Q4 2023 Aspira Women's Health Inc Earnings Call
Following management's prepared remarks, we will open the call for your questions.
As a reminder, this call is being recorded today.
Leading the call today are Nicole Sanford, Chief Executive Officer, and Torsten home back 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 private Securities Litigation Reform Act of 90 95 will be made during this call.
Including statements relating to our spirit of 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 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 experiments 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.
Participants are directed to the cautionary note set forth in today's press release as well has the risk factors set forth in Aspira <unk>. Most recent annual report on Form 10-K, and quarterly report on Form 10-Q filed with the SPC.
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 would like to call the call over to Nicole Sanford, President and Chief Executive Officer.
Please go ahead.
Thank you operator, and welcome everyone to our fourth quarter and year end 2023 earnings Conference call with me today is our.
Our Chief Financial Officer, who will provide a brief update on our financial performance. After my prepared remarks.
Open the call for questions.
Before I begin with my update on our progress I wanted to take a minute to discuss the incredible groundswell of support for more women's health research and better outcomes in the United States.
We have worked with other advocates to raise awareness among both federal and state lawmakers and Apple TV Inthe insecure inadequate gynecologic care and the particular issues, we face in excess and innovative lifesaving tour like the biomarker tests offered by aspire.
Some of you remember Cyrus patient spokesperson Diamond palette, you spend some of the last month of life preparing for and delivering to Congress a briefing that led to the introduction of new legislation.
Perhaps you and people know about our ongoing effort to change state laws and coverage policies that impact women's health matters across the country.
It's been a long exhaustive process that is required focus determination and a supportive exceptional atkinson shareholders.
<unk> appears to be paying off.
President <unk> recently signed an executive order supporting women's Health research that open up access to a $100 million in funding.
The newly formed advanced research projects agency for health or ARPA each Mauro.
Moreover, state legislation is being introduced around the country to expand coverage for biomarker testing.
Last week the state of Delaware passed the safety on again Johnson aimed at improving access to detection and intervention services for those with a family history or certain types of cancers.
They joined 15 other states that have already passed Bob biomarker testing legislation and nearly a dozen more of a bills under consideration.
We've also seen unprecedented interest in women's health research from the National Institute of Health and the Department of Defense.
The most exciting thing about the additional opportunities is that many of them focus on finding projects that play to our strengths.
<unk> World class academic and research centers.
Haven't changed the ability to launch and delivered path in a commercial setting and a pipeline of near term product or just a few of the advantages we see for Fireeye.
We intend to continue our long history of working with change makers in women's health to advocate for health equity and improve outcomes for women.
Certainly eager to take full advantage of the new opportunities that are available to us in 2024 and beyond.
Now, let's take a look at 2023.
It was an exciting and dynamic year filled with many changes and strong strategic execution throughout it all we stayed true to our three touchdowns for progress growth innovation and operational excellence.
I'll begin with a review of our growth. This year, followed by an update on developments on the <unk>.
I will then cover operational execution highlights, including some exciting recent leadership announcements.
Improving our commercial capabilities as the most important strategic growth priorities.
In 2023.
Violence commercially available assays are without question revolutionary tool with the potential to substantially improve health outcomes for women.
Steady volume growth an inflection point has remained elusive at the beginning of 2023, we completed a comprehensive review of our commercial ecosystem with the goal of identifying people process and technology enhancements.
The results were telling we needed to make sweeping changes throughout the organization to address competency gaps.
In the summer of 2023, we launched our commercial refresh program based on the findings of our review to align our team and implement critically important changes aimed at ensuring our athletes have reached their full potential.
It's hard to overstate the comprehensive nature of the changes we made.
We recruited new members to the leadership team created several high level strategic role to focus on national accounts and alliances.
Redesigned our sales incentive compensation plan.
Eliminated unprofitable territories replaced underperforming reps in sourced marketing with experienced health care and diagnostic professional created an inside sales function and expanded our data and targeting capabilities.
We knew though that we would sacrifice some volume growth in the second half of the year by cutting unprofitable territories in order to properly rebuild our team and implement new processes and protocols.
While we did see some softness in the third and fourth quarters of 2023, we managed to achieve 15% year over year growth in <unk> revenues.
Overwatch, which we introduced at the end of 2022 grew throughout the year as physicians recognize that the ability to fill an unmet need and the clinical management of it Mexico masses.
Importantly, we accomplished this growth while simultaneously decreasing our sales and marketing expenses by nearly 50%.
We had a total of 17 full time salespeople at the end of 2023 down from 24 at the beginning of the year.
Thanks to a sales team that has more experience than at any point in the company's history. The average full year Oversleep test volume per full time sales rep increased 50% from 779 in 2022 1170 in 2023.
We are approaching the end of the commercial refresh program and we'll be ready for the anticipated introduction of our new products.
We expect to see more growth in 2024, as our improved sales team hits its stride and many of the important infrastructure improvements begin to make an impact in fact March has been a very strong month, so far even with several open commercial positions left to fill.
Of course, the other critical component of revenue is probably.
The average unit price of our obviously tax increased to $383 up from 372 in 2022 driving the improvement in the AEP was the improvement in our market access capabilities, including a new P. L. A code for Overwatch the approval of our CMS request across lots of pricing of over one to Overwatch and new.
This expansion of commercial and Medicaid coverage.
Let's move now to an update on our innovation efforts, which we see is fundamental to the creation of long term enterprise value.
Fortunately, we are extremely well positioned to successfully develop novel AI based assay to aid in the diagnosis of gynecologic disease based on our extensive knowhow and experience designing and launching blood test for ovarian cancer.
This experience carries with it benefits like our biobank of over 110000 patient sample and data from thousands more.
<unk> is of course, the extremely valuable raw material from which we build our future products, including those already in development.
In January we were pleased to update you with exciting developments, we've made in both our ovarian cancer in endometriosis portfolios.
In ovarian cancer, we have been developing clinical data to expand the use of our overwatch tests from a single use test to a multiple use tests for the monitoring of the Mcnamara.
We believe many women can avoid the unnecessary or premature surgical removal of their ovaries, thereby avoiding lifelong side effects and a tremendous cost to be a health care system with the noninvasive monitoring of their masses.
Surgery does not have to be the first that however, a proper assessment and clinical planning can only happen with the benefit of a reliable clinically proven task that provides information on the that Overwatch is that critical tool.
We have manuscripts currently under review by well respected peer review journal, while we cannot predict when we will be accepted for publication. We believe the data clearly supports the monitoring of the math to provide them with an alternative to premature or unnecessary surgical intervention.
Also in ovarian cancer, we have spoken previously about over Mdx. The next generation noninvasive risk assessment test that combined film proteins clinical data and micro RNA.
We are developing this task in collaboration with Dana Farber Cancer Institute as part of a licensing agreement we signed in 2023.
Just on initial research over Mdx may provide higher specificity for all ovarian cancer.
Your sensitivities of certain early stage cancers, when compared to existing technology, a major leap forward in diagnostic testing.
We are in the process of completing our final test design, which includes completing the transfer of the tests and FDA approved Pcr system.
Expect to complete this work along with the verification and validation of the assay by the end of 2024.
Let's turn now to our endometriosis portfolio.
Endometriosis is a significant problem for millions of women up to $6 5 million women in the U S alone to be more precise.
Just on a groundswell of advocacy, we expect a proliferation of therapeutics to treat this disease, increasing the need for an easy to use reliable noninvasive diagnostic we are well positioned to meet this need.
In December 2023, we announced the exciting news that our work and produce the first ever protein biomarker attached for the identification of endometriosis.
Data from our studies clearly show that Endo check accurately identifies ovarian endometriosis in endometrial now one of the most common forms of endometriosis.
We presented the data related to the performance of this pad earlier this month at the society for reproductive investigation annual scientific conference.
We were thrilled by the reception and the level of excitement surrounding our work.
We intend to finalize the manuscript for publication based on the data and complete an NIH grant application for additional funding for the remaining development and validation steps required for Endo check.
We're currently evaluating the best commercial application and appropriate launch timeline for Endo check and later the meaningful progress that has been made in the development of Endo Mdx, our noninvasive test combining serum protein clinical data and micro RNA for the identification of all endometriosis.
Our successful sponsored research agreement with a consortium of World class academic and clinical partners led by Dana Farber Cancer Institute led to the development of our promising micro RNA signature that is currently in the final design stages.
Much like our work with Oba Mdx, the test will be transferred to an FDA approved Pcr system.
We're finalizing the algorithm and verification of the signature in 2024.
You can see we intend to lead the way in the creation of noninvasive Aib's path to aid in the diagnosis of gynecologic diseases.
On the operational side, we welcomed Dr. Sandra Milligan as President who joins an already strong leadership team.
As a seasoned executive with women's health and product development expertise Sandy is coming in to accelerate our launch plans and secure new innovation and commercialization partnerships.
She is an accomplished leader with a stellar reputation and we are excited to have her join the team.
We've come a long way and I'm very proud of that but we still have work to do to prepare for the much bigger opportunity in front of us.
The past two years, we have been methodically laying the foundation brick by brick for breakout growth.
There is growing optimism inside the company are feeling that we are ready to reach our full potential and this is a great way to start 2024.
With that let me turn it over to Torsten for an update on our financial Thorsten.
Thank you Nicole.
I will begin with a review of our fourth quarter results followed by a review of our full year 2023 results.
Over suite revenue for the fourth quarter of 2023 was $2 $1 billion, which was flat compared to the fourth quarter of 2022.
Revenue in the fourth quarter of 2023 benefited by strong year over year growth of Overwatch, which was offset by a decrease in our over one plus test volume.
We also benefited somewhat from an increase in our overall average unit price or <unk>, which rose to $376 in the fourth quarter of 2023 compared to $369 in the same period of 2022.
We've made headway in gaining additional reimbursement coverage for Overwatch, which continues to improve our overall.
Yeah.
Research and development expenses for the fourth quarter of 2023 increased slightly while G&A was essentially flat and sales and marketing expenses decreased by 40%.
Moving to our full year 2023 results over suite revenues improved 15% to $9 2 million compared.
Compared to $8 million in 'twenty two.
Revenues benefited from our Overwatch sales volume increases and our improving.
Which increased to $382.
For the year compared to 376 in 2022.
Overall volume increased by 12% in 2023 compared to 2022.
Our gross margins for the full year improved to 57% compared to 52% and 22 benefiting from lower supply and shipping costs and 23 versus 2022.
We made great improvements across the board last year, and R&D sales and marketing and G&A spending.
Our R&D expenses last year decreased 32% compared to 2022.
Sales and marketing expenses decreased 48%.
And G&A expenses were down 16% compared to 2022.
Overall, our cash use in operating activities in 2023 was $15 9 million.
Down 49% compared to cash used in operations of $31 1 billion in 2022.
Our cash as of December 31, 23 was $2 9 million, which was boosted by the $5 5 million in gross proceeds raised in January 2024, as part of our registered direct offering.
On our existing equity purchase agreement with Lincoln Park capital, we have approximately $8 $4 million remaining available to us.
Really we're pursuing a number of non dilutive sources of cash including research grants.
Our cash use in operating activities and 24 is expected to be between 15 and $18 million.
With that I will now turn the call back over to Nicole.
Nicole.
Thank you Thorsten.
We've come a long way to share one that was punctuated by macroeconomic and geopolitical uncertainty and overall softness in the diagnostic sector.
A clear need for better tools for non invasive gynecologic disease detection is increasingly being recognized by our national and state leaders.
And this creates unprecedented opportunities for our business.
We're taking all the steps, we believe are necessary to position ourselves for success.
We'll continue to be steadfastly focused on growth innovation and operational excellence.
The energy in the company is fantastic now that we've done much of the hard work associated with right sizing the business and upgrading our talent.
Now we are in the exciting part of building it up and realizing our potential.
With that I'd like to now open the call for questions operator.
Thank you.
Ladies and gentlemen, we will now be conducting a question and answer session.
If you would like to ask a question. Please press star and one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue.
You May press Star two if you 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.
Ladies and gentlemen, we will wait for a moment, while we poll for questions.
Our first question is from the line of Ross <unk> with Cantor Fitzgerald. Please go ahead.
Oh good morning, Thanks for taking our questions.
So starting off with Overwatch, a lab can you walk through the hurdles to getting your menu script out is there another channel that could publish and as publication a requirement for commercialization and if not why not go ahead and get the tests on the market given has been delayed already.
Sure.
Oh excuse me good morning, Ross Thanks for the question.
Yes, there are certainly other journal that we could submit the management to.
When you do that of course, you reset the clock so as long as the journal is reviewing the manuscript and we've made the decision to two.
To wait it out we have gotten some comments so encouraging their and <unk>.
The answer is no it's not required necessarily to have the manuscript ultimately the decision to launch the passengers in the hands of our lab director so that.
That really is the path that we're on at this juncture.
Okay understood and then maybe switching to pricing how do you see price evolving throughout the year and could you provide some color on where you stand on reimbursement efforts by each test.
Sure.
So we've continued to see reimbursement improve for both tests.
Horton to remember that as people adopt overwatch in place of potentially using over one off label.
That is good for two for lots of obvious reasons, we couldnt build that over one test was used off label, but now that Overwatch is there to meet that need it.
It is encouraging physicians to use overwatch instead of off label use about one which clearly we don't recommend or.
We're promoting anyway right so.
That helps both the old one price because we're collecting a higher percentage of those tests and Overwatch, which has.
It's really surpassed our expectations in terms of how quickly it has trended up to meet the over one about pricing in terms of the broader reimbursement.
We brought in a whole new team really experienced team that is focused on first and foremost the commercial closing the commercial gap.
Grassley are going back to any holdout on over one.
Pressing forward with Overwatch for anyone who is covering over one so we've seen some really great. Some really great progress in that area. We have released earlier this year.
So we're feeling really good about that.
Okay got it are you able to provide.
And average denial rate and your success so far on appeals.
I don't have that information at the tip of my fingers here Ross, but that's something we can look at in the future.
Okay. Good and then last one for me and I'll jump back in the queue.
So you revised your territories that are getting up last year.
After two quarters, how are you thinking about.
Your territories and head count.
Given the worst or the one that's right. Thank you.
Sure.
So we were at 17.
People at the end of the year that included a number of inside salespeople is the first year that we were able to add those folks into the Mexican they've made a pretty significant impact right out of the gate.
Great. We have three wells that were looking to fill immediately those are open right now.
One based on turnover and the other are just additional rules that were looking to add two new territories our expanded territory.
What's really important is if we're going to add a new territory, we have to do it in the context of.
Strong reimbursement and in the context of creating more opportunities through strategic relationships with physician groups and health systems.
For example for for some time, we've been targeting a large health system in the Midwest I'm not ready quite to announce who it is but targeting that health system, there and before we add a rep to that area. We want to lock in all of those critical pieces, including the medical policy reimbursement et cetera et cetera.
So we're really confident in the territory and the reps that we have now, but we're gonna be thoughtful if we're going to add more in the future it's going to be built around success in the building blocks that will make that rep successful.
Yeah.
Understood. Thank you for taking my questions.
Thanks for joining wrong.
Thank you.
Our next question is from the line of Sally Yeah, Entrust with water Tower Research. Please go ahead.
Oh, yes.
Hello, I don't know if you can can you comment on the status of vendor check is it possible that it could launch this year.
Or when will you have a better idea of when it could hit the market.
Sure.
Thanks, Sally and.
The Endo check we are we are really taking a hard look at how to best once that test in the marketplace as I mentioned in my remarks.
I will say there has been a very very high level of interest in that test in particular by NIH and.
Under the program managers has strongly encouraged us to submit a grant application for the development of the test, which we are in the final stages of completing that application. So I'm in the next week or so I think that will be submitted but theres a lot of excitement around that has it in as part of a broader.
A broader panel for understanding the nature of the Nashville math, so very encouraged by that and also encouraged by the thought that we can get a big piece of that funded by NIH through a grant so fingers.
Fingers crossed on that but.
But the other piece is really understanding.
The rapid development process for Endo, Mdx, which is going is going much faster than I think we had anticipated and thinking about how does the protein R&D that we've done so far for endo check.
Lock into Endo, Mdx and how do we look at those two is complementary and or.
Making a decision about which to launch it in house. So it's great to have options I guess is the way I would characterize it.
Okay and is there a lot of interest among the clinicians.
But your sales force.
Targets I mean are they aware of this.
This type of test.
I mean, I guess how.
How much interest and awareness.
Is there among them.
<unk> yeah.
Yeah, there's a lot of awareness and a lot of excitement for in endometriosis test.
Advisory Board that we put together in 2023 has been really helpful in helping us to understand the need.
For endometriosis quite candidly, what we hear over and over again is there is there is nothing currently.
And so anything is really helpful right. The only way to diagnose endometriosis today is through a Blackberry laparoscopic surgery.
She is not ideal.
For anybody, but it's certainly.
Even less ideal when you're talking about a pediatric patient.
Women with other Comorbidities like obesity. These are people who are not good candidates for any surgery. So there's a there's a lot of excitement and interest in in.
And the fact that we have now.
Launched the first ever protein based blood tests.
Completed the design knowledge, but completed the design hub in and verify the performance of a.
The noninvasive tests for endometriosis and endometrial not being the first target for Endo check.
Lot of excitement there.
Poster at the SRA conference.
Related to Endo check was the most part one of the most popular poster presentations. There. So I think it tells us it tells US a lot about the excitement that's happening.
That's great to hear.
Are there currently therapies.
On the market to treat under meet yours is what's yes. They are.
Okay.
Yeah, there's two.
There are several that have been around for a long time and then there's two that are more recent.
Conditions in the field.
<unk> are indicated for pain management for endometriosis.
He has a has a drug on the market and <unk>, which is now part time hours.
So it has a drag on the market.
But when you look forward into the future there are many therapies in development.
And then the need for a non invasive nonsurgical diagnostic is one of the things that pointing up progress right. We see that the creation of an effective diagnostic will will help.
Accelerated development of the drug therapies, right well yeah of course, yeah.
Okay, great well, thanks, so much.
Thanks Sally.
Yeah.
Thank you.
Ladies and gentlemen, if you wish to ask a question Please press star and one.
At this time there are no further questions in the queue I would now turn it back to Nicole Stanford for closing remarks.
Great. Thank you operator, and thank you everyone for joining us we really appreciate the support of our shareholders.
We really appreciate all of you joining us today, hopefully you're hearing the excitement in my voice and tourists and boy. The company is really well positioned in 2024, and we're excited to get back to you in just a few short weeks of our first quarter call. So thank you again and enjoy a quiet day tomorrow.
Thank you the conference so far for a woman's health has now concluded. Thank you for your participation you may now disconnect your lines.