All right, I am David Westenberg, the life science tools analyst at Piper. Joining me is Scott, the CEO of Biodesix. So, just 'cause not everyone knows the story, can you take a couple minutes to explain what Biodesix does, reimbursement, the products, and all the products in the IQLung portfolio, and how they complement each other? Yeah. Thank you, David. Yeah, so Biodesix is a blood-based diagnostics company focused on lung. So a couple things that differentiate us, first, that focus on lung. So we have a direct, dedicated sales force, again, that calls on pulmonologists, and then we have five products in their bag. Those five products are gonna cover everything from early detection and diagnosis to post-cancer diagnosis treatment guidance. All five of those tests have Medicare coverage, and I'm happy to share, as of this week, all five now have private payer coverage, as we got our first private payer coverage for Nodify CDT last week. Many more to come. We again pride ourselves on focusing on lung, and you may ask why lung? I still think that some in America are surprised when they hear that lung cancer is still the deadliest of all cancers. More people are gonna die from lung cancer in the United States than the number two, three, and four cancers combined, which are prostate, breast, and colorectal cancer. So for us, providing that consultative sales force to support those five products, also while offering the fastest turnaround times on the market, so all five test results can be delivered within three days, and so we take great pride in that. All right. Great. Great introduction. So what are the main growth drivers of your test? Your lung diagnostic test, I believe, had 60% year-over-year growth, and you had close to 80% growth in your biopharma business. You know, what drove that, and how should we look at those businesses on a go-forward basis? Yeah, when... You know, our business is really segmented into two verticals. You've got the clinical commercial diagnostic test, which are comprised of the five tests I referenced, and then you have our business development or biopharma services business. You highlighted the strong growth that we shared and communicated. You know, for us, that clinical testing opportunity is the largest. It's the largest addressable market, and it's really more significant the earlier you go in that continuum of care. So early detection and diagnosis is where we're gonna make the greatest impact. So our two Nodify tests, Nodify CDT and Nodify XL2, have the greatest opportunity, and they have been our growth drivers, and we expect them to be our most significant growth drivers and contributors, for years to come. Yeah, so let's dive into those two tests because I think, they're very important in how they work synergistically. Can you talk about the order in which they're ordered, you know, the... What is it? The attachment rate of- Yeah the two products and, and kinda how that works? Yeah, it's a great- Very interesting. Yeah, it's a great, great question. So there are two, two tests. Blood is drawn on the patient simultaneously. Tests are ordered 99% of the time, both, I should say, for each patient. We have two laboratories. Our headquarters are in Boulder, Colorado. We have a laboratory just outside of Kansas City. Those two test samples will be sent to Kansas City. We run the Nodify CDT test first. This is your traditional rule-in test. Here, we're helping a physician identify those lung nodules that are malignant. So we'll return that test result within 24 hours. If that comes back as positive or malignant, we'll cancel the other test. There's no reason to run it. If that does not come back as positive, then we turn around and run the Nodify XL2 test. This is your traditional rule-out test. Here, we're trying to identify those patients that the physician can confidently send to CT surveillance and take a wait-and-watch approach. About 15% of the time, those CDTs are positive. So the way to think about that is that about 85% of the time, you're running both tests on those patients. So strong attachment rate, and we feel that that'll stay consistent. You can order the test à la carte, and there could be some scenarios where you may wanna do that, especially as you start to think long term- Mm-hmm for monitoring and surveillance. Can you talk about the design of that? I mean, why did you go with this two tests rather than one? And I get that fact that it had... I mean, from a sensitivity, specificity, and design, you probably had to go that way, but, you know, from a marketing standpoint, you probably could have gone with one test. So what was the rationale with this? Yeah, early on, when we went out and met with physicians, you really had a split group. You had some who said, "Our biggest challenge is identifying those patients to send to CT surveillance," and you had others who said, "I need better guidance as to who I intervene with." So we noticed that early on in our market research. Secondarily, we're measuring different things, and like you said, by doing the two tests, you can order them via à la carte if you want, one or the other, but most physicians are stating, "Hey, we see value in both," right? Because if you don't get that likely positive or that likely malignant result with Nodify CDT, there still is a question, and that question can be answered by utilizing Nodify XL2. So we see the value in both. We did not launch them at the same time. So we did have experience with Nodify XL2 being launched about 4 months, 4-5 months ahead of Nodify CDT, but the greatest value really has been in offering them together. Got it. Okay. No, that's really helpful. Can you talk about the different or the three new pipeline three tests in your pipeline? What are the timeframe them, and what are the key attributes of these products that you have coming to the market? Yeah. As a lung-based company, we really value that consultative direct sales force offering as much value as possible. So for us, continuing to discover, develop, and commercialize new tests is critically important. So the three tests that you've referenced, and I'll go into greater detail, one is called Primary Immune Response, another is Risk of Recurrence, and then the third is MRD. I'll do Primary Immune Response first. This is an assay that we've discovered and developed and even validated, where we can help physicians identify those patients that will respond favorably to an immunotherapy. It's been about 5-6 years now since immunotherapies were approved for lung cancer. The initial data suggested that 1 in 3 patients would respond favorably. Real world data says it's closer to 10%-15%. So as much as that 10%-15% benefits, we're really trying to identify who they are, 'cause those that won't benefit, we need to put them on a different treatment regimen. So that's the first test. The second test is Risk of Recurrence. That's another one that we discovered, developed, and have validated internally. Here, a blood-based proteomic test, where we're identifying those patients that'll recur pre-surgical resection. So it's the opposite of MRD, where you're doing a post-surgical resection. The reason that's critically important, early-stage lung cancer diagnosis guidelines state that they deem surgical resection to be the next best scenario, and then that said surgical resection is deemed curative. Unfortunately, the literature shows that within two years, 50% of those patients recur. So today, the standard is conduct the resection and then wait for the cancer. So we can help identify those that are highest likely to recur. Can you apply a treatment post-surgical resection? And so that's really what we're, we're focused on, partnering with physicians to answer that question. And then the third test will complement that, and that's an MRD test. You may recall we made an announcement that we had partnered with Memorial Sloan Kettering here in New York to help develop this MRD test. So what this means is post-surgical resection, you know, minimal residual disease, we're trying to identify those patients that are recurring, and that can be done kind of on a monitoring and a serial basis. When you combine those two tests, we believe we'll be the first company to have both a proteomic and a genomic test measuring pre-surgical resection and post-surgical resection, and we think that'll complement and help guide the different treatment options that patients are put on. When we look at those tests that they've all been. Well, the MRD test, I should say, is lagging behind. We're still working on that development effort, and then there will be a subsequent validation that occurs with that. At this point in time, we're not looking to commercialize those tests in 2024, and that's more kind of a decision that we made. We've become really, really mindful of really getting to profitability or at least demonstrating what that path to profitability looks like. And you may have seen in our recent earnings, we started to disclose Adjusted EBITDA, giving guidance to what that looks like. When the one thing we know in diagnostics is, you know, discovery, development, and validation of a test is one thing, gaining reimbursement is another. We don't plan on adding additional products to the portfolio at this time without a good plan on reimbursement timing. Got it. And, you know, can you dive into that a little bit of that reimbursement timing? 'Cause there's been a kind of a change in paradigm in the way diagnostic companies would run. I mean, I think about 15 years ago, you went out, you got CMS coverage, you went out, you tried to get private payers, you commercialized. Yeah. You know, then the paradigm changed, I don't know, maybe 10, 5, 10 years ago, where it was, get CMS coverage, go out. Now it's kind of get LDT, I think- Worry about coverage later. Yeah, I think that pendulum is swinging back, as I think everybody's mindful of no-pay or low-pay test. They're just a drag on the business. Now, for us, as we continue to grow, there may be scenarios where we pursue that, given the fact that we already have five on-market tests. But we really want to be mindful of setting a scenario where those sales reps can succeed, and that's not a drag on the business. I think that's the challenge, right? Mm-hmm. Is how do you continue to validate a test, get as many interested parties, and then all the while work concurrently to get reimbursement coverage? You know, private payers always lag. We know you've got to get CMS first, but if you can narrow that gap or that window, that would be the ideal scenario. Now, for us, because we're focused in lung, this is a heavy Medicare- Mm. Patient population. About 60% of the patients that are eligible for all of our tests are gonna be Medicare age. Yeah. So that changes that a little bit for us. I think you'll find that across other specialties, right? Really looking at what the average age of your patient population is. Got it. So that helps with my next question, 'cause I was gonna ask if there's a magic, you know, cost, cost of goods sold or gross margin number, which says, "You know, we wanna commercialize it right now. Yeah. I guess with CMS coverage and 60%, you probably get it right at CMS coverage, where that maybe makes your decision- I think so. pretty easy to commercialize? Yeah, I think so. It's much more appealing, right? For us, the challenge will be is that'll still be a little bit of a drag, where we're exceptionally proud of the strong gross margins we've got in the mid 70%. We think we can maintain those for the near term. I think the question is, not only when you launch a new product, is how quickly can it ramp and scale? Mm-hmm. Right? And if you can get it to scale and you have Medicare coverage, then I think that's when you've got the green light to move fast. But that's really what we're talking about and considering when we look at our pipeline. Being mindful of that, not just flooding as many products as we can into the market, but really ensuring that we've got that reimbursement pathway. And as you said, that also establishes that there's a cadence. You wouldn't want to introduce three new products with no or little coverage all simultaneously. Got it. Well, you have around 60 reps, and it's leveraged on $50 million in revenue. You know, how long... I mean, how much capacity would you have on a theoretical basis to add on additional revenue to that base? And, you know, how do you measure your sales force efficiency? Yeah, so, we disclosed at the last earnings call that we had 60 sales reps driving towards that $50 million, as you said. About 10 of those have been hired in the last few weeks. So a different way of thinking about it is you've got about 50 sales reps that have contributed to that $50 million. You know, simple math shows and highlights that on the higher end, we've got some of our top performers that are well above that $1 million per sales rep productivity target. For us, when we get, and we have seen and experienced this, in some territories, when we get to that $1.25-$1.5 million per rep, that's when we start to look at territory size, to optimize their ability to continue to perform and also making it much more manageable. So we've begun splitting some territories. We think that those 60 can continue to perform at that level, but we're also. We've got plenty of room to continue to expand. 50-60 sales reps isn't gonna cover the opportunity. And so what we've done historically is add, on average, about 4-6 sales reps per quarter. We're currently working on our 2024 plans, and I think that's what you can expect. So that'll put us closer to that 75-80 sales reps by the end of next year, so that we've got an exceptionally strong exit out of 2024. Got it. Now, correct me if I'm wrong. I mean, I think your only call point is the pulmonologist, or is there an oncologist, too? Yeah. You know, how do you get to that 60 number or need more? You know, can you talk about, like, maybe the number of oncologists, pulmonologists in the US? Yeah, so we start with the pulmonologist. And the best-case scenario for us is to follow that patient through that, that treatment continuum. In integrated practices, it's much easier, where you've got a pulmonologist who's referring on to an oncologist that's on staff. In, in more rural, non-academic, settings, you can see that that's where you've got to follow them to a, an oncology call point. And in the middle, you've got a thoracic surgeon. In some scenarios, they play a role, right? They're the ones that are conducting the surgical resection. So we view it that, that we really are wed to that, that lung cancer patient. We call on all three. So the way we, we start is with Nodify. We call on all pulmonologists. As they work through that continuum, you can see the value that, the risk of recurrence test and the minimal residual disease test would add, especially when you get to pulmonologist, to thoracic surgeon, and potentially to oncologist. And then our IQLung portfolio is really focused on, the pulmonologist ordering the test so that when they refer that patient on to medical oncologist, that they arrive at their first medical oncology visit with those test results in hand, right? What we've learned is that a late-stage lung cancer diagnosis has a median overall survival of about 10.5 months. So if you're waiting weeks to months to get those results, you're impacting that patient's quality of life. And so for us, that's the real goal. But each one of those products kind of plays a little bit different into each call point. And we feel confidently that with the number of sales reps we have and the number of pulmonologists, which is about 10,000 in the United States, to your question, we've barely begun to scratch the surface. There's significant opportunity to grow, not only with the sales team that we have today and the products we have, but as we continue to invest and add to both the portfolio and the sales force. Got it. This is great. So, you know, maybe I see Robin's in the audience, but maybe I'm gonna throw an off-axis question to you. So, you know, as you're adding on this additional sales force in the going-forward basis, how should we think about SG&A? I mean, I'm assuming, you know, maybe sales grows at revenue, maybe a little bit higher. How should we think about G&A? Are you fully leveraged at this point? Yeah, I think you're thinking about it similar to how we're modeling it. You know, the one thing I stated earlier was in disclosing Adjusted EBITDA, was kind of giving the first glimpse into what that path to profitability looks like for us. We've also talked just now about the 10,000 physicians out there and the abundance of patients that we can get to. We don't wanna take a grow-at-all-cost approach. We wanna be very mindful of every dollar spent. What we've seen when we add a sales rep is they can begin paying for themselves within about three months. So for us, that really enables us to plan accordingly. That's partially the reason why we've chosen to bring on four-to-six per quarter. We think it's not only manageable, in terms of training, educating, onboarding, but we think that it's easy to plan. You know, again, in a different day, like you talked about years ago, I think you would have built a sales force of about 100 reps overnight. You would have gone out and pushed as hard as you could. Mm-hmm. SG&A would have been through the roof, and then you would have caught up. We do not wanna do that, right? We wanna be very mindful of every dollar spent and what that return is. And so I think what you saw in the most recent earnings is more of what you'll see in both Q4 and Q1. Got it. So let's go back to the IQLung portfolio. What are your expectations on private payer coverage adds, and you know, how should we think about the trends in ASPs over the coming years? Yeah, you know, so as we look at it. I referenced all five of our tests have Medicare coverage. They now all have private payers. Part of it is the recency in which you launched the test, and so the two tests that have launched most recently being Nodify, that's where we're spending the majority of our time with private payers because it's the biggest opportunity, and it's where we're growing fastest. On the IQLung side, we have strong private payer coverage to date, but again, we're mindful that with the resources we have, where's the biggest bang? And it's gonna be in the Nodify private payer coverage focus area. And on three of our five tests have ADLT status, so advanced diagnostic laboratory status. They're locked in on an annual basis on that price, and so for us, again, let's focus our sales team to sell the products that provide the greatest clinical value, and oh, by the way, those just happen to be the products that have the greatest gross margin for us and are priced appropriately so. Let's go back to the competitive landscape in your IQLung portfolio. What was the standard of care prior to you coming in? Are there any other companies looking at changing the standard of care from either the legacy or yours? Yeah, so if we segmented into the two, kind of arms there, we have Nodify, which is your pre-lung cancer diagnosis. There's nothing there, there's nobody that really predates us, and so we've got a first-mover status, which is a great honor and privilege, but it also takes time to educate and inform and build a market, and I think the team's doing an incredible job doing that. When we look at that landscape, it's a massive opportunity, so we fully expect competition. Right now, the earliest known competition with Medicare coverage is probably gonna be 2025, maybe 2026. So we think we can take advantage of that, but again, I think when you look at test performance, that's what's gonna matter. We'll look to learn more about those competitive interests and efforts over time. I do think that something that's of interest nowadays is screening programs, and I think those can positively impact us, too, because it happens earlier, and I think the more you see, whether it's a single cancer early detection test or a multi-cancer early detection test, is, I think we're gonna identify more patients that need follow-on testing, and so I think this market opportunity only continues to grow and expand. When you have a cancer diagnosis, the market gets exceptionally crowded, right? And so that's where our IQLung portfolio fits. With two of our tests being genomic, we're in a competitive space where you're trying to identify those mutations that'll help guide and inform which treatment to put a patient on. There, our competitive advantage is really turnaround time. We're all priced equivalently, but what we've said is, when somebody partners with Biodesix, they will not wait on a test, right? We're gonna be the first in the door and the first out the door. But again, about 230,000-240,000 patients in the United States are diagnosed with lung cancer annually. That's too many, and we've got to do a better job. But you've got a number of companies competing in that space. And so for us, we're gonna continue to focus on early detection and diagnosis, knowing that that'll continue to drive our growth. Gotcha. All right, thank you very much. And, maybe we can go to, the, the recurrence tests, well, or let's say the monitoring and recurrence tests. And I think you said this is a 2025 kind of phenomenon. Is that for, just around, you know, you want to add a lot more studies to this? I mean, it, it kinda sounds like you're maybe putting this on hold. Is that, is that a way to kind of describe it, or is that an unfair characterization? No, I think there's truth to that. I think it's being mindful of where our dollars are spent, being mindful of the return that we can get on that. And we always want to conduct more studies, right? More data is better. And so really, if you look at those tests, we validated those tests. We don't have ongoing clinical studies for those tests, and so again, when we do that, that's gonna be a significant expense, and so let's make certain that we've got that line of sight to reimbursement. We'll continue to update everybody as we progress through 2024, but we're continuing to learn 'cause we offer those tests as part of our biopharma services package. So if somebody wants to utilize that test, see how those tests result out on their patient population, we can provide those results. So, we still have interest on the biopharma front, and we're continuing to learn. We'll do that, and then we have a number of academic institutions that we've partnered with, and we're trying to learn as much as we can through their efforts. But again, it's really about just being intentional and mindful about where every dollar is spent, what the return looks like, and opportunistically, where we have a competitive advantage. Gotcha. All right, for my last question, it's my cliché question, or my signature question. So the year is 2028. We're here at the Piper Healthcare Conference. Can you talk about what you've been most proud of over the last five years? Yeah, you know, I think it would be the same way I would answer it today. I would be... Having a first-mover status is a significant responsibility, and I think what our team's done has been remarkable. And what we know on a daily basis is we are positively impacting those patients afflicted with lung disease, and so we take great pride in that. I think the magnitude of the impact continues to grow, and I think if we're sitting here in 2028, we'll be able to look back and say that we impacted more patients than ever in that year. And I know that our culture and our team is motivated by that and inspired by it, and we'll continue to focus on it. Gotcha. Well, we do have one more minute, so I'll just ask you then the, the typical question, which is: What's the most, misunderstood thing in the, in the, in the Biodesix story? Wow! Probably not one thing. I think when I look at it, it's the competitive advantages that we have in terms of having five blood-based tests with greater than 70% gross margins, a direct and dedicated sales force. I don't think people appreciate that in diagnostics, not only is that difficult and complex, it's expensive to build what we've built. I think what you'll find is to have five on-market tests, it demonstrates that we've got a well-oiled machine. Everything from test and assay discovery, to validation, to clinical trials, to reimbursement. We've done it, we can do it, and I don't think we have to really prove that we can do it. We just need to continue to feed and fuel the organization. I don't think many, many understand that and appreciate that, but I think they're starting to pay attention and get it. Got it. Well, thank you so much for your time. Yeah. Thank you, David.