Q4 2023 Aspira Women's Health Inc Earnings Call

Participants

Nicole Sandford; President, Chief Executive Officer, Director; Aspira Women's Health Inc

Torsten Hombeck; Chief Financial Officer; Aspira Women's Health Inc

Ross Osbourn; Analyst; Cantor Fitzgerald

Sally Yanchus; Analyst; Water Tower Research

Presentation

Operator

Good afternoon, ladies and gentlemen, and welcome to the Aspira Women's Health, Inc. fourth quarter 2023 earnings conference call. (Operator instructions)
As a reminder, this call is being recorded today. Leading the call today is Nicole Sandford, President and Chief Executive Officer and 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 related 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 note set forth in today's press release as well as the risk factors set forth in a 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 like to turn the call over to Nicole Sandford, President and Chief Executive Officer. Please go ahead.

Nicole Sandford

Thank you, operator, and welcome, everyone, to our fourth quarter and year end 2023 earnings conference call. With me today is Torsten Homex, our Chief Financial Officer, who will provide a brief update on our financial performance after my prepared remarks, we will then open the call for questions.
Before I begin my update on our progress, I want to take a minute to discuss the incredible groundswell of support for more women's health research and better outcomes in the United States. We have worked with other advocates to raise awareness among both federal and state lawmakers about the challenges we faced in securing adequate gynecologic care and the particular issues we face an excess in innovative life-saving torque like the biomarker tests offered by Aspira.
Some of you remember, Aspire as patient spokesperson dine-in powers who spent some over the last month of life preparing for and delivering to Congress a briefing that led to the introduction of new legislation, perhaps fewer people know about our ongoing effort to change state laws and coverage policies that impact women's health matters across the country. There's been a long exhaustive process that has required focus, determination and a supportive exceptional advocate for shareholders and finally appears to be paying off.
President Biden recently signed an executive order supporting women's health research that opened up access to $100 million in funding through the newly formed Advanced Research Projects Agency for Health or RPH. Moreover, state legislation is being introduced around the country to expand coverage for biomarker testing last week, the state of Delaware passed the phase Deanna Janssen Johnson act aimed at improving access to detection and intervention services for those with a family history of certain types of cancers, they joined 15 other states that have already passed broad biomarker testing legislation and nearly a dozen more of a bills under consideration. We've also seen unprecedented interest in women's health research from the National Institute of Health and the Department of Defense.
The most exciting thing about the additional opportunities is that many are focused on funding projects that play to our strengths, sanitized world-class academic and research center, a demonstrated ability to launch and deliver tests in a commercial setting and a pipeline of near term products are just a few of the advantages we see for ASPiRA. We intend to continue our long history of working with change makers in women's health to advocate for health equity and improve outcomes for women. And we are certainly eager to take full advantage of the new opportunities that are available to us in 2024 and beyond.
Now let's take a look at 2023. It was an exciting and dynamic year filled with many changes and strong strategic execution throughout it. All we stayed true to our three touchstones for product growth, innovation and operational excellence. I'll begin with a review of our growth this year, followed by an update on developments on the innovation side.
I will then cover operational execution highlights, including some exciting recent leadership announcements, improving our commercial capabilities with the most important strategic growth priorities in 2023 as pilot commercially available assays are without question revolutionary tool, but the potential to substantially improved health outcomes for women. Despite steady volume growth, an inflection point has remained elusive. At the beginning of 2023, we completed a comprehensive review of our commercial ecosystem with the goal of identifying people process and technology enhancements.
The results were telling we needed to make sweeping changes throughout the organization to address competency gaps. In the summer of 2023, we launched a commercial refresh program based on the findings of our review to align our team and implement critically important changes aimed at ensuring our assays have reached their full potential. It's hard to overstate the comprehensive nature of the changes we made, we recruited new members to the leadership team created several high-level strategic roles to focus on national accounts and alliances.
We designed our sales incentive compensation plan, eliminated unprofitable territories, replaced underperforming reps, in-sourced marketing with experienced healthcare and diagnostic professional created an inside sales function and expanded our data and targeting capabilities. We knew though that we would sacrifice some volume growth in the second half of the year by cutting unprofitable territories in order to properly rebuild our team and implement new processes and protocols while we did see some softness in the third and fourth quarters of 2023, we managed to achieve 15% year-over-year growth in over suite revenues, Overwatch, which we introduced at the end of 2022 grew throughout the year as physicians recognize its ability to fill an unmet need and the clinical management of at maximum assets.
Importantly, we accomplished this growth while simultaneously decreasing our sales and marketing expenses by nearly 50%. We had a total of 17 full-time salespeople at the end of 2023, down from 24 at the beginning of the year. Thanks to a sales team that has more experience than at any point in the Company's history. The average full year overseas test volume per full-time sales rep increased 50% from 779 in 2022 to 1,170 in 2023. We are approaching the end of the commercial refresh program, and we'll be ready for the anticipated introduction of our new products.
We expect to see more growth in 2024 as our improved sales team hit their stride and many of the important infrastructure improvements begin to make an impact. In fact, March has been a very strong month so far, even with several open commercial positions left to fill. Of course, the other critical component of revenue is price. The average unit price of our overseas tax increased to $383, up from $372 in 2022. Driving the improvement in AP was the improvement in our market access capabilities, including a new PLA code for Overwatch. The approval of our CMS request to crosswalk the pricing of OVA1 to OvaWatch and numerous expansions of commercial and Medicaid coverage.
Let's move now to an update on our innovation efforts, which we see as fundamental to the creation of long-term enterprise value. Fortunately, we are extremely well positioned to successfully develop novel AI based assay to aid in the diagnosis of gynecologic disease. Based on our extensive know-how and experience designing and launching blood tests for ovarian cancer. This experience carries with it benefits like our biobank of over 110,000 patient samples and data from thousands more.
This is, of course, the extremely valuable raw materials in which we build our future products, including those already in development in January, we were pleased to update you with exciting developments we have made in both our ovarian cancer and endometriosis portfolios in ovarian cancer. We have been developing clinical data to expand the use of our Overwatch tests from a single use test to a multiple use tests for the monitoring of. And in that format, we believe many women can avoid the unnecessary or premature surgical removal of their ovaries, thereby avoiding lifelong side effects and a tremendous cost to the health care system with a noninvasive monitoring of their massive surgery does not have to be the first step.
However, a proper assessment and clinical planning can only happen with the benefit of a reliable, clinically proven test that provides information on WiMAX. Overwatch is that critical tool we have manuscripts currently under review by well respected peer review journals. While we cannot predict when we will be accepted for publication, we believe the data clearly supports the monitoring of I-Mab to provide women with an alternative to premature or unnecessary surgical intervention.
Also in ovarian cancer, we have spoken previously about over MDX the next-generation non-invasive risk assessment test that combine serum protein clinical data and micro RNA. We are developing this test in collaboration with Dana-Farber Cancer Institute as part of a licensing agreement we signed in 2023 based on initial research over MDX may provide higher specificity for all ovarian cancer and higher sensitivity to certain early-stage cancers when compared to existing technology, a major leap forward in diagnostic testing. We are in the process of completing our final test design, which includes includes completing the transfer of the test to an FDA approved PCR system. We expect to complete this work along with the verification and validation of the assay by the end of 2024.
Let's turn now to our endometriosis portfolio. Indonesia is a significant problem for millions of women, up to 6.5 million women in the US alone to be more precise based on a groundswell of advocacy. We expected proliferation of therapeutics to treat this disease, increasing the need for an easy to use, reliable non-invasive diagnostic, we are well positioned to meet this need.
In December 2023, we announced the exciting news that our work and produce the first ever protein biomarker test for the identification of endometriosis. Data from this study clearly showed that ENDOCHECK accurately identifies ovarian, endometriosis and endometrium. I one of the most common forms of endometriosis.
We presented the data related to the performance of this test earlier this month at the Society for Reproductive investigations Annual Scientific Conference, we were thrilled by the reception and the level of excitement surrounding our work we intend to finalize a manuscript for publication based on the data and complete an NIH grant application for additional funding and the remaining development and validation steps required for ENDOCHECK.
We're currently evaluating the best commercial application and appropriate launch time line for ENDOCHECK and led to the meaningful progress that has been made in the development of Endo MVX. Our noninvasive test combining serum proteins, clinical data and micro RNA for the identification of all endometriosis. Our successful sponsored research agreement with a consortium of world-class academic and clinical partner, led by Dana-Farber Cancer Institute led to the development of a promising micro RNA signature that is currently in the final test design stages. Much like our work with of MDX.
The tests will be transferred to an FDA-approved PCR system before finalizing the algorithm and verification of the signature and 2024. As you can see, we intend to lead the way in the creation of noninvasive AI. based packs to aid in the diagnosis of Gynecologic diseases.
On the operational side, we welcome Dr. Sandor Milligan as president for joins an already strong leadership team, a seasoned executive with women's health and product development expertise. Sandy is coming into accelerate our launch plans and secure new innovation and commercialization partnership. She has an accomplished leader with a stellar reputation, and we are excited to have her join the team. We've come a long way, and I'm very proud of that.
But we still have work to do to prepare for the much bigger opportunity in front of us. For the past two years, we have been methodically laying the foundation brick-by-brick for breakout growth. There is a growing optimism inside the company a feeling that we are ready to reach our full potential, and it's a great way to start 2024.
With that, let me turn it over to Torsten for an update on our financials. Torsten?

Torsten Hombeck

Thank you, Nicole. I will begin with a review of our fourth quarter results, followed by a review of our full year 2023 results. Ovasuite. Revenue for the fourth quarter of 2023 was $2.1 million, which was flat compared to the fourth quarter of 2022. Revenue in the fourth quarter of 2023 benefited by strong year over year growth of OvaWatch, which was offset by a decrease in our OVA1Plus test volume. We also benefited somewhat from an increase in our overall average unit price or AUP, which rose to $376 in the fourth quarter of 2023 compared to $369 in the same period of 2022.
We have made headway in gaining additional reimbursement coverage for Overwatch, which continues to improve our overall AUP research and development expenses for the fourth quarter of 2023 increased slightly, while G&A was essentially flat and sales and marketing expenses decreased by 40%.
Moving to our full year 2023 results over suite revenues improved 15% to $9.2 million compared to $8 million in '22 revenues benefited from our overall watch sales volume increases and our improving AUP, which increased to $382 for the full year compared to $376 in 2022.
OvaSuite volume increased by 12% in 2023 compared to 2022. Our gross margins for the full year improved to 57% compared to 52% in '22, benefiting from lower led supply and shipping costs in '23 versus 2022. We made great improvements across the board last year in R&D, sales and marketing and G&A spending.
Our R&D expenses last year decreased 32% compared to 2022. Sales and marketing expenses decreased 48% and G&A expenses were down 16% compared to 2022. Overall, our cash used in operating activities in 2023 was $15.9 million, down 49% compared to cash used in operations of $31.1 billion in 2022.
Our cash as of December 31, 23 was $2.9 million, which was boosted by the $5.5 million in gross proceeds raised in January 2024 as part of our registered direct offering. On our existing equity purchase agreement with Lincoln Park Capital, we have approximately $8.4 million remaining available to us.
Additionally, we are pursuing a number of non-dilutive sources of cash, including research grants. Our cash used in operating activities in '24 is expected to be between USD15 million and USD18 million.
With that, I will now turn the call back over to Nicole the call.

Nicole Sandford

Thank you. Torsten has come a long way this year, one that was punctuated by macro economic and geopolitical uncertainty and an overall softness in the diagnostic sector, a clear need for better tools for noninvasive gynecologic disease detection is increasingly being recognized by our national and state leaders and this creates unprecedented opportunities for our business.
We're taking all the steps we believe are necessary to position ourselves for success, and we'll continue to be steadfastly focused on growth, innovation and operational excellence. The energy in the Company is fantastic. Now that we've done much of the hard work associated with rightsizing the business and upgrading our talent. Now we are in the exciting part of building it up and realizing our potential.
With that, I'd like to now open the call for questions. Operator?

Question and Answer Session

Operator

(Operator Instructions)
Ross Osbourn, Cantor Fitzgerald.

Ross Osbourn

Hello. Good morning. Thanks for taking my questions. So starting off with Overwatch LM, can you walk through the hurdles to getting your manuscript out? Is there another journal that could publish and his publication or requirement for commercialization, and if not, why not go ahead and get the test of the market given has been delayed already?

Nicole Sandford

Sure. Good morning, Ross, thanks for the question. And yes, there are certainly other journals that we could submit the management to when you do that. A question reset the clock and so as long as the Journal is reviewing manuscript, we've made the decision to and to wait it out. We have gotten some comments, so encouraging there. And the answer is no, it's not required necessarily to have the manuscript. Ultimately, the decision to launch the test is in the hands of our lab director. So on that, that really is the path that we are on at the juncture.

Ross Osbourn

Okay, understood. And then maybe switching to pricing. How do you see price evolving throughout the year? And could you provide some color on where you stand on reimbursement efforts by each test tumor.

Nicole Sandford

So we've continued to see reimbursement improve for both tests. It's important to remember that as people adopt Overwatch in place of potentially using over one off label that is good for to for lots of obvious reasons. We couldn't build that over one test that was used off-label. But now that Overwatch is there to meet that need. And it is encouraging physicians to use Overwatch instead of off label use of a one, which clearly we don't recommend or promote in any way, right. So that helps both the over one price because we're collecting a higher percentage of those tests and Overwatch, which has really surpassed our expectations in terms of how quickly it has trended up to meet on the OVA1 pricing.
In terms of the broader reimbursement, we've brought in a whole new team really experienced team that is focused on first and foremost, the commercial closing the commercial gap aggressively going back to any holdout and OVA1 and then pressing forward with Overwatch for anyone who's covering over one. So we've seen some really great, some really great progress in that area we had released earlier this year, so we're feeling really good about that.

Ross Osbourn

Okay. Got it. Are you able to provide like an average denial rate and your success so far on appeals.

Nicole Sandford

I don't have that information at the tip of my fingers here, Ross, but that's something we can look at in the future.

Ross Osbourn

Okay, great and then last one for me and I'll jump back in the queue of so you resize your territories at beginning of last year and after two quarters, how are you thinking about your territories and head count given obviously the once you have this. Thank you.

Nicole Sandford

So we were at 17 salespeople at the end of the year that included a number of inside salespeople in the first year that we were able to add those folks into the next. And it made a pretty significant impact right out of the gate, which was great. We have three wells that we're looking to fill immediately and those are open right now. One based on turnover and the other are just additional malls that we're looking to add to a new territories or expanded territory.
What's really important is if we're going to add a new territory, we have to do it in the context of strong reimbursement and in the context of creating more opportunity through strategic relationships with physician groups and health systems. So for example, for some time, we've been targeting a large health system in Midwest I'm not ready quite to announce who it is, but targeting that health system there.
And before we add a rep to that area, we want to lock in all of those critical pieces, including the medical policy, reimbursement, et cetera, et cetera. And so we're really confident in the territory and the reps that we have now. But we're going to be thoughtful if we're going to add more in the future than to be built around success in building blocks that will make that reps successful.

Ross Osbourn

As I said, thank you for taking my questions.

Nicole Sandford

And thanks for joining Ross.

Operator

Sally Yanchus, Water Tower Research.

Sally Yanchus

Yes, hello, I don't know if you can you comment on the status of vendor check? Is it possible that it could launch this year and when we have a better idea of when it could hit the markets.

Nicole Sandford

Thanks Sally and does Endocheck we are we are really taking a hard look at how to best launch that test in the marketplace. As I mentioned in my remarks, I will say there has been a very, very high level of interest in that test, in particular by NIH and then on the program managers has strongly encouraged us to submit a grant application for the development of the test, which we are in the final stages of completing that application. So I'm in the next week or so, I think that will be submitted, but there's a lot of excitement around that. Houston is part of a broader from a broader panel for understanding the nature of the national map.
So very encouraged by that and also encouraged by the thought that we can get a big piece of that funded by NIH through a grant. So So fingers crossed on that, but you know, the other piece is really understanding and the rapid development process for Endo MDX, which is going is going much faster than I think we had anticipated and thinking about how does the protein R&D that we've done so far for Endo check lock into Endo MDX? And how do we look at those two as complementary and or, you know, making a decision about which to launch and how so it's great to have options, I guess is the way I would characterize it.

Sally Yanchus

Okay. And is there a lot of interest among the clinicians that, um, your sales force targets, I mean, are they aware of this type of test of, I guess how much interest and awareness is there among the haves and the physicians?

Nicole Sandford

Yes, there's a lot of awareness and a lot of excitement for an endometriosis test. And our clinical advisory board that we put together at 2023 has been really helpful in helping us to understand the need for endometriosis. Quite candidly, what we hear over and over again, is there's there's nothing currently and So anything is really helpful right. The only way to diagnose endometriosis today is to lap our laparoscopic surgery surgery on which is not ideal for anybody, but it's certainly even less ideal when you're talking about a pediatric patient on women with other co-morbidities like obesity.
These are people who are not good candidates for any surgery. So there's a there's a lot of excitement and interest in in the fact that we have now launched the first ever protein-based blood tests are completed. The design validation has been launched but completed the design of and verified the performance of it's a noninvasive test for endometriosis and Dimitri Alma being the first target for Endo check. So lot of excitement. There are poster at the SRI. conference on fluids and or check was the most part one of the most popular poster presentations there. So I think it tells us tells us a lot about the excitement that's happening.

Sally Yanchus

That's great to hear. And are there currently therapies on the market to treat endometriosis and what's --

Nicole Sandford

Yes, there are --
Yes, there's two others. And there's several that have been around for a long time. And then there's two that are more recent additions to the field. Both are indicated for pain management for endometriosis. Abbvie has a has a drug on the market and Myovant, which is now part and the Tamale also has a drug on the market. But when you look forward into the future, there are many therapies in development and the need for a non-invasive or nonsurgical diagnostic is one of the things that tweaking up progress right now. We see that on the the creation of an effective diagnostic will will help accelerate the development of the drug therapy well.

Sally Yanchus

Okay, great. Well, thanks so much.

Nicole Sandford

Thanks Sally.

Operator

Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and why at this time, there are no further questions in the queue. I would now turn it back to Nicole Sanford for closing remarks.

Nicole Sandford

Great. Thank you, operator, and thank you, everyone, for joining us. We really appreciate the support of our shareholders. We really appreciate all of you joining us today. Hopefully, you're hearing the excitement in my voice and Torsten Boyce. The Company is really well positioned in 2024, and we're excited to get back to you in just a few short weeks to our first quarter call. So thanks again, and enjoy a quiet day tomorrow.

Operator

Thank you.
The conference of Aspira Women's Health has now concluded. Thank you for your participation. You may now disconnect your lines.