Sera Prognostics Q3 2024 Earnings Report

Sera Prognostics EPS Results

• Actual EPS: -$0.24
• Consensus EPS: -$0.22
• Beat/Miss: Missed by -$0.02
• One Year Ago EPS: -$0.23

Sera Prognostics Revenue Results

• Actual Revenue: $0.03 million
• Expected Revenue: $0.09 million
• Beat/Miss: Missed by -$60.00 thousand
• YoY Revenue Growth: N/A

Sera Prognostics Announcement Details

• Quarter: Q3 2024
• Date: 11/6/2024
• Time: After Market Closes
• Conference Call Date: Wednesday, November 6, 2024
• Conference Call Time: 5:00PM ET

Sera Prognostics (NASDAQ:SERA) is a precision medicine company focused on improving pregnancy outcomes through proteomic testing. The company’s flagship product, the PreTRM™ test, is a blood-based assay designed to assess a woman’s risk of delivering prematurely by measuring specific protein biomarkers in maternal serum. By identifying patients at elevated risk for spontaneous preterm birth, Sera Prognostics aims to enable earlier interventions and tailored care plans that can reduce the incidence of neonatal complications associated with early delivery.

Since its founding in 2014 and subsequent initial public offering in 2020, Sera Prognostics has worked closely with clinical research networks and obstetric care providers across the United States to validate the clinical performance of its PreTRM test. The company has secured relevant regulatory clearances and reimbursement pathways, and continues to explore additional clinical applications for its proteomic platform. Collaborative efforts with academic institutions and health systems support ongoing studies aimed at demonstrating the test’s utility in diverse patient populations.

Headquartered in Salt Lake City, Utah, Sera Prognostics is led by President and Chief Executive Officer Zachary Carr, who brings experience in commercializing diagnostic technologies. Under his leadership, the company has built a multidisciplinary team of professionals in molecular diagnostics, clinical operations, regulatory affairs, and market access. Sera Prognostics remains dedicated to advancing maternal–fetal health and expanding its footprint through partnerships with healthcare organizations and research sponsors.

Sera Prognostics Q3 2024 Earnings Call Transcript

Key Takeaways

• Thera Prognostics has published positive AVERT trial results and recently locked the PRIME database, with both studies expected to be submitted for peer review to strengthen the case for their preterm test-and-treat approach.
• They’ve rolled out multi-channel awareness campaigns—including targeted emails (up to 70% open rates), TV spots in 84 million homes, and direct-to-consumer website ordering—which drove a 227% increase in traffic to their preterm.com site.
• Ongoing payer discussions leverage economic modeling (e.g., an Elevance study showing $1,600 savings per member) and a customizable cost-impact tool to accelerate coverage decisions post-publication.
• For Q3 FY2024, revenue was $29,000 (versus $42,000 a year ago) with a net loss of $7.9 million; the company holds approximately $74.3 million in cash and securities, supporting operations into 2027.
• A new predictive analytics education tool is now in beta, offering personalized preterm birth risk insights as a digital front door to their biomarker testing portfolio.

Presentation

[Operator]

Good afternoon and welcome to the Sera Prognostics conference call to review third quarter 2024 results. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session toward the end of today's call. As a reminder, the call is being recorded for replay purposes. I would now like to turn the call over to Peter Donato of CapComm Partners for a few introductory comments.

[Peter DeNardo, Head of Investor Relations at CapComm Partners]

Thank you, Operator. Good afternoon, everyone. Welcome to Sera Prognostics third quarter 2024 earnings conference call. At the close of the market today, Sera Prognostics released its financial results for the quarter ended September 30, 2024. Presenting for the company today will be Zhenya Lindgardt, President and CEO, and Austin Aerts, 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 seraprognostics.com. This call can be heard live via webcast at seraprognostics.com, and a recording will be archived in the Investors section of our website.

[Peter DeNardo, Head of Investor Relations at CapComm Partners]

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 Securities and 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.

[Peter DeNardo, Head of Investor Relations at CapComm Partners]

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 Zhenya, Sera Prognostics President and CEO. Zhenya?

[Zhenya Lindgardt, CEO at Sera Prognostics]

Thank you so much, Peter, and good afternoon, everyone. We're solidly executing our plan for the year to support increases in test adoption and revenue. This plan, which we've communicated previously, focuses on publication of our clinical trial results, building awareness of preterm birth screening risks and Sera solutions, increasing payer coverage, making it easier to access our test, and putting scalability in place to harness that growth. Once established, these prerequisites are expected to be the engine of our growth, fueled by the critical need we can and will fulfill in improving maternal healthcare outcomes for mothers and babies. Following the publication of our positive A-BORT preterm trial results on the front cover of the July issue of the international peer-reviewed journal Diagnostics, we are eagerly pursuing publication of PRIME results.

[Zhenya Lindgardt, CEO at Sera Prognostics]

As we discussed last quarter, we're now seeking publication of these results in the key pregnancy and maternal health conferences in the spring and a manuscript submission to a high-quality peer-reviewed journal. The A-BORT publication solidly demonstrated that the health risks of babies can be improved in asymptomatic pregnant mothers without typical risk factors. We believe publication of the final PRIME clinical study results could prove even more compelling in supporting the benefits of our preterm test coupled with a test-and-treat program. We locked our database a few weeks ago and are actively working towards publication and abstract submissions. We will update you as more news becomes available on our progress. While we await this further evidence to become available, we've made progress towards other prerequisites that are required to grow our business commercially.

[Zhenya Lindgardt, CEO at Sera Prognostics]

Before I lay out updates to our commercialization progress, I'd like to take a moment to detail how significant the healthcare problem is that we are addressing and how it represents a huge opportunity for Sera to effect positive change. One in ten babies is born prematurely in the United States, and that is increasing. In fact, a recent CDC study found the rate to have risen 12% between 2014 and 2022. However, most Americans, about 71%, are unaware that the rates of infant mortality are higher in the U.S. than in other developed countries. Furthermore, 60% don't know that the U.S. has the highest rate of maternal mortality among such developed countries, and about one in four Americans incorrectly believe it does not. This shows the extent of the clinical problem and lack of awareness among consumers.

[Zhenya Lindgardt, CEO at Sera Prognostics]

And we can do better, certainly for one of the most innovative and advanced countries in the world. Toward that end, we can truly make a difference through education, awareness, and Sera's unique technology to solve this growing problem. We have doubled down on engaging all of our key stakeholders. For example, we've enlisted expert consulting advice on the best strategies and tactics to reach payers through preparing strong evidence in our ongoing dialogue with payers. As I mentioned in our last call, we've initiated and are continuing education programs with the leading platform for U.S. medical professionals, with more than 80% of United States doctors and 50% of nurse practitioners and physician assistants as members. The first campaign had great engagement across a series of three targeted emails. The first email had an open rate of 9%, the second 48%, and the third and final 70%.

[Zhenya Lindgardt, CEO at Sera Prognostics]

If you know anything about email marketing, these were stellar results and show that our message is resonating and was effective. Armed with the A-BORT publication, we began a second campaign on this platform around mid-October, and after just a few days, the data indicated that 9% of our targeted contacts were deeply engaged. We believe these types of campaigns will be a key component of physician demand generation going forward. Beyond reaching out to physicians to create broad awareness, including among consumers, we also have now activated our TV campaign with programs, Viewpoint with Dennis Quaid, and Empowered with Meg Ryan. These programs are expected to be distributed to public television stations in all 50 states and in over 84 million homes via MSNBC, CNBC, CNN, or similar networks, broadly supporting Sera's goal of informing the public about our preterm test and how it can drive improved pregnancy outcomes.

[Zhenya Lindgardt, CEO at Sera Prognostics]

Adding to this, we have been executing social media and email campaigns to broaden our product visibility to build adoption across our defined sales channels. Effective October 1st, we made the preterm test available for order from our website for home delivery of the collection kit, where expectant mothers can use our new Ambient Whole Blood Collection Kit and mail it to Sera's lab. Following the confirmation of the order by a physician, patients will receive the results to be discussed with their healthcare provider. TIME highlighted this broadened access to the preterm test we made available through the Sera website in October, and we're pleased with that exposure in this broadly distributed publication. Complementing this is, of course, our awareness campaign to encourage consumers to ask their physician about the test or to seek it out on their own via our website patient portal.

[Zhenya Lindgardt, CEO at Sera Prognostics]

We've already received a lot of interest following making preterm available for ordering online. In comparison to last year in September, our preTRM.com site saw a 227% traffic increase. We are excited by the channel opportunity it presents, and we have implemented patient access programs that we believe will enable more mothers to get the test. Beyond these implemented programs in the commercial front, while exercising great care in where we're spending money on staff and technical growth activities, we have selectively strengthened our capabilities in revenue cycle, sales and marketing, market access, regulatory, and staff members. This is the result of bringing on a few key hires and consultants focused on enabling future growth.

[Zhenya Lindgardt, CEO at Sera Prognostics]

Furthering our strategy to build relationships with women who are pregnant or planning to become pregnant, we've shared with you before our plans to launch an education tool which leverages predictive analytics to inform expectant mothers about risk factors of preterm birth. I'm pleased to know that this tool is now in beta testing. It is a website where women can explore informative reports based on the data from millions of pregnancy experiences and glean personalized insights into pregnancies like theirs. This will not only educate them on the likelihood of outcomes based on different pregnancy characteristics, but also establish awareness of Sera product offerings and the role Sera solutions can play in leading positive change in addressing birth health risks. We believe these predictive analytics tools could have a standalone value as a product, but also may be a powerful digital front door to our biomarker testing products.

[Zhenya Lindgardt, CEO at Sera Prognostics]

We will continue to develop our time-to-birth product, and with multiple offerings for pregnant moms, this portfolio will allow us to generate multiple journeys to Sera solutions for pregnant moms. Let me now take a moment to discuss care guidelines, which are an essential part of delivering the benefits of PreTRM to identify mothers at risk in addressing riskier pregnancies through better-informed care. The development of guidelines takes time. For example, in the case of American College of Obstetricians and Gynecologists, or ACOG, their development of clinical practice guidelines is a process that typically spans 24-36 months from initial topic selection to final publication. So we've spent considerable time reviewing past guideline changes to prepare for meetings with stakeholders and policymakers next year.

[Zhenya Lindgardt, CEO at Sera Prognostics]

This has been well-informed by consultants and key experts, and we're convening the right groups and focusing on what matters the most: the quality of our evidence and data. When PRIME results are published, paired with the awareness campaigns we've already launched and more in the pipeline, we believe we will be fully ready to further engage with the medical community in helping set the guidelines and standards of care necessary to support healthier babies among those at risk. Hand in hand with making progress towards care guidelines is making sure that we continue to have solid quality and rigor in our testing and lab processing from a regulatory standpoint. As many of you know, the FDA published its final rule on laboratory-developed tests in late April. This rule has already seen some legal challenges by various parties.

[Zhenya Lindgardt, CEO at Sera Prognostics]

While the outcome of this may not be known until at least the first quarter of next year, we have been taking steps to ensure preterm remains compliant. As a result, we have expanded Sera's expertise to prepare for engagement with regulatory authorities and are confident in our prior quality controls and reliability of test outcomes. In summary, to date, this has been a very busy year for Sera with successful execution of our stated goals thus far to back our growth plans. There is more to be done, but we're pleased with our progress in fortifying our commercial organization to ramp revenue when all necessary prerequisites for growth are aligned, and we are ready to expand sales and shareholder value. Now, I'll turn the call over to Austin for a finance update.

[Austin Aerts, CFO at Sera Prognostics]

Thanks, Zhenya. And good afternoon, everyone. Let me review our financial results for the quarter. Afterward, I'll briefly touch on our view of managing operating expenses while investing where we need to such that once our prerequisites have been achieved, we can begin accelerating towards revenue growth. Net revenue for the third quarter of 2024 was $29,000 compared to $42,000 for the same period a year ago. Our plan for the year has called for making very careful, cost-effective, and select investments that we believe will drive commercial sales to a higher magnitude in future quarters, and this quarterly revenue level reflects that plan accordingly. With that in mind, total operating expenses for the third quarter of $8.9 million were up 8% from $8.2 million for the same period a year ago.

[Austin Aerts, CFO at Sera Prognostics]

Net loss for the quarter was up 10% to $7.9 million compared to $7.2 million for the third quarter of 2023. About two-thirds of the increased operating costs and net loss year over year was due to an increase in non-cash stock compensation expense due to our higher stock price. Adjusting for this, our costs and net loss were relatively flat year over year with only a modest 3% increase. Research and development expenses were $3.5 million and approximately flat with the third quarter of 2023. Selling, general and administrative expenses for the third quarter were $5.4 million and up from $4.6 million for the same period a year ago due primarily to our selected investment in anticipated growth drivers, costs associated with filing our shelf registration, and increased stock compensation expense. As of September 30th, 2024, the company had cash, cash equivalents, and available-for-sale securities of approximately $74.3 million.

[Austin Aerts, CFO at Sera Prognostics]

In 2024, our gross cash expense is expected to be less than $30 million, with many of our expenses focused on evidence generation, building foundations for scalability and awareness, making select investments in market broadening opportunities, enhancing some of our commercial capabilities, and product development. As we begin planning for the year ahead, we are targeting gross cash expenses to remain under that threshold while we begin allocating more towards commercial activity than in 2024. Therefore, with a projected year-end cash balance of approximately $68 million, we believe we have cash into 2027 before assuming any future revenues. Operator, we can now open the call for questions.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a prompt to indicate that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Andrew Brackman from William Blair, please go ahead.

[Andrew Brackman, Analyst at William Blair]

Great. Good afternoon. Thanks for taking the questions. Hi, Zhenya. Hi, Austin. Maybe on your comments related to sort of the timing precedent here for guidelines. First, could you maybe just clarify your timeline expectations here for preterm? And I guess secondly, I know a lot's not in your control with respect to these guideline bodies actually moving it through their own processes, but can you maybe sort of talk about the levers that are in your control and how you're ensuring to make that process go smoothly and hopefully quickly?

[Zhenya Lindgardt, CEO at Sera Prognostics]

Definitely. Thank you so much for your question, Andrew. Good to hear you. ACOG frequently looks at other guideline bodies, for example, in this case, a Society for Maternal-Fetal Medicine, SMFM, to inform their position. And there is an existing ACOG bulletin with guidelines, so they will not be developing it from white space, de novo. It would be a consideration for an update, which frequently starts with a commentary letter on a publication. That would be the first meaningful milestone to look out for. Society for Maternal-Fetal Medicine typically comments on 20, 30 publications a year. We are excited about PRIME results, and we, of course, will be eagerly waiting to see the reaction of the society to our results as the first green shoot. The common next milestones would include Practice Advisory or a Practice Bulletin.

[Zhenya Lindgardt, CEO at Sera Prognostics]

Those usually come later as the questions from the community to the society come up on what is the position of the society on care guidelines of this innovation. We think, again, we don't have a crystal ball, unfortunately, but we think that that will come in time. But of course, it will start with a key milestone, PRIME peer-reviewed publication. Until that event, we don't expect any significant signals from the societies, SMFM or ACOG. We should also consider and are developing strategies for other USPSTF task forces, for example, and we'll keep the community updated on our progress towards these. Overall, the number one lever is the quality of our data, Andrew. To your question, what can we control?

[Zhenya Lindgardt, CEO at Sera Prognostics]

That's why we invested so much in our pivotal PRIME study to make sure that the quality of that evidence, the quality of the analytical methods, the input we got, and the work of the PIs in that study will speak for itself to the guideline-setting body influencers.

[Andrew Brackman, Analyst at William Blair]

Terrific. And then I just want to go back to your comments sort of around your discussion or ongoing discussions with payers. Can you maybe just sort of talk to us about this at a high level? I guess from your perspective, what gets them across the finish line here? Will it be PRIME results? Will it be something else? It seems to me that this is a test that sort of makes common sense for them to bring under coverage. So in your view, what sort of gets them to move there? Thanks.

[Zhenya Lindgardt, CEO at Sera Prognostics]

Absolutely. Program minimum is a quality peer-reviewed publication, which PRIME will be, and of course, coupled with an A-BORT, it will be really strong evidence base for the potential of preterm test and treat program. Second, of course, is the economic modeling. Here, we're very fortunate to have a few tools to make available for payers. Number one, of course, is Elevance modeling of their own population that delivered results, published results of $1,600 of savings per member tested on about 40,000 members they've modeled. Our partners, Elevance, will also be modeling economic impact on the PRIME study subjects that were Elevance members, and that will be additional evidence that will absolutely be considered by all the other payers reviewing the preterm test for coverage.

[Zhenya Lindgardt, CEO at Sera Prognostics]

We also put together a model we'll make available as we begin discussions with all of the payers where they can put in their own cost of care and members' characteristics so that they can see what covering preterm test can do for their cost of care reductions and cost savings, as well as the potential to improve care in some of their Medicaid plans. So those two key levers will be absolutely essential. And as you can imagine, we're working very hard on a great peer-reviewed publication of PRIME. And as I described, we have a really strong economic evidence to put in front of payers. With that, I think there will be particular payers, and we are happy to talk more about that next quarter, that will jump on the opportunity for cost of care savings early. Others will follow.

[Zhenya Lindgardt, CEO at Sera Prognostics]

It will be a process over many years, but we hope that process will start robustly post PRIME publication.

[Andrew Brackman, Analyst at William Blair]

Terrific. Thanks for taking the questions.

[Zhenya Lindgardt, CEO at Sera Prognostics]

Thanks for the question, Andrew.

[Operator]

As a reminder, should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a prompt to indicate that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. Again, should you have a question, please press the star followed by the one on your touch-tone phone. There are no further questions at this time. I'd now like to turn the call over to Zhenya Lindgardt for final closing comments.

[Zhenya Lindgardt, CEO at Sera Prognostics]

Thank you, Operator. Thank you so much, everyone, for attending our call today. We look forward to the expected publication of our pivotal prime clinical study results and continuing to propel our company towards commercial success. Although we have plenty of work to do in the final weeks of 2024, this has been a great year for Sera Prognostics, and we thank our shareholders for their support. I'll now turn it back over to the operator to conclude the call. Operator.

Participants

Executives

• Zhenya Lindgardt, CEO
• Austin Aerts, CFO

Analysts

• Peter DeNardo, Head of Investor Relations at CapComm Partners
• Andrew Brackman, Analyst at William Blair