StageZero Life Sciences Ltd.

Greetings. Welcome to the Stage Zero Life Sciences Third Quarter Financials Call. At this time, all participants are in a listen-only mode. A 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. Please note this conference is being recorded. I will now turn the conference over to your host, Rebecca Greco. You may begin.

Thank you, Holly. Good morning, everyone, and thank you for joining the Stage Zero third quarter 2023 earnings conference call. Joining me today is Stage Zero Chairman and CEO James Howard Tripp. Please note that management's discussion today will contain forward-looking statements about anticipated results and future prospects. Forward-looking statements involve a number of risks and uncertainties, and Stage Zero's results may differ materially from those discussed today. Investors should consult the company's ongoing quarterly filings and annual reports for additional information on risks and uncertainties relating to those forward-looking statements. Investors are cautioned not to rely on these forward-looking statements. The company disclaims any obligation to update these forward-looking statements except as required by law. On today's call, management may refer to non-GAAP-adjusted IPTA. This metric excludes certain items discussed in our press release under the heading Discussion of Non-GAAP Financial Measures and any other items that management believes should be excluded when reviewing continuing operations. The reconciliation of Stage Zero's non-GAAP measures to be comparable GAAP measures are available in the financial tables of our financial statements filed on CDAR. With that, I'd like to turn the call over to James Howard Tripp, Stage Zero's Chief Executive Officer. James, please go ahead.

Thank you, Rebecca, and good morning, everyone. Thank you very much for joining us. Also just want to mention for those of you that are not sort of totally aware of it, we do a lot of weekly updates. They're found on the social media sites. We particularly do a series of very short video interviews. And so a very good way to stay current with what we're doing literally week after week is to make sure that you have these feeds and you can follow along. So we'll start with the problem and I know a number of you have seen this introduction, but we also have a very significant number of new investors and it behooves us to actually lay the problem out for everyone and then what our solution is. So I think, I think the key thing with a lot of this is that, you know, most cancers are found late. We know that if we look at the North American situation alone, It's nearly 2 million patients or 2 million people will be diagnosed with cancer this year alone. We know that COVID, the advent of that, the sort of downturn in testing, the inaccessibility of physicians and clinics significantly impacted cancer testing, cancer treatment, and we're paying for that now. We're seeing an absolute sort of tidal wave of cancer cases come through. We're also seeing cancer now appear in much, much younger people. So everyone's trying to sort this out. We're having some success by finding cancer early and treating it early in terms of getting better results. Some of the cancers, particularly in the older age population, are actually beginning to decline, but that's been counterbalanced by a surge in new cancer cases in much younger people. So we're all trying to sort it out. Key with all of this is obviously screening. If you move to what is our key market segment in this, It's where you have catastrophic healthcare claims. That really plays out in two ways. One, a major focus for us is self-funded employers. We will talk a lot about this as we move through it. But in addition to that, a very strong focus has to be the patient themselves. So the direct-to-consumer aspect. We'll talk a little bit about the sort of evolving area of patients taking more control of their health care because they're in high-deductible plans. They're actually choosing where to put their dollars. And so making sure that we can cater to this is key. If you look at the way we've structured our partnerships and the way we've structured our business model, it takes both of these into account. We can't do what we want to do without having built the organization the way it is. The overall cancer screening market is extremely large. The U.S. alone is something like 77 billion, so that's a very large number. I think even bigger than that, and that most people tend to forget about, is the national economic burden that goes with that is about twice that size. It's about 150 billion. So that's everything from time off. It's sick time. It's the additional cost incurred in this. It's having to hire new people, different people, train them. It's lost productivity. It's just all of that. So clearly, if we can have a marked impact on that, it has a very beneficial effect. And then coming back finally to the patient themselves, cancer is one of the primary reasons for personal bankruptcy, certainly in the U.S. Very expensive. People need to try and get the best possible treatment that they can. But the healthcare system doesn't always cater to allowing you to do that. And so it is, I believe at this point, the number one driver of personal bankruptcy. Moving to the importance of early detection. This slide normally or this data normally takes some people's breath away. If you look at the advantages of being able to find cancer early, you're typically in the high 90s in terms of what your five-year survival rate is. A couple of the cancers aren't there, but most of them are. When you move out to finding it in late stage, so if you only find cancer in stage three or four, it drops dramatically. We very typically talk about colorectal cancer. We're finding it early. You've got about a 90% chance of living five years was finding it late. You've only got about a 10 to 14% chance of living five years. It's critical. It's absolutely critical. I think the breast cancer one is there as well. Then we'll pick up on that a little later too. So you have to, you have to find it early if at all possible. So what is the solution? Um, The solution on our side is really a mix of these three programs plus two additional pieces, one being the physician groups that we have and the other being the telehealth system that we have. So Aristotle is an obvious. It's the only mRNA gene expression multi-cancer test that's actually in the marketplace. The advantages that we believe we have over other current technologies is one, the technology has been around for long enough that it's essentially proven. The other is that we are particularly good at finding early stage cancers. And I say that because most of the other technologies are not. And we find early stage cancer equally as well as we find late stage cancer. And that's a very significant advantage. If you have cancer, we can enroll you in the TREAT program. That's the care oncology group that we have. That's an oncologist-led adjunctive care program. It's adjunctive to standard of care. And our overall claim to fame starts with the metric study, as we built it out, where we showed a very significant increase in survival. And we're building that out. We'll talk about that more as we go on. We pulled that forward into the AVERT program. The AVERT program is going to feature very heavily over the next while. And AVERT is all of the learning of both Aristotle and treat in terms of can we find other factors. Aristotle will tell you whether you likely have cancer today, yes or no, discrete cancers. AVERT will tell you whether you're likely heading for with cancer tomorrow. It not only flags major chronic disease, but it flags the metabolic pathways that are at risk for getting cancer. We then have an overt protocol, which allows you to be able to remediate so that you can try and head off those risks of the past and actually lower your risk. We know that about 40% of cancers are preventable if you adopt the right strategies. He is, can you see it in advance? Can you get there? Also, a good thing with this, where Aristotle is a new introduction to the marketplace, to some extent, a virtuous plug and play. It, by and large, adds on to a lot of the work that is being done already. It runs it through a very unique algorithm that is ours. It ties back into the treatment protocol, which I talked about, which again is ours. But it's a very easy add-on and it fits extremely well with employers. It also fits extremely well with nutrition groups. The final two pieces, and we'll talk about these more as we go forward, is that you can't do most of this. You can't deal with employers. You can't deal directly with patients unless you can actually prescribe the tests. You can read the results and present the results back to them and then guide them as they move on forward. An absolutely critical piece. In addition to that, you need to have telehealth, and we were one of the telehealth space. It's actually proven to be very prescient, and it allows us to continue forward. You can't deal with employers. You cannot deal with direct-to-consumer without these two pieces, absolutely critical. It's why we built them. It's why we're partnering with the groups that we are. When we look at the overall size of the market, as we drive through it. This is a little bit of a recap of what I was talking about before. The overall market in the US is extremely large. We talked about the economic burden of cancer, extremely large. Everyone is interested in having an impact on that. Our initial beachhead, as we've talked about it, is to focus on the group of people, sorry, the group of employees that are working in self-funded employers. And we'll talk more about that in a moment. It's very clear to see that relatively little penetration on our side actually results in bigger rewards for us. So key with us, again, comes back to the partnerships. The secondary beachhead is sort of building off of the employer side, but it also begins to build out into the direct consumer aspect because it crosses over into all of that. But if you just look at a high-risk population, we all know that the first responders in North America are a high-risk population. They number nearly 4 million in terms of who they are. You look at the revenue that could be derived from just getting adequate screening rates within them. and it's obviously a very attractive area to move down. A brief discussion on revenue as we go. You will see that as we pivoted out, it's really interesting as you manage companies, you drive them through because we're essentially relaunching into the cancer space if you think of coming back out of COVID. It's making sure that the channel's right, making sure the organization's structured correctly, It's also getting the programs up. We've shown nice growth as we built into this as we've got both the testing as well as the treatment sides running. This third quarter was essentially flat. Yes, it shows a small amount down, but it's essentially flat as we run as you look at deferred revenue as well. And it sets us well for building through. The reason for putting this slide up is that I think a lot of people go, we need to have an immediate impact. You need to show that you're doubling, tripling, quadrupling in the quarter. We will show growth. I just wanted to remind people that Exact Sciences, which is a massive success out there from a sales and marketing and revenue perspective, took four years to get there. In fact, it's taken longer than that, but it took four years to get any decent measure of success. We'll go to the other group, which is Grail, which is a direct competitor of ours. You look at how Grail is building out. Grail has massive resources behind it, but even with Grail, it is taking time to actually get things established, get them into the marketplace, get them built out. So all we're doing is we're guiding to patients They're equally as important as looking at revenue growth is looking at all of the pieces that are being put in place to allow the revenue growth. Are they there? Are they moving in the direction? Yes, we believe they are. And as a result of that, we're looking forward to incremental growth as we move on out. We're still just on a note.