GENE - Genetic Technologies Limited (GENE) Q2 2023 Earnings Call Transcript
Genetic Technologies Limited (GENE)
Q2 2023 Earnings Conference Call
Feb 27, 2023, 05:00 PM ET
Company Participants
Adrian Mulcahy - Investor Relations
Simon Morriss - CEO
Tony Di Pietro – CFO
Carl Stubbings - Chief Commercial Officer
Conference Call Participants
Presentation
Adrian Mulcahy
…for those in the US that are joining us this morning and this afternoon for Genetic Technologies First Half FY '23 Investor Webinar. With us today are Simon Morriss, CEO, Tony Di Pietro, the CFO and Carl Stubbings, the Chief Commercial Officer.
We're going to go through a formal presentation, and then we'll move to Q&A, and just to remind you, I'm sure you're aware of this at the bottom of your screen, if you want to ask any questions, please type them into the Q&A section, and we'll work through each of those in turn.
So without any further ado, let me hand over to you, Simon. Thank you.
Simon Morriss
Thanks Adrian, and also thank you to Tony and Carl for joining us this morning and welcome to everybody who's registered and joined the webinar for our first half results update. As Adrian mentioned, just a moment ago, we're going to go through a short presentation from some of the highlights and the overview of the first half. Tony will take us through some of the financials, but more importantly, we're going to open it up to a series of Q&A that Adrian will facilitate for us towards the end. So we've delegated a good half an hour block. So please feel free to type those questions into that Q&A function that time, that Adrian mentioned just a moment ago.
Just kicking things off, for those of you, new to the story, we have a world-leading portfolio in the most comprehensive, guideline-driven suite of genomic base test by human health and animal health, led by our patented GeneType multi-risk test for oncology based products, cardiovascular and metabolic diseases and non-invasive prenatal testing carrier screen testing, pharmacogenomics and pet care.
We operate three brands across the world. Our GeneType brands to serious disease, EasyDNA and AffinityDNA for a more consumer-based genomic test across Europe, America and Southeast Asia and in Australia as well. We operate in three key channels. Today, we're going to focus more around the communications around the business-to-business, the medical, the payer model. We'll talk a little bit more about that and the director-to-consumer portfolio, which is our EasyDNA and AffinityDNA.
We access all these products of our consumer initiated test channel as well, and we're going to speak mostly around the opportunities in the advancement we're going to make in the B2B channel today.
A global overview of our business as it stands today; we have about 57 employees globally, operating at about five locations around the world, two in Australia, one in Europe, one in the United Kingdom and one in the United States, and we have operations in 40 different countries around the world. We have 25 patents, is a granted opinion [ph], which we actually protect the patented GeneType multi risk test and the test for within that. We operate in 14 different test categories. We have about 51 different tests and we have partner laboratories around the world, which actually help us achieve that goal and deliver the test to consumers and patients all around the world.
I just wanted to take you through a snapshot of some of the achievements and the advancements from the team over the last 12 months. We'll look firstly, to the GeneType commercialization, the Phase 1 launch of the GeneType multi-risk test in the US and in Australia, looking at the first six diseases and we're looking forward to being able to announce Phase 2 launch in the coming days in the United States. These advancements in more than 90 medieval practices, onboarding and launching the GeneType multi-risk test and are part of the Hubs strategy here in Australia.
Presentations and invited presentations to prestigious conferences around the world to get the clinical utility and [indiscernible] in ASCO GI, the Cancers Symposium in January this year San Antonio Breast Cancers Symposium, the Precision Medicine Leaders Summit and Precision Medicine World Conference. There's some opportunities for us to showcase the amazing advancements of the R&D in the commercialization plan of the GeneType test.
The EasyDNA and AffinityDNA, completion of two acquisitions, the new [indiscernible] website ready for launch, the new EasyDNA eCommerce platform ready for launch, just doing some final checks now before that goes live. Launch of the carrier screening and NIPT into Europe through one of our partnership laboratories and partnering [indiscernible], extending opportunity infrastructure throughout India and launch of the DNA storage solution throughout not approved facility here in Melbourne.
Activating the reimbursement, which is the coverage bond throughout the US for the budget impact model independently developed by [indiscernible], a really great advantage, which is getting up the seat at the table in many of the large payers in the United States. Currently, we brought 10 active payer engagements with nearly 42 million lives covered, which we're looking to advance into commercial partnerships in the coming six months.
Some of the physician partnerships with Siles Healthcare, Dr Nicole Yap from Australian Breast Care Center and with Bruce Mann from the Royal Women's Hospital here in Melbourne. One of the greatest achievements with the team is our publication strategy, demonstrating the clinical validity and the clinical utility of our test is vitally important in the adoption of and advancement of that B2B strategy with a physician, published in plus [ph] earlier this year, published in the general precision medicine, publishing the European Journal Cancer Prevention and publishing the Journal of Breast Cancer Research and Treatment.
They are some incredible peer reviewed accolades that the team has achieved throughout the course of the last six months. We have another four publications on the way under review and we're hoping that they are going to be released over the course of the next six to eight weeks, and we -- of course, we own our own NATA and CLIA certified laboratory here in Melbourne, which does a lot of that testing for a gene type product and that's a really exciting thing.
What I'm going to do just now is I'm going to just hand across to our CFO Tony, just to talk us through just some of the financials of the first half result. Took it over to you Tony.
Tony Di Pietro
Great. Thanks Simon. Good morning, everyone, I'll just touch on a couple of the metrics that came out of the half year. So our cash receipt for the half year were up on the prior half year by about 67% to $4.5 million and that represented -- that came with a gross margin of about 45%, which is a healthy $2 million contribution to the company's results. So that also represented the sixth quarter of growth that we've had on the prior year. So we've been very happy with that.
Cash balance post the end of the year is approximately $12.4 million. That includes R&D tax incentive around $2 million, which was receivable at the half year that was then received in February. So we have that now in our account, but also we had a healthy contribution to that cash from that case we raised recently from our US capital raise. So that's bumped our cash balance up to $12.4 million at the moment.
Thanks, Simon.
Simon Morriss
Thanks Tony. One of the key aspects of the future of our business is focus and executing on a plan and I want to give you a refresh on some of the key focus areas for us as an organization and there are four of them. One is executing the B2B commercialization strategy of the GeneType multi-risk test. That focuses heavily on not only the payers in the United States, large independent doctor networks, and also concierge medicine in the United States, but also in large clinics and OBGYNs here in Australia, corporate health.
Demonstrating clinical validity and clinical utility to drive that adoption by our physicians in a GeneType test is also critical. We mentioned about four different procedures, publications that the team have been peer reviewed and published just in recent times and there are another four on the way, which we know are being in the final stages of review, and we've actually provided some commentary back, that underpins the execution of above [ph].
The third is around executing against EasyDNA and AffinityDNA, the revenue, the growth, the tests, and the channels and the marketplaces for both of those brands; key to the success and most of the revenue that we are seeing at the moment is still largely biased towards our direct to consumer channel, and we are starting to see some good signs of some revenue coming through or GeneType.
The next generation of our capability of innovation, starting with precision oncology and epigenetics; are really key next step for us as part of the holistic approach to preventative health and genomics-based testing for us as an organization going forward. The next generation of these presentations that we'll look forward to sharing is the outputs of a recent executive and board strategy data we had last week, that we'll be starting to put a lot more details and milestones and horizons behind each of these, and we look forward to sharing that with our shareholders over the course of the coming weeks and we'll have a dedicated webinar showing our plans over the course of the next six, 12 and 18 months with some milestones.
One of the exciting announcements that we shared with everybody this year was our strategic alliance with Qiagen. They are going to actually help us, improve our own capabilities with software, hardware, consumables and technical solutions and really we're starting on the oncology-based platform NGS sequencing, which is then leading to the development of some of the really most exciting comprehensive based tests that I'll talk to in the next five minutes.
So we've already started to receive some of the equipment from QIAGEN in our laboratory over the course of the last couple of weeks as a result of this partnership, and we'll be onboarding that and validating that and getting that tested. So we've actually started doing all of that tests last year before we entered into the partnership with QIAGEN, and we're very excited to help get them to partner with us going forward to advance our capabilities worldwide.
I mentioned just at the moment, and many of you may have seen the announcement of the development of the comprehensive breast ovarian cancer test. This is the world's first. So not only do we include hereditary breast and ovarian cancer germline, so variants such as BRCA1 and BRCA2, which accounts at 5% of diagnosed cancers. We also include the 10%, which is the familial or non-unknown pathogenic variants, but also most importantly, the gene type patented breast and ovarian cancer test, which is 85% of the risk that's identified.
So this becomes comprehensive in the sense that one simple test will identify an individual's risk of serious disease, whether there is a non-pathogenic variant or not and whether there's a family history or there's not. And this is going to be showcased in May in Montreal, in the BRCA 2023 Conference, when we share more details and more information about that that's coming up. So we're very, very excited about the advancements and working with the company to be able to bring this test to the wider population and not only to the wider populations, but for women 30 years plus. So from 30 to 89, this will be relevant for their risk of breast cancer. So we're very, very excited by this particular test.
The pathways to market, I mentioned earlier at the top that B2B was a critical pathway, which will deliver the most material revenues in the short to medium term for the GeneType brand for genetic technologies and we focus heavily on the payer system here. We focus heavily on large insurers, corporates, employers in the United States, independent doctor networks, and we focus heavily on OBGYN clinics.
The budget impact model that we talked about earlier validates the implementation of the GeneType test, and I'll talk through some of those outputs, which is actually getting us some fantastic conversations with these payers worldwide and really standing up and taking notice about how GeneType can actually help save lives and detect disease earlier than ever before.
This is some of the outputs of the budget impact model. The headline here is that the implementation of the genetype multi risk test for breast cancer can save the US payer system, $1.4 billion per annum. What we do is we actually take, at the moment there is 69% of women who are actually getting screened. We increase the number of people getting screened to 74%. We know that there is still a number of women that are non-compliant.
We then apply those high risk patients 6.8% to 9.2% and give them further supplemental screening, whether they be MRIs, ultrasounds, or mammograms and we screen them more often. The result of that is that we have an interval cancer drop from 14.8% to 8.8%. That's a 40% drop in interval cancers because we are screening people annually from one simple test, and an early stage detection goes from 57% to 67% and that means that the earlier that we can detect the disease at stage one or even earlier, the earlier, the cheaper it is for the payer to treat and the better the survival rate is for that particular patient.
So counterintuitive to what a model would be, this actually increases the number of people that are being screened. This actually increases the number of supplemental screening touchpoints that a woman would have if they're at high risk, but it actually drops interval cancers and increase the amount of people who are early detection. So that's a really, really exciting output for us.
Our direct-to-consumer, we have finished the brand refresh of EasyDNA. We have finished the website development, just going through some final tech run throughs at the moment, that will lead to improved lead generation, improved Google ads, Facebook ads, content marketing, influencer marketing there, and an opportunity for us to embark on new channels, new targeted B2B segments and new markets around the world. So really excited, that is just only moments away just talking to the team in Europe last night. It was really exciting for us to be able to see that come to life and touch all the links and click everything through. So we are very, very close to that.
Here is a couple of the actual screenshots that were taken yesterday from there. And you can see in the bottom left-hand corner, we've actually got a direct chat now with WhatsApp. So people can actually ask questions while they're in, so we can minimize the amount of potential cart [ph] abandonment of people that actually don't know what they're actually buying, or we can navigate them and triage them through to what they're actually really going to buy. So I think that there's some really good advancements because we will become a 24X7 business globally for people to be able to buy tests with all of the different tests that we offer around the world.
With that I think I would like to probably hand it back to Adrian, stop sharing my screen, so that we can open up maybe a couple of questions. I can see in the chat box. There's a few coming through. So Adrian, I might stop sharing my screen and hand it back to you if that's okay.
Question-and-Answer Session
Q - Adrian Mulcahy
Great, Simon, thank you for that. Yeah, absolutely right. We've got a bunch coming in. So let me start off, and I kind of take these in the order and this looks like a question for you, Simon. You've announced a strategic alliance with QIAGEN. Can you explain more about the center of excellence facility and how this is an effective way to further your strategic goals?
Simon Morriss
I think that alliance with QIAGEN is actually two ways. Instead of them having all of their equipment showcased in a training facility, we're going to be working on putting that into a commercial laboratory facility, but at the same time that it really advances some of the developments of some of the comprehensive testing that we are doing and our natural first step with QIAGEN is around NGS, it's around a monogenic disease, it's around some of those diseases that actually really compliment and are naturally adjacent to tests such as a GeneType oncology test. And that's why we've started with hereditary breast and ovarian cancer. We have the most science, the most evidence, the most validity behind those two tests, and it makes a lot of sense for us to add that.
So it's complimentary to both of us, and it becomes a commercial center of excellence as opposed to a training center of excellence. So we're really excited to be partnering with them there, in the top three laboratory diagnostic businesses around the world. So they're a global partner and they will be able to grow with us. So we're very excited.
Adrian Mulcahy
Thanks, Simon. Next question. Are there opportunities for genetic technologies to further expand its distribution markets or channels?
Simon Morriss
Yeah, I think one of the highlights on one of Tony's slides there earlier on was around market entry strategy. We're always keeping an eye on new markets and opportunities to take our tests as we continually build the ethnicity validation of all of our tests.
One of -- three of the markets that are under review, they're not -- there's not a plan to enter at this stage, but under review and being detailed explored is the UAE, India, China, and then even Southeast Asia. There's four key markets that we are really pressing heavily into with regards to the GeneType multi-risk test, assessing what the model looks like in each of those markets there. But there is tremendous growth opportunity worldwide for GeneType as we identify new opportunities. So yes, the answer, the simple answer to that question is absolutely.
Adrian Mulcahy
Thanks Simon. Couple of questions for you, Tony. I think there's a number of with respect to the recent capital raise, but let me -- let me kind of group these together and kind of help you. So the recent capital raising has provided you with additional funding. Where will this be deployed? You're on mute, Toni,
Tony Di Pietro
Apologies for that. So net direct placement expenditure, we received approximately $6.3 million in Aussie dollars during February. So that's contributed to the balance that we spoke about before around that $12.4 million that we've got. Largely we'll be deploying those funds to continue to establish a commercial pathways for the GeneType risk test with payers and with practitioners as well. But I think the other important area is the research and development of further risk type tests or the gene type risk test for other serious diseases.
Adrian Mulcahy
Thanks, Tony. I think there's another one here for you as well. So, what is the source of your company's product revenues reported for the half year?
Tony Di Pietro
So, that's largely from the consumer -- direct-to-consumer platform with EasyDNA and AffinityDNA. So EasyDNA was the largest contributor of that. That was a business that was acquired approximately 18 months ago, but we did also have a healthy contribution from the more recently acquired smaller business AffinityDNA and that was about 331-K and encouragingly, we also had, a small but growing contribution from our GeneType risk testing as well.
Adrian Mulcahy
Thanks, Tony. I'm not sure how you would direct this question, Simon, I'll leave this in your hands, but during your opening statement, you mentioned the company will announce Phase 2 of the commercialization of the US in the coming days. What exactly is Phase 2 and what are the phases thereafter?
Tony Di Pietro
Yeah, I think it's a good question. I'm happy to answer that one there. So we're just waiting on formal notification and hoping that that's going to come through. When I say coming days during the month of March, we believe that the three new tests for the multi-test being in atrial fibrillation, melanoma and pancreatic cancer, which also adds to the multi-risk test, are going to be available for us to be able to add on to the already GeneType multi-risk test with the other six tests in the United States.
We're just waiting notification on that very, very soon. We've been talking about that for quite some time, and it's a little bit later than what we would've liked, but we're really excited that that's only a matter of days or weeks away. So really, really excited by that.
Phases thereafter are going to be directly attributed to us advancing the comprehensive story around the multi risk test, which looks at, as we spoke about before, the monogenic component as well as the polygenic component, as well as the clinical risk models, which is the hereditary breast and ovarian cancer, which is the first one.
So once we've got these next three tests out, it'll be really focusing on the advancements of the comprehensive risk strategy for us as an organization in the markets that make the most sense. So that's probably the following phases. I think I also mentioned that we will be sharing more details around that as a direct output of the board and executive strategy session that we had last week in the coming webinar that we'll get you to facilitate as well, Adrian in the coming weeks.
Adrian Mulcahy
That's great. Thank you, Simon. Looks like we've got a couple here for you, Carl. We can't leave you without saying anything. So, with the new comprehensive risk assessment tests for breast and ovarian cancer, what are the avenues to market for this product?
Carl Stubbings
Yeah, thanks very much, Adrian. Let me answer that in two parts. The avenues to market for this program are similar, if not identical, to what we're currently doing with GeneType. So that avenue we will use that same sales channel, but it adds another important and I think valuable channel as well. And that is in the US in these employer environments where employers undertake extensive screening on their employees as a part of wellness and risk assessment to help employees and help their insurance manage the employee's health.
The key here is this closes the loop because Simon's alluded to, you can do a monogenic test and a familial testing that adds up to about 15% of the total population that gets cancer. It doesn't address the other 85. By adding the polygenic risk score and the clinical factors that we do in our combined test into the one test and I emphasize is it's one test, one sample. We can do all those things. And this is one of those cases where we really did talk to the customer, and in this case, it's sort of employer groups and aggregators, and they're very excited about the opportunity that having this comprehensive combined risk test can provide to them and their customers.
Adrian Mulcahy
Thanks Carl. Another one for you and we've got a couple of questions on the GeneType products. So I'll try to group some of these questions together, but with the recent publication stating the gene type models, supersedes other commonly used clinical models, Gale [ph], IVUS, and Rosner, what were the views and was it well received among the medical physicians and when would we start seeing revenue from this product group as well?
Carl Stubbings
Right. Well, so let me start by answering the last part first. We are starting to see traction and growth in that now. And as I think Tony referred to it, we've seen some modest revenues, but they are beginning to grow. And so each day we -- each week we onboard another medical practice that's implementing the test for their patients. So it's incremental growth, but it is growing.
In terms of what clinicians that we've interacted with, the doctors that we've interacted with, have seen as a benefit of our risk assessment versus some of the more traditional ones is a couple of things. One is we demonstrate, and the publications have demonstrated that we will identify more patients that are at risk and that's key. If we find more patients that are at risk, we're able to implement risk mitigation strategies or enhance surveillance. Therefore, again, that Simon has said previously, we can identify that cancer or that disease earlier, intervene earlier with a better patient outcome.
There's another really, I think, important element that we've heard from clinicians about why our risk assessment tests I'm going to use the word better, but more easily implemented than those more traditional models is they're much simpler. Clinicians, doctors, particularly in general practice are extraordinarily time poor. This is very, very straightforward, relatively simple questionnaire, one simple saliva sample, and they're done.
So, what we've heard from doctors is they love the simplicity of this, the short amount of time that it's required from their point of view to implement it. So on those scores, we are getting some very, very positive messaging back.
Adrian Mulcahy
Thanks, Carl. I think there might be one other one here for you. So we'll keep you at the microphone. So can you explain more about the engagement with ALVA10 and what the next steps are for the reimbursement pathway for the US payers?
Carl Stubbings
Yeah, thanks. No, that's a great question. We originally engaged ALVA10 to develop what we've referred to previously as the budget impact model. And this is essentially a model that Simon alluded to earlier, which demonstrates the economic health, economic benefits of implementing in this case, the gene type risk assessment test for breast cancer.
So Phase 1 of that was to develop this model. That model information then enables us to engage with these large payers, well and small payers, in fact, all payers in the United States. With that model, we're able to -- it effectively gets the seat at the table, and that's the second phase of our engagement with ALVA10. So they are facilitating our meetings with the payer ecosystem in the US. And I think Simon referred to it earlier on, we have about 10 payers, large payers in many cases that we're actively engaging with. And I think in total, they're covering about 45 million lives. So we're talking about a very, very large market opportunity.
It's a long process, engaging with and then, and then ultimately having a test like this covered, but we've started that process and I think we are making very, very good progress. The other thing I'd add to it, Simon referred to our publication strategy. I cannot emphasize the importance of this publication strategy because those publications also help us when we put them with the budget impact model and then take that in further engagement with the payers.
Adrian Mulcahy
That's great. Thank you, Carl. Next question, and I'll leave this in your hand, Simon to work out who should be best to answer, but the new breast and ovarian cancer test, what date will it be commercially available and what work is to be done to make this happen?
Simon Morriss
Yeah, I think most of the work that needs to be done is largely procedural with regards to our partner's laboratory and the development of that in the United States. We've got a partner laboratory who can actually make this available population wide at a really affordable price. So it means that we can address massive amounts of the market and the population.
So it's around developing the final pieces of the technology, putting all of the tests together in one workflow and making sure that we get the reports out for physicians that are in a really usable format. We'll have much more detail on that available in the course, probably at the Montreal BRCA conference in May, which is the first and second or second and third of May in Montreal. So we'll be able to give much more detail around that and the timings for its commercial launch. It's around the validation, the workflow and the reporting process, and we believe less around the regulatory framework and anything there to bring this product to market.
So that's a fantastic achievement from the team to develop something. I think. They're already excited by what the next tests could look like in this same comprehensive model and how fast we can advance having effectively a monogenic component to the overall multitest. So the team are working hard about how they can make this happen and what that look -- what that could look like.
So we are really excited about the R&D component about that coming forward. So yeah, we'll do one first get HBOC right, get it launched, get it out there, but they're already thinking about how can we make this even more comprehensive and more valuable population wide for a bigger addressable market.
Adrian Mulcahy
Thanks, Simon. It's been a great discussion. There is one final one, and I reckon this is probably not a bad one to finish on actually. So with the comprehensive portfolio of testing offered by genetic technologies, are you looking to develop additional products?
Simon Morriss
Yeah, I actually it just leads nicely on from what I was just talking about. We can absolutely look at cardiovascular with coronary artery disease. We can absolutely look at Lynch syndrome supporting colorectal cancer. Absolutely we can. We can actually look at prostate cancer for men as well and early detection. So there are a number of other products.
What we would really, ideally love to do is actually be able to do it all in one particular test, a comprehensive men's panel, a comprehensive women's panel, which looks at monogenic and integrates with the genotype multi risk test at the same time, which becomes a really powerful product for physicians to be able to use in one simple non-invasive saliva based test and as Carl mentioned earlier, a very largely simple questionnaire for a physician to be able to do because they are absolutely time poor. So the pipeline of development of products that are truly relevant to the market is well in the sites in our scientific team.
Adrian Mulcahy
That's great. Simon, look, thank you, thank you and thank you your colleagues, Carl and Tony, but let me hand back to you for any kind of final remarks to end today's session.
Simon Morriss
Oh, thanks Adrian. I just wanted to finish up by thanking all of our shareholders for joining this morning. We have had a really big audience. I think there's about between 30 and 35 that have come and gone over the course of the last 30 minutes. And we really appreciate you showing us the level of interest and the time to really learn about our journey.
We are absolutely focused and committed on delivering material revenues for this business. We have an amazing pipeline. We have an amazing partnership strategy and we have an amazing team of people that are focused on executing this plan. We have a very prosperous and very, very strong future ahead of ourselves over the next six, 12, and 18 months, and we look forward to providing you all with more updates along the way. So we thank everybody for joining us and we appreciate everyone's feedback. Thank you.
For further details see:
Genetic Technologies Limited (GENE) Q2 2023 Earnings Call Transcript