Good day and thank you for standing by. Welcome to the Biodesix Second Quarter 2021 Financial Results and Business Update Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to hand the conference over to your speaker host today, Chris Brinzey, Investor Relations. Please go ahead.

Thank you, operator and good afternoon everyone. Thank you for joining us today for a discussion of Biodesix's second quarter 2021 business highlights and financial results. Leading the call today will be Scott Hutton, Chief Executive Officer. Scott will then be joined by Robin Harper Cowie, Chief Financial Officer. After the prepared remarks, we will open the call for Q&A. An audio recording and webcast replay for today's conference call will also be available online as detailed in the press release announcement for this call. Today, we issued a press release announcing our business highlights financial results for the second quarter 2021. A copy of the release can be found on the Investor Relations' page of the company website. As a reminder, actual events or results may differ materially from those projected as a result of changing market trends, reduced demand, and the competitive nature of Biodesix industry. Such forward-looking statements and their implications involve known and unknown risks, uncertainties, and other factors that may cause actual results or performance to differ materially from those projected. The forward-looking statements discussed on this call are subject to other risks and uncertainties, including those discussed in the risk factors section and elsewhere in the company's annual report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission on March 16, 2021 as well as subsequent quarterly reports on Form 10-Q filed during 2021 if applicable. Additional information concerning factors that could cause results to differ materially from our forward-looking statements are described in greater detail in the company's press release issued today and in the company's filings with the SEC. I would now like to turn the call over to Scott Hutton, Chief Executive Officer. Scott?

Thank you, Chris and welcome everyone to Biodesix second quarter 2021 earnings conference call. I’m planning to kick the call off with highlight, then turn it over to Rob and for financial, them all come back with a deeper discussion on the business. Biodesix is a patient centric, machine driven diagnostics company. Our mission is to improve every patients care by empowering physicians with swift, comprehensive and actionable in sites. To that end, it was a productive quarter, with 180% year-over-year growth in total revenue. Our first four blood based test, which make up our core lung diagnostic testing grew a 109% year-over-year and 20% over the prior quarter. We ended the quarter with $56.3 million in cash, which was $1 million increase over Q1. In addition, we are happy to announce we’re bringing forward the launch of our 72 hour liquid next-generation sequencing test to the beginning of next year, which will increase our core lung diagnostic testing menu to five tests. This broad portfolio of blood base test coupled with our focused sales strategy, allowed our sales team to provide multiple solutions for the same patient at various parts of their journey. The Biodesix portfolio of lung diagnostic test is continuing to advance as well. We have multiple studies underway including the ALTITUDE, BEACON, INSIGHT and ORACLE prospective studies to continue to build the data supporting our on market test as well as our pipeline tests including risk of recurrence and primary immune response. Our progress in the quarter reflects our commitment to improving patient outcomes through high quality test and clinical data. Now let me turn it over to Robin to review the second quarter financial performance. Robin?

Thank you, Scott. Our second quarter total revenue was $11.9 million compared to $4.2 million for the second quarter of 2020, representing an increase of 180%. We are particularly pleased with the improved trends in our non-COVID business, which included core lung diagnostic testing and biopharma services, which grew revenue by 102% year-over-year, and 3% sequentially, highlighted by strength in our core lung diagnostic business, which grew 109% year-over-year and 20% sequentially. The quarter-over-quarter growth in lung diagnostic revenue reflects a rebound as pulmonologists shifted from treating patients with COVID-19 to their more normal pre-pandemic workflows. As a result of our successful growth strategy, we triggered the previously disclosed Nodify XL2 gross profit milestone from the acquisition of Integrated Diagnostics. Turning to biopharma services. Second quarter 2021 revenue was $1 million compared to $0.6 million in the year-ago quarter and $1.7 million in the first quarter of 2021. As we've said, this business can fluctuate due to several factors including contract timing, which can be longer under normal circumstances, but in this particular instance, reflects the continued impact COVID-19 has had on overall clinical trial enrollment. Despite the impact it had in our quarter, prospective trials in our biopharmaceutical activities in this area remain robust. We remain confident that we will see further improvements in the coming quarters. Overall, biopharma services remain a significant long-term opportunity for Biodesix, particularly as prospective clinical trials begin to ramp back up. As anticipated, we did see a sequential decrease in total revenue as compared to the first quarter of 2021, which was driven primarily by the decline in COVID-19 testing services. COVID testing revenue was $6.1 million in the second quarter versus $23.2 million in the first quarter of 2021. As discussed on our last quarterly call, the decline was the result of…

Thank you, Robin. Remember, our mission is to improve every patient's care by empowering physicians with swift, comprehensive and actionable insights. We will do so by integrating Biodesix molecular tests into physician practices, providing all of the testing needed for a lung patient through their continuum of care. One patient, one trusted company, multiple tests. We continue to build our company for long-term sustainable growth by investing in our sales infrastructure as we remain on track to double the size of our direct and dedicated sales force in 2021. The expanded sales force will better allow us to reach more physicians to provide them with a portfolio of tests to manage their patients from pre-diagnosis of lung cancer, through treatment guidance and monitoring of their disease. Our test results aid the physician in making more informed decisions to direct the right patients onto biopsy or surgery, help many more avoid unnecessary interventions and help guide treatment decisions. As we've previously stated, the first quarter of 2021 would be our high watermark for COVID-19 testing revenue, followed by a steady decline in subsequent quarters. While the overall rate of testing in the U.S has tapered off from the prior quarter, we will continue to offer support to communities both locally and across the country with our WorkSafe COVID-19 testing program. While we have demonstrated at Biodesix over the last 15 months is a resilience and ability to adept. The Biodesix team remains diligent in our efforts to meet the needs of our partners, physicians and their patients. One of the exciting recent developments is our new liquid biopsy 52-gene next generation sequencing test. The test was shown in a recent publication to have an unprecedented 72 hour turnaround time, which is significantly faster than the 7 to 14 days it takes…

[Operator Instructions] And our first question comes from Tejas Savant with Morgan Stanley. Your line is open.

Hi. This is Yuko on for Tejas. Thank you for taking our questions. While COVID testing revenue this quarter came in below where we were with the Delta variant driving up the number of COVID cases. Could you comment on what you're seeing more recently on the COVID testing side?

Yes, great questions. Thank you, Yuko. We monitor daily what's going on with the pandemic as does everyone else. And as we’ve said before, our new normal really is this constant, unprecedented change. And so for us, we are seeing a slight increase in testing. And we continue to monitor that as it focuses on transitioning to Delta, like you said, and then potentially even lambda. Most importantly, we're here, standing by and ready to assist our partners with testing as they see needs. But at this point in time, as you heard Robin state, we really are continuing to focus on decreasing that forecast quarter-over-quarter.

Got it. That was super helpful. And then previously you mentioned that pulmonologists have limited clinic volume as they're focusing their efforts on treating patients with COVID. Would you provide some color around the rebound you're seeing around the lung business?

Yes, Yuko, great question. In the second quarter, we saw pulmonologist return to kind of a near level of pre-pandemic. We are very encouraged by this. Unfortunately, based upon your first question, focusing on the Delta variant, we continue to monitor this daily and weekly as we know that as ICU beds fill, there's a chance that pulmonologists get pulled back into the front lines. So again, we're going to continue to monitor that. But recent days, weeks and months, we saw pulmonologists returning to pre-pandemic levels, focusing mainly on non-COVID patients, and it resulted in the productive quarter that you saw.

Great. Thank you very much.

Thank you.

Thank you. Our next question comes from Brian Weinstein with William Blair. Your line is open.

Brian you there?

Hear me?

There you go, Brian. We can hear you now. We may have lost you again, Brian. Operator, I think we may have lost Brian. Maybe it's best if we go to the next question, and we can come back to Brian.

Our next question comes from the line of Kyle Mikson from Canaccord. Your line is now open.

Thanks. Hi, Scott and Robin. Hope you guys are doing well. So nice to see the diagnostics of the core testing business kind of grow sequentially 20% growth. I'm just wondering, anything that could continue going forward based on what you're seeing in the practice of everything right now. Just talk about maybe your assumptions for the second half of the year just given I know it's [indiscernible] everything, but the directional commentary could be helpful just in the core business. Thanks.

Yes, thank you, Kyle. Yes, we feel really good. As we focus on those things that are in our control, supporting those pulmonologist needs, we've seen a significant increase as you reference. As we continue to progress, we're mindful that the pandemic is dramatically different now in 2021 than it was in 2020. Our conversations with pulmonologists increased our confidence level that they'll be able to progress through this surge better than they did in 2020. They've learned a lot, they've applied those learnings and they've got broader capabilities as do we. So focusing on those things in our control, we feel good that we'll be there in the ready to continue to support them. But we'll continue to monitor caseload volumes, bed Availability and potential shutdowns and support our physicians as best we can.

Okay. That's helpful, Scott. Thank you. And I was also wondering about the gross margin, maybe this is for Robin. I mean, just maybe first, if you could provide like the core lung diagnostics gross margin in the quarter. I don't know if you can kind of break that out, but that'd be helpful. And also there -- in the 10-Q, there was something about like a termination agreement with Bio-Rad like a royalty. I don't know if that's going to be material on gross margin that could that help in the second half of the year and like beyond. Maybe if you ask it just kind of parch that for me. Thanks.

Sure. Hi, Kyle. The lung diagnostic gross margins continue to be very strong. And while we don't break them out specifically in the Q, they do reflect what we saw pre COVID. So if you look back at 2019, we were in the 70% to 75% gross margin range, and that continues for the non-COVID business. While the Bio-Rad change is expected to have a minimal impact, and it's not expected to be have a material change on gross margins.

Okay. Thanks, guys. Quick question about the sales force. Nice to see that's ramping beat [indiscernible] revenue as planned. Could you just remind us how the reps are comped? Just wondering if there's like incentives that emphasize the lung testing over COVID just to make sure they're kind of incentivized, proposed pandemic. Thank you.

Yes, great question, Kyle. Thank you. We've not disclosed to date, but I'm happy to clarify. Our field based sales team is not compensated on COVID testing, and nor have they been throughout. When we shifted back in early 2020 to a remote or virtual work environment and clinics began shutting down, we kept our entire sales team intact. There were no furloughs, no layoffs. We wanted them demonstrating resilience becoming as creative as possible, and shifting all physician meetings for our core lung diagnostics towards virtual. We wanted to be prepared for the rebound as we opened up earlier this year. And we believe confidently and strongly that that's why you've seen the performance that you have. We did not want our sales team shifting focus. We will, as a country get through the pandemic. And as we do, we're going to remain focused on what matters most which is partnering and collaborating with physicians to better enable them to treat their patients.

Great. And if I could just one last question for me, bigger picture. Based on revised recommendations from the USPSTF, CMS is considering an adjustment to with the reimbursement policy for low dose CT lung cancer screening. So like this new eligibility criteria includes lowering the screening start age and so many commercial payers have already expanded coverage by adopting the new recommendations ahead of Medicare, which is obviously pretty uncommon. Do you think that's going to have any downstream impact on Biodesix given your nodule management offerings?

We saw the USPSTF recommendations, at least a draft recommendations over a year-ago, and given the broad support from physicians and many societies expected that to happen. So we actually included this change in our projections and in how we're looking at the business. And mainly it means there'll be more patients getting screened, which is great because we know that catching cancer early is the best way to improve outcomes in need and potentially effect a cure and anticipate that, that will lead to the very, very large number of nodules that are found. So that 5 million lung nodules that we estimate includes this change for the TAM [ph].

Well, okay. Thanks, Robin. Thanks for taking the questions. Talk to you soon.

Great. Thank you, Kyle.

Thank you. [Operator Instructions] Our next question comes from -- and I'm actually showing no more questions at this time. This does concludes today's conference call. Thank you for participating. You may now disconnect.