Earnings call transcript Q4 2022

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Operator

Good day, ladies and gentlemen, and welcome to the Personalis Fourth 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.

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. Caroline. ahead, go Please

Caroline Corner

Welcome call. fourth operator. year and XXXX earnings to you, quarter Personalis’ full Thank

on call Hall, me of and Chen, Joining today’s Medical R&D. Chief Executive Interim Chief Financial Officer Chief Officer; and Chris Officer, President; Rich are and SVP Aaron Tachibana,

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

cash year runway, trends and expectations expectations our our and any longer orders, example, and this opportunities, term, publications, clinical new the statements outlook. regarding timing, the and For technology, and regulatory reimbursement market business of future for timing revenue decisions, timing data financial and existing for activities, services, collaboration milestones, expectations performance products, and expectations outcome of cost

statements to and to actual update in filings to required Personalis These current obligation no regarding our our special SEC, We that quarter our undertakes and be risks statements, differ filed note to except statements materially most XXXX law. third the uncertainties are the review results risk by to from these could subject as of the recent forward-looking encourage you for today. XX-Q expectations. including described with cause applicable factors

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

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

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

Aaron Tachibana

of as capabilities years world's chapter the XXXX leading sequencing and as is Company's trusted many an story. the several Personalis we a begin new built Caroline. in a at with Thank a powerhouse partner Having management, as exciting both year guiding new technologies companies, monitor most cancer you, at we biopsy through the driving paradigm characterize care aim the of a one patient. believe to now of the oncology discerning for life we of with and have the from cancer

ahead key changes in our the team seize us, has opportunities leadership To of our focus. strategic made three

to tumor Personal we starting high sensitive minimal biopsy defined an win assay. informed highly impact lung new indications First, particularly three and liquid for residual indications a advantageous for our cancer. are NeXT have monitoring, with These is disease. immunotherapy detecting breast strategy MRD,

term XXXX to strategy a this partner time. over We more which offering our longer our utility possible market, few our more short, MRD where indications at the focused detecting speak pieces when in recurrence most in of shines additional entire will in moments. could a cancer with time, detail technology will in cancer in-house the new than earliest $XX commercial But giving become of be access broad and us efforts other to for billion

with our biopharma pruned annually. close lowering X-K million facility an that have focus reducing in to resized our cash and profitability. and we by we XX% consideration business our we decided line Last explaining and objectives, estimated base careful also by Second, approximately on month, workforce expenses After to $XX our in filed other we payroll China. conservation an employee our

our evidenced to of the Moderna. success, the vaccine power biopharma to service clinical extension strategic to recent is of partners engine partnership as us to puts healthy allows a even drive as it While that's in few this and a by financial is Also, compelling believe expected always at XXXX. personalized and development, our position runway of in we providing through restructuring us cash such with as announcement level highest with key products that be difficult, cancer more trial a an

validating and in validation clinical begin obtaining us turn further the clinical market Personal lays to ultra-high to the sensitivity, that extension foundation NeXT as reimbursements the critical sufficient for as subsequently for milestones the This well time volume and for allows enables revenue. to and expect utility. achieve as clinical including ramp several and the deepening launching assays, of we Finally, [indiscernible] an up test evidence our LDT

turn Now, over Chris call about I'll strategies Chris? tracking, more results be we milestones speak the that the the following and his I'll to remarks. to then the financial provide will guidance and and

Chris Hall

rapid Building key laid just Aaron there catalysts upon four Thank ahead, has us you, XXXX Aaron. which beyond. are prepare and we the for believe that growth out, into will transition

to As on focus executing we our MRD revenue, primarily grow will seek we winning profitable strategy.

such, our are XXXX follows. as As milestones

decision sensitive reimbursement Dx and Dx. NeXT of therapies most to of patients. to our to year receive comprehensive ultra year them coverage last before end the our QX genomic for expect We launched the this find appropriate clinicians first we help profile NeXT their for First, highly CMS personalized, offering

teams adoption Our early booking driving clinical medical sales made and and affairs revenue. progress in have solid additional

will We decision way also pave offering. and the revenue and expect MRD Medicare our with for that uptake a positive success growth will reimbursement accelerate

Second, as enable Personal find this half we're the testable traces infant for as NeXT decisions Dx, version stated Personal MRD earlier earlier intervention. our and of recurrence, is LDT simply Dx clinic offering to of of MRD to track NeXT allowing in the the on launch year. inform second into of as therapy detection and designed well cancer, to

where technology's breast sensitivity the cancer. a mentioned, monitoring, make to near-term lung indications three potential and IO previously high on focus be impact, our Aaron has significant therapy will cancer As

other help switch alone, estimate pseudo can imaging sensitivity progression to such cases million stop progression almost alone is challenges, monitoring lung options. helping breast from current cancer represents our X working, as through overcome for We whether if year. distinguishing therapy each and guide and assessing or believe to We continue,

we prepare obtain to in XXXX. analytical and our through to launch we NeXT Dx expect MolDx year, will go submission of XXXX, and for the clinical to addition Personal as in In data also first packages for reimbursement the we the indication

with the government's powering Personalis manufacturing diagnostic design continuation Administration's Million cancer our partners the Veterans MRD in to Third, products were we Program Veteran of lack wind our Verticals, the strategy. and with support for with inside Personalis both solution. who Deep vaccines but inside will extend strategy importantly and MRD program health our Personal Inside inside population

For XXXX that for vaccines personalized enabled biopharma vaccines trials. has to example the for several clinical since been develop engine Personalis companies cancer has

we're we progress continuing strategic noted, technology Phase recently Moderna. Aaron Xb to As with a relationship announced through them our Previously, clinical our trial. allowed

technology them, thrilled this agreement Moderna partnership melanoma this win Phase our the We've on expected with customers been clinical their and working extends other X We're this compelling working therapeutics offerings trial, can help that believe including and to in cancer which their in about to cancer trials all emerging clinical relationship with year. continue is announced and rapidly area. begin our

driver we're key UCSF. In and clinical generate the finally, and XXXX, products UKE on our BC Forth building data support Cancer, expect IO to to University, with and base indications. publishing indications collaborators Duke evidence we including and

sharing options early triple underway stage cancer. resectable lung and MRD have Consortium Personal go cancer with in Criterium the through year. Breast we partnered subsequent and the patients conduct and trial recently forward performance treatment Academic clinical of the look aggressive we with in to We negative with to milestones as our to We and breast a work NeXT prospective also validate recurrence evaluate Cancer clinical have cancer to limited

With Aaron. turn back it to that, I'll

Aaron Tachibana

the and Thank as well of provide quarter XXXX and of you, now for guidance will year Chris. as the fourth XXXX. financial quarter year detail first full full I for about our results

million MVP Total fourth VA expected $XX.X accounted oncology the and the prior $XX.X was for in Natera, of same the decreased year-over-year by company in which increased revenue revenue. almost revenue decline to quarter from XXXX year, with customers and the prior the tests, XX% mostly volume was increase revenue the over enterprise with period for the year. revenue half revenue includes of which the period due was quarter. compared as other and pharma of million increase X% The from same in our which Oncology driven

XX% in oncology full XXXX, revenue. year revenue the to primarily volume year with above business company The expected increased the company Netera. from by test XX% total to compared revenue $XX decline of to was and MVP XXXX in our XXXX, the the to due full million. VA growth range our $XX with for total Revenue of was due decreased $XX guidance XXXX million million of previous compared For

Gross to increase from oncology the due margin quarter XX.X% with prior the overhead and the of primarily compared of volume to revenue unabsorbed the the period was an same growing was support from facility. year. fourth for revenue The expected MVP, for the new of volume also expenses our in XX.X% XX.X% in costs our year-over-year decrease decrease VA

labor, labor VA lab Within related while and and equipment the such facility our and costs and genome a materials footprint, higher direct indirect as with direct laboratory, overhead MVP the proportion business requires oncology MVP. our expenses, we more compared capacity of samples, whole for production VA use other supplies, sequencing

fluctuating the investments cost Over to years, the margins year. others. for lines, the some we and expect quarter such Operating we growing million couple same VA increase scale secure reimbursement, facility due while million expect to production expenses of new as to our to next tests we MVP in Longer $XX.X of period providing compared due term, to the prior achieve by gross our margin continue our automation volume, in as increase to diagnostic efforts gross capabilities variability our fourth were our revenue. the in XX.X we oncology

period quarter for year. fourth last $XX.X China, XX.X period million clinical for and to are $XX.X validation for infrastructure in our clinical expansion, SG&A in expenses $XX.X was increase in was same and development, expense new the the which million expense and facility our medical compared was million million year sample quarter from building SG&A expense The R&D in infrastructure, increase the R&D for cost work. studies same the we commercial was to compared operations to discontinuing. test fourth in and product The and due in last

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

was million our XXXX weighted for and to million the loss share average was to The per $XXX $XXX.X the full year million basic was compared the XXXX. loss XXXX per guidance million share diluted net range $X.XX share the $XXX for a weighted net for loss and $X.XX $XX.X of compared share loss and within a net million. with count million of of average basic diluted $XX.X and XX.X account full of was the previous year for Net and

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

year full to the the investment million, original approximately the $XXX our the XXXX for reduced our cash usage beginning facility. significantly was XXXX from $XXX due we and it million Our usage cash year of estimate new peak at was of one-time in year.

to Going profitability. breakeven forward, cash our eventually expect we each usage as pursue and decline we year

workforce we gross cases, Now, ago, within had rationalizing these that margin projects tied cash that not had months resources took like enough. to In XX% turn pruning I'd were very included including We areas and areas headcount biopharma were negative to eliminated low others the cuts flow. some to profitable our guidance. business couple of reduction. and A began we

We reduction these expect of biopharma in estimate have accounts. and approximately $X have impact we these an million and million revenue, a XXXX removing to $X small unprofitable to on actions from to

that clinical next from we revenue decline growth expect the projects in vaccine amount revenue. this than and personalized XXXX to NeXT Dx small offset be However, of cancer more

year Our these full dynamics. reflects guidance

of $XX to first be $X of during be the the in MVP million quarters of expected expect approximately enterprise revenue year to the $XX estimated is $XX be recognized to oncology the with other to customers the million $XX in sales and revenue For total three to we million million range year. million. VA to full revenue and Company from of pharma, be XXXX, range

million approximately approximately of Net cash $XXX and of loss XX million million from was XX and usage XXXX. reduction

of from million, approximately the million. sequencing quarter approximately For revenue first XXXX, total customers revenue X and Revenue other $XX.X enterprise from pharma of of tests, we million. of population XX.X company approximately sales expect

XXXX. with volume over the was quickly Natera has in $XX.X and revenue ramped years two Our million last and

come previous our year, through expect this rely has We quality run continue exome to to on Natera rates our high offering. as

bring XXXX has as they laboratories their to Texas Natera with as signaled, expect However, in their Austin, we do volume online. decline us and beyond, in

vectors lab. growth These updating is many our the our as management look that forward foundation our moves technology. a of will milestones expect create milestones on paradigm you year to the do new year-over-year key into We even own We powering the cancer XXXX our with to Natera as for growth business growth their of lay in vision our enabling accelerated progresses.

Thank you.

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

Operator

Our Instructions] Morgan come will Tejas. question Tejas line Stanley. [Operator first Savant the with from of

Unidentified Analyst

This is my question. Gabby on Tajes. taking Thanks for

could for your represents on you thinking as just you you relationship partnership Moderna about announced vaccine, start expected the this personalized a firstly, with because this elaborate Phase to this XXXX? contribution meaningful how with on long-term? early as year X So are And partnership Thanks. cancer

Chris Hall

Sure. Thanks question. the for

in years. and relationship manufacturing we've We're really with success part having been doing our Phase efficacy trial in XX% been them Madonna, patient for excited X vaccine. integral process with about in the results. cancer personalized seven In six for with business of their an terms now terms improvement last the We've of their of

can what and In testing, each patient. handle with then information provide of do them upfront they customize so go this for terms for the Moderna, therapeutic lot we genomic of individual we a basically

about, X In will start talk that's trials to when it's the to to Moderna terms up and Phase not us of mention. up to

much we're strategic we say the partner in the In goes. really economics, too relationship a terms excited we're it Moderna regard about and not And to either. allowed where have from really and of been great that

well. had you Moderna release they have success Moderna in earnings yesterday, came of breakthrough we're news as and about that terms designation vaccine that and first the additional about anything recently the did for talk they add their In to Rich, relationship? excited this have, out of some really that on did their regard the

Rich Chen

that No, I summarizes well. it think

vaccines. does and extraordinary HLA, other mutations, are Aaron ImmunoID personalized the think key mutations, cancer an long-term for like cancer of vaccine their which has that relationship is identifying of our personalized new for which best things like a our platform, we've new their And job platforms partners prediction, those part our I identify of expression process. helping of information with this mentioned, platform antigen one had antigens, needed

Unidentified Analyst

seeing headwinds you do on quarter? could update seeing then, And provide subside? since an headwinds? so, delivery when sample you you're last anticipate on if the you Are still side these to these what And

Rich Chen

terms are there Yes, still sample of were some in headwinds delivery.

trouble different getting reasons, from Our of for and things farmer that staffing variety their customers are CROs having like of samples a nature.

watching lot a addition, on spend going recession and pharma now. In of biotech companies giving right been the have that's the

as been so, a terms in business. of And this that's headwind well some of

Operator

will the with line Patrick of Citi. Donnelly next from Our call come

Unidentified Analyst

about guess, you the you're wondering You kind just as for on discontinue I'm have this on wondering is decision my question. how the no China. just first China that. for see on Thanks term of Do thinking I there. or taking I was still Patrick. in presence temporary? to Lizzie a longer medium

Chris Hall

question. the for you Thank Lizzie. Hi, Thanks.

China, had trials. go three support global wanted business an to ago terms type to and some who that of to expand no we've us pharma right? a when so things regards from say In to opportunity pursue help With interest years of there, out to went to and stand out their some we and ideas, today, good China where of we had lot set clinical

terms to be it's in to longer-term, in headwind a believe and and investments good get a even terms profitability breakeven costs is the the but of to us idea, We China being of for able required. going

of to China. to had unfortunately, came in to. we've the that's we so much terms decision, decision the say pretty And And no

we've point permanent end see started a time, China. this it in as in we So what do to at

Unidentified Analyst

the follow Understood. this about the to into potential that month that guess, maybe going call And I receive thinking just possible about this Ultima the X how Thank thinking you one last Thank and how are maybe just I the the half platform up, was cadence for and you XXXX. gross you're this in then in wondering margins you margins back you. NovaSeq impact I mid you. year? year. it's were think, mentioned,

Aaron Tachibana

Sure.

we the gross had for of investments of the volume. in make to decline margins, the so the a probably margins gross because point VA be in severe we've terms the this, XXXX lowest of going to is In way view MVP lot

a absorbed through we to under of facility go we As labor online. XXXX, still overhead, amount fair primarily due have our new and bringing

before back NovaSeq require we But It's move that onto plus as online the at some way bring our once. platform. half see should customer samples it, of we testing over to get to They as the the us validation going and all won't we margins X we online. to XXXX gross do increase can come

I the year bulk the savings minimal. going the XXXX. So, this We'll is would be in see say savings to of

Operator

you. Thank

the next Joseph call from with Cowen. line of will Our Joseph Flanagan come

Joseph Flanagan

Joe for Mac. is This

and some So, $XX to you partnership, million. pharma would your guide helpful? for core for growth not commentary excluding number, concrete Natera XXXX sales if and million a testing other What test really be revenue assuming biopharma enterprise are is $XX

Aaron Tachibana

Yes. Hi, Joe.

So, Netra us for XXXX. in $XX was almost million

So, Natera $XX guide in our somewhere between and contemplates $XX what of XXXX. for in terms million million

So, business. is the of pharma core the rest it

Joseph Flanagan

model reduction of Great. and And terms strategic therefore you that of search a philosophy? change, and with of result accounts transition would going? of sort then along consider the in in how leadership is the actions these fourth, review And general changing the just business

Aaron Tachibana

and tests no situation to to of go. we runway, most the the Well, cash in needed Again, see industry. good primarily and MRD have we're where the say had And review best we because we do strategic to in ideas. we our a to have these now extend accounts, terms of when the we sensitive that in

time, reimbursement be it to get order able right. need commercialize, to we in we And and us to for

in to that you that areas some streamlining maybe to the do go where at we and perspective, and regard. go fraud? look in of regard and anything not had as And Chris, so, we needed have some as in that profitable do add we pruning of were to in terms be, from

Chris Hall

back milestones could ultra data built the and monitoring. therapy paradigm an we that that the achieve We that when and just patients say, MRD needed we lung for step cancer publishing was sensitive breast we said, assay IO was than we pivotal to and change around

adoption. together focus and clinical reimbursement would 'XX XXXX like that realized of we and to We felt a year needed data big happen. and we on making that publishing stitching decisions really be 'XX And

we've so, uniquely opportunities has the we win doing the or think performance have. space. And kind the of changing that resources that the cancer and masked we too on suited paradigm MRD that And assay there big are they're Company's Personalis, of because do that an they're to to think ultrasensitive is met with one that we management we

we a and secondly, the unique have opportunity think personalized forefront new And of space. in with of cancer and vaccines, partner the brand we be a the to companies these the to therapeutic of been we've many adoption in really vector cancer, a

we've that managed. together announced a industry way is clearly, the with that is develop but platform our that a starting those so, two comes and and with you transforms information personalized provide, the being the vaccine part key cancer personalized that of vectors Moderna And powering cancer and relationship, can uniquely

really the execute. in and making decided especially able the these and able as provide way through to happen And company that indications our a amassing to in clinicians to biopsy are often We life secondly, all key the massive and on patients from and dark. being data in that, focus patient's are are the the resources often that being define the to and flying

that industries are we're towards customer think and we to they that's coming at fair? these of we from going be the in core, profitable, and any is drive key That participate really weren't sense. us of be to able over mission in And that weren't focused time. centerpiece together Make which back them, relationships profitable core that so being that driving And what on. stepped and

Operator

Vivian come question will Vivian next of with Our the BTIG. from lines Bais

Vivian Bais

around on here. jumping been I've calls

plan instead So to we I for footprint. covered, but via already Salesforce I with been partnerships indicated smaller commercialize apologize that any if and test a opt might has previously this believe

you on the front could So on well expected partnership conversations just your as Salesforce? those that size elaborate as of

Aaron Tachibana

you do take to Chris, want it.

Chris Hall

it. take I'll Yes,

And the the where the of And really have as said, you of mean, and for patient approaches Company, that can see our unique strategic cetera we resolution know And what very and can that, resetting inform I part we has assay lessons to with really and needed where the of shine. therapy for clinician can thought discrimination et struggled. decision ultrasound that breast cancer, in MRD So, it's do really often hard always way. need content. we time other a IO tumor when a low have we the

breast patients So real opportunity a we cancer thought to the and way. managed that there in there was an along are make difference how

the build That's lung doing to cancer, you early the will to appropriately adoption sales indications, to and we're win is the those we've patients, thirdly, as that get in proceed. with we lung as incrementally cancer develop go so focus And way and spaces. way that's and And the decided evidence, to develop staff get those especially and on and way we'll it. coverage the approaching you about channel

focus we've thirdly, use that, field at begun think on some And single indications to discussions every force. our trying those leverage to evidence we once, build partnering we've other oncology another and test decided than that companies then application three we across rather and could about

that'll But far, we're, have be far, that's think positively journey. we'll we a we've so you those that be well, as received. so And gone had I be some updating along. of we'll discussions been And go

ultra-sensitive I've an entire in at our channels, at that assay. us, of market. we to it in up There we a sense and and not have space use the sense make sales path could on different doesn't certainly to it $XX make verticals been go but every not MRD make we several in and those one it channel way, -- billion indications can sales may combine those to cancer develop that for companies may sense And the and market build them see those with And are to and the a that unique test go indications. for

way the focus so, And and the partner on we approached can the where we've that's shine strategy, rest.

Vivian Bais

so for that, much Thanks Chris. Perfect.

previously a of cadence that So I about readout up. also talked steady think ASCO, ESMO ACR, you've and data coming

could flavor us we expecting Thanks. a here? should any MRD for be technologies? with you for give if what And head-to-head plans studies just So other

Aaron Tachibana

Yes. jump Rich, and that. can do Yes. probably in

Unidentified Company Representative Rich Chen

Thank Yes. you your question. for

very level a We I data that the earlier, are of IO pipeline much what's we monitoring, really as see with have we've technologies. shares And -- what other strongly in by potential we been really then these Personal detect of ACR, about, continue in parallels sensitivity a at impact studies we also areas. say cancer ASCO cancer NeXT residual now able year. cancer top saying are that's strong see happening the focused a expect reported some and to right than being Personal on levels the therapy that supports for to to high And of initial lower NeXT lot sharing And we've the for and been about particular studies leading later those cancer cancer can these centers. talked the breast this of patients primarily other conferences begin data XXXX lung and

Caroline Corner

please? question, queue you could the Operator, final

Operator

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

Your line is open.

Arthur He

of on is the business. I both have for my diagnostic two question. for side are RK. taking the This Arthur Thanks on questions

the test. to launch is need diagnostic you product? guys regarding can MRD things finish one before you What other your are So,

Aaron Tachibana

to want ahead go take you Rich, and that?

Chris Hall

into it. Yes, you Rich, jump can

Rick Chen

Yes.

we're the So, close of that product. very to launch getting

launching As of as launching a we're we would technology diagnostic mentioned, it's for developed. you product, it's even of we're what clinical to typically going basic lot second in this that be a -- year. half the do And

So it's it's of where samples the the that of platform intended use. the mainly validation for doing extended set

so, very kind the -- later we're on -- there's of a and this process for track we very laid it's well launch prescriptive expect to kind of year. And out

Arthur He

sounds It great.

give missed, us regarding for for update sorry could I status Dx if a so decision? -- the And you reimbursement NeXT reimbursement the

Aaron Tachibana

Chris, to you did ahead and take want go that?

Chris Hall

getting sure -- we're been that'll the said and making forward, data happen all We that the we're we pace. driving and Yes. building we've concordant that We've we're on and optimistic to submission that, stitching on this reimbursed and year. to and been together committed MolDx that feel that's like test is

Arthur He

So, like half it's year. of the more back or first half

Chris Hall

as middle, we walk certainly, of the we the year. in middle-ish by through Yes, guidance, the I and think the QX said part by

Operator

your in for call. participation conclude you conference Thank does today's This program. the

now may disconnect. You

Personalis (PSNL) 23 Feb 232022 Q4 Earnings call transcript