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Edited Transcript of IDXG earnings conference call or presentation 13-Aug-19 12:30pm GMT

Q2 2019 Interpace Diagnostics Group Inc Earnings Call

PARSIPPANY Aug 20, 2019 (Thomson StreetEvents) -- Edited Transcript of Interpace Diagnostics Group Inc earnings conference call or presentation Tuesday, August 13, 2019 at 12:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jack E. Stover

Interpace Diagnostics Group, Inc. - CEO, President & Director

* James E. Early

Interpace Diagnostics Group, Inc. - CFO, Secretary & Treasurer

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Conference Call Participants

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* Benjamin Charles Haynor

Alliance Global Partners, Research Division - Analyst

* François Daniel Brisebois

Laidlaw & Company (UK) Ltd., Research Division - Healthcare Equity Analyst

* Jeffrey Scott Cohen

Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research

* Naureen Quibria

Maxim Group LLC, Research Division - Senior Equity Research Associate

* Yi Chen

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

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Presentation

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Operator [1]

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Greetings, welcome to Interpace Diagnostics Group Second Quarter 2019 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. During this call, the company will make forward-looking statements. We caution you that any statement that is not a statement of historical fact is a forward-looking statement. This includes remarks about the company's financial projections, expectations, plans, beliefs and prospects. These statements are based on judgment and analysis as of the date of this conference call and are subject to numerous important risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

These risks and uncertainties associated with forward-looking statements made in this conference call are described in the safe harbor statement in today's earlier release as well as Interpace's public periodic filings, including the discussion in the Risk Factors section of our form 10-K filed with the SEC on March 21, 2019, as well as Form 10-Q for the second quarter expected to be filed shortly. This includes discussions in the section on forward-looking statements. Investors or potential investors should carefully read and consider these risks. Interpace assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so.

In addition to supplement the generally accepted accounting principle, or the GAAP numbers, we have provided non-GAAP information. We believe this non-GAAP information provides meaningful supplemental information that may be helpful in assessing the company's performance. A table reconciling the GAAP information to non-GAAP information is included in the company's earnings release, which is available on its website.

I would now like to turn the conference call over to President and CEO of Interpace Diagnostics, Jack Stover.

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Jack E. Stover, Interpace Diagnostics Group, Inc. - CEO, President & Director [2]

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Thank you, Sherry, and thank you all for joining us this morning for review of Interpace's financial results and business highlights for the second quarter. With me on the call today is Jim Early, our Chief Financial Officer.

For today's call, I will focus on our achievements to date, provide a general business update and revise and update our net revenue guidance for the year. And Jim will review our financial performance in more detail. Following that, we will open the call for questions.

As I start every call, I'd like to remind everyone of Interpace's mission and business.

Interpace is a leader in enabling personalized medicine, offering advanced diagnostics and providing molecular markers, data solutions and now biopharma services. Our diagnostic business provides evidence-based clinically beneficial molecular diagnostic tests and pathology services, and our new biopharma services business supports clinical trials by providing expertise to biopharmaceutical companies for improved therapeutic development.

Accordingly, our new business model leverages disease-specific unique data and specialized service offerings, along the therapeutic value chain from early diagnosis and prognostic planning to targeted therapeutic applications.

Our clinical diagnostic business includes; ThyGeNEXT, our next-generation sequencing test for cancer risk assessment of thyroid nodules that focuses on ruling out cancer, ThyraMIR, the first microRNA gene expression classifier for thyroid nodule identification focused on ruling in cancer. Importantly, ThyraMIR and ThyGeNEXT typically work together; and PancraGEN, the first and only U.S. commercially available molecular and bioinformatics test for sophisticated evaluation of pancreatic cysts and now solid masses as well as biliary strictures. These assays are the principal suppliers of our revenue through Q2 2019.

Now to review highlights for the quarter end to date. We recognized $6.3 million in net revenue for the quarter and $12.3 million year-to-date. Q2 net revenue was our 10th quarter of consecutive growth, a new record. For the quarter, we saw strong volume growth in both our gastrointestinal PancraGEN and our endocrine ThyGeNEXT and ThyraMIR businesses. Medicare and contract reimbursement remained strong across both products. Four new pricing contracts were achieved during the second quarter through July with more pricing contracts in the works. Today about 65% of our net revenues are generated by our thyroid business and 35% by our endocrine or PancraGEN business.

During the quarter, we continue to make good progress driving awareness, using acceptance of our diagnostic products while expanding and improving reimbursement coverage. We also continued to integrate and catch up on our collections with our new billing and collections contractor that we began transitioning at the beginning of the year.

During the second quarter and year-to-date, we made additional progress with BarreGEN, our proprietary assay for Barrett's Esophagus or BE, that is in our clinical evaluation program in our soft and has been soft launched.

The publication in BMI Gastroenterology was the first independent research published about the potential benefit of our assay in assessing the risk of progression with Barrett's Esophagus. The initiation of our KOL group specifically focused on BE. And led by Dr. Nick Shaheen of the Universal of North Carolina has been both insightful and encouraging and will undoubtedly assist us in designing and carrying our clinical trials. Importantly, in 2020, we hope to achieve clinical acceptance and sufficient reimbursement to commercially launch BarreGEN. As previously mentioned, on July 15 we acquired the assets and certain liabilities constituting the biopharma business of Cancer Genetics for approximately $23.5 million subject to certain adjustments. In 2018, the biopharma business reported net revenues of approximately $15 million. The acquisition, which we now call Interpace Biopharma is already a leading specialty oncology testing and service business, leveraging sophisticated assays, novel algorithms and custom service capabilities across the continuum of oncology from precancerous, assessment to drug discovery and clinical trial support.

In conjunction with the acquisition, Ampersand Capital Partners, one of the leading private equity firms in the diagnostic biopharma sector, agreed to invest $27 million in Interpace in 2 tranches of newly issued convertible preferred stock at a premium to our then stock price, a portion of which is subject to approval by Interpace's shareholders.

We fundamentally believe that expanding more aggressively into the biopharma business sector with strong product and service offerings will be transformative for Interpace. It should help secure and stabilize our future with biopharma rate revenue that is scalable but often lumpy due to customer scheduling and now combined with diagnostic revenue, which can be difficult to manage due to reimbursement but is otherwise very predictable. Together we believe a great combination for future growth.

Demonstrating our ability to work with top biopharmaceutical companies creates instant credibility. Combining our clinical bio banks with those of the biopharma business provides instant scale and deep data. We are already working with AI partners, such as Helomics, to help us assess these assets and determine how to best monetize them. The combination of biopharma and clinical should also provide fringe clinical products from the biopharma business that the diagnostic business can capitalize on almost immediately.

Further, as we strategize as to the next clinical product to develop, we will do so with an eye towards potentially near-term druggable oncology opportunities now in the very large market segments of hematology and solid tumor cancers that the biopharma business acquisition provides us.

And finally, we believe that the combination of the 2 businesses after onetime costs and with the synergies expected, should allow Interpace to get the cash flow and/or EBITDA breakeven sooner than we could have as a standalone growing diagnostic company.

We are also pleased with the opportunity to partner with Ampersand Capital Partners, as I mentioned, one of the leading private equity firms in the laboratory and biopharma space. With the acquisition of assets and assumption of revenues of Rosetta Genomics in 2018 and now the acquisition of the biopharma business in 2019, Interpace is potentially a platform for further synergistic acquisitions and Ampersand is well capitalized and has a deep database of global opportunities. With that, I would like to provide updated net revenue guidance for this year.

We are now guiding to net revenue of between $33 million and $36 million or a 22% to 33% increase to our previous guidance. Later in the year, we will provide guidance on our estimate of the time frame to be cash flow and/or EBITDA breakeven.

Now I'd like to hand the call off to Jim Early, our CFO, to discuss our financial highlights for the quarter and year-to-date. Jim?

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James E. Early, Interpace Diagnostics Group, Inc. - CFO, Secretary & Treasurer [3]

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Thank you, Jack. And good morning, everyone. Today I would like to focus on the key elements of our financial performance for the quarter and financial position. As previously mentioned, net revenue for the second quarter of 2019 was $6.3 million, up 14% from Q2 of 2018. Our year-to-date net revenue was $12.3 million, up 19% for the same period in 2018.

The principal reason for net revenue growth was continued expansion in both our GI and thyroid businesses, led principally by unit growth. Our gross profit percentage year-to-date through Q2 2019 was 54% as compared to 53% for the prior year-to-date. Gross profit percentage for the second quarter of 2019 was 52% compared to 59% in the second quarter of last year, primarily due to the timing of laboratory supply purchases and the hiring of lab personnel for additional test volumes according to plan.

Sales and marketing costs year-to-date were $5.4 million, an increase of 31% over the prior year period. For the quarter, sales and marketing costs were $3 million, an increase of 41% over Q2 of 2018.

This increase is due to new investment and additional headcount for both sales representatives and account managers and for contracting services to secure additional reimbursement coverage and payments.

Typically, sales and marketing costs as a percentage of revenue come down during the third and fourth quarters of the year as higher revenues are achieved. Research and development costs for the quarter increased to $0.6 million, up from $0.5 million in the prior year.

General and administrative or G&A expense for the second quarter was $2.8 million, up from $1.7 million in the second quarter of 2018, related principally to certain noncash charges, including bad debt expense from the ASC 606 conversion and the reversal of a contingent claim in the prior year.

In connection with our acquisition of the biopharma business, we incurred $1.3 million of cost during Q2 of 2019 and over $1.7 million year-to-date, which were primarily professional and consulting fees.

As a result of the above, loss from continuing operations for Q2 of 2019 and Q2 of 2018 was $5.3 million and $1.9 million, respectively. And loss from continuing operations year-to-date 2019 versus 2018 was $8.6 million and $5.0 million.

While our loss was greater than originally anticipated, we are confident that the investment in the acquisition of the biopharma business as well as our investment to support further clinical business growth and reimbursement in the second half of the year and beyond will be rewarded.

As we noted in our earnings release and discussed above, we often refer to adjusted earnings before interest, taxes, depreciation and amortization or EBITDA, a non-GAAP financial measure when evaluating our cash usage.

We define adjusted EBITDA for our purposes as income or loss from continuing operations, excluding interest, taxes, depreciation and amortization expense as well as costs relating to the revaluing of contingent consideration, stock-based compensation, asset impairment, bad debt expense, fair value loss, extinguishment of debt, mark-to-market adjustments to our warrant liability and other noncash charges.

Importantly, our adjusted EBITDA for the 3-month period ended June 30, 2019 and 2018 was negative $3.4 million and negative $0.6 million, respectively. And for the 6-month period ended June 30, 2019 and 2018 was negative $5.2 million and negative $2.3 million, respectively.

The decrease in EBITDA was due primarily to increased sales in marketing investment building for volume in future quarters, increases to laboratory headcount to support anticipated volume and acquisition costs as previously noted.

Our monthly operating cash burn averaged $1.6 million in the second quarter 2019, principally as a result of our acquisition of the biopharma business as well as our planned increase in sales and marketing expenses and operating expenses to support our planned second half of the year growth.

Cash and cash equivalents totaled $4.2 million as of June 30, 2019 and included $6 million of net proceeds from a public offering in January 2019.

Additionally, we anticipate completing the second tranche of funding of $13 million with Ampersand Capital Partners before year-end if we obtain stockholder approval and satisfy customary closing conditions. Our accounts receivable increased to $13 million from $9.5 million at the end of 2018 principally due to our growing revenues. Additionally, we changed our billing and collections contractor during the first quarter 2019, which temporarily affected the timing of our collections and cash burn during the first 2 quarters of the year.

We are finalizing the transition at this time and cash collections are now improving commensurate with our revenue growth.

As a reminder, last year, we entered into a 3-year up to $4 million credit facility with Silicon Valley Bank, involving a line of credit for working capital purposes and an $850,000 3-year term loan component.

Subsequent to June 30, 2019, we have borrowed approximately $3.4 million under this facility, principally to assist us with the acquisition of the biopharma business in transition.

Total assets were $50.3 million and total liabilities were $19.5 million, resulting in stockholder's equity of approximately $30.8 million as of June 30, 2019.

At quarter end, we had no long-term debt outstanding. Our headcount is currently 102 as budgeted as compared to 79 at the end of 2018 as we added several commercial account managers, sales reps, lab personnel and marketing resources as planned to our team.

With that, let me turn the call back to Sherry, the operator, for the Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question is from Jeffrey Cohen with Ladenburg Thalmann.

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Jeffrey Scott Cohen, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research [2]

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So few questions. So firstly, could you talk a little bit about BarreGEN and give us a little more color for as far as soft launch now and I guess timing for when revenues are expected to become material to your business?

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Jack E. Stover, Interpace Diagnostics Group, Inc. - CEO, President & Director [3]

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Sure, Jeff. Obviously, it's difficult to predict exactly what our timing is in terms of gaining reimbursement as well as data for the marketplace. But as we look at it, we think we really need some tremendous progress with BarreGEN with the expanded KOL group, that we initiated in Q1 and brought on board in Q2. We are now dealing with multiple potential partners to work with us in further development of the BarreGEN assay in terms of multiple applications. And what I mean by multiple applications is larger opportunities in the screening space as opposed to the risk assessment space, which is typically where the diagnostic business of Interpace is focused. And we've also moved forward in terms of expanding our clinical studies. If you remember, our clinical study for BarreGEN was based upon, we called our base study, which was about 70 patients, and we're currently in the process of expanding that. And the basis of that, we hope will be improved or expanded reimbursement as well. So as we target it in terms of looking at increased revenue, I think our target base is really the second half of the year with all the activities necessary to launch this at a higher level happening in the first half of 2020.

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Jeffrey Scott Cohen, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research [4]

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Okay. Got it. And then one for you Jim, could you give us perhaps a little better color on the back half OpEx that we should anticipate? I know that we've updated our models recently, but I wanted to kind of hear a fresh look at that.

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James E. Early, Interpace Diagnostics Group, Inc. - CFO, Secretary & Treasurer [5]

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Sure, we can provide that. Our focus is, as we said in the call, it's an investment filled for Q2, especially sales and marketing. So the 2 big focuses are sales and marketing G&A but also I should mention costs -- COGS, which you might refer to as operating expense LabOps, that's what we call it. Sales and marketing will probably flatten from here. Therefore, we'll see that percentage of revenue come down rest of the year. That's our anticipation. We did all the hiring in the first half of the year and that's complete. So the G&A was the noncash items I mentioned. It will be higher Q3 due to the closing of the acquisition occurring in July, and we had some success fees and other consulting fees related to that come in July. That has stopped now but that is something you'll see in Q3 as well but not in Q4. And the LabOps expense, they might be a little more hiring budgeted to handle volume growth and that's according to our plan, but most of that, again, was done in the first half of the year. Therefore, we expect our profit margin actually improve second half -- slightly improve, but that's because we did most of that hiring in the first half of the year.

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Jack E. Stover, Interpace Diagnostics Group, Inc. - CEO, President & Director [6]

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Jeff, what was interesting was our gross profit for year-to-date was actually up, while gross profit for the quarter was down. So you see that lumpiness in gross profit. I think the year-to-date is more representative.

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Jeffrey Scott Cohen, Ladenburg Thalmann & Co. Inc., Research Division - MD of Equity Research [7]

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Okay. Got it. And then one more, if I may. You did mention further synergistic opportunities, I just wanted you to discuss with us a little bit more about Ampersand and their presence in the space? And also talk about their representation with the company perhaps not on the management level but on the board level? And your appetite for M&A going forward?

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Jack E. Stover, Interpace Diagnostics Group, Inc. - CEO, President & Director [8]

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Sure. Let's start with the representation. As part of the preferred stock agreement as their investment continues through the second tranche, they will gain additional representation according to the agreement. Right now they have one of their representatives on the Board, Eric Lev and Eric was fundamental in terms of working with us to complete the acquisition. And obviously, we've been working closely with him in the transition process as well. In terms of their appetite and their interest, obviously, they continue to be very successful. I guess the most recent transaction that they were involved in was Genoptix transaction, which we knew very well -- we know the parties very well and it was a nice transaction. What's nice about Ampersand is that, I really believe they are not the largest and most focused private equity group in the lab space, both in the biopharma side as well as the clinical side but they have a really broad net of targets and opportunities, and I call it, business development for them. And we thought we had a great entrée or great knowledge of what's happening in that space. It doesn't compare to them. And I will tell you that, even before we completed the acquisition of the biopharma business, we've already been talking about other opportunities that are synergistic. If you look at us, I think that we provide a great platform commercially and now with the addition of the biopharma business, it becomes a really balanced business opportunity in the space. And I think you can look at some of the competitors where we look at as potential leaders in that space as to how to develop and how to grow this business over time. And as I mentioned too, Jeff, with the acquisition we did at Rosetta, and don't forget that Interpace itself was a series of acquisitions, we bought RedPath and we bought the assets from Asuragen for the thyroid business and expanded those. I think we have a pretty good track record, and we've demonstrated that to the Ampersand people that we can scale this and grow this pretty quickly. Right now and probably for the remainder of the year, we're digesting this and transitioning the biopharma business. But I can tell you that we are currently looking at other opportunities as well.

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Operator [9]

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Our next question is from Jason McCarthy with Maxim Group.

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Naureen Quibria, Maxim Group LLC, Research Division - Senior Equity Research Associate [10]

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This is actually Naureen on for Jason. Congrats on the quarter. So I have a few questions regarding the biopharma business that you recently acquired. Can you first speak a little bit about the integration of the business with Interpace itself?

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Jack E. Stover, Interpace Diagnostics Group, Inc. - CEO, President & Director [11]

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Yes, that's -- Naureen, that's an easy question. So if you look at the business, as you know, we have 2 labs in -- our major lab is in Pittsburgh, we have a secondary or development lab in New Haven. The biopharma business operates currently out of Rutherford, New Jersey and out of Raleigh, North Carolina. As we look at sort of the synergies, the synergies are really administrative synergies, basically, in terms of the top-level management. We have decided and decided a long time ago that it was really not a viable strategic approach to try and merge the biopharma assays into the same facility, into the same line as our clinical business. As a matter of fact, if you looked at Cancer Genetics historically you saw that they did in fact had there clinical and there biopharma business on the same lines or in the same labs. And we're really happy with the ability to separate that for a whole variety of reasons, including issues like turnaround time, customer focus, validation issues, et cetera. So we will likely continue to do that.

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Naureen Quibria, Maxim Group LLC, Research Division - Senior Equity Research Associate [12]

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That's really helpful. And speaking strictly of the biopharma business, or actually comparing that to your current assets with ThyGeNEXT, et cetera, can you talk about where you see the biggest growth drivers for the company in the near term?

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Jack E. Stover, Interpace Diagnostics Group, Inc. - CEO, President & Director [13]

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Sure. I -- and remember, we have -- we're now almost a month into basically the acquisition and effectively the acquisition process itself was, I guess, about a 6-month process. But in terms of growth, clearly, our clinical business, the historical Interpace clinical business is still the largest part of the business segment. And you can tell by the investment that we've made both in the sales and marketing and operations side, that we continue to see that opportunity to be able to grow that business at significant rate. So we're not anticipating any reduction in that activity. Of course, we're always subject to reimbursement limitations and the other investment that we've made is really been to secure reimbursement. What I mean by secure reimbursement is moving more up the contract level as opposed to just entering into agreements. So if you follow our last or most recent press releases about agreements, most of those have been contracts. And I expect that those will continue to happen. The other is, as we focus on clinical results, those clinical results not only help secure reimbursement but also help to strengthen our position against our competition in the space. So we have a really good focus, if you will, on the clinical side of our business in terms of expansion. If I flip back to the biopharma side, and I mention that the revenues last year were in the $15 million range, with the due diligence and the hard work we did, including talking with customers, their relationships with major and less significant pharmaceutical and biotech companies in this space in terms of the service they provide was extraordinary. And we continue and expect to be able to build on that. There'll be a little right organizing of the ship here in the transition period. But I expect that, that will go fairly quickly. And I think that you're going to see growth from both the biopharma side as well as the clinical side of our business throughout this year and certainly into 2020 and beyond. And the reason we're so confident with basically expanding our revenue guidance is that we are confident in that.

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Naureen Quibria, Maxim Group LLC, Research Division - Senior Equity Research Associate [14]

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Great that's really helpful. And just pivoting to one more question. You mentioned in your opening remarks that you'll be evaluating and strategizing on the next clinical development assay or asset. When would you make an announcement in terms of a candidate?

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Jack E. Stover, Interpace Diagnostics Group, Inc. - CEO, President & Director [15]

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Yes. So other than the BarreGEN assay, which we are obviously talking about, by the way, we see that as the next significant product of the market for our clinical business. In terms of looking at opportunities, I'd say, in the gray area between biopharma and clinical, we're still evaluating that currently. So we'll have more clarity around that. As we will, when we -- focusing on our timing and expectation around cash flow and EBITDA breakeven in the next 3 to 6 months as we spend more time together with the biopharma business.

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Operator [16]

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Our next question is from François Brisebois with Laidlaw & Company.

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François Daniel Brisebois, Laidlaw & Company (UK) Ltd., Research Division - Healthcare Equity Analyst [17]

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You guys obviously are very progressive in your mindset -- your biopharma and diagnostics. I was just wondering if you could talk about your due diligence that comes in when you're trying to pick the best AI provider? Seems like the feel that you hear AI all the time, it seems like it might be getting little bit saturated. I was just wondering, how you pick them? And then how much does it seem to impact your strategy in terms of going with certain disease areas and certain cancers that you were discussing?

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Jack E. Stover, Interpace Diagnostics Group, Inc. - CEO, President & Director [18]

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Yes. It's a good question. There are a number of opportunities in the AI space, however, when you look at AI and you look at it in terms of the specialty areas that we focus on, in terms of our clinical business and actually the biopharma business, there really are few potential providers in that space. We got to know the Helomics people very well because they are neighbors in Pittsburgh, where our largest clinical lab is. So we got to spend a lot of time with them and understand them fundamentally. And remember that the work we're doing with them is really investigative, meaning that we're sharing data with them, they're sharing with us, and we're evaluating opportunities both together as well as how we might go forward. All that being said, that data and that information is fundamental to us in terms of what we do and how we go forward, not just in terms of monetizing that, but selecting the next assets as well. So that is all kind of now baked into our DNA, if you will, of decision making around next products. And when I talk about next products, I'm not talking just about next clinical products, I'm talking about any products that might really fit into the package that we actually have. On the disease side, when you look at the value of what the biopharma business brings, it certainly brings us into 2 sectors that are really large market opportunities for us that we haven't had much of a footprint in before. And if you look at where we are in terms of the assays that we already have on the clinical side, it becomes a pretty attractive portfolio of assets, if you will. But what we are mostly focused on, Frank, is this whole continuum from basically preclinical or even precancerous identification in determining biopsies right now through therapeutic evaluation. So there's lots of opportunities in that kind of continuum, not only for products but for services and technologies as well. A lot of it's driven by AI, not exclusively, but a lot of it is.

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Operator [19]

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Our next question is from Yi Chen with H.C. Wainwright.

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Yi Chen, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [20]

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My first question is do you expect additional data publication based on the BarreGEN test for the remainder of 2019?

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Jack E. Stover, Interpace Diagnostics Group, Inc. - CEO, President & Director [21]

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Yes. Yi, Thanks, nice hearing from you. Whether it's a remainder of 2019 or early 2020, we are expecting additional data. I don't have the specifics right now as we're pulling that clinical program together. But obviously if our plan is to launch at a higher level in the second half of 2020, we'll have more data to be able to support that.

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Yi Chen, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [22]

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Thank you. Second question is, recently Interpace has announced several in-network contracts with [services] in multiple states. Do you think that PancraGEN test can follow the same path? And if not, what are the reasons affecting the decision?

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Jack E. Stover, Interpace Diagnostics Group, Inc. - CEO, President & Director [23]

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Yes, it's a good question Yi. As you know, our PancraGEN assay is 2 things. One is, that's typically an assay for patients that are over 65 years old. So they're typically covered by Medicare. The majority of our revenue is basically funded by Medicare coverage. So that part is easy. In terms of the expansion, if you will, in terms of commercial carriers, that's a continuing process for us. And again, it's a function of investing in clinical studies and key opinion leader groups, which obviously we're doing. The attractive part about it is that, first of all, that business is growing and it's growing very nicely now, number one. And number 2 is that, as we look at it, we are still really the only company in the commercial space dealing with pancreatic cancer in a evaluation of biopsy methodology that we currently look at. So I think there's lots of opportunities on the PancraGEN side as well. And remember the success we had with thyroid was really able to attract partners like LabCorp to work with us on the thyroid side. And we're certainly interested in evaluating partners as well to work with us on the pancreatic cancer side.

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Operator [24]

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Our next question is from Ben Haynor with Alliance Global Partners.

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Benjamin Charles Haynor, Alliance Global Partners, Research Division - Analyst [25]

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It's Ben here. Just -- thinking about the new tests that you could potentially launch here in the future. Are you going to be going after kind of large opportunities that are largely untapped, like a BarreGEN? Or could it be that you're looking at more existing and smaller markets where you could come in with better mousetraps, so to speak?

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Jack E. Stover, Interpace Diagnostics Group, Inc. - CEO, President & Director [26]

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Yes, it's good question, Ben, or Bill, whosever on the call. But -- you know what, Ben, the way I look at it is that we're typically a niche player. We're not trying to compete with the big boys in this space. They have resources greater than ours. So we like the niche component. As a matter of fact, when you look at BarreGEN, it has 2 pieces and we refer to it this way. As we refer to the niche side, we believe that we can progress with what I will call a risk assessment profile component of BarreGEN. Our potential partners that are looking at this space, look at it on a larger basis and they see it as a potential screening opportunity. And so there's an example of, if we can bring the right resources together, we can take advantage of both sides of that opportunity.

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Benjamin Charles Haynor, Alliance Global Partners, Research Division - Analyst [27]

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Okay. That make sense and it's helpful. And then can you talk a little bit about the large-scale validations? So you're thinking about ThyGeNEXT and ThyraMIR, what the goals are there? What the study might look like? And when we might expect to see some data out of that?

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Jack E. Stover, Interpace Diagnostics Group, Inc. - CEO, President & Director [28]

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Yes. We'll be reporting on that relatively shortly. And I don't want to get committed to dates exactly yet, but we'll be talking more about it in Q3. But remember that one of the studies last year -- Last year? Or maybe it was beginning of this year that we announced was really the bridging study between effectively ThyGenX, the first generation and ThyGeNEXT the second generation and basically proving or validating that they were equal. And the next stage of where we go with that is expansion, if you will, in terms of biomarkers and the combination with the microRNA component of ThyraMIR and both the efficacy as well as the next-generation activity in terms of ThyGeNEXT. We're not done with the biomarker component yet. We have some exciting opportunities I think out there in the near future that we'll be talking about. And it will take a little bit of time to complete those studies, but I'd expect to see something in early 2020, maybe the end of 2019.

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Benjamin Charles Haynor, Alliance Global Partners, Research Division - Analyst [29]

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Okay. Great. And then lastly for me, just the catch up on billing that's occurring with the switch in billing provider, billing vendor. Is the current quarter, the last quarter of kind of the catch up as you guys see it?

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Jack E. Stover, Interpace Diagnostics Group, Inc. - CEO, President & Director [30]

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Yes, I think what you'll see is that from a historical point of view, meaning that the cash collections were not as -- were not up to par, the answer is, yes. So what you're seeing now and remember, we're now looking -- we already know July, we already know half of August. What we're seeing is that we're catching up on those historical collections and our collections are moving in concert with our revenue expansion. In fact, when we went back and we looked at it, the timing issues in terms of cash collections were not really evident till kind of the May time frame. And so effectively, we were able to get in and resolve that process in June, July and now in August. So we're pretty comfortable about where we are. But we've also got a focused group both externally and internally in terms of people that are really driving cash collections. As you know, that's absolutely critical to our life blood. And we're satisfied with the progress we're making. So we're -- we are on track.

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Operator [31]

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As we conclude our Q&A session, I would like to turn the conference back over to management for closing remarks.

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Jack E. Stover, Interpace Diagnostics Group, Inc. - CEO, President & Director [32]

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Thanks, Sherry. All in all, we had a very productive and successful second quarter and year-to-date, and look forward to continue progress through the remainder of the year and beyond. Our major focus, as I said, will obviously be integrating the recently acquired biopharma business, and we will be better prepared in Q3 to update you more specifically on our progress as well as our more detailed plans. Meanwhile, we will continue to focus on executing on our highest priorities, growing our franchises, expanding our product offerings to stay competitive, collecting cash and managing costs, expanding into new geographies, seeking creative ways to leverage our data and capabilities across -- with our clinical and biopharma businesses and most importantly, on delivering on our commitments and promises. Thank all of you for joining the call today, and I'd like to thank the Interpace leadership team for their excellent performance and also welcome all the Cancer Genetics biopharma employees. Thank you.

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Operator [33]

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Thank you. This concludes today's conference. You may disconnect your lines at this time, and thank you for your participation.