Biocept, Inc. (BIOC) on Q2 2021 Results - Earnings Call Transcript
Operator: Welcome to the Biocept Second Quarter 2021 Financial Results Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference call over to Bruce Voss with LHA. Please go ahead.
Bruce Voss: This is Bruce Voss with LHA. Thank you all for participating in today's conference call. Joining me from Biocept are Michael Nall, President and Chief Executive Officer and Tim Kennedy, Chief Operating Officer and Chief Financial Officer During this call, management will be making a number of forward-looking statements within the meaning of the private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts and generally can be identified by terms such as anticipates, estimates, believes, could, expects, intends, may, plans, potential, predicts, projects, should, will, would or the negative of those terms. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those statements, as well as performance or achievements that are implied by the forward-looking statements. In particular, there is significant uncertainty about the duration, severity and impact of the COVID-19 pandemic. This means results could change at any time and the contemplated impact of COVID-19 on Biocept's operations, financial results and outlook is the best estimate based on the information for today's discussion. For details about these risks, please see the Company's SEC filings, including the company’s quarterly report on form 10-Q being filed today. The content of this call contains time-sensitive information that is accurate only as of today, August 16, 2021. Except as required by law, Biocept disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. Now I'd like to turn the call over to Michael Nall. Mike?
Michael Nall: Thank you, Bruce, and good afternoon, everyone. Today, we are reporting profitability for the first half of 2021 on revenues of nearly $30 million, driven primarily by our high quality RT-PCR COVID-19 testing. We are pleased to continue providing this valuable service with the resulting financial performance and cash flow, supporting investments in our core oncology business. Revenues for the second quarter of $12 million are significantly higher versus the prior year, again, due to the COVID-19 testing. That said, 2Q revenues were down from Q1 this year, due to a decline in COVID-19 test volumes with more Americans be coming back to campus . With the emergence of the Delta variant, our run rate COVID-19 testing in the current quarter-to-date is above last quarter’s levels, since last reporting total samples received for COVID-19 testing of 450,000 on July 21, we are now approaching the milestone of nearly 500,000 samples, an increase of about 50,000 samples in less than one month. We are prepared for higher COVID-19 testing volume, as we begin receiving samples through our partnership with the California Community College system, as students return to on-campus classes. We are already providing testing services to more than 20 colleges in Southern California, mostly for athletic teams. The full impact of testing for the California Community College System is largely unknown at this point as each college in the system determines its own policy. Some have already indicated interest in using Biocept for COVID-19 testing of their un-vaccinated students, faculty and staff. Importantly, we have taken steps to ensure our lab capacity can handle an expected influx in samples. At some campuses, we have established on-campus Sample Collection Points and implemented an online service in collaboration with Cleared4 that enables both the college and students to track COVID-19 testing. The final update on COVID-19 testing, we continue to co-develop and validate the Aegea Biotechnologies assay, as we’ve discussed the importance of this assay is in quantifying viral load regardless of the COVID-19 strain or variant Quantifying viral load can be, key in determining when patients who tested positive can safely return to work, school or other activities. We see a valuable role for this testing, particularly with the quickly spreading Delta variant. Turning now to our core Oncology business, we are highly encouraged by the ongoing adoption of CNSide, our paradigm-changing neuro oncology assay. CNSide provides physicians with a valuable tool to diagnose and manage patients with cancer that has metastasized to the central nervous system and brain. Our assay answers three critical questions. First, is cancer presence, second, is there a target for treatment. And third, what is the trend over time? Since our beta launch of this assay in early 2020, we have seen continuous growth in quarterly test volume, with gains of nearly 40% from Q4 2020 to Q2 2021. It's particularly meaningful that more than 30 of the most prestigious US academic institutions have now ordered our CNSide assay. Even more exciting is that the majority of these institutions have become repeat customers. We view this is a strong indication that neuro oncologists who are using our assay se its value in improving patient outcomes. We intend to continue reaching out to the neuro oncology community this year and to expand our outreach activities to include the broader oncology community next year. Our focus is firmly directed on making CNSide the standard-of-care based on its ability to offer physicians a more timely and accurate method to diagnose the presence of metastases to the central nervous system. Our pilot study showed that in patients with suspected central nervous system involvement, CNSide detected tumor cells in approximately 80% of cases, while the current standard-of-care CSF cytology detected tumor cells in only about 50% of cases. Our goal is to secure standard-of-care status under NCCN guidelines. Importantly, we have a pathway that we expect will allow us to publish the clinical data that we anticipate will influence these national oncology care guidelines. Our goal is to secure standard-of-care status under NCCN guidelines. Importantly, we have a pathway that we expect will allow us to publish the clinical data that we anticipate will influence these national oncology care guidelines. We expect to begin the first part of our Four C study, by mid-2022 with the goal to establish clinical validations. We will then conduct the second part of the study to evaluate the clinical utility of CNSide to identify key decision points that can be made based on testing results. We expect to initiate the second part in 2023. Earlier this year, we submitted an initial application to the FDA for Breakthrough Device Designation. Although this submission was recently denied, we are gathering data based on the FDA’s feedback to support a resubmission. Our CNSide assay is currently validated to identify metastatic cancers originating in the lung and breast, which frequently involved the central nervous system. We estimate the US market for the assay at more than $1 billion annually, with approximately 200,000 patients diagnosed with metastatic cancer involving the central nervous system per year. We plan to expand our CNSide testing, beyond breast cancer and lung cancer for additional tumor types and biomarkers, including melanoma. We are encouraged by Medicare's recent decision to cover and reimburse our breast cancer assay for the HER2 biomarker at $2,435. Importantly, this coverage decision demonstrated that Medicare recognized the value of liquid biopsy, as a necessary part of patient care. Guidelines call for every patient diagnosed with breast cancer to be profiled for key biomarkers, including HER2 which is critical for physicians in qualifying patients for anti-HER2 therapies such as Herceptin. Additionally monitoring for the HER2 biomarker is important as a patient's cancer can convert from HER2 negative to HER2 to positive as the tumor becomes more aggressive. In fact, retesting to assess current virtue status at progression or recurrence is currently in the American Society of Clinical Oncology, or ASCO and the College of American Pathologists or CAP guidelines. Common sites for metastatic progression in breast cancer are bone and brain, making less invasive liquid biopsy solution, a viable alternative to tissue biopsy. Our Target selector assay has the added advantage of profiling the HER2 biomarker from either blood or cerebral spinal fluid. This decision by the Centers for Medicare and Medicaid Services is very important for the role of liquid biopsy and less invasively and more cost effectively identifying and monitoring for two biomarkers. In May we announced an agreement with Quest Diagnostics to distribute our Target Selector NGS lung cancer assay. Quest is currently on boarding our Target Selector NGS panel, which provides genomic profiling of patients with advanced non-small cell lung cancer. We expect the beginning in the fourth quarter Quest Oncology Division will be marketing this panel to their customers. It is of course exciting the partner with the world’s largest clinical testing laboratory, whose shares our passioned for improving patient outcomes. Lung cancer is the third most common cancer in the United States and the leading cause of cancer deaths. The CDC estimates that more than 235,000 new cases of lung cancer will be diagnosed this year, with non-small cell lung cancer, accounting for 84% of these cases. Our Target Selector NGS panel for lung serves an important need as tissue can be difficult to retrieve from patients with advanced cancer and even when it is collected, the amount of tissue can be insufficient to provide results to the guide treatment. Our blood based panel is able to detect multiple biomarkers to qualify patients for therapy, including newer therapies like targeted treatments that are allowing patients to live longer with a better quality of life. Before Tim reviews our financial results, I want to welcome some new Biocept team members. Earlier this month, we announced the appointment of David Karlander, as Senior Vice President of Commercial Operations. Dave brings more than 25 years of industry experience that will be highly valuable at this critical time of commercializing CNSide. Last month we welcomed Linda Rubinstein and Antonino Morales as Directors, increasing the size of our Board to 9. Both Linda and Antonino have significant financial and leadership experience to help us achieve our strategic goals and guide our long-term success. Also in July, Sam Riccitelli was appointed Chairman. Sam joined our Board last October and brings to Biocept substantial experience in diagnostics operations, sales and senior leadership. He succeeds our long-term Chair, David Hale and Interim Chair, Faye Wilson. I’m pleased to report that both David and Faye remain as Directors. And with that, I’ll turn the call over to Tim Kennedy to review our Q2 financial results, Tim.
Tim Kennedy: Thanks, Mike, and good afternoon everyone. For Q2 2021, we’re reporting net revenues of $12 million, which is up significantly from $917,000 in Q2 of 2020, with the increase due primarily to COVID-19 testing. Commercial revenue for the second quarter of 2021 included a $1.1 million increase in reserves for potentially uncollectible aged accounts receivables. This reserve relates the testing performed primarily in 2019, which was to be reimbursed in 2020. That reimbursement process was hindered by the pandemic. We continue to be working to collect for this testing, but in the meantime we determined it was prudent to increase the reserve amount. Prior to the increase in reserves, revenues for the second quarter were $13.1 million and included commercial test revenue of $12.1 million in RT-PCR COVID-19 testing, along with $926,000 in oncology testing, $33,000 in development services test revenue and $34,000 in revenue for distributed products Target Selector RUO kits, CEE-Sure blood collection tubes and payments from Aegea for services associated with the development of a COVID-19 assay. As a comparison, revenues for the second quarter of 2020 we’re $841,000 in commercial test revenue, including $37,000 RT-PCR COVID-19 testing, $804,000 in oncology testing, $38,000 in development services test revenue and $38,000 in revenue for distributed products Target Selector RUO kits and CEE-Sure blood collection tubes. In Q2 2021, we received 102,172 total accessions. This is an increase from 1,306 total accessions in Q2 of 2020, but down from Q1 of 2021 total accessions of 145,110. As Mike stated, we anticipated a sequential quarter decline in COVID-19 testing volumes. However, COVID-19 testing has ramped up in Q3, due mainly to the Delta variant. We also expect to begin receiving samples from our agreement with the California Community College system later in the current quarter. Total cost of revenues was $7.5 million compared with $2.5 million for the prior year period, with the increase primarily due to COVID-19 related collection kits and consumable expenses. As we continue to leverage the fixed components of our cost, our cost of revenues as a percentage of net revenues decreased by approximately 213% from the prior year period. Contributors to this expansion in gross margin included better pricing on COVID-19 consumables and COVID-19 collection kits and lower facility cost related to the relocation we completed in late 2020. R&D expenses for the second quarter of 2021 were $1.1 million, compared with $1.6 million a year ago, with the decrease primarily attributable to lower facilities costs and cost of revenue allocations to R&D. We expect R&D expenses to increase in the coming quarters, as we begin the first Four C clinical study. G&A expenses for Q2 2021 were $3.3 million versus $1.9 million in Q2 2020, with the increase primarily due to headcount additions and other expenses related to COVID-19 testing. Sales and marketing expenses were $1.9 million compared with $1.3 million in the prior year period, resulting primarily from higher commission payments associated with COVID-19 sales. Net loss for the second quarter of 2021 was $1.8 million or $0.14 per share on 13.5 million weighted average shares outstanding. This represents a $5.5 million improvement in net income, even with the impact of the $1.1 million increase in reserves. This compares with a net loss for the second quarter of 2020 of $6.4 million or $0.51 per share on 12.7 million weighted average shares outstanding. Now turning to our year-to-date results. Net revenues for the first six months of 2021 were $29.8 million, which compares with $2.4 million for the first six months of 2020. Revenue for the 2021 period before the impact of the increase in reserves included $30.7 million in commercial test revenue, $73,000 in development services test revenue and $96,000 in revenue for Target Selector RUO kit and CEE-Sure blood collection tubes and payments from Aegea. Operating expenses for the first six months of 2021 were $28.9 million and included cost of revenues of $16.5 million, R&D expenses of $2.2 million, G&A expenses of $6.4 million and sales and marketing expenses of $3.9 million. Operating income for the first six months of 2021 was $916,000, a $13.5 million improvement from an operating loss of $12.6 million for the first six months of 2020. Net income for the first six months of 2021 was $771,000 or $0.06 per diluted share on 13.4 million shares outstanding. This is a significant improvement from the net loss for the first six months of 2020 of $14.8 million or $1.44 per share on 10.3 million weighted average shares outstanding. We reported cash and cash equivalents, as of June 30, 2021 of $19.5 million, which is up from $14.4 million as of December 31, 2020. During the three months ended June 30, 2021, our cash balance increased due to the addition of $1.2 million from increased collection and an additional $3.9 million through an ATM facility. And with that, I’ll turn the call back to Mike. Mike?
Michael Nall: Thank you, Tim. Before opening the call to your questions, I want to remind you of our corporate priorities, which include the following: supporting the full commercial launch of our CNSide assay; initiating clinical studies with CNSide to support adoption as standard-of-care under NCCN guidelines; expanding our CNSide testing menu for additional tumor types and biomarkers; increasing sales of our full range of Target Selector assay; growing sales of our Target Selector liquid biopsy kits and CEE-Sure blood collection tubes; entering into additional strategic commercial and technology partnerships like the agreement with Quest Diagnostics; expanding our COVID-19 testing services to the California Community College System and validating and commercializing our next-generation quantitative COVID-19 assay that was co-developed with Aegea Biotechnologies. Our portfolio of Target Selector based assays provides critical information to assist physicians in determining treatment decisions for their patients diagnosed with cancer. Our assays are based on our differentiated platforms that leverage information from tumor cells, cell-free DNA and RNA in both blood and cerebro spinal fluid. To-date, we have tested nearly 30,000 patient samples with our proprietary oncology biomarker assays and have received nearly 500,000 samples for COVID-19 testing. We expect revenues related to the COVID-19 testing to remain meaningful throughout 2021, noting that circumstances could change in the remainder of the year. We also anticipate increasing adoption of our CNSide assay as we develop collaborations in clinical studies to obtain standard-of-care designation. And to support our commitment to improving patient treatment choices and clinical outcomes, we have a strong balance sheet. With that overview, we’re now ready to take questions. Operator?
Operator:
Michael Nall: Operator, while waiting for the first question, I want to remind listeners to view our Neuro-Oncology Webinar, discussing CNSide for the Diagnosis in Management of Cancer involving the central nervous system. The webinar featured a technology overview and leading neuro-oncologists, Dr. Priya Kumthekar at Northwestern University; Dr. Nicholas Blondin at Yale University; and Dr. Amir Azadi, at the Barrow Neurological Institute, reviewing case studies, using the CNSide assay with subsequent patient outcomes. The link to view the webinar is on the homepage of our website at biocept.com. I’d also like to mention that we will be presenting at three upcoming Virtual Investor Conferences. These include the H.C. Wainwright 23rd Annual Global Investment Conference being held September 13 through 15; the Oppenheimer Virtual Fall Healthcare Life Sciences and MedTech Summit being held September 20 to 23; and the Cantor Fitzgerald Virtual Global Healthcare Conference being held September 27 through 30. We are also scheduled to be present -- to present in-person at the LD Micro Main Event Conference on October 13 in Los Angeles. Presentations and webcast, we post it to our website at biocept.com. Okay. Operator, we’re ready for the first question.
Operator: Our first question comes from Jason McCarthy with Maxim Group. Please go ahead.
Jason McCarthy: Hey, Mike. Thanks for taking the questions. Couple of questions. First on the oncology side. Do you expect now that you have the reimbursement for the breast cancer assay, the news with Quest, with the NGS lung and all the work that you’re doing on the CNSide to potentially accelerate your data collection? And maybe you can give us a little bit more color on how that data is being collected and feeding into that relationship with Prognos where we see potential a lot of value in monetization of that data long-term?
Michael Nall: Yeah, no, that’s a great question. Thank you, Jason and good to catch-up. First of all, interestingly, I’ll pivot in a second to the oncology you’re asking about, but we actually have deepened our relationship with Prognos even on COVID-19 data, which is valuable to them as well. So that is also getting uploaded to Prognos and it actually increased the way we work together. And then as you point out, the more adoption we have of our assays, the more valuable that relationship becomes, because we’re enriching their database at a faster clip with higher volume. And notably the next-gen sequencing assay we develop with Thermo Fisher that’s now going to the marketed through our partnership with Quest, we anticipate we will really ramp that up once it goes live in Q4 and takes off next year in 2022.
Jason McCarthy: Can you talk a little bit about that, you had mentioned Prognos and the COVID data, anything about the type of data that they’re collecting as their information on the vaccinated people, levels of virus that they may have, if they’re positive. All the things that people are hearing about in the media, is that the type of information they’re trying to collect?
Michael Nall: Yeah, that’s actually the important point I think for folks to get more clarity on what we would provide -- be providing. First of all, we always want to remind folks this is absolutely anonymous, non-identifiable information to a person and very much compliant with HIPAA and the privacy laws. So, but it does provide incidents. We’re getting information on age, region, et cetera, things like that. That’s basically the information. When you look at our requisition other than security and name and things like that, which are not delivered, the things that would be -- there would be, whether the patient has other co-morbidities and other things that would be delivered to Biocept and entered into our laboratory information system.
Jason McCarthy: Will there be an opportunity to -- or any interest in getting contracts for testing with large academic institutions. We’ve seen in with other testing providers sporadically different regions of the US. Is that something that Southern California or California schools may look to do, and what could be the value of something like that for your company?
Michael Nall: Well, are you meaning for COVID testing?
Jason McCarthy: For COVID testing, right, sorry. I should have…
Michael Nall: Well, that’s okay. For COVID testing, we have the agreement with the Community College System, which is 2.1 million students backed staff and that’s been on-boarded as we speak. So this is the first week of that testing for the general population. Since last spring, we’ve been providing testing for many of the athletes in sports teams. So we already work with them. When it comes to the UC system and elsewhere, they generally take care of their own testing. There could be some chance for some over workflow, but most of them have medical centers that already do the testing relationships in place.
Jason McCarthy: And just a question for Tim. Can you give us a little bit more granularity on how much of the testing revenues flowing back into the core spend on the oncology testing business? And maybe split that between being COVID testing and oncology for us?
Tim Kennedy: How much of the spend is flowing into it. The -- most of the revenue that we derived from COVID-19 is fueling the consumable purchases associated with actually doing the COVID-19 testing. So it’s not -- it’s probably, gosh, I don’t want to give you a percentage of top my head, Jason, but the lion’s share of the spend in -- associated specifically with COVID testing.
Jason McCarthy: Okay. And is there any interest in expanding further or is it all dependent in terms of personnel and overhead or is that dependent on how COVID goes over the next couple of quarters or months or whatever?
Tim Kennedy: Yes. We are prepared certainly to take on without significant expense, everything that Mike was talking about with regards to the community colleges. So we have capacity. We have built capacity over the last year in COVID and capabilities for testing. We are becoming more efficient at processing our COVID samples. We’ve negotiated lucrative deals with our COVID collection tubes and have reduced the overall costs associated with that as well as in the CLIA laboratory, the costs associated with processing those COVID tests as well. So much more advance from today than where we were when we first started doing COVID testing.
Michael Nall : And Jason what I was going to add to that, exactly what Tim said and first of all, hats off to Tim and the operations team for helping us scale the business so rapidly. As we’ve talked about the past, while Tim and I and the entire leadership team has been in the laboratory industry for the bulk of our career, none of us had to scale the business as rapidly as what we’ve had to -- with COVID and the experience that they brought to the table paid off. But much of the investment we’ve made in that is actually quite helpful for oncology business going forward. So the instruments that we use for COVID can also be used for oncology. So we’ve got the capacity now to grow much faster than we would have been able to a year ago. Another example is accession, for folks who don’t know what an accession means, it means the input the sample that’s coming in into the computer system, so it can be tracked. That’s now done via the web at the client site comes in with a barcode into our site and then it’s fully automated all the way through reporting. We’re now going to be moving that over to oncology, so we can scale that part of our business as well. So a lot of this money that’s been invested to build this COVID business is actually quite appropriate for the oncology business going forward as we grow that more with prior less resources to scale that part of our business, because of these investments we’ve made over the past year and continue to make.
Jason McCarthy: Great. Thank you, fellows.
Michael Nall: Thank you, Jason.
Tim Kennedy: Thanks, Jason.
Operator: Our next question comes from Kumar Raja with Brookline Capital Markets. Please go ahead.
Kumar Raja: Thanks for taking my questions. So, first with regard to COVID-19 testing. How much pooling are you doing in terms of the testing? And in terms of capacity, where do you stand?
Michael Nall: I’ll let Tim answer that. He is our expert in everything going on in the lab. So, Tim.
Tim Kennedy: Yeah, no, it’s a great, great question. We have tremendous capacity, if we were to go with pooling. Right now, we have capacity to do somewhere in a vicinity of approximately 30,000 COVID tests a week. Obviously that significantly increases with something like pooling, which would probably take us about 150,000 a week there. So it is a pretty significant increase, if we were to go with that piece of it.
Michael Nall: And just, we haven’t made any public statements about how we process with samples, but we’re very aware of that, and it makes a lot of sense for those laboratories to look at that as well. So it’s a good question, Kumar.
Tim Kennedy: Yeah.
Kumar Raja: And next with regard to the health plan access. Looks like you already have more than 200 million lives under coverage. How are you guys thinking – think this is kind, are you guys planning to build more works to get like more lives under coverage, or how do you guys think about where you stand right now?
Michael Nall: Yeah, no, that's another great question. One thing we've done pretty well here for being a relatively small laboratory, historically, until COVID, was get a lot of coverage policies and that was because I think folks were excited about the idea of liquid biopsy in the cost savings for the system. But we – as you know, we just hired new Commercial leader Dave Karlander, and one of his goals is to hire a new senior leader for managed care. So that’s someone we’re looking to recruit. In the meantime, we have folks that focus on the health plan contracting today, as well as the hard working billing and collections team that work for Tim that work on that every day. Now keep in mind on the COVID-19 for those, who don’t know, it’s under the CARES Act by law, payers are forced to pay for the COVID-19 testing. So where we see sometimes the challenges is on the Oncology side sadly, especially when you look at the value that's delivered for our whole industry, with laboratory and oncology testing. But at the same time, with the focus on CSF and these patients that are late stage cancer that don’t have other options. We’re having really good luck getting paid there too, and we want to put a lot more ammunition behind it. Another example of how we reinvest in the business to grow faster, collect more money in the future with the revenues from COVID.
Kumar Raja: Okay. Maybe finally a question on the commercial strategy for CNSide. There are lot of states, where you don’t have centers that are ordering. How are you thinking in terms of penetrating those states and what kind of sites do we have there?
Michael Nall: Sure. Well, we have 10 hardworking salespeople around the country, and we’re looking to expand that. But right now, we’re mainly focused for CNSide on neuro-oncologists. And for folks that aren’t familiar, neuro-oncologists are especially, you generally find in either very large oncology practices or more typically in a teaching hospitals such as Northwestern or Yale or UCSD Moores Cancer Center or MD Anderson, Yale, places like that. And we’re in almost all of those. So in fact, we’re in over 30 of the leading academic institutions across the country. So there is very few regions where we don’t have a foothold at this point. So now over the coming year, our salespeople will continue to nurture those relationships and move that on into Medical Oncology as we go into 2022. With that, we’ll be investing more, once again taking the revenues from COVID and investing in our sales and marketing organization to better penetrate the entire US, but right now we’re achieving our goals by focusing on the neuro-oncologists and growing the business there. These are the folks that are experts in metastatic cancer to the brain and central nervous system. And so it’s important that, we get them on our side, and if folks watch that webinar, they’ll see how passionate, they are about what we’re doing.
Kumar Raja: Okay. Great. Thanks for taking my questions.
Michael Nall: Thank you.
Operator: Our next question comes from Michael Okunewitch with Maxim Group. Please go ahead.
Michael Nall: Hi, Michael.
Michael Okunewitch: Hey, guys. Thanks for taking the question. So I’d like to ask, just a bit about the COVID casting number is going into the second half in particular over the last month, you received around 50,000 and you’re expecting that to increase due to the California Community College system. So given that you have -- it seems like at some increased penetration within the testing market here. So could you actually surpass the run rate you achieved at the peak of the pandemic earlier this year as we move into the third quarter?
Michael Nall: I’ll let Tim weigh in on that, but I think if we had a crystal ball life would be so easy, even with the colleges as we talked about in the script, they all have their own process and policies. So it’s been kind of hard to predict what to expect from these groups, but we do anticipate, yes, that there’ll be a sizable amount of volume coming from them. At our peak we were doing about 15,000 in a week and could we get that big? I guess it depends on Delta. On one hand of course, we all hope that this doesn’t get to that level, but we’re starting to see it with a vengeance and so we’re prepared, where we can handle it and we’ll be ready when the volume comes, if it does get that high. Tim, do you want to add anything to that?
Tim Kennedy: Yes, the one thing I’d say is that we remain very nimble in the COVID-19 area, especially, because of the unknown volumes that could come from the community colleges. We’ve certainly seen an increase in testing from our skilled nursing facilities as well. So, we’ve seen some skilled nursing facilities come back with COVID positive results on un-vaccinated as well as vaccinated, and as a result of that we have seen increase the amount of testing that we’re doing on a weekly basis, but it will be interesting to see how the colleges impact that, based on the age group of the college students that are attending the community colleges. We don’t think that a majority necessarily of those folks that are attending community colleges are already vaccinated. So it’s difficult to tell because it’s not only the students, but it’s also the faculty. So we’ll see here as the third quarter progresses, but with regard to that volume. But it certainly could be equally as big as what we’ve had in the past that our peak and could potentially exceed that. But we just don’t know just yet.
Michael Nall: And we’ll continue to give updates for folks on the COVID volume once a month or so, just like we have been. So people can see real-time kind of how that’s looking.
Michael Okunewitch: All right. Thanks. I also like to ask just how vaccination plays into the NextGen Aegea test, because it seems like among vaccinated individuals a simple, yes, no test may be more -- less useful than a more quantitative test. So I’d like to ask if this plays a role in the rationale and potential longer term durability and also as Jason mentioned, is there more of a significant COVID data play with Prognos, if you’re able to determine things like viral loads between vaccinated and un-vaccinated individuals?
Michael Nall: I think that’s very thoughtful, that’s not something we’ve talked about with them, but you’ve given me some ideas at this point that we could. Interesting, you asked about the importance of connotation and I’ve not seen it yet, but evidently I heard today from one of our scientists that there was an article or editorial in The Journal from AMT, Association Molecular Technology that talks about the importance of connotation with COVID. And so yes, we do think that’s meaningful and we continue to work with them on getting that assay commercialized.
Michael Okunewitch: All right, thank you. And then just one more. So what sort of data do you guys think that you’re going to need to demonstrate to the FDA to get CNSide considered as a breakthrough device?
Michael Nall: Well, this was very important for us to get that initial round of feedback from them. And without going into great detail, we need to have more patients and actually the normal cases. And normal is relatively, and it’s a difficult thing, when it comes to cerebral spinal fluid, but not impossible, we did it, when we did the validation to offer it in our laboratory. And we just need to enrich that population, and these are people that don’t have diagnosis of cancer. So, we need to get a greater number of those in the sample. So and we think we’ll be able to make that progress. We’re working on that now and we’ll have further information as things move forward. In addition, we got some really good feedback on really two questions. When we talk about our one to three approach. We’ve got number one as cancer present, which is kind of the diagnostic claim. Then number -- I’m sorry, number one and three questions. Then the number three, is there a trend? And so there really is two applications for the assay that each could have their own breakthrough. One is the diagnosis claim. The other one is, what it means to monitor. So, that’s the -- I think more valuable and exciting one for us long term. But we need to nail that first part down to have a clinical validation there. So we’re focused on that today.
Michael Okunewitch: All right, thank you very much for taking my questions.
Michael Nall: Sure.
Tim Kennedy: Sure. Thank you, Michael.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Mike Nall for any closing remarks.
Michael Nall: Thank you, operator. Well, on behalf of our Board of Directors and the hard working team at Biocept, I want to thank everyone for participating on today’s call and for your interest in our company. We look forward to providing an update on our progress during our next conference call in November, which is hard to believe that the next one in November when we report 2021 third quarter financial results. Thanks again and have a great day everybody.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
