Q1 2022 OncoCyte Corp Earnings Call
Greetings and welcome to the <unk> Corporation. This culture of 2022 earnings conference call.
At this time, all participants are in listen only mode.
A brief question answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press Star then zero on each telephone keypad.
As a reminder, this conference is being recorded.
It does come up he should agenda countries.
Jim I'll take that.
Patients.
Thank you operator, and thank you everyone for joining us for today's conference call to discuss <unk> first quarter 2022 financial results and operating highlights.
And I think today's financial results press release, please visit the company's website on the investors page.
Before turning the call over to Ronny, Andrew I'm going to take the President and Chief Executive Officer.
Like to remind you that during this conference call the company will make projections and forward.
Any statements regarding future events.
These statements that are not historical facts are forward looking statements. We encourage you to review the company's SEC filings, including without limitation, the company's one and 10, Qs which identify risks.
The big risk factors that may cause actual results or events to differ materially from those described in the forward looking statements. These.
These factors may include without limitation risks inherent in the development or the commercialization potential.
Potential diagnostic tests uncertainty in the results of clinical trials regulatory approval.
Pasadena Oncotype.
Third party supply blood sample analytic system to provide.
This is the precise and all that it can be felt on a commercial scale the need to obtain third party reimbursement for patients use of any backing up the test the company commercial acres are.
Our need and ability to obtain future capital and maintenance of IP rights risks inherent in strategic transactions such as scan their three light anticipated benefits legal they get totally regulatory or political changes and the applicable jurisdictions attorney and quality control greater than estimate at all.
Occasions have resources to develop and commercialize technologies.
To maintain any laboratory accreditation certification.
Uncertainties associated with the COVID-19, pandemic and its possible effects on our operations.
Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward looking statements.
<unk> expressly disclaims any intent or obligation to update these forward looking statements, except as otherwise may be required under applicable law.
With that I'll turn the call over to Juan.
Hey, Thanks, Todd and welcome everyone to our conference call to discuss first quarter 2022 financial results and operating highlights on today's call I'll review the significant progress we've made and continue to make across all of our major products as we move toward reimbursement submissions for our oncology menu and update you on our exciting opportunity.
In transplant.
But first I think it's important to address the market headwinds and some important decisions, we've made to better position arcos <unk> to weather the current external environment when I stepped into the CEO role in July of 2019, we introduced an adopted an ambitious vision to acquire companies that own technologies that could accelerate our path to deliver a complete menu of press.
<unk> treatment decision and therapy monitoring test to assist oncologists and pathologists to make them more timely informed decisions for their patients. Despite the challenging external market environment I'm very proud to say, we enter 2022 with them every product on schedule and poised for submission for reimbursement over the next 12.
Months.
Notwithstanding these favorable developments, we recognize the need to be fiscally prudent and strong stewards of capital in connection with these objectives. The company led by our board determined to take actions to strengthen our balance sheet. So as to ensure we have a solid path through 'twenty three and into 'twenty four in April we successfully consummated.
In an underwritten public offering of common stock and warrants with net proceeds of approximately 32 8 million. This financing round was accomplished with the strong support of several current investors as well as some new institutions. We very much appreciate the continued commitment to the company and to our vision we.
Believe this recent funding combined with our current balance sheet expected revenue ramp as well as licensing of platform partnerships will provide us sufficient capital into 'twenty 'twenty four.
However in order to do this we've had to make some important prioritization decisions that I want to share with everyone today.
We expect to shift from our current parallel path product development and launch processes and begin to focus on two main product priorities for the foreseeable future. We intend to focus our organizational energies on one launching our recently CLIA validated transplant monitoring tests for a liver transplant.
<unk> as well as completing the platform partnership and initiating the clinical trials for an IBD kit submission in transplant and to completing a determined early adopter program and publishing supporting papers to drive future adoption as well as submitting for CMS reimbursement in the second half of 2002.
92.
In Q1, we completed the investment required to build out our Irvine lab to accommodate the upcoming IBD development in both transplant and oncology are exciting relationship with thermo Fisher to build regulated content on their next generation sequencing system Genex's, we're quiet preparations and capital investments here.
During Q2 with the infrastructure investments now behind US we have the facilities the instruments and the expert team in place to begin this important work, allowing us to start the regulatory process to position our oncology test so launch ex U S through thermals global channels.
Before I dive into the bottom line progress we made in Q1 I'd like to address some organizational changes that I believe will assist us in our efforts as of June 1st Mitch Levine will move over to become corporate development officer, where he will oversee the multiple initiatives underway for bringing in non dilutive cash via licensing and partnership negotiations.
We're grateful to Mitch for all his work as our CFO and believe this move allows us even better leverage of Mitch has extensive capital markets experience and negotiation skills as we seek new sources of revenue also on June 1st a niche John will be promoted to the role of senior Vice President of finance and interim CFO . We originally recruited in eastern run out.
Plant business as head of operations and finance and he has done an exceptional job as evidenced by our completion of the LDC validation and the LCD submission for liver two months ahead of schedule.
Our niche has over 30 years of finance and operational experience within the diagnostics life Sciences, and high technology industry sectors, including molecular diagnostics company like Foundation Medicine, and Perkin Elmer.
And each brings incredibly broad experience to the role and he understands the challenge ahead and is uniquely qualified to help us deliver on our financial and cash management goals.
In addition, what Saddens me personally cabin Radman, our chairman of the board has decided not to stand for reelection to the board of directors at our annual shareholder meeting this summer.
Kevin has served shareholders extremely well for the past six years. However in light of some very personal reasons cabin has determined that more time with family as needed and other life interests. We're extremely appreciative of the investment in time and experience. He has made to Arca side over the years and I'm grateful for his willingness to rain remain accessible as a trusted advisor.
To me and other members of management to ensure a seamless transition and.
In connection with cabinets decision to not run for reelection I'm pleased to announce that Andy Arnaud. Our current audit share has been unanimously elected by our board to succeed cabin Andy brings a long history of financial acumen to the role, which we believe will ensure solid continuity as we navigate the current market environment and move Oncotype forward.
With that let me now provide updates on our solid progress across our product portfolio first I want to discuss our anticipated rapidly emerging revenue opportunity and transplant rejection monitoring.
Last fall, we set out an ambitious plan to finalize our lab developed tests for liver patients by the end of first half of 2022 as announced last week. Thanks to the incredible effort by our teams in Germany in Nashville, We now have a fully CLIA validated lab tests for liver transplant monitoring poised for launch the team was.
Also able to complete the liver clinical validation for CMS submission. Two months ahead of plan positioning and are positioning us for a full market launch in the fall of this year.
Building on our patents numerous papers published based on our digital PCR methods. Our two teams have streamlined the workflow delivering an incredibly efficient digital PCR process that allows us to consistently with solid assay reproducibility complete the test process and report results within a single shift once our lab.
These are patients blood sample. We believe this will be the fastest turnaround time available in the industry today and we're enthusiastic about the opportunity to provide this important test for liver patients where today. There is no current molecular monitoring test on the market I look forward to updating you on our commercial plans on future calls.
Now, let's turn to our oncology portfolio in the first quarter determinant Rx grew 66% versus Q1 of 2021 and sample volumes were 73% above the prior year, reflecting continued momentum towards our stated goal of doubling 2021 volumes and revenues.
In the first quarter, we continued to expand our pool of onboard of positions, which is now up to 472. This is an increase of 10% year over year and similarly onboard accounts also increased 10% to a total of 278 as of the end of first quarter.
Let's turn next to determine I O. It's clear from our early adopter program that there is a tremendous need for a better solution to immune therapy response prediction than the two prognostic tests that are currently available today.
Over the course of first quarter, we gained valuable insights as to the use cases for determine I O and have a clear understanding of its importance and early stage triple negative breast cancer in late stage non small cell lung cancer.
We continue to build the foundation of supportive papers, expanding the clinical utility of the test and supporting the unique claim I'm determined <unk> utility across multiple tumor types.
Recently at ACR ACR, we presented data supporting its use in metastatic bladder cancer, our second major dataset in this cancer types, which we believe is now statistically powered to allow us to expand in the bladder cancer as our third tumor type this.
In June at the American Society of clinical oncology or Astro meeting our collaborator we'll be releasing the results of the previously announced collaboration with the Ghana clinical trials group, where the term of Io was tested as a biomarker on the <unk> tribe study.
Tissot tribe has a randomized clinical trial in metastatic colorectal cancer, where patients received placebo or the standard of care plus the Roche drug a tease out last September Dr. CRE.
Excuse me Dr. <unk> <unk> of the Golar group reported the results of the trial, where the trial is considered a success, but only for a very small population of patients but as has been previously seen in numerous studies most of the benefit was seen in a subgroup of 5% of metastatic colorectal cancer patients.
That had a rare genetic mutation. It is now universally accepted that the remaining 95% of patients need a biomarker in fact without a predictive test is very large patient population will continue to lack access to immune checkpoint inhibitors as a treatment option Dr.
Dr. <unk> mentioned that her team's future work will be looking at Biomarkers for these low responding patients and determine Io as mentioned by name as a candidate. These important data will be released at <unk> and while today, we cannot comment on the results given it's a blinded study we encourage you to stay tuned I cannot overstate the importance.
So such a potential new indication for immune checkpoint inhibitors and for our determine Io program.
Additionally, at <unk>, where leasing data onto term Io in metastatic metastatic triple negative breast cancer using the drug keytruda.
While we have previous state and CNBC those studies with different immune checkpoint inhibitors and in earlier stage tumors.
Rather than metastatic disease.
So this could expand our applicable T M D C patient population for one of the leading immune checkpoint inhibitors keytruda.
Finally, we will be releasing new data in gastric cancer or gastric cancer is not a common cancer in this country. It is the third leading cause of cancer related deaths worldwide. We built this indication is important now that we solidified our platform channel partnership with Thermo Fisher for rest of World markets and are already working on the kit version of the.
Tom I O Needless to say <unk> is an important meeting for <unk> and we look forward to speaking with you further once the data is all public.
Close by summarizing despite the external environment I continue to be extremely enthusiastic about the progress. We've made today looking ahead, we will be taking steps to focus our investments on how we stage our product development and launches and have many exciting growth drivers for you to watch over the next six to eight quarters will continue to drive sample volume broke.
And revenue increases for determining Rex and beginning in the second half of this year, we plan to start the sequencing of our four major product launches with our transplant monitoring offering in liver followed by full market launch of determined Io Detroit T X for the U S clinical oncology market and finally, we expect to launch the term of C&I and the U S for.
Pharma clinical trial markets gained.
Gaining reimbursement for our portfolio, bringing our test to market and generate revenue growth is essential and we believe that we've optimized the organization to drive external partnerships and licensing to generate additional revenue streams and we've taken steps to reduce our burn to ensure our car resources carry us into 2024, we built a world class.
Organizations that I'm very proud of and I'm grateful for your support as we advance.
Our platform.
To deliver life changing tests to patients physicians, we serve each day at this point I'd like to turn the call over to Mitch Levine to review our financials niche.
Thanks, Tony Hi, everyone.
<unk> revenues for the first quarter of 2022 were approximately $1 $4 million up from $3 million from the same quarter a year ago.
First quarter revenues associated with the term Rx for 1.0 million.
Up from zero point $2 million sequentially.
Zero point $4 million year over year.
We received $40000 in licensing related revenues in the first quarter from licensing our proprietary molecular tests to China.
After the close of the first quarter, we received the final burning Roth milestone payment of $1 million. According to our November 2021 Amendment and will account for it as licensing revenue in the second quarter of 2022.
Our pharma services business generated zero point $4 million in the first quarter a degree a decrease of zero point $1 million quarter over quarter, and a decrease of zero point $1 million year over year.
As we have discussed previously revenues in pharma services likely fluctuate as we received samples from Biopharma clinical trials.
Cost of revenues for the first quarter was approximately 2.0 million ish.
Including $1.0 million from the cost of diagnostic tests and testing services, we perform for our pharma customers and 0.9 million in.
Noncash amortization expenses of the terminal <unk> and pharma services related intangibles.
Cost of revenues also include testing services, we perform for our pharma customers.
Research and development expense for the first quarter of 2022 was $5 $1 million, an increase of $1 8 million.
From the same period a year ago.
The increase in R&D expenses related to increased head count as we prepare to begin the clinical trials to give IV deep kits.
Our platform partnerships as well as increased R&D activity as we continue to support clinical trials to gain statistical power to our current determine Io datasets to ensure success as we submit to CMS reimbursement as well as build our clinical efforts for our new transplant business.
General and administrative expense for the first quarter of 2022 was $5 $7 million an increase of $900000 for the same period in 2021, due primarily to an increase in personnel and related expenses.
We saw increases in stock based in cash compensation for new hires and our standard cost of living increase for many employees.
We also incurred professional and legal fees as well as other acquisition and business development related costs, which we expect will be nonrecurring.
Sales and marketing expense for the first quarter of 2022 was $3 2 million, an increase of $1 million year over year, primarily attributable to an increase in head count and continued ramp in sales and marketing activities to prepare for commercialization of our transplant business as well.
His support the commercialization efforts of the term, Ohio terminal Rs.
non-GAAP operating loss as adjusted for the first quarter of 2022 was $11.3 million, an increase of $3 $9 million sequentially and an increase of $2 7 million as compared to the same period a year ago. This.
This increase was primarily attributable to an increase in head count in several critical areas of the company.
GAAP operating loss as reported for the first quarter of 2022 was $9 $9 million.
<unk> of $25 $8 million quarter over quarter, mainly due to the $25 million change in contingent consideration recognized in Q4, 2021, and a decrease of $1 5 million as compared to the same period a year ago.
We have provided a reconciliation between these GAAP and non-GAAP operating losses in the financial tables, including included with our earnings release.
On the first quarter of 2022, we reported a GAAP net loss of $10.3 million or 11 cents per share as compared to $35 9 million or <unk> 39 per share a decrease of $25 $6 million quarter over quarter again, mainly due.
The $25 million change in contingent consideration recognized in Q4, 'twenty one and.
And $3 $9 million, an increase of $6 4 million as compared to the same period a year ago.
Turning now to the balance sheet as of March 31, 2022, we had cash cash equivalents restricted cash and marketable securities of $22 $7 million.
Following the end of the first quarter, we raised $32 $8 million in net proceeds from an underwritten offering of common stock priced at market.
We anticipated receiving two tranches of $5 million preferred stock offerings.
In the second and fourth quarters of this year, but preferred is priced at a 20% premium to market.
Additionally, we are currently reviewing several options for non dilutive forms of capital, including capital lease lines platform partnerships with transplant licensing test in the U S markets as well as commercial partnerships and we feel confident that our current balance sheet combined with these non dilutive opera.
<unk> provide us with sufficient cash to take the company into 'twenty 'twenty four is.
As Ronnie mentioned, we are proactively preparing for continued market headwinds by re prioritizing on a more.
<unk> approach to product development and test launches specifically, we plan to reduce the number of clinical studies, we invest in over the next 18 to 24 months and rely on the data collected to date to support the submission for reimbursement and the subsequent product launches. We also plan to reevaluate.
<unk> of several capital intensive investments, including planned sales force expansion to launch determined T X and the term Oh. These.
These expense reductions combined with the anticipated revenue growth once our tests receive reimbursement is expected to have an immediate impact on reducing our cash burn.
Net cash used in operations for the quarter was $13 3 million net cash used in operations increased sequentially due to the timing of invoices that were paid in the first quarter rather than the fourth.
As well as personnel R&D and sales and marketing expenses.
Note that net cash used in Q4 reflected a $2 million milestone payment from the burning rock licensing agreement.
Looking ahead, we expect our Q1 cash usage for facilities Buildout and instrument purchases to be a one time expense and thus our operating cash usage will begin to decline over the future periods.
We are committed to solid stewardship of the current cash on hand, following our recent funding.
As I transition into my new role as head of corporate development I want to take a moment to express my gratitude for the privilege of serving as your CFO the last five years.
I look forward to working closely with Ronnie as we enter the next phase of our strategic initiatives and see new global partnerships and licensing opportunities to bring increased capital and revenue to August site.
That concludes my remarks concerning our financial highlights.
Operator, please open the call for questions.
Thank you very much sir.
Ladies Sanchez, who can now be conducting a question and answer session.
If you lack competition space and.
One on each side of a keypad a car.
Information Ken will indicate that your line is in the question queue.
You May press Star two.
If you would like to leave the question queue.
For participants using speaker equipment, it baby, Mississippi, HP comprehensive equal Christina <unk>.
The first question comes from Mike Matson of Needham and company.
Yeah, I think thanks for taking my question.
Let's see I guess I'll start with the.
The comments around things you've done to reduce the cash burn so.
Can you, maybe just talk a little bit more about this sequential approach and how that might affect the timing of any of the the test launches.
Yeah, Mike we will and I. Appreciate the question. Our goal right now is all about focus focus focus sit right now we have to we believe immediate Rev.
Revenue opportunities to complement the term Rx and so obviously, we're going to continue all the efforts around the term Rx, but we are going to throttle back on some of the clinical studies that were planned for the <unk>.
And so to expand utility et cetera. So those will be those will be re prioritized and will put energy behind.
The term of determine Io to get it submitted to the four CMS keep in mind, we've got enough data. We believe after as go in the upcoming publications of the data that's already been presented to submit for at least two indications and so that's where we're going to go to market, where we had planned I think as you know to try to get a fee.
More studies under our belt and to try to prove.
To present, the case for a pan cancer.
Reimbursement, but right now we decided that to minimize the cost and obviously theres a theres risk and anytime you go do clinical studies. So we're going to take what we got and we're going to go forward with that so it wont delayed the launch them to term Io, but it will mean that we focus iowa's launch into triple negative breast.
Non small cell lung cancer and potentially bladder cancer now that we have the ACR paper behind us.
And then transplant of course, where we were way down the road on transplant, we beat our our timelines that we set for the team to end by the end of June they finish the LCD I'm trying to finish the L. D. T. At the end of March and they finished the LCD a couple of weeks ago, and we announced that last week. So we believe that we're poised for launch for our <unk>.
<unk> plant business in the fall and so we will be shifting some of the planned sales force expansion oncology over to transplant. So that we can we can have someone are representing our transplant offering for liver in the marketplace by fall and so the delay the will only delay.
Hey that we anticipate might be pushing out the term of C&I.
And potentially determined TX launches just based on how we have to sequentially plan these things without adding new marketing head count.
So that's really the big challenge now is just to make sure we stay focused on transplant and getting Io submitted and then after that we'll begin the sequential fall one of the other products. So we're not expecting cortical years delay, we're expecting quarter delays in some of the other products that were mentioned today.
Okay got it that's helpful.
And then just any update on the potential platform deal for Curt there sure.
It sounds like Mitch mentioned that.
Still being discussed, but I guess I thought we might hear something kind of by the spring early summer timeframe does that still yeah yeah.
Yeah, Mike we have we have we are in the at the 11th hour with.
The digital PCR opportunity and we're down the road on our Nextgen sequencing opportunity as well and so it is very plausible that we might end up on two platform technology.
<unk> next Gen sequencing and digital PCR, but we're definitely be announcing very soon.
Primary relationship that we're looking to execute on in digital PCR. So just stay tuned for that it's I just cant announce it yet because we arent finalized the contract with signatures on both side yet.
Okay got it thank you.
Yeah.
The next question comes from Mark machinery, a P T G.
Hey, guys. Thank you for taking the questions Ronny I think you mentioned that you may move.
A small number of your reps over from oncology to transplant I mean is that literally one or two folks and then can you give us a sense for now that the liver transplant test is validated.
Yeah.
You indicated in the press release, our launch seems to be imminent, but maybe can you just talk about you know when exactly that will launch and then talk about some of the logistics out of your la.
Rob on the East coast.
Yeah, absolutely first off.
Mark just to be clear, we're not gonna take anyone from oncology sells that moved into transplant. If you remember we were planning on doubling pretty much doubling the oncology sales force. This year, we're going to put those plans on the back burner for now I'm going to take some of those head count we have planned to move over and we'll hire a team to cell transplant that comes from the transplant industry.
Our transplant marketplace. So that's the first thing the second thing is we did absolutely complete the L. D T validation for liver. The LCD was also completed and submitted so we arent awaiting phase to hear from.
From CMS.
Our goal is also to to try to submit as we committed could kidney as well by the end of June . So all of those are in process. Our goal is going to be to begin to establish we've already established the lab processes. We have a really good workflow we have a team in Nashville prepared to take samples and so now it's really it's really.
About executing to your point the logistics of of how we're going to get the sample collected and how we're going to get those samples into our lab and so all of that's being worked on now and we expect to have all that in place by the time, we get reimbursement, which who knows at this point, given where CMS is from a timeline perspective, but.
We expect early fall, we'd be ready to go for a market launch with reimbursement. That's that's what we believe based on what we know about CMS.
Backlog today.
Okay. That's that's helpful. Thanks for clarifying that and then.
Obviously determine Rx will remain a commercial focus for anchor site.
But did I hear you say that you may have throttled back on clinical study development on Rx and if that's the case.
Should we be maybe pushing out our own expectations for when Rx could be included into NCC and guidelines.
That's the Big question Mark you hit the nail on the head. We are we we have a randomized clinical trial open.
It is enrolling at a slow pace patients have not necessarily wanted to randomize themselves knowing how powerful our data is at selecting.
Patients that have high risk and the outcome that they take chemo, obviously is profound and so our goal is not to add any additional studies around that we have an open registry will keep the registry open and we'll keep the current slow intake of RCT, but we're not going to add into the other.
Trials that we were considering that might have accelerated a dataset for NCC and by next summer those would be risky to get them done in that timeframe and so we just said, we given the risk and given the burn it would take to get there and we just decided it's probably better to let the current trials continue to go forward.
And not add any additional expense to that.
Okay, and maybe one last question and I'll hop back in the queue.
The $40000 of licensing revenue I believe came from burning rock.
For the launch of Rx in China.
Pretty sure Shanghai has unlocked down I guess can you just talk about.
I assume that you know things.
Things are definitely under alarm in China, especially in Shanghai, but can you give us a sense for.
You know burning rocks focus on that test and.
Maybe just describe the impact that you saw as a result of the lockdown in Shanghai, Yeah, I'm going to let Mitch answer that I think everyone knows Mitch was on point for the whole since the beginning and really did all the negotiations with our Chinese partner and so again kudos to Mitch for the hard work there Mitch stays on the phone with them what.
What's the latest and we do know we're being impacted by the lockdown for sure it's definitely impacted by the lockdown.
But they are committed to our exit done studies around it if commercialized it now for about five consecutive months and they're showing showing good progress and so but you're right Marty.
China is exceptional in their lockdown regarding COVID-19 and that's going to have an impact.
Okay. Thanks for the time I'll hop back in the queue. Thanks.
Thanks Mark.
Thank you the next question.
Churn comes from David with Stupid.
Sandra.
Hi, Thank you for taking the questions I had two I think short ones first off just a clarity on all of the.
Cash metrics here I think you exited 24, you did $32 million deal.
That puts you your current cash balance somewhere around 50 does that makes sense and then.
This cash runway to 2024 and I just wanted to make sure Claire that is through was at $2 24, or $3 24, and then you said it does add in some of the non dilutive capital that your assumptions can.
Can you clarify whether some of that non dilutive capital assumptions are stuff that hasn't been announced yet or is it everything you kind of already talked about so far.
Yes, Mitch is going to take that one Mitch.
Dave Youre fairly accurate on the cash number I would say in the low fifties as probably a little more accurate, we do anticipated, bringing in another $10 million in our preferred offering with two of our institutional investors that will come in two tranches.
$5 million each one will close in the second quarter, one will close in the fourth quarter. Additionally, we cant delve into details regarding non dilutive financing and capital sources.
Specifically, because that's we're a public company and we just can't tell you Dave but.
Yeah.
Okay.
Just wanted to make sure.
So it does contemplate stuff that has not yet.
That's correct. It does contemplate things that have not been disclosed and we expect or that capital.
Combined with what we currently have on the books and bringing in the $10 million from our preferred.
Get us into 2024, how far into 'twenty 'twenty four is going to be dependent upon how we're able to scale back our our plans Dave Let me just say this I think that I think that we are.
Not like we're hoping for those non dilutive things were actually in discussions around some things. So we just can't comment on them because they are not completed yet.
Perfect. That's helpful. And then just quickly on account access you onboard it I think you have 472 on boarded accounts.
10 up 10%, but the test orders was up 73%.
Can you maybe talk about on it sounds like Theres order frequency trends going on and just wanted to maybe clarify that and yeah. We are seeing well one of the things we did David given the lockdown coming out walk down if you remember we had on board at a lot of people virtually but a wrap had not been entered basically detailed surgeon itself or himself or herself and.
So with things opening up our sales team was able to start to getting in and doing that and as a as a result of that you're seeing an increase in sample volume from same store sales. If you will our same sites that we've already gotten some now we get more positions on boarded there and they begin to order and so.
You know, we expect that that is a better use of our sales team's time, we spend all of the synergy of getting these new accounts. So while we do want to continue to grow our account base are original wave of account access and a cow effort was focused on high incident rate areas and as you know determine Rx as I.
<unk> is a smaller market opportunity, but with I O and TX costing we wanted our reps to have a presence and our brand presence in these high incident rate accounts and that's what we focused on so now that things are opening up we want to start really penetrating the current accounts and driving more utility of our products. We think it's a better more efficient use of their.
Sales time.
Alright, alright.
So much.
Thanks, David.
Thank you. The next question comes from Paul Knight of Keybanc.
Hey, Ryan on the theater ashore.
What should we think about regarding pricing for that particular type of test.
Yeah, so today kidney as our digital PCR methodology.
Was given a blanket LCD a year ago.
And it was given for kidney at 2700 and heart for 28 50, I believe we think liberal will be somewhere in that range, but hard to tell but it should be it's the same technology same methodology, a little more important outcome given.
Given the number of biopsies et cetera, So we think that the others probably are.
Good good degree of probability that will fall between the 2700 2800 dollar range.
And then isn't this a.
Multiple tests per year per patient type test.
Correct, Yeah, the depends on European standard of care is a little different in the U S. But we're looking and we think somewhere between <unk>.
Seven at least seven in year, one and four and for which is very similar to kidney and heart so somewhere in that in that follow up.
Utility for follow up Youll see liver fall more than likely.
Okay, and then regarding Rx in the quarter.
Pricing seems to be up is that a fair assumption.
Yes, that's a great point Paul.
We've been attacking the private payers pretty hard and hand to hand combat adjudication of claims and Mitch I mean, you're not I mean, I thought we saw a really really nice.
Order of being able to collect cash and actually move some of the folks that have paid us underpaid us off to a better standard for us. So the answer is yes Paul.
As you know, though when we we always say this that we are not in contract with except for one small payer and so every private claim has to be adjudicated typically and and we have a team that's doing that so they're obviously gain and sustain and we do believe the addition of term of Io and determine TX will add.
More value to our market access team because now they've got more to position for contracting. So hopefully we'll see some gains out of that group in terms of actually getting on contract, but probably not until we're ready to launch TX in I O.
Okay, and then lastly regarding the services business.
Is that is that kind of steady state for the foreseeable future.
Yeah, you know Paul it's weird I've been watching other folks.
<unk> report.
And we've heard several times from different companies that their their pharma businesses are down and that they felt like the surge the AUM. The winter surge that people stayed away from some of the clinical studies.
Does it make I have to be honest it doesn't make sense to me if you're a cancer patient why are you not go in and get into the trial, but the reality is we did see and hear from other companies. So we do have a really robust contracted pipeline, but until we see patient samples, we can't bill against those and so we'll see.
I think it's going to be lumpy. This year, we had hoped it would be a little more predictable.
It looks like it might be as lumpy this year as last year given the.
The challenges that our pharma partners are having recruiting patients.
Okay. Thank you.
The next question comes from Thomas Flaten of Lake Street capital market.
Hey, guys I appreciate you taking the questions Jeff.
With respect to the launch of the term Io you mentioned that you might be shifting some of the planned head count from the oncology team over to the the up and coming transplant team can you just talk a little bit about how we should think about the Io and Rx growth curves given what seems to be a smaller commercial infrastructure that you're planning.
Yeah, absolutely and I kind of started there on an earlier question, but let me be a little more specific so when we launched and deployed our original 10 reps. We show we thought and we think we did a good job of choosing high incident rate or high incident areas for our sales reps to be deployed.
And throughout the pandemic that proved to be true because we were able to onboard docks.
But without having more than the 10 reps we added three.
And as you know in Q1, so we have 13 now our goal by the end of the year was to have that into the low twenty's, probably and expand into some new territories. So instead, what we're going to do is take the current territories and we're going to focus on as we launch I O N T X and they get reimbursement, we're going to focus more on the current tear.
<unk> and going deeper into the accounts and gaining a better faster traction for I O in T X as you guys know T X as a blanket L. C. D. So we still expect it to get reimbursed fairly rapidly once we submit it and so the idea would be to instead of expanding outward actually going deeper into accounts some of our accounts.
Like Florida, oncology or Georgia oncology.
There's multiple positions, Texas oncology multiple physicians within those accounts and so the idea is instead of on boarding and account getting one or two dogs. We went on board the count and go deep within the the.
The infrastructure of those accounts and drive utility across positions within the account.
Versus add new territories so.
Look as as we get through the current market storm and as we launch these products and revenues begin to grow we will take a deep breath and see if it's when the right time is to add new territories, but today, that's the specifics around what we're planning to do around the oncology business.
And if I might.
You met you made reference to CMS, a couple of times with respect to timing and in response to an earlier question did I hear maybe I might.
Misheard, but did you say you're going to submit here shortly the LCD, but you expect it to have a response in the early fall did I hear that right that seemed a bit of Granada from the timing, yes, we at Thomas we already if you keep in mind the transplant LCD is a blanket LCD for digital PCR and.
And we submitted liver two weeks ago.
And so we are but liver does not have a is not part of the blanket LCD theres nobody with a liver test today as you know so we're the first ones out by the kidney and heart are reimbursed already using digital Pcr.
So.
We don't know for sure, but we believe that given theres kidney and heart that they should we should receive a rapid review of the LCD given theres already a blanket LCD written for our technology that cited our papers.
And the timing on Io do you think would be.
We're still on track, yes, we're waiting on up were waiting on one publication to be accepted in and us notified and once that happens we're going to prepare you know we've been working on the dossier. So our goal is to submit Io as we've said somewhere by the end of summer.
Got it I appreciate it thanks, so much.
Thank you Donald.
The next question comes from Nathan.
Of Stephens, Inc.
Hey, guys most of them been answered here. So maybe just one quick one.
On there sure any color you could provide around recent discussions with transplant centers, how should we kind of think about the opportunity between centers versus more community based centers.
<unk> is one of more and more near term target I'd assume that feed the transplant centers versus the community.
Centres themselves, but just any color there you could provide.
Yeah.
I think the thing that's in our favor as today. There is no there's no molecular tests for liver in the market validated today. So we are kind of the first out in that indication. The good news is theres some great competitors already out there care Dx in the Terra in the other indications and they've done a terrific job of the missionary marketing.
Work to to sort of convince.
Transplant physicians the need for molecular testing. So we certainly believe that that has created an awareness of what we're doing our initial engagement with the various centers. We've talked to has been very positive and they have acknowledged the need for what we are bringing and they certainly are excited about our rapid.
Turnaround time that we can provide out of our lab and so those things the jury's out on that till we start hitting the rubber meets the road when a rep start going in and trying to trying to start getting samples in but we certainly have received very positive feedback from the key opinion leaders that we talk to and liver in these large centers.
Got it thank you.
Thanks, Mike Thanks, Mike.
The final question comes from Bruce Jackson of the benchmark company.
Hi, Thanks for taking my questions.
With regard to the their share launch.
Are you in terms of your launch preparations in terms of the sales force.
Clinical support things like that.
Yeah. So we are you know because the lab came first we got the lab in place the workflow was in place the L. D. T is final.
We have we're working obviously on the logistical components of that now so which will include the requisition to order as well as the.
How we're going to return results.
A report electronically versus Pds <unk>.
Raises it sounds a lot of these facilities still prefer a PDF and are facts, we sometimes scratch our head at that but but that's still the case in many instances, but we are working on an electronic.
Report as well.
So all those things are in process and again, we we wanted to wait and make the investment behind those until we saw a successful workflow and L. D. T. Those are now complete so by the time, we get reimbursement, we expect will be a fully functional battlestar in transplant.
Okay and then just.
Real quick on the determined TX determined CNI timelines, how far should we be thinking about shifting those out.
I would I think that determines C&I timeline is the one that's the greatest risk candidly because right now we are not going to unless we find an appropriate partner that wants to do some studies with us and keep them fairly cost neutral for us will probably not invest behind those studies will launch it is in.
Are you owe in the United States for pharma and hope we can we can solicit some of that support from pharma, but but right now that's the one that's at the most risk and so we had originally planned to launch it which we will as an argue oh. This summer, but we had hoped to basic maybe actually submit for reimbursement later in the year.
But I think given where we are financially and the need to conserve cash that we'll have to wait till we find a stronger partner relationship where they'll help fund some of that effort and so unsure about how long that will push it out but I wouldn't expect a long time, because we do have some good conversations underway, but I would I would not expect any revenue from.
C&I in the next 12 months outside of an <unk> project with pharma.
Okay. That's it for me thank you very much.
Thanks, Bruce Thanks, Bruce.
Does that answer the final question, ladies and gentlemen, we have reached the end of the question and answer session.
This concludes today's conference call. Thank you for your participation you may now disconnect your lines.
Thanks to everybody.
Yeah.
Sure.
Yeah.