Welcome. Day one of the 46th annual TD Cowen Healthcare Conference. I'm Dan Brennan, I follow tools and diagnostics. Pleased to be joined here on stage with the management team of Sera Prognostics. I have to my immediate left, Zhenya Lindgardt, who's our President and CEO. To her right, we have Tiffany Inglis, Chief Medical Officer. Then to her right, we've got Austin Aerts, who's the Chief Financial Officer. Yeah, Austin, I hope I got your last name correctly there.
You got it.
Terrific. I'm off to a good start. Listen, I thought we'd kick it off as we typically do with some high-level questions. I thought, you know, the most important thing here for some people may be listening in the audience or on the virtual stage is maybe discussing the unmet need for preterm birth that you're seeking to address. Maybe just discuss a little bit about the opportunity for preterm birth and kinda why it's important.
Well, incredibly, it is a huge opportunity and a huge unmet need, with about one out of 10 babies being born before full term, which is considered before 37 weeks of gestation. When we are at a healthcare conference and go from room to room, we see a lot of rare conditions, or even common conditions, but one out of 10 is incredibly common. So one out of 10 women will give birth prematurely. The unmet need is so dire is because there are very, very few options for physicians on how to screen for a potential preterm birth. If you speak with OBGYNs, just, like my colleague, Dr. Inglis, there are actually a lot of factors that may contribute to prematurity, but very few tests can definitively screen for risk for preterm birth. The cost to society is enormous.
Actually, babies who are born prematurely, not only do they have higher healthcare costs for the system and many potential cardiovascular, neurological, respiratory, complications and conditions in their lifetime, they also will have potential learning difficulties. Over time, future adults who were premature babies will have lower earning potential, more health issues over the course of their lifetime. Some research shows that the costs of lifetime healthcare for premature future adults will be 50x to 300 x higher than for those children who were born at full term. Cost to society is in the tens of billions, not just for the childbirth, but also over time.
Maybe with that, evidence in hand, if you will, about the unmet need, obviously PRIME was published earlier this year after the abstract was released. I thought it'd be helpful just to set the table before we dig into the commercial plans and how you're targeting that, you know, tackling that, if you will. Maybe just on PRIME, maybe just high level since the publication, just kind of what's been the feedback from doctors and the community?
I'll invite Dr. Inglis to share.
Thank you so much for having me. I think the feedback has been really positive. It's a 5,000 person randomized controlled trial looking at the effects of screening women, and then those who were screened high risk were treated with this intervention bundle, which includes baby aspirin, vaginal progesterone, and a weekly nurse call. Basically screening for preterm birth, medication compliance, and then visit compliance. All interventions cheap, low risk, and extremely effective. 20% reduction in NICU admissions, which obviously for those paying the bill is huge. Then a 56% reduction in births below 32 weeks, which for clinicians is very impactful.
From that perspective, We've seen a lot of positive feedback at the fact that there's both clinical impact and health economic impact when you look at this test and how it does for women once you insert the intervention at the back end.
Meanwhile, the trial wasn't powered for morbidity and mortality. You did show a large reduction. I mean, the doctors, does that resonate? Or because it's not powered, is it something that they don't really focus on as much?
Yeah. The reduction in neonatal morbidity and mortality was actually a 20% reduction, and it was statistically significant, so they're very happy with that. I think too, we've seen neonatologists really start to jump on board as well 'cause they're really thinking about that baby on the other end that they're taking care of. Really seeing. The NICU impacts are impressive. NICU [utilization] can come from either reduced admissions or reduced days. The study actually showed a reduction in both, but the NICU admission reduction is huge because if you're not going to the NICU at all, a lot of those hidden costs that we think of, depression, admissions for future infection, breastfeeding success, they're all impacted positively by just not having the admission whatsoever. It's really been very impactful on both sides.
Is there like in some of our checks, doctors were very constructive, but one of the things that did come up in terms of the intervention bundle, progesterone, daily aspirin, weekly nurse calls, the outcome data looks terrific. How it all comes together with these three pieces, there were some questions. I mean, how do doctors react to like the care package, if you will, that drives the results? Are they fully on board? Are there any questions around that?
I think, it's a, it's overall, it's a good reaction. They agree, "Oh, we use these interventions all the time. They're not expensive, right? Like, this makes sense." Some of them, "What if we doubled the aspirin?" Or, "What if we, you know, what if I did the call? What if I did those screeners digitally?" Right? There's, there's definitely, interest, I would say, more than pushback on how do we start refining that to make it work with the way I take care of patients, which I think we're really open to and excited about in some of the real world evidence development. Yeah.
Mm-hmm. Okay. I mean, the number needed to screen was 4.2 to save one NICU day. Like, is that, you know, in the context of all the data you've shared so far, and I'm sure you know, the dossier they are submitting for guideline inclusion and doctors and payers is super deep, but is that number an important one? Some of our checks you know, it was an important metric. Just wondering, does that come up, and if so, is it more with payers, doctors, or both?
It's interesting. I think with payers, the number needed to screen, it's very obvious to them from the get-go the cost of the test is. Let me take it back. There's four women needed to screen to prevent one day in the NICU. The test is not 1/4, you know, 1/4 of the NICU spend, right?
Right.
Essentially, they very quickly can do that math and say, "Yeah, this actually has a lot of health economic potential with just NICU spend alone," right?
Right.
Which we know there's so many hidden costs. From the physician side, the society side, number needed to screen is a pretty well-validated tool that they've used in the progesterone space and some of the other things to look at preterm birth prevention. The number needed to screen to prevent a NICU admission is 40, or it's 38.5. I roll it up to 40 in my mind. Essentially, when you look at vaginal progesterone used after a transvaginal ultrasound, the number needed to screen to set those guidelines in place that exist today was 150. When you think about this is almost 4 x better than what they're doing today. It's really a very impactful number from that perspective, from both the society side and from the payer side.
Terrific. Maybe, and I'm sure we'll still come back to the data, but maybe just toggling over to the plan, which each quarter we get an update, but now we're between quarters, which is terrific, so we get to hear. Since PRIME's been published, you know, your high-level framework, working toward developing additional evidence via publications, right? Also just really getting into the field and, you know, building that plan for guidelines. Just maybe update us on, you know, how that's been going and maybe prioritize what, you know, kind of how you've set up the company to go tackle this opportunity.
Absolutely. It's been very exciting to prepare for PRIME publication. Last year, as we shared with you, we went deep in the specific target states where we have PRIME sites. We've got a lot of really strong champions, venerable institutions that are believing in our test to advocate for reimbursement with the local payers. We expanded the list of states that we've been going deep into, and the number of programs where we're engaged with the payers to show and demonstrate in real world what the test can do for their member population. We're very excited that instead of three to five states last year, we were able to reach to 10 states, and this year we're going to increase that even more to additional five-plus states.
We have entered the ecosystem in each of these states through a number of entry points. We reached out directly to the state Medicaid directors. They're very excited about what we can do for the Medicaid budgets, which, as you know, are facing a 10% cut imminently. We have this unique opportunity for the state Medicaid budgets, 27% of the inpatient costs being childbirth-related. We are impacting where the money is to produce in-year savings for their budgets. Especially states that are hard hit by preterm birth, like Louisiana, where sometimes it's one out of four babies that is born prematurely, it is an enormous health economic opportunity for them as well as a clinical outcomes opportunity for their members.
We're excited to go directly to state Medicaid directors and Medicaid plans. We're also engaging with the insurers' commercial plans for all of their lines of business to show the opportunity to them in a variety of programs. On our side, we're also partnering with providers that specialize in maternal care. We look forward to sharing more about that as the year goes on. We've received over the last eight weeks a tremendous response from the outreach after PRIME publication. Really looking forward to showing which programs are launching and announcing how quickly these initiatives are progressing.
The providers, so what would constitute a provider? Just so I understand that.
Well, it could be a physician's office, it could be a series of clinics, it could be even virtual providers that are organized. You know, there's quite a few that use telemedicine, that use care, you probably have heard of them-
Mm-hmm
To support employers, in getting their moms through pregnancy successfully.
When you think about these pilots, just kind of remind us, what's the target this year for pilots, and how much volume could a single pilot generate? Then if they shift from pilot to full reimbursement, kinda just walk us through maybe a predicate example?
Yeah. Last year we talked about targeting three to five states.
Mm-hmm
Launching one to three programs, and we've expanded beyond that.
Mm-hmm.
We've reached to 10 states and are engaged with 13 insurance potential partners. We've got two programs running, we've got a handful which we are hoping to to close and launch very shortly. What could it look like? Let's say a program is a pilot, there are different flavors of engagement, of course. If a program is a pilot to show on a few hundred-member population, it will take us depending on which providers we work with and density of member population and their practice of that insurance company, hopefully it will be a few months to enroll those patients. four to five months for them to deliver the babies, a couple of months to get the outcomes and drive to a decision.
Typically, what we found is all of the payers in a state get convened by the Medicaid director, especially for Medicaid population. They share the outcomes of what works. Even if there's one payer in the state that is running a program, it's very likely that everybody will be interested in the outcomes and will jump on board as we are successful in showing the outcomes. Majority of the state Medicaid programs have quality metrics that have to do with either NICU stays or low birth weight, which are the outcomes that we know our test helps drive substantially better outcomes in. We look forward to showing in the, let's say, 10, 15 states this year, let's say half a dozen, three to six major programs.
I do think the conversion to full-scale reimbursement contracts is still some time away because the processes have a long lead time. But it's been heartening to see even some states put in the language into their budgeting, budget planning requests to include preterm into state coverage, which is quite incredible this early on and just eight weeks after the publication. Be on the lookout for those 10, 15 states news. We will report on a quarterly basis and look forward to sharing more.
If the states put preterm for coverage, they would do that preemptively before even these pilot studies report out?
Yeah. It's completely unrelated sometimes. That's why I was mentioning there's a couple of entry points. States have many levers. Maybe Tiffany, you can speak to how NIPT was adopted, for example, or doula coverage...
Mm-hmm
was adopted by, state Medicaid programs.
Yeah. the-
They don't need to run a pilot.
The state Medicaid agencies have a few different ways that they can bring in sort of innovation or new technology or new opportunity. They can do it through waivers or, they can partner. The plans can bring forward ideas and do what's called in lieu of services or value-added benefit structures. Between the state Medicaid agency themselves and the Managed Care Organizations, there's about four or five different avenues to cover in the process of leading to, like just a typical pathway of coverage. As they look at that, they've used it a lot in extending postpartum coverage for 12 months. Texas is still under a waiver to do that. They've been there for 10 years. The doula coverage has been done. Originally it was a waiver in Florida, and now it's a full benefit structure.
They use it quite a bit in women's health, especially maternity care, when they look at how to address the poor quality of maternal care.
The reason we're accentuating the focus on Medicaid is because about 50% of births in this country are covered by Medicaid. It's an incredibly important fragmented payer for us because every state Medicaid does things differently, and we need to address them one by one. Because we have such a breakthrough innovation, typically it is commercial regional payers that move faster. In our case, it's been Medicaid plans and Medicaid programs that have been the most innovative and forward-looking in adopting the test.
Commercial regional would move ahead of guidelines?
Absolutely.
Yeah. In NIPT, some of the payers moved before the society even had a statement about them. There's precedent. Doula is the same. The doula coverage, especially in the case of this test, and there's a lot of things in healthcare that claim to have clinical and financial impact, but they don't, right? Most things don't. In this case, this does. For the states, especially in Medicaid, the preterm birth rates are so much higher in Medicaid as well. This is really solving a key problem that they have. They could definitely do this before, say, a society guideline would change. They can move forward.
On the commercial plan. Commercial plans would also move forward.
Mm-hmm
...potentially before guidelines.
Yeah. If the state Medicaid agency says to the Managed Care Organizations, "You know, you must cover this," then they have to cover it. It takes precedence.
Yeah. How about just traditional, like, non-Medicaid, just traditional.
Yeah. Like, for commercial population?
Uh-huh. Yeah.
Yeah. They may or may not. They can move forward without the society itself saying that through their medical-
Right
Necessity guideline coverage policy process. Those processes are very individual to each payer.
Right.
We triggered all of those processes upon the publication of PRIME that week. We sent hundreds and hundreds of emails. They're all relooking at their guidelines now that they have this randomized controlled trial in front of them.
Right. 'Cause I think we were more under the I think, I mean, I can touch base with William, but I think we're in the view that, like, the guidelines would trigger commercial coverage. Medicaid, obviously, a huge market. You're going state to state, which is great, but it is a commercial as well. Maybe just on the Medicaid again, right? You've got maybe 10 or 15 states, some of which made up these pilots. [audio distortion] A pilot, like, it could take a year for minus report out, couple hundred pages. You've got just preterm birth, preterm tests into the [g uys].
Let's sequence of like annual, the legislative, like the med-Inclusion would be announced. Is there like a drop-dead date? Is it like by March or something like that? When, when do you think we'd hear on some of these announcements?
It's different state by state.
Oh, is it?
It depends on... [audio distortion] If, let's say, later decided to come through their process, follow through, it has different... It's only in convening every two years, dates every... From a state department, if they used to do it within the process, which is another they could choose, that could happen anytime they're doing their budget process. Date is like...
Got it.
I think an annual look they're doing is pretty common. It's just not on March or on June.
I-
It's in that annual look.
It sounds like in 2026 we could see a state or two Medicaid say we're gonna kinda write this coverage in.
That's. Well, at least we have indication that some states are looking at it.
Mm-hmm.
Whether or not they will be successful in putting it in the first year, we don't know. Incredible [audio distortion] to it is and can do for if they're looking in the year when they need to produce 10% savings.
Maybe just one more. Typically, to get that, do you think it's not a pilot? [audio distortion] It's nor or is it... Yeah.
We're discussing obviously year's budget.
Right. Yeah.
It takes time to act and pull through.
Mm-hmm.
thinking about it the right way. Of course, the first one is the [audio distortion]. Once they're in, there will be others that will follow.
How much education is needed? Like, so even if You've got [audio distortion], but now all these Now this test heard a lot of doctors aren't aware of it. Just what's the awareness factor?
That's where work will begin for our medical team.
Yeah
Sales team. We will need to go door to door. Of course, armed with the legislative action or budget action by the state, awareness building is gonna be a lot easier.
Mm-hmm.
A lot easier. Do you wanna add?
No, I totally agree. I mean, we'll definitely need to educate. We're doing that now through the society work, right? Going to SMFM, going to ACOG, going to all the conferences and educating docs and getting that awareness as well will help build to then, to your point. Then once that day come covered, then that education even easier. It definitely going to be a door-to-door for sure.
Mm-hmm.
We have a great this year to meetings. We're going to meet OBGYNs where they are, both [audio distortion] digital through platforms. A lot of them pick up their news now on the digital. They engage faster than going to a meeting and taking time out of their patients.
Mm-hmm.
We want to make sure that with podcasts that our PIs and Dr. Inglis are doing to raise the awareness to a completely different.
Mm.
We know where our work comes.
You know, we haven't even got the guidelines, and it's only eight minutes left. Interesting. We've gone on. On guidelines, which is a huge focus, obviously, it's huge focus of the calls. You know, maybe just remind us on your latest thinking on guidelines and the path forward there.
We actually just left, Society for Maternal-Fetal Medicine's Annual Conference a few weeks, a couple weeks ago. Had a great conversations there. We were published in their journal, so that obviously is very, it's very helpful. It's a very good sign. Working with their council and their leadership from their foundation, to deepen our partnership, broaden our further research opportunities together to continue to enhance how we use the test and how we best use the test. Also their rapid response or their response team on how they feel about this and their endorsement is what I would call it.
With ACOG, well, that meeting is later this year, working with them and have met with the writers of both the tailored prenatal care and the spontaneous preterm birth prevention guidelines, which are their two guidelines that hit our space. They as well are very interested in looking at what this looks like and how that is. One of them even going as far as to say, "This is definitely tailored, personalized prenatal care." It really is the first thing in maternity that takes data specifically from you and gives your risk on this pregnancy alone, which is really interesting. So.
Have you learned anything since the publication as you've continued? You know, you have a lot of the right people on the, on the publication tour involved, so I'm sure your knowledge of the process was very high going into it. Nonetheless, we've heard other diagnostic companies waiting for guidelines. Sometimes it takes way longer, and it's impossible to put your finger on it. You had a lot of evidence and knowledge ahead of time. Nonetheless, since the publication and what have you learned? How are you thinking about, you know, kind of frame out what might be realistic, possible, anything on that front?
What I would say, and then Tiffany, please correct me, is, it will come in stages. It's very important to know that it's not once and done and, you know, if we wait for years, then all of a sudden there's a big breakthrough and we will see come over time. Society, or with a response, we will see something in the matter of, I don't know, a year, two years max. The evidence, incorporation into the bulletins does take longer. That takes two to three years. Full revision of guidelines. For example, taking the tailored prenatal care, which is a title shift in maternity space, which will roll through all of their bulletins. That will take five to 10 years.
Mm-hmm
I suspect. That's what, when Tiffany discusses with the leaders, within maternal-fetal medicine space, that's what they're thinking about, is what is the sequence in which they're going to shift the guidelines. I just wanted to put it out there that it's gonna happen in stages. We will see signal, over time. Tiffany, please elaborate on that. Do you agree with that?
Yeah, I totally agree. They'll come forward with, you know, statements and things of that nature, but true guideline rewrites are usually three to five years.
Mm-hmm.
So, um, and that's not-
It's kind of five or 10? five or 10, three to five?
Well, all of the bulletins.
Oh, okay.
Yeah.
You know.
In the maternity space. ACOG usually, they're supposed to relook at their stuff every two to three years. I would say recently it's been three to five years.
Mm-hmm. Got it.
That's sort of how they function their timeline. Yeah.
It's important to know when we say guidelines, what are we talking about? Our spontaneous preterm birth space is governed by one Bulletin 234. Tailored guidance that Tiffany is referencing that was issued that will cover multiple cases of [audio distortion].
It will play for a spontaneous birth, definitely eclampsia, care for diabetes. Their bulletins to change.
What other data do you think need published in order to for this are you efficient?
I think publications help, doctors well enough that from that perspective, continued publication throughout this year and looking at sub-analysis of what we had, I think the health economic impacts in writing and getting published will be very valuable not only for societies and providers as well in groups. As we think about, I think all of those things really deep data and sharing more and more will help to build that awareness, to build that acceptance, and to build how this works for me.
While you have, like, really guided for forward revenues or volume, something, investors looking at the company are looking at this really big opportunity. It's unmet need, really good data, differentiation, all that stuff's good, figuring out, like, how do we think about one, two, three, four, five years? When do they hit? Is there any way you would help provide some building blocks? Obviously, Medicaid team's in front of us. It's a big unmet need. That's great. Commercial can start, the guideline's gonna take longer. How might someone try to frame out what things look like over the next five years?
The key leading indicators, of course, number one is the footprint. How many states we're in, how many Medicaid programs are engaging with us and starting to issue some coverage. Because they would never accept a program if they didn't have the intent upon seeing the results of it to extend coverage.
Mm-hmm.
That would be leading indicator number one, just engagement. For us ramping up our teams and the reach, we are aiming to get to all 50 states. We're not quite there yet. We're still scaling. That would be number one. I do think we will get there much faster than we had anticipated. Remember we talked a year ago, I was talking about three to five states. Well, we're double that. Perhaps we will double this year's expectation as well. I do think we will reach most in three years. I do think seeing strong green shoots on reimbursement in two to three years will unlock massive revenue potential in the pull-through.
It is reimbursement that drives ultimately the revenue that we all want to see and that slope of that trajectory in three to five years. When we look at our fellow diagnostic tests in big markets, their time to peak revenue is seven to nine years, and the pivotal trials is usually a major catalyst. We're looking forward to achieving a good way to our peak potential in the next five years.
So you have, what, $100 million in cash on the balance sheet exiting Q3?
That's right.
How are you balancing this investment to get to 50 states on Medicaid when there might not be that much revenue early on from those states and there's a long game on commercial and on guidelines. How do we think about the burn and kind of commercial plans as we look ahead to the next, you know, 12, 24 months?
You're right. We had $100 million, little over $100 million on the balance sheet at the end of Q3. Our net cash OpEx last year was in the low 30s. We're gonna stick to that again this year in the budget, and that's why we're reallocating significant spend from clinical and R&D type spend to more commercial spend. That's where the trajectory is, just reallocating that capital from R&D and clinical type spend to commercial spend. If we keep it that low 30 range, right, $100 million in the cash or $100 million on the balance sheet gives us three years of runway to execute on the commercial strategy and reach some of these value inflection points.
Like how many salespeople would that entail if you're shifting that $30 million, you know, kind of focus from R&D to commercial?
I wouldn't just focus on sales because we need medical-
Well, marketing, yeah.
Field medical, absolutely. Our payer team, all of those are being strengthened as we speak. We do think we'll need to double the size of our sales team this year. Let's see where we are next year to be able to pull through. I'm looking at some of the bigger states, like Texas or California. They will need multiple salespeople. We're going to be ready to invest behind the wins.
Great. Well-
The reimbursement wins.
Maybe in the final few seconds here, how would you like to wrap it up? Like, what message you wanna leave investors with about the Sera story?
We're really excited about the traction in the United States, but there's also the rest of the world. Another news for this year will be we're entering Europe. We're going to submit our dossier and get the CE mark and start locking in partners because Europe has some single-payer systems that are much easier to get reimbursement without the fragmentation that we've described in the United States. Look forward to talking to you about that opportunity in the coming quarters.
Excellent. Well, thank you all for being up here. Thanks everyone in the audience. Perfect.
Thank you for having us.
You got it.