Exact Sciences Corp (EXAS) 2002 Q3 法說會逐字稿

Good morning, and welcome to the EXACT Sciences third quarter earnings conference call. At this time, all participants have been placed on a listen-only mode, and the floor will be opened for questions and comments following the presentation. I would now like to turn the floor over to your host, Amy Hedison. Ma'am, the floor is yours.

Thank you. Good morning, everyone, and welcome to EXACT Sciences third quarter earnings conference call. I have with me Don Hardison, our president and CEO, and John McCarthy, our COO and CFO. I'm going to turn the phone over to Don in one minute, but first I will read my usual spiel, reminding everybody that the purpose of this call is to discuss third quarter earnings for EXACT Sciences. We would appreciate it if you confine your questions to this topic when we get to the question-and-answer, although obviously operating questions associated with the quarter would be applicable.

I'd also like to remind you that any forward-looking statements we make during this conference call are based upon current expectations and are subject to change based upon various factors that could affect our operating and our financial results. These factors are set forth in detail in our 2001 10-K and subsequent filing 10-Qs and AKs.

Thank you. And Don.

Thank you. Good morning everyone, and thank you for joining us on our conference call. I have a few general comments about the company. Then we'll turn the phone over to John, who will give his report. Following his comments, we will be glad to take any questions.

The third quarter was an extremely productive quarter for the company as we commenced our relationship with LabCorp and began working closely together in order to prepare for the commercialization of our technology, PreGen-Plus, to detect colorectal cancer.

Our research and development teams are working very closely with LabCorp scientists and operations personnel to transfer the PreGen technology. We are pleased with the progress to date. On the marketing and sales front, we are in almost daily contact with our LabCorp counterparts, and the two teams are also working very well together.

While we are responsible for strategic marketing and demand creation, it is important that our partners at LabCorp are up to speed and supportive of our plans and activities. We are working closely with LabCorp's sales organization to train them so that they will be ready to hit the street when both companies say go. We expect that introduction will occur in the first half of 2003.

Our goal and LabCorp's goal is to launch PreGen-Plus as soon as we both agree we are ready. It is important that we get this right. This product is just too important to us and too important to the people whose lives we are going to save for us to launch before both companies feel ready. There is a wonderful sense of urgency to get PreGen-Plus out there. Our joint goal is to get this product into the hands of every physician who can make it available to the patients who need it.

The third quarter also saw a significant amount of activity on the scientific front. In August, we were issued our 23rd patent. This one was for oligonucleotide tiling, an important proprietary technique for scanning larger regions of a gene. This is a very simple yet elegant method of scanning for mutations. Currently our assay requires previous knowledge of colorectal cancer associated mutations in the APC, K-RASC and P-53 genes. Oligonucleotide tiling will allow us to identify mutations within gene sequences without prior knowledge of the mutations.

Therefore, the oligonucleotide tiling assay could lead to a reduction in assay complexity while retaining or even increasing clinical sensitivity. This novel method should be a valuable addition to the other methodologies exclusively available to us that scan for unknown mutations such as the digital protein truncation technology described in the January 31st article in the New England Journal, co-authored by our own CTO, Tony Shuber, in collaboration with Bert Vogelstein and Kim Kenzler from Johns Hopkins.

This technology also was the subject of two abstracts recently presented at meetings of the American Society for Human Genetics and the American Association of Cancer Research. Also presented at those conferences were abstracts on another proprietary technology developed by Tony Shuber and his team that we call the DNA integrity assay, or DIA. DIA looks at longer strands of DNA as an indicator of the presence of cancer.

DIA is one of the important analytical techniques used in our PreGen-Plus technology. We believe improvements in novel chemistry such as DIA are one of the primary means to add sensitivity to our PreGen-Plus assay. DIA also holds promise for the detection of other cancers as it simply looks for the presence of long strands of DNA in the sample. It offers the advantage of being independent of the specific genes involved with a cancer and has relatively low cost.

Both of these technologies will most likely play a role in our continuing efforts to increase the sensitivity of PreGen-Plus. We are very pleased with the sensitivity of the initial version of PreGen-Plus. However, we're not resting on our laurels. We have stated on numerous occasions that the advantage of working with DNA as an analyte is that there are several ways to increase sensitivity while maintaining high specificity.

Our approach is to look at chemistries and platforms that add sensitivity by including already-existing markers, as well as looking at new markers that can add to the ability to pick up colorectal cancer.

Another important step forward will occur tomorrow morning as Dr. Stafna Singol, one of our collaborators at Brigham and Women's Hospital, will be presenting data from her study on PreGen-Plus in a post-colonoscopy setting at the American College of Gastroenterology meeting in Seattle.

The abstract, which is available, reflects the analysis of 38 patients out of the 61 patients in the study to date and indicates a preliminary colorectal cancer sensitivity in these patients of approximately 65 percent. When Dr. Singol presents the data, she will have information on the entire cohort of available patients. This study enrolls patients who are identified with cancer or advanced adnomas through colonoscopy. There are a number of patients in the study with advanced adnomas and early-stage cancer. This study does differ from our 5,000-patient multi-center study, which is made up of patients without signs or symptoms or a significant family history and have not had a colonoscopy or fleck-sig in the last 10 years.

The patients in the multi-center study receive a PreGen-Plus test, a fecal occult blood test, as well as a colonoscopy. In the post-colo study, the patients receive the PreGen-Plus test after their colonoscopy and no fecal occult blood test. What is the same, and this is very important, is that in both studies we are looking for sporadic colorectal cancer.

The data from the Boston-area institutions provide us with more evidence of the ability of PreGen-Plus to detect the presence of colorectal cancer. We're particularly interested in the preliminary data regarding PreGen-Plus's sensitivity for advanced adnomas. Detecting precancerous polyps would significantly enhance the clinical utility of PreGen-Plus.

At this time there is no non-invasive way to detect areas of high-grade dysplasia or carcinoma insitu, neither of which are classified as invasive cancers but both of which should be removed if detected. It is thought that adnomas with these features inevitably progress to cancer. Fecal occult blood tests do very poorly in detecting these lesions, yet everyone agrees that the ability to detect these late-stage precancerous growths are a path to the eradication of a cancer itself. We are continuing to examine PreGen-Plus's sensitivity for these lesions and will include this analysis in our own multi-center study.

Since I know that some will ask me about the multi-center study, I will take this opportunity to update you. The study continues on track, and we expect that enrollment in the study will be completed by the end of the first quarter 2003. Once enrollment is complete, it takes about 90 days to get the last patients through the protocol. Then we lock down the data and analyze it. We continue to expect that data from the study will be available in the second half of next year, and we intend to make that data available through an appropriate, scientifically acceptable venue.

The study is designed to show a difference in performance between PreGen-Plus and the non-invasive standard of care for colorectal cancer, fecal occult blood testing. The data we have collected to date continues to impress the thought leaders with whom we speak. We believe that the extensive nature of our clinical program is raising the bar not only in terms of our technology and performance but also in the terms of the standards by which other tests will be judged. We pride ourselves on our ability to meet or exceed our own very high standards, and we plan to continue to do so as we move forward with the commercialization of PreGen-Plus and the achievement of our mission of eradicating the mortality associated with colorectal cancer.

Now I'll turn it over to John for his comments.

Thanks, Don. For the third quarter and nine months ending September 30, the company generated a net loss of $7.4 million and $22.9 million, respectively, compared to a net loss of $5.7 million and $16.8 million for the comparable period last year, again, reflecting our accelerating transition into a commercial operation.

Pro forma net loss for the quarter and nine months of 2002, which again excludes non-cash stock-based compensation expense for the period, totaled $6.9 million and $21.2 million, respectively, versus a pro forma net loss of $4.9 million and $13.9 million for the comparable periods last year. Pro forma net loss per share for Q-3 and the nine months of 2002 totaled 37 cents and $1.16 per share, respectively, versus 27 cents and 80 cents per share for the comparable period last year.

On an operating basis, most of the revenue recognized for the company for both Q-3 and the nine months of 2002 was associated with the amortization of up-front payments related to our two LabCorp agreements. The first, signed in the summer of 2001, focused on the HNPCC market, and the second, signed this past summer for PreGen-Plus, focused on the average-risk population for colorectal cancer screening.

We are particularly pleased with the PreGen-Plus contract, as it validates the significant and near-term commercial opportunity that exists for our technology with the recognized leader in the high-growth field of molecular diagnostics, LabCorp. Additionally, we were able to consummate this contract roughly six months ahead of our original goal, thereby allowing us to accelerate our commercial launch plans with LabCorp.

In last quarter's conference call, I detailed the revenue implications associated with the various payments to be made by LabCorp related to the most recent PreGen-Plus contract. If there are any remaining questions on the subject, I'd be glad to address those in the q-and-a session at the conclusion of my comments.

From an operating expense standpoint, we continue to carefully manage our expense burn rate, while at the same time aggressively supporting both the internal and external development of our unique technology pipeline. As Don mentioned earlier, patient enrollment to date in our large multi-center study is on plan to complete enrollment by no later than the end of Q-1 of 2003, which is the goal we established for ourselves at the initiation of the study back in the fall of 2001.

Given the significant progress made to date with the multi-center study, as well as the Q-2 signing of the LabCorp agreement which allowed us to accelerate several important product development initiatives related to a PreGen-Plus product launch with LabCorp, r-and-d expense totaled $5.1 million and $15.2 million for Q-3 and the nine months of 2002, respectively, versus $3.5 million and $8.9 million for the comparable period last year.

Similarly, the early signing of the LabCorp agreement allowed us to accelerate some important sales and marketing initiatives in anticipation of a first-half 2003 commercial product launch. For example, we now have five highly-experienced strategic accounts representatives that focus their time on LabCorp salesperson training and strategic reimbursement initiatives in preparation for a PreGen-Plus launch. I would expect this team to total approximately 10 to 15 people by next year.

Based in part on what I just described, SG&A expense for Q-3 and nine months of 2002 totaled $2.4 million and $7.2 million, respectively, versus $2 million and $7.2 million for the same periods last year. As of third quarter end September 30, the company had approximately $51 million of cash and liquid investments on hand, $15 million of which resulted from the execution of our previously-announced strategic partnership with LabCorp at the end of June this past summer.

As I described in last quarter's conference call, we expect to receive an additional $15 million payment from LabCorp in Q-2 2003 related to the commercial launch of PreGen-Plus, as well as approximately $30 million of additional milestone payments related to exact deliverables over Fiscal Years 2003 and 2004. Again, I would expect the cash from this agreement, together with cash to be generated from our commercial operations, to be more than sufficient to allow the company to achieve cash-flow break-even without the necessity of having to go back to the capital markets for additional financings.

As we indicated in the Q-2 conference call, aside from the significant positive cash flow and revenue implications related to the LabCorp agreement, we are not at this time revising our product revenue or expense guidelines until we more fully develop the commercial launch plan for PreGen-Plus with LabCorp. To the extent any expense revisions or refinements are necessary for Fiscal 2003, either for full year or quarters, I would expect to provide such clarification in our Q-4 earnings call at the end of January 2003. At this time, however, nothing that we're currently contemplating suggests to me that any full-year adjustments are warranted relative to past guidance.

Lastly, as we have begun to aggressively implement our PreGen-Plus commercial launch plan with LabCorp that includes the senior management teams from both organizations, the plan includes, among other things, full technology transfer to LabCorp, some of which is already in place as part of our original PreGen-26 agreement from last year, large-scale operational support and infrastructure to address a broad-based nationwide screening application, and a comprehensive and fully-integrated sales and marketing plan that educates and reaches a diverse audience in the most effective and efficient means possible.

The sales plan also includes a comprehensive training program for LabCorp's 650-plus-person sales and support team, focused on primary-care physicians, who we believe represent the primary target audience for ordering PreGen-Plus. We're confident that, working closely with our partner LabCorp, we have the team in place and the resources at our disposal to make the commercial plan a reality.

With that, I'd like to open up the conference call to questions.

Thank you. The floor is now opened for questions and comments. If you do have a question or a comment, please press the number 1 followed by 4 on your touchtone telephone at this time. Our first question is coming from Matt Geller from CIBC.

Hi. Thanks. I know you're not really ready to give guidance in terms of numbers for next year. But in terms of helping us to get some feeling for what the launch is going to be like, can you tell us a little bit about whether you've done marketing studies, what they're like, what kind of patients you think will first be using the product when the full product is launched, and how you think the data... the timing of the data? Will it be launched before the data comes out? And how are you combining the launch of the data with the launch of the product?

Let me try that, Matt, and John may have some comments on it, too. Let's start with the data. We think with the data that will be presented at the American College of Gastroenterology this week, along with a study that we've done with Kaiser and other data that we have, either through abstracts or submitted for publication, that we have enough data to launch the product prior to the data from our multi-center study. So that data, as you know, will not be available until the second half of next year. We would like to get this product on the market the first half of next year.

There are two populations that are prime targets for this kind of test. One would be people who have at least some elevated risk. And that may be you have some family history or you may have some signs or symptoms or that kind of thing, or you may just not be compliant with colonoscopy. There's quite a few people out there, unfortunately, who will not go get a colonoscopy. That is a pretty large population, we believe.

Then the second population is just all of us over 50 who are at average risk. That's the 80 million people that we talk about a lot. So we think, in the beginning, if I was a person betting on this, I would think people who think they may have some increased risk may be the people who submit to a test first, or somebody who is just not going to be compliant with colonscopy might be the early adopters of this.

We have done quite a few marketing studies about how physicians feel about the need for this kind of test. We're finding that people are very enthused about it and are very clear that there's a need for a non-invasive, accurate test that people will comply with. And I keep coming back to compliance, because I think that's the name of the game here. The other tests that are available, unfortunately, just are not complied with, and therefore the death rates don't seem to tend to go down on this cancer. So that would be what I would say about it.

Great. Thanks a lot.

Thank you. Our next question is coming from Yvonne Marondel from Gerard Klauer.

Hi, guys.

Hi, Yvonne.

Hi, Yvonne.

How are you doing?

Good.

I have a couple of questions, actually starting with John. Could you maybe give us a revenue breakdown? How much of the revenue came from the product royalties on PreGen-26 and how much from the licensing revenue?

Yvonne, well, as I said, the vast preponderance of it came from the amortization of the licensing revenue. So we haven't broken it down because it's not meaningful. And when I say that, I mean that we do have some tests in there. But as you know, once we signed the LabCorp contract back in the summer, we really put all of our efforts on getting that technology transfer and the sales organizations up and running for PreGen-Plus.

So, you know, again, going back to the original signing of the PreGen-26 contract, we said it's a very small market and, you know, continues to be. So we're just not putting any of our effort, nor, frankly, is LabCorp at this point in time putting much of their effort on PreGen-26, because the eye is on the ball of the PreGen-Plus product.

Understood. And I know that you have said nothing has changed in your expense guidance or revenue guidance. But I was just wanting to know if you could review what your guidance on r-and-d growth was for 2002.

For 2002?

Yeah.

Well, I think what I said before, you know, in the last series of conference calls remains to be true. I think what I've said in terms of total operating expense, you know, it was $28 million to $29 million of total operating expense. And I think, you know, as I look at where the research analysts are collectively, I think everybody seems to be in that ballpark. And given the fact that we've gone through three quarters now, I think it's pretty obvious what the composition is going to be between r-and-d and SG&A. And, you know, given the fact, Yvonne, that, you know, we're reaching the conclusion of the multi-center trial, especially as it relates to the r-and-d expense, there's not going to be that much different in Q-4 than exists in Q-3 here as we continue to do some processing.

That was actually getting to my next question. Maybe Don could answer this. I was actually wondering if you could go into a little bit of detail on your r-and-d expenditures, where they are going. And maybe there's a breakdown that you could give us insight into. Is this more into new technologies or developing products and technologies beyond colorectal cancer, or is this in association with the colorectal cancer studies?

That's a great question. Our focus right now and a lot of our r-and-d expense is going into the completion of this multi-center study and also running the samples that are associated with the NCI-funded study the Mayo Clinic is doing. But beyond that, Yvonne, our clear focus right now for r-and-d is to help with this transfer of technology over to LabCorp so we can hit a home run with this first test. But when I look at Tony's group and what they're focusing on right now, it really, over the next year or two, is to continue to increase the sensitivity of this assay.

We're very pleased with the initial sensitivity of it, but we think, through changing chemistries, adding new markers and doing other things that Tony has a unique ability to do, we have an opportunity at least to push the sensitivity up even higher, which would solidify any franchise we would have on colorectal cancer detection.

At the same time, we're looking at broader-based platforms for DNA testing, and we think that some of the work that Tony is already doing can lead to other cancers in the future. For instance, we talked about the DIA assay as having potential for other cancers. So that's an area we certainly have an interest in. But what we don't want to do is lose focus on either the initial launch of PreGen-Plus or version two, if you will, where we have even a higher sensitivity.

Yvonne, it's John. The other thing to remember is that the new technology initiatives that Don described, whether it's oligonucleotide tiling or DIA or any of the other things he talked about earlier, have all been in the research-and-development pipeline for the last, you know, year or so with the same group of people.

So, again, we're doing applied research and not basic research, and so we're able to come up...Tony and his group were able to come up with some of these very novel and unique proprietary opportunities without spending an awful lot of money. And so, as Don said, the clear focus is on the colorectal cancer opportunity, but these other things have been basically built into our pipeline for some time and obviously are embedded in the expense numbers we talked about.

Terrific. Thank you.

Thank you. Our next question is coming from Timothy Lee from Merrill Lynch.

Good morning, guys.

Hi, Tim.

Hi, Tim.

A couple of questions here. First, in terms of the sensitivity of the test, it's my understanding that the large-scale study is really not designed to show a point sensitivity. What data are needed to show a sensitivity that's got a fairly narrow confidence interval that you can kind of take that to your third-party payers and say, "Here's the type of test that we're providing"?

Tim, I think...well, first of all, this study will have a point sensitivity to it, but that's not the primary focus of the study. As you know, the standard of care out there for non-invasive tests for colorectal cancer screening is the fecal occult blood test. And I don't think, from what we've found from talking to numerous payers and other people, is that they are that concerned about what our ultimate sensitivity is. What they want to show is that we're at least as good as what's out there today. And I think our study will show that we're significantly better than what's out there today; in this case, the fecal occult blood test.

So when we talk to payers, it's more about what does the test do and how many cancers can you pick up? And we think that the data will suggest that we can pick up somewhere around the two-thirds mark, which puts it in the same ballpark as a pap smear, if you will. So it's a very good screening test.

The way that you accumulate more data around the actual sensitivity and narrow the confidence internals, obviously, is to have more cancers. And so what we're doing is, over time, we'll do more of a meta-analysis of all the different studies that we've done to accumulate, you know, probably several hundred cancers to show that we have a pretty tight confidence interval around that percentage that I mentioned, 65 percent or so.

The other thing I should say, though, and I want to keep coming back to it, is we're not stopping at whatever this point sensitivity or sensitivity ends up being. That's not the end of the story for us. That's just version one of this test. One of the things that we are committed to from the research side and from the business side is to keep pushing the sensitivity of this test as high as biologically and technically possible. And we think we have some pretty solid avenues to make that happen over the next three years or so.

Just a couple of follow-ups on that. First, any kind of sense of what the confidence interval may be on your large-scale study, one? And two, in terms of the milestone payments with LabCorp, is there any threshold tied to the sensitivity point?

Let's do that in reverse order, Tim. It's John. The answer to your second question is no, that there is no milestone payment tied to any specific point sensitivity. The milestones are based on things that are other than that. So hopefully that answers your question.

And in terms of the first part of that question, any sense what the confidence interval may be on the large-scale study?

You know, Tim, I think, you know, in this conference call, it's not really worth going into that, because it's a very complicated, confusing set of sort of statistical work that you've got to go through to really understand confidence intervals; and so, you know, not in this conference call. We'll be happy to talk with you or anybody else off the conference call if you want to better understand that. It's just too complicated.

If I can just follow up with one more. In terms of you said you're going to add other assays to increase the sensitivity, as such, would the end market price for this go up as time goes up, as tests become more sensitive, or is it going to be one-step pricing and it's going to be relatively stable?

That's an interesting thought. Really the setting of the price is LabCorp's to do. We certainly have some influence on how we think it should be priced. And I think what we can say is we're in line that this test, because of its proprietary nature, deserves value pricing, which is not something you see in the diagnostic world a lot.

What we'd like to have over time is to continue to increase the sensitivity of the test and also, at the same time, work on ways with LabCorp to improve the efficiency of the test, so there's quite a bit of pricing flexibility around the assay. So when version two does come out, we will have a nice decision to make. We have even lower cost of performing the test and a lot of different price points we can pick. So that has not been talked about yet.

Tim, let me just see if I can add one other thing, too, there, because I think it's important. All the downstream improvements that we expect to make, whether they're adding markers or improving existing elements of the assay, are likely going to be at a lower complexity and therefore lower-cost basis. So, you know, as we see the assay today and price it accordingly, we think it's in its most complex fashion. And so we would expect to continue to be able to reduce the overall cost of the assay, which gives us more pricing flexibility on the top line.

Thank you.

Thank you. Our next question is coming from Jessica San Felipo from Thomas Weisel Partners.

Hi. Good morning. First question: How many salespeople have been trained on the LabCorp team with HNPCC technology or the Plus technology? And is that still LabCorp specialized genomic on its sales force?

We're in the process...we're kind of doing a step-wise approach to training the LabCorp sales organization. We're first starting with their managed-care group and what they call their Center for Molecular Biology and Pathology reps, which are specialty reps. We'll train them first and then we will secondarily train all their sales reps on this. And what we're trying to do is [think] this closer to the launch. LabCorp is obviously very busy with the things they're trying to sell today. So as we get closer and closer to launch, we want to make sure that we train their people just in time, if you will. So we've already started the process on a kind of an ongoing basis now. We have a number of meetings set up over the next few months to train various parts of that organization and hope...well, not hope...we will have it done before product launch.

The second part of your question, I'm sorry, I couldn't hear what you said.

Oh, it was just whether or not that was a specialized genomic sales force.

It will be specialized first. But when we launch, it will be everybody. We'd like to have everybody calling on a primary-care doctor out there. The goal is that any person in this country who wants this test has a way to get it, and the only way to get it is through a physician. So we want to make sure that we cover the waterfront as far as physicians go. Therefore, we need all the LabCorp sales people.

Okay, thank you. And the product being three months away from commercialization, what traction have you received on the managed-care front? And do you have any sense for what the initial list pricing may be?

Well, we're not sure if we're three months away from commercialization. We've said the first half of 2003. But we get pretty good indications from managed care. What happens with managed care is they don't have to make a decision until the product is on the market. So you're not going to get a definitive answer from them. But we are having very productive meetings with a number of the big managed-care players. We have had discussions with the people at Medicare. And again, the same thing holds true. Until there's a test available, they don't tend to make the decision or show their hand.

However, as we've said before, there's quite a bit of legislation out there that, if passed, would require payers to pay for colorectal cancer screening. Inclusion into guidelines in the future also helps that process along. We haven't had anybody who was really negative on anything we're talking about. And the kind of price points we talk about are ones of several hundred dollars. We've done cost-effectiveness studies that show us to be very effective at a pretty high price point.

Great. Thank you.

Thank you. Once again, if you do have a question or a comment, you pay press 1 followed by 4 on your touchtone telephone at this time. Our next question is coming from Yvonne Marondel from Gerard Klauer.

Yes, hello, it's me again. Follow-up question. I was just wondering...I mean, you mentioned the presentation at the Gastroenterology meeting tomorrow in Seattle. And I was just wondering if you could give us a little bit more guidance on what other events you expect the investors could look for over the next few months before the launch of PreGen-Plus.

Well, we're speaking at a number of conferences, Yvonne, and we can give you a list of those. And we're out doing one on one on a very consistent basis. So there's also a PriMed meeting on November 7th in Boston where Paul Shruleck of Boston University will be presenting some information from a subset of the multi-center study where we were looking at how people felt about our test versus fecal occult blood testing and colonoscopy, and that data is going to be very positive toward how they feel about our test. They seem to like it much, much better than fecal occult blood testing and colonoscopy. That will be presented on the 7th of November here in Boston. And there may be a number of other meetings like that in the next few months.

Any updates on the cost-effectiveness studies from Vanderbilt and Harvard?

They're proceeding to a conclusion, particularly the one at Vanderbilt. We think we will have data from that available sometime in the next...by the end of the year, at least. We'll certainly have it prior to launch, which has been our goal to have it to talk to managed-care payers about.

Yvonne, it's John. Again, there's no...there's going to be no surprise with the cost-effectiveness data. We've been working with both Vanderbilt and Harvard on this for some time. We've done our own cost-effectiveness models. We know what it shows, and it shows that we're very cost-effective at a relatively high price point. So it's not like we don't already know essentially what those models show, and it's just a question of packaging those in a way so that we can talk with the managed-care payers about them when we do launch with LabCorp.

So basically this isn't going to be in line with the data that has been presented about a year ago, preliminary cost-effectiveness study that showed cost-effectiveness around $250?

It actually will be certainly at least that good, and probably quite a bit better. But a lot of this stuff is driven by the cost of a colonoscopy.

Okay.

The higher the colonoscopy cost is, the more price point you have underneath that umbrella. And that's how we've tried to think about this. When we think about pricing, the typical diagnostic algorithm for pricing is take the cost of doing the test and put a multiplier on it. No other...very few other health-care businesses think that way at all. And what we've looked at is the cost of a colonoscopy; the cost of something, say, like a virtual colonoscopy. That can cost up to a thousand dollars. How do we rate versus something like that? And that gives us a pricing umbrella to think about this kind of technology versus what does it cost to do the test and them some multiplier on top of it? And we think we'll be very successful in convincing managed-care payers to think about it that way, because really that's their other choices coming down the line.

Understood. Thank you.

Once again, the floor is still opened for questions and comments. If you do have a question or a comment, please press 1 followed by 4 on your touchtone phone at this time.

There appears to be no questions at this time.

Okay. Well, thanks a lot.

Thank you.

Thank you, everyone.

Thank you. This does conclude today's teleconference. Please disconnect your lines at this time and have a great day.