Good morning, all. It is Tim Sharp, Vice President of Strategy and Corporate Development here at Vitrafy Life Sciences. Thank you for joining Vitrafy's Q1 FY 2026 quarterly update. We will be commencing in about two minutes. On the line, we have our CEO and Managing Director, Brent Owens, and our CFO, Simon Martin. If you have any questions, please post them in the chat function that is located at the bottom of the Zoom portal. We'll start in 60 seconds. Thank you. Alright, we're at the top of the hour. Thank you again for joining the Q1 FY 2026 Vitrafy Life Sciences Investor Briefing. We have today with us Brent Owens, Managing Director and CEO, and Simon Martin, CFO. There will be a short presentation where Brent will share his screen and present a quick pitch deck. After that, we will host a Q&A session as well.
If you do have any questions throughout the presentation, please drop them into the chat function located at the bottom of the Zoom portal. I'll now hand over to Brent Owens to present. Thank you.
Thank you, Tim. Thank you, everyone, for joining as we do complete the first quarter financial year 2026 results. As always, the team, in particular the last few months, I would say, have been working really pedal to the metal and making good progress and have achieved a big milestone for the company, which was a core part of what one of the commitments was as we went into the IPO as well, which I'll share in a moment. I'm just bringing up my screen now so that everybody can see. With that, over the quarter, we have achieved a big milestone. If you recall from the use of funds with the IPO, a big portion of that was to build the second generation of our freezing device, which we call VCU2, leveraging a lot of what we did from the first generation VCU1.
We have now built the first version of that. It's operating with Planet Innovation in Box Hill . The team are very proud of that milestone, which obviously is one step closer to really unlocking the market share and getting products in market as well. I'll show you an image of that in a moment, but it's something that we're all very proud of, and it's essentially been 12 months' work to get to this point. As you know, we have looked at renewal of board and executive team over the last few months, and we have had a couple of appointments in that space as we prepare for the next phase of growth and commercialization. We've continued to expand our U.S.
footprint with another couple of key appointments, which are really around sales, marketing, and customer-facing operations, with further commercial milestones achieved with an increase in results from the work we've been doing with Huon Aquaculture and commencing work with the U.S. Army . We still are in a very strong cash position with over AUD 25 million in the bank and available and scale-up ready and underway as we move into this next stage following the delivery of the first generation, the second generation device, I should say. What you could see pictured on the screen here is actually the version of the device. This is the first version that we've actually built and completed from start to finish, working closely with Planet Innovation in their site in Box Hill here in Victoria. That is a big milestone for the company.
It's in line with the expectations, both cost and time, and it's taken almost 12 months to be able to complete. Now that this unit has been completed, there's a further three that are in production at the moment and will now complete factory acceptance testing, as well as preparing to send one over to North America as well, as we prepare for scaled manufacturing and deployment for customers as they come on board. Just quickly touching on a little bit of the core differences. For those that recall back before we built this unit, we had the first generation of the freezing device, which we call VCU1, and that was great for validating some of the technology that we'd created, getting great outcomes with our partners and customers and in-house. We needed a device and a unit that was much more scalable.
The version that we've built, which we call VCU2, is much more applicable to a product in market that can scale. A few of the key features that unlock more commercial opportunities is that it's got universal power. The existing system that we had only had an Australian power-based system. This has now got universal power. It's got increased performance and reliability. You can put it into a site with less human touch and more automation. It's a simpler process for both Vitrafy, but also the users as well. It's built to be scalable from a manufacturing standpoint. Less about bespoke construction, more about building it to be on production lines. It has much more integration with our software platform, which we call LifeChain, which is a really critical part for our success, is having that software and data piece connected to the device. That's what it's now got.
With the release schedule of that, it is broken into two. This milestone isn't just a product development milestone. It's actually unlocking of a whole segment of the market for the unregulated human health and obviously the animal health market as well. Now that this has been achieved, we can deploy these devices commercially with human health and animal health. Moving forward, there's now the registration with the medical device through the FDA, which we're expecting in the middle of next calendar year and a financial year. Further to that, we wanted to make sure that when the products were ready for release, that they went together. There's the hardware component, which is a big milestone, and there's the software component, which is also a big milestone, which we call LifeChain.
The team have been working extremely hard under a hybrid model in-house and with third-party contractors to build a scalable software platform that's got the infrastructure and the architecture to be able to achieve large volumes of data and continually improve on performance. It's also got control of VCU2. It's integrated into the system so that you can have this connectivity to the devices, remote access, remote control, and data insights. That has all been achieved now from a technology development perspective. It's also going out with the regulatory compliance standard of being 21 CFR Part 11 compliant, which in North America is actually a really important marketing point so that there is confidence in the way that the software has been built to the compliance standard required in human health applications.
A couple of really big milestones from the product development side of the business, which again was a core part of the use of funds through the IPO as well. Further to that, as we do progress through this next phase of growth and commercialization, primarily in North America and in the areas that we know we're prioritizing, being cell and gene therapy, blood and blood components, and animal reproduction, there's an evolution of the company that's occurring. With that, we have successfully transitioned me as CEO and Kate staying on the board to continue providing guidance and support as a Non-Executive Director, but also a chair succession and the appointment of Dr. Lee Farrell as an Independent Non-Executive Director as of last week, and then subject to the approval of shareholders at the AGM.
Lee will be appointed as Chair at the conclusion of the AGM on the 20th of November, which is something that we're really excited about to attract someone of Lee's caliber and experience both across, you know, human health applications, but also sort of listed companies and defense is a really great validator for us and very excited to work closely with Lee through this next stage of growth and commercialization for the company. I just wanted to remind everyone about the model that we're undertaking here at Vitrafy, the commercial strategy and model that goes with it. For us to be successful long-term and unlock the most amount of value for the company and its shareholders, we want to be able to deploy a managed service model. Not just selling a freezer unit and then that's the end of it. We want to stay very close to customer.
We want to be really sticky with customers. To do that, we want to do it as a managed service so that we can also collect the data. With that, it's really, really vital that we've got the best customer experience and an ecosystem from our customer-facing team, which is being built in North America. That starts at lead generation. You're sort of your sales team that are generating new leads in the market and converting those into commercial agreements. It transitions into the onboarding and implementation team, which gives us the customer success and the support. To do that, we really need to make sure that the end-to-end customer experience from the start of lead generation all the way through to support is seamless and it's the best experience that a customer can have. For that, we needed to make sure that we are building the right team.
We have continued to expand the U.S. capability and we've had a couple of key appointments in that space. Q1 was focused on getting the really specific people with really specific skill sets to support that end-to-end process, covering sales, marketing, and commercial operations. I can share for those that follow on social media would have seen this, but for those who don't, we have appointed two key hires in that space, one around commercial operations, Senior Vice President Diana King, extremely experienced in the space and competent, as well as another Director of Sales who again has got great experience in medical devices and selling cryopreservation equipment as well. That will continue, but we do feel like now we've got the foundations there leading up to the launch of the new technology to be in a strong position to make that end-to-end experience a great success.
Beyond that, we have completed the next fertilization run with Huon Aquaculture during the quarter. Year- on- year, we're getting great success where results are comparable to fresh, utilizing our technology end-to-end, including our consumables. Importantly, with this season, which is part of the three-year agreement that we have with Huon, you can see there on the graph that last year, last calendar year, the amount of eggs that were fertilized were close to 500,000 or approximately 500,000 eggs. This year, we've done over 2 million eggs, so a substantial increase in the fertilization rates when compared to the last fertilization season. What that means for us is we expect now that there should be higher throughputs. We've proven year- on- year that we can get great outcomes. Now we're seeing a significant increase in fertilization rates and the amount of eggs fertilized.
That should enable us moving forward to be able to increase the throughputs with groups such as Huon, but it's also a strong validator as we look to unlock more of a global animal market opportunity to show that there is a lot of value in our technology. Further to that, with the U.S. military, at the, I think it was at the half year, we shared that we'd completed phase I of that study with outstanding results. Those results were being presented at a conference in North America a couple of months ago, which was a great success. We're also having another presentation in San Diego on Sunday. I'm flying over to the U.S. in about three hours and we'll be presenting the results from the phase I study at the annual U.S. Blood Conference called AABB in San Diego.
That's something that's taken quite a few months to get approved. There's a process of submission of the paper and the results, a review, and an approval. Then you've got your poster set up at the conference, which we'll be presenting. That's great. Alongside that, we have commenced the second phase of that platelet study. It has been impacted by the U.S. government shutdown temporarily, but as soon as that opens back up, this will restart from where it was left off. We are still expecting those results to be very, very early in calendar year 2026 coming through, which we're really excited by as well. The results that we have generated through phase I, I'll say, have been extremely valuable. When you think about validation, people pitching new products to quite an established market, you need to have some evidence and data to cut through and to get interest.
We have been attending several different conferences in North America, primarily in cell and gene therapy, but that does cross over to blood. Having those phase I results from the U.S. military study in hand to present with our technology offering is very powerful. We have seen quite a shift with interest and with moving from intrigue to opportunity with the different parties that we've been presenting to and that are in the pipeline as we speak. I would say that the results through the phase I work was a real catalyst for that. It has been really important that we continue to achieve these great outcomes, and we're expecting more through phase II of the military. I'll hand it over to Simon now to go through some of the financials.
Thanks, Brent. Welcome everyone. You'll have seen our spend pattern has continued as we have talked about over the last 12 months. Our cash burn was about AUD 3.7 million after receipt of a significant chunk of interest on some term deposits and some revenue, of course, from our aquaculture activities. Our cash costs were AUD 4.2 million, down from the prior period of AUD 4.7 million. That's just due to a bit of the lumpiness around the spend on our major technology platform, VCU2, and the software platforms with our partners as the project sort of moved through this lumpy period. That will continue for another couple of quarters before settling down to a more steady spend subject to building a fleet to get commercialized in the second half of this financial year. On the next slide, you'll see we've closed the quarter with AUD 25.8 million in cash and term deposits.
We're expecting the balance of the Industry Growth Program grant funding, which is about AUD 2.4 million over the next 12 months. We have a forecast that puts us on a cash runway well into calendar 2027. A good path forward. Thanks, Brent.
Thanks, Simon. I guess the summary of execution. If we reflect back end of November 2024 when we did complete the IPO, since then, a very large portion of that use of funds was committed to product development. We can confirm that we have successfully delivered on two of those core projects, being VCU2 and the LifeChain software platform, on time, on budget, which we're really proud of. We will start to ramp that up in the very near term. Building out of the U.S. footprint, so organization capability was another key part. It's one thing to have good technology. It's another thing to get commercial contracts. The main thing is, can you actually deliver on them too? Building out that U.S. capability has been a really important step of preparation to be able to execute and succeed and scale. That's ongoing, but tracking well.
We're starting to really see a shift in, I'd say, brand recognition. You know, being an Australian company, you have to get, you have to sort of break through and go through this process of meeting people, recurring meetings for them to really understand who you are, what you do, and why you're good. I can confirm with that and through the different conferences that we've attended, it's gone from introducing ourselves to now, to then, sorry, people knowing who we are. Now it's moving and has moved to being asked to present what we're doing. That's, you know, things in, you know, capital raising scenarios, let's say, where it's investor faces pitches. We did one of those yesterday at the Microcap Conference, but it's also at conferences in the industry as well, such as the AABB Conference that's over the weekend.
There has been this evolution of brand awareness, which is really positive, and that can only increase moving forward now that we will actually have physical products to present early in the calendar year as well. Obviously, commercialization. It's been a really core focus for us. We've got really strong pipeline opportunities, and now our priority is to convert those from being pipeline opportunities to commercial agreements, as well as securing the medical device registration, which we're expected to do in the middle of next calendar year, and also building a fleet of devices in anticipation for the market demand that we are seeing that's going to happen in the near term. We are going to start scaling up building of the technology itself for the rest of the calendar year early into 2026. Thank you. Tim.
Excellent. Thank you, Brent. Thank you, Simon. Just a reminder now, if you do have any Q&A questions for Brent or Simon, please drop them in the Q&A function down at the bottom of the Zoom platform. There are a couple of questions already that I'll pose to Brent and Simon now. Brent, just to start off with, can you just speak to the importance of having the VCU2 delivered in addressing that immediate market opportunity and how that will expand over the next six to 12 months as we go through the medical device registration process?
Sorry, Tim, I just preferred, can you just repeat the start of the question?
Could you please just speak to the importance of the VCU2 delivery?
Sure.
It allows us to immediately address some market opportunities and how that will transition as we secure our medical device registration over the next six to 12 months.
Sure. I would say the units that we've got now, this milestone, let's say, unlocks a large portion of our addressable market. We don't need to have medical device clearance to commercialize the technology. This milestone not only is a product development milestone, it's also a commercial milestone. It's critical for us to achieve this so that we can start to really have products in market. It's an important milestone, and that's why we're actually building a bit of a fleet of those devices over the next three to six months as well for that research use only application, which covers human health and animal reproduction as well. That's important. Further to that, a couple of those devices being used for sales and marketing and having a physical device and the software for that matter on the ground to be presentable in North America is really important.
People really love what we're doing, and there's strong buy-in, and there's a need there that is being recognized. People want to see it, and they want to touch it, and they want to feel it. Having a physical presence with the device, which we can now do, is going to be a really important factor as well, which part of this first batch build we'll be allocating for those purposes too in North America. Further to that, we need to use a couple of these devices for the medical device pathway. To get the FDA registration, we need to have equipment available to do a lot of the testing on. For the first generation device, that took some time and a couple of years because we were starting from scratch.
We're now trying to really expedite that, and that's where we think we can get it done in under six months from essentially the start of the calendar year. It's a really important milestone for many different reasons.
As a follow-up there, Brent, you mentioned that we will be building out a fleet of the devices. What is the build cost looking like in this initial development phase for the VCU2 device, and what is the work being undertaken to understand the managed service cost basis a bit more as well?
Yeah, so on the unit cost, noting that this is sort of still small volume batch builds, and there's the tariff components and supply chain challenges. A couple of months ago, working really closely with PI, we had to work through some of that because we were nervous that the cost could go quite north. We have landed in a good position though. If we forecast from the cost of VCU1 to VCU2, we were expecting the bill of materials to come down slightly, even though we're increasing performance and expanding the capability. The unit cost as it stands is looking to be approximately AUD 100,000 bill of materials, and then you've got the labor component that sits alongside that. Naturally, with economies of scale, we should be able to bring that down on both fronts. That's where it sits at the moment for these smaller volume units.
Perfect, thank you. There's a question in the chat regarding the board renewal process, and in particular, the process that is being undertaken to find an additional non-executive director to replace John McBain, but also what expertise and skill sets is the company searching to replace Sonia and John in particular in their expertise?
Yeah, just on the previous one, I'll say that just to confirm, it's Australian dollars. That wasn't U.S. dollars either. You have to jump a little bit between the two, and I confuse myself at times. That's AUD 100,000 , not US dollars. On the board renewal process, John in particular, to answer your question directly, has had tremendous input and will remain an important stakeholder to the business. He is still very close, there's no issues, and he has added and will continue to add tremendous value in the area of assisted reproductive technologies and innovation. That's an important thing to note. As we move through and look at the evolution of the board, if we refer to our priority areas, we've got blood as a category, let's say, which covers, we'll say, cell and gene therapies in that as well. That's our real core and in North America.
What we're looking for is expertise and skill set and experience in U.S. operations and in the blood and cell and gene therapy space. Publicly listed experience is obviously great to have, but I'd say industry experience in our priority applications in our primary jurisdiction and target market is really important skill set to find. Fortunately, Lee has a big chunk of that experience, so that's an awesome get, but to continue to bolster that even further is what we're working through at the moment with a thorough search being undertaken.
Excellent, thank you. As a bit of a follow-up in regards to the go-to-market launch, but also the market opportunity in particular relating to cell and gene therapy, how do you see the marketing efforts that are being undertaken in terms of conference attendance? Also, how do you anticipate that will change with the availability of a device or devices in the U.S. for that tactile exposure?
I'll just categorize it. I would say start of 2025 was introductions to Vitrafy verbally. No one knew who we were. Into the middle of the year, people started to know who we were as people and what we're trying to do. Now it's because of the military results, it's people coming to us and engaging with us, and it's a much more progressive conversation of depth beyond just intrigue and interest. I'd say that's opportunity. Now that we have physical devices to present in the next few months in North America, now it's moving into actually presenting the offering in person. I think that's going to materially change the velocity of interest and progress because that's what everybody wants now is to see it and touch it and feel it and play with it, essentially.
There has been this evolution over the past sort of, what month are we in? Month 10, over the past 10 months from the marketing efforts. Now it's about presenting the offering in person, which I think is a critical part of the next phase. We're expecting some of our marketing efforts to ramp up because of that opportunity now. Early in the new year, there's a couple of key conferences in cell and gene therapy and blood in North America that will look to having some type of setup or booth or presentation at those to further generate that understanding and awareness, which obviously ultimately we want to lead to commercial contracts as well.
Excellent.
That's on the marketing side of the product. There's obviously then investor engagement, and we're trying to put in an effort now to ensure that communication is frequent, it's clear, it's concise, but also expanding that as well to new investors and new presentations. As I said, I presented at a Microcap conference yesterday to some new faces and new names, and we'll continue to do things like that as well to continue growing the awareness of Vitrafy as a company overall. It's not just to market, but also the investor world too.
Excellent, thank you, Brent. Just as a last question, obviously the next interaction the company will be having will be at the annual general meeting, which is to be hosted on Thursday, the 20th of November. Do you want to just speak to what's planned for that event and the invitation that stands to all investors?
I'm pretty excited for this. Talking about the marketing efforts in North America, customer-facing, let's just say that the AGM's got an unveiling. We hope that those on the call and others can make it in person to Melbourne on the 20th of November for an in-person AGM because we will have the technology here and available and we'll be presenting it as well, which is very exciting.
Excellent, thank you. All right, thank you everyone for joining this quarter's investor update briefing. If you have any further questions, please don't hesitate to reach out via email at investors@vitrafy.com. Otherwise, if you'd like to reach out to Brent, Simon, or myself directly for a further follow-up, we would be more than happy to arrange a session after this as well. Thank you all for joining and have a good day.
Thank you, everyone.