Q1 2025 Biodesix Inc Earnings Call
Speaker Change: Good day, and thank you for standing by. Welcome to the Biodesix Q1 2025 Ernie's conference call.
At this time, all participants are in a listen-only mode [inaudible]
Speaker Change: After the speaker's presentation, there will be a question and answer session. To ask the question during the session you will need to press star 1-1 on your telephone.
Speaker Change: You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised but today's conference is being recorded. I would now like to hand the conference over to Chris Brenzey. You may begin. Thank you for your time.
Thank you for joining us. Thanks for having us.
Speaker Change: Thank you, operator, and good afternoon everyone. Today, Biodesix released results from the first quarter of 2025. Leaving the call today will be Scott Hutton, Chief Executive Officer.
Speaker Change: He's joined by Robin Harper-Cali, Chief Financial Officer, an audio recording of today's call and the press release announcement with quarterly results can be found in the Investor Relations section of the company's website at biodesics.com.
As today's call includes forward-looking statements.
Speaker Change: We encourage you to review the statements contained in today's press release and the risks and uncertainties described in our SEC filings.
Speaker Change: which identify certain factors that may cause the company's actual events, performance, and results to differ materially from those contained in the forward-looking statements made on today's webcast.
Speaker Change: In addition, we will discuss non-GAAP financial measures on this call. Descriptions of these non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures are included in today's press release.
Speaker Change: I would now like to turn the call over to Scott Hutton, Chief Executive Officer. Scott?
Scott Hutton: Thank you, Chris, and thank you all for joining us today.
Scott Hutton: At Biodesix, our mission is to transform patient care and improve outcomes through personalized diagnostics that are timely, accessible, and address immediate clinical needs.
We leverage a multi-modal approach that includes genomics
Scott Hutton: proteomics and radiomics combined with AI to discover, develop and commercialize innovative diagnostic tests for physicians, biopharmaceutical, life sciences and diagnostic companies to help improve patient care.
Scott Hutton: In 2025, we are focused on three main goals, growing our top-line revenue
Scott Hutton: Improving operational effectiveness and efficiencies that will result in a positive adjusted EBITDA in the fourth quarter, and advancing our pipeline for future growth and expansion.
Scott Hutton: In the first quarter, we made progress on all three by growing revenue by 21% year-over-year, all while decreasing our year-over-year spend in S-GNA.
Scott Hutton: Improving are already strong gross margins by 80 basis points to 79.4% and presenting clinical data on multiple pipeline products.
Scott Hutton: Long Diagnostic Revenue, which grew 18% with our 16th straight quarter of greater than 15% year of year growth.
Scott Hutton: Starting with the clinical offering and lung diagnostics, our major focus is on lung nodule management, where nodules are either found incidentally, when the patient has an image taken for another purpose, or during lung cancer low-dose CT screening.
Scott Hutton: Throughout last year, a growing number of ordering pulmonologists provided feedback that are notified XL2 and notified CDT test may better address gaps within lung nodule management if they're ordered upstream within their referral network.
Scott Hutton: This would help optimize the referred patient population by identifying those at higher risk of lung cancer that should be referred on to the interventional pulmonologist.
Scott Hutton: while lower-risk patients remain with the primary care physicians for monitoring.
Scott Hutton: As noted in our last earnings call, we conducted a commercial pilot in the second half of last year to assess the viability of expanding into the pulmonologist referral network, which mainly consists of primary care physicians.
Scott Hutton: where claims data shows that 50% of the patients with nodules are managed.
Scott Hutton: While there's a large number of primary care physicians practicing in the US, a limited group of approximately 15,000 primary care physicians provide care for approximately 80% of those patients who are managed at primary care.
Scott Hutton: The concentrated nature of the nodule referral network and support of the pulmonologist means we can reasonably access those patients with nodules in the primary care setting.
Scott Hutton: As a first mover and lung nodule diagnostics, we have the responsibility to build this market which will increase patient access.
Scott Hutton: As a reminder, historically, pulmonologists do not routinely order blood-based tests for their patients and therefore, typically do not have phlebotomy services on site.
Scott Hutton: In order to integrate into pulmonology practice workflow, there are a variety of logistical challenges that must be overcome.
Scott Hutton: such as appropriate patient identification, facilitating test ordering through digital means, including EMR integration and coordinating blood draws.
Scott Hutton: Since the launch of Notify, we have developed a nationwide mobile phlebotomy network to support those positions who do not have on-site phlebotomy capabilities.
Scott Hutton: Additionally, in 2023, we introduced the TASO Capillary Blooddrawal Device, which enabled on-site blood collection.
Scott Hutton: Not surprisingly, completing blood collection on-site before a patient leaves the facility results in 30% more tests delivered than if the patient leaves and needs to schedule a blood draw at another time.
Scott Hutton: Similarly, since notified launch, we've expanded our digital test ordering capabilities through our Biodesix Physician Portal and early EMR integrations.
Scott Hutton: In 2024, we contracted with Redox, an EMR integration specialist, to enable efficient and cost effective site level integrations.
Scott Hutton: Based on our portal adoption in early integration efforts, we've seen success, and our digital ordering has increased by 58% over the last year.
Scott Hutton: Customer retention in those who utilize digital ordering is 40% higher than those who do not.
We're still only scratching the surface with digital integrations.
However, this is a costly endeavor [inaudible]
Scott Hutton: As we balance our cost-disciplined approach with the need to expand and accelerate the number of positions utilizing digital ordering, we have selectively engaged additional EMR providers.
Scott Hutton: for broader and more significant EMR integrations in 2025 and beyond to facilitate streamlined test ordering.
Scott Hutton: During the primary care commercial pilot in the second half of 2024, we gained critical information about primary care practices.
Scott Hutton: not only in how they manage lung nodules, but also their familiarity and expertise with incorporating diagnostic testing into standard practice, particularly blood-based testing and access to phlebotomy services, all of which is now guiding our primary care commercial
Thank you very much.
While EMR integration is an important driver in all practice types.
Scott Hutton: Primary Care Providers already have processes in place for ordering diagnostic testing and phlebotomy services to facilitate blood draws on site, which is expected to relieve some of the logistical challenges we've been working to overcome in pulmonology.
Thank you. Thank you.
Scott Hutton: As part of the primary care commercial strategic effort, we have shifted to a territory-based sales approach.
Scott Hutton: The territories are anchored by a senior pulmonology sales rep with primary care sales reps and associate reps providing support and driving adoption across specialties and care settings.
Scott Hutton: In the first quarter, we reconfigured our sales team from 71 sales reps in the fourth quarter to 65 sales reps in order to accommodate the territory-based approach.
Scott Hutton: consisting of 49 territories with 49 pulmonology sales reps and 16 associate sales reps.
Scott Hutton: Average sales rep productivity remained strong, and it annualized $1 million of revenue per rep throughout the reconfiguration.
Scott Hutton: Additionally, in the first quarter, we began recruiting the new primary care sales rep.
Scott Hutton: The profile of the primary care sales rep, as well as their onboarding and sales training, are slightly different than that of the pulmonology rep.
Scott Hutton: We've taken a cost-conscious, mindful approach in recruiting the right Biodesix team members to support the expanded market touch point.
Scott Hutton: Hiring the right team has taken more time than we had originally anticipated.
Scott Hutton: putting us one quarter behind plan in hiring and therefore revenue, which will impact our guidance.
Scott Hutton: Robin will provide greater detail on adjusted revenue guidance later on the call.
Scott Hutton: Historically, we have planned to hire six sales reps per quarter.
Scott Hutton: To support this new plan and catch up starting in the second quarter, we're now planning to hire 10 sales reps per quarter. Ending the year with 50 territories covered by approximately 95 total sales reps in the fourth quarter.
Scott Hutton: Overall, we believe reconfiguring our sales team in this way will allow us to continue building this market and increasing patient access in both pulmonology and primary care.
Scott Hutton: With a long-focus sales team in place, we are continually looking for ways to further leverage this commercial channel. A complementary area we've been evaluating is radiomics and digital diagnostics.
Scott Hutton: Imaging is a critical tool in diagnosis and monitoring of lung disease, and AI tools are being developed to augment clinical workflows and decision making across the range of indications.
Scott Hutton: Our near-term interests are in applications to better identify nodules and images and help identify the risk of cancer for those nodules.
Scott Hutton: While the potential clinical utility of digital diagnostics is obvious, the practical application of how these AI-based tests could fit into a physician workflow was an area that we needed to better understand.
Scott Hutton: In addition to the primary care commercial pilot in the second half of last year, we also ran a commercial digital diagnostic pilot to assess the specifics of adding these type of tests into our portfolio and the physician workflow.
Scott Hutton: As a result of the successful completion of the commercial digital diagnostics pilot, we are pleased to welcome Dr. Michael Camer as our head of radiomics.
Scott Hutton: Dr. Camer brings biomedical and AI experience exploring the benefits of integrating imaging and blood-based biomarkers.
Scott Hutton: Radiomics is an integral component of lung care and we're now uniquely positioned to combine AI and radiomics with the biological insights provided by our blood test.
Scott Hutton: We'll provide more details on these efforts in coming months.
Scott Hutton: Turning to our pipeline, our goals are to develop new tests and expand indications for existing tests.
Scott Hutton: Our current pipeline consists of a new combination MRD test that combines genomic MRD with our proteomic risk of recurrence test.
Scott Hutton: and expanded indications for Verrestrat, including into other tumor types and into immunotherapy selection.
Scott Hutton: At the third molecular medicine tricon in March, and again at the AACR Annual Meeting in April , we provided updates on the approaches we're taking in MRD, specifically the inclusion of our Early Clinical Endpoint.
Scott Hutton: This approach is unique from other MRD tests in that it combines ergonomics and proteomics platforms.
Scott Hutton: The parodomic information from our risk of recurrence tests provides insights into the patient's immune profile while the tumor-informed genomic component leverages DDPCR for disease monitoring.
Scott Hutton: The test will be offered as a complete package and not separate genomic and proteomic testing.
Scott Hutton: We expect this test will be available for use by Biopharma to our development services offering by the end of 2025.
Scott Hutton: As we continue to make progress, we will provide updates on the potential timeline for commercial launch, including revenue expectations.
Scott Hutton: Turning to Verisrat, data was presented at both the AACR liquid biopsy meeting and the molecular medicine trichon meeting on our pioneering immune classifier.
Scott Hutton: Bearstreet has been studied in nine solid tumor types over the last 20 years.
and the new data was in metastatic, castrate resistant prostate cancer.
Scott Hutton: The data showed that Verrestrat stratifies patients who are more or less likely to respond to the standard of care hormonal therapy.
Scott Hutton: Technical methodology data from this study will also be presented at the upcoming American Society for Mass Spectrum Dream meeting.
Scott Hutton: For new tests and indications we develop outside of our commercial lung focus we plan to partner for distribution or outlifings of these products for commercialization.
Scott Hutton: In addition to the new prostate hormonal therapy indication, new data on the use of Verrestra in immunotherapy and chemo combination treatment from the prospective registry study insight will be presented at ASCO entitled.
Scott Hutton: Post-immune classifier to predict survival with chemo immunotherapy in PDL1 greater than 50% metastatic, non-small cell lung cancer.
Scott Hutton: In addition to this data, new preliminary results from another study showed that Verrestrat may also be valuable in predicting response to immunotherapy in a wide spectrum of metastatic
Scott Hutton: It is clear from this data that the test and its ability to assess patient-immune status is a versatile and powerful tool, and as a result we plan to continue studies expanding the indications for use of verestrap.
Scott Hutton: Based on the strength of the immunotherapy data, we have replaced the Biodesix Primary Immune Response Test in our pipeline with the expanded Verastrat Immune Therapy indication.
Scott Hutton: In addition to the data being presented on our pipeline, we are continuing to make progress with our studies for our on-market products. The Clarify Study is a retrospective chart review evaluating the use of notified testing in real-world clinical practice.
Expecting to Enroll Approximately 4000 Patients
Scott Hutton: Since launch of the study in late October 2024, we've already accrued 800 patients and are in track to release intern data from the study in the second half of this year.
Scott Hutton: Finally, enrollment and patient follow-up in our prospective randomized clinical study altitude is progressing well under the supervision of the data and safety monitoring board. We'll provide additional updates as they're available.
Scott Hutton: We know there's been a lot of new information provided on our pipeline and data. Due to this, we're planning an R&D day in the fall to provide greater insights into the progress being made. More details to come.
Scott Hutton: Moving to development services, we continue to see strong interest in our service offering that leverages our multi-omic approach and R&D expertise.
Scott Hutton: to help deliver insights that are biopharma, lifelines tools, and diagnostic partners used to personalize patient care and help improve disease detection and treatment evaluation across various disease types.
Scott Hutton: In addition to delivering $1.7 million in revenue in Q1, growing 61% over Q1 2024, the pipeline has continued to develop with the team exiting Q1 with $10.9 million under contract
representing a 21% increase over Q1 last year.
Scott Hutton: Overall, we're very encouraged by the continued strong year of year growth in this business, and believe there's a significant potential for upside as both existing business and additional opportunities mature.
Thank you.
Scott Hutton: In addition to the operational improvements already mentioned, we continue to our efforts to improve business processes.
Laboratory Operations Processes and Revenue Cycle Management.
Scott Hutton: As I highlighted at the beginning, our focus on improvements and cost containment resulted in operational leverage such that we grew revenue by 21% all without growing S-G-N-A.
Scott Hutton: We delivered significant advancements in our pipeline with a very modest increase in the number of dollar spent in R&D. We grew our already strong gross margins and continued improvements in adjusted EBITDA on our path to profitability.
Robin Harper-Cowie: With that, let me turn it over to Robin to review our financial performance for the quarter. Robin?
Thanks, Scott, and good afternoon, everyone.
Robin Harper-Cowie: First quarter total revenue was 18.0 million, a 21% increase over the prior year.
Robin Harper-Cowie: Lundiagnostic Testing Revenue in the first quarter of 2025 was 16.3 million from approximately 13,800 tests.
Robin Harper-Cowie: as compared to 13.8 million from approximately 11,900 tests for the first quarter of 2024, representing 16% growth in test volumes and 18% growth in revenue.
Robin Harper-Cowie: While the first quarter was impacted by normal seasonality and normal weather and fire events and the respiratory illness season, our lung diagnostic test volume was mostly impacted by the number of failed reps we had in the field.
Robin Harper-Cowie: Development Services Revenue was 1.7 million in the quarter representing 61% growth over the quarter of 2024.
Robin Harper-Cowie: We ended the quarter with 10.9 million under contract but not yet recognized as revenue, which is a 21% increase over the prior year.
Turning to operational effectiveness, we continue to make strong progress.
Robin Harper-Cowie: Our gross margin percentage in the first quarter 2025 was 79.4% up from 78.6% in the first quarter of 2024. Even with the existing macroeconomic uncertainty, we expect gross margins to remain in the upper 70s through the rest of the year.
Robin Harper-Cowie: Overall operating expense, excluding direct costs and expenses, was 23.4 million in the first quarter, which was a 3% increase over the first quarter of 2024. Cost containment and operational efficiencies resulted in a year-over-year decrease in SGNA of 1%.
Robin Harper-Cowie: Total SGNA was 20.4 million versus 20.6 million, despite having 10 more sales reps in the field in the first quarter of this year versus last year.
Robin Harper-Cowie: The minor increase in total operating expense was driven by an increase in R&D expense of $900,000 from 2.9 million versus 2.0 million due to the investment in clinical studies to help advance adoption of our lung diagnostic tests and advancement of our pipeline.
Robin Harper-Cowie: Netloss for the first quarter 2025 was 11.1 million, an improvement of 18% year-over-year.
Robin Harper-Cowie: Adjusted EBITDA, which excludes non-cash and other one-time items, was a loss of 6.2 million, which was an 11% improvement year over year.
Robin Harper-Cowie: We ended the quarter with 17.6 million in unrestricted cash and cash equivalents as compared to 26.2 million at the end of the fourth quarter 2024.
Robin Harper-Cowie: Cash used in the first quarter includes annual cash payments for accrued expenses such as payments for short-term incentive compensation plans and royalty payments.
Robin Harper-Cowie: Subsequent to the end of the quarter, we drew down on the 10 million Trump C loan from perceptive advisors, increasing our cash reserves to a pro forma cash balance of 27.6 million, thus strengthening our balance sheet.
Robin Harper-Cowie: Based on the existing and anticipated hiring of our sales team, we anticipate an acceleration of growth in the second half of 2025.
Robin Harper-Cowie: Scott discussed, based on the reconfiguration of our sales organization, we had 65 sales reps in the first quarter versus 71 in the fourth quarter of 2024.
Robin Harper-Cowie: based on the number of reps in the field in the quarter and the subsequent hiring delay, our commercial expansion is approximately one quarter behind our original plan.
Robin Harper-Cowie: including the results of the first quarter and then shifting of the sales rep hiring and strategy implementation.
Robin Harper-Cowie: We are revising revenue guidance to 80 to 85 million for the year. Because of strong growth margins and cost efficiencies in combination with the new rep hiring plan, we expect to achieve adjusted evit.positivity in the fourth quarter. We are revising the new rep hiring plan. We are revising the new rep hiring plan.
Scott Hutton: Now I'll turn it back to Scott for some closing thoughts before the Q&A.
Scott Hutton: Thank you, Robin, to summarize our achievements over the last few quarters.
Scott Hutton: We have continued to develop the pulmonology diagnostic market, moving from early adopters into early mainstream users.
We have grown test volumes from pulmonology year-over-year.
Scott Hutton: We have conducted two pilot programs to explore expansion of our sales efforts through the Pulmonology Referral Network, Interprimary Care, and Radiomic Digital Diagnostics.
Scott Hutton: We have maintained average sales rep productivity and excess of $1 million revenue per rep.
Scott Hutton: We have leveraged learnings from the primary care commercial pilot to reconfigure our sales organization and begin implementation of the referral network strategy that will expand our access to the total market.
Scott Hutton: We have controlled cost and gained operational efficiencies to increase our already high gross margins and gain operational leverage.
Scott Hutton: We have advanced our radiomics and AI efforts and we've presented data on our pipeline of tests for future growth and expansion.
Speaker Change: I'm also proud to share that for the second year running, Biodesix has been recognized as a top workplace in 2025. While we look forward to sharing more specific details in coming days, I can say that winning another award like this speaks volumes about our team and culture.
Speaker Change: Before moving on to questions, I want to restate that we have the best lung focused team in diagnostics.
Speaker Change: and continue to make significant progress in building a market in an area that has not historically used diagnostics in the way that other medical or oncology specialties have.
Speaker Change: With first mover status and lung nodule management and an ever-increasing body of robust clinical and healthy economic data, we are generating the momentum to drive greater clinical and payer adoption as we move through 2025 and beyond.
Speaker Change: With all this happening, it's a very exciting time here at Biodesix. We look forward to sharing more with you in the coming quarters.
Speaker Change: Let's now move to questions. Operator, let's start the Q&A session.
Speaker Change: Thank you. As a reminder to ask the question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by when we compare our Q&A roster.
Speaker Change: and our first question will be coming from Dan Brennan of TD Cohen. Your line is open Dan.
Dan Brennan: Great, thank you. Thanks for the questions. Maybe the first one just digging into the Salesforce.
Dan Brennan: Changes, or rather the kind of bit of slower hiring there. I mean, Scott and Robin, can you just elaborate a little bit on what was different about hiring these PCC sales reps than you anticipated and kind of the confidence level and the new guy that you provided, kind of any more details you can provide be great, and then I have a follow-up.
Yeah, thanks, Dan.
Dan Brennan: Yeah, as we stated in shifting from kind of a pulmonology focus into the primary care focus.
Speaker Change: Well, what needed to be discovered was target hiring profile background experience network.
Dan Brennan: and so we worked through that. We've continued to apply those learnings and throughout the recruiting process here in the last few weeks.
Dan Brennan: We've also continued to hone in on that ideal profile, additionally we're new to them.
Dan Brennan: If you think about it, we've been building a pulmonology focus, so-
Dan Brennan: Those that have experienced in lung or with pulmonologist became aware of biodesics.
Dan Brennan: The general practitioner sales consultants are those with experience and relationships in that network, we renewed them so it took a little while to introduce to share our strategy.
Dan Brennan: to get them comfortable with it. And since then, we've made significant progress and we feel very confident and comfortable that we've got the right hiring profile and the right target and we're moving forward as rapidly as possible.
Dan Brennan: And then in terms of the leadership there is at the same leader, Scott, kind of who's just at the top both the pulmonologist of the PCP or do you have like a distinct subunit leader for the PCP side given the different profile of those salespeople.
Dan Brennan: Yeah, great question. Now, we've kept the same leadership team in structure. Internally, we're referring to this as a pod-based structure, so in each of those 50 territories, as we stated, we'll have 50 pulmonology sales consultants.
Dan Brennan: Those really are going to be your more senior sales professionals.
Dan Brennan: We'll have a number of associate sales consultants supporting them and also the primary care sales consultants We'll be supporting those pulmonology focus sales reps so your regional sales directors and your area vice presidents will remain the same and everybody will report up to them
Speaker Change: and did you guys discuss what the outlook is for Q2 versus the back half of the year? I know you said you want quarter behind, but the number of reps you're looking to hire remains the same by year ends.
Speaker Change: Yeah, absolutely. We have a pretty good size class of reps that are finishing up training and we'll be going live here soon in the second quarter.
Speaker Change: an average of 70 to 75 reps in the second quarter and then are looking to be in sort of the 85 range for third quarter and 95 for fourth.
John Berman: and John Berman. Thank you. Thank you. Thank you. Thank you.
[inaudible]
Speaker Change: and in terms of what you've learned so far on the PCP side, like any early color on, but ordering pattern, how those doctors are kind of, you know, kind of using your technology of you just wondering kind of what the early learnings are there.
Speaker Change: Yeah, as we've stated, this is not us calling on all primary care physicians, we're leveraging that referral network and claims data that indicates.
Speaker Change: where the majority of those patients reside. So those practices know that they've got an abundance of patients, they know they've got a problem, and the challenge really is in identifying who they refer on and who they don't.
Additionally, we referenced that last year we started getting...
Anticipate that they're going to see a stage shift.
Speaker Change: And so they think that by pushing it further upstream, we're going to get to some of these patients earlier in detecting and diagnosing cancer. So, we're seeing some of that occur. It is early, but we are seeing that progress.
Speaker Change: But this really just revolves around pulmonologists supporting us, working backward into their referral network so that when patient is referred on to them, they've increased the likelihood that they've identified the right patient to be referred on.
Speaker Change: So, pulmonologist and primary care physicians are receiving it well thus far.
Speaker Change: and maybe the final one, maybe the Robin, just on the drawdown on the 10 million, the EBITDA positivity by 4Q, just what's the latest update on kind of capital needs now with the 10 million and how we think about the burn as we kind of move in the 26 and kind of available cash you'll have.
Thank you. Thank you.
All right.
Speaker Change: We are, as you mentioned, we're working hard on catching up our sales organization and so while on a revenue side, we're about a quarter behind.
Thank you. Thank you.
Speaker Change: We maintained our low operating expense and sales and marketing was actually a little bit down year over year in the first quarter and so
Speaker Change: We've, the combination of the anticipated sales growth, the number of sales reps, and that tight control on OPEX, we feel confident about achieving a subsidy bid on the fourth quarter just as we had stated before.
Speaker Change: The additional 10 million gives us more confidence, we have more cash on the balance sheet, gives us a little bit more flexibility.
Speaker Change: and we continue to believe that this is sufficient capital to get us through to break even, that includes our commercial expansion as well as the pipeline activities we discussed in the fall earlier.
Dan Brennan: Great. Thanks a lot. Thanks for the questions. We'll get back in the future. Thank you. One moment for our next question.
Speaker Change: Our next question will be coming from Andrew Brackmann, of William Blair, Andrew, your line is open.
Robin Harper-Cowie: Hi Scott, I'm Robin. Good afternoon. Thanks for taking the questions.
Robin Harper-Cowie: for reps, just in terms of who they call on, the resources that they have, and just the broader incentives to play. Basically, what I'm trying to get at is how does this sort of change their day to day. Thanks.
Yeah, thanks, Andrew. So, from up...
Speaker Change: The pulmonology sales consultant that doesn't change their day-to-day, right? They continue to call on pulmonologist, both those that are currently ordering and those that we're targeting.
Speaker Change: What's really new and different is within that pod or territory.
Speaker Change: Having an associate sales consultant that will support them, spending a lot more of their time focused on accounts that are already ordering.
Speaker Change: So you kind of have the Hunter Farmer type scenario. This allows us to also build a bench. So our associate sales consultants are high potential, they're earlier in their career and so we can build them into, you know, transitioning from an associate into a pulmonology sales consultant.
Speaker Change: Also supporting within the pod will be the primary care focus sales rep. They're gonna be there's where the difference really is
Speaker Change: is kind of the shift this year or the reconfiguration is going further upstream talking to primary care physicians within those referral networks.
Speaker Change: The associate sales consultant really is going to spend the majority of their time supporting the pulmonology sales consultant.
Speaker Change: Those regional sales directors and the area vice presidents really kind of manage all of the activities that they report up, but we're not going to ask.
Speaker Change: The pulmonology sales consultants to shift their focus, they've built a network, we still have considerable room to continue to grow within pulmonology.
Speaker Change: We just knew that when we looked at the addressable market, that nearly 50% of the patients with a lung nodule are not making it to pulmonology. And so, this is really about us continuing to increase the addressable market size in our access to it.
That Helpful Andrew?
Speaker Change: That's a very helpful color if that's got. And then just as I sort of think about this reconfiguration, it would seem like there's a great opportunity for you within IDN. So can you maybe just talk about in the pilot, were there any IDNs included in that and how would this, how would this configuration sort of help in that effort?
Speaker Change: Yeah, you know, there wasn't specifically, what we really attempted to do was look at as many different scenarios as possible, so we didn't take kind of a top-down approach.
Speaker Change: We looked at it and said, hey, let's let's call on general practitioners that
Speaker Change: have an integrated practice that's part of an academic institution in an urban area, and then the opposite extreme. Let's call on a community-based, more rural scenario.
Speaker Change: So it's part of the pilot we tried to vet all of those different scenarios to see how not only is our sales consultant received
Speaker Change: But do they know, or are they aware that they have nodules, that they're sitting there?
Speaker Change: Are they spending time with those patients do they know who to refer on to? And ultimately trying to ensure that we could be a success.
Speaker Change: What we learned is that we can. We think there's a greater opportunity with IDNs, but that was not really something we started with. We started more from a bottoms up, trying to ensure additionally that primary care physicians
Speaker Change: Hathy Ability to Order Diagnostic Test, had access to phlebotomy services on site.
Speaker Change: and what we found was they do. More so than the pulmonologist. They've got an awareness, they've got access and capabilities within site. So logically, we think that they can be just as if not more efficient and effective.
Speaker Change: That's a tough one. And then just last one for me, I think you said ending the year right around 95 reps, is that the number that we should sort of peg as we look forward over the next few years or does that extend beyond 95?
Speaker Change: We want to end this year at 95 and we plan on returning back to hiring approximately six on a quarterly basis in 2026. That will get us right around 120 sales professionals by the end of 2026.
Speaker Change: We still feel that there's an additional room to grow. We'll continue to assess our progress. The big question we have and we still have to learn here is how rapidly can we grow within that primary care space and do we need to continue to add their disproportionately? And we'll keep you guys updated on those learnings.
Okay, thanks for taking a question. Thanks, Andrew.
Speaker Change: Thank you, and our next question will be coming from Sung, Sung Jinam, a Scotia bank. Your line is open.
Speaker Change: Hi, thanks for taking the question. Just to follow up on Dan and Andrew's question around your sales force filled out for the rest of the year. So it sounds like based on what's going on that the majority of the hire will be coming from the for the primary care market.
Speaker Change: and it also sounds like it might take longer for the primary reps to be trained or to ramp up than your pulmonary...
Speaker Change: Focus Rep. So is that the right way to think about it? And then just kind of what gives you confidence that you could be more efficient going forward for the rest of the year? Is it something that could take a quarter or two for you to really kind of get to where you need to be? Thank you.
I sung to you great questions.
Speaker Change: Yeah, you know, what gave us confidence was really vetting all of those scenarios, and so some of the first questions we had to address and answer were our primary care physicians even aware that this patient population resides in their care, and they were. It was a known problem and a known challenge.
Speaker Change: Secondarily was, well, if we're going to introduce blood-based testing, did they have access and comfort around flow-of-automy services and they do?
Speaker Change: They either offer the services within clinic or they offer them on site.
Speaker Change: What we've seen is that you increase the likelihood of a patient being compliant if you can conduct that blood draw on site the day that they have the visit.
Speaker Change: and then also helping them understand the referral needs and the patterns within their community.
and so...
Speaker Change: What they want to do from a primary care physician perspective is they want to refer on those patients with the highest likelihood.
Speaker Change: of a malignancy, trying to get to early detection and diagnosis which hopefully leads to a positive outcome.
Speaker Change: What they don't want to do is refer on patients with a benign nodule, right? Those are the patients that they can continue to monitor through CT surveillance on an annual basis.
Speaker Change: So the real question for us was did they see the value of the clinical offering and they did and so have had no issues or push back there. When it comes to ramp what we saw during the pilot was very consistent with what we had seen thus far with our pulmonology focus.
of a primary care physician's focus in awareness.
Speaker Change: But the training program is not longer or any more detailed. So we look at this and think that their effectiveness and efficient fees should be realized very similarly to how we model pulmonology sales consultants.
Speaker Change: but we'll continue to vet that and provide updates, but as we've modeled it it is very very consistent.
Speaker Change: Okay, got you. Thank you so much for that. And then just my follow-up is on, you know, it's great to see continued strength for your development services business and the pipeline there.
Speaker Change: Just curious, given everything going on with Pharma, you know, around potential sectoral tariffs, through the most favored nation pricing and whatnot, just wondering if you're...
Speaker Change: Seeing any impacts, I know it's still a small part of your business currently.
you know, if you're seeing an impact and you know, in that kind of, in that, in a dynamic environment kind of how are you positioned?
Speaker Change: in terms of that business, and Robin also could you give us a sense of what percent of your guidance would be coming from from development services. Thank you.
Speaker Change: That's a great question. We continue to monitor things just as everybody else.
and we've all seen things are changing quite rapidly.
Speaker Change: I'm happy to report and share that thus far we don't see any impacts directly from a terrif perspective, a favorite nation's perspective. Our biopharmaceutical partners have been very transparent with us, especially those that we already have a contract in place.
Speaker Change: But we're continuing to monitor it. So even more recently at AACR and then here is we had to ask go here in a couple weeks.
Speaker Change: We'll continue to have that dialogue, making certain that we stay abreast of all of the challenges that they might be facing.
Speaker Change: and how it can impact us. The good news is, as many of our studies are based on retrospective
Speaker Change: So in those cases, it's really about access to those patient samples.
Speaker Change: I think the bigger question will be prospective trials and if a pharmaceutical company continues to prioritize and invest in that trial, if they do then we should be in a good position. If they don't, obviously that could be of impact to us.
Speaker Change: and as we think more broadly, we're proud of the $10.9 million in under contract but not yet recognized. Our request for proposal and outreach has continued to increase and is at an all-time high.
Speaker Change: So, you know, the offering that we're providing, a rapid turnaround time in those insights and our team seems to be resonating with our biopharmaceutical partners.
Speaker Change: and going forward, we've consistently seen our total revenue from a biopharmus services perspective being about 10% of total revenue, and we expect it to remain consistent.
Speaker Change: Doctor, thank you so much. Thanks, Sundry. Thank you. And our next question will be coming from Kyle Mikson of Canacord, you know what I mean?
Speaker Change: and the revenue potential for the year. And just kind of curious when you do this going forward, how you can kind of work on visibility and communicate and things like that, just if any color or not would be interesting.
Speaker Change: Yes, thanks, Kyle. You know, as we've reminded others, as a first mover and long management and lung cancer, having the only diagnostic focus team, we're learning constantly.
Speaker Change: You know, we don't have any predecessors out there so we try to apply those learnings as quick as possible, update our plans and our forecast as soon as we're able to do so.
Speaker Change: As we entered this year early in the first quarter we made the decision to continue to explore more about the primary care physicians and as we progressed and saw the successes and committed to it we really started our hiring efforts.
Speaker Change: Some of those initial learnings that I talked about, whether it's like...
Speaker Change: slightly different background, a different skill set, and also familiarizing them with us, with the Biodesix team. That took a little bit longer than we had thought, but it was quite fluid. It wasn't like, you know, overnight. It was a continued process over a three to four to five week period that we were revisiting it daily.
Continuing to focus [inaudible]
and we did.
Speaker Change: Shifts and Territories and it caused some some difficult conversations with sales team members on
Speaker Change: Changing of territory where some going to move so we did have some opt out and so when we stayed that it was quite fluid as much as we were trying to add we did have some turnover that was slightly more than we had anticipated or liked we never liked to lose any team members. [inaudible]
Speaker Change: but we feel that as a learning organization, the goal really is about making progress.
If you're going to fail, fail fast, apply those learnings.
Speaker Change: We still feel very confident that we've got a great strategic plan. We continue to execute and we continue to grow all the while and most importantly
Speaker Change: We're going to get to profitability and as you know there's very few diagnostic companies that have ever done it and those that have haven't stayed and so we think that what we're doing is durable and we're excited to continue to build that out.
Speaker Change: That was great. And then when you think about the target to achieve, it's actually a bit of a break even by the fourth quarter and you reiterated that was just great. Just given this top line, detour is here. I mean, what levers do you have to pull that will help you get to that target just in case, you know, the top line remains soft as the primary care team continues to ramp.
Yeah, obviously Revenue plays an important...
Speaker Change: but we do have some levers on cost. We get asked a lot.
Speaker Change: Could you grow faster? And the answer always is, yes we could.
Speaker Change: but our focus really is getting to break even. So it's a balance of adding these sales reps quickly to catch up so that we can get our revenue in the fourth quarter where we need it to be to hit adjusted EBITDAB but also balancing that that spend on the commercial expansion. So...
Speaker Change: It's really both. It's getting these reps in, trained and out in the field as quickly as we can to catch up and then also being very closely monitoring and managing our expenses.
Speaker Change: Awesome. And then just from a private perspective, could you guys dive into the tripping guidance side of the business and talk about which of the tests there are performing well and you know, especially curious how Genestra and G.S. has done, you know, the past couple years more recently, I guess.
Speaker Change: To remind others on the call, our IQ Long Franchise is really our treatment guidance portion of the product portfolio where we have three tests.
Speaker Change: We have two genomic tests, Genestrat, which is a DDPCR based test, and we have a broader panel, Genestrat NGS test, which is a 52 gene NGS panel, and then we have our Bear Strat test, which is a proprietary test.
where we measure and monitor a patient's immune status.
Speaker Change: Barristrat really is the key driver in that portfolio where there's no competition to date. And you've heard us over the last few earnings calls start to talk about the development efforts.
Speaker Change: that we continue to pursue and invest in on the bear strap front.
Speaker Change: So it is the most valuable as we think of future state and uniquely being positioned as a proteomic test.
Speaker Change: One of the things that differentiates us is having three on market proteomic tests, unlike anybody else out there.
Speaker Change: We're not out with our sales professional selling to medical oncologists for all cancers. So it puts us at a disadvantage in capturing the broader NGS market. As a reminder, we're really focused on helping pulmonologists.
Speaker Change: Detect and diagnose cancer early, and then help order and facilitate ordering of that NGS test so that when a patient is referred onto a medical oncologist, he or she has those test results in hand.
Speaker Change: So, they're modest contributors, but we still feel that they're extremely strategic and valuable to the overall offering. And as we continue to invest in the pipeline, you may have noticed that many of those tests fit more into that treatment guidance.
Speaker Change: side of the business. So as we progress through the year and head into 2026, we'll provide greater clarity as to what that means for continued evolution of the Salesforce.
Speaker Change: Perfect. Last one before I hop off on MRD, you gave a little more color on that one today. I know you have the R&D day in the fall. I think just maybe you just touched on how you might commercialize that test and it was just given your current sales force. You know, isn't, you know, isn't adequately suited to target that and market probably like how would you sort of think about building on that team over time. [inaudible]
Speaker Change: Yeah, it's a great question, and really to reiterate, our first and foremost, our top priority when it comes to the commercial team is notify, with a first mover advantage in lung nodule management.
Speaker Change: We've got to continue to focus all of our time and attention there and as Robin said, it's where we get the greatest return and it's what will drive us and fuel us to break even.
Speaker Change: As we continue to make progress, we've had tons of experience and learnings over the years, starting back when Verestrap was the first test and we called directly on medical oncologists, so we know what that takes.
We know how to position and present those products [inaudible]
Speaker Change: But we're going to do that in kind of a phased approach and be very mindful and intentional about not distracting from notified.
Speaker Change: You won't see or hear anything in 2025 on the commercial front.
The goal that we've stated earlier on the call was...
Speaker Change: to have an MRD offering for Biopharmaceutical Research Interest by the end of this year. The longer-term play is going to be more in the latter half of 26.
Speaker Change: Going into 2027, we want to be mindful that anything we introduce, we've got to have a reimbursement plan, we've got to make sure that we've got payers on board because once we get the profitability we plan on staying there.
Carl, help us out. Thank you. Yeah, thank you, Kyle.
Thank you. Thank you.
and one moment for our next question.
Speaker Change: which will be coming from Thomas Flaten of Lake Street Capital Markets, your line is
Speaker Change: Yeah, hey, thanks for taking the questions. Scott, just doing some back-and-down ball of math. If you get to about a hundred at the end of this year, there won't be a one-for-one commonologist with a junior PCP rep.
Speaker Change: So you're obviously making a decision that certain territories should have a PCP references others. Here's walk is one is that correct and then if so could you walk us through the thinking behind that?
Speaker Change: Yeah, just to clarify, there will be a one-to-one for the pulmonology sales consultant. So all 50 territories will have a pulmonology sales consultant.
They won't all have an associate sales consultant or support.
Speaker Change: Yeah, so as they start, you really think about it, they go out and start to...
Doug the business, they gain momentum.
Speaker Change: Then as they get a customer up and ordering, we really want the associate sales consultant to come in to support that business, to help those ordering accounts increase effectiveness and efficiency, freeing the pulmonology sales consultant to continue to go out there and target and bring on new ordering accounts.
Speaker Change: We really do assess those decisions kind of on a one-by-one basis.
and it's a factor of test volumes.
a number of accounts.
Speaker Change: In some territories, it also has to deal with geographic size, right? We really are trying to ensure that we can increase access all the while being as present as needed. Same thing with the primary care sales.
Speaker Change: Professionals, as we bring them on board, you're not going to have 50 of them.
Speaker Change: We know through the claims data that we have pulled and from conversations with our pulmonology ordering physicians.
We know which primary care physicians.
Speaker Change: As we stated, out of those broader 250,000 primary care physicians, narrowing it down to the 15,000 that account for 80% of the lung nodules. So we know who they are and it's very targeted. So again, not all territories are created equal on all fronts. And so we'll continue to invest in the
Speaker Change: Primary Care Sales Professionals first and foremost in the territories where we have established relationships and can support that transition and pull into the referral network.
Is that helpful, Thomas?
Speaker Change: Yeah, I know, that's great. Thank you for that color. And then I'm just trying to understand a little bit the sequential down draft in testing volume.
Speaker Change: and the promotional sensitivity of these docs to having reps around. So you didn't expand, you tracked it a little bit the number of reps sequentially and volumes were down, is that?
Speaker Change: Is that just because it wasn't a rep there, kind of reminding them all, like on an ongoing basis to order the test, I'm trying to understand why, you know, a few weeks of a missing rep would have a significant impact on volumes.
sequentially.
Speaker Change: So that wasn't a surprise. There's a number of contributing factors that come into play there. So we anticipated that, you know, whether it's weather, some seasonality, respiratory, those things have been consistent over a four to five year period. It just...
Speaker Change: It's in flux as to how significant the impact may be. But we definitely did as we were moving around the territories and decreased the size. We did see, you know, kind of stretching the organization to ensure that we could call on and support all of those ordering physicians. Thank you very much.
Speaker Change: But where you really see it as in the absence of a sales professional, you're not going to continue to grow and bring on new accounts.
Speaker Change: That's the biggest challenge that you face and so as we we tracked
Speaker Change: Once we bring an account on and that position begins ordering obviously we want to see them continue to increase the number of orders we want to see their partners within a practice
Start ordering so that we can expand within practice.
and that takes time.
Speaker Change: Quarter Over Quarter, and so we know that when we have sales professionals in the territory aligned working within that pod structure, it sets us up for success.
Great, I appreciate it. Thank you.
Thanks Thomas.
Speaker Change: Thank you and our next question will be coming from Bill Benello of Craig Hale of your line of open bill.
Speaker Change: You guys, thanks a lot. So a few things, I guess just starting with the number of reps.
the decline from 70 to 65.
Speaker Change: Obviously you said in an answering Kyle's question, you had some attrition maybe.
Speaker Change: You know, we think of it as maybe you lost five or so or did you hire some too and you lost more productive reps than that?
Speaker Change: You also, there's a ripple effect there with the associate sales consultant because they both support each other and calling on the pulmonologist.
Speaker Change: on the pulmonology sales consultant side, it is what you've described.
Speaker Change: If we're going to constrict there down to the 50 territories, they're definitely where some that need that weren't going to fit if you will. On the associate sales consultant side it's a little bit different of a challenge because these are earlier career professionals that we have.
The confidence in and their high potential.
So when a territory opens up...
Speaker Change: They're the first individuals that we want to provide an opportunity to promote them in.
Speaker Change: So in constricting and changing, some of those associated sales consultants.
Speaker Change: Now didn't see that their timeline for promotion was the same as they desired and so they opt out.
Speaker Change: Telling or anything concerning in there. You never like to make these changes and we never like to lose teammates, but as we've continued to progress here with the primary care sales consultants, we're really seeing a lot of success. So for us, you know,
Speaker Change: Wasn't the ideal timing needed to be done and so tried to do it as fast as possible to minimize the impact and shift focus so that we can move on to
Speaker Change: The 50% of patients that are stuck in primary care, opening that addressable market up and gaining access to those patients is critical for us.
Speaker Change: And I guess just understanding that a little bit more. I mean, was that the notion of going, I mean obviously there's a direct correlation between the number of sales people you have and
Speaker Change: Generate, and so was the notion that Gash, the only way we really...
Speaker Change: can expand this associate model and hire some PCP reps which we think will be productive is if we cut back on the number of territories, we just can't afford to add associates and PCP reps and keep the number of pulmonology reps we had or what was sort of the basic thinking behind reducing the number of territories.
Robin Harper-Cowie: Yeah, you know, Robin stated it, our number one goal is to get to break even.
Robin Harper-Cowie: and so we kept that in mind. If our number one goal was to grow, we would hire, but we know that it would cause an initial spend and there would be a time before those individuals could contribute.
So it really was balancing the two efforts.
Robin Harper-Cowie: Ensuring that we could be one of the few diagnostic companies that can get there and that when we got there it was sustainable but also
Robin Harper-Cowie: really trying to apply all of our learnings as we've stated. We're going to continually learn here. We think this approach
Robin Harper-Cowie: We've been anticipating that we might have to shift to this
and the pulmonologists that have gotten to know us well.
Robin Harper-Cowie: When they started encouraging us to do this, that we saw that as the opportunity to lean in, and we did, and it's been received well and we continue to see great success, so you know.
Robin Harper-Cowie: Two, three years from now, we'll take those learnings. We might have 52 territories, right? The territory component will allow our successes and our learnings to guide us there. We aren't really wed to one scenario.
I guess that's all for now.
Bill: Yeah, that's hopeful, and then just one final question, because I know we're bumping up against the hour here, but
Bill: Just strategically, would you consider partnerships for primary care? I know you've talked about maybe a focus group of PCPs that you're trying to reach, but 15,000 is still a lot of people and there obviously are labs out there with well-developed primary care sales forces and patient service centers and in-office lobotomists and what have you. How did you-
at www.thevenusproject.com
could leverage their existing primary care.
Speaker Change: Network. Yeah, it's a great question and we spent a lot of time considering that and I think as we either walked you through it early on, it was...
Speaker Change: Then, you know, do we do it ourselves or do we partner? Because we're starting small and because of the progress we've made, we chose to go out at ourselves. But we have considered and discussed what it might look like to partner with others and we're open to that.
Speaker Change: So, we'll continue to assess it as we move forward, but really when you think about the size of that market, 15,000 primary care physicians account for 80% of those lung nodules, there's about 14,000 pulmonologist.
So, you know, we looked at it and said, Hey, [inaudible]
Speaker Change: We know that's manageable. We know who they are. We've got the map we can target to them.
Speaker Change: I think as we continue to make progress, we'll welcome those conversations, but I think the other thing was is we didn't see an ideal partner out there that would give it the time and attention that we're going to, and we owe that to our pulmonology customers and their patients that are fighting lung cancer.
Okay, thanks a lot.
Thank you, Bill.
Speaker Change: and I'm showing no further questions. I would now like to hand the call back to Scott Hutton for closing remarks.
Scott Hutton: Thank you. In closing, I want to express my gratitude to all the remarkable members of the Biodesix team who have shown unwavering belief in and dedication to our mission, vision, and culture.
Scott Hutton: Our collective commitment and daily contributions are centered around making a positive impact in the lives of patients through our healthcare provider customers and industry partners.
I am truly thankful for your efforts.
Scott Hutton: I also want to take a moment and say thank you to Dr. Chuck Watts and Jack Shuler, both of whom have been long-standing board members of Biodesix, providing invaluable insights and guidance to the company for many years.
Scott Hutton: While Chuck is retiring with our sincere appreciation, Jack will be moving into a board emeritus role and will still be participating in contributing to board activities for the foreseeable future.
Thank you.
Scott Hutton: and thank you for your participation in today's conference. This does conclude the program. You may all disconnect. Thank you.