Renalytix Plc

Good morning and welcome to the RENOLIX conference call to review second quarter and first half fiscal year 2023 financial results. At this time, all participants are in listen-only mode. We will be facilitating a question and answer session toward the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Peter DiNardo of Capcom Partners for a few introductory comments.

Thank you, Michelle. Good morning and welcome to the RenoLytics conference call to review second quarter and first half fiscal year 2023 financial results. At this time, all participants are in listen-only mode. We will be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. Thank you all for participating in today's call. Joining me today for bringing the lights to bright formal remarks are James McCullough, Chief Executive Officer, Tom McClain, President, and James Sterling, Chief Financial Officer. In addition, Fergus Fleming, Chief Technology Officer, will be on hand to join us for the question and answer session. 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 the 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, the potential benefits, including economic savings, of kidney intellects, the potential for kidney intellects to receive regulatory clearance from the FDA, the commercial prospects of kidney intellects, including whether kidney intellects will be successfully adopted by physicians and distributed and marketed, our expectations regarding reimbursement decisions and the ability of kidney intellect to curtail cost of chronic and end-stage kidney disease, optimize care delivery, and improve patient outcomes, friends in our market and potential benefits of government policy change, the impact of COVID-19 and other world events on our business, our expectations for hiring, product development, strategic partnerships and collaborations, reimbursement decisions, clinical studies, and regulatory submissions, Our business strategies and future growth, including plans, expectations, and opportunities for financing our operations and revenue projections and guidance. These statements involve material risks and uncertainties that could cause actual results or events that materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a description of the risks and uncertainties associated with our business, please refer to the risk factors section of our annual report on Form 20F that was filed October 31, 2022, with the Securities and Exchange Commission. All forward-looking statements made on this call are based on management's current estimates and various assumptions. Rinalytics 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 and is accurate only as of the live broadcast today, March 30, 2023. I'll now turn the call over to James McCullough. James?

Thank you, Peter. Good morning or good afternoon. Since our last quarterly report, Renalytics has made several fundamental advances, including completion of a $20 million capital round with significant new institutional investors, reaching the next time point for our results on the Kidney IntellX real-world evidence study, expansion of insurance coverage for Kidney IntellX, the transition to a permanent long-term commercial insurance payment model at Mount Sinai Health System, execution of a cooperative research and development agreement with the U.S. Veterans Health Administration, and further progress towards FDA de novo marketing authorization of Kidney Intellex. Tom McLean will speak to these final points in his prepared remarks. In the March quarter, we have completed the milestone of transitioning to a permanent long-term commercial insurance payment model for patients tested at the Mount Sinai Health System. This transition is taking place with the expected expiry of the exclusive coverage contract with Mount Sinai, established to the first $6 million of kidney and telex testing as part of the real-world evidence study program, which began in 2021. Key to this transition was our ability to secure a diversity of commercial insurance for kidney and telex for a significant portion of the diabetes and kidney disease population in New York City. This transition would not be possible without established payment from Medicare, Medicare Advantage, and other large New York City concentrated payers. This includes a recently disclosed coverage contract with the second largest nonprofit payer in the United States with 3.2 million members, and another coverage contract secured with a large value-based care insurer covering 1.8 million members. We are now experiencing a high rate of payment across both public and private insurance carriers in the New York region at or above our established Medicare pricing of $950 per reportable result. This model is being successfully replicated in other major regional markets for kidney and telex, such as Illinois and the Carolinas. We continue to receive payment from the national government services for Medicare claims under the individual claim review process. Our coverage determination application for a local coverage determination is under review by NGS and has been updated to incorporate the real-world evidence data from Mount Sinai. For the remainder of 2023, we expect to report expanded progress on our long-term stated primary business goal of insurance coverage with state Blue Cross Blue Shield programs, Medicare, Medicare Advantage, Medicaid, and other for-profit and not-for-profit payers. We continue to believe and have seen a growing number of demonstrations that investment in our real-world evidence data generation is helping to drive insurance reimbursement, physician use, and will eventually support the road for inclusion in clinical guidelines. As a reminder, Kidney IntellX real-world evidence results first published in the Journal of Primary Care Community Health on November 28, 2022, showed that Kidney IntellX was influencing clinical behavior in favor of early therapeutic intervention and timely referral to specialists. Most importantly, and what we didn't expect to see so soon, was that patients tested by Kidney IntellX showed improvements in two long-time standard metrics. HbA1c levels for diabetes health and UACR or urine albumin to creatinine ratio for kidney health. We expect that if the trend continues, the potential for Kidney Intellect to change these two metrics and other measures of kidney health in such a short time period can have enormous impacts on healthcare costs and reduction in patient suffering. We are currently writing up results from the next real-world evidence time point at 12 months, which will be publicly released as early as this summer. Our real-world evidence data development, for which there is no shortcut in time or money, continues to showcase the value of Kidney IntellX, particularly in the hands of primary care physicians practicing preventative medicine. Also in the current quarter, we were pleased to build a fresh infusion of 20 million into our capital base made up of new and well-funded institutional holders. While we continue to look for opportunities to reduce expenses and optimize capital deployment, this remains a delicate balance as we need to maintain the necessary fixed overhead for our product and commercial model going forward in the highly regulated U.S. clinical diagnostic market. Finally, the incredible March report from the World Obesity Foundation predicting that over half of the world's population will be obese or overweight by 2035, means that kidney disease, obesity, and diabetes, all of which run hand in hand, will continue to be one of the largest and costliest medical conditions in history. The report further indicated that failure to improve prevention and treatment of obesity would have a total negative economic impact of over $4 trillion, or nearly 3% of the global GDP. More than ever, we will need the early and accurate prognosis that Kidney Intellix offers to identify which patients are at highest risk for uncontrolled kidney disease progression, kidney failure, and dialysis. And most importantly, who should be treated early to prevent the majority of the downstream disease effects. I will now turn over to Tom McLean, our president, to discuss FDA and our commercial progress. Good morning, Tom.