Q4 2021 Biodesix Inc Earnings Call
Speaker Change: ?
Speaker Change: ?
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to the Biodesk's fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you need to press star 1 on your telephone. If you require any further assistance, please press star 0. I will now turn the call over to your hosts, Christopher and Zee, you may begin.
Christopher: Thank you, Operator, and good morning, everyone. Thank you for joining us today for a discussion of Biodesic's fourth quarter and year-end 2021 business highlights and financial results.
Christopher: Meeting the call today will be Scott Hutton, Chief Executive Officer. He will be joined by Robin Harper-Cowie, Chief Financial Officer.
Christopher: After the prepared remarks, we will open the call for Q&A.
Christopher: An audio recording and webcast replay for today's conference call will also be available online as detailed in the press release announcement for this call.
Christopher: Today we issued a press release announcing our business highlights and financial results for the fourth quarter and year-end 2021. A copy of the release can be found on the investor relations page of the company website.
Christopher: Actual events and results may differ materially from those projected as a result of changing market trends, reduced demand, and the competitive nature of biodesics industry.
Christopher: Such forward-looking statements and their implications involve known and unknown risks, uncertainties, and other factors that may cause actual results or performance to differ materially from those projected.
Christopher: The forward-looking statements discussed on this call are subject to other risks and uncertainties, including those discussed in the risk factors section and elsewhere in the company's annual report on Form 10-K for the year ending December 31st, 2021, filed with the Securities and Exchange Commission today.
Christopher: Additional information concerning factors that could cause results to differ materially from our forward-looking statements are described in greater detail in the company's press release issued today and in the company's filings with the SEC. I would now like to turn the call over to Scott Hutton, Chief Executive Officer. Scott?
Scott Hutton: As a reminder, Biodesics is a patient-centric lung disease diagnostic company with a mission to unite biopharma, physicians, and patients to transform the standard of care and improve outcomes with personalized diagnostics.
Scott Hutton: 2021 was another unprecedented year with multiple COVID waves throughout the year, impacting access to physicians and shutting down hospitals.
Scott Hutton: The Biodestics team would like to thank all healthcare professionals who have and continue to work tirelessly to help
Scott Hutton: We all know how difficult and challenging that job is and how the pandemic has made it even more complex.
Scott Hutton: Despite the headwinds and obstacles from COVID, we're pleased with the performance and results delivered by the Biodesk team.
Scott Hutton: I believe our accomplishments and successes in 2021 speak volumes about our team, mission, vision, and culture, as well as the value our tests provide physicians and healthcare professionals who use the key critical test results and insights to positively impact their patients.
Scott Hutton: Throughout the year, as we saw and experienced the ebbs and flows of the pandemic, the Biodestics team continued to lead and focus on strategic commercial execution.
Scott Hutton: We continued to focus on expansion of our direct dedicated sales team, growing from 24 sales team members to 48 sales team members by year end.
Scott Hutton: Increasing our commercial footprint is critical to our continued growth and development.
Scott Hutton: These 48 sales team members sell our broad portfolio of five blood-based lung diagnostic tests.
Scott Hutton: The testing portfolio begins with the NotifyXL2 and NotifyCDT tests, which are used for lung nodule management.
Scott Hutton: Not only did we see and experience significant growth in the number of physicians ordering and using these tests, but we also shared data on Notify XL2 in October from our prospective Oracle Clinical Utility Study at the 2021 CHEST annual meeting.
Scott Hutton: The goal of the study was to demonstrate that incorporating this blood-based test into the management of patients with newly detected lung nodules could modify how physicians treat patients while improving outcomes.
Scott Hutton: The results successfully demonstrated that the Notify XL2 test was able to reduce the number of invasive procedures on benign nodules by 67%.
Scott Hutton: which supported and reinforced the data presented and published from the Panoptic Study.
Scott Hutton: In summary, the data highlights the importance of being able to provide a simple blood-based test that can rapidly reclassify a nodule as low risk for the patient, providing confidence in a wait and watch approach supported by serial CT scans.
Scott Hutton: as they focus on avoiding unnecessary, invasive, and costly procedures.
Scott Hutton: We expect this and additional data from this study will publish in 2022.
Scott Hutton: In the long continuum of care, after a patient has been diagnosed with lung cancer, the biodesic sales team members offer three blood-based tests for treatment guidance and monitoring. The proteomic.
Scott Hutton: the targeted genomic GenoStrat ddPCR test, and our new broad genomic GenoStrat NGS test.
Scott Hutton: In 2021, the Biodesk team made incredible progress that enabled us to introduce the new Genestrat NGS test earlier than planned.
Scott Hutton: In November 2021, we initiated a limited commercial launch and followed that with full commercial launch in January of 2022 with Medicare payment for the test already secured.
Scott Hutton: When dealing with the deadliest of all cancers, in lung cancer, each and every day is critically important to the physician, the patient, and the patient's family.
Scott Hutton: At Biodestics, we value time and fully appreciate its importance, which is why we take great pride in our 72-hour turnaround time for the new Genestrat NGS test.
Scott Hutton: This complements the 36-hour turnaround time for VeriStrat and GeniStrat ddPCR and provides Biodesics with three tests for treatment guidance and monitoring with the fastest turnaround times available to physicians.
Scott Hutton: better supporting their need and interest in getting patients on the right and best treatment as quickly as possible.
Scott Hutton: On the biopharmaceutical partnership and service front, we increased the number of contracts and dollars under contract, including near-term retrospective studies that will be conducted over the coming quarter.
Scott Hutton: and longer-term prospective studies that will be conducted and recognized over the coming years as our partners enroll patients.
Scott Hutton: Overall, prospective trials in our biopharma activities in this area are robust, and we remain confident that we'll continue to see further growth and expansion in coming quarters.
Scott Hutton: Of note, we've received positive feedback and interest in the Biodesics Diagnostic Cortex, our proprietary AI and machine learning platform.
Scott Hutton: including the unique capabilities that we publish mid-year and our broad multimodal and multi-omic offerings.
Scott Hutton: Our efforts and advancements in transparent AI will provide additional insights and clarity to healthcare professionals while providing the ability and potential to identify key biological mechanisms driving specific outcomes for patient subgroups that may require a different approach or different treatment.
Scott Hutton: In 2021, the Biodesic sales team was innovative, flexible, and driven. In the third quarter, we noted that our sales team members were paying for themselves on average in four to six months. And including the COVID-19 challenge, that continues to be the case today.
Scott Hutton: Now let me turn it over to Robin to review the fourth quarter and year-end 2021 financial performance.
Robin Harper-Cowie: Thank you, Scott. Fourth quarter total revenue of $7.2 million was in line with our expectations as compared to $27.0 million for the fourth quarter of 2020.
Robin Harper-Cowie: The 7.2 million represented an increase in revenue from our five core blood-based lung diagnostic tests offset by an expected decrease driven entirely by the year over year change in COVID testing.
Robin Harper-Cowie: As a reminder, the fourth quarter 2020 reflected significant COVID-19 diagnostic testing revenue, which we did not expect to be repeated in the fourth quarter of 2021.
Robin Harper-Cowie: Total revenue for the full year ended December 31, 2021 was $54.5 million compared to $45.6 million for the full year ending 2020, an increase of 20% driven primarily by the growth in core lung diagnostic tests and biopharma services.
Robin Harper-Cowie: Our fourth quarter core lung diagnostic testing revenue was 5.4 million versus 3.7 million for the fourth quarter 2020, reflecting a 48% growth rate.
Robin Harper-Cowie: For the full year 2021, core lung diagnostic testing revenue was 18.7 million versus 12.6 million, a 49% increase over 2020.
Robin Harper-Cowie: In the fourth quarter 2021, biopharmaceutical partnership and services revenue was $1.4 million compared to $1.9 million for the fourth quarter of 2020, a decrease of 29%.
Robin Harper-Cowie: Biopharmaceutical services for the full year 2021 was 5.6 million versus 4.6 million, a 20% increase over 2020.
Robin Harper-Cowie: As we have said, this business can fluctuate due to several factors, including contract timing, which can be long under normal circumstances. But in this instance, reflects the continued impact the pandemic has had on overall prospective clinical trial enrollment.
Robin Harper-Cowie: Despite the ongoing nature of the pandemic, we've consistently projected that COVID testing would drop off for multiple reasons, including the changing COVID-19 infection rates and shifting towards convenient, rapid, and personal at-home antigen testing. And we were right.
Robin Harper-Cowie: COVID testing revenue was $0.4 million in the fourth quarter versus $21.4 million in the fourth quarter of 2020, and $30.2 million for the full year 2021 versus $28.3 million for the full year of 2020.
Robin Harper-Cowie: As a result of the decrease in COVID-19 testing, gross margin as a percentage in the fourth quarter 2021 was 65%, which was a significant improvement compared to the 46% gross margin recognized in the fourth quarter of 2020.
Robin Harper-Cowie: The nearly 2,000 basis point improvement in gross margin over the year-ago quarter was primarily a result from the change in the mix of sales to our higher margin core lung diagnostic testing and biopharmaceutical services and the sequential decline in COVID-19 revenue.
Robin Harper-Cowie: Gross margin also increased sequentially over the third quarter 2021 by approximately 700 basis points and continues to reflect a mixed shift to higher margin core products of lung diagnostics and biopharma services.
Robin Harper-Cowie: Gross margin as a percentage of revenue for the full year 2021 was 44% versus 52% for the full year 2020 and reflects a higher mix of lower margin COVID-19 revenue experienced in the first half of 2021.
Robin Harper-Cowie: Overall operating expenses excluding direct costs and expenses were $16.4 million in the fourth quarter 21 compared to $15 million for the same period of 2020.
Robin Harper-Cowie: Total operating expenses excluding direct costs and expenses for 2021 were $64.9 million versus $46.5 million in 2020.
Robin Harper-Cowie: Both the year-over-year increases seen in the quarter and for the full year 2021 were primarily driven by non-cash stock compensation increases as a result of becoming a publicly traded company in October 2020, and investments in expansion of our sales team and research and development.
Robin Harper-Cowie: The net loss for the fourth quarter 2021 was $13.3 million compared to a net loss of $4.5 million for the fourth quarter of 2020.
Robin Harper-Cowie: Net loss includes non-cash expense related to stock-based compensation of $1.3 million recognized during the fourth quarter 2021 compared to $3.6 million during the fourth quarter of 2020.
Robin Harper-Cowie: The net loss for the full year ending 2021 was $43.2 million compared to $31.4 million, which includes non-cash expense related to stock-based compensation of $4.9 million and $3.7 million during the 12 months ending December 31, 2021 and 2020 respectively.
Robin Harper-Cowie: We ended the quarter with $32.7 million in cash and cash equivalents, inclusive of a fourth quarter 2021 equity capital issuance of $15.7 million in net proceeds and the prepayment of $20 million of the 2021 term loan.
Robin Harper-Cowie: As disclosed in our recent filings and earnings calls, we have been working on raising additional capital to support our ongoing growth plan.
Robin Harper-Cowie: In addition to the continued support from our investors in December 2021, last week we were pleased to announce a new three-year facility with Lincoln Park Capital. This $50 million committed equity line, in addition to our at-the-money facility, enhance our flexibility to access third-party capital during this complex time.
Robin Harper-Cowie: Turning now to our 2022 guidance, we project total revenue of $37.5 million to $39.5 million.
Robin Harper-Cowie: The low end of this range takes into account some uncertainty around future waves of the COVID-19 pandemic.
Robin Harper-Cowie: Our guidance assumes strong year over year growth in our core long diagnostic testing business driven by improved contribution from a larger commercial organization and expected increase in utilization of all of our tests by physicians.
Robin Harper-Cowie: growth of our newly-launched Canistrat NGS test, as well as expected growth in our biopharmaceutical services business.
Robin Harper-Cowie: We have taken a variety of steps to add access to additional funding and reduce our cash burn, all while focusing on continuing to grow revenue in 2022 and 23.
Robin Harper-Cowie: We will continue to invest in the commercial growth of our on market products, including the commercial organization and select capital expenditures needed to support our projected growth.
Robin Harper-Cowie: We expect to hire additional sales team members opportunistically at a similar cadence as last year, as our new reps are paying for themselves on average in about four to six months, as expected.
Robin Harper-Cowie: However, we have chosen to delay certain long-term projects in both GNA and R&D outside of our current commercial and pipeline products to reduce costs.
Robin Harper-Cowie: The results of these cost savings measures we have implemented will be realized through 2022 and 2023.
Robin Harper-Cowie: We expect that our anticipated top-line growth and our ongoing cost-saving efforts will accelerate our EBITDA break-even timeline. Now let me turn it back to Scott.
Scott Hutton: Many of you reached out to check on the biodesics team in the aftermath of the greater than 6,000 acre Boulder County Marshall Fire that erupted on December 30, 2020. Thank you for thinking.
Scott Hutton: The Marshall Fire was the most destructive wildfire in Colorado history as it destroyed 1,084 homes and 10 businesses while displacing countless other businesses and families.
Scott Hutton: The Biodestics team was lucky, as the Biodestics Boulder-based office and laboratory were not impacted, and all Biodestics team members were accounted for, with no team members having lost their home.
Scott Hutton: Unfortunately, and sadly, the biodesics team cannot say the same about our friends, neighbors, and communities. This was not the end to 2021 that we had hoped for, nor
Scott Hutton: Yet I'm extremely proud of the BioSix team, as all team members rallied to provide support and assistance to those in need by opening their homes, volunteering, donating, assisting with fundraising, and providing COVID-19 testing for the first responders.
Scott Hutton: While our community was still dealing with the Marshall Fire's immediate impact, we began the year with yet another significant increase in COVID-19 infections as the Omicron wave hit locally and nationally.
Scott Hutton: In fact, in January , the seven day average number of COVID cases increased 93% in two weeks.
Scott Hutton: Like many other companies, our business was impacted by the Omicron variant in January and early February , mimicking the impact that Delta had in the third quarter of 2021.
Scott Hutton: However, we are encouraged that as quickly as Omicron hit, it has rapidly subsided, which was reflected in the recovery we've seen since late February and the continued improvements were seen in March, mimicking the rebound we saw in the fourth quarter of 2020.
Scott Hutton: Yesterday marks the two-year anniversary of when the Biodesics team departed the office to begin working remotely because of the global pandemic.
Scott Hutton: Over the course of that two-year period, we've shown how strong, resilient, adaptable, and capable we are as a team.
Scott Hutton: I'm extremely proud of the team and excited for us to continue to demonstrate these traits as we progress through 2022 and in a post-COVID environment.
Scott Hutton: The Biodesic team remains steadfast in our commitment to do the following. One, improve the lives of patients impacted.
Scott Hutton: Two, integrate biodesics testing into physician practices, providing all the testing needed for a lung patient through the continuum of care. One patient, one trusted company, multiple tests, personalized results.
Scott Hutton: Three, discover and develop new diagnostic tests like our risk of recurrence test and primary immune response.
Scott Hutton: Four, lead the way with AI explainability and transparency.
Scott Hutton: Five, conduct numerous clinical studies to demonstrate the real-world performance of our tests.
Scott Hutton: And six, continue to grow and expand our biopharmaceutical partnerships to aid in their research, drug development, clinical trials, and development of companion diagnosis.
Scott Hutton: In 2022, we plan to strengthen our balance sheet, which will enable the Biodesics team to deliver the following.
Scott Hutton: one strong adoption and growth of our core lung diagnostic testing and biopharmaceutical service.
Scott Hutton: Two, more physicians ordering and utilizing our test results than ever before.
Scott Hutton: Three, continued growth and expansion of the direct and dedicated biodesic sales.
Scott Hutton: Four, additional data readouts from our ongoing studies, providing additional clinical data that supports commercial adoption and reimbursement for our on-market test. And five, progress
Scott Hutton: the blood-based proteomic primary immune response test for lung cancer immunotherapy guidance, and the blood-based proteomic risk of recurrence test for early stage lung cancer presurgical resection recurrence identification.
Scott Hutton: As we close, I'd like to take a moment to recognize and thank the Biodesk.
Scott Hutton: Your focus on our mission, vision, and culture inspires.
Scott Hutton: Thank you for your commitment and daily contributions to positively impacting patients' lives.
Scott Hutton: With that, I'll turn the call over to the operator for questions.
Speaker Change: Well, ladies and gentlemen, if you have a question or a comment at this time, please press the star, then the one key on your touchtone telephone. If your question has been answered and you wish to remove yourself from the queue, please press the pound key. Our first question comes from Brian Weinstein with William Blair.
Brian Weinstein: Hey guys, good morning. Thanks for taking the questions.
Brian Weinstein: So, a few things here. First, in the script, you guys talked about significant growth in physicians that were using the Coralong franchise.
Brian Weinstein: We saw the growth rates there, but can you give us a little bit more in terms of of details there. I know you guys have been reticent in the past to kind of break things out a little bit, but is there any kind of color.
Brian Weinstein: that you can provide about docs or utilization stats that you saw in the year and then how that Robin for you, how that translates into the buildup for your guide in 2022.
Robin Harper-Cowie: Yeah, thanks, Brian . Good morning. Good to hear from you. You know, it's a great question. One of the things we've stated in the past is, you know, we've got a number of metrics that we track on physician utilization, and we were very clear over the last
Robin Harper-Cowie: 18 to 24 months that obviously with the pandemic, there were a lot of starts and stops. And so we think that we've stabilized, we're looking forward to disclosing and sharing some of those metrics as we progress through 2022. But we've, we've also been clear that.
Robin Harper-Cowie: Omicron did impact physicians. You know, the one thing we saw with Omicron that was a little bit different was people got sick, right? You saw it run through, I think, you know, we stated in the script, 93% increase in two weeks.
Robin Harper-Cowie: We saw a number of physicians, healthcare providers, and their staff get sick.
Robin Harper-Cowie: They returned to work quickly, though, so that disruption was, you know, minimal. It didn't extend.
Speaker Change: of the quarter. So we feel good that we're starting to learn how to recover and rebound. So we're excited to share those metrics when we get a little more stability. What I can share though, Brian , is
Brian Weinstein: You know, we've seen a record number of physicians ordering. Retention and reorder rates are extremely high, and they continue to improve. And that's what we were looking for, because we think that's not only a strong indicator of what the physicians
Brian Weinstein: see in terms of our test results and how much they matter and impact them, but also it starts to show the stability that they've got in their practice.
Speaker Change: Yeah, sorry, go ahead. Sorry. Sorry. From a model perspective, Brian , all of those are critical input inputs for us for predicting out the model. And as Scott mentioned, when you take out the covet waves, and sort of those starts and stops, it helps us become much more predictive about what we expect to happen, excluding, you know, covert abnormality.
Speaker Change: Yep, understood. On the NGS test, obviously very early days, but any comments that you want to make about the message and how it's being received and then Robin back to you on how to think about that product in particular, as far as the contribution that it could it could make towards that guidance range.
Robin Harper-Cowie: Yeah, thanks, Brian . We're really pleased. Early feedback and utilization has been strong.
Robin Harper-Cowie: slightly better than we forecasted and anticipated.
Robin Harper-Cowie: But, as you said, it really is early. We did the limited release at the end of the year, just introduced it a few weeks ago.
Robin Harper-Cowie: We've got the entire sales team, all 48 sales professionals, out presenting and representing that test and supporting its needs and interests.
Robin Harper-Cowie: But we're really pleased, we're excited. It will take a little bit of time to kind of scale and ramp, but thus far early indications and feedback is exceptionally positive.
Speaker Change: Yeah, from a modeling perspective, we take a fairly conservative approach as with any new test launch, we wait to see the adoption, the number of tests for physician number of physicians that begin using. And so we expect a relatively modest contribution from NGS in 2022 with a stronger.
Speaker Change: stronger performance in 23 and contribution to the business really in 23. Okay.
Speaker Change: how you doubled it in 21 and I wasn't sure if
Speaker Change: the comments on the call were signaling you talked about a similar pace so I didn't know if
Speaker Change: If that meant adding another 24 reps in 22, or kind of six per quarter. And then as you're adding those reps, and just as you think about your business in general, there was the shift towards the pulmonologist a couple of years ago. Now you have some products that are geared a little bit more towards.
Speaker Change: the oncologist setting or the oncology setting. So can you talk about how the Salesforce splits their time there and in the comp plans that are sort of, you know, uh, each segment is sort of based on, uh, in, in, you know, what, um,
Speaker Change: well, yeah, just basically how those reps are being evaluated this year. Thanks.
Speaker Change: Yeah, thank you, Brian . Just as a reminder for everybody, we had approximately 24 sales team members at time of IPO. We stated we would double that, which we did. So we exited the year at 48. What we achieved last year was a steady rate of six sales professionals per quarter.
Speaker Change: Really, that allows us to train, onboard, educate, inform, get them up and running.
Speaker Change: So, we like that cadence, but we want to be opportunistic about it. Obviously, there are a lot of things out there impacting the market. We want to make certain that when we bring somebody on, they've got clear line of sight to a path for growth, and we want them to be able to get towards profitability and paying for themselves as quick as possible. You know, for us, it is also a balance of bringing on sales professionals.
Speaker Change: we can put into new dirt or territories where we haven't had somebody calling each and every day. You know, we stated at time of IPO with 24 sales reps, we had a number of sales reps covering multiple sales.
Speaker Change: So one of the other goals for us was let's minimize overnight, decrease windshield time, not only make it a little more lean, take out some costs.
Speaker Change: But let's embed them, let's make their territories a little bit smaller, so that they truly can be that consultative sales professional that physicians look for as a trusted resource for them. So, we think we're doing exceptionally well. We're not going to be as bold, Brian .
Speaker Change: Yeah, we're going to honor that and do six per quarter and and add another 24. We think that there's room for that. But again, we'll be mindful about when we bring on sales professionals this.
Speaker Change: You bring up a great point in terms of the call point. You're correct when we introduced Notify XL2 and Notify CDT, we really did have the sales team focused going as early as they can into that early diagnosis and detection phase. Pulmonologist played.
Speaker Change: So it's really a strong role there. As we have introduced the NGS test, we have begun bringing on what we call oncology specialists.
Speaker Change: And so our plans here are within each of our regions to have a number of oncology specialists.
Speaker Change: the pulmonology-based sales professionals can bring in as the expert when they need to. If a medical oncology call point wants to go through all of the different clinical studies and talk about the trends in treatment.
Speaker Change: We're gonna ask our pulmonology team to learn that, but we're also gonna give them a resource or two that can come in and support that. It really is kind of a blender hybrid. We've done this in the past with our medical science liaison team.
Speaker Change: Obviously, all PhDs focused on clinical trials, and that worked exceptionally well.
Speaker Change: So, Brian , we hadn't disclosed really what that'll look like, and if any of those additional heads will be those oncology specialists, we'll look forward to disclosing that.
Speaker Change: More than likely in the next quarter, as we see how the year starts. Is that helpful, Brian ? Yep, that's great. Thank you, guys.
Speaker Change: Thanks. Hi, guys. Thanks for taking the questions and good to see the guidance for the year. Sounds like that includes the NGS test. So that's that's good. And I understand some of the expectations to to assume there. Could you just tell us if that assumes any like COVID testing right now? I know it's probably a small contribution. Just curious how you're kind of thinking about that for this year. And then could you also kind of parse out some of the assumptions for like Salesforce access and maybe productivity of the new reps just relative to some of the recent quarters? Thanks.
Speaker Change: Sure, Kyle, thanks for being on the call. The guidance includes very, very little COVID revenue for the year, as we saw in the fourth quarter, COVID revenue dropped off significantly, as expected, as the country really shifted more towards the point of care rapid antigen testing. Nothing in our experience really changes that assumption. From a rep productivity
Speaker Change: As we mentioned, the reps are continuing to pay for themselves in about four to six months. So right on or a little ahead of expectations. And rep access is
Speaker Change: It's good right now. That can be impacted as there are COVID spikes as we've seen over the last year. I think what we've seen, you know, wave after wave is consistent. That when there's a major wave in any given area, rep access is limited. Patients going into the doctors are limited. Physicians and staff being sick impacts access. And so it's really a sort of start and stop. But excluding...
Speaker Change: you know, Delta in the third quarter, excluding Omicron in January , early February , rep productivity continues to improve and we're very pleased with the progress of the sales organization.
Speaker Change: OK, great to hear. Thanks Robin and shifting to the biopharma services business. Notice in the 10K this morning kind of indicates that you're experiencing some delays still, so I'm just.
Speaker Change: You just want to understand if, you know, what you're kind of assuming in the near term here with some of those trials. And, you know, obviously the funding environment for some of these biotechs is pretty much non-existent right now. I know, you know, we're talking about pretty much larger companies that you're in conversations with. I'm just wondering, you know, do these things hinder the pharma services revenue, you know, going forward, maybe in the near term here for 22? Be curious to hear that. Thanks. Yeah.
Speaker Change: That recent Omicron spike definitely had a little bit of an impact in biopharmaceutical services.
Speaker Change: We experienced a temporary slowdown in retrospective studies when it comes to sample delivery access to those samples.
Speaker Change: And then on the prospective study side, they're definitely with an impact.
Speaker Change: And then we're monitoring closely those contracts we have in place and the partners we're working with.
Speaker Change: As you can imagine, any sort of clinical study that's occurring in Eastern Europe right now, we've got some questions and concerns about access to those samples and compliance for those patients.
Speaker Change: So I think it's easy to say that historically the biopharma services business has been a little bit lumpy based upon timing of contracts.
Speaker Change: You may have noticed that we stated that we've got more contracts in place, larger samples committed to.
Speaker Change: We think that's one of the paths forward to kind of minimize the lumpiness and smooth that out. And so, we're going to continue to go out and hunt and farm and bring in as many samples as possible, hoping that we can normalize that over time. When it comes to trends,
Speaker Change: right, the pandemic around the world does have the ability to impact those studies.
Speaker Change: It's really complex and difficult to actually forecast and anticipate that impact.
Speaker Change: We're spending more time than ever really looking at where are those samples coming from, can we get ahead of it, what can we do to help. But as you can imagine, as you see a spike in COVID around the world, it definitely shuts down some of those communities, it keeps patients away, and there is a delay there.
Speaker Change: We feel good about the long-term viability, you know, the conversations we're having with biopharmaceutical companies.
Speaker Change: academic institutions, research institutions. If anything, what we've noticed is that we're coming out of a pandemic where we told patients to stay away, especially those that were immunocompromised. There's a lot coming out in the literature now on the number and the percentage increase of cancers that maybe were missed and or now have a delayed diagnosis. Sadly and unfortunately, we
Speaker Change: One of the best things we can do is detect and diagnose cancer early or sooner, because it gives us a higher likelihood of a positive outcome. Those delayed cancer diagnoses could be extremely problematic. And so what we've seen is
Speaker Change: health care professionals, academic institutions, biopharmaceutical companies really highlighting that and focusing on that and trying to pull it forward.
Speaker Change: I'm hopeful and confident that no matter what happens with the pandemic in the coming quarters, that we'll change our approach and we'll continue to prioritize those high-risk and cancer patients to make sure that they're compliant and they're back in. If we're able to do that, we should see samples coming in at a consistent rate. Is that helpful, Kyle? Yes, Scott. That was great.
Speaker Change: I'll ask just a last question. You know, I heard your goals, I guess, for 2022, just given the recent...
Speaker Change: financing and capital position now. I just kind of wanted to ask what the company's priorities were for this year in order to drive shareholder value, like more from a kind of investment perspective, you know, to shareholders, obviously, and, you know, just curious, you know, how you could, what's a near-term sort of priority for you, objective for you that you think could really, you know, you could execute on and really demonstrate some value to your shareholders? Thanks.
Speaker Change: Yeah, you know, it's a great question. You know, we feel very fortunate to be in the position we're in with the number of reimbursed tests that we have, right, to be able to launch notify XL two with Medicare coverage in place, put us in a great position. So with that being said, the on market test, we have continued to drive those. That's who we are at our core. We're excited to come out of the pandemic and get back to
Speaker Change: hopefully some pre-pandemic normalcy, and leverage those reimbursed tests.
Speaker Change: You may have also heard and noticed that even though the NGS test is early days, we have begun receiving Medicare payments. So for us to have the tests that we have that are available to physicians with the clinical data that we have supporting those tests, we think the number one priority continues to be growth, top-line growth, grow the business, continue to leverage the increased
Speaker Change: Number of feet on the street with our broadened sales force
Speaker Change: And if we can do that, then we can get towards profitability. You may have noticed that we've referenced.
Speaker Change: some measures without going into great detail, some measures we've put in place. And so, we're gonna continue to push on our pipeline, peer and ROR, but as you'll recall, we said we were gonna launch those in 2023. So, you're not gonna see a revenue impact from those tests in the next two years. And so, if anything, we wanna be mindful that each and every dollar, each and every Biodesk's teammate is focused on driving top-line growth and generating revenue with our reimbursed core lung diagnostic tests.
Speaker Change: Great. Thanks, Kyle. I really appreciate that. Thanks, guys. Yeah. Thank you, Kyle. Our next question comes from Tejas Vivant with Morgan Stanley .
Tejas Vivant: Hello. For the Genestrat NGS test, what are your...
Tejas Vivant: versus Medicare volume, the mix there? And then how should we think about revenue per test in the early phases of the ramp and then over the longer run?
Tejas Vivant: The mix for Genestrat MGS is the same as we've experienced with our other lung-based tests. So Medicare accounts for about 60% of the patients, so that is and remains consistent.
Tejas Vivant: With the revenue mix for Medicare versus commercial, that drives a good strong portion of the ASP. We are billing using the existing greater than 50 gene NGS panel code. And the Medicare rate for that is about $2,900.
Speaker Change: That was great. That was super helpful. And then just a quick separate follow-up question. How should we think about...
Speaker Change: We expect OPEX in 22 to grow over 2021 as we're continuing to expand our commercial organization and drive strong top line revenue growth for our lung diagnostics and biopharma business.
Speaker Change: But as we mentioned earlier, we have pulled on several levers to delay investments in certain long-term projects that do not impact revenue near term. So we are watching OPEX growth very, very closely and trying to be very intentional with each dollar spent.
Speaker Change: Again, ladies and gentlemen, if you have a question or a comment at this time, please press the star then the one key on your touchtone telephone. Our next question comes from...
Speaker Change: Hi. Thanks for taking the questions. Just have a couple. Could you give us a sense of the, in terms of the target clinicians and hospitals, the percentage of, you know, community hospitals versus academics?
Speaker Change: that are you're currently targeting or plan on targeting with the with the new NGS test.
Speaker Change: Yeah, hi Sungji, thanks for the question. You know, we've not disclosed, but the way we look at it is.
Speaker Change: Our sales team members go in and really try to find, in their community, where they live, whether it's academic or community-based physician, where the, really, we wanna go as early as possible, right? So where are the lung nodules being assessed? Where are they being referred to? And we really want to go there. We wanna go as early as possible. We think that's where there's the greatest utility for the Notify testing portfolio, right? Again, in early detection and diagnosis with both the rule-in and rule-out tests.
Speaker Change: Then as we follow that lung cancer continuum of care, once a patient is diagnosed with lung cancer, similarly, follow those referral patterns. That's where you start to see a shift and you'll see a lot of referrals out of community into academics. And so we really call on both and all. We are not looking at prioritizing one over another. This is more about.
Speaker Change: positively impacting patients' treatment and lives. And so the earlier we can get them into kind of a testing regime and get them referred on to the best and optimal physician, that works best for us also.
Speaker Change: Is that helpful, Sanjeev? Yes, absolutely. Thank you so much. And then in terms of the Oracle study, the registry study, I believe, will be completed sometime this year. And could you talk about what are some of the potential implications once that data is available in terms of from your commercial standpoint?
Speaker Change: Yeah, you know, it's a great question. You don't want to speculate too much on what the potentials are, but, you know, there still is an opportunity to get guideline inclusion. And so we think that the best way that you can do that is with data. And so we're hopeful that as we continue to invest.
Speaker Change: in Oracle and were able to share and publish those results.
Speaker Change: that there's an opportunity for physicians.
Speaker Change: especially from a guideline perspective to consider kind of the if, how, and when blood-based diagnostics play a critical role there. So I think that's one. You know, we've never discussed what a guideline inclusion could mean to forecast. We don't factor that in. Obviously, we want to be opportunistic for the if and when that presents. I would say that's probably the biggest opportunity at hand.
Speaker Change: But most importantly for our sales professionals and team members, when they're out representing the portfolio of products.
Speaker Change: Data is key, right? And so our ability to highlight and demonstrate that in a real-world environment and real-world utilization, that our tests perform at a similar rate to what they performed in the validation studies, we think that's critically important. We don't want to stand behind tests that show any sort of degradation in performance.
Speaker Change: And so for us, I think that's the biggest, I think the.
Speaker Change: was a chest of last year in October when we were able to show.
Speaker Change: nearly a 70% reduction in invasive procedures that weren't necessary. We think that's meaningful. It matters. And we've seen that data be requested. We've got a lot of sales professionals out there talking about it. So we're really excited. I think you're spot on on the timing. We're looking forward to submitting the full data package for Oracle here and hope to share news on a publication that might occur in 2022.
Speaker Change: I would also add to that that Oracle is important for reimbursement as well. You know, payers don't want to pay for things that don't impact care, and so this data really shows not only are we impacting outcomes, but impacting physician decision-making and helping to reduce unnecessary procedures, and so we think it will be beneficial for reimbursement as well once the full publication is out.
Speaker Change: I'm not showing any further questions at this time, so this does conclude today's presentation. We thank you for your participation. You may all disconnect and have a wonderful day.
Speaker Change: ?