EXAGEN INC. Q4 FY2024 earnings call

Key Points - 2024 Results: Record total revenue of $55.6 million, adjusted EBITDA loss narrowed to ~$10 million, gross margins expanded. - New Biomarkers Launch: Successful launch of T cell and RA33 biomarkers in rheumatology, with positive early signs in test volume and reimbursement, and impact on patient care seen through case studies. - Sales and Operations: Reduced commercial footprint from over 60 to ~40 territories, prioritizing profitable volume, and expecting to add new territories in 2025. - Pipeline: Additions of biomarkers are catalysts for patient care improvement, clinical differentiation, market expansion, and validation of R&D execution, with more to come.

In 2024, Exagen Inc. achieved record total revenue of $55.6 million. The trailing 12-month average selling price for AVISE CTD increased to $411, a gain of $75 per test over 2023. Gross margins expanded by just over 300 basis points in 2024, reaching close to the 60% mark. New biomarkers launched in January 2024 are generating approximately $90 per AVISE CTD test in incremental revenue, with potential for growth as more data is gathered.

Guidance - Q1 2025 revenue guidance of at least $14.5 million. - Anticipate adjusted EBITDA positive in the fourth quarter of 2025. - Plan to share full year 2025 financial outlook in the Q1 2025 financial results call.

Risks - Volume decline in 2024 due to prioritizing profitable volume, with need to improve in 2025. - Uncertainty in the full financial impact of new biomarkers due to ongoing appeals and revenue cycle processes. - Variability in payer responses and reimbursement levels affecting revenue and profitability.

Q: Could you help think about modeling for ASP going forward based on new markers and gross margin impact?

A: John Aballi mentioned $90 incremental revenue per test is a good approximation now, with ASP potentially trending up but not doubling. Jeff Black noted mid-60s gross margin is within reach over time.

Q: Do you have an operating cash flow positive or breakeven target for 4Q?

A: Jeff Black stated adjusted EBITDA is a good proxy for free cash flow on a full year basis, with quarter-to-quarter working capital impacts from holding claims in Q1.

Q: Update on test data to biopharma companies?

A: John Aballi mentioned shifts in biopharma efforts, exciting contract changes, and projected growth in autoimmune spending, with unique proprietary offerings.

Q: RA33 sensitivity and manufacturing capacity?

A: John Aballi said novel T cell biomarkers improved lupus diagnosis sensitivity, capturing ~51% of serologically negative lupus patients, and RA markers aim to capture ~30-40% of seronegative RA patients. Manufacturing capacity upgraded with $1.2M investment in flow cytometry and robotics, with capacity adequate and buffer for night shifts if needed.

Q: Market size for AVISE product in RA vs lupus?

A: John Aballi noted RA market is larger, with rheumatoid arthritis prevalence ~8 times that of systemic lupus, and new markers enhancing value proposition for RA.

Q: Clarity on ASP per test and Q1 outlook?

A: John Aballi clarified ASP includes prior period collections, and Q1 guidance assumes $90 incremental revenue from new markers, with more clarity expected in Q1 call.

Q: Volume decline due to attrition and potential recovery?

A: John Aballi said lost ~4.5% of ordering physicians in 2024, but new markers provide opportunity to go back to those physicians and optimize processes for recovery.

Q: Payer feedback and RA opportunity?

A: John Aballi said lower denial rates for new markers due to utility, with denials often related to in-network status, and RA market opportunity estimated at ~2.5 million tests annually with potential to penetrate 5-10%.

Q: OpEx leverage and volume outlook?

A: Jeff Black said revenue growth will outpace OpEx growth, with scale seen in second half of 2025 due to investments in lab operations. John Aballi expected volume growth with new markers and sales expansion.

Q: Test volume impact and pipeline catalysts?

A: John Aballi said 2024 testing volume was 123,000 AVISE CTD units, down 11% from 2023, with new biomarkers as major catalyst, sales expansion, and second wave of RA markers expected by year end.