Idxg Corporate Presentation Global Online Growth Conference - Oct 2016
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Transcript of Idxg Corporate Presentation Global Online Growth Conference - Oct 2016
October 2016
Corporate Presentation
IDXG
This presentation contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of
1934 and the Private Securities Litigation Reform Act of 1995, relating to our future
financial and operating performance. The company has attempted to identify forward
looking statements by terminology including "believes," "estimates," "anticipates,"
"expects," "plans," "projects," "intends," "potential," "may," "could," "might," "will,"
"should," "approximately" or other words that convey uncertainty of future events or
outcomes to identify these forward-looking statements. These statements are based
on current expectations, assumptions and uncertainties involving judgments about,
among other things, future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict accurately and
many of which are beyond company’s control. These statements also involve known
and unknown risks, uncertainties and other factors that may cause company’s actual
results to be materially different from those expressed or implied by any forward-
looking statement. Known and unknown risks, uncertainties and other factors include,
but are not limited to, our ability to adequately finance the business, the market's
acceptance of our molecular diagnostic tests; our ability to secure additional business
and generate higher profit margins through sales of our molecular diagnostic tests, in-
licensing or other means, projections of future revenues, growth, gross profit and
anticipated internal rate of return on investments. Additionally, all forward-looking
statements are subject to the risk factors detailed from time to time in the company’s
periodic filings with the Securities and Exchange Commission (SEC), including
without limitation, the Annual Report on Form 10-K filed with the SEC on March 5,
2015 and in the company’s Form 10-Q filed with the SEC on November 12, 2015.
Because of these and other risks, uncertainties and assumptions, undue reliance
should not be placed on these forward-looking statements. In addition, these
statements speak only as of the date of this press release and, except as may be
required by law, the company undertakes no obligation to revise or update publicly
any forward-looking statements for any reason.
FORWARD-LOOKING STATEMENTS
In addition to the United States generally accepted accounting principles (GAAP)
results, we disclose certain non-GAAP financial measures. A “non-GAAP financial
measure” is defined as a numerical measure of a company’s historical or future
financial performance, financial position or cash flows that excludes (or includes)
amounts, or is subject to adjustments that have the effect of excluding (or
including) amounts, that are included in (or excluded from) the most directly
comparable measure calculated and presented in accordance with GAAP in a
company’s financial statements. Management does not intend the presentation of
non-GAAP financial measures to be considered in isolation or as a substitute for
results prepared in accordance with GAAP.
Management believes that this non-GAAP financial measure, when presented in
conjunction with comparable GAAP financial measure, is useful to both
management and investors in analyzing our ongoing business and operating
performance. Management believes that providing non-GAAP information to
investors, in addition to the GAAP presentation, allows investors to view our
financial results in the way that management views financial results.
In this document, we discuss Adjusted Operating Loss, a non-GAAP financial
measure defined as operating loss from continuing operations excluding
amortization expense of acquisition related intangible assets and other fair value
adjustments. A reconciliation of this non-GAAP financial measure to its most
directly comparable GAAP financial measure is presented in the table attached to
the earnings release issued on November 12, 2015 and posted on the company’s
website investor section.
NON-GAAP FINANCIAL MEASURES
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Our Mission
We provide clinically useful molecular
diagnostic tests and pathology
services for evaluating risk of cancer
by leveraging the latest technology in
personalized medicine for better
patient diagnosis and management.
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Brief History
• PDI founded by Pat Dugan in 1988 who today still owns approximately 30%
• Previously a standalone, publically held, CSO business:
• attained a market cap of nearly $2 billion in December of 2000 focused on
leveraging its commercial resources on its own Rx products
• Acquired the assets of Asuragen for thyroid and endocrine cancer for $9 million and
upgraded to an NGS platform in August 2014
• Acquired RedPath for Pancreatic and GI cancers for $24 million in October 2014
• Sold the Commercial Services (CSO) business of PDI in December 2015 for $28.5
million; repaid debt and provided working capital
• Two state of the art CLIA-certified labs. Largest in Pittsburgh. Headquarters in NJ
• Additional pipeline tests include an assay for Barrett’s esophagus and biliary—both
launching in Q4 2016
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Overview & Key Accomplishments
NASDAQ listed company offering high-margin pre-cancerous diagnosis and prognosis tests
Rapidly growing revenues (60% y-o-y) and test volumes in proprietary, high-value space
4 proprietary offerings in two key verticals (Endo & GI)—Medicare reimbursement already secured for 3 products at highly attractive prices
High barriers to entry due to reimbursement, complexity of tests and intellectual know how
Cash collections expanding—$3.3 million in Q2 alone
Achieved New York State approval in Q3 2016—should yield an incremental 15%
Corporate restructuring continuing
Powered by PathFinderTG®
Our Marketed Molecular Tests
Current U.S. Market Opportunity
Pancreatic Cysts
$350MThyroid Nodules
$350M
GastrointestionaI Endocrine
Source: Company estimates6
Pancreatic CystsCancer Risk
Powered by PathFinderTG®
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The Fourth Leading U.S. Cancer Killer
Cervix Prostate Breast Lung
45,000new U.S. cases
39,590U.S. deaths 4,020
14,270
29,480
39,590 40,430
50,310
159,260
Source: ACS Cancer Facts & Figures 2014; all figures annual
5-year survival rate 7.2%
Pancreatic cancer 3% of new cancer cases in US, 12% of deaths of common cancers
Pancreatic Cancer
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PancraGEN™ (formerly PathfinderTG®)
Imaging Cytology Fluid Analysis (CEA , Amylase)
Molecular Diagnostics
Pathologist Review
• DNA quantity & quality
• Oncogene point mutations (KRAS, GNAS)
• Loss of heterozygosity (LOH) 25 markers measured
• Detailed quantitative molecular profiling integrated with first-line clinical findings leading to risk assessment and clear, management recommendations
PancraGEN – Integrated Molecular Pathology
34%
8%
52%
6%
CEA above 1000 ng/ul with High EUS
Benign
Statistically Indolent
Statistically Higher Risk
Aggressive
+
Virtual risk assessment using 13,000+ testing & 492 cyst registry pts9
120,000 Pancreatic Cysts Annually
• The clinical dilemma:– Current guideline tests are unreliable and
poorly predict cancer risk
Cyst fluid tested for CEA, amylase, and
cytology (1st line tests)
• The result:– 80% of all surgeries are for benign disease
Unnecessary healthcare costs
High morbidity (30%) and mortality (2%)2
associated with these surgeries
– Pancreatic cancers go undetected
Pancreatic cysts:
2-5%risk of cancerincreasing with age1
Pancreatic cysts:
80%surgeries are benign
Source: 1Gastroenterology Research and Practice Volume 2012, Article 1474652Gastroenterology 2015; 148:819-822
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The Endocrine Oncology
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Common clinical problem
~10-18 mUS Adults have nodules
Estimated
525,000thyroid FNA per year in US and growing
Thyroid Cancer Incidence*
*American Cancer Society
Thyroid Nodules
First microRNA gene expression classifier
ThyraMIR™ measures the expression of 10 microRNAs and,
when used in combination with ThyGenX™, yields both high
NPV and high PPV
ThyGenX™ and ThyraMIR™ combination testing can accurately “Rule in” and “Rule out” the risk of malignancy
ThyGenX™ and ThyraMIR™ combination testing addresses
a unmet clinical need for more actionable information in
the management of indeterminate thyroid nodules
+
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Yield of Molecular Reclassification
Cancer prevalence: 32%
38% “benign”
with 93% NPV
62% “suspicious”
with 47% PPV
SurgeryFollow
Afirma
Avoidable surgeries: 68% 33%
Indeterminate diagnosis
Combination testing provides accurate molecular reclassification without surgery
• 85% (6.7-fold) decrease in unnecessary surgeries (from 68% to 10%)
• 69% (3.3-fold) decrease in unnecessary surgeries relative to Afirma (from 33% to 10%)
• 65% (1.65-fold) increase in true benign yield relative to Afirma (from 35% to 58%)
•Pts with benign disease avoid surgery, 75% pts with cancer proceed directly to total thyroidectomy (red)
Surgery
68% benign outcome
Indeterminate diagnosis
61% “benign”
with 94% NPV
39% “malignant”
with 74% PPV
Combination testing
SurgeryFollow
10%
Indeterminate diagnosis
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• Combined test performance results in a 94% likelihood that a negative result is truly benign and a 74% likelihood that a positive result is malignant (based on a prevalence of 32%)
• The 74% likelihood of a positive result being malignant is a vast improvement over the “50/50” likelihood of the Afirma’s suspicious call
• The benign call rate for ThyGenX/ThyraMIR is SUPERIOR to Afirma®—allowing up to 65% more patients to consider a watchful waiting approach
ThyGenX™ / ThyraMIR™ Summary
The end result is a 69% decrease in unnecessary surgeries
relative to the Afirma test. (Labourier et al., JCEM 2015)
+
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Barrett’s Esophagus
Risk of progression to cancer
Powered by PathFinderTG®
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~850,000 Endoscopic screens
Annually
$2B Potential
Same PathfinderTG® platform
BarreGen™ commercial launch expected in 2016
~3.3M Adults
Source: Company estimates
BarreGen for Barrett’s Esophagus
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How may BarreGEN be useful?
• Current surveillance methods based on histology are inadequate at assessing risk of disease progression to HGD/EAC
• BarreGEN may help differentiate patients a low risk of EAC from high risk of EAC prior to visible HGD/EAC morphology
• BarreGEN can allow for more personalize management of Barrett’s patients including:
• Aid in strategies to prevent cancer (ablation)
• Avoid unnecessary ablative therapy
• Help monitor patients during surveillance
• Reduce healthcare costs
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Results:
• The mean ML in pre-progression biopsies was higher in progressors (2.21) than
nonprogressors (0.42; p<0.0001)
• BarreGEN had a high overall accuracy for predicting progression to cancer (ROC
curve AUC = 0.95, 95% CI 0.89-1), with all loci contributing to this performance
• Prior to progression, accuracy of BarreGEN was highest (90%) at an ML of 1, where
optimal sensitivity (96%) and specificity (87%) were achieved.
Eluri et al 2015
Reprinted from Eluri et al. Am J Gastroenterol 2015; 110:828–834; doi: 10.1038/ajg.2015.15219
Soft launch initiated in H2 2016
Prognostic value in determining cancer progression risk
BASE study Eluri 20151 (n=69)
Diagnostic value in detecting true dysplasia (HGD) in BE
Ellsworth 2012 study2 (n=271) and Khara 2014 study3 (n=415)
Additional clinical studies underway
Establish collaborations with Barrett’s Center of Excellence
1 Eluri et al. Am J Gastroenterology 2015, 110:828-8342 Ellsworth et al. BMC Gastroenterology 2012, 12:1813 Khara et al. J. Gastrointestinal Cancer 2014 DOI 10.1007/s12029-013-9570-y
BarreGen™ - Multi-stage Introduction
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Patent Portfolio and Proprietary Attributes
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Thyroid: 9 patents pending- Seven patents on microRNAs as biological markers for distinguishing benign from malignant thyroid neoplasm. One patent on microRNAs as diagnostic biomarkers to distinguish benign from malignant thyroid nodules. One patent on the combination ThyGenX/ThyraMIR assay to classify thyroid nodules.
Pancreas: 3 patents- One on the platform for obtaining molecular information from clinical specimens and integrating with clinical information (Topographic Genotyping, issued 2001). Oneon the diagnosis, determination of malignant potential and biological potential of pancreatic cysts. One on the an improved method for determination of pancreatic cyst fluid CEA levels.
Barrett’s esophagus: Two patents pending- Use of mutational load to assess likelihood of progression of Barrett’s esophagus and corresponding need for treatment.
Proprietary attributes: Extensive experience in managing extremely low quality, fixative treated clinical specimens. Lab information management system that extracts results from database and allows efficient integration of molecular and clinical results. Analysis of DNA, mRNA and microRNA from fresh, cytology and paraffin embedded samples including residual material contained cell-free nucleic.
new U.S. cases
39,590U.S. deaths
Medicare , 35%
Medicare Advantage,
19%
Commercial, 29%
Client Billing, 11%
Others, 6%
PancraGen*
*Payer mix % based on claim submissions; May vary by month
PancraGen and Thryoid Tests - Payor Type Mix
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Medicare , 3%
Medicare Advantage,
9%
Commercial, 52%
Client Billing, 30%
Others, 6%
Thyroid
GI Endocrine
Billing & Reimbursement Overview
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List Price $4,000
Averaged Realized
Revenue$2,600
Medicare $3,100
Now Billed Under
Molecular Code81479
Covered Lives +71 million
List Price $1,675 $4,000
Averaged Realized
Revenue$1,100 $2,000
Medicare $1,057 $2,200
Now Billed Under
Molecular Code81445 81479
Covered Lives +148 million +67 million
Billing & Reimbursement Overview
Managed Care Coverage and Contracts
CONFIDENTIAL INFORMATION - DO NOT DISTRIBUTE
Health Plan NameNumber of
LivesPancraGen ThyGenX ThyraMIR
Medical Policy
CoverageContract Pricing
Aetna 22,000,000
Cigna 16,000,000
United 34,000,000
CareFirst BCBS 3,340,000
Choice Care Network (Humana) 6,600,000 $3,101 PancraGen
Humana Military (TriCare South) 3,000,000 TMAC
Geisinger Health Plan 500,000 Pending Pending $3,600 PancraGen
Kaiser 9,000,000 $795 (ThyG)/$2,800 (ThyM)
Highmark BCBS 5,930,000 $3,658 PancraGen
ACPN (Network) NA $3,200 PancraGen, $1,340
(ThyG), $3,200 (ThyM)
Fed Med (Network) NA $3,200 PancraGen
Provider Select Network NA $3,798 PancraGen
Ohio State Health Plan 58,000 $3,800 PancraGen
Multi Plan NA $3,200 PancraGen
MagnaCare $3,600 PancraGen
lnterwest Health $3,400 PancraGen
HealthSmart (Network) $3,200 PancraGen
Fortified Provider Network (FPN) $3,798 PancraGen
Emblem Health 3,400,000
Harvard Pilgrim 1,000,000
Medicare (1)
(Novitas-Solutions) 55,200,000 $3,101 PancraGen
Number of Lives Covered 187,628,000 71,288,000 148,870,000 67,540,000
(1) Medicare numbers will overlap some health plan populations above, since the total lives in the heatlh plans include some medicare lives
along with commercial lives.
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Source: Cooper DS et al. Thyroid. 2009;19(11):1167-1214; National Comprehensive Cancer Network. NCCN Clinical Practice Guidelines in Oncology: Thyroid
Carcinoma. V.1.2014; ATA Guidelines on Thyroid Nodules and Differentiated Thyroid Cancer – Highlights, Consensus, and Controversies. ICE/ENDO conference;
June 21-24, 2014; Chicago, Illinois.
2014 American Thyroid Association Revised Guidelines
MDx Tests should be considered for suspicion of malignancy or indeterminate.
2013 NCCN Guidelines
Molecular Diagnostics recommended testing on some indeterminate cytologies to minimize unnecessary surgeries
Guideline Recommendations
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PancraGen™ establishes a new standard for the prognosis and diagnosis of
pancreatic cysts
Current Pancreatic Cysts Guidelines
Sendai guidelines 2012 and ACG guidelines 2007 strongly favor surgical resection because of the inability of first-line tests to predict biological behavior and aggressiveness.
Operations & Financials
IDXG
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GASTROINTESTIONAL(GI) PRODUCTS
Launched new Biliary product October 3rd, 2016
Launched AccuCEA™ Insights August 1st, 201
Launched PanDNA™ September 1st, 2016
Launched BarreGen® Clinical Experience Program September 1st, 2016
ENDOCRINE PRODUCTS
Launched Cytopathology Services October 1st, 2016
Launched Cytology Slides as primary specimen October 1st, 2016
New York State approval of ThyGenX September 30th, 2016
New Development
Team Bios
• Jack E. Stover President & CEO since December 2015. Prior Director of PDI. Director of Onconova Therapeutics and Viatar CTC. Previously President & CEO of Antares Pharma and COO of Sicor Inc and CFO/COO of Gynetics Inc. and Partner at PWC
• Sydney Finkelstein MD, CMO and CSO, Founder of RedPath. A board certified anatomic pathologist with extensive experience and accomplishments in academic surgical pathology and molecular pathology. Formerly Professor of Pathology at the Univ. Pittsburgh. Syd has authored over 200 peer review manuscripts and is a nationally recognized authority in Gastrointestinal Pathology and Solid Tissue molecular diagnostics.
• Greg Richard Sr. VP Commercial Services. Previously at Aetna and moved to Genentech as Director of managed care. VP of Managed Care for Quest and Sr. VP of Sales for LabCorp and a frequent speaker at lab industry conferences
• Jim Early Chief Financial Officer. Previously CFO at both ABGenomics Int’l and SanGeva BioPharma as well as an interim CFO and BD services consultant to the medtech industry.
Week 39
YTD GI MDx Orders (actual vs planned)
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GI Planned
Week 39
YTD Thyroid Orders (actual vs planned)
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2016 Thyroid Orders
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Thyroid Planned
Investment Considerations
• Interpace is a NASDAC listed company
• Strong management team and over ten years of experience
• Good and growing reimbursement in place in high value-added
molecular space
• Significant revenue growth in 2016
• Expansion product launches underway
• Pipeline of products already developed in large market opportunity
• Monthly cash collections in excess of $1 million and growing
• Lowest trading price in history due to transition “overhang” from
previous CSO business
• Multiples in the MDX space often 2 to 4 X revenues
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THANK YOU!
IDXG
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