Q1 2022 Renalytix PLC Earnings Call

December 7, 2021

Good morning, and welcome to the Robotics Conference call to review first quarter results for fiscal year two 2022.

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 kept.

<unk> Com partners for a few introductory remarks.

Thank you Catherine and thank you all for participating in today's call. Joining me today from renovating our James Nicola Chief Executive Officer, Tom Mclain, President and Jean Sterling Chief Financial Officer before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of the.

Private Securities Litigation Reform Act of 90 to 95.

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 Lexus ability to lower healthcare costs improve patient quality of life and set the long term standard of care trends that 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 clinical studies and regulatory submissions and our business strategy and future growth. These statements involve material risks and.

Certainties 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 statements for a description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our annual report on form 20-F that was filed on October 21, 2021, with the Securities and Exchange Commission. All forward looking statements made on this call are based on managed.

<unk> current estimates and various assumptions right along with it.

James 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 and is accurate only as of the live broadcast today December seven 2021 and with that ill.

Turn the call over to James Mccullough James.

Thank you Peter good morning, and good afternoon as the end of this calendar year approaches we are confident that our health care system partnership model is delivering a unique value proposition for changing the course of chronic disease management.

As the real world numbers start to build lessons learned from the kidney <unk> implementations at Mount Sinai.

Lake Forest atrium health CD PHP and now the veterans Health administration system are setting the foundation for a national model with the potential to enable a broad section of health care providers to drive better outcomes for the greater than 12 million people with diabetic kidney disease in the United States.

At Mount Sinai, the kidney until X program experienced growth during the quarterly period and most importantly continues to generate key utility data around physician behavior risk assessment ordering and follow on clinical actions.

In mid November kidney Intel X testing was extended to the Mount Sinai network sites across long Island, and Queens, New York, incorporating several new physician practices to integrated electronic health record ordering.

We are now able to measure a critical measure critical metric.

<unk> and volume growth for the kidney Intel X program with conversion from prepay ended to executed orders set another way conversion as the percentage of doctors, who actually order kidney Intel X testing for their patients in response to a centralized population health suggested or pretended order Mount Sinai is.

Now seeing conversion rates as high as 80% in the quarter ended the September and outstanding metric of performance and a direct measure of active engagement in risk assessment by clinicians further Mount Sinai is now leveraging its population health Pharmacy management program to support primary care practices on <unk>.

Diabetic kidney disease, and optimizing therapy decisions early in the disease cycle for those patients that kidney <unk> prognosis intermediate and high risk Dr.

Doctors are now demonstrating that assessing risk and their kidney disease patients is important and are willing to take direct action on a prognostic result.

Assuming this high rate of conversion to executed orders with coordinated pharmacy management continues we will have demonstrated important clinical activation beginning at the primary care level. This should provide publishable evidence that health systems implementing kidney Intel X model have the potential to drive significant improvements to diet.

Kidney disease management across large groups of practicing primary care physicians connected through the electronic health record system.

We believe conversion and pharmacy management will support real World evidence results published in the coming quarters and will accelerate additional health care system adoption and payer coverage in 2022.

Implementing at scale in a complex health care environment, such as Mount Sinai has required many learnings and continuing innovation.

Importantly, we are now demonstrating the kidney until <unk> care model can not only be applied across multiple health care systems with different operating environments, but that we can accomplish a full implementation to clinical testing in shorter timeframes.

With our wake Forest implementation for example, we were able to achieve the startup clinical testing in just six months from execution of contract. A go live timeframe. We are now targeting to reduce to three to four months with coming system partnerships. We expect implementation in our most recent hospital system partners Saint Joseph will be the most efficient to date.

Implementations, such as Mount Sinai Wake Forest University of Utah physician led payer network CDP HP and the VA medical system are complicated by requirements to to coordinate electronic health record system integration broad physician education defining a care paths.

Way with general and specialty physicians and setting up a pharmacy management program. This complication. However is offset by long term care management relationships that can reach large physician basis and their patient populations from the outset.

<unk> competitive barrier to entry.

The Mount Sinai.

St Joseph and CDP HP implementations are demonstrating the value and focusing on our healthcare region with concurrent regional implementations, we expect to achieve efficiencies in sales and medical science liaison personnel deployment and overlapping insurance coverage across different patient populations. We also see a potential.

Saturation effect, beginning to occur which is generating awareness and near term demand from other players operating in the New York State region.

St. Joseph also offers an opportunity to accelerate adoption into a larger patient population as they are part of the Trinity Health system. The fifth largest healthcare network in the United States with 1600 member health care facilities.

We expect to announce additional partnerships in the New York region throughout 2022.

The kidney and <unk> real world evidence utility should continue to expand rapidly with tested patients debate now numbering into the thousands of real world evidence testing and care management in the kidney Intel X diabetic kidney disease population could well exceed 20000 patients in calendar 2022. This is <unk>.

No small population dataset and provides <unk> with considerable use case experience in the statistical power to begin addressing insurance payment for repeat testing in high and intermediate risk patients potentially expanding the indicated use this to include diagnosis and therapeutic response monitoring and to other potential really.

<unk> disease indications such as cardiovascular event risk.

In short the real World evidence program. We have established provides a direct potential pathway to significant increases in the kidney until X total addressable market and begin to erect a one stop shop for practicing primary care physicians to assess chronic disease risk.

Our real World evidence program also has the potential to provide kidney <unk> with a significant competitive advantage through continuous product innovation and performance improvements.

With the General services administration contract that establishes full reimbursement at $950 per reportable result for any kidney Intel X test ordered by our government physician.

We are on our way to a sustainable revenue pathway in the VA health system alone. There are approximately 400000 diagnosed diabetic kidney disease patients eligible for a kidney <unk> baseline risk assessment today.

Again, because we have full reimbursement in this population we have hired trained and are deploying sales personnel. In addition to medical science liaison personnel into the VA system to begin supporting kidney Intel X usage nationally.

Given our overall experience and implementation success, we are now targeting 20 large hospital systems.

Kidney <unk> contracts in 2022, these systems could provide us with the potential to achieve seven figures of diabetic kidney disease patients integrated into a kidney <unk> risk assessment model.

I would now like to turn the conversation over to our President Tom Mcclain for an update on our commercial progress.

Thank you Jay.

While the implementation timelines, we're not with Mount Sinai planned initially in part due to COVID-19. It is now clear that our shared achievements have defined the value of kidney and teluk testing in our health system focused commercial model.

Invaluable lessons learned with the first scaled kidney and telex implementation have created a playbook that is being applied not only in New York, but it's part of the core offering across multiple other health systems.

Kidney and <unk> is now driving increased value for clinicians patients and payers and Mount Sinai Wake Forest atrium.

PHP and soon across the Joseph and the VA medical system.

From the start we were aware that others have tried to apply broad care solutions and chronic disease based on their technology solution.

We studied their successes and their failures in developing our unique approach to care enabled by kidney intellect risk assessment.

Differentiated features of our cash and our core care model are allowing us to demonstrate unique utility.

Okay.

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Please standby, we're having technical difficulties just one moment.

Please standby we will continue momentarily.

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[noise] you may now begin.

Sorry for the interruption and the drop in the call.

This is Tom Mclean I'm going to begin my section of the presentation.

While the implementation timelines, we're not what Mount Sinai planned initially in part due to COVID-19. It is now clear that our shared achievements have defined the value of kidney intellect testing in our health system focused commercial model the.

The invaluable lessons learned with the first scaled kidney and telex implementation has created a playbook that is being applied not only in New York, but it's part of the core offering across multiple other health systems.

Kidney intellect is now driving increased value for clinicians patients and payers at Mount Sinai Wake Forest Atrium C. D. P. H P and soon a crossing Joseph and the VA medical system.

From the start we were aware that others have tried to apply broad care solutions in chronic disease based on their technology solution. We studied their successes and importantly, their failures in developing our unique approach to care enabled by kidney intellectual.

Risk assessment the.

The differentiated features of our test and our core care model are allowing us to demonstrate unique utility from the earliest stages of diabetic kidney disease.

2021, we accomplish something we believe no one else has been able to do we implemented advanced I D. D risk assessment in a large chronic disease population across a complex integrated network comprised of.

Hospitals, and primary care offices and specialists physician practices.

In this complex environment, we have had to learn how to drive efficiency in the clinical pathway with sensitivity to the demand on primary care physicians that affect training and adoption timelines. All of this was within our first EHR integrated.

Ordering and result reporting technology application, we have come to truly understand what it takes to be successful in a complex have be heavily regulated environment with precision.

I'd like to quickly provide more context around what this accomplishment really means for our capabilities going forward.

Mount Sinai is representative of the complexity in the health care delivery model in the United States today.

The health system was built from the acquisition of independent Hospital systems P. C. P offices of networks specialist practices and health centers.

It serves disparate patient populations from the heart of New York City to suburbs in long Island, and upstate to New Jersey and Florida.

The health system operates across different data platforms care pathways and delivery models.

Sinai has many different provider contracts with local regional and national insurers Medicare and Medicaid all.

Under unique payer and payer risk models.

The reality is that this complexity has been a barrier for many health systems in fully deploying a single care practice model across their diverse patient populations.

At Mount Sinai learned the importance of the rights sponsorship for implementation programs, especially the roles and collaboration needed between clinical medicine population health and the C. I O C. M. I O teams, we have also learned.

The essential roles of our health system partnerships Medical Affairs client services.

And sales account executives to support the rollout.

We have defined the key metrics and information that are helpful to quickly align on and assess the benefits of kidney intellects informed care. We have developed the models for integrating payors and economic data to demonstrate value and importantly, we have developed a core parameters.

To effectively apply risking foreign patient management across different care and payer models that exist within the same health system.

This program is also demonstrating the benefits of a value based care model that drive savings for payers and providers through better care for patients.

Our team is confident of what we accomplished together with Mount Sinai, what we have learned and experienced it equips us to streamline and accelerate implementation timelines and positions kidney Intel X to succeed in subsequent health systems Rollouts as James noted earlier.

We have already demonstrated that a wake forest atrium, where the time from contract to first clinical test was six months that timeline will be further accelerated in future system Rollouts.

Change Sterling, our Chief Financial Officer will now provide more detail on our financial results James.

Yes.

Good morning.

The earnings release, we issued today presents our U S. GAAP financial results for the first quarter of fiscal year 2022 ended September 30th 21.

And then I'll review a summary of these results now.

Figures are in U S dollars, which is our reporting currency.

For the quarter, we recognized about $450000 of services revenue related to testing under the Mount Sinai clinical utility study and $30000 of services revenue from Astrazeneca.

You did not post revenue in the prior year period.

We recorded $230000 of costs attributable to those revenues.

Our operating expenses were $12 $1 million for the quarter as compared to $5 4 million for the prior year period.

The increase was primarily driven by higher head count higher R&D expense related to studies at Mount Sinai Wake Forest University of Utah, as well as increased consulting and professional services fees in support of our growth.

Net loss for the first quarter of fiscal 'twenty, two was $10 $1 million or <unk> 14 per share compared to a net loss of $7 $2 million or <unk> 10 per share for the same period a year ago.

We ended the quarter with cash and equivalents of $54 $3 million as of September 32021, compared.

Compared to $65 1 million at the end of June 32021.

I'll now turn the call back to James Mccullough for final remarks, before we open the call to questions.

Thank you James.

Finally, as we have all experienced in November and December have presented a challenging capital markets environment, where the tools and diagnostics sector in particular.

Has become in our opinion oversold.

Analytics stock has fallen substantially with the rest of the sector in recent weeks to pricing levels. We believe do not reflect the series of value milestones achieved since our NASDAQ listing in 2020.

In the coming year, we intend to focus on increasing the liquidity analyst coverage and visibility arena Lettic stock and while we will continue to refrain from.

From providing specific revenue guidance at this early stage of our business scale up we will provide core elements to support financial modeling such as select specific testing run rates addressable markets and routes to expanding addressable markets such as repeat testing.

For 2022, we are targeting a series of catalysts, including one achieving insurance payment for greater than 12 million individuals with diabetic kidney disease, including with Medicare and Medicare advantage payment profiles.

Two announcing a series of new health care system partnerships, three publishing real world utility evidence from our Mount Sinai and other study programs for announcing new strategic partnerships and the services and pharmaceutical categories, five achieving FDA de novo marketing authorization and six.

<unk> demonstrating revenue growth across multiple market segments.

We appreciate your patience and support in 2021.

Have a safe and happy new year and with that operator, we'd now like to open the call for questions.

Thank you to ask a question you need to press star one on your telephone.

To withdraw your question press the pound key.

First question comes from Tycho Peterson with J P. Morgan Your line is open.

Hey, Good morning first question just on the sales ramp so I know you hired a jet Falcon plant is higher.

Or is that all dedicated to the VA can you talk a little bit about scaling up there and then broader friends from Salesforce.

Yes, Hi, Tycho it is primarily dedicated to the VA.

One of the rules of the road. We are adhering to is that we will not hire a significant fixed overhead until we have direct visibility on secured reimbursement.

And with the VA medical system.

We are going to expand into that rapidly.

There were 121 171.

Medical Medical hospital systems in the VA medical.

Group and we're now going to start with that sales force customer service and medical science liaison.

On a national rollout scale.

We have hired other salespeople, which will be supporting our efforts at wake Forest and again at atrium and also now in the Mount Sinai.

And as we get additional insurance coverage that come into those systems.

We'll continue to scale that up as well.

And then LCD timing I know, you've previously said summer 2022, and you can't FAA approval could accelerate that or any risks of a pushout.

Related subject.

Yes, great question, it's a three dimensional chess board.

So we're playing all dimensions.

The LCD is certainly one route that we're focused on we've been focused on it from the very beginning.

We are.

The guidance, we've given to the market is that we do expect an LCD.

By this summer, but there are other pathways to Medicare payment.

And it's interesting to follow the track of what's going on.

Post M sit now.

Back down in Washington, So I think that other pathways will also put up in 2022.

F D. A is not a requirement.

It is certainly something we want to have.

But.

If we do get FDA will that help in terms of timing.

Perhaps I don't know Tom if you want to add any color to that.

Certainly anything on additional with the task that evidence is its validation is helpful.

But as you know the majority of clinical diagnostic tests reimbursed under Medicare.

And their local coverage determinations today. The majority of them are laboratory developed tests, not FDA approved or cleared test.

Okay.

Yes.

On the development roadmap I know you've also talked about repeat testing for treatment response monitoring.

Far out is that in your view.

Yes, we haven't put a specific timeline.

But I am very encouraged by the developments the development of real world evidence so.

I think one of the core value propositions for what we've done is we've now recruited in multiple centers across our geographically diverse.

Implementations across a diverse patient population.

We are looking at the real world evidence equation in different ways.

We can now start to measure physician response, obviously, we talked about conversion, which is a key metric of performance for us.

We can take a look at therapeutic prescription we can take a look at different clinical workflow strategies, we can look at physician referral behavior.

So.

With the real World evidence machine that we've set up 2022.

Is going to generate a huge amount of data.

And I think.

Moving into the March quarter, and certainly the June quarter were going to start to be able to put some real guidance down in terms of the data development, we're going to be publishing on that.

And it's a matter of time, but.

Certainly we're already getting requests from physicians.

About repeat testing, particularly in the high and intermediate risk group, it's a natural thing to do.

Once you baseline risk assessment of patients with kidney Intel X and then you prescribe a drug.

You'd want to see if that's making a difference.

If you are starting to follow the patient if you're educating the patient if the patient is changing their own behaviour.

You want to start to see how that effects.

Kidney health and kidney risk. So it's a very natural extension for us now to roll into monitoring.

And.

Other thing which is important.

The landscape for therapeutic development.

Is starting to mature so we are seeing strong pipelines and multiple pharmaceutical companies. Obviously, we have the <unk> two inhibitors buyer has phenomenon.

There are number of other therapeutics, which are coming online.

And this is the cancer equation all over again, you want to have the ability to risk assess early you want to have the ability to characterize the disease and you want to start to now identify patients that are appropriate ultimately.

For therapies and you want to be tracking therapeutic response, all of this needs to be validated all of this needs to be done in a regulated pathway.

But I think what we're going to see is an acceleration of precision.

Diagnostics and therapeutics coming to play and there'll be a lot of options for patients and physicians.

And that's going to require upfront.

Risk stratification understanding and following so it's a very rich area of development right now we see it happening very quickly much quicker than it did in the cancer field.

It's going to be interesting in 2020 to have the data comes down.

Great last one for me I know Astrazeneca revenues are still small when does that start to become more material and I guess similar question for Davita I think youre launching in three markets. This year. So when you start to recognize revenue from that.

Yes, the pharmaceutical equation.

Bank is going to be very interesting in 2022, I do believe it's going to expand.

And we have learned a lot from our Astrazeneca collaboration.

We've been in with real World tracking now in the Mount Sinai Health system.

So I do expect our 2022 I'd like to expect that the first half of 2022 will be very fruitful.

When it comes to our pharmaceutical partnerships.

And the same is true with Davita, we are moving along we're having a number of different discussions.

It's it's.

It's been a learning process as we get deeper into this.

The understanding of kidney disease risk.

And how that should be applied into the clinical pathway is sporadic across the country.

It's sporadic with different physician practices the education level.

Around a kitten risk, especially in the diabetes population, where we're focusing is uneven.

That's no surprise, we've done an enormous amount of physician survey network our survey.

And we've also now seen from a real world deployments, what's actually going on in the clinic.

It's been a little bit of an eye opener, but this is the novel understanding that we're developing.

Through these real world deployments, and that's gonna feedback up now into.

The strategic partnerships and applying them.

In 2020 to start generating revenue and to take a look at new clinical strategies do you have do you have anything you want to add to that Tom.

Thank you.

Hi, there.

The opportunities here because.

This area has been under addressed for so long.

And the challenge is.

Being able to target the appropriate interventions to the right patients.

Really underscores the need for a kidney Intel X risk assessment, driven approach and where we have already seen the value of that and health systems Rollouts and now we're starting to see that more broadly.

Okay. Thank you.

Thank you Tiger.

Thank you. Our next question comes from Anita Dushyanth with Bamberg capital. Your line is open.

Hi, good morning, Thanks for taking my questions.

Kim could you please share some.

All of the trends that you're seeing.

Yeah.

<unk> kidney into lax.

In Pennsylvania, Indiana, a bunch of them.

Now.

Yes, so thank you Anita.

Okay.

The one of the things I I in particular, having a focus on this conversion.

So we've set up an integrated population health model.

This is important we have engaged population health.

In the cause to support primary care physicians and specialists.

To understand that we need to do risk assessment.

Early and diabetic kidney disease patients.

And so in a system like Mount Sinai population health provides.

Provides visibility to the primary care physician and says this is a patient that should have risk assessment.

How you move into the behavioral.

Economics component, which is does that primary care physicians and then take the ball and start running.

Which ends up in a converted executed kidney Intel X test order now we're not involved in that this is Mount Sinai system.

This is all done independently at Mount Sinai.

But what we're seeing is a very high conversion right now, especially in new practices that are coming online.

And we mentioned this.

In the scripted discussion.

Seeing conversion rate from prepay ended or suggested orders by population health.

Around 80% for actual orders that is very high.

And we are very pleased with that and if that trend continues and you couple that now with population health pharmacy management.

Where he can actually prescribed the drug to high risk patients you would completely change the equation and you completely change the equation of primary care. So the Holy Grail here.

And the way that you stopped.

Disease progression.

Keep a healthy kidney you create a better lifestyle and you start to cut down on cost of progression to dialysis because you get the primary care physician to act.

And what we're demonstrating what that conversion as we are getting action.

I would expect the.

Conversion rate without population health engagement and we've experienced this before with other diagnostic test launches in the past is substantially lower.

So this integrated population health model, we are now demonstrating is really working.

Now we have to scale it.

But we're also demonstrating scale, we've now, adding wake forest or adding atrium, where at a university of Utah, writing CD PHP.

Now, we're moving into the entire VA health system, St Josephs others. So.

We are demonstrating a change in behavior starting early in the disease cycle with the primary care physician level, we are demonstrating that we've engaged population health.

And the model is working.

So I expect 2022, we will continue to demonstrate that and we will now have thousands and thousands of patients.

Which we can derive real world evidence peer reviewed published results.

And when you get to that point.

Thats a tipping point.

Now everybody says Okay. This thing is working we have to adopt this.

That's certainly my hope.

That was very helpful.

And as a follow up to that.

I know you mentioned that you might have some publications coming and maybe end of Q1.

Let's say the calendar year next year. So would go one of the topics be around you know what the outcome is the discipline for population health nurses.

Some of those without.

Yes, that's the benefit of the real world evidence format right.

We have our control group is headed.

Affect what's going on right now.

Which.

Is is quite confusing.

In the clinical space I mean, we have generated.

A lot of awareness now in different settings over the lack of standard of care that's being applied.

And so when you now introduce a controlled population health engaged.

EHR integrated advanced risk assessment.

You start to see change very quickly.

So I do expect.

Well, we're already generating.

Significant results that will be submitted for publication in the short term.

And we have many short term.

Utility endpoints, which could have a significant downstream effect.

Just creating awareness of the need to risk assess in the diabetic kidney disease population of primary care.

Changes the game.

Talking.

For a health system to engage pharmacy management to prescribed new drugs.

On a system wide basis to high and intermediate risk patients early changes the game.

For primary care physicians to increase referral patterns of high and intermediate risk patients changes the game. So theres a lot of low hanging fruit here. Unfortunately.

In this space and.

Again, we have we have the advantage because we've done this in oncology for many many years.

So applying the oncology precision medicine model that we practice now for decades.

Into the naive kidney space.

We believe it's going to have a significant and.

Immediate impact and then of course, we move into the intermediate and long term utility categories, where ultimately we would want a slow.

Progression of kidney disease, we want to prevent large population groups from Upstaging two late stage kidney disease, we can do that.

With applied clinical management, and then ultimately we want to reduce the number of people who end up on dialysis starts we certainly want to start to reduce the number of people who are crashing into the dialysis and just as a reminder today.

Somewhere on the order of 50% of people, who start hemodialysis in the United States. So it's a $100000 year event do it through the emergency room.

This is completely unsustainable.

And so this is this is the model that we're applying on the front end now and.

The data out.

So real world evidence generation.

Across multiple systems.

In a variety of health care environments, the market demographics et cetera.

Into the thousands and thousands of patients.

As the definitive proof that is ultimately required to change standard of care.

Across eventually 40 million Americans with.

With chronic kidney disease.

Okay, Okay, great. Thanks.

And then just one last thing about <unk>.

The number of patients.

It will be screened by.

Second half next year.

It's about 6000 at Mount Sinai. So the run rate of about 300 patients per week is that kind of a low end.

What can be achieved.

So I just want to point out one thing we are not screening.

This is important we are prognosis.

In an already diagnosed patient population apologies I just have to point that out that's very important and that helps adoption.

Because this is an existing disease population that's already at risk. We're now coming in a focus on these patients and the rest can go home, we'll see next year.

So revenue generation.

And run rates again, we're not going to forecast because I will inevitably be wrong.

But.

We do have specific components Mount Sinai has signed up for 6000.

Testing patients.

We're now rolling that out we expect to be complete with that program moving into the into the June quarter of next year.

The 300 tests per week run rate was a figure that Mount Sinai and <unk> came up with is a target we do expect to achieve to achieve that moving into the March quarter.

Is that a low side I think that that's a very good target for everybody to focus on when we talk about system Rollouts.

We'll see how those numbers built certainly the patient population is available Mount Sinai Health system alone has 71000 diabetic kidney disease patients.

In their registry that is a significant population.

We believe all of them should be the baseline risk assessed and then obviously as the data comes out and were able to substantiate this.

A high and intermediate risk group should be monitored.

We will see what the frequency is.

The VA medical system again.

400000 diagnosed diabetic kidney disease patients again, we believe many of them should be baseline risk assessed and again.

High and intermediate risk patients should ultimately be monitored.

With clinical treatment.

<unk> health.

Health and the other health system.

Wake Forest.

Those two systems are operating in the diabetes belt.

In the South East region again, they have significant diabetic kidney disease populations University of Utah.

And then now we're moving into.

Into other health care systems like St. Joseph.

So.

Theres lots of addressable market a lot of it is paid for what I'm impressed with is we are now making the move in 2022 to secure broad.

Insurance payment.

Already ahead of our expectations in terms of securing private payer coverage.

We announced.

Announced that we had achieved our first blue Cross Blue shield coverage determination, which actually gave us Blue Cross Blue shield coverage in two different states.

That was a significant achievement for us.

And creates an opening to achieve other blue cross Blue shield coverage determinations.

And we do believe that we are on track to receive Medicare payment.

In 2022, so as the coverage continues to build.

We'll have more and more systems deployed which creates a footprint across a significant number of diabetic kidney disease patients that we can now baseline risk assess.

It's going to be an interesting equation in 2002.

Thank you for that game.

Thank you Anita.

Thank you as a reminder, if you would like to ask a question press. The Star then the one key on your Touchtone telephone.

We have a question from Dan <unk> with Stifel. Your line is open.

Hey, good morning, Thanks for taking the questions James on the 20 institutions that you're targeting for 2022, just a couple of clarifying points there.

Number one is that is that a goal for fiscal or calendar 2022.

And number two by my tally that's 14, New partners that you think you can sign up and that period is that right and then what if it is right. What do you envision. The makeup of that group being just in terms of hospital systems payers farmers et cetera.

Yes, so thank you Dan I'll give myself calendar 'twenty two.

The consistency will be a mix of <unk>.

Regional hospital system players.

Intermediate and large size.

And we have a number in the pipeline.

And then of course the.

The upside event here is how far we get with the VA medical system. So.

As I said there are 171.

Hospitals I believe in the VA medical system.

As we've said from the beginning we are working with da on both individual hospital systems on the <unk>.

Isn't the level, which is the regional.

Level and then we're also working nationally.

So that could very much P a swing vote.

Which puts us.

In a different position in calendar.

'twenty two.

I I think we have figured out.

Over the last two years had to do this and do it well.

Certainly the way we present the value proposition to the hospital systems has evolved.

And we are much more efficient in our discussions and the health economics.

And the clinical programs have only become more attractive so as we engage in discussions with new hospital systems.

The talks are much easier.

And of course, the key for US is we have to reduce implementation times. So we did talk about that.

In the preamble today with wake Forest, where implementation prime was reduced from contract too.

Go live testing.

In six months, we expect to bring that down even further to three or four months.

As we actually get.

A more streamlined simplified program.

To create a testing environment with care management and pharmacy management.

And each one of these systems so.

We said 'twenty as a target.

For 2022, I very much believe that that is doable.

If we end up.

With success to be a medical system, we may exceed that.

Let's see how it goes but certainly I think the management team is very pleased now.

That we've proven the model.

It started generating results and this engagement with population health.

As a significant differentiated advantage.

We are partnered now to turn on large groups of primary care physicians and support them.

And enable them to.

To do risk assessment early west.

With specific actions so.

We know the model works now.

Now, it's time to lean forward and accelerate it.

Okay, just maybe one more clarification on top of that as the as the VA accounting as one underneath that 20 institutions or are you considering multiple reasons under the VA as.

It's part of the 20.

That's a great question.

The VA is an open field for us so how I'm counting it that's a good question I actually think if we're looking at individual hospital systems.

I think the VA could contribute a number towards that 20.

If we end up with a national.

Component or even a visit component.

That number could increase rapidly so the VA as its own category.

And again I have to emphasize this we have a 10 year General services administration contract.

Which pays for all testing at $950 per reportable result, we have no reimbursement limitation there.

Nor do we need any other regulatory component this is a.

Immediate addressable market opportunity for us and obviously, that's why we're hiring salesforce, we're hiring medical science liaison customer service, but.

Back to your original question I think the VA will present multiple hospital systems for deployment of kidney Intel X in 2022.

Okay. So if you were to sign up for revisions in 2022, then that would be.

For counting towards the 20 institution goal that you're having.

So Tom jump in on this one the VA has 171 health centers, which are health systems. They are they operate independently with their own network C. Box. So there are multiple health systems in each building.

Sure.

Okay, I'm, sorry, guys I'm sure I'm not trying to belabor a point, but what's your assumption be for the VA within that 20 institution goal that you have for 2022.

So I don't have a number it should make up a quarter of that.

If I have to stand on something but again, if we're successful at the <unk> level.

It could well exceed that.

If we're successful at the National level, then we're talking about a whole different game.

But look when I talk about the 20 <unk>.

Hospital systems, I'm really looking at large independent hospital systems like Mount Sinai atrium, wake Forest et cetera.

The VA is.

A lot of upside, but let's see how it plays.

In the March quarter.

It's a good question much.

Thanks Sam.

Thank you and our next question comes from Mark Massaro with BT <unk>. Your line is open.

Hey, guys. Thanks for the questions I guess, obviously, the FDA has been busy reviewing COVID-19 submissions.

I do think one value creating.

Milestone for you would be to secure FDA approval I guess can you just give us a sense for.

How that review process is going.

Whether or not the dialogue is moving.

Iterative conversations going back and forth or has there been.

Month's worth of.

Not hearing anything I'm just trying to.

Better understand how that conversation is going in and just try to handicap when you think.

Comfortably do you think you can get FDA approval by the end of fiscal year 'twenty two.

So I am loath to be pinned down to FDA timing. Thank you markets. It's good to hear you on the call.

This is Ben let me answer the question first and then I'll give you I'll give you some color.

I won't give FDA timing as I've said from the beginning that's a fool's game and I've been that for before I don't know Pete Hurtful again the.

The process is moving well.

We believe we have a good application we have a very good understanding we have a significant amount of third party expertise, which is at the table.

Many of these folks don't take prisoners are theyre very data oriented statistical oriented.

We've mentioned some of the some of the folks that have been involved. So I think we have one of the highest iterations.

And solid basis for an FDA regulatory process that I've experienced in my career.

That being said.

Not going to comment on timing, because I will inevitably be wrong.

Agency as you know more than anybody has been under a considerable amount of stress.

And.

Theres been consequence across the board for that I talked to many other Ceos, all of whom are having similar experiences.

But I'm I'm confident that.

We're on the right track and the communication with FDA has been very good.

And very comprehensive so FDA will come when FDA will come in.

In the meantime, obviously, we intend to build a very significant business.

And obviously FDA is important but if you ask me what the number one reimbursed number one risk factor associated with growth it's reimbursement.

And I've said this from the beginning when we started the company.

We talk to the management team and I said look we've got three things we have to worry about we know how to we ultimately know how to do FDA, we know how to build the sales force we know how to build a product we know how to build a business.

We've got to focus on reimbursement reimbursement and reimbursement because if you don't get paid for your product.

Then you don't have a revenue stream you can access the capital markets to fund all of the other things that unique so reimbursement is very very much been a focus.

And we're succeeding there.

FDA will help that.

Do I expect an FDA.

De Novo marketing authorization in this fiscal year I do.

That is my expectation, we are building for that component.

But again nobody can guarantee this.

Especially in the Covid era.

How does that answer that question well enough.

You did that was perfect and then just my last question is on.

The real World evidence study from Mount Sinai I guess should we expect you to publish that in a peer reviewed journal and then can you just remind us what.

What you expect the primary and secondary endpoints of that study to be.

Yes, you should.

Should expect multiple peer reviewed publications out of Mount Sinai and other real World evidence studies that we're running this as a very powerful COO.

Cornerstone for renal clinics.

It's not easy to set up these large real world evidence programs. We did it from the very beginning understanding that real world evidence ultimately drives a regulatory pathway through multiple product versions.

It ultimately drives reimbursement.

And of course, it proves the case for physicians and healthcare systems that this is the right way to go to manage chronic disease.

The real World evidence machine that we've set up.

His extensive its comprehensive it is looking at multiple short intermediate and long term end points.

Short term Readouts, which we expect in 2022.

Start with things that we've already talked about like conversion.

If you engage population health, which is very important for a capital efficient diagnostic deployment right as opposed to creating a huge fixed overhead hiring a massive salesforce for a strictly push marketing approach by engaging population health it changes the entire the entire return on.

Capital equation, we're now able to reach.

Upfront large treating groups of physicians and patients.

With population health.

Leading the way.

And we're already starting to see proof of that with conversion. So when we talk about a conversion of prepayment or suggested orders by population health to actual executed orders, especially the primary care physician level.

Approaching or exceeding 80%.

I have never before in my career.

<unk> that type of utility.

Now that's one metric now you have to look at the downstream.

What happened to those patients with a high risk patients referred to nephrology.

Did they have new drug intervention did they have behavioral modification. So this is a very rich environment.

In a relatively open field, we would not experienced this in oncology and cancer.

But in kidney disease, it's just wide open for innovation and it's wide open for novel data.

Around utility, especially around this thing behavioral economics, which is physician and patient behavior when presented with.

Information in this case prognostic information early.

In the disease cycle, where.

We should be able to generate maximum effect with clinical action and prevent people from moving onto late stage kidney disease, that's the whole point.

<unk> maintained kidney health.

And can we really drive the utility equation around maintaining kidney health and that has a short term implications like conversion.

But ultimately we would like to show that we are slowing down progression of patients into late stage disease. Ultimately, we'd like to show that we are limiting the number of patients that have to experience dialysis.

And this real world evidence machine that we've set up is important this has not gone on this has not gone unnoticed by strategic partners.

Pharmaceutical partners medical device manufacturers and service providers.

How did we get into a position.

Where we are now integrated with large healthcare networks.

And starting to generate this type of real world evidence. This has implications across the entire industry for how different devices drugs services clinical management strategies can ultimately be applied.

So this is going to be an ongoing equation for several years.

But in 2022.

Gonna be able to submit for peer reviewed publication.

A number of significant utility endpoints across again thousands of patients, which will then evolve into.

Multiple treating facilities and different demographics across different patient populations I can tell you from my own experience sitting here in Salt Lake City.

My care and the people I speak to is very different than sitting in New York City.

So in New York City.

Your interaction with physicians really come down to.

Primary care and specialty interactions on almost a one for one ratio.

Out here in Salt Lake City, I have much more interaction with primary care nurse practitioners than I do with specialties. So you have to understand the details and all of these settings, if youre going to be successful at driving a new standard of care for advanced prognosis, sorry, Im going off the.

The deep end here, but this is what creates such an exciting equation for 2022.

Okay. Thank you and as a reminder, if you would like to ask a question press. The Star then the one key on your Touchtone telephone.

Yeah.

Again, Thats star one to ask a question.

Yeah.

Alright, well it sounds like we've answered most of the questions again, everybody. Thank you for dialing in and please have a safe and happy new year.

Operator back to you.

That concludes today's conference call. Thank you for participating you may now disconnect.

Yeah.

[music].

Good morning, and welcome to the Palo Verde Conference call to review first quarter results for fiscal year two 2022.

At this time all participants are in a listen only mode.

Thank you Catherine 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 statements. During this call that include forward looking statements within the meaning of.

Private Securities Litigation Reform Act of 90 to 95.

Any statements made during this call that relate to expectations or predictions of future events results or performance are forward looking statements.

Although these statements include without limitation statements related to kidney Intel Lexus ability to lower healthcare costs improve patient quality of life and the long term standard of care trends that our market potential benefits of government policy change the impact of COVID-19 on our business our expectations for hiring product developed.

Strategic partnerships and collaborations reimbursement decisions clinical studies, and regulatory submissions and our business strategy 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 statements for a description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our annual report on form 20-F that was filed on October 21, 2021 with the Securities Exchange Commission. All forward looking statements made on this call are based on <unk>.

<unk> current estimates and various assumptions right now what it's 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 and is accurate only as of the live broadcast.

Today December seven 2021, and with that I'll turn the call over to James Mccullough James.

As the real world numbers start to build lessons learned from the kidney and <unk> implementations at Mount Sinai Wake Forest Atrium Health G. D. P. H P and now the veterans Health Administration system are setting the foundation for a national model with the potential to enable a broad section of health care providers.

To drive better outcomes for the greater than 12 million people with diabetic kidney disease in the United States.

We are now able to measure a critical measure critical metric.

And volume growth for the kidney Intel X program with conversion from pretended to executed orders set another way conversion as the percentage of doctors, who actually order kidney Intel X testing for their patients in response to a centralized population health suggested or pre pending order Mount Sinai is now.

We're seeing conversion rates as high as 80% in the quarter ended the September and outstanding metric of performance and a direct measure of active engagement in risk assessment by clinicians further Mount Sinai is now leveraging its population health Pharmacy management program to support primary care practices on <unk>.

But kidney disease and optimizing therapy decisions early in the disease cycle for those patients that kidney until access prognosis that intermediate and high risk.

Doctors are now demonstrating that assessing risk and their kidney disease patients is important and are willing to take direct action on a prognostic result.

Assuming this high rate of conversion to executed orders with coordinated pharmacy management continues we will have demonstrated important clinical activation beginning at the primary care level. This should provide publishable evidenced that health systems implementing kidney Intel X model have the potential to drive significant improvements to diet.

Kidney disease management across large groups of practicing primary care physicians connected through the electronic health record system.

Implementing at scale in a complex health care environments, such as Mount Sinai has required many learnings and continuing innovation.

Importantly, we are now demonstrating the kidney intellects care model cannot only be applied across multiple health care systems with different operating environments, but that we can accomplish a full implementation to clinical testing in shorter timeframes with.

Implementations, such as Mount Sinai Wake Forest University of Utah physician led payer network CDP HP and the VA medical system are complicated by requirements to work to coordinate electronic health record system integration broad physician education defining a care paths.

With general and specialty physicians and setting up a pharmacy management program. This complication. However is offset by long term care management relationships that can reach large physician basis and their patient populations from the outset, a significant competitive barrier to entry.

The Mount Sinai.

St Joseph and CD PHP implementations are demonstrating the value and focusing on our healthcare region with concurrent regional implementations, we expect to achieve efficiencies in sales and medical science liaison personnel deployment and overlapping insurance coverage across different patient populations. We also see a potential.

Saturation effect, beginning to occur which is generating awareness and near term demand from other players operating in the New York State region.

St. Joseph also offers an opportunity to accelerate adoption into a larger patient population as they are part of the Trinity health system.

Fifth largest healthcare network in the United States with 1600 member health care facilities.

We expect to announce additional partnerships in the New York region throughout 2022.

But kidney Intel X real world evidence utility should continue to expand rapidly with tested patients debate now numbering into the thousand.

Real World evidence testing and care management in the kidney Intel X diabetic kidney disease population could well exceed 20000 patients in calendar 2022.

This is no small population dataset and provides <unk> with considerable use case experience in the statistical power to begin addressing insurance payment for repeat testing in high and intermediate risk patients potentially expanding the indicated use this to include diagnosis and therapeutic response monitoring and to other.

<unk> related disease indications, such as cardiovascular event risk.

Sure the real World evidence program. We have established provides a direct potential pathway to significant increases in the kidney and <unk> total addressable market and begin to erect a one stop shop for practicing primary care physicians to assess chronic disease risks.

Our real World evidence program also has the potential to provide kidney <unk> with a significant competitive advantage through continuous product innovation and performance improvements.

With the General services administration contract that establishes full reimbursement at $950 per reportable result for any kidney Intel X test ordered by our government physician.

Given our overall experience and implementation success, we are now targeting 20 large hospital systems.

Kidney and <unk> contracts in 2022, these systems could provide us with the potential to achieve seven figures of diabetic kidney disease patients integrated into a kidney <unk> risk assessment model.

I would now like to turn the conversation over to our President Tom Mcclain for an update on our commercial progress.

Thank you Jay.

While the implementation timelines, we're not with Mount Sinai planned initially in part due to COVID-19. It is now clear that our shared achievement has defined the value of kidney and collect casting in our health system focused commercial model.

Invaluable lessons learned with the first scaled kidney intellect implementation have created a playbook that is being applied not only in New York, but as part of the core offering across multiple other health systems.

Kidney intelligence is now driving increased value for clinicians patients and payers and Mount Sinai Wake Forest atrium.

D PHP and soon across the Joseph and the VA medical system.

From the start we were aware that others have tried to apply broad care solutions and chronic disease based on their technology solution.

We studied their successes and their failures in developing our unique approach to care enabled by kidney intellect risk assessment there.

Differentiated features of our cash and our core care model are allowing us to demonstrate unique utility sorry for the interruption in the drop in the call. This is Tom Mclean I'm going to begin my section of the presentation again.

While the implementation timelines are not what Mount Sinai planned initially in part due to COVID-19. It is now clear that our shared achievements have defined the value of kidney intellect testing in our health system focused commercial model <unk>.

The invaluable lessons learned with the first scale kidney and <unk> implementation has created a playbook that is being applied not only in New York, but it's part of the core offering across multiple other health systems.

Kidney Intel like is now driving increased value for clinicians patients and payers at Mount Sinai Wake Forest atrium, CDP HP and soon across St Josephs and the VA medical system.

From the start we were aware that others have tried to apply broad care solutions in chronic disease based on their technology solution. We studied their successes and importantly, there are failures in developing our unique approach to care enabled by kidney and <unk>.

Yes.

The differentiated features of our cats and our core care model are allowing us to demonstrate unique utility from the earliest stages of diabetic kidney disease in.

In 2021, we accomplished something we believe no one else has been able to do we implemented advanced IBD risk assessment and a large chronic disease population across a complex integrated network comprised of.

Hospitals primary care offices and specialists physician practices.

In this complex environment, we have had to learn how to drive efficiency in the clinical pathway with sensitivity to the demands on primary care physicians that affect training and adoption timelines. All of this was within our first EHR integrated.

Ordering and result reporting technology application, we have come to truly understand what it takes to be successful in a complex have be heavily regulated environment with precision.

I'd like to quickly provide more context around what this accomplishment really means for our capabilities going forward.

Mount Sinai is representative of the complexity in the health care delivery model in the United States today.

<unk> system was built from the acquisition of independent Hospital systems, PCP office as a networks specialists practices and health centers.

It serves disparate patient populations from the heart of New York City to suburbs in long Island, and upstate to New Jersey and Florida.

The health system operates across different data platforms care pathways and delivery models.

Mount Sinai has many different provider contracts with local regional and national insurers, Medicare and Medicaid all under unique payer and payer risk models.

The reality is that this complexity has been a barrier for many health systems in fully deploying a single care practice model across their diverse patient populations.

At Mount Sinai, we learned the importance of the REIT sponsorship for implementation programs, especially the roles and collaboration needed between clinical medicine population health and the <unk> teams. We have also learned.

Our central roles of our health system partnerships.

Medical Affairs client services.

And sales account executives to support the rollout.

We have defined the key metrics and information that are helpful to quickly align on and assess the benefits of kidney and telex informed care. We have developed the models for integrating payors and economic data to demonstrate value and importantly, we have developed a core parameters.

To effectively apply risk informed patient management across different care and payer models.

Zest within the same health system.

This program is also demonstrating the benefits of our value based care model that drive savings for payers and providers through better care for patients.

Our team is confident of what we accomplished together with Mount Sinai, what we have learned and experienced it equips us to streamline and accelerate implementation timelines.

<unk> position kidney intellect to succeed in subsequent health systems Rollouts as James noted earlier, we have already demonstrated data wake forest atrium, where the time from contract to first clinical tests was six months that timeline will be further accelerated.

In future system Rollouts.

James Sterling, our Chief Financial Officer will now provide more detail on our financial results James.

<unk>.

Good morning.

The earnings release, we issued today presents our U S. GAAP financial results for the first quarter of fiscal year 2022 ended September 30 of 'twenty one.

I'll review a summary of these results now.

All figures are in U S dollars, which is our reporting currency.

For the quarter, we recognized about $450000 of services revenue related to testing under the Mount Sinai clinical utility study and $30000 of services revenue from Astrazeneca you.

You did not post revenue in the prior year period.

We recorded $230000 of costs attributable to those revenues.

Our operating expenses were $12 1 million for the quarter as compared to $5 4 million for the prior year period.

Net loss for the first quarter of fiscal 'twenty, two was $10 $1 million or <unk> 14 per share compared to a net loss of $7 2 million or <unk> 10 per share for the same period a year ago.

We ended the quarter with cash and equivalents of $54 $3 million as of September 32021.

Compared to $65 1 million at the end of June 32021.

I'll now turn the call back to James Mccullough for final remarks, before we open the call to questions.

Thank you James.

Finally, as we have all experienced in November and December have presented a challenging capital markets environment, where the tools and diagnostics sector in particular.

Has become in our opinion oversold.

Renal lytic stock has fallen substantially with the rest of the sector in recent weeks to pricing levels. We believe do not reflect the series of value milestones achieved since our NASDAQ listing in 2020.

In the coming year, we intend to focus on increasing the liquidity analyst coverage and visibility of renal lettic stock and while we will continue to refrain from <unk>.

Providing specific revenue guidance at this early stage of our business scale up we will provide core elements to support financial modeling such as select specific testing run rates addressable markets and routes to expanding addressable markets such as repeat testing.

Real World utility evidence from our Mount Sinai and other study programs for announcing new strategic partnerships and the services and pharmaceutical categories, five achieving FDA de novo marketing authorization and six demonstrating revenue growth across multiple market segments.

We appreciate your patience and support in 2021.

Have a safe and happy new year and with that operator, we'd now like to open the call for questions.

Thank you to ask a question you need to press star one on your telephone.

To withdraw your question press the pound key.

First question comes from Tycho Peterson with J P. Morgan Your line is open.

Hey, Good morning first question just on the other.

Sales ramp so I know you hired Jen Falcon plant is higher.

Or is that all dedicated to the VA can you talk a little bit about scaling up there and then just broader thoughts from Salesforce.

Yes, Hi, Tycho it is primarily dedicated to the VA.

One of the rules of the road. We are adhering to is that we will not hire a significant fixed overhead until we have direct visibility on secured reimbursement.

And with the VA medical system.

We are going to expand into that rapidly.

There were 121 171.

Medical.

Medical Hospital systems in the VA medical.

Group and we're now going to start with that sales force customer service and medical science liaison.

On a national rollout scale, we have hired other salespeople, which will be supporting our efforts at wake Forest and again at atrium and also now in the Mount Sinai.

And as we get additional insurance coverage that come into those systems.

We'll continue to scale that up as well.

And then LCD timing I know, you've previously said summer 2022.

You can't FDA approval could accelerate that or any risks of a pushout.

Yeah.

Yes, great question, it's a three dimensional chess board.

So we're playing all dimensions.

LCD is certainly one route that we're focused on we've been focused on it from the very beginning.

We.

<unk>.

The guidance, we've given to the market is that we do expect an LCD.

By this summer, but there are other pathways to Medicare payment.

And it's interesting to follow the track of what's going on.

Post <unk> now.

Back down in Washington, So I think that other pathways will also put up in 2022.

FDA is not a requirement.

It is certainly something we want to have.

But.

If we do get FDA will that help in terms of timing.

Perhaps I don't know Tom if you want to add any color to that.

Certainly anything additional with the capsid evidence its validation is helpful.

But as you know the majority of clinical diagnostic tests reimbursed under Medicare.

Their local coverage determinations today. The majority of them are laboratory developed tests, not FDA approved or cleared tests.

Okay.

On the development roadmap I know you've also talked about repeat testing for treatment response monitoring.

Far out is that in your view.

Okay.

Yes, we haven't put a specific timeline.

But I am very encouraged by the developments the development of real world evidence so.

I think one of the core value proposition through what we've done is we've now recruited in multiple centers across geographically diverse.

Implementations across a diverse patient population.

We are looking at the real world evidence equation in different ways.

We can now start to measure physician response, obviously, we talked about conversion, which is a key metric of performance for us.

We can take a look at therapeutic prescription we can take a look at different clinical workflow strategies, we can look at physician referral behavior.

So with the real world evidence.

Gene that we've set up 2022.

Is going to generate a huge amount of data.

And I think.

Moving into the March quarter, and certainly the June quarter were going to start to be able to put some real guidance down in terms of the data development, we're going to be publishing on that.

And.

It's a matter of time, but certainly were already getting requests from physicians.

About repeat testing, particularly in the high and intermediate risk group, it's a natural thing to do.

Once you baseline risk assessment of patient with kidney Intel accident, you prescribe a drug.

You wanted to see if it's making a difference.

If you are starting to follow the patient if you're educating the patient if the patient is changing their own behaviour.

You want to start to see how that effects.

Kidney health and kidney risk. So it's a very natural extension for us now to roll into monitoring.

And another thing which is important.

<unk>.

The landscape for therapeutic development.

It's starting to mature so we are seeing strong pipelines and multiple pharmaceutical companies. Obviously, we have the <unk> two inhibitors buyer has phenomenon.

There are a number of other therapeutics, which are coming online.

For therapies and you wanted to be tracking therapeutic response or all of this needs to be validated all of this needs to be done in a regulated pathway.

But I think what we're going to see is an acceleration of precision.

<unk>.

Diagnostics and therapeutics coming to play and there'll be a lot of options for patients and physicians.

And that's going to require upfront.

Risk stratification understanding and following so it's a very rich area of development right now we see it happening very quickly much quicker than it did in the cancer field.

It's going to be interesting in 2020 to have the data comes down.

Yes, the pharmaceutical equation.

<unk> is going to be very interesting in 2022, I do believe it's going to expand.

And we have learned a lot from our Astrazeneca collaboration.

We've been in with real World tracking now in the Mount Sinai Health system.

So I do expect.

2022, I'd like to expect that the first half of 2022 will be very fruitful when it comes to our pharmaceutical partnerships.

And the same is true with Davita, we are moving along we're having a number of different discussions.

It's.

It's been a learning process as we get deeper into this.

The understanding of kidney disease risk.

And how that should be applied into the clinical pathway is sporadic across the country.

It's sporadic with different physician practices the education level.

Around kidney risk, especially in the diabetes population, where we're focusing.

He is uneven.

No surprise, we've done an enormous amount of physician survey network.

Survey.

And we've also now seen from a real world deployments, what's actually going on.

In the clinic.

And it's been a little bit of an eye opener, but this is the novel understanding that we're developing.

Through these real world deployments, and that's going to feed back up now into.

The strategic partnerships and applying them.

In 2022 to start generating revenue and take a look at new clinical strategies do you have do you have anything you want to add to that Tom.

Thank you Roger.

Alright.

The opportunities here because.

This area has been under addressed for so long.

And the challenge is.

Being able to target the appropriate intervention to the right patients.

It really underscores the need for a kidney <unk> risk assessment, driven approach and we have already in the value of that and health systems Rollouts and now we're starting to see that more broad.

Great. Thank you.

Thank you Tiger.

Thank you. Our next question comes from Anita Dushyanth with Bamberg capital. Your line is open.

Hi, good morning, Thanks for taking my questions James.

James could you think yeah, some of the trends that you're seeing.

Uh huh.

Kidney into lax.

From the company.

Up until now.

Yes, so thank you Anita.

The one of the things I I in particular, having a.

Focus on this conversion.

So we've set up an integrated population health model.

This is important we have engaged population health.

The cause to support primary care physicians and specialists.

To understand that we need to do risk assessment.

Early and diabetic kidney disease patients and so in a system like Mount Sinai population health.

<unk> visibility to their primary care physician and says this is a patient that should have risk assessment.

Now you move into the behavioral.

Economics component, which is does that primary care physicians, then take the ball and start running.

Which.

Ends up in a converted executed kit the <unk> task order.

Now we're not involved in that this is Mount Sinai system.

This is all done independently at Mount Sinai.

But what we're seeing is a very high conversion rate now, especially in new practices that are coming online.

And we mentioned this.

And the scripted discussion we're seeing conversion rate from prepay ended or suggested orders by population health.

Around 80% for actual orders that is very high.

And we are very pleased with that and if that trend continues and you couple that now with population health pharmacy management.

Where you can actually prescribed the drug to high risk patients you would completely change the equation and completely change the equation of primary care. So the Holy Grail here.

And the way that you stopped.

Disease progression.

You keep a healthy kidney you create a better lifestyle and you start to cut down on cost of progression to dialysis because you get the primary care physician to act.

And what we're demonstrating what that conversion as we are getting action.

I would expect the.

Conversion rate without population health engagement and we've experienced this before with other diagnostic test launches in the past is substantially lower.

This integrated population health model.

We are now demonstrating is really working.

Now we have to scale it.

But we're also demonstrating scale, we've now, adding wake forest or adding atrium, where at a university of Utah, We're adding CDP HP and now we're moving into the entire VA health system St Josephs others. So.

We are demonstrating change in behavior, starting early in the disease cycle with the primary care physician level, we are demonstrating that we've engaged population health.

And the model is working.

So I expect 2022, we will continue to demonstrate that and we will now have thousands and thousands of patients.

From which we can drive real world evidence peer reviewed published results.

And when you get to that point.

Thats a tipping point.

Now everybody says Okay. This thing is working we have to adapt.

That's certainly my hope.

That is very helpful.

And as a follow up to that.

I know you mentioned that you might have some publications coming.

Maybe end of Q1.

Let's say the calendar year next year, so would do one of the topics be around you know what the outcome is with discipline for population health nurses.

Some of those without.

Yes, that's the benefit of the real world evidence format right.

Our control group has had effect what's going on right now.

Which.

Is is quite confusing.

In the clinical space I mean, we have generated.

A lot of awareness now in different settings over the lack of standard of care that's being applied.

And so when you now introduce a controlled population health engaged.

EHR integrated advanced risk assessment.

You start to see change very quickly.

So I do expect.

Well, we're already generating.

Significant results that will be submitted for publication in the short term.

And we have many short term.

Utility endpoints, which could have a significant downstream effect.

Just creating awareness of the need to risk assess in the diabetic kidney disease population of primary care.

Changes the game.

Talking.

For a health system to engage pharmacy management to prescribed new drugs on a system wide basis to high and intermediate risk patients early changes the game.

For primary care physicians to increase referral patterns of high and intermediate risk patients changes the game. So theres a lot of low hanging fruit here. Unfortunately.

In this space and <unk>.

Again, we have we have the advantage because we've done this in oncology.

For many many years.

So applying the oncology precision medicine model that we practice now for decades.

Into the naive kidney space.

We believe it's going to have significant and.

Media impact and then of course, we move into the intermediate and long term utility categories, where ultimately we'd want a slow.

Progression of kidney disease, we want to prevent large population groups from Upstaging two late stage kidney disease, we can do that.

Somewhere on the order of 50% of people, who start hemodialysis in the United States. So it's a $100000 year event do it through the emergency room.

This is completely unsustainable.

And so this is this is the model that we're applying on the front end now and.

The data out.

So real world evidence generation.

Across multiple systems.

In a variety of health care environments, the market demographics et cetera.

Into the thousands and thousands of patients.

As the definitive proof that is ultimately required to change standard of care across eventually 40 million Americans with.

With chronic kidney disease.

Okay, Okay, great. Thanks.

And then just one last thing about the <unk>.

The number of patients.

It will be screened by.

Second half.

It's about 6000 at Mount Sinai. So the run rate of about 300 patients per week at that kind of a low end.

What can be achieved.

Yes.

So I just want to point out one thing we are not screening.

This is important we are prognosis.

In an already diagnose patient population apologies I just have to point that out that's very important and that helps adoption.

Because this is an existing disease population, it's already at risk, we're now coming into play.

Focus on these patients and the rest can go home, we will see you next year.

So <unk>.

Revenue generation.

And run rates again, we're not going to forecast because I will inevitably be wrong.

But we.

We do have specific components Mount Sinai has signed up for 6000 pay.

<unk> testing patients.

We're now rolling that out we expect to be complete with that program moving into the into the June quarter of next year.

The 300 tests per week run rate was a figure that Mount Sinai and <unk> came up with is a target we do expect to achieve to achieve that moving into the March quarter.

Is that a low side I think that that's a very good target for everybody to focus on when we talk about system Rollouts.

We'll see how those numbers built certainly the patient population is available Mount Sinai Health system alone has 71000 diabetic kidney disease patients.

In their registry that is a significant population.

We believe all of them should be baseline risk assessed and then obviously as the data comes out, but we're able to substantiate this.

The high and intermediate risk group should be monitored.

We will see what the frequency is.

The VA medical system again.

400000 diagnosed diabetic kidney disease patients again, we believe many of them should be baseline risk assessed and again.

High and intermediate risk patients should ultimately be monitored.

With clinical treatment.

<unk> health.

The health and the other health system.

Wake Forest.

Those two systems are operating in the diabetes belt.

In the southeast region again, they have significant diabetic kidney disease populations University of Utah.

And then now we are moving into.

Into other health care systems like St. Joseph.

So.

Theres lots of addressable market a lot of it is paid for what I'm impressed with is we are now making the move in 2022 to secure broad.

Insurance payment.

Already ahead of our expectations in terms of securing private payer coverage.

We.

Announced that we've achieved our first Blue Cross Blue shield coverage determination, which actually gave us Blue Cross Blue shield coverage in two different states.

That was a significant achievement for us.

And creates an opening to achieve other blue cross Blue shield coverage determinations.

And we do believe that we're on track to receive Medicare payment.

In 2022, so as the coverage continues to build.

We will have more and more systems deployed which creates a footprint across a significant number of diabetic kidney disease patients that we can now baseline risk assess.

It's going to be an interesting equation in 'twenty two.

Thank you for attending.

Thank you Anita.

Yes.

Thank you as a reminder, if you would like to ask a question press. The Star then the one key on your Touchtone telephone.

We have a question from Dan <unk> with Stifel. Your line is open.

Hey, good morning, Thanks for taking the questions James on the 20 institutions that you're targeting for 2022, just a couple of clarifying points there.

Number one is that is that a goal for fiscal or calendar 2022.

And number two by my tally that's 14, New partners that you think you can sign up and that period is that right and then what if it is right. What do you envision the makeup of that group being just in terms of.

Hospital systems payers farmers et cetera.

Yes, so thank you Dan I'll give myself calendar 'twenty two.

The consistency will be a mix.

Regional hospital system players.

Intermediate and large size.

And we have a number in the pipeline.

And then of course the.

There will be upside event here is how far we get with the VA medical system. So.

As I said there are 171.

Hospitals I believe in the VA medical system.

As we've said from the beginning we are working with VA on both individual hospital systems on the <unk>.

<unk> level, which is the regional.

Level and then we're also working nationally.

So that could very much P a swing vote.

Which puts us.

In a different position in calendar.

'twenty two.

I think we have figured out.

Over the last two years, how to do this and do it well.

Certainly.

The way we present the value proposition to the hospital systems has evolved.

And we are much more efficient in our discussions and the health economics.

And the clinical programs have only become more attractive.

As we engage in discussions with new hospital systems.

The talks are much easier.

And of course, the key for US is we have to reduce implementation time. So we did talk about that.

In the preamble today with wake Forest, where implementation prime was reduced from contract too.

Go live testing.

In six months, we expect to bring that down even further to three or four months.

As we actually get.

For a more streamlined simplified program.

To create a testing environment with care management and pharmacy management.

And each one of these systems so.

We said 'twenty as a target.

For 2022, I very much believe that that is doable.

If we end up.

With success to be a medical system, we may exceed that.

Let's see how it goes but certainly I think the management team is very pleased now that.

That we've proven the model.

It started generating results and this engagement with population health.

It was a significant differentiated advantage.

We are partnered now to turn on large groups of primary care physicians and support them.

And enable them.

To do risk assessment early with specific actions.

No.

We know the model works now it's time to lean forward and accelerate it.

Okay, just maybe one more clarification on top of that is the VA accounting as one underneath that 20 institutions or are you considering multiple designs under the VA as.

As part of the 20.

That's a great question.

VA is an open field for us.

So how I'm counting it that's a good question I actually think if we're looking at individual hospital systems.

Think the VA could contribute a number towards that 20 if.

If we end up with a national.

Component or even a visit component.

That number could increase rapidly so the VA as its own category.

And again I have to emphasize this we have a 10 year General services administration contract.

Which pays for all testing at $950 per reportable result, we have no reimbursement limitation there.

Nor do we need any other regulatory component this is a.

Immediate addressable market opportunity for us and obviously, that's why we're hiring salesforce, we're hiring medical science liaison customer service, but.

Back to your original question I think the VA will present multiple hospital systems for deployment of kidney Intel X in 2022.

Okay. So if you were to sign up for revisions in 2022, then that would be for counting towards the 20 institution goal that you have that you have.

So Tom jump in on this one the VA has 171.

Centers, which are health systems.

Are they operate independently with their own network C box.

So there are multiple health systems in each region.

Okay, I'm, sorry, guys I'm sure I'm not trying to belabor a point, but what's your assumption be for the VA within that 20 institution goal that you have for 2022.

So I don't have a number it should make up a quarter of that.

If I have to stand on something but again.

We're successful at the division level.

It could well exceed that.

If we're successful at the National level, then we're talking about a whole different game.

But when I talk about the 'twenty.

Hospital systems, I'm really looking at large independent hospital systems like Mount Sinai atrium, wake Forest et cetera.

The VA is.

A lot of upside, but let's see how it plays.

In the March quarter.

It's a good question much.

Thanks Pam.

Thank you and our next question comes from Mark Massaro with BT <unk>. Your line is open.

Hey, guys. Thanks for the questions I guess, obviously, the FDA has been busy reviewing COVID-19 submissions.

I do think one value creating.

Milestone for you would be to secure FDA approval I guess can you just give us a sense for.

How that review process is going.

Whether or not the dialogue is moving.

Iterative conversations going back and forth or has there been.

Month's worth of not hearing anything I'm just trying to.

Better understand how that conversation is going in and just try to handicap when you think.

Comfortably do you think you can get FDA approval by the end of fiscal year 'twenty two.

So I am loath to be pinned down to FDA timing. Thank you market. So it's good to hear you on the call.

This is Ben let me answer the question first and then I'll give you I'll give you some color.

I won't give FDA timing as I've said from the beginning that's a fool's game and I've been that for before I don't want to <unk>, who will again the.

The process is moving well.

We believe we have a good application we have a very good understanding we have a significant amount of third party expertise, which is at the table.

Many of these folks don't take prisoners theyre very data oriented statistical oriented.

We've mentioned some of the some of the folks that have been involved. So I think we have one of the highest iterations.

And solid basis for an FDA regulatory process that I've experienced in my career.

That being said.

Not going to comment on timing, because I will inevitably be wrong. The agency as you know more than anybody has been under a considerable amount of stress.

And.

Theres been consequence across the board for that I talked to many other Ceos, all of whom are having similar experiences.

But I'm confident that.

We're on the right track and the communication with FDA has been very good.

And very comprehensive so FDA will come when FDA will come.

In the meantime, obviously, we intend to build a very significant business.

Obviously FDA is important but if you ask me what the number one reimbursed number one risk factor associated with growth it's reimbursement.

And I've said this from the beginning when we started the company.

We've got a focus on reimbursement reimbursement and reimbursement because if you don't get paid for your product.

Then you don't have a revenue stream you can access the capital markets to fund all of the other things that unique so reimbursement is very very much been a focus.

And we're succeeding there.

FDA will help that.

Do I expect an FDA.

De Novo marketing authorization in this fiscal year I do.

That is my expectation, we are building for that component.

But again nobody can guarantee this.

Especially in the Covid era.

How does that answer that question well enough.

You did that was perfect and then just my last question is on the real World evidence study from Mount Sinai I guess should we expect you to publish that in a peer reviewed journal and then can you just remind us what.

What you expect the primary and secondary endpoints of that study to be.

Yes.

Should expect multiple peer reviewed publications out of Mount Sinai and other real World evidence studies that we're running this as a very powerful cornerstone for renal clinics.

It's not easy to set up these large real world evidence programs, we did it from the very beginning understanding that real world evidence ultimately drives a regulatory pathway.

Through multiple product versions.

It ultimately drives reimbursement.

And of course, it proves the case for physicians and healthcare systems that this is the right way to go to manage chronic disease. So the real world evidence machine that we've set up.

His extensive its comprehensive it is looking at multiple short intermediate and long term endpoints.

Short term Readouts, which we expect in 2022.

With things that we've already talked about like conversion.

If you engage population health, which is very important for a capital.

Efficient diagnostic deployment right as opposed to creating a huge fixed overhead hiring a massive sales force for a strictly push marketing approach by engaging population health. It changes the entire the entire return on investment capital equation, we're now able to reach.

Upfront large treating groups of physicians and patients.

With population health.

Leading the way.

Approaching or exceeding 80%.

I have never before in my career.

<unk> that type of utility.

Now that's one metric now you have to look at the downstream.

What happened to those patients with a high risk patients or hurt in nephrology.

Did they have new drug intervention did they have behavioral modification. So this is a very rich environment.

In a relatively open field, we would not experienced this in oncology and cancer.

But in kidney disease, it's just wide open for innovation is wide open for novel data.

Around utility, especially around this thing behavioral economics, which is physician and patient behavior when presented with.

Information in this case prognostic information early.

In the disease cycle, where.

We should be able to generate maximum effect with clinical action and prevent people from moving onto late stage kidney disease, that's the whole point.

<unk> maintained kidney health.

And can we really drive the utility equation around maintaining kidney health and that has short term implications like conversion.

And this real world evidence machine that we've set up is important this has not gone on this has not gone unnoticed by strategic partners.

Pharmaceutical partners medical device manufacturers and service providers.

How did we get into a position.

Where we are now integrated with large healthcare networks.

So this is going to be an ongoing equation for several years.

But in 2022.

Going to be able to submit for peer reviewed publication.

A number of significant utility endpoints across again thousands of patients, which will then evolve into.

Multiple treating facilities and different demographics across different patient populations, but I can tell you from my own experience sitting here in Salt Lake City.

<unk> care.

And the people I speak to is very different than sitting in New York City.

So in New York City.

Your interaction with physicians really come down to.

Primary care and specialty interactions on almost a one for one ratio.

The deep end here, but this is what creates such an exciting equation for 2022.

Okay. Thank you and as a reminder, if you would like to ask a question press. The Star then the one key on your Touchtone telephone.

Yeah.

Again, Thats star one to ask a question.

Alright, well it sounds like we've answered most of the questions again, everybody. Thank you for dialing in and please have a safe and happy new.

Year.

Operator back to you.

That concludes today's conference call. Thank you for participating you may now disconnect.

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