Ladies and gentlemen, thank you for standing by, and welcome to the NeoGenetics Inc. Annual Meeting. I would now like to hand the conference over to your speaker today, Ms. Denise Padua. Ma'am, please go ahead.
Thank you, operator. Will the meeting please come to order? This is the 2020 Annual Meeting of the Stock holders of NeoGenomics Inc. And Nevada Corporation. I am Denise Padula, the General Counsel and Corporate Secretary of the company.
I have been appointed by the Board of Directors to serve as Inspector of Elections. My job will be to certify the results of all voting accomplished before the meeting, as well as recording and certifying all votes registered at this meeting. This meeting is being conducted virtually in order to protect our shareholders and employees from potential exposure to COVID-nineteen. The procedure will be different than what we are all used to. You have received a notice with a link to the virtual meeting and a unique control number.
If you are logged in using your control number, you have access to an online portal through which you can communicate with us. You can send in questions either through the text box or by calling in. We will be able to see the written questions as you submit them and we'll address them during the Q and A session at the end. If you wish to call in with a question, there are instructions in the bottom left corner of the portal above the ask a question box. The phone number for the Q and A line is 844-800-3452.
The operator will confirm your name and provide wait music. From there, you can dial star 1 to enter the question queue. We ask that you please wait to dial into the question queue until we begin the Q and A session. We appreciate your patience during this process. It is new to all of us.
We hope to be able to meet in person again next year. The order of business today will be to convene this 2020 Annual Meeting of Stockholders and to consider and vote on the following three proposals. First, to elect 9 members of our Board each to hold office for a 1 year term ending on the date of the next succeeding annual meeting of stockholders or until such directors successor shall have been duly elected and qualified. 2nd, to approve the advisory vote on the compensation paid to our named executive officers also referred to as a stockholder say on pay vote and 3, to ratify the appointment of Deloitte and Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020. I would like to introduce Douglas M.
Van Oort, Chief Executive Officer and Chairman of the Board for NeoGenomics, who will now report as to the call of the meeting.
Well, thank you, Denise. Good morning, everyone. Before proceeding, I would like to introduce you to senior members of the management team that are in attendance with us today. Catherine McKenzie, Denise Padula, Bill Bonello, Rob Shovlin George Cardoza Doctor. Larry Weiss Jennifer Balliet Stephanie Bywater Steve Ross and Doug Brown.
Additionally, we have the following Board members in attendance: Lynn Petro, Kevin Johnson, Ray Hipp, Bruce Crowther, Steve Kanofsky, Steve Jones and Rachel Staller. And finally, also with us today is Bruce Rux and Brie Hillman, representatives of our external auditors Deloitte and Touche LLP. This annual meeting has been duly called in accordance with the provisions of the bylaws of the company and the relevant laws of the Nevada Revised Statutes. I have a copy of the notice of the annual meeting dated April 15, 2020, mailed on April 17, 2020 to all stockholders of record at the close of business on March 3, 2020, the record date. At the respective addresses appearing on the stock records supplied to the company by the company's transfer agent for the purpose of notice.
I also have a copy of the certificate of mailing from the company's vendor for such purposes, Broadridge, certifying that these documents were mailed to the stockholders of record of the company on April 17, 2020. Copies of the notice and certificate of mailing will be filed in the minute book with the minutes of this annual meeting. A complete list of the stockholders of record entitled to vote at this annual meeting has been open to the examination of any stockholder for any purpose germane to the meeting during ordinary business hours for the 10 days prior to this meeting at the company's headquarters. If you are logged in as a shareholder, the list is also available for inspection during the meeting on the virtual platform by clicking the link labeled registered shareholder list. I have in my possession a list of stockholders of record entitled to vote at this meeting.
There were an aggregate of 105,089,310 shares of the company's voting common stock outstanding on the record date and eligible to vote at this annual meeting. The presence in person or by proxy of the holders of a majority of all of the issued and outstanding shares entitled to vote is required for a quorum for the transaction of the business to come before this annual meeting. As a majority of the voting capital stock entitled to vote on the proposals as of the record date is represented by their presence today, a quorum is present. The required notice of the meeting has been given, a quorum is present and this annual meeting has been regularly and lawfully convened and is now ready to transact business. We will now turn to the proposals that are set out in the notice of this meeting.
The first proposal is to elect 9 Board members for a 1 year term ending on the date of the next annual meeting of stockholders or until their successors are elected and qualified. The nominees for election to the Board are myself, Douglas M. Van Ort Stephen C. Jones Bruce K. Crowther Kevin C.
Johnson, Raymond R. Hipp, Lynn A. Cattro, Alison L. Hanna, Steven M. Kanofsky and Rachel A.
Staller, all of whom currently serve on the Board and all of whom are have advised the company of their willingness to serve as a member if elected. Is there any stockholder present who wishes to make a motion on this proposal?
I do.
The Chair recognizes Catherine McKenzie, a stockholder of the company.
Mr. Chairman, I hereby move that each op Douglas M. Van Orp, Stephen C. Jones, Bruce K. Crother, Kevin C.
Johnson, Raymond R. Hipp, Lynn A. Tetro, Allison L. Hanna, Stephen M. Kunowski and Rachel A.
Soller be elected to serve as a member of the Board until the 1st annual meeting of stockholders following his or her election and until his or her successor has been duly elected and qualified.
I hereby second the motion.
You have delivered a proxy to the corporation, your shares will be voted in the manner you have specified on that proxy. Unless you wish to change your vote, it will not be necessary for you to take any further action with respect to the matter being voted on today. If you wish to vote in person on this or any proposal, you may do so through the meeting portal. We will now turn to the 2nd proposal that is set out in the notice of this meeting. The proposal is to approve the compensation paid to our named executive officers.
Is there any stockholder present who wishes to make a motion on this proposal? I do. The Chair recognizes Catherine McKenzie, a stockholder of the company.
Mr. Chairman, I hereby move that the compensation paid to our named executive officers be approved.
I hereby second the motion.
If you have delivered a proxy to the corporation, your shares will be voted in the manner you have specified on that proxy. Unless you wish to change your vote, it will not be necessary for you to take any further action with respect to the matter being voted on today. If you wish to vote in person on this or any proposal, you may do so through the meeting portal. We will now turn to the 3rd proposal that is set out in the meeting in the notice of this meeting. The proposal is to ratify the appointment of Deloitte and Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020.
Is there any stockholder present who wishes to make a motion on this proposal?
I do.
The Chair recognizes Catherine McKenzie, stockholder of the company.
Mr. Chairman, I hereby move to ratify the appointment of Deloitte and Shusch LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020.
I hereby second the motion.
If you have delivered a proxy to the corporation, your shares will be voted in the manner you have specified on that proxy. Unless you wish to change your vote, it will not be necessary for you to take any further action with respect to the matter being voted on today. If you wish to vote in person on this or any proposal, you may do so through the meeting portal. Since all stockholders of record desiring to vote have had the opportunity to do so, the polls are now closed. The Secretary is directed to place with the corporate records of the company the list of stockholders of record present in person on the virtual shareholders meeting and represented by the proxy by proxy with the number of shares owned by each.
Based upon the preliminary vote totals, the nominees for election to the Board of Directors have been elected. The compensation paid to our named executive officers has been approved and the auditors have been ratified. The proposals acted upon by the stockholders and the final voting results of such proposals will be set forth in a Form 8 ks to be filed by the company with the U. S. Securities and Exchange Commission.
As there are no other matters to be considered, I invite a stock I move that the meeting be adjourned. I second the motion.
I move that the meeting be adjourned.
I second the motion.
All those in favor say aye. Aye. Are those opposed? This annual meeting of the stockholders of NeoGenomics Inc. Is hereby adjourned.
Thank you for attending. Please feel free to remain for a management presentation and a question and answer period. So thank you for that formal part of our stockholders meeting. And I will now present the current state of our business and the future outlook. And after that, we'll have time for questions and answers.
So I will say, 1st of all, that we miss seeing familiar faces of many of our long term shareholders this year as we conduct this meeting on this virtual basis. However, we're delighted that you've joined us and we hope you feel free to ask us questions. We always enjoy your questions and we'll look forward to that. Once again, our company has changed a lot since last year's shareholders meeting. But more than ever, I would say that your management team is pleased with our competitive position and we're excited about our growth prospects.
And perhaps most importantly, we're proud of the work we do every day to save lives of the patients that we serve. Now there are a number of areas to highlight when we share our story and here are a few of those highlights. NeoGenomics is a leader today in oncology diagnostics, both for the clinical and the pharma markets and both of those markets are growing very nicely. We have significant competitive advantages, not the least of which is our comprehensive test menu, which we believe is the most comprehensive of any company doing work like we are. And we have very high levels of customer satisfaction.
And in fact that's the reason that we continue to grow very nicely. You'll see through this presentation and you've seen over the years that we're investing in our business and we're investing in our future. Considerable investments in our Pharma Services division and informatics, in our clinical business and broadening our test menu. And I believe today we have a reputation, which is very strong for quality and for financial performance. Now today, the company is very strong.
Most people that know about oncology diagnostic services know about NeoGenomics and they know about the breadth and depth of our company. You can see some of the stats at the top of the slide. Now we have 11 locations around the world. We have over 120 MDs and PhDs in our company and we performed last year approximately 1,000,000 tests for cancer patients. Now people also know that today we have 2 very, very powerful divisions.
The first is our Clinical Services division, which is the largest part of our company, where we perform testing for oncologists and pathologists and hospitals in the community setting primarily. And as I said, we compete primarily on the basis of being a one stop shop, being able to perform any test, almost any test that can be made available for a cancer patient. On the right hand side of the page, you can see a description of our Pharma Services division. And this is a smaller division, a newer division for our company and is growing very rapidly. And here we provide support for pharmaceutical companies and biotechnology companies as they develop their drugs and we perform biomarker discovery for them.
We help them with clinical validations, with companion diagnostic testing. And this business is global as opposed to our clinical services division, which operates primarily in the U. S. And for the U. S.
Now both of these divisions are growing very nicely and that's partly because our markets are growing. The next slide shows you some of the reasons why our markets are growing. The first reason is that our population is aging. And as we all know, cancer does affect older people more than younger people. And most people recognize that the aging population is going to lead to more testing for companies like NeoGenomics.
But there are a number of other reasons that our markets are growing. First of all, patients are living longer with cancer. Cancer sometimes is being treated as a chronic disease nowadays. And this requires more testing. There are also a number of advances both technologically and medically, which are requiring more advanced testing so that drugs can be better matched to patients for their specific cancer type and also to support drug development as more drugs are targeted for cancer.
Now the next three charts will demonstrate some of these growth factors I'd like to share with you. The first is really good news for cancer patients and that's cancer patients are surviving longer. This chart shows the past 45 years, the number of cancer survivors and the projection for cancer survivors for the next 20 years. And you can see that it's a lot of really good news. Our therapies, the way we treat cancer is really having an impact.
And suffice to say that as more people are living longer with cancer and surviving cancer, they're requiring more testing and monitoring of their disease as they go through their journey. And this is driving growth in our markets. This next page, this next chart is also very interesting. It shows one particular type of cancer, in this case, non small cell lung cancer and compares the treatment paradigm in 2,006 to the treatment paradigm 10 years later in 2016. And you'll notice in 2,006, there are very few therapies available for non small cell lung cancer and frankly, very few tests available to guide those therapies.
In 2016, you can see many therapeutic options both for first line treatment and then for advanced cancers. And there are many more biomarkers to guide the most effective application of those therapies. And if we were to construct the same kind of chart for 2020, it would be much, much longer. And NeoGenomics has kept pace with this change in therapeutic options and the growth in medical and science and technology applied to cancer by offering nearly every test that can be offered to guide treatment. And there are also more good drugs available and becoming more available to treat cancer, and you can see that on this next slide.
This is a chart showing spending by drug companies to develop new therapies, and the number is actually quite staggering. In 2020, it's estimated that more than $140,000,000,000 will be spent on a worldwide basis to develop new drugs and our pharma services division is helping these drug companies to develop their therapies. So these market factors are tailwinds in our business, but we're creating tailwinds of our own. And if you look at some of the things we've done recently, you can see why NeoGenomics has been growing in excess of 2 times faster than the market growth as a whole. You can see on the left hand side of this chart, our Pharma Services business is growing very rapidly.
I'll show you some detailed charts about this in a minute. We've signed a lot of new contracts recently for our Pharma division and part of that is driven by with a contract research organization called PPD. But we have with a contract research organization called PPD, but we have a lot of great capabilities in our pharma division. We're also investing in enhancing our next generation sequencing capabilities. That's what NGS stands for.
We have today very high quality next generation sequencing tests for both hematologic and solid tumor solid tumors. And just recently, we acquired a vision of human longevity out in La Jolla, California to further enhance our next generation sequencing capabilities. We also are growing because of a phenomenon called companion diagnostic testing. And this is an area in which we're partnering with drug companies to make tests available to physicians in combination with a drug. I'll show you and talk a little bit more about this in a few minutes.
But we are one of the few companies that can help a pharma company develop a new drug and a companion diagnostic for that drug and then offer that clinically through our network in our clinical division. We're also continuing to grow because we add managed care contracts and new hospital systems and group purchasing organizations. And of course, we're continuing to grow as we pursue strategic acquisitions and that's been a nice source of growth in the past and we think will be in the future for us. So growth at NeoGenomics has been strong and we expect it to remain strong. Now a lot of people ask us, how do we grow in a competitive landscape like we compete in.
We have a lot of competitors. And this slide attempts to show you how we compete with both the very large clinical reference laboratories, which you'll see portrayed on the left hand side of the slide. These are very good companies, LabCorp, Quest, Mayo and others. These companies are very large companies that also perform oncology testing. And then we compete with them and we compete also with players on the right hand side of the page.
And these are companies that typically have very limited test menus. They'll have tests that are targeted to a particular disease or they have one type of test platform that they use. And so we compete with both of these different kinds of players. We compete with the large labs by having the most comprehensive, very focused one stop shop for oncology. So since all we do is oncology testing, we think that our focus on that allows us to do that with greater service and we tend to take market share or at least have in the past from the players on the left hand side of the page because of our focus in oncology.
And then we compete with the players on the right hand side by being a one stop shop. So for an oncology practice or for a hospital system, they can use NeoGenomics to do all of their testing, not just next generation sequencing, but also immunohistochemistry testing, FISH testing, flow cytometry and everything else. And this makes us a very important player for almost all of our customers. And you can see in the middle of the page a number of the dynamics which we go to market with And these have been very powerful and it's allowed us to grow organically quite well even though the landscape is quite competitive. Now another way that we compete is, we try to provide frankly better service than anyone else on this page.
And you can see that on the next slide, Slide 13. We manage our customer satisfaction pretty rigorously at NeoGenomics. We perform 2 very comprehensive customer satisfaction surveys a year. This slide shows the last results from our last customer survey. I think we had about 1,000 respondents to this survey.
And you can see that 67% of the respondents rated NeoGenomics a 9% or a 10%, 26% a 7% or 8%. I don't know how many of you rate your suppliers, but for me, I get asked this question a lot, whether it's an airline or whatever, how do you rate our service? And I tell you, I don't give a lot of nines or tens. So this is really important for us. Our customers really like doing business with NeoGenomics.
And frankly, this is one of the reasons why we grow, because this particular chart is called the Net Promoter Score and it is descriptive because if one of our customers is rating us a 9 or a 10, they are likely promoters of NeoGenomics. And when they go to a pathology show or meeting with some of their colleagues, it's quite possible that they're saying we really like doing business with NeoGenomics. And this has been a reason that we've been growing. Now we're also having good customer satisfaction scores because we have great people at NeoGenomics. I think we have a strong culture.
And we think frankly culture is really at the core of who we are and what we do. We are a purpose driven company. We take our purpose to improve the care of patients very seriously. Our culture is values based. I think you can tell when you walk through our labs and you meet a NeoGenomics employee that they care.
They care about what they do. And I think that's part of the reason that people like doing business with us. Now you can see on the right hand side a timeline, which shows frankly our company is still quite young. We're about an 18 year old company here. We have some significant milestones in our growth and development.
And I would say, over these 18 years today, we're stronger than we've ever been before. And you'll be able to see that in the next few slides. This slide number 15 is a chart which shows 10 years of growth in our Clinical Services division. I'll orient you to this slide. The blue bars are revenue and the green line represents the number of tests that we perform.
So you can see that our Clinical Services division has grown very nicely over this 10 year period. It's been driven by very strong organic growth because partly our customer satisfaction is so high and we have so many competitive advantages. It's also fueled by 2 acquisitions. At the end of 2015, we acquired a company called Clariant, which about doubled the size of this business. And in 2018, at the very end of the year, we acquired a company called Genoptix.
Now a fun fact here is that back in 2010, the beginning of this slide here, both Clarion and Genoptix were many times larger than NeoGenomics. And over the course of this time, we acquired both of them. So this chart, I think, is a fun chart for us all to look at. Now this chart shows growth, but it's not just about growth at NeoGenomics. And if you look at the next graph, you can see that we're also focused on profit.
And we're also focused on being an efficient producer of the testing that we provide. This chart shows a track record of our improvement and the cost of unit cost of our tests, average unit cost. And you can see that through quality management techniques, through process management and automation and other reasons, we've been able to improve the efficiency of our testing process. And we've had a lot of success here in reducing our cost per test each and every year. Now in 2019, you can see an uptick in our cost per test, but this is caused primarily because by the acquisition of Genoptix.
Genoptix testing came into us with a higher price per test, but also a higher cost per test. And I think in the future, we're very focused on driving down continually our cost per test. I would say this is not done by the way through layoffs of people. This is done through good old fashioned quality improvements, process improvements, volume gains and automation. Now the next page is a graph which shows that our Pharma Services division is also growing.
In fact, it's growing even faster than the Clinical Services division. And I'll orient you to this chart. It shows the last 5 quarters of activity here and the tall light blue bars show the backlog. Now backlog is signed contracts that we have entered into with our customers. So you can see at the end of quarter 1, we had over $147,000,000 of signed contracts in our backlog.
Now the smaller dark blue bars represent revenue and the green bars show the number of new signed contracts that we enter into in each quarter. The key message on this page is that our revenue is going to continue to grow pretty rapidly we think because we're signing new contracts at over 2 times the pace that we're actually recognizing revenue and our backlog is very, very healthy. So we believe that there's a lot of growth in the future for our Farmer Services division. Now importantly, we're also investing in our business. These are 6 relatively recent examples of investments that we've made in growth.
Our Neo team has coined the phrase Neo time because it seems that we do about twice as much as we intend to do in very little time here and you can see that in this chart. Our Pharma Services division, we've invested in a new lab China, which should be open in the fall of 2020. Just in January this year, we acquired the oncology division of human longevity. It gave us a very nice capability for a whole exome, whole genome sequencing, which is an advanced application of next generation sequencing. Just 4 weeks ago, we raised over $300,000,000 in a financing of common stock and debt, which has bolstered our balance sheet very nicely and allows us to pursue some growth opportunities.
Just 2 days ago, we announced that we have invested in and formed a strategic partnership with a company called Innovata for liquid biopsy testing. And as we speak, we are bringing up COVID-nineteen testing. And we're doing this, frankly, altruistically to frankly help America return safely back to work. And we've begun to do some COVID-nineteen testing. We're ramping this up very rapidly.
And within just a matter of a few more days, we will have a very large capacity to do COVID-nineteen testing for our country. We're also investing in capacity through new headquarters and lab facility that we're constructing as we speak in Fort Myers and we'll show you some renderings of that in just a minute. Now there are 3 specific areas of growth that I'd like to just call your attention to. The first is our investment in growth through next generation sequencing. And we gosh, late last year put a considerable amount of time and energy and focus in enhancing our next generation sequencing capabilities, both for hematologic cancers as well as solid tumors.
I think today, we have very high quality tests available here. We have extensive capabilities. We perform more than 30 next generation sequencing multi gene tumor based panels. We offer these very powerful tests for purposes of making diagnosis, confirming diagnosis, classifying disease, predicting response to therapy and some of the other things that you see in the middle of this chart. And today, I think by any measure, we're considered to be a leading provider of next generation sequencing in this country.
We're also leaders in something called companion diagnostics. So these are tests that accompany drugs and are often required prior to the drugs being prescribed. We do a lot of work in companion diagnostics in our pharma services division as we help drug companies in their drug development process. And then we have the capability to offer companion diagnostic tests through our clinical division. Now this chart highlights a real success story, but we have a lot of success stories.
This success story was a case study in KEYTRUDA. KEYTRUDA, as you know, is a blockbuster immuno oncology drug by Merck. And we performed frankly a lot of the PD L1 testing, which is a companion diagnostic test for KEYTRUDA for Merck as they went through their drug development process. And today, I think NeoGenomics performs, we've heard as much as half or more of the PD L1 testing that's performed in America. We're also investing in informatics as a way to speed companion diagnostic tests and to help drug companies match better patients with clinical trials and patients with exciting therapies that are new and coming into the marketplace.
Now we're also investing quite heavily in our pharma services division. This is a very strong and quite unique business in and of itself. Although in partnership with our clinical division, it is very powerful indeed. Here we have a lot of breadth and depth of capabilities. We have very strong scientific leadership in our company.
You can see some of the stats at the bottom of the page here. We've grown our backlog very significantly. Our revenue is growing very, very nicely in this business and we think that the uniqueness of this business is going to drive growth for NeoGenomics for quite some time. Now as we end the presentation, I'd like to show you some fun renderings of another investment that we're making. So this is a rendering of the new 150,000 Square Foot lab and admin building that we are constructing as we speak in Fort Myers.
I just drove past it on the way to the office this morning. They're putting blocks up and it's very exciting to watch this go up. We're expecting to move into this new lab and headquarters building at the during the fall of next year 2021. And this facility is going to allow us to do more testing for East Coast clients in Florida. Right now, we're shipping a lot of that work out to California, so it'll allow us to provide better service for East Coast clients.
It creates a lot of capacity for us for future growth. And now I think some of you know we're in 5 separate buildings here in Fort Myers. So it will allow us to consolidate into one new facility and we're really looking forward to it. This is another rendering, another perspective of the building. It gives you some sense for the facility.
On the right hand side, you can see our admin headquarters facility. And on the left hand side of this slide, you can see the lab facility, which will be a 2 story facility. And so we're very excited about this. So I will just summarize by saying, gosh, it's really fun to be at NeoGenomics these days. We're very excited to have grown our company to be really a worldwide leader in oncology testing.
As you can tell, we have significant competitive advantages, a lot of strengths. We, I think, have a very good reputation for quality. It's very important to us and we have a very exciting future here. So thank you for being shareholders and thank you for listening to this presentation. And we would love to be able to answer any questions that you have.
52 at this time. You may also type your question in the ask a question box located on the website. One moment.
This is one disadvantage by the way of our virtual town hall meeting because we always have such great questions from our shareholders. But you can navigate the system, we'd be happy to try to answer whatever questions you have. Okay. Well, if there are no questions, I would like to say thank you very much for joining us for this year's meeting of stockholders. And we sure hope next year that we can meet in person once again and get to see the familiar faces of investors that have been with us for so long and those also who are new investors in our company.
So thank you very much. And please don't hesitate to call us if you have further questions. Goodbye.
Ladies and gentlemen, this concludes today's conference. Thank you for participating and you may all disconnect. Have a good day.