Renalytix plc

Good morning and welcome to the Rinalytics conference call to review first quarter results for fiscal year 2022. At this time, all participants are in a 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 remarks.

Thank you, Catherine, and thank you all for participating in today's call. Joining me today from Rentalytics are James McCullough, Chief Executive Officer, Tom McLean, President, and James Sterling, Chief Financial Officer. 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, statements related to Kidney Intellect's ability to lower healthcare costs, improve patient quality of life, and set a 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 a 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 that was filed on October 21, 2021, with the Securities and Exchange Commission. All forward-looking statements made on this call are based on management's current estimates and various assumptions, right on what it sustains 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, December 7, 2021. And with that, I'll turn the call over to James McCullough. James?

Thank you, Peter. Good morning and good afternoon. As the end of this calendar year approaches, we are confident that our healthcare system partnership model is delivering a unique value proposition for changing the course of chronic disease management. As the real-world numbers start to build, lessons learned from the Kidney Intellex implementations at Mount Sinai, Wake Forest, Atrium Health, CDPHP, and now the Veterans Health Administration System are setting the foundation for a national model with the potential to enable a broad section of healthcare providers to drive better outcomes for the greater than 12 million people with diabetic kidney disease in the United States. At Mount Sinai, the Kidney IntellX program experienced growth during the quarterly period, and most importantly, continues to generate key utility data around physician behavior, risk assessment ordering, and follow-on clinical actions. In mid-November, Kidney IntellX testing was extended to the Mount Sinai network sites across Long Island and Queens in New York, incorporating several new physician practices to integrated electronic health record ordering. We are now able to measure a critical measure, critical metric and volume growth for the Kidney IntellX program with conversion from pre-pended to executed orders. Said another way, conversion is the percentage of doctors who actually order Kidney IntellX testing for their patient in response to a centralized population health suggested or pre-pended order. Mount Sinai is now seeing conversion rates as high as 80% in the quarter ended to September. an outstanding metric of performance and a direct measure of active engagement in risk assessment by clinicians. Further, Mount Sinai is now leveraging its population health pharmacy management program to support primary care practices on diabetic kidney disease and optimizing therapy decisions early in the disease cycle for those patients that Kidney IntellX has prognosed at intermediate and high risk. Doctors are now demonstrating that assessing risk in their kidney disease patients is important and are willing to take direct action on a prognostic result. Assuming this high rate of conversion to executed orders with coordinated pharmacy management continues, we will have demonstrated important clinical activation beginning at the primary care level. This should provide publishable evidence that health systems implementing the Kidney IntellX model have the potential to drive significant improvements to diabetic kidney disease management across large groups of practicing primary care physicians connected through the electronic health record system. We believe conversion and pharmacy management will support real-world evidence results published in the coming quarters and will accelerate additional healthcare system adoption and payer coverage in 2022. Implementing its scale in a complex healthcare environment such as Mount Sinai has required many learnings and continuing innovation. Importantly, we are now demonstrating the Kidney IntellX care model can not only be applied across multiple healthcare systems with different operating environments, but that we can accomplish a full implementation to clinical testing in shorter timeframes. With our Wake Forest implementation, for example, we were able to achieve the start of clinical testing in just six months from execution of contract. A go-live timeframe we are now targeting to reduce to three to four months with coming system partnerships. We expect implementation in our most recent hospital system partner, St. Joseph's, will be the most efficient to date. Implementations such as Mount Sinai, Wake Forest, University of Utah, physician-led payer network CDPHP, and the VA medical system are complicated by requirements to coordinate electronic health record system integration, broad physician education, defining a care pathway with general and specialty physicians, and setting up a pharmacy management program. This complication, however, is offset by long-term care management relationships that can reach large physician bases and their patient populations from the outset, a significant competitive barrier to entry. The Mount Sinai, St. Joseph, and CDPHP implementations are demonstrating the value in focusing on a healthcare region. With concurrent regional implementations, we expect to achieve efficiencies in sales and medical science liaison personnel deployment, and overlapping insurance coverage across different patient populations. We also see a potential saturation effect beginning to occur, which is generating awareness and near-term demand from other players operating in the New York State region. St. Joseph's also offers an opportunity to accelerate adoption into a larger patient population as they are part of the Trinity Health System, the fifth largest healthcare network in the United States with 1,600 member healthcare facilities. We expect to announce additional partnerships in the New York region throughout 2022. The Kidney IntellX real-world evidence utility should continue to expand rapidly with tested patients to date now numbering into the thousands. Real-world evidence testing and care management in the Kidney IntellX diabetic kidney disease population could well exceed 20,000 patients in calendar 2022. This is no small population data set and provides renalytics with considerable use case experience and the statistical power to begin addressing insurance payment for repeat testing in high and intermediate risk patients, potentially expanding the indicated uses to include diagnosis and therapeutic response monitoring, and to other potential related disease indications such as cardiovascular event risk. In short, the real-world evidence program we have established provides a direct potential pathway to significant increases in the Kidney IntellX total addressable market and begin to erect a one-stop shop for practicing primary care physicians to assess chronic disease risk. Our real-world evidence program also has the potential to provide Kidney IntellX with a significant competitive advantage through continuous product innovation and performance improvements. With the General Services Administration contract that establishes full reimbursement at $950 per reportable result for any kidney IntellX test ordered by a government physician, we are on our way to a sustainable revenue pathway. In the VA health system alone, there are approximately 400,000 diagnosed diabetic kidney disease patients eligible for a kidney IntellX baseline risk assessment today. Again, because we have full reimbursement in this population, We have hired, trained, and are deploying sales personnel, in addition to medical science liaison personnel, into the VA system to begin supporting Kidney IntellX usage nationally. Given our overall experience and implementation success, we are now targeting 20 large hospital systems Kidney IntellX contracts in 2022. These systems could provide us with the potential to achieve seven figures of diabetic kidney disease patients integrated into a kidney IntellX risk assessment model. I would now like to turn the conversation over to our president, Tom McClain, for an update on our commercial progress.

Thank you, James. While the implementation timelines were not what Mount Sinai planned initially, in part due to COVID-19, it is now clear that our shared achievements have defined the value of kidney and telex testing in our health system focused commercial model. The invaluable lessons learned with the first scale kidney and telex implementation has created a playbook that is being applied not only in New York, but it's part of the core offering across multiple other health systems. Kidney and telex is now driving increased value for clinicians, patients and payers at Mount Sinai, Wake Forest Atrium, CDPHP, and soon across St. Joseph's and the VA medical system. From the start, we were aware that others have tried to apply broad care solutions in chronic disease based on their technology solution. We studied their successes and, importantly, their failures in developing our unique approach to care enabled by kidney and telex risk assessment. The differentiated features of our test and our core care model are allowing us to demonstrate unique utility from the earliest stages of diabetic kidney disease. In 2021, we accomplished something we believe no one else has been able to do. We implemented advanced IDD risk assessment in a large chronic disease population across a complex integrated network comprised of hospitals, primary care offices, and specialist physician practices. In this complex environment, we have had to learn how to drive efficiency in the clinical pathway with sensitivity to the demands on primary care physicians that affect training and adoption timelines. All of this was within a first EHR integrated ordering and result reporting technology application. We have come to truly understand what it takes to be successful in a complex, heavily regulated environment with precision. I'd like to quickly provide more context around what this accomplishment really means for our capabilities going forward. Mount Sinai is representative of the complexity in the healthcare delivery model in the United States today. The health system was built from the acquisition of independent hospital systems, PCP offices and networks, specialist practices, and health centers. It serves disparate patient populations from the heart of New York City to suburbs in Long Island and upstate to New Jersey and Florida. The health system operates across different data platforms, care pathways, and delivery models. Mount Sinai has many different provider contracts with local, regional, and national insurers, Medicare and Medicaid, all under unique payer and payer risk models. The reality is that this complexity has been a barrier for many health systems in fully deploying a single care practice model across their diverse patient populations. At Mount Sinai, we learned the importance of the right sponsorship for implementation programs, especially the roles and collaboration needed between clinical medicine, population health, and the CIO, CMIO teams. We have also learned the essential roles of our health systems partnerships, medical affairs, client services, and sales account executives to support the rollout. We have defined the key metrics and information that are helpful to quickly align on and assess the benefits of kidney and telex informed care. We have developed the models for integrating payers and economic data to demonstrate value. And importantly, we have developed the core parameters to effectively apply risk-informed patient management across different care and payer models that exist within the same health system. This program is also demonstrating the benefits of a value-based care model that drives savings for payers and providers through better care for patients. Our team is confident that what we accomplished together with Mount Sinai, what we have learned and experienced, it equips us to streamline and accelerate implementation timelines and positions kidney and telex to succeed in subsequent health systems rollouts. As James noted earlier, we have already demonstrated that at Wake Forest Atrium, where the time from contract to first clinical test was six months. That timeline will be further accelerated in future system rollouts. James Sterling, our Chief Financial Officer, will now provide more detail on our financial results. James?

Good morning. The earnings release we issued today presents our U.S. GAAP financial results for the first quarter of fiscal year 2022, and it's September 30th of 21. And I'll review a summary of these results now. All figures are in U.S. dollars, which is our reporting currency. For the quarter, we recognized about $450,000 of services revenue related to testing under the Mount Sinai Clinical Utility Study, and $30,000 of services revenue for Master Seneca. We did not post revenue in the prior year period. We recorded $230,000 of costs attributable to those revenues. Our operating expenses were $12.1 million for the quarter as compared to $5.4 million for the prior year period. The increase was primarily driven by higher headcount, higher R&D expense related to studies at Mount Sinai, Wake Forest, and University of Utah, as well as increased consulting and professional services fees in support of our growth. Net loss for the first quarter of fiscal 22 was $10.1 million, or 14 cents per share, compared to a net loss of $7.2 million, or 10 cents per share, for the same period a year ago. We ended the quarter with cash in equivalence of $54.3 million as of September 30th, 2021, compared to $65.1 million at the end of June 30th, 2021. I'll now turn the call back to James McCullough for final remarks before we open the call to questions.

Thank you, James. Finally, as we have all experienced, November and December have presented a challenging capital markets environment where the tools and diagnostic sector in particular has become, in our opinion, oversold. Renalytic stock has fallen substantially with the rest of the sector in recent weeks to pricing levels we believe do not reflect the series of value milestones achieved since our NASDAQ listing in 2020. In the coming year, we intend to focus on increasing the liquidity, analyst coverage, and visibility of Renalytic stock. And while we will continue to refrain from providing specific revenue guidance at this early stage of our business scale-up, We will provide core elements to support financial modeling, such as select specific testing run rates, addressable markets, and routes to expanding addressable markets, such as repeat testing. For 2022, we are targeting a series of catalysts, including one, achieving insurance payment for greater than 12 million individuals with diabetic kidney disease, including with Medicare and Medicare Advantage payment profiles, two, announcing a series of new healthcare system partnerships. Three, publishing real-world utility evidence from our Mount Sinai and other study programs. Four, announcing new strategic partnerships in the services and pharmaceutical categories. Five, achieving FDA de novo marketing authorization. And six, demonstrating revenue growth across multiple market segments. We appreciate your patience and support in 2021. Please have a safe and happy new year. And with that, operator, we'd now like to open the call for questions.

Thank you. To ask a question, you'll need to press star 1 on your telephone. To withdraw your question, press the pound key. Our first question comes from Tycho Peterson with J.P. Morgan. Your line is open.

Hey, good morning. First question just on the sales ramp. So I know you hired Jed Folk, and I think his plan is to hire 43 people to support him. Is that all dedicated to the VA? Can you talk a little bit about scaling up there and then broader plans for the sales force?

Yeah. Hi, Tycho. It is primarily dedicated to the VA. One of the rules of the road we are adhering to is that we will not hire a significant fixed overhead company. until we have direct visibility on secured reimbursement. And with the VA medical system, we are going to expand into that rapidly. There are 171 medical hospital systems in the VA medical group, and we're now going to start with that Salesforce customer service and medical science liaison program On a national rollout scale, we have hired other salespeople, which will be supporting our efforts at Lake Forest and again at Atrium and also now into Mount Sinai. And as we get additional insurance coverage that come into those systems, we'll continue to scale that up as well.

And then LCD timing, I know you previously said summer 2022, you know, any chance FDA approval could accelerate that or any risks of push out? What's the latest up there?

Yeah, great question. It's a three-dimensional chessboard. So we're playing all dimensions. The LCD is certainly one route that we're focused on. We've been focused on it from the very beginning. We The guidance we've given to the market is that we do expect an LCD by the summer, but there are other pathways to Medicare payment. And it's interesting to follow the track of what's going on post-MSIT now back down in Washington. So I think that other pathways will also open up in 2022. FDA is not a requirement. It is certainly something we want to have, but if we do get FDA, will that help in terms of timing? Perhaps. I don't know, Tom, if you want to add any color to that.

Certainly anything additional with the test that evidences its validation is helpful, but as you know, the majority of clinical diagnostic tests reimbursed under Medicare, under local coverage determinations today, the majority of them are laboratory developed tests, not FDA approved or cleared tests. Okay.

You know, on the development roadmap, I know you've also talked about repeat testing for treatment response monitoring. How far out is that in your view?

Yeah, we haven't put a specific timeline, but I am very encouraged by the development of real-world evidence. So I think one of the core value propositions for what we've done is we've now recruited in multiple centers across geographically diverse implementations across a diverse patient population. We are looking at the real-world evidence equation in different ways. We can now start to measure physician response. Obviously, we talk about conversion, which is a key metric of performance for us. We can take a look at therapeutic prescription. We can take a look at different clinical workflow strategies. We can look at physician referral behavior. So with the real-world evidence machine that we've set up, 2022 is going to generate a huge amount of data. And I think... you know moving into the March quarter and certainly the June quarter we're going to start to be able to put some real guidance down in terms of the data development we're going to be publishing on that and it's a matter of time but certainly we're already getting requests from physicians about repeat testing particularly in the high and intermediate risk group it's a natural thing to do once you baseline risk assessment a patient with kidney and telex and then you prescribe a drug you want to see if it's making a difference. If you're starting to follow the patient, if you're educating the patient, if the patient is changing their own behavior, you want to start to see how that affects kidney health and kidney risk. So it's a very natural extension for us now to roll into monitoring. And another thing which is important, the landscape for therapeutic development is starting to mature. So we are seeing strong pipelines in multiple pharmaceutical companies. Obviously, we have the SGLT2 inhibitors. Bayer has finarinone. There are a number of other therapeutics which are coming online. And this is the cancer equation all over again. You want to have the ability to risk assess early. You want to have the ability to characterize the disease. And you want to start to now identify patients that are appropriate ultimately for for therapies, and you want to be tracking therapeutic response. All of this needs to be validated. All of this needs to be done in a regulated pathway, but I think what we're going to see is an acceleration of precision diagnostics and therapeutics coming to play, and there will be a lot of options for patients and physicians, and that's going to require upfront risk stratification understanding and following. It's a very rich area of development right now. We see it happening very quickly, much quicker than it did in the cancer field. And it's going to be interesting in 2022 how the data comes down.

Great. Last one for me. I know, you know, absinthe revenues are still small. You know, when does that start to become more material? And I guess similar question for DaVita. I think you're launching in three markets this year. So when do you start to recognize revenues from that?

Yeah, the pharmaceutical equation, I think, is going to be very interesting in 2022. I do believe it's going to expand. And we have learned a lot from our AstraZeneca collaboration. We've been in with real-world tracking now in the Mount Sinai health system. So I do expect 2022, I'd like to expect the first half of 2022 will be very fruitful when it comes to our pharmaceutical partnerships. And the same is true with the VITA. We are moving along. We're having a number of different discussions. It's been a learning process as we get deeper into this. The understanding of kidney disease risk and how that should be applied into the clinical pathway is sporadic across the country. It's sporadic with different physician practices. The education level around kidney risk, especially in the diabetes population where we're focusing, is uneven. That's no surprise. We've done an enormous amount of physician survey work And we've also now seen from the real-world deployments what's actually going on in the clinic. And it's been a little bit of an eye-opener. But this is the novel understanding that we're developing through these real-world deployments, and that's going to feed back up now into the strategic partnerships and applying them in 2020 to start generating revenue and to take a look at new clinical strategies. Do you have anything you want to add to that, Tom?

I think you have that covered. The opportunities here, because this area has been under addressed for so long, and the challenges of being able to target the appropriate interventions to the right patients really underscores the need for a kidney and telex risk assessment-driven approach. And we have already seen the value of that in health systems rollouts, and now we're starting to see that more broadly.

Okay, thank you. Thank you, Tycho.

Thank you. Our next question comes from Anita Dushas with Barenburg Capital. Your line is open.

Hi, good morning. Thanks for taking my questions. James, could you please share some of the trends that you're seeing in the ordering kidney intellects from the beginning of the year up until now?

Yeah, so thank you, Anita. One of the things I in particular have a focus on is conversion. So we've set up an integrated population health model. This is important. We have engaged population health in the cause to support primary care physicians and specialists to understand that we need to do risk assessment early in diabetic kidney disease patients. And so in a system like Mount Sinai, population health provides visibility to that primary care physician and says this is a patient that should have risk assessments. Now you move into the behavioral economics component, which is does that primary care physician then take the ball and start running, which ends up in a converted, executed kidney and TELEX test order. Now, we're not involved in that. This is Mount Sinai's system. This is all done independently at Mount Sinai. But what we're seeing is a very high conversion rate now, especially in new practices that are coming online. and we mentioned this in the scripted discussion, we're seeing conversion rates from pre-pended or suggested orders by population health around 80% for actual orders. That is very high, and we are very pleased with that. And if that trend continues, and you couple that now with population health pharmacy management, where you can actually prescribe a new drug to high-risk patients, you've completely changed the equation. And you've completely changed the equation at primary care. So the holy grail here and the way that you stop disease progression, you keep a healthy kidney, you create a better lifestyle, and you start to cut down on cost of progression and dialysis is you get the primary care physician to act. And what we're demonstrating with that conversion is we are getting action. I would expect the conversion rate without population health engagement, and we've experienced this before with other diagnostic test launches in the past, is substantially lower. So this integrated population health model that we are now demonstrating is really working. Now we have to scale it, but we're also demonstrating scale. We're now adding Wake Forest. We're adding Atrium. We're adding University of Utah. We're adding CDPHP. And now we're moving into the entire VA health system, St. Joseph's, others. So we are demonstrating change in behavior starting early in the disease cycle at the primary care physician level. We are demonstrating that we've engaged population health. And the model is working. So I expect 2022 we'll continue to demonstrate that. And we'll now have thousands and thousands of patients from which we can derive real-world evidence, peer-reviewed published results. And when you get to that point, that's a tipping point because now everybody says, okay, this thing is working. We have to adopt this. That's certainly my hope.

That was very helpful. And as a follow-up to that, I know you mentioned that you might have some publications coming, you know, maybe end of Q1 or Q2 calendar year. next year. So would one of the topics be around, you know, what the outcome is with the support for population health versus from those without?

Yeah, that's the benefit of the real-world evidence format, right? Our control group is in effect what's going on right now, which is quite confusing. in the clinical space. I mean, we've generated a lot of awareness now in different settings over the lack of standard of care that's being applied. And so when you now introduce a controlled population health engaged EHR integrated advanced risk assessment, you start to see change very quickly. So I do expect we're already generating significant results that will be submitted for publication in the short term. And we have many short-term utility endpoints which could have a significant downstream effect. Just creating awareness of the need to risk assess in the diabetic kidney disease population primary care changes the game. Talking, you know, for a health system to engage pharmacy management to prescribe new drugs on a system-wide basis to high and intermediate risk patients early changes the game. For primary care physicians to increase referral patterns of high and intermediate risk patients changes the game. So there's a lot of low-hanging fruit here, unfortunately, in this space. And again, we have We have the advantage because we've done this in oncology for many, many years. So applying the oncology precision medicine model that we've practiced now for decades into the naive kidney space, we believe is going to have significant and immediate impact. And then, of course, we move into the intermediate and long-term utility categories where ultimately we want to slow down progression of kidney disease. We want to prevent large population groups from upstaging to late stage kidney disease. We can do that with applied clinical management. And then ultimately, we want to reduce the number of people who end up on dialysis starts. We certainly want to start to reduce the number of people who are crashing into the dialysis. And just as a reminder, today, somewhere in the order of 50% of people who start hemodialysis in the United States, that's $100,000 a year event, do it through the emergency room. This is completely unsustainable. And so this is the model that we're applying on the front end now. And, you know, the data outs. So real-world evidence generation across multiple systems, in a variety of healthcare environments, demographics, et cetera, into the thousands and thousands of patients, this is the definitive proof that is ultimately required to change standard of care across eventually 40 million Americans with chronic kidney disease.

Okay, okay, great. Thanks for answering that. And then just one last thing about the... The number of patients that will be screened by second half next year, it's about 6,000 at Mount Sinai. So the run rate of about 300 patients per week, is that kind of a low end of what can be achieved?

So I just want to point out one thing. We are not screening. This is important. We are prognosing in an already diagnosed state. patient population. Apologies. I just have to point that out. That's very important. And that helps adoption. Because this is an existing disease population. It's already at risk. We're now coming in to say focus on these patients and the rest can go home. We'll see you next year. So revenue generation and run rates, again, we're not going to forecast because I'll inevitably be wrong. But We do have specific components. Mount Sinai has signed up for 6,000 paid testing patients. We are now rolling that out. We expect to be complete with that program moving into the June quarter of next year. The 300 test per week run rate was a figure that Mount Sinai and Renalytics came up with as a target. We do expect to achieve that moving into the March quarter. Is that a low side? I think that that's a very good target for everybody to focus on when we talk about system rollouts. We'll see how those numbers build. Certainly, the patient population is available. Mount Sinai Health System alone has 71,000 diabetic kidney disease patients in their registry. That is a significant population. We believe all of them should be baseline risk assessed. And then, obviously, as the data comes out and we're able to substantiate this, the high and intermediate risk groups should be monitored. We'll see what the frequency is. The VA medical system, again, 400,000 diagnosed diabetic kidney disease patients. Again, we believe many of them should be baseline risk assessed. And, again, high and intermediate risk patients should ultimately be monitored with clinical treatment. Health and the other health system, Wake Forest, those two systems are operating in the diabetes belt in the southeast region. Again, they have significant diabetic kidney disease populations. University of Utah. And then now we are moving into other health care systems like St. Joseph's. So there's lots of addressable markets. A lot of it is paid for. What I'm impressed with is we are now making the move in 2022 to secure broad insurance payment. We are already ahead of our expectations in terms of securing private payer coverage. We announced that we'd achieved our first Blue Cross Blue Shield coverage determination, which actually gave us Blue Cross Blue Shield coverage in two different states. That was a significant achievement for us and creates an opening to achieve other Blue Cross Blue Shield coverage determinations. And we do believe that we are on track to receive Medicare payment in 2022. So as the coverage continues to build, we will have more and more systems deployed, which creates a footprint across a significant number of diabetic kidney disease patients that we can now baseline risk assess. It's going to be an interesting equation in 22.

Great. Thank you for that, James. Very helpful.

Thank you, Anita.

Thank you. As a reminder, if you would like to ask a question, press the star, then the one key on your touchtone telephone. We have a question from Dan Aris with Stiefel. Your line is open.

Good morning. Thanks for taking the questions. James, on the 20 institutions that you're targeting for 2022, just a couple of clarifying points there. Number one, is that a goal for fiscal or calendar 2022? And number two, by my tally, that's 14 new partners that you think you can sign up in that period. Is that right? And then if it is right, what do you envision the makeup of that group being just in terms of hospital systems, payers, farmers, et cetera?

Yeah, so thank you, Dan. I'll give myself calendar 22. The consistency will be a mix of. Regional hospital system players. Intermediate and large size. And we have a number in the pipeline. And then of course the. You know the upside event here. is how far we get with the VA medical system. So, as I said, there are 171 hospitals, I believe, in the VA medical system. As we've said from the beginning, we are working with VA on both individual hospital systems on the VISN level, which is the regional level, and then we're also working nationally with VA. That could very much be a swing vote which puts us in a different position in calendar 22. I think we have figured out over the last two years how to do this and do it well. Certainly the way we present the value proposition to the hospital systems has evolved and we are much more efficient in our discussions. And the health economics and the clinical programs have only become more attractive. So as we engage in discussions with new hospital systems, the talks are much easier. And of course, the key for us is we have to reduce implementation time. So we did talk about that in the preamble today with Wake Forest, where implementation time was reduced from contract to go-live testing in six months. We expect to bring that down even further to three or four months as we actually get a more streamlined, simplified program to create a testing environment with care management and pharmacy management in each one of these systems. So we said 20 is a target. For 2022, I very much believe that that is doable. If we end up with success to be a medical system, we may exceed that. Let's see how it goes. But certainly, I think the management team is very pleased now that we've proven the model. It started generating results. And this engagement with population health is a significant differentiated advantage. We are partnered now to turn on large groups of primary care physicians and support them and enable them to do risk assessment early with specific action. So we know the model works. Now it's time to lean forward and accelerate it.

Okay, just maybe one more clarification on top of that. Is the VA counting as one underneath that 20 institutions, or are you considering multiple VISNs under the VA as part of the 20?

That's a great question. The VA is an open field for us. So how I'm counting it, that's a good question. I actually think if we're looking at individual hospital systems, I think the VA could contribute a number towards that 20. If we end up with a national component or even a VISN component, that number could increase rapidly. So no, the VA is its own category. And again, I have to emphasize this. We have a 10-year General Services Administration contract, which pays for all testing at $950 per reportable result. We have no reimbursement limitation there. Nor do we need any other regulatory component. This is a immediate addressable market opportunity for us. And obviously that's why we're hiring Salesforce. We're hiring medical science liaison customer service, but back to your original question, I think the VA will present multiple hospital systems for deployment of kidney Intellix in 2022.

Okay. So if you were to sign up for visions in 2022, then that would be for counting towards the 20 institution goal that you're having, that you have.

So, Tom, jump in on this one. The VA has 171 health centers, which are health systems. They operate independently with their own network of CBOCs. So there are multiple health systems in each vision region.

Okay. I'm sorry, guys. I'm not trying to belabor a point. But what should the assumption be for the VA within that 20 institution goal that you have for 2022?

So I don't have a number. It should make up a quarter of that if I have to stand on something. But, again, if we're successful at the vision level, it could well exceed that. If we're successful at the national level, then we're talking about a whole different game. But when I talk about the 20 hospital systems, I'm really looking at large independent hospital systems like Mount Sinai, Atrium, Wake Forest, et cetera. The VA is a lot of upside. But let's see how it plays in the March quarter.

It's a good question. Thank you very much.

Thanks, Amanda. Thank you. And our next question comes from Mark Massaro with BTIG. Your line is open.

Hey, guys. Thanks for the questions. I guess, obviously, you know, the FDA has been busy reviewing COVID submissions. You know, I do think one value creating milestone for you would be to secure FDA approval. I guess, can you just give us a sense for how that review process is going, you know, whether or not the dialogue is moving, you know, iterative conversations going back and forth, or has there been, you know, months' worth of not hearing anything? I'm just trying to better understand how that conversation is going and just try to handicap when you think, you know, comfortably do you think you can get FDA approval by the end of fiscal year 22?

So I am loathe to be pinned down to FDA timing. Thank you, Mark. It's good to hear you on the call. Let me answer the question first, and I'll give you some color. I won't give FDA timing. As I've said from the beginning, that's a fool's game, and I've been that fool before. I don't want to be that fool again. The process is moving well. We believe we have a good application. We have a very good understanding. We have a significant amount of third-party expertise, which is at the table. Many of these folks don't take prisoners. They're very data-oriented, statistical-oriented. We've mentioned some of the folks that have been involved, so I think we have one of the highest iterations and solid basis for an FDA regulatory process that I've experienced in my career. That being said, I'm not going to comment on timing because I will inevitably be wrong. The agency, as you know more than anybody, has been under a considerable amount of stress, and there's been consequence across the board for that. I talked to many other CEOs, all of whom are having similar experiences. But I'm confident that... you know we're on the right track and the communication with FDA has been very good and very comprehensive so FDA will come when FDA will come in the meantime obviously we intend to build a very significant business and obviously FDA is important but if you ask me what the number one reimburse number one risk factor associated with growth its reimbursement and I've said this from the beginning when we started the company we talked to the management team, and I said, look, we've got three things we have to worry about. We ultimately know how to do FDA. We know how to build a sales force. We know how to build a product. We know how to build a business. We've got to focus on reimbursement, reimbursement, and reimbursement, because if you don't get paid for your product, then you don't have a revenue stream. You can't access the capital markets to fund all of the other things that you need. So reimbursement has very much been a focus, and we're succeeding there. FDA will help that. Do I expect an FDA de novo marketing authorization in this fiscal year? I do. That is my expectation. We are building for that component. But again, nobody can guarantee this, especially in the COVID era. How's that? Did I answer that question well enough?

You did. That was perfect. And then just my last question is on the real-world evidence study from Mount Sinai, I guess. Should we expect you to publish that in a peer-reviewed journal? And then can you just remind us what you expect the primary and secondary endpoints of that study to be?

Yeah, you should expect multiple peer-reviewed publications out of Mount Sinai and other real-world evidence studies. studies that we're running this is a very powerful cornerstone for renalytics it's not easy to set up these large real world evidence programs we did it from the very beginning understanding that real world evidence ultimately drives a regulatory pathway through multiple product versions it ultimately drives reimbursement and of course it proves the case for physicians and healthcare systems that this is the right way to go to manage chronic disease. So the real-world evidence machine that we've set up is extensive. It's comprehensive. It is looking at multiple short, intermediate, and long-term endpoints. Short-term readouts, which we expect in 2022, start with things that we've already talked about, like conversion. If you engage population health, which is very important for a capital-efficient diagnostic deployment, right? as opposed to creating a huge fixed overhead hiring a massive sales force for a strictly push marketing approach, by engaging population health, it changes the entire return on investment capital equation. We're now able to reach up front large treating groups of physicians and patients with population health leading the way. and we're already starting to see proof of that with conversion so when we talk about a conversion of prepended or suggested orders by population health to actual executed orders especially at the primary care physician level approaching or exceeding 80 percent i have never before in my career seen that type of utility now that's one metric now you have to look at the downstream follow up. What happened to those patients? Were they high risk patients referred to nephrology? Did they have new drug intervention? Did they have behavioral modification? So this is a very rich environment. In a relatively open field, we would not experience this in oncology and cancer. But in kidney disease, it's just wide open for innovation and it's wide open for novel data around utility. especially around this thing behavioral economics, which is physician and patient behavior when presented with information, in this case prognostic information, early in the disease cycle where we should be able to generate maximum effect with clinical action and prevent people from moving on to late-stage kidney disease. That's the whole point. Let's maintain kidney health. and can we really drive the utility equation around maintaining kidney health? And that has short term implications like conversion, but ultimately we would like to show that we are slowing down progression of patients into late stage disease. Ultimately we'd like to show that we are limiting the number of patients that have to experience dialysis. And this real world evidence machine that we've set up is important. This has not gone unnoticed by strategic partners, pharmaceutical partners, medical device manufacturers, service providers. How did we get into a position where we are now integrated with large healthcare networks and starting to generate this type of real-world evidence? This has implications across the entire industry for how different devices, drugs, services, clinical management strategies can ultimately be applied. So this is going to be an ongoing equation for several years, but in 2022, uh, we're going to be able to submit for peer review publication, uh, a number of significant utility endpoints across again, thousands of patients, which will then evolve into, uh, multiple treating facilities in different demographics across different patient populations. I can tell you from my own experience sitting here in Salt Lake city, my care And the people I speak to is very different than sitting in New York City. So in New York City, your interaction with physicians really come down to primary care and specialty interactions on almost a one-for-one ratio. Out here in Salt Lake City, I have much more interaction with primary care and nurse practitioners than I do with specialties. So you have to understand the details in all of these settings if you're going to be successful at driving a new standard of care for advanced prognosis. Sorry, I'm going off the deep end here, but this is what creates such an exciting equation for 2022.

Okay, thank you. And as a reminder, if you would like to ask a question, press the star and the one key on your touchtone telephone. Again, that's star one to ask a question.

All right, well, it sounds like we've answered most of the questions. Again, everybody, thank you for dialing in, and please have a safe and happy new year. Operator, back to you.

That concludes today's conference call. Thank you for participating. You may now disconnect.