Good morning, and welcome to the Cerenome third quarter 2026 Business Update conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, we will open the call for questions. Before we begin, we want to advise you that over the course of the call and the Q&A session, forward-looking statements will be made regarding events, trends, business prospects, and financial performance, which may affect Cerenome's future operating results and financial position. These statements include, among others, statements regarding unaudited third quarter gross billings. That figure is subject to completion of our quarter end close and review by our independent registered public accounting firm, and final results will be reported in our Form 10-Q. Any annualized run-rate figures discussed today are illustrative calculations.
They are based on list prices, our run-rate goal, and historical order rates from the platform's prior owner, and they are not forecasts of revenue, gross billings, or collections. CNSide test volume adoption and our annualized test order run-rate goal. The timing of new CNSide assay launches, the order rates for those assays, covered lives targets, Medicare expected effective date, Medicaid and commercial coverage, reimbursement rates, and the timing of cash collections, the build-out and productivity of our commercial team, our forecasted cash runway, and the availability of future tranches under our 3i financing facility, market size and epidemiology estimates, and the timing and results of our REYOBIQ clinical programs. All such statements are subject to risks and uncertainties, including those described in Cerenome's annual report on Form 10-K and quarterly reports on Form 10-Q. Cerenome advises you to review these risk factors in considering such statements.
In addition, comments made during this conference call contain information that is accurate as of the date of the live broadcast today, September 30, 2026. Cerenome assumes no responsibility to update or revise any statements to reflect events, trends, or circumstances after the date they are made, except as required by law. Please note the call is being recorded. If you require operator assistance, please press star then zero. It is now my pleasure to turn the call over to Dr. Marc Hedrick, Cerenome's President and Chief Executive Officer. Dr. Hedrick, you may begin.
Thank you, Drew. Good morning, and thank you for joining the call today. The goal for the call today is to provide investors in the capital markets with an update specifically around Cerenome's diagnostic division, CNSide. The team has made great progress over the last three quarters, and we have a number of updates, more than we can typically provide on a quarterly earnings call. As a note, we will have our full Q3 earnings call in Q4, but today the focus is on CNSide, and Russ Bradley and Andrew Sims are here with me to provide more detail. One note: you will be able to review our most recent corporate presentation on our website later today. First, though, before we talk about CNSide, I would like to provide some context.
On August 3rd, our new name, Cerenome, and brand became official, but that was really just a public acknowledgment of the two previous years of operating as an integrated CNS oncology company, combining diagnostics, therapeutics, with advanced data analytics, all under one roof. Simply put, the rationale behind the integrated strategy is that CNS cancers represent systems diseases, and therefore an integrated or systems approach is ultimately what is needed to make meaningful progress for these patients. In contrast, if you look back over the past five decades of companies taking traditional, narrowly focused approaches, they have yielded few commercial developments or regulatory wins in both diagnostics and therapeutics. A new approach is desperately needed. There are two multi-decade trends that define the CNS oncology problem and the opportunity. Trend one is the abysmal track record of gains in CNS cancer survivals.
Over the past four decades, the median overall survival for non-CNS cancers has improved nearly fourfold from roughly 35 months in 1980 to approximately 138 months today. In contrast, the median overall survival for patients with CNS cancers stands at about 15 months, and it has barely moved across that same period, despite dramatic advances in imaging and despite the major systemic therapy advances deployed around it. It seems that every oncology revolution of the last 50 years has stopped at the blood-brain barrier. Trend two is the epidemic in CNS cancers. As patients live longer with advanced cancers or metastatic disease, the incidence of CNS metastases is rising. By any definition, metastatic CNS cancer is both an epidemic and an underappreciated one at that. CNS cancers represent the largest underserved market in U.S. oncology. How does one define that market opportunity more specifically?
Of the 18.6 million U.S. cancer survivors across all sites and stages, it's estimated that approximately 2 million Americans are in the central nervous system cancer at-risk pool. Specifically, these are patients with metastatic CNS trophic disease or non-metastatic tumors at elevated risk. Of these, an estimated 600,000 patients per year receive a symptom-triggered or guideline-directed CNS workup. Furthermore, approximately 190,000 patients per year will be diagnosed with parenchymal brain metastases, and an estimated 345,000 patients per year have leptomeningeal metastases, or LM. This epidemiology drives the multi-billion-dollar addressable markets for both CNSide and our lead drug, REYOBIQ. For CNSide specifically, we sized the CNSide diagnostic market opportunity, or TAM, at approximately $2.7 billion for LM alone, with additional approximately $2.8 billion across the broader CNS at-risk workup and brain mets populations.
In our view, this represents a multi-billion-dollar hole in the current U.S. diagnostic market that we recognized when we acquired CNSide, and now, with three quarters of early commercial experience, our conviction around that opportunity hasn't changed. I would now like to invite Russell Bradley, President and General Manager of our CNSide diagnostic division, and Andrew Sims, our Chief Financial Officer, to join in on today's call and take you through the 2026 CNSide progress and provide a look forward for the remainder of 2026 and into 2027. Russell?
Thanks, Marc, and good morning. This quarter, CNSide began submitting billing claims to payers. For two years, we have been building a reimbursed business in cerebrospinal fluid, or CSF, diagnostics: building clinical evidence, payer contracts, a proprietary reimbursement code, Medicare enrollment, laboratory accreditation, and the billing infrastructure. We are no longer building towards reimbursement; we are billing for it. We set five goals for 2026, and here is where we started: commercial coverage beyond 150 million lives for our TCE test, achieved ahead of schedule at approximately 158 million covered lives. Medicare and Medicaid coverage on track, with Medicare enrollment complete and a published Medicare rate expected to be effective January 1, 2027.
A run-rate of 1,250 total tests per year on track, additional tumor characterization tests on schedule with CNSide CSF Molecular Profile Test planned for October 12 launch, and the first CNSide CSF cellular biomarkers focused on breast cancer will be launched at the Society for Neuro-Oncology annual meeting in November. Fifty or more ordering physicians on track, with 39 physicians ordering today among 43 ordering providers. Let me take you through the details supporting our goal achievements year to date. First, commercial coverage, which we achieved ahead of schedule. We entered 2026 with approximately 67 million covered lives, people whose health plans have contracted to pay for the test, from UnitedHealthcare and Humana. New agreements this year, led by Elevance Health at approximately 45 million, and Service Corporation at approximately 27 million, took us past our 150 million goal in August.
With Blue Cross Blue Shield of Michigan in September, we now have approximately 158 million covered lives under contract, and we continue to pursue agreements for additional covered lives. When Medicare preliminary pricing for our TCE test takes effect, which is anticipated January 1, 2027, we expect to add approximately 34 million beneficiaries, subject to coverage through Novitas Solutions, our local Medicare contractor in Texas. Medicare and Medicaid coverage, and we are on track. On May 7, we received our Medicare billing number. Our proprietary reimbursement code took effect July 1, and Medicare prices new laboratory test codes through an annual process. The Centers for Medicare & Medicaid Services, or CMS, reviews each new code with input from an independent advisory panel and public comment, then publishes a rate. We expect CMS to publish a preliminary rate for our proprietary reimbursement code effective January 1, 2027.
Coverage for traditional Medicare is a separate decision by Novitas Solutions, our local Medicare contractor in Texas, and that work is underway. Third, testing volume. We are on track to achieve a run-rate of 1,250 total tests per year in 2026. That is approximately 100 tests per month. The first half was access-led by design, limited early access through March, then broader availability from April 1. Our laboratory performed 232 CNSide tests in the first half of 2026. The second quarter volume was up 64% over the first quarter. We expect to close the third quarter at approximately 203 CNSide tests, up about 41% over the second quarter. The fourth quarter is supported by the coverage access now in place, onboarding waitlists, widening ordering breadth, and the offering of additional tumor characterization tests. Our fourth goal is adding tests to the platform, and we are on schedule.
On October 12, we plan to launch the CNSide CSF molecular profile, our DNA and RNA sequencing tests. Today, a spinal fluid specimen arrives at the lab, and we run one test. From that launch, the same specimen can also be sequenced across more than 300 DNA genes and more than 1,600 RNA transcripts to help guide therapy. More high-value clinical tests from the same specimen mean more value to our physician partners for the patients they serve and for CNSide. As the testing menu grows, one specimen can support several tests. For illustration only, the full plan menu, once launched, would carry a combined list price of up to approximately $15,000 per specimen. Of course, list price is not what we expect to be paid. Reimbursement will depend on payer contracts, coverage, and which tests our physician partners order.
Alongside sequencing, we are adding CSF, or CNSide CSF cellular biomarkers, our branded protein expression tests. These are now being validated in our Houston laboratory. These tests measure specific proteins on the tumor cells that we are already capturing. The first group is focused on breast cancer. They are estrogen receptor, progesterone receptor, and the HER2 biomarker. Breast cancer is the most common source of leptomeningeal metastases, or cancer that has spread to the fluid around the brain and the spine. These are the natural first biomarkers for us to launch. The aim is a CNSide result that tells the physician not only whether tumor cells are present and how many, but what can help guide the next therapy. We plan to launch this first breast cancer-focused group at the Society for Neuro-Oncology meeting in Philadelphia this November.
In June, our Houston laboratory earned College of American Pathologists accreditation, which is a prerequisite for both our ordering academic centers and payers alike. Behind those numbers is adoption, which is our fifth goal: 50 or more ordering physicians in 2026, but the pattern matters as much as the totals. Ordering institutions, five ordering institutions in the first quarter when access was capped by us, to now 24 ordering institutions today. Ordering providers, 13 in January to 43 today, including 39 physicians. The test ordering data we care about shows CNSide is becoming part of routine patient care. Repeat ordering, 15 of our 24 institutions have ordered in two or more separate months, and they generated 97% of our commercial test volume this year. Monitoring, 10 out of our 24 institutions, or 42%, are already testing the same patients more than once to follow them through treatment.
That is consistent with national cancer treatment guidelines from the NCCN, which support re-evaluating spinal fluid every four to eight weeks during treatment for this disease. It is the foundation of a recurring diagnostic, not a one-time test. That adoption now turns into claims. Let me walk you through how a diagnostic gets paid. The vocabulary sounds complicated, but the sequence is not. Five steps for our TCE test to date: a code. Our proprietary reimbursement code was effective on July 1. Contracts, 158 million covered lives. Medicare, enrolled in May, rate expected to become effective January 1, 2027. Billing infrastructure. XiFin, a leading outsourced revenue cycle management company selected by us in August, is now live. Claims. Submissions began this quarter. Our first submissions include tests performed earlier this year as well as new cases.
We are also making sure cost is not a barrier for our patients. Our patient financial services team verifies benefits, supports appeals, and offers income-based financial assistance and interest-free payment plans to our patients. Which brings me back to the sales force. Samantha Fowlkes joined us on September 16 as the Vice President and Head of Commercial Sales. Samantha brings more than two decades of oncology diagnostics experience, most recently at Caris Life Sciences and earlier at Genoptix and LabCorp. She is building our field team now, and our first representatives are being hired in the fourth quarter. Samantha's mandate is to turn the physician demand we already have into a repeatable commercial model.
Three priorities: number one, deepen current ordering institutions; make CNSide routine across the neuro-oncology teams at our 24 ordering institutions; and activate the approximately 97 signed online ordering agreements behind them. Goal number two, re-engage past ordering institutions, so 120 U.S. cancer institutions have ordered CNSide since 2020.
That is a known list, not a start from zero. Finally, sell the menu. From the fourth quarter, one spinal fluid specimen will support our tumor cell count test, the CNSide CSF Molecular Profile Test, and the CNSide CSF Cellular Biomarker Test. On timing, a new diagnostic representative typically takes two to three quarters to reach full productivity. The fourth quarter is the build quarter. 2027 is the first full year of a field-selling organization on top of the physician demand we already have. Growth also needs laboratory capacity. In September, we moved our lab to Levit Green, a new life science campus here in Houston. At Levit Green, we are constructing a purpose-designed laboratory to support our growth, with capacity of up to 50,000 tests per year.
As sequencing and protein expression join the testing menu, we want capacity in place well ahead of demand so the laboratory is never the constraint on growth. Over the next few months, here is what to watch. The published preliminary Medicare rate for our proprietary reimbursed code, effective January 1, 2027. Menu expansion, the CNSide CSF Molecular Profile, planned for launch on October 12, and the first CNSide CSF Cellular Biomarker Tests focused on breast cancer at the Society for Neuro-Oncology annual meeting in Philadelphia this November. The 1,250 total test run rate, with the field sales team standing up behind it. To sum up, this quarter we began billing with 158 million covered lives, a Medicare rate expected January 1, 2027, and 43 providers ordering, all without a single sales force in place. With that, I will turn the call over to Andrew Sims, our Chief Financial Officer.
Thanks, Russell, and good morning. As we move to a company with revenue, I would like to provide the market with an explanation of our approach on how we plan to communicate commercial business progress that will ultimately lead to revenue and cash flow guidance. Initially in 2026, we focused our public remarks on the high-level commercial building blocks of physician adoption, TCE tests performed, and covered lives. Behind the scenes, we built out the critical systems and processes for a scalable commercial business, namely operational infrastructure, revenue cycle management, and marketing commercial support. As a result, we have now begun billing on claims submitted quarter to date, representing approximately $1.55 million of gross billings on 222 performed TCE tests. That is an unaudited number, and the final figure will be reported in our third quarter Form 10-Q. We anticipate that collections will lag billings.
However, given the commercial and financial plumbing we put in place earlier this year, as Russell mentioned, we anticipate cash collections starting in Q4 2026. Going forward, in advance of any payer experience in collections history, we will look at gross billing as a logical way to communicate business progress in advance of a revenue or cash number. Ultimately, it will be a solid lead indicator of cash flow, but how much, we will know later once we have more real-world experience. In terms of our gross billing run rate as we finish the year, and using the 1,250 annualized test order run rate and new test offerings that are in our 2026 goals, that test number would correlate with an approximate annualized gross billings run rate range of $10 million-$12.5 million as we enter 2027.
The detail behind that range is based on our gross billing number times 1,250 tests per year, plus a forecasted contribution from our expanding test platform Russell mentioned. Specifically, the CNSide CSF Molecular Profile Test launching the week of October 12, and the CNSide Breast Cancer Protein Expression Assays launching at SNO in November. We have made assumptions around that product mix based on the 11,000 commercial tests performed by the CNSide developer and other factors, including physician workflow and evolving practice patterns. We will be able to tighten up that range as we get more data over the ensuing quarters. In terms of actual revenue guidance, I suspect we will have enough data points once we have two to three quarters of billing and collections in place to be able to guide to a go-forward revenue estimate. Prior to that, we will focus on gross billings.
In terms of our balance sheet, as mentioned in our press release of September 10, we entered into a debt royalty financing with 3i to help support the balance sheet as we scale the commercial team for CNSide. Our balance sheet with current sources of cash is estimated to extend our cash runway into 2028. Looking forward to 2027, we think with the commercial team in place, we should be able to significantly scale beyond the gross billing run rate of $10 million-$12.5 million I mentioned earlier. With that, I'll turn the call over back to Marc.
Thank you, Andrew. Before we open the call up to questions, let me recap where we stand against our 2026 corporate milestones and what comes next. On the CNSide platform, we will continue to expand the U.S. commercial payer coverage from the approximate 158 million contracted lives we have today to an estimated 200 million or so by the beginning of 2027. Advance Medicare from billing to collections, as described by Russell, and we are building the Medicaid coverage state by state. We are on track to meet or exceed the 1,250 annualized test run rate. That run rate should continue to expand as we field the national sales force, increase physician and institutional adoption, and expand the testing platform with additional CNS tumor characterization tests as described.
In addition, we anticipate revenue collection beginning to scale in Q4 and anticipate greater visibility to financial guidance and revenue in mid-2027. REYOBIQ, we remain on track with all key publicly reported objectives and plan to discuss these more in detail on our Q3 earnings. So with that, Drew, let's open up the floor for questions, and we'll take it from there.
Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster, and I understand that some questions have already come in.
Yeah, Drew, we'll go ahead and take questions from the listeners.
Thank you. The first question comes from Kyle Mikson with Canaccord Genuity. Please go ahead.
Hi, this is Charlotte Maurer on for Kyle Mikson. Thank you so much for taking our question. I was just wondering, as you expand beyond the CNSide, beyond the TCE, you've highlighted up to like that $15,000 in reimbursement potential for the full testing episode. While it's still early, how should we think about the expected patient utilization of the full menu versus just ordering an individual assay? Then kind of like once Medicare reimbursement is fully in place, I know it's still early, but how could we kind of think about the economics of a typical CNSide testing episode? Thank you.
Yeah, hi. I'll take the question. This is Russell Bradley here. The $15,000 that we mentioned is really illustrative of list prices, and as we said, it's based on the contracted amount ultimately and what the physician orders. That's for an initial workup. The way we're thinking about running the test that we're going to be offering when we launch next quarter is that there would be an initial diagnostic workup that would include full sequencing, the protein expression assays, and of course the tumor cell enumeration. We use the list prices of those to come up with that illustrative number. What happens in practice is that that initial workup is done on the initial diagnosis episode, and then what's more likely to happen is after that there'll be monitoring tests that will include just the tumor cell enumeration.
I want to make sure we're clear that that's all the tests ordered on the initial diagnostic workup, and then after that we would go to a tumor cell enumeration monitoring, which obviously wouldn't be $15,000. That's the numbers behind there. We're still working with Medicare. Obviously, they have made some preliminary determinations. There's an open comment period currently that closes, I think, next month. Then we expect the published rate for the CNSide test for the tumor cell enumeration test in November to become effective in January 1.
Charlotte, thank you for the question. If I may, on the Medicare mix, which I think is part of the question, leptomeningeal cancer, which is sort of the core market, at least today for us, it actually tends to disproportionately affect patients prior to age 65. If you look at it from an age perspective, perhaps about 15% or so of the patients that we're seeing are going to be Medicare patients. The rest will be in a pre-Medicare market and be covered by private payers or other sources. That will obviously materially affect the overall mix. We'll start talking about that more in detail going forward in future quarters.
Great. Thank you.
Thank you.
Thank you. The next question comes from Chad Messer with Lake Street Capital. Please go ahead.
Great. Thanks for taking my question. Just on the multi-test, wondering about how we should think about the reimbursement path there. Is it relatively similar in what you have to do and how long it takes, or is there opportunities now that you are already kind of engaged on the original test to compress some of the timelines around the steps?
Chad, I just want to make sure I understand the question. When you say the multi-test, are you talking about sort of the monitoring of the patient, or are you talking about the comprehensive menu?
Yeah, the menu. You are adding the breast cancer and the additional things that can be run on one sample, reimbursement for that. How should we think about the reimbursement for that?
Yeah, the other tests that we are launching next quarter already have established CPT codes in place. Unlike the tumor cell enumeration test that we launched earlier this year, that has a proprietary CPT code or a PLA code, which we separately contract and negotiate pricing with the private payers and with Medicare. The additional tumor characterization tests that I mentioned come with established CPT codes. For example, the DNA profiling CPT code that we will be claiming against is around about $2,900 for reimbursement for that profile. And there is a separate one for RNA as well. The protein expression for the breast cancer-focused panel that we are putting together and launching next quarter, they also have established CPT codes. So initially, we will be billing against those established codes.
Those are lower reimbursement, but they do make up, depending on what the physician orders, there can be several of those, three or four in a test. So they will be separately billed against the existing CPT codes. And that is how we derive that total number of 15,000 if all the tests would be requested, hypothetically, by a physician with the list prices and CPT codes in place.
Chad, just to maybe pile on to that, just as a heuristic of thinking about this, of that 15,000 number that Russ mentioned for the full complement of testing, about half of that is related to the TCE tests, about half is related to the RNA and genomic profiling. Then a smaller fraction of that is for the other expression tests. So the majority of the economics are on the multi-omics and the TCE tests, and that's split kind of roughly 50/50.
All right, very helpful. Then you mentioned you've got 125 institutions that have previously ordered CNSide. Just to semantic build-out sales force starting in Q1, how you think about prioritizing those. Obviously, getting existing customers to order more is generally considered the lower-hanging fruit, but it sounds like there's quite an opportunity to expand the base there.
Yeah, Chad, so yeah, we have a number of things converging here that help us accelerate the growth in the testing that we're seeing. So we have the existing sites, that's true, there was 120 institutions that had ordered the test since 2020. So there's a fair bit of familiarity already in place in those institutions. A lot of the backlog we have in onboarding involves people at those physicians at those institutions that were familiar with the test. So part of the initial goal is to go out and to make sure that we have all those existing physicians that want to order the test onboarded and able to do that. And that's part of the backlog we have for the onboarding.
We also see an expansion in the accounts that are currently ordering the test as they move from diagnosing or using the test to help with the diagnosis of a patient to moving to monitoring the patient. So you've got the same institution implementing the TCE test, the enumeration test, and then they're using it to monitor patients. So there's more testing coming from those institutions we have onboarded. I think the next opportunity for us from a growth point of view is to go out beyond the 120 cancer centers that are familiar with our test and want to order it to the community oncology-based institutions where the medical oncologists are, not so much the neuro oncologists that have a high level of familiarity.
We see the next phase of growth and the build-out of the commercial org is now moving beyond those 120 institutions to community-based oncologists that are treating and managing these patients and building awareness there. We think there's, based on our own primary research, there's quite a lot of upside there in building that awareness. If you think about the way we're scaling the commercial organization, it tracks with that opportunity. The initial salespeople we're recruiting and hiring next quarter will go out and establish the relationships with those cancer centers. Then as we move through 2027 and we see the results of those activities grow the testing requests, we will expand the commercial team to start focusing on those community oncology centers where a lot of the patients are managed and diagnosed.
We'll see the commercial org expand through 2027 in response to the level of access we get to the existing institutions, those 120, and then the medical oncologists beyond that, which there's about 10,000- 14,000 of those. That's a really large opportunity that we are going to go after.
Yeah, 10,000- 14,000 is quite a lot. Is there sort of an initial circle of higher prospects that you would go after in 2027? Is that hundreds? Is that 1,000? You have to have some kind of strategy for the 14,000 and prioritizing there.
Yes, we do. We have a multi-faceted approach to building awareness of the test. The commercial org obviously is part of it, but we're in the process of scaling that. The more efficient ways to get access to the medical oncologists beyond the cancer centers is through digital, very efficient and prolific digital media team that is building awareness. We are getting some interest and demand already generated. We do conferences as well for face-to-face access to the medical oncologists. Some of those are smaller regional conferences where we kind of build on the interest and build awareness of both leptomeningeal and adenometastases and also the diagnostic that can help diagnose and monitor these patients. We do have a strategy.
It's measured, and it relies on looking at data that we have to make sure that we're optimizing our scaling and the size of our commercial and our marketing reach in proportion to the amount of demand that we're generating so that we stay in sync and in balance.
All right, great. Thanks. I look forward to monitoring the progress.
Thank you, Chad.
Thank you. The next question comes from Sean Lee with H.C. Wainwright. Please go ahead.
Hey, good morning, guys, and thanks for taking my questions. First one is, of the 222 tests that were billed, how many of that were performed during the third quarter versus the backlog from the first half?
Hey, Sean, it's Andrew. Thanks for the question. The majority of those tests, just under 200, were performed in Q3.
Okay, got it. Thanks for that. On Medicare, do you still have additional discussions with the Medicare contract that is still to be done, or is everything ready once the pricing goes into effective on January 1st? Also, for the patients that you are seeing, how many of them fall under Medicare versus private payers?
Yeah, Sean, I'll take that. First question, yes, we do have some planned discussions with the local Medicare contractor. Those are scheduled. That's really the final step, I think, to getting coverage. We expect the rates to be published in November. We expect those discussions, in fact, they're scheduled for November as well. That's still work to be done by us. Hopefully that takes care of your first question. Second question is, based on the patients that we've run and we track this, Medicare is really not as big a proportion of the patient population as I think Marc covered earlier. Right now, based on all the patients we've run year to date, Medicare coverage would be involved in about 17% of the cases.
We obviously will continue to monitor that, but that's the number based on the 300 or so tests that we've done and the insurance information that we've gained so far.
Got it. Finally, for your runway into 2028, how much of the CNSide cash is built into that runway? And what milestones do you need to unlock the additional, I think, $16 million was it from the 3i notes?
Yeah, Sean, I'll take that. It's Andrew. Following up on collections, what we expect, as outlined in my prepared comments, we will start collecting from testing in Q4, and that will ramp through 2027. Our initial model shows approximately $1 million of collections in 2026, and north of $5 million is a realistic base target for next year, with obviously a number of assumptions behind that. And what you'll see through the period is, obviously, collections lag billing, particularly in this startup phase. By the second half of next year, we will see what I would refer to as an industry normalization of the DSO rates. So the target there is 60-80 target range.
One of the reasons why we selected XiFin in particular was the level of relationship we have between our market access team, their teams, and effectively their careers, the goal of which is expediting the collections through the reimbursement process. So I think that should answer your question about the contribution. On 3i, a couple of points I would make there. Management obviously assesses cost of capital, and the key for us in assessing 3i and the facility was overall cost of capital, ensuring we had access to cash, as we knew the quantum of milestones we had upcoming, and that obviously supports us through, as I said, Q1 2028. One of the keys there is, as you identified for the second part, is a stockholder approval later this year. And they put that in more as an insurance policy to support the overall facility.
That is what you will see come the end of the year to unlock the balance.
Got it. That makes it clear. Thanks again for taking my questions.
Thanks, Sean. Appreciate it.
Thank you. The next question comes from Ed Woo with Ascendiant Capital. Please go ahead.
Yeah, congratulations on all the progress. As you target 1,250 tests per year, what is your overall capacity to do tests in your current laboratory?
Yeah, Ed, thanks for the question. This is Russell Bradley here. We are building out a new lab in the same location that we are in that has an annual capacity of 50,000 tests. There is going to be the capacity. We do not foresee any constraints in our current location. We moved in September into this new lab, but we are also building a purpose-built lab here on site. Right now, the capacity here and the capacity we are anticipating with the new build-out will not cause a constraint for us. We have got more than enough capacity to do the testing that we are expecting to do over the next few years.
That sounds great. That is all the questions I have. Thank you very much, and I wish you guys good luck.
This concludes our question and audio question and answer session. Just checking if there are any other questions that have come in.
We are at time, Drew, so I think we will bring it to a close. Thank you. We just want to thank everyone for joining us on the call today. We greatly value your interest in the company. I want to recognize our employees who have done a tremendous amount of work in CNSide and the rest of the company over the past few quarters. Of course, we really are grateful for the patients who enroll in the trials and use the test and the doctors who are increasingly trusting us to deliver for their patients and their families. With that, have a good day. Appreciate your time.
Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.