Q4 2019 Earnings Call
[music].
Greetings and welcome to the Oncocyte Corporation fourth quarter and fiscal year 2019 earnings Conference call.
At this time, all participants are in listen only mode.
Great question answer session off all the formal presentation, if anyone should require operator assistance. During a conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to deters. Your host Bob you did managing director at Lifesize Visors. Thank you you may begin.
Thank you Doug. Thank you everyone for joining us for todays conference call.
He just got aka sites fourth quarter and full year 2019 financial results and recent operating highlights.
If you have not seen at today's financial results.
A press release, please visit Oncocyte website at Www Dot Oncocyte Dot com.
Before turning the call over to Ronnie Andrews, Microsites, President and Chief Executive Officer, I would like to remind you that during this conference call. The company will make projections and forward looking statements regarding the future of that.
Any statements that are not historical facts, including but not limited to statements that contain words, such as well believes plans anticipates.
Specs estimates and similar expressions are forward looking statements.
We encourage you to review the Companys FCC filings without limitation, the company's form 10-K and 10-Q's.
Which identified that specific risk factors that may cause actual results or events to differ.
Differ materially from those described in these forward looking statements.
These factors may include without limitation risks inherent in the developing indoor commercialization a potential diagnostic tests.
Uncertainty in there and the results of clinical trials or regulatory approvals the capacity of Oncocyte third parties supply blood sample analytical system to provide consistent and precise analytical results.
On a commercial scale.
The need to obtain third party reimbursement for patients use of any diagnostic test the company.
Company Commercializes or need.
And and ability to obtain future capital and the maintenance of IP rights.
Therefore, actual outcomes and results may differ materially and what is expressed or implied by these forward looking statements.
Outside expressly disclaims any intention or obligation to update these forward looking statements, except as may be required under applicable law, but those are prepared remarks, it's my pleasure to turn the call over to a running Andrew CEO Arnie.
Hey, Thanks, Bob and welcome everyone to our conference call to discuss the fourth quarter and full year 2019 financial results and our operating highlights.
Joining me today are my staff, our Parker, Chief operating Officer, Mitch Levine, our Chief Financial Officer Pardon My Sundar, our senior Vice President commercial.
Dr window, Hesterberg, who is our head our Chief Science Officer, and the newest addition, Dr. Doug Ross, our Chief Medical Officer. All of these folks will be available during the question and answer session. Today, just start todays call I just wanted to say how proud I am of the continued progress we've made over the last several quarters.
Since stepping into the CEO role last July we've been dedicated to Arca sites mission of providing actionable answers.
Underserved decision points, along the can't serve continue on and I can confidently say that we have significant organizational velocity towards our mission and entered 2020 with exciting new acquisitions and assets to expand our reach and drive our growth in our enterprise value for years to calm but.
But before we start I'd also like to first acknowledge the unprecedented circumstances were all facing with a cobot 19 outbreak.
As a company I can assure you we're taking every step to protect the health and safety of our team, but also recognize that cancer does it shelter in place and every day that a lifesaving procedure and or therapy or with help from a patient is one day closer to metastatic disease that becomes much much harder to try.
<unk>.
So we had Arca site remain dedicated to meeting the needs are those patients and physicians, we serve each day and to our investors who are supporting our vision. It's important to note, though that we are complying with the current restrictions in place on our work place here in California and support the actions taken by states and the federal government to ensure the safe.
The of our employees their families and our communities in these challenging times.
The uncertainty we were operating in today is unprecedented and requires our management team to use lessons learned from our successful navigation of another public company Clariant during the financial crisis of 2008 in 2009.
Let me assure you that rigorous prioritization of projects and close oversight of our operating expenses will be essential and these measures are already in place to ensure we maintain our velocity. During these challenging times, we're asking each member of the Oncocyte team to come together and pitch and to minimize the need to it.
Crease, our cash use over the next 90 days when we hope will finally be beyond the current crisis.
I would say with incredible conviction that every member of our small team is responding to that challenge with enthusiasm.
It's important to note that our lab employees in critical support staff are continuing to work on an as needed basis to perform essential services as that is the term generally defined under most local and national stay in place types of orders are mandates.
In light of the current macro environment, we remain dedicated to continually advancing our programs to ensure that we bring patients real solutions to improve outcomes in lung cancer, which remains the leading cause of cancer deaths in the United States.
We believe our dedication to provide he actually answers for cancer patients will contribute to healthier outcome for these patients.
Before we really dig into a noteworthy accomplishments I want to highlight the recent launch of our new branding. This is important as we've now rolled our growing offerings into the term a family of test so throughout the call today I'll introduce the new names of each of our new offerings. We believe this shift along with our new website.
Is representative of how we began to transform into a commercial stage company that is building a comprehensive suite of diagnostics across the lung cancer care continuum.
So jumping into the massive amount of work we've gotten done I like to start with our recent acquisition that insight genetics, which was a privately held company with the history of impactful discoveries in both lung and breast cancer. This acquisition was significant for oncocyte into very important ways first yeah.
Acquisition included a potentially transformative immuno oncology diagnostic tests for the selection of therapy for cancer patients. This proprietary test previously the immune modulation or I am score is now rebranded as the term of Oh and I'll tell you about our significant progress with.
The term I O in a minute, but before that also highlight that the acquisition insight genetics also included a successful boutique pharma services business, which operates a certified lab that immediately allows us to leverage our proprietary products and scale to better serve biopharma.
Customers.
I believe that insight will bring tremendous value to Oncocyte why is this important it provides us with a broader scientific base in potential commercial opportunities and the growing investment being made by far biopharma companies, which is delivering new therapeutic classes that require leading edge diagnostics twice.
Identify the right patients for their trials and ultimately for their clinical use.
Secondly, the acquisition gave us access to determine the Io a gene expression tests that evaluates the immune microenvironment and biopsies from cancer patients to identify individuals that are more or less likely to respond to checkpoint immune therapies also known as immunotherapy.
Responders and Nonresponders.
Good morning inhibitors have transformed the treatment paradigm in late start late stage lung cancer, but as an industry. We still have a lot of work to do on how to best use them.
They determine io cash uniquely characterizes inflammatory infiltrates any tumor in the context of the surrounding tissue micro environment. In short. This test has the ability to determine if the immune environment in and around the tumor is active are hot as we call it our dormant.
Often described as cold in our industry as a quick background. There are two currently marketed predictive diagnostic test for immune therapy selection PDL, one staining and tumor mutational burden, our as we affectionately call. It T M B.
There are widely recognized challenges with both of these biomarkers and plenty of room for improvement. This is why we're so excited about our opportunity with the term Io.
Data presented at city in 2019 in November determine I O was shown to be superior to these two available test. We clearly recognize this outcome still needs to be proven in a larger sample set. So work is already underway to extend this into larger more diverse populations across multiple types of solid tumor.
There's which we believe will further differentiate determine io.
Why is is so important for patients and the oncology community.
Mean therapies have been transformative for a subset of cancer patients identifying the patients that are likely to benefit from these therapies remains a real challenge for both oncologist and pharmaceutical researchers being able to accurately predict which patients will benefit from treatment will allow treating physicians to more accurately identify the patient population.
And that can be helped by these therapies and could also have a real impact on the speed at which new therapies are brought to market I.
Identifying the actual responders also potentially minimizes the serious side effects that happened when a laden autoimmune disorder is exacerbated by immune therapy in patients that have no response.
Well informed judicious use of immune therapy will allow oncologist to select alternative treatments as well as potentially save CMS in private payers significant spending for treatments that have no sustainable impact on patient outcomes.
This is particularly important given that a recent jama publication estimated that close to 750000 patients in the U.S. are eligible for immunotherapy, representing a total addressable market of over $2 billion for the testing to identify appropriate patients.
Determine io could potentially better target therapeutic span for insurers and our government helped reduce the immune therapy cost burden, which analysts predict could exceed $50 billion in future years. Moreover, this patient population will continue to grow as immune therapies are approved it earlier stage adjutant settings.
Beyond the potential impact improve outcomes for patients to term I O is an important pharma services opportunity. There are close to 3000 PD one PDL one ongoing clinical trials designed to recruit over half a million patients.
Being able to offer pharma attest that allows them to improve the identification in qualification a potential patients for clinical trials and appropriate treatments may be truly transformative.
And as I mentioned earlier owning the pharma compliant loud that we acquired with Incyte genetics leaves us well position to break open this pharma services opportunity.
Given how important it term I owe it may be for patients and pharma I'm incredibly proud the real progress we've made since announcing the acquisition just a couple of months ago last week, we were thrilled to announce that we completed the clear validation of term Io with the completion of clear validation. We have officially launched a term io, making it a vague.
All of a research use in Biopharma and academic settings.
Briefly touching upon clear validation, we performed to term Io and our ISO CLIA and college of American pathologist or we call cap accredited lab, which we acquired in the train Incyte transaction. This ensures that test that we get out of that lab meet or exceed pharmaceutical industry.
Standards for clinical lab testing, we're proud that the lab has been qualified by multiple top 20 diagnostic and pharma firms for clinical sample testing and based on the solid performance characteristics of the determine Biotest will also simultaneously pursuing a CE market strategy in Europe, leveraging the install base of leading.
PCR platform manufacturers, providing a test they can rapidly deployed across a large install base ex us is a priority for our potential pharma partners since central lab strategies at work here in the U.S. have not been successful and the E U R and Asia Democratize compare.
In diagnostic test allows for more rapid uptake of new drugs when launched and we believe we'll have the ability to make that happen with the term Io.
So what's to come next for the term I Oh.
We successfully shown that potential partners can be confident in the results obtained in our laboratory importantly, the test is highly reproducible and also requires minimal tissue input we expect to present additional details on our result at upcoming medical meetings are actively working to engage with new potential partners in the biopharm in research communities. This isn't.
Exciting beginning for to term I and we couldn't be more pleased with our progress moving next to determine Rx, formerly known as the razor genomics test the first test for chemotherapy benefit prediction in patients with non squamous non small cell lung cancer.
Similar to determine Io determine Rx is a gene expression test that analyzers that patients tumor. The stratify. These early stage non small cell lung cancer patients into high intermediate and low risk of recurrence. The term Rx addresses a very underserved decision point for early stage.
Lung cancer patients with over 40000, plus stage, one or two non small cell lung cancer diagnosis in the U.S. each year.
The current treatment paradigm generally consist of complete surgical reception, which is intended to be curative. However, 30% to 50% of these early stage patients will die from recurrence within five years post resection determine Rx aims to identify the subset of high risk patients that would benefit gray.
Lee from chemotherapy Stratifying early stage non small cell lung cancer patients provides many potential benefits, including improved survival in patient outcomes avoidance of over treating patients who will not benefit from toxic chemotherapy and reduction of overall cost and morbidity by preventing recurrence is in the expense.
Of late stage treatment that accompanies it.
As a brief reminder, and a clinical study high risk patients identified by the term Rx post surgery that were treated with adjunct chemotherapy had a significant increase in survival rates. Specifically these patients had a five year survival rate of 92% as compared to 49% and the high risk patient group that.
Did not receive chemotherapy. This is a remarkable result, and the reason we've been pushing hard to get this test in the market for patients.
We've accomplished to secure a significant amount with the term Rx since our last call first and foremost we announced our commercial launch of the term Rx with too early access sites. The Leonard Cancer Institute at Mission Hospital in Orange County, California, and Florida precision oncology amazingly seven weeks into commercial.
On Tech and now share that all seven of our initial early access targets are active and it totaled 13 sites have been on boarded and include customers from major health systems, including multiple physicians, who are part of the dignity dignity health care, along a large community based health system with 41 hospitals and primary care clinics.
In 22 States, we continue our efforts to bring to strategically bring on more customers and believe we'll have a rapidly growing list over the next several months here's what I'm. Most excited about today, we're already making an impact on patient lives I can share that has today of today's call we've identified seven.
High risk patients that were high risk for recurrence and based on results at the term Rx their positions made a treatment change, including administering timely chemotherapy treatment.
The ability to potentially improve patient outcomes is why joined Oncocyte and I'm thrilled to know that we're now beginning to have a real world impact that we expect will grow as we expand the reach of our test.
Recently I've been asked a lot about how the current covert 19 pandemic will affect our Rx launch. So let me just answer that question head on.
We have had a terrific launch phase with our early access sites and the response prior to the outbreak was solid and was growing.
As you know we hired a commercial team with excellent experience and they hit the ground running.
Given the broad range of local state and national responses to Cobot 19, it has required us though to curtail our face to face engaged with a new target accounts and adjust our marketing selling activities to reflect the current environment.
Our ability to meet with those are the oncology community has significantly reduced and now relies on virtual contacts. Additionally, we believe a trend might be developing were early stage lung cancer surgeries will be delay in the high incident rate cities until we see the situation get better to ensure we maintain.
As much momentum as possible all respecting the priorities are the health care communities. We serve we're proactively work to create a virtual environment for the education, a physician's their staff and their patients on the term Rx. We do know from speaking with our early access positions that urgent cases continue to be addressed.
In most areas of the U.S., except for the hardest hit cities, where greater percentages of these important surgeries are being delay. The reality, though is these tumors must be removed and thus the surgeries will happen as soon as possible. So while we are expecting a slowing of our sample volume growth.
Trajectory over the next 30 to 45 days. We know these patients are in need of life saving procedures, and we will be ready to serve our early access sites and bring on new customers when the current situation eases.
From a patient perspective early patient feedback to the test has been extremely positive and we are actively engaging with ordering physicians to conduct patient education to ensure this continues. In addition, we partner with the go to foundation, the world's leading organization dedicated to saving extending improving the.
Wise, if those vulnerable at risk and diagnosed with lung cancer.
And the partnership the go to foundation is helping to drive test adoption across their community care Center of Excellence network and also help us increased patient awareness. These patient facing efforts are synergistic with our initiation of physician education programs.
We have provided financial support foreign accredited continuing medical education or in our World. We call CMV program, which featured world renowned medical Oncologists Dr., David Gandara from you see Davis and Dr. Johan US Krotz from you CSF. In addition in addition, we've initiated a key appear.
And later Kolašin Speaker program with multiple Multispecialty Kolašin oncology surgery in pathology to ensure we are rapidly expanding our physician education and test adoption and appear to Peter setting despite the current.
Situation.
So now to touch on reimbursement on our last call I shared that proposed positive coverage decision from the centers for Medicare and Medicaid services or CMS for to term or Rx, which may also we provide reimbursement coverage, we believe for 70% of the anticipated non small cell lung cancer market.
I'd like to update you today that we've been a direct dialogue with our contacts at CMS and they have confirm we are currently in the queue awaiting final local local coverage decision are LCD and the subsequent pricing that will come with it.
Given the current situation to see me CMS related to their need to respond in real time to the number of companies seeking reimbursement for the cobot 19, PCR test we are now anticipating the LCD determination for determine our Rx did occur sometime in the first half of 2020 versus our original target, which.
He was at the end of March.
We've also continued our efforts for commercialization by reaching out to additional private payer plans that together cover over 100 million lives ever see overwhelmingly positive feedback on the evidence supporting the test.
It's important to remember from previous discussions that we are able to hold the invoices from the current patient orders and we will be able to submit to CMS once we get our final decisions and pricing.
In addition to our initial come commercialization marketing plan, which is a highly targeted within these initial focus on 10 regions in the U.S. that represent high risk populations of targeted patients. We also are beginning to explore international expansions I'm pleased to say that we've received regulatory approval to begin distribution.
One of the determine Rx in Canada, marking our first international regulatory approval. In addition, we'll be continuing our international momentum by targeting innovative X U.S. oncology focused labs with large existing sales forces and oncology relationships. We believe this approach approach can drive awareness.
Our company in test building demand in advance of the potential availability of a kit that the labs can run themselves and those remote geographies.
Next I'd like to transition to where it all started at Oncocyte with the term of Dx formally nor known as determined view, our liquid biopsy test and development to aid and ruling out malignancy, along nodules and potentially avoiding unnecessary invasive long biopsies.
From a dx utilizes our proprietary immune system interrogation approach that harnesses the immune systems response to the presence of cancer.
I'm pleased to say that since our last call we announced the on track completion of our clear validation study of the term Dx as a reminder, clear validation test at approximately 120 blood samples previously tested as part of our R&D validation study and the goal was to do.
Demonstrate equivalent test performance when conducted in the company's clear validated lab with CLIA lab staff and includes specific protocols to confirm the accuracy reproducibility and precision of determined Dx in a real world clinical lab setting.
With the clinic, what the CLIA lab validation completed we began the clinical validation with the goal to deliver solid statistical power to our test.
And to subsequent create subsequently create publications to do this we are testing approximately 500 blinded perspectively collected patient blood samples to serve as the final confirmation of determined Dx in our clinical lab setting.
If successful clinical validation will establish the independent clinical performance prior to commercial launch.
Since we had collected all the necessary patient samples prior to the current covert permit pandemic and our lab personnel qualifies essential workers under the current stay at home orders in California, We remain on track to complete Quinn Val by the end of Q2.
Once the performance parameters are established we will again preparations for commercial availability, which includes the publication of the clinical validation results, which will be required for us to submit our CMS dossier as well as the execution of additional clinical studies that we will begin.
Again, we're fortunate this product timeline is not currently impacted by the evolving macro environmental issues and we're hopeful that when we plan to submit our CMS dossier. This fall their process is indeed back to normal our ultimate goal is of course to secure a broad reimbursement and we're working to assemble a robust.
Package, just as what was submitted for our determine Rx products.
More than 1.6 million lung nodules detect an aunt annually through imaging and majorities nodules found to be benign falling in invasive diagnostic procedure. We believe determine dx has an important role to play in reducing unnecessary biopsies, which can be associated with very serious complications.
On the corporate font I'd like to highlight again my philosophy. The great people are the key to achieving great things.
We have a small but incredibly talented experienced team who selflessly work across departments and their primary responsibilities to help us stay on track. Despite the current headwinds and the macro environment and this is something that many companies our size are facing at the moment.
One important recent addition to our our staff, though is our new Chief Medical Officer, Dr. Dog Ross, Doug has been working with us in a consulting role since July when I joined the company, while he wound down some of his commitments that the Bethesda group, where we were partners before I joined Oncocyte. We're pleased he is now has the bandwidth to give.
This is full attention Doug train to pathology in genomics that you CSF and Stanford and has spent the past 20 years, discovering and shepherding multivariate diagnostics into the marketplace. His extensive experience at leading molecular diagnostic companies, including applied genomics Clariant GE molecular life technologies and three.
Thermo Fisher make him uniquely qualified to bring a valuable medical scientific and commercial perspective to our company.
Our commitment to growth and team building is actually one of the main reasons for our recent relocation to Orange County, California, Our New headquarters has replaced our Alameda office in the Bay area. This relocation is key for our growth as Orange County is an emerging hub for the life sciences in the U.S. and with that brings.
Real access to talented individuals to grow our team as we grow by moving to Irvine, We're confident that we can continue to support our growth trajectory with top notch talent and ultimately reduce the overall costs of operating our west coast CLIA facility.
In addition, the relocation allows us to engage with patients in the community setting leveraging access to credit incredible community treatment centers, including the winter Cancer Institute admission hospital, one of our our early D are determined Rx sites, along with a recently opened city of hope cancer Center and Hocol.
Hospital, we're excited to build strong ties within the Orange County community and are hopeful that will contribute bringing clinical trials that may benefit area patients.
Taken altogether, it's clear that the Oncocyte, a 2020 is poised to do remarkable things and nine months, we've gotten determined Dx back on track. We've added two new exciting test determine rx and determine our Io both have the potential to dramatically change the treatment paradigm for lung cancer.
Even more with a lot of hard work and dedication. These two test are now commercially launched Rx for the clinical patient care and Io for research use in Biopharma and academic setting.
Our last caller said this is just the beginning for Oncocyte and I believe that statement remains true today, we're continually evaluating opportunities along underserved decision points on the cancer care continuum and believe there are number partnership that could expand our on how we value ourselves and the value that we're bringing to patients Dr.
As payers and our shareholders.
We expect to report a number six a significant milestones in 2020 and I'm committed to continue our fast paced progress was that we work to accomplish our mission of providing access to answer is a critical decision points across the cancer care continuum with the goal of improving patient outcomes by accelerating and optimizing treatment decisions.
At this point I'd like to turn the call over to midstream for a river a review of our financials Mitch.
Hey, Thanks Rodney.
Hi, everyone.
Before I begin to review of our financials Im pleased to note that earlier this quarter, we strengthened our balance sheet with the completion of a 7.6 million dollar offering of registered common shares.
Offering was completed directly with healthcare focused institutional investors, which we believe is a testament to our strategy now proven ability to execute.
We also believe the reinforcing our balance sheet via smaller offering price ad market.
Levels us to remain agile from a strategic perspective, well also rapidly advancing our efforts for commercialization and market preparation across a rapidly growing offerings.
Further and flexibility and Optionality and satisfying our capital objectives.
We put in place at the market or ATM, offering, which is an efficient and cost effective solution.
You mean equity overtime.
As of December 31st 29 team.
We had cash cash equivalents marketable securities of $22.5 million.
That's compared to $8.5 million at December 31st 2018.
For the fourth quarter of 2019.
We reported a net loss of $8.0 million or 15 cents per share.
As compared to $4.5 million or 11 cents per share.
Fourth quarter 2018.
Operating expenses as reported.
Fourth quarter 2019 were $7.5 million.
An increase of $3.5 million, that's compared to the fourth quarter 2018.
Operating expenses as adjusted.
Fourth quarter 29 team were $6.7 million, an increase of $3.1 million.
That's compared to the same period in 2018.
We have provided a reconciliation between GAAP and non-GAAP operating expenses in the financial tables, including with our earnings release, which we believe is helpful. In understanding our ongoing operating expenses.
Research and development expenses for the fourth quarter 2019.
The point $3 million.
As compared to $1.2 million for the same period in 28.
An increase of $1.1 million.
The increase was primarily attributable personnel in laboratory related expenses for the activities related to and completion of.
The clear validation of determine Dx.
General and administrative expenses for the fourth quarter 2019.
$4.2 million.
As compared to $2.6 million.
Same period in 2018, an increase of $1.6 million.
The increase was mainly due to personnel and related expenses.
That's the banking inexpensive.
Legal business development investor related expenses, and noncash stock based compensation expenses due to additional equity grants.
As mentioned before we transition from lend itself therapeutics or formerly Biotime.
Shared services in the latter half of 2019.
Instead against our own administrative.
Human resources, legal finance and accounting functions and teams.
This transition also included the termination of the shared facilities agreement with maybe edge.
As of December 31st 2019.
And as Randy mentioned earlier, we at least our own facilities last December and move into our Irvine, California headquarters in January of this year.
Sales and marketing expenses for the fourth quarter of 29 team.
Were $1.0 million, that's compared to about $300000 for the same period in 2018.
The increase of approximately $700000.
This increase was primarily attributable to the ramp up in sales and marketing activities, including key hires.
Our commercialization efforts of determine Rx.
Cash used in operations was around $5.3 million for the fourth quarter.
29 team.
As compared to approximately $4.9 million during the third quarter of 29 team a modest increase on cash burn on a sequential quarter to quarter basins.
In the latter half of 2019.
That's compared to our cash used in operations of about $2.5 million during the fourth quarter 2018.
This is consistent with our earlier comments.
Not on consigned has begun to transform into commercial stage company, that's compared to a one product R&D stage company, just one year ago.
That concludes my remarks.
Concerning our financial highlights Ronnie.
Operator, we can now open the a the for the call for questions. If you don't mine.
Thank you ladies and gentlemen at this time, we will be conducting a question and answer session. If you'd like to ask a question you May press star one on your telephone keypad a confirmation total indicate your line is in a question Q you May press star too if you like to remove your question from the Q4 participants using speaker equipment, it may be necessary to pick up your handset.
Before pressing the star key.
Our first question comes from the line of Paul Knight with Janney Montgomery Scott. Please proceed with your question.
Hi, Ronnie on could you talk about our view got your sales force hires done and how are they going to get into the field in the current environment.
Sure. We had I think everybody remembers we've had a goal hiring the sales team in early January.
We were able to get that team on board by January 13th They spent the first couple of weeks.
Training and learning about our various products, but certainly focused on orexin and getting prepared for the target launch.
Pardon the is on the call today, So I think what I'd like to do is as flip it to her and and let her talk about the number of reps, we haven't and how we've targeted and then what she sees the ongoing opportunities and then I'll add a little color commentary partner.
Yeah, I'm happy to do that so we did hire and limited sales force to Oh on.
Top the volume of hospitals in the United States, what's happened as that face to face interaction that definitely slowed down because the hospitals, increasing you have a policy of not allowing.
That's the command however, we have not slowing down what they've done as well we have favorite that's two offering a virtual learning opportunities and interaction opportunities and this finding that doctors that actually quite receptive to it because actually they have more time than they had before for such event. So we had started to do that.
On a weekly basis, and then getting I'm not I'm interested in participating in these learning opportunities. So like you said these surgically have to be perform they may be postponed but do you saw ginnies must be performed anymore cume I forget expecting that once these hospitals I bought an arm of the surgeon, even though they perform.
And then we'll be sort of pent up demand for these appointees samples and for the stuff at that time.
Yes, let me let me answer this too.
I've affectionately name this.
Internally or at least for me operation inherent resolve and being an ex military guy I like to look at commercial execution much like warfare and this team and partner won't.
She won't she won't beater chess, but I'm going to do it for me they have.
Dave flexed quickly into a a more of a virtual selling and marketing model and today, we've got over thousand invite sent out to oncologist and targeted thoracic surgeons to have what I would call lunch and learns with some of the key opinion leaders and Dr. Krotz and Dr.
Can on specifically who are early adopters.
The CMC event that.
Our head of met Ed Sarid and put together with Dr. Gandara has if you haven't had a chance to go look at it. It's you can access it through our website. It is phenomenal and these are two world leaders in lung cancer that you can see the enthusiasm for educating physicians that finally, there was a test that we identify.
Hi Inn and Upstages, we call it in our industry a patients from early stage to now high risk of recurrent. There's also a we've also got the go to foundation living rooms that we put in place which are sober discussions in a living room setting that get videoed incentive across a we've got a video ad.
AD Board that this team has put together a we've got developing marketing strategies now for when post cobot ends Weve a nurse navigator program. We've got a patient education resource a program that is gonna be helping patients become educated from that surgeons. So when they go to their doctor they're up mid October.
Have edge there will be educated on how to influence the medytox decision to give them there chemotherapy.
As well as numerous social media type things, we're working on so we aren't sitting still and I think thats. The message we want to send to everyone. These are unique times, but.
As always like to say you know Lox Lin preparation meets opportunity and so this team is working on new ways to touch clients and to educate and as part of said I talked to one of our early access.
Sites last night and they were they were inc. encouraging us to do more of these virtual things because they jokingly said they have all this time on their hands, because they're not able to do surgeries right now and so they really like to encourage us to really beep. These things up so we're going to take that to heart and do that so probably a long answer.
But I think it's important to get that out for everyone that we are using the tools at our disposal to two overwhelming we provide force in the marketplace for our message.
If you're a targeted cash burn this year as well Ronnie.
Yeah, I'm going to let Mitch handle that but we have been working as you might imagine over the last 30 day. Since this this kobin situation took place to look at how do we attack this and how do we minimize it and only do the essential things versus assumed that the capital markets are going to be there for us. So Mitch you want to you want to handle that question for us.
Yes of course, thanks, Paul currently at the end of the ended the year, we had $22.8 million in cash and think we mentioned we burned about 5.3 million I think thats probably in line, maybe slightly high level, we expect for the next several quarters.
How much cash burn in the quarterly that number.
It was 5.3.
For the the fourth quarter of 29 team.
Spec that cash burn to come come in slightly but not much from there okay.
Thank you.
Thank you Paul.
Okay.
Operator are there any other questions.
Yes. Our next question comes from the line of Bruce Jackson with the Benchmark Company. Please proceed with your question.
Hi, good afternoon, and thanks for taking my questions with the with you had to term Rx.
Kit for CE, Mark when do you anticipate having that available.
We are working with a couple of potential partners. There you know there the good news for the PCR World is there's quite a few manufacturers of instruments today that are saturated the clinical market at the bad news for US right now as all the momentum we had as you might imagine is now being absorbed by by these Manny.
Factors trying to get co bid our what we in my World Koby, two kids to market so that they can identify.
Positive patients for for Cobot 19.
But those are conversations continue to be ongoing our original goal was by the end of fourth quarter. This year and we really won't know Bruce. Unfortunately told the dust settles on the current situation. When if we can stay on track with that or Thats going to push into Q1, but certainly by certainly by April hopefully by April may call, we'll be able to.
Give you some insight as to if we're going to go to make it this year not real real real quick overview that Kid is a is a 14 gene kit and it's run on you know a mostly all it can be run on any multiplex PCR platform real time platform. So.
I think we're in good place to get that Don It we just need to see some some light at the end the tunnel on the current situation. So we can get some bandwidth from these potential manufacturers.
Okay, great and.
And then I believe you mentioned you're doing some additional studies for the is that the determine io.
Product and then can you tell us a bit more about how those studies are progressing given that the because the 19 situation.
And when you might have some additional follow up data.
Yeah, I'm going to let Dr., Doug Ross and Dr. Lindell Hesterberg tag team that won but at a high level. We were we had been in very close contact with a couple of key investigators that had some.
Some trials that had had failed in Italy, and we were very hopeful to be able to bring that to closure, but as you might imagine that has been now put it on the back burner for all the obvious reasons, but our strategy remains intact. So I'll, let Doug do you want to you want to handle how we're going to approach the expanded data collection and Linda.
You can add some color commentary in terms of our lab readiness and what will be able to do out of Nashville.
Sure. Yeah. This is Doug I. Appreciate the question. So you know there's three different sources of doing retrospective studies with a product like that's fair institutional studies that you can get through working with academic institutes or potentially pharma companies that have archive samples and as Rodney said a weird.
Understood both in pursuing advancing the data in both triple negative breast cancer, because that's where this product started but also in lung cancer developed for commercial focus of Oncocyte. So as Ronnie noted we were working with of area.
A spectacular study frankly in with some folks in Italy, and that's been pushed off of that for now and then and can't really give me any guidance as to when that might get a little bit more momentum since its situation in Italy, so challenging.
But there are other opportunities both in triple negative breast cancer and in lung cancer.
That were pursuing than we're in conversations with multiple different pharma partners for the potential to pursue studies with them and I might remind you that this product was originally developed as an R&D product. So you can do hold transcriptome analysis in Silico. So that's really just a an experiment done in computer.
You will so it's very efficient.
Or we can you be clear validated products from our Nashville lab to go retrospectively on archived paraffin block samples and so that makes a the ability to generate on that's rather.
Quick and efficient as soon as we can get the things go and given the current situation right.
Yeah, Lindo, you want to comment on the Irene cohort in the access to our 60 plus sites that we are actively collecting in Irene and the impact that that the covance situation, having what what you expect in the next 90 days maybe.
Sure we have to talk about that.
The Irene cohort as you May recall has a study that we had been running for.
Over three years now and has over 3000 patients in a.
With nodules size between 0.5 and three.
Centimeters and this is the intended use range in the area that physicians tell us or the greatest need for nodule management.
For the benefit that has is that we're in contact with the key positions and the folks who are working both research and clinically.
Cancer patients and so this opens the door for us or conversations for iOS studies to be able to approach them and get rapid answers. Unfortunately were impacted here in the U.S. just as much.
Studying all Italy is but that's a great resource for us to have and we have over 60 sites across the U.S.
That are potential sites for us to expand our I O studies on.
Thanks Lendl.
Okay. Great. That's very helpful. Then or last question for me just wanted to confirm Misty physicians, who are watching your webinars to getting continued continuing medical education credit for this and.
Are you profiling, just just to determine Rx product are you or you're getting the entire product lineup in there.
Yeah, we're starting just with Rx, but I'm going to pitched pod mother give you more details around the see any program. It's the first of what we expect to be many from us but pardon.
Yes, that's absolutely right. So the first one that we did like.
Ronnie described with a word renowned lung oncologists dr., David gondola as well as the Doctor Honda scratch, let's focus on a management of early stage lung cancer and naturally are focused on the utility I've done my all right, but that strategy is to continue with that see any events, we probably have one more.
That's probably not but I'd bring additional tests online for clinical use outside did you have anybody.
Pretty much will be to have see any event you talked about that.
[noise] Brian.
My question I'm, sorry, there to answer the question, yes, the doctors, who watched attach do get see any credit.
Yeah for the see me event, but I think the important note is that these are now virtual given the current situation and so we will continue to produce season put them out.
And anybody who watches it over the course also next one yarbrough anybody conveniently on their computer can get see any credit. So they can you comment.
All right that's great. Thank you very much.
Thank you Bruce.
Thanks, Bruce our next question.
Next question comes from the line of key Nikai with Chardan capital markets. Please proceed with your question.
Yes. Thank you Rodney a couple of questions about pricing, maybe starting with the Io test in the research use only what kind of price sorry getting.
Yeah. The goal of the re are you owe program with pharma is to obviously enroll patients in and to be a part of their trial process.
The list price for the product today has not been determined in terms of what the clinical price will be a form a what we typically do as we have a per patient fee for the the management of the sample collection and the running of the test and so right now.
I'm actually we by the way we are not on the same room. So we are I have my team on zone and I'm looking at a at dog and maybe you can comment on sort of our thoughts on that I think the reality is at this point, we're in negotiations and we haven't really landed on that price, but we'd rather get these clinical trial.
Yes.
And then worry about price, but we will be able to too you know to charge for these and we certainly think we'll we'll we'll be able to make these profitable ventures, but okay doug's, putting up a sign that lindell is going to take that one so literally you want to take that one for us [laughter] sure.
So.
Your your run is correct that we don't have.
Exact pricing yet we're working on that but one of things do I'll. Let you know is that we have the lab capacity deal with.
Our own studies as well as those pharma studies, we have lab readiness in place we've established a performance one of the concerns that has been voice at least in the public press.
Is the ability to get PCR related reagent supplies materials, because so many are being diverted diverted to the current crisis with the cone of ours testing, we have all those supplies reagents in place for last us for the foreseeable future. So we stand ready. In addition, we have trade.
Train certified staff.
Oh already set ready to roll and operating thankfully in the national environment, It's not quite as severe and as in New York in California.
And so we stand and a very good position to service the pharma clients that we lineup.
If you guys are KBR trying to consider sort of how these things typically price typically there there's some discount to what we would think the clinical price would be so again, we can't really comment specifically, yet because we havent closed a deal, but we will obviously a share some of that information as we go forward typically.
Do you see these things anywhere from 1500 hours, a patient to $4000 a patient, but since we're running a small multiplex PCR panel I suspect will be at the low end of that range and whatever we're able to negotiate so hopefully that helps you should think about pricing.
Dr Ross and Dr. hang on Dr. Ross decided he is going to offer some thoughts sorry, guys. I know this is a little clunky, but we're not in the same room due to the the mandate. So Doug do you want to just add some comment to that for these guys.
Yeah, I just thought I'd comment on the range of sorts of relationships that you could imagine. So we think this product will be very attractive the folks, but I want to get into the lung cancer market and so those would be arrangements that would be cdx partnerships potentially and so that would be very different for instance, and customer.
Who wanted to get R&D seek them on a whole transcript on our next week on on all their samples, which is something our lab in Nashville does very well and then it would be an informatic analysis on that aren't they seek beta and so there would be charges for the R&D seek and then charges for access to the algorithm and so forth. So there's a very broad range of serve.
This is that that National lab offers so that's a little hard to talk in general about you know price participation or price for project because some of those projects benefit us as much as they do pharma and so forth.
Great point that big overview.
That's a great point.
Okay.
Right.
What I would now be the timeframe for this to be launches commercial test.
You mean clinically are in terms of use for pharma trials.
Yeah beyond this initial beyond this limited research use only got it yeah right now the plan is to the plan was to get get our breast cancer data out at ASKO, We still think we'll be able to do that because.
Ask go even though there won't be a physical meeting we will we will actually have an online meeting and so our researcher from Indiana person and Yale they are preparing to present the long I'm sorry, the breast cancer data at that meeting and at that meeting we will collect we will have now collected where.
Well in excess of 125 patients across to tumor types, and we know that M.S. I received their CMS approval with about that many patients. What we are not doing is assuming that we will get that so we are planning a upcoming meeting with with CMS and.
And we think by the time, we get to our next call we might have some information to shed some light on that question, but dr. Ross is raising his hands or Doug you want to add a little comment to that.
Yeah sure. This I mean this is an incredibly exciting project.
Product that is going to be we believe impacting the use of immunotherapy use of checkpoint inhibitors and so.
I think I'm, a little try to give exact guidance on it but as Rodney said, we're going to talk with CMS and give some guidance from them on how to advance that forward you know whether it be you know with one of the drugs that are trying to penetrate the market or temporary why they're right sort of information that would give a oncologists.
More information for the judicious use or sorry, judicious judicial picking up there that were just if you theres a checkpoint inhibitor.
Given as Ron is already mentioned, there's a lot of excitement about those drug but in fact, they also caused a lot of side effects. When you take the breaks up the immune system.
People sort of late and auto immune diseases get activated and so it's really important you know not just for the financial reasons for the further further further healthcare system, but also for the appropriate care patients to know when are they work and when they go out and we think this this biomarkers signature and they really improve our ability to identify those space.
Currency will respond or Conversely, those questions you might not respond.
Yeah.
Oh, okay.
And then.
Sorry, that's switching to Rx can you talk about pricing there and how that how does that how your economics change that model.
Yeah, So I'm pardon me and that's one of the doctors that founded the test spent a significant amount of time in October November putting together an incredibly.
Strong health economic dossier Silpada, you want to you want to talk about the price would go on foreign our confidence in what we think we're gonna see and then the whole costs, while approach that CMS might use.
Yeah sure happy to do that so CMS crisis that in two different ways. The first is that preferences across walk.
The price so assuming that that's a methodology I need they cannot do that then they look at other factors, including health economic benefit from using that that's the price but that's.
We have submitted a very comprehensive pricing dossier to CMS I've been explains that are the right benchmark and kind of across welcome. The Oncotype Dx test because that's uses are they similar methodology and RT PCR and proprietary algorithms like that that's good that's one approach we've.
Okay I've done it pretty comprehensive health economic analysis that demonstrates that at a price compatible dawn.
This does anybody significant savings for the healthcare system, because it's infusystem record.
Canseco in advance stage when the concept treatment can be as high a $300000 per patient so based on those.
Analyses, we feel pretty confident and getting <unk> pricing that's compatible that task in this industry is there some of their methodology. One obvious example, being Oncotype Dx go back I'm sorry.
So the GE and action.
Right Yeah. The gentleman helped test today is reimbursed around $3800 bye.
The the you know a few of the Max and I think the lowest is about $3500. So that is our expected range.
Our next question comes on line of Rachel Denzel with Piper Sandler. Please proceed with your question.
Good afternoon, thanks for taking the questions. So I appreciate the comments that reimbursement for it to turn on Iraq deeply given the cobot outbreak can you give us anymore color on your conversations I cannot so for example, if you see it for see handling the timeline for your determined de acts reimbursement CMS has a backlog of policies to get there.
Yeah listen we pardon is you know one of the incredible she brings a lot of attributes to our company. The one is this knowledge of how to get through pricing the thread the pricing needle with CMS. So pardon I'm going to let you talk about your conversation with CMS and and your.
Thoughts on that and I'll close with some color commentary, maybe you probably will handle.
Sure so as far as our excess and so on that is a cadence milestones that that's moved to pass before it gets final coverage the first.
The proposed CDB got to that and then we had the common theme, but should we got two and then November timeframe and I said that medical imaging, which have been pretty that's one thing that's what I would ask guest feedback from other my accent. We got to go back in January and so.
No not final step is to get final LCD and unfortunately, that's when a cool then no call that situation happened. So we haven't heard anything we know that went up 13 other than the final stage, we haven't heard anything that suggests.
Whenever the idea name, but as you pointed out and they do have a their pets.
But you have they didn't approval and probably expedited approval. So it could be in Bakken, we haven't heard anything to suggest that there's any and any kind of bottleneck so far.
Yeah, So I think Rachel the what we're doing is where we were expecting and telling our analysts we thought we'd get it by the end of March I do think we are we're backing off of that to be bought today, because we last time, we talk to them a few weeks ago. We know we're one of 13 companies in the queue, but we know a lots happened a few weeks.
In the last few weeks and so we're just anticipating that it's going to be somewhere in the April may timeframe, but we're still hopeful that it will be sooner obviously than later and but we aren't sure about what that backlog means we know that there's 13 companies awaiting approval for the May before the next cycle.
They are unofficial cycle begins in may and and we don't know how many companies will be in the may cycle, there might be delayed we won't be proves we won't be presenting a dossier into a fall. So it's really hard to tell right now and there's going to be a backlog.
For the spring going through the summer cycle until we see how many companies actually summit for that cycle, but we'll probably no more after we get our approval and we can start to see whose teed up for the may cycle, and that'll give us a better indication of whether we're going to see something delayed in fall or not so more to come on that but hard to tell at this point in time.
Great. Thank you and then last question for me can you just tell us about the feedback you've ever seen from your discussions with private payers on determine our act.
I know this is kind of hard question, but when you expect to see private payer coverage decision on that thank you.
Yeah, Let me tell you what we're doing there and then palm add some color commentary if you like I mean, we were we were we were and are focused.
Focused on obviously CMS, because 70 about 70% patient population is Medicare that we're going after with Rx. However, as you know having private payers in the regions. We have ourselves reps will be important because not every patient is a CMS patients and physicians want to order. It once again go on not just for their Medicare patients.
For all patients and so what we want to do is come behind our reps in these key target areas and we want to have access to the top payers in that area and then to follow up as CMS gives us our pricing follow up with Dave a well organized push to meet with those payers and to get those payers on board.
We do know from previous work with those payers that as part of said because of the.
The significant cost of late stage end of life lung cancer that anything that you can do to reduce the number patient setting up there for a payer is saving them money and so we think that we have a really strong healthy economic story to go to those private payers with but but we'll know more as we start to engage.
Hey, Jim in the coming months.
Palma gave me the thumbs up on zone. So I think that she is okay with my answers [laughter] [noise].
Our next question comes from the line of Thomas Flattened with Lake Street Capital markets. Please proceed with your question.
Hey, guys. Thanks for taking the question I just wanted to follow up on the the the earlier question about the commercial footprint, obviously, you've got a pilot program ongoing right. Now can you talk just a little bit about what the plans where for expansion.
For Kobe them and what the plans look like you know.
Perry in post Kobin from a summary from a rep hiring perspective in any expansion perspective.
Yeah sure. Let me give you my thoughts on that I mean, right now we think we've got no. We know we've got really five high powered reps and a really talented leader from our previous world. These reps are multi sort of experience. They come from folks like Foundation medicine like garden like Clariant and so we've got a nice blend of.
Folks from various areas of the industry selling high value to us our goal or original goal was to build these territories up and then these early hires would become the district managers and then we would begin to higher.
Reps underneath them in adjacent areas to the markets that they build out and so again, if you remember some earlier discussions we talked about that it takes about you know nine to 12 months. These reps get too sometimes 18 months, depending on how big the territory is to get to what I would say is about a 60% growth.
Through our 60%.
Of the total available revenue market for that area, which we would which typically saturate to wrap in this type of industry at about $3.54 million and so as we started this get to the 152 million dollar range of a rep territory, we'd start looking for that second Rep third Rep fourth rapid and that's just.
From experience in building Clarient and that's how we built it.
It was a responsible way to add sales reps. So that the revenue was was not lagging very far behind.
The cost of the wrap and so that was the plan and candidly still is the plan.
Going forward. The one thing that could change that plan is the if we were to get an early approval from CMS of our the term Io test and we were to score. Some early influence from key opinion leaders and papers that would indicate that this is the test of that could become so.
Standard of care. There then we would obviously increased the number of cells were force around that but that would come with the knowledge that we're going to get reimbursement forward and that we would have to expand significantly because as you imagine the Rx a 40 45000 patients there might be over fourx or for us for the Rx to.
Yes, if there are 750000 eligible patients in 2024 immune therapy than we would need to expand our rep coverage and significant ways. We can do that one or two ways. We could hire that are we could we could a partner with another company that might have a salesforce already in place that could help us do that.
And so we obviously have both of those on the table not sure which way. We go I think the goal would be to retain as much of that revenue and profit, but these are very profitable to us. So we want to retain as much of that as we can for our company and we want to maintain the customer experience with an oncocyte experienced since we have.
A lot experience through the years of creating a very very positive sort of engagement with physicians and their patients. So I don't know if that answers. The question I'm happy to go deeper if you want but that's the current high level strategy and I will continue to add reps as the eye as the Rx test expands in its influence will continue to add reps around the curve.
Current Rep base, but we don't expect a significant number of additions this year, especially given this little break that we're getting from our momentum with a with the covance situation.
A a.
I think that's great. Thanks, Ronny and then you know could you talk a little bit about a you know with the dossier submission for Dx in the fall if everything stays on course could you talk a little bit about when you would expect to make the commercial and how that would influence commercial expansion.
Yeah that is that has a terrific question outlet pardon my feel free to comment.
That is a different call point, that's pulmonology versus thoracic surgeons medoc. However, what we are seeing with Rx is this as a team that treats lung cancer patients and the Pulmonologists believe it or not become somewhat a quote unquote primary care type position for people with respiratory distress or whether it be a pre.
You know pre surgery, our post surgery and post treatment. The pulling all this is actively involved and these long cancers lives pretty much the rest of their lives and so we do have some experience already and what that market would look like.
But we would with Dx, we think we'd have significant momentum behind us at that point with that type of reimbursement that we believe we would get based on what's currently reimbursed in that space and that would afford us the ability to go higher a significant number of cells reps to go attack that market PAMA, you're not in the room I see.
Small and so you want to comment on on my comments and that if you you know some color commentary for these guys.
Yeah, I think you're absolutely right the way up patients are being increasingly even in the community setting.
The management of by a team of Doctor the to my Board.
The fact that our reps that already talking to the so again talking to the oncologists and in fact, even beginning to stocking up on the knowledge, it's already means that they're fully equipped.
Also called on by the knowledge. It's once we have the Dx that's available in those systems that they had an already having said that the market for the excess is considerably bigger than the market for our actually you could we would want to expand I reach with the judicious again emission sales reps in the areas that a lot of these.
No I do that actually detected.
So we know that a number of these screenings and that's where a lot of these.
And then do you want to make sure that we have reps covering those high one thing and then that is not is that detected tobacco via strategy, but we do think that we caught in perhaps can be effective amendment and other reps targeting high volumes.
Yep.
I think thats, a great problem for US right. It's a great problem for us to have though folks if we have Io, which is a pan cancer opportunity and we have Dx, which is a significantly larger market. Those are two really good problems to have and I think we'd be happy to her salesforce behind both of those.
As initiatives, so, but but we'd have once we get closer we can give you are thinking on what that will cost us, but right now it's too early to say until we see what reimbursement is gonna be.
Great. Thanks, so much.
Yes. Thank you.
That is all the time, we have for questions I'd like to turn the call back to Mr., Andrew for closing remarks.
Okay gang. Thank you it was a long call today, we appreciate everyone's patience, obviously, we've got a lot going on at Oncocyte.
I'll just close with this look we are in a unique position as a company to do something pretty spectacular for lung cancer patients. We we believe we have the right mix of products and we certainly have the right team behind it.
I think we're extremely acutely aware I mean use that word of our need to make sure that we manage our burn given the current environment. So you can count on us to do that and we think we're extremely well positioned for growth I'd like to close by thanking our team. They are amazing they were.
Work long hours.
They never never shy away from stepping in and helping someone here that needs. It keeps us from having a higher in this current environment and so a I appreciate their effort and I look forward to future calls, where we can continue to update you on a on the success of Oncocyte. Thanks, everyone.
Okay and.
Gentlemen, this does conclude todays teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.