Zomedica Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 11, 2023

There are 4 speakers on the call.

Operator

Good afternoon, ladies and gentlemen, and welcome to the Americas First Quarter of 2023 Earnings Release Call. Call. On today's call are Thermedica's CEO, Larry Hinton and CFO, Peter Donato. Before we begin, the company would like to remind everyone that various remarks about future expectations, Plans and prospects constitute forward looking statements for purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. The medical cautions that these forward looking statements are subject to risks and uncertainties that may cause the actual results to differ materially from those indicated, including risks described in the company's filing with the SEC.

Operator

Any forward looking statements made on this conference call speak only as of today's date, Wednesday, May 11, 2023, and the company does not intend to update any of its forward looking statements to reflect events or circumstances that may occur after today. I will now pass the call over to Vermedica's Chief Executive Officer, Larry Heaton. Please go ahead, sir.

Speaker 1

Thank you. I'd like to start by thanking our shareholders for their support, wishing our Prospected investors and analysts and others, a good afternoon, and welcome all of you to the Zomedica Q1 2023 earnings release call. On this call, I'll be providing an update on the business, followed by Peter Donato, our Chief Financial Officer, who will walk through our financial results. After our prepared remarks, we'll open the line to your questions. Earlier today, Zomedica released its financial results for the quarter ended March 31, 2023.

Speaker 1

As we reflect on these results, we continue to be pleased and excited With the progress the team is making, not only financially and operationally, but also towards our strategic priorities. First off, financially, where our top priority is to grow revenue. The Q1 of 2023 was another busy quarter for us. Revenue for the quarter was $5,500,000 a 45% increase over the Q1 of 2022, Driven by organic growth within our PulseVet and Trupharma platforms and the inclusion of our ICC and VetGuardian products, which were not part of our consolidated figures last year. While sequentially down a bit from the Q4 of 2022 due to the seasonality of capital Sales as expected, it was a record first quarter performance and the 2nd highest revenue quarter for the company.

Speaker 1

Truforma continued to show increased utilization and adoption producing a 2 22% increase over the Q1 of 2022. We were also pleased with the 8% year over year growth in our pulse set products as we continue to penetrate the small animal veterinarian market, Selling 21 systems to this customer segment during the quarter. Overall, since our acquisition of Pulse Veterinary Technologies about 18 months We've grown the installed base of Pulsetec systems 33% to approximately 1800 Installations. This is important since the system is a razor and blade model where the consumable troves Produced substantial revenue for the company, averaging approximately 55% of total PulseNet revenue. Additionally, in the Q1, we also began selling the VetGuardian 0 Touch Vital Signs remote monitor, a novel wireless monitoring technology.

Speaker 1

We were encouraged by the market's response to the BetGuardian offering. And on May 8, we announced that we have exercised our option to acquire structured monitoring products, the makers of the VetGuardian system and expect to close on an acquisition subject to the completion of due diligence. We believe this transaction will enhance Dometic's ability to bring the VEGARVIEN groundbreaking specialist monitoring products to clinics around the world. And this acquisition also furthers our efforts to improving margins as we will be transferring manufacturing to our facility in Roswell, Georgia. Margins remain strong at 70%, and we expect these to continue at or around these levels, especially as we are transitioning distribution of our SCC products From the current 3rd party logistics provider to our global manufacturing and distribution center in Roswell, Georgia during the current quarter And transferring that Guardian Manufacturing, as I just mentioned, to this facility once we close that transaction.

Speaker 1

Lastly, we want to continue our journey to both positive cash flow and GAAP profitability, and we are pleased to report that we are seeing leverage on the G and A line as we continue to invest in R and D and sales and marketing to grow commercially and through integration of acquired products. Operationally, we continue to invest considerable time and resources into developing and enhancing our internal processes And production capabilities. In the Q1 of 2023, we expanded our sales and marketing organization and related capabilities with today's announcement via 8 ks that we will be expanding our production footprint at our Georgia facility by 50%, Primarily to support transitioning of the Truforma production line from our partner, CorVel. We hired industry experts, scientists, veterinarians and other personnel with extensive experience and knowledge of the companion animal field. We leveraged an improvement of our administrative capabilities, making them scalable to a business with much higher revenue, and we continued expansion of marketing and the build out The Zomedica brand generated favorable commentary from veterinary professionals and pet parents.

Speaker 1

Strategically, we continue to look for M and A opportunities that meet our rigorous internal financial and strategic hurdles, all while adhering to our 5 pillars, which are improving the quality of care for the pet and the satisfaction of the pet parent, while also improving the workflow, cash flow and profitability of our veterinarian partners. The decision to acquire structured monitoring products with its VetGuardian product line is a good example of this. Achieving our strategic priorities requires a combination of growing revenue to a substantial level, efficient manufacturing that produces substantial margins And investing in commercial capabilities to enable growth from both organic sources as well as through acquisition. This means that we will be increasing R and D spending over last year's levels as we transition the development of new true form a assays from Qorvo To Zomedica, we will be both compensating Qorvo for transition services and also building the internal R and D team. We will be both compensating CorVel for the development of assays already underway, equine, EACTH and non infectious GI, And also beginning development of the next wave of true form a assays by our own team.

Speaker 1

Looking ahead, our per assay development costs will be Significantly lower than what we've been paying Qorvo historically, but for this year, we'll see increases in overall spend for R and D versus 2022 levels. Similarly, as we continue to build the sales organization and execute marketing programs, we'll see increases over the levels seen in the 1st half of twenty twenty two, but expect these levels to remain fairly steady state from now aside from expansion of the sales force itself. We are committed to achieving positive cash flow And profitability and see the steps we're taking now as essential in hitting these objectives as expeditiously as possible. In closing, we're very happy with what we were able to achieve during the Q1 and look forward to building on this momentum as we continue to be very optimistic about Zomedica's future. And with that, I'm pleased to introduce you to our new Chief Financial Officer, Peter Donato, We recently joined Zomedica and will take us through Zomedica's Q1 2023 financial performance and provide additional thoughts on what to expect for the rest of the year.

Speaker 2

Thank you, Larry, and good afternoon, everyone. Revenue for the Q1 of 2023 was $5,500,000 An increase of $1,700,000 or 45% from the Q1 of Keep in mind that historically revenue is sequentially down in the Q1 from the Q4 of the prior year and generally increases in quarters 23 before peaking in Q4 due to our capital selling cycle and higher utilization of those capital systems that we sold or placed earlier in the year. Also Q4 of last year, as Larry mentioned, was the largest revenue quarter in our company's history, making our Q1 the 2nd best quarter on record, but the best first quarter ever. Highlights include 11% of this growth was organic with the rest coming from the acquisition and integration of our Assisi, Rivo and VetGuardian product lines. Achieving Q1 2023 sales in excess of historical averages is encouraging given that our first quarter typically represents our lowest revenue quarter for the year and generally about 20% or less of the overall annual sales.

Speaker 2

Pulse deck continues to grow organically, reflecting an 8% increase over the Q1 of last year, fueled by high margin trodes and consumables. We believe Pulsepec sales will remain strong into 2023, especially given the seasonal step up usually observed in the back half of our selling year. This was continued efforts around development of the smell animal market. True Pharma Generated a 2 22% increase in revenue over the Q1 of last year. This was driven by organic growth in our cortisol, And CT4 assays and from our new assays launched last year, FT4 and EACTH.

Speaker 2

We expect year over year growth to continue and we continue our investment in the development of additional assays, including the first assay for horses And a panel of assays for noninfectious gastrointestinal disease that we expect to launch later this year. Assisi brought in $1,100,000 of incremental revenue that was not present in the Q1 of last year. We continue to leverage our communication and marketing networks, and we expect the CC recognition and brand awareness to increase, resulting in continued growth for the balance of 2023. We expect additional growth through the rest of 2023 from the sales of VetGuardian. As Larry mentioned, it's a 0 touch wireless vital sign monitoring system, which was launched in early January, As well as our new TruVu digital microscopy platform, which is expected to launch this quarter.

Speaker 2

In general, we expect to increase in subsequent periods the benefit from expanding our product lines and from our recent acquisitions And the increased investment in sales, marketing as well as all commercialization efforts. In addition, Sales will increase sequentially from the Q1 and hit their historical highs, usually in the Q4. Our gross profit for the Q1 of 2023 was $3,800,000 an increase of $1,100,000 or 41% from the Q1 of 2022. Margin remained strong at 70%, and we expect them to remain at or above 70%, inclusive of many of the costs and supply chain initiatives already underway within our company. Operating expenses are up $4,300,000 or 61% from the Q1 of 2022.

Speaker 2

Research and development expense for the 3 months ended March 31, 2023 were just over $900,000 compared to just under $400,000 for the 3 months ended in 2022. That's an increase of about $500,000 or 125%. The increase was primarily driven by our continued investment in our internal capabilities to develop, test and manufacture our next generation of diagnostic products. Total SG and A for the 3 months ended March 31, 2023 was $10,400,000 This compares to $6,700,000 for the 3 months ended March 31, 2022. That's an increase of $3,700,000 or 55%.

Speaker 2

The sales and marketing portion of the total $10,400,000 G and A was $3,700,000 or approximately 36% of the grand SG and A total. This compares to $1,400,000 for the 3 months ended March 31, 2022, were approximately 22% of last year's total SG and A. The increase was primarily driven by hiring 22 additional people in sales, 16 of whom are selling directly to the customer, As well as to increase spending on marketing campaigns, increased attendance at trade shows as we continue to build brand awareness and recognition of our ever expanding suite of products. The remaining portion of the $10,400,000 SG and A line relates to noncommercial general and administrative expense, and this totaled $6,700,000 for the 3 months ended March 31, 2023. This compares to $5,300,000 for the Q1 of last year or an increase of $1,400,000 or 26%.

Speaker 2

We are pleased to report and see leverage in this cost category even when considering that this year's increases were primarily the result of non recurring churns such as CFO transition costs and other growth in integration related expenses. Operating loss For our Q1, it was $7,500,000 up from $4,300,000 a year ago and $5,100,000 from last year's 4th quarter. When adjusting for one time items associated with our Qorvo Truforma related transition and our transition Cost to a new Chief Financial Officer as well as adjustments from our REVO earn out liability, our adjusted operating loss was Approximately $6,900,000 All of the operating loss variance from prior periods are attributable primarily There's significant investments in the commercial personnel infrastructure as well as continued investments in R and D, specifically diagnostics. Net loss for the 3 months ended March 31, 2023 was $6,400,000 or $0.007 per share, compared to a net loss of $3,900,000 or $0.004 per share for last year's Q1. The increase in losses of about $2,500,000 or 64%, again was almost entirely Our balance sheet is strong and we had cash, cash equivalents and available for sale securities of $147,500,000 at the end of our Q1 this year compared to $195,000,000 as of March 31, 2022.

Speaker 2

Our decrease in cash was primarily driven by acquisitions of Assisi and REVO platforms, 4 of our related transition payments and our general operating activity. Our cash burn for this quarter was approximately $3,200,000 when eliminating one time items for business development activities. This burn rate is relatively consistent with prior periods And should see improvements in operations burn as the year progresses absent any one time investment later in the year. I now hand the ball back over to Larry to finish the call. Thanks, Peter.

Speaker 1

So we had a very strong and record breaking Q1. We were able to grow revenue by 45% as we continue to sell more of our established Truforma And Polset products, while at the same time benefiting from the sales coming from our SCC, Revo and MedGuardian acquisitions during the course of last year. With focused marketing and commercialization efforts built into ever increasing brand recognition, the launches of our VetGuardian and TrueView products And the release of new true form a assays along with expected efficiencies coming through our corvo transition work and centralization of manufacturing and distribution Capabilities, we think the future is bright for Zomedica. Looking into the remainder of 2023, we'll continue to work diligently To bring Zomedica's suite of world leading products to an even greater number of veterinarians and their pet patients. So let me end our report by again thanking those that have been With that, I'd be happy

Speaker 2

to open the line for

Operator

questions. Thank you, sir. Ladies and gentlemen, we will now be conducting a question and answer session. I'll now turn the call over to If you are making use of speaker equipment, it may be necessary to lift the handset before making your selections. The first question comes from Jason Kolbert of Dawson James.

Speaker 3

Hi, guys. Thanks for all the details on the quarter. What I'd really like to get is just an idea of where the bulk of the revenues came in. For example, can you share the revenue number on PulseVet versus Truforma and Assisi? That would be helpful.

Speaker 1

Sure. Peter, why don't you handle that one?

Speaker 2

Yes, sure. No problem. Sorry, I just lost my detail on that. I apologize. Is there another question while we dig for my detail?

Speaker 2

I apologize.

Speaker 1

So I will tell you that it's as in previous quarters, while Peter is pulling the detail together, As in previous quarters, the bulk of the revenue came from PulseVec, where we saw 8% increase over Q1 of last year. Truforma presented, so let's see. ACC revenue was Similar to last quarter, it was around $1,100,000

Speaker 2

I have the exact numbers here. Peter, do you want to go ahead and do So, our PulseNet is just under $1,500,000 The Revo devices were just over $100,000 VetGuardian also around 100,000 The C2, as Larry said, right at 1,100,000 True form a. And true form a is just under $200,000 for a total of $5,500,000

Speaker 3

I'm sorry, what was the PulseVet number?

Speaker 2

So all of that number was Just under $3,000,000

Speaker 3

Okay. And sequentially, it was 4.7%, if I'm right, in Q4 last year. So is that a Cyclical I mean, that's a big cyclical drop. I'm just trying to understand if second, third and fourth quarter will be sequentially higher. Is there something else going on in that drop or that's just a cyclical drop?

Speaker 1

Yes, Jason, thanks for that question and that's a good question too. We see seasonality with the PulseVet Technology in particular because a large portion of that is capital about, as I mentioned, 55% of our pulsed revenue is Consumables and that generally stays pretty steady from Q4 to 1st, but the capital in the Q4 is substantially higher than any other quarter In the year. And this has been something that we've seen historically. And so if you look back to last year, we expect the same thing to happen this year, which is We take a dip in the Q1, as I announced on last quarter's conference call, that we expected a dip in total revenue in the Q1 Just a bit as the PulseVet revenue dip from capital. And then it grows sequentially in the second, third and fourth quarters.

Speaker 1

1st quarter, lowest quarter of the year, generally 20% or maybe a little lower of our total year sales. And then we see Q2 up, Q3 up a bit and then a significant increase in Q4 as a lot of pulse fed capital is closed During that Q4. In fact, as I look at the sort of projections that you put out there, if you take The 4th quarter revenue where we were higher and the 1st quarter revenue where we're lower, you add them together, we're actually a little bit higher than the combined. So I think you had it exactly right, just didn't know about the seasonality of that capital component.

Speaker 3

Okay. Thank you. That's very helpful. And one last question, which is, I can hear in your voice The burning desire to get to cash flow positive, we're assuming that in 2024, You're going to be neutral to positive. Are you comfortable with that assumption?

Speaker 3

Absolutely.

Speaker 1

So operator, my understanding is that somehow the webcast link For people to be able to ask questions for this call was Either not presented or was incorrect or what have you. And so I think that's going to limit some of the calls that we Certainly happen to take off. If you happen to be on the web and you'd like to ask a question, please dial into the phone line and we'll be happy to answer. We have one on the line now, operator.

Operator

My apologies, sir. Thank you. The next question comes from Rabe Rojas, who is a Private Investor.

Speaker 3

Hi. Thank you for taking the time to answer our questions. Was curious as far as, Zanetica's marketing strategies are all I've seen so far is just trade shows. Would you care to elaborate on what other marketing strategies are actually being implemented?

Speaker 1

Yes. So we have a really robust approach to marketing here at Sumedica. Trade shows, personal selling To animal health professionals is really a big part of marketing to veterinarians and the veterinarian community. My

Speaker 2

background is

Speaker 1

in the human health space and there trade shows were important, but we didn't do any transactions at those trade shows. In the animal health industry, veterinarians bring their checkbooks to these trade shows. That's where they essentially go shopping. They're super busy in their practices and Sometimes it's tough for them to allocate time to see new products. So when they go to these trade shows, they buy.

Speaker 1

In fact, that's one of the reasons why our PulseNet capital revenue is so high in the 4th quarter, and that's because the annual the big annual Equine trade show is in either November late November or early December each year, and we sell as many PulseVet systems in that trade show As we do in some quarters, just routinely. But I don't want to Having the belief that the only thing we do is market tax ratios, although we don't do them. We also have a very robust social media program. The social media program is on Instagram, it's on Facebook, it's on Google, it's on Twitter. And you have to kind of tailor your marketing efforts to who's going to see them.

Speaker 1

It's not It doesn't really do a lot of good, for example, to try and reach veterinarian professionals on, say, Instagram, We certainly can meet pet parents. And so we do a lot of social media marketing that's addressed towards pet parents So that they in turn can go and share with their veterinarian, hey, take a look at this, take a look at that. These are products that you might want to look into. We also do a lot of online marketing. We do a lot of extensive email, web based email campaigns To veterinarians around the country, this is a very effective way to get to vets who might otherwise not go to a trade show or aren't on social media.

Speaker 1

These e mail campaigns are reflected in leads that come in. We also do a lot of educational programs. So Our sales reps are out doing getting together with veterinary professionals for dinner meetings or for lunch and learns in their practices. We also have a program that we call Zomedica University. One of the things that all veterinarians and techs need are continuing education hours.

Speaker 1

And so we sponsor Zelmanica University, which is a web based program that offers every Wednesday during the year, A race approved or a CE approved education program where they can attend via the webinar. And then once they attend, then they get certificates for ongoing education, continuing medical education credits, Which they need. We not only do these every Wednesday, but then we also have additional web programs that we do throughout the year. These aren't for pet parents, although I suppose one of them could join if they wanted to. These are for vet professionals.

Speaker 1

In addition, our professional services veterinarians, we have 4 of them. They're out in the field, interacting with the salespeople And with that practices around the country. So marketing to the animal health professionals, a combination of So both marketing directly to them, very directly, here's a product you should buy. So you sort of indirectly marketing to them, which is Here's some educational information, which will talk to you about a disease state or an injury condition, which is treated very well or diagnosed very well By our products, and so it's a little bit of indirect marketing. And further indirect marketing is through social media to the pet parents Before we go ahead and sort of help the, I don't know, virtual salespeople for Soumedica products.

Speaker 1

In fact, Any of our shareholders that are on the call today, next time you go to your vet, please have them give us a call.

Speaker 2

Does that answer your question? Yes. Thank you. I really appreciate it. Thank

Operator

you. Thank you. And that will place you in the question queue.

Speaker 2

So operator, I have a

Speaker 1

question that I know I'm going to ask for shareholders that If we had a web conference, web questions, I know they would ask it and that would be, will we be doing a reverse stock split? So I'll take the liberty of asking that question myself and I'll answer. We do not need to And we have no plans to execute a reverse stock split. Reviewing data around reverse splits shows that there are much more often than not call. And while many companies have executed reverse split do so because they're facing delisting, Because they are on an exchange that has a $1 threshold and may have other issues Such as they have maybe revenue declining or insufficient capital.

Speaker 1

We do not. The threshold for the New York American Exchange is $0.20 And while we're close to it, we're not below it. And with liquidity of almost $150,000,000 and Revenue last year of $19,000,000 We would not expect ourselves to find ourselves in that condition. Certainly don't have declining revenue, and we have a liquidity of almost $150,000,000 and a burn normalized burn of about $3,500,000 a year. We think we're in pretty good shape.

Speaker 1

Now we would, of course, like to see our stock price above the level that institutional investors can acquire it Because we think that would be helpful to all of our shareholders. But we would not attempt it unless we were highly confident that given the circumstances At the time, our post split results would be beneficial to our current shareholders. In any event, it's not just our confidence that would be needed, But also 2 thirds of our shareholders would have to support it and vote in favor of it as well, which we believe is highly unlikely, At least for the near future. So put it another way, the answer to that question is no. A second question that's often asked, and I'll just go to it.

Speaker 1

I know there's another question on the line is, will we be buying back shares? And the answer there is consistent with previous quarters. We continue to believe that in the economic climate that we're in, very uncertain. It is prudent to hold on to capital. Additionally, we believe that the best use of our capital for all of our shareholders

Speaker 2

It's for us

Speaker 1

to use it to generate organic growth and support acquisitions that facilitate reaching profitability. As our immediate goals are getting to cash flow positive and beyond to profitability. Back to you, operator.

Operator

Thank you, sir. The next question comes from Douglas B. Smith of Douglas P. Smith, DDS.

Speaker 3

Thank you for taking my question. The question that I have is around the Truforma with equine assay. My question is how attractive In the equine market, will a single assay be? And using the razor blade model, how many units do you think are possible to move into that as far as With the single assay?

Speaker 1

Yes, great question. So first, I'll point out that it's the first assay that we intend to launch for the equine market. It's the most important assay, I think, that horse owners could and horse vets could possibly get. But we also intend to also launch our cortisol assay into that market. We just don't have a time frame on that yet.

Speaker 1

So Not really harping that up yet. The assay that we have for Endogenous ACTH for horses is a screen for a condition called equine Cushing's disease. It's also I think now called PPID, but it's equine Cushing's disease. Now the reason that this is important is that a horse that's 12 years old, maybe down to 10 years old, certainly over the 12 are highly susceptible to Cushing's disease. If they get Cushing's disease and it's not in the heart right away and it's not treated, then that leads to laminitis.

Speaker 1

And the only course of action for horse with laminitis is that horse gets put down. And so while it's only a single assay, It's an assay that could really truly mean the difference between life and death for horses that are of an age. And so we believe that veterinarians will adopt this Equine Vets will adopt this Very quickly, very rapidly, because this will be the opportunity for them to finally have a practical screen for this disease. We can't imagine any horse owner effort declining to have this screen done for the price of the Mark up buying veterinarians so that they make money off of it. We can't imagine any equine vet not offering this to every horse that's of a certain age On a wellness visit basis.

Speaker 1

And so we're super excited about this particular assay. It is the first assay that we're launching that instead of an assay that's run by a vet with an animal, a pet Present symptoms like, boy, did you have symptoms? I think it's adrenal disease maybe, so let's do these assays Or looks like you might have a thyroid problem, let's do these assays. Instead, this is an assay that will be done on every horse That's of a certain age that vet sees. So we're very optimistic and looking forward in a significant way.

Speaker 1

I should say that The only other way that you can get this assay performed is if you once you pull the blood from the horse, You immediately freeze it and then you send it off to a highly specialized center, an academic center to do the test. They can sometimes do the small animal vets can sometimes do that in the clinic because they have a freezer right there and so on. Even then it's not great because the molecules start Great as soon as it's out of the body, but neither here nor there. Equine vets, they almost always go to the horse, their stall side. So they don't have a big freezer that they can pop the blood into.

Speaker 1

So we're very optimistic about this assay and we think that the fact that it's One assay just simply reflects the fact that it's the first of multiple assays that will come. But even if there weren't other assays, We think veterinarians are going to really adopt this very quickly.

Speaker 3

Thank you very much. So How much revenue do you think that I mean, what's the market for that single assay then? How much will that add to Zomedica's Bottom line. So that's a good question. And as

Speaker 1

we get closer to launching the product, we'll produce some data I will tell you that there are about 2,400 equine vets in the United States. There's about 2,200 vets That do have mixed practices. So it's a relatively small Group of veterinarians that we have to contact, so we think we can reach them in a fairly expeditious way In terms of rapidly penetrating the market and I will say to you that the PulseVet system, Which is sold we sell now to small animal vets. For the last decade or so, it was sold primarily to equine vets, and it has become a standard of care. And over the last 18 months, we have transitioned from PulseVet selling The device to Equine Vets to Zomedica's Pulse Vet division selling the device.

Speaker 1

And so when our salespeople or when we as a company approach these equine vets, it's they're not dealing with a brand new company they never heard of. They're dealing with a company that has been providing them with the very credible tried and true Product that they've come accustomed to use it as a standard of care, Polestad. So we think we get some really good synergy from that situation.

Speaker 3

One last follow-up question on that then. You mentioned the U. S. Market. How does the U.

Speaker 3

S. Market compare with the international market for the equine population? And Is it possible to launch that assay internationally as well as stateside In the near future?

Speaker 1

So yes, right. So Currently, we sell both the PulseVet products and the Assisi products outside the U. S. Through 2 different networks of distributors, which we are Merging into a single network. The not every country has the same sort of affinity for Horses as the U.

Speaker 1

S, but many of them do, and you can imagine where they are all around the world. About 20% of our revenue currently comes from international. And of that, probably, I don't know, 80% or more of that is postpaid. So that's sold through the postpaids. So we do expect to Launched this product outside of the U.

Speaker 1

S. We actually we currently sell to in North America The 2 form a assays, it's a matter of having a distribution set for them. And we're currently working on selling into our first center in Brazil, South America. So as we launch this product, we'll use this as a springboard to launch Duforma ex U. S.

Speaker 1

To wherever Certainly, wherever there's a substantial equine market.

Speaker 3

Thank you very much. I appreciate the information. You're welcome.

Operator

Thank you. The next question comes from Barrett Boone of Road Trip.

Speaker 2

Hi, Larry. Congratulations on another great quarter. I was wondering if Either you or Peter could go over the gross margin for each product line.

Speaker 1

We could, Barrett, but that's not some information that we can Yes,

Speaker 2

we normally don't disclose it. So what we will tell you though is blended, we feel really good about 70% for the full year. As you think about our business, we have a high capital margin, higher than most Capital companies, right? We haven't disclosed what that is. And then our consumables are traditionally very high.

Speaker 2

But blended, We feel good about 70% going forward. There's a lot of positive things going on at the Roswell facility that we feel pretty good about. Wonderful. Thank you very much.

Operator

Thank you. The next question comes from Jim Franks of Writing.

Speaker 3

Hey, Larry, private investor here. I haven't heard in a while anything in regards to our cancer Patent. And do we have in the future any cancer detecting assays in the works?

Speaker 1

So the cancer patent was thanks for the question. The cancer patent was issued as a result of work that was Several years ago in collaboration with a company called CELSI. CELSI was the entity that was In potentially developing a cancer assay and this patent arose out of that work, which we did in collaboration with them. Several years ago, and we commented on this in the 10 ks that we issued 3 months ago. But Several years ago, CELSI was sold to another company.

Speaker 1

And it was sold to that company for things other than Animal health assays in particular with cancer. And that company closed that program down. And based on the stage of the program where it was at the time and the fact that the new acquirer of CELSI Did not see that it would be fruitful. They decided to close it down. And so And our work in that area also stopped at that time.

Speaker 1

We disclosed that, I think, in the recent submission. I will say that the market since then and perhaps if 4 years ago that product would have rapidly come to market, it would Then first to market with a best first mover advantage. But since then, there have been a couple of other companies that have come to market, One for measuring inflammation as a proxy for cancer and another one to do a cancer diagnostic. And so I think at this point, given that there are other products already in the market purporting to do this, we decided we would wait and see Whether or not those were going to be effective after all and whether there seemed to be a market for them Before we decided to go down the road with another instrument, it's apparently not possible To use the Truforma platform to determine whether a pet has cancer. And We would have to come up with an entirely new platform.

Speaker 1

And given our investment in Truforma and where we are with that and our other products, At this point, we do not have an active program to do that.

Speaker 3

Fair enough. That makes sense. Thank you again. Have a wonderful day.

Speaker 1

Thank you very much.

Operator

Thank you. Ladies and gentlemen, With no further questions in the queue, we have reached the end of the question and answer session. I would now like to turn the call back over to Barry Heaton for closing remarks.

Speaker 1

Yes. Thank you very much. I appreciate those of you who attended the call today. Thank you for your time. Thank you for your support of Zomedica.

Speaker 1

Just because we have these calls once a quarter doesn't mean that's the only time that we would be happy to talk to you. Feel free to reach out via email Or phone to our investor line. We'd be happy to talk to you at any point. We'll continue to work hard to help your company grow and increase the value of your holdings. Thank you for your time.

Speaker 1

Goodbye.

Operator

Thank you. Ladies and gentlemen, that concludes today's conference. Thank you for attending and you may now disconnect your lines.

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Earnings Conference Call
Zomedica Q1 2023
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