Ronnie Andrews, Chief Executive Officer
Welcome everyone, to our conference call to discuss our third quarter 2021 financial results and operating highlights. Joining me on today's call are Mitch Levine, Chief Financial Officer; Gisela Paulsen, our new Chief Operating Officer; Dr. Doug Ross, Chief Science Officer; and Padma Sundar, Chief Commercial Officer. We will all be available during the question-and-answer session.
Our continued progress delivering on our product development milestones in Q3 brings us closer to our goal of becoming the most comprehensive and differentiated precision diagnostic company to inform the treatment of Cancer and monitor for response to treatment throughout the patient journey. I have received feedback from several investors that while it is exciting to follow all of the progress being made at Oncocyte, they would appreciate more context as to how all the moving parts fit into the exciting strategy. So, based on that welcomed honest feedback, I want to start first with an overview of how it all fits together.
For those new to Oncocyte, two years ago my team and I stepped in to reposition the company for the future and laid out a very compelling strategy to bring on a portfolio of tests that would complement each other and deliver answers to critical questions physicians and patients face that today’s industry focus on large scale genomics has failed to answer. Two major decisions still face every physician managing a cancer patient, “What is the best treatment option” and “Is the therapy working for my patient?” The advancement of targeted and immunotherapy options has happened rapidly with a clinical trial pipeline full of promising drugs across all major solid tumors. As the options for mono or combinatorial therapy expand, understanding the tumor biology of each patient is becoming more and more important!
Oncocyte’s vision is to reduce to practice the appropriate technology, DNA or RNA or the two together, and provide the relevant information to physicians, faster, with less use of precious and hard to get tissue, and most importantly, with predictive precision not delivered by the current tests available in the market. With confidence, I can say, in 2 short years and in the face of a global pandemic, Team Oncocyte has made several important strategic advances that have moved us rapidly to the forefront of precision oncology diagnostics to answer these questions.
On the treatment decision front, we now are the only company that has a precision answer to all three questions necessary to provide the best treatment pathway for patients across numerous solid tumors:
- Do I give chemo? Answered by DetermaRx™.
- Do I give a targeted drug? Answered by DetermaTx™ (launching in Q1 2022).
- Do I give an immunotherapy? Answered by our recently clinically launched DetermaIO™.
These three tests complete our Treatment Selection menu and allow us to enter an extremely large market which industry sources estimate at over $5B in the US alone.
DetermaRx was launched last year in the middle of the pandemic and has the smallest of the available markets of any of the tests in our arsenal, but it has been a beacon for our mission of improving the lives of cancer patients! In a little over a year, we have touched over 1200 patients of which just over 500 have been found to be high risk for recurrence and thus needed chemo, and with that choice, those patients will now have an improved five-year life expectancy of 92% versus the 49% five-year expectancy they would have had without our test information!
We are now bringing the second of our three treatment selection tests to clinicians with the commercial launch of DetermaIO this quarter. Moreover, we plan on fulfilling the promise we made to investors and the customers we serve to have a complete repertoire of precision treatment decision tests on the market by the middle of 2022 with the launch of DetermaTx, our 500+ gene-targeted decision panel in late Q1 2022. By mid-year next year, Oncocyte will be the only company with a full menu of tests from one lab, that uses minimal tissue and provides <10 day turnaround time to address the estimated >$5B cancer treatment decision diagnostic market in the US and the EU. The potential value generation from the full menu is very substantial, and after two years of integration, development, and clinical studies, we are now on the cusp of realizing the chance to go after these large markets.
The second question that still remains unanswered for the majority of tumors is, “is the therapy working?”, information that if provided early in the disease cycle could allow changes to therapy to be made in real-time and thus, potentially offer better outcomes for more patients. While emerging companies are beginning to offer tests that help identify Minimal Residual Disease to try to answer whether patients were adequately treated by surgery alone, they can only serve a subset of patients whose tumors can be removed surgically. These tests are complicated to execute upon because they need to be personalized to individual patients and require genomic sequencing of the resected tumor specimen prior to testing which takes time and is not always available. The fact is, the majority of decisions in solid tumor treatment monitoring happen without surgical resection of the tumor, meaning these patients have no option today since MRD cannot serve them When we acquired Chronix Biomedical earlier this year, we acquired patents and proprietary methods that allow a blood-only approach to therapy monitoring. This allows immediate initiation of testing upon the start of therapy and interpretation of test results without requiring prior knowledge of the tumor genome. Our therapy monitoring product, DetermaCNI™ is launched in the EU for research use, and we will be completing tech transfer to the US in Q1 of 2022.
Our test is blood-based only and does NOT need resected tumor tissue, offering physicians an option for the majority of patients they serve. In fact, we not only solve the tumor tissue requirement issue, but DetermaCNI also provides results on disease progression at the second cycle of Immunotherapy, targeted therapy, and chemotherapy options. This is a very exciting opportunity for Oncocyte to participate in the $4-$6B global therapy monitoring market. Getting more clinical utility studies under our belt and getting this important test to market remains a priority for Oncocyte. Taken as a whole, our monitoring capability rounds out a very robust offering that represents the only comprehensive set of tests to answer every question facing patients and treating physicians throughout the patient journey.
The bottom line is this: while the pandemic has slowed other companies’ development efforts, I am excited to say that we have stayed focused and are now poised to deliver the full complement of tests in our current portfolio to the market over the next four quarters! With these product launches, Oncocyte is now entering very large market opportunities with unique, proprietary capabilities and by the end of 2023, we believe based on our current momentum, all of the current tests in our portfolio will be on the market, receiving reimbursement and driving the rapid revenue growth we envisioned when we laid out our compelling strategy. Yes, there will be revenue growth along the journey for individual tests as we launch them, but the full force of Oncocyte’s strategy is found in the comprehensive information we can deliver to treating physicians. Our go-to-market strategy is only in the beginning stages and thus, we remain incredibly enthusiastic about the long-term value creation ahead!
That’s the strategy and now some updates on the products supporting our vision. Last week we announced the clinical launch of DetermaIO! We have known for some time internally that the proprietary technology behind DetermaIO had incredible potential to change the way we selected patients for immune therapy, and in less than 2 years, we have validated the analytical reproducibility, completed CLIA validation, and completed clinical validation across 4 major solid tumors. We have now tested over 1,000 patients to date and in every study, including randomized clinical evaluations, we have outperformed every other molecular diagnostic test. So today… I am very excited to discuss the clinical launch strategy for our flagship product, DetermaIO, the first and only clinical test that comprehensively assesses both the tumor and immune microenvironment (TIME) to identify patients who can benefit from immunotherapy. In clinical studies evaluating patients across multiple tumor types, including lung, breast, bladder, and renal cancers, DetermaIO has consistently been better at identifying immunotherapy responders than the standard of care test PD-L1 IHC in head-to-head comparisons and in some tumor types, even identified patients missed by the current tests that would have benefited from immunotherapy. DetermaIO addresses a critical unmet need in the market, which is to inform the optimal use of immunotherapy treatment for more than one million eligible patients annually in the United States alone. Over the past few quarters, we’ve shared updates on the incredibly strong foundation of data that we’ve presented which we believe has built a solid clinical foundation for DetermaIO to be used as a potential pan-cancer and pan-immunotherapy test.
Our strategy is to roll out the test initially as part of an Early Access Program with sites and physicians that have successfully partnered with Oncocyte on prior tests and in our clinical study efforts. During the early access program, we will optimize sample processing and logistics to ensure we deliver on our promise to provide rapid turnaround time and utilize the lowest sample requirements in the industry to inform immune status while maintaining strict HIPPA compliance.
Sometime in Q2 2022, after a successful EAP launch of DetermaIO, we will roll out DetermaTx™, our tissue-based, 500+ gene comprehensive genomic profiling using next-generation sequencing on the same tumor sample as DetermaIO, which will allow us to meet our turnaround time targets of less than 10 days, and conserve precious tissue while still delivering the comprehensive synoptic information a physician needs to understand the targeted and immune therapy options for their patient. DetermaTx will fall under a current Local Coverage Decision or LCD, from Medicare, so we expect Tx to be revenue-generating in the second half of 2022, and its launch will complete our Treatment Decision tests offering giving us access to a large market of close to $5Billion and establish us as the most comprehensive and differentiated test provider with predictive answers for the various therapy options available to physicians for cancer patients.
To complement this exciting test combination, we will launch DetermaCNI as a research-use product in the US in Q1 of 2022. Our initial efforts in the US will be providing the test for pharma clinical trials and via our Registry efforts to generate real-world evidence on the benefit of this test for managing patients being treated for cancer. DetermaCNI is currently available in Europe for pharma research and trials and is attracting researchers who are running immunotherapy and targeted therapy trials. We now have over 1,000 Patients in various studies in the EU across several solid tumors and look forward to report outs as early as ASCO of 2022. We remain very enthusiastic about DetermaCNI and the feedback from researchers and oncologists has been solid as they appreciate the blood-only monitoring solution without the need for tissue or the need for very costly genome testing.
Moving to DetermaRx, our test for early-stage lung cancer patients…when we launched in spring of 2020 at the beginning of the pandemic, we had no idea what was ahead of us, but our team forged ahead to bring this important test for early-stage lung cancer patients rapidly to market. Despite the unprecedented challenges surgeons managing these patient cases have had to get access to surgical suites for over a year now, I am proud to say that we are on track to close 2021 at over 100% year over year growth in test volume for DetermaRx! Since launching DetermaRx just over a year ago, we have run over 1200 samples, of which 40%, or approximately 500 patient samples, have been deemed at higher risk of recurrence of their lung cancer. Without action, more than 40% of these patients would lose their life within five years. Instead, many of these high-risk patients are receiving chemo, and their five-year survival rate is expected to be well above 90%. Simply put, DetermaRx is saving lives …the essence of Oncocyte’s mission!
We continued to experience strength in the key metrics we use to judge adoption in the current environment. Our growth in the number of new physicians and hospitals onboarded in Q3 was solid, and Mitch will go into more details, but this is particularly meaningful given the strong headwinds from the delta surge which has dramatically impacted surgeries and early-stage diagnoses in our key areas where we have significant adoption. In fact, one study showed a 38% reduction in diagnosed cases and early-stage lung cancer surgeries in the summer of 2021. While the summer showed a slowdown in surgical cases, we were encouraged by a steady uptick in sample volume in Sept and had our largest volume month to date in Oct, which we believe is a good sign for our YE closing push. Our growing base of physicians ordering DetermaRx speaks to the value our test brings to patients, and we are confident that as we emerge from the delta surge, screenings and early-stage surgeries will get back to pre-pandemic levels. Our growing network of onboarded physicians has us poised to resume a strong growth trajectory with Rx as we exit 2021 and into 2022.
Next, I’ll transition to our emerging growth opportunities which stem from our acquisition of Chronix Biomedical. We briefly talked earlier about DetermaCNI our patented blood-based test to monitor cancer patients post-treatment. Through this acquisition, we also acquired access to the TheraSure™ transplant monitor test for early transplant solid organ rejection monitoring. This is a large market of approximately $2 billion in the US alone, with established CMS reimbursement of between 2700 and 2800 dollars per patient in the United States. Given the repeat testing modality for monitoring for transplant rejection, this is a recurring revenue stream and represents a very large revenue opportunity for Oncocyte. Recently we received issuance of our second U.S. patent covering the use of our digital PCR technique for molecular detection of solid organ allograft rejection. This new patent complements our first patent issued which gave us IP around absolute quantification, a very important differentiator for our method versus the competing next-generation sequencing methods. We now have both IP components needed in the US to support entry into the Transplant Monitor Market in the U.S. with our Therasure product as an LDT out of our Nashville CLIA lab.
So how is Therasure differentiated? First, Our test offers the broadest application across transplanted organs! While we have indications in heart and kidney, the two largest volume organs transplanted, Therasure is the only test with a current indication for monitoring liver transplants. We will offer the fastest turnaround time, and greater sensitivity for early indication of rejection which can prompt a timely and critical change in dosing of therapy to suppress the rejection, or a biopsy to confirm the rejection. Additionally, our test offers absolute quantification which allows for greater sensitivity in the identification of rejection providing utility for longitudinal monitoring of organ health over time. Over 20 clinical studies and numerous peer-reviewed publications have validated the usefulness of our donor-derived cell-free DNA (dd-cfDNA) test as a non-invasive biomarker to assess rejection, cell death, and under-immunosuppression – all signs that a transplant is or is soon to be rejected. However, the other technologies in use differ in effectiveness, accuracy, and speed of turnaround. Data published to date identifies our dPCR method as the fastest and most cost-effective for payers as compared to other methods that measure dd-cfDNA. These results have been published in prestigious journals including PLOS Medicine, the American Journal of Transplantation, and others. Importantly, the recent CMS coverage policy for transplant rejection monitoring citing digital PCR methods for solid organ allograft rejection, as it's titled, cites three peer-review publications from Chronix on the performance of our test in solid organ transplant monitoring. This is a HUGE validation of the Chronix technology and paves the way for commercialization and reimbursement here in the U.S. We are on a fast track to launching an LDT in the U.S. by the end of Q1 2022 so we can begin our efforts to gain access to the current reimbursement offered by CMS.
Europe represents another attractive market that is currently untapped, and last quarter we unveiled new details about our plans for the TheraSure transplant monitor test in Europe, and we are moving rapidly to work with local governments for reimbursement ahead of our 2022 launch in Germany. We’re incredibly enthusiastic about the potential of dd-cfDNA testing to deliver cost-effective, precise surveillance of transplant recipients to decrease premature graft loss resulting in the need for re-transplantation. In summary, our differentiated approach is more specific, quantitative for longitudinal follow-up, cost-effective, and can provide same-day turnaround time of important information for patient management.
As we look forward, I am very excited for our team and our investors who have supported us throughout the development phase of our comprehensive offering. We’re continuing to make progress on each product area and will exit 2021 with solid momentum toward our goal of launching a compelling and powerful portfolio of molecular diagnostic test assets with a large combined market opportunity of over $10 billion, and we will have proprietary positions in some of the fastest-growing areas of molecular oncology.
2022 promises to be a year of rapid expansion of our markets and testing growth, and in order to take full advantage of our progress, the board and senior management felt it was time to solidify the infrastructure to deliver a best-in-class customer experience. Our recent appointment of Gisela Paulsen as Chief Operating Officer brings world-class talent in strategy, operations, and industry leadership to the Oncocyte team. Her history with Genentech/Roche and Exact Sciences/Genomic Health will provide solid experience and position us to enter our upcoming growth period where flawless execution will be essential. We are excited to have her on the team and look forward to her contributions as we build out the fundamentals required to deliver our menu to physicians and patients in the US and EU.
I continue to be amazed by the dedication of our incredible team, particularly during the relentless challenges of the pandemic, and I am incredibly proud of how our organization has responded by keeping all major programs on track. I can say with incredible conviction that Team Oncocyte believes we have the potential to transform treatment decisions in oncology and beyond, and their unwavering commitment is evidence!
Paul Knight with KeyBanc: Ronnie, how do you expect IO to roll out? I understand you're going to collect more data in 2022. But when do you think the data (inaudible) is complete and you're able to submit a dossier into the CMS?
Ronald Andrews: Great question, Paul. We believe we have the data today to-go-to market clinically. We got enough tumors that we validated all ready to go, much like historically in our industry, whether it'd be Genomic Health, Clarient, Foundation Medicine, Garden, I mean, all of these great companies have launched their tests ahead of reimbursement and have moved towards adoption.
We realize that we still have a little bit of a road ahead for reimbursement. But especially given that DetermaIO is a PCR test, we believe it's prudent to go ahead and launch it and start the clinical adoption process. The dossier, we believe, will be completed, and we should be able to submit it for submission by the end of the first half of 2022.
Paul Knight: Then on the Burning Rock milestone, are we in progress there?
Ronald Andrews: Mitch is really on point, he's an executive team, we have an executive sponsor. I'll let Mitch, answer that for us.
Mitch Levine: Hi, Paul. Yes, we're on point with Burning Rock and are completing the tech transfer on time and to everyone's satisfaction.
Paul Knight: Lastly, any change in the sales force composition, Ronnie?
Ronald Andrews: Not today, Paul. We had plans to expand and we may expand by a few heading out of this year because there are some interesting territories that we have interest for IO that are uncovered. We may add a few, but until we see the pandemic completely lift and reps be able to access positions for face-to-face meetings, we're a little reluctant to go full throttle and add a lot more reps.
But ultimately, as we’ve spoken I think a few times on calls, we will be adding and expanding the sales force, because as you add DetermaIO and TX, it adds breadth to the offering and requires these reps to spend more time in the key accounts, detailing and talking to various positions within the account.
As we began to expand the menu and launch these tests, we will more than likely at some point in 2022 add to the sales force, but not planning on significant adds today.
Paul Knight: Okay, thanks.
Mark Massaro, BTIG: Hi, guys, thanks for the questions. I guess my first one is on transplant. Recently, the market leader received two federal investigations and one state investigation. I'm just curious if you are familiar if any of these investigations might be pertinent to the transplant industry at large? Or do you think it's perhaps specific to the market leader itself?
The second part of that question is, can you clarify which organ states you will launch in initially? My understanding is the kidney, but I'm not sure about that.
Ronald Andrews: On the first question, to be candid, I don't know enough about the situation to be able to comment specifically. I will say, being in this space for 30 years, that it's not uncommon for labs running LDTs and submitting claims to get investigated. Unfortunately, it's somewhat the nature of our industry at times. Again, don't want to comment on what the nature is, but I do believe that as we launch our LDT, our plan is to launch the LDT across all three donor types, kidney, heart, and, of course, liver, since we have a unique position with the liver. But as we go to our clinical trials to start the clinical trial for putting our test into a kit, we may end up having to prioritize the organs. When we do that, most likely we would do liver and probably kidney in that order, given that we have a proprietary position in the liver.
Mark Massaro: Yes. That makes perfect sense. Just to clarify, you've talked about wanting to launch kidney, heart, and liver. You've talked about the TheraSure transplant tests launching as an LDT out of your natural lab in Q1 2022. Are you planning to launch kidney, heart, and liver out of that lab in Q1 of 2022? You've also talked about potentially partnering with another company. Any clarity on some of your planning around a potential partnership would be helpful.
Ronald Andrews: Yes. Sure, Mark. Let me give you the color on that. Our plan is to bring all three indications up as a lab-developed test and have that ready to go by Q1. We will then sick Padma on CMS and let her go after getting our reimbursement. As you know, the LCD did cite our publications. We feel good that the test we're bringing up is the test they've already approved for that blanket LCD. But we still have to go through the paces of getting that. Once we get through that, we will be going to market with the LDT across all three donor indications, or organ indications.
The goal is to launch as an LDT. We are in process of speaking with a couple of major partners, and our goal is still to have those as our long-term partners to help us with the clinical trial process and, obviously, ultimately turn this into a kit that can be democratized, which is really the unique opportunity that we have. From the market research that we completed to make the decision to go into transplant, we clearly saw that the leading attribute for decisions for all these centers is the ability to provide same-day turnaround time for their transplant patients.
We believe that we will be in a unique position to deliver on that promise to the centers by completing the clinical trial and democratizing on a digital PCR instrument. Therefore, we do need a partnership with a digital PCR platform company, and as you might imagine there are three really good ones. I can't go much deeper than that, but just suffice to say we're in conversations with them all and trying to find the best one to partner with.
Mark Massaro: Okay. Then I did want to ask, I guess, about the quarter itself. I do think it's impressive that you grew sequentially DetermaRx volumes despite the headwinds in the South and Southeast and California and a decline in surgeries. I think every other precision oncology lab that has reported has commented about the headwinds in Q3. I guess if you could elaborate a bit, as we think about the last couple of months here in Q4 and a little bit into 2022, is it your expectation that RX can meaningfully accelerate from here, quarter-to-quarter? Then my understanding is you had about 10 people in the field. I think you've talked about going into 20 by the end of this calendar year. Any commentary on go-to-market and sales headcount will be helpful as well.
Ronald Andrews: Yes. Padma is on, and I'll let her answer that. I'll start with, though, we did see a really solid October. Both Mitch and I said that. We want to be open about that. We started to see surgeries come back and we started to see our volumes pick up, and they were meaningful. It was a meaningful increase. It wasn't just by a little bit. That's the good news. We'll see how the quarter plays out. As you know, at the end of the year, there's always seasonality with elective surgeries because physicians nor patients want to be in the hospital over the Christmas holiday season. We've yet to see. We do know there's a backlog of these types of patients. It could be that because they've been waiting for these surgeries, they do work through the holidays. We'll have to wait and see what happens. But in terms of the sales force expansion and growth, Padma, why don't you handle that one?
Padma Sundar: I just wanted to reiterate what Ronnie said. We are pleased with our 65% year-over-year growth, and I'm confident of the growth continuing into 2022 even with our existing 10 reps. I'm very confident of continuing the growth into 2022. In terms of the sales reps, as of now, we still have 10 reps. As Ronnie said, we'll be very judicious about adding reps. We didn't intend to have 20 by the end of this year. We had said perhaps by the end of next year. As Ronnie said, we'll be adding a small number of reps to support the launch of IO, which has a broader oncologist call point. We'll be adding them in states with the largest total addressable market, as you can imagine. That's the strategy, and it will be a phase addition, starting with a small number now and additional reps as we proceed through the year, and then additional launches including DetermaTX.
Ronald Andrews: Mark, in terms of the transplant sales approach, you can anticipate as we get to the end of Q1, depending on who our partner was, we would more than likely support that partner with what I'll call medical liaisons or medical technical sales reps so that we can actually go in and help those platform companies differentiate our test and etc. We'll probably add some of those reps, but more to come as we get closer to that date.
Mark Massaro: Terrific. Thanks for all the color. I'll hop back in the queue.
Ronald Andrews: Thanks, Mark.
Mitch Levine: Thanks, Mark.
Joseph Stringer, Needham: Hi, everyone. This is Joseph on for Mike. I guess maybe the first one is just around DetermaIO and the launch. I guess you did say earlier that you do not expect to need another study for the reimbursement, but I guess maybe I just want to see what you guys are thinking in terms of the next couple of studies, the next study that you'll be pursuing, what type of cancers you guys are targeting, and maybe the structure of this. Then I guess the second part to that, in terms of physician education, should we be expecting more KOLs in the future to drive awareness? Thank you.
Ronald Andrews: Yes, those are all good questions and really best answered by Padma, our Chief Commercial Officer. Let me just clarify something. We believe we have enough data to date to support the launch and utility of the test. But we are still in the middle of collecting data that we expect to be published that we can use to go for CMS.
Padma, you want to take it from there?
Padma Sundar: Yes. In terms of usage of the test, the reason we announced the EAP is because there was interest from physicians to have access to the test clinically. There's definitely a demand for the test. That's why we're doing the EAP program. After reimbursement, yes, we do have data obviously for clinical launch. We are completing our studies that will generate the data. These are retrospective studies that will generate the data we need to put into our dossier.
Obviously, we have data on lung and triple-negative breast cancer, but we do believe that this test has pan-cancer utility. We will be making investments, and Doug chimes in here, to show utility in additional tumor types. Last quarter we talked about, for example, we are part of the AtezoTRIBE study in colon cancer. There will be investments in clinical studies to demonstrate the utility of this test that will ultimately lead to a pan-cancer claim.
As to KOLs, we're very lucky that because we've done studies in multiple tumor types, we already have enthusiastic KOLs, and you'll see them speaking about DetermaIO in upcoming conferences, namely SITC, the Society of Immuno-Oncology Conference happening in Washington D.C. this week. There'll be a CME at the San Antonio Breast Cancer Symposium, so we're very lucky that because these key people have participated in our studies in Europe and here, we already have enthusiastic KOLs speakers.
Of course, one of the goals of the EAP is that that early access of sites, those doctors that automatically become additional KOLs that will spread the word about the test as we go for full commercial launch.
Joseph Stringer: Okay, great. That makes a lot of sense. Thank you for clearing that up. Then maybe just a quick one on DetermaRx. What are the expectations, or, I guess, could you guys maybe clear up the timeline a little bit, on potential NCCN guideline inclusion?
Then, it was my understanding that they would also be an additional milestone payment in coordination with guideline inclusion from Burning Rock. Is that correct?
Ronald Andrews: Yes. I'm going to let Doug comment on where we are in NCCN, since he's on point for that. But let me give you just a high-level answer. There are two milestones. one milestone is the completion of the tech transfer and then Burning Rock going live. Then there's a follow-on milestone that when we do get into NCCN guidelines that there is an additional milestone. So that is correct. There are two milestones, and so that is a correct assumption.
Doug, do you want to talk a little bit about NCCN? I know that they've reported out on quite a few of the smaller tumors, but we still haven't seen anything on some of the larger tumors yet.
Doug Ross: Yes, that's correct. Their proceedings are confidential until they're released publicly, and so we really don't get any clue from them about what's going on. I have written them and asked for an update on what is usually a fall release, and they've written back and said more likely towards the end of the year.
We're in a wait-and-see mode, but it appears that the lung cancer guidelines are going to be released later this year than is usual. I don't have any knowledge of why that is.
Ronald Andrews: Just to add a little color commentary from my role with ASCO. There have been a significant number of new therapies and new additions to the arsenal for non-small cell lung cancer this year. The feeling is there was a lot to take in and a lot to add context to for the members. I suspect that that's what's driving some of the delays, but clearly we, like you guys, are very hopeful that we see those soon.
Joseph Stringer: Yes, absolutely. Well, thank you for taking our questions.
Ronald Andrews: Of course, yes. Thank you.
Bruce Jackson with The Benchmark Company: Hi, everyone. Thanks for taking my question. I wanted to talk about the pharmaceutical services business briefly. In the past, you've discussed the backlog in that business has been rather sizable. I wanted to know if we could get maybe a rough update on the amount.
Then secondly, with the data that shows that DetermaIO is predictive, have you gotten any more inbound calls from potential pharmaceutical partners?
Ronald Andrews: We'll split this amongst the team. Let me start with the last question. We continue to see and get discussions opened up by some of the emerging therapy companies that have products that are either complementary to the patients who were not responding to an immune therapy, and/or therapy companies that are trying to enter the ICI, or the immune checkpoint inhibitor, world. Those conversations are always ongoing.
We continue to do some pilots for those companies. We are hopefully going to see some of the closure of some of those pilots, and those pilots, obviously, we hope will lead to full access to a trial. There is interest there. We continue to get inbound phone calls as well as we continue to make outbound phone calls. We aren't short of activity with pharma, but it is mostly with the emerging therapy companies that are trying to take on the large market leaders.
In terms of pharma services, we still have a solid pipeline, but it's been a little bit confounding for us, if I can just be totally transparent, which, Bruce, you always expect me to be. We have these projects and we have the master services agreement signed up. But the actual projects, it's a start, stop, start, stop.
Every time we think we're going to get started on a big project, we are told by the Company that they're going to delay it for another quarter or another month, which is one of the reasons we wanted to do something a little more reproducible and predictable, which is why we started taking the bandwidth we had and going after some of the diagnostic companies that need platform validation.
Obviously, we're extremely good at that, both in Nashville as well as in California. We can offer them a cleaner environment by which they can do crossover studies from one version of an instrument to a new version, one version of the software to a new version, and even validate new kits for them and software for their FDA submissions.
That business does not really require pharma patient samples for clinical trials and is more predictable. As Mitch said, we did get our first big contract in. We've got the instruments installed, and that first big contract is underway. Hopefully, we'll be able to complete that by the end of the quarter, but we should see a lot more of those as we enter 2022, and that should help smooth out their revenues in pharma services.
Bruce Jackson: Great. Then one follow-up question if I could. Burning Rock. You're on track this quarter for the next milestone. How does that revenue stream unfold during 2022 when they transitioned to actually performing a test? And do you have a rough idea of how much that might add to the top line?
Mitch Levine: Hi, Bruce. While we're not sure how much it's going to add to the top line, we will get paid per sample that they run, and they have given indications that it's a very large market in China for early-stage lung cancer surgeries. We are hopeful that it adds quite a bit, but it is premature for us to have a better handle on that because they haven't gone up to commercialize it as of yet.
Ronald Andrews: Mitch, as soon as we complete tech transfer though, their plan is to immediately launch in the new year.
Mitch Levine: Absolutely.
Ronald Andrews: Yes. Bruce we'll start to see the royalty trail and we'll get an idea of how they're going to ramp in Q1. As you know, Burning Rock is an extremely capable company. They are one of the top molecular oncology companies in China. Obviously, we have high hopes for that. Our royalty payment actually is a guarantee per-patient fee, which we like, because that way we aren't susceptible to pricing fluctuations in various provinces and things. We'll know more as we get into Q1, but it's something to watch, and we're obviously eager to see how they take off.
Bruce Jackson: Great. Thanks for taking my questions.
Ronald Andrews: Yes, Bruce, thanks. Stay warm.
