Q3 2023 Biodesix Inc Earnings Call

November 7, 2023

Good day, and thank you for standing by and welcome to the Bio D. Six quarter three 2023 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question answer session to ask a question. During the session you will need to press star one.

One on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one one again please be advised that today's conference is being recorded I would now like to hand, the conference over to Christopher <unk> Investor Relations. Please go ahead.

Thank you operator, and good afternoon, everyone. Thank you for joining us today for a discussion of biotech third quarter 2023 business highlights and financial results.

Leading the call today will be Scott Hutton, Chief Executive Officer, He will be joined by Robin Harper Cowie Chief Financial Officer.

After the prepared remarks, we will open the call for Q&A.

Audio recording and webcast replay for today's conference call will also be available online as detailed in the press release announcement for this call.

Today, we issued a press release announcing our business highlights and financial results for the third quarter 2023, a copy of the release can be found on the Investor Relations page of the company website.

Actual events or results may differ materially from those projected as a result of changing market trends.

Reduced demand and the competitive nature of <unk> industry.

Such forward looking statements and their implications involve known and unknown risks uncertainties and other factors that may cause actual results or performance to differ materially from those projected.

Forward looking statements discussed on this call are subject to other risks and uncertainties, including those discussed in the risk factors section and elsewhere in the Companys annual report on Form 10-K for the year ending December 31 2022.

Filed with the SEC on March six 2023.

As well as subsequent quarterly reports on Form 10-Q filed during 2023 as applicable.

Additional information concerning factors that could cause results to differ materially from our forward looking statements are described in greater detail in the company's press release issued today and in the company's filings with the SEC.

This call will also include a discussion of non-GAAP financial measures, which are adjusted to exclude certain specified items are.

A reconciliation to the most directly comparable GAAP financial measures is available in the press release, we issued today.

I would now like turn the call over to Scott Hutton, Chief Executive Officer Scott.

Thank you Chris.

Essex has a patient centric mission driven lung disease diagnostic company with a focus on uniting physician patients and biopharma to transform the standard of care and improve outcomes with personalized diagnostics.

At <unk>, we've built a comprehensive portfolio of precision diagnostic test to support clinical decision, making across the lung cancer continuum of care.

Our long diagnostic testing portfolio ranges from initial risk assessment of lung nodule with notified lung testing to post cancer diagnosis treatment guidance and monitoring with IQ lung testing.

Notify lung consists of two blood based proteomics test notify CDT and notify <unk>, which are used by physicians to assess the risk of malignancy of a lung nodule.

Q1 consists of three blood based test.

The <unk> DD PCR targeted genomic test.

Jenna threat NGF genomic test and the various <unk> proteomics tests.

Offered as options within IQ along these three tests are used to inform treatment decisions and monitor for the rise of resistance mutations while patients are on therapy.

All five of our lung diagnostic tests are covered by Medicare and we believe we're the only diagnostic company with five on market tests for lung cancer, all with Medicare coverage.

Similar to prior quarters, the third quarter was defined by significant progress across the business.

We grew lung diagnostic test volumes and revenue.

A healthy rebound in our biopharmaceutical partnerships and services business.

Expanded our gross margins to the mid seventies.

And did so while reducing operating expense.

Clearly our commitment to our cost disciplined approach, while growing and expanding the business continues to pay off and I believe everyone is beginning to appreciate the leverage that exist within the business model and our efforts to demonstrate the team's significant progress and outstanding execution on our path to profitability.

We're pleased that our lung diagnostic sales adoption continues to gain momentum.

We delivered 10400 test results, increasing by 60% compared to the 6500 test results delivered in the third quarter of 2022.

And another sequential increase over the second quarter of 'twenty three.

This is five straight quarters of at least 60% year over year growth and is primarily driven by our notified lung testing volumes.

One of the more significant annual events for the Bioethics commercial team as the American college of chest physicians or chest annual meeting.

Last year was the first year returning to an in person event and it laid the groundwork for the growth and momentum we're experiencing in 2023.

Having just returned from the 2023 annual chest meeting, which had a record number of healthcare providers in attendance.

I feel like Bioethics presence exceeded last year's strong showing with clear evidence of the physician community is growing interest in how our products can benefit the diagnosis and treatment of their patients.

While these health care professional meetings do present, an opportunity to expand our commercial profile within the health care provider community. We also rely on these conferences to share data and outcomes related to the importance of our products and to further support clinical adoption and reimbursement.

This past quarter was another productive period, where we published and shared numerous updates at multiple meetings.

In July we published the primary analysis from the prospective Oracle study examining the clinical utility of the notify XL to test in real world patient utilization and also the impact on patient treatment.

It is important to remember that demonstrating clinical utility is a critical and necessary step to drive the adoption of any diagnostic tests.

And we're excited that the Oracle study exceeded our expectations, demonstrating the 74% relative reduction in unnecessary and costly invasive procedures.

Overall, the findings from the Oracle study represent a significant advancement in the clinical evidence for use of the notify XL to test and nodule management.

At the sixth annual conference of the American Association for Bronco, <unk>, and interventional Pulmonology or a VIP in August a subgroup analysis of Oracle data was presented.

The data showed that reducing unnecessary invasive procedures on benign nodules improved patient selection for diagnostic biopsy prior.

Prior to implementation of the notify XL to test, 49% of patients receiving a biopsy actually had a lung cancer diagnosis compared to 74% when the notify XL to test was used in clinical decision, making representing a 51% relative increase in the can.

Our diagnosis rate.

In September we shared two presentations at the International Association for the study of lung cancer 2023 World Lung conference.

The first presentation highlighted a new analysis of the large multicenter prospective observational insight registry study that demonstrated <unk> ability to predict response to immune checkpoint inhibitor regimens in patients with advanced stage non small cell lung cancer.

The growing evidence around the various stress test complements today's current standard of care and is proving to be a valuable test that physicians can use to guide the optimal treatment for patients.

Lastly in October we presented two abstracts at the chest meeting.

The first was a subgroup analysis from the Oracle study that underscores the transformative potential of the notify XL to test and managing all types of lung nodules.

The second was an analysis of patients with both pet imaging and notify CVT results.

Administrating the complementary nature of the results in guiding clinical decision, making.

Continuing to build the body of supportive evidence remains a key component of our strategy to demonstrate the clinical utility of our test to both health care providers and payers.

In addition to the growth in volumes driven by our sales team broadening reimbursement coverage remains an important part of our growth strategy in.

In July the notify CDT test was awarded advanced diagnostic laboratory test or <unk> status by the center for Medicare and Medicaid services.

<unk> status was a major milestone for the biologics team as this status is reserved for innovative test with Medicare coverage that provide clinical value and new diagnostic information that cannot be obtained from any other test or combination of test <unk>.

Recognizing the unique utility of notify CDT.

Now Bioethics has three test notify CDT notify XL too and various threat all with ADL status.

We will continue to expand and build upon our reimbursement coverage and expect to have additional updates in the coming months.

Moving on to our biopharmaceutical partnership and service business in the third quarter, we reported revenue of $1 2 million, which represents a significant improvement of 79% year over year growth and a 181% over the second quarter.

We are encouraged with the strong growth this quarter and pleased to see an increasing number of samples received from a number of different biopharmaceutical companies running multiple clinical studies.

Equally as encouraging as the continued strength, we're seeing in our Biopharma partnerships and services volume of incoming request for proposal and ultimately dollars under contract, but not yet recognized as revenue.

Even with the solid performance in the quarter expanded and now stands at $9 9 million under contract, but not yet recognized as revenue.

Before I turn the call over to Robyn I'd like to reiterate our commitment to transform the standard of care in lung cancer and improve patient outcomes with personalized diagnostics lung.

Lung cancer is still the deadliest of all cancers as it claims more lives annually in the United States than the combined total of the next three deadliest cancers breast prostate and colon cancer.

Time is of the essence, when it comes to diagnosing and treating these patients.

November is lung cancer awareness month, when we come together in the lung cancer community to educate and empower patients and healthcare providers to screen detect diagnose and treat lung cancer early.

By discovering developing and commercializing test with demonstrated clinical utility and best in class turnaround times, we believe that our diagnostic tests play a critical role in these efforts.

To treat the right patients quickly and effectively.

With that let me turn it over to Robyn to review the third quarter 2023 financial performance Robin.

Thanks, Scott third quarter total revenue was $13 5, million% to 21% increase over the prior year, including Covid revenue and a 37% increase over the prior year, excluding COVID-19 revenue of $1 3 million.

<unk> diagnostic revenue in the third quarter with $12 3 million compared to $9 2 million for the third quarter of 2022, an increase of 34% over the prior year.

Third quarter 2022 included approximately $1 5 million in cash revenue for test performed in prior periods largely as a result of the positive coverage decision by Medicare for notify CDT.

Excluding this amount revenue grew approximately 60% as.

As Scott mentioned, we delivered 10400 lung diagnostic test results versus 6500 test results for the third quarter, 2022% to 60% increase in our fifth straight quarter of at least 60% year over year growth.

Biopharmaceutical services revenue was $1 2 million in the quarter compared to 664000 in the third quarter 2022, and 423000 in the second quarter of 2023, an increase of 79% compared to the third quarter 2022 and an.

<unk> of 181% over second quarter 2023, as a reminder, this.

Business can fluctuate due to several factors, including contract timing and project execution, but in this instance reflects increases in sample volumes received from multiple clinical studies.

As Scott mentioned, we ended the third quarter of 2023 with $9 9 million contracted but not yet recognized as revenue.

Six 5% increase over the second quarter, 2023, and 38% increase over third quarter of 2022. Please.

These dollars are tied to multiple agreements with different timelines and will be recognized that these projects are executed.

Gross margin percentage in the third quarter 2023 was 76.

Percent versus 67% in the prior year quarter and 73% in the second quarter of 2023 current gross margin trend reflects the growth in our higher margin long diagnostic testing business.

Vessel completion of project decreased cost and optimize testing workflows and cessation of Covid testing, we anticipate the ability to maintain margins in the low to mid <unk> going forward.

Overall operating expense, excluding direct costs and expenses was $17 4 million in the third quarter of 2023 compared to $18 1 million for the same period of 2022 and $19 6 million in the second quarter of 2023.

The decrease in operating expense versus last year is primarily the result of a decrease in R&D expense, partially offset by increased sales and marketing costs to support long diagnostic sales growth to enhanced product awareness and drive adoption the decrease as compared to the second quarter is related to the realization of savings.

From our prioritization of projects that are expected to result in near term revenue and the delay of longer term projects.

Operating expense for the third quarter 2023 includes 1.0 million in noncash stock compensation expense as compared to $1 2 million during the third quarter 2022, and $1 1 million in second quarter 2023.

Net loss for the third quarter 2023 was $10 9 million compared to a $13 7 million net loss for the same period of 2022 and $13 4 million for second quarter 2023, driven by the increase in revenue improvements in gross margin and reduction in operating expenses.

The decrease in net loss for the quarter included a reduction in noncash stock based compensation and decrease in total interest expense, partially offset by a $1 4 million non cash charge due to the change in fair value of warrant liabilities associated with warrants certificates tied to the anticipated dry.

Of the $10 million tranche b from the perceptive advisors term loan facility in the fourth quarter.

To provide better clarity of our progress on our path to profitability. We are now reporting adjusted EBITDA, which excludes certain noncash items and COVID-19 testing revenue and direct costs and expenses adjusted.

EBITDA for the third quarter 2023 was a loss of $5 4 million compared to a loss of $9 1 million for both the third quarter 2022, and second quarter of 2023% to 40% improvement over both periods and notably a 60% improvement over the first quarter of 2020.

Three.

The improvement in adjusted EBITDA in the quarter demonstrates our focus on actively managing our operating expenses our success in improving gross margins and driving growth in the topline revenue.

We ended the quarter with $19 8 million in unrestricted cash cash equivalents as compared to $17 4 million in unrestricted cash and cash equivalents at the end of the second quarter, an increase of $2 4 million, which included the scheduled milestone payment of $3 3 million paid in July 2023 to <unk>.

Greater diagnostics.

Changes in working capital and also includes $5 3 million in tenant improvement dollars, which are now exhausted.

Set by $5 $8 million and investment in the new facility. In addition, the cash balance included $15 3 million up $27 5 million private placement announced in August in the fourth quarter. The company will receive the remaining $12 2 million from the private placement and also plans to draw down an additional 10 million.

From tranche B, if its $50 million term loan facility with perceptive advisors.

I do want to highlight a required shift in display of the milestone payments to integrated diagnostics on our statement of cash flows for clarity.

Payments made through third quarter 2023 have been classified as cash outflows from financing activities in our statement of cash flows. However.

However, beginning with a portion of the milestone payments made in October 2023, as well as all milestone payments to be made in 2020 for these payments will now be classified as cash outflows from operating activities due to the applicable U S GAAP requirements.

Dollar amounts are not changing just where they're required to be captured on the statement of cash flows.

In the coming weeks, we will be moving into our new state of the art corporate facility in Lewisville, Colorado near our current border location. The new facility has improved capacity for long diagnostic testing biopharmaceutical services testing specimen collection kit manufacturing as well as other collaborative.

Services.

The construction of the new facility materials and equipment were incorporated to optimize energy efficiency and reduce emissions advancing some of our longer term ESG goals.

Finally, turning to guidance.

At the beginning of this year in our fourth quarter 2022 earnings call. We disclosed that we were experiencing a delay in collections for Medicare advantage tests that were performed in prior periods from a small number of Payors and expected the revenue will be recognized upon cash collection in the second half of 2023, thus, including it in our.

Full year 2023 guide, while we have made progress and now have begun receiving some payments given the ongoing variability around the timing of receiving the payments. We are now pulling the backlog balance of two $5 million to $3 million from our 2023 guidance, taking us to $50 million to $52 million.

The spread is based on the variability of the timing of collections of note. This is not a change to our core business and guidance continues to assume continued strong year over year growth in our lung diagnostic testing business.

<unk> reimbursement of our five on market tests as well as modest expected growth in our biopharmaceutical services business.

Now, let me turn it back to Scott Scott.

Scott.

Thanks Robyn.

In closing I want to express my gratitude to all the remarkable members of the bioethics team who've shown unwavering belief in and dedication to our mission vision and culture.

Our collective commitment and daily contributions are centered around making a positive impact on the lives of patients.

And I am truly thankful for your efforts.

We have again experienced strong double digit growth in the past quarter attributed to the exceptional performance of our dedicated lung focused sales team who have been instrumental in fueling our growth and success.

We've improved our already strong gross margins and made substantial progress and our path to profitability.

Published critical clinical data that demonstrates the utility of our test supporting both physician and payer adoption and achieved a major reimbursement milestone.

By aligning these strategic efforts, we are confident in our ability to sustain our growth trajectory.

Progress on our path to profitability and deliver value to our physicians and their patients and all shareholders.

We look forward to moving into our new state of the art facility that affords us the opportunity to grow and expand in an efficient effective and environmentally friendly manner with that I'll turn the call over to the operator for questions.

Thank you at this time, we will conduct a question answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

Our first question comes from Andrew Brockman of William Blair. Your line is now open.

Yes, Hi, this is Dustin online for Andrew Thanks for taking our questions.

First problem and Scott.

I'm just wondering what gives you guys confidence for the for Q ramp in diagnostic revenues I know you touched on that a little bit, but just wondering what trends you are seeing thus far and then how about.

<unk> growth in 2024, thank you.

Yes.

Nice to hear from you and great question.

We've continued to build out our sales force.

And you May recall last year at this time, we introduced a.

A pilot, which we focused on and associated sales consultant kind of support mechanisms. We've continued to build that out.

But we've still got less than 36 territories. So we've got tremendous opportunity to continue to expand and what we know and we've learned is if we can decrease the size of a territory.

Minimizing overnight plane flights windshield time, youre going to drive down costs, and youre going to make those sales professionals more readily available and accessible to the accounts. They call on so we've got plenty of room to continue to invest and expand that sales force also continuing to add associated sales consultants, which will really free up.

A really strong sales professionals to go back out and hunt.

While they maintain and manage onboarding new accounts.

Understood Thanks for that.

Kind of related to that how are how is everything tracking with a sales force relative to expectations.

When you're thinking about 2024, one can that sales rep productivity kind.

Kind of reached a level that youre, hoping for.

Yes, it's a great question and we track a number of key metrics.

What we've shared in the past is that we've seen our sales professionals over the last 12 months to 18 months ramp quicker than ever you may recall.

Middle of last year, we had shared that it took about six months to get to a productivity level that we were pleased with then shortly thereafter, we noted that that continued to decrease and was closer to two to three months were more in that two to three month range. So we feel good that a new hire in a new territory can ramp and scale.

Rather quickly providing an opportunity for them to start paying for themselves sooner.

When it comes to sales Rep total productivity. We've also highlighted over time that we're yet to see a sales professional cap out we have a number of sales professionals on a monthly and quarterly basis that have recently established new kind of quote unquote high watermarks and their performance continues to improve and grow so we think.

It gives us additional hope that the sales reps. We currently have can continue to thrive and win additional accounts and most importantly partner with their physicians to help provide the care that their patients need.

And then we can continue to add additional sales force reinforcements.

There's a big opportunity.

<unk> cancer is the deadliest of all cancers, we know that there is over $1 7 million lung nodules identified incidentally on an annual basis, and we know that we are having a hard time getting to all of those patients so tremendous opportunity for us to continue to invest scale and grow.

I appreciate that Scott just one more for us good to see Opex step down sequentially wondering.

Im wondering how youre thinking about that in the fourth quarter.

Into next year, and then related to that on the new adjusted EBITDA metric is that something you guys.

Plan on guiding to next year. Thank you.

Okay.

Yeah.

<unk> been working very hard over the last several quarters as we've talked about focusing on projects.

That are related to near term revenue growth.

While.

Making progress on our path to profitability.

We're very pleased to see that 40% improvement in adjusted EBITDA over the second quarter and 60% over the first quarter.

Mentioned, we did start hiring some additional associate sales consultants at the very end of the third quarter.

We would expect to see a little bit of an uptick on opex in the fourth quarter and potentially a little bit more in the first quarter as we consider adding additional reps in the first quarter as well as we work to build and capitalize on the demand in the field for 2024 and 2025.

Okay.

I appreciate that thanks for taking our questions.

Thank you Duffy.

Thank you and one moment for our next question.

Our next question comes from the line of Carl Mixon of Canaccord Genuity. Your line is now open.

Hey, guys. Thanks for the questions Congrats on the core strength.

So on the guidance reduction maybe you just like walk through that with some more I guess.

Clarity or like kind of detail because early.

Early in the areas you thought you were going to get these claims in the back half and then its related to M&A. So I mean.

Is this something like does this have to do with private payers as well as I'm thinking about some of the.

Carriers the sponsors for some of these plans are probably like United and Humana those plans so it.

It seems like this could persist maybe if you could just comment on those factors would be helpful for us. Thanks.

Yeah, absolutely thanks for joining Kyle.

Yes, all of this backlog is related to Medicare advantage.

And these are all claims that have met the Medicare coverage criteria, but we're dealing with some administrative hurdles with a couple of private plans.

That we're working through now.

It is not a biodot sticks issue. This is not even a diagnostics issue there have been challenges with the Medicare advantage plans for pretty much all of health care and Theres been a lot of news on that recently.

We have made good progress and started to see payments.

But it's just slower than we wanted it to be we had anticipated seeing those collections in the second half.

While they did start we're not going we don't necessarily expect to get all of it in in this quarter. Although there is possibility and that's why we.

We removed the backlog out of the guidance, although left the spread there. So if we do receive some that would that would be more towards the top end of the guidance versus if it continues to be delayed into 2024 that would be at the lower end of the guidance.

Okay.

So it's really.

A function of like I.

I guess, the adjudication on there and not like the revenue cycle management under and like that wouldn't help things.

Think about it.

Yeah, I would definitely say it's on their end.

Okay and then how many claims is this I mean definitely seems like it's it can be quantified that just can you share anything on that.

Yeah. Our current estimate is two $5 million to $3 million in collections. So.

I would say, it's mostly notify XL two in various shop.

Okay, Yeah. It helps with the kind of ASP get into following that kind of thing.

Alright, and then thinking about the fourth quarter I'd like again like the ramp I guess, though sequential increase.

Volume grew.

It was quite strong quite robust in the first half of the year over 70% growth year over year.

On the core business of course.

This quarter, 60% I guess, I mean does that going to maybe dip a bit again to that kind of creep back up into that possibly the <unk> from a volume year over year perspective.

Fourth quarter, yes.

Yes, it's a great question Kyle again, we believe that it's still a function of sales reps and putting them in the field, but we want to be mindful and.

And not just run towards the 100 plus sales reps, we really are focused on hiring approximately six per quarter.

Recruiting training onboarding them setting them up for success.

And getting that return that we want so.

Again, we want to be mindful of our cost basis and expense structure.

We think.

Continuing to do what we've been doing and getting gaining progress towards that path to profitability is critically important. So we do believe confidently that we can state.

With a high level of confidence that that 60% range is the range. We can stay in and I think on any given month or quarter, given the year over year comp, we could get that back into the 70% range, but it really will be a function of the number of sales reps that we bring on and the timing.

Okay that was helpful.

Notably CVT you have the ability for the full quarter basically can you walk through the impact on the P&L.

Look on that line item like that product I guess, some like how much of a benefit was that or is that going to kind of come.

End of this year next year like the real benefit from that tailwind.

Maybe if I could ask.

Qualifying question are you, referring to private payer coverage for CDT.

Right.

Sorry, yes, so on ADL T.

Notified CDT was awarded existing <unk> status. So there's two different types of Adl's status, there, new <unk> LTE and existing <unk> for the new <unk>.

They are paid list price.

On the day that their first offered for the first three quarters for existing ADL teeth.

They are paid the Mac right. So.

We did not experience any increase from.

Deal any price increase from the awarding of Adl's status and continue to receive the $649 per test.

Okay. That's helpful.

I don't really love the gross margin questions, but I do want to ask why they were theyre very high this quarter 76 anything that you can do up to low to mid 70% range going forward.

Was there anything in this quarter thats like onetime in nature nonrecurring because I feel like it was.

Good result, and it seems sort of.

It could be sustainable so why does not the standpoint.

6%.

Yeah.

I would say our long diagnostic gross margins are very strong and very stable.

Biggest variability we see in the gross margin numbers are actually in our biopharma contracts.

Some can be a little bit more labor intensive than others, which can impact gross margin.

But that would be really the only difference in the low <unk> to the mid Seventy's, where we are now but the lung diagnostic gross margins are very very stable and improved over the course of this year.

Okay, and then maybe Scott just finally with the some of the data Readouts. This year in my chest and everything is there any potential for like a guideline update or sort of a conclusion in the relative near term for you guys. Some code that can really help drive adoption or just coverage in general potentially.

Yes, it's a great question Kyle.

We've referenced this before.

The main guidelines for us would be the chest guidelines, which is the ACP guidelines.

The chest physicians have not updated the ACP guidelines related to nodule management in cancer treatment since pre pandemic.

Any of the changes they've made over the last few quarters and years have really been related to respiratory diseases that have impacted us as a society, whether its RSV last year COVID-19 in prior years.

And then the related acute respiratory distress syndrome. So we're eager for the chest physicians, both as a society and physicians, we call on to make updates to those guidelines.

And the short answer really is any inclusion in guidelines will only help.

But we believe we can continue to grow without it we're building all the all the data plans in publishing as much as possible to ensure that when those different guidelines groups meet and they have an opportunity to review the data that we put ourselves in the best position possible to be considered for guideline inclusion.

And we will continue to do so.

Okay, and you don't have any.

Started timing for anything like that.

Around that deal.

No no they don't really.

Publisher give much guidance on when they're planning on updating in who is involved.

As decided they really want to keep that anonymity.

What we've seen historically.

The ACP, usually is kind of in the back half of the year.

So there could still be some updates that they may provide here this year.

And then some of the other the other guidelines, whether it's fleissner and CCN.

Update at different cadences of frequencies.

I think there is a high likelihood that we'll see other physician groups start to create their own new guidelines and start to publish on that and I think thats really a reaction to the delays that we've seen from some of the major societies.

We know the rate of change in the pace of change.

In the World. We're in today is happening maybe at a faster rate than ever before.

It's really questionable.

To justify not updating certain guidelines over a four to five year period, we're hearing that a lot from physicians. So we do expect some updates.

And again, we're going to continue to put ourselves in the best position possible, regardless of which guideline it might be.

And we're going to continue to push and put out the best data possible.

Great. Thanks, Scott Thanks, Robin I appreciate it.

Yes, Thanks, Tom.

Thank you and one moment for our next question.

Our next question comes from Josh Savant from MFS. Your line is now open.

Hi, This is Madison on for JJ.

Congrats on the quarter and thanks for taking the question.

Maybe firstly.

I was wondering if you're still expecting.

Your first private payer coverage for <unk> notify CDT in 2023 and maybe some.

Color on how we should be thinking about ASP.

For the rest of the year into 2024 on notify.

Yeah.

To be honest were just waiting for them to published so that we can announce publicly.

So.

That will be able to share publicly in the second.

Two months.

What's left of 2023.

But we're very pleased with where the team has gotten and the.

The reception that has been happening out in the field for notify XL two in CDT.

For us because Medicare and Medicare advantage are about 60% to 65% of our claims.

On individual private payers will have a relatively limited impact on asps.

But as we start to gather more momentum on the private payer coverage, we will start to see some incremental improvements.

Improvements in Asps, but I would say that's probably later in the year then.

The fourth quarter and first quarter.

Perfect. Okay, that's very helpful.

And then now you're running the altitude randomized clinical utility study.

Was wondering if you could provide an update on the enrollment for that when you think that you may be able to release data from the study.

And if you think that we could still be things in interim analysis before the end of the year.

Yes, it's a great question.

At this time, we won't be conducting an interim analysis before the end of the year.

We've seen record enrollment kind of month over month this year.

And you May recall, we kicked off the altitude study in the pandemic and so patient recruitment was rather slow.

Which definitely delayed and impacted any potential interim analysis, but we've continued to play catch up there and those record month over month enrollments really have us back on track, but we need to be tracking those patients for.

Minimum year. So we're looking at that kind of on a monthly basis I think by the next earnings call, we'll be able to provide more clarity on potential interim analysis that will occur in 2024.

And then where we are kind of in terms of long term enrollment and when we think we'll meet those enrollment criteria.

But it is going exceptionally well and we're pleased with the number of sites, we have the engagements and again the enrollment.

Okay, great to hear that.

And then maybe just one more I'm wondering if you could give an update on the progress of your risk of recurrent past and your path to reimbursement and commercialization here.

I'm wondering if you have any updated timelines that you could speak to.

Yes, our risk of recurrence test as a reminder, and a refresher is a blood based proteomics test the blood draw occurs pre surgical resection, and we're able to identify those patients likely to recur.

It really is different in MLD, we recently published.

This is our first published paper and we've continued to support biopharma suitable conversations and additional conversations with physicians at this point in time, we've not provided any new updates on our plan or timing related to commercialization.

We stated at the beginning of the call. We're really mindful of return on every dollar spent we know that reimbursement for this test would take some time.

And we want to continue to invest in our notify franchise. So no new updates on timing I think it's fair to say that in 2024 at this time, we're not planning on fully commercializing risk of recurrence, but we will have additional information we can share in coming quarters.

Awesome, Thanks for the questions.

<unk>.

Awesome. Thank you.

I am showing no further questions at this time I would now like to turn it to Scott Hutton Chief Executive Officer for closing remarks.

Thank you operator, we've worked long and hard to build the best Pulmonology focused sales team in diagnostics and think that this is just the beginning of our growth with first mover status in lung nodule management and an ever increasing body of robust clinical data.

We're building on the momentum already generated as we increase our clinical and payer adoption in this extremely large and underserved population ultimately, it's all about the physicians and the patients they treat and we believe in our ability to make a more significant impact in the future.

This quarter, we delivered on 60% loan diagnostic test volume growth, 79% Biopharma services growth provided a 76% gross margin and a 40% improvement in adjusted EBITDA.

Our team is constantly working to increase our reach and adoption and improve our operational effectiveness, all while prioritizing a quality focused biotech six team and culture.

We look forward to updating you on our continued progress and successes in the coming calls and ultimately hosting you in our new state of the art highly accredited facility soon thank you.

Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Okay.

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There will be a question answer session.

Ask a question during the session you will need to press star one one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one one again, please be advised that today's conference is being recorded.

I'd now like to hand, the conference over to Christopher Lindsey Investor Relations. Please go ahead.

Thank you operator, and good afternoon, everyone. Thank you for joining us today for a discussion of biogas ex third quarter 2023 business highlights and financial results.

Leading the call today will be Scott Hutton, Chief Executive Officer, He will be joined by Robin Harper Cowie Chief Financial Officer.

After the prepared remarks, we will open the call for Q&A.

Oreo recording and webcast replay for today's conference call will also be available online as detailed in the press release announcement for this call.

Actual events or results may differ materially from those projected as a result of changing market trends.

Reduced demand and the competitive nature of <unk> industry.

Filed with the SEC on March six 2023.

As well as subsequent quarterly reports on Form 10-Q filed during 2023 as applicable.

This call will also include a discussion of non-GAAP financial measures, which are adjusted to exclude certain specified items are.

A reconciliation to the most directly comparable GAAP financial measures is available in the press release, we issued today I would now like turn the call over to Scott Hutton, Chief Executive Officer Scott.

Thank you Chris.

Hi, good ethics, as our patient centric mission, driven lung disease diagnostic company with a focus on uniting physicians patients and biopharma to transform the standard of care and improve outcomes with personalized diagnostics.

At <unk>, we've built a comprehensive portfolio of precision diagnostic test to support clinical decision, making across the lung cancer continuum of care.

Our long diagnostic testing portfolio ranges from initial risk assessment of lung nodule with notified long testing to post cancer diagnosis treatment guidance and monitoring with IQ lung testing.

Notify long consists of two blood based proteomics test notify CDT and notify XL too which are used by physicians to assess the risk of malignancy of a lung nodule.

IQ1 consists of three blood based test the.

The Genesis of our DD PCR targeted genomic test.

The Genesis threat NGF genomic test and the <unk> proteomics test.

Offered as options within IQ along these three tests are used to inform treatment decisions and monitor for the rise of resistance mutations while patients are on therapy.

All five of our lung diagnostic tests are covered by Medicare and we believe we're the only diagnostic company with five on market test for lung cancer, all with Medicare coverage.

Similar to prior quarters, the third quarter was defined by significant progress across the business.

We grew lung diagnostic test volumes and revenue.

A healthy rebound in our biopharmaceutical partnerships and services business.

Expanded our gross margins to the mid seventies.

And did so while reducing operating expense.

We're pleased that our lung diagnostic sales adoption continues to gain momentum.

We delivered 10400 test results, increasing by 60% compared to the 6500 test results delivered in the third quarter of 2022.

And another sequential increase over the second quarter of 'twenty three.

This is five straight quarters of at least 60% year over year growth and is primarily driven by our notified lung testing volumes.

One of the more significant annual events for the Bioethics commercial team is the American college of chest physicians or chest annual meeting.

Last year was the first year returning to an in person event and it laid the groundwork for the growth and momentum we're experiencing in 2023.

Having just returned from the 2023 annual chest meeting, which had a record number of health care providers in attendance I feel like bioethics presence exceeded last year's strong showing with clear evidence of the physician community is growing interest in how our products can benefit the diagnosis and treatment of their patients.

While these health care professional meetings do present, an opportunity to expand our commercial profile within the health care provider community. We also rely on these conferences to shared data and outcomes related to the importance of our products and to further support clinical adoption and reimbursement.

This past quarter was another productive period, where we published and shared numerous updates at multiple meetings.

It is important to remember that demonstrating clinical utility is a critical and necessary step to drive the adoption of any diagnostic tests.

And we're excited that the Oracle study exceeded our expectations, demonstrating a 74% relative reduction in unnecessary and costly invasive procedures.

Overall, the findings from the Oracle study represent a significant advancement in the clinical evidence for use of the notify XL to test and nodule management.

At the sixth annual conference of the American Association for Bronco, <unk>, and interventional Pulmonology or a VIP in August a subgroup analysis of Oracle data was presented.

The data showed that reducing unnecessary invasive procedures on benign nodules improved patient selection for diagnostic biopsy.

Prior to implementation of the notify XL to test, 49% of patients receiving a biopsy actually had a lung cancer diagnosis.

Compared to 74% when the notify XL to test was used in clinical decision making.

Representing a 51% relative increase in the cancer diagnosis rate.

In September we shared two presentations at the International Association for the study of lung cancer 2023 World Lung conference the.

Lastly in October we presented two abstracts at the chest meeting.

The first was a subgroup analysis from the Oracle study that underscores the transformative potential of the notify <unk> test and managing all types of lung nodules.

The second was an analysis of patients with both pet imaging and notify CVT results.

Demonstrating the complementary nature of the results in guiding clinical decision, making.

Continuing to build the body of supportive evidence remains a key component of our strategy to demonstrate the clinical utility of our test to both health care providers and payers.

In addition to the growth in volumes driven by our sales team broadening reimbursement coverage remains an important part of our growth strategy.

In July the noted by CVT test was awarded advanced diagnostic laboratory test or <unk> status by the center for Medicare and Medicaid services.

<unk> status was a major milestone for the <unk> team as this status is reserved for innovative test with Medicare coverage that provide clinical value and new diagnostic information that cannot be obtained from any other test or combination of test <unk>.

Recognizing the unique utility of notify CDT.

Now Biodot success, three test notify CDT notify XL too and <unk>, all with ADL status.

We will continue to expand and build upon our reimbursement coverage and expect to have additional updates in the coming months.

Moving onto our biopharmaceutical partnership and service business in the third quarter, we reported revenue of $1 2 million.

Which represents a significant improvement of 79% year over year growth and 181% over the second quarter.

Equally as encouraging as the continued strength, we're seeing in our Biopharma partnership and services volume of incoming request for proposal and ultimately dollars under contract, but not yet recognized as revenue.

Which even with the solid performance in the quarter expanded and now stands at $9 9 million under contract, but not yet recognized as revenue.

Before I turn the call over to Robyn I'd like to reiterate our commitment to transform the standard of care in lung cancer and improve patient outcomes with personalized diagnostics <unk>.

Cancer is still the deadliest of all cancers as it claims more lives annually in the United States than the combined total of the next three deadliest cancers.

<unk> prostate and colon cancer.

Time is of the essence, when it comes to diagnosing and treating these patients.

November is lung cancer awareness month, when we come together in the lung cancer community to educate and empower patients and health care providers to screen detect diagnose and treat lung cancer early.

By discovering developing and commercializing tests with demonstrated clinical utility and best in class turnaround times, we believe that our diagnostic tests play a critical role in these efforts to treat the right patients quickly and effectively.

With that let me turn it over to Robyn to review the third quarter 2023 financial performance Robin.

Thanks Scott.

Third quarter total revenue was $13 5, million% to 21% increase over the prior year, including Covid revenue and a 37% increase over the prior year, excluding COVID-19 revenue of $1 3 million.

Lung diagnostic revenue in the third quarter with $12 3 million compared to $9 2 million for the third quarter of 2022, an increase of 34% over the prior year.

Third quarter 2022 included approximately $1 5 million in cash revenue from test performed in prior periods.

Largely as a result of the positive coverage decision by Medicare for notify CDT.

Excluding this amount revenue grew approximately 60%.

As Scott mentioned, we delivered 10400 lung diagnostic test results versus 6500 test results for the third quarter, 2022% to 60% increase and our fifth straight quarter of at least 60% year over year growth.

1% over second quarter 2023, as a reminder, this business can fluctuate due to several factors, including contract timing and project execution, but in this instance reflects increases in sample volumes received from multiple clinical studies.

As Scott mentioned, we ended the third quarter of 2023 with $9 9 million contracted but not yet recognized as revenue at.

Six 5% increase over the second quarter, 2023, and 38% increase over third quarter of 2022. Please.

These dollars are tied to multiple agreements with different timelines and will be recognized that these projects are executed.

Gross margin percentage in the third quarter 2023 was 76.

Sent versus 67% in the prior year quarter and 73% in the second quarter of 2023.

Gross margin trend reflects the growth in our higher margin long diagnostic testing business successful completion of projects to decrease cost and optimize testing workflows.

Cessation of Covid testing, we anticipate the ability to maintain margins in the low to mid <unk> going forward.

From a prioritization of projects that are expected to result in near term revenue and the delay of longer term projects.

Net loss for the third quarter 2023 was $10 9 million compared to a $13 7 million net loss for the same period of 2022.

And $13 4 million for second quarter 2023, driven by the increase in revenue improvements in gross margin and reduction in operating expenses the.

Of the $10 million tranche b from the perceptive advisors term loan facility in the fourth quarter.

Adjusted EBITDA for the third quarter 2023 was a loss of $5 4 million compared to a loss of $9 1 million for both the third quarter 2022, and second quarter of 2023% to 40% improvement over both periods.

Notably a 60% improvement over the first quarter of 2023 the.

The improvement in adjusted EBITDA in the quarter demonstrates our focus on actively managing our operating expenses our success in improving gross margins and driving growth in the topline revenue.

Greater diagnostics.

Changes in working capital and also includes $5 3 million in tenant improvement dollars, which are now exhausted.

Asset by $5 $8 million and investment in the new facility. In addition, the cash balance included $15 $3 million up to $27 5 million private placement announced in August and.

In the fourth quarter the company will receive the remaining $12 2 million from the private placement and also plans to draw down an additional $10 million from tranche b of at $50 million term loan facility with perceptive advisors.

I do want to highlight a required shift in display of the milestone payments to integrated diagnostics on our statement of cash flows for clarity.

Payments made through third quarter 2023 had been classified as cash outflows from financing activities in our statement of cash flows.

Dollar amounts are not changing just where they're required to be captured on the statement of cash flows.

In the coming weeks, we will be moving into our new state of the art corporate facility in Lewisville, Colorado near our current Boulder location. The new facility has improved capacity for long diagnostic testing biopharmaceutical services testing specimen collection kit manufacturing as well as other collaborative.

A services.

The construction of the new facility materials and equipment were incorporated to optimize energy efficiency and reduce emissions advancing some of our longer term ESG goals.

Finally, turning to guidance.

<unk> reimbursement of our five on market tests as well as modest expected growth in our biopharmaceutical services business.

Now, let me turn it back to Scott Scott.

Thanks, Robyn in closing I want to express my gratitude to all the remarkable members of the biologics team, who has shown unwavering belief in and dedication to our mission vision and culture.

Our collective commitment and daily contributions are centered around making a positive impact on the lives of patients.

And I am truly thankful for your efforts.

We've improved our already strong gross margins and made substantial progress and our path to profitability.

Published critical clinical data that demonstrates the utility of our test supporting both physician and payer adoption and achieved a major reimbursement milestone.

By aligning these strategic efforts, we are confident in our ability to sustain our growth trajectory.

Progress on our path to profitability and deliver value to our physicians and their patients and all shareholders.

Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.

Our first question comes from Andrew Brockman of William Blair. Your line is now open.

Yes, Hi, this is Dustin online for Andrew Thanks for taking our questions.

First problem Scott.

I'm just wondering what gives you guys confidence for the <unk> ramp in diagnostic revenues I know you touched on that a little bit, but just wondering what trends you're seeing thus far and then how that might inform growth in 2024. Thank you.

Yes, hey, thanks Duston.

Nice to hear from you and great question.

As we've continued to build out our sales force.

And you May recall last year at this time, we introduced a.

A pilot, which we focused on and associated sales consultant kind of support mechanisms. We've continued to build that out.

But we've still got less than 36 territories. So we've got tremendous opportunity to continue to expand and what we know and we've learned is if we can decrease the size of a territory.

A really strong sales professionals to go back out and hunt.

While they maintain and manage onboarding new accounts.

Understood Thanks for that.

Kind of related to that.

How is everything tracking with a sales force relative to expectations.

When you're thinking about 2024, one can that sales rep productivity kind of reached the level that youre, hoping for.

Yes, it's a great question and we track a number of key metrics.

What we've shared in the past is that we've seen our sales professionals over the last 12 months to 18 months ramp quicker than ever you may recall mid.

Quickly, providing an opportunity for them to start paying for themselves sooner when it comes to sales Rep. Total productivity. We've also highlighted over time that we're yet to see a sales professional cap out we have a number of sales professionals on a monthly and quarterly basis that have recently established new quote unquote.

High Watermarks and their performance continues to improve and grow.

So we think it gives us additional hope that the sales reps. We currently have can continue to thrive and win additional accounts and most importantly partner with their physicians to help provide the care that their patients need.

And then we can continue to add additional sales force reinforcements.

There's a big opportunity.

<unk> cancer is the deadliest of all cancers, we know that there is over $1 7 million lung nodules identified incidentally on an annual basis, and we know that we are having a hard time getting into all of those patients so tremendous opportunity for us to continue to invest scale and grow.

I appreciate that Scott just one more for us good to see Opex step down sequentially Im.

Im wondering how youre thinking about that in the fourth quarter.

Into next year, and then related to that on the new adjusted EBITDA metric is that something you guys.

Plan on guiding to next year. Thank you.

Okay.

Yeah.

<unk> been working very hard over the last several quarters as we've talked about focusing on projects.

That are related to near term revenue growth.

Wow.

Making progress on our path to profitability.

Very pleased to see that 40% improvement in adjusted EBITDA over the second quarter and 60% over the first quarter as Scott mentioned, we did start hiring some additional associate sales consultants at.

At the very end of the third quarter. So I would expect to see a little bit of an uptick on opex in the fourth quarter and potentially a little bit more in the first quarter as we consider adding additional reps in the first quarter as well as we work to build and capitalize on the demand in the field for 2024 and 2025.

I appreciate that thanks for taking our questions.

Thank you Dustin.

Thank you and one moment for our next question.

Our next question comes from the line of Kyle <unk> of Canaccord Genuity. Your line is now open.

Hey, guys. Thanks for the questions Congrats on the core strength.

On the guidance reduction, maybe just like walk through that with some more.

Clarity or like kind of detail because.

Early in the area you thought you were going to get these claims in the back half and then its related to M&A. So I mean.

Is this something like does this have to do with private payers as well as I'm thinking about some of the.

Carriers the sponsors for some of these plans are probably like United and Humana those plans so it.

It seems like this could persist maybe if you could just comment on those factors would be helpful for us. Thanks.

Yeah, absolutely thanks for joining pile.

Yes, all of this backlog is related to Medicare advantage.

And these are all claims that have met the Medicare coverage criteria, but we're dealing with some administrative hurdles with a couple of private plans.

That we're working through now.

Is not a biodot sticks issue. This is not even a diagnostics issue there have been challenges with the Medicare advantage plans for pretty much all of health care and Theres been a lot of news on that recently.

We have made good progress and started to see payments.

But it's just slower than we wanted it to be we had anticipated seeing those collections in the second half.

While they did start we're not going we don't necessarily expect to get all of it in in this quarter, although there is possibility and thats why we.

Okay.

Helpful.

It's really it's a function of like I guess, the adjudication on there and not like the revenue cycle management under and like that wouldn't help things.

I would just think about it.

Yeah, I would definitely say it's on their end.

Okay and then how many claims is this I mean, it definitely seems like it's it can be quantified that just can you share anything on that.

Yeah. Our current estimate is two $5 million to $3 million in collections. So.

I would say, it's mostly notify XL to embarrass drop.

Okay helps with the kind of ASP getting to following that kind of thing.

And then thinking about the fourth quarter I'd like again like the ramp I guess, though sequential increase.

Volume grew.

It was quite strong quite robust in the first half of the year over 70% growth year over year.

The core business of course.

This quarter, 60% I guess, I mean does that going to maybe dip a bit again or could that kind of creep back up into the possibly the <unk> from a volume year over year perspective.

Fourth quarter, yes.

Yes, it's a great question Kyle again, we believe that it is still a function of sales reps and putting them in the field, but we want to be mindful and not just run towards the 100 plus sales reps. We really are focused on hiring approximately six per quarter.

Recruiting training onboarding them setting them up for success.

And getting that return that we want so.

Again, we want to be mindful of our cost basis and expense structure.

Thank <unk>.

Continuing to do what we've been doing and getting gaining progress towards that path to profitability is critically important. So we do believe confidently that we can state.

With a high level of confidence that that 60% range is a range. We can stay in and I think on any given month or quarter, given the year over year comp, we could get that back into the 70% range, but it really will be a function of the number of sales reps that we bring on and the timing.

Okay that was helpful.

Notify CVP had the ability for the full quarter basically can you walk through the impact on the P&L.

Look on that line item like that product I guess, some like how much of a benefit was that or is that going to kind of come.

End of this year next year like the real benefit from that tailwind.

Maybe if I could ask.

Qualifying question are you, referring to private payer coverage for CDT.

The <unk> rate.

Sorry, yes, so on ADL T.

Notified CDT was awarded existing <unk> status. So there's two different types of Adl's status, there, new ADL T and existing ADL for the new <unk>.

They are paid list price.

On the day that their first offered for the first three quarters four existing <unk>.

They are paid the Mac right. So.

We did not experience any increase from.

Any price increase from the awarding of Adl's status and continue to receive the $649 per test.

Okay. That's helpful.

I don't really love the gross margin and some questions, but I do want to ask why they were very high this quarter 76 anything that you can do up to low to mid 70% range going forward.

Was there anything in this quarter thats like onetime in nature nonrecurring because I feel like it was good.

Good result, and it seems sort of.

It could be sustainable so why they are not standpoint, 76%.

Yeah.

I would say our long diagnostic gross margins are very strong and very stable.

Biggest variability we see in the gross margin numbers are actually in our biopharma contracts.

Some can be a little bit more labor intensive than others, which can impact gross margin.

Okay, and then maybe Scott just finally would be some of the data Readouts. This year and like you said just everything is there any potential for like a guideline update or sort of a conclusion in the relative near term for you guys and could that can really help drive adoption or just coverage in general potentially.

Yes, it's a great question Kyle.

We've referenced this before.

The main guidelines for us would be the chest guidelines, which is the ACP guidelines.

The chest physicians have not updated the ACP guidelines related to nodule management in cancer treatment since pre pandemic.

And then the related acute respiratory distress syndrome. So we're eager for the chest physicians, both as a society and physicians, we call on to make updates to those guidelines.

And the short answer really is any inclusion in guidelines will only help.

But we believe we can continue to grow without it we're building all the all the data plans in publishing as much as possible to ensure that when those different guidelines groups need and they have an opportunity to review the data that we put ourselves in the best position possible to be considered for guideline inclusion.

And we will continue to do so.

Okay, and you don't have any.

But the timing for anything like around that do you know.

No no they don't really.

Publisher give much guidance on when they're planning on updating in who is involved.

As decided they really want to keep that anonymity.

What we've seen historically.

Is it ACP, usually is kind of in the back half of the year.

There could still be some updates that they may provide here this year.

And then some of the other the other guidelines, whether it's fleissner and CCN.

Update at different cadences of frequencies.

We know the rate of change in the pace of change.

In the World. We're in today is happening maybe at a faster rate than ever before.

It's really questionable.

To justify not updating certain guidelines over a four to five year period, we're hearing that a lot from physicians. So we do expect some updates.

And again, we're going to continue to put ourselves in the best position possible, regardless of which guideline it might be.

And we're going to continue to push and put out the best data possible.

Great. Thanks, Scott Thanks, Robin I appreciate it.

Yes, Thanks, Tom.

Thank you and one moment for our next question.

Our next question comes from Josh Savant from MFS. Your line is now open.

Hi, This is Madison on for P. J.

Congrats on the quarter and thanks for taking the question.

Maybe firstly.

I was wondering if you're still expecting.

Your first private payer coverage for notify CDT in 2023 and maybe some.

Color on how we should be thinking about ASP.

For the rest of the year into 2024 on notify.

Yeah.

To be honest were just waiting for them to published so that we can announce publicly.

So.

That will be able to share publicly in the second.

Two months.

What's left of 2023.

But we're very pleased with where the team has gotten and the.

The reception that has been happening out in the field for notify XL two in CDT.

For us because.

Medicare and Medicare advantage are about 60% to 65% of our claims.

On individual private payer will have a relatively limited impact on asps.

But as we start to gather more momentum on the private payer coverage, we will start to see some incremental.

Improvements in Asps, but I would say that's probably later in the year then.

The fourth quarter and first quarter.

Perfect. Okay, that's very helpful.

And then now you're running the altitude randomized clinical utility study.

I was wondering if you could provide an update on the enrollment for that when you think that you may be able to release data from the study.

And if you think that we could Dolby things an interim analysis before the end of the year.

Yes, it's a great question.

At this time, we won't be conducting an interim analysis before the end of the year.

We've seen record enrollment kind of month over month this year and.

And you May recall, we kicked off the altitude study in the pandemic and so patient recruitment was rather slow.

Minimum year. So we're looking at that kind of on a monthly basis I think by the next earnings call, we'll be able to provide more clarity on potential interim analysis that will occur in 2024.

And then where we are kind of in terms of long term enrolment and when we think we'll meet those enrollment criteria.

But it is going exceptionally well and we're pleased with the number of sites, we have the engagement and again the enrollment.

Okay, great to hear that.

And then maybe just one more I'm wondering if you could give an update on the progress of your risk of recurrent cost and your path to reimbursement and commercialization of <unk> and.

I'm wondering if you have any update it that the timelines that you could speak to.

Yes, our risk of recurrence test as a reminder, the refresher is a blood based proteomics test the blood draw occurs pre surgical resection.

And we're able to identify those patients likely to recur.

It really is different in MLD, we recently published.

We stated at the beginning of the call. We're really mindful of return on every dollar spent we know that reimbursement for this test would take some time.

Okay.

Awesome, Thanks for the questions.

Awesome. Thank you.

I am showing no further questions at this time I would now like to turn it to Scott Hutton Chief Executive Officer for closing remarks.

Building on the momentum already generated as we increase our clinical and payer adoption in this extremely large and underserved population.

Ultimately, it's all about the physicians and the patients they treat and we believe in our ability to make a more significant impact in the future.

This quarter, we delivered on 60% loan diagnostic test volume growth, 79% Biopharma services growth provided a 76% gross margin and a 40% improvement in adjusted EBITDA.

Our team is constantly working to increase our reach and adoption and improve our operational effectiveness, all while prioritizing a quality focused <unk> team and culture.

We look forward to updating you on our continued progress and successes in the coming calls and ultimately hosting you in our new state of the art highly accredited facility soon thank you.

Thank you for your participation in today's conference. This does conclude the program you may now disconnect.

Q3 2023 Biodesix Inc Earnings Call

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