Earnings call transcript: Insight Molecular Diagnostics Q2 2025 reveals strategic advancements

Insight Molecular Diagnostics (IMDX) provided an in-depth view of its Q2 2025 performance during its earnings call on August 11, 2025. The company reported laboratory services revenue slightly below its target, alongside strategic product developments and market expansion plans. Despite these financial figures, the company’s stock price remained stable, reflecting a neutral market reaction. For a deeper analysis of IMDX’s financial health and growth potential, InvestingPro subscribers can access comprehensive financial metrics and expert insights through the Pro Research Report.

Key Takeaways

• Q2 laboratory services revenue was $494,000, slightly below the $500,000 target.
• Gross margins for laboratory services were nearly 68%.
• The launch of second-generation GraftAssure IQ kits marked a significant product innovation.
• The company is preparing for FDA submission of its kidney transplant rejection test by the end of 2025.

Company Performance

Insight Molecular Diagnostics reported a mixed performance for Q2 2025. While the laboratory services revenue fell short of the target, the company achieved significant milestones in product development and innovation. The launch of the second-generation GraftAssure IQ kits and the development of a new assay workflow are expected to strengthen its competitive position in the transplant rejection testing market. The company is also expanding its research and clinical trial sites across the U.S., Europe, and Asia.

Financial Highlights

• Q2 Laboratory Services Revenue: $494,000
• Gross Margins: Nearly 68% on laboratory services
• Cash Position: $26 million, including restricted cash
• Quarterly Cash Burn: $6.3 million plus $350,000 in capital expenditures

Outlook & Guidance

Looking ahead, Insight Molecular Diagnostics is preparing for the FDA submission of its kidney transplant rejection test by the end of 2025, with anticipated approval between Q2 and Q3 2026. The company projects a 5-7 month FDA review process and plans to maintain a $6 million average quarterly cash burn until the commercial launch, expected in mid-2026. Want to track IMDX’s progress toward these milestones? InvestingPro offers real-time updates and expert analysis on key financial metrics, helping investors make informed decisions about biotechnology investments.

Executive Commentary

CEO Josh Riggs emphasized the company’s progress and strategic direction, stating, "We are making solid progress, and we see a clear path to product launch and potential meaningful clinical differentiation." CFO Andrea James reinforced the company’s commitment, noting, "Our top priority is unchanged, bringing our first clinical molecular diagnostic test kit to market."

Risks and Challenges

• The company faces the risk of slower-than-expected adoption of its new products by transplant centers.
• Regulatory hurdles could delay the FDA approval process.
• The financial sustainability of maintaining a high cash burn rate until product launch is a concern.

Q&A

During the Q&A session, analysts inquired about the company’s clinical trial enrollment strategy and the timeline for product adoption. The management expressed confidence in reaching the required number of biopsies and anticipated a gradual adoption of their products by transplant centers over approximately one year post-launch. Additionally, the company is exploring expansion into heart, lung, and liver transplant indications, which could diversify its market presence.

Insight Molecular Diagnostics remains focused on strategic growth and innovation, with significant developments on the horizon that could reshape its market positioning in the coming years. To stay ahead of IMDX’s market developments and access detailed financial analysis, consider exploring the company’s comprehensive Pro Research Report, available exclusively on InvestingPro. The platform offers valuable insights into company valuations, financial health scores, and growth prospects across more than 1,400 US stocks.

Full transcript - Insight Molecular Diagnostics Inc (OCX) Q2 2025:

Gaby, Moderator/Host, Insight Molecular Diagnostics: Hi, everyone. Welcome, and thank you for joining us to discuss Insight Molecular Diagnostics Second Quarter twenty twenty five Results. If you have not seen today’s shareholder letter, please visit Insight Molecular Diagnostics Investor Relations page at investors.imdxinc.com. Today’s prepared remarks build upon the information already shared in this robust letter. Joining us today are InSIGHT Molecular Diagnostics President and CEO, Josh Riggs Chief Science Officer, Ecky Schutz and CFO, Andrea James.

We also have our analysts with us as panelists. After our prepared remarks, our analysts may ask questions. Before turning the call over to Josh Riggs, I’d like to go over our safe harbor. The company will make projections and forward looking statements regarding future events. Any statements that are not historical facts are forward looking statements.

These statements are made pursuant to and within the meaning of the safe harbor provision of the Private Securities Litigation Reform Act of 1995. We encourage you to review the company’s SEC filings, including the company’s most recent Form 10 ks and subsequent Forms 10 Q, which identify risks and uncertainties that may cause future actual results or events to differ materially. Please note that the forward looking statements made during today’s call speak only to the date they are made, and Incyte Molecular Diagnostics undertakes no obligation to update them. And with that, I would like to now turn the call over to Josh Riggs.

Josh Riggs, President and CEO, Insight Molecular Diagnostics: Thanks, Gaby. Welcome, everyone. Thanks for taking time today. I spent much of last week at the World Transplant Congress meeting with leaders from top transplant centers for both here in The U. S.

And in The EU. In the future, these sites will be our customers representing the earliest adopters of our IBD product. Today, they are our partners. We are working together, bringing transplant centers something they are missing, the ability to manage their patients locally and get paid for it and run their own research studies, build guidelines and explore new clinical utilities. Our transplant partners are energized and motivated to see us be successful with our FDA program, and that energy is starting to spread.

Just in the last week, we’ve had more centers raise their hands to see if they can support the clinical trial. We are working with them to get them up and on board as quickly as possible. Today, I’m going to talk about our progress with the FDA product, ReptAssureDx, what we are doing to prepare for commercialization and where we are headed next as a company. To recap our key areas of focus for ’twenty five: first was finalizing our clinical assay and trial design second was getting through our clinical trial to submit a data package to the FDA by the end of the year and third, spring loading back half twenty twenty six revenue through our land and expand strategy with transplant centers. On the first area, we talked earlier in the year about assay and workflow design improvements.

I’m pleased to note that those have been completed and transferred to manufacturing with the first kits shipping out to our beta sites in June. The changes make it possible to get both the relative and absolute quantification of DDC FDNA at the same time on the same run. This simplifies the workflow for our future customers, making it easier to adopt and offer some improvement in turnaround time. Early feedback is positive and multiple centers are taking it through the validation process. As far as the clinical trial, we’ve had our first center site initiation visit last week, with the next two coming over the next two weeks.

It feels really good to be making progress with the clinical trial, which is a key component of our FDA submission. We believe that we are still on track to submit to the FDA by the end of this year, which is the same timeline that we communicated in March and again in May. Like with any FDA program, there are several work streams that must come together. And from what we can see, we are on pace. So we continue to target FDA approval in 2026.

On July 30, we had our third FDA meeting and walked away feeling great about our program. These meetings with our FDA review team are productive and provide clear guidance on what’s expected from our study. From the first meeting back in December to now, the questions and comments have gotten much more precise and the path forward much more clear. Our team at IMDx have been through many FDA reviews, and what we see in front of us looks like a yellow brick road. We just have to stay on the path.

Additionally, we have not felt any loss of continuity with our FDA review team, even amid some of the macro changes in Washington, D. C. Continuing on to focus on 2026 revenue, Recall that our strategy was to land leading transplant hospitals with our Research Use Only, or RUO, kitted assay. Now a year into landing, the benefits are threefold. First, we familiarized labs in key markets with our assay.

Second, they’ve begun generating internal research and studies, and we’re hoping to see the first couple of those publications out this year. And third, they provided us with valuable field tested feedback on how to improve the assay, and those improvements are now in the field and going to the FDA. I can say we’ve gotten exactly what we needed and then some out of our BetaCyte program. The expand part of our strategy will be selling the diagnostic kits to these labs after we achieve expected FDA authorization. As of today, we are shifting into pre commercial mode as we get ready for a meaningful launch about a year from now.

We believe that we are on track to have 20 sites trained on our GraftAssure workflow by the end of this year. We now have 10 sites running our RUO assay, and they are in The U. S, Germany, U. K, Switzerland, Austria and Southeast Asia. In addition to those 10, you can see that there are five major U.

S. Hospitals listed on our publicclinicaltrials.gov listing. Only one of those five sites is already counted among the 10 running our research use only assays. So adding those two buckets, you can see that there are a total 14 transplant centers that are already becoming familiar with our assay, either through deploying the research use only kits or through supporting our clinical trial. In such a highly concentrated market, this represents great progress.

From a market standpoint, the recent guidance from MolDx around surveillance testing has been incredibly helpful. The growing acceptance of surveillance in the clinical setting moving away from strictly for cost testing makes the revenue opportunity clearer for potential IBD customers. The draft guidance aligns with how we have sized the market, supporting our view of a substantial and growing opportunity for our kitted assay. Now I want to raise the curtain slightly on an exciting differentiator that is emerging about our assay. And please bear with me a second as I get a bit technical.

So one of the challenges with using dd CF DNA for surveillance has been the low positive predictive value, or PPV, of either fractional or absolute quantification on their own. In lay terms, this means that high rates of false positives lead to many unnecessary biopsies. Most ddCFDNA tests have a PPV around fifty percent, which is basically a coin flip, meaning if you are using it to rule in patients for biopsy, about half of those biopsies are going to come back normal. That’s not great. When you consider that ddcfDNA adoption has largely been driven by the desire to avoid unnecessary biopsies, it leaves a lot to be desired.

To put it simply, there are patients who are getting biopsied, do not need to be, due to ddcfDNA’s PPV problem. We think we have an elegant solution to this problem, and this is why we are so excited by the data shown at the WTC World Transplant Congress last week. Alongside our research partners at Charite in Germany, we were able to show a positive predictive value close to 80% by combining our two scores together algorithmically. So recall earlier that I told you that our optimized assays allow clinicians to get both the relative and absolute quantification of DDCF DNA at the same time on the same run. It’s these values that we’re combining into an algorithm to eliminate many false positives as a step in solving the PPV problem.

We are optimistic that this represents the next generation of ddcfDNA assays. Should it validate in our FDA program, it might prove to be a significant hurdle for companies seeking to do a follow on five ten as they would have to show substantial equivalencies. The data is expected to be submitted for publication here in the near future. Given that we are more than halfway through 2025, and we believe about a year away from a very exciting GraftAssure DX launch, we wanted to shed some light on what comes next. This is just the beginning.

We’re not stopping at kidney. We plan to immediately expand into additional solid organ transplant indications, building a multi indication portfolio that we believe can unlock substantial clinical and commercial value. We see heart transplant as the most logical next indication. We’re already engaged with the number one heart transplant center in The U. S, which gives us confidence in our ability to execute.

Doctor. Anthony Langone is leading efforts here, and as soon as we complete enrollment in kidney, we expect to begin enrollment in heart followed quickly by lung. So the takeaway today is that we are making solid progress, and we see a clear path to product launch and potential meaningful clinical differentiation followed quickly by meaningful revenue. And we’re committed to investing in this product pipeline to deliver continuous growth and long term value. Now I’m going to turn it over to our CFO, Andrea James.

Andrea James, CFO, Insight Molecular Diagnostics: Thanks, Gabby and Josh. Hello, everyone. Before I briefly give financial highlights, I want to warmly invite our analysts and investors to our key opinion leader webinars scheduled for Friday, August 15, and that will feature Vanderbilt University’s Doctor. Langone, who is leading the efforts for our ongoing clinical trial, as Josh mentioned. The link to register for that is in our shareholder letter.

We’re thrilled to have Doctor. Langone joining us to talk about our GraftAssureDx clinical trial and the benefits of in house donor derived cell free DNA testing since he is the national principal investigator for our clinical trial, and he is very well regarded in this space. Some of you on this call today have already registered, so thank you. We chose this timing for this upcoming Friday due to Doctor. Lancome’s very busy schedule.

But I know that just after market close on a Friday afternoon in August, for many of you, is not your preference. So we totally get it. And of course, if you cannot attend, there will be a replay available at investors.imdxinc.com. Okay. So far in 2025, we’ve announced progress with our multicenter clinical trial, commercial expansion of sales of our GraftAssure IQ research use only test kits, and we’ve announced favorable data that further solidify our global credibility in the transplant community.

Our top priority is unchanged, bringing our first clinical molecular diagnostic test kit to market so that we may begin to capture value in the estimated $1,000,000,000 total addressable market for transplant rejection testing. Quickly touching upon our results. We had said last quarter that we expected our Q2 Pharma Services revenue to come in under $500,000 and it did so at $494,000 You’ll notice this quarter that we renamed this revenue category to Laboratory Services. This better reflects what we’re doing, which is mainly sequencing and proficiency testing for customers. We’re very pleased that our gross margins on this work came in at nearly 68% in the quarter.

Also in the second quarter, we sold a very small number of first generation GraftAssure IQ kits, about $24,000 worth. And as we shared in our letter, we began shipping the second generation kits to customers in June. These initial second gen RUO kits do not carry revenue as our customers need free samples to validate in their labs. We expect those customers to begin ordering after validation, which should drive a small amount of revenue later this year. We’re pretty excited about the workflow improvements in these second generation kits.

Joc had talked about this and I wanted to double hit the point here. This innovation benefits not only the RUO product, but also the future clinical kitted product. It’s an elegant solution that expands our market lead and ease of use. And we do have our Chief Science Officer, Doctor. Ecky Schutz, on the call with us today if you’d like to ask more about that.

On to operating expenses. Including the impact of noncash charges, operating expenses were roughly flat over the first quarter. Our R and D spending reflects additional investment in FDA compliant software development for GraftAssure DX. As expected, we are also incurring increased consulting fees tied to our regulatory submission and increased laboratory and site setup costs related to our clinical trial. We’re also investing more in commercial activity as we prepare for meaningful revenue ramp next year.

We concluded the second quarter with $26,000,000 in cash, and that includes restricted cash, which we are beginning to access as we wind down our Irvine lease. Our cash used in operating activities in the second quarter was $6,300,000 plus about $350,000 in CapEx. This is right in line with our previous communication, which was that our quarterly cash burn of about $6,000,000 would start to increase in Q2 and Q3 slightly as we invest in our FDA program. Okay. So looking ahead for the third quarter revenue.

We expect to bill less than $300,000 in laboratory services. And as a reminder, and I’ve said this the last couple of quarters, these services can be lumpy, and they’re largely unrelated to our core strategic objective of selling global kitted product. Also, so far in the third quarter, we have not invoiced for any of these laboratory services. Turning to cash management. As we noted last quarter, the biggest needle mover is our clinical trial, and the instruments that we’re purchasing discount support that trial at our partner sites.

FDA compliant software development is also a near term incremental expense. We continue to target an average of about $6,000,000 per quarter in cash burn until our commercial launch next year, although we said it’d be higher than that in Q3 before coming back down again in Q4. Okay. And with that, Gabby, we are ready for questions. I can see a few of you guys have your hands up.

Let’s give Eric a chance to bring everyone up into gallery view.

Gaby, Moderator/Host, Insight Molecular Diagnostics: Thank you, Andrea. We’ll have questions. Let’s Mark Massaro from BTIG.

Mark Massaro, Analyst, BTIG: Hey, great. Thanks for taking the questions, guys. Congrats on the progress. I wanted to start with the clinical trial. It looks like you guys are on track.

And I just wanted to maybe double click on I think you talked about approval as early as mid-twenty twenty six. I think I have this, but just making sure I’m tracking that you think as early as six month approval time line, assuming you submit, call it, Q4, the six months would be the earliest. I’m just wondering if you could potentially bracket what you think the other side of the earliest would be. Is that twelve months? Or how are you thinking about timelines?

Josh Riggs, President and CEO, Insight Molecular Diagnostics: Yes. I’d say the guidance from the agency itself is five months of review time. You know, so we’ve budgeted six to seven on our side, which, you know, puts us right there at the end of Q2 next year to early Q3. What the outside of that could be, it’s tough to tell. Right now, think we’ve spent as much time as we can with the FDA kind of reviewing where their concerns are, and I think they’ve been very forthright about what we need to address in the study.

And I think Doctor. Schutz and his team have a really good plan to address those kind of head on. So there’s always unknowns, but I think we feel confident that we can address what they’ve put in front of us so far.

Mark Massaro, Analyst, BTIG: Okay. Thank you for that. I wanted to follow with a question about the recent proposed draft LCD by Palmetto. And I’m just curious, I know you recently spoke with the FDA, and I know that the FDA is looking for safety and efficacy. I’m just curious if there is any potential discussion about perhaps coordination among the government between the FDA and CMS.

But so that’s the first part. The second part is, I guess, Josh, how are you thinking about the proposal draft and potentially putting some limits on utilization. And I want to square that with what do you think the appropriate level of utilization would be in kidney? I’m just curious how you’re thinking about the repeat test opportunity.

Josh Riggs, President and CEO, Insight Molecular Diagnostics: No, it’s a great question, and so I’ll take them in reverse and go with, you know, how we think about the LCD, and then I’ll answer the question on the FDA. You know, I think it always kind of rubs you a little bit the wrong way when decisions are being taken out of the hands of physicians. And so, you know, I think our instinct is to support physicians on whatever schedule they think is appropriate for their patients. I think as we get the testing into the hands of centers and they’re able to do their own research and build their own protocols, I think we’re hopeful along with the rest of the industry that there’s movement in the out years to support more testing. I think, you know, adding better positive predictive value so you’re having less false positives and so less unnecessary biopsies helps in that story.

So I think, you know, if you’re enrolling a bunch of patients or sort of biopsying patients that don’t need it, that’s, you know, runs counter to the argument that we should be testing more frequently. But in general, I’m on the side of the docs on this one, and I think we should help them build whatever data they need to support the protocol that’s right for their institution. Trying to keep myself out of the direct crosshairs of Multi X with that answer. But the FDA, you know, we started our conversation with the FDA well back, I think, in ’twenty four as an LDT going in and, you know, having a conversation with them that way, and they directed us towards the path we’re on. We haven’t had any conversation with them that directly ties the work that they’re doing to CMS.

So I don’t know that I have any guidance to share with you on that. I think hopeful that we get to bring that test out, put it into our LDT lab, and bridge the FDA and CMS in that way, but we have nothing that says they’re going to do that from a policy point of view.

Mark Massaro, Analyst, BTIG: Okay. Understood. I’ll keep it to two questions. Thanks.

Mike Matson, Analyst, Needham: Okay. Thanks, Mark.

Gaby, Moderator/Host, Insight Molecular Diagnostics: Thanks, Mark. Mason Herrigo from Stephens.

Mason Herrigo, Analyst, Stephens: Hey, guys. Thanks for taking the questions here. I guess to start off higher level on the IOTA program. Since that program went live, have you ever have you seen any signs of margin excuse me, marginal organs getting used more frequently? It’d be great to get some insight into what you’re hearing from pilot sites as well as, I guess, centers more broadly.

Josh Riggs, President and CEO, Insight Molecular Diagnostics: Yeah. I would say, you know, I think we expected there to be a lot of negative feedback when we were at WTC, and then we heard the opposite of that. I think, you know, folks are actually encouraged by the program and the utilization. So I’d say early innings are generally positive from who we’ve spoken with, but my reach there is pretty limited. So I couldn’t say that it’s a broad response.

Mason Herrigo, Analyst, Stephens: Okay. And I think last quarter, you guys had called out five key questions for the Q Sub meeting that you wanted to ask to get more comfort around the trial. Mean, would you be willing to share some color on what those topics were? And looking ahead, what variables could materially change the current trial or your time line assumptions there?

Josh Riggs, President and CEO, Insight Molecular Diagnostics: Yes. No, thanks, Mason. I think the biggest one that we had is one that all kind of blood companies face that are looking at, CF DNA, which is around the blood tube and how do you manage that. And I think, you know, Guardant set a path there that was very successful. There have been others as well.

I think Roche has done this in the past. I think we’ve resolved that in a way that we’re comfortable with and we believe the FDA is comfortable with. So I think that was the biggest one that we had. Outside of that, I think there was just some clarity around, what orthogonal testing would be acceptable, what orthogonal methods would be acceptable. I think were relying on the old standby of Sanger sequencing to get us through on most of those questions.

So I think we feel pretty good that we’ve answered those questions at this point.

Mason Herrigo, Analyst, Stephens: Got it. Okay. And then last one for me here. You guys called out at least six potential areas of expansion for your titted assays in the release. Could you just talk about how you’re planning on prioritizing investments required to support those indications versus further commercial investments or data evidence investments in kidney product post approval?

Josh Riggs, President and CEO, Insight Molecular Diagnostics: Yes, great question. Thank you. So we group them into two categories. One is on tissue and the other is on therapeutics. So tissue are the ones that we’ve enumerated earlier.

Heart is one, lung is another, and then I think the third would be liver. I think liver is a little bit of a longer road. Heart is pretty straightforward, at least from a technical point of view. We’ve published on it in the past, have a pretty good idea of what needs to be accomplished there. So I would say an investment at a smaller scale than what we’ve done with kidney where we had to create the product and get it through.

I think now it’s more just data generation. So that feels lighter weight. I can’t hang a number on it for you today, but it is definitely lighter than the program we’re currently running. I’d say the same answer for lung unless Eckie raises his hand and tells me that I’m completely off base. Liver feels like a much longer study.

We need to prove out the reduction in immunosuppression or sort of like the de escalation of therapy piece, and that feels like longitudinal monitoring and tracking, which is a much heavier burden from a clinical trial standpoint. On the therapeutics, I think we’re going to be pulled through either by our research partners or by pharma itself on this one because they’re looking for tools that can monitor for therapeutic efficacy in trial and then also monitor for recurrence for patients that are on trial or post therapy. We’re in a couple of studies that are ongoing right now, one with, you know, a follow on on trastuzumab from the New England Journal. And then a second one is a registry study that’s running in Central Europe for daratumumab, which is Johnson and Johnson’s drug that’s being used off label. And so I think those are kind of pulling us forward there, but we’re not running any drug studies on our own.

So I think that one, we’re really at the mercy of what’s being done external. Got it.

Mason Herrigo, Analyst, Stephens: I’ll keep it at that. Thank you.

Josh Riggs, President and CEO, Insight Molecular Diagnostics: Thank you, Mason.

Gaby, Moderator/Host, Insight Molecular Diagnostics: Thanks, Mason. Up next, we have Thomas Flaten from Lake Street.

Thomas Flaten, Analyst, Lake Street: Hey, guys. Appreciate you taking the questions. Josh, just on the clinical study, I know clinicaltrials.gov tends to lag, it says only two sites are enrolling right now. And I’m just trying to do the math on the submission by year end. There’s only four point five months left.

Realistically, how many more sites can you bring on board in the study that are going to have an instrument get trained and actually put patients into the study? Can you

Josh Riggs, President and CEO, Insight Molecular Diagnostics: just walk us through some

Thomas Flaten, Analyst, Lake Street: of the math there?

Josh Riggs, President and CEO, Insight Molecular Diagnostics: Yes, I think you’ll expect to see two more come live that aren’t announced right now, one in Europe and another here in The U. S, just because of the maturity of those conversations. The others are going to lag. And as far as the enrollment piece, when we look across the centers collectively, there’s about 200, two twenty some odd biopsies happening on a monthly basis. And if you look at the listing on clinicaltrials.gov, we only need about 125 to fully power the study.

So I think we feel confident that we rapidly enroll. It’s more just getting those sites up and active.

Gaby, Moderator/Host, Insight Molecular Diagnostics: Josh, just want to talk about the fact that the clinical trial is templated. And so there’s not a lot of extra stuff that happens after the blood draw, not a ton.

Josh Riggs, President and CEO, Insight Molecular Diagnostics: Yeah, no, it is pretty simple to process. I think, you know, once a center has its batch together, you’re talking less than a week of run time for them to process the samples because you can get six samples through on a QX600 in a single run, and that run takes you about four hours to process. So a single center can run through their samples rather quickly, think. So that’s giving us confidence that we’re still on pace. Yes.

Then you mentioned some improvements to the RUO kits. Is it safe to assume that all those improvements are folded into the product that will

Thomas Flaten, Analyst, Lake Street: ultimately be the FDA approved? And if so, could you give us kind of

Josh Riggs, President and CEO, Insight Molecular Diagnostics: a 50,000 foot around what exactly those improvements were? Yes. I’d like to let Eckie chime in on this point because he this was a labor of love for him and his team for a brief four month sprint as we were trying to get all of that improvements into the assay. So maybe, Eckie, you can talk just a little bit how we improved from Gen one to Gen two of the assay. And you’re on mute there, brother.

Ecky Schutz, Chief Science Officer, Insight Molecular Diagnostics: Can you hear me?

Josh Riggs, President and CEO, Insight Molecular Diagnostics: Yes, sir.

Ecky Schutz, Chief Science Officer, Insight Molecular Diagnostics: Alright. So if we are looking back at the first version that we had was more or less still requiring two different workflows. One workflow was for the percentage and the other workflow was for the copies per ml and and Josh just told a little talked a little bit of what we could show at at WTC, why why we really wanna have the copy per ml. And so the feedback from from the first customers was, yeah, it’s really nice, but still we need to do two workflows. So we we took a deep breath and and said, okay.

How are we combining this so that we only have one workflow and that’s actually, if you wish, what we have done and and validated and and every from every aspect. So now we have consolidated our assay into one single and very simple workflow that actually only requires factory two pipetting steps. And then the customer is going to see his results, which from the, I think, market acceptance alone is going to be a huge step forward. I think it’s not only very precise and an essay with a lower limit of quantification, which is in particular, and Josh mentioned that needed for heart transplant, which have a pretty much lower donor derived cell free DNA than what we usually see in kidney. So I think this entire combination together makes this this essay really an essay that I think our customers will love.

Josh Riggs, President and CEO, Insight Molecular Diagnostics: Excellent. Thanks, Thanks, Jake. You’re welcome.

Gaby, Moderator/Host, Insight Molecular Diagnostics: Up next, we have Mike Matson from Needham.

Mike Matson, Analyst, Needham: Hi. Yeah. Thanks. Thanks for taking my questions. So I guess, just on the this Medicare reimbursement, I know it’s the the amount, the $2,753.

I know it’s the last test version draft two four, but the letter kind of implies that that will somehow factor into the amount that’s, you know, ultimately paid for to your customers for a GrabSure DX. So can you maybe just talk about how that process works in terms of deciding how much they’ll get paid? Would it be similar or could it be lower? And when do you expect that to be known?

Josh Riggs, President and CEO, Insight Molecular Diagnostics: Mike, the assumption that we’re working off of is that when we bring the FDA product to our CLIA lab and we update our filing with MolDX to say that this is now an FDA cleared product, that will make it really easy for centers that are inside of the MolDX jurisdiction to bridge to that reimbursement. And so we’re not expecting to see loss for them on the ability to bill at that same rate.

Mike Matson, Analyst, Needham: Okay. Got it. And then just once you get the approval and launch DraughtiShure DX, you know, for kidney, I guess, first, how quickly do you expect the transplant centers to sort of shift over to to the test? In other words, I guess, I’m wondering is, do you expect it to be more of a kind of a blanket transition where they move over 100%? Or is it really going to kind of be position by position where you have to kind of go in and commit each individual position that they need to be using your test?

Josh Riggs, President and CEO, Insight Molecular Diagnostics: You know, I would say if it were that easy, I would love it. But it’s certainly not. And I think Andrea put out a nice model in shareholder letter last summer. We do expect there to be a ramp. You know, you’re going to have early converts within a health system.

And then, you know, as they build confidence in the test, know, as they run their comparative studies, I expect fully that, you know, these centers are going to run head to head with us and their preferred, you know, send out tests to make sure that, you know, they validated it themselves. And once they’ve done that and they have confidence, and we showed in a publication earlier this year that we match up really well with competitive technology, that the opportunity to manage those patients locally is going to continue to pull testing in. So maybe a year after launch, they’ve converted somewhat fully, but it’s definitely not going to be on day one.

Mike Matson, Analyst, Needham: Okay. Got it. Thanks.

Josh Riggs, President and CEO, Insight Molecular Diagnostics: Thanks, Mike.

Gaby, Moderator/Host, Insight Molecular Diagnostics: Thanks, Mike. Next, we have Yuan Tsai from B. Riley Securities.

Yuan Tsai, Analyst, B. Riley Securities: Thank you for taking our questions. Probably you are going to touch on this at your KOL seminar for the WTC twenty five presentation on this combined mice method for d d double d d PCR. Can you elaborate on what it meant that only the combined models were able to distinguish all forms of rejection from normal samples? And is there any specific rejection pathology that the individual models test better than the other?

Josh Riggs, President and CEO, Insight Molecular Diagnostics: Yeah. I’d like to turn that one over to doctor Schutz to to elaborate on. And you’re on mute there, brother too.

Ecky Schutz, Chief Science Officer, Insight Molecular Diagnostics: Okay. So let let let let me start with the first part. I I think we have seen a couple of publications now that that and then that that’s kind of a little bit of a paradigm shift that selfie DNA is really highly specific for rejections and not for for all kinds of graft damage. I think that’s one outcome that we show again, has been shown by into other publications. So that’s also going to change the utility a little bit because now we can say, okay, if I have something that’s going on in a graph, let’s say clinical suspicion, you can really distinguish is it a rejection or not.

The second part of the question is almost philosophical. Mean, if we are looking at the different band lesions, it is pretty clear that the microvascular inflammation is a major driver of cell free DNA. But it’s not the only driver, but that makes it immediately clear why most of the rejections are pretty well seen. And we also understand right now and that’s also something we can show again that the level of cell free DNA clearly increases with the severity of the rejection and that’s in particularly seen in TCMR, where TCMR grade one, which is right now even debated whether it needs to be treated or not, it is a one a and and you might know in in heart, the grade one rejections are not treated anymore since I think five years now. But as soon as the rejection starts really to to enter grade two or even more so grade three, we are having a a really high increase of selfie DNA, donor derived selfie DNA.

And and so that’s that’s the the currents, I would say, consensus in the literature and whether it’s from us, whether it’s from from other groups, I think I’ve I’ve we we presented it it quite quite the way that that everybody is thinking about self healing or doing about self DNA right now.

Yuan Tsai, Analyst, B. Riley Securities: Yep. Got it. And then since the mechanism of action for your organ rejection detection is similar among kidney, heart, and lung, is it possible to run a basket trial and get a label for organ diagnostics with this combined method?

Ecky Schutz, Chief Science Officer, Insight Molecular Diagnostics: That’s a good question. I mean, the major point I’ve already said, we have pretty much different let’s call it normal values if a if a completely healthy organ. Kidney, heart, and and lung, if you are only using the three because they are representing the majority of organs that cell free DNA is used right now, have completely different normal values. So it’s around 1.5 for kidney, perhaps a little bit more than 1.5 for lung, it’s 1.25 for heart. So that also makes it a little bit hard to combine all this into one model.

I think what’s going to be possible is to have a model for each and every organ. I think that’s most probably how I think it being the one who has developed the model. And I think at the end of the day, we will have a model for each and every of the major organs, and I’m I’m very convinced that that such a model will clearly be beneficial for for our patients in each and every organ. It’s It’s not only related to kidney. It’s really a biological concept that we have more or less used to build the model up.

And what we have seen in kidney and eye and we are looking at a large number of patients here. We had over 100 rejections. We had over way over 200 normal cases and other pathologies. So it’s very robust study in terms of numbers. And so I’m pretty much convinced that it’s going to be very similar for heart.

We have some indications from one of our competitors who have published something around that. So I think over the next year or so, the diagnostic will go into this direction combining copies with percentage because it’s now shown in so many publications that that’s beneficial compared to percentage alone. And and I think we have a great potential here.

Mike Matson, Analyst, Needham: Yep. Got it. Thank you.

Gaby, Moderator/Host, Insight Molecular Diagnostics: Mhmm. Thanks, Yuan. Does anyone have any follow-up questions? Well, that sounds like that. Josh, can you please close us out?

Josh Riggs, President and CEO, Insight Molecular Diagnostics: Yes. Just want to say, you know, thanks, everybody, for showing up today. You know, we’re we’re excited to be finally in the trial phase and, you know, getting getting the proof out there. So, you know, thanks for playing along with us. You know, we’re excited and,

Thomas Flaten, Analyst, Lake Street: you

Josh Riggs, President and CEO, Insight Molecular Diagnostics: know, really looking forward to, you know, the next ten to twelve weeks of, you know, just being really deep into the FDA process, generating the data, preparing for submission later on this year. So just thank you, and talk to you guys soon.

Mike Matson, Analyst, Needham: Bye, everybody.

Ecky Schutz, Chief Science Officer, Insight Molecular Diagnostics: Bye bye.

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