bioAffinity Technologies Inc (BIAF) 2022 Q4 法說會逐字稿

Good morning, and welcome to the bioAffinity Technologies Fourth Quarter 2022 Financial Results Conference Call. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Julie Anne Overton, Director of Corporate Communications. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to today's conference call to discuss bioAffinity Technologies fourth quarter and full year 2022 financial results and our recent business progress.

Please note that certain information discussed during today's call is covered under the safe harbor provision of the Private Securities Litigation Reform Act. We caution listeners that bioAffinity Technologies management will be making forward-looking statements and that actual results may differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business.

These risks and uncertainties are detailed in and are qualified by the cautionary statements contained in bioAffinity Technologies press releases and SEC filings. This conference call contains time-sensitive information that is accurate only as of the date of the live broadcast today, April 3, 2023. bioAffinity Technologies undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as required by law.

I would like to now turn the call over to Maria Zannes, President and Chief Executive Officer of bioAffinity Technologies. Maria?

Thank you, Julie Anne, and thank you to our listeners for joining us today. In terms of structure for today's call, first, I will provide an overview of the market opportunity we are targeting with CyPath Lung and the urgency of addressing the unmet medical need for the detection of lung cancer at early stage.

Second, I will map out our commercial growth strategy, which begins with the limited launch of CyPath Lung in Texas that is designed to build and evaluate our marketing program, and help us ensure each step in the care pathway is efficient and effective, before expanding our footprint beyond Texas and potentially beyond lung cancer. We also will be seeking FDA clearance for CyPath Lung as a Class II IVD medical device. And as innovation has led to invention, we will be strengthening our patent portfolio.

And third, Michael Edwards, our Chief Financial Officer, will provide an update on the company's financial position and capital strategy. We will then conclude with Michael, Julie Anne and me available to answer your questions.

But first, let me address the need for early lung cancer diagnosis. Our mission at bioAffinity Technologies is to detect cancer at an early stage because simply put, earlier diagnosis leads to better clinical outcomes and increases the patient's long-term survival. The need for early lung cancer detection is crucial.

Lung cancer is the leading cause of cancer-related deaths worldwide. And this is largely due to the fact that people often show no symptoms of lung cancer until the disease has progressed to advanced stages, such as Stage 4, at which point 5-year survival is only around 5%.

However, when lung cancer is detected early, the prospects for successful treatment and even cure are significantly higher. Finding lung cancer at Stage 1, for example, and treating it can result in a 10-year survival rate of greater than 90%. This differential is where CyPath Lung takes aim and intends to make an impact.

Moreover, early lung cancer detection also reduces the cost of treatment and the need for additional tests. Treating lung cancer in advanced stages requires more aggressive treatments and hospitalization, both of which can significantly increase the cost of patient care.

Our first diagnostic test is called CyPath Lung. The test is sold as a laboratory developed test by our partner, Precision Pathology Services, a well-established CAP CLIA clinical laboratory. CyPath Lung is cost-effective, noninvasive, patient-friendly with at-home sample collection that enables physicians to more confidently distinguish between patients, who will likely benefit from timely intervention from those who should continue annual screening by low-dose CT.

Low-dose CT is the standard of care for screening patients at high risk for lung cancer. Screening can significantly increase survival by finding early-stage cancer. So screening is essential to lower the death rate of lung cancer. But the process can be improved.

Screening has a low positive predictive rate of 3.8%. And that means that only 4 out of 100 people who get a positive result from screening actually have lung cancer. By using CyPath Lung in conjunction with screening, we improve that positive predictive value, resulting in fewer unnecessary diagnostic procedures, earlier cancer detection and a reduction in health care costs.

We bring confidence and certainty to the diagnostic process. After a positive screening result, CyPath Lung efficiently stratified patients into 1 of 2 risk groups. Patients deemed likely to have lung cancer can proceed to more invasive and costly follow-up, while those deemed unlikely would continue imaging surveillance in accordance with the standard of care.

The physician receives actionable results informing him or her that CyPath Lung has detected the presence of lung cancer or has not. Results also include a numerical score. So physicians have more information in addition to the binary yes or no answer. We are beginning to test market CyPath Lung in Texas, and we are creating our brand. bioAffinity Technologies is based in San Antonio. And so we started our commercial rollout close to home, making sure we have everything right before expanding our footprint.

The limited launch in Texas is designed to build and evaluate our marketing program and help us ensure each step in the care pathway is efficient and effective. From the initial order by physicians to patients' sputum collection and processing to generating and delivering the patient report we will build upon feedback from this test market find future positioning and develop our strategic insight for our CyPath Lung test. We are very pleased to be working with Havas Health & You and Trinity Life Sciences, 2 global leaders in health care marketing. They are developing our brand, our messaging and our strategic marketing plan to optimize commercial success.

In addition to building our path to a staged nationwide U.S. expansion, we've begun work towards commercializing CyPath Lung in the European Union, where there are an estimated 34 million smokers at high risk. One of the most impactful accelerants for driving sales can be FDA clearance of CyPath Lung as an in vitro diagnostic. We are finalizing the design and preparing a presubmission package to FDA.

Agency approval, if and when received, would enable us to directly market to physicians and their patients. And we are finalizing the design of a planned 1,800 patient pivotal trial, so that we can submit a presubmission package and launch the trial this year. Among other measures of accuracy, this longitudinal clinical diagnostic study will establish the sensitivity, specificity, positive predictive value and negative predictive value of CyPath Lung and will likely require 3 years.

As ambitious as it sounds, our mission is even more than becoming a leader in the early-stage lung cancer diagnostic market. We have begun research to expand beyond that and see significant potential in the development of automated analysis to be used with flow cytometry technology. We are working to design noninvasive diagnostic tests for detecting and monitoring additional lung diseases, the first of which is Chronic Obstructive Pulmonary Disease, or COPD.

COPD is the fourth leading cause of death, representing another multibillion-dollar market opportunity for our growing platform. Innovation is a hallmark of bioAffinity Technologies. Our R&D efforts brought CyPath Lung to market and our ongoing research continues to reduce costs and improve accuracy.

In the past year, our discoveries have led to significant publications in scientific journals. Last week, we announced publication in the peer-reviewed journal of visualized experiments of an article describing compensation beads we engineered that improve precision, lower the cost and accelerate sample processing in our AI developed flow cytometry platform.

In January, we published results of our clinical trial for CyPath Lung, reporting that our test achieved 92% sensitivity and 87% specificity in detecting lung cancer in people at high risk who had small lung nodules, less than 20 millimeters.

Building awareness of our company and our technologies within the scientific and medical communities helps us to set the stage for our future plans in diagnostics, as well as our longer-term plans for developing therapeutics. We are still in the early innings of establishing the value of bioAffinity Technologies and CyPath Lung for the early detection of lung cancer and in establishing our company as a leader in flow cytometry-based diagnostics.

I'm proud of our company's, many accomplishments, including during these first few months as a public company. And there's so much potential for our team to address in the massive unmet medical need of early diagnosis for an estimated 18 million Americans at high risk for lung cancer. I look forward to continuing to share further updates with you.

But for now, I'll turn the presentation over to Michael Edwards, our Chief Financial Officer, to review our financial results for the quarter and the year. Michael?

Thank you, Maria, and good morning, everyone. I will review the key financial results for the fourth quarter and full year 2022 and touch base on our cash position.

Starting with the fourth quarter, revenue for the fourth quarter of 2022 was approximately $2,500 compared with no revenue for the prior period. As a reminder, our revenue is derived exclusively from the royalties for CyPath Lung currently being sold through our partner and licensee Precision Pathology Services.

Research and development expenses were $429,000 for the fourth quarter of 2022 compared with $318,000 for the comparable period in 2021. General and administrative expenses were $1.2 million for the fourth quarter of '22 compared with $290,000 for the comparable period in 2021.

Net loss for the fourth quarter of 2022 was $1.7 million compared with a net loss of $5.6 million for the comparable period in 2021. The difference is primarily attributed to a decrease in interest expense in the change in the fair value of our convertible notes.

Moving to our full year financial results. Revenue for 2022 was approximately $5,000 compared with no revenue in 2021. Research and development expenses were $1.1 million in 2022 compared with $1 million in 2021. The increase is primarily due to higher personnel, legal and research costs, partially offset by lower stock-based compensation expense.

General and administrative expenses were $2.7 million in 2022 compared with $1.1 million in 2021. The increase was primarily due to higher consulting, legal, patent and professional fees as we prepared for our IPO, and the reporting requirements of a public company. The increase was also attributed to higher stock-based compensation expense as well as hiring-related expenses to support the commercial launch of CyPath Lung.

Net loss for 2022 was $8.2 million or $1.81 per share compared with a net loss for 2021 of $6.3 million or $2.36 per share. Cash and cash equivalents as of December 31, 2022, were $11.4 million. On September 6, bioAffinity Technologies raised net proceeds of approximately $6 million from an IPO of 1.3 million units, each unit consisting of 1 share common stock, 1 tradable warrant to purchase 1 share of common stock and 1 nontradable warrant.

An additional $7.8 million was raised from the exercise of warrants and options. As a growth stage company, we intend to be opportunistic regarding potential financing activities, but we believe that funds available today provides sufficient capital to support planned operating activities through at least the next 12 months.

With that, I'll turn it back to Maria.

Thank you, Michael. I look forward to a busy 2023 with many milestones for our shareholders to look forward to, including the launch of our CyPath Lung pivotal trial, the commercial expansion of our test and continued investments in R&D.

With a strong balance sheet following our recent IPO and warrant exercise, along with key leadership appointments such as the expansion of our scientific and medical advisory board and R&D hires, bioAffinity Technologies is well positioned to execute on its milestones, advance our mission and deliver more valuable diagnostic utility.

As a final comment, I'd like to let you know that this Wednesday, April 5, my colleagues and I will be ringing the NASDAQ closing bell to commemorate our recent IPO and listing on NASDAQ. I encourage all our listeners to tune in just before 4:00 p.m. Eastern on April 5 to celebrate this milestone with us.

Thank you again for joining today's call. Operator, we're now ready to take questions.

(Operator Instructions) Our first question will come from Steve Silver with Argus.

Congratulations on a very productive 2022 in some very challenging market conditions.

Maria, you had mentioned in the prepared remarks that the company is gaining valuable insights into the initial launch of CyPath Lung. And I was just hoping to get a little bit more color in terms of any findings that the launch is providing, whether everything is going as you expected, maybe just looking for potential refinements. But if there's anything that the company really did not expect and that maybe the company is really adjusting more than you might have expected to the early launch?

Well, first, thank you, and thanks for listening today.

I think there is nothing new in the sense of something -- any surprise in how physicians have reacted and what we're hearing. But there are -- there is emphasis that we find very interesting as we move forward. And we are learning quite a bit. We do see that physicians like very much the ease of use of this test and the patients do as well.

So you remember that this is a test that is where sputum, where the sample is collected at home. And we use a patient coach, someone who spends time over the phone largely with the patient to help them collect. This has resulted in very, very good sputum collection. In other words, our samples are coming in very well. And it's also something that physicians like because they have an initial discussion with the patients, they provide them with the test kit. The patient goes home, comes back with an answer.

The other thing I think that the physicians have liked very much is the actionable results. In other words, they get a result that is helpful for them to know what to do in moving forward.

So I think we're learning a lot more about the benefits of this test, and what moves the needle as far as the acceptance and the adoption of this test. And that -- all of that work goes into the work that we're doing with Havas and with Trinity and knowing and honing in on the brand and the messaging.

Congratulations again.

(Operator Instructions) Our next question comes from Aaron Thomson with -- a private investor.

I was curious about the therapeutics that you're pursuing. I know you published some research and done some presentations regarding an siRNA. I was wondering if you could speak more, where you're going with that?

Yes, certainly. Thank you, and thank you for being an investor in bioAffinity.

So the company itself bioAffinity is very science and medically driven. In doing so or with that focus, the company started to -- we looked our research into the use of porphyrins, which is a marker for our test -- diagnostic test.

I give this as way of background. In our research with regards to porphyrin, we found that a certain knock down, a certain alteration to cells could affect a killing of cancer cells without any harm to normal cells. And that primarily is the focus of our research right now, which is continuing.

The siRNA that you mentioned is -- there's a number of siRNAs that we believe, and we have patent applications for can be used to knock down the self-surface markers and in doing so, kill cancer without harm to normal cells. It's very promising, but it's very early research, and I want to stress that.

We are moving forward and intend to do animal studies with this, and we'll have more information as that work is done. But thank you for asking.

(Operator Instructions) It appears there are no further questions. This concludes our question-and-answer session. I would like to turn the conference -- pardon me. It looks like Aaron Thomson has a follow-up.

Okay. I'm sorry. I did have 1 more question about...

Sure. Please.

The expansion in Europe. I know that one of the documents you put out mentioned that you're working closely in the Netherlands to try to expand CyPath Lung. Wondering if you could provide more information on where that is in the stage?

Sure. So we chose the Netherlands as the initial stage of entry for a number of reasons. One is it's a country that has -- we've seen early adoption of new technologies. Our Chief Science and Medical Officer, Dr. Rebel received both her MD and her PhD in the Netherlands. She's Dutch from the Fre University in Amsterdam. So that also is obviously a benefit for us.

The CE marking of new tests has become more difficult than prior years with new regulations. And so we are stepping through the requirements in order to first CE mark the test in the EU. And our entry into the Netherlands, we think, is a good first step.

This is not something that will be done this year. I look to next year as far as the CE marking process, but we have begun to do that. We have strong patent portfolio in the EU, 1 that we see growing and strengthening over the next couple of years. So it becomes a very important market.

The EU also most of the EU, I should say, does not have the requirements for early screening or recommendations, I should say, for early screening as the U.S. does. So it is possible that our test is used more earlier in the process of diagnosis as a first screen for lung cancer.

This is because 2 -- CyPath Lung has shown very balanced accuracy, meaning that it has high sensitivity in the ability to find cancer and it has high specificity in the ability to tell a patient that they do not have cancer. So it has the potential to be a very good screening test and the EU may be the first entry into that pathway.

As it appears there are no further questions, this concludes the question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Thank you. I want to thank everyone for being part of our first call as a public company. We have many, many milestones that we look to complete this year, and we hope to share with you. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.