaker Change: Due to the highly regulated nature of our operations all of these initiatives have taken time to accomplish and as a result during Q1, we didn't fulfill any shipments of MDMA product to patients under the SAP.
Or the clinical trial customers and our revenue was limited to the <unk> license fees.
Speaker Change: As mentioned, having partnered with rain, we've recommenced distribution.
Speaker Change: Upon securing the necessary permits we expect to ship the related products and recognize the revenue in future quarters.
Speaker Change: Okay.
Speaker Change: Another item I'd like to highlight from our Q1 relates to our cost profile.
Speaker Change: So there were some newfound efficiencies allowed total expenditures, excluding stock based compensation depreciation and amortization and loss on debt settlement to remain relatively consistent quarter after quarter.
By bringing strategic team members onboard while these team members carried incremental costs, resulting in overall increase in expenses. We believe we are stronger and better setup for the future with her addition.
Speaker Change: Are there some of those incremental costs were offset by cost reductions elsewhere, primarily in office and general expenses.
Speaker Change: The final item I'd like to highlight for you all to date pertains to our financing position.
Speaker Change: During the period ended November 32024, and subsequently we've secured funding reflective of our team's commitment and belief in the future of the company.
Speaker Change: Firstly, we entered into a share for that settlement with our legal counsel, taking 100000 accounts payable off the books without using any cash.
Secondly, our director group stepped up and exercise some of their outstanding options, resulting in a further 42500 on top of the 70000 received in fiscal 2024 from the CEO. We believe that this shows the commitment of management and directors to the company's future.
Speaker Change: And lastly, and most importantly on December 13, 2024, we secured funding from the sale of units consisting of one common share and a half one which is exercisable at 27 three years.
Speaker Change: For gross proceeds of just over $1 5 million.
Speaker Change: We are pleased to announce that Matthew Israeli participate as the lead investor in this private placement and as announced today as subsequently agreed to become an adviser to the company.
Speaker Change: These inflows that strengthened our cash position for the future and combined with the conversion of our customer deposits into revenue and our partnership with grain, we're well positioned for our future growth.
Speaker Change: Yeah.
Nick: Nick I'll turn it back to you.
Nick: Look if I can if I can distill down some of the stuff that will talked about.
Nick: Number one I think look long time investors and shareholders of the company will know to look for the line item of customer deposits in our financial statements, new investors and shareholders may not know it but it is sort of critical to the business right for.
Nick: We've never had a situation where.
Nick: Our documentation is the cause for someone not to get their clinical trial approved and Thats really the triggering factor for a refund so.
Nick: If we continue to view our jobs properly of course.
Speaker Change: Uh huh.
Nick: Deposits continue to fuel the growth of the company.
Nick: Utilize that cash for ongoing operations and it does get converted into revenue for accounting purposes. When we actually ship the goods, we don't control entirely when those goods are shipped it depends on a range of factors regulatory operations, Alright, just physical operations getting the goods to their destination.
Nick: And we are always looking to improve our operational efficiency. So we will be talking in some of the questions question and answer period about what we're going to do around the United States about positioning inventory certainly lots of questions kind of come up in the hospital, while around tariffs and what those do to us, but we're always looking for better ways.
Nick: To be more efficient and get our customer like I've got our goods closer to customer which is part of the reason why we why we started cortex and why we began to do manufacturing in Australia for the Australian customer right. The closer we can get to the end user I think the better off the company has a long road and frankly I think it also improves our cost base.
Nick: Cost of goods.
Nick: And of course.
Nick: Just our operational costs.
Nick: Canada is not a low cost jurisdiction. Unfortunately, so despite all being from Canada being strong boosters of Canada, not always the best place to be or manufacturing and certainly shipping everything from Canada is not always the best sort of operational decision.
Nick: So.
Nick: With that maybe I'll I'll ask Conway to start reading through some of the questions that we received in advance of the webinar.
Nick: We will try to field all of these questions now.
Nick: At least one person I know who may have some questions.
Nick: Oh can we can you can you just text Robert let us know that he is he is welcome to ask any questions that anybody has Robert is actually a professional analysts so I am not playing favorites here as a professional courtesy.
Nick: Any questions for us he is more than welcome to.
Speaker Change: Other than that for the investors. We have received your questions in advance and we'll feed them.
Speaker Change: At a time okay.
Speaker Change: Alright, I'll dive right in.
Speaker Change: We've been moving forward with our phase III trials.
Speaker Change: So we will okay that one.
Speaker Change: Yes, I can take that one.
Speaker Change: Hello, guys.
Clinical trials. They are expensive we went into last year with the stated goal of finding a non dilutive partnering to cover at least part of those costs that process is still ongoing and although we have had some progress we don't have anything specific to report at this time.
There have also been some changes reported by the Australian tax office, that's delayed our progress.
Speaker Change: We hope that we'll be able to make an announcement by the end of this quarter, but I want to just make it clear for everybody that that timeline may shift.
We're doing our best to keep moving all of this board.
Speaker Change: Find that funding partner.
Speaker Change: Yes, I will just add it is it is really about finding efficient ways to fund the trial at this point the protocol.
Speaker Change: Again. This is I think all well known but the protocol is done our trial partners sort of in place. It's really a question of making sure that we finance this in an efficient way both from a tax perspective.
Speaker Change: And from just not just selling shares but also maybe finding a non dilutive partner, who can help us with it.
Speaker Change: Thanks.
Speaker Change: With increasing momentum around <unk> in the industry, how does <unk> plan to leverage this trends.
Speaker Change: Vantage, while also balancing this other project in its pipeline.
Speaker Change: Okay.
Speaker Change: Conway C. Robert does have his hand up so maybe if you can text with him and just find out what his questions.
Okay. So.
Speaker Change: Number one I agree.
Speaker Change: I'll say, we are seeing very significant increased sales as a result of the acceleration of government funding for MDMA research, especially in the U S.
Speaker Change: We are also seeing increased clinical trials in Canada, although future clinical trial demand for MDMA from Australia has slowed down a bit I think this is somewhat logical because now there is a there is an actual access pathway in Australia.
Speaker Change: At this time, we do see progress made in our sales pipeline is synergistic with the rest of our business. So if we have a profitable year, we can reinvest in R&D, you can develop new drugs et cetera.
Speaker Change: <unk> also clearly monetizing our MDMA development in another way as you would have seen a little while ago, we announced our first drug for data deal for linear DNA and that can help us a lot I mean, it can help us with reimbursement it can help us with product registration in certain markets. So I would expect that we're going to do more deals like that in the future.
Speaker Change: But of course, the primary responsibility for the company is to drive sales and drive revenue.
Speaker Change: Okay.
Speaker Change: So we give Robert chat to speak right now is the epicentre sure I think he just asked a question go ahead.
Speaker Change: Robert whenever you are ready.
Robert: Can you hear me, yes, yes, yes, yes, yes.
Speaker Change: I just wanted to.
Speaker Change: Just.
Speaker Change: Several contracts I think around five since.
Speaker Change: For the last three or four months.
Speaker Change: Are you able to disclose how much those contracts in aggregate.
Speaker Change: To you in terms of revenue going forward.
Speaker Change: Okay.
Speaker Change: So I think what we can do is based on our current financials. So these would be this would include all of the deposits made to date I think we were at about.
Speaker Change: We will correct me if I'm wrong 280000 deposits correct, yes, 280000 customers. Okay. So that would translate to a 50% deposit that would translate to just under $600000.
Speaker Change: And actual revenue out of those out of those contracts now.
Speaker Change: I will say that does not include all of the contracts that we have announced because at the time when we closed the financials in November.
Speaker Change: We haven't received the deposits for all of those customers. So it's more than 600000.
Speaker Change: Assuming all of those go through of course.
Speaker Change: But that's what it would have been at the time of the last financials and should run around the financials.
Speaker Change: And do you actually when you.
Speaker Change: Delivered on Youtube.
Speaker Change: <unk>.
She is.
Speaker Change: Separate batches to different types of the same.
Particular client or is it one one on one batch to each client.
Speaker Change: Okay. So sometimes.
Speaker Change: When winter look we're in the customer service business. So.
Speaker Change: If our clients really want multiple shipments we will deliver multiple shipments and we'll recognize the revenue partially rather than all at the same time alright.
Speaker Change: Due to the regulatory environment that we live in we don't love to do that.
Speaker Change: Just because of the import permits all over again.
Speaker Change: It's painful it also cost our customers quite a bit of money I mean, a controlled substance shipments just from Canada to the U S can be about $3000.
Speaker Change: But that said if the customer wants to pay it and they really don't want to hold the material or they're worried that there.
Speaker Change: If they have a long term trial and they want fresh batches of drug product along the way.
Speaker Change: Yeah, well look I mean, the answer is yes, we will do that sometimes but it's not our preference.
Speaker Change: A couple of more questions.
Speaker Change: It seems like like Us has.
Speaker Change: Preparing too.
Speaker Change: <unk> been in discussions with the FDA and preparing to.
Speaker Change: For a third study of it.
Speaker Change: Phase III.
Speaker Change: MBA assisted therapy.
Speaker Change: You've actually since they've cut out their production.
Speaker Change: This capacity are you going to be supplying them.
Speaker Change: So we have no contract with like Us to say at this time that said, we do have a very warm relationship alright. Its been reported in the press that they've sent a number of clinical trials our way I can confirm that that is that is accurate.
Speaker Change: So.
Speaker Change: If they need material.
Speaker Change: They need support we are happy to provide it.
Speaker Change: And we'll just stay close to them and be of service wherever we can get.
Speaker Change: The question is basically.
Speaker Change: Could you give us the latest on yield.
Speaker Change: Drug development projects, yes.
Speaker Change: Yes, absolutely.
Speaker Change: We talked a little bit about the phase two trial for <unk> zero two already.
Speaker Change: Where that is.
Speaker Change: In a similar fashion for <unk>, which is our sort of.
Speaker Change: There are two molecule.
We're looking at ways to do the preclinical for that molecule and it does require preclinical because it is a net new molecule for that one we're trying to find again non dilutive partners.
Speaker Change: Who can help us finance that preclinical.
Speaker Change: There's sort of two elements to it right, there's the chemistry manufacturing and control the manufacturer of the new molecule.
Speaker Change: And there is the actual broken testing.
Speaker Change: Most of the road and testing that we do at the University of Arkansas for Medical Sciences, I've built into groceries left that's non GOP road testing. So it's what we call proof of concept it is not acceptable for for.
Speaker Change: For the kind of toxicological docs that we would need to develop and so.
Speaker Change: So we're again, we're looking for non dilutive partner, we think we've found one.
Speaker Change: We think we're close but until the deal is done nothing right there.
Speaker Change: So again hope in the next three months to be able to announce both the both the non dilutive funding for the L. A trial and.
Speaker Change: So non dilutive funding for the development of API through preclinical, but until until it's done it's not done.
Speaker Change: Okay. Thank you for all that very very informative.
Speaker Change: Robert.
Conway: Okay, Conway, where are we at with with the questions. We've got a couple more is from all of us applying the VA for their trials.
Conway: So the answer is yes.
Speaker Change: Our contracts are not with the VA directly that's not how this works. So the VA funds trial sites and we are contracted to supply a number of VA sites.
Speaker Change: We're also looking forward to more grant funding flowing this year.
Speaker Change: There being 2025 for groups such as the Defense Health Agency and the U S, which had a very large public calls a $10 million for MDMA PTSD research.
Speaker Change: I hope to be able to hear and announce which researchers are going to be getting background funding as well.
Okay.
Speaker Change: Upcoming news from cortex.
Speaker Change: So guys. We got this all the time, we don't we don't front revenues, we do not announce news before it's announced so please don't ask this question in the future. The news comes out with the news comes out.
Speaker Change: With that country.
Speaker Change: Patients for MDMA with RK as confirmation and subsequent FDA approval over the next three months for a long term investor.
Speaker Change: Okay.
Speaker Change: So I have just personally on a personal note I have been absolutely blown away by how the issue of MDMA assisted therapy and psychedelic to more broadly have changed in the U S. Over the last few years. So when we started our Molla I would still say this was considered in the U S. Like a left wing towe did issue.
And I think now, especially in the U S more than anywhere else. It is either a bipartisan issue or even like a maybe a softer Republican coated issue.
Speaker Change: However.
Despite all that I do want to temper expectations on what will happen in the U S. As a result of one cabinet.
Speaker Change: So regardless of whether RFP junior gets confirmed or not.
Speaker Change: I really don't have any way of knowing what the legislative and regulatory priorities are for either the Trump administration or for him.
Speaker Change: So I cant say theres, a number of folks around the cabinet table.
Speaker Change: Who are supportive.
Speaker Change: In December I met with the new National Security adviser, Mike Waltz.
Speaker Change: There have been public comments by the New Defense Secretary Pete exit who've been they've all been quite vocal they're all veterans they've all been quite vocal about their support for second oligopolistic therapy, specifically for veterans and especially for MDMA assisted therapy.
Speaker Change: That doesn't necessarily translate to.
Speaker Change: To like rapid action.
Speaker Change: I don't want people to assume that one appointment to cabinet is going to be a complete game changer it might be but that's not we don't run our business that way that's how we plan.
Speaker Change: We will keep working with our partners in the U S. We do consider that a growth market for us certainly that's where we've seen a lot of growth and lost.
Speaker Change: Six months or so and we will try to capitalize on all of the opportunities that we see there.
Speaker Change: Okay. Good.
Speaker Change: A good segue into the next question in connection with information included in our previous news release.
Speaker Change: From all of that still considering setting up in the U S. Either for a sales office or to previous directly there to supply all of our American contracts.
Speaker Change: So I'll take this one Nick I kind of touched on that in my section. We are still looking for U S based distributor.
Speaker Change: So we anticipate doing a material amount of business in the U S. Over the next 24 months and expect a U S distributor will not only lower our cross border trade risks, but also just simply.
Speaker Change: Make our operations there more straightforward.
Speaker Change: Awesome.
Speaker Change: What do you think about the recently announced international collaboration announced between the UK Canadian and U S. Psychedelic industry leaders do you think it will bring significant positive change to the industry.
Ken: Okay. So this is a <unk> initiative, obviously I am the board chair side Ken.
Speaker Change: But.
Speaker Change: This is not an initiative that I was personally heavily involved in.
Speaker Change: You've heard about it when it was a done deal it was done by our executive director, It's I can.
Speaker Change: I'm going to limit my comments to the following.
Speaker Change: Number one.
Speaker Change: <unk> as a trade association.
Do influence things over the long term, but they have a mandate to work on the on behalf of the entire industry not about any specific company. So.
Speaker Change: I'd like doing work with ICANN I think a rising tide lifts all ships I think its important but I don't think that any initiative that <unk> will have a specific measurable impact on our financial performance in the short term and the long term absolutely in the short term, but it's not so much.
Speaker Change: The other thing I'll say is.
Speaker Change: This specific thing, which is basically a collaboration between trade groups and lobbying entities in three different countries and the U K and Canada and the U S is largely about exporting best practices.
Speaker Change: But I think personally if I had to pick a jurisdiction with the best practices right now, especially Australia. So a lot of it is trying to take the Australian model and shove it into government government years in Canada, and the U K and in the U S.
Speaker Change: And we will see what the what the results are but again I don't anticipate it will bring.
Speaker Change: <unk> see change in the short term.
Speaker Change: Okay.
Speaker Change: That's all we have for submitted questions.
Speaker Change: Yes.
Speaker Change: Well listen thank you very much for joining everyone.
Speaker Change: Nice to the point.
Speaker Change: <unk>.
Speaker Change: 25 minute webinar.
Speaker Change: In the future, we're always happy to field questions, but we do need time to review for you for something like this we need time to review them. So I know I see some questions send into the chat.
Speaker Change: As for our disruptions unless you are a professional working in.
Speaker Change: And the.
Speaker Change: As an analyst you do need to register in advance and you need to send in your questions in advance and will be more than happy to field them I will try to do some more <unk> on the on the forums.
Speaker Change: But really we are quite busy in trying to get some some actual work done for the company. So that remains our number one priority.
Speaker Change: So once again, thank you very much for joining will thanks for the recap and look forward to speaking to all of you soon.
Speaker Change: Great time today.
Speaker Change: Hopefully you all found that useful.
Speaker Change: Good.