Insight Molecular Diagnostics Inc. (IMDX) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Insight Molecular Diagnostics Virtual KOL event. [Operator Instructions] As a reminder, this call is being recorded, and a replay will be made available on the Insight Molecular Diagnostics website following the conclusion of the event. I'd now like to turn the call over to Andrea James, Chief Financial Officer at Insight Molecular Diagnostics. Please go ahead, Andrea.

Thanks, Tara. Hi, everyone. Welcome. We're so thrilled you could join us on this Friday afternoon, and we're also so thrilled to be hosting Dr. Anthony Langone for our KOL call. If we could pull up the agenda slide, please. Okay. So before we begin, Josh -- with Dr. Langone, Josh Riggs is going to briefly touch upon our strategy, then we have the wonderful presentation from Dr. Langone, and then we have a Q&A session, which features those two plus Chief Science Officer, Dr. Ekke Schutz, and before Josh begins, we're going to spend about 10 seconds on the forward-looking disclaimer slide. Go ahead, Josh.

Thanks, Andrea, and thanks, everybody, for joining us today. When I took over about 2.5 years ago, we made a commitment to take our technology and get it out of our lab and into the hands of clinicians and researchers around the world because we believe that local care is better care. And the first step on that journey for us has been in the transplant space. And so I'd like to talk to you little bit about the transplant market that we have here in the United States, if we'll go to the next slide. So the [indiscernible] market here is really for donor-derived cell-free DNA, which Dr. Langone is going to spend some time talking to us about today. It's -- in over the past 6, 7 years has become generally standard of care. But it's dominated by a couple of central labs that are based in California. And we saw an opportunity to put the transplant centers themselves in business and managing their patients. And so that's what we've been working on for the past 2.5 years. And we're making progress towards the FDA. But one thing to note here is the transplant in the United States is a highly concentrated market. You've got maybe 250 to 255 transplant centers but about 100 of them do most of the volume. And I think we have the opportunity to take advantage of what's become generally standard of care and make that accessible in the local environment. I'm going to go ahead and talk to you a little bit about our approach on how we get to the market with our technology. So we'll go to the next slide, please. So we have three ways we touch the market. The first is through our service lab, and that's here in Nashville, Tennessee, alongside Vanderbilt University. This is where we create the new technology where we validate it, how we interact with payers, to establish both the clinical value of the technology and the reimbursement. Outside of that, we have an RUO product that has been on market for well over a year now. And that gives us a chance to interact with the community and find out what they would like to do with the technology, how we can improve it. And then all of those improvements roll up into our IVD kit. And so that's what we're taking into the FDA. And so we call it the land and expand strategy. So we've been out here working with transplant centers around the world to land our technology out there, get some of that positive interaction and then we'll expand once we get the IVD kit out and that lets these centers take advantage of the clinical claim and start managing their patients locally. Go ahead and go to the next slide. So when we went to the FDA, we realized we needed to prove out two points. One is basically assessing how well our test does at ruling a patient in or out for active rejection. And we're going to validate that accuracy in the clinical study. And so what we're doing is when a patient comes into the transplant center, drawn to a tube of blood. And then there's a biopsy that's done, we match up the results. So if we stay positive and the biopsy as positive, that's great, and that's what we want to see. We think it's going to take about 125 to 150 patients to prove that our test does what we say it does and then we'll get that into the FDA as a part of a dossier by the end of this year. We're working with about 5 transplant centers here in the United States. We expect another 1 or 2 to come online. And we're going to have at least 1 center out of the EU to support a follow-on IVDR submission. Last slide, please. So our primary endpoint is non-inferiority to currently use dd-cfDNA tests. All of this that you're seeing here on the screen comes out of our ClinicalTrials.gov listing, so you guys can go and pull that information yourself. If you'd like to look deeper into it. But we can see the values that we seek to prove that we're at least as good as. So this will be considered the minimum. Based off of our 10 years of publishing history with this technology, we expect to meet and exceed what is here to the right. This has all been reviewed by the FDA multiple times through the Q-Sub process. And so we feel really good about our path forward through the FDA. And Dr. Langone is our NPI on this study. So we're very happy to have him here with us today. So if we go ahead and go over to his slide. So it is my pleasure to introduce Dr. Anthony Langone. He is an Associate Professor of Medicine at Vanderbilt University Medical Center. Some of you may already know him as a leading expert in solid organ transplant. He has authored multiple publications looking into the clinical value of donor-derived cell-free DNA, His work focuses on finding better treatments and improving patient outcomes. He is recognized across the country for his expertise. This slide here contains his numerous distinctions. We are lucky to have him here today with us. Dr. Langone.

You're on mute, Dr. Langone.

Can you hear me now? Sorry. All right. So let me start over. So I'm Tony Langone. I've been at Vanderbilt since 1999. I've been a faculty member here since 2002. I've trained in many parts of the country and I've been in transplant the whole time. So I have gotten interested. I've actually been involved with everything related to cell-free DNA all the major trials since the original DART trial was published in 2017. I helped write that protocol. The history of cell-free DNA is interesting. Cell-free DNA has been known about since 1948. It actually predates Watson and Crick's understanding of DNA and the double helix which was discovered several years later. So I think they were German scientists have found this DNA floating in the blood and what was this -- what did this mean? Cell-free DNA basically is cells that are turning over and the DNA gets into -- it's not inside cells. It's freely floating in the serum. And it has a relatively short half-life, and you can pick this up with various assays. And you could determine cell from non-cell. So you can have a person's DNA, which all of us have DNA turnover. But if we had a foreign organ in us or a baby or something else that's not us, that would also put off DNA. So the theory was that the average human weigh say, 180 pounds, but the average kidney weighs is about 6 ounces. So if everything is equal, and all cells are turning over at the same rate, the cell-free DNA rate that's foreign from a kidney transplant would be less than 0.2%. So lo and behold, we said, well, if the kidney is mad and that's in rejection and it's turning over cell-free DNA quicker, we may be able to pick that up. And that's what the DART study showed us in 2017, it was actually a blinded study. And it led to CMS covering this first test, this first cell-free DNA test, and it led to the initial cutoffs like you sort -- showed -- Josh showed up, 0.5% is considered now a positive test based on their assay, but the original assays suggested that 1% was the threshold. And over time, we've come to learn to use this test better. There are now two different large registries. There's a study called KOAR which I helped write is 1,500 patients and another study called ProActive which we participated in with over 5,000 participants. And we're -- as these publications start to come out, we're really learning that how people are using the test, how -- what the true cutoff should be, and with more data coming out, we're able to come up with propensity scores to try to actually improve the accuracy of the test. The test was always very good at ruling out rejection. The cell-free DNA test has, depending on which -- all the assays are about the same, but about a 96% negative predictive value, meaning that if the test is negative, the patient does not have rejection. And this is important because a rejection or biopsy to determine a rejection is not a small matter. It costs over $30,000. We have to put the patient at house. There's a fee from the pathologists, they have to prepare the slides. I get a fee, the radiologist gets a fee, the tech gets a fee, it's a big deal. And that's how when I went to CMS to show them how many biopsies can be avoided. That's when CMS said, this is actually a money-saving idea, and that's why they approved the test. Now what's interesting is after initial approval and kind of like the Wild Wild West, CMS started to push back on it, and they said, wait a second, there was one or two people internally that said, this isn't so good. Maybe it's not going to be such a great benefit. We don't have the outcomes data. But as these data are being published now, it's all of a sudden CMS is coming back and the payers are coming back, and they're not only allowing for cause biopsies, which they had always allowed, but they're now allowing surveillance biopsies. So last year alone, there was over 27,000 kidney transplant patients, the -- 27,500. The CMS is now saying you can not only do 4 cause biopsies, but you can do at least 4 in the first year and then 2 the years after that in surveillance. And we're actually writing letters to the FDA and CMS to allow more than that. We think that's a missed opportunity because what we're finding from these registry trials is that we are picking up rejections way earlier than we were before because the creatinine, which had been the gold standard prior is such a poor indicator of what's going on histologically. There was also a hope that gene test would matter, that -- think about it, cell-free DNA is after damage is starting to occur, creatinine goes up, the kidney function goes up way after the damage is there. So you're not way beyond the microscopic level. But then there was these gene test we would go, we can discover these genes that might actually help determine a rejection even before there's actually DNA damage, and those tests have largely failed. So the cell-free DNA is actually the best test we have and the earliest test we have to determine and find rejection. And this is important because historically, if you waited for the creatinine to go, by the time you got to the case, the patient had fibrosis, God himself cannot reverse fibrosis and scarring. So the damage was already done. And in these -- and these registry trials are these -- we're following these patients longitudinally, we're picking up rejection at the earliest stage and the easiest stages to treat them. So there's no doubt in my mind that this is going to improve overall survivability of the patient and the kidney, and that should lead to better outcomes and less need for more kidneys going downstream. And I think CMS is going to increasingly cover this assay, and think a lot of the private payers as well. What did we do this test for in addition to ruling out rejection, like we talked about before or finding a rejection in patients that the -- I mean, the creatinine doesn't tell you what's going on. What the test is saying during surveillance that there's something bad going on and it creates a biopsy that finds rejection you wouldn't have found otherwise. It's been very useful to determine the response to treatment. So we can actually see the cell-free DNA come down. if the person responds to the treatment. I've been using it to find -- patients who have actually had failed allografts and have gone back to the public. If that kidney starts heating up and they don't know what it is, I think it's an infection because the patient is having fever so cell-free DNA that can be sent to their house, and you can get the results back and then know that the patient needs to have it removed. A hot area that is really interesting is that cell-free DNA may actually be picking up cancers in our -- in these studies that I've mentioned before, they are actually picking up cancers when -- the cell-free DNA suddenly pops especially to a very high number, and the biopsy is negative for rejection and say what's going on here? Well, it turns out the patient ends up having a lymphoma or some kind of cancer. Cancer is DNA that is cell that has turned to non-cell and these assays are being looked at now more and more to possibly picking up cancer. So picture a day that the PSA test or mammograms and things like that may go by way of the dodo bird. So that's actually a very hot area to look at. And last but not least, historically, something called antibody-mediated rejection was the worst thing that could happen to a transplant. We have no effective therapies. Well, there's hot -- a part of the big study nationally that's doing this. There's these new CD38 drugs that appear to work really well to treat antibody-mediated rejection basically are plasma cell killers, so they go downstream once the plasma cell starts to differentiate and make a clone against the kidney. They can actually stop the proliferation of this clone and actually hopefully reject -- or not reject but reverse the AMR or rejection that was happening in the kidney. So the early studies, the Phase II studies have been very positive. And now we're entering the Phase III era. And if this teaches us anything, and this ends up being FDA approved and the benefit, then cell-free DNA will be integral at finding these cases before they become fibrotic and scarred. So I think going forward, there's -- this is a great area. I think it's becoming more and more common for centers to incorporate it, as I mentioned before, it is maybe as many as 400 transplant centers doing it. It's been expanded beyond kidney. So I mentioned that the DART study was kidney. It's been validated now in lung transplants, heart transplants and pancreas transplants. And we're even learning how to do it when patients have kidney pancreas transplant, it's been validated because think of it, you have more mass, it's hard to tell which organ is causing the DNA to come off the cell-free DNA, but they're actually figuring out ways now to determine if you hit a different threshold and that means one or both organs is rejecting. So -- so at Vanderbilt, we're the largest transplant center in the world now. We did 918 total transplants in fiscal year '25. And we have now -- we're #1 in hearts 8 years in a row. So we are using cell-free DNA almost exclusively instead of doing biopsies to determine if our heart transplant patients are rejecting. And we have excellent outcomes. That's why we get a lot of patients coming from 22 different states. And I think since 2017, incorporating this test is helped. Now lastly, though, I must say, it's been difficult to get the test sometimes. There's -- as you know, EMRs, we are one of the many centers that uses EPYC, but there are several different EMR companies out there. And these tests have to be sent off, so they would actually have to be boxed up and set by FedEx or some kind of courier to California. And then there was a turnaround time expected between 5 and 7 days. And in fact, if it didn't get to California in a certain amount of time, the test was invalidated. So there were a lot of times they said, "Sorry, I know you had the patient come in and do this test. But it just didn't get to us in time and therefore, the test was invalidated", which is problematic and delays care because our joke is that time is kidney, right? You've got -- if you have a rejection, if it looks like if you have a heart attack, you want to get seen quickly and get treated, so you don't have more damage. So this has been a real problem for us. And even the institution worries about the send-out tests because who's billing for it and who is paying for the blood draw all of this other stuff. So I got really excited when this company came out saying, "Hey, we've got this new technology, a new way of doing PCRs that could be returned to you within a day, and you'll run the test yourself. So it will be integrated into your own EMR" and then the institution is excited because it can actually bill for these tests and maybe make their own share and not have to worry about being a middle man and hoping to get the patient's insurance to pay for it and then if not, going after the patient. So I'm really excited by this. The study that I mentioned that CD38 study, the Phase II was actually using this company's assay. I have validated tests at Vanderbilt that we sent over to the Central Lab in Nashville to prove that it works, proof of concept that works is as well as the others, but much quicker, and I can't wait to get this in our house. As the company, I think, is going to put units that run the test to the actual -- the organizations that have transplant centers, so they won't even have the capital expense of doing that -- of setting that up in the first place. And I think that's pretty much a good summary if you guys have any questions, let me know.

Great. Thank you, Dr. Langone. [Operator Instructions] So our first question comes from Mike Matson at Needham.

Sorry about that. Thanks, Dr. Langone for the overview there. That was very helpful. I guess, first, may be just a couple of questions related to this trial. So if you take the number of centers and the number of patients are expecting, it works out to -- it seems like around 20 patients per center. How quickly do you think you could get 20 patients enrolled in your center?

Yes. So this study, the FDA study is going to be similar in terms of enrollment as the KOAR study and the ProActive study, which are being published as we speak. And we were able to enroll patients very quickly because it's such a low-risk assay. It actually -- because the companies are covering it or companies are expediting it, I can get research personnel to help us with this. It's been a lot easier than what I had mentioned before, where I had to try to order it commercially. So the patients that got in it benefited from it and I'm looking at my own internal results, and I'm saying, "Oh my goodness, this is amazing, how much quicker we're picking up rejections in an earlier stage than we would have if we were relying on creatinine alone". So to answer your question, say, 20 patients, 25 patients when we're expected to do 400 in a year, in theory, could be done recruiting in a month or two. Now the ask, we're going to follow these patients longitudinally for a set period of time, in the other studies they were 3 years each. But in terms of recruitment, that shouldn't be a problem.

Okay. Got it. And then just in terms of the endpoints as specified in the ClinicalTrials.gov website. The lower balance for sensitivity and specificity are 56% and 75%, respectively. So what level of of these 2 measures do you think would be a success? And what caused you and your colleagues to move most of your testing to GraftAssureDx And do you think hitting -- if it came in close to the minimum on one or both of those numbers, do you think that would be -- do you think that would still be viewed as a success?

So I think we're learning more as we do these tests and as we have experience. And some of these, like the KOAR and ProActive that are active, when we look at the way people -- because it's open label, then the physician can do whatever they want, we're just kind of monitoring that. And we're finding that their tests are turning positive or the statistical difference 5 months before they're actually even doing a biopsy. So some centers, some people are still not familiar with the test, they are learning it and I think that will change over time. In terms of absolute numbers, for FDA, we got to give them endpoints. But what we're learning is it's a lot like a PSA test. If your PSA today is 1, a year from now it's 2, a year from -- after that is 3. 3 is still below that cutoff of 5, but something is happening, something is going on, and it's probably not good, even though you haven't crossed the absolute threshold. So I think with the use of AI and measurement of slopes, I think -- and more data, I said 1,500 in one study, 5,000 in others this data gets collected, I think we're going to have a better idea based on slopes of change, whether someone's turned positive or not, and there's actually talk of these different devices like iBOX and others that will help teach people. There's a propensity score that this company is coming up with that will teach people, hey, this is a high-risk situation, you probably should biopsy even though it hasn't crossed a certain threshold yet.

Okay. Great. And then my last question just -- it sounds like you're -- you've seen some advantages of doing the testing in your own facility. But what do you think the biggest obstacle is going to be for Insight in terms of getting doctors to switch from sending the test out to the established market leaders and doing it in their own facility with the GraftAssureDx test. And how do you think they can overcome that obstacle?

So the oldest company out there was CareDx, they're the ones that did the DART study. and we were involved with them early on. And then with us doing ProActive and they are some -- making it a little bit easier to order the test, we switched very overnight and started using the Teres test. So to answer your question, we were one center, we switched to another assay like overnight based on a preference, something that made it better. So I think we'll take all of this business and switch them over to iMDx if we get in-house to test and my faculty will follow my lead and do that.

Our next question comes from Thomas Flaten at Lake Street.

Dr. Langone, you mentioned earlier that you were writing letters to CMS to try and increase the number of tests that were going to be allowed for payment from the 4 plus 2 and et cetera, what do you think that appropriate number is? Or what are you requesting?

So when we did the DART study, it was 7 in the first year and then 4 every year thereafter. Some have been pushing, we should do 7 in the first year. I'd be happy with 4 every year. I think a quarterly amount. And the interesting thing is when we looked at our data from -- our internal data, in all the tests that we've done, not just the one's part of a study, we're finding rejections 10 years out. I mean the patients never not at risk. And especially as they get further out from their transplant, they're seen less and less in the medical center. And as we have -- we become victims of our own success, we do 400 a year, year-on-year. We could set up a system and these companies do that, where they actually remind the patient, go get your test done and get it done at a local center or get it done at Vanderbilt regardless, they get it done, we could just follow those tests. And actually, the companies have been good about warning like alerting us, like so a negative test or a low propensity. They don't -- no big deal. But if it's a positive test, they alert us say, "Hey, this patient probably has to come back to the medical center". So if I had -- if I can get the government to do what I want, I think 4 a year, year-on-year would be perfect. I know that we would be reducing graft loss, and there's 130,000 people waiting for the grafts. The largest component, growth component is patients waiting on their second or third kidney because they've rejected their first one, if we can prevent that or get to the rejections early, then I think we can get better longevity and get more people transplanted that have been waiting. There are more people dying, waiting for kidneys, than are actually getting it. If we can keep those who have it already without losing it, those patients will have an opportunity. So I think 4 a year, I mentioned we did a record number of countrywide, 27,500 transplants last year, and the growth is up. That was up like 10% the year before. There's many pushes by the government to advocate for transplant. In fact, when I get a patient on the transplant list, I have Carte Blanche, I could order the silliest test in the world and the government will pay for it. I can order PET studies even though there's no reason to. And there's no prior asks or anything like that because the expense of dialysis is so ludicrous in comparison. To put in comparison to hemodialysis patients cost the system between $100,000 and $125,000 a month with all the -- and everything that they do whereas a transplant is $85,000 plus the meds they got to take going forward. So it is definitely a cheaper activity -- and better for the patient, God forbid. But certainly, from the government perspective, it is better. Life, liberty, and pursuit of dialysis is guaranteed in this country since 1972. And it's now Medicare's budget. It's about 13%, it goes to end-stage renal disease and dialysis on the entire Medicare budget. So that's why they're partnering with us. The government wants us and it wants the private practice physicians to send their patients for transplant at a higher rate.

Got it. And then one follow-up question, if I may. You mentioned you guys have a particularly large catchment area. And I'm curious, you mentioned turnaround time trying to get that to kind of same day turnaround. What are the logistics around that? If you have someone come, do you usually have them around the center of the whole base you could actually realistically wait for the test to be turned around before they fly home or drive home?

No. With a commercial available test to go to California now, they may drive in from Arkansas. They may drive in from South Alabama. They come in, I'm worried about their trajectory, I order the test. And then a couple of days later, the test comes back positive or negative and then I bring them back. So they're actually doing another trip. Whereas if I could say, "hey, just like checking your creatinine", which I can get back in a couple of hours, "hey, it's 8:00 in the morning. Can you stay here, eat lunch. And then if the test is positive, I'll admit you and do the biopsy". As a matter of fact, these companies, these other companies tell you do not order it on a Friday. So like today, if I saw a patient in clinic, I couldn't even order it because the stuff is going to sit, whereas if I had it internal, I can get the answer back the same day and admit them on a Friday and start empiric treatment or do a biopsy or whatever I need to do. So I am excited by the technology and the turnaround because I think it's going to be a game changer.

So our next question comes from Mason Carrico at Stephens.

[Audio Gap] compares to the important data points that clinicians will be highly focused on or what they need to see in terms of driving broader adoption commercially.

So no one can forecast what the FDA is going to want. But I can tell you when we went to the -- with CMS the first time, the reason why I got approved was because it reduced biopsies. Biopsies are an expensive process. So they were excited by that because the negative predictive value was so good. Clinicians want that, but they also want to pick up real rejection. They don't want to be doing a lot of biopsies on patients that have false elevations. So I think with time, as more data comes available, propensity scores are made, AI is used, we're able to get the positive predicted value up quite a bit. And so I think like I stated before, slopes matter in addition to an absolute that matters. And there's even a couple of the assays, including iMDx's assay that actually gives you an absolute DNA score, not just the ratio because when you picture a situation where someone has like they're in an earthquake and they have a massive damage to their body, that peripheral DNA could be so high that it will make the actual kidney part, if it wasn't damaged directly, look low even though it could be in rejection. So there could be other -- or the background may be less for some reason, and it may make it look higher as a percentage but the absolute may remain low. So I think the combination of the absolute and the relative is going to improve the PPB and it's going to be something that clinicians are going to like better because they're going to not be doing false biopsies. And I think the FDA is going to like that, too, because I think when they weren't seeing the benefit of following patients longitudinally because they felt there were so many negative values. But in our own study in both assays, both the KOAR and the ProActive, we're finding 12% of patients are having positive tests that would not have been picked up by creatinine alone. And we're getting to them at the cellular rejection point, which is a very treatable and easily treatable point and their grafts should last longer. And I think that's what's going to come more and more with these new studies is they're going to do more and more outcomes to prove the benefit. And we're using AI now. There's like this thing called the iBOX there's others out there that could put all this data together and instead of waiting until a kidney fails because it would take 10 years to do that or compared to a kidney that last 20 years, they can actually base on trajectories or creatinine know how long a kidney is going to last and the FDA is accepting that now as an outcome parameter. So I think this is why I think there's been a flip back that I think they realized they were too harsh at one point, stating that could only be for cause. And now they're actually starting to approve some of the surveillance studies because they realize there's value in it.

[Audio Gap] program impacted your daily practice. Have you seen an increased use in marginal organs or what are your high-level thoughts on [indiscernible] increasing...

Yes. We're part of the Save 34 Kidneys, you probably heard of that. So there's this company. It's -- I think it's maybe for profit, not for profit, but they basically -- there's 34 people dying on the list every day or some -- and they're trying to -- it's called 34 kidneys. And we're integrally involved with it. One of my surgeons, Dr. Cornell is leading the charge here. And we have been -- you can increase the volume without taking more marginal kidneys. And there's no doubt that historically we might have been overly conservative that we looked at things that we didn't realize may not have been as important like certain things on the biopsy and stuff as we thought they were. And AI is actually helping with that now. They're actually telling what things, what factors on the history or the physical or the laboratories are really what matters. That said, we are taking a lot of very stressed kidneys. And what was nice about this test is these patients often don't get creatinines like we hoped. They get creatinine of 3 instead of 1. And what I'm seeing a lot of people doing is they're biopsy-ing these kidneys to see if they're rejecting or what's the reason? And if they did cell-free DNA testing, it would show that there was no activity. It's just that the kidney has donor-derived issues, they're like arterial sclerosis or fibrosis or something that came over from the donor. And the tests are validated at least at 4 weeks if not 6 weeks. All the implantation errors and things that can occur -- injury that can occur by 6 weeks, certainly, the test should be validated and used. And that's what the DART study showed in others. So I think this is a new opportunity with the iota that we could be using cell-free DNA more in the front end to prevent biopsies or if someone really did have a hyper acute rejection or something like that, and that's why the kidneys start waking up that would be found, and then you would go ahead and do the biopsy.

Our next question comes from Bill Bonello at Craig-Hallum.

I want to touch on a couple of things you talked about, just maybe from a slightly different angle and really appreciate your willingness to talk to us. The first thing is, again, thinking about sort of data that's necessary. As you said, this has become somewhat standard of care with a lot of still room for penetration. What do you think centers beyond your center maybe and the surgeons at those centers, what do they need to see in terms of data to feel comfortable saying, "Okay, I'm good with this testing being done internally by our hospital with a kit rather than sending it out to one of the other two providers like we've been doing". Do they have to have a peer-reviewed publication? Obviously, the FDA study is a lot smaller than DART or ProActive. So what -- how is that going to play out?

So I think an easy way to do this is what the company did for me. They came to me a couple of years ago and they said, "Hey, we got this assay that we can run faster". And I had patients in studies already, they were -- or that I was using a standard of care with the other -- without the commercial companies. And what I did was I actually ran my own little study internally where they would not charge they said, "Let me just give patients", so I did that. And I had data from those same three patients having the blood draw in the same way. and they were very close, not statistically different. So the test is fine. I think that they're equal in their efficacy. The advantage here is how fast you can get the result back and how quickly you can act upon it. So I don't necessarily think that -- and the other companies have kind of -- from a CMS standpoint, have gone on their own coattails. So one gets approved for doing something. The other one's data gets that approved too because even the FDA and CMS is not seeing them as different assays. They're seeing it as like one aggregate. But -- so I think it just -- if a person was loyal to a company out in California, and they really had any concern, I think the company here would be smart to say, look, run your test like you do, here's five free ones, compare it and you may be shocked to find out it's not any different. So you'll hear things about different numbers of SNPs and all that stuff, that doesn't seem to matter. When they've looked at like the two commercial payers out there -- the two commercial companies right now, they're just not statistically different, even though one has a lot more SNPs than the other.

Okay. That's very helpful. So it sounds like -- I mean, it's almost like any other IVD that a lab would perform as long as your team knows it's been validated and it's accurate there, they don't need to see yet a third or fourth large study.

What they're going to do, I understand, is that when they put in the hardware, the capital expense that they don't -- that the companies -- like the institutions like mine have to pay for, they can do an internal validation study. And that will actually make the HLA director happy and say, this is clear, fine, this is great. So I think they're going to do that too at the level of the lab directors But I think from the clinician standpoint, they just have to feel that all the tests are the same. And I think that's the way we are feeling. It's just a matter of the convenience of it. As long as payers don't say, well, you have to use this test like you do with drugs or something like that. That hasn't happened, and I don't know if that's ever going to happen. I haven't seen -- and CMS certainly isn't going to dictate that. They don't care which assay you use. So it's just -- it really comes down to convenience and ease and not affecting the workflow. If I can order this test like I would order a CBC or creatinine, then that's going to be part of my panel, and it will be the utilization will go up crazy amounts and then the companies can help me by even pointing out a positive test it will integrate into my EMR. And I'll be able to see trends and everything instead of having it faxed to me, and that's what we've been doing up to this point. So it's been very laborious and we believe enough in it, we'll do it, but it's just a problem with workflow. If we can do this internally. This would be -- it's a game changer.

That's really helpful. And if I can, just a couple of more quick ones, I really appreciate it. The decision-making process, I mean, you made the comment, "hey, if I want to go this way, the other docs will follow." But what at all is -- would typically be involved for -- do you think, for transplant centers to internalize something like this? I mean, is this -- do you need the buy-in of the presumably the lab director, but you need C-suite buy in. How -- do the surgeons sort of all put their heads together and talk about what they want to do, what's kind of the process?

So I could give you my scenario. I've been working on this for years. And even though I was one of the lead authors and came up with the DART study, the cohorts, everything that's published. My own institution was always worried about us losing money. So picture a situation where you order this test that cost x amount of dollars and then the insurer doesn't pay for it. So if Vanderbilt took on the cost, like paid whatever company, CareDx paid them the $3,000 for the test. And then they don't get reimbursed, they would be out the money. Now CMS would reimburse them, but a lot of the private payers at the time were not reimbursing or at least not at the full rate. Now the companies would say all of them that, "We're not going to charge you, we're not going to do it", but they couldn't do that legally. They couldn't put that in a contract. And I know of no patient in the 7, 8 years I've been doing this that actually got a bill. So the companies have held true. They have not actually gone after the patients. But the C-suite was worried because they're looking and they could be on the hook for millions if that was the typical billing. So what they said to me and others in my department, you do it independent of us, that made it even more difficult. It's like the -- my lab people couldn't even do it. That's why you almost had to do it in a study format to get it covered or get it done because then my study coordinators that are under me would be able to draw the test and send it off as a study format. But now if they do it in a way where they are actually running the test, they're actually making most of the money off of the actual test, that which would have been done in California. Now they see this as a profit center. And in times as tight as they are, you may have heard Vanderbilt as -- I mean they cry poor but $500 million, $600 million in debt with NIH and all this other stuff. They fired a bunch of employees and everything that tightened the belt. This might actually look very attractive to them because now it looks like something they can make money on and legitimately. As far as a -- we never -- I don't do things to make money. I don't get it directly. I don't order a test to get paid. I do the test because I think they're valid and they need to be done. The -- I think if the leadership within like the medical directors say, this is a good thing to do, they may set it up as a protocol and it may become protocolized. What we have done, we have independent practices, we're all part of one team but if I'm the biggest user of it, others that I've trained may follow me, but you don't have to do it. We're not forcing it. But in centers that get protocolized, it will become part of the routine. The nurse practitioners will order it at a set rate and such. So -- and I think most centers do try to protocolize things, just to make things easier, have less variability. So I think as long as there's buy in -- and people -- in most centers, there's 400 of them doing it, are starting to recognize that this is the way to do it. In fact, I worry centers that aren't do it -- aren't doing cell-free DNA or not -- or genetic testing is another thing to think about. If they're not doing it and that's becoming standard of care, they're putting themselves at legal risk because you didn't do everything that could have been done when other centers couldn't do that for that same patient. So I think there's going to be more and more push for centers to have to use this test no matter what their prior biases were because it's becoming more uniform throughout the country.

Excellent. And then just the last one, and this gets to the turnaround time and the patient staying around not having to come back in et cetera. How big of a deal is sort of kind of what you want to call it, patient leakage patients that just simply the lost in follow-up. Does that happen or because this is transplant, did you get pretty good compliance that people come back?

Well, one of the reasons you do the test is because some patients aren't compliant. I ran the VA program for almost 25 years. And the VA, there's no excuse because we give the meds for free, the veterans don't pay. But yet some of them still don't take their meds or show up for their visits. It's just human nature. So when you have that history, then you're even more worried that they're rejecting no matter what they're creatinine is, they haven't taken their meds for x amount of time. But it's kind of like when you sell a car. If the guy walks out of the showroom, he's most likely not coming back. So I want to keep him in front of me and know whether there's a problem and admit him, if I can and get things going. Because as I stated before, time is kidney. If you were having chest pain today, you don't want me to do the cap on Monday. You want to know today, am I having a heart attack. Well, that's what this test does. There's similar test called Troponin in heart attacks. And if that were negative, the negative predictive value is great, go home, you're fine. That chest pain is not real. But if we were positive, I can get that test back within a few hours, I'm bringing you to the hospital and getting you into the cath lab. So I think that's the advantage here because of some of these patients, they are limited socioeconomically, if they go down to Mobile, Alabama, after they saw me on a Friday, and I call them on Wednesday, "hey, I need you back up here." That means they got to take off time from work again and everything. And I mean, some of them just don't have gas money. It's really -- it's somewhat pathetic actually but that's the truth. So I really do see a great benefit in being able to not disturb the workflow and order in real time and get things done going forward.

Our next question comes from Yuan Zhi at B. Riley.

Thank you for all the insights. If you have to put a value to this test, what it will be? Is it based on how early this test can help you detect rejections? or how many kidneys you can save and justify this monitoring?

So I think time will tell as we figure out how many -- the problem is at this point. It's become standard of care. So it would be cruel not to offer the test to some and give it to others. So I don't think that test -- that study will be done. I don't think you can randomize people, it's like randomizing people who have heart disease to know aspirin when aspirin at least is the baseline that you have to have versus the drug you're trying to test. So I think there will have to be always offered going forward for these folks but we could look at historical data. We could certainly look at patients who presented -- well, first of all, I can look at graft half-life. So if people's half lives are increasing in an era where they are using this test, that would suggest that the test is adding value in that sense. And I think from a global standpoint, from a government standpoint, these kinds of values are -- I mean, it's huge for them. That's why I think transplant in general is being recognized as a standard of care, and that's why I think the government is allowing so many accommodations to make transplant happen. And that may be one of the reasons why they're loosening their reins on this test in particular. So I think from -- I mentioned organs. I said there's about 130,000 active patients waiting for kidneys in the United States right now and that there's actually a higher death rate. So these are things that are hard to put dollar values on if you just would say, well, death is cheap, people can die and that doesn't cost you anything. But if you really care and you want them to do better, then yes, there's a cost savings versus being on dialysis. So I also think as the test becomes more ubiquitous, I think pricing will come down. So I think the overall -- like whatever the test the cost is now, it's hard to judge when they're doing millions of tests versus thousands of tests going forward and it becomes in center and quicker and the assays are cheaper and they're producing at a larger amount, I think it will be -- there'll be some downward pressure on the cost, and that will make the overall cost benefit even greater. There should be more test done. It will be more ubiquitous.

Got it. And then as you mentioned, creatinine and eGFR is kind of the biomarker right now for any detection -- rejection detection. And you mentioned the iBOX earlier. So I'm curious, what does it take to replace creatinine or eGFR as a biomarker, whether for iBOX or whether for the cell-free DNA test to kind of replace or make it more sensitive?

Right. So as I mentioned in the -- in these studies, like the KOAR study and the ProActive study and where they're seeing where people should have been biopsied earlier and they weren't I think there's a learning curve to trusting the test. And I think as you get more used to the test and you have seen the value not only in the rise of creatinine -- rise in cell-free DNA and doing the biopsy earlier than the creatinine would tell you otherwise. I think that people are starting to replace the creatinine. They've seen that the R-squared correlation of creatinine rejection is very low. Everyone is recognizing that now. There are other biomarkers trying to be developed, but none of them have panned out. Urinary biomarkers have been difficult to validate. And I think the use of AI is going to help us even more. I think it's going to -- as we develop propensity scores, and it doesn't have to be iBOX, there's just one. Internally, Dr. Ekke has got his own propensity score and he's going to show that the PPV will go up based on both the absolute and the relative -- the percentage and then also the ratio, how it's going up and what the change is. Those changes will help us realize or recognize more than the -- our eyes would that , that patient is at risk. And the companies all say this patient is at risk. This is a high-risk situation even if it hasn't crossed a certain threshold. So it's not just relying on you or a nurse practitioner to make an interpretation. They are giving you an interpretation based on what's being seen or what the -- what's happened over time. That's why it's very important not to have an isolated number because you don't know what that means. But if you see something increasing over time and their propensity score to suggest this is a high-risk situation, that would produce a biopsy, so you need more data points. I think the government is starting to recognize that as more stuff is getting published.

So we have a few more minutes. I'm going to turn the call to Andrea to read the remainder of the questions that came over the webcast.

Yes. Thank you for sending in your questions and Dr. Langone thank you so much for all of this. This is -- I'm learning, just listening to you here. I'm going to combine this stuff because we do have some questions coming in. Chris Mercado at Wells Fargo asked about the LCD, the recent draft LCD. And you did touch upon that. And then also Vidyun Bais at BTIG also asked about testing cadence. So I'm going to combine those two. Just generally talking about testing cadence, the draft LCD, I know you did address it. And then an appropriate cadence of testing in a patient with suspected active rejection versus the protocol recommended by DART, would it perhaps be better in your view to let a physician determine the appropriate cadence on an individual patient basis?

Yes. So there are some patients at higher risk than others. There are patients that are what they call sensitized. They have reactive antibodies or elevated or they are of a certain race and gender that may be higher risk than another race and gender or age. So like older Caucasian males have lower rates of rejection. So if you want to nail it down to that level, then yes, there are probably differences in what patients should be followed. But I can tell you that it's difficult for centers to do that, to individualize it that much. So I think they got -- it would be good if they came out with some kind of reasonable protocol that they could follow. I'll give you an example, and this is not a knock against surgeons, but they like simplicity. So we know that, for example, the main drug we use called tacrolimus has an average dosing that the FDA says is 0.075 milligrams per kilogram twice daily. So you could actually look at the way and say, okay, there are 100 kilos, I should use 7.5 milligrams. But then if you have someone who's half that weight, then use less. Well, what I have seen, and this is uniform throughout, they just like one number. Let's just put everyone on 4, and then they adjust thereof, know what I'm saying? So if the experts can come up with what they think should be done for most folks, that could be the standard. It doesn't necessarily have to be exactly what the DART did. The DART did it 7 in the first year because we didn't know what we were doing. We didn't know what -- we didn't even know if this was going to work and it was blinded, so we didn't -- we wanted more data to try to figure out what's going on. The individual didn't know if the cell-free DNA was positive or not. They were doing biopsies based on what the creatinine was. So -- and -- but you're right, I think you should -- hopefully, the government is not so firm to say, "Oh, well, only 4 in a year, only 2 in a year" that they don't -- that there's individual cases where you need to do it more. And one of the things I mentioned, the utility of this test is actually to see the results of the treatment. So if I have a patient that has a cell-free DNA went to 1.2%, even the creatinine looks normal, I biopsy them and they got rejection. So I could treat them with whatever treatment it is, or whatever type of rejection is and instead of rebiopsy-ing them in a month to see if I got it because the creatinine was already normal. So I can't rely on the creatinine to tell me what's going on. But the cell-free DNA comes down, more and more publications are supporting, you got it that you did it. And if it didn't come down, you need more treatment. So I've got patients that I'm not even biopsy-ing anymore. I know they have this thing called chronic AMR, antibody-mediated rejection. I order a cell-free DNA. And when it pops, I treat them. And then I don't have to biopsy them. And that patient 7 years ago, was one of the DART study patients has been able to keep her kidney because of that. And we sure would have lost it years ago if we didn't have this ability. So I think that's the utility. That's the cadence. So I think there should be a minimum allowable. But I think you're right, there's individual practice, and I think -- and there are some patients that are higher risk than others. So there should be the ability, if necessary, even if we have the right to CMS to tell them why we're doing it to go ahead and get the ability to do that.

Thank you so much. We're not going to be able to get to all the questions. So we want to be able to respect your time. You guys, we love your interest in our technology and Dr. Langone, and what he has to say in our company investors.imdxinc.com. There's lots of investor information there. I think I want to turn it over to Josh Riggs and Dr. Langone going to close us out.

Yes. So thank you, Dr. Langone. This has been wonderful. And I think it's really interesting for us to hear sort of the center experience, particularly one of the top centers in the world and how you guys think about donor-derived cell-free DNA. So thank you for sharing all of that with us. If you had any parting comments you'd like to share with us, I'd like to turn the floor back over to you. But otherwise, we're very thankful for your time today.

No thank you, and thanks for this forum, I hope this technology keeps evolving.

Me, too. So anyway, thank you, everybody. This has been wonderful and a lot of fun. Thank you for all the very thoughtful questions and showing up on a Friday afternoon to hang out with us.