Q1 2021 OncoCyte Corp Earnings Call
[music].
Good afternoon, ladies and gentlemen, and thank you for standing by welcome to the August <unk> Corporation first quarter 2021 earnings Conference call.
At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation should you require operator assistance during the conference. Please press star zero to see the on operator. Please note. This conference is being recorded.
Now I'll turn the conference over to your host Bobby added with life side Visors. Thank you you may begin.
Thank you David and thank you everyone for joining us for today's conference call to discuss on expense side first quarter 2021 financial results and recent operating highlights.
We have not seen today's.
The actual results. Please visit the company's website on the Investor page for the press release.
For turning the call over to Ronnie Andrews, Iqos, Vice President and Chief Executive Officer of.
I'd like to remind you that during this conference call a couple of <unk> will make forward looking.
Statements regarding future events and projections any statements that are on our historical facts are forward looking statements for encourage you to review of the company's SEC filings, including without limitation, the company's form 10-K, and 10, Qs, which identify 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 risks inherent in the development <unk> commercialization of potential diagnostic tests uncertainties in the results of clinical trials over inventory approval the <unk>.
<unk> of Oncotype third party blood sample analytic system to provide consistent and precise analytic results on the commercial scale the need to obtain third party reimbursement for patients use of any diagnostic test the company commercializing.
Our need and the ability to obtain future capital and maintenance of IP rights and uncertainties associated with the COVID-19 pandemic as possible effect on our operations. Therefore actual outcomes and results may differ materially from what is expressed or implied by these forward looking statements.
<unk> expressly disclaims any intent or obligation to update these forward looking statements, except as otherwise may be required under applicable laws with that it's my pleasure to turn the call over to running Andrews CEO, Ronnie Thanks, Bob and welcome everyone to our conference call to discuss our first quarter 2021 financial.
<unk> and our operating highlights joining me today are Mitch Levine, our Chief Financial Officer, Dr. Doug Ross, Our Chief Science Officer, and Padma Sundar, our chief commercial for commercial officer will all be available during the question. The answer session later on this.
Release call, it's great to be able to report the despite the ongoing macro environmental headwinds key marker side has continued to maintain our solid momentum into 2021 with steady execution across our four growth engines, bringing us closer of our goal of delivering a single solution for physicians and their patients that will answer of critical.
On answer questions for the management of solid tumors.
The technologies and test we've integrated over the past seven quarters have the potential to improve patient outcomes.
Also reducing the cost of care and allow on cost side to execute commercially in markets that when combined have over $10 billion worth of <unk>.
Key accomplishments. So far this year include recording our first million dollar of revenue quarter, presenting compelling data on determine Io and our third solid tumor type at ACR initiating pilots with for pharma companies for the term of Io signing major agreements with two of the largest molecular platform companies to provide clear.
Nickel reference testing and validation services across PCR and next Gen sequencing platforms.
And that will be done out of our Nashville lab, we acquired products biomedical, giving us access to IP and technology that allows us rapid entry into the blood based monitoring where all the cancer as well as the high value of reimbursement product for transplant rejection and finally, we significantly strengthened our balance sheet to support our ambitious growth plans.
Plans are.
Our growing product portfolio positions acre site for both the immediate term revenue generation and long term growth and I'd like to spend the call today, providing an overview of our most recent accomplishment and watched the comm across these four areas to recap for any of our new investors.
First we have the term of Rx the first and only commercially available predictive test for informing chemotherapy decisions in early stage lung cancer. We do believe our second task. The term Io is the star of our future as a potentially differentiated and proprietary test for immune therapy response prediction that we'll give oncologists and patients <unk>.
Greater understanding of the likelihood of responding to an immune checkpoint inhibitor at the beginning of the disease management process to ensure the patient gets the right treatment from the very start giving them the best chance at a good outcome.
On a very short period of time, we built the compelling foundation of data demonstrating applicability of this test across all for approved Immunotherapies, Keytruda opdivo to centric and <unk> and across for different indications long breast bladder and kidney cancers, which together.
Suggest the pan cancer immune therapy opportunity, which is on track for clinical launch later this year.
Third is our pharma services offering from our cap accredited CLIA lab of Nashville, which continues to grow generate revenue, which doubled in Q1 as compared to Q4 2020, and we now have a solid pipeline of opportunities with pharma and diagnostic companies and finally, our newly acquired C&I test, which accelerate salary.
Entering the blood based monitoring for therapy response, and for recurrence and cancer, where we intend to replicate our successful the term of Io development playbook for the very sure of C&I monitor test for immunotherapy response monitoring together our progress across these four growth engines.
Will enable <unk> to become a one stop shop offering the term of Rx determine io and eventually determine of C&I as proprietary task of position Arcos site to become the preferred lab for clinicians who need answers to the important treatment decisions only oncotype test can answer and do that through.
The patient journey.
So let's dive into some of the details on each of the product offering.
Q1 was a solid quarter for the term of Rx, particularly given the COVID-19 surge in late January and February which we now know led to substantial delays for early stage cancer surgeries with patients waiting for vaccines and instead relying on radiation treatment until they felt it was safe to undergo surgery.
We've continued our sales efforts to expand to new health systems and as of the end of the first quarter. We had a total of 120 non onboard of systems, which represents a 57% core over quarter growth as of March 31, 2021, we had 218 on boarded positions at 57% core.
For the quarter growth rate and we completed testing on 236 patient samples in Q1 slightly ahead of Q4 with simple numbers growing every month in the quarter.
We expect that as COVID-19 cases continued decline with the expansion of the vaccine programs patients will be more comfortable seeing the doctors and undergoing these life saving surgeries.
The improving macro environment combined with our steady growth on boarding new doctors and hospitals leave us confident that as our reps can reengage with physicians in person will be able to strength of our momentum and the increase quarter over quarter growth in the term of Rx patient orders in Q2 and throughout 2021.
Our agreement with burning rock to distribute the term of Rx in China is progressing as planned on.
Our continued progress to complete for Onboarding of validation in late Q3 leaves us on track for $4 million in booked revenue from burning rock in 2021, and it is just the beginning of our efforts to tap into the world's largest early stage lung cancer market.
Moving to our second growth engine determine of Io or the new data being presented continues to validate that our test is the only precision diagnostic tests on the market that evaluates the entire immune microenvironment and biopsies and surgical specimens to identify patients likely to respond to immune checkpoint inhibitors.
We believe the term of Io is poised to significantly improve treatment decisions for individual patients and their physicians as well as help focus development process of Biopharma and pharma companies and clinical validation of a new emerging class of immune therapies.
It is clear that the opportunity with the term Io is tremendous given more than 750000 patients will be eligible annually for immune therapies in the U S alone identifying which of these patients will benefit from ICIS remains of outstanding challenge at the recent FDA oncology drugs Advisory Committee.
Eating where they reviewed retrospective data from the accelerated approvals in the immune therapy drug class. The committee stated that only modest benefits were observed across diverse and often unselected patient populations that is why we believe not only.
Believe we not only have a tremendous opportunity in guiding clinical immunotherapy treatment decisions. We believe there is also a huge opportunity inform the estimated five ongoing clinical trials evaluating these types of drugs the.
The past few months of in data rich, we steadily provided compelling evidence to determine of Io has broad potential across a range of tumor types, starting with well established clinical data across three different cancers lung breast.
In bladder.
Recently at the ACR meeting, we presented our first studies of bladder cancer, where we achieved our primary endpoint demonstrating significant correlation between determine Io and two year overall survival rate of T. Though in metastatic bladder.
Bladder cancer.
Demonstrating improved overall survival in PA and deep determine <unk> positive patients versus the all comer population, where the drug had been voluntarily withdrawn due to lack of survival benefit of.
Our message is resonating with pharma and we currently have several pilot studies underway. We're determined <unk> is being used to analyze samples from ongoing and failed pharma trials for a potential rescue opportunity by selecting those most likely to respond we may be able to help pharma reveal the true benefit of treatment and the right patient.
Duration. These pilots had definitive endpoints and if we hit them, we'll be poised of rapidly enter trials that could lead to a companion diagnostic claim that could broaden and accelerate the term of iOS clinical adoption.
So with strong data in triple negative breast cancer lung and bladder cancer. We book of solid case that the term of Io may of Pan cancer of utility as a biomarker for many solid tumor types. We're excited to build on this dataset with the new results that will be presented at <unk> in early June we will expand.
For a new indication renal cell carcinoma every new cancer indication of moves us closer to being the only precision diagnostic that can accurately predict sustained response across all solid tumors and builds the case for determine Io is a pan cancer predicted test and the 3 billion of immune therapy patient selection.
Market and importantly, we remain on track for clinical launch second half of this year.
Next I'd like to spend some time on our newest product that they're assure C&I monitor clinical assay our entry in the blood based monitoring in cancer.
We recently closed the acquisition of chronic biomedical, which provides aquacise proprietary access to the very sure of C&I monitor clinical assay, a patented blood based assay the user's copy number of instability or C&I for immunotherapy response monitoring and oncology.
As I said earlier, while part of the same playbook, we successfully used with the term of Io. This time last year.
Rebranding the test at the term of C&I and preparing for market with planned validation studies and publications to support the U S Research and pharma services launched in late 2021.
In the near term, though we've established the critical study planned for determine the C&I and will complete Trek Tech transfer to our lab of Nashville, and start marketing to pharma companies in the U S. Later this year.
However, we've hit the ground running with the chronic team who already have ongoing studies in Europe in multiple cancers, including lung head and neck ovarian and pancreatic with over 700 patients recruited to date across several studies data from the studies to date have demonstrated broad utility of this blood only to.
Test across three areas of monitoring one predicting the presence of minimal residual disease post surgery to predict the recurrence in ovarian cancer that is in remission and of course, three predicting response to cancer treatment, including but not limited to immune therapy treatment.
We believe the C&I test as the number of advantages for patients and physicians first it will allow physicians to begin monitoring patients for treatment efficacy more quickly given that the CNS test requires only a blood sample and contrast, getting a result from the competing emerging test for monitoring.
Take significantly longer as these tests start with the time consuming and costly genetic sequencing of of patients tissue sample and several late stage solid tumors, such as lung guidelines recommend neo adjuvant therapeutic intervention not surgery, which means the pathology for these tumors is performed on it.
Fine needle biopsy, which typically collect very little tumor tissue. So in many cases, the initial pathology will use the majority of the tumor tissue and doesn't leave enough to complete the full genome exome testing required to run the tissue informed MRV methodology.
Even in cases, where sufficient tissue is available preserving precious sample to enable other test will be an added benefit of anchor sites fully blood based approach.
In addition, we believe C&I tests will be able to deliver timely results on progression at the second cycle of immune therapy, which is weeks earlier than current currently seen with imaging all of the tissue on form technologies from an overall strategic perspective, there are share C&I monitor assay will not only help us expand in the projected <unk>.
$3 billion in growing immunotherapy response monitoring market. It will also provide us ownership of IP that could help develop a foundation to build additional applications for the estimated $6 billion plus recurrence monitoring market a repeat testing opportunity that tells a patient that of second tumor may.
Forming long before it can be identified by imaging.
These additions bring on our side of distinct competitive advantage as the first and only company to potentially offer continue of tests from selecting patients for immune therapy to monitoring the effects of treatment as well as monitoring for recurrence.
The chronic acquisition was also important and that included test and a patent of state for the use of digital PCR to the tech transplant rejection and recipients the COO.
<unk> share of transplant monitor test.
Solid organ transplantation of modern test intended to use the simple blood draw to monitor for rejection of transplanted Oregon's Excitingly Palmetto the Medicare administrative contractor for the centers for Medicare and Medicaid services or CMS recently issued of local coverage determination on.
LCD recognizing molecular testing for solid, Oregon, allograft rejection as a category of test eligible for Medicare reimbursement. This LCD creates a pathway for future Medicare reimbursement for the fair share transplant monitor test and the organ transplant space of note the coverage.
Policy for transplant rejection monitoring molecular testing for solid organ allograft rejection as its titled exclusively sites three peer reviewed publications on the performance of the chronic test and solid organ transplant monitoring, which is an important validation of the chronic technology and.
Edition, the policy establishes the price per AD of between seven of $2700 for $2800 per test depending on the organ transplanted, which we estimate could transplant translate the total revenues of 40 to $50000 per patient over to the three year timeframe, assuming current transplant monitor.
<unk> guidelines are followed.
While we will explore licensing that their share of transplant monitor the <unk>.
Potential partners for use in the transplant field the underlying technology may be of interest the orca sites core cancer related assay business we.
We believe there is an opportunity for the use of technology and the development of of Super sensitive test to detect tumor derived DNA in blood to monitor for long term cancer recurrence, which will ultimately come to term of MFS and complete our continuum of application.
Although our focus will remain on oncology. This LCD for transplant use along with the key attributes of this technology, including greater sensitivity reduced cost of run and most importantly, the ability to kit and democratize the modeling cash to improve turnaround times makes this a highly attractive asset for players in the tranche.
Plant diagnostic market.
Finally come into our fourth growth engine, our pharma services business. We currently have a solid and growing pipeline of contracted pharma services projects and while we know for initially these revenue streams can be lumpy and direct directly related to project timelines and sample delivery from our pharma partners.
I'd like the enthusiastic report the pharma services revenue did double quarter over quarter.
Another noteworthy were the accomplishment of the pharma services was the Q1 initiation of a project from a very large study by top 20 pharma company using our proprietary blood based sales cycle assay for monitoring systems that our pharma partners phase III trial. The first major trial using the test which was developed in house of our team.
In Nashville, specifically for this indication and for.
Finally, we're thrilled to announce agreements with two of the largest molecular platform companies. Our work with these two global leaders will focus on clinical validation and system integration of selected test on their respective PCR. Our next gen sequencing systems.
These two agreements will begin to bear fruit in late Q2, and we look forward of working closely with these two large strategic partners and of course, there is more to come but the progress in growing the client base and projects in pharma services provides an immediate and growing revenue engine to help smooth out the lump lumpy quarterly revenue ramp true.
Additional experienced when building pharma services business as well these relationships with global platform companies will support our operations as well as our strategic development the future test for our sales channel and potentially provide a partner for kit development and distribution ex U S.
As I look out into the rest of 2021, I envision a great year with rising revenues and at least three product launches from Io determined TX and determine the C&I.
These products have a large total market opportunity of over $10 billion and we of proprietary positions in some of the fastest growing areas of the molecular oncology.
We're beginning to attract the attention of the leading pharmaceutical biopharma companies and molecular diagnostic tool platform providers and.
And we are bullish on our opportunity to complete important contracts with these global partners to strengthen our market position.
It takes time to develop a comprehensive diagnostic platform for cancer, but we're making great progress on all areas. Thanks to an incredibly dedicated team at this point I'd like to turn the call over to Mitch Levine to review our financials Mitch.
Thanks, Ronny Hey, everybody.
As of March 31, 2021, we had cash cash equivalents and marketable securities of $59 8 million. Following the equity capital raises we completed in January and February as well as through the use of our ATM, which in total added $69 million in cash.
Our balance sheet.
This included $25 million from of direct placement of equity with two prominent healthcare investment funds in January and due to strong demand. We completed an underwritten public offering that raised an additional $37 $9 million of net proceeds of February.
We also paid $10 million in February to complete the razor acquisition of acquisition, giving us full control of the term of Rx test, which now allows us to execute our U S or ex U S Tech transfer to the international partners.
Cash used in operations for the quarter was around $6 $3 million for normal operating burn.
Plus one 6 million in discretionary of annual merit and bonus payments.
And approximately $1 million of nonrecurring legal and business development expenses paid in the quarter.
Excluding these items, we expect our base of operating cash burn to increase modestly in future quarters. As we continue to invest in clinical studies for the term of Io and determine the C&I as well as investments in sales and marketing to drive increased adoption of our determined of Rx test and other.
Tests remain commercialized license or acquire.
As a reminder, the first quarter each year is generally our largest cash burn quarter due to annual merit and bonus payments.
Excluding such periodic or one time items cash used in operations for the quarter was around $6 $3 million.
For the base of operating burn.
Onetime nonrecurring expenses in the first quarter of 2021 included fees related to our underwritten public offering.
The annual bonuses and legal fees arising from business development activity.
And the digital onetime extends from the quarter was the relocation of our Brisbane lab for the term of RF.
Two of our headquarters in Irvine, California.
Also in Q1, we invested in critical personnel hiring 12, new employees in areas, such as pharma R&D market access sale.
<unk>.
Business development and medical education, as we endeavor to quickly bring our diagnostic tests to market and CMS reimbursement.
With the continued ramp in revenues of Detroit from Rx combined with the solid quarter from our pharma services business, our consolidated revenues for the first quarter of 2021.
Approximately $1, one $2 million, an impressive 123% increase from the fourth quarter of 2020 as revenues from both sources increased.
I'd like to remind everyone that we launched the term of Rx one year ago.
As we accumulate payment history and experience, we are able to progress from recognizing revenue on a cash basis to an accrual basis that record as revenue in the period that tests are performed.
During the first quarter of 2021 after the accumulated in the additional history of cash receipts and other factors considered by management for Medicare advantage covered terminal Rx tests, including the recently published Medicare rate.
We transitioned to the accrual basis for <unk> tests covered by Medicare advantage insurance plan.
We will continue to recognize revenue for commercial and other payers on a cash basis until we have reimbursement contracts with those payers at that point those contracts will also progressed because the accrual basis for.
The term of RF test.
Operating loss as reported for the first quarter of 2021 was $11 4 million, an increase of $2 9 million from.
From the first quarter of 2020.
Operating loss as adjusted for the first quarter of 2021 was $8 6 million an increase of $1 2 million.
As compared to the same period in 2020.
We have provided a reconciliation between GAAP and non-GAAP operating losses in the financial tables included with our earnings release, which we believe is helpful in understanding our ongoing operations.
Cost of revenues for the current quarter was approximately $1 million, which included $307000 in noncash <unk>.
<unk> expenses from our razor asset acquired in February as a reminder, the cost of our razor asset amortization, which is a non cash amortization expense over the remaining life of the range of patent.
We will be included in cost of revenues each quarter.
Cost of revenues also include testing services, we perform for our pharma customers. It is important to note that as we ramp our testing volume, we expect to see an improvement in our gross margins in future quarters for the day terminal of Rx test.
Research and development expenses for the first quarter of 2021 three.
$3 4 million as compared to $2 2 million for the same period of 2020, an increase of $1 2 million.
General and administrative expenses for the first quarter of 2021 were $4 8 million.
As compared to $4 6 million for the same period in 2020 relatively unchanged.
Sales and marketing expenses for the first quarter of 2021 for $2 3 million as compared to $1 5 million for the same period in 2020, primarily attributable to ramp up in sales and marketing activities for our continued commercialization efforts of the term RF.
For the first quarter of 2021, we reported a net loss of $3 $9 million or <unk> <unk> per share as compared to $7 7 million.
Or <unk> 13 per share for the first quarter of 2020.
We are very pleased to announce the newest member of our finance team Leigh <unk>, Vice President of <unk> controller, and principal accounting officer.
He comes to us as a form of big for CPA with the Masters and accounting for more than 21 years of U S. GAAP at PMA SEC reporting and Sox controls experience Lee is clearly a fantastic hire and will be of critical member of the Oncotype team.
We have a good history of making timely thoughtful strategic investments in clinical studies and additional sales and marketing initiatives, which have allowed us to continue to build our momentum so far in 2021, and we will continue to evaluate key studies for the term of Io and now determined C&I that will help us accelerate.
These two important products towards market launch and uptake. In addition, we have several new relations relationships with Biopharma and molecular platform companies that may require some capital investment to get the revenue streams flowing from the services opportunity.
Pharma services infrastructure remains extremely lean and we expect investments of this time will lead rapidly to new revenues in the second half of 2021 and beyond.
We are pleased with the growth of the term Rx and positive developments with the term of Io and determine the C&I on new blood based monitoring test.
We believe these test ivanka side of the distinct competitive advantage and for one of the first and only company to potentially offer of continuum of tests from selecting patients for immune therapy treatment to monitoring the effectiveness of that treatment.
That concludes my remarks concerning our financial highlights.
I'll turn the call back to Rodney.
Thanks, Mitch operator that concludes our prepared remarks, we'd like to now open the floor for questions.
Thank you at this time, we will be conducting a question and answer session.
Like to ask the question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue. If anytime you wish to remove your question from the queue. Please press star two for participants using speaker equipment may be necessary to pick up your handset before pressing the star keys on moment. Please while we poll for questions.
Our first question is from Mike Matson with Needham <unk> company.
Hi.
Hi, Thanks for taking my questions I guess I wanted to start with the the quarterly revenue. So it sounds like most of the I guess sequential growth came from the pharma services part of the business is that right and.
Is that just sort of the lumpiness going on there or is that a sign that youre going to have.
Is any of that sustainable I guess is on getting over the next few quarters.
GAAP both.
<unk> and Io.
Significant revenue increase to get us over $1 billion. So.
But we did see a of <unk>.
<unk> is about 50 50 contribution to the number. So you had about just over 500000 in <unk> and a little over 500000.
<unk>.
And the pharma services group in terms of the Lumpiness, we have a nice pipeline and the pharma services area.
So the challenge as you know in pharma services as you're at the Mercy of the samples that the pharma companies collect the send you. So adding these two global diagnostic platform company projects really helps us smoothed out because these are validation and verification services as well as.
Some clinical development services and so there are more and more on control of the milestones in terms of our ability to complete the work and hit the milestone. So it's much more predictable known on the pharma side, where we're dependent on them to find patients to send this for the clinical work. So so I'm not going to promise that won't be still be a little bit lumpy, but we do think that these.
Two new agreements help us a lot as far as Rx, We saw January and February were slow.
I think we had said that at the end of Q1, but when we look back.
<unk>, we saw increase in sample volume in March and we've now seen.
The continued increase every month. So we believe that the pandemic is not quarter over in terms of surgical procedures, but it appears that as more and more people get vaccinated and we reached the point of what we hope will be a new normal equilibrium that these patients will see we will go back and start getting the surgeries.
And we certainly have seen that so far in March and April and but we'll see as we get to the end of the quarter, but we're pretty confident that with the doubling of on boarding accounts and doubling of onboard of dogs that we certainly have the right path.
The forward and our reps as soon as we can start getting in and actually detailing and doing what we like to call. The same same store sales. The same accounts sales with these new docs that we'll be able to start to see and grow the sample volumes again in Q2 and on through the year.
Okay. Thank you that makes a lot of sense of men.
The three the term Io of pilot projects with the pharma companies.
Can you talk more about these and how long does that pilot from the sort of last before it would go into more of a.
For the regular pace I guess.
Yes, im going to let Dr. Ross take that one yes sure. So these are pilot projects where.
It varies sometimes of fin and physical projects, sometimes it's a small west project of samples of our data that they have available and it's really a period of getting introduced to us on for the assay and then hopefully progresses through the next stage, where we would be part of the prospective study or a larger retrospective study. So it's been <unk>.
ROE progression of the relationship with somebody Who's getting you your assay and quite candidly pivoting what is usually in the existing biomarker strategy. So.
The first stage.
What's very interesting and exciting about the final project business.
Biopharma company that actually developing novel Therapeutics. So they are looking to see whether our biomarker of its predictive for these new so called second generation therapeutics. So we believe that if they do see of predictive signal of them to bulk point in of pave the path for them to incorporate our biomarker into the program.
Yes, I think the main thing to note. Mike is the reason Theyre pilots is because both pharma and us want to get to a go or no go decision point rapidly and so by the sheer nature of them being pilots. We have we are the studies are geared towards fast turnaround time of the result, so we can get to on.
On answer for them and for us.
Okay, great. Thank you.
Thank you.
Our next question is from Mark.
Mark Massaro of <unk>.
Hey, guys. Thanks for the questions and congrats on all of the progress.
Thanks Mark.
I guess my first question is.
You alluded to it but the volumes for of determine of Rx were call. It roughly flat you talked about January and February being impacted by the pandemic.
So is it reasonable for us to think that.
That you should have sequential growth in Q2, and then I believe you might have somewhere close to 10 reps in the field can.
Can you clarify that and what percentage of your reps are actually out in about in the field.
Yes, it's a great question, let me take the high level I will turn it over to partners, obviously here with me.
Yes, I mean volumes were flat quarter over quarter.
We were not obviously proud by that until we got into the mid March and we saw February January and February the surge and when we started doing our absorbed putting our fingers into the market.
Some of the some of the rumors we heard we felt were true and that is we are we heard they were true which is patients were getting radiation to bridge them until vaccination. So they could get surgeries and so and we saw March and obviously was a much bigger month than February and January so where fee.
And much better that we're starting to come out of the pandemic hangover, but but.
We won't know completely till the end of the quarter, but we do have line of sight to quarter over quarter sequential growth in sample volumes in Q3, I'm sorry in Q2 over Q1 for sure. So probably you want to yes.
So I think what's happening is we grew every month January February compared to January and March come ahead of temporary zone.
That's the big sign.
In terms of our reps I would say back half of higher absent the impact of the country on slowly, but steadily getting access to the doctors, but the other half of working.
Actually and one of the things that does do is a lot of this work is blocking and tackling to make it to make sure that the opposite actually demand back to all of the.
The antibiotics in the advantage of those sample so to the extent that it is virtually on the blocking and tackling ex slowing down and obviously as more and more offices open up and Thats the payment again the.
The other thing is about 60% of on reps have been in the field have been hired on on the job for less than a quarter. So as they get trained and as they build the connections on the as they mature.
All of the reps.
The product and the ones that have been with us and the price.
So both of those trends.
So on a function of on X.
And then of course.
The downside of that is of aviation, which is very interesting.
To some extent that has been a trend line in aviation in the new heads of substitution for surgery that will not continue for all patients, but some of that might become of interest.
<unk>.
The new marble in some cases.
Okay, and you guys talked about launching determined C&I for clinical trial on <unk>.
Use later this year.
What needs to happen for you to prepare that for our clinical launch Im guessing its data and reimbursement, but can you give us.
Some sense on what activities, you're doing the ready that for commercial clinical lunch, yes, absolutely Mark first off when we acquired C&I and we actually the deal was done we got on a wonderful surprise on the fact that they had already had numerous studies ongoing in Europe, and we have over 700 patients now.
<unk> enrolled across.
A number of different tumor types for C&I and so the critical mass and speed at which we can gain critical mass and statistical powering. These indications is obviously enhanced by the work that they were doing and now we've been able to invest to ramp that up in order to bring it to the U S. Doug do you want to comment on the tech transfer a component of that.
And yes.
We are doing the check transfer in Q4 over to the U S to facilitate work that goes on in this country and we're also.
The early trial that we're doing in the prospective trial that we're doing is going to be done in Europe. Starting this summer out of the European lab, and so we want to aggressively expand that into the U S and so having that running out of our Nashville facility.
As.
The plan to move it towards commercial launch we're trying to drive.
Do clinical studies and authentic the single clinical indication, where it's very clear what the action ability of it is.
On the plan to drive it towards the commercial launch and the reimbursement that we've had initial discussions it's actually quite straightforward in that debt already local coverage decision as you know of monarch waiver for blood based monitoring debt. So as long as the next test is equivalent in the performance of that first as it is kind of.
And net net policy for once the other data demonstrating equivalent interest of the first steps of the market the coverage of <unk>.
And an automatic so we feel pretty good mark once we get momentum under the U S studies.
And then there is always the opportunity potentially to petition.
With the European studies, but I think that obviously, we don't want to wait on that we want to get going in the U S. As soon as we can but we were very excited to see the progress that C&I are that the chronic had made between the time, we had initiated on our licensing deal on the fall on and obviously the acquisition. So they made a lot of progress ahead of.
Us.
Actually acquiring the product or the company and so.
Very excited about where C&I is and how fast we might.
We would be able to bring it through the system here and the data shows.
Couple of things, obviously, the blood on the right, which is the greatest source of the sanitation and second it's rod if not just for immunotherapy response prediction for treatment response prediction, which include the immune therapy and in some cases been the standard of care of chemotherapy.
Good debt funds for that as well as some early data in <unk>. So it's a pretty broadly applicable assets, yes, I think youre going to see out.
Don't want to let too much of the good news out of the bag here because its not it hasnt been for.
Normally black.
The last year, but we have a paper that has been accepted by a very prominent.
Journal around using our C&I assay as a monitor for progression of ovarian cancer as a very specific monitored for progression and its.
So far the data looks significantly better than the current protein biomarkers that are being used for monitoring for ovarian cancer. So lots of good things coming out of the C&I acquisition, and we look forward to bringing those to market.
Okay and just last one for me are you guys still on track too.
To show the Milan data at ESMO for Triple negative breast cancer.
Absolutely.
We would love to talk about it today, but it is embargoed and our trial partners, obviously are eager to to get it out as well, but ESMO the European group and ESMO as their big annual meeting and so that's what we're shooting for but we're on schedule for that and Doug any any further comment on that.
It's been submitted which is kind of the credit criteria and obviously there's the.
Nothing more to know about it the match.
Except that we can't wait until it gets released out of that.
Uh huh.
Alright, thanks very much thank.
Thank you Mark.
Our net.
Next question.
Is from Thomas Flaten with Lake Street.
Hey, good afternoon, guys. Thanks question.
On the determined TX.
With the pending launch can we make the assumption that of panel has been selected at this point.
Can we have we have.
Found what we like best and we are in the process of validating Tx.
And it is we took the strategic approach to this Thomas and that we wanted a technology that could allow us to continue our approach to tissue conservation, especially given we're in lung cancer, we typically will get of.
After Rx, where you get the tumor resection after that its neo adjuvant, so youre going to get these binding of the last spreads and so we chose to go after of technology that doesn't require a significant amount of tissue are extracted DNA and RNA and so that platform is moving forward and we're excited about.
The decision in the more to come.
And then just a couple of on.
Sorry go ahead.
Okay.
April for the panel Thats been selected will from film sort of hour.
Objective of being that one stop shop, all the time.
<unk> therapy, as well as all of the immune Tennessee debt.
Got it a couple of Rx questions do you know what the Medicare Medicare advantage of mix was of your sample volume for.
For percentage I should say.
So as anticipated it follows the incidents in the in the markets it's about 70%.
Together.
Great.
Then.
Where do you stand with the in the CCM I know you had talked about submitting of package to them ahead of the summer meeting has that been submitted yet or can you just give us a sense of where you are with them.
Yes that is the.
With me right next to me about the vaccine effect.
Yes.
We are on behalf of some of our meeting in July of lenses of you typically the diagnostics packages of pharma is of course on O&M May says, yes. We are we are on track for submitting an application for the July maintained day.
To make it the closed door meeting and they do make that decision in that meeting however.
The prevented from disclosing what the decision net until the next update comes out.
And we think that's going to happen in the Q4 timeframe.
What we're looking for.
Thomas is we were going after for various tiers of of acceptance within our application and so we will actually have for shots on goal in terms of the indication that we're looking to support in there and they are a blessing so more to come on it but the application is going.
In than we expected, we expect will be on the agenda and we expect that we won't hear from them until Q4, but we're very hopeful given the the work we've done with the various NCC insights so far.
Great Congrats on the quarter, thanks for taking the questions yes. Thanks Tom.
Our next question is from Steven Mah with Piper Sandler.
Okay.
Hi, Thanks for taking the questions.
Sure.
Okay.
Real quick on the determined of IL.
Given the given the very positive data that you guys presented at ACR.
Curious just curious to know have you got on more traction was potential pharma partners since.
That data release for patient stratification or companion diagnostic opportunities.
Yes. So these pilot these for pilots that.
Debt, we are now engaged with came from.
All of the.
On a byproduct of the data that we've been releasing this year.
And we have a number of other of conversations ongoing as well, but those for were directly related to the data that we've shown year to date and so obviously with <unk> coming in a few weeks and another indication around renal cell carcinoma, and we're hopeful we'll get we'll continue to gain momentum, but we're very hopeful with these for pilots as soon as they are.
<unk> the lead to to some more substantial relationships and potentially the CTX we're looking for.
Okay got it so you can see a path forward into potentially entering case, yes, we do for sure and new debt.
It's not it's not.
It's not going on notice that we seem to have somehow the.
I'd ask to get active and looking at a lot of trials with the teaser were there were failed arms are inadequate statistical power of arms, and we continue to do well with that therapeutics so well.
We will see we certainly have the final report out at the.
<unk> mentioned previously mentioned.
ESMO.
This fall we will have the neo trip data for triple negative breast, which is prospective data and randomized so it'll be interesting to have that data.
But clearly so far of the data we've seen in the data we published is very interesting to pharma.
Okay. Thanks for.
What I think we projected on previous calls where it's much easier to engage biopharma. That's early in the development cycle than it is to pivot.
The very large pharma, which has of existing biomarker program.
Towards the towards on our approach is exactly what's playing out but that isn't to say that we haven't gotten the attention.
Yes.
If the compelling data, but it flow to shift these very large ships. If you will and the reason that interest. It is I mean, obviously they would want to give the drug to the entire patient population, but as the.
The recent cash on bladder cancer shown if you give it on all commerce population, you may or may not achieve the our endpoint overall survival.
So if you select.
The market positive population and then include them in the try and Thats sort of the risks that clinical trial because at least they have the have the highest probability of achieving the endpoint of nexon population and that part of speaking that interest and net designed to at least include the biomarker in the clinical trial so far.
And of de risking strategy for the try on accounts.
Thank you Ying.
Yes, Okay, yes that makes sense and apologies. If this was already asked I have to.
All of backend, but on.
The term of our ex volumes.
Flat sequentially.
Due to the pandemic.
Do you guys have talked at Q2 catch ups.
We are we are expecting.
The quarter over quarter.
In terms of the sample volume growth and we've.
The already.
<unk> already seen some of that so we are expecting to have sequential growth from the 236, we did in Q1.
So.
We're not we haven't projected those volume, Steve, but we certainly are seeing that already.
So far we're about halfway through the quarter zone.
Okay got it thanks, and then last question given the three new test launches can you give us some thoughts on the sales force.
Hiring cadence.
Ahead of those three launches.
Yes.
Bob May go on the detail if you if you're interested but the reality is right now the goal is to add.
Add some new territories as we enter Q3 preparing for the launch.
But we also there's also interest in creative opportunities, we might have as well, where we might have some some indications in certain areas of of.
Of therapeutic for therapeutic where we might get some support from one of the pharma company. So working on that but I think you will see some growth in the sales force probably Q3.
It will probably start to see the expense impact in Q4, though.
One thing.
Thanks Rhonda.
Several of our sales reps are already have deep connections that oncologists treating lung cancer. Thanks for the time on Rx so as the pain to adding head count we will consider the fact that in some geographies the order.
For the half sales reps the deep connection the lung cancer oncologists in the home.
Necessarily.
<unk> sales ramping that day and so we've been very judicious on how we think about adding sales reps as well as we've seen real success in adding medical education head count as well because this is the Rx, but even more so the io is going to be.
Barely.
Dock to dock or our scientist to scientist discussion and so as the reps go in and generate the open door opportunity having support folks that can go in and get deep down into the science and answer the medical questions will be helpful. As well so you'll start to see some increase in that area as well.
Okay.
Okay, great yeah. Thanks for the questions on that thanks for the congrats on the progress.
Thanks, Steve.
Thank you.
Our next question.
Is from Paul Knight with Keybanc.
Mr. <unk> your line is high.
Hey, Paul.
How are you Brian could you talk to the accurate you ran into the 60 million covered lives added one on our X in the quarter and where are you in total covered lives now.
Yes, so for Rx, obviously CMS was our big fish, there we got that already.
Okay.
The multi plan is our first book.
Private payers. So if you added that on the Medicare and Medicare advantage of 70% on the <unk> line is already covered some of that 28 million and then multiply on in general had 60 million covered lives.
So that's another incremental for the population.
Half of probably not on <unk>.
High volume per Rx, maybe maybe 700000 net adds so Greg so we're probably somewhere in the low 70% of total number of covered lives. It's of great question, Paul but we are working as you might imagine on getting all because.
We're getting paid by some of the private payors, but they're paying very slow as you might imagine we're having to fight for every penny that's the nature of that world. So we'd love to get in there. We Howard of we win in Q1, we hired the professional from that area has great experience and we're already seeing the benefit of that so part of the beauty of what Mitch has gone to help shrink.
And our balance sheet is be able to go and get some of these key key players that we needed on the field to help us on some of these key areas. So we've been targeting the plan that has.
We had the highest number of claim.
And so they are going back to them and saying now we have enough claims on your population can be contracting with you. So that's the strategy into the targeting.
Three to five top payers and hope the day when they are going on is getting the test under contract at the price similar to Medicare admissions. One for you are successfully that the Manhattan.
Sure I should.
One of the blues this year and what's your thought if you get of Blue This year.
That's kind of start from the momentum now.
No doubt about it.
In constant conversation with them and so you know.
Anyway the ad.
Some color.
The rocket.
We have the same targeting and we've been of great conversations with one of the Blue is the medical director has passed the test and have made the decision to contract with us, but im going to the credit process you wouldn't believe how long it's been taking so once that Louis signed up on Unfortunately is that process I can't give you a day and you're absolutely right.
On the DAC. They go to the other nor the net sort of Skype for that's a nice cascade for us So we're.
Short of short of dropping in there personally in the.
The encouraging them.
It's been a difficult slog through their process.
Okay. Thank you.
Thanks, Paul.
As a reminder, its star one to ask a question. Our next question is from Bruce Jackson with benchmark.
Hi, good afternoon.
Okay, but obviously questions.
So most of my questions have been answered but.
I wanted to see if we could dig into the the <unk>.
Press release, where you mentioned you initiated a project.
Utilizing the proprietary blood based sales cycle test for monitoring the assistance in the phase III trial can you maybe tell us of what you are monitoring the resistance of <unk>.
What is the test application and how do you envision for the test is being used.
Yes.
It was it's the sales cycle assay that basically looks at in blood key 67, and the proliferation right.
The post therapeutic intervention, it's a large European pharmaceutical company as the phase III trial, we develop the assay for them.
We are excited about the opportunity to be in our first CTX.
We hope we have many more of these but.
The term of Io in the future, but this is a great example of just the ability of the team in Nash.
Nashville to develop.
Proprietary assays and so right now, we'll see where we end up I think the jury is out on whether this will be an ongoing therapeutic and if it is will the will have a true CTX, but it's certainly in process and we'll have more to come in future quarters.
Okay, great congratulations on the quarter and thanks for taking my question.
Yes, Bruce Thanks for the lives.
Ladies and gentlemen, we have reached the end of the question and answer session and I will now turn the call back to Ron Andrews for closing remarks, yes, thanks to everyone for joining us.
No.
'twenty one is poised to be an amazing year for acre site, we have progress on all fronts.
Despite the headwinds from the pandemic, we are seem to be emerging with our Rx volume starting to come back book.
But the exciting part ahead as the determine Io data that's still ahead of us as well as now launching determined C&I. So we will be the only company with not only a test that can predict with precision responders for immune therapy will also have a blood based assay that can identify therapeutic efficacy within weeks.
After the first dose of therapy, which will be very important for physicians. So we're very excited about the year ahead, we remain committed to to work with our physician base and our patients and we're very excited to continue to report out the progress that we plan to make over Q2 and the rest of 2020.
One so thanks for your continued support thanks for joining the call today on everyone stay safe.
Thank you. This concludes today's conference. Thank you for your participation you may disconnect your lines at this time.