Good afternoon, ladies and gentlemen, and welcome to Aspira Women's Health, Incorporated Second Quarter 2023 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 today. Leading the call today is Nicole Sandford, President and Chief Executive Officer. Joining her is Dr. Torsten Hombeck, Chief Financial Officer. After the prepared remarks, we will open the call for Q&A. 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 Aspira Women's Health'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 note 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 now like to turn the call over to Nicole Sandford, President and Chief Executive Officer. Please go ahead.
Thank you, operator. Good afternoon, everyone. I would like to welcome you to our second quarter 2023 conference call. Before I begin, I would like to officially welcome Dr. Torsten Hombeck to our senior leadership team. Torsten was appointed Chief Financial Officer on June 15th and brings over two decades of biotech experience, having served in several senior positions at life science companies. His extensive experience includes capital raising, M&A transactions, corporate strategic planning, product development and launch, and of course, expertise in all aspects of accounting and SEC reporting. Torsten has already made a major impact, including the successful closing of a $4.7 million capital raise just weeks after coming on board. He will provide remarks later related to our financial performance before we open up the call for questions. Now let me begin with a review of our performance this quarter.
As always, I'll start with growth. OvaSuite product revenues for the second quarter were $2.5 million, representing growth of 23% compared to the second quarter of 2022. This continues our established trend of year-over-year quarterly growth for each of the quarters since I became CEO. The number of OvaSuite tests performed in the second quarter was 6,289, an increase of 16% compared to the second quarter of 2022, with OvaWatch contributing 884 tests to the total. This represents an 80% increase in OvaWatch tests performed in the second full quarter of adoption. OvaSuite tests performed for the six months ended June thirtieth, 2023, was 12,548, an increase of 22% versus the same period of 2022.
Importantly, the volume growth was driven by a much leaner sales team, with year-to-date test volume per field representative improving substantially from 354 per rep in 2022 to 598 per rep in 2023. This demonstrates that our commitment to eliminating unprofitable and underperforming territories, along with a renewed focus on partnerships like BioReference Laboratories and Women's Care Florida, are beginning to bear fruit. When we look beyond volume and focus on average unit price, I'm very pleased with our progress. Our OvaSuite AUP for the quarter increased to $396. Importantly, we began billing OvaWatch under its unique PLA code on April 1st, which resulted in second quarter OvaWatch AUP of $326, a 142% increase over the first quarter.
While we are still in early days, we are pleased to see reimbursement patterns for OvaWatch line up nicely with Ova1Plus. We have launched an OvaSuite payer adoption strategy for the second half of the year that is aimed at making as much progress as possible on the OvaSuite test portfolio while we prepare for a successful launch of EndoCheck by the end of 2023. More broadly in reimbursement, events continue to unfold with CMS and Medicare reimbursement of diagnostic tests through national and local coverage decisions. We are actively participating in industry initiatives to collaborate with CMS and will disclose any changes that could have an impact on our future revenue. Lastly, in terms of our growth initiatives, we are now in the final stages of the commercial strategic refresh, which was launched last summer.
The initial focus was on refining our core value proposition, improving the effectiveness of our field sales team, and rationalizing our overall sales and marketing spend. I'm proud of our progress as our sales and marketing expenses for the second quarter dropped once again, decreasing over 50% when compared to the second quarter of 2022, while simultaneously achieving growth in both product revenues and volumes. While cost containment is critical to the company, I want to stress that our commercial refresh is not simply a cost-cutting exercise. It always has been and will continue to be about improving impact and the return on investment. As we move into the next phase of the commercial strategy in the second half of the year, we will focus on reaching physicians and other healthcare providers directly through multiple channels.... The timing of this effort is very intentional.
We are emerging from the seasonal slowdown of the early summer months and are preparing to expand OvaWatch for use as a serial or longitudinal monitoring test. Specific activities will include the creation of a content hub for direct healthcare provider interaction, advertisements in high-impact OBGYN journals, targeted virtual and in-person physician education, an Ovarian Cancer Awareness Month social media campaign, and the expansion of our sales capabilities to drive growth more efficiently in parts of the country that are outside of our field sales territories. As a result, we expect a modest increase in sales and marketing expense for the third and fourth quarters of 2023. Let me now turn to innovation. Last week, we announced that Dr. Ryan Phan has made the decision to step down as Chief Scientific Officer, effective September 15th. He is, however, expected to remain as an advisor to the company.
It is difficult to describe the contribution Dr. Phan has made to the company during his tenure. He has worked tirelessly to enhance our scientific capabilities and made significant, measurable improvements in our operations. He has built a solid foundation and a professional team that will carry on his vision. We both remain confident in our path forward and expect to remain on track to complete our OvaWatch longitudinal test clinical study publication and to commercially launch our EndoCheck diagnostic blood test by the end of the year. Let me briefly talk about each of these programs now. OvaWatch was developed with the intention to launch commercially in two stages. The first phase was to launch OvaWatch as a single point-in-time application for initial clinical assessment. The second phase expands the application of OvaWatch for longitudinal monitoring testing.
Although OvaWatch currently can be ordered at intervals that are determined by the provider to be appropriate for each patient, we are finalizing a manuscript related to an ongoing clinical study that, if accepted for publication, may provide additional clinical data to support and drive adoption of the test as an effective clinical tool for longitudinal monitoring of the adnexal masses. Moving on to EndoCheck, our first-generation protein-based blood test to aid in the detection of endometriosis. We are on track for a commercial launch by the end of 2023. Our current focus is on sample acquisition for clinical verification and validation, and we are on track to obtain sufficient cohort data to complete this important step.
We have secured nine sites for our EndoCheck clinical study and continue to collect samples that meet our study criteria from other sources around the world, giving us the confidence that we will meet our launch timeline. In terms of operational excellence, we have once again decreased cash used in operations to $3.4 million in the second quarter, representing a 46% reduction over the prior year, while still showing sustained growth. We completed an equity raise recently, strengthening our balance sheet to support our long-term strategic vision. We have a high-quality, effective team determined to set a new standard of care in gynecologic health, in addition to an industry standard for prudent, high-impact capital deployment. Now, I would like to turn the call over to Torsten for a review of our financial performance. Torsten?
Thank you, Nicole, and good afternoon, everyone. It is a pleasure to be here today to provide this update. We have wasted no time in my first 2 months with the company, executing swiftly on the capital needs while continuing to drive the company forward in all of our plans. When I joined, I saw a company that offered tremendous promise in advancing the care of women with ovarian cancer. There have been very few innovations in this area to date, and broad adoption of the OvaSuite products would be a significant leap forward in the practice of medicine. I would like to see this become a reality, and I'm proud to be part of a committed team executing on that promise. Now, let me turn to the financial performance of the company.
Product revenue for the three months ended June 30, 2023, was $2.5 million, an increase of 23% compared to $2 million for the same period in 2022. The increase in revenue was primarily driven by an increase in OvaSuite tests performed during the quarter, which increased 16% to 6,289, compared to 5,411 for the same period in 2022, combined with an increase in average selling price or AUP. Revenue per OvaSuite test performed for the three months ended June 30, 2023, increased 6% to $396, compared to $373 for the same period in 2022, reflecting better than anticipated collections for OvaWatch in its second quarter of adoption.
The gross profit margin for the three months ended June 30, 2023, was 62%, compared to 51% for the first quarter of 2023, and 47% to the second quarter of 2022. Gross profit margin improved due to an increase in average unit price and our ongoing focus on process efficiencies and cost containment. Research and development expenses for the three months ended June 30, 2023, were $700,000, a decrease of 51% compared to $1.4 million for the same period in 2022. The decrease was primarily due to decreases in expenses for consulting, clinical trials, and supplies. Sales and marketing expenses for the three months ended June 30, 2023, were $1.8 million, a decrease of 51% compared to the same period of 2022.
The decrease was primarily due to decreased personnel costs. General administrative expenses for the three months ended June 30, 2023, were $3.4 million, a decrease of 19% compared to the same period of 2022. This decrease was primarily due to a decrease in personnel expenses and outside legal costs. Total cash, cash equivalents, and restricted cash as of June 30, 2023, was approximately $4.5 million. Cash used in operations for the three months ended June 30, 2023, was $3.4 million, compared to $5.7 million for the three months ended March 30, 2023, and $6.3 million for the three months ended June 30, 2022.
We continue to focus on prudent use of resources and, as a result, are lowering our expected cash to be used in operations for the remainder of 2023 to between $6 million and $8 million. In July, we completed a privately placed registered direct offering of straight common stock with Alliance Global Partners as placement agent, raising gross proceeds of approximately $4.7 million, adding approximately $4.3 million in net proceeds to our cash balance. We were very pleased that we saw a broad participation of long-term existing shareholders, as well as the entire board and management team, in addition to bringing in new healthcare-focused investors. We believe that the cash on hand following this transaction will be sufficient to achieve our development program goals for OvaSuite and EndoCheck. I will now turn it back over to Nicole. Nicole?
Thank you, Torsten. I'd like to close by personally thanking our shareholders that participated in our most recent capital raise. The continued support from you, our investors, is not something that I take for granted. I'm fully dedicated to our future success and appreciate the faith you have shown in me and our incredible team. With that, I'd like to open the call for questions. Operator?
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 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 star keys. One moment please while we pull for questions. Thank you. Our first question comes from the line of Sallie Yanchus with Water Tower Research. Please proceed with your question.
Oh, hi, Nicole. Good to talk to you. Good results.
Thank you.
You know, it certainly looks like test volumes continue to improve. I gather you are in the process of replacing, finding a replacement for Dr. Phan. I mean, how far are you along in that process?
Thanks, Sally Yanchus. Yeah. We are confident in the team that Ryan built. I've spent a couple of days just confirming with, with Ryan and, and meeting with the key people in both product development operations. We have what we need to keep moving forward. We are in the process of reaching out to potential folks to come in, but at this point, we want to make a good decision, not a fast decision, and there's no reason to rush since we have a great team in place.
Mm-hmm.
-that's moving things forward.
Okay. How long was he at Aspira?
He was here for just about a year.
Oh, okay. All right. I guess my other question is, are you aware of any of the competitor companies like Guardant Health, you know, liquid biopsy companies, Guardant Health or Abbott? Are they close to developing a liquid biopsy test for ovarian cancer yet? I mean, what's your sense in the competitive environment?
Sure. At this stage, we are the only company that has a portfolio of tests available for clinicians for-
Mm-hmm.
-assessing ovarian cancer risk for any woman with an adnexal mass.
Okay.
whether or not they've been identified for surgery, whether or not the physician believes they're, they're looking at a benign or, more likely an indeterminate mass, that's more than 50-
Mm-hmm.
-or up to 50% of masses are indeterminate. We are the only company that has a product portfolio available today. I'm not aware of any market competitors that are that are entering-
Mm.
the market at this time.
Okay. All right, just one final question. I mean, you exhibited good cost control this quarter. Do you expect that to continue going forward? I mean, it certainly looks like the company's doing fine with the lower expense rate.
Well, we've, we've put out our cash guidance utilization for the rest of the year is between $6 million and $8 million.
Okay.
That includes everything that we need to spend in order to do the things we've talked about today, includes launching our EndoCheck test and our, commercial refresh strategy.
Okay.
As I mentioned, we may see a slight increase in expenses.
Mm
-especially on the commercial side, for the rest of the year. All of our... The cash guidance that we gave is inclusive of everything we expect to spend, for those initiatives.
Okay, great. Well, thanks very much.
Thanks, Sally.
Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from the line of Andrew Brackmann with William Blair. Please proceed with your question.
Hi, guys. Good afternoon. Thanks for taking the questions. Maybe if we can start just on the clinical trial front here, Nicole. I think, Nicole, you, you sort of talked about some of the trials in the past that you've run for, for OvaWatch. Maybe can you just sort of give us a refresher on any ongoing or, or future trials there? I'm just sort of trying to think about some of those initiatives, just as you guys are trying to get some additional payer win, any data that you think might be necessary to sort of get them over the hill. Thanks.
Sure, sure. Yeah. We have an ongoing study with OvaWatch for longitudinal monitoring. We expect to publish a manuscript for that test application sometime before the end of the year, which will drive provider adoption and will also, I believe, be helpful in securing additional payer adoption as well. On the endometriosis side, as we've talked about and, and I, I briefly touched on, we have an ongoing clinical study for EndoCheck that we have nine sites secure, and we're looking to add sites to that as well. We've designed that study to really meet a lot of different needs in terms of payer and provider adoption for EndoCheck, so we believe that will meet most of the needs that we would have. Hopefully, that answers the question.
Okay. Thanks for that. Yes, it did.
Sure.
Maybe just on Ova1Plus here for a minute. If, if we sort of look at the implied volumes there, it looks like they moderated a little bit sequentially. Can you maybe just sort of speak to that? Was that related to anything seasonally or sort of seasonality in the business, or is it any impact from the OvaWatch launch here? How should we just be thinking about that Ova1Plus business looking forward? Thanks.
Yeah. There, there's probably a little bit of seasonality there, as we know that women tend not to go to the doctor as frequently in the summer months, and they, they certainly don't tend to schedule surgeries that can be avoided, optional surgeries in the early part of the summer as well. It's possible. The other piece as well is that we believe that as physicians are adopting OvaWatch, they will pull back a little bit on off-label use of Ova1Plus, which we don't get paid for. You know, if there's a slight shift in volume there from Ova1Plus off label to OvaWatch, that's, that's a good thing because those are tests that we can submit for reimbursement as they were in line with the intended use.
However, we are not seeing a major shift or a moderation in the business. We're continuing to be aggressive in displacing CA-125, which is, you know, as we all know, an inferior but deeply entrenched test, for that doctors have used off label for women for surgical triage. We're being as aggressive as ever in displacing that test.
Okay. I'll leave it there and follow up offline. Thanks, guys.
Great.
Thank you. There are no further questions at this time. I would like to turn the floor back over to President and CEO, Nicole Sandford, for closing comments.
Thank you, operator, and thanks to everyone who joined us today. Appreciate the time and the ongoing support, and, we'll talk to you in the third quarter.
Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.