BIOC - Earnings call transcript Q3 2018

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Biocept Third Quarter 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode.

Following management’s prepared remarks, we will hold a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded today, November 13, 2018. turn over to Ms. like now the to call I’d Jody Cain. ma’am. Please ahead, go

Jody Cain

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

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

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

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

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

about this law, occurred today, or or Filings. XXXX, information see any these as any of as the November For time please to publicly that is obligation events only disclaims revise to SEC after that by required contains circumstances information this call call. except reflect company’s risks, accurate details of Biocept XX, content update The sensitive

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

Michael Nall

everyone Thank the you, call and thanks on Jody, to today.

in our said, later aim That We and taken with continue for to grow actions business make call our third that that we to it. discuss are the to quarter being disappointed have build progress future. on initiatives we revenues we the for returning will the today’s

and an strategic provide our also initiatives will business development We on opportunities. update

Tim? me then Hendrick review hear our will Chief our our robust our to First, Tim return and plans Commercial growth. from to you company Officer, will results new financial and Edwin about Kennedy,

Tim Kennedy

afternoon, Thanks, good Mike, and everyone.

commercial of mix QX revenues fourth in $X accession XXXX in and the QX that $X,XXX QX billable XXXX work in had XXXX. The QX or historical accessions In marketing $XXX,XXX of of there in were believe specialties QX still versus range accessions segments as is we process trends. quarter. revenue billable early be compared new which $XXX,XXX and with approximately acceptance X,XXX QX On based refocusing is the of we volume on XXXX. samples the averaged XXXX, our accessions day XX average. per efforts at $X.X the biopsy we on in sales third to our our in was end Commercial Liquid turn reported $XXX,XXX, on reimbursement in XXXX, adoption, around XXX test that of per accrual team XX quarter sale stages XXXX. reported QX anticipate apples-to-apples the physician, XXXX revenues continues received million can in recognizing and with million and compared we and were an received market number basis, approximately and For billable in

to As growth sample a in quarters. we anticipate coming the returning result, volume in

of range reduce we the this an annualized basis. million in $X expenses year expenses, of our to $X.X operating Turning an initiative announced to our on to million QX in

accomplished when this year, have the this cost to plan We QX in reported in of the began. the expense comparing QX baseline goal reduction when expenses

clear increase improve testing specifications with impacted increase in period XXXX validations oncology revenues and calibrations versus equipment On revenue QX associated the in panel upon in general both down a was the of development cost period for year-over-year and costs and and research was assay sales to with compared which baseline. year. molecular expenses was to Cost and of by Thermo the associated an are administrative marketing the flat $X.X While XXXX million, protocols. is first validating last from an Fisher quarter, same and basis, flat existing and QX costs

mainly per costs marketing XXXX in primarily XXXX General In associated increase million continue the allocated and The in $X.X unchanged development to of $X.X and maintain and million, of and with evaluation versus an our million, million healthcare quarter was and with improve year. for research down to million net reported expense compares last loss were volumes and or $X.X we or growth same of cases with on QX for to for million share accommodate was higher outstanding. weighted a $X.X in QX were the addition, per average the loss net expenses XXXX. $X.X trends. This X.X in work higher of average received quarter million research XXXX laboratory third cost period on XXXX Research the year-over-year QX laboratory weighted we of the for XXXX. expenses collaboration academic XXXX The were $X.XX to capacity with share proportion $X.XX as $X Sales was increase compared $XXX,XXX administrative and from studies institutions. for due XXX,XXX shares QX shares outstanding. third QX

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

our for September nine the Now months results XX, ended to XXXX. turning

XXXX. $XX.XX the million XXXX on $X.X revenues the in with in accrual of As compared in additional September months was fees steps complements to XXXX, Billable our have and raised $XXX,XXX, XXXX we on X,XXX in a recognized $X.X reduce recognized million cash. certain cash related to equivalents annual investors, our based in X,XXX, XXXX, eliminated included throughout XX, months months an Cash All million Finance cash accrual Oxford revenue long-term nine $X.X nine final compared Revenue the on $X.X extinguish upon approximately million same financing recognized an the basis first basis of debt based and the whereas we reported we the to the XXXX to to debt were for approximately installment revenues facility. million net million. reminder, have of revenues year. long-term from other With payment received to to in $X operating were on and aggregate $X.X taken in with revenue totaled review XXX,XXX appointed debt recognized restructuring by no net proceeds and revenues This which sheet million and both weighted December outstanding. revenues $XX.X were turn a first the quarter of the level and compares outstanding. were million loss of of of balance nine the Edwin $X.X are institutional converted spend. with costs our million This months related of General first $X.XX development with XX, as Edwin as million accrual in making the million. XXXX, The from an million. period per million. third key recognition track shareholder last Hendrick Edwin? our was the XXXX of of a a offering share first XX, his approximately We closed first recently of a Cost volume March his brings rights million. the like average commercial cash recognition. $X.X our diagnostic commercial the of samples or was is and In our revenues our to A nine XXXX. This our shares shares and year. over strong weighted XXXX to same quarter average high expenses X.X organizations Research revenue sales loss is XXXX, reposition made Edwin in of being of for expenses and September plans in million marketing to were call operation. overview changes of for was third the to give us we $X.X and commercial test expenses leading of background led And of the $X.X administrative to XXXX $X.X Commercial to about nine or a record to commercial successful period building which net businesses. the about joined and efforts. of for now per I $XX.X $XX.X share Officer. improve who months Chief that we

Edwin Hendrick

excited be I great days and and ground the the changes it’s running here hit hello, here certain Biocept biopsy making and bring and there’s me everyone. I’m while at potential unique company, help to Tim, Thanks, patients, at we liquid for to services physicians believe to commercial the to early team.

We are growth for position platforms base our marketing to assay currently our developing off current business. new strategies

update and noticed franchises. of details at the plan my releases been service the business in future the You we individuals may to and in on revitalize again me they to significant I commercial join of chosen sciences that have firms, other and health at give press we’re have members These to progress Biocept plan commercial where announcing hires team and here executive additional of key the leadership marketing once strategy quarters grateful product built sales, making. I’m on life reimbursement. areas

advantages are I believe analysis will tumor selector of physicians helping marketing treatment to say areas unique These physician on outcomes and the in attributes or circulating and now, technology or improve circulating our ctDNA liquid certain in patients. we DNA tumor both target platform biopsy For their cell for has industry-leading segments we oncology. where that that for repackaging CTC working our

better local is selection Our incorporate in ordination care. an pathway it’s and attractive for the pathology particularly monitoring and into treatment establish approach to to partnership designed pathologists effort of

whole genome, physicians since provides rather cell in just fragments the the status the CTC found Additionally, by than desired on intact plasma. information is DNA

more In focused the progression. other will I trends. biopsy and our be base become separates our addition, around CTC monitoring. believe disease to step liquid counting biopsy approach important engaging providers turning Biocept response stabilizing is track towards of patient This addition for used our or major or is customers as liquid for service in further that current can used from and enumerating volume growth first to

change the leadership US in the the multiple Ventana for able executive Tim my exploiting strong offer attractive corporate were and positioning these mentioned, were include in improving previous proposition, increases and channels reach experiences productivity, notably, marketing team we Labs value marketplace, worked roles businesses able diagnostic Most build menus included of Systems, to brand strategies to offerings employed my in customer to functional increases Diagnostics a services awareness, PLUS the of Medical major grew in value, profitability As Key and time organization. sales of which raising into revenue franchises. and and that products we I and each expanding rightsizing drive fold a at leadership and roles areas businesses. and solve sales our geographic specific need diagnostic test across those shareholder in

for in I’ll to speaking again call So you your attention. the the Mike. look with you turn future to and back thank I forward over

Michael Nall

Thank you, Edwin.

the into on step company is have concrete recognize revitalize need team. the to glad growing needed our commercial you -- to to We again. the take traction steps the are get team important our gaining an business to We toward business to back

and Additionally, we track build discussed efforts focused on our are as workflows scale hiring quality previous of as laboratory improving heads business can been calls, to adopting new efficiently After automation. and and with on more operations, regulatory, we’ve we that effectively. as well our the that believe on laboratory

As Tim expenses leverage pointed to reducing better out, we’ve our made progress in certain also commercial effort.

long-term eliminating off spend. million other our now growing and our pursuing in focus than collaborations have debt, We We to opportunities. annual resources cash business, strategic have $X while on more partnerships more paid

off are key is with to Blue Highmark among our that Cross strong we focused and start. We collaboration drive have these initiatives on a its Allegheny subsidiary to value, Health several

Allegheny recall may the collaboration has accrued is for Allegheny ALK the in achievable XX% project integrated very is to already X. large due KRAS This because molecular one A we been of in test. of lung improvement to rate testing to cancer advanced of for tissue believe program. is report and and blood this and as According of than lung patients EGFR, Oncologists our than this patients technology such less in to tertiary key XX% Pennsylvania cancer increase plan that more healthcare care our to XXX% many the primarily were in testing. cancer initiative. With a biomarkers are the tested and Allegheny sample biomarkers from testing to biomarker at systems between quality the using hospitals You XXX%. deemed of patients is patient’s XXXX delivery the goal molecular XXXX largest lung interested liquid of times for that reliability convenience the biopsy approach I’m the perform advance molecular insufficient simple there happy is a is Network study and

perform patient’s identified limited. lung that when Additionally, the is By cancer assays liquid designed help avoid profiling tissue expensive used, cancer Testing and value target of with of to utility which tested. in need some our so to selector testing in liquid economic actionable we options This invasive, our biopsy, actionable biomarkers treatment our for liquid indicates, well of has biopsy the the are as in can the evaluate advanced can be biopsy testing, far, risky. be patients. missing secondary monitoring clinical as biomarkers biopsy data and only patients demonstrating can initiative biomarkers is our actionable lung biopsy solution the

the strong from reported program enrollment Allegheny in and could so our Given that Highmark be believe next results collaboration we the with far, year. the

monitor evaluate in Diego tumor with use at recall, patients Cancer a may compared than Moores partnered signs you tumors. studies begun. to both recurrence PET clinical scans. solid CT have patients will of disease As XX% early of studies DNA this to using has monitoring UC San in program and for tumor recurrence Center circulating to circulating of and we two of More enrolled with variety been the the as testing disease Health conduct or The cells

collaboration a Furthermore will partnership molecular market Thermo team Biocept services of a Scientific, product for become agreement Fisher on the to access to Thermo sequencing Thermo supports biopsy with plan it tests optimize assay panel. panels we providing with us and this offering our the partnership commercialize molecular gives is of Biocept continuing excellence, for The biopsy liquid next-generation with before calls this option us launched. to also biopsy center a diagnostic only and oncology companies performing both Fisher Thermo this our Once development, company individual and to panel. company. up to be products to liquid Turning Fisher broad cancer product to pharmaceutical we because high are panel validated, test are larger will biomarker to enable focused the to liquid pharmaceutical a Fisher

panel will validation result, end we the position a the of in believe be the quarter As first in year a expect XXXX. the and we that conclude of launch before to to

make support into brand. to lab a in beyond global kit of our broadening in of with diagnostic planned continue We transition reference footprint a Biocept progress only our manufacturer international a

allow We target expect will RUO have offerings on primers These selector assays our by them or conduct selling sale This us expand our for ctDNA geographically liquid their will to for to analysis. research kits biopsy new Biocept’s molecular for in reagents lab, business based use include XXXX. our product kits novel line can international and ready these only will to which and is use are enter expand to be offering parties the utilizing biopsy with having international as to our to product. we their region utilizing such According faster outside of markets of by report a tests, biopsy View Grand Asia-Pacific testing laboratory to either own the published recent use the ongoing industry kits our and market interested proprietary growing several of or liquid Research liquid discussions U.S. in in technology. the develop

Hong Canada, as both our patents patents for in highly in our second year. broadened patents for These EU. in new and Kong microchannel for this announcing We four enrichment well issuances including a now platform Japan our half capture, cell globally. CTCs we and IP sensitive in for antibody platform molecular patent have the the position cocktail proprietary rare technologies include Finally, proprietary both issued XX as

agreement, Thermo liquid we on proud crowded especially obtain. biopsy become into and the and are recapping patents in We have to of field of more XXXX our new our initiative and studies integrated technology case patents assays. remain including margin, the healthcare this clinical and the agreements quite course for difficult entering as reproducibility, focused into plan and priorities to improvement automating improve oncology Health strategy target landscape family signing XXXX kit health with signing technology validate distribution our collaboration advancing quality, assays into quality [ph], In the additional that pathology in additional distribution biomarker our the continuing is contracts liquid sales practices, and other Highmark processes Fisher target hospital advancing strategic of improve productivity our launching with physician third-party partnerships, Allegheny to partnership emerging and our use Scientific grow to agreement, by further with selector systems, pathology sector, System, penetration publishing entering field, biopsy market and selectors pharmaceutical additional to increasing agreements with global pursue business additional in our laboratory delivery the and

care the for many We ability have proven improve with diagnosed to selector cancer. target our technology patients of

our healthcare the in time a our an are improvements gaining innovator at is when diagnostics industry for We system. field recognition the to bringing are

issued for have improved by for in associations, major guidelines in lung next as patients as liquid reimbursement the We biopsy testing. cancer this seen the generation industry well

test test need actionable to biopsy cancer. develop samples patient XX,XXX been menu information treatment our plans performed patients provide have personalized for with liquid Our clinically and approximately their with they physicians on diagnosed

to organic Our on and leverages proprietary that partnerships assays. take evidence and And to both to biomarker your now platform unique strategic biomarker initiatives. With ready of expanding assays lastly, in generate the drive other clinical sensitivity specificity are ctDNA, supports we are through to that we overview high addition questions. efforts continue based on to we and focused opportunities our information and growth, Operator? a from CTCs are

Operator

Instructions] [Operator

Michael Nall

California. the being held question, the While I’ll like making for XXth mention I’d to at we a waiting Event Micro be in Main first Annual company are LD presentation Bel-Air, Conference

time. on Our presentation Pacific at to place take December Xth is scheduled X a.m.

the are we Operator, ready first Okay, for question.

Operator

with ahead. come today phone from go WestPark question Chung First from Lauren will the Capital. Please

Lauren Chung

Hi, everyone.

Michael Nall

Hello, Lauren.

Lauren Chung

Yeah.

Operator

is up could you. please we pick hearing difficulty having you Operator, This Miss. the the are me, handset, Pardon

Lauren Chung

Okay. me hear Can you okay.

Sorry about that.

Michael Nall

Thank you. better. That’s

Lauren Chung

you that you if or can focus is are what’s about marketing, marketing and you the that tell regionally can on now an working the to and a will area you And your detail can about be on me give what so little more headcount there efforts, the going on, back are efforts more helpful?

Michael Nall

will hit And a are Edwin just in other joined against are running. that His we the and this excited in to in he over -- turn like experience minute us Edwin to institutions, and many how say ground here, to the I fact, Sure. he day. over I truly each and would but we I years that compete thankful use has just of and to doing teed-up just back over

institutions the different efforts. was over at And this he here guy knew so our and and over to doing rejuvenate commercial many successfully over we come right

I bit over Edwin. on well he to as the share take of color turn level. kind it launching, is as that he with can will is of some to He So the ideas that some a he of going to hopefully that little more initiatives is inherited the next

Edwin Hendrick

you, Sure. Thank Mike.

I my expand while here team many as and mean, the I the said this and have statements researching have of yes, I had So, strategies previously me and that my very I been of goal early months, over support on these. that, been I Mike days course to the is execute last and for have much the again, few initiatives the is in and

also several areas brought we a are VP and of and headcount support the so onboard It of several taking managed line the geographically. else these. Sales else a everything as natural in than been We’ve We of revamping onboard over more I’ve we attrition re-launching regards within truly representatives. brought onboard. finish at many care Since More new than new the across are through well brought new team. changed marketing to of in-house. and bringing We here getting we look is we anything have marketing are the them sales more about execution anything

look all that product have. a taking are lines the We at we

use back competition many taking stand our with should order there go and the and of a we why at to where revamping in we redeveloping are materials which differently many, reasons be across some are marketing field. look are us We we people those if out

and regards what are presenting. they feel sales how So they’re presenting to in representatives that the can strong

more We in to looking are training more we the past. we revamping of are and then what sales some the programs do technical and try

don’t different partnership with extremely over along hope do our better to I some busy months initiatives look call be time, we But those but going a I taking that of revamping that programs, will in can and or outline this is are expanded I us in in two going rest in are and into. my we execution want are that that future forward. move our near that and keeping pathology to at have assured have expand going it everything regards more all we all next I even through the areas last able as news the we further the are So an to to so. of news hope moment

Michael Nall

Thanks, Edwin.

Lauren Chung

marketing So total on now headcount what’s the the side?

Edwin Hendrick

We XX entire and the and now sales have side have and organization we managed two people the marketing overall marketing care on people. right that in

Lauren Chung

of you. to that see And that you products next going cost would also -- mentioned after -- Thermo on the the marketed the and have you any about you more of can and expect point? -- on detail share Fisher the Got down you kind there Is that year. also

Michael Nall

will address give I on a Fisher will then little good. Tim of color you bit to cost the first turn of kind on more Well, I Thermo to over question

we daily developing that’s this quality basis. panel, today. Thermo almost as so remains best them we far Fisher and a with As are relationship Together communicate available the highest robust, on our panel it’s

and know, the you in data, it’s our quality Lauren, before will next be we going clinically for the it first before pharmaceutical imagine, As most launch you go sales and area highest critical. you presentations in to having target those be can as year

launch next about I at at that question cost reimbursement there. to how where I’ll we goods, with as every And then understand better and still with pharma first that on Thermo, but that’s So year, to the this of Tim. clinical, have year that your turn plan validate to then we point then or to and this over commercial launch landscape are

Tim Kennedy

Sure.

validating mind basically associated obviously, period new costs in of Thermo new impacted the Those a revenues panel. increase Fisher during tests. previously never a remarks, said that, our XXXX brand Lauren, mentioned, expensive is the was oncology of mainly tests, with validate panel are assay the it expenses I in cost very -- to, prepared molecular As by I brand

once not-too-distant we the we expect of validations to the start that that costs cost expect with as coming that overall are offset selling start the itself. associated future pharmaceutical associated product with the So into Certainly, Thermo in pharmaceutical Fisher complete, panel marketing happen revenues panel the product and the we market. here to the and that down

Lauren Chung

And more you the build Okay. those to -- that on and terms are about lastly Allegheny partnership, able paths? me in can you tell of

Michael Nall

is. a that things and And are Highmark, It the That’s are you nice from in is healthcare as which those of is that. funding that them. one about provider as as Lauren samples it well this commercial payer, getting know case we

Lauren Chung

strategic you. lastly, on -- can extent you you And the just and just that Thank anything Okay. what to comment can mention?

Michael Nall

something a an that’s and the of for -- I are space, whatever times as wouldn’t expert here for every And going know cheerleader, and there industry. can in exciting may this lot us because look in you’re I where M&A absolutely us in can to and I the way do saying I in speak that, you is going are trying in our are you way of for excited potential a Board in all three I think, value stand that of increase to diagnostics on would have focused that diagnostics, but day certainly shareholders. a is the if which think Well, in our benefit as is we we the what broad Board Lauren, shareholder all huge question, we I see seen, think on

people out recognize lot an good in specific are as the is doing So space in industry all we what liquid biopsy. the a to to work are excitement right there starting now, of Biocept and

So now. macroenvironment the right looking is quite positive overall

Lauren Chung

Great. Thanks.

Operator

And showing from I’m this further questions no the Instructions] at [Operator time phone.

to turn call the would remarks. Nall closing back for So I to like Michael any

Michael Nall

your report and in call forward Thanks when you, Well, quarter our our today’s conference have for sharing thank Thank call for our great all and of Biocept. participating results. progress interest to fourth look everybody in a want on Operator. day. We financial you next we to I

Operator

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

may You now disconnect.

Biocept (BIOCQ) 13 Nov 182018 Q3 Earnings call transcript