Biocept, Inc.
Q1 2017 Earnings Call Transcript

Published: 13 May 2017

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the Biocept 2017 First Quarter Conference Call. At this time, all participants are in a listen-only mode. Following management’s prepared remarks, we will hold a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded today, May 11, 2017. I’d now like to turn the call over to Ms. Jody Cain, please go ahead.

[Jody Cain:]

This is Jody Cain with LHA, thank you for participating in today’s conference call. Joining me from Biocept are Michael Nall, President and Chief Executive Officer and Tim Kennedy, Senior Vice President of Operations and Chief Financial Officer. During this call, management will be making a number of forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that are not historical facts and generally can be identified by terms such as anticipates, believes, could, estimates, expects, intends, may, plans, potential, predicts, project, should, will, would or the negative of those terms. Forward-looking statements involve known and unknown risk, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results as well as performance or achievements that are expressed or implied by the forward-looking statements. For details about these risks, please see the company’s SEC Filings. The content of this call contains time sensitive information that is accurate only as of today, May 11, 2017. Except as required by law, Biocept disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. Now I’d like to turn the call over to Michael Nall. Mike?

[Michael Nall:]

Thanks Jody, and thanks to each of you for joining us today. I’m pleased to report on a highly productive first quarter in which our test volumes grew 38% year-over-year to 1,246 total patient samples in the period. Revenues reached $1.68 million in the first quarter, up substantially from prior year period and includes the impact of switching from cash to accrual based revenue recognition for our commercial cases. We are pleased with the ability to begin reporting our revenues on an accrual basis, helping to support our leadership position in the liquid biopsy space. Importantly during the first quarter, we took the opportunity to raise additional capital on favorable terms positioning us to be able to execute on our plans to accelerate growth of the business. We continue to believe that 2017 will be a transformational year for Biocept and with our strength in balance sheet we believe that we are now capitalized to drive further market penetration from revenue growth throughout the year. In addition to growth in our revenue in test volume, we continue to execute on our other key corporate initiatives. Since the beginning of this year the company has accomplished the following. We announced yesterday that our collaboration with the Addario Lung Cancer Medical Institute or ALCMI to provide our Target Selector liquid biopsy assays in the landmark ALCMI-009 trial. 009 is a large scale well-designed, well-controlled prospective clinical trial with plans to enroll 400 patients across 25 leading oncology treatments sites. We are very pleased to have been selected by ALCMI to participate in this trial as a results are expected to serve as a major data resource for oncologists seeking to use liquid biopsy in their practice. Importantly this trial will compare liquid biopsy to tissue biopsy when first profiling patients with late-stage lung cancer and will also evaluate the use of liquid biopsy to monitor duty status over time as patients are treated. Serial monitoring of cancer patients is one of the most important opportunities for liquid biopsy. And this trial has potential to generate clinical data to support broad use of our Target Selector assay platform for patient monitoring. In April, we announced our collaboration with Oregon Health and Sciences University or OHSU to commercialize our testing services throughout the State of Oregon, which has over 3.5 million people. This collaboration is already off to a strong start. Under this multi-phase agreement, we will also work with the Knight Diagnostic Lab at OHSU to develop assay panels backed by our platform. Importantly, world-class physicians at the Knight Cancer Center selected Biocept’s platform technology due to a highly sensitive and low cost solutions to perform liquid biopsy. We announced a collaboration with Catalyst Pharmaceuticals to provide liquid biopsy testing to patients in Catalyst Phase III clinical trial. This trial is evaluating the drug Firdapse in patients with Lambert Eaton Myasthenic Syndrome or LEMS. We get paid by Catalyst for our testing which is being used in the trial to potentially identify the early signs of lung cancer in a high-risk patient population. We were awarded new patents in both Japan and Australia, broadening the intellectual property around our core circulating tumor cell platform technology. We now own 19 issued patents for a platform technology, with several patent applications pending around the world. As a result, we expect additional international and domestic patent issuances throughout the year. Early in the first quarter we entered into a preferred provider contract with Blue Cross Blue Shield of Texas expanding managed care coverage for our test in one of our largest markets. We were also selected by the National Association of Blue Cross and Blue Shield through a rigorous request for proposal or RFP process. This agreement means that we have negotiated pricing with their network group purchasing organization CareSource, which significantly increases the opportunity for us to expand coverage of our test in additional Blue Cross Blue Shield regions. In the first quarter of 2017 we achieved the ability to convert to the accrual method for recognizing revenue related to our commercial volume. Moving forward, this method will enable our financial results for a given period to properly reflect both our revenue and our expenses from that same period. As I mentioned previously at the end of the first quarter, we raised additional capital with gross proceeds totaling $9.3 million from sophisticated institutional healthcare investors. And today I’m pleased to announce that we’ve entered into a laboratory service agreement with a national group of cancer treatment centers to provide our Target Selector liquid biopsy services within a multi hospital network. This institution is using our testing services to both profile and monitor patients in their treatment centers located throughout the United States. Moving forward, there are seven key initiatives that we are focused on delivering as we move throughout the year. These are, number one, increasing the number of physician ordering our liquid biopsy tests and expanding test volumes from our current base of accounts. Number two, continuing to drive down our cost per patient sample through economies of scale and operational efficiencies. Number three, signing additional health plan agreements to support third-party reimbursement for our tests. Number four, collaborating with additional top-tier oncology institutions to increase commercial adoption of our liquid biopsy platform. Five, initiating a commercial pilot program to partner with hospital based the pathologist. We expect to rollout this strategy in the third quarter of this year and have identified partners at top-tier cancer centers such as OHSU to help us launch this differentiated approach to liquid biopsy. Number six, broadening our test menu with the introduction of new clinically actionable oncology biomarker tests. And seven, entering into potential partnerships in the U.S. and abroad to expand the distribution of our test. We look forward to reporting our progress on these initiatives throughout the year. Our visibility and growth in the market continues to be driven by our focus on delivering high-value actionable information to physicians, broadening health plan reimbursement for liquid biopsy services and increasing patient access to our solutions in the United States and abroad. As drug companies continue to develop targeted cancer therapies that prolong life and minimize side effects, the need for our technology increases with our proven ability to identify more patients with actionable biomarkers. Our Target Selector platform enables oncologist to obtain real-time biomarker information with high clinical value in a way that is both noninvasive and cost effective. We continue to drive market awareness of the unique benefits of our Target Selector platform as we invest in our commercial organization. Our commercial leader, Mike Terry, joined the company in late February and we’re off to a great start in positioning our sales and marketing team to achieve strong growth this year. We now have 12 sales executives in the field, up from nine at the end of 2016. We successfully hired and integrated for sales executive since February, promoted one of our top salespeople to regional manager and we’ve qualified additional sales executive in our pipeline, which we plan onboard during Q2. There are strong talent in the oncology field interested in joining Biocept and we are hiring top sales representatives with oncology therapeutic and molecular diagnostic experience. We’ve also added a strategic account executive with significant industry context. She will focus on developing our business with integrated healthcare networks, along with large regional and national oncology groups. We remain on track to have between 15 to 20 sales executives in the field by the end of this year. Our broader commercial footprint is important as we head into major medical meetings this year such as ASCO or the American Society of Clinical Oncology meeting in June. We are preparing for a strong presence at this important cancer meeting and we have three scientific abstracts accepted for this conference. This event is a major opportunity for us to spend time with top oncologist in order to explain the advantages of our Target Selector testing platform and to develop business for the coming quarters. While we don’t give specific guidance on our growth as we are developing a new and emerging market segments, I will say that we’re encouraged by the growth in our volume so far in the second quarter as our newer sales executive and our established team gain traction. With our improved balance sheet and the additional resources in our commercial organization, we believe that we are positioned to deliver compelling growth this year. And with that, I’ll turn the call over to Tim Kennedy to review the financial highlights for the first quarter. Tim?

[Tim Kennedy:]

Thanks, Mike and good afternoon everyone. Revenue for the first quarter of 2017 was $1.68 million, which includes $726,000 of incremental revenue as a result of switching from cash basis to accrual basis revenue recognition. As many of you know, we have been reporting our revenues on a cash basis. And we guided on our last couple of conference calls that we plan to move to accrual based revenue recognition for our commercial revenue by the middle of this year. I’m pleased to report that we have achieved this milestone based on our ability to bill and collect consistently over the past year which has resulted in a sufficient amount of collection experience and data to allow us to estimate the value of our assays at the time we deliver the results to physicians. Without the impact of our switch to accrual accounting, revenues for the first quarter of 2017 were more than 300% from the first quarter of 2016. Moving forward accrual based revenue recognition should provide better alignment of our revenue and our expenses for financial reporting in a given period. Because of the complexities related to the conversion to accrual based revenue recognition, I’ll now give some detail on the key moving parts related to our reported total revenue for the first quarter. We recorded commercial revenues upon cash collection in the first quarter of $896,000 before switching to the accrual basis of revenue recognition on March 31, 2017. As mentioned on our last conference call, the beginning of each year brings with it a resetting of patient deductibles, resulting in lower initial cash selections. Third-party claims are adjudicated net of deductibles followed by the issuance of our patient billing statements. Therefore, before we could send out billing statements to patients, we have to wait for the third-party payers to first adjudicate the claims, then provide us with an explanation of benefit or an EOB with the appropriate dollar amount reflected as patient responsibility. As a result, these patient deductibles increase the time it takes for cash collections on our commercial revenues. As mentioned previously, in the first quarter of 2017 we recognized our accounts receivable at March 31, 2017. This accounts receivable of $726,000 is reflected net of contractual and payers’ specific reserves, as well as third-party health plan and patient payment reserves of $420,000. And finally, we reported development revenue for the first quarter of 2017 of $61,000. We accessioned a total of 1,246 patients samples in the first quarter of 2017, of that total 1,107 were billable samples, an increase of 38% from the 801 billable samples accessioned in the first quarter of 2016. As a reminder, billable samples are defined as commercial cases, plus those samples that come from our development services. Commercial cases are tests ordered by a physician for which we submit a claim to an insurance company hospital or other parties responsible for payment. Development cases are testing services performed for either a research partner, a pharmaceutical company or under an international distribution agreement. Remaining samples in the first quarter were submitted for research and validation purposes, which are not billable, but do support the use of our liquid biopsy test, awareness of our services and the development of our pipeline of new biomarker assays. New account start ups in the first quarter of 2017 reached a record level of 108 representing an increase of 46% from an average of 74 per quarter in 2016. Specimens per sales day averaged 20 in the first quarter of 2017, up 43% from the first quarter of 2016. In Q1 the company executed a realignment of sales territories in connection with our 2017 sales force expansion. And we hired four new sales executives so far this year. As a reminder, we anticipate that sales executives will take about six months on average to fully ramp up a new territory from when they first joined the company. Now moving on to our expenses. Cost of revenues for the first quarter of 2017 was $2.1 million, compared with $1.5 million for the first quarter of 2016. The increase was primarily attributable to direct costs associated with higher commercial assay volume in the recent period. Cost per accession in Q1 2017 of $1,710 was 4% higher than the $1,637 in Q1 2016 due to the creation of additional capacity in our CLIA lab operations and preparation for the incremental volume expected from our sales force expansion. Given the investment in additional lab capacity and with Q2 2017 volumes continuing to show good growth, we believe that our cost per accession will again trend lower over the next several quarters. Research and development expenses in the first quarter of 2017 were $757,000, slightly higher than the $728,000 reported in the same period last year. This increase was due to greater consumption of materials and other costs associated with research and development activities. G&A expenses for the first quarter of 2017 were $1.9 million, an increase of about 28% compared with the $1.5 million reported in the first quarter of 2016. The increase was due mainly to personnel cost associated with the expansion of both our in-house billing and Investor Relations functions, as well as higher consulting and third-party service provider fees associated with increased commercial activity. Sales and marketing expense of $1.3 million in the first quarter 2017 was essentially flat year-over-year despite higher accession volumes. Net loss for the first quarter of 2017 was $4.4 million or $0.21 per share. This compares to a net loss for the first quarter of 2016 of $4.9 million or $0.74 per share. As we had mentioned during our year end conference call in March, internally generated cash or cash generated from our operations grew nicely from the beginning of 2016 to the end the last year. During 2016, cash generated from our operations averaged about 15% of the company’s overall cash need. For Q1 2017, our cash generated from operations compared to the 2016 average was up 3% to approximately 18% of our cash need. While our overall expense base is continuing to grow to support these increasing volumes, we expect that our cash generated from operations will continue to fund a higher percentage of the company’s overall cash need. Turning to our balance sheet cash and cash equivalents as of March 31, 2017 totaled $14 million compared to $4.6 million on December 31, 2016. On March 31 of this year we raised gross proceeds of $9.3 million in an offering of common stock and warrants with healthcare focused institutional investors. We also benefited year-to-date from a significant number of warrants being exercised from the financing that we completed in October 2016. To-date $4.8 million of those warrants have been exercised, resulting in cash proceeds to the company of $5.3 million, this leaves $4.9 million of additional warrants outstanding from that financing with the potential of additional capital to the company of $5.4 million if those warrants are exercised. And with that, I’ll now turn the call back over to Mike.

[Michael Nall:]

Thank you Tim. Before we move on to Q&A, I’d like to reiterate the four key areas of our business that I believe provide Biocept with a sustainable competitive advantage in the liquid biopsy market. First, our Target Selector dual platform leverages both circulating tumor cells or CTCs, and circulating tumor DNA or ctDNA, resulting in a comprehensive menu of assays focused only on clinically validated cancer biomarkers. We’re differentiated as the only company marketing both CTC and ctDNA analysis and the liquid biopsy to medical oncologists and therefore can offer a more complete answer by providing from a blood sample the same biomarker information that physicians obtain from a tissue biopsy. Second, our tests leverage our proprietary biomarker enrichment technologies resulting in industry leading assay performance, including very high sensitivity. Third, the cost effectiveness and reimbursement strategy of our liquid biopsy solutions continues to drive our preferred provider status with health plans and increases the efficiency of our claims collections. And lastly, our technologies are amenable to the development of Target Selector in vitro diagnostic or IVD kit. With the future development of our diagnostic kits, we have potential to significantly scale our business by enabling our liquid biopsy test to be performed in laboratories throughout the world. So in summary, we’ve made significant progress establishing the Target Selector brand in the marketplace and continue growing our sales in commercial sample volume. We have achieved record revenues and new account start ups in the first quarter and importantly, we continue to help more physicians and their patients rapidly access the actionable information they need to meaningfully improve the treatment outcomes. I want to say thank you to our employees at Biocept for their constant dedication and hard work. Our customers for their trust and our investors for their support. Thanks to each of you for dialing into today’s call. Operator, we’re now ready for the Q&A portion of the call.

[Operator:]

[Operator Instructions]

[Michael Nall:]

Operator, while we’re waiting for that first question. I’d like to reiterate that we’ll be attending and exhibiting at the American Society of Clinical Oncology Meeting held in Chicago June 2 through June 6 this year. Okay, we’re now ready for that first question.

[Operator:]

The first question is from Chris Lewis of ROTH Capital Partners. Please go ahead.

[Chris Lewis:]

Hey, good afternoon guys, thanks for taking the questions.

[Michael Nall:]

Hey, Chris.

[Tim Kennedy:]

Hi, Chris.

[Chris Lewis:]

I wanted – it’s hard to understand, the financials are a bit tougher to extrapolate this quarter, given the move to accrual. But can you just spend a minute helping us better understand kind of the impact that had on the quarter? I think if I kind of exclude the $700,000 impact, it gives me about $960,000 worth of kind of normalized cash basis sales. So, I guess first, is that kind of the right outlook for this quarter? And then kind of going forward, how should we think about that conversion impacting future reported revenues?

[Tim Kennedy:]

Yes, hey Chris, this is Tim, I’ll take that. When you compare the cash received in Q1 to any prior quarter, like Q4 as an example. I mentioned on previous conference calls that the first quarter and I also mentioned today, the first quarter of any new year brings with it a resetting of patient deductibles. So while the cash received in the first quarter of 2017 appear to be certainly below where we were running and tracking as we were moving through the end of 2016. It’s simply a delay of cash, because those patient deductibles will essentially and eventually get paid and collected. But we first have to bill the third-party payers, we have to then find out how much of the actual total net expected revenue is patient responsibility. And then we get that through the EOP I mentioned and ultimately bill the patient and pursue the collection of those deductibles after that. So it might take another quarter or a quarter and a half to get that cash, but it will come in the door, that’s what our expectations are.

[Chris Lewis:]

Okay. Thanks that’s helpful.

[Tim Kennedy:]

And I think the other half of your question I think was surrounding how should you think about accrual based revenues going forward. And in the same token, when we look at our accrual based revenue for the first quarter and looking at Q2, first quarter again is a bit different than maybe subsequent quarters. And the fact that we’re accruing a reserve for those patient deductibles as well as other third-party potential accounts receivable items also. But I think as we move forward, certainly you should probably think about second quarter et cetera, as the patient deductible should be kind of worked off by that time I would think. Does that answer your question?

[Chris Lewis:]

Yes, that’s helpful. And then Mike, the ALCMI-009 trial, can you elaborate just on the scope of that, who is responsible to run it? The costs for that trial? And what should be our expectations from a data reporting and timing perspective related to that study going forward?

[Michael Nall:]

Well, no, it’s a very important trial, thanks for the question. For a couple of reasons it’s for us and we’ll benefit as the industry will, both with further demonstration of concordance data with tissue biopsy and liquid biopsy for the profiling phase. But the part that’s most exciting, I think to us, and to a lot of clinicians is the opportunity to demonstrate and the importance of monitoring with liquid biopsy at the molecular level. And that’s one of the key aspects of the trial that’s important to watch for. As far as when the data will be presented, I would imagine there will be interim points, but the trial is not even kicked off yet. So we’ll probably have further color on that on additional calls as that progresses. Literally when we put the press release that was when the agreement was signed, so we’re just at the beginning phases. And as you saw in the press releases, it’s multi-center as well, which is another important aspect to a very well-designed trial such as this, so very excited about it. There’s a couple of the institutions that are leading it and down in Miami, as well as at Ohio state with some of the PIs, but other folks involved as well in the leadership of that trial.

[Chris Lewis:]

Good. And then turning to the commercial side, I guess a couple of questions there. I guess first, just from a big picture perspective, if I look at the billable samples, you’re continuing to show nice growth year-over-year, but on the sequential basis, the past two or three quarters here it’s been kind of flattish if you will. So, I understand you’ve started to realign the sales force given the expansion. But can you kind of just help us understand kind of the impact, I guess, first, the sales force realignment is having? And you talked about second quarter volumes being encouraging. So maybe just elaborate on what you’ve seen so far this quarter that gives you some confidence that volumes can begin to reaccelerate from a sequential perspective?

[Michael Nall:]

Sure, no, that’s a good question. As you know, we’ve raised additional money and this is the prime – one of the prime uses of that raise was to reinvest in growing the company and building up the sales team. You mentioned the realignment of the territories as well as the hiring of the additional sales people. And then kind of one of the key metrics you look at is, well, how well are we doing getting new customers? And as Tim shared, we had a record number of new accounts just this last quarter, so that’s very encouraging to us. All of which is leading to an increase in the sample volume that we’re seeing today so that encourages us as well with the goal to get back to double-digit quarter-over-quarter growth as an organization. Of course as we grow that number double-digits will be a little bit on the lower side probably a double-digits as opposed to the higher double-digit side. But either way certainly robust growth we’re predicting as we go throughout the year. Tim, do you want to add anything to that?

[Tim Kennedy:]

I guess the only thing I’d add to that Chris is, to Mike’s point, we raised the capital in order to do our sales force expansion. When I think about the on a go forward basis, the reason for why we did that is we have reps that cover relatively large geographic territories. And they don’t have an opportunity to touch all of our customers on a – on what we would prefer to be a more of frequent basis. And in addition to that, when they’re traveling away from home they’re incurring hotel stays, meals away from home, rental car expenses, the flight – air flight to actually get to the territory and we’re spending money on travel and entertainment, I’ll call it, where we could be touching the customers on a more regular basis by hiring sales reps locally in those regions where we have business already and where we feel we have an opportunity to actually grow on those particular territory. So the first quarter, as Mike said, was spent realigning those sales territories. So if you think about it, your sales rep right, and you use the service multi-state and now you’re serving perhaps half of those states you want to understand what that territory is and what it means to your pocketbook when you take home your check on a biweekly basis. So the first quarter was a lot of that and I think now that that’s behind us, we’ll start focusing on that growth that we’ve been talking about. And as Mike said, get back to double-digit growth quarter-over-quarter.

[Chris Lewis:]

Okay. And just one more for me and I’ll hop back in queue. Given the bolstered cash balance, what’s the expectation for cash burn here over the remainder of this year and how long does your current cash gets you to? Thanks.

[Tim Kennedy:]

Sure, Tim again. We ended the quarter, as I said, with $14 million of cash. And the question of how long it will last is easily explained by the fact that we net cash after cash generated from operations of what we use after that cash is generated from operations is about $1.4 million a month. So, I think you can do the math for the $14 million that we’re talking about here.

[Chris Lewis:]

Thank you.

[Tim Kennedy:]

No problem.

[Operator:]

Next question comes from Keay Nakae of Chardan. Please go ahead.

[Keay Nakae:]

Just a…

[Michael Nall:]

Hi, Kay.

[Keay Nakae:]

Yes, how you’re doing Mike.

[Michael Nall:]

Good.

[Keay Nakae:]

To the ALCMI study, do you have a sense for how many markers you’ll be testing for? And then how frequently you’ll be doing a monitoring test?

[Michael Nall:]

And the profiling part, it’s a lung profile that has the standard NCCN markers. So then for the monitoring though, if we detect a marker in that patient, we’ll be monitoring with that marker to hopefully see as the biomarker would go away, the patients hopefully responding to the treatment, if not you’re probably going to see that go up and maybe other markers come along the way. In addition, they’re going to be looking at the impact of CTCs and seeing if CTCs go up and down even if we don’t find a biomarker during that profiling part. So, does that help you there, Kay?

[Keay Nakae:]

Yes. And then separately for the agreement with Oregon Health and Science, logistically what has to be complete before they can start to offer and utilize your test?

[Michael Nall:]

Well, we’re in the process of getting that launched today and it’s off to a good start, as we mentioned. There’s four main aspects of that relationship and you’re touching on the first part, which is kind of the commercial distribution arrangements both in – within the University Health System itself, as well as in the state of Oregon. And we’ve recently had our new key account manager go up there and start to get that kicked off, so we’re excited see that to start to move forward. And really nothing else there other than just logistical issues of getting shipping kits and going out and making joint sales calls et cetera as needed to get that in place. Number two is tech transfer for some of our existing assays to where they could eventually run those in their own laboratories. And we’re starting to work on that as well with kick off calls as we speak. Number three is kind of a partnership to be one of the beta sites for new initiatives such as our pathology partnership, which we’ll be launching later on this year in Q3 time period. And so we’ve had the initial discussions with that as they also give us feedback as to what kind of aspects we need to make sure we include as we’re finalizing the development of those pieces and parts. And finally, as they develop that and that’s one of the things I think they’re most excited about, the ability to come up with new assays using our proprietary platforms that are both highly sensitive and cost effective.

[Keay Nakae:]

Okay. Well, that’s all I have for now, thanks.

[Michael Nall:]

All right. Thanks Kay.

[Operator:]

The next question comes from Lauren Chung of WestPark Capital. Please go ahead.

[Lauren Chung:]

Hi, congratulations on the quarter. Thanks for taking my call.

[Michael Nall:]

Hi, thank you, Lauren.

[Lauren Chung:]

I think my first question is on the expansion of the sales force. Can you tell us about the productivity of the sales force and the on-boarding process? Tim mentioned six months, but I believe that would depend on the experience of the sales force, and are you getting any talent your competitors?

[Michael Nall:]

Well, that’s a good question without giving anything too much about that, I’ll say that, we have gotten very experienced people that have specific experience in liquid biopsy. So while other folks continue to struggle a bit sometimes with adoption of their testing. We’ve benefited by being able to recruit some of the top talent away from some of our competitors. And just as you indicate, that means a lot of times they have a faster productivity ramp. In addition, as we become more mature as an organization and build out the sales team such as with Mike Terry or developing metrics in-house in order to get them on-boarded and productive that much faster. In fact, we just finished our first official new rep sales training year. Prior to this, we hired experienced people, but with a lot of OJT with – that’s all coming together and going out and working in the field. And you count on Tim and I continuing to do that to a certain degree, but now we’re developing the infrastructure to get these folks productive much faster by providing the training and mentorship they need right off the bat. And as I will say, we only hire people that have experience usually in the actual oncology diagnostic space. But if not that, they certainly have oncology pharma and targeted therapy generally in lung cancer. So these folks know the right clients, it’s just about getting them up and going with us and learning everything they need to about Biocept.

[Lauren Chung:]

Got it. Thanks. And then also on can you tell us about the agreement that you have with the multi-center cancer treatment institution, how is that structured? How many hospitals that involve?

[Michael Nall:]

Yes, no, absolutely. It’s a very well-known cancer treatment center network of hospitals. And like a lot of our big partners, they’re not keen on us doing press releases et cetera with the relationship we have. But I think they and we are both excited about the partnership. There’s, I believe, five institutions around the country, and they – it’s – both are commercial and in the future a research collaboration that will be doing projects with. So very excited about that and already gaining volume from that.

[Lauren Chung:]

Got it. Thanks.

[Operator:]

[Operator Instructions] There are no additional questions at this time. This concludes our question-and-answer session. I would like to turn the conference back over to Michael Nall for closing remarks.

[Michael Nall:]

Excuse me, I want to thank you all for participating on today’s call and for your interest in Biocept. We look forward to sharing our progress on the next quarterly call. Thank you all very much and have a great day.

[Operator:]

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.