Aspira Women’s Health Inc. (NASDAQ:AWH) Third Quarter 2022 Results Conference Call November 10, 2022 8:30 AMm. ET
Participating companies
Nicole Sandford – President and CEO
Ryan Phan, Chief Scientific Officer and Chief Operating Officer
Robert Beechey – Chief Financial Officer
Conference Call Participants
Ross Osborn – Singer Fitzgerald
Griffin Soriano-William Blair
Operator
Good morning, gentlemen, and welcome to the call of the Aspira Women’s Health Incorporated third quarter 2022 convention. My call is David and I will be your coordinator for today’s call. At this time, all participants are in listen-only mode. Through management, we will open the call to your questions. As a reminder, this call is recorded today.
Today’s call is led by Nicole Sandford, president and CEO; Bob Beechey, Chief Financial Officer; and Dr. Ryan Phan, Chief Scientific Officer and Chief Operating Officer. After the comments are ready, we will open the call for questions and answers.
Before we begin, I would like to remind everyone that during this call forward-looking statements will be made, as explained in the Private Securities Litigation Reform Act of 1995, and statements relating to Aspira’s expected long-term performance, long-term business prospects and the execution of events or plans will be added. Although the Company believes that the expectations reflected in such forward-looking statements are based on moderate assumptions, actual effects and effects are subject to dangers and uncertainties and may differ materially from those expected because they have an effect on points beyond Aspira Women’s Health’s control.
The Company assumes no legal responsibility to update or supplement any forward-looking information, whether as a result of new information, long-term events or otherwise, unless required by law. Participants should refer to the warning set forth in today’s press release and the threat points set forth in Aspira’s recent Maximum Annual Report on Form 10-K and the Quarterly Report on Form 10-Q filed with the SEC for a description of points that may cause actual effects to differ materially from those expected in the future. s.
At this point, I’d like to call Nicole Sandford, President and CEO. Go on, ma’am.
Nicole Sandford
Thank you, operator, and thank you all for joining usArrayWe are very pleased to provide an update on our progress in the third quarter. With me is Bob Beechey, our CFO; and Dr. Ryan Phan, our Chief Scientific Officer and Chief Operating Officer. I will begin with an update on our key strategic projects and provide a review of our functionality in the third quarter. Ryan will keep up with an update to our product progression pipeline before passing the call to Bob, who will provide a monetary update. After our comments are ready, we will open the line for a question and answer session.
In the third quarter, we continued to make sustained progress in our 3 critical strategic dimensions, growth, innovation and operational excellence. Let me start with an update on our innovation efforts at OvaWatch and verify today that we will be launching OvaWatch this quarter. Our sales team is fully trained and in a position to use, and several highly reputable physicians have signed up as early adopters, adding Dr. Gerard Reilly of Axia Women’s Health and Dr. Gerard Reilly of Axia Women’s Health and Dr. Gerard Reilly of Axia Women’s Health and Dr. Gerard Reilly of Axia Women’s Health and Dr. Gerard Reilly have signed up for Anna S. Nicole Williams of the Chicago Institute of Gynecology. PLA code for OvaWatch in October, and the CPT Advisory Committee reviewed the submission on Nov. 7. We expect to receive a notification until the end of 2022 regarding the approval of our applications, which will take effect on April 1, 2023.
We completed our manuscript for an OvaWatch clinical validation exam that will be submitted for peer review and publication this week. This review will drive adoption by other providers and payers after launch. The laboratory processes have been verified or are in the final stages of validation. The kits are complete and distributed, and we are awaiting approval from New York State to deliver the check to patients in New York. We’ve gotten positive feedback from doctors about OvaWatch and are excited about the possibility of replacing the practice. of medicine for women with adnexal masses.
Healthcare providers will now have access to a suite of non-invasive blood tests that, combined with their clinical expertise, will offer unprecedented confidence and selected medical management decisions. In popularity of the applicability of our offerings to a wider population of women, our ovarian cancer portfolio will now be known as OvaSuite. For the first time, healthcare providers who identify a pelvic mass in a patient have an OvaSuite tool that will provide potentially life-saving information, whether the provider has to perform surgery or not. This is a significant expansion of our patient population beyond Ova1 and OVERA is in the FDA clearance phase.
We believe that the number of women who undergo untimely or unnecessary removal of their ovaries as a preventive measure can be particularly reduced, now that doctors have the opportunity to thoroughly assess the threat of malignancy and its initial evaluation. The launch of OvaWatch will also be an opportunity to expand the population of potential prescribers beyond gynecologists and gynecologists, who are the number one users of Ova1 and OVERA tests.
Following the launch of OvaWatch, our OvaSuite products will be more widely advertised to other women and the circle of fitness-practicing relatives. In fact, there is already some momentum in that direction. On July 5, a Policy and Practice Review article titled Management of the Adnexal Mass, Considerations for the Family Medicine Physician published by Family Medicine and Primary Care Journal. The article clearly identifies Ova1 as an effective tool for surrounding family doctors with other young people and assessing the risk of ovarian cancer malignancy.
That said, we have updated and updated our marketing strategy. We will redirect more of our marketing finish to high-impact presentations at key conferences, where we can launch OvaSuite to a larger population of physicians. We plan to officially launch our Physician Advisory Council before the end of the year and plan to implement maximum productive practices for medical systems in the chart based on approaches that have worked in our most successful territory. This is just a glimpse of the new marketing strategy, which has evolved as a component of our pre-launch activities of OvaWatch.
Now let’s move on to operational excellence. Starting with our capital and liquidity position. In September, we closed the small public offering of $9 million in gross revenue. The timing of this delivery is opportunistic. Our monetary position affects our ability to attract and trade with potential commercial or progression components, which is a critical component of our strategic expansion plan.
I net income of $7. 7 million, along with our competitive charge containment efforts, will provide sufficient liquidity to help the company execute our strategy, adding the launch of OvaWatch this year, the implementation of a competitive marketing crusade to incentivize suppliers and the adoption through payer of our suite of ovarian cancer threat assessments, and the progression and advertising launch of EndoCheck. We have a transparent vision for our capital strategy and I am confident that we have the leadership we want to offer in our key initiatives. .
Moving to another key facet of operational excellence, our use of money, managing our use of money without sacrificing progress in expansion and innovation has been a very sensible priority. Dana Farber Cancer Institute for the progression of our endometriosis testing portfolio and $130,000 in severance pay.
Our money usage guidance for the moment starts in 2022 between $14 million and $15. 5 million, and we stay on track with that guidance. People in roles that reflect the desires of our business at that specific time. We started with a sales team reorganization, which we announced in the first quarter. Since then, we’ve traveled the rest of the organization, eliminating redundancy and overcapacity. We’ve reduced our workforce by about 19% since March 1, when I took over as CEO.
All things being equal, the moves we’ll have made through the end of this year will save more than $3 million in payroll, plus benefits and payroll expenses in 2023. I think we’re largely done with workforce counting movements, and we have the right team in place for 2023. As our business grows and we succeed at critical milestones, we will continue to rent for key positions. We build a culture of performance, which emphasizes accountability and transparency at all levels of the organization.
Our purpose is to make sure everyone in the company understands our strategy and their role in achieving it. While this procedure takes time, we are proud of the efforts we have made to improve the performance, progress and retention of painters, despite the complicated staffing. decisions we made this year.
In terms of our progress and expansion. This quarter, we achieved revenues of $2. 1 million, with a volume of 5,524 tests consistent with those performed. This represents 29% growth over the same consistent period in 2021. As has been demonstrated with other corporations in the diagnostics sector, we have a tendency to see volume expansion taper off from now to Q3, which which is also the case this year. Product volume increased 2% compared to current quarter 2022. 88 consistent tests in one day in Q3 2022, compared to 83 consistent tests in one day in current quarter 2022 and 67 consistent tests on one day in the third quarter of 2022 last year.
We’re doing our best to deliver solid functionality in the fourth quarter, adding upsell incentives. And in the first few weeks of the fourth quarter, we saw some effects of Hurricane Ian, we’re back on track. of the last two weeks, we have dreamed of new daily highs for the volume of Ova1Plus.
In terms of other expansion achievements this quarter, we were pleased to officially launch our joint commercialization and distribution collaboration with BioReference Laboratories for Ova1Plus products. BioReference is a committed spouse and stores our project to get fitness results for women and close gaps in fitness equity. With the BioReference and Aspira sales team trained and functioning together, we have a positive long-term perspective on this relationship.
As a reminder, we introduced it just a few weeks ago and, as we previously announced, we expect a slight impact on product volume in the fourth quarter as the sales team gets up and running. We are positive for 2023 and intend to provide more direction in themselves as our delight of running in combination grows.
Finally, I need to provide an update on our genetic offerings, adding our appointment generation with Axia Women’s Health. As previously reported, Axia’s agreement was to provide genetic carrier screening tests to our Aspira Synergy platform. Since we signed our agreements, the market for genetic testing for carriers has been drastically replaced. Even the biggest players in the industry have experienced a huge disruption in the genetic testing picture, and there is more low-quality testing in doctors’ offices than ever before. The internal solution for the detection of genetic carriers is much less than when we signed our agreement.
As a result, Axia has informed us of its goal of stopping the progress of its testing functions and has informed us of the cancellation of our similar agreement. As the platform has not yet been launched, the cancellation did not have a significant monetary impact. during this quarter. Our relationship with Axia remains strong and we do not believe that the cancellation of the Aspira Synergy contract will have an effect on Axia’s adoption of our existing or long-term product offering.
And given the cancellation and the same market forces that caused it, I took a close look at the genetics industry and made the strategic business resolution to give up all genetic testing as of September 30, 2022. As a result, we have discontinued the source of genetics. . testing, and we will no longer obtain our Aspira GenetiX products or genetic carrier detection at Aspira Synergy. This has been a very small component of our business, and it’s hard to see a path to scale. Our resources are more focused on devising differentiated products that improve outcomes for women and generate the most productive returns for our shareholders.
As you’ve heard today, we’re focused on much bigger opportunities, adding the impending launch and ad adoption of OvaWatch, and the planned launch of EndoCheck in 2023. I would like to explain that we are proceeding to distribute Ova1Plus to Aspira Synergy. We plan to eventually offer OvaWatch and EndoCheck on the Aspira Synergy platform. We do not expect our relationships with other Aspira Synergy customers, adding women’s care, and a number of regional labs to be affected.
We’ve come a long way since the beginning of this year and we’ve gone through big changes as an organization. But the only thing that remains transparent is a critical need for more ovarian cancer diagnostic equipment for women, and the resulting prospect for our company. We take all the steps we take to position ourselves for success, which is firmly geared towards growth, innovation and operational excellence.
With that, let me talk to Ryan to get an update on our product progression pipeline.
Ryan Phan
I am incredibly pleased to announce that Aspira is on track and will effectively launch OvaWatch, our next-generation noninvasive ovarian cancer threat assessment this quarter. As part of our portfolio of OvaSuite diagnostic tools, OvaWatch focuses on women with adnexal masses with an indeterminate or non-malignant initial clinical evaluation. OvaWatch gave the impression of a negative predictive rate of 99%, as providers have a greater degree of confidence in the resolution of clinical management of their patients.
The OvaSuite portfolio offers for the first time a comprehensive toolset to help us assess ovarian cancer risk in women with adnexal masses at all stages of their fitness process. OvaWatch and Ova1Plus will be available with a singles verification request form, so the doctor to which monitoring is suitable for the patient with an adnexal mass.
As Nicole mentioned, many providers expressed a positive reaction to the launch of OvaWatch, which responds to an unmet medical need for clinical management of women with adnexal masses. We believe that OvaWatch will constitute a significant expansion of our potential patient population, by adding women at an earlier stage, who have adnexal masses in benign or undetermined threat, employing a validated proprietary set of rules incorporating patient characteristics, such as menopausal status and 7 other serum biomarkers, OvaWatch provides a threat assessment score with negative predictive price correspondent.
A lower threat score implies a low likelihood of malignancy, which supports doctors’ plan to control and monitor. A higher score does not imply the presence of cancer, but provides data that can help the doctor to further clinical evaluation, namely consultation or surgery.
With our FDA-approved products, Ova1 and OVERA, OvaWatch will be available soon. For the first time, healthcare providers have a suite of blood tests that, combined with their clinical expertise, imaging studies and patient history, will allow them hopefully to expand a medical management plan and go to the right specialists at the right time. Due to the intended use of the product, we expect the overall addressable market for OvaWatch to be particularly larger than the addressable market for Ova1Plus.
In our last update, I said that we were completing registration for our prospective examination based on real-world knowledge in aid of our Ova1 release plan, the manuscript is being submitted for peer-reviewed publication. We are confident that the knowledge provided in the analytical and clinical evaluation exam will be sufficient to ensure adoption by physicians and payers. In addition, we plan to continue supporting studies similar to those that influence race and ethnicity in ovarian cancer screening.
On June 20, 2022, a manuscript of clinical study efforts in the Philippines, which was published through the company, was accepted for publication in the International Journal of Environmental Research and Public Health. Knowledge shows that our FDA-approved OVERA test has greater overall functionality in ovarian cancer screening, regardless of menopausal prestige compared to CA125.
In particular, OVERA was found to be more delicate than CA125 in detecting disease at an early level in this population. The study also showed that OVERA had the most productive overall functionality of all the individual classifiers, adding some of the hardest-to-detect cancer cohorts. , such as premenopausal women and early-level diseases. We hope that this study, along with the effects of an ongoing study in Israel, will lead to adoption of our products through providers and payers of women in the U. S. And around the world.
Let’s move on to the progression of our endometriosis products. One of the first priorities I took when I joined Aspira was to reveal and perceive the pilot dataset we collected at the other stages of EndoCheck’s progression. Now I’ve finished this due diligence, I’ve learned a lot about the science and the effects from the foundation of our adventure to obtaining a meaningful check [plus pay][ph] to aid a diagnosis of endometriosis. In this regard, I look forward to being able to talk about the status of our progression through the first quarter of 2023 in aid of the planned launch of EndoCheck in the current part of 2023.
As a reminder, in the past we have announced a sponsored agreement with Harvard’s Dana Farber Cancer Institute, the Brigham.
Based on the clinical advances made today, we also began enrollment in our multicycle [ph] clinical study of endometriosis. This is a prospective observational study whose primary objective is to verify the clinical functionality of EndoCheck compared to laparoscopic surgical evaluation. Even that, our women over the age of 14, who had planned to undergo a momentary laparotomy or laparoscopy to chronic pain similar to endometriosis. We are actively recruiting more exam sites and plan to meet the enrollment goal by supporting the launch in the time part of 2023.
Returning to Nicole about our purpose of improving operational power and reducing money consumption, I am proud to share this golden budget from Aspira. We scripted [ph] and made significant progress in our purposes of expansion and innovation. And we continue to help improve women’s gynecological health.
Now I’ll turn to Bob Beechey to talk about our monetary performance. Bob?
Robert Beechey
Thank you, Ryan. La product profit was $2,037,000 for the 3 months ended September 30, 2022, compared to $1,617,000 for the same era in 2021. Product profit increased 26% due to an accumulation in Ova1 check volume compared to the previous year, partially offset through a decrease in average unit value or AUP, which increased from $378 in the third quarter of 2021 to $369 in the third quarter of 2022. through higher UPA payers, such as dosage for Medicare and advertising insurance companies, partially offset through a higher percentage reduction of Medicaid UPA. is compared to 12% of the volume of the same era in 2021 and an AUP of $94.
Our Medicaid-free Ova1Plus UPA $415 for the 3 months ending September 30, 2022, compared to $415 for the same era in 2021. The number of checks performed increased by 29% to 5524 in the 3 months ending September 30, 2022, compared to 4,281 check products for the same era in 2021. The number of product checks made increased by 2% sequentially in the third quarter of 2022 compared to the current quarter of 2022. These increases are the result of increased access to suppliers’ offices and increased investment in our sales channels.
Ova1Plus’ gross profit margin remains strong at 57% for the 3 months ended September 30, 2022, compared to 56% in 2021. 42%, compared to the same era in 2021. Compared to the current quarter of 2022, studies and progression expenses increased to $747,000 or 53%. This accumulation is primarily due to clinical validity, OvaWatch-like product progression prices, and prices similar to our collaboration with Harvard’s Dana Farber Cancer Institute in Brigham.
Sales and marketing expenses for the 3 months ended September 30, 2022 were minimized by $1,133,000 or 22%, compared to the same era in 2021. This reduction is basically due to the reduction in marketing staff, as well as the reduction in hiring and external marketing expenses.
General administration prices for the 3 months ended September 30, 2022 increased by $907,000 or 24% compared to the same era in 2021. The accrual is basically due to the issuance prices related to the issuance of warrants for $1,117,000, partially offset through a minimization in consulting and legal fees of $102,000. As of September 30, 2020, Aspira had $20. 8 million in money and short-term investments. We raised net income of $7. 7 million through a public provision in the third quarter of 2022. We used $8. 1 million in operating activities in the third quarter of 2022, compared to $6. 4 million in the current quarter of 2022 and $8 million in the third quarter of 2022. 2022.
As Nicole mentioned, the use of money in the third quarter includes significant investments in the progress of EndoCheck, as well as severance pay. that for the preceding 30 consecutive business days, the final offering value of Aspira’s non-unusual inventory was below the $1 minimum consistent with the consistent percentage requirement for continued listing on the Nasdaq capital market. If we fail to recover compliance by November 28, 2022, we would possibly be eligible for an additional 180 calendar days compliance according to the period, which would make the deadline to May 27, 2023 larger. We are preparing to submit the 180-day extension request.
Now I’ll pass it on to Nicole.
Nicole Sandford
Thanks Bob. Before I answer questions, let me take a moment to highlight the news we published today that you will leave us for another chance. I am personally grateful for your help in my transition and your willingness to remain as a consultant, helping to locate and integrate his successor. On behalf of the control team and the Board of Directors, I would like to thank you for your contribution to the company and wish you all the most productive in your long-term efforts.
With that, I would now like to open the question forum. David?
Q&A session
Operator
Thank you. At that time, we will hold a response session. [Operator Instructions] The first is by Ross Osborn with Cantor Fitzgerald.
Ross Osborn
Hello smart tomorrow. I hope everyone is doing well. And I thought, Bob, it’s great to paint with you and good luck in your long-term endeavors.
Robert Beechey
Thank you Ross.
Ross Osborn
So, just looking at the quarter, maybe the sequential expansion is a little less than we expected?Curious about how the quarter went against internal expectations and what the company can do to generate further expansion in the future?
Nicole Sandford
Of course. Hi, Ross. Thanks for the question. We are now in our first full year of adoption of the Ova1Plus type of the post-COVID world. Then, we will be informed of the model, the command models of this test. So us, and what we’re doing to drive expansion for the rest of the year. We have established a number of additional sales incentives that will contribute to further expansion in the fourth quarter, which has historically been a strong quarter for us and other diagnostics as other people have reached their deductibles and are seeking checkups with their doctors before the end of the year. So I hope that answers the question.
Ross Osborn
I may have missed this juggling with a few calls, but since Scarlet Health is providing a check again, at what point and if not, would I expect them to start giving?
Nicole Sandford
Sorry. Could you repeat the beginning? I heard the beginning of the question.
Ross Osborn
Yes, I just ask about the Scarlet Health partnership, if they start providing the test.
Nicole Sandford
Yes, Scarlet Health’s phlebotomy dating as a component of BioReference’s global dating, so it was also introduced in early October.
Ross Osborn
It is ok! Great. Thanks for clarifying that. How does the unfolding of synergies, I suppose, in particular with women’s care?
Nicole Sandford
Of course. Yes, we are very pleased with the launch of women’s attention, as I mentioned, it is a multi-level sale. So first, you want the platform adopted, and then you still want to drive adoption among doctors within the super organization. Therefore, we continue to do this without a number of very successful occasions with them to understand and wisdom of control within the physician organization. But we are quite satisfied with the progress made so far.
Ross Osborn
It is ok! Super. Thank you for answering my questions.
Nicole Sandford
Of course. Thank you Ross.
Operator
[Operator Instructions] The following is by Andrew Brackmann with William Blair.
Soriano Griffon
Hey HOLA. Es Griffin for Andrew. Thank you for your questions. I just heard cash, so operations are burning about $8 million in the quarter, if you cancel the only ones you discussed close to $7 million?Is this the right way to think about a long-term baseline in terms of operational combustion?
Nicole Sandford
Bob, do you want to jump on that?
Robert Beechey
Yes, we expect this to compress a bit over time, as we have reaffirmed our direction of liquidity usage for the time being and more on track with the first quarter. execute our operational initiative actions, but we actually take, we take the vast majority of counting actions, as Nicole mentioned. We will see the investment of the whole year in the discounts we have made before 2023. And obviously, as earnings and adoption improve, we’re seeing a compression of that monetary activity. So, I think in terms of the additional charge exchange rate, high-end traction will compress it a lot more in 2023. And we have already given the indicationsfor the fourth quarter.
Soriano Griffon
Ok. . .
Nicole Sandford
yes, let me upload that before. . . oh, sorry, Griffin, let me upload a little bit of that. We said in the afterlife that we don’t think we have to incur significant sales and marketing. pricing to drive OvaWatch adoption, similar marketing strategies, a similar calling point. So, according to Bob, we think we’re going to continue to see improved sales power and, indeed, overall spending power in sales and marketing. I think we’re going to see a cut.
Soriano Griffon
Fine thank you. And then just some on OvaWatch, maybe just their high-level expectations on the profit ramp, I think TAM is about 3 times bigger than Ova1Plus with the extended label alone and has an existing education there. So how do you think about OvaWatch, will it be a significant expansion driving force next year?
Nicole Sandford
Yes, that’s definitely the plan. We’ve changed the name of OvaSuite in particular so that when we contact doctors, we don’t fork verbal replacement between one or the other. We communicate to the doctor about the suite of products as a way for them to manage and make clinical decisions related to any woman who has a lump, which is very, very different from what we were, when we were only communicating about Ova1PlusArray which, as you know, is only approved for women who in a position made the decision to treat surgically. So it’s a very different verbal replacement, hopefully it’s less difficult to achieve a replacement in behavior, because doctors will see women with masses much more than they will see a woman with a lump where they’ve made a decision. A position for surgery.
Therefore, the first indications of our discussions with suppliers have been very positive. They also see it as a more comprehensive set of tools. Therefore, the plan would be to drive OvaWatch adoption much faster than the adoption of Ova1 and OVERA in the past.
Soriano Griffon
It is ok. And if I can only get two more than fast on OvaWatch and refunds from the exclusive CPT code app, do you still believe, from a pricing perspective, that a crosswalk to Ova1 is most likely?
Nicole Sandford
Yes, I did.
Soriano Griffon
It is ok. And then the last one in this 2 from OvaWatch, so 1 this unique threat assessment you’ll post here this quarter, and then 2 will be more than serial monitoring. Are Phase 2 expectations still a rollout next year in 2023?Update on a prospective study?
Nicole Sandford
Yes, that’s the plan. But I would ask Ryan to comment on the study.
Ryan Phan
Of course. Yes, we are still in the plan for this one, lately the CRL [ph] prospect is ongoing. And we have no explanation for why to replace our plan for 2023.
Soriano Griffon
Super. Thank you. And good luck Bob.
Nicole Sandford
Thank you very much for the question.
Operator
Ladies and gentlemen, we have come to the end of the question and answer session. I would like to call Nicole Sandford again for her closing remarks.
Nicole Sandford
Let me conclude by reiterating our focus on sustained third quarter execution and reaffirming our planned use of money for the remainder of the year between $5. 9 million and $7 million. With the imminent launch of OvaWatch, we will focus on adopting the OvaSuite portfolio across payers and providers, intensifying our collaboration with channel partners, adding BioReference, and accelerating the progression and launch of EndoCheck.
The Aspira team is committed to achieving our goals through rigorous resource allocation and the company’s long-term. She is energized and more focused than ever on our project for women’s gynecological health. We expect a solid finish to 2022 and our most productive year yet in 2023. Thank you all so much for joining us today.
Operator
This concludes today’s conference, Aspire Women’s Health, thank you for your participation. You can disconnect your at this time.