Exagen Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Q3 was Exagen's strongest quarter, driven by robust volume growth and ASP increase. Year-to-date revenue grew 19% with 8% volume growth and 9% ASP growth.
• Launched anti-PAD4 antibodies assays, expanding serologic profiling for rheumatoid arthritis to ~85% of patients, capturing half of seronegative RA patients.
• AVISE CTD volume was highest Q3 ever, with strong volume into October; 2 new expansion territories were top-performing growth territories.
• ASP growth slowed due to loss of a large high ASP direct bill account and slower reimbursement ramp for new biomarkers.
• Pharma Services business showing momentum with $780,000 Q3 revenue and $3.5 million in pharma services under contract.

Segment Performance

• AVISE CTD: Q3 volume was the highest ever for a third quarter, year-to-date revenue grew 19% with 8% volume growth and 9% ASP growth. Trailing 12-month ASP for CTD is $441, up 9% year-over-year.
• Pharma Services: Generated nearly $800,000 in Q3 revenue, year-to-date $1.2 million, with an order backlog of $3.5 million.

Guidance

• Expect revenue of $65 million to $70 million, with potential for cash flow positivity at the high end, though timing of sustained cash flow positivity may be pushed to 2026.
• Trailing 12-month AVISE CTD ASP at $441, with focus on driving further ASP expansion through revenue cycle management, commercial payer engagement, and market access initiatives.

Risks

• Slower-than-expected ASP acceleration due to denials on new biomarkers related to medical policy and payer utilization curtailment.
• Loss of a large high ASP direct bill account impacting current ASP as the business converts to standard commercial insurance.
• Uncertainty in timing and recognition of pharma services revenue due to lumpy nature of deliverables.

Question and Answer Q: Updated revenue per territory for Q3 and productivity of new territories?

A: Revenue per territory was slightly below prior record, expected to increase as new territories bear fruit.

Q: Incremental uplift to ASP from new RA markers?

A: Waiting to establish payment history, expect modest uplift compared to prior biomarkers.

Q: Framework for approaching $500 ASP?

A: $500 is realistic, but timing affected by factors like loss of a direct bill account and new marker reimbursement challenges.

Q: Sales force expansion and rep productivity?

A: Continue expanding sales if opportunities arise, with new reps taking 6-9 months to mature.

Q: Denials on new biomarkers and how to drive payment?

A: Denials due to payer medical policy and utilization curtailment, working on appeals process with clinical evidence.

Q: Impact of loss of large direct bill customer on ASP?

A: In-quarter ASP headwind of ~$20, volume returning over time, ASP expected to improve with payer relationships.