Insight Molecular Diagnostics Inc. (NASDAQ:IMDX) Q2 2025 Earnings Call Transcript

Insight Molecular Diagnostics Inc. (NASDAQ:IMDX) Q2 2025 Earnings Call Transcript August 11, 2025

Operator: Thank you everyone for joining. We’ll start here shortly. Used to have a couple of people joining in, so give it a second more. Alright, everyone. Welcome, and thank you for joining us to discuss Insight Molecular Diagnostics second quarter 2025 results. If you have not seen today’s shareholder letter, please visit Insight Molecular Diagnostics investor relations page at investors.imdxinc.com. Today’s prepared remarks build upon the information already shared in this robust letter. Joining us today are Insight Molecular Diagnostics president and CEO, Josh Riggs. Chief science officer, Ekke Schutz and CFO, Andrea James. We also have our analysts with us as panelists. After our prepared remarks, our analysts may ask questions.

Before turning the call over to Josh Riggs, I’d like to go over our safe harbor. The company will make projections and forward looking statements regarding future events. Any statements that are not historical facts are forward looking statements. These statements are made pursuant to and within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. We encourage you to review the company’s SEC filings including the company’s most recent Form 10-Ks and subsequent Forms 10-Q identify risks and uncertainties that may cause future actual results or events to differ materially. Please note that the forward looking statements made during today’s call speak only to the date they are made. And Insight Molecular Diagnostics undertakes no obligation to update them.

And with that, I would like to now turn the call over to Josh Riggs.

Josh Riggs: Thanks, Gabby. Welcome, everyone. Thanks for taking time today. I spent much of last week at the World Transplant Congress meeting with leaders from top transplant centers from both here in The US and in The EU. In the future, these sites will be our customers, representing the earliest adopters of our IBD product. Today, they are our partners. We are working together bringing transplant centers something they are missing, the ability to manage their patients locally and get paid for it, and run their own research studies. Build guidelines, and explore new clinical utilities. Our transplant partners are energized, and motivated to see us be successful with our FDA program, and that energy is starting to spread. Just in the last week, we’ve had more centers raise their hands see if they can support the clinical trial.

We are working with them to get them up and on board as quickly as possible. Today, I’m gonna talk about our progress with the FDA product, ReftAssure DX. What we are doing to prepare for commercialization, and where we are headed next as a company. To recap our key areas of focus for 2025, first was, you know, finalizing our clinical assay and trial design. Second was getting through our clinical trial to submit a data package to the FDA by the end of the year. And third, spring loading back half 2026 revenue through our land and expand strategy with transplant centers. On the first area, we talked earlier in the year about assay and workflow design improvements. I’m pleased to note that those have been completed and transferred to manufacturing with the first kits shipping out to our beta sites in June.

Q&A Session

The changes make it possible to get both the relative and absolute quantification of d d c f d n a at the same time on the same run. This simplifies the workflow for our future customers making it easier to adopt, and offer some improvement in turnaround time. Early feedback is positive, and multiple centers are taking it through the validation process. As far as the clinical trial, we’ve had our first center site initiation visit last week with the next two coming over the next two weeks. It feels really good to be making progress with the clinical trial which is a key component of our FDA submission. We believe that we are still on track to submit to the FDA by the end of this year. Which is the same timeline that we communicated in March, and again in May.

Like with any FDA program, there are several work streams that must come together and from what we can see, we are on pace. So we continue to target FDA approval in 2026. On July 30, we had our third FDA meeting, and walked away feeling great about our program. These meetings with our FDA review team are productive and provide clear guidance on what’s expected from our study. From the first meeting back in December, to now, the questions and comments have gotten much more precise and the path forward much more clear. Our team at IMDx have been through many FDA reviews. And what we see in front of us looks like a yellow brick road. We just have to stay on the path. Additionally, we have not felt any loss of continuity with our FDA review team even amid some of the macro changes in Washington, D.

Continuing on to focus on 2026 revenue, Recall that our strategy was to land leading transplant with our research use only or RUO kitted assay, Now a year into LANDiC, the benefits are threefold. First, we familiarized labs in key markets with our assay. Second, they’ve begun generating internal research and studies. We’re hoping to see the first couple of those publications out this year. And third, they provided us with valuable field tested feedback how to improve the assay. And those improvements are now in the field and going to the FDA. I can say we’ve gotten exactly what we needed, and then some. Out of our beta site program. The expand part of our strategy will be selling the diagnostic kits to these labs. After we achieve expected FDA authorization.

As of today, we are shifting into precommercial mode as we get ready for a meaningful launch about a year from now. We believe that we are on track to have 20 sites trained on our graft to shore workflow by the end of this year, We now have 10 sites running our RUO assay, and they are in The US, Germany, UK, Switzerland, Austria, and Southeast Asia, In addition to those 10, you can see that there are five major US hospitals listed on our publicclinicaltrials.gov listing. Only one of those five sites is already counted among the 10 running our research use only assays. So adding those two buckets, you can see that there are a total 14 centers that are already becoming familiar with our assay. Either through deploying the research use only kits or through supporting our clinical trial.

In such a highly concentrated market, this represents great progress. From a market standpoint, the recent guidance from MolDx around surveillance has been incredibly helpful. The growing acceptance of surveillance in the clinical setting moving away from strictly for cause testing makes the revenue opportunity clearer for potential IVD customers. The draft guidance aligns with how we have sized the market supporting our view of a substantial and growing opportunity for our kitted assay. Now I want to raise the curtain slightly on an exciting that is emerging about our assay. And please bear with me a second as I get a bit technical. So one of the challenges with using d d c fDNA for surveillance has been the low positive predictive value or PPV of either fractional or absolute quantification on their own.

In lay terms, this means that high rates of false positives lead to many unnecessary biopsies. Most ddcfDNA tests have a PPV around 50%, which is basically a coin flip. Meaning, if you are using it to rule in patients for biopsy, about half of those biopsies are gonna come back normal. That’s not great. When you consider that ddcfDNA adoption has largely been driven by the desire to have avoid unnecessary biopsies. It leaves a lot to be desired. To put it simply, there are patients who are getting biopsied. Do not do not need to be, due to d d c f d n a’s PPV problem. We think we have an elegant solution to this problem and this is why we are so excited by the data shown at the WTC World Transplant Congress last week. Alongside our research partners at Charite in Germany, we were able to show a positive predictive value of close to 80% by combining our two scores together algorithmically.

So recall earlier that I told you that our optimized assays allow clinicians to get both the relative and absolute quantification of d d f c f DNA at the same time, on the same run, it’s these values that we’re combining into an algorithm to eliminate many false positives as a step in solving the PPV problem. We are optimistic that this represents the next generation of ddcfDNA assays. Should it validate in our FDA program, it might prove to be a significant hurdle for companies seeking to do a follow on five ten k. As they would have to show substantial equivalencies. The data is expected to be submitted for publication here in the near future. Given that we are more than halfway through 2025, and we believe about a year away from a very exciting graft assured DX launch, we wanted to shed some light on what comes next.

This is just the beginning. We’re not stopping at kidney. We plan to immediately expand into an additional solid organ transplant indications. Building a multi indication portfolio that we believe can unlock substantial clinical and commercial value. We see heart transplant as the most logical next indication, We’re already engaged with the number one heart transplant center in The US. Which gives us confidence in our ability to execute. Doctor Anthony Langone is leading efforts here, as and as we see as and as soon as we complete enrollment in kidney, we expect to begin enrollment in heart followed quickly by lung. So the takeaway today is that we are making solid progress. And we see a clear path to product launch and a and potential meaningful clinical followed quickly by meaningful revenue.

And we’re committed to investing in this product pipeline to deliver continuous growth, and long term value. I’m gonna turn it over to our CFO, Andrea James.

Andrea James: Thanks, Gabby and Josh. Hello, everyone. Before I briefly give financial highlights, I want to warmly invite our analysts and investors to our key opinion leader webinar scheduled for Friday, August 15, and that will feature Vanderbilt University’s Doctor. Langone, who is leading the efforts for our ongoing clinical trial, as Josh mentioned. The link to register for that is in our shareholder letter. We’re thrilled to have doctor Langone joining us to talk about our GraftAssure DX clinical trial and the benefits of in house donor derived cell free DNA testing. Since he is the national principal investigator for a clinical trial, and he is very well regarded in this space. Of you on this call today have already registered, so thank you.

We chose this timing for this upcoming Friday due to doctor Langan’s very busy schedule. But I know that just after market close on a Friday afternoon and make August, for many of you, is not your preference. So we totally get it. And, of course, if you cannot attend, there will be a replay available at investors.indxinc.com. Okay. So far in 2025, we’ve announced prod progress with our multicenter clinical trial commercial expansion of sales of our GraftAssure I research use only test kits, and we’ve announced favorable data that further solidify our global credibility in the transplant community. Our top priority is unchanged. Bring our first clinical molecular test kit to market so that we may begin to capture value in the estimated $1,000,000,000 total addressable market for transplant rejection testing.

Quickly touching upon our results, we had said last quarter that we expected our Q2 pharma services revenue to come in under $500,000. And it did so at 494,000. You’ll notice this quarter that we renamed this revenue category to Laboratory Services. This better reflects what we’re doing, which is mainly sequence and proficiency testing for customers. We’re very pleased that our gross margins on this work came in at nearly 68% in the quarter. Also in the second quarter, we sold a very small number of first generation graft Assure IQ kits, about $24,000 worth. And as we shared in our letter, we began shipping the second generation kits to customers in June. These initial second gen RUO kits do not carry revenue. As our customers need free samples to validate in their labs.

We expect those customers to begin ordering after which should drive a small amount of revenue later this year. We’re pretty excited about the workflow improvements in these second generation kits. Joc had talked about this, and I wanted to double hit the point here. This innovation benefits not only the RUO product, but also the future clinical kitted product. It’s an elegant solution that expands our market lead and ease of use. And we do have our chief science officer, doctor Ecky Schutz, on the call with us today if you’d like to ask more about that. Onto operating expenses. Including the impact of noncash charges, operating expenses were roughly flat over the for first quarter. Our r and d spending reflects additional investment in FDA compliant software development for graft assure DX.

As expected, we are also incurring increased consulting fees tied to our regulatory submission and increased laboratory and site setup costs related to our clinical trial. We’re also investing more in commercial activity as we prepare for meaningful revenue ramp next year. We concluded the second quarter with $26,000,000 in cash, and that includes restricted cash, which we’re beginning to access as we wind down our Irvine lease. Our cash used in operating activities in the second quarter was 6,300,000.0 plus about $350,000 in CapEx. This is right in line with our previous communication quarterly cash burn of about 6,000,000 would start to increase in Q2 and q t Q3 slightly as we invest in our FDA program. Okay. So looking ahead for the third quarter revenue, we expect to bill less than $300,000 in laboratory services.

And as a reminder, and I’ve said this last couple of quarters, these services can be lumpy, and they’re largely unrelated to our core strategic objective of selling global kitted product. Also, so far in the third quarter, we have not invoiced for any of these laboratory services. Turning to cash management, as we noted last quarter, the biggest needle mover is our clinical trial, and the instruments that we’re purchasing at a discount support that trial at our partner sites. FDA compliant software development is also a near term incremental expense. We continue to target an average of about $6,000,000 per quarter in cash burn until our commercial launch next year, although we said it’d be higher than that in Q3 before coming back Down again in Q4.

Okay. And with that, Gabby, we are ready for questions. I can see a few of you guys have your hands up. Let’s give Eric a chance to bring everyone up into gallery view.

Operator: Thank you, Andrea. Have questions. Let’s Mark Massaro from BTIG.

Mark Massaro: Hey. Great. Thanks for taking the questions, Congrats on the progress. You know, I wanted to start with the clinical trial. It looks like you guys are on track, and I just wanted to maybe double click on I I think you talked about approval as early as mid 2026. I think I have this, but just making sure I’m tracking that you you think as early as six month approval timeline, assuming you submit you know, call it Q4 the six months would be the earliest. I’m just wondering if you could potentially bracket what you think the other side of the earliest would be. Is that twelve months or how are you thinking about timelines?

Josh Riggs: Yeah. I’d say the the guidance from the agency itself is, you know, five months of of review time. You know? So we’ve we’ve budgeted six to seven, on our side, which, you know, puts us Right there at the ‘2 next year to to early Q3. What the outside of that could be, it’s tough to tell. Right now, I think we’ve we’ve spent as much time as we can, you know, with the FDA kind of reviewing where they’re concerned are, and I think they’ve been very forthright about what we need to address in the study. And I think, you know, doctor Schutz and his team have a really good plan to to address those kind of head on. So there’s always unknown unknowns, but I think we feel confident that we can address what they’ve put in front of us so far.

Mark Massaro: Okay. Thank you for that. I wanted to follow with a question about the recent proposed draft LCD by Palmetto. And I I’m just curious. I I know you recently spoke with the FDA and I know that the FDA is looking for safety and efficacy. I’m just curious if there was any potential discussion about perhaps coordination among the government between the FDA and CMS But, so that’s the first part. The second part is I guess, Josh, how are you thinking about the the proposal draft and potentially putting some limits on utilization. And I I wanna square that with what do you think the appropriate level of utilization would be in kidney You know, I’m just curious how you’re thinking about the repeat test opportunity.

Josh Riggs: No. It’s a it’s a great question. And so I’ll I’ll take them in reverse. And go with, you know, how we think about the the LCD, and then I’ll answer the question on the FDA. You know, I think it’s it always kind of rubs you a little bit the wrong way when decisions are being taken out of the hands of physicians. And so, you know, I think our instinct is to you know, support physicians on whatever schedule they think is appropriate for their patients. I think as we get, you know, the testing into the hands of centers and they’re able, to do their own research and, you know, build their own protocols, I think we’re we’re hopeful along with the rest of the industry that that there’s there’s movement, in the out years to support more testing.

I think, you know, adding better positive predictive value so you’re having less false positives and so less biopsies helps in that story. Because I think if you’re if you’re enrolling a bunch of patients or sort of biopsying patients that don’t need it, that’s, you know, runs counter to the argument that we should be testing more frequently. But in general, I’m I’m on the side of the docs on this one, and and and I think we should you know, help them build whatever data they need to support the the protocol that’s right for their institution. Trying to keep myself out of the direct crosshairs of MultiX with that answer. But the you know, the FDA you know, we started our conversation with the FDA, oh, well back, I think, at ’24 as as an LDT going in and, you know, having a conversation with them.

That way, and they directed us towards, towards the path we’re on. We haven’t had any conversation with them that directly ties the work that they’re doing. To CMS. So I don’t know that I have any any guidance to share with you on that. I think, you know, we’re we’re hopeful that we get to bring that test out, put it into our LDT lab, and, you bridge the FDA and the and CMS in that way. But we have nothing that says that they’re gonna do that from a policy point of view.

Mark Massaro: Okay. Understood. I’ll keep it to two questions. Thanks. Alright.

Josh Riggs: Thanks, Mark.

Operator: Thanks, Mark. Mason Kerrigo from Stephens. Hey, guys.

Mason Carrico: Hey, guys. Thanks for taking the questions here. I guess to start off higher level on the IOTA program, since that program went live, have you ever have you seen any signs of margin excuse me, marginal or getting used more frequently, be great to get some insight into what you’re hearing from pilot sites as well as, I guess, centers more broadly.

Josh Riggs: Yeah. I would say you know, I think, we expected there to be a lot of negative feedback when we were at WTC. And and then we heard the opposite of that. I think, you know, folks are actually encouraged, by the program. And the utilization. So I’d say early innings are are generally positive from who we’ve spoken with. But my my reach there is pretty limited. So I I couldn’t say that it’s a broad response.

Mason Carrico: Okay. And I think last quarter, you guys had called out five key questions for the Q Sub meeting that you wanted to ask to get more comfort. Around the trial. Mean, would you be willing to share some color on what those topics were? Looking ahead, what variables could materially change the the current trial or or your timeline assumptions there?

Josh Riggs: Yeah. No. Thanks, Mason. I think, you know, the biggest one that we had is one that all kind of blood companies face that are looking at, you know, CF DNA, which is around the blood tube, and how do you manage that. And I think you know, Guardant set a path there, that was very successful. There have been others as well. I think, you know, Roche has done done this in the past. And and I think we’ve resolved that in a way that we’re comfortable with, and we’ve believe the FDA is comfortable with. So I think that was the biggest one that we had. Outside of that, I think there was just some clarity around you know, what orthogonal testing would be acceptable, what orthogonal methods would be acceptable. I think, you know, we’ve you know, I think we were relying on the old standby of sequencing to get us through on most of those questions. So I think we feel pretty good that that we’ve answered those questions at this point.

Mason Carrico: Got it. Okay. And then last one for me here. You guys called out at least six potential areas of expansion. For your kitted assays in the release. Could you just talk about how you’re planning on prioritizing investments required to support those indications versus you know, further commercial investments or data evidence investments in the in the kidney product post approval.

Josh Riggs: Yeah. Great question. Thank you. So we group them into two categories. One is, on tissue, and the other is on therapeutics. So tissue are the ones that we’ve enumerated earlier. You know, heart is one. Lung is another. And then I think the third would be liver. I think liver is a little bit of a longer road. Heart is pretty straightforward. At least, you know, from from a technical point of view. We’ve published on it in the past, have a, you know, pretty good idea of of what needs to be accomplished there. So I would say an investment at a smaller scale than what we’ve done with kidney where we had to create the product and get it through. I think now it’s more just data generation. So that feels lighter weight.

I can’t hang a number on it for you today, but it is definitely lighter than the program. We’re currently running. I’d say the same answer for lung unless Eckie raises his hand and tells me that I’m completely off base. Liver feels like a much longer study. We need to prove out the reduction in immunosuppression or sort of like the de escalation of therapy. Piece, and that that feels like longitudinal monitoring and tracking, which is a much heavier burden from a clinical trial standpoint. On the therapeutics, I think we’re going to be pulled through either by our research partners or by pharma itself. On this one because they they’re looking for for for tools that can monitor for therapeutic efficacy in trial and then also monitor for recurrence for patients that are on trial or post therapy.

We’re in a couple of studies that are ongoing right now, one with, you know, a follow on on trastuzumab. From the New England Journal, and then a second one is a is a registry study that’s running in Central Europe for daratumumab. Which is Johnson and Johnson’s drug that’s being used off label. And so I think those are kind of pulling us forward there. But we’re not we’re not running any drug studies on our own. So I think that one, we’re really at the mercy of of what’s being done external.

Mason Carrico: Got it. I’ll keep it at that. Thank you.

Josh Riggs: Thank you, Mason.

Operator: Thanks, Mason. Up next, we have Thomas Flaten from Lake Street.

Thomas Flaten: Hey, guys. Appreciate you taking the questions. Josh, just on on the clinical study, I know clinicaltrials.gov tends to lag, but but it says only two sites are enrolling right now. And I’m just trying to do the math on the submission by year end. There’s only four and a half months left. Realistically, how many more sites can you bring on board in the study that are gonna have an instrument get trained and actually you know, put patients into the study? Like, can you just walk us through some of the math there?

Josh Riggs: Yeah. I think you’ll expect to see two more come live that that aren’t announced right now. One in Europe and another here in The in The US. Just because of the the maturity of those conversations. The others are going to to lag. And as far as, you know, the enrollment piece, you know, when we look across the you know, collectively, know, there’s about 200, 220 some odd biopsies happening on a monthly basis. If you look at the the listing on clinicaltrials.gov, we only need about a 125, to fully power the study. So I think we feel confident that we can, you know, rapidly enroll. It’s it’s more just getting those sites up and active.

Andrea James: And, Josh, do wanna talk about the fact that the clinical trial is templated. And so there’s not a lot of extra stuff that happens after the blood draw. Not a ton.

Josh Riggs: Yeah. No. It’s it it is pretty simple to process. I think, you know, once a center has you know, it’s batched together, you’re talking less than a week of runtime for them to process the sample. Because you can you can get six samples through on a q x 600 in a single run, and that run takes you about four hours to process. So a single center can run through their samples rather quickly. I think So that’s giving us confidence that that we’re we’re still on pace.

Thomas Flaten: Got it. And then, you you mentioned some improvements to the RUO kits. Is it safe to assume that all those improvements are folded into product that will ultimately be FDA approved? And if so, could you give us kind of a 50,000 foot around what exactly those improvements were?

Josh Riggs: Yeah. I’d like to, you know, let Eckie chime in on this point because, you know, he this was a labor of love for him and his team, for a brief four month sprint as we were trying to get, all of that that improvements into the assay. So maybe, Eckie, you can talk just a little bit about you know, how we improve from gen one to to gen two. Of the assay. And you’re on mute there, brother. Yes, sir.

Ekke Schutz: Alright. So if we are looking back at the first version that we had was, more or less still requiring two different workflows. One workflow was for the percentage. And the other workflow was for the copies per ml. And and Josh just told a little talked a little bit of what we could show at at WTC, why why we really wanna have the copy per ml. And so the feedback from from the first customers was, yeah, it’s really nice. But still we need to do two workflows. So we we took a deep breath and and said, okay. How are we combining this so that we only have one workflow, and that’s actually if you wish, what we have done and and validated and every from from every aspect. So now we have assay into one single and and very simple workflow that that actually only we requires factory two pipetting steps.

And and and then the the customer is going to see his his results, which from the I I think market acceptance alone is going to be a huge step forward. I I think it’s not only a a very precise and and essay with a unprecedented lower limit of quantification, which is in particular, and Josh mentioned that, needed for heart transplant, have a pretty much lower donor derived cell free DNA than what we usually see in kidneys. So I think this entire combination together makes this this essay really an essay that I think our customers will love.

Thomas Flaten: Excellent. Thanks for taking the questions.

Operator: You’re welcome. Up next, we have Mike Matson from Needham. Hi. Yeah. Thanks. For taking my questions. So I guess just on the this Medicare reimbursement, I know it’s they they announced the $2,753. I know it’s the lab developed test version draft to show four. But the letter kind of implies that that will somehow factor into the amount that’s you know, ultimately paid for to your customers for a grab share DX. So can you maybe just talk about how that process works in terms of deciding how much they’ll get paid? Would it be similar or be lower? And, you know, when do you expect that to to be known?

Josh Riggs: It might be the assumption that we’re working off of is that when we bring the FDA product to our CLIA lab, and we update our filing with MolDx to say that this is now an FDA cleared product, that will make it really easy for for centers that are inside of the MoleDx jurisdiction to bridge to that reimbursement. And so we’re not expecting to see loss for them, on the on the ability to to bill at that same rate.

Mike Matson: Okay. Got it. And then, know, just once you get the approval and launch Draft2Shirt DX, you know, for kidney, I guess, first. How quickly do you expect the transplant centers to sort of shift over to to the test? In other words, I guess what I’m wondering is, do you expect it to be more of a kind of a blanket transition where they move over a 100%, or is it really gonna kinda be physician by physician where you have to go in and convince each individual physician that they need to be using your test?

Josh Riggs: You know, I I would say if it were that easy, I would love it. But it it’s certainly not. And I think Andrea put out a nice model in our in our shareholder letter last summer. We do expect there to be a ramp. You know, you’re going to have early converts within a health system And then, you know, as they build confidence, in the test, you know, as they run their comparative studies, I expect fully that, you know, these centers are gonna run head to head with us and their preferred, you know, send out test to make sure that, you know, they they’ve validated it themselves And once they’ve done that and they have confidence and, you know, we showed in a publication earlier this year that we match up really well with, you know, with competitive technology.

That, you know, the the opportunity to manage those patients locally is going to continue to pull, you know, testing in. So maybe a year after launch, they’ve they’ve converted, somewhat fully. But it’s definitely not gonna be on day one.

Mike Matson: Okay. Got it. Thanks. Thanks, Mike.

Operator: Thanks, Mike. Next, we have Yuan Tsai. From B. Riley Securities.

Yuan Zhi: Thank you for taking our questions. Probably, you are going to touch on this at your KOL seminar for the WTC twenty five on this combined mice method for d d double ddPCR. Can you elaborate on what it meant that only the combined models were able to distinguish all forms of rejection from normal samples. Is there any specific rejection pathology that the individual models does better than the other?

Josh Riggs: Yeah. I’d like to turn that one over to doctor Schutz to to elaborate on. And you’re on mute there, brother, too.

Ekke Schutz: Okay. So let let let let let me start with the first part. I I think we have seen a couple of publications now that and then that that’s kind of a little bit of a paradigm shift. That cell free DNA is really highly specific for rejections. And not for for all kinds of graft damage. I I think that’s one outcome that that we show again has been shown by in into other publications. So that that’s also going to change the utility a little bit. Because now we can say, okay, if I have something that’s going on, the graft on a let’s say, clinical suspicion you can really distinguish is it is it a rejection or or not. The second part of the question is is almost philosophical. I mean, if if if we are looking at the the different, BENF lesions, it is pretty clear that that the microvascular inflammation is a major driver of cell free DNA.

But but it’s not the the only driver. But but that makes it immediately clear why most of the rejections are are pretty well seen. We we also understand right now and and there’s also something we can show again that the level of cell free DNA clearly increases with the severity of the rejection, and that’s in particular seen in TCMR. Where TCMR grade one, which is right now even debated whether it needs to be treated or not. It is a 1a, and you might know in heart the grade one rejects are not treated anymore. Since I think five years now. But as soon as the rejection starts really to enter grade two or even more so grade three, we are having a a really high increase of cell free DNA, donor derived cell free DNA. And and so that’s that’s the the currents, I would say, consensus in the literature and whether it’s from us, whether it’s from from other groups.

I think I I we we presented it it quite quite the way that that everybody is thinking about cell free DNA right now.

Yuan Zhi: Yeah. Got it. And then since the mechanism of for your organ rejection detection is similar among kidney, and lung, is it possible to run a basket trial and get a label for organ diagnostics with this combined method?

Ekke Schutz: That that that’s a good question. I mean, the the major point I’ve already said, we have a pretty much different let’s call it normal values if a if a completely healthy organ kidney, heart, and and lung, if are only using the three because they are representing the majority of organs where cell free DNA is used right now have completely different normal values. So it’s it’s it’s at around 1.5 for kidney, perhaps a little bit more than 1.5 for it’s 1.25. For heart, So that that also makes it a little bit hard to to combine all this into one model. I think what’s going to be possible is to to have a model for each and every organ I think that that’s most probably how I think it being the one who has developed the model.

And I I I think at the end of the day, we will have a model for each and every of this the major organs. And I’m I’m very convinced that that such a model will clearly be beneficial for our patients in each and every organ. It’s it’s it’s not only related to to kidney. It’s a it’s it’s really a biological concept that that we have more or less used to to build the the model up And what we have seen in in in kidney and and I and and we are we are looking at a at a large number of patients here. We had over 100 rejections. We had over way over 200 normal cases. And other pathologies. So it’s a very robust study in terms of numbers. So I’m I’m pretty much convinced that it’s going to be very similar for heart. We have some indications from one of our competitors who have published something around that.

So I I think over the next next year or so, the the diagnostic will will go into this direction combining copies with with percentage. Because it’s it’s now shown in in so many publications that that’s beneficial compared to percentage alone. And and I think we have a great potential here.

Yuan Zhi: Yep. Got it. Thank you. Mhmm.

Operator: Thanks, Yuan. Does anyone have any follow-up questions? Well, that sounds like that. Josh, can you please close us out?

Josh Riggs: Yeah. I just wanna say, you know, thanks everybody for showing up today. You know, we’re we’re excited to be finally in the trial phase and, you know, getting getting the proof out there. So, you know, thanks thanks for playing along with us. You know, we’re excited. And, you know, really looking forward to, you know, the next ten to twelve weeks of, you know, just being really deep into the FDA process, generating the data, preparing for submission later on this year. So just thank you, and talk to you guys soon.

Mike Matson: Bye, everybody.

Yuan Zhi: Bye bye.

Mike Matson: Alright.