Microbix reports results for Q4 & full-year fiscal 2023

Microbix Biosystems Inc. reports results for its year and fourth quarter ended September 30, 2023, with solid sales and a resumption of profitability in Q4, ongoing progress to increase revenues from its diagnostic-test related ingredients and devices, and recognition of a fully-funded program to revalidate and relaunch its approved drug, Kinlytic® urokinase.

Management discussion
Results for Q4 and 2023 complete a challenging and fulfilling year during which Microbix successfully adapted to post-pandemic conditions – adding important new customers and products, signing a fully-funded redevelopment deal for its biological drug, Kinlytic® urokinase, and maintaining its financial strength. However, sales did not grow in 2023 due to a lack of new orders for our DxTM™ viral transport medium, which net of other new revenues and expenses, led Microbix to a small net loss for 2023. More happily, Microbix expects record sales across fiscal 2024, along with significantly positive net earnings.

Year ending September 30, 2023 (“2023”)
2023 revenue was $16,514,776, a 13% decrease from 2022 revenues of $19,076,241. Antigen sales grew by 16% to $9,592,219 (2022 – $8,287,908), while QAPs declined by 5% to $5,087,321 (2022 – $5,375,329). Revenue from DxTM was nil in 2023, down from $5,004,359 the prior year, while royalties increased to $484,718 (2022 – $408,694). 2023 revenues were most influenced by the lack of DxTM sales, which was only partially offset by growth in Antigens and receipt of Kinlytic licensing revenues of $1,348,500 (2022 – nil).

2023 gross margin was 45%, down from 2022 gross margins of 58%. Gross margins were impacted by increased labour, manufacturing, and supply chain costs; all due to inflationary pressures. In addition, the lack of DxTM sales negatively impacted gross margin due to product mix and an inventory write-off.

Operating and finance expenses in 2023 increased by 14% relative to 2022 principally due to increased investment in R&D projects for our QAPs business and incremental spending on implementation of ERP and eQMS systems. This was somewhat offset by reduced interest costs due to the repayment of debentures and BDC loans, plus greater interest income from short-term investments.

Lower sales, reduced gross margins, and increased operating expenses (due to increased investment into business growth and infrastructure) led to an operating loss (before finance expenses and reversal of impairment of intangible assets) of $2,736,432, and a net loss of $39,483 versus a 2022 operating income of $2,610,213 and net income of $1,788,689. Cash used in operating activities was $1,094,561, compared to cash provided by of $3,465,199 in 2022.

At the end of 2023, Microbix’s current ratio (current assets divided by current liabilities) was 5.13 and its debt to equity ratio (total debt over shareholders’ equity) was 0.45.

Quarter ending September 30, 2022 (“Q4”)
Q4 revenue was $4,264,229, relatively flat from Q4 2022 revenues of $4,329,052. Included were antigen sales of $2,977,179 (2022 – $2,629,783), up 13% due to continued demand recovery. QAPs sales were down 25% to $1,195,231 due to timing of deliveries (2022 – $1,601,950). DxTM sales were $nil in Q4 (2022 – nil), and royalties were $91,820 (2022 – $97,319). Year-over-year, Q4 sales were most influenced by growth in antigens, offset by weaker QAPs sales due to timing of shipment to customers and revenue recognition.

Q4 gross margin was 33%, down from 47% during Q4 2022 and due to a higher proportion antigen sales, the antigen product sales mix, increased antigen batch failures, and weaker QAPs sales in the quarter.

Operating expenses (including financial expenses) were up 4% in Q4 2023 when compared to Q4 2022. The quarter reflected both increased investment in R&D projects for our QAPs customers and increased IT infrastructure costs related to systems upgrades. This was offset by a reduction in interest costs due to the repayment of debentures and BDC loans and increased short-term investment income in fiscal 2023.

Overall, flat sales and less available gross margin dollars led to a Q4 2023 operating loss (before finance expenses and reversal of impairment of intangible asset) of $990,563 and net income of $1,997,273 versus Q4 2022 operating loss (before finance expenses and reversal of impairment of intangible asset) of $256,885 and net loss of $464,080. Cash used in operating activities was $1,456,196 for Q4 2023, compared to cash provided by of $146,437 for Q4 2022, reflecting increasing systems.
MB Bureau