Aspira Women's Health Q1 2023 Earnings Call Transcript

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Provided by Quartr
May 11, 2023

There are 6 speakers on the call.

Operator

Ladies and gentlemen, and welcome to Aspira Women's Health Incorporated First Quarter 2023 Earnings Conference Call. During the presentation, all participants will be 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 are Nicole Sanford, President and Chief Executive Officer Marlene McLennan, Interim Chief Financial Officer and Doctor.

Operator

Ryan Fawn, Chief Scientific Officer and Chief Operating 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 Private Securities Litigation Reform Act of 1995 will be made during this call, including statements relating to Aspire'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, 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 Aspira 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.

Operator

Participants are directed to the cautionary note set forth in today's press release as well as the risk factors set forth in Aspire'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 Q1 2023 conference call. With me today are Doctor. Ryan Phan, Our Chief Scientific and Operating Officer and Marlene McLennan, our Interim Chief Financial Officer. After my prepared remarks, Ryan and Marlene will provide a brief update on our product And financial performance respectively before we open the call for questions.

Speaker 1

Let me begin with a review of our performance this quarter. In the few weeks since our 2022 year end earnings call, we have continued to make progress on a number of fronts. Our sales and revenues for the quarter, The launch of Overwatch in December with new record highs. A total of 491 Overwatch tests were performed in the 1st full quarter after launch, contributing about 8% to the total OVA suite volume. Our strategy has been to leverage the trust and brand recognition that has been established with OVA1 plus for a rapid adoption of Overwatch by the OBGYN community.

Speaker 1

Total product volume increased 29% over the Q1 of last year, one of the strongest performances ever recorded by the company. Our pivot to a more physician focused portfolio approach and awareness marketing for the entire over suite of tests appears to be effective. We have also seen progress with alternative sales channels such as our relationship with BioReference Laboratories and our Xyra synergy relationship. As a result of these efforts, we achieved volume growth while simultaneously cutting sales and marketing expenses by 43% and nearly doubling the number of tests per full time sales representatives from 173 to 348. We also saw increases in our new ordering positions and average daily test volume.

Speaker 1

As is common with newly launched products, the majority of Overwatch in the Q1 were not covered by insurance, which led to larger number of patient cell accounts. Our historical collection patterns appear to be holding across the Ovisuite portfolio. However, we expect the shift in product volume to create some volatility in the average selling price of our test for the rest of the year. We are focusing on securing broad reimbursement as a key driver to revenue growth and announced in March that overwatch will be covered under our existing contracts with a leading national payer. In addition, our overwatch specific PLA code went into effect on April 1.

Speaker 1

We expect to make an announcement regarding the publication of a sponsored OVA1 clinical utility study in the coming weeks and plan to use that as an accelerator to continue our progress with the remaining national payers for OVA1 plus and as a catalyst for the expansion of coverage for Overwatch. While we are confident that our reimbursement strategy will be successful, we cannot control the timing of payer coverage decisions. We intend to continue aggressively driving provider adoption as we execute upon our strategy and will closely monitor the resulting impact on our cash needs. Let me now turn to our progress on our operational performance. I believe it remains prudent to extend our cash runway as much as possible through strategic reductions in discretionary spending.

Speaker 1

As a result of the personnel cuts in 2022 And continued focus on cost containment, we significantly reduced our net operating cash spending in the Q1 to $5,700,000 compared to $10,200,000 the Q1 of last year. We reiterate our operating cash utilization target for the remainder of 2023 to be between $10,300,000 $13,300,000 Given our first quarter ending cash balance of 7,500,000 We are keenly aware of the need to identify additional sources of liquidity. We continue to meet with potential partners and I'm pleased to see the positive momentum the launch of Overwatch has created. We have proven ourselves to be capable of launching innovative diagnostic products to address unmet needs in gynecologic health. We are in a stronger position for partnership discussions than at any time since I joined the company.

Speaker 1

We have increased our efforts to attract investors and Since the beginning of the year and we'll continue to make that a top priority. In the meantime, we have significantly increased our access to just in time capital by $22,500,000 this quarter by implementing an ATM sales agreement with Cantor Fitzgerald and securing a committed stock purchase agreement with Lincoln Park Capital. We intend to utilize these facilities prudently over the next 1 to 3 years to close funding gaps. These are valuable tools that provide access to the market at an attractive cost of capital, especially compared to transactions that have been closed by microcap companies in recent months. Aspire's strategy and science is sound and has helped us to attract talent and retain our top performers.

Speaker 1

Our attrition remains very low. We were also able to attract 3 outstanding new Board members, Stephanie Cavanagh, Jannie Herchuck and Lynn O'Connor Voss. They bring the experience and passion we need in these challenging times. With that, it is now my pleasure to turn the call over to Ryan for a closer look at our product portfolio.

Speaker 2

Thank you, Nicole. I am very pleased to say that we continue to make progress on the development front. Let me begin with Overwatch. Overwatch has been very well received by physicians since the recent launch in December last year, As it provides a personalized read assessment for women presenting with their natural message, the Overwatch clinical validation manuscript We accepted publication in January. This peer reviewed publication in the frontiers in medicine provides real world evidence The physician can be confident in utilizing Overwatch in the management of Alachromastyx, including to safely decrease premature ovary removal and reduce surgical backlog.

Speaker 2

As excited as we are to have Overwatch available to patients, our work is not done. Overwatch two benefit lies with its potential as a serial monitoring test for managing anaxiomases. Currently, physicians view Overwatch as a one time test to determine the clinical management of a patient, including whether a woman can continue to be monitored On these additional workup or surgical consideration, as a serial monitoring test, physicians would use Overwatch multiple times To follow-up on the women at natural mask status, this personalized risk scores will guide the physician decision to monitor the mask or to refer her for additional testing or surgery. We continue to follow enroll patients in the perspective of a watch multicenter clinical study The additional periodic blood draws, as a result, we are collecting real world evidence to support the use of overwatch At the serial monitoring assay, we anticipate this phase of the study to be completed in the Q3 of this year. Moving to Emtek, our in development non invasive test to aid the diagnosis of endometriosis.

Speaker 2

We are making progress on both internal development efforts and the development program with a consortium of institutions led by Harvard Dana Farber Cancer Institute. Starting with our internal development process, we recently succeeded in identifying and cataloging a large number of patient samples from our own biobank. This is a significant milestone given the previous concern about the adequacy of available samples Needed for the development of our assays, we are in the process of validating our tests using those samples. We remain focused on the launch of the 1st generation endometriosis assay in the second half of this year. With respect to our partnership with Dana Farber, the endometriosis research collaboration continues to be productive.

Speaker 2

Through our collective efforts, we have obtained sufficient cohort data enabling us to move forward. This project is on track to meet expect development goals for 2023. Turning to the recent announcement on our We are very excited to expand the collaboration to include the development of a microRNA based ovarian cancer test. Because micro RNAs are easy to extract from blood samples And appear earlier compared with other testing targets like circulating tumor cell or proteins, we are a good target for an early stage diagnostic test. This new non invasive molecular based risk assessment test will become part of our over suite portfolio.

Speaker 2

We look forward to having a deeper discussion on our portfolio During the Investor R&D Day on May 21, featuring our physician collaborator, Doctor. Kevin Elliott, Harvard Medical School Gynecology Professor. I will now turn to Marlyn for discussion of financial performance. Marlyn?

Operator

Thank you, Ryan. Product revenue for the 3 months ended March 31, 2023 was $2,300,000 an increase of 26% compared to $1,800,000 for the same period in 2022. The increase in revenue was primarily driven by an increase in Overstreet Tech performed during the quarter, which increased 29% to 6,259 compared to 4,846 for the same period in 2022. Revenue per oversuite test performed for 3 months ended March 31, 2023, decreased 2% to $3.70 compared to $3.79 for the same period in 2022. We expect revenue per test to be volatile during 2023 as we seek payer adoption on the Overwatch test.

Operator

Total profit margin was 51.4 percent for the 3 months ended March 31, 2023, compared to 50.8% for the same period in 2022. Research and development expenses for the 3 months ended March 31, 2023 were $1,200,000 a decrease of 9% compared to $1,300,000 for the same period in 2022. The decrease was primarily due to a reduction in clinical trial, supply and consulting costs. Sales and marketing expenses For 3 months ended March 31, 2023 were $2,600,000 a decrease of 43% compared to the same period in 2022. The decrease was primarily due to a decrease in personnel costs, including severance related to our sales force reorganization in the Q1 of 2022.

Operator

General and administrative Expenses for the 3 months ended March 31, 2023 were $3,200,000 a decrease of 27% compared to the same period in 2022. The decrease was primarily due to reductions in personnel, consulting and outside legal costs. Total cash and cash equivalents as of March 31, 2023 was approximately $7,500,000 Cash used in operations for 3 months ended March 31, 2023 was $5,700,000 compared to $10,200,000 for the same period in 2022. This is the result of cost cut in and personnel realignment activities taken in 2022. In February, we secured an ATM sales agreement for $12,500,000 And in March, we secured a committed stock purchase agreement for $10,000,000 As Nicole mentioned, we intend to utilize these facilities on an as needed basis over the next 1 to 3 years to close funding gap.

Operator

We generated a total of $162,000 and proceeds for these agreements in the Q1. I will now turn it back over to Nicole.

Speaker 1

Thank you, Marlene. May 8 was World Ovarian Cancer Day, which presented an opportunity to reflect on the need for better ovarian cancer diagnostic tools and the resulting potential for our business. We are extremely proud of the work we are doing to improve health outcomes for women and are excited to continue our forward progress across our strategic growth, innovation and operational excellence goals. With that, I would like to now open the call for questions. Operator?

Speaker 3

And I'd now like to turn the conference over to Marlene.

Speaker 1

Actually, no, I think we're ready to open for questions. Actually, I'm going to I have one quick other thing to add and then we'll open for questions. Thank you, Grant. Sorry about that. Earlier this week, Our shareholders overwhelmingly approved a reverse stock split of between 1 to 10 to 1 to 20 during our annual meeting.

Speaker 1

Management and the Board undertook an extensive analysis of similar capital transactions from a wide variety of sources and considered alternatives that would be most likely to allow us remain in compliance with NASDAQ listing standards and protect the interest of our existing shareholders. Our Board of Directors approved a 1 for 15 split, Reverse split that was announced earlier today and will be effective at the start of trading tomorrow morning. We remain 6th, that upcoming milestones, including the expansion of Overwatch as a serial monitoring test and the launch of a 1st generation endometriosis test, among others, We'll have a meaningful impact on ASPYRUS stock performance through the end of the year and beyond. We're ready to look towards the future. I remain firmly committed to transparency with you, our shareholders and focused execution of our strategy.

Speaker 1

With that, I will open for questions.

Speaker 4

Thank

Speaker 3

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

Speaker 5

Hey, everyone. This is Maggie Buie on for Angie today. Thanks for taking our questions. Appreciate the commentary on the Ova Watch momentum. Could you maybe give a little bit more color there?

Speaker 5

What specific types of accounts are you seeing the traction in and anything you can tell us about how this launch has allowed for you to open new doors into accounts you maybe previously weren't able to get into?

Speaker 1

Sure. Thanks, Maggie. Appreciate the question. We've seen pretty broad interest in OVOAT. Candidly, Physicians have been interested in a test like this and in this test in particular, we've been priming the pump for a while now.

Speaker 1

So We've had a lot of interest from our existing physicians. We had a record number of new physicians, new ordering physicians in the Q1. And of course, some piece of that was related to Overwatch. So it's been helpful on both Thanks, in terms of driving repeat order physicians and bringing new physicians on board. And just quickly adding to that, We've said that we really believe that the brand and trust that we've built up with physicians with OVA1 plus Would create a great springboard and platform when we launched Overwatch and so far that strategy has proven to be sound.

Speaker 5

Great. Thanks for that. And then just on the spend here, so it looks like another solid quarter of moderation. As you think about perhaps increasing spend, what specific areas are you eyeing and how are you evaluating potential ROI on that spend?

Speaker 1

I think that, we would really focus on accelerating the remaining steps on development for products that are in the portfolio. So or in development, for example, we would want to open sites for the endometriosis study, which we think will be helpful not only in our 1st generation test, which we have committed to launching by the end of the year, But for every for the add on tests that we expect to be part of that portfolio in the future. So that Certainly would be one area that we would love to add resources.

Speaker 5

Great. Thanks so much.

Speaker 3

And the next question comes from the line of Sally Yankaus with Water Tower. Please proceed with your question.

Speaker 4

Yes. Hello. Hi, Nicole. Do you expect sort of the same volume of tests To be sold in the next quarter? I mean, that's a huge jump.

Speaker 4

It was I mean, do you think you're sort of at that kind of quarterly level or do you expect it to further increase?

Speaker 1

So it's pretty early in the Overwatch launch to draw too many conclusions about the trend. I will say though, as we've Gone into Q2, we've continued to see strong demand both for the legacy Obalon Plus test and for Overwatch. So we're feeling pretty good. We've mentioned in the past that we have focused on physician educational events and conferences. That is that continues to be a priority for us.

Speaker 1

We're in conference season right now. We will be out and about and presenting and Holding product roundtables and theaters and other ways to present the test to large physician groups. And We have seen that after we attend and present at one of those events, we see a significant bump after that. So we're feeling confident that that shift in focus has been appropriate.

Speaker 4

Okay, good. And then in terms of the marketing partner with Organon, You expect some sort of some commercial sales this quarter. Do you have any idea when they're going to launch? Are they doing like a full launch meeting or anything like that?

Speaker 1

So I'm not sure what we don't have And announced partnership with Organon. You may be referring to our relationship with BioReference Laboratories that we launched

Speaker 4

last year. Okay.

Speaker 1

Yes. Yes. Yes. So that continues to gain momentum. Our sales team is working very closely with their sales team.

Speaker 4

Good.

Speaker 1

Okay. And that's And very positive in terms of one of the drivers, frankly, for the increase in the test volume per sales rep, Because the other channels are starting to produce more test volume, so we can get volume without adding a lot of costs and headcount. So we're feeling Pretty confident in the sales team that we have and the momentum that we're getting from our alternative channels.

Speaker 4

Okay, great. Well, thank you very much.

Speaker 1

No. Thanks for joining, Sally.

Speaker 3

And there are no further questions at this time. I will now turn the presentation back to the host.

Speaker 1

Well, thank you, everyone. I just want Take another opportunity to thank you for joining us and encourage you to register for our May 23 event. You'll hear more about our forward progress across our 3 strategic priorities. Those have not changed Growth, Innovation and Operational Excellence and we'll give you additional color commentary and detail around the expansion of our product portfolio. So please make sure you join us then and thanks so much for being here.

Speaker 3

That does conclude today's conference. We thank you for your participation and ask that you please disconnect your

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Earnings Conference Call
Aspira Women's Health Q1 2023
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