OVERVIEW
On February 17, 2021, we spoke with a board certified general and colorectal surgeon in the Mid-Atlantic region. He works for a multi-specialty surgical practice and specializes in robot-assisted colon resections. This was a positive check on Signatera for a few reasons highlighted just below. The conversation also reinforced our belief in the pent-up demand thesis. The friction we hear about and capacity constraints mean that "demand" will be sustained at a level in excess of what oncologists, GIs, and surgeons can practically handle. A wave is about to be unleashed as COVID-19 cases and hospitalization drop and vaccinations accelerate - it could be as chaotic as March and April of last year - i.e., it'll be challenging to work through. $NTRA remains a Best Idea Long into earnings after the close today.
Takeaways
- Patient-specific screening for residual disease/recurrence resonates with oncologists and surgeons. Broad panels sound appealing, but the amount of data that must be collected could delay use while the use case for Singatera is cemented.
- Starting in CRC where there's immediate demand because the standard of care is lacking should mean there's an opportunity for rapid uptake - e.g., our contact could see using Signatera in all of the rectal cancer patients post-operation.
- While he'd like to see competition for the da Vinci, there's still no other good option available. His surgical volume is back to pre-COVID levels after being off by 8-10% for full-year 2020, and capacity is constrained presently (utilization will remain at a high level for the foreseeable future).
- Capacity is constrained and medical professionals are fatigued - it's going to take time to work through the backlog/wave that's coming as a result of deferred care.
CALL NOTES
Background detail: Our contact is board certified in general and colorectal surgery and performs ~250 colon resections per year (80% robotic w/ the da Vinci). He has been in practice for over 25 years and specializes in rectal cancer (follows these 50-60 pts per year more closely than the others). Other cases he performs include pelvic floor work, IBD, and other complex colon procedures (pull-throughs for colitis).
What impact did COVID-19 have on your practice in 2020? How's your volume now?
- For the full year, I was off about 8%-10% vs. 2019.
- In March and April, volume dipped down 20%-25% but came back. I didn't see a bigger hit because it's colon/rectal cancer (i.e., when I'm needed, it's not elective). The general surgeons in our group took bigger hits, and the GIs I work with were down more too (visits and follow-ups, all down). We're now seeing some of the fallout.
That fallout, what are you seeing? We heard 5% late stage (3 and 4) of a GYN-onc practice volume went to 15% recently from a contact in CA. Is the front-end of the discovery pipeline not as rich?
- It's a big problem. I'm seeing a lot more advanced cancer now. Talking to the GIs I work with, it's very true. People have been afraid to come in, even if they had symptoms. Our cardiologists said that people with acute MIs (heart attacks) stayed home.
- I'm seeing an uptick in the number of lesions, for sure. If you drop the number of visits and thus colonoscopies by 10-20% in a given month or quarter, that's a lot.
- At the same time as people are coming in/back sicker, the system doesn't have much more capacity to ramp up. There’s "a little" capability to help catch up, but patients are coming back more complicated - a 3-month hiatus is a year's worth of work unless you're operating in a place running at low capacity, but most places aren't like that.
Wait - 3 months leading to a year or longer?
- I think it's linear and we’ll catch up. We’re digging out of it now, but you can't just ramp up. I can't get much more out of my staff, but I was only down 8-10% last year.
- This generation of physicians is different too, and we can't staff enough nurses. There's real fatigue - I see the same people every day and it seems like they are always there - even older physicians.
- A lot of us are tired. A bunch of older doctors retired; many anesthesiologists saw the risk of intubating COVID patients and quit (and haven't come back).
- I generally work ~70 hours per week - during the height of the issues in 2020, I was only working 40-45 hours.
Have you been vaccinated?
- Yes. Everyone is - we had well over 1k doctors vaccinated - first shot - in a week.
- Some nurses were reluctant, but I asked everyone, “Do you know exactly how the vaccine is constructed?” If not, I explained the molecular biology of it and the response was, "Oh my God, that’s awesome.” The technology is amazing - no more eggs.
There are a lot of players gunning for the molecular residual disease (MRD) space where Signatera plays. We see the claims submitted w/ a C18 code but it looks like lung, breast, and others are in the mix too. What are your general impressions thus far?
- We have been watching this and saw it coming. We just ordered our first Signatera test for a patient. I think it's great.
- There's a lot of controversy about how to follow/surveil our patients after surgery. To be honest, the available modalities for surveillance after definitive treatment are pretty poor: CT scanning, CEA, serial colonoscopies, etc. I feel like we “get sandbagged" all the time.
- What do you mean by that?
- Note, CEA (carcinoembryonic antigen) is a protein normally found in very low levels in the blood of adults.
- If someone has CRC and gets a colectomy in the UK, the follow-up is literally nothing. If you consider the cost given the risk of recurrence - colonoscopies, CEA test(s), CT scans, physical exams, etc. they view it as a waste of money w/ 3-5% recurrence.
- I had a patient with rectal cancer 4 years earlier - stage 1 cancer in a polyp that was removed - ended up with recurrent metastatic disease in his liver after complete excision. It's so hard to know how that happened/how that happened. Did the pathologist miss it? Maybe a lymph node? These are serious procedures - the risk is about 7% of that outcome, but why 4 years later?
- The other area we can use Signatera, I think, is with stage 2 colon cancer where there's a 15% relapse rate - we dont’ have a good way to monitor [relapsed] patients OR prevent a recurrence. If you have stage 3, known +, you get chemo, resection, and/or lymph node dissection and chemo. There's an 85-90% survival rate with surgery, but 10-15% relapse. That's not trivial but may not justify giving chemo to all patients (said differently, we can't give chemo to 85%, we need to find the 10-15% before they relapse).
How did you come to order Signatera?
- It was in collaboration w/ the [rectal cancer] patient's oncologist. We want to monitor the patient.
- There are lots of patients we want to monitor - for example, there's one that did well with squamous cell treated via chemo and radiation but has an enlarged lymph node in the mesentery. This thing is right at the base of the mesentery next to the aorta - surgery to get it out would not be easy. If there were a better way to monitor, it'd be great.
- The problem with CEA is that it's not specific enough, or all that sensitive either. The standard of care is loosely CEA every 3-6 months, colonoscopy ever year, CT every year.
Would you use a broad panel? We hear about drift and the clonal selection and what you take out isn't always what you get/see upon recurrence. Could you use that in place of CE or CT scans?
- Good question - I think you have to overlap and do both, but then that means doing something on an individual level makes more sense, right? If you have 50k people, are the same genes dropping out? How much data do you need to prove that? With Signatera, it's patient-specific and the thinking is it's the right group of genes (16). For a broad panel, are there lots of genes in common? Is it 50 genes? Probably not that many (i.e., fewer are common).
- There's an analog with SARS-Cov-2 - the spike protein. All we needed to know is the receptor binding domain - even if the spike protein mutates, we can still target it. I think we'll see further refinements in genetic alterations in tumors and how to target therapy.
Ok, then how many of your patients could you use something like Signatera for?
- My best guess, with the caveat that I don't follow the colon cancer patients, is that for the rectal cancer patients (rectal is less common - confined to lower ¼), I could use this in all 50-60 per year (I follow most of them). Outside of those 50-60, it's debatable. But, with rectal cancer, surveillance options are poor.
- If I/we could detect recurrence early, or hopefully screen earlier, we could do less of an operation or less surgery, perhaps avoid some of the PET/CT scans, etc.
Do cancers have a typical pattern of metastasis?
- Yes, but then there are many exceptions. We see PET scans light up similarly all the time, but we don't know until after the fact.
- For this surveillance discussion, for physicians to get on board with the concept, [Natera] needs to point out areas where there's trouble with surveillance. For rectal, surveillance is critical because of the radical nature of the surgeries.
- Insurance coverage is a hurdle too - so far, it's good to hear that Medicare is reacting positively to Signatera. The standard of care is not optimal, and the cost doesn't seem high.
Can you share any thoughts on telemedicine or the potential for competition to emerge for Intuitive Surgical?
- With telemedicine, there are so many subtleties of patient interaction that you don't get from a virtual visit. GIs can tell you more, but I don't get a good feeling from it. I like to observe reactions to touch, for example.
- Also, I would love to see a competitor emerge for the da Vinci - I think we need one in the market. I haven't seen anything, yet, that looks good. The Senhance - they ($TRXC) made a lot of noise, but it wasn't good. The da Vinci is so much physically easier on me, as a surgeon, and it's really been great for patients too. Hard to compete with that.
Please reach out to with any feedback or inquiries, questions or topics for future field checks, or requests for underlying data. We mean it - if you've got an idea or want us to "check" something, within our reach, of course, we can likely do it.
Thomas Tobin
Managing Director
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