On November 14, 2023 bioAffinity Technologies, Inc. (Nasdaq: BIAF; BIAFW), a biotechnology company addressing the need for noninvasive detection of early-stage lung cancer and other diseases of the lung, reported financial results for the three and nine months ended Sept. 30, 2023, and provided a business update (Press release, BioAffinity Technologies, NOV 14, 2023, View Source [SID1234637673]).

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Highlights from the third quarter of 2023 and subsequent weeks included:

Corporate and Commercial Highlights

The Company’s wholly owned Precision Pathology Laboratory Services (PPLS) subsidiary acquired the non-medical assets of Village Oaks Pathology Services on Sept. 18, 2023. The clinical laboratory, certified under the Clinical Laboratory Improvement Amendments (CLIA) of 1988 and accredited by the College of American Pathologists (CAP), is now owned and operated by PPLS.
The Centers for Medicare and Medicaid Services (CMS) released a preliminary payment decision in September 2023 for the Current Procedural Terminology (CPT) code for CyPath Lung, our noninvasive test for lung cancer, issued by the American Medical Association (AMA) in June 2023. CMS is expected to finalize the 2024 payment for CyPath Lung in November 2023 with an effective date of Jan. 1, 2024. CMS’ final payment determination is expected to favorably impact PPLS’ established fee schedule for CyPath Lung, determining reimbursement by private insurance carriers.
The U.S. Department of Defense (DOD) purchased CyPath Lung tests for use in an observational study on active military personnel at high risk for developing lung cancer (NCT05870592) and for research on the use of bronchoalveolar lavage fluid to assess cardiopulmonary function and exercise performance in military personnel post-COVID-19 infection.
Dallas J. Coleman joined the Company as National Director of Sales responsible for leading the CyPath Lung sales team, sourcing new business opportunities and expanding the pilot market launch across Texas in preparation for the national rollout. Previously, Mr. Coleman was an Executive Account Manager for the respiratory portfolio of Olympus America’s therapeutic solutions division.
Management Commentary

"The transformative strategic acquisition of PPLS in September gives us a strong revenue base as we move forward with the rollout of our game-changing CyPath Lung test. PPLS is forecast to contribute $8.7 million in net revenue over the next 12 months, with additional upside as we work to expand sales of CyPath Lung regionally and nationally," bioAffinity President and Chief Executive Officer Maria Zannes said.

"We achieved another significant milestone in September when we received a preliminary payment decision from CMS for CyPath Lung that is in line with the July 2023 payment recommendation from the Medicare Advisory Panel on Clinical Diagnostic Laboratory Tests. The CMS payment determination is a crucial step forward in our commercial rollout of our noninvasive test to improve detection of early-stage lung cancer," Ms. Zannes said. " As we begin our pilot marketing program for CyPath Lung in Texas, we look forward to applying what we learned in our beta market testing and informing and accelerating our regional and national rollout plans. As we plan to expand the geographic reach, add prescribing physicians, and partner with larger medical systems, we anticipate substantial revenue growth for CyPath Lung."

Third Quarter Financial Results

Revenue for the third quarter of 2023 increased to $298,484, up from $1,150 in the prior-year period. Prior to the Sept. 18, 2023, acquisition of PPLS, bioAffinity Technologies’ revenue was generated from royalties from sales of CyPath Lung as a laboratory developed test (LDT), clinical flow cytometry services related to CyPath Lung, and CyPath Lung tests purchased by the DOD. Post-acquisition of PPLS, beginning Sept. 19, 2023, the income from royalties and clinical flow cytometry services was classified as related party income and eliminated from consolidated net revenues, while additional revenue streams from PPLS were consolidated. PPLS generates three sources of revenue: patient service fees, histology service fees and medical director fees. Sales to the DOD were $4,500 for the third quarter of 2023.

Research and development expenses were $330,376 for the third quarter of 2023, compared with $319,744 for the comparable period in 2022. The increase was primarily due to higher compensation costs from adding research personnel and higher costs for lab supplies and reagents.

Clinical development expenses were $106,422 for the third quarter of 2023, compared with $60,941 for the third quarter of 2022. The increase was primarily due to higher professional fees related to clinical strategy evaluation for the pivotal clinical trial of CyPath Lung.

Selling, general and administrative expenses were $2.0 million for the third quarter of 2023, compared with $595,702 for the comparable period in 2022. The increase was primarily attributed to higher accounting, legal and professional fees related to the acquisition of PPLS and being a publicly traded company, higher board compensation, employee and stock-based compensation, and sales and marketing costs for commercialization of CyPath Lung.

Net loss for the third quarter of 2023 was $2.3 million, or $0.26 per share, compared with a net loss of $4.9 million, or $1.17 per share, for the comparable period in 2022.

Cash and cash equivalents were $4.5 million as of Sept. 30, 2023, compared with $11.4 million as of December 31, 2022. Management will assess opportunities to raise additional capital when the markets are favorable.

2023 Financial Outlook and Next Twelve Months

The Company expects to generate between $2.1 and $2.3 million in net revenues for 2023. This is up from $4,800 in 2022. Over the next 12 months (fourth quarter 2023 to third quarter 2024), the Company expects to generate between $8.4 and $9.0 million in net revenues.

CyPath Lung sales are expected to trend up as the Company expands its sales force and marketing efforts. Through Sept. 30, 2023, the pilot marketing program for CyPath Lung had 20 physicians enrolled, 15 physicians who had ordered tests for their patients and 44 CyPath Lung diagnostic tests conducted. Over the next 12 months (fourth quarter 2023 to third quarter 2024), the Company expects to grow the number of physicians enrolled to 82, the number of physicians that have ordered to 61, and the number of CyPath Lung diagnostic tests conducted to 284, which will contribute gross revenues of $457,166. To achieve this growth, the Company plans to expand its sale force from two to five in strategic metropolitan areas of Texas, promote CyPath Lung through branding and marketing assets, and benefit from broader reimbursement from private payers and public health insurance programs, including Medicare and Medicaid, based on CMS’ final payment determination.