Exagen Inc.

Greetings, ladies and gentlemen, and welcome to the Exigen, Inc. Fourth Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during this conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to our host, Mike Cavanaugh, Investor Relations for Exigen. Thank you. You may begin.

Good afternoon, and thank you for joining us today. Earlier today, Exogen, Inc. released financial results for the quarter and fiscal year ended December 31, 2020. The release is currently available on the company's website at www.exogen.com. Ron Rocca, President and Chief Executive Officer, Kamal Adawi, Chief Financial Officer, and Mark Hazeltine, Chief Operating Officer, will host this afternoon's call. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including without limitation statements regarding our business strategy and future financial and operating performance, including 2021 guidance, the impact of the COVID-19 pandemic on our business, our current and future product offerings, and reimbursement and coverage are based upon current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please see our filings with the Securities and Exchange Commission, including our Form 10-K and subsequent filing. The information provided in this conference call speaks only to the live broadcast today, March 16, 2021. Exogen disclaims any intention or obligation, except as required by law, to update or revise any information, financial projections, or other forward-looking statements, whether because of new information, future events, or otherwise. I will now turn the call over to Ron Rocca, President and CEO of Exogen.

Thanks, Mike, and thank you to everyone joining the call today. As always, we appreciate your continued support of XGEN. We are very pleased with the exceptional performance in the fourth quarter. Our testing franchise continues to grow despite well-known challenges that patients have visiting healthcare providers. During the fourth quarter, we delivered a record 28,601 of our flagship advised CTD tests, which includes our advised lupus test, and in back-to-back years of over 100,000 tests for the full year. We believe this is a testament to the value patients and healthcare providers receive with our advised suite of testing solutions. Due to the pandemic, patients must make additional efforts to visit their doctors and get their symptoms correctly diagnosed, making our test volume even more impressive. This gives us confidence in the continued growth of our testing franchise especially as COVID-19 related restrictions ease and patients can again freely visit their healthcare providers. Along a similar vein, we saw 1,690 ordering healthcare providers in the quarter, including a record 635 adopters. Moreover, we had a high retention rate of 99% among adopting healthcare providers. Again, we are very proud of these numbers given the circumstances. This further demonstrates the unique utility of our advice franchise to rheumatologists who are challenged with clinically difficult to diagnose diseases. Additional value provided by our advice CTD test during this pandemic is the convenience and accuracy to cover multiple connective tissue disorders versus serial testing, which could take many doctor visits over numerous years. As we have said before, life-threatening diseases like lupus and chronic disorders like rheumatoid arthritis do not stop during a pandemic, and testing cannot either. With the pandemic making it more challenging for patients to see their doctors for treatment, the necessity of tests that can speed up the diagnosis and prognosis of autoimmune diseases is apparent. We believe our advised brands can address that need better than anything currently on the market. The Symphony Co-Promotion Agreement which was amended in December, delivered revenues of $1.7 million in the fourth quarter, which was near the contractually quarterly ceiling for the second consecutive quarter. That said, I do want to take this opportunity to provide some perspective around the future expectations. When we consider the opportunity provided by the new amended agreement coupled with COVID-19 pandemic Going forward, we expect Symphony revenue to come in at the quarterly contractual minimum of $300,000. As always, we evaluate our product portfolio and allocate our important resources to the opportunities to generate the most value for our organization and patients. I'd like to now turn to our sales force, which is a key driver of our performance. The team covered 56 territories as of December 31st, 2020. In the first quarter of 2021, we added seven new territories for a total of 63 territories, as well as the creation of an inside sales force to further our reach with rheumatologists in the white space, complementing our decentralized sales force and covering vacant territories. Our specialized team has adapted well to the pandemic, continues to expand Exogen's reach to rheumatologists, and is highly energized entering into 2021. I would also like to comment on the progress we have made on the reimbursement front over the course of 2020. This is a high-priority effort for Exogen and yielded over 14 million in-network lives over the course of the year, bringing us nearly to 60 million in-network lives as of the year end. We have maintained this momentum thus far in 2021, having recently completed a new covered and in-network agreement with Tricare West and Highmark, the fourth largest overall Blue Cross Blue Shield affiliate organization, as well as adding contracts in network services to two medical systems, the Tufts Medical Center and St. Charles Health Systems. Turning now to our R&D efforts, this remains a key strategic focus as we seek to solidify Exigen's position as a premier autoimmune company, providing an extensive range of testing solutions to help rheumatologists diagnose, treat, and monitor autoimmune diseases, which is notoriously difficult to do. We are focused on driving multiple sources of innovation and strengthening our intellectual property portfolio. For example, in November, we announced a new study in collaboration with Brigham and Women's Hospital in Boston to evaluate the effects of COVID-19 virus and its possible connections to subsequent autoimmune diseases. We will also continue to advance the development of further tests to add to our advised franchise, including our test for fibromyalgia, a disease which has a large addressable market. While not an autoimmune disease, it's often confused with connective tissue diseases and is therefore frequently diagnosed by rheumatologists. Adding an effective rule-in, rule-out test for fibromyalgia promises to be invaluable to healthcare providers. We believe that our advice tests are the most effective, complete, and differentiated series of tests for autoimmune diseases. and we remain focused on strategically enhancing that advantage. In closing, we are very pleased with our results in the fourth quarter and the full year of 2020. Our core testing franchise is strong and has proven to be resilient in the face of significant challenges. However, there are additional challenges which are out of our control, such as the inclement weather in February 2021 experienced in Texas and other parts of the country. We made a lot of progress on the reimbursement front during the year, and we will continue to give that a high priority. We will continue to invest in our R&D to find additional differentiated tests to add to our advice franchise. And finally, we will have a sales force in place to drive rheumatologists to our platform. We believe that XGEN is well positioned for the future. I would now like to turn over the call to Kamal to discuss our financial results.

Thank you, Ron, and good afternoon, everyone. Total revenues in Q4 2020 were $12.7 million, an increase of 24% over Q4 2019. Total revenues for the full year 2020 were $42 million, which was a 4% year-over-year increase from 2019, despite the impact from the ongoing COVID-19 pandemic. Total revenues were driven primarily by Avai CCD testing volumes including a record 28,601 in the fourth quarter and 100,450 for the full year. As Ron mentioned, the number of ordering healthcare providers was 1,690 for Q4 2020, compared with 1,665 for Q3 2020 and 1,707 for Q4 2019. Avai CTD test revenue was 8.6 million in the quarter, and other testing revenue was $2.4 million. Avai CTD revenue for the full year was $29.2 million, and other testing revenue was $7.7 million. Revenue for Symphony was $1.7 million for Q4 2020, and $5.1 million for the full year 2020, with 100% gross margin. Once again, we are very pleased with the performance of our core testing franchise in the face of headwinds from the ongoing COVID-19 pandemic. Costs of revenue were $4.3 million in Q4 2020, resulting in a gross margin of 66%, compared to 55% in Q4 2019. For the full year 2020, costs of revenue were $16.6 million, with a gross margin of 61%, compared to $18.8 million and gross margin of 53% for the full year 2019. The improvement in gross margin was driven by an increase in high-margin symphony revenues a decrease in royalty costs associated with the expiration of royalty under CB-CAPS technology, and a decrease in direct costs including materials and supplies. Operating expenses in Q4 2020 were $15.4 million compared with $13.1 million in Q4 2019. Operating expenses for the full year 2020 were $57.2 million compared with $49.7 million in 2019. The increase was primarily due to employee-related expenses, including stock-based compensation associated with the overall increase in headcount and an increase in R&D expenses. The net loss in Q4 2020 was $3.5 million compared with $3.4 million in Q4 2019. For the full year 2020, the net loss was $16.7 million compared to $12 million in 2019. Looking at our balance sheet, cash and cash equivalents as of December 31st, 2020 were approximately $57.4 million. For full year 2021, we expect the total revenue to be approximately $47 million to $49 million. This includes testing revenue of $46 million to $48 million, representing growth of approximately 27% over 2020 at the midpoint of the range. We are prioritizing resources to our buy testing franchise and expect $1.2 million in revenue for Symphony for the full year 2021. We will now open the call for questions.

Thank you. Ladies and gentlemen, at this time, we will be conducting the question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star followed by the number two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Chris Lin with Cowan & Company. Please state your question.

Hi. Good afternoon, and thanks for taking my questions. First, could you just help us unpack the 2021 revenue guidance in a bit more detail? I'm curious what is factored in for testing ASP volumes and the impact of COVID-19. Why don't I just stop there and start with that?

Yeah, thanks for the question, Chris. At the midpoint of that range, that's a 27% increase in testing revenue. As you heard on the call, we did get in-network and contracted with Highmark and Tricare West, so we're continuing to make progress on that front. We anticipate that we will continue to make progress with contracting and networking, And that's going to be accretive to our overall ASP. Yeah.

And as far as the COVID impact, obviously we don't know if it's over yet, Chris, but we're obviously monitoring that. The one thing I've repeatedly said is that COVID does not cure these autoimmune disorders, and those patients are still out there. So we will continue to monitor it. We're real happy with the way the year ended last year and this year. It seems like things have opened up quite a bit, and we hope it continues to do so.

Okay. Kamal, just based on your comments, just to be clear, I guess for 2021, you're expecting testing ASP to be up sequentially relative to 2020. Is that right?

Well, we don't give guidance around our ASP, but what we do anticipate is they continue to get in-network and contracted with the payers.

Okay. Then how would you describe the relationship between the increase in testing revenue relative to testing volumes. Should we expect a similar level of increase or any commentary you want to give there understanding you don't want to quantify it?

Yeah. Thanks, Chris. We do anticipate our volume to increase. We did mention that we are going to expand the number of territories. from 56 to 63 and add a virtual sales rep team based on the success our current decentralized sales force has had having Zoom calls with the physicians.

Okay. And maybe for just one more question here, Ron Small, we talked about the potential there being pent-up demand for VICE testing, and certainly I think you alluded to that in your prepared remarks, just on the benefit of panel testing versus serial testing. Can you talk about if that was a tailwind at all in Q4? And secondly, what is built into 2021 guidance as it relates to that dynamic? I mean, are you explicitly factoring that in, or would that represent upside to guidance this year?

I think what we saw there with the trend was that COVID has forced doctors to be much more efficient in how they treat patients, especially specialty like rheumatology. where these patients are coming in as a PCP referral, and they're all waiting to see their specialist. So when we talk about serial testing, which is the way a lot of them were trained, that really doesn't work now, not with all these patients coming in. So our test, because it's so convenient, it has 11 of the generic markers that most often overlap with each other, plus the best lupus test. offers convenience with accuracy. I don't think that's going to go away, at least from the conversations I've had from physicians. Some have said they dabbled with it before, but now they have to use something to be more efficient to see these patients. So as far as whether it's in the guidance or not, I think that Kamal looks at everything when he puts these things together. But I don't think that's going to go away, Chris. I think doctors have found that they're much, much more efficient with advised CTD than the traditional serial testing, which, as surveys showed, could take up to six years to get correctly diagnosed.

Okay. That's very helpful. Thanks for taking my questions. Thanks, Chris.

Our next question comes from Brian Weinstein with William Blair. Here's your question.

Hey, guys. Thanks for taking the questions. Good afternoon. Hey. So understanding that you're going to be spending less time on the promotion here on Symfony, so just curious, How much time were your reps actually kind of spending in an average sales call talking about one versus the other? And what I'm trying to get at here is what does that incremental time that they're going to be allotted really do for you guys in terms of being able to drive clinicians to begin to write for a visor, you know, or order the test, but then also to get deeper into the accounts? Does that give you a little bit more flexibility? I mean, what do you do with that extra time, I guess?

Yeah, great question, Brian. So the capacity that went into the promotion of Symphony was good capacity at the time, but it does free up a little bit more time for us now to engage them in other discussions with our other brands. Now, I will say this, that with Symphony, it did open doors to doctors that traditionally just treat rheumatoid arthritis patients, so we will continue to use it to be able to leverage the relationship with our other brands. But the capacity will now go over to our other brands. That has a lot to do with the way we look at the markets. We put something in principle one, principle two, principle three. And right now it's principle one is definitely advise CTD for all calls. So that extra capacity will go. To quantify it, it depends on territories, some territories who are heavier with lupus, rheumatology treating lupus, and others who are heavier with the RA doctors. But in general, I'm looking to free up quite a bit of capacity when they're moving over to our testing brands.

Great. Thank you for that. Obviously, it doesn't sound like you're expecting anything else to be brought into the bag organically this year, but can you talk about at least is there a funnel of things that you're considering or that you're looking at and how, you know, what inning, what quarter, what half of a soccer match, however you want to kind of talk about where those things kind of sit in the funnel to the extent that there are anything, any of those things that are out there that might be able to replace that lost revenue and allow you to kind of continue to grow the bag.

Yeah, another great question because while I can't share with you everything that's in our funnel, we have a big funnel. We look at everything that could possibly make sense for us from a ROI standpoint, from a reputation standpoint with a rheumatologist. And since we now have fairly, you know, might sound a little bold, but dominate this channel at this point with all the products we have and how much commitment we have with dermatologists, we do get contacted quite a bit. We strain those through our strainer and VD to make sure that it makes sense. And if and when it does make sense, it will increase value, increase our reputation, and leverage our infrastructure. We'll take that on. So quick answer is we have a big funnel. We look at it, and when appropriate, we will put that into our sales bag.

Okay. And the last one for me is, you know, you mentioned ROI as you're thinking about adding things to the bag, but how do you think about the ROI on Salesforce here? You're up to 63. I wasn't sure if that was the, I think that's the current number. I wasn't sure if you were looking to go beyond that this year. I understand you have the inside sales reps there, but how do you look at the ROI from both an external, but also I'm really curious about what you think the ROI is on the inside Salesforce here and some of the things that they're doing. How do you measure that? Thanks, guys.

Yeah, thanks, Brian. I'm just going to clarify one point. We ended 2020 with 53 sales reps. We have 56 territories. We're now increasing to 63 territories and hiring those additional sales reps to get to 63. I'm going to let Ron speak to the answer.

Thanks, Paul. Yeah, so Brian, what we're finding is when we put a rep in a new territory, what we kind of call white space here, they're quickly getting up to speed with their doctors. It's not like when we launched this product, you had to explain what cell-bound complemented activation product is or who we are. By the time the rep goes into these new territories, the doctors are waiting to get the information, the logistics on the package, and so forth. So we think the ROI for every additional rep we add in the United States is going to yield a good return even faster. The virtual, what we call virtual or centralized Salesforce will augment that in a couple ways. One is we'll use that for white space, places we don't have reps yet, and we still don't cover places like Alaska, Hawaii, Puerto Rico, for example. So we'll look to increase our presence there. The other thing the virtual reps do is when somebody goes down on a medical leave, whether it's pregnancy, hurt ankle, whatever, we won't lose any momentum. So using the two together, which is a lot less expensive and has centralized reps, we think we're going to be able to cover everybody in the right capacity, get the reach and frequency necessary to grow these brands.

Great. Thank you guys so much. Thanks.

Thank you. Our next question comes from Kyle Mixon with Cancer Fixed General Stem. Please go ahead with your question.

Hey, guys. Thanks for taking the questions. Congrats on the quarter. And Kamal, thanks for the color on the guide. It was helpful. But I want to start on the sympathy agreement first. So Ron, we've always talked about how the Prometheus model would be kind of preferred over the type of agreement that you've had with JAN to this point. With all these looper therapeutics on the market and coming to market, obviously, have you thought about pursuing like a traditional companion diagnostic strategy? And obviously, that would take time. You would need to prove those probably. But would you kind of rule out doing one of those collaborations somewhere down the road or maybe – you know, I'm just thinking about it especially since you have the relationships already with a lot of those manufacturers on the data side already. And I guess where I'm kind of getting at is the future of the DXRX. strategy kind of because of what's kind of going on with Janssen and what you're kind of expecting for 21. Thank you. I appreciate your perspective.

Sure, Kyle. Thank you. We believe in precision medicine, and we believe it's here to stay. Let's just say that. And flat out, as you see more and more quality testing products coming and you see more and more $60,000 a year biologics coming, you're going to see more and more of a push for precision medicine. I love that because I think we're in pole position to be able to help the rheumatologist and the payers in that area. We had wild success with this strategy at Prometheus with the steroid. And I will say this about Symphony. It has been successful for what it was. The problem is we negotiated this agreement pre-COVID, and then shortly after the agreement was inked, COVID showed up, and that derailed it. But I like the fact it's a biologic. It's the only at-home self-injected biologic. But the reality of the situation is when we look at future deals for us in our model, we'll look for things we have a little bit more control in the marketing aspect, the pricing aspect, as well as the sales aspect. When we just have the sales aspect, we really don't get to control the messaging as much. So that's what we'll look for in the future. We have not given up on precision medicine. We're still wide open to that. We think marrying up a diagnostic with a pharmaceutical quite frankly, in many cases, it's the ethical thing to do. So thanks, Kyle, for that question. Appreciate it.

Okay. Yeah, that was a supple run. Thank you. And pretty impressive, actually, with the added lives over the course of the year. You know, it was kind of quiet for a certain period of time, but it kind of takes up at the end there. And congrats on all these, like, client-bill agreements and the in-network kind of, I guess, partnerships. But should we expect to see more of those in the near term, like with – some of the hospitals in Boston and so forth, or maybe will we see the payers kind of be added on, like, over the course of 21? Like, which of those should we see more of, just given what's kind of going on with COVID and the vaccines and all this uncertainty?

Yeah, we know what payers want, and we did it, and that's the dossier. And I think we did a wonderful job, as you saw, with now both TRICARE, East and West, and you know they operate separately. with the fourth largest blue high mark and with some of the meetings we've got planned going this year. So I don't expect it to stop because I think it really addresses an issue. You've got to keep in mind that ANA, which is considered a lupus test, was developed like in the late 40s, like 1947. We haven't had a really, really good test for these doctors in a long time. The other thing that COVID has really brought to the forefront is the disparity in treatment with African-American women and Hispanic women. Well, nine out of 10 lupus patients are female, and of that, the majority are Hispanic and African-American. So we think that that awareness, along with the fact that we have what we believe the best diagnostic on the market for these patients, will help us get the payers to do the right thing and take care of these patients. So I have no doubt that we'll continue to progress forward. My intent is to get as many of these wrapped up as soon as possible. not only for us, not only for the people on the phone, but for the patients. They really need quality testing for autoimmune, and we're here to provide that.

Okay. That was great, Ron. Thanks a lot. The non-Caucasian data is great, but it works with the pairs of things, so that's awesome. And I guess just the last question for me. Kamal, on the gross margin for 21, obviously there's not going to be – you're not expecting this much symphony revenue, which is 100% margin, obviously. So the margin is going to set down quite a bit. Is there anything you can help us kind of model that out? I know the royalty is coming off quite a bit. It's really rolling off quite a bit in 2021. So there's that kind of dynamic I think about. Just help us sort of sort through those moving pieces, please, Kamal. Thanks.

Sure. So on testing gross margins, we've seen some significant quarter-over-quarter increases. Going back to Q2 2020, we're at 52% gross margin for the testing business. We increased it to 54% in Q3, and then this past quarter in Q4, we did 60%. So we're continuing to make increases, and you touched on some of those points on the testing, that royalties, it takes about 12 months to see that royalty completely go away, and it's sunsetted on January 7th, 2020. So it should be completely out for the majority of 2021. And then we continue to make efficiencies in the labs, We commented on lower material costs and lower supply costs, and we're looking to automate as much as we can to drive down our labor expenses.

Okay, perfect. Thank you, Kamal. Thanks, guys, for taking the questions.

Our next question comes from Mark Massaro with ETIG. Please see your question.

Hey, guys. This is Vivian. I'm for Mark. Thanks for taking the questions. So are you seeing any heightened interest in your mobile phlebotomy sites as a result of the pandemic? I know you've talked about the efficiency of your virtual sales force. Is the intention there to kind of maintain both of those as COVID eases up?

Can you repeat the back end of that question? I got the mobile part. What was the second part?

Yeah. So the efficiency of your virtual sales force – Is the intention there to maintain that as COVID eases up and looking forward to 2021?

Great question. Thank you. The mobile phlebotomy is something we do when there's a reputable mobile phlebotomy event in the area and it is not owned by a physician nor does it have links to a hospital because there are some regulations there. It has to be truly independent. So we sign those deals up when we find them or they find us, and we do like the mobile phlebotomy. We've also introduced two capillary tests, you know, the methotrexate and the hydroxychlorine test both come in a capillary fashion, so you don't need a mobile phlebotomist. And, you know, just to say, we've got one rep in particular that reminds a physician that they did go to medical school and learn how to pull blood, so believe in the product, draw the blood yourself and put it in the tube. And I'm always fascinated when they say, oh, yeah, I guess I can do it myself. It's not a really tough procedure, even though you do have to be trained. So the mobile phlebotomy is here to stay, we think, in the short term, and definitely, and we'll continue to sign more of those agreements to make sure that every patient and every doctor has access to the asset. Now, as far as the effectiveness of the virtual sales reps, they're very effective, especially when you compound the fact of how many calls they can make, and they don't have to fly, nor do they have windshield time. I think it's here to stay. One of the things I think COVID does to society is we've evolved, I bet, five, 10 years faster than we would have in being able to do things like Zoom calls, Zoom conferences, reps on a Zoom call. And I think everybody's gotten used to it to the point. And quite frankly, I don't think it's going to go away. Will it be the lead part to initiating a new therapy or a new test? Probably not. But to augment what's already out there, I think it's a very efficient, cost-effective way to deliver a core message to the right audience. Thank you for the question.

Thank you. So just a quick follow-up from me on your collaboration with Brigham to evaluate the emergence of autoimmune disease post-COVID-19 infection. Would you anticipate the outcome of the study to grab revenue at all? Has any kind of link been noticed at this point and when we should expect the final data readout there?

Sure. So the thought process is if you have COVID, you will develop autoimmune diseases faster than if you were in the control group that did not have COVID. There's a lot of scientific papers being written on it currently. Some are already on the web and you can look them up. And the theory actually looks pretty solid that that might be the case. Now we've got to prove it out and that's what we're going to do. We're really happy to be working with a marquee organization like Brigham Women out of Boston. And we're really happy that they're using our advised test to do this. I mean, that's really important. Will it drive additional revenue? We believe so, because familiarity with us and the asset will naturally draw doctors more towards us. We know they like esoteric labs like us with White Glove Service. Anybody at Brigham or any of these institutions, whether it's Tufts, St. Charles, that we signed up, the Fosse's that we signed up, Sonora Quest out of Arizona, They know they have access to our PhDs and MDs 24-7, have access to them to ask any questions. I think that's the type of quality that these marquee institutions want. They don't want a nebulous lab. They want a partner in labs, and that in and of itself will make us more important to them and drive business as well as very good science for the public.

Okay, got it. Thank you. Just a final question for me. If you could provide an update on other areas you're thinking of expanding into as additional offerings to lupus patients. So I believe in the past you've mentioned organ transplant, kidney damage, et cetera.

Yeah, I'll take the kidney damage may be more relevant quickly, the fibro long-term. So let me do the lupus nephritis first. Lupus nephritis is a very serious issue. Benlista, the biologic from GSK, got their approval, I think, late in the fourth quarter last year. And Arinia just got their valoxosporin approved, I think, early in January. So you've got two new pharmaceutical companies coming out pushing for lupus nephritis. And we really take a look at the assets that are out there to measure that. There's not really high-quality assets. So we do have a monitoring product that has some lupus nephritis markers. And as we have told the physicians and so forth, we'll look to enhance that even further since both these products will be drawing a lot of awareness and attention to lupus nephritis. We'll have the test to measure that in our advised monitoring test. As far as the long-term and looking at what others add in the bag for rheumatology, fibromyalgia is really important. Big TAM, 15 million patients roughly in the United States, and no such thing as a rule-in test. We have had a lot of conversations with payers and they say these fibro patients eat up a lot of resources. They come into the offices, they think they have lupus and they just do doctor shopping. So having the first rule in fibro test I think will be very important because the rheumatologist now will be able to tell that patient with pretty much definitive with adding it to their clinical diagnosis that they have it or do not have fibro and then the patient can rest assured of what they have. Right now they get a non-answer for fibromyalgia. And because they end up in a rheumatologist's office because they look, smell, and act like lupus patients, they do eat a lot of resources there. So really looking forward to seeing the development of that product as well as the lupus nephritis asset as well.

Okay, awesome. Thanks for taking the questions, guys.

Thank you. Our next question comes from Paul Knight with KeyBank. Please state your question.

Hey, Ron. Congrats on the... From reallocation away from Sympony, I know it was a successful, you know, your success and your test is fabulous. On the Fibro, could you spell, kind of give us a little bit of a timeline on when you would expect data and the progress on that over the years? I had for starters, and then could you quantify your virtual sales force? Is it 10 people? Is it going to 15? A couple of metrics on that.

Sure. So as far as fibro timelines, as a CEO, of course, I'm very anxious to get this quality product on the market as soon as possible. So I always got to be careful not to rush my scientists too much because it's the good science that will lead to good product development. So the stages here for Fibro, obviously, when we're working with Ohio State on this, is to develop the analytical validation. And enrollment has picked up recently, which is really nice. I think that has to do with COVID dissipating a little bit in some of these areas. And then we have to do the clinical utility and clinical validation. These studies for a big product with a big TAM needs a higher end number. And we're going to do everything we can to get this product to the public as soon as possible. I'd rather not give the stamp a date. I mean, I talk to my science people all the time, and they know that the urgency is there to get this on the market. But I want the studies done correctly. I want the dossier fully baked and launched correctly into the marketplace. So we're moving as fast as we can on that market. As far as the virtual sales reps, we are looking to have seven right now. And we're doing a pretty good job of recruiting the right type of people. It's a little different type of skill set that you need. for this type of person. But I'm excited about it. I would not have believed this pre-COVID that they'd be as effective as they are. But I think the one thing, Mark, that COVID has done has made doctors ready for Zoom calls with a virtual rep. You send them a Grubhub lunch and sit there and have a good conversation with them. So, Paul, I think that's just a good different change that a lot of us are doing is adding virtual sales calls to your decentralized sales representatives.

Okay, great. And then did you quantify the number of covered lives under Highmark?

We did.

Mark, do you have that in front of you? Yeah, absolutely. Covered lives for Highmark is about 5.6 million.

And that's in Q1 here, correct?

Yeah, we had the coverage decision from Highmark in Q4, and the in-network was a Q1 event. Tricare West, which we also disclosed, is a Q1 event as well.

And then, obviously, you quote the 99% sequential ordering retention rate. How do you feel like that compares to a year ago? Do you ever really have dropouts? It seems pretty sticky.

It's very sticky. Very few dropouts. And I think that's a testimony to the quality of product as well as the fact they really didn't have much before we entered the marketplace. Like I said, ANA, anti-DSD, and anti-Smithy are very old products, and they all have issues of either being too many false positives or too many false negatives. So once a doctor looks and uses our product, and it appears 11 to be a magic number, 11 or more times in a quarter, they stick at 99%. I'm fascinated because I did have the number one Crohn's product at one time. I could never get that thing to stick more than 75%. So this is really a testimony to the value that it adds to the physicians and the patients. And it has been that way. You're absolutely right, Paul. It's been sticking at 99%. And that's just a terrific testimony to the asset.

Okay, thank you.

Thank you. There are no further questions at this time. I'll turn it back to management for closing remarks.

Yeah, I want to thank everybody for participating in the call. We're very excited about what we've done with Exogen so far. And we're really impressed with what we got in place for the future. As we continue to build this company, you have to know that our goal is to make sure that we take care of every patient that is out there. Because we believe that helping one autoimmune patient may not change the world, but it will change the world for that one patient. And that's the way we're looking at it. So thank you again for your time on the call. Really appreciate it. And I look forward to a terrific 2021. Thank you. This concludes today's conference. All parties may disconnect. Have a good evening.