Good morning, ladies and gentlemen, and welcome to Aspira Women's Health Inc. fourth quarter and year-end 2022 earnings conference call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will open the call for your questions. As a reminder, this call is being recorded. Leading the call today are Nicole Sandford, President and Chief Executive Officer, Marlene McLennan, Interim Chief Financial Officer, and Dr. Ryan Phan, Chief Scientific and Operating Officer. Before we begin, I would like to remind everyone that forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995 will be made during this call, including statements relating to Aspira's expected future performance, future business prospects, and future events or plans.
Although the Company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, actual outcomes and results are subject to risks and uncertainties and could differ materially from those anticipated due to the impact of many factors beyond the Company's control. The Company assumes no obligation to update or supplement any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law. Participants are directed to the cautionary notes set forth in today's press release, as well as the risk factors set forth in Aspira's most recent annual report on Form 10-K and quarterly report on Form 10-Q filed with the SEC for a description of factors that could cause actual results to differ materially from those anticipated in the forward-looking statements.
At this time, I'd like to turn the call over to Nicole Sandford, President and Chief Executive Officer. Please go ahead, ma'am.
Thank you, operator, and good afternoon, everyone. It is my pleasure to welcome you to our 2022 year-end conference call. Today, we plan to share with you highlights from a year of company-wide necessary change for Aspira Women's Health. Since stepping into the CEO role last year, I have said that achievement of our mission rested on focused execution in three areas: growth, innovation, and operational excellence. I made a commitment to be transparent with our stakeholders and to earn your trust by clearly stating our intentions and then following through. I've also given my word that I would utilize our resources, your capital, and our time as effectively and efficiently as possible in pursuit of the long-term success of the company. While it has not been an easy year, I am proud of our progress and believe we have emerged stronger than ever before.
I hope you will feel the same before this call is over. Let me pause and introduce Dr. Ryan Phan, our Chief Scientific and Operating Officer, and Marlene McLennan, our Interim Chief Financial Officer. You will hear from each of them shortly with an update on our product portfolio and financial performance, respectively, before we open the call for questions. Let me start with an overview of our commercial progress in 2022. We grew product revenue last year to $8.2 million, a 20% increase over 2021. At the same time, we increased gross profit 8 percentage points and reduced sales and marketing expense by 13% on a full year basis. Test volumes increased to 21,423, a 23% increase, continuing the sequential and year-over-year growth trends that we have sustained for every quarter since I became CEO.
OvaSuite test volumes have continued their upward momentum in the first quarter of 2023. Despite major weather events that caused weeks of delivery disruptions around the country, we saw dramatic daily volume growth in both January and February. In 2022, we rebranded our ovarian cancer portfolio under the name OvaSuite. Our Ova1Plus test, which has now been ordered more than 60,000 times, continues to displace inferior but deeply entrenched single biomarker tests. With the successful launch of OvaWatch in December 2022, we now offer a non-invasive risk assessment test for all of the more than 1 million women a year that develop an adnexal mass. Our OvaSuite tests have the potential to replace fear with data when women and their healthcare providers make decisions about how, when, or even if they remove a woman's reproductive organs.
With one of the most extensive ovarian cancer biobanks and decades of bioinformatics expertise, we believe there is no one better positioned to become the market leader in the development of the most advanced diagnostic tools for this devastating and deadly disease. Before moving on, I want to remind you that we face no competition in the market for OvaWatch. It is a completely new risk assessment blood test with a clinically validated 99% negative predictive value that can significantly reduce the number of indeterminate masses and provides a previously unattainable level of confidence in a physician's decision about the care of their patients. We learned a great deal about our OvaSuite sales and marketing strategies in the last year.
In addition to completely rebooting our marketing program, we reallocated funds to high-impact provider conferences, streamlined our KOL program, and reworked our incentive plans to drive behaviors that result in provider adoption. In 2023, we will engage in more market-focused, high-impact media, starting with an interview on Lifetime's morning show, The Balancing Act, in April. Last year, we announced an Ova1Plus co-marketing and distribution agreement with BioReference. Following an October launch, momentum among the joint sales teams has been slower than anticipated. However, we believe our partnership continues to be an important part of their women's healthcare program. We are working together to implement more effective sales incentives as part of a relaunch between the commercial teams.
We intend to make the most of this experience and the lessons learned as we look towards the development of commercial partnerships for our other products, including OvaWatch. On the reimbursement front, we are actively pursuing payer adoption and fair pricing for the OvaSuite test portfolio, hitting a number of important milestones in 2022. Starting with OvaWatch, the American Medical Association moved quickly to assign OvaWatch a unique PLA code, which will facilitate efficient coverage and reimbursement when it goes into effect in April of 2023. We also secured OvaWatch coverage from an industry-leading global payer just 2 months after our official launch and only weeks after the publication of our clinical validation study. Meanwhile, we continue to press holdout commercial payers on Ova1Plus coverage, adding Centene of Oklahoma and Molina of Ohio coverage in the first quarter of 2023.
The Ova1 clinical utility study, which experienced significant COVID delays, has been completed, and a manuscript has been submitted for publication. On the Medicare front, we joined with ovarian cancer advocacy groups to educate Congress on the failures of single biomarker tests and the need for better diagnostic tools to save women's lives. Our combined efforts resulted in the call for national Medicare coverage for multi-marker ovarian cancer tests, and the omnibus spending bill passed late last year. While we continue to pursue the crosswalk of OvaWatch coverage via our Novitas Ova1 LCD, the implementation of this provision by CMS in 2023 would potentially provide a national coverage determination for all of our ovarian cancer testing portfolio. On the Medicaid front, we became credentialed in a number of additional states in 2022 and are actively engaged with Medicaid decision-makers since launching OvaWatch in December.
Turning to our operational excellence initiatives, we have aggressively reduced back office and discretionary spending and reallocated funds to activities that drive our strategic goals. We are a smaller, more nimble organization today compared to a year ago. We eliminated nearly 30% of the workforce, creating significant payroll and payroll-related savings that we will see in 2023. While this has meant that the team that remains must do even more to support our success, I know each individual shares a passion for our mission to improve outcomes for women with gynecologic diseases. Last quarter, we used $7.1 million in cash, a meaningful step down from the trajectory we were on at the beginning of 2022. We will continue to streamline spending while growing top-line revenue.
In 2023, our cash usage for operations is expected to be between $16 million and $19 million, a significant reduction when compared to the $32.3 million of cash used in operations in 2022. While this is meaningful progress, we recognize that our cash needs exceed our year-end cash balance of $13.6 million. We are actively identifying additional sources of liquidity and in February put a $12.5 million ATM in place with Cantor Fitzgerald. I'm confident in our ability to secure additional funding to meet our needs and in our ability to navigate these difficult market conditions without sacrificing revenue growth. Our cash needs will drive how quickly we can move some of our programs, products, and activities forward. I will turn the call over to Ryan for a closer look at our product development and innovation progress.
Thank you, Nicole. I am proud to say that in spite of challenges, we have found opportunities and have made significant progress in our growth and innovation goals. I will spend the next few minutes updating you on our overall product development and pipeline progress. Let me start with OvaWatch, which we launched in December. OvaWatch is the first and only of its kind non-invasive ovarian cancer risk assessment test. It provides healthcare providers with a personalized result based on seven biomarkers, age, and menopausal status for women presenting with benign and indeterminate adnexal masses. Historically, physician and patient might have chosen preventative surgery, potentially causing lifelong implications for women who have their ovaries unnecessarily removed. With the launch of the OvaWatch, clinicians are able to make better-informed care decisions for women than they were previously possible.
I am also pleased to say that the OvaWatch clinical validation manuscript was published in the peer-reviewed journal Frontiers in Medicine just a few weeks ago. This publication highlights real-world evidence to support the clinical usefulness of OvaWatch in the management of adnexal masses. It demonstrated OvaWatch high negative predictive value across diverse data sets and saw its utility as an effective assessment tool for clinicians to safely decrease premature or unnecessary surgery. Enrollment in the prospective OvaWatch study has been completed. However, we continue to follow with the enrolled patients via additional periodic blood draws. As a result, we are collecting real-world evidence to support the second phase of the OvaWatch launch, a serial monitoring assay for women with adnexal masses who are not identified for surgical intervention. Let's move on to EndoCheck, our in-development test for the identification of endometriosis.
You may recall that we expanded our development activity in 2022. The results of our internal development of a protein-based test were expanded to consider a multi-omics non-invasive diagnostic test via a sponsor agreement with a consortium of academic institutions led by Harvard Dana-Farber Cancer Institute. I will provide an update of each. Starting with the internal efforts, while I am pleased that we have made much progress on the development of an effective assay, the speed of development and commercialization of any endometriosis test will depend on the availability and cost of usable high-quality samples that align with our test's intended use. While we have recently succeeded in identifying and cataloging a large number of patient samples from our own biobank, additional samples from other sources will be needed to develop a commercially viable test.
The search for sufficient sample continues. We remain focused on the launch of the first generation assay in the second half of the year. With respect to the sponsored research agreement with Dana-Farber, we are pleased to report that the development efforts with this group of scientists and collaborators are on track. Sufficient and highly qualified endometriosis patient and control cohorts were obtained for this study. The development efforts are well underway, utilizing a next-generation sequencing-based approach and proteomic analysis for the identification of microRNAs and proteins. We believe that the progress of this collaborative effort will meet our expected development goals for 2023. To support the development of an endometriosis diagnosis assay, our multicenter clinical study for endometriosis was designed and is currently enrolling patients to confirm the clinical performance of EndoCheck as a non-invasive tool to aid the diagnosis of endometriosis.
This is a prospective observational study. We are pleased with our enrollment of sites and patients so far. We are closely monitoring progress and potentially competitive efforts both in the U.S. and globally, but are optimistic about the competitive positioning of our EndoCheck test. We believe our experience with gynecology diseases and our ability to develop and validate a clinical assay in a CLIA laboratory setting offers an advantage over others. The strategy and approach for an EndoCheck launch will be discussed at an R&D Day that we plan to host on May 23rd. We will also highlight the potential for the serial monitoring application of our OvaWatch test and share our plans for growing the OvaSuite portfolio. It has indeed been a very dynamic and exciting time for Aspira.
I've been with the company for less than a year and have focused on building momentum through the first phase launch of OvaWatch and steady progress in the development of EndoCheck. I am confident in the progress we've made in the development of powerful products to help improve women's gynecology health. I will now turn to Marlene for discussion of our financial performance. Marlene?
Thank you, Ryan. Total product revenue was $8.2 million for the year and $2.1 million for the quarter ended December 31, 2022, compared to $6.6 million and $1.9 million for the same periods in 2021. The 20% full year and 16% fourth quarter revenue increases were due to an increase in Ova1Plus test volume compared to the prior year, partially offset by a lower average unit price of $372 for the year and $369 for the fourth quarter of 2022, compared to $378 and $381 for the same periods in 2021, respectively.
The overall number of tests performed increased 23% for the year to 21,423, with the fourth quarter volume increase in 18% to 5,642 tests. Gross profit margin for the year was 53% compared to 45% in 2021. For the fourth quarter, gross profit margin was 57% compared to 55% in the same period last year. Margin improvement is primarily attributed to targeted cost control measures in the laboratory and information technology spending. Research and development expenses for the year increased 12% to $6 million, primarily due to costs related to our sponsored research collaboration agreements and increases in employment-related expenses, partially offset by decrease in cost attributed to clinical trials. R&D for the quarter decreased 29% over the same period last year, primarily due to personnel expenses.
Sales and marketing expenses decreased 13% for the year to $14.9 million and 40% for the quarter to $2.9 million, primarily due to decreases in employment-related expenses, consulting expenses, and other marketing expenses, offset by an increase in travel costs. General and administrative expenses for the year increased 22% to $16.2 million, primarily due to legal costs, severance for role eliminations, and incremental costs of the executive chairperson and costs related to our capital raise. For the quarter, G&A expenses decreased 21% to $2.9 million, primarily due to a decrease in outside legal expenses. As of December 31, 2022, Aspira had $13.6 million in cash and short-term investments. Cash used in operations for the year was $32.2 million, compared to $27.4 million in 2021.
We utilized $7.1 million in operating activities during the fourth quarter of 2022, compared to $7.6 million in the fourth quarter of 2021 and $8 million in the third quarter of 2022. Cash to be used in operations in 2023 is anticipated to be between $16 million and $19 million. I will turn it back over to Nicole.
Thank you, Marlene. In closing, we've come a long way since the beginning of 2022, we have been through tremendous change as an organization. The one thing that remains clear is the critical need for better ovarian cancer diagnostic tools for women and the resulting potential for our business. We're taking all the steps we believe are necessary to position ourselves for success and continue to be steadfastly focused on growth, innovation, and operational excellence. With that, I would like to now open up the call for questions. Operator?
Thank you. Ladies and gentlemen, if you would like to ask a question, please press * one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press * two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the * keys. One moment please while we poll for questions. Our first question comes from the line of Ross Osborn with Cantor Fitzgerald. Please proceed.
Hi, everyone. Congrats on the progress.
Thank you, Ross.
I thought we'd start off on ASP this year. You know, there's a lot of moving dynamics. Maybe focusing on OvaWatch initially, how should we think about ASP following your ability to sign a national payer? As a follow-up, when looking at the corporate ASP, can we just walk through the, you know, changing payer mix there and how that should evolve over this year?
Sure. Well, on the OvaWatch side, as you know, it does take some time to get those payer relationships lined up. We were very pleased with the progress that we've made so far. Of course, the businesses, or the test market is really divided in a number of parts, including Medicare, which is really important for an ovarian cancer test, as women are at higher risk as they age. You know, we continue to be optimistic about the crosswalk of the Novitas LCD. As I mentioned in my earlier remarks, we are looking at a potential NCD for multimarker ovarian cancer blood test based on the provision in the Omnibus bill. Still work to do there, of course.
Ultimately, we expect in reasonably short order, you know, sometime towards the end of the year, to start to see the OvaWatch ASP start to line up with the Ova1Plus price. To your point around the changes. I'm sorry, Ross, I think you were asking around Ova1Plus average selling price, you know, what to make of that in the mix. It is true we've had additional Medicaid sales this year, and that mix has sort of resulted in a little bit of erosion on the sales price.
On the upside, that gives us a great platform to go back to those states, which we have been doing aggressively in the last several weeks, to go back to states and say, "Your patients, your Medicaid patients are benefiting from this test. They've been ordered, you know, frequently." We've been able to provide statistics and have had very positive conversations with a number of state Medicaid administrators to make them see that the test is useful and is being used for their population, and to encourage them to accelerate adding OVA1+ to the fee schedule.
Okay, great. juggling a couple calls, I may have missed this, but how are conversations going with potential partners for a co-marketing distribution agreement for OvaWatch? Any idea on the timeline there?
As you probably know, the important issue that people are looking to is very similar to the question you already asked, which is: What does reimbursement look like for this test? Because that is an important risk factor for any potential partner on a commercial partnership for OvaWatch. Every time we have an announcement, which we've had many in the last couple of months, which is great, you know, we get a more captive audience with people to talk about the market potential for the test. No timeline here to announce. Believe me, we'll be happy to tell you when there's something there.
Okay, got it. Maybe on your cash burn, does the signing of a potential partner for OvaWatch, is that included in your cash burn guidance, positively or negatively?
No, we have not included anything relative to cash for OvaWatch partnership.
Okay, great. Lastly on Endo, nice to see a reiteration for your plan to launch on that test. I guess between now and launch, what needs to happen from both a development and regulatory perspective?
We've mentioned in the past that we are pursuing a number of different potential paths for the launch of an endometriosis test, which could include an FDA path or an LDT. We're not ruling either out at this point or, you know, we rule them all in, I guess I would say. From a regulatory standpoint, that's still sort of developing as we continue to think about what makes the most sense from a launch perspective. What needs to happen, as Ryan mentioned, you know, the biggest barrier to a completed test is and remains the availability of acceptable samples for the validation of the test. That has been a challenge, and it continues to be a challenge.
It doesn't do us any good whatsoever to try to validate or continue development with samples that are not high quality and that don't line up exactly with the test that we're developing. That is a challenge. We continue to seek out additional sources, as we said in the remarks earlier, we were very pleased to see that we were able to identify a number of additional samples in our own biobank, as we continue to refine the test and the requirements.
Okay, great. Thanks again for taking my questions.
Sure. Thank you, Ross.
Our next question comes from the line of Andrew Brackmann with William Blair. Please proceed.
Hey, good afternoon. This is Griffin on for Andrew. Thanks for taking our questions. Maybe just to start on OvaWatch. Oh, hi. Can you talk a little bit about the doc feedback that you're getting on OvaWatch? You know, are you seeing an expanded ordering population now that you have that expanded label? I think there was some expectation for some cannibalization of Ova1Plus. Has that played out, you know, as sort of expected so far?
Thanks for the question. I'll say on the cannibalization side, we have not seen that. We've continued to see growth in Ova1Plus. We were really thoughtful about how we presented the test to the physicians and the intended use for each and very, very clear. We've found that they've been able to understand very easily which test is appropriate given given the intended use. Happy to say that has not materialized as of yet. Of course, it's early days. In terms of physician response, so far it's been overwhelmingly positive. As you know, it takes a while to get the word out on a new test.
You know, we continue to go out in the field and also as a company, we're investing in a lot of additional physician conferences and higher impact at the conferences we're attending to get the word out. People seem to be really open to the intended use, and they understand the value of taking what turns out is a pretty significant number of masses that sort of fall into the indeterminate category, which frankly, means they really don't have a good sense of what to do with that patient, and it's a large percentage. Having a tool that helps them to reduce that number or to just have better insight into that number of patients is incredibly valuable. We've heard that time and again.
As they've learned how the test works, and the value of being able to isolate the patients that really do need additional scrutiny or additional clinical intervention, and rule out, to some extent, the women that are in that indeterminate category, has been very valuable.
Okay. Thank you. You know, that corporate deck, I think, has a potential OvaWatch res of $300 million-$420 million. Obviously, serial monitoring is a really big part of that. Can you just go in a little bit more detail on the timelines for the serial launch indication? I know you talked about a prospective study that's enrolling, any sense of timelines for launch there?
Yeah. Yeah. You know, I'll start and then Ryan can add any color to the study. The study is actually that we're using for the serial monitoring test is actually an extension of the OvaWatch clinical validation study which is closed, but we continue to take draws and monitor those patients through additional draws. Our commitment has been to launch that serial monitoring test in the second half of 2023. Ryan, anything else you'd like to add?
I think that Nicole mentioned everything needed, and we're really good to ask that question. You're absolutely right. I think the OvaWatch serial monitoring assay is gonna be key for the patient and the physician as well, particular for this particular population. Many of them was either by selection or by clinically may say that not selected for surgical intervention, so they need the tool to follow up, and OvaWatch serving that purpose. The great news is our clinical study has complete, but we continue to follow those enroll patients, so we know exactly what the paired plus one gonna be. Those data are gonna help us to set the stage for what the timeline and also at the doses, if you will, if you're thinking therapeutically, frequently how the woman should see the OvaWatch.
We may have those information, when near to the time that we can launch the test, which we intended, we remain intended for second half of the year.
Okay. then just last one maybe for.
Let me just.
Sorry.
Sorry, guys. Let me just say one thing. You know, we understand that in the market that we are in right now, the market conditions being what they are, investors, both current and potential investors, are hyper-focused on companies with revenue. We continue to believe that the OvaWatch serial monitoring test is going to drive material revenue for the company and has been really put to the top of the list in terms of things we think about every day. We do believe that our revenue estimates that we've talked about in the past are very, very realistic for a serial monitoring test.
Okay. Last one maybe for you, Marlene, on just the burn $16 and $19 for the year. Anything on, you know, how you think about pacing first half, second half split? I know you had previously sized the reduction in force as being maybe something a little over $6 million year-over-year savings in 2023. Is that sort of still how you're thinking about that?
We are definitely on target for that and monitoring it very closely. It's pretty evenly spread over the quarters. Most of our savings will be realized towards second quarter going forward because they were just initiated in first quarter. Overall, we're on target for $16 million-$19 million.
Okay. Thanks for your time.
Thank you for the question.
Thank you. Ladies and gentlemen, there are no further questions at this time. I'd like to turn the call back to Nicole Sandford for any closing remarks.
Thank you so much. Thanks for the questions. We appreciate the attendance today and the continued support and interest in the company. We've been through an awful lot of change this year, as I said. I'm more optimistic than I've ever been. As I've said before, I'll say it again, that, you know, as companies that are farther away from commercialization of their product, are really gonna struggle, and as we see the fallout of that happening all around us, I believe that we're going to be comparatively a very, very attractive investment, especially as we kind of move through the year and we continue to deliver on all of the things that we've promised.
Appreciate your time today and look forward to continuing to bring you additional news and insight as the year goes on. Thank you so much.
Thanks, everyone.
This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.