Talis Biomedical Corporation

Good day, and thank you for standing by. And welcome to the TALIS Biomedical Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star 1 on your telephone. Please keep it to one question with one follow-up. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to Emily Fawcett, Senior Vice President, Corporate Communications and Investor Relations. Please go ahead.

Good afternoon, and thank you for participating in TALIS' fourth quarter and year-end conference call. Joining me today are Rob Kelly, our Chief Executive Officer, and Roger Moody, our Chief Financial Officer. Earlier today, the company released financial results and a business update for the quarter and full year ended December 31, 2021. A copy of that press release can be accessed on the investor's page of our website at talusbio.com. Before we get started, I would like to remind you that management will make remarks during this call that are forward-looking statements within the meaning of the federal securities law. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated. Additional information regarding these risks and uncertainties appears in the section entitled Forward-Looking Statement in the press release TALIS issued today. For a more complete list and description, please see the company's filings with the SEC, including the Risk Factors section of the company's 10-K filed with the SEC on March 15, 2022, and in its other filings. Except as required by law, TALIS disclaims any intention or obligation to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast, March 15, 2022. With that, I would like to turn the call over to Rob.

Thanks, Emily. Good afternoon, everyone, and thank you for joining us. It's an honor to participate in my first earnings call as CEO of Thales after assuming the role back in December. For those of you who are not familiar with my background, prior to serving as the company's chief commercial officer, I spent 25 years in various commercial and operational leadership roles at life science and diagnostic companies, including Genelite, Illumina, Siemens, and BioCyte. Given the delays Thales has been experiencing, I have spent the past three months diving into specific areas of our business to better understand the issues we are facing. I want to take this opportunity to walk you through my initial assessment with as much transparency as possible based upon the information we have today. And more importantly, I will outline the changes we are implementing immediately that we believe will set TALIS up for long-term success. Let me begin with where we stand today. Upon receiving our EUA in November, we decided to take a phased launch approach for rolling out the Talus One system with the goal of initiating a limited rollout to prospective customers beginning in the first quarter of 2022. Unfortunately, we have not yet started our phased launch of Talus One due to challenges with manufacturing at scale. Specifically, while we continue to see high performance in the Talus One platform, The yield and consistency of our current manufacturing process is not yet sufficient to support commercialization. That said, we strongly believe in the performance of the TALIS I system and are steadfast in our belief that it is a valuable and viable asset. One of the reasons we believe so strongly is our scientists continually monitor the impact of COVID-19 variants that are on the rise. Over the past several months, we have evaluated the notable variants circulating. as well as samples with broad range of viral load. In doing so, the TALIS-1 COVID-19 test system continues to perform as expected with respect to sensitivity and specificity and accurately identifies variants, including Delta and Omicron. When we spoke with you back in November, we were beginning to evaluate the performance of cartridges coming off our high-yield lines. Over these past few months, the rate of invalid or failed tests remains higher than what we believe is acceptable. With respect to instrument manufacturing, our current process is not yet optimized to produce a minimum monthly yield to support a commercial launch. At this time, it appears a delay in manufacturing ramp-up is a combination of our manufacturing process and challenges with our suppliers. We have informed the FDA of these delays and continue to plan to launch the TALIS-1 COVID-19 test system under our EUA once we can manufacture reliably at scale. Both based on the level of information we have today, we are not providing a timeline for commercial launch. Further, with the most recent guidance on EUAs, we are now preparing to pursue a 510 regulatory pathway for our second planned assay, which is a COVID flu respiratory panel. This shift will result in a longer path to market. We have not changed our objective to broaden the TALIS I test menu to address additional unmet needs at the point of care. Development of our chlamydia and gonorrhea assay continues, but this timeline is also impacted by delays in manufacturing scale-up. While we are not satisfied with the current level of uncertainty and delays, we have a plan to address these challenges and to deploy our capital in the most effective manner to position TALIS for future success. With the information that we have today and guidance from our board, we have engaged external consulting firms to advise us on assessing product design for both cartridges and instruments to manufacture at scale, evaluating our manufacturing processes and partners, and determining appropriate next steps, which could include production modifications. We believe this work will inform our path forward in bringing the TALIS I system to market and will provide critical information to develop better informed timelines for our product roadmap. While this assessment is underway, we have established a strategic plan focused on the following key areas. One, demonstrating our ability to manufacture the TALIS I instrument and cartridges at scale. Two, initiating a phased launch for TALIS I COVID-19 under our EUA. Three, concentrating assay development to prepare for 2023 clinical milestones, and four, preserving cash to carry us through 2024. To align resources with this strategic direction and extend our cash runway, we have undertaken an approximately 25% reduction in force and are implementing additional cost reduction measures. Roger will provide more detail on the impact of these actions shortly. We are also making changes to our leadership team. Doug Lew will be stepping down as Chief Operating Officer and is transitioning his manufacturing and R&D responsibilities over the next several weeks. With these changes, we focus on clear objectives, a strong financial position, and commitment to preserve capital. We believe we are on a path to deliver the long-term value and potential of the TALIS I system. Finally, I want to emphasize that our long-term goals have not changed. We are fully committed to fulfilling our mission to advance health equity and outcomes by delivering accurate infectious disease testing in the moment of need at the point of care. I'll now turn the call over to Roger to walk through our fourth quarter and year-end financials. I will then return with closing remarks.