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spk06: they could be taken to surgery or put on treatment faster if they have lung cancer, or can avoid further workup, including risky invasive procedures, if their nodules are benign. Our Percepta Atlas will provide what we believe will be the most comprehensive gene alteration information in lung cancer, helping to direct patients to appropriate targeted therapies that are available or in development promptly at diagnosis. Importantly, it will also serve as a vehicle for building the first biorepository of lung cancer biology to include early stage cancers. We plan to hold a virtual investor R&D day on December 16th, focused on our lung cancer franchise. The event will allow us to share new data for our nasal swab tests and our Percept Atlas as they continue to advance in development. Investors will hear from thought leading physicians about how our lung cancer portfolio is positioned to positively impact patient care and we will provide a deeper look into our scientific approach and data. We'll provide updates on progress across our lung cancer portfolio which we estimate has a total addressable market of $40 globally. Stay tuned for more information about this event shortly. I will now turn the call over to Keith for a more detailed review of our third quarter 2020 financials.
spk01: Thank you, Bonnie. I'll also refer to our business and financial presentation, which you mentioned earlier and which is available on our website. Turning to slide six, the table and footnotes shown here, along with the details in our SEC filings, further explain how we recognize and report revenue under U.S. GAAP. For discussion purposes, we may combine testing and product revenue to describe our diagnostic testing business and biopharma and collaboration revenue to describe our strategic arrangements. As a reminder, net sales of data or other services to our customers are classified under biopharmaceutical revenue and all other non-customer revenue are classified under collaboration revenue and are consolidated statements of operations and comprehensive laws. Turning to slide seven, our performance against six key performance indicators or KPIs for the third quarter of 2020. compared to the prior year third quarter was as follows. Total revenue of $31.1 million was in line with the prior year quarter. Testing and product revenue of $30.3 million increased $3.6 million, or 13%. Biopharma revenue of $0.8 million decreased $3.4 million, principally due to the recognition in the prior year quarter of $4 million in revenue from Johnson & Johnson. Gross margin of 67 percent declined 400 basis points principally due to the decline in biopharma revenue. Gross margin excluding biopharma revenue was 66 percent in both the current and prior year quarter. Operating expenses excluding cost of revenue of 24.8 million increased 1.2 million. Net loss of 4.1 million increased 3.4 million due principally from lower biopharma revenue, reduction in interest income on invested cash, and higher amortization of our intangible assets. Net cash provided by operating activities was 1.8 million compared to $1.6 million used by operating activities in the prior year third quarter. The $3.3 million increase in cash flow from operations relative to the prior year quarter is due to a $4.9 million reduction in networking capital, a $1 million increase in depreciation and amortization, a $0.4 million increase in stock-based compensation, and a 0.4 million increase in other operating cash flow items, offset by a 3.4 million increase in our net loss. Genomic volume of 10,242 increased 3% and included 9,437 of FIRMA, 502 Percepta, and 303 Invisia-reported tests. From the second to third quarter of 2020, sequential reported test volume increased 97% for Afirma, 52% for Invisia, and 30% for Percepta. As Bonnie has mentioned, we expect the pace of recovery to remain more gradual for Percepta principally from fewer underlying procedures performed during the pandemic. Slide 8 provides a further breakdown of revenue into testing and product revenue, biopharm and collaboration revenue, and total revenue. As previously mentioned, testing and product revenue increased 13% or $3.6 million for the third quarter of last year, offset by a 3.4 million decline in biopharma revenue. Total revenue was slightly above the prior year quarter. Testing revenue of 28.2 million includes two million in cytopathology services. Slides nine and 10 illustrate our pacing and performance year to date against the same KPI metrics, as well as break down our revenue into testing and product biopharma and collaboration, and total revenue. Year-to-date, revenue is down 8% and genomic volume is down 9%, principally due to the impact of COVID in the second quarter. For the three months and nine months ended September 30, 2020, we accrued on average between $2,800 and $2,900 for both the Affirma classifier and Expression Atlas which met our revenue recognition standard. This was between 90 and 95 percent of the reported Affirma classifier test volume. The next eight slides outline the sequential and year-over-year results underlying each of the KPIs. Consistent with prior quarters, we present genomic volume trends on slide 12. Genomic volume includes commercial volume for Affirma, Percepta and Mendizia genomic classifiers. Genomic volume represents tests we perform in our CLIA laboratory. In December 2019, we acquired the Procigna breast cancer prognostic gene signature assay, which is the only commercial test we sell on the encounter platform as of September 30, 2020. We intend to expand our offering of diagnostic tests sold or distributed to third-party laboratories to run on the encounter platform, which we also intend to include in product revenue. To give investors insight into our total test volume trends, we added tests sold to third-party laboratories that met our revenue recognition standard to our genomic volume and showed those trends on slide 13. On the right-hand graphic of slide 13, we identified the quarterly volume of commercial ProSigna tests sold since we acquired the test in December 2019. For those of you that are not viewing the presentation, those volumes are 680 in Q4 2019, 2,482 in Q1 2020, 1,249 in Q2 2020, and 1,448 in Q3 2020. From the second to third quarter of 2020, the sequential reported test volume increased 16% for Prosigna. We expect the pace of recovery to remain more gradual for Prosigna, principally from fewer underlying procedures performed during the pandemic. We continue to see a rise in reported COVID cases and expect governments to continue to evaluate restrictive measures to attempt to contain the spread of the virus. We are uncertain that inter-quarter or seasonal trends we typically see in the business will hold in light of COVID. We have been encouraged by the recovery to date. As a result, a continued rise in cases in the impending flu season. We remain cautious about predicting the slope of the recovery. In light of uncertainty in the market, we are not currently returning to giving guidance. We continue to expect minimum corporate travel and expense associated with large group meetings, and we plan to continue to leverage digital and virtual selling. We believe it's prudent to plan for the impact of the pandemic through 2021, and we hope to continue to update you each quarter as we manage through this very challenging time. As shown on slide 18, we have $340 million in cash, and we believe we have significant resources available to manage through the pandemic. I will now turn the call back over to Bonnie.
spk06: Thanks, Keith. In closing, I'll refer you back to our key takeaways on slide four of our business and financial presentation. We are very pleased with our third quarter results as our business is rebounding from the pandemic ahead of schedule. We have significant momentum across all of our products, both our original test performed in our CLIA lab and our Persigna breast cancer assay. This includes strong revenue and volume growth along with reimbursement milestones and evidence development to further fuel progress. We are on track to launch four novel genomic tests in 2021, including our nasal swab test and Percepta Atlas as part of our expanding lung cancer portfolio. And we continue to exercise strong financial discipline with margins in line with expectations and positive cash flow from operations in the third quarter of 2020. Importantly, with our successful equity raise in August, we now have $345 million in the bank and no debt, giving us extensive strategic flexibility as we establish ourselves as a global genomic diagnostic leader and position the company for long-term profitable growth. With that, I will now ask the operator to open up the call for questions, please.
spk03: Ladies and gentlemen, if you have a question at this time, please press star then the number one on your touchstone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. Please wait while we compile the Q&A roster. Your first question comes to the line of Punit Suba from SFVV Lyric. Your line is now open.
spk02: Hi, Bonnie. Thanks for taking the question. So first of all, congrats on the strong quarter here in terms of volumes. Affirmative volumes obviously came in strong, but on pulmonology, volumes were a little bit weak. And as you pointed out, it could be due to the procedures. And so I just wanted to understand, I know you mentioned bronchoscopists were distracted with COVID-19. I assume that's what's continuing to be the case here in third quarter. And I'm wondering if you could confirm that and what are the expectations for improvement in light of this continuing as we continue to deal with COVID. And then on ProSigna, you know, good to see that you're reaching the volumes for the full year already in terms of the revenue. But wondering how should we view that in light of the recent EU shutdowns?
spk06: Yeah, well, on the back of COVID, that's why we keep taking caution with everyone. The historical actuals are what they are, but it's still difficult to predict the future. But look, back when this all hit, we predicted our Affirma business would be the first to rebound. And we're correct on that. Affirma has a large percent of the market that is physician offices. And it's very easy for physician offices to open to patient care and control the flow of patients very easily. We continue to see hospital environments take restraint and the flow of patients has not reached what it should be both by our data and other folks' data. I think Invisia is doing well, but keep in mind the prior year numbers were really low on Invisia because it was just getting off the ground. So all in all, I think we're very pleased with all of those products. And then when you add to that the tremendous progress in hitting Prosigna's original annual number through the first nine months, I'd say we're really pleased on all of those fronts. Um, I think that the lung cancer, uh, workups will slowly, you know, assuming COVID doesn't create more shutdowns, which it may, uh, we will begin to continue to see those procedures, uh, unfold, uh, like we are. Certainly there's been growth there over prior quarter, uh, but just not to the magnitude of the others. And, um, Yeah, I would say our European market is obviously the strongest for Persigna. It is both the fact that we have continued to gain great reimbursement coverage, had a really big win this quarter in Germany, which is a huge market. We're super excited about that. And keep in mind, when we brought the team over for Persigna, we kept all of the people associated with the EMEA business in place. We've since actually added a few positions and we continue to plan on adding a few more positions here and there as we go into 2021 in anticipation of launching our second menu item, Invisia, on the Encounter in addition to Crescigna. So all in all, we're super pleased with where things are and we think we're in a great position to continue the momentum.
spk02: Okay, that's very helpful on the details. On the nasal swab, I know you're providing a complete update here on lung cancer portfolio in December. But just in terms of, you know, going into that event, if you could lay out for us how should we be looking at this data And sort of the, you know, traditionally Verisight has taken an approach historically where you have steadily build data and clinical evidence behind an assay over time. Should we expect this to be any different? And should the data by you know, year end that you're expecting here, should that be sort of, should we assume that is going to be a little bit more accelerated for potentially for publication and a reimbursement after that? I know you have provided the 2021 timelines for this, but just trying to understand as we go into this data set, how should we be actually viewing, you know, this data in light of past assays that you have delivered? Sure.
spk06: Well, I'll give an intro, and then I'm going to bounce the ball over to our Chief Science and Medical Officer, Julia Kennedy, and let her actually walk you guys through how this works. I mean, we've been down this rodeo a few times. We're not doing anything different this time than what we've done in the past, and you're right. It is an entire series of data that starts in the early feasibility work, like what we presented last year at CHESS, and goes ongoing through the whole process of launching the test. But typically final validation data for publishing the validation of a study is not going to come late until late in the process because there's still additional studies and work that has to be done before you're ready to unveil that. But let me turn it over to Julia. Have her walk you through that and then maybe give you a little peek at the nature of some of the data we expect to show on R&D Day as well. Julia?
spk04: Sure. So we've been training our algorithm, which has included developing many candidate algorithms, and then we obviously refine them to ensure that we're accounting for all the various lung biologies that we would in the real-world clinical practice, different cancer stages, nodule locations, and other factors. So we continue to explore those. And right now we're still in algorithm training, but we do expect to lock our algorithm within the next several months. The next steps would be to do typical to what we do with all of our products, extensive analytical verification studies, and these are designed to provide a view toward the robustness of the test. And then once we're satisfied with that, in advance of commercializing, as Bonnie said, we would be unblinding the independent validation test sets late in the process when we're sure that we have the algorithm that we've locked that we're satisfied with. And just to color into what we'll be presenting at the R&D day in December, since we've last unveiled data at CHEST of 2019, where we showed some early feasibility for the nasal swab classifier, we've since then acquired additional samples, cohorts, to add to the training. and have added both their genomic data and the clinical data to our various algorithm development exercises. So what we're going to be presenting in December is what's called cross-validation data. It's not an independent test that is within the training set and on various versions of the algorithm because, of course, we haven't locked yet. We'll continue to refine these draft algorithms until we determine we're ready to lock and pick a final choice. Investors should see more data on more patient samples, a view of some of the development hurdles that we've encountered along the way and how we've solved some of those hurdles. and how close we continue to believe that we'll be close to the early feasibility data, which the key opinion leaders that we work with are quite excited about. At that time, we'll also highlight clinical positioning, data, patient benefit for all of our tests in the Precepta lung cancer portfolio across that portfolio. So that's what we can expect at R&D day next month.
spk02: Thanks, Julia. That's great. Thanks for all the details. I really appreciate it. Last one, if I could squeeze in, Bonnie, Invisia ADLT, that was great to see. Great to see the reimbursement here, but just trying to also understand, you know, how are you thinking about the uptake of that product now with ADLT? And if Keith could elaborate how accretive could this be longer term in terms of gross margin at peak levels on encounter? Thanks so much.
spk06: Sure. I mean, yeah, this was a great success. The test was priced at $5,500. As you know, Invisia is the eligible patient population for Invisia is about 70% Medicare eligible patients. So you can kind of do the math. Having an ADLT and then what we believe will be a stable PAMA rate out of the commercial range. calculated data that will be going to effect next July that sets us up to see some nice expansion in reimbursement for tests going through 2021 and beyond.
spk01: All right, great.
spk06: Keith, anything to add to that?
spk01: No, you covered that. Thanks, Bonnie.
spk06: Okay.
spk01: Making my job easy.
spk06: Thanks, Keith. Appreciate you joining.
spk03: Your next question comes to the line of Soongji Nam from BTIG. Your line is now open.
spk05: Hi, thanks for taking the questions, and congratulations on the quarter. Maybe, Bonnie, I'm just curious to hear your thoughts in terms of potential delays in terms of lung cancer diagnosis, and what are the implications, do you think, for Verisight, you know, going forward over the next 18, 24 months, or even beyond that?
spk06: Well, sadly, I would say that the implications of COVID to any cancer workup, you know, certainly we spoke to this early on in breast cancer, patients weren't running out to get their mammograms done. And I think that it's sad to imagine that three years from now, we may actually be in a position where we see more later diagnosis on these cancers that are big killers. So You know, I hope that we can get the health institutions and patients kind of rallied behind the call to make sure these patients do go get the screening protocols that are designed to save their lives. whether it's a mammogram for a breast cancer patient or a low dose CT for a patient eligible for free screening for lung cancer. And as we amp up our efforts on both of these clinical indications, we are certainly going to be advocating for that because the last thing we want is to start to see those cancer rates and late stage diagnosis go up two to three years from now.
spk05: Okay, great. Thank you for that. And then it's great to see the firma volume recovering very nicely. And I realized that the there is still uncertainty with you know, pandemic related uncertainty going forward. But would you would you guys be able to share even if qualitatively what the volume trends look like for firma for the month of October?
spk06: Yeah, I mean, I think that, you know, we're pretty comfortable that You know, the trends that we saw in this quarter we expect could carry through Q4. We're obviously wanting to shine light of giving any guidance in that regard. But maybe Keith has a few words he could point to on the Q4 peak. Keith, anything you can add there?
spk01: No, thank you. You know, we had a really good strong quarter, and there's a lot of uncertainty. October, you start to see, you know, the case load go up, and then obviously it's the election, and there's a lot of politics going on as well. And so, you know, we don't really know what's going to happen in November and December, but October trends were similar to what we saw in the third quarter, and we were encouraged by that. So, Affirma was doing well, and then Percepta still maintained similar sort of declines relative to the prior year, but still good numbers, and then Vizia is doing well. So, we'll see what happens for the quarter, but if it comes out in line for third quarter, and then where our testing and product revenue will be, you know, it'll end up being what it was in the prior year, which would be a big win for us in light of all the pandemics.
spk05: Great, that sounds great. And then just lastly, from me, I'm not sure if this will be discussed at the investor meeting in December. But the noble study just kind of curious, is that largely to continue to enhance your existing tests? Or is that to develop new tests in lung cancer?
spk06: Yeah, then the noble study is for future. We have not been dependent on any of our developments for building new cohorts, which is why all of that work could continue uninterrupted with COVID. But because we're doing so many great things in lung cancer and we ultimately want to be able to move upstream, we have a slide in our deck that illustrates this so elegantly that You know, once we're able to intercept a patient with a known nodule and guide that patient to get people with cancer into surgery or treatment early, keep the people with benign nodules out, we then want to move upstream and see if we can use the nasal swab to identify patients pre-cancer. And that's a big part of our work with J&J. And so the NOBL program is built around that future.
spk05: Great. Thank you so much.
spk06: Thanks for joining our call, Sanjay.
spk03: Your next question comes from the line of Brian Weinstein from William Blair or Lying Snow Open.
spk00: Hey, guys. Thanks for taking the question. Good afternoon. I think we just start with a couple on nasal risk and then one on encounter for you, Bonnie. But on nasal risk, Can you just go through the TAM here and how you build up to the, I think it's 750,000 patients and how the new USPSTF draft changes the way that you view what that opportunity is? And then can you talk about the minimum performance levels that you think are necessary from the PPV and NPV side? I believe that the data was 76% on the PPV and almost 98% on the negative predictive value from the data last year at CHESS. But How should we think about that relative to kind of where things ultimately need to be?
spk06: Yes, very good. So, well, I would say, first of all, the feasibility data that we put out sort of showed our cards in terms of where we think roughly the ultimate test needs to be. But the critical level for the cutoff on the low-risk side is obviously sensitivity and while the key aspect of cutoff on the upper end is specificity. I think we're very comfortable. We're going to get to cutoffs that have those two ends characterized very well. And then the question just becomes the number of patients that we can put into those buckets. So how many of the true benign patients can we keep from undergoing a workup? Making sure that we continue to drive a cutoff that's going to be highly sensitive I think our NPV on the early set of data was something like 98%, which was remarkable. And then on the upper end, sort of the opposite. If we're going to cut off and create a highly specific test, we want to make sure that we are not putting a lot of benign patients falsely into that bucket. And so the question will become, do we continue to move 50%, 45%, 55% into that bucket I would say on both of those, we wouldn't need to get to the same numbers that we got to to move to high risk or low risk for feasibility to have a very, very acceptable test. The key is not letting the sensitivity on the low end or the specificity on the high end suffer. Those are the key metrics. We'll look forward to moving the data along, showing a little more data on the cross-validation side at R&D day and giving people a little more flavor to that. You know, the TAM is really fairly straightforward for us. The TAM will increase if, in fact, the preventative task force comes out and makes a final decision to lower eligibility criteria for patients getting screened. We typically don't change our numbers on market sizes until after those things get finalized because then you're just moving numbers all over the place. We also tend to not really look at the number of patients that might get screened and find to have nodules because there are a lot of parameters set up out there that you know very well. that not every tiny nodule that is found is going to be paid to be worked up. And that's correct, because if a patient has a two-millimeter nodule, the last thing you want is that patient getting worked up. And so we size the market using the criteria that already exists on what patients with lung RADs, if they're coming through screening, or what the feature characteristics are of the nodule, if it's an incidental nodule, to size, the number of patients that we believe in today's market would be referred for workup. And those would be all the patients that we would expect to have our test paid for.
spk00: Got it. That was very clear. Thank you so much. And then on encounter, and we're about a year in here, can you just talk about the updated view on that product and the opportunity and and how well it has advanced over the last year?
spk06: Yeah. So first of all, I would say we have just definitely reconfirmed that we picked up the best platform for doing distributed testing that exists. There's no doubt in our mind. This platform is incredibly robust. Of, you know, the hundred plus customers that we have around the world, running Presigna on this platform, we have one technical service person that supports all of those customers. That tells you how incredibly robust this platform is. Now, when we acquired the platform, we were very clear that we weren't going to go out and early on proliferate a lot more accounts with a lot more instruments because, quite frankly, that was the challenge Nanostring had. is it's very difficult to justify a high cost piece of equipment on one single menu test on that platform. And so instead, we put our effort into accelerating menu. We've advanced the Invisia test. That will come out late next year as a new menu item on the platform. We've advanced our lymphoma test through our collaboration with Asserta Pharma in lymphoma. and look forward to adding that menu to the test. And then we remain on track to move the nasal swab test over to the encounter following its launch in the U.S. market, which will happen second half of next year out of our CLIA lab. But we've got partners now that are looking to expand that menu, including CureDx, whose work is still underway. We've got the COVID testing with our partner, Mavidx. And I would say we also have a tremendous pipeline of interest from pharma companies that are working and collaborating with Nanostring today. We built a bridge so that as those companies reach a point where they're ready to entertain moving a CDX along, they get handed off to us, and we will determine at what point should we then enter the enter the situation and migrate that customer from a nanostring research customer to a Verisight clinical diagnostic customer. So there's a lot of every, I'd say every lever we pointed to as value creation when we announced that deal has been confirmed that that still is the case. And we're very excited about where we are. I think next year, As we come toward the end of the year and begin to unfold these new menu items and begin to just re-accelerate Prosigna on the back of new coverage decisions, as I said, we've hired a couple new country managers. We've hired an additional marketing lead for EMEA. We're set up very nicely to see the win off of this deal that we did less than a year ago.
spk00: Got it. Thank you so much.
spk06: Thanks for joining us.
spk03: Your next question comes to the line of Thomas from Lake Street Capital. Your line is now open.
spk07: Great. Thanks, guys, for taking the questions. Just one for Keith. On the gross margin excluding biopharma, can you talk a little bit about what you think we should be or how we should be thinking about that? You're kind of back to where you were mid last year. It seems like a happy place for the gross margins to be. But, you know, particularly as we roll into 2021, can you give us some flavor for how you see that evolving?
spk01: Yes. As we said before, we try to keep, call it a 64% to 66% margin here as we're launching multiple tests. Obviously, Affirma, the more we do in our mix, it's further along the reimbursement curve. That obviously helps. But 64% to 66% is where we'd like to see that. And we obviously, Q2, you know, we got to test what the bottom of that may look like and the shock and the volume. So we have some downside protection there. So I feel pretty good about it.
spk07: Great. And then... I know you guys are incredibly busy with an exciting 2021 coming out, but I'm trying to balance that against this cash balance that you have. Are there thoughts from a strategic perspective? How are you thinking about best utilizing that cash position? Are there additional tests that you're looking at bringing on board? Or how should we think about how you might utilize that cash you have on hand?
spk06: Yeah, that's a good question. I mean, I think ultimately we're set up with incredible strategic flexibility now having no debt and having substantial cash in the balance sheet, we feel good about that. Look, over the next few years, we're going to be executing on all sorts of fronts to accelerate this business, take advantage of what we now have and what we have the ability to accelerate. And that's going to mean taking on some new capabilities and certainly you know, expanding menu everywhere we can to become a global advanced genomic testing company with the broadest menu reaching the global markets. And so I think there's multiple ways we could use the cash, but we'll, I'm sure, be smart and pull the trigger and things that seem to make the most strategic sense for the business.
spk07: Great. I appreciate you taking the questions. Thanks, guys.
spk06: You bet. Thanks for joining us.
spk03: Your next question comes in the line of Tejas Salvan from Morgan Stanley. Your line is now open.
spk08: Hey, guys. Thank you for taking the time. This is Edmond on for Tejas.
spk06: Hi, Edmond.
spk08: Hi, guys. Just to circle back on, I guess, your outlook and your thoughts on 4Q and beyond, I appreciate the color that you guys provided on your reasons for being cautious and not providing the guidance. Given your performance in third quarter, is there anything else behind this more than just conservatism? Like, are you actually seeing any reversals of trends among your physician practices or hospital settings, or is it purely just being careful?
spk06: Yeah, we aren't, but I think as you pick up the newspaper every day, or I guess you don't pick that up anymore, you go online and look at the news every day. It's just a really uncertain world we live in out there. I think we don't feel like we have any greater crystal ball than anyone else, and that it just behooves us to not provide guidance in a world that's incredibly uncertain for That said, we're really pleased with where things are. As Keith said earlier, you know, October remained strong, which is great. But clearly, you know, it's hard to see out a couple months in the environment that we're in. And then we probably will provide guidance for next year as we come off of our Q4 call. I think we'll have a lot greater line of sight to what might be possible for next year at that point.
spk08: Got it. Thank you very much. And I guess kind of in similar lines of looking forward, you guys had mentioned that you were rehiring some people ahead of your product launches that you were expecting coming up. But just in terms of your operating OpEx side, How should we think about your scaling up of your sales force, given that you had to lay off some of the employees earlier in the year? How should we think about this in 4Q?
spk06: I'll let Keith get into some of the numbers, but look, we're living in a different world now. We have embraced and our clients have embraced a whole new world of digital and virtual engagement. Digital education, medical education has always been our number one marketing program because continuing to have peer-to-peer education on our products is what moves the needle on adoption. So we've embraced that. John Hanna pivoted very early on. And with that working so well, you just have to be smarter around the number of feet you have on the ground, et cetera. Keep in mind, though, that next year we are going to be, you know, moving toward the introduction of new products. That's going to mean market opportunities to expand. And, you know, I'm sure that we will continue to layer in more reps in our sales and marketing organizations as we get organized around exactly how to bring these four products to market on the backdrop of what we're doing today. But I don't know, Keith, do you have any operating expense insight there?
spk01: Yeah, I think this quarter we've always talked about sales and marketing or our acquisition costs getting to a target of around 35%. which is where we ended up this quarter. So I think we're in a point where people aren't traveling and digital is taking over. We think that's great. I do believe our sales and marketing, as we ran multiple tests, will go back up to 45% of sales. But long term, I think the point of what's possible this quarter is indicative of that. And so I'm less concerned with the amount of money we have and how disciplined we tend to be that if John Hanna goes from, say, $11 million this quarter and he spends $14 million or $15 million in a quarter as we ramp that, that that's not a problem. We need to penetrate those markets. We need to get physicians using the test. This is not a perfect world. The reason we have this capital is so that we can go in there and smartly address each of those markets. And so I'm pretty optimistic about the future.
spk08: Got it. Thank you, guys. That's very helpful. And just one last one for me. Can you provide us with a little more color on your collaboration with NaviDx on COVID-19? I know you guys had stated that you still expect to submit your EUA submission by year end, but has the fact that the FDA stopped issuing EUAs impacted this at all? And given that rapid antigen tests have scaled up rapidly and qPCR is still considered the gold standard, where do you see the NaviDx solution filling the gap in here? Thank you.
spk06: Yeah, well, first of all, MaviDx isn't exactly a collaboration. We basically granted MaviDx the rights to use our technology and platform to develop a very high ultra high throughput COVID testing machine and he they are doing that you you may or may not recall. The founders of Mavidx were the original inventors and founders and CSO of Nanostring. So they know the technology behind the product probably better than anybody. And what they're doing is taking advantage of the multiplexing capability that we like in the test. We like being able to put 800 genes into a single test. what they're doing is taking advantage of that sophisticated large-scale multiplexing and multiplexing many patients to a single COVID gene. And that's going to allow them to get to thousands of patient throughput in a given run. And the EUAs from FDA have halted with the exception of very high-throughput testing because that is exactly the unmet need out there. Um, you know, there are
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