Precipio Inc (PRPO) 2024 Q3 法說會逐字稿

Good day. Welcome to the Precipio third-quarter 2024 shareholder update conference call. (Operator Instructions) Please note that the conference is being recorded.

再會。歡迎參加 Precipio 2024 年第三季股東更新電話會議。（操作員指示）請注意，會議正在錄音。

Statements made during this call contain forward-looking statements about our business. You should not place undue reliance on forward-looking statements as these statements are based upon our current expectations, forecasts, and assumptions and are subject to significant risks and uncertainties.

本次電話會議中的聲明包含有關我們業務的前瞻性陳述。您不應過度依賴前瞻性陳述，因為這些陳述是基於我們目前的預期、預測和假設，並受重大風險和不確定性的影響。

These statements may be identified by words such as may, will, should, could, expect, intend, plan, anticipate, believe, estimate, predict, potential, forecast, continue, or the negative of these terms or other words or terms of similar meaning.

這些陳述可以透過諸如可能、將、應該、可以、預期、打算、計劃、預期、相信、估計、預測、潛在、預報、繼續等詞語或這些術語的否定形式或其他具有類似含義的詞語或術語來識別。

Risks and uncertainties that could cause our actual results to differ materially from those set forth in any forward-looking statements include, but are not limited to, the matters listed under Risk Factors in our annual report on Form 10-K for the year ended December 30, 2022, which is on file with the Securities and Exchange Commissions, as well as other risks detailed in our subsequent filings with the Securities and Exchange Commission. These reports are available at www.sec.gov.

可能導致我們的實際結果與任何前瞻性陳述中所述的結果存在重大差異的風險和不確定因素包括但不限於我們截至 2022 年 12 月 30 日的 10-K 表年度報告中「風險因素」下列出的事項，該報告已提交給美國證券交易委員會，以及我們隨後提交給美國證券交易委員會的文件中詳述的其他風險。這些報告可在 www.sec.gov 上查閱。

Statements and information, including forward-looking statements, speak only to the date they are provided unless an earlier date is indicated. And we do not undertake any obligation to publicly update any statements or information, including forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

聲明和資訊（包括前瞻性聲明）僅代表提供日期的觀點，除非另有說明。並且，我們不承擔公開更新任何聲明或資訊（包括前瞻性聲明）的義務，無論是由於新資訊、未來事件或其他原因，除非法律要求。

Now, let me hand the call over to Ilan Danieli, Precipio's CEO. Please go ahead, sir.

現在，讓我將電話交給 Precipio 的執行長 Ilan Danieli。先生，請繼續。

Thank you, and good afternoon. Thank you all for joining our 2024 Q3 shareholder upgrade call. Thanks to all those who submit questions. As always, we'll do our best to address them during this call.

謝謝，下午好。感謝大家參加我們 2024 年第三季股東升級電話會議。感謝所有提交問題的人。像往常一樣，我們將盡力在本次通話中解決這些問題。

Before we jump into the numbers, I'd like to take a moment to remind everyone of the business we're in and the impact we have. We recently crossed the 10,000th case mark for the year compared to close to 8,000 in 2023. For us, those aren't just numbers that translate into revenue and share price. These are real people, parents and grandparents, siblings and children who have to deal with the awful battle against cancer.

在我們討論數字之前，我想花點時間提醒大家我們所從事的業務以及我們的影響。我們最近突破了今年的第 10,000 例病例大關，而 2023 年則接近 8,000 例。對我們來說，這些不僅僅是轉化為營收和股價的數字。這些都是真實的人，父母、祖父母、兄弟姐妹和孩子，他們都必須面對與癌症的可怕鬥爭。

I'm really proud of the impact we have on those patients and their families' lives as we execute on our mission to battle misdiagnosis. I can assure you that many of those 10,000 people are better off, because they were diagnosed by our company.

在我們履行對抗誤診的使命時，我對我們為這些病人和他們的家人的生活帶來的影響感到非常自豪。我可以向你們保證，那10,000人中的許多人都得到了改善，因為他們得到了我們公司的診斷。

Now, let's jump into the business performance. At the end of last year, we declared our goal of reaching breakeven in 2024. Beyond bringing the business to this important successful operational milestone of a company that starts making money, the objective reflects our commitment to avoid raising dilutive structured capital and to bring the company into a new era who are able to deliver appreciation and shareholder value. I'm pleased to report that our Q3's growth demonstrate that we are well on track to achieve our goal this year.

現在，讓我們來看看業務表現。去年年底，我們宣布了2024年實現收支平衡的目標。除了使公司達到這一重要的成功營運里程碑，即開始盈利之外，該目標還反映了我們的承諾，即避免籌集稀釋性結構化資本，並將公司帶入一個能夠實現增值和股東價值的新時代。我很高興地報告，我們第三季的成長表明我們有望實現今年的目標。

Let's review each of the division's performances in a bit more detail, starting with the pathology division. For the second consecutive quarter, our pathology revenues exceeded the division breakeven point and at $4.5 million per quarter represents a robust 18% increase from the previous quarter of Q2. We're going to continue to grow this division organically with our existing sales team, and our goal is to reach approximately $20 million run rate for this division and remain above that.

讓我們更詳細地回顧每個部門的表現，從病理學部門開始。連續第二個季度，我們的病理學收入超過了部門盈虧平衡點，每季度 450 萬美元，較上一季強勁增長 18%。我們將繼續與現有的銷售團隊一起有機地發展這個部門，我們的目標是使這個部門的營業額達到約 2,000 萬美元並保持在這個水平之上。

This creates a division that does two key things for our company. First, the division will generate positive cash flow. Second, it provides a self-sustained cost-free R&D platform that enables us to support our product customers and build our next generation of products, which is the future growth engine of the company.

這樣就創建了一個部門，為我們公司做兩件關鍵的事。首先，該部門將產生正現金流。其次，它提供了一個自主且持續的免費研發平台，使我們能夠支援我們的產品客戶並打造我們的下一代產品，這是公司未來的成長引擎。

Our current sales team of five members enabled us to deliver this revenue. We may be hiring one more salesperson to provide additional revenue stability, so we remain well above that breakeven point. I'm really proud of the team, both our commercial team and the lab operations, for their contributions to reaching this point.

我們目前由五名成員組成的銷售團隊幫助我們實現了這筆收入。我們可能會再僱用一名銷售人員來提供額外的收入穩定性，因此我們的收入仍遠高於損益平衡點。我為我們的商業團隊和實驗室營運團隊感到非常自豪，感謝他們為達到這一點所做的貢獻。

I know of no other lab that can reach breakeven at these revenue levels. Indeed, if you look at some of the other competitors in the lab services market, even if revenue is tenfold ours, they're still struggling to generate cash. This is a testament to our efficiency of operations, the quality of our service, and our business structure that enables us to achieve this financial milestone.

據我所知，沒有其他實驗室能在這樣的收入水準上達到收支平衡。事實上，如果你看看實驗室服務市場中的一些其他競爭對手，即使收入是我們的十倍，他們仍然在努力賺錢。這證明了我們的營運效率、服務品質和業務結構，使我們能夠實現這一財務里程碑。

I'm also confident that with the current team, the division will remain in this position, ensuring that the pathology services will continue to serve as a positive operational and financial contributor to our broader strategy.

我還相信，在現有團隊的幫助下，該部門將繼續保持這一地位，確保病理學服務繼續為我們更廣泛的策略發揮積極的營運和財務貢獻作用。

Moving along to the products division. Although this division has not yet hit breakeven, we are making steady progress and moving closer. Q3 revenues increased by 13% over Q2 reaching $680,000. As we discussed, we're building a robust customer pipeline among which we have three key customers who are in various onboarding stages. We anticipate that in this third quarter, as well as in the next quarter, we're going to see the full weight of those three customers as they onboard our products and that's going to have a significant impact on the business performance.

繼續轉向產品部門。雖然該部門尚未實現收支平衡，但我們正在穩步前進，並不斷接近目標。第三季營收較第二季成長 13%，達到 68 萬美元。正如我們所討論的，我們正在建立一個強大的客戶管道，其中我們有三個處於不同入職階段的關鍵客戶。我們預計，在第三季以及下一季度，我們將看到這三家客戶對我們產品的全部重視，這將對業務績效產生重大影響。

Going forward, this division is going to become the main engine of growth for our business and as one -- let me recap and remind you of the three reasons for that. Number one, recurring revenue. The products generate consistent, reliable income streams unlike the variability of the pathology division. Number two, customer retention. Product customers are committed to this technology, which means there is less likelihood of customer turnover and which in turn contributes to stable and predictable revenue generated.

展望未來，該部門將成為我們業務成長的主要引擎，讓我回顧並提醒大家其中的三個原因。第一，經常性收入。與病理學部門的多變性不同，這些產品可以產生穩定、可靠的收入來源。第二，客戶保留。產品客戶致力於這項技術，這意味著客戶流失的可能性較小，進而有助於產生穩定且可預測的收入。

And the last point is margins. The margins for our products are significantly higher than those generated by the pathology services division. Developing products require R&D investment, which in our case, thanks to our pathology division, is relatively minimal. Selling them requires less overhead, simpler operational complexity, and a small sales force, and less management attention. This results in a far higher contribution to the bottom line from the products division.

最後一點是利潤。我們產品的利潤明顯高於病理學服務部門的利潤。開發產品需要研發投資，而對我們來說，得益於我們的病理學部門，研發投資相對較少。銷售它們需要更少的管理費用、更簡單的操作複雜性、更小的銷售團隊和更少的管理關注。這使得產品部門對獲利的貢獻更高。

The product commercial team consists of three members and, for the foreseeable future, we intend to keep this small team as is. The strategy is to leverage our distribution channel and ultimately reach their full potential. To this day, the majority of our revenues is from direct sales, but going forward, we expect to see a gradual shift, increasing the share of revenue as generated by our distributors.

產品商業團隊由三名成員組成，在可預見的未來，我們打算維持這個小團隊的原樣。我們的策略是利用我們的分銷管道並最終充分發揮其潛力。到目前為止，我們的大部分收入來自直銷，但展望未來，我們預計將逐步轉變，增加經銷商創造的收入份額。

Although our distributors receive 20% of the margin, we, in turn, gain access to hundreds of sales reps that are not on our payroll, yet have access to essentially every customer in the country. And with that access supported by the brand and reach of these distributors, we're able to get in front of many more customers than we'd have likely achieved had we gone the direct sales route.

儘管我們的經銷商獲得了 20% 的利潤，但我們卻可以接觸到數百名不在我們薪資單上的銷售代表，但他們卻可以接觸到該國基本上每一個客戶。借助這些經銷商的品牌和影響力，我們能夠接觸到比直接銷售方式可能接觸到的更多的客戶。

Moving to our cash position. In terms of our cash position, as you saw in our filings, our change in cash balance from the end of Q2 to the end of Q3 was $226,000 in cash burn. This is compared to approximately $1 million of cash burn during the same period in 2023, a reduction of 75% in cash burn.

轉向我們的現金狀況。就我們的現金狀況而言，正如您在我們的文件中看到的，從第二季末到第三季末，我們的現金餘額變化為 226,000 美元。相較之下，2023 年同期的現金消耗約為 100 萬美元，減少了 75%。

I don't think there is a better metric to show you the impact of our company growth and improved performance than our cash position, as we are rapidly approaching breakeven. With our current quarterly performance and our cash balance, at this point, management sees no need for capital raises.

我認為沒有比現金狀況更好的指標來向您展示我們公司成長和業績提升的影響，因為我們正在迅速接近盈虧平衡。根據我們目前的季度業績和現金餘額，管理層認為沒有必要增加資本。

With our current market cap, we remain committed to building cash reserves through our organic growth and customer sales, avoiding shareholder dilution. This is a very exciting time for us. Our team is working tirelessly to achieve the goal of financial independence, and it's exciting to see it within reach. Turning the corner from survival mode to build mode is going to be a very refreshing change for us, and we're ready to embrace this new chapter, building on the strong foundations we've established.

憑藉我們目前的市值，我們仍致力於透過有機成長和客戶銷售來建立現金儲備，避免股東權益稀釋。對我們來說這是一個非常令人興奮的時刻。我們的團隊正在為實現財務獨立的目標而不懈努力，並且很高興看到這個目標觸手可及。從生存模式轉向建造模式對我們來說將是一個非常令人耳目一新的變化，我們已經準備好在已經建立的堅實基礎上迎接這一新篇章。

Some of the questions we received revolves around how to translate the company business performance into future shareholder value. In our analysis, up until now, two main things have held us back, and I'd like to address both. Number one is the risk of continued capital raises, and the second is the lack of education of our company's vision and market opportunity within the investor community.

我們收到的一些問題圍繞著如何將公司經營績效轉化為未來股東價值。在我們的分析中，到目前為止，有兩個主要因素阻礙了我們的發展，我想解決這兩個問題。第一是持續融資的風險，第二是投資者群體對我們公司願景和市場機會的教育不足。

I think we've reached a turning point in addressing the first concern. With our business performance, progress towards breakeven, and cash reserves, we are now in a position where capital raises to cover cash burn, as we've done in the past, are no longer necessary. This marks a significant step forward, and we can confidently say that this challenge is behind us.

我認為我們在解決第一個問題上已經到達了轉折點。憑藉我們的業務表現、實現收支平衡的進展和現金儲備，我們現在不再需要像過去那樣透過籌集資金來彌補現金消耗。這標誌著我們向前邁出了重要一步，我們可以自信地說，這項挑戰已經過去了。

As with the lack of education about our company, this is going to change next year. Once the company has achieved several consecutive strong performance quarters, we will then be able to point back to both solid past performance as well as provide investors with insight into what they can expect. This will be done through management guidance on certain parameters, such as revenues and EBITDA performance going forward.

由於我們公司缺乏教育，這種情況明年將會改變。一旦公司連續幾季取得強勁的業績，我們便能回顧過去的穩健業績，並為投資人提供他們可以期待的見解。這將透過管理層對某些參數的指導來實現，例如未來的收入和 EBITDA 表現。

Our plan also includes participating in investor conferences, building analyst coverage, and other investor-related activities that will help provide more visibility to the company. That, alongside solid consistent growth and performance, meeting and exceeding our guidance, should hopefully provide a substantial boost for our visibility, increasing trading volume and ultimately impact our share price, adjusting the market cap to revenue multiples higher than the current level.

我們的計劃還包括參加投資者會議、建立分析師覆蓋範圍以及其他與投資者相關的活動，這將有助於提高公司的知名度。除穩健持續的成長和業績，達到並超過我們的預期外，有望大幅提升我們的知名度，增加交易量，並最終影響我們的股價，調整市值至高於當前水平的收入倍數。

In summary, it's really exciting to see the company approach these milestones. We have been through a lot. And as Winston Churchill said, if you're going through hell, keep going, and we did. I think we're going to end the year strong, and going into next year even stronger.

總而言之，看到公司實現這些里程碑真的令人興奮。我們經歷了很多。正如溫斯頓邱吉爾所說，如果你正在經歷地獄般的折磨，那就堅持下去，我們也確實這麼做了。我認為我們將會以強勁的勢頭結束今年，並以更強勁的勢頭迎接明年。

With the holidays approaching, I want to wish everyone a joyous holiday season with family and friends, and a Happy New Year to everyone. I'd like to thank you all for your support, and I look forward to connecting with you in our next call in 2025.

值此佳節將至之際，我謹祝福大家與家人、朋友度過一個愉快的節日，並祝大家新年快樂。我想感謝大家的支持，並期待在 2025 年的下一次電話會議中與您聯繫。

Happy holidays and have a nice evening. Thank you.

節日快樂，祝您晚上愉快。謝謝。

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

會議現已結束。感謝您參加今天的演講。您現在可以斷開連線。