Thomas Flaten

Thomas Flaten asked for clarification on whether Aaron Tachibana's comment about having cash to execute the plan implied having cash to break even.

Answer

Aaron Tachibana, Chief Financial and Chief Operating Officer, clarified that the statement meant they have sufficient capital for the next couple of years to invest in gaining market share, not a projection for breaking even. Thomas Flaten also asked about the Real-Time Variant Tracker, specifically if physicians are ordering it in the early access program and how its stickiness is driven. Chris Hall, Chief Executive Officer and President, and Rich Chen, Chief Medical Officer and EVP R&D, confirmed it's an opt-in module, the early access program is gearing up, and there's excitement for its ability to track tumor changes. Thomas Flaten further inquired about the expected clinical volume for 2026, asking about the balance between driving deeper within existing accounts versus expanding to new oncologists. Chris Hall stated the focus remains on driving deeper within the existing 900+ ordering oncologists while also continuing to grow that base, as longer-term customers tend to order the most.

Thomas Flaten asked for clarification on the statement about having cash to execute the plan, specifically if it implies having cash to break even. He also inquired about the Real-Time Variant Tracker, asking if physicians are ordering it, how it mechanically works as an opt-in test, and how to drive its stickiness. Finally, he asked about the expected number of doctors responsible for the 43,000-45,000 clinical volumes in 2026, focusing on depth versus breadth.

Answer

Aaron Tachibana, CFO and COO, clarified that the cash statement does not imply cash to break even, but rather indicates sufficient capital for the next 2.5 years to gain market share. Chris Hall, CEO and President, and Rich Chen, Chief Medical Officer and EVP of R&D, explained that the Real-Time Variant Tracker is an opt-in module, with early access program gearing up and positive feedback from physicians who see value in tracking tumor changes. Hall added that the company will focus on driving deeper within existing accounts and growing the number of ordering doctors, as longer-term customers tend to order the most.

Thomas Flaten of Lake Street Capital Markets questioned the company on test turnaround times, the observed cadence of repeat testing by physicians, and the strategy for co-managing customers between Personalis and Tempus as the sales team expands.

Answer

CEO Christopher Hall stated that significant R&D investment has dramatically reduced test turnaround times, making them competitive in the market, and noted that strong volume growth is evidence of successful operational execution. He mentioned it was still early to define a definitive testing cadence but that IO therapy monitoring appears more frequent than recurrence monitoring, as expected. Regarding the sales strategy, Hall explained that most volume will flow through Tempus's established infrastructure, while the Personalis sales team will support key academic relationships and cover market gaps with non-Tempus customers.

Thomas Flaten asked about Personalis's commercial strategy following a potential breast cancer reimbursement approval and requested color on the physician user base, such as the mix of new versus returning doctors.

Answer

Executive Christopher Hall explained that the commercial organization is already focused on breast and lung cancer specialists. He confirmed that upon reimbursement, they plan to accelerate by adding more sales representatives and leveraging their partnership with Tempus. Hall noted that physician retention has been very high, with several hundred doctors ordering, and that reorder rates for subsequent patient samples are strong. He also highlighted that over half of direct orders include the comprehensive genomic profiling (CGP) test, indicating a successful integrated strategy.

Thomas Flaten of Lake Street Capital Markets asked for clarification on the 2025 guidance for enterprise and VA MVP revenue, specifically regarding Natera, and also inquired about the number of physician customers and reorder rates for the NeXT Personal test.

Answer

Aaron Tachibana, CFO, clarified that the enterprise guidance includes both VA and other enterprise customers, with the VA contract accounting for $7.5 million to $8 million. Christopher Hall, CEO, added that Personalis is approaching 300 physician customers for NeXT Personal and that retention remains very high, driven by the test's ultra-sensitive detection capabilities.

Thomas Flaten sought clarity on which indications (breast, IO, lung) are being prioritized for 2025 reimbursement submissions and asked how the wind-down of Moderna's melanoma trial might affect the company's aspirational $100 million revenue target for 2025.

Answer

CEO Christopher Hall clarified that Personalis is aggressively pursuing reimbursement for all three core indications—breast, IO, and lung—in 2025, viewing it as having 'three shots on goal' to secure at least two. Regarding the 2025 outlook, Hall stated that the company remains committed to its internal goal of reaching $100 million in revenue, a target established with the foreknowledge that the Moderna melanoma trial enrollment would be largely completed this year.

Thomas Flaten asked about the allocation of new sales force additions in 2026 between primary care and pulmonology. He also inquired about the expected differential growth rates between these two channels through 2026. Finally, Flaten sought any new insights regarding HEDIS guidelines.

Answer

CEO Scott Hutton stated that the exact allocation of new sales reps between PCP and pulmonology has not been disclosed, emphasizing an agile, need-based approach guided by current performance. He could not provide prescriptive differential growth rates due to unknown hiring focus but reiterated massive growth opportunities in both channels, noting consistent reimbursement. Hutton reported no new updates on HEDIS guidelines since September of last year, when no update for 2025 was stated, but expressed eagerness for 2026 updates, anticipating significant benefits for earlier detection.

Thomas Flaten asked about the allocation of new sales force additions in 2026 between primary care and pulmonology, the qualitative differential growth rates expected between these two channels, and any updates on HEDIS guidelines.

Answer

Scott Hutton (CEO) stated that the allocation of new sales reps is not disclosed and will be agile, based on current performance and needs in different territories, with the majority being a blend of associate and primary care-focused reps. He noted that while he couldn't be prescriptive on differential growth rates, there are massive, unaddressed opportunities in both channels, with consistent reimbursement regardless of the referral source. Regarding HEDIS guidelines, Scott Hutton (CEO) reported no new updates since September 2025, when it was stated there would be no 2025 update, but expressed eagerness for 2026 updates, expecting them to benefit screening and earlier detection.

Thomas Flaten of Lake Street Capital Markets questioned how the growth from the core pulmonology community is affected by the increasing focus on primary care referrals. He also requested an update on the current distribution of the sales team across different roles.

Answer

Scott Hutton, President, CEO & Director, explained that while ordering may shift from some pulmonologists to their primary care networks, overall company growth will come from adding new pulmonologists and capturing upstream volume. He stated that each of the 49 territories is anchored by a pulmonology sales consultant, with a growing number of general practice-focused reps, currently fewer than 10.

Thomas Flaten inquired about the rationale for allocating primary care reps to certain territories over others and sought to understand the promotional sensitivity of physicians, questioning why a small, short-term reduction in reps would cause a significant sequential drop in test volumes.

Answer

CEO Scott Hutton explained that associate and primary care reps are allocated to territories based on factors like existing relationships, test volumes, and geography, noting not all territories are equal. He clarified the Q1 volume decline was consistent with historical seasonality, and the main impact of reduced rep presence was on onboarding new accounts, not a drop-off in ordering from existing customers.

Thomas Flaten from Lake Street Capital Markets asked if the sales force pilot study implies a need to further segment territories to better engage with primary care physicians. He also inquired about the remaining potential for gross margin improvement.

Answer

CEO Scott Hutton clarified that the plan is to grow to 50 territories with approximately two sales professionals per territory, rather than creating many new territories. The strategy involves a targeted approach, leveraging pulmonologist relationships to identify and engage high-volume primary care referrers, not a broad push into all primary care. CFO Robin Cowie addressed gross margins, stating that while volume growth and ongoing operational improvements offer some potential upside, the company expects to maintain its already strong margins in the upper 70s for the year.

Thomas Flaten of Lake Street Capital Markets asked about any lingering business impact from the hurricanes in early October, whether the planned sales rep additions are net new hires, and for an update on resolving outstanding Medicare Advantage payment issues.

Answer

Executive Scott Hutton acknowledged a lingering hurricane impact, particularly from flooding, but did not expect it to affect Q4 results long-term. He clarified that the goal of hiring 6-8 reps per quarter represents net additions. Executive Robin Cowie reported no change in the Medicare Advantage backlog, which remains concentrated with one to two payers, but noted positively that the issue has not expanded to other groups.

Thomas Flaten asked for anecdotal feedback from the sales team regarding why the initial 100 prescribing doctors chose to write prescriptions for EXXUA, inquired about the timing and triggers for potential sales force expansion in fiscal 2026, and requested details on the direct-to-consumer campaign.

Answer

CEO Josh Disbrow explained that early prescriber motivations were mixed, including challenging patients with inadequate response or side effects, interest in EXXUA's novel mechanism of action, and the ease of prescribing through RxConnect. He stated that sales force expansion is unlikely in fiscal 2026 and would be triggered by overachieving internal forecasts and positive cash flow, without raising capital. For the DTC campaign, Mr. Disbrow noted it would be largely web-based (SEO, keyword search) and explore social media forums, while emphasizing efficiency and prioritizing face-to-face sales force interactions.

Thomas Flaten asked about anecdotal feedback from the sales team regarding why the initial 100 doctors prescribed Exxua, the potential for sales force expansion in fiscal 2026 and its triggers, and details on the direct-to-consumer campaign.

Answer

CEO Josh Disbrow explained that early prescriber motivations for Exxua were mixed, including challenging patients, interest in the novel mechanism of action (MOA), and the ease of prescribing through RxConnect. He stated that sales force expansion in fiscal 2026 is unlikely, with triggers being overachieving internal forecasts and positive cash flow, emphasizing no capital raise for this. Regarding the direct-to-consumer campaign, Mr. Disbrow noted it would be largely web-based, focusing on SEO and keyword search, with exploration into social media forums like Reddit, while prioritizing efficient spend and face-to-face sales force interactions.

Thomas Flaten, Senior Research Analyst at Lake Street, inquired about Aytu BioPharma's Exua launch timeline, specifically regarding channel loading, national sales meetings, and initial physician detailing. He also asked about the company's strategy for pre-clearing promotional materials with the FDA and their approach to payer engagement, including the rationale for a case-by-case review and the triggers for such discussions.

Answer

CEO Josh Disbrow confirmed that channel loading is expected by late calendar 2025, followed by a sales force launch meeting and full physician detailing in Q1 calendar 2026. He stated that Aytu does not plan to pre-clear promotional materials with the FDA, citing a solid, compliant platform and current FDA staffing issues, opting instead for the traditional 2253 submission process. Regarding payer engagement, Disbrow explained that Aytu will be highly selective, focusing on preserving margin from government payers (due to mandated MDD coverage) and only pursuing very selective, favorable commercial contracts that ensure pull-through without undermining government discounts. He emphasized leveraging the RxConnect platform for insights and patient access.

Thomas Flaten inquired about Aytu BioPharma's Exua launch timeline, including the national sales meeting and full launch following Q4 calendar channel loading. He also asked about the company's approach to FDA promotional material clearance and its selective payer engagement strategy.

Answer

CEO Josh Disbrow confirmed plans for a sales force launch meeting and full physician detailing in Q1 calendar, immediately after channel loading by year-end 2025. He stated Aytu does not plan to pre-clear promotional materials with the FDA, opting for the traditional 2253 submission due to confidence in compliance and FDA staffing issues. Regarding payer engagement, Mr. Disbrow explained the highly selective, case-by-case approach, prioritizing government pay (due to universal coverage mandates and fixed rebates) and avoiding actions that could undermine margins or trigger 'best price' clauses on the commercial side. He emphasized leveraging the RxConnect platform for smart, targeted contracting.

Thomas Flaten asked about the planned timing for Exua's national sales meeting and full launch following channel loading, the company's approach to pre-clearing promotional materials with the FDA, and the strategy for engaging payers on a case-by-case basis, including any pre-launch discussions and potential implications for best price.

Answer

CEO Josh Disbrow confirmed that channel loading is expected by late calendar 2025, with a sales force launch meeting and full physician detailing in Q1 calendar 2026. He stated that Aytu BioPharma does not plan to pre-clear promotional materials with the FDA, relying on a compliant platform and traditional 2253 submission. Mr. Disbrow explained the highly selective, case-by-case payer strategy is designed to preserve government pay margins (due to protected class status) and ensure commercial contracts yield effective pull-through without triggering best price.

Thomas Flaten of Lake Street Capital Markets inquired about the remaining steps for Merck (MSD) to decide on its option for the collaboration programs and asked for color on the current business development discussions, specifically regarding interest in infectious disease versus oncology assets.

Answer

Birgitte Runa, Interim CEO and CSO, explained that both the B3 and B2 collaborations with MSD are progressing according to plan and are on track for a conclusion in 2025. Regarding business development, she noted that discussions are active across the entire R&D pipeline, including both therapeutic areas and target discovery collaborations, with some dialogues being more mature than others.

Thomas Flaten of Lake Street Capital Markets, LLC inquired about the T-cell response bias in EVX-one data, the strategic design of the lead ERV candidate, and the company's perspective on the UK's repurposing of a meningitis vaccine for gonorrhea.

Answer

Chief Scientific Officer Birgitte Rønø explained that EVX-one primarily induces a CD4 T-cell response due to its peptide-based formulation and clarified the ERV candidate is an 'off-the-shelf' concept not initially combined with personalized vaccines. CEO Christian Kanstrup added that competitor news on gonorrhea underscores the significant unmet medical need and commercial potential for their EBXB2 candidate, though CSO Rønø noted they had not discussed it with partner MSD.

Thomas Flaten inquired about the focus of current business development discussions, asking whether interest was greater for oncology or infectious disease assets. He also asked about the planned format for releasing the upcoming ERV proof-of-concept data.

Answer

CEO Christian Kanstrup noted a recent increase in interest for the infectious disease pipeline, partly validated by the MSD deal, but acknowledged ongoing discussions around the EVX-01 oncology data as well. Chief Science Officer Birgitte Rono added that the ERV proof-of-concept data is planned for presentation at a conference in December.

Thomas Flaten of Lake Street Capital Markets asked for more detail on the nature and stage of ongoing partnership discussions and requested guidance on R&D spending for the second half of 2024.

Answer

CEO Christian Kanstrup characterized the partnership discussions as broad-based, covering both the AI platform and pipeline assets, with some being "fairly advanced." He also guided for slightly lower R&D and G&A spending in the second half of the year compared to the first half, resulting in lower overall cash burn.

Thomas Flaten of Lake Street Capital Markets asked new Chief Medical Officer, Dr. Julie Krop, about her reasons for joining DiaMedica and her perspective on the preeclampsia and stroke programs. He also asked for a timeline for the upcoming preeclampsia trial cohorts and clarification on the target indication for the U.S. Phase 2b study.

Answer

Chief Medical Officer Dr. Julie Krop expressed her excitement about joining, citing the large unmet need in preeclampsia and ischemic stroke, the derisked biology of the KLK1 protein, and promising clinical data. President & CEO Rick Pauls outlined the preeclampsia timeline, noting Cohort 10 will start next week, followed by concurrent enrollment in Parts 1B, 2, and 3. He confirmed the U.S. study will target expectant management and that an IND application is being prepared for a study start next year.

In a follow-up question, Thomas Flaten of Lake Street Capital Markets asked whether Parts 2 and 3 of the preeclampsia trial would be based primarily in South Africa or would require U.S. expansion and a new IND filing.

Answer

Executive Dietrich Pauls clarified that Parts 2 and 3 are covered under the same existing protocol, so no new regulatory clearance is needed for the current collaborators. He added that while the company plans future expansion to the U.S. and globally, the immediate focus is on advancing the current trial through its next phases.

Thomas Flaten inquired about the ReMEDy2 trial, asking how many of the 30 activated sites are considered top-tier sites and how many are actively enrolling. He also sought clarity on the scope of data reviewed by the DSMB in January.

Answer

Dr. Lorianne Masuoka, Chief Medical Officer, clarified that approximately 13 of the top 15 sites are included in the 30 activated sites, with many currently enrolling. She explained the DSMB reviewed the entire available patient database up to a specific cutoff date, not just acute-phase data.

Thomas Flaten inquired about the primary motivation for reevaluating the ReMEDy2 trial's protocol and statistical analysis plan, the technical process for randomizing tPA non-responder patients, and whether the original total patient target of 364 remains viable with the updated interim analysis size.

Answer

Dr. Lorianne Masuoka, Chief Medical Officer, explained the changes were driven by a desire to accelerate enrollment and by expert statistical advice suggesting a larger interim cohort improves precision. She clarified that patients are randomized before receiving tPA, or if they've already received it, they are assessed for non-response after 6 hours before entering the trial. CEO Dietrich Pauls added that with the larger interim cohort of 200, the final trial size is now anticipated to be lower than the original 364 patients.

Thomas Flaten of Lake Street Capital Markets inquired about Journey Medical's end-of-year goal for Amrozi payer coverage, the expected evolution of gross margins, and the timeline for providing financial guidance.

Answer

COO Ramsey Alloush explained that while the company has reached 65% commercial lives covered for Amrozi, they have not set a public year-end target and are focused on both the quantity and quality of coverage. CFO Joseph Benesch stated that gross margins are expected to continue improving as the low-cost Amrozi becomes a larger part of the sales mix. CEO Claude Maraoui noted that it is too early in the product launch to provide financial guidance, and the company will wait a few more quarters.

Asked about the year-end goal for payer coverage for Amrozi, the expected evolution of gross margins for the rest of the year, and the timeline for when the company might provide financial guidance.

Answer

The company has not disclosed a specific year-end target for payer coverage, focusing on both quantity and quality of access. Gross margins are expected to continue improving as the low-cost Amrozi becomes a larger part of the sales mix. It is too early in the product launch to provide financial guidance, and they will wait a few more quarters.

Asked for specific anecdotal feedback from doctors regarding erythema, the company's strategy for incorporating erythema data into its messaging, and whether the initial prescribers are writing repeat prescriptions.

Answer

The company has received positive anecdotal feedback from doctors on erythema reduction. The strategy to communicate this involves leveraging the data published in JAMA Dermatology and the inclusion of Emrosi in the National Rosacea Society's treatment algorithms for severe erythema, which will be handled by medical affairs. Management confirmed that there are already repeat writers among the initial 660 prescribers, with some having written over 25 prescriptions.

Thomas Flaten asked for elaboration on the comment that Harrow's solutions might evolve beyond pharmaceuticals and inquired if VEVYE's 2025 refill rates are on track to match the high rates seen in 2024.

Answer

CEO Mark Baum stated that the company's pipeline, which includes non-pharmaceutical initiatives, will be detailed at the upcoming Investor Day, framing Harrow as a broader 'ophthalmic disease management solution business.' He also confirmed that VEVYE's refill rates are on track, attributing the sustained high rate to the product's excellent tolerability profile, which leads to strong patient adherence.

Thomas Flaten inquired about any price increase initiatives for 2025, particularly for IHEEZO, and asked for details on 'Project Eagle,' including its scope and whether it could involve divesting the compounding business.

Answer

CFO Andrew Boll and CEO Mark L. Baum clarified that Harrow did not implement significant price increases and, in some cases, lowered prices. Baum explained that Project Eagle's initial goal is to transition Klarity-C patients to VEVYE, a financially and clinically superior move. He firmly stated that Harrow has no plans to exit the compounding business, describing it as the company's foundational and profitable core.

Thomas Flaten asked for clarification on the extended payment terms for a distributor that led to a large increase in accounts receivable, sought insights on commonalities in metro markets with high VEVYE share, and inquired about the next-generation TRIESENCE product.

Answer

CFO Andrew Boll explained that extended payment terms for buy-and-bill products like IHEEZO and TRIESENCE are intentional, allowing customers to complete their own reimbursement cycle before paying Harrow. CEO Mark L. Baum noted that VEVYE's success is driven by the product, team, and market access, which the new program addresses broadly. Regarding the next-gen TRIESENCE, Baum declined to share specifics for competitive reasons but confirmed it is a key part of the long-term brand strategy with an NDA targeted before the end of 2027.

Thomas Flaten of Lake Street Capital Markets inquired if Aquestive has conducted research on its competitor's launch to understand what motivates patients to adopt a needle-free alternative.

Answer

Chief Commercial Officer Sherry Korczynski responded that patient demand is driven by a desire for choice, convenience, and ease of use. She noted that competitor advertising is growing the overall rescue market by increasing awareness, which ultimately benefits all non-injectable options by highlighting the need for patients, especially children, to carry their medication.

Thomas Flaten asked about the optimal time to deploy a sales force post-approval given market seasonality and inquired about the number of Anaphylm dosage forms that will be available at launch.

Answer

Executive Sherry Korczynski stated that reps would be deployed 'almost immediately' following a potential February approval to capitalize on the allergy season ramp-up. CEO Daniel Barber clarified that the initial launch will feature one dosage strength for patients 30 kilos and up, with a junior dose to be developed and launched subsequently.

Thomas Flaten of Lake Street Capital Markets asked what level of commercial investment for Anaphylm is included in the company's cash runway guidance through 2026 and whether there are any ongoing efforts to overturn the orphan drug exclusivity for Libervant.

Answer

CFO Ernie Toth clarified that the cash runway into 2026 supports the Libervant launch and all pre-commercial activities for Anaphylm, but does not include a full sales force ramp-up, which would only occur post-approval. CEO Daniel Barber added that while there is some back-and-forth with the FDA on Libervant's exclusivity, the company's primary focus is on executing its pipeline milestones and letting the exclusivity period expire naturally.

Thomas Flaten from Lake Street Capital Markets asked whether there is a difference in purchasing attitudes between existing customers who have already adopted GrowthDirect and prospective new customers, especially in the current macro environment.

Answer

President and CEO Robert Spignesi confirmed a difference, stating that existing customers, particularly larger ones, tend to be more resilient to market uncertainty because they have already experienced the system's ROI. He noted that the sales funnel has a meaningful proportion of these existing customers, which provides a degree of stability.

Thomas Flaten of Lake Street Capital Markets inquired about the underlying ROLVOIDON sales figures for the quarter, the dynamics between provider demand and pricing, the current environment for potential M&A deals, and the key variables in the updated full-year guidance.

Answer

CEO Brendan O’Grady confirmed the adjusted ROLVOIDON sales number and clarified that while ex-factory sales were lower, provider demand grew nearly 20% from Q1 to Q2, creating a strong setup for the second half. Regarding M&A, O'Grady stated that the company is patient and disciplined, passing on overpriced deals while the strengthening balance sheet expands their options. He also noted that the full-year guidance range is influenced by other strategic initiatives and will be narrowed significantly in the next quarter's update.

Thomas Flaten of Lake Street Capital Markets asked about the financial terms of the opioid litigation divestiture, the expected timing of cash usage to reduce accrued liabilities, and the progress on getting Rolvedon's same-day dosing included in NCCN guidelines.

Answer

Executive Brendan O’Grady stated the company received a nominal value for the divested entity. CFO Ajay Patel explained that cash usage for accrued liabilities, primarily for Rolvedon rebates, should occur relatively evenly throughout the year. O'Grady added that the NCCN strategy is on track, with plans to submit for 2026 guideline inclusion after an expected mid-summer peer-reviewed publication.

Thomas Flaten inquired about Assertio's 2025 strategic pillar of reducing legal exposure, asking for color on the large Q4 legal reserve and its future implications. He also asked for confirmation and commentary on the recent uptick in Rolvedon's Average Selling Price (ASP).

Answer

CEO Brendan O’Grady explained that the legal exposure relates to ongoing, well-known opioid litigation and shareholder lawsuits, noting that progress in dismissing cases should reduce future operating expenses and positively impact EBITDA. CFO Ajay Patel confirmed a sequential 2% increase in Rolvedon's published ASP, attributing it to a combination of securing volume gains and maintaining disciplined pricing.

Thomas Flaten of Lake Street Capital Markets inquired about Assertio's M&A strategy, asking for updated thoughts on the timing and scale of potential deals, specifically whether the company still planned for a smaller deal this year followed by a more transformative one in 2025.

Answer

Brendan O’Grady, an executive at Assertio, responded that the company continues to evaluate the landscape for available assets. He noted a potential shift in thinking, suggesting that Assertio might pursue a more robust deal in the near term rather than a small tuck-in, depending on asset availability, pricing, and strategic fit. O'Grady emphasized the priority is finding the right deal at the right price, not just making an acquisition for the sake of it.

Thomas Flaten of Lake Street Capital Markets inquired about the number of patients to be included in the 120-day safety update, the expected ramp-up in commercial spending ahead of launch, and the pricing strategy for cytisinicline relative to generic competitors.

Answer

President & CMO Dr. Cindy Jacobs clarified that the safety update will include all subjects from the June database cut, which is more than the required 100. CEO Rick Stewart stated that commercial spending will ramp up incrementally after NDA acceptance, with a larger increase post-approval, while maintaining financial discipline. CCO Jaime Xinos confirmed the company plans to price cytisinicline as a premium branded product, noting this has resonated well in early discussions with payers.

Thomas Flaten asked about the schedule for future Data Safety Monitoring Committee (DSMC) reviews for the open-label safety trial. He also sought confirmation on the readiness of the manufacturing partner, Sopharma, for a potential FDA inspection. Lastly, he inquired if the Q4 G&A expense of $4.9 million is a reasonable run rate for 2025.

Answer

Chief Medical Officer Dr. Cindy Jacobs stated that one more DSMC review is likely, which will cover the 1-year safety data. CEO Richard A. Stewart affirmed that external consultants are being utilized across all areas, including manufacturing, to ensure the highest quality NDA submission. Chief Financial Officer Mark Oki confirmed that the Q4 G&A expense level is a good starting point for 2025, although the company will continue to manage costs.

Thomas Flaten of Lake Street Capital Markets asked about a Q3 spike in G&A expenses, the prior treatment exposure of patients in the ORCA-OL study, clarification on the NDA review timeline post-submission, and the status of potentially securing non-dilutive NIH funding for the vaping trial.

Answer

Principal Accounting Officer Jerry Wan confirmed the G&A spike was due to one-time executive restructuring and severance costs. President and Chief Medical Officer Dr. Cindy Jacobs stated the ORCA-OL patient mix reflects the Phase III trial ratios (about one-third each for 12-week, 6-week, and placebo arms) and clarified the NDA review is a 12-month total process from submission. CEO Rick Stewart affirmed that seeking NIH funding for the vaping study is 'definitely still on the cards.'

Thomas Flaten of Lake Street Capital Markets inquired about Castle Biosciences' plans for seeking FDA approval for DecisionDx-Melanoma following its breakthrough designation and asked for clarity on DecisionDx-SCC revenue from non-Medicare payers.

Answer

Founder, CEO, & President Derek Maetzold confirmed that the company is actively pursuing an FDA submission for DecisionDx-Melanoma but did not specify a timeline. CFO Frank Stokes explained that payments for DecisionDx-SCC from commercial payers are 'episodic' and not a significant, consistent revenue source to model going forward.

Thomas Flaten from Lake Street Capital Markets sought clarity on the timeline for continuing to offer the DecisionDx-SCC test and requested an update on the atopic dermatitis test pipeline.

Answer

CEO Derek Maetzold stated that a decision on the SCC test offering depends on interactions with Medicare during the reconsideration process, emphasizing the ethical obligation to offer the test. He also confirmed the atopic dermatitis test is still on track for commercial availability by year-end.

Thomas Flaten sought clarity on the company's capital allocation strategy, asking if potential M&A would focus on existing or new verticals, and requested insight into the 2025 adjusted EBITDA outlook given the DecisionDx-SCC headwind.

Answer

CEO Derek Maetzold explained that while acquisitions in current verticals are easier to model, the company remains open to entering new areas if the opportunity is strong, referencing the TissueCypher acquisition as a precedent. CFO Frank Stokes confirmed the company expects to remain adjusted EBITDA positive for the full year 2025 but declined to provide a specific range or magnitude.

Thomas Flaten asked about the assumed contribution from DecisionDx-SCC in the updated revenue guidance and the early impact of the expanded TissueCypher sales team.

Answer

CFO Frank Stokes indicated that the guidance assumes DecisionDx-SCC revenue contribution for nearly the entire fourth quarter. He also noted that the new TissueCypher sales representatives are progressing as expected and should reach full productivity heading into the next year.

Asked about remaining requirements for the FDA submission beyond the clinical study, the expected geographic mix of research sites by year-end, and the strategy for ramping sales and marketing spend pre-launch.

Answer

The main remaining task for the FDA submission is generating the clinical trial data, as other workstreams like software development are on pace. The company expects the mix of research sites to skew more toward the U.S. by year-end. The sales and marketing ramp is already factored into the current cash burn guidance, with plans to divert funds from the clinical trial to commercial efforts as submission nears.

Thomas Flaten asked about potential uses for the company's cash balance, such as major CapEx projects, and inquired about revenue seasonality for the streamlined business.

Answer

CEO Roderick de Greef detailed two CapEx projects: a near-term, sub-$10 million expansion of biopreservation media capacity and a larger project in 2026 to build a new facility in Indianapolis for hPL manufacturing and product fulfillment. CFO Troy Wichterman added that the business has minimal seasonality, with only a potential for slight slowness in Europe during summer months.

Thomas Flaten asked about the potential for the cell processing platform's growth rate to accelerate beyond the guided 18-21% and if any further P&L changes are expected post-divestiture.

Answer

CEO Roderick de Greef suggested that while growth could accelerate over time, it would be 24-36 months before non-media products could materially impact the growth rate, which remains dependent on therapy approvals. Executive Troy Wichterman confirmed no further significant P&L changes are anticipated, reaffirming his earlier comments on SG&A and R&D spending baselines.

Thomas Flaten of Lake Street requested qualitative commentary on the business trends for smaller customers, such as early-stage biotechs and academic institutions. He also asked about the strategic relevance of Asia for long-term growth in the cell processing segment.

Answer

CEO Roderick de Greef stated that smaller customers are 'coming along fine,' with distributor performance serving as a positive proxy for this segment. Regarding geography, he noted that Asia is not a material driver, with China specifically accounting for less than 5% of revenue. He added that the company does not foresee any impact from geopolitical issues like the BioSecure Act.

Thomas Flaten of Lake Street Capital Markets inquired about the anticipated contribution of the Germline test to 2025 growth and the forward-looking outlook for gross margins.

Answer

CEO Michael McGarrity stated that while the Germline test is expected to contribute to revenue in 2025, the company's guidance is not dependent on a significant contribution. CFO Ron Kalfus added that gross margins are projected to be in the mid-60% range for the upcoming quarters.

Thomas Flaten of Lake Street Capital Markets asked for metrics on the percentage of physicians ordering multiple tests to understand growth potential and inquired about any business impact from recent hurricanes.

Answer

CEO Michael McGarrity stated that while MDxHealth tracks multi-test utilization internally, it does not report the metric publicly. He confirmed that adoption is becoming 'a lot stickier' and that seeing utilization increase within a single practice is a key driver of their confidence. He also confirmed there was no material business impact from recent storms.

Questioned if the full-year guidance for average net revenue per prescription of over $250 is conservative given the H1 performance of $269, and asked about the nature of discussions with payers regarding expanded coverage for the new indication.

Answer

The guidance of exceeding $250 for net revenue per prescription allows for flexibility in case lower-profit volumes rebound and for potential use of co-pay programs. The H1 figure was also influenced by a one-time event (Change Healthcare disruption). Regarding payers, they are reportedly seeing increased demand and are approaching the company about the new indication and improved coverage.

Thomas Flaten asked if the interim data readout in Q3 would include patients from the third dose level and whether the data would be released at a scientific meeting. He also inquired about the necessary manufacturing capacity for the planned Phase 2 trial and the timeline to achieve it.

Answer

CEO Kevin Boyle stated that while the Q3 update will include data from multiple new patients, specific details on dose levels are not being disclosed to avoid pre-empting the announcement. He added that the company is keeping all options open for the release format. VP of Technical Operations Abhi Srivastava explained that manufacturing capacity was expanded for Phase 1 and that a multi-pronged strategy, including in-house expansion and potential CDMO partnerships, is being evaluated for Phase 2.

Thomas Flaten of Lake Street Capital Markets asked for clarification on what defines 'Phase 2 ready' beyond patient numbers, whether the 12-15 patient enrollment target requires more than the current 12 TCRs, and the timeline for reducing manufacturing time to 15 days.

Answer

CEO Kevin Boyle explained that becoming 'Phase 2 ready' involves establishing safety, a maximum tolerated dose, and a recommended Phase 2 dose. He expressed confidence in hitting enrollment targets with the current TCR library, aided by cryopreservation. VP of Technical Operations Abhi Srivastava stated the 15-day manufacturing goal will be achieved through automation and process development as they approach commercialization.

Thomas Flaten sought confirmation that the two new TCRs target the existing genes (KRAS, TP53, EGFR), asked for more insight into the enrollment pacing and whether it was due to patient availability or manufacturing, and inquired about the planned number of patients for dose level 2.

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VP of Research and Development, Drew Deniger, confirmed the new TCRs are within the existing gene targets. CEO Kevin Boyle Senior reiterated that manufacturing has not been a rate-limiting factor and that enrollment momentum is building post-CICON data release, despite some potential patients being excluded due to declining health. He added that the number of patients at dose level 2 will be guided by the clinical data.

Thomas Flaten from Lake Street Capital Markets asked for an update on the total number of patients screened for the TCR-T trial, the corresponding match rate, and for a qualitative description of the patient population being screened at MD Anderson.

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CEO Kevin Boyle reported that over 500 patients with lung and colorectal cancer have been screened, yielding a match rate of over 5%. He noted that the hunTR platform is expected to add new TCRs to the library, which will increase the addressable market. Boyle also explained that the trial sees a wide range of patients, from newly diagnosed to those in later lines of therapy, and their readiness to join the trial varies based on their individual treatment journey and cancer indication.