Paul Arndt - Managing Director, LifeSci Advisors Panna Sharma - President and CEO Ed Sitar - Chief Financial Officer

Bill March - Janney Montgomery Scott Ben Haynor - Feltl and Company Thomas Pfister - RedChip

Greetings. And welcome to the Cancer Genetics’ Third Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paul Arndt, Managing Director of LifeSci Advisors. Please go ahead, sir.

Thank you, Kevin. And thank you for joining us for Cancer Genetics’ third quarter 2015 earnings conference call. On the call today are company President and Chief Executive Officer, Panna Sharma; and Chief Financial Officer, Ed Sitar. The company issued a news release this morning along with a set of slides highlighting the company's financial results and progress on operations. Both are available under the Investor Section of the company’s website. Following the Safe Harbor statement, Panna will provide an overview of the second -- third quarter, including recent events and company activity. Ed Sitar will then provide a summary of the quarterly and nine months ended September 30, 2015 financial results. We’ll then open-up the call to questions. I’d like to remind everyone that various remarks about future expectations, plans, and prospects constitute forward-looking statements for purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Cancer Genetics cautions that these forward-looking statements are subject to risks and uncertainties that may cause their actual results to differ materially from those indicated, including risks described in the company’s filings with the SEC. Any forward-looking statements made on this conference call speak only as of today’s date, Tuesday, November 10, 2015, and Cancer Genetics does not intend to update any of these forward-looking statements to reflect events or circumstances that occur after today’s date. This conference call is being recorded for audio rebroadcast on Cancer Genetics’ website at www.cancergenetics.com. All participants on this call will be in listen-only mode. The call will be followed by a question-and-answer session. With that, I’d like to turn the call over to President and CEO, Panna Sharma for his opening comments. Good morning, Panna.

Thank you, Paul, and good morning to all of you who are joining us on the call today. Thank you for taking time to participate in our third quarter 2015 earnings conference call. We have had a solid third quarter and doubling of our business for the first nine months of this year as compared to last year, a trend we think will continue year-to-year as we continue to integrate our recently closed acquisition of Response Genetics, support additional tests and product launches, and scale up to meet the growing needs in biopharma and clinical customers. Let me begin by providing a brief overview of our company for the benefit of those who maybe new to our story. Cancer Genetics is an emerging leader in providing critical genomic and biomarker information for the personalization of oncology treatment. We offer our proprietary disease focused and clinically validated genomic tests and services to clinical centers, hospitals, as well as biotechnology and pharma companies and research organizations. We have a unique and unparallel global infrastructure for the development and delivery of oncology diagnostics from bench to bedside through our state-of-the-art facilities both here in the U.S., as well as India and China, and now most recently in Los Angeles with the acquisition of Response Genetics, a leader in the molecular profiling and therapeutic selection of solid tumors. Our research collaborations at over 70 leading academic and research centers, including Mayo Clinic, Memorial Sloan Kettering, the National Cancer Institute, Columbia University, Moffitt Cancer Center, among many others allows us to access innovation in oncology and genomics, rapidly validate our insights and tests, and have unique access to translational oncology programs that assure unique and competitive portfolio. Our vision is to be the oncology diagnostics partner from bench to bedside. With that, let's review some of our key accomplishments over the past few months. We recently closed in our previously announced agreement to purchase substantially all of the assets and operations of California-based Response Genetics. The acquisition is a true value creator for us that expands our product offering into solid tumors, enhances CGI's ability to compete for national payor contracts, enhances geographic sales coverage and especially into the West and Southeast expand the existing clinical and biopharma customer base and provides the capabilities for deeper customer penetration, both in our community hospitals as well as biopharma and biopharma partners. As previously discussed, over the next 12 months, we expect this transition will add an additional $10 million to $12 million revenue to CGI. Of significance, over 90% of this expected revenue will be generated by business areas related to molecular profiling, therapeutic selection and patient monitoring in solid tumors including lung, colorectal and skin cancers, areas that are experiencing significant demand both with patients and very importantly, in biopharma trials. There is significant need in great progress in the utility molecular characterization in these solid tumors to change patient outcomes. And more importantly, it tripled the number of new patients that we can address each year in the U.S. and increases by about 5x to 6x the number of tests that are now addressable by Cancer Genetics. By taking our model, we can accelerate -- we can accelerate the growth and penetration into these markets but also very importantly, impact more patients and more rapidly help the new generation of therapeutics get approved and integrated into patient care. The acquisition is also expected to add over $4 million to $5 million to CGI in future contract value from biopharma and clinical research clients, including the ALCHEMIST trial, which is being hosted by the National Cancer Institute and sponsored in part by Pfizer and Astellas. If you combine both the Cancer Genetics and RGI for the nine months ended September 30th, pro forma revenue was $22.6 million which puts us at a $32 million run rate on an annual basis and very close to our expected breakeven number of $37 million to $40 million per year. Our goal is to develop the center of excellence in solid tumors on the West Coast in order to drive significant market share expansion while we focus our New Jersey operational lab on hematologic cancers and build a center of excellence focused on heme malignancies in Rutherford, New Jersey. We are confident that CGI will benefit from increased demand and the increased complexity in clinical trials. And this focus will allow us faster and more meaningful relationships with biopharma customers. In the near-term, CGI will continue working with the National Cancer Institute by providing the genomic testing for the multiyear ALCHEMIST trial. These trials involve the genetic screening of tumor specimens removed during surgery for specific lung cancer focused in mutations and testing of postoperative treatment with drugs that target those mutations. CGI will also begin to immediately offer the FDA cleared and Medicare-reimbursed Tissue of Origin test. This test was initially developed by Pathwork Diagnostics in a test out of California. And the test has been at the genomic vanguard for diagnosing metastatic poorly differentiated and undifferentiated cancers. It is the only FDA-cleared test of its type. This proprietary, patented test is being offered to both our biopharma customers as well as our clinical customers, globally. CGI estimates that the clinical diagnostic market for this test is approximately $50 to $100 million in the U.S. annually given that there are over 31,000 new cases of cancer of unknown origin that are diagnosed in the U.S. In alignment with CGI’s vision of providing greater access to clinically relevant and actionable genomic tools, CGI will also explore partnerships and distribution arrangements whereby the Tissue of Origin test can be readily offered by global network of partners and clinical collaborators. For this test, we currently are experiencing reimbursement in the range of $2,700 to $3,000 per test. And we are confident that we'll -- it should be meaningful gross profit margin as we scale this test and bring it into all of our sales -- to our national salesforce. The combined company will also have a state-of-the-art molecular hematologic portfolio along with a clinically validated portfolio for solid tumors. This presents at the forefront of being a one-stop solution for clinical partners as well as biopharma customers. We believe that our comprehensive methodologies ranging from immunohistochemistry from FISH to gene-expression, microarrays and very importantly next-generation sequencing is needed in order to deliver the most meaningful answer. The combined capabilities of Response and CGI will offer the most complete bench to bedside solution in the marketplace with a unique and unmatched portfolio of innovative clinical test that will drive demand and more importantly impact patients. Ed will provide further financial details related to this transaction as well an update on integration activity shortly. But before I move on, I want to discuss the public offering we recently announced in the context of the response integration. We expect $12 million in gross proceeds resulting from the recently priced public offering. Besides strengthening our balance sheet, this capital will help further progress the integration activities so that we can achieve our objective and reach scale faster. It is essential to accomplish this work as effectively and efficiently as possible because the revenue and cost synergies of the combined organization will accelerate the time to cash flow breakeven for CGI and make us more valuable and more durable company. In addition, the balance sheet is critical to not only capture but continue to accomplish the meaningful biopharma revenues that we’ve been enable to contract over the past 12 and 24 months. Now let me spend some time reviewing CGI's operational and financial results for the third quarter and for the first nine months of this year. As we near year end, I continue to be pleased with the direction and momentum of our business. What particularly excites me about the current state of our business is that there are multiple drivers fueling our growth, including the successful sales efforts and integration on both the clinical and biopharma teams, wider recognition of our brand and higher adoption rates for cash being driven by additional data, additional marketing and the comprehensive use of our NGS panels along with other testing capabilities. In addition, as was the case in the second quarter, our growth in the third quarter was driven both organically and through our recent acquisitions in North Carolina and India. While Ed will discuss the financial details in more granularity, let me we provide you some of the trends and results in the third quarter that are helping to drive momentum in our business. In the third quarter of ‘15, we experience organic growth of 24% over the third quarter of ‘14. For the nine months ending September 30th, growth was 104% over the same period last year achieving $12.6 million in revenue. This is prior to the Response acquisition. In addition, our new locations in North Carolina and India continue to drive increase in the number and size of clinical trials were being selected to power the testing for. Of significance, for the three -- of importance, for the three months and nine months ended September 30th, our biopharma services business increased 35% and $82.6 million and 204% to $8.6 million over the same period in 2014. In addition, over the first nine months of 2015, our gross profit margin improved significantly doubling over the first nine months in 2014 from 13% to 26% and a significant improvement from $0.8 million in ‘14 to $3.2 million in ‘15. Importantly, while our quarterly revenue from biopharma can be impacted by the timing of contracts and the delivery results and the acceptance of project by our customers, the demand for our services remains extremely high from customers. Our substantial contracts that are now worth over $34 million going forward is indicative of the strong demand. And we continue to see very good acceleration especially as many of our customers enter into later phase trials. With that, I'd like to provide an update on the important progress we're making with some of our key 2015 strategic initiatives. First, our unique portfolio of genomic test and panel continues to grow. We believe that in this current environment, you have to not only execute and gain market share but you have to show innovation and demonstrate your test to have unique clinical validity. In the next few months, we intend to launch four major new panels. In blood cancers, we expect to launch Focus lymphoid before the end of the year. Our lymphoid panel not only is able to address a variety of all B-cell cancers but also gives mutation data, copy number data and also help therapeutic selection and also better understand the course, critical diseases such as CLL, DLBCL and other B-cell lymphomas we will take. This is a unique panel that we expect will drive significant demand not only in biopharma trials, but also with leading in-centers across the country. In hereditary cancers, we expect to launch our very first panel focused on female cancers, especially the gynecological and breast cancers to talk -- to show predisposition from an inherited basis. This panel, we expect to be commercially available in early 2016 and there is already significant reimbursement in place for hereditary cancer testing. In early 2016, we also expect our Focus, renal or a kidney panel to be commercially available. We’ve had three major presentations of this panel very recently both at the Kidney Cancer Symposium, as well as it will be presented at GI ASCO in January. And the unique think about this panel is not only does it give information about what is a subtype of kidney cancer, but very importantly, it gives information on its ability to a metastatic and the potential for response to first-line therapy for malignant cancers, which is sunitinib. These unique panels will be commercially available over the course of the next two quarters. But more importantly, they meet critical disease states where depth of information can be achieved from one test and it has the potential to meaningfully impact the efficiency of clinical trials, drive additional testing and change patient outcomes. Finally, through our joint venture with the Mayo Clinic, Oncospire Genomics, we intend to launch a test panel in multiple myeloma that we think will set the new standard. Our multiple myeloma panel will identify patients in this earlier follow-up based on whether or not they have MGUS. It'll determine the best treatment for malignancies based on the biomarker profile and more importantly, provide a very accurate way to gauge patient prognosis and therapeutic response. It’s an NGS panel based on a unique ADA gene design and it can work on either NGS platform. This is a significant disease and the lifetime therapy cost for multiple myeloma in the U.S. range from a $100,000 to $240,000. And this is about assuming any cost for managing the side effects. In addition, there were over 200 therapeutic agents in the pipeline today that will make a significant impact on this very heterogeneous disease. So again, our comprehensive panel designed with the leading thought leaders in multiple myeloma will reduce and change the paradigm of testing because traditional cytogenetic studies, single biomarkers and gene expression will no longer have to be done. All that information will be available on one panel. It will establish earlier more cost effective prediction of the transformation of MGUS to multiple myeloma and also will provide information on clonal evolution and identify targets for therapeutic selection that will be able to identify potential new therapeutic agents. So, we believe that these types of innovations not only will drive demand, but more importantly, it will drive our value to clinical hospitals, community hospitals and the biopharma community. Let me give you an update in regards to FHACT, our blockbuster technology for triaging cervical cancer and changing the paradigm of HPV testing. We recently presented data, surrounding a FHACT related study that CGI conducted with the National Cancer Institute in approximately 300 patients. This independent study was done to assess the use of the FHACT test and established clinical cut-off values to more rapid -- to allow us to more rapidly commercialize the test. In that test, we showed 96.9% sensitivity. But more importantly, we also had another independent study done in roughly 200 patients in India conducted by Kamineni Hospitals. This study sought to evaluate the potential for detection using a variety of methods and comparing them and this was done at the time of cytologic assessment for women who had already high-grade cervical disease. The date in this test showed that FHACT, when combined with a high-risk HPV genotyping provided 94% sensitivity and specificity. We think that data is very unique and unparallel and we expect to replicate this date now in multiple studies in the U.S. Finally, we received a third U.S. patent, covering the FHACT test and our proprietary capabilities for the detection of HPV -- sorry for HPV cancers. And this includes other HPV-related cancers such as head and neck, anal, vulvar and others. One of our key initiatives and as you’ve seen from the growth over the last couple of years is the biopharma market. Two major initiatives in the biopharma market, one is to accelerate and develop more meaningful collaborations and to achieve that, we entered into an agreement with ICON Laboratory with ICON plc, the central laboratory. This global CRO is exactly the type of industry collaboration that we needed. They are currently managing hundreds of clinical oncology trials around the globe and now we are able to offer a unique genomic and biomarker testing alongside their central laboratory expertise. We’ve already experienced several wins, which will grow our contracting revenue both during Q4 and Q1. We spend a significant amount of time cross-trading their global sales force, their global scientific affairs team and we are realizing several new wins and more importantly, several new RFPs where CGI alone would not have been. The other major key initiative that we seem to enhance our value for the biopharma community is also having very positive results in the clinical community. And that is to marry our expertise in genomics, with the need for measuring and monitoring immune response and immune markers for immuno-oncology trials. As some analysts approve the indicated, they expect immuno-oncology drugs to take up 30% to 50% of the oncology market over the next decade. And we think this will change the paradigm of care in the near-term, but more importantly, change how trials are done. We are one of the few unique lab that now has the abilities to offer a one-stop solution to measure immune response through a broadening -- broadening our immuno-oncology offering both in IHC, gene expression, as well as genomics and marrying that with their traditional genomic capabilities. The momentum that we’ve seen with the biopharma customers in this space is significant and growing. We have been asked of several large-scale global RFPs where our capabilities are very unique and more importantly, we offer a one-stop solution for many of these partners and the ability to take many of these immuno-oncology markers and the genomic profile and provide a potential for a companion diagnostic for many of our pharma customers. With respect to reimbursement, we continue to build significant momentum and our reimbursement managed care team has developed key relationships with ACOs and healthcare plans. We’ve had several in-network provider agreements over the last several months and quarters, including several of the Blue Cross Blue Shield plans in Illinois, North Carolina, Nebraska, Iowa, North Dakota and just in these last few months alone we’ve added another 14 million lives into the covered lives that are now in network. And key was that CGI will offer cancer diagnostic services to all of these networks including our proprietary products. According to American Cancer Society, roughly 40% of Americans will need cancer testing or will come down in cancer in their lifetime. So establishing this footprint is critical to ensure reimbursement and deliver value back to shareholders and ensure the utility of our tests. The end goal of this strategy is to help providers appropriately manage and personalize treatment while doing it cost-effectively to improve patient outcomes, and our focus on these agreements are very solid example of how we’re building durable value in this area. To-date, the new regional payor agreement we signed represent over an additional $26.2 million covered lives and our total covered lives are now over 50 million in the U.S. Going forward, we also intend to leverage all the testing done at Response and expand the test menu with larger regional plans and national organizations. Our business continues to trend extremely well and I am excited for future prospects, so the oncology spending is expected to reach $458 billion by 2030. The global market opportunity for testing products and services is substantial. We expect that nearly 5% to 6% of that spend will be done on testing and diagnostic services. In order to leverage and better achieve significant share in these markets, we have a unique strategy to develop proprietary portfolio, that's unmatched and engine, that’s driven by collaborations and strong partnerships, provide all the testing around these critical disease areas and then partner both in the biopharma community and in the clinical community. We expect to continue market penetration, expect to continue our revenue trajectory year-over-year, which is being driven by organic growth and meaningful contributions, as well as expect margin expansion and we look forward to executing on our mission to become the oncology diagnostics partner of choice from bench to bedside. At this point, I'll hand the call over to Ed Sitar for review of our recent financial results. Ed?

Thank you, Panna. And good morning, everybody. We've had a very eventful quarter as we progress on our mission to become the leading oncology provider from bench to bedside. Our Q3 and early Q4 activity provide us the platform and resources to reach our goal. In order to provide the maximum amount of time to focus on our recent activities, including the integration initiatives related to Response acquisition, and maximize Q&A time, I had limited my prepared remarks to significant items. For additional information, please refer to our Form 10-Q for the quarter ended September 30, 2015, available on our website. My discussion will focus on changes in the third quarter of 2015 versus the third quarter of 2014 and the nine months ended September 30, 2015, versus the nine months ended September 30, 2014. The recently completed third quarter was another strong performance for CGI. Third quarter revenues were $4 million, a 24% increase over 2014. Biopharma services were $2.6 million, clinical revenues were $1.1 million and discovery services were $0.2 million. Biopharma services continued to drive our success in 2015 and grew 35%. This growth was driven by organic growth in our Select One business as well as our pharmacogenomic business. Biopharma services were slightly lower than third quarter of 2015, when compared to the second quarter of 2015. As we discussed previously, we often experienced variability in the timing of projects from this group of customers. Clinical services decreased mildly 7% due to a combination of slightly lower volume and small changes in our average build price. Discovery services, our newest category of customers and services, generated $243,000 in revenues. Gross margins were 22%, or $0.9 million, which compared to 20%, or $0.7 million, in 2014. The improvement in gross margin percentage is attributable to better utilization of resources. Cost of revenues increased $0.5 million to $3.1 million principally due to cost of revenues from having a full quarter I should say of our two acquired businesses. While revenue increased 24%, total operating expenses increased 17% and totaled $6.5 million, compared to $5.6 million in 2014. This continues to demonstrate the significant potential for leverage in our business as we scale. Research and development expenses increased $0.4 million to $1.8 million primarily due to increase in collaboration costs. Collaborations with leading institutions are very important part of our innovation strategy. General and administrative expenses increased $0.4 million to $3.5 million, primarily due to fees incurred related to Response acquisition, along with costs from our acquired businesses for a full quarter in 2015 versus a partial quarter in 2014. Sales and marketing expenses increased $0.1 million to $1.2 million primarily to increases in headcount. Our GAAP loss for the third quarter was $5.2 million, or $0.56 per diluted share, compared to a loss of $0.51 per diluted share in 2014. Included in our loss are non-cash charges of $0.7 million for stock compensation, which is approximately $0.07 per share and $0.3 million for depreciation and amortization. Turning to the nine months ended September 30, 2015, revenues were $12.6 million, a 104% increase over the corresponding period of 2014. Biopharma services were $8.6 million, clinical revenues were $3.3 million and discovery services were $0.7 million. Biopharma services grew 204% driven by significant organic growth in our Select One business and the contributions of our pharmacogenomic business from our North Carolina acquisition. Clinical services revenue was essentially flat year-over-year. Discovery services generated $616,000 in revenue. We are pleased with the growth in our discovery services and we believe this provides inroad for future revenue opportunities. Cost of revenues increased $4 million to $9.3 million, principally due to cost of revenue from our two acquired business of $3 million and increases in headcount and lab supply due to higher volumes. Gross margins were 26%, or $3.2 million, which compares with 13%, or $800,000 in the nine months ended September 30, 2014. The improvement in gross margin percentage is primarily attributable to improved utilization of our resources. Total operating expenses were $17.4 million in the nine months ended September 30, 2015, compared to $14.1 million in the same period last year. The increase is due to nine months of our acquired operations in 2015 and increased collaboration costs in R&D. Our GAAP net loss for the nine months ended September 30, 2015, was $14.5 million, or $1.49 per diluted share, compared to a loss of $1.25 per diluted share in the corresponding period in 2014. This includes non-cash amounts of $2.2 million for stock compensation, approximately $0.23 per share and $1 million for depreciation and amortization. Our basic and diluted shares at September 30, 2015, were 9,726,067 and 9,727,597, respectively. At September 30, 2015, we had cash and cash equivalents of $19.9 million. Now let’s turn to the Response acquisition. I am very pleased with the progress we have made in just four weeks after closing this acquisition. In terms of synergies, we continue to expect potential savings approximating more than $5 million annually. We were able to move quickly to rationalize G&A, billing and make changes to the operational structure. Of course, as previously discussed, the most significant opportunity is the area of revenue synergy and the ability of the combined entity to capture additional market share. We are happy to report progress here, both in the clinical arena and with our biopharma customers. To give you a sense of the Response impact, if you take our Q3 revenue and add the Response revenues to the same period, pro forma revenue for Q3 would have been $6.7 million. As we’ve noted before, we expect Response to contribute $10 million to $12 million of revenue in the first 12 months after closing. The customer reaction in the first four weeks after closing gives us confidence in that estimate. Also in addition to the integration of Response facility, the majority of the Response there, including a highly trained and nationally distributed sales force, was brought into CGI's existing structure. CGI’s integrated RGI’s clinically focused sales professionals and we now offer both a state-of-the-art hematological portfolio and solid tumor portfolio across the country. As Panna alluded earlier, the other significant area of progress is our reimbursement area. Panna covered many of the details, but we are seeing high level of interest from regional plan including Blue Cross affiliate. We continue to move along in discussions with national payors and we hope to announce further news in this area in the next few months. With that, I will turn the call back to Panna.

Thank you, Ed. To the first nine months of '15, it’s already been landmarked here for CGI as notably doubled our revenue over the same period last year and our growing portfolio of cash and the Response acquisition positioned us very well for future growth and success. Looking ahead, we’ve had a number of additional key milestones in the coming quarters. Beyond integration milestones, we’re going to continue communicating and executing on our reimbursement strategy, with payors and healthcare organizations. We will also form additional agreements for the distribution and co-marketing of our test, especially for FHACT and our Tissue of Origin FDA-cleared test and we’ll continue securing partnerships in key geographies where oncology diagnostics is highly needed. In addition as I discussed earlier, we intend to launch multiple NGS panels over the next two quarters and we have begun launching a very comprehensive immuno-oncology offering, both for the biopharma customers, as well as for patient care. And there we’re partnering with some of the biggest players in the immuno-oncology category. So, we believe that not only will we have near-term growth drivers, but also very good long-term positioning to build a durable brand and more importantly, a durable company that is the oncology diagnostics partner from bench to bedside. And leveraging or continuing on innovative advances with our partners will drive further adoption rate capabilities, create more value for patients, for payors and more importantly also for shareholders. We also have additional data coming out and we’ll be communicating that data in our lymphoid, in our renal panels, as well as in our multiple myeloma launch. With that, I think we’re building a very durable brand, both for the clinical cancer community, as well as for the biopharma customers. And we fully expect additional growth looking forward into next year. With that, I’ll turn it over to any questions.

Thank you. [Operator Instructions] Our first question today is coming from Paul Knight from Janney Montgomery Scott. Please proceed with your questions.

Hey, guys. This is actually Bill March on behalf of Paul. How are you doing?

Good morning. How are you?

Good. Bill, how are you doing?

Very well. I was hoping you could maybe talk a little bit more about the competitive landscape for the Tissue of Origin test. How is yours differentiated from competitors? And then maybe what do you guys need to do to gain traction and take share in the market?

Very good question. Bill, let me address some of that. So the competitive landscape, traditionally in Tissue of Origin, the traditional dynamic has been to use Immunohistochemistry. But with the samples becoming smaller and more scarce and with greater awareness by the pathologists and the oncologists that tests are available out there, they are beginning to rely on some of these gene expression tests that companies are offering. At the same time, we also see that people are looking at doing large-scale mutation profiling. So the landscape and the direct competitors really are bioMérieux which offers a cancer type ID, USADA which offers a cancer of origin. But again, the accuracy for these that's been published is fairly a significantly lower. More importantly, the test that both the company’s offer are not FDA-cleared, so they gives us, I think, a major competitive position. Also the test that we acquired the Tissue of Origin was done by Pathwork Diagnostics. It was really a leader in this space and they very early on spend a lot of time and energy and money over $60 million developing this panel that looks at over 2000 genes and as over 20 -- almost a two dozen now peer-reviewed publications. And so, just if you look at the peer-reviewed from external perspective is significantly higher versus any of the kind of other competitive tests. And more importantly, and this is critical is that, once the test is done by CGI and you determine the Tissue of Origin, whether it’d be lung or head and neck or liver or lung tissue, we then provide the testing for all of the other -- for that cancer type. So it's a great lead-in product because not only can we address the 30,000 patients that are done and there’s probably two to three times the number of tests that are done each year, but also it has 99% certainty for rule outs versus other test of it. So it’s -- the performance wise it’s significantly superior. The FDA clearance gives it’s a major mode of differentiation and we think it's a minimum $50 million or $200 million addressable market near-term. What we’re doing that we saw that this test was not robustly marketed at all and lacked information online, lacked case studies. So what we're doing is there is lot of a simple 101 is better online marketing, better discussion with pathologist and oncologist, more webinars to make them aware, significant training of our sales force that we’ve already done over joint sales force. And more importantly, we’re going to be launching more comprehensive offering where the Tissue of Origin that once the origin is selected then reflexes to the rest of the testing that our lab can do and that is very uniquely positioned because not other labs can do that. So I was very confident this test will grow significantly now that it's under our stewardship.

Got it. And what you’re seeing upon biopharma size in terms of upfront contractors [Technical Difficulty]

You are, so, Bill, I think you are little bit muted, so I am going to just repeat the question. I think you asked about the biopharma contracts, correct?

Yeah. Sorry, if you could just maybe speak to biopharma contracts, what you're seeing in terms of size and pacing, and maybe if there are any specific disease or areas that are you are seeing more traction in?

Yes. So I will be happy to share some of that, our revenue in the biopharma community has grown to over, future contract value -- future value of the contracts with biopharma customers has grown to over $34 million and continues to grow. I want to certainly highlight some of the trends. We're seeing, number one, a lot of the early work that we did in 2014 and 2015 within the big pharma's post the Gentris deal, is now translating into larger scale late-stage Phase II and some Phase III work. We are very excited by that. That’s really for us reinforces the decision behind the acquisition. Secondly, what we are also seeing is tremendous need for marrying genomic and biomarker data with immune profiling and immuno-oncology monitoring. And what that means is not only combining IHC target such as PD1, pD01 and CTLA and some others that are pharmas are developing the other kind of proprietary, but also looking at RNA levels and then marrying that to the somatic profile of the tumor. That’s a big trend we are seeing and virtually every major pharma that we are talking to has one or multiple immuno-oncology trials either with biotech partners or with internal compounds or where they are just trying to get their arms around the immune cascade for potential future arms of their existing trials. So the complexity in clinical trials is also another trend that we are seeing and this complex in clinical trials is driving them to use more and more resources from one provider. This is exactly the reason why last year we started having discussions and finally entered into an agreement a strategic alliance with ICON. The pharmas realizing this but purely the logistics and the data integration costs from all these trials is massive that oftentimes is equal to some of the testing. So they want simplicity, they want innovation and they want fewer providers. So that’s a big trend, that trend is in continue and play to our favor, because we are nimbler and sort of largely players like LabCorp, Covansys. or [indiscernible] or others. But more importantly, because we are able to marry innovative genomic and biomarker data now with their need for the immune profiling and immune monitoring data, that’s a big trend. And lastly, what we have already seen as a result of the Response acquisition. They were very well known for lung, not only because of the heritage that they have and the IP especially around a lot of the biomarkers such as ERCC, KRAS, others, and the -- also the ALCHEMIST trial which is -- which Pfizer and Astellas are partner. And so that’s driven a lot of desire by the biopharma community to engage with us on understanding our needs in lung cancer monitoring, profiling, biomarker assessment, CDX development. And so those are the trends and that’s why we are very confident that we'll be able to achieve the synergies out of that transaction, but also very importantly rapidly continue to grow, and again, as I noted, we had several wins already that will hit in Q4 and Q1, and accelerate that revenue -- contracted revenue number.

Great.

Thank you.

And then just one last, yeah.

Thank you. [Operator Instructions] Our next question today is coming from Ben Haynor from Feltl and Company. Please proceed with your question.

Good morning, gentlemen.

Ben, how are you?

Doing well. Now on the two nice FHACT studies that you had come out recently, I don’t know of anything, but I have seen anyway that approaches the sensitivity and specificity that you found in those couple of trials? On the new trial that, excuse me, that you are planning now conducting in the U.S. Can you talk about the plans there, when those might kick-off, what maybe preliminary design those look like?

Yeah. Ben, this is great question. We are actually going to be hosting a whole update on that probably in January. We are now developing a leading team of advisors in HPV cancers. We are meeting in December to really plan those out. But the most important thing that we're doing now is taking the study that we did multi, around 200 women, I think, is 199, actually, where we had sensitivity and specificity of 94% when combined with -- when combined with HPV genotyping. We think that really could be paradigm that that's what has everyone very excited, because now only can you get the HPV information, but now we also get -- able to get the critical information on whether that HPV has advanced and integrated itself into the human genome enough to start causing changes that will show pre-cancer in cancer. And again, we want to have -- we are currently thinking is, in one study, let say, multi-site study or multiple studies that are independent that replicate that kind of few 100 patients at each site and showing the value of the cash when used in conjunction with either high risk HPV genotyping or in conjunction with existing Pap. But it’s really going to move and the paradigm is going to just move to HPV plus the triaging technology like ours and we are clearly leading that space. So we are very hopeful. We might have an European arm in that, since the product is already CE Marked, so that will also give us, I think, an additional lever point. But again, we are now assembling an HPV focus advisor team. We have one of the leaders in the world who has agreed, we will be announcing that and then next couple of weeks is agreed to chair the advisory board and again, December we will be kind of sitting down designing and having sites and then probably sometime in January communicating that news flow and communicating the overall trial out. So the -- thank you for noticing that.

Okay. Great. That’s helpful. And then on the Response integration, particularly with regard to the sales integration, any color you can offer on some of the customers that may have pullback as Response’s financial condition deteriorated prior to the acquisition? And then also cross training of the sales force on the blood cancers and solid tumors? Should we expect there might be any initial impact from, maybe point them out of the field to undergo training?

That’s great question. So let me first talk about the customer change that we have already experienced in the last, now it’s been one month, almost one month exactly. We have had an uptick of about 20% already just in the Response order site, the Response order volume. Again, that's obviously the business had deteriorated because largest customers were being aggressively courted by all the big labs and little local labs and different groups, and so there is lot of noise in the marketplace about that and I completely understand. So one of our first key jobs to, we had a hit list of top five accounts for each site, having calls and emails, visit or head of sales has been very busy visiting each of these regions. And as a result, not only have -- because we have a 20%, 25% increase but we’ve also actually done the more important thing, which is cross selling. We are now cross-selling three major sites, major hospital group in Southeast, major hospital group in the Midwest and group in the West Coast. These are large existing customers for a response that didn’t have a solution for the Heme side and now they have all the Heme, they are sending that to our Heme center of excellence at Rutherford. So just in the first 30 days, we’ve experienced a recovery in their clinical order volume. We’ve experienced cross-selling that we think would be a good platform and model in case study to establish more of those and we’ve also had one of our largest customers that was exclusively sending the Heme work here for the Northeast. It has now begun sending all the solid tumor to response. So to me that gives me very good data. The directionality of the clinical volume is going in the right way. And again in thesis of acquiring it to drive additional clinical volume across multiple sites is in fact very solid. Let me address the training question and that's very important. So, we have a fairly -- we rolled out a very good training platform. We will look to demo that at some point. The part of that training platform is a very interactive eight session training that covers all the basics of our portfolio, the CGI -- from CGI Rutherford. Everything from the science to the algorithms for testing, to testing menu, to how to use, everything from the high science down to logistics and that we’ve been doing on a weekly basis. We are not really bringing people together and taking them out of the field, really doing it, virtually getting people on. We have a national sales trainer who has been working very closely with them. So that has been working very well. We don't anticipate that there is going to be a loss of significant hours. We are about -- we are more than halfway through that. Again, we are going to do one module a week and we encourage everyone to do all the other modules on their own time. So, I don't expect that there will be significant loss of hours in the field. More importantly, we have developed a two-tier program to incentivize our sales force, the new combined sales force to cross sell. So additional incentives, first accounts that are cross sold, additional commission dollars for achieving certain milestones that of new testing that they haven’t been doing before and of course, everything in the sales which people love, which is number one, number two, number three type things for Q4. So, I think we've been very aggressively and that was one of the reasons that drove the desire to do a pick-up response and so we’ve been very focused from day one and having what we call a playbook. And so we're really have done a very good job on the sale integration playbook.

Excellent. Thank you very much. I will jump back in queue.

Thank you, Ben.

Thank you. Our next today is coming from Thomas Pfister from RedChip. Please proceed with your question.

Hi, Panna. Hi, Ed. How are you guys doing today?

Good, Tom. How are you?

Good. Good. I was hoping for my first question here. Congratulations on some of the recent agreement you've entered into with the regional payors. Could you just kind of go over, maybe what some of these payors are looking for, maybe on an economic basis from some of these tests and kind of how are your solutions are kind of addressing those needs?

Sure. Each payor is a little bit different or unique. But let me just start with generally what the payors are looking for. Right now the -- getting into network is becoming more and more critical for companies like ours and having a network agreement. And that has been the focus of our Head of Reimbursement, Randy Goodman and his team of getting us into some of these networks. But what we are dealing with typically has been the specialized oncology testing group. A lot of the blues and a lot of payors now have special teams or groups that are looking specifically at the spend in oncology on a disease-by-disease basis. They are looking at how much are we spending for breast, how much are we spending in blood, where are spending at, what are the drugs that we are going to make available, what are the labs that do this kind of testing. And they all focus on the same challenge that we talk about. I think the blues have done a good job. They are kind of beginning to realize that genomic and biomarker based testing and profiling is going to be central to care in the future and they’ve built this team same with the ACOs. What they typically want is they want someone who can do as much of the testing for their menu need that they have identified as possible, but also looking for partners that are open. One of the key things that we found is that they are more open to dialogue and they are more open in terms of your approach, you are with them, the better chance you have of getting a network. What that means by being open is really one of our core values, which is collaboration. I think one of the things that we've had a lot of feedback from payors is that they really don't like the companies that come in with very gigantic this test or the highway type approach, cover this test or we will make it available to your patients or we won’t do it and these kind of lot of companies do not have that approach. Whereas I think we come in and say this is what we’re doing in myeloma or lymphoma or cross in or cross fund and we show them the unique capabilities and we show them the other testing capabilities and they are all concerned about over testing. And so if you share them, here is how we make decisions, here is how proprietary tests are used, here is where it fits in, here is where it doesn’t fit it, and then get their feedback, that’s how you get into these plans is to have a collaborative dialogue, show where you fit in, don't take a one size fits all approach, and then very importantly they really want one or any of the one few groups in specialized oncology that can do as much of the testing across their needs as possible. And that's why again the Response menu in solid tumors which increases our market size significantly is very important because for every hem malignancy that these payors see, they are seeing at least three or five or six at some solid tumor side.

Okay. Great. Thanks for the color there, Panna. And just for my follow-up question. You mentioned earlier that you are planning on releasing a hereditary cancer panel over the next couple quarters. Could you just kind of go over the potential market size of that, maybe what you're seeing there in the reimbursement environment?

Yeah, what we’re seeing is we have to SAC test for women who have an abnormal HPV test. So what we found in doing so that the discussions and dialogue is that a lot of this thing reading OB/GYN is really one hereditary cancer panel focused on women's health, specifically all of the gynecologic and breast cancers because you’re seeing these women. And almost without fail during our dialogue, they are asking about how does it fit in and what their pros and cons of hereditary somatic testing and we’ve ordered it because of the very good first reimbursement that Myriad is achieving and other companies in hereditary cancer testing, not just the BRCA, but the BRCA in hands and all the other markers. We really had a very good commercial interest to go there. The reimbursement, as you know, from -- there is a lot of coverage on Myriad, but the reimbursement, the low end is 1,400, high end close to 3,000 and with our focus on women's health with having only fact for women who are abnormal or have preanalysis looking at women have a potential inherited or predisposition, we offer very good solution in that space. And that was why decided to a focused women's health hereditary cancer panel. And we’re pretty in late phases. We have multiple collaborators that we will be announcing and the key is the two book-ins to getting that reimbursed, one is upfront, you need to have the preauthorization, and again we really put a very good billing and reimbursement team now place. So now we can handle the preauthorization and then very importantly the counseling on the end of it, it’s not just but in the test, it’s also delivering what’s the actual, what you do next and we're partnering with leading institutions to offer that counseling. So again, I think we will have a very compelling offering that will drive volume, drive more value and also be a great way to be of value to the OB/GYN Women’s Health Community that will lead the way for FHACT testing in the future. So it's a very synergistic move on our part. And we think there is very solid reimbursement done by groups like Myriad and others who have really paved the way for women to take control and understand their cancer is better. So it’s a very available market and is perfect for us to enter into.

Great color there. Thank you for answering my questions today and I’ll hop back in the queue.

Thank you. Our next question today is follow-up from Ben Haynor from Feltl and Company. Please proceed with your question.

Thanks for taking the follow-up. First off, what needs to take place to turn the LA lab into solid tumor center of excellence?

And so the two big ramps that we’re doing there is -- very important is portfolio renewal. The portfolio at Response I think had been unattended for a while. So that’s a big area of focus for us is to update the portfolio. They are doing some very good focus testing in lung and is executed very well. But there's a tremendous need for additional markers. There is also a big need to migrate a lot of testing more to NGS which will benefit not only patients but also benefit the company because we’ll be able to achieve potentially even higher margins through multiplexing So portfolio renewal is big one. The other one is biopharma customers. Center of excellence will become the center of excellence not because of capabilities but because of customer reach and customer access. And so we expect the biopharma as a percentage of what happens in that side to increase quite rapidly over the next six to nine months. And the third thing in terms of achieving the center of excellence that we’re going after is really the immune side, immuno-oncology. I mean, without fail almost every pharma discussion that we’re having big pharma, they ask about the immuno-oncology capabilities. So again, we'll be seeing more data and more announcements about combining immuno-oncology with solid tumors, immuno-oncology with heme. And so those are kind of the three areas. Portfolio renewal, biopharma customers and the immuno offering and I think those are the three that we’re hoping to achieve over the next 90 and 180 days there.

Okay. Great. And then, kind of a big picture question on the companion diagnostics side. If we look at couple years and one or more of the biopharma compounds that you are currently helping out with the clinical trials on, gets approved. What could that mean for you economically? One of your tests becomes a companion diagnostic there. Obviously, it depends on how many patients there are in the category, the adoption of the drug but just to kind of have an apples-to-apples, we’ll assume it 10,000 patients annually that ultimately receives the drug?

That’s a very good question, Ben. So what we’re seeing today and I think this will probably continue going forward. It’s really successful trials that we’ve been involved with or ones that are showing success. So while the pharmas are coming back and saying is there way to narrow down this panel or narrow down this set of biomarkers to one test. And in fact, we have a couple of follow-on studies from some of our big customers that have started where their trial or their phase is successful. But they noticed that there is a certain pattern that either we already knew about or is already embedded into them. They are going back and saying, can we do a narrower potential for the CDX. And CDX development as you know is very important because it can drive very high margin but has to be in a label. And to date for all the noise around CDX, most of the CDX is still around a few markers or to KRAS, BRAF et cetera. And so, this will grow as you go forward but having relationships with the pharmas and scales going to be central to this. If you have something like say, 10,000 people that are going to a very specific drug, there's a couple of other economic involved. Number one is the multiplier effect. So if there are 10,000 people being given a prescription, how many are you actually testing to achieve that 10,000, is it 3x? Is it 4x? So really you're looking at testing, assuming 3x 30,000 patients. And let say, on a companion biomarker typically pricing is higher. And for our sake, let say somewhere in the range of let say, $2,500 for a companion diagnostic or even if its $2,000 for a companion diagnostic, you're looking at markets in the $50 million, $60 million per companion diagnostics for that patient set.

Great. That’s exactly what I was looking for. Thank you very much, gentlemen.

Thank you. We’ve reached the end of our question-and-answer session. I’ll turn the floor back over to management for any further or closing comment.

Thank you all for joining us today on our third quarter earnings call. As you can tell, we have a number of initiatives that we think will drive the building with a durable company that is the partner on oncology diagnostics from bench to bedside. And we believe that we’re putting in place to right business model and more importantly, the right portfolio to be that partner. So thank you again for listening to the call. I look forward to giving you more updates as the business progresses.

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.