Prashant Kota: Hey, guys. This is Prashant on for Matt. Just with the key competitor in rare disease off the market, do you anticipate being able to capture some of the market share? And if so, what’s your strategy to try and capture some of those share gains?
Katherine Stueland: Yes. It’s a fantastic question. We absolutely feel confident in our ability to be able to step in and provide our services to – to that market. I think in particular, a lot of the focus that we saw with some of the rare disease testing was exactly in the market that we’re aiming to drive greater utilization of exome in, which is the pediatric neurology setting. And so we’re grateful for the efforts of others, who have really gotten pediatric neurologists to start ordering genetic testing. Historically, they hadn’t. So we now have customers who understand how to order testing, which patients should utilize it. And we have a growing body of evidence, including data that we presented at the American Epilepsy Society last fall, that shows that exome is going to drive a higher diagnostic yield than panels.
So these are customers who we have been converting already. We have a proven ability to convert them from panels to exome, and we’ll continue to drive, I think, our market brand to those clinicians and be able to convert the business throughout the course of the year. All of that really would be upside in terms of our outlook for 2024.
Prashant Kota: Got it. Thank you. That’s helpful. And then what is the current split between NovaSeq 6000 and Xs that you have? And how large of an impact will that transition have on COGS and how long will it take to start realizing cost savings, given the upfront cost of replacing machines?
Kevin Feeley: Yes, the Xs represent — the new machine, the X represents about 20% of our fleet. It will take us through the end of the year based on our scheduled deliveries to replace the entirety of that fleet. We’ve got two machines live with the second only going live in November. And so there’s not yet a full quarter effect on the benefit to COGS for that second machine. We’re seeing good experience. And I’d say, more importantly, the larger flow cell that has come out, we launched subsequent to the end of the year. So in February, that went live. And so really won’t start to make an impact on COGS until the second quarter, at least from a full quarter perspective. So we’ve got two machines live and intend to replace the remaining or the fleet over the next year or so.
The benefits, I’d say, more importantly, will start to be seen once we are producing at scale with all of those machines and with that larger flow sale in place, which, again, just went live for us in February here. So, still to come.
Prashant Kota: Got it. And then just a last quick question on what’s the process of retiring a panel? Could you just elucidate that? And how long does it take?
Katherine Stueland: Certainly. I mean, first, what we’ve done is establish a set of criteria for determining whether or not we should be keeping a panel. And it starts with what’s best for patients. And then there’s a number of factors that we take a look at to really assess whether or not the gross margins are there. It’s the type of panel where it’s actually primed for conversion to exome, and we should just be driving exome first versus clinic and who may be used to ordering via a panel. And so we established this rubric. We identified about 350 tests that we determined we could retire. We did retire them earlier this month. And that will be a process that we continue to utilize as we drive more and more utilization of exome and genome it represented, I would say, a small portion of utilization.
So, it really was maintenance for us to be able to keep those up and running. So, once we’ve made that determination, it usually takes several months just to be able to put the product and tech teams in place to ensure that we’re communicating with customers, ensure that we have a good strategy for ensuring that there isn’t a discontinuation of care and that we can kind of have a warm transfer to whatever that new test is, if it’s a new panel or if it’s an exome or genome. It’s something we intend to continue to drive and feel like we’re developing kind of a strength with that being a muscle organizationally.
Operator: Thank you. And our next question comes from the line of Dan Brennan from Cowen. Your question please.
Dan Brennan: Great. Thanks for the questions. Congrats on the quarter. Maybe first one would be, I think, maybe Brandon, I think asked on the first question. You exited the year in the fourth quarter, I think 27% mix as you kind of commented on exome/genome. So, I believe you said that is a reasonable point for all of 2024. I’m just wondering why that wouldn’t continue to move higher?
Katherine Stueland: We’ll continue — it’s a good starting point, Dan, and thank you for the clarifying question. We think it’s a good starting point. We intend to continue to increase that mix percentage throughout the course of the year.
Kevin Feeley: Yes. Yes, Dan, to be clear, we think it’s the right exit point. But absolutely, with each sequential quarter, we should expect to pick up some mix there towards exome and genome for the each passing quarter throughout the year.
