Company Quick10K Filing
10-Q 2020-03-31 Filed 2020-05-11
10-K 2019-12-31 Filed 2020-03-25
10-Q 2019-09-30 Filed 2019-11-12
S-1 2019-08-23 Public Filing
8-K 2020-05-11 Earnings, Exhibits
8-K 2020-03-25 Earnings, Exhibits
8-K 2020-03-12 Enter Agreement, Off-BS Arrangement
8-K 2020-01-09
8-K 2019-11-19 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2019-11-18
8-K 2019-11-12 Earnings, Exhibits
8-K 2019-09-23 Amend Bylaw, Other Events, Exhibits

XGN 10Q Quarterly Report

Part I. Financial Information
Item 1. Condensed Financial Statements
Note 1. Organization
Note 2. Summary of Significant Accounting Policies
Note 3. Other Financial Information
Note 4. Borrowings
Note 5. Commitments and Contingencies
Note 6. Fair Value Measurements
Note 7. Redeemable Convertible Preferred Stock
Note 8. Stockholders' Equity
Note 9. Stock Option Plan
Note 10. Related Parties
Note 11. Covid - 19
Note 12. Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 xgn311-33120.htm
EX-31.2 xgn312-33120.htm
EX-32.1 xgn321-33120.htm

Exagen Earnings 2020-03-31

Balance SheetIncome StatementCash Flow


Washington, D.C. 20549

 FORM 10-Q

(Mark One)

For the quarterly period ended March 31, 2020

Commission File Number: 001-39049

(Exact name of registrant as specified in its charter)

(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
1261 Liberty Way,Suite C
(Address of Principal Executive Offices)(Zip Code)

(Registrant's Telephone Number, Including Area Code)
 Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareXGNThe Nasdaq Global Market
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Securities Exchange Act of 1934.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act  
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No
Total shares of common stock outstanding as of the close of business on May 8, 2020 was 12,640,217.

Part I.Financial Information
Item 1.
Item 2.
Item 3.
Item 4.
Part II.Other Information
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

Part I. Financial Information
Item 1. Condensed Financial Statements
Exagen Inc.
Condensed Balance Sheets
(in thousands, except share and per share data)

 March 31, 2020December 31, 2019
Current assets:
Cash and cash equivalents$68,648  $72,084  
Accounts receivable, net5,843  5,715  
Prepaid expenses and other current assets3,084  3,451  
Total current assets77,575  81,250  
Property and equipment, net1,376  1,380  
Goodwill5,506  5,506  
Other assets187  174  
Total assets$84,644  $88,310  
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable$2,566  $1,476  
Accrued liabilities4,763  4,419  
Total current liabilities7,329  5,895  
Borrowings-non-current portion, net of discounts and debt issuance costs26,050  25,854  
Deferred tax liabilities147  264  
Other non-current liabilities581  638  
Total liabilities34,107  32,651  
Commitments and contingencies (Note 5)
Stockholders' equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized, no shares issued or outstanding at March 31, 2020 and December 31, 2019
Common stock, $0.001 par value; 200,000,000 shares authorized at March 31, 2020 (unaudited) and December 31, 2019; 12,627,056 and 12,560,990 shares issued and outstanding at March 31, 2020 (unaudited) and December 31, 2019, respectively
13  13  
        Additional paid-in capital
220,689  220,248  
Accumulated deficit(170,165) (164,602) 
Total stockholders' equity50,537  55,659  
Total liabilities and stockholders' equity$84,644  $88,310  
The accompanying notes are an integral part of these financial statements


Exagen Inc.
Unaudited Condensed Statements of Operations
(in thousands, except share and per share data)

 Three Months Ended March 31,
Revenue$9,584  $9,260  
Operating expenses:
Costs of revenue4,545  4,442  
Selling, general and administrative expenses9,626  6,179  
Research and development expenses634  513  
Total operating expenses14,805  11,134  
Loss from operations(5,221) (1,874) 
Interest expense(631) (901) 
Other income, net171  71  
Loss from operations(5,681) (2,704) 
Income tax benefit118    
Net loss(5,563) (2,704) 
Accretion of redeemable convertible preferred stock  (2,114) 
Net loss attributable to common stockholders (Note 2)$(5,563) $(4,818) 
Net loss per share, basic and diluted (Note 2)$(0.44) $(76.46) 
Weighted-average number of shares used to compute net loss per share, basic and diluted (Note 2)12,595,715  63,016  
The accompanying notes are an integral part of these financial statements


Exagen Inc.
Unaudited Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)
(in thousands, except share and per share amounts)

 Common StockAdditional
Balances at December 31, 201912,560,990  $13  $220,248  $(164,602) $55,659  
Exercise of stock options43,700  —  10  —  10  
Stock-based compensation—  —  431  —  431  
Net exercise of common stock warrants22,366  —  —  —    
Net loss—  —  —  (5,563) (5,563) 
Balances at March 31, 202012,627,056  $13  $220,689  $(170,165) $50,537  

Preferred Stock
Common StockAdditional
Balances at December 31, 2018532,606,084  $105,232  63,005  $  $40,598  $(152,564) $(111,966) 
Accretion of redeemable convertible preferred stock
—  2,114  —  —  (2,114) —  (2,114) 
Exercise of stock options—  —  24    —  —    
Stock-based compensation—  —  —  —  12  —  12  
Issuance of Series G redeemable convertible preferred stock for aggregate proceeds of $0.078 per share, net of issuance costs of $96 (Note 7)
97,646,289  7,520  —  —  —  —  —  
Net loss—  —  —  —  —  (2,704) (2,704) 
Balances at March 31, 2019630,252,373  $114,866  63,029  $  $38,496  $(155,268) $(116,772) 
The accompanying notes are an integral part of these financial statements


Exagen Inc.
Unaudited Statements of Cash Flows
(in thousands)
 Three Months Ended March 31,
Cash flows from operating activities:
Net loss$(5,563) $(2,704) 
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization126  182  
Amortization of debt discount and debt issuance costs65  201  
Non-cash interest expense
131  159  
Deferred income taxes(117)   
Loss on disposal of assets  4  
Stock-based compensation431  12  
Changes in assets and liabilities:
Accounts receivable, net(128) (487) 
Prepaid expenses and other current assets367  378  
Other assets(14)   
Accounts payable1,054  145  
Accrued and other liabilities347  160  
Net cash used in operating activities(3,301) (1,950) 
Cash flows from investing activities:
Purchases of property and equipment(84) (363) 
Net cash used in investing activities(84) (363) 
Cash flows from financing activities:
Proceeds from sale of common stock upon exercise of stock options10    
Principal payment on capital lease obligations(61) (20) 
Proceeds from issuance of Series G redeemable convertible preferred stock, net of issuance costs  3,770  
Payments of deferred offering costs  (274) 
Net cash (used in) provided by financing activities(51) 3,476  
Net change in cash, cash equivalents and restricted cash(3,436) 1,163  
Cash, cash equivalents and restricted cash, beginning of period72,184  13,264  
Cash, cash equivalents and restricted cash, end of period$68,748  $14,427  
Supplemental disclosure of cash flow information:
Cash paid for interest expense$432  $502  
Supplemental disclosure of non-cash items:
Accretion to redemption value of redeemable convertible preferred stock$  $2,114  
Equipment purchased under capital lease obligations$2  $  
Costs incurred, but not paid, in connection with capital expenditures$37  $12  
Issuance costs included in accounts payable and accrued liabilities$  $750  
The accompanying notes are an integral part of these financial statements

Exagen Inc.
Notes to Unaudited Interim Condensed Financial Statements

Note 1. Organization
Description of Business
Exagen Inc. (the Company) was incorporated under the laws of the state of New Mexico in 2002, under the name Exagen Corporation. In 2003, Exagen Corporation changed its state of incorporation from New Mexico to Delaware by merging with and into Exagen Diagnostics, Inc., pursuant to which the Company changed its name to Exagen Diagnostics, Inc. In January 2019, the Company changed its name to Exagen Inc. The Company is dedicated to transforming the care continuum for patients suffering from debilitating and chronic autoimmune diseases by enabling timely differential diagnosis and optimizing therapeutic intervention.
The Company has suffered recurring losses and negative cash flows from operating activities since inception. The Company anticipates that it will continue to incur net losses into the foreseeable future. At March 31, 2020, the Company had cash and cash equivalents of $68.6 million and had an accumulated deficit of $170.2 million, respectively. Since inception, the Company has financed its operations primarily through private placements of preferred securities, the sale of common stock through its initial public offering (IPO) and debt financing arrangements. Based on the Company's current business plan, management believes that its existing capital resources will be sufficient to fund the Company's obligations for at least twelve months following the issuance of these financial statements.
To execute its business plans, the Company may need additional funding to support its continuing operations and pursue its growth strategy. Until such time as the Company can achieve significant cash flows from operations, if ever, it expects to finance its operations through the sale of its stock, debt financings or other strategic transactions. Although the Company has been successful in raising capital in the past, there is no assurance that it will be successful in obtaining such additional financing on terms acceptable to the Company, if at all. The terms of any financing may adversely affect the holdings or the rights of the Company's stockholders. If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its programs, product portfolio expansion plans or commercialization efforts, which could have a material adverse effect on the Company's business, operating results and financial condition and the Company's ability to achieve its intended business objectives.

Note 2. Summary of Significant Accounting Policies
Basis of Presentation and Use of Estimates
The accompanying interim condensed balance sheet as of March 31, 2020, the condensed statements of operations and the condensed statements of redeemable convertible preferred stock and stockholders' equity (deficit) for the three months ended March 31, 2020 and 2019 and cash flows for the three months ended March 31, 2020 and 2019 and the related footnote disclosure are unaudited and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (SEC), and with accounting principles generally accepted in the United States (GAAP) applicable to interim financial statements. In management's opinion, the unaudited interim condensed financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company's financial position as of March 31, 2020 and its results of operations for the three months ended March 31, 2020 and 2019 and cash flows for the three months ended March 31, 2020 and 2019 in accordance with GAAP. The results for the three months ended March 31, 2020 are not necessarily indicative of the results expected for the full fiscal year or any other interim period. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. These unaudited condensed financial statements should be

read in conjunction with the Company’s audited financial statements for the year ended December 31, 2019, included in its Annual Report on Form 10-K filed with the SEC on March 25, 2020.
The preparation of the accompanying condensed financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the condensed financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ from those estimates.
Significant estimates and assumptions made in the accompanying condensed financial statements include, but are not limited to revenue recognition, the fair value of financial instruments measured at fair value, the recoverability of its long-lived assets (including goodwill), net deferred tax assets (and related valuation allowance), and for periods prior to the IPO, the fair value of the Company's common stock and redeemable convertible preferred stock. The Company evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts those estimates and assumptions when facts and circumstances dictate. Actual results could materially differ from those estimates.
Concentration of Credit Risk and Other Risk and Uncertainties
Financial instruments that potentially subject the Company to credit risk consist principally of cash, cash equivalents, and accounts receivable. Substantially all the Company's cash and cash equivalents are held at one financial institution that management believes is of high credit quality. Such deposits may, at times, exceed federally insured limits.
Significant payers and customers are those which represent more than 10% of the Company's total revenue or accounts receivable balance at each respective balance sheet date. For each significant payer and customer, revenue as a percentage of total revenue and accounts receivable as a percentage of total accounts receivable are as follows:
 Three Months Ended
March 31,
Medicare25 %26 %
Blue Shield12 %13 %
United Healthcare10 %11 %
Medicare Advantage13 %10 %

 Accounts Receivable
 March 31, 2020December 31, 2019
United Healthcare22 %22 %
Blue Shield14 %15 %
Janssen (SIMPONI®)
 19 %

*Less than 10%.
For the three months ended March 31, 2020 and 2019, approximately 83%, and 85%, respectively, of the Company's revenue was related to the AVISE® CTD test.
The Company is dependent on key suppliers for certain laboratory materials. For the three months ended March 31, 2020 and 2019, approximately 96% and 94%, respectively, of the Company's inventories were purchased from two suppliers. An interruption in the supply of these materials would impact the Company's ability to perform testing services.

Disaggregation of Revenue
The following table includes the Company's revenues as disaggregated by payer and customer category (in thousands):
 Three Months Ended March 31,
Healthcare insurers$6,062  $5,461  
Government2,245  2,432  
Client1,082  1,105  
Other(1)195  162  
Janssen (SIMPONI®)
Total revenue$9,584  $9,260  
(1)Includes patient self-pay that is immaterial.
Fair Value Measurements
The carrying value of the Company's cash and cash equivalents, other assets and accrued liabilities approximate fair value due to the short-term nature of these items. Based on the borrowing rates currently available to the Company for debt with similar terms and consideration of default and credit risk, the carrying value of the Company's long-term borrowings approximates its fair value, which is considered a Level 2 input.
Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.
The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows:
Level 1 - Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices included within Level I that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and
Level 3 - Unobservable inputs that are supported by little or no market activity for the related assets or liabilities.
The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Cash, Cash Equivalents and Restricted Cash
The Company considers all highly-liquid investments purchased with a remaining maturity date upon acquisition of three months or less to be cash equivalents and are stated at cost, which approximates fair value.
In 2016, the Company entered into an arrangement with a financial institution with which it has an existing banking relationship whereby in exchange for the issuance of corporate credit cards, the Company agreed to obtain a $0.1 million certificate of deposit with this financial institution as collateral for the balances borrowed on these credit cards. The Company has classified the value of this certificate of deposit (including all interest earned thereon) within other assets in the accompanying balance sheets. The Company has the right to terminate the credit card program at any time. Upon termination of the credit card program and repayment of all outstanding balances owed, the Company may redeem the certificate of deposit (and all interest earned thereon).

Cash, cash equivalents and restricted cash presented in the accompanying condensed statements of cash flows consist of the following (in thousands):
 March 31, 2020December 31, 2019
Cash and cash equivalents$68,648  $72,084  
Restricted cash100  100  
$68,748  $72,184  
Revenue Recognition
Substantially all of the Company's revenue has been derived from sales of its testing products and is primarily comprised of a high volume of relatively low-dollar transactions. The Company primarily markets its testing products to rheumatologists and their physician assistants in the United States. The healthcare professionals who order the Company's testing products and to whom test results are reported are generally not responsible for payment for these products. The parties that pay for these services (the Payers) consist of healthcare insurers, government payers (primarily Medicare and Medicaid), client payers (i.e., hospitals, other laboratories, etc.), and patient self-pay. The Company's service is a single performance obligation that is completed upon the delivery of test results to the prescribing physician which triggers revenue recognition.
Payers are billed at the Company's list price. Net revenues recognized consist of amounts billed net of allowances for differences between amounts billed and the estimated consideration the Company expects to receive from such payers. The process for estimating revenues and the ultimate collection of accounts receivable involves significant judgment and estimation. The Company follows a standard process, which considers historical denial and collection experience, insurance reimbursement policies and other factors, to estimate allowances and implicit price concessions, recording adjustments in the current period as changes in estimates. Further adjustments to the allowances, based on actual receipts, is recorded upon settlement. The transaction price is estimated using an expected value method on a portfolio basis. The Company's portfolios are grouped per payer (i.e. each individual third-party insurance, Medicare, client payers, patient self-pay, etc.) and per test basis.
Collection of the Company's net revenues from payers is normally a function of providing complete and correct billing information to the healthcare insurers and generally occurs within 30 to 90 days of billing. Contracts do not contain significant financing components based on the typical period of time between performance of services and collection of consideration.
Janssen Promotion Agreement
In December 2018, the Company entered into a co-promotion agreement with Janssen Biotech, Inc. (Janssen) to co-promote SIMPONI® in the United States (the Janssen Agreement). The Company is responsible for the costs associated with its salesforce over the course of such co-promotion. Janssen is responsible for all other aspects of the commercialization of SIMPONI® under the Janssen agreement. In exchange for the Company's sales and co-promotional services, the Company is entitled to a quarterly tiered promotion fee ranging from $750 to $1,250 per prescription based on the incremental increase in total prescribed units of SIMPONI® for that quarter over a predetermined baseline. The promotion fee is determined on a sliding rate, ranging from the high hundreds of dollars to the low one thousands per prescribed unit of SIMPONI®, depending on the number of increased prescriptions, and varies per increased prescription. In addition, during the term of the Janssen agreement, the Company is restricted from promoting any other biologic or Janus kinase inhibitor, or JAK inhibitor, used for treatment of indications covered by the agreement without first obtaining Janssen's written consent.
In September 2019, the Company exercised its option to extend the term of the Janssen Agreement to December 31, 2021. Janssen may terminate the Janssen Agreement at any time for any reason upon 30 days' notice to the Company, and the Company may terminate the Janssen Agreement for any reason at the end of any calendar quarter upon 30 days' notice to Janssen. Either party may terminate the Janssen Agreement in the event of the other party's default of any of its material obligations under the agreement if such default remains uncured for a specified period of time following receipt of written notice of such default.
The Company's obligations relating to sales and co-promotion services for SIMPONI® is a series of single performance obligations since Janssen simultaneously receives and consumes benefits provided by the Company's

sales and co-promotional services. The method for measuring progress towards satisfying the performance obligations is based on prescribed units in excess of the contractual baseline at the contractual rate earned per unit since the agreement is cancelable. The Company recognized no co-promotional revenue and approximately $0.1 million during the three months ended March 31, 2020 and 2019, respectively. The related expenses for marketing SIMPONI® are included in selling, general and administrative expenses and are expensed as incurred.
Research and Development
Costs associated with research and development activities are expensed as incurred and include, but are not limited to, personnel-related expenses, including stock-based compensation expense, materials, laboratory supplies, consulting costs, costs associated with setting up and conducting clinical studies and allocated overhead including rent and utilities.
Advertising and Marketing Costs
Costs associated with advertising and marketing activities are expensed as incurred. Total advertising and marketing costs were approximately $0.4 million and $0.3 million for the three months ended March 31, 2020 and 2019, respectively, and are included in selling, general and administrative expenses in the accompanying condensed statements of operations.
Shipping and Handling Costs
Costs incurred for shipping and handling are included in costs of revenue in the accompanying condensed statements of operations and totaled approximately $0.4 million for the three months ended March 31, 2020 and 2019.
Stock-Based Compensation
The Company recognizes compensation expense for all stock-based awards to employees and directors based on the grant-date estimated fair values over the requisite service period of the awards (usually the vesting period) on a straight-line basis. The fair value of stock options is determined using the Black-Scholes-Merton (BSM) option pricing model, which requires management to make certain assumptions regarding a number of complex and subjective variables. Equity award forfeitures are recorded as they occur.
The BSM option pricing model incorporates various estimates, including the fair value of the Company's common stock, expected volatility, expected term and risk-free interest rates. The weighted-average expected term of options was calculated using the simplified method. This decision was based on the lack of relevant historical data due to the Company's limited historical experience. In addition, due to the Company's limited historical data, the estimated volatility incorporates the historical volatility over the expected term of the award of comparable companies whose share prices are publicly available. The risk-free interest rate for periods within the contractual term of the option is based on the U.S. Treasury yield in effect at the time of grant. The dividend yield was zero, as the Company has never declared or paid dividends and has no plans to do so in the foreseeable future.
Upon the effective date of the IPO, the Company began using the closing price of its common stock as the fair value of its common stock on the corresponding date.
Comprehensive Loss
Comprehensive loss is defined as a change in equity of a business enterprise during a period, resulting from transactions from nonowner sources. There have been no items qualifying as other comprehensive loss and, therefore, for all periods presented, the Company's comprehensive loss was the same as its reported net loss.
Net Loss Per Share
Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods. Potentially dilutive common stock equivalents are comprised of

redeemable convertible preferred stock, warrants for the purchase of redeemable convertible preferred and common stock and options outstanding under the Company's stock option plans. For the three months ended March 31, 2020 and 2019, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as the inclusion of the potentially dilutive securities would be antidilutive.
Potentially dilutive securities not included in the calculation of diluted net loss per share because to do so would be anti-dilutive are as follows (in common stock equivalent shares):
 Three Months Ended March 31,
Redeemable convertible preferred stock  5,734,680  
Warrants to purchase redeemable convertible preferred stock  224,493  
Warrants to purchase common stock436,581  934,789  
Common stock options1,630,014  662,365  
Total2,066,595  7,556,327  

Segment Reporting
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. The Company views its operations as, and manages its business in, one operating segment.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB), or other standard setting bodies and adopted by the Company as of the specified effective date. Under the Jumpstart Our Business Startups Act of 2012 (JOBS Act), the Company meets the definition of an emerging growth company. The Company has elected to use the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company's financial position or results of operations upon adoption.
In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). The new topic supersedes Topic 840, Leases, and increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requires disclosures of key information about leasing arrangements. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, which provides narrow amendments to clarify how to apply certain aspects of the new lease standard, and ASU 2018-11, Leases: Targeted Improvements, which was issued to provide relief to companies from restating comparative periods. Pursuant to this ASU, in the period of adoption the Company will not restate comparative periods presented in its condensed financial statements. The effective date of this guidance for public companies is for reporting periods beginning after December 15, 2018. As an emerging growth company as defined in the JOBS Act, the Company has elected to delay adoption of this ASU until January 1, 2021. Topic 842 mandates a modified retrospective transition method. The Company intends to adopt the new lease standard using a cumulative effect to accumulated deficit and will elect the package of practical expedients, which among other things will allow the Company to carry forward its historical lease classification. The Company is currently evaluating the impact of Topic 842 on its condensed financial statements.
Recently Adopted Accounting Standards
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement: Disclosure Framework--Changes to the Disclosure Requirements for Fair Value Measurement, which adds and modifies certain disclosure requirements for fair value measurements. Under the new guidance, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, or valuation processes for Level 3 fair value measurements. However, public companies will be required to disclose the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and related changes in

unrealized gains and losses included in other comprehensive income. The narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all period presented upon their effective date. This update is effective for annual periods beginning after December 15, 2019, and interim periods within those periods, and early adoption is permitted. The Company adopted this guidance on January 1, 2020, and the adoption did not have a material impact on its condensed financial statements.

Note 3. Other Financial Information
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of the following (in thousands):
 March 31, 2020December 31, 2019
Diagnostic testing supplies$1,299  $1,427  
Prepaid product royalties110  123  
Prepaid maintenance and insurance contracts1,651  1,768  
Other prepaid assets24  133  
Prepaid and other current assets$3,084  $3,451  

Property and Equipment
Property and equipment consist of the following (in thousands):
 March 31, 2020December 31, 2019
Furniture and fixtures$32  $25  
Laboratory equipment2,501  2,228  
Computer equipment and software891  851  
Leasehold improvements424  424  
Construction in progress49  247  
Total property and equipment3,897  3,775  
Less: accumulated depreciation and amortization(2,521) (2,395) 
Property and equipment, net$1,376  $1,380  
Depreciation and amortization expense for the three months ended March 31, 2020 and 2019 was approximately $0.1 million and $0.2 million, respectively. At March 31, 2020 and December 31, 2019, the gross book value of assets under capital lease was $1.1 million and $0.8 million, respectively, and is classified in "Laboratory equipment" in the table above.

Accrued Liabilities
Accrued liabilities consist of the following (in thousands):

 March 31, 2020December 31, 2019
Accrued payroll and related expenses$2,733  $2,362  
Accrued interest145  145  
Accrued purchases of goods and services282  319  
Accrued royalties407  727  
Accrued clinical study activity50  40  
Capital lease obligations, current portion241  238  
Other accrued liabilities905  588  
Accrued liabilities$4,763  $4,419  

Note 4. Borrowings
2017 Term Loan
In September 2017, the Company executed a term loan agreement (the 2017 Term Loan) with Innovatus Life Sciences Lending Fund I, LP (Innovatus) and borrowed $20.0 million, $17.8 million of which was immediately used to repay the Company's existing loan with Capital Royalty Partners II L.P. and its affiliates. On December 7, 2018, the Company borrowed an additional $5.0 million under the 2017 Term Loan. At March 31, 2020, no additional amounts remain available to borrow under the 2017 Term Loan.
In November 2019, the Company executed the First Amendment to the Loan and Security Agreement (Loan Amendment). The interest rate on all borrowings under the Loan Amendment is 8.5%, of which 2.0% is paid in-kind in the form of additional term loans (PIK Loans) until December of 2022, after which interest accrues at an annual rate of 8.5%. The Company has estimated the effective interest rate of this loan to be approximately 10%. Accrued interest is due and payable monthly, unless the Company elects to pay paid-in-kind interest. The outstanding principal and accrued interest on the Loan Amendment will be repaid in twenty-four equal monthly installments commencing in December 2022. Upon repayment of the final installment under the Loan Amendment, the Company is required to pay an additional fee of $1.0 million. This obligation is being accreted into interest expense over the term of Loan Amendment using the effective interest method. For the three months ended March 31, 2020 and 2019, the Company issued PIK Loans totaling $0.1 million and $0.2 million, respectively.
If the Loan Amendment is prepaid before November 19, 2020, the Loan Amendment requires a prepayment premium of 3% of the aggregate outstanding principal. The prepayment premium decreases by 1% during each subsequent twelve-month period after November 19, 2020.
The Loan Amendment is collateralized by a first priority security interest on substantially all of the Company's assets, including intellectual property. The affirmative covenants of the Loan Amendment require that the Company timely file taxes, maintain good standing and government compliance, maintain liability and other insurance, provide prompt notification of significant corporate events, and furnish audited financial statements within 150 days of fiscal year end without qualification as to the scope of the audit or as to going concern and without any other similar qualification.
The affirmative covenants require that the Company achieve a specified level of revenue, as measured quarterly on a rolling twelve-month basis, and commencing with the quarter ending December 31, 2019. The Company believes it is reasonably possible that it may fail to meet this affirmative covenant in the second or third quarter of 2020 as a result of the COVID-19 pandemic and its adverse impact on testing volumes. The consequences of failing to achieve the performance covenant will be waived if, within sixty days of failing to achieve the performance covenant, the Company issues additional equity securities or subordinated debt with net proceeds sufficient to fund any cash flow deficiency generated from operations, as defined. In addition, the Loan Amendment requires that the Company maintain certain levels of minimum liquidity. The Company is required to maintain an unrestricted cash balance of $2.0 million.
The negative covenants provide, among other things, that without the prior consent of Innovatus subject to certain exceptions, the Company may not dispose of certain assets, engage in certain business combinations or acquisitions, incur additional indebtedness or encumber any of the Company's property, pay dividends on the

Company's capital stock or make prohibited investments. The Loan Amendment agreement provides that an event of default will occur if, among other triggers, (i) the Company defaults in the payment of any amount payable under the agreement when due, (ii) there occurs any circumstance(s) that could reasonably be expected to result in a material adverse effect on the Company's business, operations or condition, or on the Company's ability to perform its obligations under the agreement, (iii) the Company becomes insolvent, (iv) the Company undergoes a change in control or (v) the Company breaches any negative covenants or certain affirmative covenants in the agreement or, subject to a cure period, otherwise neglects to perform or observe any material item in the agreement.
At March 31, 2020, the Company was in compliance with all covenants of the Loan Amendment.
Upon an event of default in any of the Loan Amendment covenants, the repayment of the Loan Amendment may be accelerated and the applicable interest rate will be increased by 4.0% until the default is cured. Although repayment of the Loan Amendment can be accelerated under certain circumstances, the Company believes acceleration of this loan is not probable as of the date of these condensed financial statements. Accordingly, the Company has reflected the amounts of the Loan Amendment due beyond twelve months of the balance sheet date as non-current.
Future Minimum Payments on the Outstanding Borrowings
As of March 31, 2020, future minimum aggregate payments, including interest, for outstanding borrowings under the Loan Amendment are as follows (in thousands):
March 31, 2020
2020 (remaining)$1,299  
Unamortized debt discount and issuance costs(367) 
Total borrowings, net of discounts and debt issuance costs$26,050  

Note 5. Commitments and Contingencies
As of March 31, 2020, the Company leases an office and laboratory space in Vista, California, under leases that expire in January 2026, with an option to extend a portion of the lease for an additional 5-year period. In addition, the Company also leases an additional office space in Vista, California, under a lease that expires in January 2026 with an option to extend the lease for an additional 5-year period. The Company's lease payments under each of these leases are subject to escalation clauses.
For the three months ended March 31, 2020 and 2019, rent expense was $0.1 million.
Acquisition-related liabilities
In connection with the acquisition of the medical diagnostics division of Cypress Bioscience, Inc. in 2010, the Company was required to pay certain amounts in the event that certain revenue milestones were achieved and upon the first commercial sale of a product associated with this acquisition. The acquisition also included amounts that may be due under several licensing agreements. All milestone payments other than one have been paid as of December 31, 2017. The remaining milestone obligation is for an additional $2.0 million payment due to Prometheus Laboratories, Inc. (Prometheus) for which the fair value was determined to be zero at March 31, 2020 and December 31, 2019.

In addition, the Company has ongoing royalty payment obligations on net sales of products which incorporate certain acquired technologies ranging from 2.5% to 7.5%. Future royalties payable under these arrangements are limited to the lesser of an aggregate of $4.2 million (including an upfront payment of $100,000) or the total royalties earned through January 1, 2024.
Licensing Agreements
The Company has licensed technology for use in its diagnostic tests. In addition to the milestone payments required by these agreements as described above, individual license agreements generally provide for ongoing royalty payments on net sales of products which incorporate licensed technology, as defined, ranging from 3.0% to 20.0%. Royalties are accrued when earned and recorded in costs of revenue in the accompanying condensed statement of operations.
Supply Agreement
In 2019, the Company entered into an amended supply agreement with one supplier for reagents which includes a minimum annual purchase commitment of $4.2 million for each of the three years covered by the original agreement, which terminates in 2021.
In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications; including subpoenas and other civil investigative demands, from governmental agencies, Medicare or Medicaid payers and managed care organizations reviewing billing practices or requesting comment on allegations of billing irregularities that are brought to their attention through billing audits or third parties. The Company's exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.
The Company is not a party to any litigation and does not have contingent reserves established for any litigation liabilities. From time to time, the Company may be subject to various legal proceedings that arise in the ordinary course of business activities.

Note 6. Fair Value Measurements
The following table sets forth the Company's financial instruments that were measured at fair value on a recurring basis within the fair value hierarchy (in thousands):
 March 31, 2020
 TotalLevel 1Level 2Level 3
Money market funds$67,431  $67,431  $  $  
 December 31, 2019
 TotalLevel 1Level 2Level 3
Money market funds$70,760  $70,760  $  $  
The fair value of the Company's money market funds is based on quoted market prices. 

Note 7. Redeemable Convertible Preferred Stock

Series G Financing
In January 2019, the Company entered into an agreement with new and certain existing preferred stockholders to issue shares of Series G redeemable convertible preferred stock in multiple separate closings at a per share price of $0.078 in each closing. In conjunction with the issuance of the Series H redeemable convertible preferred stock, each share of issued and outstanding Series G redeemable convertible preferred stock was converted into shares of Series H redeemable convertible preferred stock.
Upon completion of the Company's IPO in September 2019, an aggregate of 7,816,643 shares of common stock, excluding warrant conversions, were issued to the holders of the Company's Series A-3, Series B-3, Series C, Series D, Series E, Series F and Series H redeemable convertible preferred stockholders upon the automatic conversion of all shares of redeemable convertible preferred stock to common stock. As a result, no shares of redeemable convertible preferred stock remain outstanding at March 31, 2020.

Note 8. Stockholders' Equity
Outstanding Warrants
The following equity classified warrants to purchase common stock were outstanding as of March 31, 2020:
SharesExercise PriceIssuance dateExpiration date
Common stock warrants259,975$1.84  January 19, 2016January 19, 2026
Common stock warrants71,7531.84March 31, 2016March 31, 2026
Common stock warrants1311.84April 1, 2016April 1, 2026
Common stock warrants (1)83,77814.32September 8, 2017September 8, 2024
Common stock warrants (1)20,94414.32December 7, 2018December 7, 2025
(1) Prior to the conversion upon IPO, the remaining warrants were for the purchase of Series F redeemable convertible preferred stock.
During the first quarter of 2020, warrants to purchase common stock for 24,692 shares of the Company's common stock were exercised via cashless exercise resulting in the issuance of 22,366 shares of common stock

Note 9. Stock Option Plan
In September 2019, the Company's Board of Directors adopted, and the Company's stockholders approved, the 2019 Incentive Award Plan (the 2019 Plan). Under the 2019 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units and other awards to individuals who are then employees, officers, non-employee directors or consultants of the Company or its subsidiaries. A total of (i) 2,011,832 shares of common stock plus (ii) shares subject to awards granted under the 2013 Plan on or before the effective date of the 2019 Plan became available for issuance under the 2019 Plan and will initially be reserved for issuance under the 2019 Plan. The 2019 Plan contains an "evergreen provision" that allows annual increases in the number of shares available for issuance on the first day of each calendar year through January 1, 2029 in an amount equal to the lesser of: (i) 4% of the outstanding capital stock on each December 31st, or (ii) such lesser amount as determined by the Board of Directors. As of March 31, 2020, 1,488,919 shares remained available for future awards.
The options generally expire ten years after the date of grant and are exercisable to the extent vested. Vesting is established by the Board of Directors and is generally four years from the date of grant. 
Activity under the Company's stock option plans is set forth below:

Number of
Exercise Price
Term (Years)
Outstanding, December 31, 20191,375,542  $8.33  9.16$23,654  
Granted514,131  $19.51  
Exercised(43,700) $0.26  
Forfeited(215,542) $9.73  
Expired(417) $19.04  
Outstanding, March 31, 2020
1,630,014  $11.88  9.22$9,324  
Vested and expected to vest, March 31, 2020
1,630,014  $11.88  9.22$9,324  
Options exercisable, March 31, 2020
199,168  $3.77  7.90$2,740  
The intrinsic value is calculated as the difference between the fair value of the Company's common stock and the exercise price of the stock options.
Stock-Based Compensation Expense
The fair value of employee stock options was estimated using the following assumptions to determine the fair value of stock options granted:
 Three Months Ended March 31,
Expected volatility
Risk-free interest rate
Dividend yield
Expected term (in years)
Total non-cash stock-based compensation expense recorded related to options granted in the condensed statement of operations is as follows (in thousands):
 Three Months Ended March 31,
Cost of revenue$6  $1  
Selling, general and administrative422  10  
Research and development3  1  
Total$431  $12  
As of March 31, 2020, total unrecognized compensation cost was $8.7 million, which is expected to be recognized over a remaining weighted-average vesting period of 3.3 years.

Note 10. Related Parties
The closings of the Series G financing described in Note 7 were issued to existing holders of the Company's redeemable convertible preferred stock, including certain members of our Board of Directors.

Note 11. COVID-19
The current COVID-19 worldwide pandemic has presented substantial public health challenges and is affecting the Company's employees, patients, physicians and other healthcare providers, communities and business operations, as well as the U.S. and global economies and financial markets. International and U.S. governmental authorities in impacted regions are taking actions in an effort to slow the spread of COVID-19, including issuing varying forms of "stay-at-home" orders, and restricting business functions outside of one's home. As a result of these limitations and reordering of priorities across the U.S. healthcare system, which have resulted in a reduction in patient flow, the Company's test volumes began to decrease in the second half of March 2020. From March 15 through March 31

and during April as compared to the same period a year ago, the Company has experienced AVISE® CTD test volumes decreases of 12% and 56%, respectively. The Company expects its test volumes to continue to be adversely affected by COVID-19 and cannot predict when volumes will return to normal levels. In addition, the Company believes there are several other important factors that have impacted, and that it expects will impact its operating performance and results of operations, including shutdowns of its facilities and operations as well as those of its suppliers and courier services, disruptions to the supply chain of material needed for its tests, its sales and commercialization activities and its ability to receive specimens and perform or deliver the results from its tests, delays in reimbursement and coverage decisions from Medicare and third-party payors and in interactions with regulatory authorities, as well its inability to achieve volume-based pricing discounts with its key suppliers and absorb fixed laboratory expenses. In addition, the Company has experienced delays in patient enrollment for ongoing and planned clinical trials involving its tests. The Company may also experience a decrease or potential halt in shipments of its testing products as the Company's suppliers may be required to focus their resources to manufacture testing kits in response to the COVID-19 pandemic, which could in turn result in decreased gross margins.
While it is too early to predict the full impact COVID-19 will have on the Company's business, the Company expects it to have a material impact on its financial results for at least the next quarter and potentially beyond, depending upon the timing of any lifting of COVID-19 limitations on the U.S. healthcare system and general economic recovery. In response to the COVID-19 pandemic, the Company has equipped most of its employees with the ability to work remotely with the exception of its clinical laboratory employees, and implemented measures to protect the health of its employees and to support the functionality of its clinical laboratory. In March 2020, as a result of the COVID-19 pandemic, the Company terminated temporary employees and six full-time employees, which included three employees at the vice president level. The termination of full-time employees resulted in the recognition of a restructuring charge for termination benefits of $0.3 million which has been paid as of May 2020. Additionally, as a result of the workforce reduction, the Company recognized a reversal of stock-based compensation expense of $0.1 million in March 2020. The restructuring charges were included in selling, general and administrative expenses in the condensed statements of operations. In addition, the Company has increased the use of virtual sales tools, halted employee travel, implemented work schedule reductions, instituted a temporary hiring freeze and scaled marketing spend. The full extent to which the COVID-19 pandemic will directly or indirectly continue to impact the Company's business, results of operations and financial condition, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19, as well as the economic impact on local, regional, national and international markets.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits NOL carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. The CARES Act did not have a material impact on the Company's effective tax rate or income tax provision for the three months ended March 31, 2020. Under the Tax Cuts and Jobs Act (TCJA), NOLs generated post TCJA were allowed to be carried forward indefinitely but were only allowed to offset 80% of taxable income. As a result of the CARES Act and the change to permit NOLs generated in taxable years 2018, 2019 and 2020 to offset 100% of taxable income, the Company has released valuation allowance against its deferred tax assets in the amount of $0.1 million. The release of valuation allowance results in a discrete tax benefit of $0.1 million in the first quarter of 2020.

Note 12. Subsequent Events
On April 10, 2020, the Company received $0.7 million of funding under the CARES Act Provider Relief Fund, subject to the Company's agreement to comply with the Department of Health & Human Services' standard terms and conditions. These funds are not loans and will not be required to be repaid.


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion of our financial condition and results of operations in conjunction with the unaudited condensed financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited financial statements and notes thereto for the year ended December 31, 2019 included in our Annual Report on Form 10-K for the year ended December 31, 2019, filed on March 25, 2020.
Forward Looking Statements
The following discussion and other parts of this quarterly report contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical facts contained in this quarterly report, including statements regarding our future results of operations and financial position, business strategy, the impact of the COVID-19 pandemic, current and future product offerings, reimbursement and coverage, our ability to implement an integrated testing and therapeutics strategy, the expected benefits from our partnerships or promotion arrangements with third-parties, research and development costs, timing and likelihood of success and plans and objectives of management for future operations, are forward-looking statements. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “should,” “estimate,” or “continue,” and similar expressions or variations. The forward-looking statements in this quarterly report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, operating results, business strategy, and short-term and long-term business operations and objectives. These forward-looking statements speak only as of the date of this quarterly report and are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A, “Risk Factors.” The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

We are dedicated to transforming the care continuum for patients suffering from debilitating and chronic autoimmune diseases by enabling timely differential diagnosis and optimizing therapeutic intervention. We have developed and are commercializing a portfolio of innovative testing products under our AVISE® brand, several of which are based on our proprietary CB-CAPs technology. Our goal is to enable rheumatologists to improve care for patients through the differential diagnosis, prognosis and monitoring of complex autoimmune and autoimmune-related diseases, including systemic lupus erythematosus, or SLE, and rheumatoid arthritis, or RA. Our strategy includes leveraging our portfolio of testing products to market therapeutics through our sales channel, targeting the approximately 5,000 rheumatologists across the United States. Our business model of integrating testing products and therapeutics positions us to offer targeted solutions to rheumatologists and, ultimately, better serve patients.
We currently market nine testing products under our AVISE® brand that allow for the differential diagnosis, prognosis and monitoring of complex autoimmune and autoimmune-related diseases. Our lead testing product, AVISE® CTD, enables differential diagnosis for patients presenting with symptoms indicative of a wide variety of CTDs and other related diseases with overlapping symptoms. We commercially launched AVISE® CTD in 2012 and revenue from this product comprised 83% and 85% of our revenue for the three months ended March 31, 2020 and 2019, respectively. There is an unmet need for rheumatologists to add clarity in their CTD clinical evaluation, and we believe there is a significant opportunity for our tests that enable the differential diagnosis of these diseases, particularly for potentially life-threatening diseases such as SLE. In order to advance our integrated testing and therapeutics strategy, in December 2018 we entered into the co-promotion agreement, or the Janssen Agreement, with Janssen Biotech, Inc., or Janssen, to exclusively promote SIMPONI® in the United States for the treatment of adult patients with moderate to severe RA and for other indicated rheumatic diseases. We began direct promotion of SIMPONI® in January 2019 and in support of these promotion efforts we expanded our salesforce from 41 representatives as of March 31, 2019 to 62 representatives as of March 31, 2020, prior to our business starting to be affected by the COVID-19 pandemic. Our SIMPONI® promotion efforts contributed no revenue and approximately $0.1 million in revenue for the three months ended March 31, 2020 and 2019, respectively, with our

quarterly tiered promotion fee based on the incremental increase in total prescribed units above a predetermined average baseline of approximately 29,000 prescribed units per quarter.
We also have additional agreements with other leading pharmaceutical companies, including GlaxoSmithKline plc., or GSK, and Horizon Therapeutics Public Limited Company, or Horizon Therapeutics, that leverage our testing products and the information generated from such tests. We plan to pursue additional strategic partnerships with a focus on the commercialization of therapeutics that are synergistic with our testing products.
We perform all of our AVISE® tests in our approximately 8,000 square foot clinical laboratory, which is certified under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, by the Centers for Medicare and Medicaid Services, or CMS, and accredited by the College of American Pathologists, or CAP, and located in Vista, California. Our laboratory is certified for performance of high-complexity testing by CMS in accordance with CLIA. We are approved to offer our products in all 50 states. Our clinical laboratory reports all AVISE® testing product results within five business days.
We market our AVISE® testing products using our specialized salesforce. Unlike many diagnostic salesforces that are trained only to understand the comparative benefits of their tests, the specialized backgrounds of our salesforce coupled with our comprehensive training enables our sales representatives to interpret results from our de-identified patient test reports and provide unique insights in a highly tailored discussion with rheumatologists. Our integrated testing and therapeutics strategy results in a unique opportunity to promote and sell targeted therapies in patient focused sales calls with rheumatologists, including those with whom we have a longstanding relationship and history using our portfolio of testing products.