VCYT - Earnings call transcript Q3 2020

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Operator

Good afternoon, ladies and gentlemen, and welcome to Veracyte Third Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. I'd now like to turn the conference over to Tracy Morris, Veracyte's Vice President of Corporate Communications and Investor Relations.

begin. may You

Tracy Morris

Chairman Good Officer; today Terry. Officer. Hanna, XXXX and for and Officer Officer; Anderson, thanks results. Kennedy, Medical Officer; Thank Chief Chief Kennedy, our a afternoon, Chief Chief discussion our us Operating Veracyte's Bonnie are for me Chief quarter John Chief of joining Commercial Executive With Keith Financial you, and today everyone, and Giulia our and financial Officer third Scientific

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

statements statements goals are It facts. includes our and the Forward-looking drivers timing materially from not future of statements call, total to veracyte.com financial attributes website addressable public the also implied and that actual press and potential our quarter results, company's our by performance products, our reflected Please and for and assumptions, expectations to financial are impacts are our actual no a pandemic, Management's or business any in the in COVID-XX future regarding the product second resulting and potential the other unless differ and quarter from risks filings in statements. Releases results November contained recovery business pipeline, strategy, Prior guidance and timing be the and provide regarding we the regarding or opinions of to discussed correct factors cause subject new anticipated XXXX factors to can or a that Exchange uncertainties included forward-looking internationally market. those during from statements tests and launches any guidance, our the statements, on expectations further cause in company's in may do our of of historical plans, those include to these performance Commission discussion with growth, the results, Investor X, forward-looking prospects and forward-looking and/or of so differ refer at availability achievements events reimbursement our may to under Securities and on to updates will announced company assurance section. for this XXXX risk our important Press a that we they of prove release give forum. Relations results which will the materially the or available in not such performance

business during is and call published the also CEO. in Bonnie we also presentation We a will I our website Anderson, Veracyte's Events to under over reference and Relations available presentation, financial on the turn remarks. This our now Presentations will which section. Investor Chairman and

Bonnie Anderson

across Tracy. quarter strong results us delivered thanks Thanks, a very XXXX today. measures And success. third of for We everyone joining multiple

increased and the revenue timing. quarter, over pre-pandemic volumes of Our rebounding projected prior to our significantly levels, ahead

presentation beginning was XX% of the quarter an million, revenue of over XX% quarter XXXX our of financial that Tracy backdrop, the takeaways second with total increase mentioned. $XX.X products quarter was third highlights through the and as let's XXXX. with and $XX.X of Revenue walk the testing genomic increase growth. from second quarter over XXXX commercial results. million, key prior-year over on Our We've our for a the business slightly above quarter the the four outlined and slide And of and XX%

third volumes of quarter Afirma X%. year led recovery by the surpassing Our the last business with

test Prosigna breast well, franchise quarter cancer with at is pulmonology as a anticipated an rate. Our recovering although our well. delivered We slower solid as

XXXX operations, has revenue pre-pandemic already revenue which year In the our fact, our XXXX, Prosigna our full first nine comes from goal. months of for of most achieved European

on in late the our and nCounter lay the Envisia test to growth team the international Prosigna of out groundwork build for EMEA to instrument. drive introduction continue our We to XXXX

the cancer. products, Additionally, continued and cancer diagnostics Loxo/Eli program are partnerships lymphoma strong cancer us. In Pharma fueling received this our Joint Prosigna high by testing for bid to Federal our market COVID pipeline perform tests, labs MAVIDx coverage expansion, Acerta European for the test J&J quarter submission a government, nCounter access the reimbursement for forward lung This in aiming great EUA our which on from partnerships, to nCounter, our the a FDA their key and in which terms the thyroid catalyst Committee, breast advance, was We in or continues volume a GBA, an biopharma with using our a including work can and large end platform. decision to business. progress giving and company of year. in our to Lilly our locally we women German win of October, very genomic specifically in had the

CMS, $X,XXX, on market-based test, test, or we fibrosis We marks also near idiopathic this Protecting which initiated on important the diagnosis CLIA paid we for the approach Medicaid the or which test July genomic Act, price our milestones in price perform our becomes Envisia by This will CMS unique under achieved Medicare our approved classifier priced advanced pricing will laboratory tests new improves to other remain It lung payers. Medicare and status designation or pulmonary for rate specific at the effective for test a the of September, reimbursement believe to XXXX. at and also and the PAMA. interstitial the diagnostic Services, median Centers that be for the level of Medicare X, when a In diseases. market-based private the Access based ADLT, or lab. nature

carcinoma is CPT both favorable to payer Medicare Additionally, forward new and Xpression Medicare We for Atlas. pricing facilitate national reimbursement this private look and our thyroid codes classifier prices expansion. you and preliminary for Afirma updating as received believe medullary will we finalized

on York State. peer-reviewed pleased in here progress metric and Delphi third will scientific which committee Afirma of data in Evidence week New made Clinical Oncology, eligible positive in we explain coverage consensus published Xpression well. will development medical breast which among about third the In long-term a were Europe clinicians of Europe the across to XXX success are Also complex we recurrence quarter biology independent Atlas Journal related leaders to facilitating for a of is built take study that's Prosigna. Blues we frequently genomic scientific cancer tests. renowned breast higher last achieve including also likelihood PROCURE the large The experts our an which will underlying is Finally, of a and utilize committee launched across great is for together to plan study participation that for as women other over submit suggests known its utility a compared technique its risk policy compelling consensus clinicians well-established Europe, tests, predicting with The the period, the study help clinical most Prosigna, by from from test cancer issues. PROCURE led may report bringing as on the the XX cancer after of breast place used and XX-month to a methodology, of on other the publication. evidence results and thought

our believe reimbursement. for coverage and diseases, We clinical adoption interstitial expanded further evidence we cancer, and help also lung will library and in physician lung test which of the thyroid facilitate cancer payer

and abstracts previous and world Two published key at External Chest and ability the real-world e-poster improve also respectively. Cytopathology tests Virtual data our cancer really suggesting meetings, findings and Society's Thoracic of to American were real which Percepta and lung researchers in Afirma journals oral reinforced Envisia presentations, three five diagnosis publications strong of demonstrating Percepta Meeting, shared a of our ILDs. clinical at the two and quarter, the e-posters five and classifiers an classifiers' strong focus utility Annual studies including This a showing. our were

the weeks field Additionally, including test the abstracts two R&D CHEST an presentation pulmonary our efforts diagnosis. presented, at of science our cancer in-development meeting lung early oral nasal on underlies two related to injury swab ago, foundational for that were

year. We pending request. swab pipeline to test nCounter These de our during in four cancer, and continue development quarter and an new on the subtyping remain nasal grant our next our on encompass LymphMark international track markets FDA our in novo to classifier lung Atlas classifier the of the advance genomic classification introduce Envisia lymphoma third Percepta also tests system and

especially diagnosis and cancer expanding early transform excited our to of treatment help about curve we believe killer. are world's lung the physicians cancer, leading We will cancer and bend mortality against giving in portfolio, new the lung which tools the fight the powerful patients

invasive or will if diagnosis benign. cancer This workup. non-invasive mean including procedures give to they in avoid earlier they be taken or treatment swab lung nodules the put test can nasal people nodules further workup answers risky on if clearer lung their could Our could faster are have surgery with

be what to patients alteration in available the Atlas most comprehensive diagnosis. will direct appropriate that at promptly therapies Percepta we to in are Our development targeted provide will cancer, gene information or helping believe lung

Keith serve data globally. for our more Importantly, R&D our December our it investor shortly. care now of and approach how nasal hear we positively which addressable detailed will lung focused to XXXX to swab provide from to tuned Investors estimate The in advance about a data. day building scientific financials. first XX, information the updates deeper market hold cancer to progress early stage for quarter We'll about this plan lung positioned is into cancers. vehicle We of a review and over on we include lung as biorepository will I biology on a virtual lung also to total our portfolio Percepta across [Technical franchise. event patient our and test Difficulty] thought will allow for continue our for as share more of cancer development. a provide look event to leading cancer has impact will us turn physicians portfolio, cancer third our Atlas new will on they call the a Stay

Keith Kennedy

and refer business presentation, to which you, website. mentioned financial and Bonnie. earlier I'll our which Thank also available is on our you

with report SEC in filings shown how Turning X, table the our revenue US and under to we along further explain and GAAP. slide details footnotes the here recognize

combine purposes, to discussion biopharma diagnostic our and testing describe revenue product and our to may collaboration describe strategic revenue testing business and we For arrangements.

and in net are loss. revenue all operations and revenue other a sales biopharmaceutical comprehensive revenue consolidated data classified under statements collaboration customers or our services non-customer under classified are As of to reminder, of our other

to Turning X. slide

revenue principally by higher loss increased line performance Operating XXXX million net performance intangible points, against or revenue, due excluding $X.X was working $X basis the million in from amortization quarter in & in cash million prior-year quarter. flow million quarter prior-year increase compared income million quarter stock-based third activities of reduction due in used $X.X for prior-year in provided in capital, Testing activities in by the of Net depreciation $X.X prior-year of increase increased is to $X.X $X.X and Total the increased Johnson recognition $XX.X to million prior-year margin, due to in margin of operating million increase and from the The due amortization, in to cash decreased items, in of revenue million increase relative of operating product Afirma, XXX $X.X quarter. cash $X.X XX% the in the and million to net Net a operating quarter. flow XX,XXX assets. cost Envisia cash of reduction tests. increase was was our of revenue $X.X increased $X quarter loss. revenue or compared operations $X.X $XX.X as for XXX million of other interest reported of principally both from of million and $X.X million million a excluding lower offset by a $X.X XX%. and second for XX% KPIs and $X.X in Gross increased indicators follows. prior-year was third X,XXX XXX sequential Gross Afirma, to to $X.X compensation biopharma expenses, volume Biopharma in quarter key and million million, the current $XX.X for six X% Genomic a Envisia biopharma the revenue. volume with test XX% principally third the From Johnson. our invested Percepta. revenue, XX% and third XXXX, included on decline declined reported biopharma of XX% revenue, Percepta the million Our million. million

provides As revenue expect Bonnie for remain from the of breakdown underlying Slide of to gradual and more revenue, has X collaboration revenue. the testing into principally performed fewer Percepta, product pace recovery and procedures we total during further mentioned, biopharma pandemic. a and revenue

year-to-date $X.X quarter million was third the for mentioned, revenue or slightly and Slide into illustrate our to quarter. well of second in as genomic total collaboration cytopathology volume performance and same by product and previously services. million testing revenue. increased in down and of Total million down as and these year, As $XX.X is due revenue a is and offset the product, pacing testing revenue decline includes in and XX% KPI $X X Year-to-date, of break metrics, quarter. revenue. against impact biopharma down COVID Testing $X.X the prior-year above revenue XX our last revenue million biopharma the X%, principally X%

our of Genomic December signature the which sold to intend on gene commercial present assay, offering of of XX, three prognostic average include In third-party genomic classifier trends XX. Afirma to investors To platform CLIA Envisia test our on Atlas, met months includes Genomic reported volume we we in months was commercial XX% nCounter both This as Prosigna of platform, recognition distributed and on the test test volume Afirma, for in volume the classifier KPIs. our those revenue insight ended the genomic XX. third-party breast added we between For tests recognition we nCounter each $X,XXX tests Afirma sold standard. represents XXXX, standard tests product also underlying which and volume. results to September on laboratories $X,XXX diagnostic volume with year-over-year only into XX, quarters, for between sell and cancer nine Percepta, the and and trends We run our revenue intend which that our we and sequential to trends, September we showed revenue. acquired the total next classifiers. we and Xpression laboratories XXXX. slide accrued outline genomic to XX% The our prior expand laboratory. the to or slide the volume Consistent XXXX, give volume on slides our perform met is eight

quarterly graphic Prosigna the volume acquired we XX, slide since the tests identified right-hand On XXXX. of December we in the sold of commercial test

presentation, reported XXX X,XXX of you in XXXX. second viewing the those From in volume those X,XXX For volumes for Prosigna. QX quarter XXXX, XX% to that XXXX, of in QX and X,XXX in third the not XXXX, sequential are test QX QX XXXX, are increased the

underlying We procedures from remain performed pace to recovery expect the gradual more during the principally pandemic. of for Prosigna, fewer

measures to to and the a to attempt of see contain continue reported the to continue COVID in We rise virus. spread cases expect governments restrictive evaluate to

by are uncertain date. of inter-quarter we trends or in business We we that seasonal typically been And COVID. see the recovery to light encouraged will hold have the in

in result As In the a about market, in not currently predicting of to flu cautious and guidance. uncertainty cases continued we season, remain are slope of recovery. returning the rise the giving light we of impending the

XXXX believe to of we very continue and to through corporate you large travel we we associated with selling. We update through virtual continue to to minimum and and as quarter and to pandemic challenging expect the manage time. We to group plan continue expense meetings, this impact for each the it's digital leverage plan prudent hope

slide As through to we believe in XX, and cash, back to the the now turn shown I resources we we will have million $XXX on available call pandemic. significant over manage Bonnie. have

Bonnie Anderson

Keith. financial takeaways Thanks, on of back our you slide closing, key In our and presentation. I'll business refer four to

from rebounding of the third are business quarter schedule. our pandemic We as our is pleased with results very ahead

reimbursement Both along original lab, essay. significant have Prosigna of evidence fuel momentum to strong includes and We progress. milestones and revenue products. with in cancer our all our development growth across our our volume breast and CLIA This performed further tests

from genomic as of on part we lung the And swab in expanding test portfolio. in tests in with four positive our exercise are in cancer with Atlas novel including and XXXX, our continue flow of XXXX. quarter discipline, expectations We third Percepta financial nasal launch strong to to track line margins operations cash

giving ask and will us and for our that, as with as open growth. now profitable we diagnostic no a position ourselves I Importantly, flexibility call have raise to establish please. global now the debt, questions genomic equity the successful up bank, in With million for company in long-term the the $XXX operator extensive we leader strategic August,

Operator

Instructions]. [Operator

Your Puneet of the Souda comes first Leerink. from SVB question line from

Puneet Souda

strong all, obviously you as in strong. pointed But here came the the And quarter Afirma terms weak. be procedures. were volumes of of volumes congrats First in bit on a could volumes. out, it pulmonology to due little

with assume here the be I that. third to you So, could in deal understand. recent terms the I to light confirm that's the full on to continue you're mentioned just of volumes what's wanted light are already And for EU with COVID. and and should view that good were the year Prosigna, I case expectations we this What of we wondering in I'm distracted you of wondering that shutdown? reaching see COVID? But in the quarter for continuing know revenue. improvement as continuing how to then, the in bronchoscopists if

Bonnie Anderson

On the costs what the actuals very this physician still the look, of on to hit, when And very we are But, but they our the a correct that The care to easy business Afirma COVID, easily. future. with and difficult historical would large everyone. patient we're percent physician that. why are, be open offices keep all offices for of the we and flow to projected to taking back first that's is it's market of back Afirma it's patients has control rebound. predict

both and reached constraints data. We what of not continue the should folks' and patients it environments to be data by taper other see flow has hospital our

the off But is in the were it on I low numbers year was Envisia really well. because ground. doing mind getting prior think keep just Envisia

Prosigna's the months, think number those tremendous that And all original pleased hitting So through annual add products. all first nine progress the when I'd then, on those you all to of in we're very pleased really all, say with in of fronts. we're I

continued the magnitude in added which when Germany with that. over big workups in in others. the which we Prosigna, just we associated huge And May, is European say a place. of fact a think those there's procedures on great create slowly begin actually the that quarter not few we over reimbursement as Envisia, And shutdowns, prior business of keep growth there the to about of cancer a launching but in the the there brought for quarter, both will will to doesn't addition kept in and hit to to Had few gain It I team positions, unfold, strongest people lung I really would we have the this obviously and the plan go XXXX Prosigna. that for assuming more Certainly, second since we adding Prosigna. here more is are. We're we menu win into mind, excited to been nCounter our market. is coverage. see market super a to continue we on like COVID – item, positions the all We've anticipation our continue EMEA

all, and in are with we great a think position the things in we're where we're momentum. pleased all So, super continue to

Puneet Souda

And an On data know should for be assume for I potentially a lung over and sort to expecting can should how more have that? and we if the that that here, on swab, clinical going out for after we bit year-end reimbursement that you're expect publication is be the be you that December. little us looking know this assays by you time. should we go but you just you to any – of should But approach, in provided I cancer complete has this this data trying providing as behind here data? going light how have build we where this, that the for past XXXX Traditionally, be understand, delivered? we at a portfolio data just timelines Should terms lay assay viewing to data into in in actually set, different? of into of taken accelerated should this nasal be update historically, evidence steadily you're Veracyte an event,

Bonnie Anderson

last in to final studies of over nature through typically, to you me what additional and But and guys then publishing come test. show Medical at not validation work, let than it doing and some starts I'll what a we Giulia, an like let is in you're bounce turn her Chief this works. But work there's give well. ball walk little through We're the of anything expect this be to that give process until study different down of in Giulia Kennedy, has And rodeo We've a launching and going going late this an you because to Science the intro that done as that her of we've have that. not actually ongoing through the the of our to to and still few and for been at data I'm process done the Officer, times. walk you're you year whole before Giulia? is ready series goes to it feasibility day past. R&D we the entire maybe over unveil CHEST a early the on data then time right, presented peek the data validation the how

Giulia Kennedy

we then for lung would real been our that candidate locations factors. which various we're developing obviously encounter nodule other has to biologies included world algorithm and and algorithms stages, different all cancer the clinical ensure in that we We've the them accounting refine training many practice,

R&D we've at commercializing, we'll unveiled of Bonnie have a validation be with. color independent robustness the in unblinding we're with next we to verification extensive be do as that we to since Day in the toward last when we late And would that with then the and where those. we're XXXX we're tests The classifier, would satisfied explore at data just to the view early analytical now, sure our algorithm locked added training, we the we're these data all that said, algorithm is several in the And have be studies, advance designed expect what that the We of we've steps genomic still algorithm do of to lock to into then, December, and exercises. that, the And clinical some satisfied since months. continue what process provide to algorithm presenting – products, next various right in the the typical a but once within we've test. cohorts our do samples, swab to to showed feasibility nasal development and data training additional we acquired add for their our CHEST both are

presenting the locked So, the Percepta At encountered haven't on the early we of a hurdles leaders solved that opinion that data, close what we're and cross these about. because, believe to is benefit we're see more the some feasibility an highlight we'll to we that we'll validation to test to that within our along going cancer that algorithm how and in be ready versions not choice. more pick is algorithms some which for data December be data, of we draft samples, a It's We'll we clinical of portfolio yet. Investors on independent how until quite in time, we've also that continue way should called data. all continue to we've of what's tests determine course, work of refine and view are across lock the training patient the portfolio. excited various set lung key patient the with final positioning, and development hurdles close those

Day month. R&D at next we that's what can So, expect

Puneet Souda

Great I you trying reimbursement to just how one, could see how to so of with that at this that Envisia squeeze uptake peak Bonnie, But now of here. accretive longer and in, see. And product if nCounter? was gross much. margin the Keith levels if could are to in great on about could also Last thinking ADLT, be ADLT? terms Thanks elaborate term understand,

Bonnie Anderson

was was test great This at priced success. The a $X,XXX.

As Medicare you about for patients. patient XX% know, eligible the population eligible is Envisia

sets anything beyond. Having see in PAMA July, data next effect you will per to test of the into math. to of do believe out go to that? be up ADLT calculated that commercial some going kind we array XXXX reimbursement add nice be a through that expansion So can what will and an – us the in Keith, stable

Keith Kennedy

that. No, Thanks, you covered Bonnie.

Operator

Sung from next line Ji of BTIG. Your comes from the question Nam

Sung Ji Nam

just hear that? implications XX, Maybe, of cancer potential lung beyond terms the I'm terms forward of months Bonnie, and you in on curious to delays or what next Veracyte thoughts going think are for Congratulations the diagnosis quarter. XX over your do in even the

Bonnie Anderson

I would to to early on done. that say running breast their certainly, cancer implications get patients any we workup, sadly, out this and the mammograms COVID of in to Well, cancer, spoke weren't on cancers three think actually I And that more see from position we a now, to may sad where in are later be imagine we it's killers. that years diagnosis these that big

whether do patient hope we a these we rates the the to lung dose eligible diagnosis designed protocols low are to up for for I patients is get kind sure and CT now. see start cancer their it's for and or patient that breast be make health go we cancer a cancer. can up patients mammogram get advocating institutions the behind lives, these certainly to the So, to as And a of to rally call screening on go that thing years for are because those to screening both want stage efforts going clinical indications, of three amp late we that two free our for from last save

Sung Ji Nam

like month there still going even to Afirma would qualitatively, is And for what see the recovering volume volume trends if great for forward. that October? to look share, guys be I Afirma pandemic-related of you It's able uncertainty the realize very the But nicely.

Bonnie Anderson

maybe shine comfortable point wanting few as I regard. that words to we're that this light pretty Keith, the peak. giving quarter, carry saw Keith that the QX. any to add But can think We're in trends we that obviously we anything QX there? through you has could in a guidance expect, on he could

Keith Kennedy

you and a strong obviously, October, as well. going uncertainty. think a go lot load quarter, start And on a lot I up. see of to we politics the case good, really there's had of then, election and

saw that. we but what's the And And in we're really know by in November, were encouraged to trends happen going December, don't what so, to October quarter. we third similar

declines So, Afirma doing the then to still of maintain and doing good sort similar well year, well. still prior was Percepta Envisia is but and relative numbers,

happens we'll quarter. if the comes for what which testing be revenue should up So, it'll in But line and win in being a then big end it – was in for product see it light the be out third the of prior will all the year, what pandemic. us quarter with and

Sung Ji Nam

December, that Just this the not lung curious, kind to I'm of in at tests existing develop cancer? if that sure discussed new largely lastly is is be your meeting to but enhance from in continue to me, investor the Or will study, just tests? NOBLE

Bonnie Anderson

NOBLE study is for future. The

part We have could developments on cohorts, able we're work cancer all we're deck we for once so doing COVID. many the lung we that with not identify upstream early, people have our of then building to illustrates and any J&J. new guide patient uninterrupted to see move to things so But patients which a great intercept upstream, dependent because that why continue a out, big people in cancer our been the ultimately work slide get a known want in is to this of a be and that cancer. elegantly with our and want nodules in the to move pre to that's surgery patient And keep with we treatment that can we use with able nasal nodule swab with if or benign of

built that around future. is the And NOBLE so, program

Operator

Your next Weinstein of William from comes Blair. line question Brian from the

Brian Weinstein

how you year talk are you how data how new can PPV was minimum negative But from value about of necessary on and to we XX% is? USPSTF things levels performance But relative be? at that I on where predictive the that should we need last almost kind PPV the data couple NasaRisk, about that to patients XXX,XXX to side? TAM that believe And think one NPV think the up the ultimately a think on the the you that I from go the then here and XX% the NasaRisk think and it's with the and nCounter CHEST. can for what way on start view just Bonnie. through draft you, the changes you on you opportunity – just build and I then,

Bonnie Anderson

showed side off on we of would think put key low the while the sort cut ultimate the needs the I the aspect of sensitivity, out risk is cut say, be. for first test to feasibility obviously the in But roughly where all, of critical specificity. on terms that data the level is end Well, cards our of we upper off

We're characterized patients the into we becomes think to question to then, get going two And buckets. put we're of comfortable. that off just very the that very have I those ends well. number those can cut

the of from we drive cut true making to sure highly that can many to workup, patients So, we sensitive. a a keep that's benign undergoing how be continue going off

that into benign was remarkable. the XX%, something set if opposite, end, think I to test, we sure NPV the like of falsely the make sort of of our want upper patients off a then, we're was create putting going that data which a on to and we're lot bucket. early And highly on cut not specific

risk high XX% get key acceptable are numbers or continue key letting high that for feasibility the And sensitivity test. metrics. do both XX%, the suffer. to to I those, not is end The to to we of so, on question to the move same the very, that we low move would will specificity or XX%, on the very got wouldn't need end become, the to have the we've say, on bucket. a low risk Those the into

makes of giving moving will day really more The for is to fact, more a getting forward lower flavor side fairly for numbers and moving people market criteria or don't eligibility typically TAM TAM get The screened. decision numbers the data little that. out then place. us. final change our to over data in our straightforward sizes finalized patients to preventative look a because cross-validation the and just along, We those little we'll increase if, showing comes all force the you're the after So, task R&D until on a things

want tiny that's if nodule, out get patients of that last every to started going because you X-millimeter really patient well set you are and paid be worked the is might thing that nodules tend the getting a up. to has be is also a screened not that that know correct, very And worked a nodule up. We at patients is there lot to number parameters of found not look that up there have because to

number we on those our expect market the be in what that rads, patients nodule feature if today's will screening, we nodule, so, lung And have or patients the they're of to market the patients the exists that believe criteria of using test the all workup. we size would referred the if And already paid through for. size would that with coming an what to characteristics for are be incidental it's

Brian Weinstein

about about that view we're nCounter, it well you year the over opportunity talk a how last advanced in is here, and product can just On the year? and updated the on

Bonnie Anderson

would on world Of I all, platform customers. the – platform, definitely those of that platform customers supports up this running doing all we distributed have exists. plus reconfirm of That robust. is service we tells the in picked incredibly say have mind. person There's that one no for doubt platform This hundred to this we robust our that technical testing the we First Prosigna have incredibly is. around you that how best we

more on on platform. acquired we piece very go out we equipment on to weren't high frankly, platform, a were a test to going when with cost the a is of it's justify single that more and NanoString menu that we the challenge proliferate because, accounts that early clear lot lot difficult was instruments quite one very Now, had,

move with and to item to a lymphoma that test to expand partners lab. menu. with so, track are still COVID which on our menu, We've lymphoma testing got That accelerating over the underway. Envisia advanced advanced to will including look now our out then, on US we our the of looking late new Acerta year the We've will got menu we along, today. a working are of say a companies tremendous also that would market put through next we've And the nasal remain year the get companies We as where built our platform. swab pipeline out us its so forward NanoString in Veracyte And half customer. still will bridge, second have happen and next is we we off to of is partner MAVIDx. But diagnostic are. We've the lever menu that that CLIA the we that determine that reach to instead, nCounter say moving the following we interest situation with adding into the test a from entertain to test. point Pharma they we and And excited launch I then very the point been when CareDx come whose CDx our work case. And as and collaboration I'd about in effort to a test. those what we're clinical handed pharma collaborating they're as that NanoString research every from deal at where that should has customer that to customer creation a announced migrate value enter pointed we confirmed ready

very did new we this items of than win as marketing see reaccelerate an EMEA hired next year, begin set come decisions we've less the and the that additional year for these off the – up think, the and couple lead unfold just I managers, hired end new –we're new year toward to Prosigna to back of menu coverage of to a ago. said, deal we I as nicely we've on a country begin

Operator

Capital. the Flaten from from Street comes question line Thomas next of Your Lake

Thomas Flaten

Keith. Just one for

you should little we about that? On talk kind be back the thinking You're or gross what we margin excluding bit be where should how a to you you of about think were be. for that we see biopharma, mid last flavor into XXXX, place you give seems how evolving? gross us roll happy to like can a you as margins Particularly year. some for It the can

Keith Kennedy

where keep, margin obviously the more tests. our like before, see got obviously helps. volume. curve. what multiple reimbursement and that. it's And as launching we're we Obviously, it, to of in here XX% to we to we'd may XX% the that further along we in XX% – call Afirma, bottom But the do the shock try test As is we to a That said we to XX% mix, like look QX,

have we there. protection So, downside some

So, feel pretty good about it.

Thomas Flaten

coming XXXX trying an incredibly – cash I'm you Are balance with I busy balance how that are know exciting thoughts but against perspective, are have. you out, a strategic that guys to there you utilize hand? how tests thinking should board? from this position? best have there you're that that cash at you bringing you utilizing on we think that looking about might how Are additional Or cash about on

Bonnie Anderson

to about we're years, having debt sorts no few expanding menu can have We in business, markets. advantage taking on new of now the become we're some and to have, ultimately, accelerate. the question. Look, this now, to set with over substantial we broadest sheet. with strategic that. fronts take up all what the of We that's the the good certainly, be what cash reaching testing global next advanced going to ability we company we on and And genomic think, feel capabilities, accelerate balance having going good to global menu incredible a mean That's flexibility everywhere executing and a

the use the to make ways and on will, most be strategic that could seem smart pull the think but we business. I'm so, sure, And there's cash, for the trigger I multiple things sense

Operator

Stanley. Savant Morgan question of next from Your line Tejas comes from the

Unidentified Participant

is Edmund This for on [ph] Tejas.

more you performance being hospital is in conservatism? reversals anything is else your and cautious I for guess, on, any being the trends there third not outlook appreciate this practices Or color behind among just your settings? are guidance. of I you given actually provided XQ beyond, thoughts or just back purely that the your circle reasons seeing on guys to careful? your Just on and Like, quarter, the providing it than and But your physician

Bonnie Anderson

there. pick or world a we uncertain day, up I you that view up Yeah, and out pick newspaper just think at news day, as I really online, But every it's we in look every guess don't you the aren't. live the anymore,

don't any uncertain. we're ball have we behooves world us it pleased just provide that's And not are. greater guidance said, than like feel then, incredibly think That crystal we I in else. to things really with where a anyone

will probably As we year. earlier, couple guidance that we're see remained great. provide for a But is environment strong, Keith then, in. to And which it's said months October the in clearly, out next hard

come call, be think at I to that off have sight lot a for our might possible next QX line year point. As of greater we of what we'll

Unidentified Participant

think some similar your OpEx ahead should that up. up had just of earlier given the about you this the your think mention terms that some you're people didn't looking guys to should product of coming in of you rehiring in off how forward, about were in guess, side, year? we I your we lines of employees you of in launches your that expecting XQ? sales How force scaling But lay

Bonnie Anderson

I'll let we're different But, numbers. in now. some look, Keith a living the of world get into

marketing our of always and embraced world have engagement, whole education. and needle new number have digital adoption. have the been Medical peer-to-peer has program our what education one digital virtual a is on because moves embraced to on We clients education our products continuing

ground, continue that So, et doing in around we've what layer introduction our know with more cetera. have will working the pivoted reps feet mind, today. organizations we're market be how you you on. as going if to products. well, I Hanna we have exactly organized four to operating sure to going that expense backdrop in new embraced though, the toward we to And you in opportunities year sales John expand. that Keep of just very around early And any number to get insight of there? be That's bring products to market so that. the don't I'm the these to of are have smarter moving marketing next and mean on in we

Keith Kennedy

this we've around our where to marketing up sales acquisition ended a think, we about quarter. this of quarter, or I which always and target costs getting XX%, talked is

think our multiple what's this is up I think ramp that's do think we the possible and sales of great. sales. I taking point quarter people of term, indicative we're believe back and to traveling over. aren't tests as is in But I digital will point that. where We go marketing of a long XX%

quarter world. $XX the a we is we is can And goes go amount a from, spends he if right? This we John those we be tests. disciplined a and Hanna million in as so, markets. that to or so those and million concerned each with tend that this get We have the of problem, I'm in to address ramp that say, penetrate money not of markets. $XX quarter $XX need how million less and have need We The capital physicians reason not smartly that's using this perfect we to there that

And so, future. I'm the about optimistic pretty

Unidentified Participant

one the that Thank the stated for where I have in EUAs that do just you. year-end, that here? Can with stopped know up us this considered on FDA fact issuing scaled the submit submission with provide impacted antigen but tests still rapid a and on me. gold is have given And you MAVIDx one COVID-XX? the gap last your see standard, rapidly by at filling color GPCR all? you solution you the still And little guys MAVIDx your collaboration has expect more EUA you to

Bonnie Anderson

a and exactly are develop high very isn't We basically to throughput machine platform granted doing a technology ultra-high MAVIDx all, and of that. they COVID testing our MAVIDx to use rights collaboration. First the

founders inventors may may CSO MAVIDx original not NanoString. You and recall, the or founders of of were the and

very product they're COVID test. is of patients single advantage is in that halted of advantage like what patient gene, testing capability a that many need we of end thousands doing multiplexing progress them they the unmet multiplexing the good And significant is any in They're to year, because behind anything. remarkable. that being keep high single doesn't And product and a be this given to exception remain with put the they're still to they're going simple. super to And believe out run. accept What will for probably FDA feasibility. of that's day taking they're patient advancing And XXX in taking technician allow differentiation have file So, single doing into a the making test. doing given able their also, technology to or I thousands and to throughput the It's I than get exactly which bring. continue the think EUAs large-scale technology the throughput multiplexing of the to because samples believes to there. mind, from that super, a pretty they the to anybody. the going FDA know better sophisticated of of in single track a the We genes amplification a require run have like able EUA instrument is that by work, to and on

along. I'm that moves sure they So, posted, as as we'll you keep will,

Operator

line Steve last Unger comes from Our question the from of Needham.

Stephen Unger

sort curious Germany. positive I'm Germany of couple First now coverage that tests a I just question getting was in Congrats competing there's decision. distributed platform but Is supposed are one And one of positive how what in Prosigna And has have wondering, revenue I you. a on was for Germany. on if know decent now. volumes already. this rolls supposed just was Germany meaningful stream? your become isn't Like, to, on coverage out a to a thoughts and just

Bonnie Anderson

Yeah.

within And centers, coverage we're a very testing strong I It's strong very covered. think have of only market, test market Germany a being of covered. advocated us. position, and of there And that the And with actually will that be KOLs the a provide some in Germany, in are top to market big that's desire drive situation to we relationship local is hard Prosigna some shaken able well. decision. a But Germany adoption very as up. test for for now, when the for multiple tests the which we this got there's that believe in one to strong a the for was nCounters get

to team and Germany very immediately to really a will have We next great that cover to and contributing pivot that able year. forward be look

Stephen Unger

revenues the as and sort quarter? running it's reimbursement, look specifically what $X,XXX to for that changes, the the test? around XXXX third been And in in XXXX? a revenue with far is Envisia of pulmonary possible like level per test, it Keith, get does As

Keith Kennedy

Yeah.

$X.X the revenue? was I So, million. you like think it lung wanted we said

revenue have revenue. backed test, of QX could with that terms you on well lung doing Now, the in into for we're test. per number per And revenue

same until of with going how as and determine side bit up Envisia ADLT lung I come out status, in the we'll year, build has sort talk the done that the well. That we'll sort QX, get the model around as keep Difficulty] next Bonnie into really ticked XX% but obviously, would about Medicare and said, on [Technical we of in rate – impact little that's billing back and a of, that with So, goes. the to market

for that for now. QX, the volumes we've just and on billing aren't We'll going the It's So, started the year make the call The right come that QX the difference rest that high lay back. model. but test. to out meaningful of in we'll

Stephen Unger

next you correct? bump overall, should get year, But, a

Keith Kennedy

Yeah.

positive. it'll there for You be into – out have pencil I And to year be I $X,XXX very but math can we'll to the the can people could imagine do don't want call, get we'll with and next to numbers and so on the that to lay the tests. all that up models. a analysts, of really want that build

Stephen Unger

And then last question.

you decision it the maybe LymphMark, So, expecting a with are up would correct? guess I soon? so. a in or from that that fairly we thinking FDA be week came Is

Bonnie Anderson

There's FDA no, happens no. no, no week. a decision No, in that

in where would respond shortest be to a days. to XX have the XXX(k) fact, you In route

on is track So, think We no, pointing the first LymphMark that. half the of that next probably I we been commercialize for year. in what to still think we've we're expectation will

Operator

further am for concludes day. no Ladies participation a conference today's Thank I gentlemen, have and at time. questions this this you showing and all wonderful call.

all may You disconnect.

Bonnie Anderson

you. Thank

Tracy Morris	Vice President, Corporate Communications and Investor Relations
Bonnie Anderson	Chairman and Chief Executive Officer
Keith Kennedy	Chief Operating Officer and Chief Financial Officer
Giulia Kennedy	Chief Scientific Officer and Chief Medical Officer
Puneet Souda	SVB Leerink
Sung Ji Nam	BTIG LLC
Brian Weinstein	William Blair & Company, LLC
Thomas Flaten	Lake Street Capital Markets
Tejas Savant	Morgan Stanley
Stephen Unger	Needham & Company, LLC

Veracyte (VCYT) 2 Nov 202020 Q3 Earnings call transcript