Q1 2021 Biocept Inc Earnings Call
Pardon me, ladies and gentlemen, thank you for your patience of your conference we'll be getting on materially again. Your conference will begin in just a few of them. Thank you. Please continue to hold.
[music].
Good day and welcome to the bias of first quarter financial results conference call on.
Participants will be in listen only mode should.
Should you need assistance. Please take note of the conference specialist by pressing the star key followed by zero.
After today's presentation there'll be an opportunity to ask questions two.
To ask a question you May Press Star then one on your Touchtone phone.
To withdraw from the question queue. Please press Star then two please.
Please note. This event is being recorded I would now like to turn the conference over to Jody Cain. Please go ahead.
This is Jody Cain with L. A J. Thank you all for participating in today's conference call. Joining me from bio sector of Michael Dahl, President and Chief Executive Officer, and Tim Kennedy, Chief Operating Officer, and Chief Financial Officer. During this call management will be making a number of forward looking statements within the Mi.
The private Securities Litigation Reform Act of 1995 for like his statements include all statements that are not historical facts of generally can be identified by terms such as anticipates estimates believes could expects intends may plans potential predict.
For JAKKS should well would or the negative of those terms for religious statements involve known and unknown risks 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 implied by the forward looking.
Statements.
In particular, there is significant uncertainty about the of duration severity and impact of the COVID-19 pandemic. This means results could change at any time and the contemplated impact of COVID-19 on Bios of operations financial results and outlook is the best estimate based on information for day.
This 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 may 12, 2021, except as required by law <unk> 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. Today, we are reporting outstanding quarterly results with revenues of $17 $8 million operating income of nearly $2 7 million and our second consecutive quarter of profitability. These.
These results were driven by our quality RT PCR testing for Sars COVID-19 two as our dedicated team continued to serve our community in turn our strong financial performance supports the investments in our core oncology business and more specifically, our see inside cerebral spinal fluid assay, which we officially launched.
Late last month.
I'm also pleased to announce today, an agreement with quest diagnostics, with whom we will collaborate to give patients access to our targets of Elector Ngls lung assay throughout the United States.
As you know quest is the world's largest diagnostic laboratory, we expect setup to be completed in the third quarter with availability to accept orders from quest clients to follow.
This is an exceptionally exciting and transformational time at <unk> with the bulk of commercial launch of our proprietary see inside assay now underway. It's no overstatement to say that see inside its paradigm changing for both <unk> and for patients in need of more accurate diagnostics for late stage cancers.
The inside provides physicians with the significantly improved tool to diagnose and manage patients with tumors that have metastasized to the central nervous system.
Since the soft launch of this assay in early 2020, we have seen quarterly volume growth from an increasing number of early adopter physicians with many becoming repeat customers and this is a trend that we expect will continue.
Importantly, we're already seeing that see inside can positively impact the life expectancy and the quality of life of patients, who otherwise might be referred to hospice care.
Our C. Inside assay is currently validated to identify metastatic cancers in patients originating in the lung and breast, which frequently involve the central nervous system.
We estimate that the U S market for the assay at more than $1 billion annually with approximately 200000 patients diagnosed with metastatic cancer involving the central nervous system per year.
Over time, we plan to expand our see inside testing menu for additional tumor types in biomarkers, including melanoma by year end. We recently highlighted the advantages of our C inside assay and key opinion leader webinar, featuring prominent neuro oncologist, Dr. Amir as Audi from the Barrow Neurological Institute Dr.
Nicholas Blunden from the Yale School of Medicine, and Dr per year cum taker from northwestern University.
I invite our listeners to learn more about <unk> side by registering for the webinar on the <unk> Dot com homepage.
Our enthusiasm for C inside stems from its ability to offer positions of more timely and accurate method to diagnose the presence of metastases to the central nervous system compared with the current standard of care, which is CSF cytology in fact, our pilot studies show that an approximately 80% of cases of patients with suspected central nervous system involvement tumor.
Sales were detected using C inside whereas CSF cytology only about 50% of cases were detected on.
Unlike CSS cytology see inside has the added advantage of identifying actionable molecular targets patients with metastatic cancer involving the central nervous system have the potential for significantly better survival and reduction of neurologic symptoms due to the many advances in treatment, particularly new targeted therapies. Additionally.
Identifying specific biomarkers can be critical and treatment selection for example.
In the case study cited by Doctor as Audi during the webinar.
57 year old woman diagnosed in 2017 with stage for her two negative metastatic breast cancer showed negative results for <unk>.
CNS involvement with CSF cytology testing with the insight on the presence of metastases, including her two positive cells.
Dr. <unk> was able to use this information to prescribe the treatment regimen as of January 2021. This patient is free of symptoms.
Also during the webinar of Dr. Coon taker noted that at least one patient with her two negative breast cancer and are systemic disease was found to be her two positive after being tested with the inside Dr.
Dr. <unk> was unable to modify this patient's treatment.
Additionally, the inside provides the quantitative cell count that we can use to identify early trends in patients therapy response. This vital information can help physicians determine whether a patient remains on treatment comes off treatment or change the street, but I wanted to share some upcoming milestones with our C inside program.
We expect to have an update on securing FDA breakthrough device designation in the third quarter the.
This designation provides patients and health care providers with timely access day novel medical devices by speeding up their development via improved clinical trial assessment and review. We also expect this designation will be valuable in our ability to partner with pharma companies that are developing oncology drugs for the treatment of central nervous system metastases and it creates the potential.
For high value of reimbursement within the next year.
Given the many advantages of <unk> inside over alternative diagnostic methods. Our goal is to establish the inside as the new standard of care for diagnosing and monitoring patients with metastatic cancers.
Involving the central nervous system, we have developed the clinical pathway intended to produce publications that will influence national oncology care guidelines by 2023, we expect to begin the first part of our for <unk> study by the end of this year with completion in mid 2022. This study is designed to provide clinical validation for F.
Breakthrough device designation, we will then conduct the second part of the <unk> study to evaluate the insides clinical utility in order to prove key decision points that can be made based on testing results. We expect to initiate the study in the third quarter of 2022 with completion of approximately one year later.
We will also be involved in at least one major multi institutional neuro oncology farm of trial and are working to develop additional related clinical trials with other academic centers of excellence. The objective of these studies will be to establish the use of C. Inside in assessing patients therapy response and for monitoring patients post treatment.
Turning to our broader oncology business every patient diagnosed with cancer need some level of genomic profiling to provide valuable insights in order to help guide physicians with treatment decisions historically, one or maybe two tissue biopsies were performed during the continuum of patient care now with liquid biopsies, where they're using blood or cerebral.
And on fluid. This testing can be performed far more frequently for monitoring purposes, it's not surprising the during the early days of COVID-19 pandemic, our oncology testing volume declined. However, we've seen a steady increase in volume beginning in 2023rd quarter. We believe this increase.
Includes an increase in our assay is being used for monitoring, which sometimes have a lower price point per test.
Turning now to COVID-19 testing our <unk> team takes pride in serving our community during the pandemic by providing quality testing with quick turnaround times. Since June 2020, we have received approximately 390000 samples for COVID-19 testing.
You may have read recently about our announced partnership with the foundation for California community colleges to serve the COVID-19 testing needs of the largest college system in the U S.
This testing could help protect the safety of campus populations and reduce the spread of the virus as California community colleges return to in person classes, we have already serve some athletes and many of the systems of 116 colleges and we're excited to expand our service to the general population of some $2 1 million students as well as teachers and staff.
Regarding our expectations for COVID-19 testing going forward. We are encouraged more people are getting vaccinated as we're already to get back to normal that said many of our customers for COVID-19 testing of our assisted living and nursing homes and these facilities still must test on a routine basis. We expect COVID-19 testing will continue to be.
An important component of our business and will provide meaningful revenues throughout 2021, noting our expectations could change as the year progresses.
As an update with our G of Biotechnologies collaboration validation is underway to distinguish new strains of the virus, while providing quantitative viral load results. This new assay will likely be especially helpful for our clients for reflex testing when patients test positive for COVID-19, the information provided will assist health care providers to monitor.
For viral load overtime to help determine next steps with their patients.
And with that I'll now turn the call over to Tim Kennedy to review, our first quarter financial results, Tim Thanks, Mike and good afternoon, everyone. As Mike mentioned for Q1, 2021, we reported revenues of $17 8 million.
This is a significant increase from $1 4 million in Q1 of 2020 and is primarily due to COVID-19 testing.
Our revenues included $17 7 million in commercial test revenue, including $16 8 million attributable to COVID-19 testing.
In Q1, 2021 we reported 145110 total of exceptions. This is a significant increase from 1306 total obsessions in Q1 of 2020 and in line with Q4 2020 total access.
<unk> of 145129.
Total cost of revenues was $9 million.
Paired with $2 9 million for the prior year period with the increase primarily due to COVID-19 related collection kits and consumable expenses.
As we continue to leverage the fixed components of our costs.
Our cost of revenues as a percentage of net revenues decreased by approximately 153% for the first quarter of 2021 from the prior year period.
Contributors to the percentage decrease in cost of revenues and.
<unk> better pricing on COVID-19, 19, consumables, and COVID-19 collection kits as well as lower facility costs related to the move of our facility, which we completed in late 2020.
R&D expenses for the first quarter of 2021 were $1 million compared with $1 3 million a year ago.
With the decrease primarily attributable to lower facilities costs and.
And cost of revenue allocation to R&D.
We expect R&D expenses to increase in the coming quarters as we begin the first for C. Clinical study that Mike just previously mentioned.
G&A expenses for Q1, 2021 were $3 1 million versus $1 9 million in Q1 2020 with the increase primarily due to head count additions and other expenses related to COVID-19 testing.
Sales and marketing expenses were $1 9 million compared with $1 5 million in the prior year period.
The resulting primarily from higher commission payments associated with COVID-19 sales.
You may recall that we moved our headquarters from and our CLIA lab, So a new San Diego base facility late last year.
While we incurred some expenses related to the move 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.
Operating income for the first quarter of 2021 was $2 7 million and this compares with an operating loss of $6 2 million for the first quarter of 2020, representing an improvement of about $9 million.
As Mike stated, we reported our second consecutive profitable quarter with net income of $2 6 million.
Or <unk> 19 per share on $13 7 million diluted weighted average shares outstanding.
This compares with a net loss for the first quarter of 2020 of $8 3 million or $1.06 per share on seven 9 million diluted weighted average shares outstanding.
We reported cash and cash equivalents as of March 31, 2021 of $14 2 million.
Compared with $14 4 million as of December 31, 2020.
Revenues, sorry receivables grew by $3 million from 2020 year end, which we anticipate will provide for robust cash collections as we move forward in 2021. Additionally from a cash flow perspective, viasat negotiated a nine month.
Rent free period with the facility move.
Which rent free period began.
In January of 2021.
And finally revenues from COVID-19 testing and expense management are supporting our investments and our neuro oncology strategy.
Based on historical and planned cash usage, we believe that our current cash position and revenue generation will support our business through the second quarter of 2022.
However, with the uncertainty introduced by COVID-19 on revenues and collections, our cash runway may be shorter with that I'll turn the call back over to Mike Mike. Thank you Tim before opening the call to your questions I want to review of our corporate priorities, which include the following.
One supporting the full commercial launch of our C inside assay and positioning our assay as standard of care.
The inside answers three key questions for physicians treating patients with suspected metastatic cancer involving the central nervous system number one is their tumor number two is there a target and number three is there a trend.
The next priority is submitting for FDA breakthrough device status with the inside by the third quarter of 2021.
Number three initiating clinical studies with see inside the support adoption as standard of care under in CCN guidelines number for expanding our see inside testing menu for additional tumor types of biomarkers.
Five of security and Medicare coverage for our target select or lung NGF panel.
Number six growing sales of our target select or liquid biopsy kits and C share of blood collection tubes.
Number seven entering into additional strategic commercial and technology partnerships like the agreement announced today with quest diagnostics.
And eight commercializing our next generation quantitative COVID-19 assay that we co developed along with <unk> Biotechnologies.
Our portfolio of target select are based assays provides critical information to assist physicians in determining treatment choices for their patients diagnosed with cancer.
Our assays are based on our differentiated platforms that leverage information from tumor cells cell free DNA and RNA in both blood and cerebrospinal fluid to date, we have tested approximately 29000 patient samples with our proprietary oncology biomarker assays and have received approximately 390000 samples for <unk>.
With 19 testing, we expect revenues related to COVID-19 testing the remain meaningful throughout 2021, and anticipate increasing adoption of our C. Inside assay as we develop collaborations in clinical studies to obtain the standard of care designation.
And we have the support of a strong balance sheet.
In closing, it's gratifying to see the <unk> team's excitement as we work towards establishing the <unk> inside of standard of care and continue with our important COVID-19 testing.
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.
I'll begin the question and answer session.
I'll ask the question you May Press Star then one on you touched on for Bob.
If youre using a speakerphone please pick up your handset before pressing on machines.
To withdraw your question from the queue. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
While we're waiting for the first question I'd like to remind listeners that of you've not watched our neuro oncology webinar. It's available on the homepage of <unk> Dot com. It runs just about an hour and I think you'll find it to be highly informative.
Okay, operator, we're ready for that first question.
Thank you.
First question comes from Jason Mccarthy with Maxim Group. Please go ahead.
Yeah.
Hey, This is Michael <unk> on the line for Jason Thanks for taking the question and congratulations on the great quarter.
Well. Thank you Michael good to hear from you.
So I'd like to just.
On a gauge from you guys how has COVID-19 testing held up into the second quarter.
As we have seen a decline in our case in the vaccine rollout I know that a lot of yours.
Target business here is somewhat insulated from that so how has that held up for the second quarter.
Michael as you know in the the script.
The script just now we let folks know that we've done 390000, so far this week so that of lots of people kind of know the last time, we reported I believe was about this time back in April and that was about 40000 different them between when we reported in April and now so that gives you an idea I think of.
Where we're at and one of the key things to remember is that the bulk of our customers today come from the skilled nursing centers and they are required to continue to test and while we're maintaining all of our clients I think they are quite happy with us when we have low positivity rates as we do now on Dr. Dougens here in the room with me along the shaking his head you know theres not an.
Need to retest folks may not understand that previously when there were higher positivity rates. When you got a positive then based on the county guidance that the skilled nursing centers in the either have to retest all of the residents and employees twice a week or three times a week now that we're finding very seldom positives in that spread of thankful thing we should all be <unk>.
Think before there's not a need to do the re testing so that's where you're seeing the impact so far with our client base. In addition, we are enthusiastic about the ways. We can help the colleges the community colleges that we've discussed and that we don't know because theres not a policy yet for the community colleges for how they're going to go back to school. So we know what they need to test their athletes.
Which we're doing today in the spring sports such as baseball and others that were helping with but as the year progresses and they get their plans together for the year I think that will inform us of lot about what to expect from that agreement.
Okay. Thank you.
I'd also like to talk a bit about the.
The full launch for the inside I'd like to know.
And how we should look at that what kind of differences should we expect and what.
What are you targeting for the full launch as opposed to the soft launch from back in 2020.
Well I think the reason for the difference one we we've learned a lot over the past year about how valuable is asking can be thus the investment you saw with the actual you know named see inside in the the.
The.
<unk>.
Way that we're doing the logo it folks go on to the thing there's a lot of going behind it from the marketing side.
And.
Other than that there is a lot of to go into it and it's also has to do with who we're targeting so we've started with neuro oncologist and that's who folks would see if they go on the webinar and there are the early adopters here. They are doing everything they can to help these patients who get referred to them. The next level down on them will be the medical oncologists as far as our targeting to expand the the bay.
And they're interested as well, but very often they're just sending patients to hospice and so what we want to do is give them an alternative with our test and we'll need a little bit more data that might get the bigger lift there. So that's what we're investing in now is the data and I think Dr. Dougan has some things you'd like to share with that as well.
Yes, Thanks, Mike.
Michael the other things that are happening with the commercial launch the more formal commercial launches and updated.
Presentation of this test in terms of the test for acquisition form in a more integrated report that's easier to read.
In addition.
Youll see more educational materials come out, including the publications related to key studies that we've already completed and others that will that will help further explain the role of the test and then we anticipate doing additional work with our COO.
T O L network are key opinion leaders to really establish additional studies of both investigator initiated studies as well as our own studies to declare.
Verify the role of the tests and how it's used for a variety of indications of use.
Thanks, Mike.
Alright, Thank you very much.
And then one more I'd like to just see if you could talk.
The replay a bit more.
In detail about the agreement with quest and what that means for your core business.
Sure well this is for our Ngls assay that we've been working on for now of a couple of years folks will recover of the call that we partnered with thermo Fisher on that and it's a targeted panel for lung cancer patients in non small cell lung cancer patients and it's used to inform treatment decisions. So ideally it's used both at the time of diagnosis and can also be used for.
During the Restaging, along the way and looks for key Biomarkers that are all tied to targeted therapies for lung cancer and so we.
We developed the assay and.
The have had some discussions over the past few months with quest as they evaluated various options and they chose <unk> to partner with their as they start to rollout there for next Gen sequencing assays for oncology as well. So we're excited about the relationship as with any Big company, it's going to take a while for us to get on boarded but we expect that to happen by the end of Q3.
And then start to accept the specimens along the way.
Alright, Thank you very much.
Sure.
This concludes our question and answer session I would like to turn the conference back over to Michael <unk> for any closing remarks.
Thank you on behalf of our board of directors from the hardworking team here at <unk> I want to thank everyone for participating on today's call and for your interest in our company. We look forward to providing an update on our progress during our next conference call in August when we report our 2021 second quarter financial results. Thanks, again and have a great day.
Yeah.
The conference is now concluded. Thank you for attending today's presentation you may now disconnect.