Renalytix Plc

Ladies and gentlemen, thank you for standing by and welcome to the Rinalytics Second Quarter Fiscal 2021 Financial Results 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. 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. Thank you all for participating in today's call. Joining me today from ArenaLytics are James McCullough, Co-Founder and Chief Executive Officer, and James Sterling, Chief Financial Officer. Tom McLean, President, 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 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 regulatory 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 annual report on Form 20-F filed with the Securities and Exchange Commission on October 28, 2020. All forward-looking statements made on this call are based on management's current estimates and various assumptions. Reanalytics disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information It's accurate only as of the live broadcast today, March 2nd, 2021. And with that, I'll turn the call over to James.

Thank you, Carrie, and good morning to everyone, and thank you for joining us to review our second quarter results for the fiscal year 2021. The past six months, and especially the recent quarter, have made the event horizon much clearer for Rinalytics and our stakeholders. Thanks to a major rule change in the reimbursement landscape, our growing partnership base, and an increasing awareness of the large unmet need in kidney disease, Renalytics is rapidly building the foundations necessary to bring kidney and telex precision prognostics to thousands of clinicians treating individuals with early-stage kidney disease. Today, I will focus on key developments in our business that have laid the groundwork for our growth strategy. First, on our reimbursement and regulatory pathways. On January 12, 2021, CMS finalized its Medicare Coverage of Innovative Technology Rule, also known as MSIT, giving renalytics a direct path to a national Medicare coverage determination for kidney and telex testing in the United States. As Medicare beneficiaries make up the majority of individuals with kidney disease in the United States, we believe this represents a watershed moment in the pursuit of our national commercial strategy. Under MSIT, Kidney IntellX would receive national Medicare coverage at $950 per reportable result when the FDA clears Kidney IntellX out of the Breakthrough Device program. We submitted our final Kidney IntellX regulatory package for review under Breakthrough Device in August of 2020. This was shortly following the FDA's announced reprioritization of resources due to the large influx of COVID-related emergency use applications appropriately slowing down the process across the board for diagnostics regulatory applications. Fortunately, on February 19th, we received written notification that FDA expected our review process would return to normal no later than April 15th of this year, and that FDA expected no further delays beyond this date. While we will not forecast a specific timeline for finalization of the FDA process, We view this notification as a positive step and anticipate FDA clearance and subsequent national Medicare coverage under MSET will likely take place in the current calendar year 2021. In addition, we are continuing to expand the regulatory and reimbursement expertise at Renalix and will continue to pursue multiple parallel pathways to secure comprehensive long-term private and public insurance reimbursement. Turning next to the real-world implementation of Kidney Intellects, During the quarter, we began our clinical testing experience with Kidney IntellX within the Mount Sinai Health System. To date, Kidney IntellX testing volume has run into the hundreds, and there are currently over 25 primary care and specialist physicians in the Manhattan region ordering early-stage risk assessment for diabetic kidney disease patients through the Mount Sinai electronic health record implementation. We are pleased to note that despite challenges presented by COVID restrictions, our experience has met or exceeded targeted quality metrics. With Kidney IntellX live testing reporting, we also performed a series of services for Mount Sinai to support physician and office practice education, care navigation development, and electronic order integration. These services are essential for both uptake and downstream clinical utility of Kidney IntellX over the short and long term. We continue to focus on the benefits of kidney IntellX machine learning enabled in vitro prognostic risk score in the context of everyday clinical practice, particularly as we deploy to an overburdened primary care physician base. Reporting a clear, easily understandable risk score with specific clinical actions attached, all supported by education and care navigation, is essential to drive testing growth and acceptance in early stage disease. Again, we define early stage disease as stages one, two, and three of kidney disease before irreversible damage to the kidney has occurred. We expect clinical testing will accelerate in the third and fourth quarters with the addition of more physician practice sites at Mount Sinai, and we also expect to start recognizing revenue from our work at Mount Sinai in the quarter ending March 31, 2021. Working alongside the experienced clinical and technology teams at Mount Sinai in the real-world environment is playing an important role in helping us further develop the integrated partnership deployment model. We are beginning this real-world experience with discussions with other large potential healthcare networks for Kidney IntellX implementations. As a case in point, the successful deployment of Kidney IntellX at Mount Sinai was a key part of the University of Utah's decision to partner with us. We intend to announce additional partnerships in 2021 that could significantly expand the reach of Kidney IntellX to treating clinicians. Turning now to our commercial strategy, as previously noted, strategic partners are essential in building commercial use cases for Kidney IntellX. The quality of the information from partnered implementations, such as with Mount Sinai, will help us avoid mistakes during product launch and scale. The partnering model remains a top strategic priority as we work to drive long-term sustainable addressable market opportunities prior to achieving a national Medicare coverage determination through MSIT. However, with MSIT, we are now engaged in an intense internal review of the strategic options to accelerate United States distribution for kidney and telex. Strategic partnering is certainly one way to accomplish expanded physician access. Our partnership with DaVita, announced on January 5th, provides a unique value proposition to insurance payers and healthcare networks that creates a first-in-kind, end-to-end care model in early chronic kidney disease. DaVita and Renalytics intend together to implement Kidney Intellex, starting an early stage 1 diabetic kidney disease, along with care management services in three major regional healthcare markets. These regional health care markets may contain multiple health care systems and also multiple insurance providers. The data and insight into utility flowing from this end-to-end model should also be quite unique and potentially give rise to a true value-based health care equation. Also on February 24th, we announced a partnership with the University of Utah, one of the top research institutions in the United States, that will implement Kidney Intellect system-wide at the University of Utah Health, Kidney IntellX will be deployed directly into the electronic health record system, providing over 1,700 clinicians access to seamless test ordering and patient risk score reporting as part of the standard clinical workflow. With the VITA and the University of Utah, we are now on track to exceed our stated goal of announced partnerships for three major Kidney IntellX deployments before the end of fiscal 2021. Given these successes, we are now increasing our deployment goal, our announceable deployment goal, expecting to announce five to seven partnerships before the end of calendar 2021. Next, I would like to highlight our product development roadmap and the expanding market opportunity ahead of us. While Kidney IntellX has initially been indicated for adult patients with type 2 diabetes and existing chronic kidney disease, a population that accounts for an estimated 30% of the U.S. chronic kidney disease population, we are now solidifying plans to broaden the Kidney Intel X platform with a new indicated use to the larger chronic kidney disease population. Notably, this new indicated use, when validated, will also include the underserved African and Hispanic ancestry populations, populations which show disproportionate risk of developing kidney disease and have poor outcomes. Due to these large and incremental populations, we estimate the TAM for Kidney IntellX platform could potentially grow to over three times its current size to an estimated 37 million individuals in the United States. Finally, and most importantly, we are continuing to build on our clinical data, supporting the performance and real-world utility of Kidney IntellX. We have submitted for presentation key findings from recent studies at the World Congress of Nephrology, the American Diabetes Association, and the Healthcare Information and Management Systems Society this year, and we expect additional important data will be submitted in collaboration with our study partners shortly. This growing body of evidence supports important findings for broader population validation, test monitoring, patient drug therapeutic response, and the impact on clinical decision-making and therapy management of the Kidney IntellX platform. We will continue to invest heavily in validation and utility study data development as we seek to establish Kidney IntellX as the standard for early stage precision medicine prognosis in kidney disease. Collectively, we believe the developments in reimbursement, partnering, and data development position Kidney IntellX for testing volume growth in fiscal 2022. Again, our mission for the remainder of this fiscal year is to lay the groundwork for broad healthcare system and physician access prior to an anticipated FDA clearance and national Medicare coverage. We are exploring multiple options to ramp U.S. distribution, keeping capital expenditure efficiency always in mind, so that we are prepared to take advantage of the scaled growth opportunity across large populations in the coming years. Expanding the Kidney Intellex platform with a new indicated use to the larger chronic kidney disease population, including individuals of African and Hispanic ancestry, would materially increase our total addressable market. Lastly, a note on the impact of COVID-19 on our operations. COVID has presented short-term challenges to our business, particularly during the high-intensity first deployment of Kidney Intellex in the Mount Sinai Health System during the second quarter. During the period, both New York State and Mount Sinai reinstated COVID surge protocols, which restricted our ability to operate. Fortunately, with broad-scale population vaccination now proceeding at pace, we expect COVID will have a substantially less impact on our operations moving into fiscal 2022. I would now like to turn over the call to James Sterling, our Chief Financial Officer, to provide more detail on the financial results. James?