Earnings call transcript Q3 2022

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Operator

Good day, ladies and gentlemen and welcome to the Personalis Third Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this call maybe recorded. I would now like to hand the conference over to your first speaker today, Caroline Corner, Investor Relations. Please go ahead.

Caroline Corner

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

Joining and Tachibana, Chief today’s call Chief West, President are John Executive Officer. me on Financial Officer; and Aaron

All statements within not meaning of that historical this laws. should the statements securities matters facts forward-looking to of do considered be U.S. made on relate call

timing regarding clinical our and orders, for subject term, expectations recent We our applicable our these to regulatory risks timing, our third regarding new described that our as XXXX to These runway, law. review XX-Q example, outlook. outcome of cash performance with you filings this forward-looking For update and current factors revenue the statements publications, trends except expectations. no obligation opportunities, market collaboration reimbursement any the uncertainties financial services, actual of technology, statements materially milestones, the cause decisions, the could special by products, are most business statements and encourage in and required activities, longer expectations to data for statements, SEC, results year filed undertakes and the timing including to expectations cost risk note today. and Personalis and future of and from quarter differ

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

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

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

John West

our from was XX% all year. the QX, over Caroline. the from you, In our which period of up revenue prior same business, Thank oncology came

expect business the of Going test, MRD be to NeXT forward, Personal. oncology our our we centerpiece

and most informative the this NeXT test future sensitive cancer we I in and the I focus QX, will new for made progress richly revolutionary most that Personal today Given its is on world. have since our platform. the importance believe MRD

clinical for Although that ultimately in oncologists for has patients. a information of begun, treatment cancer potential already pharmaceutical and trials the lot advanced is and we adoption for see platform provide individual of to use intended to decisions making key this platform this

NeXT needed. When the completely rethought what of we Personal, development we began was

While to recurrence other detect again received platforms than generation MRD that monitored above year cancer first enough. we not have of MRD Patients eventually radiology, cancer good negative believe earlier the rise a detection. more the results with only often or assays for was being limit

actually and been. We is patient case surgical blood but to from another, sensitivity not what to detect be we published what test data found the to one technologies, make it able sensitivity the calculated that a point at enough take? the and year, resection cancer, has we just initial Using the might In earlier that level tumor back after sensitive it. signal the have per plasma During asked extrapolated the part ourselves after should detection. would million

improvement a that mutations genome mutational different is XXXX few more a easy blood molecules, of molecules each of tumor we of We only knew at plasma sequencing million signal XXX enough. plasma unknown few a million signature. sample. not signature would thousands To Detecting copies daunting experience, of required tumor exomes, would find a typical part thousands few the genome tens not at and part million data help, in least total cancer in amass single of the molecules. we the a our of a over a sample. unique are in at not cancer the few realized sequence requiring to is few there much DNA sensitivity from be It a XXXX requires a the as per spanning the detect From tumor plasma each as blood positions challenge, million will combine that at those because to Sequencing from fold. need XXXX and a to deeply per

of American largest number of consistently at rates thousands the from was use realized are these breast only mutation. genome cancers to the of the had needed Society, types, low who cancer We have or cancer. risk the by particular, tumor mutations whole According identify we cancer of Cancer far that people of prostate way two the sequencing Those have to those tumors. recurrence survivors cancer in to

ago. we filed believe very decade At first about would foundational the that our and whole patents on Personalis sequencing deep come cost this time, a genome was worked problem but expensive, down.

of we company. than years, over XXX,XXX that whole other whole cost and any Million for-profit Personalis more whole sequencing believe down genome human optimization Program. for drove the sequenced the automation has the also genomes implemented VA own we we genomes U.S. our number now Veterans that is sequencing a by Over human

experience MRD pioneer this genome tumor testing leveraged have million and to part informed of goal our We achieve sensitivity. whole per

only was our we not test, When MRD dimension re-imagined. planned we the sensitivity

not is a need about can and enough. how decide just be detection Physicians on MRD recurrent monitor to for essential good cancer information an initial sensitivity used it. recurrent test fight monitoring the the growth cancer, to the While of will recurrence its own to of cancer is

responding cancer a the the if there And it be are the Is detected at line the what so, the would even resistance characteristics the different cancer a to treatment? the from original? best therapy? developing first or tumor what patient therapy? second for new line with could options line therapy? be recurrence first to Is example, Is all For

content, patient recurrence could single actionable. frankly with is a test questions in tumor characterization every a assay, informed To which is sensitive detected, a tumor deserve for result for To the to has pioneered tumor been that combine every which physicians realized test agnostic much MRD we to MRD integrating ongoing same and we reimbursement assay. method cancer more address just mentioned, into different recurrent content, the an patient after capabilities our fight in help a make

content Our designed and data in software of custom two for all together a this each synthesize patient. combines assay these types we

XXX MRD Presentations on surgical patients may patient’s can of one an sensitive immunotherapy published metastatic cancers initial that few a more focus also early patients earlier amount just In be This study counterintuitive, and But the by resection can blood It response metastatic therapy. a plasma shed than weeks. technology, in drop using can fall to much an much from factor dramatically and of cancer a DNA sometimes to MRD larger than in MRD signal after detection can fell need. assay. brought before and years of and the plasma. responding the stayed since into we that huge below in above though often back stage seem there, a limit X detection recurrence MRD benefit DNA of about detection. the is regrowth finally have more of What the found cancers the blood of a tumor limit almost is others

case the resection, MRD assay whole surgical cancer with in to the sensitive it. the had patients was time, detect enough as Just not but the

diagnostic next management. diagnostic affairs, they are help talented In diagnostics perceive for business, recruited marketing, In reimbursement, medical our opportunity. lab Personalis be clinical in drawn what to often leadership big to has new field, and development, the general sales, to planning the leaders advanced operations,

best an magnet, amazing advanced from recruited, have across drawing platform, our the leading been Personal, our NeXT has we talent of MRD some As companies industry.

progressed Veracyte. a Chris is Diagnostic in our XXXX at addition XXXX, I Hall from Officer From COO, through Vice and would broad President President particular, like our it at as highlight Commercial to group, While business. recent ultimately to Senior Chris of Chief

a team. which he our Welcome, is For Chris. This decade was by held leadership almost management before a roles at Celera Berkeley that, acquired senior Diagnostics. addition to great HeartLab,

management, our new leaders attracted to field opinion top key in Like also technologies. are transformational

NeXT Over the increasingly platform. we year, drawn MRD our to to KOLs have be Personal last found

executing are to We and points have stages. of of across cancer testing set different collaborations be growing types expect signed and time a on plasma thousands many and

months. collaborations more to of these in announce the coming expect We

patient of that these data important lead Quite collected We conference of sets will from a over these collaborations years. anticipate publications collaborations which XXXX. have in few involve many been presentations longitudinal and samples, to

reimbursement that technologies which can important exactly appear collaborations we generated our patients would our to that a show to what earlier whose be publications at immunotherapy We our the million detect future sensitivity. from data process we expect at of results from detection Initial lay entire per cases, level of beginning the see some and We be normally these below an anticipated. detected not with to of the applications. is escape part for foundation be MRT for limits tumors trajectories In yet. MRD beginning

a be does We targeted possibility. mutations indicate if could also see immunotherapy fail, which second line that therapy

early pilots seen we addition each. over have scale to $X academic and KOLs, pharma to orders non-profit Two should adoption. lead have pharma In now placed in million larger

Personalis in at since interest vaccines results NeXT in Europe that and We have majority use of that with in be interest pharma recent Notably, worked interest and we clinical the to growing of seen platform neoantigen United therapies. seem in XXXX challenging, States, of results investment. targeted clinical has and the the personalized trials and rekindling early other our field a companies cancer Personal in growing see personal although were China. is more

test launch expect lab or test plan it in market diagnostics to to the MRD we largest in a clinical our be for Long-term, and XXXX. LDT developed as

an submission to QX team to commercial optimistic early and that NeXT receive initial now MolDx all sales version across support September initial anticipate latest States. and our late in that have of have in payers. have flow leadership QX. beginning LDT We building in are and approval We orders will a We Test the the launched we been and regional a of invoice are United Dx

which personal of synthesized a we Each as X,XXX In patient each personalized our genetic mutations we XXXX future, test diagnostics, NeXT the personalized we are and personal being as level loci the deeply platform, is the the cancer centerpiece. have fight against at it, attempting. never MRD largest to targets and for over also our designed tested. Looking The diagnostics individually those over before the cancer are opportunity and a seen cause Personal, are one. patient predict to and pioneering

our company personal to Appropriate highly as which now diagnostic are name, creating well. we are tests, cancer Personalis,

market. SITC to into importance strategy have week for this clinical future, Please preview. company next we our our our as Boston join brand at of enter first the conference us an the the we in evolution of Given initiated

of have far Personal our on Given launch today to and the NeXT MRD support its strategic assay, importance, I so our diagnostic business focused it.

Before this to I’d three financial Aaron to over of like progress. I other mention results, for hand our areas

project work of we Personal, breadth tissue-based with exome-scale the as find company. QX, KOLs $X.X revenue liquid for test Platform in Interestingly, our we a with points point. our approximately to leading test, liquid biopsy ask an deep of they as and combine million on its time we NeXT ImmunoID our First, select from global biopsy pharmaceutical often MRD NeXT starting exome sensitivity at a recognized

were awarded the a Second, years. of provider during in after to they has the the again XXX,XXX under enrolling After were $XX the an VA a exclusive The whole is been September, contract veterans Veterans competitive are bidder. goal pandemic. XXXX. also has Program. that XX once sequencing break the and X-year from notified approximately sole we begun by Veterans program Administration stated we was MVP Million genome now MVP order awarded, a to up X to for contract enroll an enrollees, And contract million into of the Personalis protest the in million VA initial veterans with the

XXXX. begin order favorable recent most months a expect and we in recognize the expect receiving outcome, Assuming of from revenue few first a samples to within half the to we

the as very and run costs to have wave in on the Third, large briefly future this in exciting how of DNA that help technology announced lower Personalis assays. I want year sequencing can comment that breakthroughs been drive we

have access being Genomics, the genome. customer early is realizing of forefront an which mentioned We $XXX at of the Ultima

NovaSeq throughput twice XX% addition, an per Illumina the recently base. cost platform current approximately In the announced will have that Plus of their lower at sequencer X NovaSeq

will genome orders first cost over This available. because becomes built we for sequencing. and large once We platform using We sequencing system it can so exome deep have that evaluate scale, either the it placed of our and throughput Personalis products our expecting the one whole time. of test or that decrease are most matters

use size our As the can than ours. think that products of of we that companies and happens more sequencing platform, than benefit because other less we with much

margins. our New throughput our the potentially on plan at an costs our lower sequencing assays improve gross to high to part and platforms of us cost give focused important reduce they of are large opportunities

see have advanced we oncologists MRD We and best with leaders the customers manage our test will as and test, patients will on for cancer and why the see customers, the have summary, diagnostics want we off built to will MRD that to test NeXT win clinical in actively the we best our a level that the takes more personalization marketplace. In build to we and of to cancer. KOLs. Personal, we much believe market their believe the pharma company beginning It is is new and take other base which with

have telling quarters to strong you look sheet balance come. and We a support to this more the to in forward

With it our for over hand that, now will financial Aaron I to results.

Aaron Tachibana

good everyone. Thank and you, John afternoon

$XX.X revenue. third MVP with the period was for in continued quarter. detail oncology prior of and perform guidance our I compared entire by about from business, well, third the year, XXXX which accounted $XX.X increase for due revenue year-over-year was same to will prior the the of volume million $XX.X of oncology our expected to The Natera, year. and XXXX of was company million remarks, the in half was which over full revenue period million VA year. mostly prepared by revenue financial the quarter my oncology The from the XX% provide for During same XX% revenue the of our for increase quarter of decreased increasing which the driven results Total the with decline

of while same revenue XX.X% production and such our XX.X% was to support prior MVP to laboratory, period supplies, the and a labor the equipment our an related lab samples, primarily volume. the oncology quarter absorbed business requires for for facility overhead in The was decrease expected higher decrease the increase our margin and the and footprint of for third from whole under materials MVP more overhead growing genome year. due XX.X% year-over-year with compared capacity costs Gross compared oncology use costs revenue sequencing VA labor, from the Within volume in as we direct of MVP. the the proportion direct expenses to also other indirect expenses, VA and VA

next couple the biopsy we secure and margin such work we in tests, some expanding variability capabilities, to fluctuate gross to investments due VA adding while our production years, for Over offerings, liquid new of increasingly in as reimbursement expect the others. diagnostic lines volume, facility dedicated MVP providing China, new

term expect However, growing as our gross our scale margins increase we achieve oncology by longer we to revenue.

the in were to in was test clinical R&D expansion was million to last enhance commercial Operating compared the infrastructure. year. sample for million expenses last product for of our due for The quarter SG&A same same same increase $XX.X and million validation with year period and with continuing was expenses expense R&D in third in $XX.X for expense $XX.X million increase building clinical the The year. million third the expense the compared development, our the third SG&A medical quarter for was period $XX.X prior work. infrastructure to and and for million quarter $XX.X compared period $XX.X the the

loss of Net a loss loss weighted $XX.X compared diluted third $X.XX million of the of basic per for period of and net the year. the and $XX.X share basic diluted share for quarter with average share and count count million the $X.XX the prior third and compared share a million prior net with for was was same of same the per $XX.X $XX.X year. average a million quarter was weighted period The for the net loss

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

sheet. time to our cash quarter the cash of have the We in third as extending years balance the work on continue possible than as end of runway on out far we of more and as X

XXXX adjustment the of setup million the for which million amount a this amount landlord. this approximately reduced improvements $XXX from facility million net tenant at approximately and have Our the is of $XX $XXX construction cash is full of our and year new investment $XX from million, of one-time beginning year. This we use includes for

approximately be $X early paid and expect million be to amount expect costs landlord. in reimbursed XXXX by We $X to million that building we of of the

Although good, invest our very and our liquidity is we to continue cash manage prudently.

our revenue enrollment remain and I’d clinical range. slower to the reduced track results year, was this In impacted our Despite like of to that these half headwinds, Now turn we patient achieve within are to due for trials to on original oncology COVID. by revenue guidance. guidance first

million. the For be expect $XX million of revenue we $XXX to revenue revenue to million of $XX $XX.X of be in other in biopharma recognized $XX.X MVP XXXX, first of million and the range expect XXXX. total million. of to customers to million company be beyond million range the in range the loss full $XXX the in we is to half year from No expected net additional And and to oncology VA the $X.X

enrollment We clarity have sense forward provide XXXX on our a MVP. information XXXX to more should fourth are time. the and expect sample to at And importantly, customer to shipments. guidance conference trends better look of that VA for time, providing we quarter planning that At full biopharma call. our the recovery and more about have we ensuing clinical year trial We

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

Operator

comes [Operator ahead. from Stanley. Thank Morgan go Tejas first Please question Instructions] you. Our with Savant

Unidentified Analyst

level you us color issues And and shipments are seeing Recently, mid-sized you evolving potential Neil a is thinking share high biotechs? more macro in or backdrop, about how sample tightening pharma you this seeing on Tejas. can this you pronounced a Would on large among among or any you you dynamic for the with customers. cautioned are this trend having customers of these smaller are any impact budgets on broad-based Hi, as growth characterize amidst amongst ‘XX?

John West

Hi, Neil. the Thanks for question. Yes.

overall a been recessionary terms the and budget concerns primarily them in spend. we watching slowdown with their their of the backdrop, have concerns seen recently biopharma of and So what’s happening macro demand with because

tougher be and with a to biotechs or to money smaller it’s who addition, for bit cash maybe been have definitely constraints little projects. forward have move additional go to raise In able the trials

the over here. that seen have we last several months So,

will it upon when of terms it now In to see, continuing today. is we based do right what start improve

it’s this into around. with And And start go pharmaceutical anticipation companies things help problem, a to we our is but and be so, to on And that important them XXXX, to believe aspect of what could a on. an discovery we tool drug it turn have is work early something hopefully platform global cancer it. is needs great solved. And

And dynamic with. so, this that hopefully is a are we dealing short-term

Unidentified Analyst

peers And have trial in of related dynamic of Understood. to note, delays slowdowns sample these seeing it customer staffing own Are shortages. of your on efforts? noted your shipment relates or of some similar a you hiring clinical some sort any as impacting any

Aaron Tachibana

Yes.

sample it’s we our at to shipments trials, because back slower projects. before definitely you do prospective trials, in can from backlog coming to-date, and for the of two-thirds enrollments these on So have look as work sample occur meaning is collection patient when well, backlog clinical our primarily

it’s for flow some going shortages for that or terms us. starting several on from with months the constriction another tightening so, pandemic, gone of with reason the the on the now sample been that’s and And staffing of have to of in so some things

John West

Aaron has just the probably everything with would that said that agree – say I here. I I

of lot on And I cancers, a focus pharma example, in trials used areas after now adjuvant being different we surgical in stage for that has pharma drugs multiple needs. of affect interest on basis seeing an earlier clinical resection. think that one are is the

think our next in product budget to I strength will capability So, if new more of of us the a there pharma. help beginning think year overall are understand NeXT our as people the environment, platform, Personal difficult is I even

that. to to beginning NeXT we mentioned, are Personal. larger studies go you with We pharma are scale pilot beginning take see through as up some in see And

because I as the growth I overall bit year recessionary stage, a more pilot issues. of that, think through that to pharma think, is can lead constricted get even if next market that area

Unidentified Analyst

MRD additional then the with MRD you Got last requesting order one clinical having to you entrants so your And opportunity? in it. the implications one coverage. space foresee data pushback other new this me, recently any efforts as in secure the of some saw Do the for response FDA for on proceed

John West

Yes, this John. is

the about collaboration up quite of of the that. I of have careful obviously think we And we its will the thorough so so such data. platforms, of other part some and test performance be the it’s that different are set information extensive that from our reason that real have richness

are large samples extensive with sample VA with looking collaborations and are And that volumes. But when and the will think we shape insurance I extent, I scale the for we and are laboratory handle fantastic be some MVP data. And be to set that think publications. of data to we reviewed that have to some I were the I have looking up, the be peer to the going great amazing able think companies published also we to going of think, processed. such built working at we some thousands in thousands us puts FDA

may this of other the be I space. a from we in think some companies position different in

Unidentified Analyst

time. the Appreciate Great.

Operator

Our ahead. question you. next from comes Thank go [Operator from Please Cowen. Max Instructions] Masucci

Max Masucci

curious to refreshing Thanks how your sequencing afternoon. strategy timing about you good to for infrastructure for the ideal around questions. or complete takes taking are and Hey, understanding it just time upgrade. I the John, start, am you the just infrastructure thinking that one or updating

we that ballpark the it gross sort what Just a down there improve today? could to seeing too per where we just curious compares are of how ceiling margin or say sample if road, generally few you is years can anyway the look

John West

know that’s commercially question. great a you that’s say,the still would Platform as and not Yes, are the working timing Ultima released. I we been with

middle of next released maybe the in Our a year. full-blown basis understanding that is on

bit. quite So that a us help may

already context, would costs on Just current genome. end that high have $XXX equivalent of it about to the we platforms sequencing the in NovaSeq a be put our

a be genome our of XX% to reduction down cost many sold. sequencing is products, $XXX in for an going $XXX So largest cost. single sequencing And of of our goods from the gene would element

did a So, one that an XX% prime the reduction Plus cost original Illumina of be when of order new NovaSeq We NovaSeq first in the could like substantial. systems very the came back XX. the of ordered we and ordered how this we Ultima it delivered with sort we compare have out, In case, maybe system, in it just this February. goes one see X been hearing that, that

I I let’s think usually have these platforms, expectation but shaken new platforms issues say X compare year, is would And that’s for out take cell frankly by Plus will a get bring them. the will this while on that delivering expect next Illumina the system. really the two to actually the large the flow cost be down. time our they little of to And expect what

access like probably point will that that. something to at early have somewhere that So

on HiSeq products be around to we be Illumina ended that time which down to tests in thing, in quite cost designed products the of guessing in, products could margin am I those bringing cancer we substantial products to you we of that So the that diagnostic really if it might the not designed take the to the but in gross sold that early are. put ‘XX. Similar by the our the kind up platform, be to competing much how or that goods the something a reduction of we could seeing be some given future Platform, of our improvements many that’s begin have from on past, that systems, costs the comes the sequencing extent of Ultima intentional

new come I from out a platforms So we margin into those gross get standpoint. can and help I production, think them will really those substantially us – they sequencing as think

Max Masucci

for the if And with And technology – addressing know fantastic. proteomics technology announced you of Personal that can of limitations I had a partnership you the key factors work in of synergies platforms as But are only at out proteomics to the start would take you some into more whether see sort the just meaningful great That’s month differentiating the be to look would since way there MRD? equation PA MRD just compared in of hear the other a of been we core Olink. a some be of about it’s it of differences you platform. like MRD Great. that where see NeXT any the to value then sort the I the

John West

are Yes, right. proteomics in. something that we say, would anything would I saying publicly that say have us. for to pretty about That’s be exploratory I say can’t be would interested we

We will certainly what that. we are the work with But not it’s centerpiece doing. of

whether cancer key addition, difference fact for our assay, an really think that than assay a MRD the higher side, patients. MRD so the dramatically just detected And the others may not two be maybe not that isn’t in that dynamics different substantial them on I changing substantially there – characterization the means are which are measuring platforms, it’s or of of that providing the that deep a sensitivity, the recurrence treatment. certain but just it’s tumors differences know relative and successful like other to have year MRD earlier with the lot some subclones recurred it’s to just not, has quantifying cancer affect We it, tumor. may many

opportunities on see that You the use the to different put a patient resistance therapy has to that therapy. may

transformationally that the or pretty really guide, richness so not detecting of oncologists, to just detecting actual not is decisions data the different. of And

enough. that – test much really we the and think tumor only are aren’t kind just pretty of test informed I has capability the that that tumor sensitive tests agnostic

– a regard. both think best So the have in we I it’s that of worlds

we about of and NeXT the And changing put for that an Personal tumor not at it’s out difference. to is And MRD, will how important I tumor think the aimed it’s think really us. half I of content be lot strategy that at characterizing the is turn aimed a seeing a dynamically. into winning

Max Masucci

a have this Great. front but hear year, will at sneak in acknowledge will to here. and one least one final I probably running question been I opinion. And your great And then be by

I So phase MRD next of we the see optimization and are platforms. development monitoring of starting to mean,

anecdote Now, acceptance approaches read whole versus seen I potential one of technologies whatnot. is of obvious and employ for we MRD guess, upfront integrations that would rising genome rumblings that interest be have long and sequencing, exome but there whole

you IP feel hear best aspects portfolio, sort? that look it the most which be at would to of your of great protected, you if defensible things just platform So are

John West

Sure.

been identify that I an focused upfront genome key sequencing have from two we on the that to the standpoint largest the variants. areas number of think IP use are our whole of

talked We also to a being of we content personalized content being around do bunch content and the variable about And the fixed fixed combination variable that the agnostic with then individual. have tumor content, and that. call would the the what IP

two those So real centerpieces. are

useful IP a of the molecules those would of other have long. variety that so the being from not I’d average say space, We probably pieces, XXX of DNA on bases DNA focus in most be think I helpful. if things. you MRD about MRD and cell-free sequencing, again, most measured cell-free read because But the covers long is two mostly in terms those

require admirable, long would long it. molecules the it be aren’t just though enough even are technologies So to read the

shorter the it’s forward that we I I think molecules. enormously read of an on and Ultima because So, tool reason focused think of all have throughput, high much is important pretty like biopsy the some very part platforms short going it’s liquid Genomics,

important than more long us at for platforms. the I think read in so least that’s And oncology

Max Masucci

you, color. it. always, the for great Appreciate as thank Well, Great.

John West

Thanks Max.

Operator

Donnelly Our with Please [Operator question you. Instructions] next go from Citi. ahead. Thank Patrick comes

Unidentified Analyst

of just you facility, Thanks new wondering Hi, quarter this Shanghai for a the a opening same timeline you new and for question. see I that given revenues my Is kind kind beginning last through on of is should think Lizzie you that taking XXXX? lockdown about the was the expect next mentioned just of are recent Thank accelerate quarter Patrick. I to we you. think trend?

Aaron Tachibana

anticipate Yes, We going XXXX. so here in XXXX. believe to we into accelerate it’s revenue don’t any

and an expectations, XXXX given to we of ramped are haven’t estimate but to the In terms in revenues moderate be going guidance share, then from there. or formal

John West

China, been capability needed has initiative really they it driven that to say the to are a our that by understand works really clinical are I’d companies that things over saying run from they one world of us But samples important samples to of China. that than to recruiting not have anywhere patients in international can just the ship allowed was China fine. about ship trials to the that’s all where other out they and they and all in pharmaceutical world the

only large So the facility open directly handle are that China, actually is maybe we because international to of the What return China could in we get in they just in that outside though China China. other them where asked X% the entire for samples do the China, X% trials, patients XX% are we deal. enabled that’s enrolled of where being the in us in to data But China. a can

had that in so had in And processed worth handle that’s small we where haven’t recognized have pharmaceutical orders we of – we have could part, we China. revenue actually but dollars we because China seen millions wanted revenue, in we yet, companies percentage of from

And larger or recognized us will California. the of part having actually revenue will our a by us in so sense, that a be having caused be in China benefit of here the operation

Unidentified Analyst

Great. think Thank chain, I is that Thank I think me. on for XXXX, into into and the to you QX off well. going it will same head about And interesting. And am just supply we as you. as Do with then labor you still That’s the this question be said that’s last way earlier. there the some quarter alleviation. you. – quarter, that

John West

understand. I am you clarify the We Can quite gain? didn’t sorry. question

Unidentified Analyst

Yes.

anything seeing what you on supply Just on chain. are

may bit me? on if elaborate Were to as little I you you just on could that. well. you was when able labor spoke about on touched you a hear think wondering this have I

John West

Yes.

Now, we got have much. it. Thank very you

Unidentified Analyst

you. Thank Okay.

John West

chain from supply made to this shortages able the to issues were I and first but think us. for a see see thing had we started. that we pretty RNA, But we At the in vaccines what primary lot last need, have couple much for don’t this supply those reagents substantially limiting chain are don’t of of suddenly point, generally the of point. of the the a it’s restriction the we I when that’s past. and kind used were because get us. And as because COVID reagents some that probably would at that for a RNA, I years a normal many past say ago of of [indiscernible], issues back had I factor being being of

Unidentified Analyst

Thank Great. you.

Operator

Thank you. [Operator Instructions] from BTIG. Please Our Massaro next question comes from Mark go ahead.

Vivian Bais

Hi, for for the Thanks Mark. question. guys. This is on Vivian taking

about during and gross contemplating a give list, margin we some you us on? what sense quarter? maybe VA the coming for could should for drove XXXX back think any How Thanks. factors modeling the potential revenue So,

Aaron Tachibana

Sure.

Vivian, was ago, of So, XX the dynamics to terms gross so or decline decline or in margins, volume. from terms predominantly year compared in QX a the point point XX.X of the

because of we up intensive. of had supporting and labor biopharma expenses going that, is business more the which Although little bit a

points. For drop the of caused VA the in most that it’s off volume the part, MVP been in reduction the margin most

one competitive MVP, In of mentioned batters had VA terms as John the remarks, the of so the a in protest. prepared file did

outcome, first until that back going the for the in estimation, $XX million so terms look the our But point is know receive, our that we flow the VA, like. we it’s fulfill of time, did sample what at order XXXX. hear in this to of exactly And half from expectation in we us it’s would the hard from to

pleased is very because about award, contract are primarily We it the exclusive X-year contract. a

years the to last XX been the now. with MVP sole the VA – have We for close provider

a of than probably Boston, enrolling number. It’s of it’s they terms that still their that are again. exciting more the number it’s XXX,XXX they they samples so, or are significant collecting freezer veterans. And collecting And new have samples. are in They in samples in

And has many so program that we believe to many, years run. the

John West

unusual. comment are VA just received protests with would we that contract I John. had a like course, is that of The of We respect. XXXX. not this This these we VA one that back And in I being still back period the was re-analysis contract. awarded up process XXXX, will we But ended with this. of us thorough in happened things on through least after of a at think go what a

this to And obviously with record so months if two the and We in a things certainly XX-year VA. next continuing the we well. over we what hope track here, will month or look happens been to what’s go communicate hear about forward

Vivian Bais

so Thanks that. for much it. Got

the initiating just the MolDx us mentioned on also outreach give oncologists sense And refresh and us for with also you for next you for there? year. So, the you building file submission? Thanks. could been Can a timing demand that’s

John West

be have quarter. – timing approval the in the to MolDx the to quarter hope so, of second we And and in first submission an next year the expect

or basically been that have I timing our sales think have that’s force. So, out, we going we launched the

We our September. have the at brought of Dx out the Test newest version of NeXT end

to been beginning payers. have We to been orders invoice for receive we beginning to them And the test. have

tests So, are I decisions small processing think reimbursement it be revenue pretty get online. invoicing we them today. the until actually we But will and

Vivian Bais

for Alright. for taking question. Thanks the That’s me. it

John West

Great. Thank you.

Aaron Tachibana

Thanks Vivian.

Operator

next you. question de ahead. Derik Thank Bank Bruin from [Operator Please Instructions] of comes go Our America. from

Unidentified Analyst

Hi. Good John Derik. afternoon. is on This for

there? or cash the being operations, of you in this been on the in any for has thoughts $XX XXXX. your there update burn year million, With terms range $XX looking use down of Are still cash million,

Aaron Tachibana

Hi, This John. Yes. is Aaron.

the on at in than QX. years end balance of of of terms sheet, sheet cash more do So, we the cash have on X balance so

headquarter the so below we are because of looking year, that XXXX, facility, and is to terms this be setting operating a $XX cash burn are definitely expecting so This below unusual, net going forward, In million. to million. operating cash our going year, up roughly but we the $XX little burn, bit of yes, cost it’s or new us to is be $XX going forward, million

Unidentified Analyst

And that. at What any taking looking of Are for of use orders Thanks CapEx any for you instruments? building. at? you expecting that cash demand are sort additional Alright. the yes, new new

Aaron Tachibana

Yes.

the we for spend now look facility. So, capacity is that so we in terms forward see as new CapEx, right the of new here, most of

of equipment, that There of lot really answered terms I potentially bit are a refresh in ready on None sequencing a a production the little think yet. technologies exciting marketplace. new ago. John them In is of just

we older sequencing don’t ourselves capacity so see any technology. with adding And

some to have, like then here and going look quarters several next We of suppliers are with and Ultima, Alumina where a these have we get to will are take and at at through others. what the we

John West

part need terms piece. lab $XXX,XXX of year of add, the think new in the still been of to get in We new the a would already use that just new but expenditure I there of actually old new high-end equipment, can to and is terms facility, of for They lot the lab lot sequencers, of laboratory robots. is while running robotics. had not in the has this facility a a the a And running. have we be Yes. I we $XXX,XXX quite up the few And them.

burn So, And year, for in building out robotic brand that’s amount of we new facility. fair in laboratory that’s have actually added the the been the terms a part this equipment new of new cash facilities.

shape terms – when by be So, are there which fully expenditure. for robotics, in in we next time the think will a of substantial I great I think the we can in be and year,

we point, they instrument, out year. So, a flow at next for instruments think have side, second may but high the come see the the this with when Alumina new work have half. sequencer the the when second of be but That’s throughput said I the biggest platform. to has know on new cell they question We the that be probably to well projected which by in have in Alumina was for won’t half driver don’t how

uptake So, could XXXX before turns quarter. on it box, I of it out, so things fourth the if early If until platform. then of the second turns flow, it year, works could next the and think that out in the drive new near third end be that’s it really in at out well that would ready half, be quarter we the looking some isn’t then or the

Unidentified Analyst

contributions $X could Appreciate speak between that and it. it. great. you could I steady – $X that, Natera of would your million just couple quarters pretty million, If to there? been And Got changes any in if last has more one squeeze be potential the

Aaron Tachibana

Yes.

believe around the partnership good we So, to here. pretty the with and guidance over Natera tick have given formal several or volumes Natera. volume any or up haven’t quarters has We continued increase we a estimates Natera last

MRD marketplace longer reimbursement. are term, believe go. commercial goes to the job that a this way has the we on getting where the done front the of volume Natera In good terms And products tumor-informed in

go our the continue into could Natera And future. so grow we it’s as our business expectation that with to

John West

parts about, MRD And people with at Natera have their we the market. think product. are that have whether about different have addresses are I asked asked of that’s issue we they And us their products different they And product. an so MRD really because helping an obviously, all,

and of in on actually we of their coming, addressing be our of but what have see market. parts So, help it’s the to going with front they a Natera the the product market. segment different doing way work of happy we And own to are them as end

both have this So, growth and of plenty I products, the a segment. I in both they think MRD lot forward will look room of for to

Unidentified Analyst

Thank you.

Operator

Thank Needham. Instructions] go is with question Please you. [Operator from Matson Mike ahead. Our next

Joseph Conway

for be MVP VA or Can bidding MVP involvement guys. is more really have the the for efforts? release MRD importantly, Affairs. that these Personalis VA the using what today an And on in But kind VA Question to on or the I of this potential then Mike. Thanks. saw competitive press maybe that? in to for basically ex-Personalis they with [indiscernible] do is for there testing? for Joseph Hi, Natera contract months guess with agreement speak maybe you processing to in maybe really a This option your the in Veterans first, I a announced essential a for involvement, similar year coming a

John West

question. Great

clinical a just was was from Natera the won to see the the The side VA of clarify VA. the not things. of that Let’s contract MVP. from couple It from

the funded research MRD Natera million was side. side that’s a The clinical research the of the VA. through that the veterans won project program testing on is So, entirely

have any not diagnostic out point, our version the Personalis MRD of in at was So, they the compete really product product don’t of different position yet. that to for a segments. are because this we MRD

hospital be And And NeXT to doing. But that We what expect systems we the would parts probably we that other version with would we market have we is of once major to or that Natera you would diagnostic in the have of things. happy Personal, work from pursuing XXXX. implement. then something that at VA know, different point, be again, be would

Joseph Conway

task clarification. I new future Thank Yes. or Okay. on that MVP, sequencing we seeing reduced for Obviously, in decreased efforts contracts. given seeing into saw the spend encouraging. the And for much increased bodies haven’t whether you VA we population to recessionary order too gotten any States But announcement, take the you which are or commentary just some guess of the internationally? going any kind these, then is pharma from we of you. this interest governmental environment, like are on United types Thank

John West

building off-state we outside found Sure. some years One the of actually to the Happy to issue looking at local of two in their that generating States the couple answer actually that. spend It’s own United sequencing time opportunities and country. of a done in Yes, want ago, capabilities, addition and that an be data. we many to those employment work things. countries up was

population patients. labs efforts up rather we slowed setting sequencing during have say us and of pandemic, academic countries to things, of to gone in patients those really hospitals lot often it’s found than that were when those of subsidiaries those full also, countries. often all to chock a do down I would so efforts And inside those difficult the have recruit

particularly of almost the after into on. up put surgical just it’s immunotherapy there, or patient an able no that that’s is beginning where today, the what’s really cancer effort to resection when So, opportunity of such all problem sensitively probably speed more, can we see to solution being We the that see going either business. responded really to to our has detect but there have side an when oncology

our what so we And that’s into. put energies

would So, we point, really opportunities, there a actively were longer will MVP. look sequencing. standpoint. And work VA no to that this continue at But pursuing it’s we commercial we happily with are population from an if area opportunistically, at

gets test. business a, into product, with both but that diagnostic NeXT it NeXT time reimbursements supplementing also the our way as pharma our MRD business from we our because then be revenue the many more augmenting of Dx think is with Personal points our I expanding with pharma will and it

Joseph Conway

our very for Okay. Thank questions. much you taking

John West

Thank you.

Operator

Instructions] [Operator Please the next for standby question.

comes H.C. Arthur Wainwright. He from question next go Please Our ahead. with

Arthur He

and is John the Aaron. a quick Arthur afternoon one VA Good had Hey. This program. on just for I on He RK.

for initial So, you. following decision the for we contract, when the VA in main assuming factor the the your outcome option? from can opinion? X-year their the to hear decision Thank favorable drive what’s And

John West

Yes.

John. is So, this

year, of will goes this this already orders So, additional end that – would forward, year. of issued happen September. we the at back be amount towards prior It’s contract In the September, contracts, fiscal in experience we of applied of the don’t government the We task working not. whether the multiyear of that assuming there each near the know off possible order year. was task it’s that end be end money decided often be September year that or where the of could because had generally, during would that the

and last for that assuming weeks of point, So, it having But issue wasn’t ahead any anything now X-year or do unusual with is to the of issue to the period like orders continue protest, with next time that. there go it over is to free without at task competitive us no few rebid be contract and this to VA this to the September. decision

contract have been sequencing the the new if have in will know completely could easily September. start the and the happens them been extensible they has is just for obviously that afford every on amount so And way. don’t for thing usually what’s they So, And it to wanted happened decided option decade, year, what doing they next the they it. straightforward size this the that something over I to that’s just since have order. It of Historically, be. given us we that’s to. But we a most extended task that is of money think year’s VA spend

Arthur He

question. Thanks for taking my

Operator

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

disconnect. You day. Have all may a great

John West

you. Thank

Personalis (PSNL) 2 Nov 222022 Q3 Earnings call transcript