Veracyte, Inc. Q2 FY2023 Earnings Call

Good day, and thank you for standing by. Welcome to the Veracyte Second Quarter 2023 Financial Results Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Shayla Gorman, Director, Investor Relations.

Good afternoon, everyone, and thanks for joining us today for a discussion of our second quarter 2023 financial results. With me today are Marc Stapley, Veracyte's Chief Executive Officer; and Rebecca Chambers, our Chief Financial Officer. Veracyte issued a press release earlier this afternoon detailing our second quarter 2023 financial results. This release, along with the business and financial presentation is available in the Investor Relations section of our website at veracyte.com. Before we begin, I'd like to remind you that various statements that we may make during this call will include forward-looking statements as defined under applicable securities laws. Forward-looking statements are subject to risks and uncertainties, and the company can give no assurance they will prove to be correct. Further, we are not under any obligation to provide further updates on our business trends or our performance during the quarter. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Veracyte files with the Securities and Exchange Commission, including Veracyte's most recent Form 10-Q and 10-K. In addition, this call will include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures are included in today's earnings release accessible from the IR section of Veracyte's website. I will now turn the call over to Marc Stapley, Veracyte's CEO.

Thanks, Shayla, and thanks, everyone, for joining us today. Our second quarter was incredibly strong with revenue of over $90 million, representing growth of 24% compared to the prior year. This success was driven by our core testing business, which grew an impressive 37% and is another clear demonstration of our proven framework of driving test adoption through robust clinical evidence, reimbursement and guideline inclusion. Our performance in Q2 once again demonstrates our ability to consistently deliver strong top line results as well as our commitment to enhancing our already differentiated financial profile. To this end, this quarter we generated approximately $17 million in cash from operations, a record for the company. We reported approximately 15,000 Decipher Prostate tests in the quarter, with our Level 1 evidence status in the most recent NCCN guidelines we believe now contributing to a meaningful step-up in tests delivered to patients. This and the execution by our talented commercial team led to us recording the highest number of new physicians receiving Decipher Prostate results that we have experienced so far. We are proud to be empowering so many physicians with key insights to guide important treatment decisions for their patients with prostate cancer. We last updated our penetration estimates for the prostate market at year-end. Given the outperformance of our Decipher franchise year-to-date, we now believe that the market for molecular diagnostics in prostate cancer is approximately 30% penetrated with Decipher continuing to represent the majority of that penetration. While we've made significant progress in adoption, we believe that there is still ample opportunity for continued growth for many years to come as we work to make this test available to more patients facing a prostate cancer diagnosis. In line with our strategy of developing clinical evidence for our tests, we continue to add to our impressive library of over 75 published studies supporting the performance and clinical utility of the Decipher Prostate genomic classifier. We were pleased to share a real-world study that published in JNCI Cancer Spectrum, which matched the data from our Decipher Prostate tests with that from the National Cancer Institute's population-based SEER program. Results of the clinical utility study suggest the use of the Decipher Prostate test helps physicians personalize prostate cancer treatment approaches as intended. Specifically, the findings show that physicians treat patients with higher risk Decipher scores more aggressively and patients with lower Decipher scores more conservatively, demonstrating clear real-world utility for the test. Our dedication to evidence development extends to leveraging our testing capabilities and datasets to help advance scientific understanding in the disease areas that we address. A good example is our research-use-only Decipher GRID offering in prostate cancer. This quarter, the American Society of Clinical Oncology Annual Meeting findings from three separate studies were shared demonstrating the ability of Decipher GRID to help provide new insights into specific molecular profiles that may predict individual responses to certain treatments. Endocrinology, we delivered another record quarter with more than 13,000 Afirma tests performed, helping physicians make better diagnostic and personalized treatment decisions for their patients with thyroid nodules. This outstanding performance is due in part to continued enhancements we've made to the test, including the addition of promoter mutation testing as well as ongoing customer experience improvements to our online physician portal, including online ordering. Our excellent commercial team leveraged these enhancements to add over 70 new accounts in the quarter and drive further penetration of existing accounts. Given this performance, we are now raising our Afirma revenue growth expectations to be in the low to mid-teens for 2023. We are excited about the potential to leverage our testing capabilities and data sets to also help provide researchers with further insights into thyroid nodule biology, similar to how we are using Decipher GRID. This quarter, for example, in a study presented at the Endo 2023 meeting, investigators developed and tested hundreds of genomic risk signatures based on Afirma's whole transcriptome gene expression profiling. Interestingly, they were able to identify risk signatures that show potential to differentiate indeterminate thyroid nodules that were low risk for tumor invasion and regional lymph node metastases. Insights such as these may help fuel product development efforts in the future as we continue to improve our test and enhance our ability to help patients facing thyroid cancer. Turning to our biopharma business. Like others in the space, we continue to face significant challenges this year given the current macro environment. As a result, we are seeing reductions in existing projects as well as lengthened timelines for signing new business. At this point, we have not yet seen a shift that would indicate this trend is reversing in the near term, and so we continue to expect declines in our biopharma and other revenue line and have updated our guidance accordingly. Moving to our long-term growth drivers. We made significant progress in the second quarter on site initiation for NIGHTINGALE, the clinical utility study for our Percepta nasal swab test. I'm extremely proud of our clinical and medical teams who have signed up almost 70 sites to be part of the study so far with even more in the pipeline. This demonstrates, we believe, the strong support and enthusiasm for the nasal swab test from principal investigators, or PIs, and patients, with the vast majority of lung module patients who are offered the test choosing to participate. However, the pace of individual site ramp-up and patient enrollment is lower than we and our PIs anticipated, driven largely, we believe, by ongoing staffing challenges of many of our investigator sites. Given that, we have conservatively adjusted our estimates for enrolling the last patient in the trial to now be during the second quarter of 2024. Our IVD strategy, which will enable us to deliver test to physicians and their patients outside of the United States, focuses on our current IVD offering, the Prosigna breast cancer test as well as the development of Envisia, Decipher, and nasal swab IVD products. Beginning with Prosigna, we had another solid quarter. Compelling clinical utility data for the test was presented at the ESMO Breast Cancer Congress from the EMIS study in Norway, a prospective multiyear population-based study, including data from over 2,100 participants. The results of these initial data demonstrated that Prosigna test results fall to treatment decisions, including significantly reducing the use of chemotherapy among patients with clinically high-risk disease. Consequently, Prosigna has been adopted as the definitive breast cancer test in Norway and is now used routinely for patient care. On the development front, with Envisia already submitted for regulatory approval, we continue to make good progress on our Decipher Prostate and Percepta nasal swab offerings, with regulatory submissions slated for 2024 and 2025, respectively. In summary, Q2 was an exceptional quarter with strong execution in our core testing business and progress across our diagnostic long-term growth drivers. We're excited about our performance through the first half of the year, and as such, have meaningfully raised our expectations for the full year. So with that, I will now turn to Rebecca to review our financial results for the quarter and updated guidance for 2023.

Thanks, Marc. As Marc mentioned, we achieved excellent results in the second quarter with $90.3 million of revenue, an increase of 24% over the prior year. We grew total volume to approximately 31,800 tests, a 28% increase over the same period of 2022. Quarterly testing revenue was $81.7 million, an increase of 37% year-over-year, driven by higher-than-expected Decipher Prostate and Afirma volume as well as strong cash collections in the quarter. Total testing volume was approximately 29,000 tests. Testing ASP was over $2,800 per test, benefiting from approximately $2 million of out-of-period collection. Adjusting for this impact, testing ASP would have been more than $2,700. Second quarter product volume was approximately 2,700 tests, and product revenue was $4 million, up 29% year-over-year. Biopharmaceutical and other revenue totaled $4.6 million, down 55% year-over-year. Reductions in customer projects and extended sales cycles driven by overall spending constraints across the industry led to the decline. Moving to gross margin and operating expenses. I will highlight non-GAAP results, which exclude the amortization of acquired intangible assets, other acquisition-related expenses and restructuring costs, but do include routine stock-based compensation. Non-GAAP gross margin was 67%, up approximately 100 basis points compared to the prior year. Testing gross margin was 71%, up 250 basis points compared to the prior year, benefiting from higher lab volume, test mix and $2 million of out-of-period collection. Product gross margin was 42%. Biopharmaceutical and other gross margin was 12%, down year-over-year, given lower fixed cost absorption. Non-GAAP operating expenses, excluding the cost of revenue, were up 21% year-over-year at $59.3 million, driven by higher personnel costs as well as clinical trial and IVD development expenses. Research and development expense increased by $3.4 million to $12.5 million. Sales and marketing expenses increased by $1.7 million to $24.9 million, and G&A expenses were up $5.1 million to $21.9 million. We recorded a GAAP net loss of $8.4 million, which included $10.4 million of stock-based compensation expense and $6.9 million of depreciation and amortization. Overall, we ended the quarter with $191 million of cash, cash equivalents and short-term investments, well ahead of our expectations. Turning now to our 2023 guidance. We have raised our revenue projections to $342 million to $350 million compared to our prior guidance of $330 million to $340 million. This increase is a result of our strong first half results as well as updated full-year expectations of mid-20s growth in testing revenue and $18 million to $19 million of biopharma and other revenue. We are forecasting Q3 revenue to be down sequentially across testing, product and biopharma and other given typical seasonality and normalized testing collections before finishing the year with strong quarter-over-quarter growth. On full-year non-GAAP gross margins, we are raising our total company projections to mid- to high 60s from the prior guidance. This assumes second half testing and product gross margins that are roughly in line with Q2 results, as well as lower biopharma and other gross margins given the fixed cost structure of this business. Moving to our expectations for cash, cash equivalents and short-term investments. As always, our comments are barring potential M&A. We now expect to end 2023 with $190 million of cash on hand accounting for the impact of upcoming contingent consideration payments, capital expenditures related to our lab expansion and other working capital trends. Importantly, this updated guidance represents an increase of approximately $25 million compared to our expectations at the beginning of this year, driven by the strength of our testing portfolio as well as the excellent execution of our managed care and billing team. I am proud of how our entire Veracyte team has performed through the first half of the year, and I'm excited to continue to deliver on the financial goals we've set for 2023. I'll now turn the call back to Marc for closing remarks.

Thanks, Rebecca. Before closing, I'd like to share some organizational updates. Given the underlying strength of the Decipher business and our focus on succession planning, Tina Nova has decided that now is a good time for her to step down from an operational role. So effective on September 3, Tina will be transitioning from GM of the Urology business and will continue to support Veracyte in a consulting capacity. Tina has been instrumental in the success of Decipher, refocusing the company for growth in 2018 and has provided valuable leadership at Veracyte since our acquisition of Decipher Biosciences in 2021. We thank Tina for all of her contributions, including building an incredibly strong team to support our clear business going forward. To that end, John Light will move into the role of Chief Commercial Officer of the CLIA business, providing leadership and oversight to our urology, endocrinology and pulmonology businesses as well as our managed care team. We just had an excellent quarter, and we're on track for a strong 2023. I'm especially pleased with the growth in our core testing business, the progress we are making on our long-term growth drivers, and our differentiated financial profile to enable sustained growth. I'd like to thank the Veracyte team for their hard work, execution and commitment to the patients we ultimately serve and to our vision to transform cancer care. We'll now go into the Q&A portion of the call. So operator, please open the lines.

Our first question comes from Matt Sykes of Goldman Sachs.

Congrats on another strong quarter. Maybe just to start with Afirma. Marc, you gave a couple of different dynamics that led to that sort of the guidance raise for pharma growth. But just given what we've seen, I know, obviously, COVID had an impact, but it's been pretty impressive to see that growth continue. Just wondering if you could dig in a little bit more into some of those dynamics you were talking about. Obviously, the new accounts you signed up, but also the online ordering and just kind of help us understand what are some of the bigger levers within that that's driving that increased growth.

I appreciate your comments. Afirma has been a significant focus for us for quite a while, and we have consistently discussed product enhancements. This includes the improved ordering capabilities and the recent addition of the mutation promoter gene, which many of our customers have been seeking and is now available. We have concentrated on sales execution and communication with our physicians. Throughout this time, we have engaged with our customers for various reasons, including addressing the supply chain challenges we faced around this time last year. This allowed us to reassure our customers that we were managing the situation effectively. Since then, with improvements in the ordering process, we have established a regular pattern of communication, which has helped us attract new customers, expand our share among existing ones, and grow both in current and new accounts. I credit this to the excellent execution of our talented team and our strong internal focus.

Yes. Marc's comments are completely accurate regarding the volume drivers. In addition to those drivers, we have also seen positive developments in our average selling price, thanks to the efforts of our managed care and billing teams, as I mentioned earlier. Last year, we faced challenges due to the CPT code change, but now that we have overcome that, we also collected a few million dollars from previous periods, with about half of that related to Afirma. Currently, the total for prior period collections year-to-date is around $4 million, with Afirma contributing half of that. This will be a significant boost to our growth. Thus, we are experiencing both volume and ASP growth, and we are excited to raise our guidance to the low to mid-teens, up from our earlier forecast of mid- to high single digits. Overall, it's a great story, and I want to congratulate the Afirma team for their exceptional execution.

Great. And then just for my follow-up, just on the biopharma business, you guys have flagged this very early. So it's clearly not a surprise, some of the dynamics in that industry. But just given sort of the level of revenue where it sits today and the gross margin, which seems to be dilutive to the group a little bit, how are you thinking about that business? It's obviously longer term attractive, just given kind of the biopharma you have and the relationships you have, but how are you thinking about that business in terms of level of investment and sort of commitment to that business moving forward just given the strength in the rest of your portfolio?

Yes, that’s a good point. To recap, the biopharma segment is included in our biopharma and other category, which accounts for less than 10% of our total revenue, with biopharma being a slight majority of that. This category also includes IVD services and contract services revenue. On the biopharma side, we previously mentioned some macro-level challenges that we are still experiencing, impacting us in two significant ways. First, we have had project terminations, including a notably large project from our Marseille organization that ended, which we discussed a few quarters back. This has certainly affected our backlog and our ability to secure new business. Although we are engaged in many fruitful conversations, the process from discussion to contract has been slower than in the past due to these macro challenges. Looking ahead for that business, we always evaluate our strategies and make appropriate investments, balancing them based on visible growth opportunities. Currently, the timeline for overcoming these macro challenges is unclear, so we must remain cautious in our approach to growing or stabilizing that segment, given the impact on customers. This is something that our team, including myself, Rebecca, and our general manager for that area, are very focused on, and we will continue to prioritize it until we see opportunities for growth resume.

Our next question comes from Tejas Savant of Morgan Stanley.

This is Yuko for Tejas. Maybe following up on that biopharma question. You previously mentioned that you're putting efforts towards diversifying that customer portfolio. Could you talk about some of the strategies that you're employing and also provide some color around the progress you're making to diversify that?

Yes, it's a good point. The comment that I provided previously is that there has been a very concentrated customer base with a few large customers making up a significant portion of the revenue, and that's obviously impactful when you start to see those customers holding back on their spending. And so we've been on a drive here to bring in more new customers even for those initial small pilots that often lead into bigger contracts. So as I said earlier, one of the things that we have seen is an increase, certainly more conversations than we were having with more customers previously. But again, it's that issue of those transitioning to firm contracts and arrangements that we are able to deliver on and then turn into revenue. So some of those are happening, but not at the pace that we would like to see, but we're continuing to be very focused on that. A couple of other areas where I see diversification opportunities are very much in the U.S., most of our revenue, as I think you're probably aware, is very focused on our customers that are based out of our Marseille team's delivery remit. We also have the incredible data that we have with Afirma and Decipher that we can also leverage in the U.S. and globally. And so those create other opportunities for customer diversification. And there are conversations again continuing there, but it's the same macro-level issue of getting those over the finish line. So continue to focus on that and diversification of that customer base is clearly going to be something that we're going to continue to strive for.

And then also for Rebecca, could you provide early color for 2024? Particularly for Decipher as we began to lap tough comps, how should we think about steady-state growth in the medium term?

I'm glad to provide insights, Yuko. Regarding Decipher, we have had an exceptional year and have now captured about 30% of the market. Considering other products like Afirma, which have been around longer, we still see significant opportunities for growth, potentially reaching 60% or 70%. I am confident that we will maintain strong growth for Decipher for a considerable time. We have much work ahead in 2023, so we aren’t making comments about 2024 at this point. However, we are optimistic about our capacity to continue market penetration and revenue growth. Afirma has been established for 12 or 13 years, and Decipher is still catching up. We expect to face tough comparisons in the latter half of the year, yet we anticipate Decipher growth in the mid- to high-30s for 2023, which will still yield a significant growth rate moving forward. While I won't comment on 2024 specifics, I'm excited about our ongoing growth in this market and our ability to support more prostate cancer patients over time.

Our next question comes from Puneet Souda of Leerink Partners.

Marc, congrats on the quarter here. And Tina, great work on Decipher all along and really wonderful working with you. So good luck going forward. Maybe with that, let me ask a question on Decipher. I'm wondering, obviously, clinical evidence is built. That's helping you get to the 30% penetration you talked about. Could you talk a little bit about the commercial sales force that's in place? Were there additions to that? Was there anything that changed on the commercial that helped you drive strength in the current quarter? And what are you contemplating for the commercial side for Decipher and the rest of the year?

Thank you for joining us. We have consistently highlighted the strong performance of our sales team, which excels in various efficiency metrics and builds robust relationships with existing urology practices while also seeking new ones. Each year, we consider minor territory realignments, and this year was no exception, proving to be very successful. We added a small number of representatives, and as they ramp up over about six months, they have begun to make significant contributions to the business. Our sales team, which consists of roughly 45 people, has successfully grown both existing and new accounts, contributing to this year's performance. Last year, we announced approximately 10,000 tests; this quarter, we saw 15,000 tests, marking a 50% growth in volume within a year. I attribute much of this to our sales excellence. Additionally, the evidence generation, which you mentioned earlier, has played a crucial role. With over 75 publications and the NCCN Level 1 guidelines, the increase in test orders has been significant, which likely explains the influx of new customers this quarter. This bodes well for Decipher's long-term potential, as there is substantial market opportunity. Despite our estimated 30% penetration, there remains a considerable number of prostate cancer patients who are not receiving any molecular diagnostics. Our goal is to position Decipher as the go-to test, ensuring that more patients can access it, not just in the U.S., but globally.

Got it. That's very helpful. And on Afirma, Rebecca, I mean you gave context around Decipher in the prostate. Could you maybe just provide some context about 2024? I know it's hard to sort of give overall guidance. But how do you expect that business to trend given these higher growth rates for Afirma that you're seeing now?

We are excited about Afirma. Although it is further along in its life cycle compared to Decipher, this year took us all by surprise, especially with the team's execution. I'm not going to provide specifics on Afirma, similar to how I didn't comment on Decipher for 2024, but it remains a strong franchise. We are continuing to invest in product differentiation, and the team is eager to deepen our market penetration. We haven't updated penetration figures beyond the year-end report, which indicated that Afirma has reached approximately 50% market penetration, with it capturing the majority of that alongside other tests available. We believe we're in a solid position, though there is still room for growth. We plan to aggressively pursue these opportunities, and we anticipate this will remain a strong narrative for us in 2024 and beyond. Afirma and Decipher are major contributors to our growth, accounting for nearly 90% of our revenue, which puts us in a good position.

Our next question comes from Sung Ji Nam of Scotiabank.

Congratulations on the quarter. Regarding the Envisia IVD submission that was completed at the end of last year, I wanted to know if there is any active engagement with the regulators in Europe and if you might be receiving any feedback on that. Additionally, is there a chance that you could receive clearance in the next 12 months?

Yes, I certainly hope so. Thank you for that question. To provide some context, our IVD strategy involves launching several products, including Envisia, Decipher Prostate, and nasal swab outside the U.S. as IVDs. You are correct that we submitted Envisia last December, slightly ahead of our schedule. We have been in communication with a notified body and have gone through multiple rounds of questions. Initially, we received a lot of questions, but our team responded quickly and effectively. In the second round, we received significantly fewer questions, which we are currently addressing. Ideally, we hope to gain approval soon, though it's still early in the IVDR process. I'm proud of our team's achievements so far and optimistic about the feedback we have received, but we can't confirm when approval will occur. Our focus will remain on responding to questions, providing necessary information, and generating evidence to drive adoption. Importantly, even after we secure approval in Europe, we will need to navigate the reimbursement and adoption processes in different countries. This will also apply once we seek approval for prostate and nasal swab tests.

Great. And then just a quick follow-up for Rebecca. For the IVD contract manufacturing revenue that's part of biopharma and other, I know there's a portion of that, that would be prioritized, right? Just remind us again when you expect that to anniversary that?

I would love to say that's an easy question to answer, Sung Ji, but it's a little bit more fluid than that. So I would think about the majority of the impact kind of being in the run rate now, if you would, and not necessarily anniversarying out. So I apologize if I'm not being clear because I think it's just a challenging question to answer because those resources are relatively fluid. But it's not going to be a major driver one way or the other in terms of the $18 million to $19 million guide above and beyond where we're at now. Does that make sense? Okay.

Our next question comes from Andrew Brackmann of William Blair.

This is Dustin on the line for Andrew. Very strong cash generation in the quarter. Just wondering what the number one priority is now or what this changes the most? Is it M&A reinvestment in the business or just continuing to build up the cash in anticipation of something else in the future?

Yes, that's a good question. I don't see it changing anything at this point. Our strategy remains the same, with a strong focus on investing in long-term growth drivers for both nasal swab and the IVD strategy, advancing those as quickly as possible. This doesn’t allow us to increase our pace; we were already working at maximum speed on those projects. We will continue to pursue these as our core strategies for long-term growth while ensuring that Decipher and Afirma achieve their current success. Regarding M&A, our thesis remains unchanged. The criteria for us remains high, and we would concentrate on businesses like Decipher that can rapidly enhance our unique financial profile. As I've mentioned before, the opportunities are limited in that regard. I am proud of the strong cash generation by our team, and many people in our company have focused on achieving this outcome, which will continue.

Understood. Rebecca, on the prior period cash collections, are any future collections anticipated in the guide? And was this any part of the raise that you had in revenues?

Yes, totally fair. So with regard to the guide, the only thing that's contemplated in the guide is what we have booked year-to-date, which is that $4 million. So on a go-forward basis, we're expecting more normalized ASP, and that's what's implied in the guide. And just again, on a year-to-date basis, it's around 50-50 Decipher-Afirma. And we do believe that's prudent to just take that one step further. And the reason why we believe that's prudent is because those are very much related to both the increasing performance of the number of managed care contracts that we had on the Decipher side, which has been relatively stable now for a couple of quarters, as well as the normalization of the Afirma CPT code issue. And so we're now starting to anniversary those. So it is prudent that we are not necessarily counting on collection performance to the extent we saw it year-to-date because those were temporal issues in nature that have been resolved.

Our next question comes from Mason Carrico of Stephens, Inc.

This is Jake Krahenbuhl on for Mason. Maybe one on Decipher here. I appreciate the color you guys gave on the updated penetration for that market. But could you just maybe update us on the competitive dynamics within the market? Have you seen any competitors gaining traction? Or do you guys feel like you're capturing share at a higher rate?

Thank you for the question. If you consider the growth rate, there's been a 50% increase in volume this quarter compared to the same time last year. You can check your own competitive reports to see that we are clearly gaining market share. Anecdotally, our sales team reports insights on where they see other tests and where they do not. While there will always be individual customer situations, at a macro level, the numbers are quite compelling. I attribute this success to two factors: the strong evidence generation for Decipher, which resulted in inclusion in the NCCN Level 1 guidelines, and our outstanding sales team that is excelling across all metrics.

Got it. Let's switch gears a bit. Regarding your manufacturing transition, assuming it's completed by the end of the year, what factors should we consider when thinking about the product gross margin for next year?

Yes, I'll let Rebecca comment, but you really shouldn't place too much emphasis on that regarding the income statement. The significant impact will come from the volume of our IVD tests outside the U.S. Currently, as you know, we're selling Prosigna. The volume is good, and the test is performing well, but it's only a few thousand tests each quarter. What we really need is Decipher Prostate to be launched commercially, even with Envisia also coming out, as that's a rare condition. While we will see some volume from Envisia, we need Decipher Prostate on the market to truly reflect the benefits of the manufacturing transition in the income statement. We're planning to submit that test in 2024, with commercialization expected shortly thereafter. So we have some time, but it's important for us to pursue this, and our team is focused on making that transition happen. It's tracking well, and we are in the final phase now. Anything to add on the P&L, Rebecca?

Our next question comes from Mike Matson of Needham & Company.

This is Joseph on for Mike. Just one from us. With the, I guess, pushback of the estimated completion for the enrollment in the NIGHTINGALE study, I was maybe wondering if you could give an updated expectation for when you would be able to release preliminary data from that study.

Yes. As I mentioned at the beginning of the call, we have pushed back the final patient enrollment for that trial to the second quarter of next year. I consider this a conservative estimate, but it's one we are committed to achieving despite the lower enrollment and ramp-up we've experienced at several sites. I am encouraged by the nearly 70 sites we have initiated so far. Our clinical, medical, and commercial teams have done an excellent job in identifying and enrolling these sites. There is a high level of enthusiasm among both patients and the principal investigators involved. Regarding the data, as I mentioned before, once we complete enrollment—and even beforehand—we can start analyzing it. However, for clinical utility, we need to see the benign status, which may take time. Typically, we follow a two-year guideline, although there is evidence suggesting that a one-year follow-up may be sufficient. Our strategy remains unchanged. We will review our master data, assess the insights it provides, conduct necessary follow-ups, publish our findings, and engage with Medicare accordingly. Our goal is to commercialize this test in the U.S. as soon as possible. Additionally, we are preparing for the international launch, which we plan to submit in 2025 for regulatory approval in Europe before launching the nasal swab globally. I am very excited about the positive reactions to the test we've received so far and look forward to advancing through this pivotal study.

Thank you. Ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.