Q3 2019 Earnings Call
Welcome to know terrorists 2019 third quarter financial results conference call. At this time, all participants are in listen only mode.
Management's prepared remarks, we want a key when they session to ask a question at that time. Please press star followed by the one keeping your touchtone telephone if anyone has difficulty hearing the conference. Please press star zero for operators system. As a reminder, this conference call is being recorded today November six 2019.
I would now like to turn the conference call over to Mr., Michael Prophy Chief Financial Officer. Please go ahead.
Thanks, operator, good afternoon. Thank you for joining our conference call to discuss the results from our third quarter also on the line is Steve Chapman, our CEO posturing, Chief operating officer Insomnia, Boskovich General manager of oncology in transplant. Today's conference call is being broadcast live via webcast, we will be referring too is a.
In the has been posted two investor done Antero Dot com a replay of the call will also be available at an investor inherent dot com.
During the course of this conference call, we will make forward looking statements regarding future events in our anticipated future performance, such as our operational and financial guidance for the full year 19.
Our assumptions for that guidance market size partnerships clinical studies opportunities and strategies and expectations for various current and future products, including product capabilities expected release dates reimbursement coverage and related effects on our financial and operating results.
We caution you that such statements reflect our best judgment based on factors currently known to us and that actual results.
Or events could differ materially please refer to the documents we file from time to time with the FCC, including our most recent Form 10-Q in the form 8-K filed in today's press release. The these documents identify important risk and other factors that may cause our actual results to differ materially from those contained in or suggested by the fourth statements.
Forward looking statements made during the call are being made out of them. Today. If this call is replayed are reviewed after today.
The information presented during the call may not incurring more accurate information the turn disclaims any obligation to update or revise any forward looking statements. We will provide guidance on today's call will not provide any further guidance or updates on our performance during the quarter unless we do so no.
We will quote a number of numeric or grow changes as we discuss our financial performance and unless otherwise noted each such reference represents a year on year comparison.
Now I'd like to turn the call over to Steve.
Great. Thanks, Mike.
Good afternoon, everyone and thank you for joining us I will cover our recent highlights and progress in the business. Since we spoke last August and Solomon will cover our progress in oncology and then Mike will provide additional details on our financial progress as Mike mentioned, we'll be referring to slides that were just posted that investor Donald Terra Dot com.
A quick review the highlights and then I will go into more detail on each topic, we had a very successful quarter. We're really pleased to put up another strong quarter with 77.9 million in revenues for Q3 easily exceeding the 74 to 76 million range, we preannounced as part of the equity offering in October .
This represents roughly 19% revenue growth versus Q3 of last year.
We also had another strong volume quarter, which was also up roughly 20% versus the third quarter last year and represented sequential growth versus Q2 2019.
We feel like we're hitting on all cylinders now average selling prices and volumes were up in the quarter Cogs was lower sequentially and we cleared additional development hurdles in our partnership with BG, I, which allowed us to recognize additional revenue from our collaboration efforts as many of you know we were also very pleased to receive a draft local coverage decision for men.
To care for colorectal cancer, we're now actively planning for a significant clinical launch next year.
We've also started to make strides in our partnership with foundation medicine to develop and commercialize personalized circulating tumor DNA monitoring assays.
We signed a deal in Q3 and as we've discussed we believe this opens up an entirely new oncology market that we hadn't been able to access previously and finally, we completed a very successful equity offering we upsized the deal in executed the green shoes. So the total deal raised 230 million, which puts us in a strong position to execute.
On our upcoming commercial launches for Prospero insignia tariff.
Now, let me jump into the details.
On volume growth more than 200000 test process in the quarter represents roughly 20% growth versus the same quarter last year consistent with our year on year growth in our strong first half and up 3% sequentially versus Q2 2019, Despite Q2 being one of the best quarters, we've had.
The growth was really balanced between Eni PT in carrier screening.
We've seen continued momentum so far in Q4, and we believe that we're on track for a strong overall volume growth in 2019 very much in line with the goals we set at the beginning of the year.
The next slide covers average selling prices, we were very pleased to see the sequential improvement in Q3 Q2 itself was ahead of our expectations from the beginning of year.
As we've discussed the average risk market remains a largely untapped opportunity as we've described previously we estimate average risk is only 15% to 20% penetrated and we think the key driver for unlocking that market is it revision to the ACOG guideline on NPT that was withdrawn last year, we continue to believe.
Update will be positive but of course, the timing of the new guideline remains uncertain.
In addition to volume growth. We believe there is roughly 60 million in cash in revenue, we can unlock from our existing PT volume when average risk is fully covered.
In the meantime, we think theres, an opportunity to drive Sps higher even without average risk reimbursement through continued execution on cash collections and improved performance against peer requirements such as prior authorization policies. After having some success on these front in the spring we launched a fresh set of initiatives in the south.
Summer any early returns have been encouraging so board.
Because we err on the side of caution when setting or revenue accrual. However, a lot of these recent improvements are not yet reflected in the is piece. We are reporting today, because we want to see the trends persist over several quarters.
So we feel like we have some good momentum here.
Just a reminder to calculate these is piece we're stripping out revenues earned from strategic partnerships like BG.
Because we want to give you a sense of our unit level is piece, but those partnerships certainly make a valuable contribution to our financials.
The milestones we reached with BG contributed about $6.6 million in revenue this quarter.
And with work now starting with Foundation Medicine, we expect to continue to have some contributions from various partnerships overtime as.
As a reminder, on our Q2 call we pulled the average risk reimbursement assumption out of the 2019 guide and essentially replace that revenue with progress on partnerships like PGTI. So this is playing out largely as expected.
The next slide describes our blended cost of goods sold progression as you can see on this slide we've made significant progress over the past year and have a long track record of reducing Cogs overtime.
We posted a $234 per unit costs in Q3, which is again an improvement from Q2 and clearly we are running much leaner than the 260 to 70 range. We posted last year, we remain on track to reach our goal to bring blended cogs below $200 per unit.
As we've described in the past we think the next wave the savings will come from larger projects underway. We expect to hit in 2020. As we described we have a clear line of sight to completion of those projects.
Just want to call out that in Q4, we're making several infrastructure investments to increase the scale of the lab, which will play a key role in hitting our long term Cogs targets. Some of these investments we will conservatively book is upfront expenses in Q4, which may take the Cogs per unit marginally higher in that quarter, but again, we remain on track for the set of improvements.
I have described in 2020.
Okay now, let me touch on a moment for our effort in transplant.
As we've described we think the transplant business can be meaningful contributor to our overall business. We estimate this market is only about 5% penetrated today I've had a chance to go on the road recently and meet with transplant centers in different regions. One key takeaway from those meetings is it the majority of the centers are still in the very beginning stages of using cell free DNA.
As a tool in patient care. So we see a very meaningful greenfield opportunity and we will also compete hard for the existing cell free DNA users. The rate you had said at the chart. Just gives you an indicative range of potential future revenues from this business. If you assume 20000, new transplants per year in the United States seven tests per year in the first year in it.
Quarterly thereafter for the next two years with realized pricing at the current CMS rate you can see a range of estimated annual revenues it could be achieved at a reasonable market penetration rate and could well, it's good well proved to be conservative.
The next slide is to seem chart that we've shown ever since we announced the presentation of a validation data last summer we hit every milestone towards the commercial launch on time, so far and now we're just waiting the final local coverage decision and pricing before commercial launch. We said previously we expect to have those in hand by the end of the year and well, obviously, we don't control the too.
I mean, everything we know so far indicates that we are on track for that goal.
We previously announced our proactive registry.
Led by Dr., Jonathan broad bird from the University of Maryland, and a second study led by Dr., Phil Halloran from the University a Toronto, we are actively recruiting sites for those studies and we're really pleased with the interest thus far and we look forward to providing updates in the future.
Now, let me hand, the call over to Solomon to discuss our recent progress in oncology Solomon.
Thanks, Steve.
Many of you tuned into our oncology update call a few weeks ago.
Primarily so that investors could have easily accessible presentation.
Through our oncology efforts in some detail.
Im not going to go without saying, we'll determine here, but please take a look at our Investor Relations page for the more detailed presentation. If you havent seen it.
Given we have a lot of newer investors on the call I will give a summary of that information today.
The first slide as a reminder, on were circuits are his position as a molecular residual disease test for M. R&D test, we're not focused on asymptomatic screening seen on the left side of the slide.
Sequencer is also not focused on therapy selection, which is typically where people talk about when referring to a liquid biopsy and where many of the other commercial tests today our position.
Therapy selection tests looked at the specific genomic profile consumer and then match the patients when appropriate therapy based on the tumors Juno type C. Compares main focus however is in the middle to slot cancer monitoring and MRV assessments, which we estimate to be a roughly 15 billion dollar market.
We think our core technology is well suited to this indication.
With certain theres personalized tumor informed approach uniquely positioned to win because it maximizes accuracy and deficiency, which is critical in this setting.
There are three key applications within this segment first patient stratification, where MRV status to determine the risk of recurrence and support better treatment decisions.
In the arguments in the near occupancy.
Second serial testing after definitive therapy to detect recurrence earlier than current diagnostic tools.
Third therapy effectiveness monitoring how well as my immunotherapy working for example.
We're making meaningful meaningful progress in each of these three areas.
The next slide summarizes the key commercial channels, we are pursuing in our direct pharma channel, we're offering so conservative biopharmaceutical companies as a tool for use in clinical trials, when we talked about the oncology business, even six months ago sales to form of was the primary path for us to generate near term oncology revenue.
Since then we've opened up three additional channels future, which will be represents a significant opportunity.
First is the direct clinical effort.
We received a draft coverage decision in colorectal cancer from Medicare in August this indication addresses to unmet needs for a very large population of colorectal cancer patients and we are now building out the commercial team and designing a registry study to support the clinical adoption of signature at scale in colorectal cancer.
Next is the clinical opportunity for signature in China, and for computing and global clinical trials with our partner BG our genomics.
We are already has a very large genetic testing business in China, which did more than 1 million cell free DNA test last year and has experience with Chinese FDA approval. We expect digital on cigarettes are for the Chinese market in 2020 , where did you I will handle all the sales marketing effort.
So we'll be on sales, we believe China represents a very large opportunity with roughly 4.3 million new cancer cases, and 2.8 million cancer deaths annually.
Many of these cancer survivors do not get consistent access to high quality imaging.
So a blood based monitoring tool and Cigna Terra that's relatively simple to distribute can address a crucial unmet need.
Finally in Q3, we're very pleased to announce partnership with Foundation Medicine and this partnership we will co developed personalized ctdna monitoring products using tissue analyzed our foundation, one cdx as the baseline asset.
With the partnering of Foundation medicine, a leader and comprehensive genomic profiling tumor tissue and the resulting ease in offering this additional months or information so their existing patients and existing buyer from partners. Given this product the chance to rapidly become the standard for monitoring in this setting.
For our newer investors I'd like to just briefly summarize the two intended uses proposed by Medicare in colorectal cancer.
The first unmet need is the early detection of cancer recurrence, approximately 25% to 30% of patients with local or regional CRC will relapse in colorectal cancer is a cancer type. We're early relapse detection is known to improve outcomes.
Selling some patients to become eligible for curative surgery, if recurrences detected early enough.
For this reason visions today are monitored closely using a combination of CG imaging and serum Biomarkers CEO Ed for at least five years.
Unfortunately, the vast majority of recurrences today over 85% or to procure to surgery with most cases being diagnosed after clinical symptoms of already appear.
And our Jama oncology paper cigarettes are detected relapse up to 16.5 months earlier this tender tools and on averaged 8.7 months earlier.
This is a significant lead time, but can result in more patients having a chance a curative treatment.
For patients as positive with signature in the center the physician could reports to higher resolution images, such as contrast, guided ctcs, Dan pet scan or MRI to locate the lesion as soon as possible.
Furthermore, the direct head to head comparison testing serially with signature versus testing surely with CEA showed significant improvement in both sensitivity and specificity.
Turning to sensitivity was 88% compared to 69% for CBS .
And patient level specificity was 98% compared to 64% with CA, meaning less than 110th the false positive rate. So yes.
On a per test level cigarettes are specificity was even higher at 99.7%.
Flying a positive predictive value per test of over 97%.
This is where Medicare proposed coverage for cigarettes are testing with the timing and frequency that matches NCCN guidelines for surveillance was CEO .
In this regard signature could significantly reduce unnecessary clinical diagnostic work ups and anxiety associated with false positive results.
The second major unmet need to treat those patients for adjuvant chemotherapy after surgery.
Most local and regional CRC patients are cured with surgery alone.
So the objective of chemotherapy after surgery is to eradicate any micro metastatic disease that may remain in the bar.
The problem to the physicians and so now could not know who has micro metastatic disease and who does not so many patients today are significantly over treated with chemotherapy.
And the status quo, we estimate that up to 11 patients are treated to benefit just one.
Using cigna Terra however to stratify patients after surgery can lead to more patients getting treatment in new and through significant reduction in unnecessary treatment adverse events provisions, which has negative uncertain Sarah enter clinical candidates for treatment de escalation.
There's potentially improves treatments efficiency to treating only three visions to benefit one instead of 11 cents at one.
This slide lays out the pathway to commercial launch we were ahead of schedule and Garden draft LCD, which covers the use of cigarettes are in certain visions for stage, two or three colorectal cancer.
Supporting testing with the same frequency as CEO , which is roughly four times per year in the first two years and about two times per year thereafter.
With occasional short interval testing indicated for certain high risk patients.
Overall, we think the invitation describes could represent a test and pool of up to 1 million SaaS annually, making this we believe the largest specialty oncology diagnostics to ever receive a draft coverage policy for Medicare.
Based on these developments were not designing a registry trial with multiple NCCN centers and we'll begin enrolling patients in the near future. We're also building out a meaningful direct sales channel targeting oncologists and GR surgeons retreat colorectal cancer.
We will be ramping that effort over time and expect to have a sizable seem hired by mid Twentys margin, which is above the time expect to have a final coverage decision for Medicare.
While this effort will be focused on driving volumes in the colorectal indication for which Medicare has already propose coverage. We anticipate this commercial channel will also support additional indications across solid tumors ideally, we'd like to have a steady stream of coverage decisions that opens up the use of cigarettes are broadly in the clinical space.
With that let me hand, it over to Mike to walk through the financials.
Mike.
Zelman now to summarize our results from the quarter the results for the quarter crossed the wire this afternoon and I'm going to focus on the key points into Q3 results.
As Steve mentioned revenues for the quarter were 77.9 million of 19% versus Q3 last year gross margins were 44% in the quarter of 800 basis points versus the same period last year, we benefited from our development efforts with BG in the quarter as Steve described but even without this device.
Element revenue, we estimate gross margins were better versus last year, given the significant drop and cost of goods sold per unit we are seeing.
Steve referenced average selling prices in the quarter as a reminder, we calculate that metric by dividing total revenues by tests reported out of our lab and we try to be conservative and stripping out variables such as reserves and true ups that we don't think are consistently recurring events in the last three months, we've seen a significant improvement in our collection metrics.
And if those trends hold we think there's potential to see more on that benefit reflected in the revenue accrual Q4 and beyond.
Panorama revenues for the quarter were 37.6 million compared to 36 million in the third quarter 2018, an increase of roughly 1.6 million.
As in revenues for the quarter were 26.1 million compared to 23.5 million in the third quarter of 28.
An increase in roughly 2.6 million.
Total operating expenses for the second quarter were 69.5 million compared to 50.5 million in third quarter last year.
Stock based compensation charges related to the share price increase litigation expenses that we don't think on permanent ongoing expenses.
Personnel and other outside services contributed significantly to the increase.
We did see expected operating expenses ramp up consistent with our planned product launches that we've discussed.
We also incurred in $1.5 million impairment charge related to the sale of Evercore.
In addition to the total operating expenses, we reported a 14.4 million gain from the sale of Evercore, which is why the loss per share so much lower this quarter.
Pro forma for the recent equity offering shortly after the close in the quarter. The company held 455 million in cash cash equivalents short term investments and restricted cash compared to roughly 238 million as of June Thirtyth 2019.
The capital structure remain in the same place at the end of Q3.
Turning to our future outlook, we are effectively raising and tightening our revenue guidance to 295 million to 302 million for the year.
If you include the revenue that would have come from Evercore, which we sold in the quarter. Our guide would have been 299 million to 306 million.
On gross margins were previously guiding 30, 541% and we're not timing that at 39% 41%.
On SDMA, we had guided to 180 million to 190 million and we are increasing that slightly to 195 to 205 million increases largely driven by a non cash expense related to stock based compensation, which again is driven by the increase in the share price along with some legal expenses as I described.
We had forecasted R&D expense to be 60 65 million. This year, we're lowering that 52 to 57 million. We did we did find some efficiencies and the teams and were able to accomplish our R&D goals with fewer people than we had initially forecast, but another key driver that reduction frankly is more timing related we added more.
People later in the years I didn't quite fuel the full expense during the calendar year 2019.
Finally, we are significantly reducing the cash burn forecast for the year.
We were previously guiding to 80 to 100 million in cash burn and we're now down to 65 to 75 million in cash burn and that changes really driven by the 13.3 million and upfront cash we received from foundation medicine, and the 10.2 million in upfront cash we took in for the sale of Evercore.
Neither event was included in our last guide.
We will stick to our standard plan for the 2020 guidance format and the timing and the Q4 call.
I will also note that in Q1 of 2020, we plan to start reporting a combined unit number for painter Panorama and horizon and a combined revenue number for Panorama and horizon.
As for competitive purposes since we're the only public company breaking out the data currently at this level of detail. We will continue to break this out like we normally do for Q4, and then make that change will report Q1 next may.
Now I'd like to open the line for questions operator.
Thank you as a reminder to ask a question do you want me to press Star one on your telephone to withdraw your question. Please press the pound key please standby when compared to Q and Eva there.
First question comes from Doug Schenkel with Cowen income.
Hi, there this is Adam wish us on for Doug. Thanks for taking the question maybe to start off with a question for a few Mike.
This year Q4 guidance imply.
Of contributions from some of these emerging licensing revenues like.
Cajun DG and foundation Medicine also it looks like to midpoint by 8 million. So can you just walk through what was contemplated that guidance update thanks.
Yes, I don't anticipate.
The the licensing deals to to contribute as much as they have contributed in the last two quarters.
I'm not breaking that out specifically Adam is that it really is the revenue recognition is a function of the teams working together between the two companies and meeting milestones in the Rev. Rec is kind of flows from that as well.
Burden on giving specific guide there I do anticipate some licensing revenue in Q4, but not not as pronounced as what we've seen last two quarters.
Okay. Thank you.
It looks like you, making really good progress next quarter with those technical and commercialization milestones what hurdles remain before a product can be launched there and any further specifics on when that launch can be I know you said 2020, but anything.
More detailed would be helpful. Thanks.
Yes. Thanks, Adam This is Steve So theres two products that were working on I think one is signet Terra in China, which we think is a.
Very big opportunity because the Chinese oncology market is about four times larger than the U.S. market. So not only does it enable clinical testing in China to serve those patients, but it also allows us to run global clinical trials with companies who want to have.
An arm of that trial run in China. So we think Thats a significant advantage and we've already signed deals that include that Chinese arm, which were excited about so.
To commercialize we think it will be in 2020, as we said on the Cigna Terrace side.
Initially too.
Targeted hospital centers and specialty sensors, and then once Chinese FDA approval comes in launch more broadly, but it will also be available.
In prospective clinical trials in 2020.
The other.
Opportunities on the prenatal side as we've mentioned the BG partnership includes.
Access to our prenatal technology and we also expect that to launch in 2020.
Thank you.
Thank you. Our next question comes from Bill Quirk with Piper Jaffray.
Hi, This is responsible congratulations on quarter you guys.
So any color at all you guys talk yes. The colorectal you guys talked about mid 2020 for reimbursement. So is there any update from all the axon signal Tara and more of a defined timeline in that and then going off of that can you talk about the pace of hiring salesforce for colorectal and the ramp but how you guys will hire for that.
Yes, thanks, Rachel so as Weve said previously we think sort of mid 2020, roughly would be one the final LCD would come in I mean, there's there's sort of a standard cadence to these submissions and the open comment period, and so forth and just we believe this will line up to that sort of.
Mid 2020 timeframe.
We mentioned also on our oncology call that we're actively engaged with multi acts in Medicare on various fronts not only this LCD, but we've already completed a pre submission meeting for our second to oncology product. So we see signature really as a pan cancer opportunity.
In the future in colorectal, even though it's we believe.
The largest specialty diagnostic test of all time to ever received draft coverage. It's really just one of many coverage decisions that we think will come in the future. So we had a very positive.
Second to pre submission meeting.
On that second product and we look forward to submitting the dossier there in the future as well and we'll update.
Investor community on that as we complete that process as for sales hiring goes.
What we said is the product is now clean pre approved it's available.
We have a very limited.
Commercial effort at this point, we plan on ramping up the Salesforce to beat aligned with building momentum and building growth into that summer.
Local coverage decision that we think will come so we're going to start off relatively small and scale. It up over time, we're also going to be launching our registry trial, which we expect to announce later this year, we've gotten very good feedback from a top centers and key opinion leaders. So a lot of momentum very positive things going on.
Great and then Panorama Cod see ready made substantial improvement over the last two years.
Our goal is to get to 200, but how much lower do you think you can drive that if any.
Yeah, So I'll comment and then maybe Mike can comment so the number that we show you is the overall Cogs, which includes all the different products. So what we've said it panorama has already below $200. We think that we can get that down significantly lower with some of the projects that we already have in place that will be.
Launching in 2020, we think our overall cogs across the board and reproductive health business will be below $200 based on the currently ongoing projects.
I wouldn't add to that of conferences.
Okay next question will come from Kaco Peterson with JP Morgan.
Hi, Thanks. This is the Lenny on for Tycho, Thanks for taking your questions.
Going back to your comments on guidance, Mike can you unpack the different pieces there you've increased the mid point by about 8 million, but then you beat by 4 million this quarter and you're also expecting geared around 4 million headwinds from the sale of Evercore.
Seem to practically cancel each other out so what other Keith if you consider here that is driving the 8 million increase.
Point.
Well the actual year to date are driving that obviously, we had a very strong Q3 women.
We expect the core business to continue to grow and we expect.
As fees to we expect this continue to see progress there. So the short answer is we've we've beaten now the.
Expectations, our own internal expectations Q1 for Q3, and we do expect good strong core business growth in Q4.
We do expect more muted.
Revenue recognition from our.
Our partnerships relative to last two quarters as I described to Adam.
Okay. That's helpful and then.
From the cumulative pharma contracted value can you talk about where you're tracking.
Today, and how much has been recognized.
Yes, so we're well on track for that $40 million to $50 million contracted value target that we laid out at the beginning of year just consistent with what we said at the end of year, we're going to use that as kind of an annual target religious to help you guys kind of frame the overall opportunity.
And we'll give the will kind of give the readout on the Q4 call.
In terms of where we landed for the full year, but thats, we thought thats well on track in terms of revenue recognition.
Not really immaterial amount of actual revenue recognition coming from those deals yet as we've talked about there is a waterfall here, where you signed to deal with the pharma customer. It takes them on average something like a year to actually have the trial launch in start sending you samples and you start booking revenue then so the way I generally think about these things as you signed.
The deal.
There's a year I'm proud that goes into that than the sample start flowing and you recognize the revenue from the deal.
That that contracted value turns into revenue in years, two three and four.
Okay.
And then lastly, I realize youre not guiding for 2020, yet, but given the wide range of outcome for the different catalyst purchase a cause average risk reimbursement per spirit Cigna pair ramp.
Axon BTI Foundation Medicine, and other partnership can you give us an early read on how you're going to be thinking about your guidance framework.
About the different moving pieces and how youre thinking about the wide range of outcome. Thank you.
Yes, I mean look I think that.
In terms of that the catalyst that you mentioned.
Really we feel like the risks are more weighted towards kind of timing versus whether or not we get them. We feel very very good about executing on all of those.
All of those initiatives.
What we do expect for 2020 as we do expect continued.
Progress in the core business and we do expect to have successful launches in both that transplant.
And in oncology.
In terms of putting numbers around that the reason why we guide on the Q4 color that we'd like to have a couple of months of actual to do a bottoms up analysis and actually kind of give you.
Give you guidance thoughtful and kind of grounded in those actuals.
Okay. Thank you.
Thank you. Our next question comes from Catherine Channel with Baird.
Okay.
Hey, guys. Thanks for the questions is first just given college it shifted that sequencing strategy, what's the path forward, there and changes to your reference expectations for the rest of the year, if that's being terminated.
Yes, thanks, Catherine not really any changes.
To what we had.
Had previously expected to tie in revenue recognition, just because we'd always anticipated that it would have been quite small in 2019, one way or another.
In terms of what happens next with the partnership we just need.
We need to.
To be in dialogue with hygiene and when we're doing that now so once we have some resolutions area. We have some feedback from our partner then we'll share that with you all.
Okay, and then with with final Medicare coverage for transplant potentially coming pretty soon how quickly do you think you could start seeing revenue contribution from Prospero following effect does Medicare coverage or you guys prepared to flip the switch commercially to drive volumes or should we think of this as a more gradual ramp.
Yes.
I think what we've said before is we wanted to put ourselves in a position to fully commercialized. Shortly after the final LCD comes in and we think that that will happen this year.
Course, with any new product.
Theres always a gradual ramp.
And we think.
We'll be similar in this case, so that we feel very positive about the feedback that we've gotten.
From physicians.
Not only on our product, but also on the overall market opportunity as I alluded to in the prepared remarks.
And the initial.
Discussions that we're having now on our proactive registry study have also been very positive we're engaged with many of the top centers. So.
Overall I think.
It's it's looking very good.
I would I would expect we would announce a launch shortly after.
Receiving the final LCD. It does take about 60 days roughly before you can start collecting from Medicare and so we're trying to time things appropriately.
Okay, and then can you just give us an update on the smart trial when should we be expecting a readout and what's your level of confidence that this data should should drive better reimbursement from Microdeletions every time.
For Smart question, we look questions about smart spend while.
Yes so.
This more Charles actually really going along beautifully I mean weve.
Completed enrollment to the last patient.
The last baby has has been born.
It.
Newborn arrays are being analyzed and being completed and it's almost done we think the readout on the data will be sort of mid next year. We think this is really a groundbreaking study. It's the largest up its kind is the largest prospective study that's ever been done.
On noninvasive prenatal testing.
And specifically for Microdeletions. So we think it has the opportunity to move the needle in multiple different ways, one in any clarity and IP.
Thats necessary at the time.
And then separately in Microdeletion testing.
So the Microdeletion disorders are very common and they're very severe and we have seen positive guidelines from groups like 80, Mg and I SPD. So if this was able to move the needle more broadly.
To receive better coverage overall, it would make it enormous impact on the Terra business, it's not even something necessarily that weve included in some of the upside models that we've described.
But it does have the opportunity to be really enormous contributor. So today, we're seeing about 80% of our orders include a order for micro deletion testing and we were very happy to secure a unique CPT code for that micro deletion test into secure pricing from CMS.
In the 700 dollar range, so even at a very discounted rate to that $700 price it would make a very significant impact.
Okay.
Okay, great. Thank you.
Thank you. Our next question comes from Alex Nowak with Craig Hallum.
Great Good afternoon, everyone.
So I am on can you detail out the CRC registry study here just how many patients how long are they going to be monitor, Florida and what the primary endpoints are.
Great. Thank you for the question.
We plan to release announcing release full details of the registry study by the end of year.
We expect first patients have been rolled early 2020.
And we're going to have many sites involved in the trial.
And we haven't announced yet those details pays are getting finalizing looking towards a share those details when we're ready.
Okay understood and then Steve on just the prenatal business the volume growth for Panorama horizon, that's been around 20% for 29 team in some case, a little bit higher than that you're looking towards 2020 here do you expect to maintain that level of growth or do you think their growth is probably going to modulate a little bit back to the more like them.
Market growth, which is probably in the high single digits.
Yes, I would say, we feel very strongly about supporting and continuing to grow our core business and remaining the market leaders. In fact, we have multiple different enhancements that we think we'll be launching in 2020 that our sales team is very excited about some Mike you want to comment more specifically on on the guide.
Not really just because we're going to guidance on the Q4 call I mean, I do think that.
The way to think about our growth is in terms of absolute units and the performance that we can show there and so.
The last few quarters are good good proxy for what we can do steady state without some of these improvements that Steve as Steve alluded to we're looking forward to announcing those next year.
Okay understood makes sense and then you had prior authorizations kind of impacting.
The ASP and a little bit this year, you, obviously had CPT changes over the last couple of years is there anything major happening in the coding or billing landscape here that we should be aware of entering 2020.
I mean, the landscape has has remained relatively stable through the course of 2019.
And.
This is something that is a.
So it's an evolving landscape.
There's not some new paradigm shift that were that we're anticipating for 2020 in terms of kind of the steady say other than of course average was going to be reimbursement, which would be a big deal.
But again, Alex these things are often incremental and we continue to.
To execute against some of the new requirements that are put on us and we do expect there to be incremental new challenges of than we have to just execute against them.
Ill just reader.
What Mike said on the call I mean, the a lot of the changes that we made that were proactive this year.
Where we are seeing improvements are really not yet baked into our SSP and so when we do our accrual process.
Just by the nature of the way that we do it and the fact that we're conservative we really see some of that in the future. So we we think there's actually some some upside that we're looking forward to from the improvements that we made this year.
Okay understood good to hear congrats on a good results.
Great. Thanks Jess.
Thank you I'm showing no further questions in the queue. At this time I would now like to turn the call back over to management for any closing remarks.
Just thank everyone for the call another successful quarter for us and we look forward to begin touch.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.