Exact Sciences - Earnings Call - Q4 2010

Transcript

Operator (participant)

Good day, ladies and gentlemen, and welcome to the Exact Sciences fourth quarter and full year 2010 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a Q&A session, and instructions will follow at that time. If anyone should require assistance during the program, please press star, then zero on your touch-tone telephone. As a reminder, this program is being recorded. I would now like to introduce your host for today's program, Ms. Cara Tucker. Please go ahead, ma'am.

Cara Tucker (Manager of Corporate Communications)

Thank you very much, and thank you for joining us for Exact Sciences' Fourth Quarter 2010 conference call. On the call today are Kevin Conroy, the company's President and Chief Executive Officer, and Maneesh Arora, the Chief Financial Officer. Exact Sciences issued a news release earlier this morning detailing our fourth quarter 2010 financial results. If you have not seen the release, please go to our website at exactsciences.com or call 614-302-5622, and it will be provided to you. Following the safe harbor statement, Maneesh Arora will provide a summary of our fourth quarter financial results. Next, Kevin Conroy will provide a brief profile of the company and product overview, and a review of our 2010-2011 priorities.

Before we get underway, I'd like to ask everyone to take note of the safe harbor paragraph that appears at the end of this news release issued this morning covering the company's financial results. The paragraph states that any forward-looking statements that we make, one, speak only as of the date made, two, are subject to inherent risks and uncertainties, including those described in our most recently filed annual report on Form 10-K, and our subsequently filed quarterly reports on Form 10-Q, and three, should not be unduly relied upon. Except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein or elsewhere to reflect any change in our expectations with regard thereto to any change in events, conditions, or circumstances on which any such statement is based.

It is my pleasure now to introduce our Chief Financial Officer, Maneesh Arora.

Maneesh Arora (CFO)

Thanks, Cara. Let's review our fourth quarter financial highlights. The chief takeaway for the fourth quarter and all of 2010 is that we achieved several significant milestones, including the completion of our validation study and beginning the preparation for our clinical trial while meeting our 2010 financial objectives. We continued our investment in talented, experienced people, and the company has grown to 42 employees. Three-quarters of the team at Exact are focused either on product development or the clinical study. These investments are already paying dividends and will be particularly important as we continue to prepare for and execute our clinical trial. While R&D increased during 2010, we worked diligently throughout the year to minimize cash utilization, and our work paid off. We used just over $11 million of cash during 2010 below our guidance of $14 million. There were four key factors that drove this favorability.

There were a couple of unforecasted one-time events in stock option exercises and the government-sponsored therapeutic discovery project, which the company was a beneficiary of. Additionally, there was a shift in CapEx spending from 2010-2011. Finally, and most importantly, we were able to drive operating efficiencies and run lean while achieving all of our business priorities. Two stock offerings, including a $64.7 million offering in November, helped us end the year with $95.4 million in cash, cash equivalents, and marketable securities. In sum, we are well capitalized to execute on our priorities for 2011. We'll make our most significant investment in the clinical trial for our Cologuard product during 2011 and 2012. We will invest $20 million in the trial. As a result, we expect to use $29 million in cash during 2011.

The investment we're making in the clinical trial represents the priority we continue to place on this important project and on creating value for shareholders. It's now my pleasure to introduce Exact's President and CEO, Kevin Conroy. Kevin?

Kevin Conroy (President and CEO)

Thanks, Maneesh, and thanks, Cara. Thanks to the shareholders for joining us today. Before I get into a review of 2010 and a discussion of our priorities for 2011, let's first take a quick look at the problem that we're confronting and the opportunity that the company has with our non-invasive colon cancer screening test. Unfortunately, due to the limited number of options, many of which are not patient-friendly, there's an unacceptably high colon cancer rate in the U.S. and globally. In the U.S., there are 150,000 new cases every year, and there are 50,000 deaths, 600,000 globally. This is for a disease which is entirely preventable if detected early, either as a precancerous polyp or in an early-stage treatable cancer. That's not what is occurring today. On the whole, cancers are detected; 60% of cancers are detected stage three or stage four.

This slide shows that progression from small precancerous polyps to stage four cancer. The goal, and our goal, needs to be to detect precancerous polyps before they turn into cancer, or at a minimum, to detect treatable stage cancer. That is why we are focused on a non-invasive test that will detect these precursor lesions or early-stage cancers to hopefully eventually reduce both incidence and mortality, something that is not driven today by current non-invasive tests in the market. As you can see here, there are approximately 4 million invasive procedures for colon cancer screening of average-risk patients every year in the U.S. Those are patients primarily over the age of 50. That is the flexible sigmoidoscopy procedure and the colonoscopy procedure. Altogether, there are about 4 million of those invasive tests. There are 12 million, though, fecal blood tests.

This is a combination of the older version, the FOBT test, which looks for hidden or occult blood in the stool, or the IFOBT, or sometimes referred to as the FIT test, which is an immunochemical version of the same test looking for a blood protein in the stool. The problem with this test is cancer sensitivity is only 66%, and that is weighted towards the later-stage cancers. This test does not do a very good job. It is a very low precancer sensitivity rate. Our test will take aim at this fecal blood market. We intend to be a significant improvement over that non-invasive test. As you can see, there are 12 million of these tests performed every year. Taking a look now at the opportunity, if I can move this slide, there we go, the market opportunity here is significant.

With 80 million Americans eligible for screening today and target reimbursement of approximately $300, with repeat testing, even achieving 30% penetration of this market, it leads to a $1.2 billion market opportunity. There are a lot of different ways you can get there. You can have lower penetration, more frequent testing, higher pricing, lower pricing. The general takeaway here is that this is a significant market opportunity. To put this in perspective, this is larger than any current molecular diagnostic opportunity. Our goal here is to execute operationally so we can get to this and to focus the whole company and constituents on the opportunity that we face today with this non-invasive test. This picture shows the current collection mechanism, which will be used.

There will be a paper collection device that goes under the toilet seat, and a patient in the privacy of their own home can collect an 8-gram stool sample, which is about the size of a grape, deposit it by ejecting the white baskets directly into this 60-milliliter tube, which is a short tube, which contains a DNA preservative. It is a very simple collection procedure and a very small sample amount. There is no bowel prep required. One of the great things about this test is it can be simply mailed back to the clinical lab via the U.S. Postal Service. It is a very inexpensive collection device. Now, let's talk about 2010. I'm very pleased with the execution of the team in 2010 and the three priorities that we laid out at the beginning of the year: product development, clinical trial planning, and market development.

We faced a pretty significant hurdle in developing a test that vastly exceeded the prior versions of this test that the company had developed in previous years. We achieved that goal. We developed both extraction assays and detection assays, which led to preclinical validation results that we were quite pleased with. We'll talk about those results in more detail shortly. We also developed a quality system, which is critical as we head into a PMA clinical study. We're very happy with the progress that we made in defining the clinical trial study with the FDA. We've done all of the work that you need to put the systems and people in place to begin enrolling by engaging the CRO and external clinical affairs team. We have begun the process of reviewing clinical trial sites. We've qualified well over 30 sites today, and that process continues.

In terms of market development, in the fourth quarter, we completed an initial go-to-market study, which was an in-depth study. We will talk about that study later on in the call. We also evaluated the ex-US market, and we began the process of educating key opinion leaders, doctors, primary care physicians, gastroenterologists, labs, and payers. There has been a tremendous amount of work to be done to lead us into 2011. Our 2010 validation study, a quick summary of that, there were approximately 1,200 patients, both cancers, precancers, and normal samples. With a prototype product, we achieved strong sensitivity for cancer of 85%, precancer sensitivity of 64%, and 88% specificity. There are additional validation studies planned for 2011. It is really important to note the increasing sensitivity of the test as the size of the adenoma increases.

It's also important to note that the smaller the polyp, the less risk there is of colorectal cancer. At a 1-centimeter polyp, there is less than a 10% chance of that polyp proceeding to colon cancer. In colonoscopy, those polyps are removed. A 3-centimeter polyp is almost certain to progress to colon cancer. What this shows you is our test fits very well as an adjunct to colonoscopy because we identify with an increasing level of sensitivity the more dangerous polyps so that they can go to colonoscopy and be removed. Investors have asked what improvements we've made to the prototype product that achieved strong performance. Here are some of the highlights. We've locked down the marker panel for the test. We've optimized the multiplex methylation assays. We've improved the DNA capture efficiency significantly.

This gives you more starting DNA, which gives you a better chance of achieving the sensitivity targets that we've set. We have designed and developed the collection device, which is ready to go to manufacturing. Additional validation studies will be performed this year on the validation lots of reagents that are developed with the lockdown assay. Now, let's talk about our 2011 priorities. Our 2010 priorities, we had strong execution, which puts us in a very strong position going into 2011, which is an important year for the company. We're focused on three things: product development, actually running the clinical trial, starting the clinical trial and running it, and market development.

Under product development, we are very focused on doing all of the things that are required to start the clinical trial: developing the quality system, design control, making development lots of reagents, manufacturing the collection device, conducting all of the analytical studies that are required that the FDA requires as part of a PMA submission. I am pleased to report that we will have an automation program that will be relatively simple automation. It will not be sample in, result out, but very achievable automation that, A, makes the test easier to run for our laboratory customers, and B, makes the test more reproducible and repeatable. We are able to bring this automation program into our product development program, which was not planned, without extending the timelines.

We're pleased with the team's effort in that regard, and we really have a strong automation team in place within the company. We're excited about this new program. The clinical trial infrastructure and enrollment, the goal here is to have a minimum of 30 enrollment sites, up to approximately 60 enrollment sites, and we will begin enrollment in the third quarter of this year. I want to make it clear that although we have achieved the major agreement with the FDA on the principal points of the study, there is, of course, additional discussion that will be ongoing during the course of 2011 to refine the protocol and to better prepare to begin the study. Market development. In the next quarter, we plan to hire a Senior Vice President of Commercial. We've retained Spencer Stuart, and we are interviewing candidates currently.

This person will be responsible for putting together the market development plan, which is important. Although tomorrow is not the day that we begin to commercialize the test, we have to act like it is and do all of the things that are required by publishing additional validation studies and scientific papers, reaching out to the key constituents that will help us create this market, and conducting the necessary economic studies that are required to achieve the reimbursement levels that we plan to achieve. Now, let's talk about our pivotal clinical trial design. This is a study of average-risk patients. We are not looking at high-risk patients. We are looking at the patients that will be in the intended use for this product, the average-risk patients over the age of 50. Every patient in the study will receive three tests.

The Cologuard test, which, as you probably recall, includes embedded in it an FIT test, also a distinct, separate, commercially available FIT test. Those tests will be followed by a colonoscopy procedure. Subjects will be between the ages of 50 and 84. It is important to note that Medicare has offered to do a parallel review, which is not common, but a parallel review of a national coverage decision, which potentially gives the company an opportunity to have FDA approval and national coverage by CMS at the same time. That would potentially save two years, which is the typical delay in achieving Medicare coverage. Just as a side, Medicare covers about 50% of patients over the age of 50. That is a very meaningful event should it occur. Closer look at the numbers.

The number of patients in the study would be in excess of 8,600, up to approximately 12,000, a minimum of 30 enrollment sites, a minimum of 49 cancer patients, hopefully up to 70 cancer patients in the study, precancer patients 400-600, timing about 12 months for enrollment. You should think about another three months thereafter to put together the PMA and do the submission. Altogether about 15 months from the start of the trial to submission to the FDA and a cost of approximately $20 million. The FDA has given us a lower bound of a confidence interval as a primary endpoint that we need to exceed. That is 65%, again, at the lower bound of the 95% confidence interval. What does this mean? With 85% point sensitivity, we are well north of the 65% lower bound with even 49 cancers.

Obviously, we will seek to enroll as many cancers as possible so that those error bars are narrowed. We believe that this goal puts us in a very strong position to achieve the primary endpoint that the FDA has laid out. It is a logical lower bound. Today, we know from the Morikawa study, which is a long-term study of FIT screening, that showed a 66% sensitivity for the FIT test. The FDA is saying, "Look, we want to see you exceed that level of sensitivity as a lower bound for this non-invasive colon cancer screening test." We believe that this is, again, achievable, and it is great to work with the FDA and to get this level of clarity. Now, let's turn our attention to just selected highlights from our market research.

We conducted over 300 interviews with primary care physicians, with gastroenterologists, with payers, with patients, with OB/GYNs, all the key constituents that you really need to understand their mentality going into developing a go-to-market strategy. One of the things of note was that 87% of physicians stated that they would recommend sDNA testing for at least some portion of their average-risk patients. And those physicians believe that Cologuard could become the primary adjunct to colonoscopy screening. 80% of surveyed patients favored Cologuard over FIT because of test performance. And 50% of FOBT tests today are being done improperly. That's known by physicians. It's known by payers. There's very low physician awareness of the differences between FIT and FOBT. But the problem they have is that there is no great alternative for patients who simply refuse to go to colonoscopy. So, hopefully, we can address that unmet need.

Currently, there isn't a major player willing to invest in FIT marketing in a major way because there is such great fragmentation among the FOBT-FIT market. Selected feedback from our market research shows OB/GYNs understand that the whole goal here is to identify precancerous lesions in a non-invasive way. GIs have said the same thing. Intervention is critical before the polyp turns to cancer. Large payers have acknowledged that FOBT is not being done correctly now, and we need to highlight that in our marketing efforts as we go forward. Average-risk patients, when presented with the sensitivity of precancerous polyps with potential stool DNA test, indicate that if the population knew this, they would be very open to a stool DNA test.

Now, coming back to 2011 guidance, we want to reiterate our guidance that we believe our test will meet or exceed 85% cancer sensitivity and greater than 90% specificity. We will have in excess of 9,000 normal patients that the specificity calculation is performed on. That is a huge number of samples. That will have extremely tight confidence intervals. With the improvements that we've made to the test, we think that that will help achieve both of these goals. Our clinical trial enrollment, again, will begin in the third quarter of this year, and we plan to enroll a minimum of 8,600 patients. FDA submission is anticipated in 2012. Key milestones, these basically have not changed from 2009 forward. We laid out these milestones, and the team has done a great job of executing on them. In conclusion, we as a team are totally focused on execution.

We know that a PMA study is all about the details. We are very pleased with the validation results that were achieved last year. We plan to commence this FDA study, which is a major prospective study, which we believe will garner significant attention in the colon cancer screening community. Our research shows that there is a significant unmet need that can be addressed, leading to one of the largest markets in molecular diagnostics. Finally, I'd like to thank the team at Exact Sciences. We now are over 42 employees, and the team has done just a tremendous job in 2010 and has started the year off strong in 2011. Thanks for all of your efforts. Now, I'd like to turn this over to shareholders for any questions.

Operator (participant)

Certainly. Ladies and gentlemen, if you have a question at this time, please press star and one on your touch-tone telephone. If your question has been answered and you'd like to remove yourself from the queue, please press the pound key. Our first question comes from the line of Quintin Lai from Robert W. Baird. Your question, please.

Quintin Lai (Analyst)

Can you hear me okay?

Kevin Conroy (President and CEO)

Yes.

Quintin Lai (Analyst)

Great, Kevin. Thanks. Question. When you start to put together the enrollment for the clinical trials, normal, asymptomatic, does that—I guess, do you assume that you're not going to get a whole lot of stage four, or is there any way to exclude stage four from that clinical trial?

Kevin Conroy (President and CEO)

That is something that we have to discuss with the FDA, whether it's really a decision that they need to make as to whether stage four patients should be included in a screening population and whether that's part of the intended use of the test. That is one of the discussions that I referred to earlier that we still need to have with the agency.

Quintin Lai (Analyst)

Could you give us an update on kind of the test? Because the test that you did for the preclinical trial had to use kind of a modified FIT for the frozen samples. Give us a little update on using, I guess, the FIT that you desire for the test going forward on fresh frozen stools and kind of your expectations for sensitivity.

Kevin Conroy (President and CEO)

Sure. One of the important things to note is that the HemoQuant test, which is the male version and a 25-year-old version of the fecal occult blood test, did not perform very well on the samples that had been stored for up to seven years in a buffer. They did not meaningfully contribute to cancer sensitivity. We will be using a FDA-cleared FIT test that will be embedded as a part of our test. That will give us the ability to, we believe, achieve a greater level of sensitivity. Unfortunately, these FIT tests do not work with stool that is stored in the DNA buffer. That will have to be a side-by-side collection as part of our test. That is no problem whatsoever because the FIT test is such a simple collection. It is basically like a pinprick.

We will combine that FIT test, which we believe will give us room for improvement on our cancer sensitivity. If you think of those tests even configured, Quintin, at a 99.9% specificity cutoff, if it picks up an incremental 50% of cancers and assuming that bleeding is independent from methylation status, that will give us several additional points, up to, let's call it, between 3% and 7% incremental points of sensitivity for cancer over what we saw previously. That gives us the ability to tune the cutoff to either improve sensitivity or specificity. Long answer, but it's an important question. The FIT test is not a research project. It is a test that will be simply incorporated into the collection process and the instrumentation offered to the clinical lab.

Quintin Lai (Analyst)

Then, final question. I'll hop back into the queue. When you talk about the lower bound of 65%, I'm assuming that that's 90% specificity. If that's the case, what if you decide to, let's say, put the cutoff up to, let's say, 95% specificity? Would that change the lower bound that you have to go up against?

Kevin Conroy (President and CEO)

That would not change the lower bound. What that would require us to do is to better power the study. There is still, obviously, a—because there is not a significant falloff in sensitivity in a major way if you increase the specificity to between 93% and 95%, we are still very comfortable with that 65% lower bound.

Quintin Lai (Analyst)

Excellent. Thank you.

Operator (participant)

Thank you. Our next question comes from the line of Bill Kirk from Piper Jaffray. Your question, please.

David Clair (Analyst)

Good afternoon, everybody. It's actually David Clair here for Bill.

Have a good afternoon. Good morning. Anyway, can you give us some additional color on the validation studies that you're planning for 2011? And when should we expect to see any data, and how will this differ from the prior validation study?

Kevin Conroy (President and CEO)

Thanks, David. We are enrolling patients today through 14 collection sites to collect as many cancers as possible. Our target is approximately 300 additional cancers at 14 different enrollment sites. That will give us an opportunity to both, A, conduct additional product development testing internally and also do validation study testing. Mayo Clinic is also enrolling in two of its sites in Arizona and also in Minnesota precancer subjects so that we will have a sufficient number of samples to conduct additional validation studies. Unlike last year, we are not going to provide guidance as to when that validation study will be done because our main goal is to focus on the priorities that we have laid out, and we do not want to create a major external set of expectations around this.

Suffice it to say, the studies will be done, and they will be done on both cancers and precancers. The numbers will be determined in the months ahead, but it's not something that we would like to guide to at this juncture.

David Clair (Analyst)

Okay. And then just a real quick question on the P&L for the quarter. Isn't sales and marketing expenses were a little bit higher than what we were looking for. Is that kind of a run rate that we should think about going forward, and what was behind the spike there?

Kevin Conroy (President and CEO)

No, Dave. The sales and marketing should not—you should not look at that as a run rate item. One of the priorities that Kevin alluded to earlier was the market study, the initial U.S. go-to-market study, and the vast majority of that expense was incurred in Q4. You should not look at that as a run rate. It was a little bit higher than the earlier quarters. You will not see it go back to Q2, Q3 levels, especially as Kevin alluded to, we will be bringing on a leader ahead of commercial. We will see it inch up, but not at Q4 levels.

David Clair (Analyst)

Okay. Fair enough. And then just a real quick one. I know that you had talked a little bit in your prepared remarks about automation. Can you give us a little bit more color on what exactly that entails? And anything you can provide there would be great.

Kevin Conroy (President and CEO)

Sure. One of the key things that we want to automate is DNA extraction. There are obviously a lot of platforms out there that are robust and very good at that. We do not want to, or we do not intend to, at this point in time, to automate all of the steps involved. There will still be manual interaction with an instrument. We are also looking at automation for plate setup, that is, depositing the reagents, the probes, the primers, and the enzymes, which automates the pipetting, which reduces some variability, which makes us more confident in the performance of the test. Manual pipetting can cause variability, and with that variability comes more variability in performance. We would like to reduce that as much as possible. We will talk about this more as we progress forward.

There's still a lot of work that needs to be done, but we're not trying to bite off too much here. We're trying to do the minimal amount necessary to make life a lot easier for our customers and more reproducible for our end customers, patients.

David Clair (Analyst)

All right. Thanks a lot.

Kevin Conroy (President and CEO)

Thank you, David.

Operator (participant)

Thank you. Our next question comes from the line of Brian Weinstein from William Blair. Your question, please.

Brian Weinstein (Analyst)

Hey, good morning, everyone. Question for you. You've talked about the 65% cutoff as what FDA is looking for on cancer detection. Have they ever said what they want on precancer detection?

Kevin Conroy (President and CEO)

That's not their main concern, in part because there's no other non-invasive test that detects precancers at any significant level. If you take a look at the other non-invasive tests, you see precancer sensitivity in the 20% range. The FDA has zeroed in on the cancer sensitivity. They are obviously concerned about cancer misses, which is why they are focused in on the lower bound of the cancer sensitivity. That's where we are with that.

Brian Weinstein (Analyst)

If you were to achieve the cancer sensitivity of 85% but show something less than 65% on precancer, you don't think that that would necessarily be a hurdle to approval?

Kevin Conroy (President and CEO)

That is correct. We hope to have in the package insert what the precancer sensitivity was in the study, but that is not, at this juncture, a critical item. It certainly will be something that the agency looks at. Obviously, the agency looks at all of the factors of the study. Again, we believe that we'll be over 50% precancer sensitivity. Putting that in perspective, that's in the ballpark of where the PAP test is today, which is obviously approved and quite effective on a interval screening program, a regular interval screening program. Should we somehow fall short of 50% precancer sensitivity, we do not think that would affect approval. Obviously, that's the FDA's decision, not ours.

Brian Weinstein (Analyst)

Okay. Do you guys want to comment at all about what the final marker set looks like?

Kevin Conroy (President and CEO)

Not at this juncture. At the appropriate time, we will, but for competitive reasons, we are not going to discuss specific markers that are in the final panel.

Brian Weinstein (Analyst)

Okay. Great. Thank you.

Kevin Conroy (President and CEO)

Thank you.

Operator (participant)

Thank you. Once again, ladies and gentlemen, if you have a question at this time, please press star, then one on your touchstone telephone. Our next question comes from the line of Stephen Unger from Lazard Capital Markets. Your question, please.

Stephen Unger (Analyst)

Hi. Thanks. Kevin, just a follow-up on that. As far as the validation studies, are you using the same marker set that you used before and just a different fecal blood test?

Kevin Conroy (President and CEO)

We're not adding any new markers, Steve. As you know, the marker selection here has been extremely rigorous, starting with the sequencing study, moving to a tissue study with quartz assays, moving to a stool DNA study. There's really nobody who's ever conducted such a significant study. What Graham Lidgard and his team has done has been very impressive. I think we know more about the effectiveness or validity of methylation markers than anybody up until this point in colon cancer screening. We will talk about those additional markers. We're just not ready to do that quite yet for competitive reasons.

Stephen Unger (Analyst)

What does the addition of the fecal blood test to the product do for you? Does it add more sensitivity and maybe reduce specificity? Is that correct?

Kevin Conroy (President and CEO)

Yeah. Think about it this way, Steve. If we achieve 85% sensitivity without a fecal blood marker in our product, then theoretically, assuming that there is very little correlation between methylation status and the blood being present in the stool, which is really a mechanical issue, then the FIT test should contribute approximately 50% incremental improvement over that 85%. You get half the way to the goal line additionally with the FIT test. If it is 50% sensitive, half of 15% would be 7.5%. We try to be conservative and think, "Well, let's say that that really means an additional 3 percentage point or 4 percentage points of sensitivity." Any way you look at it, it improves cancer detection sensitivity and gives you the ability to increase the cutoff slightly to potentially increase your specificity. Does that help?

Stephen Unger (Analyst)

Yes. Okay. As far as the original validation study using FOBT, if you had used FIT instead, that would have given you greater sensitivity then.

Kevin Conroy (President and CEO)

Yeah. Again, the reason we could not do that is because these samples had been stored, frozen in DNA buffer that degrades the blood protein, and they have been stored for up to seven years. As part of our FDA study, we believe that the FIT test will incrementally help us. It certainly cannot hurt, especially if you set the cutoff at 100%. Investors should feel very comfortable that there is upside here by adding the FIT component. Very little, if any, downside to doing so. It is a very simple collection procedure. Again, it is basically a small stick that you just collect a very small amount of stool and put into a very small, about a 10-milliliter tube.

Stephen Unger (Analyst)

That would come in the same kit, right, for customers?

Kevin Conroy (President and CEO)

Exactly. It would come in the same kit. The sample is right there. Easy to do, easy to put into the mailer, easy to send back to the lab, and very easy for the lab to run that immunoassay test.

Stephen Unger (Analyst)

Great. And then just one question more on what is the European marketing plan at this point?

Kevin Conroy (President and CEO)

Sure. Europe is a complicated market because it is not one market. It is a whole bunch of markets. You have different reimbursement hurdles and different go-to-market strategies and distribution strategies for each of those markets. As a result, our takeaway from our EU study is that although we need to now start to think about that market, we need to prioritize the U.S. market, which is larger, better reimbursement, easier to access the whole market. We will continue to look at the EU market, especially after we get ahead of commercial on board, but the main focus will be on the U.S. market, Steve.

Stephen Unger (Analyst)

Great. Thank you.

Kevin Conroy (President and CEO)

Thank you.

Operator (participant)

Thank you. This does conclude the question and answer session of today's program. I'd like to turn the program back to Kevin for any further remarks.

Kevin Conroy (President and CEO)

We have no further remarks. Thank you very much for attending today.

Operator (participant)

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.