Contract expected to generate over $1.5M in revenues annually
NEW HAVEN, CT, (April 29, 2019) - Specialty cancer diagnostics company Precipio, Inc. (NASDAQ: PRPO) today announced that it has signed a services contract with a health care management group serving several major hospitals based in Cairo, Egypt. Precipio is engaged to provide both expert pathology diagnostic services as well as access to proprietary technologies developed by Precipio.
Initially, the contract calls for sending patient biopsies for primary diagnosis and secondary (consult) opinion. Follow-on intended business collaborations will include the establishment of laboratory operations within Egypt that will license Precipio’s proprietary technologies to provide liquid biopsy testing using ICE-COLD PCR technology, and HemeScreen for hematologic molecular testing.
Based on historic volumes, Precipio anticipates significant first year revenues. In addition, once Precipio’s liquid biopsy and HemeScreen tests are available within Egypt, revenues will be substantially augmented from sales of Precipio’s tests. Initial testing revenues are forecasted to start by the end of Q2, pending the final completion of several setup, logistics and regulatory tasks.
This services contract is another example of the rapid and effective deployment of Precipio’s global initiative, enabling the provision by Precipio of premier pathology services while utilizing the expertise of leading expert cancer pathologists from members of its academic network such as Yale, Harvard and the University of Pennsylvania.
Financial impact to Precipio
The Company projects that second half of 2019 consolidated revenues and gross profits will be substantially increased, subject to completion of necessary logistics and compliance requirements. Accordingly, the projected increased revenue from growing our domestic business along with the global revenue volume will enable Precipio to optimize economies of scale. As such, early estimates project H2-2019 gross margin to improve by 20 to 25 points; while benefiting from the pre-paid cash aspect of international business (unlike the domestic reimbursement challenges). Hence, management anticipates that the company’s cash burn is similarly expected to decrease.
All in all, Precipio anticipates that when considering these factors, it is likely that these steps, combined, will have a positive impact on the company’s breakeven point, and a reduction of the company's capital needs.
By gaining access to Precipio’s network of expert academic pathologists, treating physicians are able to benefit from Precipio’s delivery model which is designed to drive more accurate diagnoses which are more likely to enable better targeted treatment options. Furthermore, with access to some of the advanced technologies developed by Precipio, laboratories in Egypt may be able to improve their value proposition to their patients with cutting edge testing.
“I am delighted to see the benefits of our international efforts beginning to capitalize on Precipio’s platform and technologies and deliver the highest level of expertise to patients worldwide,'' said Ilan Danieli, Precipio’s CEO. “The international segment of our business is going to be a valuable contributor to our revenues, margins and cash flow in the coming quarters.”
Precipio has built a platform designed to eradicate the problem of misdiagnosis by harnessing the intellect, expertise and technology developed within academic institutions and delivering quality diagnostic information to physicians and their patients worldwide. Through its collaborations with world-class academic institutions specializing in cancer research, diagnostics and treatment such as the Yale School of Medicine and Harvard’s Dana-Farber Cancer Institute, Precipio offers a new standard of diagnostic accuracy enabling the highest level of patient care. For more information, please visit www.precipiodx.com.
Certain statements in this press release constitute “forward-looking statements,” within the meaning of federal securities laws including financial projections related thereto and potential market opportunity, plans and prospects and other statements containing the words “anticipate,” “intend,” “may,” “plan,” “predict,” “will,” “would,” “could,” “should,” and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors. Factors that could cause future results to materially differ from the recent results or those projected in forward-looking statements include the known risks, uncertainties and other factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 as filed on April 16, 2019 as well as the Company’s prior filings and from time to time in the Company’s subsequent filings with the Securities and Exchange Commission. Any change in such factors, risks and uncertainties may cause the actual results, events and performance to differ materially from those referred to in such statements. All information in this press release is as of the date of the release and the Company does not undertake any duty to update this information, including any forward-looking statements, unless required by law.