Biocept, Inc.

And welcome to the BIOSEP first quarter financial results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw from the question queue, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Jody Kane. Please go ahead.

This is Jody Kane with LHA. Thank you all for participating in today's conference call. Joining me from BIOSEPT are Michael Nall, President and Chief Executive Officer, and Tim Kennedy, Chief Operating Officer and Chief Financial Officer. During this call, management will be making a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts and generally can be identified by terms such as anticipates, estimates, believes, could, expects, intends, may, plans, potential, predict, projects, should, will, would, or the negative of those terms. Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievement to be materially different from those statements, as well as performance or achievements that are implied by the forward-looking statements. In particular, there is significant uncertainty about the duration, severity, and impact of the COVID-19 pandemic. This means results could change at any time, and the contemplated impact of COVID-19 on BIOSEP's operations, financial results, and outlook is the best estimate based on information for today's discussion. For details about these risks, please see the company's SEC filings. The content of this call contains time-sensitive information that is accurate only as of today, May 12, 2021. Except as required by law, BIOSEP disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. Now I'd like to turn the call over to Michael Nall. Mike?

Thank you, Jody, and good afternoon, everyone. Today we are reporting outstanding quarterly results with revenues of $17.8 million, operating income of nearly $2.7 million, and our second consecutive quarter of profitability. These results were driven by our quality RT-PCR testing for SARS-CoV-2 as our dedicated team continued to serve our community. In turn, our strong financial performance supports the investments in our core oncology business, and more specifically, our CN-side cerebral spinal fluid assay, which we officially launched late last month. I'm also pleased to announce today an agreement with Quest Diagnostics, with whom we will collaborate to give patients access to our target selector NGS lung assay throughout the United States. As you know, Quest is the world's largest diagnostic laboratory. We expect setup to be completed in the third quarter with availability to accept orders from Quest clients to follow. This is an exceptionally exciting and transformational time at BioCept with the full commercial launch of our proprietary C-Inside assay now underway. It's no overstatement to say that C-Inside is paradigm changing for both BioCept and for patients in need of more accurate diagnostics for late stage cancers. See Inside provides physicians with a significantly improved tool to diagnose and manage patients with tumors that have metastasized to the central nervous system. Since the soft launch of this assay in early 2020, we have seen quarterly volume growth from an increasing number of early adopter physicians, with many becoming repeat customers, and this is a trend that we expect will continue. Importantly, we're already seeing that See Inside can positively impact the life expectancy and the quality of life, of patients who otherwise might be referred to hospice care. Our C-inside assay is currently validated to identify metastatic cancers in patients originating in the lung and breast, which frequently involve the central nervous system. We estimate that the U.S. market for the assay at more than $1 billion annually with approximately 200,000 patients diagnosed with metastatic cancer involving the central nervous system per year. Over time, we plan to expand our C-inside testing menu for additional tumor types and biomarkers, including melanoma, by year end. We recently highlighted the advantages of our C-inside assay and key opinion leader webinar, featuring prominent neuro-oncologists, Dr. Amir Azadi from the Barrow Neurological Institute, Dr. Nicholas Blondin from the Yale School of Medicine, and Dr. Priya Kumtaker from Northwestern University. I invite our listeners to learn more about CNSide by registering for the webinar on the biocep.com homepage. Our enthusiasm for CNSide stems from its ability to offer physicians a more timely and accurate method to diagnose the presence of metastases to the central nervous system compared with the current standard of care, which is CSF cytology. In fact, our pilot studies show that in approximately 80% of cases of patients with suspected central nervous system involvement, tumor cells were detected using C-inside, whereas CSF cytology, only about 50% of cases were detected. Unlike CSF cytology, C-inside has the added advantage of identifying actual molecular targets. Patients with metastatic cancer involving the central nervous system have the potential for significantly better survival and reduction of neurologic symptoms due to the many advances in treatment, particularly new targeted therapies. Additionally, identifying specific biomarkers can be critical in treatment selection. For example, in a case study cited by Dr. Rizzotti during the webinar, a 57-year-old woman diagnosed in 2017 with stage 4 HER2-negative metastatic breast cancer showed negative results for CNS involvement with CSF cytology. Testing with CNSide found the presence of metastases, including HER2-positive cells. Dr. Azadi was able to use this information to prescribe the treatment regimen. As of January 2021, this patient is free of symptoms. Also during the webinar, Dr. Kumtaker noted that at least one patient with HER2-negative breast cancer in her systemic disease was found to be HER2-positive after being tested with CNSI. Dr. Kumtaker was then able to modify this patient's treatments. Additionally, CNSide provides a quantitative cell count that we can use to identify early trends in patients' therapy response. This vital information can help physicians determine whether a patient remains on treatment, comes off treatment, or changes treatment. I want to share some upcoming milestones with our CNSide program. We expect to have an update on securing FDA breakthrough device designation in the third quarter. This designation provides patients and healthcare providers with timely access to novel medical devices by speeding up their development via improved clinical trial assessment and review. We also expect this designation will be valuable in our ability to partner with pharma companies that are developing oncology drugs for the treatment of central nervous system metastases, and it creates the potential for high-value reimbursement within the next year. Given the many advantages of C-INSIDE over alternative diagnostic methods, our goal is to establish C-INSIDE as the new standard of care for diagnosing and monitoring patients with metastatic cancers involving the central nervous system. We have developed a clinical pathway intended to produce publications that will influence national oncology care guidelines by 2023. We expect to begin the first part of our 4C study by the end of this year with completion in mid-2022. This study is designed to provide clinical validation for FDA breakthrough device designation. We will then conduct the second part of the 4C study to evaluate CNSide's clinical utility in order to prove key decision points that can be made based on testing results. We expect to initiate this study in the third quarter of 2022 with completion approximately one year later. We will also be involved in at least one major multi-institutional neuro-oncology pharma trial and are working to develop additional related clinical trials with other academic centers of excellence. The objective of these studies will be to establish the use of C-INSIDE in assessing patient therapy responses and for monitoring patients post-treatment. Turning to our broader oncology business, every patient diagnosed with cancer needs some level of genomic profiling to provide valuable insights in order to help guide physicians with treatment decisions. Historically, one or maybe two tissue biopsies were performed during the continuum of patient care. Now with liquid biopsies, whether using blood or cerebral spinal fluid, this testing can be performed far more frequently for monitoring purposes. It's not surprising that during the early days of COVID-19 pandemic, our oncology testing volume declined. However, we've seen a steady increase in volume beginning in the 2020 third quarter. We believe this includes an increase in our assays being used for monitoring, which sometimes have a lower price point per test. Turning now to COVID-19 testing, our BioSep team takes pride in serving our community during the pandemic by providing quality testing with quick turnaround times. Since June 2020, we have received approximately 390,000 samples for COVID testing. You may have read recently about our announced partnership with the Foundation for California Community Colleges to serve the COVID-19 testing needs of the largest college system in the U.S. This testing could help protect the safety of campus populations and reduce the spread of the virus as California community colleges return to in-person classes. We have already served some athletes in many of the system's 116 colleges, and we are excited to expand our service to the general population of some 2.1 million students, as well as teachers and staff. Regarding our expectations for COVID-19 testing going forward, we are encouraged more people are getting vaccinated as we are all ready to get back to normal. That said, many of our customers for COVID testing are assisted living and nursing homes, and these facilities still must test on a routine basis. We expect COVID-19 testing will continue to be an important component of our business and will provide meaningful revenues throughout 2021, noting our expectations could change as the year progresses. As an update with our AGEA Biotechnologies collaboration, validation is underway to distinguish new strains of the virus while providing quantitative viral load results. This new assay will likely be especially helpful for our clients for reflex testing when patients test positive for COVID-19. The information provided will assist healthcare providers to monitor viral load over time to help determine next steps with their patients. And with that, I'll now turn the call over to Tim Kennedy to review our first quarter financial results.