Intelligent Bio Solutions Inc. (INBS) is a medical technology company that is revolutionizing the landscape of drug testing through its innovative Intelligent Fingerprinting Drug Screening System. This non-invasive solution leverages the power of fingerprint sweat analysis to quickly and accurately detect the presence of common drugs of abuse, including opiates, cocaine, methamphetamine, and cannabis.
Business Overview and Company History Intelligent Bio Solutions Inc. and its wholly owned subsidiary, GBS Operations Inc., were each formed on December 5, 2016, under the laws of the state of Delaware. The company's Australian subsidiary, Intelligent Bio Solutions APAC Pty Ltd, was formed on August 4, 2016, under the laws of New South Wales, Australia and was renamed to Intelligent Bio Solutions APAC Pty Ltd on January 6, 2023. On October 4, 2022, INBS acquired Intelligent Fingerprinting Limited (IFP), a company registered in England and Wales, further strengthening its presence in the European market.
In its early years, Intelligent Bio Solutions faced the challenge of developing and refining its core technology - the Intelligent Fingerprinting Drug Screening System. This proprietary portable platform analyzes fingerprint sweat using a one-time cartridge and portable handheld reader. The flagship product from this platform is the Intelligent Fingerprinting Drug Screening System, a two-part system that consists of non-invasive, fingerprint sweat-based diagnostic testing products designed to detect drugs of abuse.
Over time, the company expanded its customer base globally, securing accounts in 19 countries across industries such as construction, transportation and logistics, manufacturing, engineering, drug treatment, and the judicial sector. However, the company encountered regulatory hurdles as it sought to introduce its technology in new markets, particularly the United States, where it needed to navigate the FDA approval process.
In 2023, the company faced another challenge when the intellectual property rights licensed from Life Science Biosensor Diagnostics Pty Ltd (LSBD) for its Biosensor Platform Technology (BPT) reverted to the University of Newcastle following the appointment of a liquidator to LSBD. The company entered into early-stage discussions with the University of Newcastle regarding the potential restructuring of future licensing of BPT and products, though a timeline for these discussions had not been established.
Despite these obstacles, Intelligent Bio Solutions persevered, focusing on the commercialization and refinement of its core Intelligent Fingerprinting Drug Screening System. The company reported strong growth in revenue and an expanding customer base, demonstrating the market demand for its innovative, non-invasive drug testing solution.
Financial Overview For the fiscal year ended June 30, 2024, Intelligent Bio Solutions reported revenue of $3.11 million, representing a 148% increase compared to the prior fiscal year. This growth was driven by increased market demand, expanded brand and product awareness, and the expansion of the company's customer base, which now exceeds 400 active accounts across 19 countries.
The company's gross profit for the fiscal year 2024 was $1.43 million, compared to $326,668 in the prior fiscal year. This significant improvement in gross profitability can be attributed to the company's focus on maximizing recurring revenue from the sale of higher-margin cartridges used in its Intelligent Fingerprinting Drug Screening System.
Intelligent Bio Solutions reported a net loss of $10.16 million for the fiscal year 2024, compared to a net loss of $10.63 million in the prior fiscal year. This slight improvement in net loss was driven by the increase in revenue and gross profit, partially offset by continued investment in research and development, as well as selling, general, and administrative expenses.
For the most recent quarter ended September 30, 2024, the company reported revenue of $872,287, representing a 10% year-over-year growth. This increase was primarily due to the expansion of the customer base in both existing markets and new regions. The net loss for the quarter was $2,685,633, which increased by $260,430 compared to the same period in 2023. This increase in net loss was primarily driven by the company's investment in R&D work required for its planned FDA 510(k) submission, expected in the fourth quarter of the 2024 calendar year.
The company's operating cash flow (OCF) for the most recent fiscal year was -$9.57 million, while free cash flow (FCF) was -$9.79 million. For the most recent quarter, both OCF and FCF were -$2,387,216.
Liquidity As of September 30, 2024, the company had $3,989,431 in cash and cash equivalents, providing it with the necessary resources to execute its growth strategy and fund its ongoing operations. The company's debt-to-equity ratio stood at 0.08, indicating a relatively low level of debt compared to equity. The current ratio of 1.14 and quick ratio of 1.01 suggest that the company has sufficient short-term assets to cover its short-term liabilities.
Operational Highlights and Key Milestones Throughout fiscal year 2024, Intelligent Bio Solutions achieved several notable operational milestones that demonstrate its progress and positioning in the market:
1. Successful Completion of In-Clinic Testing for FDA 510(k) Submission: In September 2024, the company announced the successful completion of the in-clinic portion of its clinical study plan, a key step toward its planned FDA 510(k) submission in the fourth quarter of 2024. This submission, if approved, would enable the company to introduce its Intelligent Fingerprinting Drug Screening System to the lucrative U.S. market.
2. Expansion into New Geographic Markets: During the fiscal year, Intelligent Bio Solutions expanded its global footprint, announcing new distribution partnerships in Saudi Arabia, Chile, and New Zealand. These strategic alliances have allowed the company to increase its international customer base and diversify its revenue streams.
3. Installation of Over 1,000 Intelligent Fingerprinting Drug Screening Readers: As of June 30, 2024, the company had installed 1,037 of its portable Intelligent Fingerprinting Drug Screening Readers, a 65% increase from the prior fiscal year. This growing installed base provides a solid foundation for recurring revenue from the sale of higher-margin cartridges.
4. Successful Adoption by Safety-Critical Industries: Intelligent Bio Solutions continued to expand its customer base, securing partnerships with companies in safety-critical industries, such as construction, manufacturing, transportation, and logistics. These partnerships demonstrate the strong demand for the company's non-invasive, efficient drug screening technology.
5. Technological Advancements and Quality Certifications: During the year, the company announced the successful completion of biocompatibility testing for its Intelligent Fingerprinting Drug Screening System, as well as the attainment of ISO 13485:2016 certification for its quality management system. These achievements underscore the company's commitment to product quality and safety.
Product Segments Intelligent Bio Solutions operates in two main product segments:
1. Intelligent Fingerprinting Products (IFPG) Segment: This segment focuses on the commercialization of the company's flagship product, the Intelligent Fingerprinting Drug Screening System. The system comprises a small, tamper-evident drug screening cartridge and a portable analysis unit that provides on-screen results in under ten minutes. The IFPG segment accounted for 100% of INBS's revenue during the three months ended September 30, 2024 and 2023.
2. Biosensor Platform Technology (BPT) Segment: This segment focuses on the development of the company's biosensor platform technology, which consists of a small, printable modified organic thin-film transistor strip. The BPT has the potential to develop a range of Point of Care Tests across various medical modalities. However, following the appointment of a liquidator to LSBD, the intellectual property rights for this technology have reverted to the University of Newcastle, and INBS is in early-stage discussions regarding potential future licensing.
Geographic Performance For the most recent quarter, the company's revenue was primarily generated in the United Kingdom, which accounted for $833,790 of total revenue. Australia contributed $580, while other regions accounted for $37,917. The company currently sells its products primarily in the United Kingdom and Australia but is actively expanding into new markets.
Competitive Landscape and Market Opportunity Intelligent Bio Solutions operates in the rapidly growing drug screening products market, which is estimated to have a total addressable market of approximately $15 billion by 2030, according to industry research. The company's Intelligent Fingerprinting Drug Screening System offers a unique, non-invasive solution that addresses the needs of employers in safety-critical industries, where efficient and accurate drug testing is of paramount importance.
The company faces competition from traditional drug testing methods, such as urine, blood, and saliva tests, as well as other emerging technologies. However, Intelligent Bio Solutions' innovative approach, which utilizes fingerprint sweat analysis, provides several advantages, including faster results, improved hygiene, and enhanced user privacy and dignity.
Risks and Challenges While Intelligent Bio Solutions has made significant strides in advancing its technology and expanding its global presence, the company faces several risks and challenges that investors should be aware of:
1. Regulatory Approval: The successful completion of the company's FDA 510(k) submission and subsequent regulatory approval is crucial for its entry into the lucrative U.S. market. Delays or setbacks in this process could impact the company's growth trajectory.
2. Competitive Landscape: The drug screening market is competitive, and Intelligent Bio Solutions must continue to innovate and differentiate its technology to maintain its competitive edge.
3. Dependence on Key Customers: A significant portion of the company's revenue is derived from a limited number of large customers. The loss of one or more of these key accounts could have a material impact on the company's financial performance.
4. Liquidity and Financing: As Intelligent Bio Solutions continues to invest in research, development, and commercialization efforts, it may need to secure additional financing to fund its operations and support its growth plans. The availability and terms of such financing could impact the company's financial flexibility and shareholder value.
5. Geopolitical and Macroeconomic Risks: The company's global operations expose it to various geopolitical and macroeconomic factors, such as trade disputes, currency fluctuations, and economic downturns, which could affect its financial performance and strategic initiatives.
Outlook and Conclusion Intelligent Bio Solutions is well-positioned to capitalize on the growing demand for innovative drug screening solutions in safety-critical industries. The company's Intelligent Fingerprinting Drug Screening System has gained significant traction in the market, as evidenced by its expanding customer base and growing installed base of readers.
The successful completion of the company's clinical study plan and its anticipated FDA 510(k) submission in the fourth quarter of 2024 represent crucial milestones that could unlock the vast potential of the U.S. market. Additionally, Intelligent Bio Solutions' strategic geographic expansion and focus on recurring revenue from cartridge sales suggest a path toward improved profitability and long-term sustainability.
While the company faces various risks and challenges, its innovative technology, strong customer partnerships, and experienced management team position Intelligent Bio Solutions as a compelling investment opportunity in the rapidly evolving drug screening market. As the company continues to execute its growth strategy, investors should closely monitor its progress and the impact of its strategic initiatives on its financial performance and market position.