Aspira Women's Health Q3 2023 Earnings Call Transcript

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Provided by Quartr
November 13, 2023

There are 5 speakers on the call.

Operator

Afternoon, ladies and gentlemen, and welcome to the ASPIRO Women's Health Incorporated Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen only mode. 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 is Nicole Sanford, President and Chief Executive Officer.

Operator

Joining her is Doctor. Thorsten Hombek, Chief Financial Officer. After the prepared remarks, we will open the call for Q and A. Before we begin, I would like to remind everyone that forward looking statements as defined under the Private Securities Litigation Reform Act of $19.95 will be made during this call, including statements related to Espira's 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.

Operator

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 Spire Women's 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 4th in today's press release as well as the risk factors set forth in Aspira's most recent annual report on Form 10 ks and quarterly report on Form 10 Q filed with the SEC for a description of factors that could cause actual results to differ materially from those anticipated in the forward looking statements. At this time, I'd like to turn the call over to Nicole Sanford, President and Chief Executive Officer. Please go ahead.

Speaker 1

Thank you, operator, and good afternoon, everyone. I would like to welcome you to our Q3 2023 conference call. I'll start the call with highlights from this quarter before handing it to our CFO, Torsten Hombach, to review our financial performance in more detail. As always, I'll start with growth. We were excited to see CMS' preliminary approval of our request to crosswalk pricing from OVA1 to OVA Watch in the 2024 preliminary laboratory test fee schedule.

Speaker 1

If approved as expected later this month, Pricing will apply to all Medicare beneficiaries beginning in January 2024. Elsewhere on the growth front, We welcome back Michelle Snyder as our Senior Vice President of Commercial Strategy and Operations. She rejoins Aspire following successful leadership at Sonic Laboratories and CEMA 4. Michelle and I have been collaborating closely on the execution of the next phase of our commercial refresh, including the development of a physician focused omni channel strategy, the reinvigoration of our inside sales organization And the launch of several high impact campaigns, including our recent physician focused Overwatch KOL webinar that attracted over 400 participants. We also launched a point of care practice aid to help healthcare providers talk to their patients about adnexal masses And how our non invasive OvaSuite products can help assess their risk of cancer.

Speaker 1

We believe these efforts will continue to drive our OvaSuite test into the patient care pathway and increased provider adoption. We have created a new Vice President of Business Development role and recruited a talented executive with extensive healthcare relationships to accelerate our commercial expansion plan. Elsewhere in sales, we turned around several underperforming territories, Further reinforcing a performance culture in the commercial organization, we implemented a new relationship with a contract sales organization to improve flexibility I've seen immediate improvements in many of those territories as a result. This quarter, we continue our track record of year over year growth for Ovisuite since I became CEO. Product revenues for the Q3 were $2,200,000 representing growth of 9% compared to the Q3 of 2022.

Speaker 1

The number of OvaSuite tests performed this quarter was 5,783, an increase of 5% compared to the Q3 of 2022, with Overwatch contributing nearly 20% of that volume. We performed 18,331 Ovisuite tests in the 1st 9 months of this year, an increase of 16% versus the same period of 2022. The volume growth was driven by a much leaner sales team, which demonstrates our commitment to eliminating unprofitable and underperforming territories and a renewed focus on partnerships to drive profitable growth that can sustain the company as we bring new and expanded product lines to market. Turning to our average unit price, I continue to be pleased with our progress. Since we began billing Overwatch under its unique PLA code On April 1, our Overwatch AUP has shown a steady increase to $3.47 a 7% increase over the 2nd quarter.

Speaker 1

OvaSuite AUP declined to $383 from $3.96 in the Q2. However, as Thorsten will cover in more detail shortly, The ongoing focus on cost containment helped to hold gross margin at 59%. Operating expenses dropped Again, in the Q3, returning to levels the company has not achieved since 2020, while simultaneously achieving growth in both product revenues and volumes. Let me now turn to innovation. This quarter, we welcome Doctor.

Speaker 1

Jody Barry to our senior leadership team. Jody joined ASPira as Chief Scientific Officer in September following a distinguished academic and commercial career in Biochemistry and Diagnostics Research and Development. Most recently, Jody served as the Chief Scientific Officer of OraSure Technology, where he led the breakthrough discovery of The first integrated swab test for COVID-nineteen. Not only is he a prolific and award winning researcher, but he is also passionate about women's health, an interest that goes all the way back to its earliest work in pelvic inflammatory disease and HIV. We made great progress in our effort to expand our OgaSuite portfolio, tests that use machine learning to provide a personalized risk of malignancy score for patients with the maxill masses.

Speaker 1

Overwatch was designed to be commercially launched in 2 stages. The first stage was a point in time application for initial clinical assessment, which has now been ordered by physicians 2,440 times with more than 40% of those tests coming in just this last quarter. I'm pleased to report that we have completed a critical step towards the 2nd stage launch of Overwatch as a longitudinal monitoring application. Our clinical study of the real world use of Overwatch as a tool for monitoring low risk patients has been completed and we have submitted the resulting paper for peer review and publication. We're in the process of completing final launch activities and expect to begin offering the longitudinal monitoring test by the end of the year as planned.

Speaker 1

Looking beyond overwatch, we are excited about adding other modalities to expand our Ovisuvi portfolio. As we recently announced, Doctor. Kevin Elias, Director of the Gynecologic Oncology Laboratory at Brigham and Women's Hospital and Assistant Professor of Obstetrics, Gynecology and Reproductive Biology At Harvard Medical School, recently presented a poster related to an in development microRNA based ovarian cancer test at the American Association of Cancer Research Special Conference for ovarian cancer. Doctor. Elias highlighted data showing microRNA's potential to improve the diagnostic Accuracy of non invasive blood tests for women with anexcel masses based on his extensive ovarian cancer research.

Speaker 1

The study combines serum protein and patient clinical information from Aspirus ovarian cancer clinical studies with microRNA identified by the Elias Laboratory in collaboration with a consortium of world renowned academic researchers. Among other findings, the presentation concluded that The combination of micro RNAs, proteins and metadata identified 90% of early stage and 100% of late stage ovarian cancers in the study This research formed the basis of OvaMDX, which is expected to become part of the company's Ova Suite portfolio under a previously announced licensing agreement. We are currently finalizing an advisory agreement with an experienced lab to assist our team with platform migration And test validation, which we expect will significantly accelerate the development, validation and launch of a commercial product. Work under this agreement will begin shortly with the support and collaboration of Doctor. Elias.

Speaker 1

Moving now to Endocheck, Our 1st generation non invasive protein based blood test to aid in the detection of endometriosis. We continue our verification and validation of the test Utilizing samples acquired from both our EndoTech study sites and the University of Oxford through a material transfer agreement. Upon validation, we will follow a similar launch strategy as was utilized for Overwatch, with a small scale rollout to clinicians who have been involved in the development of the test to be followed by a broader commercial launch upon publication of peer reviewed data. We continue to develop EndoMDx in parallel with the protein based EndoCheck test. EndoMDx, which will combine proteins and microRNA for a higher performing test, is being developed through our sponsored research collaboration with a consortium of academic by Dana Farber Cancer Institute.

Speaker 1

We made a second milestone payment of $125,000 in July following the delivery of the signature. We are now working closely with the collaborators to finalize the platform migration and validation strategy for a commercial test. Finally, we established a new clinical advisory board as an element of the company's overall mission to develop and commercialize The Clinical Advisory Board will provide clinical input and guidance throughout the development of the company's portfolio of products and will be chaired by Aspira's Director of Medical Affairs, Doctor. Leo Twigg. Our three members include Doctor.

Speaker 1

Levi Downs, Medical Director for Gynecologic Oncology with Park Nicollet Health System at Methodist Hospital Doctor. Nisha Gard, gynecologic surgeon with Arizona Gynecology Consultants and Doctor. Tamika Sze, the Founder and Owner of Advanced Women's Care Center. Turning now to operational excellence. We have once again decreased cash used in operations to $3,300,000 in the 3rd quarter, representing a 56% reduction when compared to the prior year, while still showing sustained growth.

Speaker 1

We strengthened our balance sheet with a recent equity raise to We have a team that is determined to set a new standard of care and gynecologic health while setting an industry standard for prudent high impact capital deployment. Now, I would like to turn the call over to Torsten for a review of our financial performance. Weston?

Speaker 2

Thank you, Nicole, and good afternoon, everyone. It is my pleasure to be here today to provide you with an update on our financial performance. Product revenue for the 3 months ended September 30, 2023 was $2,200,000 an increase of 9% compared to $2,000,000 for the same period in 2022. The increase in revenue was driven by an increase in OVA3 tests performed during the quarter, which increased 5% to 5,783 compared to 5,524 for the same period in 2022. Revenue per oversweep test performed for the 3 months ended September 30, 2023 increased 4% to $383 compared to $3.69 for the same period in 2022.

Speaker 2

Total gross profit margin for the 3 months ended September 30, 2023 was 59% compared to 55.8 percent for the same period last year. Research and development expenses for the 3 months ended September 30, 2023 were $1,000,000 compared to $200,000 for the same period in 2022. The decrease of 54% was primarily due to decreases in collaboration and consulting costs. Sales and marketing expenses for the 3 months ended September 30, 2023 were $1,700,000 compared to $4,000,000 a decrease of 57% versus the same period last year. The decrease was primarily due to decreased personnel costs Due to our focus of eliminating unprofitable territories and improving bottom line results, General and administrative expenses for the 3 months ended September 30, 2023 were $2,700,000 compared to $3,600,000 a decrease of 25% versus the same period last year.

Speaker 2

This decrease was primarily due to a decrease in personnel expenses And outside legal costs. Total cash, cash equivalents and restricted cash as of September 30, 2023 was approximately $5,400,000 Cash used in operations for the 3 months ended September 30, 2023 was $3,300,000 compared to $7,500,000 in the same period of last year and $3,400,000 in the Same in the Q2 of this year. Our cash balance this quarter benefited from the registered direct offering We completed in July, where we raised $4,200,000 in net proceeds. The company cash utilization guidance for the second half of twenty twenty three to between $6,000,000 $8,000,000 I will now turn it back over to Nicole. Nicole?

Speaker 1

Thank you, Torsten. My goal has been to be very clear with our investors about our plan and then focus on execution to meet those goals. We've taken many important steps this quarter. While we experienced some moderate seasonal impacts in the Q3, we grew both volume and revenue with a leaner and more efficient sales team. The submission of the Overwatch Longitudinal Monitoring Paper is a significant achievement, which will expand the addressable market for our OvaSuite test portfolio.

Speaker 1

Exciting progress was made in the development of our other near term products, including OvaMDx, Endotech and EndoMDx. In addition, we remain committed to our operational excellence goals and are spending less to achieve more as a result. We are excited to move into 2024 from a position of strength. With that, I would like to now open the call for questions. Operator?

Operator

Thank you. Our first question comes from the line of Ben Haynor with Alliance Global Partners. Please proceed with your question.

Speaker 3

Good afternoon, guys. Thanks for taking the questions. Just first off for me, the on the clinical Sorry, fee schedule, Medicare reimbursement, congrats on that development. Just wondering how quickly do you anticipate that That will sort of diffuse out to other payers?

Speaker 1

Hey, Ben. Thanks for the question. Really challenging to answer that, to be honest with you. It does take some time. We are in the process of A full scale blitz to any holdouts that we have, both with OVA1 and with Overwatch, With an updated set of materials including when approved, it will also include the CMS Pricing decision and the crosswalk, but the process is a little difficult to predict.

Speaker 3

Yes. I know it's a difficult question, but I thought I'd see if there are any grant insights there.

Speaker 1

I wish I could give you a more satisfying answer, but I'm sure you're not surprised that it's just a little challenging to get there with the environment the way it is.

Speaker 3

Yes, completely understandable. And then on the folks that were using OVA1 plus kind of Off label, if you will. Do you think that the kind of cannibalization that's happened with Overwatch has kind of run its course now or are folks Still doing it the previous way?

Speaker 1

Well, I think that we're going to continue to see people Choose the test that's best for each situation. For us, we consider that we don't really think about it in cannibalization because as you're not as you would imagine, we don't use of OVA1. So, it's really It's revenue regardless, right? It's revenue we wouldn't have recognized if they were using over one off label even with contracted payers, we wouldn't get paid. So every test that we run for Overwatch There's an improvement over the off label use of Vova 1.

Speaker 1

However, we are seeing both tests are growing independently of one another. So I do think that we've seen probably the experimentation It's behind us. Okay.

Speaker 3

Fair enough. And makes sense. And then on I think you gave the number on the Q2 call and the kind of the test volume per field representative. Do you have that handy by any chance?

Speaker 1

I do. I'm going to go pull it from earnings release because I believe it was in there.

Speaker 4

Sorry, I misunderstood that.

Speaker 1

It wasn't enough. I don't have it handy. I should have it handy. I apologize for that, but let me see what I can do to find it before we drop it.

Speaker 3

Okay. I got it. And then lastly for me, you mentioned in the press release the revenue per test is expected to be volatile During 2023 upside, downside, magnitude, what's the right way to kind of think of The volatile terminology there?

Speaker 1

So it's another challenging question to answer because some of it depends a little bit on timing of collection because we're kind of working on enrolling Quarters, anything in addition to that that you'd add? I mean, by definition, volatile is challenging to predict, right? But we can Our team has been doing a great job all year. So every dollar of revenue that's available They're capturing.

Speaker 3

Got it. I think that's all I had today. Thanks a lot, guys.

Speaker 1

Thanks, Ben.

Operator

Our next question comes from the line of Andrew Brackmann with William Blair. Please proceed with your question.

Speaker 4

Hey, everyone. This is Dustin on the line for Andrew. Thanks for taking our questions. First on EndoCheck, Good to hear. Yes, hi.

Speaker 4

How are you? Good. On EndoCheck, good to hear progress going on there. Just wondering what the updated timeline is for the launch? I think you said previously the Q4.

Speaker 4

And then when that's launched, just what metrics are you guys going to use to see that This launch has been successful and what kind of goals are you laying out for yourselves there?

Speaker 1

Sure. So we're not changing any of the timeline today. Our goal has been and continues to be The launch of a test for commercial use by the end of the year, we're still focused on that, provided we're able to Fully validate the test and have a rollout similar to what we did for Overwatch, where we had a period of time where Overwatch was primarily being offered to physicians who were familiar with the development of the technology. We're planning on doing the same thing. That's really been the playbook we planned on following with a much broader commercial launch Of the 1st generation test in the Q1 of next year.

Speaker 4

Understood. And then on OVECHAK, great to see you guys got the proposed rule there with CMS. How confident are you guys in that being Finalized and then how would that actually influence the longitudinal monitoring product if at all In terms of pricing there?

Speaker 1

Yes. So we don't expect there to be any impact on longitudinal monitoring. We believe that the Tests will be reimbursed at the same level. The likelihood that the test or that the crosswalk That was preliminarily approved, becomes final. I would rate it at high.

Speaker 1

However, CMS Ultimately has the holds the pen. The comment period is behind us. We submitted a comment. We were very, very confident in the That we put forward for the Crosswalk. I mean, there's almost every factor that they look at for a Crosswalk request was in our favor In terms of the process, the platform, the analyze, you name it.

Speaker 1

So the case was as strong as it could possibly be. We did submit a comment letter and the final is expected in the next several weeks.

Speaker 4

Understood. Thank you. And then maybe looking out to 2024, Just any high level thoughts on volumes and ASP growth. I know you're going to have a couple of new tests launching at different price points, But anything high level you can give us there and how that compares to the Q3 results?

Speaker 1

Yes. We're not really in a position to give any 2024 guidance at this point, Dustin, but Thanks for trying.

Speaker 4

Yes, thought I'd give it a shot. And yes, just one more. Spending in burn, any color on how you guys are thinking about runway? And obviously, a lot's been done across organization to help extend that, but just how are you thinking about that? Thank you.

Speaker 2

Yes. This is Thorsten. So in terms of runway, we have reiterated our cash guidance, cash burn guidance to use cash in operations in the second half of this year to be between $6,000,000 $8,000,000 We have cash in the bank as of September 30 of a total of $5,400,000 That includes cash and restricted cash. And our cash burn for the Q3 was $3,300,000 after $3,400,000 in the And $5,700,000 in the Q1. So what you can see is that we continue to be very focused on controlling our cash burn, Bringing that further down, going forward, on a quarter to quarter basis, and as any other biotech company, definitely public biotech company, We are constantly looking into dilutive and non dilutive ways of funding mechanisms to fund the company going forward.

Speaker 2

We do have, as a reminder, 2 ATM or equity line of credit. 1 is with Cantor and the other one is with Lincoln Park that are available to us. And then while these are not true funding instruments, they definitely Help the company on high trading volume days to draw certain dollars from that very line. So safety net that we have and we continue to look into various ways to continue to fund the company going forward.

Speaker 4

Okay, great. Appreciate that. That's it from us. Thank you.

Speaker 1

Thank you.

Operator

There are no further questions in the queue. I'd like to hand the call back to Nicole Sanford for closing remarks.

Speaker 1

Thank you, Doug, and thank you to all of our participants for joining today. I wish all of you a wonderful Thanksgiving Holiday and look forward to connecting again in the New Year. Thank you.

Operator

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.

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Key Takeaways

  • CMS preliminary approval to crosswalk pricing from OVA1 to OVA Watch in the 2024 lab fee schedule, potentially extending Medicare reimbursement to all beneficiaries from January 2024.
  • Q3 product revenues reached $2.2 million (up 9% year-over-year) on 5,783 tests performed (up 5% year-over-year), with Overwatch contributing nearly 20% of volume and maintaining a 59% gross margin amid reduced operating expenses.
  • Commercial refresh led by new SVP Michelle Snyder includes an omnichannel physician strategy, inside-sales reorganization, contract sales partnerships and a point-of-care practice aid to drive OvaSuite adoption and improve territory performance.
  • Innovation pipeline advanced with Dr. Jody Barry joining as CSO, completion of the Overwatch longitudinal monitoring study (peer-review submission, launch by year-end), and progress on OvaMDX microRNA/protein and EndoCheck endometriosis tests toward validation and rollout.
  • Operational excellence reduced cash used in operations by 56% to $3.3 million in Q3, bolstered by a $4.2 million equity raise, with H2 2023 cash-burn guidance of $6–8 million and active funding mechanisms in place.
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Earnings Conference Call
Aspira Women's Health Q3 2023
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