Fulgent Genetics, Inc. (NASDAQ:FLGT) Q3 2023 Earnings Call Transcript

So while the — like you said, the mad dash kind of happened, now it’s more of a grind to find clients where Fulgent can be a better service provider than what they’re currently getting. In terms of the OB space, it’s something we have — it’s a bright spot in our radar. It’s a huge TAM. It’s a big opportunity for us. We’ve commented historically that often NIPT and carrier screening are coupled together. That’s true. But I think what we’re seeing right now with the dynamics in carrier screening, I do believe that there is a subset of that market that would be willing to separate the two. I think with our turnaround time, which is, again, right now around 12 days, we’re signing some of these out as fast as nine days, I think the OB and the infertility clinics appreciate that turnaround time, our ability to customize these panels from anywhere between a handful of genes all the way up to almost 800.

I think we’ve done a phenomenal job going to market with Beacon. And even in lieu of NIPT, I think we can get the attention of some of these OB doctors with Beacon.

Paul Kim: And Andrew, the numbers, they back that up, meaning that earlier, Brandon talked about some of our assumptions in anatomic pathology and that being relatively muted. But if you take a look at the performance that we had in Precision Diagnostics, which is the most lucrative part of the market, and it’s the area that we believe that we shine in terms of our capabilities and services. In Q1, the revenues for Precision Diagnostics, it was a little under $29 million. In Q2, it was between $32 million and $33 million. And in this quarter, it’s between $37 million and $38 million. So in terms of the growth rate and the acceleration and the performance that we’ve been having in this particular sector, within a very short time frame, it’s been really impactful on the company.

Andrew Cooper: No, that’s helpful and certainly appreciate that growth profile there. Maybe just one more for me, kind of higher level. When we think about the FDA LDT regulations, I think we’ll see whether they go in, how they’re written or not. But how do you think about that and what that means to you. Some of the pitch that you make, obviously, the turnaround time piece isn’t affected, but that ability to customize under sort of a tweak or really overhauled LDT regime, how do we think about what that might mean? And sort of what’s the plan to the degree that this does go in as written because those customizations presumably become at least more difficult. So just would love kind of your thoughts on, one, the regulation in general and two, how that specifically plays in for Fulgent and the strategy you guys take, especially with Beacon?

Brandon Perthuis: I mean, it’s a good question. We’re monitoring it as closely as every other lab out there, right? I mean this — they’ve been exercising jurisdictional discretion for many years, have leaned on LDTs with CAP and CLIA validation. So like there’s something like 22,000 genetic tests on the Fulgent test menu. We’re not sure how the FDA will approach regulating 22,000 tests per lab, for example. We think they’re going to target some of the higher-risk genetic testing, some of the higher-volume genetic testing. But look, it’s hard to say, it’s hard to predict. However, it shakes out, we’ll be prepared, right? We have the subject matter expertise. We have the operational expertise. So it’s something we’re watching and waiting.

I think it is a — quite a difficult task to step in and try to do this after all these years and all these genetic testing. But again, we will watch it, we will monitor it, and we will respond accordingly with the expertise we have here in that area. Larry, you have some additional feedback on the FDA?