Q3 2021 Biocept Inc Earnings Call
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Well, there's a bar as the third quarter of 2041 financial results Conference call.
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Thank you this is Bruce Voss with Alex and thank you all for participating in today's conference call. Joining me from the iOS After Michael <unk>, 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 meaning of the private six.
Securities Litigation Reform Act of 1995 forward looking statements include all statements that are not historical facts and generally can be identified by terms such as anticipates estimates believes could expects intends may plans potential predicts projects should will would or the.
The negative of those terms.
Forward looking 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 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 bio shops 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, including the company's quarterly report on Form 10-Q.
Are you being filed today.
The content of this call contains time sensitive information that is accurate only as of the live broadcast today November 15th 2021, except as required by law Bios up disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call now.
I'd like to turn the call over to Michael now Mike.
Thank you Bruce and good afternoon, everyone I'm pleased to begin by announcing another sequential quarter of growth can see inside volume <unk>.
See inside as our paradigm changing neuro oncology tests that use a cerebral spinal fluid for diagnosing and monitoring patients with brain metastases I will share updates on our progress and strategy foresee inside in just a moment.
Turning first to financial results, we reported another exceptional quarterly performance with profitability on revenues of more than $17 million driven primarily by our high quality RT PCR COVID-19 testing service.
<unk> team is pleased to continue providing this valuable service as we assist in the management of the pandemic with the resulting financial performance and cash flow supporting investments in our core oncology business.
Our revenues for the quarter increased 165% from Q3, 2020, which was our first full quarter of COVID-19 testing and were also up 45% from Q2 of this year as mentioned on last quarter's call Q2, COVID-19 testing volume decline from prior quarters as more American.
Became vaccinated.
During Q3, we saw a return to higher volumes in part due to the emergence of the Delta variant as well as from volume driven under our contract with the California Community College system.
We implemented COVID-19 testing and more than 35 campuses with convenient onsite sample collection locations. Many California community colleges are now requiring students and staff to be vaccinated with mandates for some taking effect. This week that being said the majority of our COVID-19 testing.
Volume continues to be sent by skilled nursing customers.
We have received more than 660000 samples since we began providing COVID-19 testing services in June of 2020.
This includes receiving more than 150000 samples in the third quarter.
We were well prepared for the influx of COVID-19 testing samples in Q3, having already taken steps to increase lab capacity and improve automation our investment and these improvements will also support our capacity to process see inside and other oncology testing as those volumes increase.
Turning to our combined COVID-19 in influenza testing, we expect to launch this test in the coming weeks and believe it will be particularly well received by our skilled nursing facility customers as we move through flu season, our combined testing can distinguish between COVID-19, and flu infections as well as identify those infected with both.
COVID-19 and flu.
This information could be critical for treatment decision, making.
As a final update on COVID-19 testing following validation, we expect to begin commercialization of the assay co developed with a geo biotechnologies by the end of the year. The benefit of this assay is an quantifying viral load regardless of variance.
Quantifying viral load can be key in determining when patients can safely return to work school.
Or other activities.
Returning now to our oncology business, we are highly encouraged by the data being generated and the resulting ongoing adoption of CN side. This assay provides physicians with a valuable tool to diagnose and manage patients with cancer that has metastasized to the central nervous system and brain our assay answers three.
Critical questions first is cancer present.
Is there a target and third what is the trend over time.
Since our beta launch in early 2020, we are seeing continuous consecutive quarterly increases in test volume.
And as I mentioned strong sequential quarter volume growth in the third quarter.
40 prestigious academic institutions have now ordered or see inside assay and importantly, the majority have become repeat customers. We view this as a strong indication that neuro oncologists, who are using our assay see its value and improving patient outcomes to drive further adoption, we will be focusing on reaching the neuro oncology.
Unity through the end of this year with plans to expand our outreach to include the broader oncology community next year.
A recent study conducted by the University of Utah Huntsman Cancer Center provides further support for CSI.
Results from this retrospective study suggests that our assay is more sensitive than standard of care CSF cytology and patients with non small cell lung cancer and leptomeningeal disease, a complication in which the cancer spreads to the membranes surrounding the brain and spinal cord.
In analyzing the cerebral spinal fluid of 15 unique patients see inside detected tumor cells, 100% of the time, while cytology detected tumor cells in just 40% of the same samples.
The inside also identified actionable biomarkers in tumor cells, which allowed oncologists to make targeted treatment decisions that reduced debilitating symptoms and extended patient lives by more than three years in some cases.
This is remarkable as the average life expectancy is just four to six weeks for patients with non small cell lung cancer and leptomeningeal disease when left untreated.
An estimated 3% to 9% of the more than 198000 patients diagnosed with non small cell lung cancer, each year will develop leptomeningeal disease.
This study was presented at the conference on brain Metastases hosted by the society for neuro oncology or snow in August we will be sharing new data supporting use of <unk> inside generated with additional collaborators at the annual Snow conference being held in Boston later this week.
We are working towards securing standard of care status foresee inside under in CCN guidelines. This includes refining our pathway to publish the clinical data, we anticipate will influence those guidelines under our <unk> clinical program, we expect to conduct two longitudinal observational studies the first will be up there.
RFP response monitoring study comparing <unk> with standard of care for the management of breast and lung cancer in patients being treated for brain metastases the <unk>.
Second will be a longer term registry study comparing <unk> inside and cell free tumor DNA to standard of care for various tumors and indication of use we expect to begin the first of these <unk> studies by mid 2022.
Currently see inside is offered as a lab developed test validated to CLIA and cap standards.
That being said, we continued collecting supporting data demonstrating the superiority of <unk> inside over standard of care for potential resubmission of an application to the FDA for breakthrough device designation.
Our C inside assay is validated to identify metastatic cancers originating in the lung and breast which are the two cancers that most often lead to involvement with the central nervous system.
We estimate that the U S market for C. Inside for these two cancers at more than $1 billion annually valid.
Validation activities are underway to expand our see inside testing for CNS involvement from all solid tumors as well as melanoma, which is the third most common cancer, leading to CNS involvement we are targeting the launch of expanded see inside assay in Q1 2022.
Approximately 30% of our currency inside testing volume is for research cases involving patients with cancers other than our current commercialized lung and breast offerings. Following validation of the expanded see inside assay. We expect to begin commercialization of the majority of what is currently research testing.
As an update on our agreement with Quest diagnostics, we expect that our target to select our Ngls lung panel will be available in quest 'twenty 200 patient service centers across the U S. In the coming weeks at which time the quest oncology Division will then begin their marketing.
Our target select or <unk> lung panel provides genomic profiling of patients diagnosed with advanced non small cell lung cancer. This testing serves an important need as tissue biopsies can be difficult to retrieve from these patients even when collected the amount of tissue can be insufficient to provide results to guide treatment are blood based panel.
Able to detect multiple actionable biomarkers to qualify patients for therapy, including newer therapies like targeted treatments that are allowing patients to live longer with a better quality of life.
Lung cancer is the third most common cancer in the U S and leading cause of cancer deaths.
<unk> estimates that of the more than 235000, new cases of lung cancer diagnosed this year, 84% are non small cell lung cancer.
Quest is the world's largest clinical testing laboratory and we are excited to partner with them to provide physicians and patients with increased access to our panel.
And lastly, we recently announced the publication of a study in the peer reviewed journal of molecular diagnostics.
This study showed that our switch locker technology enhances the sensitivity of PCR based liquid biopsy testing more than 200 times.
Switch blocker is incorporated in our target select our assays and enhances the sensitivity that's essential to accurately identifying the often extremely rare cancer cell mutations further this technology can be used whether the sample is blood tissue or cerebral spinal fluid. This highly sensitive technology is also incur.
<unk> in the COVID-19 assay that we co developed with the <unk>.
And with that I'll turn the call over to Tim to review, our Q3 financial results Tim. Thanks.
Thanks, Mike and good afternoon, everyone for Q3 2021, we're reporting net revenues of $17 5 million, which is up 165% from $6 6 million in Q3 of 2020.
As Mike mentioned in Q3, 2020 was our first full quarter of providing RT PCR COVID-19 testing services with the increase in this year's third quarter revenues due to higher sample volume.
Our revenues for the third quarter of 2021 included $17 4 million in commercial test revenue, which included $16 5 million attributed to COVID-19 testing and 826000 and oncology testing 34000.
Development services test revenue.
And 71000 in revenue for distributed products targeted select or are you owe kits seashore blood collection tubes and payments for other development services.
As comparison revenues of $6 6 million for the third quarter of 2020 included $6 4 million in commercial test revenue of which $5 7 million was attributable to COVID-19 testing and 713002.
<unk> testing.
47000, and development services test revenue.
154000 in revenue for distributed products target select or are you OK and seashore blood collection tubes and payments for other development services.
In Q3, 2021, where you received 154324 total accessions. This is a significant increase from 52542 total accessions in Q3 of 2020.
It's also up sharply from Q2 2021 total accessions of 102172 as we realize the anticipated.
<unk> quarter increase in COVID-19 testing volume due mainly to the Delta variant and samples received from our agreement with the California Community College system.
Total cost of revenues was $10 3 million compared with $5 9 million for the prior year period.
With the increase primarily due to the increase in COVID-19 related collection kits and consumable expenses.
As we continue to leverage the fixed components of our expense structure, our cost of revenues as a percentage of net revenues decreased by approximately 30%.
From the prior year period.
Contributors to this expansion in gross margins included better pricing on Covid, 19, consumables and COVID-19 collection kits and.
Implementation of automation to more efficiently handle higher volumes and lower facility costs related to the relocation we completed late in 2020.
R&D expenses for the third quarter of 2021 were $1 3 million compared with $1 1 million a year ago.
With the increase primarily attributable to increases in head count related expenses and material costs associated with investment and see inside clinical development.
We expect R&D expenses to increase in the coming quarters as we begin the first foresee clinical study.
G&A expenses for Q3, 2021 were $3 4 million versus $3 million in Q3 2020, with the increase primarily due to head count additions and other expenses related with COVID-19 volume.
Sales and marketing expenses were $1 9 million compared with $1 4 million in the prior year period.
With the increase due to higher Covid, 19 revenue and marketing costs related to sand side.
Net income for the third quarter of 2021 was 427000 or <unk> <unk> per diluted share on $15 6 million weighted average shares outstanding. This represents a $5 $3 million improvement from the net loss we reported in.
In the third quarter of 2020 of $4 9 million or <unk> 37 cents per share on 13 3 million weighted average shares outstanding.
And now turning to the year to date results.
Net revenues for the first nine months of 2021 were $47 3 million, which compares with $9 million for the first nine months of 2020.
2021 period and included a $1 1 million increase in reserves for potentially uncollectible, aged accounts receivables.
Revenue for the 2021 nine month period included $47 million and commercial test revenue 107000, and development services tests revenue and 167000 and revenue for target select or argue Oh kits and.
C sure blood collection tubes and payment.
For other development services.
Operating expenses for the first nine months of 2021 were $45 9 million and included cost of revenues of $26 8 million R&D expenses of $3 5 million G&A expenses of $9 8 million in sales and marketing expenses of $5 8 million.
Operating income for the first nine months of 2021 was $1 4 million.
A an $18 9 million improvement from.
An operating loss of $17 4 million for the first nine months of 2020.
Net income for the first nine months of 2021 was $1 2 million or <unk> <unk> per diluted share on $14 3 million weighted average shares outstanding. This is a significant improvement from the net loss for the first nine months of 2020 of <unk>.
$17 7 million or $1 74.
<unk> per share on 11 3 million weighted average shares outstanding.
We reported cash and cash equivalents as of September 32021 of $27 7 million, which is up from $14 4 million as of December 31, 2020.
During the three months ended September 32021, our cash balance increase included raising $9 6 million during the third quarter through sales of common stock under our ATM facility and with that I'll now turn the call back over to Mike Mike. Thank you Tim.
Before opening the call to your questions I want to remind you of our corporate priorities, which include the following one.
One fully supporting the commercial launch of our <unk> assay.
Number two initiating clinical studies with <unk> inside and presenting and publishing results of studies conducted both by <unk> and in collaboration with respected institutions to support adoption of standard care under NCC guidelines, three expanding our see inside testing menu for additional tumor types in biomarkers.
For increasing sales of our full range of target select our assays by growing sales of our target selected liquid biopsy kits and seizure blood collection tubes.
<unk> entering into additional strategic commercial and technology partnerships like the agreement with quest diagnostics and seven continuing to support our community with our high quality COVID-19 testing service by offering both qualitative and quantitative PCR assays and combination COVID-19 influenza testing.
Our portfolio of target select are 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 that leverage information from tumor cells cell free DNA and RNA in both blood and cerebrospinal fluid.
To date, we have tested approximately 31000 patient samples with our proprietary oncology biomarker assays and received more than 660000 samples for COVID-19 testing.
We expect revenues related to COVID-19 testing to remain meaningful through the end of 2021 over.
Over the past several weeks, we have seen volume averaging about 10000 samples per week that said there are many variables with circumstances, such as colleges improve imposing vaccine mandates that could impact our COVID-19 testing volume.
With CN side, we anticipate increasing adoption of our assay as we develop collaborations in clinical studies with the goal of obtaining standard of care designation.
We have a strong balance sheet to support our commitment of improving patient treatment choices and clinical outcomes and with that overview.
Now ready to take questions operator.
Thank you, ladies and gentlemen, if you wish to ask questions. During today's question answer session. You will need to press Star then the number one on your telephone.
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If there isn't a speakerphone please pick up your handset before entering a request.
One moment please for the first question.
While we're waiting for the first question I'd like to mention that CN side will be featured at the snow annual meeting being held later this week in two events in which neuro oncologists, Dr. Nicholas Blunden of Yale School of Medicine will be discussing the utility of our <unk> assay to manage leptomeningeal disease in patients with metastatic cancer.
You may recall that Dr. Blunden was a featured presenter on our C. Inside KOL webinar in April along with Neuro oncologist, Dr. Ramirez Auty from the Barrow Neurological Institute and Dr. Pre Okun taker from Northwestern University. We also held the second webinar co sponsored by cap today with presentations by neuro oncology.
Dr. Sima Nag Paul from Stanford.
And Dr. Santos Cursory from St. Johns Cancer Institute, we invite you to view, both webinars with links available through our homepage at <unk> Dot com.
Also we will be presenting virtually at the HC Wainwright <unk> conference and holding in person investor meetings in San Francisco during the Jpmorgan Healthcare conference with both events being held January 10th 2014.
Okay, operator, we're ready for the first question.
Thank you. Our first question comes from Jason Mccarthy Maxim Group. Please go ahead.
Hey, guys. This is Michael accumulates on the line for Jason Thanks for taking my questions.
Sure Michael good to catch up.
So I wanted to.
Ask about how we should be.
Looking at COVID-19 tests.
Forward because across the space. It seems like Q4 is headed for.
A bit of a reduction with decreased cases, and now oral antivirals are approaching which could prevent hospitalization as many as 90% of cases. So how should we think about bio steps COVID-19 testing business going forward and does the target market of skilled nursing in community colleges position.
The company to be more durable.
To changes in Covid cases.
Well I think Theres a lot in that question and of course the whole industry is also asking the same question about what to predict in the future with the volumes I think it is going to continue to go kind of up and down as you know.
With outbreaks happen here and they're regionally you are still seeing some outbreaks in some of them for example, here in California, and some of the more rural parts of the state even now so that's keeping us busy and we tried to give a little bit of guidance that our average is nine or 10000 right now a week. Currently so that gives you a little bit of kind of where we're currently at and.
That seems to be kind of where it's balancing out for now but as you said you never know what's going to be in the future. One thing is important that you ask there though is why we have we stayed with the volume we have versus some of the other labs have seen big declines already and Thats because strategically we focused on the skilled nursing.
Centres whichever routine need for testing with their very high risk population of residents and patients and so therefore, we anticipate that the testing will continue to be important for that that population of folks that we serve Tim do you want to add on its exactly right versus drive up pop up.
Collection centers that were pretty prevalent a year out to 2020 right.
Yes.
Alright. Thank you I'd like to can continue kind of on this theme I wanted to see if you could just give a bit more on your plans to expand into influenza influenza testing.
Is that a single sample combination task and doesn't increase the potential to maintain and improve durability of those testing relationships that you've built with your current contract.
No. Thank you for asking that that's an important point. It is from the same sample. We can test for both COVID-19, and influenza and also determine if someone actually has both from the same sample.
And Youre exactly right, especially for the skilled nursing centers. We anticipate this will be important for them. They asked for this they like the service levels, we provide and of course, it's critical for them to know when they have a resident or employee who is impacted.
Alright, Thank you very much and then just one more.
I wanted to ask about how the oncology testing market is looking at right now in terms of volume versus pre pandemic as we've largely exited this recent delta there.
Yeah, well I think most folks are getting back to the doctor.
And as we pivoted the company, we're now transitioning with a lot of our efforts as you heard in our prepared remarks today towards the inside which is R. R. Groundbreaking tests for neuro oncology and this is where we're helping patients have late stage cancers, whose cancer has metastasized to the central nervous.
And brain and we're getting rapid uptake of that test from the neuro oncologists that we're calling on at the major academic centers on the blood side are we're excited to have our relationship with quest and there'll be more news about that this quarter as that gets ready for launch.
The liquid biopsy side on blood.
It has a fair amount of competition and be able to have a good partner and quest that has broad reach the applicability of their 2200 patient service centers. We're very excited about what this can mean for <unk> going forward.
Alright, Thank you very much and congratulations on a great quarter.
Oh. Thank you. Thanks, Mike Thank you for your support.
Ladies and gentlemen, as a reminder to ask a question. Please press Star then one.
Hello, everyone. This concludes our question and answer session I would like to turn the conference back over to Mike Moore for any closing remarks.
Well. Thank you operator on behalf of our board of directors and the hardworking team here at <unk> I wanted 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 March when we report fourth quarter and full year 2021 financial results. Thanks again.
And have a great day.
Thank you Sir This concludes today's conference call. We thank you all for attending today's presentation you may now.
Disconnect your lines and have a wonderful day.
Okay.