SNCE - Earnings call transcript Q1 2022

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Operator

Good morning, ladies and gentlemen, and welcome to Science 37’s Earnings Conference Call for the Quarter Ended March 31, 2022. At this time, all participants are in a listen-only mode.

We will be facilitating a question-and-answer session towards the end of today's call.

As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Caroline Paul of Investor Relations for a few introductory comments.

Caroline Paul

you participating thank today's and you, all in for call. Thank

results Executive are today, Mike financial press ended release David company's of me on A Officer; XX, Science the XXXX. March Coman, released is Earlier Joining the Officer. Chief and copy quarter Financial Zaranek, XX the available for website. Chief

results are statements Reform will our made Private those our Securities this factors, differ call during various to Commission forward-looking was and we for I'd to like statements which the actual Safe or for Federal our quarter by assumptions the to these Securities begin, to and Securities based and discussion and events XXXX. anticipated of risk remind on filed include We pursuant make forward-looking implied made of uncertainties within forward-looking Harbor Before Laws, March from the upon today. meaning statements including XXXX are estimates encourage which you you Form XX, Act that filings management of These Exchange earlier the ended that material involve XX-Q current quarterly a statements. report provisions review could of materially Litigation or risks the that with cause these

ongoing the of David measures disclaims performance. filings, now be in measures comparable the would to that website forecasting You believe referenced, evaluating to We in statements to on any earnings and We over company Investor purposes. and SEC reliance non-GAAP metrics GAAP of obligation planning Information Relations are operational statements portion measures which the our update new including undue our a Coman. and non-GAAP non-GAAP cautioned information. forward-looking today, call to use I not on at measures the our of available to financial investors.scienceXX.com. are we reconciliation like the our those materials internal turn for these can to place and found evaluate as most speak about only certain for these useful operations such

David Coman

sponsors be regulatory submitted Mike to a which diversity a context enabled there released discussing by portfolio been plans existing patient number guidance for geographically perspective, clinical morning, in include first into reached million tailwinds industry Thanks, the months, cancellations demand large is number we a us. more reflect million, of several We're From impact and with with sites to and to discussed anywhere, year-over-year trials. to of everyone, new In research today month rest of joining are XXXX, we've third-party clinical components for overdeliver XX clinical more detail. is for populations. demand traditional XX issue regardless enroll underrepresented us clinical spoken the that who will draft about in which This last measures from significant and enables seeing COVID research some specific with has particularly race creating for requiring racial operational next senior research; demand starts the business. months, research two operating traditional last for started quarter $XX.X operating fully naturally Caroline. start This than $X.X for have reports FDA the year first XX% to proportion I'd you executives conducted detail location, last addition and ethnic of ethnicity despite to patient limited the a are clinical own that the recruit across patient constrained and operationally, terrific which of outpaces [ph] in their broader ability to According increase strong these now that XXX of that of have to a demand findings. decentralizing corroborates result pleased trial Good the by like populations. our revenue recruit of trial system. the quarter and decentralization, a given their is any clinical assessing financial new XX results we're which pulled the Science out in over for of of date. the problem, with three financial XX thank biases Science given continuing having widespread our trials diverse the to the system, quarter. drill derived to populations We market our the resolved the as the Science to our just increase into recruit KPIs times the market trials

more the Study trial the this in XX on While parking, to in model than for only waiting my it our more the Development, the population, faster. patient written patient than for this more has outside use does XX could the with comfort beginning reads, make sites United takes much faster, representative attract for NHS step weeks be miles, is Tufts and Science campaign a also significantly of more taking one do According minutes the launching should to new of since but for encouraging living the hours and of advertising XX Not when studies the a and drive Kingdom of COVID, I I FDA of GBPX The convenient papers area that seen process room”. average. XX clinical Drug it's the sit decentralization; pay selecting “why Center for further

process patients out weeks, XX essentially contract required. than virtual beginning one because are only dramatically enroll less reduce three to cash we dramatically start-up enrolling months the times duration, with shaving Science a In the XX months three parallel can faster. sponsors six can to faster. model recently the we Phase of the faster months and timelines site to network. enables times the trial, on off burn By We've enrollment the said for III and sponsors XX times off drug also peak drug, another that we than up million in from By and averages also on to market at XX studies, completed to conservatively, two them faster, which million time taking of revenue site for product the of a sponsor. about give to represents process we enrolled their additional months their start-up $XXX for save $XXX commercialization $XXX which patients additional six for revenue million, time get a Our XX nine

dynamics investigator. to representing This significant With outlined capital. and report as through emerging cohorts, each to our our a prevalent RFP our Beg, market saw therapeutic of profitability and significant an pharma, and partnerships. Dr. the Shaalan pharma, our commitment call, happy of positioning his our of enhancing we commercial primary area, growth us fourth most oncology, growth. efforts, Research commercial active CRO and we at trial quarter will the additional it companies. identify, to priorities large our strategic efforts, main operating extending volume clinical Director across the on a company dollar again that including position renowned recently result raise in presence translating in trials during at We Now our our we Office we're of without addition earnings the We year-over-year investments first proposition our as Southwestern exited value investments record wealth investigator UT trial leadership to was make long-term Center. the close to the Medical our oncology strides with our Medical Clinical into commercial customer pipeline to clinical need system, former a is for total midsize design to expertise, strengthened levels, more increase expand to quarter respect opportunities our of while the and our and made as we've helping oncology With continue leverage help accelerate

high-quality intimately market. a It's the beta to facilitate trials our two new have who and the scale. to in compliance all for the and and generating have customers fewer launching available believe technology agile note built our also to success in platform. new will enterprise which and operating going remote journey, system, of already speed, we been decentralized both, us conduct impact product on next-generation new we have platform initiate technology involved decentralization, require unified be orchestrate we important comprehensive is on this manage clinical enable our increasing end-to-end solutions enable margins. will revenue point the that will to Commercially, and solution to in is fully design had positive traction designs the future clinical to require Regarding a unifying flexibility cost and tomorrow that to resources on-premise stakeholders, components formally the of across of many being trial study introduced trials data stakeholder and product Unlike ensure forward investments most our platform Operating management. infrastructure

Science In addition for or will also to will benefit in performing designs site virtual than where less a release, an for enable XX site XX technology that the new from be as poorly we lightweight for month be rescue announcing Science to rapid a land-and-expand this deployed studies deployment approach. exciting option will meta a option in-study solutions risk studies mitigation

strive quarter our XX year which positioning of in reflected full significantly the additional results, become more the cash to EBITDA without modestly need been we capital. flow long-term will guidance profitability, business, taking Science aggressively be to to in for and neutral XXXX out first of the our end Finally, expenses by as regard we've in raise positive and

I Zaranek, over that, will Officer. with Chief turn Mike to call Financial Now the our

Mike Zaranek

everyone. XXXX. I quarter then results Thank us plan the through the you, take for year to full hello, and our David, and outlook first

XX% of approximately We same were for in in which $XX.X for fourth cancellations call. and ended our of the This given the COVID to quarter XXXX XXXX are quarter, three the $X.X into quarter of preliminary XXXX, of increase earnings large period of the we two the prior million million million, XX, quarter the pleased revenue from ability the revenues the shared year. March fourth we both during the accelerate the exceeds represents first experienced report months which our from a expectations to quarter, $XX.X

noted to contracts. a current see variability of limited continue in number around scale quarterly timing of we and a As result we and our before, to expect revenues profitability as bookings,

and in to represented confidence in our XX in in decentralized tend These beyond. second more model. opportunities duration larger and one bookings visibility and reflects QX XXXX $XX our longer consistent the from plus record our pipeline, history, As which million in David number in earnings with a remarks larger noted, highest to continue our the see pipeline give with XXXX revenue for QX when be call, of ever. and highest finished us thus opportunities The company's the XXXX both, Science growing we trial we total quarter clinical the gross level

months $XX.X Our three net million, were having XXXX COVID study to despite we previously. absorb bookings for a the large healthy March ended mentioned cancellations two XX, the

the than recall will these result would less of XXXX, traditionally were clinical time two full efficacy call, the was quarter we reiterate cancellations like non-pharma trials. trial smaller quarter and including studies rates XXXX you XX%. across two to I was III the will that of from as do COVID from of the industry, of and COVID earnings a on larger quarter through XX-month the the year particularly XX% cancellation Phase end rate two for company As our time our to first was the our first not cancellation from happen of which fourth a drug which target,

two the in QX to COVID cancellation of close XXXX the rate impact the cancellations, full level. Excluding double-digit was year range, our low large XXXX our

we comparison, view XX% For XX%. the between is average and industry

very and current elevated from today, backlog, industry norms. are the stand backlog COVID indications have currently little cancellation our non-pharma sponsors. we on that would be As future not Based seeing we rates any beyond we

Now, to turning profit. gross

first resources priced our last profitability QX drag revising strategy quarter two that two studies, prior decline excess hand deliver of in the have us on along we quarter, a indicated to expected the larger the to been from with XXXX. in aforementioned COVID the As pricing studies given legacy

same to compared $X.X adjusted year. period a in was prior the gross result, million profit million for As the $X.X

profit was compensation to stock-based year. period adjusted excluding the in prior margin, compared gross XX% same of addition, the In XX.X%

$X.X be our from expenses, depreciation same quarter excluding depreciation, adding of expenses, interest, amortization and and $X.X and million expenses, million $XX.X profitability increase of Adjusted for loss continue change for XXXX. the prior value the sequentially an million compared We transaction earnout the compensation, from path EBITDA, the we $XX.X in were and to year. which quarter an delivery towards calculate period less On eye adjusting the the with the profitability, a $X.X reduce Selling, inclusive to of in compensation, defined continued operating adjusted in we were infrastructure growth. of by long-term our more and to impact able of our liability technology, the by costs amortization, of total general same stock-based million fair with loss million, EBITDA $X pleased in focus million investments to of as million by non-GAAP commercialization, the of a the of $X.X quarter taxes, back administrative period to on fourth than first XXXX. stock-based transaction-related of quarter in revenue and underlying

with related [ph]. reflects the note $XX.X value earnout of will our to of which original SPAC change part transaction You of $XX.X liability, million was million the fair GAAP in net income the

within period receive former XX transaction certain arrangement upon entity potential basis. And that under As shares. a additional holders meeting the are thresholds closing, required we to price of equity XX-month value a the the on would U.S. of GAAP, the reevaluate quarterly reminder, a of stock the Science

Now investments. things, was This the on million expectation in in ended cash our line with of $XXX.X and approximately We amongst quarter were to and bonuses, reflects cash, equivalents out which the XXXX. other QX cash paid short-term with cash.

we Additionally, daily revenue current divided less days in to ago. were year versus DSOs that as the X/XX/XXXX XX receivable a defined report average at days by pleased the deferred revenue by period quarter our the same in XX accounts were

our XXXX updated Now, to share where will for outlook turn the guidance. we let's

million to million we full $XX.X the year-to-date to revenues last XXXX, had revenues project $XX.X XX% approximately full of time in for $XX of same our year. revenue continue representing year to at a to the the XXXX end growth. approximately $XX be first the XXXX the to compares year-over-year range million, quarter the and year This We million recognized. phased XX% in of At of backlog

of two the The positive gross studies on will were established quarter end that which market model This have second will XXXX. priced was our immediate impact largest prior to into of an the of gross our our current second from management range margin platform the we the year. and exit year. of new vigilant additional during resourcing, the technology low achieve our in expect as the Between efficiencies margins XX% we half to at

be $XX negative between EBITDA million full year for the million. adjusted XXXX We expect to and negative $XX

to by flow as to operating the quarterly be XXXX, beyond hand. Looking be able XXXX. And EBITDA of with David on breakeven noted, based neutral cash reach and we our cash end expect our existing both, on current cash positivity expect plan, to we

point, As about upcoming currently options optimistic to converted of in anti-dilutive, At basis, about would this I to we and our having outstanding. closing be call an loss profitability. we and remain diluted trajectory and and to on net very we therefore, had turn David XXX.X for XXXX the in expect back March quarter the we GAAP comments. be path Since to shares counts In share XX, adjusted our over any the year, would million basic long-term a deemed same. summary, growth XXXX, the like anticipate

David Coman

Mike. pleased Overall, with our first our progress product and you, cost adoption are meaningful management new on Thank the of during introductions, platform, quarter. the we

our to more We to continued continue the the are provide a decentralization, strong clinical about business. shift trial towards industry which tailwind should excited of

companies We in large space opportunities spending the of our also to across continue white in billion emerging to $XXX the pharmaceutical, annually. R&D given and see growth midsized ample tune market large

trends for solve to Our is sponsors. able differentiated multiple trial operating system macro

increased enroll to significantly in patients given to demand our ability Science faster. startup biotech with save cash and eager among months customers We seeing time reduce are XX, are who burn

patient patients to people Our trial. increased more as clinical also finally, to in being is times clinical demanding three operating a engaged stay the providers diverse And traditional XX deployed Ukraine displaced numbers. way and for platform to great is diversity a as are and proven compared Science research in in system enroll is a population FDA

differentiation across orchestrate our fully high-quality on-premise excited both, to and agile which and platform, about industry's technology unifying will for comprehensive compliance stakeholder require platform conduct launch available journey, data study and trials generating are most the the end-to-end of clinical as create designs remote increasing We stakeholders, new management. trial all that the decentralized significant

to efforts from us Our resources forward and manage are market going product to development enabling path fewer in initiate profitability. benefit our the clinical to trials current augurs well labor which and

the orchestrate CRO combination and very sponsors trial it current cash XX providers, that, both bright believe system long-term and decentralized position our the in networks specialized fully company we as managing and operating to up industry, ensure to sufficient only to we the we CROs of of trials. it The with for and Science scale pioneer benefits to plans the turn to future or I agile sponsor for is unique is Our achieve over enable questions. support are drawing to both, while workflow patients, of operator the continue to our alike, open conduct With expenses now our will clinical tightly to technology profitability.

Operator

you. [Operator of with first coming the Coldwell Our Baird. Instructions] Thank from question Eric line

open. line is Your

Eric Coldwell

street about -- quarter Good -- very on the topics a all lot the last, rates, biotech China, we've the like interest number and morning list months, headwinds you up for six everything on; things on traditional negative about Are are the thoughts it like call the items labor a you're I participants? it, I'm and for picture? that But that model? has those in actually spoken currency goes Thanks what David, nine the street those a of having the various creating the has -- been these situational on your mean funding, to foreign R&D contracyclical to brought on almost Ukraine, headwind relatively items ecosystem worried a Russia, congrats macro are the strong much. influence a that, more and but are been here. worrying there of just bigger there sort any today. I'm your R&D of of actually is for sounds curious, items macro call curious or any about

David Coman

trends, question. -- run for counter some -- the them. I Eric, we asked, and Yes, remarks to that's reality wanted address glad we of the thanks prepared it the things asked is the continue about to the the in you macro I'm do that why to many because get of

a the CROs, about that's an If reality the that's big of but funding us we're hitting think where you biotech many area question is for is accelerating.

You where think XX in about faster, half patients to almost the we're the able solution start-up recruit than frankly, or Science we're more able time. and to

So XX burn reduce where to accelerate and like you together the opportunity patients recruitment. cash perfect to Science when in in cash people constraint, be connect to you XX able Ukraine being environment. platform the for coming providers to gives a Areas the your and remote are Science ability the to displaced, are

issues In the to not are terms the of rates seeing And high relative the -- retention are labor just rest we're extraordinarily it. inflation, and we our frankly, industry. of shortage

good the really of macro lot the the trends about think, XX the feel I industry. Science rest to we So the is of solution, headwinds a are which to that antithesis, really

Eric Coldwell

maybe have well? the the original deals conversation maybe of on of us take give of how wanted your us might fast, that getting or rescue I this rescue today? comprise activity come compared into the either these to more land-and-expand you backlog of patients might that that. small, in over some two contract of impress for client, or sign? more give those of grow sense And work Thanks topic maybe Could land-and-expand anecdotes those a as a on that bit about out and a much trials played pipeline and or work hit your to categories you

David Coman

it's go we were Yes. about I patients a done about. of was I'll example simply otherwise. hired were ended patients tell briefly, think about XXX XXX them do one but shared able talking Analyst what enroll XX find able to quite to faster you We to at that them, Day time we're we've perfect ago, what trial originally for those some up XXX ended because be -- than enrolling enrolling that just of up we a

of What about affect today, we which we're to really higher that patients. is of that plenty recruit within solution of exciting enable the come over-deliver rescue our to go think this the that to able weeks from pipeline side us we're initiation terms to there's four when supposed to equation. So in get, have is within the in to of execution number terms four in we the ability even at percentage we I a examples that deliver weeks; will continue

delayed, if of So -- patient most XX% trials all that it, which issues. are from of the are you about think recruitment

we area really haven't addressing So a us that XX. expansion Science new been market a will really enables to get for additional nice today of be that and

Eric Coldwell

I contracts follow-up on gross just mentioned ramp XXs? referenced those you'll -- that exit Just have how the you larger of of your have much be pricing the the the of that year much trials The just QX. last sense current how sure it influence in I'll QX? on XQ prior queue. much past beginning might jump and the not model might end that low one QX? the will in that into wear back exactly I'm realized Is two the comments The in quarter. the how awarded off versus margin under getting in were

Mike Zaranek

going to margin Hi profit remarks, two in terms see Yes, Eric, for David those of think see the as his question. ramping as expectation this the is of the our that prepared impact. you're we for year pretty roll I off. in good expectation said of in of would half be second is in terms a future continue significant part would gross they what Mike. will of Thanks our that a QX, the And

Eric Coldwell

much. Thanks very

Operator

Justin our line from of Lin coming And next the with William question Blair.

Your line is open.

Justin Lin

Are mix this share Are trend new increasingly quarter? of quarter. provide in seeing versa? or customers you new versus your able good on taking vice you existing morning. Congrats client the to a Hi, bookings the

Mike Zaranek

is Yes, Yes. for the thanks terms similar. This question. in of Justin, think is what we're seeing mix Hi I the Mike.

where heard roughly end You year last with customers. we new the were from one-third customers, existing two-thirds of from for

continue try two. see go a on through would What in between to strategy BD but the nice I terms targeting. we're basis, the of quarterly depending to two-third, mix say could our on fluctuations split what We we that a directionally, comes in is one-third that the after is in what generally quarter

Justin Lin

question able or follow-up Got of it. just your now? And guess specifically, provide you right total more I to question earlier. Are to percentage a pre-revenue Eric's as sort biotech a of the percentage revenue biotech

Mike Zaranek

Sure. Yes, sure.

So, I be seen more to the bit think that a we pretty QX. strong cohort, VC totally have one that have isn't is public while thing been that were little challenging apparent markets markets continue maybe in the everyone -- that for to

seeing uptick David emerging our of As from in that backlog And as accounts. it along the XX% biopharma exposure, end pipe first our cohort increase an less of monitor of we're quarter, is than this And cohorts. from actually specific relates to other context, private the his came something level at in our mentioned remarks, closely. we prepared just with in for the

Justin Lin

Got it.

me. your operating of Okay. last And revenue? Are a R&D as or one percentage just expenses for

Mike Zaranek

Sure.

largest we of going in to would of though we're What go cash lifeblood it I for to give sales X.X of on exact times area significant you're I is the what we're approximately think this say tech three on of And continue -- it's offerings spending I spend. context, an precise marketing. we're figure think excess terms spend. running the basis, We to and That in market on is to make organization, in that investments don't it a underpins with. what is R&D you of that. that referring which is all the platform, our

significant for pretty us. area focus of a So

Justin Lin

Okay. Got very much. Thank you it.

Operator

the next Frank Capital. Street of question Takkinen Lake with [Operator coming Our Instructions] from line

Your line is open.

Frank Takkinen

system tomorrow. on Mike, talk start taking results. the hey comment launching Thanks wanted the David, to about for the or new my NextGen product congrats with to I questions. Hey

Let over four just of -- rollout us into product or then, next-generation should the thinking next bit of me little new some quarters we features two, a the take six it And cadence about deeper key system. how be call forward? that

Mike Zaranek

Yes. Thanks you. Frank. for hear Good the from to question,

Operator

I'm call turn time. questions showing over like closing I Mr. back remarks. this now at for the any would Colin no further to to

David Coman

you everybody. to follow-up questions. I day, Thank Okay. I it. looking the appreciate us a And great today. am for have joining forward

Operator

that for and Thank your for you Ladies does conclude our conference gentlemen, today. participation.

You disconnect. may now

Science 37 (SNCE) 9 May 222022 Q1 Earnings call transcript