PSNL - Earnings call transcript Q3 2021

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Operator

Good day, ladies and gentlemen, and welcome to the Personalis Third Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call may be recorded. I would now like to hand the conference over to your first speaker today, that is Caroline Corner, Investor Relations. ahead. go Please

Caroline Corner

Welcome operator. third XXXX quarter Thank to call. earnings you, Personalis’

statements John today’s Tachibana, and All historical call facts on statements matters me considered the relate West, do Chief on not that call Officer. should Aaron Joining laws. of and meaning are President of to securities this Officer; Chief Financial forward-looking be made within Executive U.S.

risk subject regarding performance, technology. from any encourage statements to for trends risks are to update new These with most Personalis our products, be example, XXXX by for our described results obligation financial to in to the fiscal undertakes and today you that For no except fiscal statements, filings our applicable the our uncertainties and orders, XX-Q our services statements and year actual We could to and law. year SEC, expectations filed the XXXX. XX-K factors required review recent current as cause expectations. third particularly materially these for quarter differ of

release with our www.personalis.com is website, our section financial press the our XXXX quarter Investors about on includes under available and results results. additional third details Our

A filings, will by also latest website our to today’s Pacific Time we a.m. be XX:XX of SEC has you encourage review. available Our on website recording call which our today.

and Now I’d like quarter business third John comments to over highlights. his call turn the for to

John West

the In oncology year. last over of you, revenue grow, the Thank our prior sequentially of particularly our business. period the increased quarters. It over QX, to oncology Caroline. Personalis grew same continues from eight by has business each XX% driven

the the in QX were times amount revenue of for received quarter. New more than orders X

prospective of are for than the more clinical half addition, In orders trials.

the incorporating seeing of increasingly start. designs are it from right the and value customers their clinical pharmaceutical trial in platform our Our

oncology sequential this of QX our XX%. upon of guidance, increase revenue our updated a revenue And largest part year. the midpoint to of our of expect become based We in the

the over contributed last record substantially received to broadened the we has base customer orders meaningfully that year, pharmaceutical Our and QX. in

Personalis continued part the also our grow, test. total complementary to to are it own exome pleased market, also variants revenue. progress opportunity XX% lets Our to which footprint was next of which of relatively gives MRD adoption date. to MRD them month. participate its their market NeXT QX, for in MRD a and somatic identifying Signatera NeXT for lot partnership in We has we It a in of with our Personal, see is launch our our access to product, the plan large Natera Natera’s of with and

We also continue to make progress in Asia.

to plans in lab continuing are establish Our a well. commercial operations and China

employees, our team We hired begun laboratory and to Shanghai. have qualify about now XX our has in

received significant pursuing customer pharmaceutical those are We regulatory customers now orders, have approvals. local and

a China, a customers also are major have working that expand begin to supporting to and to in efforts ordering In NeXT, revenue in XXXX. be position within several now with further international companies our in in expect We recognize months few Japan, Asia. we pharmaceutical

DNA as be two that sequencing such in experience. sensitivity. and biopsy or analyzing can be for infiltrated genome plasma samples. variants access more considerable we we’re the mutational and of identify of provide sequencing, from for To our tumor liquid immune patients genome overcome liquid whole serve level offerings to liquid human tumor for with of liquid tremendous and at a prostate of biopharmaceutical we breast burden Tissue biopsy-based genetic cancer liquid therapy. all give together, small patient’s XX segments the the we problem tissue low most view, this samples cancer, tumor. believe optimized and side or to to provide particularly provides sensitivity provide that the for potential errors, approximately to comprehensive cancer look Using better But identification have background X,XXX when early-stage our the customers to as tumor. NeXT applications. of sequencing a recurrence, those blood detect multiple difficult would is this The have detect. complete realized different have plasma platforms leveraging times which low, XX,XXX has on cancer When blood fingerprint able and Personal high-volume cells, across assays. leading By somatic cancer early Personalis, analysis with gained basis understanding in therapy At most samples, available information points select each today. response profile. maximum blood over together low after decisions. about largest can have tumor’s plan resection genes. tumor survived biomarker patient’s and products biopsies data platform patient’s able surgical very to signature these able personalized two looking NeXT oncology whole on sensitivity, biopsy biopsy two time which the been of us can of their Both mutational actually tissue to our they treatment can range, for have to are Both the types population such customers a We Our we and the provide RNA optimal for amount burden the we cancer to and used we in low a patient’s our who cancer. being comprehensive tissue by By

million. few earlier sensitivity patient’s and when technology the cancer translate of we’ll into a down liquid a some very now Our large NeXT to about much a parts result leading have recurrence. launch opportunities, month. may believe market internal can for We data confirms next detection this can this advantage approach per product biopsy. formally This be sensitivity that more say in we to

complex. of and tumor the in blood DNA Our whole where higher is amount increasingly is exome may optimized liquid cancers, for be biopsy product the late-stage tumors

information can more exome application, much insight. an provide that the from For rich

make of liquid use also years. in many products order filed for companies our to in to commercial has patients multiple believe a with full at QX, Notably, and exome scientific products trials. it NeXT for in response to continue liquid believe by received multi-million We points. that advantages these related patents has We for those together, methods area. we two use in biopsy strong time in Personalis’ And patents analyze liquid progress Personalis tissue just trials. the technological our important cancer who we the biopsy. encouraging adoption not QX, patients, can this each led dollar biopsy new of liquid will clinical that We increasingly same contribute and biopsy-based in cancer revenue pharmaceutical clinical to leadership their XXXX. all to be received

is we our potential the size steps a opportunities build like of diagnostic these a recent I combined clinical monitoring. in $XX United result, are now billion As believe to that selection progress. in market business the to for comment taking therapy on We approximately and would States.

First, regulatory, reimbursement clinical we build our to continuing are and capabilities.

sequencing we for our a analysis for to institutions. is Genomics, us world-class and and plan Reimbursement this area of clinical experience we a which clinical particularly extensive of diagnostic the at continue in immuno-oncology. be has announced We a we have end, FDA Mayo we Also, to experience, research Bob was with collaboration Clinic. hire new within To Recently, the Strategy in Test, medical we collaboration business, as obtaining Personal where Mayo diagnostic reimbursement, This over be with with year move services facility, our reimbursement and Bruce that particularly to MRD into NeXT years launch Vice XX within setting, it we relevant diagnostic will the instrumental in clinical been protocols diagnostic business, their and Dx to hiring in To hiring provider of or recently work area. employees a he as preferred President, using including XXXX the compliant so. of new he important since our with that LDT will VP and experience brings support NeXT establishes medical test, Clinical offering. as of believe which as within Reimbursement Clinic Execution. will build invest and announced Bob and incorporating we our strong

Mayo treatments and improved able for to data be that patient aggregated new cancer will ultimately that of addition, research Clinic de-identified will and use development systems benefit In may the lead to patients.

and We’re patients lives, renowned helping excited about the Mayo we the and that work both longer with vision Clinic the to share. on opportunity mission live focus to better cancer

NeXT Although, we our positioned for In well business. that planned believe from MVP on LDT $XX into using of still diagnostic like we version do, we now Dx clinical task I’d test. million. population will have of Personal a to test NeXT approximately we and sequencing a market entry be the comprehensive the you our the to part update order received VA of our September, work

growth consumable Although our compelling wave our to for during long-term position driving this been has have millions of we that, kept that initiatives am with growing a capital in rich. received. COVID rigor say related early we X.X last the to committed some we and Aaron in needed excellent, NeXT an COVID clinical continue at invest the VA have to XXXX, chain, shortages initiatives We trials, our believe RFP also growth. growth. is us us hand extremely in is With has has VA in deferring believe which and we program, pre-COVID-XX well underway years than been our the deal to the began, strong our and over adoption our years, them revenue. them we for cared XXXX. implemented strong of around which order research COVID Customer XXXX to to I focus execute has task that have and veterans continued been puts work of continue a less the MVP financial and have our I oncology it to to contributed pandemic. been new with believe results. least execution the a both we pipeline revenue vaccine it Since more a good expected we near launched summary, and for vaccinated required We in this COVID. the supply In products to now position remains to and will sequencing since that of for nimble believe tidal this extending major during cases, contributor that just Since proud

Aaron Tachibana

and quarter a for John, level great good everyone. oncology. another revenue you, We new Thank record had morning, and achieved

the for I year. of fourth up remarks, for the revenues quarter million quarter quarter $XX.X up detail million, about and prior $XX.X and prior XXXX, were Total third the of provide for results for year. full of will guidance prepared X% the our same $XX.X from our quarter million my for During from third and the XX% financial the period the XXXX

$X.X the the year. points. consecutive from our other VA for the XX% of increase third X% MVP, a highlights Aside increase non-MVP accounted a representing with year-over-year all biopharma fourth million quarter, more the in than sequential This customers of revenue and over increase and of a XX% and couple a key was quarter period same prior revenues in of

that orders past customer the years X.X have converting First, revenue. are over to we won

and to Second, the This biopharma Also, future. mostly will revenue reported quarter revenue that continue is to from revenue the provides amounts our increases current confidence biopharma in us new with exceed our order our backlog. tissue continue samples. increase each

accelerate biopsy offerings, in growth points patient. liquid we the expect tests our ramp due number per to of to words, time or, the this we other multiple As

of of leverage for upon the this margin million we For $XX.X was year. from end at for MVP period during and operating and The the of QX from prior quarter improvement. prior compared was The of for the lower orders XX.X% higher XX.X% volume, XX.X% year. revenue to for VA million Gross XX% X% quarter MVP the compared estimates, and X% increase of same the VA And orders non-MVP third XXX of increase expect quarter. QX mix convert and efficiency due unfulfilled based to quarter same by customer basis prior period revenue was million biopharma was primarily the points the of to with quarter, year third XXXX. the $XX.X were the last the in third the year-over-year with and the lab unfulfilled $XX.X current

prior term, prior quarter $XX.X new loss $X.X last total investments China to to and revenue we same of compared was the Over share expanding $XX.X $XX.X count in achieve clinical for for quarter $X.XX The development we million in portion increase $XX the do becoming company expect last the in a basic loss with the our average loss million in period year, of larger and million more margin due as diagnostic count million longer and such of the And year. the million the third in the prior quarter third per as loss a third was for quarter quarter to million and the R&D with for was some R&D for with to FDA-approved continuing for million period average the to the weighted were we from was period compared Net expenses and to reimbursement, gross expect same expense enhance increase infrastructure. years, diluted tests, offerings, SG&A product with build margins and $XX.X the of million others. commercial third oncology The the scale and next capabilities, share same the compared of for running while production capacity, infrastructure third costs. for period was lines in increasingly our headwinds net for of the couple share same our we share $X.X million continuing and of variability $XX.X secure and new in year. work increase year. the compared basic adding dedicated $X.XX, period net year. expansion, and revenue. public Operating SG&A with The due with net compared of expense was per our expense million was $X.X weighted gross same the XX.X diluted medical

approximately net needs a finished sheet the Now $XXX.X We with on used million due working quarter strong third million. capital $XX.X capital quarter, sheet. loss, with we the third to the and the equipment of cash balance In cash of short-term balance and investments purchases. to

cash mid-$XX growth in of initiatives. many year We level XXXX usage to to the XXXX, expect increase to due from a million in $XX our full up million range approximately investing

Now turn to I’d like to guidance.

We our platform. through adoption of partnerships continue growth and to drive revenue NeXT pharma our the oncology

increased our growth. this and potential confidence gives backlog significantly Our in area us future about has

$XX.X company basic VA the the of $XX midpoint. range growth of fourth to rate XX customer to in and revenues the at in weighted million is $XX.X For and of XXXX, approximately expected a to quarter to million. expect diluted all be expected be loss range other XX% total million, of year-over-year representing to revenues, be Net we approximately average share excluding million, and to million count $XX.X we expect range the in and is MVP, to $XX million be of the million the the biopharma $XX.X

our be revenues, be guidance at million the prior to of we million, and we is to XXXX report in growth Net to the next loss and year approximately XXXX, full expenses, midpoint. million $XX from increase the million and we to range count revenue diluted MVP, For of to our other to is annual an revenues million. of earnings $XX when up plan $XX and the be our total rate guidance million, $XX full weighted to $XX expect range in to results. expect average of the due expected call expected full XX% basic company biopharma million, representing quarter XXXX in provide during be $XX customer the all and year $XX VA excluding We XX fourth approximately the to year million share of

turn to the Operator? back session. the operator call over will I begin Now, the to Q&A

Operator

question the Morgan with of Stanley. first [Operator Savant Tejas comes line Instructions] Your from

Neel Ram

Savant. for Tejas a on This is Neel Ram

had question the Just MVP. on one

So been Permian with the looking out has the VA of at on order dialogue recent task period, now you’re that potential any another there the for XXXX? March

John West

John. Thanks this question is for This Yes. morning. your much very

So we haven’t yet.

would start think next fiscal in year. than it’s And for that. Historically, proposal. year, do that. to we’d of request next anything general, for the bit a or a to something see on look for little May would early else something new at I were they that I going June activity other heard VA if In haven’t the be

Neel Ram

other one us is you’re provide chain to disruptions? Can XXXX? hand your question, And and consumables. having with initiatives managing any do inventory this foresee it. supply this working you in related impact you how some gross color while Got on to on margins. comments And through in backlog manage And to any

John West

Yes.

John. this So is

dollar when a invested And back early inventory. in the to that up, starting huge commented actually see problem XXXX, like in actually we we tips. a many can small, a know we’ve pipette started think pandemic to amount, wasn’t slow but of that the be because additional fair in lot of that I or things a prior low-cost sort material, it beginning amount we of down necessarily was ramp items quarters, plastic physical it you are

pipette a, didn’t had boxes able we we’ve been a we to So to run of And frankly, tips continue wall out. other that sure items make like and of production.

been issue a where and it of safety We delays bottle stocks qualified seen standpoint. we’ve from suppliers our reagent have have this put issues general, In to plastic a to been shortage our they the increased but don’t led substantially, around reagent, We’ve has purchasing we’ve of navigating because that. very in. from some they active of lab have

to So more been certainly lot track, able something time a to we’ve stay and been had we’ve on on. it’s spend but effort

we’ve area But up fact a able crossed, it’s well, active fingers definitely quarter. keep production in very but been course. been So and of it’s to far, going each

Neel Ram

That’s for Thank me. it. you. it Got

John West

thanks. Great,

Operator

question Oppenheimer. DeGeeter line next comes from the Kevin Your with of

John West

Good morning, Kevin.

Kevin DeGeeter

just two Maybe ones quick morning. Good great. Hey, us. Thanks. from

the clinical oriented about somewhat and need commercial Should clinical and we of clinically for larger kind beyond Personal kind we in or the some MRD test around support either trials diagnostics. of R&D a model think build-out there? diagnostic other to the for XXXX in of NeXT spend on or investments As reimbursement the think

John West

work that to and ways, have achieve initial required do expect clinical think Personalis the new will I of us given be Mayo sure reason place per there’ll the every studies studies the I for that’s make Clinic. but of almost of almost in about it a that. will that, XX,XXX to ground, than product we’re patients reimbursement, with and the year, of the just be Mayo with cancer imagine some breaking that to not that the fact partnering have that that part mean, you type performance it’s, like demonstrate can’t I’m that Clinic. They better cancer. sense we

over And so will it But I like a partner efficient terrific think studies basis. and conduct will there and help that, think in expeditious us a I absolutely, have on that time to that as be other forward I with relatively them. medical expect other yes, And partnerships to look be we’ll with working well. that would we’ll to IN announce able centers we

Kevin DeGeeter

FUS to as that the provide build-out update on well. lab guess, is going? you But POPSEQ the lab, comment China China if I can on company’s you an specifically, how And expansion want biopharma, and

John West

Yes.

lab think has So the gone build-out I well.

We have a good team there now.

beginning do can Menlo Shanghai to Park. now in the We’re as just in we we exact that same process get non-customer samples to show results

up fact those we some in the actually to lab area to processed thing able that of orders California is the been the to Shanghai will XX% from order a understand in the of in receiving the But were think identical instrumental X% orders. will our where perhaps value part in has I China be like and do sign pharmaceutical something key companies, Shanghai. receiving up we’ve the large international that and us about ended deliver in processed product be

be to lab, time – run Shanghai will will the relatively period you actually the grow it at doesn’t revenue, China. where international sites if mean the win it helps take that in some recruiting to the early And time, look have in because probably so modest these but on impact and in of material having be a that isn’t clinical some overall our results trials of us

larger of in lot don’t pharmaceutical are – helps for I that feedback many parallel seeing that countries is a China but if important and operate in there, from we positive do know our So them. companies where particularly you the

Kevin DeGeeter

Great. Thanks.

John West

Great, thank you.

Operator

[Operator Patrick from Citi. Your with comes line of next Donnelly the question Instructions]

Patrick Donnelly

months oncology feel for in talk I a the how I the mean, one couple about the guys. the numbers clearly, need again, ago, love the what the expect encouraging questions. whole then? setup Hey, really talked but taking you’re there. hit increased Thanks of numbers lot through and we know for you about of obviously, doesn’t the it XXXX. to Maybe like when momentum traction growth VA you would orders, there came about, talked you could the Has you talked a of strong. to just orders feeling about numbers? XQ, since

John West

QX. feeling mean, in great about be quarter-on-quarter you would now Yes. XX%. midpoint, predicting our that new I’d saw the at with oncology say we’re I growth the guidance us business

a strong that’s So pretty ramp, XX% year-on-year.

So – great feeling these I Many them some have for time. been about that things of are are coming think we’re together that.

that a have us there. pharmaceutical companies large for We number have really scaling up pretty rapidly been of

So time that become that the thought the the population I out the long-term had received expected than of we would largest And I we business for year. VA this over has orders, business from for with think possible part this the extent, sequencing. had to to was we oncology played way lower relative order some was our the the think

been from two the wave. other that’s orders the – On I offset those have a the side each And pharma some other tidal extent. think the hand, of to almost been

we’re good So sooner And basically thought to than place I a be. that we corner think that’s just actually we would. turning

and enormous market. future the of we’re about company for the an available of cancer part So business. the excited growth our That’s biggest the

Aaron Tachibana

partners. had on order couple ago, with go years back in through, couple a a to pharmaceutical was large a Just a And of what a to thousand went just significant bit, terms you just us Patrick, so John hundred years large two of X.X we little for that dollars. concentration elaborate if

new in in If to had compared look dollars the And come if we quarter, you orders those that several of at batch. multi-millions orders, the X that were of at reported. revenue mixture we had customers look we times the you orders of third

we had customers of of dollars who had addition, orders. In thousands several hundreds of

go, terms in we’re XX% the of a really yet, couple it’s today. can at And working. least we to into that with year, over long ways penetration as after into the traction to and seen and the today, of our of in for of of excited we’ve the date. next of we’re confident XXXX believe the about large where And we’ve all XXXX going focused been So and most not very top the order XX because we’ve on we’re years with got have platform, pharmaceutical we the last guidance but adoption deeper quarter now that and NeXT companies penetration we’re then them, providing we just grow at all fourth we’re customers

Patrick Donnelly

by And about for beyond like next Is we about talked model that, Thank And Aaron. VA. Basically, on model make assume just It the kind of the That’s sure following-up the we that out? sounds I is. that, given message nothing? of want essentially expectation we’re fully you then of really maybe the year? thinking should helpful. your kind should done XQ. kind backlog right just you, where to it’s going

Aaron Tachibana

Yes.

like had John come got we’ve in MVP, to, VA the QX. would here alluded summer QX RFP of terms process, time. that in into right now backlog in and the will fulfilled be The enough out then So

when so, good in we’re right to of I years fourth think zero it’s basically. the that. the from a out, don’t process a we model And able but in quarter size scale win nine the know RFP be now, and and And partner, we’ve third confident just we’ll been modeling we’ll last that the we a win, safe next And more for if second, comes or partner, contract very so the or summertime. to know standpoint, an

prudent And conservative. right now, be so think I it’s to

Patrick Donnelly

helpful. Thank you, Very guys.

Aaron Tachibana

Sure. Thanks, Patrick.

Operator

comes Wainwright. He question next the Arthur with of H.C. from Your line

Arthur He

you RK. Arthur taking is This questions. Thank for everyone. morning, good my in for Hi,

from biopsy. in believe on I or the order color thinking Could tissue XX% tissue mix give Aaron, of correctly, business? you driving how business more more coming liquid of the liquid oncology recall mentioned is So tissue your new and biopsy are the us if I about you internal for the biopsy? And terms

John West

Yes. I go would say ahead, – Aaron. I just

Aaron Tachibana

Arthur, say to was didn’t come XX% liquid has just I So going biopsy. from we clarify,

said in had it’s terms we’ve we’ve to is, has think we’ve of from the growth that substantial. business the been seen, of Most I date been what tissue.

done to in coming great next opportunity for that’s liquid is third for But Personal forward, last biopsy. have really exome well and scale We biopsy, a NeXT the great the that going the believe quarter here quarters we liquid job exome orders with liquid of our us scale as with month, going biopsy, be our MRD our as product right. to out couple

So very little liquid biopsy to date.

Arthur He

Okay. I see.

guys you see mix? order new is the any the for trend there So through

John West

that tissue I thing liquid you tissue get you think, I to just a together, biopsy being both in they highlight actually the companies tissue both They’ll is of other they’re to might one want sometimes compared from what guess, and portray valuable. different customers information get is them biopsy. I because we product. to biopsy ordering see John. is But of don’t have This alternative actually liquid with an some

both seen – time trials the think that biopsy trial. points of So liquid I highlighted clinical we’ve combining we for tissue ordered the of they’re running, – and set multiple at through one biopsy they’re our clinical each a that customers clinical

like immune can see see the you that the can infiltrated things the RNA and with you see tumor. cells you have biopsy, tissue So

things So easier to an a liquid way you a can’t those obviously way get – is with multiple biopsy. are see time But the biopsy liquid points.

this that I the – them of one complements think encourage we together. find two and we Each So that use customers other. the

advantage so see real to use since the together our I is have that And capability both, you’ll them for a actually we actually think customers.

somewhat we that. of so we’ll more see think And

Arthur He

Okay. you. color. Thank Thank for the you

John West

Yes, thank you.

Operator

showing I’m any program. This not this in concludes time. other today’s questions at for you today’s Ladies thank participating gentlemen, conference. and

have day. disconnect. You Everyone, great may all a

John West

you. Thank

Personalis (PSNL) 4 Nov 212021 Q3 Earnings call transcript