DermTech, Inc.
Q4 2020 Earnings Call Transcript

Published: 4 Mar 2021

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to DermTech’s Fourth Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. It is now my pleasure to turn the conference over to Ms. Caroline Corner. Ma’am, please go ahead.

[Caroline Corner:]

Thank you, operator. Welcome to DermTech’s fourth quarter and full year 2020 earnings call. Joining me on today’s call are Dr. John Dobak, President and Chief Executive Officer; and Kevin Sun, Chief Financial Officer. This call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements made on this call that do not relate to matters of historical facts are considered forward-looking statements. Forward-looking statements made during this call including projections of future performance are based on management’s expectations as of today, March 4, 2021, and are subject to various factors, assumptions, risks and uncertainties, which change over time. Actual results could differ materially from those described in such statements.

[John Dobak:]

Thank you, Caroline and thank you everybody for taking the time to join us today. We believe DermTech presents a unique growth opportunity that is capitalizing on two of the biggest trends occurring in healthcare today, the genomics revolution and the in-home delivery of healthcare. DermTech is a leader in a new category of medicine we refer to as precision dermatology. Precision dermatology is the use of genomics to provide accurate and objective diagnostic and treatment information for a variety of skin conditions. It is enabled by our non-invasive skin genomics platform based on our smart sticker. The smart sticker is an adhesive patch collection method that provides pain-free and scar-free skin sampling for genomic testing. Through precision dermatology, we can realize our vision to democratize access to high quality dermatologic care by allowing any healthcare practitioner and even the patient to accurately assess skin disease and health. So, while we may be focused on the dermatologists today, our vision takes us beyond the dermatologists into primary care and into the patients’ home via telemedicine. And while we may be focused on melanoma with our first product, our platform allows us to address a wide range of skin problem. DermTech is at the forefront of bringing these fundamental transformational changes to dermatologic care. Our lead commercial product, the Pigmented Lesion Assay or PLA is the first product to solve a decade’s old problem in dermatology, which is the need to enhance the early detection of melanoma by improving diagnostic accuracy and reducing unnecessary surgery. Melanoma is the most aggressive form of skin cancer and is diagnosed approximately 200,000 times each year and results in more than 7,000 deaths in the U.S.

[Kevin Sun:]

Thanks, John. total revenues for Q4 of 2020 increased 33% to $2.1 million compared to $1.6 million for the same period of 2019. total revenues for full year 2020 increased 75% to $5.9 million compared to $3.4 million for 2019. Assay revenue for the fourth quarter of 2020 increased 214% to $1.6 million, compared to $0.5 million for the same period of 2019, due to higher billable sample volumes and revenue recognition of Medicare samples related to the final local coverage determination that went effective in February 2020. assay revenue for full year 2020 increased 202% to $4.2 million compared to $1.4 million for 2019. Our potential assay revenue that could be recognized from having broader payor coverage is meaningfully higher than the actual reported revenue as we continue to monetize our billable sample volumes. Billable samples for the quarter were approximately 8,300 compared to approximately 4,900 for the fourth quarter of 2019 or a 69% increase and compared to approximately 6,700 in the third quarter of 2020; we’re at 24% sequential increase. We continue to see headwinds due to the pandemic and may see more fluctuations for our growth trajectory continued during the fourth quarter of 2020. billable samples for full year 2020 increased 75% to approximately 24,000, compared to approximately 13,700 for 2019. We continue to make progress with increasing awareness of the PLA in the Medicare population. Medicare samples represented about 18% of our billable samples in Q4 of 2020, compared to approximately 14% in the same period of the prior year and 16% in Q3 of 2020. the Medicare proportion grew about 1% per quarter during 2020 with an acceleration to a two percentage point increase during the fourth quarter. we continue to increase clinician and patient education and awareness that the PLA is covered by Medicare. As a reminder, approximately, half of surgical biopsy performed for melanoma each year in the U.S. are in the Medicare population. So, additional opportunity remains for us to monetize our sample volumes. However, we believe the growth in our Medicare proportion could continue to be impacted by COVID since Medicare patients are less likely to visit the dermatologists during the pandemic. With approximately 1,700 unique ordering clinicians during 2020, we penetrated 34% of our initial target market out of approximately 5,000 dermatology clinicians, who account for a high concentration of the total annual surgical procedures to diagnose melanoma and we have penetrated about 13% of our current overall target market of approximately 13,000 dermatology clinicians. We had approximately 1,040 unique ordering clinicians in Q4 of 2020 compared to approximately 950 in Q3, 620 in Q2 and 900 in Q1 of 2020. We continue to both increase the number of unique ordering clinicians and increase the average number of tests ordered by each clinician each month, even though new ordering clinician additions are heavily impacted by COVID. sales call volumes and the ramp trajectory for our new sales reps have both been affected by the pandemic due to reduced in-office access to clinicians. We estimate sales call volumes depending on region are only about 20% to 40% of pre-pandemic levels. Our average quarterly utilization or average number of tests ordered per unique ordering clinician continue to increase and was 8.0 billable samples in Q4 of 2020 compared to 7.0 in Q3, 5.2 in Q2 and 6.5 in Q1 of 2020. we continue to achieve record or near record highs during Q4 and key metrics, including billable samples, new ordering clinicians, average monthly utilization, and number of ordering clinicians, who ordered 10 or more tests per month. We believe as new ordering clinicians continue to understand, our PLA provides greater accuracy and minimizes patient discomfort, scarring, and risk of infection along with efficiency for their practice, they will increase utilization. contract revenue decreased 49% to $0.6 million for the fourth quarter of 2020, compared to $1.1 million for the same period of 2019. Contract revenues continued to be highly variable that is dependent on the pharmaceutical customers, clinical trial progress, patient enrollment success, and other factors, which have been affected by the pandemic. During the quarter, we signed agreements with our pharmaceutical partners worth up to approximately $1.1 million in contract revenue for work-related to those partners clinical trials. As of December 31, 2020, we had a maximum of $4.7 million in potential remaining contract revenue related to our current agreements. Gross margin for Q4 2020 was 19%, compared to 24% for the same period of 2019. The decrease in gross margin was largely driven by higher contract revenue during Q4 of 2019. assay gross margin for Q4 2020 was negative 9%. sales and marketing expense increased to 110% to $5.1 million for the fourth quarter of 2020, compared to $2.4 million for the same period of 2019. the increase is primarily due to additional sales headcount, additional marketing investment to increase awareness of our PLA. Research and development expense increased 194% to $1.9 million for the fourth quarter of 2020, compared to $0.6 million for the same period of 2019. the increase was primarily due to higher compensation costs related to expanding the R&D team, increased clinical trial costs and increased spend on laboratory supplies support from new product development. General and administrative expense increased 17% to $2.8 million for the fourth quarter of 2020, compared to $2.4 million for the same period of 2019. The increase was primarily due to higher payroll-related costs and higher stock-based compensation, offset by reduced legal costs. Net loss for the fourth quarter of 2020 was $9.4 million, which included $1.4 million of non-cash stock-based compensation, compared to a net loss of $5.1 million for the same period of 2019, which included $0.1 million of non-cash stock-based compensation. At the end of the fourth quarter, our cash, cash equivalents and marketable securities, totaled $63.8 million. here in Q1 of 2021, we are confident that we’ll continue to make progress with adoption and grow our sample volume over the fourth quarter of 2020, despite some unique challenges this quarter, including the peak of the COVID pandemic in early July and the polar vortex weather event in February that shutdown much of the country. We are seeing continued growth in utilization of the PLA in the first two months of the year. We have recently initiated billing under our new payor contracts. And as typical, there have been some start-up billing challenges related to claims and prior authorization processing. We are also working with Medicare to resolve a recently identified claims adjudication programming issue, which results in a reduced number of paid claims by Medicare. Thus, while we expect revenue to grow, it is somewhat challenging for us to project the growth at this time. we estimate the Q1 2021 assay revenue will be between $1.6 million and $1.9 million. We are not providing formal full year of 2021 revenue guidance due to ongoing COVID uncertainties and because COVID initially hit right at the beginning of our formal PLA launch. we delayed our sales force expansion, which affects the sales ramp period and we’re still working to get to the target sizing of the sales force to enable the proper deployment. while the pandemic is still creating some headwinds, we are optimistic about the declining case numbers and the vaccine rollout. We are pleased with the progress we have made in the current environment and believe we are well positioned and capitalized to execute on our near-term and long-term opportunities. Now, I’ll turn the call back to the operator for questions.

[Operator:]

Your first question comes from the line of Brian Weinstein from William Blair. Your line is now open.

[Brian Weinstein:]

Hey, guys. thanks for taking the question and thanks for the real solid overview on our people down there. Maybe, we could just start with kind of an update on some of these private payor negotiation, as well as kind of, you mentioned it a little bit in the prepared remarks, but efforts to better target CMS patients there, because we annualize your Q4 volumes and apply in ASP, I don’t know, let’s even say, 600. So, below the Medicare rate you guys are already kind of at a revenue base at $20 million. So, just trying to better understand when we might start to see this revenue ramp starting to show up in your results from the pricing going up is you deal with private payors and then also anything you can talk about as far as better efforts to target CMS patients, where you have that higher reimbursement.

[John Dobak:]

Great, thank you, Brian. I’m glad that you recognize that our potential revenue is much higher based on our sample volume and will grow significantly as we increase the ASP. It’s hard for us to know exactly when payors will provide coverage since we don’t really control the process. We know historically achieving about 80% coverage takes two to three years from your Medicare coverage. We did have a delay in our effort due to the pandemic, because it literally hit – the pandemic literally hit the month that we got our Medicare coverage policy that went into effect. But we are seeing that the recent activity is picking up and we think we’re back on track with a more typical timeline. I would say that we are engaged with almost all major payors and they are critically reviewing our data package, and this is a dramatic improvement from 12 months to 24 months ago when we really couldn’t even get them to thoroughly evaluate the test. We believe that they’re now starting to understand the problems with the current pathway, which they are not really aware of. And so there’s an education process there. They do not seem to challenge the credibility of the data we’ve developed. And I think the NCCN guidelines help that also and we do have 21 publications and thousands of patients studied, and I think this economic impact study is going to also carry a lot of water with the payors. So in general, this constant pressure campaign we’re applying, I think, and that I talked about in the opening remarks, I think is going to lead to broad payor access and will ultimately increase our ASP to monetize that significant sample volume. as far as the Medicare goes, we do – our consumer campaign, digital campaign is actually targeted at the Medicare population. And so we’re trying to educate them and make them aware. I think our biggest challenge is just having them feel free to go into the office during this pandemic. We’d like to see higher Medicare proportion and have it matched more closely with what the payor mix is for biopsies for melanoma, which would be half. And so we think it’s an opportunity to grow that that will also help accelerate that ASP and we’re doing everything to raise awareness among the Medicare population and drive utilization there.

[Brian Weinstein:]

Great. Thanks for answering that. And then we noticed that there were some changes as it relates to some of the points that are used here starting January 1, can you talk about those changes and how they may or may not impact sort of the economics, as we start thinking about in terms of thinking about bringing this product in or utilizing it more often?

[John Dobak:]

Sure. There’s always – there is some concern about, we’re taking biopsy revenue away from the dermatologist. I would first start by saying that we’re really not trying to position the product to compete directly with the biopsy practice and I discussed that in my opening comment. But I think it’s important to kind of calibrate on the reimbursement dollars that are staged here, because we’re really not talking about thousands of dollars or hundreds of dollars, but really tens of dollars. So, the average payment for the most common biopsy procedure across Medicare and commercial payors is about $85 for the first biopsy sample. The payment is reduced by about half for each subsequent biopsy to maybe, approximately $40, $45. So, in a typical use case with our product, where the dermatologist likely surgically biopsies the most atypical mole, and then it’s going to use our test on that subsequent lesion. The reimbursement differential is only about $40. And you have to remember that that revenue potential revenue loss is offset by the fact that about 10% to 15% of our tests are going to come back positive, and those lesions will undergo a full excision, which will offset that some of that revenue loss may be by a quarter to a third. So, I think what we hear from our high volume users after they start adopting them in the product is that my revenue – my biopsy revenue didn’t change that much and if anything, my overall billings are up, because they do get some practice efficiencies when the PLA is deployed widely in their practice. And so we just don’t think in the long run that the economic concerns are going to completely hinder adoption. We just don’t think that the notion of forgoing dramatically better care or missing a melanoma is worth really what amounts to a couple of movie tickets. So, we feel like we can overcome that and still be successful in the adoption of the product.

[Brian Weinstein:]

Got it. So, the two – the coding changes really don’t change anything on how you view it and I just wanted to make sure that that was clear.

[John Dobak:]

I don’t think so. I’m not going to – it’s a concern of the doctors, but we have a way to address that concern and I think it’s working.

[Brian Weinstein:]

Yes. And then the last one from me is around primary care. You’re kind of addressing it a little bit more head on now than you had before. You’re having a program to identify the appropriate clinicians here based off of the criteria that you laid out. Can you talk about how impactful this can be for you in the resources that you’re putting to do this? I think you mentioned that you were going to potentially add some reps here or whatnot. Can you just be a little bit more specific about how big primary care theoretically could be for you guys, how you would go about attacking it and the resources that you’re going to need? I mean, you mentioned Cologuard; obviously you’re not going to be spending Cologuard kind of money here to kind of do anything. So, can you just give us some idea about how important primary care is? Thanks.

[John Dobak:]

We think it’s becoming a more important part for the business and this has really grown organically, because over the last year, we’ve seen a lot of interest from integrated primary care networks in what we’re doing and these networks sort of exist to avoid referrals, to specialists and dermatology referrals are a clear pain point for these integrated primary care networks. And so they’ve taken an interest in, as I mentioned, we’re working with a number of them to commence some pilots. I think that it’s nice for us, because these are aggregated groups of physicians – primary care physicians. So, we can get after that without having to make tens of thousands of direct calls. And so we think there’s a meaningful opportunity and where we basically could shift some of the assessment of pigmented moles from the dermatologist into that primary care group. I do also think that there is going to be an opportunities for do some direct calls on primary care. And I think we’re going to be able to figure out, where those primary care doctors are that meet that profile I discussed. We do have some primary care users that love the product and we think we can find those primary care doctors and then target them effectively with a more modest sales – direct sales effort. So, we’re working on that and we’ll have more on those plans probably after the second quarter here. But we do want to start laying the ground foundation in primary care, because our other product, the carcinoma for non-melanoma skin cancer, we’ve done some market research there, and those doctors are very interested in this product. They tell us they see that cancer all day long. It’s extremely challenging for them to refer to dermatologists. They often don’t follow through. They want a way to assess those lesions either to rule them out. So, they don’t have to make the referral or to urge the patient to get to the dermatologist to get it taken care of. So, we think there’s a big opportunity there. And so we do want to lay some of that foundation in primary care.

[Brian Weinstein:]

Great. Thanks, guys.

[Operator:]

Your next question comes from the line of Kevin DeGeeter from Oppenheimer. Your line is now open.

[Kevin DeGeeter:]

Hey, guys. Thanks for taking my questions. And I want to add my thanks for all the detail on this call. And so I guess, it’s a question with regard to average number of orders per doc per month, I guess, up to around eight and a quarter, if you look at some of your derms that are a little more experienced with PLA. Do you have a perspective as to where that kind of ordering on a test per month basis may begin to plateau out or what’s a reasonable nearer-term point of stabilization on that metric?

[John Dobak:]

Yes. So, we know that when you take on average of all surgical biopsy procedures across all dermatologists, it’s about 60 to 70 per month. And so we are already seeing certain users do north of 20 per month. So, we really measure that three buckets, the users that have one or two a month, we call the dabblers; three to nine a month, the middle tier; and then 10 or more a month are the high volume users. And so we’re seeing great trends in the progression through those cohorts. So again, once they hit that aha moment to where the performance of the test really kicks in and they figure out how to integrate it into their work streams, they are using it more and they’re getting practice efficiency to be able to see more patients. So, we think that we can penetrate a decent amount the exact number, it’s hard to say. but if we only penetrated say, 10% or 20% of that, 60 to 70 biopsies per month kind of volume, that’s still a very healthy business for us. We think we can certainly do more than 10% to 20%, but that just gives an example for our opportunity here, given how large the market is.

[Kevin DeGeeter:]

Okay, great. That’s helpful context. And then as we think about the commercial infrastructure build out. in 2020, I think we’ve talked about previously, there were a number of key geographic markets and States, where you focused our resources as we think about expansion at 2021, and hopefully, lifting some of the COVID restrictions. Can you walk us through how to think about other key geographic markets or I guess, building on Brian’s question with regard to primary care? Should we think about some of the ads here being segregated your primary care versus derm, or is this sort of a geographic driven build out, where you’ll have reps calling on both their arms and primary care in certain markets?

[John Dobak:]

Yes. So, Todd is going through some additional evaluations, Todd, our Chief Commercial Officer to assess, not only that primary care opportunity, but where we’re going to do some additions to our professional dermatology channel? And it’s going to be a combination of both opening up some new territories as well as additional rep to existing territories likely where we can capture more opportunity, where there’s a dense concentration and we’re going through that process now. we’ll have more on that at the second quarter. I would expect that on the primary care targeting, we may have some direct sales ads that we want to do to target those folks. But we also think that some of our current sales reps are going to be able to tap into those opportunities as they are doing now when they present themselves. So, it probably will be a blend, but we’re really in the planning phases. We need to understand, where those doctors are and then what deployment against those primary care doctors looks like for that study. for the integrated primary care networks, that’s a different type of sale. It’s more of an institutional type sale; take some time and there’s a pilot and a lot of integration with electronic medical records, things like that. So, we’re at the slightly different team that’s going to focus on that integrated primary care network effort and sales cycle.

[Kevin DeGeeter:]

Great. And then if I’m just thinking of one last question. I appreciate the comments with regard to the impact of certain adjudication processes on Medicare in Q1. At this point, do – should we think about that dynamic is largely playing out in the first quarter, or should we think about that as a dynamic that may continue beyond Q1 through later into 2021?

[John Dobak:]

Yes. It’s hard to say it’s probably not going to be fully resolved in Q1 to get through various changes and updates, and fixing things through Medicare and all the different service providers that they rely upon takes time. They usually have some – kind of like quarterly cycles and things like that. So, I don’t expect it to be fully flushed out in Q1.

[Kevin DeGeeter:]

Great. Thanks for taking my questions.

[Operator:]

Your next question comes from the line of Alex Nowak from Craig-Hallum Capital. Your line is now open.

[Alex Nowak:]

Hello, everyone. Maybe, to start on the outlook for 2021. You previously mentioned a run rate of 34,000, 35,000 tests exiting 2020, just roughly, where do you think this run rate could go as you end 2021, just given what you know, what you can control with a larger sales force for marketing spend?

[John Dobak:]

So, we’re not giving formal guidance for 2021 just yet, but as clearly, our testing volume, new physician ads correlates directly with the pandemic and the cycles of new case loads that related to COVID. So, as things wane, we’re seeing nice uptick in our sample volumes, and we were able to grow despite those headwinds in 2020, we’re excited to see how much better we can grow as this pandemic subsides. And I think we’re seeing that in this first quarter that we’re seeing upticks as the pandemic slows down. So, we’re excited that run rate we talked about at the end of 2020 based on December numbers is doable. And I think is – we’re going to grow beyond that based on what we’re seeing currently today.

[Alex Nowak:]

That’s great. And as you wait for the private payors’ update, their medical policies is the NCCN guideline inclusion of making it easier to appeal any of the incoming denials. And I’m just thinking specifically about February, are you starting to see the number of reimbursed tests take a little bit higher, even though payors are – have yet to officially issue coverage?

[John Dobak:]

So, we – you’re absolutely right. We think that the NCCN guidelines will help us with appealing claims that are denied, but the claims appeal process is a month long cycle. It’s like a two quarter cycle to get through appeal claims. So, we can’t – we don’t know just yet what the impact of that’s going to be in terms of our success in getting denials appealed. But it’s hard, I think for a payor to justify what the typical reason for denial is that it’s experimental investigational, right. That’s a very common way that payors will deny a claim. I think it’s hard for them to justify that denial when you’ve got an NCCN guideline recommendation. So, I do think we’re going to be much more successful on the appeal front. We just brought a person – a very senior person, who’s an expert at managing the appeal process and she’s going to really ramp that up and leverage that NCCN guideline recommendation.

[Alex Nowak:]

All right. That’s great. And then just last question, should we expect any readouts or data releases from your former partners this year? And would you expect a similar sort of pharma activity just given what you see in the pipeline starting the year off as 2021, or could it be up slightly as COVID starts to abate and give it a bigger backlog?

[John Dobak:]

We do have a lot of activity with the pharma partners, and there are a lot of folks that were putting RFPs out for to provide the services, to support their trials. Mike Howell is a leader in inflammatory diseases. That’s where most of our pharma partnerships exist. So, he’s doing a lot to help us out there. I would say, I don’t think that the enrollment in clinical trials is really back to pre-COVID levels and that’s what’s going to dictate when those readouts occur. And I – the pharma partners are not really clear to us or open to us about what their timelines are exactly. So, it’s hard for us to say, but we do think there’s an opportunity. We can grow that opportunity with our pharma partnerships and we think that like, everything else is going to get better as the pandemic subsides.

[Kevin Sun:]

Yes. And I’ll just add to that. We are devoting more internal resources in addition to Mike Howell and some other team members that will be looking to build a team to go proactively at some of these pharma partners, whereas historically, we’ve been kind of opportunistic as they’ve come to us for our technology, the fact that it’s so unique. So, we do think it’ll grow, but it’s hard to say exactly how quickly and how much.

[Alex Nowak:]

That’s great. Thank you.

[Operator:]

Your next question comes from the line of Thomas Flaten from Lake Street Capital. Your line is now open.

[Thomas Flaten:]

Great. Thanks. Thanks, guys for taking the questions. And you might’ve mentioned this John, in your prepared comments, and I didn’t catch it. Did you mention when the Optum project was going to be completed?

[John Dobak:]

Yes. I think, I’m optimistic that they’re going to have that done by the end of the first quarter or there about. So, it’s progressing nicely. and so I’m optimistic we’ll have that done here around the end of the first quarter.

[Thomas Flaten:]

And is that data, you think you’ll press release to us or will you embargo it effectively for publication somewhere?

[John Dobak:]

I think we will release the top-line data from that and we’ll release it in a way that it doesn’t impair our ability to publish the data either. So, I – my plan is that we would put out some release on what that data looks like.

[Thomas Flaten:]

And then just a couple on the DTC efforts, if I may, how would you guys think about expanding, what seems to be a very successful campaign just – not just in terms of dollars, but in terms of geo-locating it around, are you thinking about where are we seeing the fewest COVID cases? Are you trying to use the search or find a doc to help govern that? I’m just curious how you guys strategically think about rolling that out over the course of the year.

[John Dobak:]

No, you’re exactly right. Right now, it is definitely a targeted area. We’re – we invest more heavily, where we know there’s some access to physician doctors and Todd would tell you that the parking lot during COVID has become the new waiting room. And so we can actually geo-locate some of our ads when the patients are in there in the parking lot waiting to see their dermatologists. And we know it works, because we’ve had dermatologists calling us saying, hey, all my patients are coming in and asking about your tests. So it is effective. And right now, we do target it in places where we think it can be affected because the doctor’s offices are open and we will continue to expand that effort, because it is very successful. The metrics are three or four times higher than typical medical technology products. That means we have a fairly low cost to get action from digital campaign. And so we’ll begin to expand it even more as the country opens up more and the pandemic begins to wane.

[Thomas Flaten:]

And then just one more thing on that. So, as you guys return to find a doc result, I’m assuming you’re capturing that data. Have you been able to find even loose correlations between where you have find the docs and search results, and where you see testing volume, have you guys gone back and tried to do that math?

[John Dobak:]

We are looking at that. We are getting better at that. It’s hard to follow people down the funnel beyond the initial search for the doctor, but we are starting to get some of those metrics in and we’re building out more CRM capabilities that will allow us to capture more of that data. We do know we have looked at – we have looked at it and we know that doctors have participated in that find a doctor search feature. They do grow more rapidly than the doctors that don’t, if you compare the sample volumes, for example, from a doctor that’s not on the find a doctor page and one that is, we see more sample volume growth to there. So, we do think it is paying off and we’ll continue to invest in that. And we’re going to get better at targeting, what actually turns into a true order test at some point, that’s the ultimate where we want to go, right? How many find a doctor tests searches lead to an actual ordered PLA. We’re not quite there yet, but that’s where we want ahead.

[Thomas Flaten:]

Excellent. Thanks for taking the questions. I appreciate it.

[Operator:]

Your next question comes from the line of Sandy Draper from Truist Securities. Your line is now open.

[Sandy Draper:]

Good afternoon and thanks for taking my questions. A lot of them have already been asked and answered. Then maybe, John, just I think, I know the answer just want to confirm. So, it sounds like the private payor discussions are – your view is it’s really just a function of time. There’s no more data or anything else they need from you guys. It’s just going through that time consuming process of the meetings and the forms and everything else. So, I just wanted to confirm there’s not like some other study results or something else they need to see.

[John Dobak:]

In our discussions of late with payors, there hasn’t been an issue where we need to more evidence development basically. Now, we do – they do want to see obviously the results, the final published results with that trust study, because we released that top-line data. but in general, I would say the emphasis is not on do we have the evidence to support? It’s more, how do we integrate this in? What’s the right pathway? How should we write a coverage policy? Things like that and more taking a critical review. And it is a time thing, they do – they do need to understand the problems with the current pathway. So, that’s taking some time. They want to confirm that there really is a cost benefit associated with what we’re doing and that’s what the OptumInsight study will do. So, we think that we’ll continue to make progress. And I like what I’m hearing from the payors, very different than what we heard before. They wouldn’t even really entertain it, because we didn’t have enough volume. We didn’t have enough data. That discussion has changed. Now, we’re generating the volume. We’re generating the data. And I wouldn’t underestimate the ability of appeals for us to drive action by payors as we ramp up those appeals now, particularly around the earlier discussion about being able to counter that E&I denial with the NCCN guidelines. I think that’s going to put more pain on the payors, which is going to make them really want to take more action to give us some coverage.

[Sandy Draper:]

Okay, great. That’s really helpful commentary. And then my follow-up on the sales force side, I think I heard you say that due to COVID and some other things you sort of slowed down the hiring in terms of expanding the sales force. I wasn’t clear whether you’ve already started to reengage that. And also, I didn’t know how much you had already sort of identified people, maybe, had initial discussions and you think you can just reengage and so ramp it quickly. Or do you feel like you’re sort of starting back over in terms of how you’re thinking about the timing of building out sales force? Thanks.

[John Dobak:]

So, we haven’t quite started to add the additional headcount that Todd – that I mentioned for the direct professional channel and Todd is doing some work to figure out what the best strategy is there. I don’t think we’re going to have a problem retaining good sales people. We have a lot of tremendous buzz around the company and enthusiasm by the dermatology, and the professional dermatology world with what we’re doing. So, I think we’ll be able to find those reps as soon as we decide exactly, where we want to place them. I think we’ll be able to find those representatives very quickly, and they’re good candidates and Todd has a tremendous pipeline of candidates that he can approach and go back to. So, I don’t suspect there’s going to be a real time element when we decide to start adding those additional headcounts.

[Sandy Draper:]

Okay. Thanks. Those are my questions. Appreciate it.

[John Dobak:]

Okay, great. Thank you.

[Operator:]

Ladies and gentlemen, this concludes today’s conference call. You may now disconnect. Thank you for your participation.