Q3 2021 OncoCyte Corp Earnings Call

[music].

Greetings and welcome to the Arkansas Best Corporation third quarter 2021 earnings Conference call. At this time, all participants are in a listen only mode.

And the answer session will follow the formal presentation, if anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.

I'd now like to turn the conference over to your host Bob yet it of lifestyle advisors.

Thank you Joe and thank you everyone for joining for todays conference call to discuss <unk> third quarter 2021 financial results and recent operating highlights.

If you have not seen today's financial press.

The financial results press release, please visit the company's website on the investors page.

Before turning the call over to Ronnie Andrews, <unk>, President and Chief Executive Officer, I would like to remind you that during this conference call. The company will make projections and forward looking statements regarding future events.

Any statements that are not historical facts are forward looking statements.

We encourage you to review the company's SEC filings, including without limitation, the Companys forms 10-K and 10.

10, Qs, which identify the specific risk factors that may cause actual results or events to differ materially from those described in these forward looking statements.

These factors may include without limitation risks inherent in the development <unk> commercialization of potential diagnostic tests uncertainty in the results of clinical trials or regulatory approvals need to obtain third party reimbursement for patients use of any diagnostic test the company commercialize.

Our need and ability to obtain future capital and maintenance of IP rights risks inherent in strategic transactions such as the failure to realize the anticipated benefits legal regulatory or political changes and the applicable jurisdictions.

Counting and quality controls greater than.

Estimated allocation of resources to develop and commercialize the technology.

Or the failure to maintain any laboratory accreditation or certification.

And uncertainties associated with the COVID-19 pandemic, that's possible effects on our operations.

Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward looking statements.

<unk> expressly disclaims any intent or obligation to update these or.

The statements, except as otherwise may be required under applicable law.

What those prepared remarks, it's my pleasure to turn the call over to Ronnie Andrews CEO Ronnie.

Yes.

Thanks, Bob and welcome everyone to our conference call to discuss our third quarter 2021 financial results and our operating highlights joining me today on our call is Mitch Levine, our CFO, Keith <unk>, our new COO, Dr. Doug Ross, our CSO plasma Sundar.

And Dr. Eke shirts, our GM of our Oncotype, Germany, and head of our liquid biopsy in transplant programs will all be available during the question and answer session.

We received feedback from several investors during my travels over the past few months, but what's exciting to follow all the progress being made in Oncotype they'd appreciate more context as to how all the moving parts fit into our overall strategy. So based on that welcomed honest feedback I want to start first with a high level overview of how all of the initiatives fit together to enable our.

Future for those new to Arca site, two years ago, I stepped off the board and into the CEO role to reposition the company for the future and laid out a strategy to bring a market.

Our portfolio of test that would complement each other and deliver answers to critical questions physicians and patients still face today that the industry's focus on large scale genomics has failed to answer.

Two major decisions still face every position managing a cancer patient what is the best treatment option and is the therapy working for my patients.

The advancement of targeted immunotherapy options has happened rapidly with our clinical trial pipeline full of promising drugs across all major solid tumors as the options for mono or comment oil therapy expand understanding the tumor biology of each patient is becoming more and more important with.

So I can say in two short years and in the face of a global pandemic Tinapa site has made several important strategic advances that have moved us rapidly to the forefront of precision oncology diagnostics to answer these questions on.

On the treatment part we.

We are now the only company that has a menu of precision.

Test is to.

To answer all three questions necessary to select the best treatment protocol for cancer patients.

First question do I give chemo.

Is answered by our determined Rx product secondly, do I give it targeted drug. This is answered by determined TX, which is currently planned to launch in late Q1 of 2022 are due out given immunotherapy, which is answered by the term of Io.

These three tests complete the treatment selection menu, we've been working on for the past 18 months and allow US now to an extremely large market for treatment decisions.

To answer the chemo question determined all X was launched last year in the middle of the pandemic.

Is the smallest of the available markets with any of the test in our Arsenal, it's become a beacon for our mission of improving the lives of cancer patients and a little over a year, we've touched over 200 patients.

Of which just over 500 have been found to be high risk for recurrence and thus needed chemo and with that choice. Those patients will now have an improved five year life expectancy of 92% versus the 49% five year expectancy. They would have had without our test information.

We are now bringing the second of our three treatment selection tested conditions with the commercial launch of determined Oh. This quarter. Moreover, we plan on fulfilling the promise we made to investors and the customers. We serve to have a complete repertoire precision treatment decision test on the market by the middle of 2022 with the launch of determined.

Our 500 gene targeted decision panel scheduled for launch in late Q1 of 2022 by.

By mid year next year acre site, where we're the only company with a full menu of tests from one lab that uses minimal tissue and provides less than 10 day turnaround time to address the estimated $5 billion of cancer treatment decisions diagnostic market in the U S and the EU that potential value.

<unk> from the full menu is very substantial and after two years of integration development and clinical studies. We are now on the costs. We are realizing our vision to go after these large markets with our proprietary offerings.

The second question that remains unanswered from the majority of tumors is is the therapy working this information provided early in the disease cycle call out changes to therapy to be made in real time, and thus potentially offer better outcomes for more patients are emerging companies are beginning to offer tests that help identify minimal residual disease.

Yes to answer where the patients were adequately treated by surgery alone. They can only serve a subset of patients whose tumors can be removed surgically. These tests are complicated execute upon because they need to be personalized to individual patients and they require genomic sequencing of the resected tumor specimen prior to testing.

<unk>, which takes time and extra tissue is not always available.

That is the majority of decisions in solid tumor treatment monitoring happen without a surgical resection of the tumor meaning patients. These patients have no option today since mardi cannot serve them. When we acquired chronic biomedical earlier. This year, we acquired pace patents and proprietary methods that will allow a blood only.

Approach to therapy monitoring this allows immediate initiation of testing upon the start of therapy and interpretations test results without requiring knowledge of the tumor genome.

Therapy monitoring product Dethomas C&I is launched in the European Union for research use and we will be completing tech transfer to the U S. In Q1 of 2022.

Our test is a blood based only and does not need resected tumor tissue operating physicians an option for the majority of patients that they serve in fact, we not only solve the tumor tissue requirement problem determined C&I also provides results on disease progression at the second cycle of immunotherapy target therapy or <unk>.

<unk> therapy weeks before <unk>, our imaging can provide meaningful results. This is a very exciting opportunity for <unk> to participate in the four to 6 billion global therapy monitoring market.

With the term of Io now in its launch phase our development efforts can now focus on getting more clinical utility studies under our belt. So we can move the term of C&I closer to market in the U S and in Europe.

I can overhaul our monitoring capability rounds out a very robust offering that represents the only comprehensive set of tests to answer every question facing patients and physicians, who treat them throughout that patient's journey.

Bottom line is this despite the challenges of the pandemic I'm excited to say, we stay focused and are now poised to deliver the full complement of test in our current portfolio to the market over the next four quarters with these product launches <unk> is now entering very large market market opportunities with unique proprietary capabilities.

And based on our current momentum we believe all of the current tests our portfolio will be on the market within the next year gaining market adoption. The most important metric will be watching during their launch year.

Ultimately, we will seek reimbursement, which will drive the rapid revenue growth, we envisioned when we laid out our compelling strategy, while there'll be solid revenue growth along the journey for individual tests as we launch them. The full force of Arca site strategy is found and a comprehensive information we can deliver to treating physicians our go to market strategy.

<unk> is only in the beginning stages and thus we remain incredibly enthusiastic about the potential for long term value creation ahead, that's the strategy and now some updates on the product supporting our vision last week, we announced the clinical launch it to term Io internally, we've known for some time that the proprietary technology behind the turmoil.

<unk> had incredible potential to change the way, we selected patients for immune therapy in less than two years, we validated the analytical reproducibility completed clear validation and completed clinical validation across four major solid tumors. We've now tested over 1000 patients today and in every study including random.

<unk> clinical evaluations, we've outperformed every other molecular diagnostic test. So today I am very excited to discuss the clinical launch strategy for our flagship product the term of Io the first and only clinical test that comprehensively assessing both the tumor and the immune microenvironment to identify patients who can.

Benefit from immunotherapy.

In clinical studies evaluating patients across multiple tumor types, including breast lung bladder and renal cancers. The term of Io has consistently been better identifying immunotherapy responses and the standard of care tests, PDL, one IC and head to head comparisons and in some tumor types, even identified patients missed by the.

Current test who would've benefited from immunotherapy.

<unk> addresses a critical unmet need in the market, which is to inform the optimal use of immune therapy treatment for more than 1 million eligible patients annually in the U S alone or.

For the past few quarters, we've shared updates on the incredibly strong foundation of data that we presented at various conferences and we believe we've now built a solid clinical foundation for the term Io to be used by physicians as a potential pan cancer and Pan immunotherapy test our strategy is to rollout.

The test initially as part of an early access program with sites and physicians that have successfully partnered with Orca site on prior test and participated in our clinical study efforts.

During the early access program will optimize sample processing and logistics to ensure we deliver on our promise to provide rapid turnaround time and utilize the lowest sample requirements in the industry to inform immune status, while maintaining strict HIPAA compliance.

After the successful EAP launch it to term Io and our processes have been optimized we will then rollout determined TX our tissue based 500 gene comprehensive genomic profiling test using next generation sequencing on the same tumor sample that we used for determining Io.

This will allow us to meet our turnaround targets with less than 10 days and conserve precious tissue, while still delivering a comprehensive synoptic information.

<unk> needs to understand the targeted and immune therapy options for their patients.

Determined TX will fall under our current local coverage decision or LCD for Medicare. So we expect to turn the T X to be revenue generating in the second half of 2022 and its launch will complete our treatment decision menu, giving us access to a large market of close to $5 billion.

And establish us as the most comprehensive and differentiated test provider with predictive answers for various therapy options available to physicians for their cancer patients.

To complement this exciting test combination will watch determined C&I as a research use product in the U S. In Q1 of 2022, our initial efforts in the U S will be providing the test for pharma clinical trials and via our registry efforts to generate real world evidence on the benefit of this test for managing patients being treated for cancer.

The C&I as I said is currently available in Europe for pharma research and trials and is already attracting researchers who are running immunotherapy and targeted therapy trials.

We now have over 1000 patients in various studies and the EU across several solid tumors and look forward to report out as early as <unk> 2022, we remain very enthusiastic about the term of C&I and the feedback from researchers and oncologists has been solid as they appreciate the blood only monitoring solution without the need for tissue.

All the need for very costly genome testing.

Moving to the terminal Rx our tests for early stage lung cancer patients when we launched in the spring of 2020 at the beginning of the pandemic. We had no idea what was ahead of us but our teams forged ahead to bring this important test for early stage lung cancer patients rapidly to market.

Despite the unprecedented challenges surgeons managing these patients cases have had getting access the surgical suites for well over a year now I'm proud to say that we are on track to close 2021 at over 100% year over year growth in test volume for to Tom RFS.

Since launching our X just over a year ago, we've run over 200 samples of which 40% are approximately 500 samples have been deemed high risk for recurring for recurrence of their lung cancer without action more than 40 pursue these patients will lose their life within five years. Instead many of these high risk patients are receiving chemo.

Just on the results from our test and their five year survival rate is expected to increase well above 90% simply put to terminal are actually saving lives. This is the essence of acre sites mission.

We continue to experience strength in key metrics, we use to judge adoption in the current environment our growth in the number of new physicians and hospitals on board in Q3 was solid and Mitch will go into more details, but this is particularly meaningful given strong headwinds from the Delta surge was has which has dramatically impacted surgeries in early stage diagnosis and a key.

Area, where we have significant adoption back one study showed a 30% reduction in diagnosed cases and early stage lung cancer surgeries through the summer of 2021, while.

While the summer showed a slowdown in surgical cases were encouraged by steady uptick in sample volume in September and had our largest volume month to date in October which we believe is a really good sign for our year end closing push.

Our growing installed base of physicians ordering the terminal Rx speaks to the value of our tests brings to patients and has us poised to experience strong volume growth as we emerge from the delta surge and screenings and early stage surgeries return to pre pandemic levels.

Next I'll transition to our emerging growth opportunity opportunities, which stem from our acquisition of chronic <unk> biomedical.

We briefly talked earlier about dethomas C&I, our patented blood based test to monitor cancer patients closed treatment.

Through this acquisition, we also acquired access to the share assure transplant modern tests for early transplant solid.

Oregon rejection monitoring.

This is a very large market of approximately $2 billion in the U S alone.

With established reimbursement of between 2700 $2800 per test per patient in the United States.

Given the repeat testing modality for monitoring their transplant rejection. This was a recurring revenue stream and represents a very large revenue opportunity for anthracite reach.

Recently, we received issuance of our second U S patent covering the use of our digital PCR technique for molecular detection of solid Oregon Allograft rejection. This new patent complements our first patent issued which gave us IP around absolute quantification, a very important differentiator for our method versus the <unk>.

<unk> next generation generation sequencing methods.

We now have both IP components needed in the U S to support entry into the transplant monitoring market in the U S with our <unk> product.

Starting out as an LDC out of our Nashville CLIA lab.

So how is there a share differentiated first our test offers the broadest application across transplanted organs.

We have indication in heart and kidney the two largest volume Oregon's transplanted.

<unk> is the only test with a current indication for monitoring liver transplants.

We will also offer the fastest turnaround time and greater sensitivity for early indication of rejection, which can profit timely and critical change in dosing of therapy to suppress the rejection. Additionally, our test offers absolute quantification, which allows for greater sensitivity to identify early onset of rejection providing utility.

The longitudinal monitoring Oregon health over time.

Over 20 clinical studies and numerous peer reviewed publications have validated the usefulness of our donor derived cell free DNA test as a noninvasive biomarker to SaaS rejection cell death, and under immunosuppression all signs at a transplant is or soon will be rejected.

However, the other technologies and use different effectiveness accuracy and speed of turnaround.

Data published to date identifies our digital PCR method is the fastest and most cost effective for payers as compared to other measures that other methods that measure donor derived cell free DNA. These results have been published in prestigious journals, including Plos Medicine American journal of transplantation and others.

Italy, the recent CMS coverage policy for transplant rejection monitoring, citing digital PCR methods for solid, Oregon allograft rejection as its titled sites three peer reviewed publications from chronic <unk> on the performance of our test in solid organ transplant monitoring. This is a huge validation of the chronic technology and we.

We believe paves the way for commercialization and reimbursement here in the U S.

We're now on a fast track to launch an LDC in the U S. By the end of Q1 2022. So we can begin our efforts to gain access to the current reimbursement offered by the center of Medicare services Euro.

Europe represents another attractive market, which is currently untapped and last quarter, we unveiled the new details about our plans for the <unk> transplant monitor test in Europe, We're now moving rapidly to work with local governments for reimbursement ahead of our 2022 launch in Germany.

We're incredibly enthusiastic about the potential of digital a donor derived cell free DNA to deliver cost effective precise surveillance of transplant recipients to decrease premature graft loss, resulting in a need for retrans plantation in summary, our differentiated approach is more specific quantitative for launch.

During the follow up cost effective and can provide same day turnaround time of important information for patient management.

As we look forward I'm very excited of our team our investors who have supported us through the development phase of a comprehensive offering we're continuing to make progress on each product area and we will exit 2021 with solid momentum towards our goal of launching a compelling and powerful portfolio of molecular diagnostic test assets with a large combined market.

Opportunity well over $10 billion, and we will have proprietary positions in some of the fastest growing areas of molecular oncology.

<unk> 2022 promises to be a year of rapid expansion of our markets and testing growth in order to take full advantage of our progress the board and senior management felt it was time to solidify the infrastructure to deliver a best in class customer experience.

Our recent appointment of Aesop Paulson was chief operating officer brings world class talent and strategy operations and industry leadership to the onsite team our history, our history with Genentech Roche and exact sciences genomic health or about solid experience and positions us to in our upcoming growth period, where flawless execution.

<unk> will be essential.

We're excited to have on the team and look forward to her contributions as we build out the fundamentals required to deliver our menu to position to patients in the United States and Europe.

Continue to be amazed by the dedication of our incredible team, particularly during the relentless challenges of the pin debit and I'm incredibly proud of how our organization has responded by keeping all major programs on track I can say with incredible conviction that T. Marcasite believes we have the potential to transform treatment decisions in oncology.

Beyond and their unwavering.

<unk> is evidence.

At this point I'd like to turn the call over to Mitch Levine to review our financials Mitch.

Thanks, Ronny hi, everybody.

Our consolidated revenues for the third quarter of 2021 were approximately $1 million.

Representing 77% growth year over year combined revenues for the first three quarters of 2021 or $4 1 million.

Which represents a 480% increase year over year.

Progress with determined <unk> remains solid with 289 samples for the third quarter, an increase of 65% year over year and a modest increase over Q2, despite the substantial slowdown in early stage cancer surgeries caused by the Delta variant.

I would like to make an important point here.

We feel the best measurement of adoption growth for the terminal Rx is the number of physicians being trained to use the test, which we call onboarding.

As well as the adoption by community cancer Center treatment treatment centers and hospital systems.

When we no longer have the headwinds of COVID-19, these physicians and hospitals will be responsible for going to terminal are extra their patients.

Growth in physicians trained and hospital adoption should drive test adoption and revenue growth.

Eternal Rx clinical results are attracting a rapidly growing base of prescribing physicians.

In the third quarter, the pool of Onboarding prescribing physicians increased by 22% from Q2, and 150% year over year to a total of 367 physicians.

Similarly on boarded hospitals and account site increased 24% from Q2 and increased 225% year over year to a total of 218 sites.

Again, our key performance metrics.

On boarding of physicians as well as adding new hospitals and community treatment location or.

Are the best measure of the terminal Rx adoption by physicians, who will generate higher sample growth and lead to greater revenues. So it's worth keeping an eye on those.

Sweet.

Revenues and pharma services are lumpy as we depend upon sample volumes from Biopharma clinical trials and.

And because of the ongoing COVID-19 challenges, we received fewer samples from our former partners for testing.

We expect a rebound and samples in queue for his clinical trials resume and as I mentioned in our second quarter call. We signed a major services agreement with the Molec large molecular platform company in June and have spent the last couple of months investing in and installing instruments in our Nashville lab facility.

We believe increasing artwork for diagnostic companies should drive a rising and more predictable level of services revenue.

Turning to the balance sheet as of September 30th 2021, we had cash cash equivalents and marketable securities of $44.3 million.

In July two institutional investors increase their positions in August site by acquiring 1.1 million shares via our ATM or at the market at an average price of $5.63 per share providing a total of six.

$2 million to anchor site.

We use the ATM strategically in response to investor demand not simply offer stock into the market and this was a perfect example of the ATM in action.

Additionally, we collaborated with a long term investor to exercise for cash.

Warrants issued in a 2016 offering <unk>.

<unk> received $1.8 million Nondilutive capital when the legacy warrants for exercised.

With that being said.

We're in a solid financial position and are well funded a few our engines of long term revenue growth. The term Io are immune therapy response predictor, which we just launched via out early access program.

Terminal Io and determine Rx together, well established us as the most differentiated precision diagnostic company for cancer treatments selection.

You sure must CNI are blood based treatment monitoring assay that we expect to launch research you suddenly in the first quarter of 2022.

Which completes our apology menu and offers a complete solution for treatment selection in response monitoring for patients throughout their journey.

The term Rx Ah reimbursed lung cancer recurrence producer and theorists your transplant to ask for the early detection of transplant rejection.

We expect to launch in the first half of 2022.

Cash used in operations for the quarter was $10.0 million.

For normal operating burn plus approximately $1.3 million and non-recurring acquisition legal and business development related payments and the quarter.

Excluding non-recurring items, we expect our base operating cash burned remains stable.

We will continue to invest in our diagnostic tests to create or gain market share.

To solidify proof of concept through studies and registries and to strengthen collaborations with strategic partners.

Non-GAAP operating loss as adjusted for the third quarter of 2021 was $9.3 million, an increase of $3.3 million as compared to the same period in 2020.

GAAP operating loss as reported for the third quarter of 2021 was $13.6 million, an increase of $7.4 million from the third quarter of 2020.

We have provided a reconciliation between gap and non-GAAP operating losses in the financial tables included with our earnings release, which we believe is helpful in understanding our ongoing operations.

Cost of revenues for the current quarter was approximately $1.9 million, including $990000 in non-cash amortization expenses from our razor asset acquired in February.

Cost of revenues also include testing services, we perform for our farmer customers.

It is important to note that as we ramp are testing volumes, we expect to see an improvement in our gross margins and future quarters.

It's a term Rx test.

Research and development expenses for the third quarter of 2021 or $3.1 million as compared to $2.6 million for the same period in 2020.

General and administrative expenses for the third quarter of 2021, where five $5 million as compared to $5 million for the same period in 2020, due primarily to an increase in personnel insurance and legal expenses.

Sales and marketing expenses for the third quarter of 2021 or $2.9 million as compared to $1.6 million for the same period in 2020, primarily attributable to ramp up in sales and marketing activities for our continued commercialization efforts of the turmoil Rx and now.

Now the term IL.

For the third quarter of 2021, we reported a net loss of $13.8 million or 15 cents per share as compared to six $8 million or 10 cents per share for the third quarter of 2020.

We have a good history of making timely thoughtful strategic investments in clinical studies.

An additional sales and marketing initiatives, which has helped us build commercial momentum of 2021.

We aim to extend that momentum by growing the sales of determined Rx.

In November we began the U S commercial loss of determine I O and soon we expected launch the term Rx and determined CNI.

We'll also invest thoughtfully behind the planned launch if they're assured transplant test for transplant rejection monitoring by the end of the first quarter of 2022.

Thanks, everybody for your time that concludes my remarks concerning our financial highlights Ronnie operator that concludes our formal remarks, if you don't mind opened up the call for questions. Please.

Yes. Thank you.

Will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad and a confirmation some'll indicate that your lines in the queue you.

You May press store too if you would like to remove your question from the queue.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the starches one moment. Please when we pull for questions.

Our first question comes from Paul Night with Keybanc. Please proceed.

Ronnie how do you want.

Io to roll out I I understand you are going to collect more data in 2022, but.

But.

When do you think of the data.

Fleet.

And you are able to submit a dossier introduced to CMS.

Yes, Great question, Paul We believe we have the data today clinically to go to market clinically we got enough in the tumors that we validate it already to go.

Much like historically in our industry, whether it be genomic golf Clariant Foundation Medicine Garden I mean, all of these companies. These great companies have launched their test ahead of reimbursement move towards adoption. So we realized that we still have a little bit of a road ahead for reimbursement, but especially.

Actually given that the trauma, TX I'm sorry December Io is a PCR test we believe it's prudent to go ahead and launch it and start the clinical adoption process. The dossier, we believe will be completed and we should be able to submit for submission by the end of the first half of 2022.

And then on the.

On the.

Burning Iraq milestone it or we own progress there.

We Mitch is really on point with.

Good thing, we have an executive sponsor our Mitch answer that for US April Yeah. We were on on flying with burning rock and are completing the tech transfer.

Time and to everyone's satisfaction.

And lastly, any change in sales force composition Ronnie.

Not today Paul.

We had plans to expand and we may expand by a few heading out of this year because there are some interesting territories that we have interest for Io that are uncovered. So we may add a few but but until we see the pandemic completely left in reps be able to access positions for face to face meetings, where we're really.

To go full throttle and and add a lot more reps, but ultimately as we spoken I think a few times on cause we will be adding and expanding the salesforce because as you add determine io in Tx.

Ads breath to the offering it requires.

These reps to spend more time in the key accounts detailing and talking to various positions within the account. So as we began to expand the menu and launched these tests, we will more than likely at some point in 2020 do add to the salesforce, but not planning on significant ads today, okay. Thanks.

Our next question comes from Mark Massaro with BTG. Please proceed.

Hey, guys. Thanks for the questions I guess my first one is on transplant.

Recently the.

The market leader.

Received.

Two federal investigations in one state investigation I'm just curious if if you are familiar if if any of these investigations might be pertinent to the transplant industry at large or do you think it's.

Perhaps specific to the market leader itself.

And the second part of that question is can you clarify which.

Which Oregon State you will launch an initially my understanding is kidney, but I'm not sure about that.

Yeah.

Well first on the first question.

To be candid I don't know enough about the situation to be able to comment specifically I will say.

And in this space for 30 years that it's not uncommon for Ah labs, running ldp's and submitting claims.

To get investigated unfortunately, it's somewhat the nature of our industry at times. So again don't want to comment on on what the nature is but I do believe that.

As we launch in.

As we launch our LDP our plan is to launch the LDP across all three tumor or I'm, sorry, Oh three donor types.

Kidney heart and of course liver.

We have a unique position with liver.

But as we go to a clinical trials to start the clinical trials for putting our test into a kit. We may end up having to prioritise. The the Oregon's and when we do that most likely we would do liver and probably kidney in that order and given that we have a proprietary position and liver.

Yeah that makes perfect sense, so just to clarify you've talked about wanting to launch kidney heart and liver.

You've talked about the third for transplant tests launching isn't LDP out of your National Lab in Q1 22.

Are you planning to launch kidney heart and liver out of that lab in queue on the 22, and then I know you've also talked about potentially partnering with another with another company.

Any clarity on some of your planning around a potential partnership would be helpful. Yes, sure Mark Let me give you the car on that our plan is to bring all three indications up as a lab developed test and have that ready to go by Q1, We will then sick Padma on Cmos and let her go after.

Getting our reimbursement.

As you know the LCD was I did site or publication. So we feel good that the tests were bringing up as the test they've already approved for that blanket LCD, but we still have to go through the paces of getting that once we get through that then we will be going to market with the LDP across all three.

Re donor indication, Oregon the indications.

And so the goal is to launches in LDP. We are in process of speaking with a couple of major partners.

Our goal is still to have those as our long term partner to help us with the clinical trial process and obviously ultimately turn this into a kit that can be democratized, which is really the unique opportunity that we have in from the market research that we completed to make the decision to go into transplant.

We clearly saw that the leading attribute for decisions for the centers is the ability to provide same day turnaround time for their transplant patients and we believe that we will be in a unique position to deliberate on that promise to these centers by completing the clinical trial and democratizing on a digital P C.

Instrument. Therefore, we do need a partnership with a digital PCR platform company and as you might imagine there's three really good ones and so I can't go much deeper than that but just suffice to say we're in conversations with them all and trying to find the best one to partner with.

Okay and then.

I do want to ask I guess about the quarter itself. So I do think it is impressive that you grew sequentially determined Rx volumes. Despite the headwinds in the south and southeast in California, and the decline in surgeries I think every other precision oncology lab that is reported has commented about the headwinds in Q3.

I guess, if you could elaborate a bit as.

As we think about.

The last couple of months here in Q4, and a little bit into 2022 is it your expectation that.

Rx can meaningfully accelerate from here quarter to quarter and then.

My understanding is you had about 10 people in the field I think you've talked about going to 20 by the end of this calendar year.

Any commentary on go to market in sales head count would be helpful as well.

Yeah apartments on and I'm I'll, let her I'll, let her answer that I'll I'll start with though we did see a really solid October we both both Mitch and I've said that we want to be open about that we started to see surgeries come back and we started to see our volumes pick up and they were meaningful as a meaningful increase it wasn't just by a little bit. So that's the good news.

So we'll see how the quarter plays out as you know there is the end of the year, there's always seasonality with elective surgeries, because physicians nor patients want to be in the hospital over the Christmas holiday season. So.

Yet to see we do know there is a backlog of these types of patients. So it could be that because they and waiting for the surgery. They do work through the holidays. So we'll have to wait and see what happens but in terms of the cells fourth expansion and growth partner why don't you handle that one.

Yeah I just wanted to reiterate electronic said, we are pleased with a 65%.

Get over here and I'm confident.

Continuing into 2022, even with our existing 10 reps, so I'm pretty confident deaths continuing to grow it into 2022.

In terms of the sales reps and as of now we still have the 10 reps and is Ronnie said, we'd be very judicious about adding reps. We didn't intend to have 20 by the end of this year, we had said.

Perhaps by the end of next year and I was on each side will be adding a small number of steps to support the launch of I O, which has and and abroad at oncologists call point.

And these be adding them instincts.

Just total address have been market as you can imagine so that's the strategy and it'll be obtained edition starting with a small number now and additionally reps as we proceed to the yard and additional launches including determined Tx.

Mark Okay arms.

In terms of the transplant sales approach.

You could you can anticipate as we get to the end of Q1, depending on who our partner would we will more than likely support that partner with what I would call medical liaisons, our medical technical sales reps. So that we can actually go in and help those platform companies differentiate our test and et cetera, So we'll probably add some.

Of those reps, but.

More to come as we get closer to that day.

Terrific. Thanks normal color I'll I'll hop back in the queue. Thanks.

Thanks, Mark Martin.

Our next question is from Michael Madsen with Needham. Please proceed.

Hi, everyone. This is Joseph on for Mike.

I guess, maybe first one you surround deter them Io and the launch.

I guess you did say earlier that you do not expect to need another study for reimbursement, but I guess, maybe I just want to see what you guys are thinking in terms of the next the next couple of studies. The next study that you'll be.

Pursuing what type of cancer as you guys are targeting and maybe the structure. This in and then I guess second part to that in terms of.

Physician education should we be expecting.

More kols in the future to drive awareness. Thank.

Thank you yes.

Yeah. Those are all good questions and really best answer about partner Archie a commercial officer, Let me let me just clarify something we we believe we have enough data today to support the launch and utility of the test, but we are still in the middle of collecting data that we expect to be published that we can use to go for CMS.

Pardon me you want to take it from there.

Yeah, and time usage of the test the reason we announced the EAP is because there was interest some physicians have access to the desk clinically. So there's definitely a demand for the test and that's why they are doing the EAP program. After reimbursement, yes, we do have data obviously for clinical launch.

Completing studies, that's going to generate the data. These are heterosexual somebody that can generate the data we need to put into a dossier.

Obviously, we have data in London triple negative breast cancer.

We do believe that this test 10, Stan Kenton.

Utility and so we will be making investments in both China in here to show you tend to be an additional two my accounts. So last quarterly talked about for example, the part of the drive study.

In colon cancer, so there will be investments and clinical studies to demonstrate the utility of this test and ultimately lead to upon cancel team <unk>, they're very lucky that because they've done studies in multiple too. Many times, we already have enthusiastic came around and you'll see them speaking about determine.

And upcoming conferences, namely <unk> and so can I get.

Oncology conference happening in Washington D. C. This week.

And then.

At San Antonio breast cancer Symposium, so you're very lucky that because of these these people I've participated in our studies in Europe and yeah, we already have into the ethnic kalo speaker and of course the goal of one of the goals of the EAP in those early access all files are those doctors will automatically become additional channels that.

What kind of spread the word about the desk as they go for some commotion lunch.

Okay, great that.

Makes a lot of sense. Thank you for clearing that up and then maybe just a.

Quick one on.

<unk> R X.

What's the expectations are I guess could you guys maybe clear at the time on a little bit on potential and CCN guideline inclusion.

And then it was my understanding that they would also be a an additional <unk>.

Milestone payment.

And coordination with guideline inclusion.

Burning rock is that correct.

Yeah, So I'm gonna like dog comment on where we all <unk> since he's on point for that but let me give you just a high level answer. There is there are two milestones one milestone is the completion of the tech transfer and I'm going to been done burning Rod going live and then there is a follow on milestone that when we do get into NCC and guidelines that there is an additional milestone.

So that is correct or two milestones.

And so that is that is that.

Correct assumption, Doug you Wanna talk about <unk> I know that they reported out on quite a few of the smaller tumors, but we still haven't seen anything on some of the larger tumors yet.

Yes, that's correct.

<unk>.

Their proceedings are confidential until they're released publicly and so we really don't get any clue from them about what's going on I have written them and ask for an update on what is usually a fall release and they've written back and said.

More likely.

Towards the end of the year so.

All we are in a wait and see mode.

But.

Appears that the lung cancer guidelines are going to be released later this year than than is usual.

Any knowledge of why that is.

Just to add a little color commentary from my role with ASKO.

There have been a significant number of new therapies and new additions to the Arsenal for non small cell lung cancer this year and and so the feeling is there was a lot to take in and a lot to add context too for the members and so I suspect that that's what's driving some of the delay, but clearly we like you guys are.

Are very hopeful that we see those soon.

Yeah, So yeah absolutely.

Well. Thank you for taking our questions of course, yes. Thank you.

Our next question is from Bruce Jackson with a benchmark company. Please proceed.

Hi, everyone thinks checking my question wanted to talk about the pharmaceutical services business briefly in the past you discuss the backlogs and that business has been rather size, but I wanted to know if we could get maybe.

The rough update on the amount and then secondly, with the the data that shows that determine iowa's predictive have you gotten any more inbound calls from potential pharmaceutical partners.

Yeah, Let's we'll split this amongst the team let me sort of.

Start with the last the last question.

We continue to.

To see and get discussions opened up by some of the emerging therapy companies that have products that are either.

Complimentary too.

To the patients who were not responding to an immune therapy and are they are the companies that are trying to enter the ICI or they need checkpoint inhibitor world and so.

Those conversations are always ongoing we continue to do some pilots for those companies. We are hopefully going to see some of the closure of some of those pilots and those pilots. Obviously, we hope will lead to a full access to a trial.

So there is there is interest there we continue to get inbound phone calls as well as we continue to make outbound phone call. So we are short of activity with pharma, but it is mostly with the emerging therapy companies that are trying to take on the large market leaders.

In terms of pharma services.

We we still have a solid pipeline, but it's been a little bit confounding for us if I can just be totally transparent, which which Bruce you had always expect me to be we have these projects and we have them. The master services agreement signed up but but the actual projects. It's kind of a start stop start stop every time, we think we're going to get <unk>.

Tarted on a big project.

We are told by the company that they're going to delay it for another quarter another month and so.

Which is one of the reasons, we wanted to do something a little more reproducible unpredictable, which is why we started taking the bandwidth we had in going after some of the diagnostic companies that knee platform validation and obviously would extremely good at that both in Nashville, as well as in California, and so we can offer them.

A clear environment by which they can do crossover studies from one version of an instrument to a new version one version of the software to a new version and even validate new kits for them and software for their FDA submissions and so that business does not really require.

Farm, a patient samples for clinical trials and is more predictable. So we as Mitch said, we did get our first big contract.

And we've got the instruments installed in that first big contract is underway. So hopefully we'll be able to complete that by the end of the quarter, but but we should see a lot more of those as we enter 2022 and that should help smooth out the revenues and pharma services.

Okay, great and.

And then one follow up question, if I could burning rocks. So you're on track this quarter for the milestone next milestone.

How does that revenue stream unfold during 2022, when they transition to actually performing the tests.