Neptune Wellness Solutions Inc (NEPT) 2010 Q3 法說會逐字稿

Good morning. My name is Simon, and I will be your conference operator today. At this time, I would like to welcome everyone to the Neptune third-quarter results conference call. (Operator Instructions). Thank you. Mr. Godin, you may begin your conference.

Hi, everybody. My name is Andre Godin. I'm the CFO of Neptune Technologies & Bioressources. I would like to welcome everyone to Neptune teleconference for the financial results for the three months and nine months ending November 30, 2010.

First, I would like to report our consolidated results, and then, after, I will cover the nutraceutical or Neptune standalone results.

I would like to say that for the first -- the last three months in the last quarter, we recorded CAD4.3 million as opposed to CAD3.8 million last year, for a total of CAD12.6 million after nine months. And this is an increase of 57% over last year.

Our EBITDA is -- consolidated EBITDA is at CAD1.5 million after nine months. And even though the EBITDA for the last three months was CAD135,000, which is a little bit smaller than the EBITDA for the same period last year, and the reason is mainly because of high legal expense and increased expense in IR. We have hired two IR firms, as you probably know, Howard Group in Calgary and CEOcast in New York, and this is for the benefit of the Company and of our shareholders.

We basically also maintain our gross margin, even though the market is now more competitive. As you know, we have more competition worldwide, and we had to be more aggressive with our pricing. But at the same time, we managed to be more efficient in terms of our production, which resulted in a decrease of our cost for NKO and EKO, which is our new commodity product.

Our net earning reached CAD1.8 million for this quarter and CAD2.6 million for the nine-month period ending November 30, 2010. This is basically the results for the consolidated result, the consolidated group. It is amazing that we have performed that well, knowing that we have Acasti, which is in operation for two years and is running preclinical data and soon will be starting its Phase II as soon as we receive the CTA application. And Tina Sampalis will discuss that a little bit later in the presentation.

If I talk now about the Neptune nutraceutical business, which is Neptune standalone, after nine months, the results are amazing. We have managed to record a CAD3 million EBITDA, as well as a CAD3 million net earning. So we are very pleased to report that. Last year, for the same period, we were negative in both EBITDA and net earnings of about CAD100,000 in each cases.

We also, as probably everybody know, raised about CAD5 million in this quarter, CAD2.6 million from a private placement at CAD1.85 in October, and we also raised CAD2.4 million from Acasti warrants exercised in November. Neptune basically took most of its CAD2.6 million, invested that CAD2.6 million in Acasti in order to finance the Phase II and finance the operation of Acasti.

Presently, we have CAD11 million, a little bit more than CAD11 million in our working capital, an increase of more than CAD6 million over last year. Last year, our working capital was CAD4.5 million. So we are in very good position, and this is due to sales increase and obviously also our money-raising.

The cash position for Neptune Group is CAD5 million as of November 30, CAD2 million in Neptune and CAD3 million in Acasti.

I think that now that I have covered the numbers, and as you know, we will be receiving and answering questions are little bit later, but I would like to make a small update on several files that people have been asking. We already received a lot of questions since we announced the webcast or the teleconference, one of which is the Bayer launch.

We have announced last year that Bayer was going to be launching its Arctic launch in the first quarter of 2011. And this is on schedule. So you'll hear a little bit more in the next month or so, first quarter, calendar, of 2011, as well as Nestle and Yoplait. Everybody -- as everybody knows, we have signed these two alliances a few years back, and the results are finally coming. And in the second quarter of the calendar year of 2011, we should be able to announce the results of those two clinical studies.

Also, in terms of capacity expansion for our production, right now in Sherbrooke, we are managing to produce about 100,000 -- 130,000, sorry, kilograms per year. And we are at full capacity right now, building a little bit of inventory. But with our increase in sale -- in revenue, obviously, we are going to need a new plant soon.

We have been in negotiation with different parties to build a new plant. We have narrowed down to about three options right now, three interesting options for us. And very importantly, we need to be sure that Neptune will not have to invest, or very minimum investment in CapEx for these options or this option that we will finally choose.

In the next Board, which will happen after the year-end in February, we will give several recommendations to the Board. And after those, we will be able sometime in 2011 to announce the new partner. And hopefully, everything goes well.

I think I have covered everything as an update for Neptune. As I said, if we have questions, specific questions, after the teleconference, I will be happy to answer all your questions.

In the meantime, I think that some of the questions we receive are about Acasti. People are eager to know a little bit more about Acasti, where it stands and everything. So I have Tina Sampalis, the President of Acasti, sitting beside me. And I will give her -- sorry, I just received a question that I think that I should answer right away, before I pass the micro to Tina, regarding Acasti listing. I can't believe I forgot that one. It asked me so much time right now.

The whole team in Neptune is working and Acasti is working very hard in order to achieve this listing on the TSX Venture. It is going as planned, and if everything goes well, we are going back and forth with the exchange. We have a sponsor for the listing. Everything has been done. So basically, in the first quarter calendar 2011, we believe Acasti will be listed on the TSX Venture.

So now I will pass it to Tina for an Acasti update.

Thank you, Andre. Hello, everybody. Thank you for giving us the time to update you on what is happening. Of course, this is a Neptune financial webcast, but we would like to inform you of what is happening, the status of Acasti.

I'm very happy to tell you that we are moving forward in a very steady pace. We are online with everything that we announced in our previous webcast and we have been announcing in the press releases.

More specifically, the CTA application, as you know, was submitted last year. It was last October. We already received the first set of -- the first information request from Health Canada before Christmas. We responded very fast and certainly within their deadline -- before their deadline, I should say. We are waiting for their response now, so everything is going well on that side.

As you also know, competition is out there. We have completed a program of preclinical studies against what we consider to be -- I shouldn't say against -- I should say compared to what we consider to be our main competitor. You have all read the results. We are very happy with those results. We feel very encouraged and optimistic, and we do believe now, after seeing those results, more than ever that we are on the right road.

We are in discussions with pharmaceutical companies about our over-the-counter fixed-dose combination product. And for Onemia, I will be passing the word to Dr. Pierre Lemieux, our Chief Operating Officer, who will inform you of the status of Onemia. Thank you.

Thank you, Tina. Good morning, everyone. Yes, I guess some of you are interested to know a bit more about the Onemia launch. As you might have seen in the press release, we have launched Onemia end of October, beginning of November of 2010.

The program is going -- is on track. And this means that the doctors, a lot of doctors in the West, because this is a launch that was done in the US, have been receiving samples of Onemia. So the product is well received, and we get some good feedbacks. And we believe that the first sales of the product will start at the beginning of or during the first quarter of 2011.

So, so far, so good, I would say, because this is -- one question that we had, if the doctors would actually accept to try the product, and the answer is yes. So as you know, there's a lot of omega-3 products out there on the shelf, but there's also some prescription product that are prescribed right now. And doctors are willing to try new products. And I think Onemia is really filling a medical need right now. And this is exactly the strategy that we wanted to pursue. And so far, as I said, everything is going according to plan.

We have already got some sort of press coverage. If you -- there is an Onemia website, by the way, if you want to have more information on the product itself, how it is being perceived in the marketplace. And you are welcome to consult the website.

So this is for Onemia. I think it's a brief update, but everything is going as planned. So now I'm going to turn the word to Andre Godin.

There's two elements that I would like to clarify as well regarding Acasti. The first one is the fact that the money that Acasti has now is sufficient to complete Phase II, because this is the kind of question that we get on a regular basis. The CAD3 million that Acasti has presently in cash is sufficient to complete the Phase II.

Also, for the listing of Acasti, we haven't yet determined the price of the listing, so the starting trading price. And this will be determined, obviously, before we list, and it is coming. It's going to be depending on the evaluation, several factors that we need to evaluate before we do address this price.

Now I would like to -- I will turn it over to Xavier just to see if we have any questions.

No, I believe we have most of the questions that we received [as of] now. We will be following up with other questions, if there are, after the conference call.

Okay. And one small clarification for the working capital in Acasti. As everybody knows, in order to be listed on the TSX, you need to meet specific requirements, one of which is that you have sufficient money -- sufficient cash to last for 12 months. We have managed to determine to the exchange that we can last much longer than that. And even though we can finance the Phase II, I want to make sure that everybody understands that we also have sufficient money to support Acasti operation, including all the money needed to launch the medical food, Onemia.

I think that is it. I think (multiple speakers)

Yes, I think we received a lot of questions prior to the conference. And I guess if we have no more question right now, it is probably because we answered all of them.

So I would like to thank everyone for listening. And you know that we are open to answer all your questions. So if you have any question that you want to answer directly to the Neptune or Acasti team, feel free to call us, and we will be available to answer all your question. So have a good day and a good weekend, and thank you for listening.

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.