Session here. Thanks again for being here, everybody. You've probably heard that at least a few times over the past day and a half. We're pleased to be joined by Biodesix's CEO, Scott Hutton. Number one, thanks for being here. Number two, why don't we jump in? Yeah, let's do it. Thanks, Max. It's great to be here, great to be in person. Good to see each other in person. I do wanna just give you an opportunity maybe to for those that are new to the story, just to give a brief overview. Yeah. You did, just, re-report, so, brief overview of the business and then, you know, how big is the business? Yeah. Yeah. Scott Hutton of Biodesix's CEO, as Max said. It's great to see you all. We are a lung-based and lung-focused diagnostics company. We have five on-market tests, all with Medicare coverage, four of the five with private payers, the fifth to begin private payer coverage this year. We did give a guidance range for 2023 of $52 million-$55 million, and our core business will continue to grow greater than 60% year-over-year. We also as part of our business offer biopharma services and testing. That business is very strategic to us. That business has really begun to rebound, and we're expecting 2023 and 2024 to be great years for us there. We did disclose as part of the earnings call, that we have a record number of dollars under contract on the biopharma services front. We've got over $9 million of contracted dollars that'll be spread out over the next year to 2 years. Inbound RFPs are at an all-time high, and so we feel pretty confident we can continue to build that book of business over time. That is, I would imagine, driven by the Diagnostic Cortex. It is. technology, but maybe we could touch on that a little bit. Yeah. No, thanks, Max. Our internal AI machine learning platform we call the Diagnostic Cortex. We use that to both interrogate and identify unique signals that can be informative in both drug discovery and assay development. We use that and we apply a multi-omic approach. What we mean by that and what it means to us is we don't think that there's one single platform technology that'll provide all of the key critical insights that we're looking for. We have NGS, PCR-based technologies, we have proteomic platforms, and we work with a number of platform providers like Bruker, Bio-Rad, and Thermo. That also adds to that biopharma perspective, where we'll help them come at it both from a genomic and proteomic front. The Diagnostic Cortex continues to help us discover and develop new assays and tests that hopefully we'll commercialize over the coming years. Yeah, you've press released, you know, that you've, you know, brought some of the next gen platforms like the Proteograph and timsTOF and yeah, Proteograph. Yes. timsTOF, you're not withholding to the Illumina tax on the sequencing side. You know, for us, I think it's really trying to be a good partner with all providers. We definitely feel like certain technologies are slightly more effective and more meaningful to us. On the commercial side, we really pride ourselves on turnaround time, so if we can keep our costs down and we can turn those test results quickly, we think that matters, right? We're dealing with some of the deadliest cancers, every day, every minute matters. That helps us and, you know, guide us in terms of which technologies may be ideal for us. We've got a long-standing relationship with a number of these partners. We've built trust, trusted relationships and really proud to represent the Biodesix's team 'cause it's a number of those team members that have built those relationships. Yeah Speaks volumes for kinda who we are as a team. Yeah. I'm sure get to gross margins at some point, but, I would imagine that, your facility, space in Colorado is probably a bit less expensive than being in Redwood City. Yeah. No, I definitely think so. As Max said, we're headquartered in Boulder, Colorado. We've grown so rapidly over the last few years that we're currently renovating a new space that we'll be transitioning into towards the end of the year. We'll transition out of about 35,000 sq ft there in Boulder to just under 80,000 sq ft just outside of Boulder, really building a state-of-the-art lab that can accommodate all of our growth that we've achieved thus far and that we plan on achieving over the next couple of years. We also have a laboratory just outside of Kansas City. We historically had a laboratory in Seattle. I think to your point, West Coast costs are exceptionally high. Yeah. Our annual rent just outside of Kansas City didn't even cover one month's rent in Seattle. Really you start to deal with not only just labor costs, but labor shortages and then T&E. As we come out of the pandemic, we wanna be very mindful that finding the most talented people and enabling them to do the work where best they can is what will benefit us. Having teammates stuck on planes, trains, and automobiles trying to get in and out of a lab isn't the most effective and efficient use of time. Yeah. Absolutely. You know, we've been connecting since before you were a public company. Yeah. You know, I know that in prior years, your gross margins have been, you know, as high as nearly 80%. Yeah, yeah. in some quarters. We think that's a best in standard. When we look at other diagnostic companies, you still see some of them up in that range. We saw ours take a hit during COVID, mainly attributed to our getting into COVID testing. We thought that was the right thing to do. We proactively took that gross margin hit, and we've begun working our way back out of that. We wrapped the year with gross margins right at blended about 66%, and we've stated as part of our guidance for 2023, we fully expect to be in that low to mid 70% range, still giving us ability to scale. The other product that we launched most recently was a commercial NGS test with a 36-hour turnaround time. That 36-hour turnaround time meant if we were gonna honor that, we were gonna take a little bit of a hit. As that scales, we fully expect that to get back into that blended 70%-75% range. Yeah. We feel confident that that puts us kind of in that upper tier, upper class of other diagnostic companies. Yeah. Yeah, which many of those companies are land grabbing, you know, in certain applications, before, you know, before they have certainly commercial payer coverage. Yeah ... in some cases, even Medicare coverage. Yeah, it's, it's the... I think it's probably the third straight quarter where your gross margins have come in pretty solidly above ours, and you had the CDT Medicare win you know, recently, the four private payer wins. Maybe just, be curious, how we should frame, you know, the gross margin opportunity, you know, in 2023, and then have you provided a, you know, a revenue number and gross margin number that gets you to breakeven? Yeah. Let's start in reverse order. We haven't to date. As we worked our way out of the pandemic, we've stated that we would like to provide that, but we wanted to put a couple more good quarters up and really let our performance speak for itself. Yeah and demonstrate. We'll plan on doing that as we progress through the year. As we look at kind of that performance, you stated Nodify CDT getting Medicare coverage, that happened in third quarter, actually end of Q2, beginning of Q3, so we did see that benefit. Private payers still are yet to come on Nodify CDT. That's not a surprise. We fully expect and are working towards that for this year. Again, putting us in that position with five on-market tests for lung, all with Medicare coverage, four of the five having private payers. You highlighted the announcements we made towards the end of last year with three to four private payers coming on. We've had additional private payers come on since then, and that really is just part of that playbook, where having a targeted managed care team that's working on those relationships, sharing the data, putting it back out in front of providers, we're gonna continue to see private payers come on board. For Nodify XL2, we closed the year with right at about five million lives covered on the private payer front. We'll continue to see that grow and expand. Most importantly to us, it's not just the number of lives covered, it's ensuring that it's lives that are reachable to us. Are they in areas where there's a high incidence of lung cancer? For us, thus far, it's yes. Are they in an area where we have good utilization and physician support? Yes. Obviously having a great commercial team out there to support that need and interest. We'll continue to see that grow and expand. That will help drive, you know, improve gross margins, but because CDT won't come on until the latter half of the year, we really think that big impact is probably in 2024. Yeah. Okay, that makes sense. Then just, yes, sticking on margin leverage, one of the other unique observations has been how quickly your sales reps have been able to get up to speed in terms of productivity. I guess to start, you know, why do you think that is? Of course, between the gross margin factors and, you know, some unique Salesforce productivity factors, I think it'll be, I think we're all excited to see that number when it comes out. Yeah thanks, Max. As a prior commercial person myself, and I view myself as a commercial leader, I'm gonna state what most CEOs state, and that's it starts with the team. I've I know I'm biased, but I feel that we've got the best team in the business. I think that's part of it, is having a sales team that really each and every day walks that mission and vision and supports the culture that we've been so adamant about building. I think that speaks volumes. I think secondarily, it's supported with our test. I think having tests that have high performance, I'll go back and reference that ORACLE, our registry study, we've demonstrated at multiple time points on interim analysis that the tests are performing in a real-world environment, equal to what they performed during the validation study. That's a bold statement, not many companies can state that. Many try to study off an enriched patient population, and then you see degradation in test performance in the real world. We haven't seen that. I think that speaks volumes so that when our sales professionals go in, not only do I have the confidence that we've got the best in the business that know exactly how to position it, and they can be consultative and answer those difficult questions that physicians may have for them, but then the test stands alone and speaks for itself in terms of their ability to perform. You know, we've looked at it and said, "If we can get a sales professional on board, get them contributing, and paying for themselves in that three to six-month time window, we've done a great job. Mm-hmm where we're at now though is as we get to that, you know, 50-ish and 50-plus sales reps covered in the United States, is really being mindful that not every territory and region is really the same in terms of opportunity and coverage. We're starting to explore bringing on associate sales consultants. Mm splitting some territories. The goal here really is to optimize those talented, capable experts on the sales force. Yeah that have gone out and built business, freeing them up to continue to go out and hunt and bring on new business. Those associate sales consultants, they're gonna focus more on managing and maintaining the relationships and those accounts. We also think that's a means by which we can drive higher profitability and productivity on the sales front. Maybe can you just remind us, you know, the number of, you know, pulmonologists in your end market, right? Like, what h ow do you right size the sales force? Like, what's the right number? Yeah. There's approximately 14,000 pulmonologists in the United States. Now, their practices are gonna vary. They can see everything from, you know, asthma. Yeah to COPD. There's a much smaller sub-segment of that that you say. Mm-hmm purely kind of in that, you know, incidentally found nodule leading to a lung cancer diagnosis. There's also about 3,000-4,000 interventional pulmonologists, and so they're the ones intervening, conducting bronchoscopies, doing biopsy. We really start there. We focus on that being the sweet spot. We also know that this is a broad referral network, and so as we continue to grow and scale and have more sales reps, we're gonna reach deeper into that referral network across that pulmonology call point. After that, years down the road, you start to tease that out and state, where does the referral originally start? That's with your primary care physician. We are not gonna build a primary care physician sales force. Yeah but we see the ability to continue to educate and inform to empower those primary care physicians, to refer the right patients onto the right pulmonologist for whatever it is that they're treating. There's a few public companies with decent sized sales forces. That y eah. We've got about 50 sales professionals, so the thought of expanding to 1,000 to cover, you know, 200,000 Yeah is not something that's in our wheelhouse. We're not experts at it and we don't really aspire to ever be. Yeah. Well, it's. You know, I think back to the earlier days and Biodesix being, one of, if not the earliest companies to launch a multi-omic liquid biopsy Yeah assay used upstream, right? Yeah. Um With that being proteomic Yeah in nature too, right? I mean, we're one of the only companies out there that have three on-market proteomic tests with greater than 70% gross margins and rapid turnaround time. I think what the teams you know, really demonstrated from a development perspective is we can scale these tests. We know how to do that. We're gonna continue to do that. The multi-omic component, I think is a differentiator for us, and we'll continue to explore that. We've got a number of efforts in our pipeline, and those are kind of true multi-omic tests and capabilities. We wanna be mindful of the opportunity at hand. Five on-market tests, Medicare coverage, all focused on lung, four of the five having private payers. That's rare by dare. There's not many diagnostic companies that find themselves in that position, and so we're gonna go ahead and capitalize on that. Yeah. Maybe I'm gonna ask one question before, we speak to the one factor that's been the major pressure on your stock, which is balance sheet. It's the hyper-focus on blood-based colorectal cancer screening for the past half, over half decade. Yeah. Right? The more recent shift towards blood-based lung cancer screening, right? You know, your offerings can rule in, or rule out, you know, a benign or a cancerous lung nodule. Yeah which could occur if you, if you have somebody that is actually adhering to lung cancer screening guidelines, which is less than 10%. Yeah. Yeah. or it could show up, if there's imaging being done for some other purpose, right? Yeah. If you think about Guardant like a company like Guardant Health that's launching, you know, a large prospective trial for a blood-based test, for lung cancer screening, and then you think about your test, that differentiates between cancerous and benign lung nodules, do you consider it displacing or complementary? Yeah. It's a, it's a great question. I think what may be news to some is, you know, lung cancer remains the deadliest of all cancers, right? More people in the United States die of lung cancer annually than the next three combined. That's breast, colon, and prostate combined. What's the, what's the biggest impact we can make in a short period of time? It's gonna be early detection, right? We can make a huge impact with early detection and diagnosis. You highlighted it. The literature will show, current lung cancer screening program adoption is really between that 4% and 10% range. That's just not acceptable, we gotta get better. I think in stating that, I think we all are cheering for all of the kind of liquid biopsy efforts, you know, whether it's pan-cancer diagnosis or not. It's gonna positively make a big impact. I then would state that the data will speak volumes. How those tests perform in a real-world environment. Yeah will matter most. I won't speculate on that. We'll see in time and hopefully they perform well. We see it as complementary and enriching to us. You know, the one thing when it comes to lung is even if you had a blood-based predictor that said you had lung cancer, there's not a pulmonologist that is going to intervene without running a CT scan, right? They're gonna want to look at the lungs. The moment they do the CT scan, all of our tests are capable of being run. So in a test that maybe has, let's say they have a high number of false positives, you can utilize our test to risk assess that and risk adjust that, right? The contrary would also exist. Once you conduct that CT scan, a physician's gonna look at that, and they're gonna say, "Okay. Am I gonna intervene?" It's never as black and white as one may think, right? I think every single person in this room probably has something on a CT scan that would look suspicious. Mm-hmm. What they really wanna know is, "Where am I gonna go? Why am I going there? What's that lesion look like?" Our blood test can help identify is that truly a malignancy or is it not. We think it's complementary. We also look at this and say the current healthcare system has a difficult time supporting all of those patients, right, that have an incidentally found lung nodule. Outside of screening, you have over 5 million incidental lung nodules identified annually in the United States alone. We can't get to those. If we bring on additional tests and we double and triple the size of this market, physicians are gonna have to understand what helps them discern when do I intervene and why do I intervene, and when do I take a wait and watch approach that can be supported with CT surveillance? Again, we think it's complementary. We think it is going to cast a really broad net. It's gonna bring more and more patients that are at risk into the fold. We can help them adjust and assess what that risk looks like. Yeah. I mean, it's just so i t's very interesting because originally I would think of Biodesix as being upstream to, say, a Veracyte because of the ability, right? Yeah to differentiate between benign and cancerous. Yeah nodules without a surgical biopsy. A Guardant screening exam which likely, you know. We're hosting a panel later today by the way. It's CRC screening. Say it's wrapped into as a, you know, part of a multi-cancer solution aimed towards populations that have low screening compliance. Intuitively it would lead to more CT scans, and a cancerous nodule, lung nodule can look very, very similar to one that's benign. Yeah. Right? Yeah. It can. If you look at the literature, really going back over the last 10 or so years, one in three patients that had an intervention actually had an intervention on a benign nodule. It goes to what you said. Just looking at an image in the absence of additional biomarker insights, what did that lead us to? It led to 65% of those patients having an unnecessary procedure, which just drives up healthcare costs. We have been able to demonstrate, through a couple of studies, that utilization of the Nodify nodule management risk assessment testing can reduce ineffective and unnecessary procedures by up to 70%. We think that's where that fits. It really plays that role. Even if you take a blood-based result and/or you take an image as a standalone, there still are questions to be answered, and we can provide those insights. Yeah. Again, this isn't on the question list... Okay By the way, but it almost. To me it seems like a blood-based lung cancer screening test, you know, without a subsequent capability to differentiate the findings on imaging would be, you know, a less useful tool than, say, obviously a CRC screening. Yeah. I think as I think of it in that continuum, I think it'll be more useful than the current USPSTF standard of lung cancer screening significantly. That's when you've got 4%-10% adoption after doing this for many years and you've also lowered the age requirements, they're doing everything they can to bring this population in that were just not successful. I think it's a huge opportunity. It's gonna cast a broader net. The real question is what do you do with what you capture, and I don't think it's gonna be that definitive. I think that then leads to, hey, you know, we can make up and just call it round numbers, but if I'm a physician and I'm having a hard time getting to 20 patients today, that number could jump to 200- 300 patients I'm trying to figure out. A blood-based test that can be done either in office or remotely with mobile phlebotomy, I can get those test results, I can help enrich my population by knowing who do I pull forward, who is the highest risk of lung cancer, versus just having a population that you say they're at risk or we think they're gonna have it. We really help them define not only who has the highest risk, but who they intervene on first and soonest. I think that comes full circle. If we really are gonna have a positive impact in kind of quelling the impacts of the deadliest cancer, we've gotta get earlier detection and diagnosis and get these patients back into that kind of continuum of treatment options. Yeah. The reason why I'm asking a lot of these questions that are, somewhat Guardant related is to try to frame, you know, to build the foundation of knowledge. Yeah around, you know, lung, around, you know, the full end-to-end journey. Yeah of determining whether or not somebody has actual lung cancer. Yeah. I think what I would add to that, Max, just real quick, is, lung is difficult, right? There's a graveyard full of companies that have attempted to get into lung. Yeah and tests that people thought would perform in lung didn't. At Biodesix, not many know we were started as a pan-cancer company. We had years of research in multiple cancer types. Some of our early tests worked well and performed well in lung. I think we've proven that it can happen, but you can't just assume that a test that works well in colorectal, in breast, in prostate, whatever it may be, is gonna translate and work equally as well in lung. We haven't seen that historically. Doesn't mean that it won't happen or that it's not capable, but we've got room to improve. There's also a number of companies, some that are here and some that have been to meetings like this in the past that have attempted to get into lung unsuccessfully. We take great pride in the progress we've made, but we also realize that that lung has a history of demonstrating it's gonna perform and act a little bit different. So we still think we play a very strategic and significant role going forward, even with those players. Yeah. The more companies that we have investing in this space, I feel confident we're gonna make an impact in lung, and I think that's ultimately the goal. Yeah. you know, likely a reason why, you know, you decided to conduct a creative but very helpful financing for the company and in a to go about it as a standalone Yeah for a bit, right? Because intuitively, I guess if you put all the data points together that we've just discussed, including the margin commentary, right, the productivity and the sales force, and the complementary nature of the tests, a combined entity that had both of those capabilities would probably be profitable off the bat. Well, I think that's... I think, you know, walking these halls and talking to many of my peers, I think that's the challenging time we're in. Coming out of COVID, going through inflation, heading into a recession. You know, you can go through all those scenarios, we all know that fundraising's difficult and complex, even in good times. Yeah. Right. I think, you used the word creative. I'd like to think we were creative. really I'd say we were adaptable and flexible trying to make, our financing work for the best, of us as a team, but also keeping in mind our shareholders. Mm-hmm that have been with us a long time. The real goal has always been at Biodesix, let's build the best company we possibly can. Let's really focus on having tests that are clinically important and relevant. As we do so, there's gonna be continued opportunities for growth at scale. You know, we're excited about what's going on in the marketplace. Some of our peer group companies are doing some big things and, you know, we're gonna prepare and plan as if we're gonna continue to be here for years to come, probably competing with some of them. We are focused on really optimizing performance and productivity, getting to an EBITDA break-even time point sooner rather than later, and really demonstrating that we can do this at scale for years to come. Great. Maybe just to close out 'cause we're at time. Yeah Where does the cash balance stand now? Yep. Exited the year with around $49 million. That's why, you know, we're gonna take a very prudent approach this year. I talked about the 50 sales professionals. We have a history of kind of adding about six per quarter. We're gonna slow that down. I referenced the associate sales consultant role. Mm-hmm. We're gonna invest in that, let that perform for a period of time, allow those learnings to help not only inform, but guide us as we invest going forward. It really is about productivity and profitability. If $1 spent today doesn't have a near-term return, we're gonna look at pausing that. Yeah what we can do, again, because we're in such a unique position with 5 on-market tests, all with Medicare coverage, and four of the five having private payers. Not something to be taken lightly and something that we're proud as a team of what we've achieved, we think we've got a runway for the next year or two just to leverage that. Yeah. If we had some more time, we'd probably talk about the risk of recurrence and some other pipeline tests. Yeah. Anyway. I look forward to that. We've got a rich pipeline, and I Yeah I think it's encouraging to share that with others. If anybody has any questions, they wanna learn more, don't hesitate to reach out. Again, thanks to Max and the Cowen team for this opportunity. Yeah. Thanks for being here, and thanks for everybody for joining. Appreciate it.