Good day, and thank you for standing by. Welcome to the Veracyte Third Quarter 2023 Financial Results Webcast. At this time all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Tristan Ribar. Please go ahead.

Good afternoon, everyone, and thanks for joining us today for a discussion of our third quarter 2023 financial results. With me today are Marc Stapley, Veracyte's Chief Executive Officer; and Rebecca Chambers, our Chief Financial Officer. Veracyte issued a press release earlier this afternoon detailing our third quarter 2023 financial results. This release, along with the business and financial presentation is available in the Investor Relations section of our website at veracyte.com. Before we begin, I'd like to remind you that various statements that we may make during this call will include forward-looking statements as defined under applicable securities laws. Forward-looking statements are subject to risks and uncertainties, and the company can give no assurance they will prove to be correct. Further, we are not under any obligation to provide further updates on our business trends or our performance during the quarter. To better understand the risks and uncertainties that could cause actual results to differ, we refer you to the documents that Veracyte files with the Securities and Exchange Commission, including Veracyte's most recent forms 10-Q and 10-K. In addition, this call will include certain non-GAAP financial measures. Reconciliation of these measures to the most directly comparable GAAP financial measures are included in today's earnings release accessible from the IR section of Veracyte's website. I will now turn the call over to Marc Stapley, Veracyte's CEO.

Thanks, Tristan, and thanks everyone for joining us today. I am pleased to share our third quarter results as well as an update on progress across our growth drivers. Our Q3 revenue was approximately $90 million, an increase of 19% compared to the prior year period. Yet again, our core testing business drove this strong outcome with impressive revenue growth of 27% versus the prior year period. We also continued to further enhance our already differentiated financial profile, generating $14 million of cash flow from operations and marking the fourth out of the last five quarters with positive cash flow. Our proven framework of driving test adoption through robust clinical evidence, reimbursement and guideline inclusion has provided indisputable differentiation for our leading on market tests, enabling us to serve more patients and grow revenue at an accelerated rate. During the quarter, we reported approximately 15,500 Decipher Prostate tests up slightly sequentially as summer seasonality was more than offset by a reduction in whip [ph]. Given Decipher's growth, we have invested in our San Diego lab operations over the course of this year, focusing on both lab capacity and efficiency. I'm incredibly proud of our lab operations team that has executed on these improvements. One of the impressive outcomes of their efforts is that the Decipher turnaround time is now lower than we've ever seen, enabling us to get answers to physicians and their patients even faster. Consequently, Decipher whip was lower at the end of the quarter than we forecasted by more than 500 tests, which were resulted and recognized as revenue. With the faster turnaround time as the new normal, our whip should remain approximately at this lower level going forward. We again saw a record number of unique ordering physicians for the Decipher Prostate test in the quarter,…

Thanks, Marc. As Marc mentioned, we achieved excellent results in the third quarter with $90.1 million of revenue, an increase of 19% over the prior year period. We grew total volume to approximately 32,500 tests, a 23% increase over the same period of 2022. Quarterly testing revenue was $82 million, an increase of 27% year-over-year, driven by strong adoption of our Decipher Prostate test, post-level one evidence designation by the NCCN and continued penetration of the Afirma market, as well as strong prior period cash collections. Total testing volume was approximately 29,500 tests, which includes the impact of our improved lab efficiency and whip reduction that Marc mentioned. Testing ASP was approximately $2,750 per test, benefiting from approximately $1.5 million of out of period collections. Adjusting for this impact, testing ASP would have been approximately $2,700. Third quarter product volume was approximately 2,850 tests and product revenue was $4 million, up 21% year-over-year. Biopharmaceutical and other revenue totaled $4.1 million, down 47% year-over-year. As expected, reductions in customer projects, extended sales cycles and overall spending constraints across the industry led to the decline. Moving to gross margin and operating expenses, I will highlight non-GAAP results which exclude the amortization of acquired intangible assets, restructuring costs, and the impairment of long lived assets, but does include routine stock-based compensation. Non-GAAP gross margin was 69%, up approximately 350 basis points compared to the prior year period. Testing gross margin was 73%, up 400 basis points compared to the prior year period, benefiting from efficiency gains, fixed cost, leverage, test mix and higher ASP. Product gross margin was 39%, roughly flat versus the prior year period. Biopharmaceutical and other gross margin was 18% down year-over-year given lower fixed cost absorption. Non-GAAP operating expenses, excluding cost of revenue were up 13% year-over-year at $58…

Thank you. [Operator Instructions] Our first question is from Tejas Savant with MS. Your line is now open.

Hello, this is Yuko [ph] on for Tejas. Thank you for taking our questions. Maybe starting with the Illumina collaboration that you announced today; how does this collaboration fit into more centralized testing model in the U.S.? Or is the focus here mainly OUS adoption? And if that's the case has there been any changes in the strategy to build the test-on [ph] nCounter?

Yes, great question. Thanks for that. So the collaboration with Illumina is very much focused on the OUS market, and it's regarding our distributable IVDs as kits on the NextSeq 550Dx platform. Now, remember we're very much from a clear standpoint, we're a customer of Illumina's today, and this doesn't change or impact that in any way, shape or form other than we've expanded our relationship with Illumina to relate to outside the U.S. as well. So we're excited about that. In relation to the nCounter approach, the question you asked there. Yes, the way that this multiplatform strategy of ours will take place is we are going to leverage the best instrument or instruments for the test. So as we talked about in the prepared remarks, we will launch Decipher Prostate on qPCR. We will launch Nasal Swab on NGS, and for every other future test we'll consider the platform or platforms on which we'll launch those tests. The nCounter we're still going to support very much for our Prosigna test and others that we have in place today, like Lymphmark for example. No changes there. Prosigna is actually one good example where we will also launch that product on NGS, which expands and provides more options for our customers. Hopefully that answers your question.

Yes. No, that was great. Thank you. And then a separate follow up question. You touched on this during the prep remarks, but it sounds like some of the timelines have changed for submission of Prostate and Nasal Swab for the IVDR process. I was wondering if you could elaborate on some of the discussions that you had with the notify body and whether what from the discussions may have changed the timelines there?

Yes. So actually the timelines for when we now expect to launch these tests commercially has not changed. And when I say these tests, I'm talking about Decipher Prostate and Nasal Swab. But we've moved from providing a submission timeline, the steps after that, which would largely be outside of our control and unpredictable from a timeline standpoint to now, a commercialization timeline, which we think is better, more predictable and clearer. And so now we're at a point where we're comfortable saying when we're able to commercialize these tests based on our roadmap and our project plan, whereas previously we weren't ready to put a commercialization time out there. So had you previously assumed something like at least a year for commercialization, you would have landed on Decipher Prostate in 2025 and Nasal Swab in 2026. We're now confirming we will be ready to launch commercially Decipher Prostate in 2025 and Nasal Swab in 2026 consistent with that assumption, okay. So we've just taken, I think, less of the uncertainty out of it and made a little bit more committal – a lot more committal in my opinion, in terms of when we're ready to commercially launch. Now, one thing I want to be very clear about, when we're ready to commercially launch from an IVDR perspective, it doesn't automatically get us reimbursed and adopted in every country. Remember and we've always said this we still have to go country-by-country and drive reimbursement decisions and drive KOL support and adoption. So that doesn't change, which is why we continue to position this as a long-term growth driver.

And just one thing to add to that, Yuko, obviously this decision to broaden our strategy to include other platforms is really predicated upon the growing installed bases of those other platforms and as well ensuring that we can serve even more customers than what the install base of the nCounter allowed for. So we really very much view this as something that is going to not only solidify the timelines that Marc discussed, but also really allow us an opportunity to grow revenue even more quickly given the number of instruments already in the field across qPCR and NextSeq Dx.

Great. Thank you very much.

Thank you. One moment for our next question. Our next question comes from Matt Sykes with Goldman Sachs. Your line is now open.

Hey, guys, this is Prashant Kedia [ph] on for Matt Sykes. Congrats on the quarter; really great to hear the results. So how does an MSEd Test fit into the paradigm of screening for lung cancer with Percepta Nasal Swab and LoDo CT?

Yes. That's a really great question. So we've talked about this a little bit before, and the way we think about multi-cancer early detection and basically healthy screening today is very different than the way we position and think about Nasal Swab. So Nasal Swab is focused very much on patients who have been identified with a lung nodule and therefore a high risk for lung cancer, and helping to make an appropriate decision whether to accelerate treatment or avoid unnecessary procedures for those patients. Today, very few people out of the 15 million or even more, as we talked about in the prepared remarks who could or should be getting screened today are actually getting screened. So it's a small percentage it's about a million. And then there's actually more lung nodules found incidentally, actually, than there are by screening. So clearly there's a lot of people, including us who care a lot about getting more and more people screened. Now, the way I think about Multicancer Early Detection is that could feed that funnel. So if a patient is identified through one of those tests in the future, assuming that they are adopted and reimbursed as potentially having lung cancer, the next step would be a low dose CT. And if a lung nodule is identified, then that puts that patient firmly into the workflow for Nasal Swab, for example. And so that's how we think about it fitting in. Of course, at that point you have to believe that there'll be reimbursement for these tests, Multicancer Early Detection tests for healthy individuals. And you also have to believe that there will also be reimbursement for low-dose CT and Nasal Swab. Having said that, I continue to believe that at least in the nearer term, the incidental population will continue to be larger than the screening population until that issue of under screening is resolved. And that will be, as we launch Nasal Swab test will be one of the primary use cases and drive a significant volume.

Got it. Thank you. That's helpful. And how are you planning on increasing market penetration with Afirma? Is it more sales reps, additional coverage, expansion, product updates, or can you give us some more color there?

More of what we've been doing quite honestly, I mean, as you've seen this year, we far exceeded our original expectations with Afirma coming into the year, and we recently increased our guidance on that to 18% growth, and that's significantly higher than we anticipated. And it would appear that the multitude of things that we're doing are absolutely paying off in terms of penetrating the market and bringing on new accounts, which continues to be an encouraging sign. So what are we doing? We've enhanced the product. We've added mutation testing to our product offering. We've launched a portal for customers to make it a lot easier for them to order the test and for the billing information to be correct. We just announced our grid offering for research use only for Afirma. We also have an incredibly effective and dedicated sales team. To be honest, I mean, adding a large number of sales reps isn't what's been driving this at all. In fact, we've been doing this with pretty much a stable sales force and a very strong sales force. So continuing into next year and beyond with these steps, we believe will help drive and fuel further growth. The market is about 50% penetrated today for these kinds of tests. And we've always said that we think that could get to 70% or beyond, and we can be the primary driver of that. So, yeah, a lot more of the same quite frankly.

The other thing I would add is there was also recently, I don't know if you want to talk about the draft LCD. It's not necessarily for next year per se, because the timeline of that could be slightly longer. But as we look broadly across both Decipher and Afirma, we obviously are focused not only on penetrating the market as defined today, but also ensuring every appropriate patient can get the appropriate test, and to that end broadening the market. And so I think longer term, as we think about penetrating both Afirma and Decipher, it's both about doing exactly the things that Marc mentioned, but also broadening the market indications over a multi-year period. And to that end, our managed care team is actively working to do so vis à vis working with MolDX on the draft LCDs that have come out most recently.

Yes. And so that's a great point, Rebecca. And that could add reimbursement for patients in the Bethesda V category, where we do believe there's a significant clinical utility of our test, and so if that gets passed in a year or so, then we'll be very pleased about that for patients.

Got it. Thanks. It sounds like you're tackling it from all angles. Congrats again.

Thank you.

Thank you.

Thank you. [Operator Instructions] Our next question comes from Andrew Brackman with William Blair. Your line is now open.

Hi, Andrew. We're not able to hear you.

All right, we will move to our next question. Please stand by. Our next question comes from Puneet Souda with Leerink. Your line is open.

Hey, guys, hopefully you can hear me.

Yes.

So wondering if you can talk a little bit about the supply chain issues, and what does that mean for the – sort of the fourth quarter, if you can quantify that? And then maybe also it's good to see that you are addressing this with multiple platforms, but can you maybe talk about the economic agreement there with Illumina, assuming that being a multiplex platform, that you would see more growth there versus sort of the qPCR and nCounter approach?

Let me come back to that one in a moment, but on your first question regarding supply chain. So, as you know, I mean, this isn't the first time that we have dealt with supply chain challenges. We talked a little while ago, a couple of years ago, less than that about what we were dealing with – with Afirma, and this isn't really that different in regard to every now and then. You end up with a lack of supply of key components or parts or kits, and you have to mitigate that. And so the good news is we were doing our own – we were standing up our own manufacturing for these particular kits for Prosigna in Marseille as part of our IVD strategy anyway. As and we had planned to get that done around the end of this year. Once we saw this supply chain challenges happening, we were able to accelerate that and are able to accelerate that and are making great progress on being able to launch our own kits to mitigate that supply challenge, which means that our kits supplement the other kits that we have, increasing our available inventory. And so the next thing you do then is you go through a very robust customer allocation process. You don't want to build inventory at customer sites when that inventory is extremely in short supply, and you want to make sure it's available for all patients. And so there's a lot of activity involving our commercial teams to balance that effectively. So I'd say we're getting through it. We have assessed a potential impact. You saw in our prepared remarks from Rebecca, Q4 product revenue of $2 million to $3 million, which is lower than we've been seeing in previous quarters and even lower than we anticipated, because we did anticipate a little bit of an uptick in the fourth quarter. So hopefully we won't see that much, but that's what we're projecting right now.

And then, Puneet, could you repeat your question on economics for the Illumina, it wasn't abundantly clear. Yeah, thank you.

Yes. With Illumina, I mean just want to understand, is it an IVD kit that you'll be manufacturing and it'll be simply run on 550Dx, or is there some sort of revenue sharing or profit sharing with Illumina structure?

Got it. Good structure. Thank you.

Yes. I mean, the way to think about that is Illumina has this standard open offer clinical agreement. There's not a lot of room for maneuver in that, and so we've been able to adopt that agreement, or at least our version of that and that's how the economics is going to work. So there's technology access, there's milestone payments as you launch a new IVD, and then there's a royalty based structure. And if you look online, you'll be able to see how that typically works.

And just one point is our updated cash guide does contemplate the technology access fee which is contemplated in the open offer, and we've absorbed that in our cash guide.

Got it. That's helpful. Rebecca, I'm just wondering, as we think about the Biopharma impact, obviously is happening with some of the biotechs and biotech funding being under pressure. It seems like Decipher is doing well. Afirma continues to gain traction at these penetration levels. So maybe just wondering what can you provide us in terms of sort of 2024 or sort of the right jumping off point and overall just given a number of these moving parts and now supply chain as well sort of mixed into it and as you bring on these other platforms, maybe just if anything you can provide that'd be helpful?

Yes. Of course, so the other platforms maybe just to hit those first Puneet, those are tied to longer dated catalysts, right? With regard to the Decipher being launched in the back half of 2025 and Nasal Swab in 2026, so that won't impact 2024 per se. On the product supplier issues that Marc was just highlighting, given we are standing up our own manufacturing, we're very hopeful that this will not have an impact on 2024 and that it is short-term in duration, especially since we are pulling forward those activities from our previous timelines of roughly around the end of the year. So that it will not necessarily impact 2024 at this point in time, albeit still work, a lot of work for the team to do there. On Biopharma, we aren't ready to call 2024 at this point. The good news is we said on our last earnings call, we expected $18 million to $19 million for 2023. How that looks in 2024? There's still very wide error bars, too, so I wouldn't necessarily want to go into that at this point in time or draw a line in the sand, given we're obviously working very hard with the teams to really kind of put a stake in the ground with regard to where we think 2024 will be. Afirma and Decipher continue to be good news stories across the entirety of the portfolio. 2024, we hope will continue to see more of the same. That's not a quantitative statement, that's a qualitative statement in terms of we are not fully penetrated in these markets. We are broadening the indication. We are making it easier for physicians to order our tests and our sales team continues to crank. So I think 2024 will be continued to be headlined by Afirma and Decipher and the rest of it hopefully will be more around the edges as we progress forward with our strategy.

Yes. And maybe to add a little bit to that, I agree with 100% with everything Rebecca said the Decipher and Afirma tests, if you think about all of the things that we’re doing, and I ran through in response to an earlier question, what we were doing in Afirma, and you can clearly see what we’ve been doing in Decipher too. None of that’s going to stop. We’re going to continue to generate the evidence. We’re going to continue to pursue guidelines. We’re going to continue to pursue coverage and all of these things that have been so successful for us in the past. So the only real headwind I see for those businesses is the fact that as they grow, the comp is a higher number. So mathematically there’s a headwind. But relative to how these tests continue to grow each quarter, we’re not going to change the working formula that served us really well over the last few years.

Got it. And if I can squeeze one more in. Good to see Phil’s addition to the team. I don’t know if he’s there, but just wondering, obviously, prostate and thyroid continue to be major areas, and nasal swab you’re developing, but are there other areas or indication types where you can potentially take the technology with now that you’re going to have access to multiple platforms?

Yes, so thanks for that. Yes, it’s certainly is great to have Phil on board with his expertise and experience in not just those, but other areas as well. And as we think about expanding within indications and across indications, let me start with the current indications and our specialty model that is working so well and is highly leverageable. Of course, we’re going to continue to drive into urology applications and more focus on bladder and so on. We’re going to continue to drive our pulmonology franchise with nasal swab as the really important anchor for that. And we’re extremely dedicated to that. And then outside in other indications, of course, as part of our strategic planning process, we always look at those other indications and think about where we can organically or otherwise expand. Nothing specific on that at this point. We’re very satisfied with the indications that we’re in and how they’re fueling our business, but we’re excited to continue to apply the model that we’ve built in other ways in the future. And that’s why we brought on people like Phil and others to help with that strategy. So I’m excited to continue those conversations.

Okay. Helpful. Thanks, guys.

Thanks.

Thank you. One moment for our next question. Our next question comes from Sung Ji Nam with Scotiabank. Your line is now open.

Hi. Thanks for taking the questions and congrats on the quarter. Maybe starting out with the IVD strategy. Just kind of curious if you might be able to comment on why you’re putting the Decipher Prostate on a qPCR versus next-gen sequencing versus the NextSeq. Just given that, I think Decipher, if I’m remembering correctly, it’s a whole transcriptome analysis. And then also if there’s a specific qPCR platform you have in mind or could this be utilized across multiple qPCR systems?

Yes, great question and thanks for that. So Decipher is a whole transcriptome test, as is a firmware in the U.S. in our CLIA lab environment. And that’s what enables us to launch something like GRID. But just a reminder that as we plan to launch IVDs, including any platform, whether it be nCounter, PCR or NGS, we’re launching more of a targeted test. So Decipher 22 genes fits beautifully on qPCR. There is a significant installed base for PCR, and as we look at the installed base, the economics, we listen to customers and so on, we’ve landed on qPCR as the appropriate platform for that. By the way, it was also going to be a 22 gene test on the nCounter. So that doesn’t change at all. That doesn’t mean in the future, as the economics permit, that we wouldn’t launch it also on NGS. We could, and that is an option for us. Other tests, for example, nasal swab, which look at a lot more targets, make a lot more sense on next-gen sequencing same with Prosigna, which as you know, is essentially PAM50. So again, that is the approach. It enables us to look at the right platform, the best platform to optimize for the test. And it could of course be multiple platforms. So hopefully that answers that question. On your second part, with respect to a PCR provider, there’s multiple options. And of course you can imagine we’re looking at them all and we could support multiple options with the test with very little incremental effort in terms of R&D work. So that may ultimately be where we go. It’s more of an open platform. So it’s not following the same formula as the supply agreement does with Illumina.

Got it. That’s super helpful. And then just on Afirma. Great to hear that you’re taking market share there still, just kind of curious, are you referring to – are you actually taking share away from your competitors? And kind of could you maybe talk about the key drivers of that, why they might be switching to Afirma? And also kind of, what’s your estimate in terms of your current market share is? Thank you.

Yes, it’s a great question. It’s difficult to pass these things, as you can imagine. But I think actually, and this is the case for, I believe, Decipher as well as Afirma. If you look at the overall market share – market penetration that we’re clearly driving more market penetration. In other words, patients getting tests that wouldn’t otherwise have got a test, physicians using the products that otherwise would not have used ours or anyone else’s product. So that’s the first. Within our existing customers, we also see that the utilization is increasing. So that’s the second. And then the third area of taking share from other tests that’s more anecdotal than anything else. But as we look at the respective growth rates, I think that you can clearly get to that as a conclusion in some respects. And as we hear from our sales team, some of the things physicians like in a firmness case, for example, we’ve got the new ordering portal as we’ve just launched GRID. And then of course, there’s evidence. One of the most important differentiators for all of our tests is the level of evidence. In the case of Decipher, You’ve got NCCN level one. In case of Afirma, you’ve got a tremendous array of evidence supporting the use of our test, including comparing it to other tests. So I think that and then you couple that with a very effective salesforce in both cases, who are very good at making sure that existing and new customers are aware of the level of evidence behind that then you start to see the kind of share gains we’ve talked about.

Great. Thank you so much.

Okay. You’re welcome.

Thank you. Please stand by for our next question. Our next question comes from Mason Carrico with Stephens Inc. Your line is now open.

Hey, guys, thanks for the questions. Congrats on another strong quarter. Maybe a higher level one here on the $14 million in cash from operations. That’s great to see and obviously pretty unique in the space. As we look into 2024, how are you thinking about the focus going forward, balancing investments and driving top- line growth versus focusing on operating leverage and starting to drive free cash flow?

I’ll maybe start. And Rebecca, please weigh in as well. But nothing’s changed in our philosophy in that regard. We’ve always been very focused on doing everything that we can drive top line growth appropriately, and we’re not getting ahead of our skis in that regard. I think we balance that extremely well. We have been optimizing throughout our P&L for the last couple of years, if not before that. So there’s a lot of things that we’re doing that drive operational performance. In fact, you saw some of that as I talked about what the accomplishments in our Decipher CLIA lab in San Diego and the turnaround time and efficiency there. That’s one example. Another example would be ITN [ph] systems, for example. So we’re continuing to invest in terms of helping us scale our business, but also keeping a very close eye on the net profitability and cash flow. And we’re not in a position, fortunately, where we need to raise cash. And we don’t anticipate we will be. Anything to add?

No, just I think what you’ve seen out of us in 2023, our goal would be to continue that into the future. And obviously, now we’ve had four of the last five quarters where we’ve generated cash flow from OPs. And that is a good new story and one that we hope, obviously, we’re not guiding to 2024 at this point in time, but one we have, from a philosophical perspective, every intention of moving forward with. And we don’t believe that is coming at the expense of revenue growth, and we would not want to do that at the expense of revenue growth. So, I think, Mason, thanks for asking the question, but I think when it comes down to it, we believe this is a differentiated portion of the Veracyte investment thesis, and one we feel strongly we should continue.

That’s helpful. Thank you. And moving to the Decipher metastatic draft LCD, could you talk about kind of your interpretation of the LCD, thoughts around the languaging criteria that needs to change or could change in order to potentially open it up to multiple tests per patients – per patient. And then maybe if that were to occur, I’d assume that testing up front when patients have localized disease would potentially decrease the percentage of patients who ultimately progress. So could you kind of frame up how we should be thinking about if that were to occur the incremental testing opportunity?

I think to your first part of your question, I’ll come back to the second one, but to the first part of the question, you’ve hit, really, the nail on the head in terms of the key element of the draft LCD that we’re focused on. Let me take a step back. The draft LCD in and of itself is extremely favorable, as it should be for patients. We believe in testing for this cohort of patient. We believe we’ve got evidence to suggest that Decipher supports it. And so we’re very happy to see the LCD. The one area that we believe needs to be addressed is what you called out, which is the multiple tests per patient. There are many, many examples where legitimately the same patient might need multiple rounds of molecular diagnostic testing. And as currently written, it would preclude that. So, of course, as you can imagine, we’ve shared our feedback very openly with MolDX and prepared – shared our comments. And so we’re somewhat hopeful that that gets addressed. It’s important for it’s not a large number of patients, but it’s enough and these patients do need to be taken care of appropriately. So we’re hopeful that that gets dealt with. Now, in terms of the second part of your question, I want to make sure I understand, but are you saying that by identifying patients earlier you increase the – maybe you can just repeat the question and we can make sure we’re addressing.

Yes, and maybe my interpretation here is flawed, but I guess the way I think about it is a certain number of localized patients ultimately progress. There’s numbers out there. I think that the way I kind of think about it is if you’re tested up front with Decipher, treatment management is better. Maybe the progression rate goes down. Maybe that’s not the case. I was kind of just asking about how you think about the incremental testing opportunity if you were able to test each patient twice.

Yes. So, I don’t think you should think of it as a multiple episodes of testing for every patient type of approach. More so than there are some patients for whom multiple tests would be required. And an example of that might be. And it’s a little bit related to the case you described where a patient is on active surveillance and then develops another lesion. And that other lesion needs to be tested and it’s a more aggressive cancer. And so that will be driven by clinical factors. And we agree that there should be a concern from the physician who’s treating them to desire a second test in that case. But I don’t think you should think of it as every patient gets tested multiple times over their lifetime.

Right. And now that’s pretty clear. But thank you guys. I appreciate it.

Thank you. [Operator Instructions] Our next question comes from Mike Matson with Needham and Company. Your line is now open.

Hi, everyone, this is Joseph on from Mike. Maybe just looking at Decipher and Afirma GRID, I guess you announced the research use only for Afirma. Maybe just wanted to get your comment again, I guess on the biopharma business, I guess, is there any expectation that more tools or more services will be coming out of this side of the business? I know you guys have talked about it being kind of on the back burner, lower priority, but maybe just wanted to get a refresh on how you think about the business. And I guess maybe is there a plan for, I guess Afirma GRID to be shifted to the clinical setting and just one more follow up after that?

Yes, so just to clarify, both Afirma GRID and Decipher GRID are intended for research use only, to provide additional information, and that’s helpful in the context of the patient that the physician is treating and their overall practice and the research that they’re doing as well. But in terms of biopharma, this isn’t really enabled by GRID. GRID is a byproduct of this. But the fact that we do whole transcriptome analysis on all of our tests gives us this incredible rich data set for all of these patients and that has value for biopharma customers. And so that side of our business of driving utilization of that data with biopharma continues. It isn’t enabled by GRID, it’s enabled by our whole transcriptome approach. And we’ll continue to engage with biopharma in utilizing that data for their studies. So yes, that’s absolutely a part of what we’re focused on.

Okay, yes, sure. That makes perfect sense. Thanks for the clarification there. And then I guess I’ll maybe ask just because I think Marc, you mentioned in the prepared remarks, but I guess LymphMark just haven’t heard that said from you guys in a while. So just wondering if there’s like an update of anything there, any milestones in the future? Yes, just an update on the product in general would be great.

No. Nothing specific at this point. We’re continuing to work with our partner on that and throughout this IVD strategy approach with no change there, continue to support that on nCounter. And as we work towards commercial launch, think about the right approach there with our partner. So no new updates. And certainly at this point it’s not something that you should factor in terms of the numbers until we get to a point where the studies are completed and it’s clear where the commercialization happens and how that happens, what that would looks like, in which case we would give more color at that time.

Okay, great. Thank you very much.

Thank you.

At this time I’m showing no further questions. I would now like to turn it back to Marc Stapley for closing remarks.

Thanks. I appreciate it. I’m extremely pleased with the performance of our core testing business, and I’m encouraged by the unpenetrated opportunity to help more patients in both the prostate and thyroid cancer markets. We’re clearly growing in both indications at a rate that is exceeding the market, and with our extensive product enhancements, evidence development, and opportunities to broaden reimbursement, I see that continuing for many years. In addition, I’m excited to see our global expansion come to fruition with our augmented IVD strategy, and I applaud our team for their diligence and commitment to continuously evaluate our opportunity and approach. I’m proud of our Veracyte employees who have demonstrated their ability to execute quarter-after-quarter, driven by their passion to transform cancer care for patients all over the world. Thank you.

Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.