Q3 2023 Sera Prognostics Inc Earnings Call
Yes.
Good afternoon, and welcome to this era Prognostics conference call to review <unk> third quarter fiscal year 2023 result.
At this time, all participants are in listen only mode.
Be facilitating a question and answer session towards the end of today's call.
As a reminder, this call is being recorded for replay purposes.
I would now like to turn the call over to Peter Denardo of cap Com partner for a few introductory comments.
Thank you operator, good afternoon, everyone welcome to Sara Prognostics third quarter fiscal year 2023 earnings conference call at the close of the market today, Sara Prognostics released its financial results for quarter ended September 32023.
I think for the companies. They will be then you blend garg, president and CEO and often <unk> our CFO during the call. We will review the financial results. We released today after which we will host a question and answer session.
If you've not had a chance to review our quarterly earnings release. It can be found on our website at cira Prognostics Dot com. This call can be heard live by webcast at Cerro prognostic Dot com and a recording will be archived in the investors section of our website. Please note that some of the information presented today may contain projections or other forward looking statements.
About events and circumstances that have not yet occurred including plans and projections for our business future financial results and market trends and opportunities. These statements are based on management's current expectations and the actual events or results may differ materially and adversely from these expectations for a variety of reasons, we refer you to the documents the.
Company files from time to time with the Security Exchange Commission specifically the company's annual report on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on form 8-K. These documents identify important risk factors that could cause the actual results to differ materially from those contained in our projections and other forward looking statements.
As a reminder, a webcast replay of this call will be available on the investors section of our website I will now turn the call over to Zane, yet Sarah Prognostics, President and CEO tenure.
Thank you so much Peter and good afternoon, everyone.
Since our last quarterly call. We've continued to evaluate the best means to pursue near term revenue and position the company for long term success, all the while being vigilant on controlling our costs and preserving solid balance sheet, which is free of debt and we believe comprised of sufficient cash to generate shareholder value in the coming years.
We expect the balance sheet strength and managing operating expenses, while focusing on the best means to accelerate revenue will take us to a leading position in the pregnancy in women's health market in the future.
As we continue to develop evidence to support adoption of the preterm tests. We're also focused on developing new products to address many unmet needs in the pregnancy market. One example is a clinical tests to provide a risk assessment tool for multiple pregnancy complications.
I think both high risk Rollin and low risk rollout result in a single attack.
Another is our work on a project to provide a more accurate estimate of when a baby will arrive to help her mother and planning maternity leave travel and.
Other important milestones.
These are all critical pathways towards additional revenue for Sarah.
Key to accomplishing further adoption of our technology is competition of steady results with supporting compelling data that showcases the benefits of our technology.
With that in mind, let me start with a detailed update on our first pre term trial.
Detailed results for the Hertz, which was conducted at Christiana care in Wilmington, Delaware from June 2018 to September 2020 have been submitted for publication in a peer reviewed journal.
The study was designed to determine neonatal outcomes after risk assessment, using our pre term tests and using guided intervention after targeting those with elevated risk corporate active treatment. Let me summarize the results of the study as provided in the preprint manuscript.
And three women were subsequently deemed ineligible after screening.
Of these roughly 35% or 570 patients.
Deemed high risk with roughly 56% or 286 of these accepting intervention.
Pregnancy as identified by the test to be at elevated risk for preterm birth were offered 81 milligrams.
Brent Daily 200 milligrams of vaginal progesterone daily and care management.
Our goal was to compare outcomes for women screened either low risk or high risk and accepting treatment with those in our historical study are all 10000 pregnancies.
Oh cool primary outcome, where new NATO hospital stay.
And ordinarily neonatal morbidity index score.
The primary analysis found the munis and the prospective arm were discharged from the hospital earlier and had lower new needle morbidity index scores pre.
Test impact showed driving two and a half week improvement in gestational age of innocence, most at risk for early delivery two.
Two 1% reduction in neonatal hospital length of stay 18% reduction in severe and neonatal morbidity and mortality and an impressive 28 day reduction in neonatal intensive care unit length of stay for infants born before 32 weeks were really pleased to note that are hurt.
Validated our proteome that blood test for preterm birth risk, which improved neonatal outcomes compared to control and have recently diverse cohort when the test was coupled with treatment to those at risk.
With these results we believe our test in treatment strategy show significant promise for mitigating and hopefully in some cases, eliminating the negative impact of premature birth among those at risk.
Moving on to the update on our Prime study having observed the results from the Averts study. We now have an updated model to project anticipated patient disposition compliance rate.
The expected impact of our test and treat strategy.
Armed with those insights we believe the prime study will be stronger if we add up to a thousand more patients to have a sufficient number of high risk treated patients.
Current rates, we expect enrolling these additional patients to only add a few months to the study. So we do not believe this change will impact our overall plan to have final Prime result in 2025.
We also decided to shift statistical power from the interim look to the final readout to fever success in the final study readout and to give us an opportunity to enroll additional individuals' without delaying the interim look as a result, there are three possible outcomes in the interim look that we expect to be completed in December.
One the data safety monitoring board do somebody you concluded. The study May proceed to full enrollment in the final readout second the decent be instructed the sudden should stop for safety reasons, although highly unlikely given that the interventions in the study are well tolerated in common use for other indications and they're viewed as very.
Little risk by the central community.
Three the benefit is statistically demonstrated at the interim look also highly unlikely due to the shift of power from the interesting point.
We would be very pleased with the scenario number one which would result in full enrollment delivery of all babies and their outcomes available in reported between anticipate will all be known analyzed and reported in 2025.
We expect the prime interim look to be completed as expected and communicated before by the end of this year as a reminder, the prime interim look and the timing of this event requires delivery hospital discharge of mothers and babies and final cleanup of the data prior to the analysis of study results all of which are progressing as planned.
On to provide a commercial progress update.
We're excited to be adding new large institutional customers to our roster this quarter and have rolled out care coordination offering for women identified as high risk alongside with that we expect new institutional customers to help us evaluate and identify what works best and coordinating care for expecting mothers that are facing the risk of preterm birth, we built.
Leave that our service offering to such patients can improve test adoption by their physicians by providing better overall care.
Given the size of these institutional customers, we expect to scale volume up testing within these institutions gradually overtime.
Sarah provided care coordination is built for separately, though we don't expect this service to become a major source of revenue for Sarah in the short to medium term, but rather serve as a catalyst for better patient care and adoption.
We're looking forward to providing two important for commercial traction updates to you in our next Q1 'twenty 'twenty four analyst briefing.
First on our new product development progress as we've moved to a new product to the next stages of their development and second on the improvements, we're making to logistics of blood collection to enhance our customer experience.
With that I'll now turn over the call to often for a review of our third quarter financial results awesome.
Thanks, John and good afternoon, everyone. Let me review our financial results for the quarter, and then I'll provide a bit of detail on our steps to reduce cash burn and extend our runway following our moves to better align our commercial approach to the market we serve.
Revenue for the third quarter of 2023 was $42000 compared to $87000 for the third quarter of 2022 gross.
Gross revenues were $87000 for the quarter, but were offset by adjustments on old accounts as a result of a regular review of our revenue estimate as a reminder, on our last call. We noted our expectation that 2023 revenues will be less than $400000.
Total operating expenses for the third quarter of $8 $2 million were down significantly from the $11 $3 million from the same period a year ago. As we continue to streamline our operations research and development expenses were $3 $5 million compared to $4 2 million for the third quarter of 2022, due primarily to improved efficiencies.
Our lab operations and lower clinical study costs.
Selling general and administrative expenses for the third quarter of 2023 were $4 $6 million down significantly from $7.0 million for the same period, a year ago due primarily to steps we've taken over the past year to streamline commercial operations to better focus our commercial strategy. While also streamlining administrative costs to match our current level of operation.
Yes.
Net loss for the second quarter of 2023 was $7 $2 million down from $10 $7 million for the third quarter of 2022.
As of September 32023, the company had cash cash equivalents and available for sale securities of approximately $85 million.
In addition to the aforementioned year over year operating cost reductions we've taken additional steps in the early part of the fourth quarter to further improve our cost structure across the organization.
Carefully aligning our commercial focus and development activities on what we believe are the best near and long term revenue opportunities.
Our 2023 gross cash expenses are expected to be approximately $34 million for the year compared to approximately $39 million for the year in 2022, an approximate $5 million or 14% decrease.
Our gross cash expenses for 2024 are expected to be less than $29 million as we fully recognize the impact of the streamlining efforts we've made in 2023.
This represents an additional annual decrease of approximately $5 million or 15% we'd.
We believe our plan for managing operating expenses in the future should enable us to operate into 2027, given our very strong cash position.
Operator, we can now please open the call for questions.
Well now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
If you're using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
My first question is from Patrick Donnelly at Citi.
Hi, This is brendon on for Patrick Congrats on the quarter I wanted to start off by asking us.
So last quarter, you guys talked a lot about.
Establishing partnerships and possibly licensing some of each in house data I was wondering if you guys had any updates there and who may possibly sounds like your ideal either partnerships or people you'd want to place in some of the data.
Thank you so much for the question I'll start off and then see Boston, we'd like to jump in and add anything we're still incredibly excited about the opportunity to partner with our with other companies both on our product and on our data we actually have a lot of life discussions underway.
I'm not able to share specifics however for our products collaboration we're looking for are companies that have a relevant capabilities in commercializing products in our space overlap in a lab presence, our commercial footprint and et cetera on data.
Oh, we continued developing the definition of our product the target audience and the commercial model. So the type of partners that we will be seeking will be driven by where we land on what is the optimal place for us to contribute with this unique asset, but we're very excited too.
Share more in the coming analyst calls about how those products are shaping up and alongside with them potential partnership.
Yeah.
Great. Thank you and then one follow up for the timeline for the a bird publication I know you submitted those documents.
This year any timeline of when that may be.
Published a would it be next year or kind of later into 'twenty four 'twenty five.
Great question. The publication is currently under review I cannot estimate the timeline.
I'm, hoping not 2025, but I there are no guarantees, but we know it's under review at the publication, where we submitted so the process is moving.
Got it thank you guys again.
Thank you.
The next question is from Andrew Backman at William Blair.
Hey, everyone. This is Maggie on for Andrew today. Thanks for taking our question I wanted to start maybe just on the Kols feedback you've gotten from my birth, thus far and maybe talk about how that kind of shaping your conversations with institutional customer because you continue to add them.
Great question. The early conversations have been really powerful the data that we were excited to produce brings a couple of really important takeaways.
Takeaways that Oh, where key opinion leaders noted and of course, the data is achieving the goal which of course is creating more opportunities for us to add additional customers. So what are those number one is everybody is delighted by the diversity of the patient population and seeing the impact.
<unk> of test and treat strategy with preterm with varying population because FERC study had a significant portion of the high risk treated patients, but that was all diverse backgrounds. Unlike the previous studies, we shared before number two.
Who is the incredible impact on the babies that are born the earliest as you probably know for some of the babies that are born before 32 weeks it could be the math the matter of life and death as well as severe morbidities, becoming some of the.
He helped impact that can go away over time, so the improvement in gestational age has been noted as a really significant powerful if not breakthrough improvement in what exists today for some of these earliest birth because four earliest to be born babies, two and a half.
[laughter] matters incredibly versus for babies, who are let's say after 37 weeks of gestation extending their traditional age by two and a half weeks is powerful however, it doesn't carry significant as significant health outcomes as it does for <unk>.
Babies under 32 weeks of age.
So those two have been highlighted as the most striking.
Striking insights from the data and we're really excited to share more as we engage with more and more customers.
I will also add that due to the the nature of the study with significant historical arm. We are looking to explore if we could pull out the economic impact of of the clinical endpoint results that we've shown on the customers. So.
All of these will be very valuable in discussions with as the important with providers as they will be with payors.
Great. Thank you that was super helpful. And then maybe just a follow up there just on your service care offering.
How are you viewing those as expanding the note down yeah, you know down the long term.
It's a great question as you know our care management offerings exist by many providers a majority of the time, they're generic they are not specifically for obgyn, nor are they standardized with protocols that can be replicated from one customer to another customer so when we engage with new customers.
Especially the large institutional players, where we began our focus the last six months. We found that they are they get intrigued and excited about achieving full scale of outcomes demonstrated in our clinical studies and they are interested in seeing how the protocols we've tested in the random.
<unk> clinical trials will impact the patient population in their institution, even if they have their own general care management offerings. So we found it as a great catalyst, having that offering to engage to show the impact of our product over time. However.
I would say that our strategy will be to drive standardization of care management offerings in the institutions themselves. So sir it doesn't need to do that and present that standardization and ability to achieve outcomes for payer coverage to really drive the conversations with the payers that they.
Our results are replicable across institutions time, and again for broader adoption.
Yeah.
Great. Thank you so much.
Thank you Maggie.
Again, if you have a question you May press Star then one.
The next question is from Tom Stephens at P D Cowen.
Yeah.
Congrats on the extension of Cashback.
I had a couple of follow up questions on time, and I'm kind of some of your comments around the interim read out. So I guess my my first one is.
Have you seen any data from five and I guess can you give a bit more color as to why you're waiting for the full readout to give results though.
Yeah, I guess I'd start with that and then we can follow up afterwards.
Yeah sounds great I was anticipating somebody was going to ask a follow up question. So thank you for for teeing that up.
Mentally it has to do with the number of high risk treated patients that we need in the study to show the outcome and the benefit of the test and treat strategy. When we initially set our prime Ah patient population both for the interim and final we had an estimate of how many high risk patients.
We will see in this national population from the initial single study site data that we've seen from for example over Christiana care second is we estimated what would be the overall compliance by the physicians with the treatment. We are offering and third is we have a model for how to estimate.
The number of patients needed for power in order to show the outcomes. We're seeking so with all of these three leavers in the last three to six months, we saw significant new data that allowed us to update our model and see how many patients we need in order to achieve.
The outcome is.
Again, we're not increasing the study by a lot only buy about 15% of patients and Oh, we may not even need that many.
And it doesn't extend this study significantly and as we've been reporting on a quarterly basis, we're really far along in our recruiting.
The patient population, even along our original estimates so when we updated our model for what is needed in terms of the number of high risk patients. What we saw is with a single site studies the high risk population rate with homogeneous.
The population in a single site was different than from the National which is the study that Prime is second is we had a different rate of compliance with treatment higher and last but not least we now have the benefit of the avert data to see what impact was achieved with.
The high risk treated population.
As I just shared in my remarks in that study so armed with those three new pieces of data we felt that given we're so far along that recruiting the full patient population. It is better if we are fully powered for the final readout and just go ahead and complete the study then Mrs.
They're in the timeline of interim look by enrolling more into the interim study. So that's why.
We made that call now your question was specific how are we going to see any data. The answer is no. Unfortunately, we're not going to see the data that said, we're very confident now with the updated model that we will see very very strong results. When prime is completed because we are seeing now.
The benefit of the <unk> study and of course, we are in communication with the signs so far everything is going well. So we will be delighted when we hear from D. S. M. B, which is reviewing the interim data are without showing us and will give us a feedback in December and we're counting on.
Continuing the study to full enrollment and coming back to all of you with great results hopefully by the time to study concludes.
But it doesn't help that's pretty helpful color there if I if I could ask just another follow up there.
Should we expect in the Prime study that you know that there's any kind of incremental information on potentially widening the patient population or maybe now in the patient population any color you have around that would be what do you really helpful. Thank you.
And another excellent question with a lot of discussions we're having underway with the learnings from the recent papers submitted for publication in the questions. We're getting from payers and providers. We are exploring how rich can we make the dataset from prime and and reviewing that right.
Now I don't have a specific answer for you right now on extension or narrowing of the of the target population, but promise to come back to you. When we know more I will tell you that the the endpoints are very similar or they're exactly the same between a hurt and prime.
So for sure expect the same data we reported from a bird.
<unk> today.
To come from Prime and I believe given we have a bit of time to continue shaping what analyses are done we will do our best to make this very significant actually the most significant investments there has made to date into prime.
Data to really help drive adoption with our customers by answering as many questions as we can so thank you for raising that.
I'm going to squeeze one more in just just because.
I guess.
Your other your other test offerings are coming on the pipe did you have any timeline as to when you could give us potential timelines on you know that by the day to eat out. So maybe just update us in kind of Alpha development that'd be wonderful for Florida and calendars.
Yeah, absolutely we are focusing to bring them to market as quickly as possible I will say that for the products. We described that are on our corporate deck. We have moved to each one of them into the next stage of our development this quarter, which is a big milestone a lot of work underway.
With completing research and teeing up for clinical validation well I don't have for you exact launch date as I mentioned in my remarks, we are hoping to give you a much deeper updates on new product timeline stage in Q1 analyst call for our Q4 analyst.
Call that will happen early next year.
Perfect. Thanks very much.
Thank you.
Once again, if you'd like to ask a question. Please press Star then one on your Touchtone phone.
Again, that's star then one if you'd like to ask a question.
Okay.
Seeing no further questions.
I'd like to turn the conference back over to Daniel and Clark for any closing remarks.
Thank you operator, and thank you so much everyone for attending our call today, we continue to be really excited about the study results and the data that our studies show, including the birds that we shared today that support the benefits for patients physicians and insurance companies and a form of improved health care outcomes and care cost reductions.
In utilizing preterm doesn't treat strategy. These results indicated that our technology can afford better futures better health for expectant mothers and babies, along with reduced health care costs.
We see <unk> role as the pregnancy company.
Key enabling a paradigm change that is overdue going forward to help reduce the impact of premature birth on families and our society overall, and we're really grateful to all of our investors for their support in pursuit of that endeavor.
So much and we are now turning it over to you operator to conclude the call operator.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Yeah.