Q3 2020 DermTech Inc Earnings Call

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Later, we will conduct a question and answer session and instructions will follow at that time, if anyone should require any assistance. During the conference. Please press Star then zero on your Touchtone telephone.

I would now like to turn the conference over your host Ms. Caroline corner like.

Please go ahead.

Thank you operator, welcome to <unk> third quarter 2020 earnings call. Joining me on today's call are Dr., John Doe back President and Chief Executive Officer, and Kevin Sun Chief Financial Officer. This.

This call will provide forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 Allstate.

All statements made on this call that do not relate to matters of historical fact are considered forward looking statements forward looking statements made during this call including projections of future performance are based on management's expectations as of today November 2020, and are subject to various factors assumptions risks and uncertainties, which change over time.

Actual results could differ materially from those described in such statements.

Factors that may contribute to our caused such differences are described in today's press release and jumped <unk>. Most recent filings with the SEC, including during <unk> annual report on form 10-K for the year ended December 31, 2019, and quarterly report on form 10-Q for the quarter ended September 30, 2020 drunk Tech undertakes no obligation to update.

These statements, except as required by applicable law dumped.

Jumped expressly for the third quarter 2020 result is available under the Investor Relations section of the drug test website, Www Dot <unk> dot com.

Additional details about <unk> financial bubble also available on the dramatic website are dumped takes latest SEC filings, which you are encouraged to review a recording of today's call will be available on the dramatic website by five P.M. Pacific time today, now I would like to turn the call over to Jon for his comments on third quarter 2020 business highlights.

Great. Thank you Caroline and thank you everyone for joining us today before we get started I would like to go through a background or the company. Since this is our first NASDAQ earnings call. It's a NASDAQ listed company and there may be some of you who are new to our story.

From Tech is among a rare class a genomics companies, whose goal is to transform the practice of medicine by making diagnosis less invasive more accurate and less expensive. We were one of the first companies to bring genomics to clinical dermatology, which is a relatively uncrowded marketplace in which we are a recognized leader dermatology is.

The largest medical marketplaces skin cancer assessments alone result in approximately 15 million diagnostic surgical procedures each year in the U.S.

Derm Tech is a commercial stage company, creating a new category of medicine, we called precision dermatology Chris.

Precision dermatology is enabled by our noninvasive skin genomics platform. This platform is based on our smart sticker and adhesive patch skin sample collector that allows us to perform a variety of genomic analyses on skin diseases with this platform. We can address very large markets and skin cancer and inflammatory diseases and we are currently.

Scaling around our first commercial product the pigmented lesion and say or P.L.A.. The P.L.A. enhances early melanoma detection with a goal of reducing melanoma debts. Today, we offer the P.L.A. and all 50 states and we'd processor samples in a CLIA certified and cap accredited laboratory in San Diego.

If youve been following our story you likely saw that Medicare coverage for our appeal. They went into effect in February of this year.

We're very pleased to receive a reimbursement rate of $760 per test, which we think reflects the quality and utility of our data today, we are leveraging the CMS coverage as well as our clinical experience and data to negotiate with various commercial insurance payers for additional coverage.

The existing diagnostic paradigm for melanoma detection relies on subjective visual assessments by the dermatologist or pathologist and invasive surgical biopsies. This pathway is notoriously inaccurate and leads to an excessive number of unnecessary surgeries and a high number of missed diagnoses.

Currently approximately 25 surgical biopsies are performed to find one melanoma and despite all this cutting the negative predictive value of this pathway is only about 83%, which means the probability of missing melanoma is approximately 17%.

P.L.A. reduces the number of surgical biopsies needed to identifying melanomas by approximately 10 fold and increases the negative predictive value to 99%, meaning the appeal it has less than 1% probability of missing the disease.

Tech is effectively bringing melanoma diagnosis into the 21st century by transforming it from a pathway to subjective invasive inaccurate and costly to one that is objective noninvasive highly accurate and less costly.

To understand how dramatically the P.L.A. can impact melanoma diagnosis I will share with you a recent anecdote involving our test appear.

A patient with a history of most suspicious for melanoma and several surgical biopsies that were found to be negative visited one of our dermatology clinicians the patient express concern about being cut again unnecessarily. Our test was subsequently used and it came back double gene positive, meaning both the leak in prime jeans wear.

Detected.

Surgical biopsy was performed and the pathology report came back as Nonmelanoma, but severely a typical.

However, because the pathologist only looked at 1% of a biopsy sample. The clinician felt the pathologist may have missed a more significant problem and asked to pass all just to look at more sections of the biopsy sample afterwards.

After additional sections of the sample were reviewed and early stage invasive melanoma was confirmed.

This diagnostic upgrade significantly change the treatment for this patient such that a curative wide excision was performed whereas under the tree previous treatment plan and much less effective narrow excision would've been performed creating a risk that all tumor cells would not have been removed.

We often hear stories like this about how our platform enhanced the early detection of melanoma and led to a potentially light lifesaving outcome.

With Medicare reimbursement secured we began to initiate the full launch for purely tests in the scaling of our sales force. Unfortunately this effort was curtailed by about six months due to the cobot pandemic.

However, I'm pleased to report that at the end of Q3, we completed the hiring of our latest sales team cohort and we now have approximately 40 sales reps.

Completing the significant effort sets the stage for future growth and we believe we're back on track as the volumes. We saw in September and October were approximately what we're planning for in April and May before the pandemic hit.

I will add here that the environment still has a lot of uncertainty due to the recent surge in cobot cases, and we are closely watching for increasing state restrictions, while we still face headwinds headwinds in terms of access to offices by our sales team. The initiatives, we launched around virtual sales calls and training webinars.

Allowed us to return to what we believe is a solid growth trajectory in our sample volumes.

We also gaining traction with commercial payers and have seen a modest increase in our Medicare payer mix, which we believe will allow us to monetize the sample volume overtime and potentially accelerate our revenue growth.

While a primary concern of ours has been and will continue to be the health and safety of our employees patients and clinician customers. We believe that we can continue to deliver sales and commercial traction despite the challenging environment.

I would also point out that the pandemic is catalyzed a tele medicine initiative here at Durham Tech, we now offer our test for clinicians supervisor remote collection, while the current volume of samples. We received via this method is very low right. Now we are working on technology solutions to streamline to tell them as an access to the p. away and drive.

More testing of a volume via this delivery method.

We recently launched a consumer awareness campaign for the P.L.A. in several select turret territories, which has been very successful and generated 1500 or more find a doctor searches on our web site. Each week. This indicates a strong consumer interest in our P.L.A. Our plan is to capture more tele medicine volume of the P.L.A.

By offering these motivated potential patient a simple tele medicine solution. They can access immediately when they visit our find it Dr page.

Because melanoma cancer will not wait and delays in diagnosis can lead to more advanced disease. This.

As telemedicine option may be critical for patients going forward, particularly when they are reluctant to visit the doctor's office.

In summary, we believe the Derm Tech has a tremendous long term growth opportunity given the size of the markets, we address and the unique attributes of our noninvasive skin genomics platform Workover continues to create some near term challenges. We believe that we can achieve robust adoption, particularly one a more normalized environment resumed.

For example, we were pleased to see our numbers in October hit record or near record highs in key metrics related to sample volume utilization and ordering clinicians. This occurred during the low in viral infections. After the summer surge of cobot cases.

There has been some flattening of sample volumes with the current surge we are optimistic we can manage through this and maintain our growth trajectory.

We were also very optimistic we can monetize our sample volume and are starting to have some important commercial payer contracts successes will discuss those later, but we have been able to preserve the value assigned to Peel the p. delay by Medicare in these discussions with payers.

I'll turn this now over to Kevin to go over our financial results.

Thanks, John.

<unk> revenue increased 220% to 1.2 million for the third quarter of 2020 compared to 0.4 million for the same period of 2019 due to higher billable sample volumes and revenue recognition of Medicare samples related to the final local coverage determination that went effective in February we consider billable sample volumes as one of our key metric.

Just to understand the demand and health of the business at this point of early commercialization of appeal it though.

Billable samples do not include a small fraction of samples received that are rejected for a variety of reasons. Our goal is to monetize or billable sample volumes like any commercial payer contracts and policies and increasing the portion of samples received that are reimbursed currently our potential revenue that could be recognized from having broader payer coverage is meaningfully higher than the actual reported.

Revenue.

Billable samples for the quarter were approximately 6700 compared to approximately 3600 for the third quarter of 2019, or an 86% increase compared to approximately 3200 in the second quarter of 2020.

All right, 107% increase while we are still seeing continued headwinds due to the pandemic and may see more fluctuations we're back on our growth trajectory as John mentioned.

We continue to make progress with increasing awareness of appeal in the Medicare population.

Note that approximately half of surgical biopsies performed for melanoma each year in the Medicare population.

However, Medicare represented only about 16% of our billable sample volumes in Q3 of 2020 compared to approximately 11% in the same period of the prior year we.

We are now actively working to increase clinician and patient education awareness that appeal is covered by Medicare, though this patient population is currently less likely to seek dermatologic care steroid dependent.

Our current overall target market includes approximately 13000 dermatology clinicians we size our salesforce to reach our current overall target market and prioritized approximately 5000 clinicians or our initial target market to account for a high concentration of the total annual surgical procedures to diagnose melanoma.

During the first nine months of 2020 would probably trade at approximately 30% our initial target market and 8% of our current overall target market with approximately 1400 unique ordering clinicians.

We had approximately 950 unique ordering clinicians in Q3 of 2020 compared to approximately 620 in Q2 and 900 in Q1 of 2020, highlighting our corporate recovery.

While we are working to both increase the number of unique ordering clinicians and to increase the average number of tests ordered by each clinicians each month.

Our average quarterly utilization or average number of tests ordered her unique ordering clinician was 7.0 billable samples in Q3 of 2020 compared to 5.2 in Q2 and 6.5 in Q1 of 2020.

We hit all time high monthly and in monthly utilization in July but.

But as new sales reps, bringing new ordering clinicians average utilization to decrease slightly in recent months.

We believe this new order and clinicians continue to understand the increased accuracy ability to find melanoma earlier in practice efficiency with our test they will increase utilization.

Contract revenue decreased 28% to 0.1 million for the third quarter of 2020 compared to 0.2 million for the same period of 2019.

Contract revenue can be highly variable as the pen is dependent upon the pharmaceutical customers clinical trial progress, which can be difficult to forecast due to variability of patient enrollment and other factors, which then exacerbated by the pandemic taught.

Total revenues increased 141% to $1.4 million for Q3 of 2020 compared to 0.6 million for the same period of 2019.

Gross margin for Q3, 2020 with negative 18% compared to negative 38% for the same period of 2019 the.

The improvement in gross margin was largely driven by increased revenue recognition of Medicare samples in 2020.

[noise] asset gross margin for Q3, 2020 with a negative 29%.

Sales and marketing expense increased 132% to 4.6 million for the third quarter of 2020 compared to 2.0 million for the same period of 2019.

The increase was primarily primarily attributable to salesforce expansion and additional marketing investment to increase awareness of our pls.

Research and development expense increased 113% to 1.6 million for the third quarter of 2020 compared to 0.8 million for the same period of 2019. The increase was primarily primarily attributable to higher compensation costs related to expanding the R&D team as well as increased spend on laboratory supplies.

General and administrative expense decreased 9% to 2.9 million for the third quarter of 2020 compared to $3.2 million for the same period of 2019.

The decrease was primarily due to reduced legal costs in the current quarter since reverse merger closed in August of 2019.

Net loss for the third quarter of 2020 was $9.4 million, which included 1.4 million of non cash stock based compensation compared to a net loss of 5.7 million for the same period of 2019, which included 0.7 million of non cash stock based compensation.

At the end of the third quarter, our cash cash equivalents and marketable securities totaled 51.5 million, we continue to invest in our commercial efforts and infrastructure to support our expected increase in billable samples as well as our pipeline products and commercial channels, we feel well positioned to capitalize on the opportunity in front of US now I'd like to turn the call back to John for addition.

Q3 accomplishments and pipeline updates.

Thank you Kevin as mentioned previously we paused our salesforce hard when the pandemic hit but we're now back on track and in line with our previously stated expectation that we'd have 40 to 50 reps by the end of the year. We may continue to incrementally add a few more sales reps before the year end, but we feel like we are currently at.

About the right size.

We held our national sales meeting virtually at the end December September and have now.

Sit trained our new sales reps like all other companies in our industry. It takes some time for new sales reps to reach the level of sales productivity of a seasoned reps. We are monitoring this ramp up period for the group of news new sales reps, we hired during the summer of 2019 and expected the ramp period to be about nine to 15 months after it.

Three month training period.

However, the pandemic is introduced challenges in ramping new sales reps due to reduced in office access to clinicians, which we expect could result in the ramp taking a little bit longer than originally anticipated. We will continue to monitor the ramp trajectory and we have implemented other tools as we discussed such as virtual sales calls training since Beecher Speaker sessions.

To potentially mitigate the impact of the pandemic.

[noise] activity and new technology assessments by commercial payers declined in the first six months of the pandemic. However activity picked up in the third quarter and we have been able to engage with approximately 50 payers representing about 250 million covered lives in the U.S.

We are currently reviewing various contracts and pricing proposals, while some payers are seeking a discount to Medicare pricing. We're confident we can achieve pricing targets that we believe will allow us to meet our long term revenue and gross margin targets to better inform our payers during our negotiations around price we are completing another economic.

Impact study with Optum inside United Health care groups Health care data subsidiary. The initial output of this study supports the current price at Medicare provided and cost savings associated with this price.

We recently were able to negotiate and execute a contract with Blue Cross Blue Shield of Illinois with over 7 million covered lives on their P.O. plan with pricing that is commensurate with the value Medicare has assigned.

We've also been informed by another large blues plan that they too will contract and they value consistent with our pricing targets. We're actively educating many other payers on the clinical and economic value proposition of our test and believe we will be successful in achieving coverage goals that will allow us to monetize or sample volume, which would lead to meaningfully higher revenue.

Q over what we recognize that our current levels.

During the quarter, we also signed agreements with new pharmaceutical partners worth up to approximately 1.1 million in contract revenue for work related to those partners clinical trials. We have currently have a maximum 4.6 million and potential remaining contract revenue related to our.

Current agreements.

We are we're also working hard to launch the PLD plus in the next couple of months to further enhance early melanoma detection. This second generation test identifies mutations in the turret promoter along with the other genes and improves the sensitivity of our appeal a test to approximately 97 based on a published validation study.

Her promoter mutations have been found to be driver mutations for early melanoma development are key opinion leaders and clinician users believe. The addition of turret provides an important improvement to the test sensitivity performance and its clinical validity. We believe the addition of turbo for further enhance early detection.

Help drive adoption of the test.

Given the challenges posed to the dermatology space by the pandemic, we're happy with our Q3 performance and the strides we've made and cultivating some key infrastructure development work for our business and positioning us for future growth.

Now I'd like to talk a little bit about our clinical.

[noise] and pipeline update we.

We have completed enrollment in our trust study and are currently analyzing the data and expect to present top line results by the end of the year.

The Trust study is a real world long term follow up study of lesions that tested negative for melanoma with the PL eight it is designed to confirm the high negative predictive value of the PL eight by reevaluating and retesting lesions that were Peel a negative one to two years prior to enrollment.

The study will have approximately 300 evaluate both subjects to confirm the NPV of 99%. We would expect to have only about three millenial melanomas identified in this cohort others.

Other variables measured will be any melanoma related deaths and the melanoma diagnoses and stage of Melanomas if found.

We believe the trust study will help us build more confidence in the performance of the test and the long term outcome for lesions that test negative.

Now talking a little bit little about about our product.

Initiatives that we have ongoing I'd like to update you on our Tele medicine effort as mentioned previously we have identified a unique tele medicine strategy that will capitalize on our digital consumer education campaign and offer patients visiting our find it Dr page and immediate Tele medicine option.

One technology development solution, we completed in the third quarter is a downloadable iPhone and Android HIPPA compliance software application that allows for submission of high quality images and lesion information to a portal for review by a clinician.

We will initiate beta testing of this application before the year end. We're also evaluating web based software application to provide the same function without the need to download a phone application.

In the first half of 2021, we will look to pilot a complete solution.

Moving onto our aluminum product. It is now in the internal validation phase and will assess UBI related gene mutations in normal appearing skin, which is related to skin cancer risk and photo aging. We are very excited about the preliminary data that we've seen for luminate.

Our study investigated the mutation number and very Leo frequency of UBI associated driver mutations in genes related the bazelon squamous cell carcinoma, almost no driver mutations for tech were detected in non sionyx, both skin areas, but there was a high frequency of mutations in normal appearing skin from patients with a history of skin.

Cancer and Sun damage in general driving mutation burden correlates with Asian history of Sun exposure is our goal that luminate will provide patients and consumers with an option to objected objective we measured the UBI damage related sun exposure and to seek treatment options and initiate behavior changes to better manage their.

The damage and premature photo aging.

In the third quarter, we also completed some qualitative and quantitative consumer research on the Luminate product involving over 700 participants.

We're very encouraged by the data from the research, which indicated a strong interest in the product and the actionable information it provides as well as a strong likelihood to purchase the product from this research we estimate a target market opportunity of approximately 18 to 20 million persons in the U.S. we.

We expect to complete more internal validation and proof of concept testing in the fourth quarter and initiate real world validation and pilot demand testing in the first half of 2021.

Assuming success of that real world validation and interest from our pilot demand study, we expect to offer the product commercially in the second half of 2021.

We also continue to make solid progress on our Carson on product for the diagnosis of non melanoma skin cancer product skin cancer.

During the quarter, we identified several potential gene classifiers from our whole transcriptome sequencing effort in Q2 weeks.

We expect to complete the training and proof of concept studies for the target gene classifiers in the first half of 2021, assuming success of these training and proof of concept effort. We would look to complete clinical validation of the test in the second half. The 2021 with initial launch of the test as a laboratory developed tests in the first half of 2022.

In parallel we are assessing plans to also seek FDA clearance or approval of the test, which would not occur until late 2022 or early 2023.

Looking ahead, we are keenly focused on three key growth drivers of our business in the near and mid term. The first it to drive billable sample volume growth the Pls test.

With our sales force in place and trade, we feel well positioned as we continue with our digital direct to consumer marketing efforts. We think the combination of an expanded sales team with the patient base that is educated to demand a more accurate noninvasive melanoma test will spur increasing adoption.

We're also hoping to drive additional billable sample volume through our unique tele medicine solution and build on this care delivery channel as it becomes more accepted.

Yes.

The second is to make additional progress with commercial payer coverage.

We are happy that new technology assessments have resumed after the initial kobin crisis, and we are actively negotiating.

Pricing with various private payers although.

Although these processes can take some time.

We do feel confident that our clinical and economic data will continue to win over payers.

The third key driver is to deliver additional products to the market based on our noninvasive skin genomics platform.

As you can tell there was a lot happening behind the scenes here a derm tech over the third quarter, while the pandemic continues to provide some headwinds to our near term revenues, we feel very well positioned for growth across multiple initiatives as we look ahead.

Look forward to updating you on our progress.

With that I'll turn things over to the operator for questions.

Ladies and gentlemen, if you have a question at this time. Please press Star then the number one key on your Touchtone telephone. If your question has been answered or you remove you wish to remove yourself from the queue. Please press the pound key.

Yes, our first question coming from the line of Ryan Blicker with Cowen Your line is open.

All right. Thanks for taking my questions maybe.

Maybe starting with commercial payer conversations congrats on the two blues plans that you that you mentioned.

Beyond those two plans are there are there any other major deals that you think you're close to the finish line, where it's possible we hear something over the next few months or do you think inherently going to take a bit longer to dislike any major deals and called it might be a consideration.

It's hard to predict what the impact to covert might have.

We are in discussions with a lot of payers some of the other larger payers. They tend to have particular review cycles.

Some of those review cycles, becoming up in the first quarter.

So I can't really project, what exactly will happen before the end of the year.

And.

With those payers and with additional payers, we do think though that the payers are understanding.

Limitations and the problems with the current path through which is step one they didn't want to understand the economic impact and we're providing them a lot of information on that so we do think we will be successful in.

In the coming year in coming quarters, with other payers and particularly we think that the activity. We have with the blues plans will help catalyze some of those other payers to get on board.

Got it that's helpful and then.

Maybe just a near term volume question is there any more color you can provide on volume trends early in Q4, I just want to make sure. We don't get ahead of ourselves up with a strong update.

Should we expect volumes to grow in Q4 versus Q3.

Can you just talk a bit more about what gives you confidence in this trajectory given the flare up and over 19 across much of the U.S. in the past.

Thank you.

Yes, so as we mentioned you know for September and October we were at.

Levels that we expected to be a prior to the pandemic hitting and so October was certainly a growth trend compared to September.

But then obviously the choppiness that John referred to is related to the most recent uptake above 100000 coated cases per day for certain days as well as potentially some election fallout. So we are optimistic that the trend that we saw in October will continue but it's just hard to really determine the actual impact of cold it in various tourist.

Actions, especially if the the search continues to accelerate.

Yes, our next question coming from the line of Brian Weinstein with William Blair. Your line is open.

Hey, guys. Good afternoon. This is Andrew on for Brian Thanks for taking the questions.

Maybe just start sort of on the funnel of new Doc adds can you maybe just talk a little bit about how that funnel is progressing and maybe some of the ways that you guys are knocking down some of the hurdles of uptake out there what are some of the specific tactics.

So if you think that you need sort of timeframe. Thanks.

Yes, sure so the new Doc adds continue to progress along the.

They have certainly recovered from the initial coated but I'd say the the new Doc adds are still a challenge because our sales force has reduced access to the finished physicians clinics and so, especially as we brought on all these new sales reps getting that access to to bring them on is critically important but.

But what weve been able to see is that the doctors that do know us and have started using EPS are actually using us more and so that's really what's been driving a little bit more of our sample volume growth over new clinicians.

And again just to clarify the new clinicians we are still adding them in Q3 and so far in October we just do worry that as you know the clinicians continue to lock down or state restrictions continue to lock down then they will focus only on seeing pace.

Patients in office and really reduce the sales People's calls in office. So we've been able to use a virtual sales calls and training sessions and educational tools and virtual tools to really get them up to speed in this environment. We do think that the virtual trains have gone well and we've gotten great attendance on some of these fine adopt.

Our hosted sessions recently that again, we believe the message is getting out there even though we've got this limited access right now.

Got it thanks, Kevin and then maybe just a follow up to you here recognizing that were.

That's great.

Mike said, yet can you maybe just talk less about how you're thinking about investment spend heading into 2021, and maybe some of the key products or projects that you're going to be putting those investment dollars to.

Yes, if you look historically at our expenses, we have been under spent in marketing and R&D for a while obviously were becoming public in getting the Medicare reimbursement and really starting to launch the PL eight full scale. So we do plan on making investments there both marketing and R&D to help accelerate some of the products those.

John mentioned the limited product is very exciting to us.

We're completing kind of our initial pilot work and market research right now, but if that goes well then it's likely we'll need some additional investments next year to really fully launched that product since it will be a DTC type product and then general awareness of the Pls again, it's still early stages and so we'll need to increase the marketing spend for our people.

Latest just so that we can really activate the patient, especially the population that we think really is appealed by our noninvasive technology for melanoma diagnosis.

Got it Okay, and then last one John you talked a little bit about the sort of telemedicine opportunity and somebody each year.

Work, that's going into that but maybe can you just talk to us sort of about how you're sizing that opportunity and maybe a little bit more color on some unique what is it you're going to tap that thanks for taking the questions.

Well, we think that.

One thing the Tele medicine opportunity offers are.

Most only about seven.

Percent of people in the U.S. actually go to the dermatologist for ISC in check and a very small fraction of patients actually see dermatologists. So we think that option well it can open up.

Patients to be have lesions reviewed by dermatologist that might not otherwise be able to do that.

So again, we do think it can expand the overall access to Dermatologic care, which is a good thing, particularly as it as it pertains to melanoma.

We think that.

What's nice about our tele medicine opportunities that dovetails significantly with our consumer awareness campaign. So we want to take advantage of what we're doing there by offering patient Tele medicine solution and we know we're driving just with having that campaign in a few select states, we're driving 1500 or more.

And the Doctor searches every week.

We believe those patients are motivated.

Perhaps they have something they're concerned about and we think they would respond to a.

An option to have a lesion reviewed immediately via Tele medicine.

So that gives you some idea about how we think we can capture.

That market and we do think overall will expand access and the number of patients that could seek dermatologic care, particularly for melanoma.

Great. Thanks, guys.

Again, if you have a question at this time. Please press Star then the number one key on your Touchtone telephone.

Your next question comes from the line of Thomas Fun with Lake Street Capital. Your line is open.

Hey, guys. Thanks for taking the question just a couple for me just back of the envelope math, Kevin looks like the Medicare penetration remains pretty low from a billable sample volume could you comment on that a little bit.

Yes, we are seeing growth quarter over quarter, but it is a fairly slow growth right now and so even compared to Q2 of this year. It was about a percent better in Q3 and same with against Q1, So we're seeing a little but the little bit over 1% per quarter growth in the Medicare proportion.

And so while we have activated marketing for the Medicare population through our direct to consumer marketing efforts that population is again, the least likely to want to go into a clinic right now during the cold environment. So we're trying to.

Counter some of the macro.

Macro environment that is going on right now what that population, but we are seeing improvements. It's just again fairly slow going right now just generally because until that.

Great and then can you go in to see the dermatologist right now.

Right.

And then John could you, let us know what the status of the Optum project isn't what you might expect to see some data coming out of that or at least be sharing data with us about that.

Sure we do have some preliminary data.

That suggests the all in costs.

Two adjudicated pigmented lesion are about $2000 that.

Somewhat comparable to our earlier economic impact study.

And.

You know again it supports at Medicare pricing.

This is a more rigorous.

A more rigorous study that looked at 29 million claims over.

Over a one year period, and tabulate or all the costs associated with assessing milena citic lesions and so that number reflects all those costs from the initial surgical biopsy through late stage treatment. So we're going to finalize that in the coming weeks, but so far the data looks.

Be very commensurate and as you'd expect a little higher than our initial study just because theres been some inflation in the cost, particularly around later stage melanoma treatment.

Great and then just one final one for me as you think about ILLUMENATE are you thinking double actually launch as a cash pretty product are you seeking reimbursement for that upfront as a covered product I'm just trying to think of how that how you are going to launch that you mentioned a lot of consumer campaigning around that so I was wondering if you could give us some color on that.

We do see that as a cash base consumer pay product. That's one of the reasons, we like that because it diversifies the potential revenue mix.

We will.

Again utilizing digital channels that we have developed over the last couple of quarters to help funnel patients into a place where they can obtain that product. We will also drop it into that are our sales teams back there are clinicians that have expressed interest because the dermatologists actually sells a lot of the same.

Services to remove that as damaged cells, whether it's a chemical peel or photodynamic therapy.

We got to understand the pricing better if we sell to the dermatologist first in what they would want to up sell to but we do think that there's a good opportunity based on that market research for the consumer to pay directly for that that product.

Awesome, Thanks, guys for taking the questions much pressure.

There are no further questions at this time. This concludes today's teleconference. You may now disconnect.

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