Veracyte, Inc. (VCYT) Earnings Call Transcript & Summary

All right. Hey, everyone. Good afternoon. I'm Tejas Savant, and I'm with the Life Sciences team here at Morgan Stanley. Before we begin, for important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. And if you have any questions, do reach out to your sales rep. So it's my pleasure this afternoon to host Veracyte, and speaking on behalf of the company, we have CEO, Marc Stapley; and CFO, Rebecca Chambers. So thank you guys for doing this. Appreciate it.

Marc, maybe to kick things off, just talk to us about what you view as Veracyte's key accomplishments in '24? And what are you most excited about heading into the new year?

Yes. Thanks very much for having us. And before I get in, maybe I'll just make a statement about our safe harbor. To the extent we are making any forward-looking statements today, we'd expect those to be covered by that safe harbor statement, which can be found at www.veracyte.com. Thanks again for having us. So to your question regarding our accomplishments so far in 2024, I'm really excited about the progress we've made on a number of different fronts. And a couple I'd like to highlight. Firstly, the growth in our core business, our core Testing business has exceeded our expectations again. And we significantly raised our estimates for that at our last earnings call, having had an incredible test -- core testing performance in the first half, driven by Afirma and Decipher and I'm sure we'll get into the reasons behind that. In addition, the progress that we are making on our 3 strategic growth drivers, one of which MRD came from our acquisition in the year, of C2i, and so I'm very excited about our MRD platform and the opportunities that, that presents and the optionality that, that acquisition gives us as well. And just in general, the progress that we've made as a company on our financial performance. And one of the things is that I would highlight is that we turned, I think, a really important corner in terms of profitability. And in the second quarter, we posted 21% adjusted EBITDA margin, which I think is we believe is leading in the industry, and I think really a demonstration of the very focused approach that we have to financial performance, combined with the growth that we're seeing.

Got it.

And just one more thing to add there. Obviously, that focus on profitability has translated into an incredibly strong balance sheet. We have guided that we're going to end the year at $260 million to $270 million of cash on hand. Obviously, don't have any debt. And so I think that's also very differentiated.

Got it. So let's start with Decipher. Just in terms of the market, the penetration for Prostate Classifier is about 35%, so plenty of room for future growth. What are the factors, you believe, have kept this market from being much further along in adoption? Is it awareness? Or is it prior auths? And what are you doing to help grow market penetration?

Yes. And 35% is what we estimated for the penetration of all the tests in this market at the beginning of the year. And I tend not to think about it in terms of what's kept the pace because -- from going even faster because, frankly, the pace of adoption has been quite astounding in the last 3 years, as we've gone from a position where we've literally tripled the number of tests from around 7,000 a quarter to almost 20,000 a quarter that we've done in Decipher. And so I've actually been very encouraged and very excited by the pace. Having said that, to the point of your question, if I think about it from a patient perspective, our vision is clearly that every patient with prostate cancer should get a Molecular Diagnostic and we'd love that to be the Decipher test. And -- and so I think as we go forward, we think about making sure that those guidelines -- that guide to use Decipher in the case of all NCCN risk classifications low, intermediate and high. And then in the future, metastatic, means that 100% of new prostate cancer patients who are dealing with this terrible disease should be able to benefit from the Decipher test in the future. And so -- our estimate is that we think this market can grow to 80% penetration. I would never go so far as to say 100% because there's always reasons why you never get there. But to your point, there's a tremendous amount of opportunity for it to go from where it currently is to that 80%.

Got it.

And on the prior off piece, that hasn't really been an impact for us. We have put in place over the last number of years proactive measures on prior authorizations. And so we have a whole team in operational process that enables every non-Medicare test to be done prior auths before. So -- so I don't think -- i don't view that as a challenge on the reimbursement front or on the -- on the penetration front, nor do I view reimbursement as a challenge, especially in light of the large payer that we get contracted in the first quarter, which I'm sure we'll get to as well.

Yes. that's actually my next question. So I think you went in network with that large commercial payer that was about 30 million lives covered in the first quarter. Where are you today in terms of total lives covered? And are there any major holdouts at this point that would represent step function opportunities to broaden out reimbursement?

Yes. That was a very, I think, pleasing from our standpoint and long overdue achievement -- milestone achievement for us in the first quarter, and we've seen the benefit of that. We're now over 200 million covered lives in Decipher. I would compare and contrast that with Afirma, which is at 275 million and has been obviously, on the market for a lot longer, and we've been contracting with commercial payers for a lot longer, plus Afirma is a lot more biased towards commercial payers than Medicare. But I'm very pleased with where we are on Decipher. There aren't any major holdouts, but I think that last one in Q1 was probably the one that we needed to get over the fence. But there are lots of conversations still to have. And clearly with the guideline, the KOL support that we have, those conversations become a lot easier with over 100 studies supporting Decipher and strong evidence again, those are kind of conversations that it's easy to have. And so I see us blocking and tackling our way through those remaining payers over time.

Got it. Switching gears to the Metastatic Prostate expansion, that's underway. WPS recently established an LCD as well. You've talked about the setting representing an incremental sort of 30,000 patient opportunity for you. Who are the players in this metastatic setting? And has Palmetto now issued an LCD as well?

Yes. So remember, the total incidents for prostate cancer is 300,000, and that includes the 30,000 for metastatic. And up into this point of the recent reimbursement LCD for metastatic cancer, we were only able to serve 90% of the market now. As I said, we can serve 100%. I'm not aware of anyone else who's able to address that metastatic market, and so it's really important for us. And there's a few steps that we need to go through, to do the necessary tech assessment, training of the sales force and so on. Remember that just like we did with Decipher in the beginning with Afirma, we're changing practice. And so now in this situation, you're changing practice where a test typically hasn't been used for these metastatic patients. And the reimbursement, I think, is good validation that there's utility here. And so now it's a case of having the sales team -- training the sales team and having them go out and educate physicians and drive that adoption.

And the LCD form Palmetto was finalized a couple of weeks ago. We then have to go through a tech assessment process, which we're in the midst of -- so we hopefully will have reimbursement early next year, and then we'll do the awareness campaign that Marc cited. And so we're excited about it as a potential growth driver for '25 and beyond, albeit more in the back half of '25.

Fair enough. On the commercial organization, can you remind us the number of urology sales reps today, and do you see an opportunity to expand that further to drive growth, assuming that it would become harder and harder to penetrate the market, as you move into the lower prescribing accounts?

Yes. And I think that's a really important point that some may not fully appreciate, which is the leverage that we get from our commercial team. By the way, I want to start by saying our commercial team, both on Decipher and Afirma are fantastic, and they do an incredible job. But in terms of actually growing that team, I'll talk a little bit historically and then go forward. But historically, if you think over the last 3 years that we've been driving Decipher, we've probably added 15 sales reps to now be roughly 50, 5-0. And so you can see that the revenue is clearly growing a lot faster than the sales team is growing, and that just demonstrates the leverage we can get. Going forward, if we thought we could add more sales team to drive more volume, we clearly would have done that. There's actually an optimization in equation that you get into here in terms of territories and territory splitting and how much a rep can cover, and you have to be very thoughtful about changing and introducing new territories always creates some disruption. And so I think we've really found a way to optimize that and our commercial leadership has done an incredible job doing that. And so no, I don't see a great deal of future necessary investments, certainly, I'd say -- it's consistent with what you've seen in the last 3 years.

I would say that, that actually flows across the portfolio as well, right, whether you're talking about Decipher or Afirma, on the IBD side, we're in this enviable position where we're serving specialty markets, and therefore, we can grow with -- grow the sales team as the revenue plays out and not just -- provides the immense leverage across the entirety of the portfolio that Marc cited.

Got it. On the product enhancement side, Marc, any thoughts on what's on the cards for Decipher similar to what you've done with Afirma that could potentially deliver more value around the test?

I'd say not really. I mean most of what we've had to do on Decipher is focus on expanding the indications and including metastatic. We launched Decipher with the GRID research use only tool and capability that is driving and fueling a lot of the evidence development that we're seeing in a real-world setting. And so -- and the test performs incredibly well across many categories of the care continuum from prognosis now clearly moving into mole prediction-based utility. And so we're very happy with how the product is performing. And other than what we might do internally from a lab operations and COGS perspective, that would be largely invisible to the external world that the external product is the product I see for the future.

I think on that one, just one quick thing to add is, effectively, the benefit of those enhancements on the Afirma side have really been driving the cadence of going out and seeing customers quarter in, quarter out. We're able to do that through the massive public body of publications that are generated for Decipher. And so it's a little apples and oranges that way. I think the most important thing is are you better in the product designs, et cetera, and Decipher was a little bit ahead of that with regard to GRID publication evidence than Afirma was. And so we've kind of now gotten them to be a little bit more [indiscernible].

Got it. On the competitive landscape, Decipher has shown really impressive growth in share. Who do you run into most often? And what has allowed you to be the dominant player in that market?

Yes. So Decipher didn't obviously start that way. Unlike Afirma where we created that market for diagnostic testing in thyroid cancer, that market already existed in prostate cancer. I go back to the point I made at the beginning here, from a patient perspective, we want to see every patient with prostate cancer get a molecular diagnostic test. And as I said, we'd love that to be the Decipher test. And the way that we drive that in terms of differentiation of the test, is a lot of different factors. One, and most importantly, this is a decision we made in Decipher, it's a decision we made in Afirma at the very beginning to run a whole transcriptome. And that was a very conscious decision because we fundamentally believe that more data is better and that's really proven itself out in Decipher. So what does the whole transcriptome give us in terms of differentiation? First and foremost, obviously, we have a very high-performing test and a lot of evidence to support that statement. Secondly, the research use only GRID, which is ordered by roughly 50% of patients of physicians -- I apologize, enables us to -- enables them to do more research and oftentimes, investigator-led research that we don't necessarily sponsor or even get involved in that creates this huge flywheel of data generation, creating more evidence and evidence generating insights and insights fueling adoption, and then the greater real-world evidence that you -- you get from adoption keeps that flywheel turning, which is why Decipher to Rebecca's point has so much evidence out there to date over 100 studies. And so that is one of the real differentiating factors that comes from our data-driven decision to run a whole transcriptome. And then, of course, the guidelines, I talked about the guidelines before, but just to put that in context of the market, Decipher is the only gene expression test with the level 1B guidelines and not just the guidelines themselves, but a very specific table that references the different NCCN risk categories, low, intermediate. high, depending on the decipher score, how the physicians should think about treating that patient from active surveillance to single therapy to combination therapies, to surgery and so on. And so having that level of clarity around decision-making really, I think, helps and we carried out a survey of positions recently, and I think very encouragingly, 80% were aware of these guidelines, which is great. That education has been done. 75% said they would use that table to guide their decision making.

Got it. You've had -- in the sense you have the market yourself to the extent that Prolaris has been playing catch up on evidence generation and Oncotype obviously went through that switch to MDx Health. Where are -- are you starting to see them sort of rework their strategies towards as they try and play catch-up in this market to Decipher?

I couldn't tell you what I think they're necessarily going to do. I think the most important thing from our standpoint is that same flywheel I talked about for evidence development, because like I say, when you've got a test that is used as broadly now as Decipher even though in the market that's only roughly 1/3 penetrated, but Decipher is broadly used, it's well recognized by KOLs, not just in the U.S. but around the world. And so when a new study has commenced, it's often commenced using Decipher. Retrospective studies are done using the whole transcriptome analysis that we're able to provide. So that just, as I said, creates more utilization of Decipher, more studies involving Decipher. So the bar just keeps raising for evidence. And so I think that creates a little bit of a barrier to entry for others in that regard. But that's our focus is -- it's an important market. We want to see all patients being -- having access to molecular diagnostic test and we keep driving the evidence development around Decipher and others do, then that should continue to be the market-leading test in our opinion.

Got it. You sort of deemphasized the bladder part of the Decipher portfolio a little bit. Talk to us about how you're thinking about that opportunity. Are you waiting for prostate to hit a certain threshold before you broaden out the focus?

Yes. Well, I actually say, we've re-emphasized our focus on bladder now, given our MRD acquisition more so than anything else. One of the things we recognize -- and Rebecca mentioned earlier, the Specialty Diagnostics focus that we have and the channel that we have. We have access to urologists with Decipher, and so that creates a window and an opportunity for us in bladder as well and other urologic cancers. Having acquired MRD capabilities, the whole genome approach and we can talk about that later, I'm sure. That gives us an opportunity to launch what I think is our first of many potential future tests in muscle-invasive bladder cancer. And so our internal focus in that channel beyond Decipher Prostate has really turned to muscle-invasive bladder cancer MRD, because that's where we think the clinical utility is, we have the capabilities to do it. The pathway to reimbursement is there. And so that's now our new focus. It doesn't mean that we will not also focus on Bladder Diagnostics, Prognostics, that's still within our wheelhouse and just a question of prioritization.

Fair enough. Switching to Afirma, Marc. It's a more established market, 60% penetrated. Could you elaborate on your strategy for getting that penetration to that sort of 80%-ish level that you talked about. What are the low-hanging fruit that remain? Do you think you need to expand the sales force further to capture the opportunity?

Yes, great question. We've seen a really nice resurgence in Afirma. And over the last couple of years, it's even surprised us relative to expectations for growth. And a lot of things -- and Rebecca mentioned, a lot of the things that we've done, we launched our TERT promoter gene. We launched GRID. We've done other things in the whole physician workflow that have really enabled us to have regular conversations with our physician customers, and that has led to even greater interest in the test. And so we're very happy with the level of penetration. To your point, the market itself is around or was around 60% penetrated at the beginning of this year. And we also think this market can get to around 80%, if not more. And so clearly, there's the white space that we can go after in terms of underpenetrated part of the market, but there's also a share gain opportunity here. And I think it's fair to say with the numbers that we've been seeing lately in the growth and the information that's available to us publicly that we have been taking some share now in Afirma as well. Some meter analysis came out that support the test, including some real-world evidence that showed that Afirma performed even better than its own clinical validation study. And so performance of the test continues to encourage further utilization. So I would also add to that, we just got coverage for the Bethesda V indication. And so that adds another 30,000 patients. So that's a tailwind going forward, and that's effective in late July. So you'll start to see that in the Medicare setting, which is about 1/3 of our patients towards the end of this year and beyond.

Got it. So yes, that's actually a good segue to my next question. On GRID, good traction there. I think you said about half of the physicians ordering Afirma in 2Q chose to receive additional information from GRID. Can you just provide examples of how physicians are using that data today in the field?

Yes. Again, it would be used to drive some additional studies, and we've seen some of those where we presented 3 of them at ENDO, where in several other cases, it was a retrospective analysis of almost 50,000 patients. One example is the expression of PSMA and how that shows up in thyroid cancer, which was an important one as well. And there were a couple of others that we had at ENDO. And I think what the key takeaway from those is it's helping physicians look for new biomarkers or new combination of biomarkers that might suggest aggressiveness of the thyroid cancer, specific treatments, prognostic outcomes and so on. So -- really excited about that. It's only been on the market, what is it now, less than a year so far that we -- in fact, we launched GRID, I think.

Late in Q4 year.

Late last year. So it's almost a year. We're already seeing great progress in studies already coming out.

Got it. And then on the patients with the Bethesda V nodules 5. I think you said 30,000 patients. How are you thinking about the associated ramp for Afirma? What fraction of your current volume involves patients with Bethesda V nodules? And what proportion of that volume comes from Medicare?

Okay. So on the Bethesda V patients of around 30,000 a year -- the patient population, Medicare commercial split is the same as the broad population. So 1/3, 2/3, if you will, Medicare, Medicare Advantage and then on the commercial side. We are running tests for commercial payer patients on the Bethesda V side. And that typically is kind of in the 5% to 10-ish percent of total volume range. And I think that is -- going forward, we'll have a benefit to ASP as we start get paid on the Medicare side to that end. On the commercial side, we'll be to have more forthcoming conversations as well on getting a higher reimbursement value for those Bethesda V patients on the back of the LCD, and so our managed care team will be going through that whole process over the coming years, similar to the one Marc talked about going payer by payer, contract by contract and it just takes time. So I would say it's a nice tailwind and a pretty large established market that's still growing. And in general, it's aligned with our approach to broaden market -- broaden the market through indication expansion and gain incremental coverage. So all good.

Got it. So between Bethesda V and the GRID tailwinds, plus the recent performance you've had in Afirma, why is high-single digits still the right framework to use for steady state growth?

Why is -- sorry, what the...

High-single digit sort of Afirma growth.

That's not our number, so it must be yours. But I think when it comes down to it, we absolutely are excited about the continued prospects of growth for the Afirma product. And we've been in the mid-teens now for a number of quarters, and we think that we have ample growth between the growth of the market, which is low to mid-ish single digits, penetration and share gains. And so there's still a decent amount of white space. So in any given year, comps are going to be what comps are. And I'm less concerned about whether it's high-single digits or something else. And I'm more concerned about continuing to penetrate that market and demonstrate strong growth for Afirma, both Afirma and Decipher just our -- Afirma, obviously, is in its later stages. But between the two of them, we have been nothing but forthcoming on our confidence level in terms of the ability of those two things to really bridge us to our long-term growth drivers. We have extreme confidence in our ability to effectively deliver outsized revenue growth to that end on the back of both those products.

Got it. So on nasal swab, Marc, the NIGHTINGALE study continues to enroll, but it's seen some delays in expected enrollment. It sounds like one of the challenges, just stringent inclusion criteria. Is there anything you can do to lower that requirement without compromising the integrity of the trial? And you've got about 100 sites enrolling at this point. So is there any room to expand that further a little bit?

Yes. So NIGHTINGALE is our pivotal trial for demonstrating clinical utility for the nasal swab test. And as you mentioned, we have around 100 sites enrolling right now. And our goal is to get to 2,400 patients. Our priority is a pristine clinical study, not velocity of enrollment. And so one thing that we obviously did as you would typically do is make sure that there's stringent criteria for which patients are eligible to be in either the control arm or the study arm. And of course, we have -- it's important that we have the right cohort of patients in both of those. So we can demonstrate very clearly that when nasal swab is utilized, it changes the physician behavior in terms of treating patients with invasive procedures when they're low risk or taking patients to more aggressive therapy or aggressive treatment when they're high risk. So we want to be able to demonstrate that very cleanly. A good example of one of the stringent criteria is, it has to be a new nodule without an existing treatment plan. If we had a patient who had the nodule identified even in a different institution 6 months or a year ago and had already been treated or even a treatment plan developed and not implemented, that could affect whether they're in control arm of the study arm, it could -- it would absolutely affect the outcome. And so there's nothing I want us to change in terms of the study design itself. And I don't think adding more sites, it's helpful. by the time we add, contract, initiate and get those sites started, we're more likely to finish the enrollment. And so we'll let people know when we're done with the enrollment. But I'm very happy with where we are and the pace, the pace is what it is. What's more important is the quality of the study.

Got it. And in terms of initial data, what's the time frame for that as best as you can...

Yes. I'll cover that and then Rebecca, you might want to weigh in here as well. But the way I think about the time frame of this is once we finish the enrollment of the final patient, we obviously have to follow up and track those patients who are benign. And the standard of care there is it takes 2 years to declare that every patient you think is benign. It's actually benign, but there's good evidence to suggest that something in the low 90% of patients can be called benign after 1 year. And so we'll look at both time frames and determine whether or not that gives us what we need in order to drive clinical utility. But that and of itself makes this a very long-term prospect because then you got to go to publication and reimbursement.

Yes. And then that's where I'll pick it up. So this is the longest of our long-term growth drivers. I think that's well understood. It's not in our 3-year numbers. It's in our 10-year numbers. And I think when it comes down to it, we have so many catalysts in front of us between Afirma, Decipher, the IVD strategy MRD, that we're sitting here in what we believe to be a relatively enviable position.

Got it. Switching to the MRD side of things, Marc, talk to us about the competitive landscape. Obviously, it's a large market, ample room for multiple players here, but an increasingly competitive one. How is C2i differentiated from some of the tumor informed products that are also using a whole genome sequencing approach such as Personalis or Myriad?

Yes. MRD is an important market for us. We want -- we've been looking at this market for a number of years, and we wanted to make sure we had an opportunity to participate here in an option here. And it's a very crowded market, as you say. What I'm really excited about with our acquisition of the C2i asset and team is the whole genome approach, which has a number of advantages. And when I say whole genome, you mentioned others who do whole genome. We don't just do the initial landmark sequences as a whole genome. We do the liquid biopsy follow-ups as a whole genome, which means a couple of things. A, we don't have to create a personalized assay, so there's a turnaround time benefit related to that; B, with a whole genome, we need less blood as well. And we actually think the performance of the test is very strong based on the data that we have. So there's lots -- and plus, of course, back to that flywheel of data generation, we actually believe ultimately this market needs to be a whole genome market and that data that we'll generate will fuel that flywheel for MRD as well, and we'll continue to see more studies and more discoveries and more evidence there. Now we're starting with muscle-invasive bladder cancer. That's a market I said earlier, we already have that channel and there's a path to reimbursement, we'll have that assay in the first half of 2026. But this is a platform. This isn't a single product assay. This is a platform that we could expand into other indications. And you can imagine those indications might include the ones that we already have a presence in and others beyond that as well. And so we'll take our time to do this right. The muscle invasive bladder cancer will demonstrate the power of the platform, and we'll take it from there.

Got it. Is there a risk in your mind, Marc, that perhaps it's a little bit of overkill for the MRD setting? I mean obviously, whole genome sequencing gives you more data back, and that's a good thing, that can't be a bad thing, but there are examples in the past where at [ alumina ], for example, when folks were expecting whole genome sequencing to proliferate it at a much more rapid pace. And it's there in the rare and undiagnosed disease setting, but elsewhere, it's still very much the targeted approach. So as you think about MRD playing out, what gives you the conviction that using whole genome sequencing even for the surveillance is going to be the differentiator...

And I know MRD is a little different to the prostate market, for example. But again, our whole transcriptome approach, we could easily have just done a 22-gene PCR and we didn't. And that evidence generation benefit has really led to Decipher becoming the market-leading test as we spoke about earlier. We actually think that with the downside of doing a whole genome relative to the upside, make it for us makes sense, especially over time. And so there may be an initial burden, but there's a long-term benefit. And as I say, we'll launch thoughtfully indication by indication. And so we'll be able to optimize for that benefit over time.

Got it. And then, of course, I mean, the cost of sequencing keeps coming down, and that's going to be a benefit. But beyond that, are any other COGS initiatives in the works that you have in mind to make the COGS aspect a little bit more manageable, given the sequencing intensity?

Yes. No, I think there's a number of different levers to pull and not just on the MRD portfolio, but on the broader portfolio. And obviously, the cost of sequencing is one, and it's something that we're looking into, albeit there are considerations on the other side as well, right? You want to make sure you're protecting reimbursement and all those other things. So we absolutely have a whole portfolio of projects that are going on, too early to talk about time lines or magnitude. But we're super excited about them, and we're starting to really see what this could look like. And I think when it comes down to it, the Afirma platform is on NextSeq and the Decipher platform is [indiscernible]. And so we still have -- we have ample opportunity there. And obviously, that will be important as we try and offset reagent price increases, labor increases and stuff like that. But we're -- we'll have a lot more to talk about in the coming period of time on that one.

Got it. And then on the MIBC launch in the first half of '26, what remains to be done at this stage? And where are you in terms of the tech assessment and lab automation process?

I mean that's what we're working on, putting this -- doing the R&D project to get this ready for our lab, transferring it to our lab, doing the tech assessment, getting through that review and feedback period. And so that's what leads to the first half of 2026 is our time line and no change to that.

Yes. If we wanted to launch earlier without reimbursement or without a line of sight reimbursement, that could be a faster time line, but that's not something that we feel is appropriate for our financial profile.

Got it. Is there a world in which we could see you do a controlled launch gated volumes ahead of reimbursement?

Potentially, I mean it's nascent to talk about that right now.

As we think about the amount of data that's generated for MRD, given the acquired longitudinal blood draws, particularly for whole genome sequencing. Obviously, the challenges associated with data storage and analysis are going to increase. So how are you looking to keep a lid on the rising costs associated with storage once the C2i test sort of launches and starts to ramp?

Yes. It's a real really good question. And we've been working on -- I mean, actually, in advance of our C2i acquisition, just so that we can really benefit from and capture both external and internal benefits of generative AI and other technologies that are coming. We really worked hard on our infrastructure, our cloud strategy, building the backbones that we need in order to support the type of heavy data application. And then, of course, we acquired C2i along with a very talented team who've been thinking about that themselves for many years. So put that together, we now have a very experienced team on both the infrastructure and application side, and so managing our storage and compute cost is a key part of that whole strategy. And a lot of what they're doing is figuring out how to do that most effectively and to optimize.

And to that end, it is something that we obviously burdened our business case with when defining the purchase price for C2i and the COGS profile on a go-forward basis without making large assumptions around declining costs there as well, which, obviously, we've seen similar to sequencing.

Got it. Marc, quickly on the IVD strategy, right? Are you still as convinced that this is an important strategic initiative for Veracyte? You've got a bunch of assays that you're bringing over. You've tweaked a few things there, NGS, PCR, et cetera, versus Prosigna on nCounter. But talk to us about that.

We are very -- very much again back to patients, right? There are patients in Europe, in the case of prostate cancer, even greater than the U.S., 500,000, who should be getting a prostate cancer test. And so we believe we have the strategy and the approach to make that happen in a financially prudent and cost-effective way. And our multi-platform strategy is fueling that. We have 3 IVD products in development right now. And I'm really excited about launching Prostate as a PCR test in 2025 and then Prosigna on NGS and after that nasal swab. And so yes, we continue to believe very much in this approach and how we're going about it.

Rebecca, let's wrap up with just an early framework for 2025. I know you don't want to guide, but guard rails for growth for each franchise. And then you've got really good margins, as you said, 25%-ish EBITDA margin. I mean is that sort of a 2-year thing? Is that sort of further beyond that?

Yes. So fair question. And then you're absolutely correct. I don't want to guide, partially because at this time of the year, it's not appropriate to do so and partially because we're in the midst of defining and having those conversations with the team. I will say, at this point in time, obviously, we're incredibly committed to our financial differentiation that we have delivered to date, and going forward with something that's not dissimilar and continuing to make strides. Historically, we've had leaps and bounds. And I think from here, both Marc and I and the broader management team are committed to delivering incremental leverage to the adjusted EBITDA line getting to that eventual goal of 25%, albeit small -- there'll be small increments than the 5 or 10 percentage points that we've seen over the last couple of periods. So we're super excited about our strong balance sheet, our strong P&L and what we can do to continue to both serve patients, which is obviously part of our critical mission, but doing so in a way that's responsible and investing for the future growth while still delivering profitability.

Awesome. Great to hear. Thank you so much, both, for joining me today.

Thank you. I appreciate it.

Thank you.