Sera Prognostics, Inc., a leading health diagnostics company, is dedicated to improving the lives of women and their babies through the development and commercialization of innovative pregnancy biomarker tests and predictive analytic products. The company's mission is to revolutionize maternal and neonatal healthcare by providing physicians and expectant mothers with clinically meaningful, data-driven insights that enhance the pregnancy journey and lead to better health outcomes.
Company Overview
Established in 2008 and headquartered in Salt Lake City, Utah, Sera Prognostics has a strong focus on research and development, leveraging its proprietary proteomics and bioinformatics platform to discover and validate key protein biomarkers found in blood that can accurately predict dynamic changes during pregnancy. The company's flagship product, the PreTRM test, is the only broadly validated, commercially available blood-based biomarker test designed to predict the risk of premature delivery, a significant health challenge affecting approximately 1 in 10 babies born in the United States.
Since its inception, Sera Prognostics has been primarily focused on performing research and development, conducting clinical studies for its pipeline products and services, acquiring product rights, raising capital, establishing facilities, and organizing commercial operations to market its testing and analytics products. The company's operations include a Clinical Laboratory Improvement Amendments (CLIA)-certified laboratory in Salt Lake City, Utah. Sera Prognostics has largely funded its operations through the sale and issuance of convertible preferred stock, debt financings, bank loans, and the sale and issuance of Class A common stock in its initial public offering.
Financials
The company has faced significant financial challenges, incurring substantial operating losses since its inception. In 2023, 2022, and 2021, Sera Prognostics reported net losses of $36.2 million, $44.2 million, and $35.0 million, respectively. Despite these financial hurdles, the company has continued to invest in its research and development initiatives and the advancement of its proprietary technology platform.
For the fiscal year 2023, Sera Prognostics reported revenue of $306,000, with a net income of -$36,242,000. The company's operating cash flow (OCF) for the year was -$27,188,000, and its free cash flow (FCF) was -$27,316,000.
In the most recent quarter (Q3 2024), the company reported revenue of $29,000, a decrease of 31.0% compared to the prior year quarter. The net income for Q3 2024 was -$7,919,000, representing an increase in net loss of 10.0% compared to the same period last year. The operating cash flow for the quarter was -$6,995,000, and the free cash flow was -$6,324,000. The decrease in revenue was attributed to the company's continued focus on increasing adoption and reimbursement for the PreTRM test rather than maximizing short-term revenue. The increase in net loss was primarily driven by a 20% increase in stock-based compensation expense.
Sera Prognostics operates primarily in the United States and does not break out geographic performance.
In 2020, Sera Prognostics encountered additional challenges related to the COVID-19 pandemic, which disrupted its operations and supply chain. The company responded by implementing safety protocols and alternative sourcing strategies to mitigate the impact of these disruptions while continuing to make progress on its core objectives.
Key Milestones and Achievements
Sera Prognostics' journey has been marked by significant milestones and strategic initiatives aimed at driving commercial success and improving patient outcomes. In July 2021, the company completed its initial public offering, raising $165.6 million in gross proceeds to fund its growth initiatives. This infusion of capital has enabled Sera to expand its research and development efforts, strengthen its commercial infrastructure, and pursue regulatory approvals and reimbursement strategies for its products.
One of the company's key achievements in 2024 was the publication of positive results from the AVERT PRETERM TRIAL in the prestigious international journal Diagnostics. This study, conducted in collaboration with ChristianaCare in Wilmington, Delaware, demonstrated that the PreTRM test-and-treat strategy can lead to an 18% reduction in severe neonatal morbidity and mortality, as well as a significant decrease in neonatal hospital length of stay. These findings further validate the clinical utility of the PreTRM test and its potential to improve maternal and neonatal health outcomes.
Building on this momentum, Sera Prognostics is now eagerly awaiting the publication of results from its pivotal PRIME (Prematurity Risk Assessment Combined with Clinical Interventions for Improving Neonatal OutcoMEs) study. The PRIME study, which was recently completed, is expected to provide even more compelling evidence supporting the benefits of the PreTRM test and a test-and-treat approach. The company is actively working to disseminate these findings through key pregnancy and maternal health conferences, as well as in a high-quality peer-reviewed journal, further strengthening its case for broader clinical adoption and payer coverage.
Financial Performance
Sera Prognostics' financial performance has been reflective of its strategic focus on evidence generation and commercial readiness. In the third quarter of 2024, the company reported net revenue of $29,000, compared to $42,000 in the same period a year ago. This quarterly revenue level is in line with the company's plan to make selective, cost-effective investments that will drive future commercial sales growth. Total operating expenses for the quarter were $8.9 million, up 8% from the prior-year period, with the increase primarily attributed to higher stock-based compensation expense and continued investment in growth initiatives.
Liquidity
As of September 30, 2024, Sera Prognostics had a strong cash position, with $74.3 million in cash, cash equivalents, and available-for-sale securities. Specifically, the company had $2.68 million in cash and cash equivalents and $71.66 million in available-for-sale securities. The company's management is projecting gross cash expenses of less than $30 million for the full year 2024, with a focus on evidence generation, building scalability, and enhancing commercial capabilities. With a projected year-end cash balance of approximately $68 million, the company believes it has sufficient runway to fund its operations into 2027, even without assuming any future revenue generation.
Sera Prognostics maintains a strong liquidity position, with a current ratio of 2.11 and a quick ratio of 2.11 as of September 30, 2024. The company has no outstanding debt, resulting in a debt-to-equity ratio of 0. This solid financial footing provides Sera Prognostics with the flexibility to continue investing in its growth initiatives and product development while navigating the challenges of commercialization.
Future Outlook and Challenges
Looking ahead, Sera Prognostics is well-positioned to capitalize on the significant opportunity in the maternal and neonatal healthcare market. The company's comprehensive approach to addressing major pregnancy milestones, conditions, and features through its proprietary technology platform and rigorous data-driven development process positions it as a leader in the field of pregnancy-related diagnostics.
However, the company is not without its challenges. The regulatory landscape for laboratory-developed tests, such as the PreTRM test, has been evolving, with the U.S. Food and Drug Administration (FDA) recently issuing a final rule to exercise oversight over these products. While the outcome of this regulatory shift remains uncertain, Sera Prognostics has taken proactive steps to ensure its compliance and is confident in the quality and reliability of its testing processes.
Additionally, the company's commercial success will depend on its ability to navigate the complex reimbursement environment, secure favorable coverage decisions from third-party payers, and drive broader adoption of the PreTRM test among healthcare providers. Sera Prognostics has made significant progress in this regard, leveraging the positive data from its clinical studies to engage with payers and build a strong economic case for the test's value proposition.
Product Segments
Sera Prognostics' business is focused on a single product segment - the development and commercialization of the PreTRM test and other potential future products related to women's health and pregnancy management. The PreTRM test is the company's first commercial product, a non-invasive blood test given to pregnant women between weeks 18 and 20 of gestation that provides an accurate prediction of the expectant mother's risk of delivering spontaneously before 37 weeks gestation.
The company believes the PreTRM test offers significant health benefits by enabling early detection of high-risk pregnancies, which can lead to more proactive management and improved outcomes for mothers and babies. Sera has conducted several clinical studies to demonstrate the clinical and economic utility of the PreTRM test, including the PREVENT-PTB study, the AVERT PRETERM TRIAL, and the PRIME study. The results from these studies, particularly the AVERT PRETERM TRIAL and the forthcoming PRIME study results, are expected to further support the adoption and reimbursement of the PreTRM test.
Conclusion
Overall, Sera Prognostics is a compelling story in the diagnostics industry, with a clear focus on improving maternal and neonatal health outcomes through innovative biomarker solutions. The company's proprietary technology platform, robust pipeline of product candidates, and strategic partnerships position it for long-term success, as it continues to navigate the evolving regulatory and reimbursement landscape and drive commercial adoption of its cutting-edge tests. With a strong cash position and a clear strategy for growth, Sera Prognostics is well-equipped to pursue its mission of revolutionizing maternal and neonatal healthcare in the years to come.