CelLBxHealth plc (CLBX.L) Earnings Call Transcript & Summary

Good morning, everybody, and welcome to ANGLE's interim results for the 6 months to 30th of June 2022. This has been a breakthrough half year for the company. We secured the first ever FDA clearance for a product to harvest cancer cells for subsequent analysis. And that followed a long-term effort over many years. So it was a tremendous outcome for us this half year. And we're now moving ahead fast with the commercialization of Parsortix to transform cancer care. Cancer, of course, is a growing problem. No 2 cancers are the same and cancers change over time. So doctors need repeat biopsies to guide treatment but tissue biopsies cannot be repeated. And ANGLE has achieved a world breakthrough with the first-ever FDA product clearance to allow a repeat biopsy of intact living cancer cells from a simple blood test. This half year has delivered key progress, the FDA clearance, the establishment of a new high-growth Pharma Services business and the deal with the largest urology clinics chain in United States to progress prostate cancer. Momentum has continued into H2 with a capital raise to strengthen our financial position. The release of a new low-cost way to utilize Parsortix in the pathology laboratories known as Pap staining, which I'll explain a bit more later, and the announcement today are quite frankly superb results in ovarian cancer. Financially, the company's cash position is solid. At the period end 30th of June, we had GBP 20 million in cash. We had GBP 4.5 million, due interest from R&D tax credits now received. And in July, we raised a further GBP 18.9 million net, giving us over GBP 40 million at that point to provide us cash runway through to the mid-2024 time frame. In terms of our financial results, obviously, the cash position is the key point. Revenue is still at an establishment stage and this period predated the FDA. Nevertheless, we saw a 40% increase in the period-on-period revenues. Our margins dipped slightly to 62%, so still well over 60% as we purposefully entered into some joint development contracts in relation to our bespoke assay development. And the beauty of that is we're making money whilst at the same time building out new assays to add to our menu. Commercialization is the key to success and that is where all our efforts are being focused. We're executing a clear and well-developed commercialization plan, which is targeting the adoption of our system across the entire industry and leveraging that industry to achieve success. We have 3 key business areas: number 1, Pharma Services. This is working with large-scale pharmaceutical companies and biopharma companies to support them in clinical trials. The great thing about this business is that every element, every step of this business is paid for by the pharma or biopharma company. They pay us to undertake clinical trials for them. And then, ultimately, our aim is they will bring forward Parsortix as companion diagnostics to support their drugs and become the customer. Every element of that commercialization is a fully funded business model paid for by the pharma. The second element of our business model is the MedTech partnerships. Because we have such a good system for recovering the sample for analysis, it makes absolute sense for us to work with those companies that already have diagnostic procedures for analyzing the sample. We can provide them the opportunity to repeat testing with patients, because they can only get 1 tissue biopsy. But if they work with ANGLE, they can use the Parsortix system to get repeat samples from blood for analysis with their systems. And this is a great opportunity for ANGLE to leverage the sales channels of the big players in this market. We want to partner with all of the leading diagnostic companies around the world. And I'm pleased to say that our discussions in relation to this part of our business model have accelerated significantly since FDA clearance, both in terms of the detailed discussions and the number of parties that we're in discussions with. The third part of our business model is the product business. This is us directly selling our Parsortix system as a product to customers. Up until the FDA clearance that has been focused on translational researchers who use it to do investigative research into cancer. Now of course, we're expanding that into clinical use as well, having got the FDA clearance. And critically, one of the things that we're doing is extending our sales and distribution capability. I will explain that in more detail. Sorry, I missed out on a critical part of this slide. There are multiple drivers and factors affecting success here that we're focused on. There really are 5 key points needed for success. The first one is to get regulatory clearance. We've achieved that with the FDA clearance and with the European CE Mark. The second one is to demonstrate the value of analyzing this sample. And we've achieved that with our ovarian cancer results announced today in a very difficult to diagnose cancer. The third one is to have clinical laboratories, of which we set up 2; one in the United States and one in Europe to act as accelerators and demonstrators. The fourth one is to do product development to show ways that you can use these cancer cells to benefit patients. And we're actively promoting various different products, which I will describe shortly. And the fifth and final one is to obtain reimbursement codes. That is to get insurance companies and others who are funding health care to accept that they should pay for such a test. And we've appointed a leading consulting firm in this area to drive forward our efforts to secure reimbursement codes for Parsortix. So the FDA clearance is well understood as being the gold standard. We were very, very pleased with the form of clearance that we got from the FDA, which was as an enabling platform. So FDA has not limited the uses of these cells once they've been recovered. That's an unusual platform clearance and it gives us the best possible basis for commercialization. Just to restate the obvious point, no other company in the world has achieved a success. And not only that, we're not aware of any company that's even started engaging with the FDA to secure this in any sensible fashion and it took us 6.5 years. Since we've achieved this FDA product clearance, we've seen the first mover advantage coming through quite strongly. So we've had great interest from third parties, MedTech companies, pharmaceutical companies and even government. And we're particularly pleased by discussions that we're having with large MedTech companies, where there seems to be an increased sense of urgency to move forward with us. Our aim is to enable the entire industry. We don't want to remain a small company owning the technology. We want this technology in the hands of everybody. Our Pharmaceutical business is our near-term major business opportunity. We successfully established this business over the last 12 months from a standing start. We offer something that pharma companies cannot get otherwise, which is the ability to do multiple tests on patients during their drug trials, assessing patient condition before they have the drug, during the time when they have the drug and then afterwards and sometimes multiple time points afterwards. We successfully secured the first 4 significant customers for that business. One of them is a large-scale company with $1 billion revenue line and multiple different products. We signed the first contract with them worth $1.3 million targeted revenues to ANGLE. They have already -- despite the fact that it's still running, they've already signed us up for a second contract worth up to $1.2 million. And that is just a single customer and they have numerous other projects that they can play us into. We've also developed a new aspect to the Pharma Services business, again, which they cannot get elsewhere, which is what we call bespoke assay development. And this means that the pharma can define their targets that they're looking for on the cancer cell. We can work to develop an assay paid for by them in terms of development, which we can use to look for that target. So if it's an immune checkpoint inhibitor targeting, for example, the protein PD-L1, we've developed an assay that can look for PD-L1 on cancer cells. It can tell you how many cancer cells are present in the patient's blood and do they express the target. The first customer that bought into that has asked us to work on some proteins relating to DNA damage repair. And I'm delighted to say today that we've successfully completed the assay development phase, meeting their requirements. And so the great thing about assay development is that the customer will then have to use it in their trials. They don't have an alternative supplier with that. So we're giving them something that meets their requirements precisely. And our pipeline in Pharmaceutical Services has grown significantly since FDA clearance. We now have over 20 new customers in discussions with us, majority of which are looking for the bespoke assay development. So the bespoke assay development, maybe make us $100,000 or so in terms of that assay development paid for research and development. So this is also a very clever way of deploying our R&D activity and turning it from being an overhead into being a profit-generating asset. But once they've done that, we're likely to get several millions of dollars of revenues relating to the clinical trials application of that bespoke assay. And ultimately, if it gets all the way through to the market, that bespoke assay may well become a companion diagnostic used to test patients to assess whether they should be given the drug. So this is a whole flow-through methodology, whereby third parties, large third parties pay for development of assays, which will make ANGLE shareholders a great deal of money in the future. And of the 20 customers that we're in discussions with, there's a whole range of different types of customers. As I said, most are interested in bespoke assays. These include 3 household name pharma companies that we're in discussions with. So we're hopeful that some of them will come through. So the Pharma Services business is a very attractive, high-growth, high-margin business, in which ANGLE is uniquely positioned. The scale of that opportunity is illustrated by this slide. This just takes data from the clinical trials clinicaltrials.gov website of the number of studies that are in process at the moment. So what you can see in the first column there, for example, breast cancer. There are over 950 clinical trial studies in progress according to clinicaltrials.gov, recruiting 247,000 patients. Now if you think about minimum of 3 time points for every patient and a charge per blood sample of $1,000 and potentially more if we do detailed molecular analysis, that's a very large market. We estimate with just these 4 cancers and we're not limiting our activity to these 4 cancers. The market opportunity is over $2 billion. So we're very, very well positioned in offering something that the pharma can't get: longitudinal monitoring before, during and after in a large-scale market opportunity. In terms of our product business, we're ramping up our sales and distribution efforts to sell the Parsortix product and consumables associated with it. And we're doing that by building out sales and distribution channels with distributors who are expert in oncology and can provide engineering service and maintenance support to the product. So we're seeking -- and this is a core underlying theme of everything that ANGLE is doing. We're seeking to leverage third parties to get maximum impact. And as you can see from the chart, we've already got discussions going in a very widespread geographical area, way outside anything that we could cover ourselves with a direct sales force. And these distributors are being tasked to sell the Parsortix system into clinical labs. These have to be fairly -- at this point, they have to be fairly advanced clinical labs, who are able to do laboratory developed test development. In other words, they take the Parsortix system. They get the best sample out of that and then they work out what to do with it themselves. They're also going to -- these distributors are also going to sell a range of new ANGLE products that are being developed down the same channel. And I'll tell you a little bit about some of the products that are under development. The first one is the one I mentioned at the beginning, Pap staining. We've already announced that we've launched this. And what it is, it's a really super simple methodology, where we take established Pap staining approaches, which is used for dealing with cervical smears. And we basically deploy that on to the cancer cells. So it's a simple way for the pathologist to look at the cancer cells. And that was launched at the American Society for Clinical Pathology Meeting. So that one has already been launched. We've got 3 other immunofluorescent assays, which is using a technique for staining the cells for particular facets. The first one is a sort of standard offering, Portrait+, which enables the user to identify and look at different types of cancer cells and thereby they can enumerate those cells at different time points. The second one is Portrait+ PD-L1, which adds on top of the standard assay, the ability to look from PD-L1 immune checkpoint inhibitor. The third one is the Portrait+ DNA damage that I mentioned that we've developed for customers. So again, just to clarify that, the customer paid for this because they wanted it, but the terms of the agreement are that we own it thereafter. So we're now offering it to other customers. And it's a very good way of building out our menu funded by third parties. And then the final area, which is under development, is called Landscape+ and that's focused on molecular solutions. And the key thing here is that we're working to provide the ability for our customers to measure DNA and RNA cancer gene panels on the cancer cells that come out of the Parsortix. That is one to watch out for. We're working very hard on getting that in place. And once we have it, we believe it will be extremely attractive to our pharma customers, which will increase the level of engagement from pharma and also significantly increase the pricing that we can charge pharma, because it's very well established that they will pay a lot of money for molecular assays. We also think it will be a trigger for the expansion of clinical sales of the product because it is what our customer base actually wants to do is the molecular analysis. I've said most of the things here about this Pap staining solution. You can see the examples of some of these very rogue-looking cancer cells that are found in patient blood using Parsortix. Just a reminder, these cells are very, very rare. There may be one cancer cell in 1 billion blood cells. And so you can't just look at them without being able to concentrate them using the Parsortix first. So the Pap staining is a way of taking the output of Parsortix very simply at low-cost staining it in a manner that the pathologists are very, very familiar with. That's a standard approach for cervical smears. And then, they can look at it underneath the microscope. Now we see the Pap staining approach because it's low cost and it's very easy to do as a Trojan horse to get our system into the labs. Many companies come up with new ways of doing things. And they hit resistance and conservatism from incumbents in the clinical world because they don't like changing what they're doing and pathologists certainly don't like being told that they're now obsolete. We're doing the exact opposite. We're giving the pathologists more power, more important things that they can do and they can repeat their testing. And that's why we see it as a very important Trojan horse in the way that we go forward. So I said at the outset that clinical studies to demonstrate the value of this best sample coming out of Parsortix is absolutely critical. And that is why I'm absolutely delighted with the ovarian cancer results that have been announced today. These are best-in-class results. They outperform every other technology both in the market and under development that we're aware of very significantly. And they have the potential to reduce the false positives, which is a massive problem in all kinds of cancer diagnosis. False positives mean overtreatment, anxiety for the patient and other problems. You do not want false positives. And in ovarian cancer, the false-positive rate is very high, up to 80% of positives are false positives. So we've shown in the direct matched pairs samples, so the exact same patients, we showed that we could reduce the false positives by over 50% and also reduce the false negatives by 50%. So I see this as a massive demonstration of the power of the best sample coming from Parsortix. It's the exact opposite of GIGO. We talk about GIGO, garbage in equals garbage out. If you start with a bad sample, you're not going to get a good result. Alternative assays start with something called CA-125. It's a free-floating protein in the blood of patients. And it is absolutely true that the CA-125 gets upregulated for patients with ovarian cancer. But the problem is it also gets upregulated for other things as well. So it doesn't matter how well you measure it, it is a bad input. It is garbage in, so you get garbage out. If you start with a good sample, in fact, the best sample, which is living in-tact cancer cells coming from the patient blood in real time, then you have a good chance to do something good. And that's why we think that this is an important exemplar. We've taken an extremely difficult cancer, ovarian cancer, very well known as being difficult to diagnose, cannot do tissue biopsy on it because it's invasive. Once you start doing a tissue biopsy you might as well do surgery. We've done it in a real-world population. So this is not some fake study like you see all the time in the Daily Mail of, "Oh, we had some healthies and we had some cancers and we could detect them." This is a real-world sample. Every single patient of 144 patients had an abnormal pelvic mass, not one of them was healthy. They all have to have surgery. The question is, did they have cancer or did they not have cancer? Because if they had cancer, they needed to be treated differently with a different surgeon. And then may be needed a neoadjuvant chemotherapy. And we showed even in that very difficult to diagnose cancer with all the patients being sick, we could discriminate between those who had a pelvic mass, which was benign, and those who had a pelvic mass, which was malignant despite them having broadly the same symptoms. So we see that as a very, very important exemplar of the strength of the Parsortix best sample. We also see it as a very good example of the strength of molecular analysis because we use molecular analysis to assess the presence of these cancer cells of the Parsortix harvest. And therefore, has a very wide read across to multiple different cancers and multiple different applications. And I'd just reemphasize this is real-world data and it far outperforms other things coming out from other places. So we're delighted with the ovarian cancer results announced today. We're moving forward. We started with breast. We've now got ovarian, and we're moving into prostate. And during the half year, we cut a deal with the biggest chain of urology clinics in United States called Solaris. And these folks want a test using Parsortix in order to help their patients assess whether they have prostate cancer via a simple blood test and secondly, to assess whether it's clinically significant. And they have over 700,000 patients every year who would like such a test. So I think this is a smart commercial approach by ANGLE. We've started with the commercialization before we do the study in this case. We have a partner that wants to deploy the test. They want to market this to their patients. And they're also going to help us fast track the prostate cancer studies, clinical studies that we're doing because they have access to a lot of patients. So we're very, very pleased with that and it opens up the potential for a very large market. And we're on track to complete the necessary studies for that by the end of next year. So I'm going to get to the sort of summary position now. We are very focused on near-term strategic and commercial imperatives. We're making strong progress and key milestones are being delivered. And we've launched our FDA cleared and CE Mark system in United States and the rest of the world, and we're working to secure leading reference with clinical laboratories as referenced customers. Our Pharma Services business is now well established and it's growing out with additional customers and repeat business from the existing customers. The corporate partnership, corporate deals for MedTech companies, pharma clinical labs, we have numerous discussions ongoing. And we're hopeful that they're going to move forward rapidly in the future. And we're working to secure the accreditation of our 2 clinical labs, which are branded now as Onc-ADaPT Laboratories. And we've got beyond that. We've got a plan -- a 4-point plan to deliver future growth. The first one is building out that distributor network that I mentioned as a channel for our products. And the second one is to finalize the different products that I identified as content to put down that channel. And the third one is to complete additional clinical studies, next lot being in prostate cancer to demonstrate the utility of what we have to offer and prove out the value of the best sample coming from Parsortix. It's worth noting as a sub bullet there that we don't have to rely just on ANGLE to fund these important clinical studies. We know of multiple studies being funded by third-party clinical labs because they want to see the benefit of using Parsortix. And 2 notable ones are the Lianidou Lab in Europe, which is working on a PD-L1 immunotherapy study. So there was an active study right now working with cancer patients, measuring using Parsortix as the front end, the PD-L1 status of patients and assessing whether they respond to immunotherapies, totally funded by one of our customers. But if that -- and that's due to read out somewhere around the end of this year. The outcome is very positive. It's a massive uptick for ANGLE and it's cost us nothing. That's what I mean about a leverage strategy. We want the industry to adopt and take this forward. We're trying to do the early work to get things moving, but then others need to pick up the pattern and run with it. And similarly, The Aceto Lab in Switzerland. They're working on the cluster buster drugs, which were identified as the ability to disaggregate circulating tumor cell clusters identified by Parsortix. So it's fundamentally dependent on Parsortix. And they are running the first in-person trials for these cluster buster drugs in breast cancer, again, expected to read out around the end of the year or beginning of next year. And we have a major read across to ANGLE, fully funded by third parties, not by ANGLE. And the fourth key factor here is getting payment for these services. So you need to get the health companies and insurance companies behind the payment for the use of Parsortix. So we're working on that as well, and we've appointed consultants to help drive that forward. So to summarize, despite challenging stock markets, ANGLE is very well funded and is in a strong position to drive forward our commercialization. And we've got first mover in a very large market. We're the only FDA clearance being a breakthrough. And we are now in a position to capitalize on this strength with multiple corporate partnerships, with leading MedTech and pharma companies in discussion. Our pharma business is beginning to accelerate now, and we believe that we're in a very strong place. This is all driven by the fact that we have a product-led solution. Because we have a product, we can sell it to third parties. We're not dependent on doing everything ourselves. We're enabling the industry to go forward. We've got multiple potential catalysts over the coming months. We see this is very exciting times as momentum is building within the company. So thank you, everybody, for your attention. I'm going to go and sit down and look forward to taking questions from the analysts. Thank you. Who wants to go first? And I should say that Ian Griffiths, the CFO, is with me and you'll probably hear him speak next.

Thanks a lot for the presentation, Andrew. So first of all, on the [ ability ] strategy for ovarian cancer testing, could you please remind us the steps required and expected time line on each to start offering this to gynecologists, let's say, or hospitals?

Yes, I can. So there's, multiple different commercialization routes for the ovarian cancer assay. We are still doing actually some further analysis of samples and some further statistical analysis, which may strengthen the results further. We can consider offering the ability to run this test to a third-party clinical lab. We can also install it in our clinical lab. And we could find a cancer center a bit like Solaris in prostate cancer to offer it to their patients. We could also work with a downstream partner who might want to promote this. And we can also consider whether we want to have a service-led approach or a product-led approach. So there's a number of factors. Now that we've got these excellent results, we're considering those, and we're expecting that -- we're working on the detailed plan for commercialization. We're expecting to be able to essentially announce those plans by the end of the year at the latest.

Very clear. And one of your MedTech partnerships for downstream analysis post extraction using Parsortix. So I mean now that you've been through several more discussions here with potential partners, could you give us some color on what the economics of such partnership would look like? And also filling off, what would be the first few steps after you announce these partnerships?

Yes. I can tell you what our target is. I can't tell you exactly what we're in discussions about. But our target is to engage with a very large company or companies that have downstream capability to analyze the cells to explain to them the opportunity to get repeat revenues from their existing installed base. So at the moment, they can only do one test for each patient because you can only do a tissue biopsy once. But now with Parsortix, they could do repeat. So maybe 3 or 4 additional tests and then agree to run necessary studies to demonstrate clinical evidence and then potentially go and get an FDA clearance for the combined product and then offer it via the sales and distribution channel of the partner. In terms of the commercial basis, we are expecting the partner to get access to sell the combined products, and we will be paid for provision of the Parsortix consumables and the Parsortix instruments. But in exchange for that, we expect them to pay the development process. So we expect them to fund the clinical studies and fund other aspects. Now this commercialization approach is a very important part of our strategy because it then makes it very similar to pharma, where the MedTech Company is paying the cost of development and we benefit at the end. This is an opportunity we can do because we have a product, not a centralized lab with a service. And we expect to use it to drive forward commercialization at third-party cost.

And that's critical for us because we don't want to build a massive product sales teams. We want to leverage existing sales teams where they are now. And as Andrew mentioned, they're doing a solid tissue analysis already. We're able to expand the MedTech or pharma market and those repeat tests. But we still use their sales and distribution channel. So that's a win-win for both of us.

Great. And last one on the Landscape, NGS panels. Is it just you investing in creating these panels or is it your provider of the sequencing platform as well, helping you develop that? And what is the time line of an estimate on when you're planning to sort of take this in the market?

So we've developed a very innovative ovarian cancer panel in-house. Now going forward, what we have is multiple conversations with third-party companies who have already developed panels. Often, they develop these panels either for tissue or for circulating tumor DNA. And so what we're doing is we're engaging with them and working to collaborate to show that those same panels or may be slightly modified could be used with Parsortix. And the great thing about that is it's all about leverage. So where there are customers who bought NGS systems, they spent millions already. They want to run these cancer gene panels. But they're stuck where do they get the sample from? They get tissue. They maybe do CT DNA, but then they can't get their RNA, they can't get actual cells. So if they partner with us and sell Parsortix, then their customers can do repeat tests on their equipment.

Well, the other key thing as well is with us is they can do both DNA and RNA.

You've mentioned and clearly so the multiple commercial streams that you have available to you. Can I ask, some of them seem to have a shorter lead time, others are longer lead time. Can you give us a feel for how these revenues will land over, say, the next 2, 3, 5, 10 years?

Sure. So as Andrew mentioned, with the LDT and FDA-cleared product type of things, you've got to go through a process of getting a reimbursement code. So initially, you'd have a soft launch with private pay, the revenues would be very modest before you've got the reimbursement code in place that then allows those revenues to build. And that's why we've got the focus on the nearer-term revenue opportunities as well. So we kind of run these in parallel, but recognizing that clinical sales has got a longer time line to get the revenues then. The focus is therefore very strongly on the nearer term as well. So that is then the existing translational research sales. So that's just need to fill that business. Obviously, the FDA cleared product gives us credibility. So we're seeing with tenders on the criteria, we're in a much stronger position, higher conversion rate. Also, we don't have to go for the sort of longer evaluation period that we did with the earlier sales. So we see that side of things accelerate. But the critical bit that we've been building into is the Pharma Services. And that's one where, obviously, the pharma do have money. You don't need to go through the reimbursement. You'll negotiate with them directly. Depending on what type of analysis is being done, those tests are typically between $1,000 and $2,000, which is in a clinical trial setting $1,000 to $2,000 per sample process. And most of these clinical trials are going to have multiple time points that might be sort of free before drawing and after or up to 7 we've got in some existing client samples over a multiyear project. So once we start building out pharma, it also gives us that medium term visibility. And it's very much in the pharma, it's the -- both the assay development and the clinical trials. And as Andrew mentioned, the assay development is the early stage where we're very strongly differentiated the smaller contracts to start with building that up. It's the discussions with the large MedTech companies doing paid development work to join Parsortix with their downstream analysis. Again, that's nearer term revenue. And the other bit that the FDA clearance has allowed us to do is about placing the PC1 to places worthy about and getting the PC1 sold into the different parts in the world by engaging with the distributors who are able to now place PC1 directly into hospitals, oncology labs and so forth. And that's why we're taking that approach. They are the 3 near ones. And as Andrew said as we're running the clinical side of things, the LDT and the FDA out of this, that those revenues will kick in later.

Let me pick up on one of your points. You say each test will cost around $1,000. How much of that would actually attribute to yourselves?

Okay. So it will vary. The margins for us will be between 60% and 95%. But at the moment, we don't have an in-house NGS capability. So we have to send that out if it's being done. And obviously, we're giving up some of the margin that pushes us to the lower side. We'll have a higher value test towards the $2,000 because it evolves NGS. But we get a lower margin on it because we're not doing it all in-house, where some of the other things, if it's a PCR-based test, we've got that in-house. If it's immunostaining, we've got that in-house. And so we can get a higher margin, but the test value is probably going to be lower just looking at specific smaller number of genes. So it will vary between the 2. So we -- it'd be a case-by-case basis on what's the appropriate margin.

Just following on slightly from that last point. In terms of the Pharma Services and the client-led development process, would you expect to see the same kind of pricing model for assays sold that are developed by that route...

I can't quite hear you. I'm sorry.

Is this any better? There we go, great. So in terms of the Pharma Services led development model, would you expect to see the same kind of pricing as LDTs or would that be more royalty based?

So the -- I can answer that. So the LDTs will be priced based on the value to the market. And you can add as well in. But the ovarian, there's a less good test that's currently reimbursed at $897. So that gives you a bit of an indication on that. Do you want to add to that?

Yes. And what we've seen is that some of the existing CT DNA panels, it's more typical in the region of $3,000 to $5,000 is the reimbursement code. Obviously, they're looking at a lot more information. When you're looking at a smaller number of genes or [ zero ] mark, whatever it tends to be and the lower side on the reimbursement. What we have to do, and this is, again, back to the point of getting the reimbursement codes takes time before you get the payment on there. We have to make the healthy economics case to justify what is an appropriate reimbursement code. And that's, as I said, with a more accurate test, you can justify a higher level of reimbursement. And also there's other features that we've done so with the ovarian and what we're seeing in current treatments moving more to a neoadjuvant side of it as well. And because of the data we're getting, we can help guide the oncologists on what is the appropriate treatment there as well. Again, that leads to higher value. So we have to go through that process of making the argument of what is appropriate reimbursement code. The other thing is, as I said, what we're tending to see is that they're in that range more of the $3,000 to $5,000 if it's panel. They're sort of at the $1,000 to $2,000 if it's a low number of genes. We have seen some exceptionally high ones at $7,500 is the highest one I've seen, but that's very unusual.

And there's also a read across, by the way, in the metastatic breast area where we've got an FDA clearance. It's in the national counter guidelines in the United States that a patient should have a tissue biopsy of the metastatic site. So this is the secondary site. And that's not possible in a lot of cases because patients are too sick or the tumor is inaccessible. But where it is possible, the average cost of the surgery involved is $16,000 and we're offering a blood test alternative. So clearly, that is a very good read across for health economic argument.

That's $16,000 for the biopsy surgery?

$16,000 for the biopsy of the -- liver or lung or whatever.

Yes, that's an average price, obviously, with multiple mix.

Fair enough. So will you be aiming for gap fill in this case for the pricing codes for your LDTs? Is this -- would you be aiming for gap fill then in that case in terms of your pricing codes? Is that for all the LDTs or it'd be a mix depending on what's available?

That's under consideration at the moment. Probably what we're going to go for is a CPT Cat 1 code. But it's not yet clear and now we've got experts working on that at the moment. And I should say the reason it's not clear is it's just like the -- [ there are no ] FDA clearance. It's the first time anyone has done this, so different approach.

And just on the -- you've talked about the product development being a pillar of third-party funded and then retaining the IP on the bespoke assay analysis you talked about. Is that the same situation there? Or is the big pharma going to want to keep the IP on that?

There's lots of different downstream techniques. So the methodology that we use for the ovarian cancer is an in-house proprietary molecular platform where we've got patents across the world. We are, however, very, very keen to use industry standard downstream techniques. So for example, Illumina is extremely well-established sequencing platform. We can run our Parsortix sample on Illumina easily. It's much easier to get adoption. And obviously, Illumina make all the money from the Illumina side, but we will make the money from the Parsortix side. So that's the way we think about it. We don't need to own everything. The Pap staining, it offers, all industry standards, not -- there's no intellectual property on that. The immunofluorescence assay that we're bringing out, however, we are going to have reagent kits. We're working on, for example, lyophilization of the reagent so that they will be shipped in powder form rather than as liquids. We've done the optimization. We have the secret source recipe of the best way to combine the antibodies. So there is -- and we've also got a methodology for getting the cells called a harbor slide, getting the cells down on to a microscope side, which is also an additional intellectual property area where we've launched patents. So where it makes sense to do, do it. We are going out for additional intellectual property and building out our barriers to entry from that point of view. But equally, we do want to use standard downstream platforms.

Yes, I was going to probably add one other thing is on the assay development side of things. We're taking sort of a co-development approach with a lot of companies. So they get a sort of a cheaper initial development price. But we also then have the know-how and associated IP that we can add that to our menu. That makes our offering more attractive to other pharma customers as we build out that menu.

Yes, that's specifically for the pharma bespoke assay development. So they own their data, but we own all the methodology and we're allowed to use it. Specifically, we're allowed to use it for other customers as widely as we want. Okay. That's been a very helpful discussion. And thank you very much for everybody's attendance. Good day.