Biocept (BIOCQ) 12 Aug 202020 Q2 Earnings call transcript

Good day and welcome to the Biocept Second Quarter Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jody Cain, Please go ahead.

This is Jody Cain with LHA. in call. participating for you today's conference Thank

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

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

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

contemplated Forward-looking or results, uncertainties operations, duration time at and performance achievements or implied the significant that statements on as statements. Biocept’s on different other contemplated actual to and pandemic. about unknown achievements for statements, cause materially the is are outlook particular, be expressed the may change and impact uncertainty involve could information known means forward-looking discussion. any there is estimate today's best or This from financial by and and of based results performance COVID-XX results factors of the COVID-XX In as risks, those impact that well

revise Company's these Biocept disclaims accurate time-sensitive any obligation SEC about see information as call. occur publicly call law, reflect by any today, or after Except to circumstances required as that The risks, details August this please of information content of For only events filings. is the this contains that XX, or update XXXX. to

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

everyone. and Jody you, Thank afternoon good

to the down progressively even second point year-over-year better early reached forecast. pandemic. core volume our the was through oncology commercial We the with XX% June. up year impact of in improved testing we testing the our quarter COVID-XX initiate a quarter than Our with which decision to low which anticipated XX% had off volume in paying significantly in business prior overall volume from for X% oncology the was in Commercial up is

percent the our not pre-COVID physicians billed oncology are that continuing down of than with testing have at to pandemic reports comprise returned and smaller office these lower by is biotech to as resurgence and Development volume. year-over-year testing a The visits was companies commercial trials. patient However, are decline in and volume testing surprising the XX% business development of used levels which not affect generally drug is pharma rate. a assays and clinical mainly yet

Volume QX rate lower some built while many During hold the make testing today. oncology decline commercial and COVID per of up oncology or than to the sample on business. development halt COVID-XX in pandemic from modest testing at a either assays. our is clinical a remain trials in came helped to some significantly

the XX% higher for lower of COVID-XX commercial first impact and slightly of with billing This testing. down So XXXX were over the prior the our half were strong the volume oncology year. volume X% the the prior performance prior to quarter to from rate year due pandemic. the our of Revenues revenues impact for increase lower up quarter first for reflected full the

by we our secure we Moving were weeks kits. the on third in-house. and our part the BSL-X exponentially important of to for After since along an implemented revenue. to to Volume business ramping this our the samples accommodate We we on collection testing. and our testing $XXX validating quarter to level We laboratory immediate average volume tapping are specimen by is testing to kit automation COVID-XX safety up supplier per COVID-XX increased testing assembling of specimen this the COVID-XX believe in process seeing. with received future. complexity is challenged securing samples have in initially over has in into testing begin and approximately them levels high and then components overcame with hurdle increased labs distributing support other testing impact to ability COVID-XX and The staffing XX,XXX specimen testing a this demand for date. reimbursement have we this significant high have robust we COVID-XX kits expect collection To we for CLIA

majority a with are tests we sent quickly sample. of receiving XX COVID-XX to health resulted Importantly, processing hours vast the of within providers tests

collection on These These will viral testing specimen to for wish offers. who also also for labs. kits later platforms progress COVID-XX from track developing potential launch We be collect sale own be a good number are other Biocept such remain specimen for will of our as this samples patients kits making in the be kits year. COVID-XX tested and to to on validated used

and blocker viral under to CTCs as the our sensitivity strengthened successfully Biotechnologies which to about has copy COVID-XX development second would help well as uses. to COVID-XX fluid be switch to If for addition tests having offering load differentiating are to its as short a the near-term advantages. levels business to growth results testing our testing developed during for detect DNA we generation launched even could announced business brain are and develop drug circulating us CT cells Aegea important the of The in and these who provides several spinal ultra if agreement detecting system. COVID-XX to applied quarter whose tumor such challenging support infect The order high This assay able Among an oncology an currently In This virus. could infectious allow a expanded has our sensitivity potential cancer also next found identify that molecular in granted an our tumor as such testing developments with neuro these RNA. viral different cerebral the was Aegea lower potentially post-pandemic. competitive COVID-XX specificity to analyze to Biocept feature others. the utilize DNA core our or biomarkers, this testing nervous higher is conventional to and of this this significant and ability We assay of level in R&D assay contributor at successful assay patients strains technology COVID-XX new much services patients newly period agreement will with superior an central diagnostics of levels incremental PCR-based services potential have capabilities or lower Aegea COVID-XX excited oncology asymptomatic relatively assays. commercial to development patented base virus addition at to as and low with volume our revenue time assay numbers very diseases the in with oncology. option and detect In this metastasized PCR cancer uncirculated than for the customer has detect these virus Biocept in to into expand

few national labs for among their analyze and the which identify cerebral are life. these in may We patients CLIA therapy can extend qualify important alterations fluid that that helps spinal

the first products We research-use-only benefiting from an combined doubled increase sales or topping these allowing RUO $XXX,XXX. introduced as liquid our first well most been that kit This biomarkers CE also mutation. from European tubes We commercialize EFGR other blood RUO the the Mark XXXX cancer. Revenues for for March as frequently geographies are in for half is tissue in and CE-IVD awarded Mark. recognize of biopsy union among and has kits. CEE-Sure lung than of to us it kits RUO more EGFR evaluated the our collection in

the objective currently RUO kit margin was other biomarker important This in kit and blood are and important higher COVID-XX This one our RUO second collection and world kits toward are collection our BRAF encouraging laboratories to assays. interest treatment great us. well. as allow proprietary uptick the future this tubes oncology working are kits is an we our the business molecular and specimen area different for strategic in are has target we determining kits and this selector of expansion growth. our than for and Our the this BRAF launched an for be RUO business is are factor developing. a Mark blood pre-COVID-XX to services around for molecular utilize lung clear from cancers physicians. researchers in Mutations melanoma, To May and tissue in for gene CE-IVD

I announced is a Another review by which agreement Highmark's Highmark And with is organization. Blue financial Shield for review vitals nation's the results. program provider call turn utility key Kennedy the clinical positive our now recently The a second Health and Cross which will economic earned affiliated delivery to system new after technologies over development Tim Blue health that was to health largest with our integrated Tim? agreement evaluates benefit. the

everyone. afternoon Thanks Mike and good

a with $XXX,XXX XXXX QX, with pandemic. of we For COVID-XX the in XXXX attributable the impact compared million revenues $X.X QX, to reported of decline

from accession is period. on commercial reimbursement from previously per As prior prior year. in $X,XXX the range in historical mentioned XX% up $X,XXX declined range the year Commercial the oncology tests mix the volume and based

new In with we in QX, compared We from comprised in ordering. QX, and total volume X,XXX core and XXXX launch X,XXX QX, XXXX improve our X,XXX operational XXX and XXX of accessions was testing COVID-XX continue leading capabilities physician accessions to processes increased to XXXX. business accessions assays performed oncology total tests. Commercial

for that business is biopsy This QX now were to Total costs testing, the mainly year to We expenses fees from exercises down million net in ago COVID-XX. received XXXX $X.X and XXXX was XX warrant during average the $X.X to or with the This the million expense, included per in million outstanding. and liquid increase million Net second a million restrictions. lower weighted in QX, were due a and to of million G&A the weighted from lease and $X.XX $X.XX was negotiations, compared in XXXX associated sales of versus of per of have $XX,XXX XXXX $X.X expenses development X,XXX XXXX prior shares million $X.X quarter share costs cost activities with we panels. $X.X year with and on net $X.X expenses of laboratory Other compared share other period date. on QX, $X.X $X.X increase QX, higher prior for oncology oncology $X.X insurance with for with primarily accessions average attributable The a related million $X.X travel related to specimens to core the and million Sales than the loss decrease XXXX. with matters. in compares inducement COVID-XX second due or COVID-XX million due to outstanding. of which compares XX,XXX accessions expense. for launch with Importantly wired automation with $X.X the million legal believe primarily pandemic year marketing million revenues ongoing core due R&D projects was were shares loss XXXX marketing of more period. quarter $XXX validation million QX, million XXXX. decrease our was higher QX, for certain $X.X compared for of impact primarily the

numbers. Now turning year-to-date to our

were were XXX,XXX six June XX, approximately the compared $X.X first pandemic. months with cash the Our Costs even million $X.X as as Cash the expenses Sales December $X.X million of and $X.X months R&D of revenues compared XXXX half of million. impact XXXX expenses XXXX or XX, $X.X were were $XX.X G&A the for of XXXX. by $X.X XXXX equivalents X% of to for and expenses of increased six million. the million. first were of marketing first million with and with million revenues

from we and financing proceeds historical proceeds on the March XXXX believe warrant a net its XXXX. an raising In we offerings the million usage planned funding allotment transaction. based exercising to additional we from inducement April direct offering $X.X warrants In $XX.X proceeds during raise million received registered completed registered underwritten in operations over most two from QX underwriter the offering million. the we direct In cash through December of XXXX approximately net addition our $X.X of current and approximately from of net XXX,XXX support will our

our shorter. to collections Cory runway And provide introduced call our with over progress. COVID-XX an and Dunn now cash uncertainty I'll Cory? commercial the the may on to However, turn overview of by be revenue

you of Tim Thanks all delighted and with I'm to speaking be today.

That mentioned shelter-in-place lifting dynamic. volume momentum by the commercial continues the restrictions. be second testing Mike commercial in with progressed as gained As of to lockstep said quarter

than visits. resurgences Biocept pandemic that some and to a particularly understandable across fill patients country rather oncology and pandemic office postponing forgoing blood the it's biopsy. physicians during are patients pleased tissue invasive alike Given the for niche testing physician cancer through the simple sample more is a with a

oriented An perform at also more example phlebotomist continue the service blood to allowing gene time. through a profiling customer shelter-in-place. our, patient's Furthermore testing the to approach is sending this business niche. always working As our we home draw individual support to liquid well patients mobile of to expensive cost than testing conscious by large during benefited very rather gene biopsy is panels

on performed provide most The this for in assays treatment brain may patients option with advanced lung patients. breast critical. and selecting timed pandemic metastasized diagnosed of with likely sickest, advanced identify is that introduction in cancer valuable Testing brain approximately physicians spinal help cerebral metastasis. cancers tumors treatment cerebral results in potential third Our for who the spinal assays is patients for best where provide These fluid fluid their during cancer well the key options testing the during the to see timely the information that to fluid are the more and selector have pandemic. the target treatment spinal develop of to fluid targeted cerebral cancers breast one lung at physicians patients or spinal biomarkers

often Our facilities. Notably, working medical otherwise connect significantly. who to approaches with would neural sales with home using physicians been restricted staff able team these are to in with productively of customers other vast healthcare states. date the off-site steady in still of we meetings with growing reach. oncologists modest fluid ability sales of increase in starting has two, see meetings saw and to in The our in-person and members in to physicians customers cerebrospinal numbers The the quarter now we've is virtual very are to week serving be this testing creative the our engage we of in throughout along from web, quarter meetings while been connect second a been Zoom last but processed number to majority are difficult from we force California of the COVID-XX are has multiple After lab The trend. continue assays and effective.

being deliver manner size lab and hours of advantage in nimble a COVID-XX able test Our to in a the works provide results to timely kits within time. majority our to specimen XX collection quickly

able for state with to nursing stay are process. securely Our Biocept testing to and the residents patient are personnel and for skilled customers facilities Biocept obtain testing to helpful online access f All these throughout care their services results compliant particularly requirements.

initiative commercial team the that core With So health execution back testing. of build business in to Mike. while to challenging call summary, strategic our to during efforts oncology the I'd with support public turn our time continues the this COVID-XX like also to serving

Tim time. both during for outstanding your this leadership you, thank and you challenging Thank

well-being Our the is our foremost employees. of the during safety and concern pandemic

staff emerge quality Notably, delivering for We technicians staggered or without lab are providing excellent full distancing our safe through while time shifts conditions social or our and the is a day same strong layoffs Like the normal have strategies work delay. from maintained interruption with and the from to and no at working a turnaround under business Biocept we policies pandemic furloughs our designed forward returning we when are position. looking more everyone to to operations. pandemic and implemented having control home in

domestic, and Cross Biocept data publishing assays, presenting to essay target technology relationship with remain breast with Our entering clinical testing, expanding the specimen target COVID-XX securing assay our NGS Blue further with These and scientific PCR that technology and target cancer, both plans sales additional market signing and Blue in capital neuro-oncology, term under validate selector next studies market our collection develop collaboration corporate panels agreements with and into more and our ThermoFisher health with of RUO party longer including of switch case conferences include collection blood kits and our our tubes, Shield, commercial coverage, increasing partnerships our global a growing launching focus selector additional third launching using in developed Aegea. CEE-Sure penetration penetration molecular our lung strategic urology, blocker COVID-XX collaboration and Medicare priorities generation unchanged. kits breast increasing selector on lung plans

and for we growth. are positioned pandemic to return the weather to Importantly,

established physicians for information liquid and treatment an are provides in determining their selector diagnosed in with We decisions our testing critical assist cancer. to target leader patients biopsy

to our on To-date based will CT return normal CTCs DNA spinal gradually have as both fully and leverage tested approximately are in cerebral from our pandemic platforms more the assays both with biomarker we test blood and Our COVID-XX over differentiated that samples levels patient oncology information fluid. proprietary XX,XXX We expect assays subsides. and our samples. volume XX,XXX

especially Tim which XXXX operations uncertainty and brings a of of be to revenue dedication particularly are during our this most and strong shorter we're mentioned may operator. and that like with We for work will to entire take to cash in challenging support expect hard team collections we as our closing period. at With to runway thank balance their and I'd overview sheet ready Biocept questions the COVID-XX through now have pleased

you. Thank

begin Instructions] will question-and-answer the now [Operator session. We

at website question through be our held While at include for Global presenting H.C. mention posted our Pacific XXnd Xnd Micro and to we're next to at webcasts the Investment Conference biocept.com. like LD XX:XX September first I'd the the being conferences XXX Biocept on These presentations AM Annual will September Wainwright of month. XX virtual be waiting two that XX. time Conference will

we're operator Okay question. first for the ready

Thank you.

go McCarthy question Jason first Maxim ahead. Group. Our from Please with will come

Hey Jason.

line thanks taking Michael question. guys Jason. the for is for This on the Hey [indiscernible]

Michael. Hey

a bit testing. color I'd more the on COVID like So you see to provide

previous on of on X So the X,XXX XX in last the you mentioned doing XX,XXX like third tests to based [to-date] those announcement were and your days.

per week. X,XXX napkin some back calculation doing about that's So the

or supply to throughout runway question to this my the is So QX? produce have do the continue ability supply the you

oncology I Things math. here if the your newer that thing it get type here a a for. looking appreciate of has more the you testing to you're should provider, diligence volume doing on understand done do, around a an there are perspective and smaller as The comprehensive Yes. they're story it's great some test not ways you team growing fast one just and folks that in in job

for XX And that greater the well to rapidly probably day I so But future. Tim even rant upper to the we as as and for as issues automation hundreds well weigh our in collection supplies we as now lately specimens capacity into the were kits some of well crossing reagents in maybe be plus here we've threshold soon have per of some and our that kit on our up hand. both the on grown we let will doing the

Sure. Thanks Mike.

So it question. was a great

mentioned our in his collection kit previously in-house later process releasing Mike surrounding Mike finalizing year. XX,XXX that which we'll mentioned have still kits be secured the remarks we're we also while preparation in currently on the actually As of this collection

a In a associated situation our in that order addition standing the that actually COVID-XX to perform require in we on to with are reagents we CLIA to our be suppliers fortunate testing. with laboratory

that I variety a and two we chain the we've those I things effectively able other think the been experienced say of combined So earlier pandemic. during overcome to supply that challenges have would experienced folks

providing to has on alluding end the automation our more much and ability to in eliminate efficient clients we're manner them volume. also able very be with as to shape there good decappers efficient We're process also positioned very we front variety us tests continue and of with issues So more COVID-XX both a in the Biocept our up constantly well think a on handlers, we're stream process in clients they're end having at call efficient well COVID-XX the able here was CLIA motion repetitive our efficiently ordering our a also to testing with process things doing Biocept in to a but do once order more into COVID-XX implementing to lab able continue I process and to more to implementing results I what our different ramp in also for CLIA. a much of people those doing with testing liquid what back to the be to testing of in think potential process Mike in being

Tim. Thanks

have enable outdated. then Thank as if the here that see provide All wait times the to right. results you you. information a impressive. XX I which that's within week And some in also been renders to much of particularly could hours know out I'd like as because basically pretty which New factors you discuss York

So comment that could you on all? at

Yes.

is In own that's of people are fact, but of needed running have for labs that both is by in society been us. waiting having results which this general. are vitally that the some really a is but This those national at course for their challenging critical those weeks health test for it and for two

make So that, the we're been hard working are and week here lab operation. increased committed right and day there to automation our We've gets lab at putting the in staffing initiatives, we team maintaining that the a test sure now turnaround we're into seven time ASAP. through has to very also the

morning tests Saturday to or referring and or night Sunday morning Monday So Saturday Sunday get back that night physicians. going the on arrive results run to are on

So shouldn’t critical XX and feels us I hours. article Bill any beyond Gates if they're provider. he by important the paid think don't saw be if folks where he I mentioned for all test that for that's for know

it's and might the So not to important same meet time be thing make think in as this guidance. that I representative greatest case a that at sure lab you but the relevant

to actually detection you and test expect like you see with All be expect what and a limit results? into to lower much lower you going you that translate the test can practical I just would limit how developed right. a differences how to as being seen and if a PCR of the use Aegea Thank then main more would that's one oncology on are this model have are with of

yet, expect of you look the an it point to a similar to at because premature at we where development us lead for not as of think the performance what designs to would is point PCR this are the anywhere it's results to you to we're I at test sensitivities that idea the model to the oncology you Well, make about any to way claims oncology X% and target of selector and on molecular give X.XX%. has, but to can go have we've assays the to down standard down our target with X.XX% oncology prevalence done five, would seen X% that from current one

performance far oncology as the be at sensitive assays our much So That more here well the Aegea would you abreast designs provides developers with goal the assays progress. with standard versus assays if keep Arnold for PCR folks way partners of Dr. we who along of the the will. as and so as make we'll our

Thank right. very the and much you on All congratulations progress.

Yes. you. Thank

Our Yanchus ahead. Please next Capital Markets. with question comes from go Brookline Sally

Hi doing Mike, call. thanks for the

Sally. Hi

Hi.

do expectation going going when you, when I business any U.S. have biopsy do to do know it is have when physician the mean for or wondering again? you be that's have I any pick you varies to traditional of the any, liquid regionally expectations around Just you visits rebound? I do up mean, but when

course are getting about getting not in the and still physicians cancer lot this a as is but the many amongst amongst so much talk we serve and we are is we've physicians so people industry Well, hand. of of at this made have and early of with a detection progress us concern a visits going a which cancer patients and stuff early about There critical. to avoiding is problem arena healthcare and is as we concern

guess going spotty where dovetail of the, subsiding now. mentioned I earlier as kind it's with I somewhat it's Cory pandemic to think

everybody As was go bit. we to fearful started just it One down this then seen like everybody then a said it came different are come down said haven't to started it's once it has and people points slow at to when down whenever in you it because variable. how work and was started slow be going back. of and different be and to I resurgence to it business again back back to pandemic regions will in place started shelter region

predict. hard kind So it's of to

front with with and can little clients about get the CSF new a ability though Zoom. bit Now Cory neuro-oncology gaining positions you we're in also our maybe in to talk of

Right.

we it's such unique biomarker been, fluid cerebral niche spinal So a testing. nice have with

and very during able been sector have after it of neuro is oncology a going so pandemic well to us We small targeted targeted to and times. oncology especially specialized served which these be and

able So them we've more connect to so. remotely with been

team it's a medical learning sometimes they're shortage and were not that's for the folks I think to having is testing. they selling so more and Well, last to hours the just they're Normally patient and patient of normally get quite to is good they've had continued luck surplus staff we load medical a that the about folks with time started only call with America one that or time. hard oncologists having sales as difficult have used process. case oncologist our noon very neuro night Zoom our oncologists in and we two and of understand far visits the of had I available. so in and and shortage lot advantage There more to mentioned time that see morning, don't a their they're they've scheduled and actually on gone our

So been the get the benefit, ability to message side that's across. really a

Okay. Interesting.

this do this expect quarter it R&D to next? $X.X that then continue like is Okay. of quarterly before look going to year million or end And spent in you run is into like going the forward and your you vary rate a that

going our validations I'll the done include R&D our like like also developing will thinking that's kits the assay let lab in like collection to that say [hard] work and validated. CLIA Tim the has just address expenditure it's not the of the be everything that. COVID kits pure of you're COVID to in I and tubes

but R&D over more in Tim re-classed detail. that's question to address So can your

there. answered Yes. few dollars Actually, think the did certainly second of validation very well COVID-XX cost have hundred it in Mike quarter thousand I a but

tests say certainly care. physicians to and testing that that they expect I've for not level, where continuing new launch said patient continue those related you the to capabilities COVID-XX as it do are that validations but that could I constantly for at when So it necessary our we to order deem extent we could

So but be was was to heavy with that done lifting with QX, time come always that done testing. launching tests lot out of in that a to say from I new we've there would unique time the COVID-XX somewhat

Got it.

Okay. at And you'll or? level the think you XXXX then Do next about what year? continue

testing COVID-XX With overall? or

Overall R&D, yes.

in it's there. out if Aegea would have collection R&D, have test that mind say. were time our With the Keep that own even revalidation we'd to perform COVID-XX to revalidate. test hard our to exercise work option a every to on have to Overall kits we we'll

to going new long revenue that's develop justifies to probably that improvements there would be that. process I COVID-XX the as some as folks most with potential certainly, think expenditure this now agree we right but So is

Definitely, yes.

Okay. much. Thanks. very Thank you

Yes. Sure.

I conference This concludes over to our the remarks. would question-and-answer Michael to question. Nall back any closing turn for like

day. not and an you update our report today Thanks thank We at of or to hard-working look call to everybody our thank in you operator want progress for to Well, quarter and for company. again have a an forward board believe financial our Biocept and team on today. we conference behalf great results it for of and on attending and interest participating on third November. directors next when we thank update providing everybody our provide in our your

presentation. conference now Thank today's attending is concluded. for you The

now may You disconnect.