Disrupting Healthcare Through Genomics

So great to have back with us. Katherine Stoulin, she's the CEO of Gendx, a small cap publicly held company. They're roughly about two hundred and seventy million in market cap stocks, up twenty five percent a year to date, and she is in her Bloomberg Interact, a broker's studio. Nice to have you back. I feel like there's a lot of places I want to start. Let me start really big, broad if we may, because we're in a funny, interesting,

confusing at times macro environment. You play in a very specific space, but you've got to be watching market volatility, the headlines about the banking sector. How do you see the environment today? So we've taken a very i would say responsible approach to how we're managing the company moving forward. So when I started, we combined two companies, so Semaphore

and GenX actually came together. Last year. I took the helm of the combined companies May second, and we had already started to see the pressures of the economy and the company had been burning about ninety million dollars in Q one last year. So job one was really figuring out a plan to ensure that we could become self sustaining as soon as possible. So we went through a

series of changes in the company. We actually shut down a few of the business lines that were materially negative gross margins and we're in their nascency or just we're not performing. And where we landed was in a place where we have a distinct competitive advantage. We can really help people in a unique way in the marketplace that also happens to deliver on very healthy growth margins and

as well reinverse moving forward. So we've really been taking the era of growth at all costs is behind us, and we have been really focused on revenue driving growth moving forward. Well, Catherine, I'd love to talk just about the your main business because it's pretty fascinating and correct

me if I misinterpret what you're doing. But you basically take the full genome sequence of a person and try to look for genetic diseases and that type of thing is that is that basically it, So you're right on.

What we do is essentially take a genome's worth of information and we distill it into actionable insights, which is an incredibly daunting task if you think about the fact that it's only been about twenty years since the Human Genome Project delivered its first its first draft really, so we've been really working to develop the technology that can take a genome's worth of information and deliver it. Deliver the information in a way that provides a definitive diagnosis,

looking more comprehensively than a single gene like Bracca. We want to look at the entire scope of the genome. So what's the holy grail? Like when we think about this, like in an ideal world, you would say, okay, we've said we've mission accomplished. What would it mean for a patient and or a medical professional. Ultimately, we want to diagnose disease as quickly as possible, get them on the treatment that's best for them, so truly personalized medicine, and

get them on a healthier path. Now. Ideally what that means is we're all walking around today with DNA that can help inform our health and it can either help diagnose disease immediately or even get to the point where we can prevent disease. But there's one piece that would make that information even richer, and it's the information that

we find in each of our own mrs. So being able to have an MR, an electronic medical record, so being able to take a look historically, having a longitudinal look at each of us, and being able to say, what are the different lab tests that we're taken, What did an MRI say, what different treatments have I been on?

And be able to take the genomic information from within you and have that additional context from your own medical history that can then give us an even more precise diagnos So it's not like just the case of the out of the womb that we're we do this mapping and we know kind of what's to come. Is it

even that that is a fantastic starting point. So we are starting to do newborn screening, So we are we're working on a study right now called the guardians Any and that really is taking a look at healthy babies, sequencing their genomes and screening for two hundred and fifty conditions.

So that is a fantastic starting point, and we do want to get to that point where we can make this available and accessible to absolutely everyone, so your customers are more of the scientific community rather than me bringing my newborn to you and say can you sequence its correct? What we're doing is we're working with providers. Because I've been in the genomics industry for ten years, I've been in the healthcare industry for thirty. It gets more and

more before I know it. But really, what we want to be able to do is continue to work with providers and ensure that the information can be delivered responsibly, because when you have a healthy newborn, the last thing that you want is a whole bunch of worrisome information. What we want to be able to do is hold onto the information and when there is a simple be able to provide on demand whether or not there's an

underlying genetic condition. And I think what's really important about the study that we're doing right now, it is Wendy Chung, a fantastic pediatrician and genetesis out of Columbia, who is driving the entire thing. A thousand patients or a thousand families have really enrolled in this since it launched in October. What we did was a retrospective analysis. So we took a look at our own database at GENDX, and we

predominantly test children. And what we did was we said, if we took the Guardian screening criteria and applied it to our database to our patients, we actually would have been able to diagnose twenty percent of the children that we tested at birth. Instead, they went on for eight, nine, ten, eleven years without a diagnosis. So in other words, okay, so that's interesting because I keep thinking about we talk about disruption. We've seen it in a lot of different spaces.

We certainly saw it as a result of the pandemic, just in terms of buying online. You know, I never carried cash anymore as a result of it. But I do think about healthcare disruption and I have been thinking the genome, like this has got to be where it all comes from. Ultimately, how tricky is what you're doing is it is highly complicated. I mean, if you think

about it, why is it complicated? If you think about the twenty three thousand genes, there is a very big gap that we call variances of unknown significance, So there's just an uncertainty about the characterization of those variants. Are they disease causing or are they not. So we're still in the early days of learning so much about individual genes and variants within each gene that it creates in

inequity in and of the genome itself. There are certain variants that are very clear pathogenic or not pathogenic, but then there's all of these variants where we just don't have enough information. Yet. The more patients that we test, our underlying interpretation platform actually gets smarter, so data we need more patients, We need more data, and then we

learn more about those variants. And it strikes me as I don't want to sound like a sales rep for your company here, but it strikes me as the type of thing that if I were an insurance company, I'd probably be on board with this. You know, you'd want to identify these type of conditions early. I mean, is

that kind of the selling point for you guys? It is fascinating to see seventy percent of commercial payers, so insurance companies are paying for xomergino not at birth, so that's something we need to figure out in the future,

but they're paying for it in the pediatric setting. What's even more interesting, so Signa and United Healthcare earlier this year both put out new medical policy supporting utilization of our xome or genome as a first line treatment for exactly that it helps produce their costs because right now it's just a big trial and error of different tests which are inefficient and creates a lot of waste in

the system. So they are actually very much on board with ensuring that people are getting this technology because it helps them too. I want to get back to our conversation. Catherine Stouland, the CEO of Gendx, is with us here in studio. I want to get back to what you guys are doing, because we were just talking in our break, Mike and I with you, and there's a lot of

more interesting things that we want to get to. I want to ask you, though, you said in the break that this is your first time as a CEO of a company. It's publicly held, it's a small cap which can move around a lot. It's a week that I'm looking at your share prices it's down a lot, it's still up twenty five percent year to date. How do you think about those things as you run your company, and it sounds like it's going to be a long, you know, runaway if you will, in terms of what

you're trying to do. Absolutely well, we happen to be um I think, in a very rare position, just having raised one hundred and fifty million dollars in January, which was a very difficult market to be raising money in. Although glad you did it now so so glad that we did it, and that enables us to get to profitability in twenty twenty five. And to be in that position, I think is a very rare place to be. And what we've said to the team, the stock is going

to be noisy. It just will be. And the best thing that we can do is stay focused on executing on our plan. We have a clear plan that gets us right to that twenty twenty five profitability place. We have a lot of operating ricor for the team, so we're really really staying focused on driving revenue, driving volume, bringing down our cogs. So we try to keep the stock price noise as much out of the discussion as possible and really keep it focused. We have a lot

of work to do. We have a lot of patients that we're serving, we have a lot of customers. We work with hundreds and hundreds of hospitals across the United States, and so there is plenty to keep us busy. And what I say is, so long as we can deliver on the goals that we've put forth as a team internally report that out to the street, the stock price

is going to follow. So I very much believe that our board has been nothing but supportive of our kind of maniacal focus on execution this year and for the following year. So that's the best message that I think we can be delivering to the team. And fortunately we have a very mission based company. Employees come to the company sometimes because they've used our exom er genome to diagnose one of their own children. Wow. And so people really really care the samples that come into our lab.

It is usually of a child who is a rare disease. It sometimes is a sample from a baby who's in the necke and the parents are waiting to get an answer. So there is very much a connection of exactly how important the work that we're doing day in and day out, is in terms of being able to bring an answer which brings peace of mind to parents and it helps get their child on a healthier path sooner. You know, Catherine.

When I think about what your company does and what its ambitions are, some of the real trendy market buzzwords come to mind innovation, disruption. The problem with disruption is, you know, not everyone likes that right that there's often pushback, resist stance, And I'm picturing, you know, my kids seventy five year old pediatrician talking to you and really not being on the same page, not being trained in genetics.

So I'm curious, like, how, you know, what are the roadblocks to further adoption of this type of technology and using it in diagnosis and treatment. I assume there's probably some pushback from the medical community that is at risk of being disrupted from this. Is that Is that fair

to say? So, it's interesting we have a groundswell of support from medical geneticists who are well equipped to be able to interpret the information, know which patients to use the information on, and they have put out very clear

guidelines that other providers listen to. And what's interesting now is if you look at the medical societies outside of medical genetics, so the American Epilepsy Society, they've come out to tell their practitioners a neurologists and pediatric neurologists that if you think that a child has may have epilepsy, you're witnessing a seizure, you should use an exome or

a genome as a frontline. So we are starting to see providers from other groups outside of the medical geneticists receive the message that this is something that can help them. It's our job to make it as easy as possible for them to identify which patients are eligible for it, and then in turn, this is something we have not solved yet. In turn, we have to be able to deliver the information in a way that is easily understandable to a non genetics expert. So that is a probably

interpretation the interpretation test itself exactly. So do you guys do that? We do that. That is part of what we do exquisitely well is being able to take all of that information and say this is a positive test result, this is what it means for your patients. But because historically it really has been geared towards a genetics expert.

Part of my challenge to the team is to say, make it understandable for the seventy five year pediatrician, because then it becomes much less of a barrier for them to utilize it. So, how what does the test cost? So we are in a very fortunate position after a lot of work and publishing a lot of data. Seventy percent of commercial payers pay for our services. We're continuing to get more and more coverage and in fact, United Insignia just issued coverage earlier this year saying you utilize

this testing. So what So usually four out of five patients have zero out of pocket, which is great. Our goal is to make sure that, from an equitability standpoint, everyone has access. We work with state medicaids and in fact there's six states right now cover xome and genome for baby as well as parents. So we're starting to see even more and more coverage across the board. But if not, what would it cost peple? Think about thirty seconds lap. If not, then it's about thirty five hundred dollars.

I feel like I have a million more questions. You wrap it up real quick. Well, I was to say that, you know, is it a matter of a doctor suspecting a patient has something and sending them to you, or would it be more prophylactic, say, ideally you'd want to do it's everyone. I imagine ideally you want to do it to everyone. But if there is a potential that there is an underlying genetic condition, we want the clinician

to order from us. We'll get them an answer and hopefully get that and that's when it's covered by insurance. I guess yeah. But the more data that comes in, the more tests that are done, it gets even better and better it does. And the more testing we do, the more we learn that more people actually are impacted by this. Hopefully you come back in a few months and talk more about the progress you guys are doing. Katherine Stulin, chief executive Officer of gene d x US.

Here in our interactive broker's studio, you're listening to Bloomberg Radio