Earnings Labs

Precipio, Inc. (PRPO)

Q3 2018 Earnings Call· Mon, Nov 19, 2018

$31.65

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Transcript

Presentation

Management

Operator

Operator

Good day everyone, and welcome to Precipio's Third Quarter 2018 Corporate Update Call for Shareholders. Please note, that this event is being recorded. And I would now like to turn the call over to Miri Radomski. Please go ahead.

Miri Chiko-Radomski

Management

Thank you very much, and good afternoon, everyone. 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, forecast and assumptions and are subject to significant risks and uncertainties. These statements may be identified by words such as may, will, should, could, expect, intent, plan, anticipate, belief, estimate, predict, potential, forecast, continue or the negative of these terms or other words or terms of similar meaning. Risks and uncertainties that could cause our actual results to differ materially from those set forth in any forward-looking statement include but are not limited to the matters listed under risks factors in our Quarterly Report on Form 10-Q for September 30, 2018, and our Annual Report on Form 10-K for the year ended December 31, 2017, which is on file with the Securities and Exchange Commission, as well as other risks detailed in our subsequent filings with the Securities and Exchange Commission. These reports are available at www.sec.gov. 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 obligations to publicly update any statement or information including forward-looking statements whether as result of new information, future events or otherwise, except as required by law. Now, let me hand over the call to Ilan, Precipio's CEO.

Ilan Danieli

Management

Thank you, Mary. Good afternoon, everyone. I'd like to thank everyone for joining the call. I also appreciate all the shareholders that have been communicating with the company throughout this period and those that sent in questions in advance. We'll do our best to address those questions throughout our call. So on today's call, we'll address several aspects of the business. I'll start with the state of the commercial side where I'll discuss three key aspects of our business; our Liquid Biopsy offering, our Pathology Services, and the status of the new technologies we have and continue to develop. Following that, our CFO, Carl, will provide some insight into the financial aspect of the company. And lastly, I'll address some of the matters in the recent proxy statement pertaining to the share price and our strategy around the company's capital needs as we continue to grow. So let's begin with our flagship technology, ICE-COLD PCR, also known as ICP. Over the past quarter, and indeed since the start of 2018, our team has made significant progress on the product development side of ICP. Only a year ago we launched our first ICP test, a single lung assay with two resistant mutations on the EGFR gene. Today, we have 5 panels covering 17 exons within 5 genes; these panels are relevant to patients with lung, colon, melanoma and pancreatic cancers which make up almost one-third of the cancer patient population. This product line will continue to expand throughout 2019 to cover more cancer patients and meet our customer's needs. So what does this mean? We've invested in the technology to develop a robust offering that is becoming more and more appealing to the market and meets our customer's needs, and there is no better evidence of this appeal than the recent…

Carl Iberger

Management

Thank you, Ilan. Good afternoon. This is Carl Iberger, Chief Financial Officer for Precipio. From the financial perspective, Q3 has been an extremely challenging time for the company, but with that said, Q3 has also been a very productive quarter for the company. For the shareholder call, I'd like to first identify some specific items regarding our productivity and then discuss our challenges. From the productivity side, highlights come as Ilan has reviewed; from the R&D team, our sales organization and our diagnostic lab located in New Haven, Connecticut. Each group has done Yeoman's [ph] work during Q3 that will benefit upcoming financial performance. First, the products and services highlighted, IV-Cell and HemeScreen demonstrate our ability to deliver technology to solve diagnostic testing problems and enhanced revenue and bill profitability. A key point that should not be lost in this discussion on the proprietary solutions side is that while solving problems is rewarding, in a net R&D environment, the key is to be able to incorporate the solution in a commercial lab and a production environment. So we expect significant benefits coming from both, HemeScreen and IV-Cell. Second, our sales group; in Q3 the sales team has grown not only in size but the reps are gaining traction in the market. We've seen steadily improved numbers on our new account closure rates. We're concentrating on significant accounts and focusing on increasing our market share. For 2018, pathology sales have accelerated quarter-over-quarter, we're pleased with this growth rate and we look for continued acceleration in Q4. Third, I'd like to point to the success internally of our diagnostic lab here at New Haven. In Q3 the lab management successfully expanded it's in-house molecular testing capabilities. This expansion will all but eliminate the need for very expensive outsourcing that we have incurring…

Ilan Danieli

Operator

Thank you, Carl. And I want to thank you and your team for doing an incredible job at managing the challenging financial landscape of our company and enable us to have the resource to execute on our mission. So in terms of final comments, as many of you read the proxy, we called for a special shareholder meeting on December 20, 2018. I know many of you were surprised to see some of the measures to be voted on and in particular, the reverse split. I want to be very clear on our intention, which is only one, to create optionality. As I said in the letter that shareholders circulated last Friday, while my team and I strongly believe in the pipeline and growth trajectory of the company, we cannot rely solely on that. Any responsible manager must have a Plan B, and even a Plan C and a Plan D in their back pocket; this is what this is. We are presently in volatile markets driven by the impacts of politics, trade wars, nuclear missile testing's and wildfires, any external event can impact even the most successful companies in ways that are impossible to predict. That's why we included in the proxy, a statement -- a proxy statement request to authorize managers to effectuate a reverse split if needed. This does not mean we're going to do a reverse split and we see no reason to do so unless absolutely necessary to regain compliance with NASDAQ. However, management feels it is important to have the option available and ready to be acted upon if needed, in the best interest of the company and our shareholders. There were several questions surrounding the timing of the special shareholder meeting and why we didn't wait until the end of the first quarter.…