All right. Good morning. Thanks for everyone for joining us. Happy to have with us here today President and CEO of Inogen for our next presentation, Kevin Smith. I'll turn it over to you, Kevin. Thanks for being here.
Hey, thank you very much. All right. I also have with me here today Mike Bourque, who's our Chief Financial Officer. And before we open it up for questions, I'll just give you a little bit of an overview on Inogen, if anybody is not familiar with our story. So we're a global leader in portable oxygen therapy. So our aim is to improve lives through respiratory care. And when you look at the overarching disease states that we're looking to tackle here, it's COPD. It's chronic obstructive pulmonary disease affecting 450 million lives across the globe. Today, expected to grow to 600 million by 2050. And the sixth leading cause of death in the United States in 2020. But the risk factors are not just limited to smoking, secondhand smoke, but it's also environmental hazards that we have to deal with on a regular basis.
Our solution is portability and mobility. So when you think about COPD, you think about patients that are on long-term oxygen therapy. They're typically tethered to a tank at home. That limits their ability to leave the house. If they do, they need to muscle an oxygen tank onto a cart, get it into a car, take this wherever you need to go. You cannot transport it on an airplane, so that does limit your ability to move around. We have a device Inogen's founders had created, developed technology to take ambient air around us, strip out the nitrogen, and deliver medical-grade oxygen to patients needing the therapy, which is battery-powered and, of course, enables the mobility.
The mobility has been demonstrated to have benefits: reduced mortality rates versus patients who are on tanks versus patients who are on stationary oxygen concentrators or liquid oxygen, tied primarily, of course, back to the ability to get up, to move around, and be mobile. Not only reducing the mortality rates, but also reducing the cost burden on healthcare systems. If you step back a little bit and look at the United States as a whole, those patients that are on oxygen tanks are still prevalent today in the marketplace. Two-thirds of the patients on long-term oxygen therapy have tanks, which is limited mobility. We're talking about less than 20% have a POC. There still is market potential for us to continue to grow. Half the patients don't even know about POCs.
When they're diagnosed with COPD, when they're given the prescription for oxygen, they don't know that that's an option for them. So our commercial channels enable us to go after these patients and engage with them where they need us the most and continue to service them for the length of their disease. We have a direct-to-consumer channel. Direct-to-consumer is focused on patients inbound contacting us, advocating for themselves. We have commercials on television. We have web-based advertising, social media. We have various campaigns in order to bring those patients into Inogen where we can act as our own HME and set those patients up with an oxygen concentrator. We also have a prescriber channel, which goes to physicians' offices to get referrals coming into Inogen to spread that word. Remember, half of these patients still don't know about oxygen therapy. They go home with an oxygen tank.
They have to find out through one of our channels about a POC. And we also have our business-to-business network. Our business-to-business is us working directly with the HMEs in the United States and the large HME-style companies abroad to service those patients and give them the option of higher mobility with a POC. So if we shift over to our strategic priorities, we are focused on driving top-line growth, advancing our path towards profitability, and, of course, expanding our innovation pipeline. So I've been here for just over a year. I just celebrated my one-year anniversary mark with Inogen. Mike's been here for about eight months. We've turned over the leadership team here in the last year. So between Mike coming on eight months ago and where we are today, it's pretty much a new leadership team that we have in place.
We've been focused on reducing the friction that we have between the sales channels. Previously, not communicating with each other, not supporting each other. We've made a lot of cultural changes to the organization. We've rebaselined our direct-to-consumer channel. We have refocused our rental channel into initiatives that allow us to further upstream engage these patients. We've been building back the relationships that we've lost over the years with our B2B channel. It's been a cultural shift for us as an organization. We're not just focused on the revenue. We're also focused on profitable growth. That is looking at every dollar that we spend as an investment back in the company. We've made good progress on that this year. We've had a couple of quarters in a row here of a positive EBITDA, so that was a big move for us.
We've generated cash over the last two quarters, and we're seeing ourselves start to get on that pathway to long-term sustainable and profitable growth. But we're also expanding our innovation pipeline. This year, two months ago, less than two months ago, we launched the Rove 4. So the Rove 4 is an expansion of our pipeline that has a smaller, lighter weight POC with four settings that enables us to engage patients earlier in their disease states where mobility is even more important. They want the long-term battery life. They'll need the higher mobility, lower weights. They don't need the five or six-setting POC. This enables us to get those patients introduced to Inogen on a POC, and as their disease progresses and they need a five or a six-setting device, they can move up to that in time. We've also acquired PhysioAssist, which is the first foray.
This was in September of 2023. This is our first step towards broadening our portfolio from just being portable oxygen concentrators or stationary concentrator to airway clearance. So broadening our reach out a little bit with these patients. We're also advancing our Inogen Connect, developing further our digital health offering to better serve patients as well as our partners in the B2B setting. But if we step a little bit deeper into the Rove 4, this is a device that's the lightest weight out there, up to 840 ml of oxygen. And again, it allows us to expand our capacity to treat patients earlier and then have that second step towards a higher capacity device as they progress. The Simeox device is the PhysioAssist. So the PhysioAssist is the company that we acquired. Simeox is the brand name. It's on the market in Europe.
We're working towards regulatory clearance in the United States. Again, that will be our first step beyond just the POCs. But this will leverage the existing commercial channels that we have today. Bronchiectasis, which is a primary disease for airway clearance that we'll be treating with a Simeox device, overlaps with COPD. Similar patient populations, same call points. We can leverage the commercial channels that we have here today. And the device itself, from what we've learned in Europe, comes with patient preference. The comparators would be physiotherapy in order to clear the airways or percussion vests, the high-frequency chest wall oscillation devices. Those are bulky devices that patients have to wear. They're uncomfortable. There's patient populations that they can't treat, patients who are obese, patients who are too frail. This is a comfortable, easy-to-use device that's extremely effective.
So when you look at Inogen and who we are and what we've been doing, we've got 20 years of experience in respiratory care. We've taken those first steps now to expand beyond the POCs. We have broad geographic reach. We still have geographies that we have not yet penetrated that we're expanding out to now. We have manufacturing locations in the United States, so we manufacture for the U.S. in Texas. We manufacture through a contract manufacturer for outside-the-U.S. customers through the Czech Republic. We have a large under-penetrated market opportunity for us to continue to go after, which is backed by clinical trials. We feel that we've made some pretty good progress here so far. We have a strong balance sheet. We have sufficient capital to continue to develop our portfolio as we go forward, and our leadership team, we believe, is very strong.
Again, I mentioned that we have new folks in place. We have a very effective board of directors and engaged board of directors. So we believe that we're positioned to grow in the future. So with that, I will go ahead and stop and open it up for any questions.
What's different? One's more important than another?
Yeah.
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Yeah. So all of our channels are interlocked in certain ways. But if you think about it this way, our direct-to-consumer, that is going to be our highest cost-of-sale channel, partially because of the advertising that we do. It's not inexpensive to do advertising on television. But that's developed also a very strong brand awareness for us. When patients go into a physician's office, they advocate for themselves. They don't ask for a POC. They ask for an Inogen. The same thing with our B2B customers that they're providing us that feedback that patients ask for an Inogen. They don't ask for a POC. That is a higher-margin business for us because we're selling primarily cash, although we are working on expanding that out through some pilot programs to engage those patients with insurance coverage as well in that direct-to-consumer. The rental is about creating awareness, of course.
That one will start to become more important for us as we launch the Simeox product in the future as we go and create awareness with the physicians. But the rental business, which is what that primarily is, is slower growth over time. The biggest hit, of course, is on the B2B channels, the B2B where you have large national or multinational companies that buy in large quantities, the POCs. Those are the guys that are putting patients on tanks to begin with. And so we need to convert them to the story of POCs. And for them to be able to see that the POC is cost-effective, they don't have the capital that needs to go into that to support patients on tanks, people, trucks, the tanks themselves, the refill, and so forth.
And our eight-year useful life is helping us weave that story and get more traction with our B2B. So yeah, it's a fair question. It's not that we're necessarily leaning more heavily into one or the other. They balance each other out, and we do see them supporting the company as a whole.
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Sure. When we launched Simeox, it will be in a pilot to begin with. If you think about a new therapy that's coming in, we have to go through, of course, the FDA process. But once the FDA process is complete, then we can start the process towards reimbursement. So there, it's going to be building KOL support for Simeox, having peer-to-peer engagements, comparing to technologies that exist today in patient populations. I talked about the frail and the obese that are right for the vest technology, looking at some of those low-hanging fruit as early adopters for the Simeox. But we'll have to build both the private insurance coverage as well as get CMS coverage. And that takes a little bit of time to build up. So it'll be a slow gain once we get that launched out there. But we do see that being a pull-through as well.
So be able to have something that is new, something that technology that is sexy, that's attractive for physicians to want to try with their patients. That gives us further ability to engage with Inogen and pull POC sales.
Yeah. So for CMS, there's two windows. You have January 1st, and you have July 1st when you can file. And so there, it's a little bit of a game as engaging with CMS once you have the 510(k) or the de novo approval PMA, but engaging, having an understanding as to where the gap is, what they want to see from an evidential standpoint. We do have clinical evidence coming out of Europe. If that's sufficient, we could file earlier. If they're looking for some additional data, it may take us to wait for a period to get to the next one. So as soon as we have that engagement and timeline, we'll certainly be able to give some guidance towards that. The payer side of things is a little bit different. We can start engaging early before we have CMS coverage.
But there, you also need to build up some denial, some acceptance. We have a team that's in place prepared to do that, but it'll be some time.
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Yeah. So I think our first priority, Kevin talked about some of the things we're looking at. You saw the strategic initiatives that we have in place. First, what are businesses driving those? Profitable growth that he talked about, managing our cost structure. We want to get to the position where we've generated cash for two consecutive quarters. We go into, say, a Q4 seasonality period. From that perspective, in terms of where we end up the year, we might essentially see that, well, two things. One, the seasonality of the business, particularly in the direct-to-consumer business, is lower in Q4s and Q1 and Q4. That's a higher-margin business for us. As we look at our cash flow, when you say, Kevin mentioned, adjusted EBITDA positive for two quarters, cash flow positive for two quarters, those are the two strong quarters we have.
So it's really about getting us positioned to say, "Okay, now how do we do that in the other quarters where it's a little bit weaker?" So that'll be our focus. We're not. There's nothing in terms of we're looking at anything potentially for M&A. We're going to look at what we think is best for the business in general, but we want to conserve that cash, continue to develop our internal pipeline, as Kevin mentioned, as our other strategic objective. But right now, it's really about getting to the point we can generate cash flow on an ongoing basis for every quarter, and that's kind of what we're focusing on.
All right. Thank you very much.
Good morning. My name is Derek Maetzold. I'm the CEO and President of Castle Biosciences. And with me today is Frank Stokes, our Chief Financial Officer. I want to start out by thanking Piper Sandler for inviting us to this healthcare conference and having the opportunity to present here publicly. So I'll go into a couple of slides about Castle's core business and where we are, where we're going. And then Frank can go ahead and close out with the financial update through the third quarter of 2024. Encourage everybody to review the financial disclaimer statements both in this presentation as well as contained on our website. So Castle Biosciences is focused on developing or offering or commercializing innovative tests that really change the course of treatment of diseases, with the output being hopefully transforming what patients are facing today and what will happen to them tomorrow.
We have a model in terms of how we try and build our business investment decisions, which essentially starts with first focusing on, is there a significant clinical unmet need that we believe a proprietary, innovative, first-in-class diagnostic test will have an impact on changing and improving decisions made between a clinician and their patient and therefore their outcomes after that? If we find those needs, then we focus on building the evidence pathway. The need is not only to validate and, well, not only to discover and validate that we have a test, but also how that test can be used clinically to impact patient care decision-making processes.
And we continue, and we continue, and we continue to make those investments as we commercialize products because our belief is that in order to have adequate penetration, that is, both adoption by clinicians to use their test clinically as well as coverage by commercial payers and appropriate reimbursement, we will need to go ahead and keep generating a large, robust piece of data set in order to help us penetrate both clinician use and adoption as well as reimbursement penetration. And then we hope we do that cycle again and again, hopefully by picking the right clinical need inputs, developing or discovering or acquiring the right proprietary test to answer those needs, and then going forward again. So overall, business-wise, we have really three kind of pillars, I guess you would say, of commercial investments today. Our largest area of both volume and revenue is within our dermatology product offerings.
We offer two tests for risk stratification and other treatment decision-making processes. One of them is DecisionDx-Melanoma. The other one is our DecisionDx- SCC test. The DecisionDx-Melanoma test actually has two clinical needs. It is used in patients who are diagnosed with cutaneous melanoma or skin-based melanoma who have an invasive component, which is the patients have at least a level of invasion beyond just the epidermal layer of the skin. We believe there are about 130,000 patients in the U.S. that are addressable in this category every year. And our test actually informs two significant treatment decisions. One of them is this patient who could be eligible for a procedure called the sentinel lymph node biopsy surgical procedure. Should they actually undergo that because they have a likelihood of having a positive sentinel lymph node that's greater than 5%, which is the national threshold standard?
Or can they avoid that procedure because they have a likelihood of having a less than 5% sentinel lymph node positivity? Positivity being defined as the lymph nodes being removed and you find even one melanoma cell. The other use of our test is beyond that first surgical decision, which is to say, is this patient facing a very low likelihood of ever having a recurrence between the date of diagnosis and five years out, which is when most recurrences occur? Or does this patient have a higher likelihood of recurring, in which case I will change my care? I'll change my imaging centers. I'll change if I'm a dermatologist and I have a patient with a high-risk Castle test score, I may be coached.