Q1 2022 Aspira Women's Health Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to Aspire is women's Health, Inc. First quarter 2022 earnings Conference call. My name is Tom and I will 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 line for your questions.
As a reminder, this conference call is being recorded today.
Leading the call today are Nicole Sanford.
And Chief Executive Officer, and Bob <unk>, Chief Financial Officer. After prepared remarks, we will open the call for Q&A before we begin I would like to remind everyone that forward looking statements as defined under the private Securities Litigation Reform Act of 1995 will be made during this call including statements relating to Spiro.
Future performance future business prospects and 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 the sphere of.
The company assumes no obligation to update or supplement any forward looking forward looking statements, whether as a result of new information future events or otherwise except as required by law.
Participants are directed to the cautionary notes set forth in today's press release as well as the risk factors set forth in the sphere is most recent Form 10-K 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 and now at this time.
I would like to turn the call over to Nicole <unk>, President and Chief Executive Officer, You May proceed.
Thank you operator, and thank you to all of you for joining US today I'll start with a business update before I hand, the call over to Bob to review, our Q1 financial performance.
Our commercial leader, Michael maintenance and executive chairwoman Valerie Palmieri are also here with us and will be available for questions later on the call.
During my first two months as CEO of Fireeye I focused on validating our strategic priority and aligning resources to the areas of the business that we believe are most likely to contribute to short and long term growth.
That effort has included focusing our attention on volume growth in our core business allocating R&D resources to the products that we believe are most likely to drive commercial success.
And rationalizing our cash usage across the business.
As I said the last time, we were together I believe the ability to achieve our mission to improve the health outcomes of women with gynecological diseases.
Relies on our ability to make 2022 of our most successful year across three dimensions growth innovation and operational excellence.
I've worked hard to align our leadership team around these value drivers and I am pleased with our initial progress.
I can say with confidence that we are poised to see significant acceleration over the rest of the year.
I'm going to speak to each value driver in a moment, but first I'd like to share an exciting development about our leadership team.
We are announcing that Dr. <unk> will be joining us as our chief scientific and operating officer Dr.
Dr. Dan joins us from care Dx, we currently as senior Vice President of Lab services and medical director.
Combined and extensive experience ranging from world class academic institutions health care systems, and the commercial biotech industry is rare and it aligns with our strategic priorities.
We believe this appointment will strengthen our operations and accelerate our targeted pipeline development.
Dr. San was a key member of the care Dx Executive leadership team, where he led clinical testing service operations clinical development pipeline manufacturing supply chain regulatory affairs, and compliance and automation and engineering Division.
In addition, he served as a licensed medical director of the company's CLIA and cap accredited laboratory and played a key role in the growth and expansion of the Companys testing revenues and portfolio.
Prior to joining <unk>, Dr bandwidth, managing director and head of regional molecular genetic pathology and Cytogenic at Kaiser Permanente and Northern California.
He led a series of programs related to strategic clinical development laboratory expansion in clinical testing.
Before that doctors bandwidth faculty member at the University of California, Los Angeles, and the Los Angeles VA medical sector.
Dr. <unk> is highly prolific in academic medicine. He has published numerous academic papers and cooperative medical textbooks, yeah listen somatic pathology Dr.
Dr. Stan received his bachelor's degree from the University of California at Berkeley, and his Phd from Columbia University. He completed his postdoctoral training at Harvard Medical School, where he was a cancer Research Institute Fellow and American Society of Hematology scholar.
I believe Ryan as the leader, we need to enhance our innovation efforts accelerate the expansion of our product portfolio and scale, our clinical diagnostic operations as we grow.
Fortunately Ryan saw aspire has substantial potential and decided to devote his talents to providing help providers with better tools to treat women with gynecological diseases.
He will be joining us in just a few weeks and will be on our next quarterly earnings call.
Now, let's talk about our core business starting with growth.
Our commercial team face both challenges and opportunities in the first quarter.
Even though we started the year in the throes of another COVID-19 surge, which threatened our aggressive growth plans our volume recovered rapidly. Unlike other companies in the diagnostic sector, many of whom have struggled with sales throughout the quarter. We saw improvements in volume achieving topline revenues of $1 9 million an increase of 26, 4%.
To the first quarter of 2021, and two 1% sequentially compared to the fourth quarter of 2021.
Perhaps not surprisingly the COVID-19 surge significantly impacted sales volume in January.
Average daily over volume was $64 six for the month of January by March. However, average daily over volume had increased to $84 three a new record for the company. The increase continued into April when over volume per day achieved $86 seven and additional two 8% increase over March the early days of May.
They are very promising with average daily sales so far in the low nineties.
Our new head of commercial Michael Newton wasted no time in making an impact as previously disclosed we executed a reorganization of the commercial team in March to effectively deploy personnel with the most relevant skills and experience for our portfolio.
We have also taken a fresh look at territories and the incentive plans we have in place for our sales force. These efforts appear to be paying off in terms of sales efficiency.
We ended Q1 with 23 salespeople up only two from the end of 2021, yet we achieved the previously mentioned record sales volume in March and incrementally increase sales volume in April .
We are in the process of adding to our sales team and newly created role planned to have approximately 34 field sales professionals by the end of 2022.
An important leading indicator regarding future growth potential as new ordering physicians.
In the first quarter of 2020 to approximately 600 positions, Oregon over product for the first time, a record high and an increase of 47% compared to the first quarter of 2021, and a 3% increase compared to the fourth quarter of 2021. Despite the slow start in January we expect.
These physicians to drive incremental volume for the rest of 2022.
Looking towards the rest of the year, our leadership team will focus on both volume and price as drivers of top line growth.
As part of our refresh of the commercial organization, we have improved the alignment of our sales and reimbursement teams to help ensure they are positioned for maximum impact.
We will continue to push hard for new physician adoption, especially in areas of the country, where we have secured favorable payer pricing on whether our large relatively untapped position pools, such as women's health Super groups hospitals, and other health systems and clinics that work with underserved populations.
To that end, we have launched a series of market, making sprint aimed at creating accelerated progress in areas of potential high volume growth.
This includes active and retired military and their families Medicare and Medicare advantage nationally and Medicaid populations in large states like New York, California, Georgia, and Illinois, where we have previously secured reimbursement.
I want to assure you that we continue to explore strategic partnerships to rapidly expand the reach of our sales organization and.
In fact, while it is too soon to disclose detailed information we are in the final stages of negotiating an agreement with a commercial partner to co market and distribute our Ova products and expect to have additional information to share in the coming weeks as we have said in the past. We believe these relationships are key to the adoption of our existing products and will drive rapid.
The future products.
Let's now turn to innovation and an update on our product pipeline.
We have already achieved several important milestones this year with respect to our older products. The Overwatch manuscript analytical validation of a deep neural network algorithm for the detection of ovarian cancer has been accepted for online publication in J C O clinical cancer informatics. This.
This study was a critical step towards the launch of Overwatch, Our next generation ovarian cancer risk assessment tool.
As a result, we have shifted to finalizing the commercialization and launch plan for Overwatch, which will occur in two phases.
We intend to launch the single use Overwatch test later this year the timing will depend on the results of our clinical validation study that we expect to be completed over the summer with a plan to publish in the fall. We expect this interim study, which will include real world data from patients to be instrumental for driving both adoption and reimbursement we.
Leave all other prerequisites for a successful commercial launch have been met.
The launch of the serial monitoring test is planned for 2023 upon the completion of the ongoing clinical validation study.
Looking ahead on our Ova product line, our strategic research collaboration agreement with Harvard Dana Farber Cancer Institute that we have previously disclosed.
We'll build upon strong initial findings.
We believe the highest specificity demonstrated by the micro RNA technology, coupled with strong sensitivity of our protein based technology has the potential to deliver a groundbreaking personalized risk solution for patients.
Connecticut predisposed to ovarian cancer.
With respect to our development of a commercially viable endometriosis diagnostic product.
We have made a strategic decision to develop this diagnostic as in <unk> or laboratory developed test rather than pursuing breakthrough device designation.
One of the most attractive reasons for companies to pursue the breakthrough device path, which was achieving streamlined reimbursement through the FDA program was eliminated last year.
While we now believe the most appropriate path to market for endometriosis diagnostic product is an LPT were not ruling out FDA breakthrough medical device designation in the future.
Our final strategic priority is operational excellence. This speaks to how we operate the business and allocate our resources, especially with respect to people and discretionary spend.
I've asked our leaders to focus on higher our ROI activities, especially those that drive overall adoption sales volume price improvement and the accelerated development of our first generation endometriosis diagnostic products.
Outside of those priorities, we have implemented additional cost controls aimed at scaling our people process and technology infrastructure at a pace that is appropriately in line with our growth.
In areas, where we seem to be spending in advance of business need we have pulled back significantly and will continue to do so over the remainder of the year.
Bob and I have also taken a hard look at discretionary spending and have challenged ourselves to be prudent with our cash reserves.
To be clear, we will continue to focus time talent and funds on driving broad adoption of our older products and to the development of our endometriosis product. However.
We will continue to challenge the ROI of spending across the organization and we plan to refrain from expanding our strategic focus to other priorities in the near term.
As an executive team, we are firmly committed to managing our cash flow very closely for the rest of the year.
With that I'll hand, it over to Bob to talk about our first quarter financial performance over to you Bob.
Yeah.
Thank you Nicole.
First quarter 2022, <unk> revenue was $1 8 billion, an increase of 29% over prior year and a 1% increase sequentially.
This 29% revenue increase was primarily due to an increase in the number of tests performed in 2022 as well as an increase in the old one average revenue per test in the first quarter 'twenty to 2022 compared to the prior year.
As discussed we discussed on our year end call for first quarter commence with some COVID-19 headwinds, resulting in modest sequential growth for the core.
We were pleased with the sequential progression throughout the quarter and for the month of April .
The revenue per <unk>, plus tests performed was $380 for the first quarter of 2022 compared to $374. During the first quarter of 2021.
The year on year price increased one 2%, while the sequential price was a slight reduction from the $382 realized in the fourth quarter.
This slight decrease was driven by patient pay collection challenges.
Patients deductibles reset at the beginning of the year as well as our strategic initiatives to serve the Medicaid population, which currently has a lower price when compared to our average.
Gross profit margin on a one plus was 53%, but first quarter of 2022 compared to 54% in the prior year first quarter of 2021.
The year on year decrease was driven by the addition of laboratory personnel.
<unk> anticipated growth in the coming quarters.
Research and development expenses for the three months ended March 31, 2021 were $1 $3 million, an increase of 476000 compared to the first quarter of 2021, and a decrease of 105000 when compared to the fourth quarter 2021 spending less.
This spending was focused primarily on product development.
Costs related to Overwatch and investments in our fiber synergy.
Sales and marketing expenses were $4 5 million for the three months ended March 31, 2022, an increase of $1 4 million compared to the first quarter of 2021.
The increase was driven by personnel costs as well as related travel and entertainment.
During the first quarter of 2022.
Executed a reorganization, resulting in the separation of the number of employees.
Changes were aimed at enhancing our national sales force and driving accelerated adoption of <unk> plus <unk>.
Animal care for early detection of ovarian cancer in women, who have been planned for surgery.
The organizational changes resulted in the recording of severance separation and settlement payments as well as legal costs in the first quarter of approximately.
$1 million 284000 <unk>.
<unk> estimated future payouts, partially offset by an insurance reimbursement of 523000.
Paid for sales and marketing totaled $1 million 80 for ourselves.
General and administrative expenses were $4 4 million for the three months ended March 31 2022.
We incurred $2 $12 million in general administrative expenses in the prior year quarter.
The year on year variances attributable head count and personnel expenses.
We ended the first quarter of 2022 with approximately $27 1 million in cash cash equivalents and restricted cash.
Cash used in the first quarter of 2022 was $10 2 million, including approximately $1 3 million of severance settlement and legal expenses associated with our first quarter Regal reorganization and.
And approximately $1 million for payments under our new incentive bonus plan.
With that I'll turn it back over to Nicole.
Thank you, Bob and clothing, our executive team remains firmly committed to our strategic vision and we will focus our efforts on execution for the remainder of 2022.
One that is betting against the spire just hasnt wrong. We believe the wind is at our backs and we are on the best path towards achieving our goals.
You for your time today and with that we will open up the lines for questions.
Thank you we will now begin the question and answer session if you'd like to join the question queue Press Star then one on a touchtone phone.
Youre using a speakerphone please pick up your handset before pressing any keys to withdraw yourself in the question queue Press Star then two.
And our first question comes from Brian Weinstein with William Blair. Please go ahead.
Hey, guys. Good morning, Thanks for taking the questions.
I wanted to start on.
What youre seeing from from your physician cohorts that are ordering your test.
You.
You are talking about.
600, Docs I think.
That were first time users here.
Im just curious as you look historically, what you tend to see from new cohorts of clinicians when they start to order. The test have you seen differs.
Differences in the way the cohorts behave are they ordering more or more recent cohorts ordering more tests faster I just wanted to get some.
Right here, because you have a significant number of doctors that are ordering.
And we continue to wait to see kind of revenue inflect here. So can you give us some idea about what you're seeing kind of on a per doc basis or kind of a cohort basis.
Anything that would get us comfortable on kind of how we should think about future trends.
Sure.
Brian Thanks for the question Thanks for joining us today I'll start and then.
It gives Michael Newton are commercial.
Leader, a chance to add to my thoughts I think it is difficult to project based on prior trends because as you know.
Excuse me as you know we.
<unk> only had a short runway of historical experience.
So I think it's important to look at the most recent trend.
Back overtime, a lot has changed over the last year.
Michael I'll ask you to comment on what your sales team is seeing in the field in terms of adoption from the new docs.
Absolutely from that piece.
Thank you Brian I appreciate the question when you look at essentially behavior in this space, where there's kind of the biggest question Mark concern is when patients with a pelvic mass are going to present to these particular providers.
So that's really kind of the X factor as it relates to frequency of use in particular application based on.
Utilization was at a clinic.
But from that perspective, as we get new providers with the Kingdom comment upon the sales team is to make sure that they are present.
On the standpoint of being there to remind to refresh your memory.
Any habit when you first start someday it certainly takes a much more.
Effort on the front side.
Really kind of first utilization for us is where the work begins to get the pull through.
As we look at particular cohorts, it's a little bit tougher to say in terms of utilization because of the fact that again patients.
This type of tests don't show up into the clinic every single day.
Thankfully, obviously based on what it is we're testing for.
But from that standpoint, there's not necessarily a big differential in terms of the patient influx from a particular provider based on how long they've been a user of <unk>. It's really just a matter of patient frequency and then from there. It's incumbent upon us to make sure that we're present to stay top of mind with those providers with over one plus.
For them when those patients show up so.
It's a little bit tougher to stratify and a more typical way of.
Initial user will kind of ramp up of this particular speed.
Because of again the unknown of when a patient is going to appear.
Does that answer that question.
No it could give some color on that and I appreciate that.
Is that right.
Ryan I'm, sorry to interrupt.
One thing we have learned that the back office plays a really important role here because those first few interactions.
<unk> has with our tests are really important.
Driving whether they may choose to order the test again and that means making sure. There are no surprises in terms of what is going to collapse the patient, making sure that the patient know where to go with the ads question, making sure that we're bringing online our customer service and clinical expertise to the table.
It also means making sure that the test is.
Getting back to the Doctor in a timely manner. So so obviously our focus on operational excellence is really important to make sure that those early interactions are positive because what we do know is that doctors who have good early experiences tend to continue ordering.
Do not.
Yes that makes sense.
Is there an update on on synergy it was talked about a lot in prior calls.
As much of an update on that today can you just talk about where that stands what the interest looks like and how the the first experiences around.
Yeah sure.
Excuse me.
Recovering from a little elements here.
Sure.
The way.
Yeah, so as we continue to be.
Very high potential opportunities for the company in fact, since I joined as CEO I've come to believe that.
Very critical part of our.
Future growth plan, even more than they had before so there's no. There's no backing off on synergies is an important part of our strategy are first for our clients are in the implementation phase we can have.
We do have ordering physicians coming through on <unk>.
And the board.
And in the last call we wanted to be sure that we were getting the implementation right. So that we have a playbook going forward that allows us.
To ramp up fast and to make sure that we're doing implementations.
And the most efficient way possible in the future but.
So far are very positive and we're not backing off on that commitment at all.
Okay, and then I heard you talk about negotiating some sort of a partnership to distribute the product and we get more information in the coming weeks can you just talked about the strategic rationale for for thinking about bringing in a partner for distribution.
Yeah. So I think it all comes down to how fast can you grow your sales organization on your own versus partnering with with other.
Strategic partners that have.
In the same marketplace that we are and so and so it's about driving adoption for our products, which is obviously critically important today, but it's also important as a platform for our future products.
So the rationale there is that we can get.
Far more.
On the ground.
<unk> impact working with others and they could make growing the sales force on the island.
Okay, we'll wait till that is announced to come back with questions on kind.
The operational logistics of that but look forward to that can.
Can you give us any update on.
On timing for kind of next data readout or next steps with the Harvard Farber situation as well as.
What's the LDP approach for Endo.
As far as timing and kind of next steps there.
Sure well, we've been very pleased with the partnership with with Harbor, Dana Farber Cancer Institute.
Incredibly positive working relationship is moving along.
As we had planned.
And I think that.
We will just see further development on that partnership going forward. This year excuse me.
Okay.
So nothing incredibly interesting to say there Brian other than it continues to be an incredibly positive.
Relationship for Us and is helping us to accelerate our development.
You can't just buy them for sure.
And the second question around around Endo, we're not making any specific changes to.
The timeline for Jack.
In this call. So we are still tracking as we had said for second half of 2023.
Okay, and then a question.
Bob maybe or whoever on on cash situation. Obviously, the burn was it was higher this quarter.
You have I think you said 25 27.1, I think is what you said in cash just how should we be thinking about the cash burn for the year and plans you guys have to shore up the balance sheet.
Well.
Nicole discussed we're anticipating some compression of the cash burn going forward.
The issue, obviously, we articulated a bunch of one timers, which is kind of impacts more of the balance sheet.
I would encourage people to look at that it's not the not the new run rate.
And so a combination of <unk>.
Cost control.
Sales rep productivity.
Productivity and.
Kicking in relative to the synergy volumes.
And then.
Recall.
The relevant time horizon, we will launch Overwatch.
We've largely already done most of the preparation work in terms of the marketing work and things of that nature and that will be incremental top line. So we see the same compressing in terms of our cost structure and our margin expansion as well as as we look at ramping up volume over the course of the year.
So that will be narrowing in terms of cash burn as we commence into the quarter. So that's the principal issue to communicate.
Okay got.
Got it.
We will follow up with you.
On that.
A follow up call okay, great. Thanks.
Again its star then one to join the question queue. The next question is from Ross Osborne with Cantor Fitzgerald. Please go ahead.
Yeah.
Ross if youre speaking your line might be muted on your end.
Okay.
Yeah.
Alright.
Sure.
Alright.
That's on the quarter.
I guess, just as a follow up from Brian's questions on physician what was the total amount of ordering physicians during the quarter.
Bob do you have that number handy.
Okay.
I would describe it.
Okay.
Okay.
Yeah.
Robert.
Yes, Sir.
275.
Okay got it thank you.
And then I guess turning to the operating environment I realized average daily volumes improved throughout the year and I appreciate that additional color.
Just curious are you still seeing any headwinds at this point better limiting growth.
So it's interesting.
To me that the Covid impact is turning into more of a.
Just the general productivity issue.
Specifically im speaking more kind of broadly right, but we're not seeing huge shutdowns, but we are seeing new cases that are resulting in people missing margin and not being able to peak sales.
Brian and that kind of thing so.
I don't think I see anything macro beyond what everyone else is operating in this environment.
And we as we said in the last quarter call.
And the year end call, we've been working really hard to make sure that we have a good response plans for any additional slowdown or.
The macro issues that we find whether they are related to COVID-19 or otherwise.
Some of those levers that we pulled in the first quarter helped us to recover quickly.
So for example, we very quickly as we thought.
On a slowdown from Covid in January to Mara Kols events.
We had one of our best.
Excuse me in one of our best attended physician Webinars and history of the company in February resulted in quite a few installations.
Being added in February which would've.
A reason that we were able to recover so quickly so.
We're not seeing any form network Super concerned about however, we have developed a playbook to make sure that regardless of the reasons that we might see headwinds we have the playbook to respond.
Okay.
Want to add to that I mean is there anything that on your side data.
Bob and Michael.
I don't want to speak on Michael's behalf, but the access restrictions to doctors has largely subsided.
But obviously there is.
<unk> variants that impact people go into the Doctor. So, we're really planning operationally to resume to normal environment, but being ready to adjust as we move forward as Nicole indicated so we.
We're not seeing Covid is a big headwind, but where you have the fact that that could research just like everybody.
Okay perfect Alright.
Great and then maybe one on ESG have you seen a willingness of payers to meet.
Has that increased throughout the year.
And then how does the pipeline look like in terms of coverage and then lastly, how many covered lives did you end the quarter with.
I'm sorry could you repeat the first question I didn't catch that.
Just odd payer access have you seen any willingness from payers to meet with you all has that increased.
I think it's been pretty consistent.
Bob any fiber Valerie anything to add to that I don't know, we havent, we havent seen.
We haven't seen any issues there.
Yeah.
No.
There hasnt been a big.
Change in terms of acceleration, but we haven't had that as a.
As an access restrictions over time.
We've we've obviously mentions a.
Our big effort, we have in place is improving the ASP relative to Medicaid given the fact, our products has a differentiation that can help to serve that underserved population. So.
There is a fairly.
Currently the Medicaid is somewhat dilutive to the average and our objective is to increase that ESP over time and we've been.
Really focused on Credentialing and the like.
Lots of a scientific sell it's more of an administrative.
Conversion effort. So we continue to.
To ramp that up over time, and we will see some increase in the <unk>.
ASP, there, but there hasnt been access restriction, what I would comment on is that a big effort right now is getting.
Coverage getting preparation for coverage as we get the appropriate publications for Overwatch, which will be.
We've reiterated the plan to launch in Nicole's remarks in the latter part of the year. We did have a key publication in Q1.
A critical factor for US is getting that cross walk if you will I think that's the appropriate term to get reimbursement for Overwatch and I think thats, a big part of the dynamic to Bryan <unk> question earlier in terms of physician behavior is that theres, just the broader indication and a more.
Day to day usage is our expectation relative to overwatch so.
Think about getting reimbursement for Overwatch has the critical strategic for US we have in motion right now.
Okay, Great and then just do you have the number of covered lives you ended the quarter with on hand.
And you can get it later.
I believe it was $194 million.
100 <unk>.
100 <unk>.
Yes.
Got it thank you for taking my questions.
Thank you.
This concludes our question and answer session I'll turn the conference back over to Nicole Sanford for any closing remarks.
Thank you operator, and thanks again to everyone for joining us today.
Hopefully you found the information helpful. I think youre going to hear over and over the rest of the year to be consistent.
Our hyper focus on growth innovation and operational excellence.
The company is focused in these areas and we're making great progress. So thank you again for joining us and we'll speak with you soon.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.