Good morning, ladies and gentlemen, and thank you for joining us today for ImmunoPrecise Antibodies Second Quarter Fiscal Year 2025 Earnings Call. We appreciate your time and interest in IPA. Today's call will be led by our CEO, Dr. Jennifer Bath; and our CFO, Kristin Taylor. They will provide a review of our financial performance, strategic initiatives and key operational highlights for the quarter. Please note that a copy of today's presentation, along with our financial statements will be available on our company website for your reference. We encourage you to review these materials to gain a deeper understanding of our performance and strategic direction. Once again, thank you for joining us today. We look forward to sharing our progress and discussing our future plans with you. Before we proceed, I would like to remind everyone that today's discussion will contain forward-looking statements. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those anticipated due to various factors, including, but not limited to changes in market conditions, regulatory changes and other unforeseen business risks. Please note that these forward-looking statements are made as of today and we undertake no obligation to update them as a result of new information or future events unless required by law. We strongly advise all participants to refer to our filings with the Securities and Exchange Commission, SEC, including our most recent Form 20-F, and other periodic reports, for a more detailed discussion of these risks and uncertainties and for a more complete understanding of the risks inherent in our business operations and the potential impact on our future performance. We appreciate your continued interest in ImmunoPrecise Antibodies. I will now turn the call over to IPA's President and CEO Dr. Jennifer Bath.

Thank you, Regina, and good morning, everyone. Thank you for joining us today to review IPA's second quarter results for fiscal year 2025. Operationally, this quarter has been transformative for IPA as we continue to drive adoption in AI driven antibody development, push innovations at our global operations and firmly execute on a strategic plan to ensure sustained growth and increasing shareholder value. Our decision to relocate our headquarters from Victoria, British Columbia to Austin, Texas marks a significant step in IPA's growth strategy. Austin has emerged as a global hub for artificial intelligence, semiconductor innovation and biotechnology, a unique convergence that aligns perfectly with our strategic goals. Austin's vibrant AI community and collaborative culture are driving breakthroughs in precision medicine and data driven research, which directly supports our LENSai platform and HYFT technology. The city's strong semiconductor industry provides a solid foundation for our AI driven initiative, while its rapidly growing biotech sector offers fertile ground for partnerships and innovation. The University of Texas at Austin further enriches this ecosystem, providing a steady stream of skilled talent and fostering collaborations that fuel innovation. With $1.5 billion in funding across 253 biotech startups, Austin is becoming a focal point for the life science advancement. By positioning IPA at the intersection of AI, the mic, conductor, technology and biotech in Austin, we're ensuring access to top tier talent, fostering strategic collaborations and solidifying our leadership in the evolving life sciences sector. This move is a cornerstone of our rebranding and repositioning strategy, aligning our operations with the long-term growth opportunities and strengthening our presence in a critical market for life sciences. Before we proceed, I'd like to recognize Dr. Barry Springer who is stepping off of our public company Board of Directors to begin his well-earned retirement. Dr. Springer's distinguished career…

Thank you, Jennifer. I'll provide a brief overview of our financial results for the second quarter of our fiscal 2025 before touching on our financial position as of the end of the period, which was October 31, 2024. As a reminder, all numbers I reference are in Canadian dollars, unless otherwise noted. For the second quarter of our fiscal 2025, we generated revenues of $6.1 million versus $6.1 million in the previous year. While flat year-over-year, this represents a 16% increase over revenues in the first quarter of fiscal 2025 with strong growth achieved quarter-over-quarter at each of our wet lab sites. BioStrand, our AI-driven platform, achieved $397,000 of revenue in the second quarter, marking its highest quarterly revenue achievement to date, along with life-to-date revenue of $917,000. As we continue to roll out the fee-for-service analytical capabilities of LENSai to our clients, not only are we supporting drug discovery and development with more efficient and effective tools, but also achieving much higher gross margins than what is recognized from traditional wet lab methods. Now on to our operating expenses. Our research and development expenses for the second quarter of fiscal 2025 were $1.2 million versus $0.8 million for the second quarter of fiscal '24. Year-to-date R&D expenses were $2.8 million versus $1.8 million in the previous year. While this represents a substantial percentage increase, the dollar value highlights our capital-efficient investment strategy as we expand our proprietary platform, LENSai. Our sales and marketing expenses for the second quarter of fiscal 2025 were $1.2 million versus $0.9 million in the previous year. Year-to-date sales and marketing expenses were flat year-over-year at $2 million versus the previous year. We continue to benefit from cross-selling efforts across both our wet labs and LENSai platform as we support the expansion of our comprehensive…

[Operator Instructions] Our first question will come from the line of Swayampakula Ramakanth with HCW. Please go ahead. Thank you.

This is RK from H.C. Wainwright. Jennifer, there's a lot of information which you put out this morning. I apologize, I'm jet-lagged with an overnight flight. So just to get -- I'd like to understand what's the strategy behind a couple of things that you're doing. One is moving the headquarters to Austin and also some of the cost containments that you are proposing, I understand the immediate financial benefit, but overall, on the strategy front, how is -- what's your thoughts and also the Board's thoughts on that?

RK, thanks for your question. So first of all, starting with the moving of the headquarters. This is actually something we've been discussing for several years. Just given that the location of the current headquarters is not an area where we have a vibrant biotechnology community. It is also just not an area very well associated with biotechnology and technologies in general. And it's also relatively remote. So we have a working wet lab there, but we really don't have our executive presence there or an integration into the community the way that we would want in a headquarter location. In addition to that, the selection of those locations also opens up the potential for other non-dilutive funding sources. We've tapped into those as people have seen in the State of North Dakota being awarded over USD 2 million over the last couple of years. And that is always a requirement for soliciting that type of funding is your presence on the ground and the operational program leaders for that non-dilutive funding also being present there. And so, Texas is an area that is very well known for that. We have already connected with and began integrating with a variety of different sources of non-dilutive funding and partnership and collaboration activities in both the biological research realm as well as the semiconductor realm. So, as we became more integrated, more familiar and these partnerships and collaborations began to bear fruit, this started to become a more obvious choice for us other than additional location that we were considering, which was Boston, which we also do have some future plans for in the not-too-distant future, but which just from the non-dilutive funding and partnership was a different -- kind of a different relationship. So that's really the rationale there. In a…

Perfect. So just talking about what you have done financially in the second quarter of '25, going forward, as you're talking through the changes in the corporate structure and whatnot, how should we think about contribution to the entities? And also, how should we think about growth from here? And I'm just trying to kind of get everything into my head properly.

Sure, absolutely. That's an understandable question, RK. So when we look at contributions from the entities, Canada is obviously a staple in that equation for us. Canada has been providing the single leading service that we have been offering over the course of the last year to one and a half years, which is that Memory B Cell Select platform. And as you've also noticed and is gaining more public attention, quite specifically also the rabbit version of that platform, although they have double-digit species and R species agnostic. So we do anticipate that to continue to grow, but with their expanded footprint, also other areas like the rapidly growing revenue that they have within the protein manufacturing areas as well as well as the other capabilities that they continue to offer. So single-step hybridoma discovery programs, they offer not only protein expression, but cloning services, NGS services and a multitude of other offerings at that site that have been very successful. So we see a large contribution there. We do, as I mentioned previously, also see an investment opportunity, which is primarily low capital infusion for us to -- for our contribution. However, opening up direct access to the Boston Cambridge area, where we already have a significantly growing revenue base and the ability to tap into a part of the market that has significantly opened up since we have seen tighter regulations on utilizing Chinese facilities for certain activities. So that is an additional area that we have pinpointed specifically for the high throughput downstream activities that happen in BioStrand, where we can more rapidly validate for both clients and for ourselves work coming off of the in Silico platform post in silico lead candidate selection and optimization. And with that, not also push into the capacity in…

Okay. And then -- so the last question from me is you're talking about some of your assets, especially like the LILRB2 asset and also the Trk asset. What should we expect in terms of next set of data and how these programs will kind of flow through development?

Yes. That's a great question because all of the assets that are currently existing within Talem are really kind of in the development stage and optimization stage. So one thing we haven't really talked that much about, but you will have glimpsed a little bit in a few of the more recent press releases, including, for instance, the Biotheus press release is the way that BioStrand has really started to take a lead role in optimizing and engineering those assets that have been discovered within Talem. That has been very significant for us with regard to what we view as the value add coming out of BioStrand. So when will we see the next set of data? That's actually a really interesting question because obviously, with the asset that's been out-licensed to Biotheus now under the control of BioNTech, we're in regular communication with them, and we get updates with them, and are working together with them on -- in progressing that particular asset. And so we do expect information from them forthcoming with regard to -- we have information already, but information in terms of decision-making within about six months from the date that they signed the original MTA. With regard to the other assets, we're not only working on these assets where we have additional development work and optimization work, which you can expect an update on in the next two weeks. But in addition to that, we have other assets that have been wholly developed from the beginning. So, discovery development and optimization at BioStrand. And for us, it is completely revolutionized the way that we do our drug discovery. We're still thrilled with our potential best-in-class and potential first-in-class assets in Talem, but the time that it takes and the cost in doing this in BioStrand…

Our next question comes from the line of Will McHale with Ingalls & Snyder.

Jennifer, first question for me is, how do we, from the outside, square all the discoveries and advancements that you talked about in both the script and in the press release with revenue being flat year-over-year? Like are we just -- is it a timing thing that we just haven't really ramped commercialization on these things? Or what's kind of the right way to think about that?

Yes. That's a great question, Will. I mean, we stand by this fact that our technologies are exceptional in the industry. And our retention rate for clients continues to be very strong, and our reputation is really exceptional in discovery and development phases. Despite occasionally hearing that biotech and pharmaceutical industry companies have recovered from a bit of a downside, that's not what we hear and what we see from clients and partners and more importantly, competitors. So especially in the service industry, which tends to be a lagger because you're looking at other groups needing to recover, stop really the significant budget constraints, which we saw very strong impact for pharmaceutical and biotech companies over the last summer. But then in addition to that, be more comfortable releasing the reins on their spend. So when I look at being more flat year-over-year on that quarter, I see a couple of things. I see, one, pretty swift recovery from a quarter that did dip, which is a little bit more aligned with what we're seeing with our competitors, although not as extreme to what they've experienced over the last 18 to 24 months and a swift recovery into this quarter, which I think would represent and be a part of the impact of why we would have been flat year-over-year, right, because it's a bit of a rebound or recovery, much of which we attribute to the significant belt tightening that we saw over the summer, which isn't hypothetical or picked up from papers. I mean these are things obviously that our clients talk to us about. They tell us about these budget constraints and reorganizations, et cetera. So I do believe that, that's the primary impact that we've seen with regard to that.

Got it. And I guess the new -- like the new products that or services that we're launching, they're ripping, but they're just not yet at scale to have enough of an impact to really move the needle in a significant way?

In terms of the BioStrand services?

Yes, exactly, in terms of BioStrand's in silico services.

Yes. A lot of the BioStrand users on the early access, these are -- these early access users are ones that are actually brought in and have a specific period of time to be able to utilize the technologies, give feedback, work out any bugs because every one of these groups coming in is still customized with regard to not the algorithms, but what they're utilizing and how they're utilizing it. And so part of that early access agreement does actually require them to give direct feedback to the team at BioStrand so that the engineers can make improvements. And that's not a super fast process, obviously, the users need to use those, but the engineers being on extremely limited staff also need to make those modifications. So those early access users are not paying their monthly subscription fees. That is what happens at the end of the trial period. Most of those trial periods are about a month, some are a little bit longer. And that's where we start looking at the conversion. And so that's not something we expect to see immediate revenue contributions from, but it is something that we're seeing growing.

Got it. And I guess, as those convert over the course of this fiscal year, you'd expect BioStrand to exit the year at a much higher revenue run rate than it is today.

Exactly. That is absolutely our aim. Based on just the pipeline information we have, we look at prospects. These are people we're talking to people that have an interest. We look at leads. These are people who have gone beyond that interest stage and received quotes and are having very meaningful conversations that sound like they have the intent, the capital and the ability to execute on that, and then also clients who have already executed a quote. And we use all of that information to do pipeline projections and better understand where we anticipate being in one quarter, two quarter, three quarter, very similar, how do we do to our other locations. And so, we saw the build coming to what we saw this quarter, and we're happy with that just given that it's a substantial -- marks a substantial increase and the profit margins are even more significant than we had anticipated. That being said, those pipeline KPIs that we monitor are still indicating that we should expect BioStrand to do well to continue to grow, absolutely. And the API usage of LENSai as well as the portal usage of AP -- of LENSai are both significant components of that. The fee-for-service work is still a significant component. Our largest client is still using almost unilaterally LENSai at this point for very complex drug discovery programs. So that's also been a significant contribution, and we have just signed new additional contracts with that group. So we have good reason to believe that, that will also continue. And just anecdotally, I think we've talked about this group before saying they've tried a multitude of different AI companies that had not been successful, had not been able to actually execute on what they said they could do and that BioStrand was the first company that could. And not only that, but they've been able to validate the results they get from BioStrand in their wet lab, which also was a first for them. They've now also come back given all the capabilities that BioStrand has and recognize that BioStrand and really no one else from the true definition of de novo discovery has ever accomplished building a therapeutic molecule entirely de novo and have asked to contract BioStrand specifically for that, because of their faith in that technology. So we also use that sort of not just, of course, that anecdotal feedback -- but in addition to that, monitoring the signing of those new contracts and the faith they're putting in us to continue to expand alongside them.

Got it. That's all super helpful. A question on our capital structure and balance sheet. I think it's not a coincidence that our share price has lagged pretty badly since the convertible financing that we took on over the summer. I'm just curious to get what your guys' thoughts are on whether we pay that off with proceeds from the divestiture of the European assets or just kind of how you're thinking about optimizing our capital structure.

Yes. That's a great question, Will, because we are painfully aware that the optics of that particular transaction have been difficult for some shareholders. And we've heard that directly from retail shareholders and institutional shareholders alike. And so we've been pleased with some of the ways that things have unfolded with regard to that debenture, but concerned about the optics and the impact for both existing investors and new investors that would like to come into the story. And so regarding that, we have, as Kristin mentioned, approximately $2 million left on that, not a super large sum. And we absolutely have had detailed conversations around when and how to remove that particular investment group from the equation in order to just reduce whether it's the downward pressure or the burden on the share price or also just the optics, is an important priority for us. So yes, that would be an expected part of the capital from that event at the end of the fiscal year-end.

Got it. Okay. That makes a lot of sense. I was wondering if you could provide an update on the discovery program with Astellas? Just sort of where we stand or whatever the path ahead looks like. I understand you may be limited what you're allowed to say, but this -- anything would be helpful.

Yes. Well, we actually turned over the contract to a lawyer to see what, if anything, we could share, which is pretty limited. And we also reached out to Astellas and asked for a -- let's see what's the right word? We asked for an exception to the contract to be able to share very minimal details, at least so people could connect certain things to Astellas or whatever, and we were declined. And that really, according to them, of course, is their way of trying to project their strategic plan with regard to what they're working on and where it's at. And also because they do tend to bring these types of programs to multiple different partners, I'm sure that there's an element there, too, of just not wanting that information public. That contract prevents us from talking about where the program is, any updates on the program, if it's historical, if it's current, if it's future, whether it's still ongoing, whether it's ramping, we're really -- it literally is incredibly detailed with regard to what we are and are not able to say, because some of it does seem a little bit more tightly controlled than other ones. That's the rationale for going to them with regard to the exception, and it just wasn't something that they felt was appropriate. So we wish we could give more details on that. And sometimes on some partnerships, we are able to.

Okay. Got it. And then on the potential collaboration with the semiconductor companies, could you just expand on like what that would look like from a commercial standpoint? Like would this be us partnering and kind of co-developing a solution for pharma partners? Or how would that -- how do you envision that looking?

Yes. That's a great question as well. So with the current ongoing collaboration that we have, a lot of that is gearing toward cloud-based infrastructure for offerings. So a co-offering between the two groups with a bit of a common theme that we're seeing, whether it was through intersystem semiconductor companies, and then we've also heard this through larger AI or chip manufacturers as well, being that oftentimes, these groups have a good enroll into the market, and they already have users for different technologies or they already have technologies that are compatible with ours, but they do not have any sort of proprietary drug discovery program that enables them to get specifically into the drug discovery market. And they also oftentimes don't have the relationship with the pharmaceutical companies. And many have realized in the past year as they started to try and move toward that relationship with pharmaceutical companies, the level of due diligence and expense that's required to do a vendor onboarding, which is oftentimes 12 to 18 months and back and forth trips between the two groups and pretty significant due diligence and everything from the people that would be working on the project to the technologies through the finances. So we offer for them not only LENSai, which is very unique and oftentimes is a way for them to be able to showcase something that they already do, but then also make inroads into the pharmaceutical community, but also in some cases as well, very synergistic technology to what they're currently offering. So it does seem like a lot of technology and semiconductor companies are just a little bit behind the pack when it comes to what has garnered a lot of attention in the market in the last 12 months, which is the application of AI and ML, specifically with drug discovery. So in this particular case, they've been working with us to bring their capabilities with our capabilities to make faster, more scalable and stronger products that we can bring forward to mark -- to co-market together. And again, focusing very much with that first semiconductor collaboration on cloud integration and offerings for the new market.

Got it. And then just my final question is on the possible divestitures of the European assets. I guess just looking at where CROs have traded hands in the private market and making some rough estimations about the revenue base of those, like it seems like this would have the potential to really transform our balance sheet. And as you noted, while we lose some revenue, it seems like we would be left with a smaller base, but probably growing faster. I guess, one, do I have that all correct? And two, what -- you mentioned possible additional investments. Curious if you could just elaborate on that at all?

Great questions. Let me make some notes here, so I don't miss any. Okay. So yes, first of all, with regard to the divestments. So it's kind of interesting when we look at the growth potential of the company as a CRO, we've talked multiple times about how it's fragmented, right? How you have discovery, you have development, characterization, manufacturing. These all tend to be very fragmented industries where most companies do one or two things and just trying to do those really well. And I think we've done a great job over the last seven years of building a fully integrated end-to-end solution. But we are going to tap out really on revenue potential strictly from a CRO perspective unless we make major investments to move into the next parts of the CRO chain, right, which starts moving into -- we do stable cell line development, which is just kind of a fancy way of saying a cell line that will like forever stably produce your molecule of interest. But we don't do GLP manufacturing. We don't contribute to manufacturing for preclinical trials. We don't do preclinical trials. We don't do safety or efficacy or any of the associated types of work there yet. That's kind of the next step. We obviously don't do clinical manufacturing or commercial manufacturing or any of the sort of batch release type of QA/QC that you would expect to go along with that type of work. So there will be constraints overall in the potential revenue as we move through this. And we've done, I think, a very good job of moving into all of these different kind of emerging markets that have popped up, bispecific, multispecifics, VHH antibodies, ADC with regard to production in Talem has really been a strong focus for…

Got it. That's super helpful. So it seems like putting it all together, it's -- we'll have a slightly lower revenue base, but we'll be growing faster, have much higher margins, much improved cash balance sheet and be extremely well aligned with some of the kind of megatrends happening in the space.

Exactly. And we are making the assumption that we will have several years of operating capital as well, and then also all the reduced overhead associated with those two locations and one fewer officer as well. Our Chief Scientific Officer will also be a part of that transaction.

Thank you for your insightful questions. I will now hand over the call to Dr. Jennifer Bath, our CEO, to conclude the call.

Thank you. I'll need one second to relog back into my computer. Okay. All right. So thank you so much, Regina. So just closing us out here. One second here. Okay. So thank you again for joining us today. We hope that it's clear through today's announcements, our relocation to Austin, the divestiture of the European wet labs and also the upcoming rebranding initiative, they all align with our vision to create a more agile, a more focused and an innovative company. We're not just adapting to the future of drug discovery. We are actively shaping it. With our enhanced computational efficiency, expanding partnerships and the imminent launch of our marketplace offering on AWS, we're poised to accelerate the democratization of drug discovery. Our journey is one of significant potential where science-powered technology-driven solutions will continue to break new ground. As we forge ahead, we remain committed to delivering value to our stakeholders, advancing therapeutics toward clinical success and ultimately making a profound impact on global health. Thank you so much for joining us today.

And this will conclude today's call. Thank you all for joining. You may now disconnect.