Sera Prognostics, Inc.

Good afternoon and welcome to the CIRA prognostics conference call to review fourth quarter and fiscal year of 2021 results. At this time, all participants are in a listen-only mode. We will be facilitating a question and answer session toward 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 Mr. Peter DiNardo of Capcom Partners for a few introductory comments.

Please go ahead, sir. Thank you, Chuck. Good afternoon, everyone. Welcome to Sarah Prognostics' fourth quarter and full year 2021 earnings conference call. At the close of the market today, Sarah Prognostics released its financial results for the quarter ended December 31, 2021. Presenting for the company today will be Greg Critchfield, Chairman, President, and CEO, and Jay Moyes, our CFO. During the call, we will review the financial results we released today, after which we will host a question and answer session. If you've not had a chance to review our quarterly earnings release, it can be found on our website at serapognostics.com. This call can be heard live via webcast at serapognostics.com, and a recording will be archived in the investor section of our website. Please note that some of the information presented today may contain projections or other forward-looking statements about events and circumstances that have not yet occurred, including plans and projections for our business, future financial results, and market trends and opportunities. These statements are based on management's current expectations, and the actual events or results may differ materially and adversely from these expectations for a variety of reasons. We refer you to the documents the company files from time to time with the Securities and Exchange Commission, specifically the company's annual report on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-K. These documents identify important risk factors that could cause the actual results to differ materially from those contained in our projections and other forward-looking statements. As a reminder, a webcast replay of this call will be available on the Investors section of our website. I will now turn the call over to Greg, Sarah Prognostics Chairman, President, and CEO. Greg?

Thank you, Peter, and good afternoon, everyone. Today, I will provide an overview of key business highlights during the quarter and our expected developments over the near term. We are pleased that CIRA completed 2021 with a number of significant accomplishments that we believe will help pave the way for substantial success in the future. These include continuing to build our commercial infrastructure, signing important third-party agreements, payer agreements, and publishing key studies that strongly support CIRA's test and treat preterm strategy. We believe that all these activities will help us to improve the health outcomes for moms and babies and thereby achieve significant healthcare cost savings for society. Commercially, at this point in time, we are in very early market development. As a market builder, we are doing something no one else has done before, bringing the first commercially available blood test to market to determine an expectant mother's individual risk of spontaneous preterm birth. Taking a broadly and rigorously validated test to market that has the potential to enhance the paradigm of pregnancy treatment is not a simple endeavor. It involves creating awareness through education of doctors, patients, and payers of the significant health and cost-saving benefits of using our tests. This process takes time and requires the careful coordination of each element of the strategy that must be put in place to effectively build the market. COVID-19 complicated this process during the first seven months of our launch. with unforeseen pandemic spikes having a profound and continued negative impact on normal healthcare delivery, physician engagement, and enrollment in clinical studies. Thankfully, we appear now to be emerging from that situation. Today, I'll focus my commentary by providing you with insights into major areas we are addressing in the execution of our plans. Our strategy and execution with payers, including an update on Anthem, our continuing efforts to generate important health and economic data, including a timeline for enrollment of our prime study with Anthem and clinical and economic data readouts, our work to address health care disparities, the efficient use of capital resources to build infrastructure and capabilities, continuing the design of the sales operations, including key sales learnings that we are leveraging to empower our team for success as we call on physician practices and a brief review of the progress on our product pipeline as we leverage our advanced proteomics and bioinformatics platform. First, a word on payer strategy. Payers require data in order to make informed decisions on coverage. As we have consistently articulated, our strategy is to publish peer-reviewed articles that demonstrate the clinical and economic benefits that occur as a result of applying preterm testing. In November of 2020, we launched the prime study within the Anthem network to generate further data that should enable Anthem and others to optimize how preterm testing is rolled out in their networks. From July 2021 until the present, four clinical and health economic studies have been published in respected journals. One of these was the rigorous health economic analysis performed by Health Corps and Anthem of the preterm strategy. which was published in September of 2021, based on Anthem's own data. As a consequence of strong clinical and economic data, we successfully entered a multi-year long-term commercialization agreement with Anthem in the first half of 2021. The commercialization agreement enables Anthem to access CIRA's testing services and for CIRA to be paid for such testing. It also specifies that Anthem will pay annual minimums for testing during the term of the agreement. We received the first minimum payment this past January. We believe this payment is one of the many elements indicative of Anthem's continued support. Payer revenues, including from Anthem and others, have been slow to develop, due in part to COVID-19, as well as some payer personnel turnover. Further, while it takes time to materialize, we have seen some payers shift their strategic focus toward disadvantaged populations in a way we believe will broaden the business opportunity for our testing. We will address our view on short-term expectations later in the call. A key positive is that the Centers for Medicare and Medicaid Services, CMS, recently set a Medicare payment rate of $750 for CSER's unique CPT proprietary laboratory analysis, PLA code, for the preterm test. We see this assigned rate as a further validation of the commercial value of the preterm test, which puts us in an excellent position for reimbursement discussions and decisions with all payers, commercial, self-insured employers, integrated health networks, and governmental Medicaid and Medicare plans. While we continue to work closely with Anthem, we've also entered into contracts with a number of self-insured employers and have recently announced a contract with Multiplan, a national large insurance network payment system with more than 700 healthcare payers and 1.2 million healthcare providers participating in its network. We see these and other executed contracts as a positive indicator for future reimbursement. We are in active discussions with a number of payers, and we will announce future key opportunities contributing to the revenue growth in the future. We see these kinds of payers as nearer-term revenue opportunities that will contribute to growth over the next few years ahead of more widespread payer adoption. I'd like to give you a bit of the timetable on clinical and economic outcomes. The PRIME study, a prospective randomized controlled trial launched within the Anthem Network is designed to to provide a template for Anthem and others to optimize how to effectively roll out serious preterm tests and treat strategy across their networks. I'm pleased to report that the prime study enrollment is accelerating as we emerge from the COVID-19 impacts we saw last year and early this year. We have now enrolled nearly 1,000 pregnancies across 14 sites around the country. The co-primary endpoints are hospital length of stay reduction and improvement of neonatal health. We believe that the prime study is on track to have 2,800 interim enrolled pregnancies in the fall of this year and for the readout of the trial to take place during 2023. We believe that publication of positive prime study results will be an accelerant for growth in 2024. In the meantime, we expect additional clinical and economic data to be made public during the first half of 2022 and continuing thereafter. We will announce the data from these efforts as soon as we are able to do so. We believe that positive results from these studies will continue to provide momentum for continued test order and revenue growth ahead of the prime study readout. A word now on health disparities. CIRA is committed to addressing the significant disparities in maternal and newborn health that exist in underserved populations, particularly among black women. This has become an important key focus for CIRA with its contracted partners. You may recall our recent appointment of Dr. Woodrow Myers as an advisor to CIRA focusing on public and political affairs. We continue to work with him and other key individuals and organizations on a multidisciplinary strategy to address health equity and disparities. We believe the preterm test has great potential to make a meaningful contribution to more proactive management of the large numbers of higher-risk pregnancies that result in poor outcomes in these underserved populations. We're pleased to see an increasing number of third parties joining with CIRA in focusing on these huge unmet medical and societal needs to work together toward greater health equity. Discussions are underway with state, national, and regional insurers to address these challenges. We look forward to being able to announce specific initiatives, not only among currently contracted payer parties working with CIRA to do so, but also how we involve additional payers in helping us to make a real difference. We believe that adoption of CIRA's cost-effective and cost-savings approach will generate significant societal benefits and will also be a source of future revenues. This points to a long-term, robust opportunity to help doctors and patients improve the outcomes of pregnancy while sera grows over time. We view these initiatives that I've just described as key elements in our deliberate, persistent, and multifaceted strategy to build the foundation for a much accelerated uptake as payers and physicians more widely adopt sera's technology, and we capture a large percentage of the enormous preterm testing market. Use of capital resources to build infrastructure and capabilities is important. Notably, there are approximately 3 million candidate pregnancies annually for the preterm test in the U.S., and we're building a solid platform that is designed to enable us to make a strong impact as more data become available, more widespread insurance coverage occurs, and physician acceptance accelerates at the provider and or professional society levels. To effectively impact those millions of pregnancies, there are a number of operational imperatives that must occur. To that end, we're utilizing our significant capital resources to accomplish the following activities. Build out electronic ordering and infrastructure. Negotiate new blood draw partnerships and or developing new blood collection techniques. Streamline the customer experience for patients, physician offices, as well as our billing processes. complete important clinical studies to reinforce and support strong sales messaging and advance preterm as a standard of care, establish contracts with strategic early adopter commercial payers, healthcare and physician networks, self-insured employers, and governmental third-party payers, and improve our lab processes that will increase efficiency and capacity while lowering costs. We've had a lot of learnings from deploying our sales reps. In 2021, we hired over two dozen sales territory managers. During 2022, we will continue to aggressively pursue early market development driven by these territory managers that we believe will produce steady near-term revenue growth as we refine our approaches and learn while we create a new paradigm for pregnancy management. Again, we are marketing the only commercially available prognostic blood test to determine the risk of spontaneous preterm birth. As such, we embark on this important journey with key learnings from the sales force hired and deployed beginning in Q3 through Q4 of 2021. This has informed our approach and allowed us to optimize our go-to-market strategy for success. We've adjusted our sales messaging based on our experience, while also improving the training, coaching, and performance measures of our existing sales team. These changes have already led to gradually increasing month-over-month and quarter-over-quarter improvements in Q1 2022 physician visits, practices converted to ordering, order volumes, and test results delivered. And we are encouraged by what we are seeing. We're using tools to identify and target innovative and early adopter physician practices. we are expanding consumer engagement that we believe will drive interest at the patient level. We plan to expand the sales force selectively in response to increased demand and payer coverage. A final word about product pipeline advancement. Beyond commercializing preterm, we're also pleased with our progress in advancing our product pipeline by leveraging our advanced bioinformatics and proteomics platform to create better predictive information for pregnant women. We recently presented our work on preeclampsia in a late-breaking poster session at an international scientific meeting. We are planning on validating a preeclampsia predictor by the end of this year with the completion of the development of the commercial predictor taking place during 2023 and launch thereafter. We continue to believe that Sarah's vision to be the pregnancy company will be realized by developing valuable information for mothers, doctors, and payers across a number of important pregnancy conditions. As new products are launched, we believe that these efforts will create additional revenue streams for Sarah. I'll now turn over the call to Jay for a review of our fourth quarter financial results and a view of our expectations through the end of this year.