Hello. Thank you for standing by, and welcome to Biodesix First Quarter 2022 Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to Chris Brinzey. Please go ahead..

Thank you, operator, and good morning, everyone. Thank you for joining us today for a discussion of Biodesix first quarter 2022 business highlights and financial results. Leading the call today will be Scott Hutton, Chief Executive Officer. He will be joined by Robin Cowie, Chief Financial Officer.

After the prepared remarks, we will open the call for Q&A. An audio recording and webcast replay for today's conference call will also be available online as detailed in the press release announcement for this call. Today, we issued a press release announcing our business highlights and financial results for the first quarter of 2022.

A copy of the release can be found on the Investor Relations page of the company website. Actual events or results may differ materially from those projected as a result of changing market trends, reduced demand and the competitive nature of Biodesix industry.

Such forward-looking statements and their implications involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected.

The forward-looking statements discussed on this call are subject to other risks and uncertainties, including those discussed in the Risk Factors section and elsewhere in the company's annual report on Form 10-K for the year ending December 31, 2021, filed with the Securities and Exchange Commission on March 14, 2022, as well as in subsequent quarterly reports on Form 10-Q filed during 2022, if applicable.

Additional information concerning factors that could cause results to differ materially from our forward-looking statements are described in greater detail in the company's press release issued today and in the company's filings with the SEC. I would now like to turn the call over to Scott Hutton, Chief Executive Officer.

Scott?.

Thank you, Chris. As a reminder, Biodesix is a patient-centric lung disease diagnostic company with a mission to unite biopharma, physicians and patients to transform the standard of care and improve outcomes with personalized diagnostics.

In the short time since our last earnings call, we've had a very productive end of the quarter and are looking forward to the rest of 2022. Beginning with our financial performance, we reported total revenue of $6.5 million and core lung diagnostic testing revenue of $4.6 million, which reflects 17% year-over-year growth.

Like many of our peers, performance in the first half of the quarter was affected by the COVID-19 Omicron variant, which significantly impacted the month of January and February with practitioners, patients and many of our Biodesix team members getting COVID and staying home to recover, which resulted in an overall revenue decrease versus fourth quarter 2021.

While we do not plan to talk about individual monthly results in the future, we do want to share more color about sales performance in the first quarter to highlight the rapid and strong recovery we experienced following the Omicron wave.

We're pleased to report that the month of March produced the highest volumes for our core lung diagnostic test in the history of the company.

We saw sales access and activities rebound to pre-pandemic levels and April continued this trend with a higher number of core lung diagnostic tests per business day than March, giving us continued confidence in our current 2022 revenue guidance of $37.5 million to $39.5 million.

Stepping back for a moment, we began the year with what we believe is one of the most comprehensive suites of diagnostic test targeting the large lung disease market with an estimated combined total addressable market of $29 billion.

We have 5 blood-based tests on market that support clinical decision-making across the lung cancer continuum from initial risk assessment of lung nodules with the Nodify lung testing strategy, to post diagnosis treatment guidance and monitoring with the IQlung testing strategy.

The Nodify lung testing strategy consists of 2 blood-based proteomic tests, Nodify CDT and Nodify XL2, which are used by physicians to assess the risk of malignancy of a lung nodule. This helps prioritize high-risk lung nodules for invasive diagnostic procedures while also helping avoid unnecessary procedures on very low-risk lung modules.

Since launch in early 2020, we've successfully driven adoption of Nodify lung despite the challenges presented by the COVID-19 global pandemic.

Ongoing positive feedback and advocacy from our customers as they gain more experience with Nodify lung further validates that we are only beginning to realize the full potential for these tests to change the standard of care in lung nodule risk assessment. Moving to IQlung.

We started the year with a full commercial launch of the GeneStrat NGS test, increasing our therapeutic guidance portfolio to 3 blood-based tests, including the GeneStrat-targeted ddPCR genomic test and the VeriStrat proteomic test.

Offered as options within IQlung testing, these tests are used to inform treatment decisions and monitor for the rise of resistance mutations while patients are on therapy. The GeneStrat NGS test launched in January with Medicare payment already secured.

Adding the NGS test means we can now offer the option of broad sequencing of circulating tumor DNA and RNA with a turnaround time of 72 hours, the fastest of any test available in this space. This complements the more targeted GeneStrat ddPCR test, introducing flexibility in addressing individual patient and physician needs.

Feedback from our physicians has been incredibly positive since launch, reinforcing the importance and competitive differentiation of the rapid turnaround time and coverage of both DNA and RNA genetic alterations by this test. In summary, we're pleased with adoption over the last 4 months.

Continued support and investment in data generation to demonstrate and reinforce the clinical utility of our test is another critical factor for future growth. We expect the upcoming full data readout and publication of our ORACLE study on Nodify XL2 will further support our sales and reimbursement efforts for the test.

Additionally, we look forward to providing further updates on our ongoing INSIGHT study for the IQlung testing strategy, the ALTITUDE study of our Nodify test and the BEACON study for primary immune response, our immunotherapy guidance test and our further development efforts for our pipeline risk of recurrence test.

We've said it before and cannot reiterate enough. Lung cancer kills more people in the U.S. annually than the next 3 cancers combined and time matters when treating these patients.

We pride ourselves on Biodesix's ability to quickly provide critical results and insights back to health care providers with best-in-class testing turnaround times for all of our tests to improve patient care.

We believe we've just begun to scratch the surface of this $29 billion market, and we have both the team and the products to drive growth in 2022 and beyond. Speaking of our team, and as previously discussed, we doubled the size of our sales team in 2021 as we grew from 24 to 48 team members.

We believe our commercial team is critical to continued growth and as such, in line with plans, we've added another 5 sales team members in the first quarter of 2022 to increase our coverage in promoting and selling the complete portfolio of core lung diagnostic test.

With a large greenfield opportunity in our existing territories, we will further expand this team in 2022 and beyond as long as we continue to see the levels of productivity experienced thus far, with sales team members paying for themselves on average in 4 to 6 months. Moving to our biopharmaceutical partnerships and services business.

We reported revenue of $0.9 million for the quarter, reflecting the COVID-19 Omicron variant wave in the first half of the quarter impacting prospective study enrollment and shipping of samples.

Overall, we continue to receive positive feedback and interest in the Biodesix's Diagnostic Cortex proprietary AI and machine learning platform and our broad multimodal and multi-omic service offerings.

Our ongoing efforts and advancements and explainability in transparent AI will provide unique insights and clarity to health care professionals by providing the ability and potential to identify key biologic mechanisms driving specific outcomes for patient subgroups that may require different approach or different treatment.

Overall, we remain confident that we'll see growth in revenue from increasing demand for our service offerings. Lastly, we've made considerable progress strengthening the company's financial position to ensure that we have the funds and resources to execute upon our growth objectives.

In addition to the $50 million committed equity facility that we announced in March, we're also pleased to announce a new term loan for $15 million, a private placement of $11.7 million and a revision to our integrated diagnostic asset purchase agreement milestone payments to extend the time to pay and provide near-term financial flexibility.

Now let me turn it over to Robin to review the first quarter 2022 financial performance.

Robin?.

Thank you, Scott. First quarter total revenue of $6.5 million was in line with our expectations and compared to $28.9 million for the first quarter of 2021, represented an increase in revenue from our 5 core lung diagnostic tests and offset by an expected decrease driven entirely by the year-over-year change in COVID testing.

As a reminder, the first quarter 2021 reflected significant COVID-19 diagnostic testing revenue, which we did not expect to be repeated in this last quarter. Our first quarter core long diagnostic testing revenue was $4.6 million from total volumes of 4,300 tests versus $4.0 million from total volumes of 3,100 tests for the first quarter 2021.

The growth in test volume was primarily driven by our Nodify CDT and Nodify XL2 tests. As Scott referenced, growth in the quarter was impacted by the latest wave of the COVID Omicron variant. Fortunately, the impact from Omicron decreased as quickly as it came, and we saw a rapid recovery and a record month in March.

Biopharmaceutical services revenue was $0.9 million compared to $1.7 million in the first quarter of 2021, a decrease of 45%.

As we have said, this business can fluctuate due to several factors, including contract timing and project execution, but in this instance, reflects the continued impact the pandemic has had on overall prospective clinical trial enrollment and shipping of samples needed to complete the projects and recognize revenue.

We ended the quarter with up to $7.5 million contracted but not yet recognized, $2.5 million of which is currently on the balance sheet as deferred revenue as we have already collected the cash. COVID testing revenue was $1.0 million in the first quarter versus $23.2 million in the year ago quarter.

The first quarter 2022 was slightly higher than anticipated due to the Omicron spike in January and February. We have consistently projected that COVID testing as a percentage of our revenue would drop off as compared to the prior year as testing shifted to rapid at-home antigen testing. We expect this dynamic will continue throughout 2022.

Gross margin as a percentage in the first quarter 2022 was 51% versus 37% in the first quarter of 2021. The improvement in gross margin over the year ago quarter was primarily a result from the shift in mix in sales to our higher-margin products of our core lung diagnostic testing and the sequential decline in COVID-19 testing revenue.

Gross margin decreased sequentially over the fourth quarter 2021 due to higher-than-expected COVID revenues, which have lower gross margins and due to the full launch of our GeneStrat NGS test, which creates a drag on margins in the initial stages of launch as we get to scale. The gross margins for each of the other tests remains consistent.

We expect that the overall gross margin as a percentage to steadily increase over the course of the year. Operating expenses, excluding direct cost and expenses were $17.8 million in the first quarter of 2022 compared to $16.2 million for the same period of 2021.

The year-over-year increase seen in the quarter was primarily driven by increases in sales and marketing expense from the doubling of the sales force in 2021. Operating expense includes $1.3 million in noncash stock-based compensation.

The net loss for the first quarter 2022 was $15.6 million compared to a net loss of $7.0 million for the first quarter of 2021. The increase in loss is attributable to the decrease in total revenue from COVID-19 testing in 2021 and the growth of the commercial organization in 2021.

We ended the quarter with $16.4 million in cash and cash equivalents, a decrease from the prior quarter due to a net loss in the quarter and a scheduled payment to Integrated Diagnostics of $4.6 million.

As we announced this morning, we've renegotiated the Integrated Diagnostic payment schedule, reducing required payments by approximately $7.5 million and $7.2 million in 2022 and 2023, respectively. The complete details can be found in the documents filed with the SEC.

The cash balance as of March 31, 2022 excludes $11.7 million raised in our April private placement and the new $15 million debt deal announced today. Turning to our outlook for 2022. We are reaffirming our previous guidance and anticipate 2022 total revenue to be between $37.5 million and $39.5 million.

Over the course of the last 6 months, we have taken a variety of steps to add access to additional funding and reduce our cash burn, all while focusing on continuing to grow revenue in 2022 and 2023. We will continue to focus on liquidity enhancements that will enable us to maintain focus on revenue growth and accelerate our time to profitability.

In 2022, we will invest in projects and hires that result in near-term revenue growth while implementing additional cost savings measures that will impact the second half of 2022 and 2023. Now let me turn it back over to Scott.

Scott?.

one, improve the lives of patients impacted by lung disease; two, integrate Biodesix testing into physician practices, providing all the testing needs for a lung patient through the continuum of care.

One patient, one trusted company, multiple test personalized results; three, discover and develop new diagnostic tests like a risk of recurrence and primary immune response test; four, lead the way with AI explainability and transparency; five, conduct numerous clinical studies to demonstrate and reinforce the real-world performance of our test; and six, grow and expand our biopharmaceutical partnerships to aid in their research, drug development, clinical trials and development of companion diagnostics.

In closing, I would like to thank all Biodesix teammates for their dedication to the Biodesix mission, vision and culture, which revolves around our collective commitment and daily contributions to positively impact patients' lives. With that, I will turn the call over to the operator for questions..

[Operator Instructions]. Our first question comes from Brian Weinstein with William Blair..

Just a couple for me. First, you said April trends were better than a record March. So obviously, April a record as well.

But is there anything that you can provide us in terms of kind of what that trajectory sort of looked like so that we can get a better idea about how quickly things are recovering here?.

Yes. Brian, thanks for the question. As we've stated, we really don't want to get down to projecting monthly numbers going forward. We feel as if there's a pretty significant interest and continued ramp. We'll give greater clarity on the next earnings call.

But most importantly, we're excited to get back to what we deemed as kind of pre-COVID access, physicians focusing on early detection and diagnosis of cancers, which we know is critically important.

And as we continue to grow the sales team, obviously, more feet on the street with increased access gives us great prospects of continued growth, and we feel really good about where we're at..

Got it. Speaking about the team, can you just remind us how the team is being deployed here with multiple tests that they're selling.

What is kind of in the sales comp plan here? Is all growth equal? Are you focused on volume? Are you focused on docs? Just give us some idea about how you're incenting the sales force and where you want them spending their time?.

Yes. Great question, Brian. We haven't given specifics of the individual comp plan on any given year, but it really is focused on growth, and that's volume, where that matters most is getting into accounts. And so we reward and compensate both for expansion, right, going out and getting new accounts to begin ordering.

And then once we get an account kind of that land-and-expand type approach, there we can get more ordering physicians with an account, but we compensate equally. It really is about volume growth across the portfolio. We want our sales professionals to sell the entire portfolio of lung diagnostic products.

Again, being the only company with 5 on-market products focused on lung, we think that gives us a significant advantage that once we land in an account, it gives us the ability to deploy additional tests, providing value.

And that's ultimately our goal is as the patient progresses through that continuum of lung cancer care, we want to be that trusted provider to provide insights at each and every touch point or a clinical visit..

And what kind of guidance do you give them on pulmonology versus oncology in the two different call points?.

Yes. We traditionally start with pulmonology. We know with Nodify that, that's the largest market opportunity that exists for us. We also know most importantly, that if you can go earlier, right, the earlier we can help physicians detect and diagnose cancer, the higher the likelihood of a positive outcome. So we start there.

And then as -- if you think of an integrated practice as a patient progresses through that continuum, there's numerous handoffs. Our sales professionals are guided to build those relationships.

We've, in the past, highlighted the difference and the nuances between those 2 call points, and we've referenced utilizing our medical science liaison team or a medical affairs team. And we've also continued to grow and expand in adding oncology specialists.

We're not going to come in and expect 1 sales professional to be able to answer every single clinical question and understand every clinical trial. So we'll have specialists that support them through that.

Is that helpful, Brian?.

Yes, it is. And then, Robin, for you, can you -- well, I appreciate all the work that you guys have done on strengthening the balance sheet in a much better position today than you were, obviously, just a couple of months ago, and that's good to see.

How should we be thinking about cash burn for the year? I don't think I heard you give any kind of any guidance on that. And I did hear you talk about cost saving measures that would be impacting the second half of '22 and '23.

Can you be more specific about what those are? And just overall, how we should be thinking about burn this year?.

Sure. We're really focusing our operating expense near-term projects or projects that drive near-term revenue.

So as Scott stated, we do anticipate continuing to add to our sales and commercial organization as opportunistically across the year, so we'd expect to see some increase in the sales and marketing expense as we -- and frankly, the associated departments in sales and marketing that support increased volumes.

As our revenues increase over the course of the year and into 2023, we expect our burn to drop off across 2022 and into 2023. And we really are focused on driving to profitability as quickly as we can..

Okay. All right. We'll follow up with you on the follow-up call and add some more detailed questions on that, but I appreciate it, guys..

Our next question comes from Kyle Mikson from Canaccord..

So thanks for providing the core lung test volume and you gave a nice year-over-year comp. I guess, first, I was wondering if you're going to be providing that going forward. I don't -- I think this is the first quarter that you provided that metric and it was helpful. And then it looks like that volume grew faster than revenue.

I just was wondering if you could talk about the year-over-year ASP trends. It seems to have decreased. I'm just wondering if that's basically solely due to the NGS test..

Yes. So it's due in part to the NGS test just launching. And so starting off with Medicare, but really working on the others, but also heavily due to CDT. So as you know, we do not yet have Medicare coverage for our Nodify CDT test.

And as the overall test volume growth was driven primarily by growth in Nodify XL2 and Nodify CDT that Nodify CDT pending revenue status really does drag down the overall ASP. But we are very pleased that by product, our ASPs have been very consistent. So once we have that Medicare milestone, you'll see a jump there..

the first being NGS start-up costs dragging down margins and then the kind of overperformance, I would say, on COVID. I'm just wondering on the start-up costs, I just want to understand that a little bit better.

Is that -- is it just that exactly? Or is it actually like dial rate or cash question and things like that, that actually have to do with like reimbursement as a whole on those things could maybe be a little bit more systemic rather than just startup. And I know COVID dragged down the margins, too.

I mean is it just safe to assume you can like return to the 4Q level maybe in the second quarter and beyond?.

So great questions. With the NGS, it really is start-up costs. So there's a lot of fixed costs, particularly for NGS technologies with running a certain number of samples per plate. And if you don't have complete plates, obviously, your cost per sample are higher. So the biggest drag for us really was in that new test start-up.

We -- as for second quarter and looking at gross margin, I would expect us to get close to that, but would anticipate, as we're continuing to ramp NGS, it will take us a little bit to ramp up to that number, but we are making great progress on -- with our NGS test and that growth.

So I would anticipate that the second quarter is maybe a little less than the fourth quarter from a gross margin perspective, but pretty close..

All right. Perfect. And just a few more for me. And maybe, Scott, you could chime in as well. So on GeneStrat NGS, one of the main questions around the test heading into the launch was just the competitive positioning, given the multiple similar products in the marketplace.

And in the past, you called out turnaround time and its focused role in the testing continuum as kind of key differentiating factors. I just wanted to revisit that given it's been on the market for like 1/3 of a year basically at this point.

What's the feedback been like from a competitive perspective? And do you stand by your original commentary around like differentiation of the test in the marketplace?.

Yes. Thanks, Kyle. Great question. Definitely, feedback has been positive. It's been consistent with our assumptions. We're receiving a lot of positive commentary on turnaround time. We've always said that current turnaround times or previous turnaround times prior to our launch weren't acceptable. And we're actually getting that.

We're finding a number of physicians that are verifying that, right, kind of the trust the verify approach. And their commentary is, wow, why can't others do that? What are you guys doing different? And we are seeing traction in those accounts. Right now, we've talked about this test having the ability to be utilized across multiple cancer types.

We still see the majority of physicians that are utilizing the test today focus on lung cancer. But we are starting to receive additional inquiries. And so we feel really good about it. We stand behind the product and adding it to our portfolio of products has done exactly what we said, which has made it a little more robust.

When you're a Biodesix sales professional and you knock on a door today, not only can you come in with the broadest portfolio of products, but you can make a commitment that you're the only sales professional that's going to be able to provide those critical clinical insights at multiple time points.

So much more to follow there, Kyle, I think you highlighted how recent that product launch is. But right now, we're very excited about what we're hearing, what we're seeing and we still think that this will add to our growth trajectory in the future..

Perfect. I appreciate that. If I could just ask a final question. It's great to you reaffirm the guidance. If I'm doing the math right, it looks like the guide continues to assume well over 50% year-over-year growth in the core business, obviously impressive. Your 1Q performance was obviously tempered by Omicron.

I just wanted to ask if in order to meet that growth objective that I stated and maybe kind of similarly robust growth targets in future years, like how much do you have to increase your sales force over the next 12, 18, et cetera months? And if you could call out any plans like specific that would be great as well..

Yes. Thanks, Kyle. It's a great question. We stated or at least I stated earlier, we're going to be very mindful about that. We're not blindly going to continue to state or strive to double the size of the sales force.

We're really focused now that we've got traction and some experience over the last 12 months expanding the sales force, it really is about their contribution and how quickly they can get to sales rep productivity numbers that we feel strongly about.

What we have experienced and seen is no surprise to anyone as we expand into new territories where we haven't had prior coverage, that ramp time and onboarding time can take a little bit longer, where we have a good foothold, and we're dividing or cutting territories and adding reps, as you can imagine, they scale much more quickly.

So for us, you may have noticed we stated we added 5. This really was the first quarter, over the last 4 to 5 quarters, where we didn't 6. And so we're tempering that to make certain that we can get that return. So we'll continue to update you as we progress through the year.

We know right now that when you add a sales professional, like we said, it can take 4 to 6 months. So if we expand in the second half of this year, we want to be mindful of that expense, knowing that the return will really happen next year. So it is about growth.

And again, the most important thing is that we bring in the best highest quality talent, which we're really excited about the talent level of the Biodesix sales team. And we know that competitively, they're out knocking on doors and gaining access that we didn't have prepandemic..

Our next question comes from Max Masucci with Cowen..

So I know it's largely out of your hands at this point, but it would be great to hear if you have a sense for when we could see the final ORACLE publication hit. And if you've had any recent interactions with NCCN guideline members or other guideline consultants, advocacy groups.

It would be great to hear whether you see potential to sneak into the next NCCN update later this summer or it's more prudent for us to really set our sights on potential NCCN guideline inclusion in more of the, call it, 2023 time frame..

Yes, Max, welcome to the call. Thanks for the question. Yes, ORACLE goal is to have that published this year. Like you said, much of that is out of our hands and out of our control and review times. But we feel good about where we stand with that to date.

And as we receive feedback from the potential publisher, obviously, we're going to respond in a timely fashion to ensure we do everything we can to get that out as soon as possible. So more to come on that. Hopefully, by the next earnings call, we'll be able to give greater clarity and guidance on where that's at and when we expect it to be published.

When it really comes to guidelines, I think we all know in this space, you've really got 3 different groups that provide guidelines with NCCN, as you referenced. You have ACCP, which are the CHEST guidelines. And then you have the Fleischner Society. One of the things we've watched is the cadence of updates.

So we're mindful that ACCP or the CHEST guidelines have really not updated much throughout the pandemic. And if they did, they really focused more on the pulmonary components related to COVID. So we're excited and eager to see ACCP initiate some updates and guidance.

We think we've done a good job of putting ourselves in a position to be that company that can help represent blood-based diagnostics gaining inclusion into those guidelines. NCCN, they update more frequently. And similarly, we feel like we've put ourselves in a good position there.

The Cleveland Clinic Foundation just had a meeting about 2 weeks ago, a lot of great dialogue. As you can imagine, the attendees at that meeting are really luminaries in the space, multiple presentations and ongoing discussions.

We were able to update many physicians that we believe are involved in making some of those decisions answering their questions and giving additional input. The reason that's critical is as we come out of this pandemic, we've got to be mindful that we haven't had face-to-face interactions in nearly 2 years.

Just to remember, and as a reminder, ACCP is tied into CHEST. There has not been an in-person CHEST meeting since 2019. So in essence, all that we've done with Nodify has occurred without having in-person meetings.

So it's a great question, Max and where we're focused on is getting that face-to-face interaction, updating physicians not hoping that they can read something or catch up, and we're off to a great start. We've had a lot of interest and inquiries. And again, we think we've done everything we can to put ourselves in a good position.

Is that helpful, Max?.

Yes. That's a very helpful summary. I appreciate that, Scott. A final one for me would be curious if you had to point to the specific offerings or Biodesix capabilities that are -- that you expect to drive biopharma collaboration wins here in 2022, it would be great to hear.

And then what sort of resources are you dedicating towards new biopharma contract wins this year? Are there any specific customer types or biopharma services applications, where you see the current biopharma services offerings fitting in the best..

Yes. Thanks, Max. It's a really good question.

The one thing that we continue to spend time assessing is has biopharma changed the areas that they're focused on, right? As they come out of a pandemic, what clinical trials are they kicking back off? What new ones are they starting? Where are they spending kind of their energy, time and money? Right now, it's still early, but we're really pleased with the dialogue.

I think the one thing that differentiate -- well, there's a couple of things that differentiate us. One is the breadth of the portfolio and offering, like you said, having a multi-omic multimodal approach really means in a simple form as you translate it is we're not wed to one single platform technology.

And so I think as the biopharma comes out of the pandemic, they're really starting to ask those questions. It's no longer just ddPCR and NGS-based questions on what's going on genomically. We're seeing a lot more questions about the patient's immune system. What's going on with proteomics.

We've seen a lot of proteomic players over the last 12 to 18 months enter the space.

And so it's still early, but as really, if not the only company, one of the only companies that's commercialized 3 LDTs that are proteomic-based, you can imagine we're getting a lot of questions as to how we've done that, how we've done it at scale and why others can't. So that's one area of an extreme interest and the dialogue continues to increase.

I think the other is really going back to something that I think is underappreciated about Biodesix and that's that we were in AI and machine learning in the mid-2000s. So we've got over 12 to 15 years' experience with AI and machine learning. Our proprietary Diagnostic Cortex is a differentiator, right? We utilize it to discover new assays and tests.

We're getting a lot of interest from biopharma to continue to do that, and that's very promising. The other component of that is you may have seen that we've really started focusing on what we call AI explainability. And we're pleased to state that on a proteomic level, we're seeing proteins and peaks that we've never seen.

And so we hope and plan on disclosing here in the coming months and quarters what that means and how it can translate, but I'll give an example. We've actually been able to highlight and demonstrate the exact and specific proteins that we measure with our VeriStrat test. And so we're going to be rolling some of that information out.

That is significantly different than what some of our peers are able to do and see. So we want to leverage that. And as you can imagine, Max, biopharma, when they can see those individual proteins, it gives them targets and those conversations are starting to expand.

So on the biopharma front, as much as we're disappointed with where we are to date, the number of ongoing conversations, the number of dollars under contract and the number of agreements that we're currently negotiating gives us great hope that we'll see tremendous growth in biopharma in the coming months and quarters.

Is that helpful, Max?.

That's great..

[Operator Instructions]. Our next question comes from Tejas Savant with Morgan Stanley..

This is Neil on for Tejas. Could you remind us on your expectations on the timing for Nodify CDT reimbursement this year? And then a quick follow-up on that..

Yes. We continue to have great conversations with Medicare and remain confident that we'll start to see some payments for Nodify CDT here in the second half. I would anticipate later in the second half, but we will update you as we have more from our MAC..

And Robin, I know you touched on gross margin improvement through the second quarter earlier in this call, but any additional color on the cadence through the back half of the year and how the potential reimbursement and increasing GeneStrat volumes might play in your expectations towards the fourth quarter?.

Sure, absolutely. I expect us to see some pretty good improvement, steady improvement from first quarter into second quarter and into third quarter.

Adding in coverage for Nodify CDT and NGS test volumes, I would expect us to get close to that 70% mark, which is still under where we were prior to launch of the new tests in 2019, but getting back up towards that stronger sort of 70% range..

That's very helpful.

And so beyond the sample shipment delays that you're seeing on the biopharma side, any other ongoing supply chain or pricing pressures carrying through the business?.

Supply chain has been okay. I've talked about it a few times before. At the beginning of COVID, we formed a team, and they have diligently worked to ensure that we have not had any supply chain disruptions and no business disruptions, and I'm very happy to say that, that has continued.

We, like everyone else, are seeing the impact of inflation and rising costs and rising shipping costs. So just increases in supplies, travel, shipping just what everybody else is dealing with.

So we do see that reflected in overall cost of travel and goods, and you see that in OpEx, but from a supply chain, nothing at this point, disrupting supply chain..

And one last for me.

Apologies, I'm not sure if I missed this during the prepared remarks, but should we anticipate any major updates at ASCO?.

Yes. Great question, Neil. We don't have a major readout. If you'll recall, our INSIGHT study historically, we've targeted ASCO as kind of an interim analysis. That study enrollment slowed throughout the pandemic as most clinical studies and trials did. And so we're right now at about 4,500 patients.

As you may recall, the target enrollment was 5,000 patients. So we're actually looking at next ASCO or prior to that, hopefully closing out the study and reporting out on the 5,000 patients enrolled. Yet we will have a significant presence at ASCO because we launched the NGS test this year.

So as you may recall, historically for us at ASCO biopharma presence was heavy. This year, we'll have both a large biopharma and sales or commercial footprint presence there. So we're excited to start those conversations.

Another way of looking at it is ASCO is the first in-person meeting where we'll be able to highlight and promote our full portfolio of tests for pulmonologists and medical oncologists. And so we think that's a great opportunity. And again, the last time we were able to do this without disruption was 2019.

So that in-person meeting here at the end of May is critically important for us.

I highlighted what we've seen and done on the AI explainability front, we hope to have additional opportunities to discuss what we're doing with VeriStrat and also what we're -- how we're going to incorporate those learnings into our pipeline products, both risk of recurrence and primary immune response. So we're expecting ASCO to be a big meeting.

And going forward, we think our presence will continue to increase at ASCO. Great questions..

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