Q4 2021 Renalytix PLC Earnings Call
Yeah.
Good morning, and welcome to the Reno Ethics Conference call to review fourth quarter results for fiscal year 2000.
Hum.
At this time all participants are in a listen only mode.
We will be facilitating a question and answer session towards the end of today's call.
As a reminder, this call is being recorded for replay purposes, I would now like to turn the call over to Peter Denardo of Popcorn partners for a few introductory comments.
Thank you Mary and thank you all for participating in today's call. Joining me today from analytics are James Mccullough, Chief Executive Officer, Tom Mclain, President and James Sterling Chief Financial Officer.
Before we begin I'd like to remind you that management will make remarks. During this call that include forward looking statements within.
Meaning of the private Securities Litigation Reform Act of 1095.
Any statements made during this call that relate to expectations or predictions of future events results or performance are forward looking statements.
Examples of these statements include without limitation statements related to kidney Intel active ability.
<unk> to lower healthcare costs improve patient quality of life and set long term standard of care trends with our market and potential benefits of government policy change the impact of COVID-19 on our business our expectations for hiring product development strategic partnerships and collaborations reimbursement decisions.
Within the clinical studies, and regulatory submissions and our business strategies and future growth.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements.
Accordingly, you should not place undue reliance on these.
For a description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our <unk>.
The report on form 20-F that was filed today October 21, 2021 with the Securities Exchange Commission.
All forward looking statements made on this call are based on management's current estimates and various assumptions.
<unk>.
<unk> disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise. This conference call contains time sensitive information is accurate only as of the live broadcast today October 20.
21 2021.
And with that I'll turn the call over to James Mccullough.
Thank you Peter.
Good morning, and good afternoon, everyone over the past year, we have continued methodical execution of the fundamentals for the renal clinics care model, which was designed to change outcomes cost.
And patient quality of life and chronic kidney disease.
We believe the next six to 12 months, we'll be event filled with new hospital system partnerships.
Broad real world evidence development and publications expanded private and public reimbursement coverage and FDA de Novo marketing authorization for kidney Intel.
<unk> growing pharmaceutical partnership activities and the build out of our direct sales marketing and customer service capabilities.
We expect revenue growth this fiscal year from three main areas or announce scale up with kidney and <unk> testing in the Mount Sinai Health system initiation of the kidney Intel X program across the Veterans Administration health.
Health system, and expanding pharmaceutical partnership related activity.
Our kidney until X EHR integration with atrium Wake Forest is expected to go live this current quarter.
Blue Cross Blue shield coverage contracts and coverage contract from a major New York State insurance provider.
We have also continued to build on our Medicaid strategy with 27 approved state provider contracts.
So the kidney space the stakes have never been higher with close to 40 million Americans, who have existing kidney disease.
Most fortunately are in the early stages, where advanced risk assessment and active treatment can have the greatest impact on maintaining health and limiting social cost.
Globally, the number of people living with kidney disease is estimated to exceed $850 million.
This is a massive challenge that needs to be addressed surgically with education early.
Detection prognosis proactive treatment all beginning right at the primary care physician level.
Unsustainable health economics here are readily apparent kidney disease related illness consumes more than 20% of our 120 billion annually in the U S. Medicare budget for our U S veterans and the Veterans Administration health system Spence and estimated.
<unk> $19 billion annually for non dialysis kidney disease alone.
Rapid growth in diabetes, and obesity continue to fuel kidney function impairment across the global population one in five Americans with kidney disease will suffer life threatening complications in their lifetimes with many progressing unchecked until.
An emergency room visit.
The very good news here is the cost of preventable suffering has ignited a new era of accelerated drug and medical device innovation across the kidney spectrum recent government policy shifts have underscored the importance of early prevention to maintain kidney health.
And have started the migration from late stage disease management. These.
Policy changes and the growing awareness in the clinical and patient community have provided significant tailwind for our kidney Intel X early risk assessment and care management program.
These converging economic regulatory reimbursement and clinical dynamics have created the most opportunistic environment, we have experienced in our collective diagnostic.
Mr careers, and we believe that will provide lasting benefits for patients doctors and investors alike.
We believe the solution to kidney disease epidemic. Ultimately lies in the accurate risk assessment of large populations with early stage kidney disease closely matched with corrective clinical actions that can be implemented by the estimated 200.
Third 10000 practicing primary care physicians in the United States too.
To be effective as clinical action must be guided by a patient's current biology as measured by active blood Biomarkers kidney intellects currently uses three well established blood biomarkers for kidney status predictions.
Preventable solution also needs to be deployed.
With physician education advance population health strategies, and a dedication to continuous real world evidence development. This in a nutshell is our kidney until X care model.
In this current half year of 2021 <unk> is building on our national commercial launch strategy for getting a pill.
Alex and less than 36 months from our first funding the kidney Intel X program is now scaling system wide in the Mount Sinai Health system, which is currently carrying for an estimated 250000 patients with chronic kidney disease. We.
We have been granted a 10 year U S General services administration.
<unk>, allowing.
Allowing us to initiate a comprehensive sales program into the VA health system, which is currently caring for a chronic kidney disease population that could exceed 2 million individuals' additional program implementations are underway at the University of Utah in the southwest region and atrium wake Forest in the South East that we expect to begin live testing this quarter.
We expect kidney intellectual achieved payment by Medicare at the set national Medicare rate of $950 per reportable result by the summer of 2022.
With GSA, Medicare and other private and government reimbursement, we expect kidney Intel X insured covered lives will exceed 10 million.
With diabetic kidney disease in the United States.
We are working on expanding the kidney Intel X product capabilities to support our breath of precision medicine diagnostic therapeutic and monitoring strategies further expanding the potential eligible and insured market size for testing.
On that are key two key.
People in all areas, our Mount Sinai Health system implementation.
And the VA health system launch that we just announced.
Both market categories will drive revenue for the for this fiscal year and growing the fiscal 2022.
One of the remarkable value points to our hospital system implementations.
Operational with population health, which brings the capability to coordinate care services across broad groups of treating physicians with Mount Sinai early successes triggered a system wide scale up with a target testing run rate of 300 patients per week in the near term Mount Sinai expects to complete approximately 6000 patients tested.
Engage around the second calendar quarter of 2022, which will result in an important large real world evidence demonstration.
All testing conducted is set at the National Medicare in General service.
General services administration price of $950 per reportable itself.
To support the scale up.
We are deploying newly hired renal lytic sales customer service and medical science liaison personnel around Mount Sinai and other health care institutions, we expect will bring the kidney Intel X solution program online in coming months.
We believe the real world evidence, we believe the real world evidence.
Emerging from Mount Sinai is validating our business model that integrating with kidney MPLX within a population health management system can drive meaningful change in care for early stage kidney disease patients.
This kidney and <unk> pop health care model is also demonstrating a capital efficient means to drive revenue.
Both by reaching regional basis of primary care physicians and at risk patients quickly with a consistent actionable message.
I'd like to turn the conversation now to our President Tom Mcclain.
Who will detail our launch into the Veterans Administration health system currently underway Tom.
Thank you James.
The veterans Health administration system is the largest integrated healthcare system in the United States. It represents a significant lunch opportunity for kidney Intel X because the V. H J has a long standing commitment to improve care and outcomes.
For veterans with chronic kidney disease.
The V. H has established itself as the leader in clinical care for CK D.
<unk> implemented the first evidence based clinical practice guidelines.
Head of other guidelines for both nephrology that K Dokey NK.
<unk> guidelines and for diabetes care through the ATM.
V H as leadership in this space is built from knowledge and innovations in care delivery that they develop for more than 20 years of kidney disease clinical trial experience.
Recent examples of.
A V H a lead advances in care include the deployment of digital platforms that can help guide C. P D management and direct appropriate utilization of resources.
They recently launched V a range a nationwide renal information system to.
To inform and improve clinical care.
The V. H a demonstrated commitment provides a unique setting to implement kidney Intel X risk assessment to improve the health of veterans with chronic kidney disease.
A key factor that will accelerate.
The adoption of kidney Intel X is a new V. H eight clinical directive directive number 10, 53, that's titled chronic kidney disease prevention early recognition and management. It was issued in March of 2020.
Okay.
Outlining the significant health challenge faced by V H E B.
The directive references that CK D is the fourth most common diagnosis in the V H a system.
Of the 9 million veterans receiving V. A health care 960000 of them.
Or 11% meet the established criteria for C. T D.
The V a rain database.
Estimated that with improved diagnosis, there could be as many as one to two and a half million veterans using strict versus liberal definition of CK deep.
The cost of caring for the CK D population is substantial with annual V. H a costs estimated to exceed 19 billion, that's 24% of the V. H a health care budget each year.
Directive 10, 53 specifies the V H H.
Strategy for prevention recognition management and evaluation of CK D and the veteran population.
It brings focus to kidney health by pushing C. J D care upstream to prevent progression.
That change in tariff focus is expected.
<unk> to reduce the incidence of kidney failure and premature mortality.
<unk> has just announced launching kidney and pellets through a comprehensive commercial and clinical program focused at the national regional and local levels of the V H.
A strong system.
Jed folk are V. P sales government accounts has just completed the first sales training class. This week for a teams that will build to four regional directors and 40 account executives.
Allison sure Cillo, our new VP of medical.
You'll affairs is assembling a team of medical science liaisons, who will partner with the account executives to introduce kidney Intel X in the context of the CK D directive and share clinical insights insights that are based on our experience with large integrated health.
Jason's like Mount Sinai.
Our long lunch focus will be on supporting V. H, a primary care physicians and three key elements of the directive early recognition patient management and the prevention of end stage kidney disease.
Our.
Since the Impella solution can leverage key elements of the directive.
Including the work of a newly formed kidney Health Committee.
Telling nephrology consultations.
Michigan is focused on patients in rural areas and importantly, the patient aligned care.
Kidney Merck packed model that integrates the P. C P care coordinators specialists and the patient and advancing kidney health.
Importantly for revenue recognition beginning this year coverage for kidney Intel X is provided under the company's.
These general services administration or GSA contract.
This contract allows individual primary care physicians to order the test today.
And larger purchase quantities can can be committed through a simple purchase order process.
The V a center or.
Regional level.
We expect to report initial revenues in fiscal quarter, two and to drive significant revenue growth in calendar year 2022.
Back to you James.
Thanks, Tom finally, a summary on regulatory and reimbursement.
And I was just.
Been experienced broadly across the diagnostic industry kidney Intel X has had a prolonged review since our de Novo submission in August of 2020.
Due to staffing challenges and continued prioritization of Covid related emergency use authorizations F.
The FDA is not currently meeting its 150 day de Novo.
Coal due to quotes considerable increases in COVID-19 activities and close with.
We're committed to working collaboratively and expeditiously with the agency and continue to provide additional information clarification and supplemental analyses as requested while we will continue to decline to provide a forecast.
Our cast for FDA timing, we are confident that kidney and <unk> will receive FDA authorization, given our interactive dialogue today.
And that fiscal 2022 commercial objectives remain on track.
The recent government proposal to repeal the EM suite for National Medicare coverage was disappointing however.
<unk>, our Medicare coverage program through different Medicare contractors has been ongoing and we do not see a significant impact on our execution of our calendar 2022 business plan.
If <unk> is ultimately to be repealed we believe Medicare payment for <unk> will be achieved.
In the summer of 2000.
'twenty two.
Our progress with private payer contracting, including the announcement today of our first Bluecross Blueshield coverage contract has exceeded our expectations. We now believe additional blue Cross Blue shield coverage will be available in the near term and can provide significant insurance support for expanding kidney Intel X.
With that let me turn it now to James Starling, Our Chief Financial Officer, who will provide more detail on our financial results James.
Yeah.
Good morning, everyone. The earnings release, we issued today presents our financial results for the fiscal year ended June 32021, and I'll review a summary of these results now.
All figures are in U S dollars, which is our reporting currency.
The summary, I'll present, our U S GAAP financials as reported on our form 20-F filed with the SEC you can refer to today's rns press release for the IRS financials, and a reconciliation of ire for us to gap.
During our fiscal year ended June 30.
We recognized $1 5 million of revenue, which comprised nearly $1 $1 million of services revenue related to our work from Mount Sinai and Astrazeneca and just over $400000 of testing revenue.
These represent the commencement of revenue generating activity for the company, we did not post revenue in the prior year period.
<unk>.
We recorded $858000 of costs attributable to those revenues.
Yeah.
Our operating expenses were $32 $5 million for the year compared to $10 3 million for the prior year period.
Increase was mainly driven by higher head count and infrastructure build out as we scale the company.
Commercialization of the kidney Intel X platform in the United States.
Net loss was $34 7 million or <unk> 49 per share on a GAAP basis as.
That's compared to $9 8 million or <unk> 17 per share for the same period a year ago.
We ended the fiscal year with cash and equivalents of 65.
$5 1 million on June 32021.
I'll now turn the call back to James Mccullough for final remarks, before we open the call to questions.
Thanks, James and closing.
With the payment and regulatory landscapes solidifying for kidney Intel X, we intend now to build a substantial sales marketing and <unk>.
Any for capability that allows us to expand baseline testing and monitoring of kidney health to the broader national market and eventually globally.
This includes a direct to any primary care physician capability in the United States.
We expect growth opportunities for calendar 2022.
Clinical 'twenty three to be substantial.
With few precedents that we have seen in the diagnostic space and.
And importantly, with few precedents and chronic disease management.
This is a time and a place for step change innovation, which is driven by unsustainable social cost and the need to reduce unnecessary suffering.
Suffering from.
There are multiple near term catalysts for value accretion to <unk> <unk>.
And we will remain focused on measured execution to realize this potential.
Operator, we'd like to now open it up for questions.
Thank you.
To ask a question you will need.
Need to press star one on your telephone.
Gary a question that's the problem.
And then Seth question present Star one on your telephone please standby will be compiled with linear roster.
Our first question comes from the line of Dan Arias.
From Stifel. Your line is open.
Okay.
Hey, guys. This is Dan <unk> on for Dan. This morning, Thanks for the question.
So I guess first of all is there an overall volume number or a range that we should think about for fiscal 2022, and I assume it's probably safe to say that Mt.
Mt.
6000 tests as maybe a starting point, but realizing that there's ramping opportunities in the VA and also wake Forest in Utah I was just wondering if there's some sort of volume number that we should be thinking about.
Yes, Thanks, Dan I appreciate that we're not going to give guidance.
Yes.
We're getting close.
But we're giving ourselves a little bit of breathing room.
Which I think is appropriate as we're building out all these different segments.
But I do think that we're starting to give some specific clues Mount Sinai with 6000 patients tested as.
A pretty big chunk.
And we're also giving you some direction in terms of ramp rate.
The 300 tests per week number.
And we would like to.
To translate that type of ramp rate and that type of volume.
The other systems that we're bringing online.
<unk> that each of these systems is different.
And I think the important thing here in terms of the hospital ramp rate.
Is this year, we're now getting direct experience in demonstrating how the business functions in different environments. This is key.
Because the the United States as a lasagna plate in terms of.
Sure provision.
And if we're really talking about generating long term sustainable revenue growth long term sustainable changes in standard of care increases in volume ramp rates, we have to understand that demonstrated in different systems in different environments and different demography.
So your primary care experience.
Health care in Utah.
There's going to be different than your primary care experience in New York City I can speak to that directly because they spent 35 years in New York.
I've been here in Utah now for three years. So we're understanding all of these dynamics.
That's going to help us to start to forecast much more reliably.
As we come into the end of 2022 and start to provide everybody with guidance, but.
Certainly taking a look at the Sinai numbers that we put down.
Should give you a good clue, we shall see how the VA health system ramps.
There are no barriers for us at the moment, there's no regulus.
Regulatory barrier, there's no reimbursement area were fully paid.
Moving into this very large market.
In the VA system, and we're now putting all of the personnel capacity.
To start to implement it in the sort of way.
Starting this quarter, so that's going to be very.
Interesting to see the demonstration of testing growth and the experience that we're going to get as we start to launch into individual hospital systems, and we start to work at the visit level as well.
But we'll be providing guidance hopefully soon I hope that answers your question.
Yeah, Yeah, that's helpful. Thanks.
And you mentioned.
Do you expect initial testing.
Wake Forest in Utah at first I, just want to make sure I heard that right was it in this.
Fiscal <unk> fiscal <unk> or was it in the fiscal year I, just want make sure I heard that right.
And.
And then where are you in terms of those does ramps.
In.
Spike implementation integration physician education, you mentioned, how different every health system is so I'm just trying to get a get a feel for the both of those.
Yes, it's a very good question.
We believe we're going to be live in November.
At Wake Forest atrium.
I said this quarter.
In terms of December quarter, because I want to give.
I'll give a little bit of room, because these are complex implementations, but.
What what's become readily apparent is.
We have learned in enormous amount on the technology side, the clinical workflow side, the education side of the behavioral economics.
And some of the.
Amex that are required to implement with these large systems. Each one of these systems that we bring on is a big deal. They treat large populations. They set standard of care in their regions.
The recognized nationally.
With Mount Sinai Health system.
It was a fabulous training ground.
To work.
<unk> the diligently in partnership to get the first implementation done and that provided us with credibility to go out to other institutions.
Wake Forest atrium.
Actually had a very well defined a care pathway in place between population health of primary care. So when we got to the point of implementation was actually a lot easier.
For us to implement kidney intellects broad manner.
With electronic health record integration.
No.
We're very pleased with how wake Forest is going we think they are a very important partner for us.
And we're going to be demonstrating a lot of real world evidence development I just want to warn everybody.
<unk>.
Actual revenue recognition from a group like atrium Wake Forest comes as we build out insurance reimbursement around the system.
We do have a $6 million testing contract.
With Mount Sinai Health system, which is providing us with direct revenue. This year, we are going to.
Have to wait for reimbursement to come in which we believe will come in starting in the first half of next year before we start to recognize actual revenue with wake forest.
But the experience of being able to move in and do an integrated implementation educate the physicians create the.
It infrastructure.
Ahead of the insurance reimbursement is invaluable.
But because we don't want to just show up with Medicare coverage and say, Okay. Let's go.
So as we move into Medicare coverage.
We will have multiple systems online.
Clinical pathways will be.
Worked out the it integration is in place we will have salespeople in place now we will have medical science liaison support customer service all of the things that are required.
To start to drive significant adoption and uptake.
Sustainable manner. This is the key so when we start generating revenue what I.
To do.
Is have a slot to revenue generation.
<unk> I want to have consistency growth building.
We're able to do that now because of our experience with Mount Sinai Health system and some of the other systems, where we.
We're really starting to know what we're doing here.
Yeah.
Okay I appreciate that.
Don't want them I say, maybe just.
Give give similar thoughts in terms of the VA ramp.
It's obviously early but if you could just speak to the path toward ramping there and then I'm wondering too if if there's a you know you have I think you said you plan on hiring.
Okay.
And that's the exact number but I just I'm wondering if hiring maybe a risk and if you just hired a.
A.
Person in charge, there and I'm just wondering you know if.
If there is how that's going and if there's risk to.
Other hires potentially as well.
Yeah, and I'm going to bring Tom Mcclain.
The great news about the VA for us.
It's we already have the government pay contract in place.
At the National Medicare rate of $950 per reportable result.
The government has a wonderful player. So we don't have revenue recognition risk.
When it comes to driving.
Yeah.
Very beginning of the company I do not want to build up fixed overhead.
Until we have direct line of sight.
Two reimbursed recognizable revenue revenue.
That's something you can stand on in terms.
The ability to recognize revenue with concrete reimbursement that's very important.
But the VA is an extraordinary opportunity Tom do you want to come in and just talk a little bit. We just completed our first sales class training with the next one in December. So this salesforce build with medical science liaison is happening today.
Thanks, James So the drive for test volume and revenue at the V. H eight systems needs to be driven in the PCP office, we already have the contracts in place with the GSA contract and the form of contract that.
That we were able to secure.
For VA and other government health systems. So.
In order to get volume, we are deploying a trained sales force with <unk>, who will call on the PCP.
Is the diagnostic commercial model on.
That is deployed by all laboratory service providers, and it's those relationships and education and the work that we will do with them with the teams on the care integration.
<unk> risk assessment that is going to drive volume in.
It would drive the revenue growth under the payment that we've secured with the GSA contract.
Thanks, guys.
Thanks, Dan.
Our next question comes from the line of David The Western Bank from Guggenheim.
Your line is open.
Hi, Thanks for taking the question just a quick clarification on the on the FDA.
I mean, you know I was reading through the press release and I just wanted a clarification in terms of like missing. The 150 days, that's nothing new right. I mean, when you are commenting there that was just.
On the August date, and Am I correct. There is no new delay or anything like that and that's just a quick clarification.
Yeah.
Thanks, David No no new news, we're all waiting with the FDA process.
I think the important thing is we see no show stoppers.
I think the dialogue has been very prescriptive.
And very specific in terms of the process to date.
Which gives me a lot of confidence.
And obviously, if there was a significant delay or if there was a showstopper, it's something we would let the market know.
But.
I'll, let the statements stand where it is and but due dates.
We're targets.
So FDA has been under as everybody knows an enormous amount of stress there are still as I understand it processing emergency use authorizations for.
Covid diagnostic tests.
Apparently now moving into the home testing market.
So the stress on the agency is significant I think theyre doing a remarkable job.
Getting through the process and.
We remain quite confident where we are with the application.
I appreciate it and then just on reimbursement and private Payors, how many private payers should we expect prior to the LCD and you know do you is there any kind of snowball effect from signing the first blue to maybe some of the other blues.
It seems like sometimes there isn't sometimes.
Or there isn't so I'd love to get your your thoughts on that.
Yeah, It's a very good question Tom.
Tom do you want to take that one.
Sure.
So we continue to secure private payer coverage agreements so while.
Sometimes on Medicare coverage is helpful with that already being on the clinical lab fee schedule for Medicare has given us a wind in our sails.
Significant to our coverage efforts is the expanding numbers of health systems partnerships that.
All are putting into place.
When you have a large health system.
In a region adopting kidney Intel lack that accelerates the coverage process with the payers in those regions. So that probably is.
We are as significant for us in expanding coverage and.
As a as any factor could be at this stage of deployment of keeping and tell us.
Yeah, David I think.
A lot of people have heard me say this a long time, but.
Is when we started renal clinics.
Reimbursement strategy.
It was the number one item.
Because.
We know how to run an FDA process, we know how to build an IBD, we know how to build marketing sales, we know how to do all these things but.
The value generation here comes from obviously ultimately.
Revenue growth.
As a function of payment and reimbursement so.
We have had reimbursement as a complex strategy from the very beginning.
We do not.
Take any specific reimbursement pathway as a sole pathway.
Ultimately, we always have multiple pathways that were working on this is critically important because different pathways happened at different times as we've just seen with exit.
Things change.
I'd just like to remind everybody that <unk> was one.
Part of the reimbursement strategy.
It was not a dominant part.
In fact, when we created the entire Medicare focus.
<unk> was not even a thing yet shipping come in until January so.
That's why we can make the statement that ultimately we don't think that.
Medicare.
Is Medicare coverage is going to be off track with or without <unk>.
So I think.
The safety here and the Derisking isn't the multiple pathways, we have been pleasantly surprised by the private coverage.
Termination momentum.
And I think it's a reflection.
<unk> of.
The fact that in general we got to do something to solve.
Kidney disease, causing a progression.
And again, its a time and a place where there are a whole sequence of factors government policy.
The protecting access to Medicare Act, there's been a wave of policy around reimbursement, which is open.
Open it up innovative pathways.
It's just a time and a place where we actually feel very good about reimbursement, which is not always been the case in my.
Diagnostic career, so and having private pay come along like this.
There are no guarantees about how.
Now this private pay momentum continues but.
It is certainly very encouraging.
Gotcha and then just my last question in terms of.
New hospital systems integration goals or and I do apologize we are tracking different companies that are reporting.
This morning, so sorry, if I missed it.
How do you feel you're tracking in terms of your new hospital system.
Adoption goal.
Yeah.
Well, what's kind of the puts and takes in terms of hitting it missing it going over going under et cetera.
Yeah.
I'm very confident where we are in terms of hitting goals that we stated.
I think actually our view is really a.
How broad do we want to build it in calendar 2022.
We are now for example getting into.
Hospital network discussions user group.
Capitals that work together.
So.
And this is aspirational.
To make that clear.
But I.
I believe in calendar 2022 that we will actually be able to start to move into.
Multiple.
Deployment.
Environment through.
Networks.
And we're certainly having.
Many many discussions.
What again whats abundantly clear is that everybody is looking for a solution.
And.
We'll talk a little bit more about value care value based care coming up but we offer a very.
Very interesting prospect to the hospital systems, which is we can bring.
The solution, we can invest in its implementation.
Within the compliance legal framework, which is not trivial.
And we could do it at no cost to the hospital system.
And what we're enabling is population.
Management on a broad scale.
Treat large groups of patients with early stage kidney disease to maintain their kidney health.
And this can be very profitable for the hospital system.
And it can enable a substantial standard of care and we see this now with the deployments that.
That we're doing.
The real World evidence is showing that in fact, we are improving things, which is what we're looking for.
So I think that the value proposition to the hospital is very compelling.
And I think it's unique.
Unique because we are the only one with an advanced product.
Ignostic tool.
Because you need to take a blood draw and you need to have Biomarkers. If you don't do that if you don't create an IBD strategy, then you can't tap into reimbursement.
And we're the only ones at the moment doing that.
And we're doing that in an integrated fashion in the care model with population health.
And by recruiting population health it provides us with a considerable amount of capital efficiency.
It provides us with the ability now to extend out to broad patients.
It provides us with the ability to provide consistent.
Education message out to broad groups of physicians.
I'm.
Pleased with.
This approach and I think it's bearing a lot of fruit not to mention now that we have set up a real world evidence machine.
And this is one of the core value components of renal clinics, which I also think is unique this is a multicenter.
Demographically broad real world evidence.
Very sheen, where we can now start to look at a whole sequence of factors not only that supports long term reimbursement supports multiple product categories running through a regulated IBD process.
And gives us a lot of insights as we start to build out this precision medicine continuum.
The front end of.
This huge disease class.
And so now we can start to look at real world evidence around subtyping.
Disease progression.
A primary care physician.
A behavior change education.
All of the factors that are required.
<unk> and the ecosystem to start to bend, the cost and outcome.
Got it alright, well. Thank you guys very much have a nice day.
Thanks, David.
Yeah.
Our next question comes from the line of Tycho Peterson from J P. Morgan Your line is open.
Hi, This is Julia on for Tycho. Thanks for taking the question just wanted to follow up on the Mount Sinai ramp I know its not 6000 total testing next year with a run rate of.
300 tests per week, which equates to 15000 tests per year versus to 250000 total patients that you mentioned earlier.
How does it get to that run rate number and what can drive that ramp faster or slower versus your expectations. What key factors at play as you know the pace of your sales and service reps.
However.
The timing of publications or you know LCD coverage.
So just talk to kind of another moving piece, there's an upside and downside to guidance is that run rate number and then I know, it's still a little early but how should we think about the long term around beyond that that that 6000 number you gave.
Yes.
Yeah, we kept the great questions that we could probably spend two hours.
On that.
Tom do you want to do you want to set the framework there.
Sure I'd be happy to.
So within Mount Sinai volume is actually driven through the care coordination and the carrier deployment at Mount Sinai. So.
We have.
Individuals who is supporting the effort at Mount Sinai, but the identification of patients ordering of the Paas follow up from the class.
<unk> is a clear initiative that is going on at Mount Sinai.
So.
Not a question of resource scaling on the renal lytic side. It's a question of the training that execution the deployment of that care coordination program at Mount Sinai and that involves practice administrators, the medical directors, adding forms training.
Nurse practitioners pharmacy managers dietitian, who are supporting this integrated care model at Mount Sinai.
We are working with them on everything that they are putting in place as well as helping to support them in the education.
Training of those resources that are so critical to patient care. So really the in our health systems deployment, it's that health system itself that sees the value in the risk assessment and the care of that comes from that so it's the health system that drives the pace of that.
That volume growth and so what was important in the announcement that we made what we're sharing with you based on the success of Mount Sinai has seen thus far with kidney and tell us they were able to start projecting how that growth rate would begin to build as they.
Asia POI at system wide.
James back to you on that.
Yeah I think.
There are a couple of key points here.
<unk>.
I think that the fact, we could put down a run rate.
Didn't put down the run rate Mount Sinai did.
Of.
They <unk> and we have not yet deployed our sales force.
So there are a number of ways you can grow a business in the diagnostics space. The traditional way as you put a bunch of salespeople out.
And you start knocking on doors that tends to be a very expensive exercise it drives up a lot of fixed overhead.
And.
It can become very difficult to understand really what the connecting messages to drive utility.
In other words, what are people, saying to.
To get those sales how has it gone.
So we arrived on this and we knew we had a major challenge which is.
This how do you start to change.
Some of the clinical workflow at the front end of the disease the primary care level.
And that's a big challenge it requires a whole sequence of.
Things to make that happen or symphony surround sound around that primary care experience.
With these patients.
And the fact that we've been able to get to this type of a run rate.
Without a sales force for me as a new achievement.
And I think it bodes very well for how we can now add a salesforce.
Add customer service.
Medical Science liaison.
And continue to build out that surround sound concept at the front end of this disease in a capital efficient manner, because ultimately you know by 2025.
We'd like to be out to most of the 210000 practicing primary care physicians.
Three of whom are in systems.
Partnering with population health provides us with the leverage to be able to do that.
So it was significant that we could put that type of run rate down.
And we can now add resources.
To be able to support and expand that run rate.
But.
Let's see how we go here, it's been a significant step to get to this point.
Got it thanks for that color and then I'm sorry, if I missed this if you mentioned earlier did you say how many new systems are you looking to add in 2022.
Think about your product commercialization effort like how would you say it.
Medical because it's between adding new systems versus ramping the existing partner he has.
Oh, that's the million dollar question right.
Right, because we always want to do this with quality, it's not just about adding systems I think we figured out how to add systems.
And Ah Theres always nuance as you move in.
A lot of test systems, but.
We've figured out the regulatory and compliance framework.
Which is first and foremost when your partnering or collaborating with a major system like this.
We've got a lot of legal advice.
Could be able to structure. These agreements they are not trivial.
So do I think we've got a very good handle on it certainly we are simplifying.
The way that we can complete test ordering with an electronic health record data pulp.
That has been a learning experience, but now we've we've been reaching a consistency of what we need to do.
So adding.
But our systems I do not believe in 2022 will be a rate limiting factor.
Maintaining quality of execution.
Is number one how many systems would I like to add in 2022.
I'd love to be able to add between 10 and 20.
Let's see how it goes.
But I won't compromise the quality of the execution because already.
Between the several systems, we have announced the private payer groups that we're working with who are also implementing.
We're out to a considerable addressable market of diabetic kidney disease patients.
Adding that could drive whatever revenue line, we need to drive if we execute properly so.
So quality is number one but this is without a doubt a scalable model I think thats the key and actually.
Your group at J P. On ask that question a couple of quarterly calls ago, how scalable.
<unk> is this.
And Thats stuck in my head I think we're now demonstrating this is scalable.
And certainly I know from an internal basis with the efforts to get the implementations going.
It's getting easier and we're getting much smarter, which you only get with experience.
But I think this is imminently scalable.
Capable to any.
Integrated disease network health system in the country.
And I believe it's also scalable internationally. So the key for US is to maintain quality of the data coming out now.
It's critical for demonstration of utility impact COO.
Cost reduction.
Reduction in patients suffering etcetera.
Et cetera, so we want that to be very high quality data and this is not a trivial numbers we're talking.
Thousands and thousands of patients and as we add as we've added in house systems in the southwest the northeast southeast there will be others.
This becomes a very comprehensive.
Comprehensive real world evidence production.
That will tell us exactly how the kidney and telex integrated care model effects different patient populations and that's the type of evidence that you need to create a long term standard of care type of evidence that you need to expand your regulatory pathway and its type of evidence that you need.
Need to maintain and sustain long term reimbursement coverage.
Okay. Thank you.
Thank you.
Our next question comes from the line of Anita Croissant for member capital. Your line is open.
Okay.
Hi, good morning.
Thanks for taking my question, so I'm going to add a little bit to talk about.
Approval timeline P. A M. I know you mentioned earlier that you know.
Kind of that.
Busy with the image of the applications related to Covid, but.
As much as this year in the past.
It's been slightly unusual.
So keeping up timelines from the agency and how.
How do you sort of feel about you know the weather the approval is more like the coming before the end of this year or.
It's likely to get pushed out to next year.
Yes fair enough.
We're not going to call FDA timing.
Because as I've always said, that's a fool's game.
And especially in this environment, we can't call it.
What we're more interested in is how is the process.
Is it prescriptive do we know exactly what needs to be done.
Do we have good communication with the agency.
Is the is the agency looking at kidney and <unk> with its full attention.
And ultimately you always.
Want to make sure that Theyre no show Stoppers, which are.
You need to run another prospective clinical trial or you need to.
Provide a dataset that you can't provide.
And so at this point.
We're very pleased with where we are.
Sure what I like to have cut in.
FDA de Novo marketing authorization by now absolutely but.
I think this is.
An industry wide issue.
And most importantly.
This.
FDA is one component.
We do not need FDA to commercialize we do not need FDA to drive revenue.
And in fact.
We are gaining a huge amount of experience.
Now because we've set up the kidney Intel X testing.
As a single site IBD so.
We are commercially capable in 50 states.
To me.
The equation is not FDA its reimbursement.
Right and.
Also the most important thing is will generate real world evidence.
Because FDA de Novo marketing authorization timing notwithstanding.
It's it's the use of kidney Intel exiting the year.
Use of kidney intelligent population health, it's the demonstration of.
Can you start to bend, the cost and utility and outcomes equation.
That's what creates the business.
I have high confidence, we will have a beautiful FDA pathway not.
Just for kidney Intel X, but for subsequent versions of kidney until actually designed the program to do that because we think regulation is important and it's supportive but.
The heart of this business that drives value is demonstrating change.
And demonstrating utility and we're doing this now this isn't a three rat study.
Yeah.
That we're putting up as a laboratory developed test.
This is a very complex multi.
Multicenter.
Diverse real world evidence database that we're building here, which is quite rare.
When you look at the history of diagnostic launches and we designed it that way because.
We knew that that was ultimately what what's going to drive.
Kidney Intel acts as a standard.
So I just I, just want to make that clear and I'm.
I'm going to be a little bit ambiguous on FDA, because we cant we just cannot call the timing I think that that would be irresponsible.
Yeah, that's understandable.
Thanks for that.
Okay.
That's helpful and then I just had one more question about the.
Revenue ramp again, I'm, sorry, if I missed this earlier.
That's it.
Yeah.
Getting to that 300 tests, a week with Mount Sinai something that they had.
Come up with how do we sort of think about the ramp from VA and wake forest are on a comparative basis I know as much as that the you know the systems are different but.
Is that something higher than 300 or less than that and sort of how quickly.
We can get to that Mike or maybe midyear next year.
Yes, fair enough and I'm, sorry, I'm still going to be a little ambiguous.
And Tom you should chime in on this the.
The VA health system is its own animal.
That's very important doing comparisons with <unk>.
A greater disease networks is difficult.
We're not going to try to do that.
And there are advantages and disadvantages.
The sales force that we're hiring to implemented VA is largely military.
Blackhawk pilots and fighter jet pilots.
My reports coming in from Baltimore and the folks.
This is a really.
Impressive sophisticated group.
And I think it is going to be a significant asset for the national VA system rollout.
And that's very different than what's going on with population health driven.
Integrated disease networks like Mount Sinai Health.
What is important is that.
The V E systems.
We're looking at.
As the early adopters of co located with the.
The large integrated disease networks, so again, an overused word, but I'll use it here theres a huge amount of leverage.
System with our population health driven integrated disease network deployments like Mount Sinai Health system.
And VA hospital systems that are geographically contiguous with those health systems.
And there are different but there are many for example primary care physicians that practice on both sides of the defense at the VA system and at the hospitals.
So it's.
We do get a lot of benefit from.
Education movement et cetera.
With the integrated disease networks that spills over into our ability now to start to implement kidney Intel exiting the VA hospital system.
Tom did I did I describe that correctly do you want to add to that.
I think he did a great job James.
We are just training the first class of.
Account executives this week we're.
We're aware that there are unique features in the VA.
Both our contract and the chronic kidney disease directed that will.
System.
Will be helpful to us as we commercialize but with with this being our initial launch.
Putting our sales force into the field.
We've got experience as James indicated.
Before we start to make very specific projections and that we.
Comfortable when we get to the end of this fiscal year that will have unmatched better idea and be able to be clear.
Clear on where we expect that volume growth to go in fiscal 2023.
Yeah.
Okay. Thank you.
We feel that I think it's a function of building the fundamentals and putting them in place and the rest will come.
That is the diagnostic story, if you get all the fundamentals in place you have the data.
You've got the reimbursement pathway, you've got the sales and marketing strategy and you have the need.
Need here is significant.
The growth.
Entity that ramp will come.
Great. Thank you.
Thank you Anita and I think we're out of time, there operator very good questions today. Thank you all for participating.
Yeah.
There are no further questions at this time.
Now I will turn the call back over to James Mccullough.
Okay.
Back again for limited. Thank you all please stay safe and we look forward to talking to you on our next quarterly call.
This concludes today's conference call. Thank you everyone for joining you may now disconnect.
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