Exeget (XGN) Q2 2025: Per-Territory Revenue Jumps 50% as Commercial Execution Accelerates
Exeget’s Q2 marked a step-change in commercial productivity, with per-territory revenue up over 50% since 2023. The company’s organic volume growth and higher average selling price (ASP) reflect both successful physician engagement and the impact of new biomarkers. With salesforce expansion and pipeline launches yet to fully contribute, Exeget’s operating leverage and margin trajectory are set to improve as the company pushes toward profitability and greater market penetration.
Summary
- Commercial Leverage Builds: Per-territory revenue growth signals stronger field execution and physician adoption.
- Biomarker Innovation Catalyzes Adoption: New markers drive higher ASP and deepen clinical value proposition.
- Profitability in Sight: Operating leverage and disciplined investment position Exeget for near-term cash flow break-even.
Performance Analysis
Exeget delivered record quarterly revenue and volume, with 14% year-over-year growth to $17.2 million, driven by organic expansion in its core autoimmune diagnostics business. Advise CTD, the company’s connective tissue disease test platform, saw its best volume since the 2023 commercial reset, highlighting both increased ordering from existing physicians and successful onboarding of new clinicians. The business model, which monetizes proprietary biomarker panels through field-based sales to rheumatologists, is showing clear signs of scale as average revenue per territory reached $430,000, up from $285,000 two years ago.
Gross margin improved to just over 60%, up sequentially and year-over-year, reflecting higher ASPs and normalization of lab operations after Q1 investments. Operating expenses increased to $13 million, up from $11.6 million a year ago, reflecting R&D investment, leadership hires, and salesforce expansion. Despite a net loss of $4.4 million, Exeget approaches neutral operating cash flow, supported by a strengthened balance sheet after a $20 million equity offering and new credit facility. The company projects full-year revenue of $65-70 million and expects to reach positive adjusted EBITDA by Q4 if current trends persist.
- Revenue Per Territory Surges: 50%+ growth since 2023, with expansion impact yet to materialize.
- ASP Expansion Drives Margin: Trailing 12-month ASP rose $27 YoY to $428, buoyed by new biomarker launches.
- Cash and Flexibility Secured: $30 million in cash and up to $50 million in credit capacity support continued investment.
With market penetration under 10% and commercial expansion just beginning, Exeget’s revenue and margin trajectory appear well supported, with further upside as new products and territories ramp.
Executive Commentary
"What's especially encouraging is that this growth is being driven organically by our existing commercial team and the growing clinical recognition of our differentiated science. We've seen our per territory revenue grow by over 50% since I joined, and it's important to note that the expected impact of our sales expansion likely won't be felt until at least Q4, further accelerating our trajectory."
John Abali, President and CEO
"Our balance sheet now provides us with the flexibility to invest in growth while maintaining a clear path to positive operating cash flow. Gross margin in the second quarter was just over 60 percent, up from about 59 percent in the first quarter and 60 percent in the second quarter of 2024. We expect continued gross margin expansion throughout the year, driven mostly by our expected ASP improvements."
Jeff, CFO
Strategic Positioning
1. Commercial Productivity and Sales Expansion
Exeget’s disciplined territory management and field-based sales approach are unlocking commercial leverage. With voluntary turnover in the single digits and a third of the team new in the last year, training and stability are paying off. The company is methodically adding territories (from 40 to 42 in Q2, targeting 44-45 by year-end), focusing on high-potential markets and quality hires rather than arbitrary scaling. The field presence, as opposed to inside sales, remains central to driving physician engagement and test adoption.
2. Biomarker Innovation and Clinical Differentiation
Recent and planned biomarker launches, including novel T-cell and anti-PAD4 markers, are expanding the clinical utility of Advise CTD. These innovations not only enhance diagnostic accuracy—especially for seronegative rheumatoid arthritis and lupus nephritis—but also provide new talking points for the salesforce, further strengthening physician relationships and supporting ASP expansion. The addition of Chief Scientific Officer Michael Mahler, a recognized leader in biomarker development, signals a deepening commitment to scientific leadership.
3. Margin Expansion and Operating Leverage
Gross margin improvement is being driven by higher ASPs, revenue cycle optimization, and normalization of lab costs. Operating expenses are expected to remain stable in the near term, with modest increases as revenue scales, supporting improved operating leverage. The company’s path to profitability is underpinned by the margin-accretive nature of its biopharma services business and ongoing cost discipline.
4. R&D Pipeline and Biopharma Partnerships
Exeget is advancing multiple R&D programs, including urine and blood-based diagnostics for lupus nephritis and damage markers for kidney disease, with validation partnerships through the NIH and biopharma collaborations. The biopharma services business, while lumpy, is margin accretive and helps de-risk R&D investment by leveraging external funding and clinical samples for validation. The company expects this segment to be a growing contributor in the back half of 2025 and beyond.
5. Market Access and ASP Upside
Management is focused on expanding payer coverage and reimbursement rates, with ongoing appeals, national and regional payer engagement, and a strengthened market access team. With a clinical lab fee schedule of $1,299 versus a blended ASP of $428, substantial headroom exists for further ASP gains as coverage improves and new markers are adopted.
Key Considerations
Exeget’s Q2 demonstrated the compounding effects of commercial discipline, scientific innovation, and operational leverage. The company’s methodical approach to territory expansion, combined with a robust pipeline and improving payer economics, offers multiple avenues for sustained growth and margin improvement.
Key Considerations:
- Salesforce Quality Over Quantity: Incremental territory additions are data-driven, with a focus on maximizing productivity per rep before scaling further.
- Biomarker Launches as ASP Tailwind: New seronegative RA and T-cell markers are expected to continue driving ASP and clinical adoption, with additional launches planned for 2026.
- Margin Accretion from Biopharma Services: Biopharma partnerships provide both validation resources and high-margin revenue, supporting the path to profitability.
- Payer Engagement Remains Critical: Success in appeals and expanding coverage with major payers and regional plans is pivotal to unlocking further ASP upside.
- Seasonality and Expansion Lag: Q2 benefited from seasonal strength, with new territory impact expected in late 2025; investors should watch for Q3/Q4 normalization and ramp from recent hires.
Risks
Key risks include the pace and consistency of payer reimbursement improvements, as ASP expansion depends on successful appeals and broader coverage. Seasonality and the lag between territory expansion and revenue contribution could create quarter-to-quarter volatility. Biopharma revenue remains lumpy and is not yet a large contributor. The company must also execute on pipeline launches and maintain disciplined cost control as it scales. Any delays in marker validation, regulatory approvals, or reimbursement could impact growth and margin targets.
Forward Outlook
For Q3 and Q4 2025, Exeget expects:
- Continued revenue and margin expansion, with new territory and biomarker launches providing incremental upside.
- Operating expenses to remain stable in absolute terms, declining as a percentage of revenue.
For full-year 2025, management maintained guidance:
- Revenue of $65-70 million, with positive adjusted EBITDA expected by Q4 at the high end of the range.
Management cited several drivers of confidence:
- Organic growth from existing salesforce and physician base
- Upcoming biomarker launches and continued payer engagement
Takeaways
Exeget’s Q2 results highlight a business moving from foundational build-out to scalable growth and operating leverage.
- Commercial Execution Drives Leverage: Per-territory revenue and volume growth are translating into higher margins and a credible path to profitability.
- Pipeline and Market Access Offer Upside: New biomarkers and payer wins are set to further expand ASP and adoption, with pipeline launches and biopharma partnerships adding optionality.
- Watch for Territory Ramp and ASP Progression: The late-2025 impact of new hires and continued ASP gains will be key to sustaining momentum into 2026.
Conclusion
Exeget’s Q2 performance underscores the company’s growing commercial productivity, margin expansion, and disciplined investment in innovation. With strong execution and a robust pipeline, Exeget is positioned to scale profitably as it pushes deeper into the autoimmune diagnostics market.
Industry Read-Through
Exeget’s results reinforce several trends in specialty diagnostics: Physician engagement and clinical differentiation remain essential for driving adoption in underpenetrated markets, while payer coverage and ASP expansion are critical levers for margin improvement. The success of biomarker innovation as a commercial catalyst suggests that diagnostics companies with robust R&D pipelines and field-based sales models can drive both volume and pricing power. The growing role of biopharma partnerships in de-risking R&D and providing high-margin revenue is likely to become more prominent across the diagnostics and life sciences sector, especially as precision medicine advances and payer scrutiny intensifies.