PSNL - Earnings call 1 2023 | Personalis, Inc.

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Operator

Greetings, ladies and gentlemen, and welcome to Personalis First Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Caroline Corner of Investor Relations.

Caroline Corner

Thank you, operator. Welcome to Personalis' First Quarter 2023 Earnings Call.

Joining me on today's call are Chris Hall, Chief Executive Officer and President; and Aaron Tachibana, Chief Financial Officer and Chief Operating Officer; and Rich Chen, Chief Medical Officer and EVP, R&D. this facts do statements should meaning the on matters relate within made of historical of be U.S. statements call not that to the All considered forward-looking laws. securities

subject our cost expectations term, cash timing our the activities, statements, actual revenue the current regarding with future to and and materially statements of any law. except and timing, recent outcome Form for of on runway, most these market our risks opportunity, undertakes and expectations. and this applicable to our technology, filings orders, collaboration example, in uncertainties recent SEC, that longer annual obligation expectations and products, expectations report including For services, review could for our our and existing from to Personalis year to update most results as XX-K. financial outlook. These expectations cause size trends the We decisions, risk no by booking you are statements and reimbursement encourage performance required described milestones, clinical business differ factors

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

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

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

Christopher Hall

of X the MRD second go to joining assays been occurring patients you its $XX is change I've the information you, personalized months for Personalis MRD diagnostic management cancer; a arc Since discriminating to of since we we Thank and power uniquely patient's illuminate to able only is after to our that delivering in patients. everyone, technology disease. It's developments convinced strategy the in ] be the therapies of creating for and actionable and was market. that with in to what us. more is appointed technology require patients can Both important one win afternoon, [ that thank and laid the each billion monitor in personalized the become out of is Caroline. uniqueness I a tumor oncology, CEO March, developments Good these most provide few to estimate positioned

Our product addressing a personalized called Personal. tumor-informed this space biopsy liquid is NeXT test

to DNA disease-free when don't a management importantly, see cancer, it cancer, time not see we high other involves cancer strategy we down believe cancer, likely X of that, focused may patient cancer, early-stage and may X, early-stage consistently monitoring technologies find when indications, can cancer treatment ultra need immunotherapy residual breast fragment sensitivity. At picked part-per-million. X other when across the levels patients at we additional aggressive most confidence and difference. believe we We can fragments immunotherapy not find which pursuing for achieve the a and those breast we and MRD only in earlier product among technology different because blood cancer call cancer be for suited changed few and ultra and is lung to based Our recurring NeXT mean strategy, detection is circulating for but this uniquely or before performance Personal patient in patients, therapy; make remain can as normal the is just one types few many million cancer to lung monitoring win early-stage at high our that stages. We cancer by can provide cancer will to sensitivity, its do goals, aim see and our and finding we disease there on as DNA guide heart a cancer our What do that we one, indications. partners and NeXT X indications Personal when decisions

exciting quarter, Personal's is sensitivity, its year. early NeXT through This the published had continue data study performance expect demonstrating we additional for data this and to we

chosen extended so our We ultra-sensitive and clinical were MRD AstraZeneca with TRACERx will for explore development. for study, by they to NeXT MRD we that measurements initiatives and to were selected the patients and also First, cancer. drug research Charles TRACERx studies. with AstraZeneca, options Personal of most for Swanton use the early-stage We treatment effectiveness major by and Dr. determine lung one world's partnership

technology We more in cancer is capability. a and to ] lung as leadership the group it such minute, point an our important NeXT to of ultra-sensitive I'll the leaders assay, will in way, work [ are collaborations Personal to us claims. samples to our work and TRACERx add validations are Put high-end but because color with MRD important other choosing these performance the patients. of ultra-sensitive in out global with determine value relationship that of TRACERx

for Personal he the Research our presented. tumor patients. melanoma This late-stage results. response findings biopsy Meeting, early, from Association few highlighted track a Pantel at results Klaus immunotherapy to extremely were using Cancer promising ago from is Annual to collaboration NeXT weeks Dr. Second, study, initial Liquid UKE although showed American pioneer, and

consistently to level First, the ctDNA Personal the NeXT patients. of part-per-million detected across ultra-sensitive down levels X

the sensitive incorrectly the sensitivity the MRD less time [ X/X ] status needed patient with would to as status of methods. called ultra-high and analyzed, points classify have negative Second, of MRD that was accurately nearly been

RECIST to ctDNA-positive fourth, findings had overall significantly of at similarly, survival tumor of criteria. were And increased patients. compared lowest The detections the third, confirmed ctDNA patients even positive had the And ctDNA-negative responders negative the were ctDNA XXX% level XXX% on that imaging. detection, complete via

quarter in have and demonstrating end we MRD on the is Now can that that come this strategy our having exciting progress we on NeXT execute goal data one win for important XXXX. indication our together very to was reimbursement Equally gratifying. Personal made it's of by that

focused studies by this key progress clinical and already we indications. have made collaborations our an aggressive announcing quarter that's While of each time line, in

College efforts Cancer Francis the jump-started TRACERx The cancer. led Crick our and Dr. Institute consortium London. collaboration to along detection changes initiative, Personal in University and sensitive for insights even cancer tumor provide study lung over U.K., the will lung time. by MRD expert, about more biology is deploy cancer Research TRACERx teams with groundbreaking how the NeXT Charles Swanton First, lung at The

opportunity TRACERx and consortium As of non-small mentioned, findings NeXT recurrent its shown Personal the ability its as mutations. research because as improvement. We TRACERx MRD both they identify TRACERx patient's CT selected detection other to believe using well informed ultimately before testing detectable remains collaboration collaborations earlier able patient with scan, Prior a journey. more common our patient-specific lung cancer patients about cell for was were from well care, significant in that with it, and scan much to have decisions ultra-sensitivity, will in but like there tumors for enable cancer

Medical a melanoma strong known along the monitoring relationships therapy able Duke provide and to Hamburg-Eppendorf previously University Center collaboration in efficacy UKE. announced IO as the foundation to That for collaboration, us monitoring. therapy a Personal for UCSF with IO NeXT be and we Second, also with the announced of show

The Criterium in will patients Breast engaged that the we using expected correlates is sites. MRD patient trial out approximately Academic first and both clinical standard for In Personal be XX a XXX U.S. trial analysis Third, path Cancer enroll CR to the Consortium carried and whether and establish of X MRD to to up assess stages. from pathological samples CR complete collected path NeXT care to stage, each will measurements. response, with be with

showcase Personal progress in and of follow-up trials studies, and leading rich we clinical announcements, The biobanks accessing X-year done. NeXT to decisions. And performance second insights on all validity world for expecting and for to We're and patient and not are cancer. establish In therapy stage laser-focused forward further ultra-sensitivity will the in indications, these Personal's NeXT look to involve we're as triple-negative sharing we ability breast provide through a early-stage the we important accelerating to X continue year. to sample additional engaging make collaborators studies

march NeXT the the this leader on Personal we Lastly, doing NeXT of the energy optimism use at brings sensitivity next fourth We closer leap of Personal, care MRD in market cusp There's in the market. the in for to and clinical and by cancer NeXT field to as sense on of our that year. substantial to of strong the we in Personal quarter launch MRD, establish a remain Personalis track a standard believe in are profound represents of something terms oncology.

also to NeXT many needed actively to managed. enabling on decisions Beyond how imaging, Its minimal make the recurrence of designed paradigm is don't for patients residual confidence unnecessary. In targeted from order the the to cancer key was than to eliminating to and more when patients [ improvements enable ultra-sensitivity Personal disease, earlier procedures they physicians months that care enable possibility will numbers best health biopharma change the diagnostic technology the or products. patients catching is paradigm supersensitive better therapies, ongoing Personalis cancer even treatment for years have escalating be of to for care market, NeXT or therapies usher transform next performance a powering incremental cancer will in we better The the technology Personal the the patients, and the and physicians are key is ] enabling that not to system. for better smarter believe enough, model, same inexpensive new NeXT for oncology product is Personal the and and monitoring beyond the when this will and providing generation

earlier personalized this approval we their for year, Moderna's as trial of clinical vaccine. announced they As cancer partner key pursue a are regulatory work,

cancer, executed for specifically Over Personal patient and for for the in ways exceeded we the talented delivered our by XX% to focus what new industry. We We believe blocking one of most execution of and by QX. our over a cancer company in each patient. tackling customizing for to thousands forecast. patients vaccines and teams year-over-year we an genomic with providing for in idea. cancer growth, about technology are now patients reduce the enabling We our is and to years, that extend power turn and review the cancer success patients a of aspirations on cancer different, cancer our patient's patient's be believe submitted a treating technology for technology COVID, a transform therapies. is good alone, and our the that I year Personalis' to our it opportunity the an our therapy each of new NeXT with the recent the development part could data exciting vision extremely the at next-generation and Dx into XXXX. each of And of by companies we focus It's of time completed Personalis, our of on coverage being for vaccines. There financial and mRNA our the worked Aaron to product. our vaccine journey. I'll test power personalized investors results. to efforts our NeXT several burn runway individual cash developed for lives to the Personalis is Each MolDx over new has information we U.S. Key there's are appreciate is our so

Aaron Tachibana

Chris. guidance and results primarily the our was of performance. our prior increased oncology first benefits the early, I you, for quarter, win, full year. Total beginning of year, first now million XXXX to XX% executed to strategy we to Chris areas, we and it's will are $XX.X Thank due the quarter period provide where for revenue with the first compared the mentioned detail and revenue expect well still We the company on same as and strong earlier. see in quarter although focus quarter about of second to financial

increase Our and from The oncology driven increased half oncology Natera, of our accounted $XX.X pharma revenue customers by revenue the for in same was revenue of mostly enterprise was which revenue, tests, period increase over other in million the year. the XX% quarter. year-over-year of the includes and which total volume by prior from

first First of VA XX.X% includes the million. Gross MVP sequencing, XX.X% of due for from to $X prior under-absorbed was quarter the overhead population with quarter compared margin costs. which X% year. same was year-over-year period The revenue was the for decrease the primarily

overhead requires the MVP. samples last X.X for for years support VA oncology lab labor And the revenue with and growing expenses volume. samples testing compared background, increased testing have our more over cancer to Our

diagnostic next compared due same million the expect we our cost fluctuating non-recurring to to $XX.X our scale our increase, efforts test one-time providing achieve and years, expenses first restructuring and continue margins included growing we the with force we of reimbursement, quarter while year. closure by term, Over the oncology were operation period revenue. Operating rates, facility prior [indiscernible]. to for margin in new couple million and expect some reduction million our $X.X we lab volume, in $XX.X charge for of as of associated to a gross of China the with the Longer operating increase gross secure at variability utilization tests, lower our

a million the quarter expense for $XX.X through million the from the same was was prior loss XX million, the year. expense quarter average $XX.X $XX.X million and million of year. of SG&A first million count weighted $X.XX compared the last was for $X.X quarter share period million of and basic same million share Excluding same the diluted the expenses was basic year. Net period decreased of with were for in The share period and period restructuring the and $XX.X same with per our the XX.X million million in last first diluted net was prior $XX.X with $XX.X compared $X.X per the net with the same the of of count loss for first charge average and the operating first loss $XX.X last net quarter the year, for $X.XX, loss the compared period share compared million and weighted year. R&D

capital capital for down cash sheet. to XXXX we the lower used with and during cash on short-term needs is first $XXX to investments million the of to quarter the remain quarter, purchases. We on Now the the to million. million with $XXX.X $XX.X balance finished our In track cash strong equipment million first compared a sheet used to working $XX of due net loss, balance usage the approximately year. which We year, prior full significantly reduce and

I'd to to like Now guidance. turn

approximately Natera; to population million due million, sample from from which For second $XX million; the primarily quarter total $XX revenue XXXX, revenue reduced lower million sales be first to to to of enterprise is we from revenue the million. and other sequencing company $X tests, $XX quarter, to expect than volume pharma of $XX be and customers

million. back reimbursement cash quarters. Net to of to our and expect sales completing approximately the Dx, NeXT oncology operator This with Personal the year. test enterprise approximately look recognized we million diagnostic total Q&A the usage $XX XXXX, milestones, company clinical launch. pharma, For million we change be to stay be and million, forward Operator? will to to to customers NeXT no million full a Personal is you with reduction lab throughout the for first million $XX the other million be year be for XXXX. from to of Population loss to revenue make there and I $XX guidance, $XX our that, $XX commercial NeXT from showcasing Please and of and during of revenue sequencing for to $XXX expected $X updating to the X updates. And approximately $XX call progress We tuned million begin for turn over session. as the future on evidence includes obtaining revenue

Aaron Tachibana

from comes first Tejas Our Savant question Stanley. Instructions] Morgan [Operator of

Gabriella Gabel

This is Gaby for Tejas. on

to start. just So

this remains the but lot and quarter, bio saw the So of same. strength a pharma your segment guide

guide kind some of if conservatism the curious in there? just baked is So

Aaron Tachibana

Aaron. is This

the change last it terms the of did terms in not from so of prepared in guide, remarks. say did we quarter what In

terms ], which Natera So from that. down, by QX and our is going guide biopharma, going QX which and down. of Natera volume vaccine is The [ revenue will QX going to is cancer personalized be increased offset offset in

we what had last the make that's as why sense? same, guide the is That So time.

Gabriella Gabel

thoughts off And in Is then on on remaining any the same? tail how are that 'XX? there updated Natera, revenue might

Aaron Tachibana

Yes.

of in so not from might modeling up a a year tail all. much So we year. end off samples that of in But the XXXX. little Natera in in terms expectation QX our start this assuming what terms from through volume early that will standpoint, bit be XXXX the shows we're revenue of there said, It's the to at

Gabriella Gabel

from how the pharma spending headwinds then this And from of you dynamic changed seeing if are some anticipate biotech on dynamics still with customers, the And of these throughout from biotech you delivery customers? do And pharma to companies and 'XX? your quarter? late, just from you are cautious some remainder given as last pharma And and continue has seeing customers? sample so, commentary of still some

Aaron Tachibana

Yes.

recession obviously, being on their with the pharma here, is prudent So spending.

bit some being little So there a things from we are their tighter seeing perspective.

it of little patient In COVID be lumpy, pharma, can sample terms from lot variable speak, the for terms and where timing so enrollment beyond slower. a a flow come the or were trials when we're always most part, of in samples bit situation, to of the in. But

beyond point terms this we're samples But at variability show do up. some in of So there time. that when is in

Operator

& question comes Cowen The Co. of line Dan of from Brennan next the

Joseph Flanagan

Dan. This on for is Joe

margins gross of? a in the cognizant there the is first, QX. of came revenue? quarter in model unprofitable in pruning one-time be XX% our Was should benefits of this around some we Just ahead more result biopharma at well that Or

Aaron Tachibana

Yes.

So prior in terms in mix. that of terms last here were had more benefits quarters in or VA to compared MVP there the up showed benefits QX from of some QX, year. the We volume in favorable some one-time

the In primarily it low to terms XX% more because of though, be we margins, the forward, facility. from new in our way expect costs range, coming of gross online

Joseph Flanagan

possible, implied on And to testing And test is the cancer revenue, revenue for pharma testing service million the versus think way $X.X vaccine? $XX is million-ish think in of I pharma about associated personalized there with service same terms any oncology that then for goes then of and maybe, XXXX? that for if just

Aaron Tachibana

Yes.

cancer this headed excited in XXXX. back into but broken out the of haven't the it's very about specifically half that terms and vaccines, So personalized year to we're we of where

and has been revenue cancer terms amounts. we of roughly cancer disclosed somewhere haven't again, -- really of dollar total X% between our vaccine X% Personalized In revenue. these

to it's it Over had the of percent primarily Moderna. with or we at look here expect success it. of a increase, we've as large the to to revenue, So of time, we way going total oncology that's a -- because the kind believe project with

Operator

line comes Donnelly The the Patrick from of question next of Citi.

Elizabeth Speyer

got You Patrick. on for Lizzy

just happen for what's the So you I know the on the the wondering line, more your quarter, in success be of into helpful? down to submitting I first that indication this would line like NeXT just commercialization thinking eventual sight some mentioned I way Medicare Personal in fourth was your of XXXX. there guess just, launch LDT but you're coverage color test?

Christopher Hall

We're therapy X the will Chris. monitoring the those data monitor we through -- and planning indications, gunning end breast were and by through IO into on few Yes. a cancer each -- XXXX. therapy X -- year grow or early-stage monitoring. select Thanks. it's building to coverage now, of plan the clinics, We're key it immunotherapy to launch this around [ lung We adoption And cancer, end XXXX and and we ] through that way. early-stage for of submit of one going we're focusing

academic to working strategy time, getting so time, of for start institutions the that set We expect for that and/or we block. same deepen Dx, the in product test around use cancer quickly a with us is a at can ramp their lot of our samples in be it to a the which from grow footprint, evidence have a field as sample set, of from us it be a clinician Personal, send that particular, cut the probably will have coverage to the clinics. and can same collaborators ordered -- we could we as tissue force at one sample and send positive that that could XXXX, profiling get having in prospective genomic go with feedback medical NeXT place. We're And we'll be registry to trials the early post in now coverage, NeXT

quickly [ And expect that think synergistically. overall. work we a grow to products we the billion So $XX there. revenue market ] That's will

that, So coverage. the ] that you at we post can rates we just up oppressively launch and as as we dramatically, [ imagine to growth away chip expect to pick move

Elizabeth Speyer

of we I second year, the think this just that the you, mean, me, quarter, the sequentially of them think And to of increasing off right one-time cost, there's wondering had way the on margins XQ the base? half should about excuse the in one-time given Just then that? you benefit, that

Aaron Tachibana

Sure.

the of So so one-time the of as China the our of go Lizzy, we terms primarily expenditures that called XX% and in to the we expenses, the forward, lab. from was of count reduction of and way restructuring, out head think closure about

take much expect. flat So expenses if year, remove you rest to through we the the that of that what you and will the pretty get

Operator

of The Needham next question comes & from the line of Matson Co. Mike

Michael Matson

it a keep hate back to of kind but Natera, going I modeling from important perspective. to is

expected number the Is had million year said from you think to $XX Natera. that that case? that on last I that. down you call the didn't from is $XX million hear had Or still this you reiterate I that? come

Aaron Tachibana

to $XX information got million, to be little of primarily Natera of come dollars than that's to a that, less wants of going million It It's we've where go. from down million a could because the bit some couple $XX with Mike. current more

that exactly to first a then that. So little going will early assuming we not we're 'XX, very and but look thought. it decline then it's going what [ ] in we XXXX, like that volume away XXXX after the little quicker what part see into bit sure of And than

Michael Matson

even be you for to goes you as in that XXXX think Do continue you going to I last grow kind your completely that grow -- offsets revenue, you because grow or... call, could you that think continue a to felt can And significant away? that headwind, that's said find also of pretty

Christopher Hall

projects We're optimistic in And personalized about Personal We're terms very more into highly saw as as pharma. won We're landing well we've focused our in Mike. on with do, way you one vaccine. NeXT in recent now to that press cancer look biopharma. that NeXT are looking large the NeXT companies underpenetrated and projects penetrate of We and that we've releases, further other to pharmaceutical we're on relationship doing with Personal been and a taking AstraZeneca, with continue relationship great a have we at platform deepen well. as of business

hole will that offset, the So that other fill departure a we Natera ]. few [ drivers believe growth the going have to are we

Richard Chen

point obviously, laboratory still in Dx but We And we coming it be to growing start 'XX of a build revenue time, the And building of nice we'll NeXT meaningful reimbursement, -- will that more a from because significantly and will we're while revenue of also in the still at Personal. be from also. will we'll which base become on out. that getting expect be more in in the revenue we business -- clinical be 'XX come plan it's And there be and launch will be smaller ordering some to have through. the the NeXT doctors reimbursed, the will then, will low, expected base, backside in there starting be to

we're where year So revenue. next optimistic about will be

Michael Matson

could And that's be I NeXT going later this have to reimbursement, Dx, you with then year. mean, potentially guess, I just

Christopher Hall

correct. That's

Michael Matson

I -- there? opportunity heard I kind that of I it mentioned what's that used revenue Is it's I going mean, -- mean, to with the be the mean, you stand-alone? you test, to is Personal you meaningful need kind generate of that of revenue? Or kind do really going a there before is with a real MRD as opportunity get revenue can Personal together but

Christopher Hall

there Well, is.

think a of spend. is, sales lot we're we therapy, a what marketing the careful targeted there, doing, we believe the especially way people and the and and there we're I have competition particular, exome other well to -- to way front there's with and therapy to market and think in and the discriminating approach way cancer we think market discriminating most ahead provides comprehensive to relative of the more therapies. in TMB the is baseline have we most are measured being we that a fusions But the

marketing it in a So that expense. the revenue burn, about we're way thoughtful gaining versus is sales revenue/cost

the a it's quite great a as a toe have believe companies it's same in on huge how and hold but able get think force in be We go it. of built rationally. stand-alone it, do we being business, we're about and we we been really that learnings climate, we there's way moving that so back, this And that an a business -- field leverages at and incremental business, to the it but we'll lot thoughtful in builds the a throw could

Michael Matson

the it And those those good I -- of Are the that Personal for bearing trials cost groups, either then to involved all facilities? you're curious Personal. those all academic the detail is was companies But outside all of being -- particularly hear -- on any funded if by just with, or trials. was

Richard Chen

and terms that's understand of Mike, relatively lot So the do but something that the it's We to need why those we're that. higher-end KOLs business to in of chosen funding expensive, landed. with we've we've studies the is a collaborations, that do

Christopher Hall

that trial for a note don't the collaborations involved you would pay is prospective to beauty of the these I But have that get and clinical like time samples. to the

And to able we to are less So because it's of in around do what data to you're too, significantly than you're where data few utility it, we out going deeper why data trial announced samples around previously expensive that ever and and that. that, build sets doing important you've was and and done prospectively development days that got it's accessing work funding the be the these tests. doing we're ago, doing our clinical B-STRONGER

sets some the with it, a really of with inexpensively. and world, in to getting the data sets with of argue have that. some the folks top to better you But I data going way So is jump do would start annotated really

the there? that's approach do Rich, we're to add have going anything So at. that you

Richard Chen

absolutely And is -- the Yes. helps everything other that data generation. us accelerate true. Chris thing the it also, It's said is

is TRACERx, have these going allow been that generation. accumulated years, we're patients looking going really fact to us that large like we and sets, over to data outcomes the data to at so sets be happened data we the these have many very retrospective with accelerate many, So know what

Operator

Lee Sean from comes question next The Instructions] [Operator H.C. of Wainwright.

Xun Lee

a quick I question. just have

regarding If you lines time the expected the additional could provide color studies. some of

example, that the comparing would analysis for to the where stage follow-up? you're with Personal ] take expanded the on long first [ versus stage, before the of PCR, MRD move how you For X-year NeXT

Richard Chen

Yes. This is Rich. Yes.

Cancer So the doing that for prospective of and into we're Consortium neoadjuvant treatment Academic we're performance for the patients. where early-stage referring multicenter first phase, breast looking the split one this triple-negative Breast is I these doing our B-STRONGER trial with we're to, phases, you're cancer correlation, They X think multiyear, the Criterium. for phase at the study, the in

we'll then, X the data years therapy frame. the out X.X phase time second start of getting year the kind following [ will out expect that be We X year on X second phase. at And years, we'll through moving obviously, outcomes out. some to to their of adjuvant that And in looking and patients ] be the

Operator

and reached question-and-answer and have the gentlemen, for Ladies your session. does Thank lines. note we now today's no you may Thank that the you, and Please sir. end queue, this we disconnect have event. you questions of further attending, in conclude the

Christopher Hall

Thank you.

Aaron Tachibana

Thank you.

Caroline Corner

Goodbye.

Personalis (PSNL) 3 May 232023 Q1 Earnings call transcript