Biocept, Inc. (BIOC) on Q1 2021 Results - Earnings Call Transcript
Operator: Good day, and welcome to the Biocept First Quarter Financial Results Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Jody Cain. Please go ahead.
Jody Cain: This is Jody Cain with LHA. Thank you all for participating in today's conference call. Joining me from Biocept are Michael Nall, President and Chief Executive Officer and Tim Kennedy, Chief Operating Officer and Chief Financial Officer During this call, management will be making a number of forward-looking statements within the meaning of the private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts and generally can be identified by terms such as anticipates, estimates, believes, could, expects, intends, may, plans, potential, predicts, projects, should, will, would or the negative of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those statements, as well as performance or achievements that are implied by the forward-looking statements.
Michael Nall: Thank you, Jody, and good afternoon, everyone. Today we are reporting outstanding quarterly results, with revenues of $17.8 million, operating income of nearly $2.7 million and our second consecutive quarter of profitability. These results were driven by our quality RT-PCR testing for SARS-CoV-2, as our dedicated team continued to serve our community. In turn, our strong financial performance supports the investments in our core oncology business and more specifically our CNSide cerebrospinal fluid assay, which we efficiently launched late last month. I am also pleased to announce today, an agreement with Quest Diagnostics with whom we will collaborate to give patients access to our target selector NGS lung assay throughout the United States. As you know, Quest is the world’s largest diagnostic laboratory. We expect set up to be completed in the third quarter with availability to accept orders from Quest clients to follow. This is an exceptionally exciting and transformational time in Biocept with the full commercial launch of our proprietary CNSide assay now underway. It’s no overstatement to say that CNSide is paradigm changing for both Biocept and for patients in need of more accurate diagnostics for late-stage cancers. CNSide provides physicians with a significantly improved tool to diagnose and manage patients with tumors that have metastasized to the central nervous system. Since the soft launch of this assay in early 2020, we have seen quarterly volume growth from an increasing number of early adopter physicians with many becoming repeat customers. And this is a trend that we expect will continue. Importantly, we are already seeing that CNSide can positively impact the life expectancy and the quality of life of patients who otherwise might be referred to hospice care. Our CNSide assay is currently validated to identify metastatic cancers in patients originating in the lung and breast which frequently involves the central nervous system.
Tim Kennedy : Thanks, Mike, and good afternoon, everyone. As Mike mentioned, for Q1 2021, we reported revenues of $17.8 million. This is a significant increase from $1.4 million in Q 1of 2020 and is primarily due to COVID-19 testing. Our revenues included $17.7 million in commercial test revenue, including $16.8 million attributable to COVID-19 testing. In Q1 2021, we recorded 145,110 total accessions. This is a significant increase from 1,306 total accessions in Q1 of 2020 and in line with Q4 2020 total accessions145,129 . Total cost of revenues was $9 million, compared with $2.9 million for the prior year period, with the increase primarily due to COVID-19 related collection kits and consumable expenses. As we continue to leverage the fixed components of our cost, our cost of revenues as a percentage of net revenues decreased by approximately 153% for the first quarter of 2021 from the prior year period.
Michael Nall : Thank you, Tim. Before opening the call to your questions, I want to review our corporate priorities which include the following: one, supporting the full commercial launch of our CNSide assay and positioning our assay as standard-of-care. CNSide answers three key questions for physicians treating patients with suspected metastatic cancer involving the central nervous system; number one, is there tumor; number two is there a target and number is there a trend; the next priority is submitting for FDA breakthrough device status with CNSide by the third quarter of 2021; number three, initiating clinical studies with CNSide to support adoption as standard-of-care under NCCN guidelines; number four, expanding our CNSide testing menu for additional tumor types and biomarkers; number five, securing Medicare coverage for our target selector lung NGS panel; number six, growing sales of our target selective liquid biopsy kits and CEE-Sure blood collection tubes; number seven, entering into additional strategic, commercial and technology partnerships like the agreement announced today with Quest Diagnostics; and eight, commercializing our next-generation quantitative COVID-19 assay that we co-developed along with Aegea Biotechnologies. Our portfolio of target selector-based assays provides critical information to assist physicians in determining treatment choices for their patients diagnosed with cancer. Our assays are based on our differentiated platforms to leverage information from tumor cells, cell-free DNA and RNA in both blood and cerebrospinal fluid. To-date, we have tested approximately 29,000 patient samples with our proprietary oncology biomarker assays and have received approximately 390,000 samples for COVID-19 testing. We expect revenues related to COVID-19 testing to remain meaningful throughout 2021 and anticipate increasing adoption of our CNSide assay as we develop collaborations and clinical studies to obtain standard-of-care designation and we have the support of a strong balance sheet. In closing, it’s gratifying to see the Biocept team’s excitement as we work towards establishing CNSide as standard-of-care and continue with our important COVID-19 testing. As always, we are committed to improving patient treatment choices and clinical outcomes. And with that overview, we're now ready to take questions. Operator?
Operator:
Michael Nall: While we are waiting for the first question, I’d like to remind listeners that if you’ve not watched our neuro oncology webinar, it’s available on the home page of biocept.com. It runs just about an hour and I think you’ll find it to be highly informative. Okay, operator, we're ready for that first question.
Operator: Thank you. Our first question comes from Jason McCarthy with Maxim Group. Please go ahead.
Michael Okunewitch: Yes, it’s Michael Okunewitch on the line for Jason. Thanks for taking the question and congratulations on the great quarter.
Michael Nall: Thank you, Michael. Good to hear from you.
Michael Okunewitch: So, I’d like to just kind of gauge from you guys, how has COVID testing held up into the second quarter as we’ve seen a decline in cases in vaccine roll out? I know that a lot of your target business here is somewhat insulated from that. So has that held up into the second quarter?
Michael Nall: Michael, as you know, the script just now we let folks know that we’ve done 390,000 so far this week. So, that lets people kind of know. The last time we reported I believe was about this time back in April and that was about 40,000 different, Tim, between when we reported in April and now. So that gives you an idea I think of where we are at. And one of the key things to remember is that the bulk of our customers today come from this skilled nursing centers and they are required to continue to test and while we are maintaining all of our clients, I think they are quite happy with this. When we have low positivity rates as we do now and Dr. Dugan is here in the room with me along me shaking his head, there is not a need to retest. Folks may not understand that, previously, when there were higher positivity rates, when you got a positive then, based on the accounting guidance that skilled nursing center is in, they either have to retest all the residents and employees twice a week or three times a week. Now that we are finding very seldom positives and that’s a thankful thing, we should all be thankful for, there is not a need to do the retesting. So that’s where you are seeing the impact so far with our client base. In addition, we are enthusiastic about the ways we could help the colleges, the community colleges that we’ve discussed and that we don’t know, because there is not a policy for the community colleges for how they are going to go back to school. So we know they need to test for athletes which we are doing today and their spring sports such as baseball and others that we are helping with. But as the year progresses and they get their plans together for the year, I think that will inform us a lot about what to expect from that agreement.
Michael Okunewitch: Alright. Thank you. I just like to talk a bit about the full launch for CNSide. I’d like to know, how we should look at that. What kind of differences should we expect? And what are you targeting for the full lunch as opposed to the soft launch from that in 2020?
Michael Nall: Well, I think the reason for the difference, one, we’ve learned a lot over the past year about how valuable this assay can be thus the investment you saw with the actual name CNSide and the way that we are doing the logo. If folks go on to the same there is a lot of going behind it from the marketing side. And other than that, there is a lot we go into it. And it also has to do with who we are targeting. So we’ve started with neuro oncologists. And that’s who folks would see if they go on the webinar and they are the early adopters here. They are doing everything they can to help these patients to get referred to them. The next level then will be the medical oncologists as far as are targeting to expand the bases and they are interested as well. But very often, they are just sending patients to hospice and so what we want to do is, give them an alternative with our test. And we’ll need a little bit more data then they get the bigger list there. So that’s what we are investing in now is the data. And I think Dr. Dugan has some things he’d like to share with that as well.
Michael Dugan : Yes. Thanks, Mike. Michael, the other things that are happening with the commercial launch, the more formal commercial launch is an updated presentation of this test in terms of a test requisition form and a more integrated report that’s easier to read. In addition, you will see more educational materials come out including the publications related to case studies that we’ve already completed and others that will help further explain the role of the test. And then, we anticipate doing additional work with our KOL network, our key opinion leaders to really establish additional studies both investigator initiated studies as well as our own studies to clarify the role of the test and how it’s used in a variety of indications of use.
Michael Nall: Thanks, Mike.
Michael Okunewitch: Alright. Thank you very much. And then, one more I’d like to just see if you could talk just to replay a bit more on in detail about the agreement with Quest and what that means for your core business?
Michael Nall: Sure. Well, this is for our NGS assay that we’ve been working on for now couple of years, folks who recall that we partnering with Thermo Fisher on that. And it’s a targeted panel for lung cancer patients, non-small cell lung cancer patients and it’s used to inform treatment decision. So, ideally, it’s used in both of the time at diagnosis and can also be used for monitoring and restaging along the way and looks for key biomarkers that are all tied to targeted therapies for lung cancer. And so, we develop the assay and have had some discussions over the past few months with Quest as they evaluated various options and they chose Biocept to partner with them as they start to roll out their first next-gen sequencing assays for oncology as well. So, we are very excited about the relationship. As with any big company, it’s going to take a while for us to get onboarded. But we expect that to happen by the end of Q3 and then it start to accept specimens along the way.
Michael Okunewitch: Alright. Thank you very much.
Michael Nall: Sure.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Michael Nall for any closing remarks.
Michael Nall: Thank you. On behalf of our Board of Directors and our hard working team here at Biocept, I want to thank everyone for participating on today's call and for your interest in our company. We look forward to providing an update on our progress during our next conference call in August, when we report our 2021 second quarter financial results. Thanks again, and have a great day.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
