Renalytix Plc

Ladies and gentlemen, thank you for standing by, and welcome to the fiscal 2020 year-end earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Carrie Mendeville, Investor Relations. Thank you. Please go ahead, ma'am.

Thank you, and thank you all for participating in today's call. Joining me from Retalytics AI are James McCullough, Co-Founder and Chief Executive Officer, and James Sterling, Chief Financial Officer. Tom McLean, President and Chief Commercial Officer, Steve Koka, Co-Founder, and Fergus Fleming, Chief Technology Officer, will also be available for Q&A. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of private securities litigation reform act of 1995. Any statements made during this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements. Examples of these statements include without limitation, statements related to Kidney Intellix's ability to lower healthcare costs, improve patient quality of life, and set a long-term standard of care, trends in our market and potential benefits of government policy change, the impact of COVID-19 on our business, our expectations for hiring, product development, strategic partnerships and collaborations, reimbursement decisions, clinical studies, and regulation submissions, and our business strategies and future growth. These statements involve material risks and uncertainties, that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For description of the risks and uncertainties associated with our business, please refer to the risk factors section of our final prospectus for our initial U.S. public offering filed with the Security and Exchange Commission on July 17, 2020. All forward-looking statements made on this call are based on management's current estimates and various assumptions. Renolytics AI disclaims any intention or obligation, except as required by law, to update or revise any financial projection or forward-looking statement, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information, and it's accurate only as of the live broadcast today, October 27, 2020. And with that, I'll turn the call over to James.

Thank you, Kerry, and good morning, everyone, and thank you for joining us. I'm pleased to welcome you to the Renalytics AI conference call to review our fiscal results for 2020. 2020 was nothing short of a pivotal year for Renalytics. Together with our colleagues at Mount Sinai and EKF, we founded Renalytics in 2018. with the goal of accelerating advanced diagnostic products and solutions in the clinical practice that could significantly lower healthcare costs and also improve the quality of life for the millions of patients currently living with chronic kidney disease in the United States and abroad. The social and economic impact of chronic kidney disease, or CKD, cannot be underestimated. CKD is one of the largest unmet medical challenges today. with more than 37 million individuals with CKD in the United States and an additional 660,000 people currently living with kidney failure. Our lead product, Kidney IntellX, provides critical information about the rate of CKD progression and the risk of kidney failure in an easily understood format to healthcare providers and patients. in an effort to support optimization of care delivery, effective use of available therapies to improve patient outcomes, and reduce the $120 billion annual cost of chronic and end-stage kidney disease in the United States healthcare system. Kidney IntellX is an artificial intelligence-enabled in vitro diagnostic that combines the power of blood-based protein biomarkers with features drawn from an electronic patient record, all processed by a powerful machine learning algorithm. The result is a first-in-class solution that can provide an accurate prognosis of a patient's risk of kidney function decline and or kidney failure early on in the CKD disease cycle. That's CKD stages 1, 2, and 3, early stage CKD, where over 80% of CKD patients reside. Taking a blood draw and measuring biomarkers means that we can capture the current picture of the patient's biology. A foundation in blood-based biomarkers also means that we are not wholly dependent on what is and is not in a patient's electronic record in order to generate an accurate risk score. We believe this represents a significant competitive advantage that will be difficult to overcome. And again, we believe it is necessary to take a blood draw and measure biomarkers in order to enable early stage prognosis, that is in stages one, two, and three of CKD. Most importantly, understanding risk progression in early stage CKD can also help provide doctors and patients with the most lead time to prepare an optimal treatment strategy and increase choices to slow or stop the march towards kidney failure. For patients who do progress to end-stage kidney disease, kidney IntellX early prognosis can potentially help provide more lead time to assess the options for home dialysis versus in-center hemodialysis, substantially reducing costs and potentially patient suffering. Because kidney IntellX is first and foremost an in vitro diagnostic, we were able to follow a well-developed roadmap to product validation for clinical use. This has enabled two critical commercial milestones. First, the ability to have a regulated product, and second, the ability to divine reimbursement payments in the U.S. medical system. While developing and validating an in vitro diagnostic can be time consuming and costly, we firmly believe this is an innovative and pragmatic route towards enabling the power of artificial intelligence through a regulatory pathway, achieving defined payment, and establishing long-term guidelines-ready standard of care. To date, our in vitro diagnostic strategy has yielded an acceleration of core milestones in period, including a distinct national reimbursement code, effective October 2019, a national Medicare price, effective January of this year, and New York State Department of Health approval, which we achieved in June, that has allowed us to begin commercial product sales. In addition, post-period, we submitted our final regulatory submission to FDA for consideration of Kidney IntellX clearance. This consideration is part of a process which began 18 months ago, as you know, with FDA awarding breakthrough device designation to Kidney IntellX in May of 2019. Operating under breakthrough designation has allowed us to have an ongoing dialogue with FDA to address some of the more innovative aspects of Kidney IntellX. I firmly believe running a full regulatory FDA process has helped make Kidney Intellex a more robust product that rises to the quality necessary to set a long-term standard of care. Initially, Kidney Intellex is indicated for adult patients with type 2 diabetes and existing CKD. This population accounts for roughly 20 to 30% of the estimated 37 million U.S. CKD patients. As you know, Kidney IntellX is a scalable platform, and we are pursuing development and validation of additional indicated uses, which we expect to submit for regulatory consideration as early as this December. We will share more on our platform expansion strategy in the coming quarters. Throughout the fiscal year 2020, we crossed several core milestones sooner than we expected, which are necessary for sustained long-term market adoption. In addition to the regulatory and reimbursement objectives mentioned, we've also signed key strategic partnerships, completed large-scale clinical trials, secured private insurance payer support, continued to generate clinical utility and health economics data, and we've also expanded our operating team. And, of course, we successfully completed the dual listing to NASDAQ global market, which raised over $85 million in gross proceeds. substantially strengthening our balance sheet and allowing us to pursue a more expansive product development and commercial implementation course. Hiring the right people to help us execute is a major focus. To date, we have filled several core positions, including VP Health Systems Partnerships, VP Chief Human Resources Officer, VP Project Management, Director Scientific Project Management, Senior Quality Director of Quality Assurance, and have expanded our internal software development and AI capabilities. Other roles added to support our commercial scale-up of Kidney IntellX include billing manager, client service director, senior psych reliability engineer, clinical laboratory scientists, senior manager technical accounting, clinical services specialists, among others. We have a mission-driven culture at Renalytics with an underlying commitment to transform the lives of patients with CKD and all of these people will be able to help us execute on that mission. As we continue to invest heavily across our technology platform, we are committed to retaining these core values that are critical to our long-term success. At the end of September, we crossed the key implementation milestone with the activation of Kidney IntellX in the Mount Sinai Health System in New York City. The Mount Sinai implementation has been proceeding in line with our expectations. Kidney and telex is currently being ordered with risk score reporting to more than 30 primary care physicians and more than 20 nephrology specialists. We expect the ordering group of physicians with Mount Sinai and other healthcare providers to grow in the coming quarters. Getting into more detail on our regulatory process, post-period in July 2020, We received a clinical laboratory permit from the New York State Department of Health to provide commercial testing of Kidney IntellX in New York State. The permit was granted following a review by a panel of New York State Department of Health scientists and external reviewers of the analytical and clinical validation results for Kidney IntellX. Officials from New York State successfully completed an inspection of the Renalytics New York Laboratory as part of this process with no findings reported. For reference, a New York state approval is the most stringent state-run regulatory process and serves as a cornerstone for our national commercial rollout. Achieving broad reimbursement coverage beginning as early as fiscal year 2021 remains one of our highest objectives. In fiscal 2020, we established several of the fundamental components necessary both for both private payer coverage and Medicare coverage determinations. Medicare recipients represent a substantial portion, if not a majority, in many U.S. regions of our addressable market, and Medicare coverage remains one of the defining milestones for Broad Kidney Intellect's commercial success. Further, to date, we have also executed Medicaid contracts in seven states, including Michigan, North Carolina, Rhode Island, South Carolina, Vermont, Wisconsin, and Wyoming. We expect to continue executing Medicaid contracts through fiscal 2021 and fiscal 2022. In the period, Kidney IntellX has achieved a distinct common procedural terminology code, or CPT code. That's a payment code which is included in the final 2020 clinical laboratory fee schedule by the Centers for Medicare and Medicaid Services, also known as CMS. As a reminder, a CPT code is a unique identifier for the kidney and telex test used by CMS as well as by private payers in the United States. And in January, this CMS set a price of $950 per reportable test result, which became effective nationally. In an interesting development post-period in August 2020, CMS submitted for public comment a rule on innovation which would provide an automatic national Medicare coverage determination for those diagnostic devices under FDA breakthrough device designation when they are approved. If it becomes effective, this new proposed CMS rule could help shorten the time to insurance coverage for some 12 million Americans within Kidney Intellex's initial indicated use population, adult diabetic kidney disease. In our New York City launch market, Medicare recipients represent a majority of insured DKD patients. Whether or not this rulemaking ultimately plays out, it is important to note the recent and ongoing favorable changes in the policy landscape for the diagnostics industry, and specifically the chronic kidney disease diagnostic landscape. We believe these policy changes will continue to benefit the Kidney Intellect's commercial path, for example, starting in January of 2021, patients with private insurance covered under a Medicare Advantage plan will be able to choose to stay with their private insurance company for kidney failure and dialysis treatment rather than being automatically transitioned over to Medicare. This policy shift will likely result in a material health economics burden to large private payers in the United States for managing kidney disease. We believe early and accurate identification of disease prognosis will become an even more important part of the private insurance equation in CKD in 2021. During the period, we continued to achieve traction towards private insurance coverage of Kidney Intellects, most notably with physician-led plan CDPHP in Albany, New York, and two large preferred provider organizations, including the Three Rivers Provider Network. Our conversations with additional insurance payers and healthcare providers continue to advance, and we expect to continue to grow private reimbursement coverage over the near term. We believe achieving FDA regulatory clearance will also be an important factor to building on our national reimbursement strategy. At the core of our commercial strategy is our focus on driving strategic collaborations. Strategic partnering activities are important to not only building commercial use cases for kidney and telex, but also validating kidney and telexis unique in the early stage CKD progression space. To date, we have announced collaborations with two major pharmaceutical companies, most recently with AstraZeneca. With AZ, we have entered into a multi-phase collaboration to develop precision medicine strategies for cardiovascular, renal, and metabolic disease. In our initial work together, we are examining the uptake of and patient adherence to chronic kidney disease treatments using the ability of Kidney IntellX of the Kidney IntellX platform to identify patients earlier with progressive kidney function decline. We expect to report our initial findings in collaboration with AZ in the first half of 2021. And based on study outcomes, A multicenter randomized control trial will be initiated to evaluate uptake and adherence to new potassium binding agents in patients with CKD and hyperkalemia. We are confident that Kidney IntellX's unique value proposition and the early but rapidly developing market for applications in CKD drug therapeutics will allow us to form long-term partnerships with key industry stakeholders, including pharmaceutical companies, service, and healthcare providers. Turning now to clinical evidence, as our health economics and clinical utility data continues to accumulate, Kidney IntellX has growing potential to be viewed as the compelling solution to promote early intervention in kidney disease where impact on cost and care is most effective. We have now completed an expanded validation study set from more than 12,000 blood samples and analyzed, 12,000 blood samples, which are analyzed across multiple time points in 6,000 patients, with positive results consistent with the Kidney and Telex interim analysis, excuse me, interim analysis announced on 9th of July, 2019. These study results were presented at the 80th Annual American Diabetes Conference and are under peer review currently for internationally recognized journal publications. These data results were part of our Kidney Intellex FDA filing submission clearance as well. Included in these data results is a collaboration study that was completed with the University Medical Center of Groningen in the Netherlands to determine the ability of Kidney Intellex to identify patients that will experience a progressive decline in kidney function or kidney failure in over 9,500 blood samples analyzed across multiple time points in about 3,700 patients followed longitudinally. Initial findings from this work are being prepared for presentation and publication. In addition, we are evaluating the response to drug therapy based on baseline risk and change in risk over time as defined by Kidney Intellix. Concurrent with our clinical data generation, our intellectual property portfolio is continuously evolving. In the period, the U.S. Patent and Trademark Office allowed claims extending the use of one of Kidney Intellect's primary blood markers, STNFR1, to all patients with diabetes to determine an increased risk of developing progressive kidney disease or kidney failure. We have also completed rights to additional patent applications for use with Kidney Intellects. We are currently activating and evaluating a number of in-licensing opportunities that will also enhance our competitive product positioning. As you know, we are working closely with leading clinical investigators, population health departments, clinical societies, and patient advocacy groups to make sure we have actionable, simply understandable, and accurate medical communications. Expert experience is reflected in the design of the Kidney IntellX test report and the newly launched product website, which can be seen at kidneyintellx.com. We believe our education and support program will be an important resource to help inform and improve care for early stage DKD patients and support future hospital system deployments of Kidney IntellX in the United States and abroad. We have been asked many times about the effects of COVID-19 on our business, Without question, this is an unprecedented operating environment. We ultimately cannot quantify the challenges which all of us may face with the emergence of the fall and winter infectious wave. But I am incredibly proud of the intensive effort and the innovation that our employees and our partners have demonstrated as we continue to build out the Kidney IntellX franchise to patients in need and to their clinicians. A particular highlight during this time is the level of proactive collaboration that we're seeing to solve the complexities of technology licensing translation and data generation. And while our focus remains specifically on chronic kidney disease, like many others in the diagnostic community, we are contributing to help find a diagnostic solution to this global crisis. In May 2020, we entered into a joint venture with Mount Sinai to form Kintaro Biosciences for the purpose of developing and commercializing test kits for the detection and quantification of blood antibodies to SARS-CoV-2. Yesterday, Kintaro announced CE Mark approval of its quantitative antibody testing kit, which can now be distributed to laboratories in the UK and Europe. Global manufacturing leader in immunoassay technology, Biotechnique Corporation, is Kintero's manufacturing and distribution partner, giving Kintero access to testing laboratories worldwide. A major advantage of the Kintero kit technology is that it doesn't require any specialized equipment to produce antibody test results, further expanding the commercial scale of potential. Kintero has applied for FDA review, and we're expecting to hear the results in the near term. In addition to the Kentaro joint venture, in August, we also announced a multicenter study to evaluate the risk of long-term kidney damage by kidney and telex to patients who have experienced hospitalization from COVID infection. Investigative teams participating in the study include the Icahn School of Medicine at Mount Sinai in New York, Yale, University of Michigan, Johns Hopkins, and Rutgers. We expect to report initial findings from the study in the first half of calendar 2021 and then subsequently prepare for regulatory filings. In conclusion, fiscal 2020 was a transformational year for Renalytics. We believe we have truly unprecedented opportunity and unprecedented opportunity to transform patient care for CKD patients with our artificial intelligence and feature diagnostic solution. We have made significant progress towards our operational, regulatory, and reimbursement goals and are now engaged in commercial rollout of Kidney IntellX in the United States. Looking ahead, we have a number of core milestones to achieve over the next 12 months including increasing reimbursement coverage, expanding strategic partnerships, FDA regulatory events, additional health system partnerships, and growing testing volumes. We intend to keep our heads down and focused on the fundamentals of execution. I want to thank the Rinalytics team again for their continuing hard work, and we look forward to updating you all on our progress in coming quarters. In the interim, please stay safe, and I'd like to turn the call over now to our Chief Financial Officer, James Sterling, to provide more detail on our financial results. James?