XGN - Earnings call transcript Q1 2020

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Operator

Greetings, and welcome to the Exigen Quarter One 2020 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

As a reminder, this conference is being recorded.

I would now like to turn the conference over to Mark Hazeltine, Senior VP of Finance and Corporate Development. you. Thank begin. Please

Mark Hazeltine

the thank Adawi, Exagen and ended joining today. this Executive available us XX, Rocca, call. www.exagen.com. Good and afternoon's Financial President released you Officer financial today, Chief on currently is Inc. The and quarter website results Earlier at XXXX. Ron Kamal afternoon Officer; release for company's Chief for March host the will

that statements pursuant include which remind get statements everyone like that Reform during XXXX. started, this of be will are safe Act we meaning call Before the Litigation provisions to making forward-looking laws, within Private of to I management securities Securities the of harbor would federal the made

deemed without contained forward-looking coverage call Any and in statements. of our to operating statements current involve and business, our cause statements limitation, that forward-looking assumptions. forward-looking this pandemic uncertainties of impact anticipated the statements. and These differ from or our that the future statements financial not these and actual COVID-XX and material those All on business should performance, strategy including and and statements upon by implied are be statements regarding be risks historical materially could product offerings current estimates to various results reimbursement are future facts based

not reliance you on undue place Accordingly, should these statements.

or future otherwise. required our Commission, associated because forward-looking law call information projections For obligation our May of the The any or the Exchange whether this today, XX, a other conference as of list to broadcast subsequent and business, new Form our information, Exagen including speaks please see with XX-K description by in and revise uncertainties XXXX. risks any with live information Securities and or the provided intention filings. financial only disclaims and events filings to update any statements, or except

to the I call will and over of Exagen. Ron President turn Rocca, now CEO

Ron Rocca

and discuss welcome call all pandemic. behalf I our To results. On the pleased to to begin, good of thank also employees customers worked first Thanks like testing professionals for Exagen you of thank the our I COVID-XX I'm to dedicated essential XXXX and highest entire Mark afternoon the to critical everyone. to would who I of to team, with patients. like care other the professionalism like the to and quarter fighting on first workers to would solutions our would comment us pandemic. providing have the and health with committed therapeutic autoimmune disease levels continue support

patients turnaround maintained our that Despite the health times employees efforts. their and care of standards excellent team providers very Exagen trying proud have quality condition, their and expect. and I'm

began beginning business XXXX pandemic was quarter Following impact XXXX the to until start of well the a mid-March. Exagen and and the very the performance, record the operations in good first company off in performed extremely our for to

the increase Test in volumes line for generated And XX% we the would have XX pandemic. a very quarter were resulted our year-over-year strong quarter, test are CTD the for COVID-XX XX,XXX weeks best record the metric we of first quarterly flagship business. AVISE of our despite volumes. trend of on The volumes the in growth of

Importantly, of remain prior we XX% who riders very of high from adopters rate maintained our quarter. a the retention

and selling were negotiate ASP are in year-over-year million volumes revenues in-networks the the lower by we help the To navigate We testing a retain and higher offset increase Lupus AVISE that partially we reported price. of $X.X completed dossier high X% the using coverage for average an reimbursement of as to address test quarter, rate. lower

below the revenue the issues of resulting of first in prescription being SIMPONI, was Turning There agreement. which zero quarter. volume the in co-promotion to to our baseline, variety predefined a contributed recognition

was there and force nearly QX XXXX, with with of rheumatologists. the sales relationships First, doubling which disruption realignment, in into extended

of creating is our with a anti-TNF the substitution effect Second, products. programs competitiveness for inhibitors self-administered significant marketing JAK new marketplace for the

flow. patient impacted has COVID-XX Third,

the Finally to the course-correct. and not to importantly, and change measure allow our that was quarter results proactively syndicated a did data we us to discovered after use

committed this medicine We we resolve novel are model, with a actively our differentiation a to physicians partner. working the We to and developing to improves that approach and a selling remain provides believe Dx/Rx which personalized access solution.

XX areas to have strong enable long-term business to plenty and taken detail. cash to In In sales our six and significant fully steps appropriately increase growth. of takes force have QX, in in and liquidity these decisive often also will Kamal conserve investment months it While representative or a is and robust reach continually a force balance more outcome for we training core expansion expanded we be in productive. to there sheet, of order frequency. investing sales more while discuss steps to the sales any we in the

XXXX. cohort achieving products testing mid-XXXX The and hired in January this was by productivity

is sales appreciated there of reorganization territories. of sales the that sales size, realignment is expansion a in the When doubles often of aspect a force Another force not sales territories. is the

heard is have rheumatologists. our to the As optimize me with reach our goal contacts you of say, and frequency

the economic recovery force this a will crucial achieve despite the begin demonstrates we care quarterly impact downturn. testing this that as we made the working process to health and is had with many investments of from This sales the dramatic time. providers. the new takes will relationships goal, COVID-XX-related planned volume in We in ingredient representatives And developing the believe achieved be

effort AVISE the impact dossier XX We million signing in-network AVISE for covered benefit covered. are Sonora the and lives negotiations now in made for of XXX payers groups. the with utilizing in currently and medical is during Lupus Quest with on million quarter agreements put we multiple California testing excellent representing reimbursement progress perspective, this front lives To the

The initiative reimbursement a to efforts reimbursement we payers signed has offers for our be value in XXXX XXXX. and dossier Our agreements and slowed pandemic expect not compelling payers. advance proposition with our additional to

impact on and the the thoughts our of for of outlook for the XXXX. COVID-XX Now rest

half a to testing week at second period. volumes month performing testing reduction month attribute the volume of the April Exagen's in prior of a mentioned Since year over high AVISE year was the which XX% result in and of flow, prior business have testing mid-April. the fall through to since growth in March, we level we seen Despite this, patient compared I have second stay-at-home decline of then, volume a as we experienced seen before week to for As per related compared period, the restrictions. the XX% various orders we earlier,

delivered channels to of samples supplies to ability required. We positioned support remain and health testing providers as well the through and ensure SIMPONI communication are the remote care kits

autoimmune as As believe serious treated team disease orders can are lift. begin My that as and as possible. fatal, be symptoms for not once sharp seek to treatment the diagnosed quarantine all diseases with know, and is prepared will safety soon autoimmune you patients recovery of if correctly. We a

are patients our and market timely said and autoimmune and tests we have with this the a that factors our there treatment. prioritize two, CB-CAPs clinical done prescriptions that of tests: relationships recognize it will will tests niche autoimmune the that the time easier by depend diseases is backlog some doctors excellent of accurate monitoring with We upon and believe serious, have than evaluations are understand patient doctors several which are take technology; anchored been and address But diagnosis, and we along make and massive One, rheumatology; proprietary to three, delayed. prognosis

financial now over like Kamal would our call to turn will who the to I discuss results.

Kamal Adawi

Thank you, Ron.

would COVID-XX it me pandemic health costs, apparent our lead by discussing once took steps became that we Let impact significant the have industry. the to the to rationalize a care

and Presidents other terminated selectively full-time temporary we Vice released three employees all and three First, workers.

put unimpeded and critical following was hold determined these on could continue we hiring wherever reduced We staff staff Additionally, reductions. possible. our that operations and laboratory other hires

while We've T&E costs also spend, and associated dropped. with expenses sales have scaled variable back marketing volumes bonuses,

workflow. monitor resources We demand flex will on continue and to based

Turning to quarter. income the statement the for

total million ago. increase AVISE the revenues by driven of AVISE growth a due compared $X.X is CTD Volume year adoption As XX,XXX test over Ron mentioned, over volumes a the CTD were rheumatologists. continued by testing XX,XXX to with to XX% in

care health of million first rose of revenues testing quarter were the other period. care million. AVISE to $X.X the for number health $X XXXX CTD trend, X,XXX as in revenues in same this XXXX Reflecting X,XXX and providers test providers quarter compared were to ordering the the

revenue months ended of three with the for XX, consistent March relatively remained months Cost three the XXXX compared ended XX, XXXX. March

Our quarter was was in gross compared XXXX. first gross higher margin volume. in of quarter testing the XX% to improvement in The driven by the XX% margin slight

million Net million compared rose force, not of public sales our quarter of of in first with quarter present to first costs the loss incremental million expansion quarter the Operating the XX% was year-over-year primarily company due the first first quarter $X.X a XXXX. being associated cost XXXX. $XX.X expenses for to with the an $X.X in of in

million. Cash sheet. of and balance March equivalents approximately, XX, our cash XXXX $XX.X as at Looking were

not we is Regarding this it do climate. the XXXX at believe and formal uncertainty economic offer light the pandemic the time of guidance, resulting COVID-XX in guidance prudent that in to

over Ron. the to turn now call back I'll

Ron Rocca

to and to their from Exagen continued weather solid uncertainties and better Kamal. position this economic I'm the for you, dedication. financial like hard I emerge position. the in competitive strategic would team Thank thank will that again once work we confident and is Exagen a pandemic in

I call for will questions. open the up now

Operator

of Doug proceed and questions questions. with the Cowen Instructions] [Operator line first your Please you. Thank Our come from Schenkel Company. with

Unidentified Analyst

Doug QX as for Thanks for you guidance, volumes you're to but Hi. my reduction say Good a to confirm. AVISE Chris volumes not think is in This do the April? on XX% I XX% scenario? taking wanted today. triangulate you just was there I worst-case afternoon. know is try question. providing we Did in

Ron Rocca

drop does the Yes. I second there. to it with Since point a the back. Chris point stretch say, April. week We've we sometime the in a back that seem then be it's then the not are full since third April recovery in any by low seeing low of imagination, come but at the would of seen climb so

Unidentified Analyst

early, a it's panel Have maybe serve in require a the of bit a to adoption AVISE this interest visits of any lot for -- adopting And could lupus. that event but at catalyst rheumatologists there's diagnose May AVISE just which the can CTD multiple indications as CTD? increased seen lockdown once a stations actually Okay. early, of eases? you given

Ron Rocca

logical that's since because think say rheumatologists. and the with of a we we to conversations have Chris, had think thing

connective patient forth. be time with and to lupus a serial and bringing tissue, perhaps you they're testing where four As doing at tests going you're three especially, tests back know that

test the lupus for draw that extra surge going as glut like tissue connective utility we to with fact logically it's patients lupus a one blood convenience well overlap that that think are post-COVID. that as factor disorders test, best ours the With XX the ourselves back, of positions covers

with So that we agree scenario.

Unidentified Analyst

this at making Okay. just -- sales And you us to question. Maybe are the changes Could Thank just practices you on one given your how force current detailing time? last environment? update you. you're any

Ron Rocca

Right. that It are is state, There states a open state others. question. good more are is than Yes, that by Chris. certain

down. shut pretty is York New

So services representative they're as telemarketing, calls for -- that as in virtual virtual in-services. calling using we're well

little those offices. able a So more I'm In kits of other in as we of more states. kits actually Arizona those the out -- as it's Those wide and samples states lines are parts open, to do representatives Florida, about and to where deliver closed those well along getting transportation Texas. and thinking

the on do that at call overall many and be foremost is them adhere don't of all. living to ensuring them. as number and the to are rules at that them patients we're as we that of take first need able have break of what computer samples those whatever the to care a But we office possible are phone representatives on kits laws amount get stay What encourage to staff level, to adequate coming take and is do and through the the they and under national encourage looking to the on they of

We accordingly and Kamal do the week. and call at every we I nation reach frequency will plan look adjust the and throughout adjust accordingly.

Next question?

Operator

come Weinstein your William question. Please proceed Our of next with Blair. from the Brian of line questions

Ron Rocca

Hi Brian.

Brian Weinstein

the of on are unable SIMPONI. for for thanks Starting little quarter you that guys, the kind here. to Thanks -- in guys I'm explain bit hey there? Can a what's doing? taking going revenue at on how you recognize Hey you any surprised question. all were

call that your and March didn't trending get held indication that was we You late way. it an

with kind trend things weeks. like bit that that what little last confused shook start in of after other a on questions the up out then how the that. some quarter line SIMPONI until two looked I'm and I'll So

Ron Rocca

we we to No That were were syndicated projection notified the us Wolters some going Sure. Kluwer Brian. exactly And the comes and IQVIA. to were do problem either were was After given the disagreements some we or said doing that we course-correct. data IMS afterwards or changes so there. shows ended what in there we data. not our moving The quarter have to by in needle, actually that Janssen from we couldn't

that glass that their The lot into ran especially a obviously end. could sand them factor. quarter They to out a of the with of frankly introduced this working but in of immunocompromised. term IV that realized the before is they with COVID scared jeopardy if and patients call to data, amount actively the because center go are quite hour resolve also We're business the an call this situation they still IV under the

place. We're more these us back therapies they at-home want Those forth. taking discussions therapies. and are that talk So, are going to about do to

them we like discussions. to prudent look just we data the was way the additional up it the to We quarter. after do this have with thought at set came in don't time But say meetings

too. about the We the We been data really going escape it it culpability saw could comes down we to also and better job in way doing much some is pushing that have what have here to but it, -- not I'm here Brian that. them notifying a that.

a in believe clients. is the a big arthritis market think rheumatoid We We a big still market Dx/Rx is still model. and our for issue RA great

is agreement they So that but a work baseline of customer. nutshell products are feel us how tells to brunt what We're how to into database there's don't that are and pandemic this the baseline. Janssen fact we hurt, with we're with judged engaged. keeps getting still have we that. with should that's And us, what the this the taking and on doing, and what IV trying be telling the us we issue. that the to come highly the In going happy an we we're are be

agreement. Let of -- what substantial were was me economics proves to decline is know using add what which quarter do on just This And this reps we product one stop the into our infrastructure is did is the that one the job that reverse internal declining. sales to year and our the in diagnostic our that do.

to have Janssen make adjust we forward. Now this we just sure with going

Brian Weinstein

want to just dig that. I into

itself the much clear. make are you there sales And sorry that is Are way, your the for I actually they two sure bit on want had little some a Which dense reps this or saying what saying a how of being you they to there's over this well that how uncertainty but and -- is dispute performed baseline changed quarter? actually did about? those in in

Ron Rocca

Yes.

that changes The one not and to has quarter. is that first The happened we data. data due end were baseline their changed some and about the ours the told after on

after humming changes on. actually that pretty when we're work something thinking until the we well these got So along, the they said we're doing happened well data. That's quite to to quarter,

SIMPONI a the than, a creating have get to we could the alternatives yeah, JAK done at-home taking where long the therapies. during better longer through, quarter, time with And part The we'd was environment disruption inhibitors definitely like. the for was job competitive selling

product With that today. selling out, we was both timing into to forward. this being we said, of can still that figure negotiations combination need the it one before this We're we and a said, move the the recalibrate look, year

We're management still between promoting the it. But team. there's an agreement

rework how be interpretation IV. calculate side culpability So we here, we enough there's to again, shared. the sit there's have down and their on on some But And baselines. to

do well. partners that, better Brian. job don't a want as better could I escape managing always job a We So our and to

Brian Weinstein

And up this are for on know this, how targets at going measured second you're air? the that quarter? get the what your is or do in to still you point, So,

Ron Rocca

that through working are We right now.

Brian Weinstein

in JAK advantages Okay. from have you from are or on, the mean looking inhibitors? the wherewithal Janssen marketing necessarily support the that to this? are under the you under How that them market you message the in the marketing it's and SIMPONI getting pressure I the changing support pressure that that here, guys has How they given don't does. they're --

Ron Rocca

good to definitely protect a all it. want franchise thoughts be immunocompromised being their other of bunch With to There same Brian. a patients side. right. see, The we said, the that and patients. with Yeah. immunocompromised That's on thing wanting They see their are question, some that's they not,

support their So for go is to contingent us be these over with going couple on the discussions next how weeks them. of

side on introduced them is to, IV obviously They us factor -- just that recognize something the we of this big affects as COVID they've concern a theirs. which

will for to from to up want work that we we progress. don't in look profits, of like for would as efforts That's our part So And to some the work them, activities. all a of these infusion retain speed marketing centers. significant the we with go them into patients, also

stress I more lot But foundations well have a quarter and the right to think still the do first want were in how into in to the on cash business, I a fact flow the our way all us, the Dx/Rx. want the that, And We these business the of think this. to you we that's very SIMPONI promote great SIMPONI saw to spite bring products. base of to testing side, solid that is do Because it. also we did.

Brian Weinstein

discussion with you're the be what going some to How Street, will measured your able I that mean, the be on? we of what to you metrics idea, inform have the to partner outcome new this are going are is?

you find Can as this out last to up XX here for on then, you when choose this well? another extension that line that right is, it's the I the about time I coming we on that? believe, confirm guys intentions, will is your months. And can extend question the on have that And I believe

Ron Rocca

what into extend out extended we already to? -- did We've it it Sure. out

Kamal Adawi

XXXX. End of

Ron Rocca

End already of so and they've extended XXXX that. accepted and it we've

So that's already been extended.

question as agree the and we know. have your And once on the baseline. with as with do get far them, -- metrics, metrics all we will metrics really we Now Brian let to you the other yes, we'll

they see and because Baseline patients moving what of windfall, at-home a huge potential is into testing.

are those So the two things.

been it allow as metrics, share And with extended. will us you. many share we So will to they as has

Brian Weinstein

right. All And one. last

nature, the big cuts. picking some there made you've OpEx was and or I was for much I were it that a mean, is step-up thinking. we one-time that more there so that Was on there. – up Sorry in But sequential recognize than kind of anything

So trying XX.X% in what for the of year. versus – understand I'm set up the to QX rest of kind for you're the

Kamal Adawi

Yes, Brian. severance we expense that mentioned There for came the a expense one-time we on was March and that six with terminated that employees XX. the for

So there QX sales in onetime to that year-over-year, we now mind QX force. compared is keep last company expense, are expanded the a public in we And but of year.

Brian Weinstein

that what's we're for we or be that the modeling baseline thinking of So right the at for spending type? kind about least should how

Ron Rocca

spending. The model for

Kamal Adawi

the So the to question at right now, there your disclosed we've we're of for XX sales outside more sales headcount reps. force? on Is

Brian Weinstein

just going number we OpEx forward. the Yeah. should I'm think about how wondering

$XX us where kind some – to give of it OpEx quarter forward just thinking were being I'm put other XX.X% you is a spending. we're were reductions on some to some You up about there there $XX the million? this idea understand, Is – million if about There onetime Just it Is trying a just is. at in million? $X trying going OpEx? and in the quarter. this was in

Kamal Adawi

Sure.

right when might So comes to mind OpEx. be continue on in now going – variable increase right variable T&E with we OpEx we're are lab primarily we cost the sales to expense keep that there's with going in I with some the to now it And a come and rep sales seen Ron as expenses costs But to the small going of we're But bonus, with decline hit the mentioned number expenses, our it is. biggest see XX. that's at we've monitor of in as down, was some the this as in pandemic, And sales. to mentioned, OpEx force. what in have the there's that

Brian Weinstein

Okay. Thanks, guys.

Ron Rocca

Thanks, Brian.

Operator

line the Our next proceed Please of questions your from Mikson Cantor of with question. Fitzgerald. Kyle come

Ron Rocca

Hi, Kyle.

Kyle Mikson

the Hi, guys. taking for Thanks Hey. question.

at what Is point I first was at your So wanted last the April. in or just this confirm point to it down testing AVISE maybe volume late May I data XX%? guess least or year-over-year

Ron Rocca

in QX volume or Do it? The in April? have you

Kyle Mikson

like last your point. No. x No. data amount. were No. I'm Volumes down saying

Ron Rocca

we the we disclosed we're year-over-year saying of low So April, month what with were the April in coming down point through XX% mid-April.

Kyle Mikson

then since right it? But it's ramped of up all

Ron Rocca

come a day Yeah. Every Yeah. it's up more little yeah. bit just

Kyle Mikson

Okay.

Ron Rocca

Every We've we've we're or of lot made real not to ground more at that's Kyle been up it's going where states bit coming obvious us since that level pre-COVID, map at progress point. monitoring which and little heat we was since And which a a been low showing day a time. up but confidence. that We're map. gives closed a heat it's then are when through from look where open our

Kyle Mikson

makes that No Okay. sense.

of kind question. Another related

increase So forced to the the providers in we've including physicians, of including clearly. clearly among this kind medication. pandemic new on seen normal obviously, telehealth adapt rheumatologists prescribers yeah, to Obviously, has

So I after sales going rheumatologists strategy are I you mobile working your this that services? context, accommodate guess is your or COVID? And how in remote affect or shift how this with to force this to with guess

Ron Rocca

Yeah.

telemarketing telehealth doing a doing meetings and a quite lot bit doing We're are them. with of bit of quite you will. if that. a We're virtual We of

virtual with thing Board-certified all M.D., talking and doing a we're got Ph. her in them engagement work a colleagues CMO, which pretty new is to rheumatologist, about been The tour fairly and the we're to Deb CB-CAPs our what Dr. much that doing. other be KOLs, and on we and happened D., reminding she's Zack, friends

has come along additional rheumatologists communication for a to the CMO, the an So doing to introduce actually up that having and additional all things a the we're with window to herself calls the telehealth, in new opportunity having be other field. virtual

Kyle Mikson

therapeutics And question. had a helpful. I Okay, then

market only not So product. but even Prometheus from what I sell AstraZeneca promote in understand able ENTOCORT, was distribute the to also with its agreement

evolve maybe time, -- something or how your with kind or over Thanks. strategy. of agreement your align comprehensive manufacturer curious a could with that just and that I'm agreement J&J another more Dx/Rx into would So, is

Ron Rocca

a That's then was we level, because we'd Yeah. the just split well ENTOCORT, would -- in back a ball we basically the control We fashion on data. really marketing. quarterly Kyle, with somewhat good our AstraZeneca. control how We report the court. and And of in with a royalty the did, point

This this agreement is quite done lot intrepidation. agreement a different. an like never Janssen so there's has of

gave to what So that in with to the I wanted I to which ability am and going they the marketing. us future, control control for the marching what going control to market data the the we us they to only a of they going lot is much market can more a negotiations baseline. do be what closer In had we're more ENTOCORT, data, the on lot be

to we we going and the would control it's accepted That's if way or of we whether more But stance have and in another my could communicate story. be not what help negotiation communicate. is the it definitely us,

for future we As look we line more that deal. did the ENTOCORT up continue agreements will do the Dx we'll way to deals, with

Kyle Mikson

XQ? there? I Okay. last guess are so what feedback? around, How you And That's maybe Thank have you with discussions then payers How the is far I going? you, virtual having share great. question reimbursement. those meetings Ron. been mean can And in

Ron Rocca

approach to we up -- until was the and actually ASP. working payers some Kyle. to Yeah. on for were coverage December, Thanks our We increased -- dossier get ready we everything with had

couple we quick started. year of So as real the them a got

big Sonora to did we've the we as Street. We're had. California what looking -- will solidified the if we as Evercore with the And with agreement saw that Decision Quest outlets and them. to You get already presented the companies well you

feedback been said The for solid. it, get The you own to have at We're looked everything up. is in-network from consultant not to we've is gotten required every employees forward. coverage. set Meetings you move did continuing that that's dossier outside our has

done everything So is there.

some The is care them twice clinical published published the study, study and complete. utility analytical validation, economic the of clinical validation, the health

be meetings take with We're these with but We're for. as what right not ready. now. place major that's payers, feel going we're payer. no feel every virtual continuing there's So Kyle in-network work And meetings to that to we doing we reason we're the included

Kyle Mikson

so great. much. Thanks That’s Okay.

Ron Rocca

you, Thank Kyle.

Operator

all conclude the for does session. is we conference. left That today's the time That have question-and-answer that

your for lines at you your day. and a may Thank time. participation, You great disconnect this have

Ron Rocca

you. Thank

Exagen (XGN) 13 May 202020 Q1 Earnings call transcript