Biodesix, Inc. (BDSX) on Q1 2021 Results - Earnings Call Transcript
Operator: Good day and thank you for standing by. Welcome to the Biodesix First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference maybe recorded. I would now like to hand the conference over to your host today, Chris Brinzey, Investor Relations. Please go ahead.
Chris Brinzey: Thank you, operator and good afternoon everyone. Thank you for joining us today for a discussion of Biodesix's first quarter 2021 business highlights and financial results. Leading the call today will be Scott Hutton, Chief Executive Officer. He will be joined by Robin Harper Cowie, Chief Financial Officer.
Scott Hutton: Thank you, Chris and welcome everyone to Biodesix first quarter 2021 earnings conference call. We were pleased with our operating and financial performance in the first quarter and believe we're off to a solid start in 2021. Beginning with a high level overview of our financial performance, we reported record revenue of $28.9 million in the quarter, which represented year-over-year and sequential quarterly increases of 466% and 7% respectively. Robin, will go into more detail, but this comes on the heels of another record quarter from our COVID-19 testing services revenue, which grew 8% over the fourth quarter of 2020. As many of you know, our COVID-19 offering was developed in response to the public health emergency and has been driven by the need for quality rapid testing that could be delivered quickly and reliably. We were compelled to respond to the pandemic and our COVID-19 testing services quickly became a strong source of revenue growth for Biodesix. While the overall rate of testing in the US is tapering off due to the availability of vaccines, and readily available retail at-home testing options, we continue to work to support communities both locally and across the country by expanding our WorkSafe COVID-19 Testing Program.
Robin Harper Cowie: Thank you, Scott. Our first quarter revenue was $28.9 million compared to $5.1 million for the first quarter of 2020, representing an increase of 466% and an increase of 7% over the $27.0 million reported in the fourth quarter of 2020. For year-over-year and quarter-over-quarter revenue improvement continues to be fueled by our successful entry into COVID-19 testing services, which has enabled us to diversify our portfolio during a period of expected downturn resulting from the global pandemic. Our COVID-19 testing services revenue was $23.2 million in the first quarter 2021. Since this business began in the second quarter of 2020, there is no meaningful year-over-year comparison. However, sequentially, our COVID-19 testing revenue grew 8% over the fourth quarter of 2020. The increase in revenue was driven by volumes from existing and new customers. We continue to expect meaningful contribution during the second quarter 2021.
Scott Hutton: Thanks, Robin. So before opening the call up for questions let me do a quick summary. Our liquidity position remains strong and provides us with the financial flexibility to achieve our business growth objectives. We were thrilled with our financial performance in the quarter and most encouragingly, we're seeing early signs of paleontologists returning to pre-COVID-19 levels. Barring another wave, we expect this trend will drive our core lung business for the remainder of 2021. We continue to enhance our clinical data set to support both on market and pipeline products, and are thrilled to have announced two new tests, the cPass COVID-19 Neutralization Antibody Detection test and our new 72 hour turnaround time, liquid biopsy next-generation sequencing test. The latter expands our comprehensive portfolio of products focused on solving complex diagnostic challenges in lung disease. We're also making progress expanding our salesforce by doubling of our salesforce over the course of this year calling on paleontologists will allow us to reach more physicians and better leverage improving trends and our growing product portfolio. Lastly, I want to close with a thank you to all bioethics teammates, whose effort, dedication and daily contributions make it possible to achieve our ambitious mission. With that, I'll turn the call over for questions.
Question-and:
Operator: Thank you. Our first question comes from the line of Tejas Savant with Morgan Stanley. Your line is open. Please go ahead.
Tejas Savant: Hey, Scott, Robin, good evening, maybe, I'll start off here with one question in the 52 Gene Liquid Biopsy panel. Scott, can you give us a sense of what remains to be done between now and commercialization? In the first half of next year, other plans to add sort of additional markers like, TMB and MSI to the panel of pre-launch. And then, as a follow-up, how do you see this panel fitting into the relatively crowded landscape with larger incumbents who already have reimbursement in place, and also, visually your own, sort of, GeneStrat and VeriStrat workflow?
Scott Hutton: Yeah. Thanks, Tejas, great question. As you might recall, we stated that, GeneStrat is complimentary to the other NGS tests that are currently on the market. And we expect the same with our own NGS tests. Reminder for everybody in refreshers that GeneStrat is a small, actionable offering of guideline recommended targeted mutations. And the NGS test is going to be a broader panel for additional targeted and rare mutations. We believe this combination of two tests allows physicians to utilize at all stages of lung cancer and through the full patient journey including, both, diagnosis, prognosis and even later lines of treatment selection. On the first part of the question, in terms of our development timeline, obviously, we're working towards commercialization and regulatory submission. So with that, many things in our product development timeline are consistent with prior product launches. So just really ensuring that we're ready, as a business, to scale and ramp the test. I'll turn it over to Robin. She may want to comment on reimbursement and our plans there.
Robin Harper Cowie: I can also comment on the MSI and TMB portion of it. So right now, the current clinical data that we've seen on MSI and TMB is predominantly in tissue. However, as that starts to move and evolve into the liquid space, we will absolutely love to add those. From a reimbursement perspective, yes, it is definitely a crowded landscape. But I also think there's benefits there too. This is not something that will be brand new for payers, there's an established set of criteria. And so it's going in and discussing with them, how and -- how the test works and providing the statistics for the test. So, yes, while it's crowded that, it also provides some benefits as well.
Tejas Savant: Got it. Very helpful. And then, one on COVID testing. I know, I think, Robin, you mentioned in your prepared remarks that you do expect sort of a sequential decline through the rest of the year here. Is there anything beyond that in terms of color that you can share? I mean, obviously, 23 million is sort of the high watermark, but do you expect to be in the single digit sort of COVID contribution range by the fourth quarter here? Or are you just don't have that kind of visibility yet? And then, secondly, in terms of the neutralizing antibody testing launched in mid-2021, can you help us think through how significant of a contributor that could be? Obviously, you'll have to set wide guardrails around it, because it's not likely and that any color there would be helpful.
Robin Harper Cowie: Sure. I think with everything in the pandemic, it's really hard to predict how this will evolve and change. I think the one thing we absolutely can predict is that it will continue to change. And I think that's one of the things that we excel at is evolving our offering, changing and adding services, adding the neutralizing antibodies. So with the visibility we have now, yes, we continue to think that the COVID testing will decrease, but do anticipate that there is demand that recurs into the fall, particularly around schools, travel events, things like that. And so, while we are still anticipating the decline, we are not in any way giving up on COVID testing. There's still a huge need and they're continuing to pursue opportunities. As for the neutralizing antibody test, that one really is a big question mark right now, because we're all still trying to figure out where and how it fits. I think the utilities there, at least from a personal standpoint, seems pretty clear to me. But what the country will recommend and how it gets integrated into understanding personalized immunization schedules is still yet to be determined. But in the webinar we hosted a few days ago, we presented some early data from a study we've been conducting over the last several months, where we have seen individuals who are immunized maintain very high neutralizing antibody levels for a long period of time, up to, I think, we're at six or seven months now and not seeing any decreases. And we've seen individuals that start to decrease very rapidly as early as three to four months and have their neutralizing antibodies drop off very quickly. So it just goes to show that with this, as well as every other piece of healthcare, everything really is very personalized, and we think a test could help there.
Tejas Savant: Got it, got it. Helpful. And then, one on COVID testing. I know, I think, Robin, you mentioned in your prepared remarks that you do expect sort of a sequential decline through the rest of the year here. Is there anything beyond that in terms of color that you can share? I mean, obviously, 23 million is sort of the high watermark, but do you expect to be in the single digit sort of COVID contribution range by the fourth quarter here? Or are you just don't have that kind of visibility yet? And then, secondly, in terms of the neutralizing antibody testing launched in mid-2021, can you help us think through how significant of a contributor that could be? Obviously, you'll have to set wide guardrails around it, because it's not likely and that any color there would be helpful.
Robin Harper Cowie: Sure. I think with everything in the pandemic, it's really hard to predict how this will evolve and change. I think the one thing we absolutely can predict is that it will continue to change. And I think that's one of the things that we excel at is evolving our offering, changing and adding services, adding the neutralizing antibodies. So with the visibility we have now, yes, we continue to think that the COVID testing will decrease, but do anticipate that there is demand that recurs into the fall, particularly around schools, travel events, things like that. And so, while we are still anticipating the decline, we are not in any way giving up on COVID testing. There's still a huge need and they're continuing to pursue opportunities. As for the neutralizing antibody test, that one really is a big question mark right now, because we're all still trying to figure out where and how it fits. I think the utilities there, at least from a personal standpoint, seems pretty clear to me. But what the country will recommend and how it gets integrated into understanding personalized immunization schedules is still yet to be determined. But in the webinar we hosted a few days ago, we presented some early data from a study we've been conducting over the last several months, where we have seen individuals who are immunized maintain very high neutralizing antibody levels for a long period of time, up to, I think, we're at six or seven months now and not seeing any decreases. And we've seen individuals that start to decrease very rapidly as early as three to four months and have their neutralizing antibodies drop off very quickly. So it just goes to show that with this, as well as every other piece of healthcare, everything really is very personalized, and we think a test could help there.
Tejas Savant: Got it, got it. Helpful. And then, one final one for me on the base business. I know you mentioned sort of seeing a pickup here and in March. But are you are you willing to sort of quantify, where exactly patient volumes stand today among your pulmonologist community relative to pre pandemic levels? Is it sort of 80% back to normal? Or is it sort of even higher than that, perhaps? And can you also share the trajectory I mean, a Jan versus Feb, how things looked versus March and into April here?
Robin Harper Cowie: We're pleased with the state of the recovery and seeing improvement over time, January was an interesting month with a massive spike, February, an interesting month with the massive snowstorm and are pleased with how we're seeing recovery. And in March and April, it's hard to, to state to compare really pre pandemic to current, mostly because we had really just launched XL2, and then launched CDT in March literally days before we sent everybody home, so it's a little difficult to compare the two.
Tejas Savant: Got it? Fair enough. Thank you.
Robin Harper Cowie: Thank you, Tejas.
Operator: Thank you. And our next question comes from line of Brian Weinstein with William Blair. Your line is open. Please go ahead.
Brian Weinstein: So sticking to the core business here for a second here, obviously there's a backlog of patients that are going to be coming through that are going to need to have some sort of workup that is done, which would mean that you notify franchise seems like it's in a very good position to be able to kind of leverage the capabilities that it has and make the workflow more efficient. So can you talk about the sales and marketing activities that you guys are undertaking to amplify that message to your customers. And any early read where you have salesforce back in place, how that message might be being received?
Robin Harper Cowie: Yeah. Thanks, Brian. Great question. As you recall, post IPO, we stated that our 2021 goal was to double the size of our direct and dedicated sales force, going from 24 sales reps to 48 sales reps. So, first and foremost, we continue with that plan and are progressing nicely. We're very encouraged with the quality of teammates that we've added and their ability to onboard rather quickly. To your other point about kind of the recovery, yes, pulmonologists are seeing less and less COVID patients and are returning back to what one could describe as kind of a normal business cadence. But there is this described backlog of patients, which makes a tonne of sense, knowing that we've not seen patients the way we would have prior to the pandemic. The real question is vaccination schedules comfort of those patients to come into clinic, right. We started with our biggest concern being the physician, ensuring the physicians were protected, not just physicians, but their health care staff. Now that they've all been vaccinated, ensuring that this patient population is vaccinated is key and critical. That is one of the rate limiters. Our dialogue with pulmonologist is that they are seeing patients returned to in person. We know that also benefits us, as much as we may never return to a pre pandemic environment. Because of COVID being able to meet face to face, a physician consulting a patient, not through telemedicine still has a place. And so our sales reps are there. They're conducting in person sales calls. Yet at the same time, we do monitor the virus, we monitor spike, and we still collaborate with – with pulmonologists to ensure that we're welcome coming into their clinic, and that we're mindful of any potential exposures they may have had.
Brian Weinstein: Okay, thank you. And then on the liquid biopsy NGS test, you talked about the unprecedented 72 hour turnaround time versus to seven to 14 days. Can you give us any insight into what you have done to allow that to take place recognizing that some of it is is probably trade secret, but just generally speaking, what is it about the way that you guys are operating that allows you to show that turnaround time? Then as a follow-up question on that is, these products are available for research and clinical trials, I think you said since 2018. So why is now the right time to launch? Is that tied to the improvements in turnaround time? Thank you.
Scott Hutton: Yeah, thank you, Brian. Great question. You know, I’ll start with turnaround time for GeneStrat. We've discussed how opportunistic we've been at Biodesix and how we really have evolved during the pandemic. One of the benefits of proceeding with COVID testing and utilizing and leveraging our ddPCR platform is that we've been able to expand our laboratory, we also are running 24/7, that allows us to decrease that turnaround time. And you may recall GeneStrat has improved by 50% during the pandemic, so we went from 72 hours, down to 36 hours of GeneStrat. That really is leveraging the additional resources team and laboratory capacity that we have. Related to the NGS product, you highlighted a 72 hour turnaround time on an NGS product is unprecedented. You're correct. Some of that is trade secrets. And you were also correct. We did introduce that for biopharma research in 2018. And many of those partnerships and collaborations gave us additional experience and opportunity to optimize that offering. So we're really excited about that. We think it matters. We know that we're dealing with patients that have cancer, and patients that have cancer, the one thing that they don't always have an abundance of is time. And so our ability to return those actionable insights as quick as possible, we'll make a difference.
Brian Weinstein: Thank you for the answer, Scott.
Scott Hutton: Thanks, Brian.
Operator: Thank you. Our next question comes from the line of Sung Ji Nam with BTIG. Your line is open. Please go ahead.
Sung Ji Nam: Hi. Thanks for taking the questions. So just on the liquid biopsy next gen sequencing assay, could you talk about your go-to-market strategy there? Do you anticipate leveraging the existing sales force and the sales channels and also with the RUO users, since 2018, or could they be kind of some of the early adopters of this platform?
Scott Hutton: Hi, Sung Ji. Thanks for the question. I'll go in reverse order, when it comes to our biopharma partners, unfortunately, we haven't disclosed who those partners are at this time. But yes, it's safe to say that those – those partnerships, those collaborations, and those relationships do provide great insight for us. And we're able to apply that to our commercialization strategy. We've not yet disclosed our commercialization strategy, because we've announced that will launch this mid-2022. We plan on developing that plan and rolling that out as we progress through the year. So much more information to come there. But the good news is, is because of our existing Salesforce footprint, relationship, and experience, selling GeneStrat, this really is an opportunity for them to continue to leverage the relationship that they have built on the awareness of GeneStrat and VeriStrat to ensure that we can provide the treatment guidance that others strive to.
Sung Ji Nam: Great. That's super helpful. And then just on the CDT test neutralizing the antibody, could you talk about also kind of the go to market strategy there? Are you targeting largely the biopharmaceutical companies that have these vaccines under development, or developing the vaccines or have developed the vaccines? And also if you could talk about T-cell profiling and other types of characterization, right, in terms of patient response and monitoring to the pathogens as well as to the vaccines? And just kind of curious in terms of how this test might fit into this kind of the whole ecosystem?
Scott Hutton: Yeah. Great question, Sung Ji. Thank you. Because we just had the webinar and just announced that we'll be commercializing this test this summer. As you can imagine, we're getting a lot of input, a lot of inquiries and numerous conversations are occurring as we speak. For us, this really has been about being a one-stop shop. As you recall, early in the pandemic, we announced that we had partnered with Bio-Rad to launch the ddPCR test. Then shortly thereafter, we announced our collaboration with Bio-Rad to introduce our first antibody test. And then we continued to pivot, where we provided support, surveillance and monitoring for antigen testing that would then reflex to high quality ddPCR testing. We really have viewed ourselves as a comprehensive COVID solution provider, a one-stop shop, if you will. So adding this into the portfolio, we think positions us exceptionally well, to continue to provide those personalized insights that individual institutions may have. And so with that our approach has been consistent. Anyone that we've provided testing solutions and support to thus far, we've reached out to them to introduce the neutralizing antibody tests. We've begun answering the questions and really formulating a plan by which this may provide meaningful insights to them, whether it's a return to work strategy, whether it's travel or international travel or then building upon some of our sports and athletics and educational services that we've offered. Just really ensuring that they have the ability to utilize any one of these tests to set them up for success, whatever that means to them or however they define that. So much more to come with that in the coming weeks and months. And then when we do make that commercially available, we will disclose that and we'll start providing greater insights into the feedback we're receiving. But if you had an opportunity to participate in that webinar, some really good dialogue, numerous participants across biopharma industry and research. And so for your other question, yes, we have continued to reach out to biopharma companies to include the vaccine company. And we think that we can provide critical insights here that as we progress through 2021, and prepare ourselves for flu and cold season, and the question that Robin presented is how long does the vaccine work or last, we'll be able to provide those insights on an individual basis, which we believe is meaningful.
Robin Harper Cowie: As for the rest of your question, with a T cell and B cell, we are we are looking at those as options, looking to better understand, continuing to research, like many others understanding the virus the impact on the immune system and how we respond as individuals. The cPass test is FDA EUA authorized, and so was a great option for us to partner with GenScript to bring that forward quickly. And as pandemic evolves, and as the discussion evolve will evaluate if it makes sense to add others as well?
Sung Ji Nam: Great. And then just lastly, for me, I was wondering if you might be able to break out, great to see recovery in the base business. But I was wondering if we might get some insight into the oncology channels versus the pulmonologist VeriStrat and GeneStrat drive versus the Nodify product lines, if you're seeing growth across the board -- if you're seeing recovery across the board, or if it's mostly on the Nodify side? Thank you.
Scott Hutton: Thanks Sung Ji. Good question. We see it being very consistent and similar. Obviously, we've highlighted that pulmonologist were significantly impacted as they were pulled into ICUs and ERs early in the pandemic. And then whenever there was a spike or resurgence, they continued to be pulled back in. When they were pulled in, though the one thing that also occurred is potential patients were told to stay home, right, stay in distance yourself. And so our experience across the multiple medical specialties that we call on and consult with is we are seeing a similar recovery in return. And we're pleased with that. And I think for all of us, it's exciting to see that we're making progress. We're coming out of this, and there is some sense of normalcy on the horizon.
Sung Ji Nam: Great. Thank you so much.
Scott Hutton: Thank you, Sung Ji
Operator: Thank you. Actually no further questions. This concludes the question-and-answer session and today's conference call. Thank you for participating, you may now disconnect. Everyone have a great day.
