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

Hello, everyone, and thank you for joining the Biovica Q3 interim report, the second attempt. Apologies for the failure yesterday, where we have a software update issue that created some difficulties for us, but now we're up and running, and I'm happy to see that so many are attending. So today, we have some -- we have me and Anders Moren, our CFO; and Warren Cresswell presenting. And we'll go through a first and a short introduction about Biovica to get you some background about the company and the product. We'll go through the highlights during the quarter. Warren will provide an update here with the latest news about where we stand in U.S. before Anders go through the financials, and I do a summary before we open up for a Q&A session. And if you want to ask questions, you can use the feature in the application already now. If you want to remain anonymous, there's a check box you need to check in that case, and we will then at the Q&A session, we will publish the questions and answer that. We will also have our equity researchers, Johan Unnerus and Dan Akschuti, will have the opportunity to dive into the meeting and ask questions. Okay. So first on background about Biovica. The company is founded in 2009, and it's based on research that has been performed at the Uppsala University since many years back. We are now since 2017, traded on NASDAQ First North Premier. And we still have our headquarters in Uppsala. And in the U.S., we have our headquarters and our labs certainly in the U.S. market in San Diego, California. We're about 35 people currently and 13 of those are now working from U.S. Warren will dive in a little bit more on what we're doing there. We have ISO certification since many years, and that's the foundation also for our regulatory approvals where we have CE label covering the European markets. And since last year, we have a 510(k) cleared product from the FDA, which enables us to offer the product on the used market. So moving on to the product. The product is called it DiviTum. DiviTum stands for dividing tumor and what dividend does is that it measures cell proliferation from a blood sample, blood test from the patient. And as you all know, cell proliferation is something really essentially enough for us humans, especially so within cancer, as cancer grows through uncontrolled cell proliferation. Digital is shown in more than 20 clinical trials that it has very strong prognostic value. That means can for see how the disease will progress. And also, when used as a monitoring tool that we can provide quick feedback how the patient is responding to treatment. We have shown in clinical trials that we already been the treatment can provide feedback on treatment efficiency. And this is something that is very important and it's an unmet need currently that with a blood test provides a quick feedback. Currently, the standard method for monitoring of these treatment and patients are using imaging technologies where you take a snapshot of the tumor size at started treatment and several months into treatment. So with DiviTum, we can provide a more convenient and method with a quicker feedback than current best current standard being used. Of course, this is important for the patients, getting that feedback and the treatment physician because the treatments have side effects and are costly. So it's important to make sure that they are also efficient and there are several treatment options. So we need to make sure that the patient has the best possible treatment and are benefiting from that. Our commercial road map starts with the launch of the product for clinical use for monitoring of metastatic breast cancer on the U.S. market. That's why the 510(k) clearance and the CLIA lab certification is such important milestones and also marks a new phase for the company. In the U.S., our go-to-market model is through our own operated CLIA lab. And the next markets we're looking to expand into is the European markets, where we are looking primarily for the bigger countries and the Nordic countries as initial targets where we'll go to market using a partnership model. Outside of Europe, we're looking to enter the Japanese market using a partnership model as well. These market potential figures on the right is based on market research that we have done. And in order to -- from market research with payers to sort out the price that reflects the great value the product can provide. And with oncologists regarding the treatment schedule, which was also confirmed in the 510(k) clearance intended use times the number of patients living with the disease. And outside of the metastatic breast cancer area, a natural expansion is, of course, to go into earlier phases within breast cancer within, for example, local advanced, where the same treatments that we have already provided such great results in our clinical trials are being used, and we also are participating in clinical trials and expect to see positive results soon. Outside of the breast cancer area, we also have identified several areas that are interesting that also has a similar unmet needs that we can meet with our product. A good example is metastatic malignant melanoma, where immunotherapies are being used. And we also have strong data together with Karolinska that proves that we can have value and meet that unmet need within that area as well and other areas with similar situation is castrate-resistant prostate cancer and non-small cell lung cancer. The last area on the bottom is our sales for research use to pharma but we already have been active commercially actually for several years. Currently, we have about 10 pharma companies that we have agreement with and also doing several projects per company in some cases. And that is also a percent of revenues. You see an increase in that as well and also a positive response on the 510(k) clearance that we received. This is also an exciting area with great potential. Our ambition here is to further develop these collaborations into co-development projects, where we, together with pharma, developed a new combination of a new cancer drug and diagnostic product that is complementary to that drug, so-called companion diagnostics. Okay. If we move on to the significant events that took place under our third quarter for the fiscal year of '22 '23. We had one major milestone was the closing of the capital injection that we closed just before end of the year. That gave us funds in order to invest in the go-to-market, especially so in the U.S. And that also led to us hiring the sales rep team from 1st of December. That has now been working for a little bit more than 3 months, and we can already see some initial impressive results from what they have achieved. Another area where we were active was at the San Antonio Breast Cancer Conference, where we had 2 posters. San Antonio Breast Cancer Conference is important to us, being the #1 conference within breast cancer every year in December in San Antonio. One very interesting trend at that conference was the fact that the industry is more and more moving from maximum tolerated dose to minimal effective dose, which, of course, drives the demand for biomarker assays like ours where we can assess the efficiency of the treatment, giving more tailored, better monitoring in order to get more tailored treatments for patients. So it was a great conference from many aspects for us. On the topic of clinical data and publications, our clinical validation trial that we used for the 510(k) clearance is also now out in the public domain, published in a biomarker paper. And that's also important having that published when we are commercializing the product and meeting oncologists. Mason was the start of Anders Moren, our CFO, Anders will go through our financials later on, as I said. And after the end of the period that ended in January, we had our CLIA Lab certification in San Diego, marking the starting point for the lab being able to offer the assay, the product for clinical use as a service, and Warren will cover that in his presentation. So with that said, I'd like to give the word to Warren Cresswell, our President of Biovica Americas to go through where we stand in U.S. And please, Warren.

Thanks, Anders. It's been both an exciting and productive quarter, I can say. Back in October of 2022, we submitted our application to the California Department of Public Health and this was for our CLIA certificate. During the time between October and January when the site inspection actually took place, we worked closely with CDPH and provided them with all the necessary quality documents, answered all the questions for they had before [Technical Difficulty] Can you hear me? Okay. Thank you. Sorry, we had a technical difficulty there. We had a site inspection in January. There were no deficiencies whatsoever. So that just shows what a fantastic job the organization did here running the CLIA lab. About a week later, we received our clinical and public health laboratory license from the State of California, which means we can conduct business in the state of California. And in February, we received our CLIA certificate from CMH. The great thing that's going on is we're able to conduct testing for pharmaceutical and for clinical research, which we've been doing. And we've also been -- we're receiving patient samples. So we're very excited about that as well. Next slide. In December, December 1, we hired our commercial team. And our approach was to hire the most experienced team that we could bring in. And these are people that have deep knowledge of the CLIA laboratory. Also, they come with significant experience with respect to relationships in the industry as well. One of the things that we wanted to do is we wanted to make sure that once these individuals join the organization that they could really hit the ground running and be productive. So what we did is we did at home training months in advance so that clinically, when they joined the organization, we didn't need much additional education for them to be able to be in the front of customers and for us to execute on our sophisticated targeting strategy. With respect to that, the team that we brought on board, there was really kind of 4 separate groups of folks that came on board. We have our sales team themselves. And they really focused on educating the physicians and the nurse practitioners, the back office in regards to thymidine kinase and DiviTum. And they're also the demand drivers as well. We also brought on market access and what market access does is they really provide -- work with institutions to ensure that when physicians want to order DiviTum that they're able to do so. And they also focus on the contracting side of our business as well. So part of our reimbursement strategy that I'll talk about is client bill where we actually contract directly with institutions so that when we receive samples in, we bill the institution versus bill an insurance company and they focus on that. The third is managed care and managed care is really responsible for coding and reimbursement. And with this group, they really focus as well on working directly with insurance companies and on guidelines as well. And then lastly is our revenue cycle and our revenue cycle team, they process claims. So once we receive those products -- those tests or the samples in-house, and we test those samples, they work closely with insurance companies and institutions for payment. But also what they do is they're the patient engagement side of things. So when customers call, they're going to speak with this particular department. So these folks are on board, and they've been, I think, extremely productive in a very short amount of time. They -- part of our sophisticated targeting strategy is takes into account a number of different things. One of the focus is to be able to focus on NCI centers and NCCN centers, academic institutions, cancer centers, key opinion leaders, regional thought leaders. We also take a look at insurance distribution across the U.S. There's different insurance companies that focus on different geographies and also relationships. And we know that there are about 7,500 medical oncologists that focus pretty heavily on breast cancer and that 10% of those make up about 50% of the total addressable market. So as part of our targeting strategy, we're really focused on that top 10% of medical oncologists. In the last few months, we've been able to have clinical discussions with 50% of the 63 designated NCI cancer centers that treat patients, which is very impressive. We've also been able to have meetings and clinical discussions with 20% of those top 10 oncologists that focus on breast cancer. The feedback overall has been incredibly positive. And if you move to the next slide, I'll give you -- I'll show you a few quotes from that. So with respect to the feedback, this is really a cross-section of feedback that we've been able to get back from oncologists. So if you take a look at the first one, this is a key opinion leader from an NCI an academic center in the Southwest U.S. and they say, "I find how DiviTum levels predict and monitor patients on CDK4/6 drugs to be potentially very helpful. There are several patients I have on these drugs that I'm now wondering which pattern they fit in." And what they're talking to specifically as it was a study Bio Italy study that used DiviTum and by looking at patients at baseline day 15 and day 28, the pattern that gives off of those particular sample dates that helps a physician understand what the progression-free survival is for the patient on a CDK4/6 inhibitor. And this particular key opinion leader thought that was incredibly valuable in his practice. Another oncologists that we spoke to who's in the Northeast area really believes that the monitoring, the long-term monitoring access of patients is significant to them. The third one down is from a leading breast oncologist in the Southeast. And they say, "I can see using DiviTum in several different settings, and I have ideas for incorporating DiviTum into the standard of care, also researching how using DiviTum affects physicians' decisions and change behavior." So we think that's very interesting as well that they're really thinking outside of even the intended use of where DiviTum could be used. And that also plays into the last one as well, which is a community oncologist in California. And they say they see this as a perfect fit in the adjuvant setting. And the adjuvant setting, of course, is very large. These are patients that have already gone and gone through surgery, potentially radiation or maybe chemo and they're being monitored and they think that there's a significant opportunity there as well. So overall, the feedback has been very, very positive. Next slide. So from a reimbursement perspective, this is one of the core things that we're working on as well, very important to the business. There's really 3 channels here that we're focusing on, one of which is Medicare. And from a Medicare perspective, we have applied for our credentialing with Medicare. The application has been submitted. There's already been a site visit to our organization that we anticipate getting our -- having the credentials sometime next month. What this allows us to do is it allows us to be able to suit claims directly to Medicare? The other thing that we're doing is we're working with both the AMA and CMS. To get -- one is to get a PLA code, which is called a proprietary laboratory analysis code. That code is specific to our assay and that assay being run into our laboratory. So we're working with the AMA on that as well as CMS from a pricing perspective. So initially, when we launched the product, what CMS allows us to do is to use a miscellaneous code, which we will do from day 1 essentially. And then as we walk through this process of getting a PLA code, we will have a code specific for our assay. So it's very important to our business. The other thing to recognize as well is that Medicare makes up about 50% of the total available market or total addressable market for our product. So having Medicare coverage is significant to our business. The second thing is client bill. And with client bill we're developing a real pipeline of opportunities with institutions to contract. So we have folks out meeting with different institutions that are very interested in contracting with us and there will be a lot more information to share moving forward on that. We're also working with them in regards to integration. So what we intend to do is to be able to be built into the electronic health record so that when a physician orders DiviTum, they don't have to do it like on a paper requisition. They can go directly to their system. They can click a box and the order will come through to us in San Diego. And the third is private insurance. And with private insurance, there's a process to get coverage in private insurance, typically, it is getting Medicare coverage, it is getting into guidelines as well. And we are doing outreach to private insurance now to be able to educate them on the benefits of DiviTum and what they can do to -- for patient or for physicians to help manage their patients. And in this category of reimbursement, we do have a financial assistance program that we've put in place. So that financial assistance program will benefit patients in regards to the amount that they pay for the test. One last comment is that our managed care team is working as well with -- on the guideline side of things as well. So that's a significant focus for our organization also. And with that being said, I'm going to hand it to you, Anders.

Thank you, Warren. Few slides on the financials. See if I can click the slides like that. So net revenue for Q3 were about SEK 1.3 million, last year same period it was SEK 300,000. Net sales for the 3 quarters of May '22 to January '23 was SEK 2.8 million almost. Last year, it was SEK 963,000. These sales are coming from the bottom line on Andrew's slide earlier around the research and pharma collaborations where DiviTum is used as a biomarker for developing new cancer drugs. We -- as you can see on the right-hand side of the slide, we see a really good growth compared to last year. And we think that this comes from the -- it's based on the very well-documented DiviTum test. We've also seen an increased interest after the 510(k) clearance. And I think this acted a little bit like sort of quality stamp on the test and also on Biovica as a company for potential partnering around CDx co-development projects that Anders were talking about earlier. A little bit about cash. Closing amount for cash, January '23 was SEK 145 million. As you -- as we said earlier, and you are aware of, we had a successful rights issue of SEK 148 million back in December last year, and we will use that for launching DiviTum in U.S. and Europe. With that cash position and the existing funding plans, the Board of Director has assessed the companies, pointing that the operations are secured. Talking a little bit about more cash and cash burn. Everyone is looking at cash burn these days. We hired very high-quality people, but they also cost a bit. So our cash burn is around SEK 10 million per month right now. Our expectation is that, that will go down as we start seeing revenues coming from the U.S. business and also from our European partners, which will be launched very, very soon. We also think that the current growth trajectory of the pharma collaborations will continue as is. So we have high expectations on all these 3 different revenue streams in the coming years. A little bit about headcount. We were 33 heads on average during Q3. Last year, we were at 26. So it's quite a significant increase there, and that is coming from the U.S. sales team that we discussed earlier. Out of the 33 employees on average in Q3, 14 were female. Last year, the same number was 13. So with that, I'll hand back to Anders for a summary slide.

Thank you very much, Anders. Yes, to sum it up. We have a product with a great potential that measures something very fundamental cell proliferation. And it also addresses currently somewhat unmet clinical need, which is a simple, convenient method to -- for a quicker monitoring within cash treatment initially in metastatic breast cancer, but over time, in more cancer areas than that. We have also a strong support from key opinion leaders together with them. We have performed in scientific collaborations or clinical collaboration that has resulted in publications that proves the value and the potential of the product. That's the foundation for our commercial activities, our commercial phase that we now enter for clinical use. The product has great market potential within that field, over SEK 2 billion in total. And now we're entering the first application, which is monitoring a metastatic breast cancer perform more positive women, which we also have a 510(k) clearance with an intent to use that coverage that. We just passed a couple of very important milestones, the Fit clearance and the capital injection and now the PLB certification -- we are just starting to receive new samples. As Warren says, we are working also to get into the U.S. reimbursement system in the market. One important thing is the PLA code that you can expect to see us get during 2023. We also are talked about the importance of having direct build agreements with U.S. hospitals. That's another thing you can expect us to see during 2023. And you should also see revenues coming from the U.S. organization. Medicare being the biggest patient population with over 50% of the patients in the group that we are targeting are covered by Medicare. So getting inclusion into Medicare is also, of course, super important, and we've always started that journey as well. As Warren said, and during '24, you can expect us to get the nationwide Medicare coverage. This should lead us to reach our target of realizing 15% of the market potential for the U.S. market 3 years after and after launch of the product. If you look at the European markets, we have said previously that during 2023, we will launch the product using partners on multiple markets and we are also in late stage of finishing agreements with the first partners and markets. So you can expect to see that very soon being announced. So thank you very much. That was our presentation, and we are happy to open up for questions. I mean we should -- could start. I see that we have Dan Akschuti from Pareto online. So maybe then, if you're in line, if you have any questions, you can now unmute yourself and please [Technical Difficulty] Dan still muted maybe seem to be block, maybe, Al, if you can look at if there's an issue. [Technical Difficulty]

Okay, right. Well, let's do it like this. We seem to have problems with us well. I think we have a lot of questions. So I'll move into that. And Dan and Johan -- no.

Can you hear me?

Yes, perfect. There we go.

Congrats on the progress. Really exciting progress and exciting percentages mentioned by Warren. And you also mentioned earlier that you have been receiving patient samples. So is this already no patient samples that you can handle at the CLIA lab. So your -- basically, your sales have started...

Yes. I think, Warren, if you can maybe elaborate a little bit on what you mentioned earlier in your presentation.

Yes, absolutely. Thanks for the question. Yes, we have just started receiving patient samples in fact, this week. We have been receiving pharmaceutical samples and clinical research samples. So we have been testing and testing quite a few of those. So yes, the revenue stream per se, for the patient clinical samples have started.

Okay. And if you could go through the percentages of oncologists that you have reached out again, you mentioned several numbers there, and I'm not sure if I got them all right. So if you could just go through them again.

Yes, sure. I don't have the total number in front of me, but in regards to the ones that I indicated in the presentation, the -- our real focus is focusing on the top 10% of the oncologists that have essentially written CDK4/6 inhibitors. So they have -- they are managing patients with metastatic breast cancer. The top 10% of those patients are 750. We've had clinical discussions with 20% of those. So 150 of those we've actually set and had presentations with. Specifically, we've had engagement with many more than that. But in sitting down and having a clinical discussion, it's 150.

Okay. Amazing numbers for such a short time, I guess you could use that prior to lab certification already. I guess that didn't happen all after?

Yes, exactly. So our strategy was when we brought the team on our strategy was to -- when the team joined the organization, we wanted them to be productive immediately. So we did a lot of work before they joined the organization to ensure that they were trained in regards to what thymidine kinase enzyme was, what DiviTum was. So that when they joined the organization, there was a very little work in regards to onboarding and clinical training. We had already done the work in regards to the targeting side of things. So when they joined the organization, we could immediately have them out in the field meeting with physicians and leveraging all of their existing contacts as well. So we've been extremely productive since the day they joined the company.

Great. And the last question. So if you look at these numbers now, then would you assume that you reach profitability in '24 and do you assume $300 million in '26 considering your market estimates, is that correct?

I can answer that -- we haven't given the -- that precise estimate yet, we will be coming back with more precise estimate when we get more feedback from the market. And so, so far, we will just keep the guidance that we have given so far, 15% of the market potential, which I see that you, for instance, Dan has modeled in your estimates. And from that, we think that your estimates is pretty accurate and in line with what we are looking at as well. All right. Johan Unnerus, if you could try to unmute yourself, see if you have any questions. Microphone is still unmuted, Johan, says. Maybe Halley, you can help us fix that the way we did for Dan. No. Is it Johan should unmute or we -- unmuted. All right. In the meantime, no -- he's online. All right. There we go. Johan, please welcome to the call -- you are unmuted, but it still seems to be some issues with the sound. Okay. In the meantime, while we sort that out, we have a lot of questions from the attendees, which we appreciate. So I'll go through them here as many as I can. We have one from Robert here, who -- see if I can publish it. There we go. See. No. Okay. So Robert asks what about Europe, and then we've got several ones asking about that actually. Where do you stand in Europe? When can we expect to see a launch on the European market? And that is, as I said in my presentation, we are negotiating with several partners, and we are very close in closing that. We said that we will be announcing that within the first quarter of 2023, and we still believe that we will be able to deliver on that promise. Another related question to that, also Robert, is will, by Biovica need to open new labs in new geographies to access new markets, such in Japan or other markets? This is actually a really good question and something that will be -- when we open up in Europe, this will -- it will be part of that agreement actually with a partner. We will have labs in Europe, maybe not in every country. So we're planning to see what geographies we can have labs for efficiency and coverage that combination. But yes, we will have labs on other markets than the U.S. lab. We won't be sending samples over the Atlantic. That's not our plan. We will have labs in Europe and primarily or initially we'll have offer that through partners. And I also got a question here from -- see if I lost here. Yes, here was the Robert. I published the wrong one. I got one question, which I thought was good. I'm publishing similar questions, so we check them out. One question was in the CE report -- CEO report of the Q3 report wording in the Q3 report, we talked about partners that we collaborate with and which one can you mention? We can mention the ones that have published data, so they have made official with -- that they work with Biovica or that we have included in the agreement that we are allowed to mention. And the ones that we can mention so far is the one, the first one was Pfizer, who presented several years ago on HACR. The results that they did in an Asian trial with CDK4/6. And so that's one of the collaborating partners. Another one is Novartis who use our assay in their Bio-Italy trial, which was had excellent result, but we also were compared against ctDNA and came out very well. So that's another partner that we can measure. And then the last one is Carrick Therapeutics that presented results on their CDK inhibitor. It was not a CDK4/6. It was a version that they are developing that they presented on the San Antonio Breast Cancer Conference 2 years ago or 1.5 years ago. And Yes. Here's a U.S. question that I will hand over to you, Warren, and I read it. I mean you can respond. The question is, how many private insurers do you expect to have meetings with before end of a first half of 2023? Will private insurers await CMS Medicare decisions before they give reimbursement? Maybe you can elaborate a little bit about this, the order, the strategy basically within reimbursement in which order we focus our efforts because we have a pretty smart plan there.

Yes, absolutely. Anders, I can answer that. So with respect to reimbursement, as I indicated in the presentation, there's really kind of these 3 prongs to our strategy, one of which is the Medicare coverage strategy, one of which is this client bill or direct bill where we're contracting with institutions specifically, the third is private insurance. So we're working on all 3 of those simultaneously, but they all will move at a different rate. So the one that's really -- or the 2 that move fairly quick, one is contracting with institutions. For us, it's being able to get a contract in place with an institution. Once that is in place, when we receive samples from that institution, we essentially invoiced that institution, we get paid and then they have contracts with existing payers that they'll get paid on. So that's one of the core strategies that we have. The second is obviously the Medicare side of things because as we've indicated, approximately 50% of all of our patients are 65 years or older that would use DiviTum, which means -- and that's -- it's a huge advantage for us because when we get Medicare coverage, essentially 50% of our market will be covered by Medicare. So for us, that's a real core strategy. We have -- there's a universal CPT code we can use for reimbursement at the beginning. But as we move forward, in fact, we're going to submit an application for our PLA code, work with the AMA on that, work with CMS on pricing. And as Anders has indicated by 2024, we'll have national coverage on that, we believe. But the third is private insurance. So with private insurance, private insurance typically looks to see if you have coverage with Medicare, and they also look at guidelines and they make decisions. And that's not all insurance companies, but that's typically the pattern. And that's what we're doing. We're focusing on Medicare. We're focusing on guidelines. But at the same time, we will engage insurance companies because the one thing we don't want to do is wait until we have Medicare coverage, and we're in guidelines to open up that discussion. So those discussions are going on today where we reach out to these insurance companies and educate them on thymidine kinase, educate them on DiviTum. In regards to giving you an exact answer of how many insurance companies we're going to engage, I can't provide that information to you. However, it's significant. And it's also -- there's lots and lots of insurance companies in the U.S., so it's also about prioritizing which ones you focus on. So if you take a look at the top 5 or 6 insurance companies, they probably make up 80% of the insured lives. So of course, those are the folks that we focus on...

Thank you, Warren. I'll continue with another question here. Robert asks about in the CEO comments, as a question as a quote, "they understand the value of measuring cell proliferation from mass like breast cancer as well as in other areas." I'm eager to understand what other areas does this hint the physician interested to use David off-label. And maybe, yes, I could start -- elaborate a little bit on that, maybe you can sell in Warren. But the way it works is that you can move to the quotes here. We have a 510(k) clearance with an intended use. That allows us to market the product for that specific intended use, which is used for monitoring within metastatic breast cancer and hormone positive type to be very specific. And when we do presentations for oncologists, they understand the biology of how this works, and they see other areas of possibility. And there are also other clinical evidence outside of our intended use that we are allowed to point to, but we're not allowed to market the product outside of the antenna use. The treating positions, they're allowed to make a decision on how they want to use products so they can order the product and used for other areas, but it's on their responsibility. We are only allowed to market within our integers. Is that a fair summary? Or do you want to add something, Warren?

No, no. That's completely fair.

So our strategy, of course, is to continue the great start that we've had with our clinical documentation and expand into new areas. And like the quote down below is I see this as a perfect fit in the adjuvant selling. Yes, we are also really interested to see how this is going to be used outside of the metastatic breast cancer and are looking from the collaborations that we already have to expand into and get a wider documentation. And that leads into another very good question that we have we have received. And that is how far have you come in other applications outside of the metastatic breast cancer area like prostate cancer. Yes, this has been our key strength area, I would say, for us to be able to sell this product to oncologists that they invest their time and money to document the value of the product. And the reason they do that is that they see the value for the patient, of course. And for us, it has given us the opportunity to get documented the value of the product. And currently, the other areas, -- if you start within breast cancer, we're already involved in clinical trials within a neoadjuvant setting. Just -- that's just before the metastatic are faced from metastatic. So that's really interesting to see the outcome of that, and we expect to have a positive outcome since it's the same type of drugs being used in the metastatic setting where we have successful data. And if you look at outside of the breast cancer area, I'd like to highlight the work that we have done with Karolinska on [ modeling ] melanoma metastatic melanoma on immunotherapies. That area has a great potential and immunotherapies are being used very widely, not only within metacycline melanoma. They have a strong foothold there. So we are keen to see -- to repeat that results on a larger patient population to give the results more weight and to be able to use it to expand the use of the product outside. So we are active in that area. I will come back when we are starting [indiscernible] or are having results to present. All right. Yes, I think that was the question. There's one here that you already answered. Warren, have you sold a single test in the U.S.? Yes, we have. Johan Unnerus, I see that your unmute, should we do us a last tent?

Am I live?

You're live. We can hear you loud and clear.

Yes. Congratulations again on the progress made around the certification and a few questions then. It's pretty clear that the first target group is the contract related, and that's presumably also related to the NCI and IDN network. I presume that you will press release when you do progress with the contracts eventually.

Yes. That's very good. In Warren's presentation, he gave an overview. We're actually talking with IDN. Maybe I can give the word back to you, Warren, you can elaborate a little bit what is an IDN, why are those important? Why are we talking to those guys? And how much progress have we made?

Yes, absolutely. So we have -- I think the answer of press release is absolutely we would want to do that, ideally, even use the institution's name if possible. Sometimes they will agree to that sometimes not. Certainly, our focus is on NCI and NCC and designated centers, but also there's other cancer centers, academic institutions and also institutions that really act as both providers, like a hospital and also insurance companies as well, these integrated delivery networks, they look at both sides of it. And it's very important that we work closely with those as well because when you're not only the provider and the insurance company, you really looked at is not only making the best clinical decision but potentially making the best financial decision in regards to how to manage patients. And there's a lot of weight that comes with that, and we are working with -- or just starting to have discussions with -- had several discussions with an IDN here in the U.S. that I think if we're able to finalize an agreement or get an agreement with them, I think it will be pretty significant, very significant for our business moving forward. So that is part of our strategy is working with IDNs across the country as well.

Yes. And to my understanding, these networks can include many -- several large and powerful centers and hospitals.

That's exactly right. That's exactly it. It's not typically one center. It's a group. And so it does become very significant in business when you're able to make an arrangement with those organizations as well. And typically, when you make those arrangements as well is you actually are able to often get data back from them as well, which can help out if they're interested in looking at indications outside of the current indication of DiviTum, this is where some additional value comes as well. So for instance, some of those other indications that Anders mentioned, they have the stay of the same interest in that and others. I mean one of the things that come back with us when we start talking about DiviTum itself is they typically say, well, what about this cancer that cancer or an adjuvant setting or the neoadjuvant setting. And we have to sell on label. They're very interested in those other applications because they look at it, to a certain degree, a proliferating cell is a proliferating cell. And this can be very beneficial to us when we do these agreements and if they want to do some additional clinical research, which they typically do, we can benefit from that data as well.

Yes. That's interesting because the proportion of these centers are obviously proactive in terms of research and progression as well, and they might be likely early adopters.

Absolutely. And many of them as well. They really -- they market themselves as leaders in cancer. And so they definitely are looking for a product like DiviTum that sets them apart from other institutions as well. So there's a real benefit from them as well not only to manage the patient better, to give the patient a better opportunity or better outcome. But also from a marketing perspective is it also helps them in influencing patients to come to their system for treatment.

So some tactical related issues then, when hopefully a press release will follow then that you have a contract, what was the time line to -- from the contracts to actually clinically using dividend and attracting securing orders...

Warren?

Yes, absolutely. So it depends on the institution. So in some cases, institutions, you can do some things in parallel, where you can actually start testing and then you transition over to that agreement. In other cases, those institutions will want you to have a connection to their electronic health care record, which takes a little bit of time to do because you need to build that connection between the institution and yourself. So I would have to say it really depends. I mean, typically, when you have kind of a handshake agreement and you're working through a contracting process that takes a little bit of time. And then it takes a little bit of time as well to build these into the system and also do all the in-service work because you're training individuals internally in regards to the logistics of getting the samples to your institutions. But I would say probably a few months. It's not a year project, but it's not a day project. So I would probably say somewhere in that neighborhood of a number of months.

That's very helpful. And also in the early stage ahead of PLA codes and so on, presumably, there will be sort of a little bit of a mixed bag in terms of pricing.

Yes, absolutely, it will be. So each one of those categories that I showed, one is Medicare, one's private insurance and one's contracting. Each one of those will typically have a different -- they will have the same price point. But what you receive from a reimbursement perspective is a bit different, absolutely. And we factored all of that into our modeling internally, but you're exactly right. Once we have the PLA code. Then there is really something to almost index off of for others because that becomes very public information. But at the beginning, when we use a universal chemistry code, that that's not something that's published. We're using a universal chemistry code. We're negotiating with Medicare in regards to the pricing of that. But once we're able to establish a PLA code, prices tend to kind of converge close to that price point. But you're exactly right at the beginning. Depending on the channel that we build our business in will be a different price point. And that's, of course, one of the things why we're so interested in client bill is because as we sign these client bill contracts, it gives us certainty in regards to what we're going to get paid and the time frame in getting paid because that's the other piece is that depending on the channel, you get paid at different times. So there's some deep thinking -- when it goes into the strategy in regards to how do you actually get paid an appropriate amount at the beginning? And how do you build a business for sustainable growth and making sure that you can get paid for a long term?

Yes. And a clarification also, you were talking about and bringing about the ambition to secure direct billing. Is that mainly related to time to actually build and cash flow? Or is it also related to the logistic of clinical treatment...

Yes. So I apologize a little bit in respect to -- there's a lot of -- unfortunately, there's a number of ways to say the same thing here. Direct bill is the same as client bill. And so it's the same thing as we receive a sample from an institution and instead of us building an insurance company, whether that be public or private, whether it be Medicare or whether it be a private insurance. We bill the institution that sent us the sample and then they pay us within the standard terms ever we agreed to at a particular price. And the probability of payment from those institutions is 99%. It's unlike other channels.

And what about the prospects of -- you mentioned that the ambition is to secure PLA codes '24, and you will presumably approach Medicare earlier than that? And what's the prospects of actually getting clinical use from Medicare in terms of the sort of other coats, hybrid codes... Already late '23. Sorry.

Yes. So the real benefit with public insurance is that the process is very well defined. And what we're able to do is we're able to use an existing code that's in the marketplace today. It's a universal chemistry code is the code that we will use. So as we receive Medicare samples, we'll be able to bill for that code. Now there's a process in regards to getting a PLA code and there's a process that starts -- it's kind of a once-a-year process that starts. Ironically, that process starts at the beginning of April, and we are completely set to be able to submit our application in time at the beginning of April to start that PLA code process. If we had waited until June, we would have to wait all the way back until the beginning of April. So some of this, we've been very strategic in making absolutely certain that the lab that we receive, the CLIA certificate that we received the first samples in that we had all the appropriate people in place so that we could do the submission for the PLA code, and that happens prior to April 6. And then when you're in -- once you do the submission on April 6, there's a standard calendar of events that happens. And there's 2 things that happen simultaneously. One is working with the AMA to get the PLA code. The other is working with CMS and there's 2 potential -- there's 2 ways to be able to get payment on this. One is called a crosswalk and one is called a gap fill and we will walk through that process with CMS to negotiate the price for DiviTum. So we feel that we have a very good plan in place. We feel that there are good predicate devices in the marketplace that we can point to. So I think from that -- and we have the right people in the organization to be successful doing this.

And should we expect some clinical use based on CPT codes already late '23 ahead of the PLA code.

Absolutely. We will receive all the samples that come in, if they're Medicare samples, we will submit those through Medicare with the Universal code, absolutely. And we actually do the submission. It's not been through Medicare. It's actually through an organization called Noridian, which is a Medicare administrative contractor. That's how Medicare works and we have a -- we have a dialogue going with them. So that's all part of it.

That's useful. And finally, you have extended the number of collaboration with pharma. And so I have 2 questions on that side. Do you expect these sort of collaborations to advance into a formal development partner chip already '23?

That's our ambition that we should at least do that within the fiscal year of '23 '24. We haven't named it as a milestone because we are bit depend on external factors, but a little bit as a number scheme. We have now a portfolio of several collaborations and we expect to at least get one of them into the next level, you can say, which is a co-development project, and we hope to come back with that as well. But yes, that's definitely our ambition.

Interesting. And these activities are clearly generating some sales and test demand already now? And what can we expect in terms of scaling up 23%, 24%? Is it something like...

You can see enough. Currently, we have mostly -- we sell kits or we perform it as an analysis services for our partners. And a lot of the partners are based in the U.S. So having the CLIA lab in San Diego offers an opportunity to more easier provide them with the service. We also provide them with advisory services. The next level, when you enter a collaboration project, then it becomes more strictly a development service project. So -- and we'll have a decent profit margin in that as well. So we'll have a service that would result in a bundled project, you could say with -- for us, a new diagnostic test and the pharma company, new drug. And the real potential upside, of course, is when the 2 are launched together. It's a similar business model that we will -- that we have with DiviTum when we launch it now for clinical use with the benefit, of course, that the pharma partner will invest in marketing activities, which will drive uptake. So it's a really attractive business model. And I think the work that we have done so far with the clinical documentation, the 510(k), the Salesforce and lab all qualifies us. It's like trying ticket to play sort of to be part of those discussions. And within this field, just as Warren pointed out, with the management of care we have with the management managed care, we have people that has great experience and successful of getting things into Medicare. We also, within the CD competitor diagnostics field, we have people that has that experience as well. So that is very comforting, and it's very inspiring to see the progress we're making there as well.

Excellent. And finally, Europe, it seems like you're in a rather advanced stage of securing a partner or a commercial partner for Europe -- should we expect some contract signing contribution? Or is it something to be seen?

Yes. The partner discussions there are in the late phase. So you can expect it to happen very soon. And there's a dependency of course. The U.S. team has developed a lot of assets for launching this type of product. These assets, we will be able to reuse when we launch the product on the European markets. So there's a dependency and we, of course, don't want to develop the same material and make the same rather big investment twice. So this is why we're doing it in sequence, but you can expect it to happen really soon and also that we will benefit a lot from all the work that we have done in the U.S. that we can put in the hands of our European partners to accelerate their go-to-market efforts. Thank you very much for listening today. Once again, sorry for the inconvenient equated move just a day forward. However, I see that we have a lot of attendees and we've got a lot of good questions. So we appreciate that. And I just wanted to say thank you and wish you a great weekend. Thank you.