Science 37 Holdings, Inc.

Greetings and welcome to the Science 37 second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Stephen Halper, LifeSci Advisors. Please go ahead.

Thank you, Renan, and thank you all for participating in today's call. Joining me are David Coleman, Chief Executive Officer, and Mike Zaronek, Chief Financial Officer. Earlier today, Science 37 released financial results for the quarter ended June 30th, 2023. A copy of the press release is available on the company's website. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon our current estimates of various assumptions and involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. We encourage you to review our filings made with the Securities and Exchange Commission for discussion of these risk factors, including in the risk factor section of the company's most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today, and the company disclaims any obligation to update such statements for new information. We believe that certain non-GAAP metrics are useful in evaluating our operational performance. We use these non-GAAP measures to evaluate our ongoing operations and for internal planning and forecasting purposes. Information about non-GAAP financial measures reference including a reconciliation of those measures to the most comparable GAAP measures can be found in our SEC filings and in earnings materials available on the investor relations portion of our website at investors.science37.com. I would now like to turn the call over to David Coleman. David?

Thank you, Steve. And thank you, everyone, for joining us today for our second quarter 2023 earnings call. I'm really pleased to report that the strategies we've implemented over the past several quarters, as discussed on these calls, including fully transforming our commercial model, becoming laser focused on the Medisite value proposition, investing in patient recruitment, and quality as key differentiators, shedding expenses that don't support the metasite, and investing in near and offshore centers of excellence to improve our unit economics have all really started to pay dividends. Quarter over quarter, our RFP dollar volume is up more than 50 percent. Our gross bookings are up more than 60 percent. Our net bookings are up nearly 15 percent. Our revenue is up nearly 10%. Our gross margins are more than 13% percentage points higher. EBITDA is nearly 40% better, and our cash burn is more than 30% lower. You'll note in our press release that we released some of our backlog this quarter. Our bookings adjustment was $24.6 million. $20.8 million, or about 85% of the total, comes from COVID risk mitigation studies where we were contracted in 2020 and 2021 to supplement traditional site-based activity, and we were only compensated when sites used our services. Given the incredibly poor site adoption rates for these studies, we agreed to discontinue these contracts with our sponsors in the second quarter. While this enabled us to free up some carrying costs and, in some cases, accelerate revenue as part of our modest closeout provisions, we had very low expectations for these studies. They had little impact on our second quarter P&L and do not have a material impact on our 2023 guidance. We have about $8 million in similar COVID risk mitigation work in our backlog that we are watching very closely. We're also watching a handful of other studies in our backlog totaling about $25 million in contract value that may be amended this year, not unlike traditional clinical trial sites or CROs. The reason for these potential amendments include early endpoint detection, sponsor funding, and sponsor pipeline prioritization. None of these potential adjustments that we're watching are quality or execution related. It's important to note that we've anticipated these potential adjustments and we have risk adjusted our guidance or what we call our phase backlog with these expectations. We expect our normalized realization rate to be around the industry average of between 15 to 20% of our gross bookings in 2024 and beyond. Pulling this together from a forward looking perspective, Given our increasing RFP volume, we expect gross bookings in the second half of the year to exceed the first half, with heavier weighting in the fourth quarter given booking seasonality. In regards to forward-looking revenue, we are taking into account that gross bookings for the first half were greater than expected. RFP flow continues to accelerate. And we expect continued momentum given the recent FDA draft guidance documents regarding the acceptance of decentralized clinical trials and the need for greater participant diversity. As a result, we're raising our 2023 revenue guidance to approximately $60 million, which was the top end of our previous guided range. With our continued focus on cost management, we expect 2023 EBITDA to be a loss of approximately $35 million. which is much stronger than our previous guidance. If you recall, during our first quarter earnings release, we set the expected burn rate to be $10 million of cash in the fourth quarter of 2023. Given our first half 2023 performance and cost containment efforts to date, we're now expecting to burn less than $10 million of cash in the third quarter of 2023 and less than $15 million of cash over the second half of this year. exiting 2023 with more than $50 million on hand. We expect continued bookings and revenue growth in 2024 with a similar approach to cash management and have been consistent in our communication that we expect to exit the fourth quarter of 2024 even to a positive with ample cash on hand without having to raise additional capital. We have implemented the right strategy to achieve this objective, and we're starting to see the positive effect of these changes. With that, I'll turn the call over to Mike Zaranek, our Chief Financial Officer, to provide additional details.