Zomedica's (OTCQB: ZOMDF) CEO Highlights Its Innovative Product Offerings and Significant Growth ...

Morning Tim, Robert. Happy to be here.

Sure, I'm happy to. So my journey to animal health started in human health. I started with a surgical device company called US Surgical and got experience with selling innovative solutions to surgeons to enable them to improve clinical outcomes while also reducing the time and cost of their procedures. US Surgical was a company that introduced laparoscopic cholecystectomy to the market. And I rose through the ranks over 18 years to eventually become its CEO when we were acquired. It then became Covidien and now is part of Medtronic. I spent the following years leading startups from inception through commercialization in a few different areas: genomics, gastroenterology, reconstructive surgery, cardiology, hepatology, and pain management. When the opportunity to lead Zomedica arose, it was appealing due both to being able to help pets as I had done with humans and also the relative freedom to innovate and get to market from a regulatory standpoint compared to the human side of health care. At Zomedica, we're committed to innovation that helps both pets and vets, and we can do that here quickly and straightforwardly.

Sure thing. So, in 2021, I joined the company and at that time we started with a single product, the TruForma platform with three assays. Since then, we've made a number of acquisitions or license arrangements, and so we now have six product platforms on the market. Our products are all proprietary, highly differentiated either diagnostic or therapeutic devices to help veterinarians do what they really love to do, improve the quality of care of the pet and the satisfaction of their pet parent client. But also to help them do the things that veterinarians really need to do: improve their workflow, cash flow, and profitability of their practices. So, we have two segments, therapeutic devices and diagnostics. Therapeutic devices include the PulseVet shockwave system, which is a revolutionary non-invasive therapy accelerating healing in tendon and ligament injuries, wounds. It sets new standards of veterinary therapeutics. It's become the gold standard in the equine market, and we're working towards that in the small animal market. Our ACC Loop and Col Laser Canine products leverage advanced targeted pulse electromagnetic field therapy to produce devices that provide drug-free, highly effective pain and inflammation management. And the Col Laser Canine therapy is for behavioral separation anxiety of pets. That gel is an innovative plant-based hemostatic gel designed for rapid and effective bleeding control, revolutionizing wound management in veterinary medicine. It has achieved hemostasis in less than 5 seconds. On the diagnostic side of our business, we've got three platforms. The TruForma diagnostic platform, which is a next generation in-clinic system offering unique, precise, rapid diagnostic testing to support complex veterinary cases with extreme accuracy at the point of care. Our TruView digital cytology system provides best-in-class imaging. It's an electronic microscope with a telepathology platform, and it features the only fully automated slide prep solution, which ensures consistent quality, telepathology backed confidence, and a streamlined workflow for faster, more accurate diagnoses in veterinary medicine. And our Vet Guardian no-touch monitoring system is completely unique. It's a state-of-the-art contact-free monitoring solution ensuring continuous remote tracking of vital signs for pets if they're most vulnerable after surgery, in the ICU, or alone in the clinic overnight. All of these products sort of walk the walk of our five, what we call our five pillars, improving the quality of care for the pet and the satisfaction of the pet parent, and improving the workflow, cash flow, and profitability of the practice.

Sure. So, for most of our products, we're introducing brand new proprietary technology and we're alone in the space. For example, we're the only electrohydraulic shockwave, the only pulsed electromagnetic field loop, the only no-touch remote vital signs monitor. And with our TruForma platform, we offer certain assays, most of them, that are the only ones available at the point of care. For the other products, we offer highly differentiated products. For example, the TruVet microscope is the only scope that automatically prepares the slides, and the VetaGel gel achieves the intended hemostasis far faster than its nearest competitor. Of course, the challenge in being not just a leader, but a pioneer in the market, is that it takes time to build awareness of the benefits of shockwave or electromagnetic field therapy, or just to know about the availability of products that are now available at the point of care. Essentially, we're a startup times six, for which we've invested in a robust sales and marketing team to put our products on the map and more importantly in the vet's clinics.

So, we generate revenue through a combination of capital and consumable sales. We're the classic razor and blade model. But sometimes we sell the razor as well. Our capital sales generate recurring revenue in a number of ways. Each PulseVet system we sell today generates from $4,000 per year in ongoing revenue in the years to come. Our CC loops are replaced after 150 uses and then reordered. The VetGuardian monitors generate ongoing cloud and warranty fees. Now in some cases, in accordance with industry practice, we place the instrument with no upfront capital investment. Our TruForma instruments then generate ongoing sales of assay cartridges. Our TruVu microscopes generate monthly subscription and telepathology fees. And our Vetigel product is consumed and reordered. So we have a combination of capital and consumables. Consumable sales currently account for around 70% of our total revenue and provide a steadily increasing foundation of that revenue. The capital sales on top generate meaningful additional revenue along with generating ongoing increases in the consumable revenue base. To give you an idea of how big the opportunity is, let's look at our PulseVet system. It's become the standard of care in equine sports and performance medicine and achieved penetration of over 50% of equine vets overall with the penetration percentage of sports and performance vets being considerably higher. Now we just started marketing this system to small animal vets in late 2021. We've made good progress since then, but we're well below 5% penetration of this market, which is much larger. There's 30,000 clinics in the US. If we got to 50% of the small animal market from a penetration standpoint, we'd have 15,000 accounts generating about $4,000 per year in trade reorders, producing $60 million per year in consumable revenue, not to mention the 15,000 systems we would have sold at $32,000 each or $480 million. So, a very significant opportunity. Now, that's just one of our products, but it is our flagship for now. All told, the combined total addressable annual market consumables for our products in the US is over $2 billion. Now, clearly, we're just scratching the surface with $27 million in 2024 sales. But, we have a lot of opportunities and the manufacturing and sales and marketing infrastructure in place to capitalize on them.

Sure. In 2024, we invested in gaining regulatory clearance for all of our products. And when I say that, of course, each country has its own standards, but the CE mark again gives us access to Europe, the EU, and then there's a lot of other countries that also recognize the CE mark as a gateway to introduce your products in their country. So, we currently sell PulseVet in over 30 countries around the world. We have a wholly owned subsidiary in Japan that has been marketing PulseVet to their significant equine market. And so, and Assisi products are also sold in many countries around the world as well. Having said that, the remaining products now all have received the CE mark. And so, during the course of the year, we'll be introducing those products. We already have in some cases to new international markets. So generating increases in international sales is a function of both establishing distribution in country and we're working towards that with specifically with the small animal market on a continuous basis as well as in launching our products into those countries. And so that's our strategy.

So tariffs haven't really presented a significant challenge to Zomedica. We manufacture all of our own products here in the US outside Atlanta and Minneapolis. And very few of our components are sourced from outside the US. We analyze the impact on our cost of goods if we encountered really high tariffs on those components and it was, I think, less than $50,000 for the year. Now the one product we don't manufacture is Vetigel, but for that we pay an established contracted price to our US partner.

On the sales front, as you mentioned, we saw an increase in international sales in the first quarter versus the first quarter of last year. So while it's likely there was an impact in some way, it was offset in the first quarter. Looking forward, most of our international revenue is from the sale of PulseVet consumables. And our customers need their replacement trodes or they can't use their system. So I don't expect to see a significant hit to that part of the business. Capital sales may be compromised depending on the situation, but it's tough to predict just now.

Sure. So, our path to profitability is through leveraging the investments we've made in our manufacturing infrastructure and sales and marketing teams to grow revenue and continue to generate relatively high margins of 68%. Now, we're also able to reduce certain cash operating expenses as we have completed or complete in the future development projects undertaken to further develop products, expand our Atlanta area facility, which is done, and automate aspects of our Plymouth facility, which is also done. Overall, in the first quarter we reduced actual cash expenses about 10% relative both to the first and fourth quarters of last year. And we expect to continue to spend less providing additional leverage. As for timing, it's a major priority, but it's tough to predict tipping points in the market. So, I'll just say that we're working toward it as rapidly as possible.

So, I believe we're a perfect example of the quote that Jeff Bezos coined, which is the company is not the stock and the stock is not the company. As you said, we're increasing revenues, manufacturing efficiently, are well capitalized, have no debt, and have significant market opportunity, but the share price the market has set is below cash. I suppose people may view the drop in our share price as the index funds departed our stock en masse shortly after our delisting and moved to the OTCQB market as meaning that the company is in trouble, but it's not. I think the issue isn't necessarily excessive worry, but rather that due to being on the OTCQB market and trading where we are, we're not able to be considered as an investment by institutions that take a long view while taking significant positions. Our shareholders are almost all retail investors, many of whom have been here for the long haul. Yet, the macroeconomic climate right now isn't the best for making longer-term investments and some shareholders need to sell to free up cash. On the other hand, every share sold today by someone who needs the cash or is worried is bought by someone who sees an opportunity for a return from a rise in the share price. As for relisting on a major exchange, there are a number of options. We're considering all of them. We take advice from a number of professionals in the capital markets, and we have that as a major goal, and we're working towards it.