Q2 2021 DermTech Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to Dan Teck's second quarter 2021 financial results conference call.
The first time, all participants lines are in a listen only mode.
The speaker's presentation, there will be a question and answer session.
The question during the session you will need the press star 1 on your telephone I would now like to hand, the conference over to Caroline corner of Investor Relations. Please proceed.
Okay.
Thank you operator welcome to the <unk> second quarter 2021 earnings call. Joining me on today's call of Dr. John <unk>, President and Chief Executive Officer on Kevin <unk>, Chief Financial Officer. This call will include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1095, all statements made on this call.
All of that did not relate to matters of historical fact are considered forward looking statements forward looking statements made during this call, including projections of future performance of based on management's expectations as of today August 4.2021 and are subject to various factors assumptions risks and uncertainties, which change over time actual results could differ materially from those 2.
Scribed in such statements several factors that may contribute to cause such differences are described in today's press release on <unk>. Most recent filings with the SEC, including <unk> annual report on form 10-K for the year ended December 31, 2020 on quarterly report on form 10-Q for the quarter ended June 30 of 2021 <unk>.
<unk> undertakes no obligation to update these statements except as required by applicable law. During the next press release with second quarter of 2021 result, because of available under the Investor Relations section of the <unk> website Www Dot <unk> Dot com and includes additional details about <unk> financial results also available on the term checked by the tighter <unk> the latest SEC filings.
You are encouraged of Ricky a recording of today's call will be available on the <unk> website by 5 P. M Pacific time today, now I'd like to turn the call over to John.
Thank you Caroline and thank you everyone for joining us today, the second quarter was another great quarter for <unk>. Despite some choppiness in our selling environment as we emerge from the peak of the Covid pandemic, we continued to execute against our core business drivers, which are of sample volume growth payer access expansion and pipeline.
The development, putting up record numbers in all almost all commercial metrics briefly for the benefit of those who might be new to the story of <unk> as the developed of noninvasive skin genomics platform, we collect the skin sample with our adhesive based smart sticker with this platform. We can create a whole new category of medicine, we referred.
2 is precision dermatology and address large market opportunities in skin cancer and inflammatory diseases. For example, skin cancer is the most common form of cancer in the U S with approximately 15 to 16 million diagnostic surgical procedures each year.
Our first product addresses melanoma skin cancer for which there are approximately 4 to 4 and a half million surgical diagnostic procedures performed each year in the U S. We believe our skin cancer vertical of products addresses of $10 billion market opportunity just in the U S.
To highlight how our melanoma product has the potential to dramatically improve patient care by finding melanoma at the earliest stages. When there is a 99% 5 year survival rate I will share an increasingly common anecdote we were hearing from our current users.
Before I begin I just want to let you all know that after some extensive market research. We are rebranding the name of our melanoma product to the <unk> melanoma test, which is comprised of the core pigmented lesion assay in the turf and Jean add on test or PLO plus this rebranded name was overwhelmingly supported by dermatologists and it's.
Simplifies our marketing messages.
1 application of the <unk> melanoma test to assess mole suspicious for melanoma that for a variety of reasons might not be subjected immediately to a biopsy, but are photographed and of our followed over time for change by a health care provider. It is in these malls, where melanoma diagnosis may be delayed or missed where the earliest stage melanomas may.
We found in where our precision platform is well suited to provide early protection early detection.
You can imagine the surprise in satisfaction of dermatologists have when our test identifies an early stage melanoma in the lesion that they could not biopsy on that day and this is the anecdote. We are increasingly hearing about the lesion. The dermatologists surgically biopsied was negative, but the <unk> melanoma test picked up and early stage melanoma and the lesion there we're going to reevaluate.
Wait 6 months to 12 months, where the melanoma could have progressed to a later stage with the lower survivability rate. These types of experiences are often catalysts that accelerate utilization of our melanoma tests by our clinician as it helps them realize the sensitivity and accuracy of our platform can potentially save lives.
<unk> now to our first business driver of adoption in sample volume growth of our <unk> melanoma test, we had record billable samples assay revenue and new ordering clinicians during Q2. Despite the continued limited access for our sales force to physician offices or average daily billable sample volumes increased from approximately 104.
For per day in Q1 to approximately 183 per day in Q2 average selling price or ASP increased to $248 per sample, resulting in a record assay revenue of $2.9 million in Q2 compared to Q1 ASP of 234 per sample and assay revenue of 2.
$2 million.
In addition, we increased our number of unique ordering clinicians in Q2 by approximately 230, clinicians or 19% sequentially to achieve a total number of unique ordering clinicians of 1430, we.
We believe increasing sample volumes in the ASP.
Through additional payer access success with the appeals and increasing our Medicare proportion will provide long term a long term compounding effect on future revenue growth.
Our contract revenue was light last quarter at 0.2 million, which reflects the slowdown in activity for inflammatory drug trials due to Covid. However, we have recently seen an uptick in interest from companies looking to deploy our platform in their development programs.
We expect to have some additional new contracts in the second half of the year.
During the height of the pandemic, we were forced to go deep into our current installed base of prescribing clinicians is accessed by sales professionals was limited. We noted on the last call that we started and analysis regarding the expansion of our current direct dermatology sales team. This expansion effort will allow us to broadly target potential prescribers, which will help the.
Raise the overall awareness of our technology and make it easier for patients to find the participating provider of close to home.
We completed this analysis in Q2 and plan to nearly double the target number of professional dermatology clinicians to approximately 9 to 10000 compared to the approximately 5000 clinicians which were in our initial target market.
The territory alignment to address this larger group of dermatology targets requires us to expand to a total of 72 sales managers and 9 regional directors to implement this expansion. We recently hired Ray Bassi as our VP of sales to lead this effort, where he has more than 2 decades of experience in dermatology sales and we believe he is an IV.
They'll fit to help us transition our selling strategy to go broad throughout the professional dermatology channel.
In Q2, we also completed our analysis for pursuing a targeted selling approach in primary care.
Based on the claims data lookalike analysis, including biopsies in Dermatologic drug prescription volume, we have identified approximately 30000 primary care clinicians with claims volume similar to a small dermatology practice and approximately 5000 primary care clinicians with practice volume similar to an average dermatology practice.
We are currently assessing the strategy to address this population of primary care of users, which may include some combination of cross selling by our dermatology professional sales channel inside sales and a smaller focused team of primary care health care sales representatives.
Through this effort, we will build on our initial foundation for primary care of selling which we expect to further develop as our carcinoma product for non melanoma skin cancer becomes commercially available in Q2, we completed some qualitative market research in primary care the.
This research indicated interest in the melanoma tests, particularly among family physicians, who practice some level of dermatology.
In addition, most primary care clinicians were very eager to have a noninvasive solution for non melanoma skin cancer, which they see routinely in their practices and have challenges with the outside referrals to dermatologists due to excess of wait times distance to the nearest provider and patient reluctance to take the referral.
As noted in the past we are also currently moving into primary care setting through primary care networks. We continue to make progress with several large networks in key states, where we have of commercial presence.
As discussed previously these efforts have longer sales cycles, and can require executive management by and vendor qualification I T.
The integrations training and rollout plans pilots to establish standard operating procedures and finally contracting.
We are at various stages in the process with the handful of large networks and have begun initiating some pilots.
These network span multiple states and have 300 of more primary care physicians. Some are both payers and providers, while others contract with third party payers well at this time, we're not at Liberty to disclose the specific names of these networks. We are working hard to move these efforts forward through the rest of the year and are optimistic we can secure some contracts over the.
Next several quarters.
Our telemedicine and market Beta tests has recently gone live in Florida, our telemedicine App known as germ Tech connect is now available for both iOS and Android and we are now offering patient initiated store and forward photographic review of suspicious moles by a dermatologist this end market.
Beta test is designed to confirm the stability of our technology platform established marketing funnel metrics to acquire users and tests are operational procedures for in home sample collection.
We expect this end market testing to occur throughout the rest of this quarter and into the fourth quarter assuming success of this in market testing, we intend to expand this offering to additional states and worked to develop partnerships with other telemedicine companies in virtual care networks to expand access to the platform.
We also plan to pie of the platform with the existing dermatology customers of the value added services. They can offer their own patients and lastly, we plan to develop additional technology solutions that will streamline access to remote skin sample collection for follow on laboratory testing.
Our second business driver is to broaden our payer access.
After our success in contracting with individual blues plans in Texas, California, and Illinois, we have invested in building out our payer access team to focus more closely on contracting with individual blues plans and regional Payors. We are starting to see progress with this effort by securing contracts with smaller regional players, where there's an opportunity to grow payable volumes and we expect.
More plants to come on board in the future quarters. We've recently contracted with several smaller plans in the northeast totaling approximately 400000 covered lives with another 350000 covered lives pending contract execution.
Accordingly. These plants also have primary care networks, and we plan to approach these groups about deploying our platform.
We continue to have substantive can't.
The discussions with National Payors, and Multistate Blues plans. Some of these payers have requested to see the results of our Trust study published which has been accepted for publication and is expected to be available by the end of this quarter. We're also working to publish the results of our of the Optima study with the goal of enhancing our economic and clinical value of position.
2 of these important play of payer.
Payers there are no definitive updates on Cigna and as discussed last time, we of provide them with all requested materials to complete their process.
I will now turn to the third business driver of new product development development on the illuminate product continues as planned illuminate will assess ultraviolet related gene mutations in normal appearing skin, which is related to skin cancer risk and photo aging. We believe the future of skin cancer involves not just early detection of cancer.
But detection of precancerous genomic changes, which is essentially what our illuminate product does.
Our research and development team has identified several important cancer related genes that are mutated by ultraviolet exposure and we are currently optimizing the assay. After successfully completing the internal validation study we've exceeded the the 1000 patient target enrollment for our external of 8 validation.
That was conducted at multiple U S centers and it has now enrolled more than 1300 subjects will begin final validation testing in the second half of Q3 with an expected introduction of the product in late Q4.
We also continue to make product on the verification of gene targets for the carcinoma product, which.
Which will facilitate the detection of basal and squamous cell skin cancer, we often field questions about the development challenges associated with this product and the timelines related to this stage of development. The primary reason for the extended verification stage is related to the complexity of this product, which is designed to differentiate to non.
Non melanoma skin cancers, basal and squamous cell from a variety of other suspicious lesions that are often surgically biopsied in this diagnostic pathway. The heterogeneity of the suspicious lesions requires larger numbers of genes classifier genes and more complex algorithms that require the verification.
As noted previously our clinical study to enroll subjects in samples for the validation study is fully up and running and we expect to complete enrollment of this validation cohort around the end of the third quarter of this year. We are still targeting an introduction of this product in mid 2022 as an L. T.
On our last call, we announced our first clinical study in atopic dermatitis to evaluate genomic markers of pre and post treatment with biologic therapies, such as do pillar Mab markers identified in the study will be correlated with treatment response, including the eczema area of severity index, it scores and adverse events among others.
The goal of the studies to identify Biomarkers that will predict treatment response to the drugs and other related outcomes.
Study is actively enrolling and we are currently Onboarding and training additional clinical study sites. We have made some progress against our target enrollment of 500 subjects with approximately 15% of the study currently enrolled.
At this time, we are not able to comment on winter product will be available for this indication, but we're building off of some earlier work. We completed in this area and have a panel of genomic markers that we believe are relevant if we can validate these markers in our current study then we hope to we then hope to develop fairly aggressive product timelines.
We will provide updates as research progresses.
In addition to all of the activities discussed we spent significant effort on building out additional core commercial laboratory and technology infrastructure, which had been paused due to the pandemic as we've discussed in the past we have yet to scale our business operations to a level that will allow us to capture the attractive market opportunity.
That is in front of US part of the scaling effort involves securing a new corporate headquarters, which will more than double our CLIA and R&D lab spaces to support expected higher volumes of commercial tests as well as additional product development efforts.
Our facility strategies will allow us to transfer our current CLIA license to the new building upon moving without any interruption to service. We spent considerable time negotiating the lease and feel that the terms are competitive given the high demand in the local life Sciences real estate market. We also feel like we have partnered with a top notch.
Lord and have an ideal location to attract and retain talent as we grow.
We are very pleased with our Q2 performance and efforts to expand our commercial and development activities and infrastructure. We're also excited about our efforts to expand beyond dermatology, given our progress with integrated primary care networks and the commencement of our end market beta testing of our telemedicine platform in Florida.
We are of course carefully monitoring the situation with the Delta variant and other variance of concern. The ryzen cases has created some uncertainty in the business outlook, which could cause us to adjust our plans.
Given our past success in managing the growth of our business. During the first few waves of the pandemic I'm confident in our ability to achieve success in this challenging environment now.
Now I'd like to turn the call over to Kevin to go over our financial results. Thanks, John total revenues for Q2 of 2021 increased 269% of $3.1 million compared to <unk> 8 million for the same period in 2020.
Assay revenue for the second quarter of 2021 increased 349% the $2.9 million compared to <unk> 6 million for the same period of 2020, we continued to see improvements to our ASP in Q2, but on a potential assay revenue that could be recognized from having broader payer coverage is still meaningfully higher than the actual reported revenue.
Billable samples for the quarter were approximately 11750 compared to approximately 3200 for the second quarter of 2020 of 267% increase and compared to approximately 9400 in the first quarter of 2021 or 25% sequential increase here.
Historically, Medicare advantage of Staples, where a small proportion of our total Medicare samples, but recently started to see increases on the mix going forward. The Medicare proportion of we report will be in total and will include Medicare advantage.
<unk> samples represented about 19% of our billable samples in Q2 of 2021 compared to approximately 16% in the same period of the prior year and 17% in Q1 of 2021.
Our Medicare proportion of Staples is now recovering from the pandemic low point last quarter additional growth in our Medicare proportion could continue to be impacted by the virus variance and based upon the proportion of medical versus aesthetic dermatology of appointments the clinicians take upon reopening.
The medical Derm is not yet fully recovered and we aren't sure of 1 of our fully recovered to the Delta Varian.
With approximately 2100 unique ordering clinicians during the last 12 months, we penetrated 42% of our initial target market of approximately 5000 of dermatology clinicians who account for a high concentration of the total annual surgical procedures to diagnose melanoma. This translates into a 22% penetration of our expanded initial target.
Market of 9 to 10000, dermatology clinicians and penetration of about 16% of the 13000.
Total practicing dermatology clinicians.
We had approximately 1430 unique ordering clinicians in Q2 of 2021 compared to approximately 620 in Q2 of 2020 or of 131% increase compared to approximately 200 in Q1 of 2021 or a 19% sequential increase sales.
Sales call volumes continue to be affected by the pandemic in Q2 due to reduced in office access to clinicians and were estimated to be less than 70% of pre pandemic levels, depending on region Reese.
The recently sales reps started losing access to efficient physician's offices in certain geographies with higher Covid case rates and we estimate the overall level of access by our sales force today is back down to approximately 50% pre pandemic levels. We do not currently believe there will be of widespread economic shutdown like we saw last winter and are confident.
Our sales force of will navigate the future environment.
Our average quarterly utilization of our average number of tests ordered per unique ordering clinician remained strong and was $8..2 billable samples in Q2 of 2021 compared to 7.8 in Q1 of 2021 and 5.2 in Q2 of 2020.
The new users typically order less per month, when they first start using our melanoma test we expect overall utilization of the vary and may even decline in the near term as we add more new accounts with our expanding sales force. We still expect our total billable sample volumes to increase as potential lower utilization rates are offset with a higher number of overall of ordering clinicians.
Encouragingly, we continue to achieve record or near record highs during Q2 in key metrics, including billable samples new ordering clinicians average monthly utilization and number of ordering clinicians of order 10 or more tests per month.
Contract revenue increased 7% of <unk> 2 million for the second quarter of 2021 compared to zero point of 2 million for the same period of 2020 contract revenue continues to be highly variable and is dependent on the pharmaceutical customers clinical trial progress patient enrollment success on other factors as of June 32021, we had a maximum of $4.3 million of potential remain.
Contract revenue related to our current agreements.
Gross margin for Q2, 2021 was 16% compared to negative 71% for the same period of 2020. The increase in gross margin was largely driven by higher billable samples in assay revenue. During Q2 of 2021 assay gross margin for Q2 of 2021 was 11% compared to negative 118% for the same period of 2020 and 10 per.
The scent for Q1 of 2021.
Q2 of the second consecutive quarter of positive gross margins for of melanoma test even with the addition of the turgeon, which the slightly increases the per unit cost of the test we believe achieving positive gross margins given the relatively early stage of commercialization highlights our melanoma test margin potential at higher volumes in the Asps.
Sales and marketing expenses increased 130% of $7.9 million for the second quarter of 2021 compared to $3.4 million for the same period of 2020, primarily due to additional head count for the commercial teams and additional marketing investment, we expect sales and marketing expense to continue to increase throughout the year as we increase the size of our sales force and increase our marketing initiatives.
The raise awareness of our technology reach.
Research and development expenses increased 316% for $3.6 million for the second quarter of 2021 compared to <unk> 9 million for the same period of 2020. The increase was primarily due to higher compensation related costs and increased clinical trial costs.
General and administrative expense increased 39% of $6.3 million for the second quarter of 2021 compared to $4.5 million for the same period of 2020. The increase was primarily due to higher payroll related costs and higher stock based compensation offset by lower legal costs, we expect our general and administrative expense to continue to increase throughout the year as we implement systems.
In infrastructure to support our direct to consumer efforts and overall growth.
Net loss for the second quarter of 2021 was $17.1 million, which included $3.5 million of noncash stock based compensation offset by <unk> 2 million of benefit related to the noncash change in fair value of the warrant liability compared to a net loss of $9.6 million for the same period of 2020, which included $1.1 million of noncash stock based.
<unk> and <unk> 2 million of expense related to noncash change in fair value of the warrant liability.
At the end of the second quarter, our cash cash equivalents and marketable securities totaled $268.3 million.
We've made progress of Medicare and the newly contracted blues plans to resolve the claims adjudication programming issue and startup challenges, but the process is still not fully efficient and we are still experiencing some delays in getting some payments or additional documentation from requirements, which we'll look to streamline <unk>.
<unk> cycles for non contracted commercial payers continue to be long and success on getting payments continues to be choppy, but we've noticed some improvement with our appeals.
We do believe inclusion of noninvasive genomic patch testing in the NCC and guidelines for cutaneous melanoma and data from the Optima study will help in our commercial payer efforts, but it will still take a little time to play out.
We estimate the full year 2021 assay revenue will be between 11, 5% of $13.5 million, which represents 171% to 218% growth over full year 2020 assay revenue and considers the uncertainty regarding the pandemic, which are subject to change pending the duration and severity of.
What appears to be the fourth wave of the pandemic.
We continue to execute on our core growth drivers in Q2 and are excited about the sales force expansion for the rest of the year, our initiation of the telemedicine and the market Beta test in Florida, and our first pilots with integrated primary care networks now I will turn the call back to the operator for questions.
Ladies and gentlemen, if you have any questions at this time.
Other than the number 1 of G touched on the telephone. Thank for your question of same answer.
From the queue. Please press the banking once again. Please press Star then the number 1 on your question.
Telephone for assay question.
Your first question comes from the line of Brian.
From William Blair. Your line is kind of thing.
Hey, guys. Good afternoon subscription on for Brian Thanks for taking my questions.
Just first of all of the guidance can you walk us through the buildup there should we roll on that second quarter, ASP through and and anything of note on the volume side and then.
Youre not guiding the contract revenue, but some comments up there on the prepared remarks, so any color on how we should be thinking about that would be great.
Yes, so regarding ASP, we continue to focus on the main drivers of ASP growth, which our sales mix broader payer coverage success with the appeals and generation of additional data and we're seeing improvement on those fronts, we do need more historical historical experience on appeals to better project the future ASP growth.
Like I said, we do believe that the NCI Skim guidelines Trust and Optum studies will help with these fronts. So we do expect asps to rise over time, though it will likely fluctuate and we can't really guarantee that theres going to be of linear build the contracted payers again from can sometimes change documentation requirements for processing claims which could.
The short term growth in Asps.
But again over time, we do expect them to go up so it could be lumpy and so instead of assuming the same quarter over quarter growth. That's an area, where we tend to be a little bit more cautious because it is very hard to predict regarding sample volumes again. This that's probably in the area, where it could be more of a linear type of growth pattern upward.
As we hire the new sales force members again, we've mentioned that it does take somewhere between 9% and 15 months for a sales rep to of new sales rep to ramp up the productivity levels of historical sales reps and we do believe that ramp period is delayed a little of it because of the pandemic. They don't have the repetition that they're used to seeing.
But regardless of that we would expect the step function of those samples over Q3, and Q4 to be a little bit more linear.
And then in terms of contract revenue again, yes. It continues to be highly variable and if you look into prior periods, where there's like large.
Spikes up it's usually when there's a large study thats being completed of the extraction work happens and so those are very kind of lumpy type of things, which all of that efforts have really been.
Delayed or pushed around pushed out because of the pandemic.
As John mentioned on prepared remarks again, we are starting to see some activity pick up in terms of new contracts, but it's very hard to predict on contract revenue just because it's outside of our control, it's totally up to the pharmaceutical partners and their clinical trial progress.
Got it that's all really helpful. Thank you.
And then just 1 more on that can I ask about 'twenty 2 guidance here, it's too early but conceptually how should we think about the trajectory of revenues over the next sort of year or 2 versus the low to mid single digits that we've seen per quarter I.
I guess really trying to get at when should we start to expect.
To see some sort of an inflection here.
Thank you.
Sure well so when we talk about the plan to hire the sales force and again, we expect to have all of them hired by the end of <unk>.
Q4 <unk>.
And again with the ramp period, right, that's where we would expect to have starting to exceed the hockey stick of acceleration of growth once those new reps can ramp up fully and then that will drive the volume increases and in terms of Asps again those are.
The hardest question to ask because a lot of the stuff is out of our control in terms of when new payers come on board.
But that's where we are focusing our efforts to make sure we can drive adoption and improvements to pricing as much as possible. So payer mix sample volume mix will help ahead of getting additional new contracts and then the all the efforts with the appeals that we've been working on so again, we don't have a ton of data right yet.
With at least appealing in terms of MCC and guidelines, but that's where we would hope that once we start getting some of the coverage. We will have a better idea of how the ASP feature luxury lays out which feeds into the overall revenue growth.
Great. Thanks, guys.
Sure.
Yes.
Sure.
Your next question comes from the line of Doug Schenkel from Cowen Your line is open.
Hi, Good afternoon. This is Kyle on for Doug just a question here you mentioned in your prepared remarks that you had which seems to make progress with some smart payors and discussions with national payers continue in your view is the broader goal of achieving 1 national payer the sheer still achievable.
That's our goal and we think it is achievable and we're working hard to to reach that goal and we have a lot of activity as we talked about.
We are getting the trust paper published.
Some folks have been looking at debt and been asking for that the often day to be published we think our other pieces of information, but that is that's the goal and that's what we're working on.
Thank you and maybe just 1 more on the telehealth solution is there any sort of data you can point to for any meaningful volume set have been driven by that thus far or.
Starting on the state of there yet.
It's only been live really for.
Weaker a little less than a week.
We are seeing activity in terms of people accessing the site and downloading the app, but.
It's there is no anything meaningful there just yet I think this is a process that is going to take some time as we talked about in the past, it's not like flipping on a light switch we really have to understand how we need the market the product both from our own internal DTC efforts, but also through partnering with other virtual care of companies and we also have to roll it out to additional state.
So those things are going to take some time and it's really of long term effort.
To drive that as part of our overall strategy to democratize dermatology care.
But we're excited about it we think that's where the marketplace is heading and now we're up and running and then we'll be able to grow that that opportunity over time.
Your next question comes from the line of Kevin <unk> from Oppenheimer. Your line is open.
Hey, great. Thanks for taking my questions maybe on.
Following up on the.
Total health opportunity.
Assuming that the platform gets up and running.
There is the level of demand from the consumer perspective.
When you look at sort of some of the existing contracts of coverage decisions.
Do you need to go back to sort of revisit any of those actually get.
For the user of your paid.
The under those and just kind of how from a are there any unique any of the prior authorizations or other elements that come into play.
As we begin to think about.
Hopefully some broader adoption of hundreds of technology.
The requirement for our tests from a payer perspective as ordered by practicing clinician and 1 that has some experience in assessing pigmented lesions and we of dermatologists that are assessing those lesions. So we don't expect that debt.
Going to impact the payment situation around those tests on a test is ordered to the extent there might be some prior authorizations, where the particular payer that can still occur of a test is ordered through that platform. So.
The test is going to be prescribed by a doctor of upon review of the Legion as it's got to meet the.
Requirements that shouldn't be.
An issue.
We have not.
We don't expect anything there.
And then as the fall off of 1 separate question as we think about the rollout illuminated the carcinoma that telemedicine platform.
A more meaningful piece of the go to market strategy for those 2 products are or should we think about the relative emphasis.
In the field sales force are modest in the emphasis being kind of similar between.
During the tech melanoma.
Client programs.
Well I think there is an opportunity for certainly the carcinoma to be deployed into our telemedicine channel and.
And that's partly why we're.
We want to get the the groundwork laid for that that particular channel. So aluminate is going to be similar in the sense. It is.
Requires of direct to consumer marketing effort and so I think there are going to be synergies between what we do in terms of marketing for the illuminate with both the telehealth and even with any of the of our other products. So that's why we were.
We're trying to create the vertical of skin cancer products, because we do see synergies in terms of all of our marketing activities across all of these different channels with all of these different product lines because they are all skin cancer related so.
We will deploy wherever we can through that telemedicine channel. We will also deploy wherever we can through our professional sales channel.
And we want to we want to leverage all of the that infrastructure was built on all of the synergies we can achieve through all of these these efforts.
And then just lastly for me today.
In.
As we continue to see some really nice uptake with the current technology.
Yes, as you identify sort of target pharmacology profile of that.
Tend to be some of your you are on back.
The active users of debt.
The kind of more of the salt practitioner of member of the group practice or other features that <unk> been able to identify other associated with it.
Yes, not just early adoption.
Translating the higher volumes of regular use in their practice.
Not a lot of changes from what we've talked about before that it tends to be the smaller independent practices. At this time for for fewer dermatologist in a in a practice they tend to be a little more suburban.
They also tend to be female dermatologists.
Yeah.
But I think that that's going to change right. Our strategy to go abroad as we expand the sales team, where we're going to we're going to go broadly to a lot of terms and we're going to be just asking for.
Potentially less incremental utilization for any given account.
That dynamic is going to change a little bit, but that's where we are now with our in our strategy, where we go deep is that tends to be the profile of that pops out.
Thanks for taking my questions.
Once again to ask the question you will need the press Star then the number 1 on your Touchtone telephone.
Your next question comes from the line of how much momentum from Lake Street Capital. Your line is open.
Great. Thanks for taking my questions and congrats on the quarter. Kevin you mentioned in your prepared comments that you would have the expanded sales team hired by the fourth quarter could you give us a sense of where you are in terms of that expansion as we sit today.
Yes, we've hired a few additional reps since the end of.
Q2, and as we mentioned to re Bassi as our VP of sales started I think about a month ago now and so we've already specced out a lot of the all of the territories went on hire we've posted all of the physicians Ray again has a broad network of dermatology sales professionals from his prior experience.
And so I believe he's already got a good number of people that were targeting to bring over and we're already getting responses from our posted job posting so.
Probably at about $43.40 for right now in terms of actual sales reps that's up from 40 at the end of.
The last quarter, and and again, we would plan to get as many as we can in the coming weeks and so even though our target to finish everything is the fourth quarter. We do hope we can get everything done even quicker than that.
Got it and then a question on the the numbers of primary care physicians that you identified. So there was 35000 that have claims database or profile of that resemble terms, but then there was a separate group of.
The primary care physicians that are in in larger networks is there is there overlap between those 2 numbers of those entirely separate target audience is for you.
Yes, it was.
Yes.
There could be some overlap, but we've tried to filter of little bit for that but but we tried to find pri.
Primary care doctors that we could call on service outside of the the activity we're doing with these networks and that's where those numbers from the look alike.
On.
Analysis come from so those would be actually that 5000 group debt that group of 5000 doctors. The practice that have practiced claims volumes that are similar to an average dermatology practice.
The ones, we would want to call on specifically with the with a.
With us of direct sales calls because it would be outside of sort of the activity. We have within some of these network opportunities.
Got it and then just 1 quick final 1 on your order forms as I understand it the doctor has the proactively check the Turk box, how often is that happening or have you.
The figure that in such a way that towards the automatically included how is that working.
We continue to rollout the turn I think more than half of the tests for receiving now have the <unk> gene added to it. So we're not fully deployed there, but that's growing and.
And I suspect.
I suspect that's going to be of problem to continue to grow that it just takes some time to get.
The things changed over at the Doctor's office with reduced access et cetera.
And get the some of the training done with the sites about checking the box, but that continues to grow.
Awesome. Thanks for taking the question guys.
Your next question comes from the line of Alex Nowak from Craig Hallum. Your line is open.
Hey, great. Good afternoon, everyone jumping around between a few calls here, but I was hoping you could expand on the sales and marketing changes that youre, making not only putting more feet on the street, but really what else is being done to raise awareness for the BLA tests either from a rebranding initiative or a different marketing are doing out there. What are you doing from the medical liaison side to help us.
The doctor funnel to expand and go deeper into the accounts.
And then I guess the final question would really be what is the major pushback from the Doc that has used the BLA, maybe once or twice what is the pushback Ben to get them to use it more frequently.
Alright.
Okay.
So theres a lot of activity going on the marketing side, we've been scaling up that now I think we have 5 MSL now strategically placed around the country. They are really in charge of of.
Leading that coal activity in the more peer to peer selling in those regions.
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The most of those folks have come on and sort of the last 6 months. So they are really kind of getting up to speed. The terrific candidates a lot of them have of genomics background and have advanced degrees of the.
They bring a lot of credibility in terms of managing all of that coal activity in the peer to peer selling.
Todd has a lot of initiatives on ongoing.
Ongoing.
The 2.
In terms of increasing our presence not only at societies and local meetings.
He has been working on improving the messaging about how the product should be used and the.
The highlighting the accuracy of the whole position that we talk about so that we're not really necessarily competing with the with the biopsy.
So.
There's a tremendous amount of activity going on all of the strategic communications, we've got a person there thats now working on all of the strategic communications that go out to the doctors and then the digital.
Find the Doctor volume.
I think doubled since some of the numbers we've talked about in the early early.
Quarters of the year, we've gone I think from about 7000 and find the doctors per month to around 15000.
Per month, so we're really starting to refine that digital marketing effort and we have more evidence showing that that does translate into.
Some sample volume by doctors that are on that find the doctor search are growing faster than those that are not we are a big effort also to continue to add doctors to that find the doctor search.
Now we have to go on they have to sign a contract to be on that and thats been a little slower because of the access to the office, but we we've been adding more to that find a doctor platform.
Yeah.
So I mean, there's just a lot of marketing activity is growing and that's been part of our scale up Brian. It was another thing we had kind of pause it really hadn't invested fully in the marketing the way, we should have but thats really happening now and theres been a tremendous amount of activity there.
In terms of how how do we of doctors from the lower utilization buckets of the higher utilization buckets.
A couple of things there 1 is dermatology as the frequency call point right. We're trying to change their habits. They trained a certain way. It's the case with any dermatology product that you've got to have high touch activity with them and again thats been constrained over time.
Because of the pandemic and we saw it getting better and we were very excited and we like some of the follow through we saw from June into July, but we know the choppiness is kind of come back in with the with the rise in the pandemic, but.
We think that that's an important piece to drive that utilization is just that frequency of calls and we're doing everything we can to get the frequency that we.
That we need the other thing we always talk about as they do for have an aha moment, where where the.
The anecdote I gave they find the melanoma that was unexpected particularly of the lesion that they wont kind of biopsy that day and that is often the catalyst and that's probably the biggest catalyst and we've tried to rollout of various things to get people through that catalyst point more quickly like the road. The 100 recall that again requires the access to the dermatologist office, but.
We think that's going to be successful campaign.
When we can get more normal access to the Doctor's office. So those are the things we do to drive that volume.
The last thing I'll, just say on this as debt as we go abroad.
The and we and we expand the sales team, we're not going to be relying as much on the heavy volume users. The idea to go broad as we can we can get the volume on the growth in that inflection point that Kevin talked about earlier by having that debt even more modest average utilization rates and that's what we've always been trying to get us at Broadmoor.
Launch and Thats, where were going so I think even when we look at the number of users. The average number of samples that users are doing today across all of our users as.
As we go to the broad strategy, that's going to help drive that sample volume growth that we're looking for and that everybody is looking for the debt inflection point, yes, and we've mentioned before to where theres, probably 20% to 25% of the surgical biopsies right now where dermatologists have no pushback or concerns at all to integrate our.
Start using our technology does our cosmetically sensitive areas people, who are anti coagulated people of the issues with wound healing and so that's again the 1 million tests per year, if we get broad access across all dermatologists and all of those procedures. So I think that's part of what we're trying to do here is again, making sure of.
We can get to that broad access across all of the dermatology targets that we're looking at and as John said, they will get to that Aha moment, eventually where the performance of the test really kicks in and then they will start.
They become true believers and really start ramping up their utilization.
Really appreciate the China very helpful and maybe 1 area, where you don't have the kind of patients with biopsy and no pre conceived notion is on the PCP route so maybe expand on what youre hearing from them. What the initial response has been and what the sort of of the volume uptick there is.
So we haven't we don't have a.
We obviously have some primary care users and they tend to be fairly robust users and that's why we wanted to build on that.
We were all pleasantly surprised by some of the qualitative market research, particularly among family physicians and their interest in even the melanoma test was very clear was their interest in a non melanoma skin cancer test, we're doing more quantitative research around that to understand expected volumes in any kind of given practice.
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What the effort might have to look like for us to really get more broadly after primary care.
Selling directly.
I think again, 1 of our greatest opportunities to get going in primary care as 2 of these network plays because that's the aggregated group of clinicians, yes, the cycle to get those deals closed is longer and it's more complicated, but youre not having to hire hundreds of reps to call on these.
Doctors individually. These are aggregated groups of primary care physicians and net.
And that's how we're leveraging that they're already in 1 location and as we've talked about we have some pilots going on we're progressing through the process with a handful of these networks and.
I think we're going to that's going to start to bear some fruit in the coming quarters.
Alright I appreciate it thank you.
Ladies and gentlemen. This concludes today's conference. Thank you for your participation and have a wonderful day you may all disconnect.
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