Exagen Inc. Common Stock Canaccord Genuity's 46th Annual Growth Conference

Great. Well, good morning, everyone. Exagen is a specialty diagnostic lab based in San Diego, California. We focus in the autoimmune, specifically the rheumatology space. We offer proprietary, unique, and comprehensive testing for patients with lupus, rheumatoid arthritis, scleroderma, other types of connective tissue disorders. For us, we are heavily focused on the rheumatology call point, and we serve annually about 2,800 physicians right now, dispersed throughout many different subspecialties, but again, rooted more commonly in the rheumatology space. Overall, we believe we have about 3%-4% of the autoimmune testing market. That is estimated on our end, about $2.2 billion annually. We are trying to bring a level of clarity and precision that you commonly see in the oncology space into autoimmunity.

We published a systematic review which pulled together the results of 14 different studies across about a decade, or almost 12 years' worth of research. That was just published in June. In these disorders, you have the innate immune system really ramped up and attacking the individual's body. What is occurring in, call it conventional autoantibody testing, is you are getting a snapshot point in time, what is the immune system doing right then. CB-CAPs, as you referenced, is an acronym for Cell-Bound Complement Activation Products, and this leaves a covalently bound scar on the surface of various cell types, which is highly specific and pathologic for certain diseases, lupus being one that we focus on more heavily. What you get with our testing is a true sense of has a pathological episode occurred?

Is this patient's immune system more consistent with this disease rather than just a snapshot in time? The snapshot in time can be misled through various infections, viral loads, these types of things. With CB-CAPs, you actually get a disease-specific feel for it. Additionally to this, last year, we launched several new markers specific to rheumatoid arthritis that, again, enhance the sensitivity and specificity of diagnosis there.

Yeah, it's really interesting. Grail actually published a unique paper, and I think the reason I reference it is because in oncology, most folks generally accept that we need to reach a diagnosis sooner. To give you a sense, the paper that Grail put out was around a half a million patients, so 500,000 patients across various different oncological conditions. You have breast cancer, prostate cancer, lung cancer, these types of things. Median time from symptom onset to diagnosis in that study was about 3.8, 3.9 months. In autoimmune conditions, you're an order of magnitude beyond that. For lupus, for example, average time from symptom onset to diagnosis is six years. Rheumatoid arthritis is somewhere around 2.5-3 years. Sjögren's syndrome, a substantial number of patients have that. That's on 5-7 years timeframe.

You're talking very different timeframes, and it all has to do with the ambiguity or the ambiguous nature of the symptomatic presentation from these patients. You have folks with fever, you have folks with bone pain, rash, alopecia, these types of things, and these symptoms don't give you a very specific idea of what the patient's dealing with. As they progress, aggregate, remain refractory to various therapies, then you start to get a feel for it. But having that level of precision earlier is what really matters. You can intervene much sooner and really make a difference, and that's what we strive to do. We've actually published a few papers where CB-CAPs specifically, our AVISE Lupus algorithm, shows that we can diagnose lupus about 18 months sooner than conventional testing. Our algorithm will be positive in that context.

That was a study with Northwestern, prospective study, so very proud of that data there. On the seronegative side for RA, we closed the gap by about half, so we identify half the seronegative patients that conventional testing does not. Those are the types of impacts we're trying to bring to this field, and really excited about the potential to have that level of precision in clinicians' hands.

Yeah. Well, it feels like almost a decade ago, to be honest with you. It's been a ton of work. When I joined, just to highlight a couple other things, top line was declining. It was the first year at the organization that the top line had declined. Our cash burn was about $40 million in 2022 and accelerating. Our Q4 burn was around $15 million. So, you had that level of acceleration. Our R&D pipeline was focused on a lot of projects that I didn't feel would ultimately yield clinical benefit or enough clinical benefit and had a, call it an obscure path to reimbursement, if you will. We had to really pick apart and tune the entire company. The reimbursement side of it's critically important, especially diagnostics. I think a lot of organizations struggle with it, and Exagen was no different.

We had four or five years prior to me coming on board where the ASP or average reimbursement had remained static, at $280, $85, something like that. We know the playbook that has to be run. I've done this in other roles at different specialty lab organizations. You have to dive into all of the details, and you have to really enhance the message that you're giving to insurers. You have to view them as a customer, and you have to be very relentless with your appeals efforts. We put all of that in place. It's taken a couple of years. We've really looked to make this more efficient and effective, and so we've integrated some different tools which actually interpret the clinical history of the patient, make a custom appeal letter, reference specific medical policy for certain plans, and we've been highly effective.

I think our trailing 12-month ASP in this last quarter was $446. It's led to a growing top line with a dramatic improvement in our cash burn approach. This past quarter cash burn was around $100,000. That's our adjusted EBITDA number. The transition of the company's been phenomenal over the last couple of years. Tons of credit to the team. As I said, when you rebuild different parts, it's not just processes, it's also bringing in people that know how to do this, that you trust, that you enjoy working with, that work well together as a team, and that's what we've done at this organization over the last four years.