Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes Tim Stenovich on Bloomberg Radio. We talked
Speaker 1: earlier with the team over at John Hopkins Bloomberg School
Speaker 1: of Public Health. Ay talked about pharmaceutical advertisement and treatment efficacy. Well,
Speaker 1: right now we have a guest in the healthcare space
Speaker 1: using AI, the human genoman more to improve health outcomes.
Speaker 1: So great to have back with us. Katherine Stoulin, she's
Speaker 1: the CEO of Gendx, a small cap publicly held company.
Speaker 1: They're roughly about two hundred and seventy million in market
Speaker 1: cap stocks, up twenty five percent a year to date,
Speaker 1: and she is in her Bloomberg Interact, a broker's studio.
Speaker 1: Nice to have you back. I feel like there's a
Speaker 1: lot of places I want to start. Let me start
Speaker 1: really big, broad if we may, because we're in a funny, interesting,
Speaker 1: confusing at times macro environment. You play in a very
Speaker 1: specific space, but you've got to be watching market volatility,
Speaker 1: the headlines about the banking sector. How do you see
Speaker 1: the environment today? So we've taken a very i would
Speaker 1: say responsible approach to how we're managing the company moving forward.
Speaker 1: So when I started, we combined two companies, so Semaphore
Speaker 1: and GenX actually came together. Last year. I took the
Speaker 1: helm of the combined companies May second, and we had
Speaker 1: already started to see the pressures of the economy and
Speaker 1: the company had been burning about ninety million dollars in
Speaker 1: Q one last year. So job one was really figuring
Speaker 1: out a plan to ensure that we could become self
Speaker 1: sustaining as soon as possible. So we went through a
Speaker 1: series of changes in the company. We actually shut down
Speaker 1: a few of the business lines that were materially negative
Speaker 1: gross margins and we're in their nascency or just we're
Speaker 1: not performing. And where we landed was in a place
Speaker 1: where we have a distinct competitive advantage. We can really
Speaker 1: help people in a unique way in the marketplace that
Speaker 1: also happens to deliver on very healthy growth margins and
Speaker 1: as well reinverse moving forward. So we've really been taking
Speaker 1: the era of growth at all costs is behind us,
Speaker 1: and we have been really focused on revenue driving growth
Speaker 1: moving forward. Well, Catherine, I'd love to talk just about
Speaker 1: the your main business because it's pretty fascinating and correct
Speaker 1: me if I misinterpret what you're doing. But you basically
Speaker 1: take the full genome sequence of a person and try
Speaker 1: to look for genetic diseases and that type of thing
Speaker 1: is that is that basically it, So you're right on.
Speaker 1: What we do is essentially take a genome's worth of
Speaker 1: information and we distill it into actionable insights, which is
Speaker 1: an incredibly daunting task if you think about the fact
Speaker 1: that it's only been about twenty years since the Human
Speaker 1: Genome Project delivered its first its first draft really, so
Speaker 1: we've been really working to develop the technology that can
Speaker 1: take a genome's worth of information and deliver it. Deliver
Speaker 1: the information in a way that provides a definitive diagnosis,
Speaker 1: looking more comprehensively than a single gene like Bracca. We
Speaker 1: want to look at the entire scope of the genome.
Speaker 1: So what's the holy grail? Like when we think about this,
Speaker 1: like in an ideal world, you would say, okay, we've
Speaker 1: said we've mission accomplished. What would it mean for a
Speaker 1: patient and or a medical professional. Ultimately, we want to
Speaker 1: diagnose disease as quickly as possible, get them on the
Speaker 1: treatment that's best for them, so truly personalized medicine, and
Speaker 1: get them on a healthier path. Now. Ideally what that
Speaker 1: means is we're all walking around today with DNA that
Speaker 1: can help inform our health and it can either help
Speaker 1: diagnose disease immediately or even get to the point where
Speaker 1: we can prevent disease. But there's one piece that would
Speaker 1: make that information even richer, and it's the information that
Speaker 1: we find in each of our own mrs. So being
Speaker 1: able to have an MR, an electronic medical record, so
Speaker 1: being able to take a look historically, having a longitudinal
Speaker 1: look at each of us, and being able to say,
Speaker 1: what are the different lab tests that we're taken, What
Speaker 1: did an MRI say, what different treatments have I been on?
Speaker 1: And be able to take the genomic information from within
Speaker 1: you and have that additional context from your own medical
Speaker 1: history that can then give us an even more precise
Speaker 1: diagnos So it's not like just the case of the
Speaker 1: out of the womb that we're we do this mapping
Speaker 1: and we know kind of what's to come. Is it
Speaker 1: even that that is a fantastic starting point. So we
Speaker 1: are starting to do newborn screening, So we are we're
Speaker 1: working on a study right now called the guardians Any
Speaker 1: and that really is taking a look at healthy babies,
Speaker 1: sequencing their genomes and screening for two hundred and fifty conditions.
Speaker 1: So that is a fantastic starting point, and we do
Speaker 1: want to get to that point where we can make
Speaker 1: this available and accessible to absolutely everyone, so your customers
Speaker 1: are more of the scientific community rather than me bringing
Speaker 1: my newborn to you and say can you sequence its correct?
Speaker 1: What we're doing is we're working with providers. Because I've
Speaker 1: been in the genomics industry for ten years, I've been
Speaker 1: in the healthcare industry for thirty. It gets more and
Speaker 1: more before I know it. But really, what we want
Speaker 1: to be able to do is continue to work with
Speaker 1: providers and ensure that the information can be delivered responsibly,
Speaker 1: because when you have a healthy newborn, the last thing
Speaker 1: that you want is a whole bunch of worrisome information.
Speaker 1: What we want to be able to do is hold
Speaker 1: onto the information and when there is a simple be
Speaker 1: able to provide on demand whether or not there's an
Speaker 1: underlying genetic condition. And I think what's really important about
Speaker 1: the study that we're doing right now, it is Wendy Chung,
Speaker 1: a fantastic pediatrician and genetesis out of Columbia, who is
Speaker 1: driving the entire thing. A thousand patients or a thousand
Speaker 1: families have really enrolled in this since it launched in October.
Speaker 1: What we did was a retrospective analysis. So we took
Speaker 1: a look at our own database at GENDX, and we
Speaker 1: predominantly test children. And what we did was we said,
Speaker 1: if we took the Guardian screening criteria and applied it
Speaker 1: to our database to our patients, we actually would have
Speaker 1: been able to diagnose twenty percent of the children that
Speaker 1: we tested at birth. Instead, they went on for eight, nine, ten,
Speaker 1: eleven years without a diagnosis. So in other words, okay,
Speaker 1: so that's interesting because I keep thinking about we talk
Speaker 1: about disruption. We've seen it in a lot of different spaces.
Speaker 1: We certainly saw it as a result of the pandemic,
Speaker 1: just in terms of buying online. You know, I never
Speaker 1: carried cash anymore as a result of it. But I
Speaker 1: do think about healthcare disruption and I have been thinking
Speaker 1: the genome, like this has got to be where it
Speaker 1: all comes from. Ultimately, how tricky is what you're doing
Speaker 1: is it is highly complicated. I mean, if you think
Speaker 1: about it, why is it complicated? If you think about
Speaker 1: the twenty three thousand genes, there is a very big
Speaker 1: gap that we call variances of unknown significance, So there's
Speaker 1: just an uncertainty about the characterization of those variants. Are
Speaker 1: they disease causing or are they not. So we're still
Speaker 1: in the early days of learning so much about individual
Speaker 1: genes and variants within each gene that it creates in
Speaker 1: inequity in and of the genome itself. There are certain
Speaker 1: variants that are very clear pathogenic or not pathogenic, but
Speaker 1: then there's all of these variants where we just don't
Speaker 1: have enough information. Yet. The more patients that we test,
Speaker 1: our underlying interpretation platform actually gets smarter, so data we
Speaker 1: need more patients, We need more data, and then we
Speaker 1: learn more about those variants. And it strikes me as
Speaker 1: I don't want to sound like a sales rep for
Speaker 1: your company here, but it strikes me as the type
Speaker 1: of thing that if I were an insurance company, I'd
Speaker 1: probably be on board with this. You know, you'd want
Speaker 1: to identify these type of conditions early. I mean, is
Speaker 1: that kind of the selling point for you guys? It
Speaker 1: is fascinating to see seventy percent of commercial payers, so
Speaker 1: insurance companies are paying for xomergino not at birth, so
Speaker 1: that's something we need to figure out in the future,
Speaker 1: but they're paying for it in the pediatric setting. What's
Speaker 1: even more interesting, so Signa and United Healthcare earlier this
Speaker 1: year both put out new medical policy supporting utilization of
Speaker 1: our xome or genome as a first line treatment for
Speaker 1: exactly that it helps produce their costs because right now
Speaker 1: it's just a big trial and error of different tests
Speaker 1: which are inefficient and creates a lot of waste in
Speaker 1: the system. So they are actually very much on board
Speaker 1: with ensuring that people are getting this technology because it
Speaker 1: helps them too. I want to get back to our conversation.
Speaker 1: Catherine Stouland, the CEO of Gendx, is with us here
Speaker 1: in studio. I want to get back to what you
Speaker 1: guys are doing, because we were just talking in our break,
Speaker 1: Mike and I with you, and there's a lot of
Speaker 1: more interesting things that we want to get to. I
Speaker 1: want to ask you, though, you said in the break
Speaker 1: that this is your first time as a CEO of
Speaker 1: a company. It's publicly held, it's a small cap which
Speaker 1: can move around a lot. It's a week that I'm
Speaker 1: looking at your share prices it's down a lot, it's
Speaker 1: still up twenty five percent year to date. How do
Speaker 1: you think about those things as you run your company,
Speaker 1: and it sounds like it's going to be a long,
Speaker 1: you know, runaway if you will, in terms of what
Speaker 1: you're trying to do. Absolutely well, we happen to be
Speaker 1: um I think, in a very rare position, just having
Speaker 1: raised one hundred and fifty million dollars in January, which
Speaker 1: was a very difficult market to be raising money in.
Speaker 1: Although glad you did it now so so glad that
Speaker 1: we did it, and that enables us to get to
Speaker 1: profitability in twenty twenty five. And to be in that position,
Speaker 1: I think is a very rare place to be. And
Speaker 1: what we've said to the team, the stock is going
Speaker 1: to be noisy. It just will be. And the best
Speaker 1: thing that we can do is stay focused on executing
Speaker 1: on our plan. We have a clear plan that gets
Speaker 1: us right to that twenty twenty five profitability place. We
Speaker 1: have a lot of operating ricor for the team, so
Speaker 1: we're really really staying focused on driving revenue, driving volume,
Speaker 1: bringing down our cogs. So we try to keep the
Speaker 1: stock price noise as much out of the discussion as
Speaker 1: possible and really keep it focused. We have a lot
Speaker 1: of work to do. We have a lot of patients
Speaker 1: that we're serving, we have a lot of customers. We
Speaker 1: work with hundreds and hundreds of hospitals across the United States,
Speaker 1: and so there is plenty to keep us busy. And
Speaker 1: what I say is, so long as we can deliver
Speaker 1: on the goals that we've put forth as a team
Speaker 1: internally report that out to the street, the stock price
Speaker 1: is going to follow. So I very much believe that
Speaker 1: our board has been nothing but supportive of our kind
Speaker 1: of maniacal focus on execution this year and for the
Speaker 1: following year. So that's the best message that I think
Speaker 1: we can be delivering to the team. And fortunately we
Speaker 1: have a very mission based company. Employees come to the
Speaker 1: company sometimes because they've used our exom er genome to
Speaker 1: diagnose one of their own children. Wow. And so people
Speaker 1: really really care the samples that come into our lab.
Speaker 1: It is usually of a child who is a rare disease.
Speaker 1: It sometimes is a sample from a baby who's in
Speaker 1: the necke and the parents are waiting to get an answer.
Speaker 1: So there is very much a connection of exactly how
Speaker 1: important the work that we're doing day in and day out,
Speaker 1: is in terms of being able to bring an answer
Speaker 1: which brings peace of mind to parents and it helps
Speaker 1: get their child on a healthier path sooner. You know, Catherine.
Speaker 1: When I think about what your company does and what
Speaker 1: its ambitions are, some of the real trendy market buzzwords
Speaker 1: come to mind innovation, disruption. The problem with disruption is,
Speaker 1: you know, not everyone likes that right that there's often pushback,
Speaker 1: resist stance, And I'm picturing, you know, my kids seventy
Speaker 1: five year old pediatrician talking to you and really not
Speaker 1: being on the same page, not being trained in genetics.
Speaker 1: So I'm curious, like, how, you know, what are the
Speaker 1: roadblocks to further adoption of this type of technology and
Speaker 1: using it in diagnosis and treatment. I assume there's probably
Speaker 1: some pushback from the medical community that is at risk
Speaker 1: of being disrupted from this. Is that Is that fair
Speaker 1: to say? So, it's interesting we have a groundswell of
Speaker 1: support from medical geneticists who are well equipped to be
Speaker 1: able to interpret the information, know which patients to use
Speaker 1: the information on, and they have put out very clear
Speaker 1: guidelines that other providers listen to. And what's interesting now
Speaker 1: is if you look at the medical societies outside of
Speaker 1: medical genetics, so the American Epilepsy Society, they've come out
Speaker 1: to tell their practitioners a neurologists and pediatric neurologists that
Speaker 1: if you think that a child has may have epilepsy,
Speaker 1: you're witnessing a seizure, you should use an exome or
Speaker 1: a genome as a frontline. So we are starting to
Speaker 1: see providers from other groups outside of the medical geneticists
Speaker 1: receive the message that this is something that can help them.
Speaker 1: It's our job to make it as easy as possible
Speaker 1: for them to identify which patients are eligible for it,
Speaker 1: and then in turn, this is something we have not
Speaker 1: solved yet. In turn, we have to be able to
Speaker 1: deliver the information in a way that is easily understandable
Speaker 1: to a non genetics expert. So that is a probably
Speaker 1: interpretation the interpretation test itself exactly. So do you guys
Speaker 1: do that? We do that. That is part of what
Speaker 1: we do exquisitely well is being able to take all
Speaker 1: of that information and say this is a positive test result,
Speaker 1: this is what it means for your patients. But because
Speaker 1: historically it really has been geared towards a genetics expert.
Speaker 1: Part of my challenge to the team is to say,
Speaker 1: make it understandable for the seventy five year pediatrician, because
Speaker 1: then it becomes much less of a barrier for them
Speaker 1: to utilize it. So, how what does the test cost?
Speaker 1: So we are in a very fortunate position after a
Speaker 1: lot of work and publishing a lot of data. Seventy
Speaker 1: percent of commercial payers pay for our services. We're continuing
Speaker 1: to get more and more coverage and in fact, United
Speaker 1: Insignia just issued coverage earlier this year saying you utilize
Speaker 1: this testing. So what So usually four out of five
Speaker 1: patients have zero out of pocket, which is great. Our
Speaker 1: goal is to make sure that, from an equitability standpoint,
Speaker 1: everyone has access. We work with state medicaids and in
Speaker 1: fact there's six states right now cover xome and genome
Speaker 1: for baby as well as parents. So we're starting to
Speaker 1: see even more and more coverage across the board. But
Speaker 1: if not, what would it cost peple? Think about thirty
Speaker 1: seconds lap. If not, then it's about thirty five hundred dollars.
Speaker 1: I feel like I have a million more questions. You
Speaker 1: wrap it up real quick. Well, I was to say that,
Speaker 1: you know, is it a matter of a doctor suspecting
Speaker 1: a patient has something and sending them to you, or
Speaker 1: would it be more prophylactic, say, ideally you'd want to
Speaker 1: do it's everyone. I imagine ideally you want to do
Speaker 1: it to everyone. But if there is a potential that
Speaker 1: there is an underlying genetic condition, we want the clinician
Speaker 1: to order from us. We'll get them an answer and
Speaker 1: hopefully get that and that's when it's covered by insurance.
Speaker 1: I guess yeah. But the more data that comes in,
Speaker 1: the more tests that are done, it gets even better
Speaker 1: and better it does. And the more testing we do,
Speaker 1: the more we learn that more people actually are impacted
Speaker 1: by this. Hopefully you come back in a few months
Speaker 1: and talk more about the progress you guys are doing.
Speaker 1: Katherine Stulin, chief executive Officer of gene d x US.
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