Renalytix Plc

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00:30 Thank you, [Mary] [ph] and thank you all for participating in today’s call. Joining me today from Renalytix are James McCullough, Chief Executive Officer; Tom McLain, President; and James Sterling, Chief Financial Officer.

00:43 Before we begin, I’d like to remind you that management will make remarks during this call that include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of nineteen ninety five. Any statements made during this call that relate to expectations or predictions of future events, results or performance are forward-looking statements.

01:04 Examples of these statements include, without limitation, statements related to KidneyIntelX’s ability to lower healthcare costs, improve patient quality of life and set long-term standard of care, trends at our market and potential benefits of government policy change, the impact of COVID-nineteen on our business, our expectations for hiring, product development, strategic partnerships and collaborations, reimbursement decisions, clinical studies and regulatory submissions and our business strategies and future growth. 01:36 These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements.

Accordingly, you should not place undue reliance on these statements. For a description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our Annual Report on Form twenty F that was filed today October twenty one, twenty twenty one with the Securities and Exchange Commission.

02:05 All forward-looking statements made on this call are based on management’s current estimates and various assumptions. Renalytix disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise.

This conference call contains time-sensitive information and is accurate only as of the live broadcast today, October twenty one, twenty twenty one. 02:32 And with that, I’ll turn the call over to James McCullough.

02:37 Thank you, Peter. Good morning, good afternoon everyone.

Over the past year, we have continued to methodical execution of the fundamentals for the Renalytix care model, which was designed to change outcomes, costs, and patient quality of life and chronic kidney disease. We believe the next six to twelve months will be event filled with new hospital system partnerships, broad real world evidence development and publications, expanded private and public reimbursement coverage, an FDA De Novo marketing authorization for KidneyIntelX, growing pharmaceutical partnership activities and the build out of our direct sales, marketing and customer service capability.

03:19 We expect revenue growth this fiscal year from three main areas. Our announced scale up of KidneyIntelX testing in the Mount Sinai Health System, initiation of the KidneyIntelX program across the Veterans administration health system and expanding pharmaceutical partnership related activity.

Our KidneyIntelX EHR integration with Atrium Wake Forest is expected to go live this current quarter. 03:42 The universe of KidneyIntelX insurance coverage has increased to twenty private commercial contracts, and we are pleased to announce today now includes our first Blue Cross Blue Shield coverage contract and a coverage contract from a major New York State insurance provider.

We have also continued to build on our Medicaid strategy with twenty seven approved state provider contracts. 04:05 For the kidney space, the stakes have never been higher, with close to forty million Americans who have existing kidney disease.

Most, fortunately, are in the early stages were advanced risk assessment and active treatment can have the greatest impact on maintaining health and limiting social cost. 04:20 Globally, the number of people living with kidney disease is estimated to exceed eight fifty million.

This is a massive challenge that needs to be addressed assertively with education, early detection, prognosis, proactive treatment, all beginning right at the primary care physician level. The unsustainable health economics share readily apparent.

Kidney disease related illness consumes more than twenty percent or one hundred and twenty billion annually at the U.S. Medicare budget.

04:47 For our U.S. Veterans, the Veterans Administration Health System spends an estimated nineteen billion annually for non-dialysis kidney disease alone.

Rapid growth in diabetes and obesity continue to fuel kidney function impairment across the global population. One in five Americans with kidney disease will suffer life threatening complications in their life times with many progressing unchecked until an emergency room visit.

05:13 The very good news here is the cost of preventable suffering has ignited a new era of accelerated drug and medical device innovation across a kidney spectrum. Releasing government policy shifts have underscored the importance of early prevention to maintain kidney health and have started the migration from late stage disease management.

These policy changes in the growing awareness in the clinical and patient community have provided significant tailwinds for our KidneyIntelX early risk assessment and care management program. 05:41 These converging economic regulatory reimbursement and clinical dynamics have created the most opportunistic environment we have experienced in our collective diagnostic careers.

And we believe that will provide lasting benefits for patients, doctors, and investors alike. We believe the solution to kidney disease epidemic ultimately lies in the accurate risk assessment of large populations with early stage kidney disease, closely matched with corrective clinical actions that can be implemented by the estimated two hundred and ten thousand practicing primary care physicians in the United States.

06:15 To be effective this clinical action must be guided by a patient's current biology as measured by active blood biomarkers KidneyIntelX currently uses three, well established blood biomarkers for kidney status prediction. The preventable solution also needs to be deployed with physician education, advanced population health strategies and a dedication to continuous real world evidence development.

This in a nutshell is our KidneyIntelX care model. 06:44 In this current half year twenty twenty one, Renalytix is building on a national commercial launch strategy for KidneyIntelX.

In less than thirty six months from our first funding, the KidneyIntelX program is now scaling system wide in the Mount Sinai Health System, which is currently carrying for an estimated two hundred and fifty thousand patients with chronic kidney disease. 07:06 We have been granted a ten-year U.S.

General services administration agreement allowing us to initiate a comprehensive sales program into the VA Health System, which is currently carrying for a chronic kidney disease population that could exceed two million individuals. Additional program implementations are underway at the University of Utah in the Southwest region, and Atrium Wake Forest in the Southeast that we expect to begin live testing this quarter.

07:32 We expect KidneyIntelX will achieve payment by Medicare at the set National Medicare rate of nine fifty dollars per reportable result by the summer of twenty twenty two. With GSA, Medicare and other private and government reimbursed we expect KidneyIntelX insured covered lives will exceed ten million people with diabetic kidney disease in the United States.

07:56 We are working on expanding the KidneyIntelX product capabilities to support a breadth of precision medicine diagnostic, therapeutic, and monitoring strategies. Further expanding the potential eligible and insured market size for testing.

08:10 On now to key, two key operational areas, our Mount Sinai Health System implementation and the VA Health System launch that we've just announced. Both market categories will drive revenue for this fiscal year and growing in the fiscal twenty twenty two.

08:28 One of the remarkable value points to our hospital system implementations is engagement with population health, which brings the capability to coordinate care services across broad groups of treating physicians. With Mount Sinai, early success is triggered as system wide scale up with the target testing run rate of three hundred patients per week in the near term.

08:48 Mount Sinai expects to complete approximately six thousand patients tested around the second calendar quarter of twenty twenty two, which will result in an important large real world evidence demonstration. All testing conducted is set at the National Medicare and General Services administration price of nine fifty dollars per reportable result.

To support this scale up, we are newly hired Renalytix sales, customer service, and medical science liaison personnel around Mount Sinai and other healthcare institutions we expect will bring the KidneyIntelX solution program online in coming months. 09:28 We believe the real world evidence emerging for Mount Sinai is validating our business model that integrating with KidneyIntelX within a population health management system can drive meaningful change and care for early stage kidney disease patients.

This KidneyIntelX top health care model is also demonstrating a capital efficient needs to drive revenue growth by reaching regional basis of primary care physicians and at risk patients quickly with a consistent actionable message. 10:01 I like to turn the conversation now to our President, Tom McLain, who will detail our launch into the Veterans Administration Health System currently underway.

Tom?

10:13 Thank you, James. The Veterans Health administration system is the largest integrated healthcare system in the United States.

It represents a significant launch opportunity for KidneyIntelX, because the VHA has a longstanding commitment to improve care and outcomes for veterans with chronic kidney disease. 10:36 The VH has established itself as the leader in clinical care for CKD.

VHA implemented the first evidence based clinical practice guidelines ahead of other guidelines for both nephrology the KDOQI and KDIGO guidelines and for diabetes care through the ADA. VHA’s leadership in this space is built from knowledge and innovations in care delivery that they’ve developed from more than twenty years of kidney disease clinical trial experience.

11:12 Recent examples of VHA lead advantage and care include the deployment of digital platforms that can help guide CKD management and direct appropriate utilization of resources. They recently launched VA-REINS, a nationwide renal information system to inform and improved clinical care.

11:37 The VHA demonstrated commitment provides a unique setting to implement KidneyIntelX risk assessment to improve the health of veterans with chronic kidney disease. A key factor that will accelerate the adoption of KidneyIntelX is a new VHA clinical directive.

Directive number ten fifty three that’s titled chronic kidney disease prevention, early recognition and management. It was issued in March of twenty twenty.

12:13 In outlining the significant health challenge faced by VHA, the directive references that CKD is the fourth most common diagnosis in the VHA system. Of the nine million veterans receiving VA Healthcare, nine hundred and sixty thousand of them or eleven percent meet the established criteria for CKD.

The VA-REINS database estimates that with improved diagnosis, there could be as many as one to two point five million veterans using strict versus liberal definitions of CKD. 12:54 The cost of caring for the CKD population is substantial with annual VHA costs estimated to exceed nineteen billion that's twenty four percent of the VHA healthcare budget each year.

Directive ten fifty three specifies the VHA strategy for prevention, recognition, management and evaluation of CKD in the veteran population. It brings focus to kidney health by pushing CKD care upstream to prevent progression.

That change in care focus is expected to reduce the incidence of kidney failure and premature mortality. 13:41 Renalytix has just announced launching KidneyIntelX through a comprehensive commercial and clinical program focused at the national regional and local levels of the VHA systems.

Jed Fulk, our VP sales government accounts has just completed the first sales training class this week for a team that will build to four regional directors and forty account executives. 14:11 Allison Trucillo, our new VP of Medical Affairs is assembling a team of medical science liaisons who will partner with the account executives to introduce KidneyIntelX in the context of the CKD Directive and share clinical insights, insights that are based on our experience with large integrated health systems like Mount Sinai.

14:36 Our launch focus will be on supporting VHA primary care physicians and three key elements of the directive, early recognition, patient management and the prevention of end stage kidney disease. Our KidneyIntelX solution can leverage key elements of the directive.

14:59 Including the work of a newly formed Kidney Health Committee, Telenephrology consultations, initiatives focused on patients in rural areas and importantly, the patient aligned care team or packed model that integrates the PCP, care coordinators, specialists and the patient in advancing kidney health. 15:27 Importantly, for revenue recognition beginning this year, coverage for KidneyIntelX is provided under the company's general services administration or GSA contract.

This contract allows individual primary care physicians to order the task today and larger purchase quantities can be committed through a simple purchase order process at the VA Center or regional level. We expect to report initial revenues in fiscal quarter two and to drive significant revenue growth in calendar year twenty twenty two.

Back to you, James?

16:09 Thanks, Tom. Finally, a summary on regulatory and reimbursement.

As has been experienced broadly across the diagnostic industry, KidneyIntelX has had a prolonged review since our De Novo submission in August twenty twenty due to staffing challenges and continued prioritization of COVID-related emergency use authorizations. 16:30 FDA is not currently meeting its one hundred and fifty day De Novo review goal due to “considerable increases in COVID-nineteen activity”.

We're committed to working collaboratively and expeditiously with the agency and continue to provide additional information, clarification and supplemental analyses as requested. While we will continue to decline to provide a forecast for FDA timing, we are confident that KidneyIntelX will receive FDA authorization given our interactive dialogue to date.

And that fiscal twenty twenty two commercial objectives remain on track. 17:08 The recent government proposal to repeal the MCIT rule for national Medicare coverage was disappointing.

However, our Medicare coverage program through different Medicare contractors has been ongoing and we do not see a significant impact on our execution of our calendar twenty twenty two business plan if MCIT is ultimately to be repealed. We believe Medicare payment for KidneyIntelX will be achieved in the summer of twenty twenty two.

17:36 Our progress with private payer contracting, including the announcement today of our first Blue Cross Blue Shield coverage contract has exceeded our expectations. We now believe additional Blue Cross Blue Shield coverage will be available in the near term and can provide significant insurance support for expanding KidneyIntelX deployment.

17:56 Let me turn it now to James Sterling, our Chief Financial Officer who will provide more detail on our financial results. James?

18:04 Good morning, everyone. The earnings release we issued today presents our financial results for the fiscal year ended June thirty, twenty twenty one.

And I'll review a summary of these results now. All figures are in U.S.

dollars, which is our reporting currency. In the summary, I'll present our U.S.

GAAP financials as reported on our Form twenty F filed with the SEC. You can refer to today's press release for the IFRS financials and a reconciliation of IFRS to GAAP.

18:33 During our fiscal year ended June thirty, we recognized one point five million of revenue, which comprised nearly one point one million dollars of services revenue related to our work for Mount Sinai and AstraZeneca, and just over four hundred thousand dollars of testing revenue. These represent the commencement of revenue generating activity for the company.

We did not post revenue in the prior year period. 18:56 We recorded eight hundred and fifty eight thousand dollars of costs attributable to those revenues.

Our operating expenses were thirty two point five million dollars for the year compared to ten point three million for the prior year period. The increase was mainly driven by higher headcount and infrastructure build out as we scale the company for commercialization of the KidneyIntelX platform in the United States.

19:20 Net loss was thirty four point seven million dollars or zero point four nine dollars per share on a GAAP basis as compared to nine point eight million dollars or zero point one seven dollars per share for the same period a year ago. We ended the fiscal year with cash and equivalents of sixty five point one million on June thirty, twenty twenty one.

19:38 We’ll now turn the call back to James McCullough for final remarks before we open the call to questions.

19:43 Thanks, James. In closing, with the payment and regulatory landscape solidifying for KidneyIntelX, we intend now to build a substantial sales, marketing and clinical capability that allows us to expand baseline testing and monitoring of kidney health to the broader national market and eventually globally.

This includes a direct to any primary care physician capability in the United States. 20:11 We expect growth opportunities for calendar twenty twenty two and twenty three to be substantial with few Presidents that we have seen in the diagnostic space.

And importantly, with few Presidents in chronic disease management. This is a time and a place for step change innovation, which is driven by unsustainable social costs and a need to reduce unnecessary suffering.

20:36 There are multiple near term catalysts for value accretion to analytics and we will remain focused on measured execution to realize this potential. 20:45 Thank you.

Operator, we'd like to now open it up for questions.

21:18 Hi guys. This is Dan Macek on for Dan Arias this morning.

Thanks for the question. So, I guess first of all, is there an overall volume number of range that we should think about for fiscal twenty twenty two?

And I assume it's probably safe to say that Mount Sinai is six thousand tests is maybe a starting point, but realizing that there's ramping opportunities in the VA and also Wake Forest and Utah. I was just wondering if there's some sort of volume number that we should be thinking about?

21:50 Yes. Thanks, Dan.

I appreciate that. We're not going to give guidance just yet.

We're getting close, but we're giving ourselves a little bit of breathing room, which I think is appropriate as we're building out all these different segments. But I do think that we're starting to give some specific clues.

Mount Sinai was six thousand patients tested as a pretty big chunk. And we're also giving you some direction in terms of ramp rate with a three hundred test per week number.

22:25 And we would like to continue to translate that type of ramp rate and that type of volume into other systems that we're bringing online, recognizing that each of these systems is different. And I think the important thing here in terms of the hospital ramp rate is this year, we're now getting direct experience in demonstrating how the business functions in different environments.

This is key because the United States is a [lasagna plate] [ph] in terms of healthcare provision. If we're really talking about generating long term sustainable revenue growth, long term sustainable changes in standard of care, increases in volume ramp rates, we have to understand and demonstrate it in different systems in different environments and different demography’s.

23:13 So, your primary care experience here in Utah is going to be different than your primary care experience in New York City, I can speak to that directly because I spent thirty five years in New York and I've been here in Utah now for three years. So, we're understanding all these dynamics.

And that's going to help us to start to forecast much more reliably as we come into the end of twenty twenty two and start to provide everybody with guidance, but certainly taking a look at the Sinai numbers that we put down should give you a good clue. We shall see how the VA Health System ramps.

23:53 There are no barriers for us at the moment. There's no regulatory barrier.

There's no reimbursement barrier. We’re fully paid moving into this very large market in the VA system.

And we're now putting all the personnel capacity to start to implement in an assertive way starting this quarter. So, that's going to be very interesting to see the demonstration of testing growth and the experience that we're going to get as we start to launch individual hospital systems and we start to work at the [business] [ph] level as well.

But we'll be providing guidance hopefully soon. I hope that answers your question.

24:32 Yeah, that's helpful. Thanks.

And you mentioned you expect initial testing for Wake Forest and Utah. First, I just want to make sure I heard that right.

Was it in this fiscal 2Q or was it in the fiscal year? I just want to make sure I heard that right.

And then where are you in terms of those ramps, in terms of like implementation and integration, physician education you mentioned how different every health system is? So, I just trying to get a feel further both of those.

25:06 Yes, it's a very good question. I believe we're going to be live in November at Wake Forest Atrium.

I said this quarter, the December quarter, because I want to give a little bit of room because these are complex implementations, but what's become readily apparent is we have learned an enormous amount. On the technology side, the clinical workflow side, the education side, the behavioral economics, and some of the dynamics that are required to implement with these large systems.

25:39 Each one of these systems that we bring on is a big deal. They treat large populations.

They set standard of care in the regions; they are recognized nationally with Mount Sinai Health System it was a fabulous training ground to work very closely in partnership to get the first implementation done. And that provided us with credibility to go out to other institutions.

26:03 Wake Forest Atrium actually had a very well defined care pathway in place between population health and primary care. So, when we've got to the point of implementation was actually a lot easier for us to implement KidneyIntelX in a broad manner with electronic health record integration.

26:24 So, we're very pleased with how Wake Forest is going. We think they are a very important partner for us and we're going to be demonstrating a lot of real world evidence development.

I just want to warn everybody that actual revenue recognition from a group like Atrium Wake Forest comes as we build out insurance reimbursement around the system. 26:48 We do have a six million dollars testing contract with Mount Sinai Health System, which is providing us with direct revenue this year.

We are going to have to wait for reimbursement to come in, which we believe will come in starting in the first half of next year. Before we start to recognize actual revenue with Wake Forest.

But the experience of being able to move in and do an integrated implementation educate the physicians, create the IT infrastructure ahead of the insurance reimbursement is invaluable, right. Because we don't want to just show up with Medicare coverage and say, okay, let's go.

27:28 So, as we move into Medicare coverage, we will have multiple systems online, the clinical pathways will be out. The IT integration is in place.

We will have salespeople in place now. We will have medical science liaison support customer service, all of the things that are required to start to drive significant adoption and uptake in a sustainable manner.

This is the key. 27:54 So, when we start generating revenue, what I don't want to do is have a [indiscernible] revenue generation.

I want to have consistency growth building and we're able to do that now because of our experience with Mount Sinai Health System and some of the other systems. We're really starting to know what we're doing here.

28:14 Okay. Appreciate that.

And then lastly, maybe just give similar thoughts in terms of the VA ramp? It's obviously early, but if you could just speak to the path toward ramp in there?

And then I’m wondering too if there's a, you know you have, I think you said you plan on hiring, forgot the exact number, but I just – I’m wondering if hiring maybe a risk and you just hired a person in-charge there? And I'm just wondering on if there's – how that's going and if there's risk to other hires potentially as well?

28:54 Yeah. And I'm going to bring Tom McLain.

The great news about the VA for us is it's, we already have the government pay contract in place. At the National Medicare rate of nine fifty dollars per reportable result, the government is a wonderful payer.

So, we don't have revenue recognition risk when it comes to driving testing. [29:17 [Indiscernible] beginning of the company, I do not want to build up fixed overhead, until we have direct line of sight to reimbursed recognizable revenue.

So, when you see us starting to announce sales force build, that's something you can stand on in terms of the ability to recognize revenue with concrete reimbursement that's very important. 29:42 But the VA is an extraordinary opportunity, Tom, do you want to come in and just talk a little bit.

We just completed our first sales class training with the next one in December? So, this sales force build with medical science liaison is happening today.

29:57 Thanks, James. So, the drive for test volume and revenue at the VHA systems needs to be driven in the PCP office.

We already have the contract in place with the GFA contract and the form of contract that we were able to secure for VA and other government health systems. So, in order to get volume, we are deploying a trained sales force with MSOs who will call on the PCP.

This is the diagnostic commercial model that is deployed by all laboratory service providers, and it's those relationships and education and the work that we will do with them with the [indiscernible] teams on the care integration of KidneyIntelX risk assessment that is going to drive volume and therefore drive the revenue growth under the payment that we've secured with the GSA contract.

31:07 Thanks, guys.

31:09 Thanks Dan.

31:19 Hi. Thanks for taking the question.

Just a quick clarification on the FDA. There's, I mean I was reading through the press release and just want a clarification in terms of like the missing the one hundred and fifty day that's nothing new, right?

I mean when you're commenting there, that was just on the August day, am I correct? There's no new delay or anything like that, and that's just a quick clarification.

31:46 Thanks, David. Now no news.

We're all waiting with the FDA process. I think the important thing is we see no show stoppers.

I think the dialogue has been very prescriptive and very specific in terms of process to date, which gives me a lot of confidence. And obviously, if there was a significant delay or if there was show stopper at something we would let the market know.

But I'll let the statement stand where it is. 32:23 The MDUFA dates were targets and FDA has been under as everybody knows an enormous amount of stress.

They are still as I understand at processing emergency used authorizations for COVID Diagnostic test, currently now moving into the home testing market. 32:44 So, the stress on the agency is significant.

I think they're doing a remarkable job at getting through the process and we remain quite confident where we are with the application.

32:59 Appreciate it. And then just reimbursement in private payers, how many private payers should we expect prior to the LCD?

And do you – is there any kind of snowball effect from signing the first blue to maybe some of the other blues? It seems like sometimes there is and sometimes there isn’t?

So, I'd love to get your thoughts on that.

33:24 Yeah, it's a very good question. Tom, do you want to take that one?

33:29 Sure. So, we continue to secure private payer coverage agreements.

So, while Medicare coverage is helpful with that, already being on the clinical lab fee schedule for Medicare has given us a wind in our sales. Significant to our coverage efforts is the expanding numbers of health systems partnerships that we are putting into place when you have a large health system in a region adopting KidneyIntelX that accelerates the coverage process with the payers in those regions.

So that probably is as significant for us in expanding coverage as any factor could be at this stage of deployment of KidneyIntelX.

34:33 Got it.

34:34 Yeah. David, I think a lot of people have heard me say this a long time, but when we started Renalytix reimbursement strategy it was the number one item.

Because we know how to run an FDA process. We know how to build an IVD.

We know how to build marketing of sales. We know how to do all these things, but the value generation here comes from obviously ultimately revenue growth, which is a function of payment and reimbursement.

So, we have had reimbursement as a complex strategy from the very beginning. 35:13 We do not take any specific reimbursement pathway as a sole pathway.

We always have multiple pathways that we're working on. This is critically important because different pathways happen at different times as we just seen with MCIT.

Things change. And I'd just like to remind everybody that MCIT was one part of the reimbursement strategy, it certainly was not a dominant part.

35:42 In fact, when we created the entire Medicare focus, MCIT was not even a thing yet. MCIT didn’t come until January.

So, that's why we can make the statement that ultimately we don't think that Medicare is Medicare coverage is going to be off track with or without MCIT. 36:05 So, I think the safety here and the de risking is in the multiple pathways.

We have been pleasantly surprised by the private coverage determination momentum. And I think it's a reflection of the facts that in general, we got to do something to solve kidney disease costs and progression.

And again, it's a time in a place where there are a whole sequence of factors, government policy since the protecting access to Medicare Act has been a wave of policy around reimbursement, which has opened up innovative pathways. 36:42 It's just a time and of place where we actually feel very good about reimbursement, which has not always been the case in my diagnostic career.

So, and having private pay come along like this, there are no guarantees about how this private pay momentum continues, but it is certainly very encouraging.

37:06 Got it. And then just my last question in terms of new hospital systems, integration goals or – and I do apologize, we are tracking different companies that are reporting this morning.

So, sorry if I missed it, how do you feel you're tracking in terms of your new hospital system adoption goal and what's kind of the puts and takes in terms of hitting it and missing it going over going under etcetera?

37:40 I'm very confident where we are in terms of hitting goals that we stated. I think actually our view is really how broad do we want to build it in calendar twenty twenty two?

We are now, for example, getting into hospital network discussions. These are groups of hospitals that work together.

38:02 So and this is aspirational, I want to make that clear, but I believe in calendar twenty twenty two that we will actually be able to start to move into multiple deployment environment through networks. And we're certainly having many, many discussions.

And again, what's abundantly clear is everybody's looking for a solution? 38:32 And we'll talk a little bit more about value care, value based care coming up, but we offer very interesting prospect to the hospital systems, which is, we can bring the solution.

We can invest in its implementation within the compliance legal framework, which is not trivial and we could do it at no cost to the hospital system. 38:57 And what we are enabling is population health management on a broad scale to treat large groups of patients with early stage kidney disease to maintain their kidney health.

And this can be very profitable for the hospital system and it can enable a substantial standard of care. And we see this now with the deployments that we're doing.

39:22 The real world evidence is showing that in fact, we are improving things, which is what we're looking for. So, I think the value proposition for the hospital is very compelling.

And I think it's unique. It's unique because we are the only one with an advanced prognostic tool because you need to take a blood draw and you need to have biomarkers, if you don't do that, if you don't create an IVD strategy then you can't tap into reimbursement.

And we're the only ones at the moment doing that. 39:55 And we're doing that in an integrated fashion in the care model with population health and by recruiting population health, it provides us with a considerable amount of capital efficiency.

It provides us with the ability now to extend out to broad patients, it provides us with the ability to provide consistent education message out to broad groups of physicians. 40:20 I’m very pleased with this approach and I think it's bearing a lot of fruit.

Not to mention now that we have set up a real world evidence machine. And this is one of the core value components of Renalytix, which I also think is unique.

This is a multi-center demographically broad real world evidence machine, where we can now start to look at a whole sequence of factors not only that supports long term reimbursement, supports multiple product categories running through a regulated IVD process and gives us a lot of insights as we start to build out this precision medicine continuum at the front end of this huge disease class. 41:03 And so, now we can start to look at real world evidence around subtyping therapeutic response, disease progression, primary care physician behavior change, education, all of the factors that are required in the ecosystem to start to bend the cost and outcome curve.

41:25 Got it. All right.

Well, thank you guys very much. Have a nice day.

41:30 Thanks, David.

41:41 Hi. This is Julia on for Tycho.

Thanks for taking the question. Just want to follow-up on the Mount Sinai ramp, I know you expect six thousand total testing next year with a run rate of three hundred test per week, which equates to fifteen thousand tests per year versus the two fifty thousand total patients that you mentioned earlier.

So, just curious how to get to that run rate number and what can drive that ramp faster or slower versus your expectations? What key factors are at place, as pace of your sales and service rep, [Technical Difficulty] is the timing of publications or LCD coverage?

So, just talk through kind of, you know the moving pieces and upside and downside versus that run rate number? And then I know it's still a little early, but how should we think about the long term ramp beyond that six thousand number you gave?

42:37 Yes, we could – great questions. We could probably spend two hours on that.

Tom, do you want to set the framework there?

42:47 Sure. I’d be happy to.

So, within Mount Sinai, volume is actually driven through the care coordination and the care deployment at Mount Sinai. So, we have an individual who is supporting the effort at Mount Sinai, but the identification of patients ordering of the tests follow-up from the test that is a care initiative that is going on Mount Sinai.

43:20 So, it's not a question of resource scaling on the Renalytix side, it's a question of the training, the execution, the deployment of that care coordination program at Mount Sinai. And that involves practice administrators, the medical directors, adding forms, training, nurse practitioners, pharmacy managers, dietitians, who are supporting this integrated care model at Mount Sinai.

43:51 We are working with them on everything that they are putting in place, as well as helping to support them in the education of those resources that are so critical to patient care. So, really in our health systems deployments, it's the health system itself that sees the value and the risk assessment in the care that comes from that.

44:16 So, it's the health system that drives the pace of that that volume growth. And so, what was important in the announcement that we made what we were sharing with you based on the success Mount Sinai has seen thus far with KidneyIntelX, they were able to start projecting how that growth rate would begin to build as they deploy it system wide.

44:44 James, back to you on that.

44:47 Yeah, I think there are couple key points here. I think that the fact we could put down a run rate or we didn't put down a run rate, Mount Sinai did of this significance and we have not yet deployed a sales force.

So, there are number of ways you can grow business in the diagnostics space. The traditional way is you put a bunch of salespeople people out.

And you start knocking on doors. That tends to be a very expensive exercise it drives up a lot of fixed overhead.

And it can become very difficult to understand really what the connecting messages to drive utility. 45:31 In other words, what are people saying to get those sales?

How has it done? So, we arrived on this and we knew we had a major challenge, which is how do you start to change some of the clinical workflow at the front end of the disease of primary care level?

And that's a big challenge. It requires a whole sequence of things to make that happen surround sound around that primary care experience with these patients and the fact that we've been able to get to this type of a run rate without a sales force for me is a new achievement.

46:14 And I think it bodes very well for how we can now add a sales force, add customer service add medical science liaison and continue to build out that surround sound concept at the front end of this disease in a capital efficient manner, because ultimately by twenty twenty five we'd like to be out to most of the two hundred and ten thousand practicing primary care physicians. Many of whom are in systems.

And partnering with population health provides us with the leverage to be able to do that. 46:50 So, it was significant that we could put that type of run rate down.

And we could now add resources to be able to support and expand that run rate. But let's see how we go here.

It's been a significant step to get to this point.

47:07 Thanks for that color. And then I'm sorry if I missed this if you mentioned earlier.

Do you see how many new systems are you looking to add in twenty twenty two? And as we think about your broader commercialization as for, like how would you say the relative focus is between adding new systems versus ramping the existing partners you have?

47:28 That's one million dollars question, right? Because we always want to do this with quality.

It's not just about adding systems. I think we've figured out how to add systems.

And there's always nuance as you move into new systems, but we've figured out the regulatory and compliance framework, which is first and foremost when you are partnering or collaborating with a major system like this. 47:54 We've got a lot of legal advice to be able to structure these agreements they are not trivial.

But I think we've got a very good handle on it. Certainly, we are simplifying the way that we can complete test ordering with an electronic health record data pull?

That has been a learning experience, but now we've been reaching a consistency of what we need to do. 48:20 So, adding systems, I do not believe in twenty twenty two will be a rate limiting factor, maintaining quality of execution is number one.

How many systems would I like to add in twenty twenty two? I'd love to be able to add between ten and twenty.

Let's see how it goes. But I won't compromise the quality of the execution because already between the several systems we have announced, the private payer groups that we're working with who are also implementing, we're out to a considerable addressable market of diabetic kidney disease patients.

That could drive whatever revenue line we need to drive. If we execute properly.

49:08 So quality is number one, but this is without a doubt a scalable model. I think that's the key and actually your group at JPM asked that question a couple of quarterly calls ago, how scalable is this and that stuck in my head?

I think we're now demonstrating this is scalable. And certainly, I know from an internal basis with the efforts to get the implementations going.

It's getting easier and we're getting much smarter, which you only get with experience, But I think this is imminently scalable to any integrated disease network health system in the country. 49:49 Hence I believe it's also scalable internationally.

So, the key for us is to maintain quality. The data coming out now is critical for demonstration of utility impact, cost reduction, reduction in patients suffering etcetera.

So, we want that to be very high quality data. And this is not in trivial numbers.

We're talking about thousands and thousands of patients. And as we've added and how systems in the Southwest, the Northeast, the Southeast, there will be others, this becomes a very comprehensive real world evidence production that will tell us exactly how the KidneyIntelX integrated care model affects different patient populations.

50:33 And that's the type of evidence that you need to create a long term standard of care. It’s the type of evidence that you need to expand your regulatory pathway and its type of evidence that you need to maintain and sustain long term reimbursement coverage?

50:49 Right. Thank you.

50:51 Thank you.

51:01 Hi good morning. Thanks for my question.

So, just wanted to little bit talk about the approval timeline from the FDA. I know you mentioned earlier that it's that kind of busy with the emergency use applications related to COVID, but as much as this year in the past has been sort of very unusual in terms of keeping up timelines from the agency.

How do you sort of feel about whether the approval is more like coming before end of this year, or it's likely to get pushed out to next year?

51:41 Yes, fair enough. We're not going to call FDA timing because as I've always said, that's a [fools’ game] [ph].

And especially in this environment, we can't call it. What we're more interested in is how is the process, is it prescriptive?

Do we know exactly what needs to be done? Do we have good communication with the agency?

Is the agency looking at KidneyIntelX with its full attention? And ultimately you always want to make sure that there are no show stoppers, which are you need to run another prospect at clinical trial or you need to provide a dataset that you can't provide.

52:36 And so at this point, we're very pleased with where we are. Sure, what I like to have gotten an FDA De Novo marketing authorization by now absolutely.

But I think this is an industry wide issue. And most importantly, this FDA is one component.

We do not need FDA to commercialize. We do not need FDA to drive revenue.

And in fact, we are gaining a huge amount of experience now because we've set up the KidneyIntelX testing as a single site IVD. 53:18 So, we are commercially capable in fifty states.

To me, the equation is not FDA it's reimbursed, right. And also, the most important thing is we’re generating real world evidence because FDA, the noble marketing authorization timing notwithstanding, it’s the use of KidneyIntelX.

It’s the use of KidneyIntelX and population health. It's the demonstration of can you start to bend the cost and utility and outcomes equation?

That's what creates the business. 54:00 I have high confidence we will have a beautiful FDA pathway, not just for KidneyIntelX, but for subsequent versions of KidneyIntelX and we've designed the program to do that because we think regulation is important and it's supportive, but the heart of this business that drives value is demonstrating change and demonstrating utility.

And we're doing this now. This is in a three rat study that we are putting up as a laboratory developed test.

This is a very complex multi-center diverse real world evidence database that we're building here, which is quite rare when you look at the history of diagnostic launches. And we designed it that way because we knew that that was ultimately what was going to drive KidneyIntelX as a standard.

54:51 So, I just want to make that clear. And I'm going to be a little bit ambiguous on FDA because we can't, we just cannot call the timing.

I think that that would be irresponsible.

55:04 Yes, that's understandable. But thanks for explaining the process.

That's helpful. And then I just have one more question about the revenue rent again.

I'm sorry if I missed the earlier, if you had addressed it earlier, getting to that three hundred test per week with Mount Sinai, it’s something that they had come up with, how do we sort of think about the ramp from VA and Wake Forest on a comparative basis? I know as much as the systems was different, but is that something higher than three hundred or less than that and sort how quickly can we get to that, by sort of maybe mid-year or next year?

55:49 Yes, fair enough, and I'm sorry, I'm still going to be a little ambiguous and Tom, you should chime in on this. The VA Health System is its own animal.

That's very important doing comparisons with integrated disease networks is difficult. We're not going to try to do that.

And there are advantages and disadvantages. 56:13 The sales force that we're hiring to implement at VA is largely military We have Blackhawk pilots and fighter jet pilots.

My report is coming in from Baltimore and the folks that I've met this is a really impressive sophisticated group. And I think is going to be a significant asset for the national VA system rollout.

And that's very different than what's going on with population health driven integrated disease networks like Mount Sinai Health System. 56:46 What is important is that the VA systems that we're looking at as the early adopters are co-located with the large integrated disease networks So, again, an overused word, but I'll use it here.

There's a huge amount of leverage with our population health driven integrated disease network deployments, like Mount Sinai Health System and VA Hospital Systems that are geographically contiguous with those health systems. And they're different, but there are many, for example, primary care physicians that practice on both sides of the fence at the VA system and at the hospital system.

57:26 So, it's, we do get a lot of benefit from education movement, etcetera with the integrated disease networks that's spills over into our ability now to start to implement KidneyIntelX and the VA Hospital System. Tom, did I describe that correctly?

Do you want to add to that?

57:47 I think you did a great job James. We are just training the first class of account executives this week.

We're aware that there are unique features in the VA, both our contracts and the chronic kidney disease directors that will be helpful to us as we commercialize, but with this being initial launch putting a sales force into the field, that experience as James indicated, before we start to make very specific projection and that we feel comfortable when we get to the end of this fiscal year that we’ll have a much better idea and be able to be clear on where we expect that volume growth to go in fiscal twenty twenty two.

58:45 Okay Thanks James, Tom. [Multiple Speakers]

58:46 Again Anita. I think it’s a function of building the fundamentals and putting them in place and the rest will come.

That is the diagnostic story. If you get all the fundamentals in place you have the data, you get the reimbursement pathway, you've got the sales and marketing strategy.

And you have the need, the need here is significant. The growth and the ramp will come.

59:11 Great. Thank you.

59:12 Thank you, Anita. And I think we're out of time there, operator.

Very good questions today. Thank you all for participating.

59:31 Back again, for one to thank you all. Please stay safe and we look forward to talking to you on the next quarterly call.