Q3 2022 Renalytix PLC Earnings Call

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Again Ladies and en.t, lement. Please stand by again, Ladies and gentlement. Please stand by, Ladies and gentleman. We do appreciate patation. Good morning and lcome to the Al feren call revie third court year 2020, fin? ancial resul the time all red only mo. We will be the ating questionion Ion where the of the call, the reminder, the call record, Ed re proposes I would not the the call overto ter AR conpartn comment all pro today call joining that James call ief expect Ed of officee the claim pres and James irly IE financial officee are for remind that manage statements. Call that includde for looking statements within the meaning of V secureity itation Reform Act 19, niny 5, any statements during call that rellate expectation or proredictions of future events, results or formments are for looking statements. Example statements includ: limitation the potential benefits, including not stateving kidney llects tentionial for kney intellect regulator proval from the F? D a the court ex llect appro including whether kidne intellect except opt by posion and DIS buted markeed are expectations rearding ver ment decisions and the ability kidney intellect COUR cause of C and kidney to the the and approved pati outcomes's that our market tential benefits of government policy change the Act 19. other? U events on our business are expectations for hiring, proct development, ateg partnner and claboration ver decisions. clitical studies regulat COUR sub.missation are strateies future courth including plans, expectation ortun financing or operation and re projections and guid the statements material ris and certainty that could call results EV materially applied by these for the statement couring should not placeed reliance on the statements. discription of the risks. 30, those cated with our business. Please referred to the risks fact section or end report Form 20 that wasfiled octoover 20. one 20, 20 with the cur that James commmission all for looking statements on call Ed the manageions COUR suptions it claims any intention legation except quired by law, date or rev any financi projections or for the statements ther because of new information, fut events or otherw the conference call cont time sent information Act only as of the live broad test today. une 30 20 20 2, with that all the call over James, the call jes morning afternoon. This been Act court or for Al itics are lead program kney intellect continues to securee major versement coveragees, generate key utility dat for our real world, appoint and ill on court commercial ization. Fundamentals, as of the end une kidney intellects is now generated 3253 kidney ris courres. oun health system across 53 departments and one ninety one order positions. Cour this courtter we have now made the lead to auudto mated eleglig patiation identifification and important element for scaling kidney intellect risk assessment across conxs integrated health system. Wa Forst fact health kidney intellect is now generated 310 ris courres as of June 20, six across 56 ordering positions. We are now schedual to expand the kidney intellect program of select waate Forst patients with inance coverage beginning early as July . Also, as of the CLO of thiscourter, we and process secureing approvals to set up testing 80 M sorry, 59- of the total hundred seventy one centers in the Veterans of ministration health system. While the the a medical system implementation has not been easy or state forward, we have clarified or implementation process over the past six month we began and expect kidne intellect live testing to occur and eight centers and calendar or 2020 two this is the significant advancement court our goal of reaching 20 health system implementation by calendar year and we are also pleased of the that sever new major surance coverage contracts kidney intellect court validating our strategy to securee payment early and across broad regional populations. Of note, the first coverage contracts secureed with the AR, with the largest priv pay and Illinois, serving eight point one million lives in Illinois, 13 perpresentcent of the stateates population or proionment. We one point three million people or Li with diabetes. Chicago will now be a commercial implementation focus for us. Also the coverage contracts secure kidney intellect with the larest independ provider network in the state region North Carolina, South Carolina and ginia with over one hundred thousand health care providers and network the coverage particularly important for our commercial rollout with wake Forst fact health and eight he in the sou, the United state, beginning the summer secureing payment. kney intellect remains the number one value driver for our business. When insurance reachions the majority patients in a region ue, broad adoption becomes possible because doctors and patiations no long under need worry about receiing the illfor testing. We are now reaching critical coverage tiing pointints in multiple key regional markets where we have integrated health system partnership. Please note are ability press release. These coverage wins is limited because, against the policy of most insurance providers, we have also exexpanded our mediccare contracting now of 30 three stateates, mediccase C, the medicaate contract. medica remains the Ke program for kney intellect. Given the population, SI government and patiation vocates are now fully focus on solving he equity issues and actcess the medical care and under communes ven the population C of under diabetes and kidne DIS patients in the Medicaid program. We believe Al itics is well positionion to committed towards making different in the quality of Lights in this population. We are also pleased courtter, that important utility dat from several years were of kidney intellect set up, implementation and real world clinical use is now been released. two studies on over two thousand idney intellect test patients were presented June that the americ diabetes Association andnual meeting real world dat is now validating posit change the or and action.

We've been operating amount Sinai now for about a year, a little bit over a year.

There's been so much that we've learned in this process.

These are complex integrations.

And it's now starting to pay significant dividends. So we're adding more and more practice sites.

The message with population health is now coordinated. The electronic health record system integration is now running smoothly.

And we've taken a lot of these learnings obviously to the next.

Set of integrated disease networks, including. We're now starting to see the same thing happen at Wake Forest.

And at Atrium health, and then, of course, into the VA So.

pu.

I'm pleased with how the traction is occurring, and I'm pleased most importantly, because what really counts at the end of the day is the utility data. Are you showing that you're making a difference? Are you changing behavior at the primary care level? Are we increasing guidelines-driven care care?

Where before there was none or it was lacking and clearly the evidence of showing that we are.

Okay okay, thanks for that. And then just maybe on the reimbursement side, it sounds like you are seeing some success and signing up some of these plans and obviously there's plenty of focus on where you'll be a reimbursement wise as it relates to the revenue forecast. Can you- and I know we're not a 23 of two thousand and 23 yet, but can you give us a view on, if things go well, where you think you might be in terms of percentage of coverage in two thousand and 23, maybe without the lcv scenario coming into the picture?

Yeah and this is again. This has always been the key.

Driver in my head. We said from the very beginning of starting the company, we got three things to worry about: reimbursement reimbursement, reimbursement. Now, of course, that's a compound function because you have to generate utility data in order to get reimbursement.

Validation data, et cetera. So it's a compound function, but at the end of the day, the ultimate expression, we believe, of success from a business standpoint is: how much coverage are you achieving?

And the biggest barrier.

That you face when you're introducing a new prognostic standard or a diagnostic standard is.

Physicians and patients are worried they're going to get built.

And if we test a patient, we have to build.

Otherwise we CAn't give away free testing. The legal framework is very clear around that so.

The worst thing that can happen is a patient gets a bill for $950 and then they immediately go back to their physicans say: drctor, what is this thing So? Having comprehensive coverage or majority coverage is very important, especially in the regions that we're rolling out so directly. To answer your question.

It looks as though we are moving to a position of majority coverage in each of the major regions that were rolling out inand unfortunately we CAn't name a lot of the insurance companies because that's against the policy when they issue a coverage determination. But the win we had in Chicago with the largest private insurance Page payer is a major win.

And that precipitates other wins that we see.

The same is true in North Carolina So.

We've got majority coverage developing now in the key regions that we have integrations: New York, North Carolina, South caro.lina, now moving into chicagowe do expect to have Medicare coverage, Medicare payment.

In this calendar year and then, I think, we're off to the races. And once you get to that tipping point where you have the majority coverage against your indicated use population.

It does change the game because now.

Physicians and patients have confidence.

That they're not going to be stuck a testing bill.

And we are moving into that position. So I'm actually very pleased that in a very short period of time.

We've only been operating a couple of years here.

That we've been able to achieve the reimbursement milestones and positive coververs. Determination from major players.

This's quickly. Usually it doesn't happen as quickly. It takes a lot longer. So clearly the emphasis on reimbursement and putting that in place.

Was important to. Of course, diagnostics is a fundamundamals game onceyou get all the fundamentals lined up.

Including reimbursement. Then the revenue comes.

Yeah OK OK, I thank you all. Hot bothl and what someone jump in there.

Thank you. Our next question will come from Randy baron of Pinnacle.

Randy, your line and morning can you hear me?

Yes we CAn't really fivelide two questions. The first is, I guess, for pum, an administrative one I want to go through those V? A numbers you talked about again. You met with roughly one hundred Thirty of one hundred twenty U V a centers and you said you'll have eight kind of up and running fully.

By the end of this year. I just wasn't sure if you met this calendar year or next fiscal year. And then, just along those lines, I'm really curious to get your sense of what determined success at the VA. in other words, how many tests would you expect at each of these eight in the first? Call it full year. And then what's the delay, that to get to the 100 plus from the 8- and I'll come back with my another question. Thank you.

Sure Randy, that was for eight V a a centers in the calendar year, So that would be by and of the CE 2022. what we will see is that each V a center is like health system rollout, So that you build adoption in an expanded number of clinicians over time. The important metric for us in any of these implementations is to see that we demonstrate. We recurring testing with the same clinicians- it's not not an experiment, but it's a test- that they integrate to their practices and each V a center is of different size and scope, So will set the volume targets based on the centers themselves. Overall, we manage our sales effort to make sure that account exacts in the field are able to generate volume that actually contributes above the cost of having in the field in terms of what's required to get get centers on board and to be able to move forward. It's working with in the V a center similar to a health system that you have support from primary care and teral med icine, from the phrology, from en do chronology, the case of the V a laboratory support for sending the sample to renalytics is also critical and then there are specific contracting steps that are required to offer laboratory services within a V a center and that's where the account exacts in the medical science Le on have been spending their focus.

And how many reps do you have today and what determined success if they convert a thousand test, one thousand test I secure. I want to get some frameworks that you guys are determining the success of one of your shelles reps.

So what we're focused on now is turning on centers to testing. Once we put everything in place, then it becomes the the traditional sales effort focused on generating volume. So right now we're holding them accountable for all, completing all of the steps at the center level that are necessary to get those agreements in place. Right now we have 12 account exacts in the field. There they are the resource that are covering those hundred 39 centers where we have we've had introductions and meetings over the last six months.

Ok and then I guess that shifts to my second question with your 12 reps. there's a couple of things from today's call it out, James. one of them was kind of the shift of focus to geographies like Chicago where you can ramp revenue. I'd love to hear much more detail on that. And then o J related to the Tom, just saying you seem pretty cavalier about the $3 million shells but obviously the market today is viewing your cash burn in conjunction with that very differently. I don't see you guys needeting that cash in the next kind of tlve to een months. So I wonder if it's related to one of the farmer deals you're talking about, if you can just break down kind of your cash burn expectations for call it the next 12 months and, related to that, if you plan on paying the convert in cash. earurn shairs, thanks.

So in terms of the coverage.

You need to develop coverage in the territories that you're rolling the history of diagnostics is.

You have weak coverage.

Or quasi coverage and you move in and start building fixed overhead in a sales marketing medical science AON customer support capacity.

And you really haven't develop concrete majority insurance coverage against the population that you're rolling that texted overhead out against. And of course it's the trap right. We've got to generate revenue. So we send the sales force in and we start a bottoms up push approach. We decided from the beginning we were not going to pursue that strategy. We're going to develop coverage first.

Before we started to develop significant fixed overhead. So that was the case with the general services administration. So we had a coverage decision in across the VA medical system.

Now it's complex and it takes time to get into turn on all of V as.

But we did have insurance coverage and that justified ramping fixed overhead to go after that addressable market. And the VA, as we said, has somewhere in the order of a million diabetic kidney disease patients and we now have a 10 -year government contract, So it justified moving in again. Chicago and Illinois now become a focus because we've secured one of the the big bears.

In insurance in Chicago and that was a major win for us- across a substantial population base. So that now starts to justify us taking a look at thechicago market to start developing, and we're having lots of discussions with different medical systems. We're having discussions with KOLs in the icago area. We're looking at the health equity angle, which is something that affects all major cities. But that was that was a significant and, in fact, an accelerated win for us.

To be able to walk into that market with that coverage again in Southeast.

We now have integrations going on with two of the major systems: Atrium and wait forus.

And we are now building coverage into that region, and again, the same is true with new York. So I think the strategy is becoming very clear.

You have an anchor health care system.

And you start to build coverage around the population that that health system serves and to me that's a prudent way to look at the rollout strategy. We don't have to go too far in terms of expanding the fixed overhead. And to your second question around cash burn.

We're going to modulate that based on how quickly these things roll or don't roll, So we have quite a bit of flexibility in terms of dialing up or dialing down the cash burn, based on how quickly the coverages come in, how quickly the adoption rates move in. The good news is that we've got a lot of learnings that we are now applying and I don't think the coverage insurance coverage- landscape is a linear function.

As you get more and more coverage, that we get more and more coverage. So you have this acceleration effect and I kind of feel like we're at that tipping point.

In several major regions.

And so that starts to derisk the commercial program moving into the second half of this year. In terms of the shelf registration oj, you may want to comment on this. This is housekeeping stuff.

It's a good time for us to do it, get it out of the way. That provides us what's lexibility in the future. Yes, we do want that flexibility especially was some of the strategic partnership movements that we have, which obviously we would expect the market would view is good news. There are two ways to get to revenue profile growth in FIs 23 and fiscal 24, one of which is the organic growth that we're pursuing system by system, region by region, coverage by coverage, and obviously the other is being of the partner with much larger concerns that have large national sales forces, existing distribution and an incentive to make sure that patients are being adequately identified and risk assessed at the primary care level. So right now we're setting up for what we think will be a lot of movement on the strategic front in fiscal 23 and fiscal 24: the shelf registration in the ATM or two standard vehicles that are partort of the general housekeeping that we're putting in place in anticipation of that over the next couple of years.

ohayj, I don't know if you want to add to that.

Now add three million is a fairly traditional number for shelf registration of that nature. Certainly no expectation or plan to do raise anything like that and indeed were're restricted at the by the authorization provided to us through through the shareholders in our general meetings. So that that is should be viewed as a have keeping number allow us some flexibility in in the.

Months and years ahead to do raises as we achieve significant milestones, as company grows, as new significant partnership opportunities avail themselves, and and when it makes sense to raise capital, allows his flexibility to to do so at the time. But no, no immediate plans for anything like that.

B.

James addressed the cash burn. Certainly we feel we've got at least 12 months and comfortably more than that, and we do, as James said, have flexibility to just is needed. There's revenue assumptions in there and so we'll flu, ctuate or which just our spend, depending on how actual revenue starts to starts to fall in.

You also asked about cash versus shares. On the amortization, that will be decided on a case-by-by-case basis each quarter. So depending on our view of cash needs, also where our shares shares are at the time, and so it's my stuff, the flexibility there, to do that.

Not each order.

Okay But in a market that CARES a lot about ashburn, if you're saying 12 months and $5 million, that that infers at the cash burn of this past quarter is going to be continue for the next four quarters, or should we not think about it that way? To be real clear on this point, thanks ys. No no, we expect to continue to the breank cashburn down, frankly. So right, So give me a range of magnitude So I can at least pencil this out.

I doesn't go down to go down to five million. Does it ststate? I mean, this is the market. You guys get this. It CARES about casash burn more than anything. This plus shelf is very concerservative. I just need to put it to bed. Yes, is you. Thanks so much. No, I understood, except we haven't been giving guidance, forward-looking guidance, yet and and we're not so it's. I CAn't go into any further detail into what the targets are, where we expect to be, other than to say it's top of mind and we are making sure that we reserve cash responsibletime, but specific guidance from the giting those time.

Yeah Randy, just a little bit of comfort on that.

We're not naive- to the cash position or where the market capital markets are.

At the moment from the capital markets equation, I'm planning for the worst than hoping for the best.

Bear markets last a lot longer than we want. Capital markets can shut off.

But some of the things we CAn't give direct visibility on, but there are. There are a number of things in the hopper at the moment that changed that burn equation.

What re outside of just organic growth in revenue I mean the strategic partnering and I don't want to set myself up for failure. Here but.

Kidney intelleex opens up a very important market access point for a lot of people.

Drugs need to be prescribed at the primary care level. Medical devices need to be issued at the primary care level against diabetes. Diagnostic companies need to get there as well. So I do anticipate that there will be significant marginal contribution.

Towards that cash burn from strategic partnering. Now it could be wrong, but these are things we've been working on for a long time, and so the cash burn position can change relatively quickly.

And so can our ability to project revenue. We've been very conservative about providing forward guidance.

But I would like to be in a position to provide forward guidance this year, not just for fiscal' 23 But for fcal' y-four. We'll do it at the appropriate time. That changes the entire outlook of the company in terms of cash burntime. But I'm also not afraid if we get six months down the road here and things are not developing the way that we want them to.

We start to start to slim things down and we make sure that we have adequate runway.

Because the rule in this market, the number one rule, is: don't run out of cash.

Yeah and I would just echo then say you guys have been so conservative on guidance that when you finally give a range, you know bear bull case. I think it's going to be received very well. Anyway, Thank you for taking my questions of a back in here.

Yes we have been conservative about guidance because we want to anchor a guidance number.

pu.

When we have very specific, direct visibility on that revenue piece, whether it comes from a step-up in organic growth, which may be a function of continuing to expand insurance coverage.

Or whether it's a strategic partnership in place which opens up a whole new distribution channel. But in today's market, if you're going to give guidance, you'd better hit it.

And you better base it in validated contracts.

That's really what we're trying to set up for this year, and if things don't happen as quickly as we want- which often is the case- well then we're going to be very aggressive at how we look at.

The fixed overhead base in the company.

And we'll see where the market is next year.

But the ATM and the F three are part of the standard housekeeping that we're putting in place.

Thank you.

And our next question comes from Mark mataro at of btiig. Your line is open.

Hey guys, Thank you for the questions. I guess Congrats on the health plplan when in Illinois maybe James or Tom, can you just give us a sense for maybe like how many health plans you're meeting with, whether any of these are larger in nature or some of these little ones? It looks like you added for commercial health plans for the quarter. So just give me a sense for what your funnel looks like on the commercial health plan side.

Sure I'll give a quick answer to that market and Tom. You should jump in. We are meeting with many health plans.

It goes into more than it doesn't.

And that's exclusive of the VA, where we provide very specific numbers.

A.

The decisions we're making right now are really around. Where do you want to turn on to health command?

To me in this market. Back to Randy's point about cash flow going forward, because there is an investment when we turn on a health plan.

To me, we're really looking at what I'll call accretive implementations meaning, let's start in a region where we already have a health plan, where we already have reimbursement.

And let's.

Add on to other health plans in that region. As an example, Wake Forest and Atrium are a very good example, because that's building on the regional specific strategy and that lowers our risk if we just turn on a health plan, say in Oregon.

All of a sudden. Now we've got to look at making sure we have coverage. We've got to make sure that we have klss, we have support staff there.

So it makes a lot of sense for us to focus in New York.

North Carolina, Chicago.

Areas where we already have a footprint and of course most importantly.

Where we already have coverage. So we are speaking to many health plans.

And of course the other overlapping considerations around the Veterans administration and so in a lot of the.

The Veterans administration systems that we are working with. They also happen to be contiguous with.

Some of the integrated disease networks.

That we're depy kidney intelexand, So there's a leveraged effect there and you can hire into a concentrated regional area. And I think what's emerging which is important is: let's pick a couple of key regions. They have plenty of population. Let's make sure we saturate the reimbursement, let's make sure that we do it right in those regions and prove out that we can start to scale the model which is starting to happen now. Then we can think about jumping into additional regions, regions and we can modify how aggressive we go.

Which affects spend, cash burn, et cetera, based on where the market conditions are. If the market continues like this, we may want to stick with a lot of the regions that we're developing out now, and we may want to be cautious about moving into too many regions and spreading ourselves too thend. That's where I get back into the. We can moderate the cash burn as we go along.

Based on all the variables that we as a management team and other management teams are facing, but the pipeline is relatively full.

Everybody is looking for ways to control cost in diabetes, kidney disease and cardiovascular disease.

There's nobody out there, that is.

Not trying to figure out how do we control these costs. So we're usually able to get into a health system and have a pretty open and engaging discussion.

About the benefits of kidney telx and that are re publishing utility data based on our experience with major health systems like Mount Sinai. These discussions are becoming a lot easier because we can now point to the evidence that if you deploy kidney intelexx on an integrated basis.

You engage your primary care physician base and you start to increase guidelines-driven care which, at the end of the day, is the ultimate gain.

To I don't know if you want to add to that.

James, I think you covered it very well. I think this also goes back to what and the baron was asking: even before markets became constrained, we began to take a very strong regional focus. Looking at where we have health systems is a leverage to bring in payers, which brings in realized revenue dollars, and that we would concentrate our investment in- in medical scient, clon in account, exacts fields, people on those opportunities. And again, James covered why we have a focus in the New York City and New York state region, in North Carolina, South Carolina, in the Gulf Coast with Mississippi and Louisiana and in Chicago, and it's a very discipline, scalable model where we leverage costs and maximize the return on investment for being in those areas. Health systems drive payers, payers drive health systems and that'.s strength of the commercial model at renalytics.

That's great. And then just my second question. I know that activating your Medicare price is a very important strategic initiative at renalytics. James, you talked about how you expect to have Medicare payment. That's calendar year, I have to assume that's calendar year 2022. So by the end of December , can you just give us any update as far as whether or not you've had some contact with any of the local Medicare contractors or how we should think this might play out through the balance of the next six months?

Yes Tom, you want to take that one.

Sure So we have concentrated our laboratories in three regions where the regional contractors consider testing of of services like kidney and intellexon, a claim by claim basis. So yes, the the timing for all of that has been driving towards understanding what that pattern of payment is going to be in each of those regions and then being able to make make decisions about where we process our medical Medicare samples going fortoward, because traditional Medicare is such an important part of the patient population- and at the same time we are gaining experience for being on the clinical lab fee schedule with payment by Medicare Advantage programs, and so to date, our experience on that is very strong, strong in terms of positively strong.

Ok that's it for me, Thank you.

Ladies and gentlemen, if you you have a question, please press star than one our next question comes from Ethan of HC wayighwright. Your line is openken.

Thank you for taking my questions. Could you give us an update on the application, whether you have any received recent feedback on FDA, and whether you expect FD clearance to have any meaningful impact on testing volume and adoption going forwardthank.

Yes the FDA process is moving forward.

I hope that we are coming to a conclusion there. Whatever I say on timing will inevitably be wrong.

As I've said in the past.

But that process is moving forward. The impact. What's interesting is?

We continue to make significant strides on coverage.

Insurance coverage, which I still view as the number one risk factor to the business.

That's very important. We're demonstrating and validating now that we can continue to make major gains and coverage.

Regardless of FDA. I do believe however, that FDA is important.

I do believe that FDA will continue to facilitate coverage. I do believe that we're facilitated option, which is why we are continueing down the path with FDA and setting up what is going to be a sequence of FDA approval processes through multiple product versions. So it's important that we do get through FDA and cornerstone or regulatory pathway, because kidney and intellex is it's not just the test, it is a platform. We're already working on subsequent versions.

Improving performance, expanding indicated use, looking at repeat testing. All of these things are coming together and once we do establish a pathway with FDA, we can then turn around and use that pathway as a predicate for subsequent versions of kidney and telx to expand the product profile. So hopefully we're coming to a conclusion.

There soon.

Okay Thank you.

And our last question comes from Jens: little of investtech. Your line is open.

Yes I one just a couple of filer questions fees. First of all, on the F D a process, just just like understand what's going on, even not withstanding co, has been. I used a long process. I mean, first of all, I assume that the Noble request left. It hasn't been temporary withdrawn or anything. You that but is. Is this delay due to additional information requests by the F D a or has there been a major set back along the way? The deficiency in the original filing? But if the agents have an issue with risk mitigation of controls, you know, just just to make sure that understand was have to been going on here. And second, on the cash burn figure that you mentioned, I think in October that you would have a fourty strong sales team targeting into V a by the other twent 20 to So. Am I right that this intended sales team expvention was somewhat premature? Was given the operational H that you just grab? Where are we on this recruitment? And we will still be standing towards that number.

That's a very good question. Yes, Thank you, and this highlights our flexibility, right So?

We got to cover determination of VA. as I said from the beginning, we're going to build fixed overhead where we have payment identified.

ahthe a is taking longer.

No surprise, it's working with a very complex government agency, So we have gone slow on the hiring.

In that sales force we have what we think is an adequate force deployed to be able to turn on a number of VA systems as we start to see more and more success more and more traction. Then we will consider adding more overhead if.

We believe it, we justify or results in near-term growth. That's very important, especially in this market. If we don't think it's going to really produce near-term growth and marginal contribution, which obviously meets the salespeople pay for themselves very quicklythen we may take aabbreath and go slow. We'll have to see how that, how that pendans out. The same is true in other regions that we're working. We're not just going to go out and W? illy go fixed overhead to try to gun for the growth.

Because we typically don't get awarded, rewarded for that in this structure, and as so many questions have been focused- what is your cash burn and what's the runway, et cetera- So we're very conscious about all of that in terms of FDA.

You know it's been a it's been a long process.

And it's been complicated by obviously, COVID-19. I know people don't want to hear.

About COVID-19, but the realities. The agency was severely stressed.

And this has resulted in a substantial delay, not just with renanalytics but across the Board. We're now coming out of that delaythe agency is starting to functiona little bit like it was prepandemic. So we're having it back and forth with the agency, things that are ramping back up.

And I want to make another quick statement here. This is a denoble marketing authorization for.

A new type of product. This is A. this is a complex application. This is not a 5- 10 -k with a predicate.

We're not pointing to another type of diagnostic. We are creating in effect- and these may not be the exact right words, but we are creating in effect- our own category.

And that's going to take time to do.

We think we have the best advice and the finest FDA internal and external team working on it. We've already given some of the names that folks who are involved in this team. Nobody's reading their own headlines. There is a very significant internal process around this.

And biostatistics and other folks that are chining in in a very Sober way on how the FDA process is working. We're very much in the game here and this process is active and is moving forward. So we haven't withdrawn an application. Fda has not said no, you CAn't. And we're way deep into.

The data and where we're headed. So people should pay confidence from that and if we finish this properly, we will have created a very strong category. It will be very difficult from the competitive standpoint because everybody's going to to go this sort the same thing that we've done, and it really will set a future baseline, as I said, for subsequent product versions that we can now refer back to. We've learned a tremendous amount: that internal knowledge is important. It's informing future product development and validation.

So that we can have a smoother process going forward. But when I look back on it, covidt has certainly had a massive impact on timelines and those are just the facts. When I do expect.

At the moment, there are never any guarantees. Until you have, until FDA has given you authorization, you don't have it.

And in terms of timelinei'm not calling any timelines anymore because every time I look at leading into a timeline I'm inevitably wrong, but I'm pleased with where the process is at the moment. I hope that answers your question enough. Yes, I good thing you that.

I really be careful about commenting too much.

On the FDA process. I think that's inappropriate.

Good.

Certainly again. Ladies and gentlemen, if you'd like to ask the question, Please P Star, then one lineillar touchcomes telephone. Again, please press star than one for any additional questions. one moment.

And I'm showoring no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.

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Ladies and gentlemen, we do appreciate your patients. Good morning and welcome to the renanalytics conference call to review third quarter fiscal year 2022 financial results. At this time, all participants are in a listen only mode. We will be solicitating a question-and-answer session toward the end of the call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Peter Don ardo of cap com partners for a few ended ductory comments.

Thank you, tonanya. Thank you all for participating in today's call, joining it today. pics sor: James mccall, a Chief Executive Officer, Tom McLean President, and James Sterling, Chief Financial Officer.

Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the priorate Securities Litigation Reform Act of one thousand nine hundred and ninety-five.

Any statements made during this call that relate to expectations or predictions of future events, results or performance are forward looking statements. Examples these statements include, without limitations, the potential benefits, including economic savings of kidney and intellects. The potential for kidney intellects to receive regulatory approval from the FDA, the commercial pect, its lect, if approved, including whether kidy intellect will be successfully adopted by physic and distributed in marketed. Are expectations regarding reimbursement decisions and the ability of kidney intellected curtail costs of chronic and end basates kidney disease, optimize care delivery and approve patient outcomes. Trends in our market and potential benefits of government policy. Change the impact of COVID-19 to other Ro events on our business. Are expectations for hiring, product development, strategic partnerships and collaborations, reimbursement decisions, clinical studies or regulatory submissions. Are business strategies and future growth, including plans, expectations and opportunities for financing our operations and revenue projections and guidance.

These statements involve material risks and uncertainties that could cause actual results or events is materially differ from those inticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For description of the risks and uncertainties associated with our business. Please refer to the risks Factors section or annual report on Form 20 -f that was filed on October twenty-one.

20 21 with the Securities that exchange. Commission all forward-looking statements made on this call or based the management's current estimates and various assumptions. rytics disclaims any intention or obligation except, as required by law, the update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time sensitive information. Is accurate only as of the live broadcast today, June thirtieth 2022, and with that I'll turn the call over to James mccalla James.

Thank you, Peter. Good morning and good afternoon. This has been an active qutter of forren alytics.

Our lead program, kidney intelx, continues to secure major reimbursement coverages, generate key utility data from our real-world deployments and build-on core commercialization fundamentals.

As of the end of June , kidney intellectx has now generated 3253 kidney risk scores at Mount Sinai health system, across 53 departments in 191 ordering physicians.

Importantly this quarter, we have now made the leap to automated eligible patient identification.

An important element for scaling kidney intellectx risk assessment across a complex integrated health system.

At wait Forest baptice health kidney intellectx is now generated 310 risk cores as of June . twenty-sixth across fifty-sixth ordering physicians.

We are now scheduled to expand the kidney and telx program to select weightfor St patients with insurance coverage beginning as early as July .

Also as of the close of this quarter, we are in process of securing approvals to set up testing at 80- I'm sorry at 59- of the total hundred and 71 centers in the Veterans Administration health system.

While the VA medical system implementation has not been easy or straightforward, we have clarified our implementation process over the past six months since we began and expect kidney intelx live testing to occur in eight centers and calendar 2022. This is a significant advancement toward our goal of reaching 20 health system implementations by calendar year-end.

We are also pleased to have established several new major insurance coverage contracts for kidney and telx this quarter, validating our strategy to secure payment early and across broad regional populations of note.

The first coverage contract secured with the, with the largest private payer in Illinois, serving eight point one million lives in Illinois. 13% of the state's population are approximately one point three million people are living with diabetes. Chicago will now become a commercial implementation focus for us.

Also have noticed a coverage contract secured for kidney intellectx with the largest independent provider network in the TRI ATE region of North Carolina, South Carolina and Virginia, with over one thousand health care providers in network.

This coverage is particularly important for our commercial rollout with wakeforest baptis health and Atrium health in the Southeastern United States beginning this summer.

Securing payment for kidney. intellectx remains the number one value driver for our business.

When insurance reaches a majority of patients in a region true, broad adoption becomes possible because doctors and patients no longer need to worry about receiving a bill for testing.

We are now reaching critical coverage tipping points in multiple key regional markets where we have integrated health system partnerships.

Please note, our ability to press release these coverage wins is limited because it is against the policy of most insurance providers.

We have also expanded our Medicare contracting, now to 33 States.

Medicaid seems to be Medicaid. Contracting Medicaid remains a key program for kidney intelex given the population size served. Government and patient advocates are now fully focused on solving health equity issues and access to medical care and underserved communities. Given the population size of underserved diabetes and kidney disease patients in the Medicaid program, we believe renanalytics is well positioned and committed towards making a difference in the quality of Lights in thisthe population.

We are also pleased this quarter that important new utility data from several years wor kidney intellectx set up, implementation and real world clinical use is now been released. two studies on over two thousand kidney intellectx tested patients were presented in June . That the American diabetes Association annual meeting real world data is now validating positive change in behavior and action for primary care physicians who have used the power of electronic health record integrated kidney intellectx in their clinics. Most importantly, utility data showed that primary care physicians were seven times more likely to prescribe guideline directed new therapies to their high risk patients when kidney intellectx risk assessment was introduced into practice.

The direct takea that kidney intelx is working and making a difference in clinical practice. Tom the plan. Our President will discuss the importance of this utility data in its implication for expanding insurance coverage in the next statement.

Our significant progress of reimbursement utility data has not gone unnoticed. We are now in advanced discussions with larger potential strategic partners in the pharmaceutical and diagnostic distribution categories, who understand that kidney intetelx is opening a unique market access point to millions of patients and doctors struggling to understand their disease. We expect that these partnership agreements be fully executed, that they would have a measurable impact on kidney intetelx usage and would allow us to provide forecast revenue with the appropriate time for fiscal 2023 and fiscal 2000 and twenty-fourand.

In these unusual economic timeses, we will continue to reassess our business and take definitive steps to conserve cash. As appropriate, these steps may include narrowing our commercial focus to revenue productive regional market opportunities, operating cost reductions and or relying more on less expensive third-party providers for noncore services.

Key potential catalysts for the second half of calendar 2022, that is, the next six months remain, as previously noted, including a major expansion of insurance coverage, with Medicare as a priority. Strategic partnering activity, additional health system partnership announcements and FDA to NoA marketing authorization.

I will now turn over to Tom McLean, our President, to discuss data reimbursement and commercial pres progress, Tom.

Thank you, James.

The last 12 months have been focused on addressing all the factors that will drive long-term adoption and insurance coverage for kidney and intellectx testing in the U's market.

The quality of published evidence drives use and payment for innovative diagnostic tests like ours, and recently published and presented data represent important and lasting milestones.

This required evidence broadly fits under four categories: first, analytical validation second, clinical validation third, clinical adoption and fourth, clinical utility.

In November 2021, our analytical validation evidence demonstrating kidney andtelatx is highly robust and reproducible was published in clinical proteomics.

Our clinical validation evidence has also expanded and now totals three peer-reviewed publications across multiple major international medical centers.

That includes results from a 1146 patient cohort from University of Pennsylvania and Mount Sinai published in diabetaloia in June 2021 and data from 1325. Patients enrolled in the international canvas trial that was published in the American Journal of nephrology in January 2020. Two.

We've also delivered significant progress against the third category scaled real-world clinical adoption through our programs at Mount sinaite, a payer collaboration in Albany, New York, and in the wake Forest health system in Atrium health system in North Carolina. The number of patients risk assessed with kidney and tellex is now approaching four thousand.

Finally on the fourth evidence category, clinical utility, a budget impact economic analysis was published in the Journal of health care and economics in July 2020. onethis publication demonstrated the kidney intelx risk infor prescription of appropriate ther. Appropriate therapies alone, in one thousand patients could generate savings in excess of $1 billion over five years.

The publication established the clear benefit in identifying at-risk patients early and then supporting their access to new FDA approved drug therapies shown to slow or stop progression of kidney and associated cardiovascular disease.

Importantly, real-world clinical utility. Data drawn from the adoption of kidney and intelx testing within the Mount ANA health system in New York City was presented at the American diabetes Association 80 second scientific sessions earlier this monththe data is from the first 1100 patients tested with kidney and intelx and it provides two important observations.

First kidney and telex was ordered at a high rate by primary care physicians versus being driven by specialists.

Second the data demonstrated that the kidney intellect risk core drives care management.

Specifically primary care physicians were seven X more likely to prescribe kidney disease directed therapeutics for kidney intellect. High-risk patients versus low-risk patients.

Further these primary care physicians were three times more likely to employ specialist consultations. Indoor referrals for high-risk patients.

The data presented at ADA is now being prepared for publication later this year.

The most concrete benefit of this growing body of evidence can be measured in insurance coverage determinations being secured for kidney and tellex.

As James mentioned, the recent coverage determination by the largest private insurer in Illinois, with eight point one million covered lives, is an indicator of what we can expect in fiscal year 2023 in terms of broader coverage opportunities.

Separately. We launched our veterans health system program at the beginning of this calendar year through a combination of account executives and medical science liaons.

That team has made significant inroads over the last six months.

The VHA website States it is the largest integrated disease network in the United States. The VHA is made up of 171 centers, each consisting of a hospital and a network of community outpatient centers and specialty clinics.

Initiating recurrent testing within each center requires the same kind of effort we deploy in establishing health system partnerships.

Over the last six months we have developed the process that satisfies what we have identified as five key operational approval steps for requred testing to begin in a V H center. Of the hundred and 71 V H centers across the U's, we have met with 139 of them over the last six months. We are in the process with securing the approvals, the operational factors, necessary to set up testing at 59 of the centers. We've completed all five phases needed to initiate testing at two centers and have completed efforts, leaving one or two remaining phases at an additional seven centers. Based on this progress, we expect to implement recurring testing at at least eight V H centers in this calendar year. We would also expect to be able to execute center specific agreements with up to four of those centers before the end of the year.

We've also initiated a program with the vhha to develop and launch a cloud-based interface with their EHR systems to facilitate test ordering and reporting to streamline the testing process on a nationwide basis. We expect that capability to be operational within the next 12 months.

I'd now like to turn the discussion over to James Sterling, who will review our financial performance. James.

Good morning.

Today we issued our quarterly SEC filing under U's gaps that includde three and nine month financial results for the period ending March. thirty-first twent thousand and twenty-two.

All figures I will discuss are in U's dollars, which is our reporting currency.

For our fiscal third quarter we recorded revenue of $812 thousand all from kidney intellex testing. This is an increase from $67 thousand in kidney intetelx testing revenue in the prior quarter.

In the prior year period we reported $6 thousand of services revenue and $1 thousand of cusestmer revenue.

We recorded $685 thousand of costs attributable to revenue in the third quarter of 2000 and twenty-e.

We also indicated in our release that, for the full year of fiscal 2022 which ends today, we anticipate revenue to be two point nine million, of which $2.7 million is testing revenue.

Up from one point five million total revenue in fiscal' 21, of which just four thousand assessing revenue.

Operating expenses for the third quarter of 2022 were $14.7 million, as compared to eight point five million for the third quarter of 2021.

The increase was primarily driven by higher headcount, higher RND expense related to studies at Mount Sinai, wakeforest and University of Utah, as well as increased total compensation and benefits and consulting and professional fees to support growth.

During the nine months ended March thirty-first, our operating expenses totaled forty point nine million dollars, compared to $22.7 million for the same period of 2021.

Net launch for the third quarter was a fiscal 2022 was $14.7 million, or 20 cents per share, compared to the net loss of eight point eight mill dollars, or 12 centpershare for the third quarter of thousand and twenty-one.

We ended the quarter with cash of $32.4 million as of March thirty-first twent thousand and 22, though this cash balance does not include most of the proceeds from our convertible note and equity issuance, which was completed in early April and provided over $25 million in net new capital.

We're pleased to have completed that financing, which bolstered our cash position and provides runway to pursue the large market opportunities available to us.

The terms of the note are favorable, including conversion at $8 in 70 cents per ads with a heart floor of $7 in 25 cents.

I want to reiterate that the lowest price at which the note can convert is $7 in 25 cents per ads.

In addition, at each quarterly amortization payment, we have the flexibility to elect to pay in cash or with adence.

We continue to actively look for opportunities to strengthen our cash position through strategic partnering, including certain discussions underway and other means.

As a matter of corporate housekeeping, we plan to file a shelf registration along with an at-the-market or ATM vehicle.

For clarity, we have no immediate plans to utilize either the shelf or the ATM. We believe our present cash position enables us to execute our strategy and grow VA and commercial health center test sales as the reimbursement landscape continues to rapidly come into place.

Operator could we now please open up the call for questions?

Certainly as a reminder. To ask the question, Please ress Star one to ask the question, please press star, then one

one nor.

And our first question will come from Dan. Arise to seple. Your line is open.

onening those. Thanks for the questions, James. I wanted to start on Mount sina. I could, and you just update us on where you are with the ramp for that institution by our math on 3000 tests or so, which I think because what you mentioned in aggregate you're tracking a bit thebelow year 300 per week targets. So can you just catch us up on where you are, whether or not that remain a target for the near term and then just some of the things that you think are going to be important when we we think about volumes for the back half of this calendar year and ultimately next fiscal year.

Thanks it always takes longer than you think it does right.

You know the Mount Sinai ramp.

Has hit a couple of key points. one is the, the automated.

prepending or.

Electronic suggested orders to primary care positions.

That was a key River to jump over to start to automate that process.

And we worked through a lot of technical issues associated with because the first time we've done it.

And I'm pleased that we're now on the other side of that River and we're starting to see volumes. You ramp up again.

The most important thing that we're looking for right now is: what is physician response?

And are we generating the utility data which is so critical for us? To take the other health systems, insurance companies, Medicare of the physicians in, the answer is yes, we are.

And I think the data that we publ or we didn't publnerishshipit with the data that was published at the American diabetes Association, presented at the American diabetes Association meeting.

Is concrete and it shows that.

In the integrated healthcare system, kidney and intellex is doing what we thought it would do, which is providing an education portal.

Highlighting.

Risk Factors in diabetes and kidney disease.

And starting to change behavior at the primary care level, and so this is concrete utility data that we're generating, which leads to the growth. We're still sticking by the targets.

That we put out.

And I expect the next six months is actually going to run a lot smoother.

We've been operating amabout Sinai now for about a year, a little bit over a year.

There's been so much that we've learned in this process.

These are complex integrations.

And it's now starting to pay significant dividends. So we're adding more and more practice sites.

The message with population health is now coordinated. The electronic health record system integration is now running smoothly.

And we've taken a lot of these learnings obviously to the next.

Set of integrated disease networks, including. We're now starting to see the same thing happen at weke Forest.

And at atri health and then, of course, into the VA So.

pu.

I'm pleased with how the traction is occurring, and I'm pleased most importantly, because what really counts at the end of the day is the utility data. Are you showing that you're making a difference? Are you changing behavior at the primary care level? Are we increasing guidelines-driven care care?

Where before there was none or it was lacking and clearly the evidence of showing that we are.

Okay okay, thanks for that. And then just maybe on the reimbursement side, it sounds like you are seeing some success and signing up some of these plans and obviously there's plenty of focus on where you'll be a reimbursement wise as it relates to the revenue forecast. Can you- and I know we're not at 23 of two thousand and 23 yet, but can you give us a view on, if things go well, where you think you might be in terms of percentage of coverage in two thousand and 23, maybe without the lcv scenario coming into the picture?

Yeah and this is again. This has always been the key.

Driver in my head. We said from the very beginning of starting the company, we got three things to worry about: reimbursement reimbursement, reimbursement. Now, of course, that's a compound function because you have to generate utility data in order to get reimbursement.

Validation data, et cetera. So it's a compound function, but at the end of the day, the ultimate expression, we believe, of success from a business standpoint is: how much coverage are you achieving?

And the biggest barrier.

That you face when you're introducing a new prognostic standard or a diagnostic standard is.

Physicians and patients are worried they're going to get built.

And if we test a patient, we have to build.

Otherwise we CAn't give away free testing. The legal framework is very clear around that so.

The worst thing that can happen is a pient gets a bill for $950 and then they immediately go back to their physicians say: doctor, what is this thing? So having comprehensive coverage or majority coverage is very important, especially in the regions that we're rolling out so directly. To answer your question.

It looks as though we are moving to a position of majority coverage in each of the major regions that were rolling out inand unfortunately we CAn't name a lot of the insurance companies because that's against the policy when they issue a cover determination. But the win we had in Chicago with the largest private insurance Page payer is a major win.

And that precipitates other wins that we see.

The same is true in North Carolina So.

We've got majority coverage developing now in the key regions that we have integrations- New York, North Carolina, South Carolina, now moving into Chicago. We do expect to have Medicare coverage, Medicare payment.

In this calendar year and then, I think, we're off to the races. And once you get to that tipping point where you have the majority coverage against your indicated use population.

It does change the game because now.

Physicians and patients have confidence.

That they're not going to be stuck a testing bill.

And we are moving into that position. So I'm actually very pleased that in a very short period of time.

We've only been operating a couple of years here.

That we've been able to achieve the reimbursement milestones and positive coverage determination from major players.

This quickly. Usually it doesn't happen as quickly. It takes a lot longer. So clearly the emphasis on reimbursement and putting that in place.

Was important and of course diagnostics is a fundamentals gameright onceyou. All the fundamentals lined up.

Including reimbursement, than the revenue comes.

Yeah OK okay, I thank you all. Hot often, and what someone jum in there.

Thank you. Our next question will come from Randy baron of Pinnacle.

readyand your line, and Ning can you hear me.

yesess, we CAn't really Slide two questions. The first is, I guess, for Tom, an administrative one I want to go through those V? A numbers you talked about again. You met with roughly one hundred Thirty of one hundred Y? U V a centers and you said you'll have eight kind of up and running fully.

By the end of this year. I just wasn't sure if you met this calendar year or next fiscal year. And then, just along those lines, I'm really curious to get your sense of what determined success at the VA. in other words, how many tests would you expected at each of these eight in the first? Call it full year. And then what's the delay, that to get to the 100 plus from the 8- and I'll come back with my another question. Thank you.

Sure Randy, that was for eight V a a centers in the calendar year, So that would be by the and of the number 2022. what we will see is that each V a center is like a health system rollout So that you build adoption in an expanded number of clinicians over time. The important metric for us in any of these implementations is to see that we demonstrate recurring testing with the same clinicians. It's not not an experiment, but it's a test that they integrate to their practices and each V a center is of different size and scope, So will set the volume targets based on the centers themselves. Overall, we manage our sales effort to make sure that account exacts in the field are able to generate volume that actually contribute above the cost of having in the field in terms of what's required to get get centers on board and to be able to move forward. It's working with in the V a center similar to a health system that you have support from primary care and teral, that is, from nephrology, from en dochronology- the case of the V? A laboratory support for sending the sample to renalytics is also critical and then there are specific contracting steps that are required to offer laboratory services within a V a center and that's where the account exacts in the medical science Le on have been spending their focus.

And how many reps do you have today and what determined success if they convert a thousand test, one thousand test I secure. I want to get some frameworks that you guys are determining the success of one of your shelles reps.

So what we're focused on now is turning on centers to testing. Once we put everything in place, then it becomes the the traditional sales effort focused on generating volume. So right now we're holding them accountable for all, completing all of the steups at the center level that are necessary to get those agreements in place. Right now we have 12 account exacts in the field. There they are the resource that are covering those hundred 39 centers where we have we've had introductions and meetings over the last six months.

Okay and then I guess that shifts to my second question with your 12 reps know a couple of things from today's call that sit out, James. one of them was kind of the shift of focus to geographies like Chicago where you can ramp revenue. I'd love to hear much more detail on that. And then o J, related to the Tom was just saying you seem pretty cavalier about the $3 million shells but obviously the market today is viewing your cash burn in conjunction with that very differently. I don't see you guys needeting that cash in the next kind of 12, 18 months. So I wonder if it's related to one of the farmer deals you're talking about, if you can just break down kind of your cash burn expectations for, call it, the next 12 months and, related to that, if you plan on paying the convert in cash. earurn shairs, thanks.

So in terms of the coverage.

You need to develop coverage in the territories that you're rolling the history of diagnostics is.

You have weak coverage.

Or quasi coverage and you move in and start building fixed overhead in a sales marketing medical science Li AON customer support capacity.

And you really haven't develop concrete majority insurance coverage against the population that you're rolling that fixed overhead out against. And of course it's the trap right. We've got to generate revenue. So we send the sales force in and we start a bottoms up push approach. We decided from the beginning we were not going to pursue that strategy. We're going to develop coverage first.

Before we started to develop significant fixed overhead. So that was the case with the general services administration. So we had coverage decision in across the VA medical system.

Now it's complex and it takes time to get in to turn on all of the as.

But we did have insurance coverage in that justified ramping fixed overhead to go after that addressable market. And the VA, as we said, has somewhere in the order of a million diabetic kidney disease patients and we now have a 10 -year government contract, So it justified moving in again. Chicago and Illinois now become a focus because we've secured one of the the big bears.

In insurance in Chicago and that was a major win for us- across a substantial population base. So that now starts to justify us taking a look atthechicago market to start developing, and we're having lots of discussions with different medical systems. We're having discussions with KOLs in the Chicago area. We're looking at the health equity angle, which is something that affects all major cities. But that was that was a significant and, in fact, an accelerated win for us.

To be able to walk into that market with that coverage again in Southeast.

We now have integrations going on with two of the major systems: Atrium and wait forus.

And we are now building coverage into that region, and again, the same is true with new York. So I think the strategy is becoming very clear.

Uh you have an anchor health care system.

And you start to build coverage around the population that that health system serves and to me that's a prudent way to look at the rollout strategy.

We don't have to go too far in terms of expanding the fixed overhead. And to your second question around cash burn.

We're going to modulate that based on how quickly these things roll or don't roll.

So we have quite a bit of flexibility in terms of dialing up or dialing down the cash burn, based on how quickly the coveragees come in, how quickly the adoption rates move in. The good news is that we've got a lot of learnings that we are now applying and I don't think the coverage, insurance coverage- landscape is a linear function.

As you get more and more coverage, that we get more and more coverage. So you have this acceleration effect and I kind of feel like we're at that tipping point.

In several major regions.

And so that starts to derisk the commercial program moving into the second half of this year. In terms of the shelf registration oj, you may want to comment on this. This is housekeeping stuff.

It's a good time for us to do it, get it out of the way. That provides us with fxibility in the future. Yes, we do want that flexibility especially was some of the strategic partnership movements that we have, which obviously we would expect the market would view is good news. There are two ways to get to revenue profile growth in fiscal 23 and fiscal' 24, one of which is the organic growth that we're pursuing system by system, region by region, coverage by coverage, and obviously the other is being of the partner with much larger concerns that have large national sales forces, existing distribution and an incentive to make sure that patients are being adequately identified in risk, assessed at the primary care level. So right now we're setting up for what we think will be a lot of movement on the strategic front in fiscal 23 and fiscal' 24: the shelf registration in the ATM or two standard vehicles that our partort of the general housekeeping that we're putting in place in anticipation of that over the next couple of years.

Okay I don't know if you want to add to that.

Add three million is a fairly traditional number for shelf registration of that nature. Certainly no expectation or plan to do raise anything like that and indeed were're restricted at the by the authorization provided to us through through the shareholders of our general meetings. So that that is should be viewed as a house keeping number allow us some flexibility in the.

onceths and years ahead to do raises as we achieve significant milestones, as company grows, as new significant partnership opportunities avail themselves, and and when it makes sense to raise capital allows the flexibility to to do so at the time. But no, in no immediate plans for anything like that.

B.

James addressed the cash burn. Certainly we feel we've got at least 12 months and comfortably more than that, and we do, as James, that have flexibility to adjust is needed- those's revenue assumptions in there- And so we'll fluctuate or adjust our spend depending on how actual revenue starts to starts to fall in.

You also asked about cash versus shares. On the amortization, that will be decided on a case-by-case basis each quarter. So depending on our view of cash needs, also where our shares shares are at the time, and so it's myself the flexibility there to do that.

Not each orarter.

Okay But in a market that CARES a lot about cash burn, if you're saying 12 months, $5 million, that that infers at the cash burn of this past quarter is going to be continue for the next four quarters, or should we not think about it that way? To be really clear on this point? Thanks, ys. No no, we expect to continue to the brank ASH URN down, frankly. So give me a range of magnitude So I can at least pencil this out.

I doesn't go down to GU, go down to five million, does it St? I mean, this is the market. You guys get this. It CARES about cash burn more than anything. This plus shelf is very conservative. I just need to put it to bed on: yes is you? Thanks so much. No, I understood. Except we haven't been giving guidance, forward-looking guidance, yet and and we're not so it's. I CAn't go into any further detail into what the targets are, where we expect to be, other than to say it's top of mind and we are making sure that we reserve cash responsibletime, but specific guidance from giting those.

Yeah Randy, it's just a little bit of comfort on that.

We're not naive- to the cash position or where the market capital markets are.

At the moment from the capital markets equation, I'm planning for the worst than hoping for the best.

Bear markets last a lot longer than we want. Capital markets can shut off.

But I some of the things we CAn't give direct visibility on, but there are. There are a number of things in the hopper at the moment that changed that burn equation.

What are outside of just organic growth in revenue. I mean the strategic partnering and I don't want to set myself up for failure here but.

Kidney intelleex opens up a very important market access point for a lot of people.

Drugs need to be prescribed at the primary care level. Medical devices need to be issued at the primary care level against diabetes. Diagnostic companies need to get there as well. So I do anticipate that there will be significant marginal contribution.

Towards that cash burn from strategic partnering. Now it could be wrong, but these are things we've been working on for a long time, and so the cash burn position can change relatively quickly.

And so can our ability to project revenue. We've been very conservative about providing forward guidance.

But I would like to be in a position to provide forward guidance this year, not just for fiscal 23 But for fcal twent-four. We'll do it at the appropriate time. That changes the entire outlook of the company in terms of cash burn. But I'm also not afraid if we get six months down the road here and things are not developing the way that we want them to.

We start to, we start to swlim things down and we make sure that we have adequate runway.

Because the rule in this market, the number one rule, is going' run out of cash.

Yeah and, and I would just echo then say you guys have been so conservative on guidance that when you finally give a range, you know bare bull case. I think it's going to be received very well and know. I thank you for taking my questions of a back in here.

Yes we have been conservative about guidance because we want to anchor a guidance number.

When we have very specific, direct visibility on that revenue piece, whether it comes from a step-up in organic growth, which may be a function of continuing to expand insurance coverage.

Or whether it's a strategic partnership in place which opens up a home new distribution channel. But in today's market, if you're going to give guidance, you'd better hit it.

And you better base it in validated contracts.

That's really what we're trying to set up for this year, and if things don't happen as quickly as we want- which often is the case- well then we're going to be very aggressive at how we look at.

The fixed overhead base in the company.

And we'll see where the market is next year.

But the ATM and F three are part of the standard housekeeping that we're putting in place.

Thank you.

And our next question comes from Mark Maro at of btiig. Your line is open.

Hey guys, Thank you for the questions. I guess Congrats on the health plplan when in Illinois maybe James or Tom, can you just give us a sense for maybe like how many health plans you're meeting with, whether any of these are larger in nature or some of these little ones? It looks like you added for commercial health plans for the quarter. So just give me a sense for what your funnel looks like on the commercial health plan side.

Sure I'll give a quick answer to that market in Tom you should jump in. We are meeting with many health plans.

It goes into more than a doz't.

And that's exclusive of the VA, where we provide very specific numbers.

The decisions we're making right now are really around. Where do you want to turn on a health command?

To me in this market. Back to Randy's point about cash flow going forward, because there is an investment when we turn on a health plan.

To me, we're really looking at what I'll call accretive implementations meaning, let's start in a region where we already have a health plan.

Where we already have reimbursement.

And let's.

Add on to other health plans in that region. As an example, Wake Forest and Atrium are a very good example, because that's building on the regional specific strategy and that lowers our risk if we just turn on a health plan, say in Oregon.

All of a sudden. Now we've got to look at making sure we have coverage. We've got to make sure that we have klss, we have support staff there.

So it makes a lot of sense for us to focus in New York.

North Carolina, Chicago.

Areas where we already have a footprint and of course most importantly.

Where we already have coverage. So we are speaking to many health plans.

And of course the other overlapping considerations around the Veterans administration and so in a lot of the.

The Veterans administration systems that we are working with. They also happen to be contiguous with.

Some of the integrated disease networks.

That we're depying kidney intelexand, So there's a leveraged effect there and you can hire into a concentrated regional area. And I think what's emerging which is important is: let's pick a couple of key regions. They have plenty of population. Let's make sure we saturate the reimbursement, let's make sure that we do it right in those regions and prove out that we can start to scale the model which is starting to happen now. Then we can think about jumping into additional regions, regions and we can modify how aggressive we go.

Which affects spend, cash burn, et cetera, based on where the market conditions are. If the market continues like this, we may want to stick with a lot of the regions that we're developing out now, and we may want to be cautious about moving into too many regions and spreading ourselves too th that's where I get back into the. We can moderate the cash burn as we go along.

Based on all the variables that.

We as a management team and other management teams are facing, but the pipeline is relatively full.

Everybody is looking for ways to control cost and diabetes, kidney disease and cardiovascular disease.

There's nobody out there, that is.

Not trying to figure out how do we control these costs. So we're usually able to get into a health system and have a pretty open and engaging discussion.

About the benefits of kidney intelx and that republishing utility data based on our experience with major health systems like Mount Sinai. These discussions are becoming a lot easier because we can now point to the evidence that if you deploy kidney intellex on an integrated basis.

You engage your primary care physician base and you start to increase guidellineines-driven care which, at the end of the day, is the ultimate gain.

To I don't know if you want to add to that.

James, I think you covered it very well. I think this also goes back to what in the baron was asking. Even before markets became constrained, we began to take a very strong regional focus. Looking at where we have health systems is a leverage to bring in payers, which brings in realized revenue dollars, and that we would concentrate our in investsment in in medical scient, clon in account exact fields, people on those opportunities. And again, J James covered why we have a focus in the New York City and New York state region, in North Carolina, South Carolina, in the Gulf Coast with Mississippi and Louisiana and in Chicago, and it's a very discipline, scalable model where we leverage costs and maximize the return on investment for being in those areas. Health systems drive payers, payers drive health systems and that's strength of the commercial model in arealytics.

That's great. And then just my second question. I know that activating your Medicare price is a very important strategic initiative at renalytics. James, you talked about how you expect to have Medicare payment. That's calendar year, I have to assume that's calendar year 2022. So by the end of December , can you just give us any update as far as whether or not you've had some contact with any of the local Medicare contractors or how we should think this might play out through the balance of the next six months?

Yes to you. Want to take that one.

Sure So we have concentrated our laboratories in three regions where the regional contractors consider testing of of services like kidney and intelectxon, a claim by claim basis. So yes, the the timing for all of that has been driving towards understanding what that pattern of payment is going to be in each of those regions and then being able to make make decisions about where we process our medical Medicare samples going fortoward, because traditional Medicare is such an important part of the patient population- and at the same time we are gaining experience for being on the clinical lab fee schedule with payment by Medicare Advantage programs, and so to date, our experience on that is very strong, strong in terms of positively strong.

Ok that's it for me, Thank you.

Ladies and gentlemen, if you you have a question, Please prep Star than one our next question comes from the Ethan HC wighwright. Your line is open.

Thank you for taking my questions. Could you give us an update on the dver application, whether you have any received recent feedback on FDA and whether you expect FD clearance to have any meaningful impact on testing volume and adoption going forwardthank.

Yes the FDA process is moving forward.

I hope that we are coming to a conclusion there. Whatever I say on timing will inevitably be wrong.

As I've said in the past.

But that process is moving forward. The impact. What's interesting is?

We continue to make significant strides on coverage.

Insurance coverage, which I still view as the number one risk factor to the business.

That's very important. We're demonstrating and validating now that we can continue to make major gains and coverage.

Regardless of FDA. I do believe however, that FDA is important.

I do believe that FDA will continue to facilitate coverage.

I do believe that we're facilitated option, which is why we are continuing down the path with FDA and setting up what is going to be a sequence of FDA approval processes through multiple product versions. So it's important that we do get through FDA and cornerstone or regulatory pathway, because kidney andintelx is it's not just the test, it is a platform. We re already working on subsequent versions.

Improving performance, expanding indicated use, looking at repeat testing. All of these things are coming together and once we do establish a pathway with FDA, we can then turn around and use that pathway as a predicate for subsequent versions of kidney and telx to expand the product profile. So hopefully we're coming to a conclusion.

There soon.

Okay Thank you.

And our last question comes from Jens: little of invest. Your line is open.

Yes I am. 1, just a couple of filer questions fees. First of all, on the F D a process, just just I understand what's going on, even not withstanding comment, has been I used a long process. I mean, first of, I assume that the Noble request Act ive it hasn't been temporated, withdrawn or anything like that. But is this, is this delay due to additional information request by the F D a or has there been a major set back along the way? The deficiency and the original filing, if the agents have an issue with risk mitigation of controls, you know, just just to make sure that understand what was have been going on here. And second, on the cash burn figure that you mentioned, I think in October that you would have a fourth Y strong selfes team targeting into V a by the other 20 20, two. So am I right that this intended selfales team expansion was somewhat premature say, given the operational hurdness that you just grab? Where are we on this recruitment? And we will still be standaining towards that number.

No that's a very good question. Yes, Thank you, and this highlights our flexibility, right So?

We got to cover determination of VA. as I said from the beginning, we're going to build fixed overhead where we have payment identified.

The a is taking longer.

No surprise, it's working with a very complex government agency, So we have gone slow on the hiring.

In that sales force we have what we think is an adequate force deployed to be able to turn on a number of VA systems as we start to see more and more success more and more traction. Then we will consider adding the more overhead if.

We believe that we're justify or result in near-term growth. That's very important, especially in this market. If we don't think it's going to really produce near-term growth and marginal contribution, which obviously meets the salespeople pay for themselves very quickly, then we may take aabbreath and go slow. We'll have to see how that, how that pends out. The same is true in other regions that we're working. We're not just going to go out and wlie illy, go fixed overhead to try to gun for the growth.

Because we typically don't get awarded, rewarded for that in this structure, and as so many questions have been focused- what is your cash burn and what's the runway, et cetera- So we're very conscious about all of that in terms of FDA.

You know it's been a it's been a long process.

And it's been complicated by obviously, COVID-19. I know people don't want to hear.

About COVID-19, but the realities. The agency was severely stressed.

And this has resulted in a substantial delay, not just with renanalytics but across the Board. We're now coming out of that delaythe agency is starting to functiona little bit like it was prepandemic. So we're having it back and forth with the agency, things that are ramping back up.

And I want to make another quick statement here. This is a de Noble marketing authorization for.

A new type of product.

This is a complex application. This is not a 5- 10 -k with a predicate.

We're not pointing to another type of diagnostic. We are creating in effect- and these may not be the exact right words, but we are creating in effect- our own category.

And that's going to take time to do.

We think we have the best advice and the finest FDA internal and external team working on it. We've already given some of the names that folks who are involved in this team. Nobody's reading their own headlines. There's a very significant internal process around this.

And biostatistics and other folks that are chining in in a very Sober way on how the FDA process is working. We're very much in the game here and this process is active and is moving forward. So we haven't withdrawn an application. Fda has not said no, you can'tand. We're way deep into.

The data and where we're headed. So people should pay confidence from that and if we finish this properly, we will have created a very strong category- will be very difficult from a competitive standpoint, because everybody's going to to go this sort the same thing that we've done, and it really will set a future baseline, as I said, for subsequent product versions that we can now refer back to. We've learned a tremendous amount: that internal knowledge is important. It's informing future product development and validation.

So that we can have a smoother process going forward. But when I look back on it, cot has certainly had a massive impact on time lines and those are just the facts. When I do expect.

At the moment, there are never any guarantees. Until you have, until FDA has given you authorization, you don't have it.

And in terms of timeline, I'm not calling any timelines anymore because every time I'd look at leading into a timeline I'm inevitably wrong, but I'm pleased with where the process is at the moment. I hope that answers your question enough. Yes, I thing you that.

I Don really be careful about commenting too much.

On the FDA process. I think that's inappropriate.

goodyou.

Certainly again. Ladies and gentlemen, if you'd like to ask the questquestion, please press star, then one mar touchhome telephone again. Please press AR than one for any additional questions. one moment.

And I'm showoring no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.