Greetings and welcome to the Oncocyte Corporation First Quarter of 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. And please question and answer session will follow the formal presentation. . As a reminder, this conference is being recorded. This time to turn the conference of Investor Relations..

Thank you Operator and thank you everyone for joining us for today's conference call to discuss Oncocyte's first-quarter 2022 financial results and recent operating highlights. If you have not seen today's financial results, press releases, please visit the company's website on the Investors page.

Before turning the call over to Ronnie Andrews, Oncocyte's President and Chief Executive Officer. I would like to remind you that during the conference call, the company will make projections and forward-looking statements regarding future events. Anything that are not historical facts are forward-looking statements.

We encourage you to review the company's SEC filings, including without limitation, the company's Forms 10-K and 10-Q, which identifies the risks, the specific risk factors that may cause actual results or events to differ materially from those described in the forward-looking statements.

These factors may include without limitation, risks inherent in development and, or the commercialization of potential diagnostic tests. Uncertainty in the results of clinical trials or regulatory approvals.

The capacity of OncoCyte third-parties supplies, blood sample analytics system to provide consistent and precise analytics results on a commercial scale. The need to obtain third-party reimbursement for patients use of any diagnostic test the company commercializes.

Our need and ability to obtain future capital and maintenance of IP rights, risks inherent in strategic transactions, such as failure to realize anticipated benefits.

Legal, regulatory, or political changes in the applicable jurisdictions, accounting and quality controls greater than estimated allocations of resources to develop and commercialize technologies or failure to maintain any laboratory accreditation or certification and uncertainties associated with COVID-19 pandemic and its possible effect on our operations.

Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements. OncoCyte expressly disclaims any intent or obligation to update these forward-looking statements, except as otherwise, may be required under applicable law. But that I'll turn the call over to Ronnie..

Hey, thanks,. Welcome everyone to our conference call to discuss first-quarter 2022 financial results and operating highlights.

On today's call, I'll review the significant progress we've made and continue to make across all of our major products, as we move toward reimbursement submissions for our oncology menu and update you on our exciting opportunity in transplant.

But first I think it's important to address the market headwinds and some important decisions we've made to better position OncoCyte to whether the current external environment.

When I stepped into the CEO role in July of 2019, we introduced and adopted and ambitious vision to acquire companies that own technologies that could accelerate our path to deliver a complete menu of precision treatment decision and therapy monitoring test to assist oncologists and pathologists to making more timely, informed decisions for their patients.

Despite the challenging external market environment, I'm very proud to say we enter 2022 with every product on schedule and poised for submission for reimbursement over the next 12 months. No we stand in these favorable developments, we recognize a need to be fiscally prudent in strong stewards of capital.

In connection with these objectives, the company led by our board, determined take access to strengthen our balance sheet so as to ensure we have a solid path through 23 and into 24. In April, we successfully consummated an underwritten public offering of common stock and warrants with net proceeds of approximately $32.8 million.

This financing round was accomplished with the strong support of several current investors, as well as some new institutions. We very much appreciate the continued commitment to the company and to our vision.

We believe this recent funding combined with our current balance sheet, expected revenue ramp, as well as licensing and platform partnerships will provide us sufficient capital into 2024. However, in order to do this, we've had to make some important prioritization decisions that I want to share with everyone today.

First, we expect to shift from our current parallel path product development and launch processes, and begin to focus on two main product priorities. For the see -- foreseeable future, we intend to focus our organizational energies on 1. Launching our recently CLIA validated Transplant Monitoring test for liver transplant patients.

to build out our Irvine lab to accommodate the upcoming IBD development in both transplant and in oncology. Our exciting relationship with Thermo Fisher to build regulated content on their next generation sequencing system, Genetics’, require preparations and capital investments.

Here in Q2, and with the infrastructure investments now behind us, we had the facilities, the instruments, and the expert team in place to begin this important worth allowing us to start a regularly process to position our oncology tests, to launch XUS to grow thermos global channels.

Before I dive into the product line progress we made in Q1, I'd like to address some organizational changes that I believe will assist us in our efforts.

As of June first, Mitchell may will move over to become Corporate Development Officer, where he will oversee the multiple initiatives underway for bringing in non - dilutive cash, we're licensing in partnership negotiations.

We're grateful to Mitch for all his work as our CFO believe this move allows us even better leverage of Mitch's extensive capital markets experience and negotiation skills as we seek new sources of revenue. Also, on June first, a Nice John will be promoted to the role of Senior Vice President of finance and Interim CFO.

We originally recruited a Nice to run our transplant business has had of operations of finance, and he's done an exceptional job as evidenced by our completion of the LDT validation and the LCD submission for liver two months ahead of schedule.

A Nice has over 30 years of finance and operational experience within the diagnostics, life science, and high technology industry sectors, including molecular diagnostics company like foundation medicine and PerkinElmer.

And these brings incredibly broad experience to the role and the understands a challenge ahead and as uniquely qualified to help us deliver on our financial and cash management goals.

In addition, launched saddens me personally, Cavan Redmond, our Chairman of the board, has decided not to stand for re-election to the Board of Directors at our Annual Shareholder Meeting this summer. Cabin has served shareholders extremely well for the past six years.

However, in light of some very personal reasons, Cabin has determined that more time with families as needed and other life interests were extremely appreciative of the investment in time and experienced he's made to OncoCyte over the years and I'm grateful for his willingness to remain accessible as a trusted advisor to me and other members of management to ensure a seamless transition.

In connection with cabinets decision to not run for reelection I'm pleased to announce that Andy Arnaud, our current audit share, has been unanimously elected by our boards and succeed Cabin.

Andy brings a long history of financial active into the role which we believe will ensure solid continuity as we navigate the current market environment and move OncoCyte forward. With that let me now provide updates on our solid progress across our portfolio.

First, I want to discuss our anticipated rapidly emerging revenue opportunity in transplant rejection monitoring. Last fall, we set out an ambitious plan to finalize our lab developed test for liver patients by the end of first half of 2022.

As announced last week, thanks to the incredible effort by our teams in Germany and Nashville, we now have a fully CLIA-validated lab test for liver transplant monitoring poised for launch.

The team was also able to complete the liver clinical validation for CMS submission two months ahead of plan, positioning us for a full market launch in the fall of this year.

Building on our patents and numerous papers published based on our digital PCR methods, our two teams have streamlined the workflow, delivering an incredibly efficient digital PCR process that allows us to consistently, with solid assay reproducibility, complete the test process and report results within a single shift once our lab receives a patient's blood sample.

We believe this will be the fastest turnaround time available in the industry today, and we're enthusiastic about the opportunity to provide this important test for liver patients, but today, there was no current molecular monitoring test on the market. I look forward to updating you on our commercial plans on future calls.

Now let's turn to our oncology portfolio. In the first quarter, DetermaRx grew 66% versus Q1 of 2021 in sample volumes of 73% above the prior year, reflecting continued momentum towards our stated goal of doubling 2021 volumes in revenues. In the first quarter, we continue to expand our pool of onboard physicians, which is now up to 472.

This is an increase of 10% year-over-year. And similarly, onboarded accounts also increased 10% to a total of 278 as of the end of first quarter.

Let’s turn to the term DetermaIO, it's clear from our Early Adopter Program that there's a tremendous need for better solution to immune therapy response prediction than the two prognostic tests that are currently available today.

Over the course of first-quarter, we've gained valuable insights as to the used cases for DetermaIO and have a clear understanding of its importance in early stage triple negative breast cancer in late stage non-small cell lung cancer.

We continue to build the foundation of supportive papers, expanding the clinical utility of the test in supporting the unique climbing of DetermaIO's utility across multiple tumor types. Recently, at AACR, we presented data supporting it's used in metastatic bladder cancer.

Our second major dataset in this cancer type, which we believe is now statistically powered to allow us to expand in the bladder cancer as our third tumor type.

This June at the American Society of clinical oncology or ASCO meeting our collaborator will be releasing the results of the previously announced collaboration with the GONO, clinical trials group where to DetermaIO was tested as a biomarker on the ATEZO tribes study.

AtezoTRIBE is a randomized clinical trial in metastatic colorectal cancer where patients received placebo or the standard of care, plus the rose drug atezo. Last September, Dr. Chiari -- excuse me, Dr.

Chiara Cremolini of the GONO Group reported the results of the trial where the trial was considered a success, but only for a very small population of patients. But as has been previously seen on numerous studies, most of the benefit was seen in a subgroup of 5% of metastatic colorectal cancer patients that had a rare genetic mutation.

It is now universally accepted that the remaining 95% of patients need a biomarker. In fact, without a predictive test, this very large patient population will continue to lack access to immune checkpoint inhibitors as a treatment option. Dr.

Cremolini mentioned that her team's future work will be looking at biomarkers for these low responding patients, and DetermaIO was mentioned by name as a candidate. This important data will be released at ASCO. So while today we cannot comment on the results given it's a blinded study, we encourage you to stay tuned.

I cannot overstate the importance of such a potential new indication for immune checkpoint inhibitors, and for our DetermaIO program. Additionally, at ASCO, we're releasing date on DetermaIO and metastatic triple mega breast cancer, using the drug Keytruda.

While we have previous date in TNBC, those studies were with different immune checkpoint inhibitors, and in earlier stage tumors, rather than metastatic disease. So this could expand our applicable TNBC patient population for one of leading immune checkpoint inhibitors, KEYTRUDA. Finally, will be releasing new data in gastric cancer.

Our gastric cancer is not a common cancer in this country, it is the third leading cause of cancer-related desk worldwide. We built this indication is important now that we solidified our platform and channel partnership with Thermo Fisher, the rest of world markets, and already working on the kit version of the DetermaIO.

Needless to say, ASCO is important meeting for DetermaIO and we look forward to speaking with you further once the data is all public. Let me close by summarizing, despite the external environment, I continue to be extremely enthusiastic about the progress we've made today.

Looking ahead, we'll be taking steps to focus our investments on how we stage our product development and launches, and that many exciting growth drivers for you to watch over the next six to eight quarters. We'll continue to drive sample volume growth in revenue increases for DetermaRx.

And beginning in the second-half-of-the-year, we plan to start the sequencing of our four major product launches with our Transplant Monitoring operating in liver fall about full market launch and DetermaIO determined TX for the U.S. clinical oncology market, and finally we expect the launch DetermaCNI in the U.S. for pharma clinical trial markets.

Gaining reimbursement for portfolio of bringing our test to market and generate revenue growth is essential. We believe that we've optimized the organization to drive external partnerships in licensing to generate additional revenue streams, and we've taken steps to reduce our burn to ensure our current resources carry us into 2024.

We booked a world-class organization that I'm very proud of and I'm grateful for your support as we advance our -- our platform to deliver life-changing tests to the patients positions we starve each day. At this point, I'd like to turn the call over to Mitch Levine to review our financials. Mitch..

Hey, thanks, Ronnie. Hi everyone. Our consolidated revenues for the first quarter of 2022 were approximately $1.4 million up from $0.3 million from the same quarter and year ago. First-quarter revenues associated with DetermaIO, with $1 million up from $0.2 million sequentially, and up $0.4 million year-over-year.

We received $40,000 in licensing-related revenues in the first quarter from licensing, our proprietary molecular tests to China. After the close of the first quarter, we received the final Burning Rock milestone payment of $1 million according to our November 2021 amendment and will account for it as licensing revenue in the second quarter of 2022.

Our pharma services business generated $0.4 million in the first quarter, a decrease of $0.1 million quarter-over-quarter, and a decrease of $0.1 million year-over-year. As we have discussed previously, revenue and pharma services likely fluctuate, as we receive samples from biopharma clinical trials.

Cost of revenue for the first quarter was approximately $2.0 million, including $1.0 million from the cost of diagnostic test and testing services we performed for our pharma customers, and $0.9 million in non-cash amortization expenses of DetermaRx and pharma services related intangibles.

Cost of revenues also include test and services we performed for our pharma customers. Research and development expense for the first quarter of 2022 was $5.1 million, an increase of $1.8 million from the same period a year ago.

The increase in R&D expense was related to the increased headcount, as we prepare to begin the clinical trials to build IVD kits for our platform partnerships, as well as increased R&D activity as we continue to support clinical trials to gain statistical power to our current DetermaIO datasets to ensure success as we submit the CMS reimbursement, as well as build our clinical efforts for our new transplant business.

General and administrative expense for the first quarter of 2022 was $5.7 million, an increase of $900,000 for the same period in 2021, due primarily to an increase in personnel and related expenses. We saw increases in stock-based and cash compensation for our new hires and a standard cost of living increase for many employees.

We also incurred professional and legal fees, as well as other acquisition and business development related costs, which we expect will be non-recurring.

Sales and marketing expense for the first quarter of 2022 was $3.2 million, an increase of $1 million year-over-year, primarily attributable to an increase in headcount and continued ramp in sales and marketing activities to prepare for commercialization of our transplant business, as well as support the commercialization efforts of DetermaIO and DetermaRx.

Non-GAAP operating loss as adjusted for the first quarter of 2022 was $11.3 million, an increase of $3.9 million sequentially, and an increase of $2.7 million as compared to the same period a year ago. This increase is primarily attributable to an increase in headcount with several critical areas of the companies.

GAAP operating loss as reported for the first quarter of 2022 was $9.9 million, a decrease of $25.8 million quarter-over-quarter, mainly due to the $25 million change in contingent consideration recognized in Q4, 2021. And a decrease of $1.5 million as compared to the same period a year ago.

We have provided a reconciliation between these GAAP and non-GAAP operating losses in the financial tables, including with our earnings release. For the first quarter of 2022 we reported a GAAP net loss of $10.3 million were $0.11 per share, as compared to $35.9 million or $0.39 per share. A decrease of $25.6 million quarter-over-quarter.

Again, mainly due to the $25 million change in contingent consideration recognized in Q4 '21. And $3.9 million, an increase of $6.4 million as compared to the same period a year ago. Turning now to the balance sheet as of March 31, 2022, we had cash equivalents, the scripted cash in marketable securities of $22.7 million.

Following the end of the first quarter, we raised $32.8 million in net proceeds from an underwritten offering of common stock priced at market. We anticipated receiving two tranches of $5 million preferred stock offerings in the second and fourth quarters of this year, but preferred is priced at 20% premium to market.

Additionally, we are currently reviewing several options for non - dilutive forms of capital including capital lease lines, platform partnerships for transplant, licensing test in the U.S. market, as well as commercial partnership.

And we feel confident that our current balance sheet, combined with these non - dilutive opportunities, provide us with sufficient cash to take the company into 2024. As Ronnie mentioned, we are proactively preparing for continued market headwinds by re-prioritizing on a more some sequential approach to product development and test launches.

Specifically, we plan to reduce the number of clinical studies we invest in over the next 18 to 24 months, and rely on the data collected to date to support the submission for reimbursement and the subsequent product launches.

We also plan to reevaluate timing of several capital intensive investments, including planned sales force expansion to launch DetermaTx and DetermaIO. These expense reductions, combined with the anticipated revenue growth, once our test received reimbursement, is expected to have an immediate impact on reducing our cash burn.

Net cash used in operations for the quarter was $13.3 million. Net cash used in operations increased sequentially due to timing of invoices that were paid in the first quarter rather than the fourth, as well as personnel, R&D, and sales and marketing expenses.

Note that net cash used in Q4 reflected a $2 million milestone payment from the Burning Rock licensing agreement. Looking ahead, we expect our Q1 cash initiatives for facilities build out and instrument purchases to be a onetime expense and thus, our operating cash initiative will begin to decline over the future periods.

And we are committed to solid stewardship of the current cash on hand following our recent funding. As I transition into my new role as Head of Corporate Development, I want to take a moment to express my gratitude for the privilege of serving as your CFO for the last five years.

I look forward to working closely with Ronnie as we enter the next phase of our strategic initiatives and seek new global partnerships and licensing opportunities to bring increased capital and revenue to OncoCyte. That concludes my remarks concerning our financial highlights. Operator, please open the call for questions..

Thank you very much, sir. Ladies and gents, we will be now conducting the question-and-answer session. . The first question comes from Mike Matson of Needham & Company..

Yes. Thanks for taking my questions. Let's see, I guess I'll start with the comments around things you've done to reduce the cash burn. So can you maybe just talk a little bit more about this sequential approach and how that might affect the timing of any of the test launches..

Yeah, Mike, we will and I appreciate the question. Our goal right now is all about focus. And right now we have to -- we believe immediate revenue opportunities to compliment Determa RX.

And so obviously we're going to continue all the efforts around the term Determa RX, but we are going to throttle back on some of the clinical studies that were planned for the Determa RX and so to expand utility etc. Those will be re-prioritized and we'll put energy behind Determa IO to get it submitted to the -- for CMS.

Keep in mind, we've got an update. We believe after ASCO and the upcoming publications of the data that's already been presented to submit for at least two indications.

And so that's where we're going to go to market where we have planned, I think as you know, to try to get a few more studies under our belt and to try to present the case for a pan cancer reimbursement.

But right now we decided that to minimize the cost and obviously there's risk in anytime you go do clinical study, so we're going to take what we got and we're going to go forward with that.

It won't delay the long DetermaIO, but it will mean that we focus IOs launch into triple-negative breast non-small cell lung cancer, and potentially bladder cancer, now that we have the AACR paper behind us.

And then transplant of course, where -- we're way down the road on transplant, we -- we beat our tom lines that we set for the team to end -- by the end of June, they finished the LCD. I'm trying to finished the LDT at the end of March and they finished the LCD a couple of weeks ago and we announced that last week.

So we believe that we're poised for launch for our transplant business in the fall, and so we'll be shifting some of the planned sales force expansion oncology over to transplant. So that we can -- we can have someone representing our transplant offering for liver in the marketplace about fall.

And so the delay -- the real only delay that we anticipate might be pushing out DetermaCNI and potentially DertemaTx launches just based on how we have to sequentially plan these things without adding new marketing headcount. So that's really the big challenge now is just to make sure we stay focused on transplant and getting IO submitted.

And then after that we'll begin the sequential fall one of the other products. So we're not expecting quarter years’ delay, we're expecting quarter delays in in some of the other products that were mentioned today..

Okay. Got it. The thoughtful. And then just any updates on the potential platform deal for TheraSure. It sounds like Mitch mentioned that there's still being discussed, but I guess I thought we might hear something by those spring or early summer time frame.

Is that still the case?.

Yeah, let me -- Yeah Mike, we have -- we are in the -- at the 11th hour with the digital PCR opportunity and we're down the road on the next gen sequencing opportunity as well.

And so it's very plausible that we might end up on two platform technology -- technologies, next gen sequencing and digital PCR, but we'll definitely be announcing very soon the primary relationship that we're looking to execute on in digital PCR. So just stay tuned for that.

It's -- I just can't announce it yet because we aren't finalized the contract with signatures on both sides yet..

Okay. Got it. Thank you..

The next question comes from Mark Massaro of BTIG..

Hi guys, thank you for taking the questions. Ronnie, I think you mentioned that you may move a small number of your reps over from oncology to transplant.

I mean, is that literally one or two folks? And then, can you give us a sense for now that the liver transplant test is validated, I think you indicated in the press release a launch seems to be imminent, but maybe can you just talk about when exactly that will launch and then talk about some of the logistics out of your lab on the east coast?.

Yeah, absolutely. First off, Mark, just to be clear, we're not going to take anyone from oncology sales and moved into transplant. If you remember, we're planning on doubling -- pretty much doubling the oncology sales force this year.

We're going to put those plans on the back corner for now and we're going to take some of those headcount we have planned to move over, and we'll hire a team to sell transplant that comes from the transplant industry, or transplant marketplace. So that's the first thing. The second thing is, we did absolutely complete the LDT validation for liver.

The LCD was also completed and submitted, so we are in a waiting phase to hear from CMS. Our goal is also to try to submit as we committed, kidney as well, by the end of June. So all those are in process. Our goal is going to be to begin to establish. We've already established the lap processes; we have a really good workflow.

We have a team in Nashville prepared to take samples, and so now it's really about executing to your point the logistics of how we're going to get the sample collected and how we're going to get those samples into our lab.

And so all that's being worked on now, and we expect to have all that in place by the time we get reimbursement, which who knows at this point given where CMS is from a timeline perspective, but we expect early fall we'd be ready to go for a market launch with reimbursement.

That's the -- That's what we believe based on what we know about CMS 's backlog today..

Okay. That helped. Thanks for clarifying that. And then obviously DetermaRx our will remain a commercial focus for OncoCyte. But did I hear you say that you may throttled back on clinical study development on RX, and if that's the case, should we be maybe pushing out our own expectations for when RX could be included into NCCN Guidelines..

Yeah. I think that's the big question Mark to you hit the nail on the head. I -- we are -- we have a randomized clinical trial open. It is enrolling at a slow pace.

Patients have not necessarily wanted to randomize themselves knowing how powerful our data is at selecting patients that have high risk in the outcome if they take chemo obviously is profound. And so our goal is not to add any additional studies around that.

We have an open registry, we'll keep the registry open, and we'll keep the current slow intake of RCT, but we're not going to add into the other trials that we were considering that might have accelerated a dataset for NCCN by next summer. Those would be risky to get them done in that time frame.

And so we just said -- we'd given the risk and given the burn, it would take to get there. And we just decided it's probably better to let the current trials continue to go forward and not add any additional expense to that..

Okay. And maybe one last question and I'll hop back in the queue. The $40,000 of licensing revenue, I believe came from Burning Rock for the launch of RX in China. I'm pretty sure Shanghai is on lockdown.

I guess, can you just talk about -- I assume that things are definitely under alarm in China, especially in Shanghai, but can you give us a sense for Burning Rock 's focus on that test and maybe just describe the impact that you saw as a result of the lockdown in Shanghai?.

Yes. I'm going to let to Mitch answer that. I think everyone knows Mitch was on point for the whole -- since the beginning and really did all the negotiations with our Chinese partner. And so again, kudos to Mitch for the hard work there. Mitch stays on the phone with them. What's the latest? And we do know we're being impacted by the lockdown for sure..

Definitely impacted by the lockdown. But they are committed to RX, they've done studies around it. It's commercialized now for about five consecutive months and are showing good progress. And so you're right, Mark, the -- China is exceptional in their lockdown regarding COVID and that's going have an impact..

Okay. Thanks for the time. I'll hop back in the queue..

Thanks, Mark..

Thank you. The next question comes from David Westenberg on Piper Sandler..

Hi. Thank you for taking the questions. I got two I think short ones first, just a clarity on all the oil cash metrics here. I think you exited the 24 you did $32 million deal. That puts you -- your current Cannis balance somewhere around 50, does that make sense? And then you gave this cash runway to 2024.

I just want to make sure, Claire, that it's -- was it to '24 or through '24. And then you said it does add in some of the non-dilutive capital that your assumptions.

Can you clarify whether some of that non-dilutive capital assumptions or stuff that hasn't been announced yet, or is it everything you kind of already talked about so far?.

Sure. Yeah, Mitch is going to take that one, Mitch..

Yeah. Dave, you're -- you're fairly accurate on the cash number.

I'd say in the low fifties is probably a little bit more accurate and we do anticipate it bringing in another $10 million in our preferred offering with two of our institutional investors that will come in two tranches, $5 million each one will close in the second quarter, one will close in the fourth quarter.

Additionally, we can't delve into details regarding non-dilutive financing and capital sources specifically because that's, we're a public company. We just can't tell you that but --.

Just wanted to make sure. It does contemplate stuff that has not yet.

That's correct. It does contemplate things that have not been disclosed and we expect that capital combined with what we currently have on the books and bringing in the $10 million dollars from our preferred, will get us into 2024. How far into 2024 is going to be dependent upon how we are able to scale back our plans..

Dave, let me just say this, I think that we are -- it's not like we're hoping for those non-dilutive things, we're actually in discussions around some things, so we just can't comment on them because they're not completed yet..

Perfect, now that's helpful. And then just quickly on account access, you onboarded, I think you have 472 onboarded accounts, up 10%, but the test orders were up 73%.

Can you maybe talk about on -- it sounds like there's order frequency trends going on and just want to maybe clarify that?.

Yeah. We are seeing -- well, one of the things we did, David given the lockdown -- coming out of lockdown, if you remember, we had bond board at a lot of people virtually, but a rapid not been into basically detail that surgeon itself, or himself of herself. And so would things opening up, our sales team was able to start to getting in and doing that.

And as a result of that, you're seeing an increase in sample volume from same-store sales, if you will, or same sites that we've already gotten some. Now we get more positions onboarded there and they begin to order. And so we expect that that is a better use of our sales teams time we spent all the synergy getting these new accounts.

So while we do want to continue to grow our account base, our original wave of account access and account effort was focused on high incident rate areas. And as you know, DetermaRx is a smaller market opportunity.

But with IO and TX counting, we wanted our reps to have a presence in a brand presence in these high incident rate accounts, and that's what we focused on. So now that things opening up, we want to start really penetrating the current accounts and driving more utility of our products. We think it's a better more efficient use of their selves time..

Thank you so much..

Thanks, David..

Thanks, David..

Thank you. The next question comes from Paul Knight of KeyBanc..

Thank you, Ronnie.

On the -- On TheraSure, what should we think about -- regarding a pricing for that particular type of test?.

Yes. So today, kidney as our digital PCR methodology, was given a blank at LCD a year ago, and it was given for kidney at $2,700 and heart for $2,850, I believe. Good degree of probability that will fall between the $2,700 and $2,800 range..

And then is this a multiple test per year per patient type test?.

Correct, yes. The -- Depends on -- European standard of care is all different from the U.S. but we're looking and we think somewhere between seven -- at least seven in year one and four and four, which is very similar to kidney and heart. So somewhere in that follow-up -- utility for follow-up you'll see liver fall more than likely..

Okay. And then regarding RX in the quarter, the pricing seems to be up.

Is that a fair assumption?.

Yeah, that's a great point, Paul. We -- We've been attacking the private payers pretty hard in hand-to-hand combat adjudication to claims. And Mitch, I mean, you're nodding, I thought we saw a really, really nice quarter of being able to collect cash and actually move some of the folks that have paid us -- underpaid us, up to a better standard for us.

So the answer yes -- is yes, Paul. And as you know though, when we -- we always say this, that we're not in contract with -- except for one, a small payer, and so every private claim has to be adjudicated typically. And we have a team that's doing that, so they're obviously gaining sustain.

And we do believe the addition of DetermaIO and DertemaTx will add more value to our market access team, because now they've got more a position for contracting. So hopefully we'll see some gains out of that group in terms of actually getting on contract, but probably not into already the launch TX and IO..

Okay.

And then lastly regarding the services business, is that kind of steady-state for foreseeable future?.

Yeah. Paul, it's weird. I've been watching other folks report and we've heard several times from different companies that they're pharma businesses are down and that they felt like the surge -- the winter surge, that people stayed away from some of the clinical studies.

I have to be honest, it doesn't make sense to me if you are a cancer patient, why you not go and get into the trial. But the reality is we did see and hear from other companies, so we do have a really robust contracted pipeline, but until we see patient samples, we can't bill against those. And so I'll see I think it's going to be lumpy this year.

We had hoped it would be a little more predictable, but it looks like it might be as lumpy this year as last year, given the challenges that our former partners around having recruiting patients..

Okay. Thank you..

Thank you..

The next question comes from Thomas Flaten of Lake Street Capital Markets..

Hey, guys, appreciate you taking the questions. Just with respect to the launch of DetermaIO, you mentioned that you might be shifting some of the plan headcount from the oncology team over to the up-and-coming transplant team.

Can you just talk a little bit about how we should think about the IO and RX growth curves given a -- that seems to be a smaller commercial infrastructure that you're planning..

Yeah, absolutely. And I started there on an earlier question but let me be a little more specific. So when we launched in deployed our original 10 reps, we show -- we thought and we think we did a good job of choosing high incident rate. Our high incident areas for our sales reps to be deployed.

And throughout the pandemic that proved to be true because we were able to onboard docs, but without having more than the 10 reps. We added three and Q1, so we have 13 now. Our goal by the end of the year was to have that into the low 20s, probably and expand into some new territories.

So instead, what we're going to do is take the current territories and we're going to focus on as we launch IO and TX and they get reimbursement, we're going to focus more on the current territories and going deeper into the accounts and gaining a better, faster traction for IO and TX.

As you guys know, TX is a blanket LCD, so we still expect it to get reimbursed fairly rapidly once we submit it. And so the idea would be to instead of expanding outward, actually going deeper into account. Some of our accounts like Florida oncology or Georgia oncology.

There's multiple Physicians, Texas oncology, multiple positions within those accounts, and so the ideas instead of onboarding and account and getting one or two dogs were one onboard the accounting go deep within the sort of the infrastructure those accounts and drive utility across physicians within the account versus add new territory.

So as we get through the current market storm and as we launched these products and revenues begin to grow, will take a deep wrap and see if it's when the right time is to add new territories. But today that's the specifics around what we're planning to do around the oncology business..

And if I might, you made reference to CMS a couple of times with respect to timing. And then in response to an earlier question, did I hear -- maybe I -- I might've misheard, but did you say you're going to submit here shortly the LCD, but you expected to have a response in the early fall, did I hear that right? I've seen a bit of.

Yes, we are -- Thomas, we already -- Keep in mind the transplant LCD is the blanket LCD for digital PCR, and we submitted liver two weeks ago. And so we are -- but liver does not have a -- is not part of the blanket LCD. There's nobody with a liver test today as you know, so we're the first ones out.

But kidney and heart are reimbursed already using digital PCR, so we don't know for sure, but we believe that given there's kidney and heart, that they -- we should receive a rapid review of the LCD given there's already a blanket LCD written for our technology that cited our papers..

And the timing on IO, do you think would be --.

IO will still attract -- Yes, we're waiting on one publication to be accepted and us notified. And once that happens, we're going to prepare. We've been working on the dossier, so our goal is to submit IO, as we we've said, somewhere by the end of summer..

Got it, appreciate it. Thanks so much..

Thank you, Thomas..

Next question comes from Mason Carrico of Stephens Inc..

Hey, guys, most of my question to the manager tiers, so maybe just one quick one, on TheraSure, any call you can provide around recent discussions with transplant centers. How should we kind of think about the opportunity between centers versus more community-based centers, is one or more and more near-term target.

I'd assume that the, the transplant centers versus the community centers themselves, but just any color there, you can provide?.

I think the thing that's in our favor is today there's no molecular tests for liver in the market validated today. So we are kind of the first out in that indication. The good news is there are some great competitors already out there, CareDx in the Tara and the other indications.

And they've done a terrific job of the missionary marketing work to sort of convince transplant positions the need for molecular testing. So we certainly believe that that has created an awareness of what we're doing.

Our initial engagement with the various centers we talked to has been very positive and they have acknowledged the need for what we're bringing and they certainly are excited about a rapid turnaround time that we can provide out of our lab.

And so the jewelries out on that till we start hitting the rubber meets the road when our reps star going in and try to start getting samples in. But we certainly have received a very positive feedback from the key opinion leaders that we talked to in in these large centers..

Got it. Thank you guys..

Thanks mate..

The final question comes from Bruce Jackson of The Benchmark Company..

Hi, thanks for taking my questions. With regards to the TheraSure launch, where are you in terms of your launch preparations in terms of the sales force, clinical support, things like that..

Yeah. So we are because the lab came first. We got the lab in place, the workflow was in place. The LBT is final. We have -- we're working obviously on the logistical components of that now. So which will include the requisition to order as well as the how we're going to return results via a report electronically versus PDF.

Even crazy as it sounds, a lot of these facilities still prefer a PDF and a fax. We sometimes scratch our head at that, but that's still the case in many instances. But we are working on an electronic report as well. So all those things are in process.

And again we wanted to wait and make the investment behind those till we saw a successful workflow in LDT. Those are now complete. So by the time we get reimbursement, we expect will be a fully functional Battlestar in transplant..

Okay. And then just real quick on the DetermaTx and DetermaCNI timelines.

How far should we be thinking about shifting those out?.

I would -- I think the DetermaCNI timeline is the one that's at the greatest risk candidly, because right now we are not going to -- unless we find an appropriate partner that wants to do some studies with us and keep them fairly cost neutral for us, we'll probably not invest behind those studies, we'll launch it as an RUO in the United States for pharma and hope we can solicit some of that support from pharma.

But right now, that's the one that's at the most risk. And so we had originally planned to launch it, which we will, as an RUO this summer. But we had hoped to basic -- maybe actually submit for reimbursement later in the year.

But I think given where we are financially and the need to conserve cash, that we'll have to wait till we find a stronger partner relationship where they'll help fund some of that effort.

And so unsure about how long that'll push it out, but I wouldn't expect a long time because we do have some good conversations underway, but I would not expect any revenue from C&I in the next 12 months outside of an RUO project with pharma..

Okay. That's it for me. Thank you very much..

Thanks, Bruce..

Thanks, Bruce.

That was the final question. Ladies and Gentlemen, we have reached the end of the question-and-answer session. This concludes today's conference call. Thank you for your participation. You may now disconnect your lines..

Thanks to everybody..