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Edited Transcript of IMMNOV.ST earnings conference call or presentation 23-Aug-19 2:00pm GMT

Q2 2019 Immunovia AB (publ) Earnings Call

LUND Aug 28, 2019 (Thomson StreetEvents) -- Edited Transcript of Immunovia AB (publ) earnings conference call or presentation Friday, August 23, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Mats Grahn

Immunovia AB (publ) - CEO

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Conference Call Participants

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* Ingrid Gafanhão

Kempen & Co. N.V., Research Division - Research Analyst

* Lars Hevreng

Vator Securities AB, Research Division - Head of Research & Senior Equity Partner

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Presentation

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Operator [1]

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Ladies and gentlemen, welcome to the Immunovia Interim Report January to June 2019. Today, I'm pleased to present Mats Grahn, CEO. (Operator Instructions)

Mats, please begin.

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Mats Grahn, Immunovia AB (publ) - CEO [2]

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Welcome to the call, everyone. I'll talk about the first half of 2019 and the quarter 2, specifically. This is the peer data that, of course, was characterized by the major milestone that we reached in the second quarter when we completed the optimization study with excellent results, and we'll spend quite a long time on this one today, going through the very, very good results and what they mean.

But before that, I'd just like to comment shortly on the financials that we have released also today. And there, you can see that the cash position is very well. We are well financed. We have SEK 327 million at the end of the period. And that will take us approximately 2 years from now on moving forward with the current business plan.

Burn rate, January to June, was approximately SEK 60 million, and that will increase somewhat during the second half, given the ramp-up on the commercial efforts and somewhat on the prospective collection and mostly on the commercial assets. And therefore, we can safely say that we have the 2-year run rate, given the cash at hand.

So with that, I'd like to move on to the main topic of the day, which is, of course, the optimization results. Truly excellent results and, actually, the first ever in the pancreatic cancer area globally to show that we can differentiate PDAC pancreatic cancer subjects, patients from symptomatic people who have symptoms that could have been pancreatic cancer, but it is something else.

And this is great because it does reflect the clinical situation where the test and the commercial IMMray PanCan-d will be used in the 2 large groups of the symptoms -- early symptoms and, of course, the diabetes group, which is back into the major part of the business opportunity of over $4.4 billion that we are addressing going forward.

So talking about the patients that do have concerning symptoms, I talked about this before, and this can be many vague symptoms, such as back pain, abdominal pain, jaundice, sudden weight loss, reflux, bloating, dyspepsia, gastritis and, of course, diabetes and some others. And the people who do have these symptoms, some of them have pancreatic cancer, and these are the ones we need to differentiate or find and diagnose, as opposed to the ones who are not healthy, but they have some other condition that gives similar symptoms, such as pancreatitis, which is inflammation in the pancreas; different liver diseases; biliary duct diseases; gallstone diseases; abdominal pain, in general, where no diagnosis is actually found, but it goes away anyway after a while; and inflammatory bowel diseases and so forth.

So it is a very complex and difficult diagnosis to set for the clinicians, and it also means that the immune system is active in all these situations. And as part of this, we have now shown that we can differentiate this with extremely good accuracy, which is a truly major milestone that has reduced the technical risks significantly moving forward.

So it's been a great quarter. And definitely, in this sample also support from others in a great way.

If you look upon the study, it did include pancreatic cancer samples from all stages: so treatable, stage I and II; non-treatable, stage III and IV; and also, of course, controls from a collective perspective, mainly in our collaboration with U.K., where they actually have this set up with the primary care stations and the people coming into the gastro center for defense diagnosis.

So that is -- really, truly, it can reflect in the clinical situation and also, of course, healthy controls in the study. I think that there are many, many different comparisons within this, actually. It's all the stages versus all the symptomatic or all the diabetics or all the healthy. And of course, the symptomatic ones are actually subgroups as we understand as well, given that they have different conditions.

But all in all, we do -- we've only in PanCan-d find all these pancreatic cancer ones versus the rest in different comparisons here with accuracies over 90% and moving up to 98%, which is what we released.

We went on during the summer after the first release of this excellent paper and I presented at the PancreasFest meeting in U.S. in Pittsburgh a poster detailing the results in more detail, and we focus then, of course, on the clinical-relevant situations, meaning that for the hereditary, it's mostly, actually comparing healthy versus the ones who are starting to get cancer and that we did when we added the value of the measurement of CA19-9, the standard, simple test of a biomarker got a result of 98% accuracy rate, truly great.

And also, even more important, when it comes to the symptomatic versus the pancreatic cancer ones, all these mixed groups of various conditions showed that we could differentiate them with 96%, 97% accuracy. And that is, of course, reflecting directly the early symptoms, commercial situation that they're going for. So that was great as well.

And thirdly, when it comes to the diabetics, ones where we had diabetic controls who do not have cancer that we then managed to separate from the pancreatic cancer samples with 96% -- over 96% accuracy in combination then with the 19-9.

So even if only IMMray PanCan-d show greats results, truly commercially viable, adding this additional few percentages up to this level gives us an incredibly attractive performance situation moving forward. And that is a great situation to be in.

Furthermore, at that poster, we also showed only stage I and II versus all the controls, and that is also a great result of 98% accuracy. So it's not only that we differentiate pancreatic cancer, stages I to IV, we've showed also that it is equally applicable to the very early stages, stage I, II or III are treatable, which is, of course, very, very important.

Another aspect I get asked sometimes after these presentations, and we've got questions at the PancreasFest as well: do you need different signatures or tests, subtests, let's say, for these different situations? Or is it actually, you can do with this one test? And that answer is we can do this with one test, which is also very strong -- very, very strong. So this sets us in a great attractive situation now moving forward with full speed towards, of course, the Q3 launch during 2020.

The next steps moving there remains as communicated before, starting with the commercial test model study, which is there to run the now candidate signature and algorithm on the reduced commercial slides, so to say, where we only run the ones that we believe it will be the test.

And there, we're testing, so to say, the significant point optimization, not to, say, too much-rounded the full discovery check with 400 different ones on, so that's the difference there. We have an ability during this study -- in this study also to do some fine-tuning to make it even more robust. And we also have an increased number of different supplying costs that tell us to be absolutely sure of -- that can handle any potential systematic valuation in the deliveries from these ones.

So it's, of course, the big technical risk has been taken down already now with the optimization study. But after this commercial test model study, that will be finished at the end of the year. As indicated before, we will have a truly low, low, low risk on the technical side and moving forward through the steps after that, which are the verification tests and the validation studies that are done on completely lost products: the first one in open samples that we know which one they are; and the second one, validation done on blinded samples, where we mostly, though, I don't know before the data is opened, which one is which.

So we are on time there. The major time-wise risk has been what we also communicated in the early summer, was to get all agreements in place with delivery on the fresh additional samples needed. And there, I have to report that we are having these agreements in place and deliveries are allowing for the start as planned on the commercial test model study.

And even for the later verification studies and relation studies that starts directly after the commercial test model study, we are well underway with agreements for deliveries to these ones as well. And as you may have seen an additional benefit there is that we added the first supplier or collaborator in this area and key opinion leader in Germany, which is good because it opens up a market where we previously had no collaborations with key opinion leaders, and this is a good additional bonus, so to say, even though we have great deliveries from the U.S. and from other European countries to these studies.

So looking forward to, as I said, results at the end of the year for the commercial test model study, and that will then lead to the locking of the test completely and the final steps towards commercialization in quarter 3.

In parallel to this, we are also increasing, as we talked about before, the market access to commercial activities in various areas. For example, the awareness that we have to make sure that the customers, various ones, the targets are aware and know about the test and get informed. So that means that we are continuing the collaborations with the patient organizations to reach the risk individuals in the familiar group mainly, reward individuals with only one relative that has started that are very, very likely to be self-pay customers.

We also are really mapping, and we're going to continue to work with, of course, articulated the pancreatologist, but expanding that to the gastro clinicians that are the ones that are in charge of the places where early symptoms use will be extremely important, and that's also where we will deploy the same stores initially for the first years.

And we have -- on top of this, also, and especially, U.S. started to reach out to certain primary care organizations that are very interested in that, what goes on here, which is another important growth on a medium and longer term. So that's a lot of what I think is going on the awareness side and building of customer stock -- potential customer stock and the type curves.

We are also, of course, investing in sales support functions. Examples of this are logistics, how to get the samples in the most convenient way for the customers from their place to our labs. This is something that's overlooked sometimes. Our colleagues have called it the color board. That's, frankly speaking, extremely successful in this in terms of -- actually, the logistics of that test is the most important factor of their success, one of the most important factors.

And we have great plans underway in that area, how to move the blood samples in a very, very convenient way to our facilities. Other functions that need to be put in place, and it's underway, it's, of course, the ability to do billing in the right way, in the correct way and making it easy to put the orders in and get the results back and so forth to all the infrastructure. In parallel to prepare for the sales force build-up, in terms of identifying people, getting plans for the 2 sales teams in place, training plans, timing and the sales strategies, of course.

So that's ongoing in parallel to the technical work, and we are moving forward diligently on both ends there, which is a great, great spirit for Immunovia, it's really fun to work with this.

Another area that moves in parallel to this, not affecting the sales store but still important for the later reimbursement discussions of the large prospective studies there, depends on how one has 2 -- during periods in 2 very important key opinion centers added in the U.S.: the Columbia University in New York, one of the world's most well-known sites in cancer; and also in Chicago, another very, very important hospital.

The PanDIA, the study that collects samples from the new onset diabetics, has been progressing very well in Scandinavia, in Sweden, and they have passed the 2,000 individuals' samples. So that is building very good as planned.

PanSYM, yes, you know that that is a -- it's a very successful sort of collaboration and has certainly been instrumental in the delivery of samples also to the optimization study and now the commercial test model study as well. If -- the UCL collaboration, we announced in the quarter there, that the formal agreements were continuing into the prospective stage of that one moving forward and also expanding it geographically in U.K., that means the UCL can deliver even more samples per time. Units going forward has been signed. That's given in the press release that during the period as well.

So the prospective studies move forward well. And these individuals then will be directly after the validation study is completed, following ones that we tell you is to take the steps inching for interventional phase.

Right, so the PanCan-d, that's our main, main focus. We remain very, very focused to move to commercialization to address this fantastic market that is there waiting for us and their clinical need that is there where the patients are waiting for it, where the clinicians are waiting for it and that no one is still close to where we are in actually, addressing this area.

So if I answer that we have also the pipeline, where we work with the lung cancer, a very attractive market, of course, where there is screening ongoing with low dose CT. That has certain problems that need to be solved in terms of the many false positives, and that is one target for us.

However, the pharma collaboration we're doing is -- has also another quarter's performance practices that's picked up before to run a number of studies with us: first, to show that we can differentiate cells, noncell lung cancer from -- non-small cell lung cell cancer from healthy and also symptomatic. So there has been extensions to the work scope here. And we are working diligently together with the pharma on that. Because that result gives us the data we want as a company to move further into the studies where we will study the potential to differentiate the people who have a positive test from the low-dose CT and then why they had some problem with the lung being symptomatic, but it really differentiates these lungs from the ones who actually have cancer. But also to see how early you can find the cancer in stage I and so forth because it is a similar problem as the pancreatic cancer case with low survival rates, but it's a larger cancer area with more than 4x as many people affected and death per year.

So the current state is that we are focusing on the pharma study because that leads as a foundation to both directions. In parallel, we are building the key opinion leader network and addressing where to get the very best samples for the company studies after that one as well. So it's been quite a lot of activities. It's always the sample access that is the main time-consuming and the time-critical area in all studies, and you want it also to be of very high quality. So the clinical data that comes with the samples is correct and so forth and that the sample is collected in a correct way.

We will continue to, of course, report when we have milestones reached in these ones, and we'll get back to that. Same goes for the -- all the areas where it's seen likely these are ongoing studies.

Okay. So to summarize the key things of this time period, of course, it is the PanCan-d results that are excellent and for all risk groups that we do address show fantastic data to build on for the finalization. And we -- puts us in a very strong position, meaning that the technical risk is significantly reduced already with the optimization study and will be minimized with little remaining parts once we have completed the commercial test model study.

So we are on plan for this one, the commercial test model study, as indicated. The critical sample delivery agreements are in place, and deliveries are ongoing. In parallel, we are ramping up the commercial activities, as described in this call, and we are all moving towards sales start in Q3 next year, 2020.

So that was my summary of the report today, and I'd like to open up for questions.

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Questions and Answers

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Operator [1]

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Thank you. We're now ready to take your questions. (Operator Instructions) And the first question comes from the line of Lars Hevreng from Vator Securities.

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Lars Hevreng, Vator Securities AB, Research Division - Head of Research & Senior Equity Partner [2]

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Mats, can you just please remind us about the expected timing for the results of the -- about these 3 large studies and really from the PanSYM and the PanFAM?

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Mats Grahn, Immunovia AB (publ) - CEO [3]

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Well, the sampling is ongoing, and it's going really well. But we would like to-- we will run the interim readout of all of them using the test that has been validated because that will be a requirement for the ethical bodies to go into the interactive phase after that. So that means that it will directly, after the validation study in Q3 next year, move into interim results.

And all 3 of them will actually be ready for it at that time. So it's going to be a lot of running there right after that one. So that's a great situation, of course, for efficiency.

And then there's a little bit different timing on the completion, given the nature of these studies after that in the intervention phase. The one that is the fastest was the PanSYM because we have very high flow of patients and a predictable number of events moving forward. So that will take another -- as we have indicated before, I follow the time lines there, another year, 1 to 1.5 years. And same with the diabetes ones, there will be a collection completed about a year after the first one. So it's [an asset].

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Lars Hevreng, Vator Securities AB, Research Division - Head of Research & Senior Equity Partner [4]

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Okay. Can you -- also, about the number of employees that you expect to have in the company in around a year's time. You're today around 50, that on launch, what will you say?

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Mats Grahn, Immunovia AB (publ) - CEO [5]

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Exactly, we're not -- but yes, we will be significantly increased, and the increase will happen in the commercial organization, particularly in U.S., where we will employ a sales force, and we will be at least 75 people, probably more in a year's time.

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Operator [6]

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And the next question comes from the line of [Peter Swenson], he's a private investor. (Operator Instructions) The next question is from the line of [Michael Osman]. He's also a private investor.

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Unidentified Participant, [7]

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Mats, I listened into the Q2 conference call of Garden Health in the beginning of August, and they just increased the addressable market to $60 billion annually, and the stock went up, of course, and that's now more than fivefold since October last year to reach a market cap around USD 10 billion.

They estimate the size of the addressable market, leaves plenty of room for many other players, including Immunovia. Have you made any updated estimates since last summer of the addressable market for your near-term products and for your pipeline products that you can share with us, please?

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Mats Grahn, Immunovia AB (publ) - CEO [8]

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The pancreatic cancer area, we have a pretty good and solid estimate of, as you know. And there, we look into the addressable groups. The hereditary group being about 300,000 patients that are having the -- it's enforcing the criterions of familiar pancreatic cancer, mainly more than 2 close relatives, actually, and that means $240 million in Europe and U.S.

Early symptoms, about 1 million tests per year for the need for the areas where as the health care systems are moving in the direction where they absolutely need to like that, USD 600 million. And then the type 2 diabetics, where the number of people are about 3 million in Europe and U.S., that will get diagnosed with diabetes every year.

I know we calculate -- maybe it's, in your mind, I know, a little bit low with 1 test per year in 2 years. But that -- it is -- you have to think also about the median survive -- time before diagnosis, after diagnosis of diabetes announcing the diagnosis of pancreatic cancer. For the ones who are affected there, it's 1, 1.5 years. So there is -- even though the clinically relevant time is 3 years, it may be cut down to 2 years by authorities. We shall see.

But even going for that, so to say, realistic this is a USD 3.6 billion opportunity in Europe and U.S., should we reach everyone. So I'm not updating that one because I think it addresses the situation as it is.

When it comes to our pipeline products that are in early stage, as you now, we will, given the results we are getting in the ongoing studies, be able to quantify what part of these markets that is addressable, but I will not do it now.

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Operator [9]

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And the next question comes from the line of Ingrid Gafanhão from Kempen.

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Ingrid Gafanhão, Kempen & Co. N.V., Research Division - Research Analyst [10]

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Can you please just remind us again on the time line for your lung programs?

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Mats Grahn, Immunovia AB (publ) - CEO [11]

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We are working with a study that is the foundation of further steps there, and that is the one I alluded to here, in which we do together with one of the big pharma. That one is actually dealing with the ability to differentiate lung cancer at all the stages versus healthy from -- it's what we released last year now.

There has been another. The ongoing study has been extended, and there are more samples put into it when it comes to people who have symptoms as well, which makes a lot of sense. And so we -- given the comments on the formula, we don't have an exact day when we will complete it. We just know we will complete it. And as -- our ambition is to complete it within the year here and I think that's definitely doable.

But in parallel, we are securing additional relevant buybacks for our needs moving forward to detection of the ones that have done the low-dose CT, specifically. That's an only Immunovia activity. And we will, of course, communicate both the ongoing study and progress on building up that program when we have it.

So when it comes to (inaudible), therefore, I will not give the data. I can't tell exactly when we will complete the whole launch of the products yet. But as we move forward and the results are coming, we can become more and more precise.

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Ingrid Gafanhão, Kempen & Co. N.V., Research Division - Research Analyst [12]

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No problem. I was just curious that should we still expect any sort of update in H2? Or that's also for now timing that you're not communicating?

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Mats Grahn, Immunovia AB (publ) - CEO [13]

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Yes, we definitely hope to be able to communicate during -- from midyear, so during the second half of the year, yes.

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Operator [14]

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(Operator Instructions) And we have a question from the line of [Peter Swenson], who is a private investor.

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Unidentified Participant, [15]

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Well, I'm not sure if -- I think it's me that you're referring to. My name is [Michael Peterson]. So that explains that it was just quiet before.

Anyway, my original question was that -- to hear your view about the derisking of the technology with the results that came out now during the summer. But the way I understand it is that your view is that you have significantly been derisked. So if I look on the share price, so either you and I are wrong, which I hope that we are not or the sort of the risk premium within the commercial phase has increased. So -- and because of that, can you please walk us through the coming quarters' sort of events and how we should monitor that? What are sort of expectations in the coming -- in this coming quarter?

I'm not sure if you -- what will happen now, I think if not now you are -- you have finished the preparations for the commercial tests and now you're starting in September. And do you have anything else you can say in Q4 and Q1? And then hopefully, you will sort of hit sales. I'm trying to visualize what's happening.

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Mats Grahn, Immunovia AB (publ) - CEO [16]

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Absolutely. And one very important milestone is, as you allude to, the -- of course, the start. That means that we have all the samples in hand, which we are very confident of now in September here. And then the -- even more important, of course, the results of the commercial test model study in -- at the end of the year; and then the 2 steps, which are very tightly linked to verification, validation; and then, of course, sales start in Q3.

So that's going to be physically every quarter moving towards the same quarter. There will -- yes. And then we will -- as we said, we will, of course, increase our market access activities that we informed you about in news updates and so forth.

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Unidentified Participant, [17]

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Yes. So did I get it correct that the next sort of step is that the end of this year, we will have the results of the commercial test? Is that the next one or did I miss something in the beginning?

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Mats Grahn, Immunovia AB (publ) - CEO [18]

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No. That is absolutely correct. And that's the key milestone that we'll take down the remaining, if there is any, technical risk, very, very low.

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Operator [19]

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As there are further questions, I will hand it back to the speakers.

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Mats Grahn, Immunovia AB (publ) - CEO [20]

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Okay. So thank you for listening in. It's been a great quarter so far given the results, and they are a truly milestone in the whole area of pancreatic cancer, not only for Immunovia. It's the first time that anybody shows that you can, with this fantastic data, show that you can detect and find the pancreatic cancer ones out of a group of symptomatic and/or diabetic ones.

Remember, they do address at these results exactly the risk groups that we are going for. And the study has been done with fresh samples from [Trax] side and prospectively collected controls. That has not been done by anybody else before.

So great talking to you, again, and we are looking forward to the continued step-by-step approach. And I think we are looking forward as much as everybody, not to mention how much the patients and the clinicians look forward to this test. Thank you.

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Operator [21]

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This now concludes our conference call. Thank you, all, for attending. You may now disconnect your lines.