Aspira Women’s Health Inc. (NASDAQ:AWH) Q1 2023 Earnings Call Transcript May 11, 2023

Aspira Women’s Health Inc. misses on earnings expectations. Reported EPS is $-10.95 EPS, expectations were $-0.75.

Operator: Good afternoon ladies and gentlemen and welcome to Aspira Women’s Health, Incorporated First Quarter 2023 Earnings Conference Call. During the presentation all participants will be in a listen-only mode. Following management’s prepared remarks we will open the call for your questions. [Operator Instructions] As a reminder, this call is being recorded today. Leading the call today are Nicole Sandford, President and Chief Executive Officer; Marlene McLennan, Interim Chief Financial Officer; and Dr. Ryan Phan, Chief Scientific Officer and Operating 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 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 first quarter 2023 conference call. With me today are Dr. Ryan Phan, our Chief Scientific and Operating Officer, and Marlene McLennan, our Interim Chief Financial Officer. After my prepared remarks, Ryan and Marlene will provide a brief update on our product portfolio and financial performance respectively before we open the call for questions. Let me begin with a review of our performance this quarter. In the few weeks since our 2022 yearend earnings call, we have continued to make progress on a number of fronts. Our sales and revenues for the quarter buoyed in part from the launch of OvaWatch in December reached new record highs. A total of 491 OvaWatch tests were performed in the first full quarter after launch, contributing about 8% to the total OvaSuite volumes.

OBGYN community. Total product volume increased 29% over the first quarter of last year, one of the strongest performances ever recorded by the company.:

Aspira: We also saw increases in our new ordering physicians and average daily test volumes. As is common with newly launched products, the majority of OvaWatch tests in the first quarter were not covered by insurance, which led to larger number of patient bill accounts. Our historical collection patterns appear to be holding across our OvaSuite portfolio. However, we expect the shift in product volumes to create some volatility in the average selling price of our tests for the rest of the year.

Ova1: While we are confident that our reimbursement strategy will be successful, we cannot control the timing of payer coverage decisions. We intend to continue aggressively driving provider adoption as we execute upon our strategy, and we’ll closely monitor the resulting impact on our cash needs. Let me now turn to our progress on our operational performance. I believe it remains prudent to extend our cash runway as much as possible through strategic reductions in discretionary spending. As a result of the personnel cuts in 2022 and continued focus on cost containment, we significantly reduced our net operating cash spending in the first quarter to $5.7 million compared to $10.2 million in the first quarter of last year. We reiterate our operating cash utilization target for the remainder of 2023 to be between $10.3 and $13.3 million.

Given our first quarter ending cash balance of $7.5 million, we are keenly aware of the need to identify additional sources of liquidity. We continue to meet with potential partners and I’m pleased to see the positive momentum the launch of OvaWatch has created. We have proven ourselves to be capable of launching innovative diagnostic products to address unmet needs in gynecologic health.

just-in-time: Aspira’s strategy and sciences sound [ph] and has helped us to attract talent and retain our top performers. Our attrition remains very low. We were also able to attract three outstanding new board members, Stefanie Cavanaugh, Jannie Herchuk, and Lynn O’Connor Vos. They bring the experience and passion we need in these challenging times. With that, it is now my pleasure to turn the call over to Ryan for a closer look at our product portfolio.

Ryan Phan: Thank you, Nicole. I am very pleased to say that we continue to make progress on the development front. Let me begin with OvaWatch. OvaWatch has been very well received by physicians since the recent launch in December last year, as it provides a personalized risk assessment for women presenting with adnexal masses. The OvaWatch clinical validation manuscript was accepted for publication in January. This peer review publication in the Frontiers in Medicine provides real evidence, so physicians can be confident in utilizing OvaWatch in the management of adnexal masses, including to safely decrease premature ovary removal and reduce surgical backlog. As excited as we are to have OvaWatch available to patients, our work is not done.

OvaWatch’s true benefit lies with its potential as a serial monitoring test for managing adnexal masses. Currently physicians view OvaWatch as a one-time test to determine the clinical management of a patient, including whether a woman can continue to be monitored or needs additional workup or surgical consideration. As a serial monitoring test, physicians would use OvaWatch multiple times to follow up on the woman’s adnexal masses status. This personalized risk course will guide the physician’s decision to monitor the mass or to refer her for additional testing or surgery. We continue to follow enrolled patient in a prospective of a large multi-centered clinical study via additional periodic blood draws. As a result, we are collecting real-world evidence to support the use of OvaWatch as a serial monitoring assay.

We anticipate this phase of the study to be completed in the third quarter of this year.

Institute.: With respect to our partnership with Dana Farber, the endometriosis research collaboration continues to be productive. Through our collective efforts we have obtained sufficient cohort data enabling us to move forward. This project is on track to meet expect development goals for 2023.

microRNA: This new non-invasive molecular base risk assessment test will become part of our OvaSuite portfolio. We look forward to having a deeper discussion on our portfolio during the Investor R&D Day on May 23rd, featuring our physician collaborator, Dr. Kevin Elias, a Harvard Medical School Gynecology Professor. I will now turn to Marlene for discussion of financial performance. Marlene?

microRNAs: This new non-invasive molecular base risk assessment test will become part of our OvaSuite portfolio. We look forward to having a deeper discussion on our portfolio during the Investor R&D Day on May 23rd, featuring our physician collaborator, Dr. Kevin Elias, a Harvard Medical School Gynecology Professor. I will now turn to Marlene for discussion of financial performance. Marlene?

Marlene McLennan: Thank you, Ryan. Product revenue for the three months ended March 31, 2023 was $2.3 million, an increase of 26% compared to $1.8 million for the same period in 2022. The increase in revenue was primarily driven by an increase in OvaSuite tests performed during the quarter, which increased 29% to 6,259 compared to 4,846 for the same period in 2022. Revenue per OvaSuite test performed for three months ended March 31, 2023, decreased 2% to $370 compared to $379 for the same period in 2022. We expect revenue per test to be volatile during 2023 as we seek payer adoption on the OvaWatch test. Total profit margin was 51.4% for the three months ended March 31, 2023 compared to 50.8% for the same period in 2022. Research and development expenses for the three months ended March 31, 2023 were $1.2 million, a decrease of 9% compared to $1.3 million for the same period in 2022.

The decrease was primarily due to a reduction in clinical trial supply and consulting costs. Sales and marketing expenses for three months ended March 31, 2023 were $2.6 million, a decrease of 43% compared to the same period in 2022. The decrease was primarily due to a decrease in personnel cost, including severance related due to our sales force reorganization in the first quarter of 2022. General and administrative expenses for the three months ended March 31, 2023 were $3.2 million, a decrease of 27% compared to the same period in 2022. The decrease was primarily due to reductions in personnel, consulting and outside legal costs. Total cash and cash equivalent as of March 31, 2023 was approximately $7.5 million. Cash used in operations for three months ended March 31, 2023 was $5.7 million compared to $10.2 million for the same period in 2022.

This is the result of cost cutting and personnel realignment activities taken in 2022. In February, we secured an ATM sales agreement for $12.5 million, and in March we secured a committed soft purchase agreement for $10 million. As Nicole mentioned, we intend to utilize these facilities on an as needed basis over the next one to three years to close funding gaps. We generated a total of $162,000 in proceeds for these agreements in the first quarter. I will now turn it back over to Nicole.

Nicole Sandford: Thank you, Marlene. May 8th was World Ovarian Cancer Day, which presented an opportunity to reflect on the need for better ovarian cancer diagnostic tools and the resulting potential for our business. We are extremely proud of the work we are doing to improve health outcomes for women and are excited to continue our forward progress across our strategic growth, innovation and operational excellence goal. With that, I would like to now open the call for questions. Operator?

Operator: And I’d now like to turn the conference over to Marlene.

Nicole Sandford: Actually no, I think we’re ready to open for questions. Actually, I’m going to, I have one quick other thing to add and then we’ll open for questions. Thank you Grant. Sorry about that. Earlier this week, our shareholders overwhelmingly approved a reverse stock split between 1-for-10 to 1-for-20 during our annual meeting, management and the board undertook an extensive analysis of similar capital transactions from a wide variety of sources and considered alternatives that would be most likely to allow us to remain in compliance with NASDAQ listing standards and protect the interest of our existing shareholders. Our Board of Directors approved a 1-for-15 split, reverse split that was announced earlier today and will be effective at the start of trading tomorrow morning.

We remain optimistic that upcoming milestones, including the expansion of OvaWatch as a serial monitoring test and the launch of a first generation endometriosis test among others, will have a meaningful impact on Aspira’s stock performance to the end of the year and beyond. We are ready to look towards the future. I remain firmly committed to transparency with you, our shareholders, and focused execution of our strategy. With that, I will open for questions.

Q&A Session

Operator: Thank you. [Operator Instructions] The first question comes from the line of Andrew Brackmann with William Blair. Please proceed with your question.

Operator: And the next question comes from the line of Sally Yanchus with Water Tower. Please proceed with your question.

Operator: And there are no further questions at this time. I will now turn the presentation back to the host.

Nicole Sandford: Well, thank you everyone. I just want to take another opportunity to thank you for joining us and encourage you to register for our May 23rd event. You’ll hear more about our forward progress across our three strategic priorities. Those have not changed; growth, innovation, and operational excellence. And we’ll give you additional color, commentary and detail around the expansion of our product portfolios. So please make sure you join us then, and thanks so much for being here.

Operator: That does conclude today’s conference. We thank you for your participation and ask that you please disconnect your line.