Full Year 2022 Renalytix PLC Earnings Call
The conference will begin shortly.
Raise your hand during Q&A, you can dial star one one.
[music].
Okay.
Good morning, and welcome to the Reno Lake <unk> Conference call to review fourth quarter and full year fiscal 2022 financial results at this time all participants are in listen only mode.
We will be facilitating a question and answer session towards the end of today's call.
Minder This call is being recorded for replay purposes.
I would now like to turn the call over to Peter Denardo of cap Com partners for a few introductory comments.
Thank you Michelle and thank you all for participating in today's call. Joining me today from <unk> are James Mccullough, Chief Executive Officer, Tom Mclain, President, Michael Donovan, Chief Medical Officer, 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 private Securities Litigation Reform Act of $19 95.
Any statements made during this call that relate to expectations or predictions of future events results or performance are forward looking statements. Examples of these statements include without limitation, the potential benefits, including economic savings of kidney intellect, the potential for kidney intellect to receive regulatory approval.
<unk> from the FDA, the commercial prospects of kidney intellect, if approved including weather kidney until it will be successfully adopted by physicians and distributed and marketed our expectations regarding reimbursement decisions and the ability of kidney intellectual curtail cost of product and end stage kidney disease optimize care delivery.
And improved patient outcomes trends in our market and potential benefits of government policy change the impact of COVID-19, and other world events on our business our expectations for hiring product development strategic partnerships and collaborations reimbursement decisions clinical studies regulatory submissions our business.
Strategies and future growth, we couldnt 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 to material differently from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements for a description of the risks and uncertainties associated with our business. Please refer to the risk factors section.
<unk> of our annual report on form 20-F that was filed on October 21, 2021 for the Securities and Exchange Commission.
All forward looking statements made on this call are based on management's current estimates and various assumptions <unk> disclaims any intention or obligation except as required by law to 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.
<unk> is accurate only as of the live broadcast today October 31, 2022, and with that I'll turn the call over to Jane Mcauliffe James.
Thank you Peter good morning, or good afternoon from our first funding in November of 2018, <unk> has built was built to generate extensive data evidence and comprehensive reimbursement for early risk assessment and kidney disease with our advanced prognostic tool kidney Intel X.
And both of these categories, we have had significant wins, which are widening the opportunity to grow market share and drive real change in patient care.
We have now expanded Blue Cross Blue shield coverage to our third state and as was in our SEC filing last week kidney intelligent billings are now being paid by the Medicare system.
Medicare in the United States covers approximately 64 million beneficiaries.
Tom Mclane will speak in detail about payment and insurance shortly.
We are reaching a tipping point, where in certain population centers, where the large prevalence of diabetes and kidney disease, a super majority were greater than 70% of individuals will have some form of insurance payment for kidney Intel X testing supermajority coverage is a critical feature for kidney and <unk> implementation at the front end primary care level of medicine.
To put the sheer size of this health problem and opportunity in perspective, some 40 million Americans are estimated to have existing kidney disease today over half of the adults with diabetes will develop kidney disease costs. Your pile up quickly and October report in the journal of American Medical Association, citing.
Medicare dialysis costs at over 80000 in their first year alone on dialysis, while privately insured patients are costing close to $200000 in their first year alone. This is simply unsustainable and unfortunately, a large portion of individuals suffering from this preventable cause of kidney failure.
Our from economically disadvantaged groups kidney diseases become a raging center of health in equity in the United States with disastrous consequences for communities.
Our Chief Medical Officer, Michael Donovan will summarize data now being published which shows doctors using kidney Intel X are much more likely to prescribe new medicines early.
Timely referrals to specialists and initiate important blood pressure controls to prevent their patients from suffering the consequences of progressive kidney disease and dialysis.
In this quarter alone.
New presentations are being given next week at the American Society of Nephrology kidney week.
And one of our real world evidence programs on 658 patients who has just been accepted for publication showing positive changes in patient management and outcomes in.
In the period ended September 30th.
Hosted our first $1 billion quarter.
For the month of September alone, we recorded a record 527 kidney Intel X patient reports issued.
And while it month to month results will continue to vary we're encouraged to see testing volume beginning to emerge from disparate sources, including individual physician groups located in different states, where insurance payment has now been established.
We continue to have productive discussions with FDA under our breakthrough device review, we have been fortunate to use this past year to recently submit additional data on over 1000 patients that further confirms the performance of kidney Intel excellent risk discrimination for patients with diabetic kidney disease.
We now believe we are approaching the completion of the de Novo regulatory process and while there is no guarantee of success until FDA has made its final determination. We are optimistic based on both the quality of the analytical and clinical evidence provided and the high level of engagement, we have had with FDA our current.
Expectations are for a decision to be made in the first quarter of calendar 2023 ending March.
But there can be no guarantee on this timeframe.
Also as clarity builds for kidney and <unk> insurance, we have been able to reduce our cash burn by focusing on regional markets with developing supermajority payment we.
We have also reduced third party vendor contracts made selective head count reductions and slowed our rate of hospital integrations.
If our business progress continues as expected, we could very well be in a position in the coming quarter or two where we have mitigated risks for insurance payment regulatory approvals and utility validation of kidney Intel X and while it has been nothing short of a roller coaster getting here with market conditions.
We cannot forget that <unk> is achieving its major milestones and objectives in a very short period of time four years from our founding financing round in November of 2018, and just over a year from our commercial product launch.
I will now turn the call over to our President Tom Maclean, who will detail progress with insurance and commercial rollout Tom.
Thank you James.
From a commercial view, we're making significant progress with expanding payment and coverage for kidney and <unk> testing with increasing testing volumes and maintaining high quality laboratory operations that are necessary to operate in a highly regular regulated laboratory.
<unk> services environment.
The recent filing I'm seeing Medicare payment for kidney and <unk> testing is significant for health care providers patients and also for other payers.
Our analysis of data available through the Kaiser family Foundation indicates that Medicare beneficiaries accounted for 50% to 60% of the intended use population for kidney and Carla.
This has been validated in a real world patient experience within the Mount Sinai Health system in New York City.
It is important to understand that Medicare payment determination is made based on where the testing is performed.
Not where the patient lives or where the blood is drawn.
So this includes patients across the world that are covered by Medicare.
All kidney and <unk> testing for Medicare beneficiaries is being performed in our New York City Laboratory <unk>.
As a result national government services, the region regional Medicare administrative contractor or Mac, covering New York REIT.
Views, all Medicare claims and issues payment to <unk>.
In an SEC filing last week, we provided material information that we have been paid for Medicare claims for kidney intellect testing services with testing date, starting July one 2022.
Under individual claim review or ICR, a medical director from the Mac reviews, each claim submitted for payment and makes the determination as to whether the claim is reasonable and necessary.
This determination is based on the extensive clinical evidence we have submitted to the Mac and documentation related to the specific service performed.
This is significant for the 50% to 60% of patients eligible for kidney and <unk> testing, who have Medicare coverage.
We also believe this Medicare payment press for kidney and tell us will support additional coverage determinations from other insurance Payors, who rely on evidence of Medicare payment.
Based on the significant increasing volume of Medicare claims for kidney and <unk> testing. We also submitted a request for a local coverage determination or LCD from the Mac.
<unk> been notified that our LCD application is complete and it has been accepted for review.
Similar to the current individual claim review process the medical directors at the Mac will consider the previously submitted evidence to determine whether kidney intellects is reasonable and necessary.
This determination is then published in a draft coverage policy and reviewed in an open public meeting.
We are now awaiting notification of the public meeting date when their recommendation will be reviewed this meeting could take place as early as the March quarter of 2023.
The Mac has indicated that they will continue to pay under the current ICR process until the LCD review is completed.
Beyond Medicare insurance coverage and payment reviews are accelerating and we would expect to secure additional coverage contracts, including contracts with large regional and Blue Cross Blue Shield payers.
Rolling basis through the remainder of fiscal 2023.
As James indicated our focus is on enabling kidney and <unk> testing with Super majority coverage or greater than 70% of insurance payment in large commercialization markets.
Turning now to commercialization as part of the cost reduction actions announced in 2022, we reduced our field sales force to 12 account executives for fiscal year 2023, our sales team is focused on territories.
The near term opportunities for health system individual practice in VA sales are significant and broad payer coverage is likely.
As James indicated earlier testing at the Mount Sinai Health system increased during the September quarter.
It is important to understand that Mount Sinai has developed a care pathway for early stage diabetic kidney disease patients that leverages the value of kidney and <unk> testing.
This care pathway is being rolled out across the health system.
In the quarter through better coordination with Mount Sinai testing increases are being driven by adding new practice locations to the care program by optimizing the use of the care program in established practices and by bringing care to the patient through a combination.
Of home Phlebotomy services and telemedicine.
Our Chief Medical Officer, Michael Donovan will discuss the positive results from the first 1700 patients receiving care under the kidney Intel X informed care pathway. This compelling clinical utility data will drive increasing testing volume at Mount Sinai.
And we will be influential in launching or expanding similar programs in other kidney Intel X integrated health systems. Those include atrium health singing River health system and St. Joseph Health.
Yes.
Our efforts inside the Veterans administration health system have continued to advance wholesale.
We're focused on clinicians in VA center facilities as well as clinicians in the community who also provide care for veterans.
Pacific Li the Veterans Administration community care network or VA CCN provides a direct link between the VA and community providers to ensure veterans receive timely high quality care.
CCM uses industry standard approaches and guidelines to administer services pay for services promptly and manage the network to its full potential.
During September and October we introduced kidney and <unk> testing into two of the five <unk> regions in the United States.
<unk> is a highly scalable program.
Based on that initial success, we expect to see volumes increase in November and December of this year.
In addition, we have executed the first past quarter and the first blanket purchase agreements with VA centers in the west and in the southeast in.
In addition, we secured a prepayment for testing at a third VA Center.
<unk> on these initial successes we are in the development stage for task orders and laboratory services agreements in other locations, we expect agreements with up to eight more VA centers through June of next year.
While the initial testing commitments under the task order and purchase agreements are modest.
<unk> are designed to generate evidence of clinical adoption and patient care value before increasing volume commitments.
Building on our experience at Mount Sinai. We've also developed an at home testing program that can be offered to veterans by contract on a center by center basis to increase access to kidney and <unk> for those who have mobility or other issues preventing them from <unk>.
Accessing VA center.
While these initial wins have taken 10 months to accomplish the opportunity with the VA health system remains strong based on the higher incidence of diabetes and chronic kidney disease in this population.
Demographic and health economic data for the VA from a study being conducted by the University of Utah, and the University of Illinois, Chicago will be published in 2023.
This quarter, we also opened up.
Focus on the local primary care physician and endocrinology market to our sales account executives starting in late August under this program our field reps are introducing testing two accounts meeting two criteria.
A significant percentage of their patients are Medicare beneficiaries second there was demonstrated adoption of innovative new therapeutic approaches to treat diabetic kidney disease.
Our account targeting occurred is already demonstrating value and we expect to see test volumes, increasing every territory during the current quarter and to the end of our 2023 fiscal year <unk>.
<unk> health systems, VA and direct a primary care physician sales. We expect every account exec will contribute a positive ROI in the current year.
Finally, the company continues to demonstrate its compliance with the rigorous standards for laboratory testing performance.
Wired under clear ISO tap and FDA.
That has been evidenced by a series of positive external and internal audits and regulatory certifications during fiscal year 2022, Our laboratory and client services teams continue to prioritize quality in processing samples and delivering test strip.
Ports to clinicians and patients.
I'd like to turn the discussion over to Michael Donovan, who will review the important new clinical utility data supporting test volume increases and payment Michael.
Thank you so much term so we continue to document real world impact of kidney and pellet and decision, making by primary care physician managing their patients with diabetes completed.
As part of our ongoing railroads evidenced investigation, we recently evaluated over 1500 patients with kidney Intel exiting.
At a six month repeated time claim and observe the following changes in patterns of care.
53% of patients identified as high risk by kidney until it had a clinical encounter in the month compared with the current standard of care, which is every 12 months.
Most importantly, 71% of this high risk group had at least one management actions taken within six months of their kidney and pallet.
Such as Dr. They're ordering a consult prevented the specialty services or a modification teams and their medications.
We believe the observed behavioral adjustment at the primary care level based on the patient's risk for progression decline in their kidney function may form the basis for what future management would look like in managing patients with early stage kidney disease.
Ongoing evidence development program should continue to reinforce the role of kidney and currencies.
In the coming months.
Three of the more important observation for $2 five fold increase in new referral to specialty services for high risk patients predominantly by primary care physician.
And a four and a half fold increase in the use of novel effective therapies, such as the <unk> two inhibitor for high risk patients.
Importantly, we also observed that more than a third of the 496 black pesos, representing 29% of the total cohort reclassified as high risk by the kidney and products.
By comparison, the right patient population, representing 24% of the total cohort or 406 patients only 17% were identified as high risk.
Finally, although still early in the course of the study we did observe trends and reductions in <unk> and Youll HCR level across the kidney and pallet risk strata and patients have received some change in management at six months.
Yes.
Data collection is ongoing including anticipated longer term outcomes associated with improvement in kidney function based on egfr slope and reductions in UAE, Dr. Along with a protein recommended blood pressure value and weight loss target at 12 and 24 months.
I'll now turn the call over to James Sterling, Our Chief Financial Officer for review of our financial results Kim.
Thanks, Michael.
Good morning.
We issued our financial results for the fiscal year ended June 32022, which will be detailed in our GAAP financials on form 20-F filed later today.
And subsequently in our annual report under <unk> accounting.
Figures I will discuss here are based on our GAAP financials and quoted in U S dollars, which is our reporting currency.
For fiscal year 2022, we recorded total revenue of almost 3 million $2 7 million of which was from kidney and <unk> testing with the remainder being services revenue.
This was an increase from approximately $1 5 million reported for 2021 of which just 400000 was from testing revenue.
Okay.
Operating expenses for the year were $54 1 million on a GAAP basis up from $32 5 million in fiscal 'twenty, one due primarily to higher head count and higher R&D expense to fund studies as well as increased consulting and professional fees to support our growth.
Net loss for fiscal 'twenty, two was $45 $3 million or <unk> 62 per share.
As previously reported in April 2022, we issued amortizing senior convertible bonds with a principal amount of $21 $2 million due in April 2027.
Net loss on a fully diluted basis was <unk> 66 per share taking into account the possible conversion of shares of the convertible bonds and reversal of the bonds fair value adjustment.
This is compared to a net loss of $35 $3 million or <unk> 49 per share in fiscal year 2021.
We ended the year with cash and cash equivalents of $41 3 million as of June 32022.
As a reminder, in mid August we disclosed that we had executed changes designed to yield over $12 million in annual savings in fiscal 2023 with more in process.
The full effects of cash burn rate reduction are expected to be realized in our fiscal second and third quarters, ending December and March respectively.
And we've taken.
Further steps to reduce expenditures and extend our cash runway.
We anticipate that this should depending on achieving certain assumed revenue provide us with an adequate cash runway into the first half of fiscal 2024.
Operator could we now open the call up for questions.
As a reminder to ask a question you will need to press star one on your telephone please standby while we compile.
While the Q&A roster.
Our first question comes from Dan areas with Stifel. Your line is now open.
Hey, good morning, guys. Thank you just wanted to start on.
Test volumes 1200 during the quarter, which is right around 100, a week I think thats up slightly from last quarter.
James or Tom It would be helpful up within Mount Sinai Wake Forest in Utah, where Youre most established there.
Can you just sort of talk to the volume ramp that you expect and just how much of it is going to be dependent on clinical data generation and reimbursement versus those things that are more tied to logistics and commercial practice things like EMR and portal infrastructure dock awareness et cetera.
Just trying to understand what the trigger points are from here and then what you actually need to get to get testing going at a higher level.
Yes, Thanks, Dan I'll give a quick answer to that and turn it over to Tom.
We obviously are seeing a pickup in volume as we.
Get better and better at what we do.
And.
I think it would be.
Certainly becoming less of a technical issue at this point and much more of an education issue.
And then of course the single most important thing is establishing comprehensive reimbursement.
So when we start to see Blue Cross Blue Shield plans tip over.
For support and obviously now that we're on a Medicare pathway.
That's going to that's going to start to widen the market, especially going into next year and going to help support volume increase.
But I think at this point.
We know pretty pretty much how to implement.
<unk> got enough experience under our belt that it really comes down to now education.
Reimbursement those are the two major things and obviously if we.
End up with an FDA de Novo marketing authorization.
That's going to be.
And additional help as well.
Tom do you want to pick up on that.
We're the only echo what you said James coverage and utility data are very important to broadening adoption.
And increasing testing volumes and both of those have been us a strong focus for us over the last year and.
What we have been able to accomplish on coverage importantly, Medicare because of the significance for the intended use population here and utility data publication, that's forthcoming and Michael described is is going to be very important for building primary care.
<unk> understanding of how kidney and <unk> can benefit them and benefit their patients.
Okay. A follow up question I guess would just be on Mount Sinai James When do you think you might be in a position to hit that 300 tests per week targets and then within the VA I think the comment last quarter was it testing was being set up and 59 of 171 health centers, what's the update there.
Are you still thinking that testing will begin in the plus of those by the end of the calendar year.
Yes Im Sinai.
Piece 2023 calendar so starting January to January should be quite productive, especially as we now shift too.
A full commercial model with comprehensive payment rate.
And.
Without pointing to specifics we are making.
Some very real progress on securing additional <unk>.
Private payer groups and public payer groups that have.
Influence in New York State, especially in New York City.
Which again is a bit of a lasagna plate.
Payer mix, but.
We're moving into a position now where we can actually.
To get a super majority coverage we.
Believe going into next year and Sinai.
And Thats, where now all of a sudden.
You start to expand a much larger patient population.
And thats going to help and you also start to get.
Insurance payer push.
Into that patient population for diagnosis prognosis and treatment is in there.
Our best interest to do that rather than take the costs for late stage disease.
And part of the dialysis Bill.
So we do expect a push there.
That should all accrue.
George.
An increase in.
Testing volume across the board specialty practices primary care practices.
Patient demographics.
We're even looking at pulling in specialties outside of kidney disease, including cardiology.
Everybody has got a vested interest in understanding what the state of the kidney is which is the gateway to.
A lot of chronic disease management so.
2023 should actually be.
Quite a very interesting year.
Okay last one for me and then I'll just hop off Jay maybe the obvious one on the cash side, just given where the burn is today and where you think the cost structure is headed how far out should we go before thinking that you need access to capital at this point.
So we've been comfortable saying we are in shape to get through.
Or into at least the first half of fiscal 'twenty four.
So cash spend.
I indicated already.
Reiterated today that we have reduced expenses already to the tune of $12 million a year annualized.
And indeed, we've already done north of that.
With more.
Available to us pretty good flexibility to flex spend.
And so.
Feel pretty good about the.
The cash position to get us through.
Operational milestones in.
At some point.
I would I would expect.
Fiscal 'twenty four or.
Thereabouts.
Next finding a funding event.
Okay. Thank you guys.
Yeah.
Please standby for our next question.
Our next question comes from <unk>, Chen with H C. Wainwright Your line is now.
Thank you for taking my questions.
Could you comment on what would be our target.
<unk> quarter by the end of fiscal 2023.
Yeah.
Okay.
Thanks, Jim.
I appreciate the question so.
We don't want to dip into the area of forecast too hard, but it will be.
Significantly higher than where we are today.
And importantly.
I think the real tipping point for us is again.
My head the comp.
The comment of supermajority coverage once you start to have Medicare Medicaid Bluecross Blueshield Medicare advantage and other private plans.
Especially in the diabetes population.
Now youre talking about the ability to test the vast majority of patients.
Who are eligible for kidney MPLX now it becomes an ROI question, which is how many feet that we want to put on the street.
And how aggressively do we want to go out specific areas in terms of education.
Partnership.
Et cetera to get to a larger pace.
Patient basis so.
And I said this in my statement, but we could very well find ourselves in the March quarter, having substantially mitigated reimbursement risk to the business model regulatory risk.
With the publications coming up showing that kidney <unk> really does work.
And not just to rat study, but in.
Ah patients.
Across a pretty broad.
Our group.
Ah patients that we now have substantially completed.
The business case for kidney and <unk> to now move into.
Broader scale use.
And that I believe that's a short term equation.
And that will allow us.
To expand much more assertively.
Into certain high density populations.
What's an assurance that we're going to get paid I think today.
We're getting paid on.
A majority of the testing that we conduct.
That's going to continue to increase even through the through the balance of this year. So.
For me the Canary in the coal mine investors should be looking for additional <unk>.
Bilings on.
Insurance payer coverage or payment.
Later, this year and going into next year, obviously, we have the FDA.
Which is going to render its decision and you should be looking at that utility data.
Which is really where the rubber hits the road.
What those kidney <unk> actually do how do physicians use it and how does it affect.
The care pathway of Michael detailed some of that but we're very pleased.
With her.
<unk> is performing today, it's doing what we thought it would do.
So.
We're actually in a very strong position.
When we take a look at the whole package.
Around bending the curve on chronic disease management, especially in diabetes, and kidney disease, and thats going to start to.
Reflecting the market space, we believe to your point as we get into the end of next year.
At which point would you feel comfortable.
To provide revenue guidance.
Gosh.
The old question.
I think we're reaching that point.
This has been a a very difficult market.
And we've had internal debate about this.
I don't think it's going to be long from now.
Certainly starting to get.
Confidence in the ability to get paid for kidney and <unk> and the ability to get paid for kidney Intel X in different areas.
Which is important so we're moving.
Into a more confident position there.
Market volatility doesn't help.
What we say at the end of the day or project I'm not exactly sure how much effect that would have as opposed to just putting up the numbers.
And clicking off the fundamentals.
So we've taken that position for now which is let's just click off the fundamentals.
Form the market as they come along.
But I'm, hoping as we.
Starting to see interest rate moderation.
Hopefully early next year.
Capital markets get a little more friendly that.
We can start to provide guidance into 2000 fiscal 'twenty three and fiscal 'twenty four.
Which we're very encouraged about.
Got it.
You feel confident that you can.
Can get FDA clearance, we're being coming into 2022.
I do.
And again I always put the caveat that you can't call the timing.
Hello.
We are certainly reaching the end game.
And this process cannot go on too much longer.
And <unk>.
Certainly the burden on FDA has changed.
Moderator with Covid, so we're starting to see processes picking up.
And until you have FDA you don't have FDA.
Full stop but.
We have now submitted a substantial amount of validation data performance data analytical validation data and we're now seeing the clinical use.
A kidney Intel X across thousands of patients.
So.
I also think that we have one of the best FDA teams certainly the best FDA team that I've worked with in terms of outside.
Consultants and internally.
Got very smart about the process.
So.
At the end of the day, the risk of using kidney Intel X.
It's not particularly high right.
You get referred you get put on.
A drug early on and.
This is all in a patient population that has existing disease. So we are only focused on patients with diabetes and existing kidney disease, we're not screening.
So the risk of using kidney <unk> is very low.
But the benefit.
<unk> is very high.
So with all of the validation data we have.
I believe we are well positioned.
To get.
De Novo marketing authorization in the March quarter, but again.
Let's see how the process goes.
Thank you.
Please standby for our next question.
Sure.
Our next question comes from.
Randy Baron with Pinnacle. Your line is now open.
Hi, guys. Good morning can you hear me.
Yes, we can Randy.
My first question is for Tom Tom.
Congrats on last week's Medicare announcement. It is certainly a significant milestone in today, obviously talking about LCD being accepted for review.
One thing that.
It certainly seems like was glaringly missing to me on this call. It was mentioned of a national coverage determination for those Lehmann on the call like me can you explain it.
<unk> is going to be going for an NCD and if not kind of why not without rehashing the script.
How else can you get paid at scale.
Thanks Randy.
A lot of.
Confusion around Medicare.
<unk> was at a conference last week, where CMS provided some important context around payment may were clear they have three very distinct and separate payment methodologies and the first is what you referenced national coverage determinations separate or local coverage determinations.
And then there is this claim by claim adjudication, but what the director of the coverage program for Medicare was clearer about our numbers. There are currently 300 national coverage determinations, the local coverage determinations, which come from the Max number.
In the single thousands.
But individual claim Mercury you cleaned.
Claim by claim adjudication still accounts for the majority of Medicare payment in the United States. So.
Basically it's not a sequential process. Once you have coverage that's sufficient for the scale Youre at you are.
<unk> done with Medicare in arcades.
Coverage under a local coverage determination it relates to the location of the laboratory that runs the Medicare patient sample. So a local coverage determination by the Mac for the New York City Lab. If we will continue to run all of our Medicare samples through that New York Lab.
That national coverage for US there isn't a next move onto a national coverage determination.
That's required here so.
Debt.
And the reason that we're doing the LTV as I indicated is the volume of kidney and <unk> claims is going to be significant.
Makes the payment process much more efficient.
Or for that Medicare administrative contractor in New York. So short answer is our national with a local coverage determination, we would be done there isn't a need to move on to a national coverage determination.
Okay.
Yes, that's a good answer but let me ask just a dumb question is there a collar or limit the amount of tests that you could push through the New York Mick.
No no it's national.
So all the all of the New York Mac does is administered Medicare for laboratories or providers that are located in their region. The budget is the Medicare budget, there isn't a limit as to each Max.
What they can pay and theyre paying for claims for people in California people in territories like Puerto Rico and people in New York. So they are the regional contractor quote unquote isn't a national payer or any service that's provided in their region.
Okay, that's great let me.
Let me shift to O J J Im just trying to reconcile kind of the company's aspirations for.
Minimizing cash burn versus what happened in the quarter just ended.
Im seeing is the September quarter is done what where cash levels at September 30.
Okay.
So we're not previewing that as far as we're going to go and Previewing September is the revenue line.
Not ready to give more guidance on what September .
Looks like okay.
Let me answer the question.
Let me ask the question. This way was the September burn down to that $9 million and $5 million aspiration.
The September burn was definitely down I don't want to put a number on it but it will it was slower than what <unk> seen recent historically.
Okay, both Tom and James talked about return on investment for the test reps, how many tests on average for your 12 reps are needed to get to that threshold.
Hmm.
I got to be careful.
Yes.
Good question I get what you're asking and I'm just worried that it trips into forward looking guidance, which we're not giving.
To give specifics there so let me hold off on.
Let me let me ask the question this way, what's your average compensation per sales rep.
Not ready to provide that either.
Got it.
It's market rate comp they got a base and.
<unk>.
A bonus based performance.
But as far as giving you specific numbers.
Okay. Let me so that you can just comment directionally, if I'm right, but if an average salesperson gets $200000 at $9 50, a test thats 200 tests at that time.
<unk> has grown 50 that gets me to like $2 5 million does that is that directionally, how I should look at it.
Yes, I don't see why why that's not a fair.
Way of looking at the picture sure.
Okay, Great and then just last couple of questions for you Jamie Randy before you before you go on there that these are actually.
Good questions.
The reps get paid different dips.
Depending on level of experience location.
Et cetera.
But.
<unk>.
Actually like the direction that youre going in.
Especially since you guys opened the door it seems.
Pretty obvious change James Let me just get my last couple to you.
Are there.
Wanted to trade. It missed this are there any remaining open items requested by the FDA for anything else.
Yeah.
At the moment no.
That's great. Okay, and then I think I heard just to put the caveat on that okay, because I want to be very very careful and respectful of the FDA process and very humbled.
Alright.
Is a complicated process, we are doing a de novo authorization and it's a proper de novo authorization. There a reason there are no.
Substantial examples of risk assessment tests at the front end of a disease. This big.
So when FDA does opine.
We would like it to be successful.
It's going to be obviously, a significant statement of achievement, because we will now be putting a new class.
A prognostic test on the table. So it is a proper de novo authorization.
And the way the FDA process works well, we we believe we have satisfied.
<unk> is looking for.
Doesn't mean that as we continue to conclude the review process that additional questions will not appear.
Or there will not be additional discussions but the.
<unk>.
We're certainly confident that we put together a very strong package.
Okay, and then just last really quick ones from me James I don't I'm, just curious on partnership you've talked about it in the past do you expect any updates or completion of any partnership in this calendar year.
Uh huh.
We are making progress.
And I do expect completions of partnerships.
Can I commit to this calendar year.
No I can't commit to this calendar year.
Would I be surprised if we did announce a partnership this calendar year no.
But I can tell you that what's interesting as we continue to make.
Significant milestone progress with with insurance there are a lot of people taking notice.
Especially in a market. This big so it's not every day you come across a fully validated prognostic at the front end of the market without any direct competition that is now being paid for.
Insurance payment as we said from the beginning is the ultimate.
One of the ultimate validation.
When somebody starts paying for something you know that they've analyzed that they've thought about it.
Does it really add value and when the wallets open.
You've created a product that has value.
And.
There are a lot of people watching that.
At the moment and I think as the.
As the insurance landscape continues to unfold this year and next year.
It's only going to strengthen our hand.
Yes. This is my last thing I mean that last comment you said about youre getting paid I'd love your high level view on valuation of <unk>. Currently I mean, it certainly seems like you said this is a company that's getting paid in your valued at least to me it seems less in a series kind.
See venture company, which would be three years to five years away from that milestone, but just how do you think about that and I'll hop out. Thanks, so much.
I mean.
I've been doing this a long time.
And I've never been in a position where we're this close to a regulatory decision, where we have validated across multiple insurance carriers, including Blue Cross Blue Shield, where.
Are we now have millions of patients.
With insurance and I'm still valued at a venture valuation I mean, we could again as I've said, we could literally be in a short term, having derisked regulatory reimbursement utility.
Which typically takes many many years to fulfill.
So I am.
While I understand where the market volatility is.
I am surprised with this level of validation that we're putting on the table.
Where the company is currently valued but again I'm biased as CEO , but.
I would say that we are.
Significantly undervalued for the achievements that we put on the table.
Thank you.
As a reminder to ask a question. Please press star one one on your telephone.
Please standby for our next question.
Our next question comes from Mark Massaro with BP <unk>. Your line is now open.
Hey, guys. Thanks for squeezing me in here.
So I guess I wanted to just clarify and also congratulate you on the progress on Medicare.
That you announced last week, but just to kind of verify the you will continue to get paid under the ICR process.
Until the LCD process is completed.
I guess.
Just to kind of.
Dorothy I here.
This would this would likely go on for a series of months until until you know whether or not so I guess my question is really around if you have a positive draft LCD.
That's a good thing the benefit goes final.
Youll continue to get paid but what happens if you get a negative LCD.
Will you.
Post non coverage decision will you still get paid until the final is rendered.
Yeah.
So.
Yes. So if there is positive local coverage determination what that does is it more routinize is the review of every claim so that reduces the need for a medical director to review each claim.
If there was a negative coverage determination that would say that.
The medical directors, who are reviewing claims under the ICR process.
<unk> no longer see the test is reasonable and necessary.
Hum.
I guess, it would say that they in the <unk>.
They went back and looked at the data again.
They had changed their mind if they did that then they would.
Either reduce or stop payment of claims under ICR.
So the data the data that's been both processes.
Is this thing it's all of our clinical data.
And.
So mark I don't know if that answered. The question, yes that is certainly helpful and I know that's a complex question. The fact that you have started getting paid for the ICR pathway.
My suspicion is that that builds confidence that debt.
Well I guess my question is does that does that does that build your confidence that you think youll likely get a positive draft LCD.
I can't speak for where they're going to come out mark, but all of the data that will be considered in the local coverage determination process was submitted and reviewed by the math.
In the effort that led up to payment under the individual claim review process. So as the approach that we took was we submitted all of our analytical and clinical validation and utility data that we had we met with the medical directors on multiple law.
Occasionally so we we went through that whole process.
Before submitting claims for consideration under ICR.
There isn't.
I mean, we've done everything that you would do under an LCD. So.
The only additional information that we will be able to review on the open meeting will be the publication of the utility data that Michael.
<unk> shared with you today so.
I I would say they have looked at everything and are continuing on a claim by claim basis. The safety testing is reasonable and necessary, which is the hurdle for a local coverage determination as well.
Okay, Great and just my last question here I know you were asked about the LCD pathway.
I understand that you have a lab in Tampa and you have a lab in Utah as well.
Can you just give us.
Yes, some directions as to.
If you're in conversations with potentially other Medicare contractors or or do you expect to wait this mgs process out first.
Before you move other conversations with other Macs forward.
Our focus right now is on the fact that we're running 100% of our Medicare testing since the New York Lab.
We would.
We would see the value in having a backup a second laboratory facility in the future.
That could be.
With a coverage.
Process with a another Mac in the future or it could be that we open up another laboratory and in Ngls region.
But all of our Medicare testing right now is being run through the New York City location.
Okay, great Congrats on all the progress.
Hey, Mark we can finally answered these questions, including I love, having this discussion on reimbursement now.
I appreciate the color.
Please standby for our next question.
Yes.
Our next question comes from Chris Glasper with senior capital markets. Your line is now open.
Hi, good morning, guys.
Just a little bit more color, if we may on the testing volume.
Generate just in the first quarter of this year.
North of 1200 tests in the quarter of which a short thousand were from Mount Sinai can you just give us a little bit more color on where the balance has come from how many <unk>.
<unk> systems ordering whether that's regular repeat orders or one offs at this stage. Thanks.
Tom do you want to take that one.
Yes, I'm sorry.
So on the testing volumes.
Increased volumes that we're generating it's for initial testing.
Kidney and telex.
And we are I think I understood. The question correctly, we are looking at expanded indications for kidney and <unk> testing.
And that will be set for the future.
Okay. So just just a bit more on that just I'm just trying to get a sense of how many different systems now.
Secondly life in addition to Mount Sinai.
So we have a clinic.
A clinical study that is ongoing at the wake atrium.
<unk> system and that is for clinical testing with kidney and <unk>.
We expect that that will convert into commercial testing.
Before the end of the fiscal year. We also have just gone live with the singing River health system in Mississippi.
And that testing will go live.
And a number of other tests are coming from commercialization within individual primary care practices.
Which are being focused in areas, where we also have insurance coverage in place.
Yes.
Okay.
And then just I think for the <unk>.
On the on the VA was onstage.
First up so just a little bit more color on where you are with the rollout in the VA and whether you're going to hit our target of having <unk>.
Systems live.
By the end of the fiscal.
Fiscal year.
Going back to yes. So on the account we had announced that we had live testing in one VA center today.
Hi.
<unk> provided an update that we have a task order with the second center, we have a blanket purchase order with a third and we have an advance purchase commitment from a fourth so those are four centers with kidney and <unk> testing.
And I went on to confirm that we expect up to that 8% by the end of the fiscal year correct, Yes, Greg did that answer good Yep Yep.
Yeah.
Great. That's helpful. Thanks, guys.
As a reminder, please press star one one on your telephone to ask a question.
One moment for our next question.
Our next question comes from Jan Nick with Swift and vast stick. Your line is now open.
Hi, guys Hello, yes.
Just a question on.
On the on the U S dialysis market at the moment there was a profit warning from Fresenius medical care.
This morning, and it was from Davita I believe last week.
Flagging, well, but both downgrading guidance weighed against the back of cost inflation and staff shortages.
Just wondering is this is adverse market backdrop is that an opportunities for you I guess it could be that it could facilitate the adoption of technology focusing on amortization dimension.
<unk>.
The market at the moment.
Of late stage kidney patients that they have to take priority.
Interest in your thoughts on that thank you.
Very good question.
The renal business model is.
Insensitive to.
The economics of the general economy, because most of our payment is coming from.
You know very large insurers.
And the government.
And what's interesting and what I've noticed anecdotally.
Is there is a a large interest for.
Different state.
Organizations Medicaid.
And different large insurers around controlling costs.
The best way to control costs.
With disease.
He has to get in early and treated.
And the biggest problem in this this is not unique to kidney disease, but.
It's the poster child is we've let these huge populations with existing disease.
Just slowly up stage two later disease, and then fall into a very expensive medical program.
Breath was taken away with that Jama publication that I referenced.
That was talking about close to $200000 in the first year alone.
Dialysis for private insurance companies $80000 for Medicare.
And.
The fact that I believe the statistic was 52% of patients with diabetes will eventually develop kidney disease <unk>.
The majority.
So to me this is a no brainer.
And it's all about diagnosis prognosis and treatment. This is why kidney and telex is so critical to controlling state.
Government budgets.
And getting a handle on what is a completely unsustainable situation, which is who's got kidney disease, we need to treat now and who doesn't.
And we have the technology to do it with kidney Intel X.
We're now getting paid for it.
We have the regulatory pathway.
And now the utility data is emerging to show that if you are a primary care physician and you are equipped.
With kidney <unk> advanced prognosis.
We are now demonstrating behavior change.
Awareness is going up.
We're seeing new drug prescription early we're seeing timely.
Referral the physicians we're seeing.
More intensive blood control management.
This is all coming down to roost.
And.
So I.
My feeling is regardless of the economic environment, everybody needs to embrace risk assessment.
Early on in this chronic disease condition, that's how ultimately we're going to control cost.
And everybody sensitive to cost right now.
And so we're getting a lot of inbound questions.
From insurance payers on this and I think the health economics are bearing out and what's going to happen. When we start when we continue to publish utility data.
Showing that kidney intelligence effective.
But that's really going to give us the boost.
In terms of adoption.
I can't comment on Fresenius and Davita.
Profit warnings I don't know if you if you have any insights into that Tom.
Okay.
I don't change.
But a good question, yes. Thank you okay. Thank you guys.
Yes.
As a reminder to ask a question. Please press star one one on your telephone.
At this time there are no concludes todays conference call concludes todays conference call.
Thank you for participating you may now disconnect.
The conference will begin shortly to raise your hand during Q&A you can dial one one.
[music].
Okay.
Yeah.
[music].
Okay.
[music].
Yes.
[music].
Yes.
[music].
So.
[music].
The conference will begin shortly to raise your hand during Q&A.
[music].
Yes.
Okay.
Yes.
Yes.
Okay.
Yeah.
Yes.
Yeah.
Yes.
Okay.
Yes.
<unk>.
Okay.
[music].
Thanks.
Okay.
Yes.
Okay.
Yes.
Yes.
[music].
Yeah.
Okay.
[music].
Okay.
Yes.
[music].
Okay.
Okay.
Yes.
Thank you.
Yes.
Okay.
Sure.
Okay.
Thanks.
Okay.
Okay.
Thanks.
Okay.
Okay.
Yes.
Yes.
Okay.
Yes.
[music].
Hum.
Yes.
Yes.
Thank you.
Okay.
[music].
Yes.
Okay.
Yes.
Okay.
[music].
Yes.
[music].
Yeah.
[music].
Okay.
Yes.
Yes.
[music].
Okay.
Okay.
Okay.
Okay.
Okay.
[music].
Okay.
[music].
Yes.
Yes.
Okay.
Okay.
[music].
Okay.
Yes.
Yes.
Okay.
Yes.
Okay.
Yes.
Okay.
Yes.
Okay.
Okay.
[music] EBIT.
Yes.
Yes.
Great.
Yes.
Okay.
[music].
Yes.
Yes.
Okay.
[music].
Yes.
Okay.
[music].
Sure.
Okay.
Yes.
Okay.
Okay.
Okay.
Yes.
Yes.
[music].
Okay.
Okay.
Sure.
Yes.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Okay.
Okay.
Yes.
[music].
Yes.
Okay.
[music].
Okay.
Okay.
Yes.
Okay.
[music].
Okay.
[music].
Okay.
Thanks.
Okay.
Yes.
Yes.
Okay.
Okay.
Yes.
Yes.
Okay.
Yes.
Yes.
Okay.
Okay.
Okay.
Thank you.
Okay.
Okay.
Yes.
Yes.
Okay.
Okay.
Yes.
Thank you.
Sure.
Okay.
[music].
Okay.
Thanks.
Yes.
Okay.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Sure.
[music].
Okay.
Okay.
Okay.
Yes.
Yes.
Okay.
Yes.
Okay.
Yes.
[music].
Yes.
Okay.
Okay.
Okay.
Okay.
Thank you.
Sure.
Thanks.
Yes.
Okay.
Okay.
[music].
Yes.
Okay.
Okay.
Yes.
Okay.
Okay.
Okay.
Okay.
Thanks.
Okay.
Yes.
Yeah.
Okay.
Sure.
Okay.
Thanks.
Okay.
Yes.
Okay.
Okay.
Yes.
Yes.
Yes.
Okay.
[music].
Yes.
Okay.
Okay.
Okay.
Okay.
Yes.
Yes.
Okay.
Okay.
Okay.
Okay.
Sure.
Yes.
Okay.
Sure.
[music].
Yes.
Okay.
Okay.
Okay.
Okay.
Okay.
Great.
Okay.
Yes.
Yes.
Okay.
Thank you.
Okay.
[music].
Thanks.
Sure.
Yes.
Yes.
Okay.
Sure.
Okay.
Yes.
Sure.
Yes.
Okay.
Yes.
Yes.
Yes.
Sure.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Yes.
Yes.
Okay.
Okay.
Yes.
Thanks.
Sure.
Yeah.
[music].
Thanks.
Okay.
Okay.
Hi.
Sure.
Okay.
Thanks.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Yes.
Okay.
Yes.
Okay.
Yes.
Thank you.
Yes.
Okay.
Yes.
[music].
Yes.
Yes.
<unk>.
Thanks.
Yes.
Okay.
Yes.
Okay.
Yes.
Okay.
Okay.
Yes.
Yes.
Okay.
[music].
Okay.
Okay.
Yes.
Yes.
Yes.
Okay.
Yes.
Okay.
Thanks.
Okay.
[music].
Thank you.
Okay.
Okay.
[music].
Okay.
Okay.
[music].