Q3 2022 Veracyte Inc Earnings Call
Yes.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Okay.
Good day, and thank you for standing by welcome to the various sites third quarter 2022 financial results Conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session. Please be advised that today's conference is being recorded.
I would now like to hand, the conference over to your Speaker today, Sheila Goldman Director of Investor Relations. Please go ahead.
Okay.
Good afternoon, everyone and thanks for joining us today for a discussion of our third quarter 2022 financial results.
With me today are Marc Stapley, various age Chief Executive Officer, Rebecca Chambers, our Chief Financial Officer, Dr. Tina Nova President of our U S business and Dr. Giulia, Kennedy Global Chief Scientific Officer, and Chief Medical Officer.
<unk> issued a press release earlier this afternoon detailing our third quarter 2022 financial results.
This news release, along with our business and financial presentation is available in the Investor Relations section of our website.
Dot com.
Before we begin I would like to remind you that various statements that we may make during this call will include forward looking statements.
Defined under applicable securities laws.
Forward looking statements are subject to risks and uncertainties and the company can give no assurance they will prove to be correct.
We are not under any obligation to provide further updates on our business trends or our performance during the quarter.
To better understand the risks and uncertainties that could cause actual results to differ.
We refer you to the documents.
File with the Securities and exchange.
Including <unk>, most recent forms 10-Q and 10-K.
In addition, this call will include certain non-GAAP financial measures reconciliation of these measures to the most directly comparable GAAP financial measures are included in today's earnings release accessible from the IR section of their website I will now turn the call over to Marc Stapley <unk> CEO .
Thanks, Sheila and thanks, everyone for joining us today.
Our third quarter was incredibly strong in all respects and we delivered growth of 25% year over year, achieving revenue of $75 $6 million.
With outstanding execution by our team we continue to realize the potential of our highly valuable clear tests, while also advancing our long term growth opportunities and strategic vision.
Our testing business, which represents over 85% of our revenue grew 27% this quarter exceeding our expectations.
The seasonality we are used to seeing in the third quarter did not play out as anticipated and traction in our core urology and endocrinology markets strengthened.
We reported over 11000, decipher prostate test in the quarter up double digit sequentially.
Our investment in our World class commercial team, coupled with a continuous cycle of clinical evidence, resulting in broader reimbursement coverage and guideline expansion is paying off.
We believe that we now have clear majority share in a market that is just over 25% penetrated.
With the broadest indication coverage of any test positive guidelines for many of those indications. We continue to have strong conviction that most men with prostate cancer should be receiving decided to testing.
We have a proven track record of executing a well understood playback of evidence development fueling market penetration, which will enable us to achieve durable growth for this type of for many years to come.
To this point during the quarter key data were released from the phase III multicenter multinational stampede trial.
These findings suggest the decipher prostate may potentially be used to help inform decision, making regarding intensification of therapy in men with advanced prostate cancer.
This adds to the body of evidence that we will use to expand reimbursement coverage of the decipher prostate tests into the metastatic indication.
Making the test commercially available to even more patients diagnosed with prostate cancer on top of the over 90% of the tested indicated for currently.
Yes.
Additionally, a study was published in the journal of the National Cancer Institute and data were presented on a genomic signature derived from the decided for grid database at the American Society for radiation oncology annual meeting.
With close to 70 publications and many more podium presentations the clinical evidence supporting the decipher test is unparalleled.
This strong body of evidence has led to enhanced guideline inclusion and commercial payer coverage.
Last quarter, the national comprehensive cancer network or end CCN third updated as prostate cancer guidelines, making the site for the first and only gene expression test to achieve level, one evidence status in prostate cancer.
Further over the last several quarters, our experienced managed care team has been utilizing the new evidence and guideline inclusion to drive and expand reimbursement for the decipher prostate test.
We recently received positive coverage decisions from three major commercial payers, representing over 20 million members, bringing the total number of covered lives for the test to $195 million.
Afirma our market defining tests, the thyroid cancer had its strongest quarter. So far this year with revenue growth of 6% compared to the prior year period.
We launched a further 11 years ago into a market that at the time was not using any genomic tests to help determine whether it's a carryout surgery on patients who presented with an indeterminate thyroid nodules.
Again through a cycle of evidence development Kols support guideline inclusion of reimbursement we defined a market that is now we believe over 50% penetrated with room to grow further.
Thanks to our talented commercial team at pharma continues to be our leading test in terms of patient results delivered during the quarter and we believe it continues to be the market, leading genomic testing thyroid cancer.
We added more than 65, new Afirma accounts this quarter and saw an increase in the number of tests ordered per account. We also experienced continued payer traction, adding full payer contracts with large regional plans, enabling afirma to be in network offering for over $10 million additional health plan members, bringing the total to more than 200.
30 million lives.
Additionally, we launched a new online portal for our pharma customers, providing a convenient way for physicians and their staff to track patient samples view test results order supplies and in the near future order tests online.
This product enhancement the first of a number that we plan to launch will enhance ease of use for our customers accelerate their time to patient results and increase our internal efficiencies.
Finally, we were excited to share New research at the American Thyroid Association conference, which demonstrated our ability to uncover new thyroid cancer insights by drawing upon our extensive database and our whole transcriptome capabilities.
Ultimately, we believe that such insights could help fuel the next phase of innovation in thyroid cancer care and further differentiate afirma.
All of these accomplishments give us confidence that our pharma will continue to deliver meaningful revenue growth in the mid to high single digits in 2023.
Moving to our Biopharma business, we continue to pioneer new frontiers in immuno oncology, which we believe will help our biopharmaceutical partners advanced cutting edge treatments, such as car T cell therapies immune checkpoint inhibitors and others.
For example, this quarter an exciting study published in nature Medicine suggested that our proprietary technology could help distinguish patients with large b cell lymphoma, who will benefit from car T cell therapy.
This is the first paper to make this connection between predefined immune Biomarkers and response to such therapy. Among these patients. These findings provide an important proof point for how our multi omics expertise and offerings can benefit our biopharma partners.
Looking forward, we believe our broad portfolio and proven approach to evidence generation reimbursement and official commercial deployment gives us numerous opportunities to transform patient care and drive revenue growth.
At the same time with multiple early stage products, the various phases of development or commercialization and with our strong sense.
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Great.
Thank you.
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Kevin.
Sure.
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Companies.
Yes.
As a reminder, our investments and our long term growth opportunities are primarily focused on the aforementioned perceptive nasal swab test in lung cancer as well as the development of in vitro diagnostics. Our IBD versions of the enthusiast decipher a nasal swab test for the <unk> instrument.
But I think our clinical utility study for our <unk> nasal swab test is progressing well with enrollment plan for completion at the end of next year.
We shared preliminary data from 19 Gallo the chest annual meeting last month, suggesting that our test classify as more patients as low risk for lung cancer. So they can potentially avoid unnecessary procedures and more patient as high risk. So they can proceed to more timely diagnosis and treatment if necessary as compared to standard of care.
On the global launch of our test menu all three of our IBD product development programs are on track and we are looking forward to submitting the first of those are Nvidia genomic classifier for EU regulatory approval in 2023.
We are encouraged by the compelling data that were presented at the European Respiratory Society Conference.
Building awareness of the <unk> test among clinicians in Europe .
In summary, we had a great quarter in which our team executed to deliver strong results in our current business and made important tangible strides towards achieving our long term strategic vision.
We will continue to focus on driving improved outcomes for patients via our exceptional diagnostic tests and in turn driving growth and future profitability for Verisign.
With that I will now turn the call over to Rebecca to discuss our financial results in more detail. Thanks, Mark as Mark said, we had another stellar quarter with $75 6 million in revenue an increase of 25% over the prior year. We grew total volume to over 26000 tests at 26% increase over the <unk>.
Same period in 2021, and despite expectations of typical summer seasonality, a 6% increase sequentially.
We delivered testing revenue of $64 6 million, an increase of 27% year over year, driven by higher than expected decipher prostate and affirm our volume with last quarter's afirma supply chain situation now in the rearview mirror.
Testing ASP was up slightly sequentially on volume of approximately 24000 tests, driven primarily by mix as well as improved payor contracting across our afirma and decipher tests.
Third quarter product volume was approximately 2400 tests, resulting in revenue of $3 $3 million up 12% year over year, despite a currency headwind of over 10% given prior year rates.
Biopharmaceutical and other revenue totaled $7 $7 million.
Ahead of expectations with seasonality, having a smaller impact than anticipated the biopharmaceutical business usually contributes about half of the revenue in this line with IBD services and manufacturing, making up the remainder and this quarter was no different.
Moving to gross margin and operating expenses I will highlight non-GAAP results, which exclude the amortization of acquired intangible assets other acquisition related expenses and restructuring costs, but does include the routine stock based compensation.
non-GAAP gross margin was 66% approximately flat sequentially testing gross margin was 69% up 40 basis points compared to the prior quarter product gross margin was lower 7% sequentially. Importantly, we have made great progress on our manufacturing transfer as we're now fulfilling for Cigna.
So out of France ahead of our year end call as with any transition like this we saw some incremental costs as we stood up the process, which led to the lower product gross margins.
Pharmaceutical and other gross margin was lower due to product mix shift.
non-GAAP operating expenses, excluding the cost of revenue increased by $2 1 million sequentially to $51 $1 million driven by ramping clinical trial in project expenses as well as higher commission expense given our revenue outperformance.
Research and development expense increased by $1 4 million to $10 5 million sales and marketing expenses grew $1 2 million to $24 3 million and G&A expenses were down half a million to $16 3 million.
We recorded a GAAP net loss of $8 7 million, which included $7 4 million of stock based compensation, we increased our overall cash position by approximately $6 million and ended the quarter with approximately $170 million of cash cash equivalents and short term investments.
Turning to our updated 2022 guidance, we are raising our full year revenue expectations to 288 million to $293 million.
Or <unk>, 31% to 33% growth versus the prior year on a reported basis. This range compared to our previous guidance of 272 million to $280 million reflects our strong performance in the third quarter continued outperformance of our urology business.
Affirm our full year revenue growth of low to mid single digits and current currency rates, we expect biopharma and other revenue to be down sequentially given project timing.
As we've said previously we believe we have plenty of cash on hand to take the business to profitability barring M&A in 2023.
We anticipate we will be able to continue to invest in our long term growth drivers and remain approximately cash flow neutral excluding the impact of prior acquisition related contingent consideration expense I will now turn the call back to Sheila.
Okay.
Thank you Rebecca we will now go into the Q&A portion of the call and Tina Nova President of our U S. CLIA visits and Giulia Kennedy Global Chief Scientific Officer, and Chief Medical Officer will join Us.
Operator, please open the lines.
Thank you Ann as a reminder to ask a question you will need to press star one one on your telephone please standby, while we compile the Q&A roster.
Okay.
One moment for our first question that comes from Nathan <unk> with Stephens. Please proceed.
Hey, guys. This is Jacob on for Nathan Thanks for taking the questions.
Maybe just starting with Afirma and <unk>.
Maybe it clean up here was there a carryover of interrelated issues from that <unk>.
Vendor related impact on a firmer volumes during the quarter.
Or was it more or less back to business as usual throughout the entirety of the quarter.
Yes, I would say and as Rebecca mentioned, that's very much in the rearview mirror for US now and we think the the.
Positive effect, if you like of that in the third quarter was very muted very small.
Most of the issues that affected us in the second quarter.
We're dealt within that quarter, and we were able to get back to normal.
Activity without vendors has been back to normal during the <unk>.
Welcome.
Third quarter as well, so very much behind us and just as a reminder.
The third quarter of last year did see a decently large impact for our firm by <unk>.
So that is just something to keep in the back of your mind as well.
Okay got it awesome.
And then moving onto your Biopharma business.
Recently, you've been talking a lot about the immuno oncology opportunity in the high demand youre seeing from Biopharma.
If possible could you provide some color on just the size of the business currently.
Maybe just run rating the contribution from this business.
And then what are your expectations for the ramp and potential scale of this business over the long term, maybe next three years or so.
Yes, maybe I'll start and then Rebecca you might want to jump in with some of the quantification.
<unk>, but the.
We're really excited about the immuno oncology business in particular and how our Biopharma team supports customers in that business and partners. We've had a number of really interesting publications over the last several quarters, including with immuno score IC in colon and lung cancer and.
More recently with a great nature publication and car T cell as I mentioned earlier.
And so the number of assays, we have both kind of proprietary ones that we've developed as well as the custom ones that we can develop on demand.
For our customers I think really demonstrates for them an opportunity with <unk> to 30.
So advanced that clinical trial programs.
Two to help identify biomarkers and ultimately at some point drive towards continued companion diagnostic development.
In terms of the revenue numbers, Rebecca yes, I'd be happy to take that question. So.
You can explicitly see the biopharma and other revenue line in the face of our P&L approximately half of that revenue line is the biopharma portion. The other piece is the IBD contract development and manufacturing about 50 50.
Two very different growth dynamics across the two portions of that business purposely.
The Biopharma and other is sorry, the biopharma piece is growing very nicely that should be accretive to total company growth on the contract IBD and manufacturing piece of the retina.
That revenue line that is not necessarily a growth factor for the organization very purposely. The reason for it is effectively we use those same resources for our own IBD development and manufacturing and as we move towards more and more of that that is going to become less of a meaningful contributor to revenue over time.
So it's a bit of a challenge businesses, if you will and with obviously the more strategic asset from a revenue perspective in biopharma assets and the attractive development piece being very important for our R&D efforts in IBD strategy specific to verify and maybe one thing I'll add just on the Biopharma side agreement.
Everything Rebecca said.
The revenue itself due to the nature of those contracts and the timing of milestones can be very lumpy quarter by quarter, just to bear that in mind as well, absolutely and we think about that growth being accretive on a quarterly basis I'm, sorry on an annual basis Martha than a quarterly basis.
Okay got it I appreciate the color guys I'll hop back in the queue. Thanks.
Thank you.
Thank you one moment for our next question.
That comes from the line of Andrew <unk> with William Blair. Please proceed.
Hey, guys. Good afternoon. This is Chris on for Andrew. Thank you for the question was.
Maybe just on the guide here. So you beat by about $9 two versus consensus based up 14, five with most of that beat in the quarter from.
Decipher you've talked about long large numbers I think there is a competitor yesterday.
Like mid teens growth in the competing tests versus something pretty close to 50% for decipher can you just talk about how you think about the durability of prostate longer term, maybe next year I think thats just a big question we get.
Yes, maybe a couple thoughts on that by the way Firstly, just just I mean, the beat was driven also by from our standpoint, the afirma product as well as Soma had a record.
In terms of volume and I'm extremely proud of what our team has been able to accomplish and how that product continues to grow.
The market is over 50% penetrated and we keep demonstrating an ability to.
Bring on new customers and also increase the volume at existing customers with both of which are driving upside in volume in and of course, we're working on the ASP as we've talked about before on the site.
Kind of a similar story, but in earlier stage storey decipher is in a market that is about just over 25% penetrated also represents the majority share and we've clearly been able to demonstrate through that playbook of evidence development and guideline inclusion, including the NCAA level, one guidelines and it's the <unk>.
Genomic expression test that does that has that level one guideline.
We just keep driving more and more market adoption of decipher I am going to turn to Tina to add any color commentary. She wants. So I mean, she is driving this business with our team and do an exceptional job of doing so.
That's a great question and I think if you compare decipher to Afirma as Mark just mentioned our firm has been on the market for many years, but continues to gain new customers and continues to do very well and if you compare that to prostate.
You would think that on a direct comparison you would say that prostate is more like your three in its development because by the time, we had coverage for all the different biopsies and for RP.
And that was just a few years ago. So we really believe we have a lot of runway, we're still gaining a lot of new physicians every year.
We continue to develop on the clinical utility side, we're doing presentations have been all the major meetings and post and.
Not only posters, but also podium presentations by others and the level. One evidence that just came out is really.
Incredible validation of the product.
Yeah, and as I think I've said before.
Don't see this situation changing.
The foreseeable future here I mean, we've got a lot of a lot more room, a lot of headroom in the market for decipher as I said in the prepared remarks here.
We're at the point, where most every men with prostate cancer should be getting a decipher test. There is very few indications left but we need to we need to get included so plenty of opportunity for ongoing growth in the future.
Okay.
Im a firm just following up on that so you've reiterated that mid to high single digit 'twenty three growth just from a price and volume assumption can you just maybe quantify the benefit you expect next year following that the depressed afirma asps that we saw in the second half with that CPT code change.
Yes so.
Good question Griffin and I think that's probably parsing it a little bit more than we are ready to do so here I think you absolutely identify.
Should be a tailwind.
With volume growth that we're seeing that also should be a tailwind the puts and takes in any given quarter are.
Arent necessarily something we wanted to get in the habit of guiding too just because.
Thats highly dependent on a number of different variables that the most important thing to know is we are very confident in the mid to high single digit growth in 2023 for our pharma.
We will no longer be a headwind it should be a tailwind and in volume growth. There's plenty of room left in the market to get to penetration levels that support incremental volume growth.
Okay. If I could just sneak one more in the 7 million operating cash flow is pretty unique and small cap diagnostics land are you thinking about.
Just the M&A appetite what kind of assets are most appealing right now.
That's right.
So firstly I mean, obviously very proud of our team.
In terms of delivering that strong cash generation in the quarter, and obviously ending the quarter with 170 million of cash up from last quarters is fantastic.
In terms of M&A situational position that Hasnt changed it we've always said we're open to M&A.
And we'd never ignore opportunities that presented themselves to us, but the bar is very high.
It's not our primary focus right now our primary focus is growing our business.
And continuing to execute on what we're doing here, including near term and long term drivers.
Given we are very focused on cash and a clear path to profitability, we don't need to be interested in significant assets.
We're at an inflection point, where there would be.
Accretive in some way too.
Our growth rate in <unk>.
Cash position smaller technology bolt on type of things would also be possible, but I'm talking about kind of thing of significance here. So no.
No change in our approach there I will say that.
Now what do we over a year into our integrations of decipher Enhalo Dx.
Given our team's experience that we've developed over a year and we'd be very successful at absorbing acquisitions. If we did decide to do them. So.
Some good experiences there, but like I said at the beginning.
More kind of.
On the watch rather than.
What are you trying to drive on a thing at this point.
Okay. Thanks, guys.
Thank you one moment for our next question.
And it comes from the line of Mike Matson with Needham <unk> Company. Please proceed.
Yes, thanks for taking my questions and congrats on the solid quarter.
I guess first I wanted to ask about.
Operating expense it looks like it grew significantly slower than revenue.
First time I can remember seeing that so while.
While we and so is that something that you can sustain now driving leverage this growing opex I know you've done some acquisitions that stops that probably it was why it was growing a bit faster before but.
Yes.
Yes.
Assortment, Rebecca jumping but.
As you know, we're very focused Rebecca and I and the whole team on.
Cash generation fiscal responsibility using our operating expenses in the most effective way for the greatest return both near term and long term.
And so I'm happy to have mentioned and talked about the portfolio review work that we went through.
Culminated recently and we've been doing that for over a year. This isn't a reactionary thing. It's actually just good management. We've been we will continue to do it going forward.
But as far as where we are today, we've made all the decisions we need to make and so the investment level that we're making right now and into next year reflects the effect of all of those prudent decisions Rebecca yes, absolutely and.
I completely agree I think when we look at going forward. There are line by line a couple of different factors on the R&D side, obviously Nightingale is a critical priority for us and as that.
Enrollment continues to ramp you will see expense ramping but over time, absolutely believe R&D should be a point of leverage on sales and marketing we have a very unique.
Structure in that where our specialty sales teams.
Serving the urology endocrinology and Pulmonology markets actually are incredibly productive given we can serve those markets with anywhere from 40% to 50 people and therefore, our sales and marketing has been an extreme point of leverage for this organization and we will continue to be won on a go forward basis, especially with some of the decisions recently made around the pulmonologist.
LNG portfolio on G&A, absolutely should also be appointed leverage on a go forward basis, especially ex stock comp. So I think I think you hit the nail on the head.
When we look about what our investment areas are in 2020.
We've highlighted those all to you all at this point in time so.
Not yet, saying there'll be 100% dropdown margins or incremental margins that obviously wouldn't be prudent, but you should definitely see incremental margins on a go forward basis out of Opex.
Okay. Thanks, and then just one on encounter and I know that probably isn't new in terms of like the order of the sequencing of the test the IBD test that you're planning to launch in Europe , but I guess why in the first one I mean, just given the kind of homerun success of the Cypress tests I mean, why wouldn't you go with the <unk> one.
Okay.
Excellent question and you can imagine when we appointed a lot. When we first started to look at this and the reason is quite simple in this year.
Was very far advanced already in terms of before we acquired decipher.
<unk> of advancing the code set and getting the test ready and validating it and being able to demonstrate conformity with.
Our existing lab developed tests, so it's a perfect illustration of the model.
<unk>.
<unk> complex clear base test and then being able to move that over to the encounter and it was so far along on that journey.
It's just a case of getting it ready and submitting it decipher prostate needed to go back several steps to be commenced from the beginning forward right. We had to start that work at the very beginning that we'd already done on Nvidia. So we looked at this well over a year ago, just as we completed the Halo acquisition and the team came forward with.
What I thought was an extremely smart and responsible approach of launching busier first use that to prove get our team to demonstrate the capabilities. There and then decipher came next because for the very reason you mentioned there is a big market for prostate testing an unmet need.
Need over there and a pent up demand we believe.
So that's why that's the next one on the docket and then of course nasal swab the year after that.
And then what just been busy I mean, do you think that there's enough big enough market. There that you could drive kind of encounter placements with that alone or are you going to need kind of a broader menu before really start scaling up.
You need more I mean, if you think about and special lung disease and.
In IPF, it's a rare condition.
And so.
It helps to have that additional test on the menu for sure in our European team is looking forward to having that in in that portfolio to be able to sell but it's going to need the menu and for us to at least at this site for I think once once we had the cypher prostate you see a kind of a step function increase in the interest going forward and then of course, when you land nasal swab on top of that.
That you get you get the next big step function.
And recall charities.
And the installed base of encounter instruments, and then in the European market and so as we look forward to the growth vectors of the organization over.
Our long term timeframe. This is much more about the actual pull through of the kits and the reagents Martha and instrument placements.
Yes, Okay got it thank you.
Yes.
Thank you one moment for our next question.
Comes from Digest Savant with Morgan Stanley Your question. Please.
Hello. This is Hugo on for <unk>. Thank you for taking our questions.
You mentioned that you see a lot of room for growth on your prostate decipher task, but specifically on the recent shift in dynamics in prostate classifier landscape.
This could be a share gain opportunity for you do you think this could represent a temporary bump of some of the competitor tests with chance or do you view the potential share shift that's sustainable.
When you're referring to the shifting dynamics, you're talking about with respect to <unk> and Mdx health or.
Or something okay, yes.
I'll pass it over to you I mean, you are living this every day.
Yes.
I think that.
We feel very good about the market that we occupy we feel very good about the customers that we have and how we've penetrated the market and our test is different from that test.
They don't have the the grid offering that we have which really is.
Is very much used by a lot of our physicians to look at other genes and our UO setting and think about it very differently than just the the test itself and because of our level of evidence and how far ahead, we are and again back to that level. One that just came out with the MCC and guidelines.
That's very very different than the competition, where theyre seeing.
<unk> III, so I still think that with our market position.
With that movement from exact too to Mdx set we still have a great position in the marketplace and I don't feel that's going to make a great difference to us.
Totally great got it that was super helpful.
And then as a separate follow up could you elaborate on the trial design for the.
Nasal swab study Nightingale and have that enrollment for that study caught up and how many patients are you expecting to enroll into the study by year end.
And how does that the airline for the trial Readouts stack up against timeline for getting that touched on encounter.
Yes, so couple of things in terms of in terms of the Nightingale study itself I'm not going to give any more detail on the trial design, but.
I reported last quarter that were about a quarter behind in our enrollment I'm extremely.
We are pleased so far with the progress. The team is making is still very early days and very relatively small patient numbers so far.
As you would expect because the ramp comes as you bring on more and more sites, but the site acquisition. The site initiation is very much on track and we're seeing an increase in the per site patient numbers as well, which is very encouraging at this stage. So it's nice to see that.
I think it will be a couple more quarters before we start to see those numbers get to wear.
It really demonstrates how.
How far along we are we do still expect based on the work that we're doing in the projections that we've done the we can meet our own internal guideline of getting that done by the end of next quarter and into next year I'm sorry end of 2023 in terms of the final patient enrollment.
Now relative to the end count.
Mentation again this goes back to our model and our strategy, having these tests launched in the U S. Reimbursed in the U S and so on certainly helps with our U S market, but at the same time, we're looking at.
Ways that we can generate even more evidence development.
Show clinical utility.
With our partners outside the U S and so nothing to.
At this stage, yet, but thats something that were going to be looking at John light just joined us as the GM, while pulmonology business and that's one thing he is going to be thinking about.
As the U S market, but I would I would tend to.
This stage I would think about it as being typical model of your launch the test in the U S and then.
The O U S reimbursement comes after that.
Got it that's super helpful color. Thank you.
Thank you one moment, Sir our next question please.
And it comes from the line of Matt <unk>.
<unk> with Goldman Sachs. Please proceed.
Hey, guys. Congrats on the quarter. This is Dave on for Matt.
<unk> had some good wins.
Commercial payer coverage side could you tell us more about how these discussions women and expectations for future discussions going forward.
<unk>.
Yes.
Anyone else on the team and feel free to add in here, but the way. These discussions go is typically the way. They go there's a lot of blocking and tackling and a lot of negotiation and a lot of hard work by a very experienced team to get every one of these over the finish line and even when you do there are plenty to take a long time to get in some you don't.
You don't even navigate even for testers as well embedded or guided or utilized as both afirma and decipher so the team.
Team has done a great job just continuing the drumbeat here, we've always got more in the pipeline and it's nice to see so many covered lives now and both of those are core core testing products and anything you want to yes, I would just say that <unk> is still early in its <unk>.
Progression with the commercial payers, we continue to add every quarter, we did add a few more this quarter as well and again as I mentioned previously I think the addition of these level one evidenced by end CCN in the presentations that were down that extend our clinical utility data are very very helpful and securing these con.
<unk>.
Great.
The manufacturing transition of Marseille, great to hear that the first wave is completed any additional color there around.
Next steps, what we can look forward going forward.
No I think it was great suite of fulfillment stuff complete.
Completed and transitioned over to Marseille and the team's doing a really really nice job over there.
Key part of the next day stages, the actual manufacturing and that will take through as we mentioned before through the end of 2023 to get done.
So nothing more to report on that until until we really until we get to the end of next year, but I don't foresee any problems with that.
Great. Thanks, guys.
Okay. Thank you and with that I'll conclude the Q&A session I will turn the call back to Marc Stapley for final remarks.
Thank you I appreciate it so as you just heard we had an excellent quarter and we're on track to finish out the year strong I'd like to thank our incredibly talented team for their hard work execution and deep commitment to the patients we ultimately serve.
I'd also like to thank our executive chairwoman and verify Cofounded Bonnie Anderson for all of her support during the last 18 months, but he will continue to help us achieve our long term goals from the vantage point of board chair as she transitioned fully into that important role from January . The first next year. So I'm really looking forward to continuing to partner with her on the board.