Yahoo Finance Aspira Women’s Health Inc. (NASDAQ:AWH) Q4 2023 Earnings Call Transcript
Aspira Women's Health Inc. (NASDAQ:AWH) Q4 2023 Earnings Call Transcript March 28, 2024
Aspira Women's Health Inc. beats earnings expectations. Reported EPS is $-0.3, expectations were $-0.39. AWH isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, ladies and gentlemen, and welcome to Aspira Women's Health, Incorporated. Fourth Quarter and '23 Year-end Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded today. Leading the call today are Nicole Sandford, Chief Executive Officer; and Torsten Hombeck, Chief Financial Officer. 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 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's 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 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 would like to call 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 Hombeck, our Chief Financial Officer, who will provide a brief update on our financial performance after my remarks. We'll then open the call for questions. Before I begin my update on our progress, I want to take a minute to discuss the incredible ground flow 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 women face in securing adequate gynecologic care and the particular issues we face in accessing innovative life-saving tools like the biomarker test offered by Aspira.
Some of you remember Aspira's patient spokesperson, Diane Powis, who spent some of her last months of life preparing to or delivering Congress a briefing that led the introduction of new legislation. Perhaps a few 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 exhausting process that has required focused determination and the support of exceptional advocates and shareholders, and it 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 ARPA-H. Moreover, state legislation is being introduced around the country to expand coverage for biomarker testing.
Last week, the State of Delaware passed The Faith Deanna 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 with those 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 into our strengths. Strong ties world-class academic and research centers have demonstrated the 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 of those many changes and strong strategic execution. Throughout it all, we stayed true to our 3 touchstones for progress: 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 was the most important strategic growth priority for us in 2023.
Aspira's commercially available assays are, without question, revolutionary tools with the potential to substantially improve 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 we're 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 would reach 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, redesigned our sales incentive compensation plan, eliminated unprofitable territories replaced underperforming reps, in-sourced marketing with experienced health care and diagnostic professionals, 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 on profitable 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.
OvaWatch, which we introduced at the end of 2022, grew throughout the year as physicians recognize its ability to fill an unmet need in the clinical management of Adnexal masses. Importantly, we accomplished this growth while simultaneously decreasing our sales and marketing expenses by nearly 50%. We had a total of 17 prime salespeople at the end of 2023, down from ‘24 at the beginning of the year. Thanks to a sales team that is more experienced than at any point in the company's history, the average full year OvaSuite test volume per full-time sales reps 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 new products. We expect to see more growth in 2024 as our improved sales team hit its 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 OvaSuite increased to $383, up from $372 in 2022. Driving the improvement in AUP was the improvement in our market access capabilities, including a new PLA code for OvaWatch, 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 for the creation of long-term enterprise value. Fortunately, we are extremely well positioned to successfully develop novel AI-based assay to aid in the doses of gynecologic disease based on our extensive know-how and experience designing and launching blood tests for ovarian cancer.
This experience carries the benefits like our biobank of over 110,000 patient samples and data from thousands more. This is, of course, the extremely valuable raw material from which we build our future products, including those already in development.
.: 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 the noninvasive monitoring of their masses. Surgery does not have to be the first step. However, proper assessment and clinical planning can only happen with the benefit of a reliable, clinically proven task that provides information on the mass. OvaWatch is that critical tool. We have manuscripts currently under review by well-respected peer-reviewed journals. While we cannot predict when we will be accepted for publication, we believe the data clearly supports the monitoring of the mass to provide women with an alternative to premature or unnecessary surgical intervention.
Also in ovarian cancer, we have spoken previously about OvaMDX, the next-generation noninvasive risk assessment tests that combine fun proteins, clinical data and microRNA. 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, OvaMDX may provide higher specificity for all ovarian cancer and higher sensitivity for 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 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. Endometriosis is a significant problem for millions of women, up to 6.5 million women in the U.S. alone to be more precise. Based on a ground flow of advocacy, we expect the proliferation of therapeutics to treat this disease, increasing the need for an easy-to-use, reliable, noninvasive diagnostics. We are well positioned to meet this need. In December 2023, we announced the exciting news that our work can produce the first-ever protein biomarker test for the identification of endometriosis. Data from our studies clearly showed that EndoCheck accurately identifies ovarian endometriosis in endometrioma, one of the most constant forms of endometriosis. We presented the data related to the performance of this test earlier this month at the Society for Reproductive Investigation Annual Scientific Conference.
We were told by the reception and the level of excitement surrounding our work. We intend to finalize the manuscript for publication based on the data and complete an NIH grant application for additional funding for the remaining development and validation steps required for EndoCheck. We're currently evaluating the best commercial application and appropriate launch timeline for EndoCheck in light of the meaningful progress that has been made in the development of EndoMDX, our noninvasive test combining serum proteins, clinical data and microRNA for the identification of all endometriosis. Our successful sponsored research agreement with a consortium of world-class academic and clinical partners, led by Dana-Farber Cancer Institute, led to the development of a promising microRNA signature that is currently in the final test design stages.
Much like our work with OvaMDX, the test will be transferred to an FDA-approved PCR system before finalizing the algorithm and verification of the signature in 2024. As you can see, we intend to lead way in the creation of noninvasive AI-based pets to aid in the diagnosis of gynecologic diseases. On the operational side, we welcome Dr. Sandra Milligan as President, who joins an already strong leadership team. As a seasoned executive with women's health and product development expertise, Sandy is coming in to accelerate our launch plans and secure new innovation and commercialization partnership. She is 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.
In the past 2 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 this is a great way to start 2024. With that, let me turn it over to Torsten for an update on our financials.
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 tax volume. We also benefit somewhat from an increase of 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 OvaWatch, 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. OvaSuite revenues improved 15% to $9.2 million compared to $8 million in '22. Revenues benefited from our OvaWatch 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 lab 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 million in 2022.
Our cash as of December 31, '23 was $2.9 million, which was boosted by $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 nondilutive 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. Nicole?
Nicole Sandford: Thank you, Torsten. We've come a long way this year, one that was punctuated by macroeconomic and geopolitical uncertainty and an overall softness in the diagnostics sector. The 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?
See also 15 Countries with the Largest Thorium Reserves in the World and 16 Largest Satellite Companies In The World.
To continue reading the Q&A session, please click here.
