Q4 2021 Natera Inc Earnings Call
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Okay.
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Welcome to the chairs 2021 fourth quarter and full year financial results Conference call.
At this time all participants are in a listen only mode.
Following managements prepared remarks, we will hold a Q&A session to.
To ask a question at that time. Please press star followed by one on you touched on you touched home phone if anyone has difficulty hearing the conference. Please press star zero for operator assistance at.
As a reminder, this conference call is being recorded today February 24 2022.
I'd now like to turn the conference call over to Michael Brophy Chief Financial Officer. Please go ahead.
[music]. Thanks, operator, good afternoon. Thank you for joining our conference call to discuss the results of our fourth quarter of 2021.
Line of feed Chapman our CEO .
Boskovich General manager of oncology today's conference call is being broadcast live via webcast, we will be referring to a slide presentation that has been posted to the investor.
A replay of the call will also be available at Investor <unk>.
Dot com.
During the course of this conference call, we will make forward looking statements regarding future events and our anticipated future performance, such as our operational and financial outlook and projections, our assumptions for that outlook market size partnerships clinical studies opportunities and strategies and expectations for various current and future products, including product capabilities expected release dates reimbursement cut.
<unk> and related effects on our financial and operating results. We caution you that such statements reflect our best judgment based on factors currently known to us and that actual events or results could differ materially. Please refer to the documents we filed from time to time with the SEC, including our most recent Form 10-K or 10-Q, and our form 8-K filed with today's press release those docs.
You may identify important risks and other factors that may cause our actual results to differ materially from those contained in or suggested by forward looking statements forward.
Forward looking statements made during the call are being made as of today. If this call is the replay to reviewed after today. The information presented during the call may not contain current or accurate information and clarity disclaims any obligation to update or revise any forward looking statements. We will provide guidance on today's call, but will not provide any further guidance or updates on our performance during the quarter unless we do so in a pub.
At Forum, we will quote a number of numeric or growth changes as we discuss our financial performance and unless otherwise noted each such reference represents a year on year comparison, and now I would like to turn the call over to Steve Steve.
Great. Thanks, Mike Good afternoon, everyone and thank you for joining us we've got a tax session pull of announcements so let's get into the recent highlights.
2021 was a breakout year for <unk> volumes were up 53% year on year, which is higher than we pre announced in January by more than 5000 units.
Despite all the disruption of the world from the Omicron variant volumes were still very strong.
We posted another record with 439000 tests processed. In addition, this was also one of the largest sequential quarters, we've ever seen on a net unit basis.
Revenues were $625 5 million for the full year above the top end of our November guidance and more than $100 million higher than the midpoint of our original revenue guide given in February of 2021.
Looking at the quarter. Once again Q4 was a very strong revenue quarter as we came in at roughly $173 million.
Mike and I will spend more time on the drivers behind these numbers and the remaining financial results shortly.
In addition to the excellent volume and revenue performance. We recently set a new standard for clinical data in the field of cell free DNA with presentations and publications that can have a very meaningful impact on patient care.
First is the recent presentation at the <unk> Gi conference from the perspective multi site circulate trial, which showed that signature is predictive of treatment benefit in colorectal cancer.
We also showed that signature has exceptional sensitivity at the post surgical time point.
This was the largest prospective dataset ever presented using MRI testing in CRC and the first to show MRV testing is predictive of treatment benefit in CRC.
Second is the publication of the prospective multi site smart trial and the Great Journal, which is a leading journal in obstetrics and gynecology.
With the smart trial getting into publication in a top journal and with over 18000 patients in the study. This now allows <unk> screening to be formally considered for acre guideline includes inclusion.
There is a generally accepted set of criteria required for disorder to be included in the prenatal testing guidelines and we believe the study results achieved all of the performance metrics required to meet this objective finally in Oregon Health, we were able to release very strong large scale prospective data in each heart lung kidney transplant.
Patients that we think can have a very positive impact when published for example, kidney.
This study represents the largest prospective fully biopsy match study conducted to date with nearly three times the number of biopsy matched projections as a dart study, which is one of the larger historical datasets in the space.
We are very pleased that <unk> performance in the study was exceptional and we will spend more time on all of these results later in the call.
Finally, we are pleased to be guiding full year 2022, total revenues at $770 million to $790 million, which implies roughly 31% pro forma revenue growth over 2021 at the midpoint.
The guide reflects our usual cautious approach, but theres upside opportunity.
As we see ourselves entering 2022 strongly positioned for continued growth across our portfolio.
Okay, let's get into some of the business trends. The next slide is just an annual view of our volume growth over time, we have a long track record of execution, but you can see that something different happened in 2021, where we are benefiting from two fundamental trends in health care first the use of cell free DNA in Oregon Health and oncology is just getting started and we are.
We're a leader in both fields the volume from cancer products in Oregon Health products are starting to make a significant impact on our growth.
Second is the increased pace of <unk> adoption in the U S post the <unk> guidelines, which drives not only in IPD volumes, but also allows us to offer physicians other tests like carrier screening and <unk> I think our 2021 performance shows we are well positioned to leverage these trends and we think these are multiyear drivers that we can continue to benefit.
But from in the future.
Diving into a quarterly view on the next slide shows that the business trends remained very strong in Q4 with total revenue growth outpacing volume growth.
In addition, quarterly sequential volume growth was strong at roughly 8%. This was one of the best sequential growth quarters. We've ever had in spite of the fact that third quarter. In 2021 was unusually strong for us because a large ni PT player exited the space in June and Q4 has fewer obsession in days.
Due to the holidays the underlying ASP performance were strong. Although we also had roughly $7 million in cash receipts from prior period true ups and reserve benefits in Q3, which mutes the reported sequential pricing trends in Q4.
$173 million in revenue was also well above expectations and all the growth trends continue to look quite strong so far in Q1.
On the next slide I am excited to share a new snapshot of the volume trajectory in our newer products, which as you can see have been growing rapidly. This is what I mean, when I say cell free DNA is just getting started in oncology transplantation. The left chart is our volume progression and Cigna, Terra and Altera and oncology and our right chart is <unk>.
Barrett Rina site in Oregon Health.
And I apology the vast majority of these volumes are signature units ordered by physicians for clinical use but this also includes very strong pharma performance based on our current run rate and publicly available data. We believe that we're very close to being the overall market leader by volume in the field of liquid biopsy, even when including <unk>.
Both therapy selection in MRV testing categories. We think this performance is superior to any other <unk> test on the market. Today. In addition, this rapid growth shows how big the opportunity can be.
We've been able to drive this level of early adoption, focusing primarily on colorectal cancer, which we think is still an underpenetrated market. Despite our historical focus on CRC, which represents less than 10% of the overall <unk> opportunity, we're starting to see more volume come in for immunotherapy response monitoring in addition to MLR.
Testing in other solid tumors beyond the CRC.
Some doctors start using signature in colorectal cancer, and then expand to use it as a multi cancer tool. This is an advantage of our patient specific tumor informed assay. The same product can be applied to a broad range of cancer types without designing a new fixed panel for each tumor type.
Growth is also interested because 2021 was a building year for us with regards to our commercial and operational teams. We have now built a full commercial team. That's still has a lot of leverage left for growth.
Paired with that a robust lab operations now allow us to scale as we built out the infrastructure to optimize turnaround times and manage recurrent orders both of which take time to master.
We're in a great position to grow the market, but I think what's most impressive is our data leadership, we've got paradigm shifting predictive data now in both colorectal and bladder cancers, we have over 100 additional studies underway and its possible we could publish more than 20 peer reviewed papers in 2022 alone.
In addition in 2022, we will be receiving repeat testing volume from patients that started on signature at 2021, which is when the vast majority of our current patient initiated testing driving continued growth for us.
Overall, we believe we're in a very strong position to expand our leadership here and in the liquid biopsy field.
The Oregon Health the majority of our volume in the slide is coming from Prosper orders, but it does also include a meaningful contribution from Marina site. In 2022, we expect added momentum from the publication of that Trifecta study in kidney and we expect meaningful volume from the contribution of our recent launches in heart.
One, resulting from the publication of leading studies and those organs.
It's worth noting that the commercial and operational infrastructure needed to support years of growth is largely built now so we have an opportunity to get significant leverage out of our current team as centers adopt donor derived cell free DNA testing.
Can see from this volume trajectory why we think we are positioned to be a top player in this space for years to come.
For now we will plan on providing the snapshot once annually on the Q4 call in order to preserve competitive positioning, but I think the 2021 volumes show that these are not going to be niche products and we are on the path to achieving scale in these new areas.
Now, let's move to the second major trend on the next slide.
After gaining a full a cog endorsement.
2020 for AIP key adoption grew significantly in 2021, even as the overall market for Ni PT grew based on our estimates panorama actually increased market share.
As you can see on the right side of the chart. There is still a long way to go to get anywhere near full adoption. We've estimated that the <unk> market can reach 80%, 90% adoption in the coming years.
In addition to growing adoption in the community setting we are seeing growth from large group practices and health systems. For example, we recently just closed a system of over 10 hospitals that is now rolling out <unk> to its patients for the first time, we think that our competitive edge in winning these deals is our significant body of peer reviewed.
Political evidence our highly differentiated products and our strong suite of user experience tools. For example were now fully integrated into leading EMR systems, making it easier for systems to adopt panorama broadly. Additionally, although it's the only state sponsored prenatal screening program prenatal screening program, we are aware of.
In the United States, We think the state of California is likely to expand their existing prenatal screening program from high risk only which natera is already actively participating to now include average risk in IPD. We have been selected to participate in this program and are currently in discussions with the state if we do choose to.
Move forward, we would likely offer a lower priced offering this screens for a narrower set of conditions, but we think that volume would increase as access has opened up by this program. We've already submitted for a unique TLA code for the more limited offering. In addition, we expect to offer other tested our portfolio like carrier screening along.
<unk> signed the program as we enter new obgyn offices.
There are also a lot of key points in the program that are still under discussion, but we have gone ahead and built this into our forecast taking a conservative approach to the impact of the change across all channels Obgyn NSM Hospital systems et cetera, We think the terra remains very well positioned to extend its leadership position.
The other opportunity that we see potentially compounding value of increasing <unk> adoption is our ability to service a position for additional tests that are routinely offered early in pregnancy.
We think there are substantial growth opportunities here as our commercial team each with more and more physicians to also expand our client base for other tests like genetic carrier screening. Many cog recommends to be offered to all pregnant women, regardless of ethnicity or H historically, the terrorist carrier screening orders has scaled up together with our <unk> volume.
That trend will continue. Furthermore, we believe screening for the <unk> may soon be recommended as part of routine practice, which may further expand the value we can offer to our patients and ordering physicians more on that topic on the next slide.
Okay.
As many of you saw on our press release, the landmark Smart <unk> Micro deletion study was recently published in the Gray Journal, which is a premier journal among Obgyns in the United States Smart is by far the largest prospective study to confirm genetic outcomes of all pregnancies in the study the results were excellent the incidence of.
<unk> in the study was one in 524, which confirms <unk> is one of the most common prenatal genetic disorders in the general population and unlike trisomy 21, the incidence and the.
The disorder is not impacted by maternal age.
By comparison cystic fibrosis, which is screened routinely has an incidence of approximately approximately 1% to 3500. The general population and tried to 18 and 13 have an incidence of one in 3001 in 5000, respectively.
Panorama test results were accurate greater than 99, 9% of the time, meaning that 99, 9% at the time, the Panorama result, whether high risk or low risk was confirmed to be correct for high risk results only we had a positive predicted value or PPV or 53% means.
That more than one and two pregnancy screening high risk with Panorama were confirmed to be effective using a confirmatory diagnostic test. This is really strong, especially compared to traditional prenatal tests like the quad screen offered routinely to all pregnant women in the United States for the past 40 years that have a PPV of only three.
5% or $1 29.
So the question remaining is will this be recommended by a card for routine screening well, we don't control the outcome, but screen tests that offer the most clinically utility meet a few criteria.
A screen for a serious disorder with high accuracy and high PPV. It catch many cases that are not otherwise captured by the existing standard of care and early detection provides an opportunity to intervene and improve outcomes in the case of 20 <unk> that means treatment with calcium at birth in order to mitigate potential seizures that can result in.
Cognitive impairment, we think our 20 <unk> micro deletion screen clearly meets all of these criteria. It's common it's severe it can be screened for with high accuracy and theres an appropriate intervention. This sets up very nicely for a guideline change, but we will have to see where things end up.
Okay, now, let's spend a bit more time on the Oregon health opportunity you saw the excellent traction we've been getting and prosperity on the earlier slide we see a lot of room for future growth. When we presented this slide in 2020, we estimated fewer than 5% of transplant recipients were getting cell free DNA testing.
That has clearly grown we think this chart shows prospera control a significant unmet need in the coming years and what we believe is yet another large market opportunity.
One driver, we think can help increase adoption of cell free DNA in this area as additional large prospective clinical trials that confirm the excellent performance of prosperity.
While we're pleased with the data we generated thus far we know that publishing the big prospective trials can really move the needle although our volume has been growing nicely. This is probably the biggest objection we faced in the field.
So just as we did not call gene women's health, we've been investing heavily in data generation. Finally, after a ton of work by our team and our outside collaborators in 2022, we expect a wave of perspective strong and meaningful data across kidney kidney heart and lung transplantation and we think this can make a significant impact for us.
So first a minute on the trifecta study in kidney transplant patients. This study was led by Dr. Phil Halloran. He's one of the Premier researchers in the field <unk> had more than three times the number of biopsy mantra projections when the Dart study Trifecta also enrolled patients for more than 20 U S and international sites.
You can see the prosper are results from the initial readout were exceptional.
<unk> were so strong and we believe it could eliminate the need for multi modality testing to rescue test performance multi modality testing using RNA and cell free DNA is very expensive, we think it could cost roughly $6000 per blood draw compared to prosperity, which is less than half of that price. So.
We look forward to publishing the Trifecta study this spring and we think it will be a really significant step forward for prospera adoption.
We also had two studies soon to be published in each of heart and lung transplantation.
And one we were pleased last fall to pre released data from the largest prospective lung donor derived cell free DNA trial to date using a commercially available assay. The data was very strong and accepted for an oral presentation at <unk>. We look forward to the publication of this paper in the near term.
Finally in heart, we previously announced the readout of our multi site study that includes a prospective and retrospective bar. We showed an excellent overall AUC of <unk> 84 with greater than 250 prospective samples included in the study and greater than 100 retrospective samples for total of greater than 350 overall in fact the au.
You're seeing the prospective arm was slightly higher than retrospective arm.
Again. This performance is very strong it could eliminate the need to perform expensive multi modality test that in the context of heart transplantation require cumbersome specimen processing for example, spinning down the sample and shipping it on dry ice.
Okay now, let me hand, the call over to Solomon to provide an update on oncology Solomon.
Thanks, Dave we're now working across all three of these areas on the slide here for an estimated total addressable market north of 50 billion.
Given we just provided an update on the early cancer detection program earlier this year.
The key focus of this business update will be on the M D space and our signature opportunity.
As many of you know we've had several major wins recently, so I'm excited to elaborate.
Let's start with the commercial and operational teams that we've built over the last 18 months or so Steve touched on the competitive advantage. We think this team is already delivering and I think the signature of volumes in 2020 one proved that out the.
The commercial team is now similarly sized as the big teams from other liquid biopsy players they've been in place with consistent sales territories for only a couple of quarters. So we think there's ample room for our team to get more efficient with initiating new clinics and supporting growth within existing accounts. We estimate the commercial team is only at roughly 10%.
In terms of the number of ordering patients and accounts that they can manage over.
Over the same time, we've also dramatically scaled our operations and launched flexible and intuitive user experience tools for seamless ordering of the test no. Other company in this space has ever reached this level of scale with a personalized serial monitoring test. So we've sold a lot of new challenges to get to this point.
Our lab operations in Q4, we saw immediate turnaround time of 19 days for a patient's initial test results and.
Less than a week for subsequent tests. This means we're delivering test results within a clinically meaningful timeframe to inform adjuvant treatment decisions, especially since cigna Tara can be initiated at anytime pre or post surgery. Unlike other assays that are indicated only starting at 30 days post surgery.
Other laboratories that have ambitions to launch a tumor informed M. R. D test, we'll have to solve many of these same operational challenges, but with the added pressure of signature are already being commercially available.
Our suite of user experience tools are also making an impact which of course leverage everything we've learned from operating and competitive environment for the last 10 years.
Core of this offering are the online portals, EMR integrations and a customer support infrastructure that is designed to facilitate serial monitoring and can be adjusted to fit the unique evolving needs of every patient.
As Steve mentioned, we think the strongest components of our offering or the clinical performance of the test itself and the extensive validation data we've already produced and continue to produce across a broad range of cancer types. We expect our lead in data generation to only increase this year. We've now got more than 100 clinical studies in our pipeline including projects.
With pharma partners and academic partners and we expect a strong year of peer reviewed publications as Steve described.
On the subject of clinical data, we were glad to host many of you for a special call about the data that was presented in January at <unk> Gi the interim readout from circulate Japan included analysis from over 1000 patients with 12 months of follow up stratified by MRV status and for the first time also stratified by treatment.
Status, which enabled the predictive claims that we can now make about cigna Terra in colorectal cancer.
I want to just briefly review our results there and the next steps.
So the central question for Us in CRC has always been will MRV positive patients benefit from adjuvant treatment or are they just destined to recur regardless of treatment.
This data clearly shows that signature positive patients do benefit from adjuvant chemotherapy. The green lines. In these charts represent signature positive patients that received chemotherapy and the blue lines are the M. R. D positive patients that did not receive chemotherapy.
You can see a clear separation of the lines and the P values were significant in all stages of disease, even when adjusting for other confounding factors, such as age and lymph node status.
The hazard ratios here are striking for example in the Middle chart, we see stage three signature positive patients are over eight times more likely to recur. If they are observed instead of getting treated with adjuvant therapy.
We know this that a significant group of patients that are indicated for chemotherapy today do not actually get treated for a variety of reasons now with the support of this interim data, we think it's going to be much more likely that MRV positive patients choose to pursue chemotherapy.
Now on the next slide we address the other side of the coin with signature at MRV negative patients benefit from chemotherapy or can they safely avoid chemo, while being serially monitored.
You can see from the chart, but there is no separation between the lines, which means a signatory Mardi negative patients received no significant treatment benefit from adjuvant chemotherapy in this study.
Patients, who tested MRV negative at four weeks post surgery. The 12 month survival benefit of adjuvant chemotherapy was not statistically significant and it would not be worth the toxicity of chemotherapy. We believe this data would could have an immediate impact for thousands of CRC patients who are already on the borderline about chemotherapy.
And we look forward to confirming these results and future readouts from the trial.
In addition to the predictive findings that I just covered the prognostic data on the assay was also very strong as we've shown before based on the single time point post surgery disease free survival at 12 months was 95% for the Cigna turned negative patients and 55% for the signature positive patients yielding.
Hazard ratio higher than 13.
Signature of sensitivity was 67% at a single time point, which is stronger than what was previously reported in our 2019 paper in Jama oncology.
Overall, we think this test performance is really exceptional.
The next slide is an updated snapshot of the addressable patient population in M. D that has built up for estimated tests per year. The short term eligible population represents indications, where we have already generated initial data and have line of sight to getting Medicare reimbursement over the next two years, which we think together can support up to four.
Millions secretary of tests per year in those indications. This now includes several Gi indications outside of colorectal.
Including pancreatic gastroesophageal and anal cancers, where we've recently presented clinical data.
Looking further out we think prospective randomized trials may be required to unlock additional indications that if successful we believe could support cigna tariff volumes of up to 13 million tests per year, we're already working on generating that data and we expect the first large prospective readouts over the next three to five years, but just signature is personal.
Elisa and agnostic to tumor type, we have a great opportunity here to leverage the same product and the same commercial channel to drive adoption across all of these indications and to get significant leverage on our investment.
Now, let's take a look at the coverage road map for the next few years after receiving the initial mol Dx coverage decision in stage, two and three CRC and the subsequent umbrella policy was released we have been able to rapidly follow up and when coverage and Pan cancer immunotherapy response monitoring and stage for CRC.
We've now submitted additional indications to the multi X program and we expect additional coverage decisions to come in in 2022 and 'twenty three.
Key goal, we have over that timeframe is to get into M. C. C. M guidelines, we think the CRC data, we presented from circulate Japan once its peer reviewed published merits consideration for guideline inclusion.
The <unk> guideline update last December specifically referenced C. T DNA as an emerging potential predictive factor and it anticipated that forthcoming prospective data could merit inclusion in an upcoming future guideline.
We have now generated that predictive data.
And we will further support that effort with additional readouts from circulate as well as data coming soon from the spoke our prospective registry trial in CRC.
We will take a similar approach with the other cancer types as well generating additional evidence to support clinical utility.
Each of them.
Although we feel good about our chances for M. C. C. N guideline inclusion is ultimately outside of our control. So we do remain cautious in terms of the potential impact in our guide for this year.
Now, let me handover the call to Mike to discuss the financials.
Okay.
Great. Thanks, Aman I'll first recap how we finished 2021 and then move to the 2022 outlook.
Slide is just the annual financial comparison, I think ive in Psalm and cover the volume and revenue trends well just to note a couple of factors Steve highlighted on our Q4 performance of $173 million in Q4 revenues represents roughly 9.4% sequential growth over Q3.
In 2021 and test process grew almost 8% sequentially over Q3. This is despite the fact that Q3 was an unusually strong quarter as Steve mentioned.
With one time benefits both from volumes and revenues so progenitor exited the market in June and on the revenue side, we had roughly $7 million in incremental reserves in prior period true ups in Q3 versus Q4.
In Q4, we only had about $5 million is that correct.
Revenue benefits, which is a little unusual for us and that we've generally had something like one $5 million to $2 million this quarter, but that's just part of the typical lumpiness that we've seen in the past.
That lumpiness also create some volatility in the quarterly gross margin, which was a little lower at 45, 6% in the quarter.
Another key driver of gross margins is paradoxically the success, we're having with Sydney inherent volumes. The P&L for Sydney parent is really immature right now and I think is poised to improve as we get further into the launch of patients first lien in Paris is expensive for Cogs since we run that upfront exome as a one time.
Yes.
We expect significant improvements in first time point Cogs in the next 18 months or so as we scale up.
Volumes of course are much less expensive to run since we are just delivering the plasma test.
As an increasing percentage of our volumes come from repeat testing the Cogs per test on average to drift downward.
The same logic applies for ASP.
We benefit from ADL key pricing in the current monitoring and also we are in quite to receive reimbursement on a broader range of tumor types of Solomon described.
Given the strong organic adoption, we have seen across tumor types, the relatively streamlined path CMS reimbursement and alongside we have some potential and guideline inclusion in colorectal cancer, which would drive commercial coverage and CRC. We think the best strategy to take advantage of our lead pigment Tara it's been dry.
Volume in multiple different cancers, even if it is put some modest pressure on gross margins in the immediate term.
In contrast, underlying asp's for Panorama horizon, and prosperity were strong in the quarter, we made some meaningful sequential gains in the Panorama ASP over Q3 as one of the larger plan suspended their prior authorization requirement for average risk in ICT.
We still have significant room to improve on Panorama ASP.
Given a large portion of our <unk> volume is not yet reimbursed today.
The opex lines represent the scale up of our commercial channels in transplant, and especially oncology as Steve has fallen and covered in RMB. We have a couple of large projects focused on the next version in each of our core products. We are very excited about those and we'll be able to spend more time on these innovations on future calls well.
Also are developing products that can be used in conjunction with cigna Tara similar to the way the alterra is being used today.
When thinking about RMB, it's worth a reminder, that essentially all of our volume and revenue comes from products. We have developed internally, whether it's the development of the new algorithm using the smart trial or inventing cigna terra or launching innovation that dramatically reduce the cost of goods sold per unit. We've had a very high win rate and the investments we've made in our R&D.
Effort, we expect that productivity to continue particularly as we focus more on the next version of already successful products and inherently take less technical risks as a result.
Another huge benefit from this internal development pipeline is that we haven't needed to pay a premium to acquire other companies. So we think this approach is also the most capital efficient path for future growth.
R&D in 2022 also incorporates a major step up in clinical trial investment for cross their antenna tariffs for reference clinical trial spend was roughly $20 million in 2020, and we expect it to be roughly $80 million in 2022.
A large chunk of that increase is coming from the large randomized controlled trials going on right now once completed they won't have to be run again.
Given this increase we have been selective with the trial that we fund they must prove out clinical utility in a way that we think will drive broader adoption <unk>.
<unk> practice guidelines I don't see clinical trial spend needs to increase meaningfully behind our expected 22 2022 levels to achieve our goals and the indication solid presented beyond that we would pursue larger trials on a case by case basis and only on the back of very strong performance.
The last major source of investment as capital expenditures required to scale. The lab for all this new volume for context, we had about $19 million in Capex in 2020, and we expect about $60 million in 2022, we will get into this in the guide, but Capex is also not something that needs to remain elevated, but we expect to transition and maintenance.
<unk> in the future.
Just a note on the balance sheet, we exited the year with about $915 million in cash and equivalents and we think this amount of capital will allow us to pursue all of the objectives, we've outlined today.
Okay. So that is a good segue to the 2020 to guide on the next page overall, we think this is a bullish guide that in quite significant revenue and volume growth, while holding gross margins the cash flow stable versus last year as we continue to make the investments. We described today, we're guiding revenues of $770 million to $790 million.
Pro forma for the onetime Qiagen revenue recognition of $28 3 million in 2021. This represents 31% growth on top of a very successful year, we just produced Steve.
Steve mentioned, we took a note of caution with this guy while case counts are thankfully down we built in some conservatism into volume forecast to account for omicron and future COVID-19 spikes, while we haven't seen anything that would significantly disrupt our business, we want to err on the side of caution as each spike represents its own challenges we do expect.
New products volumes, we continue to grow and Thats based on the trends we've seen so far this year on asps.
On balance we expect cemetery asps to improve this year driven by expanded reimbursement and higher mix of recurrence monitoring costs. This improvement is going to be held back a bit by the volume we were driving a tumor types that are not reimbursed, but we do expect net improvement in ASP. This year, we've taken a cautious approach with the potential guideline inclusion and broader reimbursement for colorectal cancer.
Solomon combat coverage roadmap and describe this as a goal for 2022 and 23. So we are keeping that potential benefit out of the financial guide. This year right now since we don't fully control the timing.
We expect stable <unk> and prosperity in horizon, which is modestly more bullish than where we've been in the past as a reminder, we normally baking some ASP erosion into these products, but the underlying trend was much stronger than they have in the past several years on prenatal testing, we think the trends for Panorama looks strong as I'd mentioned and.
<unk> continued linear improvement in reimbursement, Steve mentioned, the California screening program, which is a bit of a wildcard because we havent formally signed on to proceed.
<unk> incorporates what we expect right now which is that we offer a narrower test at a lower price build on a test specific.
Practically speaking the counter to that should be significant volume growth for any ploidy volume and complementary products in the guide. However, we've been very cautious with this part of the forecast there are a lot of details we worked out and we may not participate at all.
So the contribution to the guide is an increase in volume from this narrower panel at a lower gross margin with room for upside on the other women's health products.
The gross margin guide also reflects the expectation that we drive a lot of first time city pair of patients as we talked about our gross margin in 'twenty, one pro forma for the Qiagen bump was about 46, 7%. So this gross margin guide holds margin stable as we get through this launch phase with Cigna Tara.
Steve touched on the path to 20, <unk> guidelines today, and while we feel very good about that process. The guide does not incorporate any meaningful change to 'twenty to Q reimbursement given that it is not fully within our control.
The drivers for R&D and SG&A are consistent with the Q4 trends I described.
We've built a strong commercial team that we think can now get significant operating leverage from this point coupled with the step up in clinical trial spend in 2022. So.
So the net of all of that expanding revenues improving asps scaling operations is that we expect that the 2022 cash burn to be roughly similar to last year. We think the commercial team build out is reflected in this guidance and to remain relatively stable in future years, even as the volumes continue to grow in these large markets where.
Ceiling, so even as we continue to make investments in R&D and lab capacity, we expect cash burn to start to go down meaningfully in 'twenty, three and 'twenty 'twenty four based on the markets and products we are pursuing today.
It's worth remembering that we've gotten scale like this before in 2019, we said the number one builder company was to get the women's health offerings to cash flow breakeven, we did that by driving growth through ever greater efficiency from our sales teams delivering excellent data and securing broader reimbursement.
Transplant and oncology offer a few new advantages many of the markets are much larger most patients received repeat testing and we think that passive broad reimbursement is shorter but fundamentally we are pursuing the same strategies that have worked for us in the past.
So it's an exciting time for me to Terra and we are and very pleased to have been able to serve these results with you.
Now I'd like to turn it over to Q&A operator.
Okay.
And thank you as a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby we compile the Q&A roster.
And our first question comes from <unk> from Morgan Stanley .
Your line is now open up.
Hey, guys. Good evening and thanks for the time here and congrats on a strong finish to the year end and a healthy outlook.
Maybe just to kick off on the guide one for you Mike can you shed some color on what's included in terms of Cigna and prosperity contributions relative to reproductive health at least directionally.
And on a related note given how far ahead of ahead of at least our model you are in terms of both cigna around plus barrel volumes can you give us a sense of what fraction of that volume youll reimbursed on at the moment.
Yeah sure. Thanks for the question, yes, so obviously as these as these businesses ramp.
They're going to contribute.
Larger proportion.
The volumes in Iraq.
Revenue as we go forward I mean, I think that's the way that we've guided it having said that I mean, theres a lot of pretty exciting dynamics happening in the <unk>.
He states that May end up having one sub business grow quite quite rapidly, but obviously, we've been more cautious with that part of the guide so directionally, it's going to be increasing.
A portion of the revenue.
For 2022, and I think that's kind of implied by the.
About the ramp that you've seen here in 'twenty one.
B.
The proportion of the.
A secret here.
It's reimbursed today is a minority of the volume.
Just because of where we are on our reimbursement timeline. So we've got volumes coming from.
Monkey different thing, it's multiple different cancer types majority of winters colorectal cancer, but it's.
Significant minority is coming from other cancer types.
Yet reimbursed on there we're in flight on a number.
No additional.
Reimbursement for more background on a number of additional tumor types.
Within colorectal cancer of course, we're just reimbursement Medicare and Steve and Tom and Labor the pathway out where we think we can we can potentially broaden that it'd be a guideline inclusion so right now it's a minority that's getting reimbursed and that's that's what's.
Obviously, replacing the guide, although I think give some commentary on now.
And anything that we do make some progress in terms of the overall, so deterrent OSB Michelle.
Got it Super helpful and one quick follow up for Solomon here, if I can.
And then on your on the Onvia Marty front, you know some of your peers, you're starting to talk about more than 16 markers for their version of a tumor informed panels friend Marty I was just curious as to your latest thoughts on what do you think you know where were diminishing returns to sensitivity begin to kick in in terms of the number of variance and then on the.
Screening side any early color from the FDA on accepting or our house cohort in lieu of a prospective trial so colorectal screening.
Yes. This is Steve I'll take that and then install them and you can you can jump in so first of all I sure.
Important to say on additional variants that we're already running broad.
<unk> panels.
Are you Oh lab, and we have been for quite a while so you know if you remember with Panorama, we multiplex 13000 probes in a single reaction so for us to develop an assay with hunt.
100 variants are 200 variant, which it's really easy to do.
We do that all the time.
We chose 16, because we thought that was the right optimization.
Performance and I think largely that's turned out to be true. So obviously, we have capabilities to run broader panels.
But we're really pleased with the performance that we're seeing today I mean look at our volumes.
In <unk> testing, we think we're now getting very very close to being the market leader overall in the entire field of liquid biopsy.
Not just including <unk> testing.
Based on the test will be out on the market. Today. So you know of course, we're always looking at opportunities to improve there's there's multiple different things that we're doing right now.
Vesting in the future at Cigna Tara <unk>.
Additional variance is something that we can do easily.
If we chose to launch that.
The CLIA setting.
I think on an early cancer detection.
Not giving any additional updates today.
I think our plan is to.
Generate some data and hopefully have that towards the end of 2022 early 'twenty three.
We can share publicly.
We do plan on meeting with the FDA to discuss the Whorehouse study.
As a reminder, the whorehouse study is not it's not just a biobank of randomly collected samples I mean this was an IRB approved early cancer detection study.
Very similar to many of the other studies that are being run today, where samples are collected and then their bank and then they run at a similar time. So these are all prospectively collected samples under longer be for the purposes of validating early cancer detection. The only difference is that we have been swapped in as the biomarker.
Of choice versus I think others, where the biomarker was defined initially.
Yeah. So I think we're in good position, we're going to get some feedback, but you should plan on getting some data sort of towards the end of the year or the beginning of next year.
Got it very helpful. Thanks for the color guys.
And thank you and our next question comes from Puneet <unk> from.
SBB Leerink your line is now open.
Yeah, Hi, guys. Thanks for taking my questions. So the first one is on an I P T and another one on Signet terrorism, maybe just for the California screening program I mean could you maybe size that opportunity for us and what's the timing of that and could you elaborate you know is that something exclude.
Ziv to you or should we assume that youre going to maintain your sort of market share in that in that.
Large opportunity.
Yeah. So.
As far as market share goes and things like that I mean, we know that we have been selected.
I I believe there are other labs, they're also being considered although we don't know the exact details.
It doesn't mean that we're definitively purchase building.
But if we do we.
We think it's going to be lower priced also will offer additional or less content.
We've applied for an individual P. L. A code there we think we'll get to sell additional content.
Content alongside the program so.
I think we're in good position, but there's a lot of details that still still need to be worked out there.
Before we can really give a lot of the specifics.
I don't know Mike do you have any other comments there.
No I think that covers it.
Yeah.
Okay, and then on them.
Signature on Alterra volumes I appreciate you, providing the details here, but it was clearly a significant pick up in the fourth quarter.
And it's and it's clear that you were emphasizing volume growth and indication expansion while.
S B.
It is expected to grow more longer term.
You know I think the biggest question here from investors is just sort of the growth rate that you're seeing here in signature in volume.
Maybe just give us a sense of sort of how should we imagine that for for 2022.
In the context of your guide.
And given the fact that what Solomon said is you're only 10% of your commercial footprint right now so.
A number of factors are going into it. So anything you can provide in sort of sort of the growth rates that we should be assuming for signature I know, it's still somewhat early days for the product but.
That would be Super helpful. And then just a final quick one for Mike on gross margin.
I want to understand.
What's the longer term gross margin objective the gross margins a bit.
Softer versus our expectations for 2022 thank.
Thank you.
Yeah. So maybe I'll comment briefly on just kind of signature trajectory and then Mike you can talk about how we incorporated that into the guide.
So obviously, we've given an annual volume here.
But of course this means on a sequential quarter on quarter basis, you know things are things are accelerating.
We feel like at this point, we're doing exceptionally well from a volume standpoint significantly better than.
And then any <unk> company out there.
Things are things are going really well I mean, we sort of know what other companies are reporting out publicly with regards to like their entire company's book of liquid biopsy volume and as we said we think we're very very close to being the entire market leader.
Entire entire book of liquid biopsy.
So things are on a good trajectory might.
Mike do you want to talk about the guide.
Yes, so I think it keeps on going and in terms of the volume growth trajectory similar to the to the answer to <unk> question. I mean, we expect both of these products based on the trends.
That we've seen so far this year to continue to contribute and continue to grow. So there are an increasing percentage of the of the acquired volume guide presented here.
Why do you want to say the numbers are the volume for us.
On the topic of gross margins.
Because this is a relatively low gross margin right now but over time clearly.
High gross margins as we.
We feel like it's worth it to be driving this volume here.
We're gonna be immediate term pressure on gross margins.
<unk> talked about in the past I mean, nothing about the past year like this weighted me from that asset.
That'd be a 70% plus gross margin business overall overtime and I think we.
Where we've shown a lot of ability to drive gross margin traction for those of US those are.
That's on the call that have been around for four or five years can recall gross margins in the low <unk> range and we've driven them to this level.
Gross margin the gross margin guide.
Implies.
Basically a stable gross margin despite kind of a.
New wave.
Aircrafts are coming in ahead of reimbursement so what that implies is that the other products unwilling to delivering a lot of gross margin leverage. So that's exactly what we're seeing in cross there are panorama and horizon. For example, so a bit of a dynamic situation, but I think on.
On balance, it's a bullish thing and where we think that's the right thing to do to make the investment just given the demand that we're seeing and the traction that we have towards getting reimbursement for <unk> and additional cancer types.
Got it okay helpful guys. Thank you.
Yeah.
And thank you.
And our next question comes from Tycho Peterson from J P. Morgan Your line is now open.
Hey, good afternoon.
On multi cancer I'm already you mentioned you've submitted some additional indications to mol Dx can you just clarify which which those are.
And I guess, you're expecting five to be reimbursed next year. So have you submitted all five at this point and then you also alluded to some adjacent products like Altera can you, maybe just clarify what you're talking about there and if that could come this year.
Yeah. So you know the guidelines basically state that you have to have published data before you can submit.
Tech assessment and so you know if you look at.
Areas, where we published data I think we now have 15 peer reviewed papers.
And Cigna Terra and we think this year, we can publish an additional 20 or more papers and we have 100 different clinical trials that are ongoing right now in the field of oncology.
So I think it's really kind of targeting in on where we published data.
This would be the candidates.
Submitting.
<unk> Dx and we think this.
Not only is it was great because we get to.
Get the performance of our product out there to talk to physicians, but we.
We think we're leading the field and we have a significant margin on the number of studies a number of papers.
That are out there so it seems like.
Bladder for example, it's one of the areas, where I think it would make sense for us to have submitted so forth you can.
Kind of go through the list, but if you flip back to the slide of of what's been published.
Then as far as additional content goes I mean, one of the strategies that has worked really well for us in women's health.
Talking about on this call is offering additional content additional products.
At the same call point, and so women's health.
If we sell our Panorama test we can also.
So our horizon carrier screening and we can also sell 22 key screening.
So we think long term and our oncology will be the same way, where there'll be a portfolio of products.
So things like.
Altera for example therapy selection something that we already have on the market today.
I think liquid biopsy therapy selection, something that probably makes sense and so as we talk about our R&D budget and the spending that we're doing there you know a lot of that is going towards making sure that we have a rounded portfolio.
Long term and that we continue to invest in a very significant way into enhancements to Cigna Tara.
Okay. That's helpful. And then on Panorama can you just update us on your latest thinking around micro deletions could we get something this year.
Yeah, So I think we're.
At this point, we're sort of in a holding pattern waiting for the guideline committee to meet and then we're going to see what the results are.
I think it's definitely possible, we could get something this year.
The smart the Big news that's happened this year.
Is that the Smart study was published in the Gray Journal and the results were excellent. So you know all the other earnings calls won't be talking about this.
Didn't have the results published and so now I think we're at a point, where the guideline committee could meet and they can assess whether they want to incorporate NUCYNTA guidelines. So if you go back to the prepared remarks, you know we sort of kicked off all the different reasons why we think this might meet the criteria but.
Ultimately, it's sort of out of our hands, but.
It certainly meets the criteria and definitely without a doubt the publication that was done in the study that was done it was very significant and the fact that it is now published makes it eligible for coverage.
Great and then just lastly, I know you don't want to talk about screening much at this point, but can you just clarify what the dataset you have will you be doing other cancers in parallel with that data set or should we just think about data later this year around colorectal.
Yes, I think the initial readout is gonna be colorectal, but but I think longer term. It makes sense to have multi cancer offering, but the initial readout that we'll be doing.
And the initial I think launch will be in colorectal.
Okay. Thanks.
Yeah.
And thank you.
And our next question comes from Catherine Schulte from Baird. Your line is now open.
Hey, guys. Thanks for the questions I guess first maybe on the SP assumptions for N. P. T. In the guide can you just talk about where you are in terms of getting state Medicaid plans to cover off our interests and what kind of progress do you expect on that front in 'twenty two.
Yeah. So you know that's been an area of continued improvement I think.
Theres still some commercial plans that we're still working on but there's a long tail of plans, including state Medicaid plans.
Theres still kind of in the process of kind of putting coverage in place and we think that has improved on an annual basis. It is going to continue to improve in the future.
So certainly we're expecting some improvement there Mike do you want to comment on on kind of your thoughts on like Ni P. T. S. P.
Trajectory.
Yeah, I mean, I think what we've.
What we presumed an a mall.
Guide of the model.
Modest linear improvement.
In ICT ESP.
Over the course of the year and I think as we've talked about before I think thats something that <unk> is poised to continue over a couple of years as we as we just win reimbursement coverage finish long tail and it's not just coverage decisions for example.
Get a prior authorization.
Or is there certain requirements removed, which helped us actually sequentially in the quarter.
As I mentioned in the prepared remarks, so there's a there's a laundry list of.
Activities to pursue their and our balance things look.
Quite positive.
Exactly.
Okay got it.
And then you had a big step up in our licensing and other revenue in the quarter were there any one timers in there. It wasn't really are you okay I got it.
Yeah, I think Theres a mix I mean, we have as we got to some milestones with our progress with Foundation medicine.
That was a contribution.
But then also we had a very strong.
Continued progress with Cigna.
Terra pharma hyperbolic nature of the prepared remarks.
Okay, great. Thank you.
Yeah.
<unk>.
Thank you.
And our next question comes from Max Masucci.
From Cowen <unk> company.
Your line is now open.
Thanks for taking the questions one on transplant.
Curious what portion of the transplant volumes are coming from competitive wins versus greenfield or new adopters and if if the mix of volumes coming from competitive wins versus noncompetitive is has shifted at all over the last 12 months.
Yeah. So.
We're doing really well in transplant.
We've said for a long time, but now.
Glad we finally are able to really share the volumes with you guys.
And we did.
And what we're gonna help you know greater than 42000 units last year I think that's really exceptional.
We see a mix there.
Some competitive wins and Theres, some greenfield wins.
We're now working with a very very significant portion of the top transplant centers, you know, we've kind of outlined and sort of pick through that before but you know if you can.
Go through the top 10, and you go through the top 50, I mean, we're working in in the Premier centers.
Many of the many of the top centers, so we're doing really well and I do think.
Our competitors in the space have done a good job.
Growing their business and they.
Proven that there's a very significant growth trajectory here and a very significant business here.
And so I think we're on that same growth trajectory now and we're pleased with our performance and we're continuing to see momentum.
I think one of the things that's going to accelerate our ability for competitive wins are these three major peer reviewed papers that we expect to come out.
In 2022.
You know the trifecta study in kidney.
That's the large multi site study and hearts.
And that's the.
Perspective.
Large prospective trial along that we described earlier in the presentation. So I think pretty good position, but things are or have the potential to accelerate.
Great and maybe one for Solomon.
Be curious to hear about the work you're doing in multiple myeloma.
Yeah, any other blood based cancers, and just curious if youre using bone marrow or blood upfront to design the follow up tests for myeloma.
Yeah. Thank you for the question, we're very excited about solving a pretty big clinical unmet need and monitoring for patients with multiple myeloma.
Today, though.
Patients in order to get M. R. D testing done needs to get serial bone marrow biopsies, which are painful and expensive and really therefore under utilized and so a lot of patients just aren't getting enough monitoring or as much as they once were and as much as physicians think would be useful.
We're able to do to run Cygnet Tara.
The same way, we do in solid tumors, so running it off of a blood sample getting cell free DNA.
In analyzing the personalized assay there we design that personalized signature from an analysis of several different specimen types that we've done in research. We presented data at a conference last year are showing really strong performance that exceeded that what you'd get from flow cytometry.
Gary.
Using F. P E samples as input followed by custom design of the assay and analysis in the plasma.
So we think this could really.
<unk> care for thousands of patients.
We're looking forward to to talk more about that when it is ready for market.
Great. Thanks for taking the questions.
And thank you and our next question comes from Mark Massaro from B T I T.
Line is now open.
Yeah.
Hey, guys. Thanks, so much for the disclosures on.
Collagen and transplant I guess on the oncology side.
Is it safe to say that the vast majority of the split between Cigna Terra and Altera is on Cigna Terra itself and then secondly, I think in the past you've talked about Cigna terror all in Asp's at around $500 per time point is that right and then thirdly altera.
Should we think of that as getting reimbursed similar to like a foundation one.
Yeah. So let me make a couple of comments and then maybe Mike you can talk about the asps, a little bit, but but yes.
The vast majority of volume here as Cigna Tara.
We launched that before altera, but also it's a much much bigger opportunity and then we're you know we're only really promoting altera.
Targeted way as well I mean generally.
For patients that want to get.
I owe monitoring that are that are getting signaled turret setup.
We will then also add altera.
Because of the convenience factor so vast vast majority.
Cigna Tara.
Vast majority in colorectal, although we are starting to see growth in Io monitoring and then as we said in the call.
More.
More of the Pan cancer volume.
Coming in.
I think on the on the ESP side.
On Altera I think there's there's FDA approved versions, which get the premier kind of <unk> pricing and we don't expect to get that but.
I think we'd be participating at the kind of more general CMS rate, but Mike do you want to talk kind of about about Asps in general Secretary of Alterra.
Yeah, So mark that was lumpy right in terms of the ASD range precision and you can see that that's a that's a far cry from the.
The price we get when we actually get paid so we have.
<unk> rate of 4500 and the accident.
<unk> into.
Into 2000 homes. So what that means is we're driving you mentioned volume.
Not yet reimbursed for Medicare or commercial lives and they just need to volume that we think we can get reimbursed in the relative near term. So we're pretty excited about the the ASC trajectory.
Great for Signet, Terry given the reimbursement wins, we've gotten the dural doesn't mean that at the moment.
The season, just quite a mature.
As we've said in the prepared remarks, even net of volume growth.
Okay.
We think some of these factors will drive them that is higher than a year and then of course, there was a higher mix.
Yes.
We're monitoring tests and just the broader trend beta reimbursement.
Those indications for mobile apps.
Okay, Great and then it certainly seems like there could be a step function increase in MRV testing.
Now that Signet Tara I O.
Is reimbursed is that fair I mean, you know the 76000 was certainly very impressive for 'twenty, one, but it seems like you guys are just getting started 22 in my opinion it could be a step function increase would you agree with that and then second part have you received pricing yet for Signet Tara I O.
Yeah. So I think we certainly are expecting growth I mean, the trajectory is excellent right now.
We said kind of accelerating threat throughout.
Throughout 'twenty one.
I think that the.
M D testing opportunity versus the monitoring opportunity is still going to drive you know a lot of the growth. Although Io is a big opportunity and we're starting to see that accelerate you know I think when you. When you just look at the number.
Ah patients available and you know I think where where physicians are.
More comfortable now using the test when that CRC MRI.
D and recurrence monitoring setting.
Yes.
So I would expect the vast majority would be there, but I O is certainly making a contribution.
That contribution is growing.
Believe me the second part of your question I apologize Yeah have you received a price for signature I O and if so what is it.
Yeah, Yeah. So we're still in that kind of final stages of that it's just the standard.
Individual discussion with the with the multi X program.
I think our expectation is is that it's going to be kind of roughly similar to the adjuvant colorectal pricing, where you know there's a bundled price.
For kind of the initial testing that.
That occurs and so we think it will be like kind of roughly similar too.
What we saw in that adjuvant bundle.
Got it okay. If I can sneak one final one.
It looks like Oh.
I believe you're getting paid something around 28 41 per test for prospera kidney.
Are you getting paid on any commercial lives at this time and then I imagine that the vast majority of that bucket was prospera kidney as opposed to arena site.
Yeah. So so right now there's really not any commercial coverage in place I think that's an opportunity.
But what we're seeing.
We're saying Medicare consistently reimbursed, but but really nothing from the commercial plans and I think that could change over time, I think that's an opportunity for upside.
Probably about half of the patients roughly sort of.
Medicare at this point.
As we're getting volume from transplant centers and also from the kindergarten Nephrologists.
There are a decent number of commercial lives there.
The contribution from heart and lung, which is currently available on the market, we're actually seeing good utilization there, but we're very very early stages.
So those are aren't really incorporated here in a meaningful way.
And then re decided it is in here. It is a meaningful portion of this but the vast majority of the cluster.
Terrific. Thanks, so much.
Okay.
And thank you.
And our next question comes from Dan Leonard from Wells Fargo. Your line is now open.
Thanks for taking the question.
Could you share your thinking on the topic of price sensitivity and Ni P. T does the California contracts signal more price sensitivity or is that an isolated.
Incident.
Yeah. So I think the you know what.
What we think is the situation in California, and we're still kind of working through the details if theres going to be a lower price offering.
They have very limited content.
And I think we we've applied for specific PLE code.
From the a M, a which will will kind of signify and be priced specifically for that more limited contact.
I think California is unique they've.
They've had a state program for probably I don't know 20.
20 plus years.
And I think it's it's it's not something that that's sort of really been.
Kind of deployed broadly across the United States.
I think we're considering whether we participate or not at this point.
We do participate.
We think there is definitely volume upside as we access.
Additional offices that we're not currently in.
Yeah. So it's something we have to kind of assess and kind of take it from there as details emerge this thing's crystallized.
And Steve what is narrower content mean is this just try somebody 21, where does it include 18 in 13.
What a narrower panel.
Like.
Yes.
I think.
I think the details need to kind of be fully flushed out, but you know from from what we understand it would be probably 'twenty 113, and 18 for example, only.
Thank you.
Sure.
Yeah.
Yeah.
And thank you.
Our next question comes from Alex Nowak.
Greg from Greg Hallum Capital. Your line is now open.
Hey, great. Good afternoon, everyone. It looks like the FDA is looking to use New York Times investigation of the prenatal test here.
On fuel for a broader push that regulate lab developed tests again can you just comment on your thoughts there what FDA has oversight it might mean for the business.
Yeah. So.
We actually really support any additional regulatory oversight I mean, we're already very heavily regulated.
But you know we you know we've looked at sort of this kind of valid act that's out there we strongly support that I think.
I think that the.
The good news is that we are by far without a doubt the most thoroughly validated and IPP product on the market today.
We have.
Significantly more patients that have been studied in clinical trials and the largest multi site perspective real world studies that have ever been done.
In this space. So you know if there is regulation, which we completely welcome we're in an excellent position.
And we're in a probably the strongest position out of anybody.
Okay got it and then we've been hearing that the multi X Tech assessment process has actually been picking up a little bit longer than what somewhere initially expect there's a couple of examples out there in the markets. So I think some of that could be corporate backlogs, but just what are you hearing and then specific appreciating with regards to all the tech assessment process for NIM.
The pair of indications.
That's the majority of what we experienced so far but yeah, let me maybe I'll make some comments and then you can go ahead.
Our experience so far.
Doesn't mean that way, but you know, but that doesn't mean, there's not the ways.
Thank you.
So far we are.
After getting the initial colorectal coverage. We then additionally submitted a tech assessment for speech for CRC Lugo metastatic and <unk>.
We got that.
I think last fall.
That was kind of a follow on.
Under the kind of tech assessment process.
After the peer reviewed paper came out last spring.
And then obviously, we got the I O coverage, which was sort of part of the Pan cancer LCD It came out.
We submitted multiple different.
Tech assessments at this point and you know we're in active discussions Solomon do you want to comment further.
Sure. Yeah, you know I think are certainly a year year and a half ago, we were seeing Medicare backed up because they were reviewing.
Reviewing so many submissions for new Covid tests.
Coming to market, but.
But they're not really seeing that from what we've heard.
So much in the last few months and what exactly what Steve said.
We're not seeing anything out of the ordinary right now.
That's great to hear I appreciate the update thanks.
Yeah.
And thank you.
And our next question comes from Kyle <unk> from Canaccord Genuity.
Your line is now open.
Great Hey, guys. Thanks for taking my questions. So you mentioned in the same type of volume is shifting in favor of the French monitoring setting so it's nice to be tailwind I.
I guess just quickly.
Is there a PD repeat testing that you're expecting for 'twenty two 'twenty three if I, mostly see our series of other tumor types I'm. Just obviously there is implications on reimbursement in ASP on like a cancer type of candidate like basis. So I'm just kind of curious what you're thinking there for like next year and going forward.
Yeah. So.
The vast majority of our orders that we see where the doctors.
Requesting a protocol or in the field of CRC.
But we are starting to see in the additional tumor types as well as doctors become comfortable.
To me that's too it kind of a repeat order model.
So we think over time, it's going to be both.
But you know the vast majority of the volume and the repeat orders and CRC.
Okay, and then just a quick one for Mike I think you were talking about this in your prepared remarks, but cogs per test and that increased or stayed flat in 'twenty. One can you just confirm if that's true then how.
Cogs per test could evolve going forward and why that would decrease as the new products received numerous remember something.
Yes, the reason why the Cogs per test, they're going to go down is because we're just really immature in particular on the.
Sydney Terra Cox, so we touched on the prepared remarks, one of the big projects in the R&D lab.
You get more efficient on that first time point X M, which we think we can do.
It's really more a matter of scaling up more than anything else.
The the.
Carlos.
Before the other monitoring tests are thinking of terror and four in ICT and prosperity really kind of on leverage.
The core technology that we've developed here over time.
And.
For example on an ITT, we've got we think a clear pathway from the $1 60 range too.
You know the 125 range or so.
Over time and potentially lower.
So it is similar trajectory across the other products. So that's that's the path to reducing cost of goods sold per test in and we've got a long track record of doing that going back.
Seven years plus.
Okay makes sense thanks, guys.
Yeah.
And thank you.
And I am showing no further questions.
This concludes today's conference call. Thank you for participating you may now disconnect.
Thanks.
Yes.
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