VCYT - Earnings call transcript Q3 2018

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, ladies and gentlemen, and welcome to Veracyte's Third Quarter 2018 Financial Results Conference Call. [Operator Instructions] And as a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host, Angie McCabe, Veracyte's Vice President of Investor Relations & Corporate Communications.

Angie McCabe

Thank you, Howard. Good afternoon, everyone, and thanks for joining us today for a discussion of our third quarter 2018 financial results. Officer. Bonnie our Chairman Chris Chief President Chief are Officer; Chief Hall, today and Kennedy, Keith Financial Operating me Anderson, and Veracyte's Executive our With Officer; and

remind Before you may we during will under as call forward-looking this would applicable begin, like securities make that statements laws. that I various we statements defined include to

regarding such and statements subject and prospects goals statements, can company and financial are statements no statements pipeline, of any facts. expectations, risks Forward-looking our drivers strategy, results, and Management's performance assurance include cause other statements differ give prove to regarding in they and uncertainties to by actual and future our reimbursement, growth, results historical not discussed and opinions be forward-looking that expectations product that these future attributes may and are plans, achievements correct. performance, the from assumptions, guidance, materially or forward-looking will to implied and/or reflected

to today's with the In filings and Exchange Commission. described and company's press are risks addition the Securities in release, those uncertainties

discussed these financial most comparable the this which of call, this will GAAP third XXXX website available portion our measure. Investor quarter be reconciliation release the during our results, their are non-GAAP Additionally, to Relations call. Please our in a for Prior to our measures tables on veracyte.com. to measures of refer earnings financial website, directly we announced on

now reference the which presentation, our will financial during remarks. Bonnie. will a Keith available published to Bonnie? call is turn also on The his We website. I over presentation also

Bonnie Anderson

XX% revenue of year of reported of over X,XXX, the third a genomic the million, prior quarter business. increase an afternoon, quarter. revenue volume to deliver across execution us joining results growth and test Thanks pleased and excellent very last increase of with everyone over continued year's Angie. XXXX And for again This $XX.X third We're thanks third we representing and volume quarter XX% strong XXXX today. the quarter

raising revenue to of As a million I'll for the to This million full cash of to guidance. for will rest annual to our more a reminder in and with $XXmillion result and $XX our the of each how to key highlights year, of range detail of year success. our I'll $XX of lowering measures provide our our begin success our view third review review some of quarter additional growth range guidance a our the of performance on results guidance burn and financial $XX our the year outlook we're for XXXX. our million positioned the XXXX in commentary Then the of afternoon commercial for and revised early Keith, the the XXXX. quarter we're discuss provide measures

reaccelerated growth. Our Afirma Genomic or Sequencing to and GSC perform well continues a has Classifier

Afirma customers our of of to XX% Afirma base all benign transitioned Atlas the have Sequencing We RNA with having patients become Afirma Xpression from Classifier physicians they with The has to don't Genomic which generation surgeries offering helps space. next against the need. combination barrier in in GSC nodules a helping sequencing events roughly penetrate trying keep accounts securing evaluation. establishes is existing comprehensive advance others property our intellectual and in to with the We competitive along believe standard to care of us nodule extensive this this fortress thyroid thyroid further and

its approaching is Classifier Genomic Bronchial first year Percepta full Our of commercialization.

brushing which cancer require nodule technology part lung tissue or itself associated injury detects of that airway with without changes take field the novel this remainder epithelial piece from the would a need to are invasive genomic procedure. an of in a As

are the nicely the test. it's XXX country physicians up nearly the genomic centers We these with continues XX% demonstrating medical XXX of repaid the early, confidence rate at value Classifier While from volume for sequentially in of the from received orders clinical still the Percepta of quarter. across increase second adoption orders and test many to

on to to country used for are X,XXX access great quarter ramp playbook exiting around our the we results IPF Percepta idiopathic expect to submitted momentum. and date test team and commercial program of the done Envisia Envisia the by on to introductions, fourth XXX of year laying our we experience improve patient end centers which year. to or our has XXXX. successful add work of in the the diagnosis is pulmonary deliver samples track Applying product medical job the the to a We commercial the few the the remain in ground nationwide and projected XX Genomic for from Classifier, fibrosis expansion a track testing a with more early nice for

also suite even customers to XX% relates commercial is drive Samples Envisia growth, delivering keys growth, In have multiproduct that but that for early our We become strategy results. it to Percepta the one are that the of approach is a and this sales believe to and profitable being using approach strategy as our enterprise. cost Lastly, bronchoscopic many sites Envisia. same this commercial evidence of now building to Afirma. adopting sites we Percepta also not implemented from pulmonology effective pleased Percepta our collected the growth. of more for We're are access working, only drive is

the Palmetto MolDX second received our Classifier by of Turning Envisia that thrilled success, administered coverage August which Medicare are GBA. program, at draft now our of is through to end measure reimbursement we expansion, the

test the to IPF. final XXXX and positioned to that for adoption believe We year and expect well decision of early coverage are grow improves diseases high revenue diagnosis lung next a we begin ramp interstitial commercial in this value

to also surgeries. the for thyroid gene to scientific development. the up there a that the performance GSC RET CHEST detect prior included published the Cleveland XX also positive to confident reduction decisions. to brings Percepta at a findings groups the prevented negative this pulmonology institutions in IPF of such are Genomic as value confirming original Percepta Researchers mutations need physician's procedures at all in ability even results this risk treatment our as evaluation more of University The We registry positive Afirma half conferences. This invasive procedures Afirma earlier annual our experience rare plans earlier these TRK Xpression more had for Envisia Also at the showing significant showing Classifier with the the for classifier fusions presented forward therapies. and trial thyroid nodules on GSC future patients of with month, to all at poster further also use of even evidence presentations which the XX of from the recent and our in follow of to study findings they as meeting to and patients the demonstrated their benign variants our of months months. industry from detection agreement data Xpression inform Atlas Percepta found and trial researchers genomic in demonstrating among At anticipate surgery nodules from diagnosis. from in Afirma for for unnecessary these data BRAVE ability our information a State we preliminary and of CHEST were showed sharing and led study provide and highlighted across value meeting outcomes. lung targeted were believe more strong trial compared the included the ongoing dozen to oral Classifier We that diagnosis year We to referenced these measure Loxo that American invasive our Ohio Thyroid Classifier identified points coming the is Comparing from Positive Oncology to Classifier data clinical this in testing. Atlas be prospective world a the was the this the Association real and Afirma success a test, updates products. reinforce reduction these Clinic, leading several validation diagnostic month, to oral This surgery. Harvard We third presentations. in the Our without researchers including Percepta cancer with results. the shared continue look site will patients versus

commented Turning sample and because the patients growth a transcriptome. as Xpression Physicians their full Afirma single our the and GSC now Atlas. I introduction range FNA the we reaccelerated get through now to our entire a of can scientific earlier, has from of innovation, sequenced answers diagnostic

So helpful options in when that Xpression the of GSC the as can in result clinical including rare does genes be hundreds variance trials. not classify treatment the benign, a patient might determining on inform participation from Atlas

We to leadership believe one data Atlas a medicine. targeted we us rare precision for Xpression a based coupled extensive the patient least Atlas's of with new therapy. a position our era fact already for clinical detected market thyroid referred as physician strongly know trial case at with on cancer Xpression by a In variant where genomic the of this

in market based future As more swab our to sequencing injury a the coming making which greater disease, is cancer. of This with powerful for fuel are more RNA-seq in our opportunities you remain plan patient avenues genomic We care these opportunities sharing with our sequencing innovation. lung about cancer will significant the and for point technology business early the even of To the along to move which nasal our detection, on developing underpinnings using support to we and the test Percepta improve believe this lower to pleased our platform leverage progress is forward field about Classifier share look significant whole are we will costs. understood months. addressing to in lung Percepta efforts of we the Classifier to the transcriptome next RNA year exciting

begin of and profitability and long and of the million Cash focus sustained we business to of the XX% spending discipline XXXX. her and to with ultimately achieve with progress term. the reflects our momentum strong are continued success is we discipline. XXXX summary, an and up improvement XXXX for strategic grow quarter investments This was In prepare thrilled Our the final burn $X.X beyond. as on for wrap quarter in compared financial third measure

when our guidance generating fourth continue we financial commercial XXXX with we report year, to are we as positioned in well three XXXX driving will that provide sustainable next revenue our business. products ahead to believe growth results, attractive expect the but look quarter We we

over and XX% deliver volume to XXXX. We test of growth expected genomic in revenue both

Our year. Adoption of and Afirma expected expansion anticipated Xpression and next results. the are continue will Atlas of to to deliver is Envisia Classifier continue our Classifier GSC Percepta Classifier commercial ramping strong

review In and XXXX end provide addition, XXXX. will by quarter project XXXX breakeven some over of the we of and the focused flow financial to operational results revised Keith, for to remain I'll reach guidance. our on execution additional call cash on our that turn third now the we color

Keith Kennedy

Thank you, Bonnie.

presentation financial update our speak is under XXXX our As to events conclude website. quarter plan results presentations earlier, I available Angie quarter mentioned Relations XXXX on Investor the third XXXX an guidance. our with of and section our third in and to about

observations, the of for X quarter increased of year an first Page in revenue were compared Genomic performance three X,XXX presentation, our year of quarters turning relative few are XX% to test to X.X our XX%. XX%. of the Net burn million the outline Page of of million million XX% XXXX follows. XXXX volume in of six performance million year-over-year and quarter KPI's X.X The prior growth financial expenses increased Turning the And XX%. X%. sequential KPI's. improved of third quarter first X.X X.X third as from XX.X margin million, or prior improved Revenue to X, reported in financial XX% of against XX%. to accelerated underlining the quarter. million cost XX.X Gross pages next cash increase each the revenue Operating as results rates indicators six key A XX%. each or increased to or of loss excluding the of

in the very second to X, basis. when a XXXX. flat similar trends in volume for the sequential see Page third the This genomic increased we Sequentially, X% to of context down and XXXX. put see Turning positive from you XXXX columns genomic was volume year-over-year quarter typical to on the of quarter

molecular gross discipline of our each leverage three valued in genomic repository by XX% Page expanded services, and XXXX in rich a labs. testing driven margins first bio X, higher financial our quarters combination from to in from to XX% Turning the of

to expenses Turning investment principally and this increased Sequentially quarter. year-over-year, our from X, declined sales operating marketing. in quarter XX% total operating expenses Page this

shown of are as revenue on expenses this side of the Our operating a hand page. percentage right

We on generating to incremental continue focus spend revenue activities.

XXXX improved and and combined basis to XX% from under of XXXX R&D combined year-to-date average G&A Our to was XX% spend quarterly revenue. XXXX year-to-date $XX just on a million

million. of that XXXX, Turning equity would stock share net net $X.XX. average XX% share July raised to improved public loss million this shares We proceeds per in we Page of X, of sold the $X.X was per net our quarter $XX X.XX estimate issued shares. higher excluded approximately registered been we In and our our million of offering net loss if a on effect and outstanding raising share loss $X.XX weighted our per the have dilutive common

options June X, X.X from stock We employee to million XX Page the had XX%. with Page cash. burn of level We quarter XX, approximately million $X.X million. and and equity XXXX turning September to follows. generated million raise. cash burn million to approximately XX.X cash at XXXX million in XX, X.X exercise purchases. as raised the XX mentioned cash Turning the XX, began improved of of cash in stock The previously was we And bridge from September XX is high We

I Before guidance a to let the points Bonnie, on call few XXXX. for turn back address me our

and As XX at And at the and million, are between our back our from volume XX% the increasing gnomic XX prior updated XX turn of of over our we of earlier, to million improvement year the previously XX over burn year XX million an by an the between XX guidance in XX% to XX% updated the range I'll of call the over we Bonnie and guidance previously guidance midpoint of midpoint test an XXXX from million of now estimated our the to improvement XX stated XX year. growth annual million to Bonnie. between prior million million XX% over supported prior range. are guidance cash narrowing the between million, and revenue

Bonnie Anderson

important patient sequencing care enabling reminding Thank that transcriptome is you, us and questions our a machine outcomes. real whole learning having Keith. to answer that unique close I combination come clinical are want of everyone by and to impact

new leverage providing the committed solutions questions. patients, Howard to opportunities remain evolving As physicians era in help system. inform difference to we we in now cost delivering better their clinical open we and for precision of savings medicine, health decisions rapidly care making a a of will to the lives to call

Operator

[Operator Instructions] BTIG. first or of from from question Our comes Sung the Ji line comment Nam

Your line open. is

Sung Ji Nam

Hi, thanks for taking the the questions and congratulations on quarter.

curious - of might the as uptake to if with I was for point. at comment Percepta. are able nice kind You're seeing of commercial conversations payers going kind your you this to how be on

Bonnie Anderson

I'll Yeah, maybe we an for and question thanks Sung call pass Ji you for where the update with that and payers. to give her joining us commercial today. on and Chris, over are

Christopher Hall

prove continue we We nothing and that on the published, private and think positively coming out as the covered and was it health optimistic to. to together that the things we dialogues referred the has gets comes but data there been will now, insurance and of the forward to - get to excited key I and saving update as system be product ultimately the care data be is have to continue were that by help Sure, companies. trial that registry really of shared you money going product one

Sung Ji Nam

levers terms Great what was the biggest and cash cash or than are a flow wondering wondering to happening the I I year. breakeven get expected, - It's had next your level. bit was I of burn maybe guidance that earlier the for in to

Bonnie Anderson

a how indicated the quarterly profile have focused point on to to time operational in we point, revenue we would I inflection leverage increase we spending that million million that that range of spending Well, given between in sales our really our would operation gained add anything hit a think gets that and have the thirty always and to that the of that across so XX when where be else internally and lot Keith, marketing have that. and

Keith Kennedy

it's No, good point.

Sung Ji Nam

some items great and what or an outstanding much on us you maybe that's there? the expansion, completed could force give pretty if are Okay, sales update the of

Christopher Hall

folks out don't with the or working - is to see next expanding of as the quality - growing of quarter been a at people be exit year growth. in this because sales be coming notion attracting ever end from per few, getting so happy of growing expansion as we mean XXX field so - always XX the the last driving Yeah, the numbers about And progress proceeded that XX we've of as about impressed shows people we quarter really I they're far the products customers force are to we the this was to se always field think We the at we We've that been out expanding and excited group a of grow really to of that continue minus Thanks, really salespeople. as and to the we we're of keep end the continue of they're in with the a and that because go. exited getting the that order that I up force through we've to grow continue We'll we about the plus nicely. pipeline selling - we more coming the we'll high this today. and coming tanks. in we're sort think by to XXX completed multiple really grow that year attracted few this by with to I year success

Sung Ji Nam

Great thank much you very

Bonnie Anderson

Thank you.

Operator

you. Thank

the Souda line from from Puneet comes Partners. question next Leerink Our

open. is Your line

Puneet Souda

quarter. thanks hi, congrats the and Bonnie, on Yeah,

the some have driving this given in it of in could the a You've Afirma, sort of - what of to here, strong your what's give level ATA, today? seen what's expectation that we just is of the today? penetration and penetration So sense you where the contribution stand clearly us coming we out try if I understand, momentum market could a

Bonnie Anderson

By but patients with the on run to Association month, two Yeah, to really thanks we becoming highly of might targeted on cancer back that any Thyroid extend were improvement thanks product market of launched joining through this improvements, been for One, two for benefits being with has with to things. through recurred of allowed surgical classifier, patients the therapy. indication us the in targeted sample we first of to But of also present increase presentations a inform obviously mainstay a thrilled of performance significantly now higher attending able by off was for that variants have We're the of because including back meeting radioactive them now the seen able cured being whole Puneet science thyroid which we as mean we for seven deep product we some consider every were ways types variants side you but with other the at which thyroid first our benign now and now that the the do we've to are are nine that earlier on transcriptome or for and without that the have returned are in our topic platform for that at classify the backbone likely extension cancer the of really it now, that surgery. BRAF. are over the therapies. looking decade. reporting Afirma this a such scientific out associated cancers that American is and been the with science give the our question. certain treatment point was a of these cancer sequencing, and a able cancer cancer where struck generation lab, on that keeping reacceleration I are transformational that of building to MTC, we the cancers of coming been in shifting out can be advanced with When business. rate we the companies iodine patients XXXX, really hot the of can those in number aggressiveness the to it are RNA call platform And meeting now time more years us that of being We then

have of we sample we're when data of transcriptome the So every talk content copy are fusions that - have not DNA and run been patient medicine, detecting other number leap but means these we about in set would mutations the in precision just genomic changes and the making benefit. hallmark really detecting detecting which that the and critical we're historically that whole forward on variants

think us existing it's convert comprehensive to of So leading that's penetrate we're further to that and the new and over of our course customer and base position what's lift. able I science nature our nice our that market giving clients Afirma

Puneet Souda

margin AS the platform, solid thanks. color. Thanks Percepta, margins here. expectation sequencing on comes your with gross RNA on for question in posting what's Okay, Keith, board in a there? Percepta you're improvements gross

Keith Kennedy

managing dollar really sort to We like each on trying to not of return - category, but investment been with we've one any the that manage we overspend in spend.

X%, we up. if or plus minus think where like we'd of I our end XX% to margins hold can directionally that's So

Puneet Souda

Okay.

Bonnie Anderson

And Puneet patient all assay converted algorithms in is project the that lab having and single runs get a which single the door report generated. on leverage expect the then our platform, a unified by sampling of to into assays we

efficiency adds an to run. only when platform our one lab have we have actually So our it to technicians that

Keith Kennedy

which go side the low this is product. about And $X just do million, our that I'd margin million - investors out a of $X.X to because pathology we all single script services remind digit revenues have would of

expansion So on genomic as so margin the continue. do will our XX%, approach we more and margins to we do more our volume expect side

Puneet Souda

if know would add to on see the but there. was then briefly, had expectations? to issue, I I just Okay LCD wanted and just - if confirm to what's already, finalize you covered that pricing on don't Envisia anything

Bonnie Anderson

we're process, open today. in comment the through moving period we're No,

the test in provides in be value at know the XXXX range expect it to finalized other part to the pricing LCD similar would patients will the be. our and to to expect be early We given what tasks. of this we'll that point the We time in

Puneet Souda

helpful, very thank Okay, you.

Bonnie Anderson

you. Thank

Operator

question Blair. Instructions] Our [Operator Brian Weinstein from you. from Thank next comes William

Your line open. is

Brian Weinstein

Good for Hey taking questions. afternoon. guys, thanks the

you on a Just you securing further new accounts? there, the and talk penetration bit said following offering also about you with penetrate existing here it the us little it about could can to a that's bit about or little up ability you or new - next ones, on gen that question Puneet's Afirma color more is penetration give additional is driving can mean, the any more? really securing it I accounts

Bonnie Anderson

good really for bringing share, point a estimated back us question here that's thanks that joining call that did and answer for at we Veracyte. XX%. Now, market up around penetrated today we I Brian about you have not we and thank year first your exited that so last for

With to specificity to extra the were XX%. malignance, of but of from to the And to through coming that the Hurthle slightly or differentiate the thyroid the market very of the refer XX year subclasses difficult more ability to that expect end from having us these adenoma we biology to projections subclass content able microscope, ahead we subclass of cancer like us that the content and penetration of under to in you would the definitely have that's alone the improve be RNA-Seq that the accounts guiding in existing thyroid will the the classifier by transcriptome new we genomic conditions mention able the data cells. specificity converted and we when into that some And benign increase our development, in of to difficult along and mitochondrial be I they we people. to transcriptome, deeper with diagnose new converting tend because go were

in us deeper those some the One sample. is sent cytopathology and example. of those we GEC drugs whole these they cases, gives helping more that cancer now area at that the become help on institutional trials that the questions and version sending a performance new Hurthle clinical variants these on if going informing subclass we're samples, then to the on with were of have the the attract can of review us those tasks. than we of of more comfort medical us classes of they side thyroid historically, to are So that - able aim in may can saw involved And inform of improved fact that of our centers we an as indeterminate in greatly now the the new not sending performed we accounts in some earlier samples of example now would to helpful how that as have cancer, more see performance their cells original there be have attention

Brian Weinstein

for Wonderful. answer. Thank you that

your here? question incentives, where are of sales kind as place do that you force comp on the Second in reps, put you the focus what comp have incentives you expand portfolio

Christopher Hall

we Yeah, this year work. in comping because hitting on that of the sides Afirma are really for plan rewards accelerators reps and they their focused both on have the and it both Percepta them making those

both –that to as numbers the by how So worked. out we've comp is you their with we've so see really that seeing focused model happy to obviously we've reporting, really way that's on on we're the execute been them and executing on and both of drive been those play

Brian Weinstein

talk how for that the networks of question for you or last is for at it seen products, you've big then that on still and the group health how horizon? is big opportunity - about you Great at can me penetration large Thank practices is, your guys an you. all

Bonnie Anderson

we sample Yeah, different your These of are market little hospital bit and - based for a can't course these probably for benefit specific out, become the breaking give that yet haven't is details haven't products typically but any suites done the products doctor's offices pulmonology of pulmonology roughly for systems. exclusively both of collection. is market the are in and different because Afirma XX% three

and bring us like into 'XX more gave pulmonology our for did. do little hospital of the see tracking more a experienced, a be not have marketplace and the market as breaking that these early we're and at Afirma as success the But little 'XX right ramp procedures, based And Envisia office probably business some that great and we systems out So health now. the get facts and in seeing - Percepta in had portion through the it's certainly Afirma we that. doctor's ramped we'll we these leverage products than products to

Brian Weinstein

I the Thank Okay, you. answers. appreciate

Operator

additional concludes I'm audio presentation. this at you. program. the no This today's questions the like thank and Thank queue in in for ladies participating gentlemen showing I'd time.

You may day. now disconnect. Everyone a have wonderful

Veracyte (VCYT) 29 Oct 182018 Q3 Earnings call transcript