Biodesix, Inc.

Good day and thank you for standing by. Welcome to Biodesic's third quarter 2024 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'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chris Brinzey, Biodesic's Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Today, Biodesics released results from the third quarter of 2024. Leading the call today will be Scott Hutton, Chief Executive Officer. He is joined by Robin Harper-Cowie, Chief Financial Officer. An audio recording of today's call and the press release announcement with the quarterly results can be found in the investor relations section of the company's website at biodesics.com. As today's call includes forward-looking statements, we encourage you to review the statements contained in today's press release and the risks and uncertainties described in our SEC filings, which identify certain factors that may cause the company's actual events, performance, and results to differ materially from those contained in the forward-looking statements made on today's webcast. In addition, we will discuss non-GAAP financial measures on this call. descriptions of these non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures are included in today's press release. I would now like to turn the call over to Scott Hutton, Chief Executive Officer. Scott?

Thank you, Chris, and thank you all for joining us today. Our key business fundamentals facilitate our ability to transform the standard of care and improve patient outcomes with personalized diagnostics. Commercial execution has been and continues to be enabled by a strong culture, as well as a foundation built upon scientific, clinical, and operational excellence. And I'm happy to report that it has been another quarter of solid year-over-year growth. As I've stated previously, 2024 is a year of execution, and our team continues to deliver on three key goals, which include driving increased revenue through the adoption of our lung diagnostic test and biopharma services, implementing operational efficiencies to continue to deliver strong gross margins, and maintaining a strict cost-discipline approach on our path to profitability. In the third quarter, we delivered 35% year-over-year growth in revenue, 77% gross margins, and a 6% improvement in net loss. Our quarter's growth was slightly under our expectations, driven in part by the hurricanes in the southeast, slower sales team expansion, and timing of completion of biopharma service projects. However, due to a variety of factors I will discuss in a moment, our experience in and expectations for the fourth quarter lead us to reiterate our 2024 full-year revenue guidance of $70 to $72 million. and our expectation that we will achieve adjusted EBITDA breakeven in the second half of 2025. Let's start with an update on the adoption of our lung diagnostic test. Test volumes grew 34% over the third quarter of last year. And as we've discussed, the timely expansion of our sales team is a critical component of our overall growth strategy. Our approach has been to hire the right sales team members that help advance our long-term strategic growth while positively impacting our culture, mission, and vision. In this quarter, we focused on adding sales teammates in new territories and upgrading talent in other sales territories to further set ourselves up for success in the fourth quarter and into 2025. The third quarter had an average of 63 contributing sales team members. and we graduated a large sales training class in early October who will contribute in the fourth quarter. Given the timing of hiring and the graduation of the class, we anticipate that our average number of fully contributing sales team members in the fourth quarter will be between 70 and 75, catching up to our planned sales team member count at the end of 2024. For 2025, we'll keep adding an average of six to eight sales team members per quarter as we continue to build out the organization needed to address this significant market opportunity. I also want to comment on the impact of the hurricanes that hit Florida and the southeastern United States in September and October. We observed in the last two weeks of the third quarter that many patients, physicians, and our local Biodesics team members were forced to evacuate their homes and businesses, thus affecting the normal volume of testing in those regions. While these communities are in the early stages of recovery, we expect most healthcare providers to return to normal service levels in the near future, and the long-term impact to our business will be minimal. Before we go on, the entire BioDessex team wishes to acknowledge the communities who continue to face the devastating effects of the recent hurricanes. Our thoughts are with our teammates, healthcare providers, patients, and residents of those communities as they continue the long process of recovery. Now back to the quarter. Lung diagnostic testing revenue grew 40% year over year, with the difference in test volume growth and revenue growth driven by our previously announced reimbursement successes and new coverages added this quarter. We added new coverage policies in the third quarter for Notify XL2 from Blue Shield of California, Blue Cross Blue Shield Nebraska, Centene, Fallon, and Security Health Plan in Wisconsin. We're pleased to add these policies to our existing Medicare and other private payer coverages, and we remain focused on adding more policies for all of our tests. In order to support expanded adoption and coverage of our tests, we continue to focus on clinical excellence by generating quality data and initiating new studies. Early in October at the CHESS Annual Meeting in Boston, the largest pulmonology conference of the year, New data was presented from a cohort of 35,000 patients who received notified lung testing in a real-world clinical setting. The presentation demonstrated that national clinical use patterns and reclassification rates are consistent with prior published data, highlighting the high proportion of results that up or down classified patients into actionable risk categories with clear guideline-recommended diagnostic plans. This was one of several presentations in the scientific program at CHESS featuring notified lung testing, demonstrating continued interest in the role our tests play in the clinical assessment of lung nodules. Reception to this educational content was exceptional, leading to hundreds of positive interactions with healthcare professionals and new partnership opportunities. Generally, we're seeing an increased focus on lung nodule biomarkers at medical conferences including CHEST last month in Boston, Massachusetts, and the American Association of Bronchology and Interventional Pulmonology, or AABIP, in Charlotte, North Carolina, in August. We believe this interest and excitement is a strong leading indicator of continued adoption of notify lung testing, given our first mover advantage and progress in generating evidence that demonstrates the benefits to healthcare providers, health systems, and their patients. The company also announced a new complementary clinical study named CLARIFY, a multicenter retrospective chart review study evaluating the impact and utility of the blood-based proteomic integrated classifier and autoantibody test in the real world. CLARIFY will collect patient outcomes and other clinical information on 4,000 patients who've received notified testing in clinical practice with at least one to two years of available follow-up. The CLARIFY study uses a cost-effective study design that is faster to execute and confirm performance of the Notify CDT and Notify XL2 test in a broad population of patients across the country. This study allows us to focus on diverse patient subgroups that historically may not have been studied in other clinical studies to further demonstrate the effectiveness of the test in the real world. We expect to release interim data in 2025 and complete the study in 2026. We're also making progress with Altitude, which is designed to assess clinical utility of the notified test through a prospective randomized controlled trial. It's continuing to accrue patients, and a third-party data safety management board is scheduled to meet early first quarter of 2025 to review the progress of the trial and discuss the potential for an interim data release. We will provide additional updates following their review. Finally, new health economic and outcomes research data on our notified test will be presented at the Professional Society for Health Economics and Outcomes Research meeting, known as ISPOR, in Barcelona, Spain, later this month. Let's move now to our biopharma services business. which is enabled by our scientific and operational expertise. We saw increasing demand for our services and grew the dollars under contract but not yet recognized as revenue to $11.1 million, up from $8.1 million at the end of the second quarter. Revenue in the quarter was a 17% decrease versus third quarter of last year. Reflecting the delay in timing of sample receipt and the resulting completion of a larger project that shifted from the last weeks of September into the first weeks of October. We're excited about the growth in the funnel through an increasing number of RFPs, contracts, and projects. This is a differentiated service offering that leverages our multi-omic platforms and research and development expertise to help deliver insights that our biopharma partners use to personalize patient care and help improve disease detection, evaluation, and treatment across all disease types. Across the board, the fourth quarter is off to a great start with an excellent CHESS meeting filled with customer interactions leading to opportunities for the sales team to drive additional clinical adoption. New data presentations and the announcement of the CLARIFY study are further establishing our position as the market leader in lung nodule risk assessment. The momentum from CHESS the new data and study, the addition of the newly graduated class of sales team members, and the completion of the large biopharma project already in the quarter are all contributing to the achievement of our 2024 guidance. With that, let me turn it over to Robin to review the financial performance. Robin?