Precipio, Inc. (PRPO) Earnings Call Transcript & Summary

Welcome to the Precipio shareholder -- Third Quarter 2022 Shareholder Update Conference Call. [Operator Instructions] Please note that the conference is being recorded. 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, forecasts and assumptions and are subject to significant risks and uncertainties. These statements may be identified by words such as may, will, should, could, expect, intend, plan, anticipate, believe, 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 statements include, but are not limited to, the matters listed under Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021, 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 obligation to publicly update any statement or information, including forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Now let me hand over the call to Ilan Danieli.

Thank you, and good afternoon, everyone. Thanks for joining our 2022 3rd quarter shareholder update call. I appreciate those who sent in questions, and we'll do our best to address them in today's call. As we come to a close in 2022, I'd like to address some of the goals we've set out at the start of the year and did not reach. I'd like to discuss some of the achievements and, most importantly, the steps we're taking and the changes we're making to make sure the company aggressively pursues and achieves its goals that were set out. Earlier in the year, we set out various goals for the company, which included both revenue growth targets as well as financial ones. While we have made some progress towards our goals, we're not there yet. This is disappointing, and we are by no means content with where we are at. Running a business is a process of continuous learning, particularly in a situation where we are essentially launching a new line of business within the company. There are several internal areas within the company that underperformed. And for those, we will be making changes so that we can do better. Realizing the results from those changes takes some time and determination, and this is what we're focused on, ensuring that the impact of those changes is rapid and substantial. It is important for me to convey to you that I, as CEO, take responsibility for the company's situation and hold myself accountable. Furthermore, my management team is also held accountable, and we've all been working hard to analyze the internal reasons within our company for where we are and put together an action plan to ensure that we meet those goals. I also recognize that our stock price has moved in the wrong direction. I'm not going to stand here and give excuses around the global economy, market conditions or things like that. The company's performance in achieving its goals, coupled with market conditions, have negatively impacted our share price. This, too, is disappointing reality we must face. And myself and management as well and each of the company's employees are aware of this and the responsibility we have towards you, our shareholders. In that context, I'd like to share with you today 3 of the main -- of the many lessons we learned. The action plans put together and the resulting changes we've made and will be making sure -- to ensure we're on track to meet those goals. Number one, it's all about the team. Anyone who has ever been part of a managed business knows that its key ingredient is not the technology, the product or market. It's the team that is able to take all of those components and execute. We have a capable R&D team that's created product that market wants. Yet our commercial team did not deliver the targeted results and, therefore, sales and revenue growth did not follow as expected. In midyear 2022, we evaluated the way we work and decided it's time to bring in additional high-caliber experienced people from the outside in order to strengthen the product's commercial team. This was not an easy decision to make because it requires investing in hiring talent, and good talent ain't cheap, while knowing that there is a certain lag until the company sees revenue results. So going back to the principle every management knows and followed by the team, we set out to hire ourselves a solid commercial team. We're extremely fortunate to be able to bring in the talent that we did with senior executive experience in molecular product sales, such as Sharon Robins, who headed up molecular sales for Qiagen, a $10 billion company focused specifically on molecular diagnostic products and a company we directly compete with. ; and Keith Meadors who headed up sales and distribution for a multibillion-dollar health care company. One of the things that I'm most proud of is that we are able to attract these talented people who left their jobs to come and work for our company. They did that for a few reasons because they knew they'd be part of something meaningful and key members of a strong team and because they would have a major impact on our business. And we believe that this impact is well on its way. With this team in place, we are already seeing a change in how our product and commercial team functions, our level of interaction with our partners and our customers, and I have no doubt this will yield the results we all expected. The second area which needed support is marketing. While our technology and products are solid, like any product in a competitive market, they need proper marketing support, and we didn't have that in our company. So we hired Greg, our Director of Marketing, and his presence has already made a significant impact. In his relatively short tenure, Greg and the team have created important content required to support the sales of our products. This includes product spec sheets, operating manuals, videos and other supporting materials that any serious company must have. In addition, we have a new website that is better organized and more reflective of the company's value proposition and our goals, with all this content available online for our customers to access. We also recently presented our first peer-reviewed poster in the world's most prominent molecular trade show. Having a professional-looking presence with a proper marketing support has already yielded dozens of leads and potential customers from this trade show. We have a system and a plan to manage all these leads and the team to follow up in an organized manner and convert them into customers in a rapid manner. The last factor I want to discuss was related to our distribution partners. As we stated in the past, our strategy has always been to rely on distribution partners rather than trying to build our own direct sales force. Issues of cost, return on investment and reach into those customers were just some of the key factors that helped us arrive at that decision, and I still think it's the right strategy. However, midyear, we realized we needed to beef up our distribution efforts. Partnering with a powerhouse, such as Thermo Fisher, was exactly what we needed. In July, we signed a distribution agreement with them, and within 3 months, we commenced the launch of our partnership. A second distribution partnership was signed a month later and announced in September with a similar formidable name whose name I, unfortunately, cannot disclose, but it's a name you all know. And that partnership was launched soon after. To date, these partnerships have collectively yielded over 50 qualified leads on a potential sales funnel of over $10 million annually. And this is all within the first 60 days of this partnerships. We have a few big customers that we hope to close before the year-end. And when we do, I assure you, those will be announced. Each of those customer contracts will take a nice chunk out of our cash burn and move us closer to breakeven. There is nothing we are doing that is more important than closing those deals. And our team is all hands on deck to get them done. So we now look forward to what we can expect. Our goals remain the same: revenue growth of our pathology services division as well as our products division. Our goal is to reach cash flow breakeven and financial independence so that our shareholders can see the growth in the business translated into equity appreciation. I do believe we have taken the steps necessary to move the company towards those goals. And while I realize that our financial statements from the last quarter don't yet reflect that, the operations, the team, the commercial efforts are all pointing to that direction. I'd like to wish you all and your families a happy holiday season. Thank you for listening, and have a nice evening. We'll see you in the next year.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.