Welcome to the RBC Capital Markets 2024 Global Healthcare Conference. I'm Conor McNamara, the Life Science Tools and Diagnostics Analyst. It's my pleasure to introduce our next company, Biodesix. On the stage with me is Scott Hutton, CEO. Welcome, and thank you for joining us, Scott. Yeah, thank you, Conor. We don't cover your stock, and so I'd like to maybe spend a few minutes just giving a quick background on yourself and Biodesix for some of the investors that are new to the story. Yeah, thanks, Conor, and thanks to RBC. It's a pleasure to be here. So Scott Hutton, I'm the CEO of Biodesix. I've been with Biodesix since March of 2018. Came in as COO and CEO in waiting. We made that transition in January of 2020, so headed right into a global pandemic. No disruption or changes or challenges there. My background is really medical devices and capital equipment, so 17 years with Medtronic. I left Medtronic and joined Spectranetics and was with them until we sold to Philips, and then had the opportunity to meet my predecessor, David Brunel, and he shared kind of the timing and interest of making a transition. So grateful to have found the Biodesix opportunity. If you're not that familiar with Biodesix, we're a blood-based diagnostic company focused on lung cancer. So five on-market tests, all with Medicare coverage, all with varying levels of private payer coverage. We just recently had an earnings call. Seven consecutive quarters of greater than 50% growth, nearly 80% gross margins, puts us best in class. And we've been sharing our progress and improvements towards profitability and started providing adjusted EBITDA, really demonstrating that we can get there really in the next year or so. So we think we've got a differentiated offering. We've got about 60 sales reps in the United States calling on pulmonologists, and we've got first mover status in that space. Great. Thanks. I think you just answered half of my question, so good job. I did my job. I made this easy for you. So can you just walk through some of the key accomplishments that you've made in the last 12 months and kind of what's next in the next 12 months? Obviously, you're putting up pretty impressive growth. So where do we go from here, and what got you here? Yeah, so when I think over the prior 12 months, you've got to start with growth. I think it is best in class, and you don't take it for granted, especially coming out of the global pandemic where there were a lot of starts and stops. So really, the team putting up that strong growth trajectory, I referenced the gross margins. But we're really focused on content and data generation. And so in the second half of last year, calendar year that is, we published our ORACLE study data, and we're really happy to see that what we showed was a 74% reduction in unnecessary invasive procedures that also happen to be costly when you utilize our two Nodify tests. So that was a long time coming. We were excited to see that out there. And then at about the same time frame, we had an independent research. Three groups came together across the United States, and they showed a 73% reduction. So anytime your validation work is supported by real-world utilization data, it's a good feeling. So we were grateful to get that published and out there. And really, when you think about it, continued sales force expansion. My background is commercial, and so I think one of the greatest assets we have is our sales channel. And so as we continue to grow and scale that, especially over the last 12 months, took great pride in what that team has achieved. And as we shift now and look out on a 12-month horizon, it really is just continuing to execute. We've highlighted that we had three main goals or top priorities for this year: grow topline, continue to improve our already great gross margins, and also take a cost-conscious approach to that growth so that we can get to profitability. I think we're well positioned to do that and achieve that kind of in that time horizon. So it's exciting for us. Looking at the next 12 months, to your point, you put up, I think, over 50% growth over the last seven quarters, and you're guiding to 30% growth for fiscal 2024. So part of me says 30% growth is a very big number. Part of me says that's very conservative given where you've been. So how do I reconcile those two? Yeah, there was a fair bit of conservatism in there. Really, as we build a team and have a culture of success, we want to make certain we set the team up for continued sustainable results. We also came into the year with a fair bit of uncertainty, whether it was FDA regulation, whether it was Medicare payments. So for us, let's take all of those off the table. Let's put together a bottoms-up plan that we can hit and excel at. And that's where we're at. We also wanted to put up a good, strong quarter, first quarter, plan on doing that again this quarter, and really like the idea of putting up a couple of consecutive quarters where we beat and then hopefully put ourselves in a situation where we have an opportunity to raise later in the year. Great. That's great. I'd great. I'd like to hear that. And then just talk about $70 million this year. I'm assuming I don't know if you've given a TAM, and you probably have. But what do you need to do from a market expansion perspective to attack that TAM? Yeah, it's a massive opportunity. It's estimated that there's 5 million patients in the United States eligible for nodule risk assessment testing annually. For us, having a first mover advantage, we really are building out a market. We've focused a lot on ensuring that pulmonologists understand the requirements. I mentioned blood-based testing. Most pulmonologists don't do blood draws in office. We've built a mobile phlebotomy network that covers the full United States. We'll help coordinate and schedule and really manage that blood draw so the physicians don't have to do it. We can turn those test results around electronically to that physician so he or she can get those patients back in as quick as possible. We've also partnered with another company and have a self-collection device that's still administered under healthcare supervision or healthcare provider supervision. But it's really making certain that pulmonologists feel comfortable that if there is an obstacle or a challenge to ordering, that we're going to resolve that. We've continued to make progress on EMR integration and also integration between software nodule management tools. And so it really is about making that initial order request as easy as possible. We also updated our internal portal this week, actually. So as we roll that out, physicians can utilize our portal to request a test and then also receive their test results. So it's just really about being more effective, more efficient, knowing that a physician or healthcare professional's time is really critical. So if you're asking them to do something that is not in their normal daily workflow or process, that's going to be a problem and an obstacle towards adoption. We think we've put ourselves in a good position to address that. We'll continue to focus on that, and there will be additional opportunities from an EMR perspective in the coming months that we'll gladly share as we make progress on those. And then two other areas I want to talk about with this expansion into the market. One, you just raised money. It sounds like you're expanding your sales force. Can you talk about where that sales force needs to be to really attack most of those 5 million tests? And then on reimbursement, let's start with the sales force expansion. Yeah, so we've got about 60 sales reps contributing right now. What we've demonstrated is from the time we hire a sales professional, they can pay for themselves in about three months. So we've got a well-defined path to get them towards productivity. We've also seen our sales rep productivity numbers on an annual basis consistently in that $1.25 million-$1.5 million. We've been aggressive in cutting territories down, so we haven't really seen a territory cap or maxed out yet. The reason we've done that was twofold. First and foremost, for our sales team, we wanted to demonstrate that there's a big, massive opportunity. They don't need to be on flights. They don't need to be in hotels. We can minimize their windshield time and drive their productivity higher. So we've done that. Now, as we expand, we're expanding more Westward. We really started placing sales reps in more urban areas where cancer prevalence is highest. And so what you saw was Southeastern United States up the Eastern Seaboard and kind of into Chicago and down into Dallas. Now, when you look West of the Mississippi, we still have some sales reps covering very large territories. And so we need to cut those territories. We need to put more resources in and allow them to go deeper into those opportunities that they have in the West. We don't really know what the right size is, right? Each and every sales rep gives us greater confidence that we know what that number will be. We have disclosed we plan on hiring six-eight additional sales consultants each quarter for the remainder of this year. So we'll exit somewhere in that 70-80 sales reps. Just depends upon the timing of when we hire them as to whether they're fully contributing. And then we've also stated we'll do the same next year, and that's as far as we've gone. We think that number gets us there. And somewhere in that once we get to about 115 or so, I think we're going to be in a good spot. Right. On reimbursement, where do we stand with reimbursement, and what are some of the hurdles that you still need to get? Yeah, it's a great question. I think for diagnostic companies, especially today in today's environment, without reimbursement, you're in a difficult spot. You really can't support a no-pay test. We are fortunate that all five of our tests have Medicare coverage. All five have varying levels of private payer coverage. Three of those five tests also have advanced diagnostic laboratory status. And so that ADLT status helps lock that price in. So we feel confident that we've done what we need to do to maintain those prices. We're focused really on additional private payer coverage. Now, those are slow, and they'll take time, and we'll continue to share as we bring them on. But this is a heavy Medicare population, so we feel like we've put ourselves in an incredible spot. We do have a pipeline full of tests and other assays. Right now, those are on hold. We'll continue to offer them in a research use environment so we can continue to gather data. But we're going to hold on those, really, again, going back to those top priorities of getting to profitability, driving topline growth, and keeping strong gross margins while everybody is focused on cost containment. Reimbursement's ever-changing in diagnostics, so we're very fortunate. We've got a great team. We've got our finger on the pulse. We're staying on whatever may be required to maintain the strong reimbursement that we have today. Okay, great. And just getting back to the sales force, what's the call point for the sales reps, and what does the referral network look like? Yeah, I mentioned it earlier that we're the first to really focus on pulmonology and build this out. So pulmonologists are kind of that main target where you say the majority of them are diagnosing cancer. They're also the ones that are intervening. So they're conducting the tissue biopsy. Then we'll refer on. So if they need to refer on to a thoracic surgeon to do a surgical resection and/or an oncologist to provide treatment. We look at it and say we've got to go to the earliest call point where they make the decisions and then refer on. We have done some exploratory work in primary care physicians because a number of these patients really are stuck at the PCP before they're referred on to the pulmonologist. But most of the efforts to date have been solely around pulmonologists and even within that specialty, those subspecialties. We've focused more on the interventionalists, knowing they're the ones that are conducting the robotic-assisted bronchoscopies. They're diagnosing cancers. We've utilized those relationships to allow them to help define what those referral networks look like. And so we work backwards to go out and educate and train those referring physicians with the support of the ordering clinician. And so the goal is to get those test results in as quick as possible. All of our tests have industry-leading turnaround times, anywhere from three to five days. They'll have all of the test results. And so we pride ourselves on going to the right ordering physician, getting those test results back in their hand, and empowering them to do what's right, whether that's refer on to someone else and/or prescribe treatment. Thank you for that. Just if you look at your growth, how much of that is, I don't know if same-source sales is not the right number, but reorder by certain pulmonologists versus just new territories? It's really a good blend of both. The latter, obviously, if we haven't had a full sales force, when we hire a new sales rep, they're out knocking on doors where we haven't called before. So kind of an easy ramp to say that that's a new ordering physician. What we've also seen in the more integrated kind of academic settings in urban areas is you'll go into a practice, and one physician usually starts ordering. The other physicians learn through that individual. We've been able to demonstrate that once we get somewhere between 20 and 40 tests, you usually start to see the other physicians start to order, and we can see a similar ramp there. We refer to that as a land and expand. You land in an account with one physician. He or she shares their performance and their utilization of the test, and then the other physicians come on. So right now, a good blend, a nice mix of both, and we foresee that maintaining through 2024 into 2025. What about LDTs? Let's talk about LDTs. So the FDA has proposed more regulation on LDT. So how does that impact you, either from the positive or the negative side? Yeah, we've all known it was coming. This has been going on again, off again since 2006. And so the most recent ruling, we feel like we're exceptionally well-prepared for that. And so I would put us in a positive position where this is of benefit to us. When we break that ruling down, one of the first requirements is an ISO 13485 certification. We've had ours for over a decade. And so our goal from the get-go was to build the strongest team, culture, and business we can. We took that approach with our quality management system, and we acquired the software tools and team well in advance of being required to do it. So we think we're in a great position. We do know that there's about 20-30 contractors that can help companies get their ISO certification. A number of those have stopped taking new clients. And so this is going to create kind of a logjam, if you will. And so not only is that a 12-18-month head start for us, we think it could end up being more significant than that. And being highly regulated, as we have for nearly a decade, we have had successful ISO audits and recertifications, CLIA, CAP, New York State, and the FDA. So we've got a strong performance record from a regulatory perspective. Additionally, we look at it and say each and every one of our tests, having the reimbursement that it does, there was a nice data package. We're going to continue to invest in data development. And so as those rules and regulations, as you gain greater clarity, we feel like we've put ourselves in a good spot. Because all five have New York State approval, right now, the FDA has given guidance that New York State approval would put you in a positive position going forward. We think we've done everything we could to put us in the strongest position possible, and we'll continue to invest in that. I think it's critical. Do customers ask about that when you go into, I mean, maybe it's early, but would they be? No. No, I think what we find is I think if the customer, if you actually look at a pulmonologist, they're so focused on diagnosing cancer and treating patients, this is kind of in the noise. They look at us to answer questions. They want clarity. I think most of them would have an assumption that there already was FDA regulation. I don't think they get actually into the certifications. Now, where that could change is if they're a physician that does research and is part of an academic institution because those large academic institution labs are part of this LDT FDA regulation. And so I think that group of physicians, they're educating themselves and becoming much more familiar with what this ruling means and how it will help or hurt them in their academic institution. Great. Thank you. Well, we've got just over five minutes left. You've never been up on stage with me, but for those of you who know me, I like to have a little bit of fun with my management team. So for the last five minutes, we're going to test your ability to multitask and problem-solve. So I'm giving you Rubik's Cube. I'm going to continue to ask you questions, see if you could solve how far you could solve that. It's like one side or the whole thing? Well, let's see how far you get so far. I don't think I've ever achieved more than one. I'm just going to state that. Okay. Well, it's a three by three, so you can. This is hard. Okay. We'll keep going. Yeah. Is there a clock? You tell. [audio distortion] Yes. Yeah. No, we definitely can. And what I said earlier was our ability to continue to scale the sales team because we've capped some of those territories, right? We know sales rep productivity can improve. So as we bring on the additional sales reps, we're going to be very focused on, is it the right time to bring that sales professional on in that territory? Do they have advocates that support them? And what we've seen is a big shift where two years ago, we were out pushing, educating, informing, and empowering physicians to order. We've now seen a pull where we've got physicians introducing us to physicians where they're saying, "Hey, this is a partner of mine that I studied with. Can you detail him on your test? I'm using it. He wants to do the same." And so that's changed significantly. So we believe we can. Just for those of you that are listening online, the question was, can you get to profitability before 115 reps? We are single-digit penetration. It's really, really low. We have a tremendous opportunity. Part of that is coming out of the pandemic. Pulmonologists were disproportionately impacted, right? They were the first ones called to the front line. Those COVID patients were presenting with acute respiratory distress syndrome. So they shut their practices down. So when we came out of the pandemic, it was like a fresh start for our sales team. So we estimate that we're still low single-digit penetration. And as we continue to add sales reps, we know those numbers will change. I'm not making much progress on this. Laser-focused on Biodesix. Rubik's Cubes have not been. Yeah, guidelines prior to us being introduced actually stated in this moderate to low-risk category of patients to use their judgment. And what was interesting, we went back and did a literature review, and what we saw was 62% of patients historically that had a biopsy actually had a biopsy on a benign lung nodule. 35% of patients that had a surgical resection had a resection on a benign nodule. On the opposite extreme, 17% of those patients that went to CT surveillance actually had a malignancy. So it's not so much whether they were doing good. What it showed was when in doubt, they intervened because there was too much risk. And so now we're able to highlight which patients actually have a malignancy. So that's where our data came in, where we showed that 74% reduction in unnecessary, invasive, costly procedures. So that's where we're getting broad adoptions, where physicians are saying, "Hey, you're enriching my population. You're making me better. My outcomes data are going through the roof, and I can confidently put a patient on CT surveillance knowing that they have a benign nodule." Is that helpful? Just talking about you just did a cash raise. And if you think about your path to profitability, let's look out 10 years. You mentioned some tests that you're developing. You were developing that you put on hold. Where do you see Biodesix in five-10 years? Do you want to expand within lung testing? Is there other areas that you could go after? How should we think about that? Yeah, Biodesix was founded as a lung cancer company. So we've got great experience in discovering and developing tests outside of lung. I think what we've demonstrated, though, is having a laser focus with the sales team and even myself being a prior sales rep. You don't want to burden your sales reps to go into a position where they're not knowledgeable and capable of contributing. And so we know within lung, we can do that. So we can drop additional product into their bag. Anything that's outside of lung, we do do biopharmaceutical partnerships and relationships there, but we don't want to distract that commercial team. We think that's what's differentiated. And I think as we continue to grow, we think we're going to get opportunity to have additional products into the bag. So again, it's probably our single greatest asset, and we need to continue to leverage it wisely. Right. For the record, he's making pretty good progress over here with. Not really. I took a big step backwards. Okay. So So I don't have any other questions, Scott. We'll wrap there unless there's any other questions from the audience. But thanks for joining us. We really appreciate your time. Yeah, thank you, guys. It was a great opportunity, and thanks to the entire RBC team.