SERA - NASDAQ

Good afternoon, and welcome to the Sera Prognostic Conference Call to review first quarter fiscal year 2024 results. [Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Peter DeNardo of CapComm Partners for a few introductory comments.

Thank you, operator. Good afternoon, everyone. Welcome to Sera Prognostics First Quarter Fiscal Year 2024 Earnings Conference Call. At the close of the market today, Sera Prognostics released its financial results for the quarter ended March 31, 2024. Presenting for the company today will be

Thank you, Peter, and good afternoon, everyone. We continue to make progress in putting keeper requisites in place for inflection in test volumes and revenue growth, coupled with improved margins. As Austin will detail, we believe 2024 is a foundational year of development for Sera, with strategic goals we are pursuing to position the company for increased test adoption in the quarters ahead, while diligently preserving our strong balance sheet and cash position as we manage the business for future growth. These strategic goals include publication of our important AVERT and PRIME clinical study results to showcase the health and economic benefits of the preterm test, building awareness of our capabilities to help improve patient care and outcomes, continuing our strong focus on R&D to bring new products in our pipeline and new collection methods to market, all the while improving access to our products to afford better health equity, scalability for our lab once demand inflection occurs, as well as increased product margins and profitability. Since the beginning of the year, we've made progress across these strategic priorities, including submission of PRIME study interim findings for publication, shipped first whole blood collection kits to our customers, shifted to a more cost-effective laboratory test analysis process, resulting in an estimated 60% COGS savings at scale, prepared 2 television programs which will air on public and network stations later this year to increase awareness surrounding preterm birth. Deliveries of PRIME study participants, the remaining 2,200 who were enrolled before the enrollment stopped for DSMB recommendation in December 2023 are also now complete, and we're now planning analysis and data for the final PRIME study publication. We're pleased to report that we have validated ambient whole blood collection and have begun shipping our new kits to customers. We expect to see whole blood collection kits start running through our laboratory in the coming weeks. This, together with our laboratory enhancements, are expected to yield several distinct advantages, primarily ease of collection, increased lab capacity and decreased turnaround time, and reduced cost of goods. By improving and simplifying the collection method, we expect to enable greater patient access to our test, which should really allow us to reach more mothers across the country. Simplified collection also means an improved user experience for the patient and provider. We believe less friction for the physician ordering process will lead to more repeat orders by providers. The processing of whole blood samples is coupled with the rollout of our newly validated laboratory process that leverages Sera proprietary antibodies used in mass spectrometry. In addition to enabling the processing of whole blood specimens, this new technology affords an approximate fivefold improvement in sample processing capacity for a laboratory technician, an approximate tenfold increase in throughput and cuts our turnaround time by about 50%. In addition to capacity and scalability enhancements, a faster and simpler laboratory process reduces material and labor costs, while whole blood ambient samples can be drawn and shipped at a much reduced cost when compared to frozen serum. Overall, we expect an estimated cost of goods reduction of up to 60%, possibly higher beyond certain scale milestones. These improvements to our margins should serve to increase access to our technology, a key prerequisite to our growth strategy. While we work to communicate data from our AVERT and PRIME studies, we believe this will provide strong validation of the benefit of utilizing the preterm test for guideline development and adoption. A recent ACOG note on guidelines on biomarker testing for preeclampsia points to the attention from guideline setting bodies to preterm birth complications. For now, we're continuing engagement with various stakeholders to increase adoption of our test in order to improve pregnancy and maternal outcomes. These stakeholders include providers we're teaming up with to target the states hit hardest by spontaneous premature birth rates. Our plans include working with payers and providers in collaboration with other stakeholders on targeted state implementation programs to promote health equity to address spontaneous premature births and improve pregnancy care, particularly among undisturbed populations and communities. This could provide a way to resolve a big problem and broaden awareness and increase adoption of preterm by patients, physicians and the medical community overall. There has been a lot of interest in the potential impact of the FDA's review of laboratory developed tests, often called LDTs. The FDA published its final LDT rule last week on April 29. And while there may be subsequent changes given pushback from certain industry stakeholders, we share the goal of keeping patients safe with a reasonable oversight of LDTs. A higher level of review and approval for new tests, whether under FDA's final LDT rule or the Valid Act that has been pending in Congress for a while, could set a new and higher bar for new entrants into the space we serve. There's always uncertainty whether a new regulation may be challenged, but we believe we are well placed to work within the FDA's proposed LDT framework to continue bringing our tests to patients. For example, the FDA's new LDT rule includes continued enforcement discretion. The preexisting status quo for LDTs approved by the New York State Clinical Laboratory Evaluation Program, which includes our preterm test. Given our strong long-term R&D-driven history and extensive clinical study data, we believe the higher bar set by stronger regulations could serve as a source of advantage for Sera by requiring competitors to dedicate years of work and significant investments. FDA states that increased oversight may help promote adequate representation in validation studies, which would help advance health equity and which lines up nicely with our mission. As a reminder, about 1 in 10 babies is burned prematurely in the United States, at a rate of 10.4% according to CDC for 2022, while racial and ethnic differences in preterm birth rates remain. For 2022, the rate of preterm birth among African-American women of 14.6% was about 50% higher than the rate of preterm birth among white or Hispanic women, at 9.4% and 10.1%, respectively. We need to do more, and we can with preterm. Sera was recently invited to support broadening awareness of innovative solutions available to expectant mothers and their physicians to understand the risk of preterm birth. Later this year, Sera will be featured on 2 television programs, Viewpoint with Dennis Quaid and Empowered with Meg Ryan. Distribution of these programs is expected to reach over 100 million people in the United States. This will be a strong awareness building tool for Sera in 2024 to follow the physician education campaigns we're launching this summer. Outside of our current core market in the United States, we're exploring attractive international markets. This process is expected to involve engaging with regulators in countries with a significant number of premature births where the addressable market for the Sera preterm test is compelling. Upon publication of our pivotal AVERT and PRIME studies, we plan to share the data with regulators. We also plan to engage with multiple potential partners to assess what may be needed to enter key international markets. If we ultimately enter such markets, our ambient whole blood kit collection methods are expected to ease market access, promote accessibility to address health care equity and have optionality on test cost to promote adoption while still leveraging healthy product margins. Developing test processing via ELISA would also make it easier for Sera to go to market internationally. In conclusion, we're pursuing multiple shots on goal to build awareness and adoption and believe our pathway will not only become easier upon publication of the study, as I mentioned, but such validated and compelling data in regard to preterm will also bolster and embolden the pursuit of our mission. Now over to you, Austin.

Thanks,

Thank you. Ladies and gentlemen, we will now begin the question and answer session. [Operator Instructions] Our first question comes from the line of Andrew Brackmann from William Blair.

This is Dustin on the line for Andrew. First question I have, just on the latest updates you're having with conversations with KOL since the publication -- or positive update on PRIME with DSMB. And then similarly, what kind of conversations are you having with guideline bodies as well? And do you think they'll give sort of any statement that very shortly after PRIME gets published in the interim analysis?

This is

Understood. A question on the pipeline. Just wondering where the time to birth assay is in development now, and then what can we expect in terms of data generation? I think you previously said some data maybe this year or next year for time to birth.

That's right, Dustin. The time to birth product is getting enhanced as we speak. As I mentioned, we decided to put it on ELISA platform to really ensure that there are strong economics for this product. Certainly, data -- making data available on the product will be on our mind as the first step in the sequence of launch. So absolutely counting on that happening in the coming months. I don't have a precise time line on that. But as you suggested in your question, certainly, before the end of the year or early next year is what I would expect as the timing for that for that -- shortly before launch.

Okay. That's helpful. And then just one more from us. I know previously, you talked about an additional $5 million investment option in the context of expenses that you baked in the guidance. Is the marketing that you announced today, those 2 campaigns, is that part of that $5 million? Or would that $5 million be on top of that?

Austin, do you want to take that one?

Sure. Yes. These -- the marketing campaigns, as

Yes. Spot on. And Dustin, so basically, the 2 campaigns are already paid for and baked into our costs.

[Operator Instructions] As there seems to be no further questions at this time, I'd now like to turn the call back over to Ms.

Thank you so much, operator, and thank you all for attending our call today. We have a lot of work to do through the remainder of the year launching self-pay and employer paid channels in parallel to pursuing fair reimbursement, as well as education and awareness campaigns for preterm. We are invigorated by growing interest in our technology portfolio, and our expectation of publications of AVERT and PRIME studies. We believe these studies when published, will fuel even greater interest in preterm and pave the way for adoption that can solve the crisis of premature births -- help solve the crisis of premature birth, while helping accelerate our growth. I'll now turn it back over to the operator to conclude the call. Operator?