Q4 2021 Aspira Women's Health Inc Earnings Call
[music].
Good morning, ladies and gentlemen, and welcome to a sphere, a woman's health, Inc. Full year, 2021 and fourth quarter 'twenty 'twenty. One conference call. My name is Kyle 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 for your questions.
As a reminder, this conference call is being recorded today, leading the call today are Valerie Palmieri executive chair of the Board, Nicole Sanford, President and Chief Executive Officer, and Bob <unk>, Chief Financial Officer.
After the prepared remarks, we will open the call for Q&A before we begin I would like to remind everyone that forward looking statements defined under the under the private Securities Litigation Reform Act of 1995 will be made during this call including statements related relating to a spear is expected future performance future business prospects or future events.
Or plans, although the company believes that the expectations reflected in such forward looking statements are based upon reasonable assumptions actual 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 a spear on.
The company assumes no obligation to update or supplement any forward looking statements, whether or whether as a result of new information future events or otherwise except as required by law.
Participants are directed to the cautionary note set forth in today's press release as well as the risk factors set forth in <unk>. Most recent Form 10-K , and our second quarter 2021 Form 10-Q filed 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'd like to turn the call over to Valerie Palmieri Executive chair of the board.
Laurie.
Thank you operator, good morning, everyone and thank you for joining US today as previously announced I had been elevated to the role of executive chair of the board I look forward to leading the company at a higher level and I will be working side by side with our new President and Chief Executive Officer, Nicolas Sanford Who's joining.
And me today to speak with each of you.
As executive chair of the board I intend to focus on specific strategic imperatives, and enterprise value drivers, including the launch of critical new products.
Further development of a spiral thought leadership, including key strategic commercial scientific and advocacy partnerships as well as our clinical and scientific leadership.
Oh, well advisory boards.
As president and CEO , Nicole will lead the business execute strategic and operational plans and scale and transform operational and functional areas to support our planned growth.
We have forged a strong.
And positive relationship working with one another over the past year and it has only gotten stronger since we took our new on her new responsibilities.
We look forward to partnering with one another to drive strategic milestones, while delivering growth revenue and profitability to all of you our shareholders.
In addition to the executive level changes, we have recently announced the appointment of select framework ph D to our board of directors. Dr. Afraid like recently retired as chief data scientist at Mcafee, where she was responsible for developing enterprise and consumer product analytics and data ecosystems for cardio.
A myopathy.
In neuro stimulation Doctor afraid like is an accomplished executive who brings over four decades of data strategy experience to the board.
She brings a broad background in technology, and specifically health care in several markets with customer and industry facing experience.
She has been recognized globally for our cross industry, leading analytics aviation strategic leadership and results oriented competencies. In addition, Dodge afraid like was named to Forbes inaugural 2018 list of America's Top 50 women in technology.
Yeah.
I would now like to update you on some recent strategic developments, which we are very pleased with before I move onto the 2021 review.
As discussed in our March 'twenty, one 2021 call we entered into a strategic research collaboration agreement for the development and commercialization of a micro RNA high risk ovarian cancer early detection test with Harbor, Dana Farber Cancer Institute, Brigham and Women's hospital, and the medical University of lot.
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They have published on a novel micro RNA, P&L, which we intend to use in combination with current technology.
Yeah.
After completion of multiple experiments interrogating diverse sample sets and dataset. We have consistently found the technology to be complementary improving the accuracy compared to the micro RNA and protein Biomarkers alone.
Based on this outcome data, we haven't met the success criteria together.
This month aspire has exercised the option for an exclusive worldwide license of its cutting edge micro RNA technology, and we'll continue development of our novel combined assay utilizing a new platform as well.
We believe the high specificity demonstrated by this technology, coupled with our strong sensitivity of our technology.
Has the potential to be the base technology for a diagnostic which will function as a test for women with a high genetic risk of ovarian cancer.
The end goal for truly developing a personalized red solution for patients who are genetically predisposed to ovarian cancer.
The brand name for this study is open here at there'll be more to come as we move forward with publishing our early data Nick.
Nicole will also discuss additional new pipeline updates in her remarks.
Yeah.
I am now moving on to a recap.
We believe a spiral women's health has effectively weathered the storm of the pandemic and is rapidly gaining momentum we.
We have delivered solid test volume recovery improved price year over year considerably.
Added to our covered lives and lastly made significant additions to our board and executive team.
We continue to advance our product pipeline and strengthen our financial position in 2020 one.
We accomplished five major milestones.
Number one our over one and platform adoption.
In terms of full year 2021 metrics volume grew 28% year over year for Q4, 'twenty 'twenty. One we performed 4007 hundred 50 over one plus tests.
Which represented an increase of 23% compared to the same period in 2020, and an 11% increase sequentially compared with third quarter of 2021.
Looking forward, we experienced headwinds in January due to the surge in the COVID-19 variant, which resulted in a slower than expected start to the first quarter 2022.
However over one plus volumes recovered quickly and are trending higher in February and March.
Our units per day increase from about 65 in the first few weeks of January to about 91 in the first week of March which is a new average record per day.
October was our prior record of 81 tests per day.
We believe this recent growth as a result of our ongoing commercial investments and increased patient visits as well as improved cobot access.
In addition to unit adoption. We also successfully entered into force synergy contracts of which two are with two of the largest independent women's health care groups in the U S with access to approximately 750 providers and 950000 patients annually.
The last contract we announced in January 2022 is a five year contract with actually a women's health.
The goal of these relationships is to allow our clients to offer a best in class clinical diagnostic testing services directly to their patients via our universal platform.
We believe this will provided significant growth as we gained the ability to touch more providers to the larger provider bases that are associated with larger spiral synergy customers are.
Our platform strategy is key to mass adoption, coupled with our direct to provider strategy.
The number of base ordering physicians increased to approximately 3216 for the fourth quarter of 2021 representing a year over year increase of 23% and a sequential increase of 10% for the quarter.
The total number of new positions in the fourth quarter of 2020 . One was 584, an increase of 25% over the same period in the prior year and we noticed significant new customer increase of 32% sequentially versus the third quarter of 2021 .
I am now moving onto our second major milestone, which is payer and price improvement.
Full year for 2021 and comparison to full year 2020 grew by 45%, while total price per unit, including Medicaid improved 13%.
Without Medicaid the price improved to $414, which is a 15% improvement year over year.
We also reached 194 million covered lives representing 59% of the lives in the U S.
We believe inclusion and the aim at Evercore guidelines provides us with further validation and credibility in our discussions with all pairs.
We expect this momentum to continue as we prepare to submit the latest evidence on over one clinical utility with 12 to 24 month outcomes, we plan to share more on this in 2022.
On the Medicaid front, we added a total of $6 9 million lives with the addition of New York State New Hampshire in Washington D. C. Having this coverage in place is critical to managing the underserved population as we believe all but one is the only technology available today that has adequate sensitivity for early stage ovarian.
Cancer risk detection, specifically in black women.
With New York State. This brings our total credentials Medicaid population to 61 million Medicaid lives, which is over 80% of the U S. Medicaid population.
Yeah.
Now moving onto our third milestone, which is government support and momentum following our two congressional briefings in 2020 one.
We actively engage with members of Congress and several noteworthy advocacy organizations, including healthy women the national ovarian cancer coalition.
In cancer Research Alliance and the Black Woman's health imperative in an effort to increase awareness about over one and ovarian cancer.
Our goal was to encourage legislation to provide financial support for additional clinical trials as we focus on diversity and trials.
We also started the discussions on the trial requirements for adding the company's ovarian cancer technology into guidelines such as the U S. Preventive services task force, which will support the company's objective to launch a product that is broadly applicable for women with a high genetic risk for ovarian cancer.
In addition, we are laying the groundwork for a bill for national coverage determination for Medicare for over one as part of expanding access.
Our work with these represented at.
Our congressional briefings and other advocacy work, including with members of the Appropriations Committee has supported the NIH as recent funding increase of 25 per cent for ovarian cancer research and the department of Defense's Congressionally directed medical research programs increase in funding for ovarian cancer of 'twenty.
9%.
We were very pleased with these recent results and the speed with which the government took action.
Further in response resident Bidens recent outreach to industry for suggestions on how we can better identify cancer early as part of the cancer Moonshot, two Plano initiative. The companies had correspondence with the by the administration to support the inclusion of early detection technologies for ovarian cancer among its key priorities.
I'm now moving on to the fourth milestone, which is our publication progress.
We completed a paper, which has been published in a special edition of diagnostics entitled Salvaging detection of early stage ovarian cancer malignancies. When C. O N 25 is not informative.
In a retrospective study of 2000 and 305 patients Oh go undetected over 50% of the ovarian malignancies in premenopausal women that theme and twenty-five would've missed.
Oh, one also correctly identified 63% of the early stage cancers missed by sea and 125.
This paper further validates and supports the superior early stage detection of ovarian cancer versus seeing when 25. The most common tests used today in a large population.
In addition, we have several other key manuscripts and submission more to come on this front.
Our last milestone is our strategic partnerships and study collaborations which finished the year with three major ones. In addition to the Harvard Dana Farber Cancer Institute.
The first one centers around Endo check product, we executed an agreement a fever assay, whereby they provided us a sizable specimen and data bank for from their therapeutic trials.
We now have trials specimens from two of the three pharmaceutical companies and these specimens will support our development of our endo check product.
Our second is our platform partnership with gene acts. This partnership will enhance our data and biobank platform gene accidents by Rusty to tackle the most difficult diseases in women's health and this platform should allow us to reduce the development time for potentially groundbreaking data solutia.
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And third is a key partnership with North well help. This study will enroll over 600 perspective women with Nashville masses. This study will also enroll 2000 women at high risk for ovarian cancer, either due to personal or family risk of cancer or carriers of a germline variance associated with hereditary breast and ovarian cancer.
Syndrome.
North well is the largest health care provider in New York State and treats over 2 million patients annually and employs over 16000 credentialed positions.
As you can see our overall goal was to merge from the three phases of pandemic operationally stronger and we believe we did just that.
We believe we are well positioned to grow scale drive adoption and most importantly save lives.
I am now pleased to introduce our new President and CEO , Nicole Sanford Nicole.
Thank you Valerie before I start I'd like to say that it has been an honor to assume the role of Chief Executive Officer and to continue working closely with you to achieve our mission.
As I've transitioned from board member to leader My respect for the team of talented professionals that you have assembled has only grown your leadership has certainly set the stage for an outstanding future for the company.
I'm now going to spend a few minutes, providing an update on our strategic priorities and the path forward for 2022.
Our theme. This year is focused execution, we've made a number of critical investments and now is the time to capitalize on those efforts.
I intend to do that through focused execution in three areas growth innovation and operational excellence.
Starting with growth you've already heard from Valerie about the increases in new physicians and volume from our existing positions in 2021. Despite several distinct COVID-19 searches that challenged our field sales team throughout the year, we're learning to live with Covid and intend to improve our response and recovery to flatten the volume curve should additional variance caused.
And in 2022, I intend to work with the team to mine, our learnings and ensure that we continue to see improvements in our sales related metrics, regardless of Covid disruptions.
Staying with growth for a minute you'll recall that we brought on Michael Newton as our head of our new head of commercial and I'm happy to report that he is already making a big impact.
Drawing on his over 20 years of diagnostic health care sales experience, Michael help to execute our commercial strategic refresh and reorganization in February of 2022 to enhance their national sales force and driving accelerated adoption of <unk> plus the standard of care for early risk detection of ovarian cancer in women.
And who have been identified for surgery.
This strategic refresh is aimed at positioning us to take full advantage of our commercial scale up over the past 18 months.
Focusing on the most promising territories and rationalizing sales reporting structures.
Early indications are that it was the right approach to achieve our growth plans for over one plus and they set us up for the successful launch of Overwatch, which we expect to occur in the second half of the year 2022.
And it is already working daily volumes in Q1, 2022 have surpassed daily highs from 2021 as Valerie mentioned in her remarks.
Let's shift gears to innovation as you know we've invested in building a pipeline of products that provides women's health care providers with a broad set of solutions for patients with a range of gynecological diseases.
As a reminder, many of the products in our pipeline are expected to be launches that'll be Ts or lab developed tests and it may be helpful to provide some additional background context on odt's before going into specific products.
L. D teas are a class of in vitro diagnostic device that is designed manufactured and used within a single laboratory.
Currently the majority of novel technology, and genetic tests or L. D Ts.
Estimates for the number of L. B Tees in the U S range from 60000 to 100000 plots with between 15020 thousand of those falling under moderate or high risk for F. D. A classification.
In comparison, there are less than 500, FDA cleared moderate to high risk tests on the market.
L. B piece are often used to test for conditions or diseases that are either rapidly changing or that are the subject of quickly advancing scientific research.
The L. B T approach might be the best approach and an evolving technology situation and it allows for ongoing improvement and machine learning algorithms.
With that as background I will provide an update on Overwatch, a next generation ovarian cancer test.
In ovarian cancer risk assessment test for women, who present with at our Knoxville math Overwatch will be launched as an L. B T in two stages.
He's one of the single use the point in time test and phase two will allow for serial monitoring we will focus on advancing to the commercial phase of the Overwatch launch plan.
Including driving provider adoption during the second half of 2022.
We believe the single use product has the potential to triple the addressable market over over one plus our current ovarian cancer test.
The launch of the serial monitoring test remains targeted for 2023 upon publication of data from the ongoing perspective serial monitoring clinical study.
Now, let's move on to Endo check our noninvasive aid in the detection of endometriosis.
As we previously reported we have received two pharmaceutical companies Busman contributions, which we believe demonstrates the critical need for a diagnostic test.
The collaboration between each of <unk> S. A and B, Inc. With aspire Ah represents a mutual dedication to create solutions to help the six to 7 million women in the U S suffering from endometriosis Ironically, improving the time to diagnosis as today. It may take seven to 10 years for a diagnosis.
We believe endo check or in development diagnostic tests for endometriosis will enable earlier detection more effective treatment and perhaps avoid unnecessary surgery.
Previously announced a dual track approach for the launch of Endo check as either an L. D T, whereas an FDA designated breakthrough device and we continue to pursue both paths at this time [noise] accelerating endo check is a top priority for the company in 2022.
In summary, our pipeline is advancing and is a priority for me and the entire company, which.
Which will be aided significantly by the expansion of our relationship with the Harvard Dana Farber Cancer Institute.
With respect to operational excellence the entire company is focused on building the infrastructure, we need to sustain our growth through 2022 and into the future.
We are also very focused on the stewardship of our resources on behalf of our shareholders, including the appropriate allocation of cash to those activities that are most likely to drive our immediate and longer term growth and as importantly, shorten the distance to positive cash flow. We are a fast growing company that is developing complex women's health products.
And as you might expect there are opportunities to enhance the efficiency of our operation.
It is important to note. However that we are facing the same tight labor conditions as the rest of the industry. We are working hard to retain our top talent and avoid costly turnover, but we expect that to be a challenge for most of the coming year.
Before I hand off to Bob to provide a financial update I want to take a moment to acknowledge highly hager, our chief operating officer, who has decided to leave the company to pursue another opportunity. We are grateful to Kylie for her dedication to us by Ray and wish her the best in her future endeavors and now over to you Bob.
Thank you Nicole.
Fourth quarter 2021, one plus revenue was $1 8 million, an increase of 29% over prior year and a 12% increase sequentially.
29% revenue increase is primarily due to an increase in the number of tests performed in 2021 as well as an increase in the over one average revenue per test in the fourth quarter of 2021 compared to the prior year.
Prior to Covid 2019.
The third quarter versus fourth quarter growth was 7% quarter over quarter. Despite COVID-19 headwinds, we grew 12% sequentially and achieved a quarterly record number of tests performed in the fourth quarter of 2021.
On a full year basis 2021 over one revenue was $6 6 million an increase of 44% over prior year. This 45% increase was driven by both the lower number of tests performed in 2020 due to the COVID-19.
And an increase in the over one average revenue per test.
The revenue per over one plus test perform was $382 for the fourth quarter of 2021.
Compared to 377 during the third quarter of 2021.
This year on year price increase was 5% compared to the prior year fourth quarter.
64.
Our full year revenue per over one test perform was $378, a 13% increase compared to the full year of 2020 price of 334.
Our full year revenue per Oborne test minus Medicaid perform was $414, a 15% increase compared to the full year 2020 price excluding Medicaid.
Gross profit margin on a one plus was 56% in the fourth quarter 2021, compared to 50% in the prior year and 57% in the third quarter of 2021.
Dear near price increase was driven by volume improvements, while the third quarter gross profit included slightly less kitchen posted tree.
Research and development expenses for the three months ended December 31, 2021 were $1 5 million, a decrease of 100000 or 4% compared to third quarter of 2021.
Our R&D investment increased $700000 or 98% year over year. The spending was primarily focused on product development costs related to overwatch investments inspires synergy and consulting expenses associated with endo check regulatory clearance sale.
And marketing expenses were four.
<unk> 9 million for the three months ended December 31, 2021, a decrease of 200000 or 4% compared to the third quarter. This decrease was permanently due to less recruiting and promotional support costs as we execute upon our commercial strategy for <unk>.
Part of your sales and marketing expense of $2 8 million was depressed as it did not reflect the current investments, we're making in market awareness and sales team additions.
General and administrative expenses were $3 6 million for the three months ended December 31, 2021, a decrease of 200000 or five 2% compared to third quarter of 2021.
We incurred $2 7 million and general and administrative expenses in the prior year quarter.
Year over year variances attributable head count and personnel expenses.
We ended the fourth quarter of 2021 with approximately $37 4 million in cash cash equivalents and restricted cash.
Cash used in operations in the fourth quarter of 2021 was $7 6 million, which was a decrease from the third quarter, which was $7 9 million.
Decreased sequentially was primarily due to reduced consulting costs as well as recruiting costs from our sales team investments.
Our short term focus is to continue execution on key coach key catalysts include acceleration of <unk> adoption approach accelerated adoption of our respire synergy platform and successful launch of new products.
The organizational changes Nicole referred to will result in one time severance separation and settlement payments as well as legal costs of approximately $1 3 million in the first quarter of 2022.
I would now like to hand, the call back to Valerie to wrap up.
Thank you Bob 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 long term.
2022 will mark the first year with our second generation technology being offered in a full access environment.
It will be the first year with our first S virus synergy customer ramping up adoption as well.
In 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% mortality rate.
Artwork and products are at the forefront of changing the standards of care and the detection of ovarian malignancies. We believe we are helping close the gap in detection and most importantly survival for women.
In the near term, we believe all the one plus with our diversity differentiation will become the standard of care and Personalised pelvic mass risk assessment for ovarian cancer.
Our long term goal is to become the personalized liquid biopsy standard inclusive of all ages stages and race and ethnicity. We are now happy to open up the call for Q&A and answer any of your questions operator.
At this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.
For 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.
Our first question is from Brian Brian Weinstein with William Blair. Please proceed with your question.
Hi, Good morning. Thank you this is Justin on for Brian .
Bob maybe this one's for you I know you called out.
Severance costs for the personnel rationalization, we're just trying to get a better detail on some more specifics around the sales force rationalization.
What are the expected cost savings from this and maybe more importantly.
What are your expected benefits from this and how is that factored in to your outlook for 2022.
I think it was largely realignment and reinvestment so while there will be some savings it was largely a change relative to skill sets and coverage.
There were also some management changes associated with that so I think the.
Other factor relative to looking at.
<unk> spend in 2022 is that we.
Anticipating launch cost associated with Overwatch this year, so in terms of absolute numbers.
Not saying, we're not planning a significant decline relative to overall.
Overall sales and marketing expenses during the year.
So it's really about effectiveness and productivity. So I think it's consistent with our intention to drive productivity up during the year and then also the other factor in terms of spend is.
Significant expectation around the Overwatch launch this year.
Got it great. Thank you.
As of last quarter I think you ended with around 40 reps just wanted to confirm that number is still right around there and maybe what your intentions are so that number for the rest of 'twenty two.
Hi, Justin this is salary and last year, we ended at about 26 reps and.
Our goal is to be in that 30 to 35 zone.
Okay, sorry about that.
Great. Thank you and then regarding a licensing deal on the RNA technology, we just wanted to get a better understanding of how that option was exercised.
You know what the cash payment was it stock until future royalties and then maybe for some further detail on the timelines when do you expect that to be developed for that new assay.
So in terms of the the highest Nicole thanks for the question.
In terms of the cost it was a relatively nominal cash payment.
And we are actually still working on the terms.
Of the of the.
Agreements going forward does that is that right Bob.
We have.
We have a royalty arrangement with them that we previously disclosed that the.
Same ZIP code as are John saw sharp sorry, it's low single digits percentages. So I think that's consistent with our margin profile currently with the additional technology.
What we will do when it's largely reflected in our current run rate but.
They exercised the option basically commits us to support the co development.
What will be an LPT likely so I think it's really not a big one time spend its really confirmation that we're moving forward with the next phase of development.
And we're very pleased with the economics of the royalty arrangement.
Got it understood. Thank you.
And then in terms of trends I know you talked about the first quarter hitting some records that's great. It looks like the recovery is going well.
But maybe just trying to get some of your assumptions for the rest of the year.
In terms of access and Isps.
Any outlook that you have maybe for next month and beyond then that would be appreciated as well.
Well, we referenced the fact, we're working clinical utility.
And I think that.
The Big factor, we think that will ultimately so relative to price and ASP.
I think in terms of incremental growth in the short term absence.
A significant publication one of the factors that we anticipate.
Helping to drive adoption in general as our synergy platform expanded use case. So I think when you look at the outlook, while we haven't given guidance.
We're all optimistic given the recent trends, we're seeing in customer conversion as well as volume that access is opening up so.
Nicole mentioned.
We're all over if we have a resurgence that we don't we want to minimize any impact to that.
But we're moving full steam ahead Valerie mentioned, we're at 30.
We anticipate.
Leading up to the launch, which we anticipate being this year old Global watch.
That will build on synergy and incrementally increase the sales force.
From 32 in the mid Thirty's 35 is really the number we've said publicly so I think the.
The optimism that we're back in our office now.
Our sales force is just up with the momentum that Michael is bringing to the table as well so we're very bullish that.
Our strategy of building out availability with synergy with the two super groups and then.
Launching the Overwatch is going to provide us very strong momentum going into the second half of the year.
Got it. Thank you and then a last one on cash burn that's been a focus for.
A lot of investors I think this earning season.
In regards to other companies in the diagnostic space.
Bob incorporating your comments about operating expenses with the restructuring.
And all the moving pieces there how should we think about what that means for cash for having us here.
Well I think.
A signal that Q1 has the one off costs. So that's that's really one time and then I think we're thinking about a marginal reduction and then you know compression of cash burn as we launch them.
Further grow adoption as the synergy platform starts to kick in with volume as our Salesforce productivity recall, we've said in the past.
While we did make some changes relative to the sales force.
We've got a lot of salespeople that are getting better tenured.
So I think we're going to start to get to work full access fully trained fully up to speed stride. So I think and then our big optimism is related to dropping in overwatch during the year, which was a much wider indications that we think is going to fuel.
Adoption because.
The the toolkit relative to Overwatch.
Comes a lot more clinically useful.
<unk> plus is much more acute in terms of life or death, and the implication for patient care, but the ability to use overwatch to really determine of surgeries necessary is very you know our voice of customer on clinicians.
Leads us to believe that there's just a gap in the tool kit that we think overwatch is going to significantly impact. So those are the factors that will provide the uplift for utilization on the revenue side and you know think in terms of cash burn being most influenced by that.
Less so by the restructuring so we're I think we're on the current trajectory. We are we've built out and essentially free.
About the Q1 is more of a it's more than a tweet, but it's really a.
You know an optimization move as opposed to a cutback.
Got it great. Thanks for taking our questions.
Our next question is from Ross Osborne with Cantor Fitzgerald. Please proceed with your question.
Hi, good morning, everyone and congrats on the progress.
So starting off can you discuss the Overwatch would you be able to provide some more color around the commercialization plan for single use.
How should we think about the ramp exiting this year and early next.
Okay.
Yeah. So as we mentioned we submitted our paper last year and we actually have some really positive signals that we may be seeing publication of that soon so stay tuned and the ramp up will be in the second half on that commercialization plan. We have them. We have a lot of work to do but we haven't.
Solid plan in place.
So we should be fully in the market in the second half of the year and we expect to see.
I think in our remarks, we talked about there being a significant exponential a driver to us to our volume as a result of Overwatch, but of course, that's not all going to happen. This year, it'll it'll really start ramping up in the second half and we will see a broader adoption next year and then as we bring on the serial monitoring it'll it'll grow from there.
Okay, Great and then are you able to discuss pricing at this point or at least how it compares to the company's E. S. P.
Yeah.
There's a couple of factors there.
We are optimistic that there'll be the ability to cross walk the Medicare pricing from the over wanted some more technology with different algorithm.
And I think that baseline Medicare reimbursement, while we don't have final approval. We're in discussion and we're optimistic that we will essentially equate to the Medicare pricing then we have to go through the grind of working through working with all the individual insurers so that won't happen overnight, but we.
Think that the technology is similar such that.
It's a broader indication so we will have.
A different.
<unk> CPT code for Overwatch, but our intention is to migrate it to similar to over over one pricing, but there will be a little bit of a lag.
Okay got it. Thank you for the color and then on India, I think I may have missed it but the company still targeting a launch in the first half of next year.
We've said 2023.
And we're not trying to be cute on the timing, but theres still some.
A lot of work to be done. So we are certainly committed to 'twenty to 'twenty three.
And we're not there yet in Ontario.
Okay, Great and then moving on to gross margin.
Just provide a little bit more clarity on what that headwind the tailwind being during the fourth quarter and how we should think about that for calendar 'twenty two it looks like Oh.
Genetic may have looked at the margin during the quarter.
No genetics I think it's really volume driven primarily we had some.
We're sorting out the scaling.
And we were doing a lot of resupply of kits and that's what gave rise to Q3.
Yeah.
What's the dynamic there is kip kit build then resupply and.
And the timing of that so.
So I think relative when we when we scale over the year, we view margin tab upside largely based on volume ramp we will have as I mentioned earlier.
More of a ticket terms of incremental price increase over the course of the year, which goes straight to margin and then the volume.
The scaling of the fixed costs relative to volume and you know, we're not anticipating any one offs, but the the kit as we scale and <unk>.
Buildout kits and go to new customers, that's where it gets slightly lumpy.
But as the numbers grow I think the significance of that will smooth out.
Okay got it and then lastly for me I guess.
Congrats on the higher selling price in the quarter have you seen in the willingness for payers.
The increase in <unk>.
Any color on the pipeline in terms of coverage.
Well, we've gotten very positive indications, primarily with Medicare on payer coverage for Overwatch, its obviously premature relative to anything with endo Chuck to approach them as I mentioned the step functionality.
That we're trying to drive we prudently discussed de <unk>.
Clinical utility study, which has been somewhat hampered from a timeline perspective relative to COVID-19 , we try not to use that as an excuse but that's why it's been somewhat delayed.
That's been the issue with some of the larger nationals, but.
The other factor in the strategy in particular relative to large super groups as we think that that'll be very helpful. In influencing payors.
Their customer base gets adoption, because I think that the voice of those providers actually counts a lot more than you know, we as a device manufacturer and vendor. So I think that's the other element is as we get adoption.
And in particular gets a major provider partners, we think that's going to help with reimbursement, but the new news relative to our dialogue needs to be clinically utility, which we expect to be able to publish something this year, but then obviously theres a lag relative to you know.
The cycle of the payers in terms of getting their agreement and when they implement so we're not we don't have our plans anything other than the incremental hitting the singles picking up.
Picking up.
Payers over the course of the year, we've been we've been doing that over time, but we don't operationally playing on the big step function.
You can say something on that too this is valerie.
Is the are the also the other piece is just having full access. This is our first year with having full access on the Cigna you know in a sense of assuming omnicom, varian and shutting things down, but we got the cigna contract pricing them at a lot of the pricing we got during COVID-19 . So the hope is that when new.
Sales force are additional feet on the street additional tenured feet on the street, we should be seeing more of those contract prices come through as Bob said is that the clinical utility of the is the big step function.
Okay, great. Thanks for that additional color.
Our next question is from Kumar Rajat with Brookline. Please proceed with your question.
Hi, I'm sure Andrew for Kumar from Brooklyn, Appreciate the business update thank you.
Of course, the ongoing and go to Cryo could you. Please talk about the type of samples that are being shared with the group companies.
And just to get an idea of how youre getting a little bit just a confirmation of the endometriosis would still require a tissue biopsy studies or do you expect another test with maybe potentially replace it going together.
Okay.
Good morning, Tamara Valerie Palmieri. Thank you for the question.
Let me answer in two parts. So in terms of the specimens we have especially in collaboration with Abbvie in a specimen collaboration not veeva two of the three pharma companies.
These specimens a retrospective retrospective specimens.
And we also have our own retrospective specimens as well as well as additional studies specimens we've been working with collaborators. So in aggregation. We have a large retrospective specimen bank, which is the heart of the validation of the Endo check a product. We also in parallel we are.
<unk>, we are initiating a prospective trial as well so we have retrospective specimens and we are in.
We are initiating a prospective trial as well.
And the end goal in terms of comparing it to laparoscopic biopsy laparoscopic biopsy is invasive this will be a noninvasive aiding detection and our goal is to have strong enough sensitivity and specificity whereby a doctor.
And the patient would have indication of the endometriosis.
Detection and at that point could initiate either medical management or could initiate a surgery that is and that is a specific treatment. So the goal is that this is for women and the initial product out of the gates will be women that are moderate to severe pain and.
This will be a noninvasive endometriosis aiding detection product.
Got you. Thank you.
And also with regards to the breakthrough designation gives us important critic Oh.
I was just curious if you've seen any further guidance from the FDA.
And is there any timeline that you could share with us and also could you talk a little bit about what kinds of benefits. This designation awkward, especially in terms of kind of regulatory issues or the commercial launch. Thank you.
Okay. So.
In terms of that question, there's a couple of parts. There. So the breakthrough designation is a brand new program not sure how familiar you are with it.
The benefits of it are that when you have a product that is truly breakthrough when you meet three criteria, which is number one.
Are you solving for a disease. That's irreversibly debilitating number two is there a predicate device and number three it is an improved patient wellbeing and we believe and our discussions with the FDA we have.
Supported those three but we are still continuing discussions with them. In addition, we are running a parallel process via L. D. T is nicol alluded to in her section. The majority of novel Diagnostics, Our L. D. Ts and we are running a parallel process and that is something that we have informed as well.
The F D a.
Your last question in terms of.
In terms of uptake on the product and also the sensitivity and specificity again, we're looking to be the noninvasive solution versus laparoscopic biopsy.
Sounds great. Thank you. Thank you for taking my questions.
Youre welcome.
We have reached the end of the question and answer session and I will now turn the call over to management for closing remarks.
In closing, we believe that our accomplishments during 2021 set us up for a strong 2022 and beyond with myself, leading the board and Nicole leading the growth and scaling of the business. We are focused on doing the right things to drive profitability and growth. Our end goal is to serve the women's health market with a platform coupled with proprietary.
Very 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 and you may disconnect. Your lines at this time. Thank you for your participation.
Yeah.
Okay.
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Yeah.