Cover life science tools and diagnostics. Really pleased to be joined here on stage with Scott Hutton, Chief Executive Officer for Biodesix. Scott's gonna go through a presentation. I think there'll be some time for Q&A from the audience after he does so. So, without further ado, Scott, welcome.
Great. Thank you. Appreciate it.
Excellent. Thanks.
It's great to be here today with you all. As Dan said, Scott Hutton with Biodesix. There we go. I'm the CEO of Biodesix, really fortunate to be surrounded by an incredible team with vast experience in the diagnostics space. This really is an execution story. We've got a first-mover advantage and a massive market opportunity, where 5 million patients annually are eligible for nodule risk assessment. We're really proud to share 6 consecutive quarters of greater than 50% growth. Total revenue grew 53% in the fourth quarter, and as you can see, biopharma services grew 38%. So strong growth. We're really proud to share 77% gross margins. We believe that's an industry-leading standard.
And then we began sharing Adjusted EBITDA a couple of quarters ago, really trying to highlight what our path to profitability looks like, and as you can see, we continue to make significant progress there with a 55% improvement. We have 50 sales professionals in the field today, fully trained and contributing. We added an additional 10 at the end of the year. Those individuals are going through training now. So, here by the end of the first quarter, we'll have 60 sales reps in the United States. It is the largest pulmonology-focused sales force in the U.S. We have two different revenue drivers, our lung diagnostic testing, which I highlighted that growth of being greater than 50%, and then we have our biopharmaceutical services business, which grew 38%.
I'll go through both of those in greater detail. So you may ask why lung? Sadly, lung cancer remains the deadliest of all cancers in the United States. More people will die from lung cancer this year than breast, prostate, and colorectal cancers combined. So, as much time, energy, and effort that we've put into it, we still have not made a significant impact. The one thing we know is that early detection and diagnosis would lead to the highest likelihood of a positive impact for these patients. So we have a portfolio of five on-market test, all with Medicare coverage. You can see here, working through the continuum of care. The first two are pre-cancer diagnosis, where we have the Nodify Lung nodule risk assessment portfolio of tests.
Then post-cancer diagnosis, we have three tests that fit into the treatment guidance and selection category. In assessing this market, we know it's a massive market opportunity, but secondarily, we wanted to look and really consider where do physicians need clinical support and assistance? What we found in the literature was that historically nearly two-thirds of biopsies were conducted on benign nodules. Even more dire is one in three patients that had a surgical resection had that conducted on a benign nodule, highlighting that the physicians were intervening when they potentially didn't need to, so there were more questions that remained. On the other extreme, nearly one in five patients sent to CT surveillance actually had a malignancy. So that's where our Nodify nodule risk assessment test come into play.
When you look at the continuum of care here, we're really focused in the low to moderate risk category. If a patient presents with a high risk or a very low risk, physicians know what to do, and they do so with a high level of confidence. Unfortunately, 80% of patients present in that low to moderate risk category. Here we have two tests, Nodify CDT and Nodify XL2, both proteomic blood-based test, one blood draw. We will run Nodify CDT first. This is your traditional rule-in test, so we're identifying those patients with a likely malignant lung nodule. We'll return that test result within 24 hours. If that comes back positive, we cancel the Nodify XL2 test because there's no reason to run it. If that does not come back positive, we'll run Nodify XL2.
We'll return those test results within four days. So here, this is a traditional rule-out test. We're identifying those patients that have a benign nodule and can safely go to a wait and watch program supported by CT surveillance. So I referenced that positive Nodify CDT, CDT test, identifying those patients with a malignancy. So post-cancer diagnosis, our IQLung portfolio of tests come into play, where we have two genomic tests and one proteomic test. The two genomic tests really are helping identify what's going on with the tumor, whereas the proteomic test is highlighting how the patient's immune system is responding. We've documented and discussed why this is so important. About 235,000 patients will be diagnosed with lung cancer this year.
As you can see, those with late-stage or advanced stage diagnosis have a median overall survival less than 1 year. Traditional testing delays can take up to 26 days. We have industry-leading turnaround times. All test results are returned within 3 days. Time matters and is critically essence to their survival. So we've highlighted this portfolio of products. Early-stage lung cancer, we offer the combination of GeneStrat ddPCR, which is a targeted genomic test, focusing on 6 known tumor mutations for lung cancer. The key here is really identifying those early stage, guiding treatment that may be effective and work for those patients. And we support that with our proprietary VeriStrat test. Here, we're measuring a patient's immune status.
For advanced metastatic, or late stage, or recurrent lung cancer, you can see that we've got a 52 gene NGS panel, that we offer and support with our VeriStrat immune profiling test. We have three products in the product pipeline. We have a risk of recurrence test. This is a blood-based proteomic test, pre-surgical resection, where we're able to identify those patients, with high likelihood of recurrence. We are working, with Memorial Sloan Kettering on a minimal residual disease test that'll complement risk of recurrence in the fact that it'll be a post-surgical resection, blood draw. Here we're looking at a combo, proteomic/genomic, test. And then our primary immune response test, we can help identify which patients will respond favorably to an immunotherapy regimen.
I think everybody knows that early research has shown that one in three patients would respond favorably. I believe some of the more recent research shows that it's closer to one in ten will respond favorably to an immunotherapy. So highlighting and identifying those patients early, putting them on the appropriate treatment, will impact overall survival. These tests are not currently in the plans to be launched this year. We're being very mindful of that path to profitability. We'll continue to conduct research with biopharmaceutical partners and give greater updates on timing of launching or commercializing of these three tests here in the coming months. I referenced our biopharmaceutical services portion of the business, 38% growth in the fourth quarter. We've seen a strong rebound.
We shared during the earnings call that this book of business has grown. We currently have $9.1 million under contract, but not yet recognized. Really, that's a leading indicator of what the future looks like. So, in 2024, we've had a record number of requests for proposals, and have signed about a third of those dollars under contract thus far in 2024. We're expecting a very strong year, and are very pleased to return from the pandemic slowdown. So again, Biodesix is blood-based lung cancer-focused company. I've highlighted it. We have a first-mover advantage in a massive market with dire consequences.
The industry-leading turnaround times are critical to patients and physicians, and we find ourselves in a unique position of having 5 on-market tests, all with Medicare coverage and all with private payer coverage at varying levels. Consistent growth, 6 straight quarters of greater than 50% growth, and we expect to maintain that for 2024. The strong growth margins, again, industry leading. We've guided and stated that we'll stay consistently in that mid-70 range throughout the year. The improvement in Adjusted EBITDA, really, we're exceptionally proud of this, and we'll give greater details as we progress through 2024 on exactly what that timing and path to profitability looks like. We just moved into a new state-of-the-art facility in Louisville, Colorado, just outside of Boulder. We increased size from our old lab by about 45,000 sq ft.
The new facility is 80,000 sq ft, and it'll accommodate growth and expansion for 10+ years. I'm really proud to be here with you today. If you ever find yourself in Boulder, Colorado, please stop by and say hello. We're happy to show you the facility. With that, I'll open it up to questions.
Just on the 4Q results. On the 4Q results on the revenue line, it was a little bit light from what some people were expecting. Can you comment on the root cause of that and how you feel about the projections for this year and this quarter?
Yeah. Yeah, great question. We highlighted some Medicare Advantage back pay that really began to accumulate and build in the second half of the year. That continued to grow. That in combination with a major and significant biopharmaceutical partner that pushed the project from Q4 into Q1, that really contributed to that delta. So when we looked at the underlying dynamics, everything was healthy, it was strong. We're working on that Medicare Advantage back pay. It's not uncommon. Many of our peer group companies are facing similar challenges. And so as we work through that, we'll give updates. But when we looked at the sales team's performance, what our actual test volumes look like, and then even on the biopharmaceutical front, we thought the business was exceptionally robust and strong.
Some of it was just a timing issue. Even on that biopharmaceutical contract, we've started receiving those samples in Q1, so no delays there. We're mindful of the Med Advantage back pay. You referenced what the 2024 looks like. You know, we took that into consideration in the guide, and so we have removed the Med Advantage back pay. And so we feel very confident in the numbers we have this year and are excited for a really strong 2024 and continuing to maintain that greater than 50% growth rate. Thanks for the question. Dan?
So when you think about the continuum of testing for your products and where you are today from a penetration basis, like still nascent, like, what are the key factors to kind of, even though you're growing very quickly, when you think about the barriers towards like having doctors do this, kind of maybe from a standpoint of guidelines, kind of where are you with guidelines be?
... in terms of the competitive environment, and then just see, I guess even though you have Medicare coverage, is, you know, on the commercial side, like, is that a barrier or kind of how do things stand there?
Yeah, great questions. Guidelines, so for us, the most appropriate guidelines would be ACCP, which is the chest guidelines. Unfortunately, ACCP guidelines have not been updated since pre-pandemic. Any updates that they've made collectively have been related to COVID and the global pandemic. They've disclosed that they're behind. So we think we're in a good position there. Obviously, you're not in control of that, and so publishing and presenting as much data as possible puts you in the best position. So, we're eager to see what we learn this year out of ACCP. NCCN is more on the treatment guidance side. There is a chance that NCCN will start to discuss earlier blood-based biomarker testing. They'll update usually a couple of times throughout the year, so we'll continue to monitor that.
The third guidelines that could be somewhat relevant would be the Fleischner guidelines. Those historically have been a little more radiologic or radiomic based, but they are starting to drift into kind of biomarkers. So, we're eager to see each one of those provide their updates here in 2024. We think we've done what it takes to publish and present data that is not only compelling, but as we continue to drive users and adopters out there, we know word is, word is spreading. On your second portion of your question, there's about 14,000 pulmonologists in the United States. That's really where, where it starts for lung cancer. So those individuals are the ones that are, that are diagnosing lung cancer. If it is lung cancer, then they get referred on to a medical oncologist.
So as I said, with about 60 sales reps, as we do the math, we know that we're not. We're just scratching the surface. We're less than 1% penetrated. We know there are still a number of pulmonologists that we haven't called on. So, success breeds success. One of the things we've noticed in recent months and quarters, you know, two years ago, three years ago, it was a push. We were introducing ourselves. Now there's a pull. Physicians showing up and introducing us to other physicians. We're seeing much more peer-to-peer selling. We think it speaks volumes for the quality of our test and the quality of the organization. Right now, the biggest driver to growth is continued sales expansion. Could we add more sales reps and do it faster? We certainly could.
But again, we're trying to be mindful and thread that needle towards path to profitability. So, right now, we would expect to end the year somewhere around 75 sales reps, and I believe that'll still put us in a position to add about 25-35 next year. I think when we get to the end of 2025, we'll have a different conversation on how much deeper can we go. But right now we're seeing new adopters come on, we're seeing existing users expand use, and then we're also seeing initial users expand into their partners within practice. So we're seeing good growth across all of those vectors. It's a great question. Thank you, Dan.
What is it about the COGS profile of Biodesix that enables high 70% gross margins? Is there any major difference in the unit economics on a per test basis across the portfolio? Is the largest drivers in the path to profitability just revenue growth, or are there more expenses that you look for on the cost outline?
Yeah, great question. So I'll kind of work backwards. You know, we optimized everything based upon the 36,000 sq ft facility we were in, we moved at the beginning of this year. So, there are some benefits that will come with that. The original laboratory was constructed with one test in mind. So now that we have a portfolio of five with three in development, you can imagine we were bursting at the seams. Something else that most don't know is we grew so rapidly, we had never returned back in person. The laboratory team was really the only team that was together. You know, we can have a philosophical debate about in-person work and not. The one thing we know is that when we're in person, we are very, very effective and efficient, and so we've seen that.
We also joked that the old facility didn't have a loading dock. So, talk about inefficiencies from the moment the supplies arrive. So, there's gonna be efficiencies gained. We built this world-class facility, with that workflow in mind. So, is there room to improve? There definitely is. When we look across the portfolio, each one of them has a slightly different gross margin, but they're all exceptionally strong. The proteomic test have the highest gross margin. That blended 77% is heavily influenced on the proteomic side. Genomic testing is slightly more commoditized and a little bit lower gross margin. You know, for us, we're gonna continue to focus on efficiencies.
The teams' know-how and their ability to improve kind of that workflow efficiency, we think that that's a kind of a trade secret. We haven't shared that. Many will know we acquired the XL2 test from Integrated Diagnostics back in 2018. InDi had done a great job of discovering that test. When we acquired it, that test had a 3-week turnaround time, negative gross margins, right? They were losing money on every test and didn't have a commercial path forward. Within 6 weeks, we got that down to... Oh, I should have said we had a 3-week turnaround time. We got that down to a 6-day turnaround time, which we've now improved to 3. We got gross margins now back up north of 70%.
So, it really is being surrounded by an exceptionally talented and experienced team, which I highlighted at the beginning. So again, we think we're doing some things that others aren't doing. We also have noticed that we have the fastest turnaround times. So, we don't always disclose exactly what it is in that secret sauce, but we're proud of it, and we're gonna continue to honor it. Any other questions? Yeah.
Sorry, just some of the GeneStrat tests post the ddPCR and NGS test post the lung cancer treatment.
Yeah.
How do you compare that with those broader panels? It seems like there's a push to move into larger gene panels, like from big players. How do you position with them?
Yeah, you know, it's a great question. So, on the genomic front, the question was specific to why offer two with the ddPCR, and the broader panel. I don't think everybody fully appreciates Medicare coverage, says 1 NGS test per patient, per cancer diagnosis, per lifetime. So, when you consider that, what's 1 alternative and means you can get around that? A ddPCR test is not included. So, you can order the ddPCR test as often as possible if you're surveilling or monitoring. Also, you can do that à la carte. So, if you're just looking for a single gene, get a rapid turnaround time within 2-3 days. So, physicians will pick and choose when they want to use that.
Early-stage diagnosis, usually they're looking for a known 1-2 genomic or genetic mutations. Those broad panels play a significant role, which is why we offer one. But they're usually better when you've failed initial treatment, when you're selecting for clinical trial, that's where that comes into factor more. What we noticed when we went out to physicians and we said, "What are you looking for in the test result reports?" Most of them said, "We're looking for 1-2 things out of 250-300 genes." And so, for us, let's give them those options. Hopefully, that's helpful. Great. Well, thank you all. Appreciate your interest and really want to thank the T. Rowe team for the opportunity to be here today.