Exagen Inc.

Greetings, ladies and gentlemen, and welcome to the Exigen Incorporated First Quarter 2022 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, then zero. Please note this conference is being recorded. I would now like to turn the conference over to our host, Ryan Douglas, of Investor Relations for Exigen. Thank you. You may begin, sir.

Good afternoon. Thank you for joining us today. Earlier today, Exogen Inc. released financial results for the quarter ended March 31st, 2022. The release is currently available on the company's website at www.exogen.com. Ron Rocca, President and Chief Executive Officer, Kamala Dowie, Chief Financial Officer, and Mark Hazeltine, Chief Operating Officer, will host this afternoon's call. Before we get started, I'd 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 2022 guidance, the impact of the COVID-19 pandemic on our business, our current and future product offerings, distribution and availability, and reimbursement and coverage are based upon current estimates and various assumptions. These statements involve material risk 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 these risks and uncertainties associated with our business, please see our filings with the Securities and Exchange Commission, including our Form 10-K for the year ended December 31st, 2021, and subsequent filings. The information provided in this conference call speaks only to the live broadcast today, May 11th, 2022. 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, Ryan, and thank you to everyone joining the call. Today I will discuss our first quarter business highlights and give updates on our pricing, payers, and pipeline. I'll then hand over the call to Kamal, our CFO, for details on our financial results. As always, we appreciate your continued support of Exogen. In the first quarter of 2022, we achieved a record of 2,175 total ordering healthcare providers and a record of 761 adopters for our flagship Advise CTD and Advise Lupus tests. Our total revenue for the first quarter was $10.4 million, which included 30,903 Advise CTD tests delivered. As we mentioned during our call, in March, our testing volume during the first half of Q1 2022 was significantly impacted by the Omicron variant. As the quarter progressed, we saw patient referrals from primary care to rheumatologists gradually return to normal. And in March, we had an all-time record month for advised CTD volume. This is the seventh quarter in a row since COVID began that we achieved a high retention rate of approximately 99% stickiness. Also, during these seven quarters, we sequentially increased ordering healthcare providers and achieved record adopters in every quarter. We believe this performance speaks to the value healthcare providers see in our test and further strengthens our foundation for growth. Now to provide an update on our pricing and payer reimbursement. Our strategy with payers has always been to apply for a proprietary laboratory analysis code, or PLA code, once we began approaching 100 million in network lives. I'm happy to announce that the American Medical Association has issued Exogen a PLA code of 0312U for advised lupus, effective April 1st, 2022. This is a major milestone for Exogen that we believe demonstrates the effectiveness and proprietary novel aspects of our CBCAPS technology, which drives advised lupus. We also received pricing through our Medicare administrative contractor, Noridian. Medicare reimbursement for this code is $1,085, which is a significant price increase over the prior CPT code reimbursement amount of $295. Although the PLA code applies to advised lupus, we believe it will have a positive effect on both our ASPs and revenue, as well as gross margins, since advised CTD is comprised of advised lupus. We continue to make progress with payers and added three additional payers in the first quarter, two of which take effect in the second quarter. We believe with the addition of the PLA code and the fact that we are expected to have over 90 million in-network lives on June 1st, 2022, we are well positioned to enter into additional payer agreements. We look forward to updating you on our progress throughout the year. Turning to our AdviseRadar platform, this platform combines over a decade worth of scientific research by Queen Mary University of London and our AI technology. Over the past few months, we have made several investments, including essential bioinformatics hires and support of our AI and machine learning programs and equipment to further expand on this technology-driven platform. With these continued investments, AdviseRadar development remains on schedule for a clinical experience program launch later this year. As part of our AdviseRadar launch preparation, we commissioned a market research to conduct a blind product concept study focused on Radar's utility and the use of precision medicine by rheumatologists. From the 131 responding rheumatologists, we learned the most challenging aspects of rheumatoid arthritis treatment is the inability to predict therapeutic response. Our Advise Radar molecular test will provide pivotal insights and directions on how newly diagnosed patients will respond to the DMARTs, like methotrexate, and biologics. Our Advise Radar 2 molecular test will address those patients that have been on therapies that are no longer getting the adequate control of their disease. Both of these tests add clarity to the physician's empirical evaluation when determining which of the very expensive therapies to prescribe to patients. To close out the market research, 80% of the responding rheumatologists indicated they strongly believe personalized medicine will guide RA treatment decisions in the future. This further strengthens our belief that the AdviseRadar platform is well positioned to address the demands for therapeutic drug response beneficial for both RA patients and physicians. We believe this will also address payers' concerns of the wasted $18 billion in annual RA therapeutic spend for RA treatment. For our other pipeline products, the better study for fibro continues, and we anticipate a readout next year. For the next iteration of Advise SLE Monitor, we are expanding the indication with markers for lupus nephritis and commercially launching on 2023. We continue to add necessary technology and personnel for our R&D organization to enable successful conclusion of these assets. We continue to execute on our business strategies and are looking forward to making our tests available to more patients by driving both adopting healthcare providers and expanding our payer coverage. We believe Exigent's track record will serve as a foundation for us to develop and commercialize our innovative pipeline and intersect science and technology. I now will turn the call over to Kamal.