Q1 2020 Earnings Call

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At this time, all participants are listen only mode.

Question answer session will follow the formal presentation.

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I'll like to turn the conference over to your host Bob Yedid lifestyle Advisors. Please go ahead Sir.

Thank you Gerry and thank you everyone for joining us for today's conference call to discuss our sights first quarter 2020 financial results in a recent operating highlights if you have not seen today's financial press release. Please visit our sights website at www.

Todd I put site dotcom.

Before turning the call over Durrani Andrews, Oncocyte, President and Chief Executive Officer, I like to remind you that during this conference call the company will make projections and forward.

Forward looking statements regarding future events.

Any statements that are out historical facts.

Including but not limited to statements that contain words, such as well believes plans anticipates expects estimates and similar expressions are forward looking statements.

We encourage you to review the company's FCC filing without limitation, the company's forms 10-K, and 10-Q's, which identified the specific risk factors that may cause actual results or events to differ materially from those described in these forward looking statements.

These factors may include without limitation risk inherent in the developing or the commercialization.

Potential diagnostic tests uncertainty in the results of clinical trials or regulatory approvals the capacity of <unk> third party supplied blood sample analytics system to provide consistent and precise analytic results on a commercial scale.

The need to obtain both third party reimbursement for patients use of any diagnostic test the company Commercializes.

Our need and ability to obtain future capital maintenance of intellectual property rights and the potential impact of cobot 19 on our 'cause sites financial and operational results. Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward looking statements.

I can say expressly disclaims any intention or obligation to update. These forward looking statements as otherwise may be required under applicable law with that it's now my pleasure to turn the call over to Ronnie answers CEO running.

Hi, Thanks, Bob and welcome everyone to our conference call to discuss our first quarter 2020 financial results and operating highlights joining me today, mostly virtually our Mitch Levine, our Chief Financial Officer, Our Parker, our Chief operating Officer, Dr., Wendell Hesterberg, Our Chief Science Officer Dr. Doug.

Ross, our Chief Medical Officer, Impartment Sundar, our senior Vice President of commercial.

All these folks will be available during the question answer session.

Thanks to the unparalleled commitment and sacrifice amazing team I'm very encouraged to start todays call being able to say that we've continued our significant momentum through the first quarter 2020 natural here on the call today have made considerable progress in pivoting the company strategy and are now beginning to realize our mission.

Even as we faced the current macro environmental headwinds.

I think most exciting as our big news for to turn the Rx. The first it only predictive tests for the identification of patients what stage one to two way non squamous small cell lung cancer, who are at risk for recurrent sprawling surgery and likely responsive to add your but chemotherapy, we're thrilled with our recent announcement.

Final local coverage determination are what we call LCB BARDA term or Rx under the centers for Medicare and Medicaid services or CMS program.

We anticipate this final LCD will lead to nationwide Medicare coverage for up to 70% of eligible early stage lung cancer patients.

Final LCD is a significant milestone towards securing broad reimbursement, but a term Rx and we believe several national and regional payers will follow the CMS decision. Our next step is try to intensify our efforts with private payers, who historically follow a Medicare coverage decision with the goal securing.

Congress for patients that have private insurance.

Today, our efforts to have already included reaching out to additional commercial healthcare plans that represent over 100 million covered lives and we received very positive feedback on the evidence supporting our test importantly in June we will submit to see a mask the invoices, we've been holding for test.

And while waiting our final LCD.

This marks a new era for Armasight, we're now proudly position as an innovative player in molecular diagnostics was secured high value reimbursement.

As a brief reminder, that term Rx is an important new test that addresses a critical unmet need for identifying the 30% to 50% of early stage lung cancer patients who have a high likelihood of recurrence. Despite having what is supposed to be curative surgery. Most importantly, and it published clinical study patients.

Identified as high respond to determine Rx test post surgery and treated with chemotherapy had a five year survival rate of 92% compared to high risk untreated patients, who only had a survival rate of 49%.

But the striking results. It is clear this task has the potential to dramatically improve outcomes for a large number of early stage lung cancer patients.

So traditionally spring is active medical conference season, but as expected many the medical associations, we work with have either cancelled or moved their conventions to a bushel format. This year due to cope with 19.

Obviously this was very disappointing for our team given the number of abstracts and presentations, we submitted that were accepted.

We were proud to have an abstract for to turn the Rx selected for an oral presentation at the American thoracic Society or Ats 2020 International Conference.

However that was one of the meetings that was cancelled this year. The abstract was published by the Ats and focused on the health economic impact of determine Rx and included long term fall. It data from a study of 195 patients. It showed that one in three untreated patients identified as high risk.

Through testing with the term Rx experienced other parts of their cancer and 70% of these patients had the recurrence within two years of surgery, 96% of patients identified as low risk there to Tom Rx testing did not recur.

These low risk patients were followed closely by frequent radiologic scans, which are associated with patient stress.

Okay and can be inefficient costly uses of health care resources, our data showed that limiting the follow up those low risk patients to annual survey on scan would've reduced overall scan frequency by 50% well, having very little impact on the detection of cancer recurrence.

These data are very important as they reinforce the clinical utility of the term Rx and identifying high risk cancers, which came recur rapidly upon treated but also that it may be possible. The safe we limit radiological follow up for low risk patients there right, thereby reducing the use of health care resources.

Well last call was only a few short weeks ago I'm excited to say that we continued our progress in our efforts to expand our reach with our new term Rx test.

Even with the ongoing pandemic since our last call on March 25th we've increased the number of onboard sites for 13 to 22, even more impressive impressive is that 12 of these 22 sites well on war on boarded since the start of the pandemic and include positions at large healthcare systems like dignity.

Dignity health care, a large community based health system with 41 hospitals and primary care clinics in 22 States Providence network and the Sutter Health network.

Today, we now identified 17 high risk patients that were at risk for recurrence, who changed their treatment course with the addition of chemotherapy.

Each of these represents a potential lives saved and this is the type of patient impact is what drives me on the onsite team to work harder every day.

In addition, we recently announced in the international distribution agreement with core diagnostics, which will expand the commercial availability of the term Rx into India Middle East Africa, We're thrilled to partner with core diagnostics, which is one of the fastest growing clinical reference labs in India, delivering the most advanced testing techniques and expertise.

In the country.

Under the terms of the agreement the tests will initially be rod in the U.S. by Oncocyte with core diagnostics generating test orders and providing customer service and their local areas and important part of our strategy is to expand beyond the U.S.

Partnering with labs were focused on the delivery of high value proprietary diagnostics into an already existing oncologic menu offering by partnering with core we gain access to their salesforce in oncology with 100 team members as well as a customer base a 5000 ordering physicians in 12 countries. This is just the but.

Getting about plans to grow internationally with the intention of extending distribution to other geographies, including South America and other parts of Asia.

Now turning our efforts to further increase adoption by clinicians novel diagnostic test often face adoption challenges since they require positions to change their practice extensive physician education is an essential component of driving adoption.

Co at 19 affected our plans a surgeries even for cancer patients were delayed and sometimes even halted many physicians, including surgeons and anesthesiologists have been recruited to aid in the care cobot patience and we've heard some patients are reluctant to undergo surgery or begin chemo is this may leave them immune compromised.

The challenge for patients is cancer doesn't shelter in place and because of that we immediately pivoted to a bushel program for physician engagement and hospital on boarding to ensure we Don as much as we can in preparation for the time when surgeries resumed normally with enthusiasm I can share that weve.

Now to were 1500 participants and online physician education programs, while we all remain very well aware the challenges cobot has placed on health care system cancer patients remain in need of lifesaving procedures in tests that provide clarity on the treatment plan. We believe weighing this foundation in a virtual environment does.

Mission to us to serve an expanded patient population as soon as the current situation eases.

My next update us on to turn the Io our gene expression profile test that evaluates the immune microenvironment biopsies from cancer patients to identify individuals more or less likely to respond to anti PD, one or PDL, one immune therapy oral last call, we announced the completion of our clear validation income.

Commercial margin to term I O four research use only making it available for use in Biopharma and other research settings as a reminder.

Europe is a been transformative for a subset of cancer patients. It is still very challenging to identify the patients there are likely to benefit from these therapies, both for oncologist and for pharma researchers based are current data. We believe the term I O has the potential to enable more accurate prediction of which patients will benefit from two.

Treatment compared to currently available biomarkers by distinguishing likely responders from non responders, we can potentially get patients a more informed choice, allowing them just like the alternative therapies that avoid the potential side effects that can occur when a latent autoimmune disorder is exacerbated by any means.

RP.

Better management of these important but expensive therapies will save on overall health costs and allow more accurate selection of patients who will have a sustained response.

We also believe a better performing biomarkers such as the term I O could ever will impact on the speed at which new immune therapies are brought to market.

As we worked towards clinical launch we recognize that there was a large opportunity in the research market and are actively pursuing pharma services opportunities and the approximately 3000 ongoing clinical trials for immune therapy, which are designed to recruit well over half a million patients worldwide.

We have received significant interest from numerous academic and pharma groups that are interested in participating in the further study of this biomarker signature.

At the 2020 now virtual ASCO meeting American Society of clinical oncology, we will be presenting data demonstrating the performance of this test in predicting response in triple negative breast cancer or as we call in the industry T. NBC, which is the deadliest former breast cancer and despite the incredible.

Progress made to date in breast cancer still more than 20% of women with this cancer will die within five years.

As I'll detail a bit more below T M. B C. As our first data outside of lung cancer as we began to explore potential applications across other tumor types with over 750000 patients potentially eligible for immune therapy treatment and you annually in the United States the potential addressable market for the determine.

Hi, O. could be very significant.

Moving next to determine Dx, our blood based test and development aid in the management of C.T. identified lung nodules to help potentially avoid unnecessary invasive long biopsies.

As a reminder, for a new investors determine dx utilizes our proprietary immune system interrogation approach that harnesses immune systems response to the presence of cancer as a sensitive early biomarker. We're currently conducting our clinical validation study testing approximately 500 blinded perspective.

We collected patient blood samples to service the final validation of determine Dx in our clinical lab setting. Despite the cobot pandemic, we remain on track to complete clinical validation by the end of Q2. This year. Thanks to the dedication of our clinical lab team.

Assuming success and final establishment performance parameters, we will begin preparation for commercial availability, including the publication of clinical validation results, which is required for CMS dossier submission as well as the execution of additional additional clinical utility studies.

We remain committed to serving pulmonologist and their patients to help reduce unnecessary biopsies, 25% of which can be associated with serious complications and the estimated 1.6 million cases of Indeterminant CTG scans annually.

As discussed on previous calls clinical validation studies are blinded into us will not be able to comment on the results until they are built to us in late June when we complete the process.

I'd like to touch upon our growing pharma services opportunity, which was enabled by our acquisition of insight genetics and.

In addition to the determine Io test the acquisition acquisition of insight genetics brought us a successful boutique pharma services business with a certified lab that allows us to immediately leverage our proprietary products and a pharma services contracts. While also continuing to meet the additional needs a biopharma customers are pharma.

Offerings enable full suite of molecular analysis services needed to support pharma drug development from discovery stage in clinical trial support all the way through to companion diagnostic development and the subsequent regulatory submission, we built a robust pharma services pipeline and excitingly or in discussions with several global for.

From a companies developing immunotherapies in other drugs for a broad range of oncology indications.

As I mentioned in the call when we announced the insight genetics acquisition the determine Io product has potential to aid in the management immune therapies across different tumor types. It has its origins in the development of a unique triple negative breast cancer test called the TMB see type asset TNBC type is a 100 gene assay that measures are in a.

From a biopsy or surgical specimen and then use as a proprietary algorithm to classify patients into five sub types associated with responses to different types of therapeutics, including a new therapy targeted therapies like PARP inhibitors and they are receptors are cytotoxic chemotherapy.

We believe this assay, maybe an important classifier to help patients with T. NBC select therapy, and also more broadly as a potential companion diagnostic beyond immune therapy to appropriately target proprietary therapeutics and development for TMB see at various Biopharma companies it's important.

To note that the technology for this already night based predictive signature actually did lay the foundation for our now the term our I O.

So why we're so excited about this well while there have been great strides improving outcomes for patients with breast cancer, there's still a real need to improve outcomes, but those diagnosed with triple negative breast cancer, it's a very aggressive form of cancer with the lower and with the lower Fabio survival rates and less effective treatment options because of this there is a.

Significant amount of pharma focus and TNBC with over 100 ongoing clinical trials and additional discovery Phase program. We believe that TBC tight may eventually provide an important role and identifying the best clinical treatment plan for these patients across multiple therapeutic platforms, while still in clinical.

Development, we're incredibly excited about potential TMB see type as a first step in expanding the reach of our suite of test beyond lung cancer and look forward to sharing more as the program develops before I turn the call to match for review of our financials I'd like to touch upon how the cobot 19 pandemic is impacting oncocyte.

Because we managed patient for Kate.

Patient cases for patients with early stage cancer, we are deemed essential and we do continue our operations, we've taken all necessary steps to protect our employees, including rotating a small number purcell personnel, our labs to minimize contact and to maintain the appropriate social distancing.

We have all from also made with revisions to our plan Opex for 2020, given the capital market uncertainty and have prioritized our investments on three main projects and reducing spend on future R&D projects that are not related to generate a market value in the next 12 months.

Our product does projects are one complete the clinical validation for determined Dx and prepare our CMS dossier to continuing to determine the Rx launched to drive revenue growth and three pursuing pharma contracts and studies for the term of Io and other pharma projects as I've shared today, we continue to be incurred.

Bridged by the progress we've made on these exciting programs importantly, we do not anticipate any significant delays to our previously shared timelines and due to the tremendous dedication of our team we remain on track across all products.

Today's call hope, it's clear that we've continued our strong momentum toward providing actionable answers for cancer patients. We look forward to continued success on the commercial on development front and always on look out for exciting new partnerships that will expand our reach at underserved decision points to improve outcomes for patients. So at this point I'd like to turn the call to Miss.

I mean for review of the financials Mitch Thanks.

Thanks, Roy Hi, everyone.

As of March 31st 220, we had cash cash equivalents and marketable securities of $16.9 million.

I am pleased to share that we have once again strengthened our balance sheet with the completion on April 28 of the $10.7 million registered offering of common shares priced at market and without paying any commissions or placement fees.

This is an exciting accomplishment that adds to our track record of completing transactions directly with fundamentally driven healthcare focused institutional investors, which we believe is a testament to our execution and strategy.

Our strengthened balance sheet allows us to support our ongoing commercial and development activities.

So, giving us greater freedom to execute on our overall strategy to build our suite of offerings.

We now have 67.217 million.

906 shares outstanding.

I would like to add that while the company has strengthened its balance sheet, our management and board.

Mindful of the impact of covert 19 on the current operating environment.

And felt that sensible.

30% of our salaries and board fees.

As part of a series of cost control measures implemented by August.

Before I discuss our operating results I'd like to add some comments around our revenue recognition policies in light of the recent CMS final LCD Ronnie discussed earlier, which takes effect on June 14 2020.

As a reminder, prior to Q1 2020, we did not have any revenues.

Cost of revenues in our results because we did not have any commercialized products. So this is a truly momentous quarter for August site with the commercialization of determine Rx and the acquisition of inside genetics.

Under U.S. accounting principles, we will be able to recognize revenues on an accrual basis. Once we have contracts for reimbursement from third party payers or a history of experience of cash collections for the test we perform or both.

All that time, we expect to recognize revenue on a cash basis.

Accordingly, we will incur an crew cost of revenues and other operating expenses related to our diagnostic test, which may not necessarily corresponding revenues.

The final CMS LCD makes our determined rx to eligible for Medicare reimbursement.

After a final Medicare coverage price has been established we expected recognize revenue.

The Rx tests are performed for Medicare patients rather than on the cash basis.

Private payers such as healthcare plans, we expect to follow a similar policy.

Our results of operations now include the consolidated results of our wholly owned subsidiary inside genetics, which we acquired the end of January this year.

For the first quarter 2020.

We reported a net loss of $7.7 million or 13 cents per share as compared to a net loss of $3.9 million or eight cents a share for the first quarter of 29 team.

Operating losses as reported for the first quarter of 2000 $28.4 million, an increase of $4.4 million from $4 million as compared to the first quarter of 29 team.

And operating losses, as adjusted were $7.4 million, an increase of $4.2 million from 3.2 million.

Compared to the first quarter of 2019 on an as adjusted basis.

We've provided a reconciliation between GAAP and non-GAAP operating losses in the financial tables included with our earnings release, which we believe is helpful and understanding our ongoing operations.

Research and development expenses for the first quarter 2000, $22.2 million as compared to 1.3 million for the first quarter 2019, an increase of $800000.

The increase was primarily attributable to personnel and laboratory related expenses.

For clinical validation activities related to our determine Dx test.

General and administrative expenses for the first quarter of 2020 were $4.6 million.

As compared to $2.4 million for the same period in 2019.

An increase of $2.2 million.

The increase was mainly due to personnel and related expenses.

Spent banking expenses legal business development Investor relations expenses, and noncash stock based compensation expenses due to additional equity grants.

As mentioned before we transitioned from lineage cell therapeutics, formerly Biotime shared services in the latter half of 2019 and established our own administrative human resources legal finance and accounting teams.

This transition also included the termination of shared facilities agreement with lineage as of December 30, Onest 2019, we at least our own facilities last December and moved into our Irvine, California headquarters in January of this year.

Sales and marketing expenses for the first quarter $1.5 million as compared to $200000 for the same period last year, an increase of $1.3 million.

This increase was primarily attributable attributable to ramp up in sales and marketing activities, including key hires for commercialization efforts have determined Rx.

Cash used in operations was $6.9 million for the first quarter of 2020.

Compared to approximately $6.7 million.

During the first quarter and 29 team, which is in large with the expectation.

The first quarter is generally the largest cash burn of the quarter of the year.

Because of timing of annual merit increases and payments.

We also had some nonrecurring acquisition related legal and other costs paid this quarter of approximately $500000.

That concludes my remarks concerning our Q1 2020.

Financial highlights.

Operator, we can now open it up for Q1 night. Please.

Thank you at this time will be conducting a question answer session. If you'd like to ask a question. Please press star one on your telephone keypad. The confirmation told will indicate that your line is in the question Q. You May proceed star to if you'd like to remove your question from the Q4 participants using speaker equipment, it may be necessary to be.

Your hand before pressing the star Keith.

One moment, please while we pull for questions.

First question is from Thomas Button Lake Street Capital markets. Please go ahead Sir.

Good afternoon, guys. Thanks for taking the question Mitchell quick question for you with the some of the cost reductions that you put in place and and the raise that you recently that could you comment on.

Your cash runway cash burn rates.

Okay.

Thomas Thanks for the question.

We expect to burn just over 5 million a quarter. That's what we have been doing those are our expectations.

And I expect to continue that rate.

Course of the year.

And then I was wondering if you guys would be willing to share any numbers around test volumes that you've seen since the launch of Rx I know the because of the accounting principles will probably not going to see it reflected accurately accurately the numbers.

Yes, Thomas what we had I think we'd all talk we wanted to begin to give guidance on that at this quarter and obviously, we didnt expect.

Kobin pandemic, it's it's a little hard to give you a real good trajectory given that we just now starting to ramp back up even though we saw steady flow of connections to physicians and samples came in during the cold. The was part of that pandemic today, We're just now store.

I knew engage a lot of the cup that places we brought on board during the virtual and Onboarding and when we started to see position start to order.

You know our goal obviously is to is to ramp up every side and have ordering physicians at every site. We do expect that will take a little while once we are able to engage them physically we want to go behind these onboarding activities and we want to be able to then a recruit the the actual positions.

Within those sites that are ready to order and get them encourage them to order so.

Today, we gave the number of 17 patients that we had actually identified as as positive that had changed their course of therapy. So that number we are public with today. So if you assume that about somewhere around.

20% to 30% of the patient population that we see will be positive you can kind of get to a number and that number is only reflective of what we were able to do during the pandemic what I committed to everyone and we'll continue to reiterate is at the end of Q2 once we have a much greater on.

You're standing of how the what the long term impact of cobot is going to be we will give you sort of a target for the end of the year in terms of our patient population that we think we can touch.

That's great and then just one final one from me would you mind detailing we're providing a little bit more detailed on the publicly the publication plan for determent Dx given how central that is to your submission timing for CMS.

Yeah happy to do that partners on the call and I'd like the reason I invite our whole team is because we have an amazing team of experts that have been around in this space apartments, you've got you've got.

And Lendl I was worried virtual Thomas I apologize I hadn't getting wave that lendl importantly, going to tag payment. So they'll land. All you want to go first in terms of the manuscript in the partner maybe comment on CMS. Thank you letter.

Sure.

As you.

I've heard for Dx, we're on track to the end of Q2, which means we will be working with key opinion leaders to draft manuscript submitted as quickly as we can without sacrificing quality our goals to have that completed by the end of Q3.

Great and I'll chime into say that obviously that is a very important requirement to engage with CMS. So that gets Santos that's fair.

Gauge men directly with CMS once the hat that publication country.

Yes, Tom it's our goal is to have yet to do as many as activities concurrently as we can but as PAMA said, one you know that the CMS engagement does require that data per excepted.

Manuscripts for publication. So that's the that's the chronology of how that will unfold in the fall.

Great. Thanks, so much guys, we're taking the questions and congrats Tom Thank you very much.

Next question is from Stephen Law Hyper Sandler. Please go ahead Sir.

Hi, everyone. Thanks for taking the questions.

Yeah, Thanks, Steve good to hear from me.

Yeah, Yeah Likewise.

Maybe just to follow up on Tom's question on on the Rx volumes and.

Let's not get specific but.

I would expect that lung cancer surgeries would be pretty resilient as compared to other elective procedures.

And.

Just want to get a sense do you guys expect a gradual ramp back up in terms of lung cancer surgeries or an immediate uptake based on the lung cancer surgery backlog.

Maybe can you give us a sense of you know how things have changed from your maybe March or to maybe late April may.

Yeah, Steve It's a great question and I'm going to give you probably more detailed then you won this I'd just be careful and I'll, let outlet pardon chime in and that color commentary, but what we see is different areas of the country are impacted differently and we chose regions of the country for our initial.

Six reps to go conquer.

Based on high value or high volume incident rates of lung cancer with a with assertive thoracic surgeons that we knew were seeing a large number of patients some of those surgeries and some of those early accounts are in states that are opening back up others or not and I'm going to give you.

Totally here locally in Orange County, because I'm very active in the local hospital community here.

We had three hospitals, who despite the vol volume of Koby case is still elected to two to save ventilators and save anesthesiology for potential a potential upswing in the outbreak and so they basically.

Stopped to test the our stock anything that was not an urgent surgeries. So anything deemed selective now you and I would agree that early stage lung cancers traditionally not elective in fact, I've seen statistics were somewhere around 8% to 10% increase in potential recurrence every month the early stage lung cancer patient goes without surgery. So.

We do expect to see those surgeries to pick back up just because as you say, they're really not elective I mean these surgeries are important for these patients, but a lot of it has less to do with the patient situation in a lot to do with the availability of surgical suite. So pardon me any any other color you.

Like to add to that.

Yeah, I completely agree so the doctor to Doctor, who do recognize that this is not an active and so obviously.

The ammonia ports on the surgery, the greater the Chang backend settlement actually become more Bang and untreatable.

So we do expect and then already.

Jimmy Dean.

Similar to the economy I don't think it's going to be a garden hockey stick it will be value all but you had already seen that its resuming particularly in the states that have already.

So that's okay. Okay.

Okay, great Yeah, that's a that's great color and maybe just one more question on your pharma services business again kind of the same.

Same line of questioning.

How's Cobot 19 shutdowns affected the your pharma customers and you know again, Dick you took a gradual recovery or sharp ramp back up as.

Research and academic labs began to open up.

Yeah. This is one where I'll I'll recruit dr., Ross or Dr. hesterberg as well, but you know it's interesting because right out of the gate. The first couple of weeks log engagement, we had with the pharma companies themselves went down significantly quiet and obviously after after Jude few weeks.

Things began to open back up we began to Reengage. What we do know is just from that feedback from the industry and my role at ASCO. We are hearing that there has been a reluctance of patients to go to the hospital to be treated and thus the number of patients that would normally get diagnosed in Peru.

Essentially put on a trial has slowed and so but what we do know is the engagement with pharma and the interest in what we're doing is starting to pick back up when those patients will actually show up and start began enrolling in various trials is really still out in our still up for grabs I think but we don't have.

Really direct insight to that except through our pharma partners, but dr. almost any color commentary you want to add on that.

No I think you're hitting a pretty well I mean I divided into two pieces. One is the legacy pharma services business independent of the Io opportunity and then the second to the Iowa opportunity enrolling trials, where we could accept out the biomarker with new agents and I would say I believe it or not sheltering in place.

I agree the wheel a little bit of conversations the negotiation, whereas as rami. So the actual execution to be thing has been delayed a little bit. So if the mix bag. We did have some delays in our conversation.

Some clinical trials, we were trying to accept that were in areas, where there was pretty bad endemic outbreak in so something got slowed down and something got speeded up it's not a if not a margin of story.

[music].

Okay, great. Thanks for all the color appreciate it.

Yes. Thanks.

Next question is from Paul Knight Janney Montgomery Scott. Please go ahead Sir.

Hey, running can you talk about the highlight of the.

Determine dx paper at Ats 2020.

In terms of.

Your highlights I guess, I know would centered around test versus buy out but.

The reason would love to hear your call on it.

Yes, sure and I think it was that determine the Rx was at the Ats and I think pardon my really because she is very close to this I'd like for her to comment on that but we were very excited about that and then when obviously the the association decided to cancel and just do it on just put everything online we.

We had hoped to have a podium presentation. There was always go over well and they get you get video you cutting edge in this day. One time, you can you social media to promote but we didn't get that opportunity, but PAMA you want to give some color commentary on on the Ats a poster.

Yeah, So just to clarify.

One was the presentation Rx because I was very exciting data and very timely to invest and I've been trying to think about healthcare plans I think how can you talk though.

What that data showed 195 patients is that two things one it showed that for the hybrid patients of excellence happens rather quickly.

70% of private patients have an occurrence within two years, which speaks to again the previous comment that we do you can't ignore these patients and they need to be managed rather quickly once they found to be hybrid yeah. I don't think that that Forster showed was that more people tend to get.

And then suddenly followed and.

Bringing them back less frequency do surveillance and actually only 4% Dunkin donuts patients record.

The case was made in metal and start that perhaps we don't need to fall in all these patients as intensively as we do and in fact, we could switch them to annual TD surveillance, which would leave a lot of patient anxiety at the same time converting question. It sounds Kevin So a very good health economic analysis.

You will not just for patients, but also sort of commercial payers as we approach them to cover the stats.

Pardon.

Oh, Yeah. The Irene trial, Yeah can you go through the Irene.

Poster as well that'd be great.

No.

Sure. This was londell has spread to glad to.

By way of reminder, the Irene cohort is.

Biobank essentially of over 2900 patients. So we are reported on in this poster that will be hopefully available electronically here in the next 10 days or so.

These 2900 plus patients all had early stage lung cancer early nodules.

And were recruited from over 60 sites across 31 stage, Puerto Rico, So very broad cohort focus very specifically on the physicians dilemma of what do you do with patients.

With nodules that are in this kind of intermediate unclear diagnostic path.

And what the poster that we then and this will be.

This co authored by Dr., Nicole pattern from the medical University of South Carolina.

And what we've identified is that there are significant differences in the practice patterns for the use of invasive procedures across the various sites by grouping and this highlights within the cohort.

We've captured a great tool in this bio bank.

To be able to apply what we believe will be better diagnostic choices for physicians as they decide.

Who to proceed into an invasive procedure versus those that they can put under surveillance and follow up.

Yeah, let me add to that Lindell, a little bit Paul.

One of the beauties of our opportunity with pharma is this longitudinal.

Biobank that we have that follows patients with blood draws.

You know across time and looks at the progression of disease in its it's kind of unheard of in our industry for the have an active biobank and Doug I know you. This is one of the.

Things that you mentioned a lot in terms of the value of what we bring to pharma, maybe just a 32nd vignette on sort of why it's so important to have this type of access to longitudinal patients that are being actively follow.

Yes, so the clinical indication here. The question of what do you do when you feel lung nodule into patients for which the current clinical paradigm is pretty unclear do you took a needle in into the tumor or into the nodule and try and make a diagnosis of tumor versus benign or do you watch and wait and repeatedly.

And then to figure out what what's happening.

I believe the.

The size of the Biobank 3000 patients to date and growing is unprecedented and it allows us not only to evaluate the current signature the but yes.

Product different clinical validation, but as we try and move to perhaps rule in Pat if it's an amazing resource for evaluating different technology that can detect tumor in blood.

So.

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I'm very excited about the potential of that bio bank not just because of the act, which will get the results in June but also as we move towards detecting tumors them and partnering with other book that May have technology that may be useful in blood.

Yes, Paul just netted out I mean, we think that this asset it's biobank asset will be very helpful. For us too as we think about the monitoring space in certain technologies that we have that could play there in looking at is a therapy working all the way through two is or is the patient seeing a sustained clinical response.

Since our or we see in recurrent so it's a really valuable resource that we don't talk a lot about so I I appreciate the opportunity to share the the paper and the importance of that trial.

Last question I am Ronnie is on that paper, what long ran classification, we're out of the ample.

Linda I'm going to ask Landolt are little you want to answer that.

All of these were these non nodules inpatient small between five and three.

Oh centimeters.

Piven three on politics, and so those are all early stage low long Reds and.

I will be reported subsequently once the embargoes over.

They're all very early stage.

On cancer patients, which also is quite unique to doug's point.

Okay great.

Sorry, guys are good Guy gets a reminder, typically what combination of benign and tumor only a fraction of them actually turn out to be tumor and so good cohort is going to inform whether or not we biopsy and nodule, which could be benign or tumor to determine whether or not it is in fact.

Tumor.

So the clinical indication to the use of invasive biopsy procedures and struck in the use of invasive biopsy procedures. Okay. Thank you.

Thanks, Paul.

We have a question from K Nikkei Chardan capital markets. Please go that sort of.

Thanks Mitch.

What kind of I guess two to two parts to this question what kind of.

Pricing are you currently getting for Rx and what percent of the test that your run or you actually getting.

Payment for.

So today, we have built the we have been holding all the CMS payments, because we need a final price before they do that so somewhere between now and the June 13th when we begin on the 14th we'll we'll get that pricing will be able to submit those and as we discussed public.

I believe we know we we have I really had had a really powerful.

Dossier that Pradman team put together, we believe that because of the into wife cost in lung cancer that we have a really good support for our 4000 dollar asking price.

As I've said publicly I think that sometimes CMS will hit the easy button and they'll cross market to the test. That's it's it's part it's a it's equal if you will in terms of the endpoint that is genomic health Oncotype Dx same endpoint, but different disease and that is about 30, I think there $3800 today, so but in the private pay world we.

We have submitted our bills that are list price and to date. The couple that we've had that where private payers keep them on over 70% or CMS eligible patient. So the few that we've had that were private pay are they have accepted our list price, but to be honest K. That's not an unusual in the early days of a new launch.

Like this the they'll accept it because the patient because of the high deductible plans of patient ends up having to pay a a good bit of that and so we won't get recognized by these payers and if the position that orders. It does a good justification, we will indeed get paid but it won't be at our it won't be at the list price ultimately when CMS gives us.

Our price, we'll use that as leveraged to go in and start negotiating our price at these private payers, we prefer not to began that until you know just historically people. They go before CMS tend to not always get the grip best value, it's better to fight for weather really powerful dossier the price you.

I want and then use that as your benchmark for private payers and so that is our strategy.

Okay, Great and then for Io.

But what would be either the.

Early pushback from pharma or what are they.

So you've got some great results here what are the most complementary about.

Using the testing their studies.

Yeah, I think I'm not dog add because he's close very close to this and discuss with pharma I think you know they already have a lot of studies with PDL, one, which as you know Mark did a great job abusing PDL one to get everybody on the draw, but we know that only about 40% to 45% of the patients that are deemed as.

As potentially responders by PDL, one actually response, we have you have a high percentage of patients that go on the drug that don't get a response the health care pays the payers pay the bill and that patient you know is exposed to.

Immune therapy that basically can you know began to increase the number of auto immune diseases in in our industry, which would be bad as well. So I think for US you know the idea.

At least pharma is that look PDL, one gets everybody and what we are positioning as where discriminating marker that can identify sustain response, so not only can we predict who should be and we can also predict who should not be yen and so that's one of the headwinds is just overcoming the the momentum to PDL one already has in these trials.

But there are a number of companies chasing Merck that would love to have a marker that would identify patient populations that would allow them new niches. If you will in the world. So dog I mean any comments on back of what I just said.

Yeah, I mean, I think you're hitting the high points well.

Thank you for some of the competitors.

The merger of USA moving from second line to first line as an opportunity and to have a biomarker that actually works much better forgiving.

Right down to find responder, there's an opportunity to enter first line first line therapy market.

And as well.

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40% response rate is not good enough and that the side effects are very significant so you know in our conversation with physician CMAP, it's very well here that there is room for improvement in bio marker performance and some and a biomarker that clearly demonstrated an incremental improvement on the existing.

Paradigm, we'd be very attractive both for help help economic reason and for patient management reasons. So.

In terms of pushed back.

I think the market has really been waiting for a good phenotypic buckmaster good buckman of what's going on in the tumor specimens we think are good.

The one at that and so I don't think that we're getting much.

Pushed back aside from sort of them out.

The process are maturing the data.

Yeah, one thing I would add Cai that things very positive. They do love. The fact that this is a PCR test its aren't they seek our PCR and the PCR task as you might imagine means that there are over 10000 clinical placements of multiplex PCR instruments around the world. So.

That should we get a positive companion diagnostic outcome for pharma, we would have a very broad install base to apply a kit strategy to outside the U.S. and that is something that none of these other capabilities are now these other tests it to provide I mean PDL one is a pathology assai and we we.

Do I understand you know thats important but it is also subjective versus something a specific insensitive as a multiplex PCR result, so there's been a lot of interest in that and a lot of excitement that we would have that large and install base to ensure their drug launched in any country would have access to the test to drive its utility.

Okay, Great and then just just a final question on the Salesforce head count where are you know.

Where might you be around the beginning of year with perhaps a commercial.

Hi, Joe as well as Dx.

Yes, so because I O today is really focused in pharma, we have a a small team including myself that actually are in dogs that are going after the farm opportunities based on our history and knowledge of the people there and we've got a lot experience there our commercial team selling Rx today is is six folks so with a leader a week.

Goes the high incident rates area areas that we believe we could reach that would give us.

Some immediate upswing the idea has always been that once we grow those current territories to a certain level, we would add another round of reps and the goal is to responsibly add reps without impacting cash burn. So the idea would be to try to build reps up till they're covering.

Their cost and adding to the to the accretion to the business and then we would go use that accretion to go build out the next round. The sales force should we get an early immune oncology CMS approval, which we are committing to but should that happen I reserve the right the come back in and change that but right now.

Now that's the plan.

Okay, great. Thank you.

Thank you escape.

We have a question from Bruce Jackson Benchmark Company. Please go ahead Sir.

Hi, good afternoon, and congratulations on all the progress at Bruce So banks with with determine Io, There's clearly a potential here for this test Tom you've got an available in our euro.

Can you tell us a little bit about some of the steps you need to go through in order to make this available as a clinical use test and then when could that happen.

Great question I'm going to do the first part I'm going to turn it over to Dr. Ross because he he is close to this week.

Pardon My Doctor Ross have had been in contact with CMS than we've gotten some really solid input from them today, we have a 71 patient study and long.

Soon at ASCO when they release there their data or are there going to release of paper that MD. Anderson has written in published that will be released that asked go that will be another 55 patients.

We believe that we're going to need another round of patients that will add to the statistical power. Doug do you want to walk us through the how we might get that and what options, we might have to accelerate a sort of the statistical powering of our tests are using some a clinical trial samples that are have already been wrong.

But either way the trial failed or are they didn't get the outcome they want it.

Right, So yeah, I got a bit before.

Clear bar for improvement on tumor mutational burden PDL, one which are the current biomarkers that are in use out there and if some degree MSR did not and not in lung cancer is to show that we offer incremental value and that really means that.

We are independent, though during mutation burden and or PDL, one, which and all the clinical studies, but we've done today.

Looking very very promising.

So doing a retrospective study on a large enough cohort of second if you will independent study in lung cancer and door affecting independent study in triple negative breast cancer, you on that path of put it that way also getting access to as Rami.

A randomized clinical trial for perhaps an alternative drug to those that are on the market first first line and demonstrating a strong performance you associated with a particular agent is another route to either a companion or complimentary diagnostic and where.

If we pursuing a book of abouts yeah.

Okay. That's it for me thank you very much.

Thanks Bruce.

Ladies and gentlemen, Weve reached the end of the question and answer session I like to turn the conference back over to Ron Andrews for closing remarks. Please go ahead Sir.

Thanks. Thank you guys for joining again this afternoon. It's it's been a great first quarter, we're very I'm very humbled by the energy and effort that our team puts into their F. The work every day, we've had incredible accomplishments and progress really across all of our programs and.

Mitch as effort to history to strengthen the balance sheet, we just feel we're very well positioned to.

To move the company forward and continue the momentum so just want to say thank you guys for your support and as always I'm incredibly grateful for our team there just in trouble group of people focused on emission and making incredible personal sacrifices right now despite the despite that the cobot situation. We continue to move forward. So.

Thank you for your support and for joining the call today and I just encourage everybody to stay safe. Thanks, guys.

This concludes todays conference you may disconnect your lines at this time and thank you for your participation.

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