Biodesix, Inc.

Hello, thank you for standing by, and welcome to Biodesic's first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you'll 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 Chris Rindy. Please go ahead.

Thank you, Operator, and good morning, everyone. Thank you for joining us today for a discussion of Biodesic's first quarter 2022 business highlights and financial results. Leading the call today will be Scott Hutton, Chief Executive Officer. He will be joined by Robin Harper-Cowie, Chief Financial Officer. After the prepared remarks, we will open the call for Q&A. An audio recording and webcast replay for today's conference call will also be available online as detailed in the press release announcement for this call. Today we issued a press release announcing our business highlights and financial results for the first quarter 2022. A copy of the release can be found on the investor relations page of the company website. Actual events or results may differ materially. from those projected as a result of changing market trends, reduced demand, and the competitive nature of biodesics industry. Such forward-looking statements and their implications involve known and unknown risks, uncertainties, and other factors that may cause actual results or performance to differ materially from those projected. The forward-looking statements discussed on this call are subject to other risks and uncertainties, including those discussed in the Risk Factors section and elsewhere in the company's annual report on Form 10-K for the year ending December 31, 2021, filed with the Securities and Exchange Commission on March 14, 2022, as well as in subsequent quarterly reports on Form 10-Q filed during 2022, if applicable. Additional information concerning factors that could cause results to differ materially from our forward-looking statements are described in greater detail in the company's press release issued today and in the company's filings with the SEC. I would now like to turn the call over to Scott Hutton, Chief Executive Officer. Scott?

Thank you, Chris. As a reminder, Biodesics is a patient-centric lung disease diagnostic company with a mission to unite biopharma, physicians, and patients to transform the standard of care and improve outcomes with personalized diagnostics. In the short time since our last earnings call, we've had a very productive end of the quarter and are looking forward to the rest of 2022. Beginning with our financial performance, we reported total revenue of $6.5 million and core lung diagnostic testing revenue of $4.6 million, which reflects 17% year-over-year growth. Like many of our peers, Performance in the first half of the quarter was affected by the COVID-19 Omicron variant, which significantly impacted the months of January and February with practitioners, patients, and many of our biodeistics team members getting COVID and staying home to recover, which resulted in an overall revenue decrease versus fourth quarter 2021. While we do not plan to talk about individual monthly results in the future, we do want to share more color about sales performance in the first quarter, to highlight the rapid and strong recovery we experienced following the Omicron wave. We're pleased to report that the month of March produced the highest volumes for our core lung diagnostic test in the history of the company. We saw sales access and activities rebound to pre-pandemic levels, and April continued this trend with a higher number of core lung diagnostic tests per business day than March, giving us continued confidence in our current 2022 revenue guidance of $37.5 to $39.5 million. Stepping back for a moment, we began the year with what we believe is one of the most comprehensive suites of diagnostic tests targeting the large lung disease market with an estimated combined total addressable market of $29 billion. We have five blood-based tests on market that support clinical decision-making across the lung cancer continuum. from initial risk assessment of lung nodules with the notify lung testing strategy to post-diagnosis treatment guidance and monitoring with the IQ lung testing strategy. The notify lung testing strategy consists of two blood-based proteomic tests, notify CDT and notify XL2, which are used by physicians to assess the risk of malignancy of a lung nodule. This helps prioritize high-risk lung nodules for invasive diagnostic procedures while also helping avoid unnecessary procedures on very low-risk lung nodules. Since launch in early 2020, we've successfully driven adoption of Notify Lung, despite the challenges presented by the COVID-19 global pandemic. Ongoing positive feedback and advocacy from our customers as they gain more experience with Notify Lung further validates that we are only beginning to realize the full potential for these tests to change the standard of care in lung nodule risk assessment. Moving to IQ Lung, we started the year with a full commercial launch of the Genistrat NGS test, increasing our therapeutic guidance portfolio to three blood-based tests, including the Genistrat targeted DDPCR genomic test and the Veristrat proteomic test. Offered as options within IQ Lung testing, these tests are used to inform treatment decisions and monitor for the rise of resistance mutations while patients are on therapy. The Genistrat NGS test launched in January with Medicare payment already secured. Adding the NGS test means we can now offer the option of broad sequencing of circulating tumor DNA and RNA with a turnaround time of 72 hours, the fastest of any test available in this space. This complements the more targeted Genistrat DDPCR test. introducing flexibility in addressing individual patient and physician needs. Feedback from our physicians has been incredibly positive since launch, reinforcing the importance and competitive differentiation of the rapid turnaround time and coverage of both DNA and RNA genetic alterations by this test. In summary, we're pleased with adoption over the last four months. Continued support and investment in data generation to demonstrate and reinforce the clinical utility of our test is another critical factor for future growth. We expect the upcoming full data readout and publication of our Oracle study on Notify XL2 will further support our sales and reimbursement efforts for the test. Additionally, we look forward to providing further updates on our ongoing insight study for the IQ lung testing strategy, the altitude study of our Notify test, and the BEACON study for primary immune response, our immunotherapy guidance test, and our further development efforts for our pipeline risk of recurrence test. We've said it before and cannot reiterate it enough. Lung cancer kills more people in the U.S. annually than the next three cancers combined, and time matters when treating these patients. We pride ourselves on Biodesic's ability to quickly provide critical results and insights back to healthcare providers with best-in-class testing turnaround times for all of our tests to improve patient care. We believe we've just begun to scratch the surface of this $29 billion market, and we have both the team and the products to drive growth in 2022 and beyond. Speaking of our team, and as previously discussed, we doubled the size of our sales team in 2021 as we grew from 24 to 48 team members. We believe our commercial team is critical to continued growth, and as such, in line with plans, we've added another five sales team members in the first quarter of 2022 to increase our coverage in promoting and selling the complete portfolio of core lung diagnostic tests. With a large greenfield opportunity in our existing territories, we will further expand this team in 2022 and beyond, as long as we continue to see the levels of productivity experienced thus far. with sales team members paying for themselves on average in four to six months. Moving to our biopharmaceutical partnerships and services business, we reported revenue of $0.9 million for the quarter, reflecting the COVID-19 Omicron variant wave in the first half of the quarter impacting prospective study enrollment and shipping of samples. Overall, we continue to receive positive feedback and interest in the Biodesics Diagnostic Cortex proprietary AI and machine learning platform, and our broad multimodal and multiomic service offerings. Our ongoing efforts and advancements in explainability and transparent AI will provide unique insights and clarity to healthcare professionals by providing the ability and potential to identify key biologic mechanisms driving specific outcomes for patient subgroups that may require a different approach or different treatment. Overall, we remain confident that we'll see growth in revenue from increasing demand for our service offerings. Lastly, we've made considerable progress strengthening the company's financial position to ensure that we have the funds and resources to execute upon our growth objectives. In addition to the $50 million committed equity facility that we announced in March, we're also pleased to announce a new term loan for $15 million, a private placement of $11.7 million, and a revision to our integrated diagnostic asset purchase agreement milestone payments to extend the time to pay, and provide near-term financial flexibility. Now let me turn it over to Robin to review the first quarter 2022 financial performance. Robin?