Marc Stapley: Yes, thanks for the question. I appreciate you picking up on the strength of our balance sheet, which is obviously only getting stronger as we increased the guide around cash here. We’ve been pretty clear about what we’re focused on and I’ll reiterate those points again today. There’s no question we want to continue to drive the penetration of Decipher into a market when we last did the math was 35% penetrated into Afirma in a market with a will after the math was just over 60% penetrated. We see tremendous opportunities than, as I said today. I see those products helping to fuel the growth of our business for multiple years ahead. And certainly, we are bridging us to our long-term growth drivers, which are the next three things that we’re very focused on: Percepta Nasal Swab, as I talked about, our IBD strategy outside the US and now MRD.
So if you think about those five things Afirma, Decipher, Nasal Swab, IBD and MRD, we had a lot on our plates. We’re very, very busy. We got a lot of projects going on. Those three long-term growth driver projects are absorbing more than the majority of our R&D spend as you would expect them to since the strategic and important to us. And then, of course, growing Afirma and Decipher and us sustaining our business and working on Discovery is driving most of the rest of the R&D spend. So we’re very, very focused. We’ve got very clear priorities. We’ve got the — we feel like we’ve got the near-term to mid-term to long-term growth spectrum covered with everything that we’re doing. And so I would say that yes M&A is the priority for us right now.
And of course, we’re always opportunistic and things come knocking on our door that look interesting to us than we would certainly take a look, but that is not something where we’re focused on because as I said, we’ve got a lot of opportunity ahead of us and what we’re already doing can ask.
Tejas Savant: Thanks for the time guys.
Marc Stapley: Thanks.
Operator: Thank you. One moment for our next question. Our next question comes from Mike Matson with Needham & Company. Your line is open.
Unidentified Analyst: Hey guys, this is Joseph on for Mike. Maybe just wanted to get an update on how you guys were kind of thinking about the FDA final rule on LDTs, I guess I imagine they kind of went to your expectations. I guess it wasn’t really worry for you too much at all, but are you kind of thinking a little bit more positively on any more spend needed for that or yes, I guess any update on that would be good.
Marc Stapley: Yes. Thanks, Joseph. Appreciate that. I mean just thinking about it at the highest level a company that has been on the market with clear tests for a number of years, with the evidence that we got behind those tests, as well as having the IVD test already on the market and IVD capabilities and developing three IVD tests as we speak. We’ve always felt very ready for whatever this new regulation might throw at us. So we’re clear, we’ve got New York State and all those things now. Obviously, the more regulation add burden to any business of course. And so we actually think we’re very well regulated already. We don’t necessarily anymore, but to the extent there is more and then we’re ready for it. If it adds cost burden in some areas again, we’ve got the quality systems in place, but there might be some things that we have to invest in order to support any new requirements that come our way, we’d be ready to do that, able to do that.
And I’d say that’s already included in our projections, because we also have opportunities to optimize and reduce cost as we scale to. So, I’d say that that would offset any increased regulation or regulatory burden that might show up in the P&L. I would say just maybe specifically on what did come out. Of course it was great to see that existing tests get some special treatment as they should obviously because they serve so many patients today?
Unidentified Analyst: Yes. Okay. Great. Absolutely. And then maybe just a question on the AUA conference. I mean you guys had a bunch of posters. They probably took up a lot of space. I was just kind of wondering what was attendance like there. Appreciate you know the initial color and everything. But I was also wondering, if you know if there’s any discussion at these conferences around Decipher Prostate and how some of the — I guess American physicians feel about the test potentially move into PCR? I guess, correct me if I’m wrong, but I guess that’s more internationally and then clear model here, but just wondering if there’s any discussion around that as that’s changed maybe your viewpoints on Tesla data.
Marc Stapley: I don’t have — yes, I mean let me clarify that in the first instance, the Decipher is run as a clear base test for the US today and that’s not going to change going forward. And of course here that also we run a whole transcript and that also helps fuel grid. Where we are moving to PCR for Decipher is our IBD product that will be launched outside the US. Okay. So, we are hearing a lot of interest for that outside the US. We do think there’s a pent-up demand. I don’t know to what extent that that showed up AUA closely. I’m sure it came up probably mostly the month. That conferences mostly focused I would say on US. From what I hear, it went really well, it was a great conference. We of course had a very good showing there will be abstracts that we had it presented and presentations.
I understand our booth was very well attended and our team congratulations to our Decipher team commercial and marketing team who did an outstanding job supporting the conference. So far everything I’ve heard so is extremely positive. And I’m sure there was a buzz around the new guidelines to the points we made in the presentation. We did our own survey and we heard them a very significant majority of physicians over 80% are aware of the guideline and 75% of them are actually using them the way that I intended.
Unidentified Analyst: Okay, great. Thanks very much Marc for taking the questions.
Marc Stapley: Yes, thank you.
Operator: Thank you. [Operator Instructions] Our next question comes from Matt Sykes with Goldman Sachs. Your line is open.
Unidentified Analyst: Hey, guys. Congrats on the quarter. Thanks for taking my questions. It’s John on for Matt. Just a follow-up the question that was asked earlier on Decipher prostrate. So you have biopsy test for mono therapy versus multi-modal as well as radical prostatectomy test to determine the addition of hormone therapy. So can you just help us understand the opportunity for improvement in term of volumes and reimbursement with respect to both sub-segments?
Marc Stapley: I would say I think they really come together. You don’t necessarily need to bifurcate them as we talk about the opportunity for growth. I mean by far the majority of growth and the majority of volume is going to come from the biopsy side rather than the RP side but there’s opportunity for them for them both, mostly as I say mostly on the biopsy side where you have by far the largest volume. In terms of reimbursement, the real opportunity there is commercial contracts like the one that we announced today. We’ve made great progress and great traction in getting both coverage and contracts in place. There’s still opportunities. I think we feel really good about where we are so far. There’s smaller payers to go after now and we never really stop.
We are still — finding out payers for Afirma 13 years after the product was launched. So you just keep blocking and tackling your way through that. So that’s where the I’d say the reimbursement opportunity comes from. I’ve talked at length about where the volume growth is going to come from and what’s going to drive it. And again it’s the NCCN payer contracts, metastatic and just fantastic execution by ourselves team quite frankly started.
Unidentified Analyst: Got it. And then moving to Afirma. Do you see the competitive landscape as essentially set? Or do you anticipate new competitors entering space? How high is the barrier of entry to enter thyroid cancer testing?
Marc Stapley: I think it would be very difficult for new entrants to enter this stage with the level of share and penetration and performance of the tests that we have. And most importantly the level of evidence behind them including the recent meta analysis that we had that really showed the performance of Afirma in a real-world setting even outperformed our own clinical validation. We actually just got word that was one of the most cited articles last year in the publication. So I think that in and of itself we’ve always maintained this is actually is at the heart of the Veracyte diagnostic platform. We talk about the just generating the evidence which comes from the data and then having more data generate more evidence is really a significant barrier to entry that shouldn’t be underestimated. And this is how Afirma has not only maintained but it’s also growing its share and how Decipher has become number one test with the high level of guidelines that it has.
Unidentified Analyst: Got it. Thank you. Congrats again on the quarter
Marc Stapley: Thank you.
Operator: Thank you. One moment for our next question. Our next question comes from Puneet Souda with Leerink Partners. Your line is now open.
Marc Stapley: Puneet, we can’t hear you? You might be on mute.
Puneet Souda: I apologize. That’s my fault. Marc, can you hear me now?
Marc Stapley: Yes. Can hear you fine.
Puneet Souda: Yes. All right. Great. Thank you. Thanks for taking my question. So — and I apologize if this was covered already, but just could you talk about the Afirma and decipher growth rates that we ought to be thinking within the context of the guide? And I have a quick follow-up after that.
Marc Stapley: Yes. So without getting into projecting either one of them let’s just I don’t know if you caught it. But just to recap on our testing in the first quarter grew 25%. I mentioned that beginning of the call that Decipher grew 36% in revenue. We guided testing to 15% to 18% which is an increase. And of course you can imagine Decipher is the larger driver of that growth and Afirma is obviously smaller, but still growing very, very nicely. And I think it’s fair to say that the testing overall is exceeding our expectations and hence we raise the guide for the company. We still have headwinds on the product and biopharm and other line at the moment. But testing is firing on all seven.
Puneet Souda: Got it. And then if I could ask about the AUM you had a number of presentations there obviously important conference for you. Anything you would note that you know is important driver for maybe 2025. And maybe if you can take a few minutes and talk about sort of the how should we think about the next set of data sets that could be released either in second half of 2024 or in 2025 on some other assays that you have or even Decipher? Thank you.
