Good day, everyone, and welcome to iSpecimens Third Quarter 2020 Results Conference Call. At this time, participants are in listen-only mode. Question-and-answer session will follow management's remarks. This conference call is being recorded. A replay of today's call will be available on the Investor Relations section of iSpecimens website and will remain posted for the next 30 days. I will now hand the call over to Phil Carlson, Investor Relations for introductions and the reading of the safe harbor statement. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to iSpecimen's third quarter 2023 results conference call. With us on today's call is Tracy Curley, Chief Executive Officer; Benjamin Bielak, Chief Information Officer; Eric Langlois, Chief Revenue Officer; and Carly Lejnieks, Vice President of Marketing. Before we begin, I would like to remind you that today's call contains certain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21 of the Securities and Exchange Act of 1934 as amending concerning future events. Words such as may, should, projects, expects, intends, plans, believes, anticipates, hopes, estimates and variations of such words and similar expressions are intended to identify forward-looking statements. These statements are subject to numerous conditions, many of which are beyond the control of the company, including those set forth in the Risk Factors section of the company's Form 10-K for the year ended December 31, 2022, filed with the SEC. Copies of this document are available on the SEC's website at www.sec.gov. Actual results may differ materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update these statements for revisions or changes after the date of this call, except as required by law. Now it's my pleasure to introduce Tracy Curley, Chief Executive Officer. Tracy, please go ahead.

Good morning, and thank you for joining our call today. I'd like to take this opportunity to discuss how our recent initiatives to rightsize our business and enhance our operational structure and processes are paving the way for a new stage of future growth for iSpecimen. I will then turn the call over to Eric Langlois, our Chief Revenue Officer; Carly Lejnieks, our Vice President of Marketing; and Benjamin Bielak, our Chief Information Officer. Each will detail activities related to their operational responsibilities within iSpecimen. Finally, I will review our financial performance for the 3 and 9 months ended September 30, 2023, and open the call for questions. Since the first of this year, our team has advanced several new initiatives to allow us to operate more efficiently and effectively. I can say with a high degree of certainty that iSpecimen is not the same company today than we were at the beginning of this year. Every facet of how the company is operating and engaging internally and externally with our customers and supplier organizations has been reviewed and were needed improved upon. Throughout the year and culminating with a reduction in force the first week of September, we have been driving towards rightsizing the company. On September 6, we reduced our total workforce by approximately 20%. As a result of this initiative, including employee turnover during the year, the monthly expenses related to head count are expected to decrease by approximately 29% for the remainder of the year compared to the average monthly cost for the first 9 months of the year. We also made additional expenditure reductions after streamlining operations and rationalizing resources to focus on key market opportunities. All other monthly operational costs are expected to decrease by approximately 52% for the remainder of the year compared…

Thank you, Tracy. Good morning, everyone. I'd first like to touch on the embedded coordinator project. As Stacy mentioned, this project is intended to provide resources to what we believe are our best and most potentially impactful sites and enable them to generate additional revenue. Most of these clinical sites lock the bandwidth to manage the day-to-day operations, much less fulfill iSpecimen customer orders, which have historically received reduced priority. As already mentioned, 4 large supply sites have been chosen to be part of our pilot program. Embedded coordinators will be employed by the supplier, but will receive training and support from iSpecimen. Strategic growth plans have been established for all participating sites. These resources have already proven useful to our next-day quote program as well as to increased fulfillment for our remnant, bank and prospective product lines. We look forward to continued improvements, increased efficiency and revenue growth from the initial and future planned embedded coordinator sites. For sequencing, we placed a significant emphasis on launching our sequencing procurement program this year, with much of the progress occurring in the most recent quarter. This program will not be possible without the breadth, depth and great support of partners from our supplier network. It's truly been a collaborative effort aimed at helping solve a major bottleneck in cancer research. Cancer based genomic biomarkers have become an integral part of therapeutic research for immuno-oncology drugs as well as in the area of precision medicine in the form of companion diagnostic tests. These characterized tissues also serve a major role for our general life science customers, making various assays, tests, techniques and capital equipment aimed at addressing the same market. As this is now public knowledge, I want to extend a special thanks to Azenta GENEWIZ, our current commercial sequencing partner who's processed and run all of our tumor samples to date. We now believe we've amassed the world's largest commercially available single-access collection of fully next-generation sequence cancer cases using Illumina's AmpliSeq comprehensive cancer panel version 3. We're approaching 1,500 exclusive cases in the program across various tumor types such as colon cancer, lung cancer, breast cancer, ovarian cancer, pancreatic cancer, head and neck cancer, prostate cancer, bladder cancer, renal cancer, brain cancer and melanoma. These samples have been analyzed for both DNA and RNA sequencing. We've embarked on a massive multipronged marketing and sales campaign that Carly Lejnieks will speak to shortly to generate demand for all of these characterized cases. iSpecimen is already processed and shipped several orders and has built out a pipeline of 20 to 30 projects. We're in the process of reaching out to tens of thousands of contacts in the world of cancer research and are quite bullish that the program will be a success. There's more to come as we get deeper into the program and the marketing effort throughout the fourth quarter. Now I'll turn the call over to Carly to provide a more detailed discussion of our multipronged marketing strategy. Carly?

Thank you, Eric, and good morning, everyone. The marketing launch of our sequence sample offerings is focused on a multichannel multipronged approach that includes targeted outreach to a growing volume of new and existing accounts in the cancer research and cancer genomic space. We have also implemented a cost-effective digital strategy that is working 24/7 to drive awareness, demand and inbound lead generation from an expanded global target audience. To accelerate the creation of new connections in this new market segment, we are also attending key conferences, beginning with the American Society of Human Genomics, which is underway as we speak. We are confident that integrating database marketing, co-prospecting, a digital inbound strategy and face-to-face conference activities will broaden our reach and increase impact in the shortest period of time. I would now like to turn the call over to Ben Bielak, who will speak regarding our iSpecimen marketplace platform and how greater efficiencies are supporting new opportunities to scale the platform. Ben?

Thank you, Karl, and good morning, everyone. Our product and technology efforts to improve the iSpecimen marketplace platform in 2023 include updating search functionality, improving the user interface, increasing automation and enhancing matchmaking. While we continue to move the product road map forward, we made the difficult decision earlier this quarter given the results in Q2 to moderate our development acceleration. This decision does not reflect any change in direction. If anything, these changes have enhanced our exploration of options like 5 versus build strategies. The team continues to work to support immediate business needs and realizing additional value from the investments over the last year. iSpecimen continues to focus on innovative ways to strengthen the iSpecimen platform for our network of researchers and providers. We are delivering on areas such as supporting our newly announced cancer sequencing procurement program, improving the integration with our provider partners, driving improved data quality and matchmaking, including leveraging external content providers and increasing operational efficiency. Further, we are continuing to update our back-end architecture to support growth and scale, enhance security and prepare for our data service pilot, which is slated to take place in 2024. The current phase of these back-end updates is expected to be completed by the end of 2023. We believe the successful completion of the data of the service pilot will allow us to validate one of many possible additional revenue streams for the company. I'll now turn the call back to Tracy to provide a more detailed discussion of our financial results for the third quarter of 2023 compared to the same period of 2022. Tracy?

Thanks, Ben. Turning to our results. For the third quarter of 2023, we reported $2.8 million in revenue compared to $2.6 million in the third quarter of 2022 and $1.6 million in the second quarter of 2023, respectively. The current 3-month period compared to the same period last year and the second quarter of 2023 increased by $195,000 or 8% and $1.2 million or 75%, respectively. The increase in revenue in the third quarter of 2023 compared to the same period last year was primarily attributable to an increase of 527 specimens or 11% in specimen account from 4,840 specimens and the 3 months ended September 30, 2022 to 5,367 specimens in the 3 months ended September 30, 2023. The effect of the increase in specimen count was partially offset by a change in the specimen mix, which caused the average selling price per segment to decrease by $16 per specimen or 3% from $534 per specimen in the 3 months ended September 30, 2022, to $518 per settlement in the 3 months ended September 30, 2023. During the 9-month period ended September 30, 2023, we reported revenue of $7.35 million compared to $7.44 million during the same period last year. The slight decrease in revenue for the 9-month period ended September 30, 2023, was primarily attributable to a decrease in average selling price per specimen of $50 or 11% from $444 per specimen in the 9 months ended September 30, 2022, to $394 per specimen in the 9 months ended September 30, 2023. The decrease in average selling price per specimen was offset by an increase of 1,910 specimens or 11% in specimen count from 16,768 specimens in the 9 months ended September 30, 2022, to 18,678 specimens in the 9 months ended September 30, 2023. Cost of revenue…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Matt Hewitt at Craig Hallum. Please go ahead. Your line is open.

Good morning and congratulations on the strong quarter. Thank you for taking the questions. Maybe first up, what has been the feedback from customers? I realize it's very early days on the sequencing service, but what has been the early feedback? And then what has you most excited about that program as you start to look into not only this quarter, Q4 but into fiscal '24??

Thanks, Matt, for the question. It's a good question. I'm actually going to defer to Eric who's on the front lines talking with our customers about this, so it's been pretty exciting. Eric, would you like to answer the question, please?

Sure. Yes. Thanks for the question, Matt. I'd say that [indiscernible] \the most excited is just that one of the major initiatives we've done over the last couple of weeks is look back over the last year to 18 months of requests that came in for mutation characterized material and kind of reach back out to those people to get awareness that we've done this and show them we actually matched up specific cases that we had case results that match the original request. And we've received an overwhelming response rate from those customers. I mean it's nearing about 75% to 100% response rate. Majority of those customers still have those needs. They haven't been able to actually fill those needs. So that was one of the most recent signals. But what we're seeing is that people are definitely not finding avenues to fulfill these projects. I think where we are in the calendar year, people have been at this for a while, so they're filling some specific niche buckets. But the response rates, the open rates, the interest in the program and then the consistent reach out to us by the sequencing companies and companies that are offering these kind of services, telling us that it's a great program to do that they'd like to be a part of. They might want to offer up sequencing services has all been really interesting. So to your point, it is early days. In the beginning, we were really hunting for preorders and trying to get things lined up from once we started the runs. But now that we have the runs and we have case data, everything has been overwhelmingly positive about what we're doing and the direction we're going, the cancers that we've selected, the profiles that we selected, all of that has been really positive. So right now, it's just all about the blocking and tackling of trying to match up to the actual open requests that people are looking for right now.

That's helpful.

This is a program which is an that we started January 1 after some significant research on where there was a deficit in the market to fill the need. And so you tailored this program to that deficit that our research indicated and our current marketing efforts are reaffirming that for us, really exciting to see that.

That's great. And maybe - and I realize maybe not specific, but how should we be thinking about the ASPs on the sequencing and maybe the margin profile on those? I would imagine that they're - especially once you start to scale up, but I would imagine those could be some of the best margins in your portfolio, but any color there would be helpful/

Yes. Go back at margins are better than our core business.

Yes. The structure of the program has been the most interesting part, and that's kind of part of the value proposition that we've really been communicating to our customer base that is truly a collaborative effort, right? I mean our suppliers are agreeing to us to access this material at little to no cost upfront. We're able to share with them on the back end. So it's really a collaboration in that sense. And then certainly, with the sequencing partners, we feel like we're getting certainly commercial quality because we're using a commercial partner, but we're getting a pretty good value there. So overall, when we sell and market these samples to the market, as Tracy said, the margins are some of the best that we have and they're only going to improve over time.

Excellent. And then last quarter, on the conference call, you mentioned that with some of the new initiatives that you've implemented this year, both on the cost reduction side as well as some of the new programs that you services that you've implemented, you expected to get to cash flow neutral by the end of this year. Is that still the plan? Is that still on track?

Yes, good question, Matt. I probably should have been more explicit in my comments earlier about that. But yes, we just finished October, we're looking - we're doing the accounting course for that and really, really pleased that we are exactly where we needed to be from position ourselves to do that through the end of October. So the answer is that I believe we are positioned well to get to cash flow neutral. There are obviously revenue goals that need to be met, and we don't give guidance, but we're working very hard to meet those revenue goals. But on the expense side, we cut the expenses down, and we're seeing those results coming through for October.

That's great. And then maybe one last one and then I'll hop back in the queue. This year, obviously, has required a lot of - I don't know if heavy lifting is the way to characterize it, but a lot of work, both on the streamlining of the organization and on the cost side as well as the new product launches and some of that's been more back half weighted with the next day quote service and now the sequencing. As we start to look to fiscal '24, how should we be thinking about your focus next year? Next year, more about driving growth and delivering on some of these new services? Or is there still some fine-tuning of the organization that's going to be required in addition to some new product launches? Thank you.

Yes. So I believe that an organization should always be growing and assessing their core competencies and efficiencies and effectiveness. So there's still going to be some tweaking to be had to find two things because we did just do a lot of stuff. And now we've got to sort of let - let the dust bet a little bit, and then we will begin and see, okay, where else do we need to improve. But definitely, next year is all about revenue growth, especially now that we've got operations where they need to be. And also some of the technology build-out that we lead in for investment purposes, the first half of this year, even though we're blowing that work now the second half, it's still going on, and so we're going to see some improvements on our marketplace platform in 2024 as well. So it it's really ease all the way around, I believe, for the company in all areas of operations and in our ability to generate value for our shareholders.

That's great. Well, congratulations on the progress so far. Thank you.

Thank you. [Operator Instructions] And we have a further question coming free. That's from the line of James Lieberman at River Securities [ph] Please go ahead. Your line is open. Q – Unidentified Analyst: Thank you very much. I'm really impressed by the incredible momentum that you've been building and by the investments and the focus that you brought there and to see such good results coming in so quickly. So I want to congratulate you on your efforts, and I'm extremely confident on the progress you've made. I just wanted to add that to your overall narrative. Thank you.

Thank you, James. Really appreciate that.

Thank you. [Operator Instructions] There seems to be no further questions coming through at this time. So I'll hand the floor back to our speakers for the closing comment.

I would like to thank everyone again for joining us on today's call and for your continued interest in iSpecimen and also my apologies for the weight that we all encounter including myself getting into the call this moment. So really sorry about that. As you can see, we are making strong progress executing our growth strategy, our operational efficiency strategy, which is really successfully maximizing the value for our iSpecimen marketplace. We believe that we will see continued growth from our new business opportunities, and we look forward to updating you with our progress. With that, thank you, and have a great day.

Thank you. This now concludes the conference. Thank you all very much for attending. You may now disconnect your line.