Insight Molecular Diagnostics Inc. Q1 FY2025 earnings call

• Strategic Focus: 2025 key areas include finalizing clinical assay and trial design, submitting data package to FDA by end of year, and spring loading 2026 revenue by signing transplant centers for RUO kit.
• Clinical Trial: Finalized clinical trial design, got central IRB approval, in productive dialogue with FDA, expect at least 3 top US transplant centers in trial, nearly 10% of US transplant volumes represented, aim to submit to FDA by end of year with target approval in first half of 2026.
• RUO Product: On track to have 20 sites trained on GraftAssure workflow by end of year, 10 sites running RUO assay in multiple countries, researchers exploring new applications like pediatric transplantation, etc.
• Technology Advantage: Digital PCR is simpler, faster, and offers better sample economics than NGS at low volumes, beneficial for transplant centers with limited sample volumes.
• Company Rename: Plan to unveil new name and corresponding NASDAQ ticker in coming weeks, done on a tight budget to allocate capital towards value creation.
• Oncology: DetermaIO shows promise in drug rescue category, with SWOG study ongoing and data expected towards end of 2025.

Pharma services revenue in Q1 was $2.1 million, exceeding expectations with a large order processed efficiently. Gross margins were 62% due to automation in the Nashville lab. Cash at the end of Q1 was nearly $33 million including restricted cash. Free cash flow was negative $6.2 million, in line with the target average quarterly cash burn of $6 million. Q2 pharma services revenue is expected to be less than $500,000, and no services were invoiced in April, highlighting the lumpiness of pharma services revenue.

• Expect to submit to the FDA by the end of 2025 and target FDA approval in the first half of 2026.
• On track to have 20 sites trained on GraftAssure workflow by the end of 2025, with 10 sites currently running the RUO assay.
• Anticipate Q2 pharma services revenue to be less than $500,000, and target an average of about $6 million per quarter in cash burn until commercial launch next year.

• Uncertainty around the pace of clinical trial progress and potential delays.
• Risks associated with FDA approval process, including potential challenges in meeting regulatory requirements.
• Market acceptance risk for the transplant and oncology products, as changing physician behavior and market dynamics could impact adoption.

Q: Can you expand on the larger revenue-generating pharma customer interested in oncology?

A: It's around DetermaIO and a kitted version, with multiple flavors possible either in concert with a larger NGS panel or stand-alone as a PCR assay, and data seen as differentiating against MSI and TMB in tougher cancers like colon cancer.

Q: What are the next milestones on DetermaIO?

A: Submitted to MolDX in December 2022 for reimbursement, waiting on data, and looking forward to the SWOG study with 800 patients, 5 years, 2 years of follow-up, samples in-house and processing starting, hopeful data out towards end of 2025.

Q: Feedback from larger US transplant centers on the study?

A: Enthusiastic, with pull-through from centers wanting access to the technology and being able to run in-house, creating a partnership approach.

Q: Next milestones on the final Q-Sub meeting with FDA?

A: On track to submit Q-Sub to FDA this week, had first pre-meeting with favorable outcome, informational meeting to teach FDA about digital PCR, baked FDA's requests into Q-Sub, with central IRB approved and expecting to collect first samples for clinical trial soon.

Q: Sales and marketing spend ramping ahead of launch?

A: Some incremental spend tied to unlocking RUO sites already in cash burn, and as submission nears, dollars will be diverted to sales and marketing, with customer market concentrated and sales team doing well with current resources.