MDxHealth SA

Good day, ladies and gentlemen, and welcome to the MDX Health August 2nd, 2022 business update. As a reminder, this conference call is being recorded. Before we begin, I'd like to remind everyone that the company will make forward-looking statements during today's call, whether in the prepared remarks or during the Q&A session. These forward-looking statements are subject to inherent risks and uncertainties. These risks and uncertainties are detailed in the risk factors section of the company's filings with the Securities and Exchange Commission, specifically in the company's annual report on Form 20S filed with the SEC on April 25th, 2022, and in subsequent filings. At this time, I'd like to turn the conference over to Mr. Michael McGarrity, Chief Executive Officer of MDX Health. Please go ahead, sir.

Thanks, Sarah. And thank you all for joining us for an exciting update for MDX Health. With me today is Ron Kelfis, Chief Financial Officer. As we announced today in our press release, MDX Health has acquired the Oncotype GPS business from Exact Sciences. We consider this a transformative acquisition that serves as the next step in our discipline process to build a world-class business focused in urology. The acquisition further demonstrates our steadfast focus on building a leading growth company with an exceptional team in place to execute across all operating disciplines. We are committed to our strategy to build value for all of our stakeholders, including patients, customers, employees, and shareholders. We are confident that this transaction positions MDX Health to uniquely serve our newly combined customer base with the most comprehensive menu of precision diagnostics for urology and prostate cancer. I would like to thank Kevin Conroy and the Exact Sciences team for their continuing partnership through this transaction. And we believe that the equity investment that ExactScience is making in MDX Health reflects their confidence that we will be excellent stewards to the thousands of Oncotype GPS patients and customers. For understanding and to characterize the strategic fit with our current menu, select MDX and confirm MDX, Oncotype GPS, or genomic prostate score, as it is widely known, is a multi-gene expression assay designed for men diagnosed with localized prostate cancer to help guide treatment decisions. The Oncotype GPS test was developed, clinically validated, and studied collectively in over 9,000 patients. The test analyzes prostate cancer gene activity to predict disease aggressiveness and to help refine risk assessment. The test provides clinically actionable information for both patient and clinician when active surveillance may be an appropriate decision as well as risk estimates to help inform treatment decisions for higher risk patients. Ron will comment on the structure of the transaction and our preliminary mid-year results, but first let me comment on the strategic rationale of this acquisition. As I have communicated, even amidst the headwinds of reimbursement timing for select MDX and the impact of patient flow from the pandemic, which are now both turning to tailwinds, we have been unwavering in our belief and confidence that MDX Health is now the most focused company in the prostate cancer urology market backed by the following. Our offering of select MDX, confirm MDX, Oncotype GPS, all included in the National Comprehensive Cancer Network, or NCCN guidelines, coupled with our Resolve MDX, which will be the new brand name for our urinary tract infection test. All share two key attributes. One, a clear and compelling set of published data and demonstrated clinical validity and utility. Two, a broad set of customers that have adopted these tests for clinically actionable disposition of patients in the diagnostic pathway of prostate cancer and infectious disease. Our focus is further backed by a best in class channel into urology with a now expanded field organization of over 70 sales reps, managers, strategic account managers, and medical science liaisons. A world class laboratory that will now serve as the most comprehensive menu partner to our urology and pathology customers. One lab that partners with urology practices for the broadest and highest quality customer and patient experience in the industry. And a significant and strengthened key opinionator network that brings in the best of the Oncotype GPS reputational excellence. We are excited to welcome the commercial team from the Exact Sciences urology business to the MDX Health family. We have worked diligently with the Exact team to ensure a transition that will capitalize on customer coverage and growth leverage of our combined teams. We will be transferring the laboratory operations from the Exact Redwood City location to our laboratory in Irvine over the coming months. and have worked closely with both teams to, again, ensure a seamless transfer and integration. Also, not to be lost is our very positive growth in the first half of 2022 for MDX Health, with preliminary revenue up 22%, while sequential quarterly revenue grew 13%. I will comment further on our view forward, but first let me turn the call over to Ron for a view of our preliminary revenue results for Q2 and first half, and additional comments on the acquisition. Ron?

Thank you, Mike. First, as Mike noted, we are pleased to report that preliminary revenues for the second quarter of 2022 were $6.9 million, representing a 22% increase from the same period last year. That brings our total preliminary revenues for the first half of 2022 to $13 million, which represents a 21% increase over the first half of 2021. Mike will comment shortly on our updated guidance for the second half of 2022 on both our core MDX health business as well as the Oncotype GPS business. Turning to the acquisition of the Oncotype GPS business. Total purchase price to be paid for the Oncotype business is up to $100 million, $30 million in the form of an upfront payment, and up to $70 million in earnouts payable through the middle of 2026 and tied to Oncotype GPS revenue. It should also be noted that of the $30 million upfront payment, $5 million will be funded through an equity investment in MDX Health by Exact Sciences. As part of this transaction, we have also secured a new debt facility of up to $70 million with Innovata's capital partners. Half of that amount, or $35 million, has been drawn at closing and applied to both the upfront payment to Exact Sciences as well as to repay our previous debt facility, Creos Capital, in the amount of 9 million euros. The remaining $35 million of this debt facility is available for us to draw down at our discretion in two or more tranches starting in mid-2024. The Innovatis Debt Facility is a five-year loan carrying an interest rate of prime plus 4.25% and has four years of interest-only payments. Complete details of both the Oncotype GPS acquisition as well as the Innovatis debt facility were provided in our press release earlier today. This concludes my brief overview of our preliminary results and transaction. I'll now turn the call back to Mike. Mike?