Q3 2021 Veracyte Inc Earnings Call
[music].
Good afternoon, ladies and gentlemen, and welcome to <unk> third quarter 2021 financial results Conference call.
As a reminder, today's conference call is being recorded.
Now I'd like to turn the conference over to Tracy Morris <unk>, Vice President of corporate Communications and Investor Relations you may begin.
Thank you Erika and good afternoon, everyone and thanks for joining us today for a discussion of our third quarter 2021 financial results with me today are Marc Stapley, Verisign, Chief Executive Officer, and Rebecca Chambers, our Chief Financial Officer.
<unk> issued a press release earlier earlier this afternoon detailing our third quarter financial results. This news release, along with the business and financial presentation is available in the Investor Relations section of our website at <unk> Dot com.
Before we begin I'd like to remind you that various statements that we may make during this call will include forward looking statements as defined under applicable securities laws forward looking statements are subject to risks and uncertainties and the company can give no assurance that they will prove to be correct. Further we are not under any obligation to provide further updates on our business trends where our perform.
During the quarter to better understand the risks and uncertainties that could cause actual results to differ we refer you to the documents <unk> filed with the Securities and Exchange Commission, including various sites. Most recent forms 10-Q, and 10-K I will now turn the call over to Marc Stapley parasite CEO.
Thanks, Tracey and thanks, everyone for joining us today, it's a pleasure to be here to provide an update we are pleased with our performance in the third quarter as we delivered revenue of $60 4 million.
Representing growth of 94% over the prior year, despite some COVID-19 related headwinds.
We have also executed on some key milestones since our last update significantly advancing our strategy.
In August we completed the acquisition of Halo Dx, securing our future to develop and manufacture our own test kits for the <unk> system.
This will provide physicians and patients all around the world with access to a growing menu of tests, which we are in the process of transitioning to the instrument.
Prior to considering the transfer of our tests onto the encounter.
Relative ldc's for the U S market and one of our clear labs, we pursue reimbursement via our process of evidenced development publications guideline inclusion and Kols adoption.
The design from the ground up to answer very specific clinical unmet needs, while fitting into the physician's workflow and they leverage not only our deep scientific expertise and whole transcriptome genomics, but also now our expertise in immuno oncology a rapidly growing field.
With the addition of Halo Dx, we now address eight of the top 10 cancers in the U S by indication.
Our expanding menu of tests will improve outcomes for patients all over the world at every step of their journey by for example, rolling out unnecessary surgeries, providing diagnostic clarity, helping physicians with treatment decisions, while helping to detect cancer early when it can be successfully treated.
To further assist physicians with the treatment of patients a menu of tests is bolstered by our partnerships with biopharma companies to whom we provide our extensive genomic and clinical data and services to assist in the development of therapies and companion diagnostics.
Turning now to the quarterly results as always ill discuss our progress in the context of our strategic drivers of commercial growth evidenced development pipeline advancement and global expansion.
Getting with commercial growth.
The decipher prostate genomic classifier continued to gain strong traction in the market further fueled by ongoing sales team expansion.
You will recall that our prostate cancer business is less impacted by COVID-19, because many of our urologist customers practicing community settings as opposed to hospitals and community settings in general have been more accessible to patients and our sales reps.
We expanded coverage for decipher prostate, making the test a covered benefit for an additional 5 million plan participants and bringing the total number of covered lives to more than 150 million people nationally in the U S.
We also signed a new contract with a large blues plan and the national government payer and.
In September the National comprehensive cancer network or <unk> CCN published its 2022 guidelines, which specifically recommend treatment decisions based upon the patient's decipher post radical prostatectomy or a peaceful policies. The only genomic prostate cancer test with this level of recommendation, which we believe will help to <unk>.
Further drive adoption and reimbursement.
Our afirma genomic sequencing classifier or GSC continues to be the new standard of care in fibroid cancer diagnosis.
Afirma GSC revenue and volume increased over prior year, although both were slightly down sequentially as we experienced some seasonality with higher than typical rates of vacations hospital staffing shortages and challenges from the COVID-19 Delta variant.
Approximately 70% of our Afirma samples come from procedures performed in a hospital setting which have tended to be more impacted by COVID-19 limiting biopsy procedures and sales rep access, particularly in those areas, where the case count and hospitalizations have been high.
We were also pleased to welcome Dr. Joshua culprit on new medical director for Endocrinology.
Copper was an investigator on our original clinical utility study for the Afirma test and he will play a key role in further establishing the test the standards of care and guiding our ongoing market development work in thyroid cancer.
Our pulmonology business continued to be impacted by Covid as we saw in prior quarters.
This stems from the ongoing reduction in the number of bronchoscopy is the procedure used to collect samples for both Apis up to GSE and Nvidia tests.
Despite limited access we continue to build awareness of our pulmonology products by leveraging digital marketing to educate our customers and targets with Kols lead online educational events peer to peer engagement tools and other digital communications.
Our prosigna breast cancer business gained momentum in Europe, where our ability to report molecular subtype information and enable the barges to perform the test locally gives us key competitive advantages.
Our next strategic growth drivers evidenced development.
We further boosted our library of clinical evidence across our Urologic cancer, Pulmonology and endocrinology products with two published studies and six abstracts of major medical conferences, which we believe will help facilitate adoption and reimbursement for our tests.
At the chest annual meeting in October we unveiled expanded clinical validation data for offset the nasal swab, which further reinforced the test's ability to help physicians assess lung cancer risk in patients with lung nodules.
The findings also showed that all tests delivered strong clinical performance across different nodule sizes in Kansas stages and for patients who have already had other cancers.
Importantly, the data showed that when nasal swab identifies patients as low risk for cancer sensitivity was very high 97%, meaning that it will miss very few cancers.
Firstly, when the test identifies patients with high risk for cancer.
<unk> was also high 92%, meaning that it can help ensure that patients who are more likely to have lung cancer can be quickly guided to further diagnostic procedures and treatments if needed.
Also at the chest meeting researches shared results of a new decision impact study for Nvidia for interstitial lung diseases, including idiopathic pulmonary fibrosis or IPF.
The findings showed that use of the test increased physician diagnosis of IPF and that when they did diagnosis of the disease. They were more confident in their decision and also more likely to initiate IPF therapy.
Accurate timely diagnosis is important for IPF patients because it can enable them to begin treatment with anti fibrotic that can slow progression of their disease.
Further data shows that immunosuppressive agents, which are frequently used to treat many interstitial lung diseases can actually be harmful to patients with IPF.
Data from two important studies for our prostate test with shared at the American Society for radiation oncology or Astro annual meeting in October.
The first study, which examined our decipher prostate test was the first to validate the use of any genomic test in a prospective randomized cohort of prostate cancer patients with long term follow up in this case, a median of 11 years.
Results demonstrated that the cycle prostate test scores are independently associated with just the Ms. Stacey <unk>.
Allstate cancer specific mortality and overall survival in patients with clinically high risk prostate cancer.
The findings suggest the use of the tests can help identify patients who may require treatment intensification beyond standard of care therapy.
Additionally, findings from a multicenter randomized phase III trial presented at Astro suggested to decipher prostate RP test can guide timing and intensity of treatment for men experiencing prostate cancer progression following surgery.
But the decipher bladder test also that helps physicians manage treatment decisions for patients with bladder cancer, New data are published in the journal of urology showing that the test accurately identified patients, whose bladder tumors will most likely to respond to chemotherapy prior to radical cystectomy.
These findings suggest that a test could ultimately help physicians optimize treatment planning for their patients with bladder cancer based upon their tumor subtype biology.
Until now there has been no reliable way for physicians to distinguish these cancer types, resulting in overuse of neo adjuvant chemotherapy with little benefit for many patients.
Italy results of our long term clinical utility study for the Afirma GSC were published in the journal will be endocrine Society.
These findings showed that use of the Afirma GSC resulted in 41% fewer surgeries among patients, whose thyroid nodule fine needle aspiration results when determinant compared to patients who had no molecular testing.
Additionally, when surgery was performed patients deemed suspicious for cancer by the Afirma GSC were nearly twice as likely to have cancer compared to those who had no molecular testing.
Turning to pipeline advancement, which is our third strategic growth driver. We have recently achieved a number of key milestones. We were delighted to launch help us up to nasal swab test for early lung cancer risk assessment in October.
We believe the clinical need for this test is significant because physicians today lack objective accurate tools to determine which patients with lung nodules are likely benign and can therefore avoid unnecessary diagnostic procedures in which patients likely have cancer and should be directed to further diagnostic workup and treatment if needed.
With 15 million Americans currently eligible for annual lung cancer screening at $1 6 million lung nodules found incidentally.
The ability to reliably determine next steps becomes increasingly important for patients physicians and the health care system with.
With the noninvasive perceptive nasal swab, we believe that more lung cancers will be detected early when they can be successfully treated.
We are making the percent to nasal swab test available to a limited number of sites since we assembled a clinical utility evidence to help secure reimbursement working up to an initial 50 sites that we would plan to engage in a clinical utility study.
Welcome cassette to genomic countless genomic profiling tests for patients with confirmed lung cancer is progressing.
We now expect to launch the test in our CLIA lab in early 2020, twos and still anticipate six to 12 months post launch to receive reimbursement.
The test will round out our portfolio of three products, serving the lung cancer patients from early detection to diagnosis and treatment.
Another key product launch was I'll decipher bladder test.
Our sales team has begun offering the test to our urology customers. The same physicians that we serve with our decipher prostate test.
The launch will be steady and measured to ensure that we maximize the long term potential of this test, which could help in the treatment of up to 80000 patients a year without disrupting our growing prostate business.
As I mentioned earlier, we completed our acquisition of Halo Dx on August 2nd marking a key step in our strategic plan for global expansion.
Delighted to welcome the company's talented team to verified and four of its leaders to my executive team.
Namely basketball fab as EVP of immuno oncology and <unk> operations.
Stefan de Bono as SVP and general manager of immuno Skoal and international diagnostic operations <unk> as SVP and general manager of our new Biopharma Bu and Fabienne that meet as SVP global quality and regulatory affairs.
Our combined team is already collaborating on the move of our IBD test manufacturing from nano string to our facility in France.
This transition, which we estimate will take 24 months will give us the end to end control over our IBD product business.
Parallel we plan to report additional tests, including Nvidia decipher prostate and the perception of nasal swap to the encounter analysis system. So that we can make them available to physicians and their patients in global markets.
We have made great progress in finalizing the plans for these development projects, which will be an exciting collaboration between our experienced R&D team in South San Francisco, San Diego must say.
Look forward to updating you on the timing in due course.
The <unk> acquisition also expands our scientific expertise into the emerging area of immuno oncology offering a range of products and services for clinicians and Biopharma partners that leverage novel insights into the tumor microenvironment.
The impressive immuno ground platform gives all Biopharma partners, a multimodal 360 degree biomarker analysis of the tumor site, helping them to understand and predict patient response to immunotherapy with the potential to help further inform patient care from treatment decisions to risk of recurrence.
Additionally, the acquisition has brought US theme unit school colon cancer Test. This test is intended to guide treatment decision, making by giving physicians, a clear and actionable measurement of how an individual patient's immune system is responding to that cancer.
The integration has gone extremely well so far I'd like to thank Bonnie and the Workstream leaders and teams from both <unk> and Halo Dx, who have worked tirelessly to ensure that we accomplished our integration goals, while maintaining a strong focus on their respective businesses.
In summary, we had a strong quarter in which we delivered solid revenue growth year over year and positioned our test for further physician adoption and reimbursement. We also made significant progress in transforming the company for long term growth through the launches of key new products and through the successful acquisition of Halo Dx to achieve a global <unk>.
<unk> vision.
I'll now turn the call over to Rebecca to give a detailed overview of our results. Thanks, Mark as Mark mentioned, we are pleased with our third quarter performance our revenue for the quarter was $64 million, an increase of 94% over prior year and included a $4 $7 million revenue contribution from Helio Dx or <unk>.
Results were driven largely by outstanding commercial execution in our urology business.
Testing revenue equaled $59 million with an ASP of approximately $2700 per test afirma enthusiasts and for exempted GSE were over 11000 tests in total an increase of 10% compared to the third quarter of 2020, while decipher contributed nearly 7500 tests in the quarter.
Product revenue contributed $3 million or 45% growth year over year with Prosigna volume of around 2150 tests.
Biopharmaceutical and other revenue equaled $6 $5 million, including Halo Dx.
Testing gross margin was 68% and our product gross margin was 50% both of which were slightly lower sequentially.
Our pharmaceutical and other gross margin was 37% lower sequentially, primarily due to a purchase price accounting adjustment to the inventory held by Halo Dx.
In total gross margin was 64% a decrease of 400 basis points sequentially.
Operating expenses, excluding the cost of revenue increased $10 3 million sequentially to $55 4 million.
Of the sequential increase $7 5 million was related to stock based compensation expense intangible asset amortization and acquisition cost attributable to the Helio Dx acquisition.
Broken down by category the $55 4 million of operating expenses are as follows R&D expense grew $1 8 million to $8 million driven primarily by the two month impact of the Helio Dx R&D organization.
Sales and marketing expenses grew $2 million to approximately $21 $7 million again, driven primarily by the two month impact of Helio Dx.
G&A expenses were $20 $7 million, including approximately $5 8 million of acquisition related expenses.
Total operating expense included $8 million of stock based compensation expense.
We recorded a net loss of $14 1 million, including $6 3 million a net loss from Helio Dx and $5 8 million of acquisition related expenses net cash used in operating expense activity and operating activities was $1 $4 million and we ended the quarter with $168 million of cash cash.
<unk> and short term investments.
Turning now to our 2021 guidance.
Given the potential for volatility created by vaccine mandates SaaS shortages COVID-19 and supply chain challenges, we are maintaining our previous guidance range, while adding the contribution from <unk>. As a result, we are now projecting revenue of $210 million to $218 million, including <unk>.
<unk> revenue of approximately $10 million.
In all we are pleased with the quarter and remain confident in our position and ability to execute on our plans as we build on our success through 2021 and beyond. Thank you for your time I will now turn the call back to Tracy.
Thank you Rebecca.
I'll now go into the Q&A section of the call and joining US will also be Dr. Giulia Kennedy, our Chief Scientific Officer, and Chief Medical Officer, and Dr. Tina Nova General manager of thyroid and Urologic cancers.
Peter Please open the lines.
The floor is now open for questions at this time I would like to inform everyone in order to ask a question. Please press star one on your telephone we'll pause for just a moment to compile the Q&A roster.
Yes.
Your first question comes from the line of Puneet spilled out from SBB Leerink. Your line is open.
Yeah, Hi, Mark Thanks for taking the question.
The first one is really on the guide I just wanted to clarify the $10 million contribution from Halo Dx when the acquisition happened.
If I recall correctly.
It's growing at a clip rate of about 25% or so.
Just wondering if that is what you're contemplating this year or if there is any change from that in the fourth quarter and then if we look out to 2022 is there any.
Is there any difference versus that.
Prior expectation.
Yeah. Thanks, Puneet I appreciate the question on that.
You do the math, we had <unk> in our numbers for essentially two months of the quarter in Q3, and our guide for Q4 contemplates a couple of things firstly contemplate.
The same kind of volatility that we and others are seeing around the quarter in general related to Covid first and second order effects effects on.
Due to the Delta area for example on the supply chain potentially.
Add on staffing shortages and other so that's one element and the other is.
While the integration is going exceptionally well I have to say.
I've done I've been involved in many acquisitions in the past and they always have some distraction for the business, we've been able to write that fairly well, so far but I want to make sure in our guidance, we give ourselves a little bit of room for that and then kind of more specific on that point.
One of the things that the <unk> team on the Marseille team is very focused on right now is working across with our R&D teams in San Diego and South San Francisco to develop our products for the <unk> platform and that's the same team the Carousel third party IBD work.
And so while that team is able to juggle those different things again I want to make sure we've got room in.
<unk> forecast for that bear in mind, and remember we acquired Halo Dx primarily for the manufacturing capability. So that that is our priority number one is that transition. Meanwhile, in addition to that we got some fantastic assets and in the IBD services business and the Biopharma business on the immuno ground plan.
From an immuno school, so we're going to we're going to benefit from those over the longer term, but right now short term priorities manufacturing.
<unk>.
And the only thing I would add to that puneet is that doesn't extend into 2022 per Mark's comments, our priority will be in the aisle.
<unk> business as well as the manufacturing.
Contract manufacturing for IBD.
Okay.
Great and then in terms of.
Thank you alluded to this somewhat earlier in terms of the.
Sluggishness that you are seeing obviously impacted on the pharma end percept does well with hospitals access. So maybe just could you remind us where you stand today.
Here in November in terms of the Rep access what are you seeing in terms of both the thyroid and person sales reps and the prostate in person sales reps.
Any indication that that is.
On a steady improvement versus let's say September or so.
Yes, I mean, putting it out.
I will say, there's a lot of.
Volatility business by business on a month by month. So let me go through it I would say timing wise, we did see particularly a greater effect than we anticipated in the middle of the quarter things.
<unk> definitely improved towards the end of the quarter, but October has gotten off to a start is more similar to the beginning of the quarter. Then the end so far if you go business by business, though.
We continue to see.
Across the Pulmonology business, which is the most impacted problem.
Problems with access and reduce number of procedures.
Again these are hospital based setting 70% or so and so you really do more no more than that you really do see an impact in pulmonology and thats not gotten better recently and we're not anticipating much change there going forward right now.
Afirma did get impacted and we talked about that and anticipated that might be the case because of farmer itself is 70% or so in the hospital setting.
And then in those areas that were particularly impacted by Covid Delta regionally, we did see the most impact on both sales rep access and patient medicine.
Procedures, we also saw an impact in staffing shortages.
Which are across the board, but we definitely saw that happened in Oklahoma.
That's more general to the hospitals and that's one thing that we think could continue and might be exacerbated by vaccine mandates and so on so one of the things we remain cautious about is the staffing situation that all customers and then moving to decipher the site, that's been particularly resilient during COVID-19 too.
<unk> kind of case counts and so far to most geographic impacts I mean, theres not one zero impact.
Relatively.
Negligible when you look at the growth of the business. It is a growing business.
However, I think staffing shortages would be something to watch for that business as well going forward. So we're continuing to remain cautious about that.
Or anything you want to add.
No. Thank you you've covered it.
Got it and just last one if I could squeeze one nasal swab.
That's obviously an important product for you.
As you stand today given the.
Early work Youre doing with the sites could you just remind us.
What sort of reimbursement that we should imagine for this product and in terms of the datasets do you have enough data at this point to move towards the reimbursement of the clinical utility that youre working on with these early sites is going to be.
Included into that for for the reimbursement. Thank you. Thanks for taking my questions.
Thanks, I appreciate it really.
A really important product nasal swab is.
Incredible progress and again as I mentioned this quarter we.
We launched the product.
Limited sites and we're continuing to grow those sites now in terms of the data that we have.
We announced new data this quarter that enhance the clinical validity data of the test.
We can spend more time on that if people want to.
But in terms of clinical validity, we've got some fantastic data for the.
For the nasal swab. The next step is the clinical utility data through those sites and thats going to take time.
Lots of people are talking about it and it's very real for many we've been able to throughout covered actually we've been able to write that out very well with our suppliers and to.
Made a concerted effort to talk to many of our largest suppliers and see what they are seeing and hearing right now because one thing you do have to worry about is the second and third order effects on them and their supplier. So far so good doesn't mean that things couldn't happen, but so far we haven't had too many problems.
Every now and then.
Issues, but we're able to resolve them fairly quickly with our vendors and partners, who collectively I think of doing an exceptional job of managing through this but again remaining cautious about it it's very real.
Could happen and we're watching it closely and to some extent are anticipating beyond road.
Speed bump hearing that but so far nothing major to report.
Okay.
And then.
An update on that rolled out a nasal swab and a number of sites we have rolled it out so far.
Early feedback on the on the cost of higher so far.
Yeah again, it's really early enough to get in terms of feedback we engaged with a lot of key opinion leaders. So we got a lot of feedback even before we launched the product from the site launching nasal swab in the sights now is giving us additional feedback on the actual utility with real patients and we started to launch it as I mentioned.
We've got site already in place and we're going to drive that up to something up to 50 clinical utility sites I mean that that's a number we could flex either way, but right now that would be more aggressive plan to achieve.
The acceleration and patient numbers that we want to access we've already gotten in patient samples and so it's great to see things are happening and as a result of even those first patient samples we've gotten some feedback on utilities abuse and so on so nothing nothing new to report yet I think it's a little.
The days as we get through the next quarter will certainly have a lot more experience and possibly something more to shell in the next call.
Great. Thank you so much.
Thank you. Thank you.
Your next question comes from the line isn't Mad scientist from Goldman Sachs Your line or something.
Hi, Mark coming back and thanks for taking my questions I appreciate it.
Maybe just Mark first one big picture question, just giving all the integration just going on and and.
And the competitive nature of the diagnostic she'll I'm just wondering if you get an update on the commercial field force you have now and.
Any issues or any positives from the integration I'm sure. Some of those have come with their own commercial forces, but I'm. Just wondering how you feel in terms of your right size for the commercial capabilities that you have currently.
Yeah. That's a great question. Thanks for asking that we have a really strong sales team and we've been bolstering that team in many areas if I take each one and timing decipher is adding sales reps.
A nice steady clip again, we can talk about this if you'd like to weave.
Congo too fast because you disrupt it takes a while to get the sales reps trained and ready to go in.
And so.
An optimal level and we think we've hit that optimal level in fact, if anything we've accelerated died in 19, if you want to comment on the sales reps to decipher in particular I think we're we're very picky about who we hire if we really have a very extensive interview process until we really looking for the best and also.
That's exactly what Mark said, you don't want to bring too many on too quickly because you've got to keep the balance at the lab and billing and customer service Orange Checkbook here rats and.
I feel like we're we have accelerated over what we had originally planned by about three reps great.
Great. Thanks, Tina and then a farmer is a very experienced sales team that has been with us for awhile and again, we've continued to build salesforce.
Part of our next strategy for 2022 is figuring out how many more sales reps, we need to add in that business to go after what is still a significant remaining white space. There are not enough people, who are getting the afirma test today, while patients need access which means potentially more.
Sales reps for us some more territory.
Pulmonology, because we have a broad portfolio of products and the one that has the most significant volume is going to be the nasal swab. We have built a meaningful sales team there and continue to focus on the commercial launch of our products over the next couple of years. So our strategy is a little further.
Looking for.
For for ensuring the that sales team continues to grow ready.
Ready for the launch and the volumes that we're likely to get so we'll make sure we have enough salespeople ready to meet the demand for that product, which could grow significantly.
And our other businesses Prosigna.
So is growing nicely in Europe, and we have a really good sales team over there and in.
And the key countries, we have country managers that are leading the charge as well and we got some strong reimbursement capabilities market access.
Teams over there and then through the Halo acquisition, we acquired some really good capabilities in IBD services Biopharma immuno school. So each of those businesses comes with sales and business development capabilities.
Leveraging across.
Some cases other policy verified as well.
Great. Thanks, It's really helpful color appreciate it Mark and then Rebecca just one quick one for you on on the gross margin started when you when you exclude the Hell Dx, who is an increase year over year just.
We'd love to kind of hear your points and take some what's going to that in any kind of view.
Views you having to the end of the year and the gross margin side, whether it's on the ASP the Cogs part of it. Thanks.
Happy to do so in the quarter. We were as you mentioned that we were impacted by a purchase price accounting adjustment to the Helio Dx business, which brought down that gross margin relatively significantly we would expect on a go forward basis that to normalize.
And gross margins on a go forward basis to be in the call at mid ish, 60% range, including the impact of Hayley out, which acts alea would would lend the core business. If you will to be more in the high sixties.
On a go forward basis, I think aspie is relatively stable.
We've seen plus or minus a little bit towards 2700 now for a couple of quarters.
And from a <unk> perspective.
Highly highly tied to volume so assuming volume that's coming through the business. We would we would expect that not to be necessarily a point of conversation. So.
Those I would say where the primary putzing takes our cost of materials isn't necessarily worth even mentioning in terms of volatility at this point in time, obviously inflation is something we're all keeping our eye on but Ah currently not not.
Not impactful.
Great.
Questions you all that part of the second part of your question about integration and integration effects, which I think was just more broadly than commercial just just to make sure I address that the.
The integration Palea, which was a focus for this quarter because decipher gone extremely well previously.
Couldn't have gone better in my opinion I have been through many of these.
One of the smoothest I've ever seen we had a really robust approach driven by collaborative work screams work together from both for our site inhaler, a bunny led the charge and is the leading the charge on that on the program office in many many many things got done whether it be in the branding and communications HR finance.
Obviously, we had to.
The books under a public company structure known a private company structure manufacturing transition clear.
Which you can imagine always has a lot of integration activity to get on every one of those where extremes did an outstanding job and folks worked really hard so I'm very pleased with the outcome in terms of effects and impacts.
Very few.
And really I mean, a few things along the way that we were able to tackle very quickly.
Outstanding results.
Great Great to hear thank you for taking my questions.
Okay.
Your next question comes from the line of Mike Matteson from the <unk> Company. Your line is open.
Yeah. Thanks for taking my questions Uhm, so with the Helio Dx immediate score test.
Is there any plans or ability to.
Leverage that into additional Gi tests or or other types of cancers.
Yes, the great thing about immuno Graham as a platform from which immuno score is derived as one product is it as a platform and it does have applicants applicability to multiple cancer types.
And so anywhere and there are a number wet.
In fact as a good nature paper that covers this where it is most applicable in somewhere it's legal less so but any way that it could be applicable in looking at the human microenvironment in particular and seeing how the individual patient is responding.
As a as a potential application for the product. So yes. It has the potential in terms of how we rolled out out on what the strategic plan is that something that.
We're still working on an basalt that who is leading that across all of.
Crossover to verify now.
For immuno ground.
Okay. Thanks, and then.
The it looks like your Opex was kind of in the low forties. It by strip out the one time or if the opposition related stuff.
That right now with that kind of the runway run right we should expect.
In the near term.
Yeah. Thanks, Thanks for the question.
As in the low thirties, if you strip out stock comp intangibles and acquisition costs. So so I think I think that that's just I think the stock com probably is the difference between your number and my number.
But just that clarification and yes, I think as we go forward I think that's a fair rough estimate obviously ahead of 2022 planning specifically more for the fourth quarter.
Yeah, Okay got it thank you.
Anytime.
Your next question comes from the line of Brian when seen from William putting or your name is open.
Hey, good afternoon. This is griffin entrepreneur, thanks for the questions.
Just a question on lung cancer space, So guard announced plans for that one.
Lung cancer screening assay for smokers pre C. T. Just wanted to get an update on your normal trial and your own pre pre C. T program. There. So I guess a specific or do you have any idea what percentage nodules or discovered incidentally versus as part of a screening program.
Yeah, I mean on the second part of your question first.
There are 15 million people, who are high risk and eligible for screening undercurrent USPS you have tough guy.
All of those $15 million roughly a million are actually undergoing screening on an annual basis and one $6 million of found incidentally, okay. So not as part of a screening regimen and in all cases, so that those kind of confirmed by logo city, which is very sensitive.
<unk> and but.
That's kind of a very high.
False positive rate or number of modules.
Benign and so you need to test like the nasal swab to be able to help them.
Whether those those nodules off and I dunno.
So that's how we think about it the knowable.
Study is going well I mean, not much more to add in terms of the on what we have said publicly about that trial, but enrollments continuing and.
Getting samples in and we're going to be learning a lot from that study. So that's a really important 12 for us.
Certainly helped to open up the markets earlier on in the Cat continuum.
Okay. Thank you.
I should quietly maybe get I'm, sorry, maybe I could just talk about Julia do you have anything to add with respect to noble in particular.
Mm no your comments were spot on it's going very well, we're curling and we hope to gather 9000 patients ultimately and followed followed their course over the next number of years. So it's gonna be a very rich repository for us moving forward, so it's going well.
Excellent thanks for Ya.
Okay. Thank you and then just one on decipher could you just talk a bit more broadly about the drivers there.
Salesforce adds product line extensions and.
And then the coverage wins any idea on the rough magnitude of each of those really trying to just understand how impactful bladder could be in 2022. Thank you.
Yeah, I'll turn it over to Tina.
So as you know, we just started with <unk>.
Ladder and we're very excited to have that out on the market.
The first molecular test, even be offered and flatter and where it's really going to be used the most is in muscle vehicle bladder cancer, where.
A lot of times nowadays treated with chemotherapy prior to removal as the bladder that is this a sector and what they have found that has a lot of patients do not benefit from the chemotherapy treatments. It doesn't actually reduce the size of the tumor and does not help when negotiated surgery and as a matter of fact can be more.
Detrimental to the health of the patient before surgery, it's a very complex surgery. It takes a lot of time it can be anywhere from six to eight hours to actually do this effectively and so therefore, you want to be half the patient in the best help possible.
Most of the patients. The average age is 73, a lot of them are long term smokers and so their health is not good to begin with so I ran in our test and being able to really say, which patients should and should not receive chemotherapy prior to surgery, that's a great advantage to that.
It's the first of its kind.
About 150, surgeons, who really focus I'm doing these surgeries because as I said they are very complex.
This is as they are located in the same offices as our urologist, who are treating prostate cancer. So therefore work at the same place at the same time.
Working with the same stocks.
Stocks and we're using the same salesforce. So we don't have to have a different salesforce because it just fit try them.
And we do have coverage from Medicare.
That it's a little over $3400 for that for Medicare and will actually seen more Medicare patients coming out of bladder. Then we will have prostate because 10 year age difference between the tail and we have data that was just released in the journal of Urology, which really substantiates this stuff.
That I, just told you that being able to decipher, which in December to decipher, which patients should get the test and should not prior to suspect to me.
Posted.
As well and on on the I'm, sorry, and on the on the on the prostate side, we've continued to add new sales reps every quarter.
We'll see in a lot of growth, it's amazing as I've mentioned in and prior discussions that I've given.
Prostate is still an area that's behind as far as molecular testing. So we still have a lot of white space and the sell a lot of dogs that we can go to and continue to.
Seldon the test and at the Astro meeting just a couple of weeks ago. It was decipher decipher deciphered there was a lot of presentations.
Given on our test by doctors, who participated in clinical trials that we ran and that was very exciting for us.
To be showcased strongly at that meeting.
And obviously, we keep adding to our grip database were up over 100000 patients now of data in that database and we use that to offer additional molecular information to our position customers.
As needed so I still see a lot of market runway with both of those products for 2022, certainly and beyond.
Next statement.
Great detail thanks, guys.
Pardon.
Your next question comes from the lineup Thomas Friedman from Lake Street Capital, where nine is open.
Hi, guys. This is Travis growing up for Thomas One question I had is.
In regards to the Halo Dx I know you guys said that you.
I wanted to do IBD testing development and manufacturing operations.
Just to tell how that process is going to provide a little bit more color on that.
Yeah, So hey, near the ex has over 15 years of experience in the development and manufacturing.
So first and foremost the manufacturing capability is going to be used to manufacture our own kids for the platform and kind of outside the U S.
That process will take 24 months to be completed is a current estimation.
Well because already started in terms of planning for that now the IBD development, which I think is a real gem here in terms of the acquisition.
It's a great business.
The team and Mercedes is built.
And we can leverage that really well to actually put the test.
Clear tests that we've developed here in the us over to the encounter platform. So our own internal team has experience of doing this for customers and we will be able to do this for for.
Variscite internally, so that's really exciting and that's what I was referring to is the collaboration between R&D teams across three sides gone really well in the planning has progressed nicely not yet ready to say, which products in which order them by which date.
Certainly we've got a draft roadmap for each of the products and as I mentioned in the prepared remarks.
We will be putting over our busy a test prostate bladder of sorry punks type of prostate.
And as well as a nasal swab.
Then other tests lifeblood of potentially could be Canada sometime in the future and beyond so more to come on that.
Got it thank.
Thank you very much for my question and congrats on a great quarter.
Thank you in Kansas.
The next question we have is from Andrew Cooper from Raymond James Your line is open.
Hey, thanks for the questions.
Maybe just first to get a little bit of clarity just to make sure I'm understanding correctly.
You mentioned kind of the 24 months timeframe for really putting that manufacturing over but if we go back historically you would talk about.
How 'bout things, specifically in vizio being a little bit faster forgetting onto the encounter platform is the 2024 months sort of to get something prepared for encounter or really just to be manufacturing it yourself as opposed to relying on on Nanostring and how should we be thinking about maybe the cadence there. Even if you don't give exact dates for exact products.
A little more flavor would be great. Yes, yes, thanks, Andrew for asking back because it really does help us clarify the two parallel paths. The 24 months is the manufacturing transition sources. The latter of what you said it is.
Getting ourselves ready to be able to manufacture the kits Adam us say.
That is distinct separate but obviously interconnected with the development product projects, which is a separate parallel path, which is three individual IBD development projects to pull the.
Tests over to the right kind of platform as you know from our previous commentary work on that on Nvidia had already started we've been able to validate that the concordance between the AG count on our existing assay was really really high. So that is ahead of the curve in terms of progress and then of course, we have to go through that same process for.
Prostate and for nasal Swab. In addition, yeah. We go to go through the validation verification test we got to go.
Through the the manufacturing connected to the manufacturing process and of course, we've also got to be very focused some of IBD.
In Europe as well so will that has to be part of the project planning for those development projects as well so those two things that go on in parallel.
The the tie.
Timing of the manufacturing transition. It's a 24 months current plan for the development chicks is over the next few three maybe slightly more years, we continuing to refine the plan.
Okay helpful. And then maybe just one more from me when we think about.
Perceptive nasal swab in in the past there.
Obviously soft launch right now really to build up the data like you've talked about but.
When you have that in hand, how do we think about sort of the stage gating for kind of full bore launch what do you expect in terms of is it is it a bit by bit or do we want to hit the ground running as fast as we can with that product and just how do we think about the investments ahead of.
Completion of that clinical utility data.
Yeah. That's a great question I mean, obviously the clinical utility part of this phase as I mentioned is very slow and planned.
Then deliberate.
We need to move at a pace that it is appropriate one.
Once we get reimbursement in that timeframe.
We need to be ready for a full scale clinical launch.
For a test of potentially has very significant volumes and so during the same time period, we will be putting in place. The plans will refining the plans because much of as many of them are already in place to build the necessary commercial capabilities and infrastructure to launch product at scale.
So that you can kind of rest assured.
The situation that we will find ourselves in is one where we don't ready for the volume we need to make sure the word.
We've got a good sense of woke up volume.
Ready to absorb it all clear lab needs to be ready to process, a sample sales team needs to be scaled up and so on so.
The work will be doing over the next six to 12 months.
Great I'll stop there thanks.
X.
There are no further questions at this time I would like to turn to call back to Mister Mark steeply. Please go ahead Sir.
Thank you thanks.
I appreciate all the great questions I would like to take this opportunity to thank the entire global verify team for the tremendous efforts and dedication as we continue with business on multiple fronts. We've got now over 700 dedicated employees and it's been really gratifying to see the collaboration across teams offices and continents as we've worked together.
Continue to work together to build variscite into global diagnostics leader that improved outcomes for patients all over the world with every step of the journey.
I look forward to updating you on our progress at our next quarterly cool. Thank you everyone.
Ladies and gentlemen, this concludes our call today. Thank you for joining US you may now disconnect.
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