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Good day and thank you for standing by. Welcome to the Talis Biomedical Second Quarter Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, Ms. Emily Faucette, Senior Vice President Corporate Communications and Investor Relations. Please go ahead.
Good afternoon and thank you. Joining me today are Rob Kelley, our Chief Executive Officer; and Becky Markovich, our Interim Chief Financial Officer.
Earlier today, the company released a business update and financial results for the quarter ended June 3th, 2023. A copy of that press release can be accessed on the Investors page of our website at talisbio.com.
Before we get started, I would like to remind you that management will make remarks during this call that are forward-looking statements within the meaning of the Federal Securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.
Additional information regarding these risks and uncertainties appear in the section entitled Forward-Looking Statements in the press release Talis Bio issued today. For a more complete list and description, please see the company's filings with the SEC including the Risk Factors section of the company's annual report on form 10-K filed on March 22nd, 2023 as maybe supplemented from time-to-time in its other filings.
Except required by law, Talis Bio disclaims any intention or obligation to update or revise any financial projection or forward-looking statement whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast on August 10th, 2023.
With that, I would like to turn the call over to Rob.
Thanks Emily. Good afternoon everyone and thank you for joining us on today's call. Before we begin, I would like to take this opportunity to welcome two distinguished leaders to Talis Bio.
In May, we appointed Dr. Heiner Dreismann to our Board of Directors. Heiner's entrepreneurial vision and track record leading multiple corporate functions over the course of his 20-year tenure at Roche, including as President and Chief Executive Officer at Roche Molecular Systems, make him a great fit for the large opportunities ahead of us.
Last week, Dr. Andrew Lukowiak joined our Executive team in the newly created role of President and Chief Scientific Officer. With more than 20 years of senior leadership experience in the clinical diagnostics industry, Andrew will be responsible for R&D, clinical and regulatory, manufacturing and operations. During this pivotal period of execution at Talis Bio, Andrew's Executive experience and proven ability to bring products to market from concept to commercialization will fortify the strong teams we have built to deliver the Talis One, test menu.
We look forward to benefiting from both, Heiner and Andrew's seasoned perspective, as we advance our mission to deliver accurate infectious disease testing, in the moment of need at the point-of-care.
Turning now to our recent business progress to, support the strategic imperatives that we laid out in May. As a reminder, we are prioritizing the development of four infectious disease test panels that women's and sexual health providers want to offer at the point-of-care based on our market research.
Our initial planned test menu consists of a Respiratory Panel for Influenza A, Influenza B in COVID-19 or Fluid, Chlamydia, gonorrhoeae, and Trichomonas vaginalis, or CT/NG/TV; Herpes Simplex Virus or HSV-1/2 and a Vaginal Infection Panel.
In order to bring these test panels to market as soon as possible, we are leveraging progress made to-date with our COVID-19 test to support 510(k) clearance of the Talis One System, while we complete development of our broader test menu.
We are executing a disciplined regulatory strategy designed to minimize risk and accelerate time to commercialization and have made important progress towards our goal of securing clearance for three test panels before the end of 2025.
Specifically, our COVID-19 clinical study to support 510(k) clearance for the fluid panel System is underway. And we are preparing to initiate a clinical study for our fluid panel. As a reminder, we know from our market research that Ob/Gyn's are interested in Respiratory Testing for pregnant patients and women in the course of their care.
As such, we plan to pursue 510(k) clearance of our fluid panel to create initial demand and experience with our platform while we complete development of our broader fluid panel test menu.
We are also beginning to work on our FDA pre-submission for HSV and to select sites for our CT/NG/TV Clinical Study that will enroll up to 5,000 patients collectively across Ob/Gyn offices, STI clinics, and Urgent Care centers.
Turning now to Clinical Development, new data presented at IDSOG, The Infectious Diseases Society for Ob/Gyn's annual meeting last month gives us confidence that we are on the path to developing a viable and differentiated test menu.
First, a feasibility study of our development stage CT/NG/TV assays and demonstrated in less than 30 minutes, clinical performance comparable to widely used on-market molecular tests.
This preliminary clinical performance was assessed using residual clinical samples initially tested by Central Lab platforms that require, up to 90 minutes to generate a result. In neat mail urine, positive results matched 100% for CT, NG and TV against the comparators, while negative result agreement matched 100% for CT and NG and 98% for TV.
In Vaginal swabs where only positive samples were tested, results matched 100% for CT and NG at 90% for TV against the comparators. In a separate previous study were negative vaginal swabs were tested against the CT/NG comparator, results matched 100%.
We are encouraged that a CT/NG/TV multiplex test is feasible on a molecular point-of-care system, and believe access to test results during a single patient visit will enable providers to make informed treatment decisions, and become better stewards of antibiotic use.
A second study also presented at IDSOG demonstrated our ability to effectively life challenging fungal pathogens in under four minutes on the Talis One system. This achievement is a critical step in developing our point-of-care vaginal infection panel. Our scientists performed initial experiments to determine lysis efficiency with and without bead-beating used on the systems on cartridge mechanical lysis chamber. These studies demonstrate that mechanical lysis using bead-beating on the Talis One system led to effective lysis of multiple Candida species, releasing sufficient target nucleic acids for detection at concentration levels comparable to limits of detection of three on-market vulvovaginal candidiasis IVD tests.
Based on these positive early results, the Talis One system may be able to achieve these limits of detection, while having a turnaround time that is approximately 30 to 90 minutes faster than these comparator tests. We believe the ability to lyse difficult pathogens and to purify and concentrate nucleic acids to deliver lab-quality test results in less than 30 minutes will be a key differentiator from current platforms.
Moving to manufacturing where we have established capabilities with the flexibility and stability to address all stages of our business. Our semi-automated cartridge manufacturing line in Chicago is now operational to support all of our upcoming verification and validation activities and eventually early commercialization efforts.
As a reminder, this line has the capacity to produce 2,000 cartridges per day. To drive further operational efficiency and spending reduction, we continue to restructure relationships with our contract manufacturing partners. During the second quarter, we transitioned to a new instrument manufacturer and are now in the process of ramping up our new partner, while we continue to draw from our internal instrument inventory.
As previously disclosed, we have built several hundred instruments to date and have raw materials to build thousands more. Additionally, to streamline our supply chain, we have transitioned away from our raw card manufacturer in Germany to a new partner located here in the United States. We also entered into a new license agreement that allows us the freedom to operate with respect to manufacturing this key component of our cartridge. We believe these changes will further increase our ability to manufacture with speed and quality required to scale when we commercialize.
In summary, our team's focused execution is delivering progress across our strategic imperatives. Our COVID-19 study is underway. We are preparing for clinical studies to support our broader test menu, we have generated positive data that positions us to develop differentiated CT/NG and vaginal infection panels, and we are continuing to optimize manufacturing processes to support all of our upcoming clinical studies, as well as early commercialization efforts. With these accomplishments, we believe we are well-positioned to deliver three cleared test panels for the women's and sexual health markets by the end of 2025.
Now, I will turn the call over to Becky to walk through our second quarter results.
Thanks, Rob. During the second quarter, we recognized $0.5 million in revenue, which was driven mostly by NIH grant income. Second quarter total operating expenses were $17 million compared to $28 million in the same period last year. Research and development spending for the second quarter of 2023 was $11 million compared to $17 million in the same period of 2022. These decreases were driven primarily by investments in raw card inventory and manufacturing in 2022 as well as lower headcount costs from last year's reductions in force and our ongoing cash conservation efforts. Selling, general and administrative expenses in the second quarter were $6 million compared to $9 million in the second quarter of 2022, primarily due to lower head count costs.
Moving to the balance sheet. Unrestricted cash and cash equivalents as of June 30, 2023, were $98 million. We continue to conserve cash during the first 6 months of 2023 by delivering a 53% improvement in net cash used in operating activities year-over-year with an average monthly cash burn rate within our target range of $4 million to $5 million. To support our long-term financial objectives, this quarter, we moved into a smaller office and lab space in Redwood City, California, which reduced our facilities footprint by two-thirds. We expect approximately $9 million of cash savings over the life of the lease. Our balance sheet remains strong with no debt, and we continue to focus on cash conservation. Our objective is to ensure that our current cash reserves are sufficient to fund operations into 2025.
With that, I'll turn the call back to Rob for closing remarks.
Thank you, Becky. The COVID-19 pandemic accelerated the development of numerous molecular point-of-care platforms to bring rapid respiratory testing closer to patients. Unfortunately, very few are designed to effectively address the needs of the women's and sexual health testing. The data we are beginning to generate suggests that Talis Bio is well positioned to address these limitations, capture a large and growing market and most importantly, make a meaningful impact on the delivery of timely and accurate patient care.
We are excited for the opportunity ahead to decentralize women in sexual health testing. Our organization is heads down and focused on executing our regulatory strategy, delivering on our development road map and continuously optimizing our manufacturing capabilities to support multiple clinical studies and early commercialization efforts.
With that, I will now turn it over to the operator to open it up for questions.
Certainly. [Operator Instructions] Our first question. Our first question will be coming from Mark Massaro of BTIG. Your line is open, Mark.
Hey, guys. Thank you very much for taking the question. So I wanted to start off with the clinical study that's underway now for COVID. Can you just give us a sense for maybe how many samples, roughly what your thoughts are on time lines and just to kind of make sure I'm on the right track. This is for a stand-alone 510(k) submission, correct?
Correct. And nice to speak to you as well, Mark. So let me start with the C19 clinical study began officially in June of this year. And the target enrollment is 50 positives and 500 negatives. We have four geographically distributed sites. We staggered the start of those, and we're currently about two-thirds of the way through to our enrollment target. And just as some background, when we started the study, the prevalence was approximately 12%. And obviously, prevalence can drive the time that it takes us to get through the clinical study.
As we started getting towards the late spring, early summer, it dropped to approximately 5%. So that slowed down a little bit. However, we are starting to see that pick up again. And hopefully, we'll see that continue to rise as we get into the fall to help us close out the target enrollment. So that's the general update for now. Is there anything else that, I'm missing from that that you'd like to know about?
Yeah. That's really helpful, all that detail. So would it be fair to think that you can complete the study, perhaps somewhere near the end of 2023, submit it and then would you think an approval might happen mid to late 2024. Is that in the right ballpark?
I think that's a good way to think about it. Obviously, after we collect all of the specimens, we'll have to do the analysis and write up the reports I also understand that December is a difficult time for the FDA. So I think expecting a submission in very early 2024 is probably the best way to look at it.
Yes, that makes sense. So it's great to hear that you -- I think this might be the first time you've provided timing on test panel launches. So three by the end of -- of the four that you've laid out, are all four of those fair game, or are there three that you -- three that you think are clearly ahead of the other?
Yeah. So, well, I'm not talking about launches, but talking about clearance, absolutely. We believe that the three panels that we would hope to have cleared by the end of 2025 or the C19 panel, which is giving us the 510(k) instrument clearance, which is critically important for us going forward with any of the other submissions that we have, followed by the fluid panel, which we talked about previously, and that is currently in verification stage.
But it's also important to note, as part of our regulatory strategy is we are going to be applying for the first time for the instrument for CLIA waiver with the fluid product, which, of course, de-risks our CT/NG/TV submission since the instrument will already be cleared 510(k) and have CLIA waiver associated with it. And that's why we've gone about it in this process. But those are the three that we would hope to have before the end of 2025 is C-19, instrument clearance, fluid as well as CLIA-waiver and then CT/NG/TV by that time.
Okay. Thanks. And would it be reasonable to -- to seek to commercialize these panels shortly after they're cleared?
Yes. Let me make one other comment first. You mentioned four assays. So the fourth one in our pipeline is HSV, HSV is currently in feasibility and somewhere between feasibility and development is where we start the pre-sub. So we have started that. We hope to have the pre-sub submitted before the end of the year. And that timing and the development has been very encouraging.
So there is an upside opportunity that we potentially could have pull in HSV into 2025. But right now, the three that I mentioned are the ones that we're confident with and HSV is one that we hope we can expedite.
In terms of your comments about launch. So we absolutely would like to take the opportunity to get our platform in the hands of end users as soon as possible. But what really is going to drive adoption of our product is CTNG, it's an adoption driver, it's a volume driver, and it's what our first women's health -- women's sexual health assay item will be. So when we think about full-scale commercialization, we're thinking about linking that up with the clearance of CT/NG/TV. However, I do think there's opportunity for us in the meantime, as we get clearance of the other products to get those to market in the hands of customers and get some great experience utilizing those as well.
Okay. Great. That makes sense. And just one last one for me. It looks like the cash burn declined to $15 million in the quarter. I think previously, you talked about a pro forma burn of about $12 million to $15 million a quarter, so you're already there. Is that still what you're hoping for? And then can you just give us a sense for how you're thinking about the balance sheet into 2024 and 2025.
Great questions, Mark. Yes. Fortunately, we're really coming from a position of strength. We have $98 million of cash on our balance sheet, and we have no debt. And with the spending reduction programs that we did put in place last year, we are at our target of the $4 million to $5 million per month on an average basis. And we expect that to continue into the near future. Can you repeat the last part of your question or the second part of your question.
Yes. The second part of the question was how you're thinking about the balance sheet into 2024 and 2025.
Yes. So, we do have a really strong balance sheet right now with our cash position. So we expect to continue to essentially fund operations. But we know that we will have to raise capital in order to fund our future growth and commercialization down the line.
Okay. Thanks very much.
And I'm showing no further questions -- question. I would now like to turn the call back to Rob for closing remarks
Thank you for joining us today and for your time and interest in Talis Bio.
This concludes today's conference call. Thank you for participating. You may now disconnect.