Hey, everyone. Good afternoon. I'm Tejas Savant, and I'm on the life sciences team here at Morgan Stanley. Before we begin, for important disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures, and if you have any questions, do reach out to your sales rep, so it's my pleasure this afternoon to host Veracyte, and speaking on behalf of the company, we have CEO Marc Stapley and CFO Rebecca Chambers, so thank you, guys, for doing this. Appreciate it. Marc, maybe to kick things off, just talk to us about what you view as Veracyte's key accomplishments in 2024, and what are you most excited about heading into the new year?
Yeah, thanks very much for having us, and before I get in, maybe, you know, just make a statement about our Safe Harbor. To the extent we're making any forward-looking statements today, we'd expect those to be covered by that Safe Harbor statement, which can be found at www.veracyte.com. Thanks again for having us. So to your question, regarding, you know, our accomplishments so far in 2024, I'm really excited about the progress we've made on a number of different fronts, and a couple I'd like to highlight. Firstly, the growth in our core business, our core testing business, has exceeded our expectations again.
Mm-hmm.
And, you know, we significantly raised our estimates for that at our last earnings call, having had an incredible core testing performance in the first half, driven by Afirma and Decipher, and I'm sure we'll get into the reasons behind that. In addition, the progress that we are making on our three strategic growth drivers, one of which, MRD, came from our acquisition in the year of C2i. And so I'm very excited about our MRD platform and the opportunities that that presents and the optionality that that acquisition gives us as well. You know, and then just in general, the progress that we've made as a company on our financial performance, and one of the things is, you know, that I would highlight, is that we turned, I think, a really important corner in terms of profitability.
Mm-hmm.
In the second quarter, we posted 21% adjusted EBITDA margin.
Which, I think, you know, we believe, is leading in the industry, and I think really a demonstration of the very focused approach that we have to financial performance, combined with the growth that we're seeing.
Got it.
And just one more thing to add there. Obviously, that focus on profitability has translated into an incredibly strong balance sheet.
Mm-hmm.
We have guided that we're gonna end the year at $260 million to $270 million of cash on hand. Obviously, don't have any debt, and so I think that's also very differentiated.
Got it, so let's start with Decipher. Just in terms of the market, you know, the penetration for prostate classifiers is about 35%, so plenty of room for future growth. What are the factors you believe have kept this market from being much further along in adoption? Is it awareness, or is it prior auth? And what are you doing to help grow market penetration?
Yeah, and 35% is what we estimated for the penetration of all the tests in this market at the beginning of the year. And I tend not to think about it in terms of what's kept the pace from going even faster because, frankly, you know, the pace of adoption has been quite astounding in the last three years.
Mm-hmm.
You know, as we've gone from a position where, you know, we've literally tripled the number of tests from around seven thousand a quarter to almost twenty thousand a quarter that we've done in Decipher. And so, you know, I've actually been very encouraged and very excited by the pace. Having said that, to the point of your question, you know, if I think about it from a patient perspective, our vision is clearly that every patient with prostate cancer should get a molecular diagnostic, and we'd love that to be the Decipher test.
And so, you know, I think as we go forward, we think about making sure that those guidelines, the, you know, guide to use Decipher in the case of all NCCN risk classifications, low, intermediate, and high, and then in the future, metastatic, means that, you know, 100% of new prostate cancer patients who are dealing with this terrible disease should be able to to benefit from the Decipher test in the future. And so, you know, our estimate is, that we think this market can grow to 80% penetration.
Mm-hmm.
I would never go so far as to say a hundred, because there's always reasons why you never get there. But to your point, there's a tremendous amount of opportunity for it to go from where it currently is to that 80%.
Got it.
And on the prior auth piece, that hasn't really been an impact for us. We have put in place, over the last number of years, proactive measures on prior authorizations, and so, you know, we have a whole team and operational process that enables every, you know, non-Medicare test to be done prior auth before. So, I don't think... I don't view that as a challenge- Mm-hmm ... on the reimbursement front or on the penetration front, nor do I view reimbursement as a challenge-
Got it.
-especially in light of, the large payer that we get contracted in the first quarter-
Mm-hmm, got it.
.- which I'm sure we'll get to as well.
Yep. Yeah, that's actually my next question. So, you know, I think you went in network with, you know, that large commercial payer that was about thirty million lives covered in the first quarter. Where are you today in terms of total lives covered, and are there any major holdouts at this point that would represent step function opportunities to broaden out reimbursement?
Yeah, that was a very, I think, you know, pleasing from our standpoint and long overdue milestone achievement for us in the first quarter, and we've seen the benefit of that. We're now over two hundred million covered lives in Decipher. I would compare and contrast that with Afirma, which is at a 275 million and has been, you know, obviously on the market for a lot longer, and we've been contracting with commercial payers for a lot longer. Plus Afirma is a lot more biased towards commercial payers than Medicare. But I'm very pleased with the way we are on Decipher.
Mm-hmm.
There aren't any major holdouts, but, you know, I think that last one in Q1 was probably the one that we needed to get over the fence. But there are lots of, you know, conversations still to have. And clearly, with the guidelines, the KOL support that we have, those conversations become a lot easier with over a hundred studies supporting Decipher and strong evidence. Again, you know, those are the kinds of conversations that it's easier to have. And so, yeah, I see us blocking and tackling our way through t hose remaining payers over time.
Got it. Switching gears to the metastatic prostate expansion, that's underway. WPS recently established an LCD as well. You've talked about the setting representing an incremental sort of 30,000-patient opportunity for you. Who are the players in this metastatic setting, and has Palmetto now issued an LCD as well?
Yeah. So, remember, the total incidence for prostate cancer is 300,000, and that includes the 30,000 for metastatic. And up until this point of the recent reimbursement LCD for metastatic cancer, we were only able to serve 90% of the market. Now, as I said, we can serve 100%. I'm not aware of anyone else who's able to, you know, address that metastatic market.
Mm-hmm.
And so, you know, it's really important for us, and there's a few steps that we need to go through to do the necessary tech assessment, training of the sales force, and so on. Remember that just like we did with Decipher in the beginning and with Afirma, we're changing practice.
Mm-hmm.
And so now, in this situation, you're changing practice where a test typically hasn't been used for these metastatic patients. And you know, the reimbursement now, I think, is good validation that there's utility here. And so now it's a case of training the sales team and having them go out, and you know, educate physicians-
Got it.
- and drive that adoption.
Got it.
The LCD from Palmetto was f inalized a couple of weeks ago. We then have to go through a tech assessment process, which we're in the midst of, so we hopefully will have reimbursement early next year, and then we'll do the awareness campaign that Marc cited, and so we're excited about it as a potential growth driver for twenty-five and beyond albeit more in the back half of twenty-five.
Fair enough. On the commercial organization, can you remind us the number of urology sales reps today? And do you see an opportunity to expand that further to drive growth, assuming that it would become harder and harder to penetrate, you know, the market as you move into the lower prescribing accounts?
Yeah, and I think that's a really important point that some may not fully appreciate, which is the leverage that we get from our commercial team. By the way, I wanna start by saying our commercial team, both on Decipher and Afirma, are fantastic, and they do an incredible job. But in terms of actually growing that team, I'll talk a little bit historically, and then- Mm-hmm ... go forward. But historically, if you think over the last, you know, three years that we've been driving Decipher, we've probably added 15 sales reps to now be roughly 50. And so, you know, you can see the revenue is clearly growing a lot faster than the sales team is growing, and that just demonstrates the leverage that we can get.
Going forward, if we thought we could, you know, add more sales team to drive more volume, we clearly would have done that. There's actually an optimization equation that you get into here in terms of territories and territories s plitting and how much a rep can cover. And you have to be very thoughtful about, you know, changing and introducing new territories, always create some disruption. And so, you know, I think we've really found a way to optimize that, and our commercial leadership has done an incredible job doing that. And so, no, I don't see a great deal of, you know, future necessary investments. Certainly, you know, I'd say it's consistent with what you've seen in the last three years.
Got it.
I would say that actually flows across the portfolio as well, right? Whether you're talking about Decipher or Afirma. On the IVD side, you know, we're in this enviable position where we're serving specialty markets and therefore, we can, you know, grow the sales team as the, as the revenue plays out, and that just provides the immense leverage across the entirety of the portfolio that Marc cited.
Got it. On the product enhancement side, Marc, any thoughts on what's on the cards for Decipher, similar to what you've done with Afirma, that could, you know, potentially deliver more value around the test?
I'd say not really. I mean, most of what we've had to do on Decipher is focus on expanding the indications and, you know, including metastatic.
Mm-hmm.
We launched Decipher with the GRID research use-only tool and capability that is driving and fueling a lot of the evidence development that we're seeing in a real-world setting, and the test performs incredibly well across, you know, many categories of the care continuum, from prognosis now, you know, clearly moving into more prediction based utility. And so, you know, we're very happy with how the product's performing. And other than, you know, what we might do internally from a lab operations and COGS perspective, that would be largely invisible to the external world, that the external product is the product I see for the future.
Got it.
I think on that one, just one quick thing to add is, effectively, you know, the benefit of those enhancements on the Afirma side have really been driving the cadence of going out and seeing customers quarter in, quarter out. We're able to do that through the massive body of publications that are generated for Decipher, and so it's a little apples and oranges that way.
I see.
I think the most important thing is, you know, are you bettering the product, the science, et cetera? And Decipher was a little bit ahead of that with regard to GRID publication evidence, than Afirma was.
Got it.
And so we've kind of now gotten them to be a little bit more parity.
Got it. On the competitive landscape, you know, Decipher has shown, you know, really impressive growth and share. Who do you run into most often, and what has allowed you to be the dominant player in that market?
Yeah, so Decipher didn't obviously start that way. Unlike Afirma, where we created that market for diagnostic testing, in thyroid cancer, that market already existed in prostate cancer.
Mm-hmm.
Go back to the point I made at the beginning here. From a patient perspective, we want to see every patient with prostate cancer get a molecular diagnostic test. And as I said, we'd love that to be the Decipher test. And the way that, you know, we drive that in terms of differentiation of the test is a lot of different factors. One, and most importantly, this is a decision we made in Decipher, it's a decision we made in Afirma at the very beginning, is to run a whole transcriptome. And that was a very conscious decision because we fundamentally believe that more data is better, and that's really proven itself out in Decipher. So what does a whole transcriptome give us in terms of differentiation?
You know, first and foremost, obviously, we have a very high-performing test and a lot of evidence to support that statement. Secondly, the research use-only GRID, which is ordered by roughly 50% of patients, of physicians, enables them to do more research and oftentimes investigator-led research that we don't necessarily sponsor or even get involved in that creates this huge flywheel of data generation, creating more evidence, and evidence generating insights, and insights fueling adoption. And then the greater real-world evidence that you get from adoption keeps that flywheel turning. Which is why Decipher, to Rebecca's point, has so much evidence out there to date, over a hundred studies. And so that is one of the real differentiating factors that comes from our data-driven decision to run a whole transcriptome.
And then, of course, the guidelines. I talked about the guidelines before, but just to put that in context of the market, Decipher is the only gene expression test with the Level 1 B guidelines. And not just the guidelines themselves, but a very specific table that references the different NCCN risk categories: low, intermediate, high. Depending on the Decipher score, how the physician should think about treating that patient, from active surveillance to single therapy to, you know, combination therapies to surgery, and so on. And so having that level of clarity around decision-making really, I think, helps. And we carried out a survey of physicians recently, and I think very encouragingly, 80% were aware of these guidelines, which is great. That education's been done. 75% said they would use that table to guide their decision making.
Mm. Got it. You know, you've had, in a sense, you've had the market to yourself, you know, to the extent that, you know, Prolaris has been playing catch up on evidence generation, and, Oncotype obviously went through that switch to MDxHealth. Are you starting to see them sort of rework their strategies toward, you know, as they try and play catch up in this market to Decipher?
I couldn't tell you what I think they're necessarily going to do. I think the most important thing from our standpoint is that same flywheel I talked about for evidence development.
Mm-hmm.
Because, you know, like I say, when you've got a test that is used as broadly now as Decipher, even though the market's only roughly a third penetrated, but Decipher is broadly used. It's well recognized by KOLs, not just in the U.S., but around the world, and so when a new study is commenced, it's often commenced using Decipher.
Mm-hmm.
Retrospective studies are done using the whole transcriptome analysis that we're able to provide. So, you know, that just, as I said, creates more utilization of Decipher, more studies involving Decipher, and so the bar just keeps raising for evidence. And so I, I think that creates a little bit of a barrier to entry for others in that regard. But that's our focus is, y ou know, it's an important market. We want to see all patients having access to molecular diagnostic tests, and if we keep driving the evidence development around Decipher and others do, then that should continue to be the market-leading test in our opinion.
Got it. You've sort of de-emphasized the bladder part of the Decipher portfolio a little bit. Talk to us about how you're thinking about that opportunity. Are you waiting for prostate to hit a certain threshold before you broaden out the focus?
Yeah. Well, I'd actually, I'd actually say we've re-emphasized our focus on bladder now, given our MRD acquisition, more so than anything else. You know, one of the things we recognize, and Rebecca mentioned earlier, the specialty diagnostics, you know, focus that we have and the channel that we have, we have access to urologists with Decipher. And so that creates a window and an opportunity for us in bladder as well and other urologic cancers.
Mm-hmm.
Having acquired MRD capabilities, the whole genome approach, and we can talk about that later, I'm sure, that gives us an opportunity to launch what I think of as our first of many potential future tests in muscle-invasive bladder cancer. And so our internal focus in that channel, beyond Decipher Prostate, has really turned to muscle-invasive bladder cancer MRD.
Got it.
Because that's where we think the, you know, clinical utility is. We have the capabilities to do it, the pathway to reimbursement is there, and so that's now our new focus. It doesn't mean that-
Got it
-we will not also focus on bladder diagnostics, prognostics.
Mm-hmm.
Though, that's still within our wheelhouse, and just a question of prioritization.
Fair enough. Switching to Afirma, Marc, you know, it's a more established market, 60% penetrated. Could you elaborate on your strategy for getting that penetration to that sort of 80% level that you talked about? What are the low-hanging fruit that remain? Do you think you need to expand the sales force further to capture the opportunity?
Yeah, great question. We've seen a really nice resurgence in Afirma, and over the last couple of years, it's even surprised us relative to our own expectations.
Mm-hmm
For growth, and a lot of things, and Rebecca mentioned earlier, a lot of things that we've done. We launched our TERT promoter gene. We launched GRID. We've done other things in the whole physician workflow that have really enabled us to have regular conversations with our physician customers, and that has led to, you know, even greater interest in the test. And so we're very happy with the level of penetration. To your point, the market itself is around or was around 60% penetrated at the beginning of this year, and we also think this market can get to around 80%, if not more. And, you know, so clearly there's the white space there that we can go after in terms of under-penetrated part of the market. But there's also share gain opportunity here.
Mm-hmm.
I think it's fair to say, with the numbers that we've been seeing lately in the growth, and the information that's available to us publicly, that we have been taking some share now.
Mm-hmm.
In Afirma as well. Some meta-analyses came out that support the test, including some real-world evidence that showed that Afirma performed even better than its own clinical validation study.
Mm-hmm.
Performance of the test continues to encourage further utilization. I would also add to that. We just got coverage for the Bethesda V indication, and so that adds another 30,000 patients, so that's a tailwind going forward, and that's effective in late July. You'll start to see that in the Medicare setting, which is about a third of our patients, towards the end of this year and beyond.
Got it. So yeah, that's actually a good segue to my next question. On GRID, you know, good traction there. I think you said about half of the physicians ordering Afirma on 2Q chose to receive additional information from GRID. Can you just provide examples of how physicians are using that data today in the field?
Yeah, again, it would be used to drive some additional studies, and we've seen some of those where, you know, we presented three of them at ENDO, where in several of the cases, it was a retrospective analysis of almost fifty thousand patients.
Mm-hmm.
One example is, you know, the expression of PSMA and how t
Mm-hmm
-how that shows up in thyroid cancer, which was an important one as well, and there were a couple others that we had at ENDO. I think, you know, the key takeaway from those is it's helping physicians look for new biomarkers or new combinations of biomarkers that might, you know, suggest aggressiveness of the thyroid cancer, specific treatments, you know, prognostic outcomes, and so on, so really excited about that. It's only been on the market, what is it now? Less than a year so far-
Mm-hmm
-that we launched. In fact, we launched GRID, I think, maybe even-
Pilot in Q4.
Yeah.
Last year. Yep.
Like, late last year, so it's almost a year, and we're already seeing great progress and studies already coming out.
Got it. And then on the patients with the Bethesda V nodules, I think you said thirty thousand patients. How are you thinking about the associated ramp for Afirma? What fraction of your current volume involves patients with Bethesda V nodules, and what proportion of that volume comes from Medicare?
Okay. So on the Bethesda V patients of around 30,000 a year, the patient population, Medicare commercial split, is the same as the broad population.
Okay.
A third, two-thirds, if you will, Medicare, Medicare Advantage, and then on the commercial side. We are running tests for commercial payer patients on the Bethesda V side. And that typically is kind of in the, you know, five to 10%-ish of total volume range. And, you know, I think that is. You know, going forward, we'll have a benefit to ASP as we start to get paid on the Medicare side to that end.
Got it.
On the commercial side, you know, we'll be able to have more forthcoming conversations as well-
Mm-hmm
-on getting a higher reimbursement value for those Bethesda V patients-
Mm-hmm
-on the back of the LCD. And so our managed care team will be going through that whole process over the coming years, similar to the one Mark talked about, going payer by payer, contract by contract, and just takes time. So I would say it's a nice tailwind and a pretty large established market that still is growing. And in general, it's aligned with our approach to, you know, broaden the market through indication and expansion and gain incremental coverage. So all good.
Got it. So between, you know, Bethesda V and the GRID tailwinds, plus the recent performance you've had in Afirma, why is high single digits still the right framework to use for steady state growth?
Why, sorry, what the-
High single digits sort of Afirma growth.
That's not our number, so it must be yours. But I think when it comes down to it, we absolutely are excited about the continued prospects of growth for the Afirma product. And you know, we've been in the mid-teens now for a number of quarters, and we think that we have ample growth between you know, the growth of the market, which is low to mid-ish single digits, penetration and share gains. And so there's still a decent amount of white space. So in any given year, you know, comps are gonna be what comps are.
Mm-hmm. Mm-hmm.
You know, I'm less concerned about whether it's high single digits or something else, and I'm more concerned about continuing to penetrate that market and demonstrate strong growth for Afirma. Both Afirma and Decipher just are. You know, Afirma, obviously, is in its later stages, but between the two of them, you know, we have been nothing but forthcoming on our confidence level in terms of the ability of those two things to really bridge us to our long-term growth drivers. We have extreme confidence in our ability to effectively deliver outsized revenue growth to that end on the back of both those products.
Got it. So on nasal swab, Mark, the Nightingale Study continues to enroll, but it's seen some delays in expected enrollment. It sounds like one of the challenges is just stringent inclusion criteria.
Yeah.
Is there anything you can do to lower that requirement without compromising the integrity of the trial? And you've got about a hundred sites enrolling at this point. So, is there any room to expand that further a little bit?
Yeah. So Nightingale is our pivotal trial for demonstrating clinical utility for the nasal swab test, and as you mentioned, we have around 100 sites enrolling right now, and our goal is to get to 2,400 patients. You know, our priority is a pristine clinical study, not velocity of enrollment. You know, one thing that we obviously did, as you would typically do, is you know, make sure that there's stringent criteria for which patients are eligible to be in either the control arm or the study arm.
And of course, we have you know, it's important that we have the right cohort of patients in both of those, so we can demonstrate very clearly that, when nasal swab is utilized, it changes the physician behavior in terms of treating patients with invasive procedures when they're low risk, or taking patients to more you know, aggressive therapy or aggressive treatment when they're high risk. So we wanna be able to demonstrate that very cleanly. A good example of one of the stringent criteria is, you know, it has to be a new nodule without an existing treatment plan.
Mm-hmm.
If we had a patient who had the nodule identified, even in a different institution, six months or a year ago, and had already been treated or even a treatment plan developed and not implemented, that could affect whether they're in the control arm or the study arm. It would absolutely affect the outcome. And so, you know, there's nothing I'd want us to change in terms of, you know, the study design itself, and I don't think adding more sites is helpful. By the time we add, contract, initiate, and get those sites started, we're more likely to have finished the enrollment. And so we'll let people know when we're done with the enrollment.
Mm-hmm.
But I'm very happy with where we are and the pace. The pace is what it is. What's more important is the quality of the study.
Got it. And in terms of initial data, what's the time frame for that in, as best as you can,
Yeah, I'll, I'll cover that, and then, Rebecca, you might wanna weigh in here as well.
Mm-hmm.
But the way I think about the time frame of this is, once we finish the enrollment of the final patient, we obviously have to follow up and, you know, track those patients who are benign. And, you know, the standard of care there is it takes two years to declare that every patient-
Mm-hmm
.- you think is benign, is actually benign. But there's good evidence to suggest that something in the low 90% of patients can be called benign after one year. And so, you know, we'll look at both time frames-
Mm-hmm
-and you know, determine whether or not that gives us what we need in order to drive clinical utility. But that in and of itself makes this a very long-term prospect because then you've got to go to publication and reimbursement.
Yeah, and then that's where I'll pick it up. So this is the longest of our long-term growth drivers.
Mm-hmm.
I think that is. You know, I think that's well understood. It's not in our three-year numbers, it's in our ten-year numbers, and I think when it comes down to it, you know, we have so many catalysts in front of us, between Afirma, Decipher, the IVD strategy, MRD-
Mm-hmm
-that, you know, we're sitting here in a, what we believe to be a relatively enviable position.
Got it. Switching to the MRD side of things, Mark, talk to us about the competitive landscape. You know, obviously, it's a large market, ample room for multiple players here, but an increasingly competitive one. How is C2I differentiated from some of the tumor-informed products that are also using a whole genome sequencing approach, such as, you know, Personalis or, Myriad?
Yeah, MRD is an important market, you know, for us. We've been looking at this market for a number of years, and we wanted to make sure we had an opportunity to participate here and an option here, and it's a very crowded market, as you say.
Mm-hmm.
What I'm really excited about with our acquisition of the C2i asset and team is the whole genome approach, which has a number of advantages. And when I say whole genome, you mentioned others who do whole genome. We don't just do the initial landmark sequences in as a whole genome. We do the liquid biopsy follow-ups in as a whole genome, which means a couple of things A, we don't have to create a personalized assay, so there's a turnaround time benefit related to that B, with you know, a whole genome, we need less blood as well, and we actually think the performance of the test is very strong based on the data that we have. So there's lots of and plus, of course, back to that flywheel of data generation-
Mm-hmm
-we actually believe ultimately this market needs to be a whole genome market, and that data that we'll generate will fuel that flywheel for MRD as well, and we'll continue to see more studies and more discoveries and more evidence there. Now, you know, we're starting with muscle-invasive bladder cancer. That's a market I said earlier. We already have that channel.
Mm-hmm.
And there's a path to reimbursement. We'll have that assay in the first half of 2026. But this is a platform. This isn't a single product assay.
Mm-hmm.
This is a platform that we could expand into other indications, and you can imagine those indications might include the ones that we already have a presence in, and others beyond that as well. And so, you know, we'll take our time to do this right. The muscle-invasive bladder cancer will demonstrate the power of the platform, and we'll take it from there.
Got it. Is there a risk in your mind, Mark, that perhaps it's a little bit of overkill for the MRD setting? I mean, obviously, whole genome sequencing, you know, gives you more data back, and that's a good thing. That can't be a bad thing. But there are examples in the past where, I mean, at Illumina, for example, when folks were expecting, you know, whole genome sequencing to have proliferated at a much more rapid pace. And, you know, it's there in the rare and undiagnosed disease setting, but elsewhere, it's still very much the targeted approach. So as you think about MRD playing out, what gives you the conviction that, you know, using whole genome sequencing, even for the surveillance, is going to be the differentiator?
You know, and I know MRD is a little different too, you know, the prostate market, for example, but again, our whole transcriptome approach, we could easily have just done a 22-gene PCR assay, and we didn't.
Mm-hmm.
And that evidence generation benefit has really led to Decipher becoming the market leading test-
Mm-hmm
-as we spoke about earlier. We actually think that, you know, with the downsides of doing a whole genome relative to the upsides.
Mm-hmm
Make it for us make sense, especially over time, and so you know, there may be an initial burden, but there's a long-term benefit.
Got it.
And as I say, we'll launch thoughtfully, indication by indication. And so we'll be able to optimize for that benefit over time.
Got it. And then, of course, I mean, the cost of sequencing keeps coming down, and that's gonna be a benefit. But, beyond that, are any other COGS initiatives in the works that you have in mind to make the COGS aspect a little bit more manageable, given the sequencing intensity?
Yeah, no, I think there's a number of different levers to pull, and not just on the MRD portfolio, but on the broader portfolio.
Mm-hmm.
Obviously, the cost of sequencing is one, and it's something that we're looking into. I'll be it, there are considerations on the other side as well, right?
Mm-hmm.
You wanna make sure you're protecting reimbursement and all those other things. So, we absolutely have a whole portfolio of projects that are going on. Too early to talk about timelines or magnitude, but we're super excited about them, and we're starting to really see what this could look like. And, you know, I think when it comes down to it, the Afirma platform is on next week-
Mm-hmm.
-and the Decipher platform's on arrays, and so we still have ample opportunity there.
Got it.
And obviously, that'll be important as we try and offset, you know, reagent price increases, labor increases, and stuff like that. But we'll have a lot more to talk about in the coming period of time on that one here.
Got it. Then on the MIBC launch in the first half of 2026, what remains to be done at this stage, and where are you in terms of the tech assessment and lab automation process?
I mean, that's what we're working on.
Yeah.
You know, putting this, doing the R&D project to get this ready for our lab, transferring it to our lab, doing the tech assessment, getting through that, you know, review and feedback period. And so, that's what leads to the first half of 2026 is our timeline.
Mm-hmm.
You know, no change to that.
Got it.
Yeah, if we wanted to launch earlier without reimbursement or without a line of sight to reimbursement, that could be a faster timeline, but that's not something that we feel is appropriate for our financial profile.
Got it. Is there a world in which we could see you do a controlled launch, gated volumes ahead of reimbursement?
Potentially. I mean, it's nascent to-
Yeah.
-talk about that right now.
Okay. As we think about the amount of, you know, data that's generated for MRD, you know, given the required longitudinal blood draws, particularly for whole genome sequencing, you know, obviously, you know, the challenges associated with data storage and analysis, well, you know, are going to increase. So how are you looking to keep a lid on the rising costs associated with storage once the C2i test sort of launches and starts to ramp?
Yeah, that's a real, really good question, and we've been working on. I mean, actually, in advance of our C2i acquisition, just so that we can really benefit from and capture the both external and internal benefits of generative AI and other technologies that are coming. We've really worked hard on our infrastructure, our cloud strategy, building the backbones that we need in order to support this type of you know, heavy data application. And then, of course, we acquired C2i, along with a very talented team who've been thinking about that themselves for many years. So put that together, we now have a very experienced team on both the infrastructure and application side.
Mm-hmm.
And, you know, so, and managing our storage and compute costs is a key part of that whole strategy, and a lot of what they're doing is figuring out how to do that more most effectively and to optimize.
Got it.
And to that end, it is something that we obviously burdened our business case with when defining the purchase price for C2i and, you know, the COGS profile on a go-forward basis, without making large assumptions around declining costs there as well.
Mm-hmm
Which obviously we've seen similar to sequencing.
Got it. Mark, quickly on the IVD strategy, right? Are you still as convinced that this is an important strategic initiative for Veracyte? You know, you've got a bunch of assays that you're bringing over. You've tweaked a few things there, you know, NGS, PCR, etc. , versus Prosigna, Oncotype, but-
Yeah
-talk to us about that.
We are very, very much so, and again, back to patients, right? There are patients in Europe, in the case of prostate cancer, even greater than the U.S., 500,000 , who should be getting a prostate cancer test.
Mm-hmm.
So you know, we believe we have the strategy and the approach to make that happen in a financially prudent and cost-effective way, and our multi-platform strategy is fueling that. We have three IVD products in development right now, and I'm really excited about launching prostate as a PCR test in 2025, and then Prosigna on NGS, and after that, nasal swab. So yeah, we continue to believe very much in this approach and how we're going about it.
Rebecca, let's wrap up with just an early framework for twenty twenty-five. I know you don't wanna guide, but guardrails for growth for each franchise, and then you know, you've got really good margins. You said 25% EBITDA margin. I mean, is that sort of a two-year thing? Is that sort of further beyond that?
Yeah. So, so fair question, and then you're absolutely correct, I don't want to guide. Partially because, you know, the time of year, it's not appropriate to do so, and partially because we're in the midst of defining, you know, and having those conversations with the team. I will say, at this point in time, obviously, we're incredibly committed to our financial differentiated-differentiation that we have delivered to date, and, you know, going forward with something that's not dissimilar and continuing to make strides.
Historically, we've, you know, we've had leaps and bounds, and I think from here, both Mark and I, and the broader management team are committed to delivering incremental leverage to the Adjusted EBITDA line, getting to that eventual goal of 25%, albeit, you know, small, there'll be smaller increments than the, you know, five or 10 percentage points that we've seen over the last couple of periods. So we're super excited about our strong balance sheet, our strong P&L, and what we can do to continue to both serve patients, which is obviously part of our critical mission, but doing so in a way that's, you know, responsible, and investing for the future growth while still delivering profitability.
Awesome. Great to hear. Thank you so much, both, for joining me today. Appreciate it.
Thank you.
Thank you. Appreciate it.