Q1 2021 Aspira Women's Health Inc Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the inspire women's health first quarter 2021 Conference call. My name is Rob and I'll be your coordinator for the call today.
At this time all participants are in a listen only mode.
Following managements prepared remarks, we will open the call to your questions.
As a reminder, this conference call is being recorded today.
Leading the call today are Valerie Palmieri, President and Chief Executive Officer.
Bob Ritchie, Chief Financial Officer, and colleagues anchor Chief operating officer Dr.
Let's see Northrop Chief Scientific Officer, and Doctor, Atlanta, Ratner Global Chief Medical advisor clinical and translational medicine.
After their prepared remarks, we will open the call for Q&A before we begin I would like to remind everyone that statements made during this call, including the Q&A session relating to spirit expected future performance future business prospects or future events or plans are forward looking statements as defined under the private Securities Litigation Reform Act from 1995.
Although the company believes that the expectations reflected in such forward looking statements are based upon reasonable assumptions.
The outcomes and results are subject to risks and uncertainties and could differ materially from those anticipated due to the impact of many factors beyond the control of his farrah.
The company assumes no obligation to update or supplement any forward looking statements, whether as a result of new information future events or otherwise except as required by law.
Participants are directed to cautionary notes set forth in today's press release as well as the risk factors set forth in as far as annual report with the SEC.
For a description of factors that could cause actual results to differ materially from those anticipated in the forward looking statements.
At this time I would like to turn the call over to Valerie Palmieri, President and Chief Executive Officer Valerie.
Good afternoon, everyone and thank you for joining us today.
Afternoon, We will review, our first quarter accomplishments financial performance as well as provide an update on Q2 developments, including <unk>.
Our first aspirant synergy executed agreement with a very large women's health network and Endo check update a strategic study agreement with the largest health care provider in New York.
Confirmed acceleration of our oversight product launch for Q4, 2021 and lastly, a new addition to our executive team.
Our engine mine is to transform women's health, starting with ovarian cancer. Our initial goal is to eradicate late stage detection of ovarian cancer and ensure that all of our solutions will meet the needs of all women of all ages race ethnicity and stage of disease or.
Our core patient call is to develop a lifelong relationship with each patient from puberty to cure and sharing each woman has access to the best in class diagnostics, we had a spiral aspire women to take control of their gynecologic health and empower providers to deliver optimal care.
Yeah.
I would now like to update you on six recent developments in the second quarter first aspiring women's health is announcing today that is executing at a spirit synergy agreement with one of the largest women's health networks, whereby the over one plus testing will be performed in their laboratory with data interpretation by a spiral.
The health network employs 300, plus physicians and is responsible for 500000 patient visits per year. We are extremely pleased with this development and milestone. This is a fundamental building block to changing the standard of care.
Number two I will provide an update on endo check we're in very productive communications with the FDA regarding our breakthrough request. The FDA has acknowledged that there are many compelling reasons why this type of device is needed for both the treating physicians and for patients. The FDA indicated that they are very interested in.
Continuing to work with the spiral into check and aspire will be continuing our discussions with the agency on the breakthrough device designation.
Number three.
We are very pleased to announce we initiated a prospective clinical study for benign risk monitoring and high risk early ovarian cancer detection with north well health. This is a study with the science Armrest Northville health, which is the Feinstein Institute for medical research North well is the largest private health care provider in New York.
State today, North well treats over 2 million patients annually and employs over 16000 credentialed positions.
Number four we are reaffirming the acceleration of the target launch date of oversight to the fourth quarter of 2021.
This test will initially will allow physicians to assess benign pelvic masses with much better performing technology versus C. A 125 and our next revision we will allow a mass to be monitored over time.
This new test will leverage its high negative predictive value to assist and rule out as well as its high positive predictive value to assist and risk of malignancy.
The first review of this product's day that will occur at the American Society of clinical oncology better known as <unk> at their 2021 meeting, which will be held virtually on June 4th.
Number five we are building a strong patient provider and payer awareness Foundation awareness education and advocacy is a key to changing the standard of care. We are establishing a foundation with clinical social media influencers participating in congressional briefings, and establishing a social media strategy with patients and <unk>.
<unk> Kylie and Doctor Ratner will discuss further in their sections.
And lastly, we are extremely pleased to announce we have added a diagnostics industry leader to the team to round out the breadth of experience needed to achieve our short and long term objectives.
Richard joined the company as head of corporate strategy reimbursement and managed care.
In this role Greg will be responsible for overall corporate strategy enhancing our blueprint for reimbursement for the company's current products as well as the new products and services and a robust pipeline. He will lead our overall managed care and managed market strategy as we expand into integrated health care systems and leverage the company's recent successes.
And gaining coverage for over one with New York State Medicaid and other important payers and.
In addition.
He will also be responsible for managing the internal revenue cycle management team and will support the Companys strategic business development initiatives.
Mike has served in several senior executive leadership positions at Air Paste Diagnostics Quest diagnostics and Lab Corp.
Before I turn the call over to Kylie to provide a commercial update as previewed on our fourth fourth quarter call. Our test volumes were sequentially flat in the first quarter versus fourth quarter 2020. This was due to the continued COVID-19 restrictions and weather disruptions I am pleased to report we are gaining traction in March April and May.
And we see increased patient access patients returning to the doctors coupled with our increased commercial investments.
This is promising as 24 per cent of our territories still have less than 50 per cent access to offices due to COVID-19.
And with COVID-19, reducing in the U S. We are hopeful that things will continue to improve.
If COVID-19 continues to stay in check we are confident our commercial momentum will continue as we continue to invest in our commercial organization drive adoption and prepare for a larger sales footprint for oversight commercialization in Q4 2021.
In summary, we continue to work towards our overall strategic goal, which was to emerge from the pandemic stronger and we believe we have accomplished this with a stronger team our stronger financial position and our stronger pipeline, we are well positioned to invest to grow and to drive adoption and most importantly save lives.
I would now like to turn the call over to Kylie Zagha, our Chief operating Officer Kiley.
Thank you Valerie we have studied the complexities of how ovarian cancer present through the patient journey and have mirrored our go to market strategy to capture that journey and intersect the pace in prior to late stage diagnosis, one year ago, We had two pronged approach with the direct sales channel in a decentralized platform channel.
We are proud to announce that we added to the direct sales channel and new health care system sales team.
They include a dedicated dual sales and integration team as a health system team that will integrate our technology into the clinical pathways across various allergies that intersect ovarian cancer patients and integrate into the complex workflow environments I'd be system.
With over 80% acquisitions anticipated to be owned or affiliated by health systems by 'twenty 23, and our large target launch and oversight, which we expect will be actively deployed and the health system. We are confident that these strategies are critical and timely for our organization. We are actively constructing our team of health care industry experts.
So we have a strong history of disrupting current standards of care and we are on track to nearly double the size of the commercial and operations organizations by the end of Q4 2021.
Our integration team comprised of highly experienced health care executive with informatics expertise. This team is working to drive integration within the health system and create seamless workflows for adoption of our products. We are working with a number of institutions and believe this approach will enable these virus wheat products again adoption and become the standard of care.
Regarding our decentralized platform channel called our synergy sales force, we are happy to announce at Fireeye Women's health is announcing today that is executed and aspire synergy agreement with one of the largest women's health networks, whereby the Oba one plus testing will be performed in their laboratory with data interpretation bias virus.
Health network in place 300 class physicians and is responsible for 500000 patient visits per year. We are extremely pleased with this development and milestone. This is a fundamental building block to change the standard of care. We expect synergies to also expand access for all expire commercialized products and we will expect.
The future pipeline innovations will be blended into the synergy platform. We are now poised for growth to allow standard of care adoption adult over one class and genetics as a solution offering.
The glue to our strategy its commercial activation of the market and awareness with greater population, we believe an increasing awareness as a critical factor to driving adoption. We have expanded our digital marketing presence and are acutely invested in commercial activation over the last two quarters.
In addition, we were present at a hug and SCO held virtually in 2021 and will be presenting our oversight abstract at <unk> in June.
The number of over one pot test performed increased 3% to 3775 over one plus pets. During the three months ended March 31st two 2021 compared to 3654 over one plus pets for the same period in 'twenty, 'twenty, which was slightly down on a sequential teeth.
Total.
COVID-19 restrictions have continued in the second quarter, we are gaining traction quarter to date April volume for a record month for the company also we just received New York State Medicaid coverage as of April 1st 'twenty 'twenty. One. So we are just starting to gain traction in this market.
In terms of ordering physicians for the first quarter 2000, and 595 physicians ordered over one plus the number of ordering physicians was essentially flat from the fourth quarter levels. As we continue to focus on larger health systems to generate adoption and lay the groundwork for new product introduction I would like to note that we are rich.
Seating orders from 65% of health care institutions listed in the top 20 of U S News and World Report's Best hospitals honor roll that supports the foundational use of Oba, one plus and demonstrate the potential to drive standard of care adoption as we expand our house system commercial team I would now like to hand.
On the call over to the Doctor a leaner ratner can provide an update on our momentum to becoming the standard of care and driving the awareness of our technology and its impact on early stage risk detection of ovarian cancer, particularly in racial and ethnic diverse populations.
Thank you Kylie as a physician education awareness and adoption he used to changing the standard of care. We have had several milestones in this quarter.
The first was the congregational breathing.
In the first quarter once it goes from one we presented at the Congregational breathing advancing health outcomes for women and minorities.
We delivered a call to action for over one turn of careful bearing cancer risk assessment book location and mouth, Caucasian women and the need from funding large rate base.
Based trials.
We will be focusing on a continued basis.
Type of policy change, we believe the time has now gained momentum with Congress.
More to come.
The second milestone I'm pleased to report very successfully zoom.
And patients that was done in collaboration with Dr. Sandra Brooke.
I reported directors weakened.
We conducted an over one plus education session, which was attended by over 130 non myopic.
Sure.
The audience was mainly obgyn providers from across the country.
We believe the Hunton 30 participants with the ticket is.
Very strong turnout for the type of who they are.
The price.
The title of the presentation that was utilization Oba, one plus optimize EBITDA in cancer risk assessment, including defining the need for personalized approach the pelvic mass diagnosis.
These topics discussed well the need for early detection of ovarian cancer. Other options open risk review, how genetic testing from a risk as impactful and the value of all but one slug for optimizing ovarian cancer risk assessment.
We also had a focus discussion on racial and ethnic differences in the performance of over one plus N C 125.
We will be continuing medical education, and communication to a large degree as well.
The third milestone is the addition of a new member to our medical team to support our awareness moving Dr.
These people go Pawnee.
Oh Joanne.
Cancer Survivor has joined the team there.
The global clinical community.
Nation.
Bonnie if you can use social media Influencer and will assist in driving ovarian cancer and why our women's health awareness overall.
Regarding clinical studies under my leadership, we are continuing to recruit more academic sites to support both the clinical validity and utility of our tests.
We have also launched a physician initiated research program go health care system.
This program provides nominal fundings from projects that help fuel clinical implementation and adoption of a beating cancer risk assessment tool and allows us to continue to expand our data repository.
But I'm really excited about the direction our clinical study.
We are continuously building our study program strengthens do better around our products.
And lastly, I would like to afford a major update on us.
These studies were excited to announce we have closed sales.
Eddie and reached 379 enrolled patients.
We will be continuing to monitor the patients up to five years to support our oversight longitudinal studies.
We're actively working on analyzing the data and we look forward to publishing the theater food.
I would now like to hand over the cold conducted mock ups, who provides an update on our innovation pipeline.
Thank you Dr Ratner.
I'd like to provide an update on our upcoming products and enhancements, let me reiterate my optimism for under check as Valerie mentioned, we are having a productive dialogue with the FDA, while we cannot disclose our sensitivity and specificity of the test performance. While FDA discussions are ongoing we are pleased with their data.
<unk> to the current standard of care laparoscopic surgical assessment.
We are working on updating our submission to the FDA based on their guidance to meet breakthrough designation showing endometriosis is an irreversible debilitating disease.
We have received extensive feedback from the clinical community. There is an unmet need for a non surgical blood based tests to confirm the cause of chronic pelvic pain as endometriosis early and help better guide clinical management.
Endometriosis is predominantly treated based on symptoms alone and immediate prescription of oral contraceptives or surgical diagnosis is becoming rare, thereby increasing women's anxiety by delaying a confirmation that their chronic pain is in fact endometriosis.
And then Chuck will address the patient population of women, who are experiencing systemic moderate to severe pelvic pain and provide confirmation that their symptoms are indicative of endometriosis.
The goal of this cash is the same for all tests that we are developing in a spiral of women's health and pelvic disease detection and still allow for early diagnosis and direct appropriate medical management.
Essentially reduces the progression of this disease.
I would like to now provide updates on the oversight.
We continue to be on track for our accelerated launch of oversight the analytical and initial clinical validation of oversight performance metrics will be presented in and ask for a poster presentation in June 4th 2021.
The accepted abstract presented data demonstrating the initial clinical and analytical validation of this virus oversight blood based biomarker tests for ovarian malignancy risk assessment and all women within that from mass.
Samples collected from real World evidence studies with a low prevalence of cancer less than 5%, we used to validate the algorithm.
This third generation technology, which is a laboratory developed test will provide clinicians with a high negative predictive value to provide confidence in planning a suspected benign mass monitoring plan as well as a greater positive predictive value to increase confidence in risk of malignancy and next steps in clinical management.
This product is expected to be available in Q4 of 2021.
In addition peer reviewed publications on both the analytical and clinical validation findings are scheduled for Q3 of 2021.
To further support longitudinal studies for the use of oversight as a serial monitoring test for high risk women predisposed for hereditary ovarian cancer. We recently entered a long term research collaboration with the Feinstein Institute for Medical research and the science arm of North Wellhouse.
This collaboration is critical and targeting a rich population women with known genetic variances associated with ovarian cancer and allows the validity data for the development of Ova inherit.
At the same time this collaboration supports our smaller physician initiated experiment and the use of our current over one plus as ability to screen malignancy risk in women undergoing prophylactic surgery, who are also positive for a pathogenic variant in genes associated with a greater than general population risk.
In developing ovarian cancer.
This partnership is now our third academic institution to participate in our clinical studies. In addition to Einstein in Philadelphia, and Wayne State University and National Cancer Institute Center.
Our clinical studies are getting traction now that we're coming out of the pandemic and its one of our sites, Arizona Obgyn associates was able to recruit greater than 100 patients in less than three months.
By bringing on larger academic institutions in clinical practices, we can collect a comprehensive cohort of women's across all races, and ethnicities to recruit for our clinical studies and continuously optimize our product development pipeline.
We continue to develop data metrics from these larger academic institutions through our clinical studies as well already established technologies validated for the detection of ovarian cancer.
Combining our high sensitivity performance as reported with oversight and high specificity with Harvard Dana Farber Cancer Institute Micro RNA technology provides a multi omics approach that it can help eradicate late stage ovarian cancer.
Multi omics technology will allow us the opportunity to develop the diagnostic and eventually screening technology that we desperately need to increase our women's survival rate when faced with an earlier diagnosis ovarian cancer.
In addition in March of 2021 the results of an over one plus study were presented as a poster at the society of Gynecologic oncology 2021 annual meeting on women's cancer S. G O meeting.
The objective of this study was to determine whether using our Vera to perform reflux testing and test results with a high over one score can improve specificity in detection of malignancy in women within our Knoxville math is a testing process, we've referred to as over one plus test. These.
These results indicate that to over one plus tests did improve specificity in detection of ovarian cancers.
With all the products from the pipeline you will begin to see we are building a lifetime relationship with the patient. This is our over 360 approach and providing a circular loop of products to better women's health, we're developing products that can start as early as men fees endo check and into prenatal planning Jeanette.
Alex carrier testing allow early detection rest of hereditary cancer genetics hereditary cancer testing until later in life risk of sporadic ovarian cancer detection with <unk>, plus and our new product oversight and look to the future and developing residual risk assessments when negative following the coupling.
Oh, one plus with genetic testing as well as reoccurring monitoring and eventually therapeutic clinical diagnostic testing.
Our scientific team is actively developing these concepts are based off our clinical studies to ensure we are always optimizing our current products and validating future products could help manage women's health and wellness I will now turn it over to Bob for an update on our financials Bob.
Thank you Doctor North route.
Product revenue was 1.416 million per before three months ended March 31, 2021, compared to 1.195 million from the same periods in 2020.
<unk> of 19%.
The number of over one plus test performed increased 3% during the three months ended March 31, 2021 compared to 3000 September 54, the one plus test with the same per 2020.
Total volume was also down slightly on a sequential basis as we experienced disruptions from the February storms.
Revenue per acre one plus tests performed increased to approximately $375 compared to $325 from same period in 2020.
From 16% and a 3% increase compared to the fourth quarter of 2020 price of $464.
This increase was primarily driven by an increase in payments by contracted payers.
Gross margin on a one product or one product was 54, 4% in the first quarter compared to 50% in the fourth quarter and 44% in the first quarter of 2020.
Our participation in the spot genetics testing clearly in the early innings is driven by our conviction that the use of genetics testing is a critical factor in the early risk assessment of ovarian cancer. Consequently.
Michigan portion of our effort is in obtaining research samples, which we do not include in reported accessions or as revenue.
Revenue for genetics from the first quarter was $80000 representing volume.
75 units with an average unit price of $456. This represents a significant position percentage growth on a year on year with sequential basis, but off a very low base.
Difficult, we generated 190 <unk> research samples in the first quarter.
Total operating expenses comprised of oral D sales.
Sales and marketing and administrative costs were.
We're 6.488 million in the first quarter compared to 6.305 million in the fourth quarter.
Kris was driven by increases in R&D expenditures and investments in personnel in the sales and marketing area slightly offset by lower administrative expenses.
We ended the first quarter was $59 4 million in cash cash used in operations in the first quarter of 2021 was $5 $2 million cash utilization in the fourth quarter of 2020 was $4 $2 million.
Greece was driven primarily by the timing of 2020 bonus payouts as well as new hires from consultants marketing and promotional activities as well as R&D spending focused on endo truck.
Our February secondary offering closed on February eight 2021 at a price of $7.50 per share and resulted in net proceeds from the company of $47 $7 million after deducting underwriting discounts and offering expenses I'll now turn it back the call back over to Valerie.
Thank you Brad.
Before we open up the call for Q&A, Let me restate, our optimism for building the company for sustainable growth for the near term and the long term in parallel we are executing quickly on our larger mission to serve the 20 million women in the U S. Starting with ovarian cancer risk assessment pelvic mass monitoring and eventually tackling them.
The largest disease endometriosis keep in mind, our hereditary ovarian cancer monitoring test Ova inherit is incremental to this market and this product will be for women with and without a mass.
Ovarian cancer accounts for more deaths than any other cancer of the female reproductive system and is the only gender specific cancer with greater than a 50 per cent mortality rate.
Our work in products are at the forefront of changing the standards of care and detection of ovarian malignancies. We believe we are helping close the gap in detection and more importantly survival for women.
In the near term, we believe Avalon plus coupled with our racial and ethnicities differentiation and genetics will become the standard of care for personalized pelvic mass risk assessment for ovarian cancer.
For the longer term. We are also moving forward on our planned launch of our oversight product for benign mass management Endo check for endometriosis, and lastly, Ova inherit for high risk genetic predisposition monitoring our end in mind is the incorporation of proteins genes and other modalities to detect gynecologic disease.
<unk>, which cannot be detected via traditional biopsy.
In time, our goal is to become the liquid biopsy standard for this is for these diseases inclusive of all ages stages and most of all all ethnicities.
With our enhanced team.
<unk> financial position and a robust portfolio, we cannot be more confident across the business. It is now time that all women of every race and ethnicity receive the best possible care and we are proud and excited to make that happen. We are now happy to open up the call for Q&A and answer any of your questions operator.
Thank you well now be conducting a question and answer session.
If you'd like to ask a question today. Please press star one from your telephone keypad and a confirmation tone will indicate your line is from the question queue.
You May press star two if he would like to remove from question from the queue from.
Participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
Thank you. Our first question comes from the line of Brian Weinstein with William Blair. Please proceed with your question.
Hi, Good afternoon. This is Andrew on for Brian Thanks for taking the questions.
Valerie maybe Andrew you are sort of where you you Ah hi, good afternoon, maybe to start sort of where do you sort of ended your script sort of around sort of all the pieces that you have in place here right now you've got sort of the building momentum in our core business you've got the team sort of now set in place and some nice new hires there you've got the capital now with the range.
And sort of you've got the pipeline behind all of this sort of encompassing all of it. So as we think about all of those building blocks here.
Should we be thinking that sort of 2022 and exiting 2021 is sort of when all the stars coming together in terms of revenue growth or is it more sort of back half of 'twenty 'twenty two.
No. So Andrew Thanks for the question I'll answer it in a couple of different parts.
We started this new vertical in the hospital systems in terms of hiring the leader in Q4 of 22020.
And we have put the team in place.
Really our Q1 I want to say flat growth was driven by COVID-19. So we now have a team in place in the hospitals, we are wrapping up a team in Q2, and we will see I believe momentum in the back half of the year.
Keep in mind prior to COVID-19. We had you know 2020 people in the field. We know are going to take that closer to 40 people in the field by the beginning of 2022 and this will line up with our oversight launch the oversight launch in Q4, we really want the entire team locked and loaded and ready to go for oversight.
Okay.
Helpful. Okay, maybe dependent here to the Aspira synergy agreement announced today can you give us a little bit more detail around that is this something that's going to have sort of pre defined volume and revenue associated it or how should we be thinking about contribution here and then secondly on that it sounds like this.
This is just going to be part of the core strategy. So how should we be thinking about the funnel.
Additional agreements beyond that.
Yeah.
Okay. So in terms of let me answer that in a couple of different pieces. So in terms of the core strategy. This is something we've been working on honestly for about two years and COVID-19 caused our GAAP in the strategy as these large super groups were distracted right. Their P&L dropped by down now that theyre right siding themselves they still have.
GAAP, so synergy actually brings revenue.
To the to the table.
For then immediately and this is like this is a customer that we have been discussing having discussions with them as I said for a few years now and now we're ready to go so what is that going to mean in terms of volume well since they are.
Looking at their P&L as being upside down there incentivize right to bring revenue in those businesses are prospectively. So I do believe that there is a huge wind at our sales for them to convert from CA 125 to one keep in mind. This is business that we did not have them in terms of our but we had some what I would say.
Body customers that were spending within the private practice, but in terms of converting to all get 300 plus positions. They were primarily using C O in 'twenty five.
So I do think it's going to when the conversion happens there is a couple of what I call pre conversion.
Checks and balances that happen, but we will start seeing volume from this particular.
Partner as early as Q3.
And then I see it as it as it's probably going to take US a couple of months to get it up to full full tilt, but because there's a there's an opportunity to really and that.
We've got to get the customers converted but they are part of that conversion process right in terms of the care pathway in terms of the notification process. The communication process process within this health care network. So this is something that we firmly believe in we firmly believe on empowering the doctors locally at point of care and are.
Our win and this is the absence of the day identity identify data as well as the margins on this because it becomes a software subscription service.
Great a lot of wins associated with that and then sort of last one from me really on the pipeline here first just a housekeeping one on endo check anything that you can really tell us around sort of the timeline on when we will get final decision on the fast track there and then as it relates to oversight in the serial monitoring.
Can you maybe just be a little bit more specific on how youre viewing a successful trial readout for that and what are some of the key metrics that we should be focused on in order to bring a product like that to market. Thanks for the question.
No problem. So let me ask answer that in two parts as well so with Endo check I would say is that with a breakthrough device. The reason its breakthrough is because there is no predicate right. So these are discussions with the FDA, where it is really a back and forth on it.
What is this device how does it make a difference how does it make a difference in terms of a debilitating disease.
So I would say that our initial discussions have gone well.
And it's a working process, but where we're very as Leslie pointed out and I pointed out we're very optimistic they've acknowledged the compelling reasons why theres a need I think theres. Some education on endometriosis you know people don't initially think of it as debilitating, but when you show them the compelling data it really makes people pause.
So right now we're in a.
Most of them really giving us feedback and I would say that you know in terms of timeline.
My sense is we will you know.
<unk> be back within I don't want to say, it's going to be this year. So I can't put a timeline on the FDA, but I think this year, we will have feedback from them and hopefully for the next earnings release.
And then part two of your question that oversight. So besides there's two trials we have our one time use trial, which that's the product that's launching in Q4 of 2021 and then we have the monitoring trial. So the onetime use trial will be we will have that analysis completed and that will be launched in Q4 of 2021.
If a doctor elect to use the use this forum multiple you said we have not studied longitudinally. This this this technology.
That's actually passed the Rev. Two of these tests will be completed by Q2 of 2022, and then we will be launching the monitoring aspects of this in the back half of 2022.
Hope that gives you enough color to answer your questions.
That's great thanks for taking them.
Yeah.
My pleasure.
Thank you. Our next question is coming from the line of Kyle mixing with Cantor Fitzgerald. Please proceed with your question.
Thanks, Hi, guys. Thanks for taking my questions. Congrats on the nice quarter. So I wanted to start with the.
The commercial expansion sure. So last quarter, you talked about 38 per cent, increasing the sales force I guess, where like the investment I believe is going to start in the second quarter. So is that still the plan and then if you can also just tell me like how large that sales force is right now and how have I need those reps are kind of focused on just the health system.
Part of that strategy that you kind of implement here more recently and then how how large you want the rig count to get to towards the end of the year as you exit 'twenty one.
Thanks.
So kind of I'm going to start and then I'm going to hit.
The ball to Kylie. So as you know we started with 20 reps and we kind of held tight through COVID-19 now that we see things truly opening up although 24 per cent of our business still has less than 50 per cent access we do see weekly increases in volume.
Can't go into details on Q2, but all I can tell you is that we were seeing just weekly records braking and it's a function of really three pillars. One is access in terms of we are getting access number two patients are going to doctors and then number three we have this new heart hospital vertical so we'll.
We will go into the details in terms of where we started and where we're going to be by the end of the year, but we're pretty confident in terms of the momentum we're seeing in Q2, and where we're going to be starting Q3, So I talked about the Kylie.
Hi, Kyle nice to speak with you. So I can give you some actuals on the actual statistics have folks that we have so inside the core sales organization, which is strictly focused on the physician practices right. Now we have 16 sales representatives across North America, and we are moving to 28 and the health systems organization.
Which is comprised of our health care executives with an informatics expertise. We currently have three by the end of next week, we will have five and we are rapidly moving to 14 wetback candidates in the funnel to be able to move to that number for our synergies specialty sales force. We currently have two individual and we're moving to.
Five we have most of those candidates also identified and then we have our integration team which sits.
Right next to the hospital vertical and we currently have one had to stay in place and we're moving to five folks to include a few H L. Seven and engineers, our system engineer and a technical consultants to assess the health system team and properly integrate day.
[laughter].
Alright, well that was great detail. Thank you Kylie and Valerie thanks, so much and just switching over to range.
Thanks, Susan.
The new study in the partnerships announced recently I just wanted to confirm that the Dana Farber Brigham Women's partnership and in the North Wall study or just how are they related directly or its just are they like kind of complementary and I'm just trying to understand if you're trying to have a few shots on goal here or if all of these partnerships are just kind of working towards the same goal.
With Oppenheimer. Thanks, Yeah, so kind of really good questions very intuitive.
And I'll start and I'll, let Dr. Leslie North have also give you some additional context, so over and here. It is a combination of proteins, which the basis of that is the oversight protein panel seven protein.
Plus age.
And we are adding to it the Harvard team, Mike a micro RNA panel that we our goal is to get to a 90 595 sensitivity and specificity.
So with us getting access to additional assessments. Harvard also has a bank of genetically predisposed patients, we actually want to start a prospective study with a with a enriched population as you can imagine in long island due to the Ashkenazi Jewish population. It's a very enriched population. So this is a prospective study.
Basically looking at the Ova inherent product.
Her product could include our proteins. It could include the Harvard samples. It also might include them in the future extra thumbs and other analytes as we're doing further research with Baylor as well.
I also like to give you the floor is there's any other color you'd like to give to Kyle.
Yes, Thank you Valerie and it's nice to speak with you Kyle So we're really trying to ensure that we have these really comprehensive clinical studies going on across the country to Valerie point to make sure that we're recruiting patients across multiple cohorts that meets them you know our diagnostic test development for over.
And cancer and the beauty of the relationship with North well is too what are Valerie alluded to is that we can really target. This enriched population two which is our ova inherent population right high risk women, who are germline carriers, and then validate the test that we developed with Harvard on these prospectively collected samples, but at the same time.
You know we're also collecting additional biological targets are.
To be able to develop future products, where we're also looking at you know cell tumor DNA detection.
As well as other.
Drivers of ovarian cancer, because we really wanted to for the future. We really want to start looking at as I mentioned potentially reoccur monitoring as well as companion diagnostics and therapeutics.
You know a therapeutic test development and so in order to do that we really need to get these large clinical studies and a large set of samples to be able to clinically validate our our cash after we analytically validate them in the lab.
Okay. Thanks, Dr. Arthur could validate that was perfect and I actually wanted to stick on this subject, but the pipeline a little bit so.
This will inherit task in the use of multi omics approach. It sounds like so are you. So I know it's early still obviously, but would you still use the cobalt system to run those to run that test and and then also I'd love. If you could kind of dive a bit deeper into the residual risk assessment, because obviously theres a lot of that Marty test out there or kind of come to market and are you thinking about kind of the.
Same way and it could be interesting in the ovarian cancer right. So just to come from just high level thoughts would be would be awesome to hear thank you.
Thank you Kyle so I'll start and let Leslie also fell in and also definitely in our Radnor is on the line to she may also like to comment.
So from a cobalt perspective, yes, so we're starting with the key with US is that we are using F. D. A cleared kits and the combination of looking at the drivers of the disease and pulling all those proteins together on the protein side of course, the micro RNA technology is not FDA clarity it's on.
So it'll be an L D T platform.
But we are we are going to continue to use the cobalt right now, but keep in mind the analytics that we use we could actually put on an Abbott system of Siemens system. So we're not wedded to Roche.
And we've intentionally done that we really are ambidextrous. So the opportunity is you know, let's just say way down. The road is how can we put this on a platform that this goes global.
And it really then we then we make a uniform platform, but right now we're staying ambidextrous with the cold box.
I'll, let Leslie comment on some other kind of technology as well.
Yes. Thank you Valerie so since we already have the system other oven and validated our proteins as Valerie I'm alluded to is both of these are S. T. A.
<unk> assays, we can easily implement this technology really quickly, but we are looking to bring in a more simplified higher throughput system, where you can actually run the proteins and then my priority on the same system and use the same sample. So what this allows us to do is we can you really put in low throughput amounts.
So our blood and be able to quantify both proteins and micro RNA on the exact same platform at a very low carb and this would give us some more high throughput operation. So that's also something that we're developing on the backend as well as to make sure that we can scale appropriately using this more high throughput system and then as far as the.
Residual risk question. This is actually a really fascinating area that we're focused on them you know as the scientific and clinical team and that I think one of the areas that you'd be familiar with there's a myriad has their my rest of these tests for breast cancer and so we're looking to utilize you know polygenic risk scores assessment and the same crush for them.
Berrien cancer, and now that Kylie and her sales team is out there selling coupled over one plus but with our genetics are germline testing, we're going to have an enriched cohort of samples from our commercial testing. We actually have three sites that are actually doing what's called a clinical implementation study, where we can get the data from these patients.
And then what we can do is if you were president with a mask and you over one plus with a low risk and you also were negative for a germline variance. We could then run a reflex we could that run a reflects cash on them on.
The patient I'm really on the patient and see what the residual risk would be if it's anything greater than the general population for these enrich snips that are known to be associated from a polygenic risk score assessment for ovarian cancer.
Well, Okay, that's really exciting thing swapped from probably detail so.
So I guess I'll leave it there from my questions, but thanks, so much for taking them and I have a good night.
You too thank you.
Our next question is from the line of Sandy Draper with true of Securities. Please proceed with your question.
Thank you very much a lot of the science.
Our science and product questions have been asked I've been out so I'm not sure. If these are more per Bob or maybe Valerie do you want to chime in so I'm honored to be both from our financial oriented right. Now first can you just remind me with.
The Health network you mentioned, it's a more of a recurring service type of model is that a fixed amount, where you're just going to get paid does it scale up with volumes just trying to get some sense of how to think about.
The revenue impact of that and then as it is.
Is it seasonal or is it like testing just trying to think about it or is it truly a recurring license model, where they just pay you X amount of dollars a month.
No Sandy this is robin.
Thank you for the question.
As volume driven it is a per work.
This model so there would be no more seasonality I think the only issue. We're looking at is how quickly we can ramp up.
On T implementation things to be put in place. So the way to think about it though is that you know.
It's basically a pork to work license fee.
Do have cost to deliver but it's not really variable in the sense of the client will source their own in coordination with us in terms of appropriately.
Detroit's Q weighed in terms of watch and things of that nature, working with the Oh, the supplier, but they'll source their own reagents says well was the blood tests. So there won't be logistical costs when they do it and there are in.
In their facility there will be a transition period in terms of send outs, we have to work out.
<unk> coordinate with them as well, but they will be billing the tests.
We will get a license fee per click.
Great and so is it I would assume then that that should come at a notably higher margin.
To you.
Then what certainly what you're seeing right now just on standard test volume.
That's clear, yes, yes, okay great.
Second question on margins.
You talked about Bob I think you said, 54% gross margins on the Ova product 50 per cent last quarter, 44% should we think about that one just the volumes were flattish are actually down slightly but your margins went up so maybe some some color on what drove that but should we think of that cadence.
And then is the difference between that 54% this quarter and the 40% reported gross margin is that really on the genetics or is that something else is going on in the cost of goods.
That is definitely the genetics, which is the which is the trends.
The blended number.
We like to keep an eye on those specifics.
The matter in terms of overall margins I think the way you should think about margins as well as clearly we are not at scale I mean, we've got plenty of capacity and or marginal cost in terms of labor is relatively small or cobalt could handle you know multiples.
With the current volume we're doing right now so our variable cost clearly depends on our blood draw.
Arrangement and Theres, a some degree of variability on that but reagent efficiency gets better. So we anticipate our margins as our volumes ramp up.
The second half of the year and into next year.
Darwin drops considerably.
Considerably.
Clearly the year on year margin uplift was very much volume driven and then well we had slight margin. So there's probably just some noise in there relative to west.
Last year as we transition I think we try and be as true as we can in terms of you know segregating cost for genetics and.
You know the over portfolio, but it was really just more efficiency was relatively small.
Smooth quarter. So there was no one off item that gave rise to it in the prior quarter.
Yeah.
Got it Okay. That's helpful and then my final question.
Could you just remind me on oversight.
The target launch the end of this end of this year fourth quarter of this year, where exactly you are in terms of reimbursement, how we should be thinking about reimbursement and.
And just getting getting paid for the volume and what we what you think the longer term.
Reimbursement levels are going to be for that product. Thanks.
Rory you want to handle that one.
Well I will thank you for the question Sami So let me kind of walk through it so oversight will be a seven person.
Analyte based algorithm, so there's seven passed or seven components of it.
Keep in mind, if you look at the backbone of over one in ovarian <unk> Oh, there was actually created from a crosswalk of other one overwhelm was created from a crosswalk to the Opco Force scarred test, which is for prostate cancer. So this test will be cross walked back to Vera.
With the southern proteins, where that you know what's the timing on that so that is getting an a M. A code, which is now called the P. L. A code and going through the process, we will probably be launching with an unspecified code, which.
Again through this I called them, making the test available prior to the monitoring tests being available and but then we're working through with the a M. A to get to the P. L. A code, but it takes us.
Lunch in the past getting the clinically utility getting the publications in place, but the plan would be a crosswalk back to Vera and you will see of course pricing appreciate over time.
Yes.
Okay, Great. That's really helpful and congrats and you guys are staying really busy a lot going on over there. So good luck with everything.
Thank you Sandy.
Thank you at this time I'll turn the floor back to Valerie primary for closing remarks.
Thank you Rob.
Clothing, as we see progress and COVID-19 vaccination rates and believe the restrictions will subside, we are focusing on doing the right things to drive sustainability and growth with our commercial footprint our strengthened balance sheet.
Guideline endorsed and differentiated test plus a differentiated portfolio of tests within the same call point and now 54 per cent of the lives covered in the U S. We believe we are in a position to support continued growth and profitability. Our end goal is to serve a large global pelvic mass population and overall women's health.
Market with a platform coupled with proprietary science and data tools, which will drive better health and wellbeing to each and every patient we serve thank you for joining us today and we appreciate your support and interest in a spiral women's health.
This concludes today's conference you may disconnect your lines at this time and thank you for your participation.