Insight Genetics, Inc. (IMDX) Earnings Call Transcript & Summary

Greetings. Welcome to the OncoCyte conference call to discuss the agreement to acquire Insight Genetics. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Ronnie Andrews, Chief Executive Officer. Mr. Andrews, you may begin.

Yes. Bob, you need to go first.

Yes. Why don't I start? Why don't I start? It's Bob Yedid from LifeSci Advisors. And before Ronnie starts, and I hate to cut him off there, we're just going to read some forward-looking statement. And thank you, operator, and thanks, everyone, for joining us for today's conference call to discuss the definitive agreement to acquire Insight Genetics. If you have not seen today's press release, please visit OncoCyte's website at www.oncocyte.com. In addition, there will be slides that will accompany this conference call and as well as the webcast and that slides are on the presentation -- on the -- sorry, on the website. Before turning the call over to Ronnie, OncoCyte's President and Chief Executive Officer, I'd like to remind you that during this conference call, the company will make projections and forward-looking statements regarding future events. Any statements that are not historical fact, including, but not limited to, statements that contain words such as will, believes, plans, anticipates, expects, estimates and similar expressions are forward-looking statements. In addition, there are specific forward-looking statements in today's press release that we urge you to read and review. We encourage you also to review the company's SEC filings, including, without limitation, the company's Forms 10-K and 10-Q, which identify the specific risk factors that may cause actual result or events to differ materially from those described in these forward-looking statements. Therefore, actual outcomes and results may differ materially from what is expressed or implied by these forward-looking statements. OncoCyte expressly disclaims any intent or obligation to update these forward-looking statements, except as otherwise may be required under applicable law. With those prepared remarks, it's my pleasure to turn the call over to Ronnie Andrews. Ronnie?

Thanks, Bob, and thanks, everyone, for joining us on a Friday afternoon. We're very appreciative of the time. We -- deals get done in our business, as you guys know, when deals get done, and we were happy to get this done heading into JPMorgan next week. And we realized that Friday afternoon is not always optimal, but it was the best time for us to get this news out. It's a very empowerful (sic) [ powerful ] deal for us, and I'm really excited to take you through it today, answer your questions, and obviously, free us and our business development teams to be in full form next week at JPMorgan. Bob is going to be driving the slides for me. So Bob, if you don't mind, going to Slide 2. So I think when you guys -- most of you guys know that when I got here in July, the vision was to not sit and become a one-test company, but to actually use our balance sheet, the expertise of our team that we inherited plus the new team we've added and then the knowledge and experience that our team brings to the industry, where we had either consulted for or have been working with, and looking at content companies in our space that have been developing powerful content that we believed was going to have profound impact on key critical decisions in lung cancer. And so our team went off-site in August and September, and we put together the sort of the mission or the vision you see here on this slide, and that is to build a global oncology content company and with an expanding portfolio, with ultimately, folks, the goal of owning all the key -- all the answers to all the critical questions that get asked in the initial phase of diagnosing, staging and selecting therapy for lung cancer. Today, there is no 1 company that does all of the key critical decision points. And certainly, now with the 2 pieces of proprietary capability that we'll have after we talk about today, today's assay -- I'm sorry, the Determa IO, we'll also be able to talk a little bit more in context of how it relates to the DetermaRx and how the 2 fit into our product portfolio. So with that, Bob, let's go to Slide 3, and let's sort of expand on the vision and how we're going to execute that. If you look at the current continuum of care for lung cancer, and this is true for most cancers, folks, but specifically, we believe we have a unique value proposition in lung. It was great to see the AMA data that we're starting to see a drop in deaths due to lung cancer. But if you look at that data closely, while the percentage looks great, the number of people that still die of this disease is way too many. And while the early screening protocols that are being put in place around the United States to screen high-risk smokers, we also want to see that expand to look at ways to get more incidental patients into the mix. So they also benefit from some of the opportunities of earlier detection and earlier treatment based on some drugs that are pretty profoundly impactful as we see. If you look at this continuum, and I've either drawn this in some of your offices or have at least talked to it at meetings, there's a continuum that includes the screening for disease, we identify the disease, and now I need to stratify it. Once it's stratified, then it is what drug do I give. And we have, as you can see, for this continuum, broken it into 3 buckets of information because these are the 3 buckets that a treating physician has to deal with when they encounter that intimate moment with a patient when they have to make a decision on how to treat. And then there is the, is the treatment working? And if it works, is it coming back, which I have bucketed for this slide as reflex testing. If you look down at the product pipeline, one of the things that we've talked about and one of the things you hear a lot about in our industry is liquid biopsy, liquid biopsy, liquid biopsy, and we certainly believe in that. Our DetermaDx product is a blood-based product. As you move upstream, our work in reflex testing and monitoring for therapeutic efficacy will also be in blood, but once we identify a tumor is there, what we've realized that is cfDNA and ctNA in blood doesn't really give you an early enough picture of what's happening to the patient versus the actual tissue field of injury itself. And so what we're going to talk about today is DetermaRx a little bit because the Rx test is the test that we are launching this month for patients with Stage I to IIa, who, today, get no further treatment other than surgery, and they typically do well. What we do know now from 10 years of study is that about 40% to 45% of those patients deemed cure show up in 2 to 3 years with metastatic disease, and about 51% of them are dead within 5 years. And so DetermaRx is the test that we will use in that stage as you subclassify to a Stage I to IIa to identify high-risk patients that need chemo. And our data from the peer-reviewed and prospective publications that have been out there now show that when our test identifies a high-risk patient and they get chemotherapy, they actually improve their 5-year response -- or 5-year life expectancy from 49% to 92%. So a real profound impact on early-stage. Well, what happens when -- and today, unfortunately, we see a lot more Stage IIb to IV patients because we catch lung cancers a little later in the cycle than we might some of the other solid tumors. And so the critical decision for the physician at that point is, is immune therapy, which we all read about are very, very excited about, is immune therapy, the right decision for this patient today? And if it is, I want to get them on immune therapy early. If it's not, then is there a target mutation, i.e., an EGFR mutation, a KRAS, EGFR, some of the mutations that we see across solid tumors, and obviously, in lung for adeno, it's mostly EGFR and Tarceva, but we want to also offer a panel that would look at the targeted drugs as well. Today, we're not going to talk about that one because that DetermaTx test is really an off-the-shelf test that's already been FDA cleared by Thermo Fisher. And so as we bring up our complementary -- or our complement of test, we want to offer one-stop shop across all these decision points. And so once we get through the clinical phases of IO, we would certainly then bring up the Tx test and validate it. So we are the one-stop shop for lung cancer physicians to have to go within 7 days, with less than 10 nanograms of extracted DNA and RNA, be able to deliver a full complement of data in a synoptic report that would allow physicians to make the most appropriate decision as early in the diagnostic cycle as possible. So I want to pause there because this is a very, very important point. So if we go to Slide 4, let's talk about Insight Genetics, and let's talk about what we're looking for as a company. Earlier in my tenure, back in August, when I had my first conference call, we put up a sort of a pathway to success for the company over the next 2 to 3 years. And you know there were 3 pathways. One was internal development of our immune repertoire-challenged technology, which we continue to invest in, and that is DetermaDx and will ultimately be the backbone for any monitoring world. We also talked about acquisition of content, and that was Razor, which is now DetermaRx. And today, we're talking about Insight Genetics. You can see the sort of the criteria that we had, the high degree of scientific confidence. You'll see that today. We wanted to be focused in clinical oncology, but certainly lung cancer out of the gate because that reduces the expense of having to have multiple sales forces calling on multiple decision points. We wanted the content to be reimbursable or in this place -- or in this case, reimbursable soon, but short term, have attraction to pharma, so we can get early revenues to finish out the development. Obviously, a high -- an area of high unmet clinical need. We're going to talk about that right now as we go into the lung cancer story. And then obviously, high margin. This is a 30-gene PCR, quantitative PCR test. So absolutely, it meets our COGS targets, and we believe will allow us -- because of the margins in PCR, will allow us to effectively launch a kit rest of world for the same decision point on one of the instruments of -- one of potential channel partners that we hope to announce in the near future. If you go to Slide 5, what we now have, if you look at differential diagnosis, and as physicians are trained, you guys know they're trained to go down a differential diagnosis algorithm to look at various tests and what information that gives us that leads us to what the next test is. And so if you look at this slide, in this diagram, you can see that our goal as OncoCyte, when I got here in July, was to hopefully within a year, own all of the critical decisions necessary to manage the decision of, "Is it a tumor or not? And if it is a tumor, what do I treat with?" We wanted to own those and have those in-house and moving forward within 12 months. And I'm blessed to say that we were able to pull that off within 6 months, thanks to the effort of an amazing team here, both on the business development side and on the science diligence side. And so we sit here today, I think, with an incredibly profound opportunity, especially as we look at the timing of our Determa IO test, which, if you look at the U.S. TAM, is about $2.2 billion in companion diagnostic sales to select patients for immune therapy, combined with another $400 million in potential just supporting pharma in their clinical trials. So if you go to the next slide, let's talk a little bit about Insight Genetics. They are quite a nice company that we've known for a number of years. The company started in 2007. They were early in the discovery of ALK and the importance of the ALK pathway in lung cancer. The founding CSO Dr. Stephan Morris, discovered the ALK gene and ultimately licensed the ALK gene. And through Insight, who developed the PCR kit, they licensed that to QIAGEN to use for lung cancer diagnostics globally. So they have an amazing history of developing high-impact diagnostics. Along the way, they moved into breast cancer, and they took out of the University of Vanderbilt, a 2,000-gene panel that they, through the years, has synthesized down into a 100-plus gene classifier for triple-negative breast cancer. Now we won't spend a lot of time today on triple-negative breast cancer, but this test, this IO arm that we'll talk about today for lung, actually was founded and developed in a trial for breast cancer, for triple-negative breast cancer. And for those of you that aren't familiar with the breast cancer world, there's ER-positive, PR-positive or HER2-positive tumors, all of which have a treatment protocol. If you are negative for all those, you are deemed to be triple negative, and there really is, today, or up until now, only 1 protocol, which has typically been neoadjuvant chemotherapy and then surgery and then follow-on chemotherapy and potential radiation. But as you know, that form of breast cancer is still very, very deadly. And so what they set out to do a number of years ago was to identify and subclassify what they believe triple negative to be, which was different cancers, not 1 big class as triple negative. And they successfully created a molecular subtyping assay that is currently active in a few trials around the world and has been published in many journals. Today, it's most noted for what they're doing in what we call the ARTEMIS trial, which is a large triple-negative prospective trial at the MD Anderson. And out of that work came a subtype or a subclass of triple-negative called the immune-modulated arm of the study. And in the immune-modulated arm, we were able to see or the researchers were able to see incredible response for a certain subset of patients that had the IM signature, which is the immune-modulated signature. There was almost 100% response for those patients in the early studies, and the mesenchymal cells, they were -- if they're positive for mesenchymal, they were negative for IM, and those patients had 0 response. And so that small study proliferated into more funding to develop out the immuno-oncology repertoire. So if we shift forward to Slide 7, what you'll see is that this couldn't come at a better time for us. And that is because, as you guys all know, most of you follow the industry. And for those of you that don't, we had high hopes that either PD-L1, which is an immunohistochemistry marker and mostly done in pathology but very subjective; and/or tissue mutational burden, which is a look at all the different mutations within a tumor, that 1 or both of those would be indicative of response and would become this companion diagnostic of choice for selecting people that will respond to immune therapy. Unfortunately, this summer at ASCO and then the subsequent fall at ESMO, we began to see papers coming out that TMB by itself does not really have a predictive area under the curve in terms of identifying pure responders. It's very prognostic in that if you have a lot of tumor -- mutations in your tumor, you're probably going to do well in some treatment, but what it doesn't tell you is which treatment. And so the opportunity right now in the industry is to deliver a score that is -- clearly separates responders from nonresponders. So if we go to Slide 8, what the team from Insight Genetics did is they begin to work with researchers around the United States and they found cohorts that allowed them to do comparative work against PD-L1 and against tumor mutational burden to look at the objective responses across the 3 different tests. And this study that you see on Slide 8 was presented at SITC in November and is the performance in non-small cell lung cancer. And if you look at the left, the box on the far left, you'll see that the IM score, which is our now, IM test, Determa IO. Determa IO had an incredible p-value of 0.001 across this sample set, and you can see a fairly linear movement from stable disease up to complete response. But clearly, significant separation between progressive disease and complete response. As opposed to PD-L1 staining, which had a p-value of 0.2, and then ultimately, TMB, which had a p-value of 0.99, which is almost -- as you guys know, p-value of 1.0 is basically flipping a coin to determine its impact. So the beauty of this test is, in these studies, it outperformed both PD-L1 and TMB in predicting responders as well as nonresponders, which is a very important nuance. Also this was run across 3 various drugs, Keytruda, Opdivo and then the new IMFINZI, which is the durvalumab from AstraZeneca. And if you look at that bullet point there, we had superior performance regardless of which drug was given. So we believe that our 30-gene IM score is indicative of response or nonresponse and has very clear fidelity when compared to all the other tests on the market. Also note, that unlike the tumor mutational burden, which is in the market today, which requires either a whole exome TMB or very, very large panel. Those very large panels typically require a significant amount of tumor to get 150 to 200 nanograms of RNA or DNA out of it. The beauty of this, because it's quantitative PCR, and we're only looking at 30 genes, we're able to meet a sample requirement of less than 10 nanograms of extracted RNA, which means that we believe the physician community, most importantly, the pathology community here will be really eager to work with us because unlike the TMB effort, which requires so much tumor and does not always leave them enough tumor to evaluate the pathology of the disease, our test will be a complement to what they do and will augment the effort that's already ongoing to identify and diagnose this disease. If you go to Slide 9, you can see that the Insight Genetics team with a very, very limited balance sheet, have been able to move the test into next phase studies, mostly with ARTEMIS trial at MD Anderson to look at other arms of interest as well. For instance, there is a TNBC arm for PARP inhibitors. We know that there is an indication for PARP in triple-negative as well as ovarian cancer. You guys follow that world as well, especially for the BRCA patients. And so there's a real opportunity to have something unique here. There's also the anti-AR, which also is something that we see in prostate cancer, which could be something that we can move beyond breast. And then of course, the IM and the M-scores, which are really responders and nonresponders to immune therapy. And so the real purpose of this slide is to say, while we, as OncoCyte, are very excited about the IO assay for lung cancer, we now own an asset that's going to be extremely powerful also in triple-negative breast cancer. So to answer the question that I'm sure is brewing is, "Well, does that mean you're going to go hire sales force for breast cancer?" And the answer there is that's not our expectations. Our expectations is we'll continue to work with MD Anderson. These trials will publish periodically through the coming year. As they published a couple of times that we hope in 2020 and into next year, our goal will be to work with one of the breast cancer molecular companies to see if there's interest in either being a commercial channel for us or adopting the test within their labs. So there is an outlet there that we believe could generate additional income to offset the investment that we've already made in this, but I believe that the future is bright for triple-negative breast cancer as well as what we're doing in lung. If you go to Slide 10, you can see a little more of the data and the Kaplan-Meier curve around TNBC type. There's already significant publications. I put this in here. So if you want to look these publications up, you can see that they've already done work on the various subtypes of patients and how they respond to both chemotherapy and taxane treatment, PARP as well as the IO and the AR antagonist. And so again, very excited about having not only the IO for lung, but certainly having another shot on goal in a different disease, even though we may not personally participate in the commercial execution, having it creates a value creation for the company as we bring it to market. So if we go to Slide 11, real quick, a little bit on Insight Genetics. Insight Genetics is a really well-suited acquisition for us for a couple of reasons. One, it gives us a fully functional pharma trial-ready lab today versus us having to build that out, get that inspected, get CAP certified and then encourage pharma to come and do their audits, their quality audits. So beauty for Insight for us in owning the Insight Genetics lab, which is in Nashville, Tennessee, is it not only gives us an East Coast presence. So we have East Coast, West Coast now to serve our customers along the Determa continuum. If you go to the next slide, Slide 12, you'll see that they have all the assays developed there are under a clinical and laboratory standards. They're ISO certified, which allows us to immediately take data from there, kit product and go CE market for a channel partner to take the test coming out of there and kit them. They were approved as a supplier for a major diagnostics company, QIAGEN. They also have been audited by ELI LILLY as well as a couple of other folks that we can't really use their name today because the deal will happen before we got their permission, but they have been working with a number of the top 10 and certainly many of the top 20 companies to be a lab for them. They -- as you can see, it incorporates 21 CFR 820 practices. What does all that mean? That means that from the FDA's perspective, that trials coming out of the Insight Genetics pharma lab meet and comply with their guidelines, so that if a dossier is submitted for a new drug application using a CDx from our lab, we will be able to file a subsequent PMA for the drug product. So we believe that this gives us an immediate place to take the IRENE cohort network that we have, which is our over 60 sites we have in our clinical trial network that we announced earlier in the fall, and it gives us an added value to them and other trial networks because we now can have a one-stop shop to perform all the pharma work that they need to be done at the molecular level for any type of trial, whether it's an early design trial. And now with our balance sheet to support the lab, they've never had that before, so pharma has been reluctant to give them any more than just small projects, we hope to now go land some major trials. And hopefully, we'll land those in the world of IO and potentially resuscitating a couple of these drugs that have failed this summer. So if we go to Slide 13, I'll summarize and then we'll open for questions. Again, we believe that this acquisition could be transformative for the company. It gives us multiple shots on goal and proprietary content, in a critical area of decision-making that is who responds, who does not respond to immuno-oncology drugs. It gives us access to a world-class pharma lab that is certified and ready to go with our balance sheet and a business development team addition to the team that science team that exists there now, we believe we can have an impact and bring in revenues from pharma and connect our company to pharma, which is something I know many of you that are on the call today have encouraged us to think about accelerating. This acquisition gives us access to a lab, but it would have taken us at least 2 years to get to this point in terms of the certifications and the validations from pharma. So with that, I'm going to pause the slide presentation. And operator, we'd like to open the floor for questions, please.

[Operator Instructions] Our first question is from Bill Quirk, Piper Sandler.

Great. So I apologize, guys, I'm on the road today, so I didn't get a chance to look through your slides, so forgive me if this is covered in those. But I think, Ronnie, you talked at the beginning about being a one-stop shop with respect to lung cancer and being able to send in a single sample with multiple tests run across it. Given that you're going to have multiple facilities, can you talk a little bit about the logistics associated with that? It sounds like you have to have some sort of sample splitting or multiple samples possibly being shifted?

Yes, it's a great question. So Bill, we'll evolve to that. Right now, we're planning to bring all the commercial assays up here in Southern California over time. And then ultimately, that Nashville, not ultimately right out of the gate, that Nashville lab will be our pharma lab. As we build volume, we'll then transfer all the protocols and bring up the East Coast facility clinically and then the decision will really be made by where the geography is. If it's a sample coming out of Maryland, it will go into Nashville. If it's a sample coming out of Phoenix, it will come into to California. So we'll have a more of a logistical split than a technology or a tissue-type split, like you might see in normal -- in larger reference labs. We're going to just base it on geography. We'll need the duplicate workflows anyway. Something I believe in, given we live in Southern California, and there is a major fault running about 100 -- not even 100 miles, maybe 10 miles from our office. So I know people don't think like that, but I learned from my Clarient years to be worried about things like that. So we want to have a complete duplicate of everything we do in another area. Also you might remember, Nashville is part of the Palmetto MAC. So it allows us to develop things under sort of the DX guidelines, and we are able to hopefully create a relationship with them. And should we have something extraordinary come out that we need to go-to-market early, then we would have this sample splitting and would require us to bring it all to Irvine, split the sample and then overnight it to Nashville, which could add a couple of days turnaround time, but that's not the intent out of the gate.

And then Ronnie, again, I want to kind of build off of what you said there with respect to ultimately bringing up both sets of assays at both labs. Now forgive me if I'm wrong here, but I thought under CLIA, you were limited to 1 laboratory for those assets. Or does this imply that you're effectively going to take these tests ultimately through FDA in order to be able to operate them at multiple facilities?

Actually, if it's 1 company and you file under the same CLIA license as 1 company, you can run in multiple places. You have to correlate and validate across those multiple sites. But that does not rule out the fact that we may have to because some of these may end up being CDx assays, comply to the LDT PMA rules.

Okay. Got it. And then just, I guess, a reimbursement question from me. Just talk us through the pathway for that with respect to the Insight assays?

Absolutely. So I have -- actually I had Padma on the phone, and she's our expert at market access. So Padma, you want to take that question on sort of what we hope to do soon to get feedback and then long term.

Yes, absolutely. So as you know, we are focused on lung cancer, and we already have 70 sample data with which to begin discussions with CMS. Based on other precedents of tests that have been approved in this immuno-oncology space, including MSI, we feel that we can get CMS to cover the test broadly for PD-1 and PD-L1 inhibitors that performing in a smaller study in the few hundred samples, which we intend to initiate in this year, 2020. We're feeling pretty good about this because we've already identified multiple sites that have archived samples that we can work with. So we will be following a path very similar to others like Genomic Health, where we'll access those retrospective samples and have a prospective design and perform that on a few hundred samples, and we'll be ready to present that data to CMS and secure coverage. So that's the plan.

Bill, the other nuance to this -- real quick nuance to that answer, too, is pharma has already been reaching out since the publication at SITC and the publication at San Antonio Breast to the company, and there are a couple of pharma companies that have trials that they've run with PD-L1 and TMB, that they have the sample sets and the data is or the transcriptome data is already in their cloud. Our goal would be and they expressed interest in us running an in silico path, which might take 2 weeks to a month. And to see if there's a significant difference in terms of selection for patients. And if there is, then we might get a set of those samples to do retrospective, but prospective to us because they'd be blinded. And if we could get that data supported by pharma, then the idea would be to take that data to CMS and move forward with that as well. So we have kind of a full-court press on how we would go after reimbursement for this.

Understood. Okay. Congratulations on the deal.

Thanks, Bill.

Our next question is from Paul Knight, Janney Montgomery Scott LLC.

Ronnie, can you hear me?

Yes, we can now.

Sorry, I know you were ramping up the sales force on the Razor acquisition, is that going to continue on schedule? And can you talk about the synergies with that group?

Absolutely. I'll let Padma add color commentary, but we clearly have hired the first wave of sales reps. They start training on Monday. We're very excited about that for Razor. Our initial workforce revenue for the IO test is actually going to be for pharma. So we are going to use a sort of -- some of these Super Bowl bound teams are using Ronnie-backed by committee. We're going to do biz dev by committee here. I've got connections. Clearly, some of the folks for the IGI have connections. And so the idea is to go into business development campaign to identify pharma that would bring trials to us and try to get early revenue from pharma both for IO, but even for other assays that they have ready. They have a significant menu of CLIA-ready assays, including NTRK and a number of other really -- I think, in other really high profile one. So right now, the goal is to keep the sales team focused on selling the Rx test. That is, as you know, a thoracic surgeon call point. One of the things we have learned in the last 6 months, we've had numerous meetings with voice of customer and advisory groups. One of the things we are happy to see is the connectivity between pulmonology, thoracic surgery and meta oncology in lung. And so part of what you'll see as we announce the early adopters for the Rx test is you'll see that while we are going after a specific end user for that test, they are all working within hospital networks, in regions or communities that allow us to play within the ecosystem. And every call we've had or at least have participated in for the Rx assay has not -- have they not only been enthusiastic about the Rx test, they also are eager to participate in whatever else we're doing. There's -- as you might imagine, there's this incredible interest, I believe, in the community and regional centers to play an active role in lung cancer because lung cancer is a very, very community-oriented regional disease. Padma, do you have anything to add to that?

No, I would reiterate what you said, Ronnie, and I do want to say that we have been very selective in building our sales force. I'm very happy to announce that we have hired the initial -- and our initial team has extensive -- has an extensive successful track record, especially in selling high-value molecular test in lung cancer. And like Ronnie said, this year, they're going to focus on the Rx test. But because the call point, the oncologists, medical oncologists call points are similar, we feel that this sales force will be equally effective when we launch the IO test as a clinical test.

Our next question is from Thomas Flaten, Lake Street Capital Markets.

Congrats on the deal. Just 2 quick questions. Ronnie, you might have mentioned this, but could you talk a little bit about the time line from today to commercialization for the Insight test?

Yes, sure. Right now, we are working immediately to begin to launch because they're already involved with pharma. So the time line to commercialization for pharma is immediate. So we will -- the announcement was made. And one of the reasons we want to get it done, to be blunt, guys, today, was so that I could be with the team at JPMorgan next week. We have major meetings with every major pharma. So we didn't want to be in those meetings and not have this announced because we want -- the reason for the meeting was to talk about these types of things. So now that it's announced, we'll have freedom to go and start those sales activities to pharma immediately. In terms of the IO test itself, the idea here is that we would take the lung cancer component of that, as Padma indicated, we're going to call on our network. We're going to do our best to either take the data that we already have and see if -- because of the dire need, because now that TMB is not an effective CDx biomarker, and PD-L1, while okay, because of the 1% cutoff, we're seeing so many patients get in that don't respond, we're seeing adverse events increase, there needs to be a more discriminatory marker. And we're hoping that that momentum would allow us to get preferential treatment with CMS. It may not, but we're going to go for it. And if not, then we'll continue to publish trials throughout the year with the idea that we'll have a dossier that we can submit either late 2020 or early 2021. For triple, and obviously, depending on where we fall on that, we'll begin to launch the IO test to the clinic as soon as we're in a position to have either private payer or CMS accept our dossier. And then finally, triple-negative breast, as I mentioned, we are not planning to hire a separate sales force. It will be too much of a burn for us based on the focus that we believe we have and based on the incredible value proposition we believe we are building for lung. So our goal is to go out to the -- and you probably can name them, I won't name them. But there's 3 or 4 major companies out there today that have proprietary prognostics, but really need other menu items in triple negative because no one really has conquered triple negative. So we would love to complement Genomic Health and GENDIA. Some of these pipelines that, today, have sales forces that are incredibly respected at calling on lung cancer physicians and see if there's an appetite to take our test to market. If not, then we have the option of kitting that product and selling it through one of our instrument providers, i.e., a Thermo-type company, and -- or we always have the opportunity, if that doesn't work, we would then maybe if the market is large enough, we might hire own sales force, but that would be the last resort. We plan to do that outbound work with TNBC to partner companies really effective immediately. There are 2 major publications that are up for publication. We have not received approval yet, but we do know that there's interest at 2 major meetings. One is in March, and one is in the end of May. And assuming we get approval for the data on breast that's going to be presented, and we get our investigator, if they get a keynote opportunity, then we would obviously use that moment in time as an inflection point, start to move faster on commercialization of triple-negative breast as a subtyping assay with ultimately PARP, taxane or hopefully IO as the companion diagnostic arm that would trigger the reimbursement we're looking for.

That's great. And then how do we -- how should we think about the P&L impact for 2020? I don't know if there's any residual revenues from existing partnerships. And then what this is going to do to the middle of the P&L as we look into this year?

Great question. I'm glad you asked. I was hoping somebody to ask it. So you guys probably saw that we were able to raise the money to cover the cost of the acquisition, the cash outlay for the acquisition. Great job by Mitch and Tony and team to be able to get those monies in. We got that from a really top-notch investor. We're very excited about having Pura Vida for the ride. We -- the company itself today is very small. They've been living hand to mouth. And one of the reasons we're able to get the asset for the value we're able to get it at and upfront is because we believe, and I think they believe that the company's worth a lot more than it can show today because they didn't have the money for our sales force, and they really didn't have the money to go pursue all the avenues that we will pursue. But the company today, based on the residual revenues, is right at breakeven. So we believe with additional pharma revenue that we can bring in, that it will actually -- the pharma service should be able to fund the IO work that we need to do to pursue it, combined with all the pharma trials from IO that we might get. But the jury is out on that. And I -- as we have further calls in future quarters, we'll obviously be updating you guys on how we progress against that, but that's the goal that this will have a neutral impact on budget itself.

That's great. And congrats again on the deal.

Yes, thank you very much.

[Operator Instructions] Our next question is from Bruce Jackson, Benchmark Company.

With the current revenue levels, I'm assuming it's not really big, but can you give us a rough idea of what they're generating in terms of revenue? And is there any kind of a backlog?

Yes. So Bruce, great question. They run about -- their last 3 years has been somewhere between $1 million and $1.5 million. It's not -- it's 12 people, they get a project and they go run a project, you'll appreciate this, Bruce, if you remember the early days of pharma revenue in my Clarient years, we weren't big enough and didn't much -- have much of a balance sheet to go get the big clinical trials. So we did projects, development projects for pharma. So a lot of the work that they've done to date have either been assay design and development of these proprietary assays out of their own money, or use pharma money to fund that, and they've -- they typically done pharma development work. So it's around $1 million, $1.5 million annually. Obviously, with our balance sheet, and we believe the commercial execution capabilities we have, we do expect to see pharma, and we know for a fact, based on early discussions, pharma is much more interested in a different type of relationship with us as the owner. And so I think the baseline is what it is, but that obviously is not adequate for me. I want to see a significant amount of deal flow through the pharma lab because I think it obviously connects us to pharma and gives us that potential for that specific companion diagnostic that we've been looking for to really drive the proprietary revenues of the company.

Okay. Great. And then in terms of the talent, it's -- finding this type of skill talent is pretty challenging sometimes. Have you taken any steps to -- with retention agreements or anything like that?

You know what, I love that question, Bruce. You know me well enough to know. It's all about the people, right? The strategy and technology, one thing. But if you don't have the right people, it all falls apart. I think we're extremely fortunate right now that that team has stayed together, despite not having a balance sheet that allowed them to fulfill their personal mission. We have already, in process, a way to retain them. We think that giving them access to public equity in terms of stock options is something they've never had. We've known these folks for a while and have consulted with them and for them in previous life. So we believe that they're very motivated and very excited about this deal and this opportunity. And I think we'll have a successful outcome with keeping the people. But just so you know, our head of talent is sitting across the table from me, and she's nodding, and she knows, we have a -- we have a 0% tolerance for what we call regrettable turnover this year, out of Insight Genetics and really out of our headquarters here. We just don't have enough people to -- we could afford to lose the quality we have because they are hard to find. But we're very excited about who's there, and we will be adding around them some quality talent there in Nashville.

Okay. Great. And then last question. On Slide 5, you showed the differential diagnosis and just kind of like has all the pieces drop into place on that side of it. On the pharmaceutical services side of it, you've got the IRENE cohort. Now you've got -- you picked up this lab. Is there anything else that you feel like you need to have on the pharmaceutical services side to have like a complete offering, not that you don't right now, but is there anything else you'd like to have on the pharmaceutical services side?

Yes. Let me just give you some greater granularity there. They have over 200 assays that they validated through the years for pharma. There's about 10 of those that are "CLIA ready." In other words, they developed them and they've done -- either work for pharma or have done a small target trial for pharma, but they've never been fully CLIA validated for a trial that's going to be submitted to the FDA. So we will need to go in, and we will need to take RET and NTRK for sure because we know there's interest there and complete the validation on site. That will probably take 12 to 16 weeks. But obviously, we'll begin that work ASAP once -- now that deal is announced and we get out there after JPMorgan.

All right. Well, that's it for me. Congratulations on the acquisition. And also I'm going through a very comprehensive presentation on a Friday afternoon.

Well, listen, thank you all for getting on Friday afternoon because I'm the only thing between you guys and a great glass of juice. So I'll -- you guys were great to placate this afternoon. And -- but it was way better today than the morning of JPMorgan when nobody would care. So thanks, Bruce.

We have reached the end of the question-and-answer session, and I will now turn the call back over to Ronnie Andrews for closing remarks.

Well, thanks again, everybody. As I said to Bruce, I appreciate you taking time on a Friday. Deals happen when they happen. This one happened to have played out into today. And so today was the day, but it's important that you know that this announcement was not done on a Friday for typical reasons of Friday announcements. This was done on Friday because it was imperative that we get the news out as well as prepare us for what we believe is going to be a really exciting week at JPMorgan next week. So we appreciate your time and energy. We appreciate the really good questions. If you need one-on-one time, I would encourage you to reach out to Mitch. As you might imagine, next week's going to be pretty crazy. We will see some of the analysts there. But if you need one-on-one time, reach out to Mitch, and we'll definitely try to get it on the calendar for you. So thanks a lot, everybody, and have a great evening.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.