But that’s certainly something we’re very focused on.
Unidentified Analyst: Okay. Yeah, great. They obviously like the one-stop shop on gold but maybe just one more looking at C2i and I guess their platform is CE marked in Europe. Just you know I guess a wondering what’s the indication or use case to that? I imagine is mostly used in clinical trials right now. Maybe if there’s any strategic partnerships that are that are ongoing or prospects in Europe that you guys are still pursuing after the acquisition?
Marc Stapley: Well, there are some existing. And of course, that’s a pipeline as well. And we’re very selective about what makes sense for us to continue to pursue. And as you can imagine that’s been a very key part of the acquisition and its integration conversations. Our approach with the test especially with the bladder test is going to be an LDT type of approach. So you’ll determine TBD, if we sell a kit as an IBD in the future. That’s certainly not the plan right now as far as the initial focus is to launch it as a lab-developed test in the way that we’ve described and leverage the platform that we’ve built there. So more to come, again that is again another expansion opportunity. And when I talk about geographic expansion and how MRD can play in that. There are there is a lot of optionality for us in terms of how we might use that in the future outside the US.
Unidentified Analyst: Okay, great. Thank you for taking our questions.
Operator: Thank you. One moment for our last question and it comes from the line of Puneet Souda with Leerink Partners. Please proceed.
Puneet Souda: Hi, guys. Thanks for the questions.
Marc Stapley: Hey, Puneet.
Puneet Souda: Yeah. Hey, Marc. Just first one on I know C2i has been asked about, but this may be and what is the level of investment that you’re expecting here this year? And wondering if you can provide anything for next year sort of before you launch this assay. And on you know how should we think about gross margin given that this assay, when it starts, does this start scaling up, it does require multiple whole genomes initially and then whole-genome with repeat assays, if my understanding is correct? And maybe just on that point just help us also understand, how do you want investors to appreciate Veracyte’s position and MRD market. This is a fairly competitive market and that’s emerging and there’s a leader in the market already. So maybe just conceptualize so that we understand what how I’m going to say it is going to be positioned in MRD?
Marc Stapley: Yes. Many thanks for that. If you don’t mind I’ll answer the third question first and I’ll answer the first question and then I’ll ask Rebecca to the second question on gross margin. But yes, and thanks for asking me. If I am glad we have an opportunity to go through this. I talked about this a month or so ago when we announced the acquisition of C2i. What we really like about this the solution and not to mention the incredible team, but they have built a product that fits so well with the Veracyte diagnostics platform that we’re referring to. It as a whole genome based approach, which means we get that rich data for every single patient, and not only that whole genome for that landmark both whole genome for every subsequent sequence that we do.
And so incredibly rich data, the test performs extremely well. It requires a low input of blood 4 ml. You don’t have to create this bespoke assay as well, which speeds up time to turn around time, time to answer. And then a great performance that results in, as we believe, better outcomes for patients. So there’s so much about the C2i MRD product in particular that we like that fits into Veracyte, not to mention that it’s going to play really well into the bladder market where we have a channel and a clear path to reimbursement. So that’s how I see. Now, it is a crowded space, but again, our approach to a specific indication that we have that channel is really, I think, a very significant differentiator in addition to all the other things that I just mentioned.
In terms of the investment, we’ve done, I think, a really important thing here is we’ve acquired C2i and absorbed, refocused our investments and absorbed the project to develop the MRD test for bladder into our current portfolio. And as you know, we’ve done a really focused approach to portfolio management over a number of years, and that’s enabled us to do this. And that’s why we gave the guidance that we gave when we announced the acquisition that, this does not change in one way our philosophy around profitability and cash generation in particular. And so without giving an exact figure on what we’re investing, because not only have we acquired an MRDs, but we’ve also acquired AI capabilities that we were going to invest in anyway, it’s just, I think, fair to say it’s absorbed in everything that we’re doing.
Do you want to talk about gross margin?
Rebecca Chambers : Yes, happy to. And just one thing to add, Puneet, we have also said in the future, to answer your question for next year, in the future we will continue to be generating positive cash flow. And so I think to any extent we’ll be absolutely continuing to follow the financial philosophy we have shared with you all time and time again in the future as we go forward with MRD and any other activities that we decide to pursue. With regard to gross margin, you’re absolutely correct. It is a multiple whole genome assay over different periods of time. But we have — we’ve looked at this very closely, as you would expect, ahead of the acquisition. And we believe both between the ASP that we’re expecting as well as the lab efficiencies that we think we can deliver, we’re expecting to have a gross margin that’s very reasonable, perhaps not all the way to our current corporate gross margin average, but very reasonable and something that we think more than is worth doing for the organization and can sustain a profitable business similar to how we have with Afirma and Decipher over time with obviously volume going through both the lab and the channel.
So it will take a little bit of time to ramp there, but, you know, I think over time we will get to exactly where we want to be from a gross margin perspective and we’re confident to that end.
Puneet Souda : Got it. Okay. That makes sense. And then just briefly on the FDA’s So it will take a little bit of time to ramp there. But you know, I think over time, we will get to exactly where we want to be from a gross margin perspective and we’re confident to that end.
Puneet Souda: Got it. Okay. That makes sense. And then just briefly on the FDA’s expectations to regulate the cancer LDTs. Any latest thoughts from your end and anything changes spend wise or OpEx wise from your perspective if that was to be implemented at this point?
Marc Stapley: At this point, no changes. One of the things I say about verified is we’re very well prepared for that because you are testing our lab developed testing process and our quality systems are very, very robust, well proven the guidance the on publications behind our tests, as we’ve talked about length of very extensive. And so, as I think about it with the kind of from lab and we have to kind of test, I think fit well into any kind of model that they come out with. Clearly, we’ll need to invest in a multi-stage process, but ultimately gets launched there will be some level of investment, but not and I don’t think as great as many others who have got to kind of create that term that backdrop that we’ve got would have to incur.
And so we’re quite term we’re quite comfortable with where we are there. We’ve got the optionality. We’ve got the experience of IBD development. And so I’m not overly concerned about the pathway whereas involved as others as you can imagine in trying to help us comment on that, respond to that and shape the way that that actually ultimately gets launched.
Puneet Souda: Got it. Okay. All right. Thank you.
Operator: Thank you. And as I see no further questions. I will turn it to Marc Stapley for final comments.
Marc Stapley: Great. Thank you and I appreciate it. So as you can see we ended a very strong year in 2023 and we set ourselves up well for continued growth in 2024 and beyond. I believe our success will continue to hinge on three core pillars of execution, meaningfully expanding the markets we serve, utilizing our established verified diagnostics platform across geographies, indications and the care continuum, embracing the best technology adding new capabilities such as MID. and AI to our world-class platform and driving revenue growth with discipline and a focus on profitability and continued positive cash generation. These tenants will allow Veracyte to continue to build a strong foundation for growth, while achieving our vision of transforming cancer care for patients all over the world. I would like to thank our entire team for their commitment hard work and passion. It is fueling our progress and driving our results. So thank you.
Operator: Ladies and gentlemen, this concludes our call today. Thank you for joining us. You may now disconnect.
