Cardiff Oncology Inc (CRDF) 2015 Q4 法說會逐字稿

Good afternoon and welcome to the Trovagene, Inc. fourth-quarter and year-end 2015 financial results. All participants will be in listen-only mode. (Operator Instructions). After today's presentation. there will be an opportunity to ask questions. (Operator Instructions). Please note this event is being recorded.

I would now like to turn the conference over to David Moskowitz. Please go ahead.

Thank you, Amy, and good afternoon everyone. Thank you for joining us on our fourth-quarter and year-end 2015 conference call. As you know, Trovagene is focused on developing and commercializing our precision cancer monitoring platform which quantitatively detects DNA mutations in urine blood with very high sensitivity.

Our novel liquid biopsy platform provides oncologists with important clinical information that can guide treatment decisions by determining a patient's mutational status, response to therapy and resistance to treatment over time. The body of clinical evidence supporting our cancer monitoring platform continues to grow as additional results from our clinical study programs and case studies from physicians using our technology become available.

These efforts will support our commercialization program which we have recently expanded. The benefits of our precision cancer monitoring platform are becoming apparent with data presentations at several major clinical oncology meetings this year and additional manuscripts to be published in peer-reviewed journals.

Our intellectual property estate protecting our technology is strong and growing and includes methods of extracting, purifying, amplifying and detecting circulating tumor DNA in both urine and blood.

Before moving on, I must remind you of the risks inherent in our business and ask you to consider the following information regarding the forward-looking statements. Statements in this call about the Company's expectations, applications of its technology, markets, launch of tests and other statements that are not historical facts are forward-looking statements within the meaning of section 27A of the Securities Exchange Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are based on management's current beliefs, assumptions, estimates and projections. Actual results may differ materially from those projected in the forward-looking statements for various reasons including risks associated with product and diagnostic test development, government regulation, market acceptance, limited commercial experience, dependence on key personnel, obtaining health insurance reimbursement, obtaining financing and other factors discussed in the Company's periodic reports filed with the SEC.

For this call our senior management will review our fourth-quarter and full-year 2015 accomplishments and we will also comment on our outlook for 2016. A question-and-answer session will follow those comments.

Now today unfortunately our CEO, Toni Schuh is down with a bad case of laryngitis so for this call, our CFO, Steve Zaniboni, will make the opening remarks and he will be followed by Matt Posard, our Chief Commercial Officer, who will provide an update on our commercialization program.

So I will turn it over to Steve now. Steve?

Thanks, David. 2015 was in fact Trovagene's coming out year as we released significant clinical data from pilot studies at 15 medical conferences. These datasets across several cancer types were sufficiently compelling to support our initial commercialization launch and the strong early interest in our precision cancer monitoring platform by oncologists.

Early adoption of our technology enabled us to begin compiling patient case studies to supplement our clinical study results and today oncologists in community practice as well as in academic settings are using our noninvasive circulating tumor DNA test to improve the care of cancer patients in certain clinical situations. These include instances when tissue biopsy is inconclusive or not available or when monitoring clinically actionable oncogene mutations may help determine response to therapy in real-time.

In 2016, we are focused on generating and reporting results from larger statistically powered clinical studies further demonstrating the utility of our assay platform. We expect to achieve clinical performance leadership this year in cancer monitoring segments using circulating tumor DNA, raising the awareness of our ultra-sensitive and quantitative precision cancer monitoring platform. The body of evidence supporting the clinical utility of our liquid biopsy solution will continue to grow as the year progresses with additional data from clinical study programs, up to nine manuscripts to be submitted for publication this year with three already submitted, and additional real-world case studies driven by our commercial team to be documented and made available to the medical community.

In addition, our clinical study and medical education programs, our recent agreements that we announced with third-party administrators such as America's Choice Provider Network, FedMed, Fortified Health Network, Three Rivers and MultiPlan open the door for cancer patients in those networks to access our tests under their health benefit plans.

It is critical that our cancer monitoring solutions are acceptable economically from both a patient standpoint and from our standpoint and we believe that with our preferred provider network agreements, we meet this criteria.

After demonstrating technological feasibility in 2014 and clinical and commercial feasibility in 2015, we anticipate that 2016 will be the year where we assume a leadership role in building the market for cancer monitoring using circulating tumor DNA with our proprietary highly-sensitive noninvasive and quantitative liquid biopsy technology.

With that, I would like to share with you the key objectives that we expect to deliver this year to advance our business, to empower more physicians and patients with our precision cancer monitoring solutions, and to create value for our shareholders.

First, our commercial organization is working to increase the adoption rate of our cancer monitoring services with our expanded salesforce and the patient access that we've recently achieved through our third-party administrator agreements. We are primarily focused on driving uptake in the non-small cell lung cancer segment particularly due to the value that we can provide to patients who are failing first-line therapy and who require testing and monitoring of EGFR T790M resistance mutations.

In addition, we will leverage our sales and marketing efforts by informing the medical community about the clinical data that we have developed for our PCM platform over the past couple of years which includes clinical data for approximately 1000 patient samples in a range of clinical settings and up to nine manuscripts this year demonstrating several clinical utilities for our KRAS, BRAF and EGFR oncogene mutation assays. By midyear, we expect to release clinicals study results at several oncology conferences including AACR and ASCO, which we believe will demonstrate the clinical performance of our platform in blinded statistically powered studies particularly in non-small cell lung cancer and pancreatic cancer.

We believe that these clinical results and additional documented patient case studies will further demonstrate the benefits of our technology including the ability to improve outcomes for cancer patients. We plan to gain traction with health insurance companies demonstrating the clinical utility and cost effectiveness of our assay platform as well as our ability to achieve systematic health plan reimbursement for our tests.

We are currently investing in two health economic studies this year to support favorable health insurance coverage.

With regard to our product and services offerings, we are continuing to enhance our technology platform and intellectual property with regard to sample processing. This includes refinements to our proprietary urine collection, extraction and automated process which should reduce process costs and improve scalability.

Finally, we expect to drive value by engaging in corporate development activities to further penetrate the US oncology market, advance our technology platform and broaden our geographic reach.

Cancer monitoring based on circulating tumor DNA is an emerging field that has the potential to significantly improve the way cancer is treated. We believe that in 2016, Trovagene will demonstrate clinical performance leadership in this segment with our noninvasive and actionable assay platform which should position us favorably in this large potential market.

I will now turn the call over to Matt Posard to update you on our commercial programs.

Thanks, Steve, and hello everyone. Our approach to commercializing our liquid biopsy platform continues to center around the disciplined strategy in which we establish core capabilities in sales, marketing, market education and reimbursement. Results from our commercial launch pilot last year fueled by our clinical experience program confirmed each of the five pillars of our commercial strategy. We demonstrated enthusiastic physician interest, followed through on sample submissions and operational readiness. We also generated several patient case studies documenting significant clinical utility and we have initiated reimbursement fulfillment plans.

As we indicated on our previous conference call, we spent the fourth quarter refining and optimizing our commercial strategy and market development plans based on the learnings from our launch pilot program.

Applying these learnings, we hired additional sales people who completed their training in January. We now have eight US sales professionals in the field including two national account executives and six territory representatives. I am confident that our new expanded team consisting of top performers with significant experience in selling innovative and clinically differentiated technologies to oncologists will distinguish Trovagene given our clinical evidence-based approach.

I will now provide an update on the key metrics that I shared with you on our third-quarter earnings call.

We were pleased to see our efforts in 2015 produce a foundational core of over 300 physicians introduced to our products and services. A total of 412 commercial samples were processed in our laboratory in 2015 of which 180 were billable. The number of billable samples is primarily attributed to physicians from our pilot launch who converted from our clinical experience program to the submission of billable samples. In 2016, our sales focus has shifted from leading with no charge evaluation samples to increasing the number of active ordering physicians and submission of billable samples.

I will report on our first-quarter progress on our next conference call in May. However, I will say that we are already encouraged to see the ratio of billable samples to no charge samples increase from 1.3 to 1 in Q4 of 2015 to a ratio of 3 to 1 through February of this year.

I will now share some insights into the progress we are making on key components of our market development plan.

We now have curated an initial set of compelling patient case studies demonstrating the clinical utility of our circulating tumor DNA platform. These case studies have been documented by practicing oncologists and are currently under consideration for publication in peer-reviewed oncology journals.

Additionally, we organized a Clinical Advisory Board comprised of 16 leading pulmonary oncologists and conducted our first meeting in February. We also initiated a case-based Tumor Board, Educational Webinar Series providing clinical support for physicians to increase adoption. And we have prepared the foundation for a National Speakers Bureau that we expect to introduce in the first half of this year.

Our 2016 commercial strategy drives focus on clinically actionable information that can inform treatment decisions supported by clinical guidelines. We believe the combination of mounting clinical evidence and compelling case studies uniquely positions us in the market to enable physicians with the ability to monitor tumor dynamics using our proprietary platform. This is perhaps best demonstrated by our clinical data in the non-small cell lung cancer application where the emergent EGFR T790M mutation can be detected up to several months before disease progression is confirmed by radiographic imaging.

Once detected, this resistance mutation can be treated with new third-generation targeted therapies now unavailable to physicians.

Given the significant opportunity, we are currently prioritizing our commercial efforts on the non-small cell lung cancer treatment segment. We expect to present and publish additional clinical data for the non-small cell lung cancer application at major oncology meetings and in peer-reviewed publications this year. We will also release clinical data and continue to promote the broader capabilities of our platform with our KRAS and BRAF mutation assays in diseases such as pancreatic cancer, colorectal cancer, melanoma and histiocytic disease.

Just a few hours ago, our Vice President of R&D presented at Molecular Medicine Tri Conference in San Francisco. The presentation will be posted to our website later today but I would like to share some data highlighting the performance of our assays.

Analytical sensitivity was demonstrated in EGFR Exon 19 and T790M to be 0.006% and 0.01% respectively. This is essentially detection at the single and double copy level for mutations of interest. Analytical data also supported the ability of our assay to capture twofold differences quantitatively demonstrating the ability to detect important mutational load changes reliably over time. This analytical performance translates into impressive clinical results. Dr. Melnikova shared data from some of our clinical studies today demonstrating clinical sensitivities of 91% and 93% in plasma and urine samples respectively.

We also show detection rates of confirmed KRAS mutations in pancreatic cancer patients that correlate closely with known occurrence rates of KRAS in pancreatic tumors from established literature.

Turning to our recent progress for securing health insurance reimbursement, I shared on our previous conference call that we hired a reimbursement and market access specialist last quarter to help us obtain reimbursement for our billed services. So last quarter we embarked on a bold goal to achieve over 100 million covered lives by Q2 of this year. I am proud to share that we have already exceeded our goal. Through early March of this year, our signed contracts together represent over 150 million covered lives and offer cancer patients in network access to our precision cancer monitoring platform under their health benefit plans. Based on these agreements, patients will receive in network tier 2 benefits for cancer monitoring services at pre-negotiated reimbursement levels for each test. We are quite pleased with both the speed and breadth of these agreements and attribute our initial success to the strategic decision to design our products with clinical relevance and actionability.

So to wrap up, our goal is to position Trovagene as the clinical performance leader in monitoring circulating tumor DNA dynamics from cancerous tumors backed by our competitive advantages. These include the ultra-high clinical sensitivity and quantitative performance of our assays, the convenience and noninvasive benefits of using a urine or blood sample, and that we are the only circulating tumor DNA Company to have invested early in over 25 clinical studies encompassing over 1000 samples across five cancer types and four unique clinical utilities. We intend to demonstrate clinical leadership as these data are shared publicly later this year at conferences and in multiple publications.

We believe that we have assembled the right resources to begin building the market for cancer monitoring using circulating tumor DNA including the ability to obtain initial health plan reimbursement for our platform that reflects compelling clinical utility.

As we execute on all the critical points of our business model, I believe that this year 2016 will be a strong one for Trovagene.

I will now turn the call back over to Steve Zaniboni for the financial review.

Thanks, Matt. Financial results for the three months ended December 31, 2015 are as follows. Trovagene reported a net loss of $7.4 million or $0.26 per diluted share as compared to a net loss of $4.7 million or $0.25 per share for the same period in 2014. Operating expenses were approximately $7.5 million as compared to $4.6 million for the same period in the prior year. The increase in operating expenses can be attributed to the expansion of our commercial team and marketing programs as well as an increase in research and development costs incurred in connection with our clinical study programs.

The net cash used from operations in the fourth quarter of 2015 was $6.8 million. The weighted average of diluted shares of common stock outstanding used to calculate per-share results increased to 30 million from 19 million shares in the prior year period due primarily to the common stock offerings of approximately 5.1 million shares and 4.6 million shares that we completed in February and July of 2015 respectively.

As of December 31, 2015, Trovagene had cash and cash equivalents of approximately $67.5 million as compared to $27 million on December 31, 2014. We believe that our current cash position is sufficient to fund operations into 2017.

In conclusion, Trovagene is well-positioned to leverage its investment and its intellectual property, clinical study and commercial programs and collaborations to build a better clinical pathway for cancer monitoring.

This concludes our prepared remarks. Operator, we are now ready for the question-and-answer session.

(Operator Instructions). Jason Kolbert, Maxim.

Hi guys. Congratulations. We really, really appreciate the steady progress. I would just like to go into a couple of key areas and see if I can pick up a little bit more detail. And by the way, just to clarify one thing, you said 25 studies, 1000 samples, five cancer types but you were talking a little bit about utilities. What did you mean on that last portion?

Sure, this is Matt. When we say clinical utility, we really categorize the different applications that our tests can be used for. So the first would be pure detection. The second would be monitoring, the third would be prognostic and the fourth would be drug response.

Okay, perfect. Thank you very much. That is exactly what I thought but I wanted to hear you say it.

Tell me a little bit about the launch of the EU subsidiary and how that is moving in terms of increasing awareness? I know that is not an easy, tangible asset to put your finger on but help me understand what metrics you are using to kind of measure that, validate it and how we should see that build?

Sure, that is a good question. So you are referring to the Trovagene Research Institute that we announced last year and that is largely an R&D partnership. We think there might be some upside commercially based on some of the relationships with the folks that we partnered with over there but for the most part these are in-house product development and platform improvement projects. We are really pleased with the progress. We continue to be on plan and I think in the future calls or future announcements we will be able to share with you a little bit more details around that.

Okay. My next question is a little bit more specific and it had to do with a number of physicians and hospital centers that have actually signed up to be using the test. And if I went through my notes properly on the prior quarter, we were around 171. So do you have any more granularity on what that number might look like today? And I think what I'm talking about specifically is physicians that signed up in 60 days to use the PCM platform.

I will do my best to answer that and the reason it may not sound like a direct answer is because context matters I guess in my answer. So what we measure is total physicians in our pipeline are those that we have actually introduced the product and the services to and they have expressed interest in moving forward either by signing the clinical experience program which is agreeing to evaluate samples on patients that have yet to come through their office. And the second is to just start sending us samples directly as billable samples and bypassing that evaluation period.

For the first category of physicians, we see that there is a period of time from the time they sign up from that program to the time that we start seeing samples come in the door. And there are some of those physicians that never send in samples. It is a small number and I think we have reported them in the past but over time when they see the right patient or we get back into that office, we tend to see conversions from the sign-ups to samples that come through the door.

what we said on the script today is that we have just over 300 physicians that are in that first category of exposure to the products and services. We haven't shared the actual number of doctors that are using once, twice or multiple times and we are going to do that on the next call. And the reason we have chosen not to do that is the summer pilot program really led with these evaluation samples and we really stopped actively promoting that program through the end of September, we got some organic conversions from physicians in the fourth quarter but starting in Q1, we are now leading our efforts with direct billable samples and when necessary, our sales team has the option to reflect to the clinical experience program when warranted. So that is why we chose to report the numbers the way we did this time.

Got it. Thank you very much. And the last question is kind of a little bit more even more esoteric but I think it is a really important one. We are tracking all of the different therapies in development particularly on the cancer immunology side and I'm sure you are doing that too. When you look at the things that are in development, what particular areas to you represent the most promise in terms of impact that you will have, in terms of ability to guide to therapy and really determine whether it is working or whether adjustments need to be made? And I guess what I'm specifically saying is are there any particular molecules that you are really focused on that when you see these get approved that there is going to be just a tremendous need for a companion theranostic to guide the therapy?

Jason, I'm going to ask Dr. Mark Erlander to answer that question. He is with us here in the room and he is our Chief Scientific Officer.

Hi, this is Mark. Great question. I mean right now what we are focused on is in the lung cancer area. I think you know that we are focused on the EGFR story and there of course there is a multitude of molecular targeted therapies that are coming out that are focused on the T790M resistance. I think we know of course, AZ already has come out with Tragrisso and there are five more drugs coming out in the next two years from other pharmaceutical companies.

This is going to be really one key area in lung cancer where there is going to be a need to be able to not only detect noninvasively through urine but also to monitor because all of these drugs will have different efficacy and they will actually per patient may be different. So we see this is right away from a very -- how should I put it -- really obvious need of what things we already have right now today that this will be a very important place to play and we think we have the tools for that.

Looking a little more broadly, we of course have not noticed the immunotherapy area. You will hear more about this in future calls or announcements but we are making a major effort into being able to have a more universal approach to determining responsiveness to therapies within a very short period of time, one to two weeks. And we already showed some of this work in some pilot work we did with UCSD. But we feel this is going to be a very powerful approach to be able to more universally approach the question of is a patient responding and being able to pivot within one to two weeks post therapy.

Fantastic. Thank you so much for the comprehensive update. Really look forward to closing the loop with you in the next couple of days again. Thank you.

Bill Quirk, Piper Jaffray.

Great, thanks. Good afternoon, everyone. I guess, Matt, I want to touch on a point that you made I think in response to a prior question regarding disclosure of accounts and figures like that I guess continue to point towards ongoing commercial progress. With 100 million covered lives now on the books, I guess help us think a little bit about how we might see the pacing of revenue growth over 2016 and maybe even further out if you feel so inclined?

Sure. So the number of covered lives that we have announced so far, Bill, is 150 million just for clarification. The real focus right now is clinical adoption and then I will address your question on revenue in a second.

But strategically we are focused on getting as fast adoption as strategically as we can from key opinion leaders and key opinion sites and that is really where the team is focused right now primarily calling on non-small cell lung cancer oncologists leveraging the data that we have presented before and also today and in forthcoming publications that we are expecting. We are also selling KRAS and BRAF and the other cancers but the primary emphasis is non-small cell lung cancer.

We have internal goals of what we expect every sales territory to generate and as you might expect, it is slower in the first quarters and once we get the right dominoes to fall we expect things to pick up.

Regarding revenue, once you submit the billable samples to the payers, there is a whole other process of actually getting cash collection and we report revenue when we have cash received. We think we need to have a few hundred samples of experiences with different payers across the US for us to feel comfortable about projecting the time and the rate of reimbursement for the different products and we have different processes set up internally to make sure that we are getting real-time metrics. At this time, we are not giving guidance on revenue this year or next in terms of the adoption. And next time we present on our earnings call, we will have a full quarter of first-quarter results and we will probably have a month or two of second-quarter metrics which will give me a little bit more confidence to tangibly answer your question on the clinical adoption rate.

Understood. I certainly understand given where you are on commercialization, it is obviously difficult to forecast some of those metrics. Just a point of clarification, you mentioned 150 million covered lives. How many of those are under contract? And I guess is there any way to ballpark what the contracted lives target will be by the end of the year?

I will tell you what my assumption is and it may be a question I need to follow up with you on after I talk to our reimbursement and market access person. But as I understand it, the contract we have with these third-party providers and it is a contract, it contains an explicit agreed to reimbursement amount on a per test basis. That contract is in place for any of the payers within their network to leverage when that payer agrees to payment for the test service provided to their members.

Okay. I certainly understand that that would be the case. I guess then I'm going to flip back to the original question which is I guess if we have these explicit agreements in place, shouldn't we have a little more certainty around the actual amount that you are going to be getting paid by those payers? And if not, why not?

Sure. So we know exactly what the amount is per test but what we haven't basically gained enough experience with is how they will define and decide the various test results that we provide. Some of our samples that come in we are asking for multiple mutations within one gene, some of them are asking for multiple genes and some mutations within each gene.

The work ahead of us is really to see the way we are going to be able to optimize payment based on the various combinations of these iterative test requests that we are receiving and until we have that experience, I don't think we feel ready yet to kind of give guidance on what we think the average selling price will be on a per sample basis.

Got it. That is a very helpful nuance. Okay, thanks a lot, guys. Appreciate it.

Sung Ji Nam, Avondale Partners.

Hi. This actually (inaudible) for Sung Ji. Just a couple of questions for you guys. First, on your KRAS mutation assay, is there a separate reimbursement strategy for when third-generation EGFR TKIs are approved? Kind of what is the process required there?

This is Mark Erlander. Maybe can you do a little more on the question, we are trying to understand exactly what you are asking. Sorry.

Sure. Just as of right now you are not like the companion diagnostic partner for example like Clovis. So kind of just how do you expect -- where do you expect to get reimbursement for the tests and stuff like that?

We have taken the approach deliberately to not be a specific companion diagnostic given the fact that as I was mentioning earlier on the Q&A that there are going to be six different companies coming out with their own T790M inhibitors. So we are really at a first blush we are really looking to be able to be a diagnostic and for T790M that is more of a class drug effect and not so much a specific drug. So that is really where our strategy is today.

What I will just add to that if perhaps your question had a different angle to it. We provide a laboratory developed test which is in full compliance with the regs, it is a cap accredited service that we offer in our service lab and the NCCN guidelines actually allow for LDT tests to be used alongside these new therapies and that is really the justification if you will that we will be making for the reimbursement.

Okay, great. And then maybe could you give us an update of the progress you are making on developing partnerships with pharmaceutical and diagnostic companies?

I guess what I can tell you is we are in active discussions with all parties including the categories that you talked about. We aren't prepared to share anything definitive because we are in discussions and nothing definitive has been agreed to yet. But our strategy is to work with pharma diagnostic players, life science tools providers and even reference laboratories. I think we have examples of members of each of those categories expressing interest to either work with us as an outsourcing opportunity for them and in other cases an in-licensing opportunity for use of our technology as part of either their platform or their channel.

All right. Thank you so much.

Dan Leonard, Leerink.

Thank you. A couple of questions. First off, Steve, you mentioned that one of the key metrics you are looking at in 2016 is to enhance your corporate development activity I believe. Can you elaborate on what you meant by that? Are you looking to do M&A, was there something else you had in mind? Just anything you can share.

I think actually it is mostly what Matt just said in response to the prior question. It is working with pharma and diagnostic companies, larger labs. That is the corporate development activity that as you can imagine, there is literally no one that probably have not been in some level of discussion with and the BD Group is very active with a small subset now. So I think we are certainly planning on progress in that area this year. That was the goal.

Okay, so partnership activity?

Yes, yes.

Got it. And then on the reimbursement contracts you have, are there any stipulations in those agreements around the frequency your tests can be run in a given time period? So for example, are you allowed to run for tests per year after somebody goes on a first line TKI? Is it something different or any color there?

Yes, excellent question, Dan. The short answer is no. There isn't any definitive guideline there either way. I can tell you from experience whether it is viral load testing or whether it is congestive heart failure testing. My experience has been when a novel diagnostic is introduced and our assay for monitoring the CT DNA is clearly a novel application that doesn't have precedence in cancer monitoring, what happens is you get acceptance of that technology which I believe we have done and then you drive data and results to show the appropriate frequency of testing. And to be frank with you in some cases where an institution deems frequency to be excessive either from a cost point of view or lack of clinical effectiveness, they then will trigger the constraints to limit its use and to find what the right frequency is. And I just think we are ahead of that point right now because we really haven't had enough experience with customers in the marketplace to get onto the radar of the people that look out for those frequency guideposts.

Got it. And then my final question, Matt, to lead with billable test volume, I am curious, in your early experience with this have you run into in the fears from physicians that patients will be the balanced build if there in insurance doesn't cover and is that a complicated message to address especially with so many other participants in the market and so many different reimbursement strategies out there?

It is a common concern for physicians for obviously understandable reasons. We thoroughly address it, we are very transparent about what the policies are. We actually have a patient assistance program that we provide when warranted. And the basic message is this test isn't unique from any other diagnostic tests facing a patient that has insurance and whatever the co-pays are, the deductibles are or percentage out-of-pocket, we will apply with our test.

Got it. Thank you.

Robert Sussman, Bentley Capital.

Thank you. I've got two questions. Number one, do you think that you can get the docs to depend upon your test or are they going to also want confirmation with radiographic imaging?

Robert, that is a timely question because it is one that we talked about with kind of what we call our power users, the physicians that use our product routinely as well as what we kind of call the sporadic users and we also talked about this at our Clinical Advisory Panel grouping in the past few weeks.

And unfortunately I can't give you a specific answer that applies to everybody. Some are more comfortable with the test and the more experience they have, the less need that they feel to do confirmation testing. Some of them are actually ordering a sample with us and in some cases using a competitive blood assay to see if we agree and in other cases waiting for the follow-up biopsy or the follow-up image to confirm or not. And in most cases at least I am involved in it is what we call a moment of magic when they think we missed something or we picked up something falsely and it is later confirmed whether it is a follow-up biopsy or some other method and that is usually when we get our converts. The people that were expecting a positive, they actually had a responding patient and that is why there wasn't detectable copy for our test to measure. And in other cases, it goes the opposite way. But we really haven't had an example where there was a discrepancy, we repeated it, we still missed it but it was a false result. We are actually feeling very confident in the performance of our test.

And in the case of converting a physician, sometimes you have to wait three months for that follow-up biopsy or that image to be available to actually convert that physician.

Okay. Second question is not long ago your former employer, Alumina, announced a joint venture that they are going to invest $100 million to try to develop some liquid cancer test. At the time they made that statement your market cap was only $100 million and it seems foolish in hindsight for them to be doing that because they may very well take two or three or four years and come up with absolutely nothing.

I am curious, did you have companies like that who would like to partner with you in some way or put money in the company but you are just not interested in doing it because of the company's market valuation?

I will let Steve maybe address whether valuation is an issue but I can tell you, Robert, from my experience, first of all, I will tell you that Illumina isn't a foolish company and whatever one thinks the odds are of GRAIL paying off or not, I think everybody agrees it is going to be multiples of hundreds of millions of dollars for them to get across the finish line and claim the GRAIL.

With respect to interest in working with us for early detection, I wouldn't say that the interest is incredibly high and if it is a discipline issue within the company, it is a trade-off. Do we put the resources that we have right now into demonstrating conclusively and compellingly that in late stage cancer patients this is a monitoring tool and that is what we have chosen to do and we have some side bets early discussions with some players that really want to leverage that analytical and clinical sensitivity exquisiteness that I went through today and Dr. Melnikova talked about. They want to actually look at that in earlier stage cancer patients where patients that claim to be cancer free and they are looking for a minimum residual disease. And I have a pretty good feeling we will be sharing with you developments on those discussions on later calls.

Okay. Thank you very much, Matt.

Brian Brokmeier, Cantor Fitzgerald.

Good afternoon. Matt, how has the conversion gone of physicians ordering free samples from the CEP to those ordering billable samples?

It has gone well, Brian. It never goes as well as kind of my expectations and the goals that I set for the team so I tend to be maybe unrealistically demanding of that. But these physicians have very different thresholds of trying a brand-new technology that to date doesn't have a ton of published literature behind it, isn't in the guidelines yet in the reimbursement. They are early adopters. So for an early adopter some people will just jump in and try it and let them build experience and if that is favorable they will continue. Others actually will wait for a patient that they have in mind that they may not see for another month or two.

So that has been frustrating because when you get that patient, you really want to hit that patient before they start a therapy because you can baseline them and then track them monthly. Some of these patients have been on therapies two months before we were introduced to the doctor.

So for all those reasons and others I won't consume more time with, it is never as fast as I want but all the metrics are working in favor and I believe I will look at my colleagues if I get this wrong but I believe the conversion rate in Q4 was 20% of the remaining doctors through September that we hadn't received a sample from of that pool of people that signed up for the program that through September we hadn't got a sample from. 20% of that pool converted in Q4 and already through February the number is higher than 20%. And we will give you that number in May on the next call.

But the conversion is moving forward but that was actually a key metric for us to decide to go straight to billables because we may have a smaller number of doctors in the funnel if you will but we really thought the conversion was just better if we actually sold on the value and actually got samples in. And as you saw from my script comments, the ratio of free tests versus billed tests was close to 1 to 1 through September. It is now 3 to 1 billed to no charge tests. And we intend to continue to grow that so that we can be financially responsible and grow this business and reinvest in it.

And you mentioned power users. How many power users do you have or how can you frame the quantity of those, the percentage of those to help us understand what you are seeing in the market?

We are not going to share the exact number at this point. We just don't think we have enough statistical meaning of what a number would mean relative to the nonpower users. But I can tell you it is pretty close to what you would expect at this stage of early adoption where it is kind of the 90/10 rule.

And maybe, Mark, I believe you have about 3000 patients in about 30 clinical studies today. What studies do you expect to be out maybe mid-this year at AACR or at ASCO?

We should be at ASCO, we should be reporting a pretty large study in the non-small cell lung cancer with the EGFR assays. So you will be seeing that.

Okay. And any progress that you can talk about with Trovagene Research Institute and Alberto Bardelli?

I mean as Matt said earlier in the Q&A, we are making actually quite a bit of progress on the R&D and also a clinical study program which you will hear about later in the year. Clearly our focus has been in that area has been in colorectal cancer. They are a center of excellence in Europe for that and the integration of that with circulating tumor DNA. So I think those are the things that if I was to anticipate, those are the things you are going to be hearing about.

Okay, thanks a lot.

(Operator Instructions). This concludes our question-and-answer session. I would like to turn the conference back over to Steve Zaniboni for closing remarks.

We want to thank everyone for participating today. I hope you can see that the Company continues to make great progress on a number of fronts. We've got a very rich news flow and milestone pipeline ahead of us for 2016 that we are very confident about in terms of achieving so we look forward to continuing to update you on our progress and certainly follow-up if you have any additional questions. Thank you.

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