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LipoScience (LPDX)

Q4 2012 Results

March 27, 2013 16:30 PM ET


Bob Yedid - IR

Rick Brajer - President & CEO

Lucy Martindale - EVP & CFO

Tim Fisher - COO


Bill Quirk - Piper Jaffray

Dan Arias - UBS

Matt Taylor - Barclays



Good day ladies and gentlemen and thank you for standing by and welcome to the LipoScience Fourth Quarter and Full Year 2012 Earnings Conference Call. (Operator Instructions). It's now my pleasure to turn the floor to Bob Yedid with ICR. Please go ahead.

Bob Yedid

Thank you Joey. Good afternoon everyone and welcome to LipoScience’s fourth quarter 2012 financial results conference call. Before we begin I will read the following Safe Harbor Statement. Statements or comments made on this conference call maybe forward-looking statements and may include but are not necessarily limited to financial projections or other statements regarding the company’s plans, objectives, expectations or intentions. These matters involve certain risk and uncertainties. The company’s actual results may differ materially from those projected or suggested at any forward-looking statements due to a variety of factors which are discussed in detail in the company’s filing with the Securities and Exchange Commission. Joining the call today are Rick Brajer, President and Chief Executive Officer and Lucy Martindale, Executive Vice President and Chief Financial Officer. After our prepared remarks we will turn the call back to the operator for your questions. It is now my pleasure to turn the call over to Rick. Rick?

Rick Brajer

Thank you Bob and good afternoon everyone. Thank you for joining the call. So this is our first call as a public company, I will describe both our strategy and our current priorities in detail. I’ll then turn it over to Lucy Martindale our CFO to review the fourth quarter and full year results.

As many of you know LipoScience is a high growth diagnostic company which is pioneering a new field of first life diagnostics based on NMR with events to quality of patients here. Our first proprietary diagnostic test the NMR LipoProfile test measures the number of low density lipoprotein particles or LDLP in blood sample and provides physicians and their patients with actual information. The personalized management of risk for heart disease, physicians have ordered our first test over 9 million times to manage their patients. For the full year 2012 the company generated revenues of $54.8 million in revenues up 19.6% over prior year at gross margins of 81.6%.

We have just begun to penetrate the market opportunity in the U.S. The 1.95 test physicians ordered in 2012 represent less than 3% of the market for cholesterol test or lipid panels that are used for managing patients. Lipo science is now driving toward becoming a clinical standard of care by decentralizing our technology and expanding our venue of first life diagnostic test. We received 501(k) clearance from the FDA for the Vantera our fully automated version of our proprietary platform in August of last year made it commercially available in December and are currently negotiating agreements replacement at national and regional clinical laboratories. More over we’re working in partnership with leading academic centers to develop new high value test for that platform.

On Friday January 25th, LipoScience began trading on the NASDAQ under the ticker symbol LPDX, LipoScience Diagnostics. This is clearly the most important financing and company branding events in our company’s history today. We rate net proceeds of $44.4 million as a result of the offering. This IPO has supplied the growth capital that will allow our company to continue to execute on the three core elements of our strategy. Market conversion, platform expansion and driving towards clinical standard of care. Now the primary focus of this growth plan is on market conversion, by market conversion we mean expanding our sales force nationally, increasing market awareness to gain new users, educating new and current users about the clinical benefits of our test to broaden test utilization and their practice, broadening medical policy coverage and listing local key opinion leaders and cardiologist and expanding relationship with clinical diagnostic laboratories. We’re excited about the $1 billion market opportunity for the NMR LipoProfile test which we calculate by taking the 78 million cholesterol test performed in the U.S. annually for patient management applying an estimated 40% market conversion rate and then multiplying by our current CMS reimbursement rate of $43.36 for the NMR LipoProfile test.

We have shown on a regional basis that we can achieve solid market penetration when these various drivers of market conversion come together. For example we have four states in the South-East where we have 6% to 11% penetration of the market because we have all the right resources in place. Our critical massive sales reps, solid payer reimbursement, the support of key hospitals and the support of our lab partners. At the time of the IPO in January we had a total of 50 sales reps, several of which were in sales training. We have another sales training class currently process which will bring the number of sales reps in the field of 54 by early Q2.

We expect the increase to 60 in the field by late second quarter, in addition to sales reps and we call cardiovascular consultants. We will be expanding the number of medical science liaisons that work with leading academic centers, key opinion leaders and cardiologist to influence community standards of care as well as healthcare policy and reimbursements experts to obtain even broader medical policy coverage for the NMR LipoProfile test. Now the second core element of our strategy is platform expansion. By platform expansion we mean decentralizing access to our technology with Vantera and developing new essays using our NMR phased technology platform. Availability of Vantera in commercial laboratory is a key step towards providing broader access for the NMR LipoProfile test. Discussions of activity regarding commercial placements with national and reference labs and hospitals are occurring.

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