Q4 2023 Scientific Industries Inc Earnings Call

Participants

Joe Dorame; IR; Lytham Partners, LLC

Helena Santos; President, Chief Executive Officer, Director; Scientific Industries Inc

Daniel Grunes; Chief Executive Officer - Bioprocessing Operations; Scientific Industries Inc

John Moore; Chairman; Scientific Industries

Presentation

Operator

Good day and welcome to the Scientific Industries report full year 2023 financial results conference call. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Joe Dorame, a managing partner. Please go ahead.

Joe Dorame

Thank you, both. Very good morning, and thank you for joining us today to review the 2023 full year financial results for Scientific Industries ended December 31st, 2023. With us today on the call are Helena Santos, Chief Executive Officer; Daniel Grunes, CEO of scientific bio processing, and John Moore, Chairman. After the conclusion of today's prepared remarks, we'll open the call for questions.
But before we begin with prepared remarks, I would like to remind everyone that certain statements made by the management team of scientific industries during this conference call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Except for the statements of historical fact, this conference call may contain forward-looking statements that involve risks and uncertainties, some of which are detailed under risk factors in documents filed by the Company with the Securities and Exchange Commission, including the annual report on Form 10K for the year ended December 31st, 2023.
Forward-looking statements speak only as of the date. The statements were made and the Company can give no assurance that such forward-looking statements will prove to be correct. Scientific industry does not undertake and specifically disclaims any obligation to update any forward-looking statements except as required by law.
Now I'd like to turn the call over to Helena, Santos CEO of Scientific Industries. Helena?

Helena Santos

Thank you, Joe, and thank you, everyone, for joining us today. So we entered 2024 having successfully raised the financing to complete the development and the launch of our two major technology platforms. Those platforms are first, the tour belted family of pill counters. And second, the SBI. That's multi-parameter platforms. The connection between these two platforms is our value proposition of digitally simplifying science and automating our customers' workflows the greatest technology visionaries of our times, all agree that artificial intelligence or AI is going to be the biggest productivity advancement of our lifetimes.
Together with our growing shareholder base, we have raised and deployed over $30 million to make certain your company. And our customers are major beneficiaries of this coming wave. And given today's update on the specifics of our progress on these two platforms. I'll just give some hints of how our customers will benefit from AI.
I'll start with the tour Bell VIVID platform. We committed to building the most comprehensive automated accounting system. And we have a terrific sales and development marketing partner in Rx systems and HealthSmart in Canada, and they've helped us steer our product development. We introduced the Vivid light S, which can count pills at three times the speed of the original design life at a great price point. And we have been very happy with the market share gains this system has allowed us to gain from the large installed base of mechanical tail counters.
So, the big news this year will be the introduction of the 13,000 price point vivid workstation in early summer that will fulfill our strategy to offer the most complete line of automated pill counters on the market, ranging from $3,000 to $13,000 we will have five working prototypes ready to show the market and began taking orders during the busy mid-October tradeshow season. Our major partner Rx systems makes most of their sales at tradeshows and Q1 is seasonally our lowest sales period.
Historically, the availability of the workstation will mean we will then be ready to start selling the system to the major chains and we expect to be the main market for more sophisticated systems where we feel there is a big unmet need for our products at the price point that we're speaking about. We have the only cloud-based system and have designed the workstation to be the first AI enabled pill count on which we'll be able to source pills by color. And as importantly, by shape.
This is going to be a fundamental change in the way pharmacists do their work, and it addresses a big headache associated with new pharmaceutical products introductions and through the supply chain. We expect that the AI enabled version of our VIVID PillCam will be trained and ready for market in early 2025. We have an important technical moat and will be alone in this market with this capability, this capability to deliver value to our growing network of users.
And with that, I will turn it over to Daniel, so he can give us an update on our bioprocessing business. Daniel?

Daniel Grunes

Thank you, Helena, and good morning, everyone. Before diving into our business, let's acknowledge the broader global context that has shaped our realities last year. 2023 was a challenging year, which saw facing continued macroeconomic events in the aftermath of COVID. While slowly normalizing high inflation rates and increasing energy prices have driven up costs and created headwinds across all sectors, including softer markets, slow economic growth and higher cost of capital. Our industry was particularly affected coming from the heights of outsized growth and profits in the corona years.
We experienced a sector-wide slump since 2022 chemistry and pharmaceutical industries, which represent a large section of our customer base. We have been observing that budgets are being scrutinized constraint and cut and that expensive equipment becomes a luxury that many cannot and will not afford anymore going forward. SPI. is not an exception to these challenging realities, but we can be one of the beneficiaries to the efforts not to compromise on their ability to innovate.
Many synbio companies are searching for more cost-effective solutions to decrease their high R&D spending as well as to reduce their time to market. And our newly developed data platform will help them achieve that over the next couple of years throughout the last quarter of 2023, we have made important steps towards rolling out the first version of the data platform. Our software has been equipped with new features and capabilities towards a simplified user experience, usability improvements and significant advancements regarding the device management framework, which enables easier and more flexible integration of additional devices.
At the same time, we have worked on the next software version 2.0, which will be released with the MPS. in April and which will include features like e-mail notifications about important events in the customers' life coaches and subscription-based licensing for recurring software revenue. And lastly, we have initiated a partnership project with cooler, one of the leading shaker manufacturers in the world to integrate their devices into the data software to enable the control of parameters such as RPM or temperature.
Thereby for the first time, customers will be able to adjust the process conditions of the environment in which take place operates automatically and in real time and based on the live data that we provide with our data technology, similar to how they are used from bioreactors. On the hardware side, our data multi-parameter sensors saw a design freeze where we continue to firmly optimization of the data acquisition algorithms as well as data handling and communication features.
Simultaneously we have focused our R&D efforts regarding the central pillars on the performance for the second round of pilot studies that take place as we speak, as well as the preparations for the upcoming market launch, including work on the die chemistry and improved core design, the coating process, packaging and sterilization, all hardware components and all being produced calibrated and quality controlled to be ready to service the first orders of the new platform.
As regards the commercial side, we focused our activities on the pilot studies, voice of customer activities, messages and contents for flyers webpages implementations and delivered the data marketing launch in the US with co-hosted symposium was corner, a launch event at MIT and the keynote at draft, the leading conference and recent advances in advances in fermentation technology, Florida, which was a huge success and give us a headstart for the data demand creation.
I'm happy to see the initial traction from the hot launch at the wider audience of interested potential customers that also attracts a testament to that is the fact that we have already taken two orders for the new product prior to the actual abate availability on the market or the customer being able to demo the equipment. We expect to ship the devices within next two weeks, which also marks the start of our market launch of the first generation of data.
At the same time, the restructuring of the commercial team that we commissioned in Q3 last year delivered an impressive pickup in productivity although we reduced the cost structure and the team drastically revenue with the legacy portfolio grew by 30% and prove that performance increased by 3x. And although the seasonal year end business was softer than usual. Our pipeline going into 2024 developed nicely with MQA's being up 40% SQS. being up 60% and in rapidly growing and maturing towards a pipeline of over $3 million prior to FDA's major trade show season in the spring and fall.
Lastly, we are very excited about the addition of John Nichols former CEO of synthetic biology, Pioneer Codexis to be our new SBA Chairman. Don will not only be a great mentor to our team and to me personally, but also represents the mind of the senior management of our customers being that here, he would give us additional credibility in the synbio space. J
ohn already visited our facilities in Germany last week to get to know the team and technology, and we call presenting data MPS. system, which inspire our Chief Commercial Officer on the main stage of synbio between San Jose next month one of the biggest conferences of the year at the annual gathering of CEOs in our target industry.
We are very excited by the impact and validation John can deliver to our customers and the important message that we want to share with the community together, that data can enable the Humber safe place to generate critical process data equivalent to much more extensive bioreactor systems that it can fuel the application of artificial intelligence and that it is fit to liberate major bottlenecks that constrained the enormous potential for synthetic biology to take over global manufacturing and supply chains.
Thank you for your time in Renault. Happy to answer your questions.

Question and Answer Session

Operator

We will now begin the question and answer session. (Operator Instructions)
There appear to be no questions at this time. I would like to turn the conference back over to John Moore for any closing remarks.

John Moore

Thank you so much. Well, first of all, we like to thank our shareholders and our employees for helping and to help us build the Company. Helene, I started the presentation by talking about the impact of artificial intelligence and how we're positioning the company to benefit from that many leading thoughts. I thought leaders on artificial intelligence believe it's going to change the world more than anything in the history of humanity, even more than electricity.
And in order for that change to happen, they need the artificial intelligence needs, high volumes of digital structured data, and we're providing the edge devices that change these analog tasks like pill, counting or light it shape flask production of synthetic organisms, two digitally enabled devices that can feed those artificial intelligence and machine learning systems.
So, we believe that this is going to be a huge wave of productivity for our society, and we're excited to be able to play a role in that. So, thank you so much for all for listening, and we thank our shareholders very much. That concludes our remarks.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.