Q3 2020 Precipio Inc Earnings Call
Good day and welcome to the Precipio quarterly shareholder update call all participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by the rail.
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Statements made during this call contain forward looking statements about our business.
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The team, which.
Which is on file with the Securities and Exchange Commission. It's one of the other risks detailed in our subsequent filings with the Securities and Exchange Commission. The reports are available at Www Dot that's easy Dot GAAP statements and information, including forward looking statements speak only to the day. They are provided on the last earlier data indicated.
We do not undertake any obligation to publicly update any statements or information include including these forward looking statements whether as a result of new information future events or otherwise except as required by law now let me hand, the call the over to E. on Danieli Precipio CEO. Please go ahead Sir.
Thank you very much good evening, everyone I'd like to thank you all for joining our Q3 2020 shareholder call.
During this call I'll provide the business update on the progress of our company of made and what we expect to see in terms of development in the near future.
This will be on last shareholder call from 2020, well also added with the few words on how we see the seer wrapping up okay. We can expect to see for next year.
Let me begin with a recap of our quarterly reports on form 10-Q. The was filed at the end of last week. As you saw we made great progress in our core business. The dog is obviously one of the top line almost threefold from 2.6 million in Q3 of last year to 1.69 in this recent quarter.
Just to bring the number the life of the first nine months of 2019, we adjusted slightly under 1200 patient cases, whereas on the same nine month period in 2020, we already eclipse. The 2500 still have skewed sports are complete.
This equates to an average of 16 cases per day up from west of eight per day.
Our customer count of more than doubled during this time with repeat customers increasing proportionally as well.
What was the additional case volume translates into increasing staffing needs. We're also starting to see the economies of scale of operations of.
The first line loved the chart 2019, our gross margin went from essentially zero to 20%. So the say nine months and 2020, it's great to start seeing the impact of our focus on growing the top line, while keeping up the kenai on the costs and improving efficiencies the produce the jump in gross margin.
As we moved from Q4 Evans of 2021, we predict lot of operation metrics to continue the yield improvements overall, our business growth will continue to generate gross profit, reducing our dependence on the external channel.
Now, let's move to our product side.
We continued to make great progress, while the two flagship product I'd be so it seems great.
Right. So we've now launched the beta site of our new I just told me the in labs in the U.S. in Europe and the initial results are very promising.
Isn't surprising since we've been using the meat and on a whole lot of for several years now no.
No. The we're not only of the that's the inventor of Ivy. So but also the user of this product allows gives us the credibility needed GAAP discussions with some of the most prominent labs in the world.
This credibility and our own experience is the key factor in building customer confidence and staring. These labs from moving away from the part of that used for years to try our products.
The sports I'd also like to recognize the bank or partner pardon or Ats biotech, who have done a terrific job of bringing us into some of their customers. So they didn't this phase of testing of our products.
We hope to achieve two important outcomes from this the benefits number one is getting new customers. These laboratories, we'll see the benefit of the body, so as compared to the existing product and the dog.
Our net.
The true well good reputable reference points.
As mentioned before this is the small industry one of those each other and getting the thumbs up from some of these reputable on highly regarded laboratories as our customers will be in the media door opener to many other customers.
As we continue to make progress we will share of that probably most of the public including the completion of the testing phase of the Onboarding of New labs, who will begin the everything Ive yourself.
On the same screen, we continue the making strong progress on boarding more customers. Just this week, we completed training of several new customers in our lab and how the strong pipeline. So this next quarter.
<unk> based builds we will begin to see the impact of the high margin recurring revenue business.
Operationally by the end of this year, we will complete the building of our entire backbone to support the product side of our business from manufacturing supply chain inventory management and the complete online ordering system, making it easy for our customers to manage the ordered the products.
We're also working on several strategic partnerships to broaden our reach team screen of heap screen to community oncologists nationwide.
What does this mean for the company strategically and financially.
From a strategy perspective, we continue the more data points the proof that our model works. We are corp. All the services business, which provides superior diagnostic services to our customers and to their patients.
We are operating a lot of we're pretty much of the weaknesses of the card products used by labs, and we've levers on knowledge and expertise to create competing technologies after.
After testing these proprietary technologies extensively in our lab essentially becoming the first customer to use the clinically.
We can then move to commercialize those technologies into products.
So we moved from laboratory services, the identification of new technologies to the conversion of those technologies integral part of your product then purchased by other labs.
Most of the business are key to our growth and success on.
Pathology services, or where we create immense value physicians and the patients what's the.
Writing a uniquely highly qualified high quality service focused on diagnostic accuracy.
The laboratory, we put on the surface. It is also a playground of sorts from.
R&D team to create new technologies.
From a financial perspective, the but all of the surface is what we'll pay the bills, but the high margin products or what the really grow the top and bottom line of the company.
Now, let's move to discuss our covert project.
I'd first like the again reemphasize the cold, but it's not part of our core business.
However, the major opportunity the hardest the technology of the test, we have and bring it to market.
I'm pleased to announce today that we have completed the studies necessary to file with the FDA for both the point of care testing as well as the alcohol.
As we stated before we kinda public to share the results of the studies or the the process of approval with the FDA.
However, it is our view of the study results and our products meet the threshold of level of scrutiny. We believe the upgrade requires for approval.
Those of you who have been following the news this week the F. day provided the first the way for out of home virus. The test kits. This.
This is not of competing product of ours. The kit that we see the <unk> test for the presence of the virus, whereas our product test of the presence of antibodies developed after the person has been affected the with the virus.
This is the however, very exciting and promising development for us.
I think there's clear consensus on the need to expand the testing market beyond laboratories, the medical facilities to enable people to take the test with of the safety of their home.
The Big question was how long would it take for the S. The eight the gets comfortable with the notion of I'm trained individuals come back from the past themselves.
This week the non smoking clearly indicates that the S. day is ready to take that important steps forward.
As of today yesterday has approved the only one antibody test from point of carriers and has not yet approved any antibody test for at home.
Some of you may have seen the recent announcement by Costco for a rapid test if you read the details. However, it turns out this the big sample collection kits, which doesn't get sense of the lab, which would result of perceived to the three days later. So this is neither on the at home.
Nor is it at least in our opinion given it takes to the two days to get the results wrapping.
I do appreciate that it's very easy to get confused with all of these different products on definitions, particularly when it's surrounded by this time debt.
Well first of the was raised was one of the point of care of testing essentially eat into the in the lab business and I would tend to agree with that notion of after all if the doctor can do the test in the office and get immediate results why from the two up from.
From our perspective, we actually prefer and welcome back Mark.
First of all it's better patient care.
Second the basically reduces our operations to selling the kits as opposed to distributors of the customers, having fluctuates collected shipped back to our lab, where we didn't need to have an entire operation to perceive the store samples run the test on the poor results to our customers.
The financial the margin strongly favorite of the sale of cash so point of care versus running in the lab operation.
The graphic on the first the way by the yesterday for the on home Cold virus test as an exciting support it the strong signal of the asterias recognition of the need to make these tests available to the masses, although it's impossible to predict the time line required by the FDA to review the book to complete the review of our results. We believe that is within our reach.
And then our product produced the strong results and are the right fit for the public health needs.
Some of you asked whether the president of vaccine will lead the our test on necessary [noise] first.
First let me say that in our opinion, we are at least six months away from full deployment deployment of the vaccine to the broad population.
Secondly, the vaccine is intended to generate of response of the body that will cause our immune system to the belt antibodies.
Well, we know the vaccine the successful how will we know of anti bodies have developed and how are we how long will the vaccines. The sex last all those questions will be after the true an antibody test.
We believe there's still a huge potential for the stuff and the the availability of the vaccine doesn't have the the opportunity in fact, we believe the presence of the vaccine will generate increased demand for ongoing testing to ensure the the person. Indeed still has the of the body on the the vaccine is still affected.
A recent smart comment from one of our shareholders also suggested.
That's the antibody tests can be use of the screening for vaccine eligibility the.
The rationale behind this idea is that given the there was the limited vaccine production and huge demand to the extent the person has already been infected with the virus and have the though the body they are less likely to need the vaccine.
The very interesting idea the will undoubtedly be explored the of the vaccine becomes available.
In summary, what does the next year holds for us and the reviewing the various areas our business here's what we expect to see.
The the pathology services, we expect to continue to see rapid growth and steady increase in margin to get our business the cash flow breakeven.
Right. So we expect to see the completion of the date of study on the adoption of the media by several prominent labs, followed by global Rollouts with our partner a the s. biotech.
The need of business would be a nice growing recurring revenue high margin business. The we anticipate the generate significant contributions to the bottom line.
Perhaps we anticipate building the large customer base of physician office laboratories, who will adopt the heap screen platform.
This will give us an installed based oncology sites all running our reagent assays.
The major rental program is a four year committing the plan during the song strong margin on an expected projected and growing cash flow for the business.
With the expected to sell some of these businesses, we would see a substantial positive financial impact for our company on the gradual reduction of reliance on outside sources of capital.
We believe it's within our reach the approach breakeven we have the team the strategy of products and the market demand for those products.
For a company outside of our size of 60, or so employees, we've got a lot going on the.
Price of any challenges our society and our economy of phase. This year Weve demonstrated that were strong enough to weather the storm and actually we showed the best our best growth results in our company's history. So far.
As many companies reinvent themselves the figure out of their business Bob on strategy. So of we and I think we have this year of poised for dramatic step for us in 2021.
I very much look forward to sharing.
With all of you our successes.
I want to thank everyone for your ongoing support and wish you on your family's health and safety and the happy holiday season, how the nice evening. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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