Good morning. Thanks for joining us today. We are going to be going over Microbix’s Q3 numbers. If you're not familiar with the story, I would recommend maybe watching some of the other webinars on our YouTube channel to get up to speed, but I believe most of the participants are very familiar with the companies. So, thanks for joining us with me. I have Cameron Groome, CEO; and Jim Currie, CFO of Microbix. Thanks for joining us, gentlemen.

Thank you, Deborah.

Thank you very much Deborah. It's a pleasure.

So, the format will be a quick run through of the quarter, and then we'll do a lengthy Q&A. As always, this presentation will contain forward-looking statements if you'd like to know more about those, you can find them on the company's disclosure on their website, in the presentation, which was actually updated for this call this morning and posted online. And as I mentioned, there will be a Q&A Section. So, feel free to put your questions in the Q&A box, or you can email them to me at [indiscernible]. And with that out of the way, Cameron, I'll let you review the quarter for us.

Great. Thank you, Deborah. And Jim, I urge you to interject, interrupt and correct me if I make any misstatements. Just in terms of Q3 the quarter, the results were really demonstrating what Microbix can do with respect to growth in revenues gross margin realization and net earnings, torque. We recorded record sales of $5.5 million; record gross margin for the quarter of 63% and record net earnings for the quarter of a shade over $1.5 million, which is a 28% net margin. So very pleased with this one item all notes in the quarter, it was that due to a bulge of our accounts receivable moving through, we actually saw cash flow from operations, turn negative for Q3. And that was the sort of fluctuation that we believe drove the logic of our raising some capital through the financings we undertook in the prior quarter just to make certain that we would be able to continue to support the sales growth, whether that's investment and receivables, or inventory, or other working capital items, as well as to drive the scaling and automation of our QAPs business, the automation of viral transport medium production, and further growth of our antigen business as more normal times eventually resumed post-pandemic via also the addition of BSL3 suite, which we see as broadening the catalog of organisms with which we can safely work. Jim, are there any particular call-out points you'd like to make with regards to Q3?

Not in particular, I think, as you identified, it was just an incredibly strong quarter. We had great performance from all of our product lines. Antigens was very strong in terms of the product mix and you identify and as we identified in our news release. And that was also very helpful. And we're seeing a lot of continued growth and strengthen our QAPs business. But yes, an excellent quarter.

Yes, and…

And a business model that I think, because it puts cash in the bank too, so.

That it does. That it does. And we have taken some steps to make certain that our own supply chains maintain integrity and well we have not grown inventories in absolute terms. We are seeing increase in the proportion of inventory of raw materials, just to make certain that we're not caught out by any of the pandemic-related supply chain disruptions. In terms of the revenue splits, as Jim was alluding, all businesses performed well, the composition of revenues was $2.9 million of our antigen sales at good margins, QAP sales of little over a $1 million, $1,052,000, very strong year-over-year growth for the QAPs business and the initial deliveries of our VTM, viral transport media branded DxTM to the procurement designate of the province of Ontario that added $1.9 million in revenues for the quarter as well. So combined very good operating dynamics from all three of those product lines is really what drove the gross margin to 63% up from 47% the prior year and really realizing a lot of the objectives that we've repeated and been consistent that we've wanted to get those margins to high 50s into as high as mid-60s potentially. And this showing indeed that that's doable. Jim, one of the things we'll mention as well, of course recently you and the finance team concluded the upgrade of our U.S. quotation to the OTCQX one Tier below NASDAQ, up from the QB. And we see that increasing potential exposure to U.S. investors a little bit more orderly market with higher grade issuers.

Yes. So that combined with U.S. Investor Relations’ support as well.

Yes, very good.

Yes.

Yes. And we're still frankly, a bit small to hit prime time potentially in the U.S., but as we see our revenues continuing to grow things get a lot more interesting when you are reporting revenues in tens of millions and on an annualized basis and driving these sorts of margins out of the business.

Just a couple of couple of things I'll mention, certainly we don't see things slowing down here. In the case that suddenly anyone's mind our QAPs business continues to proceed very, very well. And we have some incredible engagement with parties on developing very complex controls for diagnostic OEMs. One of those relationships has been disclosed that with SpeeDx out of Australia, out of Sydney, Australia, a very well-regarded global developer of assays for major multinationals. And we're working very closely with SpeeDx on controls for antimicrobial resistant variants of organisms. And we have other such relationships ongoing that are proceeding a little bit less advanced than that from an announcement point of view, but extremely material. And we see some of these as transformative relationships whereby we may see 10x or more scaling of our QAPs business from here based on some of the numbers that can be driven out of that deal. We've also been adding, of course, to our base of distributors and in the last quarter have added our first distribution partner for Asia Pacific markets that involving Hong Kong, Indonesia, Singapore, and Malaysia with SDT Molecular. And we have added Thomas Scientific, a very well-known and well-regarded distributor in the U.S. as a further non-exclusive distribution partner for our QAPs with a view to directing those principally to the clinical laboratory segment. So really nothing at old negative report, we have produced as you can see a very strong Q3. Our outlook is very strong for Q4 as well. And we're developing our budgets through fiscal 2022, starting that budget cycle now. And we certainly see fiscal 2022 as a very favorable year for Microbix as well. So. with that Deborah, are there any questions that you, and Tina and Adelaide have been posed before we open it to our participants? A - Deborah Honig: Sure. Actually, I have a question for you. I think most of the questions I see coming in are around BTM. So, we'll get to that. But just going over the QAPs, you have had a number of new product lines on that segment of the business. Can you run us through exactly what products you're offering right now?

Well, we have a total of 70 product skews right now in the QAPs business. As you can imagine, there has been quite a bit of action in this area of respiratory pathogens, pretty hard to miss some of what's been going on. We have – in the respiratory segment, we have not just COVID controls, but we also have Influenza A, Influenza B, RSV that's respiratory syncytial virus, and a number of controls for other respiratory pathogens. So that segment of our business has been certainly busy. Another area where we're very strong is in the sexually transmitted infection category, where we have controls for some of the ever popular sexually transmitted infections and a solid catalog in that field. In COVID, specifically, we started of course, very quickly developing the controls for the COVID PCR testing, using the original Wu Han strain of virus. We have since broadened out the molecular test control offerings to include proceeded variant and PT, variant products for the UK, South African and Brazilian variants of COVID. And we'll continue to add products for molecular testing as different variants show meaningful changes to the relevant testing probe segments, primary segments for molecular testing. We also have very well-regarded and broadly used test controls for COVID antigen testing. And those products are also been made available and are being widely used across Canada and internationally. And more recently with the ECCMID Congress, we disclose work that we've been conducting on controls, QAPs, Quality Assessment Products for COVID serological tests. So, these are the tests that look for your level of antibodies, protective antibodies in your blood. And we see that becoming a relevant market for us in the not-too-distant future, as people want to assess the humeral side of the immune system and what the response and protective response has been for two vaccinations.

Okay, great. And I see a number of audience questions. I think maybe we can just jump in there. I did have one other question for you, Jim. It was emailed in last week and I haven't had a chance to respond, which was around the royalties and the decline in the royalty in the quarter. Can you speak to that?

Sure. Our royalties are primarily driven by a license agreement that we have with the Ministry of Natural Resources for rabies-related. And we don't know, we only get an annual royalty’s report in December actually. So, what we end up doing is we end up accruing based upon the prior year's results. And last year we would have accrued on a higher number that didn't come through at the end of the year. So, we saw an adjustment Q4. This year we're accruing based upon last year's results. So, they're down about 10% from the previous year, at this point in time of the year. However, we won't know the actual results until we hit December and close off from a year. We've also seen a very slight reduction and there's another company that we get royalty sales from, and it's a slight amount from last year. But it's mainly the Ministry of Natural Resources as to why we're lower than we were last year.

Okay.

Just in terms of the product for anybody who is curious, Deborah, this was a technology developed a number of years ago by Microbix staff whereby an oral bait can be used to vaccinate wildlife against rabies. So literally these baits are dropped out of planes by the Ministry of Natural Resources to be eaten by raccoons, and foxes, and skunks and other species that might be at risk of rabies. And it actually vaccinates those animals against rabies. And the Ministry of Natural Resources, as Jim indicated, pays a royalty to Microbix on each bait used.

Interesting. I don't think that's ever come up in any of our conversations, Cameron it’s always something…

It's a relatively small revenue lines, so we don't focus on it, but it does speak to the breadth of expertise that Microbix has demonstrated.

Yes, interesting. So just talking about margins, so margins have increased very well over the last quarter with the automation of some of your lines due to come on in the spring of 2022, what kind of margins can we see on those products? And what will overall margins look like for the company as a whole?

Well, I think for margins, there's two sides to that equation. There's of course the labor cost element that may be reduced per unit of production. But of course, then there is also the cost side of things or the product pricing. So, we want to make sure that we're remaining as competitive as possible on pricing four products. So, our bigger drive for automation is to be able to meet the demand in terms of the unit demand and do that sustainably. So, we've for example, in QAPs, we have largely manual production methods. Now that very much need to be automated to meet the scale of demand that we're expecting from and targeting from major partners. We can certainly meet anyone's near-term needs. We want to make sure we're reliably meeting the largest upward – largest volume projections that are potentially needed by our partners. And taking action on that now is really what we're driving towards. And likewise, on our viral transport medium, we've readily moved to produce 50,000 units a week and have demonstrated we can move that up to even 100,000 units per week. But we want to make sure that the reliability of that system, as well as the scalability is optimal as well. So, we're working on two sets of automation, our programs right now, one for QAPs and one for VTM. Jim, is that a good assessment?

Yes, that's a good assessment, Kevin. As you indicated, there is the capital component and it will also be volume driven as well in terms of when we start to look at the cost base or ultimate margins on the products.

Yes. And we've – I think typically spoke of trying to hold new products to a higher margin, more on the order of 70% is what we feel we should be making on this sophistication of product. And we'll see what ultimately, we achieve and what props to the bottom line. But we're certainly a far cry from the high 30s that the margins that we were looking at a couple of years ago. When we had older production systems for some of our antigen products and a much higher proportion of sales – overall sales from antigens, it's interesting to note that we've just now snicked below the 50% mark in terms of the proportion of overall revenues coming from well, around the 50% mark now. And that's downs from 90% a couple of years ago that was driven by antigen by sales.

Can you talk a little bit about the antigen business? Are you starting to see a recovery in that business?

I think we're seeing people in start to anticipate a recovery and we did see a 10%, was at 9% for the quarter jump, Jim, in terms of a recovery. But we're not yet at the portion where we're seeing the resumption of growth that we were looking at. So, we're taking a conservative outlook on our antigen sales and still not quite seeing them come back to the million a month mark yet, but that's getting more visible now.

CRC and growth in that business for you expected to decline as a percentage of overall revenues?

Correct. So, we will be targeting growth in top line and the antigen business, but as a percentage of our overall revenues, I would expect it to continue to come down as we certainly expect QAPs and VTM to have a likely higher growth rate than we would for the antigen business.

Okay. And then Q3 EBITDA $2 million – implies $8 million per annum on a run rate, assuming increased CapEx will be funded with existing cash balances suggests cash balances will grow quite healthily. With this in mind, is there any potential for a share buyback, which I think was also part of the use of proceeds in a recent financing?

We didn't disclose that we didn't cite that as a potential use of proceeds in the financing. And certainly, I think we would have to engage the full board in any discussion about share buybacks or dividends, but there is certainly a view that we will be generating a positive cash flow from operations on a going forward basis. And if we get to the point where cash is building up too quickly, we'll have some very detailed and diligent conversations about what to do about that happy problem.

Okay. And I'm just going through, I have one more question on the overall quarter. When the expanded capacity will be made available, can you indicate it's 2022, is that correct?

Yes. Definitely 2022, for all of it, it'll be a question of what quarters of the fiscal year that comes in. Orders have been placed for the needed automation for the viral transport medium. We have not yet placed equipment orders for the automation of the QAPs production, that being the swab based QAPs and the liquid vile based QAPs. But I would anticipate that QAP and over the next what would you say, Jim, over the next couple of months? So those would follow likely in Q2 of next year for deliveries, probably late Q2, early Q3 for the QAPs automation and sooner than that more early Q2 for the VTM automation.

Okay, great. I see most of the questions are about VTM. So why don't we start there? So, what are the plans to extend VTM sales effort outside of just Ontario and what is the current capacity per week? I believe you said 50 still.

Correct. We have been running at that we demonstrated that we can move to 100,000 units a week approximately. And most of our production has been in the 50,000 unit a week realm. And we would see continuing at that rate, at the current time. Jim, as you've been looking at some of those numbers as well. I think 50,000 a week is a good estimation and going forward.

Yes, definitely. Right now, we're at 50,000, as you indicated, we've also demonstrated that we can move to 100,000 with the current, for instance.

Yes. And it's an interesting time for everybody in this because of course, in the summertime when we have bright sunshine and people outdoors, you're going to see reduction in respiratory viruses of all colors. So, we've seen that happen as you would expect with the normal seasonality, but testing is still held up on the order of 20,000 tests a day within Ontario down from a peak of 60,000. The interesting question will be how fast does that testing volume numbers pick up again, as kids go back to school from kindergarten through university, in September in the fall, and what – how many people are coming in for the playground with a runny nose and sent off for COVID tests, correctly or incorrectly. And what does the fourth wave that is likely to occur look like with the Delta variant being more transmissible, but a higher proportion of the population being vaccinated. And you have spectrum of opinion through to – through from COVID will be gone in a week to the Omega variant will kill us all. And happily, for better or worse, the truth lies between those two extremes.

Okay. And then talking about the Ontario VTM purchase order. So, I believe the initial one is due to conclude at the end of this month. What is the status of a potential second purchase order? And what is the process for renewal or extension of that contract?

The procurement tends to be one at a time purchase order rather than a multi-year purchase contract. That's just the way that Ontario procurement tends to function. We've certainly been told directly that we're an important part of the equation in Ontario's security of supply for critical products like VTM and of course, like the test controls such as that on the screen behind me. That being said, I would not, and would not anticipate Ontario to be solely reliant on Microbix last – if something happened to us that they're back in different kinds of pickles. So, we have been guided towards the reason belief that somewhere between a quarter and a third of Ontario's production might be directed towards Microbix. But orders come one at a time as inventories of VTM provincially are used up. We've been delivering product to the province in May, June, July, and August. And that will as has been indicated, conclude the initial purchase order from the province. And we've had discussions about purchase orders that are larger than the previous purchase order. And we've had discussions concerning purchase orders that are smaller than the previous purchase order. And it's a very dynamic situation that's unfolding with the province. So, they don't want to have too much viral transport media, and they certainly don't want to run out either. So, we're navigating between those two boys.

And how much should the VTM sales are for the government of Ontario currently and how much are for others?

Thus far, it has been all to Ontario. This is not a trivial number that we've been called upon to deliver. So, we have been moving principally at the province – for the province of Ontario, with our production to scale to these levels. And again, these are not – this is not an automated bottling line or filling line. This is a semi-automated production. And we've certainly been making certain we're debugging any weak points on equipment. We've had some equipment that was proposed to be a one-time purchase end up being largely disposable. And there's been a lot of a lot of optimizations of process. Of course, throughout that quality has been maintained at the highest possible level throughout. And when I speak of optimization, I'm talking about batch yields and product costs.

Can you talk about other government agencies or like both within and outside of Canada that you might be discussing VTMs potential orders with? Can you sort of give an update on where you stand with some other groups?

Certainly, we're looking at as a capacity comes up and even as our cost potentially comes down, potentially supplying other buyers within Ontario and other provinces as well. So, we've had some discussions with some of the other provinces, major provinces that you'd expect us to those thus far have not resulted in orders from those provinces. But the first step is making people aware that there's a high-quality Ontario made product available. And then seeding those markets and seeing what we can generate in terms of ex-Ontario sales. For now, those will be within Canada. There's a different regulatory process than Canada for VTM approval. In the U.S., this would be 510(k) filing. And well, it's very interesting to stand outside of those markets. We've just had a great many internal priorities on the on the QAP side and collaborations to so we've not thus far had the bandwidth to generate 510(k) on our VTM.

Okay. And just going back to the Ontario purchase order, do you still anticipate announcing the next Ontario purchase order? Would that be something you'd press release?

I think we will press likely news release the next order, just to demonstrate that if there is one but I wouldn't anticipate after that, that we'll continue to announce each and every order that just seems a little bit too obsessive. But we will announce the next order.

Okay. And I think just one more – one more part of VTM that I wanted to cover, and there's a question here about it as well, which is other uses outside of COVID. So, Canada imported, I think it was like US$50 million to US$60 million of VTM in 2019. So that was prior to COVID. Obviously, this would all be non-covered related with regards to – yeah. With regards to your relationship with the Ontario government, do you have any insight into Ontario's actual end market? Like what the size of it is with COVID and non-COVID? I guess it's just really like what applications are outside of COVID and what is the size of that in Ontario and maybe Canada as well, if you have any indication?

Well, for testing in Ontario, you've seen a range of between 20,000 and 60,000 COVID tests per day. The 20,000 being the summertime ebb and 60,000 really being the system straining to do the maximum number of tests. I would say that the steady state pre-COVID would have been towards the lower end of that range for different applications and with COVID. The testing capacity is probably 80,000 to 100,000 tests altogether, but that’s a very rough guesstimate on my part. In terms of the uses of viral transport medium will, our current product is designed to preserve viruses and to preserve them within the sample preventing bacterial overgrowth or fungal growth or any other organisms such that it can be tested for the viruses. And it’s also designed that the viruses can be cultured for further study by public health. So, this is a viral preserving non-inactivating medium. There are two other major formulas of – formulations of medium types of medium. One is a virus inactivating medium. And the second is a medium that permits the culturing of bacteria or viruses. So right now, we’re producing one category of medium that that was requested of us to prioritize. And we may look to develop formulations of the other two going forward to have a very competitive product offering as we move to automation and could deliver great products at great pricing at scale.

Okay. And I had a couple of follow-up questions that are fairly basic to the business, but maybe you can quickly run us through exactly what VTM is, what QAPs are and what antigens are. I think there’s some confusion if you don’t mind breaking it down for us non-science nerds.

Absolutely. No problem. Happy to do so. And I’ll actually pull up our presentation slides just to facilitate that if I may. So, when you look at – when we look at the antigen side of the business, this is antigens for our purposes are viruses or bacteria that are grown by us, highly purified and then inactivated. And what they do is they form the compliment to the antibodies in your blood. So, when you want to measure in your blood, for example, do you have antibodies to flu or do you have antibodies to Rubella. These antigens are required to check for that immunity. And that’s the uses of our antigens and our antigens are the biology inside a whole host of companies’ antibody tests. And so, we’re selling these as an ingredient and that proportion of our sales has been coming down as the quality assessment products side of our business has grown, but a very important, very vital production, but it’s an ingredients business. Our name doesn’t appear on the label of the tests that’s finally marketed with our product inside. The QAPs and that’s a catch all phrase, because it is a regulatory – regulatorily neutral name for our products and quality assessment products covers a number of partly regulated in a number of fully regulated applications, but effectively these are patients sample mimics. So, to a test, it looks just like a positive patient sample for COVID, for example, or a negative patient sample for COVID. And that allows you to test and know that the tests are function. And it’s this genre product uses a whole bunch of skillsets that we have that are relatively unique to Microbix. So, what you’re doing with these products is often bookending a run of tests and I’ll just stop sharing so that I can speak with my hands a little bit. But if you’re running, for example, a series of COVID tests, let’s say you’re running a 1,000 COVID tests. If you didn’t get any positives that day with those 1,000 tests, does that mean that there’s no COVID in your community right now? Or does that mean the test isn’t working? How do you find out? Well, the best way is to start the day with a known negative in known positive samples, such as the swabs – swab sample that I’m showing behind me and then ending the day with a known positive and a known negative. And if those known positives and known negatives give you the expected results at the beginning of the day and the end of the day or the shift or the lot of products used, then you can have greater confidence that the tests in the middle were in fact accurate. Otherwise, you’re literally flying blind and it’s not optimal practice to do that. So, this is the audit of the system. This is the insurance of the system that is in fact working. And we design our controls to be compatible, not just with one test, but ideally with everybody’s tests. And that’s what we’ve done. So, our COVID molecular controls, for example, like behind me have been demonstrated that they work on 50 different companies’ tests, and that’s why they’re being widely used by industry. And these controls can be used every few hundred tests, sometimes every few thousand tests, but they are regularly used as a part of the quality system of the lab, so that a mistake is going to be caught. If a technician starts making errors, if reagent start to spoil or used in the wrong order, if a machine drifts out of calibration or gets gunked up that it’s caught and it’s caught immediately, because you do not want to be telling somebody who’s actually has COVID that they’re – that they don’t have it, maybe sending them back into the healthcare setting and you don’t want to have false positives and result in unnecessary lockdowns or shutdowns in businesses or communities. So, it’s – these are the uses of the quality assessment products, and we call them that because in some instances, from a regulatory point of view, these are samples and, in some instances, these are formerly fully regulated controls. So, the three flavors as you – as it were of these products, the PT is usually an unbranded, a white label that’s sold to strictly laboratory accreditation organizations. We then have a branded intermediate product that’s used to train lab staff and validate new instrument placements. And then there is the fully regulated RED controls and control as a very distinct regulatory meaning. And those are used to actually as part of the formal ongoing quality management system of the lab, and they directly impact the outcome of patient care. So that’s why they are a more regulated use of the product and the highest priced variant as well. So that’s a little bit of what we’re doing and we’ve seen the PT side or sales had been about $1 million a year, was not growing satisfactorily. We then broadened our product lines. We’ve seen growth in the PT segment. We’ve seen growth in the Proceed segment, and we’re seeing growth in the RED Controls segment as we move to target the diagnostic OEMs with the Proceed level of business and the clinical laboratories with the RED Controls. So, three different, three variations of product in three very different customer basis, all of which were doing very well with I’m pleased to say.

Great. Sorry, Cameron. Go ahead.

No. Go ahead, Deborah. And VTM of course, is the vial of stuff that you see once a swab is taken out of a patient’s nose or throat broken off and put in a vial of stuff. We’re making that stuff that preserves the sample in order that it can be tested at leisure by the clinical laboratories.

Okay, great. That’s a really good overview. I should probably have you do that at the beginning, every time we do a call. Since we’re talking about the three different…

No, please.

Can you – are you providing any guidance? Can you talk about sales pipeline? I know you touched on it for VTM. If you could just give a general update in terms of guidance or pipeline.

Well, it’s – it depends on whether we want to counter our fishes when they’re in the sea, when they’re hooked or when they’re landed. But we have certainly, I don’t think any of view that VTM sales are going to disappear or slow. We don’t have any view that cap sales are not going to continue to grow. And some of the relationships that we’re working on now or with some of the best diagnostic companies on earth that are looking at Microbix products to potentially be included with their test consumables, with their cartridges and so forth that Microbix become a critical supplier for such companies, because of what we were doing and doing well. And then our antigen business is not going away either. So, I think all three businesses have a very positive outlook, and it’s a question of turning potential sales into real deliveries and making sure we’re continuing that transformation. Jim, what further color would you want to provide on that?

You know, me, I don’t typically like to make any forward-looking guesstimates, especially in a public forum, but no, I think you’ve covered it off well.

Okay. No, that’s good. And it just so everybody knows, Jim is – Jim keeps a very tight eye on everything including has successfully navigated much tighter cash positions than we’re now blessed with. So, we’re looking forward to implementing a real strong growth plan that’s intelligent realizable and we’ll make the most of this great expertise that we’ve had all this time in Microbix, but are now unleashing to deliver new products, new markets and the kind of sales growth that we’re seeing now, which for the full year, we’ll be in the 80%, 90% range. So not a trivial task to do that and we’re making sure that all the infrastructure, including modernization of our own quality management systems internally digitization of a lot of paper-based systems, as well as ERP upgrades that that work hand in glove with the automation. So, there’s a lot going on internally. Not all of its merits announcements day by day, but the activity is intelligent. It’s directed and its strategic.

Can you talk a little bit about your distributor build out and how that compares and contrast to direct sales, what additional markets you’re pursuing, what existing geographies you’re planning to bolster, and somebody references a recent Asian distributor that seems to be a very small operator at least by their website?

Yeah. In terms of the build out, we’ve really looked at it and where are we selling directly, where are we benefiting from distributors and where can those distributors even be supplemented with some direct sales coverage? So, in terms of the QAPs business, which I think is the most remained to this discussion, our relationships have been extremely strong with the lab accreditation agencies that actually do the proficiency testing and accreditation of the clinical labs. So, we’re selling products to all if not – most if not all of those companies are buying one or more QAPs products from Microbix. And that’s is a growing segment of our business. With regards to the diagnostic OEM relationships, I’m very satisfied with seeding that our sales and business development team has been conducting with those parties. We’ve seen companies – some companies recommending Microbix controls as a compatible third-party control for their tests. We’ve seen some other companies, diagnostic OEMs, directly buying Microbix products, particularly our onboard kits of proceed regulatory flavor product to give a better user experience, when they’re training technicians in onboarding new instruments. And that’s leading to some very interesting discussions, but broadening those relationships. And then we also have the sales to the clinical laboratories. And I think that’s where things have been a bit slower. We’ve probably exceeded our expectations on the OEM relationships and we’re probably a bit slower on the labs and that just reflects the intensity of work and the COVID burnout a little bit of some of the clinical labs that are just trying to keep ahead of the day-to-day and optimizing quality systems is maybe a step behind and just getting through the day. But we are seeing some of our distributors have success, some of them are really posting good numbers, some are a little slower, but we’re moving forward in the lab segment with those distributors and we’re also looking at how we can have a more direct presence for sales to clinical labs in the United States in particular, and moving forward directly as well for direct sales.

And could you provide an update on Meridian, it’s been a while since we’ve talked about that relationship?

Certainly. I mean, we don’t necessarily advertise that relationship, but we do have distributors on our antigen products. And one of the – I would say, the most important one would be Meridian with whom we work closely in certain markets, they are another producer of antigens. They built out their sales and customer relationships as we were modernizing production technology for certain key products. So, in some markets of the world, they’re a competitor of ours and in other markets they’re a distributor of ours. So that’s a relationship that we value greatly.

Okay. And then just talking about the overall global market, the question is quite general. But maybe you can just touch on the three business lines and sort of what percentage of the whole global market is Microbix supply. I think we’ve already talked about what it takes to capture more of that market presence, but maybe just give us an indication of sort of your size within the markets you operate.

Sure. In the antigens business, we operate in a segment of that business, where test producers are producing products with the absolute best sensitivity and specificity in mind. So, they want to use a native organism to have all the potential antibody recognition sites, all the epitopes available to have the best possible sensitivity and specificity of their tests. So, we supply the native organisms that have been grown up purified and inactivated to those parties. So, we’re a big participant in that subsegment of the antigen business, less – much less so in the recombinant antigens, where there’s a lower attention to sensitivity and specificity potentially or it’s just an organism that has a ridiculously high quantity of one antigen that’s extremely well conserved, and then you say, why wouldn’t you make it recombinantly. So that’s the explanation of that. I think in native antigen production, we would be number one, two or three in the world on that. For our quality assessment products, we’re – we’ve become a large supplier to the smaller segment of the proficiency and accreditation segment. And we’re just starting our moves into relationships with the diagnostic OEM companies and getting known by clinical labs. So, these are by necessity organizations that measure twice and cut once, but we’re being seen more and more as our branded products become more prominent as a meaningful player in these segments.

Okay, great. I think we’re almost done. There’s two areas that I’d still like to cover. I had a few questions on Kinlytic, so perhaps you can provide an update there.

Certainly. The way we positioned Kinlytic is, as folks may recall is, this is a tremendous opportunity to reintroduce the product for the catheter clearance indication. First, this is the dissolution and removal of blood clots in central venous catheters and other long indwelling catheters that can get blocked by a clot and then have to either – that clot either has to be dissolved and safely removed or a vascular surgeon has to come in and implant a whole new catheter device into a patient that’s already got enough issues to deal with. Currently, there’s only one product available on the market to do that. And that’s Genentech’s tPA, the Cathflo Activase variant. We’re looking to reintroduce Kinlytic urokinase into the market change that monopoly into duopoly offer some relief from the semi-annual price increases that Roche Genentech has been taking on that product and give security supply as well, because there have been supply disruptions of that product in the past. So, there’s a real appetite on the part of buyers and I believe even on the part of regulators to have a second product, and the market of this nature, and what we’re looking to do is find a partner to help us bring that back. The product is already – already has an FDA and Health Canada approval for that indication, but there is no validated manufacturing ongoing and sure we could do it in our house – in-house, but no regulator company in their right mind would make a human drug in a facility, where you’re growing human pathogen. So that’s just a non-starter, it has to be done somewhere else. So, what we’ve looked to do is what is the budget to have parties that already have GMP certified sites that can do the production of drug substance and then drug product bring that back and get it onto the market. And that’s about a $20 million project, 2.5 years to filing a supplemental BLA. So, it’s not something that we could do without a partner, the burden would be very large on Microbix’s P&L and resources. So, we’re really looking to find the right partner, somebody that understands the market is motivated is willing to put money up to make that happen to the extent that it’s not burdensome on us and us at the very least. And then for us to retain at least a third possibly as much as half of the overall project economics and be able to drive those benefits to Microbix. So, there’s a couple ways you can drive those relationships. You can move to some form of LoI and announced that if it’s material enough to announce, but that puts you in a bit of a box on your negotiations or you can continue to work through until you reach a definitive agreement and make an announcement on that basis. And that’s more typical and that’s the kind of path that we’re driving down now.

And do you have an update on timelines or anything like that? I believe on a recent call, you indicated sometime over the winter, you thought that there might be a conclusion to your ongoing conversations.

Certainly, we continue to work hard on it. We have – it is very much an active file. And I would be hopeful, I can’t guarantee anything, but I’d be hopeful, we will see something this calendar year.

Okay, great. The only last question I have is just, the stocks performed very well over the last little while you recently financed. Can investors expect further dilution in the near term? Are you capitalized enough to execute on your growth plans? And maybe you can give us a bit of the runway in terms of your cash position?

No, I think we ended Q3 with a little over $7.5 million of cash in the bank. We also have an undrawn line of credit of up to $2 million currently. And we certainly see Jim, I think your Q4 certainly see, say a positive cash flow from operations.

Yes. I think as you earlier indicated, it’s sometimes with cash flow from operations, it can be even impacted by one particular transaction that takes place, for example, at the end of the Q3. We had receive – our first receivable from the eventual government shipment that we had expected to receive by June 30, we didn’t get it. That was close to $1 million. And that made the difference between the positive and negative numbers. So, we certainly expect our cash position to improve by the end of Q4 from Q3.

Yes. One thing I will mention – I don’t see us diluting anyone are raising additional capital in the near term. We do have enough capital to execute on our growth plans. One thing that is worth mentioning there are the warrants that we extended by one year from October of 2020, just before we were concluding our funding agreement for VTM with the – grant funding agreement, with the Province of Ontario, we didn’t feel good about having warrants expire just as we were seeing that and other business milestones emerging. So, we did extend two series of warrants. There’s a 2015 series with the $0.55 strike about $1 million worth of those, Jim. And then there was the 2017 private placement warrants, we also extended by one year with a $0.36 strike price. So that’s about $3 million in additional capital if – to Microbix, if all those are exercised. But I would take this opportunity to urge any holders of those warrants, please do not wait until the last possible moment, if you’re going to exercise them with COVID, our staff is working very hard to process warrant exercises and the transfer agents are very overrun as well. So, I would urge anybody holding warrants with an October 2021 revised expiry to think about exercising them over the coming weeks and not wait until the last moment.

I think that we have been reaching out to most of the holders if I’ve missed you. I apologize. And if you have any questions about that, anyone feel free to reach out to me. I think that’s it for the session. I don’t see any other questions, Cameron, Jim, is there anything that you wanted to cover today that we haven’t gotten a chance to talk about?

I would conclude by saying, what we’ve got is a great company that’s – with great team functioning well, we’re driving growth in top line, growth in bottom line with a very healthy balance sheet, that’s also going to help us secure additional business relationships. So, this is absolutely a great quarter. I think we’re going to see more great quarters and continued to this trajectory for our business, certainly, that is our objective.

Right. Well, congrats on a great quarter. Look forward to the next quarterly call. And Cameron, I think you’re taking a bit of a well-deserved vacation.

That’s the plan, best laid plans at all, but that is my intention, absolutely. It’s been a long 18 months.

Yes, definitely. Well, congratulations to you and Jim, the entire Microbix team. And thanks to everyone for participating and for your questions and have a great week.

Thank you everyone. And thank you, Deborah and Tina for the support throughout. Thanks.

Thanks, Deborah.