Exagen, a diagnostics company specializing in autoimmune disease testing, recently announced solid Q1 2024 earnings. Revenue exceeded expectations, driven by substantial growth in the average selling price (ASP) of their flagship AVISE CTD test. The company also raised its full-year revenue guidance and improved its adjusted EBITDA outlook. At first glance, this paints a picture of steady progress towards profitability. However, a deeper analysis of the earnings transcript reveals a hidden gem—Exagen is strategically positioning itself for explosive growth in 2025 and beyond.

The Catalyst: New T-Cell Markers for SLE and RA

The Catalyst: New T-Cell Markers for SLE and RA

Exagen's President and CEO, John Aballi, expressed strong enthusiasm for the new T-cell markers for Systemic Lupus Erythematosus (SLE) and Rheumatoid Arthritis (RA) planned for launch in Q4 2024. He repeatedly highlighted their "accretive" nature in terms of pricing and margins and emphasized their potential to "set the standard" for RA diagnostics.

Aballi outlined the clinical significance of these markers:

The SLE T-cell markers have unprecedented sensitivity, potentially identifying up to 50% of SLE patients who would test negative with standard methods. The RA markers are expected to identify 80-83% of total RA patients, including up to a third of the traditionally seronegative RA population—a feat unmatched by existing options.

Projecting the Financial Impact

While Exagen hasn't provided specific guidance on the new markers' financial contribution, we can develop a hypothesis based on available information.

Hypothesis:

The new markers will significantly accelerate Exagen's path to profitability and potentially drive 20% or higher revenue growth in 2025.

Rationale:

Combined effect of 10% increases in both ASP and volume.

Competitive Advantage and Future Outlook

Exagen holds a competitive advantage with these new markers, secured by patent protection until 2035. This exclusivity prevents competitors from offering comparable tests.

Exagen's commitment to innovation, demonstrated by their new markers and ongoing research in disease activity and licensed technologies, positions them as a frontrunner in autoimmune disease diagnostics.

While these projections are based on analysis of the Q1 2024 earnings transcript, actual results may differ. However, the evidence suggests Exagen is on the verge of significant growth. Investors and analysts should closely monitor the company's progress with these new markers and their impact on clinical practice and financial performance. 2025 could be a breakout year for this hidden gem.

"Highlights"

"Exagen's Q1 2024 earnings show strong ASP growth and raised revenue guidance."

"New T-cell markers for SLE and RA are projected to be game-changers, offering superior clinical utility and financial accretion."

"Exagen's commitment to innovation and patent protection provide a competitive edge."

"Analysts are anticipating significant revenue growth and accelerated profitability in 2025."

Fun Fact

The term "lupus" comes from the Latin word for "wolf." It was used to describe the facial rash associated with SLE because it was thought to resemble a wolf bite.