Biocept (BIOCQ) 13 Nov 192019 Q3 Earnings call transcript

Ladies and gentleman; thank you for standing-by and welcome to the Biocept Third Quarter 2019 Financial Results Conference Call. At this time all participants are in a listen only mode. [Operator Instructions] As a reminder this conference call is being recorded today, November 13, 2019.

At this time, I'd like to turn the conference call over to Jody Cain. Ma'am, please go ahead.

at Cain Jody is LHA. This thank Good conference participating today's for afternoon and call. in you

from Nall, Operations Joining Executive are Officer. Senior Biocept me Michael Chief and Kennedy, Officer; Edwin Commercial Vice Vice Financial President Officer; President Senior President Chief of and and Hendrick, Tim Chief and

During Private of Reform Securities statements this Act be the within of number management a will Litigation meaning call, XXXX. making forward-looking of the

terms will, can such statements all are historical be that could, identified generally intends, those predict, by the anticipate, Forward-looking plans, statements include of expects, as facts not believes, would, expect, potential, and negative terms. may, project, or should,

those Forward-looking statements. that uncertainties implied results, statements, and as forward-looking statements performance cause are risk, by to actual the unknown performance may known involve other or expressed factors from be or as or and well achievements that achievements different materially

see these about risks, details For company's please SEC Filings. the

sensitive of events as is law, update The that contains that obligation to reflect any accurate content or except this after occurred XXXX, circumstances information XX, publicly revise as time information only required disclaims November any to call this or Biocept of call. by today,

to like Mike? call over turn to Michael Nall. the I'd Now,

today. to revenues strong and revenue a I'm Jody the are cost for all our reducing commercial Thank you, percentage please of the on on everyone samples growth on report good and afternoon to basis. both call continued for third quarter,

over quarter period. the in quarter has increase was XXXX, Revenue up by of growth up year The third up samples, of year. driven XX% commercial prior million, from XXX% the XX% this reached and from second $X.X the an

testing selector test our as cancers. in on commercial liquid segments anticipate such biopsy with breast help diagnosed market patients and we most the grow target volume focusing prostate, by our continue platform the strategy We that patients lung will of and where technologies can to

lung cancer and primarily testing. to cancer where areas growth, also treatment and physicians prostate market contributor key largest order the our to with be on the breast therapeutic uro-oncology focus our Our continues

expect We begun to products only added new this urology have and in so do reorders are base that fourth our growth practices, year. Not these but seeing to the continue physicians the adding using from new we earlier practices to our we are in customer quarter.

the offering treat Our for initial continue are ER, the see critical tissue patients as HERX utilizing platform breast-cancer and the biopsy. Clinicians our PR orders in and area. leverages to assays an who our cancer of to breast also in such CTC we with workup in this testing blood-based increase are missed biomarkers not ensure

remains changes DNA both in ctDNA sample. in Additionally, commercial gene our offerings, multi-gene they the developed with sequencing year monitoring are We Fisher. that panels tested partnership panel all believe the Biocept liquid offers and launched this Thermo tumor analysis treatment. after circulating for only or key or with next-generation and these during both we biopsy biomarkers the CTC company from single same blood Earlier

next offerings Molecular Association year have week with working attended AMP expect on coverage of the first a conference these Baltimore. reimbursement Pathology are in determination secure last. and panel the for Medicare We to or to in for half coverage contractors Last we

test data to sample. and obtain to we sample a ability our sensitive blood the test results advantages or these reaching selector were using including for on kits posters presentation. kits We accepted tissue when our Among six pleased target of presented highly have molecular the

for a patient tissue of choice cancer to both either use biomarker physicians a is advantage The blood or evaluate activity. providing in key a or

tissue. best doctors reduced result sample have quantity can prep of a proprietary which that from a Importantly, enrichment labor our patented efficiency of and small and ensure getting technology improves can chance save the tumor sample tissue mutation prep for errors cost,

advances tubes distributed quarter, up Biocept strategy grown in year. third these our of the position collection of with in customers from this first our and blood $XXXX of nearly globally. test products ordering Sales products $XX,XXX business approximately including has This the kits quarter

target territories. receipt U.S. of in the market blood where Last kit. protected XX Mark and and announced CE Our us is Mark other our major allow the collection collection recognized. technologies international and the we platform our in week CE both geographies CEE-Sure certifications EU patent for the tube These our sample selector in collection is patented IVD to IVD in

Mark on the detection selector target working which IVD also the We of kit, high-sensitivity is are lung biomarkers cancer. for for obtaining EGFR CE and

and certification gain plan XXXX the to by quarter future. offerings expect of additional the We launch the in second to

or patients This initiative targeted improvement and therapies. $XX,XXX to of significant cancer Cross even Our cancer lung many in tested rate Health The as subsidiary for lung is goal Allegheny still to lung are not $XX,XXX Blue quality to is XXX% patients initiative testing this key to biopsies of biomarkers the molecular can advance collaboration its more. between qualify for with increase cost continues and progress. Highmark as

XXXX. in We toward are testing. from of a demonstrating of medical the initiative find goal of enrollment clinical its The the larger and biopsy at patient reducing completion while or risk this cost is and biomarkers conference program XXX both to ability be the a results repeat in could important continuing form reported advance

of X%. our our for XXXX Congress than results medical liquid consistently to or from and ability platform utility ctDNA blood early of validation scientific platform allele circulating PLOS Journal in than of the at DNA at we the assay highlighting the At September ONE. detect analytical patient October, in same biopsy results Finally, in on study the biomarkers we were published conference. cancer more the actionable present to of important samples the And frequency World test present lung continue mutant tumor clinical data demonstrating Lung a less

of the or our This peer-reviewed testing has level target .XX% detection an that copy BRAF EGFR, KRAS limited mutations to reviewed been for selector single and publication demonstrated better. validated ultrasensitive with

cancer from normal interest Switch-Blocker blood patients uniquely mutations cells. Our with blocking DNA of amplifies technology of while from the

high This with down enables gene single detection copy. to a sensitivity very

As posters conference. AMP present at six mentioned last we week

I tissue earlier, four related Target that In highlighting data kits Selector presented and discussed addition to data. study technologies on we and our posters

from highlighting cancer posters gene our NGS for in CTC mesenchymal cancer Selector a develop data detect NGS ability pXX for prostate epithelial data Target undergoing our selecting physicians lung These to panels, pathways in breast certain treatment cells detect to transition based platform's test tumor cells cancer potential ability feature circulating our EMT mutations and that on to monitor these cells. patient to and or aid and

Cancer across San meet testing and about In leaders to key December with cancer Antonio monitor types treat in accepted educate who featuring unique of them Symposium further opinion of Breast physicians been patients plan to breast highlighting our presentation. cancer has to approximately cancer. at the breast our poster breast A we utility assay CTC the platform clinical our for testing various XXXX

literature more And which valuable with highly a HERX in breast this market, with a breast eventually monitoring information shows treat therefore test can HERX HERX deem patients alteration. anti- liquid candidates XX% key as biopsy mutant that serves of with for therapies. testing positive. need cancer become around with as negative may may cancer provide Our through is negative through patients Retesting or

hospital liquid I'd increasing other urology agreements XXXX. and the market like field, systems, include remainder of with pathologists now into large corporate physicians These for biopsy the XXXX following: signing Selector's penetration to including priorities additional practice. group summarize, emerging and Target the our in

to Advancing quality Highmark reproducibility, automating our into pursue assays. our sequencing global additional agreements signing Target of publishing with and access and improve integrated and Target our studies our Cross Selector kits that to our Medicare kit processes IVD NexGen our to new by initiative distribution Allegheny new markets panels improvement quality validate in margins, on presenting strategy by contracts healthcare laboratory Mark further plan gaining and to agreement CE for entering Selector Blue with obtaining network, clinical productivity improve and use Target health delivery Health coverage securing the additional Selector System, data third-party case and continuing

the our Tim? And Tim review financial to to call Kennedy now turn that, with results. over I'll

afternoon Thanks Mike and good everyone.

to As an $X.X in we earlier up XXXX. were million, Mike increase for XXXX Revenues QX, XXX% XXXX, reporters QX of compared $XXX,XXX the also from sequentially XX% of in reported year-over-year. revenues million QX, shared $X.X

on the is now third $XXXX to per be and of continue in based to test reimbursement Commercial XXXX and expected the increase quarter mix in received accession test range average. historical on

operational We upon continue improve capabilities new increased ordering. processes assays to leading physician to and and testing launch

X,XXX QX, to was sequentially Commercial In up and XXXX QX, total of QX compared versus up in up nearly received in XX% we accession, received XX% in XXX XX% XXXX QX XXXX the volume nearly from QX XXXX XXXX. XXXX in XXX received accessions total XXXX.

trend. volume segments that earlier, our specialty commercial and physician growth strategy mentioned are is and Mike focused driving believe our the we market As on specific

XXXX down XXX% revenue was period basis compared to same up from of period the $X.X for of to revenue XXX XX% Cost point of revenue percent for a year. year. the last QX was million, same XXX% last Total cost as

of volume. cost higher was cost per components leverage basis revenue a Notably XX% as of with down accession on the fix we

improvements workflow. costs in and variable from are benefiting processes While making are we our

our which gross as our on to began fixed of further we we XXXX In cost leveraging focus anticipate CLIA implementing margin automation result. achieving Laboratory, positive in we lead will

to to to to expect In anticipate growth Artificial CLIA accommodate laboratory we improve. capacity also provide our AI to ability our work continue as addition, volume, implement incremental began in or expense the minimal and Laboratory we've trends the Intelligence higher at

development an and increase and year. expenses slight the compared materials for to the new million development This $X.X primarily QX, same due Research was increase assay. in million $X.X period were for used XXXX of last validation for to

QX, prior down for million expenses XXXX were $X.X the $XXX,XXX administrative and General versus year.

of QX a basis QX, work XXX percentage versus contain XXXX XXXX revenue G&A expenses. to a to operating down company in as As continues were expenses points

volume expenses was XXXX for $X.X to attributable marketing The QX and commissions primarily $X.X paid were for revenue. Sales higher XXXX. in million increase sample QX, million for to compared

increased XX and of prior in QX percentage basis the marketing were a launches of points As test. year XXXX the revenue despite versus related down new marketing period, to sales costs expenses

increased changes report due cost or in revenue the year quarter sales and X% We're net is made to for of and period. our we down that growth the versus commercial with the prior loss have XXXX the with about Our the productivity improvements force $XXX,XXX third strategy. pleased to has

shares for million loss This of attributable shares $X.X to shareholders of share million common third average quarter $X.XX of outstanding. attributable the for loss on weighted compares million share net or or per shareholders million $XX to weighted was $X.X the per net quarter average $X.XX $X.X third to The on common XXXX XXXX outstanding.

The the $XXX,XXX dividend the non-cash of quarter third adjustable of warrant. results repricing for deemed XXXX for including of

which outstanding reminder one-for-XX split was a effective a in common stock our stock reverse we As of July XXXX. conducted

to compares $X.X revenue the year-to-date nine This the nearly by our last in our $X.X to The months same in XX% increase million increased team's is million XX, effort. numbers, year. ended commercial our period to attributable September during million or $X.X revenue Turning XXXX. to

QX this were of of expenses commercial million, nine million, the grown in third $XXX,XXX R&D to quarter were XXXX from and were $X.X to quarter. in expenses $X.X months alone nearly $X.X million $X.X million From year has QX marketing expenses revenue first Cost in XX% and of million. the the was XXXX G&A revenue $X.X sales

XXXX XXXX. Cash XX, to as raised September in aggregate and net $XX million cash exercise equivalents XX, we XXXX December million million refinancing from today total from approximately approximately proceeds and $X.X on $X.X $X.X in on million warrant compared

to I'll overview an commercial now over turn progress. Hendrick Edwin? the of for our Edwin call

utility both to everyone. reaching quarter. believe highs the I'm with competitive focus and off. clear Tim. a pleased high make third paying of areas to is advantage our Thanks team continues biopsy and our We need share that good test treatment can sales tests progress our offer specific new Hello liquid most on the that commercial have strategy in our to volumes where

commercial first Tim since quarter nearly this As year. mentioned, have our XX% grown revenues of the

accessions backs for quarterly productivity sales up per figures rep sales these sales to continuing team is quarter These third force XX% Our our numbers year-over-year. experienced demonstrate that results. with deliver

average more as per is biomarker are now selling increasing, doctors ordering tests price sample. our sample per patient Importantly,

one only are in now prostate product to our And in patient with urology five with example, ordering we year. For late specimen. customers line today last biomarker up our biomarkers repeat per launched cancer CTC

new with time. continuing more service uro-oncology ordering the for to first We're traction the our segment generate in urology and physicians

assays lab into Our disease. physicians existing as patient tests per more customers more and our some tests use to begun the reordering coming monitoring have for often

Urology Large XXX LUGPAs There XXXX terms surface and awareness. over one Group of believe that States. than United more that just urologists practices we're We members scratching in or Practice the of are the market in

therefore we opportunity. of X% currently in estimate practices these than less there that untapped detailing service a believe We to that large these we're our and positions is

with and team sales using on physicians more with consider Our signing test these of our doctor working more within to their is each with patient. working practices more physicians, focused

we process, the are a in circulating pre patient Among PSA tested cancer cells is a identified important determine if this opportunities. Through these with new can in area market to have prostate blood. the rising be biopsy which

in as recurrence is monitor post potential a which setting be tests cells used the area Another can cancer. in to tumor of for circulating of our predictor surgery

platform demonstrates high very which cancer. in are prostate no as institutions, internal and currently that compile registry with the utility areas data well and testing of limited These in unique utility and our collecting technology publish available practices liquid own to We're our several to are as for or physicians. tools large biopsy these data either physician working clinical our

gaining market. breast acceptance is targeted patients have tool begun the for but identifying negative platform use with in our their commonly a this We're tested in patient treated Physicians testing not which monitoring qualify and therapy. also biomarker who a as for to will tumor, biomarker their for our the receptive, liquid treatment in leveraging cancer HERX treatment initially CTC biopsy that

studies test tests who patients approximately selector and As is used for tested most amplification. that negative initially CTC target of the Mike positive to XX% biopsy. mentioned, among test for believe HERX indicate HERX based our published sensitive subsequent that this identify blood We will biomarker

a patients specific anti-HERX The qualify liquid targeted needed to treatment biomarkers for biopsy. in

next utility Medical to of the data liquid to in this University intend independent the setting. for offering investigators and demonstrate in Northwestern soon certain breast cancer assay biopsy clinical collect as on with amplification working year. our And we HERX and are We publish novel Center as

and patients, in some the The enrollment studies than and with we're treatment XXX opportunity targets breast less of a cancer study tests XXX are to to instances. of urology periods minimal some in build the year areas requiring of capital cost conducting for efficient our

to growing execute To force. and summarize, with continue business focused effective our we our sales strategy against efficiently sized our

the customers doing evolve to demonstrate collecting data to meet continue and as needs utility We Biocept's care. solution. patients of our new testing. and our clinical studies of define additional ensure liquid continue biopsy practical applications with the have access We're to within can't acceptance this we conducting to analyzing patient platforms to technology we systems by seek help physicians health party to improve that and And to third increase to unique our payers

your and the And for turn over attention. time call back you Mike. Thank I'll to

you, Thank Edwin.

adoption cost help We test invasive, are our increasing of biopsy less for our cancer. with of best broad solutions to with patients diagnosed physicians the patented proprietary pathways their effective liquid select offering treatment

Our and that are test patient leverage circulating on proprietary from and biomarker to information tumor samples circulating used platforms free based cells been have tumor XXXXX over our cell differentiated both assays DNA.

generate to sensitivity assays. of continue supports that high We clinical biomarker our the evidence and specificity

on are enhance significantly with and a reducing also improving to we the goal as all while shareholder focused we revenue, can intellectual leverage of the investment In our addition opportunities volume property, expanding to value. in our percentage revenue expenses where

we're And overview, these with Operator? questions. now take to that ready

we'll [Operator Ladies gentlemen, session. and the and Instructions] begin question answer

for our question, that waiting biocept.com. I'd like to A at be mention Micro Event we're conference presentation be first to on LDA that While I'll website of posted presenting December Main the webcast XXth. at will that

We're for first the question. Okay.

from McCarthy comes Maxim today ahead Group. question with from Jason first go your question. Our Please

quarter and for thanks guys. Congrats Hey the on questions. the taking

Thank Jason. Sure you.

bit larger agreements the services see role? quarter. sample you we've And adoption? growth presentations and on strategy or it could me products new and and increase I'd in seen actually which publication the think orders provide that do that this factor if Is playing sales commercial the lead and drive to strong primarily like could to a he a color revenue further

space of I'll I And to that. a I think, turn things. named so the all combination things all the to we've take, get over more and Jason, adoption to as the foundation And patterns to of it's acceptance I'll establish Edwin of It's their when companies years color. of heavy covered comes been physicians grow is to I to and adoption the biopsy. And a their early for our the years, liquid all help change those in patients. who's for lifting in and lead Well, new behavior days for someone Jason first little to it it answer think lot with doing that you yes treating

have Edwin out specifically Biocept, that has you that to the with But And mentioned critical laid at we're bringing been has there part been liquid that getting joined and industry story growth since us. to biopsy things there the back of strategy in our with here. he the

So really serve investment us. And off in prostate that cancer paid marketing of assets is additional with market to made the off we dividends. there has I addition primarily validating the with think paying urologists in for

So with bit him color. more that I'll add turn let over to Edwin, a little

Mike, Well, absolutely you're correct.

I all. we've that continue urology a larger to in very, think adopted is question with and regards to now offering We areas; to very lung But major the our one even also strong new two business. breast. focus still the and grow in yes stand

new in And a specimens. with and be there go done you're marketing an so job from new open into general think them and to the able the going therefore in aspect training to have our areas. and anytime out a walk market you very increase vaults with we've to these sales in to good We up sales give to team tools

new fantastic also job in as testing regards And well. bringing done a the to then laboratory market has to

biomarkers multiple to to not walk we with sell able new also now well. to and as market and being are mentioned be product, I that our only into have sell offices as brand we So but able

going the even up sell more course with hopefully these a continue we lot to been both to to it's fun year new doors of and markets. over be fun as the last new of it's So of open

are highlight One his come highlight be share something That's was to your team of you've of the with aren't -- few offerings. very about successful about data. our in a have have how on scientists, for their plans seeing. did the question the little accepted just that, before And them we're hard factor that we The points this how of of our the of to Jason, a to get clinical to we had and to generated treatment educating and more them and physicians got clinical and the of that critical we're with very working they've and example wanted that's have data exactly thing, we posters of few about last that right. just six that AMP a the because can bit sharp like to to growth mentioned Edwin continually were And as physicians which to utility piece is give folks medical you worked talk on the with folks benefits critical team that airtime call. the at here as data proud very I'd the met so, they're tests, some enhance well we can out other

been like urology And Yes. growth I'd driver. because market you mentioned it's a to bit, the Thank a actually as you. on significant touch

give why an you guys? like it kind market and you a segment like I'd refresher see on idea important and of represents the such so, of us this And for size an to could if

factor And those to one know cancers a now lot top play a things the also as large certainly the it a baby think a There's the Well than cancer where it's of come patients. market. with at and commonly sorts big you diagnosed also I opportunity I'm diagnosed three America, of for older so men. in age about physicians very the boomers becomes folks what me there. the And with about certain there's of do uncertainty more and certainly with into more, most

So in couple a we today really help areas. patients

pre-treatment test. tell about Edwin, those post the focus both that the us can and and let's our So they're using on maybe treatment you scenario

three really areas urology opened there's actually us. Well, has market the different for that up

that as one with we is that it pre-biopsy circulating we do do see posters cancer. the not tumor of in that of not where the published One people have is cells

biopsy test not a we about which to to -- kind So can that But have is have. do whether whether further need a have forward. process one when great information you do is are regards to of a to or wants or move the they deciding they give that or not in urologist patient have particular information

a they or major something have just do Secondarily, it, or do not had whether to do and it active they whether which to watchful or is a not them. segment just reach it's that they they if critical been because do regards treat diagnosed will called cancer cancer or do most surveillance, there's adult of be once whether waiting in not prostate age males or not they fatal certain whether that with

type So decide cancer cells it's versus them helps or foot the toward or that sleep a circulating giving indications knowing they're whether to whether on see not things the is not that the watchful or you pedal the have a night truly either biomarkers not they're that the an put whether or didn't can or at on that you or waiting. you better not moving treatment physician treatment through gas brake of or whether have aggressive tell trying they tumor that not and

there to and recurrences post see that And they're only that's and is on then prostate starting really there's something physicians to not go thing remove biopsy. the is not whether or when now have whether they're it's is some looking the the when or the up. but right The PSA lastly PSA genomic look that on the tests available, or really are at level they

going level up. PSA a have You shouldn't that's

you better of tumor type using physicians and predictor after have test surgery very be forward. we therefore delayed PSA of a are that's think but cells so that see and can a check lot test to now and so circulating prostate, our a a sometimes the have of we they have If moving not do we if

able and publish comfortable as we're And more regards feel to physicians even in that's setting. to the and posters help type Mike studies more data be this this of put out, to to with out gathering and pointed where more

All you Blood have And actually on Tube. the very right. Collection Thank much. more one I CCE-Sure

CE So you the Mark. IVD guys just received

you applied would the it would target be how if And to see be adoption be? your an walk us commercially. existing can customer of relationships Let's drive you fees then Who able new through. would leverage this product? And to

absolutely. No I that question. appreciate

having In worked at to way strategy stream revenue highlight fact Biocept. an a showcase distributed hard real to alternative is and a our product here with we've the IP so that gain

important folks laboratories that's So of largest part as a relationship business. a supply selling distributors. And the tubes but of recall been only if And to for we world's have tubes. one use tubes VWR with have been an the while, the our distribute they've we research sold

So of clearance But Mark the the as CE of is that actively lot we it's the tube. equivalent and catalogue in biopsy IVD critical the recognize FDA key can as countries in factor an here kind liquid a the other and Europe in market to now U.S.

They different. are little a bit

that don't would in I that. mark overstate want you But regulatory have So kind the of Europe. that's to

tube with that us folks quality of assays and in allow rest the will and to this that So market to that regulatory certification. the Europe certification developing world now

we're liquid it a other it Google patient liquid you what and about be other tissue that catch of if a get confusing currently customer be treatment you're blood always for the make And test. required talk gets of going would things are an or at I a in have all the or where sample of to and fluids a investor biopsy one kinds simple biopsy very to developers generally types base could offering folks because previous we've hits that Now calls decisions looking liquid going to presentation is order proteomics term in assay [ph] normally all to it's shared out with of genomics generally biopsy. on be

be tubes for lot types So cardiovascular, have, a that can neurology, all liquid testing, that. different patients therefore issues of could our of used rheumatology, biopsy through be prenatal a

to CE thus So are other space And further opportunity. in we're having players huge Mark it's critical even starting a and adoption. get there But the the to is adoption. some get

now good tube are for reordering this that We the have some sale overall. just enhance will customers process that and

congratulations quarter. Thank very much, again All right. on you and the

Jason. All right. Thanks

any gentlemen, answer with for session. we'll to closing remarks. like conclude question over and call Ladies Mike I'd turn back to that conference today's and the Nall

Board Well Biocept, on of interest and today's in on I our for everyone at thank and team you. here Directors to company. our of hardworking your behalf want call participating And our thank for

our and are our report We financial providing in about next excited our fourth update look forward conference on when an call and to great Thanks XXXX quarter a progress have day. results March. and

thank Ladies will that today's conclude joining today's do conference and gentlemen call. for We presentation. you

lines. You disconnect your may now