Biocept Inc (BIOC) 2020 Q1 法說會逐字稿

Good day and welcome to the Biocept first quarter 2020 earnings conference call and webcast. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Jody Cain, LHA Investor Relations. Please go ahead.

This is Jody Cainwith LHA. Thank you for participating in today's conference call. Joining me from Biocept are Michael Nall, President and Chief Executive Officer; Tim Kennedy, Senior Vice President of Operations and Chief Financial Officer; and Cory Dunn, Senior Vice President of Commercial Operations.

During this call, management will be making a number of forward-looking statements within the meaning of the 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, estimates, believes, could, expects, intends, may, plans, potential, predicts, projects, should, will, would, or the negative of those terms.

Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements be materially different from those statements, as well as performance or achievements that are expressed or implied by the forward-looking statements. In particular, there is significant uncertainty about the duration and contemplated impact of the COVID-19 pandemic. This means results could change at any time and the contemplated impact of COVID-19 on Biocept operations, financial results, and outlook is the best estimate based on the information for today's discussion. 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 13, 2020. Except as required by law, Biocept disclaims any obligation to publicly update or revise any information reflect events or circumstances that occur after this call.

Now I'd like to turn the call over to Michael Nall. Mike?

Thank you, Jody, and good afternoon, everyone. We're reporting strong first quarter results with revenues in excess of $1.4 million. This is a 41% increase over the prior year, driven by a 27% increase in average revenue per patient as physician customers are ordering more assays per sample. We also benefited from operating efficiencies that have improved gross margin by 50 percentage points versus the first quarter of 2019 as we make progress on our goal to become gross margin positive.

We are reporting these strong results even with the impact of the COVID-19 pandemic. We estimate COVID-19 led to an approximate 15% to 25% decline in commercial test volume in Q1 versus Q4 2019, and also impacted opportunities for us to gain new customers. Declining test volume during the pandemic is an industry-wide issue with some labs reporting year-over-year volume declines of 50% or more. Our outlook is for commercial volume to decline by approximately 30% to 40% in the second quarter over the prior year. This assumes a continuation of the trends to look for a gradual increase in volume as we move through the remainder of this period.

Understandably, oncology practices during the COVID-19 pandemic have reduced their hours of operation and postponed or canceled patient appointments. Similarly, many hospitals have reduced surgeries and cancer patients, some of whom had compromised immune systems, have been reluctant to visit a physician office. Further, declines in clinical trial enrollment are having an impact on sales of our seizure blood collection tubes and research use only or RUO kits, noting that these products comprise a relatively modest percentage of our overall revenues.

Importantly, we are positioned to weather the pandemic and for a return to growth. We are an established leader in liquid biopsy and our Target Selector testing provides critical information to physicians in determining treatment decisions for their patients diagnosed with cancer. We fully expect that when oncologists and hospitals resume patient schedules, our test volume will gradually return to more normal levels. We are particularly pleased to have strengthened our balance sheet, having raised net proceeds of more than $36 million since the beginning of December from financings and the exercise of warrents.

We appreciate the confidence of our institutional investors who over the past several months have provided us with funding and on favorable terms. We believe that based on historical and planned cash usage, our current funding is expected to support operations through most of 2021. However, with the uncertainty introduced by the impact of COVID-19 on revenue and collections, our cash runway may be shorter.

Our foremost concern during the pandemic is for the safety and well-being of our employees. As a molecular laboratory performing patient testing, we are an essential business and have maintained operations during the pandemic. We are providing safe conditions for our lab professionals through social distancing and staggered shifts while delivering the same excellent quality and turnaround time without interruption or delay. Notably, we have maintained our full staff of Biocept with no layoffs or furloughs, having instituted work-from-home policies and strategies designed to emerge from the pandemic in a strong position.

We were also responding to the pandemic by broadening our menu and can now accept samples for COVID-19 testing. We are able to provide this testing due to our specialized licensed molecular lab staff who have been trained to perform COVID-19 testing at our high complexity CAP accredited, CLIA certified, BCL-2 safety level laboratory here at our San Diego headquarters that is equipped to perform these tests. We expanded our relationship with Thermo Fisher Scientific and have validated their FDA approved for emergency use authorization or EUA testing of the TaqPath molecular diagnostic platform for SAARS COVID too.

We can run these COVID-19 tests quickly with turnaround times of an estimated 24 to 48 hours. This is much faster than many large national labs that can take up to 10 days. Biocept's clients have had difficulty gaining specimen collection kits to send to Biocept for testing. And to date, we have not been able to perform any COVID-19 testing for customers. The challenge in securing swabs and reagents for PCR COVID-19 specimen collection kits was recognized by California Governor, Gavin Newsom, in his daily briefing yesterday.

Importantly, he pointed to PCR testing like we provide as providing high quality and reliable results compared with point-of-care reagent pop-up test kits. In order to address the challenge of securing these tests and to provide this needed testing, we intend to manufacture our own specimen collection kits for distribution to clients and expect those kits to be available in June. As a reminder, we already routinely manufacture our own materials for our oncology testing. So we have a team in-house to do that.

Our capability allows us to run approximately 400 COVID-19 tests per day, and we can ramp that to about 3,000 per day. We will consider increasing capacity from there based on demand. As you may know, Governor Newsom has made clear his interest in wide-scale testing. We are gearing up to make sure we are prepared should test volume increase. We are appreciative of the increase in Medicare payment for testing to approximately $100 per test from the previous $51 per test. We continue to advance our growth strategy through this challenging period and announced several significant developments that position Biocept for a strong future.

In March, we launched testing detects and analyzes cancer biomarkers on circulating tumor cells or CTCs as well as ctDNA, circulating tumor DNA, found in cerebral spinal fluid. We are among the few national CLIA labs to offer biomarker detection to analyze and identify important alterations that can help these patients qualify for a therapy that can potentially extend life. Cory Dunnwill provide more detail on the assay's launch.

We also launched our technology, allowing us to detect key oncogene mutations using blood and tissue through our RUO kits. These kits allow molecular laboratories around the world to utilize our Target Selector assays to detect these mutations through the analysis of tissue gain from surgical biopsies as well as through ctDNA and a gain from blood-based liquid biopsy. Our ctDNA platform utilizes our patented switch blocker technology to enrich the specimen for mutations of interest, resulting in ultra high sensitivity and specificity compared to results currently used in most labs. The first combined tissue and liquid biopsy kit available is for the detection of EGFR mutations, which are among the most frequently evaluated biomarkers for non-small cell lung cancer.

Additionally, we recently announced receipt of CE-IVD mark for these kits, which allows us to market them in the European Union and other countries recognizing the CE-IVD mark. Importantly, with this award, we can now provide customers in these geographies with a solution start to finish, from collecting blood, the sample from our blood collection tube, to transport using our specimen shipper and finally, to performing the assay in their own lab using our molecular test kit. This solution provides molecular labs recognizing the CE-IVD mark the ability to conduct our Target Selector assays on tissue, which is the most current standard of care, and from a blood sample, which is where the market is going.

Today, I am pleased to announce that we are launching the biomarker BRAF to our menu of assays available as RUO kits to be performed on tissue or blood. Mutations in the BRAF gene are an important factor in determining treatment in melanoma, lung, and other cancers, and are of great interest to researchers and physicians. As you have seen with our first launch of EGFR testing, we will focus our efforts on biopharmaceutical customers globally and for clinical customers outside of the US. Our plan also includes applying for CE-IVD for this new offering in the future.

As we expand our reach internationally, we are also expanding our intellectual property. Most recently, we were granted patents in Australia and Brazil covering our Target Selector oncogene mutation enrichment and detection platform. We now have 39 patents worldwide covering our cutting edge molecular technology. We continue to present compelling data that further validates our technology in peer-reviewed journals.

In March, we announced the publication of previously reported yet highly compelling clinical data in the Journal of Clinical Pathology that further validates our Target Selector qPCR assay using patented switch blocker technology to identify cancer related mutations in liquid biopsy samples. Our study examined 127 clinical assays for mutations commonly associated with cancer found in patients with the EGFR, BRAF, and KRAS genes. Each Target Selector assay in the study demonstrated extremely high accuracy, sensitivity, and specificity compared to results obtained from tissue samples, showing a 93% to 96% concordance to blinded tissue samples across all assays.

And finally, many of you have seen our 2020 proxy filed with the SEC and shareholders should be receiving the proxy materials in the mail in the next week or so. We will be holding our annual meeting of stockholders in a virtual format on June 5 at 1:30 PM Pacific time. Instructions on joining this meeting are in the proxy materials. Among the proposals is one authorizing a reverse stock split. Our board is requesting stockholders to vote for this proposal so that we have the option to raise our stock price to maintain the $1 per share NASDAQ continued listing requirement. A reverse split requires approval of the majority of shares outstanding and not simply a majority of shares voting. So it's very important for all shareholders to vote their proxy as a non vote will count as a vote against the proposal.

And with that, I'll turn the call over to Tim Kennedyto review the financial results. Tim?

Thanks, Mike, and good afternoon, everyone. As Mike mentioned, for Q1 2020, we reported revenues in excess of $1.4 million compared with $1 million in Q1 2019. This 41% increase is due to higher revenue per accession as we report on more tests per accession ordered by referring doctors. Commercial reimbursement based on historical mix and tests per accession is in the $1,400 range, up from the $1,100 range in the prior year period. The increase was predominantly due to more reported biomarkers per accession.

We continue to launch new assays and improve operational processes, leading to increased testing capabilities and physician ordering. In Q1 2020, we received 1,306 total accessions, compared with 1,325 total accessions in Q1 2019. Commercial volume in Q1 2020 was 985 compared with 1,011 in Q1 2019. We believe that the decrease is due to the impact of the COVID-19 pandemic.

Cost of revenues for Q1 2020 as a percentage of revenues improved 50 basis percentage points compared with the prior year period. Total cost of revenues was $2.9 million compared with $2.6 million for the prior year period. So with revenues increasing 41% over the prior year, cost of revenue increased only 13%. In 2019, we began implementing automation in our CLIA laboratory, which we believe lead to further leveraging of our fixed costs as we pursued our goal of positive gross margin. We anticipate being able to provide incremental laboratory capacity at minimal expense to accommodate higher volumes. We also are implementing additional actions that we anticipate will further lower our cost of revenues.

R&D expenses for Q1 of 2020 were $1.3 million compared with $1.2 million during Q1 of 2019. The slight increase was primarily attributable to development and validation costs related to additional offerings such as cerebral spinal fluid or CSF, and COVID-19 testing. G&A expenses for Q1 2020 were $1.9 million, an increase of $223,000 versus Q1 2019, primarily due to a reclassification of certain customer service and related expenses from sales and marketing to G&A. However, G&A expenses as a percentage of revenues improved to 132% in Q1 2020 compared with 164% in Q1 2019.

Sales and marketing expenses for Q1 2020 were $1.5 million compared with $1.4 million for Q1 2019. This increase was primarily attributable to commissions on higher revenue. As a percentage of revenue, sales, and marketing expenses in Q1 2020 narrowed to 101% versus 134% a year ago despite higher marketing costs related to the launch of new tests.

Other expense net for Q1 2020 was $2.2 million, compared with $62,000 in the prior year period. This noncash increase was mainly due to $2.1 million in warrant inducement expense.

The net loss for the first quarter of 2020 was $8.3 million or $0.11 per share on 79 million weighted average shares outstanding, and includes the $2.1 million in noncash inducement expense and the impact of COVID-19. This compares with a net loss attributable to common shareholders for the first quarter of 2019 of $6 million or $0.61 per share on 9.8 million weighted average shares outstanding.

Cash and cash equivalents were $21.5 million as of March 31, 2020, compared with $9.3 million as of December 31, 2019. In addition to the $2.3 million in net proceeds from the warrant inducement offering during Q1, we received an additional $700,000 from the underwriter exercising its overallotment of warrants from the December 2019 underwritten financing transaction.

In March 2020, we completed two registered direct offerings, raising net proceeds of approximately $14.7 million. And in April, subsequent to the first quarter close, we raised net proceeds of approximately $9.6 million from a registered direct offering. And as Mike mentioned, while we believe that based on historical and planned cash usage, our current funding is expected to support operations through most of 2021. However, with the uncertainty introduced by the impact of COVID-19 on revenue and collections, our cash runway may be shorter.

I'm now pleased to welcome Cory Dunnto our call to provide an overview of our commercial progress. As you may know, Cory joined Biocept in October of 2018 as Vice President of Marketing and was promoted to Senior Vice President of Commercial Operations in February of this year. Cory?

Thanks, Tim, and I'm delighted to be speaking with all of you today. I'd like to begin by discussing the actions that our sales force is taking during the pandemic to engage with our physician customers. Because of limited access to clinics for in-person meetings, we have provided our sales team with full work-from-home capabilities utilizing virtual web meetings with physicians. This approach has resulted in the vast majority of physicians we've reached ordering specimen collection kits.

We have also increased outreach to our customers through social media outlets such as Twitter and LinkedIn. Importantly, we are generating significant interest with neurooncologists following the March launch of testing that detects and analyzes cancer biomarkers on CTCs and ctDNA found in the cerebral spinal fluid, which is essential fluid that nurtures and protects the brain and spine.

Especially once the tumor metastasizes into the cerebral spinal fluid, identification of biomarkers and treatment is very critical. Profiling biomarkers is key to physicians selecting the best treatment options for up to 30% and 36% of patients diagnosed with breast and lung cancer, respectively, who may likely develop brain metastases.

As Mike mentioned, Biocept is one of the only national CLIA labs to provide biomarker detection to analyze and identify important genomic and proteomic alterations that can help these patients qualify for a therapy that potentially can extend life. This is a growing patient population of patients with cancer are living longer treated due to advances in cancer treatments, and thus are more likely to experience disease progression. The ability to detect biomarkers in the cerebral spinal fluid of patients with brain metastases is a true unmet need. We estimate that about 90,000 patients with breast or lung cancer live sufficiently long enough to develop brain metastases.

Our sales force has reached out to neurooncologists and the reception has been highly favorable with many joining virtual meetings that include our medical staff. Since our commercial launch of this new test in March and despite challenging circumstances, our sales team is working to access the almost 300 board-certified neurooncologists nationwide, each of whom represents a potential new Biocept customer. And fortunately and although early, we are seeing repeat business at prestigious academic centers.

The importance of this testing is evidenced by a recent case study of a patient who tested. This mother of two in her late 30s was diagnosed with triple-negative breast cancer and brain metastases. A brain tumor was removed through surgical resection, which showed her to be HER2 positive. She was placed in the clinical trial, but her cancer continue to progress. Her physician sent us a sample of her cerebral spinal fluid to us for biomarker testing. The results of our test showed HER2 amplification. This confirmation provided the confidence and affirmation for the physician patient and her family to move forward with planned Herceptin therapy. We wish the patient and her family our very best.

We're also leveraging our mobile phlebotomy offering during the pandemic. Some physicians have continued to utilize this at home as a collection service for patients to obtain blood specimens in lieu of visits to their doctor's office. I want to mention that Seattle Genetics recently gained FDA approval for its drug tucatinib to fight aggressive breast cancer, including patients with brain metastases. This oral drug targets the HER2 protein that promotes the growth in cancer cells found in approximately 20% of patients with breast cancer. It is encouraging to see another therapy come to market which underscores the value of our liquid biopsy to detect HER2 alterations.

And finally, we are making great commercial progress with independent physician associations or IPAs. Our clinically actionable biomarker testing, coupled with cost effective benefits are resonating with value oriented stakeholders. We look forward to continued success in this area.

So in summary, the commercial team continues to support the execution on our strategic initiatives during the challenging time, and we are effectively using our efficiently sized sales force to maintain existing physician relationships while developing new ones.

With that, I'd like to turn the call back to Mike.

Thank you, Cory. And actually, thank you to both of you for your outstanding leadership for our company during this pandemic.

While we're pleased to be able to support public health efforts by offering COVID-19 testing, as a company we remain focused on oncology. That said, for the near future, we expect COVID-19 testing could be an important aspect of any laboratory, including ours, that can perform molecular testing. As long as the need is there, we will provide these critical testing services. Our focus will continue to be on increasing adoption of our patented proprietary biopsy assays and other molecular assay products with our broad offering of less invasive, cost-effective solutions that help physicians determine the best treatment pathways for their patients with cancer.

To date, we have tested approximately 24,000 patient samples with our proprietary biomarker assays. These assays are based on our differentiated platforms that leverage information from both CTCs and ctDNAs, both in blood, and importantly, as Cory discussed earlier, in cerebral spinal fluid. We continue to generate clinical evidence that builds further support for the high sensitivity and specificity of our biomarker assays and remain focused on getting data published and presented. We're focused on increasing testing volume, growing revenue per accession and expanding opportunities where we can leverage our investment in intellectual property all with the goal to create shareholder value. Like everyone, we're looking forward to the lifting of shelter-in-place restrictions and for our business to return to a more normal pace.

Our longer-term corporate priorities remain unchanged. These include increasing market penetration with a focus on neurooncology, urology, breast and lung cancers, growing sales of our Target Selector molecular assay kits and our seizure blood collection tube, increasing market penetration of our Target Selector NGS lung and breast panels under our collaboration with Thermo Fisher, and securing Medicare coverage for these assays. Entering into additional strategic commercial and technology partnerships, both global and domestic, signing agreements with new third party health plans, including capitated plans and expanding our relationship with BlueCross BlueShield, publishing clinical case studies and presenting data at scientific conferences that further validate our Target Selector testing, and launching additional assays. Importantly, we have sufficient capital to sustain us during the COVID-19 pandemic and to execute on our strategy. I'd especially like to thank our entire team at Biocept for their hard work and dedication during this challenging period.

And with that overview, we are now ready to take questions, operator.

Thank you. We will now begin the question and answer session. (Operator Instructions)

While we're waiting for the first question, I'd like to remind our stockholders to return your proxy voting. We appreciate your support for the initiatives our Board has endorsed.

Okay, operator. We're ready for the first question.

Thank you.

Jason McCarthy, Maxim Group.

Hey, guys. Congratulations on the progress because you know, the widening margins. You've got the BRAF has going in. And there's a lot we could talk about in oncology, which is obviously the core focus of the company. But I just want to take advantage of the opportunity to talk about the coronavirus and what you're doing. It could be a near-term revenue driver for you guys? And can you help us understand a little bit about the changes in Medicare payments? Or help investors understand more clearly why they went to 100 versus 51, because most people think of LabCorp, they think of Roche or Quest. The Biocept should be discussed in that same conversation. Can you help us understand a little bit about that process? And also, how do you look at it from a revenue perspective? What is (inaudible) look like in Southern California and the San Diego area? what's your demand right now? And what could that revenue look?

That was a great question. Thank you, Jason.

First about the pricing on COVID-19 testing. You know, one thing I think we've mentioned in previous calls, or certainly I mentioned as I've visited with investors is that we're pretty active with industry trade groups. And the various trade groups we have in the industry, whether it's the lab associations. And we're also involved in a molecular technology, all really on lobbied to get that increase. Because of the previous pricing of $51 barely didn't cover the cost depending on what assay was being run at the various laboratories.

Now LabCorp and Quest might have been able to have a slim margin at the price. But for most labs such as Biocept or hospital-based labs that (inaudible) most of the costs, especially with shipping included, FedEx, et cetera, to get into the lab. So we worked real hard with stakeholders at Medicare and they're very open as everybody is right now doing what was needed and they increased the price to $100. Would we have liked to see it to $200, of course. But at $100, we can make a margin. It's not quite the same margin we would make at scale on our normal testing, but still a margin and certainly can be a revenue driver for the company.

As far as the volume we all expect, a couple of things there. We tried to be explicit on the release. It's something that I think folks don't understand. There seems to be a good amount of capacity for testing now. And as we talk to other labs and other both hospital system labs here in San Diego and Southern California, most people like Biocept have quite a bit of capacity that's not being used for testing. The problem is getting the collection kit, the sample collection kits. That's where we're out. It's not the testing capacity as is being reported in a lot of folks, at least here in our area. It's actually getting the specimen collection kits. So we had been waiting for a long time for collection kits, and we finally decided to make our own.

So Jason, you may remember, we actually make the reagents and materials that we use in oncology testing. So we have a clean room, have a manufacturing staff. So this is something we're qualified to do. So we expect to have those within the next few weeks, and that's under Tim's leadership on his department. So we're expected then start to begin to get the customers that we already have teed up. The Cory's team has gone out and identified for us. So stay tuned for more news on that, but that's kind of where things are at.

As far as the demand in California and elsewhere, we still have to see. We hear the same public statements that investors do from our governor and others about the need for wide-scale population base testing. To date, we haven't necessarily seen that, but we're starting to get indications that could be where things are going. So I think there's a need to solve this problem on collection kit capacity first. And then after that, we'll start to see things starting to become more clear in those arenas. Does that answer your question?

It does. And hopefully, we ought to get back to normal. And maybe we'll hear some more about this from you guys in a couple of weeks as it relates to COVID testing.

Thank you for taking the questions. I'm glad you guys are doing really well. Nobody has been furloughed, as you mentioned earlier in your call. And hopefully -- (multiple speakers)

We expect that once the COVID-19 tests -- [I'm sorry to interrupt] comes in, and that's part of that idea is that we're expecting to bevery busy here once this becomes more clear where it's at. Because we all know there is a need. I think it's at the top of everyone, not just your questions. Everybody's. This is all you're thinking about obviously. And we all need to be prepared for when that happens. And so I think by us controlling our supply chain, we're going to be in a good position to address that need.

Well I think it's also important for investors to understand, at least from my view, that if you're doing 400 to 3,000 tests per day, you're going to run seven days a week at $100 per test. That's not nothing. That more than offsets any delays or or slowdown that you're having on the oncology side, would you agree?

I think you just read Tim's mind. He was wanting to add a little bit about that.

So yes, it's exactly right, Jason. And in addition to that, just as a reminder, when you have the COVID-19 test that we offer, which Mike had mentioned, the PCR based test, and what Governor Newsom referred to as a gold seal test in his conference call yesterday, the test is whether or not will you have the COVID-19, whether you have the coronavirus at that point in time. So it's not necessarily a one-and-done test specifically. These are tests that likely, at least for the near term, are going to be tests that are probably done more than once on a particular patient. So that was another thing I wanted to point out as well.

Yes, that's a great point. And thank you guys for taking the questions. And hopefully, we'll get to see you soon.

Yes, I hope so too. Virtually, if not in person. We're all eager to get back on the road. My wife, especially, is eager for me to get back on the road.

Likewise. Thanks, guys.

Thanks.

Sally Yanchus, Brookline Capital Markets.

Hi, Mike. Thanks for doing the call. I'm just curious, do you expect to see a test rebound in the second half of this year or even by the fourth quarter?

Provided that the hospital business and physician visits get back to a more normal pace. That's the biggest impact we're having.

So, the challenge has been that most clinic visits, and I think most people are aware of this, have been canceled. And in fact, we're seeing hospitals actually have layoffs, which seems counterintuitive to the COVID-19 crisis but different departments have no business because unless you're critically ill, you're not being referred for treatment. So this, of course, has an impact on us.

But we've done several things to counteract that to maintain the specimen volume that we're projecting and that we're seeing. And we're starting to see things start to come back a little bit. But maybe, Cory, you can give a little bit more color about the success that we're having with the virtual conferences with the physicians and how we probably wouldn't have been able to get that otherwise.

It's been quite nice, and not a lot of times that physicians are not in clinic as much. So we are able to secure some time through Zoom, through webinar time, sometimes for a whole hour, which is very difficult. And for them to learn about our offering. And then additionally too, like I mentioned with the mobile phlebotomy, we can provide mobile phlebotomy services for blood draws. So very good advantage of being in the liquid biopsy business. To their patients so that the patients don't have to have to come into the office.

Thank you for reminding me, Cory. We've actually seen renewed interest from pharma companies in liquid biopsy because of this option. Obviously, assuming biopsies done because their surgeries are canceled in the hospitals where patients don't feel safe going into the hospital for the biopsy, then they're not getting qualified to get on these targeted therapies from big pharma. So big pharma understands we can send some of our phlebotomists to someone have blood drawn there and still qualify a patient for a therapy. So this is an advantage of liquid biopsy over tissue biopsy, which of course, must be a surgical procedure.

So that's interesting. And then just how you're being paid or compensated for the COVID-19 tests? Because I know Thermo is a testing equipment. I mean, are you being paid directly? Are you being paid through Thermo?

No, actually not through Thermo. We buy stuff from them, the supply. So they are our vendor and partner that since we have other collaborations with them. But the payment comes from really two main sources. It's either going to come from an employer because more and more employers are looking to do this type of testing for the employees or in an institution. Or it's going to come from insurance. Part of the CARES Act mandates that -- this is important for any of the listeners to understand for themselves. Your insurance company has to pay for COVID-19 testing. People may not understand that when it comes to any other tests you need in the world, there is an option whether they pay it or not. And very often it's tough to get the money out of the insurance. I'm looking at him and he's grinning at that. So, you know, but when it comes to COVID-19 testing by law on the CARES Act, they are required to pay. It's Medicare.

So Medicare rate is about $100. The private payers have to pay either a contracted rate, and we're working on contracts with some of our good partners in the payer community. Or they have to pay what's published on our website. So part of this legislation in the CARES Act requires that laboratories publish their price on their website. So if you go on our website, you'll find our pricing.

Okay, interesting.

That's our price that we what we call cash pay price. Obviously for Medicare, you expect what they pay. But that would be the price that we -- for a payer we wouldn't have a contract with, that would be the price paid by (inaudible).

Okay. Good. That's helpful. Thanks.

Yes.

Thank you. This concludes our question and answer session. I would like to turn the conference back to Michael Nallfor closing remarks.

Well, thank you, everyone. And on behalf of our Board of Directors and our hard-working team at Biocept, I want to thank you for participating on today's call and for your interest in our company. We look forward to providing an update on our next conference call when we report, believe it or not, our second quarter 2020 financial results in August. Thank you and have a great day.

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