Q4 2019 Earnings Call
as a reminder
This conference call is being recorded today, March 25th. 2020. I'd now like to turn the call over to Jo dikhane, please. Go ahead ma'am.
This is Jody canid lha thank you for participating in today's conference call joining me from biocept or Michael president and chief executive officer and Tim Kennedy senior Vice President of Operations and Chief Financial Officer during this call management will be making a number of forward-looking statements within the meaning of the private Securities litigation Reform Act of 1996. Forward-looking statements include all statements that are not historical facts and generally can be identified by terms such as anticipates estimates believes could expect until late plans potential predicts projects should will would or the negative of those terms forward-looking statements involve known and unknown risks and uncertainties and other factors that may cause actual results performance or achievements to be materially different from those statements as well as performance or achievements that are expressed or implied by the forward-looking statements.
For details about these risks. Please see the company's SEC filings the content of this call contains time-sensitive information that is accurate only as of today, March 25th, 2018 except as required by law by acceptance claims in the obligation to publicly update or revise any information to reflect events or circumstances that occur after this call know. I'd like to turn the call over to Michael know Mike. Thank you Jodi and good afternoon, everyone.
I'm pleased to be reporting our outstanding performance for the fourth quarter and full-year with significant growth in revenues and Commercial samples revenues for the quarter reached a total of 1.8 million dollars up 108% year-over-year and up 17% sequentially commercial test volume for the quarter increased 46% over the prior-year with average reimbursement preparation up 34% importantly our average revenue per patient samples increased as we are reporting on more test for accession ordered by referring Physicians. We also benefited from birth efficiencies that we reduced cost of revenues perk session by 12% versus the fourth quarter of 2018 our results for two for Captain exceptional year in which red screw with each passing quarter reaching five point five million dollars up 70% over 2018 commercial revenues for the year where Five Point 1 million dollars at 68 page.
Increase while commercial sample volume increase 35% throughout 2019 into twenty-twenty our team executed exceptionally. Well across the board our business priorities. Most notably we benefited from a focus on therapeutic segments where our Target selector Technologies and testing platform can help the most patients namely prostate cancer breast and lung cancers are hard-working sales team efforts paid off with exceptions for sales rep to the fourth quarter of 43% from the prior-year our focus on testing project getting tumor cells and prostate cancer was a major contributor to our Revenue growth last year. We call that an early 2018. We identified this as an area where our liquid biopsy testing could add significant value and we launched our product line with only one biomarker.
then in early
2019 we expanded our offerings for urologist with additional prognostic and predicting biomarker test as the year progressed. We gained momentum with new positions or during our services to the first time. I'm more biomarkers ordered for sample and more reordering of test at some positions began using our essays for monitoring disease. We are targeting the more than a hundred fifty larger Ali Tolbert Urology Group practices and the 2400 who are members of those group practices representing a significant growth opportunity urologist are using our tests for men with intermediate grade prostate cancer and are considering whether they need to have more aggressive treatment such as radical prostatectomy or radiation therapy. These patients have a rising PSA and are undergoing off or waiting with Target selector testing determining where the prostate cancer cells are circulating the blood another area, which were ologist are using our testing is for monitoring CTS post-surgery dead.
Is a predictor of cancer recurrence with fuel tools available to Physicians to assess this our tests address as significant means also in urology. We're working with several large physician practices and institutions as well as collecting data in our own internal registry to compile and publish clinical evidence to demonstrate the futility of our liquid biopsy testing platform and prostate cancer in addition. We are continuing enrollment in our cost-efficient study of patients with a rising PSA who have not been diagnosed with prostate cancer. We will compare these results with tissue biopsy. If we show strong concordance, we will then embark on a larger study in this patient population who what could ultimately be a new indication for biocept
We are also leveraging rctc platform and gaining Acceptance in breast cancer. Physicians have begun to use our liquid biopsy testing as a monitoring tool for patients who initially tested not you for the biomarker her to which is commonly treated with herceptin or other anti her to therapies without identifying this biomarker in their tumor a patient will not qualify for her septum thoughts published studies indicate that approximately 20% of patients who initially tested negative for her to will test positive for this biomarker in a subsequent biopsy. We believe that Target selector CTC test is among the most sensitive blood test to use to identify her to amplifications. We are working with Northwestern University Medical Center in Chicago and certain independent investigators did demonstrate the clinical utility of our liquid biopsy a say for her to amplifications and we intend to publish this data on this novel breast cancer offering as soon as next year dead.
Another notable development. Last year was the launch of Target selector in g s lung and breast our first two multi-gene liquid biopsy panels biocept is the only commercial liquid biopsy Vidor a single biomarker testing humor specific panels and CTC analysis the Next Generation sequencing r n g s panels run on the Thermo Fisher Scientific. I am torn it n g s platform are being marketed to Physicians and researchers for the detection and monitoring of actionable biomarkers associated with these tumor-specific cancers. We expect to secure Medicare reimbursement for these tests by Q3. We also gain traction during 2019 with our Target selector research use only or are you okay? It's and are seizures specimen collection tubes. Are are you? Okay? It's our used for the high sensitivity detection of egfr biomarkers and lung cancer and our blood collection tubes allow for the transport of specimens for molecular testing.
throughout the world
Without Refrigeration or special handling this business is on a strong trajectory with customers ordering nearly $108,000 of these products in the fourth quarter up from $5,000 in the first quarter of 2019. We plan to launch our new offerings for other assays in the future including four be wrap and Chaos biomarkers. We were delighted to receive off for a blood collection to be in Sample collection kits last November. These certifications allowed us to Market our collection Technologies in the EU and in other geographies where the ceid Mark is wreckage importantly. This is another significant milestone in our strategy to grow the business and request a brand biocept globally as a leading technology provider in molecular Diagnostics off.
Among notable developments today in 2020. We are now the first and only National Lab with a valid cerebrospinal fluid test for the detection of biomarkers. We begin working this area a 2016 with Columbia University Medical Center to evaluate the clinical utility of our Target selector platform in patients with breast cancer and through a collaboration with a biopharma company for lunch are testing detect biomarkers present and then central nervous system or CNS, which can occur in tumor cells gain access to cerebral spinal fluid Pathways and regrow and distance sites within the spinal cord and brain leading to neurological complications profiling biomarkers is key to Physicians selecting the best treatment option for the 23% Thousand cancer patients and the 25% of lung cancer patients who have metastasized to the brain while very early in our commercial launch neuro-oncologist are enthusiastic about our testing dead.
These are neuro-oncology organizations in North America Europe and Japan with combined membership that is estimated to exceed $1,000 own colleges making this a manageable physician population for our sales team that said we estimate about 90,000 patients with breast or lung cancer live long enough sufficiently sufficiently to develop brain metastases. He's making the promising and rewarding opportunity for BioShock. Also this year. We sign an agreement with a well-respected northern California based independent physician Association or IPA to providing a Target selector testing services to Physicians and patients in their Network today. I'm pleased to announce as second-leading help system Affiliated IPA. This one in Southern California is now under contract with FiOS app.
These are value-based systems or capitated plans under which the healthcare provider is paid a fixed amount by organization to see patients regardless of how many treatments these patients received. We took these capitated plans which include ipas hmos and acos as the trend for health care in the United States are liquid byassee testing provides a solution by delivering cost efficient and deadly quality Care. These are our first major contracts with capitated plans and we expect to announce additional contracts as the year progresses. We continue to present compelling data the further validates our technology at scientific conferences and in peer-reviewed journals earlier this month, we announced the publication of previously reported yet highly compelling clinical data in a journal Clinical Pathology that further validates our Target selector qpcr S8 using patented switch blocker technology to identify cancer-related mutations and liquid biopsy sample dead.
Our study examined 127 clinical assays for mutations commonly associated with cancer down in patients with egfr and K rations.
James each Target selector a say in the study demonstrated extremely high accuracy sensitivity and specificity compared to results obtained from tissue samples showing in ninety-three to ninety-six persuasion coordinates too blinded tissue samples across all assets in February. We announced the promotion of Corey done to senior vice president of commercial operations, Corey joined FiOS in like 2018 as vice president of marketing having previously held leadership positions in the Diagnostics industry. We are exceptionally pleased with chorus performance and building our business including our office in urology. She has our sales team United behind her and as seamlessly assume leadership of our commercial operations in addition to our cash balance at 2019 year-end off of raised combined net proceeds of approximately 17 and 1/2 million dollars in twenty-twenty through two back-to-back financing and warrant conversions. We are thankful to a completed the financing suck.
At the market pricing and with no warrants are reviewing our cash position. You can see these funds where needed to strengthen our balance sheet and support our growth initiatives. We believe we now have sufficient cash to age out on our growth strategy through the end of 2020 is the final topic. I'd like to address an issue many of you have raised regarding our role and testing for Coronavirus biocept along with other companies was listed in a recent article as having the potential to offer such testing. Although we qualify to perform this test in our clia-certified high-complexity lab and we are evaluating different options regarding coronavirus testing. We remain focused on helping patients diagnosed with cancer on March 11th, 2020 the World Health Organization declared the novel strain of coronavirus a global pandemic and recommended containment and mitigation measures worldwide in addition as we are located in California. We are currently under wage.
Shelter-in-place mandate and many of our clients worldwide are similarly impacted as a healthcare provider. We are allowed to remain open in compliance with the shelter-in-place Mandate. I can you to provide critical information for patients diagnosed with cancer have read the global outbreak of the covid-19 coronavirus continues to rapidly evolve and the extent to which the covid-19 may impact our business will depend on future developments which are highly uncertain and cannot be predicted with confidence among these uncertainties are the ultimate Geographic spread of the disease off the duration of the outbreak travel restrictions and social distancing in the other countries is Mis coll or business directions and the effectiveness of actions taken in the US and other countries may contain and treat the disease why we were still receiving specimens from clients on a daily basis. We anticipate a potential slowdown in volume as many clinic visits are being rescheduled and along
We are continuing to vigilantly monitor the situation with our primary focus on the health and safety of our employees while providing cutting-edge services to our clients and with that, I'll turn the call over to Tim Kennedy to review our financial results Tim. Thanks Mike and good afternoon. Everyone has Mike mentioned 4 to 4:15. We reported revenues of 1.8 million compared with $859,000 in Q4 2018.
This increase of 108% is due to higher accession volumes and an increase in reporting on more test for accession ordered by referring doctor wage revenues were up 17% sequentially from the 1.5 million reported in Q3 2019.
Commercial reimbursement based on historical mix and test session billed increased in Q4 to the $1,400 range from the $1,100 range in the prior-year.
Increase was predominantly due to more reported biomarkers her accession. We continue to launch new assays and improve upon operational processes leading to increased testing capabilities and physician Lottery.
Thank you for 2019 we received 1404 total accessions up 35% versus 1043 total exception in Q4 2018.
Commercial volume into for 2019 was 1159 up 46% compared with 795 into for 2018.
And it's Mike mentioned. Our commercial strategy is focused on physician Specialties and specific market segments where we see significant opportunity for liquid biopsy, testing our execution on the strategy is driving full growth and testing volume.
Cost of revenue for Q4 2019 as a percentage of revenues improved 122%
Total cost of revenues was 2.9 Million up 18% compared with the prior year. Again. This 18% increase in cost of revenues is on a 108% increase in revenues cost of revenues on a per-session basis was down 12% after declining 23% in the third quarter of 2019 as we continue to leverage the fixed components of costs with higher-volume while variable cost benefit from improvements. We are making to our processes and workflow.
In 2019, we implemented Automation in our laboratory, which we believe led to further leveraging of our fixed costs as we focus on our goal positive gross margin.
We anticipate being able to provide incremental laboratory capacity at minimal expense to accommodate higher volumes.
R&D expenses where 1.2 million during the fourth quarter of 2019 compared with 1.3 million during the fourth quarter of 2018.
The slight decline was due to lower expenses allocated to R&D associated with validations of new assays and clear.
G&A expenses for 200 2019 or 1.9 million an increase of $279,000 versus Q4 2018 Dodge to a r e class of customer service and related expenses from sales and marketing to GNA. However G&A expenses as a percentage of wage is improved one hundred and 7% the Q4 2019 compared with 190% in Q4 2018.
Sales and marketing expenses for Q4 2019 where 1.5 million compared with one point four million two hundred 2018. The increase was primarily attributable to commissions paid for higher sample volume and revenues.
As a percentage of Revenue sales and marketing expenses in Q4 2019 Arrow to 83% versus 168% a year ago dodging increased marketing costs related to the launch of new test.
Our sales force productivity continues to improve due to the changes. We have made with our commercial strategy up 43% versus the prior-year. Dead.
Are pleased to report that with tightly controlling expenses and growing revenues the net loss for the fourth quarter of 2019 is down $279,000 for nearly 5% versus the prior-year. Org.
More specifically the net loss attributable to Common shareholders for the fourth quarter of 2019 was 5.7 million or Twenty cents per share thoughts on 29.1 million weighted average stairs outstanding.
This Compares with a net loss attributable common shareholders for the fourth quarter of 2018 of six million or a dollar forty $3 per share on four point six million weighted average shares outstanding and as a reminder, we conducted a 1 / 30 reverse stock split of our outstanding come stock in July 2018.
Now turning to our results for the 12 months ended December 31st, 2019.
Revenues for 2019 increased 70% to 5.5 million from 3.3 million for 2018. The increase is attributable to suck wrong execution commercial and operations teams from q1 to Q4 2019 commercial Revenue grew nearly 63% from 976000 Q one to one point six million in Q4.
In 2019. We received 4425 commercial accession up 35% from $3,273 in 2018.
As was the case for the fourth quarter our full-year increase reflects our commercial strategy focused on certain positions Specialties and specific Market segment.
Cost of revenues for 2019 was 11 million compared with 10.1 million.
For 2018 while cost of revenues increased 9% total accession volume received increased by 29% of R&D expenses for 2019. We're four point seven million G&A expenses were seven million and sales and marketing expense Thursday. We're 5.9 million.
The net loss for 2019 was 25.3 Million inclusive of a non-cash expense of $2 million which includes thoughts and doucement. The net loss per share was $1.22 on 20.7 million weighted average shares outstanding.
This Compares with a net loss for 2018 of 25.2 million.
The net loss per share was $9.01 with about 2.8 million weighted average shares outstanding.
Cash and cash equivalents were 9.3 million as of December 31st 2019 compared with 3.4 million as of December 31st, 2018. This includes twenty five point seven million in net proceeds from Equity Capital raises in the first and fourth quarters of 2019 and 4.9 million from the exercise common stock warrants during 2019.
Additionally is Mike noted during the first quarter of 2020. We raised net proceeds of approximately 14.6 million from to register direct offerings and 2.9 Million from the exercise words. And with that now turn the call back over to Mike for an overview of our commercial progress off.
Thank you, Tim. And thank you for your leadership. Continually every day. We are increasing adoption of our patented proprietary liquid biopsy tests with our broad offering unless in a cost-effective solutions to help Physicians determine the best treatment Pathways for their patients with cancer. We haven't tested approximately twenty-three thousand patient samples with our proprietary biomarker assets. These assays are based on our differentiated platforms The Leverage information from both cpcs and ctdna in Blood and now cerebrospinal we continue to generate clinical evidence that supports the high sensitivity and specificity of our biomarker a say in addition to significantly improving volume and revenues off managing expenses. We are focused on expanding opportunities where we can leverage the investment in our intellectual property all with the goal to enhance shareholder value wage.
In closing I'd like to summarize our corporate priorities for 2020.
These include increasing Market penetration into the emerging liquid biopsy filled with a focus on neuro-oncology Urology breast and lung cancer treatment segments growing sales Mark Target selector liquid biopsy kids and our seizure blood collection tubes increasing Market penetration of our Target selector n g s luggage channels under our collaboration with Thermo Fisher and securing Medicare coverage for these panels monetizing data from over 20 thousand patient samples, utilizing artificial intelligence AI entering into additional strategic commercial and Technology Partnerships, both Global and domestic signing in third-party Health Plan agreements, including Capital plans and expanding our relationship with Blue Cross Blue Shield publishing clinical case studies and presenting data at scientific conferences that further validate our Target selector wage.
and launching additional assays
importantly with the proceeds from our recent fundraises. We have sufficient Capital to execute on these strategies. I'd like to thank our entire team at biocell for their very hard work and dedication long as we strive to make 20/20 another highly productive year and with that overview. We're now ready to take questions operator ladies and gentlemen, if you wish to ask a question about today's call you will need to press star then the number one on your telephone if your question has been answered and you wish to withdraw your request you may do so by pressing start. If you are using a speaker phone, please pick up your handset before entering your request and speaking on the call. One moment, please for the first question.
Operator while we're waiting for that first question. I'd like to once again thank our investors for their confidence and their enthusiasm for Innovative offers.
Our first question comes from Jason McCarthy with Maxim group, please go ahead.
Hey guys. I know Jason Jason and I just first off I just want to say congratulations on a great quarter really great year overall.
So, you know overnight over 2019 you posted pretty impressive growth and it really seemed like the turnaround story is progressing from the lull in 2018 and over continue real life span of your product offerings with the NGS panels the focusing on prostate cancer and in power as well as adding commercial agreement. So what I'd like to gauge from you is that what really were the the drivers for that brought in 2019. Was it more increase in the product offerings or increasing penetration of previously available products? And what do you expect to drive growth going forward?
Thank you Jason. I like the question, you know as we talked a little bit in the prepared remarks one of the big growth drivers in 2019 was our focus in Rolla G. And that's a concept that Corey had led when she came over here to biocept and it was very successful in for us. You know, as we started to expand did not see for prostate cancer and keep in mind. These are still folks diagnosed with cancer. There was a real need on the to be able to help these patients who had these indeterminate grade cancers that they weren't quite sure what they wanted to treat more aggressively or not. And so our test was a perfect fit there and we've gotten some good adoption with our targeted approach in addition. We have seen growth in our medical oncology segment two in a specially in breast cancer so that I think those two pieces have really what's Driven most of the growth for 20 20, what we're really excited about is the neuro-oncology segment now with cerebral spinal fluid wage.
To the market we have to ourselves.
At this point and these folks are very excited about our new offering in CSF because there's really not a good alternative for that and they really want to be able to test the flash that's closest to the most aggressive part of the tumor, which is the part that's metastasized to the brain or central nervous system.
Thank you. And then actually on the Urology side I'd like to to see what is the what is the competitive advantage of a bios liquid biopsies versus the other option that makes a particularly attractive in this market?
Oh, well the big differentiator and that's a great question is our focus on circulating tumor cells our ability to capture circulating tumor cells most other liquid biopsy. Some folks have heard presentations before are pretty much focused on Cell free DNA now, we also look at cell free DNA that's good. It's a great source to get materials. But there you just looking for the biomarkers for treatment Jason when I'm looking at the cells themselves that's good information to know in itself. Are there cancer cells being shut off into the bloodstream, not every patient has that and so if they don't those are probably good candidates to watch late if they do have ctcs being said that cancer is maybe more aggressive than you want to treat it more aggressive. And so that's how the positions are using it and that's the big differential for us in that space versus areas where it's just really on the biomarkers only like lung cancer.
Thank you. And then one more for me and then I'll hop back in 2 Q. So in Q4, right your cost it goes went down on a procession basis and sequentially was all relatively flat on an absolute basis. So I'd like to get a bit more color on one of the factors contributing to your more efficient costs of goods.
Well, I need to let Tim give you most of the detail there. I would just say that that was real focus and continues to be a focus of the company. We have brought in a lot of automation wage and that's under terms of leadership. And that's really paid off. But Tim, do you want to add a little bit more color to that?
Yeah, I think you hit the nail on the head there Mike and and Jason good observation there as as I mentioned in my prepared remarks, we do expect to be able to continue to leverage the six components of cost. And the way we're doing that is bringing up additional automation off like we did in 2019 at the end the 2019 and will continue to bring up automation as we move forward and anticipate that long as we in order to accommodate additional volume growth. We believe that will be able to do so without adding a significant labor to our expenses. So the variable costs associated with consumables, you'll see that expense obviously moved as our volume moves, but of course dead.
you know as our
Oh you Rose we will come in higher and higher discounts from vendors that we purchase consumables from. So, uh that costs on a on a variable base wage should also go down but Mike's absolutely right automation is what is allowing us to basically scale and accommodate volume down with with minimal cost being added to cost of Revenue.
All right. Thank you for taking the questions and again congrats on a great quarter.
Thanks, Jason. Thanks for your support.
Again, if you have a question, please press * then 1 the next question is from John with Scotiabank, please go ahead.
Hello, thank you for giving me the floor. I work for Scotiabank, but I invest for myself. Thank you. So if you are getting me very well. I thank you very much. I'm not really uh a very good and very strong financial report for the 2019. Congratulations. Thank you. So my question I understand very well if you have been involved in coronavirus testing because currently we have all wide emergency which box has also uh, so the suggestion for everyone currently in imagines American and worldwide month. We would like to to hear clearly. If really there will be a coronavirus tests taken question. I would like to know because currently
You may lose not that compliance very soon because the stock is trading under adult. Are you reversing stock or you have a strategy of non reversing stroke stroke? And then in the compliance, what do you say on these questions? Otherwise, really? I thank you very much. And uh, I appreciate being in this conference call and I like by yourself, but I would like to suck so the points on those two questions. Thank you.
Yeah, thank you John for the question. You know, it's a common question and we often get investors calling in to ask about coronavirus at this point. Of course is the top of everyone's mind throughout the world agree with your sentiment there, you know, as I mentioned in my prepared remarks the company today has made no public statements about performing coronavirus testing other than what they are today and that you know, we are a high complexity molecular laboratory with the appropriately trained staff and the required certifications to be able to perform such testing at this point. The most that we're sharing is that we're evaluating different options and we'll have more information perhaps about that going forward. So, you know, other than that, that's all that we can say at this point about that as far as the stock price. Yes. We're familiar with that and you know, they're NASDAQ does have various mechanisms to extend wage.
runway in order to address that
And we're we're evaluating the best options for the company. You know, we've we have are in good standing with NASDAQ that's important wage goes up to him and the team and our attorneys do a great job making sure we're always in compliance there. And so we have a good relationship. So at this point we don't have any Public Announcement about any plans for a reverse split but investors should know that we aren't asleep at the wheel and very much actively involved in in that Arena.
This concludes our question-and-answer session. I would like to turn the conference back over to Mike know for any closing remarks.
Well, thank you all very much, and so on behalf of our board of directors and our hard-working team at biocept. I want it. Once again, thank everyone for participating on today's call and for your interest in our office. We are excited about our progress and look forward to providing an update on our next conference call. We report our first quarter 2020 Financial results in May. Thank you everybody and have a great day. And please stay healthy and safe. Thanks. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
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