Aspira Women's Health Incorporated (NASDAQ: AWH), a company specializing in women's health diagnostics, has reported a 2% increase in OvaSuite revenue to $2.3 million for the third quarter of 2024, with test volume growing by 4% despite seasonal and weather-related challenges. The company's recent collaboration with prestigious institutions has led to a significant publication on ovarian cancer detection. Aspira also announced a $10 million federal award from ARPA-H to develop ENDOinform, a test for endometriosis, and is making progress towards its development goals.
Financially, the company has seen a decrease in R&D expenses and general and administrative costs, while sales and marketing expenses have risen due to increased personnel costs. Aspira is focused on expanding its ovarian cancer portfolio and enhancing commercial capabilities.
Key Takeaways
- OvaSuite revenue for Q3 2024 was $2.3 million, marking a 2% year-over-year increase.
- Test volume increased by 4%, with OvaWatch tests up by 27% and now accounting for 22% of total volume.
- The company received New York State approval for OvaWatch and announced a $10 million ARPA-H award for developing ENDOinform.
- R&D expenses decreased by 9% due to deferred spending, while sales and marketing expenses increased by 26%.
- Aspira has entered collaborations with Dana-Farber Cancer Institute and Harvard Medical (TASE:PMCN) School, enhancing early-stage ovarian cancer detection methods.
- The company has initiated an at-the-market offering to raise up to $4.5 million and filed for an extension for its Form 10-Q.
Company Outlook
- Aspira plans to accelerate the development of ENDOinform and OVAinform with ARPA-H support, aiming to complete their objectives within the two-year funding period.
- The company is focused on expanding its ovarian cancer portfolio and enhancing commercial capabilities.
- Anticipated future partnerships in endometriosis therapies, with increased investment in women's health expected.
Bearish Highlights
- OvaSuite revenue experienced a slight decline from the previous quarter.
- The company is facing challenges from seasonality and severe weather, including impacts from Hurricane Helene.
Bullish Highlights
- The ARPA-H award and New York State approval for OvaWatch are seen as positive developments for Aspira's market presence.
- Gross margins have improved to 60%, and operating cash usage has decreased to $2.9 million.
- Aspira's publication with Dana-Farber Cancer Institute and Harvard Medical School demonstrates enhanced sensitivity and specificity for early-stage ovarian cancer detection.
Misses
- There was no specific mention of misses in the provided context.
Q&A Highlights
- CEO Valerie Palmieri emphasized Aspira's commitment to enhancing health outcomes for women and thanked shareholders for their support.
- Chief Scientific Officer Dr. Sandy Milligan highlighted the competitive nature of the ARPA-H award process and Aspira's capabilities as key to securing the grant.
- The company is contracted for full two-year funding and is working to expedite the development of ENDOinform.
- Positive partnership environment expected to lead to increased investment in women's health.
Aspira Women's Health remains committed to advancing diagnostic options for women's health and is poised to finish the year with a strong performance, backed by strategic partnerships and federal support for its innovative diagnostic solutions.
InvestingPro Insights
Aspira Women's Health Inc. (NASDAQ: AWH) is navigating a challenging financial landscape, as revealed by recent InvestingPro data. The company's market capitalization stands at a modest $12.18 million, reflecting the market's current valuation of its potential in the women's health diagnostics sector.
Despite the positive developments in OvaSuite revenue and test volume growth reported in the article, InvestingPro data highlights some concerning financial metrics. The company's revenue for the last twelve months as of Q2 2024 was $8.92 million, with a negative revenue growth of 1.21%. This aligns with the article's mention of slight declines in revenue from the previous quarter.
InvestingPro Tips paint a cautionary picture for investors. One tip indicates that Aspira is "quickly burning through cash," which is particularly relevant given the company's focus on research and development in a capital-intensive industry. This cash burn rate could explain the company's decision to initiate an at-the-market offering to raise additional funds, as mentioned in the article.
Another InvestingPro Tip suggests that "analysts do not anticipate the company will be profitable this year." This insight correlates with the reported operating income margin of -194.49% for the last twelve months as of Q2 2024, indicating significant challenges in achieving profitability in the near term.
The article's mention of decreased R&D expenses and increased sales and marketing costs is reflected in the InvestingPro data, which shows an operating income of -$17.35 million for the last twelve months as of Q2 2024. This underscores the company's ongoing struggle to balance investment in future growth with current financial stability.
It's worth noting that InvestingPro offers 9 additional tips for Aspira Women's Health, providing a more comprehensive analysis for investors interested in delving deeper into the company's financial health and market position.
Full transcript - Aspira Womens Health Inc (NASDAQ:AWH) Q3 2024:
Operator: Good morning, ladies and gentlemen and welcome to Aspira Women's Health Incorporated Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, we will open the call for your questions. As a reminder, this call is being recorded today. Before we begin, I would like to remind everyone that forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995 will be made during this call, including statements relating to Aspira's expected future performance, future business prospects and future events or plans. Although the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, actual outcomes and results are subject to risks and uncertainties and could differ materially from those anticipated. Due to the impact of many factors beyond Aspira Women's Health's Control. The company assumes no obligation to update or supplement any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Participants are directed to the cautionary notes set forth in today's press release, as well as the risk factors set forth in Aspira's most recent annual report on Form 10-K and quarterly report on Form 10-Q filed with the SEC for a description of factors that could cause actual results to differ materially from those anticipated in the forward-looking statements. At this time, I'd like to turn the call over to Nicole Sandford, Chief Executive Officer. Please go ahead.
Nicole Sandford: Thank you and welcome, everyone, to our third quarter 2024 earnings conference call. With me today are Dr. Sandra Milligan, our President and John Kallassy, our Interim Chief Financial Officer. I will begin with highlights from our progress in the third quarter, followed by Sandy with an update on our development strategy and then John, with a review of our financials. We will answer questions submitted through the online platform. I want to start with a brief discussion of our commercial performance for the quarter. We delivered more than 6,000 OvaSuite tests during the 3 months ended September 30, 2024, a 4% increase compared to the approximately 5,783 OvaSuite tests for the same period in 2023. Our growth for the quarter was moderated by several factors, including seasonality, something we've seen in the summer months in prior years. Our expanded field sales team had a very strong start in September, hitting new highs daily and weekly for volume. Severe weather, including Hurricane Helene impacted many of our most productive territories in the southeast at the end of the quarter, causing a short-term reversal of that positive momentum. We were not alone. Severe weather has been reported as a factor for the third quarter performance of many diagnostic companies. Nonetheless, the number of tests per sales rep for the 9 months ended September 30, 2024 increased by 21% when compared to the same period in 2023. And although severe weather events continued into the fourth quarter with Hurricane Milton, we have had several of our strongest volume days and weeks of the year in October, November. It is clear that our tests play a critical role in delivering quality patient care. We believe our focus on improving commercial capabilities across the country helps reduce the impact of regional interruptions this quarter and will continue to do so in the future. John will provide additional commentary on our financial performance later on in his remarks. The second half of the year has been extremely important for the expansion of our ovarian cancer portfolio to include OvaWatch which was launched for longitudinal monitoring of ovarian masses in May. With the expectation that providers will consider retesting of patients sometime between 3 and 9 months, we believe reordering behavior will begin to change as we head into 2025. To further accelerate the adoption of our OvaSuite portfolio, we announced a new agreement with Dorsata, a health care software company with a mission to empower health care providers with best-in-market clinical decision-making tools. Dorsata's solutions are integrated into the EMR system of doctors, including OB-GYNs, to improve consistency of patient care via automated clinical workflow processes. Together, we are collaborating with medical leadership of a 250 plus OB-GYN physician group based in the northeast to create a clinical workflow tool that will be embedded in the practice's EMR system and guide clinical assessment of patients with an ovarian mass. The workflow tool will include automated access to biomarker testing, such as our OvaSuite test when appropriate. The tool is in the development phase and Dorsata is planning for pilot user feedback in the first quarter. We expect the completed workflow tool to be ready for integration into the EMR system in 2025. In October, we announced that the New York State Department of Health Clinical Laboratory Evaluation Program approved OvaWatch for use in New York State after a standard review process that spanned more than 2 years. This approval is required for lab-developed tests to ensure compliance with New York State's clinical laboratory regulatory standards and as the result of a rigorous process to assess procedures for maintaining lab quality and risk management. By any measure, this is a major development. Not only does this open access to one of the nation's largest healthcare markets, the approval of OvaWatch solidifies our position as a mature diagnostic company capable of developing innovative algorithmic tests that can achieve New York State approval. Following the approval, we moved quickly to expand our commercial distribution partnership with BioReference labs, adding OvaWatch to its test compendium. The BioReference sales team has been distributing Ova1Plus since 2022 and will now introduce OvaWatch to the company's ordering physicians. BioReference operates 10 laboratory facilities around the country, is in network with the largest health plans in the United States and serves over 19 million patients annually. Now, let's shift gears to innovation. Of course, the most important development for the quarter was the announcement that Aspira received a $10 million federal award intended to fund the completion of our in-development multi-marketer blood test to aid in the detection of endometriosis. This test which has been rebranded ENDOinform, will rely on a powerful AI-enabled algorithm that combines protein and microRNA biomarkers and patient data and leverages technology like that embedded in our ovarian cancer risk assessment blood test. In addition to funding, the award provides for access to a team of world class subject matter experts and advisors to support the successful completion and commercial launch of the test before the end of the 2-year contract term. This is an incredible achievement and validation of Aspira's capabilities. We have worked tirelessly to advance endometriosis diagnostic research for many years but our strong scientific foundation alone would not have resulted in our success. We believe the intense focus on operational excellence and the rebuilding of our commercial capabilities over the past year were also instrumental in our selection from among the more than 1,700 submissions. Today, I'm happy to share that the team has made substantial progress against the first milestone and has submitted the deliverables and other required information related to its completion to ARPA-H, the agency responsible for overseeing the award. While it is difficult to predict the time it will take for the materials to be reviewed and payment to be processed, we expect to receive the first payment of $2 million before the end of the year. The R&D team continues its progress towards the second milestone which we intend to complete in the first quarter of 2025. The announcement of the award has led to many incredible opportunities to expand our reach as a company. We hosted a press conference in our Connecticut offices with U.S. Representative Rosa Delauro and Connecticut State Representative Jillian Gilchrest and we're recognized by Senator Chris Murphy's office as the Connecticut Innovator of the Month for November, highlighting our continued commitment to innovation in women's health. We intend to leverage the attention received from the ARPA-H award to our greatest advantage and time the launch of a completely redesigned website and aggressive social media strategy with the award announcement. Now, it's my pleasure to turn the call over to Dr. Sandra Milligan, who will continue the update on product strategy. Sandy?
Sandy Milligan: Thank you, Nicole. Following up with more detail. As Nicole mentioned, we have secured a $10 million award from ARPA-H to fund the development of ENDOinform, our non-invasive multiomic diagnostic blood test for women suspected of having endometriosis. ARPA-H and Aspira are aligned on the criticality of focused investment in ENDOinform, with a goal of launching the diagnostic within the 2-year funding time frame. Along with this honor of being an award recipient, Aspira was named a spoke member of the Investor Catalyst Hub, led by the ARPA program director, VentureWell. This membership provides us with access to a vast network of nearly 600 members from key organizations across the private, public and non-profit sectors. The driving principle for the Investor Catalyst hub is to speed the transition of innovative ideas into practical, accessible and promising solutions by connecting institutions with relevant capabilities from incubators, accelerators and venture investors to clinical researchers, academic institutions and commercialization resources. As our ENDOinform project progresses, we plan to leverage our membership to gain insight, connection and collaboration to accelerate its development and commercialization. This $10 million award from ARPA-H provides crucial support to complete development and commercialization of ENDOinform. The funding milestones agreed to with ARPA-H are not time-based but rather are built on the cross-divisional activities that are required mileposts for stage-appropriate investment. We provided a detailed overview of the award and its impact on our overall product development strategy on an R&D Investor Day presentation in October. At that time, we stated that we had made a strategic decision to incorporate our prior endometriosis protein research into the development of ENDOinform and as a result, the launch of EndoCheck as a standalone endometrioma protein test has been deprioritized. We are making solid progress on the ENDOinform clinical study with nearly 500 samples collected so far and several new clinical sites added. The ARPA-H funding will accelerate the expansion of the clinical study and we are also exploring options for purchasing additional samples to meet the required numbers for launch. We remain focused on advancing both ENDOinform and OVAinform as quickly as possible, based on the scientific progress and funding allocation. Importantly, capabilities and infrastructure built through the ARPA-H support of the ENDOinform project will also support the ongoing development of OVAinform, creating efficiencies and resources across both initiatives. This funding supports the construction of our molecular laboratory which will support the ENDOinform launch and the commercialization of OVAinform. Recently, we collaborated with physicians and scientists of the Dana-Farber Cancer Institute, Brigham and Women's Hospital, Medical University of Lodz and the Harvard Medical School to publish a scientific paper in the Gynecologic Oncology journal, providing further evidence that the addition of microRNA and metadata to our existing protein assay significantly improves sensitivity and specificity for the detection of early-stage ovarian cancer. More specifically, we found that serum microRNA and protein biomarkers are complementary in estimating the risk of malignancy of an ovarian mass. An integrated model with proteins, microRNA and metadata offers the most accurate classification performance. And the addition of microRNA improves sensitivity and specificity for identification of early-stage ovarian cancer. We shared more details about our development pipeline and the next steps for ENDOinform and OVAinform during the R&D Day presentation and I encourage you to access the replay on our Investor Relations page of our website. With that, let me now turn it over to John for an update on our financials. John?
John Kallassy: Thank you, Sandy. Let me begin with the review of our third quarter 2024 financial results. OvaSuite revenue for the third quarter of 2024 was $2.3 million, a 2% increase from $2.2 million of the same period last year and a slight decrease from $2.4 million in the second quarter of 2024. The number of OvaSuite tests performed increased 4% for the third quarter of 2024 compared to 5,783 tests in the same period last year. This growth of test volume was primarily driven by OvaWatch which increased 27% year-over-year for the quarter. As Nicole discussed earlier, our growth for the quarter was negatively impacted by severe weather, especially Hurricane Helene that devastated several of our major markets in Florida, Georgia, South Carolina, North Carolina and Tennessee in September. Our average unit price was $376 for the third quarter of 2024 compared to $383 in the third quarter of 2023. The OvaWatch average unit price increased 4% to $360 for the third quarter of 2024 compared to $347 in the same period last year. OvaWatch test volume now makes up 22% of the total OvaSuite test volume for the third quarter of 2024 compared to the 18% of the total for the same period last year, contributing to a modest decrease in AUP. Our gross margins for the third quarter of 2024 improved to 60% compared to 59% for the third quarter of 2023. Research and development expenses for the quarter decreased by $90,000, or 9%, compared to the same period in 2023 as we deferred some spending while the ARPA-H award process was ongoing. We expect research and development expenses to increase over the fourth quarter of 2024 as we focus on accelerating our ENDOinform development plan in connection with the ARPA-H award. Sales and marketing expenses for the quarter increased by $441,000, or 26%, compared to the same period in 2023 due to personnel costs for additional field sales representatives and the costs associated with the launch of the new corporate website. For the 9 months ending September 30, 2024, sales and marketing expenses increased by just 2% compared to the same period in 2023. General and administrative expenses for the quarter decreased by $675,000, or 25%, compared to the same period in 2023. For the 9 months ended September 30, 2024, general and administrative expenses decreased by $1.8 million, or 19%, compared to the same period in 2023. Decreases for both periods are related to reductions in personnel costs and in professional and legal fees. Our cash used in operating activities in the third quarter of 2024 was $2.9 million, down 12% compared to cash used in operating activities of $3.3 million in the third quarter of 2023. This is the first time since the launch of our Ova1Plus test that we use less than $3 million in operating cash in a quarter. Cash and restricted cash as of September 30, 2024, was $2.1 million down from $2.9 million as of December 31, 2023. In September we entered into an at-the-market offering agreement with H.C. Wainwright targeting aggregate gross proceeds of up to $4.5 million. We reiterate our guidance for cash used in operations in 2024 to be less than $14.5 million. The company has filed for an extension to November 19, 2024, for filing its Form 10-Q for the quarter ended September 30, 2024. The extension is needed to complete the accounting for the warrants inducement transaction entered into on July 31, 2024. This is a complex accounting matter that simply requires additional time for consideration. However, I do not believe the accounting conclusion will have any impact on reported cash or any other financial information provided in our press release. I will now turn the call back over to Nicole. Nicole?
Nicole Sandford: Thank you, John. Aspira remains steadfastly focused on its mission to improve health outcomes for millions of women, while positioning ourselves for long-term success. We are proud of what we have accomplished so far this year and thank you for the continued support of our shareholders. With that, I would like to now open the call for questions. As was mentioned previously, we will be taking questions using our online platform. If you have a question, please click on the question button at the bottom of your screen. If you have joined by phone and you have a question, please e-mail it to investors@aspirawh.com.
A - Sandy Milligan: So when I reflect on our experience in applying for the ARPA-H award, it was intensely competitive. I think the reason why we were selected as a winner was because we offer a complete package from development to commercialization with a track history for our OvaSuite. So I do believe that ARPA-H for the larger awards, such as the $10 million, really wanted to see a proposed solution make it all the way to the finish line. So I do think that that is one of the critical points, not just our science, not just our development capabilities but also our commercialization capabilities that made us stand out. Okay. And just looking at the questions right now. So here is a question. Can we provide a range of estimated timelines for OVAinform and ENDOinform development to commercialization? Will it likely take the full 2 years of ARPA-H funding for ENDOinform? So we have contracted with ARPA-H for full 2 years of funding. We are driving as hard as we can and the outside date would be the full 2 years. But we are moving as quickly as we can and are optimistic that we can accelerate the development to come under that 2 years. For OVAinform, we are continuing along the development process but of course we need to allocate the capital investments for appropriate stage-gate progression. But we are still developing OVAinform at this point. Let's see. An additional question regarding ENDOinform. Any thoughts on possible partnering with a company creating endometriosis therapies in the future? And how would I describe the current overall partnership environment? This is an excellent question and it certainly is in line of the way that we envision future partnerships. Right now we're focused with the ARPA grant in moving ENDOinform across the line as a diagnostic. But as we commercialize it and gather additional data from patients, we will look to a longitudinal diagnostic, a prognostic diagnostic and a predictive diagnostic which is what you're alluding to. In order to have a predictive diagnostic wherein we can predict the response of, or monitor the response of a certain endometriosis therapy, we will be required to partner with a endometriosis innovation therapeutic company. How would I describe the current overall partnership and environment? I think it's positive. I'm hoping that with the surge of interest in women's health, that we will see additional investment by innovator drug companies in that space which will basically increase the opportunities for us. And let me just refresh real fast. Okay. Sorry. It's a new system. Okay. So I think that's all the questions that I can answer this morning. And on behalf of the entire executive team, thank you for joining us today and we will look forward to finishing the year strong. Thank you very much.
Operator: Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.
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