Insight Molecular Diagnostics' Q3 2025 Earnings Call: Contradictions Emerge on FDA Submission Timelines, IOTA Model Impact, and Market Adoption Expectations

Guidance:

• FDA submission expected by the end of December; company targets mid-2026 authorization/commercial launch if review/timelines proceed normally.
• Q4 lab services revenue modeled sequentially flat; ~$100k billed in early Q4.
• Cash burn targeted at about $6M per quarter; may tick up in Q4 for FDA and clinical trial expenses but management can scale discretionary spend.
• Registry study to be posted on clinicaltrials.gov early next year; CM score early reports expected H1 2026 (initially to registry participants).
• Validation: heart assay validation in 2026 (reimbursement submission 2026), lung reimbursement targeted in 2027.

Business Commentary:

• FDA Submission and Market Expansion:
• Insight Molecular Diagnostics plans to submit its GraftAssure DX assay to the FDA by year-end, with an expected commercial launch in mid-2026.

• This submission is driven by pent-up market demand, with a focus on transitioning transplant centers to in-house testing.

• Clinical Trial Progress:

• The company is currently enrolling samples for its clinical trial, with five sites actively participating, and expects to have sufficient data to complete the submission by year-end.
• 

• The trial is crucial for demonstrating the assay's sensitivity and specificity, which are key to receiving FDA approval.

• TAM Growth and Market Opportunities:

• Insight Molecular Diagnostics estimates its total addressable market (TAM) for kitted transplant testing to be over $1 billion, with potential to increase this through market expansion.

• Growth opportunities are anticipated through reference lab adoption, increased organ transplant volumes, and advancements in therapies.

• Registry Program and Data Generation:

• The company has launched a registry program to familiarize clinicians with its technology and obtain real-world data on its novel measurement techniques.
• This initiative is expected to improve biopsy yield and support potential reimbursement discussions with MolDX.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management repeatedly described 'momentum is building,' highlighted successful multi-center pilot data and a white paper exceeding expectations, emphasized controlled cash burn (<$6M/quarter) and $20M cash on hand, and affirmed a mid-2026 launch plan while acknowledging FDA/government timing as the principal risk.

Q&A:

• Question from Mark Massaro (BTIG): What do you expect from the Palmetto MolDX LCD (422 kidney protocol) versus your TAM outlook, could limits be removed, how might IOTA affect utilization, and how should we think about GraftAssure core LDT/registry as upside?
  Response: Company is hopeful MolDX access will expand but outcome is uncertain; the LDT/registry strategy is intended to familiarize clinicians, generate real-world data, and provide early billable revenue (registry ramp expected to begin end-Q1/mid-Q2), so LDT/registry is primary near-term upside.

• Question from Harrison Alford (Stephens): What conversion curve do you expect 12–18 months post-clearance, what gates move centers from early adopters to full adoption, clinician feedback on improved PPV, and is mid-2026 launch still intact after the shutdown?
  Response: Adoption will be 'show-me' driven—head-to-head data and registry evidence are the gating factors; clinicians view higher PPV favorably; management is actively driving data/engagement now and still targets mid-2026, with FDA/government timing as the main risk.

• Question from Thomas Flatten (Lake Street): With ~51 days until year-end and holidays, with five of ten sites recruiting, will you have needed samples, how long to compile/analyze/format submission for FDA, and how should we think about cash burn into H1?
  Response: They report five active enrolling sites and are confident samples will suffice for year-end submission; most of the submission is already prepared (clinical data are a small plug-in), cash burn planned roughly flat (~$6M/quarter) into H1 with potential incremental investment if they accelerate, and FDA timing remains the biggest external risk.

Contradiction Point 1

FDA Submission Timeline and Regulatory Pathway

It involves differences in the reported timeline and regulatory pathway for the FDA submission, which are critical for the company's product development and launch timelines.

Is mid-2026 still the right timeline for regulatory approval and commercial launch, considering the government shutdown? - Harrison Alford(Stephens)

2025Q3: The government shutdown may impact the timeline, but we are focusing on engagement and utilization of our assay, which does not depend on government funding. We remain confident in our FDA submission plans. - Josh Riggs(CEO), Andrea James(CFO)

What is the regulatory pathway for OncoCyte's assay? - Mark Massaro(BTIG)

2024Q4: We're budgeting for 7 months for the de novo pathway. There's no real advantage for us going de novo versus 510(k). 510(k) applies if there is a predicate device, which we don't have for donor-derived cell-free DNA. - Joshua Riggs(CEO)

Contradiction Point 2

IOTA Model and Market Growth Impact

It involves differing stances on the impact of the IOTA model on market growth, which is crucial for revenue projections and strategic planning.

How effective is the IOTA model in increasing transplant testing utilization? - Mark Massaro (BTIG)

2025Q3: The IOTA model drives demand for testing. Using more at-risk organs leads to increased monitoring. It's natural that more kidneys going into patients will require more testing. - Josh Riggs(CEO)

What impact could the iota model have on market growth in the second half or going forward? - Mason Carrico (Stephens)

2025Q1: Change, including the iota model, is met with skepticism, but it may increase demand due to more adverse events from marginal organs. Anti-CD38 drugs could offset some marginal organ risks and increase demand for testing tools. - Josh Riggs(CEO)

Contradiction Point 3

GraftAssure Core LDT Revenue Potential

It involves differing expectations regarding the revenue potential and timeline for the GraftAssure core LDT, which is a key revenue stream for the company.

How do you view the GraftAssure core LDT as a potential upside driver? - Mark Massaro(BTIG)

2025Q3: The registry is closely tied to the LDT. The process will take four to six months per site. We'll be billing for the relative measurement while gathering information for alternative measures. This strategy aims to improve the revenue profile for next year but not significantly in Q1 or Q2. - Josh Riggs(CEO), Andrea James(CFO)

Have centers using GraftAssure started purchasing kits, and can we see material revenue before FDA approval? - Michael Matson(Needham)

2024Q4: We're not currently generating material revenue from GraftAssure. As we fully validate the assay and commercialization opportunities align, we anticipate opportunities for revenue generation prior to FDA clearance. - Joshua Riggs(CEO)

Contradiction Point 4

FDA Submission and Trial Enrollment Timeline

It involves differing expectations about the timeline for FDA submission and trial enrollment, which are crucial for product approval and market launch.

Can you provide enrollment metrics or sample collection data from the trial to date? - Mike Matson(Ed Needham)

2025Q3: We're on track to have enough samples by year-end. The trial involves five enrolling sites, and we expect to meet submission requirements. - Josh Riggs(CEO), Ekke Schütz(CMO)

How many centers and patients are required for the FDA package? - Mark Massaro(BTIG)

2024Q4: We're expecting at least 3 sites for the FDA package, with likely more in the U.S. and a couple in Europe. For the trial, we need 150 samples, which can be achieved with 20 centers, with 20% of samples from outside the U.S. - Joshua Riggs(CEO), Ekkehard Schutz(CMO)

Contradiction Point 5

Market Adoption and Clinical Volume Expectations

It relates to the expectations regarding market adoption and clinical volume, which are essential for revenue projections.

What conversion curve do you expect over the next 12-18 months post-clearance? What are the key factors for transitioning from early adopter physicians to center-wide adoption? - Harrison Alford (Stephens)

2025Q3: We can influence the curve by generating data and showing that our technology provides similar to better results. - Andrea James(CFO)

How long to convert the U.S. sales funnel to revenue post FDA approval? - Vidyun Bais (BTIG)

2024Q3: Even with the first 2% to 3% of the market, an increase from 10% to 13% of transplants would drive a 50% increase in the volume of assays. - Joshua Riggs(CEO)