Q4 2020 Biocept Inc Earnings Call
Pardon me the Bios up conference call. The start momentarily the biotech conference call will start momentarily. Thank you for your patience.
[music].
Good day and welcome to the bio SAP fourth quarter financial results Conference call all participants will be in a listen only mode.
Need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation there'll be an opportunity to ask questions.
The ask a question you May press Star then one on your telephone keypad withdraw. Your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Jody Cain. Please go ahead ma'am.
This is Jody Cain with L. A true. Thank you for participating in the today's conference call. Joining me from bio sector of Michael Nall, President and Chief Executive Officer, Tim Kennedy, Chief Operating Officer, and Chief Financial Officer, and Dr. Michael Dougan, Senior Vice President Chief Medical Officer and.
Medical director during this call management will be making a number of forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 forward. Looking statements include all statements that are not historical facts and generally can be identified by the terms such as the anticipates estimates.
<unk> believes could expects intend may plan potential predict project should well would or the negative of those terms for looking statements involve known and unknown risks uncertainties and the other factors that may cause actual results performance or achievements because even the.
Clearly different from those statements as well as performance or achievements that are implied by the forward looking statements in particular, there of significant uncertainty about the duration severity and contemplates the impact of the COVID-19 pandemic. This means results could change at any time and the contemplated impact of cash.
For 19, I Bios of operations financial results and outlook is the best estimate based on the information for today's discussion 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 29, 2021, except as required by law Bios of disclaims any obligation to publicly update or revise any information to reflect the events or circumstances that occur after this call.
Now I'd like to turn the call over to Michael now Mike.
Thank you Jody and good afternoon, everyone I'm looking forward to sharing both of our results for 2020 and details about our exciting neuro oncology strategy in today's call, but first I want to say that I'm exceptionally proud of our entire of bioshock team for their enthusiasm and dedication and support.
The COVID-19 testing needs of our community while at the same time advancing our oncology business for a strong post pandemic future.
<unk> began offering COVID-19 testing in June 2020, we have received more than 300000 samples, including about 140 thousands of samples during the fourth quarter.
Even with the relocation of our corporate headquarters and CLIA Laboratory in December we provided the vast majority of COVID-19 test results to health providers within 48 hours from sample collection.
Our team's success in providing COVID-19 testing as reflected in our financial results.
For the fourth quarter revenues reached a record $18 $5 million and we reported our first ever profitable quarter.
For the full year of 2020, we generated record revenues of $27 $5 million.
It's highly gratifying to report that our team achieved these results while continuing to provide excellent service to both our core oncology and COVID-19 customers.
The higher revenues in recent quarters has had the added benefit of the significantly reducing our cash burn.
This allowed us to dedicate more financial resources to our oncology business in particular, our new focus on neuro oncology as we build for a strong post Covid era.
We have a significant opportunity to serve patients with advanced cancer through our differentiated neuro oncology testing offerings, our proprietary cerebral spinal fluid or CSF assay launched in 2020 is the first liquid biopsy intended to diagnose involvement of cancer in the central nervous system.
We identified this opportunity from the findings of the collaborative study with a Biopharma company, which we announced in 2016 and presented data in 2018.
You May recall, we took a major step with our neuro oncology offering early last year with the commercial launch and availability of our targets electric CSF assay, specifically for advanced lung and breast cancer.
Later in the year, we presented highly favorable results from pilot studies with this assay at three different scientific meetings.
This year, we will be expanding our test capability and related clinical studies in the cerebral spinal fluid.
Our CSF testing has distinct advantages in that unlike the current standard of care of CSF cytology. Our assay provides enhanced sensitivity while also generating quantitative results in.
In the pilot studies I mentioned, our assay proved to be more informative than CSF cytology alone.
In addition, our assay has the added the advantages of identifying Asheville molecular targets that provide physicians with valuable information for treatment decisions as well as quantitative reporting for monitoring and treatment response and disease progression.
Our CSF assay addresses a high unmet clinical need as 10% to 30% of adult patients with cancer, depending on the type well developed brain metastases and while this is the niche area. Currently it represents a significant market opportunity that we estimate at more than $1 billion annually.
We are pursuing a pathway to designate our CSF assay as the standard of care for the gold standard for diagnosing cancer involvement with the central nervous system Dr.
Dr. Michael Dougan will discuss our neuro oncology strategy later on today's call.
Turning now to COVID-19 since last June we have received more than 300000 samples for testing at our CLIA lab with an average payment of between 101 hundred $20 per sample.
I am proud of our team's ability to accommodate this unprecedented growth in lab testing volume as we now are receiving several thousands of samples on some days the.
The work we have done the scale includes adopting automation technologies throughout our processes all of which will be helpful to our long term oncology business. In addition to the current high volume of Covid testing.
In regards to our collaboration with the G of Biotechnologies earlier. This month after successfully developing our next generation COVID-19 assay, we announced the supply agreement under which the G is providing us with the kids for validation and commercialization in our lab. This next generation COVID-19 assay was developed using the patented switch blocker technology.
That is jointly owned by <unk> Energia, which is the same technology that is the basis for many of our ultra sensitive oncology assays.
Our current COVID-19, RT PCR testing provides qualitative results only meaning the sample easy there positive or negative the new co developed assay has the advantage of distinguishing various strains of the virus, while providing quantitative viral load results.
Health care providers can use this quantitative assay to monitor viral load over time in order to determine when a patient of resident student or employee can safely return to the general population.
This new assay can also be modified to detect new variance of the Sars COVID-19 two virus as they emerge.
Many of you have asked about our expectations for COVID-19 testing going forward, particularly as the vaccines rollout.
We saw tremendous growth after initiating this testing in June our testing volume is currently running at approximately 10 to 11000 samples per week as we are providing these testing services the skilled nursing centers colleges and other organizations with repeat business. Our current expectation is for meaningful volume and revenues throughout 2021.
The $5 million.
This was a significant increase from $1 8 million in Q4, 2019 and is primarily due to COVID-19 testing.
These revenues included $18 3 million in commercial test revenue, including $17 6 million.
<unk> the COVID-19 testing.
In Q4 2020.
We received 145129 total exceptions, a significant increase from 1400 for total accessions in Q4 of 2019.
Commercial volume in Q4 2020 was 144932.
Total cost of revenues were $10 million compared with $2 9 million for the prior year period, primarily due to COVID-19 related collection kits and consumable expenses.
R&D expenses for the fourth quarters of 2020, and 2019 were relatively flat at $1 2 million.
G&A expenses for Q4, 2020 were $3 1 million versus $1 9 million in Q4 2019 with the increase primarily due to head count additions to handle COVID-19 related activities as well as consulting expenses.
Sales and marketing expenses were $2 2 million compared with $1 5 million in the prior year period as the result of increased sales commissions due to higher revenues.
In Q4, 2019, we recorded a noncash deemed dividend of $22000 for the repricing of adjustable warrants.
There was no comparable dividend.
Deemed dividend in Q4 of 2020.
As Mike stated, we reported our first ever profitable quarter with net income of $1 9 million or <unk> 14 per share on $13 six millions of diluted weighted average shares outstanding.
This compares with the net loss for the fourth quarter of 2019 of $5 7 million or $1 97 per share on $2 9 million weighted average shares outstanding.
Our weighted average share count.
Flex the one for 10 reverse split of implemented in September 2020.
Turning to our 2020 full year financial results.
Revenues for 2020 were $27 5 million and this compares with $5 5 million for 2019 again with the increase due to COVID-19 testing.
Cost of revenues for 2020 were $21 3 million R&D expenses were $5 2 million G&A expenses were $10 million and sales and marketing expenses were $6 4 million.
The net loss for 2020 was $17 8 million or $1 50.
Per share on 11 8 million weighted average shares outstanding this compared with a net loss for 2019 of $25 3 million or $12 23 per share on $2 1 million weighted average shares outstanding.
Cash and cash equivalents as of December 31, 2020 were $14 4 million compared with $9 3 million as of December 31, 2019.
In 2020, as a result of robust sales and anticipated demand for COVID-19 testing, we increase consumable inventory by $1 2 million and grew accounts receivable by $10 6 million.
Due to the increase in revenues from COVID-19 testing, we have reduced our burn rate, while also investing in our neuro oncology strategy.
We reduced our cash usage.
The operating activities in 2020 by approximately 14% compared with 2019.
Based on historical and planned cash usage, we believe our current cash position and revenue generation will support our business through most of 2021.
However, with the uncertainty introduced by COVID-19 on revenues and collections, our cash runway maybe shorter.
We completed the move to our new headquarters in the lab facility in December.
This transition was completed with minimal impact the customers.
Our new building is designed to meet our commercial development and administrative needs, while reducing rent expense and other facility costs by approximately 20% annually.
As the final note among our near term growth goals with our CSF assay is the work with the FDA and Medicare the gain high value reimbursement for quantitative detection of tumor cells in the CSF.
This is in addition to our existing reimbursement for molecular biomarkers used to make treatment decisions, which averages about $700 per specimen.
With that I'll now turn the call over to Dr. Michael Dougan to provide an overview of our neuro oncology strategy Michael.
Thanks, Tim and thank you to our participating audience.
Following Mike's introduction of the topic, we were delighted to discuss our neuro oncology strategy and specifically our expanded efforts to help patients with cancers that involve the brain and spinal cord together known as the central nervous system or CNS.
Our goal is to establish a new standard of care for the diagnosis of suspected intracranial metastasis, using bio subs quantitative tumor cell assay in cerebral spinal fluid or CSF.
We are also working to establish our CSF assay as a new standard of care for monitoring and treatment response in patients with cancer involving the central nervous system.
This is an area of high unmet medical need as current diagnostic tools are often inadequate for determining tumor involvement and assessing therapy response in a timely manner. These.
These patients do not have time to waste on an accurate diagnostic tests.
Overall survival expectancy with Raymond tests of this is low and many of these patients are not recognized early enough for therapeutic intervention.
However, the use of newer targeted therapies for lung and breast cancer patients with intracranial metastasis can often extend survival for a year or more resolving symptoms and substantially improving the quality of life.
Similar improvements have been seen in melanoma and some other solid tumors.
Survival for several years post treatment is now possible with these amazing therapeutic advances.
As Mike mentioned, the current standard of care for diagnosing central nervous system involvement is microscopic evaluation of the cerebral spinal fluid by pathologists. This common diagnostic procedure is known as CSF psychology.
However, CSS cytology has limited sensitivity for detecting brain metastasis and is imprecise.
This method can often show false negative or indeterminate results due to limited cellular already sometimes forcing oncologist to make repeated lumbar puncture or spinal tap procedures in an attempt to confirm the diagnosis of.
Additionally, CSF cytology is reported in a qualitative fashion typically is positive negative or indeterminate for the presence or absence of cancer cells with no. Additional information provided about molecular biomarkers that can be used to help make better therapy choices.
Such CSF cytology has significant limitations as the.
The clinical diagnostic tool and is widely recognized as an imperfect standard of care.
The current clinical oncology care guidelines from the National comprehensive cancer network or in CCM reflect this inadequacy recommending the CSF cytology be attempted up to three times to establish a diagnosis when central nervous system involvement of suspected.
Our quantitative tumor cell detection assay in cerebral spinal fluid addresses the unmet need and addresses three key questions for physicians directing the care of patients with suspected intracranial metastases.
Is there a tumor.
Is there a target for treatment and is there a trend showing treatment response for treatment failure.
Let's consider these three clinical indications for use of our assay for.
First is their tumor.
Data from a pilot study showed that our CSF assay was positive and 78% of lung cancer patients with clinically suspected intracranial metastasis following the involving the membranous the lining of the brain and spinal cord or left on <unk>, which are difficult to identify radiological.
In the same patient group CSF cytology showed a positive rate of only 55% and an indeterminate rate of 15%.
With this observed performance art assay could avoid the need for repeat lumbar punctures that may be necessary to make the diagnosis of cancer involvement with the CSF cytology alone.
Second is there a target for treatment of our CSF Etsy can identify actionable molecular biomarker targets the informed clinical decisions as mentioned before patients with metastatic cancer involving the central nervous system are now living significantly longer due to many advances in treatment, particularly with new targeted therapy, some of which can cross the blood.
The barrier.
Timely confirmation on the central nervous system involvement in appropriate early treatment selection can lead to significantly better survival and a marked reduction of neurologic symptoms, such as headaches, nausea impaired mobility or visual loss.
And the third question to be answered is there a trend, indicating therapy response or failure.
As mentioned conventional methods such as CFO of cytology are imprecise on that very sensitive.
Radiologic imaging by MRI is similarly limited and impractical to perform frequently leaving oncologists in the dark about therapy response.
In contrast, the quantity of the quantitative cell count and molecular Biomarkers provided by our CSF assay can be used to identify early trends on therapy response.
In collaboration with several leading neuro oncologists and other oncologists, who are treating these patients. We have observed marked changes in the tumor cell counts ranging from tens of thousands of sales per CSF sample to extremely few or even no cells in patients treated with targeted therapies.
Such responses have been observed over just a few weeks of treatment informing care decisions long before additional radiologic imaging has performed.
We have also observed durable responses to treatment with declining sell accounts lasting for several months, even when repeated CSF cytology was not informative.
In contrast, increasing sell accounts have been observed for the treatment is discontinued demonstrating the potential value of the CSF assay and more quickly identify and disease progression or drug resistance.
The current clients of our CSF assay, our neuro oncologist thoracic oncologists and breadth of oncologists.
We are pleased to have already gained substantial interest among these experts physicians from nearly two dozen leading academic institutions across the country of ordered our CSF out the mini becoming frequent repeat users.
Our CSF assay represents a small but growing portion of our current oncology business and we anticipate continued volume gains throughout 2021 building on our early adopter experience.
Among our initiatives this year will be the initiation of the pivotal larger clinical trial involving many leading neuro oncologists in lung breast of oncologists at these institutions.
We are working to expand our CSF testing menu to include more tumor types of more biomarkers.
Our primary clinical development goal is to establish our CSF assay as a new standard of care for diagnosing and monitoring metastatic cancers of involving the central nervous system.
With this goal in mind, we have designed clinical studies continue to produce publications that influence national oncology care guidelines by 2023.
To help us achieve this goal we have spoken with dozens of academic oncologists neuro oncologist and created a steering committee of key opinion leaders from major institutions, including Northwestern University of Stanford University, and the state University and the St. John's Cancer Institute or former John When Cancer Institute in Santa Monica.
To help guide our pivotal longitudinal study the <unk> study.
We also will be involved in at least one major multi institutional neuro oncology pharma trial and are working to develop other related clinical trials with other academic centers of excellence that established for the use of our tests to help us of therapy response and monitor patients post treatment.
Our first large scale study the <unk> registry study is a longitudinal observational trial comparing the performance of our CSF assay with concurrent cytology and imaging and evaluating patients with suspected intracranial metastasis to predict clinical outcomes.
The indications will include suspected metastasis in non small cell lung cancer and breast cancer patients initially and we anticipate adding patients with other tumor types as we move forward we.
We expect to enroll 50 to 100 patients in the first year on the up to 200 patients over a two year span following each patient longitudinally.
We are also planning to file for an FDA breakthrough device designation on the next few months.
This designation by the food and drug administration of our FDA provides patients and healthcare providers with timely access to novel medical devices by speeding up their development via improved clinical trial assessment and review.
It offers manufacturers the opportunity to interact with the FDA as experts to efficiently address topics of potential clinical trial design concern during the early review phase <unk> clinical trial milestones are reached if.
If granted this designation will give biosurgery, a four year timeline of Medicare coverage to generate patient data supporting the shoes and allows for accelerated FDA review of our clinical trial plans on data.
This designation also has the value and enhancing our ability to partner with pharma companies that are developing oncology drugs for the treatment of brain metastases and it creates the potential for high value of reimbursement within the next year.
With that I will turn the call back to our CEO Michael <unk>.
Michael before opening the call to your questions I want to review, our corporate priorities, which include the following.
Establishing a new brand for <unk>, CSF assay and positioning our assay as the standard of care for diagnosing CNS involvement by metastatic tumor and monitoring therapy response.
Submitting for FDA breakthrough device status with our CSF assay.
Initiating pivotal the pivotal clinical studies with our CSF assay to support the adoption of the standard of care under NCC in guidelines.
Securing Medicare coverage for our target select your lung NGF panel grew.
Growing sales of our target select or liquid biopsy kits and seizure of blood collection tubes.
Entering into additional strategic commercial and technology partnerships and commercializing our next generation quantitative COVID-19 assay.
Our portfolio of target select based assays provides critical information to assist physicians in determining treatment decisions for their patients diagnosed with cancer.
Our assays are based on our differentiated platforms to leverage information from tumor cells and cell free DNA and RNA in both blood and cerebrospinal fluid.
To date, we have tested approximately 27400 patient samples with our proprietary oncology biomarker assays and of received more than 300000, COVID-19 samples.
As mentioned in 2021, we expect revenues related to COVID-19 testing to remain meaningful due to our established customer base, we anticipate increasing adoption of our CSF assay as we develop our collaborations in clinical studies to obtain standard of care designation. In addition, as Tim mentioned we are.
A strong balance sheet and of reduced cash burn and.
In closing I want to express my appreciation to our entire <unk> team for their tireless work and their dedication over the past highly challenging year as always we are committed to improving patient treatment choices and clinical outcomes.
And with that overview, we are now ready to take questions operator.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
If youre using a speakerphone please pick up your handset before pressing the keys.
So withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.
Thank you operator, while were waiting for the first question I'd like to mention that we'll be holding of key opinion leader webinar on April eight beginning at 12 noon discussing our neuro oncology offering.
This webinar will feature Dr. Michael Dougan discussing our proprietary CSF technology and its advantages Dr. Preapproved car of Northwestern Medicine, who is the primary investigator for our <unk> clinical trial and Dr. Nicholas Blunden of Yale University, who will use our assay, who uses our assay and their clinical practices.
We will be announcing pre registration for this webinar in the next several days.
Okay, operator, we're ready for the first question.
Your first question will come from Jason Mccarthy with Maxim Group. Please go ahead.
Hello, Jason Hey, guys.
This is Michael accumulates on for Jason and congrats on the Mizuho Hey, Michael.
Great.
I don't want to build on Covid for too long, considering it's not really the core focus of the company.
Relating to the revenue is have you seen any pullback in.
Testing as we've gone through the first quarter.
How has that continued so far in 2021 of the slowed at all of the rate continued and how do you look at Covid going forward through this year.
Yeah, Michael well that's of Great question, I think thats literally the billions of dollars question everyone's asking in our industry right, but our peak was kind of as we exited last year up to the first this year, but as we stated just here on the call today, we're being consisted of around 10 to 11000 patient specimens per week at this point.
And notably as folks are following the news you know, we're starting to see a little bit of of positivity increase again in certain parts of the country and whether it's the one week only or not but we also are starting to see a little bit of that of iOS app. After several weeks of declining positivity numbers. So this is really a difficult part of the business to <unk>.
Dick what it's going to be like going forward, but in the meantime, we have of client base, who needs to continue to test with the skilled nursing centers. In addition.
The folks will recall if they were at the Investor Conference I mentioned that we had been selected as one of the for labs here in California. The service the community College system. So we continue to get business from that and anticipate that being in demand throughout the year and on into the fall as folks really get back to school.
Thank you.
And then I'd also like to add something about the.
The CSS.
Liquid biopsy.
What kind of information do physicians gain from the CSF cytology and is there any way.
Right now to get that actionable biomarker data or is it really only bio stepped out there.
Oh, that's of Great question, well first for your first part of your question I'm going to ask Dr. Dougan to weigh in and then I can talk a little bit about the competitive environment, but go ahead. Dr. Do good generic appear or test the CSF cytology sure CSF Cytology is an established standard of care for making for answering a simple question is their tumor in the CSF.
Jeff.
But it has significant limitations.
In terms of the sales are not preserved as captured Rs collected rather they're also not labeled with any particular marker and theyre not.
They are not captured by any particular method of other than air drying them on the slide so they're subject to a lot of degradation.
And they are usually few of number which makes the interpretation somewhat difficult and hence qualitative as I explained.
So with that quantitate, even when you talk about the Biomarkers and competition remember Theres really three different questions were at answering.
And on questions, one and three <unk> really is the best answer.
So question. One is is their tumor present and that's the intact cells of the cancer cells, but we we can identify with our technology question number two is there a target and thats, where youre looking for the certain biomarkers and so they will of already sent us the CSF and so it makes sense for us to also profile for the Biomarkers and then number three is there of <unk>.
Trend and once again you are back to looking for the cells looking for the sales to go up or down.
Folks towards our investor deck, and there is an excellent case study that illustrates how helpful that is in our investor deck Thats on our website, so as well as the presentations I've done at the three different investor conferences here in the last couple of weeks.
Alright. Thank you and then I would like to see if you can just.
Give us a bit more of a bit more color on the road map for you guys to establish your CSF test as the standard of care and to secure reimbursement with the breakthrough device status.
Sure well once again I think Dr. <unk>, the best one day.
Talk about our trial strategy, so maybe a little bit about that as well as how the the.
The breakthrough device works.
Sure.
I kind of went through it but it's a little bit FERC quick the first time.
There are several clinical trials that we have.
Planned the pivotal trial are for <unk> study, we will establish us against the cytology and to some degree of against imaging is the current existing centers of care, we anticipate entering into a larger multi institutional pharma trial.
Later this year that will evaluate us in particular.
As of therapy monitoring tool and then we have many.
Academic centers that are interested in working with us to develop their own investigator initiated studies, which would further elaborate the use of the tests.
And in various clinical indications of use and we will go into more of that in our on our key opinion leader webinar on the April deep, which I invite you to listen to US Mike invited you to listen to a net debt will that will lay out some more of what the clinicians are saying about the test on how the anticipate using it.
And when it comes to the breakthrough will be submitted for that later this year and that's we're very thankful that the FDA and CMS of gotten together to expand this program for diagnostic assays and.
Well I think CMS is now looking for additional comments before re finalizing their part of the program. The FDA program is there and so we're confident that we will have the necessary data to pursue that and then once you get awarded of breakthrough then you automatically.
Our qualifying for CMS reimbursement.
At the same time, which was the original plan as I said CMS has recently put that back out for comment after some feedback on it but we're looking forward to that being finalized for good and have a great path forward for <unk> and our whole industry.
Alright, Thank you very much and looking forward to the K O all of them.
Great.
Again, if you have a question. Please press Star then one.
Okay.
And this concludes our question and answer session I would like to turn the conference back over to Michael Dahl for any closing remarks. Please go ahead Sir.
Thank you operator and on behalf of our board of directors and our hard working team here at <unk> I want to thank everyone for participating on today's call and for your interest in our company. We hope you will join our neuro oncology webinar on April eight and we look forward to providing an update on our progress during our next conference call coming up soon in May.
We report 2021 first quarter financial results.
Thanks, again, everybody and have a great day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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