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spk02: Good afternoon, ladies and gentlemen, and welcome to the Aspira Women's Health First Quarter 2021 Conference Call. My name is Rob, and I'll be your coordinator for the call today. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will open the call to your questions. As a reminder, this conference call is being recorded today. Leading the call today are Valerie Palmieri, President and Chief Executive Officer, Bob Beachy, Chief Financial Officer, and Kylie Zager, Chief Operating Officer. Dr. Leslie Northrup, Chief Scientific Officer, and Dr. Elena Ratner, Global Chief Medical Advisor, Clinical and Translational Medicine. After the prepared remarks, we will open the call for Q&A. Before we begin, I would like to remind everyone that statements made during this call, including the Q&A session relating to Aspera's expected future performance, future business prospects, or future events or plans, are forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. 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 the control of Aspera. 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 ISFARA's annual report with the SEC for a description of factors that could cause actual results that differ materially from those anticipated in the forward-looking statements. At this time, I would like to turn the call over to Valerie Promire, President and Chief Executive Officer. Valerie?
spk08: Good afternoon, everyone, and thank you for joining us today. This afternoon, we will review our first quarter accomplishments, financial performance, as well as provide an update on Q2 developments, including... our first Aspira Synergy executed agreement with a very large women's health network, an endo check update, a strategic study agreement with the largest healthcare provider in New York, our confirmed acceleration of our oversight product launch for Q4 2021, and lastly, a new addition to our executive team. Our end in mind is to transform women's health starting with ovarian cancer. Our initial goal is to eradicate late stage detection of ovarian cancer and ensure that all of our solutions will meet the needs of all women of all ages, race, ethnicities, and stage of disease. Our core patient goal is to develop a lifelong relationship with each patient from puberty to cure, ensuring each woman has access to the best-in-class diagnostics. We at Aspira aspire women to take control of their gynecologic health and empower providers to deliver optimal care. I would now like to update you on six recent developments in the second quarter. First, Aspira Women's Health is announcing today that it has executed an Aspira Synergy Agreement with one of the largest women's health networks whereby the over one plus testing will be performed in their laboratory with data interpretation by Aspira. The health network employs 300 plus physicians and is responsible for 500,000 patient visits per year. We are extremely pleased with this development and milestone This is a fundamental building block to changing the standard of care. Number two, I will provide an update on EndoCheck. We are in very productive communications with the FDA regarding our breakthrough request. The FDA has acknowledged that there are many compelling reasons why this type of device is needed for both the treating physicians and for patients. The FDA indicated that they are very interested in continuing to work with Aspira on EndoCheck and Aspira will be continuing our discussions with the agency on the breakthrough device designation. Number three, we are very pleased to announce we initiated a prospective clinical study for benign risk monitoring and high-risk early ovarian cancer detection with Northwell Health. This is a study with the science arm of Northwell Health, which is the Feinstein Institute for Medical Research. Northwell is the largest private healthcare provider in New York State. Today, Northwell treats over 2 million patients annually and employs over 16,000 credentialed physicians. Number four, we are reaffirming the acceleration of the target launch date of oversight to the fourth quarter of 2021. This test will initially will allow physicians to assess benign pelvic masses with much better performing technology versus CA-125. In our next revision, we will allow a mass to be monitored over time. This new test will leverage its high negative predictive value to assist in rule out, as well as its high positive predictive value to assist in risk of malignancy. The first review of this product's data will occur at the American Society of Clinical Oncology, better known as ASCO, at their 2021 meeting, which will be held virtually on June 4th. Number five, we are building a strong patient provider and payer awareness foundation. Awareness, education, and advocacy is the key to changing the standard of care. We are establishing a foundation with clinical social media influencers, participating in congressional briefings, and establishing a social media strategy with patients and clinicians. Kylie and Dr. Ratner will discuss further in their sections. And lastly, we are extremely pleased to announce we have added a diagnostics industry leader to the team to round out the breadth of experience needed to achieve our short and long-term objectives. Greg Richard joined the company as head of corporate strategy, reimbursement, and managed care. In this role, Greg will be responsible for our overall corporate strategy, enhancing our blueprint for reimbursement for the company's current products, as well as the new products and services in our robust pipeline. He will lead our overall managed care and managed market strategy as we expand into integrated healthcare systems and leverage the company's recent successes in gaining coverage for over one with New York State Medicaid and other important payers. In addition, he will also be responsible for managing the internal revenue cycle management team and will support the company's strategic business development initiatives. Greg has served in several senior executive leadership positions at Interpace Diagnostics, Quest Diagnostics, and LabCorp. Before I turn the call over to Kylie to provide a commercial update, As previewed on our fourth quarter call, our test volumes were sequentially flat in the first quarter versus fourth quarter 2020. This was due to the continued COVID restrictions and weather disruptions. I am pleased to report we are gaining traction in March, April, and May, and we see increased patient access, patients returning to the doctors, coupled with our increased commercial investment. This is promising as 24% of our territories still have less than 50% access to offices due to COVID. And with COVID reducing in the U.S., we are hopeful that things will continue to improve. If COVID continues to stay in check, we are confident our commercial momentum will continue as we continue to invest in our commercial organization, drive adoption, and prepare for a larger sales footprint for oversight commercialization in Q4 2021. In summary, we continue to work towards our overall strategic goal, which was to emerge from the pandemic stronger and we believe we have accomplished this with our stronger team, our stronger financial position, and our stronger pipeline. We are well positioned to invest, to grow, and to drive adoption, and most importantly, save lives. I would now like to turn the call over to Kylie Zager, our Chief Operating Officer. Kylie?
spk06: Thank you, Valerie. We have studied the complexities of how ovarian cancer presents through the patient journey and have mirrored our go-to-market strategy to capture that journey and intersect the patient prior to late stage diagnosis. One year ago, we had two-pronged approach with the direct sales channel and a decentralized platform channel. We are proud to announce that we added to the direct sales channel a new healthcare system sales team. They include a dedicated dual sales and integration team as the health system team that will integrate our technology into the clinical pathways across various ologies that intersect ovarian cancer patients and integrate into the complex workflow environments of these systems. With over 80% of physicians anticipated to be owned or affiliated by health systems by 2023 and our large target launch of oversight, which we expect will be actively deployed in the health system, we are confident that these strategies are critical and timely for our organization. We are actively constructing our team of healthcare industry experts who have a strong history of disrupting current standards of care and we are attracting nearly double the size of the commercial and operations organizations by the end of Q4 2021. Our integration team comprised of highly experienced healthcare executives with informatics expertise. This team is working to drive integration within the health system and create seamless workflows for adoption of our products. We are working with a number of institutions and believe this approach will enable the Aspira suite of products to gain adoption and become the standard of care. Regarding our decentralized platform channel called our Synergy Salesforce, we are happy to announce Aspira Women's Health is announcing today that it has executed an Aspira Synergy agreement with one of the largest women's health networks, whereby the OVA1 plus testing will be performed in their laboratory with data interpretation by Aspira. The health network employs 300 plus physicians and is responsible for 500,000 patient visits per year. We are extremely pleased with this development and milestone. This is a fundamental building block to change the standard of care. We expect Synergy to also expand access for all Aspira commercialized products, and we will expect that the future pipeline innovations will be blended into the Synergy platform. We are now poised for growth to allow standard of care adoption of both OVA1 Plus and Genetics as a solution offering. Finally, the glue to our strategy is commercial activation of the market and awareness of the greater population. We believe in increasing awareness as a critical factor to driving adoption. We have expanded our digital marketing presence and have acutely invested in commercial activation over the last two quarters. In addition, we were present at ACOG and SDO held virtually in 2021 and will be presenting our oversight abstract at ASCO in June. The number of over one plus tests performed increased 3% to 3,775 over one plus tests during the three months ended March 31st, 2021, compared to 3,654 over one plus tests for the same period in 2020, which was slightly down on a sequential basis. COVID-19 restrictions have continued in the second quarter. We are gaining traction quarter to date. April volumes were a record month for the company. Also, we just received New York State Medicaid coverage as of April 1st, 2021. So we are just starting to gain traction in this market. In terms of ordering physicians for the first quarter, 2,595 physicians ordered over one plus. The number of ordering physicians was essentially flat from the fourth quarter levels. As we continue to focus on larger health systems to generate adoption and lay the groundwork for new product introduction, I would like to note that we are receiving orders from 65% of healthcare institutions listed in the top 20 of US News and World Report Best Hospital Honor Rule. This supports the foundational use of OVA1 Plus and demonstrates the potential to drive standard of care adoption as we expand our health system commercial team. I would now like to hand the call over to Dr. Alaina Ratner to provide an update on our momentum to becoming the standard care and driving the awareness of our technology and its impacts on early stage risk detection of ovarian cancer, particularly in racial and ethnic diverse populations.
spk03: Thank you, Kylie. As a physician, education, awareness, and adoption is key to changing the standard of care. We have had several milestones in this quarter. The first was a congregational briefing. In the first quarter of 2021, we presented at a congregational briefing advancing health outcomes for women and minorities. We delivered a call to action for over one as a stand of care for ovarian cancer risk assessment for Caucasian and non-Caucasian women, and the need for funding large race and ethnicity based trials. We will be focusing on a continued basis for this type of policy change as we believe the time is now to gain the momentum with Congress. More on this to come. The second milestone I'm pleased to report is a very successful Zoom dinner presentation that was done in collaboration with Dr. Sandra Brooks, who serves on Aspire's board of directors. We conducted an over one plus education session, which was attended by over 130 non-Aspire participants. The audience was mainly OB-GYN providers from across the country. We believe that 130 participants was indicative of a very strong turnout for this type of event. The title of the presentation was Utilization of OVAL1 Plus to Optimize Ovarian Cancer Risk Assessment, including Defining the Need for a Personalized Approach to Pelvic Method Diagnosis. Key topics discussed were the need for early detection of ovarian cancer, other options of assessing risk, review for how genetic testing for hereditary risk is impactful, and the value of OVAL1 Plus for optimizing ovarian cancer risk assessments. We also had a focused discussion on racial and ethnic differences in the performance of over one plus and C125. We will be continuing this method of education and communication to a larger degree as well. The third milestone is the addition of a new team member to our medical team to support our awareness movement. Dr. Shiva Grapani, a practicing OB-GYN and ovarian cancer survivor, has joined the team and will serve as head of global clinical implementation. Dr. Ghaffani is a key social media influencer and will assist in driving ovarian cancer and inspire women's health awareness overall. Regarding clinical studies, under my leadership, we are continuing to recruit more academic sites to support both the clinical validity and utility of our tests. We have also launched our physician-initiated research program for healthcare systems. This program provides nominal funding for projects that help fuel clinical implementation and adoption of ovarian cancer risk assessment tools and allows us to continue to expand our data repository. I'm incredibly excited about the direction our clinical studies have taken, and we are continuously building our study programs to strengthen the data around our products. And lastly, I would like to report a major update on our Philippines study. We're excited to announce we have closed our Philippines study and reached 379 enrolled patients. We will be continuing to serially monitor the patients after five years to support our oversight longitudinal studies. We're actively working on analyzing the data and we look forward to publishing this data soon. I would now like to hand over the call to Dr. Northrup to provide an update on our innovation pipeline.
spk07: Thank you, Dr. Ratner. I would like to provide an update on our upcoming products and enhancements. Let me reiterate my optimism for EndoCheck. As Valerie mentioned, we are having a productive dialogue with the FDA. While we cannot disclose our sensitivity and specificity of the test performance while FDA discussions are ongoing, we are pleased with our data relative to the current standard of care laparoscopic surgical assessment. We are working on updating our submission to the FDA based on their guidance to meet breakthrough designation showing endometriosis is an irreversible debilitating disease. We have received extensive feedback from the clinical community. There is an unmet need for a non-surgical blood-based test to confirm the cause of chronic pelvic pain as endometriosis early and help better guide clinical management. Endometriosis is predominantly treated based on symptoms alone and immediate prescription of oral contraceptives, where surgical diagnosis is becoming rarer, thereby increasing women's anxiety by delaying a confirmation that their chronic pain is in fact endometriosis. EndoCheck will address the patient population of women who are experiencing systemic, moderate to severe pelvic pain and provide confirmation that their symptoms are indicative of endometriosis. The goal of this test is the same for all tests that we are developing at Aspire Women's Health on pelvic disease detection, is to allow for early diagnosis and direct appropriate medical management that potentially reduces the progression of this disease. I would like to now provide updates on oversight. We continue to be on track for our accelerated launch of oversight. The analytical and initial clinical validation of oversight performance metrics will be presented in an ASCO poster presentation in June 4th, 2021. The accepted abstract presents data demonstrating the initial clinical and analytical validation of Aspirus Oviscite blood-based biomarker test for ovarian malignancy risk assessment in all women within NexilMAS. Samples collected from real-world evidence studies with a low prevalence of cancer, less than 5%, were used to validate the algorithm. This third generation technology, which is a laboratory developed test, will provide clinicians with a high negative predictive value to provide confidence in planning a suspected benign mass monitoring plan, as well as a greater positive predictive value to increase confidence in risk of malignancy and next steps on clinical management. This product is expected to be available in Q4 of 2021. In addition, Peer-reviewed publications on both the analytical and clinical validation findings are scheduled for Q3 of 2021. To further support longitudinal studies for the use of oversight as a serial monitoring test for high-risk women predisposed for hereditary ovarian cancer, we recently entered a long-term research collaboration with the Feinstein Institute for Medical Research, the science arm of Northwell Health. This collaboration is critical in targeting a rich population of women with known genetic variances associated with ovarian cancer and allows validity data for the development of OVA-Inherit. At the same time, this collaboration supports a smaller physician-initiated experiment on the use of our current OVA-1 plus as ability to screen malignancy risk in women undergoing prophylactic surgery who are also positive for a pathogenic variant in genes associated with a greater than general population risk in developing ovarian cancer. This partnership is now our third academic institution to participate in our clinical studies, in addition to Einstein in Philadelphia and Wayne State University and National Cancer Institute Center. Our clinical studies are gaining traction now that we are coming out of the pandemic, as one of our sites, Arizona OB-GYN Associates, was able to recruit greater than 100 patients in less than three months. By bringing on larger academic institutions and clinical practices, we can collect a comprehensive cohort of women across all races and ethnicities to recruit for our clinical studies and continuously optimize our product development pipeline. We continue to develop data metrics for these larger academic institutions through our clinical studies. as well already established technologies validated for the detection of ovarian cancer. Mining our high sensitivity performance as reported with oversight and high specificity with Harvard Dana-Farber Cancer Institute's microRNA technology provides a multi-omics approach that can help eradicate late stage ovarian cancer. Multi-omics technology will allow us the opportunity to develop the diagnostic and eventually screening technology that we desperately need to increase a woman's survival rate when faced with an earlier diagnosis ovarian cancer. In addition, in March of 2021, the results of an Oval 1 Plus study were presented as a poster at the Society of Gynecologic Oncology's 2021 Annual Meeting on Women's Cancer, SGO, meeting. The objective of the study was to determine whether using OVARA to perform reflux testing on test results with a high OVA1 score can improve specificity in detection of malignancy in women with an anexal masses, a testing process we've referred to as OVA1 plus test. These results indicate that the OVA1 plus test did improve specificity in detection of ovarian cancers. With all the products in the pipeline, you will begin to see we are building a lifetime relationship with the patients. This is our OVA 360 approach in providing a circular loop of products to better women's health. We are developing products that can start as early as menses, endo check, and into prenatal planning, genetics carrier testing, allow early detection risk of hereditary cancer, genetics hereditary cancer testing, until later in life risk of sporadic ovarian cancer detection with Oval One Plus and our new product, OvaSight, and look to the future in developing residual risk assessments when negative following the coupling of Oval1 Plus with genetic testing, as well as reoccurrence monitoring and eventually therapeutic clinical diagnostic testing. Our scientific team is actively developing these concepts based off our clinical studies to ensure we are always optimizing our current products and validating future products that help manage women's health and wellness. I will now turn it over to Bob for an update on our financials. Bob? Thank you, Dr. Northrup.
spk09: Product revenue was $1,416,000 for the three months ended March 31st, 2021, compared to $1,185,000 for the same period in 2020, an increase of 19%. The number of over one plus tests performed increased 3% during the three months ended March 31st, 2021, compared to 3,654 over one plus tests for the same period in 2020. The test volume was also down slightly on a sequential basis as we experienced disruptions from the February storms. The revenue per over one plus tests performed increased to approximately $375 compared to $325 for the same period in 2020, an increase of 16% and a 3% increase compared to the fourth quarter of 2020 price of $364. This increase was primarily driven by an increase in payments by contracted payers. Gross margin on over one products was 54% in the first quarter compared to 50% in the fourth quarter and 44% in the first quarter of 2020. Our participation in the Spirogenetics testing, clearly in the early innings, is driven by our conviction that the use of genetics testing is a critical factor in the early risk assessment of ovarian cancer. Consequently, a significant portion of our effort is in obtaining research samples which we do not include in reported accessions or as revenue. Our revenue for genetics in the first quarter was $80,000 representing volume of 175 units with an average unit price of $456. This represents a significant position percentage growth on a year-on-year and sequential basis, but off a very low base. Significantly, we generated 195 research samples in the first quarter. Total operating expenses comprised of R&D, sales and marketing, and administrative costs were $6,488,000 in the first quarter compared to $6,305,000 in the fourth quarter. The increase was driven by increases in R&D expenditures and investments in personnel in the sales and marketing area, slightly offset by lower administrative expenses. We ended the first quarter with $59.4 million in cash. Cash used in operations in the first quarter of 2021 was $5.2 million. Cash utilization in the fourth quarter of 2020 was $4.2 million. The increase was driven primarily by the timing of 2020 bonus payouts, as well as new hires and consultants, marketing and promotional activities, as well as R&D spending focused on EndoCheck. Our February secondary offering closed on February 8, 2021, at a price of $7.50 a share and resulted in net proceeds to the company of $47.7 million, after deducting underwriting discounts and offering expenses. I'll now turn the call back over to Valerie.
spk08: Thank you, Bob. Before we open up the call for Q&A, let me restate our optimism for building the company for sustainable growth for the near term and the long term. In parallel, we are executing quickly on our larger mission to serve the 20 million women in the U.S., starting with ovarian cancer risk assessment, pelvic mass monitoring, and eventually tackling the largest disease, endometriosis. Keep in mind our hereditary ovarian cancer monitoring test, Ovinherit, is incremental to this market and this product will be for women with and without a mask. Ovarian cancer accounts for more deaths than any other cancer of the female reproductive system and is the only gender specific cancer with greater than a 50% mortality rate. Our work and products are at the forefront of changing the standards of care and detection of ovarian malignancies. We believe we are helping close the gap in detection, and more importantly, survival for women. In the near term, we believe Oval One Plus, coupled with our racial and ethnicity differentiation and genetics, will become the standard of care for personalized pelvic mass risk assessment for ovarian cancer. For the longer term, we are also moving forward on our planned launch of our oversight product for benign mass management. endo-check for endometriosis, and lastly, over-inherit for high-risk genetic predisposition monitoring. Our end in mind is the incorporation of proteins, genes, and other modalities to detect gynecologic disease which cannot be detected via traditional biopsy. In time, our goal is to become the liquid biopsy standard for these diseases, inclusive of all ages, stages, and most of all, all ethnicities. With our enhanced team, strengthened financial position, and a robust portfolio, we could not be more confident across the business. It is now time that all women of every race and ethnicity receive the best possible care, and we are proud and excited to make that happen. We are now happy to open up the call for Q&A and answer any of your questions. Operator?
spk02: Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question today, please press star 1 from your telephone keypad. and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Brian Weinstein with William Blair. Please proceed with your question.
spk05: Hi. Good afternoon. This is Andrew. I'm for Brian. Thanks for taking the question. Valerie, maybe you can start sort of where you ended your script sort of around sort of all the pieces that you have in place here right now. You've got sort of the building momentum in the core business. You've got the team sort of now set in place and some nice new hires there. You've got the capital now with the raise and sort of you've got the pipeline behind all of this sort of encompassing all of it. So as we think about all those building blocks here, Should we be thinking that sort of 2022 and exiting 2021 is sort of when all of this starts coming together in terms of revenue growth, or is it more sort of back half of 2022? No.
spk08: So, Andrew, thanks for the question. And I'll answer it in a couple of different parts. We started this new vertical in the hospital systems in terms of hiring the leader in Q4 of 2020. And we have put the team in place. Really, our Q1, I want to say, flat growth was driven by COVID. So we now have a team in place in the hospitals. We are wrapping up the team in Q2. And we will see, I believe, momentum in the back half of the year. Keep in mind, prior to COVID, we had 20 people in the field. We now are going to take that closer to 40 people in the field by the beginning of 2022. And this will line up with our oversight launch. The oversight launch in Q4, we really want the entire team locked and loaded and ready to go for oversight.
spk05: Perfect. That's helpful. Okay. Maybe to pivot here to the Aspera Synergy Agreement announced today, can you just give us a little bit more detail around that? Is this something that's going to have sort of predefined volume and revenue associated, or how should we be thinking about contribution here? And then second on that, it sounds like, you know, that this is going to be a part of the core strategy. So, how should we be thinking about the funnel of additional agreements beyond this?
spk08: Okay. So, in terms of – let me answer that in a couple of different pieces. In terms of the core strategy, this is something we've been working on, honestly, for about two years. And COVID caused a gap in the strategy as these large supergroups were distracted, right? Their P&Ls were upside down. Now that they're right-siding themselves, they still have gaps. So Synergy actually brings revenue back. to the table for them immediately. And this is a customer that we have been having discussions with them, as I said, for a few years now, and now we're ready to go. So what is that going to mean in terms of volume? Well, since they are looking at their P&Ls being upside down, they're incentivized, right, to bring revenue in those businesses prospectively. So I do believe that there's a huge wind in our sails for them to convert from CA-125 to OVA. Keep in mind, this is business that we did not have. in terms of we had, I would say, spotty customers that were sending within the practice, but in terms of converting to all 300-plus physicians, they were primarily using COIN 25. So I do think it's going to, when the conversion happens, there is a couple of what I call pre-conversion checks and balances that happen, but we will start seeing volume from this particular partner as early as Q3, and then I see it as it's probably going to take us a couple of months to get it up to full tilt, but because there's an opportunity to really, that we've got to get the odd customers converted, but there are, part of that conversion process, right, in terms of the care pathway, in terms of the notification process, the communication process within this healthcare network. So this is something that we firmly believe in. We firmly believe on empowering the doctors locally at point of care. And our win in this is the access to the de-identified data as well as the margins on this because it becomes a software subscription service.
spk05: Great. A lot of wins associated with that. And then sort of last one for me, really on the pipeline here. First, just a housekeeping one on endocheck. Anything that you can really tell us around sort of the timeline, and we'll get final decision on the fast track there. And then as it relates to oversight and the serial monitoring product, can you maybe just be a little bit more specific on how you're viewing a successful trial readout for that, and what are some of the key metrics that we should be focused on in order to bring a product like that to market. Thanks for the question.
spk08: No problem. So let me answer that in two parts as well. So with EndoCheck, I would say is with a breakthrough device, the reason it's breakthrough is because there is no predicate, right? So these are discussions with the FDA where it is really a back and forth on what is this device? How does it make a difference? How does it make a difference in terms of a debilitating disease? So I would say that our initial discussions have gone well, and it's a working process. But we're very, as Leslie pointed out and I pointed out, we're very optimistic. They've acknowledged the compelling reasons why there's a need. I think there's some education on endometriosis. People don't initially think of it as debilitating, but when you show them the compelling data, it really makes people pause. So right now we're in a mode of them really giving us feedback. And I would say that in terms of timeline, My sense is we will have feedback within, I don't want to say it's going to be this year because I can't put a timeline on the FDA, but I think this year we will have feedback from them and hopefully it's for the next earnings release. And then part two of your question on oversight. So oversight, there's two trials. We have our one-time use trial, which that's the product that's launching Q4 of 2021. And then we have the monitoring trial. So the one-time use trial will be, we will have that analysis completed and that will be launched in Q4 of 2021. If a doctor elects to use this for multiple uses, We have not studied longitudinally this technology. That actual test, the Rev 2 of this test, will be completed by Q2 of 2022, and then we will be launching the monitoring aspects of this in the back half of 2022. So I hope that gives you enough color to answer your questions.
spk05: That's great. Thanks for taking it.
spk08: My pleasure.
spk02: Thank you. Our next question is coming from the line of Kyle Mixon with Cantor Fitzgerald. Please receive your question.
spk04: Thanks. Hi, guys. Thanks for taking the questions. Congrats on a nice quarter. So I wanted to start with the commercial expansion. Sure. So last quarter, you talked about 38% increase in the sales force, I guess, or like the investment, I believe, is going to start in the second quarter. So is that still the plan? And then if you could also just tell me like how large the sales force is right now and how... How many of those reps are kind of focused on just the health system, like part of that strategy that you kind of implemented more recently? And then how large do you want the rep count to get to towards the end of the year as you exit 21? Thanks.
spk08: So, Kyle, I'm going to start, and then I'm going to give the ball to Kylie. So as you know, we started with 20 reps and we kind of held tight through COVID. Now that we see things truly opening up, although 24% of our business still has less than 50% access, we do see weekly increases in volume. Can't go into details on Q2, but all I can tell you is that we're seeing just weekly records breaking. And it's a function of really three pillars. One is access, in terms of we are getting access. Number two, patients are going to doctors. And then number three, we have this new hospital vertical. So we'll go into the details in terms of where we started and where we're going to be by the end of the year, but we're pretty confident in terms of the momentum we're seeing in Q2 and where we're going to be starting Q3. So I'll toss the ball to Kylie.
spk06: Hi, Kyle. Nice to speak with you. So I can give you some actuals on the actual statistics of folks that we have. So inside the core sales organization, which is strictly focused on the physician practices right now, we have 16 sales representatives across North America, and we are moving to 28. In the Health Systems Organization, which is comprised of our healthcare executives with an informatics expertise, we currently have three. By the end of next week, we will have five. And we are rapidly moving to 14 with the candidates in the funnel to be able to move to that number. For our Synergy Specialty Salesforce, we currently have two individuals and we are moving to five. We have most of those candidates also identified. And then we have our integration team, which sits right next to the hospital vertical. And we currently have one head of state in place and we are moving to five folks to include a few HL7 engineers, a system engineer, and a technical consultant to assist the health system team in properly integrating.
spk04: All right. Wow. That was great detail. Thank you, Kylie. And Valerie, thanks so much. And just switching gears to the new study and the partnerships announced recently, I just wanted to confirm that Dana-Farber Brigham Women's Partnership and the Northwell study are just, you know, are they related directly or are they like kind of complementary? And I'm just trying to understand if you're trying to have a few shots on goal here or if all of these partnerships are just kind of working towards the same goal. with Ovinherit. Thanks.
spk08: Yes. So, Kyle, really good questions, very intuitive. And I'll start, and I'll let Dr. Leslie Northrup also give you some additional context. So, Ovinherit is a combination of proteins, which the basis of that is the oversight protein panel, seven proteins. plus age. And we are adding to it with the Harvard team a microRNA panel that our goal is to get to a 95-95 sensitivity and specificity. So with us getting access to additional specimens, Harvard also has a bank of genetically predisposed patients. We actually want to start a prospective study with an enriched population. As you can imagine, in Long Island, due to the Ashkenazi Jewish population, it's a very enriched population. So this is a prospective study, basically looking at the over-inherit product. The over-inherit product could include our proteins. It could include the Harvard samples. It also might include, you know, in the future, exosomes and other analytes as we're doing further research with Baylor as well. Leslie, I'd also like to give you the floor if there's any other color you'd like to give to Kyle.
spk07: Yes, thank you, Valerie, and it's nice to speak with you, Kyle. So we're really trying to ensure that we have these really comprehensive clinical studies going on across the country, to Valerie's point, to make sure that we're recruiting patients across multiple cohorts that meet, you know, our diagnostic test development for ovarian cancer. And the beauty of the relationship with Northwell is to what Valerie alluded to, is that we can really target this enriched population to, which is our over-inherit population, right, high-risk women who are germline carriers, and then validate the tests that we develop with Harvard on these prospectively collected samples. But at the same time, you know, we're also collecting additional biological targets to be able to develop future products where we're also looking at, you know, cell tumor DNA detection, as well as other drivers of ovarian cancer, because we really want to, for the future, we really want to start looking at, as I mentioned, potentially reoccurrence monitoring as well as companion diagnostics and therapeutic, you know, therapeutic test development. And so in order to do that, we really need to get these large clinical studies and a large set of samples to be able to clinically validate our tests after we analytically validate them in the lab.
spk04: Okay. Thanks, Dr. Northrup and Valerie. That was perfect. And I actually want to stick on the subject, like the pipeline, a little bit. So this over-inherit test is going to use a multi-omics approach, it sounds like. So are you still – I know it's early still, obviously, but would you still use the COBOS system to run that test? And then also, I'd love it if you could kind of dive a bit deeper into the residual risk assessment, because obviously there's a lot of MRD tests out there or kind of come to market. And are you thinking about it kind of the same way And it could be interesting in ovarian cancer, right? So just high-level thoughts would be awesome to hear. Thank you.
spk08: Thank you, Kyle. So I'll start and let Leslie also fill in. And also, Dr. Lena Ratner is on the line, too. She may also like to comment. So from COBOT's perspective, yes. So we're starting with the key with us is that we're using FDA-cleared kits. And the combination of looking at the drivers of the disease and pulling all those proteins together on the protein side, of course, the microRNA technology is not FDA-clared. It's on a, you know, it will be an LDT platform. So, but we are going to continue to use the COBOS right now. But keep in mind, the analytics that we use, we could actually put on an Abbott system, a Siemens system. So we're not wed to Roche, and we've intentionally done that. We really are ambidextrous. So the opportunity is, you know, let's just say way down the road is how can we put this on a platform as this goes global and it really, you know, then we make a uniform platform. But right now we're staying ambidextrous with the COBAs. I'll let Leslie comment on some other technology as well.
spk07: Yes, thank you, Valerie. So Since we already have the system up and validated on our proteins, as Valerie alluded to, as well as that these are FDA-validated assays, we can easily implement this technology really quickly. But we are looking to bring in a more simplified, higher-throughput system where you can actually run the proteins and the microRNA on the same system and use the same sample. So what this allows us to do is we can really put in low-throughput amounts of blood and and be able to quantify both proteins and microRNA on the exact same platform at a very low cog. And this would give us a more high-throughput operation. So that's also something that we're developing on the back end as well, is to make sure that we can scale appropriately using this more high-throughput system. And then as far as the residual risk question, this is actually a really fascinating area that we're focused on, um, you know, as a scientific and clinical team. And that, I think one of the areas that you'd be familiar with is a myriad has their, my risk-based tests for breast cancer. Um, and so we're looking to utilize, you know, polygenic risk scores assessment and the same approach for ovarian cancer. And now that Kylie and her sales team is out there, um, selling, uh, coupled over one plus with, with our genetics, our germline testing, we're going to have an enriched cohort of samples from our commercial testing. We actually have three sites. that are actually doing what's called a clinical implementation study where we can get the data from these patients. And then what we can do is if you were present with a mask and you're over one plus with a low risk and you also were negative for a germline variant, we could then run a reflex test on the patient and see what the residual risk would be. If it's anything greater, then, you know, the general population for these enriched SNPs that are known to be associated from a polygenic risk score assessment for ovarian cancer.
spk04: Wow. Okay. That's really exciting. Thanks a lot for all the detail. So I guess I'll leave it there for my questions, but thanks so much for taking them, and have a good night.
spk08: You too, Kyle. Thank you.
spk02: Our next question is from the line of Sandy Draper with Truist Securities. Please receive three questions.
spk01: Thank you very much. A lot of the science and product questions have been asked. So I'm not sure if these are more for Bob or maybe Valerie if you want to chime in. So mine are going to be a little bit more financial oriented right now. First, can you just remind me with the health network, you mentioned it's a more of a recurring service type of model. Is that a fixed amount where you're just going to get paid Does it scale up with volumes? Just trying to get some sense of how to think about the revenue impact of that. And then, you know, is it seasonal? Is it like testing? Just trying to think about, or is it truly a recurring license model where they just pay you X amount of dollars a month?
spk09: No, Sandy, this is Bob, and thank you for the question. It is volume-driven. It is a per-click model. business model. So, uh, there would be no more seasonality. I think the only issue we're looking at is how quickly we can ramp up, uh, as there's IT implementation things to be put in place. So the way to think about it though, is that, you know, it's, it's basically a per collect license fee. Uh, we do have costs to deliver, but it's not really variable in the sense of the, the client will source their own in coordination with us in terms of, uh, appropriately, you know, making sure it's QA in terms of lots and things of that nature, working with the supplier. But they'll source their own reagents as well as the blood test. So there won't be logistical costs when they do it in their facility. There will be a transition period in terms of send outs. We have to work out, you know, reimbursement and coordinate with them as well. But they will be billing the tests and we will get a license fee per click.
spk01: Great. And so is it, I would assume then that that should come at a notably higher margin to you than what, certainly what you're seeing right now just on standard test volume. That's clear. Yes. Yeah. Okay. Great. Second question on margins. You talked about, Bob, I think you said 54% gross margins on the OVA product, 50% last quarter, 44%. Should we think about that? Well, one, just the volumes were flattish, are actually down slightly, but your margins went up. So maybe some color on what drove that. But should we think of that cadence? And then is the difference between that 54% this quarter and the 40% reported gross margin, is that really on the genetics, or is that something else that's going in the cost of goods?
spk09: That is definitely the genetics, which is the blended number. We like to keep an eye on the specific matter in terms of OVA margins. I think the way you should think about margins as well is clearly we are not at scale. I mean, we've got plenty of capacity and our marginal cost in terms of labor is relatively small. You know, our co-boss could handle, you know, multiples of the current volume we're doing right now. So our variable cost clearly depends on our blood draw arrangement. And there's some degree of variability on that. but reagent efficiency gets better. So we anticipate our margins as our volumes ramp second half of the year and into next year going up considerably. Clearly the year on year margin uplift was very much volume driven. And then while we had flat margins, there's probably just some noise in there relative to last year. As we transitioned, I think we try and be as true as we can in terms of segregating costs for genetics and the over portfolio. But it was really just more efficiency. It was a relatively small, smooth quarter. So there was no one-off item that gave rise to it in the prior quarter.
spk01: Got it. OK. That's helpful. And then my final question. Can you just remind me on oversight, which I know that the target wants the end of this end of this year, fourth quarter of this year, where exactly are in terms of reimbursement, how we should be thinking about reimbursement and, you know, and just getting getting paid for the volume and what you think the longer term reimbursement levels are going to be for that product. Thanks.
spk09: Valerie, you want to handle that one?
spk08: I will. I will. Thank you for the question, Sandy. So let me kind of walk through it. So oversight will be a seven-test analyte-based algorithm. So there's seven tests. There's seven components of it. Keep in mind, if you look at the backbone of Oval-1 and Overa, Overa was actually created from a crosswalk of Oval-1. Oval-1 was created from a crosswalk to the APCO four score test, which is for prostate cancer. So this test will be crosswalked back to Overa with the seven proteins. What's the timing on that? So that's getting an AMA code, which is now called a PLA code, and going through the process. We will probably be launching with an unspecified code, which, you know, again, through this, I call making the test available prior to the monitoring test being available. But then we're working through with the AMA to get to the PLA code. But it takes us, you know, launching the test, getting the clinical utility, getting the publications in place. But the plan would be a crosswalk back to Avera. And, you know, you will see, of course, pricing appreciate over time.
spk01: Okay, great. That's really helpful, and congrats, and you guys are staying really busy. A lot going on over there, so good luck with everything.
spk08: Thank you, Sandy.
spk02: Thank you. At this time, I'll turn the floor back to Valerie Promary for closing remarks.
spk08: Thank you, Rob. As we see progress in COVID vaccination rates and believe the restrictions will subside, we are focusing on doing the right things to drive sustainability and growth. With our commercial footprint, our strength and balance sheet, a guideline endorsed and differentiated test, plus a differentiated portfolio of tests within the same call point, and now 54% of the lives covered in the U.S., we believe we are in the position to support continued growth and profitability. Our end goal is to serve a large global pelvic mass population and overall women's health market with a platform coupled with proprietary science and data tools, which will drive better health and well-being to each and every patient we serve. Thank you for joining us today, and we appreciate your support and interest in Aspire Women's Health.
spk02: This concludes today's conference. You may disconnect your lines at this time. Thank you for
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