Good morning, everyone. It's 9:31 A.M. here on the Australian East Coast. Welcome to the Q3 quarterly update for Vitrafy Life Sciences. Today, on the call we have CEO and Co-Founder, Mr. Brent Owens, and CFO Simon Martin, who will present the Q3 quarterly update and their financial results. I'll now hand to Brent Owens to present the quarterly activities report. Thanks, Brent.
Thank you, Tim, and thank you everyone for joining. I am looking forward to providing a positive update on the progress we've made over the quarter. I do encourage you all to spend some time reading both the release and the presentation in more detail following this call, if you haven't had the chance already. As Tim mentioned, joining me is Simon Martin, CFO of Vitrafy, to cover all things finances during the call. Getting into it, I just wanted to start by just reminding us all what we've got and why we're here, and what Vitrafy is. A novel cryopreservation technology company that the combination of hardware and software materially improves the quality of cryopreserved biological materials. The way that we're selling that is a solution as an ecosystem. One solution with multiple shots on goal.
Cryopreservation as a service is our revenue model, and it's the hardware and the software combined that really unlocks the value. The value for the customer, and the value for Vitrafy under a recurring revenue model. Over the term, we have seen great progress in various areas, almost all areas of the business, specifically. One which has been a program since the starting of the IPO, and that is the U.S. military blood platelets testing. We have now completed phase II of that program, which is really exciting. That program is broken into two components. One is related to the regulatory pathway for our cryopreservation freezing device. The second is a new solution for a product that is currently unavailable in the market, but very much a market need.
What I can share with that is the results are very positive, and we will have more details as the data comes in over the next couple of weeks. I guess importantly for us is the results that we achieved during phase I were exceptional. These results are consistent with that across all the different cohorts that we're testing. It is the largest sample set that we have tested to date, which is really promising for the company. Noting that the regulatory requirements for the existing process is only 50% post-thaw, which we are far exceeding by a long shot.
I do look forward to sharing that, more fulsome update once the data comes in over the next couple of weeks, and we will obviously talk through that in much more detail, including what comes next, and how we keep moving that forward to a commercial status. Beyond that, IMV, which is our global partner in animal reproduction based in France, we have built the technology, sent the technology, trained the team on the technology, and that program of work has now commenced in France with IMV with the initial testing on bull semen starting during May. We're all ready to go in that area, which is very exciting and the collaboration is going from strength to strength, which is really encouraging for the business.
Beyond that, obviously, we need technology in market to be able to do that. We have completed the build of four of the Guardian cryopreservation freezing units during the quarter. Two of those are installed at IMV, as I mentioned. We're sending more to the United States and continuing to ramp more builds over this next quarter as well in anticipation for commercial demand and also for the FDA regulatory pathway, which we have now commenced as well. So, in the U.S., which is our primary market, which we have unlocked a big portion of that market already with this first release of the cryopreservation freezing device, and we are expecting another milestone in the back half of this calendar year with the FDA registration coming, which is key inflection point because that unlocks an entirely new market in itself.
We are in a strong cash position. We do have a strong cash position. Over AUD 18.5 million in the bank, which is very positive, which Simon will expand on later in the presentation. You may, for those who have been following since the IPO, you may recall this slide. It was actually in the prospectus in slight variation. What it was is the three verticals that we're really prioritizing as our go-to-market. Animal, because it's global scale, unregulated, and there's a really urgent need in the short term there, which is obviously the global partner that we have in IMV. That's been executed. Blood and blood products, because of the inability to currently do it, and I'll expand on that in a moment.
There is a need there that is growing, and it is a large and growing market too. Cell and gene therapy because of the need for quality, consistency and standardization. During the roadshow and IPO process, we did speak to this being what we're aiming for and what we're targeting with the different reasons that I just outlined. What we've seen, particularly in recent months, is there's certain catalysts that are occurring and trends in the market that are occurring that are very favorable to Vitrafy and supporting what our strategy was, which is proving up in each vertical and very promising for the business, which I will expand on shortly in the different verticals specifically. Starting with blood, and particularly blood and military.
Again, this was one of our major projects that we're committed to through the IPO phase I achieved outstanding results with small volumes. phase II, again, we've just completed, and the results are very promising. The data will be revealed more fulsomely over the next few weeks as it comes in. But as it stands today, the different applications that we tested, both for the registration for our medical device data set and a novel new protocol that doesn't exist in the market today, both are very promising results. We do believe that will accelerate commercialization within the sector, and that interest from the phase I outcome that's bled into the civilian market is only going to strengthen moving forward. The report for that phase II testing is expected during Q4, as I mentioned, which we will spend some time on as a separate update on its own.
That's more of the military market. As I mentioned a moment ago, when we did complete the phase I testing, that result in blood platelets did start to generate some civilian interest, which is much sooner than the company expected as well. Across the U.S. in the civilian market, there are, you know, quite large numbers of sites, as you can see on the screen, with large volumes of blood collected, which we can touch various parts of the supply chain. Importantly, over the quarter, what we managed to do was use that phase I data to present at various conferences in the U.S.
That has generated significant interest, and there are a lot of active discussions with some of those larger U.S. blood collection and industry bodies, which we believe are the target audience for our technology across military and civilian, as I mentioned. That's across blood platelets, as I mentioned earlier. There's also an end-of-life technology occurring in some of the other blood components that is proving to be an opportunity for the company, and we will be able to expand on that further in due course. We've mentioned for some time that the blood market, particularly around the world and the U.S., is quite a legacy operation, and change isn't common. When change occurs, it's more fulsome, and it's hard to then break.
What we're now seeing is end-of-life technologies and catalysts for change, which we believe are very positive for Vitrafy across the blood market in its entirety, which is very positive for us. Expanding on the other priority vertical being cell and gene therapy, again, that's a bit more of a bottom-up approach. We have, for the first time during the quarter, presented the technology in person at a booth at a cell and gene therapy conference in the United States. That is very validating, and it was a very positive showcase, and a lot of interest was generated from it.
We do continue to build that pipeline and allocate resources in that area to keep building on that, to focus on commercial execution in the space, while in parallel completing some internal validation because we wanna keep building data to show the value proposition that we have in the cell and gene therapy sector, which is great. Further to that, what we've been able to do, which is further polish the devices, and that is receiving feedback from potential customers on where minor improvements can be made. These trade shows and events are really quite important for not just generating commercial interest and execution of that, but also getting feedback on the technology so that we can keep improving it and making it a more valuable and attractive offer for potential customers as well.
In the animal space, again, as I mentioned in the opening, we have commenced the collaboration with IMV. During the term, the team have done such a fantastic job in building the technology as it's required, validating the technology's performance in-house, sending the technology to France. Team have gone and commissioned the technology there, trained up IMV's staff, and they've worked through that program, and they are ready to commence that testing during May. So, very much on track and on plan and a great collaboration. What we have seen over the quarter beyond, I guess the program of works with IMV is further inbound commercial interest from other parties in the animal reproductive sector across both aquaculture and bovine.
There is interest in what we're doing and appetite for what we're doing, which is very positive for what we're trying to achieve as a joint go-to-market global offering with IMV. As revenues start to flow, as the work continues to be completed, we will continue to look at those different opportunities together with IMV as well. Great progress in that space. On the product side of things, all of that sort of the go-to-market, but we obviously need technology to be able to deliver to market. We mentioned in the last quarterly update that we were looking to ramp up production of the technology in anticipation for the commercial demand, as well as for some validation and regulatory work that we need devices for.
I can share that we have successfully completed a build of four of those units during the quarter. Two of those again have been installed at IMV in France. The additional units are being deployed to the U.S. There are demonstrations that are occurring at our U.S. site in Southern California. That's been fostered from both those blood, civilian and military engagements, as well as the cell and gene therapy conferences that I mentioned that we attended. We did see over the quarter some supply constraints due to global supply chains and geopolitical conditions that impacted some of the delivery of the units in full. We are remaining on track with that forecast delivery build throughout April and into the fourth quarter as well, as you can see on screen there.
I did mention in the previous slide on cell and gene therapy that we are getting a lot of customer feedback now on further iterations and improvements that will only add more value to our offering, which is a great time to be doing that ahead of the final design freeze when we complete the final medical device process as well. Rounding that out, we are ramping up, as you can see, during the next quarter for further manufacturing and in the United States, which is our primary area of focus, as we all know. The regulatory pathway. FDA registration is an important catalyst for the business, particularly in the blood collection centers. It is required for some of the areas.
While we can address a very large portion of the market as it stands today with the current technology offering, the FDA registration primarily in the blood area does unlock a whole another opportunity. We're working through that pathway. It has commenced, and we are expecting that to seek registration in the first half of the next financial year as well, which is a very exciting milestone that we're looking forward to achieving as well. That is obviously catalyst for further adoption and commercial deployment as well for the company. Handing over to Simon to go through the financial highlights for the quarter.
Thanks, Brent. As you can see there, we closed the quarter with AUD 18.5 million in cash and term deposits. We obviously received further Industry Growth Program grant funding through the quarter. We've got three more quarters of that funding with roughly AUD 600,000 or AUD 700,000 to go, but tracking well on that. Obviously, looking forward, we're able to get some visibility on revenue, which is nice from IMV in particular and aquaculture. Obviously we'll have interest income and further grants coming through to offset the costs. In terms of cash runway, we've got four quarters of funding available currently.
While we expect our costs will be relatively flat through this next quarter, they will, as you can see from the prior chart, go up through the second half as we invest further in the fleet and build out the team. We're in the market for a number of roles. We're, you know, reasonably confident in the runway and, as Brent has just talked through, demand is coming at us. Back to you, Brent.
Thanks, Simon. I guess rounding that out as well, we do have—while we did have a really successful quarter, we can see that building further as there are quite a few key value inflection points for the next quarter and into the first half of the calendar year, or the first financial year, sorry. With that, there's finalizing the phase II data, which we could see coming in this next quarter. As I mentioned before, that will be expanded on, but we do think that is gonna accelerate some of those commercial opportunities which we're in discussions with, both across the military and the civilian settings, primarily in the blood collection points, as I mentioned earlier.
Phase I testing of IMV, that program kicks off during May, we're expecting that milestone to be achieved very shortly as well. Aquaculture, we are looking to go down to Tasmania to continue that work and move that agreement forward. Obviously, with IMV as a partner in that space, we're looking to scale that out, up and out across the aquaculture space and continue to expand on that from a revenue growth perspective, and then scaling up the device supply, as Simon mentioned too, ahead of our FDA registration in the back half of this calendar year too. A lot of action, a lot of progress has occurred, but there's much more to come, which we're really looking forward to. I'll hand it over now to Tim for any Q&A. Thank you.
Excellent. Thank you, Brent. Thank you, Simon. Firstly, if you do have a question, please use the chat function at the bottom of the Zoom ribbon. To kick us off, a question from Tom Godfrey from Ord Minnett. Can you leverage the U.S. Army ISR data directly into a deal with one of the civilian networks, or would you look to do a similar collaboration study on this side as well? Brent.
Yeah, that is a good question. Fortunately for us, the data that we're generating can be used across both civilian and military. I guess it's U.S. blood is U.S. blood, so as long as we're getting our required approvals through the FDA, then we don't see any barriers to adoption across military and civilian, as we are treating the requirements as very much the same.
Just to add to that, Tom, obviously, as Brent has said on a number of occasions now and just now before that, the fact that we have that data is actually leverageable into the civilian network. We're getting a lot of interest and input, both on the platelet side, but increasingly on the red blood cells as well now. That's, you know, that's worked a treat. That strategy of chasing down the U.S. Army and getting military interest has flowed over as we'd hoped into civilian. There will be more studies to do and more testing, and that's part of the FDA approval, as well as expanding our footprint in the blood collections space.
Excellent. Thank you. As a follow-up question, Brent, you referenced the obsolescence of some legacy technology. Can you just expand on that further and outline what that obsolescence provides in terms of tailwinds or opportunity for Vitrafy and the adoption of our technology?
Yeah. Thanks, Tim. It's obviously there's different priority areas that we've been focusing on. One of the blood components that has been cryopreserved for a long time, it's one of the longest standing frozen products globally, is the red cells, so packed red cells, which is a core component of blood. The method to do that, which has been again around for a very long time, uses a high percentage of a cryoprotectant and additive, which is about 40% volume to weight. The way to wash that out because of the toxicity requires a piece of equipment similar to, I guess, a washing machine, and then detergent similar to what you put in a washing machine.
There are end of life technologies, both the washing machine and the detergents, that creates a problem for the entire frozen red cell market as it is a product that's used broadly, particularly across rare blood freezing and stockpiling for, you know, military uses as an example. Excuse me. What that problem is is how do you do it moving forward? The combination of Vitrafy's ecosystem, we believe that we can hopefully address some of those problems, and we do see that as quite a significant opportunity as a catalyst for change, which, when you think about the blood platelets vertical, showing that that is a great opportunity and we can do it is one catalyst for change.
If that's now an opportunity in red cells, that's two of the primary blood products that may have opportunity for catalyst for change in what is a legacy-based system in blood. Simon, did you want to elaborate on that at all?
Yeah. I just building on that, I think what we're experiencing is significant interest again on the red blood cell side from particularly the blood collection centers, because it is a. Whilst we've noted for some time that the technology that is used in blood collection is old and hasn't been updated particularly in the cryopreservation space for a long period, it appears to us that whilst it's a smaller part of a bigger subset for red blood cells that's being affected by this end of life, it's almost like a you know an indicator that this tail of technology is going to burn out, and so replacement is required.
It's a, you know, timing is everything, and we're applying a lot of energy and quite a degree of resource into chasing down how we might utilize this as an opportunity to further showcase and embed the Vitrafy ecosystem, particularly at the blood collection site.
Thank you, Simon. Thank you, Brent. As a follow-up to commercial demand, a question from Leonard McDonald: are you receiving any significant interest from areas outside the U.S., Europe, Asia, Australia? What is the color of some of the counterparties that you have been discussing with post the facilitated conference?
On the first part, is there interest? I'd say one of the benefits for Vitrafy is the global opportunity that exists. There are global counterparties in the market, which that's not limited to a specific application. It's very broad across almost all of the applications that we're working on. It is a global opportunity, and there is interest there. What I will say, though, is we are very focused and are prioritizing the U.S. to start, and that is our focus area. We don't want to get distracted, and we're gonna avoid distraction, so we are keeping focused in the United States as it stands today, while there is interest outside of the United States specifically.
Cell and gene therapy is a little bit different to blood, I would say, in the sense that it is a little bit more of a global network. Whilst our focus is the U.S., a lot of the counterparties are globally represented in some way, shape, or form, whether that's through the research, the clinical trials, or even for commercial use. There is an element that spans beyond the borders of the United States even though that is our focus area, and there is interest from that perspective as well.
Excellent. Thank you, Brent. Question for you, Simon, from Greg McCann. Can you explain the pricing model and revenue model and how that's likely to play out as you scale commercialization?
Thanks for that question, Greg. We have been very focused on ensuring our revenue model aligns with the engagement we want with our customers and also reflects the value, if you like, that we see we will be delivering, which is very much outcomes focused. We are pricing this and modeling this as a service, so cryopreservation as a service. We will be bundling hardware with software and charging a monthly service fee and overlaying that for volume with consumables, i.e. bags in the case of blood, but vials, say, in the case of animal reproduction.
Our model is very much a recurring revenue model, which is focused on engagement with the end customer and improving their outcomes, and at the same time as we drive value, we collect value from them on an ongoing basis.
Excellent. Thank you, Simon.
I'd say just sorry, just to jump in on there just to elaborate one step further on just an observation from the engagement that we've had on the ground, and that is that the model that Simon just described is actually quite attractive, and people are actually asking for that too which is a really positive sign.
Thank you, Brent. Another question from Tom Godfrey. Ahead of the initial testing, has there been any additional work done on IMV and what the possible go-to-market and opportunity post year one looks like?
Ahead of the work, there has been some work done more from a working through feedback on how the joint solution could go to market as a technology perspective. The commercial work and all of that mapping essentially kicks off over the next month in a more fulsome manner. That will ramp up in the near term, as we keep moving that forward. More of a technology work is what's been the focus so far.
Excellent. Thank you. Time for just one final question from Casper Reed. Given the current U.S. administration's policy on America First, how does that impact the company strategy to set up in the U.S. and any potentially risk factors?
One of the benefits. It's a good question, Casper. Thank you for asking that one. I'd say one of the benefits of what we've been doing over the past sort of 12 months and part of the selection criteria of our U.S. partners was that there was U.S. manufacturing capability. While the design work, we did complete a lot of that here in Australia, it's been very closely coupled with knowledge transfer to the United States as well so that manufacturing can transfer over there, and we do tick that Made in America requirement that is actually quite important.
We do have that in the next round of devices. We are building some of those in the United States as well, which mitigates a lot of that risk 'cause it is quite important as well. Simon, is there anything you'd wanna add to that?
Yeah. I think as part of that question, is there any overt pushback? There isn't. In fact, there's an embracing of the technology and our presence. We are ramping up the team so we appear American. We're trying to do everything so that we are presenting that way. In terms of copycat U.S. systems, we've got a fairly extensive protection via patents that we filed over a long period of time and continue to update. We feel reasonably confident of that in the U.S. Obviously, we continue to review that. Our biggest protection is actually momentum in the market and getting both the recognition and deployment that we are seeking. That's how we're pushing it.
Excellent. Thank you. All right. Well, thank you everyone for joining the Q3 quarterly update from Vitrafy Life Sciences. As previously mentioned, we will have upcoming announcements over the coming weeks and months in relation to the U.S. Army blood program results being formally released. There will be further engagement, so please make sure you either subscribe to our LinkedIn or follow us via our other channels to ensure you stay up to date with the latest information. Otherwise, if you do have any follow-up, please don't hesitate to reach out to the company directly via our email address, being investors@vitrafy.com. All right. Thank you very much everyone for joining, and have a great day.
Thanks, everyone.