Q3 2024 Renalytix Plc Earnings Call

Yes.

Operator: Good morning, and welcome to the Renalytix Conference Call to Review 3rd Quarter Fiscal Year 2024 Financial Results. At this time, all participants are in a listen-only mode.

Speaker Change: Good morning, and welcome to the Manila next conference call.

Speaker Change: Fiscal year, 'twenty, 'twenty, four and Asia with shots.

Speaker Change: At this time all participants are in a listen only mode.

Speaker Change: We will be facilitating a question and answer session towards the end.

Speaker Change: Today's call.

Speaker Change: As a reminder, this call is being recorded for replay purposes.

Operator: We will be facilitating our question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Peter DeNardo of Capcom Partners for a few introductory comments. Thank you, Livia.

Speaker Change: I would now like to turn the call over to Peter Denardo, Capcom partners for a few introductory comments.

Peter Denardo: Thank you all for participating in today's call. Joining me today from Renalytix for our formal remarks are James McCullough, Chief Executive Officer, and James Sterling, Chief Financial Officer, and Howard Doran, President, is on hand for our question and answer session. Before we begin, I'd like to remind you that management will make statements during this call that include four forward-looking statements within the meaning of the Private Securities Litigation Reform Act of

Olivia: Thank you Olivia. Thank you all for participating in today's call. Joining me today from real life formal remarks are James Mccullough, Chief Executive Officer, and James Sterling, Chief Financial Officer, and Howard Doran President on hand for a question and answer session.

Peter Denardo: 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 intellects, the commercial prospects of kidney intellects, including whether kidney intellects will be successfully adopted by physicians and distributed and marketed, our expectations regarding reimbursement decisions, and the ability of kidney intellects to curtail costs of chronic and end-stage kidney disease, optimized 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 regarding product development, strategic partnerships, and collaborations, reimbursement decisions, clinical studies, and regulatory submissions, our business strategies and future growth, including plans, expectations, and opportunities for financing operations, and revenue projections and guidance. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements.

Speaker Change: 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 1995 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 state.

Peter Denardo: 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 of our annual report on Form 10-K that was filed on September 28, 2023 with the Securities and Exchange Commission. All forward-looking statements made on this call are based on management's current estimates and various assumptions. Renalytix 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.

Peter Denardo: This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 15, 2024. I'll note that due to regulatory restrictions under the UK Takeover Code on what we can and cannot share at this time about the formal sales process, we are limited in the comments and information we can provide today. But suffice it to say that if there is material news to disclose about any developments, we will provide updates transparently as required. I'll now turn the call over to James McCullough. James?

Speaker Change: I conclude without limitation, the potential benefits, including economic savings of kicking until X the commercial prospects of getting into lax, including weather kidney intellectual be successfully adopted.

Speaker Change: Patient and distributed the market our expectations regarding reimbursement and the ability of kidney intellect to curtail cost of chronic end stage kidney disease optimize care delivery and improve patient outcomes trends that our market potential benefits of government policy change the impact of COVID-19, and the other one.

Speaker Change: Events on our business, our expectations regarding product development strategic partnerships and collaborations.

Speaker Change: <unk> decisions clinical studies regulatory submissions, our business strategies future growth, including plans expectations and opportunities for financing our operations and revenue projections and guidance. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated.

Speaker Change: <unk> 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 of our annual report on Form 10-K that was filed on September 28, 2023 Securities and Exchange Commission.

Speaker Change: All forward looking statements made on this call are based on management's current estimates and various assumptions Reno lytic 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.

Speaker Change: This conference call contains time sensitive information and accurate only as of the live broadcast today May 15 2024.

Speaker Change: I'll note that due to regulatory restrictions under the UK takeover code, we can and cannot share up is about the formal sales process. We are limited in the comments and information we can provide today.

Speaker Change: Suffice it to say that if there are material news to disclose about any developments, we will provide updates transparently as required I will now turn the call over to James Makola James.

James McCullough: Thank you, Peter. Good morning. Good afternoon.

James McCullough: Thank you Peter Good morning, Good afternoon, we've experienced a productive beginning to the 2024 calendar year.

James McCullough: We have experienced a productive beginning to the 2024 calendar year. On February 8th, Medicare contractor National Government Services issued a Draft Local Coverage Determination, or LCD, for Kidney Intellect. This follows an over three-year process, including two public hearings, submission of extensive outcomes, utility, and regulatory data, and a significant volume of claims submitted to Medicare, which have now been reimbursed. We expect a final coverage determination to be issued in the near term.

James McCullough: On February 8th Medicare contractor National Government services issued a draft local coverage determination or LCD for kidney Intel X.

Speaker Change: This follows an over three year process, including two year, two public hearings submission of extensive outcomes utility and regulatory data.

Speaker Change: And a significant volume of claims submitted to Medicare, which have now been reimbursed we expect the final coverage determination to be issued in the near term.

James McCullough: On March 14th, Kidney Intellects was included in the final international clinical guidelines for chronic kidney disease known as Kidego. Guidelines are followed by doctors, hospitals, and insurance payers throughout the world and are a critical milestone for the establishment of broad use of an advanced diagnostic tool such as Kidney Intellects. Also in March, we disclosed the formal sale process after receiving an approach from a large, well-capitalized diagnostics... Since this approach, additional potential acquirers have now joined in the discussion.

Speaker Change: On March 14th kidney <unk> was included in the final international clinical guidelines for chronic kidney disease known as <unk>.

Speaker Change: Lines are followed by doctors hospitals and insurance payers throughout the world and are a critical milestone for establishing broad use of an advanced diagnostic tools, such as kidney and <unk>.

Speaker Change: Also in March we disclosed a formal sale process for the company after receiving an approach from a large well capitalized diagnostics company.

Speaker Change: Since this approach additional potential acquirers have now joined in the discussions while restricted on what we are able to say, we expect the sale process to be competitive given our substantial regulatory outcomes data and reimbursement achievements and now the inclusion of kidney and <unk> and clinical guidelines.

James McCullough: While restricted on what we're able to say, we expect the sale process to be competitive, given our substantial regulatory outcomes data and reimbursement achievement, and now the inclusion of kidney intellects in clinical guidelines. In March and April, we completed common stock equity financing rounds, which extended our runway and provided us with further optionality to maximize shareholder value, whether as a standalone business entity or as part of a bigger business enterprise. In April, we officially launched our FDA-authorized KidneyIntellects.dkd product version and are now receiving commercial test orders.

Speaker Change: In March and April we completed a common stock equity financing rounds, which extended our runway and provide us with further optionality to maximize shareholder value, whether its a standalone business entity or as part of a bigger business enterprise in.

Speaker Change: In April we officially launched our FDA authorized kidney until extra DKK product version and are now receiving commercial test orders. This will rapidly supplant the original kidney <unk> laboratory developed test or LDP kidney and <unk> TKD pricing remains the same at $950 per test and we have established broad insurer.

James McCullough: This will rapidly supplant the original KidneyIntellects Laboratory-Developed Test, or LDT. KidneyIntellects.dkd pricing remains the same at $950 per test, and we have established broad insurance reimbursement on a distinct CPT code for KidneyIntellects.dkd and the clinical lab fee schedule.

Speaker Change: Reimbursement under distinct CPT code for kidney and <unk> TKD in the clinical lab fee schedule.

James McCullough: We have been steadily reorganizing the company through expense reduction and a hard turn to focus on sales growth, culminating with the appointment of Howard Duran to the position of president at the end of April. Difficult changes were made to conserve cash by optimizing our organization on sales, with a year over year headcount reduction of 50% and an overall OPEX reduction of approximately 40% year over year. That is close to a 60% overall expense reduction from peak, and we continue to look at near-term options for further expense reduction without impairing our ability to grow revenue.

Speaker Change: We have been steadily reorganizing the company through expense reduction and a hard turn to focus on sales growth, culminating with the appointment of Howard to ran to the position of president at the end of April difficult changes were made to conserve cash by optimizing our organization on sales with a year over year head count reduction of 50% and in <unk>.

Speaker Change: Overall, opex reduction of approximately 40% year over year.

Howard Doran: That is close to a 60% overall expense reduction from peak and we continue to look at near term options for further expense reduction without impairing our ability to grow revenue.

James McCullough: Renalytix has now become a sales and marketing play into a wide open market with 14 million diabetic kidney disease patients in the United States. However, the global population of diabetic kidney disease patients is much larger, with many companies now reaching epidemic disease levels. We are in discussions with potential international distribution partners to reach these patients now that kidney Intellix is FDA-approved and in the International Clinical Guidelines. Towards the end of 2023, we hired and trained a small direct-to-physician sales force in the United States, which has just completed the first full quarter of operations in March.

Howard Doran: <unk> has now become a sales and marketing play into a wide open market with 14 million diabetic kidney disease patients in the United States. The global population of diabetic kidney disease patients is much larger with many companies now reaching epidemic disease levels.

Howard Doran: We are in discussions with potential international distribution partners to reach these patients now that kidney <unk> FDA authorized and in the international clinical guidelines.

Howard Doran: Towards the end of 2023, we hired and trained a small direct to physician sales force in the United States, which has just completed the first full quarter of operations in March. The sales force is composed of experienced performers in the diagnostic industry and I am pleased to report that we are already seeing a change in the breadth and volume of individuals.

James McCullough: The sales force is composed of experienced performers in the diagnostic industry, and I am pleased to report that we are already seeing a change in the breadth and volume of individual physician test ordering. The new sales force achieved a 33% increase in direct-to-primary care test order rates quarter over quarter, a growth rate of 10, which while early, we are seeing continuing into the current fourth fiscal quarter.

Speaker Change: Physician test ordering the new Salesforce has achieved a 33% increase in direct to primary care test order rates quarter over quarter growth 10, which while early we are seeing continuing into the current fourth fiscal quarter.

James McCullough: In calendar 2024, we implemented a series of ordering process improvements around the FDA product launch, which took place in April. Specifically, we have improved our customer-facing offering to ease physician ordering and increase patient access to blood draw services. Our market focuses on a limited number of territories, such as New York, where there are large populations of patients with diabetes and kidney disease and where we have achieved comprehensive insurance coverage for kidney care.

Speaker Change: In calendar 2024, we have implemented a series of ordering process improvements around the FDA product launch, which took place in April.

Speaker Change: Specifically we.

Speaker Change: We have improved our customer facing offering to east physician ordering.

Speaker Change: And increased patient access to blood draw services.

Speaker Change: Our market focus is on a limited number of territories, such as New York, where there are large populations of patients with diabetes and kidney disease, and where we have achieved comprehensive insurance coverage for kidney <unk>.

James McCullough: These territories pose the best near-term opportunities to foster adoption of kidney intellects while accelerating tests. We believe FDA authorization in combination with a local coverage determination, if and when issued, and clinical guidelines inclusion makes kidney intellects the only choice for preventative precision medicine prognosis in this large chronic disease population. Finally, we have received several questions regarding FDA's April 29th published final rule on laboratory-developed tests, or LDTs.

Speaker Change: These territories posed the best near term opportunities to foster adoption of kidney <unk>, while accelerating test sales, we believe FDA authorization in combination with a local coverage determination if.

Speaker Change: If and when issued and clinical guidelines inclusion makes kidney Intel X. The only choice for preventative precision medicine prognosis in this large chronic disease population.

Speaker Change: Finally, we have received several questions regarding Fda's April 29th published final rule on laboratory developed tests or <unk>.

James McCullough: While we felt the final rule was more flexible than language proposed in the original drafting, it is clear that diagnostic testing is entering a new era of tighter regulation and exacting standards that will require everyone launching an advanced, innovative test such as Kidney Intellect to consider the significant capital investment and long timelines required for a full FDA review process. By achieving FDA authorization for kidney intellects, this has increased the high barriers to entry around our business and technology, particularly for diagnostic technologies that address very large markets such as chronic kidney disease and are capable of setting new clinical standards of care. We believe FDA regulation is becoming the default pathway to achieve comprehensive insurance reimbursement. Without regulation, it will be very difficult to get paid in the future.

Speaker Change: While we felt that final rule was more flexible than language proposed in the original drafting it is clear that diagnostic testing is entering a new era of tighter regulation and exacting standards that will require everyone launching an advanced innovative tests, such as kidney Intel X to consider the significant capital investment and long.

Speaker Change: Long timelines required for a full FDA review process.

Speaker Change: By achieving FDA authorization for kidney Intel X. This has increased the high barriers to entry around our business and technology, particularly for diagnostic technologies that address very large markets such as chronic kidney disease and are capable of setting new clinical standards of care. We believe FDA regulation is becoming the default pathway to achieve.

Speaker Change: <unk> insurance reimbursement without regulation very difficult to get paid in the future.

James McCullough: We believe our decision to invest heavily up front in real-world outcomes data and a full FDA de novo review process were the right ones and add significantly to the franchise value of KidneyIntellects.dkv and the KidneyIntellects Artificial Intelligence-enabled platform technology. I will now turn it over to James Sterling, our Chief Financial Officer.

Speaker Change: We believe our decision to invest heavily upfront in real world outcomes data and a full FDA de Novo review process were the right ones and add significantly to the franchise value of kidney Intel X that decay D and the kidney <unk> artificial intelligence enabled platform technology.

James McCullough: Thank you, James. Hello, everybody. Today we issued the financial results for the third quarter of fiscal year 2024, which ended March 31st. Our GAAP financials were filed today on Form 10-Q. Figures I will discuss here are based on our GAAP financials and quoted in U.S. dollars, which is our reporting currency. For the third quarter, we recorded revenue of $535,000 compared to $724,000 for the third quarter of the prior fiscal year. As a reminder, the prior year comparative period included tests that were performed under the original $6 million contract with Mount Sinai, which has since expired. Testing at Mount Sinai has since been run under a standard commercial billing model. 806 tests were processed during the quarter, of which 82% were billable.

Speaker Change: I will now turn it over to James Sterling, Our Chief Financial Officer James.

James McCullough: Thank you James Hello, everybody.

James McCullough: Today, we issued the financial results for the third quarter fiscal year 2024, which ended March 31.

James McCullough: Our GAAP financials were filed today on Form 10-Q.

James McCullough: Figures I will discuss here are based on our GAAP financials and quoted in U S dollars, which is our reporting currency.

James McCullough: For the third quarter, we recorded revenue of $535000 compared to $724000 for the third quarter of the prior fiscal year.

James McCullough: As a reminder, the prior year comparative period included tests that were performed under the original $6 million contracts with Mount Sinai, which have since concluded.

James McCullough: Testing at Mount Sinai have since been run under a standard commercial billing model.

James McCullough: 806 tests were processed during the quarter of which 82% were billable.

James McCullough: Encouragingly testing locations continue to diversify away from what had been largely dominated by a single hospital system with tests outside of Mount Sinai now accounting for nearly half of the total up from about 30% 18 months ago.

James McCullough: Encouragingly, testing locations continue to diversify away from what had been largely dominated by a single hospital, tests outside of Mount Sinai now accounting for nearly half of the total, up from about 30% a year. As James stated, we're experiencing increasing test order velocity from our direct-to-physician sales force and expect the FDA DeNovo authorized version of the Kidney Intel X test to be onboarded with other health system providers in calendar 2024 following its official launch last week.

James McCullough: As James stated, we're experiencing increasing test order velocity from our direct to physician sales force and expect the FDA to Novo authored authorized version of the kidney Intel X test.

Speaker Change: To be on boarded with other health system providers in calendar 2024, following its official launch last month.

James McCullough: Last quarter, we reported that NGS resumed consistent Medicare payment for tests under individual claims, allowing revenue recognition in that quarter of 318 tests billed to Medicare, including 205 tests from earlier. Payment from NGS is continued on a consistent basis. Operating expenses for the third quarter were $6.5 million on a gap basis, down 40% from $11 million for the prior year period.

Speaker Change: Last quarter, we reported that <unk> resumed consistent Medicare payment for tests under individual claims review.

Speaker Change: Wowing revenue recognition in that quarter of 318 tests built to Medicare, including 205 tests from earlier periods.

Speaker Change: Payment from Engie assets continued on a consistent basis.

Speaker Change: Operating expenses for the third quarter were $6 $5 million on a GAAP basis down 40% from $11 million for the prior year period.

James McCullough: This reflects the significant actions we took to lower operating expenses, including a 50% reduction in headcount, as well as vendor spend reduction. All of these steps followed our FDA de novo authorization, which allows us to focus spend on sales and marketing. Through these efforts, we've reduced our cash burn to under $5 million per quarter, which is 40% lower than the fiscal second quarter and half the level of a year ago.

Speaker Change: This reflects the significant actions, we took to lower operating expenses, including a 50% reduction in head count as well as vendor spend reductions.

Speaker Change: Certain of these steps followed our FDA de Novo authorization, which allows us to focus spend on the sales and marketing organization.

Speaker Change: Through these efforts, we have reduced our cash burn to under $5 million per quarter, which is 40% lower than the fiscal second quarter and half the level of a year ago.

James McCullough: The net loss for the third quarter of fiscal 2024 was $7.7 million, or $0.08 per share, down 36% from a net loss of about $12.1 million, or 14 cents per share, for the third quarter of fiscal 2023.

Speaker Change: Net loss for the third quarter of fiscal 2024 was $7 $7 million or <unk> <unk> per share, which was down 36% from a net loss of about $12 1 million or <unk> 14 per share for the third quarter of fiscal 2023.

Speaker Change: We ended the third quarter with approximately $4 $7 million in cash as of March 31.

Speaker Change: Does not include the approximately $6 4 million net proceeds from the second tranche of the March pipe financing, nor the $1 5 million from the registered direct placement announced last month.

Speaker Change: We raised aggregate gross proceeds of $13 $5 million in those financings.

Speaker Change: We continue to explore ways to carefully control operating costs without impairing, our ability to grow test volumes and revenue.

James McCullough: We ended the third quarter with approximately $4.7 million in cash as of March 31. This does not include the approximately $6.4 million net proceeds from the second tranche of the March PIPE financing, nor the $1.5 million from the registered direct placement announcement. We raised aggregate gross proceeds of $13.5 million, and continue to explore ways to carefully control operating costs without impairing our ability to grow test volumes and... Operator, we can now please open the call for questions. Ladies and gentlemen, to ask a question, you will need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, simply press star 1-1 again.

Operator, we can now please open the call for questions.

Speaker Change: Ladies and gentlemen to ask a question you will need to press star one.

Speaker Change: And we're planning to be announced soon.

Speaker Change: Your question simply press Star, one again, ladies and gentlemen.

Operator: Please stand by while we compile the Q&A roster. Now, the first question coming from the lineup is Dan Arias with Stiefel, Yolanda Selkman. Good morning, guys. James, what's been the feedback from clinicians and payers on the guideline changes and the LCD?

Speaker Change: The Kenny roster.

Speaker Change: Our first question coming from the lineup.

Erin <unk>: Erin <unk> with Stifel. Your line is now open.

Erin <unk>: Good morning, guys. Thank you James what's been the feedback from clinicians and payers on the guideline changes.

Daniel Anthony Arias: I mean, it seems like as much as anything else that's taken place for you guys, these should be what moved the needle on test usage. So can you just talk about how you see the impact of those changes? I'm sure the answer is they're going to be tremendously helpful, but what I'm really looking for is some discrete details on just where you expect to see the changes first as a result, the extent to which they might change, and if they're not going to change, what the remaining sticking points might be for those folks at the stakeholder level. Thanks. Yeah, it's a very good question, Dan. Good morning.

Speaker Change: The LCD I mean, it seems like there is much as anything else Thats taken place for you guys those should be what moves the needle on test usage. So can you just talk to how you see the impact of those changes I'm sure. The answer is they are going to be tremendously helpful. But what I'm really looking for is some.

Speaker Change: Discrete details on just where you expect to see that change as first as a result.

Speaker Change: To which they might change and if theyre not going to change what the remaining sticking points might be for those folks.

Speaker Change: At the stakeholder level.

Dan: No. It's a very good question Dan good morning.

James McCullough: We continuously update our communication with payers, including national payers, and obviously, we're in the final stages of LCD, with the milestones. And that includes, obviously, FDA. It includes updated outcomes data. It includes the draft LCD, which is a significant milestone, and then, of course, guidelines. So, we've had a continuous stream of updates going out to the payer community. I'll give you one anecdote.

Dan: We continuously update our communication with payers, including National Payors.

Dan: Obviously, we're in the final stages of LCD.

Dan: With.

Dan: The milestones and that includes obviously FDA.

Dan: <unk> updated outcomes data at.

Speaker Change: It includes the draft LCD, which is a significant milestone.

Dan: <unk>.

Dan: And then of course guidelines. So we've had a continuous stream of updates going out too.

Speaker Change: The payer community.

James McCullough: We talked to the CMO of a major insurance plan, who said, you know, LCD with guidelines is checkmate. We expect that with the issuance of a final LCD, we've crossed the threshold for comprehensive payment throughout. I can't see a reason why, given the health economics data, benefits of kidney intellects, and third-party real-world usage of kidney intellects, which has now been published on outcomes. This thing makes a difference not only in kidney health as measured by GFR slope but also in diabetes as measured by HbA1c. So this is advanced preventative medicine. It works!

Speaker Change: I'll give you one anecdote, we talk to the CMO of a major.

Speaker Change: Insurance plan.

Speaker Change: Who said.

Speaker Change: LCD with guidelines.

Speaker Change: Checkmate.

Speaker Change: So.

Speaker Change: We expect that with the issuance of a final LCD.

Speaker Change: We've crossed the threshold for comprehensive payment throughout the United States I can't see a reason why.

Speaker Change: Given the health economics data the benefits of kidney Intel X third party real world usage of kidney and <unk>, which has now been published on outcomes. This thing.

Speaker Change: It makes a difference not only in kidney health as measured by Egfr slope, but also in diabetes as measured by HBA want to see.

Speaker Change: This is advanced preventative medicine. It works it works very well.

James McCullough: It works very well for a variety of reasons, and it's working at a time when there are a whole sequence of new drug therapies that are quite expensive, including SGLT2 inhibitors and GLP-1 agonists. And how are you going to figure out which patients are at risk early on to be able to prescribe these drugs? So, kidney intellect sits right at the heart of the whole health economics equation in precision medicine, which includes early identification, diagnosis, prognosis, and therapeutic treatment and really is the gateway to controlling cost and outcomes.

Speaker Change: For a variety of reasons and it's working at a time when there are a whole sequence of new drug therapies, which are quite expensive, including <unk> inhibitors <unk> agonists.

Speaker Change: And how are you going to figure out which patients are at risk early on.

Speaker Change: Prescribe these drugs, so kidney Intel exits right at the heart of the whole health economics equation in precision medicine, which includes early identification.

Speaker Change: Diagnosis prognosis therapeutic treatment.

Speaker Change: And really as the gateway to controlling costs and outcome and that has been evidenced now extensively and.

James McCullough: And that has been extensively evidenced in outcome studies, and that's one of the reasons we got put into the guidelines. So, I do think we are very well positioned, in calendar 2024, for comprehensive insurance coverage, and so far, the feedback has been very good. There's never any guarantee, but we do feel that we're in a very good position.

Speaker Change: And outcome studies and that's one of the reasons, we got put into the guidelines.

Speaker Change: So I do think we are very well positioned.

Speaker Change: In calendar 2024.

Speaker Change: For comprehensive.

Speaker Change: Insurance coverage and so far the feedback has been very good.

Speaker Change: Theres never any guarantee.

Speaker Change: But.

Speaker Change: We do feel that we're in a very good position and the other thing I'll point out Dan is we're doing this in a very short period of time.

James McCullough: And the other thing I'll point out, Dan, is we're doing this in a very short period of time. It's always difficult when you get here because people want to see sales ramp up. People want to see the building of the business.

Speaker Change: It's always difficult when you get here because people want to see sales ramp people want to see building in the business, but the reality is that to be able to produce longitudinal outcomes data get through multi year FDA de novo marketing process.

James McCullough: But the reality is that to be able to produce longitudinal outcomes data, get through a multi-year FDA de novo marketing process, get into the guidelines, and start a commercial organization in five years is a very short timeline. So 2024 is going to be very interesting in terms of knocking through the rest of the insurance coverage.

Speaker Change: Get into the guidelines.

Speaker Change: And start a commercial organization in five years.

Speaker Change: <unk> is a very short timeline so.

Speaker Change: 2024 is can be very interesting in terms of knocking through the rest of the insurance coverage.

Daniel Anthony Arias: Yeah, I certainly hear you on five years being short at the corporate level, as you can imagine, investors. Less short for investors, that timeline is. So, I mean, to that point, 800 tests during the quarter, which is down from 1,000 or so last quarter. I think that was down from 1,300 the prior quarter. When, very simply, when do you think we will reverse the trend and stay up on a test volume trajectory? And along those lines, to OJ's point on non-Sinai volumes, volumes that aren't coming from our Sinai.

Speaker Change: Okay, Yeah, I certainly hear you on five years being short and at the corporate level as you can imagine investors less less short term investors that timeline is so I mean to that point 800 tests during the quarter, which is down from a 1000 or so last quarter I think that was down from 3200, the prior quarter when it's very.

Speaker Change: Simply when do you think we reverse trend and stay up on a test volume trajectory and along those lines to oj's quite on non Sinai volumes volumes that are coming from outside.

James McCullough: Can you just talk about where we are with Wake Forest, St. Joe's, Utah, et cetera? Is there a point where just in aggregate, those getting off the ground should start to be meaningful on a quarter over quarter basis? Thanks. I think it's this year.

Speaker Change: Can you just talk about where we are with wake forest St. Joe's, Utah et cetera is there a point where just in aggregate those getting off the ground should start to be meaningful on a quarter over quarter basis. Thanks.

James McCullough: And the reduction in total test volume is a function of switching over to full commercial pay with Mount Sinai. This has been frustrating for me. Mount Sinai Health System is a fabulous partner. It is, however, quite complex operating in that environment. That was our first launch customer, and as you know, we did that under a very specific environment with a defined contract. To make the jump from that defined early stage contract under IRB control to proper commercial testing has been a challenge. We think that that is starting to work out now, and the interesting thing for me is that we've now added the important optionality of growing direct-to-physician sales. And Howard will talk about that in a little bit.

Speaker Change: I think it's this year and the reduction in total test volume is a function of switching over to full commercial pay with Mount Sinai. This has been frustrating for me.

Speaker Change: Mount Sinai Health system is a fabulous partner.

Speaker Change: It is it is quite complex operating in that environment.

Speaker Change: That was our first launch customer and.

Speaker Change: As you know we did that under a very specific.

Speaker Change: <unk> with a defined.

Speaker Change: Contract.

Speaker Change: To make the jump.

Speaker Change: That defined early stage contract.

Speaker Change: Under IRB control to a proper commercial testing.

Speaker Change: It has been a challenge.

Speaker Change: We think that that is starting to work out now.

And the interesting thing for me is we've now added the important optionality, a growing direct to physician sales and.

Howard will talk about that a little bit, but the direct to physician sales is very much a bright light.

James McCullough: But the direct-to-physician sales are very much a bright light, and that is under our direct control. We also do expect to be seeing value coming out of the Atrium Wake Forest launch, and we do expect to see other groups coming on board. And I'll make one statement. It's been quite a balancing act to reorganize the company. It's like flying an airplane; slow down and go down; difficult to

Howard Doran: That is under our direct control.

Howard Doran: We also do expect to be.

Howard Doran: Seeing value coming out of the atrium wake Forest launch.

Howard Doran: And we do expect to see other groups coming on board and.

Speaker Change: And I'll make one statement.

Speaker Change: Been quite a balancing act to reorganize the company.

Speaker Change: It's like flying an airplane slowdown and go down.

James McCullough: We're now getting through the final stages of that where we've substantially reduced the operating burn, reorganized the human resources platform, brought new people on board like Howard, and a new sales force which now has one quarter under its belt. So I would expect that we're going to see a leveling off and an increase, without forecasting, in testing volume activity, and most importantly for me, the breadth, of the testing volume activity. So we're not just totally dependent on Mount Sinai as a single source customer, and that should take place in 2024. If I may, sorry to interrupt, if I may add, James.

Speaker Change: Difficult to achieve.

Speaker Change: Now getting through the final stages of that where we've substantially reduced the operating burn reorganize the human resources platform.

Speaker Change: Brought new people on board like Howard and a new sales force, which is now has one quarter under its belt. So.

Speaker Change: Would expect that we're going to see a leveling off and an increase without forecasting.

Speaker Change: In testing volume activity and most importantly for me the breadth.

Speaker Change: Of the testing volume activity. So we're not just totally dependent on Mount Sinai as a single source customer.

Speaker Change: And if I could take place in 2024.

If I may sorry to interrupt if I may add James.

James McCullough: The numbers, Dan, that you had listed were total tests, including non-billable study tests, and we have curtailed the study tests quite a bit after the terrific data after the 12th month point, and also it was a great opportunity to save some money. If you looked at just the billable tests, the decline is a lot less dramatic than what you indicated, made mainly flat, more or less, and so I just want to make that that important distinction: billable tests; it's much better.

Dan: The numbers Dan that you had listed require total tests, including non billable.

Speaker Change: Study tests.

Speaker Change: And we have curtailed the study test quite a bit.

Speaker Change: After the terrific data after the 12 month point and also it was a great opportunity to save some money. If you looked at just the billable tests. The decline is a lot less dramatic than what you indicated.

Speaker Change: Mainly flat more or less.

Speaker Change: And so I just wanted to make that that important distinction.

Speaker Change: Billable tests.

Speaker Change: It's much better picture.

James McCullough: Okay, that's helpful. OJ, since you brought it up, James mentioned in a non-forecasting way that he thinks volume should be able to ramp up here in the coming quarters. In a forecasted way, would you agree with that?

Speaker Change: Okay. That's helpful. Joe Jason since you brought it up James mentioned.

Speaker Change: Non forecasting way that he thinks volume should be able to ramp here in the coming quarters and a forecasted way would you agree with that.

Speaker Change: Sure.

Daniel Anthony Arias: Mm-hmm. Yeah. Okay, uh, yes I'm in it. Well, I'll stick to a non-forecaster way, but yes, there's certainly a path for volumes and the work that Howard is doing, particularly in the primary care, independent primary care side. Pretty exciting. Nice group.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Well I'll stick to a non forecasted your way, but yes.

Speaker Change: There's certainly a path for volumes to be increasing and the work that Howard is doing.

Howard Doran: Particularly in the primary care.

Howard Doran: Independent primary care side.

Howard Doran: Pretty exciting I assume some nice growth nice growth there.

Daniel Anthony Arias: Okay, thank you guys. Thank you. In our next question, coming from the line up, Randy Baron with Pinnacle Associates, your line is open. Hi, good morning. Can you guys hear me?

Speaker Change: Okay. Thank you guys.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: And our next question coming from the line of Randy Baron with Pinnacle Associates. Your line is open.

Randy Baron: Hi, Good morning can you guys hear me.

Randy Baron: Yes, good morning, Randy. Hey, I have a couple of administrative questions and then two broader ones. Just really quickly, it was encouraging, at least for me to hear, that more bidders seem to have come out in this process since the initial unsolicited inbound in March that you got. Understanding the constraints that Laura's put on you, is it fair to say that that process of potential acquisition is active and ongoing? So it is active, and we are restricted, so I won't comment specifically on the process. I will say that it is not every day.

Randy Baron: Yes, good morning, Randy.

Randy Baron: I have a couple of administrative questions and then two broader ones just really quickly it was encouraging at least for me to hear.

Speaker Change: Is that more bidders seem to have come out in this process since the initial unsolicited.

Speaker Change: Inbound in March that you got understanding the constraints that lowers put on you is it fair to say that that process.

Speaker Change: Potential acquisition is active and ongoing.

Speaker Change: So it is active and we are restricted so I won't comment specifically on the process, but.

Speaker Change: I will say that it is not every day in fact, it's quite rare.

James McCullough: In fact, it's quite rare that you find a product service like kidney intelli that addresses such a large market. In the case of the United States, it's about 14 million patients with diabetes and kidney disease, that's wide open, and that has a price attached to it of $950 per reportable result, which gives us a very significant margin, and which has now been de-risked on a regulatory front. We are largely de-risking it on a reimbursement front, and it is now in the clinical guidelines.

Speaker Change: That you find.

Speaker Change: A product services like kidney Intel X that addresses such a large market in the case of the United States, It's about 14 million patients with diabetes and kidney disease.

Speaker Change: That's wide open.

Speaker Change: And that has a price attached to it.

$950.

Per reportable result, which gives us a very significant margin.

Speaker Change: And which now has been de risked on a regulatory front.

Speaker Change: We are largely derisking it on a on a reimbursement front.

Speaker Change: And is now in the clinical guidelines.

James McCullough: And again, the data, which is so important, which we've invested heavily in, which has allowed us to get insurance reimbursement and get into the guidelines and get through FDA, is very good and affects not only kidney health but also diabetes health. So here you have a singular product, and with the new look from FDA on laboratory-developed tests and the expense associated with doing this, the barriers to entry are very high for a blood-based, biomarker-driven, artificial intelligence-enabled in vitro prognostic.

Speaker Change: And again, the data, which is so important which we've invested heavily in.

Speaker Change: Which has allowed us to get insurance reimbursement again in the guidelines and get through FDA.

It's very good.

Speaker Change: And affects not only kidney health, but also diabetes health. So here you have a singular products.

Speaker Change: And with the new look from FDA on laboratory developed tests and the expense associated with doing this.

Speaker Change: The barriers to entry are very high.

Speaker Change: For a blood based biomarker driven artificial intelligence enabled in vitro prognostic. So this really is the only.

James McCullough: So this really is the only precision medicine preventative solution at the front end of this huge disease funnel, and we are not surprised that that would attract significant interest from multiple players, not just in the diagnostic industry. Obviously, you know we have to continue with our sales and marketing efforts, and we want to increase optionality here. Strategic partnering is an option. Acquisition is an option, all of which allow us to address this significant market. But this is a product that is rare to find.

Speaker Change: Precision medicine preventative solution at the front end of this huge disease funnel.

Speaker Change: We are not surprised that that would attract significant interest.

Speaker Change: From multiple players not just in the diagnostic industry.

Speaker Change: Obviously.

Speaker Change: We have to continue with our sales and marketing effort and we want to increase Optionality here.

Speaker Change: Strategic partnering as an option.

Speaker Change: Acquisition as an option.

Speaker Change: All of which allow us to address the significant market, but this is a product that is rare to find so we're not surprised that this process would be competitive.

James McCullough: So we're not surprised that this process would be so great. And then OJ, just an administrative question for you.

Jay: Great and then Jay just an administrative question for you you guys did a couple of a series of raises in the quarter, what's pro forma cash today.

Randy Baron: You guys did a couple of, a series of raises in the quarter. What's your pro forma cash today? So, we reported 4.7 million in cash on March 31st.

So.

Speaker Change: We reported $4 7 million.

James McCullough: I haven't in the past given a spot cash balance during these calls, so we won't change that policy now. But 4.7 million in cash on March 31st, and that does not include the 6.4 million from the second tranche of the pipe, nor the 1.5 million from the registered direct, so the 4.7 million figure. 45 days. That should arm you with enough information to do the rest of it.

Speaker Change: Cash at March 31, I don't want to have happened in the past given our given our spot cash.

Speaker Change: Balanced during this call so.

Speaker Change: What changed that policy now, but $4 $7 million of cash at March 31, and that does not include $6 4 million.

Speaker Change: From the second tranche of the pipe north of $1 5 million from the registered direct so.

$4 7 million figure was from <unk>.

Speaker Change: 45 days ago, so that should army with enough enough information to do your estimate but.

Speaker Change: But that's the detail that I can provide now.

Randy Baron: Okay. And then just two really quick, broad questions. Howard, I guess this is for you and James.

Speaker Change: Okay.

Speaker Change: And then just two really quick broad questions. Howard I guess this is for you and James It was interesting the script to hear you talk about the breadth and volume of test changes at the direct to physician.

Randy Baron: It was interesting, in the script, to hear you talk about the breadth and volume of test changes at the direct-to-physician level. I missed the number; I think you said 30 or 33% growth, but can you just talk broadly about... You know, what you've done in sales and market activity. What did the reorganization to align commercial activities do? How many salespeople do you have now, et cetera?

Speaker Change: Level I missed the number I think you said 30 or 33% growth, but can you just talk broadly about.

Speaker Change: What you've done on sales market activity, what did the reorganization to align our commercial activities do how many salespeople do you have now et cetera.

Howard Doran: Thanks for the question, Randy. Yes, so first and foremost, we pretty much have retold the entire sales team from when it was last summer. We actually have four members of the team that are actually legacy that have been with us between 2021 and 2022.

Randy Baron: Alex for the question Randy.

Alex: Yes, so first and foremost we pretty much have retooled the entire tire sales team from what it was last summer.

Alex: We actually have four members of the team that actually our legacy that had been with US since between 2021 and 2022, we had three additional folks that are remaining from our training class that we had this past August and we brought in three new folks as we discussed on our last call. This December so their first.

Howard Doran: We have three additional folks that are remaining from our training class that we had this past August, and we brought in three new folks, as we discussed on the last call this December, so their first, you know, time in the field really was this, you know, January of this current quarter. So you know, the big change is just the folks that we have, and just as we talked about on our last call, these folks come with the new folks come with, you know, a strong diagnostic background.

Speaker Change: And the field really was this January at this current quarter. So big change is just the folks that we have and just as we talked about.

Speaker Change: On our last call that these folks come with new folks come with strong diagnostic background.

Howard Doran: Half of that group comes with nephrology experience in their past, so they know the big practices; they're able to get in touch with some of the key thought leaders, etc., and you know just the general nephrologists that are out practicing who are very supportive of our efforts but can also assist us with going out to the PCPs with the recommendation because they're part of the referral pattern. So having folks that can knock on those doors in addition is also helpful.

Speaker Change: Half of that group comes with nephrology experience in their past so they know the big practices. They are able to get into some of the key thought leaders et cetera.

Speaker Change: Just the general neurologists that are out practicing that are very supportive of our efforts, but also can also assist us with going out to the PCP, but the recommendation because they are part of the referral pattern. So having folks they can knock on those doors and edition is also helpful.

Howard Doran: We've taken a look at our marketing materials, and I just think you know one of the biggest triggers is having the one-year outcomes data that came during this period allowed us to really complete the story. You know we have a very simple test that's very simple to understand what it does. Obviously, it gives you the low, medium, and high risk test results of the patient, but now the first question the PCP or nephrologist, for that matter, is going to ask is, "What do I do with this information?" Is it actionable?

Speaker Change: We've taken a look at our marketing materials and I just think one of the biggest triggers it is having the one year outcomes data that came during this period allowed us to really complete the story.

Speaker Change: We have a very we have a test that's very simple to understand what it does obviously it gives you the low medium and high risk test results for the patient.

Speaker Change: But now the first question the PCP or crowds us for that matter was going to ask is what do I do with this information is it actionable and now that there is a lot more tools in the toolkit from a standpoint of what you can do therapeutic wise.

Howard Doran: And now that there are a lot more tools in the toolkit from a standpoint of what you can do therapeutically for these patients, there are a lot of choices. So clearly, we are seeing evidence in our outcome study where, in the high-risk category, for example, there was a 61% increase in patients that were being put on SGLG-2s. So we've answered the question, "What does the test do? Is it actionable

Speaker Change: These patients there's a lot of choices. So clearly we are seeing evidence in our outcome study. We're in the high risk category. For example, there was a 61% increase in patients that were being put on STL Q2s. So we've answered. The question is what is the tests do is it actionable, yes, and then again the third thing that we're highlighting.

Howard Doran: Yes. And then again, the third thing that we're highlighting in all of our materials, or what are the outcomes? And there are really five distinct things, when you think about it, that we're really highlighting and referencing right now. One is just the clinical betterment of the patient. One is, James mentioned a moment ago, GFR. So, when GFR... flattening of the decline occurs, that means kidney function is being withheld, or the decline in kidney function is actually more stabilized. That's what I mean by that, which means it extends the runway to potentially further negative outcomes.

Speaker Change: And all of our materials are what are the outcomes and there's really five distinct things. When you think about it that we're really highlighting referencing right. Now one is just started the.

Howard Doran: So it's about a 50% reduction in the lowering of that GFR result that is causing that assistance. When you go to UACR, which is a measure of kidney damage, we're also seeing a reduction in UACR based on the medication. So kidney health, in general, the progression of the disease is slowing. So that's very important. And then the three additional factors are all HEDIS measures. One is because we're doing UACR testing in combination with our test. That's a HEDIS checkpoint. One third of patients in this study also saw a retreat in their blood pressure down to 140 over 90, back into the normal range. That's a HEDIS function.

Howard Doran: And also, a lowering in A1c was seen statistically significant in our high-risk and intermediate-risk patients. That also is a HEDIS reduction. So there are three distinct quality measures associated with HEDIS, as well as improvements in kidney health that are coming out of this outcome study. So that was really sort of the last piece of the story that we didn't have, and that's been incorporated into a much tighter, simpler message for clinicians to understand.

The clinical.

James: Betterment of the patient as one as James mentioned, a moment ago GFR, So when GFR.

Speaker Change: Flattening of the climate curse that means kidney function is being withheld or being.

Speaker Change: The decline in kidney function is actually some more stabilizes, what I mean by that which means it extends the runway to potentially further negative outcomes. So so much.

At a 50% reduction in the lowering of that GFR result that is causing that.

Speaker Change: Assistance when you go to <unk>, which is a measure of kidney.

Speaker Change: Image. We're also seeing a reduction in UA CR based on the medications, so kidney health in general that progression of the disease is slowing so thats.

Speaker Change: That's very important and then the three additional factors are all fleet. Its measures. One is because we are doing new ACR testing in <unk>.

Speaker Change: The combination with our test that's the heat is checkpoint.

Speaker Change: One third of patients in this study also saw a treat in your blood pressure down the 140 over 90 back in normal range. That's the heat dysfunction and also lowering <unk> seen statistically significant at our high risk and intermediate risk patients that also with the heat is reduction so there's three distinct quality measures associated with <unk>.

Speaker Change: As well as improvements in kidney health, they're coming out of our out of this outcome studies. So that was really sort of the last piece of the story that we didn't have and thats been incorporated in a much tighter simpler message for clinicians to understand so I would say those are the two biggest variables new team.

Speaker Change: Broader experience coupled with better data.

Speaker Change: Very streamlined approach on the advantages of <unk>.

Speaker Change: That's great Howard and then my last question I'll get back in queue I guess James for you Dan clearly touched on the importance of the LCD. It sounds like an event to my knowledge, what I looked I didn't see any negative comments in your opening comment period. So when do you expect finalization to happen then.

Howard Doran: So I would say those are the two biggest variables. A new team with broader experience, coupled with better data, and a very streamlined approach to the advantages of Kidney-Telix-DKD. That's great, Howard. And then my last question, and I'll go back in queue. This is, I guess, James, for you. You know, Dan clearly touched on the importance of the LCD. It sounds like an event. To my knowledge, when I looked, I didn't see any negative comments in the open comment period.

Randy Baron: So when do you expect finalization to happen? And what are the implications? Yes, the National Government Services has until September to issue it.

Speaker Change: What are the implications.

Speaker Change: Yes.

Speaker Change: National Government services.

Speaker Change: Has until September.

James McCullough: They could, you know, that's the standard time frame. [inaudible] We could see it sooner, then September. The implications are significant, especially in combination with guidelines. These processes are not easy at all.

Speaker Change: To issue.

Speaker Change: Yes.

That's the standard timeframe.

Speaker Change: Yes.

Speaker Change: We could see it sooner.

Speaker Change: Then September.

Speaker Change: The implications are significant.

Speaker Change: Especially in combination with guidelines.

Speaker Change: These processes are not easy at all.

James McCullough: They take a long time, and there's a lot of data production required, especially when you're innovating in an area where there's been nothing before you. So really, early prediction of chronic disease risk is a difficult thing to do, and we saw this with FDA, the level of proof and validation required to get through these government organizations and to be able to declare risk with accuracy early and do it in a way that it's simple for a primary care physician to interpret, even though there's a lot of technology behind it.

Speaker Change: They take a long time.

Speaker Change: There is a lot of data production required.

Speaker Change: Especially when you're innovating.

Speaker Change: In an area, where there has been nothing before you.

Speaker Change: So really prediction.

Early of chronic disease risk.

Speaker Change: He is a difficult thing to do.

Speaker Change: And we saw this with FDA.

Speaker Change: The level of proof and validation required.

Speaker Change: To get through the government organizations.

Speaker Change: And to be able to declare risk with accuracy early.

Speaker Change: And do it in a way that it's simple for a primary care physician to interpret even though theres a lot of technology back end.

James McCullough: This requires a significant amount of validation, a lot of data, a lot of processes. Getting Medicare coverage into such a large population is going to be a major event for us and not easy to replicate. And I think, you know, the comments I'm hearing, I gave you one earlier on, is that you really enter a new paradigm when you are in the guidelines and you've got this long-term Medicare coverage in place, and with the health economics data, with a clear advantage of kidney IntelliX, in terms of preventative medicine, I don't see a case why an insurance company does not cover kidney intellects.

Speaker Change: This requires a significant amount of validation a lot of data a lot of process.

Speaker Change: Getting Medicare coverage.

Speaker Change: Into such a large population is going to be a major event for us and not easy to replicate.

Speaker Change: And I think.

Speaker Change: The comments I'm hearing I gave you one earlier on.

Speaker Change: Is that this you really enter a new.

Speaker Change: Our new.

Speaker Change: Paradigm. When you are in the guidelines and you've got this long term Medicare coverage in place.

Speaker Change: And with the health economics data.

Speaker Change: With a clear advantage of kidney Intel X.

Speaker Change: In terms of preventative medicine, I don't see a case.

Speaker Change: Why an insurance company does not cover <unk>.

James McCullough: And for progressive thinkers, I don't see a case why insurance companies shouldn't educate physicians on the benefits of using kidney intelligence. (Inaudible) The insurance company wins. The patient wins. Obviously, we will win. The government wins because they're spending an inordinate amount of money on patients that fall into dialysis, which was published in JAMA last year. The first year alone for dialysis costs, treatment for kidney failure is over $200,000 a year. Everything's a time and a place.

Speaker Change: And for Progressive thinkers I don't see a case when insurance companies don't.

Speaker Change: Educate physicians on the benefits of using kidney <unk>.

Speaker Change: Everybody wins, the insurance company wins.

Speaker Change: The patient wins.

Speaker Change: Obviously, we will win.

Speaker Change: Hi.

Speaker Change: The government wins, because they are spending an inordinate amount of money.

Speaker Change: On patients that fall.

Speaker Change: All into dialysis, which published in Jama last year first year alone for dialysis cost treatment for kidney failures over 200000 hours a year.

James McCullough: We have the drugs now that are available, insurance coverage, they have very good data, and pharma is now educating us on the importance of diagnosing kidney disease, especially if you have diabetes. So the equation now becomes very simple, right?

Speaker Change: And.

Speaker Change: Everything is a time and a place we have the drugs now.

Speaker Change #100: Better available.

Speaker Change #100: <unk> coverage they have very good data and pharma is now out.

Speaker Change #100: Educating with us on the importance of <unk>.

Speaker Change #100: Diagnosing kidney disease, especially if you have diabetes. So the equation now becomes very simple.

James McCullough: It's if you have diabetes. You have to be diagnosed with kidney disease. Do you have it, or don't you?

Speaker Change #100: If you have diabetes.

Speaker Change #100: You have to be diagnosed for kidney disease do you have it or don't you.

James McCullough: and if you have diabetes and kidney disease, you have to understand your risk because we know the top 10 to 15% of patients at high risk by kidney experts have a greater than two-thirds chance of experiencing an event, a significant decline in kidney function or kidney failure, over the next couple of years. The bottom 50% of patients, regardless of their staging grade. You can be in the moderate stage kidney, but if you're at low risk by kidney intellect, you are highly unlikely to progress. So this is not a marginal equation.

Speaker Change #100: If you have diabetes and kidney disease.

Speaker Change #101: You have to understand your risk.

Speaker Change #101: Because we know the top 10% to 15% of patients.

Speaker Change #101: At high risk by <unk> of a greater than two thirds chance of experiencing an event significant decline in kidney function or kidney failure.

Speaker Change #101: Over the next couple of years.

Speaker Change #101: Bottom 50%.

Speaker Change #102: The patients regardless of stage and grade you can be moderate stage kidney disease.

Speaker Change #102: But if you are at low risk by kidney Intel X.

Speaker Change #102: You are highly unlikely to progress. So this is not a.

Speaker Change #102: Marginal equation.

James McCullough: This is, to me, a very strong, black and white equation at the front end of this huge disease funnel. And we can now, for the first time, rapidly and in an easy way for the primary care physician to determine who should be treated and who's really at risk and who's not. So everybody benefits from kidney intellect.

Speaker Change #102: This is a very strong.

Speaker Change #102: To me Black and White equation at the front end of this huge disease funnel and we can now for the first time.

Speaker Change #102: Rapidly and in an easy way for the primary care physician determined who should be treated.

Speaker Change #103: And who is really at risk and who's not.

Speaker Change #103: So everybody benefits with kidney Intel X.

James McCullough: And the payoff comes very quickly because the cost of not catching people early is so significant, so we can eliminate a whole lot of suffering across millions of patients and a whole lot of cost. This really is the paradigm for how you manage chronic disease, and not to go too much further, but This is the issue that we all face in clinical medicine going forward. How do we manage chronic disease? because you can't treat everybody.

Speaker Change #103: And the payoff comes very quickly.

Speaker Change #103: Because the cost of not catching people early is so significant so we can eliminate a whole lot of suffering.

Across millions of patients and a whole lot of cost. This really is the paradigm for how you manage chronic disease.

And not to go too much further but.

Speaker Change #103: This is the issue that we all face in clinical medicine going forward, how do we manage chronic disease.

James McCullough: Populations are too large, and if you don't have early, accurate early prognosis, and accurate early risk assessment, you've already lost the war. And here we now have FDA approval, beautiful outcomes in the guidelines, and now with and LCD, the equation is really complete, and we've achieved what should be the standard of care around the world for early stage prognosis in this big disease state. So, I do think the LCD issuance is a key and critical validation and is going to help start to move the clinical community towards adoption. That's great.

Speaker Change #104: Because you can't treat everybody populations with two large and if you don't have prognosis early accurate early prognosis accurate early risk assessment, you've already lost the war.

Speaker Change #105: And here, we now have an FDA approved <unk>.

Speaker Change #105: Beautiful outcomes in the guidelines and now with an LCD.

Speaker Change #105: The equation is really complete.

Speaker Change #105: And we've we've achieved what should be now the standard of care around the world.

Speaker Change #105: Early stage prognosis in this big disease States. So I do think the LCD issuance.

Speaker Change #105: <unk> is a key and critical validation.

Speaker Change #105: And there is going to help start to move the clinical community towards adoption.

Randy Baron: Good luck. Thank you. And our next question coming from the lineup, Mark Massaro with BTIG, your line is open. Hey, Mark, we can't hear you. You may be on mute.

Speaker Change #106: That's great good luck.

Speaker Change #105: Yes.

Speaker Change #107: Thank you.

Speaker Change #108: And our next question coming from the line of Mark Massaro with BG AIG. Your line is now open.

Speaker Change #109: Hey, Mark we can't hear you maybe on mute.

Mark Anthony Massaro: Oh, sorry about that. Can you hear me now? Yes, now I can hear you. Okay, yeah, thanks for taking my questions. So, you guys got into final Codigo guidelines two months ago, and in the past, you've disclosed metrics like the number of commercial payers, the number of Medicaid contracts. I think, you know, roughly 40 private payers and call it 35 state Medicaid contracts. Do you have an update on the payer coverage that you have today? And in the last couple of months, has there been any movement towards engaging payers in a greater capacity? And maybe, could you just remind me who you have?

Mark Anthony Massaro: Sorry about that can you hear me now.

Speaker Change #111: Yes, now we can hear you.

Mark Anthony Massaro: Okay, yes, thanks for taking my questions.

Speaker Change #112: So you guys got into final <unk> guidelines, two months ago and in the past you've disclosed metrics like number of commercial payers.

Speaker Change #112: Number of Medicaid contracts, I think roughly 40, private payers and call. It 35 state Medicaid contracts.

James McCullough: You know, obviously, you've made some reductions in headcount, but do you have a team of folks in front of commercial payers at this time? Yes, and I'll take that last question.

Speaker Change #112: Do you have an update on the payer coverage that you have today and in the <unk>.

Speaker Change #113: Last couple of months has there been any more.

Speaker Change #113: Movement towards engaging.

Speaker Change #114: And a greater capacity and maybe could you just remind me who you have.

Speaker Change #115: Obviously, you've made some reductions in head count, but do you have a team of folks in front of commercial payers at this time.

Speaker Change #116: Yes, I'll take that last question the head count reduction is obviously been painful.

James McCullough: Now, the headcount reduction has obviously been painful. We have ended up with what I think is an efficient Market Access Group, which is the group that interacts with payers. We also have a third-party billing group that we've been working with for a while now who has taken on more and more of the burden of administration because as you get more and more payer contracts, there's a larger administrative burden that goes along with maintaining those payer contracts. So we've been able to find a more efficient mix there. And again, as I said originally, earlier on in the call.

Speaker Change #116: And.

Speaker Change #116: We have ended up with.

Speaker Change #116: What I think is an efficient.

Speaker Change #116: Market access group.

Speaker Change #116: Which is the group that.

Speaker Change #116: Interaction with payers. We have also we have a third party billing group that we've been working with for a while now who has taken on more and more of the burden.

Administration burden, because as you get more and more payer contracts. There is a larger administrative burden that goes along with maintaining those payer contracts.

Speaker Change #116: And.

Speaker Change #116: So we've been able to find a more efficient mix there.

Speaker Change #116: And again as I said originally.

James McCullough: This is a dynamic process. I've learned an awful lot about how you create comprehensive payer coverage. It's very difficult, right because you have different payers with different ideas of value-based care, different ideas of health economics, and different drivers. There are early adopters, mid adopters, and late adopters. There are national payers, there are local payers. There's Medicare, and Medicaid. This is an incredibly complex equation, and it requires an enormous amount of data and proof.

Earlier on in the call. This.

Speaker Change #116: This is a dynamic process have learned.

Speaker Change #116: Awful lot about how do you create comprehensive payer coverage, it's very difficult right. Because you have different payers with different ideas of value based care different ideas of health economics different drivers. There are early adopters mid adopters in late adopters that are national payers. There are local payers there is Medicare Medicaid.

Speaker Change #116: This is an incredibly complex equation and it requires an enormous amount of data improve.

James McCullough: And I think, you know, for example, for us to be able to get contracts like Texas Blue Cross Blue Shield, which covers over 8 million members, Illinois Blue Cross Blue Shield, which I believe covers over 8 million members, and Emblem Healthcare in New York City. These are very sophisticated groups. They look at the data, and they require a lot of diligence before they issue a coverage determination, especially for an advanced diagnostic test like kidney intellix.

Speaker Change #116: And I think for example.

Speaker Change #116: For us to be able to get contracts like Texas Blue Cross Blue Shield, which covers over 8 million members in Illinois, Blue Cross Blue Shield, which I believe covers over 8 million members emblem health care.

Speaker Change #117: In New York City.

Speaker Change #117: These are very sophisticated groups they look at the data.

Speaker Change #117: And they require a.

Speaker Change #117: Lot of diligence before they issue a coverage determination.

James McCullough: Many of them are now requiring outcomes data, not just utility data, and that requires time, a time function, which is a significant investment, and there's no shortcut. Many of them require FDA approval. Otherwise, you're deemed to be experimental.

Speaker Change #117: For an advanced diagnostic tests like kidney <unk>. Many of them are now requiring outcomes data not just utility data and that requires time.

Speaker Change #117: <unk> function, which is a significant investment and.

Speaker Change #118: And there is no shortcut.

Speaker Change #118: Many of them require FDA.

Speaker Change #118: Otherwise you are deemed to be experimental.

James McCullough: So we've been very fortunate because from the very beginning at Renalytix, we set this dynamic up. We knew this was going to be an uphill fight to get this, and we've all died on the hill of reimbursement. If you can't get paid, you know, you have a big research project; you don't have a business. So we knew from the very beginning we had to generate outcomes data. We made the choice to go through FDA. And all of this, of course, was focused on getting to the guidelines as well.

So.

Speaker Change #118: We've been very fortunate because from the very beginning it renal.

Speaker Change #118: <unk>, we set this dynamic up we knew this was going to be an uphill fight to get this and we have all died on the hill of reimbursement and if you can't get paid.

Speaker Change #119: You have a big research products projects, you don't have a business. So we knew from the very beginning we have to generate outcomes data. We made the choice to go through FDA.

Speaker Change #119: And all of this of course was focused on getting to the guidelines as well. So it has been a continued update process.

James McCullough: So it has been a continual update process. Having been put in the final guidelines is a major help because we are no longer experimental. Nobody can say, oh, you know, you're just a laboratory-developed test.

Speaker Change #119: Having been put in the final guidelines as a major help because we are no longer experimental nobody can say.

Speaker Change #119: Just a laboratory developed test.

James McCullough: Now we can point to a whole sequence of major payer decisions on draft LCDs, guidelines, FDA, and outcomes data. I cannot see a reason why a health care insurer, especially with the risk exposure to chronic kidney disease and diabetes. All right, this is not just screening people. These are patients walking into a primary, a very busy primary care physician's office, with a complex disease, multiple complex diseases, that could represent a significant short-term actuarial risk. There is no logical reason why you shouldn't understand the risk of that patient.

Now we can point to a whole sequence of major payer decisions a draft LCD guidelines FDA outcomes data.

Speaker Change #119: I cannot see a reason why a healthcare insurer.

Speaker Change #119: Especially with the risk exposure to chronic kidney disease and diabetes.

Speaker Change #120: Alright. This is not just we're not screening people here.

Speaker Change #121: These are patients walking into a primary a very busy primary care physician office.

Speaker Change #121: With a complex disease.

Speaker Change #121: Disease multiple complex diseases.

Speaker Change #122: That could represent a significant short term actuarial risk there is no reason.

Speaker Change #123: No logical reason why you shouldnt understand the risk of that patient.

James McCullough: And we're now talking about adding very expensive drug prescriptions to the table. So prognosis, precision medicine prognosis, which is kidney intellect, which can be utilized by the primary care physician. This is key, right? It's got to be very simple.

Speaker Change #123: And we're now talking about adding very expensive drug prescription.

Speaker Change #123: To the table.

Speaker Change #123: So prognosis precision medicine, prognosis, which is kidney Intel X.

Speaker Change #123: Which can be utilized by the primary care physician this is key.

James McCullough: It's got to be rapid. It's got to be very actionable, which is what we spent a lot of time and money figuring out and having it regulated. This becomes critical to managing the disease and all of the downstream suffering and all of the downstream expenses. It becomes critical to health equity in the United States. And I'm pounding the table here because this is the solution to managing chronic disease, getting in early at the primary care level and understanding risk.

Speaker Change #124: It's got to be very simple, it's got to be rapid it's got to be.

Speaker Change #125: Very actionable, which is what we spent a lot of time and money figuring out.

Speaker Change #125: And having a regulated.

Speaker Change #125: This becomes critical to managing the disease and all of the downstream suffering and all of the downstream expense. So it becomes critical to the health the equity equation in.

Speaker Change #125: In the United States.

Speaker Change #125: I'm pounding the table here because this is the solution.

Speaker Change #125: For managing chronic disease getting an early at the primary care level and understanding risk.

James McCullough: From there, all of the clinical decisions can be made, and if you don't understand risk, and we see this now in the real world data, physicians are not understanding risk without kidney intellects, and we see that Today in the United States, still 50% of the people who enter hemodialysis do it through an emergency.

Speaker Change #125: From there all of the clinical decisions can be made.

Speaker Change #125: And if you don't understand risk and we see this now in the real world data.

Speaker Change #125: Physicians are not understanding risk.

Speaker Change #125: Without kidney and <unk> and we see the consequence.

Speaker Change #125: Today in the United States still 50% of the people who enter hemo dialysis.

James McCullough: We're still having crash catheterization. We're now prescribing $1,500 a month cycle of biologics into patients who may respond or not, who may not be high risk. So unless you understand where you are on the risk spectrum, unless you understand the ability to characterize the disease, and you can do it in a very simple way, which is not easy, you can't control it.

Speaker Change #125: Do it through the emergency room.

Speaker Change #125: We're still having crash catheterization.

Speaker Change #126: We're now prescribing 1500 dollar a month cycle biologics into patients who may respond or not.

Who may not be high risk so unless you understand where you are on the risk spectrum, unless you understand the ability to characterize the disease and.

Speaker Change #127: And you can do it in a very simple way.

Speaker Change #127: Which is not easy.

Speaker Change #127: Then.

James McCullough: So, the LCD is a significant event for us, and we're continuing to update the payer landscape. I don't have all of the numbers in front of me, but a lot of them are listed on the website, and we issue 8Ks with material events.

Speaker Change #128: You can't control it so.

Speaker Change #129: The LCD is a significant event for us and we're continuing to update the payer landscape I don't have all of the numbers in front of me, but a lot of them are listed on the website and we do issue 8-K's with material events.

Mark Anthony Massaro: I would like to see national payers coming on board. They're spending an awful lot of money that they don't need to spend on late-stage kidney disease. If they implement kidney intelligence across their systems, it is now abundantly clear that preventative medicine goes in place, and you start to prevent progression, and you get a much better characterization of these huge populations that you're now insuring. So I think we're in a win-win position for 2024 to knock off the rest of the insurance companies. Okay, that's helpful.

Speaker Change #129: I do I would like to see national payers coming onboard.

Speaker Change #129: They are spending an awful lot of money that they don't need to spend on late stage kidney disease, if they implement kidney Intel X across their systems.

Speaker Change #129: It is now abundantly clear.

Speaker Change #129: That preventative medicine goes in place and you start to prevent progression.

Speaker Change #130: And you get a much better characterization on these huge populations that you are now insuring.

Speaker Change #130: So I think we're in a win win position.

Speaker Change #130: For 2024 to knock off the rest of the insurance coverage.

Mark Anthony Massaro: And certainly, it would be great to see the LCD go final by September or sooner. I know in the past, James, you talked about a potential opportunity to get an NCD, you know, the National Coverage Determination. Is that still a pathway you guys are looking at? Or is it really just more about, you know, getting the LCD and just going from there?

Okay. That's helpful and certainly it would be great to see the.

Speaker Change #131: LCD go find all by September or sooner.

Speaker Change #132: I know in the past James you talked about a potential opportunity to get an NCD. The national coverage determination is that still a pathway you guys are looking at or is it really just more about.

Speaker Change #132: Getting the LCD and just going from there.

James McCullough: It still is a possibility. We are speaking with CMS. We are speaking with FDA. But I think, for all practical purposes, an LCD finishes the game for us.

It still is a possibility.

Speaker Change #133: We are speaking with CMS, we are speaking with FDA.

Speaker Change #133: But I think for all practical purposes in LCD finishes the game.

Speaker Change #133: For us and just just to remind everybody.

James McCullough: And just to remind everybody, National Government Services is the Medicare contractor that is going to issue, that has issued the draft LCD, and as long as we process samples in our New York laboratory, we can now bill for $950 to National Government Services and get paid. We're being paid now under a convention called ICR, Individual Claim Review. It's a little bit cumbersome.

Speaker Change #134: National Government services as the Medicare contractor that is going to issue that is issued the draft LCD.

Speaker Change #135: And as long as we process samples in our New York Laboratory.

Speaker Change #135: We can now build at $950.

Two national government services and get paid we're being paid now under a convention called ICR individual claim review, it's a little bit cumbersome. So the issuance of an LCD again will be another incremental smoothing.

James McCullough: So the issuance of an LCD again will be another incremental smoothing into the clinical pipeline, but we can take a sample from any Medicare beneficiary, anywhere around the world, as long as we process that sample in our New York laboratory, we can build Medicare. So, a final LCD means that we can serve the entire Medicare population with kidney intelligence. All right, that's great. Last question for me.

Speaker Change #135: Into the clinical pipeline.

Speaker Change #135: But we can take a sample from any Medicare beneficiary.

Speaker Change #135: Where around the world as long as we process that samples in our New York Laboratory, we can bill Medicare So.

Speaker Change #135: A final LCD means that we can service the entire Medicare population with kidney Intel X.

Mark Anthony Massaro: Howard, I appreciate the update on the commercial organization. It sounds like there are approximately 10 people on the sales force. Do you expect to stay there this year?

Speaker Change #136: Alright, that's great last question for me.

Speaker Change #137: I appreciate the update on the commercial organization. It sounds like there are approximately 10 people on the sales force.

Speaker Change #138: Do you expect to stay there this year I understand that.

Howard Doran: You know, I understand that cash-burning capital is something you have to keep your eye on. But yes, should we expect you to stay flat at 10 this year, or is there potential to add to that? And then, you know, if there was no rate limiting factor with capital over the longer term, how would you see a healthy sales force? You know, what would that look like, you know, in a couple of years? Sure, Mark.

Speaker Change #139: Cash burn and capital is something you have to keep your eye on but.

Speaker Change #140: Yes, it should should we expect you to stay flat at 10 this year.

Speaker Change #140: Or is there a potential to add to that and then.

If there was no rate limiting factor.

Speaker Change #141: With capital.

Speaker Change #142: Longer term, what how do you see a healthy sales force what would that look like in a couple of years.

Howard Doran: Yes, so you're correct. We are currently at 10 in regards to what we have today. We are always looking at opportunities that we're opening doors to now as far as access to larger groups. And we have a couple of things that we're working on currently that, if those came to fruition, we would be adding potentially one or two folks. You know, at the end of the day, though, what we're really trying to prove is the productivity that we can see with the new team in its first year.

Mike: Sure Mike Yes. So you are correct. We are currently at 10.

Mike: In regard so we have today, we are always looking at opportunities.

Mike: That we are opening doors with now as far as access to larger groups and we have a couple of things that we're working on currently.

Mike: Those came to fruition, we would be adding potentially one or two folks.

Speaker Change #144: At the end of the day, though what we're really trying to prove out is what's the productivity that we can see in the new with the new team in its first year. So that's really the measuring stick that we're paying close attention to but yes, we would be in very small opportunities, we'd be still cautious and deliberate because of the spend but there are a couple of inflection.

Howard Doran: So that's really the measuring stick that we're paying the closest attention to. But yes, we would be in very small opportunities. We'd still be cautious and deliberate because of the spend, but there are a couple inflection points that we want to maximize that would not be able to be covered by our existing team. So we will, you know, certainly as those come on board, we certainly will, you know, talk about those. But that would be the ads.

Speaker Change #144: <unk> that we want to maximize that would not be able to be covered by our existing team. So.

Speaker Change #144: We'll certainly as those come on board, we certainly will talk about those but that would be the ads I think what we have as far as the markets. We're in as we've discussed before we follow the.

Howard Doran: I think what we have as far as the markets we're in, as we've discussed before, we follow the actual need, markets that have a high penetration rate of type 2 diabetics with chronic kidney disease overlaid with very favorable managed care. Those markets right now for us are Ohio, North Carolina, New York, Florida, Texas, and Louisiana. And so as much as we've been talking about the LCD and additional reimbursement, those are just very strong markets for us across the board, strong from a standpoint of need, and strong from a standpoint of having the managed care contracts and programs that we need to be successful within those.

Speaker Change #144: The actual need markets that have a high penetration rate of type two diabetics with chronic kidney disease overlaid with very favorable.

Speaker Change #144: Managed care those markets right now for Us, Our Ohio, North Carolina, New York, Florida, Texas and Louisiana.

Speaker Change #144: And so as much as we've been talking about the LCD and additional reimbursement those are just very strong markets for us across the board strong from the standpoint of need strong from our standpoint.

Speaker Change #144: Having the managed care contracts and programs that we need to be successful within those so from an expansion standpoint, yes.

Howard Doran: So from an expansion standpoint, yes, it would all, you know, it would be a lot of still looking at opportunities that, you know, have those same characteristics, right? We wanna go to places first where there's a tremendous need coupled with who has the best reimbursement. And look, I've had sales organizations of many sizes. Obviously, the number that we would put in the field and deploy would be the type of funding we had at the time. So that's a little hard to answer that one hypothetically without discussing, "If you had X dollars, what would you do?"

Speaker Change #145: It would be a lot of still looking at opportunities that.

Speaker Change #145: Uh huh.

Speaker Change #145: Have those same characteristics right. We wanted to go to places first though where there's a tremendous need coupled with who has the best reimbursement and look I've had sales organizations of many sizes.

Speaker Change #145: Obviously, the number that we would put in the field and deploy would be the type of funding we have at the time, so thats a little hard to answer that one hypothetically without discussing if you had X dollars what would you do I could be more direct there, but just yes, we want to expand we want to continue to raise we know we can.

Howard Doran: I could be more direct there, but just, yes, we wanna expand, we wanna continue to raise. We know we can drive results now at the PCP level, and we wanna beta magnify that over time. I just couldn't give you a firm number as we sit here today, other than the couple additional ads that I foresee over the next couple of months, and probably some other events that we're working on.

Speaker Change #145: We can drive results now with the PCP level, and we want to magnify that over time I just couldnt give you a firm number as we sit here today other than a couple of additional adds that I foresee over the next couple of months most likely do some other things that we're working on.

Mark Anthony Massaro: Okay, great. Thanks, guys. Thank you. And our next question comes from the line of Yi Chen with HC Ranmarie. Your line is open. Morning, this is Ashton on behalf of Yi Chen.

Speaker Change #146: Okay, great. Thanks, guys.

Speaker Change #147: Thank you.

Speaker Change #148: Next question coming from the line of Ian.

Speaker Change #149: Chen with H C. Wainwright your line is now open.

Ashton: Good morning, this is ashton.

Speaker Change #151: I am <unk> Chen Thank you for taking our questions.

Yi Chen: Thank you for taking our questions. The first question is, what are the hurdles for wide adoption of the test in the VA system? Also, what is the estimated timeframe to achieve cash flow break-even? So the VA system took me to school.

Speaker Change #152: First question is what are the hurdles for wide adoption of the test in the VA system also what is the estimated timeframe to achieve cash flow breakeven.

Speaker Change #151: Okay.

Speaker Change #153: So the VA system took me to school.

James McCullough: I thought that when we had a general services administration contract, which we still have, which is important, by the way, for also retaining the price point. All right. One of the great lessons in reimbursement is that if you come down on price, or you negotiate a lower price with somebody else, you never get it back.

Speaker Change #154: I thought that when we had a general services administration contract, which we still have.

Speaker Change #154: Which is important by the way for also.

Speaker Change #155: Retaining the price point.

Speaker Change #155: Alright.

Speaker Change #155: One of the great lessons in reimbursement is if you come down on price, where you negotiate a lower price or somebody else.

James McCullough: So having the General Services Administration lock in the price of $950, which obviously covers the VA system, and having CMS also crosswalk to that price point. That is the price point, and we have not backed down on that price point, and that retains the margin and the value for the addressable market. But the VA system, I think we have substantially overestimated. We are overall optimistic about what we're able to achieve. We had national support, and we really viewed VA going into it as one entity. And it turns out there are something like 170. [inaudible] individual sites in the VA.

Speaker Change #155: Never get it back.

Speaker Change #156: So having the general services administration.

Speaker Change #156: Lock in the price of $950.

Speaker Change #156: Which obviously covers the VA system and having CMS also cross walked to a $950 price that is the price point and we have not backed down on that price point.

And that retains the margin and the value for the addressable market.

Speaker Change #156: But the VA system.

Speaker Change #156: I think we substantially overestimated we are owed.

Speaker Change #156: Optimistic on what we were able to achieve.

We had national support.

And we really viewed VA going into it as one entity.

Speaker Change #156: And it turns out there is something like 170.

James McCullough: Many of them operate differently, and it became incredibly complex in that system to roll out an advanced prognostic like kidney intellects. There were many ironies, inefficiencies, and We overhired to go after VA, and we had to do a complete about-face. I still think it's a fabulous market space. There are over a hundred, I'm sorry, there are over a million diabetic kidney disease patients.

Speaker Change #156: Different.

Speaker Change #156: Individual sites in the VA many of them operate differently and it became incredibly complex.

Speaker Change #156: In that system to rollout and advanced prognostic like kidney Intel X there were many ironies.

Speaker Change #156: Inefficiencies and.

Speaker Change #157: We over hired.

To go after the VA and we had to do a complete about face.

Speaker Change #158: I still think it's a fabulous market space. There are over 100, I'm sorry, there are over 1 million diabetic kidney disease patients there are veterans.

James McCullough: There are veterans who we should be taking care of that would benefit from Kidney Intel X. And at a future date, I want to go back in to the VA and integrate, because I do believe it's an important market space and I do believe we can come from a top-down approach and gain traction, but, again, in this capital markets environment, which I've never experienced. I've never experienced such derating in a sector.

Speaker Change #159: Who we should be taken care of that would benefit from kidney Intel X.

Speaker Change #159: And at a future date I wanted to go back in to.

Speaker Change #159: To the VA and integrate.

Speaker Change #159: Because I do believe it's an important market space and I do believe we can come from a top down approach.

Speaker Change #159: And gain traction but.

Speaker Change #159: Again in this capital markets environment, which I have never experienced before I've.

Speaker Change #159: I've never experienced such a de rating.

James McCullough: And I never thought that we would have such limited access to the capital market; we had to drop the VA effort by and large. So I do not expect the VA will be part of our plans in calendar 24. If conditions approve in calendar 25, we'll go back in, but we've learned a few lessons there. It's one of the reasons we've reorganized around Howard and his experience having been very successful with broad diagnostics launches, including in cervical cancer and other areas.

Speaker Change #159: In our sector.

Speaker Change #159: And I never thought that we would have.

Speaker Change #159: Such limited access to the capital markets.

Speaker Change #159: We had to drop the VA effort.

Speaker Change #159: By and large so I do not expect the VA will be part of our plans in calendar 'twenty four.

Speaker Change #159: If conditions improve in calendar 'twenty five.

Speaker Change #160: We will go back in.

Speaker Change #160: But we've learned a few lessons there it's one of the reasons, we've reworked around Howard and his experience having been very successful with.

Speaker Change #160: Broad diagnostics launches, including in cervical cancer and other areas.

James McCullough: And we're now focused on a limited, high-performing sales force in very specific regions where we have high insurance coverage, large rates of diabetes, and maybe a large clinical provider working alongside us. It takes you a while to figure out the model that's really going to take off. Where does adoption come in?

Speaker Change #160: And we're now focused on a limited high performing sales force in very specific regions, where we have high insurance coverage large rates of diabetes.

Speaker Change #160: And maybe a large clinical provider working alongside us.

Speaker Change #160: It takes you a while to figure out the model, that's really going to take off.

Speaker Change #161: Where does adoption come in.

James McCullough: You know, I... This has been an ongoing question, and I look at it through two lenses. One, we are still a young company, believe it or not, you know, we really didn't launch Kidney in force on a commercial basis until just over a year ago. And we are just, in April, launching the FDA-approved Kidney Intellix, so last month, and diagnostics is the worst business. And it's the best business. It's the worst business because you've got to cross all of these mountains.

Speaker Change #160: Aye.

Ben: This is Ben.

Ben: Ongoing question and I look at it in two lenses one.

Ben: We are still a young company believe it or not.

Ben: We really didn't launch kidney Intel X.

Ben: Enforce on a commercial basis.

Ben: Until just over a year ago.

Ben: And we are just in April launching the FDA approved kidney intellects, so last month.

Speaker Change #163: And diagnostics is the worst business and it's the best business, it's the worst business because you've got across all of these mountains.

James McCullough: FDA, you know, Medicare reimbursement, outcomes data, and now guidelines. You've got to cross all of those things before a very conservative and codified clinical infrastructure says, okay, this should be ready now to use as a standard of care. We've now crossed all of those things, and this is where I believe diagnostics will become a very good business because the barriers to entry are very high behind us. The deeper I get into diabetic kidney disease, it becomes even more clear how significant a problem this is.

Speaker Change #163: FDA.

Speaker Change #164: Medicare reimbursement outcomes data and now guidelines, you've got across all of those things before a very conservative and codified clinical infrastructure.

Speaker Change #164: Okay. This should be ready now to use as a standard of care. We've now crossed all of those things and this is where I believe diagnostics becomes a very good business.

Speaker Change #164: Because the barriers to entry are very high behind us.

Speaker Change #164: The deeper I get into diabetic kidney disease, it becomes even more clear how significant a problem. This is not.

James McCullough: And not only is it not going away, but it's growing. You know, we've got to do something about it. And the first step is you've got to know early what your risk is. I came out of prostate cancer. And, you know, the analog is very clear. When do you want to know you have cancer?

Speaker Change #164: Not only is it not going away, but it's growing.

And.

Speaker Change #164: We gotta do something about it and do something about it is you got to know early.

Speaker Change #164: Whats your risk is I came out of the prostate cancer World.

Speaker Change #164: The analog is very clear when do you want to know you have cancer.

James McCullough: as soon as possible because it changes your treatment paradigm, it changes your outcomes, your suffering, and it changes the cost. The same is true with kidney disease. All of us on the phone are eventually going to start to lose kidney function as we get older. The question is, does it matter? For most of us, it doesn't. But for a significant percentage of us, it's going to matter a lot. And the sooner we know, Sooner, we can treat it. We have drugs to treat it; we didn't five, six years ago, not like SGLT2 inhibitors and GLP-1.

Speaker Change #164: As soon as possible.

Speaker Change #164: Because it changes your treatment paradigm it changes your outcomes youre suffering.

Speaker Change #165: The cost the same is true with kidney disease all of us on the phone.

Speaker Change #165: Are eventually going to start to lose kidney function as we get older.

Speaker Change #165: The question is does it matter for most of us it doesn't.

Speaker Change #165: But for a significant percentage of us it's going to matter a lot and the sooner we know.

Speaker Change #165: The sooner we can treat it and we have drugs to treat it now.

Speaker Change #165: Five six years ago, not like <unk>, two inhibitors and <unk>.

James McCullough: So there's no rational reason why, to me, with an FDA-approved precision medicine prognostic product that is now in the guidelines and is paid for by insurance, that this is not set up for broad adoption, and it's a matter of time. Right, you know, the capital markets aren't giving us much, and that's okay. But things will change. Interest rates will eventually come down, and investor sentiment will change. So for us, it's one foot in front of the other. We have a very focused, high-performance sales force that is going into very specific regions. We're not boiling the ocean.

Speaker Change #165: So there is no rational reason why too.

Speaker Change #166: To me.

Speaker Change #167: With a FDA approved precision medicine prognostic product that.

Speaker Change #167: That is now in the guidelines and is paid for by insurance.

Speaker Change #167: That this is not set up for broad adoption.

And it's a matter of time alright.

Alright, now the capital markets isn't giving us much time.

Speaker Change #167: And that's okay, but things change interest rates will eventually come down.

Speaker Change #168: And investor sentiment will change so for us it's one foot in front of the other.

Speaker Change #168: We have a very focused high performing sales force that is going into very specific regions, where not boiling the ocean.

James McCullough: We've learned an awful lot over the last couple of years about what the messaging is to the physician who is ordering kidney intelli. And that messaging right now is very clear. Hey, doctor, we have a tool that goes after one of the major complications in your diabetes, and it's FDA approved. We accept all insurance.

Speaker Change #168: We've learned an awful lot over the last couple of years about what the messaging is.

Speaker Change #168: The physician.

Speaker Change #168: Was ordering kidney until X and that messaging right now is very clear a doctor we have a tool.

Speaker Change #168: Which goes after one of the major complications in your diabetes patients.

Speaker Change #168: And it's FDA approved.

Speaker Change #168: We accept all insurance.

James McCullough: It's in the clinical guidelines, Guidelines Standard of Care, and here's what happens when you use it. Not only do you improve your kidney disease, but you improve your diabetes patients' health, so the rationale is very strong. It's comprehensive, and it's data-driven. We've invested heavily in the data, which now puts us in a good position to drive adoption incrementally. We've got to watch the cost; that's critically important. But we've got the right team in place.

Speaker Change #168: And the clinical guidelines, so it's guideline standard of care.

Speaker Change #168: And here's what happens when you use it.

Speaker Change #169: Not only do improve your kidney disease, but you improve your diabetes patients health.

Speaker Change #168: So.

Speaker Change #168: The rationale is very strong its comprehensive data driven we.

Speaker Change #170: We've invested heavily in the data which now.

Speaker Change #170: Put us in a good position to drive adoption incrementally.

Speaker Change #170: We got to watch the cost.

Speaker Change #170: That's critically important.

Speaker Change #170: But we've got the right team in place we have right sized the organization.

James McCullough: We have the right size, the organization. So, we're not burning a ton of cash for a... [inaudible] reimbursed clinical diagnostic company, services company. Our operating burn is actually quite good. And now we just got to keep our noses down, and put one foot in front of the other.

Speaker Change #170: So we're not burning a ton of cash for a.

Speaker Change #170: Medicare.

Speaker Change #170: Reimbursed clinical diagnostic company services company.

Speaker Change #170: Our operating burn is actually.

Speaker Change #170: Quite good.

And now we just got to keep our nose down.

James McCullough: And I think the adoption will come. I think it is a function of time at this point. The LCD is gonna help when the final is issued. That will raise visibility again. And now the question is, how do we maximize shareholder value? And that comes down to optionality. And optionality comes in the form of a competitive strategic process. It comes in the form of runway, which is a function of equity capital.

Speaker Change #170: And put one foot in front of the other and I think the adoption will come I think it is a function of time at this point the LCD is going to help.

Speaker Change #170: When the final was issued.

Speaker Change #170: That will raise visibility again.

Speaker Change #170: And now the question is how do we maximize shareholder value.

And that comes down to Optionality.

Speaker Change #170: And Optionality comes in the form of a competitive strategic process. It comes in the form of runway.

Speaker Change #170: Which is a function of equity capital.

James McCullough: So we want to have as long a runway as possible so that we can run a competitive process, or we can continue to grow the business on an incremental basis. We have a number of significant opportunities in front of us in 2024 in terms of additional hospital partners, additional areas where we can roll out, and it's a very powerful message when you walk into a primary care and say, "primary care physician" and say, "this is a simple actionable solution, which is covered by insurance and FDA-approved and in the guidelines." So, you know, for the first time, we are in a position where we've checked all the boxes, and I cannot believe that adoption will not follow. Of course, we have to prove it.

Speaker Change #170: So we want to have a long runway as possible.

Speaker Change #170: So that we can run a competitive process or we can continue to grow the business on an incremental basis.

Speaker Change #170: A number of significant opportunities in front of us in 2024 in terms of additional hospital partners additional.

Speaker Change #170: Areas, where we can rollout.

Speaker Change #170: And it's a very powerful message when you walk into the primary care and say primary care physician and say this is a simple actionable solution.

Speaker Change #170: Which is covered by insurance and FDA approved and in the guidelines.

Speaker Change #170: <unk>.

Speaker Change #170: For the first time, we are in the position, where we've checked all the boxes.

Speaker Change #170: And I cannot believe.

Speaker Change #170: That adoption will not follow of course, we have to prove it.

Yi Chen: And I think now that we've built a direct-to-physician sales force of high performers under great leadership. Again, that provides us with additional optionality to prove at the. Thank you so much for that.

Speaker Change #170: And I think now that we built a direct to physician sales force.

Speaker Change #170: High performers under Great leadership.

Speaker Change #170: Again that provides us with additional optionality to prove out the business model.

Operator: And the next question is, what is the estimated timeframe to achieve cash flow break even? Yes, so we're not going to answer that because that's a forecast, which is not what we're going to do, but... certainly, our break-even point is much lower than it was. Okay, thank you for your time. Thank you. I appreciate it. Thank you. And as a reminder, to ask a question, please press star 1, 1. Our next question comes from the line of Bobby Demmer with DM Capital Partners. Your line is open. Hey guys, thanks for taking the call. Thank you, Bobby.

Speaker Change #171: Thank you so much for that.

Speaker Change #172: Next question is what is the estimated timeframe to achieve cash flow breakeven.

Yes, so we're not going to answer that because thats our forecast.

Speaker Change #173: Which is.

Speaker Change #173: Not what we're going to do but.

Speaker Change #173: Certainly our breakeven point is much lower than it was.

Speaker Change #173: With the <unk>.

Speaker Change #173: Anthony.

Anthony: Thank you appreciate it.

Anthony: Okay.

Speaker Change #175: Thank you.

Speaker Change #176: And as a reminder to ask a question. Please press star one.

Speaker Change #177: Our next question coming from the line of Bob <unk> with <unk>.

Speaker Change #178: DM capital Partners. Your line is now open.

Bob <unk>: Hey, guys. Thanks for taking my call.

Speaker Change #180: Hi, Sharon.

Bobby Demmer: Yes, we can. Okay. This... Taylor, this towards Howard, it's kind of building on what you're talking about here, but you had 806 tests that you reported in court, and you said that 82% of those were billable. So, back of the envelope, that takes us to 660 billable tests. Of that number, how many of those were system driven, and how many of those were salespeople driven? So, OJ, we have about 40% of that number, Bobby, are the actual PCP cells, and the other is Sinon, roughly cyanide. And do you have wake in that mix, or is it just cyanide? Jeff Sarnak.

Sharon: Yes, we can.

Sharon: Okay.

I wanted to.

Speaker Change #182: Taylor this towards Howard.

Speaker Change #183: It's kind of building on what you are talking about here, but.

Speaker Change #184: You had 806 tests that you reported in the quarter, you said that 82% of those were billable so back of the envelope. It takes us to 616 billable tests.

Speaker Change #184: That number how many of those were.

Speaker Change #184: System, driven and how many of those were salespeople driven.

Okay.

Speaker Change #184: Okay.

Speaker Change #184: Okay.

About 40% of that number Bobby is the actual TCP sales and the other is is finite.

Speaker Change #184: Roughly.

Speaker Change #185: And do you have waiting that mix or is it just science.

Jeff Sinai: Jeff Sinai.

James McCullough: Okay. And is that the mix that you expect to go forward with? 40-60 salespeople, the system, Drew? No, I would actually expect that, in the not too distant future, PCP would be the largest bucket of our business, right? We'll have the enterprise accounts, and we'll have PCP, but in the future, I would expect PCP to be the largest chunk of our business volume, like flipping those. I would hope to do even better than that, but yes. Okay, um, and kind of looking at the growth trajectory here. If you've got, kind of 40% of those are PCP salespeople driven. That's, you know.

Jeff Sinai: Okay and is that the mix do you expect to go forward with <unk> 60 salespeople this system.

Speaker Change #187: No I would actually expect that.

Speaker Change #187: And then not too distant future that TCP would be the largest bucket of our business will have the enterprise accounts and will have PCP, but.

Speaker Change #187: In the future I would expect PCP to be the largest chunk of our business side.

Speaker Change #187: Like flipping those.

Speaker Change #187: I would hope to.

I would hope to do even better than that but yes.

Speaker Change #187: Okay.

Speaker Change #187: And kind of looking at growth trajectory here.

Speaker Change #188: If you've got.

Speaker Change #188: Got 40% of those is S TCP salespeople driven.

Speaker Change #188: Yes.

Speaker Change #188: <unk>.

Bobby Demmer: Call it three, just, [inaudible] 300 tests. Just use that number. You have seven salespeople that have been there for quite a while now, since August. Where are we looking at them? So how are we looking at those salespeople who have been around and getting to say 1,800 tests out of those salespeople as opposed to 300 tests out of those salespeople? Yeah, so I would say a couple things.

Speaker Change #188: Call it three.

Speaker Change #188: Hmm.

Speaker Change #188: Lower.

Speaker Change #188: 300 test this is that number you have.

Speaker Change #188: Sales people that have been there.

Speaker Change #188: So quite a while now.

Speaker Change #188: August.

Speaker Change #188: Yes.

Speaker Change #189: Where are we looking at.

Speaker Change #188: Ed.

Speaker Change #188: So how are we looking at in those salespeople and who have been around and getting to say 1800 tests.

Speaker Change #188: Those salespeople as opposed to 300 test side of the salespeople.

Howard Doran: One is, you know, at one point we had a much larger sales organization, correct? So the three people that were, I called them, legacy earlier, actually had three very productive territories that, you know, they're the right profile of folks that we obviously wanted on the team. So that's that first group. The group that started in August, again, that's still fairly new.

Speaker Change #188: Yeah. So.

Speaker Change #188: I would say a couple of things one is at one point, we had a much larger sales organization correct. So the three people that were I call. It legacy earlier.

Speaker Change #190: I actually have three very productive territories.

Speaker Change #190: They are the right profile of folks that we obviously wanted on the team. So that's that first group.

Speaker Change #190: Group that started in August.

Howard Doran: So we've got a couple of quarters under their belts. And then, of course, we have the three new folks that started in December whose first quarter was this past quarter. So, you know, what we have as far as the new team is we've got one data point, right? We've got the quarter that we're talking about now.

Speaker Change #191: August again, that's still fairly new so we've got a couple of quarters under their belt and then of course, we have three new folks that started in December of this past quarter as their first so what we have as far as the new team is we've got one data point right. We've got the quarter that we're talking about now.

Howard Doran: We alluded to in our comments in the original script that we anticipate this quarter to be similar in growth rate to this past. And beyond that, that gives us our second data point. At that point, I'll be able to look at what's occurring, momentum, et cetera, to start thinking a little bit more broadly as far as further down the line. But for right now, I'm focused on this current quarter and not necessarily four or five quarters out, depending on growth rates to hit the numbers that you're talking about. So I just don't want to make a projection on a data point of one.

Speaker Change #192: We alluded to in our comments in the original script that we anticipate this quarter to be similar in growth rate.

Speaker Change #192: Paths.

Speaker Change #192: And beyond that that gives us our second data point at that point I'll be able to look at whats occurring momentum et cetera to start thinking a little bit more broadly as far as further down the line, but for right now.

Speaker Change #192: Focused on this current quarter and not necessarily four or five quarters out depending on growth rate to hit the numbers that youre talking about.

Speaker Change #192: So I just I, just don't want to make a projection on a data point of one I wanted to I wanted to get this current quarter under our belt take a look at it and I think I better answer that a little bit more definitively next call.

Howard Doran: I want to get this current quarter under our belts, take a look at it, and I think I'd better answer that a little bit more definitively next call. So you're bucketing these seven salespeople and the new three salespeople in the same bucket, regardless of how long they've been operating and doing their, working their sales channels. No, I wouldn't necessarily say it that way.

Speaker Change #193: So you are marketing the seven salespeople and then new three salespeople.

Speaker Change #193: And the same.

Speaker Change #193: Bucket, regardless of how long they've been.

Speaker Change #193: Operating and doing their work and their sales channels.

Howard Doran: I'm just saying that, you know, we are looking at the trajectory of what it takes with this slightly different profile of person, and different background set, and what they can do and how rapidly they can do it. And, you know, we didn't really expect anything for the first month or two. So what we're really looking at is only a few months of data on, particularly the new folks, and seeing where that trajectory is going. To date, we're very pleased. And I expect it to continue to be better over time. But I just think it's too early.

Speaker Change #194: No I wouldn't.

Speaker Change #194: That way I am just saying that.

Speaker Change #194: We are looking at trajectory of what it takes with a slightly different profile of a person.

Speaker Change #194: <unk>.

Speaker Change #194: Different backgrounds set and what they can do and how rapidly can they do it and we didn't expect really anything for the first month or two.

Speaker Change #194: So what we're really looking at is only a few months of data on particularly the new folks and seeing where that trajectory is going to date, we're very pleased with that.

Speaker Change #194: And I expect it to continue to be better over time.

Speaker Change #194: But I just think it's too early even again folks starting in August they are relatively new we've made some changes et cetera.

Howard Doran: Even again, with the folks starting in August, they're relatively new. We've made some changes, et cetera. I just think you're asking a question that's a little further out than what I'm comfortable projecting to you today. Okay, I mean, just because James was talking about distance or runway, right?

Speaker Change #194: I just think Youre asking a question that's a little further out than what I'm comfortable projecting to your tobacco.

Speaker Change #194: Okay.

Speaker Change #195: Because James was talking about.

Bobby Demmer: Because, yeah, the market, I think is going to have to see sales volume here pick up, and I think we will have catalysts that will allow that to happen. You know, upon time, I just, you know, again, with the team settle in for, we're happy with what we have today. We have one quarter under our belts with that, And I will feel a little differently as far as, you know, more future discussion once we conclude this quarter. That's all I'm trying to indicate to you. All right. Well, thank you for answering that. One more, if you don't mind.

Speaker Change #195: Our runway right because.

Speaker Change #195: The market I think is going to have to see.

Speaker Change #195: Volume pick up.

Speaker Change #195: And I think we will have catalysts that will allow that to be.

Speaker Change #196: Better upon time I'd just again.

Speaker Change #196: With the teams settle with.

Speaker Change #196: Happy with what we have today, we have one quarter under our belts with that group.

Speaker Change #196: And I will feel a little differently as far as more future discussion once we conclude this quarter.

Speaker Change #196: That's all I'm trying to communicate to you.

Speaker Change #197: Alright, well, thank you for answering that one more if you don't mind.

Howard Doran: Sure. But what do you expect the conversion rate to be for getting in front of doctors? Of course, new doctors every quarter. Yeah, new doctors every quarter, and then once you're in front of those doctors, what kind of conversion rates are you expecting? Yeah, so, you know, I would say if I were going to just take a step back, and if you were going to ask me what the thing that surprises me the most is positive, I would say that our clinical message now is very tight, and getting a clinician to say that they're interested in the test, I'm not going to call it easy because it's not.

Speaker Change #198: What do you expect the conversion rate to be for we're getting in front of doctors.

Speaker Change #198: As far as new doctors per quarter.

Speaker Change #198: Yes, new doctors per quarter, and then once you're in front of those.

Speaker Change #198: Those doctors.

Speaker Change #198: Conversion rates are you expecting.

Speaker Change #199: Yeah. So.

I would say if I was clear.

Speaker Change #200: Just take a step back and if youre going to ask me, what's the what's the thing that surprised me. The most is on a positive I would say that our clinical message now is very tight.

Speaker Change #200: And getting a clinician to say that their interest in test I am not going to call. It easy because it's not it's still hard work, but the message is very sound and it holds together and they get.

Howard Doran: It's still hard work, but the message is very sound, and it holds together, and they get it. The most challenging part is patient identification, you know, so it's them being able to go into their patient data and finding, all right, who are all my type 2 diabetics? Who have I staged with chronic kidney disease?

Speaker Change #200: The most challenging part is patient identification.

Speaker Change #200: So, it's then being able to go into their into their patient.

Speaker Change #200: Data and finding alright, who are all my type two diabetics, who has who have either stage with chronic kidney disease and who has the clinical features that we need to actually run our test that's the biggest barrier to broader adoption and it's a slower process. It takes a lot of handholding.

Howard Doran: And who has the clinical features that we need to actually run our test? That's the biggest barrier to broader adoption, and it's a slower process. It takes a lot of handholding, and it's not yet a sticky business.

Speaker Change #200: And it's not yet a sticky business, we are working on ways to make it more sticky by making ordering simpler providing better nephrology access or excuse me.

Howard Doran: We are working on ways to make it more sticky by making ordering simpler, providing better nephrology access, or excuse me, nephrology, providing better phlebotomy access, and taking some of the barriers that have, you know, been pushed on us in the past. But the most important thing is getting them into that rhythm of identifying patients before they come in for their, you know, their next checkup. That's the biggest challenge.

Speaker Change #200: Providing better phlebotomy access and taking some of the barriers that are.

<unk> been pushed us out in the past, but the most important thing is getting them into that rhythm is identifying patients before they come in for their next checkup. That's the biggest challenge. So our adoption is definitely different than it was in the past we are seeing an uptick on how quickly the doctor that closes today the tests they start ordering it over the subsequent months we are.

Howard Doran: So our adoption is definitely different than it was in the past. We are seeing an uptick in how quickly the doctor closes today, and the tests they start ordering over the subsequent months. We are definitely seeing a change in behavior.

Speaker Change #200: Definitely seeing a change in behavior there but.

Howard Doran: But I think we can even have a bigger inflection point as we continue to hone in on a very simple way for them to identify these patients. And when they have them identified, we will definitely see the conversion ramp change, I think, quite a bit. Okay, and finally, I'll let you go. I'm trying to gauge how much of the $14 million TAM we can expect Renalytix to capture.

Speaker Change #200: But I think we can even have a bigger inflection point as we continue to hone on a very simple way for them to identify these patients and when they have them identified we will definitely see conversion ramp changed I think quite a bit.

Speaker Change #201: Okay and final I'll, let you go.

Speaker Change #202: I'm trying to gauge how much of that sort.

Speaker Change #203: $14 million Tam, we can expect.

Bobby Demmer: And if you have a hundred, just using round numbers, if you have a hundred new PCP presentations, how many of those doctors do you expect, or do your salespeople, are they being expected to convert to actually order a test? And those who have ordered a test? What's the expectation going to be for those salespeople? out of that particular doctor and his orders?

Speaker Change #203: Analytics to capture and.

Speaker Change #204: Wondering just using round numbers. If you are a 100, new PCP presentations.

Speaker Change #204: How many of those doctors do you expect or do your salespeople are they being expected to convert.

Speaker Change #205: So actually order a test.

Speaker Change #205: Those who have ordered it test.

Speaker Change #205: How many following test is the expectations going to be for those salespeople.

Speaker Change #206: Out of that particular Doctor orders I mean, that's just a granularity that we've just chosen not to disclose yet again, where we're really we're looking at all the things that you've just described right what I'd like to do is get another quarter under my belt to be more definitive.

Howard Doran: I mean, that's just a granularity that we've just chosen not to disclose yet. I mean, again, we're looking at all the things that you've just described, right? What I'd like to do is get another quarter under my belt to be more definitive.

Howard Doran: Again, it's a green team and we're doing some good things, but you're asking the right questions and you're asking about the right measurements, and that's just not the granularity that we're ready to go. Okay. Well, I appreciate your time. Thank you.

Ken: Ken It's green team that we're doing some good things, but you are asking the right questions and youre asking about the right measurements and that's just not a granularity that we're ready to go to.

Speaker Change #208: Okay, well I appreciate your time thank you.

James McCullough: I think it's important to note that there is a whole sequence of incremental changes that come together to reduce the resistance in the clinical pathway. Obviously, patient identification is one of the things that Howard has brought to the table, and I referred to this in the script reading, but for example, the physician order requisition sheet.

Speaker Change #209: I think it's important to note that there are a whole sequence of incremental changes, which come together to reduce the resistance in the clinical pathway. Obviously patient identification is one of them one of the things that Howard has brought to the table.

Speaker Change #209: It is a sequence of incremental improvements I referred to this in the script reading, but for example, the physician order requisition sheet.

James McCullough: We've revised that in a compliant fashion, and we revised that to be now FDA compliant, with the FDA product launch in April, but it's a much simpler procedure from what we originally had. And that's a function of experience in the real world. Increasing phlebotomy action, absolutely critical.

Speaker Change #209: We've revised that in a compliant fashion.

Speaker Change #209: And we've revised that to be now FDA compliant.

Speaker Change #209: With the FDA product launch in April, but it's a much simpler.

Speaker Change #209: <unk> from what we originally had and that's a function of experience in a real world.

Speaker Change #209: Increasing phlebotomy access.

James McCullough: And these are mundane things, but collectively they add up to, Reducing the resistance in the pathway, which leads to better adoption. So we've now significantly increased the access of patients to blood draw stations across the country, and that took us a while to figure that one out, but all of these changes add up, and I believe will be reflected in the adoption cycle. Howard, I don't know if you want to add anything.

Speaker Change #210: Absolutely critical.

Speaker Change #210: And these are mundane things.

Speaker Change #211: But collectively they add up to.

Speaker Change #211: Reducing the resistance in the pathway, which lead to better adoption. So we've now significantly increased the access of patients to blood draw stations across the country and that took us a while to figure that one out.

Speaker Change #211: But all of these changes add up.

Speaker Change #212: And I believe will be reflected in the adoption cycle Howard I don't know if you want to add anything to that.

Howard Doran: No, I think that's right. What we're really trying to do is make it easier to do business with us, and really improve the customer experience. And the more that we raise that, you know, back to your question, then, you know, we can start thinking about, you know, deeper penetration and so forth. But we have streamlined a lot of processes because, again, we are just a send out test, right? So we are disruptive to their work, to, you know, utilize us, which there's a lot of other companies are in the same boat.

Howard Doran: No I think Thats right, what we're really trying to do is make it easier to do business with us and really improve the customer experience and the more that we raised that.

Howard Doran: Back to your question then we can start thinking about deeper penetration and so forth, but we have streamlined a lot of process just because again, we are a send out tests right. So we are disruptive to their workflow.

To utilize us which other companies are in the same boat. So that's not that's not a negative its just its a reality and it takes some work and it takes some.

Howard Doran: So that's not, that's not a bad thing. It's just, it's a reality. And it takes some work and it takes some, you know, some strong relationship building to keep that pedal on those until they hit their rhythm. And once they hit their rhythm, then things can happen more systematically.

Howard Doran: Strong relationship building to keep that pedal on those until they hit their rhythm and once they hit that rhythm.

Howard Doran: But there are a lot of touch points, particularly in the early few months of an integration into an office that needs to be, you know, a couple times a week. So, you know, back to your question: we're still measuring all the things that you were referring to, but I just don't think we have enough time to give you an answer that I would feel highly confident in.

Howard Doran: Then things can happen more systematically but theres a lot of touch points, particularly in the early few months.

With integration and an office that needs to be.

Howard Doran: A couple of times a week so back to your question is we're still measuring all the things that you were referring to but I. Just don't think we have enough time to give you the answer that I would feel highly confident in so that's a lot of the learnings that we're still doing but yes, a lot of profit process improvements are going over.

Howard Doran: So that's a lot of the learnings that we're still doing. But yes, a lot of process improvements are going very well. I mean, just a simple one, just to point out what James is talking about, a better, you know, easier to use form. Well, if it takes three minutes to fill out the old one and it takes about 30 seconds to do the new one, the office thinks very favorably of that, right? I mean, it takes them less time, and we're asking them to actually add time to what they're already doing during their day.

Speaker Change #213: Very well I mean, just a simple and just to point out what change you're talking about.

Speaker Change #213: Better easier to use form well if it takes three minutes to fill out the old one and it takes about 32.

Speaker Change #214: Uh huh.

Speaker Change #214: Due to the new one.

Speaker Change #214: The office.

Speaker Change #214: Very favorably towards that right I mean, it takes them less time, and we're asking them to actually add time to what they're already doing it during their day, but more importantly, our test only requires three clinical features now it used to require seven.

Howard Doran: But more importantly, our test only requires three clinical features now. It used to require seven with the LDT. Those are seven results that someone in that practice had to go look up and put on our test requisition form. Now they only have to get three, and those three are actually very commonly used. So it's a real easy lift to ask for those.

Speaker Change #214: <unk> those are seven results that someone in that practice had to go look up and put it onto our test requisitions for them now they only have to go get three and those three are actually very commonly used.

Speaker Change #214: It's a real easy lifts the ASP of those so there's a lot of little things that may not sound that big to you, but when youre out there and the clinician, it's big it's big and important to them and were addressing them one by one.

Howard Doran: So there's a lot of little things that, you know, may not sound that big to you. But when you're out there with the clinician, it's big and important to them, and we address them one by one. So that's just, again, it goes back to what you're asking is, will that help us ramp this business faster? The answer is yes. Thank you. And our next question, coming from the lineup, Jens Lindqvist with Investeculon, is open. Hi, just a couple of quick ones from me.

Speaker Change #214: That's just again it goes back to what you are asking as well that should help us ramp this business faster the answer is yes.

Thank you.

Speaker Change #215: And our next question coming from the line of Jeff.

Speaker Change #216: <unk> with Investec Your line is open.

Jens Lindqvist: First of all, on pricing, the $535,000 of revenue you reported for the quarter translates into just over $800 per billable test, which is quite a bit off the $950 that Mount Sinai is committed to paying under that new commercial agreement which has been in place through this quarter, if I understand it correctly. There appears to be some pretty heavy discounting in the PCP channel, and is that something we should extrapolate going forward? So that's my first question.

Speaker Change #217: Hi, there just a couple of quick ones from me.

Jeff Sinai: First of all on the pricing.

Speaker Change #218: The 535000 of revenue you've reported for the quarter and that translates into just over $800 per billable test, which is quite a bit off the 950 that Mount Sinai is committed to paying under that new commercial agreements, which has been in place through this quarter I understand it correctly. So could you just help me understand that dynamic please.

Speaker Change #219: There appears to be some pretty heavy discounting in the PCP channel and is that something we should extrapolate going forward.

Jens Lindqvist: The second one is the strategic review that is ongoing at the moment. I appreciate you probably can't say too much about it, but could you provide some form of indicative timeline here? Because the studio can review it.

Speaker Change #219: That's my first question the second one.

Speaker Change #220: It is on the strategic review that is ongoing.

Speaker Change #221: I appreciate you probably can't say too much about it but.

Speaker Change #221: Could you provide some form of indicative timeline here.

Speaker Change #222: I understand you can with you.

James McCullough: Yeah, I guess we'll determine for how long potential acquirers are allowed anonymity, et cetera, under the takeover code. So, you know, when can we expect some form of update? In terms of whether you will pursue an M&A route or a different strategic option for commercialization. Thank you. So on the strategic option, again, we're limited in what we can say, Jens, and I'm now becoming more familiar because this is a UK convention. It was impressive to me under the UK Convention how seriously the takeover panel that takes approaches and if there's a whiff of a strategic interest in a company, then you have an obligation to let the market know. And so. This was a little bit more than a whiff with regard to us and the unsolicited approach.

Speaker Change #221: Yes.

Speaker Change #223: I guess, we'll determine if or how long potential acquirers are allowed anonymity et cetera under the takeover code.

Speaker Change #223: When can we expect some form of updates.

Speaker Change #224: In terms of whether you would pursue an M&A right.

Speaker Change #225: Different strategic option for commercialization. Thank you.

Speaker Change #228: So on the strategic option again, we're limited in what we can say.

Speaker Change #226: And in Ireland.

Speaker Change #227: I am now becoming familiar because this is a U K convention.

Speaker Change #226: And.

Speaker Change #226: It was impressive to me under the UK convention how seriously.

Speaker Change #226: The takeover panel.

It takes approaches.

Speaker Change #226: And if there is a whiff.

Speaker Change #229: Of a strategic.

Speaker Change #229: <unk> interest in the company then.

Speaker Change #229: You have an obligation to let the market know.

Speaker Change #229: Okay.

Speaker Change #229: And so.

Speaker Change #229: We were this this was a little bit more than a whiff.

Speaker Change #229: With regard to us in the unsolicited approach.

James McCullough: So we had an obligation to announce. The advantage of announcing is, and again I'm not an expert, I'm not a lawyer, so please take this with a grain of salt, but now that we have announced, it creates a much easier process to talk to additional players without disclosure requirements. And so the process will take its own life. I don't know the timeline. People that are looking at this include large..., you know, company players that have long timelines and leads.

Speaker Change #229: So we had an obligation to announce.

Speaker Change #229: The advantage of announcing is and again I'm not an expert I'm not a lawyer. So please take this with an element of grain of salt, but.

Speaker Change #229: Now that we have announced it creates a much easier process to talk to additional players without disclosure requirements.

And so the process will take its own life I don't know the timeline.

People that are looking at this include large.

Speaker Change #229: Yes.

Speaker Change #229: Company players that have long timelines and leads.

James McCullough: And obviously, the more sales that we accrue in that process, the better it will be, so taking a little bit of time is not a bad thing. But, you know, again, and I don't want to say anymore, but we do expect the process to be competitive, and we'll continue to move along. And ultimately, what happens, I don't know, but again, it goes back to maximizing shareholder value and creating optionality in what is an incredibly difficult market right now.

Speaker Change #229: And obviously the more.

Speaker Change #229: Sales that we accrue in that process the better it will be so taking a little bit of time is not a bad thing.

Speaker Change #229:

Speaker Change #229: But.

Speaker Change #229: Again, and I don't want to.

Speaker Change #229: Say anymore, but we do expect the process to be competitive and we will continue to move along.

Speaker Change #229: Ultimately, what what happened so I don't know, but again it goes back to maximizing the shareholder value and creating optionality in.

Speaker Change #229: What is an incredibly difficult market.

Speaker Change #229: Right now.

James McCullough: In terms of pricing, and OJ will cover this, the price is $950, and we do not, discount that for all intents and purposes, you know, we fought hard to achieve. CMS pricing at $950, and General Services Administration pricing at $950. That is our price, and we will not compromise. However, within the complexity of the insurance infrastructure, not every test ultimately gets paid; this is standard convention. So we would expect, and I know, Jay, you correct me, an average price going forward of somewhere in the mid $800.

Speaker Change #230: In terms of pricing and then O J I'll cover this.

Speaker Change #231: The price is $950 and we do not.

Speaker Change #231: Discount that for all intents and purposes.

We fought hard to achieve.

Speaker Change #231: CMS.

Speaker Change #232: Pricing at 950 General services administration pricing at 950.

Speaker Change #233: That is our price and we will not compromise however, within the complexity of the insurance infrastructure.

Speaker Change #234: Not every test.

Speaker Change #235: Ultimately gets paid this is this is standard convention.

Speaker Change #236: So we would expect and I know, Joe you're correct me an average.

Speaker Change #236: Price going forward of somewhere in the mid eight hundreds.

James McCullough: So right, so the math you're working out, Jens, is not the result of any discounting. So it's 806 total tests, and 82% are billable. 662 billable tests. And not every one of those is recognizable right away because some of them are covered by insurance that we don't have a contract with. Many of those do ultimately pay. And if they don't pay the full 950, we do appeal those, et cetera. So the difference you see there is just a result of that timing. And about 80% of that billable testing volume is immediately recognizable. The Revenue Line, the rest will... and some of the rest.

Speaker Change #236: Yeah.

Speaker Change #237: Right, so the math you're working out.

Speaker Change #237: Is not the result of any discounting.

Speaker Change #237: So it is 806 total tests, 82%.

Speaker Change #238: Our billable so.

Speaker Change #238: 662, billable tests and not every one of those is recognizable right away because some of them are covered by insurance that we don't know don't have contracts with many of those do you ultimately pay.

Speaker Change #238: And if they don't pay the 49 50, we can peel those et cetera. So the difference you see there is just a result of that timing so about 80% of that available testing volume is immediately recognizable.

Speaker Change #238: Since the revenue line the rest ultimately.

Speaker Change #238: Some of it the rest we collect over time.

Speaker Change #238: <unk>.

Speaker Change #239: Okay. Thank you.

Speaker Change #239: Okay.

Speaker Change #239: Thank you.

James McCullough: Okay, thank you. Thank you. And I'm showing no further questions in the queue at this time. Ladies and gentlemen, this concludes today's conference. Thank you all for your participation, and you may now disconnect. [inaudible] Thanks for watching!

Speaker Change #240: And I'm showing no further questions in the queue at this time.

Ladies and gentlemen. This concludes today's conference. Thank you all for your participation and you may now disconnect.

Speaker Change #240: Okay.

Speaker Change #240: [music].

Speaker Change #240: Okay.

Speaker Change #240: Okay.

Speaker Change #240: Okay.

Speaker Change #240: [music].

Speaker Change #240: [music].

Speaker Change #240: Okay.

Speaker Change #240: Thank you.

Speaker Change #240: [music].

Speaker Change #240: Okay.

Speaker Change #240: [music].

Speaker Change #240: Okay.

Speaker Change #240: [music].

Speaker Change #240: Yes.

Speaker Change #240: [music].

Speaker Change #240: So.

Speaker Change #240:

Speaker Change #240: [music].

Speaker Change #240: Yes.

Speaker Change #240: Okay.

Okay.

Speaker Change #240: [music].

Speaker Change #240: Yeah.

Speaker Change #240: Okay.

Speaker Change #240: [music].