Aspira Women's Health Incorporated reported a 9% increase in product revenues for the third quarter of 2023, driven by a 5% increase in the number of OvaSuite tests performed. The company is awaiting CMS approval for pricing changes, which it expects to apply to all Medicare beneficiaries starting in January 2024. As part of its growth strategy, Aspira is expanding its OvaSuite portfolio and has strengthened its balance sheet through an equity raise.
Key takeaways from the call include:
- OvaSuite tests performed increased by 5%, contributing to a 9% rise in product revenues.
- Aspira is awaiting CMS approval for pricing changes, expected to affect all Medicare beneficiaries from January 2024.
- The company announced new executive appointments and high-impact campaigns to drive provider adoption.
- Expansion of the OvaSuite portfolio is underway, including the launch of OvaWatch and the development of miRNA-based ovarian cancer tests.
- The company reported progress on its EndoCheck and EndoMDx tests for endometriosis.
- An equity raise has strengthened the company's balance sheet, with cash, cash equivalents, and restricted cash totaling $5.4 million as of September 30, 2023.
During the earnings call, Chief Executive Officer Nicole Sandford discussed the impact on pricing for longitudinal monitoring tests and expressed confidence in the approval of a crosswalk request. However, she stated that guidance on volumes and ASP growth for 2024 could not be provided at this time.
Chief Financial Officer Torsten Hombeck discussed cash burn guidance, stating that they expect to use between $6 million and $8 million in cash for operations in the second half of the year. The company is focused on controlling cash burn and exploring funding mechanisms.
The company's focus on expanding its OvaSuite portfolio, controlling cash burn, and awaiting CMS approval for pricing changes, indicates a strategic approach to growth. As Aspira Women's Health Incorporated (NASDAQ:AWH) moves into 2024, it aims to do so from a position of strength.
InvestingPro Insights
Drawing on real-time data from InvestingPro, Aspira Women's Health Incorporated (NASDAQ:AWH) has a market cap of 37.94M USD. Despite a challenging period, the company has seen a revenue growth of 20.81% over the last twelve months as of Q2 2023, with a gross profit margin of 56.83%. Nevertheless, the company has experienced a significant price drop recently, with a 1-month price total return of -27.63%.
InvestingPro Tips suggest that Aspira's stock is currently in oversold territory, and the company has been rapidly burning through cash. It's also worth noting that Aspira operates with a moderate level of debt and has not been profitable over the last twelve months. This is in line with analyst predictions that the company will not be profitable this year.
As we delve deeper into Aspira's financial health, there are over 200 additional tips available on InvestingPro to help investors make informed decisions. These insights, combined with the real-time data, provide a comprehensive view of the company's performance and future prospects.
Full transcript - AWH Q3 2023:
Operator: Good afternoon, ladies and gentlemen, and welcome to the Aspira Women's Health Incorporated Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will open the call for your questions. As a reminder, this call is being recorded today. Leading the call today is Nicole Sandford, President and Chief Executive Officer, joining her is Dr. Torsten Hombeck, Chief Financial Officer. After the prepared remarks, we will open the call for Q&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 Aspira’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. Participants are directed to the cautionary notes 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-K 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 Sandford, President and Chief Executive Officer. Please go ahead.
Nicole Sandford: Thank you, operator, and good afternoon, everyone. I would like to welcome you to our third quarter 2023 conference call. I'll start the call with highlights from this quarter before handing it to our CFO, Torsten Hombeck, to review our financial performance in more detail. As always, I'll start with growth. We were excited to see CMS's preliminary approval of our request to crosswalk pricing from Ova1 to OvaWatch in the 2024 preliminary laboratory test fee schedule. If approved is expected later this month, the pricing will apply to all Medicare beneficiaries beginning in January 2024. Elsewhere, on the growth front, we welcome back, Michelle Snider, as our Senior Vice President of Commercial Strategy and Operations. She rejoins the Aspira having successful leadership roles at Sonic Laboratories and Sema4. Michelle and I have been collaborating closely on the execution of the next phase of our commercial refresh, including the development of a physician focused omnichannel strategy, the reinvigoration of our inside sales organization, and the launch of several high impact campaigns, including our recent physician focused OvaWatch KOL webinar that attracted over 400 participants. We also launched a point-of-care practice aid to help healthcare providers talk to their patients about adnexal masses and how are non-invasive OvaSuite products, can help assess their risk of cancer. We believe these efforts will continue to drive our OvaSuite test into the patient care pathway and increase provider adoption. We’ve created a new Vice President of Business Development role and recruited a talented executive with extensive health care relationships to accelerate our commercial expansion plans. Elsewhere in sales, we turned around several underperforming territories, further reinforcing a performance culture in the commercial organization. We implemented a new relationship with a contract sales organization to improve flexibility and have seen immediate improvements in many of those territories as a result. This quarter we continue our track record of year-over-year growth for OvaSuite since I became CEO. Product revenues for the third quarter were $2.2 million, representing growth of 9% compared to the third quarter of 2022. The number of OvaSuite tests performed this quarter was 5,783 an increase of 5% compared to the third quarter of 2022, with OvaWatch contributing nearly 20% of that volume. We performed 18,331 OvaSuite tests in the first nine months of this year, an increase of 16% versus the same period of 2022. The volume growth was driven by a much leaner sales team, which demonstrates our commitment to eliminating unprofitable and underperforming territories and a renewed focus on partnerships to drive profitable growth that can sustain the company as we bring new and expanded product lines to market. Turning to our average unit price, I continue to be pleased with our progress. Since we began billing OvaWatch under its unique PLA code on April 1, our OvaWatch AUP has shown a steady increase to $347, a 7% increase over the second quarter. OvaSuite AUP declined to $383 from $396 in the second quarter. However, as Torsten will cover more details shortly, the ongoing focus on cost containment helped to hold gross margin at 59%. Operating expenses dropped again in the third quarter, returning to levels the company has not achieved since 2020, while simultaneously achieving growth in both product revenues and volumes. Let me now turn to innovation. This quarter we welcomed Dr. Jody Berry to our senior leadership team. Jody joined Aspira as Chief Scientific Officer in September following a distinguished academic commercial career and biochemistry and diagnostics research and development. Most recently, Jody served as the Chief Scientific Officer of OraSure Technology, where he led the breakthrough discovery of the first integrated swab test for COVID 19. Not only is he a prolific and award winning researcher, but he is also passionate about women's health, an interest that goes all the way back to his earliest work in pelvic inflammatory disease and HIV. We made great progress in our effort to expand our OvaSuite portfolio, tests that use machine learning to provide a personalized risk of malignancy score for patients with adnexal masses. OvaWatch was designed to be commercially launched in two stages. The first stage was a point in time application for initial clinical assessment, which has now been ordered by physician 2,440 times with more than 40% of those tests coming in just this last quarter. I'm pleased to report that we have completed a critical step towards the second stage launch of OvaWatch as a longitudinal monitoring application. Our clinical study of the real world use of OvaWatch as a tool for monitoring low risk patients has been completed, and we have submitted the resulting paper for peer review and publication. We're in the process of completing final launch activities and expect to begin offering the longitudinal monitoring test by the end of the year as planned. Looking beyond OvaWatch, we are excited about adding other modalities to expand our OvaSuite portfolio. As we recently announced, Dr. Kevin Elias, Director of the gynecologic oncology laboratory at Brigham and Women’s Hospital and Assistant Professor of Obstetrics, Gynecology and Reproductive Biology at Harvard Medical School recently presented a poster related to an in development miRNA based ovarian cancer test at the American Association of Cancer Research special conference for ovarian cancer. Dr. Elias highlighted data showing miRNA’s potential to improve the diagnostic accuracy of non-invasive blood tests for women with adnexal masses based on his extensive ovarian cancer research. The study combined serum protein and patient clinical information from Aspira’s ovarian cancer clinical studies with miRNA identified by the Elias Laboratory in collaboration with a consortium of world-renowned academic researchers. Among other findings, the presentation concluded that the combination of miRNAs, proteins, and metadata identified 90% of early-stage and 100% of late-stage ovarian cancers in the studied populations. This research forms the basis of OvaMDx, which is expected to become part of the company’s OvaSuite portfolio under a previously announced licensing agreement. We are currently finalizing an advisory agreement with an experienced lab to assist our team with platform migration and test validation, which we expect will significantly accelerate the development, validation, and launch of a commercial product. Work under this agreement will begin shortly with the support and collaboration of Dr. Elias. Moving now to EndoCheck. Our first generation non-invasive protein based blood test to aid in the detection of endometriosis. We continue our verification and validation of the test, utilizing samples acquired from both our EndoCheck study sites and the University of Oxford through a material transfer agreement. Upon validation, we will follow a similar launch strategy as was utilized for OvaWatch, with a small scale roll out to clinicians who have been involved in the development of the test, to be followed by a broader commercial launch upon publication of peer reviewed data. We continue to develop EndoMDx in parallel with a protein based EndoCheck test. EndoMDx, which will combine proteins and miRNA for a higher performing test, is being developed through our sponsored research collaboration with a consortium of academic and institutions led by Dana Farber Cancer Institute. We made a second milestone payment of a $125,000 in July following the delivery of the signature. We are now working closely with the collaborators to finalize the platform migration and validation strategy for a commercial test. Finally, we established a new Clinical Advisory Board as an element of the company's overall mission to develop and commercialize high impact diagnostic tools for gynecologic disease. The Clinical Advisory Board will provide clinical input and guidance throughout the development of the company's portfolio of products and will be chaired by Aspira's Director of Medical Affairs, Dr. Leo Twiggs. Our three members include Dr. Levi Downs, Medical Director for Gynecologic Oncology with Park Nicollet Health System at Methodist Hospital, Dr. Nisha Garg, Gynecologic Surgeon, with Arizona Gynecology Consultants, and Dr. Tamika Sea, the Founder and Owner of Advanced Women's Care Center. Turning now to operational excellence, we have once again decreased cash used in operations to $3.3 million in the third quarter, representing a 56% reduction when compared to the prior year, while still showing sustained growth. We strengthened our balance sheet with a recent equity raise to support our long-term strategic vision. We have a team that is determined to set a new standard of care and gynecologic health while setting an industry standard for prudent high impact capital deployment. Now I would like to turn the call over to Torsten for a review of our financial performance. Torsten?
Torsten Hombeck: Thank you, Nicole, and good afternoon, everyone. It is my pleasure to be here today to provide you with an update on our financial performance. Product revenue for the three months ended September 30, 2023 was $2.2 million, an increase of 9% compared to $2 million for the same period in 2022. The increase in revenue was driven by an increase in OvaSuite tests performed during the quarter, which increased 5% to 5,783 compared to 5,524 for the same period in 2022. Revenue per OvaSuite tests performed for the three months ended September 30, 2023 increased 4% to $383 compared to $369 for the same periods in 2022. Total gross profit margin for the three months ended September 30, 2023 was 59% compared to 55.8% for the same period last year. Research and development expenses for the three months ended September 30, 2023 were $1 million compared to $2.2 million for the same period in 2022. The decrease of 54% was primarily due to decreases in collaboration and consulting costs. Sales and marketing expenses for the three months ended September 30, 2023 were $1.7 million compared to $4 million a decrease of 57% versus the same period last year. The decrease was primarily due to decreased personnel costs due to our focus of eliminating unprofitable territories and improving bottom line results. General administrative expenses for the three months ended September 30, 2023 were $2.7 million compared to $3.6 million a decrease of 25% versus the same period last year. This decrease was primarily due to a decrease in personnel expenses and outside legal costs. Total cash, cash equivalents, and restricted cash as of September 30, 2023 was approximately $5.4 million. Cash used in operations for the three months ended September 30, 2023 was $3.3 million compared to $7.5 million in the same period of last year and $3.4 million in the second quarter of this year. Our cash balance this quarter benefited from the registered direct offering we completed in July where we raised $4.2 million in net proceeds. The company reiterates operating cash utilization guidance for the second half of 2023 to between $6 million and $8 million. I will now turn it back over to, Nicole. Nicole?
Nicole Sandford: Thank you, Torsten. My goal has been to be very clear with our investors about our plan and then focus on execution to meet those goals. We've taken many important steps this quarter, while we experienced some moderate seasonal impacts in the third quarter, we grew both volume and revenue with a leaner and more efficient sales team. The submission of the OvaWatch longitudinal monitoring paper is a significant achievement, which will expand the addressable market for our OvaSuite test portfolio. Exciting progress was made in the development of our other near-term products, including OvaMDx, EndoCheck, and EndoMDx. In addition, we remain committed to our operational excellence goals and are spending less to achieve more as a result. We are excited to move into 2024 from the position of strength. With that, I would like to now open the call for questions. Operator?
Operator: Thank you. Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Ben Haynor with Alliance Global Partners (NYSE:GLP). Please proceed with your question.
Ben Haynor: Good afternoon, guys. Thanks for taking the questions. Just first off from me, the, on a clinical laboratory fee schedule, Medicare reimbursed then, congrats on that development, just wondering how quickly do you anticipate that'll sort of diffuse out to other payers?
Nicole Sandford: Hey, Ben. Thanks for the question. Really challenging to answer that to be honest with you, it does take some time. We are in the process of a full scale blitz to any hold outs that we have both with Ova1 and with OvaWatch, with an updated set of materials, including, what when approved, it'll also include the CMS pricing decision and the crosswalk. But, the process is a little difficult to predict.
Ben Haynor: Yes. I know it's a difficult question, but that thought I'd see if there are any grant insights there.
Nicole Sandford: I wish I could give you a more satisfying answer, but I'm sure you're not surprised, that it's just a little challenging to get there with the environment way it is.
Ben Haynor: Yes. Completely understandable. And then on, the folks that were using Ova1Plus kind of off label, if you will, what -- do you think that the kind of cannibal station that's happened, with OvaWatch as kind of run its course now, or are folks, still doing it the previous way?
Nicole Sandford: Well, I think that we're going to continue to see people choose the test that's best for each situation. For us, we consider the -- we don't really think about it in terms of cannibalization because as you're not, as you would imagine --
Ben Haynor: They [don't use] (ph) anything .
Nicole Sandford: Use of Ova1. So, it's really it's revenue regardless, right? It's revenue we wouldn't have recognized if they were using, Ova1off label even with contracted payers, we didn't we wouldn't get paid. So, every test that we run for OvaWatch is an improvement over the off label use of Ova1. However, we are seeing both tests are growing independently of one another, so, I do think that we've seen probably the experimentation is behind us.
Ben Haynor: Okay. Fair enough. It makes sense. And then on I think you gave the number on the Q2 call and, kind of, the test volume per field representative. Do you do you have that handy by any chance?
Nicole Sandford: I do. I'm going to go pull it from earnings release, because I believe it was in there.
Ben Haynor: Oh, sorry. I also miss that.
Nicole Sandford: It wasn't enough. I don't have it handy. I should have it handy, I apologize for that, but let me see what I can do to [indiscernible]
Ben Haynor: Okay. I got it. And then lastly for me, you mentioned in the press release, the revenue per test is expected to be volatile during 2023, upside downside, magnitude, what's the right way to kind of think of the volatile terminology there?
Nicole Sandford: Well, so it's another challenging question to answer because some of it depends a little bit on timing of collections. Because we're kind of working on enrolling quarters. Torsten, anything in addition to that that you've add. I mean, by definition volatile is challenging to predict, right? But, we can see -- collections our team has been doing a great job all year. So, every dollar of revenue that's available to us, they're capturing.
Ben Haynor: Okay. Got it. I think that's all I had today. Thanks a lot, guys.
Nicole Sandford: Thanks, Ben.
Operator: [Operator Instructions] Our next question comes from the line of Andrew Brackmann with William Blair. Please proceed with your question.
Unidentified Participant: Hey, everyone. This is Dustin on the line for Andrew. Thanks for taking our questions.
Nicole Sandford: Hi, Dustin.
Unidentified Participant: First on EndoCheck, good to hear. Yes. Hi. How are you? On EndoCheck good to hear progress going on there, just wondering what the update timeline is for the launch. I think you said previously the fourth quarter. And then when that's launched, just what metrics are you guys going to use to see that this launch, has been success full and what kind of goals are you laying out for yourselves there?
Nicole Sandford: Sure. So, we're not changing any of the timeline today. Our goal has been and continues to be, the launch of a test, for commercial use by the end of the year. We're still focused on that provided we're able to fully validate the test and have a roll out similar to what we did for OvaWatch, where we had a period of time where OvaWatch was primarily being offered to physicians who were familiar with the development of the technology, we're planning on doing the same thing. That's really been the playbook we planned on following with a much broader commercial launch of the first generation test in the first quarter of next year.
Unidentified Participant: Understood. And then on the OvaCheck, great to see you guys got the proposed rule there with CMS. How confident are you guys and that being finalized? And then how would that actually influence the longitudinal monitoring product if at all in terms of pricing there?
Nicole Sandford: Yes. So, we don't expect there to be any impact on longitudinal monitoring. We believe that the tests will be reimbursed at the same level. The likelihood that the test or that the crosswalk that was preliminarily approved, becomes final, I would rate it at high. However, CMS ultimately has the holds the pen. The comment period is behind us. We submitted a comment. We were very, very confident in the case we put forward for the crosswalk. I mean, there's, almost every factor that they look at for a crosswalk request was in our favor. In terms of, the process, the platform, the analyze, if you name it. So, the case was as strong as it could possibly be, we did submit a comment letter and, the final is expected in the next several weeks.
Unidentified Participant: Understood. Thank you. And then maybe looking out to ‘24, just any high level thoughts on volumes and ASP growth. I know you're going to have a couple new test launching, at different price points, but anything high level you can give us there and how that compares to the third quarter results?
Nicole Sandford: Yes. We're not really in a position to give any 2024 guidance at this point, Dustin, but, thanks for trying.
Unidentified Participant: Yes. How do I give it a shot. And, yes, just one more. Spending in burn, any color on how you guys are thinking about runway? And obviously, a lot's been done across the organization to help extend that, but just how are you how are you thinking about that? Thank you.
Torsten Hombeck: Yes. This is Torsten. So, in terms of runway, we have reiterated our cash guidance, cash burn guidance, to use cash and operations in the second half of this year, to be between $6 million and $8 million. We have cash in the bank as of September 30, of a total of $5.4 million that includes cash and restricted cash. And, our cash burn for the third quarter was $3.3 million after $3.4 million in the second quarter and $5.7 million in the first quarter. So, what you can see is that we continue to be very focused on controlling our cash burn, bringing that further down going forward, on a quarter-to-quarter basis, and there's any other biotech company definitely double biotech company. We're constantly looking into dilutive and non-dilutive ways funding mechanisms to fund the company going forward. We do have, as a reminder, it two [ATN] (ph) or equity line of credits. One is with, Kantor, and the other one is with Lincoln Park that are available to us. And then while these are not true funding instruments. They definitely help the company on high trading volume days, to draw certain dollars from that very line. So it's a safety net that we have, and we continue to look into various ways, to continue to fund the company going forward.
Unidentified Participant: Okay, great. I appreciate that. That's it from us. Thank you.
Torsten Hombeck: Thank you.
Operator: There are no further questions in the queue. I'd like to hand the call back to Nicole Sandford for closing remarks.
Nicole Sandford: Thank you, Doug, and thank you to all of our participants for joining today. Wish all of you a wonderful Thanksgiving holiday and look forward to connecting again in the New Year. Thank you.
Operator: Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.
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