Interpace Diagnostics Group, Inc. (IDXG) CEO Jack Stover on Q3 2019 Results - Earnings Call Transcript

Nov. 13, 2019 9:22 PM ETInterpace Biosciences, Inc. (IDXG)
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Interpace Diagnostics Group, Inc. (OTCQX:IDXG) Q3 2019 Earnings Conference Call November 13, 2019 4:30 PM ET

Company Participants

Jack Stover - President and CEO

Jim Early - CFO

Conference Call Participants

Kevin DeGeeter - Oppenheimer and Company

Jeffrey Cohen - Ladenburg Thalmann

Ben Haynor - Alliance Global Partners

Yi Chen - H.C. Wainwright


Greetings, and welcome to Interpace Biosciences Third Quarter 2019 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. 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 the 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 the forward-looking statements made in this conference call are described in the Safe Harbor statement in today's earnings release, as well as Interpace Biosciences public periodic filings, including the discussion in the risk factors section of our Form 10-K filed with the SEC on March 21, 2019. The risk factors are set forth in our Form 8-K filed with the SEC as of September 20, 2019 as well as the Form 10-Q for the third quarter expected to be filed shortly, which includes discussions in the section on forward-looking statements.

Investors or potential investors should carefully read and consider these risks. Interpace Biosciences 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 Biosciences, Jack Stover. Please go ahead, sir.

Jack Stover

Thank you, Kevin, and thank you all for joining us this morning for a review of Interpace Biosciences results and business highlights for the third quarter and year-to-date. I don't believe that the earnings release has hit the wire yet, as this is a very busy time for filings, et cetera but it should hit during the call.

With me today on the call is Jim Early, our Chief Executive Officer. For today's call, I will focus on our achievements to date and provide a general business update. Jim will review our financial performance in more detail. Following that, we will open the call for questions.

I'm pleased to announce our name change from Interpace Diagnostics to Interpace Biosciences today. We are a leader in enabling personalized medicine, offering specialized services along the therapeutic value chain from early diagnosis and prognostic planning, by way of Interpace Diagnostics historical business to now targeted therapeutic applications for pharmaceutical and biotech companies by way of our new Interpace pharma solutions business. We changed our name to better represent our broader base combined business and to indicate that we are no longer a diagnostic company alone.

Importantly, this is the first quarter we're in the BioPharma Business we acquired on July 15, 2019, is included in our results of operations. We acquired the net assets for approximately $23.5 million, subject to a networking capital adjustment, which were completed on October 16th. Additionally, we raised $27 million in two tranches of convertible preferred stock with Ampersand Capital Partners, perhaps the preeminent investment group in the lab services business. While the transaction was complex, and we are in a transition process, we couldn't be more pleased with the acquisition as to date it is performing even better than expected.

As we have previously stated, the pharma solutions business is synergistic with Interpace Diagnostics business, which is also assay based uses similar processing equipment and platforms, and similarly qualified technical personnel. Most customers of our diagnostic business our physicians and healthcare institutions, while the primary customers of our pharma solutions business are pharmaceutical and biotech companies involved in using our capabilities for clinical research and drug development.

We believe that our future will be based on leveraging the opportunity that is created by the breadth of our capabilities working together with physicians and biopharma companies to optimize cancer therapies. For instance, we have a very deep bio repositories of both solid tumor, pancreatic, thyroid, lung and Barrett's esophagus samples.

Precision Medicine, typically known as personalized medicine is the concept of combining a drug with a test that is modified to a person's genetic disposition. Precision Medicine involves a selection of diagnostic tests, companion diagnostic or CDX that have the potential to identify changes in each patient cells. Over two-thirds of all oncology therapeutics today are developed in parallel with diagnostic tests.

Today, our pharma solutions business works with 9 out of the top 10 biopharma companies and is involved in over 225 trials, including over 45 immuno-oncology trials, where a patient's immune system is used to treat cancer.

With the acquisition being only four months old, we are confident that the growth of the pharma solutions business will be an important contributor to Interpace Biosciences pharma planned growth, larger contracts in pharma solutions with at times unpredictable revenues due to the timing of customer clinical trials we believe are a good complement to the relatively predictable revenues of the Interpace Diagnostics business, which can be subject to third party reimbursement risks.

We think that the combination of Interpace Biosciences and interface pharma solutions business now under the name Interpace Biosciences, is a great platform to deliver consistent growth, as well as a basis for additional acquisitions, while accelerating our timetable to adjusted EBITDA breakeven.

The addition of Ampersand Capital Partners, as we've mentioned before is perhaps even more important than this exciting acquisition. Ampersand is a significant financial and strategic partner and investor in Interpace Biosciences and in our opinion not only helps to provide validation of our model and plans, but also provides the basis to aggressively seek future synergistic acquisitions that we believe will help differentiate us from many of our competitors. Interpace Biosciences has demonstrated its ability to acquire and costs effectively integrate meaningful assets.

With the BioPharma acquisition, we continue to view our operations and manage our business in one operating segment for reporting purposes, which is the business of developing and selling diagnostic tests and providing BioPharma services. We recognized $7.7 million in net revenue for the quarter and $20 million year-to-date.

We had volume growth of 16% for the quarter, and 22% year-to-date for our diagnostic assays. Medicare and contracted reimbursement remained strong and continue to grow across both products. Today, about 65% of the net revenues in our diagnostic business are generated by our thyroid business and 35% by our endocrine or PancraGEN business.

Revenues from our pharma services business were included in our consolidated results from the closing on July 15, so not quite a full quarter. Net Pharma Solutions revenues for the quarter were less than $3 million and approximately as expected. Focusing on the Pharma Solutions business, contracts are growing and bookings have been recorded through September 30, 2019, worth over $18 million that are expected to be recognized over the next year or more.

Our near-term revenue growth plans are to add additional business development personnel in key unserved markets, expand our immuno-oncology franchise and accelerate growth expansion, as recently indicated by our partnership with Genecast in Beijing, China.

With consolidated gross revenues, while consolidated gross revenues were in excess of plan for the quarter and year-to-date, we reduced our estimate of the amounts to be collected by approximately $1.8 million during the quarter, principally due to the transition to a new billing contractor.

Our plan is to aggressively continue our collection efforts, and we have recently added new professional billing staff with set goals to increase our reimbursement rates. It should be noted that in accordance with ASC 606 such adjustments like this in our diagnostic business are in fact required to be reported as an adjustment, reducing revenues for the current quarter.

For clarity with the acquisition of the BioPharma business in Q3, the overall cost of the Interpace Bioscience business, has increased for both the one-time transaction costs as well as incremental operating costs and margin reductions. While we are right sizing operations, and beginning to recognize synergy. We expect this process will continue in the fourth quarter and into early 2020, with 2020 being the primary beneficiary of these improvements.

During the third quarter and year-to-date, we also continue to make progress with BarreGEN, our proprietary essay for Barrett's Esophagus that is in our clinical evaluation program. With the help of our key opinion leaders we initiated a retrospective study and as such, we are accumulating samples. We expect to announce results in 2020 to support further clinical acceptance and sufficient initial reimbursement to commercially launch BarreGEN. Additionally, we had our first independent study of the potential benefits of BarreGEN published.

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

Jim Early

Thank you, Jack and good afternoon, everyone. Today I would like to focus on the key elements of our financial performance and position. As previously mentioned, net revenue for the third quarter of 2019 was $7.7 million, up 35% from Q3 of 2018. Our year-to-date net revenue was $20 million up 25% from the same period in 2018. The principal reason for our net revenue growth was continued expansion in both our GI and thyroid businesses led principally by unit growth and the acquisition of the biopharma business from Cancer Genetics.

Gross Profit percentage for the third quarter of 2019 was 37% compared to 52% in the second quarter of last year. Our gross profit percentage year-to-date through Q3 2019 was 48% as compared to 53% for the prior year-to-date. Gross profit percentage reduction was primarily due to the acquisition of the BioPharma Business, and the reduction of our estimate of amounts to be collected.

Sales and marketing costs for the quarter were $2.8 million, an increase of 36% over Q3 of 2018. Year-to-date, sales and marketing costs were $8.1 million, an increase of 33% over the prior year period. This increase is due to the added biopharma commercial activities for the quarter, as well as new investment in additional commercial headcount for sales representatives and account managers related to our diagnostics business.

Research and development costs for the quarter increased to $0.9 million, up from $0.5 million in the prior year. General and administrative or G&A expense for the third quarter was $4.5 million, up from $2.1 million in the second quarter - third quarter of 2018, related principally to the acquisition of the BioPharma Business.

The transition services agreement between Interpace and Cancer Genetics principally terminates at the end of the fiscal year. We also incurred $0.8 million of cost during Q3 of 2019 and over $2.5 million year-to-date, primarily in professional, consulting and banking advisory fees in connection with our acquisition of the BioPharma Business.

As a result of the above loss from continuing operations for Q3 of 2019, and Q3 of 2018 was minus $7.3 million and minus $3.0 million respectively. And loss from continuing operations year-to-date 2019 versus 2018 was minus $16 million and minus $8 million. We believe that the increased costs associated with the acquisition of the BioPharma Business and operations will be an investment that is well worth the costs.

As we noted in our earnings release, and discussed above, we often refer to the adjusted earnings before interest, taxes, depreciation, and amortization as EBITDA. Adjusted EBITDA is defined as income or loss from continuing operations plus depreciation and amortization, acquisition related expenses, transition expenses, non-cash stock-based compensation, interest and taxes and other non-cash expenses, including asset impairment costs, bad debt expense, loss and extinguishment of debt goodwill impairment and change in fair value of continued consideration and changes in warrant liability.

Accordingly, our adjusted EBITDA for the three month periods ended September 30, 2019 and 2018 was negative $4.2 million compared to negative $1.0 million in 2018 respectively. And for the nine month period ended September 30, 2019 and 2018 was negative $7.7 million and negative $3.4 million, respectively. The reduction in adjusted EBITDA was due primarily to the acquisition of the BioPharma Business of Cancer Genetics.

Our monthly operating cash burn average $1.5 million in the third quarter of 2019, principally as a result of our acquisition of the BioPharma Business, as well as our planned increases in expenses and operating costs to support our planned end of year growth.

Cash and cash equivalents total $2.4 million as of September 30, 2019. Subsequent to the end of the quarter in October, we completed the second tranche of funding of $13 million with Ampersand Capital Partners. Our accounts receivable increased to $14.7 million net of adjustments from $9.5 million at the end of 2018, principally due to the acquisition of the BioPharma Business, as well as our growing revenues in diagnostics.

As a reminder, last year we entered into a three year up to $4 million credit facility with Silicon Valley Bank. In the third quarter, we borrowed approximately $3.75 million under this facility, principally to assist us with the acquisition of the BioPharma Business in transition. Subsequent to September 30th, we have paid the line back in full.

Total assets were $74.7 million, total liabilities were $37.7 million, and stockholders’ equity was $23.8 million as of September 30. With the acquisition of the BioPharma Business our headcount is currently 184 as compared to 79 at the end of 2018.

With that, let me turn the call back to Jack for his closing statements before we turn the call over to Kevin for the Q&A. Jack?

Jack Stover

Thanks, Jim. And understand that the earnings release wire has hit for those of you that are looking for it. Q3 2019 is certainly a transition period on many fronts for the new Interpace BioPharma Business. Let me remind you that the transition process, as I previously said is on schedule and the pharma services business is in fact performing better than expected. The diagnostics business volume growth has been strong, not only with our thyroid assay, but also with our GI or PancraGEN.

Interpace, though is adjusting its 2019 annual net revenue guidance to between $28 million and $32 million in revenue, as we continue to transition the BioPharma Business and prepare for a first full year together. Interface Bioscience is also announcing and confirming top line revenue guidance of $50 million for 2020.

Now, let me turn the call over to Kevin, the operator for Q&A.

Question-and-Answer Session


Thank you. We’ll now be conducting a question-and-answer session. [Operator instructions] Our first question today is coming from Kevin DeGeeter from Oppenheimer and Company. Your line is now live.

Kevin DeGeeter

Hey, guys. Yeah, thanks for taking my questions. A couple if I may. Jack, I appreciate the guidance you provided at the end of your prepared comments, $28 million to $32 million for the year if my back of the envelope math is right, that kind of land you is somewhere kind of $8 million to $12 million for the fourth quarter, pretty wide range.

Can you just kind of walk us through you are thinking some of the puts and takes that would drive you either towards potentially the upper end or the lower end of that range given that we’re sitting here in mid-November currently at the time being the guidance was issued.

Jack Stover

Yes, thanks, Kevin. As you can imagine, we've been focused on wrapping up the September month end and quarter end activity. So that obviously has been a principal focus. But I think it's basically just recognition. And you probably know me by nature as being conservative and wanting to make sure that while we are on track and things are really moving forward as planned. And as we are reiterating guidance in 2020 - I mean, that's an unusual kind of a structure to be basically saying, hey, listen, we're going to be on the lower end of guidance in the remainder of 2019. But we're really on track for 2020.

And basically, that's the transition process overall, in terms of that activity, but remember too, we took a $1.8 million charge in the quarter, and the methodology of how those effectively receivable reserves get accounted for they really hit top line revenue, under this ASC 606. So we just want to be cautious and careful and of course, we want to meet and exceed people's expectations. But we don't want to mislead anybody either.

Kevin DeGeeter

Fair enough. And then to that last point with regard to the reserves, can you just provide us some granularity as to how do we think about the three primary components of the business biopharma, thyroid, and GI, in terms of where that kind of $1.8 million is sort of falling, proportionally, and just so we can kind of think through where mechanically impacts are coming from.

Jack Stover

Yes, it's good it's really a good question and obviously it doesn't have anything to do with the BioPharma Business because those revenues just started coming on board. So it's really part of the diagnostic component of the business. And realistically what it is it goes back as far as the beginning of 2018 where we effectively - I guess we were transitioning but the ASC 606 activity reach back to that point in terms of how we evaluated revenue recognition in the beginning of 2019.

And to be honest with you the process there is that as those receivables are not collected, the further we get away from them, the more difficult it is to collect. And when you're in a billing transition and collection process, you have two different contractors trying to solve that problem. And things can fall through the crack.

So it was really the thyroid and pancreatic assay business and I don't know this exactly, but I would generally say it's more on the thyroid side than it was on the PancraGEN side. But that's a guess that's just kind of a rough estimate in terms of that number.

And in fact, if you look at it for year-to-date the reserves that we have, or adjustments that we have are over $2 million just happen to be that it was $1.8 million in Q3, as we effectively look to clean that all up.

Kevin DeGeeter

Got it. And one last question for me then I'll get back in the queue. For those of us who are interested in tracking the relative growth profile of the clinical business, thyroid and PancraGEN versus pharma, how are you thinking about sort of break out of segment revenue going forward and what should we expect, what we can monitor and what we can’t monitor there?

Jack Stover

Yes. It's an interesting question. So I said on the call, and you may have missed it, but we're going to continue to report under one segment for the time being, that doesn't mean that we won't identify and we won't talk about how we're doing in the BioPharma side and how we're doing on the clinical side. If you go back and you look at it, what we tried to do is identify or reference the volume growth and the volume activity that we add in the quarter and year-to-date. So the volume activity on the diagnostic side was pretty attractive. And really consistent with what we've talked about before.

We saw on the unit side for the quarter 16% growth and year-to-date 22%. I would tell you that we typically haven't talked about this, but now with the BioPharma Business, the emphasis around it is certainly the majority of that growth is in the thyroid business. In terms of units, but the reimbursement on the PancraGEN side is very attractive and a single digit growth on the PancraGEN, if I did the math might be the equivalent of double digit growth on the thyroid side as you sort of think about models.

On the biopharma side, it's a little early to tell. All I can tell you and I think I may have mentioned this, originally, that if you looked at the biopharma business inside of Cancer Genetics for the last couple of years, it ran about a $15 million revenue run rate. And that's not what we're projecting. But give us a little bit more time in terms of what's happening.

And what we did do is we basically gave some color as to the success they're having in terms of building backlog. Obviously, the question on that backlog is not all of it gets pulled through, and the timing of that pull through becomes important. So that's why we're adding the additional business development people specifically in territories that really have been untouched, like San Diego. And I would say or suggest that we have based upon what we're seeing in the activity, we're very optimistic about the 2020 impact.

And actually, I think we are very optimistic about Q4, as you referenced when you looked at sort of the revenue growth in Q4 for us to be able to beat our range as to what we're hoping for on the biopharma side.

Kevin DeGeeter

Great, listen thanks for taking my question.

Jack Stover

Thank you.


Thank you. Our next question today is coming from Jeffrey Cohen from Ladenburg Thalmann. Your line is now live.

Jeffrey Cohen

Hi, there. How are you?

Jack Stover

Good, Jeff, how you're doing?

Jeffrey Cohen

Just fine. So just a few questions, so we'll segue from Kevin's question on the biopharma side I know you are not going to break that out independently, but as we think about particularly 2020 where you gave some top-line around $50 million is it reasonable to expect the biopharma in the call it 34% to 36% range is that sound like about the right spot where it should be relative to the top-line of $50 million.

Jack Stover

I'm sorry, it though in terms of the dollar amount of revenue.

Jeffrey Cohen


Jack Stover

Or the percentage growth?

Jeffrey Cohen

The aggregate dollar amount, so at the top line of $50 million for 2020 on the guidance would $17 million or $18 million seem appropriate for biopharma at this point…

Jack Stover

I'm sorry, I thought, I heard you say $30 million. Yes, I think that's well within the range, yes.

Jeffrey Cohen

Okay, perfect. So to breakout the $1.8 million to be collected, so it sounds like that’s the wide range for fourth quarter, some of them may be coming back in it’s a little early to kind of get a better handle on it at this point?

Jack Stover

That's a really good question. And you're absolutely right, just because we've, basically made an adjustment for that doesn't mean that we don't and we're not attempting to collect it. But at this point in time with the addition of - or the two business coming on board we thought, it was really an appropriate time to just make sure we had an especially clean balance sheet doesn't mean that we won't have other adjustments going forward in terms of reserve adjustments by the nature of this revenue recognition, but we feel really comfortable with it.

And by the way, I hope we collect at all. As Jim said, we're not in the business of reserving or writing off, we're in the business of collecting. And that really is our primary focus.

Jeffrey Cohen

Got it, okay. And then lastly, for you Jack, could you talk a little bit about BarreGEN and as you do some of the further evaluation work, talk to us about the size of the market, and where you anticipate it could be and where it is now and how that data be reflective in your top-line?

Jack Stover

Yes. And obviously, BarreGEN the beauty or the opportunity with BarreGEN is that we have interest and we are talking to pathologists in the GI piece of our business and they've been asking us interested in this product for quite a while. Last year, it was last year we really rebuilt out the KOL and Barrett's led by Dr. Nick Shaheen at the University of North Carolina. And Nick is not only a leader in the space, he has been probably our single biggest encourager in terms of progressing to the next level with BarreGEN.

We really break it down into two products. We look at basically the initial product as an overall risk assessment or you might even look at it as an initial evaluation of the potential progression if you will of Barret’s esophageal cancer that's a really big market. We think it's $1.5 billion market. We would need a partner to really help us in that. And obviously that is what we're doing. We're talking with potential partners, but it's all about the data. So having our first independent data published this quarter is, I think, really important.

Secondarily, if you look at a smaller piece of that, and that is evaluating the success or failure around the RFA, Radio Frequency Ablation, that's a much smaller market. And that's an opportunity that we can take on and an area that we're focused on. We just need more data. We need more confidence in the insurers in terms of what we are doing will be well received and will ultimately not only improve the standard of care, but also reduce cost as well. And as radio frequency ablation processes run on average 30,000 to 40,000 apiece and go on for sometimes multiple years.

And we've also recognized that we have the ability to make a determination at a molecular level as to the success of those ablative processes. So we have a couple of different places that are potentially important for us. I think 2020 will be a big year for us. And Dr. Tina Narick from our leadership team has taken on the responsibility to guide us in this whole area. And she has been a big believer in driving us in that direction.

So, we're very excited about it. Obviously, with all the other activities on the biopharma side, we've been extremely focused on that, but I can promise you that members of our GI team are very, very excited about BarreGEN.

Jeffrey Cohen

Perfect. That does it for me, thanks for taking questions, Jack.

Jack Stover

Yes. Thanks, Jeff.


Thank you. Our next question today is coming from Jason McCarthy from Maxim Group. Your line is now live.

Unidentified Analyst

Hi, everyone, it's a Dave on the line for Jason, thanks for taking my question. Could you provide some granularity with respect to the kinds of synergies you typically look for when evaluating whether a company or component of a company is suitable for acquisition?

Jack Stover

Yes, it’s an interesting question. Actually, I thought you were going to ask another question about synergies. But as we look at sort of synergies, I can tell you that even before we actually closed on the BioPharma Business, we already were working with Ampersand in evaluating different opportunities, one opportunity or one area that we looked at are companies that somewhere range between $10 million and maybe $29 million to $30 million in revenue, that are synergistic with what we do in the esoteric part of our diagnostic business. And what I mean by that is, we're not a reference lab, we're really product driven.

So, we have a GI team, we have an endocrine team that are commercially driven, and identifying products that can fit into that group or team, because we already have the front end and the back end can be very synergistic, and not only the top line, but to breakeven as well and cash flow positive. So, that's one area.

The other is, as we look at the biopharma side, we are looking very much internationally at expanding our international footprint. We think there's a lot of value in that. The Genecast deal we did in China is a partnership there was no money exchanged in that deal. It's a relationship about sharing customers, and how we serve customers. But we've had already several customers that have developed just by that relationship in the last month or so. So there's a couple a really good examples of the areas that we're focused on.

Unidentified Analyst

Great, that's very helpful. Thank you.


Thank you. Our next question today is coming from Ben Haynor from Alliance Global Partners. Your line is now live.

Ben Haynor

Good afternoon, guys.

Jack Stover

Good morning or evening, Ben.

Ben Haynor

It’s a little bit late than morning. But just kind of curious on the bookings, you mentioned $18 million that you recognize over the next year or more. I guess my question is, how does that compare to the bookings level that CGI might have been at prior to the acquisition or any color on the expansion or is that running off kind of what direction is that going?

Jack Stover

Yes, so that's not just the booking since July 15. And remember, we acquired assets, including receivables. So that's really been a cumulative activity that was happening, prior to July 15, et cetera. And looking back on that you really have to kind of go back to 2018 and I would tell you that it's growing compared to the results in 2018.

I think you're seeing improvements in terms of the kinds of customers and also the average size of contracts, although, we typically don't typically don't disclose that. Our target for bookings or backlog, if you will is well in excess of $18 million, we'd like to see it above $25 million, and I think we'll get there pretty quickly.

Ben Haynor

Okay. Great, that's helpful. And then just thinking about the commercial organization and expanding into areas that have been untouched, like San Diego, how many people do you need to do that? How many kind of regions or areas might they be covering? Any color there would be helpful?

Jack Stover

Sure. So when you look at the BioPharma Business, and you look at the commercial team, and just for clarity, if you look at the team, we have currently we have about 18 sales and sales related people in thyroid and roughly 12 in PancraGEN or GI. As we look at the biopharma side - and by the way those are sales people that are really calling on physicians and hospitals. So they have big territories and a lot of geography to cover.

When you convert that over and you look at sort of the BioPharma Business, you're focused on pharmaceutical companies and biotech companies. And today that group is three or four people inside of the pharma business. And that's the piece we want to expand. So two territories that are missing that we expect to fill shortly.

One, we've already filled at San Diego. And you might imagine for this business, that is where you want to be. And the other Boston - and so that's the second one on our list, and once we get those two filled, I think we'll have a full plate.

Ben Haynor

Okay, great. And then a couple kind of more housekeeping questions. On the G&A, does that include the transition expenses that you break out in the EBITDA calculation? And then just wondering if there's anything else that was kind of one time in it during the quarter?

Jack Stover

Yes, if you look at sort of G&A, what you're saying is about $2 million in G&A in Q3, I'm not looking at the number right now and $3 million in G&A year-to-date, a little over a $1.5 million is related to the BioPharma Business. And so we try - we've broken out, if you will, the non-recurring costs, and those are generally - those are the costs that kind of putting two companies together without having the time effectively to rationalize what that is.

So what you're seeing is, as we move through this transition process, two companies, and some overlap. I think you'll see in the synergies as we get through the transition process at the end of the year, and move into 2020 that we’ll be able to right size, that whole activity.

Ben Haynor

Okay, great. And then lastly, for me, you mentioned that company that you're looking at with the $29 million run rate. Could you get a little bit more specific on that one?

Jack Stover

Yes, I would say Ben, that was one of the - it was one example of a company we were looking at in terms of activities. It was a reference lab business and we chose not to move forward with it was a nice company, they had a lot of great people and they had a nice level of revenue. The reference lab business, though, can be a tough business, and you compete with some really tough people like the Neo Genomics in that space.

We like the area that we compete in on the product side or what we call the esoteric side. So, we're looking for more product and more opportunities in that space, as well as a broader based opportunities in the biopharma arena, which, by the way I mentioned a couple areas that we're looking at, but don't forget that, we actually have an immuno-oncology franchise, and that is a big, big focus for us in terms of being able to continue to grow that.

Ben Haynor

Excellent, very helpful. Thanks very much, gentlemen.

Jack Stover

Thanks, Ben and see you soon.


Thank you. [Operator instructions] Our next question today is coming from Yi Chen from H.C. Wainwright. Your line is now live.

Yi Chen

Thank you for taking my questions. Could you clarify that the $50 million revenue guidance for 2020 whether that includes potential revenue contribution from BarreGEN test and whether that includes potential biopharma services from - source from China partnership?

Jack Stover

Yes, it is nominally includes revenue from BarreGEN. And primarily because it's difficult for us to estimate that now until we get improvement if you will or recognition on reimbursement. So that does not include that. There's some revenue in there for and by the way, we do see some revenue for BarreGEN currently, but it's not predictable.

And in terms of the expectation of revenue coming from China, it's not specifically in that number. But we already are seeing the benefit of having a Chinese partner and I think that's an upside to the potential. The other way to say is that we haven't seen enough of that activity to really bake it into a forecast for 2020.

Yi Chen

Got it. And second question is you previously announced the collaboration with Helomics [ph] regarding collaboration in thyroid cancer with artificial intelligence. So what's the update on that and how is that collaboration going to drive the Thyroid test in 2020?

Jack Stover

Yes, so as we look at it in terms of driving thyroid volume in 2020, I don't have that answer. It's not baked into our expectation and plan. What we're really looking to do with the AI component is; A, provide additional information data and a potential new revenue source for us in the samples that we have and basically the convert some of the data that we have to information. Remember too it's not just thyroid, although that's where we started because we have a lot of that information in PancraGEN, we have a lot of data.

And importantly, with the BioPharma acquisition, we also picked up the solid tumor, basically bio repository of one of the Cancer Genetics subsidiaries Response Genetics. And so we have a lot of data that we're looking for help in terms of kind of the artificial intelligence component.

All that being said, and I've said this before, and I firmly believe it, that as we move forward and you look at us in five years, we may be more of an AI driven or data driven company than we are an essay driven company that part of the business is changing quickly. And in the pharma side of what we do, you can imagine how important that is. So we're at the very early stages with precision or Helomix [ph] in terms of making those evaluations, but we're going to do more of it.

Yi Chen

Okay. And regarding the recent data reported, supporting the high negative predictive value of PancraGEN. Do you think that data will be sufficient to drive the volume of PancraGEN going forward?

Jack Stover

So that's a good question. Listen, it's all about more data and more data, right? So it is a continuous process. I guess, the good news is that we are seeing the growth of PancraGEN. Again, it's not growing at the same level. And remember that Medicare covers PancraGEN and the incremental or additional reimbursement that we are working on with commercial payers is in process.

So, I would also say the piece of that is missing, other than just sort of the expansion, if you will, on the negative predictive value is guidelines in pancreatic cancer, and we're seeing those come around. And I think a combination of things in terms of data improvement, in terms of guideline from GI physicians, the reduction of the 14 day rule. And the fact that while there's a number of people in the pancreatic cancer space that were virtually alone in terms of what we do on the molecular side. And maybe the last piece of this, which also is part of that gray area and really potentially benefits what we do on the biopharma side is that there's now over 600 clinical trials going on in pancreatic cancer, that's pretty amazing.

Not to mention the fact that everybody is moving back to understand cancer at an earlier stage instead of kind of a terminal disease position. So I think it's a lot of those things that are in fact changing out there. But remember, we've been doing this really 10 years.

Yi Chen

Okay, last question. Will there be a change in the stocks trading symbol now that the name has been changed?

Jack Stover

So, we chose not to make a change in the stock trading symbol. And we may make a different decision on that in the future, but for the time being, we're going to continue to trade as IDXG.

Yi Chen

Okay, thank you, Jack.

Jack Stover

Thanks, Jake. See you soon.


Thank you. Ladies and gentlemen, we've reached the end of our question-and-answer session and that does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

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