Q2 2023 Aspira Women's Health Inc Earnings Call
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Good afternoon, ladies and gentlemen, and welcome to Spirit's Womens Health incorporated second quarter 2023 earnings Conference call.
At this time, all participants are in listen only mode.
Following managements prepared remarks, we will open the call for your questions.
As a reminder, this call is being recorded today.
Leading the call today is Nicole Sanford.
Didn't and Chief Executive Officer.
Joining her doctor Torsten Hombach 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 as defined under the private Securities Litigation Reform Act of 1995 will be made during this call.
Including statements relating to our spirit expected 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 at.
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 our spare women health control.
The company assumes no obligation to update or supplement any forward looking statements, whether as a result of new information future events or otherwise except as required by law.
It just depends are directed to the cautionary note set forth in today's press release as well as the risk factors set forth in our spirits. Most recent annual report on Form 10-K, and quarterly report on Form 10-Q filed with the S. E. C for a description of factors that could cause actual results to differ materially from those.
As anticipated in the forward looking statements.
At this time.
I'd now like to turn the call over to Nicole Sanford, President and Chief Executive Officer.
Please go ahead.
Thank you operator, and good afternoon, everyone I would like to welcome you to our second quarter 2023 conference call.
Before I begin I would like to officially welcome back to a question home back to our senior leadership team Torsten was appointed Chief Financial Officer on June 15th and brings over two decades of biotech experience having served in several senior positions at life Science companies.
His extensive experience includes capital raising how many transactions corporate strategic planning product development and launch and of course, the expertise in all aspects of accounting enough to see reported.
Austin has already made a major impact, including the successful closing of a $4.7 million of capitalized just weeks after coming on board.
He will provide remarks later relating to our financial performance before we open up the call for questions.
Now, let me begin with a review of our performance this quarter.
As always I'll start with growth.
Oh, the suite product revenues for the second quarter were $2 $5 million representing growth of 23% compared to the second quarter of 2022.
This continues an established trend of year over year quarterly growth for each of the quarters since I became CEO .
The number of tests performed in the second quarter was 6289, an increase of 16% compared to the second quarter of 2022.
Overwatch contributing 884 attests to the total.
This represents an 80% increase in our watch class performed in the second full quarter of adoption.
Oh Sweet test performed for the six months ended June 30th 2023 with 12548, an increase of 22% versus the same period of 2022.
Accordingly, the volume growth was driven by a much leaner sales team what year to date test volume per field representatives, improving substantially from 354 per rep in 2022 to 598 per rep in 2023.
This demonstrates that our commitment to eliminating unprofitable and underperforming territory, along with a renewed focus on partnerships like bio reference laboratories women's care, Florida are beginning to bear fruit.
When we look beyond volume and focus on average unit price I'm very pleased with our progress.
All the suite, a pea for the quarter increased to $396.
Importantly, we began billing overwatch under its unique P. L. A code on April 1st which resulted in second quarter of watch M. P of $326, 142% increase over the first quarter.
While we are still in early days, we are pleased to see reimbursement patterns for overwatch lined up nicely with over one plus.
We have launched it in August we pair adoption strategy for the second half of the year.
Aimed at making as much progress as possible on the oldest fleet test portfolio, while we prepare for a successful launch of endo check by the end of 2023.
More broadly in reimbursement events continue to unfold with CMS and Medicare reimbursement of diagnostic tests.
National and local coverage decision, we are actively participating in industry initiatives to collaborate with CMS and we will disclose any changes that could have an impact on our future revenue.
Lastly in terms of our growth initiatives. We are now in the final stages of the commercial strategic refresh which was launched last summer. The initial focus was on refining our core value proposition and proving the effectiveness of our field sales team and rationalizing our overall sales and marketing spend.
I'm proud of our progress as our sales and marketing expenses for the second quarter dropped once again decreasing over 50% when compared to the second quarter of 2022, while simultaneously achieving growth in both product revenues and volume.
Cost containment is critical to the company I want to stress that our commercial refresh is not simply a cost cutting exercise. It always has been and will continue to be about improving impact and the return on investment.
As we move into the next phase of the commercial strategy in the second half of the year.
On reaching physicians and other health care providers directly through multiple channels.
This effort is very intentional we are emerging from the seasonal slowdown the early summer months and are preparing to expand overwatch for used cars at scale a longitudinal monitoring.
Specific activities will include the creation of a content hub for direct health care provider interactions.
Advertisements and high impact obgyn journals targeted virtual and in person physician education.
Dan cancer awareness month, social media campaign, and the expansion of our sales capabilities to drive growth more efficiently in parts of the country that are outside of our field sales territories.
As a result, we expect a modest increase in sales and marketing expense for the third and fourth quarters of 2023.
Let me now turn to innovation.
Last week, we announced the Doctor Ray ban has made the decision to step down as Chief Scientific officer effective September 15th.
He is however expected to remain as an advisor to the company.
It's difficult to describe the contribution Doctor fan has made to the company during his tenure here.
It's worked tirelessly to enhance our scientific capabilities and made significant measurable improvements in our operations.
He has built a solid foundation and a professional team that will carry on his vision.
We both remain confident in our path forward and expect to remain on track to complete our Overwatch longitudinal clinical study publication and commercially launch our endo check diagnostic blood passed by the end of the year.
Let me briefly talk about each of these programs now.
Overwatch was developed with the intention to launch commercially in two stages.
The first phase was to launch Overwatch as a single point in time application for initial clinical assessment.
Second phase expands the application of Overwatch for longitudinal monitoring testing.
Although overwatch currently can be ordered at intervals that are determined by the provider to be appropriate for each patient.
We are finalizing a manuscript related to an ongoing clinical studies that it's accepted for publication will provide additional clinical data to support and drive adoption of the test as an effective clinical tool for longitudinal monitoring the Mexico market.
Moving onto other check our first generation protein based blood test to aid in the detection of endometriosis.
We are on track for commercial launch by the end of 2023.
Our current focus is on sample acquisition for clinical verification and validation and we are on track to obtain sufficient cohort data to complete this important Scott.
We have secured nine sites for Endo check clinical study and continue to collect samples that meet our study criteria from other sources around the world, giving us the confidence that when we meet our launch timelines.
In terms of operational excellence, we have once again decreased cash used in operations to $3 4 million in the second quarter, representing a 46% reduction over the prior year, while still showing sustained growth.
Completed an equity raise recently strengthening our balance sheet to support our long term strategic vision.
We have a high quality effective team determined to set a new standard of care and Gynecologic Health. In addition to an industry standard for prudent high impact capital deployment.
Now I would like to turn the call over the torch to him for a review of our financial performance Thorsten.
Thank you Nicole and good afternoon, everyone. It is a pleasure to be here today to provide this update.
If wasted no time in my first two months with the company execute swiftly on the capital needs, while continuing to drive the company forward in all of our plans.
When I joined I saw a company that offer tremendous promise in advancing the care of women with ovarian cancer.
Yeah.
They have been very few innovations in this area to debate and broad adoption of the overseas product would be a significant leap forward in the practice of medicine.
I would like to see this become a reality and I'm proud to be part of a committed team executing on that promise.
Well, let me turn to the financial performance of the company.
Product revenue for the three months ended June 32023 was $2 $5 million, an increase of 23% compared to $2 million for the same periods in 'twenty two.
The increase in revenue was primarily driven by an increase in the oversea test performed during the quarter, which increased 16% to 6289.
Two 5411 for the same periods in 'twenty two.
Combined with an increase in average selling price or a P.
Revenue per oversea test performed for the three months ended June 32023 increased 6% to $396 compared to 300.
$73 for the same period from 22, reflecting better than anticipated collections for Overwatch and its second quarter of adoption.
Total gross.
Profit margin for the three months ended June 30, 'twenty, three or six 2% compared to 51% for the first quarter of 2023, and 47% to the second quarter of 'twenty two.
Gross profit margin improved due to an increase.
And if its unit price and our ongoing focus on process efficiencies and cost containment.
Research and development expenses for the three months ended June 30, 'twenty, three with $700000, a decrease of 51% compared to $1 $4 million for the same periods in 'twenty two.
The decrease was primarily due to decreases in expenses for consulting clinical trials with supply.
Sales and marketing expenses for the three months ended June 32023.
Well $1.8 million, a decrease of 51% compared to the same period of 'twenty two.
The decrease was primarily due to decreased personnel costs.
General and administrative expenses for the three months ended June 30, 2023 with $3 $4 million, a decrease of 19% compared to the same period of 'twenty two.
This decrease was primarily due to a decrease in personnel expenses and <unk> costs.
Total cash cash equivalents and strict cash as of June 32023 was approximately $5 million.
Cash used in operations for the three months ended June 30, 23 was three $4 million compared to $5 $7 billion for the three months ended March 32023, and $6 3 million for the three months ended June 30 'twenty two.
We continue to focus on prudent use of resources and as a result of lowering our expected cash to be used in operations for the remainder of 2023 to between 6 million and $8 million.
In July we compete the privately placed registered direct offering of straight common stock with alliance Global partners as placement agent raising gross proceeds of approximately $4 $7 million, adding approximately $4 3 million in net proceeds to our cash balance.
We were very pleased that we saw a broad participation of long term existing shareholders as well as the entire board and management team.
In addition to bringing in new health care focused investors.
We believe that the cash on hand, following this transaction will be sufficient to achieve our development program goals.
Over Sweden Endo check.
I will now turn it back over to Nicole.
Cool.
Thank you Thorsten I'd like to close by personally thanking our shareholders that participated in our most recent capital raise the continuous support from you our investors, but not something that I take for granted and fully dedicated to our future success and appreciate the faith you have shown in me and our incredible team.
With that I'd like to open the call for questions operator.
Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate that your line is in the question queue.
You May press star two if he would 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 question.
Thank you.
Our first question comes from the line of Sally Yankees with water Tower Research. Please proceed with your question.
Oh, Hi, Nicole I'm going to talk to you a good result.
Thank you.
And it looks like test volumes continue to.
And prove and I gather you are in the process of replacing and finding replacement for Doctor fan I mean, how far are you along in that process.
Yes.
Oh, Thanks, Kelly, Yes, we are.
We are confident in the team that Ryan belt I've spent.
A couple of days, just confirming with with Ryan and that meeting with the key people in both product development operation we.
We have what we need to keep moving forward. So we are in the process of reaching out to potential folks to come in but at this point there is that we won.
Want to make a good decision on a cost decision and there's no reason to rush since we have a great team in place that's moving things forward.
Okay, and how long was here to spirit.
He was here for just about a year Oh.
Oh, Okay alright.
And then I guess my other question is.
Are you aware of any of the competitor companies like guardant health in the liquid biopsy companies gotten out there I bet.
Are they.
Close to developing.
Liquid biopsy test for ovarian cancer, yet I mean, what's your sense on the competitive environment.
Sure at this stage, we are the only company that has a portfolio of tests available for clinicians for assessing ovarian cancer risk for any woman looking in that format.
Whether or not they've been identified for surgery.
Whether or not the physician believes there they're looking at a benign or more likely an indeterminate amount that's more than or up to 50% of masses are in determinant.
We are the only company that has a product portfolio available today I'm not aware of any market competitors.
That are entering the market at this time okay.
Okay.
And just one final question I mean, you exhibited good cost control. This quarter do you expect that to continue going.
Going forward I mean, it certainly.
It looks like the company is doing fine with the lower expense rate.
Mhm, well, we've put out our our cash guidance utilization for the rest of the year is between six and $8 million about okay. So everything that we need to spend in order to do the things. We've talked about today include launching our endo check test and our.
Commercial refresh strategy.
As I mentioned, we may see a slight increase in expenses, especially on the commercial side for the rest of the year, but all of R. R.
Are the.
The cash guidance that we gave it is inclusive of everything we expect to spend.
For those initiatives.
Okay, great well, thanks very much.
Thanks Sally.
Thank you.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Our next question comes from the line of Andrew Brachman with William Blair. Please proceed with your question.
Hey, guys. Good afternoon, thanks for taking the questions.
Maybe if I can start just on the clinical trial frontier Nicol.
I think Nicole you started talking about some of the trials in the past that you run for Overwatch, but maybe can you just give us a refresher on any ongoing or future trials. There I'm just sort of trying to think about some of those initiatives. Just as you guys are trying to get some additional payer win any data that you think might be necessary to sort of get them over the hill.
Sure sure Yeah. So we.
We have an ongoing study with the overwatch for longitudinal monitoring, but we expect to publish a manuscript.
For that test application in sometime before.
Which will drive provider adoption and will also I believe would be helpful.
Securing additional payer adoption as well.
And on the endometriosis side as we've talked about and I briefly touched on we have ongoing clinical study for endo check that we have nine sites secure and.
And we're looking to add sites to that as well.
Designed that study to really meet a lot of different needs.
It means in terms of payer and provider adoption for Endo check, though we believe that well.
Most of the needs that we would have.
Yeah.
Hopefully that okay. Thanks for that yeah, maybe just on over one plus here for a minute.
If we sort of look at the implied volumes there it looks like they moderated a little bit sequentially can you, maybe just sort of speak to that David anything seasonally or sort of seasonality in the business or is there any impact from the overwatch.
Watch launch here, how should we just be thinking about that going forward.
Thanks.
Yeah, So there's probably a little bit of seasonality. There is we know that women.
Tend not to go to the Doctor as frequently in the summer months and they they certainly don't tend to schedule.
Surgeries that that can be avoided optional surgeries in the early part of the summer as well so it's possible.
And the other piece as well is that we believe that as people are as physicians are adopting overwatch.
We'll pull back a little bit on off label use of old one plus.
Which we would we don't get paid for so if there's a slight shift in volume there.
From a one plus off label to Overwatch that that's a good thing because those are tests that we can submit for reimbursement as they were in line with the intended use though however.
We are not seeing a major shift or a moderation in the business.
We're continuing to be.
Recipe and displacing them.
125, which is you know as we.
I'll now an inferior but deeply in France test for that.
That doctors have used off label for <unk>.
Women for surgical triage, and and so we're being as aggressive as ever in displacing that test.
Yeah.
Okay I'll leave it there and follow up offline. Thanks, guys.
Great.
Thank you.
There are no further questions at this time I would like to turn the floor back over to President and CEO , Nicole Sanford for closing comments.
Thank you operator, and thanks to everyone, who joined US today I appreciate the time and the ongoing support and that we'll talk to you in the third quarter.
Thank you. This concludes today's teleconference. You may disconnect your lines at this time.
Thank you for your participation.
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