Q3 2020 Earnings Call
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Good afternoon May I have your name please.
Hi, It's Rachel Smith.
Semi T.H. of course.
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Company.
With these ma'am.
A year ago H.I.E.R.A.
Thank you and for which conference are you here this afternoon ma'am.
[noise] champions oncology.
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All right.
Oncology.
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Champions, our I see it right here.
Be joining you and just a moment and a good day to you.
Thank you.
We have been aggressively.
[laughter], which highlights our state of the art equipment and operational excellence.
These efforts, we have seen an approximate 40% increase.
Preclinical flow cytometry services leaning to larger studies in our core preclinical business.
We look forward to additional growth in both preclinical and clinical flow.
For the coming quarters.
Ex vivo platform, which leverages, our tumor bank to support large screening studies and assist our customers with their early preclinical work.
Growing steadily and contributing to our revenue growth.
As discussed previously, we're investing and expanding our internal ex vivo capabilities and have partner with.
To provide a unique imaging based solid tumor ex vivo platform.
We have been excited with the enthusiasm and interest.
Ex vivo product launch.
Has contributed to our revenue growth and as we expand the ex vivo platform, we anticipate that it will be a great contributor to our overall growth in general.
In addition, we continue our R&D efforts to offer both new models for in vivo and Zika assays as well to expand our biomarker endpoint analysis.
Information It was a strong quarter for the company as we saw the expected results of our strategies come to fruition.
We are excited about the interests in our core services as well as our expanded products and we anticipate our revenue will continue to grow steadily.
Now, let me turn the call over to David Miller for the highlights of our financial results.
Thanks, Ronny I will slow results on form 10-Q will be filed with the FCC on or before March 16th.
We had strong quarter kicking off the second Pat about fiscal year with record revenue of $9 million and near record net income.
Revenue increased by $2.6 million, 40% compared to the Yoigo period.
Excluding stock based comp in depreciation we recognize the gain of approximately $900000 compared to a gain of $91000 in a year ago period, including stock based comp in depreciations, we recognize the gain of $430000 for the quarter compared to a loss of $370000 in a year ago period.
Focusing as we do on costs, excluding stock based comp and depreciation our gross margin from third quarter was 52% compared to 47% for the same period last year with cost of sales increasing by $900000.
The increase is mainly attributed to the revenue growth and continued expansion of studies in process.
R&D expense was approximately $1.4 million compared to 1.3 million in a year ago period.
Increased our R&D investment to continue growing out to our bank along with expanding the capabilities of our Nvvault and Expressvault platforms.
This investment allows us to design and provide following the tool to run increasingly complex studies.
Sales and marketing expense was $1.2 million compared to $826000 in a year ago period.
The increase was mainly due to compensation expense in the form of salaries and commissions, we expanded our business development team to penetrate deeper into existing territories as well opening up new geographies and product lines.
Additionally, as discussed on prior earnings calls, we adjusted our methodology for Ocwen Commission by allocating these costs over the course of the year historically commissions were heavily weighted into our fourth quarter. It's a cool combined with commissions earned on robust sales contributed to the increase.
Over the coming quarters, we intend to continue to grow our business development team to capture more market share as was explore other strategic opportunities.
Our Gina expense was $1.2 million compared to $845000 in a year ago period.
The increase is primarily due to higher salary expense along with approximately $150000 in bad debt write off let me be clear bad debt expense in our business is minimal and this is not expected to be a recurring quarterly item.
In total our cash based expenses were $8.1 million for the quarter compared to $6.3 million in the same period last year, an increase of approximately 1.8 million of which 900 $900000 within cost of sales as a result of revenue growth and $400000 in sales and marketing.
Now turning to cash at the end of the third quarter, we had 3.3 million up cash on the balance sheet for the quarter cash used in operations was approximately breakeven mainly due to the normal variability in the timing and accounts receivable and payable with our anticipated revenue growth and profitability, we reiterate our cash from operations will grow.
Over the long term.
Additionally, subsequent to the quota and we have added approximately $4 million, mostly the result of warrant exercises solidifying our balance sheet with a cash balance of $7 million and no debt.
Looking ahead to the remainder of fiscal year 2020, with the understanding that is a bit of global uncertainty, we anticipate maintaining our profitability and we reiterate our year over year revenue guidance provided last quarter.
Information, we had record breaking revenue quarter, and we're very confident in the long term prospects of the company. We look forward to our next call, which because it's our year end, we'll be at the end of July we will now open the call two questions.
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Our first question today come from Matt Hewitt of Craig Hallum. Please go ahead.
Good afternoon, gentlemen, congratulations on the strong quarter.
Thank you very much Matt.
First one obviously on everybody's mind I'm, just curious what impact if any are you seeing from krona virus or maybe how is that impacting the start times from some studies.
Or anything along those lines.
Yeah. So obviously.
[laughter] first and foremost on our minds right now we've been meeting regularly the management team.
As it stands right now we are fully operational we have sense all non.
Lab employees to work remotely just so that we won't have an increased risk of exposure to to the other essential.
Employees that work in the lab.
We've increased our vigilance for hygiene and lab sterilization, but more frequent cleanings and obviously all the other.
Uh Huh hygiene.
Improvements that that that that we've been able to do we are closely monitoring the situation.
It's hard to know how what the full exposure as Matt I'm, obviously things change on a daily basis.
As it stands right now we haven't seen a.
Let down in our bookings and as long as we can keep our lab healthy we have ordered a couple a couple of months of supplies in advance. So in case, there is a supply chain issue, where well compensated for that but what we're really monitoring is just the extensive.
The spread of the disease in and weather will impact the operations of the workforce within our lab operations and that's something we're monitoring we're working very hard to reduce the risk of exposure.
But we'll only known the next couple of weeks or months <unk>.
There was one supplier of mice of ours that that comes from China that impacted that it wasn't what wasn't a very large.
Supplier, so might might impact revenue, a little bit but for the most part up until now we haven't been impacted but.
No. It's just starting so.
Well, if the keep you posted on that.
[noise] along those lines I I'd seen some articles talking about the the I think its and correct me if I'm wrong, but the east to a mice and how those are in very short supply I don't think correct me from Robert I don't think you guys work with with those types of my is correct.
We don't we don't correct okay.
Alright, well. Thank you for the color on the the virus I guess shifting gears a little bit you commented in the press release, and then and in your prepared remarks regarding a adding to the the sales and business to a biz Dev headcount, where does that sit now and where do you see that going over the next year.
So over the last.
Six months Weve roughly increased our headcount by about a third above 30%.
We feel like there's a lot of opportunity out there.
And we feel like that we're going to continue in increasing our business development head count.
So.
I don't know the exact number yet, but we feel like there's an opportunity out there we continue to grow our bookings and Wow.
Well, we have an increase of demand in one of the things we've been doing as you know is we've also been increasing the products and services. So that also leads to an demand of needing more sales people because we're doing more work and we're doing deeper work with more pharmaceutical companies. So sort of past six months I'd say, it's about <unk>.
30% that includes a bunch of geography is as well as just going deeper in the areas that we're currently at.
Got it Okay, and then maybe last one and I'll hop back into queue. Thank you for the update on flow cytometry in any incremental color that you provided as far as some of those pharma customers have come in inspected you're now on their approved list [laughter] <unk> any additional color that you could provide his first how frequently are those types of opportunities.
Coming up for bid do you have any sense for <unk>, how frequently that occurs and when I know, it's difficult, but when you might anticipate seeing some some contracts being signed there. Thank you.
Yeah. It's.
I think to be fair and honest, we had already anticipated that we would have assigned one or two studies.
We are talking to a lot of groups.
We are being seen as a favorable I mean at this point you know there have been multiple pharma companies as I said, who come in in order to us and talk to us and really like the work that they're seeing that we're doing I'm I think it's just a matter of timing I I don't know the exact timing.
I believe very strongly that it will happen.
A little less clarity on exactly the right timing I do believe in the next couple of months, we will get our first sign contracts, but stay tuned for that.
Understood. Thank you.
[noise] once again, if you would like to ask a question. Please press Star then one on your telephone keypad.
One moment, please walk poll for questions.
We do have a follow up from Matt Hewitt of Craig Hallum. Please go ahead.
I'll keep going [laughter] [laughter] as far as there was mention of a small bad debt or nonrecurring bad debt write off what was the amount of that during the quarter David.
Hi, just 50000.
150, K., Okay, that's great and then I guess the last piece here.
Regarding.
As you add these new services and new market opportunities and you you're adding some salespeople how quickly are those new services translating into bookings and revenues is that there are you able to flip the switch on those pretty quickly or.
Do they require some lead time, maybe not to the extent of flow, but maybe they require a couple of quarters before those orders start to flow.
Yeah. So I think it depends on the services that we yeah. So for instance, one of the one of the services that we currently have but we're making more.
Robust and we plan to add a bigger ways histology services, that's something that we currently do.
Our partners farmer customers and partners utilize that and that once we roll out the more robust platform probably the next couple of months that that we see on with an immediate impact ex vivo was.
Similar once once we had.
Obviously, the ex vivo platform is not just one assay is going to be multiple classes, but once we had one or two assays that we're ready to go the implementation and the execution was almost immediate one or two quarters. When we when we talk about winning bids for clinical studies.
I think it's just a longer period of time, because we're catching ourself to a clinical trial theres a lot more regulatory hurdles that we have to go through and so there's a lot more.
Ordering and investigating our capabilities and quite frankly, a lot of the company's had previous relationships. So so in that respect we were kind of breaking into new area, whereas in the preclinical space when we add new services and <unk> and a lot of the new service.
Is that we're adding are just biomarker analytes or other ways that we can measure.
Things within cells or expression levels. So those that come off a study offer preclinical study those the those that we will be adding.
We see a much quicker and faster path.
To the commercial ability and revenue.
Understood all right well, thank you for that color.
Thanks, Matt.
There are no additional questions at this time I would like to turn the call back to Roddy Morris for closing remarks.
Great. Thank you. So I guess you know just too.
Summing it up we had a really nice quarter, we continued to be really excited about what's happening it champions oncology we're building.
Off an exciting platform with really exceptional people.
Great Science and we just are excited to to continue this and we look forward to talking to everybody on our next quarterly call and in the meantime, hopefully by the time or next quarter, we call. It comes out the world to being a more stable place. So I appreciate it have a good evening everybody.
And we appreciate you coming on our call. Thank you.
This concludes todays conference you may disconnect your lines at this time. Thank you for your participation.
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