Biovica International AB (publ) (BIOVICB) Earnings Call Transcript & Summary

Hello, everyone, and welcome to Biovica Capital Markets Day for 2022. It's great to have people back here physically. So welcome to you and to everyone also that is watching virtually. Today -- this is the agenda for today. I will start with the introduction of the company, and then I'll hand it over to Warren and his team in the U.S., who will be present virtually and present the U.S. go-to-market plan, the sales strategy, our CLIA lab, how we'll build that up, and Amy will also give a scientific update on the latest results. Then we'll go back here to Stockholm and Henrik Winther will be presenting the progress we have made this year when it comes to pharma collaborations. And finally, Charlotte Stjerngren will facilitate a Q&A session. So you're able to also ask questions which will be discussed and answered here. And during my presentation, I'll do a short company introduction and product introduction and overview. I'll talk through the clinical evidence and the collaborations that is the foundation for our go-to-market plan. I'll talk about the market size, the potential and the overall strategy on how to go to market and the team are currently working for Biovica, executing the plan. Before I move into that, I'll just say a few words about myself. So my name is Anders Rylander. And I have a background within management consulting many years at Accenture and within IT and strategy, the combination before moving into ICA AB as a CTO. After that, I cofounded Axholmen Management Consulting firm and developed that for several years. And more than 10 years ago, I came in contact with the innovator and the founder between -- behind the Biovica and as an investor, and was attracted very much by the great potential of the company, being able to improve lives for cancer patients, and -- but also, of course, the heat economic benefits for health care providers and payers and the commercial potential. So I made an investment and a few years later, I also was asked to become the CEO of the company, which I did. And so I'm also a main shareholder, actually the largest shareholder as well as the CEO of the company. And to move into -- talk a little bit more about Biovica and the company. Biovica in it's current form is founded in 2009, but the innovation and -- is based on research that has been performed at Uppsala University for many decades -- spanning many decades back. And the company was IPO-ed in 2017. So we are currently being traded publicly on the Nasdaq First North Premier. And to date, we have more than 4,000 shareholders and also some large institutions that has invested in Biovica. Our headquarters are in Uppsala, but we have established ourselves with an office and a lab in San Diego, a life science hub in the U.S., which we'll talk more about when Warren, Kendon and Dan is presenting. In this business, of course, regulatory -- complying with regulatory standards is very important. And we have been certified with the ISO certification during the 13485 and that's also the basis for coming regulatory approvals, such as [ C label ], which we already have and the ongoing 510(k) clearance process which allows us to market the product for clinical use on the largest market in the world, the U.S. market. The product is called DiviTum. It stands for dividing tumor, and that's what we do. We are measuring cell proliferation. And as you all know, cell proliferation is essential in our body, but it's also what defines a cancer, at least uncontrolled cell proliferation. Hence, we're able to provide essential information, very important information to the treating physician about the aggressiveness of the disease, but also during treatment to gain quick feedback if the disease is effective or not. And that is our key applications which we are working hard in order to commercialize. And our initial focus area is the metastatic breast cancer, where there is an unmet need for these kind of biomarkers to give quick feedback on treatment efficiency if the treatment is efficient or not. Currently, the standard method being used is image diagnostics, where you take a snapshot of the tumors before and during treatment. And that requires couple of months -- 3 to 4 months to be able to follow up if the treatment is efficient or not. And Biovica has shown in clinical trials that we already after 2 weeks into treatment can provide feedback 83 days ahead of imaging if the patient is in risk of progression or not. So we will provide some advantages in comparison to the current best standard being used both when it comes to quicker feedback, but also more convenient process of following up on treatment efficiency. A key strategic element in our go-to-market strategy is to provide data that as proof of the performance of the product. And this is an area where we have been very successful in collaboration with some of the leading academic institutions in the world. So far, we are in collaboration with leading -- key opinion leaders within these institutions being able to complete 24 clinical trials that has been peer-reviewed and published in scientific journals, proving the value of the product. The majority of the data is within breast cancer, our focus area, but we also have important evidence proof of concept outside breast caster in some major cancer areas like gastrointestinal and lung cancer, but also malignant melanoma with immunotherapies, which is a key focus area for us. If you should summarize the results, you can say that it's been shown to be prognostic being able to look into the future, you could say and tell how aggressive the disease is and assess the risk for recurrence in the early phases of cancer -- local cancer. And in later so-called metastatic cancer, we've been able to show when the patient is in risk of progression, but also for overall survival data. When we have had access to [indiscernible] being able to follow the patient over time and to monitor the treatment, we've been able to, as I mentioned previously, show that we can provide quick feedback on treatment efficiency, as I said, in 83 days in median ahead of imaging, which was the result in a trial together with Washington University in St. Louis. And talking about the collaboration partners, Washington University in St. Louis is one of them, which we have performed several clinical trials with great success. We have also Mayo Clinic, where we are in our third clinical trial and with Dana-Farber, Johns Hopkins and the SWOG Network, which is a cancer network that reaches out to many oncologists, and that was the trial that we then later used for our FDA application. That means that we have established ourselves on the U.S. market with some of the leading institutes on the U.S. emerging market. In Europe, we have collaborations with Karolinska in Sweden and the BIG and IBCSG breast cancer group, creating a great coverage in the European countries as well. This is also key to have collaborations -- collaborating partners that are objective and can get the voice out and talk about this data in an unbiased way. So it's a strategic success factor for us. These are the activities that we have been working on for several years, and we're very close to launch the product after clearance in the U.S. to get clinical usage and uptake of the product. The product has been developed and validated and to meet the requirements of FDA. Based on that, we have documented in clinical trials that I just talked about, the regulatory pathway, the 510(k) being the most important. And also the data that we have generated will be important for guidelines for reimbursement and also for partnering and in -- as the last step to be able to market and launch the product to oncologists and patients and payers. When it comes to commercial partnering, we will use different models in different markets. In the U.S. -- on the U.S. market, we will establish our own CLIA lab and offer the product from that, which Warren will talk a little bit more about. On other markets, we will use partners to offer the product. And this is the high-level launch plan. The first market we intend to launch is on the U.S. market, where we also have developed a lot of data and assets that we are able to reuse to a great extent on this next market we're looking at, and that's the European market where we will look at selected countries in Europe and the third one is the Japanese market. The market potential figures is based on market research that we performed based on interviews with key opinion leaders, oncologists to assess the unmet need for this type of biomarker assay product and the testing frequency. And we also made several health economic projects [ that need to ] payers based on the results. We received feedback about the value of the product and the price sensitivity. That, combined with a number of patients living with this disease makes up for the potential of this -- in this slide. And when we enter a market, our ambition is to realize 15% of this market potential after -- 3 years after launch. When it comes to the 510(k) process with the FDA, it's something that we have been working with the FDA already several years ago, we had the first meeting, gotten some good guidance on which process to use, which data to generate -- and we were able to complete our submission by 2020 in September. And we quickly passed the first 2 milestones before the pandemic situation hit the FDA, and they had to reallocate their resources and focus on COVID tests. So all other tests that was non-COVID tests were put on hold. But when -- during '21, this process was restarted, and we have had a very positive and good discussions, sorting out all the open questions and also complemented with the data that they requested us to complement with. So now we have submitted our updated application that contains all the answers that the FDA have requested, and we expect to see a clearance now within a couple of months. So we have really exciting times ahead here when it comes to finally be able to end this product with a clearance. It's also important, of course, to have health economics supporting the value of the product, and we have done that as well, together with the researchers at Fred Hutchinson Cancer Research Institute. And this is the outcome of their work, where they have modeled, based on the data that we have generated, how this will impact payers' budget. So it's the budget impact model. This has been presented on several health economic conferences, but also been published in a peer-reviewed scientific journal. And the results show that with DiviTum, you can make major savings both when it comes to monitoring costs, but also when it comes to treatment costs. And to the factor for every dollar that you invest in DiviTum, you get $3 in savings, and that's based on a price level of $400 per test. So you can also say that this validates the price assumptions used in the previous slides when we talk about the market potential. So the metastatic breast cancer launch in the U.S. is the first of many that we plan. We plan to expand outside of the U.S. area into Europe and into Japan and a very -- area that is closely related is, of course, locally advanced, which is the phase -- earlier phase of metastatic breast cancer, where the same type of treatment is now being approved and used, and we also have ongoing trials and positive data. So that's a natural next step for us to expand into, which also adds to the market potential. We've also done an analysis on which other cancer areas would be interesting where there is an unmet need and where there are treatments that we could complement and provide important information for patients and treating physicians. And we concluded that the metastatic malignant melanoma, where patients are being treated with immunotherapies is 1 area, where we also have positive data from -- tried together with Karolinska that recently were published and other areas are non-small cell lung cancer and metastatic prostate cancer. That also adds greatly to the market potential and doubles it in comparison to the breast cancer area. And the last area that we are active in already is the collaboration we have with pharma companies, where we are supporting their development of new therapies, and are serving them with kits and fee-for-service work. And we have an ambition to develop that into co-development projects that will result in new products for Biovica. And this is an area that Henrik Winther will dive into and explain a little bit on where we are and how we are looking to advance. In order to do all this to drive all these different activities, of course, you need a team. And over the years, we've put together a really, really strong and experienced team where all people -- key people here on this slide have experience from doing this successfully in the past. And the latest addition is, of course, the U.S. team that during the last 12 to 18 months has been established and is, of course, a really important addition to the overall strength of the team, and you will introduce yourself going forward. And the same goes for our Board of Directors that also has been now around for -- and supported the company for several years. We have experience within both diagnostics, taking diagnostics to the market, developing diagnostic companies within pharma, within oncology. I can mention, for instance, Chairman, Lars Holmqvist that in the role of CEO of Dako developed that company into a successful sale to Agilent. So a lot of experience have gone through this process in the past that they bring to Board of Directors. And as you can see also all the Board of Directors and most of the employees also are -- have equity in the company, have invested in the company. So that was my short introduction. And I will now leave it to Warren to go through the U.S. go-to-market plan together with his colleagues over there in the U.S. So see if this works, Warren? Are you with us?

Thank you very much, Anders. I really appreciate it. So my agenda and what I'm going to talk about for the next 20 minutes or so is the go-to-market strategy and really the rationale behind that, our critical success factors and why they're important to us, and our immediate focus and really what those priorities are. So a little bit about myself. I'm Warren Cresswell. I'm the President of the Americas for Biovica. I come with about 25 years of experience in both diagnostic products and pharmaceutical side of things. On the diagnostics side, I have IVD, PMA, specifically companion diagnostic experience, device experience. I was at Dako for almost 17 years. So I've had the opportunity to have a number of different positions there from running business in the U.S. to Latin America to Asia Pacific markets. I went on to be Chief Commercial Officer and CEO of -- initially CEO of a company called Prometheus Laboratories, which was a Nestle-owned company. And there, that was a CLIA laboratory where we manufactured -- we actually developed and launched high-value, multi-analyte, algorithm-based products for the GI market specifically. Throughout my career, I've had a number of different positions, but really my expertise really lies in executive leadership, the commercial side of things, business development and operations. So when we take a look at the U.S. market, obviously, it's very large and it's complex and it's convoluted. And 1 question is, how are we going to be successful in this particular market? And there's a number of different points I want to touch on. And one of the things that was so intriguing to me when I joined Biovica was DiviTum itself and really understanding the clinical utility of DiviTum, understanding the unmet clinical need in the marketplace, understanding the size of the market. And the other piece that was really intriguing was that the opportunity for follow-on indications. So really the life cycle management of the product, it's significant. There's many, many opportunities that I know others will be talking about as well. Our go-to-market strategy, we've put a lot of effort into. We think it's very well thought out. It's executable, and it aligns or actually overlaps completely with other very successful high value diagnostic companies, and I'll be talking about that in future slides. Our U.S. team that we're putting together is very experienced. They have experience in launching high-value products that do change the standard of care. We're also very committed to the -- on the clinical side of things with building clinical data. There was one very impressive thing when I joined the organization was how much clinical data was already created, and our commitment moving forward to build clinical utility data. And lastly, our KOL relationships. We have -- I think the organization has done an incredibly good job of being able to build this network of key opinion leaders. And I know Kendon will be talking about all of our work with our pharmaceutical partners, and this is really a significant part of our business moving forward as well. So when we talk about go-to-market strategy options, there are really 3 separate options we can look at. One is the standard distributor model, where products are sold directly into, that distributor then gets an order. They fulfill that order and they move on. Second is really direct sales into clinical labs. And what that means is organizations like ourselves selling directly into community hospitals, IDNs, university settings option. The third option is the CLIA lab model. And just to make sure everybody understands, a CLIA laboratory in the U.S. means that laboratory can receive, test and report out human samples. So whether it's a hospital, whether it's a dentist office or whether it's an urgent care facility, these are all CLIA labs. So these are really the 3 models that we have to choose from. And you don't have to choose 1; in many cases, you use multiple models. The first 2, the distributor model and the direct sales to clinical lab model. You do have to have either FDA cleared or approved tests that you would sell, and we would fit into that bucket. But the other is you really have to have an existing demand for the product, and you have to have reimbursement already established for the product. So from a direct sales and a clinical lab perspective as well, it has to be really the standard of care. So when you sell the product from a distributor perspective, are they going to go out and generate demand? Probably not. And the same goes for in the clinical lab as well. An order comes in through the clinical lab and they fulfill it. So when we take a look at the CLIA lab side of things, this is where you have a sales force, you go out, you drive demand with specialty physicians. So in this case, it's breast oncologists. We also will work closely with insurance companies to drive the reimbursement process as well. So at launch, our best strategy is pursue the CLIA lab model. However, we've hedged and we reserved the right to then expand our business potentially and maybe pursue as well direct sales in the clinical lab at a later date. But initially, our strategy will be the CLIA lab model. So successful high-value diagnostic companies follow the CLIA lab go-to-market strategy as well. So whether you're looking at organizations like Exact Sciences or Genomic Health or Guardant, they all have followed these particular critical success factors that I will get into in my following slides. Those 5 critical success factors are managing relationships, managing the reimbursement process, ensuring that your product has full access across the U.S., developing a sample and the importance of that and also the data mining and the data development that goes along when launching product. Managing stakeholder relationships are incredibly important. And with the CLIA model, it affords us a number of different things to do here, we're able to really understand who the patient is that's using DiviTum. In the first 2 models that I described, the distributor model and selling into clinical labs, we're blinded by the fact of who the patient is, who the physician is and even what the reimbursement is on the payers. In the CLIA lab, we can understand these 3 points. So from a patient perspective, we want to know which patient is having -- is using DiviTum. We want to know what their test results are. We want to know how often they're using DiviTum, their response to therapy. This is valuable data to collect and understand. And also it gives us the opportunity to engage with the patient as well. Because when the blood sample comes into our lab, we'll have the patient information, we'll have the physician information, we'll understand what therapy they're on. So it's incredibly important information for us. From a physician perspective, we'll know which physicians are ordering DiviTum and how often they're ordering DiviTum, how many patients they have on DiviTum. Very important also what their clinical decisions are based on the results of DiviTum. And then finally, on the payer side, we'll be able to closely manage those relationships with payer to make sure what Anders was just saying, is our target is somewhere in the neighborhood of that $400 amount. So we'll be able to engage payers and make sure that we're able to achieve that type of reimbursement. That really gets into my next slide, which is there are 4 separate reimbursement channels in the U.S. On the top left side, we have public insurance. This is typically Medicare, Medicaid. Many of you may know Medicare, medicare is for people in the U.S. that are over 65 years of age qualified for Medicare. This falls under CMS. So -- then we have private insurance. This is what most people in the U.S. have under the age of 65. This is what a typical employer would offer, and I've given some examples there. On the right-hand side, we have hospitals and general reference labs. So just to make a distinction here. On the left side with the insurance companies, part of our organization is managed markets or managed care, and we have the expertise go in and negotiate with these institutions to ensure that we will get paid when DiviTum is used by a patient that has one of those insurance programs. On the hospital and general reference side, it's more of a contracting business. So that's typically called market access. We have the expertise there as well to be able to go in and contract with institutions. And this could be to get a blood draw from a patient. In some cases, the hospital will want to do the billing on their own versus us doing the billing, and there are some legal reasons behind that as well, where in some cases, hospitals for some patients need to do that, and same with reference labs. Some of the largest customers out there, these very large reference labs that collect blood samples, and we'll send those blood samples through because their patients have orders for them. And finally, the fourth channel are the patients. So we're not running a cash model here, unlike some of the products in the market like ancestry.com, where you're looking for your the lineage or your heritage. That's not our business model. But in the U.S., there is something called copayment or co-insurance, and patients do have a financial obligation to pay a portion of their bill. So if they get tested, there is a commitment there that the laboratory has an obligation to collect. And that's really the fourth area that we'll focus on as well. One common misconception is access when you think about a CLIA lab. Because a CLIA lab is really kind of centralized lab in the U.S. And oftentimes, people think if you launch your product through a CLIA lab, you're really restricting yourself from an access perspective, but it's actually the exact opposite. With the CLIA lab, we're able to receive samples from anywhere in the country. So whether you're at Fred Hutchinson and Washington or Moffitt Cancer Center in Florida or University in Pittsburgh, in Pennsylvania, we can move blood samples across the country in a 24-hour period. When we receive those samples in, we can actually test and result out as quick as 24 hours. So the movement of samples around and the turnaround time really doesn't get impacted much by having a centralized laboratory. Now one of the big benefits of having a CLIA lab is the ability to create a sample biobank. And when we collect blood samples from patients, the one thing that we will really focus on is collecting the sample with consent. And what that means is we will want to receive that blood sample into our lab. We will aliquot that sample out, and we will have the opportunity to do further analysis beyond DiviTum testing. And as you can imagine, when you're collecting those samples, you can build a biobank incredibly quick. And we will have -- not only will we have the sample, we'll have the patient information and we will have certainly some clinical information that go along with that. And that will help us a number of different ways. That will help us to -- help us develop or further accelerate our product pipeline and test hypotheses of different products that we've thought of. And lastly is the data development and data mining. So with all of those samples that we're collecting into the laboratory and putting into our biobank, there's many different opportunities we can use this data for. So in some cases, it can be product positioning. We're going to understand how physicians are using DiviTum, the results that patients are getting and how clinically the physicians are managing those patients. That's very helpful to us in regards to product positioning. I just mentioned product development, also life cycle management of the product. It will help us develop a clinical dossier, which is used specifically with payers to get reimbursement. It drives utility of the product. And also from a publication perspective, this really drives opportunities to publish data as well. So when we take a look at the CLIA lab itself, just to be clear, we manage everything from end to end. So we will have a sales force that's specialized in calling on oncologists. And Kendon will talk a bit about that and targeting and how we do that specifically. We will drive that utilization with the oncologists. We will have patients use a Biovica blood collection kit and those samples will come directly into a Biovica-owned CLIA lab. We will receive test and result out, report out those results. And we have a revenue cycle team as well that works directly with those insurance companies, private and public with hospitals and also with patients to ensure payment for the services rendered. And then lastly, our focus. And it really boils down to 3 things today. One is putting the organization in a place for demand generation for DiviTum. One is the clinical data and reimbursement side, and the other is the operational side of the business that Dan will speak with. So when I pass it over to Kendon here in a 1 minute or 2 minutes, he's going to really talk about the sales function strategy, what we're doing there. But also in that demand generation, we have a very, very qualified marketing team with expertise there to be able to drive these high-value diagnostic products in the U.S. from a market access perspective. We've actually already identified almost all positions that we will need moving forward with highly skilled individuals that have that expertise in this. And then medical affairs. So we need that expertise to be able to have discussions with physicians, whether it be scientific or clinical or medical perspective, and Amy Williams is responsible for that area. Dan Kiser will be talking about the CLIA lab itself. He'll be talking about both kind of certification process and the accreditation process. And certainly, the lab is -- in place to be able to receive test and report out those results. So Dan will talk a bit about that. And then Amy is going to talk about, as Anders indicated, some exciting data and her responsibilities, and her work with managed care or managed market and market access really drives that reimbursement side of our business. So that's kind of the third focus as well. So with that being said, I'm going to pass it over to Kendon Richards to talk about the U.S. sales plan.

Great. Thank you, Warren. Good afternoon, everybody. It's a pleasure to be able to spend some time with you here today. All right. Our agenda for today is, I'll walk through this specialty diagnostic selling process, how we establish some of the specimen channels, reimbursement pathways. We'll talk a little bit about our sales organization that we are working on putting together right now as well as how we will focus on physician targeting. Just a little bit of background about myself. My name is Kendon Richards. I'm the Executive Director of Sales for the United States. I have over 25 years of combined pharmaceutical and diagnostic marketing and sales experience. I spent the last 10 years of my career in the diagnostic specialty space as a sales leader. And the majority of that time has been spent as the national sales director for the leading U.S. GI specialty lab. Now over my career, I've had the opportunity to launch 15 new products, and over half of these products have been in the specialty diagnostics space. My experience in launching these specialty diagnostic products is very similar to DiviTum. The majority of these diagnostic tests that help the launch have been new, innovative, high value tests that have changed the standard of care. Now the challenges and the opportunities we're going to talk about a little bit today that we will face for DiviTum are the exact same challenges that I and my team have successfully addressed and excelled at delivering against in my past roles. So I'm super excited about this opportunity with DiviTum. And very, very confident that, given my experience and the team we're assembling, that we'll be very successful in driving the success of DiviTum. Now what I've learned from my experience is that there's a very basic recipe for success in launching new innovative specialty diagnostic tests that change the standard of care. First, you really need to create awareness and interest with your key opinion leaders and your key users, and you do this by presenting compelling data. And that's the exciting thing about the opportunity at Biovica. As Warren mentioned, the clinical data that has been amassed already is very, very impressive and is very, very compelling for physicians. We then work to obtain advocacy. Specifically, we start with the key opinion leaders and the key users. And with that advocacy, we use that advocacy to drive trial with them personally, so they get clinical use and experience and to begin using our test. And then we also use advocacy to help them become champions to share their experiences using the product with their colleagues, so we can began to create a snowball effect, where more and more people gain experience with the product. And then another very important aspect with gaining that advocacy is to get that advocacy for these key opinion leaders and key users for them to start to speak to their affiliated hospitals and their affiliated labs to go out and seek and to ask to gain access for the test within their own systems. Now as we do this, then we work to establish ordering channels. And we need to -- because we are a relatively small specialty lab and do not have physical facilities where the patients can go get their drug -- their blood drawn, we work with laboratories to make arrangements so the blood can be drawn in a sense directly to the Biovica CLIA lab. Now we do this a couple of ways. One is we set up specimen handling agreements with labs, where we pay a nominal fee to the lab to cover the cost of drawing sending the blood to our lab. And second, we also have the option to contract directly with labs to provide DiviTum testing as a covered in-network benefit. And under the CLIA model, as Warren had mentioned, we make those contracts with the labs. They draw the blood. They send the blood directly to us. We still perform the test, and then we send the results back to the CLIA lab, and they have the opportunity to do the billing for that testing. Once we establish the blood sample pathways, we work to overcome any logistical challenges, and we closely monitor and manage those channels. And once these pathways are set, we work to drive demand. We build on the momentum we gained with advocacy, we build on the momentum we gained with access. And as that demand grows, we are able to expand in network coverage and health insurance coverage. Now within the [ DX ] specialty space, there are really 2 key differences between diagnostic specialty sales and pharmaceutical sales. The first one, as we talked a little bit about is you must secure the blood sample and have it sent to your laboratory. Now HCPs or health care practitioners use a variety of routes to have their blood drawn. And the preferred route they may use for their standard labs may not be available on ordering their specialty diagnostic products. These specimen routes are also often unique to the individual physician, and many times, we find that practitioners in the same office may prefer or have access to different channels. The second difference between diagnostics and prescription sales has to do with the way the test is paid for by the patient's insurance. Reimbursement for specialty diagnostic products is often a little less straightforward and the patient is often less familiar with process. Insurance coverage and in-network privileges at local hospitals and IDNs will also influence what tests a prescriber has access to using as well. So due to these differences from pharmaceutical sales to diagnostic sales representatives must have a very strong understanding of the differences and be skilled in addressing the logistical issues. Now although launching a specialty diagnostic product is a little different from the pharma model, we will be building a team that is highly experienced, and it will have a very sound and extensive track record of success in the diagnostic selling space. So to speak a little bit more about specimen access channels, the Biovica team that we are assembling has been very successful in the past in establishing multiple ways in which blood can be routed, which will ensure that we will be able to get the samples sent to the Biovica CLIA lab in San Diego. We will follow a formula that we have been successfully -- that we've successfully used in the past, just -- which multiple specimen channels from which blood can be drawn and sent to the Biovica lab. We will partner with in-office phlebotomists. We will contract with hospitals and IDNs. We'll do this in 2 ways. As I mentioned before, we'll set up specimen handling agreements, where we pay the nominal to have the blood sample sent directly to us, and we will also contract through lab pricing agreements. We will also route samples through the general reference labs, which have broad coverage throughout the country. We will set up specimen handling group with local and regional labs as well. And then lastly, we will also use mobile phlebotomy, where we contract with a third-party company to go to patients' homes or places the business to draw the sample and send it to our lab in San Diego. What we're going to do is we're going to work to ensure that our offices have viable specimen channels that every office will have at least 1 method, in many cases multiple methods in which they'll be able to get blood drawn and sent to San Diego to our laboratory so they can get results. Now not only this give those offices and physicians multiple options, but what we've also found as we customize and work directly with these offices to find solutions that meet their needs, it really has a great effect in establishing relationships with those offices. And also the result is strong customer loyalty with the practitioners that we work with. Now there's really 3 ways or pathways for DiviTum reimbursement to take place. And Warren's talked a little bit about this. But at the end of the day, patients and practitioners are most concerned about what the patient's out-of-pocket costs were going to be. Now we'll receive payment via 3 ways, and all 3 of these payment avenues will be utilized right away and will evolve over time. The first and perhaps simplest is patient self-pay. Now patients can be billed directly, and with a reasonable patient out-of-pocket cost for DiviTum, this will be a viable avenue for some patients. If the patient has insurance, in most cases, patients do have insurance, Biovica can work with the patient to also assist in submitting claims. We will also look for solutions where we'll have the opportunity to provide safety nets for patient assistance program. The second form of payment can be received directly from the hospital system or the IDNs through in-network contracting, and I'll talk a little bit about that. In the past, our team has been very successful in contracting directly with hospital systems and IDNs to have the testing added to their in-network benefit. Now doing this really creates a win-win-win situation. The first win is for patients and health care practitioners. They gain immediate access to new innovative testing within their normal systems. It's great for physicians because they can order the test like they order their normal regular labs, and the patient's testing will either be covered or they'll receive a bill in a way that is normal to them. They receive a bill from their hospital system just like they would be a customer to receiving for their normal labs. The win for the hospital system, IDNs, is they have the opportunity to provide new and cutting-edge testing. And this drives institutional prestige along with physician and patient satisfaction scores. So it's great for the institution as well. And it's also a win for Biovica because we receive direct payment and prompt payment from the contract agreements with the hospitals and IDNs. And then thirdly, patient payment may also be received directly through health insurance plans. And on day 1, we'll begin to submit claims and expect to receive payment from insurance through claims and appeals. And over time, as we produce utility data and gain inclusion into the treatment protocols and as we demonstrate increased demand, we expect to add coverage for DiviTum through the health plans as well. Now a little bit about our sales structure. Our first wave, we will construct well-balanced regions to optimize efficiencies and drive overall sales. We will strategically target customers and allocate our call capacity against the highest potential customers. We will develop very concrete call plans to make sure that we're focusing our efforts on the right customers. We'll be providing them with the right messages and the right frequency based on these call plans. Now in regards to building the sales team, as these new regions are staffed, we will build a world-class diagnostic sales team. Now over my last 25 years of experience, I've had the opportunity to build multiple sales teams and have built an extensive network of extremely successful and talented salespeople with proven track records, specifically in the diagnostic space. We expect to hire experienced DX sales professionals, salespeople who have had experience establishing specimen channels, professionals who have existing relationships with key hospitals and IDN systems, people with proven track records and histories of successfully negotiating in-network contracts and folks who have expertise and working directly with offices and laboratories on DX logistics. Now in addition to having a strong network, Biovica and DiviTum also present a very exciting opportunity. DiviTum is an innovative new product. It has the opportunity to change the standard of care. And I got to tell you, people want to be part of this company and be associated with this product. Folks want their efforts to be meaningful. And oncology especially provides salespeople with an opportunity to truly make a difference in patients' lives. And I have a long list of very successful salespeople who have been proactively reaching out to me because they want to be part of the Biovica team. They're excited about the opportunity and they want to be part of helping to establish a new standard of care in the oncology space. Now lastly, in regards to targeting, our targeting will use a proven targeting model that has been successfully used in the past to gain adoption with a new diagnostic tests. We'll focus on HCPs with the highest potential in order -- to order DiviTum in areas where the business is accessible, and we will use multiple data points in our targeting model. We're going to overlay -- the overlay data that we will use will include making sure we're focused on influential KOLs, key NCI and NCCN cancer centers, oncologists who have the highest propensity to treat metastatic breast cancer, areas where sample access can be achieved cost effectively and also overlaying that data on top of hospital systems, IDNs where we have had a history, and we know that we can have success in terms of contracting to achieve the highest returns. So with that, that is a summary of our overall sales strategy and our go-to-market plans for DiviTum. And I'll now turn the presentation over to Dan Kiser, who is our Head of Regulatory and Quality and Lab Operations.

Good afternoon, everyone. I hope everyone is doing well. I'm Dan Kiser, responsible for establishing commercial lab here in San Diego. And I'm not sure I'm able to advance the slide here, but I wanted to go to the agenda slide. So I'll be explaining a little bit about the logistics and regulatory considerations for establishing the commercial lab. Next slide. So I have over 25 years of experience in regulatory and operations. Most of that IVDs and CLIA laboratories. I've worked at Boston Scientific, Johnson & Johnson, Merck KGaA, Nestle Health Sciences. And I'm now happy to be at Biovica, establishing lab here in San Diego. Next slide. I'm joined by Dr. Curtis McGuyer, who has come on board as our Laboratory Director. I've worked with Dr. McGuyer since 2014. We have a really, really good relationship. So I'm very happy he's going to be on board. His background is in clinical pathology, but also importantly, is a CAP regional commissioner. So the crediting agency, one of the few here in the United States, who accredits commercial labs, college of American Pathologists is very close to his heart, and he's worked with him for a number of years, which should really help us gain our accreditation. Next slide. So what we're focused on is complying with the Clinical Lab Improvement Amendments. That's a section of the regulations here in the U.S. that governs commercial labs, will be overseen most directly by the California Department of Public Health since we're located in San Diego. And what we're doing is submitting for our CLIA certificate of registration. Once we have the registration, there's about a 30-day period for the State of California to issue those post application. We're able to accept patient samples and actually provide patient test results out. They want us to be able to do this so that we can start our proficiency testing and move towards accreditation or either certification through the state of California. In our case, we've opted to go with a College of American Pathologists and gain accreditation. So we'll have a very good period of time to actually work towards full accreditation and getting what's called a certificate of accreditation. So the first one, certificate of registration allows us to get into the market. The certificate of accreditation allows us to attain our place in the market as we move forward. There are some other small jurisdictions here in the United States that we'll have to apply to separately. New York State has their own CLIA regulations at the Wadsworth Center, and we'll be complying with that, Washington State as well. Combined, these represent about 7% of the U.S. marketplace. We're also going to be working to comply and model all of our procedures to the ISO 15189 standard. This is a standard for commercial labs, and it's very well developed, very well understood by both California Department of Public Health and the College American Pathologists. Because we do want to ensure samples get to our lab, we developed our own collection kit because we're making what's called a Class I device here in the United States, [ CRM ] collection kit, we'll also register facility with the U.S. FDA and California Department of Public Health as a manufacturer and be able to distribute this kit throughout the United States. Next slide. The quality system we're putting together based on the ISO standard, we've already developed our quality manual and are putting together our safety manual HIPAA compliance requirements, all of the equipment material controls and of course, all of our processes here fortunately are modeled after the processes that have already been well established at Biovica in Sweden, and we are replicating and validating those processes. We're also setting up our retained sample and biobank processes and minus 80-degree cold storage capabilities. So all that will be put in place essentially by the end of June. On the operational excellence side, essentially, as Warren had mentioned, we can get samples to the lab within 24 hours, provide results very quickly, and we're going to be kind of moderating how quickly we provide results when we first start up based on very low volume so that we're efficient at using our plates. As we scale up capacity and the lab will easily exceed market capability, we could basically get to over 1,500 tests a day without changing any of our methods or equipment. So that's quite a bit of a volume. And of course, beyond that, if we get to that point, we can continue to scale up and support anything that we're able to bring to the San Diego laboratory. We will be working to put a lot of infrastructure in place in the coming weeks, including laboratory information systems, quality management systems and working to make sure that we put all kinds of recycling methods and things in place to be sensitive to the environment and the impact we have in the environment. Next slide. The laboratory is already set in San Diego, there's an image of it there, and we're going through now and doing the product flow from samples coming in to full test and providing test results out. We're populating the lab now with all of the equipment, lab furnishings and things that we'll need to start testing and then, of course, to scale up as we continue growing the business. Okay. After that, I wanted to turn it over now to Dr. Amy Williams, who will be talking a little bit about the clinical considerations for DiviTum.

Thank you, Dan. Next slide. Good day, everyone. My name is Amy Williams. I'm the Head of Clinical Development and Medical Affairs at Biovica. And I have the pleasure of sharing with you today some new and exciting data from the past year. This data has led to an expansion of our thinking about the possible utilities for DiviTum and the ways that it may help oncologists manage their patient's care. I will also tell you about an advisory board that was held in the U.S. last year, and I will end with some very exciting news about an upcoming presentation at the annual ASCO meeting next month in the U.S. I joined Biovica in February of last year. I have a PhD in pathology. And for over 20 years, I've worked in oncology drug development at all stages from early drug discovery to clinical trial development to product launch and then ensuring uptake in the market after approval. I've worked for several large pharma companies. The most recent was with Novartis on their breast cancer team, where I supported many of the company's FDA-approved drugs, including KISQALI, 1 of 3 approved CDK4/6 inhibitors on the market. Novartis and other CDK4/6 drug manufacturers have tried for years to find a biomarker that could predict response to this class of drugs. And so far, no good biomarker has been identified. One of the reasons I was so excited to join Biovica is that I believe thymidine kinase has the potential to finally fulfill this unmet need for a predictive CDK4/6 inhibitor biomarker. And that's some of the data I will be sharing with you. Also on the Biovica clinical development team, we have Mattias Bergqvist. Mattias Has been with Biovica for over 10 years. He has extensive experience in brand management from previous roles, and he's currently doing a great job directing all of the DiviTum clinical trials outside of the U.S. Next slide. So it's been a very busy 12 months for Biovica. Many of the clinical trials which were initiated years ago, have completed enrollment. The TKa data from those trials has been analyzed, and the results were either published or presented at major congresses in 2021 and early 2022. But more important than the publications themselves are the insights and new information about DiviTum that we gained from these trials. Next slide. I will share with you data from just 1 of these studies. It was a Novartis trial called BioItaLEE that was presented at the ESMO meeting last fall. Next slide. The trial was a breast cancer study that treated patients with Novartis' CDK4/6 inhibitor drug ribociclib. CDK4/6 inhibitors, in general, have become the worldwide standard of care for patients with hormone receptor positive metastatic breast cancer. Almost every HR-positive metastatic breast cancer patients will be prescribed a CDK4/6 inhibitor at some point during their course of therapy. And if these drugs are given in the first-line metastatic setting, most patients will remain on a CDK4/6 inhibitor for 2 to 3 years. Other than hormone receptor positivity, there's currently no biomarker that can predict benefit for a CDK4/6 inhibitor. It remains an unmet need in oncology. We have very strong data suggesting that DiviTum may be able to function as a biomarker of CDK4/6 inhibitor response. Next slide. This is the DiviTum TKa data from the BioItaLEE trial. Patients were treated with a combination of 2 drugs ribociclib plus an endocrine therapy, letrozole in this case. Blood samples for thymidine kinase activity analysis were taken at 3 different time points, pretreatment, 2 weeks after starting treatment at day 15, and then again 2 weeks later what is referred to here at cycle 2 day 1. It's important to understand how these drugs are taken by the patient in order to interpret the TK activity data. The endocrine therapy drug, the letrozole in this study, is taken once a day, every day for each full drug cycle. One drug cycle is 28 days. However, the ribociclib is taken once a day only for 3 weeks, and then the patient stop taking the drug for a week. This diagram on the lower left illustrates why this is important for the TK activity sampling time points. At baseline, the patient has not yet taken any drugs. At day 15, they've been taking both drugs for 15 days. And then at the third time point, day 28, the patient has stopped taking the ribociclib for a week, but is still taking the letrozole. If we use TK activity data from just the on treatment time points, there were 3 distinct patterns that can be observed. So on the right side of the slide are spaghetti plots that illustrate these 3 patterns. For each plot, the 3 different sample time points are on the bottom axis. And the TK activity level is the vertical axis. Each line on the plot represents an individual patient. So you can see how each patient's TK activity levels change across the 3 different time points within each plot. Pattern 1, which is the one on the far left represents patients whose TK activity levels were fully suppressed to below the level of detection assay on day 15. TK activity levels remained below the level of detection on cycle 2 day 1, which is 1 week after stopping the CDK4/6 inhibitors -- inhibitor. Patients with -- that exhibit Pattern 2, that's the one in the middle in blue, also have TK activity levels that drop to below the level of detection on day 15. But then on cycle 2, day 1, after having stopped the ribociclib for a week, TK activity levels rise or rebound. Pattern 3, which is the 1 on the far right, in yellow represents patients whose thymidine kinases activity levels never fall to below the level of detection at any time point. All right. Next slide. Where this data becomes very interesting is when you align those 3 TKa patterns with patient outcome. In this figure, you're looking at progression-free survival curves for each TK activity pattern. Progression-free survival is the amount of time that a patient's disease is being well controlled by the drugs they're on, and the tumors do not grow or progress. Along the horizontal axis is the progression-free survival time in months. The vertical axis is the percentage of patients at each time point who are progression-free. Look at Pattern 1, that black line. This is the group that had complete TKa suppression at both time points. And you can see that almost no one progressed on the combination of ribociclib plus letrozole for a year. The median progression-free survival time has not even been reached yet in this group after over 2 years of follow-up. Pattern 2, that's the blue line, that -- the median progression-free survival for that group is 22 months, which is very good, but these patients clearly do significantly less well than the Pattern 1 patients. Pattern 3 is the yellow line. These are patients whose tumors never stop proliferating, at least according to their TK activity levels, and not surprisingly, they have the worst median PFS time of the 3 groups with just 10 months. Next slide, please. I just showed you some data from 1 trial, but we've seen this pattern consistently across multiple trials with different CDK4/6 inhibitors in combination with different endocrine therapies and in different disease settings, both metastatic and early breast cancer. We see this same V pattern and a very similar mixture of patients that have a complete TKa response and do very well on CDK4/6 inhibitors, along with those who do not exhibit a complete TKa response and subsequently do less well and progress faster on a CDK4/6 inhibitor. Next slide. So based on this data as well as what we know about the function of thymidine kinase and cyclin-dependent kinases and how they are connected, we believe that we have a strong biomarker that can predict a patient's response to a CDK4/6 inhibitor from the measurement of thymidine kinase activity at just 3 time points during their first cycle of therapy. This is an illustration of the 3 different TK activity patterns along with what we believe each pattern indicates is happening within the tumor and then subsequently what that predicts for outcome for the patient. Pattern 3, this red line at the top seems to indicate that the tumor has not completely stopped proliferating or growing. The presence of detectable thymidine kinase activity suggests that complete cell cycle arrest was not achieved. And not surprisingly, the length of time on therapy will be short and the patient's outcome will be poor. In Pattern 2 patients, these are the -- that's represented by the yellow line. A complete cell cycle arrest does occur while the patient is taking their CDK4/6 inhibitor. But then there's a rebound in TK activity levels on day 28, which we believe represents the tumor dividing again during that 1-week drug holiday, suggesting that these tumors were only transiently or temporarily arrested, while on therapy and that this arrest is reversible. These patients do fairly well and will have a good outcome on therapy. But because their tumors are growing and dividing for 1 week out of every 4, they will eventually progress. Pattern 1 patients, that's the blue line on this chart, also undergo a complete cell cycle rest while on a CDK4/6 inhibitor, but this arrest appears to be more durable and does not seem to be reversible during the drug holiday. The data suggests that these patients will remain on therapy for a very long time and will have an excellent outcome. Next slide. So we think that these TK activity panel have utility and clinical practice beyond just predicting patient outcomes. On this slide are several potential ways that an oncologist could use DiviTum TKa data to manage their patient's care. So for the Pattern 3 patients in red, if a physician sees that their patient is having an incomplete response to the CDK4/6 inhibitor that they prescribed, this is an opportunity for the physician to explore why that patient's tumor is not responding and possibly take some action. One explanation is that the patient is maybe not taking their medication properly; or they could be on a second medication, which happens very frequently that is interfering with the absorption or metabolism of the CDK4/6 inhibitor and there are a list of drugs that are known to do this. So seeing this pattern could trigger the physician to ensure that their patient is taking their medication according to manufacturing instructions. The other possible explanation for a tumor that's not responding to a CDK4/6 inhibitor is that it may have a mutation which makes it resistant to this class of drugs. So this profile may trigger a physician to order a tumor mutation profiling test to look for a mutation. For the Pattern 2 patients in the yellow, they will likely do very well on therapy, which is good news, but they do have this rebound in thymidine kinase activity during that 1-week break from their CDK4/6 inhibitor drug. So it is possible that these patients could benefit from either an endocrine partner switch or a CDK4/6 inhibitor switch. And then for the Pattern 1 patients, those are the ones in the blue, their TK activity profile suggests that they will do really well and will stay on therapy for a very long time. Perhaps these patients could be scanned less frequency -- frequently. So a physician could choose to reduce the number of imaging scans from every 3 months, which is standard to possibly once or twice a year instead. Next slide. We're collaborating with Washington University in St. Louis on a prospective clinical trial called TK IMPACT. This is the first study where oncologists will receive real-time DiviTum TK activity data from their patient's blood samples and they can act on this information if they so choose. The study population is metastatic hormone receptor positive breast cancer patients who have been prescribed any FDA-approved CDK4/6 inhibitor, along with any approved endocrine therapy. The diagram on this slide illustrates when blood will be collected for TK activity testing. Every 2 weeks for the first 2 cycles and then monthly for the next 5 cycles. And this might sound like a lot of blood draws and blood samples, but it actually aligns exactly with the monitoring recommendations for all 3 approved CDK4/6 inhibitor drugs. So no additional blood draws would be required in order to use DiviTum in these patients. Next slide. Late last year, we held a scientific advisory board with 13 different breast cancer medical experts from 12 of the leading NCI cancer centers in the U.S. We ensured that every section of the country was represented at the ad board. We also had a good mix of experience among the participants, some who had a lot of prior experience with DiviTum and also some who had no experience or know what -- even no awareness of DiviTum. We shared our new clinical data with these experts, and we had very productive discussions about how best to use DiviTum in the clinic to manage their patient's care. Next slide. The reaction to the data was very positive. You can see some of the comments here on this slide. Additionally, the advisers also had some new ideas and suggestions for us for how DiviTum could be used in clinical practice. And discussions have continued with many of the advisers to initiate new research collaborations. Next slide. Separate from the ad board, we've also had some new unpublished data, which suggests a novel utility for DiviTum. We have filed a patent application for this new utility. So unfortunately, I can't disclose what it is today. I can only share that it is still within the oncology space, and that it would help address an unmet need within a very large market. Once the patent application is approved, we can communicate more details. Next slide. I will end on another bit of exciting news. At the Annual ASCO Meeting in Chicago next month, DiviTum will be featured in an oral abstract, where it will be compared directly to ctDNA data from the same patients who participated in the BioItaLEE trial. We already know from past presentations at ESMO and the San Antonio Breast Cancer Symposium last year that TKa data and ctDNA data highly correlate with each other. But we also know that there are some important key differences, and those will be highlighted and discussed during this ASCO presentation. If anyone is registered for ASCO and would like to view the presentation live, it will be held on Monday, June 6, at 6:18 p.m. Eastern time. It will also be recorded and available on demand for viewing later on the ASCO website. Thank you all for your attention. The next presenter will be Henrik Winther, Biovica's Head of Business Development and Pharma collaborations.

Super. Thank you very much, Amy. Yes. So I'll be speaking about our pharma collaborations. More precisely, I'll be speaking about the strategy we have with the pharma collaborators or collaborations in general, our current status with these pharma collaborations, and then also the financial impact those collaborations have on our business. A little bit about myself. Currently, the Head of our Business Development and Pharma Collaborations. I have plus 20 years' experience within the diagnostic field, very much around bringing biomarker assays into the routine clinic. And I've had some managing roles both in R&D and business development in that respect. Then I have a special passion around Companion Diagnostics and collaborating with pharma. I was actually design responsible for the first global market Companion Diagnostic from Dako. And I was also responsible for both the development, registration and the commercialization of a couple of key companion diagnostics on the market. It was for the 2 blockbuster drugs, KEYTRUDA and OPDIVO. And then I was -- I guess, building the companion diagnostic unit at Dako and also Agilent Technologies. So if we look at Biovica's thinking about pharma collaborations, I should start by saying, why do we actually want to collaborate with pharma. And there's both a patient perspective and a business perspective. I guess the patient's perspective is that we really want to improve personalized treatment by -- and we do that actually by adding our biomarker to that solution. So by adding a biomarker in a better way, we can select those patients that will benefit from a specific treatment at a specific time. So that's a patient benefit of really improving personalized treatment. Business perspective is that these kinds of products are high-value products. And then secondly, these products are typically -- or the development and registration commercialization of these products, we can have them funded by pharma. So that's why we want to collaborate with pharma and why we want to build Companion Diagnostics. Our strategy is 2 staged. Initially, it's about building trust with pharma, very important to build this trust, both in our biomarker, but certainly also in our company. And strategy-wise, we approach oncology companies. So it is within cancer, we focus on Companion Diagnostics. We reach out to companies, both in U.S. and EU. Initially, it's offering a fee-for-service, where we do TKa testing. And this testing is typically performed in preclinical and early clinical studies with pharma. So that's -- I should also say these pharma companies, higher success rate is -- we're aiming at large and midsized pharma. So that is also what we do. Then at Stage II, going from the building trust in the biomarker and our company, we move into 2 collaborations, where we, together with pharma develop these companion diagnostics and monitoring diagnostics that we have the opportunity to do. What kind of services are we then providing to pharma today and going forward? Right now, as I said, it's primarily within research. Which means that because we have a lot of experience in the TKa biomarker, obviously, we actually participate in pharma [indiscernible] consultants to bring in the biomarker to their clinical trials. We advise them how many samples or at what time points to acquire these samples or collect these samples, I should say. That's part of our service. We also naturally undertake the TKa testing. And that TKa testing, we either do in-house currently in our Uppsala facilities, but also, of course, we'll do that in our CLIA facilities in U.S. going forward. We also have a couple of key collaborating laboratories that we can use for these activities. We have UCR in Uppsala, and then we have the Mayo Clinic research facilities also in U.S. where our assay has been established. Then when we have undertaken the testing, we'll have some results. And then again, pharma ask us please help interpret the results and help us where to set cut-offs. So this is also part of the service we currently provide and where we spend hours together with pharma. It's all fee-for-service, as I said. Next step and a natural continuation of this research collaboration is obviously to move into IVD development of these companion and monitoring diagnostic devices. So where are we currently with our pharma collaborations. And actually, I think it's a great opportunity to present today because we had a great year -- fiscal year last year with our pharma collaborations. And it's partly due to, I think, a very professional organization, ready to execute on these projects together with pharma, but certainly also due to the great clinical data we have out there now that was presented by Amy. Some really great data that has attracted pharma. It's mainly the predictive and monitoring capabilities of the TKa biomarker that has attracted pharma. So Amy did a fantastic presentation. So I'm not going to repeat, but perhaps a little bit summarize what it is that is attracting pharma. So number 1 and the first line on the cartoon here is really the ability of our TKa assay to -- in a population of breast cancer patients, to identify and select those patients that will benefit from a single treatment versus a combo treatment. This was shown in the SWOG study. And I have a slide here that Amy actually developed a slide elegantly presenting what I mean by this ability to identify and select those patients. If you look to the left, you see a population of patients here that is -- if you look at the overall survival, as Amy presented before. So 2 curves. 2 different parts of the population. One part of it, receiving the combo treatment, the blue line and then part of the population only receiving monotherapy, the red line. And if you don't use a TKa biomarker, as is shown here to the left, I mean, there's barely any difference between the 2 populations. The blue line is a little bit higher than the red line, but it's not significant. If you then look to the right and if -- and this is a case where you then introduce TKa as a biomarker to select identified patients. You can see that if you are expressing TKa highly, then certainly, the 2 lines differentiate. And it's very clear that the blue line significantly benefit from the combo treatment. The blue line is the combo treatment and it significantly benefit from this combo treatment. So this is what TKa can actually do. I can differentiate between benefiting and not benefiting from combo treatment. And you can see on the lower one, you have a low TKa and there's really no difference between the 2 populations, getting combo versus monotherapy. So this is a great example of actually using TKa to predict and select patients. And the benefit here is, of course, if you if you are a low TKa why didn't have the second drug? You're just going to have more side effects, and it's going to be very costly, but it has no effect. So this was an eyeopener obviously, to some of the pharma companies. Going back to the cartoon here. Amy already mentioned the and BioItaLEE and the [indiscernible] studies, where you help of 3 TKa measurements can actually identify, again, in the population, those patients that will benefit from CDK4/6 inhibitor treatment, those that will not, and those that will have to -- have an adjustment of their CDK4/6 treatment, also an eyeopener to pharma, obviously. And then the dosing study, also here using our biomarker as a monitoring biomarker, again, keep an eye on the patients and identify those that still benefit from the treatment and those who don't and have to switch. So these studies, the SWOG, the BioItaLEE and the [indiscernible] and the [ palbo ] dosing studies all the results coming out last year was really convincing to pharma, that the TKa biomarker can be used as a stratifying tool to our patients, and that really attracted them. So it was both large companies and also midsized companies that reached out to Biovica to ask for the TKa biomarker assay. So as you can see from here, indications that they were looking at these different pharma companies, typically solid tumors, including breast cancer. And you can also see from the table here that we have different types of agreements with these pharma companies. It's still service agreements. It's, however, moving towards close to the collaboration agreements. We often start off with what we call a [ TSA ]. So that's an evaluation service agreement. We want to test our assay, our biomarker and see what it really can do. They want to test our company and can we execute. They want to test data, are they robust and reliable. And if they're happy, they move into broader collaborations. And so far, we actually haven't had anyone not moving into the next step, moving into broader collaborations, that being master service agreements or research agreements. We also have a couple of pharma companies and a bigger pharma company that has actually entered into supply agreements with us, receiving our research-use-only kits and then running their own trials with their own CRO laboratories. So actually, the onboarding of pharma last fiscal year, the one that just ended, exceeded our expectations. So what I tried to show here on this slide is that on the upper part of the -- on the upside -- not upside, on the upper part of the arrow here, you can see the plans or expectations we had for fiscal year '21, '22. So we had planned to sign 3 of these [ TSAs ] the evaluation agreements. We had hoped to be in a master service agreement discussion and have that initiated. We planned on having 3 midsized pharma companies into our portfolio. And we also planned on having 3 projects initiated. But when we ended the year 3 weeks ago, we looked at our progression with the pharma collaborations, and we actually had 2 [ TSAs ]. We had 3 master service agreements signed, 1 large-sized pharma company and 6 midsized pharma companies in our portfolio, and we have 6 projects initiated. So it was actually far above our expectations. And if you compare the results from '21, '22 to our goals for next fiscal year, we come to the conclusion that we are ahead -- 1 year ahead of time with our pharma strategy and goals. So then moving into the financial impact and expectations. Again, here, I tried to show the 2 stages we operate in. And in the Stage I where we build trust, we do research collaborations with pharma. So the revenue really comes from these services that we provide and research-use-only kits we provide. And you can see that there's typically a price tag on each agreement which we have with pharma, and that will then generate a certain amount of Swedish krona. You can also see that we then move into a Stage II at a certain point of time. It's a natural continuation. And what we have in our plan for Stage I, I should say, is that we really want to run approximately 10 projects with pharma. And that's based on my experience from the days that if you have 10 projects running, typically 1 project will go all the way through to a CDx product. So having 10 projects running will naturally kickstart Stage II, you can say, which is a collaboration with pharma and developing a true companion diagnostic or monitoring diagnostic product. In Stage II, the way you should read this slide here is really that in Stage II of our strategy, what you see on the left side on this slide here will continue. We'll still have the research collaborations sell of research kit. But in Stage II, we add on the CDx development activities and the fee-for-service revenue we generate from there. You also see in the table here, the sizes of fee-for-service revenue, you see the sizes of the product sales revenue for these CDx products. This is, again, really based on the experiences from my Dako and Agilent days, how much such a product and fee-for-service can generate. And a yearly revenue potential of a typical companion diagnostic product lies between USD 50 million and USD 100 million. If we dive a little bit more into Stage II, because this is really where you have the -- you can realize the potential of this business. So if you look at the components you have in the revenue here, we have tried to put it into 2 buckets. So you have a bucket which consists of the research use-only activities, that is the services and the kit sales plus the companion diagnostic development projects. So that is really the blue line to the right and how it evolves. The gross margins for that piece of the business is typically between 46% and 50%. The big win is obviously on the actual product sales that will kick in later in Stage II because it will take some time before we have developed the companion diagnostic product. But here, the potential is obvious. In these projections, we have built in some key assumptions. Again, these assumptions really come from my experience back in the Dako and Agilent days. So as I mentioned before, typically 10% of research use only projects will into a full development project IVD product. 30% of CDx projects turn into CDxs. And in a typical time line for developing such a companion diagnostic is 4 years. And if it's an add-on where you just add another indication to an existing companion diagnostic, that will typically take 1.5 years. So these projections made us set some goals for our business, some milestones for our business. And our expectations is really that within the next 6 to 8 years, we'll have at least SEK 50 million in research-use-only revenues. We'll have our first CDx product launch in the next 4 to 6 years, not at least based on the very promising clinical data we have now. And then there's potential for the CDx business revenue to become -- or to come near to SEK 0.5 billion within the next 8 to 10 years. So with that, I hand it back to Anders.

All right. I just summarize before let the questions in and discuss those. So I'd like to say that we have, as we've hopefully shown today, a very, very interesting and an important biomarker and an assay to measure that. That can be really valuable for patients, but also for treating physicians for health care providers and for payers. And together with our collaborating partners, the academic institution and key opinion leaders, we've been able to prove that with data. And that is now the foundation for all the activities that we're doing now. The regulatory process, but also we've built a team, a really strong team and now planning for the launch as soon as we have the regulatory approval in the U.S. So we have some exciting times ahead, the first one we expect to happen now in a couple of months, is the 510(k) clearance and the clearance of our CLIA lab, and we'll need a couple of months to plan and launch the product in U.S. So we expect that to happen by -- before end of this year. And then the next step is to launch it before in Europe on the first market in Europe. And then in 8 to 10 years, Henrik, we have to see companion diagnostics as well. So thank you a lot for everyone who has listened to this, and now Charlotte is ready with some questions that I think have been submitted to us. So we're looking forward to that.

Thank you, Anders. And that's true. I have a couple of questions, and we've had some from the web as well. And if you want to pose questions, please continue to do that because they will come up here on the screen. I'll start a bit where I -- take off where you ended on the FDA because you've had a couple of questions on that from the web. Is there any possibility that the FDA won't approve your application? Can we just settle that first?

Yes. Of course, there's nothing like risk-free business. But we have had a very good discussion with the FDA. The only problem really is the long turnaround times. The dialogue in itself has been really good. We've been able to sort out all the open question. The last remaining bit was the additional data that the FDA wanted to see. And we agreed beforehand before performing the trial now from January to April about the study design and then we performed the trial that complied with the goals we set up and the FDA has also approved that before signing it in. So we've gone through a number of steps sorting out all the open issues. So that, of course, will, in our mind, increase the probability for success a lot going through this process.

But I guess -- so the worst case scenario is not a "this is not approved." It's continued questions.

Yes, then there will be further discussions and that would, of course, when I say in the coming months, I assume that we will have a smooth process going forward. And then I've taken some contingency for -- like a normal process would take 1 to 2 months and -- but we're not back to 100% normal according to the FDA. They still have resource constraints due to the pandemic situation, but it's a lot better because they have increased resources and the backlog that they have is a lot less. So things are moving in the right direction also at the FDA office according to their processes...

Because that is another question. I guess you've answered it already, but what would be a standard reply time for FDA in this situation. And I guess what is their standard?

It is [ 2 ] months according to that process that was on one of my previous slides.

That was that. Now going over to some of the other, leaving FDA, it is important that you get reimbursement. We've talked about that. Do you have a time line on the plan for reimbursement? Any milestones that we...

I think what we can do is to give some guidance roughly. And I think Warren, if you could elaborate a little bit on that?

Yes, absolutely. Thank you for the question. From a reimbursement time line perspective, this is something that we work on immediately upon FDA clearance of the product. As you can imagine, there are many, many different insurance companies in the U.S. So the time line for Blue Cross Blue Shield versus Aetna versus UnitedHealthcare, they're all different. The 1 thing I want to make absolutely clear about is that there is a differentiation between reimbursement and payment. So from the beginning, we will get paid for DiviTum, we'll get paid through this direct bill channel or the hospital networks in general reference labs and patients. But we will also get paid through insurance companies as well. Typically, when you get reimbursement coverage, you're within their policy. So when a bill is submitted, you get paid very quickly, very easily at a predetermined amount for the test. Prior to being -- having that coverage, there's just a process that you have to go through. You do a -- you submit a claim, and then you typically have to go through an appeals process where you show medical necessity, and that's what we will be doing from day 1. So there's a bit of a difference. We will get paid for the assay. It's a little bit more work. But as we work towards coverage, then it will be a bit easier. But from a timing perspective, that's really driven by product utilization and clinical utility, and we're working on clinical utility today. And as soon as we launch the product, we'll have a better understanding of the uptake of the product, which will really help dictate how quickly insurance will cover the product moving forward. So I hope that answers the question. The one other piece I do want to mention with this is when Kendon was speaking about the targeting of physicians and the high-value physicians that will use DiviTum, we do actually overlay insurance companies and their locations. So insurance companies -- you don't find the same insurance company in every state or in every part of the state. So this is one of our targeting strategies, we actually look at not only the physician, but the provider. And what we do is we take a look at the providers that are typically early adopters in paying for novel tests. So hopefully, that answers that question.

Thank you very much. Now we have a question from the audience here. [indiscernible], please.

First, I got a follow up on the FDA process regarding this last clarification. I believe it was some relating interpretation of data. Is that something that could have an impact on the precision and how you interpret the data?

Henrik? if you want to help me elaborate on that?

So the discussions we've had is primarily related to the analytical performance and the way we undertook some of the studies, the data we provided. They wanted to have some additional data on the, could say, robustness of the assay. They wanted to have it in a little bit of a different way than we had understood and also, there are a lot of guidelines and new guidelines and what have you. So we designed a new study, and we sent it to FDA. They approved it and then we submitted the new data. And they looked at the new data just briefly and accepted them, but then have to discuss them internally in a broad way.

So I guess there is difficult to have a clear cut answer if it effects to read out the precision, it's more a method or not.

No, it's -- I think you're thinking about the clinical performance. This was a technical data. And it was -- the study overlapped the previous study that we've done to a great extent that Henrik said, so we just had to add some additional samples to reconfirm what we already confirm in the previous round. So yes, it's a technical performance part that was clarified. So in the format that the FDA wanted basically.

Correct. So we should emphasize, I mean, so there's 2 parts. I mean there's always the analytical performance of an assay, which is the technical decision how the assay is performing technically; and then there's the clinical piece, which is the clinical data you have shown using your assay, which I guess is -- I mean, it's not more important, but of course, very important when you show sensitivity, specificity and what have you from a clinical perspective. I think the confusing part is you always talk about sensitivity and specificity from 2 different angles. Technically, how does the assay come out technically from a sensitivity and specificity way. And clinically, how does the assay come out sensitivity and specificity wise on the clinical side. So you have those 2 aspects. And in this case, it was a technical piece of the assay, how does it work in the laboratory, how does it work in your own lab when we transfer it to the operations and all that stuff. So it's very technical. And it was just -- I say just, it is -- I say just because we had undertaken the stability testing, you can say, our performance testing and analytical performance testing in 1 way, according to a certain guideline, and FDA was really asking for some additional testing according to a different guideline. And then we provided those additional data.

So that part of the application, we believe we worked through it so many times. Now we presented convincing data. So I would say that's a low risk in this part of the application. And in general, we covered, I would say, more or less every area in deep discussions with the FDA. So that's why we feel confident with the process.

It's good to have the clarification anyway. And the next stage is, of course, what you alluded to, is typically 1 to 2-month waiting time, put it that way, which could, of course, perhaps be longer given the circumstances. And you have the stages of an interactive process. Is that something you benefit from during this process as well?

So we have a status of an interactive process leading up to the submission. And I think we have benefited from that because we've had a very open discussion being able to sort out the questions that was open with the FDA. So before resubmitting, we've clarified everything. So there should be nothing that we haven't discussed that should arise from that discussion is our understanding. So I would say that's the big benefit. And the FDA are suggesting an interactive process when there are only minor questions to discuss the result. So basically, our biggest challenge is that this interactive process has still meant long lead times in the -- so we have turned around the answer maybe in 24, 48 hours and then waited weeks to get the response from the FDA due to their resource situation.

And this -- your strategy to approach the U.S. market by the CLIA pathway, put it that way, it may not be familiar to all investors or the audience. What is the main advantage would you say?

Yes. The main advantage is that we will directly interact with both our -- the customers, the different hospitals and oncologists and the payers. And removing that 1 layer. So we will have control over the process of achieving reimbursement, like Warren said, with the different payers. So we'll be in the driver seat. I think to me, that has to be the one decisive factor, which has convinced me that that's the right strategy. I don't know if you want to add something to that, Warren.

No, I think you said it perfectly.

And given the additional opportunities and the ambitions that you presented today and partly earlier, I presume that the ability to control and secure patient consent and to actually be in control of the data and the opportunities that, that may give is also part of it.

Yes, that's an additional benefit. It's not the main driver, but it's an additional benefit of the strategy. And it works very well because it's a win-win. With an informed consent, we can present to the patient, not only the test result, but also how it works in a trend with previous test results. And as Amy, when she presented here results, you can see the pattern in itself provides some very, very important value. So being able to present that to the patient, of course, is beneficial for the patient physician, but also for us to be able to use that data to further explore opportunities to combine with other biomarkers and to develop to shorten time to market for new products. So it's a nice model. And we create a lot of knowledge, the information in itself is valuable because, yes, we can draw conclusions from that.

And in real life, there's always the flip side. What is the main disadvantages then?

Well, there's a disadvantage that we need to staff a lab. So we need to have additional competence to do this. But I think that trade-off is worth it, especially with Dan Kiser with the expertise and experience doing this successfully in the past and look at the big picture, it's worth that extra effort.

And is it -- are you convenient in giving any indication of the cost of this operation and the time when it will be not fully operational, but ready to...

The good thing is that initially, it will only be a couple of full-time equivalents in the lab. And of course, when the volume scales, we need to scale as well, but then we will have increased revenues and it scales well also. We can make really efficient processes to scale as well. So it won't be a significant cost in the total -- in our financial segments.

And the lab presentation part was very full with details, but some takeaways was that you will be able to service more or less the whole country from the central lab. And it seems like there might be some additional requirements in some regions. Was it New York and Washington?

Yes. First of all, there's a technical aspect here, which we didn't mention that much. We have developed or in the process of developing the blood collection kit to simplify this process and it will go through FDA approval as well. And so we're making progress there. But that's also based on assumption that blood samples can handle this transportation. So we've done trials, doing that, confirm that as well. So of course, the biomarker and the blood samples must be able to handle the logistics. So that assumption has been checked and verified as well. So that's also part of the equation. When it comes to the different territories, different states have different rules for this, and New York is one that normally takes some time to get approval. I don't know if some of the U.S. people, if it's Warren or Dan, you want to elaborate how this set of rules work with approvals for the [indiscernible] different states. Warren?

Maybe Dan can comment on that?

Maybe Dan, yes.

Yes, certainly, Anders, and thank you for the question. We're very happy to be setting up the commercial lab in San Diego in addition to all of the benefits on the revenue side. It certainly helps us control the test in its introduction of the U.S. marketplace very well. We'll make sure the test results go out and DiviTum gets a good reputation in the marketplace. For the first patient test samples, of course, that's the CLIA registration there are different jurisdictions like New York, as you mentioned, in Washington State that have their own regulatory schemes. But fortunately, none of the requirements are different. It's just the filings and approvals are handled separately. So you don't need different processes or different procedures or anything like that. So we'll set up our initial processes. We'll get the registration. We'll go forward with the accreditation pathway. And those states will accept that method. We just have to file separately in those jurisdictions to get approvals. And those take anywhere from 3 to 6 months sometimes, not as quickly as California, but we'll file them as early as we can and get on the market in those jurisdictions as quickly as we can.

Excellent. And if everything goes to plan, you will secure an 510(k) approval? Is that something that will be important also in the CLIA strategy, the status of 510(k)?

Not necessarily. There's no dependencies like that. But there is a dependency in the way that we intend to offer our 510(k) CLIA test through our CLIA-certified lab. So we need, of course, to have the clearance to be able to offer it as a 510(k) test, although it's in -- through our lab. So that's why we need both the clearance and accreditation.

Yes. I was also thinking about the next layer of securing reimbursement and traction.

Yes, there is no -- there are unclear tests like laboratory [indiscernible] that are reimbursed. So there's no -- it's now a requirement, but a CLIA test, of course, facilitates reimbursement as well as pharma collaborations also as well.

Excellent. And finally, if I may. Congratulations, you already secured and proved that you attract pharma interest, which was an interesting part of the presentation. But also in the CLIA part, it's also a requirement and to secure demand from the clinical segment of the market. How will you go about securing that?

You mean for clinical use for pharma use or for both?

For clinical test and monitoring therapies from specialty center and the like.

All right. Yes. Warren, you had that in your presentation. Want to elaborate on the on how to generate demand?

Well, I'm sorry, what was the specific question? I didn't quite understand it.

The question was after a CLIA test is available, you need to work on how to generate demand. If you could elaborate a little bit on how we're going to generate the demand on the U.S. market. With a different strategy, perhaps a partner or so, they would have done that, a commercial partner. But now with a CLIA strategy, I guess you will need to secure that or support that more directly in house.

Yes, that's correct. So having the CLIA laboratory, we will have a specialty sales force that calls on oncologists directly, and those specialty sales reps, not only will they talk about the clinical utility of DiviTum specifically. But these particular sales reps are also experts in regards to the logistics behind getting that patient samples sent to the laboratory. And this does give us our best opportunity to be able to drive utilization of DiviTum. If we simply sold this into clinical labs, directly into a hospital lab, then there's no driver out there discussing the product and working through the logistics to be able to get those samples into those hospitals. So it's really this joint effort between sales and our clinical group and does discussing the clinical utility of the product to drive demand. I hope that answers your question.

Great. You have many questions here. I hope most of them have been answered in this discussion actually. There is 1 question here and it's about the competitiveness of the product. Is there something already now in the short term, which could reduce the market potential for DiviTum?

In the short term, we believe we have a very strong position, especially if you look at the metastatic breast cancer monitoring area, our data little bit like Amy touched upon we believe is unique. Over time, of course, someone could develop something similar without infringing our patents. That's, of course, a possibility, but we still will, in that case, have a first-mover advantage with all the clinical data that we have generated. We -- I believe we will have a very strong competitive position.

And tests like ctDNA?

ctDNA is a really, really interesting technology and also a hot topic. However, within this area, I think Amy touched upon that as well, we believe we have a very convincing data, performs very well. Against ctDNA, something has been shown in the BioItaLEE trial and will be on that -- on ASCO in about a month or less than a month from now. However, I want to be fair to say also that the key focus for ctDNA has not been in this space, but in earlier phases of the cancer in different applications. So we're not a head-to-head competitor against ctDNA.

And this touches another question about how you will position the product. Will it be towards cost savings, such as reducing future treatments, or will it be differentiating as Henrik was talking about high-risk patients to aid the design of a treatment or changing treatments? Would you need to make a focus on either of them?

Yes. So yes, we will position when we can with data. And we have the luxury of having both. I don't -- in our health economic model, the lowest threshold initially when launching it is to do cost comparison, cost avoidance which we can prove. So we will start with that and will over time, we'll generate data on more ambitious claims.

Yes. And then yes, I guess you -- I'm not sure I understand this question actually. But it's because I know too little. So for how long can you operate with a CLIA certificate of registration before you get the certificate of accreditation.

Maybe, Dan, you can elaborate a little bit about how that worked with accreditation and the certificate.

Thank you, Anders. There's different pathways. But since we're going to accreditation model, we actually will follow for the certificate registration from the State of California, and they give you up to 2 years to gain accreditation because we're working with American pathologists. So that's quite a lengthy period of time. During that time, we'll be establishing proficiency, sending data to the CAP organization who will be actually doing an on-site inspection, and State of California will recognize all this and allow us to continue to operate while we're working through that process, but we have quite a bit of time to gain accreditation.

Great. I'm going to ask this question just because I want everyone to hear their questions being asked. How important is shareholder value to you?

Well, I think we all are driven about a couple of different drivers. I think we discussed this internally. So I think we share this as a team. I think 1 very strong driver is to make a positive impact and change for patients and for society, health care providers and payers. But of course, we understand and we are all in the managed team and the Board of Directors somehow shareholders and have that in sight as well. And we also have -- a lot of people has put their trust in invested capital in our company. So we realized that the shareholder value and return is also important, and we have a great -- with the product, great potential to generate. That is my and others' belief. Yes. So it's a unique. I think what's attracted me is the unique opportunity to do both -- to both makes a really positive product that has a great value socially and at the same time generate shareholder value.

I think this has been a really good run through. The questions, I hope that you all have had answers to your questions. If you haven't had them, please e-mail IR at Biovica. We have 1 for you on, one last one. Okay. And there was one about putting the presentations on the web, and they will, of course, be there. So I'm leaving over to you, Anders, summarize.

I would just like to thank everyone of you that were here and to who participated virtually and also to my team here who presented and to you, Charlotte, who facilitated the session. So thank you very much.