WEBVTT - Disrupting Healthcare Through Genomics 0:00:00.040 --> 0:00:03.520 You're listening to Bloomberg Business Week with Carol Messer and 0:00:03.680 --> 0:00:08.000 Bloomberg Quick Takes Tim Stenovich on Bloomberg Radio. We talked 0:00:08.039 --> 0:00:10.400 earlier with the team over at John Hopkins Bloomberg School 0:00:10.440 --> 0:00:15.480 of Public Health. Ay talked about pharmaceutical advertisement and treatment efficacy. Well, 0:00:15.560 --> 0:00:17.560 right now we have a guest in the healthcare space 0:00:17.920 --> 0:00:21.560 using AI, the human genoman more to improve health outcomes. 0:00:21.560 --> 0:00:24.200 So great to have back with us. Katherine Stoulin, she's 0:00:24.239 --> 0:00:27.280 the CEO of Gendx, a small cap publicly held company. 0:00:27.320 --> 0:00:30.280 They're roughly about two hundred and seventy million in market 0:00:30.320 --> 0:00:33.520 cap stocks, up twenty five percent a year to date, 0:00:33.560 --> 0:00:36.120 and she is in her Bloomberg Interact, a broker's studio. 0:00:36.320 --> 0:00:38.080 Nice to have you back. I feel like there's a 0:00:38.120 --> 0:00:41.400 lot of places I want to start. Let me start 0:00:41.720 --> 0:00:45.360 really big, broad if we may, because we're in a funny, interesting, 0:00:46.040 --> 0:00:50.040 confusing at times macro environment. You play in a very 0:00:50.040 --> 0:00:52.840 specific space, but you've got to be watching market volatility, 0:00:53.440 --> 0:00:57.040 the headlines about the banking sector. How do you see 0:00:57.360 --> 0:01:02.560 the environment today? So we've taken a very i would 0:01:02.560 --> 0:01:07.120 say responsible approach to how we're managing the company moving forward. 0:01:07.280 --> 0:01:13.160 So when I started, we combined two companies, so Semaphore 0:01:13.280 --> 0:01:17.479 and GenX actually came together. Last year. I took the 0:01:17.480 --> 0:01:21.240 helm of the combined companies May second, and we had 0:01:21.280 --> 0:01:25.760 already started to see the pressures of the economy and 0:01:26.680 --> 0:01:29.480 the company had been burning about ninety million dollars in 0:01:29.600 --> 0:01:34.240 Q one last year. So job one was really figuring 0:01:34.240 --> 0:01:37.200 out a plan to ensure that we could become self 0:01:37.240 --> 0:01:40.360 sustaining as soon as possible. So we went through a 0:01:40.400 --> 0:01:44.160 series of changes in the company. We actually shut down 0:01:44.280 --> 0:01:48.920 a few of the business lines that were materially negative 0:01:48.920 --> 0:01:53.680 gross margins and we're in their nascency or just we're 0:01:53.720 --> 0:01:56.960 not performing. And where we landed was in a place 0:01:57.040 --> 0:02:01.000 where we have a distinct competitive advantage. We can really 0:02:01.000 --> 0:02:05.880 help people in a unique way in the marketplace that 0:02:06.080 --> 0:02:09.799 also happens to deliver on very healthy growth margins and 0:02:09.880 --> 0:02:14.280 as well reinverse moving forward. So we've really been taking 0:02:15.600 --> 0:02:18.720 the era of growth at all costs is behind us, 0:02:18.760 --> 0:02:22.400 and we have been really focused on revenue driving growth 0:02:22.440 --> 0:02:25.880 moving forward. Well, Catherine, I'd love to talk just about 0:02:25.880 --> 0:02:29.080 the your main business because it's pretty fascinating and correct 0:02:29.120 --> 0:02:32.320 me if I misinterpret what you're doing. But you basically 0:02:32.919 --> 0:02:38.239 take the full genome sequence of a person and try 0:02:38.280 --> 0:02:41.760 to look for genetic diseases and that type of thing 0:02:41.840 --> 0:02:44.560 is that is that basically it, So you're right on. 0:02:44.639 --> 0:02:49.440 What we do is essentially take a genome's worth of 0:02:49.480 --> 0:02:55.480 information and we distill it into actionable insights, which is 0:02:55.639 --> 0:02:58.440 an incredibly daunting task if you think about the fact 0:02:58.480 --> 0:03:01.680 that it's only been about twenty years since the Human 0:03:01.720 --> 0:03:06.480 Genome Project delivered its first its first draft really, so 0:03:06.600 --> 0:03:10.160 we've been really working to develop the technology that can 0:03:10.200 --> 0:03:14.160 take a genome's worth of information and deliver it. Deliver 0:03:14.240 --> 0:03:17.960 the information in a way that provides a definitive diagnosis, 0:03:18.840 --> 0:03:22.640 looking more comprehensively than a single gene like Bracca. We 0:03:22.680 --> 0:03:25.359 want to look at the entire scope of the genome. 0:03:25.480 --> 0:03:27.440 So what's the holy grail? Like when we think about this, 0:03:27.480 --> 0:03:30.520 like in an ideal world, you would say, okay, we've 0:03:30.560 --> 0:03:34.360 said we've mission accomplished. What would it mean for a 0:03:34.400 --> 0:03:38.600 patient and or a medical professional. Ultimately, we want to 0:03:38.720 --> 0:03:41.720 diagnose disease as quickly as possible, get them on the 0:03:43.520 --> 0:03:47.840 treatment that's best for them, so truly personalized medicine, and 0:03:47.880 --> 0:03:51.240 get them on a healthier path. Now. Ideally what that 0:03:51.280 --> 0:03:55.400 means is we're all walking around today with DNA that 0:03:55.440 --> 0:03:58.080 can help inform our health and it can either help 0:03:58.080 --> 0:04:00.760 diagnose disease immediately or even get to the point where 0:04:00.800 --> 0:04:04.920 we can prevent disease. But there's one piece that would 0:04:05.000 --> 0:04:08.120 make that information even richer, and it's the information that 0:04:08.160 --> 0:04:11.800 we find in each of our own mrs. So being 0:04:11.840 --> 0:04:15.680 able to have an MR, an electronic medical record, so 0:04:16.800 --> 0:04:20.320 being able to take a look historically, having a longitudinal 0:04:20.360 --> 0:04:22.720 look at each of us, and being able to say, 0:04:22.760 --> 0:04:25.120 what are the different lab tests that we're taken, What 0:04:25.279 --> 0:04:28.920 did an MRI say, what different treatments have I been on? 0:04:28.960 --> 0:04:31.719 And be able to take the genomic information from within 0:04:31.800 --> 0:04:35.960 you and have that additional context from your own medical 0:04:36.040 --> 0:04:39.520 history that can then give us an even more precise 0:04:39.560 --> 0:04:41.720 diagnos So it's not like just the case of the 0:04:42.279 --> 0:04:45.560 out of the womb that we're we do this mapping 0:04:45.640 --> 0:04:47.800 and we know kind of what's to come. Is it 0:04:48.880 --> 0:04:53.080 even that that is a fantastic starting point. So we 0:04:53.120 --> 0:04:56.880 are starting to do newborn screening, So we are we're 0:04:56.920 --> 0:05:00.680 working on a study right now called the guardians Any 0:05:00.839 --> 0:05:05.279 and that really is taking a look at healthy babies, 0:05:05.600 --> 0:05:09.400 sequencing their genomes and screening for two hundred and fifty conditions. 0:05:10.000 --> 0:05:12.800 So that is a fantastic starting point, and we do 0:05:12.920 --> 0:05:15.039 want to get to that point where we can make 0:05:15.080 --> 0:05:20.200 this available and accessible to absolutely everyone, so your customers 0:05:20.200 --> 0:05:23.120 are more of the scientific community rather than me bringing 0:05:23.160 --> 0:05:27.640 my newborn to you and say can you sequence its correct? 0:05:27.760 --> 0:05:31.400 What we're doing is we're working with providers. Because I've 0:05:31.440 --> 0:05:34.520 been in the genomics industry for ten years, I've been 0:05:34.560 --> 0:05:39.599 in the healthcare industry for thirty. It gets more and 0:05:39.680 --> 0:05:43.120 more before I know it. But really, what we want 0:05:43.160 --> 0:05:45.400 to be able to do is continue to work with 0:05:45.480 --> 0:05:49.400 providers and ensure that the information can be delivered responsibly, 0:05:49.680 --> 0:05:51.880 because when you have a healthy newborn, the last thing 0:05:51.880 --> 0:05:54.280 that you want is a whole bunch of worrisome information. 0:05:54.960 --> 0:05:56.600 What we want to be able to do is hold 0:05:56.640 --> 0:06:00.839 onto the information and when there is a simple be 0:06:00.920 --> 0:06:04.400 able to provide on demand whether or not there's an 0:06:04.440 --> 0:06:08.159 underlying genetic condition. And I think what's really important about 0:06:08.160 --> 0:06:10.720 the study that we're doing right now, it is Wendy Chung, 0:06:11.400 --> 0:06:15.440 a fantastic pediatrician and genetesis out of Columbia, who is 0:06:15.520 --> 0:06:20.160 driving the entire thing. A thousand patients or a thousand 0:06:20.240 --> 0:06:23.880 families have really enrolled in this since it launched in October. 0:06:25.080 --> 0:06:27.960 What we did was a retrospective analysis. So we took 0:06:28.000 --> 0:06:32.800 a look at our own database at GENDX, and we 0:06:32.880 --> 0:06:35.839 predominantly test children. And what we did was we said, 0:06:35.920 --> 0:06:39.800 if we took the Guardian screening criteria and applied it 0:06:39.880 --> 0:06:43.599 to our database to our patients, we actually would have 0:06:43.640 --> 0:06:46.680 been able to diagnose twenty percent of the children that 0:06:46.720 --> 0:06:51.080 we tested at birth. Instead, they went on for eight, nine, ten, 0:06:51.160 --> 0:06:55.760 eleven years without a diagnosis. So in other words, okay, 0:06:55.839 --> 0:06:58.920 so that's interesting because I keep thinking about we talk 0:06:58.960 --> 0:07:01.800 about disruption. We've seen it in a lot of different spaces. 0:07:01.839 --> 0:07:03.839 We certainly saw it as a result of the pandemic, 0:07:04.279 --> 0:07:07.240 just in terms of buying online. You know, I never 0:07:07.320 --> 0:07:10.200 carried cash anymore as a result of it. But I 0:07:10.240 --> 0:07:13.560 do think about healthcare disruption and I have been thinking 0:07:13.840 --> 0:07:17.480 the genome, like this has got to be where it 0:07:17.520 --> 0:07:21.480 all comes from. Ultimately, how tricky is what you're doing 0:07:22.480 --> 0:07:25.840 is it is highly complicated. I mean, if you think 0:07:25.840 --> 0:07:29.240 about it, why is it complicated? If you think about 0:07:30.160 --> 0:07:35.840 the twenty three thousand genes, there is a very big 0:07:35.920 --> 0:07:39.960 gap that we call variances of unknown significance, So there's 0:07:40.000 --> 0:07:45.000 just an uncertainty about the characterization of those variants. Are 0:07:45.000 --> 0:07:47.840 they disease causing or are they not. So we're still 0:07:47.840 --> 0:07:51.840 in the early days of learning so much about individual 0:07:51.880 --> 0:07:55.520 genes and variants within each gene that it creates in 0:07:55.640 --> 0:07:58.480 inequity in and of the genome itself. There are certain 0:07:58.560 --> 0:08:03.240 variants that are very clear pathogenic or not pathogenic, but 0:08:03.280 --> 0:08:06.640 then there's all of these variants where we just don't 0:08:06.680 --> 0:08:09.720 have enough information. Yet. The more patients that we test, 0:08:10.640 --> 0:08:15.440 our underlying interpretation platform actually gets smarter, so data we 0:08:15.480 --> 0:08:17.840 need more patients, We need more data, and then we 0:08:18.000 --> 0:08:21.840 learn more about those variants. And it strikes me as 0:08:22.280 --> 0:08:23.760 I don't want to sound like a sales rep for 0:08:23.800 --> 0:08:26.640 your company here, but it strikes me as the type 0:08:26.640 --> 0:08:29.800 of thing that if I were an insurance company, I'd 0:08:29.800 --> 0:08:31.720 probably be on board with this. You know, you'd want 0:08:31.720 --> 0:08:34.439 to identify these type of conditions early. I mean, is 0:08:34.480 --> 0:08:37.200 that kind of the selling point for you guys? It 0:08:37.360 --> 0:08:43.560 is fascinating to see seventy percent of commercial payers, so 0:08:43.640 --> 0:08:49.559 insurance companies are paying for xomergino not at birth, so 0:08:49.600 --> 0:08:51.360 that's something we need to figure out in the future, 0:08:51.440 --> 0:08:56.440 but they're paying for it in the pediatric setting. What's 0:08:56.480 --> 0:09:00.760 even more interesting, so Signa and United Healthcare earlier this 0:09:00.840 --> 0:09:05.640 year both put out new medical policy supporting utilization of 0:09:05.640 --> 0:09:08.400 our xome or genome as a first line treatment for 0:09:08.440 --> 0:09:12.120 exactly that it helps produce their costs because right now 0:09:12.160 --> 0:09:14.920 it's just a big trial and error of different tests 0:09:14.960 --> 0:09:18.800 which are inefficient and creates a lot of waste in 0:09:18.840 --> 0:09:21.800 the system. So they are actually very much on board 0:09:22.280 --> 0:09:25.680 with ensuring that people are getting this technology because it 0:09:25.720 --> 0:09:28.199 helps them too. I want to get back to our conversation. 0:09:28.320 --> 0:09:32.320 Catherine Stouland, the CEO of Gendx, is with us here 0:09:32.360 --> 0:09:34.760 in studio. I want to get back to what you 0:09:34.800 --> 0:09:37.400 guys are doing, because we were just talking in our break, 0:09:37.440 --> 0:09:39.240 Mike and I with you, and there's a lot of 0:09:39.280 --> 0:09:41.600 more interesting things that we want to get to. I 0:09:41.600 --> 0:09:43.720 want to ask you, though, you said in the break 0:09:44.040 --> 0:09:45.880 that this is your first time as a CEO of 0:09:45.920 --> 0:09:48.480 a company. It's publicly held, it's a small cap which 0:09:48.520 --> 0:09:51.480 can move around a lot. It's a week that I'm 0:09:51.480 --> 0:09:54.400 looking at your share prices it's down a lot, it's 0:09:54.400 --> 0:09:57.520 still up twenty five percent year to date. How do 0:09:57.600 --> 0:10:00.880 you think about those things as you run your company, 0:10:00.960 --> 0:10:03.480 and it sounds like it's going to be a long, 0:10:04.200 --> 0:10:05.880 you know, runaway if you will, in terms of what 0:10:05.960 --> 0:10:08.840 you're trying to do. Absolutely well, we happen to be 0:10:09.080 --> 0:10:12.040 um I think, in a very rare position, just having 0:10:12.120 --> 0:10:17.000 raised one hundred and fifty million dollars in January, which 0:10:17.120 --> 0:10:19.720 was a very difficult market to be raising money in. 0:10:19.880 --> 0:10:23.560 Although glad you did it now so so glad that 0:10:23.600 --> 0:10:27.400 we did it, and that enables us to get to 0:10:27.640 --> 0:10:31.800 profitability in twenty twenty five. And to be in that position, 0:10:32.800 --> 0:10:36.160 I think is a very rare place to be. And 0:10:36.440 --> 0:10:39.320 what we've said to the team, the stock is going 0:10:39.360 --> 0:10:43.319 to be noisy. It just will be. And the best 0:10:43.320 --> 0:10:47.720 thing that we can do is stay focused on executing 0:10:47.720 --> 0:10:49.920 on our plan. We have a clear plan that gets 0:10:50.000 --> 0:10:54.640 us right to that twenty twenty five profitability place. We 0:10:54.720 --> 0:10:58.679 have a lot of operating ricor for the team, so 0:10:58.720 --> 0:11:04.520 we're really really staying focused on driving revenue, driving volume, 0:11:04.720 --> 0:11:08.200 bringing down our cogs. So we try to keep the 0:11:08.280 --> 0:11:12.120 stock price noise as much out of the discussion as 0:11:12.160 --> 0:11:14.400 possible and really keep it focused. We have a lot 0:11:14.400 --> 0:11:16.360 of work to do. We have a lot of patients 0:11:16.400 --> 0:11:19.439 that we're serving, we have a lot of customers. We 0:11:19.440 --> 0:11:24.640 work with hundreds and hundreds of hospitals across the United States, 0:11:25.120 --> 0:11:28.720 and so there is plenty to keep us busy. And 0:11:29.120 --> 0:11:31.360 what I say is, so long as we can deliver 0:11:32.480 --> 0:11:34.880 on the goals that we've put forth as a team 0:11:35.040 --> 0:11:38.280 internally report that out to the street, the stock price 0:11:38.400 --> 0:11:41.600 is going to follow. So I very much believe that 0:11:41.679 --> 0:11:47.200 our board has been nothing but supportive of our kind 0:11:47.200 --> 0:11:50.880 of maniacal focus on execution this year and for the 0:11:51.360 --> 0:11:55.120 following year. So that's the best message that I think 0:11:55.160 --> 0:11:58.040 we can be delivering to the team. And fortunately we 0:11:58.160 --> 0:12:04.160 have a very mission based company. Employees come to the 0:12:04.160 --> 0:12:07.640 company sometimes because they've used our exom er genome to 0:12:07.640 --> 0:12:10.800 diagnose one of their own children. Wow. And so people 0:12:10.920 --> 0:12:14.400 really really care the samples that come into our lab. 0:12:14.880 --> 0:12:17.600 It is usually of a child who is a rare disease. 0:12:18.960 --> 0:12:23.800 It sometimes is a sample from a baby who's in 0:12:23.800 --> 0:12:26.280 the necke and the parents are waiting to get an answer. 0:12:26.880 --> 0:12:30.679 So there is very much a connection of exactly how 0:12:30.720 --> 0:12:33.800 important the work that we're doing day in and day out, 0:12:33.960 --> 0:12:36.400 is in terms of being able to bring an answer 0:12:36.440 --> 0:12:39.640 which brings peace of mind to parents and it helps 0:12:39.679 --> 0:12:43.960 get their child on a healthier path sooner. You know, Catherine. 0:12:44.200 --> 0:12:46.560 When I think about what your company does and what 0:12:46.640 --> 0:12:50.640 its ambitions are, some of the real trendy market buzzwords 0:12:50.679 --> 0:12:55.720 come to mind innovation, disruption. The problem with disruption is, 0:12:56.120 --> 0:12:59.560 you know, not everyone likes that right that there's often pushback, 0:12:59.600 --> 0:13:03.360 resist stance, And I'm picturing, you know, my kids seventy 0:13:03.360 --> 0:13:06.880 five year old pediatrician talking to you and really not 0:13:06.960 --> 0:13:09.559 being on the same page, not being trained in genetics. 0:13:10.040 --> 0:13:12.280 So I'm curious, like, how, you know, what are the 0:13:12.360 --> 0:13:16.480 roadblocks to further adoption of this type of technology and 0:13:16.679 --> 0:13:21.400 using it in diagnosis and treatment. I assume there's probably 0:13:21.440 --> 0:13:24.760 some pushback from the medical community that is at risk 0:13:24.800 --> 0:13:27.600 of being disrupted from this. Is that Is that fair 0:13:27.600 --> 0:13:31.440 to say? So, it's interesting we have a groundswell of 0:13:31.520 --> 0:13:36.040 support from medical geneticists who are well equipped to be 0:13:36.120 --> 0:13:39.640 able to interpret the information, know which patients to use 0:13:40.360 --> 0:13:44.120 the information on, and they have put out very clear 0:13:44.200 --> 0:13:48.640 guidelines that other providers listen to. And what's interesting now 0:13:48.800 --> 0:13:51.600 is if you look at the medical societies outside of 0:13:51.640 --> 0:13:56.080 medical genetics, so the American Epilepsy Society, they've come out 0:13:56.120 --> 0:14:00.360 to tell their practitioners a neurologists and pediatric neurologists that 0:14:00.440 --> 0:14:04.479 if you think that a child has may have epilepsy, 0:14:04.800 --> 0:14:08.240 you're witnessing a seizure, you should use an exome or 0:14:08.280 --> 0:14:12.559 a genome as a frontline. So we are starting to 0:14:12.600 --> 0:14:18.199 see providers from other groups outside of the medical geneticists 0:14:18.200 --> 0:14:20.920 receive the message that this is something that can help them. 0:14:21.400 --> 0:14:24.120 It's our job to make it as easy as possible 0:14:24.240 --> 0:14:28.480 for them to identify which patients are eligible for it, 0:14:28.840 --> 0:14:31.200 and then in turn, this is something we have not 0:14:31.280 --> 0:14:33.480 solved yet. In turn, we have to be able to 0:14:33.520 --> 0:14:37.760 deliver the information in a way that is easily understandable 0:14:37.800 --> 0:14:41.200 to a non genetics expert. So that is a probably 0:14:41.240 --> 0:14:45.480 interpretation the interpretation test itself exactly. So do you guys 0:14:45.560 --> 0:14:48.480 do that? We do that. That is part of what 0:14:48.520 --> 0:14:52.200 we do exquisitely well is being able to take all 0:14:52.240 --> 0:14:56.320 of that information and say this is a positive test result, 0:14:56.480 --> 0:14:59.840 this is what it means for your patients. But because 0:15:00.400 --> 0:15:04.200 historically it really has been geared towards a genetics expert. 0:15:04.920 --> 0:15:07.080 Part of my challenge to the team is to say, 0:15:07.080 --> 0:15:10.800 make it understandable for the seventy five year pediatrician, because 0:15:10.840 --> 0:15:14.200 then it becomes much less of a barrier for them 0:15:14.240 --> 0:15:17.680 to utilize it. So, how what does the test cost? 0:15:18.560 --> 0:15:22.840 So we are in a very fortunate position after a 0:15:22.840 --> 0:15:25.600 lot of work and publishing a lot of data. Seventy 0:15:25.600 --> 0:15:31.000 percent of commercial payers pay for our services. We're continuing 0:15:31.040 --> 0:15:34.640 to get more and more coverage and in fact, United 0:15:34.680 --> 0:15:39.000 Insignia just issued coverage earlier this year saying you utilize 0:15:39.000 --> 0:15:44.680 this testing. So what So usually four out of five 0:15:44.720 --> 0:15:48.840 patients have zero out of pocket, which is great. Our 0:15:48.840 --> 0:15:52.560 goal is to make sure that, from an equitability standpoint, 0:15:52.640 --> 0:15:57.680 everyone has access. We work with state medicaids and in 0:15:57.760 --> 0:16:03.080 fact there's six states right now cover xome and genome 0:16:03.320 --> 0:16:07.560 for baby as well as parents. So we're starting to 0:16:07.560 --> 0:16:10.560 see even more and more coverage across the board. But 0:16:10.640 --> 0:16:12.840 if not, what would it cost peple? Think about thirty 0:16:12.840 --> 0:16:16.160 seconds lap. If not, then it's about thirty five hundred dollars. 0:16:16.640 --> 0:16:19.040 I feel like I have a million more questions. You 0:16:19.080 --> 0:16:20.920 wrap it up real quick. Well, I was to say that, 0:16:21.400 --> 0:16:23.840 you know, is it a matter of a doctor suspecting 0:16:24.080 --> 0:16:26.560 a patient has something and sending them to you, or 0:16:26.600 --> 0:16:29.760 would it be more prophylactic, say, ideally you'd want to 0:16:29.760 --> 0:16:31.960 do it's everyone. I imagine ideally you want to do 0:16:32.040 --> 0:16:35.320 it to everyone. But if there is a potential that 0:16:35.360 --> 0:16:38.680 there is an underlying genetic condition, we want the clinician 0:16:38.680 --> 0:16:40.760 to order from us. We'll get them an answer and 0:16:40.800 --> 0:16:43.320 hopefully get that and that's when it's covered by insurance. 0:16:43.360 --> 0:16:45.920 I guess yeah. But the more data that comes in, 0:16:46.000 --> 0:16:48.520 the more tests that are done, it gets even better 0:16:48.520 --> 0:16:51.120 and better it does. And the more testing we do, 0:16:51.600 --> 0:16:54.120 the more we learn that more people actually are impacted 0:16:54.120 --> 0:16:57.280 by this. Hopefully you come back in a few months 0:16:57.320 --> 0:16:59.840 and talk more about the progress you guys are doing. 0:17:00.080 --> 0:17:03.040 Katherine Stulin, chief executive Officer of gene d x US. 0:17:03.240 --> 0:17:06.400 Here in our interactive broker's studio, you're listening to Bloomberg 0:17:06.480 --> 0:17:06.760 Radio