Message to Shareholders
Results for the second quarter of fiscal 2022 ended
March 31, 2022 (“Q2”) provided Microbix with a sixth
consecutive quarter of profitability. In turn, sales for
our first-half of fiscal 2022 (“H1”) demonstrated year over-year sales growth of
30% and an increase of over 70%
in net profit. This progress is the result of our
successful transformation into a creator, maker, and
marketer of innovative, proprietary, branded, and
fully-regulated medical devices.
Notably, sales have been on either side of $5.0
million for five quarters now, a time in which we’ve
been intensely active – in product development,
clinical and regulatory work, manufacturing process
validations, and customer relationship-building. All
this has been conducted alongside global leaders in
the diagnostics industry, who we believe will shortly
become Microbix customers. Consequently, we are
aiming to soon achieve a break-out to a much higher
level of quarterly revenues – principally driven by
sales of our QAPs to leading diagnostic test-makers
and likely beginning as soon as Q4 of fiscal 2022.
Such product, process, and business development
work necessarily happens “behind the scenes,” as
we can’t provide real-time details about with whom
we’re working or on what – such information is
commercially-sensitive and confidential. Happily
though, the intensity-level of our work can be in-part
measured by our participation in, and product results
presentations at, leading diagnostics industry events
such as the four which we’ve attended just in April,
2022 (at which data generated over many months has
been presented). The sales cycle for our product areas
are lengthy, but we are far from idle and I believe we
are making progress that will result in unprecedented
financial results.
It is to support such greater sales that we are making
further investments in our people, equipment,
facilities, and software control systems. Each such
investment is intended to help enable us to achieve
annual sales on the order of $100 million over the next
several years. There is of course no assurance we’ll
achieve such sales with these investments, but it is
certain that we would never achieve such sales if we
do not make these capacity-oriented upgrades.
1
I’m likewise pleased to report that each of our sales driven
business areas are performing very well;
namely our antigens (test ingredients), QAPs (test
controls), and DxTM (viral transport medium). Our
segment leadership and staff are all doing great work
and ensuring that we are achieving optimum margins
on every dollar of product sold. Please join me in
thanking them for their skill and dedication, which is
very much reflected in the 64% and 65% gross margins
attained in Q2 and H1 respectively.
Canadian Funds
In light of all our fundamental progress, it may be
a source of frustration that Microbix’s share price
is near to its 52-week low. In recognizing this fact,
I’m reminded that most life sciences stocks have
performed poorly since the start of 2022, with the TSX
Healthcare Sub-Index down 58% from its high. So this
price-pressure does not seem specific to Microbix and,
with our very strong cash position and balance sheet
ratios, we have no need or intention to issue shares
and have all funds that we believe are necessary to
execute our current growth plans.
I should also note that we are continuing to monitor
and adapt to global health, economic, and political
conditions. With regards to health, we are watching
the evolution of the COVID pandemic and more. With
regards to economics, we are keenly conscious of
inflationary pressures and supply-chain issues. And
with regards to the latter, we are very pleased to
welcome our new Board Director, Jennifer Stewart,
who is a leading expert in public affairs.
In summary, you own a strong and growing
business. As fellow shareholders, your company
board, management, and staff are committed to
disciplined execution of well-reasoned expansion
plans. We believe we have the innovative products
and the customer relationships needed to drive
sales growth, and we are now hard at work at
making certain we have the capacity and support
systems necessary to realize our objectives and
create sustained value for shareholders.
Personally and on behalf of our team, I thank you for
your continuing support and wish you all the best.
Cameron L. Groome
Chief Executive Officer and President