CALDERWOOD & HARKNESS LLP Healthcare & Life Sciences Practice Group
MEETING MINUTES — CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED
Meeting: OncoPrecise GXP-47 Medicare Coverage & Coding Strategy — Project Kickoff Meeting
Matter: Genome Dx Therapeutics Inc. — Medicare Coverage & Coding Strategy
Matter No.: 1043-00002
Date: February 28, 2024
Time: 10:00 a.m. – 12:45 p.m. (PT) / 1:00 p.m. – 3:45 p.m. (ET)
Location: Conference Room 14A, Genome Dx Therapeutics Inc., 4720 Torrey Pines Road, Suite 300, San Diego, CA 92130 (in-person and videoconference)
Minutes Prepared By: Sean Morrissey, Senior Associate, Calderwood & Harkness LLP
Reviewed By: Miriam Calloway, Partner, Calderwood & Harkness LLP
Date of Preparation: March 1, 2024
These minutes are prepared by outside counsel and are intended to be protected by the attorney-client privilege and the work product doctrine. Distribution is limited to the individuals identified in Section XVI below. Recipients should not forward or disclose these minutes to any person not listed without the prior written consent of Calderwood & Harkness LLP.
I. Attendees
A. In-Person (San Diego — Genome Dx Therapeutics Inc., 4720 Torrey Pines Road, Suite 300, San Diego, CA 92130)
• Theresa Nakamura — General Counsel & Vice President of Regulatory Affairs, Genome Dx Therapeutics Inc. ("GDT")
• Kevin Driscoll — Vice President of Market Access & Reimbursement, Genome Dx Therapeutics Inc.
• Dr. Priya Sundaram — Vice President of Clinical Development; Principal Investigator, CLARITY-LUNG Trial, Genome Dx Therapeutics Inc.
• Raymond Ota — Chief Financial Officer, Genome Dx Therapeutics Inc.
• Christopher Aiken — Associate, Calderwood & Harkness LLP (San Francisco office; traveled to San Diego for the meeting)
B. By Videoconference
• Miriam Calloway — Partner (Responsible Partner), Healthcare & Life Sciences Practice Group, Calderwood & Harkness LLP (Washington, D.C. office)
• Sean Morrissey — Senior Associate (Lead Associate), Healthcare & Life Sciences Practice Group, Calderwood & Harkness LLP (Washington, D.C. office)
• Janet Carraway, CPC, CCS-P — Principal, Carraway Regulatory Advisors, Inc. (Chicago, IL)
• Dr. Nathan Ostroff, PhD, MS — Principal Consultant, Larkfield Health Economics, LLC (Bethesda, MD)
C. Absent / Not Invited to Kickoff
• Joel Strauss — Partner (Billing Partner), Calderwood & Harkness LLP — not present at today's kickoff meeting; to be engaged on specific workstreams as needed, including gapfill analysis and NCD feasibility assessment
• Dr. Anisha Raval — Chief Executive Officer, GDT — not present; Ms. Nakamura confirmed that Dr. Raval has been briefed separately and is supportive of the engagement scope and overall strategy
• Dr. Marcus Yuen — Chief Scientific Officer, GDT — not present; available for technical consultation on assay methodology, algorithm development, and analytical validation matters as needed throughout the engagement
II. Call to Order and Introductions
Miriam Calloway called the meeting to order at 10:02 a.m. Pacific Time. Ms. Calloway welcomed all participants, both those present in Conference Room 14A at Genome Dx Therapeutics' San Diego offices and those joining by videoconference, and thanked GDT for hosting the in-person portion of the meeting. Ms. Calloway noted for the record that the engagement letter between Calderwood & Harkness LLP and Genome Dx Therapeutics Inc. was fully executed on February 14, 2024, and that today's kickoff meeting marks the initiation of active work on the matter.
A round of introductions followed, during which each participant stated his or her name, organizational affiliation, role, and relevant professional experience.
Ms. Calloway summarized the composition of the Calderwood & Harkness engagement team as follows:
• Miriam Calloway, Partner — Responsible Partner for the engagement. Ms. Calloway has approximately 28 years of experience in Medicare coverage and reimbursement law, with a particular focus on molecular diagnostics and genomic testing. She has led the firm's representation in more than 15 local coverage determination (LCD) and national coverage determination (NCD) proceedings before CMS and various Medicare Administrative Contractors.
• Joel Strauss, Partner — Billing Partner for the engagement. Mr. Strauss brings deep expertise at the intersection of health technology assessment, FDA regulatory affairs, and CMS reimbursement policy. Mr. Strauss was not present at today's meeting but will be engaged on specific workstreams, including gapfill pricing analysis and the NCD feasibility assessment.
• Sean Morrissey, Senior Associate — Lead Associate for the engagement. Mr. Morrissey has approximately six years of experience in healthcare regulatory law. Prior to joining Calderwood & Harkness, he served as a policy analyst at CMS's Coverage and Analysis Group (CAG), where he participated in the review and development of national coverage analyses for diagnostic laboratory tests.
• Christopher Aiken, Associate — Working Associate for the engagement. Mr. Aiken has approximately three years of experience, with a concentration in CPT and HCPCS coding, laboratory billing compliance, and Stark Law/Anti-Kickback Statute analysis for clinical laboratory services.
Janet Carraway then introduced herself and her firm, Carraway Regulatory Advisors, Inc. Ms. Carraway noted that her firm has been retained directly by GDT, separate from the Calderwood & Harkness engagement, to serve as a coding and billing consultant. In this capacity, Carraway Regulatory Advisors will assist with the mechanics of the CPT/PLA code application to the AMA CPT Editorial Panel, provide guidance on crosswalk and gapfill pricing submissions, and coordinate with Calderwood & Harkness on coding strategy matters. Ms. Carraway holds both the Certified Professional Coder (CPC) and Certified Coding Specialist — Physician-based (CCS-P) credentials and has more than twenty years of experience in molecular diagnostic test coding and reimbursement.
Dr. Nathan Ostroff then introduced himself and his firm, Larkfield Health Economics, LLC. Dr. Ostroff noted that Larkfield has been retained directly by GDT, also separate from the Calderwood & Harkness engagement, to prepare clinical utility and cost-effectiveness analyses for inclusion in the LCD application and MolDx technical assessment dossier. Dr. Ostroff holds a PhD in health economics and an MS in biostatistics, and Larkfield has supported the preparation of health economics and outcomes research (HEOR) submissions for more than 30 molecular diagnostic tests that have successfully obtained Medicare coverage determinations.
Following introductions, Ms. Calloway outlined the meeting agenda, which included a review of the engagement scope, an overview of the OncoPrecise GXP-47 test and its clinical characteristics, a status update on the CLARITY-LUNG clinical validation trial, discussion of coding strategy, the LCD and MolDx coverage strategy, preliminary reimbursement rate analysis, the NCD pathway, financial and covenant considerations, and assignment of roles, responsibilities, and action items.
III. Engagement Scope Review
Ms. Calloway reviewed the scope of the Calderwood & Harkness engagement as set forth in the February 14, 2024 engagement letter executed by Ms. Nakamura on behalf of GDT. The engagement encompasses the following four principal workstreams:
1. PLA/CPT Coding Strategy. Calderwood & Harkness will conduct a comprehensive analysis and provide a written recommendation on whether GDT should pursue a Proprietary Laboratory Analyses (PLA) code or bill OncoPrecise GXP-47 under an existing CPT code. Based on the outcome of this analysis, Calderwood & Harkness, in coordination with Carraway Regulatory Advisors, will prepare the PLA code application for submission to the American Medical Association (AMA) CPT Editorial Panel, including the code descriptor, supporting documentation, and all required application materials.
2. LCD Application and MolDx Technical Assessment. Calderwood & Harkness will prepare and manage the submission of a local coverage determination (LCD) request to Cascade Fiscal Intermediaries, LLC ("CFI"), the Medicare Administrative Contractor responsible for Jurisdiction E (California), where GDT's reference laboratory is located. In connection with the LCD request, Calderwood & Harkness will prepare the MolDx technical assessment dossier for submission to Ridgeline Administrative Services, LLC ("RAS"), the contractor administering the MolDx program for molecular diagnostic tests. The MolDx technical assessment dossier will incorporate test description materials, analytical and clinical validation data, clinical utility evidence, and the health economic analysis prepared by Larkfield Health Economics.
3. Medicare Reimbursement Rate Analysis. Calderwood & Harkness will prepare a formal crosswalk and gapfill pricing analysis to establish the target Medicare reimbursement rate for OncoPrecise GXP-47, including identification and analysis of comparable tests and their associated Medicare payment rates, and will provide strategic guidance on positioning GDT's target rate within the applicable CMS pricing framework.
4. NCD Pathway Assessment. Calderwood & Harkness will prepare a preliminary feasibility assessment evaluating the strategic and practical considerations of pursuing a national coverage determination (NCD) through CMS, including an evaluation of the Coverage with Evidence Development (CED) framework as a potential pathway to conditional national coverage while additional clinical evidence is generated.
Ms. Calloway noted that the engagement letter specifies a budgeted fee estimate of $475,000 to $575,000 for the full scope of work through LCD issuance. She cautioned that the estimate is based on current assumptions regarding the complexity of the clinical data, the timeline for the CLARITY-LUNG trial, and the absence of significant complications in the PLA code application or MolDx review process, and that the estimate could increase if unforeseen issues arise. The estimate does not include fees for the NCD feasibility assessment, which is addressed as a separate phase.
The following hourly rates were confirmed as set forth in the engagement letter:
• Miriam Calloway (Partner): $1,350 per hour
• Joel Strauss (Partner): $1,275 per hour
• Sean Morrissey (Senior Associate): $875 per hour
• Christopher Aiken (Associate): $650 per hour
• Paralegal support: $375 per hour
Ms. Nakamura confirmed GDT's understanding and acceptance of the engagement scope, the fee estimate, and the hourly rates. Ms. Nakamura further noted that Whitford & Sable LLP (Harrison Whitford, lead partner; Danielle Reeves, associate) remains GDT's regular outside counsel for corporate governance, intellectual property, and general commercial matters, and that Whitford & Sable will coordinate with Calderwood & Harkness as needed on regulatory and corporate board matters that may intersect with the Medicare coverage and coding strategy. Ms. Nakamura confirmed that she would serve as the primary point of contact at GDT for coordination between the two law firms.
IV. Overview of OncoPrecise GXP-47 — Test Characteristics
A. Presentation by Kevin Driscoll and Dr. Priya Sundaram
Mr. Driscoll and Dr. Sundaram delivered a joint presentation providing a comprehensive overview of the OncoPrecise GXP-47 test, its technical characteristics, intended clinical use, and regulatory and intellectual property status. The presentation included slide materials that were displayed on the conference room screen and shared via videoconference. The key elements of the presentation are summarized below.
Test Name: OncoPrecise GXP-47.
Classification: The test is classified as a laboratory-developed test (LDT). OncoPrecise GXP-47 is performed exclusively at GDT's single CLIA-certified, CAP-accredited reference laboratory located at GDT's San Diego headquarters. The laboratory's relevant credentials are as follows:
• CLIA Certificate Number: 05D2187432
• CAP Accreditation Number: 9074821
• National Provider Identifier (NPI): 1902847365
Technology Platform: OncoPrecise GXP-47 is a next-generation sequencing (NGS)-based 47-gene RNA expression panel. The test utilizes targeted RNA sequencing to measure the expression levels of 47 genes associated with immune response pathways, tumor microenvironment characteristics, and checkpoint inhibitor sensitivity in non-small-cell lung cancer (NSCLC) tissue.
Specimen Type: The test is performed on formalin-fixed, paraffin-embedded (FFPE) tumor tissue obtained from patients with non-small-cell lung cancer. Dr. Sundaram noted that the FFPE specimen requirements are standard for oncology diagnostic testing and that the assay has been optimized for specimens with as few as 20% tumor cellularity, which expands its clinical applicability.
Test Output: The primary output of OncoPrecise GXP-47 is a composite Therapy Response Index (TRI) score, which ranges from 0 to 100. The TRI score is generated by a proprietary algorithm that integrates the expression levels of all 47 genes into a single composite metric. The algorithm was developed using machine learning techniques applied to a training dataset of more than 3,200 NSCLC tissue samples with matched treatment outcome data.
Patient Stratification by TRI Score: The TRI score categorizes patients into three risk groups as follows:
• High Likelihood of Response: TRI score ≥ 70. Patients in this category are predicted to have a high likelihood of favorable response to immune checkpoint inhibitor (ICI) therapy.
• Intermediate: TRI score 40–69. Patients in this category have an intermediate predicted likelihood of response, and the test report recommends discussion of both ICI and chemotherapy options.
• Low Likelihood of Response: TRI score < 40. Patients in this category are predicted to have a low likelihood of response to ICI therapy, and the test report suggests consideration of alternative treatment strategies, including platinum-based chemotherapy.
Intended Clinical Use: OncoPrecise GXP-47 is intended to guide oncologist decision-making on whether to initiate first-line immune checkpoint inhibitor therapy (e.g., pembrolizumab, nivolumab, atezolizumab) versus platinum-based chemotherapy in patients with newly diagnosed Stage IIIB or Stage IV NSCLC. Mr. Driscoll emphasized that this represents a significant unmet clinical need, as current treatment selection in this patient population relies heavily on PD-L1 expression testing (immunohistochemistry), which has well-documented limitations in predictive accuracy. OncoPrecise GXP-47 is designed to provide a more granular and accurate prediction of ICI response by capturing a broader set of gene expression signals beyond PD-L1 alone.
Analytical Validation: Dr. Sundaram reported that analytical validation of the OncoPrecise GXP-47 assay was completed on December 14, 2022. The analytical validation study assessed precision (intra-run, inter-run, and inter-operator reproducibility), accuracy (concordance with orthogonal RNA measurement methods), limit of detection, specimen stability, and interference testing. The results of the analytical validation were published in the Journal of Molecular Oncology Diagnostics, Volume 18, Issue 4, pages 412–429 (December 2022). The publication is peer-reviewed and has been cited 23 times as of the date of this meeting.
Existing Commercial Product — OncoPrecise GXP-12: Mr. Driscoll provided context regarding GDT's existing commercial diagnostic test, OncoPrecise GXP-12. GXP-12 is a 12-gene expression panel used for prognosis in early-stage breast cancer. GXP-12 is currently reimbursed under an existing LCD, designated LCD L38472, which was issued by Cascade Fiscal Intermediaries, LLC, with an effective date of August 15, 2021. Mr. Driscoll noted that GDT's fiscal year 2023 revenue of approximately $6.2 million is derived entirely from GXP-12 testing, as GXP-47 has not yet been commercially launched and is not yet reimbursed. The existing commercial relationship with CFI through the GXP-12 LCD provides GDT with some institutional familiarity with the MAC and the LCD process, which the team views as a potential advantage in the GXP-47 coverage effort.
intellectual Property: Ms. Nakamura noted that GDT holds 14 issued United States patents and 7 pending patent applications related to the OncoPrecise technology platform, including patents covering the TRI algorithm, specific gene panel compositions, and methods of predicting immunotherapy response. The intellectual property portfolio supports the characterization of OncoPrecise GXP-47 as a proprietary test for purposes of the PLA code application.
B. Discussion Points
Following the presentation, several discussion points were raised:
Ms. Calloway asked about the relationship between the existing GXP-12 LCD (LCD L38472) and the anticipated LCD for GXP-47, specifically whether GDT contemplated filing an amendment to the existing LCD or whether a separate, new LCD application would be required. Mr. Driscoll confirmed that GXP-12 and GXP-47 are entirely distinct tests with different clinical indications (breast cancer prognosis versus NSCLC treatment selection), different gene panels, and different analytical platforms, and that separate coverage determinations would be required. Ms. Calloway concurred that a new LCD application is the appropriate pathway.
Mr. Morrissey inquired about the proprietary nature of the TRI algorithm, noting that the PLA code pathway requires the test to be a proprietary laboratory analysis performed by a single laboratory. Dr. Sundaram confirmed that the TRI algorithm is protected by multiple issued patents, that the algorithm methodology is not publicly available, and that the test is performed exclusively at GDT's San Diego reference laboratory. These characteristics support the PLA code pathway. Mr. Morrissey noted this would be documented in the Coding Strategy Memorandum.
Ms. Nakamura confirmed that the OncoPrecise GXP-47 test is not FDA-cleared or approved and that GDT does not currently plan to pursue FDA premarket authorization (whether through the 510(k), de novo, or PMA pathways) for GXP-47. GDT intends to market the test under the LDT pathway, consistent with GDT's approach for GXP-12. Ms. Calloway noted that CMS does not require FDA clearance or approval for Medicare coverage of laboratory-developed tests, but that the absence of FDA authorization may be a consideration in the MolDx technical assessment and should be addressed proactively in the dossier.
V. CLARITY-LUNG Clinical Validation Trial — Status Update
A. Presentation by Dr. Priya Sundaram
Dr. Sundaram provided a detailed status update on the CLARITY-LUNG clinical validation trial, which is the cornerstone of the clinical evidence base that will support the LCD application and MolDx technical assessment for OncoPrecise GXP-47.
Trial Name: CLARITY-LUNG (Clinical Assessment of RNA Immunotherapy Therapy-response in Lung Cancer Using NGS Gene-expression Technology).
ClinicalTrials.gov Identifier: NCT05891247.
Study Design: The CLARITY-LUNG trial is a prospective, multi-site, blinded clinical validation study. Treating oncologists are blinded to the TRI score during the study period to avoid bias in treatment selection. Patients are enrolled at the time of initial NSCLC diagnosis, tumor tissue is submitted for OncoPrecise GXP-47 testing, and TRI scores are generated and recorded but not disclosed to treating physicians until the completion of the study or the patient's exit from the study follow-up period. Treatment decisions are made by oncologists based on standard-of-care clinical factors (including PD-L1 expression, tumor histology, patient performance status, and physician judgment). Patient outcomes are then correlated with TRI scores to assess the predictive accuracy of the test.
Number of Clinical Sites: The trial is being conducted at 14 clinical sites across the United States, including major academic medical centers and community oncology practices. Dr. Sundaram noted that the geographic diversity of the sites is designed to support generalizability of the results across different patient populations and clinical practice settings.
Enrollment Target: 1,200 patients with newly diagnosed Stage IIIB or Stage IV NSCLC.
Enrollment Status as of February 28, 2024: Approximately 720 patients have been enrolled, representing approximately 60% of the target enrollment. Enrollment is proceeding on schedule and is consistent with the trial's projected enrollment trajectory. Dr. Sundaram noted that the 50% enrollment milestone (n=600) was reached in late January 2024, triggering the protocol-specified interim analysis. The interim data collection is underway.
Primary Endpoint: The primary endpoint of the CLARITY-LUNG trial is the positive predictive value (PPV) and negative predictive value (NPV) of the TRI score for 12-month progression-free survival (PFS) on immune checkpoint inhibitor therapy. Specifically, the trial measures the extent to which a high TRI score (≥ 70) accurately predicts 12-month PFS on ICI therapy (PPV) and the extent to which a low TRI score (< 40) accurately predicts lack of 12-month PFS on ICI therapy (NPV).
Pre-specified Performance Benchmarks: The trial protocol pre-specifies the following performance benchmarks that the test must meet for the clinical validation to be considered successful:
• Positive Predictive Value (PPV) ≥ 0.75
• Negative Predictive Value (NPV) ≥ 0.80
Dr. Sundaram noted that these benchmarks were established based on clinical consensus regarding the minimum predictive accuracy needed for the test to meaningfully inform treatment decisions and were reviewed and endorsed by the trial's independent Data Safety Monitoring Board.
Interim Analysis: An interim analysis is planned at the 50% enrollment mark (n=600), per the study protocol. Data collection for the interim analysis is currently underway, and results are expected to be available in approximately four to five weeks, placing the anticipated date of interim results in late March or early April 2024. The interim analysis will provide an early assessment of whether the PPV and NPV performance benchmarks are being met and will also include futility analysis to determine whether the trial should continue as designed.
Data Safety Monitoring Board (DSMB): The DSMB is chaired by Dr. Evelyn Matsuda, MD, PhD, a medical oncologist and biostatistician at the Carrington Cancer Institute in Houston, Texas. The DSMB will convene to review the interim analysis data and will issue a recommendation regarding trial continuation. Dr. Sundaram confirmed that the DSMB has full authority under the trial protocol to recommend modifications to the trial, including early termination for futility or early stopping for efficacy.
Final Data Readout: The final data readout for the CLARITY-LUNG trial is originally projected for the fourth quarter of 2024, contingent on completion of enrollment and the accrual of sufficient follow-up time for the 12-month PFS endpoint across the full study population.
Total Trial Budget: The total budget for the CLARITY-LUNG trial is approximately $28.5 million. As of February 2024, approximately $15.8 million has been expended, representing roughly 55% of the total trial budget.
Principal Investigator: Dr. Priya Sundaram serves as the overall Principal Investigator for the CLARITY-LUNG trial.
B. Discussion Points
Following Dr. Sundaram's presentation, several important discussion points were raised regarding the implications of the CLARITY-LUNG trial for the LCD filing strategy and overall project timeline.
Ms. Calloway asked about the significance of the interim analysis for the LCD filing timeline, specifically whether the team could proceed with the LCD filing based on interim data alone or whether final results would be necessary. Dr. Sundaram responded that strong interim results would meaningfully bolster the MolDx technical assessment dossier and provide early evidence of clinical validation, but noted that interim results are not strictly required for LCD filing as a regulatory matter. However, Dr. Sundaram cautioned that if the interim results are weak — for example, if the PPV or NPV falls below the pre-specified benchmarks at the interim analysis stage — the team should seriously consider deferring the LCD filing until final data are available, as filing with subthreshold data could undermine the application's credibility and lead to a non-coverage determination.
Mr. Morrissey elaborated on this point, noting that MolDx technical assessments conducted by Ridgeline Administrative Services — specifically by Dr. Catherine Embry, who serves as the MolDx Technical Assessment Director — typically require robust clinical validation data demonstrating clear clinical validity and utility. Mr. Morrissey flagged that reliance solely on interim data carries risk, particularly if the interim results are ambiguous or if the confidence intervals around the PPV and NPV estimates are wide. He recommended that the team develop a decision framework in advance of the interim data readout to guide the go/no-go decision on the LCD filing timeline.
Mr. Driscoll stated that GDT is proceeding with the reimbursement strategy in parallel with trial enrollment, on the assumption that interim and final results will be positive, but fully acknowledges the possibility that the timeline may need to be adjusted. He emphasized that GDT's commercial and financial planning is predicated on a positive outcome and that any delay in the LCD filing would have significant downstream consequences for revenue projections and capital planning.
Dr. Ostroff (Larkfield Health Economics) noted that his health economic analysis will incorporate both interim and final clinical data as they become available. He stated that interim results, if favorable, would be sufficient to begin construction of the HEOR model and to draft the cost-effectiveness and clinical utility sections of the MolDx dossier. Dr. Ostroff indicated that the HEOR model could then be updated with final trial data when available, allowing the team to proceed in parallel rather than waiting for final results before beginning the economic analysis.
VI. Coding Strategy Discussion — PLA Code vs. CPT Code
A. Presentation by Sean Morrissey and Christopher Aiken
Mr. Morrissey and Mr. Aiken presented an overview of the two primary coding pathways available for OncoPrecise GXP-47 under the CMS Clinical Laboratory Fee Schedule, including the advantages and disadvantages of each approach, and provided a preliminary recommendation.
Pathway 1 — Existing CPT Code 81455. CPT Code 81455 describes "genomic sequencing procedures, solid organ neoplasm, DNA and RNA analysis when performed, interrogation for sequence variants, gene rearrangements, gene copy number variants, and abnormal protein expression, 51 or more genes." The current Medicare reimbursement rate for CPT 81455 is $2,919. Mr. Morrissey noted that while billing under CPT 81455 would be the simplest and fastest approach, this code is a generic code that does not capture the proprietary nature of the TRI algorithm or the specific 47-gene RNA expression panel. Furthermore, billing under a generic CPT code would not allow GDT to establish a premium reimbursement rate that reflects the unique clinical value proposition of OncoPrecise GXP-47. The $2,919 rate under CPT 81455 is also substantially below GDT's target reimbursement rate of $3,850.
Pathway 2 — Proprietary Laboratory Analyses (PLA) Code. A PLA code is a test-specific, laboratory-specific code assigned by the AMA CPT Editorial Panel. PLA codes are designated for clinical laboratory analyses that are performed by a single laboratory or a small number of licensed laboratories and that are proprietary in nature. Mr. Morrissey noted that pursuing a PLA code would allow GDT to differentiate OncoPrecise GXP-47 in the Medicare coding landscape, establish the test's identity as a distinct proprietary analysis, and support a premium reimbursement rate through the crosswalk and gapfill pricing process. A PLA code would also facilitate the LCD application, as CFI and Ridgeline can more readily identify and track a test that has its own unique code.
Mr. Morrissey presented the firm's preliminary recommendation to pursue a PLA code for OncoPrecise GXP-47. This recommendation will be formalized in a Coding Strategy Memorandum to be delivered to GDT by March 11, 2024.
Mr. Aiken then outlined the PLA code application requirements and the AMA CPT Editorial Panel submission process. He noted the following key requirements:
• The application must be submitted by the laboratory or the test manufacturer.
• The application must include a detailed test description, the proposed code descriptor, clinical context and intended use, laboratory identification (CLIA number, CAP accreditation), a statement of proprietary status, and supporting documentation including published validation data.
• The application is reviewed by the AMA CPT Editorial Panel at its regularly scheduled meetings, which occur approximately three times per year (typically in February, June/September, and October/January, with exact dates varying by year).
• If approved, PLA codes are generally assigned within approximately 90 days of the Editorial Panel meeting and become effective on the next quarterly update to the AMA PLA code list.
Mr. Aiken presented the following preliminary proposed PLA code descriptor for OncoPrecise GXP-47, noting that this language is subject to revision during the drafting process and GDT review:
"OncoPrecise GXP-47 (Genome Dx Therapeutics Inc.), genomic profiling, non-small-cell lung cancer, 47-gene RNA expression panel, formalin-fixed paraffin-embedded tissue, algorithm-derived Therapy Response Index (TRI) score."
Ms. Carraway confirmed that the PLA pathway is well-aligned with current AMA practices for proprietary NGS-based oncology panels and noted that several comparable tests have successfully obtained PLA codes in recent years. She offered to review the AMA submission formatting requirements and coding mechanics in detail and to provide her guidance to Calderwood & Harkness by March 8, 2024, to support the drafting of the PLA code application.
B. Timeline for PLA Code Application
The team discussed the PLA code application timeline, working backward from the target AMA CPT Editorial Panel meeting:
• Target AMA CPT Editorial Panel Meeting: September 2024.
• Submission Deadline for September 2024 Meeting: June 28, 2024.
• Draft PLA Code Application Delivery (for GDT Review): Mid-to-late March 2024 (target March 22, 2024). Calderwood & Harkness and Carraway Regulatory Advisors will collaborate on the draft application.
• Final PLA Code Application (Submission-Ready): Mid-June 2024, allowing approximately two weeks of buffer before the June 28, 2024 submission deadline.
Mr. Morrissey noted that if the September 2024 Editorial Panel meeting is missed for any reason — whether due to delays in the application preparation, the need for additional clinical data, or other unforeseen circumstances — the next available opportunity for submission would be the January 2025 AMA CPT Editorial Panel meeting, with a submission deadline of approximately October 2024. Missing the September 2024 meeting would push the PLA code assignment into early-to-mid 2025, which would have cascading effects on the LCD filing timeline and GDT's broader commercialization strategy.
C. Discussion Points
Mr. Driscoll asked about the typical timeline from PLA code application submission to code assignment and availability for billing. Mr. Morrissey stated that PLA codes, once the application is approved by the Editorial Panel, are generally assigned within approximately 90 days of the meeting and become effective on the next quarterly update to the AMA PLA code list. Assuming approval at the September 2024 meeting, the PLA code would likely become effective in the first quarter of 2025, though in some cases codes have been assigned on an expedited basis.
Ms. Nakamura requested that the Coding Strategy Memorandum address not only the recommended coding pathway but also any risks associated with the PLA code application, including the risk that the application could be denied or that the AMA Editorial Panel could request revisions or additional information that would delay approval beyond the September 2024 meeting. Mr. Morrissey confirmed that the memorandum would include a risk assessment section.
Ms. Carraway noted that she would provide input on comparator PLA codes that may be useful reference points for the OncoPrecise GXP-47 application, including:
• PLA Code 0250U — Elara Genomic Sciences, Inc., "GeneSight Onco-48": A 48-gene NGS-based oncology panel with some methodological similarities to GXP-47.
• PLA Code 0239U — Marlowe Asset Management Molecular Diagnostics, Inc., "TumorMap Pro": An NGS-based multi-gene oncology panel used for treatment selection in solid tumors.
Ms. Carraway noted that reviewing the code descriptors, supporting documentation, and pricing history of these comparator PLA codes would inform both the application drafting and the subsequent crosswalk pricing analysis.
VII. LCD/MolDx Coverage Strategy Discussion
A. Presentation by Miriam Calloway and Sean Morrissey
Ms. Calloway and Mr. Morrissey presented the team's proposed strategy for obtaining Medicare coverage for OncoPrecise GXP-47 through the local coverage determination (LCD) process, including the role of the MolDx technical assessment as a prerequisite for LCD issuance.
Target Medicare Administrative Contractor. The target MAC for the LCD filing is Cascade Fiscal Intermediaries, LLC ("CFI"), which is the Medicare Administrative Contractor responsible for Jurisdiction E (California). GDT's single reference laboratory is located in San Diego, California, which falls within CFI's jurisdiction. Key contacts at CFI include:
• Dr. William Hargrove, MD, FACP — CFI Medical Director for molecular diagnostics coverage. Dr. Hargrove oversees LCD development and coverage policy for molecular diagnostic tests within Jurisdiction E.
• Sandra Phu — CFI LCD Analyst for genomic diagnostics. Ms. Phu serves as the primary point of contact for LCD applications related to genomic and molecular diagnostic tests.
• CFI is headquartered at 2800 SW Moody Avenue, Suite 500, Portland, OR 97201.
Ms. Calloway noted that GDT has an existing relationship with CFI through the GXP-12 LCD (LCD L38472), which provides some institutional familiarity, although the GXP-47 application will be assessed independently on its own merits.
MolDx Program. The MolDx (Molecular Diagnostics) program is a CMS contractor program that provides technical assessments of molecular diagnostic tests seeking Medicare coverage. The MolDx program is administered by Ridgeline Administrative Services, LLC ("RAS"), headquartered at 1600 Hampton Street, Suite 700, Columbia, SC 29201. The MolDx Technical Assessment Director is Dr. Catherine Embry, PhD. Successful completion of a MolDx technical assessment is a prerequisite for LCD issuance through CFI for molecular diagnostic tests.
Mr. Morrissey outlined the LCD application process as follows:
1. MolDx Technical Assessment Dossier Submission. GDT (through Calderwood & Harkness) submits a comprehensive technical assessment dossier to Ridgeline Administrative Services. The dossier includes all test technical information, analytical and clinical validation data, clinical utility evidence, health economic analysis, and supporting literature.
2. MolDx Technical Assessment Review. Ridgeline conducts a detailed technical assessment of the test, including a review of the submitted dossier, independent literature review, and consultation with subject matter experts as needed. The typical review period is three to six months from the date of dossier submission.
3. LCD Proposal. Following a favorable MolDx technical assessment, CFI issues a proposed LCD. The proposed LCD is published in the Medicare Coverage Database and is subject to a public comment period of a minimum of 45 days, during which stakeholders (including laboratories, physicians, patient advocacy organizations, and the general public) may submit comments on the proposed coverage policy.
4. LCD Finalization. After the public comment period closes and CFI has reviewed and responded to public comments, CFI issues a final LCD with an effective date. The final LCD establishes Medicare coverage policy for the test within Jurisdiction E.
Target LCD Filing Date. The team's target date for filing the LCD application and MolDx technical assessment dossier is August 2024. Mr. Morrissey explained the rationale for this target date: filing in August 2024 would align with the anticipated assignment of the PLA code following the September 2024 AMA CPT Editorial Panel meeting (or would occur shortly before the PLA code assignment, with the dossier referencing the pending PLA code application). Filing after the PLA code has been applied for or assigned strengthens the application by demonstrating that the test has been recognized as a distinct proprietary analysis in the CPT coding system. Additionally, an August 2024 filing would allow for the incorporation of the CLARITY-LUNG interim analysis data, which is expected in late March or early April 2024, providing a meaningful body of clinical validation evidence even in advance of the final trial readout.
MolDx Technical Assessment Dossier Contents (Planned). Mr. Morrissey outlined the anticipated structure and contents of the MolDx technical assessment dossier as follows:
1. Test Description and Intended Use. A comprehensive description of OncoPrecise GXP-47, including the 47-gene panel composition, RNA expression analysis methodology, TRI score algorithm, specimen requirements, and intended clinical use in guiding treatment selection for Stage IIIB/IV NSCLC.
2. Analytical Validation Data. A summary of the completed analytical validation study, referencing the peer-reviewed publication in the Journal of Molecular Oncology Diagnostics (Vol. 18, Issue 4, pp. 412–429, December 2022), including data on precision, accuracy, limit of detection, specimen stability, and interference testing.
3. Clinical Validation Data. A summary of the CLARITY-LUNG interim analysis results (and, if available by the filing date, any additional clinical validation data from the ongoing trial), as well as data from any prior retrospective studies that support the predictive accuracy of the TRI score.
4. Clinical Utility Evidence. Evidence demonstrating that the TRI score changes treatment decisions and improves patient outcomes, including evidence that oncologists modify their treatment recommendations based on TRI score information and that patients who receive TRI-guided treatment have superior clinical outcomes compared to patients who receive standard-of-care treatment selection.
5. Health Economic Analysis. A comprehensive HEOR analysis prepared by Larkfield Health Economics, including a clinical utility model and a cost-effectiveness analysis comparing the cost of OncoPrecise GXP-47 testing with the cost savings attributable to avoidance of ineffective ICI therapy in patients predicted to have a low likelihood of response.
6. Bibliography of Peer-Reviewed Publications. A comprehensive bibliography of supporting peer-reviewed publications, estimated at 40 or more publications, including studies on the biological basis of the 47-gene panel, prior gene expression profiling studies in NSCLC, ICI response prediction literature, and health economic analyses of precision oncology diagnostics.
B. Discussion Points
Ms. Calloway emphasized that the strength of the clinical validation data is the single most critical factor in both the MolDx technical assessment and the LCD review. She noted that, based on her extensive experience with the MolDx program and LCD proceedings, tests that present with inconclusive or below-threshold clinical validation data have historically received non-coverage determinations, and that a non-coverage determination would be a significant setback that could take 12 to 18 months to overcome through resubmission. Ms. Calloway stressed the importance of ensuring that the clinical data included in the dossier unambiguously demonstrate clinical validity and clinical utility.
Mr. Morrissey noted that he would prepare a background regulatory landscape memorandum as an early deliverable in the engagement. This memorandum would survey existing LCDs and NCDs for comparable NGS-based oncology diagnostic tests (including tests such as FoundationOne CDx, Crowne Albany Industries xT, and Caris Molecular intelligence), summarize recent CMS policy developments relevant to molecular diagnostic coverage, and detail the current MolDx program requirements and technical assessment standards. This background analysis will inform the LCD filing strategy and help the team anticipate questions or concerns that may be raised during the MolDx review.
Dr. Ostroff outlined his planned approach for the HEOR analysis. The analysis will include two principal components: (1) a clinical utility assessment demonstrating how the TRI score changes treatment decisions and improves patient outcomes in clinical practice, using both trial data and real-world evidence where available; and (2) a cost-effectiveness analysis comparing the cost of OncoPrecise GXP-47 testing (at the target reimbursement rate of $3,850 per test) with the cost savings from avoiding ineffective ICI therapy in patients with low TRI scores. Dr. Ostroff noted that ICI therapy costs are substantial — pembrolizumab, for example, carries an average annual wholesale acquisition cost exceeding $170,000 — and that avoiding even a modest number of non-beneficial ICI treatment courses could generate significant cost savings that offset the cost of testing.
Ms. Nakamura raised the question of whether GDT's existing LCD for GXP-12 (LCD L38472) could facilitate or expedite the LCD process for GXP-47, given CFI's familiarity with GDT as a laboratory and its track record of successful LCD compliance for GXP-12. Ms. Calloway responded that while the prior LCD experience with CFI is helpful in that it establishes GDT's credibility as a reliable laboratory with a track record of complying with LCD requirements, each test is assessed independently based on its own evidence base. CFI and Ridgeline will not grant preferential treatment to the GXP-47 application based on the GXP-12 LCD.
Mr. Driscoll raised the question of whether GDT should consider engaging informally with Dr. William Hargrove (CFI Medical Director) or Sandra Phu (CFI LCD Analyst) prior to the formal LCD filing, for example through a pre-submission meeting or informal communication regarding the anticipated application. Ms. Calloway advised that preliminary outreach to CFI could be appropriate and potentially beneficial, as it would allow GDT and Calderwood & Harkness to gauge CFI's receptivity, identify any concerns or data requirements early in the process, and establish a cooperative relationship with the MAC. However, Ms. Calloway cautioned that such outreach should be carefully managed and should not occur until the MolDx dossier is substantially complete, so that GDT can present a credible and well-supported overview of the test and its evidence base. Premature outreach without adequate preparation could create a negative first impression. Ms. Calloway recommended targeting a pre-submission discussion with CFI in the June or July 2024 timeframe.
VIII. Medicare Reimbursement Rate — Preliminary Discussion
A. Presentation by Kevin Driscoll and Sean Morrissey
Mr. Driscoll presented GDT's target Medicare reimbursement rate for OncoPrecise GXP-47 and provided context regarding the importance of the reimbursement rate to GDT's financial projections and capital planning. Mr. Morrissey provided an overview of the pricing methodology and preliminary crosswalk analysis.
GDT Target Reimbursement Rate: $3,850 per test.
Pricing Methodology. The primary pricing methodology under consideration is a crosswalk analysis, in which the OncoPrecise GXP-47 test is mapped to comparable multi-gene NGS-based oncology panels that have established Medicare reimbursement rates. The crosswalk approach identifies a comparator test or tests with similar analytical characteristics, clinical applications, and resource requirements and proposes that the new test be reimbursed at a rate equivalent to or informed by the comparator test's established rate.
Preliminary Crosswalk Comparators Identified. Mr. Morrissey presented three preliminary crosswalk comparators that have been identified based on their similarity to OncoPrecise GXP-47 in terms of technology platform, gene panel size, oncology application, and specimen type:
Mr. Morrissey noted that the target rate of $3,850 falls within the range defined by these comparators and is most closely aligned with the GeneSight Onco-48 rate. A formal Reimbursement Rate Analysis Memorandum with a detailed crosswalk and gapfill pricing analysis, including a more extensive comparator set and supporting rationale, would be delivered later in the engagement.
Mr. Driscoll emphasized that the $3,850 target reimbursement rate is central to GDT's financial projections and business planning. Mr. Ota confirmed that Verdant Life Sciences Capital, LLC — GDT's investment bank, with Christine Lau serving as Managing Director — has incorporated the OncoPrecise GXP-47 Medicare reimbursement assumptions into GDT's forward financial projections. These projections are being used in connection with GDT's potential Series D fundraising round or initial public offering (IPO) planning, and any material deviation in the reimbursement rate would have significant implications for GDT's valuation and capital-raising efforts.
Mr. Ota provided the following high-level revenue projection context for the OncoPrecise GXP-47 test at the target reimbursement rate:
• Projected Year 1 Test Volume at Full Commercial Launch: Approximately 8,500 tests.
• Projected Year 3 Test Volume: Approximately 22,000 tests.
• Projected Medicare Mix: Approximately 62% of total test volume (with the remaining 38% attributed to commercial payers, Medicaid, and self-pay/institutional accounts).
• Year 1 Projected Medicare Revenue: Approximately $20.3 million (calculated as 8,500 tests × 62% Medicare mix × $3,850 per test).
• Year 1 Projected Total Revenue (Medicare + Commercial): Approximately $34.5 million.
Ms. Calloway noted that the reimbursement rate analysis would also evaluate the gapfill pricing pathway as an alternative or complement to the crosswalk methodology. Under the gapfill approach, the MAC determines the payment rate based on a range of factors including the resources required to perform the test, charges for the test, and rates paid by other payers. Ms. Calloway noted that the gapfill pathway can sometimes result in a rate that differs significantly from the laboratory's target and that the crosswalk approach, if supportable with strong comparator data, is generally the more predictable and controllable methodology. The Reimbursement Rate Analysis Memorandum will address both approaches and provide a recommendation.
IX. NCD Pathway — Preliminary Discussion
Ms. Calloway briefly introduced the national coverage determination (NCD) pathway as a longer-term strategic objective for OncoPrecise GXP-47. While the immediate priority is to obtain Medicare coverage through a local coverage determination, an NCD would provide uniform Medicare coverage nationwide, eliminating the need to obtain separate LCDs from each MAC jurisdiction.
Two potential NCD routes were discussed at a preliminary level:
1. Traditional NCD Pathway. Under this approach, GDT (or another interested party) would submit a formal NCD request to CMS. CMS would open a national coverage analysis (NCA), conduct an independent review of the clinical evidence, and issue a proposed NCD followed by a public comment period and a final NCD decision. The traditional NCD pathway typically requires a robust and mature evidence base, including completed (not interim) clinical validation data and, ideally, multiple published clinical studies demonstrating clinical utility.
2. Coverage with Evidence Development (CED). Under the CED framework, CMS may grant conditional national coverage for a test or treatment while additional clinical evidence is generated under a CMS-approved clinical study protocol. CED may be appropriate when CMS determines that the existing evidence base is promising but insufficient to support a full NCD. CED would allow Medicare beneficiaries to access OncoPrecise GXP-47 testing on a covered basis while the CLARITY-LUNG trial is completed and additional post-market evidence is collected.
Ms. Calloway estimated the NCD timeline at approximately 18 to 24 months from the date of LCD issuance, noting that CMS typically expects a test to have established local coverage and a track record of clinical utilization before pursuing a national coverage determination. She recommended that GDT pursue the LCD first and use the LCD and the associated clinical evidence base as the foundation for a subsequent NCD request.
Ms. Calloway noted that Calderwood & Harkness would prepare a formal NCD Feasibility Assessment Memorandum later in the engagement, following the completion of the LCD filing and the availability of final CLARITY-LUNG trial results. This memorandum would evaluate the strength of the evidence base relative to CMS NCD standards, assess the feasibility of both the traditional NCD and CED pathways, and provide a strategic recommendation with a proposed timeline.
No action items were assigned on the NCD pathway at this stage of the engagement. The team agreed to revisit the NCD strategy in detail after the LCD process is underway and the CLARITY-LUNG final data readout is available.
X. Financial and Covenant Considerations
A. Presentation by Raymond Ota
Mr. Ota provided important financial context for the engagement and flagged a specific covenant issue that requires attention.
GDT Financial Overview. Mr. Ota reported that GDT's current annual cash burn rate is approximately $34 million, reflecting ongoing expenditures for the CLARITY-LUNG trial, laboratory operations, GXP-12 commercial activities, research and development, and general and administrative expenses. GDT's fiscal year 2023 revenue of approximately $6.2 million is derived entirely from OncoPrecise GXP-12 testing, as GXP-47 has not yet been commercially launched.
Capital Raised. GDT has raised approximately $187 million in aggregate across its Series A, Series B, and Series C financing rounds. The $78 million Series C round was led by Pinnacle Health Ventures ("PHV") in March 2022. PHV currently holds approximately 41.3% of GDT's fully diluted equity and is the company's largest institutional shareholder. PHV board representatives — Elena Marchetti (Partner) and David Ashford (Managing Partner) — retain observer rights over all material commercialization and reimbursement decisions made by GDT, consistent with the terms of the Series C Preferred Stock Purchase Agreement and the Investors' Rights Agreement.
Pacific Coast National Bank Revolving Credit Facility. Mr. Ota flagged the existence and terms of GDT's revolving credit facility with Pacific Coast National Bank ("PCNB"):
• Facility: $15 million Revolving Credit Facility
• Execution Date: September 22, 2023
• Reference Number: PCNB-GDT-RF-2023-0922
• PCNB Relationship Manager: Thomas Becerra
• Outstanding Draw as of February 2024: Approximately $8.5 million (Mr. Ota noted that the outstanding balance is expected to increase to approximately $9.2 million by May 2024 based on projected cash flow needs)
• Interest Rate: Secured Overnight Financing Rate (SOFR) plus 3.75%
• Maturity Date: September 22, 2026
Mr. Ota drew the team's attention to a specific covenant in the credit agreement that is directly relevant to the Medicare coverage strategy:
Milestone Covenant — Section 7.14 of the PCNB Credit Agreement: This section requires GDT to obtain a final Medicare coverage determination — defined in the credit agreement as a local coverage determination (LCD), national coverage determination (NCD), or equivalent published coverage policy — for at least one proprietary laboratory-developed test by December 31, 2024. Failure to satisfy this milestone covenant by the testing date triggers a 90-day cure period, meaning that if the covenant is not satisfied by December 31, 2024, GDT would have until March 31, 2025, to achieve compliance before an event of default would be declared.
Mr. Ota asked Ms. Calloway directly whether the OncoPrecise GXP-47 LCD could realistically be obtained by December 31, 2024, given the LCD application timeline discussed earlier in the meeting (target filing in August 2024, followed by MolDx technical assessment review of three to six months, followed by a 45-day public comment period and LCD finalization). Ms. Calloway responded that achieving a final LCD by December 31, 2024, would be extremely aggressive and would require the MolDx review to be completed at the faster end of the typical range (three months rather than six), the LCD to be proposed promptly after the MolDx assessment, and the public comment period and finalization to proceed without significant delay. She characterized the December 31, 2024, target as possible but far from certain under even optimistic assumptions.
Ms. Calloway recommended that the team identify early whether GDT's existing OncoPrecise GXP-12 LCD (LCD L38472, effective August 15, 2021) could arguably satisfy the Section 7.14 milestone covenant. The covenant requires GDT to "obtain" a final Medicare coverage determination for at least one proprietary LDT. If the term "obtain" is interpreted broadly, GDT may argue that it has already satisfied this covenant by virtue of the GXP-12 LCD, which is an existing, final LCD for a proprietary GDT laboratory-developed test. However, if "obtain" is interpreted as requiring a new coverage determination obtained after the execution of the credit agreement (September 22, 2023), then the GXP-12 LCD — which was issued on August 15, 2021, more than two years before the credit agreement — would not satisfy the covenant.
Ms. Nakamura noted that the covenant language uses the word "obtain" in the future tense, which may imply that a new determination is required rather than reliance on a pre-existing determination. She flagged this as a question that should be referred to Whitford & Sable LLP for analysis from a credit agreement interpretation perspective, as Whitford & Sable negotiated the PCNB credit facility and is most familiar with the drafting history and intent of the covenant provisions.
Ms. Calloway agreed that a covenant analysis memorandum would be appropriate as an additional deliverable within the Calderwood & Harkness engagement, or alternatively as a joint work product with Whitford & Sable. The memorandum would analyze the covenant language, assess whether the existing GXP-12 LCD satisfies the covenant, and, if not, evaluate the feasibility of achieving the GXP-47 LCD by the December 31, 2024, testing date. Ms. Calloway noted that if there is a significant risk that the covenant cannot be satisfied, GDT should consider proactive engagement with PCNB (Thomas Becerra) to discuss a potential waiver or amendment of Section 7.14 before the testing date approaches.