Exagen Inc.

Greetings and welcome to the Exigen, Inc. First Quarter 2025 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 the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Ryan Douglas, Investor Relations for Exigen, Inc. Thank you. You may begin.

Good morning, and thank you for joining us. Earlier today, Exygen, Inc. released financial results for the quarter ended March 31st, 2025. Shana Bali, our President and Chief Executive Officer, and Jeff Black, our Chief Financial Officer, will host this morning's call. The recording of today's call and the press release announcing the quarterly results can be found on the company's website at www.exygen.com. As today's call includes forward-looking statements, we encourage you to review the statements contained in today's press release and the risk and uncertainties described in our SEC filings, which identify certain factors that may cause a company's actual events, performance, and results to differ materially from those contained in the forward-looking statements made on today's call. In addition, we will discuss non-GAAP financial measures on this call. Descriptions of these non-GAAP financial measures and reconciliations of GAAP to non-GAAP financial measures are included in today's press release. I will now turn the call over to John.

Good morning, everyone, and thanks for joining the call today. It's exciting to be reporting our first quarterly results with the impact of our new markers, and we are seeing fantastic results. We plan to touch on that along with providing additional color around the debt refinance we announced last week. We have a lot going on at the company. We're off to a great start and it's an exciting time. I'll detail a few critical topics relevant to our success and then turn the call over to Jeff for further detail on our financial performance over the last few months. To start, we delivered our ninth consecutive quarter of increasing trailing 12 month ASP and we're incredibly proud of the progress we've made over the last two plus years. Our revenue cycle operations continue to improve and Jeff will provide additional commentary. But we are methodically growing our per case reimbursement and have started to generate real momentum with our market access efforts. I tend to shy away from describing activity as I believe cash in the door is what really matters. But I think it's important to highlight that we have started to win administrative law judge or ALJ hearings as part of our strategic reimbursement efforts. To explain a bit more. Over the course of the last couple of years, we've sought to elevate our appeals efforts to that of an external review by a neutral third party. This takes a lot of time and diligence and is a learning process for each product we offer as we fine-tune the packet of information we submit based on feedback throughout the process. This past quarter, we successfully won our first ALJ hearing, which was a formal hearing of a Medicare Advantage denial that we initiated as part of our ongoing efforts. The case was originally denied due to a medical policy determination at a large national insurer and we petitioned the court for review in order to have this patient's case treated similar to other Medicare claims as it's entitled to. We've won the case and are highly encouraged by this effort as it starts to set a precedent for future appeals. We have several other hearings planned in the weeks ahead, and a few are with the same judge, so we're highly encouraged by this progress and look forward to future wins. These wins provide reimbursement for that individual case, but also factor into our longer-term strategy of gaining awareness at the medical director level and bringing payers to the table while building momentum and leverage. I would expect over time that continued wins at the AOJ level catalyze efforts to improve medical policy with a broad set of payers. And we will see how long it takes, but this is a very good sign. Additional momentum was gained this quarter by securing positive medical policy with TRICARE, under which all active duty service members, retirees, and their families receive civilian medical care. We recently concluded a two-year effort where we underwent medical policy review through their formal process and advised CTD was granted positive medical policy. We are finalizing the contract efforts to ensure streamlined billing transactions, but this should be a catalyst for increased ASP in the future. These updates will be few and far between as, again, I believe the most relevant metric is still the trailing 12-month ASP. But both of these efforts have strategic implications relevant to the approach we've outlined over the past two years and are important milestones on their own. And lastly, regarding ASP progress, we continue to expect the incremental boost of our trailing 12-month ASP from the launch of our new markers to be approximately $90 by the end of the year. And with the momentum and real results I just described, we remain highly optimistic to meet our goal of adjusted EBITDA positivity by year end. Our growth this quarter was fueled by a combination of continued gains in ASP, but also volume, which was very exciting to see and was in part the result of our new biomarker launch. This past quarter, volume grew 6% over our Q4 performance. Our sales team is highly energized by the rapid adoption and favorable response to the reinvigorated Vive CTD. In Q1, we launched our new markers, but we also spent a considerable amount of time training the team on the enhanced value proposition. I believe these efforts, along with fantastic preparation by our marketing and customer service teams, have enabled a highly successful launch with significant energy and excitement that is likely to persist. Additionally, our new head of sales, JR, has been on board now for about nine months, and his impact is starting to yield results. Our sales team is more focused on selling and we've removed as many of the administrative efforts from the role as possible. Of note, we are hiring as well and have started to source talent for two expansion territories. If you're good at sales, hardworking, great at solving complex problems, have a dose of humility, and operate with integrity, we'd love to have you join our team and help us build something special as we work to serve the rheumatology community. As we've seen with the broader organization, The stability of our team and reduced personnel turnover yield results. Our sales organization used to have voluntary turnover raised north of 30% just a few years back. Today, we have trailing 12-month voluntary turnover within our sales organization of 7%, and that includes one recent retirement. Congrats again, Bonnie. You've earned it. The progress in building a mission-driven culture that rewards performance is evident in the positive trend these numbers illustrate. I'm very proud of the team we have. It's energizing to see the volume growth associated with having the right team in place with stability. We expect volume to continue to grow and have a couple more expansion territories identified, which we anticipate opening for recruitment in the next couple of months. More to come, but it's great to see new clinicians incorporating the Advise CTD test into their clinical practice and increased adoption within our existing position base. We are very pleased with the volume trend we're seeing to start the year. As we continue to turn around the operational performance of our organization, we recently improved our financial position with a new credit facility from Perceptive Advisors, an exceptional business partner and highly credible life sciences investor. As a reminder, we had a $20 million loan that was maturing in April of 26. While we anticipate being free cash flow positive by this time, the amortization schedule was over a 10-month period and too aggressive for our anticipated ability to service the debt. When Jeff joined the organization last year, this was a primary priority for him, and he did a fantastic job engaging with Rob at Credo 180 to help us navigate the market and find a great partner to achieve the flexibility we needed in refinancing our debt obligations. I should also mention that we are excited to have the optionality of the current facility to tap into additional minimally dilutive capital should we desire, as we continue to shape our organization to be the preeminent provider of proprietary testing in the autoimmune space. We are very grateful to Sam and his team at Perceptive for partnering with us in building something special here, and now have the flexibility to pursue profitability and ultimately deleverage on our own timeline and capitalize on growth opportunities in a way which maximizes shareholder returns. Our efforts to develop future innovations, which will drive growth, continue with our next set of seronegative markers, expected to launch around the end of this year. We've been working to clinically validate the utility of these markers over the past several months, and their contribution to clinical practice should mirror that of our recently launched RA33 markers. We expect to gain approximately 8% in overall sensitivity for identifying patients with rheumatoid arthritis who would otherwise be serologically benign. The sensitivity gain puts our overall ability to detect the rheumatoid arthritis patient population at approximately 85%, far above conventional markers alone. This strong clinical value proposition should continue to open up a market for us, which we believe is approximately three times larger than the market for lupus diagnostics alone, and will be accretive to ASP. Additionally, our efforts to develop diagnostics for detection and management of lupus nephritis patients continue to track well. And we have now designed, and with a partner manufactured, a custom array specific to the first version of our assay, which was developed in conjunction with the team at Johns Hopkins. This paired down array will enable throughput at much higher volume with lower COGS while focusing on the key relevant biomarkers for this disease application. We are currently testing the newly customized array and plan to have results in Q3. We are also actively engaged in the biopharma level to find partners interested in leveraging this technology. More to come. Strategically, we have been advancing efforts to develop early markers of kidney disease while we pursued applications in lupus nephritis. The results from these efforts are very encouraging, and our chief medical officer, Dr. Mike Nirenberg, recently presented the findings from three clinical validations at the annual Chronic Kidney Disease Drug Development Summit in Boston a couple months ago. This work includes the profiling of two separate NIH cohorts and a lupus nephritis cohort, where we've shown great discriminating power for our proprietary analytes in identifying early disease while performing the current standard of care. We look forward to continued validation of this technology and are actively pursuing biopharma partners through our business development efforts. In general, our R&D pipeline continues to advance impactful technology in multiple areas of significant clinical need. Additionally, we continue our efforts to develop signatures of disease activity in both SLE and rheumatoid arthritis. But maybe the most important point I want to make here is that we have now successfully demonstrated a capability to bring novel biomarkers to the clinic with the current Exogen team, and done so in a reasonable time period with a prudent level of resources. Our internal teams have had to refine and build this skill, and the past 12 months have demonstrated a proficiency for doing so. I'm very proud of the teams for their work in this area and we have exciting opportunities in our pipeline, which we expect will have significant impact on patients and clinicians down the line. I'll now turn the call over to Jeff to provide additional details on this quarter's financial performance. But suffice it to say, I'm very enthusiastic about the track record our company has had and the track our company is on. We have what is shaping up to be a phenomenal year ahead of us and we continue to generate momentum in our business.