Good morning, welcome to the Renalytix conference call to review Q3 fiscal year 2023 financial results. At this time, all participants are on a listen-only mode. We will be facilitating a question-and-answer session toward the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Peter DeNardo of CapComm Partners for a few introductory comments. Sir, please go ahead.
Thank you, Chris. Thank you all for participating in today's call. Joining me today from Renalytix to provide formal remarks are James McCullough, Chief Executive Officer, Tom McLain, President, and James Sterling, Chief Financial Officer. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements.
Examples of these statements include, without limitation, the potential benefits, including economic savings of KidneyIntelX, the potential for KidneyIntelX to receive regulatory clearance from the FDA, the commercial prospects of KidneyIntelX, including whether KidneyIntelX will be successfully adopted by physicians and distributed and marketed, our expectations regarding reimbursement decisions and the ability of KidneyIntelX to curtail costs of chronic and end-stage kidney disease, optimize care delivery, and improve patient outcomes, trends in our market, potential benefits of government policy change, the impact of COVID-19 and other world events on our business, our expectations for hiring, product development, strategic partnerships and collaborations, reimbursement decisions, clinical studies, and regulatory submissions, our business strategies and future growth, including plans, expectations, and opportunities for financing our operations and revenue projections and guidance.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a description of the risks and uncertainties associated with our business, please refer to the Risk Factors sections of our annual report on Form 20-F that was filed on October 31, 2022, with the Securities and Exchange Commission. All forward-looking statements made on this call are based on management's current estimates and various assumptions. Renalytix disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, June ninth, 2023.
I'll now turn the call over to James McCullough. James?
Thank you, Peter. Good morning. As we close our fiscal year 2023, we are approaching what will be a simple and powerful message to primary care providers across the country for our lead product, KidneyIntelX. One, we accept all insurance. Two, patient outcomes improve when you use it. Three, as anticipated, KidneyIntelX is FDA approved. Completing these three pillars would assure KidneyIntelX will be accessible across all of primary care and will have achieved a distinct product proposition in a largely untapped market that could benefit millions of Americans with diabetes and kidney disease. In anticipation of securing this diagnostic trifecta, we are moving to advance the KidneyIntelX commercial footprint to win adoption across large groups of primary care providers who are helping patients with diabetes and kidney disease.
Our expanding real-world evidence proves these patients can get better and more equal access to the care they need through the healthcare systems, in independent practice offices, and through government institutions. KidneyIntelX is a unique medical device that combines blood-based biomarkers with key features in the patient's electronic medical record, all processed by an artificial intelligence-enabled multimodal algorithm. Our goal has been to create a safe and clinically validated artificial intelligence-enabled prognostic test result that can be easily used by a primary care provider to better understand a patient's risk of developing kidney failure at a very early stage. This is important because it is at the early stages when therapy, specialist involvement, and behavior modifications can have the greatest effect to keep people healthy and productive.
We believe KidneyIntelX is Exhibit A as to how artificial intelligence using clinical and biological data can be harnessed in a clinical product capable of being regulated by FDA, reimbursed by insurance, including Medicare, and subject to rigorous real-world evidence validation. KidneyIntelX also provides us with a blueprint for future product development that uses important biomarkers, electronic data features, and powerful algorithms to create the best performing, safest, and ethically responsible medical devices. With broad insurance reimbursement, definitive outcomes data, and an FDA regulatory pathway in sight, our commercial strategy is clear. We are focusing on regions of the United States where there are large populations of individuals with diabetes and kidney disease, and where insurance reimbursement for KidneyIntelX is fast approaching a supermajority status.
Our regional focus for the remainder of calendar 2023 is in Illinois, New York, North Carolina and South Carolina, Texas, and Florida. As of this quarter, in Chicago, Illinois, and the New York metro area, our estimated insurance payment for KidneyIntelX from a combination of groups like Medicare, Medicaid, and private payers have already exceeded 90% of the KidneyIntelX eligible testing population. During the Q3, we secured insurance coverage with EmblemHealth, covering over 3 million lives in New York and Connecticut, and more recently with CareFirst BlueCross BlueShield, which is the largest healthcare plan in the U.S. Mid-Atlantic region. In total, CareFirst serves 3.4 million members in Maryland, Washington, D.C., and Northern Virginia, as well as the Federal Employee Program, FEP, administered by CareFirst.
This agreement complements Blue Cross Blue Shield contracts already secured with Wellmark Blue Cross Blue Shield in Iowa, South Dakota, with an estimated 2 million covered lives, and Blue Cross Blue Shield of Illinois with an estimated 8 million covered lives. Our recent coverage contract wins with leading insurance groups are reinforcing our approach to developing strong data evidence, defining the health economics consequences of uncontrolled kidney disease, and validating KidneyIntelX in real-world use. We expect this momentum with insurance contracts to accelerate with an anticipated successful conclusion with FDA. To expand our commercial footprint, we announced in May the selection of EVERSANA, a global leader in life science commercialization services. EVERSANA will launch its field deployment and training solutions with Renalytix to cost-effectively build awareness across key parts of the United States beginning this summer.
This EVERSANA Renalytix model is expected to accelerate the adoption of KidneyIntelX. Our president, Tom McLain, will discuss this in more detail shortly. As we signaled last quarter, we completed the milestone of transitioning to long-term commercial insurance payments for patients tested at the Mount Sinai Health System. During this transition, there was a short-term adverse impact on testing volumes. Importantly, Mount Sinai has this month issued a population health update to all physicians to include the KidneyIntelX testing in the diabetes kidney disease care pathway based on their newly published KidneyIntelX utility evidence. We expect additional health systems will likely do the same, given the important positive results from the growing body of positive real-world evidence. Two recent studies presented at the National Kidney Foundation Spring Clinical Meetings illustrate the following.
Atrium Health demonstrated KidneyIntelX testing accurately assesses the higher risk for progression of chronic kidney disease in Black patients versus other races. This is an important precursor in addressing healthcare access in inequalities within this patient population. Within Atrium Health, a KidneyIntelX test result led to increased prescription of SGLT2 inhibitor drug therapy to provide improved care for Black patients. Researchers from the University of Illinois Chicago and the University of Utah presented a contemporary analysis of type two diabetes and kidney disease in the Veterans Health Administration population. The higher incidences and poor outcomes in the veteran population versus the U.S. population at large demonstrated the need for risk assessment in early-stage kidney disease, as recommended by the VA's care directive titled Chronic Kidney Disease Prevention, Early Recognition, and Management.
Please look for significant new real-world evidence data to be released at the American Diabetes Association 83rd Scientific Sessions from June 23rd to June 26th this month. I will now turn over to Tom McLain, our President, to discuss additional aspects of our commercial progress. Tom?
Thank you, James. With anticipated FDA approval for KidneyIntelX, we're in preparation for a focused expansion of our commercialization of KidneyIntelX in the U.S. The New York City metro area continues to be the most significant market opportunity for Renalytix. Having demonstrated the clinical benefits of KidneyIntelX testing in the real-world evidence study at Mount Sinai, we've completed the conversion of test payment to commercial payers. Building on that success, we have initiated expansion into large clinical practice groups in the New York metro area. They provide many of the same benefits of launching KidneyIntelX into a health system, with the added opportunities to accelerate timelines and to engage payers to support the program. We also expect to add additional health system partnerships in the New York metro area during fiscal year 2024.
A second area of focus for expanded commercialization is in the Advocate Health regions, including the Carolinas, Georgia, Illinois, and Wisconsin. Last December, Atrium Health merged with Advocate Aurora Health to form Advocate Health. With a combined, the combined health system serves nearly 6 million patients annually, and it's the fifth largest nonprofit integrated health system in the nation. Our real-world evidence study with Atrium Wake Forest has produced utility evidence that can expand commercial testing in the Southeastern U.S., focused on a combination of Atrium Health locations, large practice groups, and other health systems. In addition, with the benefit of Blue Cross Blue Shield Illinois coverage, we are generating initial test demand in large practice groups and hospitals in the metro Chicago area.
Third, over the past 12 months, we have developed sales, marketing, and clinical intelligence on what can drive successful expansion in the primary care office in new markets. We will apply that knowledge in partnership with EVERSANA in Texas and Florida beginning this summer. These states represent significant opportunities in terms of number of eligible patients and access to the primary care practice. EVERSANA will support the hiring and employee of 100% dedicated sales reps in those markets, they will also help us improve sales force effectiveness through a comprehensive program combining our KidneyIntelX sales training materials, along with their disease state and sales effectiveness programs. Our agreement with EVERSANA provides that these salespeople can transition over to become Renalytix employees. I look forward to updating you on our advances during future earnings calls.
I'd now like to turn the call over to James Sterling, who will discuss our financial results for the quarter. James?
Thanks, Tom. Today, we issued our quarterly SEC filing under US GAAP. That includes three and nine-month financial results for the periods ending March 31st, 2023, which corresponds to our Q3 of the fiscal year. Figures I will discuss here are based on our GAAP financials and quoted in US dollars, which is our reporting currency. For the quarter, we recorded revenue of $724,000, compared to $812,000 reported for the Q3 of the prior fiscal year. As James noted earlier, in which we highlighted in last quarter's call, our revenue in the quarter was impacted by the transition to commercial payment for testing at Mount Sinai. Order mechanisms are now restored, and testing has resumed at the hospital system there.
Operating expenses were $11 million on a GAAP basis, reduced from $14.7 million in the prior year period. This reflects the result of actions we took over the last year to lower operating expenses through program, vendor, and employee reductions, and an ongoing focus in maintaining cost controls prior to testing volumes and revenue ramping. Net loss for the Q3 of fiscal 2023 was $12.1 million, or $0.14 per share. This was down from $14.7 million, or $0.20 per share, for the Q3 of fiscal 2022. We ended the quarter with $33 million in cash as of March 31, 2023. Operator, we can now open the call for questions.
Thank you. To ask a question, please press star one on your telephone and wait for your name to be announced. To withdraw your question, please press star one again. That is press star one on your phone to ask a question. Stand by as we compile the Q&A roster. One moment for our first question. Our first question will come from Dan Arias of Stifel. Your line is open.
Morning, guys. Thanks for the questions here. Tom or James, to Tom's point on the importance of the New York metro area, can you just maybe talk about the ramp path forward for usage at this point and the headwinds that may or may not exist? I mean, obviously, it's been a long and winding road here, at least as it relates to the New York City area. To what extent do you feel like you're past the various issues that you've encountered when it comes to just the way that things work at institutions like Mount Sinai? How do we think about heading into 2024, the success and volume increases that we could expect, perhaps?
Thanks, Dan. I'll let Tom answer most of this. I think it has been a long, winding road, and we have learned an enormous amount about the complexities of introducing a new technology into primary care. You know, the advantage of working closely with Mount Sinai is we're able to get in and really understand all of the intricacies associated with integrating and deploying an advanced prognostic throughout the medical system, the electronic medical record system, understanding all the behavioral issues associated with physician ordering, interpretation, and action. It has been quite complex.
you know, the good news is we have a significant amount of know-how which has been accumulated, I think we've mentioned this in the past, this is making other deployments that we're doing substantially easier than when we did it the first time at Sinai. I think the road is getting clearer. We're obviously humble and cautious about predicting how that road goes, but it's very nice to see the diversity of insurance coverage coming in. That's a huge validation. It's very nice to see that we've been able to switch to a full commercial pay model. That was a major canyon to get over, we've now done that. The clinical system needed to buy into the commercial transition.
That was not trivial. There had to be an awful lot of evidence to show that KidneyIntelX works, it works well, and it is something that could be used by primary care. There are a lot of validation points which are coming around this, for the future. Tom, please comment further.
Thanks, James. just Dan, building on what James commented on, I want to point out-... two things that were accomplished in the quarter at Mount Sinai are very significant, that we went through an evidence development program with them. During the Q3, they agreed to the conversion to a commercial payment model within the system. That was significant because of the es- how seriously a health system like Mount Sinai takes that. Secondly, as James said, to have population health work with clinical medicine to issue that guideline and bulletin update that incorporates KidneyIntelX into their testing, it's very significant, not only there, but for other health systems.
The second point that can often be lost is in the course of amassing the real-world evidence for Mount Sinai, because they have a diverse population that also is a diverse payer population. Another power of that study is that we have amassed data on outcome benefits for hundreds of members of the major health plans in the New York City metro area. We can sit down and talk to them in specifics about their members. As we look to expand into large practice groups and other health systems, having that ability to bring the recommendations from payers who are confident about the benefits of incorporating KidneyIntelX's testing into care for their members, is also going to be a lot of wind in our sails as we begin to build off those Mount Sinai successes as we go forward.
That is an outcome of the work with Mount Sinai that has broad implications across that whole metro area.
Okay. If I could just ask a follow-up and sort of combine those two thoughts there. Where is the confidence that in 2024, you will, at least at Mount Sinai, see quarterly progression of volumes that, barring some sort of shock to the system or unique circumstance, will have people thinking about a natural path upward on KidneyIntelX? Associated with that, if I could, for OJ, you know, presumably the next time we're on the phone here will be the end of the calendar year. It sounds like you should have FDA approval. Do you think you'll be able to give an outlook on revenues, or if not revenues, volumes for fiscal 24?
Just to sort of, you know, people are trying to inform their models here and think about a ramp, and I'm just wondering what ability we have to do that at this point.
Yeah, let's see when we get there. We're obviously, especially after this market environment, cautious. That doesn't mean that we're cautious operationally. We're moving assertively, operationally. We wanna make sure that going forward, we are under-promising and over-delivering, and that we remain in that, in that continuum. I think, you know, again, as we emerge, hopefully in the summer with this trifecta of regulatory reimbursement and data, we should be able to grow consistently. I think what you're gonna see is the emergence of growth diversity. That's important. We're gonna start to see testing volume develop in different categories, direct-to-physician, for example, other healthcare systems. That's really the metric for success, as opposed to just relying exclusively on Mount Sinai. OJ?
like to see, you know, we need a bit more time to see some consistent volume development and build to have a basis on which to provide guidance with full confidence. We all recognize the desire and the need to provide some guidance in quarters ahead. I just want to make sure that when we do so, we do so on a strong basis of confidence, and we can see the trends that we'll be consistently building
Okay. Thanks, guys.
Thank you. One moment, please, for our next question. Our next question will come from Chaitanya G of H.C. Wainwright. Your line is open.
Hey, this is Chait on behalf of Yi Chen. Just following up from the previous question, and I know you've addressed this in your prepared remarks, but could you summarize the key factors required to drive volume growth moving forward and subsequently test volume as well? Thank you.
The trifecta it's three legs of the stool. It's outcomes data, diverse reimbursement, and regulatory approval. In this particular market, which is so large, the diabetic kidney disease, patients with diabetes and kidney disease in the United States, runs well into the eight figures. We felt from the beginning, we needed to have an FDA process in order to set, you know, a baseline standard for early-stage prognosis. That was new. This is a De Novo marketing authorization that we are seeking. It is unique. To really drive scaled growth, you need to have all three legs of the stool: regulatory, reimbursement, and data. The data looks great. That's the foundation for everything. We're obviously validating reimbursement quite rapidly. And most importantly, we're validating reimbursement with depth and diversity. It's not one coverage contract.
It is payment, established payment coverage contracts across the universe of payers here, Blue Cross Blue Shield, Medicare, Medicaid, other private insurance groups. This is the diversity that you look to establish a long-term pattern of payment. Of course, Medicare started it all off with pricing KidneyIntelX at $950 a reportable result. We have not compromised that. That's very important. Of course, FDA regulatory. Once with those three legs in the stool, you have substantial barriers to entry. You have a long-term competitive advantage because you've now set a very high bar, especially with a De Novo marketing authorization through FDA. Assuming we get there, it's going to be very difficult to turn around and create a validated, reimbursed, regulated product to compete with KidneyIntelX.
That gives us room. You know, back to Dan's question and yours, what we've been doing over the last 18 months is generating real-world experience with KidneyIntelX in the wild. What happens? How does it happen? What are the objections? What are the support points? All of this goes into defining what has become a very clear, simple message to the primary care physician, which is a majority of our market. We know that greater than 90% of people with diabetes and kidney disease are in early stage, which is terrific, because in the early stage, you can treat them more effectively before disease develops, before the costs start to spiral. You need to have a very simple message to primary care. Of course, the difficulty is getting into the simplicity.
As we said early on in the call, we're now arriving at that tipping point. We accept all insurance. The data looks great if you use it. It benefits patients, and it's published. We hope very shortly to be able to say it's FDA approved. With that trifecta in place, we've now, you know, When that trifecta becomes in place, we're now anticipating that we're looking at putting in a very strong and directed commercial program with sales and marketing, focused on regions of the country where we have super majority insurance coverage and where there are large populations of patients with diabetes and kidney disease. We've given the list of where those are.
This positions us well in the summer to really start to lean in to drive adoption, but it's rare to have that trifecta in place in such a large, effectively wide-open market, without a direct competitive threat in the near term. That should start to generate results. Tom, I don't know if you want to add to that.
I think you covered that very well, James. primary care is where the majority of these patients are seen today, the point that we expect to be at very soon with anticipated FDA approval is very simple, straightforward answers, that clearly show Renalytix it has achieved those three necessary pillars for success. That really eliminates the barriers that often limit introducing a novel, innovative approach like KidneyIntelX into primary care. We're very excited to be at the point that we are at today.
Thank you.
Thank you. As a reminder, to ask a question, please press star one one on your phone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment, please, for our next question. Our next question will come from Mark Massaro of BTIG. Your line is open.
Hey, guys. Good morning. Thanks for the questions. The first one is, you know, James, can you perhaps provide an update on communications you've received from the FDA? I know you've indicated that you're hopeful to obtain approval by the end of June, end of this month. I'd be curious to hear, like, are you still having some back-and-forth dialogue between you and the agency? Then, I know you've talked about how the agency plans to provide or prepare a reclassification order to complete its review. Just any update you could provide there, I think, would be helpful.
Yeah, thanks, Mark. I have to be very careful. This is a sensitive time, and, let me just say that, we're very pleased with our communication with FDA. It has been iterative, and we think it is a very productive process. At the moment, we disclosed to the market, we expect a decision by the end of June. That's where we are at the moment. I, you know, I will remind the market that until you have FDA, you don't have it. We're just gonna let the process continue to run, but at the moment, we're very optimistic.
Okay. Great. Hopefully, that comes in in the next few weeks or months. Maybe moving on to another question, maybe for OJ. I might have missed it. I didn't see the volumes reported in the quarter. I know in the prior quarter you indicated they would be down sequentially due to the transition at Mount Sinai. Can you just give us a sense for, you know, what the volumes were in the quarter? As we think about, as we think about the next quarter, would it be reasonable to assume that volumes can tick back up sequentially?
Volumes were just for the quarter, of which, roughly, two-thirds are billable. There is still a set of tests in there, Atrium Wake Forest, for example, that are part of study tests are not billable. Volumes are improving a bit in this quarter, but offset by something we indicated in the call. Tests that used to be billable, or reimbursed from Mount Sinai, are not now under the traditional commercial pay model. That represents about a third of the tests at Mount Sinai currently. At the moment, we have that headwind against growth for the current quarter.
We do expect that percentage to go down as a total of the, of the Mount Sinai tests, going forward as commercial tests, ramp up. Also seeing continued growth and diversification away from Mount Sinai, primary care doctors, the independent PCP tests are increasing, et cetera. Encouraged overall, but we do have that short-term impact from the Mount Sinai transition.
Okay. Sorry, I think you might have gone out. What were the volumes in the quarter?
just over 1,200 about 1,240.
Oh, okay.
about two-thirds of that is billable.
Okay, I appreciate that. I think you indicated that the transition to commercial payment at Mount Sinai was completed. Is that right? I know that testing at Mount Sinai was paused in March.
Right.
Do given the transition at Mount Sinai, is it right that we should expect more of a normal cadence of volume growth going forward, or is there still a little bit of work to do to get that sort of squared away?
No, total volumes are back. The ongoing impact is that a third of those, currently a third, hopefully less going forward, are no longer billable, whereas we were when we were under the $6 million contract with Mount Sinai, we were getting paid for those. Those are study tests that are not commercially billable at the moment. While volumes are back, a third of them are not revenue generating.
Okay. That makes sense. I would be curious to just get an update on the EVERSANA partnership. Maybe it seems like it's a contract sales organization, if that's a fair way to characterize them. How many folks do you think you have access to, you know, boots-on-the-ground, sales reps? I know I indicated that they could become employees of Renalytix going forward. Maybe just walk me through how you expect that type of transition to play out.
Actually, I'm glad you brought this up. I'm glad you brought this up, Mark. It is not a contract sales organization. In fact, we've had a relatively negative reaction to contract sales over our careers, and especially when you are looking at a new product like KidneyIntelX, which needs to be marketed in a very specific way, a simple way, but a very specific way, you need to have dedicated sales resources. The EVERSANA, for us, allows a couple of things. One, they bring a significant infrastructure in place and a network, which allows us to get access to qualified salespeople much more quickly than we could on our own.
It allows us to understand those salespeople and characterize them before we put them in the field, because they have the ability to screen and evaluate those salespeople in a very sophisticated way. These are salespeople that are 100% dedicated to Renalytix. It's not a contract sales force that's carrying multiple things in the bag. These folks are coming in as dedicated people for KidneyIntelX, and the anticipation is that they will actually convert into W-2 employees of Renalytix. Eversana allows us to accelerate that hiring process and put resources where we now have significant developing insurance coverage, a super majority concept, and in populations where there's a lot of diabetes and kidney disease, and it just made sense for us to do it. We're starting out small, so we're looking at two regions to deploy.
I think it's, we're starting out with a total of, I'll let Tom comment on the scope, but it's, you know, we're not going wild here. Let's get resources in place, demonstrate a specific ROI that we can achieve, and show it, and then now we have a model to start expanding and scaling more rapidly with increasing insurance coverage, and we're sure that the model works. Tom, you want to comment further?
Thanks, Jake. Yes. Mark, Eversana didn't get to be the leader in this area, and they are the leader worldwide without offering a continuum of options for companies. In the case of Renalytix is involved in the hiring of the account execs into these territories. We make the decision as to whether they are appropriate for the business we have. Eversana is a part of that recruiting process. Those Eversana account execs will report to a Renalytix regional sales director, and they are members of the team.
Everything that EVERSANA brings into Renalytix, that gives us the power of a much bigger company when we're a very small company in terms of learning management and other capabilities that we wouldn't be able to afford for another three years or five years, that's going to be made available to our entire sales force. This is not a contract sales relationship. This is going to be one where it is highly synergistic. We can think of this as a combined sales force and the value that both Renalytix and EVERSANA will bring in commercialization. It's a true partnership here. These are KidneyIntelX account execs, whether they get a paycheck from Renalytix or a paycheck from EVERSANA at the end of the day.
In terms of focus, we have identified three key markets in Texas and three key markets in Florida for launch of KidneyIntelX with all of the outcomes evidence, the payer commitment, the regulatory demonstration that it is a reliable, repeatable technology. Those markets that will be key to showing that with everything we have learned, that we are in a position now that we can, with our messaging, with all of the tools that Renalytix and EVERSANA bring, that we can accelerate our development into new markets. That gives you a better understanding of the parameters or the scope of this phase I , and we hope that it proves to be very successful.
It is a phase I with Eversana, so that we know working with them, we can accelerate rapidly in other markets as we have the evidence that KidneyIntelX will be successful in that primary care practice area.
Okay, great. Thanks for all the color. That's it for me.
Thanks, Mark.
Thank you. Again, to ask a question, please press star one one on your phone and wait for your name to be announced. To withdraw, please press star one one again. One moment for our next question. The next question will come from Randy Baron of Pinnacle. Your line is open.
Hi, guys. Good morning. I have two questions. The first is for OJ. I totally get that we're not giving guidance on tests, but I'm really curious about the glide path for the billable percentage, and how should we model that out? Do you think by the end of this calendar year, we're 80% billable? Just directionally, when do we get towards 100% billable on the tests?
As long as we're doing studies and on future products and so forth, there'll always be some portion of the tests that are not billable. At the moment, study tests are relatively constant, and as we grow the business and develop commercially, we should see billable tests increasing as a percentage of the total, certainly. Let's see how the new sales initiatives are taking hold in the months and quarters ahead, as well as hopefully messaging around positive FDA approval. I would expect that to continue to build the commercial side of things.
All right. Well, let me ask the question this way: is the current rate of study tests, is that kind of a constant number? Is studies ever gonna be thousands of tests, or is it always gonna be in that hundreds range? As you model this out kind of a year or two, I get that there's always. I just don't know enough about studies to know. Does it ever become, I don't know, 10,000 tests?
It depends. I wouldn't necessarily be upset if study tests go up. It means we have future iterations or products that we're working with and developing. You know, there's no concrete forecast or plan at the moment for what those study test volumes will look like in the future. It all depends on how things build. The R&D team is active in assessing additional biomarkers, indications, and so forth. The work continues there. That should have an impact in the years ahead on.
With studies, is it generally cash up front? Is that kind of the trade-off?
It varies. It's really not a case where it's an awful lot of cash up front. It's just that the tests, as they're run, they're just not billable. We absorb the cost of those tests.
Okay. James, I mean, obviously, the tone today, very positive, which is great, and I know you're cautiously optimistic on FDA and, you know, who knows what comes out of Washington. Assuming you get that, you know, positive regulatory outlook in the next couple of weeks, which is what it sounds like from your press release, can you just give us high-level, what you think the milestones you're looking for later this year? I mean, it seems like there's a thundercloud on the horizon. You've got the salesforce ramping, you've got insurance approval. Like, just looking out for the rest of this calendar year, assuming you get FDA, how should we think about how the business could really evolve and evolve at an exponential rate?
Yeah, I, FDA is obviously a major validation, especially coming out of De Novo marketing authorization. It is De Novo, it's new. It does allow us to change and simplify the conversation with payers and with physicians. You know, with physicians, we can now walk into an office and say, "You know, it's FDA authorized." That removes any doubt around, you know, is this experimental? Again, the thing that we're learning more than anything else is the simpler the message, the more effective the sales ramp and the easier time we're gonna have with adoption. Getting to simplicity, as we all know, from, you know, from experience, is difficult. The simplest messages are often the difficult, especially in a complex regulatory environment of medical devices.
Especially with the power of KidneyIntelX coming off of the AI enablement, coming off of the huge clinical datas, and how does it relate to outcomes, et cetera. Getting to that very simple message so that a primary care physician, who's often overwhelmed, they're dealing with a complex disease, can very simply say, "Oh, okay, FDA approved. I don't have to worry about insurance, and boy, here's the data. If I use this thing, my patient's gonna get better." That's a pretty simple message. Of course, it takes you tens of millions of dollars and multiple years and all this complexity to get to the point where you can legitimately say that.
I think the setup for, you know, the back end of this year is, for us, fascinating, and we are very optimistic because we're able to carry this incredibly simple but powerful message into the physician office, where there's a clear unmet need. No one has come back to us to say, "you know, it's nice. I don't need this." Especially among primary care, everybody needs it. We need a way to be able to identify who's at high risk in these very large populations, so we understand who we can treat. Because you can't treat them all. There are too many people with diabetes and kidney disease. You need a simple, rapid way to say, "Here's a patient with kidney disease that really matters.
I got to focus on them." Because we have new drugs now that really work, there's a very simple solution here. I am very optimistic about the future to drive growth, which is one of the reasons we got a hold of EVERSANA, who both Tom and I have worked with in the past. It does give us the resources to deploy with a higher degree of confidence that they're effective resources and that we can target an ROI, where we can really target an IRR. We can make sure that investing in these resources are gonna generate return with this simple message. Yeah, I'm very confident going into the H2 of this year that the seas are gonna calm a little bit.
We also have, Randy, a ton of experience now. I mean, partnering up with Mount Sinai and getting in early, and being able to use KidneyIntelX in the wild, was incredibly valuable, and I haven't done that in previous companies. I'm delighted we did it now because we get real in the world experience with what happens with KidneyIntelX. Now that gives us the capacity when we move out into other territories, we've got a great data set that we can draw from, and the product becomes much more clear in terms of the messaging. You know, I think, having the three legs of the stool, the trifecta, has been, as Dan said earlier, a long, winding road.
We're arriving at that station, with the trifecta, and I think it's ours to lose at this point.
Well, good luck.
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