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Biocept, Inc. (NASDAQ:BIOC) Q1 2020 Results Conference Call May 13, 2020 4:30 PM ET

Company Participants

Jody Cain – LHA IR

Michael Nall – President and CEO

Tim Kennedy – SVP, Operations and CFO

Cory Dunn – SVP, Commercial Operations

Conference Call Participants

Jason McCarthy – Maxim Group

Sally Yanchus – Brookline Capital Markets

Operator

Good day and welcome to the Biocept First Quarter 2020 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded today.

I would now like to turn the conference over to Jody Cain, LHA Investor Relations. Please go ahead.

Jody Cain

This is Jody Cain with LHA. Thank you for participating in today’s conference call.

Joining me from Biocept are Michael Nall, President and Chief Executive Officer; Tim Kennedy, Senior Vice President of Operations and Chief Financial Officer; and Cory Dunn, Senior Vice President of Commercial Operations.

During this call, management will be making a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts and generally can be identified by terms such as anticipate, estimate, believes, could, expect, intend, may, plans, potential, predicts, projects, should, will, would, or the negative of those terms.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those statements, as well as performance or achievements that are expressed or implied by the forward-looking statements. In particular, there is significant uncertainty about the duration and contemplated impact of the COVID-19 pandemic. This means results could change at any time and the contemplated impact of COVID-19 on Biocept’s operations, financial results and outlook is best estimate based on the information for today’s discussion. For details about these risks, please see the Company’s SEC filings.

The content of this call contains time-sensitive information that is accurate only as of today, May 13, 2020. Except as required by law, Biocept disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call.

Now, I’d like to turn the call over to Michael Nall. Mike?

Michael Nall

Thank you, Jody. And good afternoon, everyone.

We’re reporting strong first quarter results with revenues in excess of $1.4 million. This is a 41% increase over the prior year, driven by a 27% increase in average revenue per patient as physician customers are ordering more assays for sample. We also benefited from operating efficiencies that have improved gross margin by 50 percentage points versus the first quarter of 2019, as we make progress on our goal to become gross margin positive.

We are reporting these strong results even with the impact of the COVID-19 pandemic. We estimate COVID-19 led to an approximate 15% to 25% decline in commercial test volume in Q1 versus Q4 2019 and also impacted opportunities for us to gain new customers. Declining test volume during the pandemic is an industry-wide issue with some labs reporting year-over-year volume declines of 50% or more. Our outlook is for commercial volumes to decline by approximately 30% to 40% in the second quarter over the prior year. This assumes a continuation of the trip for a gradual increase in volume as we move through the remainder of this period.

Understandably, oncology practices during the COVID-19 pandemic have reduced their hours of operation and postponed or canceled patient appointments. Similarly, many hospitals have reduced surgeries in cancer patients, some of whom have compromised immune systems have been reluctant to visit a physician office. Further, declines in clinical trial enrollment are having an impact on sales of our CEE-Sure blood collection tubes and research-use-only or RUO kits, noting that these products comprise a relatively modest percentage of our overall revenues.

Importantly, we are positioned to weather the pandemic and for return to growth. We are an established leader in liquid biopsy and our target Target Selector testing provides critical information to physicians in determining treatment decisions for their patients diagnosed with cancer. We fully expect that when oncologists and hospitals resume patient schedules, our test volume will gradually return to more normal levels.

We are particularly pleased to have strengthened our balance sheet, having raised net proceeds of more than $36 million since the beginning of December from financings and the exercise of warrants. We appreciate the confidence of our institutional investors who over the past several months have provided us with funding and on favorable terms. We believe that based on historical and planned cash usage, our current funding is expected to support operations through most of 2021. However, with the uncertainty introduced by the impact of COVID-19 on revenue and collections, our cash runway may be shorter.

Our foremost concern during the pandemic is for the safety and wellbeing of our employees. As a molecular laboratory performing patient testing, we’re an essential business and have maintained operations during the pandemic. We are providing safe conditions for our lab professionals through social distancing and staggered shifts, while delivering the same excellent quality and turnaround time without interruption or delay. Notably, we have maintained our full staff of Biocept with no layoffs or furloughs, having instituted work-from-home policies and strategies, designed to emerge from the pandemic in a strong position.

We are also responding to the pandemic by broadening our menu and can now accept samples for COVID-19 testing. We’re able to provide this testing due to our specialized licensed molecular lab staff who’ve been trained to perform COVID-19 testing at our high-complexity, CAP-accredited, CLIA-certified, BSL-2 safety level laboratory here at our San Diego headquarters that is equipped to perform these tests. We expanded our relationship with ThermoFisher Scientific and have validated their FDA approved for Emergency Use Authorization, or EUA testing of the TaqPath molecular diagnostic platform for SARS-COVID-2.

We can run these COVID-19 tests quickly with turnaround times of an estimated 24 to 48 hours. This is much faster than many large national labs that can take up to 10 days. Biocept clients have had difficulty gaining specimen collection kits to send to Biocept for testing and to-date, we have not been able to perform any COVID-19 testing for customers. The challenge in securing swabs and reagents for PCR COVID-19 specimen collection kits was recognized by California Governor Gavin Newsom, in his daily briefing yesterday. Importantly, he pointed to PCR testing, like we provide, as providing high-quality and reliable results compared with point-of-care reagent pop-up test kits. In order to address the challenge of securing these tests and to provide this needed testing, we intend to manufacture our own specimen collection kits for distribution to clients and expect those kits to be available in June. As a reminder, we already routinely manufacture our own materials for our oncology testing. So, we have a team in-house to do this.

Our current capability allows us to run approximately 400 COVID-19 tests per day, and we can ramp that to about 3,000 per day. We will consider increasing capacity from there, based on demand.

As you may know, Governor Newsom has made clear his interest in wide-scale testing. We’re gearing up to make sure we are prepared should test volume increases. We are appreciative of the increase in Medicare payment for testing to approximately $100 per test from the previous $51 per test. We continue to advance our growth strategies through this challenging period and have announced several significant developments that position Biocept for a strong future.

In March, we’ve launched testing that detects and analyzes cancer biomarkers on circulating tumor cells or CTCs as well as ctDNA or circulating tumor DNA found in cerebrospinal fluid. We were among the few national CLIA labs to offer biomarker detection to analyze and identify important alterations that can help these patients qualify for a therapy that can potentially extend life. Cory Dunn will provide more detail on assay’s launch.

We also launched our technology allowing us to detect key oncogene mutations using blood and tissue through our RUO kits. These kids allow molecular laboratories around the world to utilize our Target Selector assays to detect these mutations through the analysis of tissue gained from surgical biopsies as well as through ctDNA gained from blood-based liquid biopsies. Our ctDNA platform utilizes our patented Switch Blocker technology to enrich the specimen for mutations of interest, resulting in ultra-high sensitivity and specificity compared to results currently used in most labs. The first combined tissue and liquid biopsy kits available is for the detection of the EGFR mutations, which are among the most frequently evaluated biomarkers for non-small cell lung cancer.

Additionally, we recently announced receipt of CE-IVD Mark for these kits, which allows us to market them in the European Union and other countries recognizing the CE-IVD Mark. Importantly, with this award, we can now provide customers in these geographies with a solution start to finish, from collecting blood, the sample in our blood collection tube, to transport using our specimen shipper, and finally to performing the assay in their own lab using our molecular test kits. This solution provides molecular labs recognizing the CE-IVD Mark, the ability to conduct our Target Selector assays on tissue, which is the most current standard of care, and from a blood sample, which is where the market is going.

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Today, I am pleased to announce that we are launching the biomarker BRAF to our menu of assays available as RUO kits to be performed on tissue or blood. Mutations in the BRAF gene are an important factor in determining treatment in melanoma, lung, and other cancers, and are of great interest to researchers and physicians. As you have seen with our first launch of EGFR testing, we will focus our efforts on biopharmaceutical customers globally and for clinical customers outside of the U.S. Our plan also includes applying for CE-IVD for this new offering in the future.

As we expand our reach internationally, we’re also expanding our intellectual property. Most recently, we were granted patents in Australia and Brazil covering our Target Selector oncogene mutation enrichment and detection platform. We now have 39 patents worldwide covering our cutting edge molecular technology.

We continue to present compelling data that further validates our technology in peer reviewed journals. In March, we announced the publication of previously reported yet highly compelling clinical data in the Journal of Clinical Pathology that further validates our Target Selector qPCR Assay using patented Switch Blocker technology to identify cancer-related mutations in liquid biopsy samples.

Our study examined 127 clinical assays for mutations commonly associated with cancer found in patients with EGFR BRAF and KRAS genes. Each Target Selector assay in the study demonstrated extremely high accuracy, sensitivity and specificity, compared to results obtained from tissue samples,, showing a 93% to 96% concordance to blinded tissue samples across all assays.

And finally, many of you have seen our 2020 proxy filed with the SEC. And shareholders should be receiving the proxy material in the mail in the next week or so. We will be holding our Annual Meeting of Stockholders in a virtual format on June 5th at 1:30 pm Pacific Time. Instructions on joining this meeting are in the proxy material. Among the proposals is one, authorizing a reverse stock split. Our Board is requesting stockholders to vote for this proposal, so that we have the option to raise our stock price to maintain the $1 per share NASDAQ continued listing requirement. A reverse split requires approval of the majority of shares outstanding and not simply a majority of shares voted. So, it’s very important for all shareholders to vote their proxy as the non-vote will count as a vote against the proposal.

And with that, I’ll turn the call over to Tim Kennedy to review the financial results. Tim?

Tim Kennedy

Thanks, Mike, and good afternoon, everyone.

As Mike mentioned, for Q1 2020, we reported revenues in excess of $1.4 million, compared with $1 million in Q1 2019. This 41% increase is due to higher revenue per accession, as we report on more tests per accession ordered by referring doctors. Commercial reimbursement, based on historical mix and test per accession, is in the $1,400 range, up from the $1,100 range in the prior year period. The increase was predominantly due to more reported biomarkers per accession. We continue to launch new assays and improve operational processes, leading to increased testing capability and physician ordering.

In Q1 2020, we received 1,306 total accessions compared with 1,325 total accessions in Q1 2019. Commercial volume in Q1 2020 was 985 compared with 1,011 in Q1 2019. We believe that the decrease is due to the impact of the COVID-19 pandemic.

Cost of revenues for Q1 2020, as a percentage of revenues improved 50 base percentage points, compared with the prior year period. Total cost of revenues was $2.9 million compared with $2.6 million for the prior year period. So, with revenues increasing 41% over the prior year, cost of revenue increase only 13%.

In 2019, we began implementing automation in our CLIA laboratory, which we believe led to further leveraging of our fixed costs, as we pursued our goal of positive gross margin. We anticipate being able to provide incremental laboratory capacity at minimal expense to accommodate higher volumes. We also are implementing additional actions that we anticipate will further lower our cost of revenues.

R&D expenses for Q1 of 2020 were $1.3 million, compared with $1.2 million during Q1 of 2019. The slight increase was primarily attributable to development and validation costs related to additional offerings such as cerebrospinal fluid or CSF and COVID-19 testing.

G&A expenses for Q1 2020 were $1.9 million, an increase of $223,000 versus Q1 2019, primarily due to a reclassification of certain customer service and related expenses from sales and marketing to G&A. However, G&A expenses as a percentage of revenues improved to 132% in Q1 2020, compared with 164% in Q1 2019.

Sales and marketing expenses for Q1 2020 were $1.5 million, compared with $1.4 million for Q1 2019. This increase was primarily attributable to commissions on higher revenue. As a percentage of revenue, sales and marketing expenses in Q1 2020 narrowed to 101% versus 134%, a year ago, despite higher marketing costs related to the launch of new tests.

Other expense net for Q1 2020 was $2.2 million, compared with $62,000 in the prior year period. This non-cash increase was mainly due to $2.1 million in warrant inducement expense.

The net loss for the first quarter of 2020 was $8.3 million or $0.11 per share on 79 million weighted average shares outstanding and includes the $2.1 million in non-cash inducement expense and the impact of COVID-19. This compares with a net loss attributable to common shareholders for the first quarter of 2019 of $6 million or $0.61 per share on 9.8 million weighted average shares outstanding.

Cash and cash equivalents were $21.5 million as of March 31, 2020, compared with $9.3 million as of December 31, 2019.

In addition to the $2.3 million in net proceeds from the warrant inducement offering during Q1, we received an additional $700,000 from the underwriter exercising its over allotment of warrants from the December 2019 underwritten financing transaction.

In March 2020, we completed two registered direct offerings, raising net proceeds of approximately $14.7 million. And in April, subsequent to the first quarter close, we raised net proceeds of approximately $9.6 million from a registered direct offering. And as Mike mentioned, while we believe that based on historical and planned cash usage, our current funding is expected to support operations through most of 2021, however, with the uncertainty introduced by the impact of COVID-19 on revenue and collections, our cash runway may be shorter.

I’m now pleased to welcome Cory Dunn to our call to provide an overview of our commercial progress. As you may know, Cory joined Biocept in October of 2018 as Vice President of Marketing and was promoted to Senior Vice President of Commercial Operations in February of this year. Cory?

Cory Dunn

Thanks, Tim. And I’m delighted to be speaking with all of you today.

I’d like to begin by discussing the actions of our sales forces sources taking during the pandemic to engage with our physician customers. Because of limited access to clinics for in-person meetings, we have provided our sales team with full work-from-home capabilities, utilizing virtual web meetings with physicians. This approach has resulted in the vast majority of physicians we’ve reached ordering specimen collection kits. We have also increased outreach to our customers through social media outlets such as Twitter and LinkedIn. Importantly, we are generating significant interest with neuro-oncologist following the March launch of testing that detects and analyzes cancer biomarkers on CTCs and ctDNA found in the cerebrospinal fluid, which is essential fluid that nourishes and protects the brain and spine. Especially once the tumor metastasizes into the cerebrospinal fluid, identification of biomarkers and treatment is very critical.

Profiling biomarkers is key to physicians selecting the best treatment option for up to 30% and 36% of patients diagnosed with breast and lung cancer, respectively, who may likely develop brain metastases.

As Mike mentioned, Biocept is one of the only national CLIA lab to provide biomarker detection to analyze and identify important genomic and proteomic alterations that can help these patients qualify for a therapy that potentially can extend life. This is a growing patient population of patients with cancer are living longer due to advances in cancer treatments, and thus are more likely to experience disease progression.

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The ability to detect biomarkers in the cerebrospinal fluid of patients with brain metastases is a true unmet need. We estimate that about 90,000 patients with breast or lung cancer live sufficiently long enough to develop brain metastases.

Our sales force has reached out to neuro-oncologists and the reception has been highly favorable, with many joining virtual meetings that include our medical staff. Since our commercial launch of this new test in March and despite challenging circumstances, our sales team is working to access the almost 300 Board certified neuro-oncologists nationwide, each of whom represents a potential new Biocept customer.

Importantly, and although early, we are seeing repeat business at prestigious academic centers. The importance of this testing is evidenced by a recent case study of a patient we tested. This mother of two in her late-30s was diagnosed with triple negative breast cancer and brain metastases, a brain tumor was removed through surgical resection which showed her to be HER 2 positive. She was placed into clinical trials but her cancer continued to progress. Her physician sent a sample of her cerebrospinal fluid to us for biomarker testing. The results of our test showed HER 2 amplification. This confirmation provided the confidence and affirmation for the physician, patient and her family to move forward with planned Herceptin therapy. We wish the patient and her family our very best.

We’re also leveraging our mobile phlebotomy offering during the pandemic. Some physicians have continued to utilize this at-home collection service for patients to obtain blood specimens in lieu of visits to their doctor’s office. I want to mention that Seattle Genetics recently gained FDA approval for its drug tucatinib to fight aggressive breast cancer, including patients with brain metastases. This oral drug targets the HER 2 protein that promotes the growth in cancer cells found in approximately 20% of patients with breast cancer. It is encouraging to see another therapy come to market, which underscores the value of our liquid biopsy to detect HER 2 alterations.

And finally, we are making great commercial progress with independent physician associations or IPAs. Our clinically actionable biomarker testing coupled with cost-effective benefits are resonating with value-oriented stakeholders. We look forward to continued success in this area.

So, in summary, the commercial team continues to support the execution on our strategic initiatives during the challenging time, and we are effectively using our efficiently-sized sales force to maintain existing physician relationships while developing new ones.

With that, I’d like to turn the call back to Mike.

Michael Nall

Thank you, Cory. And actually, thank you to both of you for your outstanding leadership for our Company during this pandemic.

While we’re pleased to be able to support public health efforts by offering COVID-19 testing, as a company, we remain focused on oncology. That said, for the near future, we expect COVID-19 testing could be an important aspect of any laboratory, including ours that can perform molecular testing. As long as the need is there, we will provide these critical testing services.

Our focus will continue to be on increasing adoption of our patented proprietary liquid biopsy assays and other molecular assay products with our broad offering of less-invasive cost-effective solutions that help physicians determine the best treatment pathways for their patients with cancer.

To-date, we have tested approximately 24,000 patient samples with our proprietary biomarker assays. These assays are based on our differentiated platforms that leverage information from both CTCs and ctDNA, both in blood and importantly, as Cory discussed earlier, in cerebrospinal fluid. We continue to generate clinical evidence that builds further support for the high sensitivity and specificity of our biomarker assays and remain focused on getting data published and presented. We are focused on increasing testing volume, growing revenue per accession, and expanding opportunities where we can leverage our investment in intellectual property all critical to create shareholder value. Like everyone, we’re looking forward to the lifting of shelter-in-place restrictions and for our business to return to a more normal pace.

Our longer term corporate priorities remain unchanged. These include, increasing market penetration with a focus on neuro-oncology, urology, breast and lung cancers, growing sales of our Target Selector molecular assay kits and our CEE-Sure blood collection tubes, increasing market penetration of our Target Selector NGS lung and breast panels under our collaboration with ThermoFisher and securing Medicare coverage for these assays, entering into additional strategic commercial and technology partnerships, both global and domestic signing agreements with new third-party health plans including capitated plans and expanding our relationship with Blue Cross Blue Shield, publishing clinical case studies and presenting data at scientific conferences that further validate our Target Selector testing and launching additional assays.

Importantly, we have sufficient capital to sustain us during the COVID-19 pandemic and to execute on our strategy. I’d especially like to thank our entire team at Biocept for their hard work and dedication during this challenging period.

And with that overview, we’re now ready to take questions. Operator?

Question-and-Answer Session

Operator

Thank you. [Operator Instructions]

Michael Nall

While we’re waiting for the first question, I’d like to remind our stockholders to return your proxy voting cards. We appreciate your support for the initiatives our Board has endorsed.

Okay, operator, we’re ready for the first question.

Operator

Thank you. Your first question comes from Jason McCarthy from Maxim Group. Please go ahead.

Jason McCarthy

Hey, Guys. Congratulations on the progress, because the widening margins, you got with BRAF tests going. And there’s a lot we could talk about in oncology, which is obviously the core focus of the Company, but I just want to take — I want to take advantage of the opportunity to talk about the coronavirus and what we’re doing, because it could be a near term revenue driver…

Michael Nall

Absolutely.

Jason McCarthy

For you guys. And can you help us understand a little bit about the changes in Medicare payments or help investors understand more clearly why they went to $100 versus $51? Because most people think of LabCorp and they think of Roche or Quest. But Biocept should be discussed in that same conversation. Can you help us understand a little bit about that process? And also, how do you look at it from a revenue perspective? What does the impact [ph] look like in Southern California and the San Diego Area? What’s your demand right now and what could that revenue look like?

Michael Nall

Yes. Those are great questions. Thank you, Jason. First about the pricing on COVID-19 testing. One thing I think we’ve mentioned in previous calls or certainly I mentioned as I visited with investors is that we’re pretty active with industry trade groups. And the group — the various trade groups we have in the industry, whether it’s the lab associations and we’re also involved in molecular technology, all really lobbied to get that increase because at the previous pricing of $51, it barely or didn’t cover the cost, depending on what assay was being run in the various laboratories. Now, LabCorp and Quest might have been able to have a slim margin at that price. But for most labs such as Biocept or hospital based labs that certainly cover most of the cost, especially with shipping included FedEx, et cetera they get into the lab. So, we worked real hard with stakeholders at Medicare, and they’re very open as everybody is right now. They’re doing what was needed. And they increased the price to $100. Would we have liked to see it to $200? Of course. But, at a $100, we can make a margin. It’s not quite the same margin we would make at scale on our normal testing, but still a margin and certainly can be a revenue driver for the Company.

As far as the volume we all expect, there’s a couple things there. And we tried to be explicit on the release to something that I think folks don’t understand. There seems to be a good amount of capacity for testing now. And as we talk to other labs and other — both hospital system labs here in San Diego and Southern California, most people, like Biocept, have quite a bit of capacity that’s not being used for testing. The problem is getting the collection kits, the sample collection kits. That’s where we’re out. It’s not the testing capacity is being reported in a lot of folks, at least here in our area. It’s actually getting the specimen collection kits. So, we had been waiting for a long time for collection kits, and we finally decided to make our own.

So, Jason, you may remember, we actually make the reagents and materials that we use in our oncology testing. So, we have a clean room, have a manufacturing staff. So, this is something we’re qualified to do. So, we expect to have those within the next few weeks, and that’s under Tim’s leadership on his department. So, we expect to then start to get the customers that we already have teed up, the Cory’s team’s gone out and identified for us. So, stay tuned for more news on that, but that’s kind of where things are at.

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As far as the demand in California and elsewhere, we still have to see. We hear the same public statements that investors do from our Governor and others about the need for wide-scale population-based testing. To-date, we haven’t necessarily seen that, but we’re starting to get an indication that could be where things are going. So, I think there’s a need to solve this problem on collection kit capacity first, and then after that we’ll start to see things starting to become more-clear in those arenas. Does that answer your question?

Jason McCarthy

It does. And hopefully, we all want to get back to normal and maybe we’ll hear some more about this from you guys in the couple of weeks as it relates to the COVID testing. But, thank you for taking the questions. I’m glad you guys are doing really well. Nobody’s been furloughed, as you mentioned earlier in your call. And hopefully…

Tim Kennedy

We expect, once the COVID-19 testes — I’m sorry to interrupt — comes in, that’s part of that idea is that we expect to be very busy here, once this becomes more clear where it’s at. Because we all know there’s a need. I think it’s at the top of everyone, not just your question, everybody, it’s all you’re thinking about obviously. We all need to be prepared for when that happens. And so, I think by us, controlling our supply chain, we’re going to be in a good position to address that need.

Jason McCarthy

Well, I think it’s also important for investors to understand, at least from my view that, if you’re doing 400 to 3,000 tests per day, you’re going to run seven days a week and $100 per test. That’s not nothing. That’s more than offset any delays or slowdowns that you’re having on the oncology side. Would you agree?

Michael Nall

I think, you just read Tim’s mind.

Tim Kennedy

Yes.

Michael Nall

He was wanting to add a little bit about that.

Tim Kennedy

So, yes, it’s exactly right, Jason. And in addition to that, just as a reminder, when you have the COVID-19 test that we offer, which Mike had mentioned, the PCR-based test and what Governor Newsom referred to as a gold seal test in his conference call yesterday, the test is whether or not you have COVID-19, whether you have the coronavirus at that point in time. So, it’s not necessarily a one and done test specifically. These are tests that likely, at least for the near-term are going to be tests that are probably done more than once on a particular patient. So, that was another thing I wanted to point out as well.

Jason McCarthy

Yes. That’s a great point. Thank you, guys, for taking the questions. And hopefully we’ll get to see you soon.

Michael Nall

Yes. I hope so too. That’s all right. Virtually if not in person, but we’re all eager to get back on the road. My wife especially is eager for me to get back on the road.

Jason McCarthy

Right, likewise. Thanks, guys.

Michael Nall

Thanks.

Tim Kennedy

Thanks.

Operator

Thank you. Your next question comes Sally Yanchus from Brookline Capital Markets. Please go ahead.

Sally Yanchus

Okay. Hi, Mike.

Michael Nall

Hi, Sally.

Sally Yanchus

Thanks for doing the call. I’m just curious, do you expect to see a test rebound in the second half of this year or even by the fourth quarter?

Michael Nall

Well, provided that hospital visits and physician visits get back to a more normal pace. That’s the biggest impact we’re having.

Sally Yanchus

Okay.

Michael Nall

So, the challenge has been that most clinic visits, and I think most people are aware of this, have been canceled. And in fact, we’re seeing hospitals actually have layoffs, which seems counterintuitive to the COVID-19 crisis. But different departments have no business because unless you’re critically ill, you’re not being referred for treatment. So, this of course has an impact to us. But we’ve done several things to counteract that, to maintain the specimen volume that we’re projecting and that we’re seeing. And we’re starting to see things start to come back a little bit. But, maybe Cory, you can give a little bit more color about the success with the — that we’re having with the virtual conferences with the physicians and how we probably wouldn’t have been able to get that otherwise.

Cory Dunn

Yes. So, it’s been — Sally, it’s been quite nice and that a lot of times physicians are not in clinic as much. So, we’re able to secure some time through Zoom, through webinar time…

Michael Nall

Some times for an hour.

Cory Dunn

Yes, some times for a whole hour, which is very difficult, and for them to learn about our offering. And then, additionally too, like I mentioned with the mobile phlebotomy, we can provide mobile phlebotomy services for blood draws, so very good advantage of being in the liquid biopsy business, to their patients, so that the patients don’t have to come into the office.

Michael Nall

And we — that’s — thank you for reminding me, Cory. We’ve actually seen renewed interest from pharma companies in liquid biopsy because of this option. Obviously, they need biopsies done because the surgeries are canceled in the hospitals, patients don’t feel safe going into the hospital for the biopsy, then they’re not getting qualified to get on these targeted therapies from big pharma. So, big pharma understands we can send some — a phlebotomist to someone’s home, have blood drawn there and still qualify a patient for a therapy. So, this is an advantage of liquid biopsy over tissue biopsy, which of course must be a surgical procedure.

Sally Yanchus

And then, just how are you being paid or compensated for the COVID-19 tests? Because I know Thermo is a testing equipment. I mean, are you being paid directly or are you being paid through Thermo?

Michael Nall

No, actually not through Thermo, we buy stuff from them. They supply. So, they’re our vendor and partner since we have other collaborations with them. But, the payment comes from really two main sources. It’s either going to come from an employer because more and more employers are looking to do this type of testing for their employees or in an institution or it’s going to come from insurance, part of the CARES Act mandate — and this is important for any of the listeners to understand for themselves. Your insurance company has to pay for COVID-19 testing. People may not understand that when it comes to any other tests you need in the world, there’s an option whether they pay it or not and very often, it’s tough to get the money out of the insurance. I’m looking at Tim, and he’s grinning at that.

So — but when it comes to COVID-19 testing by law and the CARES Act, they’re required to pay that includes Medicare. So, Medicare rate is about $100. The private payers have to pay either a contracted rate, and we’re working on contracts with some of our good partners in the payer community or they have to pay what’s published on our website. So, part of this legislation, the CARES Act requires that laboratories publish their price on their website. So, if you go on our website, you’ll find our price there.

Sally Yanchus

Okay.

Michael Nall

That’s our price that we — what we call cash pay price. Obviously for Medicare, that’s what they pay. But that would be the price that we get for a payer we wouldn’t have a contract with, that would be the price paid by…

Sally Yanchus

Okay. Good. That’s helpful. Thanks.

Michael Nall

Yes.

Operator

Thank you. This concludes our question-and-answer session. I would like to turn the conference back to Michael Nall for closing remarks.

Michael Nall

Well, thank you, everyone. And on behalf of our Board of Directors and our hard working team at Biocept, I want to thank you for participating on today’s call and for your interest in our Company. We look forward to providing an update on our next conference call when we report, believe it or not, our second quarter 2020 financial results in August. Thank you. And have a great day.

Operator

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