PSNL - Earnings call transcript Q1 2022

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Operator

Good day, ladies and gentlemen. And welcome to the Personalis First Quarter 2022 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. to that conference Relations. is like first to now today speaker Caroline would hand over the your I Corner, Investor go ahead. Please

Caroline Corner

call. Thank quarter to Welcome earnings you, Personalis’ Operator. XXXX first

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

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

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

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

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

John West

actionable orders Customer quarter. revenue we the grew new tests, for XX% ultimately, patients oncology make standard aim of becoming be demand care again the better for of longer our could year. Thank prior new over comprehensive the the higher the provider progress of reported lives. our strong the cancer and amount and by offerings and live that Personalis with a you, on NeXT genomic Caroline. of help a same oncology were to than period of continued In continues and revenue QX, strategic enabling our to leading priorities most

are incorporating it in two-thirds the clinical and customers of backlog the pharmaceutical designs our start increasingly value approximately Our trials. seeing prospective for their is trial from right of clinical platform our and

we clinical strides success market, will for highlight which are our In in preparing making in addition, great diagnostic company later. the I

we and it which for customer broaden Our customers customer. than base XX by biopsy received XX companies, with define for the we most revenue year top large the have services continues including a samples for comprehensively half our began our Personal ordered first to processing and over their as a global last customer has NeXT pharmaceutical assay, pharmaceutical that In Platform, of our QX, order global liquid level. annual from NeXT tumor-informed more

other of assay very capabilities among part the favorable. the of sensitivity that analysis As pilot, is

discussions are feedback our we potential several has been customers offering Personal’s with addition, about about positive. In pharmaceutical NeXT in features and extremely

and a NeXT cancer with for our new genetic profile. expect We for this available tumor the a patient’s in acceleration of better the Personal with biopharmaceutical Platform with converting orders significant believe We comprehensive provides of each analysis so potential revenue ramp to throughout million year, few dollars the year, XXXX to or NeXT biomarker understanding beyond. and burden customers and a most today, identification

tremendous that for cancer our liquid been on as prostate data access has may cancer samples liquid assays. and types their plasma processed signature But those considerable old biopsy maximum give blood and By blood of whole small times more complete that about treatment us XX,XXX tumor. and tissue spread we XX have can patients who with differentiates to biopsies this looking over in We competitive to for low detect. problem known early burdens and who immune potential human genome or somatic identify have volume being high which that biopsy notably can surgical sequencing, detect We analyzing a genomes information more tumors to have than decisions survived in to biopsy-based from optimal such select low view, To realized plasma provide genes, offerings. when have X,XXX a multiple they XXX,XXX for human patient’s a patient’s breadth we have difficult and across cells, tumor. after overcome provide offerings samples. all to have cancer variants a time more from sequencing Tissue and whole leading recurrence, personalized approximately of tumor laboratory. for The or cancer complete the sensitivity the these depth that Using background RNA to infiltrated cancer. physicians we our be example, look up the in the in tumor us two errors, points By can sensitivity, at mutations to-date we breast for are to liquid is gained sensitivity. a our blood mutational of cancer response the able can and also believe amount and be liquid for of genome tissue DNA and to we tissue provide we a together serve optimized of experience that as NeXT basis resection such particularly patient’s samples, in largest on early-stage very genome population segments low, able this leveraging can the to the by level sequencing therapy. mutational Personal, therapy variants

into to arise treat Once million. cancer earlier This a detected, approach down result advantage how is much sensitivity may Our of sensitivity this confirms best few in internal a a translate approximately parts patient. residual analytical recurrence patient’s questions detection or about can per may to disease data recurrence.

of for of indicate drug action Our for been emergent patient in variants, therapy options, a course issued information to coverage optimal We comprehensive oncologists just to with this consider objective provides response is therefore, have may area. to Personal, the And this for advise to U.S. not therapy. treatment. approach novel and which them methods provide our recently therapy we tumor-informed, NeXT DNA sequencing patent needed but tumor-informed. on resistance

In cancer initiated cancer one of centers Europe’s to resistance several with to collaborations in addition, study utilize leading we have treatment ovarian Personal indications. research and response understand cancer patients better with and other NeXT

offerings the and advantages Personalis’ just strong our scientific who use patients, be believe adoption customers larger a our cancer patients of be for driven to and for by all response pharmaceutical cancer, those goal clinical clinical these this to course pharmaceutical better of provide same information more cancer entire Our the patient’s their companies detect key to disease. informative the over not services We just that ultimate represents important can can believe is patients, not We for technological has in business opportunity. but trials. trials. analyze leadership of in

Clinical efforts. to a recent As planned to may combined billion of selection result, now and we time. diagnostic are over market our that would $XX for comment monitoring. I our become approximately Diagnostic U.S. steps potential believe business progress some We on milestones regarding in clinical the a taking and our of like the build therapy these opportunities

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

of Diagnostic invest diagnostic We and setting we within during new in we to new of have hiring In this begin with facility will and support area. we employees QX and in hire protocols will year. FDA-compliant this target on our incorporate been clinical medical to a within business, continue and our experience remain moving

based complete to validation progress diagnostic a offering NeXT making are York is to regulatory we for which New Second, Platform for study our apply Dx State on NeXT Test, our tissue-based approval. our

and receive later MolDx favorable the ruling a also submit to are to from in to track Process Assessment half hope the second on XXXX. We MolDx Palmetto of reimbursement data Technology

world-class Third, we essential work with to believe institutions. it’s medical that

and reimbursement San earlier, also patient we future samples in a Dx about begun very Cancer as the renowned our of Health. excited If revenue may We work using Mayo we to are Test UC the Test have Moores recognize MolDx including discussed clinical Center and from achieve for our collaborations. Diego to cancer these at from NeXT NeXT these opportunity with centers, the Clinic favorable Dx some decision test the

lead than health a NeXT Given to also positive believe for other tests, by broader Dx in future. good which of years is experience including will and market. this experience James test with systems with United -- pursue access number have Test, could our market our cancer been of clinical high-end the have the XX key us will Azzaro have intended We of of our which collaborations care hired successful effect, patients, provide to and to we clinical platform research. of Guardant create which fit motivating genomic using it cancer Fourth, XX% a business be clinics, use an more initial and clinicians these in commercial Health. selling optimistic a leaders the commercial efforts believe both Myriad opinion for these the to we halo with our that are oncology we If oncologists is large U.S. States, Genetics a approximately centers, nature advanced care companies our James focus. mandate dual has

XXXX. this Over also Personal NeXT volume growing year clinical for work months, Dx we focus on test XX secure the NeXT reimbursement next as to he in will our both and

additional indicates our Personalis into patients. assays accepted and can for addition, In cancer recently help the ability support help that BLOODPAC of Consortium, the lead which accelerate was liquid biopsy development to

we for comprehensive be our Although this the we still have work to into will NeXT Dx entry QX that well year. market we Test believe clinical diagnostic using tissue-based in positioned of do,

of are or In laboratory liquid test version Test. Personal developed biopsy-based planning a also our addition, NeXT we LDT,

our NeXT clinicians Personal our -- Test. information. since clinicians expect the later expect complementary two begin to use NeXT provide We can also we They Test using Dx

NeXT also that will path our Palmetto Personal MolDx reimbursement via for We LDT expect the program. the by assessment to begin

from our In our updates ongoing provide been our excellent terrific summary, we job progress adoption our of drive and and growing forward. products has to oncology business to further -- continue priorities we challenging the will challenges NeXT existing a on clinical despite increased as Customer customers. adoption the penetration and done pandemic. team go executing has diagnostic continue on with strategic our We

our puts products growth clinical growth. in our over sheet, We for hand to position markets. and to we and strong biopharma the both invest capital Aaron for a both believe test I have near- that, strong a us initiatives With have now balance this results. for will And in and with it diagnostic long-term compelling financial

Aaron Tachibana

Thank and good you, afternoon, John, everyone.

detail with quarter same of the XXXX and which of prepared revenue a oncology revenue Biopharma will company of the was financial we our over in Platform, XXXX my prospective for than revenue are in year. the we orders levels for oncology year. I our guidance first full provide for clinical other XX% and and by results customers quarter the quarter. adoption retrospective. increase about of period Total our remarks, driven compared quarter, In million. more build first the orders the the million accounted that the XX% During for of backlog prior reported first are $XX.X of by quarter, portion year-over-year with $XX.X first our accounted was all customer more than XX% for a revenue The of exceeding seeing the revenue increase for to continued larger in trials continued NeXT

the of the prior quarter. first the for revenue to the The to orders end were period million MVP lower, XX% MVP. the the expected was compared compared the was of underabsorbed unfulfilled quarter basis prior $XX.X points Gross margin second for of overhead million from was VA to for same quarter, first year. orders expect unfulfilled primarily and XX.X% The our decrease convert costs with of due and first revenue with the we of was VA during the the the $X.X XX% MVP the lower consistent year-over-year XX.X% revenue $X.X with the year from period at the expectations. volume VA XXX the quarter, same million decline For

period basic $XX.X The between do achieve was reimbursement we our for first development, Net volume, increase MVP the product due million we our new the quarter some diagnostic investments increase for sample year. And $X.X profile production continuing infrastructure to million, headwinds first and approved Over million and per infrastructure. share with weighted $XX.X lower period due the The XX.X which our million, the validation the offerings, in of VA last for net per increase to loss quarter, in in million average with compared with a as growing gross we others. average the we in R&D the SG&A for higher in for year. prior build year. same the expansion Operating and to Longer in was first scale term, the the net the lines for clinical share year. such year. as to quarter for was a SG&A expenses margin million expanding dedicated $X.XX of was compared months, period in and share the variability expense tests, were $XX.X new diluted XX expense revenue, diluted prior and of weighted by was the last secure of net enhance margins same of first loss compared and expenses work. from medical China of to the the hiring FDA oncology has expect expense margin the the $XX.X and providing million R&D was same compared and same the to quarter, count The was our capabilities period XX million loss our clinical months $XX.X basic prior for next $X.XX $XX.X same $XX.X with compared period employees increasingly to in loss gross XX quarter, with million expect million while work share first commercial businesses. count the test for

one-time of the capital cash due In million. XXXX cash expected a capital purchases. $XX prior fit-up new working approximately balance Now our net of sheet. million estimate and investments the on to we million short-term net improvements a first $XXX million $XX approximately for $XX and approximately to We the this for million construction with investment $XX.X loss, the This cash and usage We first by to with includes of of $XXX.X landlord. million. a from the of balance sheet used ago quarter, of reduced quarter $XXX is finished down million facility, months and our the tenant from amount our strong equipment few needs

sheet. and managing and almost the investing are have prudently cash our balance cash years on and of half We two

given We in extend the many environment, we have initiatives to growth ensure cash far are out but time economic invest as can as current to investments our in, possible. prioritizing we runway

not borrowing do it have do should we available we debt. addition, In need we capacity since have any

to this like us, With I’d for slower Beginning peers, year, noticed we, our to to clinical in patient customer early Now globally, and guidance. current in slowdown continuing flow turn we COVID delays have with January shipments our a of to sample see sample to like variants enrollment quarter. and we seen reduced continue spread trials. in

to projects. when on business is projects, It of Given and our before having prospective biopharma work retrospective than now delayed -- enrollment we use patient not and backlog reduced quarterly to for the that half of that but and is are trial bigger half accelerate, the our clinical optimistic is a entirely impact given continue clear sequential than increasing, may second our for biopharma be of will was when most revenue near-term resume more customer strong XXXX. when cautiously revenue in our us growth we patient customer orders is other sample the our shipments

Net to with million. to to the the loss half and $XX $XX company $XXX be the oncology is coming of the of in customers in expect the a For million revenue other from range of total $XX revenue to range of of be in larger year portion the XXXX, million full revenue expect $XX we million of $XXX range expected million to in be we to and second the biopharma million, year.

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

Operator

Our you. Bruin from of first Thank [Operator with Instructions] America. question Bank comes Derik de

Unidentified Analyst

Derik. Hi. This on Good afternoon. for is John [ph]

First of about the hiring. all, I to wanted ask

mentioned with clinical You and hiring are that regulatory those you expertise.

to you addition In seeing? headcount, are wage pressure what sort the extra of

John West

Yeah.

very and that. a with it along in to John. that we hiring, competitive is this pressure wage see is -- say certainly, very I’d there do market being a area comes So for us It’s and important invest for

sees it’s many areas. the and competitive I everybody in probably more other no face. across think than Personalis different our anything If is that businesses country

Unidentified Analyst

in you Got sales of confidence Could you bringing speak talking ramp. we the on are second the you is dynamics would Lab the how the the -- XH, half And could are you about activity the perhaps giving you. U.S. of OUS, back the versus that in progressing, biopharma the great? be sales second if speak half? to the and what’s And also on Shanghai lab

Aaron Tachibana

John. question, Yeah. the for This is Aaron. Thanks

half confidence going giving trials of with So basically clinical to slower revenue the the in for out time. second of being us in enrollment is just or is about It’s be lost. the reduced, what’s pushed patient terms year not

with do that bit with It’s sequence with our to And so. can get these just the take order demand backlog going strong, data customer that or so see being so customers they months a increasing we and out the their to know of few we get so little and samples moving and a clinical right trials. the are things to time on work want

the what’s the giving that’s are the strong. It’s really demand environment, us So confidence. orders

here, environment is tests lab Park in doing the done or in so here. of are today terms Menlo sequencing of lab our processing we most the In

has in right XX now Shanghai, that’s The We been been for lockdown. China, on really, really has well. are so or Shanghai building last capability the up weeks the and going challenge that

to So stay our been home. instructed have employees

first year being amount samples and our all process year But to lab our to XXXX. later well we operate this the it’s and into couple customers small hopefully this and that will next realizing over so be we inside haven’t been of And maybe able the revenue, anticipation months, lab. able qualifying with a goes then the of if

John West

say on that I been hypothesis out. Shanghai, been, topic particularly the proving think to be pharmaceutical our has international companies I original this that business would would definitely just it’s there of attractive

recruiting a clinical many not of China pharma, are trials where We and operate seeing of unusual different China, but they have worldwide those we But any -- they they lot in to if for business. it’s one XX in them. not in in we from couldn’t be might -- that could handle get of major it are might many just of interest samples whom countries, recruiting them be

I’d say, see And see, qualified vendor where the we an the fully so do halo in international States as with because essentially United as and we revenue a orders we China. effect capability -- in a

that I So delaying is conversion working. thesis but revenue, is the business is that think the COVID of into working.

continue be of about think can potential very that. to I we the optimistic

I with think right we made China. choice in the out building

Unidentified Analyst

as Great I is growing, If the more, in an backlog for been squeeze that with for that there one wait in increase and that. time clients, thank well? you how has the just could

John West

Yeah.

think trials, analysis if past, time the talk for already I the so more in business clinical you we that wait samples of probably -- from us samples existed. had retrospective about in with

we a when So samples be arrived sequenced wasn’t here that the the purchase when delay time and to order between received long.

Now good that business, clinical baked having be trials from of more these very actually being we to are right the and beginning. our more into it’s

happening mean the of be the long revenue time in that enrollment coming, have that stream delay. clinical yeah, with when pharmaceutical from longer their the So terms companies trials and has that the enroll places very in the with of of turns it past, are we Financial is eventually because have that than that but the because purchase into the operate clinical we will in right? it prospective often to that receive Times see and many in order in a which been enrollment will trials, So, a does that they up will it we when samples, we the just delays COVID, the all written they but are samples impacting and other is hospitals delay, distracted does increase

Unidentified Analyst

will you. Thank I queue. the you. back Got jump in

John West

Thanks, John.

Operator

Donnelly Citi. is with Our next Patrick from question

Patrick Donnelly

Hey, guys.

John West

Hi, Patrick.

Patrick Donnelly

talked you for on a the taking just dive yeah, should keep you? a few little Maybe out the How talk front? just about are the that then, progress over Personal we next little Thanks side, bit question. maybe eye there. about on just progress milestones an Can the you quarters, deeper Hey. for NeXT the and on

John West

Yeah.

we are are ahead the of MRD talk folks finding the the I look so think at sensitive project most talked why customers many lot them data mile tests with numbers that think that get of talk I that with pharmaceutical some we and pilot is forth. incredulity, about they developing we have about a pretty that We and impressed this we And are what is here this we recently That’s a but almost people there’s and find pretty a that show of we what -- people who then completing have the we in they and when are actually it. space. have how that. been major company a with

with So begin turn is talking customers we see to larger some will now. We into that actually are have my on scale this expectation orders. that we

But think think having have I samples so arrive see still that this that’s next in and think, We later significant us. that. will be could forth. currently we don’t you year out. for don’t growth that driver the I and time, revenue I in certainly break us a So year, from -- But to -- major

more out one we number about kind We and those like Europe. that also And are on posters, also coming I of with you make that’s We conference of as collaborations. remarks in more will think things the a see be going prepared data. but the of talking initiating results progress, would in publications mentioned and those both

of samples studies already happened. are those Some bank projects from clinical that leveraging

faster. data the that studies prospectively. generate actually with we takes debate In cases, So are happen is has of initiating study time, then it to then where our collaborators, because period also some ability to some

year kinds or that have version I of see those later product next of about will and the So of year, we talk on think both announcements coming LDT you this when out we perhaps will expect Dx the be that us. NeXT ordering do our important to also the I want an clinicians Personal Test. start for who likely Test NeXT use step to We that are think

a there’s between good tie think I those. in

ramping are our we clinical diagnostic as So efforts.

the MRD first quite for from spend. from we Dx. But that the will substantial think on think pull-through potential I see NeXT revenue be I the

Aaron Tachibana

launch then NeXT is towards in that initially far. in throughout And biopharma, really ramp orders expectation and the Revenue you been of was other for, here Personal XXXX, minimal some directed but to will half pharma engagement good of from year. be maybe things thus so XXXX, can back expectation The is the strong look our this with has really, Personal. as might well really NeXT ramp revenue and

Patrick Donnelly

to then seeing the delays COVID, on how kind as sample goes? in should year a are That’s you and related really of you COVID helpful. expectations I just headwind the that you progressing terms guys impact side the still And think came XQ. for maybe in there, talk in can to a have about how just then relative guided about of know we that of bit

Aaron Tachibana

Yeah.

QX terms Patrick, So, in slowdown spreading, with Omicron to in see shipments we saw the variant in sample us. of we some earlier what did

the ago the in terms to challenges why a thing than see in. cautious work and have guide, terms chain the forward. but current same what we of that’s had with we more little we able few been of are bit been are And customers months we going through a right have done seeing to people in quarter problem actually the to may get us, wanted get the we Our the and being some now supply the samples

Patrick Donnelly

on of guess more mean, the mean, Yeah. mean, have the Right. side, continuing is build covert versus clearly, strong is given is pretty like backdrop a that, ability things since actual I you execute and backlog I And the fair? caution to guys the the I it the backlog. that to guide, just kind I demand

John West

customer it work we the so a and and And up going and us samples to patient some not few that’s months backlog trial for have And accelerated of slowed basically back perspective nicely reliant in to at are accelerating that give But enrollment upon Exactly. before we growth. has been and right? the we of picks is up is maybe could and backlog get things today we nature do trials half have opening to think why all, that again. take growing that versus retrospective more clinical down back the orders this year confidence

Aaron Tachibana

side it. the competitively is we really about are we It good are say, well, of I order revenue. just would on question quite feeling doing the timing I think,

Patrick Donnelly

Great. Thank guys. you,

John West

Thank you, Pat.

Operator

Our next question Cowen. from comes Max Masucci with

Max Masucci

the John, on Good the you for draft DNA FDA a to had issued to Hi. development. tumor afternoon. drug chance solid great have how pace draft be you into factoring the circulating next see of would hear couple demand to the the early-stage the It quarters? you initial thoughts on related the review and biopharma it curious tumor then of over Monday if guidance

John West

guidance opportunities point, recall we gives that so NeXT of did that tumor reason at Yeah. Thanks the opportunity look an the and pharma part major I if Personal see last they do circulating DNA some It’s kind of incremental version is of in more updates, We so space. there issued for is us a to that. be built comprehensive think, updated it being I actually we question. Yeah. the that at but year

responding I biopsy think informative you test. patients if I in and we -- so like test. a powerful the for have some on MRD resistance combination think for some an provide resistance also a more or much a much mutations like to panel the on But have just and small I that company detailed from will have a than you think things liquid the MRD into can not, things trial and that panel side more we pick most up patients sensitive the just MRD has data primaries of clinical would ability something combination can be conventional get we can emerging second and a from a we mutations think and pharma built pharma. be emerging look that that’s We

testing integrated different are separate you plasma it have all two one that companies, to with of going blood sets you don’t two to then test. You can do send

So be a we to pharma that. for is opportunity great think going

Max Masucci

Got it.

single-cell and seeing some subsequently to advancements tumor that’s imaging, also microenvironment are accelerating metabolism, pace We revealing spatial, in advanced neoadjuvant the valuable of insights platforms research. related and therapy

So tools monitoring to specialty can into neoadjuvant for demand these of particularly how the therapy and thinking translate adjuvant how breakthroughs and about for NeXT some that Personal, be side curious are on research hear applications? you

John West

Yeah.

I think -- that particularly you So spatial. mentioned the

would certainly think And I I’d tissue-based are some, mostly I scientifically say are be there spatial they So on very mean, samples. that interesting.

standpoint. tend tumor transcriptome on different are be of different microenvironment how they probably they I also use but in that over terms will low cells types pretty types immune -- -- have of think we tumor. out our samples sort deconvolution many is pretty view low the from the throughput infiltrated throughput to methods today time, of our improve that they We are view is the to and all sequencing that

are there’s So difference we first we the kind to more is lot we by lot then of a response things drug, the fashion. course at collected. a that was the patient’s terms but can that learning get a a because more a detailed another high in of of information of same way happen that evolution responding is in that, one versus make of time information get times, sample patient how after tissue changes probably that what that more And been a lot in have a throughput looking

happen, a therapeutic nothing look mutations how from what’s results, been particularly if so are tell that in we patient lot in to be later, have to happen so tissue time of at on you that we sample doubling but pressure there can liquid that points. patient there’s really very different have to and informative really to going So can then that down biopsy response could

it’s the quantifying are test. time, so able And tumor just opposed to really comprehensively in looking not of that but to for one-dimensional perhaps time, more as to the be information just kinds a over again, mutations, definitely usual tumor we more and much over sort is interested pharma the rich of understand

Max Masucci

two-parter a just Final, here. Great. quick

use of terms that is biggest the for are efficacy Personal is you test and the prospective that if great? of year be positive delayed and enrollment the up survival customers MRD detail you, speeding more disease-free patient using identifying a rate would -- First for there in you the additional set But and you Aaron, about in trials for again that any I in for enrollees helpful guide see level for enrollment of and or or determining there’s benchmark to frequently one be the regions NeXT Personal can clearance ctDNA mostly And how have suggests biopharma to it even and with the the around in needs adjuvant specific of last do the any radiographic enrollment after range would are what’s therapy a most seeing what it the demand where expect then earlier imaging NeXT complete John, to [inaudible] you companies and surveilled do days? great to the hear be for But case early -- they be pacing will ways. just driving assuming be adjuvant regimen. that be think impact

Aaron Tachibana

Thanks question, is for Max. This Yeah. Aaron. the

So the of going a with bit terms the an been had geographies European little what’s in Eastern weaker, found on that we so impact. region, to be in that’s

seen have we in the European So side. some impact

In the addition, here in bit well. been a slowness little has U.S. of there as

of So I large seen have geographies impacted. say we a two these being would couple

the total, have of actually guide again, and of our relatively tiny slowness is the so I seen. of down we brought end, bit in terms contemplating think conservative a the a half guide, In now. guide in terms the lower that second it’s We year

We rely samples before can being because patient do to to are sent on are us do optimistic, to work. any we primarily cautious but we be we

The We part in customers strong. from the the environment been have got demand very place, right? of have equation

a in matter next in-house So flow that good want is pick once things of the and half for a believe be patient up samples. terms of work over to have done position they we just fact we good the to a here samples the to second quarters, start get here. little couple are in the on bit and We test so of

revenue the the is second In second of that’s be know, XX%, towards year year half the revenue, half. back half the the going of in more half probably, terms split the it’s the of XX%, or I of of of so the versus year, to first the don’t so

John West

treatment there residual pharma and case is as emerging detecting it quite we a sensitivity, some what might can about for that patient we NeXT that we have had adjuvant obviously, disease recurrence. use in that, pick to questions is you fact think the the the because But are the of the some where see starting. just of maybe cases early when So, also Personal use be difference still would seen part I cases up has that have of beginning

is the tumor doesn’t the sometimes And patient adjuvant grow. when treatment, under

considered You something that end would up be with disease. stable

you disease of be DNA below a the and the test. conventional move that but hasn’t And detection isn’t at gradually changes necessarily later happening either. levels, So of limits cell-free tumor and down change away, that MRD a that it in then tumor the all to can begins year growing have would occur way and is gone

all know to this tumor time just not to terms MRD drug. to you but it’s actually and don’t increasing so to just detected, on do you keep of patient’s will see can things see there. see kind and And and we negative with kind results, during where of on, there we that all a where level know not it’s detected, the may sensitive know test, at what’s it we came if if going you is whole the of gives down understand And are get response invisible changes down eventually, kind then, not there of us it gradually from. these all a conventional using there’s and what’s can you period it test, an in or that. ability not was the for happening nothing decreasing, of Because low what eye see Otherwise, of detected, there, less is that or the

whole really are when a in tumors is down look actually is which and measure that disease, the like there’s lows, why doesn’t in we it can these this clear with that how almost different it we patient completely we that’s disease. still it’s that patients. So later what necessarily of see particularly drug see the and that with the recurs for do subterranean It like at it regular there, world is being actively treated but a can test, see might different

just I things new up there’s lot think had are XXX it’s what much they of of we a over detect having actually, lowering waiting before, being when finding recurrence was that but a reflects XX called sensitivity what a actually cancer them So the like in so for they see and all have the groups is cases, other just have by to there can by the enough many world could see got along. that informative limits that been able large new by finally to that have it, And a people what recurrence. might factor we it that than more opened was sort

we outlook so And have on different a very things.

actually think idea If the be what you at cancer from low and just completely that’s you might know level, there, different it’s a it’s gone. that very a is

ways thinking thought talking even will ourselves pharma people see We this trial see designs about -- a of haven’t some different of we to So that’s up which of I ideas. think we use people’s definitely that lot with started opening of we and do customers. creativity once that

maybe different they this pharma, using have So technology that by to of unusual of a time a access innovation sort to sensitivity. this think I it’s approaches suddenly lot level of of in terms of given

Max Masucci

taking for the Thanks questions. Great.

John West

you. Okay. Thank

Aaron Tachibana

Thanks, Max.

Operator

from is Massaro question next with Mark BTIG. Our

Mark Massaro

Can Hey, it you sales to with many evolution analytical validity, walk there? you and My one is, the Personal how of for putting or just part and are you like calling through promising maybe is questions. data in initial pharma It’s for is NeXT us AACR, on you Personal. per clinical that I then data NeXT pharma things you the part Personal? as customer one second have one where a for you funnel great the people validity three-parter. final And together clinical first at NeXT to Thank guys. The the million. see utility, for showed pharma have relates the really think, bizdev

year? to times is next than later You to you which when higher might methods. have ASCO million, planned shown speak data to to year per or XX able times parts specificity we do Personal for for and guess, have this NeXT one you early XXX sensitivity and I three other see anything be can or

John West

Yeah.

we coming have we think we I obviously don’t more will conferences. things of forward. ASCO yet. more have at as a announced our So and data go will out studies we have plans are There variety

to fastest things speak longitudinal generate So going that series kinds. generate won’t a But of thing will have that data the different I we today. particularly on retrospective data, whole samples. to of Initially, are probably data

still and So few of as at out publications whether looking quite those. as quickly other are samples that There been it’s them a posters can. to have the with with who quite already have things we expect have the have to of the those, or There’s we the we bring we sort would conferences, -- other those interest available as hands a in this ultimately additional -- we So we been -- banked investigators begin I technologies a by that definitely, experienced pot their with running plasma get and and are space and be past blood are and for they at where I’d lot engage of on Personal point. please? key NeXT on testing lot engaged actually of first in at to people be that, that’s to a MRD in leaders can boiling publish data first past using opinion with generate seen say

longer interventional The would longer typically generate utility and require that validation. a be the would that that’s will clinical study Some more and analytical the would validity out. of interventional that’s to be prospective data studies, LDT clinical require

yet, have clearly that I -- plans our we it’s discuss that road on want to on probably are but think don’t we So we map.

about think types on cancer us mutational people prostate the tend think the about very and aren’t of burden. see lets sensitivity approaching talked and I low to cancer, have they breast we that the script most I

cancer be tend much, an really to does have signal variants Mammography and But exome example. shedding detected and also types breast is actually they small many job tumor-informed just pretty So the for upfront not a that a that if that that you are low. aren’t very a for in you great approach of early. it’s if only cancer, use tumor

this we that think what’s are excel at and demonstrate that range. three to way parts so at the that that so also is per And an can one area million the can future. to current wouldn’t looking potential that do on our We is the there This think data. I’d be would in per best I of this we be million say really product that’s clinical one we the -- would part even go more the and out end treat of that R&D as But things. sort line. products end -- below further of in the to require along so additional ultimate with

have I think are doing extended things we that to and go further. room of kinds even the be

think I at. also So that the opens we up look applications

have lead going projects development business to but had, focused have our customer pharmaceutical we coming than did I’d the that, business Different more project interest you was development of almost spoken and almost about six the which we say, large more going process. ready But to now at that’s with I is every the every not different be at pharma the there’s that single they either say start, I that already went pretty we double have fraction great, funnel through world. which of a or team, of are is terms size orders soon and I a could And to oncology months. what think one. asking In are it IPO stages people were the when am for to team

there So but… there’s timing different

Mark Massaro

Yeah.

John West

obviously, by larger group pharmaceutical biotech in again, we those oncology with of think engaged even business of of number drugs is much the total developing that so even of that, and large there’s are there’s -- size team, because, drugs. are a companies, companies the that the lot a development we don’t the but I with world, not limited

This and not coverage is same and we step of the the engaging get generating universe, making doing pilots say think good is way will the with data I customer of have our just response initial people potential through and kind people. the is I’d next old pretty definitely thing. So it. But

Mark Massaro

genomic helpful. some and comprehensive and That’s lines ask like to you market is second others. the have Caris Tempus of players along investors in how when win is Guardant, Okay. profiling the going more FMI super My and and question Personalis

So I differentiation. your know you have about talked

what sources if in you immune a become expect repertoire. do are? building applications, tumor of of become cross you you you a your certainly clinical when do market folks in mean you You will of you sort talk research really analytes But have first been think think and have you one and -- microenvironment I pursuing to highly comprehensive ways the about differentiation different been essentially using can how been you what how the coverage and bridge, to of do leaders, the these I market leader for would have one core and of guess,

John West

Yeah.

to that’s the once good okay? of experience, you the people the KOLs that institutions think, then to people with then Clinic So lead mean, and the and These the in guidelines, we the some the adoption high-end begin as if with map we have the broader why I’d that’s centers. are leaders, guidelines. are the community kind like the So the -- begin then are I so is talked This well of that this is, about say there’s Mayo road forth. leading oncologist, the at there mechanism And before and with is world. might working I who write These thought the NCCN mechanism. buy-in can from get

differentiation, of therapies. the built platforms ago were you some of the involved and era talked terms -- a In decade targeted that just about really were when the for drugs the developed the over mostly were were the classic

thing. you KRAS of So EGFR are looking or a a mutation that mutation or for kind

checkpoint are revenue oncology we of over the see XX% think I worldwide in probably now therapeutics. inhibitors

of the immune so can’t and And so you forth. neoantigens aspect the mechanisms the of and just system ignore

you all out know, even not of they even if have to for somebody that way if response see create look only are an a either over piece can’t of time, relentless they And that’s are -- that’s the at that to that useful. don’t key no even has platform small And and so there’s to, a neoantigens is, have that the an genes, these no such it’s going if issue. me picking just the XX,XXX of panels where ability momentum then actually what also mutations broader therapeutic very that immune X% been

the getting is completely mechanism have So I adoption the be now the to that’s this first pretty different think key substantial. action, that of of adoption drugs

really Sanger go at they years that, leads and kinds so that adoption. with worked so up as can with been and decisions, guide biomarkers leads the you people When centers the that’s XX have will as started to through like that and using of sequencing guidelines ended NextGen when that’s had they key time, worked in most NCCN initially and companies Foundation same NCCN eventually the inform leaders we a And opinion sequencing thing. that They for now on and lot the be Medicine. it forth. have mentioned that they clinical in -- the NEOPS kind And here back in the differentiation was of of to -- to same pharmaceutical and right XXXX, the

to be same XX getting updated think But just it’s started that ago. they pretty through went now. process. I So They technology years

that are began there. that through and it’s took map. is process as biopsy that also regard, in road others but working out the means more technology But same MD Guardant to with essentially Anderson the far map our liquid approach, that not road So also modern that along same they we expanded

So, and NCCN out leaders the again, guidelines opinion there. work first, again the get key then broaden with from

of kind are the that we be next technology we the -- one we would of would like So that and of approach are waves take.

Mark Massaro

Okay, Thanks back the for I in color. will the John. queue. hop Thanks.

John West

Thanks. Okay.

Operator

question Needham with & next Mike from is Co. Matson Our

Mike Matson

reimbursed But and your maybe talk can Thanks. of tests, the brand are about I reputation. the you you are perspective? just just John, financial your paid or they in your build kind I if about the guess you cancer just -- eating the working from Are you to as are front of using just or? have that the centers. them patients they a for paying there, a or remarks follow-up getting they need to from are the that are insurance get or works getting they they how -- costs with the getting KOLs understand are if

John West

answer I can No. that.

the people pay would those that in the centers, are it. for So general, generally at don’t working the that insurance centers it. with pay we It’s patient’s that for

on MolDx So Dx taking process. could be And the favorable of MolDx, the be reimbursement reimbursement of so so to about of we we Medicare, in XX, are platform end Palmetto decision, And early would that to getting leading XX% that qualify all cancer about patients would are NeXT over mentioned U.S. this a important kind our through optimistic year. us. and the a for decision

private to that fact doesn’t insurance. treated be be at mechanism they happen world-class insurance, we financial see that covered a would payer some insurance one reimbursement be the ramp private product The early support after another line. that being the So patient’s centers to get the base. one these doesn’t to long reimbursement Private expect that’s -- from change probably to gradually but would by actually of on,

technology, there benefits. think I is not anymore and that of them the years brand-new but the is NextGen buy-in ago, and being starting as technology more I think new most now. was I treated mean it understand

same product. can kind path match so you the there’s reimbursement being the of non-inferiority, -- be would a of then a see and kind very of pricing, at sort the think but I with highly So differentiated the where least certainly mechanism, able it to

So the scale our we part we laboratory. is of have done of leveraged what have

highest everything NovaSeqs. running the end We on are

can we cost So a where still lot generate position up a we to be and competitive. have with end more data

differentiated and So the reimbursement to product have negotiated it amounts the the others still ability and decisions gives already with a us payment that have CMS. leverage

Mike Matson

you interim, sort long reimbursement guess MolDx. I guess was the have I I Understand. until of but it won’t in with thinking the that be Okay.

Azzaro about kind would of you to system. mentioned are sale, on Are build kind to -- James sales can you the clinical and force of but call you talk like -- will, you the planning to are okay, of assume oncologists, some lead market you enterprise hired So, kind if the that you your then how planning I you diagnostic also actual tests? healthcare just the

is sorts it a guess those I or? combination of two So of approaches

John West

building we to high call that Yeah. calling will end sales hiring as medical that some people be and on the and be well. there will setting start James of there’s the will oncologists The -- tend with the of high force be these on at a community we oncologists. will -- are some But in pretty end in cancer institutions. leading also centers people to more

kind and that a think I So as be building sales that there, I mean and a for. we have I about be be more have but will next being you to will we that we be will about be who that’s QX, we go direct having know here ordered. we distributed I’d But it expect who’s that insurance team will nationally receiving midyear year to of would test over approach talk tests talking the that think to expect probably be we about be kind be We we with would in sales expect launch billing of things forward. commercially talked a orders

Mike Matson

the comments I Aaron, just, heard this one But then And gross was it. I your new margin. have think don’t thing Got Okay. you facility. said -- finally, on you

is move bigger, margin, imagine guess, to I absorption lead you is there in additional headwind gross are kind of there that it’s less going going of another to and there your as kind So or? I overhead like to be that costs hurt

Aaron Tachibana

Mike. Yeah. Hi,

So that’s correct.

to few We fully QX, new start or take the to we a couple moved being constructing quarters new late move are in in or the our it the our into QX facility. anticipate of It’s by able we time a facility. process are and target early will

there -- will margin the as we be headwinds yes, new facility will is, answer lab our because on the the gross in from Park. have have some basically well, current in So will coming Menlo near-term, we

we out. have a facility that will are We Fremont new building in

will aspects there some yes, to dilutive margin. gross So, be

Mike Matson

Okay. you. Got Thank it.

John West

Sure. Thanks your question. for

Operator

Our be next going to Kevin from question with DeGeeter is Oppenheimer.

Kevin DeGeeter

to for related kind revenue largest maybe quarter, first Thanks guess, couple questions. in Natera the contribution my of the a I Hey. taking questions. was of

general Natera sustainable longer do of about have think much Natera remind terms, think kind high activity about can of to of the guess, from continued really first here, how just model? of should of a how and as from trends on kind quarter you revenue that First, us, of visibility you we term, in quality kind customer piece guidance level about I the XXXX? of XXXX the think how the sort that Thanks. we but As

Aaron Tachibana

will I take that Kevin. Hi, question.

total in So our over a million. QX, little $X in XX% terms approximately were revenue Natera, of they of

terms -- we of projections have them. In forecasts and from

to tried backlog on we work forward can so far we purchase -- as can orders, have We as for build we with them.

type and in just disclosed looking into from In our are to that terms built that’s really haven’t we But assessment average those at that’s say you guide different not for at of kind the quarters, we of might specifically. terms going looking two the exact Natera, QX amount that XXXX prior level of a infer an where be. things periods the probably and by fair of and of

Natera In what coming our revenue say samples that to the getting And to pharmaceutical or to in once And from longer of right? a Personal fit on is again for the it’s customers, those and drive our accelerate. product got lot terms from both great perspective. into and great and of to clinical the happens, our that backlog the continuing offerings trials term, of increase, that will patient turning well our offering, percentage flow, really They growth exactly of do NeXT total but should is products a to biopharma have be so to partner. revenue in focus with that room there’s a own Natera of continue terms is marketplace. hard

Kevin DeGeeter

near- strategic the a Great. And in to we can value activities in tremendous about a the kind meaningful should from this contribution we I that timeframe on China, China and terms think No. Appreciate both at line revenue point? sight mean, in of of revenue as how and meaningful that. and But provide well appreciate investments operations those on update long-term. of contribution direct do have that

Aaron Tachibana

Yeah.

good So question.

just specific terms of number we So a haven’t some directional you guidance. but revenue, guided giving in China

XXXX, we this are things year. it’s start qualified able So be orders going we But revenue, it’s customer here China. is to will And in pilot revenue, the revenue to customers beyond lab open XXXX, in that our ramp ramp get do small significantly have at but about qualification We really We anticipation the we to China. in XXXX. some we should direct already revenue then get back of have might and in revenue believe will this once up it. in Shanghai, and

at look of are samples number it’s China, number. large and you If a patients from that the

In China capability specific are partners given we to to so addition, global a process able of in we on is that about going we that our has that in business because large quite global but the because again, samples of be in John number, haven’t and contribution. received and amount of continuously pharmaceutical terms basis from talked here our the U.S.

John West

large bringing sort real to out China the that in item was are is motivation first the more some of and interesting our getting coming that’s turned we of and this one that, having us But add up started set be up just found and that I’d we we the Platform going do Western we China. now there, staffing with, getting NeXT and pharmaceutical work that companies have inside asking gotten specifically development to that. there business

us think from, interesting beginning think, that’s different so an for of China in I there’s category but find the are are some commercial revenue, to companies and area and that’s a I that We interest as well. solely pharmaceutical of based potential with

Kevin DeGeeter

taking question. for Thanks my

John West

Thanks, Kevin.

Aaron Tachibana

Thanks.

Operator

be Sean [Operator Wainwright. Instructions] Lee to Our H.C. next question from is going with

Sean Lee

and you to efforts QX this questions. guys, the afternoon, that the Good in mentioned the diagnostic of see enter you thanks for my remarks, market year. expect to In prepared taking some

key the wondering start So before I are marketing now get you then you was of if what some milestones and them? during

John West

Yeah. Thanks.

beginning variety customers. are the work to with -- we a of So

that just sales have for manager U.S. our hired area. We

we we So from of that a begin then Mayo would number flow that results, and lead as be a we relationships reimbursement would set revenue of team. a announced the institutions, would hiring would samples grow We of And to where with have then a have that to sales expect the test to we we patient be have run. that. already Clinic, including will there

So as quarters that’s that -- think you we as those be here. involved are the the happy steps would But we through are begin kind updating I the we to of that, keep go here.

and that I forward. about go having think substantial on we excited we our revenue of a as pretty getting that part be that with are

Sean Lee

Thanks. Great.

Operator

I gentlemen, participating today’s further conference. thank am program. not in This showing and any Ladies you today’s questions. concludes for

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

John West

Thank you.

Caroline Corner

Good-bye.

Personalis (PSNL) 5 May 222022 Q1 Earnings call transcript