Aspira Women's Health Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 14, 2023

There are 5 speakers on the call.

Operator

Afternoon, ladies and gentlemen, and welcome to Spiro's Women's Health Incorporated Second 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 1995 will be made during this call, including statements relating 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, 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 Health Control.

Operator

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 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 now 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 Q2 2023 conference call. Before I begin, I would like to officially welcome Doctor. Thorsten Holmback to our senior leadership team. Thorsten was appointed Chief Financial Officer on June 15th and brings over 2 decades of biotech experience having served in several senior positions at life science companies.

Speaker 1

His extensive Torsten has already made a major impact, including the successful closing of a $4,700,000 capital raise just weeks after coming on board. We will provide remarks later related to our financial performance before we open up the call for questions. Now let me begin with a review of our performance this quarter. As always, I'll start with growth. OvaSuite product revenues for the Q2 were $2,500,000 representing growth of 23% compared to the Q2 of 2022.

Speaker 1

This continues our established trend of year over year quarterly growth for each of the quarters I became CEO. The number of Oversuite tests performed in the Q2 was 6,289, an increase of 16% compared to the Q2 of 2022, with Overwatch contributing 884 tests to the total. This represents an 80% increase in Overwatch tests performed in the 2nd full quarter of adoption. OvaSuite test performed for the 6 months ended June 30, 2023 was 12,548, an increase of 22% versus the same period of 2022. Importantly, the volume growth was driven by a much leaner sales team, with year to date test volume per field representative improving substantially from $354 per rep in 2022 to $598 per rep in 2023.

Speaker 1

This demonstrates that our commitment to eliminating unprofitable and underperforming territories, along with a renewed focus on partnerships like BioReference Laboratories and Women's Air Florida are beginning to bear fruit. When we look beyond volume and focus on average unit price, I'm very pleased with our progress. Our OvaSuite AUP for the quarter increased to $3.96 Importantly, we began billing Overwatch under its unique PLA code on April 1, which resulted in the Q2 Overwatch AUP of $3.26 a 142% increase over the Q1. While we are still in early days, we are pleased to see reimbursement patterns for Overwatch line up nicely with OVA1 plus We have launched an Ovisuite payer adoption strategy for the second half of the year that is aimed at making as much progress as possible on the Ovisuite test portfolio, while we prepare for a successful launch of EndoCheck by the end of 2023. More broadly in reimbursement, events continue to unfold with CMS Medicare reimbursement of diagnostic tests to national and local coverage decisions.

Speaker 1

We are actively participating in industry initiatives to collaborate with CMS and we'll disclose any changes that could have an impact on our future revenue. Lastly, in terms of our growth initiatives, we are now in the final stages of the commercial strategic refresh, which was launched last summer. The initial focus was on refining our core value proposition, improving the effectiveness of our field sales team and rationalizing our overall sales and marketing spend. I'm proud of our progress as our sales and marketing expenses for the second dropped once again, decreasing over 50% when compared to the Q2 of 2022, while simultaneously achieving growth in both product revenues and volumes. While cost containment is critical to the company, I want to stress that our commercial refresh is not simply a cost cutting exercise.

Speaker 1

It always has been and will continue to be about improving impact and the return on investment. As we move into the next phase of the commercial strategy In the second half of the year, we will focus on reaching physicians and other healthcare providers directly through multiple channels. The timing of this effort is very intentional. We are emerging from the seasonal slowdown of the early summer months and are preparing to expand Overwatch for use as a serial or longitudinal monitoring test. Specific activities will include the creation of a content hub for direct healthcare provider interaction, advertisements in high impact OBGYN journals, Targeted virtual and in person physician education, an ovarian cancer awareness month social media campaign and the expansion of our sales Let me now turn to innovation.

Speaker 1

Last week, we announced that Doctor. Rheinfann has made the decision to step down as Chief Scientific Officer effective September 15. He is, however, expected to remain as an advisor to the company. It is difficult to describe the contribution Doctor. Fan has made to the company during his tenure.

Speaker 1

He has worked tirelessly to enhance our scientific capabilities and made significant measurable improvements in our operations. He has built a solid foundation and a professional We both remain confident in our path forward and expect to remain on track to complete our Overwatch longitudinal test clinical study publication And to commercially launch our EndoCheck diagnostic blood test by the end of the year. Let me briefly talk about each of these programs now. Overwatch was developed with the intention to launch commercially in 2 stages. The first phase was to launch Overwatch as a The second phase expands the application of Overwatch for longitudinal monitoring testing.

Speaker 1

Although, Overwatch currently can be ordered at intervals that are determined by the provider to be appropriate for each patient, we are finalizing a manuscript related to an clinical studies that, if accepted for publication, may provide additional clinical data to support and drive adoption of the test as an effective clinical tool for longitudinal monitoring of the medical masses. Moving on to EndoCheck, our 1st generation protein based blood test to aid in the detection of endometriosis. We are on track for commercial launch by the end of 2023. Our current focus is on sample acquisition for clinical verification and validation, and we are on track to obtain sufficient cohort data to complete this important step. We have secured 9 sites for our EndoCheck In terms of operational excellence, we have once again decreased cash used in operations to $3,400,000 in the 2nd quarter, representing a 46% reduction over the prior year, while still showing sustained growth.

Speaker 1

We completed an equity raise recently, strengthening our balance sheet to for our long term strategic vision. We have a high quality effective team determined to set a new standard of care and gynecologic health in addition to an industry standard for prudent high impact capital deployment. Now, I would like to turn the call over to Torsten for a review of our financial performance. Torsten?

Speaker 2

Thank you, Nicole, and good afternoon, everyone. It is a pleasure to be here today to provide this update. We have wasted no time in my 1st 2 months with the company executing swiftly on the capital needs, while continuing to drive the company forward in all of our plans. When I joined, I saw a company that offered Tremendous promise in advancing the care of women with ovarian cancer. There have been very few innovations in this area to date Broad adoption of the OverSweet products would be significantly forward in the practice of medicine.

Speaker 2

I would like to see this become a reality, and I'm proud to be part of a committed team executing on that promise. Now let me turn to the financial performance of the company. Product revenue for the 3 months ended June 30, 2023 was $2,500,000 an increase of 23% compared to $2,000,000 for the same period in 2022. The increase in revenue was primarily driven by an increase in over suite test performed during the quarter, which increased 16 percent to 6,289 compared to 5,411

Speaker 3

for the same

Speaker 2

period in 2022, combined with an increase in average selling price or AUP. Revenue per OVERSE test performed for the 3 months ended June 30, 2023 increased 6% to $3.96 compared to $3.73 for the same period in 2022, reflecting better than anticipated collections for Overwatch In its 2nd quarter of adoption, total gross profit margin for the 3 months ended June 30, 23 was 62% compared to 51% for the Q1 of 2023 and 47% to the Q2 of 2022. Gross profit margin improved due to an increase in average unit price and our ongoing focus on Process Efficiencies and Cost Containment. Research and development expenses for the 3 months ended June 30, 23 were $700,000 a decrease of 51% compared to $1,400,000 for the same period in 2022. The decrease was primarily due to decreases in expenses for consulting, clinical trials and supplies.

Speaker 2

Sales and marketing expenses for the 3 months ended June 30, 2023 were $1,800,000 a decrease of 51% compared to the same period of 2022. The decrease was primarily due to decreased personnel costs. General and administrative expenses for the 3 months ended June 30, 2023 were $3,400,000 a decrease of 19% compared to the same period of 2022. This decrease was primarily due to a decrease in personnel expenses and offset legal costs. Total cash, cash equivalents and restricted cash as of June 30, 2023 was $4,500,000 Cash used in operations for the 3 months ended June 30, 23 was $3,400,000 compared to 5 $7,000,000 for the 3 months ended March 30, 2023 $6,300,000 for the 3 months ended June 30, 2022.

Speaker 2

We continue to focus on prudent use of resources and as a result alluring our expected cash to be used in operations for the remainder of 2023 to between US6 $1,000,000 US8 $1,000,000 In July, we completed the privately placed registered direct offering of straight common stock with Alliance Global Partners as placement agent, raising gross proceeds of approximately $4,700,000 adding approximately $4,300,000 in net proceeds to our cash balance. We were very pleased That we saw a broad participation of long term existing shareholders as well as the entire board and management team In addition to bringing in new healthcare focused investors, we believe that the cash on hand following this transaction will be sufficient to achieve our development program goals I will now turn it back over to Nicole. Nicole?

Speaker 1

Thank you, Torsten. I'd like to close by personally thanking our shareholders that participated in our most recent capital raise. The continued support from you, our investors, is not something that I take for granted. I am fully dedicated to our future success And appreciate the faith you have shown in me and our incredible team. With that, I'd like to open the call for questions.

Speaker 1

Operator?

Operator

Thank you. We will now be conducting a question and answer session. Thank you. Our first question comes from the line of Sally Yankaus with Water Tower Research. Please proceed with your question.

Speaker 4

Hi, Nicole. Good to talk to you. Good results.

Speaker 1

Thank you.

Speaker 4

Yes. It certainly looks like test volumes continue to improve and I gather you are in the process of finding replacement for Doctor. Fan. I mean, how far are you along in that process?

Speaker 1

Thanks, Sally. Yes, so we are confident in the team that Ryan built. I've spent a couple of days just confirming with Ryan and meeting with the key people in both product development operations. We have what we need to keep moving forward. So we are in the process of reaching out to potential Folks to come in, but at this point, there's we want to make a good decision, not a fast decision, and there's no reason to rush since we have a great team In place that's moving things forward.

Speaker 4

Okay. And how long was he at Aspirus?

Speaker 1

He was here for just about a year.

Speaker 4

Okay. All right. And then I guess my other question is, are you aware of any Of the competitor companies like Garden Health, even liquid biopsy companies, Garden Health or Abbott, are they Close to developing a liquid biopsy test for ovarian cancer yet? I mean, what's your sense in the competitive environment?

Speaker 1

Sure. At this stage, we are the only company that has a portfolio of tests available for clinicians for Assessing ovarian cancer risk for any woman with an enamel mass. So whether or not they've been identified for surgery, Whether or not the physician believes they're looking at a benign or more likely an indeterminate mass that's more than 50 or up to 50 percent of masses are indeterminate. We are the only company that has a product portfolio available today. I'm not aware of any market competitors that are entering the market at this time.

Speaker 4

Okay. All right. And just one final question. I mean, you Good cost control this quarter. Do you expect that to continue going forward?

Speaker 4

I mean, it certainly Looks like the company is doing fine with the lower expense rate.

Speaker 1

Well, we've put out our Cash guidance utilization for the rest of the year is between $6,000,000 $8,000,000 That includes everything that we need to spend in order to Due to things we've talked about today, includes launching our EndoCheck test and our commercial refresh strategy. As I mentioned, we may see a slight increase in expenses, especially on the commercial side for the rest of the year. But all of Our the cash guidance that we gave is inclusive of everything we expect to spend for those initiatives.

Speaker 4

Okay, great. Well, thanks very much.

Speaker 1

Thanks, Allie.

Operator

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

Speaker 3

Hi, guys. Good afternoon. Thanks for taking the questions. Maybe if we can start just on the clinical trial front here, Henical. I think, Nicole, you sort of talked about some of the trials in the past that you've run for Overwatch, but maybe can you just sort of give us a refresher on Any ongoing or future trials there?

Speaker 3

I'm just sort of trying to think about some of those initiatives just as you guys are trying to get some additional payer win. Any data that you think might be necessary to sort of get them over the hill? Thanks.

Speaker 1

Sure. Sure. Yes. So We have an ongoing study with the Obalon for longitudinal monitoring. We expect to publish a manuscript for that Test application in sometime before the end of the year, which will drive provider adoption and will also, I believe, be helpful in securing additional payer adoption as well.

Speaker 1

And on the endometriosis side, as we've talked about and I briefly touched on, We have an ongoing clinical study for EndoCheck that we have 9 sites secure, and we're looking to add sites to that as well. We've designed that study to really meet a lot of different needs in terms of payer and provider adoption for EndoCheck. So we believe that will Meet most of the needs that we would have. Hopefully that answers

Speaker 3

the question. Okay. Thanks for that. Yes, it did. And then maybe just on OVA1 plus here For a minute, if we sort of look at the implied volumes there, it looks like they moderated a little bit sequentially.

Speaker 3

Can you maybe just sort of speak to that? Was that related to anything seasonally or sort of In the business or is there any impact from the Overwatch launch here? How should we just be thinking about that OVA1 plus business looking forward? Thanks.

Speaker 1

Yes. So there's probably a little bit of seasonality there as we know that women tend not to go to the doctor frequently in the summer months and they certainly don't tend to schedule, surgeries that can be avoided, Optional surgeries in the early part of the summer as well. So it's possible. And the other piece as well is that we believe that as people are as Physicians are adopting Overwatch. They will pull back a little bit on off label use of OVA1 plus which we don't get paid for.

Speaker 1

So if there's a slight shift in volume there from OVA1 plus off label to Overwatch, That's a good thing because those are tests that we can submit for reimbursement as they were in line with the intended use. However, We are not seeing a major shift or moderation in the business. We're continuing to be aggressive in displacing CA125, which is, as we all know, an inferior, but deeply in French test for that doctors have used off label for women for surgical triage. And so we're being as aggressive as ever in displacing that test.

Speaker 3

Okay. I'll leave it there and follow-up offline. Thanks guys.

Speaker 1

Great.

Operator

Thank you. There are no further questions at this time. I would like to I'll turn the floor back over to President and CEO, Nicole Sanford for closing comments.

Speaker 1

Thank you, operator, and thanks to everyone who joined us today. I appreciate the time and the ongoing support. And we'll talk to you in the Q3.

Operator

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Powered by Quartr

Key Takeaways

  • 23% revenue growth in Q2 driven by a leaner sales force and partnerships as OvaSuite product revenues rose to $2.5 million and test volumes increased 16% to 6,289, even as sales and marketing expenses fell over 50% year-over-year.
  • Average unit price gains: OvaSuite AUP rose to $3.96 in Q2, while Overwatch’s AUP jumped 142% sequentially to $3.26 after switching to billing under its unique PLA code on April 1.
  • Strengthened balance sheet: Q2 operating cash burn fell 46% to $3.4 million, ending the quarter with $4.5 million in cash, and a July capital raise of $4.7 million positions the company to fund its 2023 initiatives with an expected $6–8 million of cash usage for the remainder of the year.
  • Pipeline progress: A manuscript supporting Overwatch’s longitudinal monitoring application is nearing completion, and the EndoCheck blood test for endometriosis remains on track for commercial launch by year-end with nine clinical sites secured.
  • Commercial strategic refresh: Rep productivity improved from $354 to $598 tests per rep, and the next phase will directly engage healthcare providers via a content hub, OBGYN journal ads, physician education programs and social media campaigns.
AI Generated. May Contain Errors.
Earnings Conference Call
Aspira Women's Health Q2 2023
00:00 / 00:00