Exagen Inc.

Greetings. Welcome to Exigent Inc.' 's first quarter 2024 earnings call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone today should require operator assistance, please press star zero from your telephone keypad. Please note that this conference is being recorded. I will now turn the call over to Ryan Douglas with Investor Relations. Ryan, you may now begin.

Good morning, and thank you for joining us. Earlier today, Exygen, Inc. released financial results for the quarter ended March 31st, 2024. The release is currently available on the company's website at www.exygen.com. John Ibali, President and Chief Executive Officer, and Kamala Dowie, Chief Financial Officer, will host this morning'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 were 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 fact should be deemed to be forward-looking statements. All forward-looking statements, including without limitation statements regarding our business strategy, future financial and operating performance, including guidance, potential profitability, our current and future product offerings, 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 the risk 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, 2023, or Form 10-Q for the quarter ended March 31, 2024, and any subsequent filings. In addition, some of the information discussed today include non-GAAP financial measures such as adjusted EBITDA that have not been calculated in accordance with generally accepted accounting principles of the United States or GAAP. These non-GAAP items should be used in addition to and not substituted for any GAAP results. We believe these metrics provide useful supplemental information in assessing our revenue and operating performance. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the tables at the end of our earnings release issued earlier today, which have been posted to the investor relations page of the company's website. Information provided in this conference call speaks only to the live broadcast today. 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 John Imbali, President and CEO of Exygen.

Thanks, Ryan, and to everyone for joining the call. Here at Exygen, we've executed another fantastic quarter, and today I plan to discuss our results, provide updates on our path to profitability, and give further details on the enhancements we're making to advise CTD. I'll then hand it over to Kamal, our Chief Financial Officer, for details on our financial performance. We had a great start to 2024, and for Q1, I'm happy to report that total revenue was $14.4 million, driven by a strong increase in advised CTD ASP. Our trailing 12-month ASP is now $377 per test, which is up 35% or almost $100 from a year ago. ASP continues to be a key strategic focus, and I feel good about the momentum and trajectory we have built as we work towards profitability. Our adjusted EBITDA for the first quarter was a negative 2 million. This is also a significant improvement over the same period last year and a testament to the impact ASP improvements are having on our bottom line. The progress we've made on our ASP is substantial. And execution on our strategy has continued to dramatically reshape the operating profile of the company over the past year. Volume for advised CTD in the first quarter was just over 30,000 tests, which was essentially flat from the fourth quarter of 2023. However, we did see volume increase in each month of the first quarter, and that momentum continued into Q2. At this point, we have fully recognized the impact to volume we expected to see as a result of the changes we made in the middle of last year and are confidently seeing testing growth again. Over the coming quarters, we anticipate our volume continuing to build as our team works to improve ordering efficiencies and educate physicians on the clinical value proposition of AdviseCTD. During the last earnings call, we briefly touched on improvements we're planning to make to our AdviseCTD offering. And I'd like to provide additional details, as we believe these enhancements will be very positive for customers in our organization. We currently plan to add three T cell markers for SLE and additional new markers for rheumatoid arthritis to the Advise CTD offering in the fourth quarter of this year. These new markers have been clinically validated, and we're working through the operational logistics of adding them to our core product. The benefits of these new markers will be multifaceted. We gain enhanced IP protection in offering some of the most sensitive markers to aid in the diagnosis of systemic lupus erythematosus. Second, our overall product improves in terms of clinical utility, which we expect to lead to increased adoption over time. And third, we anticipate these additional markers will be accretive to our financial performance, both in terms of top and bottom lines. In regard to the improved clinical utility that we expect for advised CTD, it helps to refresh that we've demonstrated in multiple published validation studies that the current sensitivity of advised CTD is 80%, with standard of care markers ranging from 14% to 44%. We're in the process of publishing data that will show how the introduction of T cells will significantly enhance the sensitivity of advised CTD. The improved sensitivity of these markers will help clinicians diagnose lupus patients sooner. The patent protection on the T-cell markers continues through 2035, making their proprietary nature durable for the next decade plus. Additionally, Advice CTD currently includes traditional markers to aid in the diagnosis of rheumatoid arthritis, and our markers identify approximately 70% of RA patients. This leaves roughly 30% of RA patients who would be seronegative with no current diagnostic biomarker commercially available. We plan to add new RA markers in the fourth quarter of this year, which we believe will allow us to improve the sensitivity of our rheumatoid arthritis assays and correctly identify 80 to 83% of total RA patients, or up to a third of the traditional seronegative population. We believe this level of diagnostic performance is unmatched in alternative commercially available options and will continue to demonstrate to our clinicians our commitment to providing them the best quality testing with first-in-class performance. Altogether, these new markers substantially increase the utility of advised CTD, which we believe will lead to increased product adoption. Our commercial team is preparing for the launch of these products Our sales organization is eager to educate clinicians on the gain in clinical value, and our laboratory is working through the operational requirements to offer these novel markers at scale from launch. We expect the impact to CTD demand will likely be slow at first, mirroring the pace of educational progress amongst our base of clinicians, but increasing over time. We're very excited to bring these innovations to patients, signifying the next phase of growth at Exogen. I'd also like to briefly touch on the FDA's proposed rule that became final a few weeks ago. We believe we are well situated to handle the additional regulatory requirements as our laboratory is CLIA, CAP, and New York State certified, and we perform several assays which are currently FDA approved. Broadly, we believe this regulation will create a barrier to entry for competitors in our market because it increases the resources required for commercialization of lab-developed tests. We continue to monitor the development of these rules and do not currently anticipate any major impediments to executing our plan. Lastly, I'd like to thank Brian Burke, Dr. Beto Palletes, and Wendy Johnson for their years of service, numerous contributions, and guidance to XGen as they transition off our board of directors. Since I joined the company in late 2022, they have been integral in making the necessary changes to focus on achieving profitability, and have been extremely supportive throughout my time here. Additionally, I'd like to welcome Dr. Scott Kahn to our board and look forward to leveraging his unique skill set and experience as we move to our next phase of growth. I'll now turn the call over to Kamal for details on our financial results.